House of Commons
Monday, June 24, 1946
The House met at Half past Two o'Clock
Prayers
[Mr. SPEAKER in the Chair ]
Private Business
Cardiff Corporation Bill
Read the Third time, and passed.
NEWCASTLE-UPON-TYNE CORPORATION BILL [Lords]
Read the Third time, and passed, with Amendments.
RUSHDEN DISTRICT GAS BILL [Lords]
As amended, considered; to be read the Third time.
RHODES TRUST BILL [Lords]
Read a Second time, and committed.
TYNE TUNNEL BILL [Lords]
Read a Second time, and committed.
Oral Answers to Questions
India
Indian Army (Pensions)
asked the Under-Secretary of State for India what steps are contemplated in order to extend to pensioned British officers and other ranks of the Indian Army the improvements recently announced for equivalent ranks of the British Service.
:I assume that the hon. and gallant Member is referring to the scheme for re-assessment of Service Retired Pay and Pensions in respect of War Service which was announced by my right hon. Friend the Secretary of State for War on 15th April. The application of this scheme to the Indian Army would depend upon the prior application to the Indian Army of the new Pension Code. I am in communication with the Government of India on both points, and hope to make a statement shortly.
Gurkha Brigade
asked the Under-Secretary of State for India whether, in view of the recent developments in India, he is now in a position to say what safeguards are to be offered to the British officers, Gurkha officers and other ranks of the Gurkha Brigade, under the new proposals for Indianisation of the Army in India.
:The question raised by the hon. and gallant Member has been receiving sympathetic consideration but I am not yet in a position to say precisely what arrangements will be made to safeguard the interests of the officers and men of the Gurkha Regiments.
:As sympathetic consideration has been going on since 28th January, may I ask the hon. and learned Gentleman to give very early attention to this matter, because the relationship of the Gurkhas to the Crown is something quite different from that of the rest of the Indian Army, and there is very considerable alarm as to their future?
:I can assure the hon. and gallant Member that this question is very much in the minds of both His Majesty's Government and the Government of India.
:Is the Minister aware that there is a deep principle involved apart from any question of expediency in this matter?
:I indicated in my first reply that this matter was receiving the sympathetic consideration of His Majesty's Government.
Indian Army (Pay)
asked the Under-Secretary of State for India whether he is aware that the existing rates of pay of other ranks in the Indian Army are based on the prewar cost of living; that they receive no family allowance and no ration allowance when on leave except to cover time spent travelling; and what steps he is taking to urge the Government of India to revise these low rates of pay.
:The Government of India have appointed a Postwar Pay Committee to consider and make recommendations on, inter alia, the rates of pay of other ranks of the Indian Army and I am confident that both that Committee and the Government of India will give full weight to the considerations mentioned by the hon. Member.
:Will the Minister state whether the implication is that these men receive no family allowance or that they receive no family allowance when on leave? But in either case, are their families expected to get along without any allowance at all?
:The position is as stated.
:Which of the implications is true? Is it that they receive no family allowance on leave, or that they receive no family allowance except when on leave?
:I said the implication of the statement in the Question was correct. They receive no ration allowance when on leave.
:There were two possible implications and I was very anxious to know which was the true one; either they receive no family allowance on leave or they receive no family allowance except when on leave and it is not clear which is the position.
:I tried to make it clear that the statement in the Question is quite correct. They do not receive ration allowance when on leave.
:Is not the position clear—that they do not receive family allowances at all, and that they do not receive ration allowance except when they are travelling on leave?
:I think I had better look into it.
Commonwealth Indians (Civil Rights)
asked the Under-Secretary of State for India what are the latest estimates of the number of Indians in Burma, Malaya, Ceylon, South Africa, East Africa and other parts of the British Commonwealth; and in which of these areas do Indians suffer discrimination in matters of civil rights or enfranchisement.
:With regard to the first part of the Question, I will, with permission, circulate in the OFFICIAL REPORT a tabular statement of the latest information available to the Government of India regarding the numbers of Indians resident in the British Commonwealth outside India. Indians in Burma are protected against discrimination in the matter of civil rights and enfranchisement by the Government of Burma Act. With regard to the position of Indians in other parts of the British Commonwealth, I would suggest that my hon. Friend should approach my right hon. Friends the Secretaries of State for the Dominions and Colonies for the particulars he requires.
:In view of the fact that there is a certain amount of disquiet on this matter, could the hon. and learned Gentleman say whether he will take any steps at all to bring to the notice of the respective Governors of the Dominions and Colonies what they could do to try to ease this matter?
:No, Sir. I am afraid I am only concerned with the position regarding Burma. As regards the Dominions, as my hon. Friend knows, under the principles of imperial relationships, this is a matter between the Dominions and the Dominions Office.
Food Situation
asked the Under-Secretary of State for India if he has any further information regarding food shortage in India; to what extent progress has been made respecting supplies; and what alternative method of transport of food has been secured against the eventuality of the Indian train service being affected by industrial dispute.
:Shipments of cereals, excluding rice, to India in May amounted to 172,000 tons and not about 235,000 tons as I informed the hon. Member on 3rd June. The difference of 63,000 tons represents quantities which, according to my information on 3rd June, had been shipped in May but which did not actually sail until June. Including this quantity, about 336,000 tons have been programmed for shipment in June. For July shipment, about 108,000 tons have been programmed from Australia, and it is hoped in addition to ship further quantities from North and South America. As regards rice, about 42,000 tons are known to have been shipped during the current quarter, and it is hoped that about a further 38,000 tons will sail before the end of June. The food situation in India continues to be precarious. But, on the basis of these supplies, the Government of India anticipate that distribution can be maintained up to August, assuming that there are no untoward developments. As regards the last part of the Question, measures were taken to distribute food stocks as widely as possible against the eventuality of a railway strike and to make the maximum use of road and water transport and of coastal shipping. As my hon. Friend will be aware, the railway strike notices have now been withdrawn.
:Could the Minister say what is the percentage per month of shortage on estimated minimum requirements?
:No, Sir; not without notice.
:Has the hon. and learned Gentleman no news about the 500,000 tons that Dr. Sjahrir has promised Pandit Nehru from Java?
:No, Sir. Perhaps the hon. Gentleman will put that question on the Paper.
:Will the hon. and learned Gentleman say what allocation has been made to India out of the 1¼ million tons of rice subject to contract with the Government of Siam, and what amount he expects to receive of this vital surplus on the doorstep of India in the next three months?
:I will be glad to answer that question if the hon Member will put it on the Paper.
:Can the Minister give an assurance that the 63,000 tons kept in ships after 3rd June has not yet suffered any wastage as a result?
:I would not be able to answer that question without notice.
Burma
Incident, Tantabin
asked the Under-Secretary of State for Burma in what cir- cumstances a demonstration in Rangoon was recently fired upon, resulting in two deaths.
:There has been no such incident in Rangoon. My hon. Friend must, I think, be referring to an incident which occurred at Tantabin, some 15 miles from Rangoon, on 18th May, when one person was killed and a number wounded, of whom two subsequently died. On the advice of his Executive Council, the Governor of Burma has appointed a committee of inquiry to inquire into the composition of the crowd which came into contact with the civil authorities at Tantabin and the reasons for its assembly, and also into the circumstances in which the police made use of their powers of dispersing the assembly by force.
Political Situation
asked the Under-Secretary of State for Burma, whether he is aware that the Supreme Council of the Burmese Anti-Fascist League has urged the calling of a conference by the Governor to discuss the formation of a national government and has stated that the present administration of Burma with an unrepresentative Executive Council is adversely affecting the rehabilitation of Burma; and whether he will instruct the Governor to re-open negotiations with Burmese political leaders with a view to the formation of a representative government.
:Yes, Sir, but I do not accept the implication of the statement referred to. It has been the constant object of the Governor, since his return in October last, to secure an executive council on the broadest possible basis pending the holding of elections next spring. He would welcome the inclusion in the council of any political party not now represented in it. In these circumstances, I do not consider any further instructions are required.
Rehabilitation (Financial Assistance)
asked the Under-Secretary of State for Burma, if any approach has been made to the Government of India for financial assistance in the rehabilitation of Burma in view of the fact that the sacrifice of Burma saved India.
:No approach has yet been made to the Government of India for financial assistance in the rehabilitation of Burma.
:Can the Minister say if it is proposed to make any approach to the Government of India, in view of the fact that the sacrifices of Burma saved the cities of India from devastation and pillage?
:No, Sir. I am not in a position to say what the policy will be in future, but I would remind the hon. Gentleman of the present political and constitutional position in India.
:Is not India, as the result of the war, a creditor nation?
:Certainly, Sir.
Questions
South Tyrol
asked the Secretary of State for Foreign Affairs whether he is aware that, for the last 1,300 years, the ethnic and linguistic and economic boundary between the Tyrolese and Italians runs through the Salurn Gorge, 25 miles South of Bozen; and whether he will bring this fact before the meeting of delegates of the Foreign Ministers, with a view to an equitable delimitation of the boundary.
:My right hon. Friend has, I think, made it clear that His Majesty's Government recognise the strength on ethnic and linguistic grounds of the Austrian claim to the province of Bolzano, but as my hon. Friend the Under-Secretary of State said in answer to the hon. Member on 3rd June, the economic ties of the province are now with Italy rather than with Austria. As the question is now under discussion in Paris, I think it would be unwise for me to add anything to what my right hon. Friend said in the House in a recent Debate.
:Cannot the right hon. Gentleman hold out any hope that the injustice committed by the Treaty of Saint Germain, as frankly admitted by Mr. Lloyd George, M. Clemenceau and President Wilson, will be at last rectified?
:The hon. Member has had a very full answer from my right hon. Friend not long ago, and I do not think I can try to add to what he said.
:Does the right hon. Gentleman commit himself to the doctrine that the political and economic frontiers must necessarily coincide?
:No, Sir, but I do say that, in some cases, economic factors as well as political factors must, in the interests of the population themselves, be taken into account.
:Is not the right hon. Gentleman aware that the economic connections with Italy are very largely artificial and were created in the last 25 years?
:Yes, Sir, but they are very important.
:Is not the Minister aware that the main economic factors affecting this territory are not relations with Italy at all but with Austria?
:No, Sir. I could not accept that. They may be important to both countries, but they are certainly very important to Italy.
asked the Secretary of State for Foreign Affairs, whether he is aware that in South Tyrol there were, in 1922, 770 German-speaking State schools and that within five years every one of these was either closed or changed into an Italian school; and if, under these circumstances, he will insist on the insertion of a clause in the treaty with Italy for the protection of the Tyrolese minority and language in those areas allotted to Italy.
:Yes, Sir, I understand that the summary given in this question of Signor Mussolini's educational policy in the South Tyrol is substantially correct. I have no doubt that my right hon. Friend will bear in mind the suggestion made by the hon. Member for the insertion of a clause in the treaty with Italy. The hon. Gentleman will be glad to know that the present democratic Government in Italy have already passed decrees which give the German-speaking population of the South Tyrol equal linguistic rights in elementary schools, in court proceedings, and in public offices.
:In view of the fact that every one of the most solemn promises given by Italy in 1919 was broken, would it not be prudent, this time, to have these promises inserted in black and white in the form of a treaty?
:I do not think promises inserted in black and white in treaties made any difference to Signor Mussolini.
Poland
Elections
asked the Secretary of State for Foreign Affairs whether he is aware that the Polish Provisional Government has now suspended the Polish Peasant Party in six of the most densely populated areas where it has large followings; and whether he will point out to the Polish Provisional Government that this attempt to force Mr. Mikolajczyk to join a single election bloc is inconsistent with the free and unfettered elections guaranteed by the Yalta Agreement, for which the British as well as the Polish Provisional Government is responsible.
:Recalling, as he does, the solemn undertakings given by the Polish Provisional Government in January last, and regretting the increased tension in Polish political life at the present time, my right hon. Friend is gravely concerned by the delay in holding elections in Poland, and by the signs that this delay is being used to undermine one of the principal parties permitted by Polish law.
:I feel sure that the right hon. Gentleman will realise the intensive form of intimidation which is being carried out to prevent free and unfettered elections, guaranteed by the Yalta and Potsdam Agreements.
:In view of the continued use, both in the Question and answer, of the words "Polish Provisional Government." and in view of the misunderstanding which has already occurred in that matter, will my right hon. Friend make it clear that there is nothing provisional in His Majesty's Government's recognition of this Government and that His Majesty's Government recognise them, de jure and de facto, as the only Government?
:Yes, of course, Sir, but we recognise them on condition that there should be free democratic elections at which the long-term constitutional system of Poland should be settled.
:In view of the fact that the Polish Provisional Government have not carried out the conditions of recognition, how long is that recognition going to continue?
:I have made a strong and considered statement on behalf of the Government, and I do not think I had better add to it. The Polish Government are fully aware of our views.
:Can the right hon. Gentleman say, seeing that His Majesty's Government are so regretful regarding the present position, what authority they have to improve it and what they are actually going to do to get the matter amended?
:We received certain pledges from the Polish Provisional Government when we recognised them last January, and it is on the basis of those pledges that we are making representations. We have made them understand what is our view, and we hope to persuade them that it is in their own true interest to proceed as we hope they will, and as most of the other countries in their zone have already done.
:Is it not also true that His Majesty's Government have been in negotiation with the Polish Government in this matter, that negotiations are still proceeding and that, if elections have not been held and no date has been fixed for them, the Polish Government have offered reasons and explanations of that fact?
:I cannot accept that statement, as my hon. Friend made it. The word "negotiations" is not the right word and, so far, I think that the reasons adduced from the Polish side are not very satisfactory.
:Are we to understand from the replies received that, in the event of there being some hitch in regard to this proposed referendum, we are going to recognise the exile Government in London?
:Of course not; nothing of the kind. But I hope we may still take it as certain that the Polish Government are going to fulfil their pledges and carry through an election which will give satisfaction to all concerned.
:Is not the important thing at the present moment that, if we want free elections, it is necessary that each party should have full freedom of expression as, otherwise, free elections are a farce?
:Yes, Sir, I agree with my hon. Friend.
:Does the right hon. Gentleman remember any election which gave satisfaction to all parties?
Refugees, Africa
asked the Secretary of State for Foreign Affairs what arrangements are being made for repatriation or resettlement of Poles in the refugee camps in Africa.
:Arrangements are being made for the camps of Polish refugees in East Africa and Southern Rhodesia to be handed over to U.N.R.R.A., who will then be responsible for repatriation. A Mission from the Polish Provisional Government is visiting the camps in order to promote the repatriation of refugees who volunteer to return to Poland. U.N.R.R.A. has promised to give technical assistance to this mission. I have not yet received any reports on the result of its work. Facilities will be given to refugees who are dependants of Polish troops under British Command to join their menfolk, if they so desire.
:Can my right hon. Friend say whether any facilities will be given, similar to those given to the soldiers in General Anders' Army, to join relatives in this country?
:Yes, Sir, that is what I have said. Facilities to come here will be given to refugees who are dependants of Polish troops under British command.
:I do not think my right hon. Friend understood what I said. In cases where they have relatives in this country who are not necessarily soldiers, will facilities be given to them to join their relatives?
:I think that will be covered by the arrangements already made by my right hon. Friend the Home Secretary for other categories of refugees.
:What happens to those who do not wish to be repatriated and have no relatives in this country? Will they be allowed to come here?
:We shall have to see what happens about the general refugee problem. We hope there will be settlements of many such refugees overseas, in which case people may wish to join their men overseas.
:May we take it that no pressure will be placed upon these people to return to Poland unless they wish to do so?
:Yes, Sir. The right hon. Gentleman can be absolutely certain that they will not be sent there unless they want to go.
:Can my right hon. Friend say whether any arrangements have been made to send the Poles out of Scotland to Africa or anywhere else?
Questions
Netherlands East Indies (Negotiations)
asked the Secretary of State for Foreign Affairs what stage the negotiations regarding the future status of Indonesia have now reached; and, in view of the result of the recent election in Holland, whether he has yet been informed of the attitude of the Dutch administration to Indonesian nationalist aspirations.
:On the 19th May the Lieutenant Governor General of the Netherlands East Indies, Dr. van Mook, handed to Dr. Sjahrir the text of a protocol on the future course of the negotiations. On 17th June, Dr. Sjahrir made some counter-proposals to Dr. van Mook. My hon. Friend will no doubt have seen the statement on these counterproposals issued by the Netherlands Government. The new Netherlands Government have not yet been formed, but I trust that, when they assume office, they will not only continue the negotiations with Dr. Sjahrir, but will bring them to a speedy and satisfactory conclusion.
:Could my right hon. Friend say on what he based what seemed to be his rather optimistic recent statement about the Dutch election? Was it not rather a rebuff to those who had offered the more liberal proposals?
:No, Sir, I think not, because the parties which formed the previous Government will form the new Government and they are committed to the policy on which both the Indonesians and the Dutch had negotiated. My hopes are based on the fact that all farseeing men on both sides know that their overriding interest is to settle this matter quickly and by agreement.
Yugoslavia (General Mihailovitch, Trial)
asked the Secretary of State for Foreign Affairs what steps he has taken to secure information in regard to the trial of General Mihailovitch; and whether British reporters are given facilities for reporting the trial.
:A member of His Majesty's Embassy has been present at the trial as a spectator, and my right hon. Friend has received detailed reports of the proceedings. The foreign Press has also been well represented at the trial, which has been fully reported in the newspapers both here and in other countries.
:Have we definitely asked the Yugoslav Government to permit British officers to get verbal evidence at this trial; and can the right hon. Gentleman advise any method by which this earliest friend of Britain can secure justice?
:What the hon. and gallant Member asked me for in his Question was whether I could get information about the trial and whether British reporters could go there. I have answered both points—we are getting all the information and British reporters can be present all the time.
:Can the right hon. Gentleman say whether the health of General Mihailovitch is in such a condition that he is fit to be put through the present trial?
:We had reports about his health a little while ago, and we were then told that he was a great deal better than when he was taken prisoner.
:In view of the number of statements appearing from Belgrade and Prague, and that we must have a considerable number of reports about General Mihailovitch from our own re- porters there, would it not be possible to issue some kind of White Paper showing exactly what reports we do get?
:I made an answer about that in reply to a Question the other day. Perhaps the hon. Member will look it up. I do not think we can issue a White Paper in the middle of a trial.
:Will the Minister consider, at some stage in the near future, publishing all these secret documents about our contacts with secret movements in Europe, as it is high time these matters were cleared up by publicity?
:I will certainly consider my hon. and gallant Friend's proposal.
:May I ask the right hon. Gentleman if the detailed reports to which he referred in the original answer can at least be published as a White Paper?
:I do not think we can do that at present, but I will look into the matter.
Spain
German Assets
asked the Secretary of State for Foreign Affairs what further progress he has to report in the matter of Allied identification and control of German assets in Spain.
:Discussions about the identification and control of German assets in Spain are still in progress in Madrid. But His Majesty's Government do not intend to start formal negotiations with General Franco's Government until an agreement with Sweden on German assets in that country has been made. The United States Government concur in the course of action which we propose.
Nazi Agents (Repatriation)
asked the Secretary of State for Foreign Affairs what action is now being taken by His Majesty's Government, in conjunction with other Governments, to secure the repatriation of those German citizens whom the Spanish Government regards as incorporated in Spanish life.
:His Majesty's Government have never demanded that all Germans resident in Spain should be re- patriated. But they have never agreed to exempt from repatriation Germans who rendered special service to the Nazi cause, simply because such Germans had lived for a long time in Spain or had had close associations with the country. His Majesty's Embassy, like the other Allied Missions in Madrid, are pressing and will continue to press for the repatriation of all such Nazi agents. The attitude of General Franco's Government in this matter has left much to be desired. So far, out of the 734 Germans whose record is particularly bad, and whom we have already named for priority repatriation, only 192 have so far been sent home, although more than 2,000 Germans have left for Germany. A United States ship, the Marine Perch, recently sailed from Bilbao. It could have taken some 900 Germans; in fact, 341 embarked, and of these only 37 were on our priority lists. His Majesty's Government take a serious view of the failure of General Franco's Government to cooperate in this matter, and they are now considering what further steps they should take.
:Can my right hon. Friend say whether any of those whom we wish to apprehend are included in the 2,000 who, he said, had travelled from Spain to Germany, and if steps are being taken in regard to them?
:Yes, Sir, they included 192 out of the 734 whom we have so far put on our priority lists.
:Can my right hon. Friend assure the House that these representations are made only in the case of people whose offences are of a high order, so that nothing whatever is done to interfere with the international tradition of political asylums?
:Yes, Sir, I think I can give my hon. Friend that assurance.
:In view of the facts which my right hon. Friend has given, can he say what action His Majesty's Government propose to take in view of the refusal of General Franco to hand over these Nazi agents?
:I have already said that we are considering what steps we shall take.
:What is the position with regard to German Nazi agents who have actually been granted Spanish nationality by General Franco?
:I would like to see that question on the Paper.
:Have we got hold of the 37 we wanted?
:Yes, Sir.
:Can my right hon. Friend say whether representations are being made about Nazi agents not of German nationality, for example, quisling leaders like Degrelle who have taken refuge in Spain?
:I would be happy to consider the case of Degrelle. Perhaps my hon. and gallant Friend will put the question down.
Questions
Great Britain and Russia (Parliamentary Delegations)
asked the Secretary of State for Foreign Affairs whether he will consider making arrangements for all-party delegations of Members of this House to make regular and repeated visits to the U.S.S.R. for the purpose of strengthening friendly relationship between the two countries.
:The House will recall that a British Parliamentary delegation visited the Soviet Union in January, 1945. As I told my hon. Friend the Member for Norwood (Mr. Chamberlain) in answer to a Question on 8th May, my right hon. Friend has always desired that a return visit should be arranged at the appropriate time. With your approval, Sir, I have now instructed His Majesty's Ambassador at Moscow to inquire of the Soviet Government whether they would welcome an invitation to the Supreme Soviet to send a delegation to this country after the Summer Recess. I hope that this visit will take place, and that it may lead to closer and more regular contact between the legislature of the Soviet Union and the British Parliament.
:Will the Minister consider inviting Soviet scientists to Britain in return for the visits which our scientists paid them last year?
:If the hon. and gallant Gentleman will put down the question, I will give him an answer.
Passports and Visas
asked the Secretary of State for Foreign Affairs why applicants for passports or renewals of passports at the Passport Office must present the exact fee required and cannot be given change.
:Both the Main Issue Counter and the Urgency Counter of the Passport Office do give change to those who apply for passports to be issued or renewed. For reasons which I will gladly explain to the hon and gallant Member, change cannot be given at the main inquiry counter without delaying the queue of other applicants. This counter, however, deals with only 2½ per cent. of the fees which are paid.
asked the Secretary of State for Foreign Affairs if he proposes to take any action to discontinue the use of passports and visas.
26 and 27.
asked the Secretary of State for Foreign Affairs (1) what steps are being taken to abolish passports;
(2) what steps are being taken to abolish visas on passports.
:Agreements to abolish visas were concluded with a large number of countries before the war. When war broke out, however, the visa system had to be re-established for security reasons. His Majesty's Government intend to restore prewar conditions as soon as they can by agreement with other countries; but it is evident that this country cannot abolish passports and visas by unilateral action. His Majesty's Government are most anxious to eliminate unnecessary travel restrictions. We hope that the conference proposed to the Economic and Social Council of the United Nations to discuss frontier formalities will shortly meet. In that conference we shall strongly urge the alleviation of present passport difficulties.
:Will the right hon. Gentleman consider meanwhile a revision of the Passport Office, so that those who go there and have to queue up an inordinately long time, no longer need do so, by introducing a simple system of a visible indication of the passport numbers and application numbers which are dealt with, which would save a great many people a lot of waiting?
:We are already trying to ease the difficulties in the Passport Office.
:Is the right hon. Gentleman aware that there is one country, to enter which people have to have a passport, over which this country has some control, namely, Northern Ireland? Would not the right hon. Gentleman agree that a revision of the system of entry into Northern Ireland would cause a lot of satisfaction to people who want to travel there?
:I will look into that matter.
:Is the right hon. Gentleman aware that a relaxation of restrictions in regard to passports and visas will have very little effect so long as the financial restrictions on travel today remain?
:In regard to restrictions on the financial arrangements for foreign travel, substantial changes have already been made.
Atomic Bomb Trials (Animals)
asked the Secretary of State for Foreign Affairs what reply His Majesty's Government have received to their request to the U.S. Government to agree that the animals used in the U.S. trial of the atomic bomb shall be anæsthetised.
:His Majesty's Government have not thought it right to request the Government of the United States to anæsthetise the animals which are to be used in the forthcoming trial of the atomic bomb. This suggestion has, however, been made by the University Federation for Animal Welfare, and steps have, I understand, been taken to bring it informally to the attention of the authorities of the United States.
:Is the right hon. Gentleman aware that there is very widespread concern about this cruelty to animals, and has he any information as to the reply made to this informal suggestion?
:No, Sir, I have no information about that, but I ought to say that this experiment is being managed by the United States Government. It is their business to decide these arrangements. I would add that the Medical Research Committee have grave doubts as to whether it would be practicable to anæsthetise the animals.
:Why choose innocent animals when there are so many guilty men available?
:There might be some difficulty in making a choice.
British Council (Chairman)
asked the Secretary of State for Foreign Affairs why he appointed General Sir Ronald Adam as chairman of the British Council.
:The hon. Member is, I am sure, familiar with Sir Ronald Adam's record as an administrator and as a pioneer in Army education. His election as Chairman of the British Council had the warm approval of my right hon. Friend, and I am confident that it will be justified by events.
:While appreciating the right hon. Gentleman's natural impulse to choose an Army officer as an exponent of culture, is it not a fact that Army officers have no training in publicity or propaganda and that this appointment was a colossal error, the real intention of the Government being to appoint this distinguished officer as Governor of Malta, and Mr. Douglas as Chairman of the British Council?
:I am perfectly certain that no better candidate than Sir Ronald Adam could have been found for the task of being Chairman of the British Council.
Shipping
British Residents, South America (Repatriation)
asked the Minister of Transport what arrangements are being made for the speedy repatriation of the numbers of British residents in South America who volunteered for service during the war and are now awaiting facilities to return to their homes.
:Owing to continued pressure on our limited passenger shipping resources, opportunities for passage to South America are necessarily restricted. So far as opportunities exist, however, high priority is being given to these repatriates. As at 31st May, 411 were ready to sail, and passage is being provided for 218 of them out of the total cabin lift of 392 for June.
:Will the right hon. Gentleman give special consideration to these cases, as most of these people had to be separated from their families for a considerable number of years, and the hardship on them is very great?
:As I have repeatedly stated, it is a question of sharing out our shipping resources on an equitable basis. The hon. Gentleman will see that it is increasing in this direction.
:In view of the fact that many of these people were in the Air Force, is there any reason why they should not be allowed to fly back?
:That question should be put to my right hon. Friend.
:Pass the buck to someone else.
Troopship "Winchester Castle" (Unoccupied Space)
asked the Minister of Transport why the s.s. "Winchester Castle" sailed from Southampton on 15th May, for Durban, with a large portion of her B deck accommodation unoccupied.
:On the voyage in question the troopship "Winchester Castle" was being used for civilian passengers and carried the maximum number of passengers permissible in order to keep within the capacity of the ship's lifeboats.
Continental Leave Troops
asked the Minister of Transport whether frigates are now being used for the transport of troops on leave from the Continent.
:For reasons which have been explained in correspondence with the hon. Member, it is not considered practicable to utilise frigates for this purpose.
Summer Services, Northern Ireland
asked the Minister of Transport whether it has now become possible to provide passenger services between Glasgow and Londonderry during the summer.
:Yes, Sir. A summer passenger service commenced on Friday, 21st June, with two sailings in each direction between Londonderry and Glasgow.
:How did the right hon. Gentleman manage to get over the insurmountable difficulties which he told me there were against this service being started this summer?
:I do not say what I can do until I have put it into operation.
asked the Minister of Transport whether he has any statement to make as to improvement of the shipping services to Northern Ireland during the summer season.
:In addition to the resumption of the Glasgow-Londonderry passenger service, already referred to, services to Northern Ireland will be augmented during the course of the summer by the return from reconversion of two, and possibly three, vessels. Of these, one will sail daily after mid-July between Ardrossan and Belfast, and will be capable of carrying 7,500 passengers per week in each direction. Another will replace a smaller vessel on the daily Glasgow-Belfast service, and will increase passenger capacity by about 900 persons per week in each direction. No date can be given for the availability of the third, but, if reconditioning is completed in time, it will replace the existing vessel between Stranraer and Larne, which in turn will enable an additional sailing to be made between Heysham and Belfast, i.e., outwards on Fridays and return on Saturdays. Lastly, between Stranraer and Larne additional sailings will be provided on Saturdays during July and August by extra runs by the vessel then on the service.
:Are the Government still using ships running to and from the Continent that should be on the Heysham service? If so, when will they be released?
:I think the hon. Gentleman has had a very good answer, and he might rest awhile before returning to this subject.
:Will the right hon. Gentleman say something with regard to the augmentation of the service between Belfast and Liverpool which he has not mentioned?
:Not at the moment.
Railways
Sleeping Accommodation
asked the Minister of Transport why the G.W.R. has only first class sleepers on the two night expresses to Penzance, when first and third class sleepers are provided on the L.M.S. expresses covering similar distances.
:The third class sleeping cars formerly provided on the Penzance service are now in use as temporary hostels for railway staff. Arrangements are being made which will in due course release the G.W.R. third class sleeping coaches but this will take some time.
:Why should that be the case with the Western railways and not the other railways, as, at the present time, many people are trying to go Southwards and not to the Midland areas?
:Circumstances vary in different cases. This could not be prepared in time.
:Are any adequate arrangements made at the end of the journey for waking up Conservative users of the sleeping cars?
asked the Minister of Transport what steps he is taking to increase the sleeper accommodation on the Glasgow, St. Enoch, to London, St. Pancras, route.
:The night train in each direction is already made up to the maximum number of vehicles, and additional sleeping coaches could only be provided by a corresponding reduction in the seating accommodation. This course cannot be justified as both trains are fully loaded.
:Can the right hon. Gentleman at least improve the method of notification? Is he aware that many cases arise when people who have sleep- ing berths are notified only an hour or so beforehand, and even cases when they are not notified until afterwards?
:If the hon. and gallant Gentleman has any particular experience which he can convey to me I will, of course, look into the matter.
:Is my right hon. Friend aware that throughout the whole of Glasgow there are widespread allegations of serious irregularities on the part of the staff who issue these permits?
:I do not think widespread allegations should be made without hon. Members submitting evidence to me.
Termini, London (Signposts)
asked the Minister of Transport whether he will arrange for full signposting of the main line termini in London.
:Suitable directions are displayed to assist passengers in making their way between underground stations and the adjoining main line stations, and I am looking into the question whether more signposting, in or outside the termini, is needed to guide the public to and from adjacent streets.
:Will the Minister bear in mind that whilst an employee of a station or a station-master may be well aware where the station is, visitors from the provinces may not be so minded?
:I think that generally the directions are given. As I say, the matter will be further investigated.
Roads
Accidents
asked the Minister of Transport the percentage of road accidents in which the pedestrian was held to be primarily responsible during the past 12 months.
:I regret that the information for which my hon. Friend has asked is not available.
Questions
London Passenger Transport Board (Statistics)
asked the Minister of Transport how many road passenger vehicles were operated, tickets in each category of value sold on such vehicles, and rail passenger journeys made on the L.P.T.B. for an average day in May, 1946.
:As the reply contains a number of figures, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT:
Following is the reply:
Pioneer Corps (Spanish Republicans)
asked the Prime Minister whether he will issue instructions to enable Republican Spaniards, who enlisted in the British Army in North Africa and served in the Pioneer Corps, to be discharged in countries of the British Colonial Empire if they so desire.
:I have been asked to reply. These men are free to apply for passages to the British Dominions or Colonies, or to any other country, but their acceptance rests with the Government of the country to which they wish to go. Applications from men now in the United Kingdom should be addressed to the War Office; men in Italy should apply to the Commander-in-Chief, C.M.F.
:Will my hon. Friend consult with the Colonial Office to see that not only may these men apply, but that some provision may be granted?
:Yes, Sir. I will certainly consult my right hon. Friend.
:Will the hon. Gentleman also consider that if these men apply to go to the Colonies they should agree not to take part in any political agitation?
:Why?
:Are we to understand that if they do apply for these passages financial provision will not be made for them? Will the passages be free? How does my hon. Friend expect that Republican Spaniards in these circumstances will be able to pay for the transport to the Colonies from Italy, or whatever country it is in which they happen to be demobilised?
:If they are accepted by the Dominions or Colonies the War Office will be prepared to pay for, and provide, the passage.
French Volunteers (British Nationality)
asked the Prime Minister whether any arrangement has been come to whereby the acquiring of British naturalisation during the war by any Frenchman who served in His Majesty's Forces will be recognised by the present French Government.
:No arrangement is required for the purpose mentioned by the hon. Member.
:Is the Prime Minister aware that some of these men who have become British subjects are also French nationals, and if they return home at any time they are liable to be treated as deserters, and cannot the right hon. Gentleman come to some accommodation with the French Government on this subject?
:That is an entirely different question from that which the hon. Member asked me. He asked me about their acquiring British naturalisation; his supplementary seems to refer to divesting them of French nationality, which is a different matter altogether.
:On a point of Order. I asked the Prime Minister whether their naturalisation would be recognised by the present French Government, and the right hon. Gentleman does not appear to have addressed his mind to that question.
:No arrangement is necessary; it is a matter for the French Government to recognise it or not.
:Will the right hon. Gentleman instruct the Home Secretary to put through a few naturalisation papers, so that there may be something for the French Government to recognise?
Justices of the Peace (Appointment of Royal Commission)
asked the Prime Minister whether he is now in a position to make a statement about the setting up of a Royal Commission to inquire into the position of Justices of the Peace.
:Yes, Sir. The King has been pleased to approve the setting up of a Royal Commission to consider the position of Justices of the Peace, and that the following persons should be appointed members of the Commission:
:Can my right hon. Friend say how it comes about that the Commission has been appointed without having upon it any representatives who are Members of this House? In view of the great feeling that has been expressed on all sides of the House on this matter, would it not have been advisable not to limit it, as has apparently been done, to people who are already connected with the operation of the present system?
:As a matter of fact, there is one member who has become a Member of this House, but there is no special reason why a Commission of this sort should or should not contain Members of this House.
:Will the report be published, and, if so, when?
:The hon. and gallant Gentleman can take it that a report will be published, but I have never known anyone who was able to prophesy, before a Commission was appointed, when it would report.
:Reverting to my original supplementary question, while no one suggests that there is any such precedent as that to which my right hon. Friend referred, is it not, nevertheless, customary, when a matter has been widely ventilated in the House of Commons and a Commission has been subsequently appointed, that the House has been represented on it?
:No, Sir. My hon. Friend is quite wrong; it is not a question of a representation of this House. The persons charged with the duty of a Royal Commission are selected for their particular qualities. There is nothing to exclude Members of the House or to include them. The idea of there being a representation of this House would be quite outside the question.
:In view of the totally unsatisfactory nature of that reply, may I give notice that I will raise the matter on the Adjournment at an early date?
Following are the terms of reference:
Germany
Prison Camps (Inspection)
asked the Chancellor of the Duchy of Lancaster how far camps for political prisoners and for suspected war criminals awaiting trial in the British zone of Germany are inspected by the International Red Cross.
:All these camps have been inspected by representatives of the International Red Cross who are given all facilities and work in close and cordial cooperation with the Control Service.
Religious Leaders
asked the Chancellor of the Duchy of Lancaster what contacts are maintained by the Control Commission with religious leaders in Ger- many; and if he is satisfied that they are adequate.
:In the British zone personal contact is maintained between representatives of our Religious Affairs Branch and leading German churchmen. Meetings are frequent and are held whenever either side has anything to discuss. Representatives of the Branch also attend as many as possible of the German church functions to which they are invited. These arrangements seem to me to be adequate.
:Would the hon. Gentleman give some assurance that when the leaders of the German Churches are about to publish something in the nature of a pastoral letter full consultation will take place before the actual publication?
:I do not know whether I could give such an assurance. It is not our practice to censor pastoral letters in advance, but the German Churches are made very fully aware of the type of thing that would not be tolerated in any kind of public or semi-public announcement of that kind.
:Does not the hon. Gentleman realise that this is a very suitable avenue for publicity from the British point of view, that a great deal of information could be circulated by this means, and will he use it to the full?
:I quite realise that, but it must be remembered that we have a very small branch for religious affairs in Germany, with a personnel of something like 17 or 18 only, and it is not possible for us to run every detail of the various aspects of German administration. Within the possibilities of that very small staff, however, we do endeavour to guide the German Churches without interfering unduly.
:Will my hon. Friend consider asking the German religious leaders to collaborate in putting over the true facts of the food, situation to their people?
:I have no hesitation in saying that not only the Churches, but every other German organisation is being asked to play its full part in making the truth of these affairs known.
:Is it not most undesirable that the Churches should be used for any form of propaganda?
:Precisely. The last question was not a matter of propaganda, it was a matter of informing people of the truth of the situation.
:Are these contacts also encouraged at the parish level, and not just at the top level?
:It is impossible to develop this on a parish level within the size of the administration in Germany today. It is our policy to make the Germans themselves do as much of the detailed work in these matters as possible, but we have one or two officers who move round the zone and make contacts on all levels.
:Is my hon. Friend aware that the implication of his reply to a previous supplementary question is that propaganda does not contain truth, and would he not like to deny that?
:Not at all. The question was asked about the Churches assisting us in letting the people know the facts of the food situation. There are some very vicious and inspired rumours about the food situation, and our responsibility for it, and naturally the best elements among the Churches, as in other directions in German life, are only too anxious to assist in making the truth known.
:In view of that, would my hon. Friend consider the advisability of sending a mission to Lord Beaverbrook?
Fish Supplies (Converted Trawlers)
asked the Chancellor of the Duchy of Lancaster on whose responsibility German trawlers converted to patrol boats were sunk; why these craft were not reconverted to trawlers; whether he will estimate the loss in food supplies due to the destruction of these boats; and whether every possible step is being taken to increase the supply of fish in the British zone in Germany.
:Two old naval trawlers in a bad state of repair have been destroyed by the British naval authorities in Germany in accordance with an agreement reached by the Tripartite Naval Commission set up under the Potsdam Protocol. These trawlers could not have been re-converted and made serviceable for fishing without absorbing repair facilities and materials urgently required for other purposes. In fact, all trawlers in the British zone suitable for fishing, except for nine required for minesweeping, have been converted for fishing or are awaiting conversion. Conversion of trawlers for fishing and repairs to trawlers have been given first priority in the shipyards. Similarly, first priority has been given to the clearance of mines from the fishing grounds in the North Sea for the use of German fishing vessels. Generally, everything possible is being done to increase the supply of fish in our zone.
:Is the hon. Gentleman aware that Denmark could send considerable quantities of fish, that stocks are available and could be sent?
:Replies have been given to that question before. We are very fully aware of that situation, but it has nothing at all to do with the question.
Questions
Poultry Feeding-Stuffs
asked the Minister of Agriculture what is the allocation of feedingstuffs to accredited specialist poultry breeders as compared with the normal allocation.
:Accredited poultry breeders are at the present time allowed 1 cwt. poultry food per month in respect of each 18 fowls, 15 ducks or 9 turkeys in their accredited flock, and individual rations so calculated are increased by one eighth in lieu of a special grain supplement which was previously allowed to this class of poultry. These supplementary rations are in addition to the normal basic rations which are attached to holdings and are at present at the rate of 1½ cwt. for each 20 birds.
:Is the right hon. Gentleman aware that the allocation of feeding-stuffs to the ordinary poultry keepers is so small that it is preventing them, very largely, from taking the chickens from the breeders?
:I recognise that the rations are not nearly as large as I should like to be able to provide.
:Is the right hon. Gentleman aware that the quality of the wheatings now being sent out is so bad that accredited poultry keepers will not be able to keep their accredited flocks going on this feed?
:I am not aware of that. If the hon. Gentleman will send me an example I will have it looked into.
:Will the right hon. Gentleman persuade the Government to allow the Baltic and other markets to operate freely, which would be more advantageous?
Questions to Ministers
:On a point of Order, Mr. Speaker. In view of the fact that there were 30 Questions down about agriculture on the Order Paper, and that only two, I think, out of the 30, were able to be answered today, is it not possible, in view of the importance of agriculture and of the great needs of farmers, to allocate a little more time to them?
:The House will at once remember that one day I said I would not control the supplementaries and I have let them go on today. Now the House can see exactly how the supplementaries, uncontrolled, can reduce the number of Questions. I deliberately, I confess, let all the supplementaries pass today, and this is the result.
:When you make a decision like that in the future, Mr. Speaker, will you give any notice to the House?
:No, I shall give no notice in advance.
Business of the House
:May I ask the Leader of the House if he has any statement to make on the subject for Debate in Committee of Supply on Thursday?
:Yes, Sir. The subject for Debate in Committee of Supply on Thursday will be matters affecting the Army, with special reference to the future of the Territorial Army, and recruitment and conditions of service in the Regular Army.
:In view of the statement of the Leader of the House on Business for Thursday, and as many of us are very interested in what the future of the Territorial Army is to be, can the right hon. Gentleman say whether any statement will be made on this occasion to enable a Debate to take place in which reference can be made to the action proposed by the Government?
:I see that the subject for Debate chosen by the Opposition has special reference to the future of the Territorial Army. That will be taken as notice to the Government that some questions will be put about the future of the Territorial Army.
:But the Government have not made up their mind.
:The hon. and gallant Gentleman will see when the time comes.
Orders of the Day
Finance (No. 2) Bill
Again considered in Committee.
[Major MILNER in the Chair]
CLAUSE 26.—(Relief for payments for technical education.)
3.33 p.m.
:I beg to move, in page 19, line 44, after "trade," to insert "or profession."
This Amendment is moved, because my hon. Friends and I consider that the word "trade" in this connection is far too limited. I believe that the Government are anxious to see educational associations formed, for example, to train people in the practice of management; and there may be various other not dissimilar activities which would scarcely be included in the word "trade." That is the reason why we suggest the additional words "or profession." We are not particularly committed to the word "profession." If the Government preferred "vocation," that would, probably, do just as well. Few words are needed to justify this Amendment, and I leave my case with that appeal.
:In order to give the Chancellor of the Exchequer time to think over this question, I should like to take exception to one statement of my hon. Friend who moved the Amendment. I do not think this is at all a simple issue. I think it is a very important issue. The mere fact that the Government, through the Chancellor, propose to restrict this Clause to trade only, and not to extend it to the professions, shows a class bias, which, I candidly confess, is what I should have expected from a class-conscious Chancellor. It seems to me that this Amendment must be taken in conjunction with the four Amendments which followed it on the Order Paper. We on this side of the Committee recognise the Government as a class-conscious Government, but we should not like to take advantage of the bemused hangover among people in the country, as the result of their stupidity at the last Election. Therefore, it is essential that we should make it clear to the country that this is an endeavour on the part of the Government, sponsored, in this case by the Chancellor, to—[ Interruption ]. I know the right hon. Gentleman is not listening, but I cannot "boo" in the same manner as the Chancellor, and, therefore, I cannot attract his attention. But, possibly, interest in getting the truth will in due course—[ Interruption ].
:Give him time.
:On a point of Order. I do expect the courtesy of at least a little of the Chancellor's attention for a split second. I assume now that I am expected to start all over again, but I am not going to do so. The Lord President of the Council always keeps one ear to the Chancellor and one to the ground; and, therefore, possibly, although he made a pretence of listening to the Chancellor while I was speaking he was absorbing the very sound argument I was advancing. Therefore, I presume he is passing on the argument to the Chancellor and so enabling the Committee to get on with its job, instead of forcing me to the unhappy repetition which, otherwise, I shall be forced to undertake. We have put down this Amendment in order to try to educate the country. They in the last Election sponsored, or gave support to, a class-conscious Government. We are now seeking to enable the Government to remove that impression, and to include professions as well as trades here, so as to give something to those who have got very little as a result of their mistaken votes.
I am not going to make a long speech. My hon. Friend the mover of the Amendment did not feel it necessary to make any strong advocacy of his suggestion, because it seemed to him so obviously correct and right and reasonable that he did not anticipate that the Chancellor would put any argument against it. But I would ask the Chancellor, what is the dividing line? Where do we draw the line between trade and profession? Who is to do so? Will it be the Chancellor himself, or his Parliamentary draftsmen, or the judges and the courts who are, in future, to interpret this Bill?
I would ask the Chancellor of the Exchequer to endeavour, in conjunction with the Parliamentary draftsmen, to devote a little time to avoiding woolly phraseology, which is an evil in all Government Bills at the present time. It would save those of us on this side of the Committee a great deal of trouble if we had not to study involved, dull and stupid phraseology. I hope that the Chancellor will give us some explanation of this point. Let him tell us straight out where trade ends and a profession begins. Let him tell us why this concession should be restricted to those qualifying for a trade, and why it should not be given to those qualifying for a profession.
:Is it in Order, Major Milner, to discuss the subsequent Amendments on the Order Paper, which are really linked up with this Amendment? We could save the time of the Committee by arguing the case on all the Amendments now.
:As the Amendments seem to hang together, I have no objection to a discussion covering them all, on the understanding that the discussion is not repeated on the Motion "That the Clause stand part of the Bill."
:I think it would be easier if we made reference to the subsequent Amendments at this stage. One of the Amendments would make it possible to include managerial training. I do not think there is any difference of opinion in the Committee as to the importance at this time of training for managerial and executive positions. The Government have been looking with no little favour on the extension of managerial education. It seems to us reasonable in these circumstances that this concession should be extended to cover managerial as well as technical training. It may be that this is what the Government have in mind, but at the moment it is difficult to see why professions should not benefit in the same way as trades, and why payments by architects or accountants to recognised bodies engaged in training for these professions, should not qualify for Income Tax relief just as much as payments to technical colleges. In Subsection (1) hon. Members will see that the institutions to qualify must have the approval of the Minister of Education. I am disappointed that neither the right hon. Lady or the Parliamentary Secretary is present, because the Ministry of Education is very much interested in this Clause. It would be very much to the Minister's advantage if she could be here, and she could tell us what she and the Government have in mind. We should like to see these Amendments accepted for the reasons advanced by my hon. Friend the Member for Stockport (Sir A. Gridley). If the Chancellor can tell us that what I have indicated is what the Government have in mind, and that "trade" embraces the professions, there is nothing more to be said, but at the moment it is not clear to us.
3.45 p.m.
:This Clause does not do a great deal, and is not intended to do a great deal. This is a simple and straightforward concession for one definite and not very extensive object. It is to allow a trader, when computing his profits, to deduct any contributions he may have made towards a technical college, institution or university connected with his particular trade or occupation.
:Could the Financial Secretary tell us, for instance, what is a "bookmaker"? They are termed professional bookmakers, but is that a trade or a profession?
:I was hoping to deal with that point later, but as it is now uppermost in the minds of hon. Members, I will answer it. There may be difficulty in some cases in deciding what is a trade and what is a profession, but I am certainly not going to be drawn into an argument on that point. Suffice it to say that, generally, we do know what is a trade and also what the professions are. This is a definite effort to help—I agree in a small way—the trader. We want to help production, and we want to assist those engaged in industry to help both themselves and their employees to attain a higher technical efficiency. We think that this will not only help them, but that it will also help the country and our export trade. The object of this Amendment has been made clear, namely, to widen the scope of this Clause to include all classes of trades and professions. I am sorry to say that I am unable to accept it. The concession was a limited one with a definite object, and my right hon. Friend is sorry that he cannot see his way to go any further in the matter. There is an old saying "that if you give an inch, they will take an ell," and we think that we have already gone quite a long way.
As the Committee will remember, in the Finance Act of 1944, the right hon. Gentleman for the Combined Scottish Universities (Sir J. Anderson) made a similar concession so far as scientific research is concerned. What we are doing here is to place technical education on the same footing. It seems to us that if we attempted to open the door any wider, we should hardly know where to stop. It would be possible for a professional man or an accountant, if not a turf accountant, to make a capital contribution to some college or school where shorthand is taught. We could not for one moment accept that as legitimate use of this concession. Therefore I must ask the Committee to reject the Amendment. In conclusion I should like to say a word on the suggestion that this is a class concession. The people we are out to help are traders generally. It may be that they all voted Labour at the last Election, but if that is so it is news to me. It is true that traders will be helped, but so will their employees and the country.
:Suppose an employer makes a contribution to a commercial branch of Birmingham University or Manchester University to enable his managerial staff to take advantage of training facilities. Would he not be entitled to claim a concession in respect of the contributions he has made? Would that not be encouraging and helping production which the Financial Secretary rightly stressed as being of the greatest importance? The Chancellor has stressed the importance of encouraging the highest possible efficiency in factory management, and the commercial side of factory organisation in relation to our export trade.
:The short answer is that all cases of that kind would have to be discussed and considered on their merits. As the hon. Gentleman will know, the Minister of Education comes into this, and will have to approve these things. So far as annual contributions not of a capital nature are concerned, they are now allowed to the professional man as well as to the trader by way of deduction of tax.
:Would it not be better to have definitely laid down the precise demarcation between these contributions, whether of a capital nature, or of a con- tributary nature to the current expenses of these institutions.
:It is all laid down very clearly.
:I am much obliged for the hon. Gentleman's explanation. I did not gather, from the rather involved language of this Clause, that this was applicable only to contributions of a capital nature. I think that the ordinary man reading it and seeing the words
I take particular objection to Subsection (2), because it means that a man in a trade cannot make any contribution to what one might call the "common services of industry." Under this Clause, he can only make a contribution to something which is applicable to his trade and to no other. He cannot subscribe to anything that would produce managerial efficiency. He cannot subscribe to that, although possibly as a result of the wiser administration of my right hon. Friend the former Chancellor he may be able to subscribe to scientific education. It seems rather ridiculous that, when we all agree that in industry today, production, managerial and executive efficiency is just as important as technical skill, a man shall not be able to subscribe to the thing that is perhaps most valuable to his trade, while he is allowed to subscribe to other things which, although important, may be of minor value to him.
:He is not prevented from subscribing. All we say is that if it is a capital sum, he will not get any rebate of tax on it.
:I understand that, but no explanation has been given of why this particular limitation has to be imposed. I cannot imagine that if the Clause were given a rather wider interpretation it would mean very much to the Chancellor of the Exchequer in the way of finance. It certainly would not afford, I should have thought, any loophole, or any scope for a great extension, but it would put managerial training on the same level as purely technical instruction, and it would seem that, in industry today, it is a wise and progressive view that one is at least as important as the other. For that reason, we should certainly like, if no other arrangement were possible, to see the omission of Subsection (2). I hope that the Chancellor of the Exchequer, on reconsideration, may be able to meet a point which we, on this side of the Committee, feel has not been adequately argued and give us a concession. We are perfectly ready, if our wording is faulty, to have such concession limited by him, in his words, to this particular extension which we think desirable.
:I should like to say a word about the wording of this Clause. Attention has been drawn by the hon. and gallant Member for Ayr Burghs (Sir T. Moore) to the division made between trade and profession. But this Clause also divides trades and tradesmen themselves. Under this Clause, the capital sum upon which rebate may be recovered relates to contributions to university or technical colleges by tradesmen. There may be the two classes of tradesmen both of whom agree to pay capital sums to subsidised technical education. One tradesman, who is engaged in the trade, can obtain the rebate; and another tradesman, not engaged in the trade which is taught, gets no rebate. In other words, tradesmen themselves are divided into two classes I would like the Chancellor of the Exchequer to pay some attention to making the wording include all tradesmen who make payment to a university, technical college, or a college to be approved, so that the rebate will apply to all alike, and not to one class of tradesman alone.
:I should like to support the argument of the hon. and learned Member for Carmarthen (Mr. Hopkin Morris). It seems to me that the Clause is being narrowed in a way which I do not think the Chancellor himself desires. I think the Chan- cellor has a perfectly genuine desire to encourage education in trade and industry, but, unfortunately, the wording of this Clause is such that, instead of encouraging the maximum amount of money to go into development in that way, it is narrowed so that it does not include the whole of trade and industry. I would like to see any money intended to develop trade and industry in this way, wisely expended. Money may be given today for a trade and industry which, in a short time, may be superseded and that money may be wanted for some other trade and industry. That is why I think that the contribution made by the hon. and learned Gentleman the Member for Carmarthen has been of very great value. It seems a rather bad thing, after all the advertisements which we have had concerning the generous mood of the Chancellor, and what he intends to give away, that, in this matter of education, so vital for the reorganisation of industry, he should have laid down this vague definition. The Financial Secretary said, in effect, that it is generally known what a trade is, and, therefore, he did not need to define it. I think that it would be a pity if it had to be defined later on in the law courts. I think that there should not be a definition in this respect, but that both "trade" and "profession" should come in. I feel sure that the professions are, in many cases, helpful in the expansion of trade.
4.0 p.m.
My hon. and gallant Friend the Member for Ayr Burghs (Sir T. Moore) said that this was not a matter of prejudice so far as the Chancellor himself was concerned. I do not think that it is. I would not dream of accusing the Chancellor of the Exchequer of being prejudiced on this subject. I do not think he is prejudiced as regards including the professions, but we know that it is the desire of a particular trade union to discourage people going into that trade. I understand that the Chancellor of the Exchequer is a professor, and he does not want to see a great many professors and teachers. Therefore, I feel that he is deliberately limiting them. That is not a matter of prejudice, but a matter of sound, honest trade union legislation. The object of this proposal is that every profession, or trade, or industry or whatever it is should have its technical education and I would suggest to the right hon. Gentleman that he should extend that principle. He, of course, has the colossal advantage of being able to bring the old school tie and all that kind of thing into it. I cannot go into all that now, but in the circumstances I would ask the Chancellor to take a wider outlook, and not to look at this from a particular aspect but to bring in all these other people.
It really is a matter of great importance, as the right hon. Gentleman must know, to encourage education of every kind and to encourage professors of every kind. I am very glad to see that the Chancellor is looking at me in a more sympathetic way. It is frightfully important to encourage those who are training people in architecture, building and various activities of that kind. I suggest to the Chancellor that he might go three-quarters of the way to meet my hon. Friends and include every profession bar one—in other words exclude all forms of lawyers. That would be a complete justification for accepting what we propose at the present time and in those circumstances I ask him to agree to the Amendment. There is one further reason why he might accept it. I believe he and the Government want everything possible done to get full production going in industry and to plan that we need to have the technical and professional sides of industry working closely together. We want to see them develop hand in hand; we want them to feel that they are part of one great industry. A further reason could be advanced in regard to this proposal if the Chancellor is not yet satisfied, but I think that I have probably made him see our point of view and to realise why he should accept that Amendment. I again ask him to exercise a broader outlook, and to extend us this concession.
:I was greatly struck by the contribution of the right hon. Gentleman the Member for West Bristol (Mr. Stanley) and for that reason I rise to take part in this discussion on the proposal to encourage employers to aid technical education. That is a very laudable object, but the right hon. Gentleman went on to suggest that it should be extended to colleges specially designed for teaching managerial functions. I doubt the wisdom of that suggestion for reasons which I am about to outline. I have had 45 years' experi- ence in various kinds of industry, and I have seen managers drawn from all classes of the people. I have seen managers make a very great success of the business in spite of great difficulties, because these men had the gift of organising ability. I have seen men receiving the best education the country could give them, also a good technical education, after which they were put into a position of managership which they bungled inside six months. There is no guarantee when a manager is appointed to any particular industry, that results are going to be obtained from any particular type of education. [An HON. MEMBER: "Just like a Cabinet Minister."] Exactly. There is a lot of truth in that, and one might add a Member of Parliament as well. I have seen managers who were not successful, but were the finest technicians in the industry if they had somebody with ordinary organising ability to direct them in their work. When hon. Members talk about a college for managers or a section of education especially for managers, I would reply that a manager has to be educated in almost everything, and it is impossible to put into him special organising abilities if they are not already there. Consequently, when hon. Members ask for a rebate for somebody who is prepared to give a grant for the education of managers, I submit that it would be far better, to put it bluntly, to give a rebate to anybody who gives a grant for education. I do not think it would be possible to give a rebate on the lines suggested by the right hon. Gentleman the Member for West Bristol.
:This concession which I am proposing has been put in, as I indicated in my Budget speech, at the request of my right hon. Friend the Minister of Education. Any Minister of Education in the last quarter of a century might have pressed any Chancellor of the Exchequer in the last quarter of a century to put in this concession, but this is the first time that that has happened. Perhaps previous Ministers of Education were less insistent, or, alternatively, previous Chancellors of the Exchequer were more resistant to a proposal of this kind. Here we are making an experiment. We are extending this Income Tax concession as the Bill now stands, over the field of technical education in respect of any contribution by an employer to institutions which, in the judgment of the Minister, will promote the technical education of their employees. Later, we may move further, but this is a stage on the journey. For the moment, I do not think it is reasonable to extend this provision as is proposed in this Amendment. After all, people are not being prevented from subscribing as one hon. Member suggested for anyone can subscribe to technical education. The question is whether in respect of contributions of a capital nature people shall have exemption from Income Tax, and that is what we are proposing to confer under this Clause, but I think, for the moment, it would not be wise to extend the language which is here used. As the Subsection indicates, the words:
Let us begin in this limited and practical way. This is a notable concession. So far as these institutions are legal charities—as I think they are—it is possible for contributions to be made under the seven-year deed arrangement, which we were discussing the other day. Such contributions from well-wishers will be exempt from Income Tax. Therefore, with this additional special provision, I think we have made a good start. We all recognise the importance of improved technical education. We may be a little sceptical about some of the other institutions in the course of foundation, but let us watch them. Certainly, I do not bar the possibility of extending the words of the Subsection, but let us proceed stage by stage. Let us content ourselves, for the moment, with this advance, which will be much appreciated by those concerned with technical education. I hope we shall take this, the first step without prejudice to any new institutions.
:I would like a closer definition of Subsection (2). I am not particularly worried about the type of institution—I think that is clear—but supposing the head of a cotton firm wishes to establish a chair in a branch of engineering which is not absolutely related to the cotton industry, supposing the head of a big industry, who is interested in science in general, wishes to endow a chair at one of the big Midland universities, in connection with a part of chemistry which was not clearly related to his own industry, would those instances be eligible?
:No, they would not be eligible under the Subsection but, of course, the Government are taking an active and generous interest in the development of these faculties, and new scientific departments in universities, and I hope we shall not fail to make due provision, by way of the Education Estimates, and the grant-in-aid to universities, administered through the University Grants Committee, to such things as my hon. Friend has in mind. The purpose here, however, is to limit this concession to capital grants for the purpose of providing technical education in the trade in which employees of the donor earn their living.
4.15 p.m.
:I very much appreciate what has been done already for the universities, and what the right hon. Gentleman's predecessor did for research, but I am sure the Chancellor would not wish for increased grants from the State to exclude, or in any way diminish, other valuable sources of income for Chairs and additions to university expenditure.
:I think the words, "specially requisite," in Subsection (2) are too narrow for the purpose which the right hon. Gentleman has in mind, and I would ask him to look at them again between now and the Report stage. They seem to be too narrow in the legal sense.
:I will certainly look at them again. I can only repeat that we are anxious to limit this particular concession—one of a number open to persons desiring to apply the funds for these purposes—to contributions to institutions which are providing technical education specially designed for persons in that particular occupation.
:I am in a difficulty here, and I would like to have your guidance, Major Milner. The Amendment we are discussing is not the one on this Clause to which I attach the greatest importance. I noted that the Chancellor said that he regarded this Clause as experimental, and was quite prepared, at a subsequent stage, to consider extending it. I am much more worried about Subsection (2). I am not certain whether you, Major Milner, intend to put that Amendment, and give us an opportunity of expressing a decision upon it, because it raises a quite different point. Although you gave us permission to discuss all the Amendments together, I am not certain whether you intend to put the Amendment in relation to Subsection (2), which raises a rather different point. I hope that you
will give us an opportunity of taking the decision of the Committee.
:I had not intended to select any further Amendment on this Clause, but there has been some discussion on Subsection (2), and if the right hon. Gentleman and his friends desire to vote upon the omission of Subsection (2) I have no objection to proposing the Question.
Amendment negatived.
:I beg to move, in page 20, line 6, to leave out Subsection (2).
Question put, "That the words proposed to be left out stand part of the Clause."
The Committee divided: Ayes, 204; Noes, 97.
Division No. 202.] AYES. [4.18 p.m. Adams, Richard (Balham) Davies, R. J. (Westhoughton) Mack, J. D. Adams, W. T. (Hammersmith, South) Davies, S. O. (Merthyr) McKay, J. (Wallsend) Allen, A. C. (Bosworth) Deer, G. Maclean, N. (Govan) Attewell, H. C. Diamond, J. McLeavy, F. Austin, H. L. Dodds, N. N. Mallalieu, J. P. W. Awbery, S. S. Driberg, T. E. N. Manning, C. (Camberwell, N.) Ayles, W. H. Durbin, E. F. M. Martin, J. H. Ayrton Gould, Mrs. B. Dye, S. Mathers, G. Bacon, Miss A. Edelman, M. Mayhew, C. P. Baird, Capt. J. Edwards, A. (Middlesbrough, E.) Middleton, Mrs. L. Balfour, A. Edwards, John (Blackburn) Millington, Wing-Comdr. E. R. Barstow, P. G. Evans, E. (Lowestoft) Mitchison, Maj. G. R. Barton, C. Follick, M. Montague, F. Battley, J. R. Foot, M. M. Morley, R. Bechervaise, A. E. Freeman, Maj. J. (Watford) Morris, Lt.-Col. H. (Sheffield, C.) Benson, G. George, Lady M. Lloyd (Anglesey) Morris, P. (Swansea, W.) Berry, H. Gibbins, J. Mort, D. L. Binns, J. Gilzean, A. Moyle, A. Blenkinsop, Capt. A. Glanville, J. E. (Consett) Naylor, T. E. Bottomley, A. G. Gordon-Walker, P. C. Noel-Baker, Capt. F. E. (Brentford) Bowden, Flg.-Offr. H. W. Greenwood, Rt. Hon. A. (Wakefield) Noel-Buxton, Lady Bowles, F. G. (Nuneaton) Greenwood, A. W. J. (Heywood) Oldfield, W. H. Braddock, Mrs. E. M. (L'pl, Exch'ge) Grenfell, D. R. Orbach, M. Braddock, T. (Mitcham) Guest, Dr. L. Haden Paling, Will T. (Dewsbury) Brown, George (Belper) Hale, Leslie Pargiter, G. A. Brown, W. J. (Rugby) Hall, W. G. (Colne Valley) Paton, J. (Norwich) Bruce, Maj. D. W. T. Hamilton, Lieut.-Col. R. Peart, Capt. T. F. Burden, T. W. Hardy, E. A. Perrins, W. Burke, W. A. Harrison, J. Piratin, P. Butler, H. W. (Hackney, S.) Henderson, Joseph (Ardwick) Popplewell, E. Byers, Lt.-Col. F. Herbison, Miss M. Porter, G. (Leeds) Callaghan, James Hicks, G. Pritt, D. N. Castle, Mrs. B. A. Hobson, C. R. Proctor, W. T. Chamberlain, R. A. Holman, P. Pursey, Cmdr. H. Champion, A. J. Holmes, H. E. (Hemsworth) Randall, H. E. Chetwynd, Capt. G. R. House, G. Ranger, J. Clitherow, Dr. R. Hoy, J. Rankin, J. Cluse, W. S. Hynd, H. (Hackney, C.) Rees-Williams, D. R. Cobb, F. A. Irving, W. J. Reeves, J. Cocks, F. S. Jeger, G. (Winchester) Reid, T. (Swindon) Collick, P. Jones, D. T. (Hartlepools) Roberts, Goronwy (Caernarvonshire) Collins, V. J. Jones, P. Asterley (Hitchin) Rogers, G. H. R. Colman, Miss G. M. Keenan, W. Royle, C. Comyns, Dr. L. Kenyon, C. Sargood, R. Cooper, Wing-Comdr. G. Kinghorn, Sqn.-Ldr. E. Scollan, T. Corbet, Mrs. F. K. (Camb'well, N.W.) Kinley, J. Segal, Dr. S. Crossman, R. H. S. Lang, G. Sharp, Lt.-Col. G. M. Daggar, G. Lavers, S. Silverman, S. S. (Nelson) Daines, P. Lee, Miss J. (Cannock) Simmons, C. J. Dalton, Rt. Hon. H. Lewis, A. W. J. (Upton) Skeffington-Lodge, T. C. Davies, Edward (Burslem) Lindsay, K. M. (Comb'd Eng. Univ.) Skinnard, F. W. Davies, Ernest (Enfield) Lipton, Lt.-Col. M. Smith, Capt. C. (Colchester) Davies, Harold (Leek) McAdam, W. Smith, H. N. (Nottingham, S.) Davies, Haydn (St. Pancras, S.W.) McGhee, H. G. Smith, S. H. (Hull, S.W.) Snow, Capt. J. W. Thorneycroft, H. (Clayton) White, C. F. (Derbyshire, W.) Sorensen, R. W. Thurtle, E. White, H. (Derbyshire, N.E.) Soskice, Maj. Sir F. Tiffany, S. Whiteley, Rt. Hon. W. Sparks, J. A. Titterington, M. F. Wilkes, Maj. L. Stamford, W. Tolley, L. Willey, F. T. (Sunderland) Steele, T. Usborne, Henry Willey, O. G. (Cleveland) Stephen, C. Vernon, Maj. W. F. Williams, W. R. (Heston) Stewart, Capt. Michael (Fulham, E.) Viant, S. P. Willis, E. Stross, Dr. B. Wadsworth, G. Wise, Major F. J. Stubbs, A. E. Walkden, E. Woodburn, A. Swingler, S. Walker, G. H. Young, Sir R. (Newton) Symonds, Maj. A. L. Wallace, G. D. (Chislehurst) Younger, Hon. Kenneth Taylor, H. B. (Mansfield) Wallace, H. W. (Walthamstow, E.) Taylor, R. J. (Morpeth) Warbey, W. N. TELLERS FOR THE AYES: Thomas, George (Cardiff) Wells, W. T. (Walsall) Mr. Pearson and Mr. Bing.
NOES Astor, Hon. M. Grimston, R. V. Nield, B. (Chester) Baldwin, A. E. Hannon, Sir P. (Moseley) Orr-Ewing, I. L. Barlow, Sir J. Hare, Lieut.-Col. Hn. J. H. (W'db'ge) Peake, Rt. Hon. O. Birch, Nigel Harvey, Air-Comdre A. V. Prescott, Stanley Boothby, R. Haughton, S. G. Ramsay, Maj. S. Boyd-Carpenter, J. A. Head, Brig. A. H. Reid, Rt. Hon. J. S. C. (Hillhead) Braithwaite, Lt.-Comdr. J. G. Headlam, Lieut.-Col. Rt. Hon. Sir C. Renton, D. Buchan-Hepburn, P. G. T. Hollis, M. C. Roberts, H. (Handsworth) Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n) Holmes, Sir J. Stanley (Harwich) Ropner, Col. L. Carson, E. Hope, Lord J. Ross, Sir R. Challen, C. Hurd, A. Salter, Rt. Hon. Sir J. A. Channon, H. Hutchison, Lt.-Cm. Clark (E'b'rgh W.) Savory, Prof. D. L. Clifton-Brown, Lt.-Col. G. Keeling, E. H. Smiles, Lt.-Col. Sir W. Conant, Maj. R. J. E. Legge-Bourke, Maj. E. A. H. Smith, E. P. (Ashford) Corbett, Lieut.-Col. U. (Ludlow) Lindsay, M. (Solihull) Smithers, Sir W. Crookshank, Capt. Rt. Hon. H. F. C. Lipson, D. L. Stanley, Rt. Hon. O. Crowder, Capt. J. F. E. Low, Brig. A. R. W. Stuart, Rt. Hon. J. (Moray) Cuthbert, W. N. Lucas-Tooth, Sir H. Taylor, C. S. (Eastbourne) Darling, Sir W. Y. Macdonald, Capt. Sir P. (I. of Wight) Taylor, Vice-Adm. E. A. (P'ddt'n, S.) Digby, Maj. S. W. Mackeson, Lt.-Col. H. R. Teeling, William Dodds-Parker, A. D. McKie, J. H. (Galloway) Thorneycroft, G. E. P. (Monmouth) Dower, Lt.-Col. A. V. G. (Penrith) McLeavy, F. Touche, G. C. Drewe, C. Macmillan, Rt. Hon. Harold (Bromley) Vane, W. M. T. Duthie, W. S. Macpherson, Maj. N. (Dumfries) Wakefield, Sir W. W. Erroll, F. J. Manningham-Buller, R. E. Watt, Sir G. S. Harvie Fletcher, W. (Bury) Marlowe, A. A. H. Webbe, Sir H. (Abbey) Foster, J. G. (Northwich) Marples, A. E. Williams, C. (Torquay) Fox, Sqn.-Ldr. Sir G. Marshall, D. (Bodmin) Willoughby de Eresby, Lord Fraser, Maj. H. C. P. (Stone) Medlicott, F. York, C. Fraser, Sir I. (Lonsdale) Mellor, Sir J. Young, Sir A. S. L. (Partick) Galbraith, Cmdr. T. D. Moore, Lt.-Col. Sir T. Gammans, L. D. Morris-Jones, Sir H. TELLERS FOR THE NOES: Gomme-Duncan, Col. A. G. Morrison, Maj. J. G. (Salisbury) Commander Agnew and Gridley, Sir A. Morrison, Rt. Hon. W. S. (Cirencester) Mr. Studholme.
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:There is one technical point on this Clause on which I should like to have some enlightenment. It is stated in the first two lines that:
"Notwithstanding anything in Rule 3 of the Rules applicable to Cases I and II of Schedule D. …"
One looks in this Bill for Schedule D, and one does not find it. One comes to the conclusion, therefore, that Schedule D must be Schedule D of some other Act. There is, then, the paradox that when a Schedule which is referred to in this Bill is mentioned, the words are "Schedule One, Two or Three of this Act," but when a Schedule is referred to which is not in the Bill, there is no reference to the Act. That is the first odd thing. The second odd thing is that it will be said to me— if I may (anticipate): my right hon. Friend's answer—that Schedule D is well known to everybody, and that even children know what Schedule A and Schedule D are, and consequently, that it is most extraordinary for a Member to raise a point of this nature. If that is the answer, why put in Schedule D at all? Why not refer simply to Rule 3 of the Rules applicable to Cases I and II? If the reference is to be included, it should be put in fully. I challenge the Solicitor-General to give the reference without asking anybody and without looking for the authority. Will he get up and say in which Act Schedule D is to be found?
:It is Rule 3 of the Rules applicable to Cases 1 and 2 of the Income Tax Act, 1918.
4.30 p.m.
:The hon. and learned Gentleman is wrong. It is Cases 1 and 2 of Schedule D of the First Schedule to the Income Tax Act, 1918 The most extraordinary thing about that Act is that it has a First Schedule and then a Schedule inside that Schedule. This shows that even an eminent lawyer cannot give the correct reference. If he cannot do so, surely it is a matter which should be tidied up in the Bill and the proper Schedule put in. In Clause 30, for instance, it is pretty clear that the Act of 1918 is meant, since there is some reference to it, but I suggest that Schedule D must be a sub-division, since letters are used instead of numbers. That is the clue which should have put the Solicitor-General on his guard. It has to be remembered that the layman has to look at this Measure and understand it if he can. The man making a contribution to education will say at once, "I wonder if I can do that. I will look it up myself." He probably does not want to spend money on lawyers—very properly—and he then sees "Schedule D" and says to himself, "I will just find out what the Act says." If he is told that it is Schedule D of the Act he finds in fact Schedules 1, 2, 3, 4 and 5, and has to look for a Schedule inside a Schedule.
rose —
:I thought it was understood that having regard to the wide discussion on the first Amendment we should take this Clause without further discussion.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
CLAUSE 27.—(Armed Forces, etc.)
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:I rise to make both a protest and an appeal to the hon. Gentleman opposite. When hon. Members have to study these Finance Bills they are confronted with a great deal of very difficult matter and when eventually one comes to a Clause which starts off as clearly as Subsection (1) of this Clause, one is rather relieved. The Government had made an announcement that these gratuities were to be exempted from Income Tax as soon as the legislation could be passed, which makes Subsection (1) quite easy to understand. When one comes to Subsections (2), (3), and (4) however, one is immediately confused by the reference to women serving ex hypothesi, the people who were to take the gratuities were not liable to be disabled because they were extending their military service. One has to obtain the Act and find in it a Schedule which describes the various women's services under eleven categories. The gratuities paid to any women extending their service, whether it is the nursing service, or what are called the W.R.N.S. and the others, will be exempt from Income Tax. That, of course, is very desirable and is in fact part of the announcement which the Government made, but it is the most clumsy form of drafting, it seems to me, to bring the description of these women out of the Disabled Persons (Employment) Act of 1944.
In these circumstances, whilst protesting at that bad form of drafting, I appeal to the Government to redraft all this latter part of the Clause and add to the Bill a new Schedule which merely repeats these women's classes. There is no reason why it should not be done, because on our very last sitting day we discussed the Superannuation Bill where exactly the same problem came up. In the first Clause dealing with the superannuation of these women, reference was made not to the Disabled Persons (Employment) Act, but to the First Schedule to this Measure. When one looks at that Bill, there is the Schedule, but it is really quite absurd that the Treasury should introduce, on successive days, two Bills, one properly drafted and another, which we are discussing today, in which, instead of inserting the same Schedule—which it is quite legitimate and right to do—they refer one back to an Act of 1944 which has nothing in the world to do with the case. I, therefore, protest against the bad drafting of this present Bill and ask the Financial Secretary to have this Clause reframed and a new Schedule inserted in order that it may be clear who benefits.
:There is only one point which I wish to make, but first I should like to associate myself with everything that my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) has said about the drafting of this Clause and its very cumbrous construction. I hope the learned Solicitor-General or the Financial Secretary will have something to say about the matter and will hold out some hope of clearer drafting in future, both in Finance Bills and any other legislative Measures presented to the House.
The point upon which I wish to ask for some elucidation refers to the position of members of His Majesty's Forces from Eire. In this I feel that I shall have my hon. Friends on this side with me and I should hope, hon. Members in all parts of the Committee. How will these persons benefit, or how may they be penalised? I remember putting a Question to the Chancellor of the Exchequer—I think in October or November of last year. It was brought to my notice, as I dare say it has been brought to the notice of many of my hon. Friends who may have received similar representations, that allowances made by His Majesty's Government in the United Kingdom to members of His Majesty's Armed Forces conferred no benefit at all on those members of the Forces who came from Eire, because the Eire Government had introduced what I might describe as penal legislation which rendered null and void any allowances made by His Majesty's Government which were intended, of course, to cover all members of His Majesty's Forces from whatever country they came. On that occasion I received a very unsatisfactory reply—I might even say a "woolly" reply—from the Chancellor of the Exchequer.
I am sure that no one on this side of the Committee has any fault to find with the allowances proposed under this Clause. We all agree with them, and so far as Subsections (3) and (4) are concerned I have no immediate concern on behalf of members of the Armed Forces who come from Eire. I am, however, very concerned as to what their position may be under Subsections (1) and (2), and particularly Subsection (1). Here we have a provision made on behalf of members of His Majesty's Forces who may desire to serve for a further period when their terms of service normally expires. Under Subsection (1) a provision is made that where a sum of money becomes payable to any member of His Majesty's Forces:
:The hon. Member cannot discuss the Eire Government on this Clause.
:I had no intention whatever of doing so, Mr. Bowles. I merely wish to point out that whatever the view taken by the Government on the other side of St. George's Channel we all recognise the splendid part played by the men who came from Eire and served with His Majesty's Forces. I am only desirous that there shall be in this Clause provisions to protect Members of His Majesty's Armed Forces who come from Eire. This has not been possible in the past.
:I am astonished to find that paragraph I is necessary at all. Why is it necessary to exempt from Income Tax any bounty or gratuity paid to Service people at any time? I had always understood, as millions of others have done, that our Service gratuities were in no way touch- able by Income Tax, and if it be a fact that it is necessary specifically to exempt the bounties and gratuities of those who volunteer to serve for a further period, what has happened about the gratuities of those already demobilised, who have not volunteered for further service? Have they to be declared and returned for Income Tax? It may be that this paragraph is put in merely for propaganda and that the Government hope by this means, to make perfectly clear to those who volunteer for further service, that their gratuities will not be taxed. In that case, I suppose they wish to earn a little gratitude, but if it is a question of saying "Thank you" to the Government, it is "Thank you for nothing." There may be much more to it than meets the eye, and we shall be grateful for clarification.
:I should like to ask the hon. Member under which section of Schedule E of the Income Tax Act, 1918, he would assess this income, apart from this particular Clause.
:I can assure the hon. Member for Huntingdon (Mr. Renton) that there is no attempt here at any form of propaganda. Those provisions are necessary in order to prevent these payments, which are in the nature of income to certain people within the Armed Forces, from being assessed for Income Tax. I am speaking from memory but I am almost certain—if it was not done, it should have been done—that a similar provision was incorporated in similar Acts during the war, to exempt the gratuities of those who were serving when they came out. So far as Eire is concerned, if I may say so without offence, the hon. Gentleman is under a misapprehension. What we are doing here completely absolves receivers of these amounts from all payment of tax on it. We cannot do more than let them off altogether.
:Will the hon. Gentleman, between now and the Report stage, introduce some wording to say that these people are not to be subject to penalisation afterwards?
4.45 p.m.
:We are always willing to look into a point of that kind. Paragraph I makes certain provision for those who are not normally resident here and would otherwise be penalised under Section 24 of the Finance Act, 1920. So far as we can assist those who served in the Armed Forces of the Crown, we shall undoubtedly do so. All we are doing here is, to say that so far as United Kingdom Income Tax is concerned, they shall not have to pay tax upon the bounties—that is the initial sum they get when they enter—and the gratuity of £25 a year for every year they serve, under the new terms of engagement announced by the Prime Minister in April last.
Several speakers from the other side have said that this Clause is somewhat cumbersome and difficult to follow. That may well be. Finance Bills are by their nature rather cumbersome in construction, and often difficult to follow. No Member has put his finger on what is to me the worst feature of Clause 27. In paragraph 5 we get:
Question put, and agreed to.
Clause ordered to stand part of the Bill.
CLAUSE 28.—(Relief from tax on dividends from companies resident abroad.)
:I beg to move, in page 21, line 37, at the end, to insert: consider that view. We have done so in Clause 28 of the present Bill as it now stands.
The Amendment, which I ask the Committee to accept, is designed to remedy a defect in that Clause. Hon. Gentlemen will readily concede that the Clause is difficult to draft because it has to deal with a complicated and difficult set of circumstances. In the drafting there was one omission and this Amendment is designed to rectify that omission. The omission was this. The foreign company, it is supposed, draws its income from a British source, and therefore will of necessity have paid Income Tax on that income.
That is not always accurate, because the foreign company itself may have payments to make in this country; for example, rents and annuities. By reason of the operation of Rule 19 of the General Rules applicable in respect of all the Schedules of the Income Tax Act, 1918, it is entitled, if it pays those annuities, rents and so on, out of income on which it has already paid Income Tax, to reclaim, in respect of those payments of annuities and rents, the proper amount of Income Tax. That being so—and I hope I have made clear this matter, which is not easy to understand, nor easy to explain—it obviously is the case that, if we are trying to ascertain the income which the foreign company draws from British sources tax free, we have to deduct from its British income, the income in respect of which it has paid the annuities and so on. That is to say, we have to deduct from that income what represents that part out of which it has paid those annuities and rents.
The Amendment is designed to do that. It provides that we must ascertain the income of the foreign company drawn from British sources. Having done that, we must then ask on how much of that income it has actually paid British Income Tax. In order to ascertain that fact we must deduct from that income a certain category of income namely, the income in respect of which it has recovered tax, by reason of payments of annuities and rents. The Amendment is designed, therefore, to reduce a category of British income which is brought into question by Clause 28 in its present form, and to reduce that income by deducting from it, income in respect of which British Income Tax is refunded, by reason of the payment of annuities and rents. I think the Committee will agree that that is only fair and reasonable, when we are trying to see what income of the foreign company has already paid British Income Tax. It is obviously only in respect of that income that the British shareholder should be relieved of Income Tax. If this is right, it is obviously necessary to make a deduction from that income, and it is made by this Amendment. I hope that hon. Members will agree, that the Amendment is necessary in order to bring the Clause into proper shape.
:Not merely do I think that the proposition has been well argued but I think it would be very churlish on our part not to congratulate the Solicitor-General upon having given such a clear explanation of such a complex case. I am sure that we all envied him. Sometimes we have thought that the hon. and learned Gentleman was not as clear as he might have been. We can now deduce that those were occasions on which he was doing it on purpose.
:I join in congratulating the Solicitor-General upon his clarity. As has been pointed out, I raised this point upon a previous occasion, and secured a promise that it would be sympathetically considered. I am very pleased to find how well that promise has been fulfilled. When I saw the Amendment, I found difficulty in following its effect. I consulted a legal gentleman, whose advice I usually seek in matters of this kind, and he assured me that the Clause was perfectly satisfactory and that the Amendment was most useful and proper. I therefore accept with gratitude the Amendment proposed in the name of the Chancellor of the Exchequer.
Amendment agreed to.
:I beg to move, in page 22, line 26, to leave out "more," and to insert "not less."
Hon. Members will see that Subsection (5) virtually provides for the following position: The foreign company may, of course, draw its income direct from some branch, or other similar source in this country. On the other hand, the foreign company may be a shareholder in some subsidiary of that foreign company, and that subsidiary may be the company which draws income from a British source. Subsection (5), as worded at present, provides that where a foreign company draws British income via a subsidiary company, that income shall also count, if that income, through the foreign company, finds its way back into the pockets of the British shareholder, and that the British shareholder shall equally be entitled to relief in respect of that income. Representations were made that that concession should be extended slightly. The Amendment is designed to extend it.
It was pointed out that, in a great many cases—not an inordinate number but at any rate in a number of cases—the foreign company draws British income, not from a subsidiary company but from another company in which it is an equal shareholder with some third company. In other words, there is a foreign company; then there is a second company, and the foreign company is a half shareholder in that second company. It is the second company which draws the British income, so that the British shareholder gets his income against his dividend via the second company, the foreign company and then himself. The Amendment says that not only shall the exemption for the British dividend-drawer apply if the foreign company gets British income through a subsidiary, but it shall also apply if the foreign company gets British income through a second company, in which it is the equal shareholder with some other company. This, therefore, is an extension of the concession. I hope hon. Members will say that this is also a fair and proper Amendment and one which should also be accepted.
Amendment agreed to.
Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
5.0 p.m.
:I think it was Walpole who complained in despair that he had tried his King both drunk and sober, and could find no health in him. My history does not relate whether it was Walpole or the King who was drunk or sober. I candidly confess that I examined this Clause with the greatest care and could find no sense in it. Is it not possible for the explanation which has been given by the Solicitor-General—I congratulate him on the clarity with which he has explained this most involved subject—to be published instead of the draftsman's queer English? Candidly, there is something in that suggestion, and I hope that the hon. and learned Gentleman will pass it on to the Parliamentary draftsman in the hope that it will save a great deal of Debate and a great many headaches on the part of hon. Members who try to make head or tail of the Clause. Subsection (2) and, indeed, the Chancellor's Amendments, read to me like a tale told by an idiot, and my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) said a few minutes ago that he also found it impossible to make sense of the Subsection. If the guiding factor in drafting these Clauses could be that clear basic English which my right hon. Friend the Member for Woodford (Mr. Churchill) has stressed on several occasions, it would lead to a much more amiable and understanding atmosphere on the part of the Opposition.
:I am emboldened to add my voice to that of my hon. and gallant Friend the Member for Ayr Burghs (Sir T. Moore). Just now the Financial Secretary said that he thought the wording of a previous Clause was open to criticism, and now that we have the hon. and learned Solicitor-General in such excellent expository form this afternoon, I feel that this is the moment to ask him if he would be good enough to elucidate a little further the somewhat abstruse wording of the Clause. He did much to bring light to us by his explanation of the Government Amendments. We are much wiser now than we were, for we now know that the Clause deals with duplication and the position of companies resident abroad, and it has been rendered necessary by a decision taken in another place. I also understand that mining companies are particularly affected. We now know all that, but Subsection (2) causes no little confusion to me, and I imagine I am not alone in my difficulty. It has been suggested to me by one of my hon. Friends who sits beside me that Subsection (2) is based on the Athanasian Creed; certainly there is something reminiscent of the Book of Common Prayer about it, but I cannot think that is the be-all or end-all of the matter, and I would be grateful if the Solicitor-General could help us by giving an example of a denominator. Some of us who left school some years ago used to know something about common denominators I am sure the hon. and learned Gentleman has all this at his finger tips, and it would be a good thing, not only for those of us who sit in the Committee, but for those who will have to interpret this Finance Bill, to have on the record of our proceedings in the OFFICIAL REPORT another of his excellent expositions from the hon. and learned Gentleman.
:To deal first with the request of the hon. and gallant Member for Ayr Burghs (Sir T. Moore), I sympathise with him, and I am sure everybody in the Committee is in agreement, that this Clause should be as simple and as intelligible as possible. I can assure hon. Members that the Parliamentary Counsel do their level best to make these Clauses simple, but the task of drafting them is extremely difficult. Hon. Gentlemen will remember—indeed the present case is an instance of it—that over and over again one drafts a Clause, comes to the Committee, and finds that one has to amend it because there is a defect in it. It is not through any sense of perverseness or mysticism that these Clauses are drafted in the form in which they appear, but it really is not possible to deal with the highly complicated set of circumstances which are in question in any other way. It is extremely difficult to draft them and to provide for all the manifold contingencies which have to be provided for.
With regard to Subsection (2), the position is this: If the British shareholder draws a dividend, clearly he can only be relieved of tax in regard to a part of it, that part which is commensurate with the amount of the dividend which the foreign company pays out of British income on which it has paid British Income Tax. Therefore one has to work out that fraction, and that fraction is what is called the appropriate fraction. This is how one does it. Going back to one's school days when we did this sort of thing, above the line you put the amount of income on which the foreign company has paid British Income Tax. Then you draw the line, and underneath you put these two amounts: the amount of its income on which it has paid British Income Tax plus the amount of its income on which it has not paid British Income Tax. The result is that you get a fraction, and you have to divide the British shareholder's dividend by that fraction. Let me give an example.
:You really need a blackboard.
:If the British shareholder gets, say, £X—
:Can it be £100, or something simple like that?
:Let us say £100 then. One has to find what is the appropriate fraction of that £100 in respect of which he is entitled to be relieved of British Income Tax. To find the fraction, you ask first on how much income the foreign company has paid British Income Tax? Let that be X. You put X on top of the line. Then you want to find out what to put below the line, and in order to find that you have to discover what is the amount of the foreign company's income on which it has not paid British Income Tax, and let us call that Y. Your fraction then works out in this way: X over X plus Y. I hope that is clear?
:Where has my £100 disappeared?
:X was the number you first thought of.
:X was the number above the line. The company also has income on which it has not paid British Income Tax, and it pays the British shareholder out of both those sources of income. It is quite obvious that he should be relieved only in respect of that part of the dividend representing the part of the foreign company's income on which it has paid British Income Tax. To find which part of his dividend should be free of British Income Tax, you must put above the line the amount of the foreign company's income on which it has paid British Income Tax and, under the line, the addition of the amount of its income on which it has paid British Income Tax and the amount on which it has not paid British Income Tax. That gives a fraction, you apply that to the dividend and the result is the amount of the dividend in respect of which the British shareholder is entitled to claim relief from British Income Tax.
:Of whom are these questions to be asked—the unfortunate taxpayer or the foreign company?
:The taxpayer, no doubt, in preparing his accounts will have them submitted in the ordinary way, either through an accountant or through his bank, or whoever prepares his Income Tax returns, possibly even his solicitor. He is the person who has to satisfy the Commissioners that he is entitled to that measure of relief.
:Yes, but how is the taxpayer to know what the company has done?
:The position then is that the taxpayer has to satisfy the Commissioners of Inland Revenue that he is entitled to relief. One of the objections to accepting the point put forward by the hon. Member for Edgbaston (Sir P. Bennett) is that sometimes we may have a difficulty in regard to foreign companies in finding what its sources of income are. Normally there should not be much difficulty. We would know what the first figure X should be because the Income Tax authorities know what part of the company's income would have been brought into charge. But one might have some difficulty in the case of some companies and countries in saying what Y should be, and in ascertaining the total amount of the foreign company's income on which it has not paid British Income Tax. But, as the Clause is worded, it provides that the person who claims the relief must satisfy the Commissioners and make out a case showing that he is entitled to it. The person who claims the relief must discharge the burden of saying what the two respective sources of income amount to, and establishing that he is entitled to relief and that the fraction he seeks to apply is the correct one.
:Would not the whole transaction be simplified if a standard fraction were applied to particular companies? How can the holder of the dividend be aware of the fraction? Only the Government themselves would be informed of the fraction which should be applied.
:I will answer by saying that in practice there should be no difficulty. Take a well-known foreign company, say in New York, there should be no difficulty. Probably it has a number of shareholders in this country. But I do not know whether the hon. Gentleman says there should be a stated fraction always adopted?
:Under this suggestion the onus is laid upon the claimant, the recipient of the dividend. Is it not possible for some arrangement to be come to with the company in question as to the fraction which should be applied year by year? The claimant is not in a position to be able to fix, or prove a particular fraction.
:I see the force of that. It is really an administrative matter, and I have no doubt that something of that sort would be found to be the most convenient course. The onus is on the taxpayer, and it is necessary for the protection of the Revenue. It does not follow that the Inland Revenue will be very rigid in their insistence on a strict measure of proof such as would convince a judge and jury. I have no doubt that in the case of a big reputable company carrying on business abroad and which has branches in this country, such a practice would be adopted. I do not want to bind the Inland Revenue, and I hope that no one will understand that as an undertaking, or a promise, but as a matter of convenience it would probably be done in that way. But I cannot deal a priori with every set of circumstances.
:May it not be that the Treasury themselves will be able to help the shareholder with the information?
:I have no doubt they always will whenever that is possible as they do now.
:May I, for the benefit of the Solicitor-General, say that we also appreciate his very lucid explanations of the Clause? I do not want him to be receiving the whole of his praises from the Opposition Benches. Every hon. Member on the other side of the Committee has spoken about the excellent exposition the Solicitor-General has given and how lucid it was. I want him to feel that he has some Friends behind him. For the benefit of the hon. Members opposite, could he give some explanations on the blackboard, if anyone has any doubt as to X and Y.?
:Surely the hon. Member for Woolwich (Mr. Hicks) is not comparing the Solicitor-General with Will Hay? It seems to me that the exposition he gave us was of quite a different calibre.
5.15 p.m.
:I am very glad indeed that this point of drafting has been raised. It is a point in which I have been deeply interested for a very long time. I have tried to raise it on more than one occasion in the last few years. Here we are, 50 or 60 hon. Members, perhaps not all very well instructed in finance, and we have the fortunes and fate of, it may be, thousands of shareholders all over the world in our hands. I also congratulate the Solicitor-General on his lucid explanation, but I would point out that every shareholder in every country has not the advantage of the Solicitor-General's advice to help him out of his difficulties. Can he tell us roughly how many shareholders are involved in this? I realise the difficulties of the draftsmen. An ex-Chancellor of the Exchequer once said to me when I was trying to fathom a Clause which to me, after reading it a dozen times, was incomprehensible, "What the draftsman has to do is to interpret the will of the House of Commons so that a judge on the bench can be in no doubt as to what the will of the House of Commons was. That is why we have to have these very involved sentences."
May I reinforce the suggestion which has been put forward, that in some future Bills there should be an explanation in simple language of each Clause which should accompany the Bill, and which would give one or two concrete examples giving as far as the Government know, the number of people to be affected? If that can be done, we can get a better grip of the Bill and it might save a lot of discussion.
Subsection (1) of Clause 28 begins with these words:
rose —
:Go on, Jim.
:May I have an answer?
:Clause 28—
:I have asked two questions; may I have an answer?
:Is it in Order for an hon. Member to address the Chair with "Go on, Jim"?
:I did not hear the observation—I cannot believe it was intended for me.
:I do not think it would be in accord with constitutional practice to put on the Statute Book anything other than the wording of the Statute. It would be highly undesirable to do so, and it would be departing from all precedent. But every endeavour will be made to make the wording as clear as possible, and we will bear in mind what hon Members have said.
:Might I ask the hon. and learned Gentleman to put it, not in the Measure, but in any accompanying explanatory paper?
Question put, and agreed to.
Clause, as amended, ordered to stand part of the Bill.
CLAUSE 29.—(Amendment of Income Tax Act, 1945, s. 59.)
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:The hon. and learned Gentleman the Solicitor-General has been surpassing himself this afternoon and has been rightly congratulated from all sides of the Committee, but the matters raised by Clause 29 are a great deal more complicated than those in the two Clauses of which he has just given us so lucid an explanation. I hope, therefore, that without unduly taxing the patience of the Committee, he will explain to us what Clause 29 means.
:I do not find this Clause quite as complicated as my right hon. Friend. It seems to mean, if I understand it aright, as follows: The Finance Act, 1945, gave a power of the granting of a certain relief of Income Tax that is of great value to trade. In certain circumstances at the present time there is what is called I think an initial allowance, which means that a buyer of plant or machinery is able to have this allowance except on sales between members of a group of companies, when he does not get this amount towards buying his machinery for developing trade or industry. That was all done under the Act of 1945, with this error, which the Government, I am glad to see, are now putting right. For this reason I welcome the Clause. There is one point, however, which I think requires a little clarification. In Subsection (3) which deals with this initial allowance, appear the following words, to which I object:
"the initial allowance to the buyer shall not exceed whichever of the three following amounts is the lowest,"
I may be misinterpreting it, but that seems to me to be a typical Treasury way in which, having decided to make good a mistake, they then proceed to work in three ways to do it, giving the unhappy manufacturer the chance of these three ways but always choosing that which is least in his favour. It seems to me that a wide difference is possible between
"the excess of the said price over four-fifths of the said limit of recharge;"
and
"the initial allowance which fell to be made to the seller as aforesaid;"
Then, again, there is another possibility:
"the amount on which a balancing charge is made on the seller as aforesaid."
I do not want to do anything which will penalise the seller. This Clause is undoubtedly a good one. It intended to do a good piece of work and to try to remedy an injustice, but I would like to see that the maximum amount of allowance is paid under this Clause without this kind of paring it away by providing three different conditions and giving the buyer the least favourable of them. I would like to have some assurance on that point, and to have confirmation that what I have said is the real meaning of what the Clause seeks to do.
:The Income Tax Act, 1945, provides that with a view to resuscitating industry, if a company buys plant and machinery, it will get at once an initial allowance for the purpose of Income Tax computation, of one-fifth. Section 59 then provided that if a company bought its machinery from another company in the same group the second company should not get that initial allowance. The object of that was to prevent dishonestly inflated sales. During the Debates on the autumn Finance Act the hon. Member for Stockport (Sir A. Gridley) pointed out that that provision might sometimes operate extremely unfairly in a case where there was no attempt to obtain money improperly by an inflated sale, and he asked for some exception to provide that bona fide sales should be permitted, even if they took place within a group of companies. This Clause seeks to do that.
The Income Tax Act, 1945, from Section 15 onwards, worked in this way: Supposing a company buys machinery for £1,000, it at once gets its one-fifth allowance of £200. It will, as the years go by, get wear and tear allowance. Supposing it then sells machinery again, it has to bring in the amount of the sale, with the result that if the amount of the sale is in excess of the price less the amount of the initial allowance and wear and tear allowances, there is what is called a balancing charge. If a company has bought machinery at £1,000, has got its initial allowance of £200, and then, say, a year later, sells the machinery for £900, there is what is called a balancing charge of £100 because the £900 is £100 in excess of the £800, the sum of £1,000 originally paid, less the initial allowance.
What this Clause does is this. Notwithstanding the fact that a sale may take place between two members of a group of companies, say if company A sells to company B, in the same group, company B shall, notwithstanding the 1945 Act, still get its allowance if it is a bona fide sale, that is to say if it is a sale in respect of which the Commissioners think that the main object is not to derive an unfair Income Tax benefit. That is put in the appropriate wording in the Clause. Some limitation has, of course, to be introduced on the amounts which both companies A and B get in initial allowances in respect of that same machinery. That is done in this way: in the case of a sale from company A to company B of machinery in respect of which company A has had an initial allowance company B will be allowed an initial allowance also, but it is limited in three ways, and this is what the hon. Member for Torquay (Mr. C. Williams) mentioned. It has to be the smaller of three amounts, and he will agree that that is really perfectly fair. Supposing company A sells its machinery (which costs £1,000) to company B for £900, itself having got an initial allowance of £200, and subsequently suffering a balancing charge of £100. Company B's allowance should clearly be not more than £100 so that the two companies between them get the one-fifth allowance, that is £200. That is what the first paragraph of Subsection (3) of this Clause does.
5.30 p.m.
There are two other limitations which have to be taken into account. Company A may sell the plant to company B at, say, £1,100, having itself purchased it for £1,000. In that case the whole of company A's initial one-fifth will have been wiped out, but clearly company B should only get £200 as an allowance and not £300. In other words, between them the companies should get only the one-fifth initial allowance once over. In that case, company B will get £200. Subsection (3) provides for a third situation. Section 18 of the Income Tax Act, 1945, provides that the initial allowance shall be adjusted in a certain way, particularly where there is a replacement of machinery following upon a resale. Therefore, it is provided where there is that situation that the initial allowance shall not exceed the adjusted amount which is given under Section 18 of the Income Tax Act, 1945. I think if one considers the three alternative sets of circumstances, it will be realised that it is fair that the lowest of these three should be the amount given under this Clause.
:The Solicitor-General has explained the position as it affects company A and company B within the same group of companies. I would like to know if precisely the same conditions would apply if the companies were not in the same group. Would they be in a better or worse condition?
:They would be in a slightly worse position, because they would only get the one-fifth allowance once. In effect, they would have to divide between them the 20 per cent. allowance on the cost of the machinery.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
Clause 30 ordered to stand part of the Bill.
CLAUSE 31.—(Termination of excess profits tax.)
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:I would have put a question to the Chancellor, if he had been here, concerning Clause 31 which deals with the question of Excess Profits Tax. I raised this matter on a previous occasion and the reason given by the Chancellor for extending this tax for another year was the strangest explanation I have ever heard. This tax was for the purpose of taking excess profits made during the war period. That period has come to an end. Hon. Members have pointed out, time after time, that there has been inequality of treatment between different classes of people in the same category. Certain people last year were having to pay more in Excess Profits Tax than they actually made in profits. Those difficulties could not be overcome during that period. What I wanted the Chancellor to explain, and what I hope his representative will explain, is the justification for continuing this tax for another year in what is the reconstruction period It places extreme hardship on people who have been denuded of all their excess profits during the war period, and who are now asked to continue to pay in this reconstruction period, when they need all the help they can get, while those who were fortunate enough to have made their high profits during the 1935–7 period, were able to retain all those profits. One would have thought that this position would be brought to an end at the earliest possible moment.
The Chancellor said he would like to have brought it to an end last year, but his reason for not doing so was that if the people who paid Excess Profits Tax were relieved last year, some of them would have had to pay more tax in another form. I cannot understand the suggestion that it is fair in any way that people who have been penalised, and in some cases brought to the verge of bankruptcy, should continue for another year to be denuded of all their profits in this reconstruction period in order to relieve the more fortunate people who had the high profits earlier. Frequently those high profits were made by trading with our enemies, and, because of that good fortune, these people retained their profits throughout the war period. Now, the Chancellor says to them: "I see there will be a penalty on you people, if I relieve the other Unfortunate group of Excess Profits Tax in 1946. Therefore, I will not penalise you; I will penalise them." There are thousands of small manufacturers in this country who struggled on, increased their output enormously during the war period, and who have nothing for it today but very big liabilities to the Treasury for Excess Profits Tax.
It is extremely unfortunate that a Socialist Chancellor of the Exchequer should put forward an explanation to the effect that he does not want to penalise the fortunate people who have been able to retain profits at a high standard, that he does not want them to pay more tax this year, but that in order to save those poor people, he proposes to penalise the thousands of small manufacturing concerns who this year are struggling in the reconstruction period. Whatever it costs to put this matter right, there should be equality of treatment among these people. Those who are now struggling with very small capital, should be relieved of their liability for Excess Profits Tax at the earliest possible moment, even if the Chancellor of the Exchequer has to raise the same amount of money by spreading the tax over the entire community which, of course, would include those very fortunate people who made vast profits. I wish the Chancellor of the Exchequer had been here, because on the last occasion I think he said he was going to look into the matter again. I had hoped that he would have another explanation to make today. Thousands of small industrial concerns in this country are involved. I think it is victimisation of the most vicious kind I have known under any Finance Act. I do not know whether the Solicitor-General has anything to say. It is extremely unfortunate, when we are considering an important Act such as this, that there should not be someone here to give a word of explanation. This very important form of taxation is coming to an end. I believe that many thousands of small manufacturers have been victimised in a very vicious way.
:I congratulate the hon. Gentleman the Member for East Middlesbrough (Mr. A. Edwards) on putting the matter very clearly and plausibly. He has explained the conditions of a good many people in industry in a small way, and shown how they have been hit by this tax. He has brought out the fact that there are many cases arising in these circumstances of people who have been badly hit during the war and who do not know now where they are and what they have to pay. I think there ought to have been an explanation of how the Treasury propose to deal with these rather hard cases. This has been a large source of taxation during the war and it has hit a great number of people. At present neither the Chancellor of the Exchequer nor the Financial Secretary is here to reply to a very vital question.
:I think I ought to let the Committee know that I have received a most courteous note from the Financial Secretary apologising for the fact that he had to go away for a short time to attend another meeting. He hopes that the Committee will excuse him.
:What about the Chancellor?
:I am obliged to my right hon. Friend for that information, which enables me to say that I should not ordinarily have dreamt of bringing the Financial Secretary into this. But on a matter of this importance, which involves considerable sums, it is a pity that, as the Chancellor is not here, hon. Members opposite should be deprived of the views of one of the great financial experts in their own party—one who is really able to understand and explain this Clause. I think it is a pity that there is no one holding a responsible position in the Government to explain this matter to us. This is a vital question, and I have noticed that, on these big occasions, when the Chancellor is not here, we do not even get the assistance of the Leader of the House. I hope that we are going to receive a full explanation before we part with this Clause, and I think it regrettable that there should be no representative of the Government, except a Law Officer, here, to say how this Clause is going to affect the Board of Trade or other Government Departments which deal with administrative work.
:I would like to say that I agree with the hon. Member opposite. I happen to be associated with an association which embodies a large number of the smaller manufacturers of this country. This Clause of the Bill concerns almost every one of them. The standard on which Excess Profits Tax was calcu- lated varied very much, and I think it a great pity that the Chancellor is not here to explain to us what is going to happen to these people. We ought to have a full explanation of the circumstances of the case, and the Committee should not be deprived of the assistance of the Chancellor in this case. I support the pleas which have been made by previous speakers for some further and authoritative explanation.
:On a point of Order. May I ask, Major Milner, whether the Financial Secretary is to reply on this point? Otherwise, I should like to ask leave to move to report Progress.
:I do not propose to accept that Motion.
:It seems to me that this is a storm in a teacup, which has been raised by my hon. Friend the Member for East Middlesbrough (Mr. A. Edwards) on a complete misunderstanding of the facts. My hon. Friend complained that E.P.T. had not been removed a year earlier, and referred to large companies which made substantial profits and to small businesses which, he said, were on the verge of bankruptcy but were having to pay Excess Profits Tax on profits which presumably they had not earned, otherwise they would not be on the point of bankruptcy. I cannot understand that argument. We all know that there is a minimum of £3,000 per annum—three times as much as hon. Members derive from their Parliamentary remuneration. The minimum applicable to small businesses varies from £3,000, which is the absolute minimum, to a much larger sum, and, if there is more than one person taking part, I believe it goes up to £8,500. In those circumstances, I say that my hon. Friend is choosing an extraordinary margin of figure for his expression "low." I think that we, on this side of the Committee, should be satisfied that a person is getting a reasonable remuneration if that remuneration is between £3,000 and £8,500 per annum. I cannot accept for a moment the view that there can be very many cases of persons so badly hurt by the Excess Profits Tax that they are now on the verge of bankruptcy.
5.45 p.m.
:I think my hon. Friend has chosen a most unfortunate time to intervene. We discussed this matter at greater length on Second Reading, and in the Debate on the Budget statement, at which time I quoted certain figures for a specific firm. Perhaps if I had said "liquidation" instead of "bankruptcy," it might have seemed different to my hon. Friend. It is one thing to draw £3,000 a year, and quite another thing to endeavour to carry on a business with assets of £40,000 and liabilities—and very pressing liabilities—of £45,000. One might have some physical assets and yet be very much concerned about ready cash, and, when one receives demands from the Treasury week by week to pay these taxes, and one knows that they will take all one's ready cash, while, at the same time, stocks are running down and need to be replenished, all kinds of things may happen and it is quite a different matter. It may be possible on paper, but what I am concerned about is the carrying on of these businesses, which have to find 60 per cent. of their Income Tax out of their profits on current activity, while having to pay heavy liabilities based on the previous 100 per cent. duty. It is the inequity of the business with which I am concerned. The Chancellor did not bring it in last year. He wanted to do so, and said he was as anxious as anybody to bring it in, but he said, "If I do it, these people who have been paying Excess Profits Tax will have to pay more Income Tax." Of course they will, and that is what I want them to do. That is the equity which I am demanding. Instead of the small man having to pay his Excess Profits Tax to subsidise the big man, I want the big man made to pay his share. I should have thought that my hon. Friend is probably correct in the figures he has quoted, but I suggest that he has no experience of running a business when it is difficult to find ready cash.
:I have had no little experience of that very matter, and also of visits to those responsible for collecting E.P.T. in those circumstances, and I can say that I have always found them most helpful.
:But they still have to pay the tax, and there are thousands of small manufacturers who can play a part in reconstruction today but who find it very difficult to replenish their stocks and get their businesses reconstructed. I was merely emphasising the point of the inequity of allowing one section to get away with it now, having enjoyed large profits for a long period, and not paying anything towards the little man who has to continue to pay 60 to 80 per cent. of his profits tax in this period. Surely, nobody can justify a case of a small man being penalised by a big man?
:The return of the right hon. Gentleman the Chancellor is not only opportune, but overdue, in view of the disagreement which has broken out in the ranks behind him during his absence. I thought that the hon. Member for East Middlesbrough (Mr. A. Edwards) raised a point of the highest importance and developed the views which he put forward at an earlier stage in these arguments. I am bound to say that the hon. Member for Blackley (Mr. Diamond), despite the many industrial qualifications which I see he holds and despite his knowledge of accountancy, seemed to me a very poor substitute for the Government Front Bench. He did the Government far more harm than good, and because of that I welcome his speech. Now that the Chancellor is back—we quite understood the Financial Secretary's absence which was explained—I would say with great respect, that it is a little unfortunate that the hon. and learned, and overburdened, Solicitor-General should be left alone on the Front Bench when we reach a stage in the Bill which involves a taxation matter of this character. I should have thought it would have been possible for a representative of the Board of Trade or of the Ministry of Supply to be present. If, later tonight, complaint is made of lack of progress, I hope that no charge will be laid at the door of the Opposition. We have had to hold up on Clause 31 because of the absence of the responsible Minister and because of the revolt which has broken out among the Government back benchers. Perhaps the Chancellor has now had the point explained to him by the Law Officer, and we shall be interested to hear what he has to say.
:I am sorry that I was absent when this Clause was reached. I was with certain Ministers dealing with urgent business, and as soon as I received news that this Clause had been reached, I hastily came here. I do not think the case put forward by my hon. Friend the Member for East Middlesbrough (Mr. A. Edwards) is one of substance. I have twice indicated, with the general agreement, I believe, of Members on all parts of the Committee, that the Excess Profits Tax is a bad tax when we pass out of wartime into a period of peace. At the same time, revenue is one of our necessities, and it has not seemed possible to me to propose the complete abolition of the tax. In the autumn Budget I proposed that the Committee should accept a reduction of 60 per cent., but I did not feel able to propose its complete abolition until now. Even now, I am running a certain risk in getting rid of such a large amount of revenue as from the end of this calendar year. In my Budget speech, I reserved the possibility—I did not wish to do more, but I did not want to be charged later with the fact that I had not given a warning—that when we came to next April I might have to propose some duty which would, to some extent, countervail the loss of revenue resulting from the abolition of this tax. I gave a warning, and I have not been able to put that possibility out of my mind. In this Finance Bill, I am hoping that this duty shall cease to be assessed on profits as from the end of this calendar year, but it would not be feasible to date it back before that. Administration would be troublesome, and it would cost me a lot more revenue than I can afford.
Generally speaking, it is not the small men who are penalised by the Excess Profits Tax: it is that group of larger businesses whose prewar standards are related, in a certain fashion, to the standards of today, and it is not so much as between the large and the small businesses that inequalities occur, as between those businesses which have a certain prewar standard, and those which have a different standard. It becomes more and more capricious in terms according to the standard on which it is calculated. I thought that there was approval by all parties and throughout industrial circles in the country when I felt able to repeal this tax from the end of the year. I do not think I could do more, and I do not think I should have done less. I hoped, therefore, that, taken in conjunction with the later Clauses, on which I have sought and received representations from industrialists and others regarding the terminal arrangements, this Clause would be regarded as a good Clause, and that we should be able to pass on to the technical and difficult subject of winding up the Excess Profits Tax.
:We have had an interesting little Debate. Far be it for me to join in the civil war which has temporarily broken out on the Government back benches and I think that the right hon. Gentleman has quelled any revolt which, in his absence, might have assumed serious proportions. As far as we on this side of the Committee are concerned, we are grateful for this Clause. Whether or not the period could have come to an end a few months earlier, I will not argue, but, at any rate, it is something to be thankful for that it is coming to an end because, after seven or eight years, whatever may have been the validity or justice of the tax to begin with, it has moved so far from its original basis that it has become grossly unfair in many quarters. Beyond expressing those words of gratitude for the Clause, there is only one thing I would like to ask the Chancellor of the Exchequer.
When he first told us of this proposal on the Committee stage of the Budget Resolution, he expressed the hope that both the reduction in the amount of E.P.T., which has already had effect, and this further concession, which will have effect next year, would lead not so much to increased dividends as to the ploughing back of extra money into business. I wonder if he could express his general view on that. I have been trying to follow the dividends which have been announced since he made that speech. I know that there has been a considerable doubt in the minds of some industrialists as to whether he meant a complete prohibition, or whether, in certain cases, where he was satisfied that as much money as the business could stand was being put back into it, he would regard any moderate increase of dividends with disfavour. I must say that, on the whole, I have thought that any increased dividends made since that time have been moderate and reasonable, but it would be a considerable help to industrialists if the Chancellor could say a word on whether he feels that the policy pursued up to now has been in accordance with the appeal he then made.
:I do not know whether it would be in Order for me, on this Clause, to reply to that question.
:I think that the Chancellor of the Exchequer would not be strictly in Order, on this Clause, in complying with the request of the right hon. Member for West Bristol (Mr. Stanley).
:I regret, Major Milner, it I have strayed outside the proper bounds, but I can only appeal to your kindness of heart and ask you not to deprive the Chancellor of the opportunity to answer a question on a matter of such very considerable interest to the people as a whole. The Committee stage of the Finance Bill does allow a considerable latitude. I would remind you, Major Milner, that the Chancellor was allowed to deal with this very point upon the Budget Resolution. Surely, if he was in Order on the Budget Resolution on which the Clause was founded, it would equally be in Order to deal with it when we are discussing whether the Clause should stand part.
:If that is correct, both sides have had their opportunity, and, perhaps, they should be satisfied with that. I thought the right hon. Gentleman wanted the Chancellor to speak about the future.
6.0 p.m.
:No, I would not ask him to do that. I was asking him to speak about the past. He was saying that although he was giving this concession, he might feel it necessary at some future time to repeal it unless a certain policy was followed. I am only asking whether, up to now, since he made that statement he is satisfied with the policy which has been pursued.
:The passage to which the right hon. Gentleman is referring was that in which I said that although I am asking the Committee to approve the repeal of the E.P.T. now, I must keep an open mind for next April as to whether or not I should impose any other duty similar to the existing Excess Profits Tax, modified in one way or another, or increase any existing duties, in order to make up the revenue the loss of which will begin to accrue next year. I did say that one of the considerations, though not the sole consideration—and this is another aspect of the broad inflationary problem at which we are so often looking from different angles—must be whether or not there was an inflationary tendency developing by reason of any tendency in industrial circles to over-distribute dividends, as distinct from ploughing profits back into the business. We must continue to watch that, but it is very early for me to give an opinion. The financial year has run only a little way so far, and it would be misleading and premature of me to say anything more about that at this stage. But we shall continue to watch it through the year, and the request which I have frequently made to industry is to think once or twice before increasing a current rate of dividend. There may be special circumstances in which an increase may be justifiable, but it appears to me that the tendency should be against increases in dividends and the application of additional profits to the development of the business rather than to higher dividend rates. That is a broad general rule. It is subject to all sorts of considerations, and as the year goes on we shall see how things go.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
CLAUSE 32.—(Relief from excess profits tax for terminal expenses.)
:I beg to move, in page 25, line 28, to leave out paragraph ( b ), and to insert: have been encouraged by no less than three Chancellors of the Exchequer. First, the late Sir Kingsley Wood promised industry that when the time came for the clean-up at the end of the war, he would see that justice was done and that all difficulties would be met so far as they could be; then my right hon. Friend the previous Chancellor of the Exchequer, the Member for the Scottish Universities (Sir J. Anderson), took precisely the same attitude as to the position with which industries would be faced. I think the present Chancellor of the Exchequer is really doing his best to follow the same lines of policy as his predecessors. What we are anxious to do now is to see that the arrangements which are being made to clean up what I might call the inevitable postwar mess, are carried out as fairly, justly and generously as the financial position of the nation will allow.
If hon. Members look at Clause 32 (1) ( a ) they will see that the Bill provides that deferred repairs will be written back and allowed in the period when they would have been done but for the war. Most of us, I think, in each war year did our best to estimate how much our final repairs were in arrear, and set aside a sum which obviously we could not spend at the time, but which at the end of the war might provide the wherewithal to enable us to carry out those repairs. As I say, the Bill provides that these deferred repairs shall be written back, and allowed in the period when they would have been done but for the war preventing them from being done. If we look at paragraph ( b ) which deals with rehabilitation costs, we find that the treatment there, for some reason or other, appears to be quite different. Rehabilitation expenditure is to be brought only into the last accounting period. Is that fair? The last accounting period will permit only of a 60 per cent. allowance towards those costs, as against 100 per cent. so far as the deferred repairs expenditure is concerned. Surely, it is not just or equitable that there should be any differentiation between the treatment of the two classes of expenditure.
Let me give an outstanding example. Take all the expenditure that has been incurred on air raid precautions. The cost of such work, less any special plant, is treated by means of a special depreciation allowance, and the effect of that is that the cost of providing A.R.P. work is written off at a uniform rate over the period during which bomb shelters and all kinds of protective buildings have been in existence. Under the Clause, the cost of removing all the A.R.P. structural work is to be treated differently and is to be subject to an allowance of only 60 per cent. I think it is only necessary to point out this extraordinary difference of treatment between the two kinds of expenditure, to secure from the Chancellor a promise that this should be rectified. The purpose of this Amendment is simply to rectify this anomaly which, I think, must be in the Clause by mistake.
:The argument in support of the Amendment is really based on this, that there is no reason for any differentiation between the deferred repairs allowance and the rehabilitation expenses allowance. If that argument falls, there is nothing at all in support of this Amendment. In Clause 32 (1, a ) deferred repairs are made to relate back to the period for which they are appropriate. That is reasonable and natural, because with regard to repairs which are not done but which, apart from the war would have been done, it is only to be expected that they would be attributed back to the period when those repairs would have been done, if there had been no war. That is what would be expected. Rehabilitation repairs are in an entirely different category. In practice, as the hon. Gentleman says, they will consist of expenses incurred in connection, for example, with the removal of air raid shelters. Those expenses are not expenses which accrue from day to day. It cannot fairly or properly be said that an air raid shelter should have been removed, say, two or three years ago; whereas, it could properly be said, with regard to any item of repair, that it should have been done two or three years ago. Therefore, the two sets of expenses stand on an entirely different footing.
That is reflected in the fact that when the original conversion expenses were incurred, which no doubt necessitated the rehabilitation expenses, those also were attributable to a particular period, because most of those conversion expenses were incurred in 1939 and 1940. They were incurred partly in a period in respect of which Excess Profits Tax was only 60 per cent. It would surely be most unreasonable to expect this position to be brought about. The expenses were, in the first place, incurred, to a large extent, when Excess Profits Tax was only 60 per cent. The hon. Gentleman is now asking that they should be related back to a period when Excess Profits Tax was 100 per cent. That would be quite unfair and unreasonable. That is what his Amendment would do. In other words, he is asking to be given an allowance of 100 per cent. in respect of expenses which were largely incurred in 1939, when Excess Profits Tax was 60 per cent. There can be no defence for that point of view at all. That, in the first place, is a fatal objection to the Amendment which is now proposed. How does the position stand as the Clause is at present drafted? Most of these expenses will be incurred in 1946. They were originally incurred in the form of conversion expenses in 1939. In both years the figure for Excess Profits Tax is 60 per cent. It was 60 per cent. in 1939, and it is 60 per cent. now. The result will be, the allowance will be given in the year in which the rehabilitation expenditure is incurred on the same scale as in the year in which the original conversion expenditure was incurred.
The position really is this. Rehabilitation expenses may be of a capital nature or of an income nature. In so far as they are of an income nature, and where incurred before the end of 1946, they will automatically be attributed to the period in which they were incurred. That means, if they are incurred in 1946 relief will be given at the rate of 60 per cent. If they were incurred in 1945 relief will be given at the rate of 100 per cent. Naturally, when we get to Clause 32 of this Bill, we find that expenses incurred in 1947 should be treated as applicable to the last period, 1946, and, therefore, should qualify for the 60 per cent. relief. As the hon. Gentleman knows, my right hon. Friend the Chancellor has, in point of fact, made a very substantial concession to the type of argument which is behind the Amendment, in extending the allowances in respect of rehabilitation expenditure to capital rehabilitation expenditure incurred before the end of 1946. The result of that will be when, and if, the Committee adopt the new Clause which the Government are moving to bring that about, rehabilitation expenditure, both of an income nature and of a capital nature, will be attributed to the period in which it is incurred—that is to say, 1945 or 1946—and will so qualify for the 100 per cent. or 60 per cent. allowance, according to the year in which it is incurred. As the law stands, we have gone a long way towards meeting the sort of argument which the hon. Gentleman is proposing, and the position is fair.
6.15 p.m.
With regard to post-1946 expenditure of a capital and an income nature, it cannot fairly be said that that should be spread back, so as to be repayable at a rate inappropriate to the period in respect of which it will actually be incurred. For this reason, I would ask the Committee to say that no case has been made out for this Amendment. The position is perfectly fair as it stands, or as it will stand when and if the new Clause is accepted. If the new Clause is accepted, the position will then be that capital and income rehabilitation expenditure will be allowable at the rate appropriate to the actual year in which it was incurred, in exactly the same way as the original conversion expenditure, to remedy which the rehabilitation expenditure will be incurred, will also be attributable, for the purposes of relief, to the extent of 100 per cent. or 60 per cent., according to whether it was done in 1940 or 1939. Therefore, rehabilitation expenditure will be on exactly the same footing as any other similar expenditure. Take advertising, or research expenditure incurred by a trader in the years 1945 and 1946. In that case the trader will qualify for the rebate of 100 per cent. or 60 per cent. in respect of such expenditure, according to whether he incurred it in the year 1945 or 1946. In that respect he will be on exactly the same footing with regard to that expenditure as when the new Clause is adopted in respect of rehabilitation expenditure, except that the Government are going farther in the way of helping the trader by saying that so far as rehabilitation expenditure is concerned, capital expenditure as well as income expenditure will qualify for relief.
A line must be drawn somewhere. My right hon. Friend is most anxious to assist enterprises to get back on their feet. He has embodied in the Bill, for which he is responsible, what he regards as a perfectly fair settlement with a view to enabling enterprises to get back on their feet. They will naturally get expenditure in the nature of deferred repairs in regard to the period to which the repairs can be fairly said to be appropriate. With regard to rehabilitation expenditure, the same position will result except that they will also get capital rehabilitation expenditure allowed under the new Clause standing on the Order Paper in the name of my right hon. Friend. What the hon. Gentleman asks in his Amendment is that the repairs should be spread back evenly. There cannot be any possible justification for that view. That is purely arbitrary. I do not even know how it would work out. I suppose for the Excess Profits Tax it would be spread out evenly with a trowel, so to speak, getting some figure between 60 per cent. and 100 per cent.—I do not know which it would be—applied equally. There is no reason for that at all. From no possible point of view can it be said that an arrangement of that sort is preferable and fairer to the trader than the arrangement at present represented by the Clause, and by the new Clause if and when it is adopted.
For those reasons I ask the Committee to say that my right hon. Friend has been extremely reasonable and fair about this. Even if this Amendment were accepted, it is very doubtful whether it would be of any more benefit to a trader than the arrangement at present embodied in the Bill. It is perfectly fair as it is. There can be no reason for a possibly arbitrary spreading, which may not benefit the trader at all. The trader will now get expenditure in the year in which he has incurred it, either 60 per cent. or 100 per cent. whichever is appropriate. He will therefore, in relation to that expenditure, be in the same position as he will be in relation to all other types of expenditure. For these reasons I ask the Committee to say that, no case has been made out for this Amendment. The position is clear as it stands and it will benefit the trader in every way, just as much as this proposal.
:Is there not a slight flaw in the hon. and learned Solicitor-General's argument? These are very technical and difficult matters to discuss, but he seemed to assume, in the air raid precautions case put by my hon. Friend, that all that expenditure, and all the conversion expenditure which is under discussion, had taken place at a time when Excess Profits Tax was 60 per cent. I do not think that is so. If one looks back into the history of those years, one would find that a good deal of further air raid precaution work was started after the bombing began, because people realised that what they had done under the advice of my right hon. Friend before the war, as being sufficient and suitable against attack, in practice did not prove to be so. It must be within the experience of anyone that a great deal of air raid precaution work must have been done subsequently to the period when the Excess Profits Tax was raised. I think that is also true of conversion and other expenditure of that kind. It is a matter of facts, which could be ascertained in each particular case. Therefore, if the rather broad and sweeping claim which the hon. and learned Gentleman made, that, as most of it would have been done in 1939–40 when E.P.T. was 60 per cent., and as most of it would fall now in the 60 per cent. period, therefore rough justice was done, was true in any particular case, it might be a good argument, but I should like to know a great deal more as to whether it is true. If it is not true, ought not some action be taken to deal with the injustice which must arise? Can it be related back to the periods when it was 100 per cent., or have the Government any other suggestion to make?
I am certain that the Government do not want to be unjust as between one firm and another or as between one industry and another—or, indeed, even in regard to the geographical disposition of industries or firms. It may very well be, for example, that nothing much was done in certain areas of the country in the period of the 60 per cent. Excess Profits Tax, but that afterwards, when it was discovered that the whole country was extremely vulnerable, a lot of work had to be done. Those are the sort of flaws which it seems to me were inherent in the hon. and learned Gentleman's argument, and I should like him, or the Chancellor, to be good enough to address himself now or on some future occasion to those points.
:I was very interested in the Solicitor-General's speech and, if I have any criticism to offer, it is that he spoke perhaps from the angle of a lawyer. We have to remember that we are here as legislators, and we have to try and keep in line with the general plan and scheme of the type of legislation, which was designed, broadly, in both wars to ensure that the whole tax period from the start of the war to the end, should be regarded as a unit. May I remind the Committee that in both this war and the last, deficiencies and losses were freely carried forward, and the whole of the E.P.T. incidence was really regarded as one? Here the proposition of the Chancellor is that the burden of rehabilitation shall fall substantially on the 60 per cent. accounting period. The Amendment proposes that it shall be spread over the whole of the E.P.T. period. That, one would think, is a reasonable way to deal with expenditure which does in fact relate to the whole, or nearly the whole, of the E.P.T. period.
The Solicitor-General tried to meet that case by pointing out a number of anomalies. He said that a man might have incurred some of this expenditure in 1939 in a 60 per cent. period and would be getting it back out of the 100 per cent. period. Yes, but what about the man who incurred his expenditure in 1940 in the 100 per cent. period? Is he to get it back now in the 60 per cent. period? The truth is that if the proposal in the Amendment is adopted no man will get relief of 100 per cent.; he will get relief at the average rate from the time the expenditure was incurred until the end of E.P.T., which might, I think, rise to about 90 per cent. if the expenses were incurred early. On that footing it seems that the Amendment fills the bill, because it holds the scales between all classes of cases, no matter when they were incurred. It has the advantage, which the Clause has not, of treating the matter as a whole from start to finish.
:I am afraid I am not satisfied this time. The hon. and learned Gentleman managed very well earlier this afternoon, but on this occasion I do not think his arguments are sound. As was pointed out by my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) he cannot pin down in what year rehabilitation expenditure or A.R.P. expenditure was incurred. As I well know, in connection with power stations during the war, we had to build immense brick structures round our alternators at very great expenditure. An hon. Member who is a director of a power com- pany is sitting in front of me and he knows that that is a fact which refutes part of the Solicitor-General's statement. I would also like to put this point to him—which is one of tremendous force. Would 100 per cent. excess profits have been earned but for the rehabilitation expenditure incurred? Of course it would not have been earned, and therefore it is rehabilitation expenditure which has become necessary because of 100 per cent. excess profits having been earned. Therefore the relief ought to come out of 100 per cent. earnings. That is a point which the learned Solicitor-General did not touch upon. Perhaps it had not occurred to the Chancellor himself. At any rate, I hope the Chancellor is prepared to say a few more words about this, and that he will be a little more friendly disposed towards the Amendment than his learned colleague.
This Amendment, in the view of those of us who are concerned in industry and who try to look at the matter quite fairly, we consider necessary in order to enable us to get over our difficulties, and Heaven knows they are many and serious enough. We are trying to get back to a state of abundance and full employment, and this is one of the reliefs to which we have been looking forward throughout the war period. We thought that we could look to the Government to be of assistance to us, and this is one way in which we do ask assistance. We think it is a fair request to make to the Chancellor, and I hope that, on further reflection, he will see his way to accept the Amendment.
6.30 p.m.
:The whole of the hon. and learned Gentleman's argument was based on a false premise that the bulk of the expenditure was incurred in the 60 per cent. period. I want to test his good faith with regard to that, and suggest that he should accept this Amendment, and improve on it in his own way by simply adding a sentence at the end, providing that this concession shall not apply to expenditure incurred in the 60 per cent. period. If that were done it would answer his case. I ask him to accept it in that way.
:Will these allowances apply also to expenditure on rehabilitation incurred abroad in British territory by companies registered in this country?
:I hope we shall not spend too long on this, because I am most anxious to do what is fair and right. A number of suggestions have been made to the Government. The Federation of British Industries and the Association of Chambers of Commerce have been in touch with us, and on a number of points we have been able to meet them. On a certain number of points we have not been able to do so. As the Debate proceeds we shall be able to tell the Committee where we have been able to meet them and where not. This is one of the cases in which we have not felt able to meet the representations made to us. I think that my hon. and learned Friend the Solicitor-General did state the case quite clearly, and I would, without traversing the ground again, ask the Committee to balance our response to this Amendment against this point, that I have got a new Clause down to provide that where we are dealing with capital rehabilitation, as distinct from costs of a revenue nature—that capital rehabilitation costs incurred in 1946 will be allowed in the chargeable accounting period in which they are incurred. That, I think, is going some distance to meet the argument adduced by hon. Members on the other side.
To go to the further length imposed in this Amendment would not, in our view, be justified, and it would add a good deal to the administrative complication in this business. We are anxious to wind up E.P.T. with a number of fair and equitable provisions with regard to these terminable arrangements; but they must be looked at as a whole, so that broad justice shall be done to firms. We are anxious to keep the whole thing as simple as it is fair and equitable to do, because it will not be to the advantage of private business, any more than to that of the Revenue, to have a very complicated scheme of rules here. I would ask the Committee to reject the Amendment. I hope that it will not be pressed to a Division, but if it is, I must ask the Committee to reject it in the assurance, and bearing in mind, that at a later stage the new Clause to which I have already referred will go a considerable distance to meet the points raised by hon. Members opposite.
:May I ask the Chancellor if he will be good enough to leave the matter this way? We have not yet had an opportunity of considering his new Clause, which is an important Clause, I agree. I would propose, as the mover of this Amendment, not to press it in the circumstances, but to keep my mind open until we have heard the Chancellor's arguments on the new Clause Perhaps, I may ask him to consider this matter again between now and Report stage. On that understanding, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
:I think that the Amendments in the name of the hon. and learned Member for the English Universities (Mr. H. Strauss) and that in the name of the hon. Member for Holland with Boston (Mr. Butcher), which I have not selected, could be discussed with the Amendment of the right hon. Member for the Scottish Universities (Sir J. Anderson).
:I beg to move, in page 25, line 43, at the end, to insert:
As I say, I think that that is much too optimistic a view; and I am in a position to judge what is likely to happen in certain cases of some considerable importance, for example, in the case of the Port of London Authority, with which I am familiar. The problem there is, first of all, to make good some very heavy war damage, the repair of which must rank high in priority. The costs to be in- curred under that head by that one authority run to many millions of pounds. In addition, there is deferred maintenance to the tune of something between £3 million and £4 million, a large part of which must come after the more urgent business of repairing war damage. To suggest in those circumstances that the task could be substantially completed by the end of 1947, or even by the end of 1948, is simply not in accordance with the known facts. It may be said in answer to the argument that I am advancing that there will be other later opportunities of dealing with this matter if, as I assert, the job cannot be done by the end of 1948. That is a sort of argument by which I would be impressed if there were a reasonable chance of doing the work by the end of 1948. But I say on facts which are known to me in regard to a particular class of undertaking—and I am sure there must be many others in the same position—that we now know of a certainty that the work cannot possibly be completed by the end of 1948.
I do not ask for an indefinite postponement. I suggest merely that it should be within the discretion of the Revenue authorities to fix, where the circumstances warrant it, a further period; and I should expect that, as soon as it was possible to judge when, in a particular case, the work in question might reasonably be expected to be completed, the Revenue authorities would, after discussion with the representatives of the undertaking concerned, settle what period should be allowed in that particular case. There then would be no excessive prolongation of this business. The accounts will be closed as soon as is reasonably practicable, and there will be no necessity to come back to the House for an Amendment to a provision which if allowed to stand in these terms in this Bill, we must agree, if my argument is accepted, is imperfect and out of harmony with the actual facts. For these reasons I hope that the Chancellor will see fit to accept, in substance at any rate, the Amendment which stands in my name.
:The point to which my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson) has called attention is plainly one of far-reaching importance. I desire to add my support to the cogent arguments which he has advanced. As has already been pointed out, this is not a difference in principle but a difference in method, and the way in which arrangements may be made to carry out the purpose of this Clause. We are in full agreement with that part of the purpose of this Clause which says, quite simply, that reasonable costs of repairs and renewals deferred by reason of war conditions may be treated as a charge against profits for the purpose of Excess Profits Tax. The real issue is what arrangement can be made which will best aid the production drive, the necessary increase in our export trade and general industrial recovery.
I desire to draw special attention to the position of docks and harbours. I believe that the Dock and Harbour Authorities Association, upon which I hold an appointment, has been in correspondence with the right hon. Gentleman. I think it will be agreed that the importance of the functions of docks and harbours in a maritime nation cannot be over emphasised; their importance during war certainly cannot be over emphasised. When one recollects that during the war they were among the principal targets for enemy attack, I think that much praise goes to those who were concerned in these public utility undertakings. During the war they were enjoined by the Government to cut down to the lowest possible level their maintenance costs in order that labour and materials might be available in other necessary directions. As a result of responding to that appeal there has accrued a great volume of arrears of maintenance which must be overtaken.
As my right hon. Friend pointed out, the magnitude of these repairs can be demonstrated by the position of the Port of London Authority, which estimates the cost of making good these repairs at about £4 million. The question arises how soon can this work be carried out? It is surely plain, with postwar shortages in manpower, the difficult question of housing priority and so forth, that it must take a very long time before that necessary work can be done. The Committee will appreciate that, under the Clause as it now stands, these proper allowances in respect of Excess Profits Tax may be made if the work is done by the end of 1947, or if the Commissioners find that it is impracticable to do it by that date, by the end of 1948. I would strongly support my right hon. Friend when he said we now know that the work cannot be done by the end of 1948. In these circumstances this Amendment seeks this very reasonable alteration, namely, that the Commissioners may have a further power on review of all the circumstances to extend the time and say, "Well, if it is shown that this necessary work cannot be done by the end of 1948, we will lengthen the period so that this just and proper adjustment may be made to those engaged in industrial undertakings."
6.45 p.m.
:I desire in particular to draw attention, in supporting this Amendment, to those firms, relatively few in number, which may make provision for renewal of their plant by means of putting aside a certain sum each year and arranging matters on what is called a renewal basis, instead of on a wear and tear basis. From an amateur scrutiny of this Clause I have come to the conclusion that these firms have been left out of account. I should be glad if I could be assured that this is not the case.
:I did not catch what it was that the hon. Member said had been left out of account.
:Those firms which make good their depreciations on a renewal basis instead of on a wear and tear basis. As I understand it, if a firm buys a new item of plant and machinery, the whole cost of that item when purchased is normally allowed as a charge against profits for the year in question in which they make the purchase. Any sums put aside for renewals are of course taxed, but the whole sum expended is allowed as a charge against profits in the year in which the expenditure is incurred. In many cases it will not be possible for firms on a renewal basis to buy their new plant and machinery before the end of the period stated in the Clause, and they will thus lose the benefit of charging the sum so expended against E.P.T. for the years in question. This point affects a relatively small number of firms, but it is a matter of considerable importance to those who have elected to work on a renewal basis, and I hope that the Chancellor will give consideration to the point in connection with this Amendment.
:Perhaps it would be for the convenience of the Committee if I said a word on this Amendment at this stage. I appreciate that it may turn out to be the case that the end of 1948 may be for some firms too soon for them to finish. My right hon. Friend the Member for the Scottish Universities (Sir J. Anderson) has drawn attention to a particular case, as did the hon. Member for Altrincham (Mr. Erroll). There are, of course, two Finance Bills due to be presented to the House before that date. We have a Finance Bill in April next year, and another in 1948, and we shall be able to watch how speedily these cases are able to be cleared up. I frankly say that if I am still holding this office next year, I shall first of all wish to inform myself through official channels how rapidly this liquidation is proceeding, and to listen to a Debate on the subject and hear what hon. Members have to say.
I think that it would be a pity now to extend the period in this Finance Bill, because that would rather give encouragement to firms, which may have it in their power to complete by the end of 1948, to extend the period. It is surely in the interests of industry as a whole, and of all these concerns, as soon as is reasonably possible to bring this interim period to an end. I think that it would be a pity to accept the terms of the Amendment suggested by my right hon. Friend now, but if it should turn out, as he suggests—and we have no wish to be unfair to any concern—that next year, or even a year later, there is a substantial case—
:Is my right hon. Friend quite sure about this, because in Subsection (2) the date is the end of March, 1948, and that is prior to the second Budget to which he referred? There is only one Budget and not two.
:That is quite right. There will be an opportunity next year to see how things are going. I give this undertaking to the Committee that if I should still be Chancellor of the Exchequer next year, I would—and I am sure any of my successors would do the same—listen with the closest attention to any argument adduced then, and if it should seem that there would be a number of cases of this kind, in which, in spite of all reasonable efforts, it would not be possible to finish by the end of the financial year 1947–48, it would be very desirable then, I think, to accept an Amendment in the terms moved by the right hon. Gentleman. I should regret accepting it now, because I think it would tend to encourage a feeling that there was not a great deal of hurry, and, while not wishing to oppress unduly hard-pressed officials in any office, I think that it would be better to leave this until next year. I do not feel very strongly about it, but I think that, on the whole, it would be more fitting to leave this over for the time being.
:I hope that the Chancellor of the Exchequer has not said his last word on this. I am sure that he would agree that in drafting Bills it is desirable to be realistic, and if the argument I have put forward on a basis of actual knowledge that the work cannot possibly be completed by the end of 1948 is accepted, that is, in itself, a reason for not leaving the Bill in a form which would tend to give a false impression. I put that forward as a general consideration. There is something much more important that I want to bring to the Chancellor's notice. He spoke as if the presence in this Bill of a specific date, even if the date chosen may represent an optimistic view, would operate in a desirable way as a stimulus to those concerned. I suggest to him that that is not in fact a relevant argument in the particular case which we are considering. Undertakers are confronted by the necessity of expenditure in various forms. There is the repair of war damage; there is deferred maintenance, and there is rehabilitation, which we were discussing a few moments ago. If the insertion of a specific date in the Bill, here and now, is to operate in the manner suggested by the Chancellor, that could only mean one thing: that this Clause would be a challenge to every undertaker to get on with this particular form of expenditure—deferred maintenance. I say, speaking from matters within my knowledge, that the repair of war damage, in regard to which there is no relevant date, may, in the public interest, be something which ought to have priority over deferred maintenance. Rehabilitation perhaps in certain cases ought to have priority.
I therefore put it to the Chancellor—and I appeal to his sense of logic and fairness—that there is, in what I have just said, a very strong argument for not putting in the Bill a date which is to operate merely as a spur, which does not in fact correspond with the facts as we know them today, and which may, having regard to all the complicated machinery of control, licences, and so on, result in action being taken on lines which are not in accordance with the public interest. I hope, therefore—and there is no reason why controversy should arise between us on this because we have the same purpose in view—that the Chancellor will be good enough to give further consideration to the arguments I have submitted.
:I gladly will; and perhaps on that understanding we may go on. We have the same purpose in mind—and I appreciate the strength of the argument adduced and the experience of the right hon. Gentleman—and I shall be perfectly happy, if the Committee will so leave it, to look at this matter again, with a completely unbiased eye, before the Report stage. I do not want to give a commitment, but I am quite prepared sympathetically to consider this matter and see whether these words, or some equivalent words, may not properly be put into the Clause. The hon. Member for Altrincham (Mr. Erroll) raised a point which I would like to answer. He need not have been apprehensive. A trading concern may, as an alternative to claiming wear and tear allowance in respect of plant and machinery, claim relief in respect of renewal, as and when the plant and machinery is replaced. It is not intended to draw any differentiation between one method and the other.
:Is that in this Bill, or is the Chancellor making a general statement? Is what he said about the point raised by the hon. Member for Altrincham (Mr. Erroll) embodied in this Clause or is he merely saying that that is the general practice?
:I am advised, but I will make sure, that there is no discrimination in the present law included in this Clause against persons who choose to proceed by way of renewal, or by way of wear and tear. The concern of the hon. Gentleman lest there should be any discrimination of one method as against the other is, I am advised, not well founded.
:On the question of the incentive to get the work done at the earliest possible time, I draw attention to the fact that the present wording of the Bill does cover that point very largely, in that any undertaker has to satisfy the Commissioners that he cannot get the work done before the end of 1947; so there is that safeguard, which the Chancellor has, that an undertaker has to satisfy the Commissioners before he is allowed any extension of time.
:On one point which has been slightly touched on already by the right hon. Member for the Scottish Universities (Sir J. Anderson)—the fact that it is not entirely within the power of the firms themselves as to whether they can get this work done or not—as my right hon. Friend has said, there are any number of controls and permits that have to be met. For example, in certain cases, machinery cannot be replaced unless a new building is put up to house it. You cannot stop machinery running just now; it must run on. Thus it is that the replacement of the machinery is dependent upon the act of the Government granting a priority, and it would be most unjust if firms were to be put in the position of being dependent for their Excess Profits Tax remission on an act of the Government in giving a priority. I feel that that is a cogent point. I urge the Chancellor to ensure that fair play is given to everyone in this regard, and that no firm should be placed in the position of being prevented by an executive act of the Government from enjoying this tax remission to which it is entitled.
:In view of the assurance which the Chancellor has given, and for which I am grateful, I beg to ask leave to withdraw the Amendment, and I hope that hon. Members opposite will be satisfied to leave the matter in the Chancellor's hands.
Amendment, by leave, withdrawn.
7.0 p.m.
:I beg to move, in page 26, line 23, at the end, to insert:
"Provided further that, if owing to the deferment of the necessary repairs and renewals the building machinery or plant is in such a condition that it is more expedient for the efficiency of the business to replace the building machinery or plant instead of repairing it, the said expression shall be extended to include the cost of such replacement up to an amount that would have been incurred on repairing such building machinery or plant."
During the war years it was quite impossible to carry out any repairs, and taxpayers have claims against E.P.T. for urgent repairs for which they have already paid, because the profits tax during the war was swollen by reason of the fact that repairs had not been carried out. Frequently it may be found that it is better to scrap a plant altogether, and replace it by a new one, than to carry out repairs. As the Bill stands, if it is scrapped no repairs as such can be carried out, and, therefore, the deferred claims allowance obviously cannot be admitted. I am sure the Chancellor will agree that it is highly desirable that taxpayers should be encouraged to erect up-to-date buildings and install up-to-date plant. The existing position seems to give every encouragement to do so. If I am right in interpreting the law in that way, it follows that we are imposing a method of taxation which is going to cause discouragement. I do not think any of us wish to pursue that policy, and my Amendment is designed to prevent any such happening. In previous Debates it has been pointed out by supporters of all parties that in many parts of the country, there are ancient buildings which ought to have been scrapped long ago. Indeed they are a much criticised feature of certain industries. If that be so, it is necessary that the change, which I propose to have made in this Clause, should be accepted, so that we may scrap old buildings and replace them by new instead of encouraging firms to keep them in existence by patching them. Those are the reasons which have suggested themselves to us in framing this Amendment and I hope that the Chancellor is prepared to accept it.
:I think the Chancellor of the Exchequer and the Committee will agree that this would be a suitable and appropriate Amendment to introduce into the first postwar Budget. We know that plant and machinery all over the country have now had seven years of exceptionally hard wear and tear, without adequate repairs and with insufficient attention to their general wellbeing. As the hon. and gallant Member for Dumfries (Major Macpherson) said, licences and permits have to be applied for, and it takes a considerable number of months before they are granted. I cannot see any just reason why there should be difference of treatment as between replacement and repairs and especially as no great cost is involved. I think it would be a tremendous encouragement to our hard pressed industrialists if the Chancellor with his wise, shrewd, and far sighted good will in regard to our economic position could grant this concession.
:My right hon. Friend has every sympathy with the motive behind this Amendment, but I would ask the Committee not to accept it for reasons which I shall endeavour to indicate. May I first remind the Committee of the fact, which I think is relevant, that it has been repeatedly explained that the whole theory of these allowances is that they should be devoted to expenses? That was made clear on more than one occasion by the late Sir Kingsley Wood. He made it perfectly apparent that these arrangements had regard to the actual carrying-out expenses, when carrying out became possible. That is not by any means a conclusive consideration, but it is the background against which we have to consider this matter. Why do we say that this Amendment should not be accepted? The reason is twofold. In the first place, the law as it stands covers nine-tenths of what is contained in this Amendment. In the second place, with regard to the part which is not covered by the law as it stands, the Amendment, if accepted, would result in many unfair discriminations between trader and trader.
As the law stands, there are various provisions which deal with obsolescence allowances and exceptional depreciation allowances. Rule 7 of the rules applicable to Income Tax, Schedule D, which are made applicable to this particular question, gives power to grant obsolescence allowances in respect of plant and machinery, that is to say, plant and machinery acquired at any time may qualify for the obsolescence allowance which is provided by that rule. In addition to that, which goes a long way towards covering capital replacement, we have Paragraph 3 of the Seventh Schedule of the Finance (No. 2) Act, 1939, which provides for exceptional depreciation in respect, not merely of plant and machinery, but of plant, machinery and buildings provided they were acquired subsequently to 1937. That is extended by the Eighth Schedule of the Finance (No. 2) Act, 1945, which extends the exceptional depreciation allowance virtually in such a way as to enable it to include an allowance for repairs that want doing, capital expenditure in relation to repairs that are requisite.
Those three provisions provide for obsolescence allowances and exceptional depreciation allowances in respect of all plant and machinery whenever required, and all plant, machinery, and buildings acquired since 1937. That is what I meant by saying that the law, as it stands, covers nine-tenths of what is designed by this Amendment. The only thing which the law, as it stands, does not cover, is the case of buildings which were acquired before 1937. They are not brought within the scope of any of the provisions to which I have referred. If the Amendment were adopted its only effect would be that if buildings were scrapped in 1947 or 1948 there would be a qualifying allowance. It would operate unfairly as between trader and trader. If a trader scrapped his buildings in 1946 or 1949 he would get no allowance at all, nor would be come within the scope of the Amendment, whereas if a trader happened to scrap his buildings in 1947 or 1948 he would qualify for the allowance. In so far as the Amendment is not covered by the law as it already stands, it clearly would act in a manner which could not be acceptable as fair between trader and trader.
There is one supplementary and less important reason, but one which, never-less, ought to be mentioned. It is that it would be an impossible task for the Inland Revenue to verify claims for these allowances. At present, the Inland Revenue, if they know that the money has been actually expended, and the necessary documents establish that, can satisfy themselves that the claim is one that should be allowed. It would be putting a great burden on them if they were required to approve what virtually are estimates. What the Amendment seeks is to make estimates of what would have been expended by way of repairs qualify for the purpose of an allowance of an equivalent amount. It would mean that in relation to each claim that was put forward the Revenue would have to satisfy themselves, in some way, that the estimate was correct. I do not ask the Committee to say that that is an impossible task, but it is one which their administrative machinery has not been designed to carry out. The Amendment would not improve the Bill, or bring about the object desired, and I therefore ask the Committee to reject it.
7.15 p.m.
:This is one more illustration of the disadvantages of the Opposition in having to draft Amendments to the complicated issues which are raised in this Bill. I am sure the Solicitor-General will realise that the last thing we wanted to do was to bring about circumstances in which anybody who happened to scrap his old buildings in 1946 or 1947 should get no allowance, that he should not be able to employ the particular alternative open to everybody else. That is an unfortunate effect, if that is the result of the drafting, but on the general issue, it seems to me that the idea behind my hon. Friend's Amendment is wise. It provides an alternative whereby if it is more expedient to the efficiency of the business to scrap old buildings, and erect new ones, the expenditure thus incurred should rank for claim. I am certain that the Chancellor would be the last person to want his taxation policy to be such as to postpone the modernisation which any industry needs to carry out today. It would be very unfortunate if that were to happen in spite of the reliefs which he is giving. The Solicitor-General pointed out that nine-tenths of the ground was already covered, owing to the arrangement for obsolescence allowances for plant, machinery and buildings acquired after 1937. If we accept his proportion and this Amendment covers only one-tenth—
:I said obsolescence allowances in respect of plant and machinery at all times, and exceptional depreciation allowance, including repairs to plant, machinery and buildings acquired after 1937.
:I was telescoping what the hon. and learned Gentleman had said. The upshot of it is that the one-tenth would not get any of this advantage. While denying the Amendment, he pointed out that it would be enormously complicated for the Inland Revenue to find out what the alternative amounted to. My hon. Friend's alternative is that if it is more expedient from a business point of view the same amount as would be available for repairs should be made available for rebuilding. The Solicitor-General said that this would be a hard task to put upon the Revenue because, in that case, they would have to be satisfied that the estimate of the repair was correct as a set-off for the estimate of the expenditure in part. It does not cover the whole building; it is only up to that amount. I can quite see that it is a difficult matter for the Inland Revenue, but the Chan- cellor will agree that they have tackled a number of difficult things in the past. Judging by the sort of legislation we have now, they are likely to have to tackle a lot more difficult things in the future. I doubt whether, if I may use such an epithet without disrespect, this will be the last straw that will break the camel's back sufficiently to counterbalance the arguments which my hon. Friends have put forward. [ Interruption. ] Either one breaks the camel's back, or one does not break it. I do not think this would break it, and I do not think the risk that it would do so is very great when compared with the advantage of the proposal contained in the Amendment.
I see the difficulty to which the Solicitor-General has referred about discrimination, but I cannot help thinking that, given the will, that could be overcome. I am not quite sure whether there is the will on the Government Front Bench. Perhaps they will think about the matter a little more, recognising that the particular anomaly to which the Solicitor-General referred was not something which we had anticipated would emerge from this Amendment. We thought it would be all right, but we are prepared to be told that our drafting is not good. I hope the Chancellor will recognise our contention; namely, that there seems to be here a comparatively simple way of modernising pre-1937 buildings. That is our whole concern. There are a great many pre-1937 buildings in this country, because 1937 is not such a terribly long time ago. If the reference were to pre-1850 buildings, one would still find some buildings. We are talking about what until recently were considered to be quite good buildings for industrial purposes. Yet the whole of such buildings might be very much improved and modernised if something on the lines of the Amendment were adopted. Therefore, while I recognise the difficulties which the Solicitor-General has pointed out, I hope the Chancellor will not entirely close his mind to our proposal.
:No, I will not. I have heard the case made for this Amendment from both sides of the Committee. My hon. and learned Friend the Solicitor-General has very cogently pointed out certain difficulties. We should prefer new lamps for old and new buildings for old. I will look into the matter again to see whether anything can be done. I am not very confident that anything on the lines of the Amendment can be done, but I will look into the matter again.
:Can the Chancellor explain what was the reason for the Solicitor-General saying that the Amendment was unfair as between one trader and another, since one trader might scrap buildings in 1946–47 and get no relief, and the other trader would be put in a better position? What grounds does the hon. and learned Gentleman find in the Amendment for that statement?
:We will look at the matter again.
:On that understanding, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
In page 26, line 47, at end, insert:
"( d ) costs of terminating contracts for the sale of goods, contracts for the purchase of materials, contracts for supply of fuel, power, light, water and other services, contracts of employment of redundant employees, contracts for occupation of premises or the hire of machinery, where the termination of such contracts is necessitated by the alteration in the scope or character of the business in consequence of the war.
For the purposes of this paragraph the profits of the trade or business for the chargeable accounting period ended on the thirty-first day of December, nineteen hundred and forty-six, shall be treated as reduced by the amount of the said costs."
:I do not propose to move my Amendment in page 26, line 47.
:If the hon. Gentleman does not propose to move the Amendment, he may not speak on it.
:Perhaps I expressed my intention too soon. I think this Amendment is covered very largely by the new Clause which the Chancellor has on the Order Paper under the marginal heading, "Cancellation costs." I have an Amendment on the Paper to that new Clause, and on the assumption that that Amendment will be favourably considered, I do not propose to move this Amendment.
:If the hon. Gentleman does not propose to move this Amendment then the remarks he has made upon it are entirely out of Order.
:I beg to move, in page 26, line 47, at the end, to insert:
I would like to refer to two sections of that industry, and I hope the Financial Secretary will deal with my remarks. The carbonated side of the industry was closed down, and the industry was compelled to concentrate on what are known as "squashes." Those who made the squashes were built up, and, therefore, they have no rehabilitation to carry out. They are established in a better state than they were before the war. The carbonated side have very heavy charges, and they do not appear to be included anywhere in the Chancellor's arrange- ment. Nearly 300 factories were requisitioned, and many of those factories are not yet restored to the industry. The whole costs of rehabilitation are coming upon those people. Many of them have not yet got their factories, because they are not yet derequisitioned. Those who were fortunate enough to have their factories derequisitioned last year or this year automatically charge on all those costs. Those who are unfortunate, and who do not have their factories or certain other assets restored to them, are not to be in a position to make the claim.
7.30 p.m.
The Amendment merely asks that expenditure which, in the opinion of the Commissioners, has been incurred in the recommencement of the business or the restoration of the business shall come within the expression "rehabilitation costs." I am sure that the Chancellor did not intend to exclude such people from his scheme. I am sure there could have been no intention to penalise those people as compared with the more fortunate section of this particular concentrated industry. The Chancellor of the Exchequer does make provision with regard to physical assets, and in these cases the claims get through more or less automatically. But there are many essential assets which are not included. One section of this industry, which is known as the "door to door" trade, is represented by the gentleman who used to come to the door with stone bottles of soft drink. That is entirely stopped, because the companies were not allowed to carry it on and their supplies had to go to the retail trade. It is a section of the industry which will have to be built up all over again; first of all, vans will have to be obtained in which to take the goods round and one can imagine the cost to the people concerned—employees who will not earn anything for a considerable time, and so on. Those firms will have exceptional charges which cannot be classified under the heading of "physical assets" which the Chancellor includes.
I am merely asking that these people who, through some time lag and no fault of their own, have not been able to rehabilitate themselves in the sense the Chancellor has indicated, should be allowed to do so. They should be allowed to appeal to the Commissioners and the Commissioners, if they are satisfied, should have the right to allow them to set off these rehabilitation charges against excess profits. We have discussed whether this should be in the 60 per cent. period or not, but I think that if they are allowed to claim only for the 60 per cent. period, that again is unfair. They should be allowed to charge the expenses over the whole period, including the 100 per cent. period. I do not want to emphasise that point since the Chancellor has promised to look into the matter again, but I do ask him or the Financial Secretary to say something on this point. Attention has been drawn to the case of the concentrated industries and in Clause 32 of the Bill the Chancellor has partially redeemed his promise, but it should have included the people to whom I am referring. I hope now that he will bring them in.
:The Government feel unable to accept this Amendment. My right hon. Friend made certain statements with regard to providing for terminal expenses and, as my hon. Friend the Member for East Middlesbrough (Mr. A. Edwards) has said, Clause 32 is designed to implement the undertaking he gave. But the description of rehabilitation expenses goes as far as it practically can be made to go in the definition contained in Subsection (5). What my hon. Friend really wants, as I read this Amendment, is that the definition should include expenses, of whatever character, necessary to restart a business which has been discontinued or which has declined or suffered loss. I think that if one reflects upon it it will be quite apparent that that is far too wide. It would include expenditure of almost any nature, canvassing, re-engaging employees, advertising, and every expense that is necessary for restarting and resuscitating a business which has declined or has in any way been adversely affected by war conditions. From the practical point of view terminal expenses cannot possibly be extended to that degree. It would mean an enormous expenditure on the revenue if businesses which had been concentrated had to be put on their feet again to that extent. If it were done in the case of businesses that had been concentrated one could not logically refuse the same relief and measure of aid to other businesses which had suffered for other reasons owing to war conditions.
The feeling of my right hon. Friend with regard to the Amendment is that unfortunately it deals with cases where it is impossible, having regard to the practical possibilities, to restore all that the war has taken away. The war has resulted in sacrifices of various sorts to business people and others which cannot possibly be made good, and this particular loss, which has been occasioned as the result of concentration, cannot be made good to a greater extent than has already been done by the payment of rehabilitation expenses under paragraph ( c ) of Subsection (5) of the Clause. As my hon. Friend says these would cover, generally speaking, only the restoration or re-adaptation of the physical side of the business. They would not cover, and were certainly not intended to cover, the more general type of expense which he himself mentioned in his speech. For example, they could not possibly be extended to cover canvassing expenses which might have to go on over a long period with a view to getting on to its feet a business which has suffered owing to the war. It is unfortunate, and we are very sympathetic towards those people who have suffered on account of war conditions, but they are simply part of very large numbers who have had to make sacrifices and it is not possible, either within the ambit of terminal expenses as defined in the Clause as it stands, or within the ambit of practical possibility, to provide for the restoration of businesses which have been adversely affected by concentration.
:I referred only to those industries which have been adversely affected by a specific action by the Government for the Government's own convenience in the war period. Paragraph ( c ) of Subsection (5) refers to physical assets, "altered so as to adapt them to conditions prevailing as a result of the war." The hon. Gentleman will not deny that people who have been fortunate enough to have their businesses derequisitioned will automatically charge these expenses, which might include very extravagant advertising, which the Chancellor has in fact indicated ought to be charged against Excess Profits Tax. The Chancellor is in the position of boosting the trade of one section of the industry and depressing that of the other. I think it is inconsistent to object to these non-physical things when he has been so clear in saying that the physical things are those needed for the purpose of restoring conditions to what they were before they were affected adversely by the war. I hope the Chancellor will look at this again.
:I should like to support the hon. Member for East Middlesbrough (Mr. A. Edwards) in what he has just said because I feel that this is a point of great importance. It is difficult to frame a Subsection which will deal with the matter adequately and I imagine that even the hon. Gentleman himself is not necessarily wedded to the form of words on the Order Paper, but I thought that the Solicitor-General, in resisting the Amendment, did so on rather too wide a front. The hon. Member has not asked for canvassing and that kind of thing to be included—
:If the hon. and gallant Gentleman will allow me, I should like to say that the whole difficulty lies in the words of the Amendment, "incurred in the recommencement of the business or the restoration of the business." This is an enormously wide field to cover and would include almost every expense.
:I was just coming to the point, which seems to me relevant, that that is not what the hon. Member says. He says, "in the opinion of the Commissioners." When it comes to asking for sweeping concessions I have never found the Commissioners easy. I do not know whether the hon. and learned Gentleman has. If the Amendment were made, it would automatically rule out what might be described as frivolous claims.
:I am not at all clear about the words in the Amendment:
"… the restoration of the business to that carried on prior to the operation …"
That might mean any manner of things. If the opinion of the Commissioners were to be guided by that, they would have to go a long way in allowing expenditure.
:I admit that. That is why I was careful to say that I thought the form of words was not perfect. But that is no reason for turning the principle down flat. This is not a matter in which one can generalise very easily. As the Solicitor-General is aware, there are cases where concentration was enforced by the Government during the war between two or possibly three firms. I have one in mind particularly where concentration has proved so congenial, that amalgamation on a permanent basis is now taking place. The hon. Member for East Middlesbrough has in mind concentration which is not so congenial and the firm wants to get back to its prewar practice, goodwill and situation. He is asking the Government to take a more benevolent view of firms injured in this way. I ask the Solicitor-General not to dismiss the Amendment, finally and definitely, here and now. I think the hon. Member for East Middlesbrough made a good case, and I think that the Solicitor-General might ask the Treasury officials and their legal advisers to look at it again.
:I hope that will be done. We all know that the Board of Trade exercised great pressure during the war on concentration of industry, and in so far as there may have been damage done as the result of the concentration, some provision for firms ought to exist somewhere. Whether or not this is the right form is arguable. The Solicitor-General was quite right in what he said. It is difficult to get Amendments drafted correctly. It is difficult for us on this side to do so, and even more difficult for a Socialist Member to do it on his own. We have a few more on this side of the Committee who look into matters, but there has been no evidence of anybody else on the other side having the least interest in these Clauses, so far, during the Debate. The point behind the Amendment is a clear and simple one. If it is not covered anywhere else, I hope the Treasury will look at it and see whether, on the balance of the argument, there is a case to be met. When they agree there is a case to be met, they do find ways and means of doing it.
7.45 p.m.
:There is a very interesting point here. It is all right for the hon. Member for Ipswich (Mr. Stakes), who I gather is one of the great business trust formers—
:That is the trouble I had when the hon. Member for Torquay (Mr. C. Williams) was in the Chair. The hon. Member never understood what I was saying.
:It would be most disorderly if I said anything about that. I would not dream of doing so. This Amendment raises a point, on which I think the Front Bench were getting near to meeting the hon. Member for East Middlesbrough (Mr. A. Edwards). This is the second occasion on which the best financial brain on the Government benches has brought forward an Amendment of considerable interest. In those circumstances, why do not the Government take this opportunity of saying, "Here is a point. Let us be honest about it for once"—they might say it. It would be a change—"This is doing great hardship to those people we have forced to combine and is preventing them going back to their natural trade circles. We want them to go back now if possible and we will use this instrument of taxation to help them." Surely that is a very reasonable request to make. There has been no real reason against it, so far as the Exchequer is concerned. If the Government do not go a little further and meet us a little more, which I think they probably will, we might even divide on this, and the hon. Member for East Middlebrough might get one of his friends with him, and we could have quite an interesting Division. Unless the Government go a long way to meet him, I should be inclined to go into the Lobby with him, against the Government. It would not hurt me, and it would show the independence of the hon. Member for East Middlesbrough. It would be a good thing if we put a little pressure on the Government to give way at such times, when it is a matter of commonsense. It almost looks as if we might shortly get some more speeches from the other side but I am not sufficient of an optimist to think that common sense will spread very far. This Amendment is one which many of us consider should be given further attention between now and the Report stage.
Amendment negatived.
:I beg to move in page 27, line 15, to leave out from "expenses," to "shall," in line 17, and to insert:
"to which the preceding provisions of this subsection apply."
This is a drafting Amendment to remedy a slight defect in the Clause.
:I cannot accept this as a drafting Amendment. It proposes to leave out the words:
"… incurred in any accounting period falling partly before and partly after the end of the said year…"
That means to say that we have a division in the accounting period. Part comes in one financial year, and part in another. That is a clear definition of the position. The Amendment will replace the words I have quoted, by the words:
"… to which the preceding provisions of this subsection apply."
It is true that the preceding provisions may, conceivably, mean that it is not necessary to have these words indicating a division of the year. If that is really the meaning, and if it is entirely consequential, I am confused why those words were ever put in the original Bill. It is not consequential upon any other Amendment. I am convinced that this is not a matter of bad drafting by the Treasury, who are generally pretty good. I am convinced there is some other reason. It is not good enough to try to ride off on the idea that this is a purely drafting Amendment. The sentences have different meanings and unless we can be shown that the point is properly covered I think the Committee must insist on an explanation.
:The expenses intended to be referred to in the words that I seek to leave out, are those described in the first 12 lines of the Subsection. They are expenses incurred in an accounting period which falls partly before and partly after the end of 1946, and which by virtue of Subsection (2) of Section 33 of the Finance Act, 1940, would be allowable as deductions. I can assure the hon. Gentleman that there is purely a mistake in drafting. The Amendment is designed to rectify that mistake. I hope that he will accept that from me as a fact.
:I am glad that the matter has been cleared up. I am happy to accept the explanation of the Solicitor-General, and I thank him for it. I am astonished that this mistake should have occurred. Mistakes rarely happen in the Treasury. It may be the fault of their new chief; he may have corrupted their standards of industry.
Amendment agreed to.
:I beg to move, in page 27, line 41, at the end, to insert:
"in respect of the expenses which are attributable to the chargeable accounting periods during which the corporate body is a member of the group."
:It would be convenient if the Committee discussed, with the Amendment which has been moved, the series of consequential Amendments which follow it and stand on the Paper in the name of the hon. Member for Stockport (Sir A. Gridley).
:The series of Amendments to which you refer, Mr. Beaumont, can be simply explained, although the subject is rather complicated. Subsections (10) and (11) of the Clause would, if they were not amended in the way I suggest, create an injustice which has not been foreseen. The Subsections deal with changes in business ownership. If a business changes hands, the seller does not incur liability to repairs or rehabilitation costs. The buyer incurs it. The Subsections to which I have referred do not give an allowance to the seller. Nevertheless, he will have had to take a lower price for the business because he has not been able to carry out repairs. The Subsections also refuse allowances to the buyer. It is an extraordinary position, since neither the buyer nor the seller get their expenses on the sale of the business.
I do not think anybody should say that excess profits of a business are liable, by reason of the fact that repairs were not carried out during the E.P.T. period. It is not right that the buyer should have to incur the expense of carrying out repairs and rehabilitation. If the Amendments are not accepted, there will be obvious deterrents to businesses changing hands. Such changes may be desirable from the point of view of the Government, when rationalisation is necessary, involving change of ownership. It is not desirable by high taxes to discourage rationalisation. The Amendment is intended to secure that allowances will rank to businesses, regardless of change of ownership, and to allot allowances to the various owners in reasonable proportions by spreading them over the proper period. The reference to groups of companies is somewhat confusing. The principle for E.P.T. has always been that when a company becomes, or ceases to become, a subsidiary of another, or changes from being a subsidiary of one company to that of another, that is regarded as a change of ownership. Therefore, these references are but references to changes of ownership where a business forms part of a group of companies. I do not know whether I have made by point clear to the Solicitor-General but I hope he will see the injustice which will arise.
:Again this is an Amendment which, I am sorry to say, the Government feel that they cannot accept. Groups of companies are regarded as single units in the same way as partnerships. In Clause 34 (4), it is specifically provided that where there is a change of ownership, if justice requires it, the Commissioners can adjust the position so as to be fair. If that Clause were not there, if there were no provision for adjustment, then there might be—
8.0 p.m.
:With all due respect, surely that has only to do with stocks? Clause 34 contains a supplementary provision to meet the terminal expenses and losses on sales of stock.
:The right hon. and gallant Gentleman must look at the Clause, which says that where any of the following events occur, then you have a change, and relief will be allowable under "either of the two last preceding Sections," that is Clause 33 or Clause 32.
:Oh no, surely it means Subsections (1) and (2) of Clause 34?
:No, it does not say "the preceding Subsections" but the "preceding Sections." It says: which is necessary having regard to the degree of change. That is the principal answer to the Amendment which has just been moved by the hon. Member for Stockport (Sir A. Gridley).
I would remind him that the doctrine that a group is regarded as a unit goes a long way; for example, deficiencies cannot be carried forward, as the hon. Gentleman knows. Deficiencies by the group or by a member of the group, cannot be carried forward when a particular company leaves the group. The whole basis of Excess Profits Tax legislation is founded upon regarding a group of units as constituting a particular business or a particular ownership. It is the same in the case of a partnership and a group of companies. Therefore, to adopt the Amendment would mean going counter to the whole basis of Excess Profits Tax legislation as it affects groups. If we accepted his Amendment, we should equally provide that deficiencies would be capable of being carried forward so as to be used notwithstanding that the individual company had left the group of companies.
The exception to that—and this will give the hon. Gentleman some comfort, I think—is that the exceptional depreciation allowance under paragraph 3 of the Seventh Schedule of the 1939 No. 2 Finance Act and the obsolescence allowance under Rule 7 of the Rules applicable to the Income Tax Act of 1918 do not vanish when the company leaves the group; they go with the company or individual so, to a certain extent at any rate, when the company leaves the group it will carry with it the right to a good deal of the relief, though not the whole of it, which the hon. Gentleman has in mind, and which is, of course, envisaged in Clauses 32 and 33.
It will not mean, in other words, that when the company leaves the group it will lose all its right to benefit, because it will keep with it its obsolescence rights and depreciation rights. In addition—and this is the principal answer to the Amendment—Clause 34 (4) is specifically designed to remedy unfairness where it appears that, although there is a change of ownership, it is not such a momentous or complete change as to justify the cutting off of the relief. There will, therefore, be a sort of carry-over provision by which it will be possible for the Commissioners to see that injustice is not done having regard to the extent of the particular change envisaged.
For those reasons I would ask the Committee to reject this Amendment. Quite apart from the arguments which I have already used, in practice it would not be satisfactory or easy to administer. If the Amendment were adopted, for example, supposing a company left the group, it would be undesirable that the group should be entitled to a terminal expense allowance dependent upon the company, which has left the group and has now gone to different ownership, carrying out the expenses or failing to carry them out. I hope I have made myself clear. If a company leaves the group, the group cannot control the company which has left as to whether it carries out the repairs or does not. It would be undesirable, therefore, that the group's right to relief should depend on the question of whether or not the company which has left the group decides to carry out the repairs or not. As the hon. Gentleman knows, the right to relief must depend upon the terminal repairs actually being carried out and the expense actually being incurred. For those reasons, and for that subsidiary reason, I ask the Committee to say that this Amendment ought not to be adopted.
:As I understand the argument—it is all rather abstruse—my hon. Friend is perhaps moving his Amendment in the wrong place, because he is really dealing with the ordinary case of a company coming out of a group and selling out altogether to somebody else.
:The company being acquired by a new concern?
:Yes, and the Solicitor-General relies upon Clause 34—I am sorry I misunderstood what he was saying; of course he was quite right—and upon the fact that the Clause, which we cannot discuss, leaves it to the Commissioners to allow relief which they think just. That, at first sight, is all right if it were not for the words:
"the Commissioners may, if they think fit."
That may perhaps be taking away with one hand what is being given with the other, because the Commissioners, if they think fit, may allow the relief or additional relief or such part as they think just. First of all, they have to assess the amount and what they think just, and then to decide if it is fit to do so or not. It does not seem to me an absolute certainty that, if there is a hard case, it will be met. I should have thought that the words "may if they think fit" might be altered in due course to "shall." That would meet, to some extent, the case put by my hon. Friend. However, like the other difficult Amendments, we should want to think about it again in the light of what the Solicitor-General has told us.
Amendment negatived.
Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
:I do not think that I need delay the Committee very much on this question because we have already had considerable discussion on various aspects of it, and we have had from the Government the very firm assurance that they will look into the questions raised by the Amendment of my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson). However, there is one aspect on which nothing has yet been said, and about which I would like to make an inquiry. Generally speaking, what is intended is to get relief from Excess Profits Tax for what is called the terminal expenses and they are divided up into the following: Under Subsection (4) the cost of deferred repairs and renewals and under Subsection (5) the rehabilitation costs. Both Subsections refer to the maintenance of the assets or the improvement of the assets in one way or another. For example, the cost of deferred repairs and renewals means the expenditure on repairs necessary to maintain the assets in an effective working condition, and in Subsection (5) rehabilitation is spoken of in paragraph ( c ) as arising where buildings, plant, machinery or other physical assets held for the purposes of the trade, and any expenditure incurred on again altering the assets to readapt them to peace time requirements.
There is one asset which affects my constituents more than any other, mine being an agricultural constituency—the land. We have not heard today, and I do not think we have heard at any other time, what is to be done in regard to land in this connection. Of course, it is not only the question of Excess Profits Tax, which does not arise for those whose standards were such that they were not liable to it. On the other hand, a large number of those concerned with land have had a pay Excess Profits Tax. In their case, if one can use the words "deferred repairs and renewals" in regard to land, or consider altering the assets back to peacetime requirements of land—which might be a rather difficult thing to do—it is clear that there is anxiety about this point. During the war the fertility of a great deal of our land has been in process of exhaustion, I know there is some argument in agricultural circles as to how far that has gone, and I believe some optimists say that the land has not decreased in fertility. On the other hand, it is true that particular parcels of land do require urgent restoration. But this cannot be done quickly. Nothing in regard to the land can be done quickly. For example, there was the sowing of straw crops under compulsory orders which had nothing to do with what the farmer thought good for his land, but on which the war agricultural committees, acting under the general policy in wartime, insisted. There are cases where the land may have been fouled owing to shortage of staff. Then there is the case—and this applies to what were considered the richest areas—of ploughing up first-class grassland. It will take years to get that kind of pasture back again. The old saying is that it takes about 100 years to grow grass in an Oxford college. It will be as long as that before such land is made good again. If land is to be restored and the full fertility in certain areas regained—I am not talking of the whole country—and if there has been an Excess Profits Tax liability, could the Government say whether the words used c ) apply to land? If we can get a satisfactory answer to that, it will help a great number of people in agricultural constituencies such as my own.
8.15 p.m.
:I am sure the Committee has been impressed by the way in which the Solicitor-General has handled these difficult problems. I think he did a good job this afternoon and he pleased everybody, as near as I could judge by the temper of the Committee. Speaking on behalf of a large number of smaller manufacturers, I am particularly gratified with the undertaking given by the Chancellor to the right hon. Member for the Scottish Universities (Sir J. Anderson) in regard to deferred repairs. That matter affects a large number of smaller companies who have had to expend money in restoring buildings and preparing for the installation of machinery and so on, and who would find it impossible to meet the limitation on time imposed by the Bill. The undertaking given by the Chancellor will give great satisfaction to people who find themselves in an embarrassing situation. Some manufacturers have to restore whole buildings over a large area, and cannot secure the necessary capital to restore the buildings in the time, under the restrictions put on them. A very important firm with whom I am in communication are restricted to £6,000 a year for a period of years and the cost of restoring their enterprise is £45,000. The limitation makes it impossible for them to achieve the resuscitation and rehabilitation of their productive capacity within the limits of time imposed by the Bill. The Chancellor has given an undertaking that he will reconsider the limitation of time. I am, as I say, grateful to the Solicitor-General for the way in which he has handled the Bill.
:I would like to stress the point made by my hon. Friend the Member for Moseley (Sir P. Hannon). The Chancellor did undoubtedly make a most conciliatory speech, which was very unusual for him and gave an indication that his thoughts would be more than usually amiable when we reached the Report stage. But I think he needs a little encouragement and I propose to give it to him. There is no justification so far as we can see, why each individual case should not be treated on its merits and why the Commissioners should not have the right to extend the period if necessary. There is nothing fundamental in such a change, and it would make use of the Commissioners who are there on the job, to make sure that no industry will suffer through this limiting period.
One aspect of the matter to which I draw particular attention is that which relates to shipping which needs salvaging. We know that a great amount of shipping has been beached and sunk in narrow straits in various parts of the world. We know of the effort being made by our shipping companies to restore Britain to the dominant position she held on the seas. Petrol tankers are particularly required. The right hon. Gentleman the Minister of Fuel and Power says that we cannot increase the petrol ration, because there are not sufficient dollars, or labour, and gives all the hackneyed explanations, but we know there are a number of tankers beached. How can they be brought to the surface and repaired within the two years limit? There is an instance in which it would not be humanly possible to do the job in the time. Why not, in addition to a conciliatory speech, give an undertaking that the Commissioners will have the right to treat each case on its merits. Where there is such a clamant need for shipping as exists now, give them the right to extend the period sufficiently to enable any ship to be salvaged, repaired, and made seaworthy again.
:I am sure that all my friends on this side of the Committee agree with hon. Members opposite in the kind things they have said about my hon. and learned Friend the Solicitor-General. I hope that the Solicitor-General will take careful note of them, and keep copies of HANSARD containing these bouquets, and put them on the hoardings at the next General Election. They should ensure his triumphal return.
:There are other HANSARDS he might quote, too.
:The right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank) asked whether this Clause refers to land. In particular he referred to the fact that, in many areas, the land of this country has degenerated because of the war. It has not had chemicals, manures and other things put into it, and is therefore not now in good heart. He wondered whether any of the subsections in the Clause would enable an allowance to be made to the owner or tenant for the rehabilitation of that land. On what he said, all of us are agreed. We all agree, too, that something should be done to help the agriculturist who finds his land run down through no fault of his own, because of the war. But I have to say that this Clause does not refer to agricultural land. The position is not quite so bad as it might appear, as the law permits the value of a farm or agricultural holding to be taken at the beginning and at the end of a year, and an allowance is made by the Inland Revenue where it has been found definitely that the value at the beginning of the year is higher than at the end of the year. I am told that these provisions are implemented, I will not say generously, but justly, not only to tenants when they leave the farm year by year, but also to the owner, if the owner is in possession. That covers the main points that have been made. As regards the speech of the hon. and gallant Member for Ayr Burghs (Sir T. Moore), the Chancellor has intimated that between now and the Report stage he will look into the point which he and the hon. Member for Moseley (Sir P. Hannon) raised, and therefore there is no point in my wasting the time of the Committee by gilding the lily. My right hon. Friend has indicated that he will look into the matter, and I hope we can leave it at that, and the Committee will let us have this Clause.
:I would not like the Committee to part with this Clause in too great a spirit of congratulation. The Financial Secretary talks about gilding the lily, but all the Chancellor has done is to say that possibly, in the future, he may sometime consider the points raised, which is very different from putting even a few spots of imitation gold upon them. We are grateful, however, for small mercies, and all of us on this side of the Committee frankly admit that this is the first Clause in the whole Budget, on which we have had an attempt to meet the very real grievances that have been raised. [HON. MEMBERS: "Cheer up."] My experience has been such that I do not intend to cheer up until I see this promise become a fact. If, when we come to the Report stage, there is a blank Order Paper, which shows that no Amendments have been put down, and we shall not be allowed to make again speeches already made in Committee, we on this side will have nothing to cheer about. But I take it that the spirit in which the observations of the hon. Gentleman and his right hon. Friend were made was that of a genuine desire to meet the difficulties put to them on this Clause. I hope that such an eminent combination will, in the time before the Report stage, have found some solution of our problem.
:The Chancellor has given an assurance that he will reconsider certain words of this Clause between now and the Report stage, and I would like him to take into account certain points I am about to make. I am quite certain that the Financial Secretary and the Chancellor will be the first to admit that two most important factors in this country are security and export, including invisible exports, and that our shipping trade, from that particular point of view, is absolutely vital to the life of this country. British ships are subject to transitional control by the Ministry of War Transport for the performance of vital services, and in many cases owners have no possibility at this stage of doing anything at all in regard to repairs.
The other point I wish to make is that the Chancellor will no doubt be aware that the Minister of War Transport has from time to time suggested to shipowners that they should not repair their ships at the present time. I would refer him to a particular passage of a direction passed on by the Ministry from the Admiralty on 2nd April, 1946, to the effect that—
All this is vital to the industry, and the industry is vital to our security and in helping our exports, as well as being a great gain to our invisible exports. I would like to have one further assurance from the Chancellor, that not only will he consider these certain words about which he has given his assurance, but also that he will take into account that particulars may not be able to be made available by different shipping interests by March, 1948. Provided he will give me that assurance—and I see that he is nodding his head—I am then satisfied that he has made note of these particular points.
:Yes, I shall regard that as being covered by the assurance I have already given.
:Is it not the case that certain ships have to go to sea when only partial work has been done? Will the Chancellor cover that particular point also?
:I will certainly look at the point the hon. Member raises, but it is not awfully easy, even with good will, to find a form of words which will be watertight, when dealing with the position when half an operation has been completed. But I have given a promise to look at this matter with every wish to find a satisfactory solution, and that matter will be taken into account.
:Is it quite correct, as stated by the Financial Secretary, that this Clause does not deal with deferred repairs so far as farms are concerned? My experience is that farmers are entitled to put in their accounts deferred repairs to hedges and ditches and to buildings for which they are responsible. If that is not included in this Clause I want to know under which Act it can be covered. I wish the Chancellor to take his mind from the beautiful surroundings of London to the desolate countryside, and to imagine a field with high hedges all round which was under grass when the war started. The farmer has ploughed that field and taken three or four straw crops from it and impoverished the land. The whole of his profits from that field have been paid away in Excess Profits Tax. The farmer is entitled to include any deferred repairs to the hedges round the field, and it does not seem sense to me that he is not entitled also to the cost of the rehabilitation of that field. I am glad the Chancellor of the Exchequer has returned because, after listening to the very moving peroration of his Budget speech, I am sure his sympathy lies with the lovely countryside. If it does, I think he must have a great deal of sympathy for the men who are responsible for keeping that countryside lovely. I ask him to give serious consideration to the type of case in which where during the war a farmer has ploughed up a field, taken the fertility out of it and paid it away in Excess Profits Tax, and is left with a field en- tirely impoverished, with no money in the till, he wishes to restore it to its previous condition.
8.30 p.m.
:I was rather astonished at the remarks of the Chancellor of the Exchequer. He was in a friendly mood a minute ago. I would like to give an illustration of why I think there has been a slight error in this matter. One could take the case of a market garden concern in Norfolk which, just before the war, was going into the production of asparagus in a big way. That is an instance of which I happen to know the details. During the war they had a very heavy incidence of E.P.T. and that was just the time when that asparagus might be putting back money into the industry for the purpose of renewing it. That is not an uncommon case. It might happen in a considerable number of industries such as fruit growing. I do not intend to say much on this point, but I ask the Chancellor to look into it from the point of view of the horticulturist and particularly from the point of view of fruit growers and those interested in the vegetable industry. I am sure he now appreciates my point, and I thank him. If I had had to address those hon. Gentlemen sitting near him, I would have talked at much greater length because they know very little; but having addressed the Chancellor of the Exchequer no doubt he will explain the point to them at a party meeting.
Question put, and agreed to.
Clause, as amended, ordered to stand part of the Bill.
CLAUSE 33.—(Relief for losses on sales of stock.)
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:I am interested in Clause 33 because it deals with the whole question of relief for losses under sales of stock. It is an important business matter. I have no wish to go into the details but I think the Committee have the right to a short statement from the Government on the main principles of the Clause. As I understand the Clause, coupled with the Seventh Schedule, it is designed to meet a genuine case of hardship. If we could have a short explanation of what it means, it would be an advantage to the Committee. It appears to me to be dovetailed in with various other matters which we have been discussing.
:This Clause is introduced to cover losses on sales of stock during what is referred to in the Clause as "the sales period" which means the years 1947 and 1948. It is introduced because losses on sales of stock are regarded as being, broadly speaking, in the same category as terminal expenses. It will cover a variety of cases, particularly the case of a trader who in 1946, finds himself landed with a good deal of stock which he has to dispose of during the two succeeding years, in circumstances which result in a loss to him upon the sale of that stock. The Clause defines the sale period and refers to the Seventh Schedule, which is a very complicated Schedule defining what is referred to as a claimable loss. He can recover a claimable loss incurred during the sales period.
When the Committee considers the Seventh Schedule, no doubt, they will want to go into it in more detail, but, roughly speaking, the Schedule contrasts the position of the value of the stock as at December, 1946, with the price received I during the sales period. I am talking now in very general terms, and the Committee will want to look at the matter in more detail when we come to the Seventh Schedule, but certain adjusting provisions are included in that Schedule to deal with stock damaged at the beginning of the sales period and stock which becomes damaged during the sales period. Adjusting provisions are contained in the Schedule so as to get a true picture of the measure of loss which is to be the subject of a claim within the meaning of Clause 33. There are corresponding provisions to bring it into line, in certain respects, with the provisions of Clauses 32 and 33 dealing with terminal loss. The object of it is to provide for a form of expense in respect of which it is felt that the trader can ask for reimbursement in circumstances analogous to terminal expenses in Clause 32.
:I only want to ask the Solicitor-General, since he is in such a yielding mood, whether it applies to those cases towards which he showed such a hard heart last week—cases of traders who suffered losses through being left with stock after the Purchase Tax has been reduced? Will they come under this Clause and be able to put their losses, incurred through the action of the Government, against E.P.T.?
:I would like to thank the hon. and learned Gentleman for the answer he gave me, which I appreciate. With his great knowledge of the law, his explanation will enable the Commismissioners to know what the House of Commons meant when it passed this Clause, and, if for no other reason, this intervention will have been very well worth while and will have helped the Committee and, probably, the Commissioners. I was going to ask the same question as my right hon. Friend the Member for West Bristol (Mr. Stanley)—whether loss incurred through reduction of Purchase Tax will be covered here. I do not want to make out any case why it should be covered, because it seems obvious, but, when I heard the Chancellor say "No," I felt it was a pity if he is not going to help the people whom he is putting out of business, and who may have to face a very considerable loss. I am not going to ask the right hon. Gentleman to give way and say that it will be done, I would just like an assurance. It would not, I presume, be ruled out by anything the Chancellor has said today if it were left within the power of the Commissioners to go into such a case and see whether it was a fair one. It would not be unfair to ask for that, and I ask the Chancellor to assure the Committee that, if there were such a case, it would be possible for the Commissioners to go into it.
:They certainly would not be debarred, but having to give a snap answer to a snap question, my initial reaction was that it was quite a different matter from that which we were discussing the other day—presenting arguments before the Commissioners, to give relief in cases in quite a different context from that which we were discussing 10 Clauses back.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
CLAUSE 34.—(Supplementary provisions as to relief for terminal expenses and losses on sales of stock.)
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:I feel sure that it would be an advantage if, on this Clause, the Committee could have an explanation from the hon. and learned Solicitor-General. It would not take him very long, and it would be of great value if he could tell the Committee the real meaning of the Clause.
:The provisions of Clause 34 are what are sometimes described as "machinery provisions." We have already discussed Subsection (4) which enables the Commissioners to make an adjustment where there is only a partial change of ownership. Subsection (2) is necessary where there is no profit from which losses can be deducted in respect of a terminal expense. That is a perfectly intelligible and reasonable provision. Subsection (3) is purely definitive. If hon. Members will look at Section 28 of the Finance Act, 1940, they will see that Subsection (3) does not take them very much further, because all it says is that a group of companies means a company where one is the principal and the others are the subsidiaries. It is a purely definition Clause referring back to a previous definition in the Finance Act, 1940, and then proceeds to say what shall be deemed to be a change in the identity of group companies. That is all it does and, therefore, its provisions are simply machinery provisions.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
CLAUSE 35.—(Matters occurring after certain dates not to affect excess profits tax.)
:I beg to move, in page 31, line 23, at the end, to insert:
As Subsection (2) stands, it provides for the setting off where the expenses are incurred in 1947 and the compensation is received in an excess profits period, namely, a period up to and including 1946. This Amendment provides for the converse case, that is to say, where the payment is received in 1947 and one wishes to relate it back to expenses in excess profits periods, namely, periods up to and including 1946. It is simply a provision to remedy what is an omission in the Clause. It does not really affect the principle of the matter at all, but remedies an omission, and I ask the Committee to approve the Amendment.
8.45 p.m.
:This is, of course, a very complicated Clause and, so far as I have followed the explanation of the Amendment which the hon. and learned Gentleman has moved, I think I have no objection to offer to it. There is one question with regard to the Clause which I would like to raise at the same time, in order to save time, and that is to ascertain why 1947 was chosen as the year after which this "spreading over" should no longer take place. In view of the circumstances which this arrangement was originally designed to meet, it seems to me that that period might prove a little short. I believe the origin of this machinery was to meet a very heavy expenditure which, had it been taken into one accounting year, would have swamped the whole of the E.P.T. for that year, and, in order to meet that kind of case, one is allowed to spread it over more years. In those circumstances where there is a very heavy expenditure which might have been incurred as recently as last year, it seems to me that fixing 1947 might in a certain number of cases prove rather hard. I only want to know—although I have no doubt that in the majority of cases 1947 will prove fair—whether there is any provision in the exceptional cases, by means of some appeal or other, for an extension of that period.
:There is no provision for an extension. I do not think it should prove hard in the majority of cases because the terminal expense provision will provide for a good many cases where this would not be operative. I think the answer to the right hon. Gentleman's question is that one has to look at Clause 32, which contains, not its own "spreading back" provision, but its own attributing provision which would take the place of the "spreading back" provision which terminates at the end of 1947.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.
CLAUSE 36.—(Renaming of the national defence contribution)
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:Clause 36 changes the name of the National Defence Contribution to the Profits Tax, and I think we might have from the Chancellor a little more explanation of this change than we received in the Budget speech. I would have thought that in naming a tax there might be something to be said for giving it a name which appealed to those who would have to pay it. A great many people would willingly sign a cheque towards the discharge of the National Defence Contribution, but would by no means be so eager to sign the same cheque in payment of a Profits Tax. Of course, we all know that the word "profit" is one which stinks in the nostrils of hon. Members opposite. Therefore, by changing this name from "National Defence Contribution" to "Profits Tax" we are arriving at a tax which will, no doubt, appeal very strongly to the baser instincts of hon. Members opposite.
There is a very curious provision in the proviso to this Clause, to which the attention of the Committee should, I think, be drawn. The proviso says:
:This harmless little Clause is, I think, justified. We have had the National Defence Contribution as one of our sources of revenue since the time it was invented by, I think, Lord Simon when he was Chancellor of the Exchequer before the outbreak of war.
:Mr. Neville Chamberlain.
:Mr. Neville Chamberlain, of course, at that time. The tax was presented, and quite properly presented in the conditions of that time, as an additional means of raising revenue, having regard to the need to catch up with the terrible deficiency of armaments due to the policy of the Conservative Government. [ Interruption. ] This is only history, about which we are all agreed. Some say it was because the Labour Party ragged them. At any rate, there were not enough armaments. I do not think there is any doubt why it was called "the National Defence Contribution"; it was because our defence was in great arrears and needed contributions to sustain it, and this new tax was imposed to furnish the money. We need not disagree about it; that is history. Now, after the war has been won, it does seem to be a little inappropriate to call this tax by this old name. Moreover, the Excess Profits Tax is being repealed. We have already agreed to that. The necessary Clause has been accepted by the Committee. The Excess Profits Tax is being repealed, and it occurred to me that it would be appropriate to rename this tax which we are retaining for the present.
The future is completely uncommitted. We may remit it, increase it, vary it or do all sorts of things. There is no commitment in that respect. For the time being here it is, a tax levied on the profits of companies. It seemed to me reasonable, particularly as there was no longer any danger of confusion with the Excess Profits Tax, which is being repealed, that we should call this tax the "Profits Tax" for the future. I think it fits in rather better with the circumstances of the day. I felt it was a little anachronistic and inappropriate to go on giving it the old name. That is the reason. The right hon. Gentleman said it was nice to give taxes sweet smelling titles. I do not know what title would smell sweeter here. He said he wanted to name the tax in such a way as to indicate the pleasure people found in paying it.
Everybody is delighted to pay Income Tax on their incomes; I think it was Lord Leverhulme who once said: "Give me the income and 'be jabers' to the tax"; in other words, if we have enough income out of which to pay a lot of taxation, we are very happy people. In its nomenclature the Income Tax does meet the right hon. Gentleman's requirements and equally, if people make a lot of profits, they ought to be quite happy to pay the Profits Tax. So that ought to be all right. If, however, the right hon. Gentleman has any other suggestion as to a suitable name for the tax, I am not hidebound at all; the Government are open minded, and we will be delighted to consider, on Report, any alternative names which may be suggested.
:What about "Dalton's deductions"?
:A very good idea. So much for the name. With regard to the proviso about which I was asked, when you change the name of a well established impost, unless you make it clear that even if it is called by the wrong name it is still the same dog, you may get into legal difficulties. This provides that for a period during which people are getting used to the new name of the old dog it is still quite legitimate. In a court of law, a legal document, or in a letter written from a member of the public to a tax collector or a Member of Parliament, you can still call this the National Defence Contribution and you will not get into trouble by reason of that. Everybody will understand what you mean. The period is not made indefinite because we think that after a time people will get used to the new name and therefore it is not necessary to continue the old one.
:Is it the calendar year or the tax year?
:I should think, speaking without consultation with my legal advisers, it probably means the financial year, if nothing to the contrary is stated. I will undertake to look into that and reassure the right hon. Gentleman.
:The Chancellor of the Exchequer was not less inaccurate than usual when he told us the history of this tax. It is quite true that it was introduced by the late Mr. Neville Chamberlain at a time when mounting Estimates for the Services—which needless to say were voted against every year by the party opposite—had made it essential to find some new source of revenue, and this was proposed. The right hon. Gentleman will remember that it had a rather stormy passage in its initial stages.
:Quite true.
:I quite agree with him that, in the changed circumstances, the name "National Defence Contribution" is meaningless and should be altered, but I am not entirely happy about the new name that has been chosen. I do not suppose it would be in order for me to go into great detail about the actual incidence of this tax, but hon. Members will realise that this is not really, as it is now called, a "Profits Tax"; it is a tax only on the profits retained by the equity shareholders; the debenture holders, and I think I am right in saying, the preference shareholders, escape from its effects. In other words, it is a tax which falls solely on enterprise, and not at all upon debt, in industry. As I say, I do not think I could pursue that subject at any length, but I do not expect that the Chancellor himself is satisfied that this is a wholly fair tax. Nor, I am sure, is he satisfied that it might not be possible to find some substitute for it which, while bringing in the same amount, would spread its incidence more fairly over all classes of shareholders and debenture holders in industry. I only make that point because the name "Profits Tax" does rather convey a false impression of the very limited incidence of the particular tax.
9.0 p.m.
:I think it is a pity that the name of this tax is to be changed until some, at least, of the peace treaties are signed, and U.N.O. are agreed over one thing or another. I consider this country is still in a most dangerous situation, and that it would be well to leave the title of this tax as it is at present. I admit that the right hon. Gentleman reminded us that the Coalition Government who were in power when that tax was introduced—
:I said the prewar Conservative Government, when Mr. Neville Chamberlain was Chancellor of the Exchequer and Lord Baldwin was Prime Minister.
:As I remember, in 1931 there was a Coalition. [HON. MEMBERS: "No."] A number of members of the Socialist Party joined its ranks, and Liberals, also; and as I remember it, it was called a Coalition Government, at any rate, when I entered the House first; when I saw the right hon. Gentleman the Leader of the House sitting beside the Chancellor of the Exchequer, looking rather like little Jack Horner who sat in the corner and said, "What a good boy am I." I remember he was the man who refused to allow a single Territorial to drill in a London park, and stopped all the London County Council schools having cadet corps—
:No.
:On a point of Order. Most of us on these benches would be very happy to follow these historical disquisitions, but is it in Order for hon. Members opposite to take liberties with historical facts?
:Further to that point of Order. Do not the speeches that are being made from these benches follow entirely the quite unjustified references made by the Chancellor of the Exchequer?
:These references have been made on both sides. I think we have had sufficient of them. I trust the Debate will not proceed on these lines.
:Hon. Members opposite remind me of the great fight in New York. They are running away, on the other side; and when Louis gives them one punch they just crumple up. For my part, I am very sorry to see the name of this tax changed, because I believe that this country is in just as dangerous a position today as it was in 1936, and I hope that the Prime Minister and the members of the Government will look after our defence.
:I think it important that the hon. and gallant Gentleman's misapprehension should be cleared up a little. If, indeed, he so misunderstands the amount to be derived from this tax, and so underestimates our liabilities in the field of Imperial commitments, that he thinks that the beggarly £50 million to be derived from it is going to satisfy them, and that the title of the tax should be retained because of that, he is as mistaken now as he was in 1936. Fifty million pounds is all we are to get from this. Clearly, it has nothing to do with national defence which, so far as I know, will result in a bill of £1,600 million. For that reason alone the title of this tax ought to be changed. There is only one word I wish to say on the observations of the right hon. Gentleman the Member for West Bristol (Mr. Stanley). It would be rather a pity if we got the impression from what he said, that debenture capital was being unduly taxed here. Indeed, as I understand the situation, the complaint that one reads from across the Atlantic is that we tax debenture capital extremely lightly and that they tax it very heavily. Indeed, if the Chancellor of the Exchequer goes on as he is at the moment, I quite expect to see a flight of capital from Wall Street to this country under his munificent influence, and because of the confidence the Labour Government are engendering.
:I am rather surprised at the hon. Member for South Cardiff (Mr. Callaghan). I thought that he was a great adventurer and that he was prepared to take great risks and encourage others to take great risks. I would add my plea not to change the name of this tax. I am not thinking of this tax in the sense that it is to provide an enormous proportion of expenditure for national defence. Is this really the time to change its name before the structure of the new tax has been decided? If we do this we are getting into the sphere of trying to make taxes popular. Nothing would be more detrimental to the name of the Chancellor than for him to try and make a tax popular. The only advantage of a Chancellor is that he can stand up and say, "I am the grim, hard man who is trying to drive home the necessities of the situation against the feelings of the people, and I must perform my duty." I consider that National Defence Contribution is a very good name to attach to something which will remind us for some time to come of the sort of steps which had to be taken. I admit that the incidence of the tax under present conditions is quite wrong, as my right hon. Friend the Member for West Bristol (Mr. Stanley) has said. It is quite true that the debenture side of capital investment is unduly burdened by this tax, or may be, but the real point is that we have to find some other tax. The Chancellor admits it, and until we have found the other tax, what is the point in changing the name?
:I regret to have to disagree with my right hon. Friend the Member for West Bristol (Mr. Stanley) as well as with my hon. Friend the Member for County Down (Sir W. Smiles). I consider that the name "National Defence Contribution" has much to commend it as against "Profits Tax." I daresay it may only be psychological, but I feel that the tax will be paid more readily and more willingly under the title "National Defence Contribution" than under the title "Profits Tax." I am optimistic—yes, in spite of hon. Members opposite—and I do not believe in the likelihood of an imminent war. Nevertheless, we must recognise that there will always have to be national defence. Why should not a tax which has some historical backing as a National Defence Contribution not continue to be called a National Defence Contribution? I hope that the Chancellor of the Exchequer will think again on this subject, because I am quite sure that it will be more effective if the tax is allowed to retain its original title; and, what is even more important, that it will be less resented.
:The more I look at the first part of the proviso the more unnecessary it appears to be. The words—
"Render it unlawful to continue to refer to the said tax as the national defence contribution after the beginning of the said year,"—
must surely be redundant, because the main part of the Clause does not create any offence. Surely, what the Chancellor would wish to see in the first part of this proviso is that if anybody refers to the National Defence Contribution, he shall be deemed to refer to the Profits Tax. It seems that the words here are completely unnecessary, and I hope that the Chancellor will see that he does not put on the Statute Book something which is redundant.
:When a good deal of the earlier part of the Finance Bill was under discussion, the learned Solicitor-General was allowed to participate, but now when the baptismal rite comes along, the Chancellor of the Exchequer thinks that he should be present. I stress the importance of names, and I beg the Chancellor not to be entirely modest. I recall that when the Lord President was active in the field of Civil Defence, he did not scorn to have a table described as the "Morrison shelter." I like politicians to identify themselves with their great public achievements. Here is a great opportunity for the Chancellor of the Exchequer, who wants to call this tax the Profits Tax. I submit to his Friends behind him that this is hardly the kind of tax to which they can give their adherence. His Majesty's Government are determined, I understand, to abolish profits. This saddening thought of the perpetuation of profits must seem to them to be discouraging. I beg the Chancellor not to take too pessimistic view of the party which has come in to destroy the profit-making system. If the profit system is to be perpetuated, let it be known that the Chancellor of the day was responsible for the Profits Tax, but if the profit system is to be destroyed, and a different name is to be given to it, let it be associated with his name, so that the "Dalton's deductions" may be the milestone that marked the decay and destruction of the capitalist system. I beg the Chancellor to be true to his principles, not to waver in the task to which he is committed and not to engage in pouring holy water in baptising on a tax which he calls the Profits Tax.
:The opening words of the proviso state:
"shall not render it unlawful to continue to refer to the said tax."
I myself have never seen any similar drafting in any other Bill. This proviso purports to create an offence which does not exist. I hope the Chancellor will look at the words again, take them out, and substitute those which, while fulfilling the same intentions, will not, I hope, be so absurd as those here.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
Clause 37 ordered to stand part of the Bill.
CLAUSE 38.—(Altered, rates of estate duty.)
9.15 p.m.
:I beg to move, in page 32, line 4, at the end, to insert:
"( a ) estate duty shall not be chargeable on the first two thousand pounds of the principal value of any estate; and."
Earlier this afternoon when compliments were paid to the learned Solicitor-General from these benches the Financial Secretary to the Treasury said that they would be extracted from HANSARD and used as election posters. That was the third time in the course of this discussion that the Financial Secretary made reference to an impending general election. I would urge him not to do so again, because it lowers the morale of those sitting behind him who had majorities of less than 10,000. At the risk of producing yet another poster which hon. Members might use, I want to commence my remarks on this Amendment by saying that this Clause is to my mind the best one in this Finance Bill. It is the best provision because it exempts from Death Duties estates of £2,000 or less. I think that is an excellent proposal and it meets with my wholehearted support, but the object of this Amendment is to bring this concession into line with the existing practice so far as Income Tax is concerned. I have no doubt that this Amendment will give hon. Members opposite an opportunity to express their displeasure with the rich, for it opens a door for many speeches along those lines. It might even tempt the hon. Member for Ipswich (Mr. Stokes) to discourse on the subject of the taxation of land values.
:It would be out of Order.
:I do not think it would be. However much hon. Members opposite and, indeed, the Chancellor might dislike those who have great possessions, always with the exception of those who join the party opposite, it is the case that, as far as concessions in Income Tax are concerned, they descend on the rich and poor alike, particularly the tax for personal allowances. The object of this Amendment is perfectly simple—to bring all the estates within the ambit of this exemption to estates of £2,000 and under as in the same way allowances under the Income Tax system are granted to all and sundry whatever the global income may be. This is a simple proposal and entirely one to make the concession more general. I imagine the cost of this will be very small, though I have no means of working it out
:I thought this Amendment would have been supported by other speeches, but that not being so, I gladly intervene at this stage. The scale of duty we are discussing now was instituted in 1894, by the great Sir William Harcourt. Since that time no one has ever thought, until this year, of reducing the burden on the small scales of income. Liberal and Conservative Governments have passed by, but always the small man has been heavily mulcted. If history is to be completely told there was a day in 1925, on 17th June, when I myself endeavoured to do something for these small people. I spoke from the benches opposite, when the right hon. Gentleman the Member for Woodford (Mr. Churchill) was Chancellor of the Exchequer, and a short duologue took place between us at 6 o'clock in the morning.
:Coming events cast their shadows.
:Being then most moderate in nature, as I am now, I begged the Chancellor, at that time, to exempt from Estate Duty those with estates up to £250. I said:
I do not think this Amendment fits in with the general sense of the arrangement of our death duties. You may have what is colloquially called "the slice method." You may take successive slices, so much on the first £1,000, so much on the second £1,000, and so on. That is what we do with Surtax. Alternatively, you may have a relation between the total of the taxable amount whether income or, as in this case, capital passing at death, and you may have a graded scale, with the total in one column and the scale rates in the other. But you cannot mix the two. I do not think it is sensible, if I may say so without offence, or coherent, to introduce the slice system at the bottom. It would only make for confusion, and a little more difficult to calculate what is due to be paid. The Amendment is not sensible in form, and does not fit in with present arrangements. Nor do I think its effect would be good. It would do nothing for all those persons I am able to relieve. Those with £1,500 to £2,000 are being relieved. None of these, obviously, would gain as a result of this Amendment. The only advantage would be in respect of people who were going to participate in the distribution of estates above the £2,000 level. It would operate to make certain reliefs on estates from £2,001 up to estates of many millions of pounds. I do not think I ought to give away any more revenue this year. I am advised that this Amendment would cost from £4 million to £5 million a year. A considerable part of it would arise from the relief to estates which are substantial in amount. I think we should halt here. I think that what has been done this year was reasonable, and it was not strongly opposed when the Budget proposals were debated. We give total relief to three-quarters of the poorest people, and we make it up to the revenue by grading up the Estate Duty on estates of more than £12,500. I do not think we should go farther in giving up revenue.
I am very sorry that the hon. Member for Hertford (Mr. D. Walker-Smith) is not present. Every week in the "Sunday Times"—[HON. MEMBERS: "The Sunday Express."] The "Sunday Express"—it is a very good newspaper, and I read it every Sunday. I wanted to quote the hon. Gentleman's arguments, because I think they are very good. Possibly all hon. Members opposite have already read those arguments. The hon. Member wrote, referring to this particular matter, under the title of "Background to politics." There is then a crossheading, "Wealth by inheritance." I do not know whether these two phrases were intended to be read together. He wrote:
:I would like to begin by congratulating the Chancellor of the Exchequer on his conversion to the influence of Lord Beaverbrook. It is indeed happy for us on these Benches to know that in future any word which appears in any of that great man's journals will be received by the Chancellor of the Exchequer with that empressement and almost, indeed, with that humility which the right hon. Gentleman has shown this evening. After all, perhaps the step is not a very large one from the Marxian theory of economics to the Maxian theory of economics. It is only a question of a small "r." However, I think the paragraph to which the right hon. Gentleman referred was written, not in contemplation of this very small Amendment that we are now discussing, but of an Amendment later on which raises the whole question of Death Duties to be paid.
I, frankly, am most interested in this particular Amendment, because it raises, perhaps in an imperfect form, what I believe to be a rather important question, and that is whether, in fact, the time has not come now when the gradations of Death Duties, or the method of grading Death Duties, should not be assimilated to the method of grading Income Tax and Surtax. There is no question at the moment of the yield of anything. I am merely talking about the "slicing" method, as the right hon. Gentleman described it, as opposed to the present, I think, rather clumsy, method which has been in existence ever since the Death Duties were first introduced. The whole object of the "slice" method is to try to ensure that the gradations are evenly spread and that the addition of a few pounds, in the case of income, does not suddenly make the difference of a great deal in the amount of tax which is, of course, the effect of the present gradations in the Death Duties where there is no "slice" method of that kind, the duty being paid on a certain overall percentage for the whole of the estate. An addition of £5 or £10 can suddenly bring an estate, on the whole of which duty would have been paid at say 65 per cent., into a grade where it has to be paid at the rate of 70 per cent. or even 75 per cent. on the whole, and not only on one special portion.
I think it is worthy of consideration whether some effort should not now be made to put the Death Duties on the same sort of basis as the Income Tax and Surtax with a general graduation altering at the various levels and payment at different rates on the various levels of the total amount. In order to produce the same amount of revenue it would obviously mean that as less would be paid on the smaller portions of the total capital that was left more would have to be paid on the others, but in the main I think that quite apart from the question of the final amount raised by this duty it would be a fairer means of grading and fixing the tax. In Income Tax the exemptions are applied irrespective of the final amount of the income and in a new system of this kind it would be necessary to do the same thing for death duties.
The other part of this, the regrading of the percentages to be paid, is impossible for the Opposition to work out since they have not access to the figures at the various levels. I can see some force in the Chancellor's argument that this is only one part of a change over to the new system, but I hope that some consideration will be given between now and the next Budget as to whether it would not be in the interests of all to work out what I believe would prove to be a fairer method of raising this tax.
:I hope the Chancellor will not pay any attention to the blandishments of the Opposition. It seems to me that the whole of their argument is based on a fallacy which is simply that it is better to save than to spend. What they are saying in effect is that we should let off a man who has saved things in his lifetime which he cannot possibly take with him when he goes to the grave, and by so doing has not benefited the community while alive. I hope the Chancellor will pay no attention whatsoever to what the right hon. Gentleman is trying to persuade him to do. I can understand that in time of war, when no consumable goods are available, there is an argument in favour of this kind of saving, though I always thought it fallacious and presented in the wrong way, as the Chancellor quite well knows. But once peace breaks out—[ Laughter. ] It very nearly has broken out in spite of the Opposition, and economically they are doing their best to get us back to the archaic ages—
:I must ask the hon. Member to confine himself to the Amendment before the Committee.
:With great respect, Major Milner, I was dealing with an implied interruption.
:Does the hon. Gentleman mean to imply that in future the real danger is that the Savings Movement will be too successful?
:No, I am not dealing with the Savings Movement. I am dealing with the altogether abhorrent theory to me that it is very important during one's lifetime and regardless of the effect it has on the rest of the community to store up one's power of both producing and consuming wealth in order to benefit the future at some indefinite date which may never arrive at all. That, I believe, to be a complete disadvantage and disinterest to the community as a whole. That is the argument which my right hon. Friend the Member for West Bristol (Mr. Stanley)—or my right hon. enemy—has been advancing from the Opposition.
:It was because I did not want any argument of that kind at all that I specifically said I was not concerned with the rate at which this tax was levied in the Amendment, but merely with the method of collecting. When it comes to spending and saving, I am very sorry to think that the hon. Gentleman cannot have listened in to the wireless the week before last when the Financial Secretary to the Treasury was telling us all to save and not to spend.
:It will not be any news to the Committee to learn that I disagree fundamentally, on this issue, with the Chancellor of the Exchequer and the Financial Secretary to the Treasury. They have not yet caught up to my advanced stage of thought on the non-utility of saving under our system. I agree they have accepted the system imposed on them by the Opposition.
:That question does not arise on this Amendment.
:With great respect, Major Milner, I have to answer the interruptions. I agree that the interruption was irrelevant, as was most of the right hon. Gentleman's speech. On his own admission it was irrelevant. Then he made an irrelevant interruption which I had to answer with an irrelevant one. I have no—
:The hon. Gentleman must confine himself to the Amendment.
:On a point of Order. I understood that you had called my name, Major Milner.
:I understood that the hon. Member for Ipswich (Mr. Stokes) was retiring.
:You rose in the Chair, Major Milner, and, with my invariable respect for the Chair, I sat down. The Chancellor of the Exchequer should have no regard to the submissions which have been made. I ask him to pay attention to the point of view that we ought to look forward to an expanding economy and that this idea of hoarding up things which we cannot take with us in our coffins, ought to be discouraged. The right hon. Gentleman the Member for West Bristol is saying, "For Heaven's sake, encourage people to hoard up what they cannot take away, and not take a larger proportion from them when they are in their coffins." I say, Spend the lot. I do not care at all. I would encourage people to spend and expand the great resources of the earth while they are alive and not indulge in these nasty, petty, beastly, bankers' calculations.
:I am delighted to learn that the Chancellor is a reader of the "Sunday Express."
:Every Sunday.
:Good. If he has read the last issue I hope that he extended his perusal to the page supplied by a famous journalist called Nathaniel Gubbins, because if he has done so, he will find that a considerable number of words are devoted to his famous smile. I may be wrong, but I thought I had detected today that that smile had been a little less vivid and I received a similar impression to Alice when, in Wonderland, she regarded the expiring grin of the Cheshire cat. I do not object to the Clause as it stands. But, when the Chancellor of the Exchequer referred to Sir William Harcourt in 1894, I wanted to be assured that he is aware that £2,000 in 1894 is not worth more than £600 today. If I could be certain that the right hon. Gentleman had that and its implications in mind, I should be relatively happy.
:I want to hark back to the speech of the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite). I doubt whether he will really want to be reminded of it because it struck me that he was not particularly in form, or very happy, when he made that contribution. He rested his whole case, in so far as he had a case, on the statement that concessions in Income Tax law descended on the rich and poor alike. That argument is quite misleading. When we give allowances in respect of Income Tax we give them in relation to what the community conceives will be a social benefit. For example, we give a child allowance which the hon. Member for Devizes (Mr. Hollis) always wants to increase because he says they are socially good. We give an earned income relief because we think it right that an income which is earned should pay less Income Tax than an investment income. We give a marriage allowance because we think that wedded bliss is better than the single life, and allowances in respect of life assurance, because that, too, is related to certain social good.
:A certain amount is left free.
:Yes, and that is because of the inability to pay when men are below a certain standard of income. What the hon. and gallant Member for Holderness wants to do is to give freedom to estates which might be worth £5,000, £5 million or even £50 million. The analogy with the Income Tax is not complete. In fact, I say there is no analogy at all. Income Tax reliefs are given to achieve certain specific socially desirable purposes, but the Amendment does not proceed on that principle at all. As for the right hon. Gentleman the Member for West Bristol (Mr. Stanley), he did not take into account in his argument the marginal reliefs that are given and which prevent an estate of a slightly higher figure from paying very much more than an estate of a rather lower figure. The jargon is:
I was interested to hear the right hon. Member for West Bristol commenting on my right hon. Friend the Chancellor of the Exchequer's looking at Lord Beaver-brook's newspapers. I know that my right hon. Friend is a great reader of the paper to which the right hon. Gentleman referred. I read it myself very frequently. Last Tuesday, 18th June, I read:
Here is the answer. The right hon. Gentleman of course reads the "Evening Standard." He was told that he had failed in his duty, and so he became the erring son returning home.
9.45 p.m.
I expected to hear a full blooded attack on us tonight, but of course his master's voice has changed in the meantime. When I took up the "Evening Standard" for tonight I saw this:
:I think it is time our reading came to a conclusion. While I am disappointed at the hostile reception of this very modest Amendment, may I say that as this issue is raised in a rather more acute form on one of the Schedules, we do not propose to take up the time of the Committee now, and I therefore beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:We on these benches welcome this Clause as a magnificent gesture to bring much needed relief, but we are still left with one practical problem which I think the Chancellor can solve. It is still necessary for the widow, for the testatrix, for the executrix, to go through the formality and the almost inevitable necessity of engaging professional help to complete a series of very complex forms, because letters of administration and probate are necessary to give title to the one house or the few national savings certificates of which the estate consists and to provide for the proper and equitable distribution of the estate. It should not be beyond the powers of those who devised this Clause to find some simpler form for estates of £2,000 or under to remove this disability from small estates.
:As the Chancellor of the Exchequer is not very generous towards small estates, I want to put before him a question arising on a larger estate possibly, and that is that very deserving member of the community, the man who is rearing a large family.
:I do not think that question arises on the Question "That the Clause stand part of the Bill."
:But I was suggesting that there should be another part added to the Ninth Schedule, which is mentioned in this Clause. I suggest that one of the most important things in this country today is the encouragement of big families. May I call attention to the position which arises when a man who has one child wishes to leave a moderately small sum to his one child when he dies—
:I am sorry, but I think, if that is relevant at all, it would involve an Amendment being put down, and therefore cannot possibly be raised on the Question "That the Clause stand part of the Bill."
:I would like to support the view put forward by the hon. Member for Oldham (Mr. Hale). The question of the title of an executrix or administrator to the estate to which he or she is succeeding is a very important practical point. As the Committee knows, the executor gets his title from the will, but the administrator gets his title from the Court. Up to now Estate duty has not been payable on an estate of less than £100 and there has been no need to take out letters of administration or probate. There are also court fees to pay, all of which I am sure the Chancellor of the Exchequer will take into consideration. Up to now the way in which payment of Estate Duty has been enforced by various debtors such as bankers, insurance companies or whatever they may have been insisting on probate or letters of administration being taken out, whether the the estate exceeded £100 net. Perhaps the Chancellor will look at all this.
I wish to reinforce the point which has been made that this is a very practical point. The number of estates which are going to be relieved from any estate duty—I think the figure is £150,000—will, unless the Chancellor does something, involve the people he wants to benefit having still to go to legal advisers and others for the purpose of having assistance in reference to the various forms which have to be submitted to get a title to the estate. In the case of intestates estates there is no title, except by letters from the court. I hope the Chancellor will see his way to relieve from estate duties estates of £2,000 and under and will carry through the logical process he has put before the Committee by relieving these people from all disabilities.
:With the general tenor of the two speeches we have just heard, we all agree and hope that the Chancellor will look into the difficulties and reduce the number of forms. That will be the first victory on that particular battle front. It was interesting to hear the Chancellor remind us of what he did at 6 o'clock in the morning in 1925 in trying to get the levels reduced in the lower estates. But he forgot to remind the Committee, so clever was he in his choice of topics in his recollections, that in the year 1930 there was the last revision of Death Duties before the war. Of course by 1930 he was a Minister of the Crown and his influence would have been of far more value than at 6 o'clock in the morning in 1925.
I think that in the 1930 Act, and certainly in the 1940 Act, provision was made, and so far as I know it has always been made, whenever there has been a change in the Death Duties exempting them from the increase rates. the next stage the Chancellor will have a look at it to see why this important provision has been left out and, if it has been done by inadvertence, put it in or, if it is not necessary, make a definite statement to that effect, so that those concerned may know the position.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
CLAUSE 39.—(Gifts inter vivos, etc.)
:I beg to move, in page 32, line 28, to leave out "and two years."
Clause 39 increases the period in which gifts made during the lifetime of a dead man are counted as part of his estate and attract Death Duties. It seeks to increase the period in the case of a transfer to a person from three to five years and in the case of a transfer to a charity from one to two years. Whatever arguments there may be for increasing the period from three to five years for a gift to a person, they do not apply in the case of a gift to a charity, and the late Mr. Lloyd George said so himself in 1909 in a passage which I shall read. He said: inter vivos, whether to individuals or to charities. When he increased the period to three years for gifts to persons he left the charities alone, and said:
It is quite reasonable that anybody who transfers to a charity with death close at hand should not be allowed to avoid Death Duties, but one does not normally lie on one's deathbed for two years. Few people know that they are within two years of death and proceed to make their arrangements on the supposition that they will be in their grave within two years. [An HON. MEMBER: "Lots of people do."] Not many. I submit that it is reasonable to assume that a man who gives to a charity two years before his death does not do so in expectation of death. If that be so, it cannot be right that if a man happens to die within two years, the charity to which he has given should be the loser. In fact this proposal is a tax on charity. Therefore, it is highly objectionable. The Government said last week that they desired to help charities. All I can say is they are succeeding in dissembling their affection. If they were sincere in what they said and if they really did not desire to injure charities, then I think they would accept this Amendment.
10.0 p.m.
:I rise immediately to say that we feel in a position to accept the principle of this Amendment. As I said in the previous Debate, it is entirely a question of degree. We are satisfied that it would be right to continue with the period of one year, in the case of charities. I ask the hon. Gentleman to withdraw the Amendment to give us an opportunity to make quite sure that we get the correct wording for the Report stage and to "vet" the wording he has used in his Amendment. If he will withdraw the Amendment, we give an undertaking to put down the necessary wording on the Report stage.
:I am much obliged. I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
:I beg to move, in page 32, line 33, to leave out from the beginning, to the end of the Clause, and to add: that the terms of the Clause are an improvement upon the terms of the Budget Resolution. Whereas in the Resolution, gifts made during the five years before the date of the Budget might have become vulnerable, under the Clause gifts made before 10th April, 1943, are now exempt. Though I recognise that the Clause is an improvement upon the Resolution, I am afraid the improvement has not gone far enough. The Clause still contains a big retrospective element. The House always has disliked retrospective provisions and as a rule, will only accept retrospective provisions when they are shown to be absolutely necessary. I submit that in this case it is quite unnecessary. I notice with satisfaction that in Clause 25 the Government excluded settlements made before the date of the Budget. That was perfectly proper. Whatever motive there may have been originally for establishing the rule, is a matter of some speculation. It certainly was not to prevent people getting out of their property while the going was good—that is to say, while they had a good expectation of life. Presumably it was to discourage them from getting out while the going was bad.
Whatever the policy was, it cannot have any influence upon the gifts which we are now considering, because they have all been made. The gifts with which we are now concerned are those made before the date of the Budget, and, therefore, presumably, the purpose which the Chancellor has in mind in trying to catch these gifts, which were made during the three years before the date of the Budget, is the collection of revenue. I must say that it is rather mean, as the revenue cannot be very great, and because both the donor and the recipient were surely entitled, at the time the gift was made, to assume that, if the donor lived more than three years after making the gift, Estate Duty would not attach to the amount of the gift. I submit that, in this case, we cannot really distinguish between the interest of the recipient and the interest of the donor. The very fact of the relationship of donor and recipient does imply a certain identity of interest. I think it is very hard indeed to make anyone prolong his existence for a further two years, particularly under the present Government, in order that a gift should escape Estate Duty, and it is this kind of thing, which is only one of a host of similar things, which is adding to the general feeling of uncertainty which is so inimical to profitable enterprise in this country. I do not think that, unless the Chancellor can make out a strong case for this retrospective provision, the Committee should be prepared to accept it.
:There is probably a wide difference of opinion regarding the many aspects of Estate Duty between hon. Members on the Government side and those who sit on these Benches. However that may be, this Amendment does not question the new rates of incidence which have been proposed by the Chancellor, nor does this Amendment raise the question, in the case of gifts inter vivos which were made subsequent to April, 1946, of the new and longer period of five years which will henceforth be necessary to qualify for exemption from Estate Duty. What this Amendment will do, if the Government can accept it, is to save the Chancellor's proposals from any taint of retrospection, and, therefore, I submit, unfair application. One hon. Member found it difficult to follow the statement made from this side of the House during the discussion on the Budget Resolutions, that there was an element of retrospective legislation in the Chancellor's proposals, but the Chancellor himself, I think, will appreciate that, even after the concession which he has made and which we have acknowledged from these Benches, there still remains an element of retrospective legislation.
The span of human life is uncertain, but so are many other factors in life, particularly in our economic life. But prudent men try, to the best of their ability, in the words of the Government spokesmen, to take all relevant considerations into account, and, having done that, they act. It is a perfectly justifiable method of procedure that men should think ahead. Among such men who have tried to make dispositions for the future are some still living who made gifts inter vivos less than three years ago and, therefore, less than five years ago. I submit to the Chancellor that it is wrong arbitrarily to upset calculations which have been made by individuals to the best of their ability.
In a short speech during the discussion on the Budget Resolution, I believe I said that there is not very much to be gained by instancing individual cases. This is not a case where one can argue from the particular to the general, but one can definitely say with certainty that some prudent men situated like those whom I have mentioned will die during the next two years, and that fact should justify the Chancellor in his acceptance of this Amendment.
So far as I know, it has never been suggested in responsible quarters that gifts inter vivos were anything in the nature of a ramp or a racket which should be penalised. I entirely agree with what the hon. Member for Sutton Coldfield (Sir J. Mellor), who proposed this Amendment, said—that retrospective legislation is wrong unless a very good reason can be found for entering upon it.
Most gifts inter vivos are a case of an older generation handing over to younger and more virile brains or hands a business, or setting up the next generation in business and, indeed, acts of this sort have received the blessing of the Chancellor of the Exchequer in a book of which he has been reminded on more than one occasion during these Debates. I do not think that the number concerned is very large, but I must confess to the Chancellor that I do not know how big it would be. Just because it would probably be a very small minority, that is no reason why we should ignore their case, if there is a case to be considered, or refuse them fair treatment On the contrary, if the number is as small as I imagine it may be, then this Amendment can be accepted without any material loss to the revenue.
10.15 p.m.
I do not think that the Chancellor will be over-impressed by the Liberal precedent of 1909 of which he was reminded by the Opposition Front Bench when last we discussed this subject. The Chancellor is much more likely to take a pride in creating precedents of his own. It is worth while thinking of the future to this extent, that some Chancellor of the Exchequer may want to lengthen this period from five years to 10 years, or to get rid of the qualifying period altogether. I repeat that we acknowledge the concession which has been made since the Budget Resolution, but I would appeal to the Chancellor of the Exchequer, or to the Solicitor-General if he is to reply, not to be satisfied with what has been done during the last few weeks but to "come clean" and accept this Amendment. As the Clause stands, it can be interpreted at the worst as vindictive towards those donors who had no reason to suppose that the Law would be altered and at the best it must be admitted that it embraces the taint of retrospective legislation.
:I would go much further than my hon. Friend the Member for Sutton Coldfield (Sir J. Mellor). I think this is an iniquitous Clause. The existing law is bad enough, but to add two years to the term in which people are to live before their gifts are freed from this devastating tax is a monstrous attack upon the normal justice which we expect from any Government. My hon. and gallant Friend the Member for Barkston Ash (Colonel Ropner) very tentatively referred to the Clause as bearing the taint of retrospective legislation. The taint? It is pure and clear retrospective legislation of the worst type. I am not sure that there is not a constitutional issue involved, because the Government are going back not only to the unfortunate day when they were first stupidly elected as the Government of this country, but four years before—in other words, before they were elected. I am not sure that this is a question which any Government today can properly decide under our existing constitution. However, I will leave that point for the moment because, judging by your determined eye, Mr. Beaumont, I may be called to Order. I hope that the Chancellor will avoid this retrospective legislation in the future, lest by any chance he comes under the charge of unconstitutional behaviour which, of course, is the last thing with which either his Government or himself would wish to be charged.
My main objection to this Clause is that it penalises all friendly and family arrangements. I ask the Chancellor to consider the question of a deceased who has left a will which has been shown to be invalid. That deceased, through his invalid will, has indicated what his wishes are. His next of kin naturally seeks to try to carry out those indications of his desire, but unless the next of kin lives another five years—and he may not, for life is very transitory in these times with a Socialist Government in power—those desires expressed in the will, will be translated into gifts and will be subject to the penalising taxation which the Government propose in this Clause.
:What does the hon. and gallant Gentleman think happens in regard to the gift? What does he think it is, and what does he think the Chancellor is trying to do? Is he trying to make it inter vivos ?
:The hon. Gentleman must try to follow my argument. I understand inter vivos means a gift to the living.
:Yes. Therefore, whatever happens, whether a will turns out to be invalid or not, the gift still remains a valid gift.
:No, not unless the person who has made the will lives for another five years.
rose —
:I must answer the hon. Gentleman the Member for Nuneaton (Mr. Bowles). A deceased person has made a will, that will is invalid, there is a gift to a man who, under the present law, inherits the possessions of the deceased. Therefore, that next of kin seeks, as a normal Britisher would do, to carry out what were the intentions in that will. They see it is invalid, and that next of kin, unless he or she lives for five years, may be charged with making a gift under this Clause; therefore, that gift will be taxed by this additional taxation.
:May I ask the hon. and gallant Gentleman whether he understands what a gift to the living is? It does not mean a gift that takes place under a will. It is a gift which can be made now, whether one dies now or in five years' time.
:The hon. Gentleman must wait and hear what his hon. and learned Friend says. Unfortunately, the confused phraseology adopted in this Bill—[ Interruption. ] It has been acknowledged by the Chancellor himself. It is confused phraseology which none of us understand. It is only explained when the very clear-minded learned Solicitor-General gives us his explanation. I am only suggesting to the hon. Gentleman that possibly he will understand the Clause better when the Solicitor-General gives his explanation. Hitherto, we have had to depend upon the hon. and learned Gentleman throughout this Bill for explanations of what the Clauses mean. The Parliamentary draftsmen are, no doubt, subject to many qualifications or disqualifications. One thing the Parliamentary draftsmen have succeeded in doing is making the Bill practically unintelligible to anyone but a lawyer. The rest of us, who are not lawyers, are subject to that disqualification and are waiting for the learned Solicitor-General, with his usual lucidity, to tell us exactly what is intended by the Government and the Parliamentary draftsmen. I am sorry I have been dragged away into these side issues by a lawyer. Lawyers have to make trouble, of course; that is their job; that is why they make their living. I will do no more but await the clarification of this Clause by the one Member of the Front Bench opposite who has so far been able to tell us what these matters mean.
:My hon. Friends have spoken of matters of principle in this Bill. I would like to say a few words on the practical importance of this Amendment. As my hon. Friend said, this is one of many matters upon which the Chancellor has written a book. My only doubt is whether the learned Solicitor-General has read that book. When we were discussing this question before the learned Solicitor-General took the line, if I do not misrepresent him, that the sole issue was that the Treasury should get as much money as possible. When Sir William Harcourt first introduced Death Duties, he introduced them specifically on the ground that they had two advantages, on the one hand the Treasury would get a certain amount of money, but when people charged him that, to some extent, those duties might be escaped through gifts inter vivos, he said he would not mind that in the least because there was a secondary advantage in death duties, namely, that they would have the effect of distributing income more equitably by causing old people to make gifts to young people, which would be a very good thing.
The Chancellor in his book—it is quite true that I was compelled to read the second edition, because my hon. Friend had captured the ninth edition, but I do not think the Chancellor had altered this phrase — said specifically that gifts inter vivos were a good thing, for the reason that they helped towards a more equitable distribution of income. He also made a very important point, which I have mentioned to the Committee before, namely that death duties were not paid to anything like the extent commonly imagined out of capital, but were most commonly paid through insurance. That is a practical point which I would commend, with all humility, to the Chancellor's attention. Suppose a farmer, during the course of the last three years, has made over certain sums of money to his son in order to set him up in business and then the son, in the ordinary course, has insured his father's life for the next three years and has made his calculation on the assumption that he has to pay insurance premiums sufficient to cover those three years. Now he is suddenly faced, if this Amendment is not accepted, with the possibility that his father may die not less than three and not more than five years from now, and therefore he has to increase his insurance and upset all his calculations or else has to take a pure risk of paying death duties uncovered by insurance, either of which events may be very serious. Therefore with all sincerity I would ask the Chancellor to consider again and see whether he cannot see his way to accept this Amendment.
:I have one point in addition to those put by my hon. Friends. It is that in the material three years, 1943–46, we have had the end of the war. As a result of that many people have handed over businesses to men who have been demobilised from the Services, and it is extremely unfortunate that this retrospective legislation should be introduced now. The man from the Services will be hit in all cases where the man who has handed over the business does not live five years. I think it is an important point which will weigh both with the Chancellor of the Exchequer and the Solicitor-General. There could not be a more unhappy time to choose to bring in this retrospective legislation than that which will cover the period when the war with Germany was ended and many small business men retired, after having carried on during the war, and handed over their businesses either to their relations or, in some cases, to their managers who had been gallantly serving in the Forces. I hope that in the interests of these men the Chancellor will think again on this Amendment.
:I cannot help feeling that there is a certain amount of misconception as to the precise effect first of the Clause we are discussing and then of the Amendment. It appeared to be the impression of the hon. and gallant Gentleman the Member for Ayr Burghs (Sir T. Moore) that there was some question of the gift becoming invalid if the donor died three years after the gift was made.
:No, not of the gift becoming invalid, but of the tax becoming valid on the gift.
10.30 p.m.
:I do not understand what the hon. Member is talking about when he refers to valid taxation. All taxation is valid. The effect of the Clause is that the period which was previously three years now becomes five, and if the testator—the donor—dies within five years, the gift is treated as part of his estate for Estate Duty purposes. It is perfectly valid; even if it takes place 100 years after, it is still valid.
:The point that the hon. Gentleman is trying to make is that where the will is invalid, and the administrator makes a gift to a beneficiary under the will, therefore the gift becomes a gift inter vivos and the beneficiary will have to pay taxation if the administrator does not live for five years after that.
:That is just the point I have been making.
:If an administrator was foolish enough to make that kind of gift, he would run the risk of being faced with an action for breach of trust.
:But in the case where the administrator had a beneficial interest himself?
:This does seem to me to be getting a long way from the point. Have we fixed on a fair arrangement in order to deal with the antecedent position, that is with gifts that may have been made before the coming into effect of the order? We are in danger of straying rather far from the point if we discuss various hypotheses. The question is whether what we have done justifies the complaint of retrospective action. What has happened is this. Supposing a gift is made and three years goes by. The person receiving the gift will be in exactly the same position in relation to that gift, as if the Clause had never been passed. That is to say, he will go free of tax in respect of any gift made three years before a death occurring after the material date. It cannot be said that this is unfair, or that it has the taint of being retrospective.
That is why I think there must be some misapprehension in the minds of hon. Members. There will be a sliding scale until you get to the time five years from April, 1943, when gifts in order to escape the incidence of taxation will have to run a full five years. I think hon. Members will find it perfectly clearly set out if they will look at the Tenth Schedule. This is the Schedule which brings all these transitional arrangements into effect. If hon. Members will look at Part II of the Schedule, line 34, they will find that it is dealt with there. It is quite simple if you work it out. Supposing somebody dies on 1st July, 1946, the period will have run from the 10th April, 1943, to 1st July, 1946. That is what I mean by saying there is a sliding scale, but the principal point is that anybody who had a gift three years ago, can say "I have only to wait for a little while longer and I shall get this tax free." If he says that, he is perfectly right. When the three years runs out, he will get his gift free. But two years from now, there will have to be the five years period before any gift is tax free.
:If I may interrupt, the point which I made was that if, say, in 1944, a gift was made, the assumption was that if the donor lived for more than three years, then that gift would never attract Estate Duty.
:Yes, I accept that point, but one has to make some limit somewhere, and what we are doing is to follow the precedent followed in the 1909–1910 Finance Act. That was an Act for which Mr. Lloyd George was responsible, and it is interesting to notice that when dealing with the extension of the time limit which he introduced, he wanted to make the period five years, but then made it three years. He said that he had not the faintest doubt that some future Chancellor of the Exchequer would say that three years was not enough, and would propose to put on a year or two. The scheme he adopted in the 1910 Finance Act, Section 59, was that of a sliding scale, and what we are doing tonight is to follow his precedent. We are following a Liberal precedent, and I have no doubt that we shall have the support of all Liberal Members present. I also think that we shall have a measure of support from some of the hon. Members of the Conservative Party who are present.
The right hon. Member for North Leeds (Mr. Peake), during the Report stage of the Financial Resolution, said:
:Let me say at once that we on this side of the Committee are grateful to the Chancellor of the Exchequer and the Government for having made this concession which was urged upon them by the right hon. Member for North Leeds (Mr. Peake). But that does not mean that we are satisfied with what has been done. To have done less than the Chancellor has done already would have been utterly indefensible. I propose to try and show that the Clause as now drafted is still not sufficiently well drafted to satisfy us.
I begin by asking the Chancellor of the Exchequer whether or not he wants to encourage gifts inter vivos. Perhaps when he replies he will be good enough to tell us that. Does he want to encourage gifts inter vivos ? Does he think that gifts inter vivos are a good thing? Does he think that gifts inter vivos are desirable? Does he think it desirable that a man with a certain amount of property should distribute it among his children? Does he believe it is a good thing for property to be distributed, or does he think it better that property should be concentrated? I judge from what he has said on previous occasions that he thinks it a good thing for property to be distributed. I suggest, therefore, that it is not a good plan to discourage the distribution of property by this particular provision, because the longer the period during which gifts may be restricted to gifts inter vivos, the less inclination there is bound to be among those who hold property to distribute it among their relatives.
My hon. Friend, the Member for Sutton Coldfield (Sir J. Mellor), who moved this Amendment so well pointed out that it had to some extent a retrospective smack about it. Nothing which the Solicitor-General has said in that connection has altered our view. It certainly is, to some extent, retrospective. To that extent we object to it. All legislation which is retrospective in any way must be objectionable, and it can only be justified by the most extreme urgency. No extreme urgency has been suggested by the Chancellor of the Exchequer in this particular case. We have not been told, as we are so often, that there is a racket which has to be stopped. On the contrary, these people are doing something which I firmly believe the Chancellor wants them to do, namely, to distribute property so that it is better distributed among the community than at present.
I suggest that hon. Members opposite should remind themselves how desirable it is that you should not have retrospective legislation. Anything which interferes with the reasonable certainties of life is objectionable, and particularly objectionable, I would suggest, at a time like this when there are so many uncertainties. Do not let us add to them if we can possibly avoid it. I would illustrate, if I may by one or two examples, the sort of difficulties into which you get when you do go in for retrospective legislation. Take this particular case: A man who made a gift inter vivos two years ago, and was unfortunate enough to die before the time was up, will find his estate not only charged with Estate Duty at the appropriate rate, but—and I call attention to this—he will also have been charged with the transfer duty at the time the property was transferred. The estate will therefore suffer.
:He will not mind.
10.45 p.m.
:The hon. Member takes a different view of property from those of us on this side of the Committee. But he will be, in fact, mulcted to the extent, at any rate, of 1 per cent. beyond what he would normally have to pay. That is just an illustration of the sort of difficulties into which yon get. Then there is the point raised by my hon. Friend the Member for Devizes (Mr. Hollis) about insurance. A man has made careful arrangements to insure the life of the donor and now finds the period extended and the arrangements he made for his insurance are insufficient for the purpose, and it may be it quite upsets his business arrangements; the capital he put into his business may prove insufficient for his purpose. On these grounds we, on this side of the Committee, feel we must support the Amendment so well put by the hon. Member for Sutton Coldfield, and to mark our strong disapproval of any legislation which smacks of retrospection, we intend to divide.
Question put, "That the words proposed be left out stand part of the Clause."
The Committee divided: Ayes, 255; Noes, 104.
Division No. 203.] AYES. [10.45 p.m. Adams, Richard (Balham) Glanville, J. E. (Consett) Oldfield, W. H. Allen, A. C. (Bosworth) Goodrich, H. E. Oliver, G. H. Alpass, J. H. Gordon-Walker, P. C. Orbach, M. Attewell, H. C. Greenwood, Rt. Hon. A. (Wakefield) Paget, R. T. Austin, H. L. Greenwood, A. W. J. (Heywood) Paling, Will T. (Dewsbury) Awbery, S. S. Grenfell, D. R. Palmer, A. M. F. Bacon, Miss A. Grey, C. F. Pargiter, G. A. Baird, Capt. J. Grierson, E. Paton, Mrs. F. (Rushcliffe) Balfour, A. Griffiths, Capt. W. D. (Moss Side) Paton, J. (Norwich) Barstow, P. G. Gunter, Capt. R. J. Peart, Capt. T. F. Barton, C. Guy, W. H. Perrins, W. Battley, J. R. Haire, Flt.-Lieut. J. (Wycombe) Piratin, P. Bechervaise, A. E. Hale, Leslie Platts-Mills, J. F. F. Benson, G. Hall, W. G. (Colne Valley) Poole, Major Cecil (Lichfield) Berry, H. Hamilton, Lieut.-Col. R. Porter, G. (Leeds) Bing, G. H. C. Hardman, D. R. Pritt, D. N. Binns, J. Hardy, E. A. Proctor, W. T. Blackburn, A. R. Hastings, Dr. Somerville Pursey, Cmdr. H. Blenkinsop, Capt. A. Henderson, A. (Kingswinford) Randall, H. E. Blyton, W. R. Henderson, Joseph (Ardwick) Ranger, J. Boardman, H. Herbison, Miss M. Rankin, J. Bottomley, A. G. Hicks, G. Rees-Williams, D. R. Bowden, Flg.-Offr. H. W. Hobson, C. R. Reeves, J. Bowles, F. G. (Nuneaton) Holman, P. Reid, T. (Swindon) Braddock, Mrs. E. M. (L'pl, Exch'ge) House, G. Rhodes, H. Braddock, T. (Mitcham) Hoy, J. Roberts, Emrys (Merioneth) Brown, George (Belper) Hughes, Lt. H. D. (W'lverh'pton, W.) Roberts, Goronwy (Caernarvonshire) Brown, T. J. (Ince) Hutchinson, H. L. (Rusholme) Rogers, G. H. R. Bruce, Maj. D. W. T. Hynd, H. (Hackney, C.) Royle, C. Burke, W. A. Irving, W. J. Sargood, R. Butler, H. W. (Hackney, S.) Isaacs, Rt. Hon. G. A. Scollan, T. Byers, Lt.-Col. F. Jeger, G. (Winchester) Scott-Elliot, W. Callaghan, James Jeger, Dr. S. W. (St. Pancras, S.E.) Segal, Dr. S. Castle, Mrs. B. A. Jones, D. T. (Hartlepools) Sharp, Lt.-Col. G. M. Chamberlain, R. A. Jones, J. H. (Bolton) Shawcross, C. N. (Widnes) Champion, A. J. Jones, P. Asterley (Hitchin) Shurmer, P. Chater, D. Keenan, W. Silverman, S. S. (Nelson) Chetwynd, Capt. G. R. Kenyon, C. Simmons, C. J. Clitherow, Dr. R. Kinghorn, Sqn.-Ldr. E. Skeffington, A. M. Cluse, W. S. Kinley, J. Skeffington-Lodge, T. C. Cobb, F. A. Kirby, B. V. Skinnard, F. W. Cocks, F. S. Lang, G. Smith, Capt. C. (Colchester) Collins, V. J. Lavers, S. Smith, Ellis (Stoke) Colman, Miss G. M. Lee, F. (Hulme) Smith, S. H. (Hull, S.W.) Comyns, Dr. L. Lee, Miss J. (Cannock) Snow, Capt. J. W. Corbet, Mrs. F. K. (Camb'well, N.W.) Leslie, J. R. Solley, L. J. Corvedale, Viscount Lever, Fl. Off. N. H. Sorensen, R. W. Cove, W. G. Lewis, A. W. J. (Upton) Soskice, Maj. Sir F. Crawley, Flt.-Lieut. A. Lewis, J. (Bolton) Sparks, J. A. Crossman, R. H. S. Lindgren, G. S. Stamford, W. Daggar, G. Lipson, D. L. Steele, T. Daines, P. Lyne, A. W. Stewart, Capt. Michael (Fulham, E.) Dalton, Rt. Hon. H. McAdam, W. Stokes, R. R. Davies, Edward (Burslem) McEntee, V. La T. Stross, Dr. B. Davies, Clement (Montgomery) McGhee, H. G. Swingler, S. Davies, Ernest (Enfield) McGovern, J. Symonds, Maj. A. L. Davies, Harold (Leek) Mack, J. D. Taylor, H. B. (Mansfield) Davies, Haydn (St. Pancras, S.W.) McKay, J. (Wallsend) Taylor, R. J. (Morpeth) Davies, S. O. (Merthyr) Maclean, N. (Govan) Thomas, George (Cardiff) Delargy, Captain H. J. McLeavy, F. Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Diamond, J. Macpherson, T. (Romford) Tiffany, S. Dodds, N. N. Mainwaring, W. H. Titterington, M. F. Donovan, T. Mallalieu, J. P. W. Tolley, L. Driberg, T. E. N. Manning, C. (Camberwell, N.) Ungoed-Thomas, L. Dugdale, J. (W. Bromwich) Manning, Mrs. L. (Epping) Usborne, Henry Durbin, E. F. M. Marquand, H. A. Viant, S. P. Dye, S. Mathers, G. Wadsworth, G. Ede, Rt. Hon. J. C. Mayhew, C. P. Walkden, E. Edelman, M. Middleton, Mrs. L. Wallace, G. D. (Chislehurst) Edwards, John (Blackburn) Mikardo, Ian Wallace, H. W. (Walthamstow, E.) Edwards, N. (Caerphilly) Mitchison, Maj. G. R. Warbey, W. N. Edwards, W. J. (Whitechapel) Monslow, W. Weitzman, D. Evans, E. (Lowestoft) Morley, R. White, C. F. (Derbyshire, W.) Evans, John Ogmore Morris, Lt.-Col. H. (Sheffield, C.) White, H. (Derbyshire, N.E.) Farthing, W. J. Morris, P. (Swansea, W.) Whiteley, Rt. Hon. W. Fletcher, E. G. M. (Islington, E.) Mort, D. L. Wigg, Col. G. E. Follick, M. Moyle, A. Wilcock, Group-Capt. C. A. B. Foot, M. M. Murray, J. D. Wilkes, Maj. L. Gaitskell, H. T. N. Nally, W. Willey, F. T. (Sunderland) George, Lady M. Lloyd (Anglesey) Nichol, Mrs. M. E. (Bradford, N.) Willey, O. G. (Cleveland) Gibbins, J. Noel-Baker, Capt. F. E. (Brentford) Williams, W. R. (Heston) Gibson, C. W. Noel-Buxton, Lady Williamson, T. Gilzean, A. O'Brien, T. Willis, E. Wills, Mrs. E. A. Yates, V. F. TELLERS FOR THE AYES: Wilson, J. H. Young, Sir R. (Newton) Mr. Pearson and Mr. Popplewell. Woodburn, A. Zilliacus, K.
NOES. Assheton, Rt. Hon. R. Haughton, S. G. Mott-Radclyffe, Maj. C. E. Baldwin, A. E. Head, Brig. A. H. Nicholson, G. Barlow, Sir J. Headlam, Lieut.-Col. Rt. Hon. Sir C. Nield, B. (Chester) Birch, Nigel Herbert, Sir A. P. Nutting, Anthony Boles, Lt.-Col. D. C. (Wells) Hinchingbrooke, Viscount Orr-Ewing, I. L. Bossom, A. C. Hollis, M. C. Peake, Rt. Hon. O. Bower, N. Holmes, Sir J. Stanley (Harwich) Peto, Brig. C. H. M. Boyd-Carpenter, J. A. Hope, Lord J. Ponsonby, Col. C. E. Braithwaite, Lt.-Comdr. J. G. Hurd, A. Poole, O. B. S. (Oswestry) Buchan-Hepburn, P. G. T. Hutchison, Lt.-Cm. Clark (E'b'rgh W.) Prescott, Stanley Carson, E. Hutchison, Col. J. R. (Glasgow, C.) Raikes, H. V. Clifton-Brown, Lt.-Col. G. Jeffreys, General Sir G. Roberts, H. (Handsworth) Conant, Maj. R. J. E. Joynson-Hicks, Lt.-Cdr. Hon. L. W. Ropner, Col. L. Cooper-Key, E. M. Keeling, E. H. Ross, Sir R. Corbett, Lieut.-Col. U. (Ludlow) Lancaster, Col. C. G. Sanderson, Sir F. Crookshank, Capt. Rt. Hon. H. F. C. Langford-Holt, J. Shephard, S. (Newark) Crowder, Capt. J. F. E. Linstead, H. N. Shepherd, W. S. (Bucklow) Darling, Sir W. Y. Low, Brig. A. R. W. Smith, E. P. (Ashford) Digby, Maj. S. W. Lucas, Major Sir J. Stanley, Rt. Hon. O. Dodds-Parker, A. D. Lucas-Tooth, Sir H. Stoddart-Scott, Col. M. Dower, Lt.-Col A. V. G. (Penrith) Macdonald, Capt. Sir P. (I. of Wight) Sutcliffe, H. Drewe, C. Mackeson, Lt.-Col. H. R. Taylor, C. S. (Eastbourne) Duthie, W. S. McKie, J. H. (Galloway) Taylor, Vice-Adm. E. A. (P'dd't'n, S.) Eccles, D. M. Maclay, Hon. J. S. Teeling, William Erroll, F. J. Macmillan, Rt. Hon. Harold (Bromley) Turton, R. H. Fletcher, W. (Bury) Macpherson, Maj. N. (Dumfries) Vane, W. M. T. Foster, J. G. (Northwich) Maitland, Comdr. J. W. Wakefield, Sir W. W. Fraser, Sir I. (Lonsdale) Manningham-Buller, R. E. White, J. B. (Canterbury) Gage, Lt.-Col. C. Marlowe, A. A. H. Williams, C. (Torquay) Gates, Maj. E. E. Marples, A. E. Willoughby de Eresby, Lord Gomme-Duncan, Col. A. G. Marsden, Capt. A. York, C. Gridley, Sir A. Marshall, D. (Bodmin) Young, Sir A. S. L. (Partick) Grimston, R. V. Maude, J. C. Hannon, Sir P. (Moseley) Mellor, Sir J. TELLERS FOR THE NOES: Hare, Lieut.-Col. Hn. J. H. (W'db'ge) Moore, Lt.-Col. Sir T. Commander Agnew and Harris, H. Wilson Morrison, Maj. J. G. (Salisbury) Mr. Studholme.
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:I oppose the whole principle of this Clause. The Chancellor of the Exchequer gave no reason whatever when he made this proposal in his Budget speech, and I think the Committee will agree that we have had very little further explanation of the proposal since. My right hon. Friend the Member for the City of London (Mr. Assheton) asked the Chancellor just now to say whether he was in favour of gifts inter vivos or against them, and I hope that question will be answered. Judging, however, from the Chancellor's utterances from time to time, he seems sometimes to be in favour of them and sometimes against but in this Clause he seems definitely against—[HON. MEMBERS: "Order."]
:What is going on here?
:In this Clause he seems definitely to be against gifts inter vivos, because the object of this Clause seems to be to tie a man to his property until he dies so that when he dies, you may extract the greatest possible sum out of his estate. I predict that this Clause will fail in that object, and will merely have the effect of driving a man to give away his property before he otherwise would. So far from an increase in the period stopping the leakage, I say it will add to it.
Now I want to direct the attention of the Committee to some prophetic words which were used by the late Mr. Balfour when he was Leader of the Opposition in the year 1909, when this identical proposal—as the learned Solicitor-General has just mentioned—to increase the period to five years was made by the late Mr. Lloyd George.
11.0 p.m.
This is what Mr. Balfour said:
:I have been asked whether I am in favour of, or opposed to, gifts inter vivos. This is one of the questions to which no universal answer can be given. It must eventually depend on the question by whom the gift is made, and to whom. Therefore, I must be excused from generalising. Like all the proposals made by His Majesty's Government, this is exceedingly moderate as
compared with what is done in other times and places. We have not got a regular gifts tax in this country. We have a tax on property passing at death, but we have not a tax on gifts as such. In this we are very exceptional. We have only a tax on gifts for the purpose of property passing at death within a period of three years now, but there are other countries where gifts, made independent of the time in relation to the death of the donor, are subject to tax. In the United States of America there is a gifts tax, and also in France, Belgium, Sweden and Spain, countries whose ideology differs—Franco Spain, Socialist Sweden, and our Allies, France and the U.S.A.—in addition to Death Duties.
Further, because I always like to indicate what happens in our Empire, as I think we ought to know, I find that in Canada, Australia and New Zealand it has long been the practice to encourage not only an estate tax on property passing at death but also, in addition, a tax on gifts inter vivos, regardless of the period between the making of the gift and the death of the donor. It proposes only to aggregate for the purpose of Estate Duty gifts made within five years. I trust the Committee will support us in this very moderate reform.
:The whole thing depends upon the scale of the original Death Duties.
Question put, "That the Clause stand part of the Bill."
The Committee divided: Ayes, 247; Noes, 95.
Division No. 204.] AYES. [11.5 p.m. Adams, Richard (Balham) Brown, George (Belper) Dalton, Rt. Hon. H. Adams, W. T. (Hammersmith, South) Brown, T. J. (Ince) Davies, Edward (Burslem) Allen, A. C. (Bosworth) Bruce, Maj. D. W. T. Davies, Ernest (Enfield) Alpass, J. H. Burke, W. A. Davies, Harold (Leek) Attewell, H. C. Butler, H. W. (Hackney, S.) Davies, Haydn (St. Pancras, S.W.) Austin, H. L. Byers, Lt.-Col. F. Davies, S. O. (Merthyr) Awbery, S. S. Callaghan, James Deer, G. Bacon, Miss A. Castle, Mrs. B. A. Delargy, Captain H. J. Baird, Capt. J. Chamberlain, R. A. Diamond, J. Balfour, A. Champion, A. J. Dodds, N. N. Barstow, P. G. Chater, D. Donovan, T. Barton, C. Chetwynd, Capt. G. R. Driberg, T. E. N. Bechervaise, A. E. Clitherow, Dr. R. Dugdale, J. (W. Bromwich) Benson, G. Cobb, F. A. Durbin, E. F. M. Berry, H. Cocks, F. S. Dye, S. Bing, G. H. C. Collins, V. J. Ede, Rt. Hon. J. C. Binns, J. Colman, Miss G. M. Edelman, M. Blackburn, A. R. Comyns, Dr. L. Edwards, John (Blackburn) Blenkinsop, Capt. A. Corbet, Mrs. F. K. (Camb'well, N.W.) Edwards, N. (Caerphilly) Blyton, W. R. Corvedale, Viscount Edwards, W. J. (Whitechapel) Boardman, H. Cove, W. G. Evans, E. (Lowestoft) Bottomley, A. G. Crawley, Flt.-Lieut. A. Evans, John Ogmore Bowden, Flg.-Offr. H. W. Crossman, R. H. S. Fairhurst, F. Braddock, Mrs. E. M. (L'pl, Exch'ge) Daggar, G. Farthing, W. J. Braddock, T. (Mitcham) Daines, P. Fletcher, E. G. M. (Islington, E.) Follick, M. McEntee, V. La T. Segal, Dr. S. Foster, W. (Wigan) McGhee, H. G. Sharp, Lt.-Col. G. M. Freeman, Maj. J. (Watford) McGovern, J. Shawcross, C. N. (Widnes) Gaitskell, H. T. N. Mack, J. D. Shurmer, P. George, Lady M. Lloyd (Anglesey) McKay, J. (Wallsend) Silverman, S. S. (Nelson) Gibbins, J. Maclean, N. (Govan) Simmons, C. J. Gibson, C. W. McLeavy, F. Skeffington, A. M. Gilzean, A. Macpherson, T. (Romford) Skeffington-Lodge, T. C. Glanville, J. E. (Consett) Mainwaring, W. H. Skinnard, F. W. Goodrich, H. E. Mallalieu, J. P. W. Smith, Capt. C. (Colchester) Gordon-Walker, P. C. Manning, C. (Camberwell, N.) Smith, Ellis (Stoke) Greenwood, A. W. J. (Heywood) Manning, Mrs. L. (Epping) Smith, S. H. (Hull, S.W.) Grenfell, D. R. Marquand, H. A. Snow, Capt. J. W. Grey, C. F. Mathers, G. Solley, L. J. Grierson, E. Mayhew, C. P. Sorensen, R. W. Griffiths, Capt. W. D. (Moss Side) Middleton, Mrs. L. Soskice, Maj. Sir F. Gunter, Capt. R. J. Mitchison, Maj. G. R. Sparks, J. A. Guy, W. H. Monslow, W. Stamford, W. Haire, Flt.-Lieut. J. (Wycombe) Morley, R. Steele, T. Hale, Leslie Morris, Lt.-Col. H. (Sheffield, C.) Stewart, Capt. Michael (Fulham, E.) Hall, W. G. (Colne Valley) Morris, P. (Swansea, W.) Stokes, R. R. Hamilton, Lieut.-Col. R. Mort, D. L. Stubbs, A. E. Hardman, D. R. Moyle, A. Swingler, S. Hardy, E. A. Murray, J. D. Symonds, Maj. A. L. Hastings, Dr. Somerville Nally, W. Taylor, H. B. (Mansfield) Henderson, Joseph (Ardwick) Nichol, Mrs. M. E. (Bradford, N.) Taylor, R. J. (Morpeth) Herbison, Miss M. Noel-Baker, Capt. F. E. (Brentford) Thomas, John R. (Dover) Hewitson, Capt. M. Noel-Buxton, Lady Thomas, George (Cardiff) Hicks, G. O'Brien, T. Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Hobson, C. R. Oldfield, W. H. Tiffany, S. Holman, P. Oliver, G. H. Titterington, M. F. House, G. Orbach, M. Tolley, L. Hoy, J. Paling, Will T. (Dewsbury) Tomlinson, Rt. Hon. G. Hughes, Lt. H. D. (W'lverh'pton, W.) Palmer, A. M. F. Ungoed-Thomas, L. Hutchinson, H. L. (Rusholme) Pargiter, G. A. Usborne, Henry Hynd, H. (Hackney, C.) Paton, Mrs. F. (Rushcliffe) Wadsworth, G. Irving, W. J. Paton, J. (Norwich) Walkden, E. Janner, B. Peart, Capt. T. F. Wallace, G. D. (Chislehurst) Jeger, G. (Winchester) Perrins, W. Wallace, H. W. (Walthamstow, E.) Jeger, Dr. S. W. (St. Pancras, S.E.) Piratin, P. Warbey, W. N. Jones, D. T. (Hartlepools) Platts-Mills, J. F. F. Weitzman, D. Jones, J. H. (Bolton) Poole, Major Cecil (Lichfield) White, C. F. (Derbyshire, W.) Jones, P. Asterley (Hitchin) Porter, G. (Leeds) White, H. (Derbyshire, N.E.) Keenan, W. Pritt, D. N. Whiteley, Rt. Hon. W. Kenyon, C. Proctor, W. T. Wigg, Col. G. E. Kinghorn, Sqn.-Ldr. E. Randall, H. E. Wilcock, Group-Capt. C. A. B. Kinley, J. Ranger, J. Wilkes, Maj. L. Kirby, B. V. Rankin, J. Willey, F. T. (Sunderland) Lang, G. Rees-Williams, D. R. Willey, O. G. (Cleveland) Lavers, S. Reeves, J. Williams, W. R. (Heston) Lee, F. (Hulme) Reid, T. (Swindon) Willis, E. Lee, Miss J. (Cannock) Rhodes, H. Wills, Mrs. E. A. Leslie, J. R. Roberts, Emrys (Merioneth) Wilson, J. H. Lewis, A. W. J. (Upton) Roberts, Goronwy (Caernarvonshire) Woodburn, A. Lewis, J. (Bolton) Rogers, G. H. R. Yates, V. F. Lindgren, G. S. Royle, C. Zilliacus, K. Lipson, D. L. Sargood, R. TELLERS FOR THE AYES: Lyne, A. W. Scollan, T. Mr. Pearson and Mr. Popplewell
NOES. Assheton, Rt. Hon. R. Fraser, Sir I. (Lonsdale) Lucas, Major Sir J. Baldwin, A. E. Gage, Lt.-Col. C. Lucas-Tooth, Sir H. Barlow, Sir J. Gomme-Duncan, Col. A. G. Macdonald, Capt. Sir P. (I. of Wight) Birch, Nigel Gridley, Sir A. Mackeson, Lt.-Col. H. R. Boles, Lt.-Col. D. C. (Wells) Grimston, R. V. McKie, J. H. (Galloway) Bossom, A. C. Hare, Lieut.-Col. Hn. J. H. (W'db'ge) Maclay, Hon. J. S. Bower, N. Harris, H. Wilson Macmillan, Rt. Hon. Harold (Bromley) Boyd-Carpenter, J. A. Haughton, S. G. Macpherson, Maj. N. (Dumfries) Braithwaite, Lt.-Comdr. J. G. Head, Brig. A. H. Maitland, Comdr. J. W. Buchan-Hepburn, P. G. T. Headlam, Lieut.-Col. Rt. Hon. Sir C. Manningham-Buller, R. E. Butcher, H. W. Herbert, Sir A. P. Marlowe, A. A. H. Carson, E. Hinchingbrooke, Viscount Marples, A. E. Clifton-Brown, Lt.-Col. G. Hollis, M. C. Marsden, Capt. A. Conant, Maj. R. J. E. Holmes, Sir J. Stanley (Harwich) Marshall, D. (Bodmin) Corbett, Lieut.-Col. U. (Ludlow) Hope, Lord J. Maude, J. C. Crookshank, Capt. Rt. Hon. H. F. C. Hurd, A. Mellor, Sir J. Darling, Sir W. Y. Hutchison, Lt.-Cm. Clark (E'b'rgh W.) Moore, Lt.-Col. Sir T. Dodds-Parker, A. D. Hutchison, Col. J. R. (Glasgow, C.) Morrison, Maj. J. G. (Salisbury) Dower, Lt.-Col. A. V. G. (Penrith) Jeffreys, General Sir G. Mott-Radclyffe, Maj. C. E. Drewe, C. Joynson-Hicks, Lt.-Cdr. Hon. L. W. Nicholson, G. Duthie, W. S. Keeling, E. H. Nield, B. (Chester) Eccles, D. M. Langford-Holt, J. Nutting, Anthony Erroll, F. J. Linstead, H. N. Orr-Ewing, I. L. Fraser, Maj. H. C. P. (Stone) Low, Brig. A. R. W. Peto, Brig. C. H. M. Poole, O. B. S. (Oswestry) Stanley, Rt. Hon. O. Wakefield, Sir W. W. Prescott, Stanley Stoddart-Scott, Col. M. White, J. B. (Canterbury) Roberts, H. (Handsworth) Studholme, H. G. Williams, C. (Torquay) Ropner, Col. L. Sutcliffe, H. Willoughby de Eresby, Lord Ross, Sir R. Taylor, C. S. (Eastbourne) York, C. Sanderson, Sir F. Taylor, Vice-Adm. E. A. (P'dd't'n, S.) Shephard, S. (Newark) Teeling, William TELLERS FOR THE NOES: Shepherd, W. S. (Bucklow) Turton, R. H. Sir Arthur Young and Smith, E. P. (Ashford) Vane, W. M. T. Commander Agnew.
11.15 p.m.
CLAUSE 40.—(The National Land Fund.)
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:I am quite sure that my right hon. Friend the Chancellor of the Exchequer would not expect either myself or many of my hon. Friends to allow this Clause to pass without a few comments. It may be that I shall save time if I endeavour to speak for those of us who feel as strongly as I do on the subject.
Why I and my hon. Friends object to this payment, or fund, of £50 million is simply that we are, in effect, paying out the robbers; we are, in effect, selling out under this Clause in order to pay people who have not seen the responsibility of their privilege to use the advantage which they have had to the benefit to the community. Therefore, the Government have to take charge and, under our cockeyed system—I say that advisedly because we are rapidly getting less cockeyed—which, unfortunately, my right hon. Friend had to take up and which is largely adopted in this Bill, they have to compensate people for not doing what they ought to have done. To use an analogy, it is exactly the same as the course adopted by the Government before the previous one for compensating coalowners for not taking the coal out of the ground. They certainly never put it in and they never took it out, yet they were paid something of the order of £100 million for not doing so.
:I must remind the hon. Member that this Clause refers to the National Land Fund, and to nothing more, which
"… shall be used for the purposes mentioned in this Part of this Act and for such other purposes as Parliament may hereafter determine."
:With great respect, Mr. Beaumont, I am only trying to illustrate to the Chancellor where the error of his ways is going to lead him.
:I regret that the hon. Member cannot continue that argument.
:I was only using the coal analogy as an example to enlighten hon. and right hon. Gentlemen opposite. What is going to be the effect of this Fund? It means that the poor wretched wage slave has got to work for ever to earn interest on the Fund for compensating people for not performing their duty.
:Will the hon. Gentleman tell me where reference is made in this Clause to the "poor wretched wage slave"?
:Surely, if one studies the Clause with the precision which I have—that casts no reflection on the Chair, because I do not expect anybody to have this interest so much at heart as I have—it will be seen that what is going to happen as a result of agreeing to this Fund is that the unfortunate wage slave is going to be placed in the very disadvantageous position which I have described.
indicated dissent.
:The Chancellor shakes his head; I shall be glad to hear his explanation of it. Am I, as I am resisting this Clause, entitled to suggest to the Chancellor that he might do something else? There are other ways of achieving that aim. What he is now proposing to do is to provide a fund to compensate people who should have taken steps to preserve the beauty spots for the benefit of all mankind. We have just spent something like £4,000 million to preserve ourselves but now as a consequence of the iniquitous system under which we have suffered for so long, after having spent this money and this sweat of labour, this blood, toil, tears and so on, we propose that these vandals who have acquired this land and are not prepared to use it for the benefit of the community, should be compensated. That is the be-all and end-all of this Clause. I would suggest to the Chancellor that he can quite well force them to do their duty by telling them that if they do not perform it they will have to pay a subsidy to the State for the privilege of doing nothing—in other words, a tax on idleness. [An HON. MEMBER: "A tax on land values."] Well, a tax on land values.
rose —
:But, Mr. Beaumont, I did not say a word about it; I was just provoked into doing it. With great respect, I want to point out to the Chancellor, and I do not wish to detain the Committee for more than two minutes, and I am sure that will not matter much because I am told that the Committee intends to sit all night—
:I do not find anything in the Clause about sitting up all night.
:I hope that your interpretation of the discussion will have some effect on the Committee, but as a betting man I much regret to tell you that I suspect that the odds are all against you. I want to say to the Chancellor that a White Paper has just been published which, if he follows it, will do all he wants. I am resisting this Clause, and I want to tell him why. He wants revenue [ Interruption. ]—Well, he is the first Chancellor I will have met if he says he does not.
:A few moments ago the hon. Member was telling me that I was not so well acquainted with the Clause as he was. I would suggest to him that he is now showing that he is not well acquainted with it either, and that he had better stick to the point.
:Surely I am entitled to resist this Clause?
:The hon. Member is perfectly entitled to resist the Clause, but he must confine himself to what is in the Clause.
:I think I am entitled to show to the Chancellor that he may, with safety, do without the Clause altogether if he is prepared to follow the advice I am about to give him. If not, then what he wants to do as a Chancellor is stultified. He will be saying that the hon. Member has made a speech—
:The hon. Member might adopt an alternative suggestion, and that is to deal with the Clause which is now under discussion.
:Further to that point of Order. I notice that under Subsec- tion (2) of Clause 40 there is mention of a national fund for £50 million out of the Consolidated Fund. Surely it will be quite in order for the hon. Member to ask that that £50 million should not be paid out of the Consolidated Fund, and that the money should be found in some other way?
:I thank the hon. Member for Nelson and Colne (Mr. Silverman) for putting in so few words what I have been trying to say for some time. I am resisting the payment of this £50 million in this way, and I want to suggest an alternative. I am trying to say quite shortly—and my speeches do not usually take long—that the Chancellor is, with great respect to him, not fully apprised of what is involved in all this. I am sure he knows what is in these Government White Papers, and that he is a serious student of them all, but I would suggest that his mind is not quite attuned to what is in this particular one, and what will be the effect of this particular Clause. The White Paper we have just had issued shows about 43,000 people engaged in collecting for the Inland Revenue, and that at a cost of £1,000 a head.
:I cannot see what that has to do with the Clause under discussion.
:I am trying to save the country £50 million, and I am proposing to show—
:On a point of Order. Is it in Order for the hon. Gentleman to suggest an alternative to the provision of this £50 million to the Chancellor of the Exchequer?
:The hon. Member might have put that point earlier, but I am hoping that the hon. Gentleman the Member for Ipswich (Mr. Stokes) will come to the Clause under discussion.
:I was trying to do so, with respect. I am trying to show an alternative, and I am trying to explain to the Chancellor that there is a way of doing it.
:The hon. Member does not seem able to understand that we cannot discuss an alternative to what is in the Clause.
:The Chancellor suggests £50 million for the process of what I call buying out the robbers.
:There is nothing about that in the Clause.
:Well, I do not know what that means.
:There is not one thing in the Clause which raises the question of compensation.
:Well, what precisely is the answer to that? The answer is, in fact—although as a large landlord he will not give it—[ Interruption ]—that the object of the Fund is to compensate the landlords.
:Will the Chancellor tell us what the object of the Clause is?
:I suggest that the hon. Member finishes and I will explain.
:I am not being allowed to finish. What I am trying to do is to explain that we are spending £50 million and further smaller sums, as this White Paper illustrates, but there are 40,000 people wasting their time. I want to explain that for one fifth of the expenditure thus incurred in the Inland Revenue, the Chancellor—
:That has nothing whatever to do with this Clause.
:With great respect, it has. [HON. MEMBERS: "Order" and "Withdraw."]
:I do not think that the hon. Member intended his remark to be personal or offensive.
:Withdraw.
:Which remark? Withdraw what? The whole of my argument is against the expenditure of this sum of money, and I am entitled to argue against it, and I do not see why the Chair should rule me out of Order.
:The hon. Member has had a fair amount of time. Will he now conclude his argument?
:I do not know whether my hon. Friend has had a fair amount of time or not. I do not know what that has to do with it. On the point of Order originally raised as to whether he was entitled to suggest an alternative, I submit, with great respect, that he is perfectly entitled to make such a suggestion. I suggest, Mr. Deputy-Chairman, that if the Clause provides that money shall be provided out of the Consolidated Fund, then it is perfectly competent for any Member of this Com- mittee to argue that the money shall not be provided out of that Fund, but provided in some other way.
11.30 p.m.
:That should have been done by the hon. Member at an earlier stage. The hon. Member could have put down an Amendment which could have been debated. We are now discussing whether the Clause shall stand part.
:It is quite evident that what I wanted to say has struck home, from the fact that the Opposition is putting up such a resistance.
:In case my hon. Friend should have confused the mind of any hon. Member in any part of the Committee, I desire to explain with the greatest simplicity that I can what this Clause does. This Clause provides that there shall be paid out of the Consolidated Fund a sum of £50 million. That is all. It labels that Fund with the label "National Land Fund," and it is so labelled for a reason which will appear in a later Clause. It does not appear in this Clause. The Clause also provides that any sum standing to the credit of the Fund may be invested as the Treasury so direct, in which case it will bear interest. Now that is all this Clause does. It does not deal with the use of the Fund. That will come later. It does not deal with the route by which this money passes first into, and then out of, the Consolidated Fund.
:May I ask—
:Not at present. It does not make any difference to this Clause whether the money which enters the Fund is derived from a tax on land values or beer or a tax on anything else. But the revenue, wherever it is derived from, passes into the Consolidated Fund. This Clause does not discuss that. It merely provides that out of the Consolidated Fund, so fed by various revenues entering it, including, as I explained in my Budget speech, a large sum from the sale of war stores which I linked up in that speech with this particular provision, there shall be paid into a National Land Fund £50 million. This has nothing to do with landowners or with any of the topics which my hon. Friend raised. I hope that explains to other Members of the Committee exactly what is involved.
:May I say that of course I understood the Chancellor's argument? He is always so lucid. But may I ask if it would not be better for the Committee if, instead of calling it a National Land Fund, the Fund were called "Fund A" or "Fund X," instead of misleading poor persons like myself into believing it was something for buying land?
:That does not arise on this Clause.
:It is not often, I think, that the hon. Member for Ipswich (Mr. Stokes) has proved his case, but he started his speech this evening by saying that he was going to make a cockeyed speech. I think he has proved that statement. There is, of course, no mention in this Clause of the uses to which the hon. Gentleman referred, although there is a mention in this Clause of a use to which I propose to refer afterwards. I have some sympathy with the hon Gentleman in the mistake he has made. What has happened is that instead of reading this Clause he has been reading the Chancellor's peroration in his Budget speech, but anyone who refreshed his mind will realise that he spoke at that time of a great many things which are not in fact being implemented in the Clause we are now discussing.
:On a point of Order, Major Milner. If the hon. Member for Ipswich (Mr. Stokes) was out of Order in making his remarks, is not the right hon. Gentleman out of Order now?
:The hon. Gentleman is a little premature. I am listening to the right hon. Gentleman.
:I am entitled to say to the Committee what is the meaning of this Clause, to compare it with the statement made by the Chancellor of the Exchequer on the Budget Resolution on which this Clause is based, and to see whether they mean the same thing. It is because I think they do not mean the same thing that I rather sympathise with the hon. Gentleman because the Chancellor of the Exchequer, in that peroration, did say a great deal about acquiring beauty spots by this Fund. I remember many people were acutely affected in one sense or another by this peroration. It was a pen picture—
:On a point of Order. Are we not dealing with Clause 40? Where does Clause 40 mention beauty spots or perorations or the Chancellor's speech?
:I think the right hon. Gentleman was tending to get out of Order. I think it is out of Order to discuss the use to which this £50,000,000 is to be put.
:Why not? We are being asked to approve of a Clause which proposes to pay out of the Consolidated Fund the sum of £50,000,000. Do I understand from your Ruling, Major Milner, that we are not entitled to discuss what he is going to do with that?
:Not on the Question that this Clause stand part. It is certainly not permissible to discuss in detail here the use to which the £50,000,000 may be put.
:May I point out that this Clause which we are now discussing does say that it shall be used for the purpose mentioned in this part of the Act, and for such other purposes?
:The right hon. Gentleman will appreciate that we are not discussing this part of the Act; to be precise we are discussing the particular Clause of this part of the Act, and we must confine ourselves to that Clause.
:Further to that point of Order, I speak as a minor member of the community, and when £50,000,000 is involved it seems to be probably the most important part of the Clause, and if £50,000,000 out of the Consolidated Fund is to be ear-marked for a specific purpose surely it is in Order to discuss for what purpose it is to be ear-marked, and to suggest alternative methods by which it is to be raised.
:This Clause does not refer to a specific purpose; it is not permissible to discuss in detail on this Clause the purposes for which the £50,000,000 may be used, because the Clause says these purposes are mentioned elsewhere and also will be such as Parliament may hereafter determine. It is also not permissible to discuss alternatives at this stage.
:Further to that point of Order, may I submit with great respect that this Clause provides the money, and the later Clause discusses what we shall do with the money when it has been provided. Surely it cannot be right to say we must provide the money first, and only then shall we be entitled to discuss the purpose. That, I think, with great respect, would be the logical result of the Ruling so far indicated. Furthermore, the Clause 40 provides not merely that it shall be used for the purpose set out in this part of the Act, but also for other purposes—further undefined purposes—and it seems to, me on the whole that it would best serve the interests and the purposes of the Committee to discuss on this Clause what are the general purposes that the Chancellor has in mind because on this Clause we mast decide whether he is to have the money or not. On this Clause we must decide whether he is to have the money or not. After that, no doubt, if we ever provide him with the money, we may then proceed to discuss the purposes in detail. The essential question is whether he is to get the money, and in deciding that, surely the Committee must have some regard to the purposes.
:The hon. Member appears to have overlooked that that is not the order of the Bill. The order in which the Clause appears in the Bill is that the money shall be provided first, and it is that matter which the Committee has before it at the moment. As I have said, it is not permissible to discuss here the purposes for which the £50 millions may be used. The hon. Gentleman must recognise that we have got to the stage when the Question is, "That the Clause stand part of the Bill." The Clause is there as it is set out, and in effect we are limited in the same way as on the Third Reading of a Bill. The time for moving Amendments is now past, and we can now only discuss what is in the Clause, and whether the Clause as printed shall stand part of the Bill in that form.
rose —
:I have given my Ruling, and unless some fresh point is to be put before me, I must ask the hon. Member for Ipswich (Mr. Stokes) to allow the right hon. Gentleman to continue his speech.
:It seems to me, Major Milner, with great respect to you, that a new doctrine is being introduced here. Surely, you cannot argue that any Government can come to the Committee with a blank cheque Clause, and because they do not define the purpose for which they propose to use the money, there may be no discussion of it. Surely, the House would cease to have any control over finance if that doctrine were accepted. Will you take that point into consideration?
:I am obliged to the hon. Member for Lonsdale (Sir I. Fraser), but the answer is that those hon. Members who desire to detail the purposes for which the money should be used should have put down an Amendment to that effect. They have not done so, and the opportunity has therefore passed so far as this Clause is concerned, and the Clause must be discussed as it appears in the Bill. That is my Ruling.
:With great respect to you, Major Milner, I wish to submit a fresh point. Clause 40 (3) specifically sets aside the amount of money out of the £50 million which is to be used for the purposes of the Bill, and the amount of money which may from time to time be used for those purposes. I submit that for the purposes of Clause 40 (3) it would be relevant to refer to the purposes.
:I am sorry that the hon. Member has brought no fresh light on the subject.
rose —
:I must ask the hon. Member for Ipswich (Mr. Stokes) to resume his seat. He has taken up a good deal of time, and raised a number of questions, and he must allow hon. and right hon. Members to continue the Debate.
:I wish to raise a point of Order.
:If it is a fresh one.
:It is a quite different Ruling that you have now given, Major Milner. You have told the Committee that if no Amendments are put down to a Clause, when the Question is put "That the Clause stand part of the Bill," no hon. Member who objects to the Clause can raise his objections to it, because he has put down no Amendment. That is a new Ruling, and with great respect, I would draw your attention to the words in Subsection (3), which states quite specifically the reason for which this money is being raised. Surely, even though there is no Amendment down, any hon. Member is within his rights in explaining why he objects to the money being found for this purpose, and even to suggest alternative course to help the Chancellor out of the difficulty.
:I have given no different Ruling. Under the Rules of the House there are some things hon. Members are not permitted to do. They are not at liberty at this stage, on the Question, "That the Clause stand part of the Bill," to submit alternatives. The occasion for that would have been when an Amendment was put down. The Clause is set out in the Bill, and it is now for the Committee to say whether it shall stand part of the Bill in the present form. That is the position. The Committee must accept or decline the Clause in its present form. It is not in Order to suggest alternatives. I must now request hon. Members to leave that point of Order and permit the right hon. Gentleman to continue his discussion. Hon. Members, and particularly the hon. Member for Ipswich (Mr. Stokes), have been speaking repetitively and the Debate must proceed.
11.45 p.m.
:I want to raise a new point of Order, Major Milner, arising out of what you have just said. It appears to me, with the greatest respect, to show a complete misconception of what we are trying to do. Nobody is suggesting that we can at this stage amend this Clause. Nobody is suggesting any Amendment or any alternative. What we are saying is that if the Committee is asked to authorise a payment out of the Consolidated Fund of £50,000,000, we are entitled to ask what for before we decide whether we will agree to it or not. That is what is being said, and I should have thought there was nothing very original about it.
:Further to that point of Order, Major Milner. I speak with great respect but I have been told that I have cast no light on this matter. I have pointed out that under Subsection (3) the purposes of the Clause are specifically mentioned. If, after all that, the purposes are not to be debated, I submit—
:What Subsection (3) says is
"that any sums which are not immediately required for the purposes may be invested."
It does not specifically mention and it has no direct relation to the purposes. Therefore it is not permissible to discuss the purposes. Mr. Stanley.
:Of course I bow to your Ruling, Major Milner, and I accept the position that we are in this Clause establishing a fund for a purpose which will be disclosed later. It will, of course, have this unfortunate effect that having established the fund if, when the purpose is disclosed later in Clause 42, we disapprove of the purpose, it will be rather difficult for the Committee to know what to do about it. But I shall have an opportunity on Clause 42 to discuss the purpose and the only purpose for which this fund is to be used. I would confine my remarks, therefore, to saying that I regard the whole of this talk of setting up a fund as a pure illusion. There is no setting up of a fund at all: all we are doing is earmarking for this purpose part of the year's deficit. When the right hon. Gentleman talks about the Consolidated Fund being fed by revenues coming from all sources, and part of it pouring out into the National Land Fund, of course the Consolidated Fund is not being fed by revenues, quite apart from the £50,000,000 for the National Land Fund. However I, and I think my hon. Friends, are prepared to accept the position that when we pass this Clause we earmark £50,000,000 deficit for this year, and that on a subsequent Clause we shall be told what the purpose of it is.
:I want to protest most strongly against voting £50,000,000 for an unknown purpose. It seems to me very wrong in these hard times to call for so much money for a purpose which is unable to be disclosed. Think of all the needs of our people; think of the ex-Service men who could do with some part of this £50,000,000; think of the great burden of taxation which is falling upon our people, of the Chancellor's difficulty in relieving us of Purchase Tax; think of the burden we bear in contributing towards U.N.O. and U.N.R.R.A.; think of the great burdens which every taxpayer has to bear for education, of all the social services which the Government is carrying into effect as a result of the White Papers laid before us by the previous Government. Think of the National Insurance Bill.
:The hon. Member as quite out of Order in dealing with that matter.
:I want to point out briefly the moral of the discussion we have just had.
:About what?
:The difficulty in which we find ourselves, and in which the hon. Members for Ipswich (Mr. Stokes) and for Nelson and Colne (Mr. S. Silverman) find themselves, is that this Bill has been badly arranged and this Clause has been particularly badly drafted. Had this Clause come later, and had the Committee decided the purpose for which this Fund was to be used, we could discuss whether the £50 million should, or should not, be voted. I feel that the time spent on this Clause—a very long time now—is not the fault of the Opposition or the hon. Member for Ipswich, but is the fault of the bad arrangement of the Bill by the Government and the extremely bad draftsmanship. I think the Committee has a right to complain about it.
:I am anxious to save the Comptroller and Auditor General from any unnecessary difficulty. I see that the accounts and "copies thereof" have to be laid before both Houses of Parliament. Is it intended that something or other should be done with regard to these accounts and this Fund in the other place, or only here? If only here, then what is the object of the account and copies thereof being laid before another place?
:I want to draw attention to the last few words in Subsection (1). It says that the Fund should be used
"for the purposes mentioned in this Part of the Act and such other purposes as Parliament may hereafter determine."
It is a very bad principle in drafting to put into an Act of Parliament any reference to what Parliament may or may not do later. This is a qualification which could be imposed upon every single word in any Act of Parliament. The Act could say, "The Treasury shall prepare an account, or such account as Parliament may hereafter determine, any sum, or sums as Parliament shall here- after determine." It is a meaningless qualification. One test of whether it is meaningless is to see whether words are put in to prevent the opposite occurring. A rule of thumb of the draftsman is to put in the word "not" and see whether it makes sense then. If we put in the word "not," it makes nonsense. This has certain constitutional significance. One does not wish to exaggerate at this time of night, but it is a qualification which could be put in, in any place, into any Act of Parliament. As Parliament is omnipotent, this is a quite meaningless phrase.
:I object to this Clause on a matter of principle. In fact, I object to the Clause on a matter of three principles as far as the words in the second and third Subsections go. I disapprove of the first Subsection on a matter of principle because I am strongly against the establishment of a Fund. It is immaterial to me whether that Fund has purposes or not. I am against bringing in a Clause to establish any Fund for any purpose whatever without an explanation. I cannot have that explanation; therefore, I am against this Fund. None of us has the haziest idea of what the Fund is about. As far as Subsection (2) is concerned, there is mentioned a sum of £50 million. I am not saying that we should have a larger or a smaller sum. If I had wished to see a smaller sum I could have put down an Amendment. It is obviously wrong that for the support of that Fund we should give a sum of £50 million. That is the second principle upon which I object to the Clause.
The third reason is the one which the Chancellor of the Exchequer kindly explained to us. We should not leave this matter to be discussed entirely by hon. Members opposite. Fundamentally I dislike, in Subsection (3), the words: because I cannot imagine that anyone who has to gesticulate quite so much as the right hon. Gentleman can be good at investing funds, I object to this Clause. Those are the three reasons why I would like to have an opportunity to vote against the Clause. I agree that as far as I have explained the Clause up to now it is, to use the description of an hon. Gentleman opposite, "cockeyed."
Subsection (4) gives the only possible justification which we could have for a Fund of this sort. It is that, if this is done, the Fund is to be audited by the Comptroller and Auditor-General—a provision of which I thoroughly approve—whose report will be laid before both Houses of Parliament. I approve entirely of that part of the Clause, but I cannot possibly see, if there is a Division, that anyone can vote for the Clause. I am sorry I have not been able to explain my objections to this Clause in greater detail, but I wanted to try to do it in such a way as not to cause you, Major Milner, any trouble at all.
12 mdnt.
:I am much obliged to hon. Members on both sides of the Committee for initiating such an interesting Debate, but I hope those who wish to vote against the Clause will take the opportunity open to them. The purposes for which this is wanted have been explained on several occasions. It would be out of order for me to repeat them, and I am not going to repeat them. I merely give the references for reading. They were explained very clearly in my own Budget Statement, and they were again explained on the Second Reading of the Finance Bill—by the Financial Secretary in moving the Second Reading and by myself in replying at the end of the Debate. These purposes are known, and those who go into the Lobby against this Clause will vote against those purposes. [HON. MEMBERS: "No."] The purposes will have been heard and understood by the right hon. Gentleman when he listened to my Budget speech and my speech on Second Reading. In a sentence, keeping myself in order, I hope, in uttering a few words, they are acquiring for the people of this country—
:I hope the right hon. Gentleman will not indulge in details, which, I have already indicated, are out of Order on this Clause.
:I would refer all hon. Members in doubt to what was said in my Budget Statement.
:On a point of Order. If it is out of Order to refer to the purposes directly, can it be in Order to refer to them indirectly, by reference?
:At any rate, I was not called to Order. [HON. MEMBERS: "Oh."] I was not called to Order by the Chair.
:On a point of Order. May I, most respectfully, ask if you, Major Milner, would give a Ruling on the important point of Order raised by the hon. Member for Nelson and Colne (Mr. S. Silverman)—that, if the Chancellor is in Order in making this oblique reference, other hon. Members may be allowed to reconsider their position?
:Yes, I think the right hon. Gentleman is within the bounds of Order, not to detail the purposes, but to mention where they may be seen—no more than that.
:That I have done. I wish to answer the hon. Member for Kettering (Mr. Mitchison), who asked a very sensible question, and I have to say to him that the phrase "both Houses of Parliament" is a phrase of common form, and it means that a carbon copy is sent to another place. The powers of this House in regard to finance cannot be limited in any way by those words. They are common form.
:I beg to ask leave to move:
"That the Chairman do report Progress, and ask leave to sit again."
I do so in order to afford hon. Members an opportunity of inspecting the Budget speech. I happened to be in South Africa at the time when this remarkable statement was made, and I think it is very unfair for hon. Members to be asked to vote £50 million for an annual purpose which cannot be explained by the Chancellor, and there seems to be no other way to give us the time to go to the Library and read this statement.
:I do not propose to accept the Motion.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
CLAUSE 41.—(Extension of power to accept property in satisfaction of death duties.)
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:The object of this Clause is to increase the amount of land in State ownership. That is an object with which I am in full accord; in fact, the greater the amount of land the State owns, the greater I shall agree, but I suggest that the Chancellor is showing undue optimism in expecting any great result from this Clause. The power to offer land in satisfaction of Estate Duty has been on the Statute Book of this country ever since 1910, and, as the Chancellor of the Exchequer rightly said in his Budget speech, it has only been used on two very minor occasions. Only two small pieces of land have been offered to the State by landowners or their representatives under that Act. Experience has proved, and will prove, that no very great result will accrue from the operation of this Clause as it now stands.
:On a point of Order. Merely for guidance on future occasions: as I understand it, we were prevented from discussing the objects of Clause 40, but, listening to my hon. Friend, whom I do not wish to stop for a moment, it would appear that he is discussing the objects of Clause 41.
:There is no objection to an hon. Member discussing the general objects of a Clause; the objection is to going into details of those objects when they are set out in another Clause.
:I was confining myself to the objects and was saying that I did not think that the result would be at all commensurate with the expectations. This was the view put forward with very great force by the right hon. Member for the City of London (Mr. Assheton) when he said:
"I doubt whether very much will come of it."
Further on, he used the phrase that he regarded this Clause as "a bit of bluff," and one gathered that the reason why he suggested that not much would come of it was because of what he called the "heavy burden of ownership of agricultural land." I would not endeavour, for a moment, to dispute the claim of the right hon. Gentleman to express the mind of the landowners of this country better than myself or anyone else. I have heard landowners and estate agents bemoan the great burdens which they have to bear and complain about how little they get out of their estates, but I have never found them very willing to give up any of their land, either to the State or to anyone else. I have always found that they cling to it most tenaciously, and I am afraid that that disposition will be evidenced in the future in regard to this Clause.
:On a point of Order. Surely, the hon. Member is wandering far from the Clause?
:The hon. Member is perfectly in Order. The Clause provides that the Commissioners of Inland Revenue shall have power to accept property, and the hon. Member is expressing his doubts as to whether any such property will ever be offered to the State.
:In support of that view, I would like to tell the Committee what has taken place in my own Division. The largest estate in the County of Gloucester shire has changed hands twice in the last 30 years. There was no disposition on the part of the representatives of the owners to give any land in satisfaction of Estate Duty; an entirely different procedure was adopted. The late Earl of Berkeley made his acquaintance with his tenants by serving them all with notice to quit. There was not much benevolent landlordism in that action. Accompanying the notice to quit was a circular which stated that if the tenants were prepared to pay an increased rent—
:I do not see what that has to do with the Clause. The question of notice to quit does not arise.
:If I had been allowed to finish my argument I should have shown why there could have been a better scheme which would have served much better.
:Will the hon. Member tell us on whose estate this was?
:The Earl of Berkeley's estate. I ought to know, for I have lived in the shadow of the castle all my life in the county of Gloucestershire. I was chairman of the National Farmers Union at the time, and we held meetings of protest. But instead of electing to use the powers under the Finance Act with land in payment, they did what has so often been done.—[An HON. MEMBER: "Have another guess."]—There is no guessing about it. If hon. Members had been tenants on this estate they would know all about it, but what I am telling them is that, instead of giving some of this land to the State in Estate Duties, they decided to auction a large part of it. The result was that the fanners who had farmed their land the best had to pay a high price, and consequently, a much larger sum was obtained for that portion of the estate than had been anticipated. That is the only standpoint from which landlords look at this matter.
:If that is the only standpoint from which landlords look at this matter, I would ask if that applies to the President of the Board of Trade.
:I am not dealing with the Board of Trade. I am speaking of my own experience, and the fact that it applies to landlords generally, and I am trying to show that only twice has land been given, and then only two small pieces. I am certain that appeals to the voluntary spirit of the landlords is not going to do what the Chancellor expects under this Clause, and stronger action will have to be taken.
:I hope the hon. Gentleman will excuse me if I do not enter into his speech, because I want to do nothing which will disturb the peace we had over the last Clause. But, I would ask about the power of accepting land. What I would like to know is whether it is to be effective from the Budget date—is it already in operation? When did this power of the Chancellor begin? This is no wangle. If that assumption is correct, this power has already had two months to run, and I rather wonder if there have been any arrangements under this Clause for taking up land. I have heard rumours, and I rather wonder whether the information I have heard somewhere is correct. May we know if it has been taken advantage of up to the present? I ask that because we hear a good deal of talk about it.
12.15 a.m.
:There is just one point about which I would like to ask the Chancellor of the Exchequer. This Clause is alleged to extend his power to accept property in satisfaction of Death Duties. I am not quite certain to what extent it extends his power. It gives him the option to accept any such real estate, including leasehold property. Does that mean that the Chancellor is able to accept property in addition to that which is chargeable with the duty on the occasion of the particular death? Otherwise, I do not quite see what is the object of the extension of the power which is given. I would like to say a word or two with regard to the speech of the hon. Member for Thornbury (Mr. Alpass). I will not go into his experiences in Gloucestershire, because I do not know much about Gloucestershire. The difficulty which has arisen in the past was that the Chancellor and the Board of Inland Revenue were not willing to accept land. There have been only two occasions when land was offered. As far as I know there have been only two occasions when land offered has been accepted by the Treasury. Several hon. Members on this, side of the Committee are anxious to know why the Chancellor did not put the matter the other way round and state that the Commissioners of Inland Revenue should accept property offered. Some of us would like a little explanation of that matter. Why is it that the Chancellor of the Exchequer has not said that the executors have a right to hand over property to the Chancellor in satisfaction of Death Duties? I can think of all sorts of reasons why the Board of Inland Revenue would not like such a provision, and it was on these grounds that I made an observation on an earlier occasion when we were discussing the matter to which the hon. Member for Thornbury made reference. I said I did not think much of some of this because I knew the lack of enthusiasm there was likely to be in the Treasury and the Board of Inland Revenue to a proposal of this sort. If the Chancellor of the Exchequer is obliged to take property over he will be stuck with some very unsatisfactory property—property which will not be at all remunerative. That was the point I was wishing to make. Many people feel that the Chancellor of the Exchequer ought to accept whatever is offered but I think that the real reason the Chancellor does not put it in that particular form is that he knows full well how unattractive is some agricultural land and does not wish to burden the Treasury with such a proposition.
:Before the Chancellor of the Exchequer replies, may I ask for an assurance that the hon. Member for Thornbury (Mr. Alpass) was wrong in suggesting that this Clause was to be used for the nationalisation of land? I had always understood that any land accepted by the Government under this Clause was to be handed over to the National Trust or a similar body for use as a national park.
:I would like to answer the questions put by hon. Members. The Member for Torquay (Mr. C. Williams) asked when this power would first become operative. The answer is that, subject to two extensions—which I will explain in a moment—which are given by this Clause, the power to receive land in payment of Death Duties has existed since the year 1909. It has not yet been used, as we have been reminded tonight, save in two very small, unimportant, and uninteresting cases, but the power has been there since 1909. I think I can explain the extension. The power has been there, the power was settled under the Finance Act of 1909–10, Section 56, which has never been repealed. The power has been to take, by agreement between the executors and the Inland Revenue, without any compulsion on either side, that part, or fraction of that part, of the Death Duty payable on land in settlement of Estate Duty and some of the minor Death Duties.
I put it in that way in order to show more clearly the extensions now brought about by this Clause. They are two. In the first place land can be accepted in the satisfaction of any amount up to the whole of the Death Duties payable on the estate, not merely in respect of the part of the land which consists of real property. I hope I make that clear. That is to say, it would be possible in respect of a person who owned some land and also a quantity of personalty—securities and so on—for the Death Duties on the estate wholly to be met by the surrender of land without any payment of cash at all, if the amount of land in the estate was sufficient to cover the total of the Death Duties on the estate. That is one of the extensions made in this Clause. Until now, as I hope I made clear just now, it was only possible to tender in the form of land that part concerned with the passage of the land by death.
The other extension is that legacy Duty is, for the first time, added to the list of the duties in satisfaction of which land may be accepted. These extensions are useful, but, of course, they are not fundamental, and the main difference which possibly will apply in future will not be the difference brought about by this extension, but the difference brought about by the different attitude which I intend to adopt in this matter as compared with the attitude adopted by my predecessors, and, on the other hand, the somewhat different attitude which, in spite of what the Member for Thornbury (Mr. Alpass) said, will operate in the minds of the executors of deceased persons who own land. In a number of cases—and this is not at all a question of which pays best—there is a disposition on the grounds of convenience. There is already the disposition in certain cases on the grounds of general convenience in the handling of the estate for part, at least, of the Death Duties to be settled by the transfer of land.
There is one case in which the negotiations are not yet finally completed but in which it has been indicated to me that the executors of the estate situated in the county of Merioneth—the hon. Member who represents that county (Mr. Emrys Roberts) knows all about it and has been in touch with me about certain local problems which would have to be looked at in the event of this transfer taking place. There is an estate situated in Merioneth to which I referred in a speech I made at a watering place on the south coast of this island—which I would be very glad to see passed into the hands of the nation, and I gather the executors also would be very happy if it passed into public property in payment of a large part of the Death Duty bearing upon the Watkins Wynn estate. As I indicated at Bournemouth—and I am very happy to repeat it now—this would include land of great beauty and attractiveness. It would include the whole of Lake Bala and it would also include a number of slopes mounting—I forget now the height of Anran Rig but no doubt the hon. Member will remember, and, at any rate, it is quite a useful climb and the country is very attractive from the scenery point of view, and I hope very much that these arrangements will be completed.
It is possible, though here again nothing is completely settled yet, that the National Trust will be willing to take charge of this property on behalf of the nation. All this is in the process of negotiation. I mention it in reply to the question whether there have been any cases. There has been this case. I do not want to mention other names and places tonight, because it might seem premature to disclose what discussions are going on, but I would like to tell the Committee that there are two or three other cases in which the executors are, at any rate, half-disposed to make payment of Death Duties in his way. I am frankly encouraging this in all cases where the land appears to me to be suitable to be taken over for the general enjoyment of the people and particularly for the younger and more active members of the community to spend their holidays on. That, as the Committee knows, is the purpose of all this. I hope I have answered the questions that were put.
The right hon. Gentleman raised the question whether there should be some compulsion in the acceptance of land under this Clause. There is at present no compulsion on either side; there is no compulsion on the executors to offer, and no compulsion on the Treasury or the Inland Revenue to receive. As at present advised, no additional compulsion is proposed. Certainly, I could not agree to compulsion on the Treasury to accept any bit of land offered from anywhere—scraps and bits and pieces. And we are not yet at the stage where, and I have not reached any conclusion that, we should take such a further step. Let us see how the experiment proceeds. It has begun hopefully. I am not at this stage proposing that there should be compulsion exercisable on the executors by the Treasury to hand over land to them. I think it will very likely turn out that over a period of years we shall get very substantial transfers of this kind. People speak of the disinclination of the Treasury and the Inland Revenue, but the decision and responsibility rests with Ministers. My decision is that, wherever suitable land is offered, it shall be accepted, and "suitable" I have defined in the way I have indicated. I hope I have answered the questions that were put to me, and I hope there will be general agreement in the Committee that the Clause should now stand part of the Bill.
:Will the right hon. Gentleman confirm what I said in answer to the hon. Member for Thornbury (Mr. Alpass) that there have been more than two occasions on which land has been offered, and that it was a disinclination on the part of the Treasury in the past to accept land that led to this plan not being brought to full fruition, and not the fact that only two offers were made?
:I would prefer to say that it was the disinclination of some of my predecessors. I would not wish to blame the officials. It is true that Lord Snowden was offered Loch Lomond under the provision, and he had correspondence with me about it, and he said that he did not want a piece of wasteland like that. At that stage I stopped the correspondence.
:The Chancellor has referred, as did the hon. Member for Torquay (Mr. C. Williams), to a certain estate in my constituency.
:I did not refer to any particular estate. I referred to rumours in another speech that I had read.
:The hon. Member referred to certain land in Wales, and the Chancellor defined it more precisely; it is one of the most beautiful parts of that delectable country. I only mention the matter because the Chancellor referred to it. I must correct him in one particular. He said that I knew all about it. Certainly, I did not. I read that he had announced at the Labour Conference at Bournemouth that he had received a half offer. Being a lawyer, I know what an offer is, but not what a half offer is. I had not heard of it before this announcement. My point is this: The Conservative Party naturally is concerned with the interests of the landlords in these matters and the Labour Party with the interests of the State.
12.30 a.m.
We on the Liberal benches are more concerned with the interests of the men who till the soil and work on the land. We cannot look at land without regarding the interests of the men who work upon it, to the tenants who have farmed it for generations, who have wrung and wrested a meagre living from those hillsides. I would like from the Chancellor—and I am sure he will give it—an assurance that the interests of those persons will be consulted, that this Labour Government will not be the instrument of a deal between the resources of the State on the one hand, and the landlords, the owners, on the other hand; but that they will take into account before they accept property from the landlords, the interests of the tenants themselves For instance, in this part of the country, all the tenants have got together and they may want to buy the estate and run it as a co-operative enterprise. That is a part of public ownership, and I would like an assurance from the Chancellor that before he accepts property under this Clause he will consult and take into account the interests of the men who work on the land.
:All kinds of arrangements are made in this particular case and I have had reports about the local position. The hon. and gallant Gentleman has himself spoken to me about if. We shall, of course, consult with the tenants on the estate, and may I add that I have no doubt whatever but that the tenants, if the plans we have in mind mature, will not only be assured of the security of their occupation of the land, but that they will in many respects be considerably better off than they have been hitherto.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
Clauses 42 to 45 ordered to stand part of the Bill.
CLAUSE 46.—(Units under unit trust schemes to be treated as stock.)
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:This is a Clause of some length and affects units under trust schemes. I am not clear and I doubt if there is anyone on the other side except the Chancellor of the Exchequer, who is in a position to explain this. I wonder, therefore, if we might have some explanation of this Clause.
:Clause 46 is part of a code contained in Clauses 45 to 49, and in order to explain Clause 46 I would say—if I am in order in saying so—a word as to the object of Clauses 45 to 49. The object of those Clauses is to give effect to the recommendations of a committee which met under the Chairmanship of Sir Alan Anderson, who was then a Member of the House of Commons, in order to consider the position of unit trusts. One of the recommendations of the committee related to the stamp position of unit trusts, and called attention to the very favourable position in relation to stamp duties that unit trusts were in as compared with investment trust companies. The committee made certain recommendations in order to bring the position of unit trusts more closely into alignment with those of investment trusts in relation to stamp duties. The first recommendation involved an alteration in the incidence of Settlement Duty on the unit trusts. The second was that transfers of unit trusts—that is to say, the equivalent of the share in a unit trust—should be effected under a contract note such as is used on transfers of shares attracting the same stamp duty.
The next recommendation was that the provisions for unit trusts in relation to the duty on the actual transfer should be made analogous, indeed, as far as it can be, the same as for investment trusts. The next recommendation was that bearer certificates relating to units in unit trusts should be made liable to the same duty as share bearer certificates. Then there are other arrangements relating to compositions for stamp duties and various other safeguarding powers.
The conditions of Clause 46 are designed to bring into effect part of those recommendations. Subsection (1) provides that all reference in stamp enactments relating to shares and stocks shall be construed as if they also related to units in unit trusts. The effect of that would be that they would be put in the same position in regard to contract notes transfers, and so on. Subsection (2) shows how in relation to stamp duty the nominal value of a unit in a unit trust is to be assessed. Subsection (3) provides that if a unit in a unit trust is surrendered and reissued within two months there will not have to be a double payment of stamp duty in exactly the same way as there is no double payment in respect of shares if they are bought by a stockjobber and resold within two months. Subsection (4) makes the same sort of provision where units in a unit trust are cancelled on surrender. Subsection (5) provides for composition duties—that is to say, it enables a unit trust to make a composition payment in respect of stamp duties on transfers which would otherwise become pay- able in respect of units of that unit trust. Subsection (6) is the one which deals with contract notes and brings it about that a transfer of a unit of a unit trust must be accompanied by the issue of a contract note. The proviso is a proviso which introduces the same exception in relation to a transfer of a unit in a unit trust from the managers of the trust to a member of the Stock Exchange as at present exists in relation to dealings in shares between a stockbroker and a jobber. In other words, it makes the position the same and relieves both sets of transactions from the obligation to pay stamp duty on the contract note. Clause 46 brings into effect some of the recommendations which I have indicated of the Anderson Committee.
:I am sure we have all listened with great interest to the lucid and brief explanation of the Clause by the Solicitor-General. Can he tell us how much the Government expect to benefit by this Clause?
:I do not really know the actual figure. It is almost impossible to estimate what the extra increment will be. It is almost impossible to forecast the number of units which will be issued and the number of trusts which will be created, and so on. It will depend entirely on that. I could get figures, but they would be completely unreliable as they would afford no guide to the future. There again, the material is not at present available because it was not thought it would afford anything like a safe indication as to probable revenue to the Government which would accrue from the introduction of these Stamp Duties. The object is not to provide revenue for the Government but to prevent what is at present considered an unfair operation of the Stamp Duties against investment trusts in favour of unit trusts. At present unit trusts are in a favourable position in comparison with investments trusts and the object of the Anderson Report was to iron out that injustice. This provision is simply to implement the recommendations of that report.
:I feel that everyone in the Committee would wish me to thank the hon. and learned Gentleman for the clear exposition which he has given. I feel sure many other hon. Members—for instance the hon. Lady the Member for the Exchange Division of Liverpool (Mrs. Braddock)—would wish to join with me in saying how much we appreciate the fact that now we are able to go to our constituents and to give this clear explanation. I feel sure we are both deeply gratified.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
CLAUSE 47.—(Special provisions as to certificates to bearer under unit trust schemes.)
:I beg to move, in page 38, line 28, at the end to insert:
"(3) Where stamp duty has been paid on a certificate to bearer in respect of a unit under a unit trust scheme in accordance with the provisions of the last preceding Subsection on the occasion of a transfer or assignment to the managers and, before the expiration of two months from the date of the transfer or assignment, the managers and trustees jointly certify—
This Amendment is designed to make certificates to bearer in relation to units of a unit trust analagous to certain conditions relating to transfer of registered units under unit trusts. As I indicated a short time ago, if a unit in a unit trust is transferred to the managers or the trustees of the trust and is reissued within two months, or is transferred to the managers and is cancelled within two months, Stamp Duty does not have to be paid twice. If under the present Amendment a certificate to bearer is returned to the managers or trustees of the trust and is cancelled within two months the amount of duty that would be payable otherwise in respect of the bearer certificate on its transfer to the managers is refunded upon application to the Commissioners. This remedies an omission in the Clause as it appears in the Bill at present.
Amendment agreed to.
Further Amendment made: In page 38, line 29, leave out "the last preceding Subsection," and insert "this Section."—[ The Solicitor-General. ]
Clause, as amended, ordered to stand part of the Bill.
Clauses 48 and 49 ordered to stand part of the Bill.
CLAUSE 50.—(Exceptional depreciation.)
In page 41, line 14, after "shall." insert "except in the case of ships."
12.45 a.m.
:In view of the Chancellor's assurance this afternoon in connection with Clause 32, neither my hon. and learned Friend nor myself wish to press this Amendment at the present time.
Clause ordered to stand part of the Bill.
CLAUSE 51.—(Exchange of securities in connection with conversion operations, nationalisation, etc.)
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:I would like to say a few words of thanks to the Chancellor of the Exchequer on behalf of my hon. and gallant Friend the Member for North Blackpool (Brigadier Low) and myself for bringing in this Clause, because, on the Report stage of the last Finance Bill, we moved an Amendment to this effect in a single artless sentence. What we had in mind was that insurance companies who are subject to tax on capital profits should not be put in the position of not knowing at all where they are. Obviously, if they own property which is being nationalised, they are likely to suffer a loss of income, but, as well as that, if they are held to have made a sale of investments, they are liable to incur a capital loss or a capital profit entirely by force majeure, and that may upset all their tax calculations. This Clause, as drafted, does seem to fulfil what we had in mind, but there is one point I should like to raise. What we are talking about is nationalisation, but, in actual fact, the word "nationalisation" is not mentioned in the Clause at all. The Clause says:
"any exchange of securities effected in pursuance of any enactment passed after the fifth day of April, nineteen hundred and forty-six, which provides for the compulsory acquisition of any securities and the issue of other securities in lieu thereof, if the Treasury direct that this section shall apply to exchanges of securities effected in pursuance of that enactment."
That is the point. The Treasury have absolute power to bring this Clause in or not as they will, and nothing is definitely laid down that, when an industry is nationalised, this Clause shall apply. I still feel that we are left rather in the air, and I would like an absolute assurance from the Chancellor that, in all cases where nationalisation takes place, this Clause will apply.
:I can give an assurance there. Very often the form of words suggested by our legal advisers differs a little from our own untutored common sense, but we are advised that this is the best way to give effect to the undertaking given, which I repeat that, in any case of documents affected by or arising out of transfers under nationalisation, the Treasury will direct.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
CLAUSE 52.—(Other provisions as to issues of securities in connection with nationalisation, etc.)
:I beg to move, in page 43, line 1, to leave out from "purposes," to the end of the Clause, and to add:
"as if the distribution were an exchange of securities to which Section fifty-one of this Act applied."
There appears to be a curious difference between Clause 51 and Clause 52. In Clause 51, where anybody who is mainly engaged in dealing in securities, holds a stock which is to be nationalised and receives a consideration which is partly in Government stock and partly in cash, he is not held to make any sale or profit of any sort until he sells the compensation stock which he receives, when the cash which he receives in addition is also taken into account. Clause 52 will be the Clause which is more likely to be applied, and will be applied in the case of the nationalisation of coal mines. Where there is, say, a colliery company which receives Government stock in compensation and then liquidates, any insurance company which holds colliery stock may, in the first instance, receive both cash and Government stock. As I understand it, under Clause 52, unlike Clause 51, they will be liable to tax on the cash portion of the compensation they receive, and they will, in fact, be held to have made a sale to the degree that the Treasury directs. That seems to me to be quite different from Clause 51, and I cannot see why, in fact, there should be this difference in treatment between Clause 51 and Clause 52, when it is only a difference of whether the stock is received directly or is received through the liquidation of a company which has received stock from the Government. I am moving this Amendment in order to get clarification of the position.
:I think I can explain the difficulty which the hon. Gentleman has in mind. The difference in treatment is necessarily involved by the difference in the sort of circumstances with which the two Clauses deal. Clause 51 deals with the case of, say, an insurance company which carries on the business of dealing in shares. The whole of that insurance company's assets are taken from it and, therefore, that Clause provides how those assets are to be treated in a subsequent realisation. That is one set of circumstances. I choose an insurance company to instance a company which would deal in shares, and would, therefore, come within the ambit of the Clause. It would have certain securities which would be taken from it under a nationalisation scheme.
Clause 52 deals with a different set of circumstances. It deals with the case where, say, the insurance company holds colliery shares and that colliery undertaking is nationalised, with the result that it goes into liquidation. What happens then to the insurance company is obviously different. Under Clause 51 all that happens is that the insurance company loses its shares and gets other shares in exchange. Under Clause 52 the colliery company goes into liquidation and, therefore, the insurance company which holds shares in that undertaking gets either a distribution in specie or, otherwise, not merely shares—that is to say, Government shares which are given in exchange for the colliery undertaking's shares—but also other assets of the colliery company. Under Clause 51 the insurance company simply gets the Government shares instead of the shares it held before. Under Clause 52 it may get all sorts of things; it may get Government shares distributed in specie or other shares, and such assets as the colliery company has. The colliery company may have all sorts of assets which, on the liquidation of the company would have to go to the insurance company. Therefore, it is obviously necessary, in providing how the Government shares are to be dealt with on a realisation, that the two classes of assets which the insurance company would receive upon liquidation should be separated.
That is why one gets differences of treatment under Clauses 51 and 52. Section 51 says that one shall not treat the handing over of the shares as a realisation. So the insurance company does not have to show its Government shares as increasing its profits at the end of a financial year. But when the insurance company gets not only Government shares but other assets as well, one has to distinguish between the two assets. The insurance company has been landed with Government shares, and, therefore, we provide that they shall not be treated as a realisation at the end of the year, but we have to provide for how the other assets have to be brought in in making up the colliery company's accounts at the end of the year.
:Will the Solicitor-General look at line 31 in Clause 51? That deals with cases also in which there may be other consideratons, as well as Government securties. I think the hon. and learned Gentleman has left that out.
:That provides for the case where one gets cash as well as Government shares in exchange for the shares which the Government have taken over. They may give cash or some other consideration. The other case is quite different. In one case everything comes from the Government, and in the other, there are liquidated assets of the colliery company.
:I have never heard of Government shares. What does that mean? [An HON. MEMBER: "Ask the 'Financial Times,' they will tell you."] The Solicitor-General has talked about insurance companies being "landed" with Government shares and stocks, and I would ask him to reconsider that statement. It should be remembered that there are some seven or eight million people in this country who hold insurance policies. Are we to understand that the Government are "landing" them with something? Because that implies usually having something less worth while than one had beforehand. The Solicitor-General's incursions into financial affairs show that he is totally mistaken, but I would not like the Chancellor to sit here and hear that the insurance companies are being "landed"—and I repeat "landed." It is of the greatest importance that we should know what the Government mean by "landed." Perhaps they are not policy holders, or perhaps they forget their pledges to the friendly societies. Either insurance policy-holders in this country are going to get their policies paid in full or else they are going to be swindled. What interpretation does the Chancellor of the Exchequer place upon the Solicitor-General's statement?
1.0 a.m.
:Does not the explanation mean that whatever happens, they will get their money anyway, and are sure of something on the swings or the roundabouts?
:If the hon. Member is referring to me, all I can say is, no wonder the late Minister of Food gave up his office.
:I have never heard, even from the right hon. Gentleman opposite, such a poor debating point as he has just made. I agree that I should have used the term "Government bonds" instead of "Government shares." If the right hon. Gentleman would only take the trouble to study the Clause before he intrudes upon the Debate he would realise that. I do not know whether he is complaining or not. What we are trying to do is to make a concession in favour of insurance companies which deal in shares. It is trying to make the position easier for them. I do not know whether the right hon. Gentleman realises that. But out of kindness to him, I will assume that he did not know. I used the word "landed" with Government bonds for that reason. The reason for these two Clauses is this: it was thought that it would be fair to the insurance companies and other companies which deal with shares if they are landed or if they have put upon them Government bonds. I use the word "landed" quite deliberately, because I am trying to describe the position in which they are forced to receive Government bonds.
The only reason why we have given this measure of relief is that it was thought that as they have to receive Government bonds under nationalisation proposals they should not be compelled to bring in the added value which they get on receiving the Government bonds and be taxed upon that added value. We are giving them something. I do not know whether the right hon. Gentleman disagrees with that. As we say, we are going to give them valuable shares. Then we go on and say that inasmuch as they are having these Government bonds whether they like it or not, we are not going to compel them to bring in as profit the added value which we are giving them, in the form of Government bonds, for the value of the shares or whatever it is that the Government are taking in exchange under the nationalisation scheme. Therefore, the Government are treating insurance and similar companies with the greatest generosity. I should think that it would lie ill in the mouth of the right hon. Gentleman to complain about that.
:The learned Solicitor-General has just said that the object of this Clause was to make it fair for the insurance companies. But when the hon. and gallant Member and I first mooted this question in the discussion on the last Finance Bill the Chancellor of the Exchequer taunted us by saying that the object of our proposals was to assist the Government in their nationalisation measures. No doubt he will agree with me that that is still an object of these two Clauses. The other reason this Amendment was moved was to try to assist the Chancellor in an undertaking which he gave to us at that time; that was that he would make it as fair as possible for the insurance companies, etc., and relieve them of as much doubt as possible. It would appear, if one compares Clauses 51 and 52, that there is at least a certain amount of doubt in the minds of any insurance company, banking institution or finance company if they hold shares in any undertaking which is likely to be nationalised. It first seems that they have to make up their minds whether the undertaking is likely to be nationalised under the aegis of the Chancellor the Exchequer or under the aegis of the Minis- ter of Fuel and Power. For the time being, at any rate, they would appear to gain more if the undertaking were nationalised, as the Bank of England was Nationalised, under the aegis of the Chancellor of the Exchequer. If one has to differentiate between the two right hon. Gentlemen, I have always preferred the right hon. Gentleman the Chancellor the Exchequer, and I notice he nods his head in gratitude.
There is one other point that might appeal to the learned Solicitor-General's legal mind, if he has managed to retain any of his legal mind in the political atmosphere in which he now finds himself. The whole difficulty in this question of Income Tax, for the finance companies and so on lies in the question whether or not they may be taken to have realised their investments. The two cases with which no doubt the hon. and learned Gentleman is familiar are the Royal Insurance Company against Stephen and the Westminster Bank against Osner. It was decided that a compulsory exchange of securities such as is supposed in nationalisation would constitute a realisation of investments, and in Clause 51 it is laid down that an exchange of securities which takes place in the circumstances there envisaged was not to be held to be a realisation. In Clause 52 it would appear that the exchange of securities that there takes place should be partly a realisation and partly not a realisation. That would seem to me to be a very muddled law. Perhaps the hon. and learned Getleman would apply his mind to that point.
Then we come to the question of fairness, and it would seem to me very unfair—if the Chancellor is still interested in this question of fairness—if it be open for the Government to penalise, as it were, the finance company or insurance company, banking institution, or what may be, if, on the one hand, the undertaking was nationalised in the same way as the coal mines, whereas it was not so penalised if it was nationalised in the same way as the Bank of England was nationalised. That would seem unfair, and the Solicitor-General does not seem to have touched on those two points at all. Although he contradicted me when I got up to interrupt him in the middle of his statement, I rather felt he was treating Clause 51 as if it dealt only with direct exchanges of securities in which the only consideration for the exchange was a complete issue of Government security, whereas, in fact, that Clause deals with the cases where Government securities and cash may be given in exchange for the original security. It is where cash as well as Government securities are given in exchange that it would appear that Clause 52 and Clause 51 are different, and it would help, I think, my hon. Friend and myself if the Solicitor-General would perhaps give us a few more words of explanation.
:When the hon. and learned Gentleman replies to the points just raised by the hon. and gallant Member for North Blackpool (Brigadier Low) would he give us some assurance as to the words at the bottom of page 42, lines 45 and 46: The Clause refers to any person carrying on a trade which consists wholly or partly in dealing with securities. May I assume that includes the more respectable type of insurance company which invests in but does not deal in securities as compared with the less respectable company which deals in securities?
:I should have thought it included the normal business of insurance companies, both respectable and less respectable, which business, as one of its normal incidents, does consist in the exchange and profitable investment of securities, and that therefore, both the more respectable and the less respectable insurance companies would be included.
:Although the Solicitor-General may be of the opinion that there are some insurance companies that are less respectable, I know of none. Hon. Members opposite may know something of them, but they have nothing to do with our party.
Amendment negatived.
Clause ordered to stand part of the Bill.
CLAUSE 53.—(Abolition of land tax assessors and income tax assessors, etc.)
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:I should be glad if the Chancellor would tell us something about the Clause.
:This Clause seeks to abolish once and for all the assessors who happen to be left. I think that the outside assessors today number about 154. Owing to changes which have occurred in Income Tax assessment and collection, the assessors have for a long time had very little to do. Now that we have P.A.Y.E. under Schedule E and Income Tax is collected as we go along, there has been less and less for the assessors to do. It is now proposed to abolish the few that remain.
:I hope that the transferring of the functions of the assessor to the surveyor or the collector will be carried out. There is a useful function to be performed here in the way of assessing that my hon. Friend did not mention. The function really has not ceased, and I hope it will be carried on. The other point I would like to make is in connection with Subsection (2), by which annual allowances by way of compensation are to be paid to any persons employed as assessors. I hope compensation will not be paid unless the man has been employed substantially or whole time. It would not be consistent with the expenditure of public money to compensate people who have not been engaged wholly or substantially in this job as part of their work.
:It is proposed to be just and fair to these people, but no one who has not been employed for a period of more than ten years will be entitled to any compensation.
1.15 a.m.
:Would the Financial Secretary be good enough to explain Subsection (4), which is important?
:While the hon. Gentleman is collecting the answer, may I say that I regret to see these assessors being swept away.
:Nonsense.
:I have heard many compliments about their contribution to the freedom of the individual taxpayer. I know their use has disappeared in many ways, but they have been a very useful asset to the taxpayer in some ways. I regret their passing and for this reason, that I notice the people who are really glad about it are the civil servants and not the ordinary taxpayer. From that point of view I do not think it is a good thing, and I doubt whether, in a few years' time, we shall not be tearing round trying to get some of these people back for the protection of the ordinary taxpayer.
:I would like to add to what the hon. Member for Torquay (Mr. C. Williams) has said. Here is a longstanding taxation usage with which the public are familar and with which, in the main, as far as one can be satisfied with any taxation arrangements, the public have been satisfied. This method of submitting one's taxation in the first instance to the assessor, having his comments and observations on it, and later receiving the demands of the assessor—
:You do not.
is the usual practice, and I am sorry the Chancellor intends to say goodbye to those valuable civil servants with scarcely a nod of recognition. I did not catch the number who are to go. How many have we in our employment, and how many are to go? [An HON. MEMBER: "154."] Only 154 left in the service of the public. How much do they cost? What will happen to the savings which accrue? Will the public be given some compensating advantage when a distinguished body of public servants like that are leaving the public service? It would seem to me that the Minister in charge of the Department might at least give them a friendly nod of recognition. He might pronounce a benediction. He was baptising earlier on in the proceedings; here is an opportunity, but no, His Majesty's Government dismiss these public servants with a few scurvy words and it is left to the hon. Member for Torquay and myself to call attention to the fact that there is some doubt about the compensation, and no information is given to the Committee as to how much we are saving by this. I venture to prophesy that this deletion from the staff of the Civil Service will be missed a great deal more than many others we are compelled to retain, and the day may come when we may have to recall these valuable public servants to the performance of their duties.
:May I tell the Committee in three sentences of the valuable work which these assessors are performing, because it would be of interest to the Committee in judging their value? When I was in the City of London, employed in the Inland Revenue Department some 10 years ago, we had the services of assessors and it was most interesting. We who examined the taxpayers' returns—they are not submitted to the assessors as the hon. Member for South Edinburgh (Sir W. Darling) seemed to think—were instructed that we were not to put in the figures which we adduced re the assessment in ink; we were to write them in pencil. We used to write them in in pencil in order to conform to the law. When this had been done, a crowd of ancient gentlemen used to come across and insert in ink, over our pencilled figures, the precise amounts which we had entered, and we satisfied the due process of law accordingly. That was the value of the assessors to the taxpayer in the City of London in those days, a system which, fortunately, is falling into disuse.
:If that was the practice in the City of London, it was not, and is not the practice in the City of Edinburgh.
:That, of course, is quite true. The City of Edinburgh was not able to retain its powers as did the City of London. In the City of Edinburgh the Inspector of Taxes' staff was able to put in the figures in ink in the first place. It was only in the City of London, thanks to a gentleman called Mr. Copley Hewitt, who has now passed from us, that the assessors were able to retain these most valuable powers and, what is more important, the remuneration that went with them. In point of fact, of course, it is—
:May I interrupt the hon. Member? Did these venerable gentlemen, when they gave up these sinecures, join the Capital Issues Committee?
:I have no knowledge whether they joined the Capital Issues Committee under the regime of my right hon. Friend's predecessor, but I am quite certain my right hon. Friend will appoint much more worthy people.
The points which have been made in relation to these assessors are perfectly valid and true. Their functions have ceased because they have not the means or functions to do the job, and they have been transferred to another branch of the Civil Service.
:I want to pick up one point which fell from the Financial Secretary to the Treasury on the question of the compensation of these assessors. He said, turning to his hon. Friend the Member for South Cardiff (Mr. Callaghan) that it was not intended to pay any compensation except where the assessor had held office 10 years or longer. I can see no special merit in the number of years. Rather, the yardstick should be the expectation of continued employment, in judging compensation. That a man who happens to have been in this employment a short time, or for nine and a half years should get nothing, yet one who has been in the office for 10¼ years should be compensated is I think, grossly unfair. When the State takes away a man's livelihood the State ought to see that he gets either employment or some other form of compensation.
In Scotland the assessor's job is a fulltime job and he is given heavier duties than in England. In a case I know of, the assessor's condition of employment has been that he should engage a fulltime clerk and in fact that clerk has been employed by him for 38 years. Under the compensation terms which I understand the Inland Revenue propose, this clerk will get no compensation whatever. He is advanced in years and I dare say there are others who find themselves in the same position. I ask the Financial Secretary not to prejudge this issue and lay down some arbitrary rule for the future which will make great hardship in many cases.
:I would not have interrupted but for the speech of the hon. Member for South Cardiff (Mr. Callaghan) in which he gave his ideas and his experiences in the City of London. I have heard this matter discussed in the House on many occasions over many years and I have heard of innumerable instances in which the assessors have been of inestimable value to the taxpayer. I realize that at present they are not performing the same function as they used to perform, and that they may not have the same usefulness. But, it has always been said by people independent of political parties that they have performed a valuable function and are likely to do so in the future. The one thing which has confirmed me that that was right and accurate was the speech of the hon. Member for South Cardiff, who invariably takes the side of anyone or anything which will take away the freedom of the taxpayer and the citizen.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
CLAUSE 54.—(Exchange Equalisation Account.)
Motion made, and Question proposed, "That the Clause stand part of the Bill,"
:I know it is a most difficult thing for any hon. Member to make any inquiries about the Exchange Equalisation Account because when it was set up in 1932 there were some of us, particularly Sir Irving Albery and myself, who tried very hard to get the Chancellor of the Exchequer to give the House some information. After two or three years it was arranged that certain information should go secretly to the Public Acounts Committee. Knowing that it is difficult I dare say I shall not get much of a reply from the Chancellor, but I would like him to tell us what is the object of this Clause and what is behind it. I cannot help thinking that these innocent looking words mean something although it is not very clear what they do mean. Of course the drafting is deplorable. May I briefly take the Committee through the Clause? It says:
"The purposes for which the Exchange Equalisation Account may be used shall include the conservation or disposition in the national interest of the means of making payments abroad, and Part IV of the Finance Act, 1932, shall have effect accordingly."
That is a very general statement, because if one looks at Part IV of the Finance Act of 1932, which covers three pages and three Sections, one will see that most of it is purely machinery business about the issue department of the Bank of England and the winding up of the account. It really is very difficult because what Sub section (3) of Section 24 says is that the Treasury may—
:I observe that the right hon. and gallant Gentleman is discussing a Section in another Act. He is doing that because Clause 54, which we are now discussing, begins by saying "The purposes for which .…" We had a discussion about this matter of Order on Clause 40. It was then ruled that although the word "purposes" appeared and although those purposes were clearly defined in this Bill—namely in Clauses 41 and 42—it was out of Order to discuss them on Clause 40. I submit to you, by a parity of reasoning, that now we are discussing Clause 54 we can only discuss what is actually in that Clause of the Bill and not similar Sections in some other Act which may be referred to in the word "purposes" in the first line.
:I would like to hear the right hon. and gallant Gentleman further on this before giving a Ruling.
:Of course, I had in mind the previous discussion, but it did not seem to me it had any relevance on this occasion.
:Neither did the other one.
:That is a matter on which I should not like to express an opinion. It is quite clear that Subsection (3) of Section 24 of the Act of 1932 is being extended and, as reference is made to it, I thought in this very unintelligible field perhaps it would be all right if I said what I was talking about—
:It will be extremely interesting to know what the right hon. and gallant Gentleman is talking about, if it ever becomes in Order for him to tell us, but what I am submitting to you, Mr. Beaumont, is that if this is an extension of a Section of a previous Act, we are justified in discussing that extension and not the previous Act. I submit it is not possible to interpret the same words in two Clauses of the same Bill before the same Committee on the same day in two different senses.
:I had no idea of discussing the previous Act—
:I am submitting a point of Order to the Chair.
:So far, I rule that the right hon. and gallant Gentleman is in Order.
1.30 a.m.
:I had no intention of discussing the previous Act. I was merely going to point out what was the effect, hoping that the Chancellor would explain to me what in fact it is in substance. The previous Act allows the Exchange Fund to be used for the ironing out of fluctuations in the exchange value of sterling; but in this Clause it is stated that the purposes—
"… shall include the conservation or disposition in the national interest of the means of making payments abroad."
That is, obviously, something different from ironing out a fluctuation, and I would like to know what exactly this very cumbrous phrase means. The means of making payments abroad is the exchange value of sterling or securities. I do not know. Does it mean something quite different? Does it mean that, in some future period, the Chancellor may be intending to use, as a means of making payments, commodities and not money at all? Has he in mind here that this is something to do with bulk purchasing? "Conservation or disposition"—those are odd words, too. The original purpose is quite clear. How is it added to by using these words? I should have thought that "conservation or disposition in the national interest" might mean nothing more than what was in the original Act of 1932—the exchange value of sterling. That cannot, however, be the case, because the Government would not have brought in this new clause. Our difficulties are increased because no reference was made to this in the Budget speech. As I cannot believe that the Chancellor has solemnly introduced a Clause which is merely repetition of what is on the Statute Book already, it must mean something else, and I hope the right hon. Gentleman will open up and tell us exactly what it does mean, and, in the light of what he says, we will consider whether we want to take any action or put down an Amendment at a later stage.
:Some hon. Members may remember that we had a similar Debate on a similar Clause in the Bill last year. Although this is not going to become a hardy annual, it has had to appear in this shape for at least two years now, but we hope it will disappear from next year's Budget, because, by then, another Bill, streamlined or fairly streamlined, will have been put on the Statute Book by the Chancellor entitled the Exchange Control Act. If that Bill had been put through earlier, as we at first hoped, it would not have been necessary to have included this Clause. What does this Clause do? The object of the Exchange Equalisation Fund is laid down by the Act of 1932, and Section 24 (3), which is the operative Section for our purpose, reads like this:
"The Treasury may cause any funds in the account to be invested in securities or in the purchase of gold in such manner as they think best to adopt for checking undue fluctuations in the exchange value of sterling."
That was the original purpose of the Fund. The war came, and the monies therein had to be used for other purposes in order to help in the defence of this realm and democracy generally throughout the world. The Act of 1939 altered very extensively the use to which the Exchange Equalisation Fund was put. You cannot unscramble eggs, and, therefore, we are now working this Fund under the Act of 1939 and not the Act of 1932. That being so, and in order to be on the right side of the law, as we always like to be, we have to keep the 1939 Act going until the Exchange Control Act is put on the Statute Book.
:The Government are repealing it.
:No, we are not; we are carrying on its provisions in this Bill and are bringing them up to date, but we are not entirely repealing the original provisions. There was one further question put by the right hon. and gallant Member for Gainsborough (Captain Crookshank). He asked whether I could explain the words:
"… the conservation or disposition in the national interest of the means of making payments abroad. …"
Those words mean that the Exchange Equalisation Fund is now used as a pool for both receiving and making payments on behalf of the Government, partly as the aftermath of the war and partly in the light of the existing exchange and monetary situation throughout the world. That is all those words mean. They were put in by our draftsmen who, I think, by common consent, are pretty expert and experienced in these matters. We are assured by them that that is what they mean and that, at any rate, is what we hope they mean and the meaning we desire to place upon them, and the use to which, in the interim, we desire to put this Fund.
:Surely, we ought in a difficult and delicate Clause of this kind to be sustained by something a little more substantial than hope. I must confess that I have never before, even at this not very late hour, heard a Minister at the Box say that he hopes a Clause, the adoption of which he is moving, means what he says it does. There may be—
:Such hope is universal.
:But a moment comes when knowledge should replace hope, and I do not think that we on this side of the Committee could let this Clause go unless either the Chancellor or the Solicitor-General is prepared to get up and take a more courageous line and say that, in fact, they know that it means what the Financial Secretary to the Treasury says it means, though, first of all, they would have to say that they understood what he said it means. If they can carry these two obstacles, then we should feel extremely relieved.
:I am sure the Financial Secretary need not apologise for elucidating this very important Clause. It is no fault of his that this business is being taken at the hour it is, but he did let fall one remark which, unless it is corrected, will be on record tomorrow. He said that in 1939 the Exchange Equalisation Fund was utilised for the defence of the realm and the defence of democracy. What the Financial Secretary had in mind was that it was used for the defence of the currency, which was a rather different matter. He conveyed the impression that the Fund was used in the general pool for the conduct of the war. It was brought in for the defence of-the currency, hence the Currency Defence Act, 1939. That is what he meant to say.
:I meant exactly what I said. It was used for the defence of this country, which is synonymous with saying it was used for the defence of democracy, and was also used to help the successful prosecution of the war.
:But the Exchange Equalisation Account was brought in to defend the currency. It was not expended on armaments or anything like that. My right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) interrogated the Government as to whether this new function is to be in any way connected with bulk purchase, and the Chancellor shook his head. It may be that there is no intention of doing so. But may I ask if it has a great deal to do with the dollar exchange? If that is so, I would like to ask the Government about the dollar reserve. In December last the Chancellor said that gold and dollar reserves in October, 1945, were around £450,000,000, and, so far as I know, that is the last information which the Committee has had, despite a number of questions being asked. I suggest that, as it is now June, 1946, there is no good reason why this secrecy should any longer be maintained. There was every justification in the early days of the Exchange Equalisation Account.
The hon. Member for South Cardiff (Mr. Callaghan) occupied some time giving his autobiography in serial form, and he has not a monopoly on that. I recall the establishment of the Exchange Equalisation Account at a time when the Socialist Government left office, just in time after the catastrophic handling of our affairs in 1931, and when there were heavy fluctuations. It was thought proper that disclosures could not be made about the transactions. Nor could these disclosures be made during the war. But these two menaces have passed, and sterling in relation to the dollar has been maintained at a steady level. The war is over, and the time has come when the Chancellor might be a little more forthcoming on this matter. Speculation against the pound is no longer on the scale it was in those days, and other countries no doubt have the information already. I would remind the Committee that in December last we committed ourselves in 40 minutes to the Bretton Woods Agreement. That was all—only 40 minutes. Member countries had to disclose the information to one another, and I think the only people who do not know are the Members of the House of Commons. All parties to the agreement have disclosed it to one another. In the meantime, some of us fear that this country is losing dollars heavily at this moment, and that that has been happening for some time.
:Is it in Order for the hon. and gallant Gentleman to discuss the state of our foreign exchanges under this Clause?
:The hon Member is covering rather too wide an area.
1.45 a.m.
:Further to that point of Order. We are asked to pass a Clause which provides for the continuance, with certain changes, of the Exchange Equalisation Account. Before we do that are we not entitled to ask what is the present state of the account in order to make up our minds whether it is serving a useful purpose or not?
:I did not know that I ruled against that. But I do suggest that the hon. Member is dealing with a great deal of past history and it would be of greater advantage to the Debate if he would confine his remarks more closely to the Clause.
:On that point of Order. It was suggested by an hon. Member just now that this Clause provides for the continuance of the Exchange Equalisation Account. As I read the Clause, it does nothing of the kind. It only provides for the extension of the law which authorises the creation of such an account. That is a long way from discussing the state of our finances in relation to an account. If we are going to start discussing that we shall have a very interesting discussion and be here for a long time.
:We seem to be getting rather wide of the matter at issue.
:I am naturally anxious to conform to your Ruling, Mr. Beaumont, but I wish to submit that we ought to have information regarding present circumstances. I believe the homeless are very anxious to know how we stand. Attempts are being made to gag those who want to find out.
rose —
:I cannot take more than one point of Order at a time Mr. Paton.
:Under this Clause, Mr. Beaumont, we are not discussing the state of the account at all. We are discussing, surely, the authorisation for a piece of machinery, but not the state of our foreign exchanges. That, I think, is what the hon. Member is doing.
:That is what comes of a Member not following the Debate.
:When an hon. Member makes a point of Order it is for the Chairman to decide how he shall rule on that point of Order. Although I think the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) was getting rather wide I canot rule him out of Order.
:It is very difficult to keep to the straight and narrow path in the face of all these points of Order. The last one would not have been raised at all had the hon. Member for Norwich (Mr. Paton) taken the trouble to follow the Debate. I asked the Chancellor of the Exchequer just now whether these new powers would have some impact upon the dollar exchange. The Chancellor is very courteous and is not indulging in all these silly tricks and antics. May I return to this topic? Many of us fear that the Treasury have lost dollars heavily and are still doing so. Some state of resettlement has been gained from the Canadian loan and the appreciation of the American stocks which we held and which had been deposited as security with the Reconstruction Finance Corporation at the beginning of the war. But we are paying very heavily in dollars for such things as the administration of our zone in Germany, and it would appear that we are—
:On a point of Order. Those of us on this side of the Committee who are interested in these subjects want to know whether the cost of the administration of our zone in Germany is really in Order for discussion on this question.
:I do not think that is quite in Order. The purport of the Clause under discussion is that the Exchange Equalisation Account shall include the conservation or disposition in the national interests of the means of maturing payments abroad.
:But the dollar exchange has an impact on that matter a very heavy impact on our undertakings. These are all factors which bear upon this subject. It is a payment abroad and we have to pay in dollars for a certain section. I hope that is not going to bring the hon. Member for Nelson and Colne (Mr. S. Silverman) to his feet again, but I am going to try at any rate. We are still committed to pay in dollars some proportion of our imports from Japan.
:May I once again, Mr. Beaumont, draw your attention to the fact that what this Clause provides for is not making payment for any purpose at all, but is only the means of making payments, and, therefore, any discussion, I should have thought, about anything except the actual financial operation, as distinct from its purpose or its motives or operation, was not in Order at this stage?
rose —
:I can only deal with one point of Order at a time. It is unfortunately true that the hon. and gallant Member for Holderness tempts the hon. Member for Nelson and Colne and that the hon. Member for Nelson and Colne succumbs to such a temptation.
:On a point of Order. In view of the clear desire of the back benchers on the Government side to do both the work of the Opposition and of the Chairman, may I ask you, Mr. Beaumont, in the interests of the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) and, indeed, of his constituents who are greatly concerned, to protect the rights of Private Members from this invasion of our liberties.
:I do not think he requires any protection.
:Further to that point of Order. May I assure you that in the first place I was not in the least interested by any temptations from the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite)? He does not tempt me in the least. The point I am submitting is that this Clause quite clearly deals with means, and with means only. That is to say, it deals with machinery and with machinery only, and, therefore, we ought to discuss, at least so I submit, only machinery and not motives, and not policy and not payments.
:Now that the hon. Member for Nelson and Colne (Mr. Silverman) has put his point, may I suggest that the Debate be allowed to continue, and it be left to the discretion of the Chair?
:I was just reaching the conclusion of my observations when the last point of Order but two was raised. Were you not occupying the Chair, Mr. Beaumont, I should have asked whether it was in Order for one hon. Member to accuse another of temptation without giving a definition. However, I think I have raised certain points which are of considerable substance in this matter. The Chancellor, at any rate, has been good enough to give his attention, not always in approval, but, I think in comprehension. That is more than can be said for hon. Members below the Gangway opposite. They have wagged their heads in disapproval. I should be grateful if some of the points could be put for the reason of this extension. Its impact on the dollar exchange and the present state of our dollar reserves are matters on which we on this side would welcome a statement by the Chancellor.
:We have taken a long time to get a little way. The fault may lie where it may lie, but that is the fact. It is true that it is not yet two o'clock, but it is also true that we have a good deal more of the Bill to consider. The answers are very simple. The purpose of this Clause is to continue powers taken last year, which we hope to take in a more permanent form in legislation which we hope will be introduced in the autumn Session, namely, a Measure giving us permanent powers of controlling all foreign exchange dealings in general.
:In general?
:Yes. That is what is to come later. I give that as the reason why I hope to have this provision appearing in a Finance Bill for the last time. I am aware that there is interest taken and speculations run around as to what happens to our stocks of gold, dollars and other valuable currency reserves. It is perfectly right that inquiries should be put, but it is also perfectly right for me to refuse to give answers at this time. I must be the judge of the public interest in this matter, and my mind is very clear. At a later stage it may be possible to say more than that, but I, being the judge in the public interest in this matter, say that it is against the public interest to answer this question.
At the same time, it is known to all that at this stage in the transition from war to peace it is very important that we should keep a firm hold upon our reserves, that they should be properly husbanded—not dissipated—and strengthened and in-increased from time to time as opportunity may present itself. That operation will be facilitated undeniably by having these wider powers than were originally given for the Exchange Equalisation Account. The means of making payments abroad does not refer to bulk purchase schemes or anything of that kind. It is the way in which the lawyers express the notion of foreign exchange—currencies, gold, and so on, in our possession which can be swopped, exchanged, for goods and services. It does not refer to goods. That is what this Clause means. It refers to the conservation and disposition of our stocks of gold and foreign exchange. We must have sufficient power to handle these matters. We must take a continuing power in the Finance Bill to be able to look after the national interest in this very important respect. I hope it will not be necessary to repeat this in future finance Bills, but that it can be substituted later on by permanent legislation.
:The Chancellor's explanation was not a very satisfactory one. He told us, first of all, that nobody knows the state—
:No.
2 a.m.
:I advise the Financial Secretary not to offer help to the Chancellor. The right hon. Gentleman has reason enough to be grieved when the Financial Secretary comes to his aid. The Chancellor has said, "I know, but nobody else will know." But let me remind the Chancellor of the Exchequer that he has supplied the Government of the United States of America with a statement of our foreign exchange. Do not let the Chancellor try to deceive the Committee tonight by saying that nobody else knows except the Chancellor. He has rendered a return to the United States Government of all our foreign securities and gold—
:When?
:As the right hon. Gentleman knows—[HON. MEMBERS: "Answer."] I cannot give a date. In order to get the loan, a full disclosure of our resources was made to the United States Government by Lord Keynes on the instructions of the Chancellor of the Exchequer, and that statement was widely repeated throughout the United States. However, I am not so much calling attention to that as to the fact that the Chancellor says tonight, "I will not tell the Committee. I only know," when the fact is that he has disclosed this information to foreign Governments. That is the first point. He treats the Committee with a strange form of respect when he does not admit that fact. However, I want to ask him this. He tells us that he intends to introduce a drastic new control of the foreign exchange. Surely that is completely contrary to the Bretton Woods policy to which the Government have subscribed? Let us make quite certain before we accept this loan that we hear from the Chancellor tonight that he thoroughly understands what he has said. The Chancellor's policy is, of course, a general Government policy, that we are to feed the exchanges. That is the basis of the Government's policy. Tonight we hear for the first time from the Financial Secretary to the Treasury, and supported by the Chancellor of the Exchequer, that we are to have drastic new control of foreign exchange. If that is the case, we ought to be honest and tell the Americans before we accept the loan that we do not intend to free exchanges. I invite the Chancellor to make a further explanation of his very strange statement tonight.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
CLAUSE 55.—(Provisions as to permanent annual charge for the National Debt.)
Motion made, and Question proposed, "That the Clause stand part of the Bill."
:Before we leave this Clause will the Chancellor explain why in this permanent annual charge this figure of £135 million has been put in by the Treasury draftsman? Is it a figure which the Financial Secretary hopes is correct, or is there some substance to show that it is?
:The answer is that this figure was mentioned by the Chancellor of the Exchequer in his Budget statement, and I can assure the hon. Gentleman that it is not a guess. I have the full figures from 1928 onwards when this figure was first fixed, but I will not weary the Committee with them. The amount has been changing and the amount given in this Clause, I think the hon. Gentleman will find, is the correct amount.
:This Clause gives the Chancellor an opportunity of explaining to the Committee something of his policy with regard to borrowing, and I would like to ask if he will tell the Committee whether he intends to make any change in the policy that he has adopted in the past six months with regard to cheap money. There has been some anxiety of recent months in regard to the effect of cheap money on the price level in this country. It has been said in more than one quarter that a serious inflationary development is occurring, largely as a result of the Chancellor's policy. I would like him to tell us, if he will, whether he shares that view, and whether recent changes in the City of London are the result of a change in his policy, and what, in fact, his policy is. Does he intend money to be even cheaper than it is now, or does he intend to leave it as it is?
:I would like to know whether, if I respond to that invitation, it is in Order, Mr. Beaumont. I should be inclined to think not.
:At present it would be out of Order.
:The Clause says:
"The Treasury may at any time, if they think fit, raise money in any manner in which they are authorised to raise money under the National Loans Act, 1939."
Surely this is the opportunity for discussing the terms and conditions under which money may be raised? If this is not the opportunity of discussing that, may we be told what is the opportunity?
:On that point of Order. Is it not clear that Sub-section (2) provides:
"The Treasury may at any time, if they think fit, raise money in any manner in which."
The Subsection is therefore limited to the way in which money can be raised and does not open up the general question of borrowing.
:I want to refer to the point raised by the hon. Member for Thirsk and Malton (Mr. Turton). Could the Chancellor tell us why this sum has risen by £140 million odd to £490 million, which is the figure put on this year? What sum does it actually represent? Does it represent the interest on the amount of money borrowed since last year? That surely cannot be the case. There has not been anything like the gross amount of that sum borrowed in one year. Could the Chancellor tell us what is the second sum mentioned, £355 million? Is that the figure which was in the Budget, or something previously?
:1928.
:What effect had the caretaker Government's policy when they raised the price of gold by 4s. 3d.? How far has that been responsible for a very grave inflation in so far as it cost £12 million for the price of gold from Africa?
:We now have the Solicitor-General, the Financial Secretary to the Treasury, the Chancellor of the Exchequer and the Chief Patronage Secretary and a few odds and ends on the Government Front Bench and they are asked fundamental questions about millions added to the National Debt and not one of them seems to have the haziest idea of what it is about. The Chancellor admits it and it is the first honest thing he has done to-night, and I congratulate him on it. But I would comment on the fact that here we are to-night—
:Is it in Order to impute dishonesty to the Chancellor?
:I did not hear the word "dishonesty".
:The point was not clear to the hon. Member and I thank him for trying to help me—
:Will the hon. Member address the Chair?
:I thank you, Mr. Beaumont. The point I was raising was that we have here the Committee of the House of Commons raising a fund from £355 million to £490 million. That is a very large sum and I would like to know the reason why it is raised at present. Apparently it is not a matter of raising the sum by £10 million, £15 million or £20 million, but of raising it by a colossal figure. I have not yet seen anything, not even in the Budget statement, which made it plain why it was necessary to have this tremendous rise at the present time. That question has been asked and I feel sure by now that with the help of various hon. Members around him, someone on the Front Bench will be able to give an answer.
rose —
:Before the right hon. Gentleman replies, perhaps it would be as well if I gave a reply to the right hon. Gentleman the Member for the City of London (Mr. Assheton). If he reads Subsection (2) of Clause 55 he will see:
"The Treasury may at any time, if they think fit, raise money in any manner in which they are authorised to raise money under the National Loans Act, 1939."
Therefore, I think it is quite in Order to discuss how money should be raised, but it is not in Order to discuss the general financial policy of the Government.
:I assume one can discuss whether the money should be raised at two and a half or three per cent. That would raise the whole question which I put to the Chancellor and to which I hope he will be good enough to give us an answer.
:The explanation is that this figure which is inserted is the estimated charge for interest on the National Debt this year. The figure for which it is substituted is the figure at which the fixed debt has stood, without change, since the year 1928. It has become a traditional and almost a notional figure which does not bear a clear relationship to the facts. This Government, desiring above all things to be both honest and clear, therefore have made this change of presentation. This figure represents the interest which we assume we shall pay. With regard to the rates at which we are borrowing, I understood, Mr. Beaumont, that a short and not too lengthy or detailed answer to the question put by the right hon. Gentleman the Member for the City of London (Mr. Assheton) would be in Order. Of course, this debt charge would have been very much greater but for the cheap money policy which has been pursued consistently by His Majesty's Government. When we came into power borrowing was at rather over 3 per cent. The "caretaker" Government had to pay 3 per cent. plus long terms. Here I am repeating almost verbatim some remarks that I made in the right hon. Gentleman's constituency. I must apologise for the repetition but as the right hon. Gentleman did not turn up to hear me then, I will repeat my remarks.
Gradually by intelligent management of the capital market His Majesty's Government, in cooperation with the Bank of England under its new nationalised constitution, have reduced the rate of interest on long-term loans from rather over 3 per cent. to 2½ per cent. That has made a substantial difference already. We are now enjoying the benefit of the 2½ per cent. "tap" loan. In the early days we enjoyed only a 3 per cent. "tap" loan. So much for long and medium-long terms. With regard to short terms, as I explained in my last Budget speech but one, I was able to announce that we had succeeded in the very early days of our tenure of office, in cutting by half the Treasury Bill rates, with the result that the cost of the floating debt has been reduced during the short term we have been in office by a sum between £30 million and £40 million a year. These are mere examples. I would not impose on the Committee too lengthy an account of the success which our financial activities have achieved, at this hour in the morning. These are examples taken at random from what has been done in order to secure lower rates of interest. I have said more than once that it was the intention of His Majesty's Government so to arrange their financial operations as never to pay more for the loan of money than they need having regard to the economic and financial conditions of the moment. We do not think that high interest, for its own sake, is a good thing.
2.15 a.m.
With regard to the dangers which some have thought to have detected in the cheap money policy, I give this answer in complete sincerity. I do not think that the constant and consistent pursuit of a cheap money policy is bringing, under present conditions, and under any conditions likely to prevail for some years to come, any inflationary risks. One of the reasons why I do not think that, is because it is partly through the cheapening of money rates that production is now being stimulated, and the stimulation of production is a real safeguard against the risk of inflation. The danger of inflation is when there is too much money and too few goods. We are very well pleased with the progress of production at home and with the export drive.
The only other point I want to make is that this is one more example of the very great importance of financial control. If we have cheap money and no financial control, we should not be able to hold the position. There will be competition for a limited quantity of capital funds by a large number of different applicants, and interest rates will be pushed up again by unregulated competition by various capitalist ventures, local authority ventures and public board ventures competing with one another in an unorganised market and tending to push up interest rates. We intend to hold the rates of interest down, equally for the benefit of public boards and local authorities as for the benefit of private industry, and, if this is to be done, we must have control over the queue for borrowing. At a later hour today, we shall have an opportunity of considering the Lords' Amendments to the Borrowing (Control and Guarantees) Bill, and we are not going to take that from the Lords, for the reasons I am giving now. To illustrate the point I am making, we are not going to tolerate attempts by any unrepresentative body to limit the power of this Government of permanently controlling access to capital. So long as this control is maintained, there is no danger in a cheap money policy.
:I am much obliged for the Chancellor's answer, but I disagree with his first statement—that the permanent annual charge had been kept at the same level since 1939.
:Since 1928.
:That is, in fact, not the case, as the figures show. I think the figure before the war was £230 million, but I may be in error. I am pretty certain it has been altered. With regard to the Chancellor's answer on the question of cheap money, I quite appreciate the sincerity of-the point of view he put forward, but I hope that he and those on the other side of the Committee will appreciate that some of us have very grave anxieties on this matter. Cheap money is, of course, a tremendous advantage. If that money has become cheap through natural causes, it is all very well, but the Chancellor is attempting, and he says so very frankly, to make money cheap through artificial causes, through exercising control over investment and by various restrictions. That, I suggest, can lead to the most serious inflationary consequences, and I hope he will believe that I am as sincere in putting this view as he was himself in putting his point of view, but I do not wish to develop the point now, though I would like to do so on some future occasion.
Question put, and agreed to.
Clause ordered to stand part of the Bill.
Clauses 56, 57 and 58 ordered to stand part of the Bill.
:I beg to move, "That the Chairman do report Progress, and ask leave to sit again." [HON. MEMBERS: "Oh"].
Of course, I know that there are a great many hon. Members who sit behind him who think they can do the Chancellor's job as well as he can, but, perhaps, as a matter of formality, I might be allowed, in the first instance, to put my question to the Chancellor. I move this Motion in order to ascertain from the Chancellor how far he intends to go this morning. In order to appreciate the difficulties, it is necessary to look both back and forward. When we look back over the progress we have made this morning, it has really been astoundingly satisfactory. I believe that this is one of the longest and most complicated Finance Bills with which I have ever had to deal. We have already passed through some 35 Clauses, and it is only fair to remind the Chancellor that, in our efforts to expedite the passage of this Bill, we have not always been assisted by hon. Members opposite. We have no complaint because they have contributed very much to our Debate.
I recollect with pleasure a speech by the hon. Member for Ipswich (Mr. Stokes) which, although it was a little interrupted on account of order, I thought was about the most lucid utterance I have heard on financial subjects from the benches opposite for a very long time. The hon. Member for South Cardiff (Mr. Callaghan) has, on many occasions, assisted us with words of advice on matters of which he has, admittedly, a great knowledge and experience. And the hon. Member for Nelson and Colne (Mr. S. Silverman), although it is true he has not addressed himself to any great degree to the sub- stance of the Bill, has contributed frequently, and at considerable length, to the discussion of those points which are always interesting, both at the time and as a precedent for the future Therefore, as far as the past is concerned, I am sure that the right hon. Gentleman will be the first to agree that we have today made very substantial progress with some very difficult Clauses.
With regard to the future, it is quite true that there is a certain amount of busines still to do, and when I look at the Order Paper I see that, were we to continue now, we would be faced immediately with no less than four new Clauses which are down in the name of the Chancellor himself. I am sure they are excellent Clauses, but they have what I am afraid the Chancellor's Clauses always seem to have, a great length, a great complexity and almost great unintelligibility. As they deal with matters of very great substance and of great importance to a large number of people, I suggest that it would be quite wrong to stop on the discussion of Clauses of this importance at this hour in the morning. Then, beyond the Chancellor's Clauses, there are, of course, a large number of new Clauses in the names of hon. Friends of mine and of hon. Members opposite, raising a number of new points, many of a complicated character and of great importance. Finally, we come to the Schedules where the right hon. Gentleman has offered every encouragement to hon. Members to bring forward their ideas and to put down Amendments on the Purchase Tax for the elimination of this or that article in order that he may have the advantage of asking our advice and, as the result of that, properly come to a final decison. I am sure that the Chancellor will respond in the same reasonable spirit to us this morning as we have shown during the Debate. If he does so he will do a service, for the hon. Member for Nelson and Colne is tired, the hon. Member for Ipswich has left the Chamber, the hon. Member for South Cardiff is hoarse and has lost his voice, and the Financial Secretary to the Treasury has just woken up.
:This is the second time during the proceedings on this Bill that the right hon. Gentleman has made observations about my being asleep. It is not true, but it is quite true to say that very often when speeches are made from that side of the Committee, I wish I had been.
:I congratulate the hon. Gentleman on making a joke which was made by Lord North in 1778.
:Are we to understand, Mr. Chairman, that Tory speeches have been boring us ever since then?
:Lord North, I would point out, was a Tory, and the speeches boring him were the speeches of the Left Wing of that time. But, in view of all these observations, I think that it must be agreed we all want to go to bed and come again to the discussion afresh. I am going to ask the Chancellor not to be intimidated by the noises behind him, and I move that the Chairman report Progress.
2.30 a.m.
:I think it is in "Alice in Wonderland" that it is recorded that "all have done well, and all have deserved prizes." We have done well—we have got through a lot of Clauses. But this is not a good moment to cease from well-doing. We are all very fresh, and I should not wonder if there are hidden resources somewhere about the Committee which could be called to action if necessary. This is not a good time to give up, because for some it is too early, and for some it is too late. We fall between two stools of inconvenience. [HON. MEMBERS: "Why?"] Well, for some there is the desire to continue their work because of their political acumen and their public spirit; and others would not wish to stop working because they do not wish to be marooned without transport. I suggest that we finish in good time today, and there will be an interval. I recollect the time when we went round the clock, and when Question time started, we were still discussing the Business of the previous day.
We will make a short halt at the right moment. I think we have done very well, as the right hon. Gentleman says; I would like to congratulate all parts of the Committee on doing so well. But we must continue to do well. I have some more interesting new Clauses, and we are all eager to get on and discuss them. After that come the Schedules. I myself think that our target should be to complete now the new Clauses and, shall we say, three Schedules. That would leave only seven Schedules. I think the buses will have begun to run by then. The seven Schedules we can deal with after Questions today in the House. That would enable us to complete this Bill by seven o'clock this evening as was hoped; and then we can get on with the Borrowing Bill and Cable and Wireless, and other items of the programme. I feel that it would be wrong to knock off now. Let us be severe and courageous.
:I feel that the Committee ought to report Progress. It is simply a question of the Government adjusting its time to allow for its overloaded programme. If they thought about the essential needs of the country, and dealt with finance and security and important social matters with intelligent priority, we would not be in this sort of difficulty. But the truth is that Ministers are tired and irritable. [HON. MEMBERS: "No, no."]—those of them who are in this country, of course, and the fact that so many are in India and other parts of the world obviously places an even greater burden on those at home. The Civil Service is overworked.
:The hon. Member is getting very wide. He can only discuss the question whether Progress should be reported.
:With respect, Mr. Beaumont, that was the question I was endeavouring to discuss. If it were not for the mishandling of the time of the House there would be no need to sit until this hour. Better work would be done, and in all the circumstances I reinforce the plea made by the right hon. Gentleman, that we do now report Progress.
:I, for one, was disappointed by the Chancellor's statement. I want to be clear that I heard him aright. Did he really say, that he meant to get to the end of the Third Schedule before the Committee adjourned?
:I said that I thought that should be our target.
:What does that mean? Let us be sensible about it. After all, the Government have the majority, and if they want to go on sitting they can go on sitting. If they want to hold up a sitting at any moment they can do so. Therefore I ask him seriously when he says that, does he seriously mean that he hopes that before the Committee adjourns to get to the end of the Third Schedule?
:I do, with the cooperation of all Members of the Committee.
:I think that is treating the Committee with scant consideration. I may say to hon. Members opposite that I have been Financial Secretary for six Budgets, which is longer than anyone else. That is one topic on which I have some experience, and I do not recollect any occasion when a Chancellor has been treated so easily as has the present Chancellor. Hon. Gentlemen do not know what they are talking about. Certainly I would put it that the Patronage Secretary opposite has only to look outside to see the records of the number of minutes given to each of the Clauses we have discussed, to realise we have done our part to expedite the matter. We were told by the Leader of the House last Thursday—who ought to be here when these matters are discussed but never is—that he hoped to get through on Tuesday evening, but neither he nor the Chancellor appreciated how much there was to discuss upon this Bill of a novel and technical character. Again it cannot be claimed hat we have had long discussions on what the Treasury call the perennials—the topics on which, year after year, it has been possible within the rules of Order and in the interests of everybody concerned and the nation at large, to have long discussions such as the matter raised in the last Amendment on the question of cheap money. There has been no closure—
:We have been very good about it.
:Exactly there has been no delay, and I say there was not on the last Amendment, which was open, under your Ruling, Mr. Beaumont, to a discussion on the whole policy of cheap money. That is a matter on which people outside would have been glad to hear the Chancellor speak, at much greater length; they would certainly have been interested to hear the arguments on the other side because the argument is fairly well balanced. How much publicity and report is the right hon. Gentleman going to get to the important statements he made here? Obviously, none at all. It has nothing to do with any particular newspaper but because of the handicap of the hour he will not get into any newspaper tomorrow, and by the next day, goodness knows what will have happened to submerge this particular topic. The helpful attitude of the Opposition on this Bill is evident in the short time which has been given to each Amendment; in fact, the Government have never found it necessary to ask the Chair whether they could or could not have the Closure. To ask us now to embark upon all these new Clauses, and the first three Schedules, is asking something that is most unreasonable. The right hon. Gentleman just now, preened himself, saying that we had been most reasonable and that the Government had been most reasonable. If that is so, he has suddenly changed his tactics and become most unreasonable.
After all, the first new Clause is on page 2368, and the end of the third Schedule is at the bottom of page 2381. The very nature of the Schedule dealing with the Purchase Tax is unfortunate. It is unfortunate because it is in the form of a tax, and unfortunate because it must be discussed in detail because no one point is the same as another. We cannot easily move these Amendments because there is no similarity between the arguments which can be put forward for epidioscopes and for notepaper. All these matters raise very different points, and I do feel the right hon. Gentleman would be wise not to open his mouth as widely as that. I hope he will say that, on further consideration he thinks it would be wrong to go as far as the Third Schedule, and will make some other proposition.
:The proposition I make is—let us go on and see. The right hon. Gentleman and I have been Members of previous Parliaments. We both know there have been previous occasions when there was much less co-operative inclination in the Committee. We have on the whole worked very well so far, but this is an impossible time to stop. To stop now would be both a waste of time and a penalisation of large numbers of hon. Members. Therefore, we shall go on, and it is merely an academic question as to whether we can make the Third Schedule or only the end of the new Clauses, or somewhere between them. If we can dispose of this Motion now, we will tackle the new Clauses, and see where we get.
:May I suggest that the Chancellor is being a little unreasonable? I think it is quite clear that the Chancellor is getting rather tired.
:Not in the least.
:The right hon. Gentleman says that he is not in the least tired; but I would like to draw attention to the fact that when discussing the last very important Clause—a matter of increasing the permanent annual charge of the National Debt to the sum of £490 million—the Chancellor gave the Committee information which was not accurate. I pointed it out at that time.
:The right hon. Gentleman may not discuss that Clause now.
:I was trying to point out that the Chancellor was rather tired, because unless he is tired he does not make mistakes, and in discussing the last Clause he made a very serious mistake. I suggest that the Chancellor is tired, and it would be much better if he went to bed.
:I suggest to the Chancellor that the Press will give no report tomorrow, either in the morning or in the evening papers, of what transpires from now onwards. If we are to have adequate reporting of the points raised on both sides of the Committee on the important Clauses which now follow, and still more the important Schedules, I suggest that this is the right moment to break off, so that the morning newspapers on the day after tomorrow will come to this matter fresh. There is no question of getting any active statement of the Debate in the evening newspapers. It will be reported that there was a late night sitting, the scene will be described, the number of drinks that hon. Members take will be described, but there will be no serious record of the Debate. That is an important reason why the Debate should be concluded now, and we should resume tomorrow afternoon.
2.45 a.m.
:I was very much interested in the guidance which the Chancellor, in the absence of the Leader of the House, has given to us tonight. He rightly observed that he and I have taken part in similar nights for a good number of years, and I think I am right in saying that always on these occasions there has been an indication by the Government of the day as to the amount of business which they expected to get through before the House adjourned. It is quite true that, when he first spoke, he told us that he wished to conclude the whole of the new Clauses and the Schedules, but then he introduced a new doctrine. He said, "Oh no, it is not a question of the business." In reply to the appeal made by my right hon. and gallant Friend the Member for Gainsborough (Capt. Crookshank) he said, "It is a question of time." I have never in all these years heard this new doctrine. Generally there have been discussions between both sides and in the course of an evening they have said, "All right, we will get so many Clauses. That is enough." It is the progress made with the Bill that matters. Now he has changed his ground and his new doctrine is that we either go to bed at 12 o'Clock or at 6 o'Clock in the morning. It has nothing to do with the progress made with the Bill. It that is to be the doctrine,—there is a good deal to be said for it, I quite see, for the convenience of hon. Members—then we might have some new Standing Orders, so that on alternate days we go on until 12 or until the next morning. That would be understandable, but I might perhaps venture to point out to the right hon. Gentleman who, with all his skill and extreme agility, is leading the House, that if he puts time as the factor and not progress, he cannot expect very much cooperation from the Opposition as to the actual progress—we shall work to time.
:In resisting the Motion to report Progress, the Chancellor quoted from "Alice in Wonderland"—"All have done well and all will have prizes." The occasion of that saying was the caucus race in which, at the end, Alice received, I think, her own thimble and everybody finished exactly where they had begun. If I remember rightly, the verdict was "All have won." I would suggest that this is what we are confronted with—the caucus race—the race of the Socialist caucus to get through this overloaded, topheavy programme before the end of July. But so far from all being the winners, I suggest that all will be the losers if this sort of thing goes forward. Where have we got to with the Bill? We have got now to the point at which Private Members have the opportunity of moving new Clauses. We have finished with the Bill proper; we have finished with a long series of Amendments with considerable expedition, as the Chancellor suggested, and we now come to the point where Private Members can raise important matters by means of new Clauses.
There is one thing which is almost inevitable about an all-night Sitting. It generally begins in an atmosphere of hilarity, which we are now passing through; it goes on to an atmosphere of weariness and bad temper, and about five o'Clock in the morning we get our second wind and get back to hilarity again. That almost always happens. The Government's position has been considered in this discussion; the Opposition's position has been considered; the comfort of hon. Members has been considered. No one has yet suggested that our constituents should be considered. There is a long list of new Clauses put down by hon. Members on both sides of the Committee, very often in response to representations from their constituents. What will our constituents say when they are told that these new Clauses were considered in this atmosphere of hilarity and somnolence alternating? I myself have down two new Clauses which I am going to stop here and debate whatever time it is. [HON. MEMBERS: "Hear, hear."] It is not a question of weariness at all. I have been here all day and I shall be here all night. But is it fair to my constituents that those new Clauses should be considered at five o'Clock in the morning when the Committee will then have sat for some 14 hours? I want seriously to suggest to the Government that that is not the way to treat the people of this country. They can steamroller the Opposition. Of course they can, because they have the big battalions to do it. Is it their intention to beat down the wishes of the people who put them in? The right hon. Member for Woodford (Mr. Churchill) was quite right—
:Where is he?
:I imagine that the Leader of the Opposition, like the Prime Minister, is in bed. In any case it is not part of the duties of the Leader of the Opposition to conduct Government business. I would say that if it were not for the right hon. Gentleman we would not be sitting here tonight. The right hon. Gentleman was quite right—if this is the way the Government are going to conduct their business—when he told our party at a great meeting that the issue was the Socialists versus the people.
:I must say I am surprised at the attitude taken up by the Chancellor on this question of reporting Progress. I cannot see that the convenience of the Members of this Committee should be the paramount consideration when we have our annual opportunity of discussing the financial affairs of the nation. As I understand it, the argument is that we cannot stop now because it would be inconvenient to hon. Members as, unfortunately, many of them cannot get home until the transport services start in the morning. That is an astonishing consideration for the right hon. Gentleman to put forward as the governing and paramount consideration in the conduct of the affairs of Parliament. In the old days this was the best opportunity of safeguarding the interests of the taxpayer. Now, apparently, these new Clauses and important matters which still have to be considered are treated more or less as matters of form. Who can suggest that at 3 o'clock in the morning we
can debate these important issues adequately or properly? It is a duty we owe the country and our constituents on the annual occasion of the Committee stage of the Finance Bill. This is about the most important financial occasion of the year, and we should treat it as a serious matter. We should give these matters due debate and not a nominal discussion at three or four or five o'clock in the morning when they cannot get the consideration worthy of the tradition of the British House of Commons.
In this case the Chancellor has not suffered from anything in the nature of obstruction. This is a very long Finance Bill. I have been in the House when many Finance Bills have been discussed and seldom have I seen one larger than this. The new Clauses are a very important part of the Finance Bill and that they should be discussed in an all-night Sitting, as a kind of matter of form, in the small hours of the morning is not treating the nation or our constituents in the right way. That the convenience of hon. Members should be considered as of paramount importance, when considering whether we should go on or not is a shocking thing.
rose in his place, and claimed to move, "That the Question be now put."
Question put, "That the Question be now put."
The Committee divided: Ayes, 206; Noes, 83.
Division No. 205.] AYES. [2.55 a.m. Adams, Richard (Balham) Callaghan, James Driberg, T. E. N. Adams, W. T. (Hammersmith, South) Castle, Mrs. B. A. Durbin, E. F. M. Allen, A. C. (Bosworth) Chamberlain, R. A. Dye, S. Alpass, J. H. Champion, A. J. Ede, Rt. Hon. J. C. Attewell, H. C. Chetwynd, Capt. G. R. Edelman, M. Austin, H. L. Cobb, F. A. Edwards, John (Blackburn) Awbery, S. S. Cocks, F. S. Evans, E. (Lowestoft) Baird, Capt. J. Collins, V. J. Evans, John (Ogmore) Barton, C. Colman, Miss G. M. Fairhurst, F. Bechervaise, A. E. Comyns, Dr. L. Farthing, W. J. Benson, G. Corbet, Mrs. F. K. (Camb'well, N.W.) Fletcher, E. G. M. (Islington, E.) Berry, H. Crawley, Flt.-Lieut. A. Foot, M. M. Binns, J. Crossman, R. H. S. Foster, W. (Wigan) Blackburn, A. R. Daggar, G. Gibbins, J. Blenkinsop, Capt. A. Daines, P. Gibson, C. W. Blyton, W. R. Dalton, Rt. Hon. H. Gilzean, A. Boardman, H. Davies, Edward (Burslem) Glanville, J. E. (Consett) Bowden, Flg.-Offr. H. W. Davies, Ernest (Enfield) Gordon-Walker, P. C. Braddock, Mrs. E. M. (L'pl, Exch'ge) Davies, Harold (Leek) Greenwood, A. W. J. (Heywood) Braddock, T. (Mitcham) Davies, Haydn (St. Pancras, S.W.) Grey, C. F. Brown, George (Belper) Davies, S. O. (Merthyr) Grierson, E. Brown, T. J. (Ince) Deer, G. Gunter, Capt. R. J. Bruce, Maj. D. W. T. Delargy, Captain H. J. Guy, W. H. Burden, T. W. Diamond, J. Haire, Flt.-Lieut. J. (Wycombe) Burke, W. A. Dodds, N. N. Hale, Leslie Hall, W. G. (Colne Valley) Middleton, Mrs. L. Simmons, C. J. Hamilton, Lieut.-Col. R. Mikardo, Ian Skeffington, A. M. Hardman, D. R. Mitchison, Maj. G. R. Skeffington-Lodge, T. C. Hardy, E. A. Monslow, W. Skinnard, F. W. Hastings, Dr. Somerville Morris, Lt.-Col. H. (Sheffield, C.) Smith, Capt. C. (Colchester) Henderson, Joseph (Ardwick) Morris, P. (Swansea, W.) Smith, S. H. (Hull, S.W.) Herbison, Miss M. Mort, D. L. Snow, Capt. J. W. Hewitson, Capt. M. Moyle, A. Sorensen, R. W. Hobson, C. R. Murray, J. D. Soskice, Maj. Sir F. Holman, P. Nally, W. Stamford, W. House, G. Nichol, Mrs. M. E. (Bradford, N.) Steele, T. Hoy, J. Noel-Baker, Capt. F. E. (Brentford) Stewart, Capt. Michael (Fulham, E.) Hughes, Lt. H. D. (W'lverh'pton, W.) Noel-Buxton, Lady Stubbs, A. E. Hynd, H. (Hackney, C.) O'Brien, T. Swingler, S. Irving, W. J. Oldfield, W. H. Symonds, Maj. A. L. Janner, B. Oliver, G. H. Taylor, H. B. (Mansfield) Jeger, G. (Winchester) Orbach, M. Taylor, R. J. (Morpeth) Jeger, Dr. S. W. (St. Pancras, S.E.) Paling, Will T. (Dewsbury) Thomas, John R. (Dover) Jones, D. T. (Hartlepools) Palmer, A. M. F. Thomas, George (Cardiff) Jones, J. H. (Bolton) Pargiter, G. A. Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Jones, P. Asterley (Hitchin) Paton, Mrs. F. (Rushcliffe) Thorneycroft, H. (Clayton) Keenan, W. Paton, J. (Norwich) Tiffany, S. Kenyon, C. Peart, Capt. T. F. Tolley, L. Kinghorn, Sqn.-Ldr. E. Perrins, W. Tomlinson, Rt. Hon. G. Kinley, J. Piratin, P. Ungoed-Thomas, L. Lang, G. Platts-Mills, J. F. F. Walkden, E. Lavers, S. Poole, Major Cecil (Lichfield) Wallace, G. D. (Chislehurst) Lee, F. (Hulme) Popplewell, E. Wallace, H. W. (Walthamstow, E.) Lee, Miss J. (Cannock) Price, M. Philips Warbey, W. N. Leslie, J. R. Pritt, D. N. Weitzman, D. Lewis, A. W. J. (Upton) Proctor, W. T. White, H. (Derbyshire, N.E.) Lindgren, G. S. Randall, H. E. Whiteley, Rt. Hon. W. Lyne, A. W. Ranger, J. Wigg, Col. G. E. McGhee, H. G. Rees-Williams, D. R. Willey, F. T. (Sutherland) McGovern, J. Reeves, J. Willey, O. G. (Cleveland) Mack, J. D. Reid, T. (Swindon) Williams, W. R. (Heston) McKay, J. (Wallsend) Rhodes, H. Willis, E. McLeavy, F. Roberts, Goronwy (Caernarvonshire) Wills, Mrs. E. A. Macpherson, T. (Romford) Rogers, G. H. R. Woodburn, A. Mainwaring, W. H. Royle, C. Yates, V. F. Mallalieu, J. P. W. Sargood, R. Zilliacus, K. Manning, C. (Camberwell, N.) Scollan, T. Manning, Mrs. L. (Epping) Shawcross, C. N. (Widnes) TELLERS FOR THE AYES: Mathers, G. Shurmer, P. Mr. Pearson and Mr. Bing. Mayhew, C. P. Silverman, S. S. (Nelson)
NOES. Agnew, Cmdr. P. G. Grimston, R. V. Peto, Brig. C. H. M. Assheton, Rt. Hon. R. Harris, H. Wilson Poole, O. B. S. (Oswestry) Baldwin, A. E. Haughton, S. G. Prescott, Stanley Barlow, Sir J. Hinchingbrooke, Viscount Renton, D. Birch, Nigel Hollis, M. C. Roberts, Emrys (Merioneth) Boles, Lt.-Col. D. C. (Wells) Hope, Lord J. Roberts, H. (Handsworth) Bower, N. Hutchison, Lt.-Cm. Clark (E'b'rgh W.) Roberts, W. (Cumberland, N.) Boyd-Carpenter, J. A. Hutchison, Col. J. R. (Glasgow, C.) Ross, Sir R. Bracken, Rt. Hon. Brendan Jeffreys, General Sir G. Shephard, S. (Newark) Braithwaite, Lt.-Comdr. J. G. Joynson-Hicks, Lt.-Cdr. Hon. L. W. Shepherd, W. S. (Bucklow) Buchan-Hepburn, P. G. T. Keeling, E. H. Smith, E. P. (Ashford) Butcher, H. W. Langford-Holt, J. Stanley, Rt. Hon. O. Byers, Lt.-Col. F. Lipson, D. L. Stuart, Rt. Hon. J. (Moray) Carson, E. Low, Brig. A. R. W. Sutcliffe, H. Clifton-Brown, Lt.-Col. G. Lucas-Tooth, Sir H. Taylor, C. S. (Eastbourne) Conant, Maj. R. J. E. Macdonald, Capt. Sir P. (I. of Wight) Teeling, William Crookshank, Capt. Rt. Hon. H. F. C. Maclay, Hon. J. S. Thomas, J. P. L. (Hereford) Darling, Sir W. Y. Macmillan, Rt. Hon. Harold (Bromley) Turton, R. H. Digby, Maj. S. W. Maitland, Comdr. J. W. Vane, W. M. T. Dodds-Parker, A. D. Manningham-Buller, R. E. Wadsworth, G. Duthie, W. S. Marlowe, A. A. H. Wakefield, Sir W. W. Erroll, F. J. Marshall, D. (Bodmin) Williams, C. (Torquay) Foster, J. G. (Northwich) Mellor, Sir J. Willoughby de Eresby, Lord Fox, Sqn.-Ldr. Sir G. Morrison, Maj. J. G. (Salisbury) York, C. Fraser, Maj. H. C. P. (Stone) Mott-Radclyffe, Maj. C. E. Young, Sir A. S. L. (Partick) Fraser, Sir I. (Lonsdale) Nicholson, G. George, Lady M. Lloyd (Anglesey) Nield, B. (Chester) TELLERS FOR THE NOES: Gomme-Duncan, Col. A. G. Nutting, Anthony Mr. Drewe and Mr. Studholme. Gridley, Sir A. Orr-Ewing, I. L.
Question put accordingly, "That the Chairman do report Progress, and ask leave to sit again."
The Committee divided: Ayes, 81; Noes, 207.
Division No. 206.] AYES. [3.3 a.m. Agnew, Cmdr. P. G. Grimston, R. V. Peto, Brig. C. H. M. Assheton, Rt. Hon. R. Haughton, S. G. Poole, O. B. S. (Oswestry) Baldwin, A. E. Hinchingbrooke, Viscount Prescott, Stanley Barlow, Sir J. Hollis, M. C. Renton, D. Birch, Nigel Hope, Lord J. Roberts, Emrys (Merioneth) Boles, Lt.-Col. D. C. (Wells) Hutchison, Lt.-Cm. Clark (E'b'rgh W.) Roberts, H. (Handsworth) Bower, N. Hutchison, Col. J. R. (Glasgow, C.) Roberts, W. (Cumberland, N.) Boyd-Carpenter, J. A. Jeffreys, General Sir G. Ross, Sir R. Bracken, Rt. Hon. Brendan Joynson-Hicks, Lt.-Cdr. Hon. L. W. Shephard, S. (Newark) Braithwaite, Lt.-Comdr. J. G. Keeling, E. H. Shepherd, W. S. (Bucklow) Buchan-Hepburn, P. G. T. Langford-Holt, J. Smith, E. P. (Ashford) Butcher, H. W. Lipson, D. L. Stanley, Rt. Hon. O. Byers, Lt.-Col. F. Low, Brig. A. R. W. Stuart, Rt. Hon. J. (Moray) Carson, E. Lucas-Tooth, Sir H. Sutcliffe, H. Clifton-Brown, Lt.-Col. G. Macdonald, Capt. Sir P. (I. of Wight) Taylor, C. S. (Eastbourne) Crookshank, Capt. Rt. Hon. H. F. C. Maclay, Hon. J. S. Teeling, William Darling, Sir W. Y. Macmillan, Rt. Hon. Harold (Bromley) Thomas, J. P. L. (Hereford) Digby, Maj. S. W. Maitland, Comdr. J. W. Turton, R. H. Dodds-Parker, A. D. Manningham-Buller, R. E. Vane, W. M. T. Drewe, C. Marlowe, A. A. H. Wadsworth, G. Duthie, W. S. Marshall, D. (Bodmin) Wakefield, Sir W. W. Erroll, F. J. Mellor, Sir J. Williams, C. (Torquay) Foster, J. G. (Northwich) Morrison, Maj. J. G. (Salisbury) Willoughby de Eresby, Lord Fox, Sqn.-Ldr. Sir G. Mott-Radclyffe, Maj. C. E. York, C. Fraser, Maj. H. C. P. (Stone) Nicholson, G. Young, Sir A. S. L. (Partick) Fraser, Sir I. (Lonsdale) Nield, B. (Chester) George, Lady M. Lloyd (Anglesey) Nutting, Anthony TELLERS FOR THE AYES: Gomme-Duncan, Col. A. G. Orr-Ewing, I. L. Major Conant and Mr. Studholme
NOES. Adams, Richard (Balham) Dye, S. Lee, Miss J. (Cannock) Adams, W. T. (Hammersmith, South) Ede, Rt. Hon. J. C. Leslie, J. R. Allen, A. C. (Bosworth) Edelman, M. Lewis, A. W. J. (Upton) Alpass, J. H. Edwards, John (Blackburn) Lindgren, G. S. Attewell, H. C. Edwards, W. J. (Whitechapel) Lyne, A. W. Austin, H. L. Evans, E. (Lowestoft) McGhee, H. G. Awbery, S. S. Evans, John Ogmore McGovern, J. Baird, Capt. J. Fairhurst, F. Mack, J. D. Barton, C. Farthing, W. J. McKay, J. (Wallsend) Bechervaise, A. E. Fletcher, E. G. M. (Islington, E.) McLeavy, F. Benson, G. Foot, M. M. Macpherson, T. (Romford) Berry, H. Foster, W. (Wigan) Mainwaring, W. H. Binns, J. Gibbins, J. Mallalieu, J. P. W. Blackburn, A. R. Gibson, C. W. Manning, C. (Camberwell, N.) Blenkinsop, Capt. A. Gilzean, A. Manning, Mrs. L. (Epping) Blyton, W. R. Glanville, J. E. (Consett) Mathers, G. Boardman, H. Gordon-Walker, P. C. Mayhew, C. P. Bowden, Flg.-Offr. H. W. Greenwood, A. W. J. (Heywood) Middleton, Mrs. L. Braddock, Mrs. E. M. (L'pl, Exch'ge) Grey, C. F. Mikardo, Ian Braddock, T. (Mitcham) Grierson, E. Mitchison, Maj. G. R. Brown, George (Belper) Gunter, Capt. R. J. Monslow, W. Brown, T. J. (Ince) Guy, W. H. Morris, Lt.-Col. H. (Sheffield, C.) Bruce, Maj. D. W. T. Haire, Flt.-Lieut. J. (Wycombe) Morris, P. (Swansea, W.) Burden, T. W. Hale, Leslie Mort, D. L. Burke, W. A. Hall, W. G. (Colne Valley) Moyle, A. Callaghan, James Hamilton, Lieut.-Col. R. Murray, J. D. Castle, Mrs. B. A. Hardman, D. R. Nally, W. Chamberlain, R. A. Hardy, E. A. Nichol, Mrs. M. E. (Bradford, N.) Champion, A. J. Hastings, Dr. Somerville Noel-Baker, Capt. F. E. (Brentford) Chetwynd, Capt. G. R. Henderson, Joseph (Ardwick) Noel-Buxton, Lady Cobb, F. A. Herbison, Miss M. O'Brien, T. Cocks, F. S. Hewitson, Capt. M. Oldfield, W. H. Collins, V. J. Hobson, C. R. Oliver, G. H. Colman, Miss G. M. Holman, P. Orbach, M. Comyns, Dr. L. House, G. Paling, Will T. (Dewsbury) Corbet, Mrs. F. K. (Camb'well, N.W.) Hoy, J. Palmer, A. M. F. Crawley, Flt.-Lieut. A. Hughes, Lt. H. D. (W'lverh'pton, W.) Pargiter, G. A. Crossman, R. H. S. Hynd, H. (Hackney, C.) Paton, Mrs. F. (Rushcliffe) Daggar, G. Irving, W. J. Paton, J. (Norwich) Daines, P. Janner, B. Peart, Capt. T. F. Dalton, Rt. Hon. H. Jeger, G. (Winchester) Perrins, W. Davies, Edward (Burslem) Jeger, Dr. S. W. (St. Pancras, S.E.) Piratin, P. Davies, Ernest (Enfield) Jones, D. T. (Hartlepools) Platts-Mills, J. F. F. Davies, Harold (Leek) Jones, J. H. (Bolton) Poole, Major Cecil (Lichfield) Davies, Haydn (St. Pancras, S.W.) Jores, P. Asterley (Hitchin) Popplewell, E. Davies, S. O. (Merthyr) Keenan, W. Price, M. Philips Deer, G. Kenyon, C. Pritt, D. N. Delargy, Captain H. J. Kinghorn, Sqn.-Ldr. E. Proctor, W. T. Diamond, J. Kinley, J. Randall, H. E. Dodds, N. N. Lang, G. Ranger, J. Driberg, T. E. N. Lavers, S. Rees-Williams, D. R. Durbin, E. F. M. Lee, F. (Hulme) Reeves, J. Reid, T. (Swindon) Soskice, Maj. Sir F. Wallace, G. D. (Chislehurst) Rhodes, H. Stamford, W. Wallace, H. W. (Walthamstow, E.) Roberts, Goronwy (Caernarvonshire) Steele, T. Warbey, W. N. Rogers, G. H. R. Stewart, Capt. Michael (Fulham, E.) Weitzman, D. Royle, C. Stubbs, A. E. White, H. (Derbyshire, N.E.) Sargood, R. Swingler, S. Whiteley, Rt. Hon. W. Scollan, T. Symonds, Maj. A. L. Wigg, Col. G. E. Shawcross, C. N. (Widnes) Taylor, H. B. (Mansfield) Willey, F. T. (Sunderland) Shurmer, P. Taylor, R. J. (Morpeth) Willey, O. G. (Cleveland) Silverman, S. S. (Nelson) Thomas, John R. (Dover) Williams, W. R. (Heston) Simmons, C. J. Thomas, George (Cardiff) Willis, E. Skeffington, A. M. Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Wills, Mrs. E. A. Skeffington-Lodge, T. C. Thorneycroft, H. (Clayton) Woodburn, A. Skinnard, F. W. Tiffany, S. Yates, V. F. Smith, Capt. C. (Colchester) Tolley, L. Zilliacus, K. Smith, S. H. (Hull, S.W.) Tomlinson, Rt. Hon. G. Snow, Capt. J. W. Ungoed-Thomas, L. TELLERS FOR THE NOES: Sorensen, R. W. Walkden, E. Mr. Pearson and Mr. Bing.
NEW CLAUSE.—(Rehabilitation costs incurred before end of 1946.)
"(1) Where—
( a )whether before or after the passing of this Act, any person carrying on a trade or business incurs rehabilitation costs in connection with the trade or business before the end of the year nineteen hundred and forty-six; and
( b )apart from the provisions of this Section, relief is not allowable in respect of those costs or part of those costs in computing the profits of the trade or business for excess profits tax purposes for any accounting period constituting or including a chargeable accounting period.
the profits of the trade or business for the chargeable accounting period in which the rehabilitation costs or that part thereof, as the case may be, are incurred, shall, for the purposes of excess profits tax, be treated as reduced by the amount of the said costs or that part thereof, as the case may be.
Provided that so much of any rehabilitation costs as has been or is to be met directly or indirectly by the Crown or by any Government or public or local authority, whether in the United Kingdom or elsewhere, or by any person other than the person carrying on the trade or business, shall be left out of account.
(2)Where the person carrying on the trade or business is, for the purposes of excess profits tax, entitled in respect of buildings, plant or machinery on which rehabilitation costs are incurred, to an allowance under paragraph 3 of Part I of the Seventh Schedule to the Finance (No. 2) Act, 1939, or subsection (1) of section thirty-three of the Finance Act, 1940 (which relate to exceptional depreciation allowances), and that allowance is increased owing to the rehabilitation costs having been treated as part of the net cost of the provision of the buildings, plant or machinery, so much of those costs as is equal to that increase in the allowance shall, by virtue of the making of the allowance, be treated for the purposes of subsection (1) of this section as costs in respect of which relief is allowable apart from the provisions of this section.
(3)The provisions of subsection (2) of section thirty-three of the Finance Act, 1940 (which relates to the spreading of deductions over more than one accounting period), shall not apply to any deduction allowable by virtue of this section.
(4)In this section the expression 'rehabilitation costs' has the same meaning as in section thirty-two of this Act."—[ The Solicitor-General. ]
Brought up, and read the First time.
:I beg to move, "That the Clause be read a Second time."
The Committee will remember that when we were discussing Clause 32, which was the Clause dealing with deferred repairs and renewals and rehabilitation expenses, I intimated, or reminded the Committee, that the Government had put down a Clause which extended rehabilitation expenses to expenses incurred before the end of 1946. Without this new Clause, the position was that rehabilitation expenses, whether of a capital or of an income nature, incurred during 1947, and in some circumstances during 1948, could be attributed to 1946 and could be treated as a deduction for that year. I intimated that the Government were going farther and putting down a Clause having the effect of making capital rehabilitation expenses incurred during the Excess Profits Tax period capable of relief.
This is a concession to the point of view of right hon. and hon. Members opposite that the allowances should be as generous as possible to allow traders to get back on their feet. This affords a considerable measure of relief, in addition to that afforded under Clause 32.
:This is an improvement of the Bill. The only thing which puzzles me is that the hon. and learned Solicitor-General tells us that under this new Clause expenses which are for rehabilitation costs in this connection which are of a capital nature will as a result of the new Clause be deductable if incurred before 1947 in the same way as those rehabilitation costs of a revenue character in the period covered. I understand that and agree with the learned Solicitor-General that it is desirable that this should be done, but I do not see in what part of that Clause this occurs.
3.15 a.m.
:This is brought about by Subsection (1, a ):
"Where … before or after the passing of this Act, any person carrying on a trade or business incurs rehabilitation costs in connection with the trade or business before the end of the year nineteen hundred and forty-six"
rehabilitation expenses of a revenue character are automatically deductable as a current outgoing. Therefore, the only rehabilitation expenses to which this can refer are rehabilitation expenses of a capital nature. It is that Paragraph which brings that within the ambit of the allowances which qualify in assessing the profits of the trade or business for the Excess Profits Tax period.
:I am very much obliged to the learned Solicitor-General for pointing that out. It does not exactly meet the eye. That is the worst of this technical drafting of these complicated Clauses, and it is really a great pity that we have to discuss them as late as this, because this is a matter of vital importance to many businesses and industries, and, of course, they will be wondering what is going to be the advantage of this Clause. I am afraid that by the nature of the case it will get very little explanation, at least in the public Press. That was why I was anxious at least to have it in the records that those whose business it is to follow these things will get from the learned Solicitor-General's speech what is involved in this Clause, and that it is on this that they and their advisers have to rely to see that they get the benefit which the Committee confers by adding this Clause to the Bill. I do not think there is anything following to which I want to call attention here. It falls in line with the Debate we had earlier today, and I expect my right hon. Friend, the Member for the Scottish Universities (Sir J. Anderson), will be surprised that this has been taken this morning, because earlier we were under the impression that there was no intention to sit after midnight. Therefore, it will be a disappointment to him not to have been able to take part in this Debate. I think that will apply also to my hon. Friend who takes such a prominent part in these dis- cussions. I notice that the learned Solicitor-General did not make any reference to the second paragraph of the new Clause. Does that contain anything that we ought to know about and do not know about?
:The second paragraph is designed to prevent there being a double allowance. In other words, where an allowance which is now being made available to the trader is one which also would fall within the scope of what has been referred to as the exceptional depreciation Clause—namely, Paragraph 3 of the Seventh Schedule to the Finance Act (No. 2) of 1939—it does not rank as a deduction both under the terms of that Schedule and also under the terms of this new Clause. That is what this is designed to do.
:Which does it rank under?
:If it is exceptional depreciation it comes under Paragraph 3 of the Seventh Schedule to the Finance Act (No. 2) of 1939. If it is not, it will qualify for deduction under this new Clause.
:I think we are all very grateful to the hon. and learned Solicitor-General for the explanation he has given us. Certainly it represents a concession so far as the taxpayer is concerned, but each concession so far as the taxpayer is concerned represents also a loss of revenue so far as the public Exchequer is concerned, and I was wondering whether he will be able to give us any indication of the amount of revenue the Chancellor will be forgoing should the Committee decide to accept this Clause. It is desirable that we have these estimates of the cost of concessions as we proceed, otherwise we will not know whether we ought to accept the various Clauses as they come along.
:My right hon. Friend said that the Member for the Scottish Universities (Sir J. Anderson) would be rather surprised to find that we had gone on so late, and so may I say there are some obscurities in this new Clause which I did think no hon. Member or right hon. Member of this Committee could explain except, perhaps, the learned Solicitor-General. I would like to put the Financial Secretary through an examination on this new Clause to see whether he would pass. I am doubtful of it, but I wish to inquire into the proviso to paragraph ( b ) where it says:
"Provided that so much of any rehabilitation costs as has been or is to be met directly or indirectly by the Crown."
I can understand what is meant by indirectly. I can understand the position with regard to rehabilitation costs made directly by the Crown or the local authorities. The matter is easy to judge and fairly easy to estimate, but on what grounds, and in what way, does one estimate the indirect rehabilitation costs? If the Solicitor-General could clear up that one point, I should be a little, but only a little, clearer as to the meaning of the new Clause.
:Just now we were told that the new Clause is a concession and that it benefits those people. We were further told that the Subsection (2) of the Clause was to stop a double claim being made whilst at the same time still allowing these people, in certain circumstances, to the benefit. It would appear to me if this profit system is to avoid trying to get away with something, which I am sure they would not, we are entitled to have a rather clearer wording of the Subsection. I do not know, and it is not for me to inquire how these things are drafted, but I cannot help seeing, in the drafting of this Subsection, something which reminds me of some of the subjects we have heard from the Government Front Bench which, in law, are terribly clear, but, in commonsense, are most obscure. I think that in a case such as this, where we have to protect the citizen from trying to get into trouble, we really are entitled to have a clearer wording than is contained in the Subsection. It is most complicated phraseology. It seems to repeat itself several times over. I ask the Solicitor-General to read this provision to the Committee, and I warrant that hardly one Member on either side will be able to understand it. Where we have Clauses such as this put in to make it impossible for people to do something which is wrong, I think those people are entitled to know where they can go wrong. From the drafting of this Clause, they cannot do that.
:The benevolent intention of the Clause is quite clear, but it seems to me there are some practical difficulties. As the Government are aware, I might be very anxious to rehabilitate my machinery or buildings, I might put the matter in the hands of an architect, and get the usual estimate, and then find that I could not get a licence. This concession seems to me to encourage a feverish search for an opportunity to do this rehabilitation in order to secure the advantage which is conceded. Is that in keeping with the Government's general desire? Would it not be more advisable to extend the right of this claim to 1947? The effect of this particular Clause seems to concentrate an almost hectic pursuit of the carrying through of the work as early as is possible. That may well interfere with the Government's somewhat belated housing programme, or with the many public works which they have in view. I think there should be priorities, but because I hold back my priority for a greater and more essential public good, I do not see why I should forfeit the claim which has been conceded to others. I think that if the Chancellor would consider the suggestion made by my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson) and give the Commissioners power to consider any special circumstances, such as the absence of materials, suitable labour, or difficulty in getting pieces of machinery, it would be fully in keeping with the intention of the Chancellor. It seems to me that the Clause as it stands imposes a limitation, and, on the other hand, an acceleration of building and other development activities, which is perhaps not the intention of the Chancellor.
:Lieut.-Commander Joynson-Hicks.
:On a point of Order. Did the hon. and gallant Member rise to speak?
:Certainly the hon. and gallant Member rose to speak both on this and on a previous occasion. [ Interruption. ]
:Is it in Order for an hon. Member to say that it is not my business? Is it in Order for an hon. Member to tell me to shut up?
:The hon. Member must forgive me but he rather brought it upon himself. He should leave the conduct of the Debate in the hands of the Chair.
:I am very grateful to you, Major Milner, for protecting my opportunity to catch your eye, even though I am slightly behind you. As the hon. and learned Gentleman the Solicitor-General was about to rise, I was anxious to put one small conundrum to him. It is one that causes me a little anxiety. It is in regard to Subsection (2) of this Clause. It reads as follows:
"Where the person carrying on the trade or business is, for the purposes of excess profits tax entitled,"
and we then proceed to the words after various sentences rolled into one which I think we can omit for the moment
"that allowance is increased owing to the rehabilitation costs having been treated as part of the net cost of the provision of the buildings, plant or machinery."
Then we get:
"so much of those costs as is equal to that increase in the allowance shall … be treated for the purposes of Subsection (1) of this Section as costs in respect of which relief is allowable. …"
:Allowable apart from the provisions of this Section.
:I should have added:
"apart from the provisions of this section."
What I do not quite follow is whether the Clause applies in order to afford relief to those who do not pay Excess Profits Tax. There are, of course, many businesses—possibly not quite so many trades—particularly in the sense of professional businesses, which have suffered very considerably during the war and which have never come near to paying Excess Profits Tax at all. I think that they would in the normal way be well entitled to rehabilitation allowance of a capital character for the restoration of their premises, their equipment, and so forth, but if they have not enjoyed that happy position of being able to contribute to the national resources through the medium of Excess Profits Tax, I am not at all clear whether they will qualify for relief, either under this Subsection or under the preceding one, because the capital relief envisaged, as opposed to the current expenses relief of an income character to which the Solicitor-General referred, appears to be related directly to Excess Profits Tax. I should therefore be grateful if the learned Solicitor-General would clarify the exact incidence of Subsection (2).
:Several hon. Members have expressed a certain amount of puzzlement at the exact meaning of this Clause, and the hon. Member for Weston-super-Mare (Mr. Orr-Ewing) has suggested that Subsection (3) is particularly confusing. With a desire to simplify this matter, might I suggest to the learned Solicitor-General that Subsection (3) is perhaps unnecessary altogether because, although I have not the book at hand, I think he will find, if he refers to any of the Local Government Acts passed in the last 50 or 60 years, that these three expressions—"joint authority," "constituent authorities," and "local authorities"—are already defined in a way which is almost precisely similar to the definitions here given. Why should we repeat them? I am very reluctant to appear to be "teaching my grandmother to suck eggs," especially—
:On a point of Order, Major Milner. Is it in Order for an hon. Member to argue about a Clause which has not yet been called?
:If the hon. Member is doing that, he is certainly quite out of Order.
:Might I respond to the plea of those who have asked that the Clause should be made a little more clear? It may be that I can clear up a little of the haze in which some hon. Members seem to be. The Solicitor-General will forgive me, I am sure, if I explain what the Clause does. Subsection (1) is intended to give a person an allowance and says: b ) is that he shall not otherwise be entitled. Subsection (2), which has caused a lot of heart-burning, explains "not otherwise allowable." I suggest that the way in which an attempt is made to explain what I have paraphrased as "not otherwise allowable" is rather confusing. The expression which is attempted to be defined is: That is what has caused confusion. The Subsection should have said:
It proceeds:
:I have read this Clause carefully to find out if there is any time limit to the period in which claims may be submitted. I would like to hear from the Solicitor-General whether there is any limit in which claims can be submitted for rehabilitation costs incurred before the end of 1946.
:I would like to know exactly what the phrase "incurs rehabilitation costs" is intended to convey. Does it mean that the rehabilitation costs must have been incurred before the end of 1946 or does it mean that estimates must have been provided? Does it mean that the work has to be finished or that an estimate has to be submitted?
:I will deal briefly with the various points. With regard to the point that the amount is being incurred in 1946, the claim can be put forward in an accounting period subsequent to that—
:What does that mean—1947?
:Under Subsection (2) the depreciation allowance is computed in this way. One finds what is the net cost of the asset—I am simplifying it very much—to the person who acquired it and also one finds what he got for it when he disposed of it. Roughly speaking, the difference is the depreciation allowance. What Subsection (2) says is that when the cost to the person who has acquired the asset has included rehabilitation expenses, and therefore has been increased by that amount, one does not get exactly the same amount under this new Clause because the person has had it as part of the nett cost. As it was put by an hon. Gentleman opposite, if a person already has had this, it is merely going to be treated as an expense which is allowable apart from this new Clause as exceptional depreciation. Therefore, it does not come within the category of expenses which are allowable under this new Clause. It is only applied to expenses one cannot get in some other way.
:Before the hon. and learned Gentleman leaves that, I would point out that he said these rehabilitation costs had to be incurred in 1946. Does he mean that—in the year or before the year?
:In and before the year 1946. In an Excess Profits Tax period—that is to say, not later than the end of 1946. That is how Subsection (2) works.
rose —
3.45 a.m.
:I really must get on.
With regard to the point made by the hon. Member for South Edinburgh (Sir W. Darling), I am not quite sure that I caught his point. This Clause covers expenses incurred in the Excess Profits Tax period up to and including 1946. Clause 32, as it was, without this Clause, covered the period 1947–48, and, between the two, we have rehabilitation expenses covered for the whole of the Excess Profits Tax period, plus one year, and, in suitable cases, two years, after the end of that period. An hon. Member asked about the cost. Attempts have been made to estimate it, but it is quite impossible to do so. All I can assure the hon. Member is that it would not be of such a formidable kind as to throw the estimates out of balance. It may be relied upon as being an amount within the prescribed limit of elasticity. There are no definite data upon which anything like a reliable estimate could be made.
:May I have a reply to my question whether, if these expenses are incurred before the end of 1946, there will be any time-limit during which the expenses must be submitted for consideration under this Clause?
:The Clause does not provide for a time-limit. It would have to be included in the ordinary way in an accounting period in respect of which accounts were being made up for Excess Profits Tax.
Question put, and agreed to.
Clause read a Second time, and added to the Bill.
NEW CLAUSE—(Cancellation costs.)
(1)The provisions of sections thirty-two, thirty-four and the section (Rehabilitation costs incurred before end of 1946) of this Act, shall, with the modifications hereinafter mentioned, apply in relation to cancellation costs as they apply in relation to rehabilitation costs.
(2)In this section the expression "cancellation costs" means, in relation to the person carrying on a trade or business, payments by him in consideration of the terminating of any contract for the supply of goods or materials, the rendering of services or the hire of machinery to the person carrying on the trade or business, or of the surrender by that person of any lease, where the contract is terminated or the lease is surrendered as a consequence of the termination of a contract
(3)The proviso to subsection (2) of the said section thirty-two shall not apply in relation to cancellation costs, but if the person making the claim produces to the Commissioners before the end of March nineteen hundred and forty-eight particulars of contracts or leases which, as at the thirty-first day of December, nineteen hundred and forty-six, were expected to be terminated or surrendered by him and satisfies them that it was necessary for the termination or surrender to be deferred beyond the end of the year nineteen hundred and forty-seven, the Commissioners may treat the period mentioned in the said subsection (2) as extended, in relation to any cancellation costs incurred in consideration of the termination or surrender of the contracts or leases, until the end of the year nineteen hundred and forty-eight.
(4)Where a person carrying on a trade or business who incurs cancellation costs also receives sums in consideration of the termination of contract for the provision by him of goods or services for the purposes of the war, the sums so received by him shall, except in so far as they go to increase the profits of the trade or business for any chargeable accounting period or are taken into account for the purposes of the proviso to subsection (3) of the said section thirty-two or the proviso to subsection (1) of the said section (Rehabilitation costs incurred before end of 1946), be applied in reducing for the purposes of this section, first, the cancellation costs in respect of which relief would otherwise be granted under the said section thirty-two and, in so far as they are not so applied, in reducing the cancellation costs in respect of which relief would otherwise be granted under the said section (Rehabilitation costs incurred before end of 1946).—[ Mr. Dalton. ]
Brought up, and read the First time.
:I beg to move, "That the Clause be read a Second time."
This new Clause, again, is one which was mentioned when we were discussing Clause 32. This is the Clause which deals with costs incurred in cancelling contracts. An Amendment put down in the name of the hon. Member for Stockport (Sir A. Gridley) provided for contract cancellation costs, and, as was indicated when that Amendment was called, this new Clause, which I now move, deals with the same point. This new Clause does cover the case of costs which are incurred by a trader in cancelling a contract of the character specified in Subsection (2), a class which really covers most ordinary types of contract. If a trader has incurred loss in terminating a contract of that kind—and I quote from the new Clause— that means that if, in consequence of having to put an end to some contract under which he himself was supplying goods or services for the war, he had to pay compensation under other contracts which he had with other persons who provided him with various goods and services, he is entitled to claim, as cancellation costs, compensation and similar expenses to which he was put by the termination of those other contracts. I ask the Committee to say that this is a concession in the direction of making more liberal the treatment of these expenses and a Clause which makes more funds available to enterprises which are trying to start again after the war period. Therefore, I feel that, in principle at any rate, it will be agreed on all sides of the Committee, and particularly by hon. Members opposite, that the Clause is in the right direction. There may be some difference of opinion, I anticipate, from an Amendment which the hon. Member for Stockport (Sir A. Gridley) has put down to this new Clause, on whether the words which I have quoted are quite wide enough. I ask the Committee to say that there must be some delimitation to mark the sort of contract which can give rise to a cancellation claim of this kind. The Amendment of the hon. Member for Stockport will seek to widen the Clause, and, therefore, perhaps it would be better to defer further discussion until the Amendment is moved. The Clause as it stands is, I submit, very satisfactory. It provides for cancellation costs being allowable as a deduction when they are incurred in the circumstances defined in the words I quoted. Therefore, I ask the Committee to say that it is quite suitable as it stands.
:Subject, of course, to the discussion on the Amendment which, I understand, is to be called, the principle of having a Clause dealing with cancellation costs is one which we can accept. In fact, it is rather strange that it was not in the Bill already, because all that Clause 32 and the other Clauses dealt with were costs of deferred repairs and renewals, and rehabilitation costs. Oddly enough, the question of the cancellation of contracts did not come into it. We are grateful that the Government have seen that there is a gap in their arrangements and are asking us to fill it. Subject to discussion on the Amendment, I hope that this Clause will, in its general outline, be acceptable to the Committee. There are two or three questions which I want to put to the Solicitor-General. First, it is necessary for the claimant of this relief to produce to
There is a second point upon which I would like an answer. As the Committee will remember, when we were discussing Clause 32 an important Amendment was moved by my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson) on the subject of the date, and the question at issue was whether the year 1948 was sufficiently long a period for this to be done. The Chancellor gave a pledge that he would consider the matter further and, on that, the Amendment was withdrawn. The year 1948 is here in very much the same sort of circumstances, always granted that there may be necessary costs where contracts cannot be determined beforehand. If that is so, I should like to know if the general pledge also applies here. The third point upon which it seems to me some sort of explanation is necessary—and I am sorry to see that there are difficulties of drafting, and that not for the first time in this Bill—is in paragraph 4. I am afraid that if one read that out aloud several times, one would not be able to understand it. Roughly speaking, where a person incurs cancellation costs and receives sums in consideration of the termination of the contract, the sums received by him, except in so far as they go to increase the profits, are dealt with in a certain way. It is on the question of these provisos that the Government draftsman ought to look again.
One has to consider whether these payments go to increase the profits of the trade to be taken into account for the purpose of the provision of Subsection (3) of Clause 32. If one looks at that, one finds that it is a proviso concerning expenses which are to be met directly or indirectly by the Crown or by any local authority. As I read that Subsection, these expenses have to be taken into account for the purpose of the proviso, but the proviso is that such expenses should be left out of the account. I find it extremely difficult to understand. Also it must be remembered that one has to consider Subsection (1) of the Clause. One finds that it is our old friend again a provision about meeting expenses indirectly or directly on the part of the Crown or a local authority. It is a clumsy thing which refers to a proviso in one Clause and a proviso in another Clause. Let us drop the allusions of these various provisos and set out what the proviso refers to. It is set out at length in Clause 32, and in the Clause we have just passed. Why refer twice to the same proviso, and make it so difficult for those who, in the future, will have to worry themselves about what this difficult thing means. Before the Clause is finally passed, I hope that the Chancellor, or his learned Friend will have a look at it and see if I am not right in saying that these words are not necessary.
I must admit that when one goes over the page and reads about the cancellation costs in respect of which relief would otherwise be granted by Clause 32, one is again in some difficulty. As far as I know under Clause 32 there is not going to be any cancellation costs. It is this Clause which deals with cancellation costs, and therefore I find it difficult to talk on cancellation costs on a Clause which does not give relief to these people. I am sorry to put such difficult questions but it really is inherent in this difficult question of E.P.T. and cancellation and rehabilitation costs and all the rest of it. If I may revert to the earlier point I would like a further explanation on the sort of grounds that would be likely to earn the description necessary under Subsection (3), and whether the date 1948 is a final date or whether the promise of reconsideration of Clause 32 holds good for this new Clause. Thirdly, I would like to ask whether this jungle of provisos cannot be looked into again and the matter clarified and redrafted. Subject to that, I think it is a wise thing that the Government should come forward with this Clause dealing with this part of the problem, and for that I am very much obliged to them.
4.0 a.m.
:I would not have intervened in this Debate had it not been for some of the words used by the learned Solicitor-General when he moved this Clause. He spoke of a concession which he implied had been wrung out of the Chancellor by hon. Members on this side of the Committee. I am very glad that we have been able to wring anything out of the Chancellor of the Exchequer, if we have been able so to do. But I cannot agree that this is a concession. Surely what has happened is that the Chancellor has realised the justice of the case that was put up and that no concession has been made at all; something that was wrong before, has now been put right. I do not think anyone reading the Bill without this Clause and then reading it with the Clause, could possibly imagine that the Bill was other than improved by the new Clause. As far as it goes, I personally welcome this Clause, but I do not think that the words of the learned Solicitor-General should go through because they give a wrong indication. Secondly, he gave another impression by saying that this matter was of particular interest to hon. Members on this side of the Committee. Is he really saying that a matter of justice, a matter of right or wrong, is of interest only to this side of the Committee? I am inclined to think that is so but I am surprised that we should have that admission from a member of the Government. I am glad to see that the Government realised the justice of the case put up. Therefore I say that no concession has been made by the Government. They have corrected a fault and I am glad they have done so. I hope that this is not a matter of interest only to this side of the Committee, although I fear from what the Solicitor-General has said that that is the case.
rose —
:I understood the new Clause was acceptable.
:Saying that a new Clause is acceptable surely does not preclude debate upon it. Surely it does not preclude the Solicitor-General from answering questions put to him at this stage. I know that an Amendment cannot be moved until after the Clause has been read a Second time, but surely this is an occasion for general discussion on a new Clause, and for the Solicitor-General to answer if he intends to do so.
:I wish to put a further question on the Clause as it now stands, particularly with regard to the cancellation of costs. If I understand this Clause aright, cancellation of costs can only cover costs which it is agreed to pay to the other party to the contract, or the landlord as the case may be; that damages which are assessed in default of agreement as to termination damages which are assessed by a court can, in no circumstances be treated under this Clause as "cancellation costs," even though it may be wise and right not to agree to perhaps exorbitant terms which the landlord or the other party to the contract might insist on receiving as a condition precedent to agreeing to the cancellation. I ask the hon. and learned Solicitor-General if that be the case, whether there ought not to be some amendment to this definition of "cancellation costs" so as to include the possibility, under proper circumstances, of treating damages, assessed after the termination of a contract, as costs within the meaning of the Section. That is my first point. I want him to consider that the words in Subsection (2):
The second point is really a matter of drafting. It seems to me something has gone wrong with the last three lines of the Subsection. It seems to be a little repetitive. We get the words:
:I join in the belief that the Subsection should be redrafted. What has happened to the Subsection is that it is intended to prevent a person in certain cases from getting the benefit of an allowance for cancellation costs as well as an allowance for the same in respect of the termination of contract. As my right hon. and learned Friend who spoke from the Opposition Front Bench pointed out, the Clause says that these sums shall be taken into account for the purpose of the proviso to Subsection (3) of the same Clause 32, or of the proviso to Subsection (1) of the Clause we last discussed. When one looks at these two Clauses, it is found that they say that the sums shall be taken into account. Therefore, what the Clause is saying is that those sums shall be taken into account in order not to be taken into account. Although that, of course, is quite clear, it is really a very inept way of saying it. What the Clause should say is that those sums, quite simply, shall not be taken into account, because the insertion of the extra words "shall be taken into account in order not to be taken into account" are merely confusing in that context. I urge the Solicitor-General to have the Clause reconsidered so that that part of it can be made simpler.
I would also like him to explain why the sums which are not to be taken into account are then provided by the Clause to be taken into account if they are in respect of profits chargeable in any accounting period. It would seem to me that the Clause says that the person may recover cancellation costs and may recover termination sums if the termination sums are counted as profits of the trade. It then goes on to say that those sums can be taken advantage of if they are, presumably, capital sums. I would like the Solicitor-General to explain exactly how that works out. I think that is the effect of it—that if the termination sums are income, then the person can get them both; if they are not income, they have to be taken into account.
:Are we not to have an answer from the Solicitor-General?
:With regard to the questions that have been asked, we will look at the drafting. What is intended to be provided is that if the costs have not been taken into account in computing profits already, then they are to be set against the costs dealt with by Clause 32, and in so far as those are insufficient, the costs dealt with in the last Clause we discussed. As to contracts being terminated in 1947 and 1948, it is impossible to say a priori when it would be impossible to terminate a contract in 1947, but it might well be, with regard to a particular contract, quite impracticable to say that it has got to end in 1947, and in those circumstances, if particulars are given before March, 1948, 1948 will also be available. With regard to the question of the possible extension of time, my right hon. Friend will consider that, although there should be no such difficulty in this case as there might well be in cases of doing repairs. My right hon. Friend will also bear in mind the arguments that have been addressed to him on that score. I do not see any necessity for alterations in the drafting. We will bear in mind the arguments that have been made, and we will look at them from the point of view of drafting.
:The question of the definition and interpretation of cancellation costs cannot be described as a drafting point. Has the Solicitor-General deliberately excluded from coming within the definition of cancellation costs damages which are caused by breach of contract, where the contract has been terminated by one party and not by the other? If he has deliberately excluded that, I would ask him to say why. The words here are not apt enough to cover such damages, quite clearly. I think the hon. and learned Gentleman will agree with that. If he says that it is his intention to cover that, I would welcome it if he made that perfectly clear, because it will involve some Amendment of this Clause. Merely to describe it as a drafting point, however, is to treat it with a levity which it does not deserve.
4.15 a.m.
:The Clause is designed to cover only the cost of moneys paid by way of settlement where a contract is determined. It is not intended to cover damages awarded by the court and, by the very nature of things, it ought not to be framed in such a way as to cover cases where the court awards damages because one party to the contract has broken it. It is designed to cover the case where the claimant for the relief has been obliged to pay compensation in order to get rid of a continuing liability under the contract.
:But the mere awarding of damages will always be a form of compensation, the hon. and learned Gentleman will agree. The point I am putting is this: Supposing you have a lease which it is reasonable and right should be terminated, and supposing that the landlord is not willing to accept a surrender and the result is that the tenant ceases to pay rent and gets sued for breach of the lease, it may be that the amount he has to pay will be far less than the amount originally demanded by the landlord—the same would apply to any other contract. Is it to be said that damages are not to be included within this definition and that, in order to get the benefit of the Clause, he will have to pay a larger sum and then come within it, a larger sum than he thinks is right in the matter of compensation, a larger sum to induce the agreement of the other party? Is that what the hon. and learned Gentleman means?
:It does not cover it at the moment but, without commitment, we will look at the point.
Question put, and agreed to.
Clause read a Second time.
:I beg to move, in line 10, to leave out from "as," to the end of line 12, and to insert:
The Chancellor's Clause in spite of its good intentions, which I readily accept, appears to be drawn far too narrowly. There will be many manufacturers indirectly engaged on war work who could not cancel the contracts they made, such as, for example, the suppliers of electric light, gas, water and such like, immediately the war contracts were terminated. Others may not have been engaged on war contracts at all, but their business might have been dislocated as a result of the war. They have to incur cancellation costs in putting an end to the temporary arrangements they may have had to make.
May I give an example or two by way of further explanation? Take the case of a manufacturer who for safety purposes had to disperse his factory to lessen the risk of air attack. It may have been quite impossible to transfer all his work back to his original premises when his war contract came to an end, meanwhile it is more than likely that he may have started on postwar work and only at some later late and after a considerable volume of such work had been carried out would he have been able to close down his dispersal factories and get back to his original premises. Such cases are not covered for the reason that the manufacturer would not have cancelled contracts he made in connection with the dispersal of factories directly as a consequence of that cancellation of his war contract, but only after some period of time had intervened.
There are other cases where contractors' premises may have been requisitioned and later on contracts may have been made in connection with temporary premises. Cancellation of these contracts would not arise because of the termination of war contracts under the limiting words of Subsection (2), but because a manufacturer was returning to his own premises. In my constituency cotton mills and hat factories have been closed down. Some have been taken over for storage purposes and one could give many illustrations of work which has to be done which cannot be said to be due to the termination of contracts for the provision of goods and services for the purposes of the war. For the reasons I have given, I put down this Amendment to the Chancellor's Clause, a Clause for which I thank him, and hope he will see the force of the Amendment.
:We feel we cannot accept the Amendment because the scope of the words proposed to be substituted is much too wide. It would cover a very wide variety of contracts—contracts which are related only very indirectly to the war effort and contracts which the trader undertook with a view to altering his business back to a peacetime footing to build it up to its former state. That is entirely outside what is contemplated by the Clause, which contemplates cancellation of contracts directly related to the earning of war profit.
The hon. Gentleman mentioned the case where the trader did not know that the purposes for which he was working under his contract were war purposes. Under the Clause as it reads, it is sufficient if the contract is for the purpose of war whether or not the trader knows it. The question is whether when the claim is put forward it can then be shown that the contract under which he was working was a war contract. If it is, then the necessary conditions for a claim will obtain and he will be able to get his relief. The Clause is really wide in its scope already. It will cover a great many cases. It will cover a case where a trader in order to carry out a war contract has had to engage other premises which, when he no longer is engaged upon the war work, have become useless to him and from which he wants to disembarras himself. Therefore, the scope of the Clause is quite wide. It is certainly as wide and gives as much relief as is contemplated and intended by the Government. I ask the Committee to say that it is quite wide enough as it stands and that to extend it beyond its present limits would make it impracticable because there would be no recognisable definition of what is a contract which would qualify for relief.
:I am afraid that, once again, I am not satisfied with the explanation given by the hon. and learned Solicitor-General. It may be that perhaps my Amendment is a little wide. On the other hand, I think he may as cordially agree that the Clause as drafted is drawn too narrowly. If there is some happy medium to bridge the gap between us and I am encouraged to believe that we can be met on the point, I will not carry my Amendment to a Division but unless I can have a definite assurance in that respect, then I propose to divide the Committee on this point.
:I support the Amendment on the ground that the words of the Amendment moved by the hon. Member for Stockport (Sir A. Gridley) will achieve what the Government themselves are trying to do and that the words which are proposed to be deleted will not achieve those objects. To understand that, we have to examine the Clause. One will see that it is intended that a person who has incurred certain expenses should be allowed to count those as cancellation costs. The expenses which are to be allowed are, first of all, any
"payments made by him in consideration of the terminating of any contract for the supply of goods or materials, the rendering of services or the hire of machinery…"
Then one sees at the end of the Clause that that only applies where it is the consequence of the termination of a contract for the provision of goods or services. That means that a contract for the provision of materials or for the hire of machinery would not entitle a person to compensation when he has to pay for terminating the hire of machinery. In other words, the termination of a contract is limited to a contract of only two kinds. The first is a contract which provides for goods or services. There are four kinds of expenses allowed—goods, materials, services and hire of machinery. The result is that the contract does not come anywhere near the kind of expenses which are allowed, because it is quite clear that a contract for the hire of machinery alone does not come within the description of either goods or services, and it is also clear that the provision of oil, gas, water or electricity is not the provision of goods. Therefore, it is clear that a contract for the provision of electricity or water which is terminated in consequence of the war will not entitle the person to claim any payment he has had to make in consequence of the termination of that contract for the cancellation of costs. Some alteration of this Clause should be effected in order to give effect to what the Government want.
4.30 a.m.
:I hope the fact that we are discussing this matter late at night will not prevent the Committee from giving it serious attention. Supporting the point, which was ably put by the hon. and learned Gentleman in support of the hon. Member for Stockport (Sir A. Gridley), I do feel that the words in the Clause as drafted by the Chancellor are not wide enough to give effect to his intention, and I hope that, between now and the Report stage, he will look at this again, because, unless we can have a very strong assurance that he will try to meet the argument put forward, I shall feel inclined to support my hon. Friends and divide against it.
:The Clause, as drawn, is obviously too narrow, from the arguments to which we have just listened. It may well be that the Amendment proposed by my hon. Friend the Member for Stockport (Sir A. Gridley) is too wide. An appeal has been made to the learned Solicitor-General to reconsider this Clause between now and the Report stage, and the hon. Member for Stockport has said that he will withdraw his Clause if an assurance can be given that this matter will be re-examined between now and the Report stage. That, surely, shows a reasonable attitude and frame of mind and a desire to improve this Bill, and I want to ask the Solicitor-General if he will give that assurance and try to improve the Bill. I do not want to divide on this matter, but I think that, if we had such an assurance, there would be an improvement in the Bill.
:We will have a look at it. If hon. Members want to divide, let them divide.
:The right hon. Gentleman must not allow these early morning feelings to get the better of him. If we had any reasonable security that this very important point, to which no answer has been made, would be met, we should not press for a Division, but for the Chancellor
merely to say that he will look at it, is not good enough. Presumably, he has been looking at it for some time already, and his looking has not got him anywhere. If he will say he recognises the point which has been made, even if the words are not the right ones, but that he will put the right ones in on the Report stage, we should be prepared to agree, but a mere look is not enough.
Question put, "That the words proposed to be left out stand part of the Clause."
The Committee divided: Ayes, 202; Noes, 72.
Division No. 207.] AYES. [4.35 a.m. Adams, Richard (Balham) Foot, M. M. Monslow, W. Adams, W. T. (Hammersmith, South) Foster, W. (Wigan) Morris, Lt.-Col. H. (Sheffield, C.) Allen, A. C. (Bosworth) George, Lady M. Lloyd (Anglesey) Morris, P. (Swansea, W.) Alpass, J. H. Gibbins, J. Mort, D. L. Attewell, H. C. Gibson, C. W. Moyle, A. Austin, H. L. Gilzean, A. Murray, J. D. Awbery, S. S. Glanville, J. E. (Consett) Nally, W. Baird, Capt. J. Gordon-Walker, P. C. Nichol, Mrs. M. E. (Bradford, N.) Barton, C. Greenwood, A. W. J. (Heywood) Noel-Buxton, Lady Bechervaise, A. E. Grey, C. F. O'Brien, T. Benson, G. Grierson, E. Oliver, G. H. Berry, H. Gunter, Capt. R. J. Orbach, M. Binns, J. Guy, W. H. Paling, Will T. (Dewsbury) Blenkinsop, Capt. A. Haire, Flt.-Lieut. J. (Wycombe) Palmer, A. M. F. Blyton, W. R. Hale, Leslie Pargiter, G. A. Boardman, H. Hall, W. G. (Colne Valley) Paton, Mrs. F. (Rushcliffe) Bowden, Flg.-Offr. H. W. Hamilton, Lieut.-Col. R. Paton, J. (Norwich) Braddock, Mrs. E. M. (L'pl, Exch'ge) Hardman, D. R. Pearson, A. Braddock, T. (Mitcham) Hardy, E. A. Peart, Capt. T. F. Brown, George (Belper) Henderson, Joseph (Ardwick) Perrins, W. Brown, T. J. (Ince) Herbison, Miss M. Piratin, P. Bruce, Maj. D. W. T. Hewitson, Capt. M. Platts-Mills, J. F. F. Burden, T. W. Hobson, C. R. Poole, Maj. Cecil (Lichfield) Burke, W. A. Holman, P. Price, M. Philips Byers, Lt.-Col. F. House, G. Pritt, D. N. Callaghan, James Hoy, J. Randall, H. E. Castle, Mrs. B. A. Hughes, Lt. H. D. (W'lverh'pton, W.) Ranger, J. Champion, A. J. Hynd, H. (Hackney, C.) Rees-Williams, D. R. Chetwynd, Capt. G. R. Irving, W. J. Reeves, J. Cocks, F. S. Jeger, G. (Winchester) Reid, T. (Swindon) Collins, V. J. Jeger, Dr. S. W. (St. Pancras, S.E.) Rhodes, H. Colman, Miss G. M. Jones, D. T. (Hartlepools) Roberts, Sqn.-Ldr. Emrys (Merioneth) Comyns, Dr. L. Jones, J. H. (Bolton) Roberts, Goronwy (Caernarvonshire) Corbet, Mrs. F. K. (Camb'well, N.W.) Jones, P. Asterley (Hitchin) Roberts, W. (Cumberland, N.) Crawley, Flt.-Lieut. A. Keenan, W. Rogers, G. H. R. Crossman, R. H. S. Kenyon, C. Royle, C. Daggar, G. Kinghorn, Sqn.-Ldr. E. Sargood, R. Daines, P. Kinley, J. Scollan, T. Dalton, Rt. Hon. H. Lang, G. Shawcross, C. N. (Widnes) Davies, Edward (Burslem) Lavers, S. Shurmer, P. Davies, Ernest (Enfield) Lee, F. (Hulme) Silverman, S. S. (Nelson) Davies, Harold (Leek) Lee, Miss J. (Cannock) Simmons, C. J. Davies, Haydn (St. Pancras, S.W.) Leslie, J. R. Skeffington, A. M. Davies, S. O. (Merthyr) Lewis, A. W. J. (Upton) Skeffington-Lodge, T. C. Deer, G. Lindgren, G. S. Skinnard, F. W. Delargy, Captain H. J. Lyne, A. W. Smith, Capt. C. (Colchester) Diamond, J. McGhee, H. G. Smith, S. H. (Hull, S.W.) Dodds, N. N. Mack, J. D. Snow, Capt. J. W. Driberg, T. E. N. McKay, J. (Wallsend) Sorensen, R. W. Durbin, E. F. M. McLeavy, F. Soskice, Maj. Sir F. Dye, S. Macpherson, T. (Romford) Stamford, W. Ede, Rt. Hon. J. C. Mainwaring, W. H. Steele, T. Edelman, M. Mallalieu, J. P. W. Stewart, Capt. Michael (Fulham, E.) Edwards, John (Blackburn) Manning, C. (Camberwell, N.) Stubbs, A. E. Edwards, W. J. (Whitechapel) Manning, Mrs. L. (Epping) Swingler, S. Evans, E. (Lowestoft) Mathers, G. Symonds, Maj. A. L. Evans, John (Ogmore) Mayhew, C. P. Taylor, H. B. (Mansfield) Fairhurst, F. Middleton, Mrs. L. Taylor, R. J. (Morpeth) Farthing, W. J. Mikardo, Ian Thomas, John R. (Dover) Fletcher, E. G. M. (Islington, E.) Mitchison, Maj. G. R. Thomas, George (Cardiff) Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Wallace, H. W. (Walthamstow, E.) Willis, E. Thorneycroft, H. (Clayton) Warbey, W. N. Wills, Mrs. E. A. Tiffany, S. White, H. (Derbyshire, N.E.) Woodburn, A. Tolley, L. Whiteley, Rt. Hon. W. Yates, V. F. Ungoed-Thomas, L. Wigg, Col. G. E. Younger, Hon. Kenneth Wadsworth, G. Willey, F. T. (Sunderland) Zilliacus, K. Walkden, E. Willey, O. G. (Cleveland) Wallace, G. D. (Chislehurst) Williams, W. R. (Heston) TELLERS FOR THE AYES: Mr. Bing and Mr. Popplewell
NOES. Assheton, Rt. Hon. R. Grimston, R. V. Orr-Ewing, I. L. Baldwin, A. E. Haughton, S. G. Peto, Brig. C. H. M. Barlow, Sir J. Hinchingbrooke, Viscount Poole, O. B. S. (Oswestry) Birch, Nigel Hollis, M. C. Prescott, Stanley Boles, Lt.-Col. D. C. (Wells) Hope, Lord J. Renton, D. Bower, N. Hutchison, Lt.-Cdr. Clark (Edin'gh, W.) Ross, Sir R. Boyd-Carpenter, J. A. Hutchison, Col. J. R. (Glasgow, C.) Shephard, S. (Newark) Bracken, Rt. Hon. Brendan Jeffreys, General Sir G. Shepherd, W. S. (Bucklow) Braithwaite, Lt. Comdr. J. G. Joynson-Hicks, Lt.-Cdr. Hon. L. W. Smith, E. P. (Ashford) Butcher, H. W. Keeling, E. H. Stanley, Rt. Hon. O. Carson, E. Langford-Holt, J. Stuart, Rt. Hon. J. (Moray) Clifton-Brown, Lt.-Col. G. Lipson, D. L. Studholme, H. G. Crookshank, Capt. Rt. Hon. H. F. C. Lucas-Tooth, Sir H. Sutcliffe, H. Darling, Sir W. Y. Macdonald, Capt. Sir P. (I. of Wight) Taylor, C. S. (Eastbourne) Digby, Maj. S. W. Maclay, Hon. J. S. Teeling, William Dodds-Parker, A. D. Macmillan, Rt. Hon. Harold (Bromley) Thomas, J. P. L. (Hereford) Drewe, C. Manningham-Buller, R. E. Turton, R. H. Duthie, W. S. Marlowe, A. A. H. Wakefield, Sir W. W. Erroll, F. J. Marshall, D. (Bodmin) Williams, C. (Torquay) Foster, J. G. (Northwich) Mellor, Sir J. Willoughby de Eresby, Lord Fox, Sqn.-Ldr. Sir G. Morrison, Maj. J. G. (Salisbury) York, C. Fraser, Maj. H. C. P. (Stone) Mott-Radclyffe, Maj. C. E. Young, Sir A. S. L. (Partick) Fraser, Sir I. (Lonsdale) Nicholson, G. Gomme-Duncan, Col. A. G. Nield, B. (Chester) TELLERS FOR THE NOES: Gridley, Sir A. Nutting, Anthony Commander Agnew and Major Conant
Clause added to the Bill.
NEW CLAUSE.—(Receipts by joint authorities to meet deficits.)
(1) Any sums received, whether before or after the passing of this Act, by a joint authority from their constituent authorities, being sums which, by the terms of any enactment or of any order confirmed by or made under any enactment, the joint authority are authorised to require from their constituent authorities to meet or towards meeting the amount or estimated amount by which the net revenue of the joint authority for any period falls short or may fall short of their expenditure for that period, shall not be, and shall be deemed never to have been, trading receipts for any of the purposes of the Income Tax Acts.
(2) Nothing in this section shall render a joint authority liable to pay a greater amount of tax (including excess profits tax) than they woud have paid apart from the provisions of this section.
(3) In this section,—
Brought up, and read the First time.
:I beg to move, "That the Clause be read a Second time."
This Clause arises from a decision in the House of Lords in the matter of an action between a joint water board in Wales and an inspector of taxes. The purpose is to reverse the decision of the Lords in this matter. It deals with the question of joint boards of local authorities and proposes to exclude from trading receipts chargeable to tax moneys received by these joint boards under statutory precepts issued by them to their constituent bodies to make up a deficiency in their revenue. The position is that money so recovered normally falls on the rate funds of the local authorities concerned although a case has arisen and has primarily caused grave concern to these two local authorities, yet, if the law is allowed to remain as declared by the House of Lords there will be a wide field of inconvenience caused to a number of other joint boards. Therefore, we think it right to ask the Committee to accept this Clause which, in fact, reverses the decision. If the decision were allowed to stand, it would result in a very heavy increase in the rate to be borne. It would be necessary to make up the arrears of ten years, and to discharge that in a year or two; and that would be of great concern to the authorities—Pontypridd and Rhondda. Both of them are in develop- ment areas, and have rates above the average level. The hardship to the ratepayers would be considerable. We are not asking the Committee to work on this one particular case in isolation. If the law stands in the form in which the House of Lords has declared it, the greatest inconvenience and the greatest additional burdens would result. Therefore we propose in this Clause that the precept money should be excluded from taxable profits.
4.45 a.m.
:I listened with great attention to what the right hon. Gentleman said about the decision of the House of Lords. At this hour I may be a little hazy, and I want to ask the Chancellor if he will deal with this question a little more fully. I have in mind one joint authority operating under a series of Acts of Parliament of considerable complexity. I think that one was passed so long ago as 1899. That joint authority takes in representatives from no less than four big boroughs. From my recollection of the provisions of the Statutes, the way in which the revenue of the joint authority is collected for water is that it is divided into certain proportions between each authority, and a precept is served on each authority to meet the cost of the water. So far as I can see in the wording of this Clause, anything which is paid to the joint authority by the local authorities for that water will, in fact, be tax-free. In the case of a water board which has that particular constitution, it does not sell its water at so much a gallon to the local authority, but levies on the local authority a share of the cost of the collection of the water, and so, in a sense, what it gets from the local authority is always a payment to meet expenses. In these circumstances, if I understand the new Clause aright, all the payments received by the joint authority will in future be free of tax, because the joint authority does not receive a contribution from the ratepayers direct and it does not sell the water to the ratepayers. That is done by the local authority.
Does this new Clause mean that the Government are not only reversing the decision of the House of Lords in that case, but are making these operations free of Income Tax retrospectively for every joint authority? Does it mean they will be able to recover the tax paid? As I understood the right hon. Gentleman's concluding observations it is retrospective. That is to say, that although they had paid tax they paid it wrongly under the law as it would be when this Bill passes, and, therefore, all these joint authorities in different parts of Great Britain will get a return from the Treasury to the benefit of the particular local authorities which have combined together. If that be the case, it does seem to me that the local authorities who combined for their water supplies are going to gain a considerable advantage over the local authority which maintains its own water supplies.
I doubt very much the equity of that. If you have a county council which provides a water supply for the great part of that county, and does it by itself, it gets no benefit at all under that Clause, but if Northamptonshire combines with Oxford-shire or Bucks, as is very likely, then if you have the joint authority supplying water to the two counties by arrangement with both county councils, then, as I understand it, no tax will be paid at all by this corporation. I may not have followed this quite closely because I admit I have not given the closest study to all the aspects of this Clause, but I do hope the right hon. Gentleman will be able to satisfy us there is no advantage to be gained here just because there happens to be a joint authority providing that water, over the case where there is a single authority. I hope also the right hon. Gentleman will be able to explain how far back this refund of Income Tax is going to go in the case of the joint authority to which I referred. Are they now going to be able to recover all tax paid since 1899? If that be so it will indeed be a welcome bit of news to the ratepayers of the four boroughs which supplies that water.
:My first words must be of thanks to the Chancellor for placing the new Clause before this Committee. I agree this may only be a matter of justice, but unlike the hon. and learned Member opposite, I am not above saying a very hearty "Thank you" to the Chancellor for doing this item of justice. The hon. and learned Member for Daventry (Mr. Manningham-Buller) quoted the case of a water board that was really a wholesaler of water, and there are not many of them in this country. The Derwent Vale Water Board, I suspect is the one mentioned, and the Ponty- pridd-Rhondda authority is not in that category at all. It is perfectly true that these boards may tend to grow, but the majority of the boards to which the Chancellor is offering this Clause are not in that category at all but are those who levy a rate direct. But when the rate does not make up the necessary receipts then they levy a precept on the local authorities, and under the decision of the House of Lords Income Tax would have been payable on that precept, and in order to make up the amount necessary it would have been inevitable to increase the precept, and thereby raise the rate of the local authority.
I regret that this Clause, like the sun, has one spot on it, because in the definition of the joint boards it refers to their membership of local authorities. The most important board of this character in the country is not confined purely to local authorities. I refer to the Metropolitan Water Board. One member of that Board comes from the Thames Conservancy Board. It can hardly be defined as a joint authority, seeing that it has representatives of trading interests on it. It appears that under the definition of Subsection (2, b ), the Metropolitan Water Board would be excluded—I hope that it is not so. I ask my right hon. Friend to look into this matter between now and the next stage of the Bill, because I am certain that, in doing justice to the large majority of the smaller authorities, he does not want to do injustice to the largest and most important water authorities of the country. Even though there is this immediate defect, I would like to close, as I began, by saying a word of gratitude to the Chancellor for rectifying these injustices to the smaller authorities.
:Now that the Committee has at last caught up with me, may I once more hope that the Solicitor-General will answer the point that I raised prematurely before? I must apologise to the Committee for having done so, because I am never at my best much before sunrise. The hon. Member for West Woolwich (Mr. Berry) raised the question whether Subsection (2, a ) is appropriately phrased to include the authorities which he has in mind. Without referring to the book, it seems to me that the three types of authorities which are described in Subsection (3) are of a type which occur frequently in legislation relating to local government, and it surprises me to find that any definition Clause is necessary at all. That is one point that I put to the Solicitor-General. I come to the next point. Subsection (1) is extremely technical, and it is surprising to find that when revenue falls short of expenditure, there may be a trading receipt. One would expect naturally a trading deficit. I should be grateful for an explanation of that point.
:It seems to me a very peculiar thing that the Inland Revenue officials should institute a case against a local authority, and having won it, should then have to appeal to the Chancellor to get the decision reversed. I want to ask whether that is, in fact, what happened, and if so, why this muddle within the Department? The other point to which I want to draw attention is the light, and, I think, thoughtless way in which this Committee is proceeding to pass a Clause which has retrospective effect. In this case, of course, the Chancellor is dealing with matters between the Inland Revenue and the local authorities. No great private interest, or business interest or trade union interest is affected, and because the Inland Revenue has won the case, the Chancellor is threatening to come down and reverse the decision. Suppose that it had been the other way round. I think we should guard against decisions arrived at by processes of law in the House of Lords being almost immediately reversed. I would like the Chancellor to justify this arbitrary action before we let the thing go.
5.0 a.m.
:I wish to ask four questions. First, the object of this Clause is to remove the liability to Income Tax in respect of a precept which has been levied by a joint authority on the constituent bodies in order to make up the deficit. What I would like to ask is whether the Solicitor-General or the Chancellor is satisfied that the provision which allows an estimated amount of this deficit to escape taxation may not be capable of abuse, because all that a joint authority needs to do is to make an overestimate of the deficit, and then it seems that that amount would escape liability to tax. In other words, let us suppose that in one case the deficit is £100,000 and a precept is levied, that £100,000 would escape taxation, but let us suppose that under some other Acts the joint authority is entitled to estimate the deficit, it estimates the deficit a £500,000, and it turns out to be £10,000. According to the Clause, the £500,000, although not a deficit, would escape taxation because it was an estimated deficit. The second question is whether it is intended, if as the Clause says, that these sums:
"shall be deemed never to have been trading receipts"
to reopen the Income Tax assessment in every case where Income Tax has been charged. The third question is, What is the point of Subsection (2) which says:
"Nothing in this sction shall render a joint authority liable to pay a greater amount of tax … than they would have paid apart from the provisions of this section."
I would like to know what danger that Subsection is guarding against, and what possible circumstance, if it were not for that Subsection, the Clause would have made a joint authority pay a greater sum in tax. Obviously Subsection (2) is intended to guard against something. Obviously circumstances occurred to the draftsman and those who advised on this Clause where a larger sum in tax would have been levied on the joint authority because of this Clause. The fourth question is whether the Solicitor-General is really satisfied with the definition of a joint authority. To me it seems to be in a complete circle. A joint authority is defined as follows:
"any body corporate constituted under any enactment"—
That is quite simple so far, but it continues:
"of which all the members are, or are representatives of, or are appointed by, local authorities"—
That is fairly clear. Then it says:
"or other joint authorities."
Now how in the world can you have a definition where you say that X is a company, the representatives of which are appointed by local authorities or by X? Then you ask what is X, and you have to reproduce X, so you have to say then, "X is a body corporate in which all the representatives are appointed by local authorities or by X. What is X?" It is clear that one could go round in that circle indefinitely. It reminds one very much of the iniquitous provision in the Nuremberg law where they were trying to define Aryans and non-Aryans and they said that a Jew was a person whose grandfather was a Jew. That was no definition. It is elementary logic that you cannot have a definition which defines in itself the seed of its own definition. Even at five past five in the morning that cannot be right. A definition must refer to something outside. There were many Greek proverbs and teachings of logic, but the first was the saying that a definition must refer to something outside. Perhaps I am not making my point very clear. [HON. MEMBERS: "No."] I would like an answer to those four questions and I am especially curious as to the point of Subsection (2).
:I will endeavour shortly to explain to the hon. Gentleman what I think this means. The only claim I have to detain the Committee is that at some time in the past I was a member of this joint board which was the subject of the case finally decided in another place. It started some years ago with a local Income Tax commission and went through the several stages until it finally reached the House of Lords. In the first three stages the joint boards sustained their case against the Revenue. In the Appeal Court, the decision was reversed. The Board then submitted the matter to the House of Lords where the decision of the Appeal Court was upheld. Now this joint board is also part of another water supply board and it has been held by this decision that a joint water board is not a local authority within the meaning of the law. That explains why it is necessary for the representatives of the joint board who are representatives of a water supply board to be included. While this case has been proceeding, the income tax on precept has not been collected. Now the decision of a single water authority was decided a long time ago as the result of a legal case known as the Glasgow Water Case. Subsequently Viscount Simon gave this interpretation:
As a consequence, if this position were permitted to remain, small municipalities who join together for the purpose of supplying their people with a pure water supply would be put in an inferior posiion as compared with the bigger municipalities who are big enough to embark on a water scheme themselves. The effect would be to nullify the Water Act of 1945. Parliament decided in its wisdom in 1945 to pass a Water Act which in effect suggested to smaller companies that they should amalgamate for the purpose of providing a water supply for their people. If this decision is not reversed, it will prevent those local authorities from embarking on these amalgamation schemes lest any precept they might have to levy on their constituent authorities would be subject to Income Tax.
I suggest that if Parliament desires that the people of this country shall have a pure water supply, irrespective of whether they live in a small municipal area or a big municipal area, they should be treated alike in the matter of precept. For that reason, I think all the joint water authorities up and down the country will welcome the Chancellor's decision on this occasion to place the small municipalities who amalgamate for the purpose of supplying their inhabitants with water in at least a similar position to the bigger authorities who are big enough to embark on schemes of their own.
:A question was asked as to the object of Subsection (2). The answer is that the exclusion of the precept income, for very technical reasons, might affect the standard charge and chargeable accounting periods and the result—paradoxically as it may seem at first glance—would be an increase of tax. The object of the Clause is that there should be no question of any increase of tax by reason of the alteration of incidence of Income Tax. The question was raised, and several speakers addressed themselves to it, as to whether the definition of a joint authority is satisfactory. In particular it was asked whether the Metropolitan Water Board would be included. My right hon. Friend wants to have a look at that definition again before Report stage to satisfy himself on the point. I rather doubt whether as the definition is at present framed the Metropolitan Water Board would be included. The definition, notwithstanding the criticism levelled by the hon. Member for Northwich (Mr. John Foster) works. The body is constituted under an enactment and the representatives are appointed by local authorities and that is perfectly sensible as a definition. But it is a question of whether it really does meet all the categories which were intended to be included in the Act. I was asked whether there was not some vagueness in the sums which were excluded from the ambit of the taxation which could be imposed, and I do not think there can be any doubt what those sums are. They are sums which have actually been received by way of precept. The estimation does not affect the amount of money actually brought into tax which is to be money received by virtue of the precept. As far as this is concerned I think the Clause is perfectly satisfactory as it stands.
5.15 a.m.
An hon. Member asked how it was that the matter was allowed to go to litigation. This was a matter which had been discussed and canvassed for some time. It involved a considerable sum of money and efforts were made to arrive at a satisfactory settlement, but the water board were not able to assent to the terms of settlement and inevitably the matter had to go before the courts. It was desirable, as no terms of settlement could be reached which were reasonable from the point of view of the Inland Revenue authorities, that some final ruling should be obtained so that for the future there should be no doubt about the matter. That being the position, the matter went to the courts and the ruling was given about which the Committee have been informed. For the reasons which were given, that ruling would in point of fact have had most unfortunate results, and there was no alternative but to put the matter right, as it is put right by the Clause which the Committee are now asked to approve.
:I thank the hon. and learned Gentleman for the information which he has given. An even greater debt of gratitude is owed to the hon. Member for The Hartlepools (Mr. D. Jones) for the excellent and constructive speech which he made. I must say I am grateful because he saved me the trouble of asking quite a lot of questions. He put his points well. I only wish we could have an explanation from him on a few other things in addition to this. He was really constructive and his explanation was helpful to many hon. Members on this side of the Committee. It is encouraging to find an hon. Gentleman who can explain matters. What I am still rather worried and puzzled about is a question in reference to Subsection (2). I want to know why it has been necessary to put the words "includes Excess Profits Tax" in brackets. The hon. Member for Northwich (Mr. J. Foster), when he read to us this Subsection, left out those words which are in brackets, and I am wondering why he did that. He was trying to make something clear and he left out the words about which apparently everyone is shy. Is there any possibility of these boards having to pay Excess Profits Tax? I should have thought there was a possibility for several reasons. Have they ever been called upon to pay that Tax in the past? That is a point upon which we ought to have information because it would seem to me otherwise that it was putting something into a Clause which was entirely unnecessary. In the circumstances, the Government would be well advised to leave this out.
Having said that, and realising that the Clause is the result of a legal decision, and that we have had a certain amount of accommodation from the Front Bench, may I suggest that it might be better for the right hon. Gentleman to go a little further? Since he admits that the Clause is not perfect, why not withdraw it entirely, and come forward later with a new Clause when the Government have thought out the matter and got it properly fixed up, that would be so much easier. I make that suggestion in a perfectly kindly way, as the Chancellor will probably have heard about what is happening behind him. Suppose I challenge this Clause, and, having won over the whole of the Chancellor's supporters, and we defeat the Government on this Clause, it would be very awkward. I do not want to do that on this particular issue, and, in the circumstances, my suggestion is that it might be better for the Chancellor to withdraw the Clause and take the opportunity of presenting us with a new Clause which we might find simple and easy.
:I add my voice to the plea of my hon. Friend the Member for Torquay (Mr. C. Williams). Hon. Members will have noticed that there has been indicated a certain aura of intention regarding this Clause. Some reference was made in the earlier stages of the Debate by the hon. Member for Daventry (Mr. Manningham-Buller) to water boards. There seems to be nothing at all in the Bill about this. One hon. Member referred to buckets and explained where water came into the picture. I should like the Solicitor-General to say something about this, or the right hon. Gentleman the Home Secretary, whom we have not heard so far. I apologise if my words have acted like a douche of water upon him. I think the Committee is entitled to know whether the Clause, which is drawn to cover joint authorities in general, will, in fact, cover any other joint authorities with one particular water board, or one particular series of water boards and, if so, in what connection. This seems to be a Clause which has very far-reaching possibilities. It is power being taken through the medium of taxation which may run into considerable sums of money, and to which the Committee should direct its attention.
I venture to think that we are not receiving a very great deal of information on the point. We have also to bear in mind the fact that it is retrospective legislation. How far back is it going to affect payments which have already been exacted by the Treasury? The hon. and learned Solicitor-General referred to the question of arrangement between the Treasury and the joint authority in question. What is to be the outcome if this Clause is passed? Presumably a similar line has been attempted to be adopted in other cases. We have no reason to suppose that this is the sole occasion upon which the Treasury has endeavoured to come to an arrangement with the joint authority on this question. Therefore, it is a fair and proper presumption for the Committee that the Treasury has, in the past, made a practice of coming to arrangements with joint authorities, possibly not only with joint water authorities. There may be other kinds of authorities as well, and it is quite likely that a joint authority would prefer to enter into such an arrangement rather than risk the time, expense, trouble and delay of the case going to the House of Lords. Substantial sums of money have, in the past, been paid over to the Revenue from these sources.
The Committee is entitled to be informed as to what amounts, if this Clause is passed, the Revenue will be required to pay back to the joint authorities concerned. A number of hon. Members are exceedingly interested in this subject, although only the hon. Member for The Hartlepools (Mr. D. Jones) has been able to identify a case coming within his constituency. But it may well be that other hon. Members will know of similar cases, whether composed of water boards or other utility services. If that be so, what will be the effect upon those joint authorities if this Clause is passed? We have already discovered that there is a very considerable difficulty—I will not say doubt, because the hon. and learned Solicitor-General is quite complacent about his ability to interpret the interpretation Clause—and, to the simple minds of some of us, focusing the full brilliance of our intellect on the intricate phraseology at this hour of the morning, we do not seem to be getting anywhere at all. Why not have done with it and shorten the definition and say that the joint authority—
:I hope my hon. and gallant Friend will excuse my interrupting him, but it seems to me that, instead of being so very serious on this very important matter, he might introduce a little lightheartedness into our Debate. I hope my hon. and gallant Friend will not think that is a rebuke. I should never rebuke anyone belonging to my own party because they would never do anything which calls for rebuke.
5.30 a.m.
:This is quite definitely a serious matter. One should bear in mind the importance of this question, particularly as it affects con-
stituents of the hon. Member who has made such a valuable contribution to our debate. We should make efforts to assist him because the Government Front Bench has not done much in that direction. There is also this vexed question of Subsection (2). The hon. and learned Gentleman referred to Subsection (2), but I could not follow his argument. I ask, in what circumstances is Subsection (2) to apply? Subsection (1) provides for the remission of taxation in certain circumstances. Subsection (2), however, provides that
"Nothing in this Section shall render a joint authority"—
and we have not yet been told what is a joint authority—
"liable to pay a greater amount of tax than they would have paid apart from the provisions of this section."
The "provisions of this section" are solely for the remission of taxes. If it is only for the remission of taxes, under what circumstances can the Clause possibly introduce the element in which taxes may become greater? I do ask the learned Solicitor-General to clarify his statement on that, because he has not carried it very far.
rose in his place, and claimed to move, "That the Question be now put."
Question put, "That the Question be now put."
The Committee divided: Ayes, 204; Noes, 72.
Division No. 208.] AYES. [5.35 a.m. Adams, Richard (Balham) Chamberlain, R. A. Edwards, W. J. (Whitechapel) Adams, W. T. (Hammersmith, South) Champion, A. J. Evans, E. (Lowestoft) Allen, A. C. (Bosworth) Chetwynd, Capt. G. R. Evans, John (Ogmore) Alpass, J. H. Cocks, F. S. Fairhurst, F. Attewell, H. C. Collins, V. J. Farthing, W. J. Austin, H. L. Colman, Miss G. M. Fletcher, E. G. M. (Islington, E.) Awbery, S. S. Comyns, Dr. L. Foot, M. M. Baird, Capt. J. Corbet, Mrs. F. K. (Camb'well, N.W.) Foster, W. (Wigan) Barton, C. Crawley, Flt.-Lieut. A. George, Lady M. Lloyd (Anglesey) Bechervaise, A. E. Crossman, R. H. S. Gibbins, J. Benson, G. Daggar, G. Gibson, C. W. Berry, H. Daines, P. Gilzean, A. Bing, G. H. C. Dalton, Rt. Hon. H. Glanville, J. E. (Consett) Binns, J. Davies, Edward (Burslem) Gordon-Walker, P. C. Blenkinsop, Capt. A. Davies, Ernest (Enfield) Greenwood, A. W. J. (Heywood) Blyton, W. R. Davies, Harold (Leek) Grey, C. F. Boardman, H. Davies, Haydn (St. Pancras, S.W.) Grierson, E. Bowden, Flg.-Offr. H. W. Davies, S. O. (Merthyr) Gunter, Capt. R. J. Braddock, Mrs. E. M. (L'pl, Exch'ge) Deer, G. Guy, W. H. Braddock, T. (Mitcham) Delargy, Captain H. J. Haire, Flt.-Lieut. J. (Wycombe) Brown, George (Belper) Diamond, J. Hale, Leslie Brown, T. J. (Ince) Dodds, N. N. Hall, W. G. (Colne Valley) Bruce, Maj. D. W. T. Driberg, T. E. N. Hamilton, Lieut.-Col R. Burden, T. W. Durbin, E. F. M. Hardman, D. R. Burke, W. A. Dye, S. Hardy, E. A. Byers, Lt.-Col. F. Ede, Rt. Hon. J. C. Henderson, Joseph (Ardwick) Callaghan, James Edelman, M. Herbison, Miss M. Castle, Mrs. B. A. Edwards, John (Blackburn) Hewitson, Capt. M. Hobson, C. R. Morris, P. (Swansea, W.) Skeffington, A. M. Holman, P. Mort, D. L. Skeffington-Lodge, T. C. House, G. Moyle, A. Skinnard, F. W. Hoy, J. Murray, J. D. Smith, Capt. C. (Colchester) Hughes, Lt. H. D. (W'lverh'pton, W.) Nally, W. Smith, S. H. (Hull, S.W.) Hynd, H. (Hackney, C.) Nichol, Mrs. M. E. (Bradford, N.) Snow, Capt. J. W. Irving, W. J. Noel-Baker, Capt. F. E. (Brentford) Sorensen, R. W. Jeger, G. (Winchester) Noel-Buxton, Lady Soskice, Maj. Sir F. Jeger, Dr. S. W. (St. Pancras, S.E.) O'Brien, T. Stamford, W. Jones, D. T. (Hartlepools) Oliver, G. H. Steele, T. Jones, J. H. (Bolton) Orbach, M. Stubbs, A. E. Jones, P. Asterley (Hitchin) Paling, Will T. (Dewsbury) Swingler, S. Keenan, W. Palmer, A. M. F. Symonds, Maj. A. L. Kenyon, C. Pargiter, G. A. Taylor, H. B. (Mansfield) Kinghorn, Sqn.-Ldr. E. Paton, Mrs. F. (Rushcliffe) Taylor, R. J. (Morpeth) Kinley, J. Paton, J. (Norwich) Thomas, George (Cardiff) Lang, G. Pearson, A. Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Lavers, S. Peart, Capt. T. F. Thorneycroft, H. (Clayton) Lee, F. (Hulme) Perrins, W. Tiffany, S. Lee, Miss J. (Cannock) Piratin, P. Tolley, L. Leslie, J. R. Platts-Mills, J. F. F. Ungoed-Thomas, L. Lewis, A. W. J. (Upton) Poole, Major Cecil (Lichfield) Wadsworth, G. Lindgren, G. S. Popplewell, E. Walkden, E. Lipson, D. L. Price, M. Philips Wallace, G. D. (Chislehurst) Lyne, A. W. Pritt, D. N. Wallace, H. W. (Walthamstow, E.) McGhee, H. G. Proctor, W. T. Warbey, W. N. Mack, J. D. Randall, H. E. White, H. (Derbyshire, N.E.) McKay, J. (Wallsend) Ranger, J. Whiteley, Rt. Hon. W. McLeavy, F. Rees-Williams, D. R. Wigg, Col. G. E. Macpherson, T. (Romford) Reeves, J. Willey, F. T. (Sunderland) Mainwaring, W. H. Reid, T. (Swindon) Willey, O. G. (Cleveland) Mallalieu, J. P. W. Rhodes, H. Williams, W. R. (Heston) Manning, C. (Camberwell, N.) Roberts, Emrys (Merioneth) Willis, E. Manning, Mrs. L. (Epping) Roberts, Goronwy (Caernarvonshire) Wills, Mrs. E. A. Mathers, G. Rogers, G. H. R. Woodburn, A. Mayhew, C. P. Royle, C. Yates, V. F. Middleton, Mrs. L. Sargood, R. Younger, Hon. Kenneth Mikardo, Ian Scollan, T. Zilliacus, K. Mitchison, Maj. G. R. Shawcross, C. N. (Widnes) Monslow, W. Shurmer, P. TELLERS FOR THE AYES: Morris, Lt.-Col. H. (Sheffield, C.) Silverman, S. S. (Nelson) Captain Michael Stewart and Mr. Simmons
NOES Agnew, Cmdr. P. G. Gridley, Sir A. Nutting, Anthony Assheton, Rt. Hon. R. Grimston, R. V. Orr-Ewing, I. L. Baldwin, A. E. Haughton, S. G. Peto, Brig. C. H. M. Barlow, Sir J. Hinchingbrooke, Viscount Poole, O. B. S. (Oswestry) Birch, Nigel Hollis, M. C. Prescott, Stanley Boles, Lt.-Col. D. C. (Wells) Hope, Lord J. Renton, D. Bower, N. Hutchison, Lt.-Cm. Clark (E'b'rgh W.) Ross, Sir R. Boyd-Carpenter, J. A. Hutchison, Col. J. R. (Glasgow, C.) Shephard, S. (Newark) Bracken, Rt. Hon. Brendan Jeffreys, General Sir G. Shepherd, W. S. (Bucklow) Braithwaite, Lt.-Comdr. J. G. Joynson-Hicks, Lt.-Cdr. Hon. L. W. Smith, E. P. (Ashford) Buchan-Hepburn, P. G. T. Keeling, E. H. Stanley, Rt. Hon. O. Butcher, H. W. Langford-Holt, J. Stuart, Rt. Hon. J. (Moray) Carson, E. Low, Brig. A. R. W. Studholme, H. G. Clifton-Brown, Lt.-Col. G. Lucas-Tooth, Sir H. Sutcliffe, H. Crookshank, Capt. Rt. Hon. H. F. C. Macdonald, Capt. Sir P. (I. of Wight) Taylor, C. S. (Eastbourne) Darling, Sir W. Y. Maclay, Hon. J. S. Teeling, William Digby, Maj. S. W. Macmillan, Rt. Hon. Harold (Bromley) Thomas, J. P. L. (Hereford) Dodds-Parker, A. D. Manningham-Buller, R. E. Turton, R. H. Duthie, W. S. Marlowe, A. A. H. Wakefield, Sir W. W. Erroll, F. J. Marshall, D. (Bodmin) Williams, C. (Torquay) Foster, J. G. (Northwich) Mellor, Sir J. Willoughby de Eresby, Lord Fox, Sqn.-Ldr. Sir G. Morrison, Maj. J. G. (Salisbury) York, C. Fraser, Maj. H. C. P. (Stone) Mott-Radclyffe, Maj. C. E. Young, Sir A. S. L. (Partick) Fraser, Sir I. (Lonsdale) Nicholson, G. Gomme-Duncan, Col. A. G. Nield, B. (Chester) TELLERS FOR THE NOES: Mr. Drewe and Major Conant
Question, "That the Clause be read a Second time," put accordingly and agreed to.
Clause added to the Bill.
NEW CLAUSE.—(Reduction of tax charged on certain chargeable processes.)
(1) Where in respect of the application of a chargeable process to chargeable goods it is shown to the satisfaction of the Commissioners—
( a ) that those goods were at the time of the application of the process the property of the person to whose order that process was applied and were last acquired by him more than two years, or such shorter period as the Commissioners may allow, before that time, or were acquired by him under any testamentary disposition or intestacy; and
( b ) that the goods were not held by him at any time as stock for the purposes of any trade carried on by him,
any purchase tax chargeable, whether before or after the passing of this Act, by virtue of the application of the process shall, instead of being chargeable on the wholesale value of the resulting goods, be chargeable on the amount by which that value exceeds the wholesale value of so much of the chargeable goods to which the process was applied as is incorporated in the resulting goods.
(2)If the person to whose order the process is applied in furnishing any information for the purpose of, or in connection with, the obtaining of any relief under this Section makes any statement which he knows to be false in a material particular or recklessly makes any statement which is false in a material particular, he shall, without prejudice to any liability to punishment in respect thereof, be accountable for the tax which would be chargeable by virtue of the application of the process apart from the provisions of this Section.—[ The Solicitor-General. ]
Brought up, and read the First time.
5.45 a.m.
:I beg to move, "That the Clause be read a Second time."
On Clause 14 of the Bill, apprehensions were expressed as to the possible effect of that Clause upon the jewellery trade. The Clause, as hon. Members will remember, created a Purchase Tax on what was called a chargeable process. Briefly, a chargeable process is a process which brings into being or makes goods that come under the Schedule to this Bill in regard to Purchase Tax. This new Clause is designed to provide a measure of relief against the possible effect of Clause 14 on the jewellery trade. I will indicate shortly how it is that the Clause is designed to operate. Suppose that a person possesses some jewels, or some article of jewellery that he wants to have made up, in order to give them as a present and he goes to a jeweller and gets the jeweller to break them down and make them up in some different way: if this new Clause were not added to the Bill, the result would be that he would have to pay Purchase Tax on the full value of the remade article. I am talking, of course, about the case where there is a new piece of jewellery made. I am not talking about a mere alteration. A new piece of jewellery comes into being as a result of the application of the chargeable process. That would be the position without this new Clause.
The new Clause operates as follows. If the owner of the article of jewellery has had it in his possession for a period of time—two years or such shorter period as the Commissioners may determine—or if he acquired it under a testamentary bequest or an intestacy, and does not hold it as stock—that is to say, if, being a private person, he has had it in his possession, roughly speaking, for two years—and then he goes to the jeweller and says, "Will you make it into a new piece of jewellery" the Purchase Tax is then paid only upon a much reduced sum, and that reduced sum is the excess of the value of the new article that has been made up over the old article out of which it has been made up. That is what the new Clause provides. In other words, supposing the article of jewellery which the private person possessed had been of a wholesale value of £1, and he goes to a jeweller and has it made up into a new article of jewellery, and the result of the making up is that a new article of jewellery comes into being worth £2, the Purchase Tax is paid only on £1—the difference between the new value of £2 and the old value of £1.
That will go a long way to protect particularly the jewellery trade, which, of course, devotes a good deal of its time to altering and remarking secondhand articles of jewellery. It might be seriously affected if this new Clause were not introduced into the Bill. I ask the Committee to accept the new Clause as conferring upon the jewellery trade, and possibly other trades also, a measure of relief which will be necessary to them, and will prevent them from suffering a good deal of hardship which they would have suffered under Clause 14, as it appears in the Bill at present.
:As I spoke on Clause 14 and made the point which is largely covered by this new Clause, I would like to thank the Government very much for having acceded so rapidly to the request which I made that they should consider it further. I must admit that I am still rather surprised that it was not a point which occurred to those who were concerned with the Clause at an earlier stage.
I am the more happy because only this morning of the Sitting Day on which we are now engaged—yesterday in calendar terms—I received a letter from a constituent of mine raising this very point. She had not seen my speech because the date of the letter was prior to my making the speech, but owing to some curious delay, I only received it now. She said that she was labouring under a sense of injustice, and I am glad to think that, as a result of this Amendment, that will no longer be her feeling. It is an interesting case. She writes:
:That is the lady's, not the right hon. and gallant Gentleman's?
:The hon. Member must not lure me—I think that was your term, Mr. Beaumont? I will continue:
However, when we come to the other argument which we had on this Clause with regard to rabbit skins, then I think there will be some difficulty, because this concession apparently only applies in the case where the article was acquired more than two years before the change was made or was acquired under testamentary disposition or intestacy. The case raised was of the countryman who snares or shoots a few rabbits, or gets a few moles, and saves them up for the time he has enough to make a waistcoat.
:Or breeds them.
:Yes. Having either shot or snared or bred them, it seems very improbable that he will keep them for over two years in order to benefit from this concession, or that he is likely to get them as the result of a testamentary disposition. Therefore, while I agree with the point about jewellery, which was very much prompted by the important considerations of the trade in Birmingham and elsewhere, where skilled men have been largely driven to do this owing to the impossibility of getting the raw materials for making new jewellery owing to the proper restrictions of wartime—I am sorry the Chancellor is going to sleep. [AN HON. MEMBER: "Are you surprised?"]
indicated dissent.
:While that case has been made, it does not seem to me that there is anything in this Clause to help the rabbit skin case. I do not know whether it would be possible to devise some other form of words.
:It will be dealt with somewhere else.
:That is all right, then, and it will not be necessary to keep these unfortunate dead rabbits for a period of over two years, or to make arrangements to leave them by will, or to suffer an intestacy. I am glad we shall have another opportunity of discussing rabbits. As far as this proposal goes it is, at first sight at any rate, a satisfactory arrangement.
:I am very pleased to hear that the Chancellor is going to deal with rabbits later on. But that is a very small portion of the problem. If one reads the Chargeable Processes on the Fourth Schedule one sees:
I am sure the Chancellor is anxious to help us, but it seems a pity that he should merely help the jewellery trade and not help rural industries or indeed, as people who know more about it than I do point out, the motor car trade. There are numbers of people engaged in making gloves, furs and rugs and they should not be at a disadvantage to the jeweller or anyone brought into the Fourth Schedule. The main object of the Schedule is to put a tax on those who have a turnover of less than £500 a year. Why should those in a small way of business in the skin, fur, hair, wool, glove or cape—as the hon. Lady the Member for Woodford is wearing—
:The hon. Lady the Member for Epping (Mrs. Manning).
:The better half of Woodford. I like to see the hon. Lady at this hour of the morning. There is a strong case to be made out—and I hope the Chancellor will treat it with all seriousness—for these native skins as opposed to foreign skins. The mink which the hon. Lady the Member for Epping (Mrs. Manning) is wearing today is, I believe, a foreign skin and she should pay the full amount of Purchase Tax which the Chancellor is levying in this Schedule. Homebred skins should be exempted. I hope the assurance which the Chancellor has given by nodding earlier when he dealt with the humble rabbit, will be extended to the mole, the beaver, the muskrat and the cat. After all, there is a very good trade in selling cat skins. Perhaps the Chancellor will give us a lead on this point which will shorten the discussion a great deal. If we can have an assurance that the reason why this new Clause is not designed to help the home bred fur trade is because he is going to exempt the whole of the home bred products from the scope of the Fourth Schedule, that would shorten matters.
6.0 a.m.
:When we come to the Fourth Schedule, I am prepared to accept the Amendment which is on the Paper in the name of the hon. Gentleman the Member for Thirsk and Malton (Mr. Turton). I cannot at this stage commit myself to further Amendments of this sort in the Schedule and I am doubtful whether anything nearly as wide as he has just suggested has been put down—[An HON. MEMBER: "It has."] Anyway, I commit myself to him and I will look at the others.
:There are several features of this Clause which, while we are grateful for it, nevertheless, appear to cause a great deal of unnecessary complication on relatively small matters. Really, is it worth the trouble of acquiring this rela- tively small amount of Purchase Tax by a process so complicated as that defined in lines 10 to 14? We are faced immediately with the problem referred to by my right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank) of deciding what is the correct valuation of the articles before and after the chargeable processes have been applied to them. I suggest that that is a very difficult matter to determine satisfactorily. I am sorry that the Clause makes no reference to how these valuations are to be conducted. Who is to decide the value? Is it to be the person carrying out the process, or the owner of the article, or is there to be an independent valuation? If there is to be an independent valuation, who is to pay for it? If the valuation is disputed by the Commissioners, what right of appeal is open to the owners or the people carrying out the chargeable process? As it stands the Clause lends itself to considerable difficulty in regard to motor cars. It is a hobby with young and old to buy old motor cars, to tinker with them and to make them up into better models. Very often they will take two second-hand motor cars and rebuild the two into one serviceable vehicle—
:It is not so very long ago that the hon. Gentleman said three, four or five old cars. I think he ought to make up his mind whether it is to be two or more than two. It may be that in some cases it will be two, and in other cases it will be several.
:I always bow to the great Parliamentary knowledge of the hon. Member for Torquay (Mr. C. Williams). In this particular matter his knowledge with regard to automobile engineering is liable to lead me astray. It is most essential that the cars should have been originally of the same make if we are to bring two or more motor cars together into one reconstituted whole.
:Am I to understand from what the hon. Gentleman has just said that it is not possible to get more than two old motor cars of one make? Unless that is so, his admonition of me falls to the ground.
:I intended nothing in the nature of an admonition by my remark. It was just a case of pointing out a matter of a technical nature which surrounds the whole of this Clause. There is another problem which we shall have to face in future. When one takes an existing motor car and carries out a major overhaul, or when that motor car is fitted with a new engine, gear box or back axle, that, I suggest, according to this Clause, would become a chargeable process, but it would be most undesirable if it was so decided.
:On a point of Order. Is not every word that has been said in the last 10 minutes relevant to a Clause which has been passed and not relevant to the Amendment we are considering?
:The hon. Gentleman is quite in Order, but I would express the hope that he will curtail his remarks so that we can get on with the Committee stage of the Bill.
:Further to that point of Order, can anything be done to enable us to get away earlier and to prevent hon. Gentlemen opposite from wasting our time by claiming the protection of the Chair?
:The hon. Member for Torquay (Mr. C. Williams), out of his wide experience and great knowledge, should know that that is not a point of Order and is not a matter for the Chairman to decide.
:I appealed for the protection of the Chair when we were suffering very badly, but I will not pursue the point now.
:The hon. Gentleman was not asking for the protection of the Chair. My remarks had relation to the power of the Chair to curtail discussion.
:On a point of Order. I had occasion to leave the Chamber after asking for the windows to be opened. I did so for necessary refreshment, but, while I was absent, somebody obtained your permission to have them closed again. The atmosphere in here is unnecessarily heated, and perhaps the opening of the windows might induce a lower temperature of Debate. May I reinforce the plea made by the hon. Member for Eastbourne (Mr. C. S. Taylor) that the windows opposite should be opened?
:We were sitting here when the windows were opened, and the air that came in was very refreshing, but, after a time, the air that came in made it rather cold and it became something of a gale.
:The windows have been closed at the request of several hon. Members. It is not for the Chairman to take into account a rising temperature. Perhaps the Debate can now proceed.
:I hope I may have your assurance, Mr. Beaumont, that I am doing my best to keep the temperature of the Debate down to the lowest level. I should like to continue to discuss this rather difficult Clause, and I would like to say that not all the points have been answered and the Clause is far from clear at the moment. I feel that this is far from clear at the moment and I ask the Government to give further attention to it. I should like to return to the question of jewellery, which is the main criticism against this Clause. If persons have some old jewellery which they have had modernised, is it really worth while, with all this devious business, to try to get money from them? Will the Government ever get enough money to make the game worth the candle? I submit that the Government are going to get very little out of it. It will cause an immense amount of trouble, complications and inconvenience to simple people who have bits of old jewellery or motor cars, and will produce, altogether, a relatively small amount. It would be extremely interesting if the Government could tell us how much money they expect to get so that we may compare it with the amount of inconvenience which it will cause to the harassed British public.
It is about time that we heard the facts of some of these ingenious provisions of civil servants. This is a clever Clause and well devised, but look at the trouble it will cause for a relatively small return. And look at the Civil Service signature in the last few lines. There is even a specially ingenious penalty because, in addition to any unspecified penalties to which one is liable for transgressing the earlier part of the Clause, should one make a false statement, one shall be accountable for the tax chargeable apart from the provisions of this Section. Cannot a man be fined and be done with it without taking this little bit out of him as well? I ask the Government to reconsider this Clause and, if we must have it, to make it really workable in a way which will give the least inconvenience to the public, who are the people who will be affected by it.
:My hon. Friend the Member for Altrincham and Sale (Mr. Enroll) has touched on a point with regard to this Clause on which I think we should have a full explanation from the hon. and learned Solicitor-General. I am not going to deal with the contentious subject of rabbit skins, rings or matters of that sort. I invite the Committee to look at Subsection (2) and to consider the case of a lady who thinks she has received some skins under what she believes to be a testamentary disposition when, in fact, it turns out to be a gift inter vivos, or something of that sort. Suppose she made any statement she knew to be false in a material particular, she would, without prejudice to any liability to punishment in respect thereof, be accountable for the tax which would be chargeable by virtue of the application of the process apart from the provisions of this Section.
Does this Subsection create an offence against the criminal law? If so, where is it going to be tried, who is going to determine whether the statement is made recklessly or knowingly, and what are the other punishments which might be inflicted in addition to the payment of tax? Before we pass a Statute which provides "without prejudice to any liability to punishment," we ought to be told what the law is, as, otherwise, a lot of innocent people will find themselves paying full tax when they think they are only entitled to pay a very little when having their own goods altered or made up. We ought to know what process of law is going to be brought against them and whether they are to be subject to heavy fines, in addition to the tax, or to imprisonment, and, above all, what court is going to try them.
The last time I raised something on new Clauses, the hon. and learned Solicitor-General did not deal with the points I raised, but I hope that, on this occasion, he will not only deal with the points raised by my hon. Friend, but will at least tell us what effect, if any, have the words: going to be in the High Court with the Inland Revenue seeking to recover tax, it seems to me that some people may well be involved in very heavy costs in defending cases brought against them involving very small sums of money. I really think that we should be told what is the meaning of this Subsection.
6.15 a.m.
:Just one small point, before the Solicitor-General replies. It has been pointed out that Purchase Tax would be left on an article which had been processed. Its value before processing might be a pound, and after processing, two pounds, and the Purchase Tax would be paid on the pound. There might well be some jewellery, where two articles are made from one, or one article is made from two. Now the point is that the altering of the jewellery does not increase its wholesale value. It might be desired to change an article of jewellery, and although there would be some cost for doing that, the wholesale price is the same. Now, is there any Purchase Tax alteration, presuming the value is more or less after the alteration? If we could have some clarification on this point, it would be helpful.
:I have been giving this matter a considerable amount of attention and thought, and I would bring one point to the Chancellor's notice. Subsection (1, a ) says:
"were acquired by him under any testamentary disposition or intestacy".
I ask the Chancellor to consider inserting "bona-fide gifts." Let us assume that the hon. Member for Torquay (Mr. Williams) wishes to give his cousin a wedding present. He might do it in the form of family jewellery, and that cousin might wish to have it altered into a ring or a bracelet. As this Clause stands, I do not think his cousin would be able to have that jewellery altered without paying tax. I think that is rather unfair on the cousin of the hon. Member for Torquay, and I would ask the Chancellor if he would not consider the inclusion of the words I have mentioned.
:At this hour of the morning, I think we should address ourselves to a serious aspect of this matter. The Board of Trade has had a campaign, and a very proper campaign, for four years past, urging people to "make do, and mend." The campaign of the Chancellor strikes at this. Throughout the country, the Women's Volunteer Service have made do and mended. They have converted husbands' trousers into skirts—[ Interruption. ] The hon. Lady knows that what I say is the truth, although I am not saying that the hon. Lady converted her husband's trousers. I would not go so far. But this process has been going on. The Chancellor knows that there has been a case with which a tailor has been presented with a button and told to add a pair of trousers. That is an abuse, just as was the case of the lady who handed the frill of a petticoat to an assistant and asked that a top be put on to it. I have had experience of these matters, which I should hesitate to place at the disposal of the Committee at this early hour in the morning. It is not so much that I complain of the tax, but I beg the Chancellor to consider, in consultation with the President of the Board of Trade, whether it is wise in these days, when the shops are empty of goods of any sort, so to restrict the desires of men and women who want to manipulate and make do and mend and adjust—is it wise to restrict them in what after all is only the remaking of second-hand goods? That is all we are asking for. But the Chancellor in his eager search for "baw bees" pursues the wretched shopkeepers with the filling up of forms, and the equally wretched women who want to alter some small thing about the house to brighten the darkness and dullness of these austerity years. The Chancellor with all the panoply of the law, with all his scouts and snoops and spies and the heavy penalties, harries and chases these wretched citizens. Is it really worthy of a great Minister, who hitherto has given us perorations relating not to women's skirts or men's discarded trousers, but to the mountain tops, where the national parks await us? It is on these heights that he has hitherto skipped, and I deplore that he should descend to this petty second-hand sort of transaction. I am certain that many Members on both sides of the Committee know that this is a miserable business, and are ashamed when they go to a tailor or draper or jeweller and ask him to refashion some trifling trinket or other thing. It is humiliating to think of imposts piled upon imposts, of tax piled upon tax. I should think that the Chancellor in his hours of genial cordiality, would sympathise with us at this dawning of a new day, and would consider us a little by taking this tax from the trousers and the shirts and the mended jewellery.
:If I might deal with the points made in their order and briefly, I accept the point that it is not always easy to say what the wholesale value of an article is. But as the right hon. and gallant Member for Gainsborough (Captain Crookshank) said, rough justice can be done, and in ordinary circumstances although it may not be easy, one can arrive at what is a fair figure in regard to wholesale values. It has to be dealt with as best as can be in particular cases.
:Who places the valuation on them?
:When the article is produced it has to be valued. If it is a thing of substantial value some additional supporting evidence may be required to support the valuation, but that would depend on the actual circumstances of the case. As to the question raised about punishment, if the hon. and learned Member for Daventry (Mr. Manningham-Buller) will look at the Section 35 of Finance (No. 2) Act of 1940 he will see there a penalty provision which does provide differing penalties for differing classes of dishonesty, in connection with the Purchase Tax, and that is what is referred to in the Clause.
The question was then asked what the position would be if the result of the application of the chargeable process was to produce no additional value. In other words, if the new article that was brought into existence was of no greater value than the articles from which it was constructed. The answer is that in those circumstances, under the express provisions of the new clause, no tax would be payable because there would not be any excess value upon which it could be charged. The point was also made that it would be proper to include bona fide gifts as well as testamentary dispositions and acquisitions under an intestacy. To include bona fide gifts would be largely widening the scope of the Clause itself. If there is a bona fide gift that has remained in the possession of the donee for two years, or such shorter time as the Commissioners have decided, it will, after all, qualify for the relief in respect of Purchase Tax. So, in a sense, a bona fide gift is already included, but it has to remain in the possession of the donee for two years or such shorter period as may be determined.
The last speaker directed his argument not so much against this Clause as against Clause 14, but this Clause is, after all, a concession. It is an inroad into the operation of Clause 14, and much as the hon. Member may dislike Clause 14, if he directs the same argument against this Clause he can only be arguing against the granting of the concession, and I am sure he does not intend that. This Clause is intended to be a concession; it is intended to limit the operation of Clause 14 and prevent its operating hardly upon certain categories of traders.
:The hon. and learned Solicitor-General will be aware, I have no doubt, that London used to be one of the markets of the world for jewellery and for the renovation and making up of new jewellery. Could he say whether this new Clause will allow foreigners to bring
their jewellery to London to have that jewellery renovated or modernised or refashioned or treated in any particular way, provided it is the same jewellery, without their having to pay Purchase Tax upon it? If that is not the case, he will no doubt be aware that this trade, like so many other parts of our trade, will go to foreign countries?
:The Solicitor-General dealt with the question I asked him to some extent, but will he confirm the view that a person who commits an offence under this provision is liable not only to the full amount of the Purchase Tax, but also to £500 fine or two years' imprisonment? I think we ought to be told the penalty.
rose in his place, and claimed to move, "That the Question be now put."
Question put, "That the Question be now put".
The Committee divided: Ayes, 195; Noes, 71.
Division No. 209.] AYES. [6.30 a.m. Adams, Richard (Balham) Davies, Haydn (St. Pancras, S.W.) Irving, W. J. Adams, W. T. (Hammersmith, South) Davies, S. O. (Merthyr) Jeger, G. (Winchester) Allen, A. C. (Bosworth) Deer, G. Jeger, Dr. S. W. (St. Pancras, S.E.) Alpass, J. H. Delargy, Captain H. J. Jones, D. T. (Hartlepools) Attewell, H. C. Diamond, J. Jones, J. H. (Bolton) Austin, H. L. Dodds, N. N. Jones, P. Asterley (Hitchin) Awbery, S. S. Driberg, T. E. N. Keenan, W. Barton, C. Durbin, E. F. M. Kenyon, C. Bechervaise, A. E. Dye, S. Kinghorn, Sqn.-Ldr. E. Benson, G. Ede, Rt. Hon. J. C. Kinley, J. Berry, H. Edwards, John (Blackburn) Lang, G. Bing, G. H. C. Edwards, W. J. (Whitechapel) Lavers, S. Binns, J. Evans, John Ogmore Lee, F. (Hulme) Blenkinsop, Capt. A. Fairhurst, F. Lee, Miss J. (Cannock) Blyton, W. R. Farthing, W. J. Leslie, J. R. Boardman, H. Fletcher, E. G. M. (Islington, E.) Lewis, A. W. J. (Upton) Bowden, Flg.-Offr. H. W. Foot, M. M. Lindgren, G. S. Braddock, Mrs. E. M. (L'pl, Exch'ge) Foster, W. (Wigan) Lipson, D. L. Braddock, T. (Mitcham) George, Lady M. Lloyd (Anglesey) Lyne, A. W. Brown, George (Belper) Gibbins, J. McGhee, H. G. Brown, T. J. (Ince) Gibson, C. W. Mack, J. D. Bruce, Maj. D. W. T. Gilzean, A. McKay, J. (Wallsend) Burden, T. W. Glanville, J. E. (Consett) McLeavy, F. Burke, W. A. Gordon-Walker, P. C. Macpherson, T. (Romford) Byers, Lt.-Col. F. Greenwood, A. W. J. (Heywood) Mainwaring, W. H. Callaghan, James Grey, C. F. Mallalieu, J. P. W. Castle, Mrs. B. A. Grierson, E. Manning, C. (Camberwell, N.) Chamberlain, R. A. Gunter, Capt. R. J. Manning, Mrs. L. (Epping) Champion, A. J. Guy, W. H. Mathers, G. Chetwynd, Capt. G. R. Haire, Flt.-Lieut. J. (Wycombe) Mayhew, C. P. Cocks, F. S. Hale, Leslie Middleton, Mrs. L. Collins, V. J. Hall, W. G. (Colne Valley) Mikardo, Ian Colman, Miss G. M. Hamilton, Lieut.-Col. R. Mitchison, Maj. G. R. Comyns, Dr. L. Hardman, D. R. Monslow, W. Corbet, Mrs. F. K. (Camb'well, N.W.) Hardy, E. A. Morris, P. (Swansea, W.) Crawley, Flt.-Lieut. A. Herbison, Miss M. Mort, D. L. Crossman, R. H. S. Hewitson, Capt. M. Moyle, A. Daggar, G. Hobson, C. R. Murray, J. D. Daines, P. Holman, P. Nally, W. Dalton, Rt. Hon. H. House, G. Nichol, Mrs. M. E. (Bradford, N.) Davies, Edward (Burslem) Hoy, J. Noel-Baker, Capt. F. E. (Brentford) Davies, Ernest (Enfield) Hughes, Lt. H. D. (W'lverh'pton, W.) Noel-Buxton, Lady Davies, Harold (Leek) Hynd, H. (Hackney, C.) O'Brien, T. Oliver, G. H. Roberts, Goronwy (Caernarvonshire) Thorneycroft, H. (Clayton) Orbach, M. Royle, C. Tiffany, S. Paling, Will T. (Dewsbury) Sargood, R. Tolley, L. Palmer, A. M. F. Scollan, T. Ungoed-Thomas, L. Pargiter, G. A. Shawcross, C. N. (Widnes) Wadsworth, G. Paton, Mrs. F. (Rushcliffe) Silverman, S. S. (Nelson) Walkden, E. Paton, J. (Norwich) Simmons, C. J. Wallace, G. D. (Chislehurst) Pearson, A. Skeffington, A. M. Warbey, W. N. Peart, Capt. T. F. Skeffington-Lodge, T. C. White, H. (Derbyshire, N.E.) Perrins, W. Smith, Capt. C. (Colchester) Whiteley, Rt. Hon. W. Piratin, P. Smith, S. H. (Hull, S.W.) Wigg, Col. G. E. Platts-Mills, J. F. F. Snow, Capt. J. W. Willey, F. T. (Sunderland) Poole, Major Cecil (Lichfield) Sorensen, R. W. Willey, O. G. (Cleveland) Popplewell, E. Soskice, Maj. Sir F. Williams, W. R. (Heston) Price, M. Philips Stamford, W. Willis, E. Pritt, D. N. Steele, T. Wills, Mrs. E. A. Proctor, W. T. Stubbs, A. E. Woodburn, A. Randall, H. E. Swingler, S. Yates, V. F. Ranger, J. Symonds, Maj. A. L. Younger, Hon. Kenneth Bees-Williams, D. R. Taylor, H. B. (Mansfield) Zilliacus, K. Reeves, J. Taylor, R. J. (Morpeth) Reid, T. (Swindon) Thomas, George (Cardiff) TELLERS FOR THE AYES: Rhodes, H. Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Mr. Joseph Henderson and Captain Michael Stewart.
NOES. Assheton, Rt. Hon. R. Gomme-Duncan, Col. A. G. Nutting, Anthony Baldwin, A. E. Gridley, Sir A. Orr-Ewing, I. L. Barlow, Sir J. Grimston, R. V. Peto, Brig. C. H. M. Birch, Nigel Haughton, S. G. Prescott, Stanley Boles, Lt.-Col. D. C. (Wells) Hinchingbrooke, Viscount Renton, D. Bower, N. Hollis, M. C. Ross, Sir R. Boyd-Carpenter, J. A. Hope, Lord J. Shephard, S. (Newark) Bracken, Rt. Hon. Brendan Hutchison, Lt.-Cm. Clark (E'b'rgh W.) Shepherd, W. S. (Bucklow) Braithwaite, Lt.-Comdr. J. G. Hutchison, Col. J. R. (Glasgow, C.) Smith, E. P. (Ashford) Buchan-Hepburn, P. G. T. Jeffreys, General Sir G. Stanley, Rt. Hon. O. Butcher, H. W. Joynson-Hicks, Lt.-Cdr. Hon. L. W. Stuart, Rt. Hon. J. (Moray) Carson, E. Keeling, E. H. Sutcliffe, H. Clifton-Brown, Lt.-Col. G. Langford-Holt, J. Taylor, C. S. (Eastbourne) Conant, Maj. R. J. E. Lucas-Tooth, Sir H. Teeling, William Crookshank, Capt. Rt. Hon. H. F. C. Macdonald, Capt. Sir P. (I. of Wight) Thomas, J. P. L. (Hereford) Darling, Sir W. Y. Maclay, Hon. J. S. Turton, R. H. Digby, Maj. S. W. Macmillan, Rt. Hon. Harold (Bromley) Wakefield, Sir W. W. Dodds-Parker, A. D. Manningham-Buller, R. E. Williams, C. (Torquay) Drewe, C. Marlowe, A. A. H. Willoughby de Eresby, Lord Duthie, W. S. Marshall, D. (Bodmin) York, C. Erroll, F. J. Mellor, Sir J. Young, Sir A. S. L. (Partick) Foster, J. G. (Northwich) Morrison, Maj. J. G. (Salisbury) Fox, Sqn.-Ldr. Sir G. Mott-Radclyffe, Maj. C. E. TELLERS FOR THE NOES: Fraser, Maj. H. C. P. (Stone) Nicholson, G. Commander Agnew and Fraser, Sir I. (Lonsdale) Nield, B. (Chester) Mr. Studholme.
Question, "That the Clause be read a Second time," put accordingly, and agreed to.
Clause added to the Bill.
:I beg to move, "That the Chairman do report Progress, and ask leave to sit again."
I do this in order that we may hear what the Government now propose to do. It is about four and a quarter hours since the question was put to the Chancellor. He offered us then a somewhat extended programme. However, we have made considerable progress in the interval. [HON. MEMBERS: "Oh."] I think it is considerable progress to have disposed of four Government new Clauses, which were of such importance that we had to discuss them, and have done it to the satisfaction of all who have attended the Debate—certainly to the visible satisfaction of the hon. Member for the Exchange Division of Liverpool (Mrs. Braddock), for I have seldom seen anybody who seemed to be enjoying herself quite so much as she was during the last hour. Now the question is, what does the Chancellor propose to do, because previously, while he indicated this enormous programme of work which he thought we might secure, he also made some remarks, which were touched upon by my right hon. Friend the Member for Bromley (Mr. Macmillan), which seemed to indicate that there was some magic between the hours of 12 and 6; that they were, so to speak, a close season during which there was no hope for any of us, except, of course, those who faded away from the Labour Division Lobby in the last few minutes, because we have all noticed that the figures have gone down during the last Division—[HON. MEMBERS: "No."] On the contrary, they dropped to 195 from 204, whereas ours remained stationary. So there has evidently been some slipping away, on the theory of the right hon. Gentleman that, I suppose, after six, the doors are open.
If the right hon. Gentleman's intention really was to keep the Committee sitting until 6 o'clock, he has achieved it. If it was to get the Government's new Clauses, he has achieved that. That is a pretty good record for hard work. But I hope he will realise that the programme sketched out was rather too ambitious, like many other things in the Labour programme, and that now is the time when we had better all be released in order to return to our duties later in the day refreshed and ready to discuss the further important points which remain in this Bill.
:The right hon. and gallant Gentleman has truly said that we have been making very good progress. We have dealt, since a similar Motion was moved, with four Government Clauses. They have been debated, discussed, and accepted. But we still have a long way to go. We have a large number of other Clauses put down by hon. Members in different parts of the Committee, and we have the Schedules. The target which I suggested as a basis of common effort on the part of us all—and we have been working very cooperatively—was that we should seek to get the Third Schedule. It is not quite a quarter to seven; do not let us despair, because it has all gone very well in terms of quality of Debate, temper and rarity of the moving of the Closure. Surely, we should now go forward.
The Government would not wish to monopolise the discussion of this session on the new Clauses. We have had four Government Clauses considered, and now the time has come for Private Members' Clauses, and I think we should certainly go forward. I do not wish to pin the Committee down at this stage to a fixed time, or a rigid, immovable, programme, but we should go on with the new Clauses put down by Private Members, and see how we get on. As I said when the last Motion of this kind was moved, let us see what we can do. Do not let us think too meanly of the possibilities. I think that before long we shall find that we are through the new Clauses and can see what the clock says, and consider whether it is worth while to seek, before the later Sitting today is due to begin, further progress with the Schedules, or whether we would have to face perhaps a later Sitting tonight. I do not want to confront any of these possibilities now, but let us go ahead and do our best in considering the new Clauses.
:I think the right hon. Gentleman, due, I know, to excessive zeal, is making a mistake. It is true that the Solicitor-General has to go off now, and that will bring me to the point I was going to make. The right hon. Gentleman has gratified us on this side of the Committee by the tribute he paid to our cooperation; he has paid testimony to the high level of the Debate which has been carried on during the last period mainly by my hon. Friends. We have not heard the hon. Member for Nelson and Colne (Mr. S. Silverman) or the hon. Member for Ipswich (Mr. Stokes) lately. They seem to have disappeared. —
:No.
:It was a temporary disappearance, which, I am sure, will now bring the hon. Member back to our Debate with renewed vigour.
6.45 a.m.
I think the hon. Member for Ipswich is sunk without trace. If we are to continue for much longer, this high standard which we have reached and to which the right hon. Gentleman has paid tribute, may not be maintained—[HON. MEMBERS: "Withdraw"]. I speak purely objectively. Hon. Members behind me have their particular points of interest and matters in which they are expert. On one occasion some speak on a matter which they really know and on another occasion a different lot discuss a matter which interests them. During that time when we can rest, the same three stalwarts have to hold the bridge on the opposite side of the Committee. I began to see signs even in the last four hours of a certain deterioration in the quality of their replies. It struck me, for instance, that the Solicitor-General, though still as lucid, was not quite so long. My fear has been confirmed by the fact that he has since left us. The right hon. Gentleman still maintains his good humour, still finds without difficulty the place in his brief, but his gestures do not appear as free and easy as they were earlier in the evening. I have watched the Financial Secretary for two hours and he has been awake all the time. It is clear, therefore, that we must look for a progressive deterioration of the standard to which I am sure we on this side of the Committee would like to pay our sincere tribute.
A further reason is that, if the right hon. Gentleman is to avoid a by-election in what in the circumstances in that particular city might be an awkward moment, he would do well to adjourn, because the hon. Lady the Member for Epping (Mrs. Manning) has had a fit of hysterics already and I think a second one might be fatal. Let us face the future. The right hon. Gentleman has attained his object. He really made it very clear when we discussed this matter some hours ago that he was not particularly interested in what we were going to debate or how we were going to debate it. What was really important was that some occupation should be found for hon. Members on the opposite side of the Committee until their trains began to run again. I understand now that the trains are running on their usual courses—buses also, I hope—and everything is set fair for a return of hon. Gentlemen to their homes. Everything combines, I think, to point to the fact that, after a very useful, fruitful Debate, which has occupied, from the point of view of time, a very considerable period, but which, to many of us, has gone like a flash, I think that, possibly, the time has come when, like all good things, this should end, in order that the three right hon. and gallant Gentlemen opposite may have a short period—it will be only a short period—for rest and refreshment, for looking up their briefs and, indeed, preparing for the very considerable amount of effort which will lie before us before we finish the Committee stage of this Bill.
:This Sitting, which commenced at half-past two, has continued until five minutes to seven, and,
when we commence again at 2.30 p.m., we have a very heavy day's work in front of us. Not only have we the Finance Bill and a great many other matters of Government Business, but I would remind hon. Members that some of my hon. Friends have put down a number of Resolutions affecting certain Orders. So we have a long programme which may well last for a considerable time.
:I would like to support those who have suggested that this Motion should be accepted. There is the question for decision by hon. Members whether they will continue to divide this Committee of the whole House, or divide Standing Committees upstairs, but that is not the principal reason. The Debate has reached an extraordinary high level, and it really has been conducted in a spirit of amity and good will. Indeed, we have not spent too long in examining some of these important matters. We have travelled rapidly and reached a satisfactory stage, but what has been indicated has been that the Patronage Secretary, inspired, I am sure, by the Leader of the House, who is conspicuous by his absence—[ interruption. ] I suggest that we might adjourn now so that the Patronage Secretary might have the time in which to institute a search for the Leader of the House and tell him what an appalling mistake he has made in arranging the time table of the House. I am only putting into words the thoughts that are in the heart of the Patronage Secretary, and, indeed—
rose in his place, and claimed to move, "That the Question be now put."
Question put, "That the Question be now put."
The Committee divided: Ayes, 189; Noes, 75.
Division No. 210.] AYES. [6.55 a.m. Adams, Richard (Balham) Bowden, Flg.-Offr. H. W. Comyns, Dr. L. Adams, W. T. (Hammersmith, South) Braddock, Mrs. E. M. (L'pl, Exch'ge) Corbet, Mrs. F. K. (Camb'well, N.W.) Allen, A. C. (Bosworth) Braddock, T. (Mitcham) Crawley, Flt.-Lieut. A. Alpass, J. H. Brown, George (Belper) Crossman, R. H. S. Attewell, H. C. Brown, T. J. (Ince) Daggar, G. Austin, H. L. Bruce, Maj. D. W. T. Daines, P. Awbery, S. S. Burden, T. W. Dalton, Rt. Hon. H. Barton, C. Burke, W. A. Davies, Edward (Burslem) Bechervaise, A. E. Callaghan, James Davies, Ernest (Enfield) Benson, G. Castle, Mrs. B. A. Davies, Harold (Leek) Berry, H. Chamberlain, R. A. Davies, Haydn (St. Pancras, S.W.) Bing, G. H. C. Champion, A. J. Davies, S. O. (Merthyr) Binns, J. Chetwynd, Capt. G. R. Deer, G. Blenkinsop, Capt. A. Cocks, F. S. Delargy, Captain H. J. Blyton, W. R. Collins, V. J. Diamond, J. Boardman, H. Colman, Miss G. M. Dodds, N. N. Driberg, T. E. N. Lee, F. (Hulme) Reeves, J. Durbin, E. F. M. Lee, Miss J. (Cannock) Reid, T. (Swindon) Dye, S. Leslie, J. R. Rhodes, H. Ede, Rt. Hon. J. C. Lewis, A. W. J. (Upton) Roberts, Goronwy (Caernarvonshire) Edwards, John (Blackburn) Lindgren, G. S. Royle, C. Edwards, W. J. (Whitechapel) Lyne, A. W. Sargood, R. Evans, John (Ogmore) McGhee, H. G. Scollan, T. Fairhurst, F. Mack, J. D. Shawcross, C. N. (Widnes) Farthing, W. J. McLeavy, F. Silverman, S. S. (Nelson) Fletcher, E. G. M. (Islington, E.) Macpherson, T. (Romford) Simmons, C. J. Foot, M. M. Mainwaring, W. H. Skeffington, A. M. Foster, W. (Wigan) Mallalieu, J. P. W. Skeffington-Lodge, T. C. Gibbins, J. Manning, C. (Camberwell, N.) Smith, Capt. C. (Colchester) Gibson, C. W. Manning, Mrs. L. (Epping) Smith, S. H. (Hull, S.W.) Gilzean, A. Mathers, G. Snow, Capt. J. W. Glanville, J. E. (Consett) Mayhew, C. P. Sorensen, R. W. Gordon-Walker, P. C. Middleton, Mrs. L. Soskice, Maj. Sir F. Greenwood, A. W. J. (Heywood) Mikardo, Ian Stamford, W. Grey, C. F. Mitchison, Maj. G. R. Steele, T. Grierson, E. Monslow, W. Stubbs, A. E. Gunter, Capt. R. J. Morris, P. (Swansea, W.) Swingler, S. Guy, W. H. Mort, D. L. Symonds, Maj. A. L. Haire, Flt.-Lieut. J. (Wycombe) Moyle, A. Taylor, H. B. (Mansfield) Hale, Leslie Murray, J. D. Taylor, R. J. (Morpeth) Hall, W. G. (Colne Valley) Nally, W. Thomas, George (Cardiff) Hamilton, Lieut.-Col. R. Nichol, Mrs. M. E. (Bradford, N.) Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Hardman, D. R. Noel-Baker, Capt. F. E. (Brentford) Thorneycroft, H. (Clayton) Hardy, E. A. Noel-Buxton, Lady Tiffany, S. Herbison, Miss M. O'Brien, T. Tolley, L. Hewitson, Capt. M. Oliver, G. H. Ungoed-Thomas, L. Hobson, C. R. Orbach, M. Walkden, E. Holman, P. Paling, Will T. (Dewsbury) Wallace, G. D. (Chislehurst) House, G. Palmer, A. M. F. Warbey, W. N. Hoy, J. Pargiter, G. A. White, H. (Derbyshire, N.E.) Hughes, Lt. H. D. (W'lverh'pton, W.) Paton, Mrs. F. (Rushcliffe) Whiteley, Rt. Hon. W. Hynd, H. (Hackney, C.) Paton, J. (Norwich) Wigg, Col. G. E. Irving, W. J. Pearson, A. Willey, F. T. (Sunderland) Jeger, G. (Winchester) Peart, Capt. T. F. Willey, O. G. (Cleveland) Jeger, Dr. S. W. (St. Pancras, S.E.) Perrins, W. Williams, W. R. (Heston) Jones, D. T. (Hartlepools) Piratin, P. Willis, E. Jones, J. H. (Bolton) Poole, Major Cecil (Lichfield) Wills, Mrs. E. A. Jones, P. Asterley (Hitchin) Popplewell, E. Woodburn, A. Keenan, W. Price, M. Philips Yates, V. F. Kenyon, C. Pritt, D. N. Younger, Hon. Kenneth Kinghorn, Sqn.-Ldr. E. Proctor, W. T. Zilliacus, K. Kinley, J. Randall, H. E. Lang, G. Ranger, J. TELLERS FOR THE AYES: Lavers, S. Rees-Williams, D. R. Mr. Joseph Henderson and Captain Michael Stewart.
NOES. Assheton, Rt. Hon. R. George, Lady M. Lloyd (Anglesey) Nield, B. (Chester) Baldwin, A. E. Gomme-Duncan, Col. A. G. Nutting, Anthony Barlow, Sir J. Gridley, Sir A. Orr-Ewing, I. L. Birch, Nigel Grimston, R. V. Peto, Brig. C. H. M. Boles, Lt.-Col. D. C. (Wells) Haughton, S. G. Prescott, Stanley Bower, N. Hinchingbrooke, Viscount Renton, D. Boyd-Carpenter, J. A. Hollis, M. C. Ross, Sir R. Bracken, Rt. Hon. Brendan Hope, Lord J. Shephard, S. (Newark) Braithwaite, Lt.-Comdr. J. G. Hutchison, Lt.-Cm. Clark (E'b'rgh W.) Shepherd, W. S. (Bucklow) Buchan-Hepburn, P. G. T. Hutchison, Col. J. R. (Glasgow, C.) Smith, E. P. (Ashford) Butcher, H. W. Jeffreys, General Sir G. Stanley, Rt. Hon. O. Byers, Lt.-Col. F. Joynson-Hicks, Lt.-Cdr. Hon. L. W. Stuart, Rt. Hon. J. (Moray) Carson, E. Keeling, E. H. Sutcliffe, H. Clifton-Brown, Lt.-Col. G. Langford-Holt, J. Taylor, C. S. (Eastbourne) Conant, Maj. R. J. E. Lipson, D. L. Teeling, William Crookshank, Capt. Rt. Hon. H. F. C. Lucas-Tooth, Sir H. Thomas, J. P. L. (Hereford) Darling, Sir W. Y. Macdonald, Capt. Sir P. (I. of Wight) Turton, R. H. Digby, Maj. S. W. Maclay, Hon. J. S. Wadsworth, G. Dodds-Parker, A. D. Macmillan, Rt. Hon. Harold (Bromley) Wakefield, Sir W. W. Drewe, C. Manningham-Buller, R. E. Williams, C. (Torquay) Duthie, W. S. Marlowe, A. A. H. Willoughby de Eresby, Lord Erroll, F. J. Marshall, D. (Bodmin) York, C. Foster, J. G. (Northwich) Mellor, Sir J. Young, Sir A. S. L. (Partick) Fox, Sqn.-Ldr. Sir G. Morrison, Maj. J. G. (Salisbury) Fraser, Maj. H. C. P. (Stone) Mott-Radclyffe, Maj. C. E. TELLERS FOR THE NOES: Fraser, Sir I. (Lonsdale) Nicholson, G. Commander Agnew and Mr. Studholme.
Question put accordingly, "That the Chairman do report Progress, and ask leave to sit again."
The Committee divided: Ayes, 75; Noes, 188.
Division No. 211.] AYES. [7.4 a.m. Agnew, Cmdr. P. G. George, Lady M. Lloyd (Anglesey) Nield, B. (Chester) Assheton, Rt. Hon. R. Gomme-Duncan, Col. A. G. Nutting, Anthony Baldwin, A. E. Gridley, Sir A. Orr-Ewing, I. L. Barlow, Sir J. Grimston, R. V. Peto, Brig. C. H. M. Birch, Nigel Haughton, S. G. Prescott, Stanley Boles, Lt.-Col. D. C. (Wells) Hinchingbrooke, Viscount Renton, D. Bower, N. Hollis, M. C. Ross, Sir R. Boyd-Carpenter, J. A. Hope, Lord J. Shephard, S. (Newark) Bracken, Rt. Hon. Brendan Hutchison, Lt.-Cm. Clark (E'b'rgh W.) Shepherd, W. S. (Bucklow) Braithwaite, Lt.-Comdr. J. G. Hutchison, Col. J. R. (Glasgow, C.) Smith, E. P. (Ashford) Buchan-Hepburn, P. G. T. Jeffreys, General Sir G. Stanley, Rt. Hon. O. Butcher, H. W. Joynson-Hicks, Lt.-Cdr. Hon. L. W. Stuart, Rt. Hon. J. (Moray) Byers, Lt.-Col. F. Keeling, E. H. Studholme, H. G. Carson, E. Langford-Holt, J. Sutcliffe, H. Clifton-Brown, Lt.-Col. G. Lipson, D. L. Taylor, C. S. (Eastbourne) Crookshank, Capt. Rt. Hon. H. F. C. Lucas-Tooth, Sir H. Teeling, William Darling, Sir W. Y. Macdonald, Capt. Sir P. (I. of Wight) Thomas, J. P. L. (Hereford) Digby, Maj. S. W. Maclay, Hon. J. S. Turton, R. H. Dodds-Parker, A. D. Macmillan, Rt. Hon. Harold (Bromley) Wadsworth, G. Drewe, C. Manningham-Buller, R. E. Wakefield, Sir W. W. Duthie, W. S. Marlowe, A. A. H. Williams, C. (Torquay) Erroll, F. J. Marshall, D. (Bodmin) Willoughby de Eresby, Lord Foster, J. G. (Northwich) Mellor, Sir J. York, C. Fox, Sqn.-Ldr. Sir G. Morrison, Maj. J. G. (Salisbury) Fraser, Maj. H. C. P. (Stone) Mott-Radclyffe, Maj. C. E. TELLERS FOR THE AYES: Fraser, Sir I. (Lonsdale) Nicholson, G. Sir Arthur Young and Major Conant.
NOES. Adams, Richard (Balham) Evans, John (Ogmore) Macpherson, T. (Romford) Adams, W. T. (Hammersmith, South) Fairhurst, F. Mainwaring, W. H. Allen, A. C. (Bosworth) Farthing, W. J. Mallalieu, J. P. W. Alpass, J. H. Fletcher, E. G. M. (Islington, E.) Manning, C. (Camberwell, N.) Attewell, H. C. Foot, M. M. Manning, Mrs. L. (Epping) Austin, H. L. Foster, W. (Wigan) Mathers, G. Awbery, S. S. Gibbins, J. Mayhew, C. P. Barton, C. Gibson, C. W. Middleton, Mrs. L. Bechervaise, A. E. Gilzean, A. Mikardo, Ian Berry, H. Glanville, J. E. (Consett) Mitchison, Maj. G. R. Bing, G. H. C. Gordon-Walker, P. C. Monslow, W. Binns, J. Greenwood, A. W. J. (Heywood) Morris, P. (Swansea, W.) Blenkinsop, Capt. A. Grey, C. F. Mort, D. L. Blyton, W. R. Grierson, E. Moyle, A. Boardman, H. Gunter, Capt. R. J. Murray, J. D. Bowden, Flg.-Offr. H. W. Guy, W. H. Nally, W. Braddock, Mrs. E. M. (L'pl, Exch'ge) Haire, Flt.-Lieut. J. (Wycombe) Nichol, Mrs. M. E. (Bradford, N.) Braddock, T. (Mitcham) Hale, Leslie Noel-Baker, Capt. F. E. (Brentford) Brown, George (Belper) Hall, W. G. (Colne Valley) Noel-Buxton, Lady Brown, T. J. (Ince) Hamilton, Lieut.-Col. R. O'Brien, T. Bruce, Maj. D. W. T. Hardman, D. R. Oliver, G. H. Burden, T. W. Hardy, E. A. Orbach, M. Burke, W. A. Henderson, Joseph (Ardwick) Paling, Will T. (Dewsbury) Callaghan, James Herbison, Miss M. Palmer, A. M. F. Castle, Mrs. B. A. Hewitson, Capt. M. Pargiter, G. A. Chamberlain, R. A. Hobson, C. R. Paton, Mrs. F. (Rushcliffe) Champion, A. J. Holman, P. Paton, J. (Norwich) Chetwynd, Capt. G. R. House, G. Pearson, A. Cocks, F. S. Hoy, J. Peart, Capt. T. F. Perrins, W. Collins, V. J. Hughes, Lt. H. D. (W'lverh'pton, W.) Piratin, P. Colman, Miss G. M. Hynd, H. (Hackney, C.) Poole, Major Cecil (Lichfield) Comyns, Dr. L. Irving, W. J. Price, M. Philips Corbet, Mrs. F. K. (Camb'well, N.W.) Jeger, G. (Winchester) Pritt, D. N. Crawley, Flt.-Lieut. A. Jeger, Dr. S. W. (St. Pancras, S.E.) Proctor, W. T. Crossman, R. H. S. Jones, D. T. (Hartlepools) Randall, H. E. Daggar, G. Jones, J. H. (Bolton) Ranger, J. Daines, P. Jones, P. Asterley (Hitchin) Rees-Williams, D. R. Dalton, Rt. Hon. H. Keenan, W. Reeves, J. Davies, Edward (Burslem) Kenyon, C. Reid, T. (Swindon) Davies, Ernest (Enfield) Kinghorn, Sqn.-Ldr. E. Rhodes, H. Davies, Harold (Leek) Kinley, J. Roberts, Goronwy (Caernarvonshire) Davies, Haydn (St. Pancras, S.W.) Lang, G. Royle, C. Davies, S. O. (Merthyr) Lavers, S. Sargood, R. Deer, G. Lee, F. (Hulme) Scollan, T. Delargy, Captain H. J. Lee, Miss J. (Cannock) Shawcross, C. N. (Widnes) Diamond, J. Leslie, J. R. Silverman, S. S. (Nelson) Dodds, N. N. Lewis, A. W. J. (Upton) Simmons, C. J. Driberg, T. E. N. Lindgren, G. S. Skeffington, A. M. Durbin, E. F. M. Lyne, A. W. Skeffington-Lodge, T. C. Dye, S. McGhee, H. G. Smith, Capt. C. (Colchester) Ede, Rt. Hon. J. C. Mack, J. D. Smith, S. H. (Hull, S.W.) Edwards, John (Blackburn) McKay, J. (Wallsend) Snow, Capt. J. W. Edwards, W. J. (Whitechapel) McLeavy, F. Sorensen, R. W. Soskice, Maj. Sir F. Tiffany, S. Williams, W. R. (Heston) Stamford, W. Tolley, L. Willis, E. Steele, T. Ungoed-Thomas, L. Wills, Mrs. E. A. Stubbs, A. E. Walkden, E. Woodburn, A. Swingler, S. Wallace, G. D. (Chislehurst) Yates, V. F. Symonds, Maj. A. L. Warbey, W. N. Younger, Hon. Kenneth Taylor, H. B. (Mansfield) White, H. (Derbyshire, N.E.) Zilliacus, K. Taylor, R. J. (Morpeth) Whiteley, Rt. Hon. W. Thomas, George (Cardiff) Wigg, Col. G. E. TELLERS FOR THE NOES: Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Willey, F. T. (Sunderland) Captain Michael Stewart and Thorneycroft, H. (Clayton) Willey, O. G. (Cleveland) Mr. Popplewell.
NEW CLAUSE.—(Easter offerings.)
Easter offerings made to clergymen or other ministers of religion, up to a maximum of fifty pounds in any one year, shall not be regarded as income for any of the purposes of the Income Tax Acts for any future year of assessment.—[ Mr. Lang. ]
Brought up, and read the First time.
:I beg to move, "That the Clause be read a Second time."
I much regret having to detain the Committee at this hour upon this matter. I would much rather have made a speech at some other time in the day, but the Committee has waited long for it, and I must do my duty. This is not a new matter. It was debated some three years ago, when, after a very full Debate, a vote was taken and revealed, as I think is still the case, a considerable support for this Clause in all parts of the Committee. It is essentially not a party matter, and essentially not a sectarian matter. There is support for the Clause, as I suppose there may be a little mistaken opposition to it, in all parts of the Committee.
Prior to 1946 there had been no Debate since 1925, so the subject has not been unduly flogged in recent years. At any rate, owing to the large number of new Members of Parliament, it seems to some of us right that there should be an opportunity to test feeling once again on this matter. I am sure if any hon. Members have a feeling that this Clause is an attempt to secure favoured treatment for a section of the community, that is not in my mind at all, and I am quite sure, is not in the minds of hon. Members who support me. What we desire is that gifts which are of a purely voluntary nature and are made by members of congregations entirely as they are disposed to, without any compulsion at all, should not be brought within the purview of taxation. I am not going to argue the case on the poverty of the clergymen. There is a great deal to be said of the poverty amongst ministers of religion, but that is not a matter which I would desire to use in support of this Clause. It is a matter which ought to be attended to, and I am glad to think it is slowly but surely being redressed in most, at any rate, of the important branches of the Church.
7.15 a.m.
I am concerned with two things mainly. One is that this tax, whatever its effect may be upon the recipients of Easter offerings and the like, is a very serious tax upon the generosity and interest in charity of large numbers of people. What, in effect, happens? There are people who are kind to some of us and now and then send us gifts. Those gifts we thankfully receive and put to good use. But they are not taxable. If I am sent a parcel of books, or if somebody sends me the money to buy books, that is not taxable; but if people place their donation upon an offertory plate in order that I may buy books or in some way be relieved of certain obligations, that becomes taxable. In other words, the effect is that the cheque of the richer patron sent to me privately as a gift at Easter or Christmas is not taxable, but the 5s. placed upon the offertory plate by people who desire to recognise perhaps their own gladness at the great Easter festival, or their personal sense of gratitude to the man to whom it is given, is taxed. If somebody wishes to give me a £5 cheque, they may do so, and the £5 is mine. If poorer people wish to do it, nearly half of what they give goes willynilly to the Chancellor. That is a very serious tax upon public generosity. I expect that the Chancellor is a little embarrassed, because, himself a distinguished son of a clergyman, I am sure that he must have a great deal of feeling with me. It may well be that my words would send him right over and that he is escaping temptation by his present absence from the Committee.
I do not want to go into matters which have hitherto been discussed on the question of the law. It is true that for some 60-odd years, after the reintroduction of Income Tax, there was no attempt made to tax Easter offerings, and it was a decision, not in the King's Bench Division, but in the Court of Appeal, confirmed in another place, which actually made these incomes taxable. There are two things in which I would like to ask the Committee to try to follow with me. It will be said, I dare say, that if this concession were given, not only would it favour certain people at a certain time, but we would be asking for an advantage that other people do not get. Yet I read on the tape earlier in the day of a large sum of money, I think something like £1,150, which had been presented to a wellknown footballer, and no doubt it was very well earned and deserved. That, I understand, is not subject to tax. [HON. MEMBERS: "Yes."] Then either the law has been changed, or the Commissioners have been active in recent years. It was distinctly stated by Sir Kingsley Wood that one benefit and even two benefits for a cricketer or a footballer did not come within the provisions, because it was not a regular income. I will not trouble the Committee by looking up the volume, but I hope that one of my hon. Friends will look up Volume 390 and Sir Kingsley Wood's speech, which I do not think I have misread or misinterpreted. Plainly stated, it was not taxable because in a different category. In any case, whether it is, or is not, is not really germane to what I have to say.
I have no desire to rope other people into taxation any more than I have that those I support should escape their lawful taxes, but I cannot see how these offerings, given voluntarily, can be held to be either fees or salaries, or even perquisites. Fees paid to ministers of religion are, of course, taxable. They are nothing like as opulent as many people imagine. The majority of the fees paid to ministers and clergy are for the dubious benefits of marriage and burial of their members and parishioners. In practice there is very little gain from that. It is, I know, the habit of most ministers when they officiate at funerals to hand back their fees, especially in cases where people are comparatively poor. I myself have never in any circumstances taken a fee for the burial service of people who are in anything like reduced circumstances nor, I think, would any minister other than a chaplain, who is paid a regular salary for officiating at a cemetery and is of course in a dif- ferent position. Very little money like that comes to ministers. In fact, the only occasion of profiting like that is when wealthy people die, for even in death the rich are more profitable to those of us who have to depend on serving them. The size of the fee depends not on the length of the service, nor indeed upon services rendered, but entirely upon the nature or quality of the grave. The fee for a grit grave is double the fee for an ordinary grave, and the fee for interment in a vault is double that again.
Then there is the question of marriage. We are considered to make a great deal of money out of that. There again it is often the practice—I have done it again and again where I married working class girls—to give back the fee, and I have often been a wee bit anxious about them. It is a good job that love is blind. I have often, when leaving the church after a ceremony, heard disappointed friends ask, "What on earth did he see in her? I have sometimes wondered the same. The fees are not anything on which ministers may fatten and, indeed, sometimes the minister has taken another course where the fee has been slow in coming in. He has nudged the bridegroom and pointed out that it is customary to pay something in the hope that the bridegroom may be tempted to pay rather more than the fee. The bridegroom asks what he ought to pay. The minister says in a fit of optimism, "You had better pay what it is worth to you." The bridegroom looks at the bride. He passes a shilling over to the minister. The minister looks at the bride and gives 11½d. change. There is very little gained out of it.
I do not want anybody to think that in this new Clause we are asking for more money for men who are fabulously rich as a result of the work they do. They are in many cases scandalously underpaid, though that is no part of my argument. I want to do everything I can, and as long as I am able, that will help to make freer the flow of generosity of Christian charity. There is not too much opportunity in our life for this kind of impulse, and as we regulate our society, get it upon a more orderly and secure basis, the opportunities may become still less. Here at least is one of the oppressed classes I can still champion, and I hope that the Committee will listen favourably to what I have to say.
It is always asked in these Debates, why do we fix upon Easter Sunday? Why not have it at other times? Why not, indeed? One must begin somewhere and Easter is a glorious time. It is the queen of the Christian festivals, and I can imagine no better occasion or an occasion more likely to stimulate people. There is a feeling of thanksgiving and of hope and of triumph, and we have great occasion for that. We have all come through a period of danger, nearly disaster, and we were delivered, not of ourselves—
:I am very glad to be associated with the hon. Member for Stalybridge and Hyde (Mr. Lang) in supporting this new Clause. It is one which, as the names on the Order Paper show, appeals to all sides of the Committee and all sorts of religious opinion. It is not a party question, nor is it a sectarian question. I am sorry, although I appreciate that he has been here throughout the night, that the Chancellor could not be present to hear this Debate. It is one of very real importance and I would appeal to him not so much as a financier but as the head of the Treasury and the adviser on all our financial affairs as they react upon the individual.
There are two principal ground's for making this request to the.Treasury—two principles from which many details flow. I do not propose to deal with the details as I hope other hon. Members will feel they can do so. The basic ground, which was touched upon by the hon. Member for Stalybridge and Hyde, is that these offerings which are made at Easter, and are at present, owing to a decision of the High Court and Court of Appeal, liable for Income Tax, are freewill offerings. They are not intended to be and are not in the same category as ordinary earned income of any man or woman whatever their walk in life may be. These offerings made at Easter time, and at Easter time only, are made in church for the particular purpose of being presented as a thanks offering to God and offered up on His holy table for His blessing in order that they may be devoted to the particular purpose of enabling the minister of His church to carry out his duties more effectively and more properly. That is a different form of contribution, going through a different process and made in a different way from anything else which is contributed by way of tips or gifts or anything which can otherwise be conceded as a freewill offering.
This gift is the only way in which the poorest members of the community can signalise their gratitude and appreciation to the minister who has attended to their spiritual needs throughout the year. That may sound an extravagant statement but it is not really so. People who are more wealthy can recognise what the minister has done in other ways. They can give him a cheque or a present and help him in this or that way; but the poorest member of the community cannot, for very shame, go to the rectory or vicarage door and tender him sixpence, threepence, some stamps, or whatever it may be. It is not in keeping with the dignity of the position and the relationship between the parishioner and the priest. The only opportunity they have, therefore, is on the occasion of the one offertory collection for the year which is destined to go to meet the needs and to assist the requirements of their parish priest. That is the first line of principle upon which we base our plea to the Treasury.
The second line is a much more prosaic and mundane one, which I hope the Financial Secretary will not mind my saying I have no objection to addressing to him while I was hoping to address the other one to the Chancellor. This is the more technical aspect of the affair. There is every objection to this particular tax from the Treasury point of view because it is the easiest possible thing in the world to avoid. That may sound something of a paradox, but if the Church wish to avoid this tax upon their offerings they could do it easily. I am sorry to say that as battle after battle has been fought for the freedom of this gift from tax, it is becoming more and more usual that it shall be avoided. It can be avoided easily by the gift being made to the diocese or the Bishop instead of to the person as a free will offering, and then being distributed in some other way. It can be made, by those who can afford to give slightly larger sums, by donation to the parochial church council who, instead of giving an Easter gift to the parson can then reward him for a specially good sermon at Whitsuntide, or any other season of the year by making him a present.
It can be avoided in any number of ways. I have only outlined two because I do not want to detain the Committee unnecessarily but it can be seen how easy it is to avoid it. It is because the Church does not wish on moral and ethical grounds to step aside from what the highest court of justice in the country has indicated is their proper due, and also because of the deep seated traditional and very fundamental habit of granting an Easter offering to parish priests, that the practice is adhered to even at present when it is found to result in about one half of the gift going to the Treasury. Upon those two main lines of principle, I urge the Government to reconsider this matter. The Chancellor this morning has already seen fit to move a new Clause for the purpose of reversing a decision of the senior court of appeal in this country. I do ask him, in all sincerity, to accept, if not these actual words, then, at any rate, such words as he may find necessary, upon advice, to meet what is quite evidently the desire to achieve the same object. In doing so, I can say, with absolute certainty, that he will grant an immense amount of relief to the feelings of the whole of the Anglican community and to the vast majority of the Nonconformists as well.
:I find myself in agreement with the arguments which have been advanced by the mover and seconder of this Clause, but I cannot understand why they have put in the Clause "up to a maximum of £50," and no explanation of that has been given. Their argument was based on the fact that the Easter offering was a gift, and not income, and I agree with that, but I cannot see why, if it is a gift up to £50, anything above that figure should not come in the same category. I believe it would have been more logical if there had not been this distinction, and I think the mover himself would have preferred that Easter offerings should be free from tax, without any restriction on the amount concerned. It may be that the only reason why the limit of £50 was put in was because the mover did not have the confidence in the sense of justice of the Chancellor of the Exchequer that I have. I consider that the Easter offerings should be entirely free of tax.
As I agree also that this is not a sectarian matter, I am very glad to support the principles of the new Clause. The clergy of my own denomination are not affected by it, Christian clergy, however, have so often pleaded the cause of the Jew that, as a Jew, I am very glad to plead the cause of the Christian clergy. A tax should not only be a just and fair one, but it should appear to be just and fair to those who have to pay it. I do not believe we can convince either those who make the Easter offering or those who receive it that this gift should be subject to tax. It is given perfectly voluntarily and as a freewill offering, and it is not intended by those who give it that it should form part of the income of the clergyman to be used by him for his ordinary means of livelihood, but, rather, that he should use this gift to derive some special pleasure for himself—perhaps enjoy a well-deserved holiday, or buy some books, or pictures or some other objects which will give him pleasure. It is for that reason that they regard the Easter offering as a gift and not as part of the clergyman's ordinary income.
Therefore I ask what is the objection to the Chancellor accepting this Clause? Why has it been rejected hitherto? I understand that the objection raised in the past has been that, to accept this Clause would open a door which might result in abuse of the principle laid down in it. I think the Chancellor would agree that justice ought to be his first consideration. If a tax on Easter offerings is unjust, it ought not to be imposed, and it is certainly the view, both of those who receive the gift and those who give it, that the tax is an unjust one. Cannot the Chancellor, having regard to all the circumstances, consider this Clause with sympathy, and cannot he find some way by which he can overcome what he fears might be an abuse of it. After all, if he is not satisfied that the Clause as worded is satisfactory, but if he will accept the principle behind it, I am sure that my hon. Friends will be willing to leave the wording to be drafted in such a way as will prevent any abuses which he thinks might be created by the acceptance of the present Clause.
There is an old Latin tag with which I am sure the Chancellor is familiar: "Fiat justitia ruat coelum," which, translated, means, "Let justice be done though the Heavens fall." I am sure that the Chancellor is not going to say that, if he makes this concession, the Heavens are likely to fall or even that his Budget would be much affected by it. The amount of money involved in doing this act of justice is very small indeed. It will mean very little to the Chancellor of the Exchequer. On the other hand, it will mean a great deal to the clergymen who receive these gifts. I, too, do not wish to stress the question of poverty, but I think the Chancellor might ask himself to whom this injustice is being done. I am sure he will agree with me that the clergy do play a very important part in the life of the community. I am not referring only to their spiritual ministrations; outside of those, they do a great deal of good. They give a lead in various directions, and they do not confine the services they render to members of their own community only.
It seems to me to be particularly hard that this injustice should fall on men such as these. I need hardly remind the Chancellor that the clergy have provided this island with sons who have served the nation in various walks of life in a most distinguished way. They have made a very great contribution to the national life, and there is, probably, no body of men whose record can compare with theirs. While I am not asking for favoured consideration on their behalf, I feel that the Chancellor should hesitate before anything which looks like injustice is inflicted on them. Therefore, I join in the appeal which has been made to him by my hon. Friends. I should like there to be no limit at all. I do not think that, in the majority of cases, the actual amounts received by individual clergy would amount to much above £50, but to limit it to that sum would imply making a concession to which they are not strictly entitled. The clergy feel that the justice of their claim ought to be recognised and that Easter offerings should certainly be regarded as voluntary gifts, given for the most part not by the wealthy, but by the poorer members of the congregation in appreciation of the many acts of kindness and good done on their behalf by their clergy. The rich make their gifts in another fashion. I hope that, in the light of all these considerations, the Chancellor may be able to give a sympathetic reply to the appeal to accept the new Clause.
7.45 a.m.
:My hon. Friend the Member for Stalybridge and Hyde (Mr. Lang) proposes a new Clause which will exempt up to £50 of any Easter offering from the incidence of Income Tax. The hon. Member for Cheltenham (Mr. Lipson) and the hon. Member for Devizes (Mr. Hollis), who has not yet had an opportunity to speak, would like us to extend it to all Easter offerings, regardless of what the amount put into the plate may be. On the face of it, there is a good case for this, although I hope to show that the mere fact that these offerings are now subject to Income Tax cannot be said to be an injustice, as the hon. Member for Cheltenham said several times during his speech. This issue has been raised before. It comes up, not every year, but we get it from time to time down the years. I think that it came up last year, when we had a division, and the idea was rejected. If we look at this fairly, and leave sentiment out of account, income of this kind must be part of the general income of the clergyman who receives it. There can be, it seems to me, no other way of looking at this matter. It is received by the clergyman, and if he was not an incumbent of a church, or the minister of a chapel, he would not get the Easter offering. He might get more if he is liked than if he is disliked, but the income to a particular clergyman is by virtue of his office.
:It comes to much less now that it is taxed.
:We have a law by which all Chancellors of the Exchequer have to abide, and Income Tax is levied on all income, and nobody has put up a case to show that this is not income in the ordinary sense of the word. More than one case has gone to the House of Lords, and the conclusion has been that this is income and must be subject to the incidence of Income Tax. Many clergy, I agree, are poorly paid, but that is a matter for the Church conscience. We have to administer the law justly between one individual and another, and if clergy are poorly paid, well, so are other sections of the community, and we cannot rest our needs on that plea. If we take a page of Crockford, at random, and take out two cases on that page, we find this. One clergyman gets £430 in the course of the year, £1 of which came to him by way of Easter offerings. Another, a much more fortunate man, received £648, of which £127 was by way of Easter offering. Straight away you get an anomaly as between one clergyman and another. II you charge no tax on this it means that one gets away with—and I use the phrase advisedly—£127, and the other man has to be content with £1. Therefore if we absolve Easter offerings from tax it seems to us that it would be unfair.
The hon. Member for Stalybridge and Hyde seemed to think that footballers and cricketers were exempt. That may be true in a given case. There is a case where a cricketer, I think, received a benefit, and the courts held that it was a once-for-all thing, and that therefore it was not subject to tax. On the other hand, however, a benefit accorded to a footballer has definitely been held to be subject to the tax in that it is part of his expectation: it comes regularly to a footballer. It is something he expects, and in a sense it is almost part of his contract that he should get a benefit. Therefore, it is part of his regular income. But a cricketer may have no such expectation. He may get a benefit as a friendly gesture at some time in his career, and that should be considered not as part of his regular income but as a windfall.
The arguments against the proposal on the facts are that Easter offerings quite definitely must be considered as income. They are regular, they go with the office, and they must therefore be considered as emoluments with the other income which goes to a particular clergyman. The fact that the payment is voluntary and not contractual makes, in Income Tax law, no difference whatever. In that sense they do not differ from bonuses or tips, or even, as some hon. and learned Friends will bear us out, from barristers fees. All barristers pay Income Tax on fees, although they are not able to sue for them if a solicitor is so minded as not to pay. Should a barrister be in any different category from a clergyman in a case of this kind? I am sorry to say that my right hon. Friend cannot accept this Clause. If we desire to help, as we all do, clergymen, who do a great work in most parishes, and who deserve all the help and assistance we can give them, this unfortunately is not the way to do so. If we do this for clergymen and their Easter offerings, we shall have to do it for all sorts of analogous persons who have, or say they have, equal claim to similar treatment. Therefore, for the reasons I have given, as well as for those I have not given, I am sorry to say that my right hon. Friend must resist the Clause.
:I must say that I am not at all surprised at the line the Financial Secretary has taken. It seems to bear a strange familiarity to the argument put up in 1943 on this subject by the then Financial Secretary, who was not myself. But in spite of the fact that it is a very normal line I am not myself persuaded that it is the right line. If a Division is taken I shall support this Clause because I put two tests to this question. The first is, if this concession were made, would it in fact adversely affect anyone else? Would it indeed, as the Financial Secretary said in his closing words, cause a great demand that the same concession shall be made in analogous cases? On that question I would say "no," because I think the hon. Member for Stalybridge and Hyde (Mr. Long) put the case extremely well, and the important part was, I thought, that this tax is undoubtedly a deterrent to would-be givers. They just do not understand it, and I must say it is, in a way rather hard to understand because the text book Halsbury's-Laws supports the analogy which the Financial Secretary has in mind. It puts the Easter offering of the clergy in the same category as tips to a waiter or the permitted commissions or presents of owners of racehorses to winning jockeys.
It seems to me most extraordinary to say that clergy of all denominations, waiters, and jockeys are in the same class and must be treated alike. I find that very hard to explain because while a waiter is, presumably, tipped for some direct personal service he has rendered to whoever gave him the tip, and the jockey who receives a permitted commission or present from the owner of the horse he has ridden is again in a very intimate personal relationship with that man, but when a clergyman receives an Easter offering—I use clergymen because It affects all kinds of clergymen—what is put into the offertory plate, as the hon. Gentleman said, is not necessarily a recognition of what he has done for me or for my family. That may be a factor in it, but it is also representative of the good work he is doing in the parish or in the circuit, or whatever it may be to which he ministers. That is part recognition of what he is doing as a man through the whole field of his activities, and is not restricted to what he has done for any individual.
:If the parishioner then made his gift to the Church in order to further the work of the Church or to make it more easily possible for the Church to increase the stipend of the minister, I take it that would not be taxable.
:I do not think it would achieve quite the same result because it would not be linking it up with the particular work of the parish. That is one of the aspects of the question which it is as well to weigh in the balance of the argument. If the question is that by doing this we shall have to drag in a whole lot of other cases, I think the answer is it would not necessarily do that.
The second test I put is this. If this is done will it, in the long run, impair the clergy or the Church or the Churches? Will the fact that they have got some definite special advantage in the question of Easter offerings react against them? I find it very had to think it will. So, by these two tests, I am inclined to support the Amendment. I was rather fortified in my views by accounts which I saw recently and by chance, of a certain place where they had a new incumbent. It was very noticeable that for one reason or another the Easter offerings had dropped and dropped, and then the new man came, and at his first Easter he got an offertory quite different in magnitude to any which had been given in years past. That being so, it makes it very difficult to accept the argument that in Crockford, as the Financial Secretary has just told us, the average Easter offering is considered over a period as part of the living because it does vary with the individual and the assessment the parish puts upon the individual's work.
The third difficulty that I see in the speech of the Financial Secretary is this. He rejected the new Clause on the grounds that once you open the door, you have to open it elsewhere, and that the existing arrangement is that this income is part of the general income of the clergyman by virtue of his office. Then he went on to say that his right hon. Friend cannot do it because he is held by the general body of the Income Tax law, by which he has to abide. Of course, he has to abide by it until it is changed. Of course, the Chancellor could not make any ex gratia arrangement of this kind, but if the Committee accepted this new Clause, to that extent the scope of the Income Tax law would be changed, and that would be the end of the story. It is no kind of argument to say that the Chancellor cannot do it because he is tied by the body of the Income Tax law.
8.0 a.m.
To return to the first point made by the hon. Member for Stalybridge and Hyde, I think this is a deterrent to givers, because no ordinary parishioner can understand why this particular gift should be taxed. He looks upon it as a gift, and the fact that everybody joins in giving it on a particular day does not make it any easier for the ordinary individual to realise why it should be taxed. There would be no outcry anywhere if this was done, and the loss to the Revenue would be quite small, and it would be doing an act of justice in this case. At any rate, it would be indicating that we think there has been something wrong in the legal decision which was reached about 60 years after the Income Tax law came into being. I do not put my argument on the grounds of poverty, because I do not think that is a relevant argument. This is a present, and it seems a very hard thing to tax a present for service rendered. It is given in a quite different way, and in quite different circumstances, from any other gifts. I hope the new Clause will be accepted.
:It is because I was so disappointed with the remarks made by the Financial Secretary, and because I am so firm in my support of what has been said by the right hon. and gallant Member for Gainsborough (Captain Crookshank), that I venture to say a few words in support of this new Clause. The hon. Member for Stalybridge and Hyde (Mr. Lang) has given the Committee most of the cogent and substantial reasons which exist for pressing on the Chancellor this change in the law. It is utterly wrong to penalise in any way the free giving out of the kindness of their hearts and natures, of ordinary men and women. There is something almost priceless, I feel, in an offering made in the right spirit, and as a mark of good will and affection for an exponent of the imponderable spiritual values. It is on that basis that this gift at Easter is made. To tax such voluntary offerings is an affront to the generous impulses of ordinary churchgoers. The Committee may be interested to hear an extract from a letter from one of my constituents, who has put the case remarkably well. He writes:
"People give the Easter offering as a present out of an income which has already been taxed, and not as a fee for work done. They certainly do not wish to see half the amount go to a greedy Chancellor of the Exchequer—"
:Shame.
:I will add a word about that in a moment. He goes on: free. It was felt by my hon. Friend the Member for Stalybridge and Hyde—quite rightly, I think—that so to limit the amount would be to exclude the possibility of abuses which might otherwise develop. The total amount which it would cost the Exchequer to free these offerings altogether would be something in the region, I believe, of a meagre sum like £150,000 a year.
There are undoubtedly ways and means of quite properly getting round the payment of tax if the churchwardens or others in charge of accounts are astute. But why, I ask, should the traditional and pleasingly straightforward old custom of saying "Thank you" to our parsons be warped and spoiled by any form of subterfuge, however, legal it may be? This custom has been sanctified by centuries of observance, and I would like to see it restored in all its full and original significance.
This tax on Easter offerings perpetuates class distinction in a very undesirable way. Many wealthy parishioners of a parson go away at Easter to the seaside and send a cheque to him as a free gift which is not counted for tax purposes. It may be so given, at any rate, that it is not counted for tax purposes. On the other hand, the poorer members of his congregation remain at home and give perhaps half a crown, five shillings or ten shillings in place of the much smaller sums they would normally put in the plate on an ordinary Sunday, and those sums are roughly halved. Such people run the risk as I see it, of being regarded as mean and ungrateful compared with their few well-to-do neighbours who send large cheques. It amounts, therefore, to this, that this is really a tax on the shillings and half-crowns of poor people and not on the £5 notes of the richer parishioners of the clergy.
I hope that the Chancellor realises how much the Easter offering means to many harassed, overworked and underpaid parsons and their families. That they are so often underpaid and hard up is a factor, of course, which one cannot entirely dismiss from one's mind in considering this, but it is not a factor which should be stressed, nor did my hon. Friend the Member for Stalybridge and Hyde base his case on that factor. Great numbers of people are most upset and disturbed by this taxation of Easter offerings. They feel that it insults their consciences and is radically wrong. I feel that myself. It would reassure such people and re-establish a healthy feature in the religious life of this country, if the change that is being advocated today is made. I hope that the Chancellor will look at this matter again. I would add that if this Amendment is carried to a Division, I will gladly give it my support.
:I entirely agree with the Financial Secretary in refusing a merely sentimental approach to this problem, and I see that he cannot make a concession because clergymen are ill-remunerated or a deserving class of people. He must approach the matter hard headedly. But the issue seems to me to be whether he is correct in saying that the Easter offering is part of the general income of the clergyman in the ordinary sense of the word. A clergyman receives a contractual income and there is no doubt about it that that should be taxed. He receives certain fees for services and there is no question that they should be taxed. Over and above that he receives the Easter offering. Whether the Easter offering he receives is generous or low or if he receives none, he still has the same canonical duties to perform. It is not a parallel to tips because if a clergyman does receive what one might call tips in addition to the Easter offering, he does not pay on them. It is not strictly parallel to the non-contractual question in relation to a barrister, because the barrister makes the whole of his income from a non-contractual state of affairs.
My right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) is quite right in saying that these are gifts. Earlier this morning, or last night, I forget which, the Chancellor was congratulating us, or himself, on our moderation. He gave a long list of countries, Sweden, Spain, France, Belgium and, I believe, New Zealand, which had gift taxes and it was to our great advantage that we had not a gift tax in this country. I suggest that it is a very grave anomaly that this tax should be made on the Easter offering The anomaly is made more ridiculous by the fact that if we give our offerings to the clergyman in any other form than that traditionally sanctioned by Christian custom, we can avoid Income Tax, whereas under the traditional Christian form the clergyman has to pay Income Tax. I most strongly associate myself with what seems to be a widespread feeling in all quarters of the Committee.
:The Financial Secretary based his argument mainly on the desire—a very proper desire on his part—to appeal to principles laid down in the Finance Acts. But the hon. Member for Devizes (Mr. Hollis) has just pointed out that that is most inconsistent and I suggest that for that reason this part of his argument must go.
:It is not my argument but the argument of the House of Lords. They decided that this was analogous to tips and so on and was income.
:It may be the argument of the House of Lords but the Financial Secretary and the Chancellor of the Exchequer have two alternatives. One is to follow that argument, as has been said, willy nilly, and the other is to think about it again. We suggest that they should think about it again. There is one matter about which everyone seems to be reluctant, a little squeamish, and that is the question of poverty.
8.15 a.m.
I suggest that it should not be approached from the point of view of sympathy with individual clergymen. It should be approached from the point of view of making the Church the best unit to fulfil the very great need which we have for it in the country. We do not want rich priests. That is not likely to result from the suggestions that have been made this morning. That is not what we want, but extreme poverty among the priesthood cannot make for efficiency. Knowing the Financial Secretary as we do, I am sure he did not intend to be in any way cynical when he suggested that the Churches should somehow find the money for themselves. In fact, we know that it is very difficult indeed for them to find it. We want the churches to do a good job. This is a simple way of helping them. For those reasons I ask the Chancellor to consider favourably the suggestions that have been made.
:The plea that Easter offerings should be exempted from Income Tax has been put by hon. Members on all sides of the Committee with very great sincerity. Frankly, I was disappointed with the speech of the Financial Secretary and the line which he took. He did not mention something which I hoped he would tell us, namely, just how much this concession, if it were accepted, would cost the Treasury. Perhaps the Chancellor or the Financial Secretary, if he speaks again, could give us that information because it is of considerable importance. My own view is that the benefits which would accrue to clergymen in poor livings by a concession in respect of a tax free Easter offering would outweigh immeasurably any loss to the Treasury. I agree with hon. Members that the plea of poverty is not the correct plea on which to argue this case. I am quite certain that most parishioners who put money into the plate on Easter Sunday regard it as a gift and in no way as part of the clergymen's income. I am open to correction if I am wrong—and if so I have no doubt I shall be contradicted—but I think I am correct in saying that the incumbent receives the Easter offering not as of right but as of courtesy, and it is within the power of the churchwardens to withhold the Easter offering or to divert it far any other purpose.
I do not believe that any section of the community has a more difficult furrow to plough today than the incumbent of a living worth perhaps £300 a year who has a family to educate and a large rectory to maintain. He may have a widely scattered parish or even two united parishes the incomes from which do not amount to a stipend of £300 a year net. For that incumbent, in far too many cases, the sum represented by the Easter offering is the principal means—very often the only means—by which he can attempt to bridge the gap between his income and expenditure. The Financial Secretary took cover behind the fact that the Treasury's decision to regard the Easter offering as income was based on a decision in the House of Lords. Surely if he agreed to amend the Finance Bill their Lordships' interpretation would have to be amended, and I am surprised that he should treat so respectfully a decision given in another place when it is convenient to do so after taking an entirely different line about their Lordships powers when they conflict with his political views. I think the Chancellor will be the first to appreciate that, the difficult days in which we live, have certainly increased the importance of the clergy in the life of the community. Their own difficulties in discharging their obligations adequately have greatly increased also.
:I speak with real reluctance, not because of the hour, but because I have a genuine sympathy with the case put by my hon. Friends. I did, indeed, share their views when this matter was raised in the last Parliament. On that occasion, I was considerably impressed by the case put up by the former Chancellor. But, despite my great admiration for the work of the clergy and my sympathy with them, I have been driven, quite irresistibly, to the conclusion that the Easter offering is, in the main, a more or less regular and expected part of income. I cannot help feeling that the hon. Member for Bedford (Mr. Skeffington-Lodge) was wrong when he made the rather special point about class distinction and wealthy parishioners who could send a £5 cheque. I am not an expert on Income Tax, but I should have thought that, if a cheque comes regularly at Easter, the clergyman ought to return it as part of his income, and I have no doubt that he does, if he is conscientious, as clergymen are.
:I believe that, if it is sent just outside the Easter period, it need not be returned for taxation purposes.
:I am pretty sure that, if it is sent every year at any period of the year, it should be counted as part of income.
The point has been made that this is a personal tribute to the clergyman and this is very largely true. The Easter offering, if he is not very popular or not doing his work too well, tends to drop off in consequence. That is also true of the income of many professional men, such as doctors or writers, whose professional success depends to a considerable extent on their personal qualities. My hon. Friend said that it is perfectly true that many clergymen are disgracefully badly paid and that it was a matter for the conscience of the Church to improve the pay of the clergyman. That is perfectly correct, and one of the ways in which the conscience of the Church has manifested itself is precisely through the Easter offering, when the rank and file of the Church contribute to the alleviation of their pastor's poverty. I have often heard members of a congregation say "It is a miserable stipend; we must be generous in the Easter offering." I do not think it can be contended that it is not part of the income that accrues to the living.
I cannot see how it can really be argued that, if we have two men, one of them a layman, earning £300 a year, of which £50 is a Christmas bonus given by his employer, and the other a clergyman, earning £300 a year, of which £50 is an Easter offering given by his congregation, the latter ought to be exempt from tax and the former not. After all, if the clergyman is very poor, and if his total income, including this, is very small indeed, he will have to pay only a very little tax. It will really not amount to very much.
A point I would like to emphasise rather strongly is that almost every speaker who has spoken for this new Clause has mentioned the paying of Income Tax as though it were in itself indecent and sacrilegious. Why should not a clergyman, like any other citizen, contribute to the community? He ought to render unto Caesar the things that are Caesar's.
:Will the hon. Gentleman allow me to correct him? He has the wrong point of view. It is not that the clergyman should not contribute to the needs of the community by paying Income Tax; what we object to is that gifts made in church and offered up on the altar, so to speak, should be mulcted by the State for Income Tax and not be used for the purpose for which they are given.
:I do not share what I regard as the heretical dualism of the hon. and gallant Member. I do not make this clear-cut difference between the sacred and the profane. I think that some of the gifts offered on the altar can be handed to the Chancellor of the Exchequer to be used very appropriately for God's poor.
:I thought my hon. Friend had covered the point. Nobody suggested that clergymen should not pay Income Tax.
:I quite agree. I did not suggest that anybody had suggested that. I merely suggested that these offerings should be regarded as part of the clergy- man's taxable income. That is the point on which we obviously differ.
:This is very serious. I took a close note of what my hon. Friend said, and he did say that most hon. Members had suggested that it was almost indecent.
:What I said—and I took even closer note of what I said than did my hon. Friend—was that several hon. Members had suggested there was something almost indecent and sacrilegious in taking this offering and using it for public and social purposes. If I did not convey that clearly enough the first time, I am grateful to my interrupters for enabling me to make my point still more clear. It has been suggested by several speakers that there is something almost sacrilegious in taking this offering and applying it for social purposes, which is what I maintain the Chancellor mostly has to do.
My last point of fact is this. I have been looking at some of the clerical advertisements in the "Church Times" and other ecclesiastical newspapers. A close study of such advertisements will show that, quite regularly every week, among the details given of livings and curacies that are vacant, is frequently included, not only the stipend attached, but also the average expectation of the Easter, or sometimes the Whitsun, offering. Here is a recent issue of the "Church Times."
:I am not sure that the hon. Member is on the right point there. Perhaps he does not know that the Income Tax authorities assess a clergyman for an Easter offering if he does not return it. [HON. MEMBERS: "NO."] It is a fact that they do. I know a clergyman who did not get an Easter offering for some good reason, but who still had to pay the tax on it.
8.30 a.m.
:I am quite sure the hon. Member is wrong, if I may respectfully say so. These advertisements are drawn up and inserted by the patron of the living or by the vicar or rector of the parish. Here is one:
"All Saints, Perry Street, Gravesend, Kent. Happy parish needs priest. Title considered. £300 and Whitsun offering £16."
Another gives an average of £25 for the offering. I merely quote these advertisements to show that, quite properly and naturally, if the stipend is not large, an attraction is the regular expectation of the Easter or perhaps the Whitsun offering. I wanted to make these few points, although I was reluctant to speak because I have sympathy with the feelings of my hon. Friends. But I do not think that they have made out a logical case. It is suggested that this tax can be—I will not say evaded—but it can be escaped. I believe that if the churchwardens, or others who have the handling of the money, take it and make sure that it is used for a bona fide gift to the parson—a set of books, or a hat for his wife, or a holiday at the seaside—they will legitimately escape Income Tax.
:Is the hon. Member aware that payments in kind have assessable value for this purpose?
:I did not know that, but I was given this advice three years ago by a Treasury official.
:The clergy are a deserving class of men, and the Income Tax law is a branch of the law which ought not to be used in this way. I am one of those, who, like the hon. Member for Maldon (Mr. Driberg) have changed their minds. This is why. I went to church last Easter Day and found that I had no particular amount of money with me. I had about two shillings in my pocket, and so I asked the churchwarden to come back to the house with me. He said, "All right," but added that he wished I would keep back the gift in some way and give it later on, because, he added, "You know it is rather bad luck on the poor chap having to pay tax on this small offering." It is ridiculous that our law has got to that state. It is a pettifogging state for the law to have reached when I can send the parson a bottle of whisky, or a brace of pheasants, but cannot give him a money gift. I have changed my mind, and I put a plea for this to be re-considered. If I feel particularly grateful to my doctor for having looked after me very well, there is nothing to stop me from sending a small present. I may be grateful to the doctor for not having killed me, and I can give him what I like. Why should the parsons, who receive their gifts on a particular day of the year, be treated differently? This logic chopping has to come to an end, and I hope that this new Clause, or something analogous to it, will be adopted.
:I do not like entering into this Debate because it is something outside of my scope, but it is also for that very reason that I am taking part. I was brought up in a church where there is a central fund from which the minister gets a salary, and he has to live on that salary. I do not see any reason why we should make this concession, and there has been no suggestion that any such concession in the southern parts of this island would be made to the ministers in the northern part of the island. Whatever the minister's salary or stipend is in Scotland, he has to pay Income Tax on it, although it is all given as a result of the free will offering of the people, and in some cases there is no other source of income for the minister but those freewill offerings. There are churches, of course, within the establishment, just as there are in England, and there is public money going to them. But there are many churches where I come from where there is no public money, and where there is only the freewill offering of the people. Yet the ministers have to return the whole of their income to the Income Tax collector for scrutiny. So I do not think there is anything which can justify the proposal. I agree with those who say that if it is regular, then it is part of a man's income, and ought to be adjudged as such.
:The hon. Member who has just spoken has made the only case I have yet heard against this Clause. I want to take the case put up by the Financial Secretary piece by piece, because I think it was the weakest attempt to defeat an argument that I have ever heard. His first point was that the money was received by the clergyman by virtue of his office; and that I think was the only really true statement that he made. It is quite true, but it is unreasonable to say no more than that, and to compare that income with the waiter's and jockey's.
:My hon. Friend says the clergyman receives it by virtue of his office. But does not he often receive it because he is generally respected in the locality as a good man? And is not it often the case that he gets presents from many who are not of his faith?
:That is true. I was quoting the Financial Secretary. His words were true in the sense that unless the parson were the incumbent of a particular parish he could not receive the Easter offering. Therefore, to that extent that is true, but when he says that it is income in the accepted sense of the word, I say that is not true. I will give one point in proof of that. Any private income one has which one gives away has to pay tax, but an Easter offering can be given away and no tax paid upon it. If I give away to a charity, unless I sign a seven-years' covenant, that charity cannot receive back the Income Tax. If I sign a seven-years' covenant, it can. But the Easter offering can be given away by a clergyman by the mere fact of not receiving it. That may sound slightly Irish, but the Financial Secretary may know what I mean.
:I have not the faintest notion what the hon. Member means, although I have tried hard to understand him.
:I will wake the Financial Secretary up a little. This is what I mean. The collection is made, and taken by the churchwarden or the treasurer of the parish. If the parson does not want the Easter offering the churchwarden can give it to whatever parish society he likes, and it is not included as part of the parson's income. Have I made myself plain to the Financial Secretary?
:The clergyman does not receive it, so obviously it is not his income and he does not pay tax upon it.
:The Financial Secretary has made my point to perfection.
:If he does not get it what is the trouble?
:The Financial Secretary says that "if he does not get it what is the trouble?" He is trying to make out it is income in the ordinary sense of the word.
:If the hon. Member has said he agrees that these payments arise by virtue of his office, does not the hon. Member know that is a definition of income for Income Tax purposes, and is fully taxable?
:I think it is quite clear; I do not want to repeat the arguments I have given. The third point the Financial Secretary made was that if clergymen are poorly paid, so are other sections of the community, but that does not affect this argument for the simple reason that most of my hon. Friends who are supporting this think that this is not for services rendered.
The second argument was there would be many anomalies as between the responses to the Easter offering because the Easter offering varied widely. If that is so, the people who should abject are the people who are affected by the anomalies. In other words, the other parsons, and I have never heard a murmour of any difference between parsons when one receives a large Easter offering and one receives a small one. I cannot believe that there is any substance in that.
Finally, two other points. I want the Chancellor to listen to this because I believe there is great substance in it. I can give a seven year covenant for the upkeep of the church and the churchyard, and the church can receive free of Income Tax, and I do not pay tax upon that seven year covenant. Secondly, I am a tithe payer, and I pay tithe out of an estate to the parson indirectly, but I do not pay Income Tax on that tithe.
:We will amend that next time.
:Not at all, it is a normal expense of management. There is nothing wrong about that, but, as I was saying, I pay tithe and I do not pay Income Tax on it. But if, in addition, I give a £1 note at Easter I pay Income Tax on it, and so does the parson. If that is not a blatant case of double Income Tax I do not know what is. Finally, I am not so squeamish as some other hon. Members of this House, and I believe that ministers should be treated in a different way from other people when it comes to matters of directly affecting the Church and this is one of these matters. Apart from that they should, and do, pay full taxes, many of them direct taxes, and, therefore, they take a full share, according to their income, of the burden. I feel that the Chancellor would do a wise and generous thing to accept the new Clause. If he does not, I shall vote for it.
:I am rather sorry that this important, new Clause, which raises very deep feelings in all parts of the Committee, has come after a rather long period of debate. I am glad to see the Chancellor in his place when the Committee is discussing a new Clause which is fortunately remote from any of the more controversial matters discussed during the night, but in which all Members in all parts of the Committee take a profound interest. We still begin our work in the House with Prayers, and it is fitting that at the end of this discussion of the new Clause, the Chancellor should see fit to be present when a matter of such interest to clergymen of various denominations are under discussion. This new Clause covers all denominations.
:Is the right hon. Gentleman correct in saying it applies to all Churches?
:The new Clause is so drawn that it covers ministers of all denominations.
:But do all Churches receive Easter offerings?
:I was not present when this matter was discussed in 1943, but I have read carefully the Debate that took place. I feel that this is rather a balanced argument. I do not think it is an overwhelming argument by any means. I hope that the Parliamentary Secretary to the Ministry of Civil Aviation may be on his way down to the Standing Committee and may take part in the concluding parts of this Debate, because if it were possible to state the case here as well as it has been stated by the hon. Member for Stalybridge and Hyde (Mr. Lang), it was done by the Parliamentary Secretary to the Ministry of Civil Aviation. I have read all the speeches that were made on that occasion and I have listened to the speeches today. The argument is a balanced one. I do not think we ought to put it too high on either side. I was a little disappointed that the Financial Secretary repeated almost word for word the brief that was clearly given to his predecessor. If he compares his speech tomorrow in HANSARD with the one I have been reading, it is word for word the same brief. I suppose they fished it out of an old drawer. I was a little disappointed also with the hon. Member for Maldon (Mr. Driberg), who frankly confessed that he had recanted from the views he had previously expressed. He told us he did not accept the dualism between Church and State. I do not know whether his conversion related to the religious or civil category of his life, but he made some extremely pregnant and valuable observations in the former Debate in which he countered almost everything he said today. I do not complain of that but it is a very rapid and remarkable conversion, and whether it is the road to Damascus or the road to promotion, I do not know. [An HON. MEMBER: "What is the difference?"]
I recognise the logic of the case as presented by the Financial Secretary. At the same time I think that a great part of the Committee feel that you must not, in these matters, press the logic too far. After all, there are many borderline cases which we legislate for in a normal way. If you take a purely logical view, I agree that you can make a case against this concession, but I do not think it can be a very serious grievance, not one which would really subvert the whole of our Constitution. It would not really do much harm or cause great anxiety. It would not strike a blow against the whole moral principle of our taxation, and I am fortified in that opinion by the fact that for 60 solid years, since the beginning of Income Tax, nobody made the slightest attempt to raise any Income Tax from these offerings. So all those long years—not inglorious years in British history—from 1840 until about 1900, it was believed to be the law that the Easter offering was not subject to Income Tax. It was believed to be the law by the Commissioners of Income Tax. It was believed to be the law by the judge of the High Court. It was believed to be the law, I understand, by the Court of Appeal, and it was found in the House of Lords to be an incorrect view of the law on a purely legal argument. But it cannot be a very injurious thing because it has gone on so long without apparently causing anybody much emotion on one side or the other. Therefore I fortify myself to say that we would only be reverting to what everybody believed to be the law, including the Treasury, for 60 years. Perhaps the House of Lords have been wrong. Even profound lawyers believed the opposite to be the correct view of the law, so it cannot really be such a frightfully strong argument. The balance cannot be said to lie so strongly either one way or the other on that point alone.
There is another point which I want the Financial Secretary or the Chancellor of the Exchequer to make a little more clear. The Financial Secretary said, "If you want to help the clergy, this is not the way." In a certain part of what he said he seemed to tell us that there were methods by which taxation could be avoided, that if donors were careful to make gifts not in connection with any of the feasts of the Church, but merely from time to time to a clergyman of their acquaintance or even in the parish in which they live, they could somehow or other avoid taxation.
indicated dissent.
:No? I rather thought the hon. Gentleman suggested that. I do not want to press this, because it may do more harm than good, but I would like to know how long chance gifts are supposed to be returned as income by the clergy or anybody else who receives them—doctors and others. What we cannot understand is that only two other categories of persons are concerned—what one might call the receivers of tips or the givers of tips—the receivers, waiters; the givers, jockeys. These three constitute this extraordinary trinity of persons who alone appear to receive a form of gifts which is subject to Income Tax. I would like to know in point of fact, whatever the law may be, does the postman return for Income Tax his Christmas box? Does every waiter return the tips he gets in his Income Tax return? People give presents to their servants at Christmas and to their employees. Are they all returned. No. But the very people who can least afford it are probably the people who have the highest standard and will feel that they ought to make these returns. These are facts that we all know. There must be hundreds and thousands and millions of such gifts made on a festive occasion such as Christmas which the recipients never think of returning for Income Tax, and the Revenue makes no attempt to claim. It would be going against the traditional custom of the people to press the pedantic view.
I want to take the discussion on this Clause out of the atmosphere of some of the other Amendments and Clauses we have been discussing. This does not raise any party issue. I see the reason why it was not accepted before. But I hope the Chancellor can think it over again and see whether he can make some concession which I feel sure would be popular in all parts of the Committee and all parts of the country, which would be welcomed by practically everybody and resented by nobody.
:I have listened with attention to the speech of the right hon. Gentleman the Member for Bromley (Mr. H. Macmillan) and to a considerable part, although not quite all, of the Debate on this subject, and I am anxious not to raise false hopes. I cannot advise the Committee to accept the new Clause. If it goes to a Division, I shall ask the Committee to reject it. That does not mean—I hope I shall be clearly recognised as speaking truthfully—that I imply any lack of sympathy with a large number of ministers who are very poorly paid indeed in regard to services they render. But the responsibility for that rests on those to whom they minister. It is most inappropriate to say, "We have failed to do our duty; therefore the taxpayer must do it."—[HON. MEMBERS: "Speak up, we cannot hear."]—I was addressing myself particularly to some hon. Members who are on the benches behind me and who accept the view that because members of religious communities to whom those ministers minister had failed to do their duty their obligation should be shuffled off in part on to the general taxpayer. It is very undignified—
rose —
:Will the hon. Member wait until I have finished what I am saying? I am saying that such a procedure is extremely improper, unworthy, undignified and hardly just.
rose —
:I have not finished. I have not been charging the hon. Member for Farnham (Mr. Nicholson) with having said it, but I am saying that persons who admit that ministers in many branches of religion are badly paid, instead of seeing that the religious communities carry out their duty of providing properly for their ministers, say "Let us instead of organising proper financial resources within our own community, seek to pass over part of the responsibility to the community." They deserve the epithet I have applied to them.
:I really do think—and who on earth is to blame him?—that the right hon. Gentleman has not been following the Debate as closely as he would have followed it 12 hours ago. That has not been the tenor of the argument. I went out of my way to say that only recently have arguments led me to hold a view contrary to that which I hold to-day. I feel that the Chancellor of the Exchequer is putting up an aunt Sally and knocking it down.
:No. I am putting the argument on what seems to me to be the proper setting. I say the responsibility for seeing that ministers of any denomination in the Christian religion are properly paid rests primarily on the members of their community.
9.0 a.m.
rose —
:No, I will not give way. May I be allowed to continue my argument? I say that that being where the responsibility primarily lies, it is not at all logical or convenient or, I think, right, to say that it is recognised that in fact this is not income in terms of the Income Tax law, but because a number of clergymen have not been properly provided for by those to whom they minister, therefore this should be made an exception in terms of the Income Tax law. There is really no more reason, in terms of the Income Tax law, for giving exemption to Easter offerings to the clergy than there is for giving exemption to a large number of other cases which might be selected. I am sure I cannot justify to the Committee that this exemption, this exception in the administration of the Income Tax law, should be made when what needs to be repaired in the position of the clergy is a matter which rests in quite another place and is a responsibility of quite another section of people than the general taxpayer.
:If, as is the case now, the Church to which I belong raises the incomes of all its ministers to a minimum level will the Chancellor give way on this point? Would the Chancellor agree if that was done in the churches throughout the country?
:No. I say, and I repeat—I am sorry if I cannot make it clear;
I do my best—that the responsibility for maintaining the clergy rests upon those to whom they minister. It does not rest upon the general taxpayer by way of some change in the general Income Tax law. That is why I ask the Committee to reject the new Clause. I say further that the clergy, in common with a large number of other people, and the poorer sections of the clergy in particular, have been considerably advantaged and I am glad that they have been. I have them, among others, in mind in the changes I have been responsible for making. They have been considerably advantaged by the Income Tax readjustments that have been made in the last two Budgets—in this Finance Bill and the one which preceded it. It has meant a great deal to many of the clergy that the personal allowances for Income Tax have been raised. The reduction of one shilling in the standard rate has also meant a lot to them. Other adjustments, which I will not enumerate in detail, have benefited them very much and I am very glad that they have. I hope in the course of the further development of the financial policy of this Government that they will benefit further. Here they will benefit in common with large numbers of other people on the same income levels as they are.
That seems to me to be the right way to approach it. On the one hand, they should have proper income provided by those to whom they minister, and, on the other hand, they should be treated in common with all other sections of Income Tax payers in a fair and considerate fashion and should be afforded—particularly the poorer among them—relief as we gradually lighten the burden. That seems to be the right way, and the Clause suggests the wrong way.
rose in his place, and claimed to move, "That the Question be now put."
Question put, "That the Question be now put."
The Committee divided: Ayes, 184; Noes, 59.
Division No. 212.] AYES. [9.3 a.m. Adams, Richard (Balham) Attewell, H. C. Barton, C. Adams, W. T. (Hammersmith, South) Awbery, S. S. Bechervaise, A. E. Allen, A. C. (Bosworth) Ayrton Gould, Mrs. B. Benson, G. Allighan, Garry Bacon, Miss A. Berry, H. Anderson, F. (Whitehaven) Baird, Capt. J. Bing, G. H. C. Binns, J. Herbison, Miss M. Peart, Capt. T. F. Blenkinsop, Capt. A. Hewitson, Capt. M. Perrins, W. Blyton, W. R. Hobson, C. R. Piratin, P. Boardman, H. Holman, P. Poole, Major Cecil (Lichfield) Bowden, Flg.-Offr. H. W. House, G. Price, M. Philips Braddock, Mrs. E. M. (L'pl, Exch'ge) Hoy, J. Pritt, D. N. Braddock, T. (Mitcham) Hubbard, T. Proctor, W. T. Brown, George (Belper) Hughes, Lt. H. D. (W'lverh'pton, W.) Randall, H. E. Brown, T. J. (Ince) Hynd, H. (Hackney, C.) Ranger, J. Bruce, Maj. D. W. T. Irving, W. J. Rees-Williams, D. R. Burden, T. W. Jeger, G. (Winchester) Reeves, J. Burke, W. A. Jeger, Dr. S. W. (St. Pancras, S.E.) Reid, T. (Swindon) Byers, Lt.-Col. F. Jones, D. T. (Hartlepools) Rhodes, H. Castle, Mrs. B. A. Jones, J. H. (Bolton) Roberts, Goronwy (Caernarvonshire) Champion, A. J. Jones, P. Asterley (Hitchin) Royle, C. Chetwynd, Capt. G. R. Keenan, W. Sargood, R. Cocks, F. S. Kenyon, C. Scollan, T. Collins, V. J. Kinghorn, Sqn.-Ldr. E. Sharp, Lt.-Col. G. M. Colman, Miss G. M. Kinley, J. Silverman, S. S. (Nelson) Comyns, Dr. L. Lang, G. Simmons, C. J. Corbet, Mrs. F. K. (Camb'well, N.W.) Lavers, S. Skeffington-Lodge, T. C. Daggar, G. Lee, F. (Hulme) Smith, S. H. (Hull, S.W.) Daines, P. Lee, Miss J. (Cannock) Snow, Capt. J. W. Dalton, Rt. Hon. H. Leslie, J. R. Sorensen, R. W. Davies, Edward (Burslem) Lewis, A. W. J. (Upton) Soskice, Maj. Sir F. Davies, Ernest (Enfield) Lindgren, G. S. Stamford, W. Davies, Harold (Leek) Lyne, A. W. Steele, T. Davies, Haydn (St. Pancras, S.W.) McGhee, H. G. Stewart, Capt. Michael (Fulham, E.) Davies, S. O. (Merthyr) Mack, J. D. Stubbs, A. E. Deer, G. Swingler, S. Delargy, Captain H. J. McKay, J. (Wallsend) Symonds, Maj. A. L. Diamond, J. McLeavy, F. Taylor, H. B. (Mansfield) Dodds, N. N. Macpherson, T. (Romford) Taylor, R. J. (Morpeth) Driberg, T. E. N. Mainwaring, W. H. Thomas, George (Cardiff) Dye, S. Mallalieu, J. P. W. Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Ede, Rt. Hon. J. C. Mann, Mrs. J. Thorneycroft, H. (Clayton) Edwards, John (Blackburn) Manning, C. (Camberwell, N.) Tiffany, S. Evans, John (Ogmore) Manning, Mrs. L. (Epping) Tolley, L. Fletcher, E. G. M. (Islington, E.) Mathers, G. Wadsworth, G. Foot, M. M. Middleton, Mrs. L. Walkden, E. George, Lady M. Lloyd (Anglesey) Mikardo, Ian Wallace, G. D. (Chislehurst) Gibbins, J. Monslow, W. Warbey, W. N. Gibson, C. W. Morris, P. (Swansea, W.) Watson, W. M. Gilzean, A. Mort, D. L. White, H. (Derbyshire, N.E.) Glanville, J. E. (Consett) Moyle, A. Whiteley, Rt. Hon. W. Murray, J. D. Willey, F. T. (Sunderland) Gordon-Walker, P. C. Nally, W. Willey, O. G. (Cleveland) Greenwood, Rt. Hon. A. (Wakefield) Nichol, Mrs. M. E. (Bradford, N.) Williams, W. R. (Heston) Greenwood, A. W. J. (Heywood) Noel-Baker, Capt. F. E. (Brentford) Willis, E. Grenfell, D. R. Noel-Buxton, Lady Wills, Mrs. E. A. Grey, C. F. O'Brien, T. Woodburn, A. Grierson, E. Oliver, G. H. Yates, V. F. Guy, W. H. Orbach, M. Younger, Hon. Kenneth Haire, Flt.-Lieut. J. (Wycombe) Paling, Will T. (Dewsbury) Zilliacus, K. Hale, Leslie Palmer, A. M. F. Hall, W. G. (Colne Valley) Pargiter, G. A. TELLERS FOR THE AYES: Hamilton, Lieut.-Col. R. Paton, Mrs. F. (Rushcliffe) Mr. Joseph Henderson and Hardy, E. A. Paton, J. (Norwich) Mr. Popplewell. Henderson, A. (Kingswinford) Pearson, A.
NOES. Baldwin, A. E. Gridley, Sir A. Nicholson, G. Birch, Nigel Grimston, R. V. Nield, B. (Chester) Boles, Lt.-Col. D. C. (Wells) Haughton, S. G. Nutting, Anthony Braithwaite, Lt.-Comdr. J. G. Hinchingbrooke, Viscount Orr-Ewing, I. L. Bullock, Capt. M. Hollis, M. C. Peake, Rt. Hon. O. Butcher, H. W. Hutchison, Lt.-Cm. Clark (E'b'rgh W.) Peto, Brig. C. H. M. Carson, E. Hutchison, Col. J. R. (Glasgow, C.) Prescott, Stanley Channon, H. Jeffreys, General Sir G. Stanley, Rt. Hon. O. Clifton-Brown, Lt.-Col. G. Joynson-Hicks, Lt.-Cdr. Hon. L. W. Stuart, Rt. Hon. J. (Moray) Conant, Maj. R. J. E. Langford-Holt, J. Studholme, H. G. Corbett, Lieut.-Col. U. (Ludlow) Linstead, H. N. Sutcliffe, H. Crookshank, Capt. Rt. Hon. H. F. C. Lipson, D. L. Teeling, William Darling, Sir W. Y. Lucas-Tooth, Sir H. Thomas, J. P. L. (Hereford) Digby, Maj. S. W. Maclay, Hon. J. S. Wakefield, Sir W. W. Dodds-Parker, A. D. Macmillan, Rt. Hon. Harold (Bromley) Williams, C. (Torquay) Dugdale, Maj. Sir T. (Richmond) Manningham-Buller, R. E. Willoughby de Eresby, Lord Eccles, D. M. Marlowe, A. A. H. York, C. Erroll, F. J. Marshall, D. (Bodmin) Fox, Sqn.-Ldr. Sir G. Mellor, Sir J. TELLERS FOR THE NOES: Fraser, Maj. H. C. P. (Stone) Morrison, Maj. J. G. (Salisbury) Mr. Buchan-Hepburn and Gomme-Duncan, Col. A. G. Mott-Radclyffe, Maj. C. E. Commander Agnew.
Question put accordingly, "That the Clause be read a Second time."
Division No. 213.] AYES. [9.12 a.m. Agnew, Cmdr. P. G. Fraser, Maj. H. C. P. (Stone) Nutting, Anthony Baldwin, A. E. Fraser, Sir I. (Lonsdale) Orr-Ewing, I. L. Birch, Nigel George, Lady M. Lloyd (Anglesey) Peake, Rt. Hon. O. Boles, Lt.-Col. D. C. (Wells) Gomme-Duncan, Col. A. G. Peto, Brig. C. H. M. Braithwaite, Lt.-Comdr. J. G. Gridley, Sir A. Prescott, Stanley Buchan-Hepburn, P. G. T. Grimston, R. V. Rhodes, H. Bullock, Capt. M. Hinchingbrooke, Viscount Royle, C. Butcher, H. W. Hollis, M. C. Skeffington-Lodge, T. C. Byers, Lt.-Col. F. Hutchison, Lt.-Cdr. Clark (Edin'gh, W.) Stanley, Rt. Hon. O. Carson, E. Jeffreys, General Sir G. Stuart, Rt. Hon. J. (Moray) Channon, H. Langford-Holt, J. Studholme, H. G. Clifton-Brown, Lt.-Col. G. Linstead, H. N. Sutcliffe, H. Conant, Maj. R. J. E. Lipson, D. L. Teeling, William Corbett, Lieut.-Col. U. (Ludlow) Lucas-Tooth, Sir H. Thomas, J. P. L. (Hereford) Crookshank, Capt. Rt. Hon. H. F. C. Maclay, Hon. J. S. Wadsworth, G. Darling, Sir W. Y. Macmillan, Rt. Hon. Harold (Bromley) Wakefield, Sir W. W. Delargy, Captain H. J. Manningham-Buller, R. E. Williams, C. (Torquay) Digby, Maj. S. W. Marlowe, A. A. H. Willoughby de Eresby, Lord Dodds-Parker, A. D. Marshall, D. (Bodmin) York, C. Dugdale, Maj. Sir T. (Richmond) Mellor, Sir J. Eccles, D. M. Morrison, Maj. J. G. (Salisbury) TELLERS FOR THE AYES: Erroll, F. J. Mott-Radclyffe, Maj. C. E. Mr. Lang and Fletcher, E. G. M. (Islington, E.) Nicholson, G. Lieut.-Cdr. Joynson-Hicks. Fox, Sqn.-Ldr. Sir G. Nield, B. (Chester)
NOES. Adams, Richard (Balhant) Gibbins, J. Manning, Mrs. L. (Epping) Adams, W. T. (Hammersmith, South) Gibson, C. W. Mathers, G. Allen, A. C. (Bosworth) Gilzean, A. Middleton, Mrs. L. Allighan, Garry Glanville, J. E. (Consett) Mikardo, Ian Anderson, F. (Whitehaven) Gordon-Walker, P. C. Monslow, W. Attewell, H. C. Greenwood, Rt. Hon. A. (Wakefield) Morris, P. (Swansea, W.) Awbery, S. S. Greenwood, A. W. J. (Heywood) Mort, D. L. Ayrton Gould, Mrs. B. Grenfell, D. R. Moyle, A. Bacon, Miss A. Grey, C. F. Murray, J. D. Baird, Capt. J. Grierson, E. Nally, W. Barton, C. Guy, W. H. Nichol, Mrs. M. E. (Bradford, N.) Bechervaise, A. E. Haire, Flt.-Lieut. J. (Wycombe) Noel-Baker, Capt. F. E. (Brentford) Benson, G. Hale, Leslie Noel-Buxton, Lady Berry, H. Hall, W. G. (Colne Valley) O'Brien, T. Bing, Capt. G. H. C. Hamilton, Lieut.-Col. R. Oliver, G. H. Binns, J. Hardy, E. A. Orbach, M. Blenkinsop, Capt. A. Henderson, A. (Kingswinford) Paling, Will T. (Dewsbury) Blyton, W. R. Herbison, Miss M. Palmer, A. M. F. Boardman, H. Hewitson, Capt. M. Pargiter, G. A. Bowden, Flg.-Offr. H. W. Hobson, C. R. Paton, Mrs. F. (Rushcliffe) Braddock, Mrs. E. M. (L'pl, Exch'ge) Holman, P. Paton, J. (Norwich) Braddock, T. (Mitcham) Holmes, H. E. (Hemsworth) Pearson, A. Brown, George (Belper) House, G. Peart, Capt. T. F. Brown, T. J. (Ince) Hoy, J. Perrins, W. Bruce, Maj. D. W. T. Hubbard, T. Piratin, P. Burke, W. A. Hughes, Lt. H. D. (W'lverh'pton, W.) Poole, Maj. Cecil (Lichfield) Callaghan, James Hynd, H. (Hackney, C.) Price, M. Philips Castle, Mrs. B. A. Jeger, G. (Winchester) Pritt, D. N. Champion, A. J. Jeger, Dr. S. W. (St. Pancras, S.E.) Proctor, W. T. Chetwynd, Capt. G. R. Jones, D. T. (Hartlepools) Pryde, D. J. Cocks, F. S. Jones, P. Asterley (Hitchin) Pursey, Cmdr. H. Collins, V. J. Keenan, W. Randall, H. E. Colman, Miss G. M. Kenyon, C. Ranger, J. Comyns, Dr. L. Kinghorn, Sqn.-Ldr. E. Rees-Williams, D. R. Corbet, Mrs. F. K. (Camb'well, N.W.) Kinley, J. Reeves, J. Daggar, G. Lavers, S. Reid, T. (Swindon) Daines, P. Lee, F. (Hulme) Roberts, Goronwy (Caernarvonshire) Dalton, Rt. Hon. H. Lee, Miss J. (Cannock) Sargood, R. Davies, Edward (Burslem) Leslie, J. R. Scollan, T. Davies, Ernest (Enfield) Lewis, A. W. J. (Upton) Sharp, Lt.-Col. G. M. Davies, Harold (Leek) Lindgren, G. S. Silverman, S. S. (Nelson) Davies, Haydn (St. Pancras, S.W.) Lipton, Lt.-Col. M. Simmons, C. J. Davies, S. O. (Merthyr) Lyne, A. W. Skinnard, F. W. Deer, G. McGhee, H. G. Smith, S. H. (Hull, S.W.) Diamond, J. Mack, J. D. Snow, Capt. J. W. Dodds, N. N. McKay, J. (Wallsend) Sorensen, R. W. Driberg, T. E. N. McLeavy, F. Soskice, Maj. Sir F. Dye, S. Macpherson, T. (Romford) Stamford, W. Ede, Rt. Hon. J. C. Mainwaring, W. H. Steele, T. Edwards, John (Blackburn) Mallalieu, J. P. W. Stewart, Capt. Michael (Pulham, E.) Evans, John (Ogmore) Mann, Mrs. J. Stubbs, A. E. Foot, M. M. Manning, C. (Camberwell, N.) Swingler, S.
The Committee divided: Ayes, 67; Noes, 179.
Symonds, Maj. A. L. Wallace, G. D. (Chislehurst) Wills, Mrs. E. A. Taylor, H. B. (Mansfield) Warbey, W. N. Woodburn, A. Taylor, R. J. (Morpeth) Watson, W. M. Yates, V. F. Thomas, George (Cardiff) White, H. (Derbyshire, N.E.) Younger, Hon. Kenneth Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Whiteley, Rt. Hon. W. Zilliacus, K. Thorneycroft, H. (Clayton) Willey, F. T. (Sunderland) Tiffany, S. Willey, O. G. (Cleveland) TELLERS FOR THE NOES: Tolley, L. Williams, W. R. (Heston) Mr. Joseph Henderson and Walkden, E. Willis, E. Mr. Popplewell.
:On a point of Order. Would it be in Order to ask the Chancellor of the Exchequer if he can, at this stage, give any indication of what he intends to do? For myself, I am perfectly happy to sit here until 25 minutes past 2 or 25 minutes to 3, but we have other arrangements to make and I hope it is in Order to ask the Chancellor. A lot of people depend on these arrangements—secretaries, constituents and others.
NEW CLAUSE.—( Revised rates of entertainments duty. )) As respects payments for admissions to entertainments held on or after the first day of August, nineteen hundred and forty-six, the following rates of entertainments duty shall be substituted for those set out in Part II of the Fifth Schedule to the Finance Act, 1943:— Amount of Payment Rate of Duty Where the amount of the payment, excluding the amount of duty— s. d. s. d. s. d. Exceeds 0 3 and does not exceed 0 5 … … … … … … 0 0½ Exceeds 0 5 and does not exceed 0 6¼ … … … … … … 0 0½ Exceeds 0 6¼ and does not exceed 0 8 … … … … … … 0 1 Exceeds 0 8 and does not exceed 0 8¾ … … … … … … 0 1½ Exceeds 0 8¾ and does not exceed 1 0 … … … … … … 0 3 Exceeds 1 0 and does not exceed 1 2 … … … … … … 0 4 Exceeds 1 2 and does not exceed 1 6 … … … … … … 0 6 Exceeds 1 6 and does not exceed 1 7 … … … … … … 0 8 Exceeds 1 7 and does not exceed 1 8 … … … … … … 0 10 Exceeds 1 8 and does not exceed 1 9 … … … … … … 1 3 Exceeds 1 9 and does not exceed 2 0 … … … … … … 1 6 Exceeds 2 0 and does not exceed 2 2 … … … … … … 1 7 Exceeds 2 2 and does not exceed 2 6 … … … … … … 2 0 Exceeds 2 6 and does not exceed 3 0 … … … … … … 2 6 Exceeds 3 0 and does not exceed 3 5 … … … … … … 2 7 Exceeds 3 5 and does not exceed 4 2 … … … … … … 3 4 Exceeds 4 2 and does not exceed 4 11 … … … … … … 4 2 Exceeds 4 11 and does not exceed 5 5 … … … … … … 4 7 Exceeds 5 5 and does not exceed 5 11 … … … … … … 5 0 Exceeds 5 11 and does not exceed 6 5 … … … … … … 5 2 Exceeds 6 5 and does not exceed 6 11 … … … … … … 5 10 Exceeds 6 11 (5 s. 10 d. for the first 6 s. 11 d. and 5 d. for every 6 d. or part of 6 d. over 6 s. 11 d. )) —[ Sir W. Wakefield. ]]
Brought up, and read the Second time.
:I beg to move, "That the Clause be read a Second time".
This is an important Clause. It widely affects some 30 million cinema goers every week, apart from other people. It also affects thousands of small cinemas in agricultural and in industrial areas. Therefore, it has a bearing on very many people. It will take me a little time to put the evidence I have for these reasons. I shall quote facts and figures and I hope
:There is no Motion before the Committee. Therefore other matters cannot be raised.
:Would you, Major Milner, accept a Motion to report Progress?
:I do not think I could accept that in such a short time after a previous one.
:Two hours.
that as a result of the evidence I put before the Committee the Chancellor of the Exchequer will look favourably on this new Clause and give it his sympathetic consideration. But, because of the effect upon so many millions of our people, I must protest that this Clause has to be put forward at this late hour. We have been debating now continuously for some 19 hours. It seems wrong that a Clause like this, which affects so many millions of people, should have to be debated after 19 hours of continuous discussion. At any rate, it will be an oppor- tunity for many millions of people to see the incompetence of Socialist management of the affairs of this House, which is but typical of course, of their mismanagement of our affairs in the far wider sphere of the nation. The people will be able to judge for themselves.
The purpose of the new Clause is to remove certain anomalies in the present incidence of tax on prices of admission to entertainments which range from sixpence to 1s. 6d., and in general to lower the amount of Entertainment Duty payable by the public and also to provide a greater net amount after the payment of tax to those exhibitors who provide the entertainment for the public. The Clause enables these exhibitors to meet their greatly increased and increasing costs of providing this entertainment due to the inflation which is now taking place, and has taken place. As the Chancellor well knows, the pound is now growing less and less in value, and the pound in the pocket of the people is less and less because costs are rising, and this very greatly affects the small cinema. I am not so much concerned with the great big cinemas; it is the small cinemas in the country areas and in the industrial areas charging a low range of prices that are affected at the present time. It is mainly as it concerns them that I address my remarks to the Committee. There have been, in recent years, three increases in the Entertainments Duty tax—in 1940, again in 1942, and yet again in 1943. It may be of interest to the Committee to know that this last increase resulted in a rise from £31,250,000 approximately paid in tax in 1942 to over £43,000,000 paid in 1943.
The late Sir Kingsley Wood, when he increased the Entertainment Duty, at the time wondered whether the business could stand the extra charge. The Chancellor of the Exchequer, if he turns up the records of a meeting when the late Sir Kingsley Wood gave an assurance will find that one of the first things he said was that this increase in that tax would have immediate consideration at the end of the war. It is now a year after the end of the war, and I hope that for that reason the Chancellor of the Exchequer will consider that the time has now come to give this industry some remission in the heavy burden it has had up to date. The late Sir Kingsley Wood certainly did not expect that this industry would prove the very fruitful source of revenue to the Chancellor and, indeed, to the country as a whole, that it has proved.
There is no gainsaying the fact that the film trade has enjoyed great prosperity during the war years, and I think that one of the reasons for this was the fact that the Coalition Government did consider that the workers, and rightly so, should have every opportunity for visiting the cinema at the end of their day's work. In addition to that, as the Committee well knows, there was the very large number of troops from overseas in this country contributing from their pay to the revenues of the cinema and, indeed to the revenues of the Treasury. Americans came from overseas, and Canadians and others came, and all that helped to swell the takings of cinemas. Not only that but, as is well known, all members of families were working overtime; there were substantial payments during the war years for overtime and double time, and all this undoubtedly was of assistance in making the cinema industry prosper. Now this position is changing. No longer are there troops from overseas, no longer is there the same amount of double time and overtime, and no longer are whole families working in the same way they did in the war years. It is true that many are now being demobilised and have gratuities to spend, and while still on leave go into jobs as well; therefore, no doubt for a short time they have a greater amount of money at their disposal than they will have in the near future. I think we can take it for granted that within the next few months the takings from cinemas will begin to decline, and the peak of the war years has been or is about to be passed.
9.30 a.m.
It must be remembered that the cinema is the universal family entertainment. It affords a means of recreation, a place to which the whole family can go and spend an evening together. It is the head of the family, the breadwinner, who generally makes the payment for that entertainment. Therefore, the takings of the cinemas, particularly in certain industrial and agricultural areas, will depend upon the ability of the head of the family, the breadwinner, to find the money to pay for the entertainment and recreation of the family. We all know that in certain parts of the country patches of unemployment are appearing. In certain areas which used to be Special Areas, those areas which were called "depressed areas," unemployment is appearing—in South Wales and in certain parts of the North. We also know, again due to the reconversion from war to peace, there is a certain amount of unemployment in the Clyde. All that has an effect on the small cinemas in those parts of the country. That, together with the fact that troops are no longer quartered in the country districts, has a serious bearing on the takings of a great many small cinemas dotted throughout the country.
I would like to give some idea of the very hard burdens these small cinemas are bearing at the present time. I have here two or three examples which I think will be of value to the Committee. This is evidence, which cannot be gainsaid, of the revenue and expenditure and, in particular, the amount or Entertainments Duty paid by some of these small cinemas. One letter says:
"It occurs to me that some practical figures might give you an excellent illustration of how this tax affects small cinemas. On Monday of this week the total gross takings amounted to £6 16s. 5d.; the Entertainment Tax on this came to £2 11s. 4½d., leaving a net total of £4 5s. 0½d. to pay all running expenses, film hire, etc., and wages. Similarly, on Tuesday of this week the figures were: gross takings, £4 10s. 11d.; Entertainment Tax £1 16s. 7½d., leaving a net total of £2 14s. 3½d. You will no doubt realise from these figures how the present rate of Entertainment Tax strangles small cinemas. We take more money on a Saturday night, but if it were not for the Saturdays we could not keep running. …
P.S. Even better illustration. Last week's total takings, £80 15s. 10d.; Entertainment Tax, £30 19s. 8½d.; net takings £49 16s. 1½d."
That illustration will give the Committee and the Chancellor a pretty fair picture of the situation. I have another one here, which again illustrates the point I am trying to make. For the week ended 1st June, 1946, the total gross takings were £75 1s. 3d., Entertainments Duty £28 18s. 3¼d, net takings £46 2s. 0¾d. This, the letter goes on to say, has to cover wages, film hire, advertising, rent and rates, transport of films, repairs and maintenance, fuel, electricity and all running costs. Not much is left over there when Entertainments Duty has been paid, and when all these expenses have been met.
I am putting forward this Clause on behalf of myself and other hon. Friends, because we feel that the time has now come to reconsider the situation of the small cinemas. Perhaps it is true to say that generally speaking cinema takings throughout the country have not yet shown any great decline. That is due to the improvement in the takings in London. During the war London was a depressed area. During the last year people have been visiting London in great numbers, and the cinemas have prospered. But the situation in London cannot be taken as a fair example of the situation throughout the country, because in the London area the prices of admission are, generally speaking, higher than in the provinces, and on the higher priced seats a higher rate of Entertainments Duty has to be paid. Therefore, for the reasons I have given, the increase in the Chancellor's receipts from the London area should not give him too rosy a view of the situation generally, as the tax on these higher seats averages about 40 per cent.
I do not think it is generally realised how much money is paid away by the public in the way of duty, and how much goes to those who provide the entertainment. It may be of interest if I give two or three examples to illustrate this. For example, those members of the public who pay 1s. 9d., pay away 8½d. to the Treasury and 1s. 0½d. goes to those responsible for providing the entertainment. When a member of the public pays 2s. 9d. the Chancellor receives 1s. 1d. and the exhibitor receives 1s. 8d. These figures give a general picture of the rate of distribution as between the Treasury and the persons who provide the entertainment. The Committee might be interested to know the kind of increase in revenue which exhibitors have received compared with prewar days. In view of certain figures I shall quote about the extra amount of costs, it is important that these figures should be given. In prewar days, when there was a price of admission of 10d., the tax was 2d. and the public paid a shilling. At present, where the price of admission is 10½d. there is a tax of 7½d. and the public pay 1s. 6d. Out of all these increases, the exhibitor has an increase of 5 per cent. to help him meet the increased costs. Where the public pays 1s. 3d., in prewar days, the tax was 2½d. and the present tax is 8½d. The price of admission remained the same, and the price that the exhibitor received was in each case 1s. 0½d. Compared with prewar days, on the 1s. 3d. and 1s. 9d. seats, there has been no increase to the exhibitor to meet the increased costs of operation. On the 1s. 8d. and 2s. 3d. seats in prewar days, the tax was 4d. as against 10½d. now, and the price was 1s. 4d. and 1s. 4½d. The increase to the exhibitor was, approximately, 3 per cent. Where in prewar days the public paid 1s. 9d. and now pay 2s. 6d., the increase to the exhibitor was nil.
It will be seen that there have not been any great increases to meet the very substantial increase in costs. I have some figures to show how much these increases in costs are. Rises in wages and war bonuses have ranged from 29 per cent. to 45 per cent. during the war years. I understand that negotiations are now proceeding with the appropriate trade unions for more increases. Items such as seats, which have to be replaced, now cost four times as much as in pre-war days. Carpets cost seven times as much, and everything is up in similar proportion.
:I think the hon. Member is missing out one very important thing; what about ices?
:I was about to say, when the hon. Member intervened, that these figures prove conclusively what I said at the beginning of my speech, that everything is costing far more, and money goes less far. I rather gathered on that occasion that the Chancellor of the Exchequer dissented from what I was saying. It is quite clear that these increasing costs have to be met somehow or other by the small cinema operators. There has been very little and, in some cases, no increase in the amount of revenue accruing to these small cinema operators. Exhibitors are now faced with a very serious position. They cannot increase their prices because, if they do, people just will not go to the cinemas. A small increase in price on the figures I have given means a great deal more to the Treasury, and the public will not pay it. On the prices as they exist, and the incidence of Entertainments Duty at present on certain prices of admission, make it really impossible for the prices to be reduced to the public.
9.45 a.m.
The situation is quite unlike that of the railways. There when costs go up the Government increase the prices and there is no crushing Entertainments Tax on top of that to prevent people from travelling. Why is it that there is difficulty in reducing the prices? I think I can explain that best by describing the anomaly of the 1s. 3d. seat. The 1s. 3d. seat, which I am sure the Minister of Education has frequently enjoyed, is in a peculiar position because the tax on a 1s. 3d. seat is 7½. That is to say, the public pay 1s. 3d. and 7½d. goes to the Chancellor of the Exchequer and 7½d. to the exhibitor. But if the price charged to the public is 9d. then 7½d. still goes to the distributor and 1½d. to the Chancellor of the Exchequer. Quite clearly, it is of no advantage to the distributor to reduce the 1s. 6d. charge to some intermediate figure because there is no gain to him. This leaves the exhibitor in the awkward position that the only effective prices for him to charge the public are 1s. 0d., 1s. 6d. and 1s. 9d., but as the 1s. 9d. seat is more remunerative both to the Chancellor and to the exhibitor, it is always used in preference, where it is possible to use it, to the 1s. 6d. seat. That really means a jump from 1s. to 1s. 9d. which is something which the public do not like.
The new Clause contemplates a more elastic and flexible scale altogether compared with that which exists at present. I hope for the reasons I have given that the Chancellor will reconsider the incidence of this tax. I have explained the anomalies which exist, why it is so difficult for exhibitors to reduce their prices, and why it is impossible for them to increase them. I will now give one or two figures to support my argument. On a charge of 9d. the net return to the exhibitor is 7½d. and the tax is 1½d. The proposal which I put to the Chancellor is that on the same gross charge to the public there should be 1d. tax and 8d. should go to the exhibitor. That suggestion means that there will be a reduction in tax of a halfpenny. I suggest that halfpenny ought to be allowed to go to the exhibitors to help them to meet the rising costs the details of which I have previously described. On the present admission of 1s., 3½d. goes in tax and 8½d. to the distributor. Here, again, it is suggested that the reduction in tax should be a halfpenny, so that, out of the gross admission of 1s. paid by the public, there will be 3d. tax and 9d. will go to the distributor. The 1s. 3d. seats are not used for the reasons I have given, but it is suggested that, on the gross admission price to the public of 1s. 3d., the tax should be 3d. and the net takings to the distributor will be 1s. Again, on the 1s. 6d. price it is suggested—
:Would the hon Member allow me to make a suggestion? It is getting very late, and would he mind me suggesting that he should refer hon. Members to the Schedule without going through each individual item?
:What I am trying to do is to point out my suggestions and compare them with the present tax. The Schedule does not do that, and I am doing it, not to waste the time of the Committe, but because I want to show the amount of reduction in tax that is proposed and how much is to be passed on to the public, and how much to the exhibitor. Up to now, the exhibitor has benefited, but as we move on, according to the proposals that are being made, I can say that undertakings have been given to the Chancellor by the film exhibitors to reduce the prices of seats by various amounts. I was just on the point of dealing with this when I was interrupted. I had got to the 1s. 6d seats. It is suggested that there should be a reduction in tax of 3½d., so that 1s. 2d. goes to the operator and 4d. is paid in tax, compared with 7½d. in tax and 10½d. to the operator out of the 1s. 6d. at present. The proposal is to reduce the 1s 6d. seats to 1s. 3d. The public will save 3d. and the operators gain 1½d. On the next price of seats, 1s. 9d., it is suggested that there should be a reduction of 2½d., 6d. going in tax and 1s. 3d. to the exhibitor, against the present position of 1s. 9d. being paid by the public, 8½d of which goes in tax and 1s. 0½d. to the operator. In that case there is a reduction of tax.
:The hon. Member may be misleading the Committee innocently by referring to "operators." The operator is an employee, and if the hon. Member uses the word "exhibitor," the Committee will better understand his argument.
:I am much obliged. I was under the impression that I was using the word "exhibitor," but perhaps I am under a misapprehension. I am much obliged to the hon. Member for making it quite clear that, of course, it is the exhibitor whom I mean. Next, we get to the 2s. seats. There, the suggested reduction in tax is 4½d., so that 1s. 6d. will go to the exhibitor and 6d. in tax, as compared with the present payments of 10½d. in tax and 1s. 1½d. to the exhibitor. It is proposed to reduce the 2s. seat to 1s. 9d., so that the public will save 3d., and there will be a gain of 1½d. to the exhibitor. Now we come to the final figure of the seats in the lower prices. Of the gross taking of 2s. 3d., the actual tax will be 8d., the net amount to the exhibitor, 1s. 7d., compared with the present situation that, out of a gross amount of 2s. 3d., 10½d. goes in tax and 1s. 4½d. to the exhibitor. Again, on the 2s. 3d. seat, which it is proposed to reduce to 2s., the public saves 3d. and the exhibitor gains 1½d.
That summarises the position that I am proposing. It shows that there will be a saving to the public, a reduction in price that is urgently needed. After all, things are pretty grim these days, and I think it is only right that some concession of this kind should be given to help the public to keep their morale up. There is nothing like the cinema for keeping the spirits of the public high. They have much to make them need to keep them high these days.
While there is a reduction suggested here, it may well be that the amount of loss to the Treasury will not be so great because of the reduction in price. People who do not go to the cinema now, or who go only occasionally, may well go more often by reason of the reduction in prices; and so it is reasonable to assume that the Treasury will not lose that amount of revenue which, at first sight, might be expected. But more important than this, it does mean that these reductions in price, and the alteration in the incidence of duty, will enable the small exhibitors to meet their expenses. The result of these savings to the public can be calculated on this ground: if a man and his wife and one child went twice a week to the cinema throughout the year there would be a saving to them of £3 18s. a year. If that is multiplied many times we get a great saving to the public. But there is another, the most important reason of all, why the Chancellor should most favourably consider this proposal. During the war years the British film industry went ahead. It prospered. The Financial Secretary knows far better than I do the great progress that the film industry made. Because of its having such substantial home support it was possible for the British film to be developed abroad. A valuable export trade was developed. We all know that, compared with the Americans, our film producers are at a disadvantage. The home market has not as large a market as the American home market. Whereas in America, American films can get their expenditure back, and all foreign takings are a surplus, in this country it is only the most successful ones that can get a surplus. Others have to be sent abroad to get money to meet expenses incurred.
10 a.m.
It is most important that the cinema industry be not allowed to languish. It must be kept at the height of prosperity, because anyone who has been abroad knows that the films play a great part in furthering the export trade. If people see British cars, British clothes, and articles of furniture, and all kinds of things shown in British films, they are more likely to buy these articles rather than American articles. The Chancellor might well get more on the increased export trade which ought to result from the increased showing of British films abroad. That would be one of the ways of making up the revenue he might lose if he gave sympathetic consideration to this proposal. I realise that, at this time, it may not be possible for the Chancellor to make all of the concessions I am asking for, but I do hope he will give sympathetic consideration to it for, say, next year. I hope, now, that he will consider removing some of the anomalies to which I have referred round about the shilling and 1s. 3d. price. I hope he will believe that the people will very greatly appreciate any concessions this year in the hope that something greater will come next year. I will conclude by summarising the points I have made.
:My hon. Friend says he is going to summarise his arguments, but surely he should develop them first.
:I did say that I wanted to provide some statistics and evidence in the statement I was to make. I was trying to show that there was some reason for sympathetic consideration of the matters of which I have spoken. There is good reason for a reduction in prices in industrial areas where unemployment is beginning to show its head, and in agricultural areas, where there are small cinemas, to help the small exhibitor to pay for the rising costs he is daily incurring, and it will also help the public.
:Since the hon. Gentleman has deployed the case so fully and so admirably, I think it would be convenient if I stated, at this stage, the Government opinion on the matter. We must all take a continued and watchful interest in the export possibilities of this industry, as well as watching the home market. This is an expanding industry. None the less, I am afraid that, for this year—and I rather think that those closely acquainted with the industry are not expecting anything—I cannot promise to make concessions. The reason I cannot do anything this year is exceedingly simple. It is because on the one hand, I did in my original Budget statement go as far as I felt it prudent then to go in regard to tax reduction, including the reduction of the tax on entertainments other than cinemas, particularly on football and cricket. I took the initiative in that particular line, partly because one can, as I calculated, do so much more good there for so much less than would be needed to do what the hon. Member is asking me to do now.
I took his scale, and have had it carefully worked out by my advisers. To do what he is asking would cost the Exchequer £10 million this year, and £15 million in a full year. That, frankly, is quite out of the question now. Next year, of course, all these things can be looked at again. But this year it would be quite out of the question to do this, or even to do part of this, in addition to what I have already agreed to do, particularly since the Committee will be aware that I have lost £48 million of beer money. [An HON. MEMBER: "How"?] Because that amount of beer is not going to be brewed.
That has a bearing on what can be done in various directions in tax reduction. I mention that because this is a convenient moment to mention it. It will be relevant to certain other discussions we shall have later. I would like to do it this year, but I did not feel, when I introduced the Budget, that I could do this in addition to the other things; and still less do I feel able to do so now because since my Budget speech the amount of beer to be brewed is less by £48,000,000 in respect of beer money. That must put a very considerable brake on any inclination towards generosity which might otherwise well up in my heart.
On the other hand it is important to observe that the cinemas are still doing very well. I do not have any doubt about that. It is quite true that there are inequalities between different parts of the country; but as a matter of fact attendances are going up still, and are showing no tendency in the aggregate to decline at all. There are as many people going to the pictures now as have been to the pictures in any previous time. I am not speaking loosely. Because of the Entertainments Duty we get regularly monthly returns in the Customs and Excise, and therefore we know what is happening to attendances. It may interest the Committee to know that in May, last month, we took more in Entertainments Duty in respect of cinemas than at any other time in the history of the tax. An all-time record was reached in cinema takings in May for any monthly period.
This leads me to the conclusion that this, from another point of view, is not the right moment to consider this. People are well able to go to the cinema, and cinema companies are undoubtedly doing extremely well. Therefore, whether you are looking at it from the point of view of what revenue can be spared, or from the point of view of where relief can most properly be given, I am afraid that for this year the cinema industry does not qualify on either count. In the light of the figure I have given the Committee of £10,000,000 this year and £15,000,000 next year, against the general background of the Budget picture, I have no hesitation in saying that, with regret, I cannot see my way to do anything this year, but I can add that I will keep the position under review and next year we shall be able to take a view of the whole scene. We shall be able to see what has been happening with regard to attendances at cinemas, and the general prosperity of the country, and so on. This is one of the matters it will be my duty to look at again next year, but I hope that in the light of what I have said the hon. Gentleman will not press his Amendment.
:It is now about ten hours since I told my right hon. Friend the Chancellor of the Exchequer that he was rather tired, and I think that by this time he must be rather more tired. In spite of that he made it clear to us he does not share the view of my hon. Friend the Member for Marylebone (Sir W. Wakefield) who put his case extremely well. I see that the Chancellor has been reinforced by other Members of the Front Bench, and I am glad to see the Minister of Education is with us. Perhaps she was able to go to the cinema last night, and perhaps knows more about prices than we do. It is nice to again see the Solicitor-General back with us again after a short rest.
I wanted just to say a word about the relative amounts which the Chancellor collects from these different forms of taxation, and see whether he will not consider again the position of the taxpayer. At the present moment not only is the taxpayer grossly overburdened with taxation on his income—Income Tax of all kinds, Pay-as-you-earn Surtax, and, in addition to that, the very heavy Purchase Tax on commodities of all sorts, but there is also this tremendously heavy burden on all forms of enter tainment and enjoyment. I am sure the unfortunate taxpayer—[ Interruption ]. I gather the Communist Party has rejoined us. In due course I dare say we shall get one or two of the Liberals. I would like the Chancellor to listen to one or two figures I want to put before the Committee. I think these will interest the Committee. I am going back to the year before the war, and comparing the position with last year. In the year before the war the Chancellor of the Exchequer collected £8,000,000 from Entertainments Duty, and last year he collected £50,000,000, and he budgets to collect about £50,000,000 this year. The Committee will observe that this is more than six times what it was before the war. That is to say, the Chancellor of the Exchequer is getting more than six times as much out of this tax as he got before the war; with only the reduction in taxation on the cricket and football, it still leaves this tax enormously high, and if the Chancellor were to sacrifice £10,000,000 of revenue and still leave himself with £40,000,000—
:£15,000,000 in a full year.
:In a full year that would reduce it to £35,000,000, and he would still be getting four or five times what he got before the war. How does that compare with some of the other taxes? Take what most of us consider to be the heaviest increase of all in taxation—tobacco. Tobacco before the war produced for the Chancellor of the Exchequer £108,000,000, and in 1945 it produced over £400,000,000, that is, less than four times, and most of us regard that as the heaviest taxed article there is. Come to the Customs and Excise Duties on drink. That has gone up from £116,000,000 before the war to £375,000,000 last year. None of these gigantic increases are as great in proportion as the rise that there has been in the collection of the tax from entertainments, and I do think it is only right the Chancellor should bear that in mind. He has told us he does not propose to do anything further about it this year, but that will not satisfy my hon. Friend behind me, I think. When he comes to look at it again let him see the relation between what was collected before the war and what is being collected now.
I believe the general public is pretty fed up with this high taxation, and I think it is about time something was done about it. [An HON. MEMBER: "The war has got to be paid for, has it not?"] The war has to be paid for. I hope the hon. Gentleman will bear in mind that the war is over. It is about time that some of the expenses in connection with the war which are still hanging over us, expenses which ought by now to be cut out, were cut out, then there would be a great deal more money to use in the reduction of taxes of all sorts.
10.15 a.m.
:My right hon. Friend mentioned that the Entertainments Duty for last month was the highest in history. Would it be possible, at some stage or other, to give particulars of those figures?
Can the figures be broken down to show the Entertainments Duty yield for sports, theatres and cinemas? In addition, can they be broken down further to show the yield of taxation from various parts of the country, from Scotland, the London area, the Midlands, Wales and so on? It would be very helpful if the total figure could be broken down in that respect.
:The figure I quoted is, in fact, a figure of £3,950,000—£4,000,000 as near as can be. That is the revenue from the cinema alone. I was not speaking of the other sources of Entertainments Duty, but of the cinema alone. I have not got handy the figures relating to matters other than the Amendment, which deals with the cinema. It was that figure which was an all-time high last month. No doubt we could break it up to some extent later, but it does not cover sport or other entertainments.
rose in his place, and claimed to move," That the Question be now put."
:Hitler.
Question put, "That the Question be now put."
The Committee proceeded to a Division.
:On a point of Order—
:A point of Order cannot be raised while a Division is in progress.
:On a point of Order. I do not know whether you heard shouts from the other side of the Committee—
:A paper covering is not a proper covering.
:I will reserve my point of Order till later.
The Committee divided: Ayes, 198; Noes, 62.
Division No. 214.] AYES. [10.18 a.m. Adams, Richard (Balham) Berry, H. Burke, W. A. Adams, W. T. (Hammersmith, South) Bevan, Rt. Hon. A. (Ebbw Vale) Byers, Lt.-Col. F. Allen, A. C. (Bosworth) Bing, Capt. G. H. C. Callaghan, James Alpass, J. H. Binns, J. Castle, Mrs. B. A. Anderson, A. (Motherwell) Blyton, W. R. Champion, A. J. Anderson, F. (Whitehaven) Boardman, H. Chetwynd, Capt. G. R. Attewell, H. C. Bowden, Flg.-Offr. H. W. Cocks, F. S. Awbery, S. S. Bowles, F. G. (Nuneaton) Colman, Miss G. M. Ayrton Gould, Mrs. B. Braddock, Mrs. E. M. (L'pl, Exch'ge) Comyns, Dr. L. Bacon, Miss A. Braddock, T. (Mitcham) Cooper, Wing-Comdr. G. Baird, Capt. J. Brown, George (Belper) Crossman, R. H. S. Barton, C. Brown, T. J. (Ince) Daggar, G. Bechervaise, A. E. Bruce, Maj. D. W. T. Daines, P. Benson, G. Burden, T. W. Dalton, Rt. Hon. H. Davies, Edward (Burslem) Lee, F. (Hulme) Reeves, J. Davies, Clement (Montgomery) Lee, Miss J. (Cannock) Reid, T. (Swindon) Davies, Ernest (Enfield) Leslie, J. R. Ridealgh, Mrs. M. Davies, Harold (Leek) Lewis, A. W. J. (Upton) Royle, C. Davies, Haydn (St. Pancras, S.W.) Lindgren, G. S. Sargood, R. Davies, R. J. (Westhoughton) Lipton, Lt.-Col. M. Scollan, T. Davies, S. O. (Merthyr) Lyne, A. W. Sharp, Lt.-Col. G. M. Deer, G. McGhee, H. G. Silverman, S. S. (Nelson) Delargy, Captain H. J. Mack, J. D. Skinnard, F. W. Diamond, J. McKay, J. (Wallsend) Smith, Ellis (Stoke) Driberg, T. E. N. Mackay, R. W. G. (Hull, N.W.) Smith, S. H. (Hull, S.W.) Dye, S. McKinlay, A. S. Snow Capt. J. W. Edwards, N. (Caerphilly) McLeavy, F. Sorensen, R. W. Evans, John (Ogmore) MacMillan, M. K. (Western Isles) Soskice, Maj. Sir F. Foot, M. M. Macpherson, T. (Romford). Sparks, J. A. Forman, J. C. Mainwaring, W. H. Steele, T. Gallacher, W. Mallalieu, J. P. W. Stewart, Capt. Michael (Fulham, E.) George, Lady M. Lloyd (Anglesey) Mann, Mrs. J. Stross, Dr. B. Gibbins, J. Manning, C. (Camberwell, N.) Stubbs, A. E. Gibson, C. W. Manning, Mrs. L. (Epping) Swingler, S. Gilzean, A. Mathers, G. Symonds, Maj. A. L. Glanville, J. E. (Consett) Messer, F. Taylor, H. B. (Mansfield) Gordon-Walker, P. C. Middleton, Mrs. L. Taylor, R. J. (Morpeth) Greenwood, Rt. Hon. A. (Wakefield) Mikardo, Ian Taylor, Dr. S. (Barnet) Greenwood, A. W. J. (Heywood) Mitchison, Maj. G. R. Thomas, George (Cardiff) Grenfell, D. R. Montague, F. Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Grey, C. F. Morgan, Dr. H. B. Thorneycroft, H. (Clayton) Grierson, E. Morris, P. (Swansea, W.) Tiffany, S. Guy, W. H. Mort, D. L. Timmons, J. Hall, W. G. (Colne Valley) Murray, J. D. Titterington, M. F. Hamilton, Lieut.-Col. R. Nally, W. Tolley, L. Hardy, E. A. Nichol, Mrs. M. E. (Bradford, N.) Wadsworth, G. Henderson, A. (Kingswinford) Noel-Baker, Capt. F. E. (Brentford) Walkden, E. Henderson, Joseph (Ardwick) O'Brien, T. Wallace, G. D. (Chislehurst) Herbison, Miss M. Oldfield, W. H. Warbey, W. N. Hewitson, Capt. M. Oliver, G. H. Watson, W. M. Hobson, C. R. Paling, Rt. Hon. Wilfred (Wentworth) White, C. F. (Derbyshire, W.) Holman, P. Paling, Will T. (Dewsbury) White, H. (Derbyshire, N.E.) Holmes, H. E. (Hemsworth) Paton, Mrs. F. (Rushcliffe) Whiteley, Rt. Hon. W. House, G. Paton, J. (Norwich) Wigg, Col. G. E. Hoy, J. Pearson, A. Wilkinson, Rt. Hon. Ellen Hubbard, T. Peart, Capt. T. F. Willey, F. T. (Sunderland) Hughes, Lt. H. D. (W'lverh'pton, W.) Perrins, W. Willey, O. G. (Cleveland) Hynd, H. (Hackney, C.) Piratin, P. Williams, W. R. (Heston) Jeger, G. (Winchester) Poole, Major Cecil (Lichfield). Willis, E. Jeger, Dr. S. W. (St. Pancras, S.E.) Price, M. Philips Wills, Mrs. E. A. Jones, D. T. (Hartlepools) Proctor, W. T. Woodburn, A. Keenan, W. Pryde, D. J. Yates, V. F. Key, C. W. Pursey, Cmdr. H. Younger, Hon Kenneth Kinghorn, Sqn.-Ldr. E. Randall, H. E. Zilliacus, K. Kinley, J. Ranger, J. Lang, G. Rankin, J. TELLERS FOR THE AYES: Lavers, S. Rees-Williams, D. R. Mr. Simmons and Mr. Popplewell.
NOES. Assheton, Rt. Hon. R. Harvey, Air-Comdre. A. V. Raikes, H. V. Barlow, Sir J. Hinchingbrooke, Viscount Ramsay, Maj. S. Braithwaite, Lt.-Comdr. J. G. Hollis, M. C. Reid, Rt. Hon. J. S. C. (Hillhead) Bullock, Capt. M. Hutchison, Lt.-Cdr. Clark (Edin'gh, W.) Savory, Prof. D. L. Butcher, H. W. Hutchison, Col. J. R. (Glasgow, C.) Shephard, S. (Newark) Channon, H. Keeling, E. H. Snadden, W. M. Conant, Maj. R. J. E. Langford-Holt, J. Spearman, A. C. M. Corbett, Lieut.-Col. U. (Ludlow) Linstead, H. N. Stanley, Rt. Hon. O. Crookshank, Capt. Rt. Hon. H. F. C. Low, Brig. A. R. W. Stoddart-Scott, Col. M. Cuthbert, W. N. Lucas-Tooth, Sir H. Sutcliffe, H. Darling, Sir W. Y. MacAndrew, Col. Sir C. Thorp, Lt.-Col. R.A.F. Dodds-Parker, A. D. Maclay, Hon. J. S. Touche, G. C. Dugdale, Maj. Sir T. (Richmond) Marshall, D. (Bodmin) Turton, R. H. Eccles, D. M. Mellor, Sir J. Wakefield, Sir W. W. Erroll, F. J. Morris-Jones, Sir H. Walker-Smith, D. Fox, Sqn.-Ldr. Sir G. Nicholson, G. Webbe, Sir H. (Abbey) Galbraith, Cmdr. T. D. Nutting, Anthony White, J. B. (Canterbury) Gammans, L. D. Orr-Ewing, I. L. Williams, C. (Torquay) Gates, Maj. E. E. Peake, Rt. Hon. O. Glossop, C. W. H. Peto, Brig. C. H. M. TELLERS FOR THE NOES: Gridley, Sir A. Pitman, I. J. Sir Arthur Young and Mr. Drewe. Grimston, R. V. Prescott, Stanley
:On a point of Order, Mr. Beaumont.
:The hon. Member cannot put a point of Order until I have put the Question.
Question put accordingly, "That the Clause be read a Second time."
The Committee divided: Ayes, 65; Noes, 205.
Division No. 215.] AYES. [10.24 a.m. Assheton, Rt. Hon. R. Hinchingbrooke, Viscount Prior-Palmer, Brig. O. Barlow, Sir J. Hollis, M. C. Raikes, H. V. Braithwaite, Lt.-Comdr. J. G. Hurd, A. Ramsay, Maj. S. Bullock, Capt. M. Hutchison, Lt.-Cdr. Clark (Edin'gh, W.) Reid, Rt. Hon. J. S. C. (Hillhead) Butcher, H. W. Hutchison, Col. J. R. (Glasgow, C.) Savory, Prof D. L. Channon, H. Keeling, E. H. Shephard, S. (Newark) Conant, Maj. R. J. E. Langford-Holt, J. Snadden, W. M. Dorbett, Lieut.-Col. U. (Ludlow) Lennox-Boyd, A. T. Spearman, A. C. M. Crookshank, Capt. Rt. Hon. H. F. C. Linstead, H. N. Stanley, Rt. Hon. O. Cuthbert, W. N. Low, Brig. A. R. W. Stoddart-Scott, Col. M. Darling, Sir W. Y. Lucas-Tooth, Sir H. Sutcliffe, H. Dodds-Parker, A. D. MacAndrew, Col. Sir C. Thorp, Lt.-Col. R. A. F. Dugdale, Maj. Sir T. (Richmond) Maclay, Hon. J. S. Touche, G. C. Eccles, D. M. Marshall, D. (Bodmin) Turton, R. H. Erroll, F. J. Mellor, Sir J. Wakefield, Sir W. W. Fox, Sqn.-Ldr. Sir G. Morris-Jones, Sir H. Walker-Smith, D. Galbraith, Cmdr. T. D. Nicholson, G. Webbe, Sir H. (Abbey) Gammans, L. D. Nutting, Anthony White, J. B. (Canterbury) Gates, Maj. E. E. Orr-Ewing, I. L. Williams, C. (Torquay) Glossop, C. W. H. Peake, Rt. Hon. O. Gridley, Sir A. Peto, Brig. C. H. M. TELLERS FOR THE AYES: Grimston, R. V. Pitman, I. J. Sir Arthur Young and Harvey, Air-Comdre. A. V. Prescott, Stanley Mr. Drewe.
NOES. Adams, Richard (Balham) Dye, S. Mackay, R. W. G. (Hull, N.W.) Adams, W. T. (Hammersmith, South) Edwards, N. (Caerphilly) McKinlay, A. S. Allen, A. C. (Bosworth) Evans, John (Ogmore) Maclean, N. (Govan) Anderson, A. (Motherwell) Foot, M. M. McLeavy, F. Anderson, F. (Whitehaven) Forman, J. C. MacMillan, M. K. (Western Isles) Attewell, H. C. Gallacher, W. Macpherson, T. (Romford). Awbery, S. S. George, Lady M. Lloyd (Anglesey) Mainwaring, W. H. Ayrton Gould, Mrs. B. Gibbins, J. Mallalieu, J. P. W. Bacon, Miss A. Gibson, C. W. Mann, Mrs. J. Baird, Capt. J. Gilzean, A. Manning, C. (Camberwell, N.) Balfour, A. Glanville, J. E. (Consett) Manning, Mrs. L. (Epping) Barton, C. Gordon-Walker, P. C. Mathers, G. Bechervaise, A. E. Greenwood, A. W. J. (Heywood) Messer, F. Benson, G. Greenwood, Rt. Hon. A. (Wakefield) Middleton, Mrs. L. Berry, H. Grenfell, D. R. Mikardo, Ian Bing, Capt. G. H. C. Grey, C. F. Mitchison, Maj. G. R. Binns, J. Grierson, E. Montague, F. Blyton, W. R. Guy, W. H. Morgan, Dr. H. B. Boardman, H. Hall, W. G. (Colne Valley) Morris, P. (Swansea, W.) Bowden, Flg.-Offr. H. W. Hamilton, Lieut.-Col. R. Mort, D. L. Bowles, F. G. (Nuneaton) Hardy, E. A. Murray, J. D. Braddock, Mrs. E. M. (L'pl, Exch'ge) Henderson, A. (Kingswinford) Nally, W. Braddock, T. (Mitcham) Henderson, Joseph (Ardwick) Nichol, Mrs. M. E. (Bradford, N.) Brown, George (Belper) Herbison, Miss M. Noel-Baker, Capt. F. E. (Brentford) Brown, T. J. (Ince) Hewitson, Capt. M. Oldfield, W. H. Bruce, Maj. D. W. T. Hobson, C. R. Oliver, G. H. Burden, T. W. Holman, P. Paling, Rt. Hon. Wilfred (Wentworth) Burke, W. A. Holmes, H. E. (Hemsworth) Paling, Will T. (Dewsbury) Byers, Lt.-Col. F. House, G. Paton, Mrs. F. (Rushcliffe) Callaghan, James Hoy, J. Paton, J. (Norwich) Castle, Mrs. B. A. Hubbard, T. Pearson, A. Champion, A. J. Hughes, Lt. H. D. (W'lverh'pton, W.) Peart, Capt. T. F. Chater, D. Hynd, H. (Hackney, C.) Perrins, W. Chetwynd, Capt. G. R. Jeger, G. (Winchester) Piratin, P. Cocks, F. S. Jeger, Dr. S. W. (St. Pancras, S.E.) Poole, Maj. Cecil (Lichfield) Colman, Miss G. M. Jones, D. T. (Hartlepools) Price, M. Philips Comyns, Dr. L. Keenan, W. Proctor, W. T. Cooper, Wing-Comdr. G. Key, C. W. Pryde, D. J. Crossman, R. H. S. Kinghorn, Sqn.-Ldr. E. Pursey, Cmdr. H. Daggar, G. Kinley, J. Randall, H. E. Daines, P. Lang, G. Ranger, J. Dalton, Rt. Hon. H. Lavers, S. Rankin, J. Davies, Edward (Burslem) Lee, F. (Hulme) Rees-Williams, D. R. Davies, Clement (Montgomery) Lee, Miss J. (Cannock) Reeves, J. Davies, Ernest (Enfield) Leslie, J. R. Reid, T. (Swindon) Davies, Harold (Leek) Lewis, A. W. J. (Upton) Ridealgh, Mrs. M. Davies, Haydn (St. Pancras, S.W.) Lindgren, G. S. Royle, C. Davies, R. J. (Westhoughton) Lipton, Lt.-Col. M. Sargood, R. Davies, S. O. (Merthyr) Lyne, A. W. Scollan, T. Deer, G. McGhee, H. G. Shackleton, Wing-Cdr. E. A. A. Delargy, Captain H. J. McGovern, J. Sharp, Lt.-Col. G. M. Diamond, J. Mack, J. D. Shawcross, Sir H. (St. Helens) Driberg, T. E. N. McKay, J. (Wallsend) Silverman, S. S. (Nelson) Skinnard, F. W. Thomas, George (Cardiff) Whiteley, Rt. Hon. W. Smith, Ellis (Stoke) Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Wigg, Col. G. E. Smith, S. H. (Hull, S.W.) Thorneycroft, H. (Clayton) Wilkinson, Rt. Hon. Ellen Snow, Capt. J. W. Thurtle, E. Willey, F. T. (Sunderland) Sorensen, R. W. Tiffany, S. Willey, O. G. (Cleveland) Soskice, Maj. Sir F. Timmons, J. Williams, W. R. (Heston) Sparks, J. A. Titterington, M. F. Willis, E. Steele, T. Tolley, L. Wills, Mrs. E. A. Stewart, Capt. Michael (Fulham, E.) Vernon, Maj. W. F. Woodburn, A. Stross, Dr. B. Viant, S. P. Yates, V. F. Stubbs, A. E. Wadsworth, G. Younger, Hon. Kenneth Swingler, S. Walkden, E. Zilliacus, K. Symonds, Maj. A. L. Wallace, G. D. (Chislehurst) Taylor, H. B. (Mansfield) Warbey, W. N. TELLERS FOR THE NOES: Taylor, R. J. (Morpeth) Watson, W. M. Mr. Simmons and Taylor, Dr. S. (Barnet) White, C. F. (Derbyshire, W.) Mr. Popplewell. Thomas, Ivor (Keighley) White, H. (Derbyshire, N.E.)
:On a point of Order. I wish to raise with you, Mr. Beaumont, a point of Order which I hope you will not think frivolous or unimportant. It hardly escaped your notice that when in the exercise of your discretion you accepted the Motion for the Closure there were shouts of protest from the other side of the Committee. It has always been held, I think, that any criticism of the acceptance of a Motion for the Closure was not a criticism of the Member who claimed to move it, but a criticism of the Chair. Had it not gone any further than protest, it would have been gravely disorderly, but when the criticism and the discontent are carried so far that the Chairman of the Committee is called "Hitler," then I suggest that it is something of which the Committee and of which you, Mr. Beaumont, ought to take due notice. Nothing can be more disorderly than to express resentment at all at the exercise of your discretion in accepting the Closure Motion, but to do it in such extravagant terms is completely out of Order.
:I am conscious that there were protests against the moving of the Closure, and I also heard the remarks that were made. I could not think that they were intended for the Chair.
:In that case no doubt my point of Order ought to be framed differently. If they were not meant for the Chair they must have been meant for some Members of the Committee, and I suggest that that would be equally disorderly.
:No. I think we had better leave the matter as it is.
:I beg to move, "That the Chairman do report Progress, and ask leave to sit again."
Nothing could be more humble, nothing less Hitlerian, and nothing less calculated to rouse the forensic skill of the hon. Member for Nelson and Colne (Mr. S. Silverman), who has returned to the fray refreshed, but who still wants to flash his genius upon the substance of the Bill which we are now discussing. It seems to me to be an appropriate time to ask the right hon. Gentleman what his intentions are this morning. The sacred hour of 11 o'clock is approaching. Coffee and buns are calling. I heard not so long ago in the Lobby one of the hon. Ladies who support the Government say that if any of the unmarried girls saw hon. Members at this time of the morning, it would put them off marriage for ever. Everything seems to conspire to make it desirable to adjourn now, having made steady progress. While it is not so fast as we were making earlier in the evening, though still considerable despite the perfunctory replies and automatic Closures from right hon. Gentlemen, I think we can be well satisfied with our progress and call it not a day, but half a day. There is one thing which operates in the other direction. For the first time for many weeks, we have seen the Attorney-General on these premises, and, no doubt, it is the desire of the Attorney-General that he should relieve for a little his learned associate, the Solicitor-General, who has performed so valiantly and so graciously.
Finally, I should like to assure the Chancellor of the Exchequer that I do not blame him for what has happened yesterday and this morning. It is a more sinister and more distant figure that I blame, a figure which probably many hon. Members perhaps would hardly recognise by sight now. That is the Lord President of the Council, who at the beginning of this Session was appointed Leader of the House. The right hon. Gentleman has set the Chancellor of the Exchequer and the Committee an impossible task. It was insulting that we should be asked to complete the Committee stage of a long and intricate Budget in under four days. My recollections of the days before the war were that even on the most ordinary Finance Bill we were usually allotted five or six days. This disregard for the rights of the Opposition and indeed for the rights of his own supporters too, in being indifferent as to whether any Measure is fully criticised and examined is an instance of the modern juggernaut way of getting Bills passed without the least concern for what is in them. When we hear about hon. Gentleman talking at their conferences we find that they never talk about what is in the Bills but rather the number that they pass. They say, "We passed 73 Bills last month." I hope that the right hon. Gentleman realises that the blame, therefore, is not for him, but we do hope that he, who has a more proper realisation of the functions and the privileges of this House, will in future oppose the rather severe pressure of the Leader of the House and, for his own sake as well as for the sake of the rest of the House, will in future ensure that there is adequate time to discuss these matters.
:We are making moderately good progress with this most excellent Bill, which is one amongst the 72 excellent Bills which we are engaged upon passing into law. At 10·30 we completed 20 hours continuous sitting. In that time we had had 19 hours continuous sitting on this Bill, for we must except the one hour allotted to questions. It is remarkable how close attention can be given to these intricate details by Members in this condition. It shows, too, that we are still fit to survive. I am thinking of various considerations. There are Standing Committees upstairs, some of which are already meeting. We must help them to survive. There are other things to be considered, too. I think perhaps it is not unreasonable that Members should have an hour in which to make themselves more attractive to the ladies as was mentioned by the right hon. Gentleman when he reported overhearing a remark by a lady Member in the Lobby. I think a short time for refreshment and toilet would not be amiss.
Therefore, I make a proposal. We must take into consideration that after we have finished this morning's business on the Finance Bill, there is the half hour's Adjournment Debate, which is in the hands of the hon. Member for the Exchange Division of Manchester (Mr. Lever), who no doubt will wish to exercise his privilege as a Private Member. We would wish him to have an effective hearing and a good Ministerial reply. No doubt, whatever Minister will be replying has been sleeping while the rest of us have been working. The proposition I have to make is that it seems quite reasonable to suggest that we should get the next Clause, which I do not think is very intricate, and then we should report Progress at that point. It will be for consideration as to how soon we will get the remaining stages of the Bill. We have still a certain number of new Clauses and then there are the Schedules. Though we have accomplished much of the work of the Finance Bill at this stage, yet there remains much to be accomplished on another occasion. With the possibility I had in mind, I think it would be with the least inconvenience to ourselves if we could get on, and that is one reason why I have been rather persistent in getting progress. But, if we can get the next Clause, I shall be pleased to report Progress.
:I shall be pleased to advise right hon. and hon. Members on this side to fall in with the arrangements suggested. The next Clause is an interesting one, but not a difficult one, and my own view is that it is not a Clause which ought to take a long discussion. I beg to ask leave to withdraw the Motion.
Motion by leave, withdrawn.
NEW CLAUSE—(Option to have refunds treated as profits of 1947–48.)
Notwithstanding anything contained in the proviso to subsection (1) of section forty-five of the Finance (No. 2) Act, 1945, the provisions of that subsection shall apply if the person carrying on the trade in connection with which the post-war refund is to be used for the whole or any part of the year 1947–48 is a company to which the original trade or business has been transferred in consideration solely or mainly of the allotment of shares of the company to the persons or one or more of the persons who carried on the original trade or business in the relevant chargeable accounting periods, and if the person or persons to whom such shares have been allotted is or are the beneficial owner or beneficial owners of such shares for the whole or any part o the said year 1947–48.—[ Colonel J. R. H. Hutchison. ]
Brought up, and read the First time.
10.45 a.m.
:I beg to move, "That the Clause be read a Second time."
Nothing will give me greater pleasure than to fall in completely with the suggestions of the right hon. Gentleman in moving the new Clause on the Order Paper in my name, but he raised my hopes in two directions. First, I thought that we were to adjourn. Then he used the phrase, "get this Clause". I thought that meant that we should get this Clause, and I propose to take as little time as possible. I would have preferred to argue this case at a different time, when one came afresh to the subject. I think that the easiest way to make this problem clear to the Committee—although it is a principle I do not usually agree with—would be to argue from the particular to the general, and to show an actual case. There must be many others like it, or we should not have put down a Clause dealing with it.
The particular case I would mention is the case of a firm of leather tanners. They are not a limited company, and they were not a limited company before the war, but they put down much new plant with the result that, at the outbreak of war, their potential output and their actual, was increased and they made considerable profits. These profits were large and their entitlement to refund under the 20 per cent. refund Clause would allow them some £80,000. This, in turn, would be liable to Income Tax, leaving a net figure of about £40,000. But these profits, having been as high as they were, have brought the two partners into the highest rate of Surtax. They are liable accordingly to Surtax in respect of this refund of Excess Profits Tax, which would otherwise have been kept for the modernisation and refurbishing of the plant, and which thus would leave them finally only £2,000 available for modernisation.
Section 45 of the Finance Act (No. 2) of 1945 allowed a limited company, where it wished, to carry forward its refund into the year 1947–48. So this particular concern, if it turned itself into a limited company during the current year could ask for that refund to be carried forward into 1947–48, and it would then not be liable to Surtax. The whole £40,000 would be available for them to plough into their business in order to make them competitive and to help the country's export trade. That they are prepared to do; only, unfortunately, this facility to spread forward into 1947–48 the refund able to the same concern as made the of Excess Profits Tax is in fact only avail-profits.
Technically, the private concern which made these profits during the war and which turned itself into a limited company during the current year would, in fact, not be considered as the same concern. So the whole of the burden of this Clause of mine is directed towards allowing a concern which has not materially changed its character, where the proprietors of the business, the control, the works, and so on, are the same, to be able to take advantage of that situation.
I have had a little correspondence with the Chancellor of the Exchequer, and I know that he is clearly aware of the circumstances; and I believe it was not his intention, and was not the intention of the law in the past, that one particular type of concern which happens not to be a limited company should be so hard hit that in fact it cannot modernise itself. And I do not think it is the desire of the Chancellor to hold the balance unfairly against a concern of this kind.
So I am not at all without hope that the Chancellor may give this favourable consideration. I know that he is a little bit drawn between the devil and the deep blue sea, and that he needs to get the tax he requires for balancing Budgets and so on. But, at the same time, if these concerns are, in fact, prepared to use all these repayments which they can in this way preserve for themselves for ploughing back into industry in the same way as the Chancellor is asking the limited companies to plough their refunds back into industry, then I suggest that he might accept this Clause which would in fact put them into that position.
:My right hon. Friend the Chancellor feels that it is not possible for him to accept this Clause. I think I can explain shortly why he cannot do so. What the mover of the Clause desires is that this particular firm should be in a position to change itself into a limited liability company and yet reserve the right to have its refund available for the 1947–48 period. Of course, as he says, if he does get that concession the limited company, not being liable to Surtax, will not have to pay Surtax on that refund. It will get the refund free of Surtax. It will only have to pay Income Tax on it. But E.P.T. is taken into account for the purpose of computing how much income falls to be charged to Income Tax and Surtax. You deduct the amount of E.P.T. you pay and you only pay Income Tax and Surtax after you have deducted the E.P.T. This £80,000, which represents the amount of refund to which this firm is entitled, was a deduction for the purposes of the assessment of the income of the partners for Income Tax and Surtax during the E.P.T. period. That means to say that, when they were preparing their Income Tax returns during the E.P.T. period, a sum of £80,000 E.P.T. was deducted from their gross income and they only paid Income Tax and Surtax on the balance.
That means to say that the partners in this firm during these years saved Surtax on £80,000. That is to say, they saved Surtax at the highest possible rate on £80,000. What the hon. Gentleman is seeking to do is to put that firm into the position of having saved Surtax during the years that this refund was being paid out by them, and now it is being paid back he wants to put them into the position when they can avoid paying Surtax on that refund.
That is obviously grossly unfair. Either you save Surtax when you pay money out, and when you get it back you have to pay Surtax on that amount—that will be the position with the Finance Act of 1945 as it stands—or you are a limited company, in which case in neither period are you liable to Surtax, but you pay Excess Profits Tax. You can have it one way or the other, but you cannot have it both ways.
:Surely the concern cannot have saved Surtax on a profit which, in fact, it never enjoyed. When you say it saved Surtax, it saved a possible liability to Surtax on the £80,000, but as it never had the £80,000, it cannot have paid Surtax.
:It paid it as part of its Excess Profits Tax liability of £80,000 during these years. If, instead of paying that sum it had retained the £80,000 that sum would have formed part of its income, and, therefore, they would have had to pay Surtax on that £80,000.
:Yes, but they never got it.
:Exactly, because they paid it and they deducted it from their Income Tax assessment, together with the rest of their Excess Profits Tax. That means to say that during these years they saved Surtax on that £80,000, as I said earlier. They saved it—they avoided paying it. I do not mean that they avoided it in an improper sense, but that they avoided paying Surtax on that £80,000 during those years, and now what they want to do is to avoid paying Surtax when they receive it back in the form of these refunds.
They cannot have it both ways. It would mean that the Inland Revenue was losing at both ends, and that is, clearly, quite impossible and an indefensible position. That is a short answer to the proposed new Clause, and I think it is an answer that is quite conclusive, and I ask the Committee, for that reason, to reject the Motion.
Question put, and negatived.
Chairman to report Progress, and ask leave to sit again.—[ Mr. Whiteley. ]
Committee report Progress: to sit again this day.
Adjournment
Resolved: "That this House do now adjourn."—[ Mr. Joseph Henderson. ]
Adjourned accordingly at One Minute to Eleven o'clock a.m. on Tuesday, 25th June.