Clause 13. — (Special provisions as to mines, oil wells, etc.)

Orders of the Day — Finance Bill. – in the House of Commons on 8th August 1940.

Alert me about debates like this

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

6.14 p.m.

Photo of Mr John Tinker Mr John Tinker , Leigh

The Committee will remember that when this subject was before us earlier very strong exception was taken to the proposal from this side of the Committee, largely because there was uncertainty about what the Clause meant. I am still not sure what it does mean, and I am anxious to know what implications there may be in it. As I read the Clause it proposes in certain circumstances to allow coal mines a special preference in the matter of Excess Profits Tax. Paragraph (b) of Sub-section (1), says: shall not in any case increase the said percentages by more than a further 4 per cent. Does that mean that if a firm or company are already making 10 per cent, they may make an application for a further 4 per cent., or does it mean that where the dividend is less than 10 per cent, they can ask for an increase of 2 or 4 or 6 per cent, or whatever is necessary to bring it up to 10 per cent, but must not exceed 10 per cent.? To my mind Excess Profits Tax should apply equally all round, and if we are making an exception in this case, then we ought to know why. Why are these particular concerns to have special treatment? I want to know whether there are any means by which a workman employed in that industry will be able to get back, from the given percentages, some of the money that is being handed to the companies. Some explanation is required before my mind will be more easy about the reason for this proposal being put forward. I take this opportunity to ask the Solicitor-General to explain the matter. Complicated proposals like this are usually handed over to the Law Officers of the Crown. They give us legal phraseology, which often makes us so confused that we let the particular proposal go by without much criticism. Sometimes we do not understand what it means, but rather than appear doubtful we let it go.

6.16 p.m.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent Stoke

Is the right hon. Gentleman satisfied with the wording of this Clause? Is the Clause fair to the rest of industry? Will not the administration of the Clause lead to a large amount of legal quibbling? I am very concerned about the export trade, because many centres of it have to contend with assets of a wasting nature. For example, when material is ordered and has to be stocked, it may deteriorate and contract. I understand that an allowance is made in the assessment of Income Tax for that deterioration and contraction, but I would like to know whether the administration of that allowance is fair, when the amount of the allowance that will be made if the Clause is accepted is considered in relation thereto.

The engineering industry has to take considerable risks. It seems important that its export section should be maintained, in order that we might keep our markets abroad. When large castings are being made, for turbines or electrical generators, for example, large risks have to be run, and often there are two or three scrappings. Does the right hon. Gentleman think it is fair for an allowance to be made to one section of industry when other sections are running risks such as I have just indicated? The same thing applies to wood, which has, in many instances, to be stocked for a considerable period. Deterioration may take place and result in very large expense to the industry. Although allowances are made in the assessment of Income Tax in regard to deterioration, I understand they are not fair, when compared with the allowances to be made under the Clause. I should like answers to the questions I have put, in order that people in various sections of industry might understand the reason for the Clause.

6.20 p.m.

Photo of Mr Alexander Sloan Mr Alexander Sloan , South Ayrshire

We had this matter before us previously, and a very important speech was made by one of our mining Members. Since then, much has been going on behind the scenes. It appears to me that the mining industry is now prepared to allow the matter to go forward. I protest very strongly against this innovation, and against any action to place mineowners in a different position from any other class of people in the country. From time immemorial, mineowners have been able to place their handkerchiefs to their eyes and to cry that their industry was always a losing one. They have lost money in the mining industry since I was a boy. I cannot go back further. From my earliest recollections the mining industry has always been losing money, and coal-owners have always died, leaving fortunes. The industry is doing pretty well at the present time, from the mine-owners' point of view, but not so well from the miners' point of view. Any concession in this matter should be made to the workers in the industry.

I sat through the Debate the other night and did not speak. I was impressed very strongly with the speeches that we had from all parts of the House referring to the enormous wages being earned by the workers. I do not know what wages are earned in munitions works, but I fancy that the £9 or £10 a week which have been stated are very much exaggerated. I know one thing, and it is the wages that the miners earn. Within two minutes I could bring this Committee the latest ascertainment of the Scottish miners. It proves that the average wage of 90,000 Scottish miners was 12s. 5d. a day for May and 12s. 4d. for June, and that is at a time when prices are going up. Assuming that the miners are working a five-day week, which is a fair average, Scottish miners are to-day working for a wage of about £3 a week.

No case is put forward in the Finance Bill for the miners, but a case is put forward for the employers to get away with a great deal more of the swag. Read through the reports of the coal companies at the present time and see what they are earning. They are able to put back sufficient into the industry from those earnings to meet what are termed the wasting assets. Miners in every part of the coalfields of Great Britain have strongly resisted the attempt to have something inserted into their wage agreements in this connection. In Scotland, the coalowners have attempted to insert in mining agreements made since 1921 a clause referring to the replacement of capital. The suggestion has been resisted by the strength of the organisation. The miners have now refused to allow such a provision to be inserted in their agreements, but the Chancellor of the Exchequer is making this present to his friends in the coalfields, the coalowners. Evidently, the opposition that has been put up from these benches is to be very limited indeed. [HON. MEMBERS: "No"] Well, they are not here. If any Clause in the Bill should be pressed to a Division, it is this Clause.

The proposal is nothing short of an imposition. How can the claim be made that there are wasting assets here, more than in any other industry? Pits in Scotland have been working for 100 years. It has taken, so far, 100 years to waste those assets. The Chancellor of the Exchequer now proposes that we should make provision for assets that last 100 years. I hope he will be here to see the last of them. Why are they called wasting assets? The coal is said to become less every year it is worked, but it is still there. We are now told that more coal is to be taken out and, therefore, that the assets will waste more quickly than in a normal period. For the last 20 years the pits have not been working more than half time. If they had been working full time, far more of the assets would have been wasted than will be the case, during the period of the war. The prospect now is that the assets are going to waste on the bings. The coal is to be brought out of the pit and stocked. We are told that there are at least 20,000,000 tons in stock now. The wasting assets for which we are to pay the coalowners is to be wasted on the bings.

The Chancellor of the Exchequer would be very wise to withdraw both of these proposals, which suggest to me unemployment for the miners at the termination of the war. Remember what took place at the end of the last war. In 1921 and 1926 the miners were smashed. They will be smashed more rapidly if the mine-owners get this extra 4 per cent, with which to build up their financial assets and if they stock the country with coal. They will be able to say to us, "Now we have you, if you go on strike. The industries of this country will not suffer, even if you do not work for the next six months." The proposal to hand over the 4 per cent, and to stock the country with coal are very serious dangers to the miners of this country. The Chancellor should ask himself whether it is not advisable to get in touch with the mineowners with a view to putting the industry in a better position than it is at the moment. We have been told that the more money you give to the coalowners to build up their industry, the better it will be for the miners in times of depression and the more money you will put into their pockets. That has not been my experience during the whole of my life—and up to the present I have spent it all in the mining industry—and I hope that the Chancellor will now act upon what I have said.

6.31 p.m.

Photo of Sir William Jowitt Sir William Jowitt , Ashton-under-Lyne

The question has been asked whether hon. Gentlemen opposite were right in guessing that the explanation of this Clause would fall to my lot. It is a singularly complicated subject, and, as such, it is one with regard to which the Chancellor says to the Law Officer, "This is something to which you must attend." I was asked whether I was satisfied with the language of the Clause. When I find a Clause with regard to which there is obviously a good deal of misunderstanding, notwithstanding that the Clause has obviously been read with some care, I say quite frankly that I am not satisfied with the language of the Clause. I am not suggesting for one moment that I could do better, but it is obviously unsatisfactory that the matter is found to be so complicated that even after it has been carefully read there is left a doubt as to the meaning of it in the minds of hon. Members opposite. That there is a misapprehension is, I think, clear, and I want if possible to try, not to obscure its meaning, but to make quite plain what the Clause is to do.

We start at this point. We begin with the Excess Profits Tax. The Excess Profits Tax pre-supposes a standard. You tax that which is excess to that standard. The standard, as laid down in the 1939 Act, is a standard of a certain year or an average year. That is the standard period. In the great majority of cases, of course, you are dealing with excess profits by comparing the earnings afterwards with the earnings in the standard year, and the difference between the two is the excess. That is not affected at all by this Clause. There do arise certain cases, however, in which you cannot avail yourself of the pre-war standard. It may be that the business was started too late and that it has no pre-war existence, or it may be that although the business was started in the pre-war days yet it has been altered by the addition of a new amount of capital, so that there is no prewar standard for what I may call the new business. That is one case in which you cannot avail yourself of the pre-war standard. In such a case the Act of 1939 provides that in the case of these new businesses, or businesses where new money has been brought in, one should have regard to the statutory percentage, and the Act provides that such businesses may get 8 per cent, or 10 per cent., as the case may be, upon the amount of capital which they have in the business. That applies to all businesses—not mines or things of that sort but businesses.

Photo of Mr John Tinker Mr John Tinker , Leigh

Why in a case like that is there the difference of 8 per cent, or 10 per cent.?

Photo of Sir William Jowitt Sir William Jowitt , Ashton-under-Lyne

It depends, in the Act of 1939, as to whether the business is a director-controlled business or not. If it is a comparatively small company which is really the alter ego of the director, then they allow him 10 per cent., but in relation to the trade or business not so carried on, 8 per cent. That was settled in 1939. The other class of case in which it would not be safe to base yourself upon a pre-war standard is where, although a company has had a pre-war existence, it has had very bad luck during the pre-war years and has either made no profit or has made such a very low profit that it would be obviously unfair to base your standard upon a pre-war period. Therefore, in that case also, the legislature has provided by the existing law for an alteration of what otherwise would be a nil standard or a very small one. By the first Finance Act of 1940 the Commissioners, if they are satisfied of those facts, are allowed to fix what the standard shall be, provided that the standard is not to be more than 6 per cent, or 8 per cent.; again, there arises the same question whether it is director-controlled or not. Those are the cases in which you cannot rely simply on a prewar standard and you must have regard to what I may call a statutory percentage.

Now let us take the illustration which I gave before of, say, a laundry company and a copper mine, because, be it observed, this Bill applies to all English companies. It does not necessarily follow, however, that the business is in England. An illustration is provided by a copper mine because copper is so badly needed for the war that, of course, we are asking those copper mines to produce above their normal production at the present time, and they are selling the copper at controlled prices. I do not wish to deal with coal mines—

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent Stoke

That means a copper mine in another part of the world?

Photo of Sir William Jowitt Sir William Jowitt , Ashton-under-Lyne

Certainly. Unfortunately, there are none in this country, as the hon. Member knows. I am referring to a copper mine where the company is situate in England and is subject to English Income Tax. Of course, it may own a copper mine in Rhodesia.

Photo of Mr Alexander Sloan Mr Alexander Sloan , South Ayrshire

May I ask why the Solicitor-General does not deal with the coal mines?

Photo of Sir William Jowitt Sir William Jowitt , Ashton-under-Lyne

I shall deal with coal in a moment, but I wish to deal with it in my own way.

Photo of Mr David Adams Mr David Adams , Consett

The Solicitor-General said it applied to all companies. Is that so?

Photo of Sir William Jowitt Sir William Jowitt , Ashton-under-Lyne

It applies to all British companies, whether the business is in Rhodesia, or in Honolulu, or in any other place. It applies to businesses dealing in minerals or oil, and copper is a mineral. Now, is it fair to treat the laundry company and the copper mining company on exactly the same basis from the point of view of fixing what the statutory percentage shall be? In one sense the assets of every company are wasting assets.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent Stoke

It is a matter of degree.

Photo of Sir William Jowitt Sir William Jowitt , Ashton-under-Lyne

It is a matter of degree entirely. Some companies waste more than others. I can conceive of a copper company where you can more or less measure what the reserves are. I can conceive of it being said, "You are asking me at the present time to waste out my copper at four or five times the normal extent by reason of the war effort, and it is grossly unfair to me to give me the same statutory percentage as you would give, for instance, to a laundry company. It is true that their machinery wastes too, but relatively my waste is much greater than theirs." Consequently, the copper company would be entitled to go to the Commissioners—and this is rather important—and say, "Having regard to the fact that our assets are wasting assets in the relative sense of the word, we ought to be treated on a favourable and a differential basis. Give us some allowance."The Commissioners may give them up to an extra 4 per cent. It does not necessarily follow that they get 4 per cent. It is not an automatic, addition of 4 per cent, to the 6, 8 or 10 per cent., as the case may be. It is the ceiling beyond which the Commissioners may not go. Of course, the company may not make good their case at all. If hon. Members will look at Clause 13 (1, a) they will see a proviso as to what the Board can do. They shall increase the said percentages only so far as they think necessary to allow for the consideration that, by reason of the wasting nature of the natural source in question, the benefit of capital expenditure incurred by the persons carrying on such trades or businesses may be exhausted at a greater rate than in the case of other classes of trades or businesses. I shall not attempt to pre-judge what the Commissioners may say, but both the hon. Members for Stoke (Mr. E. Smith) and for South Ayrshire (Mr. Sloan) have made observations which would be quite relevant for the Commissioners to consider. I can well imagine somebody saying to the Commissioners, as the hon. Member for South Ayrshire said, "You really should not have any regard to the theory of coal mines having wasting assets. They estimate the coal periodically and, so far from wasting it, each time there is more." The argument of the hon. Member for Stoke, with his engineering experience, concerning those workshops where castings have to be scrapped and the woodwork warps, or whatever it may be, could also be used. You may say that those industries have a greater wastage of assets than the coal mines. It is a matter for the Commissioners to consider.

What is being done in this Clause is to give these people a right to go to the Commissioners to have their cases heard, and to say, "My industry is wasting its assets at a faster rate than other businesses; please let me have something in addition to the statutory percentage which you give to everybody else—Tom, Dick or Harry." They may or may not make a case. It is for the Commissioners to decide. Whatever the Com missioners decide, in the most extreme case such as my case of the copper company, the Commissioners may not give more than an additional 4 per cent. I hope I have made it plain what, at any rate, this Clause is trying to do. I deliberately took the case of the copper company because I think that is a very extreme case in which to make out a case for wasting assets. I merely gave that as an illustration. I do not want to deal with this question as if it were an issue between the miners and mineowners.

Photo of Mr John Tinker Mr John Tinker , Leigh

asked me whether there was any way by which, if the mineowners got something special allowed to them—it may be up to 4 per cent.—they could ensure that that money should be obtained for the miners. Of course, my right hon. Friend the Chancellor—the hard taskmaster—has to get his money, not for miners or mineowners but for the benefit of the nation as a whole, and the miners will look to their trade unions— if I may say so I am a good trade unionist and proud to be one—to see that they get a proper deal. If they do not get it that way, I am not sure how else they will. I confess, quite openly, that I think they are more likely to get satisfaction from an employer who has some money to spare than from one who has been cut right down to the bone.

But that is not my principal reason for supporting the Clause. I desire to support it on the simple ground that if a man can make out that his business is differentiated from those of other people, then, in this rare case where you are dealing with a statutory percentage, he ought to be able to go to the Commissioners and have his case heard, and have a chance of making good that case. If he does make it good, he ought to be treated differently from the other men. When this matter came up before, it took the miners' representatives by surprise, and the Chancellor authorised me to say that it would not be proceeded with that day. Since then, it has been discussed with both sides of the industry. We have dealt with the mineowners' representatives and with the Mineworkers' Federation. We have obtained an assurance that this concession will never be allowed to enter into the ascertainment of wages, and, in those circumstances, we have, after full consideration, obtained a letter from the Mineworkers' Federation saying that they are fully satisfied with what we have done, and that they accordingly withdraw any opposition that they have had.

Photo of Major William Allen Major William Allen , County Armagh

The right hon. and learned Gentleman referred frequently to "the Commissioners." The Bill mentions a Board of Referees. Perhaps he would explain how the Board of Referees comes in to this, and what is the connection between the Commissioners and the Board.

Photo of Mr George Hall Mr George Hall , Merthyr Tydfil Aberdare

How, by any stretch of imagination, can such a matter as this be expected to enter into questions of wages? How could the mineowners take it into account in deciding the wages?

Photo of Sir William Jowitt Sir William Jowitt , Ashton-under-Lyne

With regard to the last question, I never thought that it could enter into such questions; but some apprehension was expressed, and we were told that an attempt had been made in the past. It was for that reason that I referred to it. I am afraid that I referred to the Commissioners in error. I should have said that, under Clause 13, the application is made to the Board of Referees, not to the Commisioners.

6.49 p.m.

Photo of Mr Francis Douglas Mr Francis Douglas , Battersea North

The Solicitor-General has given us a very valuable explanation, but the explanation does not cover all the points involved in this question. The ascertainment of profits for the purposes of the Excess Profits Tax is in normal cases, I understand, made upon Income Tax lines. The provision here applies only in those cases in which comparison is made between the actual profits and the standard. In a normal case, there is no provision, I understand, for the wasting mineral asset. I know that in many mining companies, if not in all, the dividend declared is on the gross profit, without any provision for the replacement of the wasting mineral asset. That is true of many mines such as those to which the Solicitor-General referred. Mines conducting business in South Africa normally pay their dividends on such a basis. They do not accumulate any reserve for replacing wasting mineral assets. That being so, the provision in this Clause, instead of rectifying an anomaly, introduces a new anomaly, and places certain companies, which have been recently started or which happen to have had in the comparison period extremely low profits, in a privileged position.

In addition, the principle of making provision for replacing the mineral asset, or its value, is entirely wrong. The Clause is drafted in an extremely ambiguous manner. Proviso (a) refers to capital expenditure incurred by persons carrying on trades or businesses. It is not clear whether it means capital expenditure in acquiring the mineral, or capital expenditure in working the mineral. If it is capital expenditure on the plant and machinery required to work the mineral, I can appreciate the argument in favour of making some special provision for extraordinary depreciation owing to the shortness of the life of the mineral asset; but if it is intended to make provision for replacing the mineral asset itself, you are not making provisions for the normal thing provided in the accounts of commercial undertakings, which are all directed to replacing tangible capital—machinery and things of that kind. The asset which it is proposed to replace is something which never cost anything to produce, and there is no economic necessity for any fund to be built up in order to replace it.

6.53 p.m.

Photo of Mr David Adams Mr David Adams , Consett

The exception that I take to this Clause is based on its partiality. The principle on which this concession is made seems to be entirely unsound. Surely, coalowners and others take proper cognisance of their financial liabilities at the moment, and of their future liabilities. If the business is soundly run, provision is made accordingly. Who imagines that the copper mine does not make adequate provision for the depreciation mentioned by the Solicitor-General? His complaint is that their profits for disposal to shareholders are limited to anything from 6 to 10 per cent. Surely, in these times that is a reasonable profit. I shall be greatly surprised if the House does not insist before long on a limitation of dividends. It is possible that the concerns which will come later on for this relief may have been earning very large dividends. I know of certain concerns which are gladly paying 100 per cent. Excess Profits Tax, but are paying 25 per cent, upon their capital. Such concerns may, under this Clause, come to the Commissioners at some later date, and say, "Our assets are substantial and rapidly wasting, and, although it is true that we have paid away our capital in dividends several times over, we are entitled, under this Clause, to this concession as a public charge."

Photo of Sir William Jowitt Sir William Jowitt , Ashton-under-Lyne

The hon. Member is under a misapprehension. This Clause will not apply at all to a company which had a good standard year. I tried to make that clear.

Photo of Mr David Adams Mr David Adams , Consett

Suppose a company had a standard year of not more than 10 per cent., would it not apply then?

Photo of Mr David Adams Mr David Adams , Consett

Then I cannot understand it at all.

Photo of Sir William Jowitt Sir William Jowitt , Ashton-under-Lyne

The Clause provides only for those companies in respect of which there must be resort to some other method than the standard year, either because they are new companies or because their pre-war record was so unsatisfactory that they have to be assessed on capital, and not on revenue.

Photo of Mr David Adams Mr David Adams , Consett

That is precisely what I am arguing. A company having a standard year of below 10 per cent, can, in due course, come to the Commissioners and ask for relief on account of wasting assets. I contend that it is unjust to find this additional money for a specialised set of businesses, whose alleged assets may rapidly decline, as against other businesses. The assets may not decline more rapidly than those of shipping, manufacturing, railways or the export trades. This is in decided contrast to the treatment meted out to the industrial workers. We hear it bruited about that they must content themselves with the wages they received in pre-war days, and that no one must be richer because of the war. Here you are going to give to great industrial concerns treatment of a preferential character, so that they may receive, without any justification that I can find, very large sums at the public charge.

6.59 p.m.

Photo of Mr William Gallacher Mr William Gallacher , Fife Western

I want to make it very plain that I consider such a Clause as this most shameful. It is often said that some of us on this side of the House preach the class war. We do not know the first thing about the class war in comparison with the other side of the House. There are Members on that side who ostensibly represent their constituencies, but who are the highly-paid legal advisers to big industry. Highly-paid legal advisers to the mineowners are behind this, and it is a shameful thing. Whose assets are we talking about? Are they the mineowners' assets? The coal belongs to the people, or should belong to the people. The Solicitor-General is directing his attention to very clever and cunning special pleading. It is a pity that we do not have Members on this side of the Committee ready at all times to defend their class. Wasting assets. I ask the Solicitor-General to go around the industries and to see how the assets of the workers in the steelworks and shipyards are being wasted at this particular time. The only asset that they have is the strength of their muscles, their nervous energy and their power to labour. Is not that being wasted? Some of these big fat fellows in the City of London have been asked to make a sacrifice because their assets are being used to bring up from the mines four times more copper than ever before. They must receive consideration. It is shameful that this should be allowed to go on. How can any man in this House who claims to represent the working classes tolerate any talk of wasting assets, when he sees all around him hundreds of thousands of men and women working all hours, and their strength and energy being torn out of them, and there is never a word of consideration for them? This Clause should be opposed by every Member of this Committee.

7.2 p.m.

Photo of Mr Andrew MacLaren Mr Andrew MacLaren , Stoke-on-Trent Burslem

I came in in time to hear the argument of the Solicitor-General, and it was very entertaining. I know him better than to believe that he advanced it in all seriousness. Anyone who mixes up a laundry with a copper mine is making a first-class blunder. Here is a Clause in which language is used which should be challenged in the first instance. The thing that is vitiating the whole discussion is this nonsense called "wasting assets." I do not know who devised these words, but in recent months it has been interesting to notice that Government Departments have been inventing a nomenclature of their own. Perhaps there was a genius behind this Clause. Instead of calling this land, he calls it a wasting asset which someone is exploiting or using.

When a mining company or any other form of company exploit a natural opportunity, surely they understand, if they are wise business men, how much they are likely to make out of the exploitation of some natural element, whether it be copper, coal or anything else. They know how much capital expenditure will be required, in the first instance, to exploit to the full the natural opportunity at their disposal. They are not objects of pity because they use their capital to exploit some part of the earth. In this case we are told that it was a copper mine, or a coal mine, and there is a fixed term in time during which their capital can be in operation. That is what it amounts to. A copper mine or a coal mine, as the case may be, it is adduced from the argument to-day, is not infinite in time; it cannot be subject to natural exploitation for all eternity. Therefore, in terms of time, those who are going to exploit the natural opportunities know that there is a fixed time to it. The capital expenditure in the first instance, if it is undertaken by wise business men, will be such that it will be compensated in use by the amount of the natural opportunity they are to exploit.

Here we come across this fanciful invention of wasting assets. The only thing that is wasting here in the long run is machinery. If you have a good business system, you will be able to make enough profit to be able to replace your wasting machinery. But it is a well-known economic fact that you do not really waste machinery, because the cost of the machinery is included in the price of the commodity that you sell. You retrieve yourself in the price. I hope that I am not going too technically into economics on this point. Men who do not understand economics usually use the words "wasting assets." What object is there in submitting to this Committee, and what point can be submitted even to the right hon. and learned Gentleman opposite for his consideration, that the persons who are using their capital to exploit a natural opportunity—subject to exploitation by a given time, of which they know in the first instance—should have special treatment as against any other user of capital in the ordinary processes of the development of business? If you intro duce the words "wasting assets," you bring into the discussion sentimentality, and that gives an immediate escape. Therefore, special pleading is introduced on behalf of people who are using the mines, whether they be copper mines or coal mines. Is there any compensation to be advanced in proportion to the reduction of the natural opportunity whether it is copper or coal? Is it the argument that they are to have special consideration here because the longer they exploit this natural opportunity the less there is in the store of nature for them to exploit, and, therefore, pro rata, they have to be given a special remission or receive special consideration?

The copper mine, the coal mine and the oil specially mentioned in the Clause —all these things are land. They come into the economic category of land, whether it is oil, coal or anything else. Therefore, when capital is used to exploit the land in order to get at the natural opportunites, those opportunities are not being wasted if they are being taken out of their natural situation and so shaped and formed as to be used to gratify some human desire. They are really being put at the service of mankind. The capital undertakings which undertake these duties see to it that they are adequately compensated by the community for so expending their capital, and that they will all have a good profit by so doing. I cannot for the life of me see why they should be specially treated in comparison with other forms of capital exploitation. And so I say to the Solicitor-General, "Do treat some of us with a little consideration, and do not mix up laundries with copper mines." They are quite different. If I were asked to explain it, I would say this: Copper and coal play a part in one of the things we are discussing here. They were not created by man-made efforts, whereas laundries in all their operations and make-up are surely created, from A to Z, by purely capital production.

Photo of Sir William Jowitt Sir William Jowitt , Ashton-under-Lyne

I gave illustrations as far apart as possible.

Photo of Mr Andrew MacLaren Mr Andrew MacLaren , Stoke-on-Trent Burslem

I see the analogy, but I think my right hon. and learned Friend will admit that sometimes you can make comparisons so far apart that you get no middle course. You had to fly to the extreme in bringing in a copper mine to support the fallacious contention embodied in the Clause. If there is a difference between capital expenditure on the development of some mine, or part of some land, that is different from capital expenditure on a laundry. If there is a difference, why try to make a comparison between one and the other to support your case? Keep this form of capital development quite apart from any other form of capital development and argue your case on the capital expenditure you are discussing, which is that owners of capital who are exploiting a golden opportunity have under this Clause to receive special treatment against those who are using capital in other directions. The plea put forward to-day for special consideration is on the ground that they are using a wasting asset. The words "wasting asset" have vitiated the whole atmosphere.

Photo of Mr John Tinker Mr John Tinker , Leigh

The hon. Member for Burslem (Mr. MacLaren) was not present when I asked the Solicitor-General for an explanation of this Clause. I want to say to the right hon. and learned Gentleman that, to his credit, he has explained what I had in mind. I certainly do not agree with it all, but the explanation was good, and I accept it.

7.13 p.m.

Photo of Mr William Craven-Ellis Mr William Craven-Ellis , Southampton

I spoke on this question of wasting assets a few weeks ago, and the objection I took then I take now. There is no such thing as a wasting asset in coal mining, stone mining or any similar operation. I put it forward that the words "diminishing assets," not "wasting assets," should have been used. A colliery or mineowner who has to conduct his business in a proper manner and make provision at so much per ton for the mineral he is mining is proceeding to exploit that mine, and if a company is not doing that, then I say there is no justification for making special provision for E.P.T. If this matter goes to a Division, I shall not feel disposed to support the Government, because I think it is establishing a very vicious circle and giving a concession to a section of the industry to which they are not entitled. I heard nothing from the Front Bench which justifiably supports this special allowance.

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

Clauses 14 to 17 ordered to stand part of the Bill.