Clause 6. — (Discharge of outstanding tax for years before 1943–44 in certain cases.)

Income Tax (Offices and Employments) – in the House of Commons at 12:00 am on 17th February 1944.

Alert me about debates like this

Photo of Mr Thomas Burden Mr Thomas Burden , Sheffield Park 12:00 am, 17th February 1944

I beg to move, in page 3, line 36, after "section," to insert "or in the railway service."

I need hardly explain that a large number of the salaried staffs of the railways are serving in the Forces and that they have been replaced by temporary staffs. In the payment of Income Tax, the railway salaried staffs are in precisely the same position as civil servants, with insignificant exceptions. They are right up to date, in the majority of instances. I think that that is generally admitted. From the reply given by the Chancellor of the Exchequer to the hon. Member for Central Hackney (Mr. Watkins), in the course of the Debate, it was certainly understood that any concession given to the Civil Service would be extended to the railway salaried staffs. The Clause now before the Committee concedes the case of the temporary civil servant; I claim the same concession for the railway salaried staffs. I admit that the problem is relatively small, but I feel sure that the Chancellor of the Exchequer would desire to carry out fully what was understood to be a promise given by him.

Photo of Sir John Anderson Sir John Anderson , Combined Scottish Universities

My hon. Friend has raised what may be a small point, but it is a point of substance, and I am perfectly ready to meet him upon it. The Amendment he has upon the Paper will not do. I think he will appreciate that the arrangement as between one railway company and another varies. In some cases payments have been made and tax has been collected up to date, as in the case of the Civil Service, and in some cases the tax has been collected as from the 12 months beginning in November, as in the case of the ordinary taxpayer under Schedule E. In other cases the taxation has not been collected until June, so that provision will have to be made, in order to meet my hon. Friend's point, for all those differences. It will take just a little time to work out a suitable Amendment, but I readily promise to propose one to meet his point fully at the Report stage. In view of that assurance, perhaps the hon. Member will withdraw his Amendment.

Photo of Mr Thomas Burden Mr Thomas Burden , Sheffield Park

In view of that assurance, for which I thank the Chancellor, I have very great pleasure in asking leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

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

Photo of Mr Quintin Hogg Mr Quintin Hogg , Oxford

I am sorry that, on my point of Order, the massive architecture of the speech of the hon. Member for Rugby (Mr. W. Brown) was disrupted.

Photo of Sir George Benson Sir George Benson , Chesterfield

I am sorry to interrupt the hon. Gentleman, but I must point out that the Committee are likely to be in some little difficulty. I understand the hon. Gentleman proposes to move to omit Clause 6.

The Deputy-Chairman:

No. We are now discussing whether Clause 6 shall stand part of the Bill.

Photo of Sir George Benson Sir George Benson , Chesterfield

Exactly, but if Clause 6 stands part, the new Clause in the name of the hon. Gentleman cannot be discussed. His purpose is obviously to substitute a new Clause for Clause 6. Where is the basic discussion of the temporary civil servant to take place; on the question, "That the Clause stand part" or on the proposed new Clause of the hon. Gentleman; or can we discuss the two matters together, or, are we to have two entirely distinct discussions?

The Deputy-Chairman:

If the Committee agree, we can take the discussion of the temporary civil servant now. I think it would be wise to have the discussion in such a form that, in the event of the Motion not being agreed to, we are left with the new Clause. In other words, we may discuss the two together if that is agreeable to the Committee.

Photo of Mr Quintin Hogg Mr Quintin Hogg , Oxford

As I was saying, I was sorry indeed that the massive architecture of my hon. Friend's argument was disrupted by a point of Order. He has now, to some extent, had his own back, but I am comforted at any rate by the reflection that the same massive architecture will be rolled into position—[Laughter]—if that is what happens to architecture—to the end that my far more humble structure may fall when it is assaulted by the Chancellor of the Exchequer.

Even now I think I hear the rumble of powerful artillery coming up to support my feeble infantry assault. The point at issue at the present time is whether Clause 6 is to stand part of the Bill. Admittedly I am opposing the Clause as a preliminary to asking for the Second Reading of a new Clause, and I ask the Committee to take the broadest possible view of the opposition to Clause 6. It may be that the Clause which my hon. Friends and myself, after consultation, have proposed to put in place of Clause 6 is not an ideal one. It may be that it is open to difficulties which we do not foresee at the present time, but the question before the Committee is whether Clause 6 stand part of the Bill. Should this matter go to a Division I should hope to bring with me into the Lobby all those who believe that the Government's Clause 6 is a bad Clause 6 and all who think there is a genuine grievance of some kind which ought to be remedied more generously than by the methods which the right hon. Gentleman proposes. I therefore base my argument upon the broadest possible grounds.

The class affected by this particular issue is a large one. I understand there are some 700,000 temporary civil servants. Whether that be so or not, there are in addition to that class the whole class of serving soldiers, sailors and airmen, the officers and men of all the Armed Forces who are affected by the concessions which are made by the Government and, as I shall submit to the Committee, affected unjustly by these concessions. What is the nature of the grievance complained of? I think it can be stated in very simple language. The country as a whole is in process, under this Bill, of switching over from the old system of pay in arrear to the new system of Pay-as-you-earn. That is the broad position. It was observed at once that if we had to switch over from one system to the other either the country would suffer from a double collection of tax—I do not say double payment—within the same period, or it must be given a discharge of tax in order to prevent a double collection. That was the dilemma which presented itself to the Government when it sought to benefit the whole country by payment-as-you-earn. It was found, I think perfectly rightly and inevitably, that it was wholly impracticable to adopt the former alternative of double collection. It therefore became necessary to ease the burden by granting a partial discharge. That was the position.

This situation arose in respect of the class I have defined which is affected by this Clause, this very broad class: Years ago, when they first entered the employment of the Crown they had to switch over from paying in arrear to paying as you earn, and again the Government were faced with the same alternative of a double collection of tax or else a partial discharge. In these circumstances the Government, realising that the class although numerous, was not sufficiently large to effect a major political agitation, chose the former alternative, which they deliberately rejected when they had to deal with the country as a whole. They chose the alternative of a double collection of tax, sometimes referred to as a double payment, because it is a double payment over a period of 12 months, although it is true that in the end, by the time they are dead, they do not have to pay twice in respect of the same amount of income earned during a given period. It ought to be said on their behalf to-day that what is sauce for the goose is sauce for the gander, that if it be right to discharge the main tax-paying classes from their tax on the switch over from payment in arrear to payment as you earn, it is right also to do it for the temporary civil servants and the serving officers and men of the Forces.

Photo of Mr William Brown Mr William Brown , Rugby

And the permanent civil servants.

Photo of Mr Quintin Hogg Mr Quintin Hogg , Oxford

The hon. Member's massive architecture, though useful, may sometimes be a trifle cumbrous if used as an offensive weapon. The first contention is that if you do it for the rest of the country it is only right to do it for these people. The second contention is that when the temporary civil servant entered Government service and had to undergo—unjustly, I think, it must now be admitted—the hard burden of a double collection of tax, he was buoyed up with a natural, proper and legitimate expectation of better times to come. As the law then stood he would be compensated for his double collection of tax when the temporary service with the Crown came to an end. He would have a tax holiday, because having switched over from payment in arrear to payment as you earn when he entered the service of the Crown he would switch over from payment as you earn to payment in arrear on leaving the service of the Crown.

Therefore, the class affected no doubt bore their troubles fairly philosophically with the thought "What we will lose on the swings to-day we will gain on the roundabouts to-morrow." Unfortunately, that has not proved to be the case, because the roundabouts are controlled by my right hon. Friend, and he has stopped them working. He has stopped them working in this way: He has proposed for the whole country that they shall go on to Pay-as-you-earn before the temporary civil servant goes back to payment in arrear, so the promised holiday never takes place. There is to be no holiday at all. They are not merely to be treated unjustly as compared with the rest of the community in the switch-over but they are to suffer the additional injustice that the compensation which they were originally entitled to expect has been removed by the fact that the rest of the community has been given a benefit. The second contention is, therefore, that it is wholly unjust that this limited class should have taken away from them a reasonable expectation of interest on which they were entitled to rely simply because my right hon. Friend has given a benefit to the rest of the community. They are being actually penalised as a result of this Measure. That is the second contention.

On Second Reading the right hon. Gentleman presented the case against these two contentions which I have attempted to summarise. He did not, as I understood him, attempt to deny their justice. He said "This is a legitimate grievance. Wrong has been done, or wrong will be done if the Measure is passed in its present form, but I propose to do it. The Chancellor of the Exchequer cannot always be expected to be just, and there is the interest of the Revenue to consider, and I propose to commit this injustice because I cannot see my way clear to avoid it." That was his argument, and he based it on these grounds. He said that the logical way in which to benefit this class would be to discharge seven-twelfths of their tax assessment of the original year in which they entered the Crown service. That would be the rightful thing, because it would put them on the same level as the rest of the community. If I understood his argument correctly he went on to say that he would be only too glad if this solution were open to him but he said "It is quite impossible. The ingenuity of the Revenue—so long engaged upon screwing money out of the taxpayer—is baffled by this insoluble problem of how to find out what that rate of assessment was when they first entered the service of the Crown. It is too difficult for them; the great powers of the tax-grinding machinery have broken on this tiny obstacle; it is too baffling; they cannot manage it."

Why cannot they manage it? Apparently, it would be quite easy in respect of the temporary civil servants, who are the main class we are discussing, but when we come to deal with the serving officers and men we come to the insuperable difficulty that some are abroad, the records for the assessment of the year in question are difficult to find, they are distributed over a number of Army commands, we cannot get them, we do not know what the sum would be, we are baffled and so we must commit an injustice. I, personally, do not find that argument altogether convincing. I do not believe the power of the Crown is too small to deal with so trifling a difficulty. Of course, we must accept the arguments of the Government, but we have to remember when we do so that these arguments have been presented before. We cannot forget that at every stage in this Measure we have been confronted with insuperable difficulties of administration. For years we were asking for Pay-as-you-earn for the community as a whole, but no, it would involve sacrificing nine months' revenue, and it was extremely difficult to devise a method of collection. It was not until the House insisted that something should be done that a reluctant Revenue took the trouble to do it.

We have great confidence in the Revenue, we believe that when they are pressed they can solve these difficult problems which seem to baffle our inexpert minds in this House. Over a period of years, when they have been compelled they have always acted in the way we have wanted. I suggest that the proper course is to compel them to do as we want even, if necessary, by means of an adverse vote. For the purposes of this argument I am prepared to concede the Chancellor's point. I shall say that admittedly it is true that for a very small number of serving officers and men it would be difficult or impossible to secure the figures which the Chancellor says he cannot secure. But does that prove his case? Is it to be held in this Committee that the fact that you cannot do justice to two men is to compel you to deny justice to 98? That seems to me the logical conclusion of his argument on that point. As far as I can see there is no insuperable difficulty with regard to the vast majority of the class affected, no insuperable difficulty with regard to the temporary civil servant himself, nor with regard to serving officers and men; only a small proportion whose records are not in this country are affected by this baffling problem. I am bound to say that even if one accepts the problem as impossible of solution one would have been tempted to rejoice over the 99 that could be saved rather than over the poor unfortunate who has perished.

The Treasury is seldom generous to us, but it is our duty to be generous to the Treasury. Let us assume that they are right, and that it is necessary to rope in this great multitude of unfortunates, in order to give comfort to the souls of the very few. We have, at any rate, proposed a solution which we think ought to command a certain amount of respect. We are willing to say to the Chancellor, in the Clause which we hope to move, should Clause 6 be negatived, "Very well, if it is not convenient for you to take the year of assessment, why not take the current year?" The difficulty does not occur about the current year. It is very simple to find out about any officer or man, about any civil servant, abroad or at home, what the Chancellor of the Exchequer proposes to extract from his pocket in the current year. If it is not, I should like to know how my right hon. Friend proposes to extract it. It is a case of the swings and the roundabouts—one of the great maxims of political experience. The Chancellor may lose a little on some of the incomes which have increased in the interim, but he will gain a little on some of the incomes which have, unfortunately, diminished a little in the interim. What is good enough for other people is good enough for the Chancellor of the Exchequer. That surely is logical.

Let us suppose that, on the balance of the swings and the roundabouts, the Chancellor of the Exchequer is the loser. Is that so very unjust? I submit not. On the contrary, this solution—admittedly not the only one—proposed by ourselves, in favour of the temporary civil servants, is not, in its existing form, proposed for the benefit of the temporary civil servants at all, but is proposed as a concession to the difficulties of the Chancellor of the Exchequer. It is proposed for the convenience of the Crown, which has got itself so muddled with the records that it cannot trace them back a few years. If the concession is made for the convenience of my right hon. Friend, it is not so unjust for my right hon. Friend to be the loser by a few thousands of pounds on the balance. It is rough justice: it is the sort of justice that we are always getting; and it does a great deal more for the subject than the Chancellor of the Exchequer proposes to do. One other argument, I understood, was in my right hon. Friend's mind. That was that if he did not withstand the temporary civil servants it would be impossible for him to withstand the permanent civil servants. I was impressed by his caution. Now he can fling that caution to the winds. Rightly or wrongly—I know that one hon. Member of the Committee thinks wrongly—we have withstood the permanent civil servants, so we need not bother about them any more; we are fighting on a united front for the temporaries. It is a pity that the solution which has, in fact, been proposed under the Clause we are actually discussing should be subjected to so violent a criticism as I feel will inevitably be poured on it in this Committee. The alternative, put forward by my hon. Friends and myself, may not be perfect, but, however bad it may be, it will stand very favourable comparison with that in the name of my right hon. Friend.

What is the proposal in Clause 6? It is that if on 6th April, 1944, a person is in Crown employment on that date, and there remains unpaid by him any Income Tax under Schedule E for the previous year or the previous years, he gets a certain discharge. The proposal which we are discussing is one by the Chancellor of the Exchequer to penalise those who have paid their taxes and to benefit those who have left them unpaid. Of course, this is familiar Treasury practice. We have known for years that the way to avoid paying your Income Tax was to accumulate vast quantities of unpaid tax, and then the Chancellor of the Exchequer would be most generous. The larger the amount, the better. A £30,000 indebtedness to the Treasury is a great advantage in dealing with His Majesty's Government. The paltry 5s. goes to the police court, but the £30,000 is the subject of a favourable composition. It is not unnatural that the right hon. Gentleman's mind is so debauched by the reckless extravagance in which his Department has indulged for years with the money of the citizens, that he should have proposed an extension of it in this Bill, but I doubt whether the Committee would favour an innovation enshrining for the first time in the Statute Book, and giving permanent effect to, a practice which has always been the subject of grievance, frequently of complaints, and often of scandal. We shall, under this Clause, let off the people who will not, or have not, paid, and do nothing whatever for the people who have paid.

The Treasury is very often penny wise and pound foolish. It may be that, under the alternative—and I am not persuaded that it is the only alternative—we propose to offer, the Treasury would be the poorer by a few thousands of pounds—who knows? But I believe that if you proceed upon an immoral basis of taxation, penalising the just and doing good to the unjust, though it may have Biblical sanction in the parable of the unjust steward, ultimately you will not benefit the Exchequer of the United Kingdom. I resist this Clause. I resist it on the ground that it does not remedy an admitted grievance; I resist it on the ground that difficulties in the way of remedying that grievance have not been satisfactorily proved by my right hon. Friend; I resist it on the ground that there exist reasonable alternatives, one of which, at least, is on the Order Paper; and I resist it on the ground that the compromise which is in fact proposed is one which does small credit to the Exchequer and introduces a vicious principle into the administration of Revenue law.

Photo of Mr William Brown Mr William Brown , Rugby

I wish to establish two points. The first is that in this area which we are now considering what is proposed under this Bill will be productive of great hardship. I could quote hundreds of letters which I have received on this subject, but I want to give only one or two examples. Here is the case of a temporary administrative officer, released from a post at a university to assist more directly in the war effort. When he came into the Civil Service, in 1940, he owed £90 in respect of his last year of outside earnings. He was told that he would have to go on to Pay-as-you-earn, and so in the first year he was liable for the £90 outstanding, and to his month-by-month deductions from his earnings in the Civil Service. Like most workers in universities, who are grossly underpaid, he had no large balance to pay this £90. He went to the bank manager to borrow the money, and the bank manager advanced it only on the assurance that later the man would get a tax holiday—otherwise, his credit would not have been good enough. So, having borrowed the £90 and paid the double taxation, he is now told by the Chancellor that the compensatory tax holiday will not be forthcoming.

Take the case of two men, one entering the Civil Service and the other not. The one entered the Civil Service on 1st November, 1942. His tax payable on the 1942–43 assessment, payable in full before 31st March, 1943, was £126 2s. 6d. The 1943–44 assessment, payable for the year ending 31st March, 1944, was again £126 2s. 6d. That is a total of £252 5s. Compare him with the man earning exactly the same money who stayed in the outside occupation.

Photo of Mr William Brown Mr William Brown , Rugby

Yes. In the case of the second man, the tax payable will be £126 2s. 6d. for the 1942–43 assessment, and then he will be liable for the 1943–44 assessment, amounting to five-twelfths of £126 2s. 6d., or £52 11s., so that his total taxation in that period will be £178 13s. 6d., as compared with the £252 5s. paid by a man in an exactly similar position coming into the public service as a temporary officer. The difference is £73 11s. 6d., of which the Chancellor of the Exchequer has robbed that man. Up to now the Chancellor has only borrowed the money, but now he makes it plain that he will not return it. What does he propose? All he proposes is that when we come to 6th April, 1944, if a fellow has any tax outstanding on his outside earnings before he came into the Civil Service, that will be excused.

Let us see what difference that makes. Most of the temporary officers of the Civil Service were recruited, not this year or last year, but in the first two years of the war. Out of 350,000 temporary civil servants, probably 325,000 do not now owe a penny in respect of their outside earnings. The overwhelming majority of them, in return for this substantial loss of anything from £100 to £200, will not get a penny back. My hon. Friend the Member for Oxford (Mr. Hogg) was absolutely right in saying that where the Chancellor does pay benefit under this Bill he pays it to the least worthy, not to the most worthy. Those who have been most just in paying their tax are least likely to have sums outstanding and those who have been most backward in paying are more likely to have sums outstanding. In response to the plea for the 350,000, the Chancellor gives us nothing for 325,000. And to the rest he gives less than what he has taken and gives it in inverse ratio to their tax worthiness from the Exchequer point of view. I think that to be a grave mistake. I cannot conceive that this Committee can regard that as an answer to the case. I submit that, after all these are our servants, and they look to us for justice. What reason does the Chancellor give us for this attitude? His reason was that he thought about it, and thought about it, and thought about it and that this was the best he could do. When I heard that I was amazed. The Chancellor has the widest experience of the mechanics of government of probably any man alive in Britain—40 years' experience, with occasional help and advice from me.

An Hon. Member:

You put him where he is.

Photo of Mr William Brown Mr William Brown , Rugby

Forty years' experience, and, if I may be allowed to say so, a first rate brain, though I sometimes think, that his bowels of compassion are somewhat under-developed! As a result of this first-class mental equipment and long years of experience, for years past, whenever a problem cropped up in the Government which was more than ordinarily difficult, the word has gone out "Send for the Chancellor." And he has been sent for and in due season has produced the appropriate solution. Now, Sir, we witness the collapse of that great brain! The right hon. Gentleman has solved problems from Ireland to India, and from every quarter of Britain and the globe, but he collapses completely in face of the mechanics of this little problem of adjusting a temporary clerk's Income Tax. We are told that Homer sometimes nods. This is Jehovah snoring! We do not want to divide against this Bill, but we really must have a square deal. If we can only impress on the Government that the Lobby is the only way to get justice, then let us go into the Lobby, and show this country that, united as we may be behind the Prime Minister in the prosecution of the war, we are equally united to see that our own servants in the public service get a square deal, and are not let down.

Photo of Sir John Anderson Sir John Anderson , Combined Scottish Universities

I wish I could offer the Committee as great a treat in the matter of oratory as it has just had from my hon. Friend. When this question Of the temporary civil servants, or the temporary Crown servants—we must always keep in mind the wider category—first came up, I admitted, as the Committee will recall, that we were face to face with a grievance which was a real grievance, and, in some degree, a legitimate grievance. When I made those observations, I knew perfectly well that I should be encouraging some hope that a way would be found of meeting the grievance. I am not so simple as to have thought otherwise. But I did call attention to the complexities of the matter, and some hon. Members, even some hon. and learned Members, were disposed to make light of what I said. I did not exaggerate. The matter is, in fact, highly complex, and I shall show in a moment, by reference to the remedy that has been proposed by my hon. Friend behind me, how difficult it is, in the realm of tax law, with which we are now concerned, to find a satisfactory remedy. Let us just see what this Amendment, to which, I am sure, very much thought and high intellectual capacity has been applied, does. I do not say this merely for the sake of criticising. It is necessary that the Committee should realise what it is with which we have to deal.

In the first place, the Clause which is suggested as an alternative to Clause 6 in the Bill, has quite clearly been drawn with the Civil Service primarily in view. I suggest to the Committee that the case of the men serving temporarily in the Armed Forces is no less important, and I must point out how much more favourable is Clause 6 of the Bill, on which my hon. Friend behind poured such scorn, enjoying himself so much in the process, than this new Clause which it is proposed to substitute. We must examine what Clause 6 does in regard to the hardest case of all, probably, the case of a man who went from a good position in private employment into the Armed Forces at a very small rate of remuneration, not liable to tax at all. The fact is that, during the new employment in the Forces in the majority of those cases where the previous pay was not made up, the Revenue authorities have simply allowed the debt from previous employment to stand over. There was no alternative; the man had no resources. I do not claim it as a virtue on anybody's part, but it did, in fact, stand over. What this Clause does—and its effect should not be underestimated—is to discharge the outstanding liability. Against that, which, in these particular cases was generous, and rightly generous, in my opinion, what the amending Clause does is to discharge seven-twelfths of any liability in respect of the emoluments of the person in question in his capacity of Crown servant, that is, perhaps, as a member of the Armed Forces not liable to Income Tax at all. The thing will not do; most obviously, it will not.

I was puzzled at first to know why my hon. Friend and those associated with him had selected for the purpose of their Clause the basis of tax in the current year and not taken the logical course, as he recognised in his speech, of the over- Lapping tax in the first year of Crown service. My hon. Friend explained by reference to what I said about the difficulty and complications, but I did not then merely mean the difficulty of ascertaining in due course the amount of the tax that had been paid in the first year of Crown employment. That is on record and can be ascertained, though in a number of cases the deductions are made all over the world—this is literally true—and it takes some time to get the records together. But that is not the only source of complication and difficulty.

If you are to deal with this matter, as we are asked to deal with it, on its merits and in cases where there might be real hardship and injustice, if you like, you have to look at every kind of case that comes into the picture. You have the man who went from paid employment into the Crown service. That is one type of case. You have, on the other hand, the man who went from no employment at all into Crown service. In his case, there is no overlap. He was not paying Income Tax, but begins to pay when his Crown service begins, and there is no hardship at all in that case. Somewhat similar is the case of a man who enters Crown service having been an Income Tax payer under Schedule D, such as a doctor in practice, who goes into the Civil Service or the Armed Forces. He has an overlapping payment; but he gets his tax holiday when his Crown service comes to an end. There is no case there for doing what the alternative Clause would do—provide for remission of tax. Then there is the case of a man who enters Crown employment during the war and is retained permanently. His position is in no way different from the position of anyone who has entered the Service at any time in the past in a permanent capacity. The case, in equity, for making some repayment to him cannot be established. There are other complications. There is, for example, the one—which is not inconsiderable—that people who entered the Civil Service temporarily prior to November, 1940, entered it under a different régime of taxation altogether. They entered before the method of deduction from monthly payments as from the 1st November had been introduced. In their case, the liability was to pay half-yearly and the overlap in these cases is quite different from what it is in the case of those who entered the Crown service after November, 1940. I think that was the date.

I have said, I think, enough to show that the matter is, in fact, highly complicated, if you are to deal with it by way of Amendments of revenue law, and I think I have shown also that Clause 6 is, in fact, much more generous to a very deserving class of case than the alternative which has been proposed. But there is, in my view, a very grave objection in principle, even if the complications to which I have referred did not exist, for dealing with this by way of amendment of the Revenue law. I mentioned the matter when dealing with the case of the permanent civil servants, when I said that every time a reform is introduced some anomaly is created, and it is destructive of the principles on which Revenue law must be based to have to go back and reopen closed transactions and accept liability for repaying revenue which at the time it was due was lawfully due. I should be very sorry indeed, as an old Revenue man, to be the first to introduce a principle of that kind into Revenue law. May I point out that the situation that arises here is not entirely new? It has happened before that the House of Commons, with its eyes open, has changed the law with regard to Income Tax in such a way as to deprive people of facilities to pay, or of an easement in payment, which they have previously enjoyed and to the continuance of which they felt entitled to look forward. Take, for example, the change made not very many years ago, when the arrangements for collection of Schedule A were changed by this House, when payment was exacted in full on 1st January instead of by two half-yearly instalments. When that change was made many people found themselves under the necessity of having to pay 18 months' tax over a period of about six months.

When I have said all that and, I hope, explained fairly adequately the difficulty that I have seen—and that I still see—in dealing with this matter by way of a provision in this Bill or any other Bill of the kind, I have not come quite to the end of my story. I do recognise this element of hardship. I am anxious, as a man who has been in the public service for 40 years, as my hon. Friend was so unkind as to remind me, that people who come into the service of the State in time of great emergency, not thinking of their personal interests, to give the best service they can, should not go out with a bad taste in their mouths. I have decided that, as I cannot find a remedy in this Bill, I will seek a remedy elsewhere. I am prepared now to say that I will see to it that arrangements are made which will have the effect that temporary Crown servants of all kinds, civil servants, and members of the Armed Forces, where two conditions are satisfied, where there has been an overlapping tax payment and where the tax holiday to which they were entitled to look forward has been withdrawn from them as a consequence of this legislation, shall receive a cash payment sufficient to relieve them of their disability.

I do not think I can really say anything fairer than that. It cannot be done here; and in the way in which I contemplate doing it, the complications will be much less troublesome than they would be under something which had to be provided in legislation in precise terms. I have made this statement, in terms which I have carefully considered—they are precise and free from ambiguity—of what I intend to do. What I contemplate, although I do not want to be absolutely tied, is that the matter should be dealt with in much the same way as the post-service credits to Service men are dealt with—a cash payment on a corresponding occasion. And I would add, that the matter will have to come to this House, because I shall have to secure a provision which will dispense the Revenue authorities from the necessity of collecting Income Tax on the payments in question. But exactly the same position will arise in regard to the credits of the men in the Fighting Forces, and it will be very convenient probably if the House were called upon to deal with the two matters at one and the same time. The assurance I have given is precise and free from ambiguity, and I think it does remove any great hardship.

Photo of Mr Frederick Pethick-Lawrence Mr Frederick Pethick-Lawrence , Edinburgh East

I am sure that I am speaking for the Committee as a whole when I say that we welcome very sincerely the statements made in the last part of the speech of the Chancellor of the Exchequer. I do not believe that there was anyone but who felt that, as the Bill stands, it would have been the creation of a hardship and that it would have been an injustice that would have rankled in the minds of some of the most patriotic people in the country and would have left, as the Chancellor himself inferred, a nasty taste in the mouths of those who had done the work which their country had required them to do. If I might utilise a metaphor employed by the hon. Gentleman below the Gangway, we have seen Homer awakened from his sleep and apply the full genius of his mind to a solution of this problem. We know the Chancellor of the Exchequer in this House to be an honourable man and that when he says a thing he means it, and when he means a thing he does it. I do not go quite as far as to say that what he intends to do is precisely as clear in our minds as it is in his own mind. The words he used were, "relieve them of their disability," and precisely what that means I do not know. At any rate, we shall no doubt know hereafter and I am prepared to give the Chancellor, who has come down on this side, in view of our past experience of him, the benefit of the doubt, and feel sure that it will adequately meet the case.

With regard to the salaried staff—this is a small but important point—on the railways, the Chancellor has already recognised in a previous Clause the justice of the claim put forward on their behalf by my hon. Friend who moved the Amendment. If the Chancellor will look into the matter in regard to this as well, I am sure he will find there is a precise similarity between some of the cases of the salaried staffs of the railway service and those of the temporary civil servants. In view of what he has done on previous Amendments I feel confident that, if he applies his mind to this question, he will provide some remedy for their case. There are two types of people. There are those who entered the salaried service from outside employment and those who came up into the salaried staff from a wage grade at some time during the war. I am convinced that, if he applies his mind to them, he will find some remedy for them equal in character to that which he is proposing with regard to the servants of the Crown. I can only conclude by saying once more, that the Committee is grateful to the Chancellor of the Exchequer for his action. We believe that it has been taken not merely in order to please a certain small section of the community, but to please the whole community, which desires to see justice done and no hardship created which could be removed by a Member of His Majesty's Government.

Photo of Commander Sir Archibald Southby Commander Sir Archibald Southby , Epsom

I would like to express appreciation of the way the Chancellor of the Exchequer has dealt with what obviously was an exceedingly difficult problem. I would like to express to him my own gratitude and the gratitude of the very large number of civil servants whom I have the honour to represent, and I would also like to express thanks on behalf of, though not representing them, the members of the Service to whom the right hon. Gentleman referred in his speech. I certainly accept the promise of the Chancellor of the Exchequer, knowing full well that it will be honoured not only in the letter but in the spirit. He has dealt with a very difficult problem and he has dealt with it, as the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) said, not because it affected only a small section of the community, but because it was an injustice which the whole community realised was being inflicted upon one section.

Photo of Mr Thomas Harvey Mr Thomas Harvey , Combined English Universities

I would like to join in expressing thanks for the very valuable concession made by the Chancellor of the Exchequer and also for his sense of justice in his desire to remove what he really felt was a legitimate grievance. It would help, I think, if we could have an explanation from the Financial Secretary on one point. When the time comes for this concession to be made, will it be necessary for individual applications to be made to the Inland Revenue authorities, or will the assistance be granted whether or not an application is made?

Photo of Mr Quintin Hogg Mr Quintin Hogg , Oxford

As I was, perhaps, responsible for this Debate, I would like to express my appreciation of what has been done. I would have asked for an explanation on the lines of that of the hon. Gentleman the Member for the Combined Universities (Mr. Harvey), but so far as I am concerned I think we can afford to wait until the Chancellor's statement. The moral to be drawn from this Debate is that real, concrete results can be obtained by pressing the Government in this Committee and in the House of Commons, and that the Government derive their strength and not weakness from making concessions to the House of Commons as they have generously done to-day.

Photo of Mr Ralph Assheton Mr Ralph Assheton , Rushcliffe

There are two points to which I would like to refer before we pass from this Clause. My right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) asked about the railway companies. We must talk to the railway companies about this matter and they may well wish to consider whether they should make some similar sort of arrangements for their employees. But beyond that I cannot go at this stage. With regard to the question put by the hon. Member for the Combined English Universities (Mr. Harvey) I am afraid that I cannot answer it at the present time. We have not sufficiently worked out the plans on which this is to be operated but in due course I hope that we shall be able to give the reply.

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

Clauses 7, 8 and 9 ordered to stand part of the Bill.

Schedule agreed to.

Bill reported, with Amendments; as amended, to be considered upon the next Sitting Day, and to be printed.