New Clause. — (Prohibition of Certain Activities for Protection of Pool Betting Duty.)

Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 17th June 1952.

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(1) With a view to protecting the revenue derived from the pool betting duty, it shall be an offence under this section for any person—

  1. (a) to conduct in Great Britain any business or agency for the negotiation, receipt or transmission of bets to which this section applies; or
  2. (b)knowingly to issue, circulate or distribute in Great Britain, or have in his possession for that purpose, any advertisement or other document inviting or otherwise relating to the making of such bets.

(2) This section applies to all bets made byway of pool betting, except (in the case of bets not made by means of a totalisator) where the promoter of the betting is in Great Britain or the promoter of the betting is in Northern Ireland and the bets are such as to be chargeable with a duty corresponding to the pool betting duty under an Act of the Parliament of Northern Ireland, or (in the case of bets made by means of a totalisator) where the totalisator is in Great Britain.

(3) A person guilty of an offence under this section shall be liable—

  1. (a) on summary conviction to a fine not exceeding one hundred pounds or, in the case of a second or subsequent conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding two hundred pounds or to both; or
  2. (b) on conviction on indictment, to a fine not exceeding five hundred pounds or, in the case of a second or subsequent conviction, to imprisonment for a term not exceeding one year or to a fine not exceeding seven hundred and fifty pounds or to both.

(4) A person who makes or tries to make a bet by way of pool betting, or who gets or tries to get any advertisement or other document given or sent to him, shall not be guilty of an offence by reason of his thereby procuring or inciting some other person to commit, or aiding or abetting the commission of, an offence under this section.

(5) For the purposes of this section the expression "bets made by way of pool betting, "the expression "promoter" and the expression "totalisator" have the same meanings as they have for the purposes of section six of the Finance (No. 2) Act, 1947.

(6) This section shall come into force on the fifteenth day of August, nineteen hundred and fifty-two.—[Mr. Boyd-Carpenter.]

Brought up, and read the First time.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

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

This Clause relates to the rather different subject of pool betting. As the House is aware, Clause 4 of the Bill is designed to close a loophole which has been discovered in the present administration and operation of the Pool Betting Duty. I will, if I may, summarise what it dealt with. Certain firms had adopted a system known by the agreeable title of "flexible odds," which under the law as it stood enabled them to evade duty. Apart from the loss of revenue, this was very unfair to the pools operated in the normal way and which, therefore, paid duty in the normal way.

Since the introduction of this Bill, one of the firms which had been operating the flexible odds system has devised a new method which, under the existing law, would enable them to evade duty. The essence of the problem is that under Section 6 of the Finance (No. 2) Act, 1947, under which the Pool Betting Duty is imposed, the operation of the duty is limited to bets, wherever made, in cases in which either the totalisator, or, as the case may be, the promoter of the betting, is in Great Britain.

One of the firms which had been operating the flexible odds system no doubt studied the Finance (No. 2) Act, 1947, with the attention it deserved, and formed a company in the Isle of Man from which a pool could be promoted. No pool betting was conducted in that island because under Manx law pool betting is illegal; but the fact that the company operating the pool was registered in the Isle of Man, taken in conjunction with the provision of the 1947 Act to which I have referred, would almost certainly enable the operation of that pool to evade duty.

This new Clause has been put down to close that very rapidly found loophole in Clause 4 of the Bill. It is taking the minimum powers required for the purpose. For example, subsection (1) of the new Clause provides that no penalty is incurred by anybody who merely sends in a coupon. Equally, I am advised that junior employees of any pool so operating would not be caught by the provisions of the new Clause unless they were knowingly co-operating in that evasion of the law.

Similarly, newspapers inserting advertisements would not be so caught unless the Crown were in a position to prove that they had knowingly assisted in an evasion of the law. But the agent, the person really conducting the pool, would be caught by the Clause and would be liable to the penalties, which are the same penalties as under the present betting and lotteries legislation.

Another aspect of the matter to which I should invite the attention of the House is the fact that the Clause does not apply to a pool operating from Northern Ireland. The reason is not a desire to encourage tax evasion in that Province; it is so drafted merely in view of the fact that already the pools operated in Northern Ireland come under a tax which is substantially the same as our own, and their enforcement legislation last year exempted a pool operated in this country. That is the reason for that exemption.

The object of the Clause is to protect not only the interests of the pool promoters who operate their pools in accordance both with the spirit and letter of the existing law, but, what is more important, the substantial revenue which the Exchequer derives from this duty, which last year was about £17 million.

Photo of Mr Will Nally Mr Will Nally , Bilston

With so many much more important matters ahead, I do not wish to detain the House for too long upon this subject, but I would venture to make one or two comments which I hope the Financial Secretary and the House might not think inappropriate. This Clause, largely justified in itself, is the culmination of a process which began three or four years ago.

The process consisted roughly in this. More and more the pool betting business of this country was and is falling into fewer and fewer hands. So much was this so that two years ago it was true to say that 90 per cent, of the normal, legitimate football pool betting in this country had fallen into the hands of seven major firms. Since that time there has been a further amalgamation. The result now, broadly, is that four major firms control 90 per cent. of the pool betting.

Appetite grows. The major pool companies—Littlewood's, Vernon's and two others—are now engaged on a campaign which is perfectly legitimate but about which it is just as well the House should be aware, and which the Financial Secretary and the Chancellor—I make no complaint about them on this—are engaged at the moment in aiding and abetting by this Clause. It is a campaign whereby the major pool firms are in process of cleaning up all smaller forms of pool betting, no matter what they might be, or by whom they might be run, or from where they might be run. The large pool organisations, the great quartette, are now engaged in exterminating the periphery of minor people in the pools business. This Clause substantially assists them in that task.

This Clause, in effect, makes matters almost, though not quite, impossible not only for one firm but for one or two others, which are taking, at a rough estimate, something like £500,000 to £750,000 a year in turnover out of the general pool business of the United Kingdom.

I hope the Financial Secretary will forgive me, as there is not the slightest reflection on him about this. I think, however, I am right in saying—I am certain it was for the first time in his life—that a few weeks ago he had the pleasure of meeting downstairs a pool millionaire. The pool millionaire, accompained by a very able legal adviser—in this case I am looking into the crystal and perhaps the Financial Secretary will correct me if I am wrong—made representations to him on behalf of the pool promoters' group, which led to this Clause. I am not complaining of the Clause as it stands. I ask, however, the Financial Secretary and the Chancellor to realise precisely what is happening, and what they are doing in this Clause.

The Financial Secretary referred to the ingenious discovery of "flexible odds. "It is true that the flexible odds device was intended to overcome the provisions of the 1947 Act. The leading pool promoters were perfectly entitled to draw his attention to and embark on their campaign, with his co-operation, for the extermination of those who had discovered this device.

Surely that argument can cut both ways? The position now is, with the leading football pool firms, that although we know they receive £X amount and although we know the State draws 30 per cent. of any revenue of a legitimate pool firm—in addition to which the Post Office draws a satisfactory sum from the point of view of the Financial Secretary —and although flexible odds are a device for evading Income Tax, if one were to inquire more closely into the general expenses of the football pool firms who are largely responsible for the introduction of this Clause, one would, equally, find grave anomalies which should be cleared up.

The pool firms who made the representations to the Financial Secretary, and others whom he saw, claim to pay out —and I think they do so—80 per cent. of their total revenue. The other 20 per cent. goes as to roughly 5 per cent. in promoters' profits and 15 per cent. for expenses. But, if I were a leading pool promoter and chose to put my cousin's son on my pay roll at £1,500 a year in the capacity of a director of a sub-postal department, that would be completely allowable for normal expenses purposes.

One of the minor complaints I make about the Financial Secretary's apology for the Clause is this idea that here are the blacks and the whites—the naughty little people registered in the Isle of Man who have actually devised a wicked way of getting round the provisions made by the Chancellor of the Exchequer and on the other hand, the legitimate, worthy gentleman conducting a large legitimate pools business whose only purpose in seeing the Financial Secretary was in order that the honour of the State should be preserved and in order that proper Income Tax revenue should be derived from those naughty people who are evading it.

I think that, on the whole, the Financial Secretary has been just as clear and just as honest about it as was our own Front Bench in these matters; that is to say, there is no question of blame attaching in this, but I would make this point to him. One of these days the House and the country will have to face the fact that, although a person is as entitled to put on two or three bob a week as anyone is entitled to smoke cigarettes, or have a glass of beer, this football pool business is becoming a large profiteering racket which is made even worse by virtue of the fact that the State takes 30 per cent. of the proceeds.

This new Clause, which certainly I do not dream of criticising unduly, does not represent a genuine effort on the part of the big pool promoters to draw the attention of the Chancellor of the Exchequer to an evasion of tax; this is part of a long-term policy embarked upon by the quartette who now largely run the football pool betting of this country to exterminate any competitors of whatever kind, large or small, who interfere with the monopoly which, in about 18 months from now I should say, those firms will have in controlling the whole of football pool betting in this country.

Whilst approving of the new Clause, it is my sincere hope that either this Government or another, one of these days, will at least have the courage, in drawing 30 per cent. of football pool revenue, to have regard to how far those who are at present battening on and making large fortunes out of the football pool industry themselves deserve the further examination and possibly the further penalties involved in this Clause which apply, as drafted, only to minor firms who have committed the major offence of taking a few odd thousands out of the pockets of bigger promoters.

4.45 p.m.

Mr. Muiley:

What struck me most in the speech of the Financial Secretary was the enthusiasm he appeared to show in stopping private enterprise. It really seemed to me that hon. Members opposite are realising, what we have known a very long time, that the great disadvantage of private enterprise is that it is, much of it, not in the public interest but has a purely selfish profit end. For that reason we shall support this new Clause.

In reading the Clause through, I must confess that I did not understand what it really meant. Indeed, there was a very great contrast between the cogent and clear explanation by the Financial Secretary and the actual drafting of the Clause. I ask him to assure me, and possibly other hon. Members, that there is nothing in this Clause which will interfere with or get into trouble the ordinary working man, and many non-working men, who participate in pool betting. I am quite sure that if I cannot, and other hon. Members cannot, realise whether or not if they participate in pool betting they will be under a penalty under this Clause, a great many other people will be similarly placed. Therefore, I should like his assurance on that point.

I wish to reinforce what my hon. Friend the Member for Bilston (Mr. Nally) said with regard to the check on pool expenses generally. I think it would be very unreasonable and hypocritical to bring in a Clause of this size to catch one small firm evading tax, although I agree that they should be caught, if comparable measures are not taken to check the accounts of the large companies. Pos- sibly they are not defrauding because it is quite legal for them not to submit accounts.

We have been through this in Committee and received very little sympathy from the Financial Secretary and the Government Front Bench in our demand that tax evasion should be dealt with on a large scale. I do hope that after this Clause, although it is a very small point dealing with a tiny hole in the net of tax through which evasion can take place, we shall get the support of the Financial Secretary in stopping some of the much larger holes we have to discuss as the Report stage progresses.

Photo of Mr Douglas Johnston Mr Douglas Johnston , Paisley

I understand and sympathise with the aim of the Financial Secretary to strike at those persons who are avoiding their due rate of tax. But I was not quite satisfied with his explanation when he went on to say that those small persons employed by the pool promoters as clerks, messengers and so would not be struck at by the Clause nor incur very heavy penalties under subsection (3)—the penalties being, on summary conviction, a fine of £100 and, on indictment, £500.

If the hon. Gentleman will look at subsection (1, b), which is the alternative offence, he will see that it says it is an offence: knowingly to issue, circulate or distribute in Great Britain …any advertisement or other document inviting or otherwise relating to the making of such bets. Surely any person who knows that the circular relates to bets and issues that, either by putting it in an envelope, addressing it and so on, or delivering it, is a person who may be convicted under this subsection and on whom heavy penalties under subsection (3, a and b) may be inflicted.

The second question I would ask is, what would happen in the case of a person who registered his company in the Channel Islands and then operated in this country? If an offence would be committed, as I think it would, by the circulation of advertisements in this country, how would jurisdiction be obtained over the person really behind the circulation? I doubt even if it would be possible to attack or obtain jurisdiction over such persons.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

Perhaps I may put one or two questions to the Financial Secre- tary before he replies, and thus save time.

This, of course, is different from many of the other new Clauses and Government Amendments, because it does not arise from any of our discussions during the Committee stage. It is a last minute move by the Government to prevent tax evasion. We on this side of the House are against tax evasion, and therefore in principle we welcome the new Clause.

But some of my hon. Friends have, I think very properly, expressed anxiety about it, and I should like to ask the Parliamentary Secretary whether subsection (4) of the new Clause is really adequate protection. It reads: A person who makes or tries to make a bet … and so on, shall not be guilty of an offence by reason of his thereby procuring … Does that mean there is no danger whatever of some British citizen—who may not indeed know that the firm in question is located outside Great Britain —who makes a bet or writes for a coupon being prosecuted? I think we ought to have that assurance. We certainly do not want to attack innocent people.

I hope also, and here I am following what was said by my hon. and learned Friend the Member for Paisley (Mr. D. Johnston), that the Financial Secretary will give a full answer as to how the offenders are to be got at. It is not only a question of the Channel Islands. It may happen in France, or elsewhere in Europe, or in the United States. Or it may even become a move in the cold war, with little bits of Soviet propaganda included in the literature——

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

Which would ensure widespread interest.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

—thus ensuring widespread interest, as the Financial Secretary said. How do we impose fines on these people? We do not want to punish our own citizens. How, therefore, can we get at those who really are at fault?

I should also like to ask about the position regarding Northern Ireland. I understood the Financial Secretary to say that Northern Ireland was treated with Great Britain for the purposes of this new Clause, because there is a similar tax on pool betting in Northern Ireland. Therefore, there is no danger of any incentive for a firm to operate from Northern Ireland, because of course it would have to pay the Northern Ireland tax if it did so. But that seems to me very much to depend on the rates of tax. Can the Financial Secretary give us an assurance that there is not sufficient difference—if there be any difference at all—between the rates of tax here and in Northern Ireland to provide an inducement to firms to move over to that part of the United Kingdom?

I was interested, as I think was the House, in the speech of my hon. Friend the Member for Bilston (Mr. Nally). I was a little anxious once or twice. He seemed to associate the Front Bench on this side of the House with the Government Front Bench in being extremely obtuse about the machinations of the leading pool companies.

Photo of Mr Will Nally Mr Will Nally , Bilston

One thing I have always held to be true of all Governments of all parties is that they are completely frightened of the pools organisation, the Lords Day Observance Society and the Bookmakers' Protection Association. That applies to both Front Benches.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

I would say to my hon. Friend that I do not think the fact that we introduced taxation on pool betting, and derived very considerable revenue from it, is very good evidence that we were frightened of this organisation.

I did not quite follow the argument of my hon. Friend that in some way or other the imposition of a tax had helped the pools. It is very rare that anybody on whom a tax is imposed thinks that he is being helped. It may be, but while I was at the Treasury I got no indication, direct or otherwise, from the pools firms that this was the case. I should like to reassure my hon. Friend at once that I never met any pools millionaire, upstairs, downstairs or anywhere else. If the Financial Secretary has had the pleasure of such a meeting, I hope we shall hear about it and that he will tell us what transpired.

Having done my best to reply to what, I will not call aspersions, but to some misunderstanding which may have arisen as a result of the speech from my hon. Friend, I would suggest to the Financial Secretary that if there really is prima facie evidence of monopolies in this industry— if we may call it so—it would be an appropriate subject to be referred to the Monopolies Commission; and as it would probably be much more interesting than many other industries submitted to them, we might get an earlier report. I think he might look at it in that way.

Having put these few questions, I would also say that the printing of this new Clause has gone wrong in one word. There are five "s 's" in the word "possession" in line 6. Perhaps the Financial Secretary will see to it that that is put right, or it might somehow or other prove to be another loop-hole through which the pools companies could march.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

I require the leave of the House to reply to the points which have been raised.

I did not quite follow—any more than did the right hon. Member for Leeds, South (Mr. Gaitskell)—the whole of the argument of the hon. Member for Bilston (Mr. Nally), which went perhaps a little wide of the precise provisions of this Clause. I would say, too, that to the best of my recollection, and to use the words of the Bill, I have not knowingly consorted either with a pools millionaire—I may have met one, but I did not knowingly do so—or with his legal advisers; and if I had, that had nothing whatever to do with the origin of this Clause—as it appears to be me rather than the right hon. Member for Leeds, South who is supposed to have moved in that refined company.

Photo of Mr Will Nally Mr Will Nally , Bilston

It may have been a clumsy phrase on my part about precisely what happened. The Financial Secretary would probably be unaware of it, but downstairs recently he did meet a gentleman, as he was perfectly entitled to do, who was with others. He may not have known that the gentleman he saw, and with whom he discussed this Clause and another Clause, was in fact one of our leading football pool millionaires. I can well understand why the name may not have been familiar to the Financial Secretary, as the name of the pool is different from the name of the person concerned; and I can well understand why the person concerned was not anxious that the Financial Secretary should fully understand what was his financial interest in the matter.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

It gets more and more exciting. I am bound to say, lacking as I do the expert knowledge of the hon. Member for Bilston on this subject, that I may have met somebody without realising I was enjoying the distinction of being in the company of a pools millionaire.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

Is my hon. Friend quite sure that it it was not the Minister of State for Economic Affairs?

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

I am sure that my right hon. Friend would be capable of dealing even with a pools millionaire. I think that we may now proceed to matters which are at least as important as a pools millionaire, the points raised in the discussion on this new Clause, most of which were of a very helpful nature.

The point of law, as I think it was, which was raised from the Front Bench opposite is one to which I would reply with some hesitation. If my reply does not satisfy the hon. and learned Member for Paisley (Mr. D. Johnston), the Solicitor-General is available as always to give the House the value of his legal advice.

5.0 p.m.

As I understand it, the use of the word "knowingly," to which I have already referred in another context, has the result that for the Crown to secure a conviction it will be necessary to prove that the person concerned knew not merely that he was dealing with pool bets but with illegal pool bets. It is, in any event, not intended to proceed either in the case of a subordinate employee of this organisation or, still less, in the case of the person who fills up a coupon and sends it, as is made illegal by the proposed new Clause. Although it is possible that a member of the public might be prosecuted for so doing he could not rightly be convicted, which is what an hon. Gentleman opposite had in mind. The right hon. Member for Leeds, South raised a very important question—

Photo of Mr James Ede Mr James Ede , South Shields

Before the hon. Gentleman leaves that point, would he explain it a little further? A person commits an offence; he is one of those understrappers to whom the hon. Gentleman has alluded. If anyone lays an information against this person, surely the court has to try the case on the words of the proposed new Clause. Does it need the fiat of the Attorney-General, or anything like that? If an offence has been committed, surely the person can be convicted.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

The right hon. Gentleman is referring now not to the member of the public, who is expressly excluded by subsection (4), but to the agency assistant of the pool promoter. There—I speak subject to correction by the hon. and learned Gentlemen opposite —it is necessary to prove only the illegality of the transaction. If that is proved, a prosecution, when launched, might result in a conviction. What I have tried to suggest is that in the administration of this provision it is not our intention to initiate prosecutions. That is what I said and is what I would like to have on record.

Photo of Mr James Ede Mr James Ede , South Shields

Surely a police officer, finding that an offence has been committed, can lay information, and the Government cannot prevent him. He puts the machinery of the law in motion. It proceeds and, on the assumptions I have laid down, there is a conviction. Is it proposed to ask the Home Secretary then to recommend the exercise of the Royal prerogative and a remission of the penalty?

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

Certainly not. For such a person to be convicted he must have known, and it must be proved that he knew, that he was taking part in the operation of an illegal pool. I cannot see why the House should hesitate to bring about that legal possibility. All I wish to say by way of qualification is that the right hon. Gentleman is perfectly right. It is open to any police officer or any citizen to take such proceedings as he desires, but it is not our intention to waste time and public money on the prosecution of small fish. Our intentions are to aim at much bigger game.

Photo of Mr Douglas Johnston Mr Douglas Johnston , Paisley

Is the Financial Secretary not right only if "knowingly" in subsection (1, b) applies to the words "issue, circulate and distribute," and also to "such bets"? Is it not clear from the reading of the subsection that the word "knowingly" applies only to the first of these words and it does not apply to "such bets."

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

If the hon. and learned Gentleman is unhappy on that point I will leave my hon. and learned Friend to reply to him. My own un-instructed understanding would be contrary to that sense, but I would not, on a matter of legal construction, put my own powers against those of a former Law Officer of the Crown. I will leave that point to be dealt with by my hon. and learned Friend, if it is so desired.

The point was raised by the hon. Member for Leeds, South that we might not be able to catch the principal promoter if he were outside the jurisdiction. That is true, but in the case which has given rise to this problem promotion is apparently to be undertaken simply by the formation of a subsidiary company in the Isle of Man without, so far as I know, transportation of any of the individuals concerned in the effective operation of the pool. There may be cases where what the right hon. Gentleman fears may be effected, and where the operation of the pool may be, not only in strict law but in substantive fact, outside this country—not, as he suggested, behind the Iron Curtain but in some more conveniently placed territory.

What we would be enabled by the proposed new Clause to do is to proceed against the principal agent or operator inside this country in respect of whom no difficulty about jurisdiction would arise. After fully considering the matter, we think that the difficulty about the real promoter being outside the jurisdiction could in substance be met by making it extremely difficult for such a person to find a responsible agent to act for him in this country and to incur the penalties of the Clause.

Photo of Mr James Ede Mr James Ede , South Shields

Suppose a person is domiciled in Alderney and carries on business there. He has his office and sends out all his circulars from there.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

He would have some difficulty in operating a pool of any size without having some operating machinery in this country involving some senior representative being in this country on his behalf. It is possible there may be someone doing this on a small scale who could, in that way, evade the operation of the proposed new Clause, but as a matter of practical common sense the operation of any large-scale pool from outside this country would present very considerable difficulty.

In any event, the fact that the proposed new Clause might not completely prevent evasion should not act in its disfavour provided we can show that it is a means of dealing with a real threat to the Revenue. In point of fact, there arises in the particular case to which I have referred an actual instance in which there is no doubt that the operation of the proposed new Clause would prevent evasion. This was the argument which I was seeking to put when I gave way to the right hon. Member for South Shields (Mr. Ede). It will be possible, even where the principal person concerned is outside the jurisdiction, to make his operations in this country very difficult, because he will have difficulty in finding a person to act as his agent in this country.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

May I clear up one point? Does not that mean, though, that the Government would have to prosecute the underlings in this country? The hon. Gentleman was saying earlier that that is precisely what they did not intend to do.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

I think the right hon. Gentleman misunderstood me. There are three categories of people. There is the actual promoter himself, be he an individual or a body corporate; there are what one might describe as his senior operating officers; and there are what I describe as the underlings. I think that probably the right hon. Gentleman was construing as underlings everybody other than the main promoter himself, whereas I was proceeding on the three-tier basis. At any rate, we have cleared that up. We are not seeking to prosecute the office boy; what we want to do is to deter by seeing to it that the principal agent or operator incurs the penalty to discourage him from acting as principal agent.

Photo of Mr Will Nally Mr Will Nally , Bilston

Mr. Nally rose——

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

Really, the hon. Gentleman must contain himself for a moment. I am unable to get out more than a couple of sentences before he rises to his feet.

Photo of Mr Will Nally Mr Will Nally , Bilston

On a point of order. The hon. Gentleman may remember that, as a matter of courtesy, when I had his permission to ask a question, I gave way, at his request to my right hon. Friend. In point of fact, apart from the one occasion when I put a question to him, I have not bothered the Financial Secretary at all. The truth of the matter is that, with great respect to my own leaders, the Financial Secretary is very uneasy about this Clause, because the Clause does not do precisely what he says.

Mr. Deputy-Speaker (Mr. Hopkin Morris):

If the Financial Secretary does not give way, the hon. Gentleman cannot intervene.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

That particular intervention does not encourage me to give way to the hon. Gentleman, although I think I have given way on a great many occasions to right hon. and hon. Gentlemen opposite when I thought they had some helpful contribution to make in dealing with this very difficult matter.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

Will the hon. Gentleman allow me? I am very much obliged. I hope he will not misunderstand the situation. My hon. Friend knows a great deal about this matter, and he was putting an important point. We are anxious, as is the Financial Secretary to stop all evasion as far as we possibly can. I think the Financial Secretary will agree that this Clause as it stands does involve certain difficulties, and we are discussing those difficulties. The problem really is how we are to catch the people who really count and not the people who do not count. Now, we have a three-tier system. Supposing the principals are all outside this country, and there is nothing but a quite small office here. What, then, is the position? I would ask the hon. Gentleman to give consideration to that point.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

If the right hon. Gentleman thinks that his hon. Friend has a useful contribution to make, I will give way to the hon. Member when I have dealt with the point raised by the right hon. Gentleman.

The difficulty which the right hon. Gentleman contemplates is a very real one. In the case of someone who is outside effective jurisdiction, it is quite obvious that nothing which this House can legislate can operate against him, but we can provide, as this Clause in my submission provides at the moment, that it will involve the risk of penalties falling upon those through whom a person must operate if he is to operate inside this country.

It is our intention to try to catch the senior and most responsible servants, and I think the right hon. Gentleman, from his own experience, will appreciate that, although this is no doubt second best, in the case of a person operating from outside, if we are to catch the agent through whom he acts, it is going to be very much more difficult for him to conduct his operations in this country if the fact of these people acting as his agents involves them in certain criminal penalties, and that is the principle on which we are proceeding. We would rather catch the principal, and in some cases we hope to do so.

It is our view that the provisions of this Clause will in practice discourage the operation of a system which, I would remind the House, is perfectly legal under our law, because I do not believe that many people in this country deliberately fly in the face of the criminal law. Fairly hard words have been used about these people who use their ingenuity to evade tax, but it is fair to point out that they have operated within the law, and that it is the defects in and inadequacy of the law which enables them so to operate and which caused us to come to the House to ask for the law to be amended. Now, in accordance with my promise, I must give way to the hon. Member ton Bilston if he so desires.

5.15 p.m.

Photo of Mr Will Nally Mr Will Nally , Bilston

I am grateful to the hon. Gentleman, and I would assure him that all I desire to do is to be helpful. It is plain from the discussion on this Clause that he completely misunderstands the nature of the football pool business. The major agents in cities like Manchester, Liverpool or Birmingham are not full-time people at all, but part-time agents who work in other occupations, who distribute the coupons and receipts for £200 or whatever it may be. In spite of the reluctance of the Financial Secretary to put up with my interventions, I must give him warning that I shall pursue the matter, and, I think, demonstrate to him that this Clause is not his at all, but a pool promoters' Clause. That he knows it as well as I do.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

I do not think that intervention helps us very much.

The right hon. Gentleman the Member for Leeds, South asked about the Northern Irish tax. I understand that it is about the same rate as our own. I have had inquiries made, and although I cannot say that it is precisely the same, in substance it is somewhere round about it, and it is unnecessary to make special provision in this Clause for Northern Ireland. I agree entirely with the suggestion that the pool promoters were helped by the tax, and, certainly representations made on their behalf to me, as they were to the right hon. Gentleman, seem to indicate that they took that view.

This Clause has been subjected to criticism, most of which has been very helpful. I do not submit it to the House as being a specific for the prevention of all possible means of future evasion. In many cases here, we are dealing with extremely quick-witted people. The duty on pools is heavy, and there is a substantial incentive to them to evade it. This further provision is necessary to deal with those whom we cannot catch under the existing law, and we have taken the trouble to draft this Clause at this stage because we are convinced that, if this hole is not stopped, a substantial part of the duty which the Exchequer derives from these pools will be imperilled, and that is a result which I imagine no hon. Member would wish to see.

Photo of Mr Fred Mulley Mr Fred Mulley , Sheffield Park

May I ask the hon. Gentleman to state the position in regard to newspapers? Quite clearly, in these days, if a pool promoter is to contact the public, he must advertise the nature of his pool and the results and the dividends in the newspapers. What is the position regarding these newspapers which accept advertisements from one of these pools and publish them alongside other advertisements of pools which are apparently legal and which pay the duty in the proper way?

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

The answer is to be found in the Clause itself, in subsection (1, b,) which uses the words "knowingly to issue, circulate or distribute. "That means that a newspaper accepting an advertisement in respect of a pool is not liable to conviction unless the Crown can establish that, at the time of such acceptance, the newspaper was aware that this was an illegal pool under these provisions. I suggest to the House that that is a perfectly fair position. A newspaper which, in the ordinary course of business, knowingly accepts what appears to be just another pool advertisement will not be subject to conviction under this Clause.

Photo of Mr James Ede Mr James Ede , South Shields

I want to make it quite clear that we on this side of the House are as anxious as is the Financial Secretary that this evasion of the law shall be stopped and that persons liable to pay this tax on pool betting shall pay it. I am bound to say, however, having listened to the hon. Gentleman's explanation, that I cannot regard this as a very satisfactory Clause for inclusion in our law, because I do not think the answer he gave to questions put to him can be regarded as satisfactory.

After all, contributions to the Irish Sweepstake are illegal in this country, but hundreds of them are made every year. Efforts are made to stop just the kind of procedure which I can envisage being used here by someone who is resident in the Channel Islands and who uses the Channel Islands, or possibly the Isle of Man, or some other place which is not technically within our jurisdiction, which is not part of the United Kingdom and certainly not part of Great Britain. Those firms would be quite small in their operations but would enable a very considerable amount of business to be done. I wonder how many tickets are still sold in this country in the Irish Sweep. Some of the agents are known and on occasion they are prosecuted.

If this Clause is included in the Bill— and I shall not oppose that—I hope that the various difficulties which have been pointed out this afternoon will be considered and that the practice of some of these people on the fringe of the legitimate pool business will be watched so that next year the difficulties which have been discussed this afternoon and any weaknesses in the operation of the Clause can then be remedied.

I very much dislike the position in which it is said, "Well, the big man will be prosecuted but the small man, although guilty of the offence, will not be prosecuted." That leaves a number of people open to a kind of legalised blackmail. We have tried to get rid of the common informer, and we do not want to re-establish his operations in a similar way by someone saying to someone else, "You are probably just big enough to be within what the Government said they would deal with. Do not rely too much on your immunity if I go and tell the police that I know you are operating."

Everyone will agree that that would be a most unfortunate position to arise, and I am certain that no Government in this country would desire that it should arise. It is clear, nevertheless, from the answers which the Financial Secretary gave to me, that there is a loophole for that kind of thing. While we wish the Financial Secretary well in his efforts to stop evasion, I hope it will be possible to get something more satisfactory when further consideration has been given to the matter.

Photo of Mr Reginald Manningham-Buller Mr Reginald Manningham-Buller , Northamptonshire South

Perhaps I may say a few words in reply to the right hon. Member for South Shields (Mr. Ede). We all agree that, if we can, we want to catch the chief offender, no matter where he may be, but the right hon. Gentleman knows as well as I that it is extremely difficult to bring before the courts of this country someone who commits an offence under our law but who, at the time of organising it, is resident outside the jurisdiction and does not come inside. That is the case in the ordinary law and the case which will arise after this Clause has been introduced; we cannot avoid it.

I do not profess to be such an authority on pool betting as the hon. Member for Bilston (Mr. Nally), but I should have thought there was great force in the contention put forward that it would be difficult to get pool betting organised from overseas up to any considerable size without some advertising in the newspapers. The right hon. Member for South Shields took the Irish Sweep as an analogy, but there was a time when that sweep was fairly widely advertised in this country and thus became widely known. It would not be so easy to get a pool operation so widely known in the absence of advertisements.

This Clause has a general application to people in this country. One will always want to prosecute the chief offender, but it may be that one cannot get the chief offender, and one must then try, if one wants to stop this sort of thing, to get the next people responsible. As the right hon. Gentleman said, very fairly, this Clause will enable any policeman to lay information and to have the matter adjudicated upon. I must say that that is right. It is a very bad thing to have the right of prosecution confined to certain individuals. There may be an exceptional need for that, but the general rule should be that it is open to anyone to lay information for the court to adjudicate upon.

We want to go for those primarily responsible inside this country, if we are not able to get at those primarily responsible who are outside our jurisdiction. I agree with my hon. Friend the Financial Secretary that the mere passage of this Clause should do a great deal to stop the expansion of this loophole and to prevent its use by people for the purpose of evading duty.

Photo of Mr James Ede Mr James Ede , South Shields

I do not want to give away too many secrets of the trade, but surely it is not unusual on occasion to start with the lowest offender in the scale in the hope that, by following a trail, you will get back to the principal offender. Here the Financial Secretary has virtually promised the lowest offender that he is in no jeopardy. Why should he then do anything to help to get to the chief offender?

Photo of Mr Reginald Manningham-Buller Mr Reginald Manningham-Buller , Northamptonshire South

I listened to what my hon. Friend said, and I do not think that accurately represents his words. As I understand it, my hon. Friend wanted to make two things clear. If one knew an offence had been committed one would primarily go against the chief offender. The second point he wanted to make was this—that the person innocently placing a bet would run no risk.

Photo of Mr James Ede Mr James Ede , South Shields

I am not dealing with him.

Photo of Mr Reginald Manningham-Buller Mr Reginald Manningham-Buller , Northamptonshire South

We will leave him on one side. If this Clause is passed it will enable prosecutions to be launched in proper cases. Obviously it may be necessary on occasion to prosecute in the hope of getting evidence in order subsequently to prosecute those higher up, but that will depend on the case in question.

May I turn to the question of the application of the word "knowingly" in Subsection (1, b.) In my view—and I fear that lawyers often differ—I believe the word "knowingly" covers the whole of the content of that paragraph. It makes it an offence knowingly to issue, circulate or distribute in Great Britain, or have in his possession for that purpose, any advertisement or other document inviting or otherwise relating to the making of such bets. I think the word "knowingly" covers the whole of the paragraph. I have taken steps to obtain other advice to see whether my opinion is right; and that advice agrees with my view. I am grateful to the hon. Member for Sheffield, Park (Mr. Mulley) for having raised that point, and I hope I have put his concern at rest.

Question put, and agreed to.

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