Finance Bill (Friendly Societies)

– in the House of Commons at 12:00 am on 24th May 1966.

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Photo of Mr Graham Page Mr Graham Page , Crosby 12:00 am, 24th May 1966

On a point of order, Mr. Speaker. May I seek your guidance on the Finance Bill, which is set down for Second Reading tomorrow, and, in particular, on Clause 27(1,a), which singles out a very small number of friendly societies for special and, I must say, unfavourable treatment?

As the House knows, if a Bill … affects a particular private interest in a manner different from the private interest of other persons or bodies of the same category or class …"-[OFFICIAL REPORT. 10th December, 1962; Vol. 669, c. 45.] it must be subjected to procedure appropriate to Private Bills—that is to say, the publication of notices in the Press, the opportunity for presentation of petitions and the argument on those petitions. That was the Ruling on the issue made by your predecessor, Mr. Speaker.

This, I submit, is not a pettifogging point of procedure. If the whole of a class of persons or bodies is affected by legislation, it is right that their case should be argued by the representatives of the people in this House. If a Bill discriminates between members of that class and affects just a few private persons or bodies, then they have the right to argue their own individual case.

This has been recognised for the past 500 years and, in Standing Orders No. 38 and No. 224, we are directed in this House to carry out that procedure. These Standing Orders, as you will know, prevent the House from proceeding to a Second Reading of a Bill which contains private legislation until that Bill has been subjected to the procedures through which private legislation must pass.

It matters not whether that private legislation comprises the whole of the Bill, or whether, as in this case, it is one Clause in a Public Bill of 50 Clauses, the 49 other Clauses being public business. If the private business comes within an otherwise Public Bill, then the Bill is a Hybrid Bill and still must go through the process of private legislation. For example, there is a Bill before the House at present, The Post Office (Subway) Bill, which is a Public Bill introduced by the Government, passing through its normal stages in the House, and yet it is a Hybrid Bill against which Petitions are being heard.

Mr. Speaker, I do not have to ask you to decide this afternoon whether the Finance Bill is or is not a Hybrid Bill. I have to ask you to refer it to the Examiners of Petitions for Private Bills, in accordance with the Standing Orders, because it is the Examiners in whom the House has vested the right to come to a decision on this point and to report to the House. All that I have to do is to satisfy you that there is a case for reference to the Examiners, and if the House will bear with me for one moment more I think that I can do so.

The position is that the Income Tax Act, 1952, Section 440, gave tax exemption to all friendly societies. Clause 27 of the Finance Bill limits and regulates this exemption, again in respect of all—and I repeat all—friendly societies. But it then proceeds to pick out certain friendly societies for special deprivation of rights. It describes them in Clause 27(1,a) as those which were registered after 31st December, 1957, and which entered into certain types of transaction in the three months between 3rd February and 3rd March, 1966. Transactions of that type have been entered into probably by all the other friendly societies registered before 1958, and it is only the date which is significant here, 31st December, 1957. The result of inserting that date in the Bill is, I am advised, to have a very grave effect on not more than half-a-dozen friendly societies out of a thousand or more friendly societies. It affects that half-dozen to the extent of putting them out of business as life or endowment insurance societies.

This is a once-for-all provision. It is not a provision against some future malpractice by friendly societies. What it says is that these half-dozen shall not in future carry on the business permitted to their thousand or more fellow societies, and they are not permitted to do that merely because they came into existence after a date 8½ years ago.

You will be aware of the precedents, Mr. Speaker, and if I may I will refer to them very briefly. They are set out on page 883 of Erskine May. The Railways Bill, 1921, was questioned as a Hybrid Bill. It was decided after discussion that it was not a Hybrid Bill because it affected all the main railways in Great Britain and not merely some of them. The Electricity (Supply) Bills of 1926 and 1934 were questioned. They escaped the provisions of a Hybrid Bill because they affected electricity undertakings of a particular class all alike, not discriminating against any particular undertaking. The Iron and Steel Bill, 1948, was questioned at some length, and it was finally decided that it was not a Hybrid Bill because its purpose—and I quote from HANSARD, Vol. 458, col. 52—was to bring under public ownership all-important companies producing iron ore and certain basic iron and steel products. …"—[OFFICIAL REPORT, 15th November 1948; Vol. 458, c. 52.] The phrase is "all-important companies".

It is clear that the basis of these decisions is that the Bills affected all persons or bodies of a substantial class and not, as in the case on which I am commenting, six out of a class of more than a thousand. A much closer precedent appears on page 884, the Canal Trust Bill in 1905, which was setting up a trust for all canals and which picked out a few canals for compulsory transfer to the proposed trust. That was a Hybrid Bill, and it had to go through the private legislation procedure. This is a much nearer precedent than any other to the six friendly societies out of a thousand.

I am not asking you, Mr. Speaker, to decide this question. I am asking you to say that I have shown a sufficient case for a reference of the Finance Bill to the Examiners of Petitions for Private Bills.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

I am grateful to the hon. Member for Crosby (Mr. Graham Page) for letting me know, with his characteristic courtesy, the point which he has raised with equally characteristic Parliamentary skill and Parliamentary devotion.

The matter raised by the hon. Member for Crosby concerns perhaps one of the most difficult and complex points of the procedure of the House. It was right that he should submit it at length. Considerable difficulties often arise in determining the category to which Bills properly belong—whether a Bill introduced as a Public Bill so affects particular private rights that it should be referred to the examiners as a Hybrid Bill. I might remind the House of Mr. Speaker HyltonFoster's definition of what constitutes a Hybrid Bill. It is: A public Bill which affects a particular interest in a manner different from the private interests of other persons or bodies of the same category or class. That is on page 872 of Erskine May.

The authorities of the House have to examine all Public Bills from the quasi-judicial standpoint of whether, prima facie, private rights are affected, and if they are, the Members in charge of the Bill, irrespective of whether they are Government or private Members, are notified that private rights are affected and the examiners are then required to make a report on the Bill before the Second Reading stage is entered upon.

In the present instance, the Bill has not been referred to the Examiners and the hon. Member is fully entitled to ask why. The answer to his submission depends on the definition contained in Clause 27(1,a), the Clause to which he was referring. This Clause—as the Chancellor explained in his Budget statement, reported in HANSARD of 3rd May, c. 1435 and 1436—deals with the tax exemption which friendly societies enjoy under Section 440(1) of the Income Tax Act, 1952.

Broadly speaking, the effect of the Clause is to take away this exemption from new societies—as defined in subsection (I,b)—and also from those old societies which did any single premium business in the three months ending 3rd May, 1966, as defined in paragraph (a). Old societies, with the exception of those defined in paragraph (a), will continue to enjoy their tax exemption so long as they do not enter into single premium business.

The hon. Member for Crosby submits that paragraph (a) makes the Bill prima facie hybrid, because its effect is to penalise only six out of more than a thousand old friendly societies and that the date has no particular significance in friendly society law or finance law.

After considering the definition contained in subsection (1,a) of Clause 27, however, I am satisfied that it comprises a certain class of friendly society which are to be treated in a uniform manner and, therefore, this must be treated as a public and not a Hybrid Bill.