Clause 33. — (Abolition of Investment Allowances and Amendments as to Initial Allowances.)

Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 22nd June 1966.

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3.50 p.m.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

I beg to move, Amendment No. 221, in page 36, line 42 to leave out from "1966" to end of line 2 on page 37, and to insert: or on any date after 16th January, 1966, but not later than 16th January, 1968 where the following conditions are satisfied in respect of that asset:—

  1. (a) that it is for use in or about a building or structure provided for use for industrial purposes (as defined in section 38(8) of the Finance Act 1963) or is for use in conjunction with other machinery or plant so provided, and
  2. (b) that its provision was required for the fulfilment of the purpose for which the building or structure or, as the case may be, the other machinery or plant was provided, and
  3. (c) that contracts for the provision of a substantial proportion of the assets required for the fulfilment of that purpose had been entered into before 17th January, 1966".

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

It would be convenient to consider at the same time Amendment No. 252, in the name of the hon. Member for MorecaMbe and Lonsdale (Mr. Hall-Davis): in page 36, line 41, after "on", insert: or for the purposes of a project undertaken before". Amendment No. 253 in the name of the right hon. Member for Altrincham and Sale (Mr. Barber): in page 36, line 42, leave out from "1966" to end of line 2 on page 37.

Amendment No. 9 in the name of the hon. Member for Ashton-under-Lyne (Mr. Sheldon): in page 36, line 43, after "made", insert: "not later than 16th January, 1967".

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

That would be convenient, Sir Eric.

We have reached the Clause dealing with the abolition of investment allowances and Amendments to initial allowances. My Amendment touches only one aspect of the Clause, but you have kindly selected three others to discuss with it. I shall keep more or less exclusively to the aspect of my own Amendment, although there are certain similarities between it and No. 252.

I want to draw attention to subsection (2), which provides in general that investment allowances will be due in respect of expenditure on assets where that expenditure was incurred—and this is the important point—after 16th January, 1966, provided, however, that it was spent under a contract entered into on or before that date.

But the matter is not quite such plain sailing as appears by that. There are two clear restrictions. The first is that the payment should be made and that the assets concerned should be brought into use not later than 16th October, 1966. My Amendment has two specific purposes. The first is to remove the restriction that the payment should be made and the asset brought into use not later than 16th October, 1966.

The reason for this is that both buildings and plant—and I am surprised that the Government did not give more thought to this—take perhaps two years or more in some instances to complete. It seems to us—and, I am sure, to hon. Members opposite—wrong to impose such arbitrary restrictions on investment allowances. I remind the Committee that these restrictions were not thought necessary when investment allowances were supen-ded for a time by the Conservative Government in 1956.

My second objective is to provide that investment allowances should be due in respect of expenditure on what is acquired under contracts placed within two years of 16th January, 1966, where they are required in order to complete a project and the contracts for a substantial proportion of the assets have already been placed before 17th January, 1966.

In these circumstances, contracts placed after 16th January, 1966, may well give effect to decisions already taken by that date. Although there may not necessarily be a legal obligation to complete, it would be somewhat unrealistic and perhaps unbusinesslike, to say the least, not to do so Depending upon the date of payment rather than upon the date of expenditure being incurred is highly unsatisfactory and contrary, as far as I can inform myself, to all previous legislation of this nature. It is an undesirable departure from our customs.

A considerable administrative problem would seem to arise also if the termination of investment allowances is to be made by reference to the date of payment rather than the date the expenditure was incurred. Time and again in business and commercial houses records are kept —nowadays often by computer—and stored with the date of expenditure. The date is not likely to be the date of payment. I understand that today it was stated that the Industrial Development Bill will be amended by the President of the Board of Trade to meet precisely these difficulties in this context. Therefore, it would not be unreasonable if the Finance Bill were also to be amended to take account of the same factors.

I appreciate that there are many other aspects of the Clause, but I have tried to keep to my own Amendment at this stage. I realise that my Amendment is a little open, but again it is the old story of the back bencher's difficulty in drafting, even with help and advice. But if the Chief Secretary to the Treasury takes the point and at least undertakes to look at the matter before Report stage to see what can be done to meet my general view, I feel that my argument will have been met to some extent.

Photo of Mr Joel Barnett Mr Joel Barnett , Heywood and Royton

In view of the support I was given last night—wholly unsolicited—and which I naively like to think was given without ulterior motive, I would like to give my support not wholly to the Amendment but to the reasoning behind it. There is a need for adjustment. I would not necessarily go as far as the hon. Member for Shipley (Mr. Hirst) does in taking the date to 1968, for I think that would be going a little far. Whenever an allowance of this sort is withdrawn a line has to be drawn somewhere and it is a question of drawing the line to make it fair. What is important is that this transitional arrangement should be seen to be as fair as it can be.

4.0 p.m.

The Amendment of my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) and myself, Amendment No. 9 deals with the sort of case of which my right hon. Friend will be aware, that is to say, instances where items of plant or other equipment are ordered and the expenditure incurred before 17th January, 1966, and brought into use before 16th October, but not paid for until some time later. There are variations on that where the items are ordered and the expenditure is incurred before 17th January, but the items are not even delivered perhaps for some 12 months or even more. I am sure that hon. Members could, and will, give many examples.

It is not clear from the Clause what will happen if payment is made on credit terms or hire purchase. Does the payment have to be completed, or will it be sufficient if payment is commenced before 16th October, 1966? According to my reading of the Bill, it would have to be wholly paid for by 16th October.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

The allowance will be given only on that part of the hire-purchase price which has actually been paid on that date.

Photo of Mr Joel Barnett Mr Joel Barnett , Heywood and Royton

I hope that my right hon. Friend will deal with that.

There seems to be some inequity, but the difficulty is that this is tied with the new investment grant and because items of fixtures and fittings and vans which were previously allowable for investment allowance are not now allowable for investment grants, there will clearly be many attempts to bring in fixtures and fittings and vehicles for the old investment allowance for as long as possible. I do not think that we should here argue the merits of the investment grant, and I do not think that these Amendments should be used as a method of frustrating the philosophy behind the investment grants, but it is important to understand that.

While one can accept the logic of the Opposition Amendment, Amendment No. 253, admitting items of expenditure incurred before 17th January, that would leave the position far too open. One can appreciate the administrative trouble which would arise if the Amendment were accepted, because for many years hence the Revenue would still have this type of allowance coming up. That will be the case when accounts are submitted a few years later, even drawing the line as now proposed. To leave the position as wide as the Opposition suggest would involve the Revenue in dealing with these matters into the 1970s. So while one can understand the logic of Amendment 253, administratively it would be impossible.

The important thing to understand is that it was presumably the Government's intention that expenditure genuinely incurred before 17th January, 1966, should be allowable for investment allowance. If so, they should accept one of the Amendments, or bring forward one of their own, so that the majority of genuine expenditure incurred before that date can be allowable. It is with that sort of consideration in mind that I hope that my right hon. Friend will accept, if not my Amendment and one or two others, at least something on those lines.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

I am sure that the Committee will be grateful to my hon. Friend the Member for Shipley (Mr. Hirst) for the clear and cogent way in which he moved his Amendment. I want to deal with the narrower Amendment, Amendment No. 253, which you, Sir Eric, have been kind enough to link with my hon. Friend's Amendment.

I stress at the outset that the essential point about the Amendments is that unless some such changes are made, there is a grave danger that business confidence in the system of investment allowances will be shaken. For that reason, I very much hope that the Chief Secretary will find it possible to accept our Amendment. The hon. Member for Heywood and Royton (Mr. Barnett) said that it was necessary to draw the line somewhere. Our contention is that in this case it is not necessary to draw the line as the Government have done, because that makes the Clause far more restrictive than it needs to be.

In effect, the Clause says those people who have made contracts for investment within the specified time, none the less will not benefit from the system of allowances unless they have also qualified under two further headings, the first being that payment has been made and the second being that the assets have actually been brought into use by 16th October, 1966. There is no reason why the line should be drawn in such a way as to impose those additional restrictions.

We do not feel that the system of incentives which the Government are now proposing is as good as the previous system of incentives. The reasons for this have been spelled out at great length in previous debates—the fact that the new system of grants will be paid regardless of profitability, the fact that firms will not have to work out the system and therefore need not use modern techniques, the fact that there is no right of appeal, and so on. I want not to dwell on those subjects this afternoon, but to concentrate on the rather narrow Amendment.

I stress the importance of confidence. The danger as the Clause stands is that firms who have engaged in an investment decision and who have taken the decision in completely good faith, will now find, either because they have not or have been unable to pay, or because the building or construction of the asset has not been completed, that they are not permitted investment allowances.

I appeal, in many ways on a personal basis, to the Chief Secretary to accept the Amendment. In a previous occupation, I spent many hours with chairmen and managing directors and directors trying to persuade them of the advantages of the investment incentives which the Government were giving to industry under the system introduced by the previous Government. As the Chief Secretary no doubt knows, it was very heavy going at times. It was difficult to convince directors and industrialists that the allowances were equivalent to a reduction in production prices and, if expressed in present value terms, something which they should take into account and which should encourage them to invest.

If I had been successful, as on one or two occasions I might have been, in encouraging investment in a particular asset and the investment allowance had been taken into account and the contract signed and so on, and then at some later stage this Clause was passed unamended, and if the company had not paid for the asset in time, or if there had been some delay so that the original project needed a longer construction time than that specified in the Clause, the people whom I had been advising in my previous occupation might turn round and say that I had advised them wrongly and completely misled them and should have foreseen what an absurd Clause this would be.

It is not reasonable to expect people to know that parts of this Clause which we are now arguing should be deleted could have been foreseen, and I very much hope that it will not become part of the Act. The need to inspire confidence in these incentives is brought forward very cogently by the way in which the debate took place on an earlier occasion on the question of the new incentives when my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) stressed the fact that the Government's National Plan anticipated a growth in investments of 7 per cent. per annum. He pointed out that the actual achievement of investment in the present period was far below that. Indeed, it compared very unfavourably with the 2·4 per cent. annual increase in investment which had taken place in the period 1960–64.

The point which I am trying to make is that, against this background of stagnating investment, instead of a 7 per cent. per annum increase in investment, it is all the more important that we should amend this Clause and continue slowly and laboriously to build up the confidence of industry that the Government are determined to encourage investment by the kind of incentives that we are now debating.

I notice that in a Press notice published today by the Board of Trade it said that in May, 1966, the Board of Trade asked companies contributing to the investment intentions inquiries to state whether they planned to spend in 1966–67 more or less than they had forecast in November-December of 1965. The latter inquiry now suggests that manufacturing industry is likely to spend very little more on fixed assets in 1966 than in 1965, that the distributive and service industries are expected to spend about the same in 1966 as in 1965, and that both groups envisage that plans for spending in 1967 are going to be about the same as in 1966. This is far below the proposals made in the National Plan and far below the performance of recent years.

It is surely important that this Clause should be seen in its true perspective and that this Amendment should be carried. It is not good enough to impose, first of all, the restriction on the fact that the asset must be brought into use by 1965. It is not an adequate time to allow a number of companies to complete the investment decisions which they have made. Industrial buildings, of any size, will not normally be completed within nine months of entering into contracts, which is what the Clause at present specifies. Plant installed within those buildings will again not normally be completed within nine months. This nine months' limit is a very restrictive limit, and the point which we are making is that the restriction on bringing into use should be disregarded. The same is true with regard to the question of payment.

Here again this may raise very real difficulties. My hon. Friend the Member for Shipley raised the point, which has been discussed in the Committee upstairs, that great difficulty may arise in the case of firms who put their records on computers if we change from a basis on which asset records are related to the date of contract and the date of expenditure rather than the date of payment. I hope that this point will be covered by the Chief Secretary, because we are trying to encourage firms which are mechanising and using computers.

4.15 p.m.

On the question of the date of payment, we have not only to ask what is the position on hire purchase, which has been clarified in Committee, but also what is the position if a payment has been partially made and the remainder is being met on credit. From a point of view of definition there may be some doubt. If the Chief Secretary can clear this point up we can take it into account. I do not wish to detain the Committee further because I am very hopeful that the Chief Secretary will respond favourably to the Amendments. It does not seem necessary to restrict the payments of the allowances in the way in which they are being restricted, and it certainly does not seem adequate that it should be done merely for administrative convenience, in order to change over cleanly from one system to the other.

This would seem to be a very high price to pay if we are going to, as I believe we may, to discourage faith in the Government's intentions. I hope that the Government will make a clear statement saying that if a system is entered into, those firms may have confidence that they will get the allowances which they are taking into account when making their investment decisions. On these grounds I hope that the Committee will accept these Amendments.

Photo of Mr Robert Sheldon Mr Robert Sheldon , Ashton-under-Lyne

As my hon. Friend the Member for Heywood and Royton (Mr. Barnett) has done, I wish to speak on Amendment No. 9 which seeks to allow the period of three months between the asset being brought into use and the payments for that asset. It is very rarely industrial practice that delivery of a particular piece of equipment or plant coincides with the payment for that particular piece of plant or equipment. The company might buy an asset, say a business machine, on long-term delivery —and there are some very long-term deliveries at present. When the asset is finally delivered, the payment is not expected to be made instantaneously.

This Amendment is a very reasonable one and we hope that my right hon. Friend the Chief Secretary might see fit to accept it. I do not agree with the hon. Gentleman the Member for Shipley (Mr. Hirst) who said that the final date should be when the order was placed. Payment is a very much more precise means of calculating a date than is the order. Neither would I agree with the hon. Gentleman the Member for Worthing (Mr. Higgins) who said that there was no need to draw a line in deciding when these provisions should finally terminate and give way to the new provisions for investment grants. It is natural, and we must accept it, for there to be a desire to close the books on a particular form of investment incentive is strong. To have two kinds of systems going along together for any period has obvious administrative inconveniences and, while this may not be a prime consideration, we must take some account of it. I think that this is a very modest Amendment and I hope that the Committee might consider it. Large schemes of investment take several years to bring to fruition, from the planning stage to the time when they are brought into use.

It is always a shame when the investment decision is undermined by means of any change of Government policy. In this case I accept that Government policy operates in an advantageous way. Whereas there may be some disputes about the level of investment grants in individual cases the clarification given to businessmen is extremely valuable.

Whenever there is a change of investment incentive the investment decision which at the time was considered suitable and of value to the company concerned is also changed. If it is terminated in a provision of this kind it is necessary that we should be generous in order not to prejudice what might have been a reasonable forecast as to the outcome of that investment decision. We should be careful that when we do change over we provide the least inconvenience to those firms which have made those far-reaching decisions and I hope that because of this my right hon. Friend will go some way towards accepting this Amendment.

Photo of Mr Alfred Hall-Davis Mr Alfred Hall-Davis , Morecambe and Lonsdale

I do not think anybody would doubt that the Clause is unnecessarily restrictive in its terms and that the qualifying period within which investment allowances can be secured is too short. I contrast the shortness of this period with the latitude that the Chancellor has given himself in his payments timetable for the introduction of the investment grant.

Most of my hon. Friend's Amendments are designed to secure an extension of the time in which contracts entered into before 16th January, 1966, could be completed and payments made as a result of those contracts with the benefit of the investment allowance. Amendment No. 252 which stands in my name and that of my hon. Friends is concerned with those items which previously qualified for investment allowance but which will not now qualify for investment grant and regarding which a contract was not entered into by 16th January, 1966, but in respect of which a project had been undertaken which made expenditure inevitable if the project which had been commenced by 16th January, 1966, was to be completed and was to fulfil its purpose.

Hon. Members on both sides can think of a number of examples. My hon. Friend the Member for Worthing (Mr. Higgins) has given some. I will confine myself to one example which I believe to be sufficient to illustrate my point. Prior to 16th January, expenditure on a wide range of hotel equipment qualified for investment allowance. Under the Industrial Development Bill it will no longer do so. I will heed the suggestion of the hon. Member for Heywood and Royton (Mr. Barnett) that we do not now attempt to discuss the merits of the qualifications under the Industrial Development Bill. This exclusion from investment grant of this equipment was a grave blow to an industry which is a major earner and saver of foreign currency and which under this Bill is to suffer the additional burden of the Selective Employment Tax.

It is unusual when letting a contract for hotel construction to order at the same time the whole range of hotel equipment. There is no need to do so. Delivery dates, about which we hear so much, are not so long that it is necessary to order carpets, curtains and cutlery at the same time as the erection of the building is commissioned. It is desirable to be in a position to take advantage of the most up-to-date designs. Therefore, the ordering of this equipment is deferred for as long as possible. Yet there is no doubt that in the initial decision to undertake the project the availability of investment allowance for that equipment will have been taken into account. Therefore, I suggest to the Chief Secretary that the investment grant should not be denied solely on account of the absence of a contract.

I suspect that the right hon. Gentleman will echo the statement made by the hon. Member for Ashton-under-Lyne (Mr. Sheldon) that the line must be drawn somewhere. Although I hope that the right hon. Gentleman will accept all the Amendments, I should be surprised if he does not continue to enjoy some protection under subsection (2,a) and (2,b). It may have escaped the right hon. Gentleman's notice that the Industrial Development Bill recognises that identification of projects and their date of authorisation is possible. Paragraph 1(b) of Schedule 1 of that Bill contains the words: under a contract entered into, or for the purposes of a project undertaken, while the area was a development area". If it is possible to identify projects which were commenced while an area was a development area, I see no reason why it cannot be done for the whole range of investment grants.

The wording of Amendment No. 252 has a respectable parentage, but I would not be dismayed if the Chancellor or the Chief Secretary preferred to introduce his own wording if he were prepared to concede that the circumstances I have mentioned merit recognition in the Bill. In the example I have quoted, this is what the hotel and tourist industry would hope for. The industry feels that it has suffered badly at the Government's hands in recent months. The Treasury should start to recognise the currency-earning abilities of this industry. This is a very humble way in which the Chief Secretary could indicate that some softening of the Treasury's heart may be about to take place. I know that acceptance of Amendment No. 252 or something on these lines would be welcomed by this industry and by other industries.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

I am very encouraged by the fact that the Chief Secretary has the background of an accountant. I am further encouraged by the fact that the hon. Member for Heywood and Royton (Mr. Barnett) is also an accountant and that he is very much in agreement with the views which have been expressed from these benches.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Not entirely, but the amount of unanimity on both sides is a great encouragement. The fact that the hon. Gentleman is an accountant and that the Chief Secretary was a very distinguished member of that profession——

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

I have found that in the past the right hon. Gentleman's background played a great part in formulating the views he has expressed in the Chamber. Despite the fact that he is now in the Treasury, I hope that his professional ideas will intrude themselves into this debate and enable him to recognise the justice of our claim. What we are claiming is that there should be some equity in the matter of these allowances and the termination of the time in which they can be allowed.

Some industries are not worried about the dates which have been stipulated. They will benefit to the full. Other industries are very concerned about the effect if the present situation is not changed. I hope that the Chief Secretary will forgive me if I deal specifically with an industry in which I have an interest—the aircraft industry—and which clearly illustrates the problems as they will appear if the Clause goes through unamended. This applies also to other industries which are comparable in the way they order their equipment, the way in which the equipment is delivered, and the time which is taken to deliver it, and the way it is financed.

According to the present terminology of the Clause, the air transport operator will receive allowances only on aircraft or other tools of his trade which were ordered on or before 16th January of this year and which will come into use and be wholly paid for by 16th October of this year. The hon. Member for Heywood and Royton asked whether it would apply to the whole of the capital expenditure if the capital equipment was on hire purchase or if it would apply only to that part of it which had been settled under the hire purchase agreement. As I understand it, the allowance will apply only to that part of the total sum which has been settled.

These proposals completely ignore the established conditions under which some industries purchase the tools of their trade, equipment which often costs millions of £s. Air transport operators finance their equipment on a long-term basis by a pay-as-you-earn process of hire purchase or lease purchase agreements. In other words, it is the practice of the industry to finance aircraft purchases from current earnings by assessing the cash flow which is likely to result when the aircraft is put into operation. In assessing that cash flow account is taken of the 30 per cent. investment allowance which was available on all new equipment under Section 16 of the Finance Act, 1954. With Corporation Tax at 40 per cent., this is of the greatest assistance on the capital equipment of costly items such as aircraft.

4.30 p.m.

Removal of this concession will be a great blow to the air transport industry, quite apart from the terms under which financing is carried out. Capital equipment such as aeroplanes and spares must be ordered many months ahead, in many instances a year or two or more ahead. When a new aircraft comes into operation, particularly if it is a revolutionary machine, there is often a rush to get down orders, which have to be placed at least two years ahead. That is probably the shortest delivery time. Operators who are not prepared to do this will not get the aircraft. This is a question of long-term planning and it is an inescapable requirement of successful air operation. It has become a greater necessity in this age of jet aircraft.

If the Chancellor adheres to the proposals of the Clause, they will have a harsh and penalising effect upon the air transport industry, and certainly upon other companies which are in a comparable position and which finance their equipment in a similar manner.

I therefore ask the Chancellor to extend the period in which the investment allowances will be paid so that it will become available in the case of all contracts placed before 17th January, 1966. I also ask him to extend the time factor at the other end, so that it embraces the total payments for equipment ordered before that date, irrespective of the date on which payment is completed. This is the fundamental issue.

For a great many companies, the effect of the Clause as drafted would be viciously retrospective. A moment's thought should enable the Chief Secretary to realise that that is a fair statement concerning companies which have to order in the way I have stated as against others which can get their equipment almost "off the peg" and will receive the full benefit.

Many companies have arranged the financing of their purchases under existing law and on the assumption that all the existing allowances will apply to equipment which they contracted to buy prior to 17th January this year. Surely the Chancellor will recognise the harsh penalties that the proposed cut-off dates governing the entitlement to investment allowance will impose in the case of companies which often subscribe considerably to the strength of our economy.

My hon. Friend the Member for More-cambe and Lonsdale (Mr. Hall-Davis) has referred to the foreign currency-earning capacity and powers of hotels and holiday resorts. Air transport also plays a great part in this matter and also earns a great deal of foreign exhange, as well as saving a great deal of foreign exchange.

This is a matter which not only affects private operators but is obviously of tremendous importance to the nationalised air corporations, which are in a similar position in the way in which they have to make their purchases of aircraft and plan their future. Although it might be argued that in the case of the Corporations it would merely be a book entry from one side to the other, this in no way justifies the fact that there should appear to be different treatment between private operators and a nationalised Corporation. I am sure that the boards of the nationalised Corporations are fully aware of this and would wish to be treated in the same way as every other operator in this connection.

I hope that the Chief Secretary will seriously consider this matter and endeavour to smooth out what could be an untenable anomaly if it were allowed to pass as it stands.

Photo of Mr Michael Alison Mr Michael Alison , Barkston Ash

I wish particularly to reinforce the comments of my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis. I start with a point which seems to me to be one of considerable injustice. Here I declare a constituency and not a personal interest. It relates particularly to small-scale operators of commercial vehicles, the quality lorries manufactured by some of our big commercial vehicle manufacturers. I am told by the Road Haulage Association that some of the major manufacturers—I refer particularly to Leyland, E.R.F., A.E.C. and Albion —are quoting as long as two years for delivery for some of their quality vehicles. In one instance the delivery date is three years ahead.

It is entirely unjustifiable that in this Finance Bill the Government should introduce a provision which means that a small road haulage operator can place an order for a quality vehicle with a delivery date two or three years ahead in the expectation of getting his allowance but that by what amounts to retrospective legislation he should be denied it. The Government need only to recognise the truth of this to make the necessary change.

The injustice is all the more glaring because some of the assets which will be caught out by the time limit will be assets which, under the new discrimination in investment incentives, will in any event be cast into the wilderness. There are a lot of these which have the double disincentive of loss of investment grant under the new Industrial Development Bill and the burden of the Selective Employment Tax, and now the smack in the eye which they are to get from this crudely unimaginative and obviously ignorantly-drawn provision.

I wish, secondly, to point out to the Government another severe nail which they are knocking in to the coffin of what they are pleased to call industrial incentives as being an apparent driving force behind Government policy. If they look carefully at the provisions not only of the Clause, but of various Finance Acts and Bills, including the Industrial Development Bill, it is obvious that they are producing for the country a scheme of investment disincentive. It is not only that some businesses, whether or not they invest as a qualifying asset under the Industrial Development Bill, will be knocked by the time limit: they will lose their allowance, and this itself will be a severe jolt to some of them.

What is worse is that the excuse that might be put forward that even if they lose their allowance under the time limit they will recoup it on the possibility of getting a grant if they come within the "qualifying asset" definition of the Industrial Development Bill, is entirely vitiated by the Government's announcement that the industrial development grants will be delayed for at least as long as were the old investment allowances.

The whole justification for the change from allowances on a tax basis to grant on a cash basis, although it was highly discriminatory against service industries, and so on, was speed. Here, however, we have a clear pronouncement by the Government, looking ahead and seeing their economic difficulties, that the grants will be delayed for at least as long as the old investment allowances were held up. Some industrialists will lose their grant or encouragement and, because of the anxiety of the Treasury to save grant, they will not get any conpensating speed in grant in substitution. There is, therefore, a double disincentive.

We should not pass this point without also noting another serious underlying weakness, which my hon. Friend the Member for Morecambe and Lonsdale and other hon. Friends of mine and I have tried to put right by Amendment No. 252, which would make it possible for what might be described as the follow-through to continue to qualify for the incentive allowance.

In reality and practice, it is quite impossible to separate these qualifying assets under the terms for grant from the assets which, under the Industrial Development Bill, will no longer qualify for grant but which formerly received an allowance. My hon. Friend has mentioned the hotel industry, which is an obvious case in point. When one raises capital to build a hotel one is, by implication, raising capital to buy television sets, armchairs, carpets, cutlery, and all the paraphernalia that go into hotels.

There are other examples, the most pressing current one being the motor manufacturing industry. I read in The Times today that General Motors—Vaux-halls—are looking askance at the possibility of night-shift working in the coming months because of the slight lack of buoyancy in the export market, the seamen's strike and so on. It is sometimes forgotten that the motor manufacturing industry's investment in new plant and equipment in the factory is geared to the provision of motor car showrooms and servicing facilities in new towns, in attempting to get into the market for selling cars where new towns are being built, where housing is expanding and the population is developing. It is not possible to separate the provision of plant and machinery from the provision of some of the service facilities that go with it, particularly in construction and building.

My hon. Friends and I are anxious that the follow-through which is the logical consequence of investment decision in manufacturing should be provided for. If the Government will take to heart their own message on investment and the need to encourage it, they will accept the abolition of the time limit, together with the logical necessity of allowing a follow-through for a tax allowance as a result of decisions taken to invest in plant and machinery, and will seriously look at the levelling off in investment prospects and projects as shown by the Board of Trade in its report issued today, and by the steady shortfall in capital investment as compared with the National Plan target of 7 per cent., and what my hon. Friend the Member for Worthing (Mr. Higgins) referred to as the 3 per cent. per annum increase which is the present rate, and will knock this time limit right out of the Bill.

The hon. Member for Ashton-under-Lyne (Mr. Sheldon), who is not in the Chamber at the moment, spoke of the Government's need to keep two balls in the air at the same time—allowances and grants. I do not think that this is a serious problem. There will be an overlap anyway, because even if the October, 1966 date is accepted allowances will inevitably still be going on for the 18 months after that, and we must assume that grants will begin to be paid earlier than 18 months after October, 1966.

Therefore, they will have to keep two balls in the air at the same time whether they like it or not. The hon. Member will see in the Industrial Development Bill that the President of the Board of Trade has taken powers, which we believe are far too great, to regulate the amount of money which he lets out of the grant system by his own discretionary powers written into that Bill.

I hope that the Government will look sympathetically at the Amendment.

Photo of Mr Ian Lloyd Mr Ian Lloyd , Portsmouth Langstone

I notice that the Amendment to which I should particularly like to refer, No. 136, is unusual, if not unprecedented, in having the accolade of being supported twice by my hon. Friend the Member for Tynemouth (Dame Irene Ward). I hope that this will give added emphasis to whatever argument I might employ in its favour.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

On a point of order, Sir Eric. I think that Amendment No. 136 was selected for discussion with the next Amendment.

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

That is quite correct. Would the hon. Member like to postpone his speech until we come to Amendment No. 151?

4.45 p.m.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Like many of his predecessors, the Chief Secretary has had to spend a good deal of his time at the Dispatch Box in stonewalling, and, like them he has frequently acknowledged the merit of a particular case and had reluctantly to turn it down. He should hardly do either of these things on this occasion.

It is usually deemed a merit to state a case in the House of Commons in moderate terms, but I do not think that this case should be stated in moderate terms. I see very little merit in the way in which the Clause is drawn at present.

Three methods have been prescribed by various hon. Members to amend it; those proposed by my hon. Friends the Members for Shipley (Mr. Hirst), Worthing (Mr. Higgins), and that proposed by the hon. Member for Heywood and Royton (Mr. Barnett). I like best the method proposed by my hon. Friend the Member for Worthing, which would do away with both the quite unjustifiable limitations.

I beg the Chief Secretary first to reconsider the aspect of the limitation as to time when the asset is brought into use. That sets an unjustifiable and unfair premium on the nature of the asset. In some cases it is possible for the asset to be provided and made use of fairly quickly. In other cases, a much longer period must be involved. There is no merit in a rigid prescription of this kind, which takes no account of the nature of the asset with which a company has sought to provide itself.

There is the same objection to the limitation of payment. This takes no account of the method in which the original contract was entered into and no account of the resources of the company or of its liquidity at the time. It merely prescribes in a rigid, wooden way that payment must be made by a certain date.

The hon. Member for Heywood and Royton said that the line must be drawn somewhere. Surely, the place where it should be drawn was where the contract was made and the commitment was entered into? That was the time when the businessman made his commitment, and he made it in good faith under the law as it then obtained. This is vitally important.

Successive Governments and Oppositions have been cajoling firms to enter upon investment commitments of this kind for a decade and more. Conservative Governments and Labour Oppositions sought repeatedly to step up the investment allowances and to induce more and more companies to embark on investment. It was deemed a meritorious activity for the companies and firms, and they entered into the commitments.

With great respect to my hon. Friend the Member for Shipley, his Amendment would go a fairly long way to dealing with this, but there may be some cases where even his proposed date would exclude a worthy project properly entered into under the existing law. That is why I consider that the Amendment in the name of my hon. Friend the Member for Worthing should be accepted. In equity, the Chief Secretary must admit that there is no answer to the case, and the Government should accept it.

Photo of Mr John Peyton Mr John Peyton , Yeovil

I should like to support very briefly the arguments adduced with such eloquence by my hon. Friends, particularly those of my hon. Friends the Members for Barkston Ash (Mr. Alison) and Morecambe and Lonsdale (Mr. Hall-Davis).

I shall refer particularly to the hotel industry. For the life of me, I cannot understand how the Government have let themselves get into the position of singling out the hotel industry for a really vindictive swipe. They might just as well have issued a really glossy brochure advertising and commending holidays in Spain in very euphemistic and flattering language. They could not have done more to urge upon the public the merits of holidays abroad than by reserving for the hotel industry this extraordinarily vindictive treatment.

I do not believe that the Government, who have the merit of having the right hon. Gentleman the Chief Secretary as one of their leading lights, could have done this willingly, and with their eyes open. They must have attacked the problem in a piecemeal manner. First, we have the denial of the grant, and now we have this burden, on top of the Selective Employment Tax. Is it the intention of the Government to cripple this industry? From time to time many of us have criticised the hotel industry for its shortcomings, but it is making obvious efforts to contribute to our vitally important tourist industry and it is inexplicable that the Government should have introduced these three measures, which are calculated to do it almost irreparable harm.

I hope that the Chief Secretary will have second thoughts about this matter. Quite apart from the weight of the argument, we have just about arrived at the time when a major Government concession is due. Perhaps the right hon. Gentleman will find that consideration even more commendable than the weight of the argument.

Another question concerns retrospection. Literally speaking, there is no retrospection here, but my hon. Friends are on good ground in arguing about commitments which have been entered into. There can be no gainsaying this. I was very impressed by what my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) said, namely, that at the time a person builds a hotel he does not enter into any contracts for furnishings. The wretched man is therefore caught whatever happens.

I am always shocked by the carelessness with which Governments inflict sudden tax changes upon industry, and I should like to make one constructive suggestion. During the Committee stage of the Finance Bill one day should be set aside when the entire Government should be chained to their Front Bench and made to listen in silence to industrialists who would be given the Floor of the House free so that they could express their views about what is being done.

In the House we are very free in expressing our opinions about industry, but industry has little or no opportunity to tell Government after Government what a paralysing and crippling blow it suffers when policies upon which it has depended, and upon which its budgets have been balanced, are changed overnight without a "by-your-leave" and apparently without any awareness on the part of Governments of the effect of their actions upon industry.

On this count my sympathies are wholeheartedly with industry. I hope that the right hon. Gentleman will get up in a white sheet of repentance and say, on behalf of the Government, that he is indeed sorry and that he will offer, instead of these proposals, a policy based on justice.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

I respond immediately to the request of the hon. Member for Yeovil (Mr. Peyton) that I should make a statement on behalf of the Government. Nobody enjoys more than I do close, regular and direct contact with leading industrialists and representatives of industry of all kinds. I take it as part of my responsibility continually to have my mind refreshed by their current views, and I am having my next stage of refreshment on Friday night of this week, when I am going to one of our major towns to listen to representatives called by the local chamber of commerce in order to discuss absolutely openly any points that they wish to discuss concerning those aspects of Government policy which affect business. I share the view of the hon. Member that Ministers must continually keep in touch with industrial opinion of all kinds.

We are grateful to the hon. Member for Shipley (Mr. Hirst) for the way in which he moved the Amendment, and also for its content. It puts before the Government some serious problems, which must be considered sympathetically. Many points have been put forward, and the simplest wav of dealing with them would be to gather together the strands of what has been said and indicate the way in which the Government's mind is moving.

My hon. Friend the Member for Heywood and Royton (Mr. Barnett) said that we could not have the door too wide open; administrative difficulties would arise if we had no dividing line of some kind or the other. My hon.

Friend the Member for Ashton-under-Lyne (Mr. Sheldon) echoed this opinion by saying that we must draw a line somewhere, and must close the books somewhere.

That is a starting point. We are changing over from one system to another and it would not be appropriate or proper to argue about the various issues that arise. I am grateful to all hon. Members who have spoken for not dragging other issues into the question. The Government take the view that this is a change for the better. I do not seek to impose any view upon the Committee; I recognise that this is part of our thinking. But there is a change, and we must provide reasonable arrangements for it. Therefore, we must have a dividing line, and give reasonable consideration to the administrative problems which will arise.

My hon. Friend the Member for Hey-wood and Royton also said that he thought that it must have been in the Government's mind to take account of investment expenditure which was genuinely incurred. That is so. But that presents a certain problem to the Government when—as had to be the case here—many months' notice had to be given of the kind of change that was in the Government's mind.

That is one side of the story. I was also impressed by what was said by several hon. Members opposite about keeping faith with investors. They made the kind of speech that I have made from those benches on many occasions as a result of the experience I had, day by day. I was very interested in what the hon. Member for Worthing (Mr. Higgins) had to say. I have been myself in exactly the same position in respect of the problem of persuading boards of directors of the value of investment allowances. I am sure that he tries very hard to do this, as I did, but it is tough going. This is the whole basis of our case; it is very tough going to persuade people who ought to understand without any need for persuasion that investment allowances are valuable.

That is why we had to turn to another kind of investment incentive—one which could be more readily grasped and more easily understood. I do not suppose that that was the intention of the hon. Member's illustration, but he and I have had the same experience. He was drawing attention to the fact that we must keep faith with those who make investments on the basis of an allowance which they can reasonably expect——

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

I would draw the attention of the right hon. Gentleman to the C.B.I. Industrial Trends Review, published recently, which suggests that many people who said that their investment decisions were not affected at all further added, "Neither system affects our investment decision." There is still a great deal of ignorance. I cannot agree that the answer is to provide assistance which is more easily understood; the real answer is to educate management.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

Nobody would deny that part of the answer is to educate management, but we must also make it more easy for management to understand what is in the interest of the country and also of their own firms.

5.0 p.m.

So we have to take account of the need to have a dividing line because we are having a change, of the need to have regard to investment genuinely undertaken, and the need to keep faith with the investors, and of the comparable situation under the Industrial Development Bill which the President of the Board of Trade is arguing in Standing Committee.

Under the provisions affecting development areas, the Government have accepted the point of view that those who went to development areas may well have been induced to go there by the very allowances which were offered, and therefore, when a development area is ceasing to be a development area and depreciation allowance is being withdrawn, the Government recognise that by the manner in which the allowance is withdrawn, but it should be remembered both that there was clearly in those cases a more direct inducement by the Government through the Finance Acts to manufacturers and others to go there, and, secondly, that what is being offered in the form of investment grant is a discretionary grant. So long as discretion remains with the President of the Board of Trade one can obviously afford to go a great deal further than one can in Finance Bill provisions where every taxpayer has the usual rights of appealing to the Commissioners, the High Court, and so on, where there is no question of any discretion resting with any inspector of taxes, as the hon. Member for Chelmsford (Mr. St. John-Stevas) keeps on suggesting to us as the method of conducting our tax affairs.

All I am saying is that we have to have a reasonable balance between those opposing points of view. I am not suggesting that the balance we have at the moment is necessarily the right one. I am not suggesting that. There are obviously cases which are genuine which do not fit in with the limitations which have been provided in the Bill. We have always expected that there would be representations made; we knew of certain views before the Bill was drawn in its present form. I will not say it was drawn in a tentative way, but we did think it was right that it should be fully discussed in Committee and that we should take account of everybody's views.

I do not suppose each individual contributor to the debate would wish me to deal individually with what he had to say. I would want to be a little discouraging, I am afraid, to those hon. Gentlemen who suggest we should go back before the contract was entered into, as the hon. Member for Barry (Mr. Gower) would like——

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

I did not say that.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

What he said was that the determining factor should be the entering into of the contract, and he was pouring very cold water on his hon. Friend's suggestion who wanted to go back before the contract and consider the project.

I think that perhaps at this stage, if the Committee would be good enough to agree, we would like to consider very carefully and as far as we can sympathetically appropriate cases and everything that has been said, with a view to bringing forward such amelioration as we regard as proper. I have indicated that there must be a dividing line. I have indicated that we do not at the moment feel very much persuaded about going behind the date of contract. I am bound to say about the two years' delay with the lorries the hon. Member mentioned, becoming three years in certain cases, that I accept those figures; they correspond with my own information and I accept those figures——

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

Let me just finish this statement, which will not be all that acceptable, I am afraid, to the hon. Gentleman. I accept the figures, and I accept the argument that where we are unable for two years, to supply what we have to sell it does not seem on the surface as if there is a tremendous need to increase investment allowance, so far as the purchase of those goods in concerned. I am bound to say that that is part of the case which the hon. Gentleman is making, though I would not wish to encourage him to believe that the Government are likely to look very sympathetically on cases where investment is already so over-stretched it is impossible to supply the investors' demand for two or three years. I am saying this because I do not want to mislead hon. Gentlemen.

I would have hoped that we could go some way at a later stage to meet some of the reasonable requests which have been put before the Committee.

Photo of Mr Michael Alison Mr Michael Alison , Barkston Ash

I think the Chief Secretary is a little unfair on the question of road haulage vehicles. He will have noticed that the export figures this year have been supported by extraordinarily good performance in the export of commercial vehicles, whereas the ordinary private cars have gone slumping down substantially. He is really penalising the home buyer because he is unable to exert pressure against the industry, which is doing extremely well with exports.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

It is a very marked contribution they are making to exports, and I congratulate the hon. Member. His constituent will get investment grant, that grant with which they are making lorries. That is what he is talking about. What I am talking about is the domestic purchaser of the lorries who does not seem to be so laggardly in his purchases as to require the inducement and the stimulation of additional and obvious incentive allowance.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

I am sure the right hon. Gentleman will appreciate the situation of the aircraft industry. We are now dealing only with orders placed on or before 16th January of this year in various fields. It must be taken into consideration, as I am sure he appreciates, that the particular character of the capital article purchased may be such that there must of necessity be a long delay before there is delivery—because of the character of the article.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

I do understand that fully. I would now, therefore, suggest to the Committee that, as I have indicated as clearly as I can, the lines on which the Government are thinking, the way in which we will try to meet reasonable requests, the need to have regard to points made by both my hon. Friends, which are absolutely right, and as I have given a fairly clear indication of the lines of Government thinking, that it would be the best next stage if we could consider very carefully indeed everything that has been said—read it all again in HANSARD —and bring forward our proposals to go some way to meet their needs.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

I must say that I am very disappointed with what the right hon. Gentleman has said. I had expected that he would have risen earlier during the debate on these Amendments, because I could not conceive that he would not be able to announce to the Committee that he would be able to accept the general principle underlying these Amendments. Then when the right hon. Gentleman got up a short time ago I expected even at that late stage that he would do that. In fact, all he has done is to hold out some pious hope that he may be able to meet us in one way or another.

Of course, I do not doubt the right hon. Gentleman's sincerity, but what really concerns me is this. He told us representations were being made to the Treasury before the Bill in its present form was published. He will, of course, have had far more representations, I am sure, than we on these benches have had, but I personally have received innumerable letters from businessmen about this Clause, since the Bill was published. The right hon. Gentleman and his right hon. and hon. Friends have had a very long time in which to consider this, and I really must tell him, before I deploy the arguments which my hon. Friends have put forward on the Amendments, that unless he feels able to get up before this debate is concluded and be a little more specific about what he proposes to do I feel it would be right that we should divide the Committee. I hope that he will have second thoughts. He must be considering, in the Treasury and with the Inland Revenue, what he will do. I have no doubt that if he has something specific in mind an Amendment will be in draft already. We might be told —there can be no reason why not—what the right hon. Gentleman has in mind which might lead us to reconsider our position. After all, the single purpose of the Amendment is the same. It is to do justice, no more and no less. The purpose is to ensure that those who entered into firm commitments before 17th January, 1966, should not be prejudiced by the abolition of investment allowances, that abolition having been announced on that day.

There has been some talk about administrative difficulties. The hon. Member for Heywood and Royton (Mr. Barnett) said that the line had to be drawn somewhere. I would not press the Government to go the whole way, but my hon. Friend the Member for Barry (Mr. Gower) agreed with the hon. Member when he said that the line should be drawn at the date of the contract. This is the right way to deal with it. If there are serious objections, we must hear more about them. Certainly, the administrative difficulties which the right hon. Gentleman mentioned were not particularly compelling. We are told there are two balls in the air and that it is difficult to keep them there for too long. But we know that the staff of the Inland Revenue is to be increased and that the Board of Trade will have another 1,100 staff, so that I should have thought that between them they could have kept the two balls in the air for a considerable time.

The right hon. Gentleman's observations have not been satisfactory. This is a simple demand for justice. I can see no reason why the right hon. Gentleman should not give way on this point, or at least extend the period within which payment has to be made and the asset brought into use. The general reasons in favour of some relaxation here were cogently argued by my hon. Friend the Member for Shipley (Mr. Hirst) and my hon. Friend the Member for Worthing (Mr. Higgins). When, in the past, investment allowances were discontinued, they were available for assets which had already been contracted for. I can see no reason why the same principle should not apply in this case.

My hon. Friend the Member for More-cambe and Lonsdale (Mr. Hall-Davis) gave the example of the building of a hotel. It must be common sense and obvious to everyone that, if someone started to build a hotel at the end of last year, the equipment and the furniture—all of which are necessary, even if they were ordered before 16th January: I concede the point on this aspect made by the right hon. Gentleman—could not possibly be brought into use before the middle of October, the deadline in the Bill.

I would endorse what my hon. Friend the Member for Yeovil (Mr. Peyton) said about the tourist industry. After all, the tourist industry has received one blow after another the total abolition of investment allowances with no cash grants put in their place, followed by the Selective Employment Tax and so on. I would have thought that, for the tourist industry and the hotel industry in particular, some concession ought to be made to ease the way.

I was told the other day of an actual case and I can give the right hon. Gentleman the details if he would like to have them. This was a multi-million pound development which should be completed and brought into use at the end of September, 1966. But what will happen if there is some small delay in completion until after the date specified in the Bill, 16th October? Suppose, in the Prime Minister's words, that some "politically motivated" trade union leaders were to call a strike in the middle of September and that this new building could not be brought into use in time?

Why should the developers suffer in order to satisfy the convenience of the right hon. Gentleman and those who work with him? This is a simple case of justice. Why should someone who has ordered plant and machinery be penalised, simply because of late delivery, which is entirely beyond his control? It is, of course, common knowledge that industrial buildings of any size will not normally be completed within nine months of the date of the contract.

5.15 p.m.

I was pleased that my hon. Friend the Member for Gillingham (Mr. Burden) referred specifically to the air transport industry, because it is obvious that in its present form the Clause is far too restrictive. From what I have heard about the air transport industry, I would say that the Amendment which is supposed to cover it, in the name of the right hon. Member for Orkney and Shetland (Mr. Grimond), is far too restrictive to do all that is necessary for the industry.

What of plant and mechinery generally? Frequently, for heavy plant in particular, it is bound to take more than nine months from the date of contract for the plant to be installed. After all, it is not just a question of delivery: the plant must actually be brought into use. There is the case, for example—one can consider many types of heavy plant— of a glass-forming machine——

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

There is one example of what my right hon. Friend is saying in the fact that when a new aircraft is ordered a number of new engines have also to be ordered so as to ensure serviceability for the future. This underlines his point.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

I am grateful to my hon. Friend, and in view of that example, I will not press on further with my own, which was a similar one.

My hon. Friend the Member for Barkston Ash (Mr. Alison) ——

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

The right hon. Gentleman was talking about a glass-forming plant. I have no firsthand knowledge of a glass-forming plant, but I assume that it is the ordinary kind of plant which will get the investment grant. Therefore, wherever one draws the line on whatever operation that part will get the investment grant. I do not know what the right hon. Gentleman is complaining about.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

I will tell the Chief Secretary what I am complaining about— simply that, if he will compare the figures, he will find that for this type of plant and machinery the investment grant is worth less, in cash terms, than the investment allowance. This is why these people are complaining. This is the position. If the right hon. Gentleman has not found that out yet, after all the comment in the press and all the discussion in Standing Committee on another Bill and all the figures given in the House, he is proceeding with a complete misunderstanding of what the Government are doing.

My hon. Friend the Member for Barkston Ash referred to commercial vehicles, of which delivery can take up to two and perhaps even three years in some cases. Surely it is reasonable to meet a case like this. The extra burden is considerable. On Second Reading of the Industrial Development Bill, I gave figures about a goods vehicle costing £2,000. Under the proposed scheme, in the Industrial Development Bill—the scheme of cash grants—the actual cash benefit in the first year of purchase would be £259 less than in 1964. I went on to say that, in each successive year, the cash benefit would be less than under the old system.

This Clause, as drafted, shows that Treasury Ministers have simply no idea of the practical realities of business life. They are, of course, in favour of paying lip-service to long-term planning, but how can a businessman plan in the face of this sort of legislation? In many cases, contracts for new equipment have to be placed a long time ahead. In entering into those contracts, regard is had to the effect of investment allowances on the future cash flow. Thirdly, of course, it is normal in many industries to finance the equipment on a long-term basis and not by an immediate cash payment.

My hon. Friend the Member for Yeovil conjured up the endearing picture of the whole of the Government Front Bench being chained in their places to listen to the views of industrialists.

I would point out to him that, on the narrow issue which is covered by the Amendment standing in my name, during the last few days, even though the Amendment has only been down for a few days, I have been inundated with protests about the way in which subsection (2) works. Only this morning, I received a letter from——

Photo of Mr John Peyton Mr John Peyton , Yeovil

I am obliged to my right hon. Friend for giving way. I am grate- ful to him for re-conjuring up that vision. The reason why I suggested it was not because they had not heard the arguments before, but because they should be seen publicly to endure the ordeal again.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

I must say that I am with my hon. Friend on that. This would be a very jolly occasion.

I was going to refer to a letter which I received this morning from a trade association. I will not read it all, but one paragraph raises the sort of point which is genuinely troubling people. It says: Even in those cases where assets contracted for before January are brought into use by October, it would seem that a complicated situation would arise in that in many instances they will only have been partly paid for"— which is the point made by the hon. Gentleman opposite— if for no other reason than by virtue of the customary practice of retention moneys. That is bound to be fairly widespread. Yet, depending upon the particular time schedule, the person concerned will be prejudiced under the Clause.

What possible reason was there for the Chief Secretary not, at least, accepting the principle of the Amendment in the name of the hon. Member for Ashton-under-Lyne (Mr. Sheldon), which is the most modest of all the Amendments with which we are dealing? We heard not a word from the Chief Secretary that he was willing to accept it.

Photo of Mr Joel Barnett Mr Joel Barnett , Heywood and Royton

Is not the right hon. Gentleman being a little churlish? As I heard my right hon. Friend, he was making it reasonably clear that he did accept the principle.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

An allegation is coming from the other side, most improperly. Would not the Chief Secretary comment now on the assertion of his hon. Friend and give the Committee the benefit of his advice? Why is he quiescent? I am waiting for him.

Photo of Mr George Rogers Mr George Rogers , Kensington North

Order. That is not a point of order.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I did not rise on a point of order.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

The reason why I did not rise was because the hon. Gentleman was still on his feet. Unlike him, I do not think that it is a good thing for two hon. Members to be on their feet at the same time.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

That only goes to prove the point which is being made by my hon. Friend. All that the Amendment doss is to provide for the case where payment is delayed for a matter of 12 weeks. Even now, the Chief Secretary will not give way on that simple point.

With the added burden of Corporation Tax and the new one of the Selective Employment Tax, surely the Amendment is not unreasonable. If the hon. Member for Heywood and Royton (Mr. Barnett) manages to divide the Committee, when he goes into the Lobby we shall be right behind him and shall support him in the same way that we did yesterday evening.

If there had been any real hope expressed by the right hon. Gentleman in the sense of some specific undertaking, and if he had only spelled out in general terms what he proposed to do, I would not have advised the Committee to divide on the Amendment. In the circumstances, I am bound to say that I hope that my hon. Friend will divide the Committee on Amendment No. 253.

There have been one or two other observations made about the Clause in general. Some of my hon. Friends wish to refer to other aspects of the Clause. I want to say that the purpose of it is a simple one. It is to abolish completely the whole system of investment allowances. In our view, that is a retrograde step. We are opposed to it and, when we come to the Question, "That the Clause stand part of the Bill", we shall vote against it.

No one who has had any experience of the taxation of companies would pretend that the existing system of investment allowances is not capable of improvement. The Chancellor and the President of the Board of Trade have listed some of the defects. There is the fact, for example, that some assets such as rented television sets qualify for investment allowances, contrary to the original intention when the system was first introduced. But those sorts of matters are capable of simple amendment, and, in our view, they provide no reason for abolishing the whole system. It is dishonest to pretend otherwise.

The Clause refers to the new system of cash grants. If that new system, which is to replace investment allowances, was an improvement on the existing system, we would not oppose it. The fact is that, by the Clause, the Chancellor of the Exchequer is abolishing investment allowances and intends to replace them by a system of cash grants. In so doing, he is, firstly, abolishing a system which gives industry an investment incentive as of right and, as the right hon. Gentleman admitted in his speech just now, replacing it with a system which is to be operated at the discretion of the bureaucracy.

Secondly, the right hon. Gentleman is abolishing a system under which industry had the right to appeal to the courts, and he is replacing it with a system where the say so of a Government official is final and unchallengeable.

Thirdly, he is abolishing a system where the cash incentive——

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

On a point of order, Mr. Rogers. Can you tell me whether we are on the Question, "That the Clause stand part of the Bill"?

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

Further to that point of order, as I have been reserving my comments largely for the Question, "That the Clause stand part of the Bill", and you, Mr. Rogers, and your predecessor have allowed this debate on a group of Amendments to go so wide as almost to represent a debate on the Question, "That the Clause stand part of the Bill", would it be in order if we now spread the net a little wide than just the narrow issue of timing in anticipation of the Question, "That the Clause stand part of the Bill", because the two are nearly inseparable?

Photo of Mr George Rogers Mr George Rogers , Kensington North

It would not be in order to spread the debate any wider than it has already gone. There are other Amendments to be discussed. I am also listening very carefully to the right hon. Member for Altrincham and Sale (Mr. Barber).

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

Then, I wonder whether you could help me, Mr. Rogers.

Obviously, there are a number of hon. Members on this side of the Committee, including myself, who want to say something about the general purpose of the Clause. If it is for the convenience of the Committee for me to say no more, having dealt broadly with the Amendments, and if we can be sure that we will be able to have a short debate on the Question, "That the Clause stand part of the Bill", I will not pursue these matters any further. Can you help the Committee, because I know that some of my hon. Friends wish to speak on the wider issues?

Photo of Mr George Rogers Mr George Rogers , Kensington North

I think that it would be better if these points were dealt with on the Question, "That the Clause stand part of the Bill".

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

In that event, we can deal with those when we debate the Question. I will only express once again my deep regret that the Chief Secretary has not been more specific, and I must advise my right hon. and hon. Friends to divide the Committee.

Photo of Mr Cranley Onslow Mr Cranley Onslow , Woking

I want briefly to reinforce the arguments in support of the aircraft industry which my hon. Friend the Member for Gillingham (Mr. Burden) was deploying some minutes ago.

Amongst the representations which the Chief Secretary has received about the effects of the arbitrary date which has been set, I have no doubt that he has had some from the aircraft industry. If I may remind him of them, he will have been told of specific cases of orders for VC10 and BAC111 aircraft where investment allowances to the value of some £1½ million will be lost unless the date is extended. He will have been told of cases of contracts for the supply of engines for VC10's, where investment allowances would amount to some £200,000, and those will be lost if the date is not extended.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

I am sorry to keep intervening on points of order, but there is an Amendment dealing with this very point which is just about to be discussed.

Photo of Mr Cranley Onslow Mr Cranley Onslow , Woking

Further to that point of order, Mr. Rogers, I am speaking in support of Amendment No. 253. There has been mention of the aircraft industry in this connection, and I hope that you will wish me to continue.

Photo of Mr George Rogers Mr George Rogers , Kensington North

It does not seem to me to be out of order so far.

Photo of Mr Cranley Onslow Mr Cranley Onslow , Woking

Thank you. If I may return to the Chief Secretary, probably he has also been made aware of orders for machine tools placed by aircraft firms, in many cases from overseas and involving delivery lags of as much as 17 months, and, in the case of one firm alone, totalling some £300,000.

5.30 p.m.

It is within the knowledge of the Chief Secretary and the House that the aircraft industry has no cause to love the Government. There is no doubt about that. I do not believe that it will have any additional cause to love the Government if the Clause as it stands is allowed to pass to the Statute Book. There can be no case in equity for leaving it as it stands, because it will affect severely the viability, the future prospects and the ability to compete for future orders of the aircraft industry, which the Government have already very much damaged.

The Chief Secretary knows that in many respects the position of the aircraft industry will be much worse when the investment allowance system is tapered away and that therefore the case being put forward warrants a much warmer response than he has so far given. I do not want the Chief Secretary to come into the Chamber in a mini-skirt with nothing else to hid his nakedness, but there is no reason why he should come into the Chamber in bombasine down to his ankles and refuse to show us more than his big toe.

We have a right to be told more of the Government's intentions now. This is not a situation in which we can afford to delay indefinitely and in which business can afford to postpone decisions indefinitely while he makes up his mind. I therefore press him hard to tell us more of his specific intentions in relation to the aircraft industry and to give this much-maligned, much-abused industry some encouragement for a change.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

I thought that after all these years I knew the Chief Secretary roughly in and out. That is a very big undertaking, and it has taken the concentration of thousands of hours in Committee over the years to arrive at it. Today I have come to the conclusion that I must be wrong.

When I moved the Amendment which started the proceedings earlier this afternoon, in what the Chief Secretary kindly said were very reasonable terms, I detected him nodding agreement several times. I realised that my Amendment was a little wide in certain respects and I said that if he met the principle behind it to the extent of promising to take action on Report, I should be happy and I am sure that my hon. Friends would be happy, and that would shorten the course of the proceedings enormously. But I must make it clear that if that is not the case, that will make debates on further Amendments and on the Clause extremely volatile and long-winded affairs.

I am prepared to limit myself somewhat and perhaps to take action in a moment or two which would help my hon. Friends and the Committee, because, as I said earlier, my Amendment has two distinct parts and one part is pretty well parallel with Amendment No. 253, which would remove the restriction imposed by the date, 16th October, 1966. If the right hon. Gentleman cannot give an assurance, that, whatever its terms may be, the purpose of his Amendment on Report will be to achieve that, then frankly all his nods and indications and bonhomie seem to be completely pseudo.

This is one of the occasions which we always get on Finance Bills which test the temper of the Committee and to a great extent control the proceedings long after we have passed from the Clause. It is useless to seek unanimity or reasonable working in the Committee when the right hon. Gentleman gets up and says, more or less, "That is all reasonable. The argument is reasonable. The hon. Member for Shipley is reasonable"—and that is going a long way—and to create the atmosphere that he is prepared substantially to meet the case, and then to do nothing of the sort. That is not up to his usual integrity or to the standard which we expect from the Government and from such an experienced member of it, and it will make our discussions very protracted.

I want to know whether he is prepared to be more specific on this point here and now—not, of course, as to the wording of the Amendment. I agree with my right hon. Friend that one would expect a draft Amendment to meet these points to be in his pocket, because all these representations have been made for a very long time. I know all about them. He knows that industry has not for one single moment accepted this alternative system of grants. He knows that the Federation of British Industries—and he knows my connection with it—have represented to the Government time and again that they do not like the system. It has not a single friend except some of the imported economists who possibly thought it out—potted economists, I call them.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

As far as I know the contamination from Wales which we heard earlier has not yet reached the Finance Bill, though it seems to be on the way.

The right hon. Gentleman must be honest with the Committee. All the time I have been in the Committee I have never known so much co-operation from an Opposition on a Finance Bill as on this occasion. There has been far more co-operation than my right hon. Friends got from their own hon. Friends, including myself, on Finance Bills. This ought to be worth something. It ought to expedite our business. I know that the Government have a difficult timetable and it might be made easier if the temper were attuned a little by the right hon. Gentleman being specific and honest. My right hon. Friend rightly challenged him by stating that he had said nothing which comes anywhere near the assurance which he indicated in his piecemeal acceptance of our arguments. Does he intend here and now to be more specific? Will he rise from his place to be more specific—in which case I will sit down.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

I gladly respond to the hon. Member. He asked me whether I had an Amendment in my pocket. No. He then asked whether an Amendment had been prepared. No. What was my purpose in coming here? It was to listen to right hon. and hon. Gentlemen. If they do not like it, well, they do not like it, but I propose to continue to listen to what the House of Commons has to say.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

That may mean listening for a very long time for by no means has the right hon. Gentleman given the sort of assurance which he set out at the beginning to give. We have been somewhat rhetorical and talked about an Amendment in his pocket, but he knows what is meant by that phrase. I know that he has already had representations— he admitted that—in the drafting of the Bill. He kindly said that it was not done as a joke. I admit that that is an advance on last year. He clearly knew that representations and objections would be mads today. And yet he has the nerve to come to the Committee and to pretend that he is listening sympathetically to our views, pouring oil on troubled waters when in fact he is walking about with a napalm bomb in his pocket. This armistice which I have had with him on the Finance Bill is at an end, and I am sure that in this context I shall not lack support on these benches.

The right hon. Gentleman has not treated the Committee with his usual courtesy. He has not treated the Committee with anything like the candour which we expect. Because it should be seen by a Division how hollow these assurances are, if the right hon. Gentleman cannot give a better answer than he has given, I shall join with my right hon. Friend in the Lobby. In listening to the discussion I have been impressed

by the fact that the Amendment in the name of my right hon. Friend and other hon. Friends which does not contain the second part of my Amendment is probably the best way to impress this matter on the mind of the Government. If I were for this purpose—not out of any satisfaction but the opposite—to withdraw my Amendment, Mr. Rogers, would you be agreeable to my doing so and to permit a Division on Amendment No. 253?

Photo of Mr George Rogers Mr George Rogers , Kensington North

That would be quite in order.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

On that understanding, although I withdraw not a single word I have said and I am likely to add many more, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendment proposed: In page 36, line 42, to leave out from "1966" to end of line 2 on page 37.—[Mr. Higgins.]

Question put, That the words proposed to be left out, to "October," in page 37, line 2, stand part of the Clause:—

The Committee divided: Ayes 252, Noes 183.

Division No. 45.]AYES[5.42 p.m.
Abse, LeoBrown, R. W. (Shoreditch & F'bury)Dunnett, Jack
Albu, AustenBuchan, NormanDunwoody, Mrs. Gwyneth (Exeter)
Allen, ScholefieldBuchanan, Richard (G'gow, Sp'burn)Dunwoody, Dr. John (F'th & C'b'e)
Anderson, DonaldButler, Herbert (Hackney, C.)Eadie, Alex
Archer, PeterCallaghan, Rt. Hn. JamesEdwards, Robert (Bilston)
Armstrong, ErnestCant, R. B.Edwards, William (Merioneth)
Ashley, JackCarmichael, NeilEnglish, Michael
Atkins, Ronald (Preston, N.)Carter-Jones, LewisEvans, Albert (Islington, S. W.)
Atkinson, Norman (Tottenham)Castle, Rt. Hn. BarbaraEvans, loan L. (Birm'h'm, Yardley)
Bacon, Rt. Hn. AliceChapman, DonaldFaulds, Andrew
Bagier, Gordon A. T.Coleman, DonaldFletcher, Ted (Darlington)
Barnett, JoelConcannon, J. D.Floud, Bernard
Baxter, WilliamConlan, BernardFoot, Michael (Ebbw Vale)
Beaney, AlanCraddock, George (Bradford, s.)Forrester, John
Bence, CyrilCrawshaw, RichardFowler, Gerry
Bennett, James (G'gow, Bridgeton)Cronin, JohnFraser, John (Norwood)
Bidwell, SydneyCullen, Mrs. AliceFraser, Rt. Hn. Tom (Hamilton)
Binns, JohnDalyell, TarnFreeson, Reginald
Bishop, E. S.Darling, Rt. Hn, GeorgeGardner, A. J.
Blackburn, F.Davidson, Arthur (Accrington)Garrett, W. E.
Blenkinsop, ArthurDavies, G. Elfed (Rhondda, E.)Garrow, Alex
Boardman, H.Davies, Harold (Leek)Gourlay, Harry
Booth, AlbertDavies, Ifor (Cower)Gray, Dr. Hugh
Bottomley, Rt. Hn. Arthurde Freitas, Sir GeoffreyGrey, Charles
Bowden, Rt. Hn. HerbertDelargy, HughGriffiths, David (Rother Valley)
Boyden, JamesDell, EdmundGriffiths, Rt. Hn. James (Llanelly)
Braddock, Mrs. E. M.Dempsey, JamesGriffiths, Will (Exchange)
Bradley, TomDewar, DonaldHale, Leslie (Oldham, W.)
Brooks, EdwinDiamond, Rt. Hn. JohnHamilton, William (Fife, W.)
Broughton, Dr. A. D. D.Dickens, JamesHamling, William
Brown, Rt. Hn. George (Belper)Doig, PeterHannan, William
Brown, Hugh D. (G'gow, Provan)Donnelly, DesmondHarper, Joseph
Brown, Bob (N'c'tle-upon-Tyne,W.)Dunn, James A.Hazell, Bert
Heffer, Eric S.McMillan, Tom (Glasgow, C.)Rowland, Christopher (Meriden)
Henig, StanleyMcNamara, J. KevinRowlands, E. (Cardiff, N.)
Harbison, Rt. Hn. MargaretMacPherson, MalcolmShaw, Arnold (Ilford, S.)
Hobden, Dennis (Brighton, K'town)Mahon, Peter (Preston S.)Sheldon, Robert
Hooley, FrankMahon, Simon (Bootle)Shinwell, Rt. Hn. E.
Horner, JohnMallalieu, E. L. (Brigg)Short, Rt. Hn. Edward (N'e'tle-u-Tyne)
Houghton, Rt. Hn. DouglasManuel, ArchieShort, Mrs. Renée (W'hampton, N. E.)
Howarth, Robert (Bolton, E.)Mapp, CharlesSilkin, John (Deptford)
Howell, Denis (Small Heath)Marsh, Rt. Hn. RichardSilkin, S. C. (Dulwich)
Howie, W.Mason, RoySilverman, Julius (Aston)
Hoy, JamesMellish, RobertSilverman, Sydney (Nelson)
Hughes, Rt. Hn. Cledwyn (Anglesey)Mendelson, J. J.Slater, Joseph
Hughes, Emrys (Ayrshire, S.)Miller Dr. M. S.Small, William
Hughes, Hector (Aberdeen, N.)Mitchel, R. C. (S'th'pton, Test)Snow, Julian
Hughes, Roy (Newport)Molloy, WilliamSpriggs, Leslie
Hunter, AdamMorgan, Elystan (Cardiganshire)Steele, Thomas (Dunbartonshire, w.)
Hynd, JohnMorris, Alfred (Wythenshawe)Stonehouse, John
Jackson, Colin (B'h'se & Spenb'gh)Morris, Charles R. (Openshaw)Strauss, Rt. Hn. G. R.
Janner, Sir BarnettMoyle, RolandSummerskill, Hn. Dr. Shirley
Jay, Rt. Hn. DouglasNeal, HaroldSymonds, J. B.
Jeger, George (Coole)Newens, StanTaverne, Dick
Jeger, Mrs. Lena (H'b'n&St. P'cras, S.)Oakes, GordonThomas, Iorwerth (Rhondda, W.)
Jenkins, Hugh (Putney)Ogden, EricThornton, Ernest
Jenkins, Rt. Hn. Roy (Stechford)O'Malley, BrianTinn, James
Johnson, Carol (Lewisham, S.)Oram, Albert E.Tomney, Frank
Jones, Dan (Burnley)Orbach, MauriceUrwin, T. W.
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)Orme, StanleyVarley, Eric G.
Jones, J. Idwal (Wrexham)Oswald, ThomasWainwright, Edwin (Dearne Valley)
Judd, FrankOwen, Dr. David (Plymouth, S'tn)Walden, Brian (All Saints)
Kelley, RichardOwen, Will (Morpeth)Walker, Harold (Doncaster)
Kenyon, CliffordPage, Derek (King's Lynn)Wallace, George
Kerr, Mrs. Anne (R'ter & Chatham)Paget, R. T.Watkins, David (Consett)
Kerr, Russell (Feltham)Pannell, Rt. Hn. CharlesWellbeloved, James
Lawson, GeorgePark, TrevorWells, William (Walsall, N.)
Ledger, RonParker, John (Dagenham)Whitaker Ben
Lestor, Miss JoanParkyn, Brian (Bedford)Williams, Alan (Swansea, W.)
Lever, Harold (Cheetham)Pavitt, LaurenceWilliams, Alan Lee (Hornchurch)
Lever, L. M. (Ardwick)Pentland, NormanWilliams, Clifford (Abertillery)
Lewis, Ron (Carlisle)Perry, George H. (Nottingham, S.)Williams, Mrs. Shirley (Hitchin)
Lomas, KennethPrice, Christopher (Perry Barr)Williams, W. T. (Warrington)
Loughlin, CharlesPrice, Thomas (Westhoughton)Willis, George (Edinburgh E.)
Luard, EvanPrice, William (Rugby)Wilson, William (Coventry, S.)
Lyon, Alexander w. (York)Probert, ArthurWinnick, David
McBride, NeilRandall, HarryWinterbottom, R. E.
McCann, JohnRees, MerlynWoodburn, Rt. Hn. A.
MacDermot, NiallReynolds, G. W.Woof, Robert
Macdonald, A. H.Rhodes, GeoffreyWyatt, Woodrow
McGuire, MichaelRoberts, Albert (Normanton)Yates, Victor
Mackenzie, Gregor (Rutherglen)Roberts, Gwilym (Bedfordshire, S.)TELLERS FOR THE AYES:
Mackie, JohnRobinson, W. O. J. (Walth'stow, E.)Mr. Alan Fitch and
Maclennan, RobertRodgers, William (Stockton)Mr. William Whitlock.
MacMillan, Malcolm (Western Isles)Rose, Paul
Ross, Rt. Hn. William
NOES
Alison, Michael (Barkston Ash)Channon, H. P. G.Gilmour, Ian (Norfolk, C.)
Allason, James (Hemel Hempstead)Clark, HenryGilmour, Sir John (Fife, E.)
Atkins, Humphrey (M't'n & M'd'n)Clegg, WalterGlover, Sir Douglas
Awdry, DanielCooke, RobertGlyn, Sir Richard
Barber, Rt. Hn. AnthonyCooper-Key, Sir NeillGoodhart, Philip
Batsford, BrianCordle, JohnGoodhew, Victor
Beamish, Col. Sir TuftonCorfield, F. V.Gower, Raymond
Bell, RonaldCostain, A. P.Grant, Anthony
Bennett, Sir Frederic (Torquay)Crouch, DavidGresham Cooke, R.
Bessell, PeterDalkeith, Earl ofGrieve, Percy
Biffen, JohnDance, JamesGriffiths, Eldon (Bury St. Edmunds)
Biggs-Davison, JohnDavidson, James(Aberdeenshire, W.)Grimond, Rt. Hn. J.
Birch, Rt. Hn. Nigeld'Avigdor-Goldsmid, Sir HenryHall, John (Wycombe)
Blaker, PeterDean, Paul (Somerset, N.)Hall-Davis, A. G. F.
Bossom, Sir CliveDigby, Simon WingfieldHamilton, Michael (Salisbury)
Boyd-Carpenter, Rt. Hn. JohnDodds-Parker, DouglasHarris, Reader (Heston)
Brewis, JohnDoughty, CharlesHarrison, Brian (Maldon)
Brinton, Sir TattonEden, Sir JohnHarrison, Col. Sir Harwood (Eye)
Brown, Sir Edward (Bath)Elliot, Capt. Walter (Carshalton)Harvey, Sir Arthur Vere
Bruce-Gardyne, J.Errington, Sir EricHawkins, Paul
Bryan, PaulEyre, ReginaldHay, John
Buchanan-Smith, Alick (Angus, N&M)Farr, JohnHeath, Rt. Hn. Edward
Buck, Antony (Colchester)Forrest, GeorgeHeseltine, Michael
Bullus, Sir EricFortescue, TimHiggins, Terence L.
Burden, F. A.Fraser, Rt. Hn. Hugh (St'fford & Stone)Hiley, Joseph
Carlisle, MarkGalbraith, Hn. T. G.Hill, J. E. B.
Carr, Rt. Hn. RobertGibson-Watt, DavidHirst, Geoffrey
Cary, Sir RobertGiles, Rear-Adm. MorganHobson, Rt. Hn. Sir John
Hogg, Rt. Hn. QuintinMaydon, Lt.-Cmdr. S. L. C.Sinclair, Sir George
Holland, PhilipMills, Peter (Torrington)Smith, John
Hordern, PeterMills, Stratton (Belfast, N.)Steel, David (Roxburgh)
Hornby, RichardMiscampbell, NormanStodart, Anthony
Howell, David (Guildford)Mitchell, David (Basingstoke)Stoddart-Scott, Col. Sir M. (Ripon)
Hunt, JohnMonro, HectorSummers, Sir Spencer
Hutchison, Michael ClarkMore, JasperTapsell, Peter
Irvine, Bryant Godman (Rye)Morrison, Charles (Devizes)Taylor, Sir Charles (Eastbourne)
Jenkin, Patrick (Woodford)Mott-Radclyffe, Sir CharlesTaylor, EdwardM. (G'gow, Cathcart)
Jennings, J. C. (Burton)Munro-Lucas-Tooth, Sir HughTaylor, Frank (Moss Side)
Johnston, Russell (Inverness)Murton, OscarTemple, John M.
Jopling, MichaelNabarro, Sir GeraldThatcher, Mrs. Margaret
Joseph, Rt. Hn. Sir KeithNicholls, Sir HarmarThorpe, Jeremy
Kaberry, Sir DonaldNott, JohnTilney, John
Kershaw, AnthonyOnslow, CranleyTurton, Rt. Hn. R. H.
King, Evelyn (Dorset, S.)Orr-Ewing, Sir IanVaughan-Morgan, Rt. Hn. Sir John
Kitson, TimothyPage, Graham (Crosby)Vickers, Dame Joan
Knight, Mrs. JillPage, John (Harrow, W.)Wainwright, Richard (Colne Valley)
Lewis, Kenneth (Rutland)Pearson, Sir Frank (Clitheroe)Walker, Peter (Worcester)
Lloyd, Ian (P'tsm'th, Langstone)Peel, JohnWalker-Smith, Rt. Hn. Sir Derek
Loveys, W H.Peyton, JohnWall, Patrick
Lubbock, EricPike, Miss MervynWard, Dame Irene
McAdden, Sir StephenPink, R. BonnerWeatherill, Bernard
Mackenzie, Alasdair (Ross&Crom'ty)Pounder, RaftonWebster, David
Maclean, Sir FitzroyPowell, Rt. Hn. J. EnochWhitelaw William
Macleod, Rt. Hn. IainPrior, J. M. L.Wills, Sir Gerald (Bridgwater)
McMaster, StanleyPym, FrancisWilson, Geoffrey (Truro)
Macmillan, Maurice (Farnham)Ramsden, Rt. Hn. JamesWinstanley, Dr. M. P.
Maddan, MartinRidsdale, JulianWolrige-Gordon, Patrick
Maginnis, John E.Rodgers, Sir John (Sevenoaks)Woodnutt, Mark
Marten, NeilRossi, Hugh (Hornsey)Worsley, Marcus
Maude, AngusScott, Nicholas
Maudling, Rt. Hn. ReginaldSharples, RichardTELLERS FOR THE NOES:
Maxwell-Hyslop, R. J.Shaw, Michael (Sc'b'gh & Whitby)Mr. R. W. Elliott and
Mr. George Younger.

Photo of Mr Richard Wainwright Mr Richard Wainwright , Colne Valley

I beg to move Amendment No. 151, in page 37, line 2, to leave out "October 1966" and insert: March 1967 in the case of industrial buildings and aircraft not later than 16th October 1966 in the case of all other assets". I gave the Chief Secretary fairly clear notice of the Amendment in a speech on Second Reading more that four weeks and a fairly lengthy Recess ago, which I hope constitutes adequate notice.

The purpose of the Amendment is to push the time limit in the Clause five months further on without taking the date into a fresh fiscal year—in fact, to bring into the Clause a more significant fiscal date than that of 16th October. I scarcely imagine that the Chief Secretary will defend the date of 16th October as having any special fiscal significance. Our proposal is to take it into March and in respect of two very clearly defined classes of asset, the definition of which should give the Board of Inland Revenue no trouble. In both cases the cessation of investment allowance, at any rate outside the development areas, is not being followed by the substitution of any other kind of grant. We therefore regard these two types of asset as being of outstanding importance because if, through the operation of a harsh and unconscionable time limit, the investment allowance is lost in the case of these two classes of asset there is nothing else to put in their place.

We are discussing large sums of money both relatively and often absolutely. May I take the case of a new building contracted for in January of this year at a contract price of £200,000. The question of time limit will settle whether or not the taxpayer has to pay in cash an additional £12,000 if he is a company paying Corporation Tax or if, perchance, he is a sole trader paying Income Tax and Surtax at the same rate as that which the hon. Member for Worcestershire, South (Sir G. Nabarro) tells us he pays; or if one could visualise even a partnership of people similar to the hon. Member for Worcestershire, South unincorporated the amount of money at stake could well be over £20,000. It seems very important to us on this bench that a much more reasonable time limit should be fixed.

We were tempted, in drawing up the Amendment, to pitch the date a good deal further on, but it was our hope that by being relatively modest in the date we chose we should prevail on the Government to accept the Amendment in its entirety. If it is not accepted, it is not necessarily only certain taxpayers who will suffer. I am trying to look at the matter from a practical point of view for a moment. If the taxpayer does not suffer, there may be two other sorts of consequence. Either a trader, realising the new and much more unfavourable situation, will seek to cancel the contract, and a valuable industrial building, providing very much better working conditions for those engaged in the enterprise, will be postponed or cancelled, or aircraft will not be ordered; or, perchance the businessman will seek to alter the building contract and cut out a number of the refinements having regard to the fact that he will be, in the case which I have quoted, £12,000 worse off.

The result of the present time limit, if the Government insist that it should remain unaltered, may well be that mill and factory workers will find themselves with a much less adequate new building than they would otherwise have had, shorn perhaps of the frills, if frills they be, of a canteen, rest rooms, decent gardens and so on. So this is not necessarily a matter which affects only the taxpoyer.

The general arguments against the harsh and unconscionable time limit have already been well rehearsed and I do not wish to detain the Committee by repeating them, but I should like to close with a rather more general point relating to the frequent statements made from the Treasury Bench asking the public to adopt a sort of fair-shares attitude towards taxation and not to seek to exploit intricate loopholes in the tax statutes. From such little practising experience as I can offer, I should say to the Chief Secretary that nothing is more calculated to turn a fairly easy-going, tolerant, good citizen who is, on the whole, disposed to adopt a fair-shares attitude towards taxation into a determined tax avoider—I do not say "evader"—than when he stubs his toe badly against a time limit of this kind which he considers to be arbitrary and unconscionable.

I do not wish to detain the Committee by giving examples of this, although I have quite a number from my experience. I hope that if the Treasury Bench is sincere in wishing to bring the public into a co-operative relationship with the Inland Revenue it will take some of its own medicine and will remove from the Bill unconscionable time limits of this character which we seek to amend and on which, if necessary, we should certainly divide the Committee.

Photo of Mr George Rogers Mr George Rogers , Kensington North

I suggest that it might be to the advantage of the Committee to discuss at the same time the following further three Amendments: Amendment No. 251, in page 37, line 2, to leave out "October, 1966" and to insert: January 1967 in the case of farmhouses, farm workers' cottages, and agricultural machinery which is used seasonally, and not later than 18th October 1966 in the case of all other assets". Amendment No. 302, in page 37, line 2, at the end to insert: (b) in so far as that expenditure is on road vehicles of a type not commonly used as private vehicles and unsuitable to be so used. Amendment No. 136, in page 37, line 2, at the end to insert: Provided that the requirement for that payment to be made and that asset to be brought into use not later than 16th October 1966 shall not apply to any expenditure in respect of a ship.

6.0 p.m.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I share the view expressed by the hon. Member for Colne Valley (Mr. Richard Wainwright) on the sense of injustice which is arising out of the manner in which it is proposed the Clause shall be applied. I shall direct my remarks specifically to Amendment No. 302.

Amendment No. 302 deals with a very serious matter which will quite dramatically affect the costs of road transport and fares on the buses. This being so, I can only express surprise at the absence of a representative of the Ministry of Transport. This is a matter fundmental to that Ministry's affairs. Only yesterday, the Minister of Transport summoned to her Ministry the Chairman of the Road Haulage Association to discuss the Association's recommendations on putting up road haulage charges. The person she should have summoned is the Chancellor of the Exchequer. No one has done more to put up road haulage costs than the present Chancellor. He has already increased the petrol duty, the motor vehicle licence duty and National Insurance contributions, he proposes by this Clause to remove the investment allowances for commercial vehicles, and in September he is to demand an enormous interest-free loan from the road haulage industry. Yet throughout there has, seemingly, been no protest whatever from the Minister of Transport.

One can only have one's suspicions raised by that lack of protest and the absence today of any representative of the Ministry of Transport. The Ministry shows no interest in this matter, except for a rather surprising comment upon it. One wonders whether it is, in fact, the present Government's keen desire to see that the road haulage section of transport is penalised, presumably in order to justify the White Paper on transport which, we are told, will shortly be published.

The Government's case regarding commercial vehicles is quite remarkable. They have provided that equipment needed to move goods within a factory shall enjoy the new investment grants. The movement of goods abroad by ship from the docks will in the future come within the ambit of special provision for investment grants. But, for some mysterious reason, equipment and machinery needed for the movement of goods from the factory to the docks is to be left out, receiving neither investment grants nor investment allowances in the future.

Road haulage is going through a period of considerable change now in the types of vehicle used. In the debate on the earlier Amendment, the Chief Secretary advanced a remarkable argument. He said that the Government were sympathetic about the date relating to commercial vehicles but they understood that there was a two or three-year delivery period and this only went to show that there was no need for any incentive. What it came to was, "We need not bother about giving these chaps an incentive in the future. There is a waiting list for vehicles".

One of the prime reasons for the waiting list for vehicles is that the commercial vehicle industry has concentrated better than most upon the export market. Nearly 40 per cent. of its production is now going abroad.

The result of the date proposed by the Government will be to put considerable pressure on distributors to go to the manufacturers and say, "Neglect exports a bit till next October so that our chaps can at least get the investment allowance on the goods they have ordered". Indeed, it will pay a road haulier to offer his distributor, and the distributor to offer the manufacturer, additional sums of money to deliver before next October, at the expense of our export drive. This is the result of the muddled thinking coming from a Government who say that, if an industry has a good record in modernising itself, in going over to new types of vehicles and developing new types of transport such as containerisation, the investment allowances can be taken from it because no one needs any incentive.

In taking the investment allowances away from road hauliers, the Government reduce the amount of money available for future investment. If by this action they are giving notice that, whenever their investment grants succeed and they begin to see an industry doing well in reinvestment, they will withdraw the grants, it is a very sad projection of their investment policy and their attitude towards industry.

The effect of these changes will be considerable. Let us consider for a moment the way in which the incentive to modernise road haulage has deteriorated during the period of this Government At the time when they came into office, a road haulier buying a £2,000 lorry received during the lifetime of that lorry if he kept it for the whole length of its working life a total tax relief of £1,463. After the introduction of the Corporation Tax, that incentive was reduced to £1,040. Under the present proposals, it will be reduced to £800. This is a savage blow from a Chancellor who has already put taxes on road haulage of £30 million extra for motor vehicle licences and £30 million extra in fuel duty.

I take next the case of a smaller firm buying a vehicle for £1,000 and selling it three years later for £400. In 1964, under a Conservative Administration, the value of the total allowances was £483. After this Clause is passed, it will be reduced to £240—more than halved in 18 months of Labour Government.

The Government constantly complain that some road vehicles being used today do not meet the required standards of maintenance and road safety. There should, therefore, be every encouragement to ensure that road hauliers maintain modern and up-to-date fleets, not holding on to out-dated vehicles which have been on the road too long. Yet this move by the Government, of course, is a direct discouragement to that.

I come now to a very serious question——

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Everything I have said is directed to the Amendment. It is quite plain that the Ministry of Transport is complacent, and we know that the Government are very happy to deliver a further crippling blow to private enterprise road haulage, but we on this side are intent on seeing that they do not.

What I have said already applies also to the bus services. Last year, when the Government introduced their increase in the petrol tax, they made special provision for a rebate system so that passenger transport would not have to bear that additional taxation. This concession was to the value of £5 million a year. It was an important concession, welcomed on both sides of the House, and regarded by the Government as essential in order to prevent a rise in fares.

Yet by this Clause the Government are adding £2·8 million to the costs of that same service for which last year they arranged a rebate of £5 million. On top of that, in September the bus operators will have to give the Government an interest-free loan of £15 million under the Selective Employment Tax. Having arranged a rebate of £5 million last year, they propose this year to take £2·8 million back and demand a £15 million interest-free loan. Thus, the effect of the rebate last year is completely taken away and will remain taken away for the next seven years. This is the way they are treating the industry.

The effects of the date desperately affect the industry. Proprietor after proprietor of the fleets of public transport buses have contacted us with lists of the coaches that they have on order. There is a long delivery time. Many of these operators will take delivery of the chassis of the vehicles before next October and have them fitted in their own organisation, but they will not benefit under the present provision because the buses will not be in use. The effect of the wording of the Clause will be very severe.

The remakable thing is the total impact on costs. A £6,000 bus will cost an additional £720 to the proprietor. A medium-sized operator, one with 300 vehicles, if he adopts the normal practice of keeping his buses for 12 years and replacing 25 each year, will find that the Clause will add £45,000 a year to his costs. This will mean one of two things —reduced services or higher fares.

It is remarkable to read a statement issued after talks which took place between the Public Transport Association and the Ministry of Transport. The Committee will be surprised to learn that it was said that the representative of the Minister of Transport: had considered the representations made by the industry to see what could be done to help but he appreciated that this had not yet resulted in effective action. He appreciated that the effect of the withdrawal might be increased fares, reduction of services or standards. This is the spokesman of the Ministry of Transport quoted at talks which had taken place. It is a complacent view for the Ministry of Transport to take on such a serious issue. The statement went on: It was necessary that the industry and the Ministry jointly should face these problems and whilst he was not yet in a position to comment on the recommendations of the Prices and Incomes Board, he had noted the recommendations that the industry should take the lead in obtaining extension of one-man operation. Here is the Ministry of Transport saying that the bus industry should take a lead in going over to one-man operation, and the Ministry will back it, presumably, against the restrictive practices of the union on the issue, and the Treasury saying, "But we shall take away the investment allowances that would give the extra money and incentive to go over to the one-man buses". This is a complete contradiction in policy on public transport. If the Government, as they so frequently say, want to improve public transport, it is a very odd way of going about it to take away the investment allowances on new buses and imposing a Selective Employment Tax which will result in a large interest-free loan being paid by the industry.

The whole question of leaving out the commercial vehicle and having this adverse effect particularly upon the privately-owned bus companies operating bus services reeks of a Government with a policy which is hostile to the private sector of transport and wishes to impose penalties on that sector to benefit the publicly-owned sector. It is because of that that we shall press the Amendment to a Division unless we can obtain satisfactory undertakings from the Chief Secretary.

6.15 p.m.

Photo of Sir Robert Cary Sir Robert Cary , Manchester, Withington

I intervene to reinforce what has just been said so eloquently and vigorously by my hon. Friend the Member for Worcester (Mr. Peter Walker). As will be well known, I am the chairman of a very large transport operating company in the north of England, with 500 or 600 buses and coaches. The replacement of the fleet is almost a monthly preoccupation with me. A considerable capital investment has to be made by my directors and officers every year.

Rather than waste the time of the Committee by indulging in generalities, I would merely say that I am shocked to find from the Clause that the vehicles and bodies which I ordered in 1965 and which cannot be delivered by the manufacturers before 1967 will now not carry an investment grant. This penalty will be extremely great. In regard to recent expenditure on 26 vehicles at an average cost of roughly £6,000 each—the vehicles to be delivered in 1967—the Clause will cost me £21,000. I am the chairman of a private operating company, and I do not have the privilege of the municipalities which when in deficit have the ratepayers' cheque books to call upon. So I am in the front line in making both ends meet each year in operating the company.

The Committee will appreciate that the resentment now against any fares increase is at white hot level. I do not think that fares increases can now be allowed to continue. But it means in regard to the costing of my vehicles that if I spend, say, £200,000, I now have to face an additional cost of £20,000-£30,000 in order to find the 14 per cent. envisaged in the Clause. That is a very unfair penalty to place on the bus industry. It applies to all the operating fleets in the country.

I would point out—I do not say this exclusively to the Chief Secretary and other members of the Government—that over a period of years the Treasury has not in policy been over-generous towards public service vehicles. Hon. Members on both sides have for years received bitter complaints from constituents about the constant applications made for increases in fares. In 1956 the industry was used by the Treasury to find its Suez deficit of £6 million by a levy of 1s. which lasted for five months. In the cost-of-living Budget in 1958—it should be remembered that the bus fare is a basic part of the cost-of-living index—2d. was given to beer but no concession was given to bus transport except a rather small concession in regard to licences. Since then the public service vehicle has been carying taxation to the extent of 2s. 9d. per gallon on its fuel, and has had no concessions on that.

The first legislative act of the Government in the last Parliament was to introduce the pet of the Chief Whip—the Travel Concessions Act. I supported that Measure because the thread of compassion through our society is strong. On the blind, the elderly and the poor scholar we conferred a benefit. But this still added a little more to the burden of the operating companies.

My hon. Friend the Member for Worcester has indicated that the Chancellor has recently relented, reimbursing the bus operators for increased fuel taxation. I strongly suspect that that concession and our exclusion from the Selective Employment Tax is because the Government know well that they dare not risk the level of fares being taken higher.

In the battle now being waged between the Transport and General Workers' Union and the Treasury about the incomes policy, with the claims that are now being made by bus crews, if the Government give way I dread to think what reaction might come from the public if once more the whole country sees an unending procession of bus operators asking the Traffic Commissioners again to increase the scale of fares.

I know that I make a special plea here. I beg hon. Members to watch the impact of the Clause if the Government continue to deny bus operators the investment grants to which they should be entitled in the replacement of their fleets. It is usually the last straw which breaks the back carrying the load. I beg the Chief Secretary to enlarge the sentiments he expressed earlier and tell us, even if he cannot meet us all the way, that he can relent to some extent and on Report give us the concession we seek.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

I have great sympathy with the hon. Member for Manchester, Withington (Sir R. Cary), who presented a powerful case for the bus industry. The greatest hardship will fall on those living in rural areas as a result of the Bill. In municipalities one generally has the local council in the bus undertaking and in the Greater London area we have the London Transport Board. But in rural areas and in places like the Highlands, people depend much more on privately-run transport. These are the very regions in which they can least afford to pay the increased fares which will inevitably result if the Government refuse to accept the strong plea made by the hon. Member for Withington.

I was delighted to see the Joint Parliamentary Secretary to the Ministry of Transport listening to the hon. Member for Withington, and I hope that he will use his influence on the Chief Secretary to see that this crushing blow at the bus industry in rural areas does not fall after all. The right hon. Gentleman should undertake, in the review he has promised. to give sympathetic consideration to this issue.

My hon. Friend the Member for Colne Valley (Mr. Richard Wainwright) has already adequately dealt with the issue raised in Amendment No. 151, but I want to go into a little more detail, particularly in relation to aircraft. As with industrial buildings, nothing else is to be put in the place of investment allowances for aircraft and, also similarly, these are assets which are not normally brought into use within a period as short as nine months from the placing of the contract. This is not an academic point but one which is having to be demonstrated by some of the independent air transport operators.

I have received information that at least three of the British independent air operators, having placed orders for new aircraft before 16th January, 1966, in good faith and in the absence of knowledge of this development, are not going to take delivery of these aircraft until the middle of 1967 or even perhaps later than that.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Is the hon. Gentleman also aware that, in most of these contracts, there is a very stiff cancellation clause as well, so that if, as a result of the Government proposal, they are forced to cancel, they will nevertheless be called upon to pay very large cancellation charges to the manufacturers?

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

The hon. Gentleman has made an important point and I am sure that the Chief Secretary is also aware that it is a normal feature of such contracts for a cancellation clause to be included. In at least the three cases I have mentioned, the operators are on the horns of a dilemma. They can either forfeit the investment allowance that they expected at the time of placing their orders or they can cancel the contracts and pay the penalty to the manufacturers. However they decide, they are faced with a severe financial penalty.

The dates of delivery of aircraft are completely outside the control of the airlines. Frequently, even when the delivery date has been promised, the facts of life being what they are in the aircraft industry—and I am not particularly criticising the British industry now—aircraft are not delivered until later. It may well be that, in some cases, operators think they will obtain delivery in time to benefit from the nine months provided for in the Bill but due to circumstances beyond their control may not receive them until after that date.

Earlier, the right hon. Member for Altrincham and Sale (Mr. Barber) said that our Amendment did not go nearly far enough. I agree. As my hon. Friend the Member for Colne Valley tried to point out, we have been modest in putting the date back only from October until March. Many customers for aircraft will not be able to derive benefit from the Amendment because it may well be that the delivery of their aircraft will take two years or even longer. One might, there-more, have chosen the date of 16th January, 1968, for the Amendment.

It was only because we wished to be as cautious as possible in the hope that the Government would grant a modest request that we put in the date of next March. I am optimistic that the Chief Secretary will accept this proposal because he must realise that our independent air transport operators are one of the chief sources of foreign currency earnings. British United Airways has pioneered the new route to South America, using a British aircraft, the VC10, and very highly successful it has been. Caledonian Airways are pioneering inclusive tours across the North Atlantic, which could be an extremely valuable and growing source of dollars for this country.

6.30 p.m.

This is an important industry in which there is large investment of capital. The modern jet aircraft now coming into use cost at least £2,500,000 before starting to take account of spare engines and other components required before an aircraft can be put into service. Removal of investment allowances and grants from this industry can be a serious blow to it unless it can get some concession from the Chief Secretary.

In his reply to the previous debate, the right hon. Gentleman said that he would bring forward such amelioration as he found possible. He would have no difficulty about applying this Amendment which is plain sense and which we very much hope that he will accept now.

Photo of Mr Ian Lloyd Mr Ian Lloyd , Portsmouth Langstone

I take the opportunity to apologise to you, Sir Eric, and to the Committee for my attempt to jump the gun on Amendment No. 136. Those of us who were here at a very early hour of this morning were probably not as alert as we should have been in discerning the change in the grouping of Amendments between that hour and now.

However, the debate gives me the chance to say that I hope that my hon. Friend the Member for Tynemouth (Dame Irene Ward) will not take offence if I describe Amendment No. 136 as a "double Darned" Amendment. It is far better to have that than what one must now call the "double damned" economic policy of the Government. The fate of the Finance Bill, now that my hon. Friend the Member for Shipley (Mr. Hirst) has declared war on it, must fall into that category.

Throughout many of our discussions, particularly on this Clause, the Government have presented themselves as the patron saint of enterprise, but I cannot help reflecting that it is some saint who lies in a glass case of regulation and restriction over which there is a notice "Do not touch", because if it is touched, the whole thing turns to powder and ashes.

I hope that I shall give the Chief Secretary an opportunity to refute my allegation and I shall be very happy if he can do so on my Amendment. This does not differ substantially in principle from the other Amendments which seek to modify or limit the time factor which the Clause imposes. The reasons are closely similar. The number of claims for investment allowances on the building instalments of ships falling due after 16th October, 1966, under contracts made before that date, is very limited but will be completely eliminated by the Clause if the ship is not in use by 16th October, 1966.

It may well be said that ships can be constructed in three or four months and that that is being done in Japan and Sweden and in this country. But the Labour Party is the protagonist of planning and a piece of capital equipment such as a ship involves years of planning in advance of building and probably at least two months to bring it into operation after it has been launched, which automatically takes us well outside the limits which the Clause allows. I hope that the Chief Secretary will consider the problems of the shipping industry for much the same reasons as those mentioned in connection with the service vehicle industry. It is the policy of the Government to develop both shipping and shipbuilding, but the Chief Secretary has defined the Government out of their intention to do so.

The Amendment refers to "a ship", which the right hon. Gentleman should interpret rather more widely than hitherto. The Prime Minister has recently made some snide remarks about the modernisation of the shipping industry and he and others have suggested that the key to modernisation lies in what is broadly known by the dreadful word "unitisation" the principal meaning of which is the use of containers. It could be argued that standardisation equals containers. I want briefly to refer to an E.D.C. Report, Through Transport to Europe, which has 37 recommendations at least 13 of which refer directly and specifically to the desirability of containers being developed and used. Paragraph 17 of that Report says: The Government should consider whether ICDs should qualify for loans and grants as do ports; also whether containers should qualify for investment grants. Paragraph 28 says: The shipping companies should give continuing study to the new methods of transport, and in particular the movement of goods in containers of size 8 ft. by 8ft. end profile which can be loaded semi-automatically into specially constructed container ships. My reason for referring to that in detail is that it is no longer efficacious for the Government to give assistance, in whatever way they choose, whether by allowing the Amendment, or in another way, simply for the ship as such. They must also give assistance for the associated equipment which is necessary to build and operate that ship and to operate the container system.

But the capital requirements of such assistance in my experience generally exceed the capital cost of the ship by a factor of at least 100 per cent., that is, if investment in a ship is £1 million, investment in containers and all the ancillary and associated equipment necessary to operate the special container ship is about £1 million. There is no point whatever in simply allowing the ship to be built and then saying that no assistance will be given with the container equipment. If that is done, the disincentive on the development of the system will be so great that development will not occur.

I commend to the Chief Secretary most earnestly not only the specific point, but the whole character of the assistance which the Government proclaim it to be their intention to give to the shipping industry, and I hope that he will bear that point in mind.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland

I want to refer to Amendment No. 251 which seeks to mitigate the considerable hardship to agriculture which will result from the Clause. The Amendment seeks to extend to January, 1967, the final date for qualifying for investment allowances for farmhouses, farm workers' cottages and agricultural machinery when the equipment has not been brought into use.

Two aspcts of hardship might occur. First, there is investment in farmhouses and farm workers' cottages. As the Committee knows, the delays in building are often much more likely, even under the present Government, to be greater in the country than in the towns, because in the country we have rather smaller builders who are often slow starters and even slower finishers and who employ relatively few people, so that the construction of houses takes much longer than in urban areas.

Very often one has a situation in which the small country builder will build only during the summer months and will not work at all in the winter months. Hence, after a contract has been signed, there may be a considerable delay after 16th January, 1966, until the work is started. There may be a considerable delay with the carrying into use of the farmhouse or the farm workers' cottage after it has been constructed. There is a seasonal element here, because, by the very nature of agriculture, there is a pressure of work in the summer months and often a farmer will wish to wait until the turn of the year to occupy a house constructed during the summer months.

This Amendment seeks to extend the final qualifying date from October to January. There is a potential problem with regard to farm buildings, because, quite apart from the delays in construction, there are often delays in getting grant aid and approval from officials of the Ministry of Agriculture. As we know, in the last few months things have piled up very considerably and this might lead to a serious problem. The situation could arise, because of the seasonal nature of the use of the buildings, in which a farmer may make a contract about the turn of the year for a new farm building to be constructed during the summer months for use in the following winter.

I can think of an obvious case, when a building is put up for wintering animals in the following winter. This clearly would not begin to be brought into use by 16th October. These are just some of the problems. I do not wish to delay the Committee but I hope that the Chief Secretary will show that the Government are sympathetic to the needs of rural investment and particularly the needs and the seasonal problems of agriculture.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

I hope that it will be convenient if I now offer comments on behalf of the Government in response to the many interesting speeches which have been made about the various Amendments. The hon. Gentleman the Member for Colne Valley (Mr. Richard Wainwright) was persuasive in his brevity. He understands, as I am sure most of us do, that the weight of an argument is not to be measured by the volume of words accompanying it. I hope that he will not be deterred in future from speaking with equal brevity and clarity, and weight of argument.

I am not able to do more, with regard to his Amendment, which was supported by his hon. Friend the Member for Orpington (Mr. Lubbock), than to say that I recognise that it is, if not modest, more modest than any other Amendment put forward. It is certainly not an immodest Amendment. I am not in a position to accept any individual Amendment, and I am sure that the hon. Gentleman realises that the reason why I was unable, on the previous occasion to accede to the request put forward in such gentle, persuasive and lamb-like terms by the hon. Gentleman for Shipley (Mr. Hirst) to accept a particular Amendment was because, as I have explained, the Government are most anxious to hear all the representations and, at the appropriate stage, to bring forward the new form of words which would go as far as we reasonably can—and I make no specific promises because that would be misleading the Committee—in meeting the generality of the case. The provision when made is a provision which will apply to a number of transitional cases and not necessarily a particular subject for investment allowances.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

The right hon. Gentleman has praised the hon. Member for Colne Valley (Mr. Richard Wainwright) for his brevity and clarity. I wish that the right hon. Gentleman could be a little more forthcoming and a little more brief and clear about whether the Government do or do not intend to do something. We have had an awful lot of words and, "I will not give any promises; I cannot say anything; we will look at the situation". Surely the right hon. Gentleman must come out and say whether the Govern- ment are going to do something and stop shilly-shallying.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

Now that the hon. Member has put his speech over I hope that he is feeling better. I return to the hon. Member for Colne Valley and say that I listened very carefully to what he said. I can only ask him to be good enough to leave with me the consideration of everything that he and his hon. Friend have said.

6.45 p.m.

I am really only in a position to say the same with regard to the other Amendments put forward. I am in particular difficulty about the speech of the hon. Gentleman the Member for Worcester (Mr. Peter Walker), because he was making a speech which was really directed against the removal, at any time, not only on a transitional basis, of the investment allowance. That was the tone of his remarks and I am in slight difficulty because I cannot promise the same consideration to his Amendment, which he did not explain in any way. I am in this difficulty because his Amendment can only be interpreted—and I do not know whether it was intended that it should be so interpreted—as continuing for all time the investment allowances on the assets in question. If that is what he is saying, I want to make it clear that the Government will not be considering that kind of proposal.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

On this subject, we have the problem that there are two Bills involved, one of them upstairs. In that one there is no form of grant for the commercial vehicle, and therefore there are two ways in which we can tackle this. We can try to get a grant upstairs or we can try to continue, in this context, the grant providing investment allowance on commercial vehicles and buses. This is what we are trying to do.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

I have correctly understood the hon. Gentleman. I am only saying this so as not to mislead the Committee on a future occasion. What we would be considering sympathetically are arrangements related to the transitional period and we would not be considering a complete root and branch operation. I am sure that the hon. Gentleman understands that.

I was very interested in what the hon. Gentleman the Member for Portsmouth, Langstone (Mr. Ian Lloyd) had to say, and I will take his comments very carefully into account, as well as those of the hon. Gentleman the Member for Westmorland (Mr. Jopling). I can only say in reply to these Amendments, as I did earlier, that we are very anxious to try to meet, as far as we reasonably can, the suggestions that have been made, in order to provide a satisfactory transition arrangement. I have indicated the lines upon which the Government are thinking, and I am completely unable to give any more precise indication until careful thought has been given to everything that has been said.

Photo of Mr David Webster Mr David Webster , Weston-Super-Mare

That is one of the most fantastic speeches I have ever heard. We are invited to give our opinions on these Clauses and to move our Amendments, and the Chief Secretary is going to sit and listen to them day after day, and the answer that he will give at the end of each debate is going to be a large yellow lemon. This seems to be a most extraordinary way in which to proceed. The Chief Secretary went down to the City the other day and talked about the Selective Employment Tax. There was a violent protest about this both in the City and on this side of the Committee. He has said that a violent protest is something which he likes, and I think that we ought to give him one today.

This is a thoroughly discriminatory method of leaving both the public transport sector and the road haulage industry out of the investment allowances and investment incentives. It is completely deplorable and I think that the Committee and the country should be well aware of it. It seems extraordinary that, having praised every speaker, the right hon. Gentleman should then sit down, and that was all that we got. I think that it is contempt of the lowest order for us to be treated in this way.

The Minister said that he listened to what has been said. I think that he had his mouth shut and his ears closed. At a time when his colleague the Minister of Transport is saying that we should develop the public transport system, this omission of investment allowance or in- vestment incentive for bus companies is completely stultifying and frustrating what the Government say they are trying to do.

The Minister of Transport, who I understand is fairly busy, says that we cannot clear the traffic congestion in our cities without a public transport system further developed. We have heard this view expounded at great length in the debates on London Transport recently. But the right hon. Lady does nothing to try to persuade the Chancellor to do something for the bus companies.

There are at the moment exciting developments in buses, such as the 24 bus, which is a bigger bus, the standee bus and the one-man bus, all of which require considerable investment. My hon. Friend the Member for Manchester, Withington (Sir R. Cary) said that it does not pay to make such investment at present. The Chancellor of the Exchequer and the Minister of Transport tell the bus companies that they must develop these things, as if they have not been trying to do so for many years, yet they exclude them from any form of investment incentive and take away from them the investment allowance. My hon. Friend the Member for Withington said that since 1954 the cost of a bus has risen by £2,000 to £6,000. For a 300-vehicle company to set aside £600,000 over 12 years means £50,000 a year. When, because of the crippling rises in expenditure, fares have to be increased, the National Board for Prices and Incomes becomes very interested.

This places these unfortunate people, who are trying to give a service to the public in very difficult circumstances, in a dilemma. They are struggling to give a service. They must now choose between reducing that service or increasing their fares. Whichever course they adopted, they would be criticised by the Government, who are doing nothing to help them. A 300-vehicle company, assuming a vehicle-life of 12 years, purchases 25 new vehicles every year at a cost of £150,000 a year. The loss of the investment allowance amounts to £45,000 a year after profits. So such a company will have to increase its profits by about 40 per cent. to stay where it is now. How can such a company explain that to the man at the bus stop? It is the Government who should be explaining it to the man at the bus stop when he complains to the unfortunate conductor about reduced service, congestion and higher fares.

I think that the Chancellor of the Exchequer and the Chief Secretary, after they have finished with the exercise which my hon. Friend the Member for Yeovil (Mr. Peyton) recommended of being chained to their seats in the Chamber, should be chained to the seats of a public service vehicle, because in that way I believe that they would gain invaluable experience which might be reflected in their granting these companies more favourable treatment.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Does not my hon. Friend think that it would be a good idea if Government back benchers were here to listen to these arguments?

Photo of Mr David Webster Mr David Webster , Weston-Super-Mare

It seems that some of them are here.

Photo of Mr John Peyton Mr John Peyton , Yeovil

There is one addition that I would make to the proposition just expounded by my hon. Friend. It is tailor-made for the Prime Minister: gags should be provided.

Photo of Mr David Webster Mr David Webster , Weston-Super-Mare

I do not want to join my hon. Friend in what might be a politically motivated plot, but I tend very much to agree with him. In addition, these companies are facing fiscal decisions which are taken overnight with little warning. They are asked to have a phased investment policy which they have had to try to negotiate.

I am glad that the Chancellor of the Exchequer has arrived. I am sorry that he missed his bus ride, but we can still arrange that at a peak traffic time. These companies are engaging in a phased investment policy on which our public transport system depends if we axe to solve the problem of congestion in cities and also, as the hon. Member for Orpington (Mr. Lubbock) rightly said, in rural areas. Hon. Members representing rural areas in general and the West Country in particular are well aware that bus companies in those areas are faced with a very great problem which has been aggravated by about 40 per cent. by this decision.

This is a horrible situation which has been arrived at. I can see no logic in their being left out, particularly at a time when we have this exhortation to go by public transport. Yet the providers of public transport are penalised up to the hilt. This is in conflict with the publicly expressed policy of the Government.

In the light of the repeated claims by Government supporters in debate after debate on transport matters that people should cease to go by motor car and go by public transport, I am horrified that none of those Government supporters is here to speak up on behalf of the public undertakings. It is all so hollow and shallow. I suppose it is simply another plot, as the Prime Minister would say.

What about the position of a company which has a long-drawn-out investment policy but which has deferred its purchase of buses so that they could be channelled into the export market? If there is a strike this summer and the supplying company fails to meet the delivery date by the qualifying time, the bus company suffers, as does the public it is trying to serve. This is why I cannot understand why the Government's supporters are not here to criticise this provision.

Different considerations arise in the case of the Government's attitude to the road haulage industry. Their attitude here is in complete support of the declared Government policy to penalise the road haulage industry. This industry, or any form of distribution, is simply a continuation of the factory process, just as much as a fork lift truck is. For this reason, we must ensure that it is not penalised if we wish to proceed with a highly pressurised export drive.

The Minister of State, Board of Trade is sending letters out regularly beginning "Dear Colleague" and asking what is being done to assist the export drive. No help is being given to 80 per cent. of the haulage fleets which take the goods to the docks. There has been a slow-down of the road building programme. There is a penalisation of the road haulage industry. We await with horror the freight plan to be announced later this summer. There has been a conditioning by the Government over the last 18 months and by this Minister of Transport, who had the temerity to summon road hauliers and put them on the red carpet for having the insolence, as she thought, to recommend a blanket increase in prices.

May I give one illustration of where the anomalies creep in and why company secretaries are very worried. Oxygen is used very much for the enriching of the furnace techniques in the steel industry. The oxygen-supplying industry delivers its goods in the form of liquid oxygen which can be in a container taken off a tanker and put into the factory yard and then connected through a manifold to the various furnaces. If the steel company concerned has its own container, this is then part of the manufacturing process. If it is a liquid oxygen tank which can be detached and connected to the manifold but belonging to the distributing company, it seems to be the case at present, although we have not had any ruling on the point, that it is only a distributive function and therefore does not qualify for investment allowance. We should like clarification. This would apply also to the manufacturers of acids and corrosives.

My hon. Friend the Member for Portsmouth, Langstone (Mr. Ian Lloyd) rightly described pioneering methods of transport into the docks and the type of dock development which he wants in his constituency and which I want very near mine—containerisation. This forward-looking process is being penalised by the Government's own action, although the Prime Minister promises a cutting edge to our economy modernisation, and a massive export drive. Again, for the sake of political dogma the whole exercise is being completely frustrated and frittered away. The White Paper recognises the importance of ports in this connection but not that of road transport which is the vital link between factories and ports.

7.0 p.m.

The Government have handicapped on every occasion the efforts of the hauliers to modernise their fleet and to make their vehicles safe and roadworthy. This is an attempt to give the industry as bad a name as possible. This unfortunate industry, by which 80 per cent. of our goods are being delivered to the docks and to industry, has suffered in the last 18 months of this Government and its predecessor a series of crippling blows, first, the 6d. increase in petrol duty and the increase in excise duty, each of which cost the industry £30 million. There was the increase in P.A.Y.E. and there have been repeated wage increases.

The industry is rebuked publicly by the Minister in her war of nerves when it tries to put forward a recommended standard increase in charges which companies in the industry, it is suggested, should negotiate with their customers. When will she rebuke the Transport and General Workers' Union for having a blanket demand for increased wages? The industry is referred to the National Board for Prices and Incomes, with the threat of the Freight Authority behind the reference, and with a Selective Employment Tax to be imposed. One comes back to the psychological warfare going on in the Ministry of Transport to get control of the industry but not by a legislative act of nationalisation. May I quote what the Prime Minister said: We have said, in our policy statement, that we shall rebuild the integrated system, not so much on the basis of buying off every lorry, every truck, every little back-street garage that's got four or five broken-down lorries together with the goodwill and pay enormous sums for them as we did last time—but on the basis of taking the lid off the already nationalised British Road Services. Today we see many small companies being penalised by the Budget. We find deliberate attempts by the Government to put up the cost of distribution in this country by private hauliers, and when the industry attempts to pass on the cost to the customer, we see an act of psychological warfare against the industry. This is Socialism at its worse and most subtle. I recommend my hon. Friends to fight this in every way they can.

Photo of Mr Daniel Awdry Mr Daniel Awdry , Chippenham

I have been sitting here throughout the debate and it seems to me that we have come off very badly indeed. The Chief Secretary has given no comfort at all to bus operators. He has not shown even the slightest sympathy with them in their difficulties.

I want to say a few words on Amendment No. 302, and I am glad that we have the support of the Liberal Party on this occasion. The Government's proposal to withdraw investment allowances will cost bus operators £2¾ million in the year, just when the industry is going through a very difficult time. The National Board on Prices and Incomes reported last month on the industry and stressed that there has been a very steady decline in the bus industry. Paragraph 22 of its Report reads: The principal cause of the decline in demand lying largely within the industry's own control has been the rise in fares. Between the end of 1953 and the end of 1964 bus fares rose on average by 70 per cent. (63 per cent. in the larger companies, 69 per cent. in the local authorities and 89 per cent. in London Transport) or twice as fast as the price of all consumer goods and services and nearly four times as fast as motoring running costs. The solution to the plight of the industry, as in so many industries, lies in a better use of manpower. This means a new type of bus manned by one man. At present only 8 per cent. of the mileage travelled by company buses on stage services is operated by buses manned by only one man, and this is not good enough.

The Government should help the bus industry to modernise and should encourage it to acquire new equipment and new buses. The proposals in the Bill are a step in exactly the wrong direction. Those who represent rural constituencies, as I do, know from our correspondence and our surgeries that already bus services are totally inadequate and oppressively expensive. These measures will add to the expense and this increased expense will fall on people who can ill afford it. In view of the totally unsatisfactory attitude of the Government, I hope that we shall press the Amendment to a Division.

Photo of Mr Richard Wainwright Mr Richard Wainwright , Colne Valley

In his reply to me, the Chief Secretary blandly overlooked the fact that it is over four weeks since I drew his attention to this matter on Second Reading. What a state the Treasury must be in if, on one simple item of tax law, they are unable to produce a satisfactory solution, which required only elementary work, within four weeks and at the end of a lengthy Recess which in the case of my hon. Friends was imposed upon us.

Before I recommend my hon. Friends to divide, I wish to draw attention to the difficulties of people who made contracts in January of this year. The clock is ticking on, the pages in the diary are being turned. If I had placed a contract for a building costing £200,000 and now faced the operation of this cruel imposition, I should want to alter the nature of the building and to talk to the builder in order to adjust the contract to reduce the price by about the £12,000 which I shall lose. If the Chief Secretary leaves it until August before making an announcement, it will be too late and a reasonable part of the building will already be up. I hope that even now we shall hear something from him in the spirit of accepting the Amendment. If not I shall recommend my hon. Friends to divide against the Government.

Photo of Mr Charles Morrison Mr Charles Morrison , Devizes

When my hon. Friend the Member for Weston-super-Mare (Mr. Webster) began his speech he said that the Chief Secretary had praised most speeches from this side of the Committee and yet was prepared to do nothing about what my hon. Friends had said. I can only conclude that the Chief Secretary was convinced by our arguments but had not the authority to give a concession.

He has survived 2½ hours since my hon. Friend the Member for Yeovil (Mr. Peyton) remarked that the time must be approaching when we could expect a major concession from the Government. I am glad to see that in the last quarter of an hour the Chancellor has entered the Chamber and I hope that in most of the conversation which he has had with him the Chief Secretary has been conveying yet again my hon. Friend's arguments and that the Chancellor will allow the Chief Secretary to give the concession for which we are asking.

I reinforce remarks made by a number of my hon. Friends about bus services and, in particular, about rural bus services. The bus companies have been righting against increasing costs for a very long time, but they have been fighting a losing battle, and the level of rural bus services has shown a steady deterioration. Yet, as long ago as 1961, the Jack Committee on rural bus services reported: It was maintained that lack of public transport in rural areas created ' difficulties for young people attending further education classes; difficulties for those working in towns, whose homes are in the country; difficulties for the elderly drawing pensions … difficulties for the housewife who has to do her main shopping in the towns; difficulties for those attending doctors' or dentists' surgeries or needing to have prescriptions made up by the chemist; difficulties for those visiting patients in hospital or attending hospital for treatment'. In many parts of the country—not only in central Wales and in Scotland, to which the hon. Member for Orpington (Mr. Lubbock) referred—these inconveniences are very considerable. Since the Jack Report in 1961, there has been a huge increase in the number of families which own cars, and the figure may be as high as 80 per cent. or more in some areas. The husband going to work is almost invariably the car user, and therefore the wife and the family are often left without any private means of transport.

Because the overall number of people using public transport is steadily decreasing, public transport in its turn is gradually becoming more uneconomic, and therefore more and more services are withdrawn. As a result, many people are without any form of transport. This causes hardship and inconvenience, particularly to the elderly, the infirm, and those young people who have not yet reached an age when they can have a driving licence, or who cannot afford to buy their own transport.

If the Government have their way, the economics of the bus services will become even more hazardous than they are already. The bus companies have estimated that the withdrawal of investment allowances would cost the industry about £2·8 million. The only result could be an increase in fares, a reduction in services, or a reduction in standards.

These points may be of marginal importance to the Treasury, but they should be of the greatest relevance to the Ministry of Transport. They are of ever-increasing importance to thousands of people, who deserve far more consideration than they have received this afternoon from the Government. I cannot believe that the Government intend to add to the difficulties of those people in rural areas to whom I have referred.

Much more help from the Government is needed for the bus services, instead of the harmful effect of the Government's proposals. I hope that the Chancellor will be able to make a concession on this matter.

Photo of Mr Peter Mills Mr Peter Mills , Torrington

I wish to support Amendment No. 302, particu- larly as it concerns rural buses. The problems of communication in the Southwest are very acute, and the loss of investment allowances will considerably aggravate the situation.

I am very pleased to see that the Transport Ministers are here. We are constantly having to remind them of the transport problems in the South-West. They know them very well. The Clause will present another problem which will be very difficult to solve.

Rural bus operators, especially those in my constituency, are in very serious trouble and feel that they cannot go on much longer. The various things that have brought this to a head, such as taxation, have already been mentioned this afternoon. Now we have the loss of the investment allowance. I believe that this is the end of the road for many rural bus operators unless the Government wake up, take notice of the problem and give them back the allowances that they had before.

7.15 p.m.

I make a very strong appeal to the Minister to look into this matter again and to give way a bit on Amendment No. 302, particularly as regards rural bus operators. He is the most "ungiving" man that I have ever come across. The only way to solve our rural communications problems is to provide some sort of specialised buses for these areas. I am very much in favour of the small, tailor-made bus that will carry not only people but also goods and other things. But the small bus operators cannot invest in them unless they receive adequate allowances.

I should also like to say something about Amendment No. 251, in the name of my hon. Friend the Member for Westmorland (Mr. Jopling). I support this practical Amendment, because agriculture needs the safeguard which it would give. I must declare my interest, as I am having a farmhouse built and therefore I, too, may be in difficulties.

There are always delays in the building of farmhouses, cottages and farm buildings. The weather is one cause, particularly in the South West, and there is also a shortage of materials—except, of course, bricks—and labour, especially skilled labour.

The Amendment is worthy, and I ask the Minister to give a bit on it.

Photo of Mr Hector Monro Mr Hector Monro , Dumfriesshire

Any problem that is serious in the South-West of England is 20 times more serious in Scotland. We have been debating the position of rural bus services. Those who live in rural areas and know the small bus operators also know that they are hanging on by their boot straps at this moment. The Clause is likely to be the last straw. Many operators will not be able to carry on if the Government continue in this way.

I note—and Scottish hon. Members are becoming used to this—that no Scottish Minister has come to listen to the problems of Scotland. They are not here even when we discuss hill sheep. We have no idea of how seriously the Government are treating Scotland at the moment. They knew that Scotland would be discussed when we considered the problem of rural buses, and one Minister from the Scottish Office should have been present to hear about it.

Many cogent arguments have been put forward to show why bus operators should be helped, particularly in Scotland, where there is less opportunity to travel by train, there are fewer roads, and the country is much larger. We deserve special treatment in the rural areas, and I hope that at last we shall have some form of repentance from the Government.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

What a wonderfully dumb Front Bench ! Would it not be better if the Front Bench withdrew and had a Cabinet meeting and came to a decision on various matters which have been raised during this debate? I do not think that most of them even know what the Chief Secretary said—[HON. MEMBERS: "He said nothing."] He said nothing and that is just the point. They did not even know that he said nothing.

I rise because I have a particular interest in Amendment No. 136. Few voices in the House are raised on behalf of the shipbuilding industry. No doubt that is why the Government have decided to bring the industry under the control of the Minister of Technology—who, in view of that fact, also might have made a contribution to the debate.

We have not heard a word in support of the industry from hon. Members opposite who represent—or think they represent—shipbuilding and shipping interests. Nearly all those who represent large centres of shipbuilding won their seats at the last General Election, since when they have all gone dumb. I very much regret the fact that the Chief Secretary said so little about this very important industry.

The details of the series of Amendments that we are discussing have been put by experts on this side of the Committee, and I want to ask the Chief Secretary what he meant when, as far as I understood it, he addressed somebody as a lamb. I am not certain whether he was lambing or cooing.

Photo of Mr John Peyton Mr John Peyton , Yeovil

The right hon. Gentleman would certainly never refer to my hon. Friend as a lamb.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

I agree. He never would. All the industries connected with these Amendments will be put into an even worse position. None of them will be able to make any plans. They do not know whether the Chief Secretary was promising to do anything. They will not know how to plan their future, and they will wait for the Report stage hoping that Father Christmas will pop up, because we shall be nearer Christmas then than we are today.

These provisions come from a Government which attacked the Conservative Government on the ground that they took such a long time to make up their minds. But when the Budget was introduced, and then the Finance Bill, and when all the Amendments appeared on the Order Paper, it was surely possible for the Chief Secretary to discover what he was going to do about them, or what the Chancellor was going to do. All the Amendments are in clear terms. I do not see that any technical difficulties confront the right hon. Gentleman. He can make up his mind for or against.

All the facts should be known to the Treasury. Whether they are, I do not know. Sometimes I do not think the Treasury knows anything at all now. Its director—the man who now dictates policy—has changed. A long time ago I said that the Treasury would get on better if it got rid of Dr. Kaldor, but nobody took any notice of me. Now, however, I notice with great interest that the public are reaching the same conclusion. I am delighted that Aims of Industry has now said the same thing.

What on earth was the Chief Secretary thinking about when he introduced an attitude into the debate which will cause even further anxiety to people in the industries that have been mentioned. I cannot believe that any of those people will think that the Chief Secretary meant anything. I suppose that this is a new technique, to try to prevent hon. Members on this side of the Committee from putting the case for the Amendments that they are supporting. The Government Front Bench is dull as dull. Ministers have no ideas in their heads, because they do not know how to make up their minds.

Photo of Mr John Peyton Mr John Peyton , Yeovil

I must explain to my hon. hon. Friend the Member for Tynemouth (Dame Irene Ward) that I meant no discourtesy or disrespect to her when I said that the Chief Secretary would certainly not refer to her as a lamb. I meant to suggest that he undoubtedly regards her as the lioness that she is. Despite the terrible gloom and pessimism exhibited by my hon. Friends I, optimistic to the end, saw a ray of hope when the Solicitor-General appeared on the Government Front Bench. We all know that an apparition of that sort never materialises unless an Amendment is about to be accepted. We are very seldom given the intellectual treat of listening to the Solicitor-General unless he has the onerous task of accepting an Amendment. Unfortunately, our hopes have been dashed, because he has gone away.

I want to refer to the point made by my hon. Friend the Member for Torrington (Mr. Peter Mills). This is a desperately serious matter for the countryside. The Government should know that we are growing stronger in the conviction that the Government, obtaining little support from the countryside, care even less for it. We are becoming extremely discontented with the way in which our pleas constantly fall on deaf ears. I feel very sorry for the Chief Secretary. He has been sitting there all afternoon, taking the bowling from both ends. He has not scored many runs. He has stood consistently in front of his wicket but, there being no umpire—because we are not allowed to appeal to you, Mr. Grant-Ferris—nobody has been able to get him out, although he has constantly been leg-before-wicket.

I hope that the Government can be induced to take this matter seriously and to realise that all their piffling talk about a dynamic country, purposive planning and regional arrangements will go entirely by the board if they do not allow the seeds of a decent transport system to develop. They are stifling them almost before they are born.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

The hon. Member for Deptford (Mr. John Silkin) has come in to closure the debate.

Photo of Mr John Peyton Mr John Peyton , Yeovil

I hope that it will not be too far out of order for me to remark that the vet has come in with the humane killer, to put the Government out of their misery.

Photo of Mr Archibald Manuel Mr Archibald Manuel , Central Ayrshire

You look pretty miserable yourself.

Photo of Wing Commander Sir Robert Grant-Ferris Wing Commander Sir Robert Grant-Ferris , Nantwich

Order. I hope that the Committee will allow the hon. Member to conclude his speech.

Photo of Mr John Peyton Mr John Peyton , Yeovil

I will not reply in kind to such a vulgar remark as the hon. Member for Central Ayrshire (Mr. Manuel) has seen fit to make. I was saying, as gravely as I could, that the vet had come in with his humane killer. Unfortunately, although there is no doubt that he will be successful in putting the Government temporarily out of their misery on this issue he will be powerless to persuade them to alleviate the misery that their policies will cause if persisted in in the West Country and elsewhere. We bitterly resent this, hence our very sustained attack upon the Government this afternoon.

7.30 p.m.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I really must ask for an answer to this debate, and I appeal to the Chancellor. As he knows, throughout the Committee's consideration of the Bill there has been considerable cooperation by both sides of the Committee —I think he will agree with me about that—and so considerable progress has been made. But a major Amendment has been proposed by the Opposition— I hope the Chancellor will listen to this —and many people have spoken on it, and then the Chief Secretary gets up and says, "I have listened with great interest to all the speeches" but presents no arguments in reply to the Opposition case. This is really a very bad way of treating this Committee, and it has resulted in an unfortunate delay in our progress. He really does have the duty to stand up and say why this Government should have decided to stop giving investment allowance or any other form of incentive to the buses.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

The hon. Gentleman is quite wrong. He has been speaking all the time to the Question, "That the Clause stand part of the Bill". I have been listening very carefully indeed for any single remark addressed to the Amendment.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

If I may say so, it is the Chief Secretary who is absolutely wrong about this. The Amendment which I proposed was on the principle that it is wrong to do away with investment allowances completely for commercial vehicles and buses, and nobody in this Committee has heard one argument from the Chief Secretary against that. If it is because he has not bothered to be briefed upon this subject, and the effects on the bus industry, there is the Joint Parliamentary Secretary to the Ministry of Transport here, so let him come to the Dispatch Box to defend putting an extra imposition of £2·8 million a year on the bus industry. Let us hear the Ministry of Transport defending this. If the Chief Secretary has in fact been briefed that he should not say anything in reply to our arguments, then the Chancellor himself has the responsibility to come to the Dispatch Box and make his comments about why these two major industries should be so adversely affected.

Other industries are not so adversely affected by doing away with investment allowances. The Committee is well aware that for other plant and machinery investment grants are to take their place, and the Committee knows that for road haulage and for the bus industry no incentive grants will take their place. Before we press the matter to a vote, I must ask for a reply from the Government as to why they are in favour of leaving the bus industry and the road haulage industry without these investment incentives.

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

A personal request has been made to me and I shall be courteous to the Committee, although I hope that the Committee will be equally courteous in this matter to the Chief Secretary.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

We must have reason.

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

Sometimes there is discourtesy without reason.

The Chief Secretary and I discussed this series of Amendments before we came here this afternoon and we selected a particular date in respect of these contracts, namely, 16th October. We have had a number of representations about the selection of that date, and it seemed to us that there was a case which ought to be considered here, and we reached the conclusion, which I would have thought would have appealed to the Committee—indeed, I dare say it does appeal to the Committee—that the best thing to do would be to listen to the debate and hear all the arguments put forward— and not vilification—and then come forward in a fortnight's time on Report with considered conclusions.

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

The hon. Gentleman the Member for Colne Valley (Mr. Richard Wainwright) thought we should have thought the matter out before coming here. We could have had another date or we could have stuck to this one. We are sticking to this one, but we thought we would prefer to hear the arguments—I know that this is something which will appeal to the Liberal Party— and then consider it again and put down an Amendment, if that were thought desirable, to change it on Report.

On this Amendment we are discussing we have heard a lot said in the last half hour since I have been here—and I apologise for not having been here earlier but it is well known to hon. and right hon. Members opposite that although one has a duty to the Committee one has a lot of other duties to carry out, too— about the bus industry, but the fact is that that has nothing to do with this particular Amendment. This arises in connection with investment grant, or on the Question, "That the Clause stand part of the Bill", but it does not arise on the date of 16th October, which is the particular question which will be put to the Committee.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

With respect, I realise that coming into the Committee late it is difficult to know what is being debated, but we are debating Amendment No. 302, which has nothing to do with the date at all. Amendment No. 302 seeks to see that commercial vehicles and coaches are not affected by this Clause. I can see that the right hon. Gentleman has an argument about the date, although I think it an unjustifiable one, because, as the hon. Member for Colne Valley (Mr. Richard Wainwright) pointed out, the Treasury have had four weeks now to think of this issue. It is not the date we are worried about. The Amendment was proposed by me, perhaps inadequately, in a speech of some 20 minutes, and it has been supported and spoken to by other hon. Members, and then the Chief Secretary said that he had listened to some very interesting speeches and he was not going to give way to them. That is not the way to treat this Committee.

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

The Chief Secretary always treats this Committee with courtesy. It is his well-deserved reputation in this Committee. We have listened to the arguments, and, as I said, they have been put forward in relation to buses especially.

In relation to the point about uncertainty, I do not think there should be any more uncertainty now than at any other stage of the Bill, in the sense that the date which we operate is 16th October, and anybody who makes his plans while the Bill is going through must make his plans on the assumption that that is the date although it could be changed.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

Dame Irene Ward rose ——

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

With respect, I am trying to answer a point which was put to me. What I am saying is that the Bill is being considered in Committee, and anyone trying to reach conclusions must do so on that understanding and at that risk. All right, I will give way.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

I am grateful to the right hon. Gentleman. If the Chief Secretary or if the Chancellor now decides 16th October is to be the date why did not the Chief Secretary say so? All he said was that he was listening.

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

I do not think that that really needs any reply from me. I think what I have said is clear to everybody in the Committee except the hon. Lady.

We shall give further consideration to the matter. We shall reach our conclusions and on Report we shall then be able to say to the House why we have taken the dates that we have taken.

I wish to appeal to the Committee. We have had over three hours on these related subjects. I hope the Committee will not take this amiss, but I do not think that the arguments of the last half hour during which I have listened have carried the matter any further. They have, substantially, only reiterated it. We have a lot of business to do and I would ask the Committee now if they will agree to come to a conclusion so that we can registered our views.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I really must reply to this, because the Chancellor's comment is on the date, and he actually says the argument on the buses is another matter. The fact is that the major Amendment from this side is about the buses and the commercial vehicles. The major debate has been about this. The Liberals' Amendment was the one about the date; the Liberals moved it and perhaps they are satisfied with the Chancellor's answer and the Chief Secretary's, when he said that he would consider this further. But the major debate from this side has been about the buses and the commercial vehicles. The Chancellor was not here. I do not complain about that at all, but if he had been here he would have known what the major debate was about and that we got no answer at all. In the circumstances the Chancellor must expect delay on this point. I think we are grateful to him for joining in and endeavouring to placate the Committee, but I fear that when he studies in HANSARD tomorrow the report of the debate he will see that our arguments have been treated with unusual contempt——

Photo of Mr Peter Walker Mr Peter Walker , Worcester

—by the Government Front Bench, and we certainly vigorously complain at the treatment which we have received.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I have refrained throughout the last four hours from contributing to the debate, because my interpretation of the selection of Amendments was that they dealt only with timing, save only the. last Amendment selected, that in the name of my hon. Friend the Member for Worcester (Mr. Peter Walker) and others of my hon. and right hon. Friends.

It is incongruous—I make no adverse criticism—that the selection for our last debate is an admixture of a timing Amendment from the Liberal Party and an exclusion Amendment—

Photo of Wing Commander Sir Robert Grant-Ferris Wing Commander Sir Robert Grant-Ferris , Nantwich

Order. I am sorry to interrupt the hon. Gentleman. It is not in order to criticise the Chair's selection of Amendments. Perhaps he would have that topic.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

No, I said deliberately that there was no criticism. I know my Parliamentary rules much too well for that. There is no criticism, but I observed, factually, that there is an admixture. There is a timing Amendment from the Liberal Party and there is an exclusion Amendment from my right hon. and hon. Friends. The exclusion Amendment, I remind the Chancellor of the Exchequer, who has only just returned to the Committee—[An HON. MEMBER: "He has been here for an hour."] Well—one hour out of four— does not primarily relate to buses.

It relates to hundreds of thousands of commercial vehicles. It relates to 1·3 million C licence vehicles. The buses, though important, are a secondary consideration. This is not a debate about buses. It is a debate on a point

of massive importance. I hope that there will not be a repetition of the sad occurrence 48 hours ago, when a debate on the Question, "That the Clause stand part," was denied to my hon. Friends because the present Question, "That the Clause stand part," which I shall oppose, is an exclusion consideration——

Photo of Wing Commander Sir Robert Grant-Ferris Wing Commander Sir Robert Grant-Ferris , Nantwich

Order. The hon. Gentleman must wait until we come to the Question. He will hear then what I have to say about it, and I will have something to say to him.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

Thank you far your guidance, Mr. Grant-Ferris. As always, I am most grateful.

This is an exclusion consideration. I appeal to my right hon. and hon. Friends, as I do not want the two considerations to be mixed up, that the timing consideration of the Liberal Party, which I shall strongly support in the Lobbies, should have a separate Division from the exclusion Amendment of my right hon. and hon. Friends. At the risk of tiring myself, I shall seek to walk through the Lobbies twice, and a third time on the Question, "That the Clause stand part," when I propose to spend some time, if I catch your eye, Mr. Grant-Ferris—I have sat here for four hours holding myself back for the debate on the Question, "That the Clause stand part"—to criticise severely the proposition to exclude important assets from capital allowances.

Question put, That the words "October 1966" stand part of the Clause:—

The Committee divided: Ayes 215, Noes 147.

Division No. 46.]AYES[7.44 p.m.
Abse, LeoBraddock, Mrs. E. M.Dalyell, Tam
Albu, AustenBradley, TomDavidson, Arthur (Accrington)
Alldritt, WalterBrooks, EdwinDavies, G. Elfed (Rhondda, E.)
Archer, PeterBroughton, Dr. A. D. D.Davies, Harold (Leek)
Atkins, Ronald (Preston, N.)Brown, Rt, Hn. George (Belper)Davies, Ifor (Gower)
Atkinson, Norman (Tottenham)Brown, Hugh D, (G'gow, Provan)de Freitas, Sir Geoffrey
Bacon, Rt. Hn. AliceBrown, Bob (N'c'tle-upon-Tyne, W.)Delargy, Hugh
Barnett, JoelBrown, R. W. (Shoreditch & F'bury)Dell, Edmund
Baxter, WilliamBuchan, NormanDempsey, James
Beaney, AlanBuchanan, Richard (G'gow, Sp'burn)Dewar, Donald
Bence, CyrllCallaghan, Rt. Hn. JamesDiamond, Rt. Hn. John
Benn, Rt. Hn. Anthony WedgwoodCant, R. B.Dickens, James
Bennett, James (G'gow, Bridgeton)Carmichael, NeilDoig, Peter
Binns, JohnCarter-Jones, LewisDonnelly, Desmond
Blackburn, F.Coleman, DonaldDunn, James A.
Blenkinsop, ArthurConcannon, J. D.Dunnett, Jack
Boardman, H.Conlan, BernardDunwoody, Mrs. Gwyneth (Exeter)
Booth, AlbertCraddock, George (Bradford, S.)Dunwoody, Dr. John (F'th & C'b'e)
Bottomley, Rt. Hn. ArthurCrawshaw, RichardEadie, Alex
Bowden, Rt. Hn. HerbertCronin, JohnEdwards, Robert (Bilston)
Boyden, JamesCullen, Mrs. AliceEdwards, William (Merioneth)
English, MichaelLedger, RonProbert, Arthur
Evans, Albert (Islington, S. W.)Lestor, Miss JoanRandall, Harry
Evans, loan L. (Birm'h'm, Yardley)Lever, L. M. (Ardwick)Rees, Merlyn
Fletcher, Ted (Darlington)Lewis, Arthur (W. Ham, N.)Rhodes, Geoffrey
Foot, Michael (Ebbw Vale)Lewis, Ron (Carlisle)Richard, Ivor
Forrester, JohnLomas, KennethRoberts, Albert (Normanton)
Fowler, GerryLoughlin, CharlesRoberts, Gwilym (Bedfordshire, S.)
Fraser, Rt. Hn. Tom (Hamilton)Lyon, Alexander W. (York)Robinson, W. O. J. (Walth'stow, E.)
Freeson, ReginaldMcBride, NeilRose, Paul
Gardner, A. J.McCann, JohnRoss, Rt. Hn. William
Garrett, W. E.MacDermot, NiallRowlands, E. (Cardiff, N.)
Ginsburg, DavidMacdonald, A. H.Shaw, Arnold (Ilford, S.)
Gray, Dr. HughMcGuire, MichaelSheldon, Robert
Gregory, ArnoldMackenzie, Gregor (Rutherglen)Shinwell, Rt. Hn. E.
Grey, CharlesMackie, JohnShore, Peter (Stepney)
Griffiths, David (Rother Valley)Maclennan, RobertShort, Rt. Hn. Edward (N'c'tle-u-Tyne)
Griffiths, Rt. Hn. James (Llanelly)MacMillan, Malcolm (Western Isles)Short, Mrs. Renée (W'hampton, N. E.)
Griffiths, Will (Exchange)McMillan, Tom (Glasgow, C.)Silkin, John (Deptford)
Hamilton, William (Fife, W.)McNamara, J. KevinSilkin, S. C. (Dulwich)
Hannan, WilliamMacPherson, MalcolmSilverman, Julius (Aston)
Hazell, BertMahon, Peter (Preston S.)Silverman, Sydney (Nelson)
Heffer, Eric S.Mahon, Simon (Bootle)Slater, Joseph
Henig, StanleyManuel, ArchieSpriggs, Leslie
Herbison, Rt. Hn. MargaretMapp, CharlesSteele, Thomas (Dunbartonshire, W.)
Hobden, Dennis (Brighton, K'town)Mason, RoyStonehouse, John
Hooley, FrankMellish, RobertThomas, lorwerth (Rhondda, W.)
Horner, JohnMendelson, J. J.Thornton, Ernest
Houghton, Rt. Hn. DouglasMiller, Dr. M. S.Tinn, James
Howarth, Harry (Wellingborough)Mitchell, R. C. (S'th'pton, Test)Urwin, T. W.
Howell, Denis (Small Heath)Molloy, WilliamVarley, Eric G.
Howie, W.Morris, Charles R. (Openshaw)Wainwright, Edwin (Dearne Valley)
Hoy, JamesMorris, John (Aberavon)Walden, Brian (All Saints)
Hughes, Hector (Aberdeen, N.)Neal, HaroldWalker, Harold (Doncaster)
Hughes, Roy (Newport)Newens, StanWallace, George
Hunter, AdamNoel-Baker, Francis (Swindon)Watkins, David (Consett)
Hynd, JohnOakes, GordonWellbeloved, James
Irvine, A. J. (Edge Hill)Ogden, EricWhitaker, Ben
Jackson, Colin (B'h'se & Spenb'gh)O'Malley, BrianWhitlock, William
Janner, Sir BarnettOswald, ThomasWilliams, Alan (Swansea, W.)
Jay, Rt. Hn. DouglasOwen, Will (Morpeth)Williams, Alan Lee (Hornchurch)
Jeger, Mrs. Lena (H'b'n&St. P'cras, S.)Page, Derek (King's Lynn)Williams, Clifford (Abertillery)
Jenkins, Hugh (Putney)Paget, R. T.Willis, George (Edinburgh, E.)
Johnson, Carol (Lewisham, S.)Pannell, Rt. Hn. CharlesWilson, William (Coventry, S.)
Jones, Dan (Burnley)Park, TrevorWinnick, David
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)Parker, John (Dagenham)Winterbottom, R. E.
Jones, J. Idwal (Wrexham)Parkyn, Brian (Bedford)Woodburn, Rt. Hn. A.
Judd, FrankPavitt, LaurenceWoof, Robert
Kelley, RichardPentland, NormanYates, Victor
Kenyon, CliffordPerry, George H. (Nottingham, S.)
Kerr, Mrs. Anne (R'ter & Chatham)Price, Christopher (Perry Barr)TELLERS FOR THE AYES:
Lawson, GeorgePrice, Thomas (Westhoughton)Mr. Alan Fitch and
Leadbitter, TedPrice, William (Rugby)Mr. Harry Gourlay.
NOES
Allason, James (Hemel Hempstead)Crowder, F. P.Harris, Reader (Heston)
Atkins, Humphrey (M't'n & M'd'n)Dalkeith, Earl ofHarrison, Brian (Maldon)
Awdry, DanielDance, JamesHawkins, Paul
Baker, W. H. K.Davidson, James (Aberdeenshire, W.)Heseltine, Michael
Barber, Rt. Hn. AnthonyDean, Paul (Somerset, N.)Higgins, Terence L.
Batsford, BrianDigby, Simon WingfieldHiley, Joseph
Beamish, Col. Sir TuftonDodds-Parker, DouglasHill, J. E. B.
Bell, RonaldDoughty, CharlesHirst, Geoffrey
Bennett, Sir Frederic (Torquay)Eden, Sir JohnHobson, Rt. Hn. Sir John
Bessell, PeterElliot, Capt. Walter (Carshalton)Holland, Philip
Biffen, JohnElliott, R. w. (N'c'tle-upon-Tyne, N.)Hordern, Peter
Biggs-Davison, JohnErrington, Sir EricHornby, Richard
Birch, Rt. Hn. NigelEyre, ReginaldHowell, David (Guildford)
Blaker, PeterFarr, JohnHunt, John
Bossom, Sir CliveForrest, GeorgeHutchison, Michael Clark
Boyd-Carpenter, Rt. Hn. JohnFortescue, TimJenkin, Patrick (Woodford)
Bryan, PaulFraser, Rt. Hn. Hugh (St'fford & Stone)Jopling, Michael
Buchanan-Smith, Alick (Angus, N&M)Galbraith, Hn. T. G.Joseph, Rt. Hn. Sir Keith
Buck, Antony (Colchester)Gibson-Watt, DavidKaberry, Sir Donald
Bullus, Sir EricGiles, Rear-Adm. MorganKershaw, Anthony
Burden, F. A.Gilmour, Ian (Norfolk, C.)King, Evelyn (Dorset, S.)
Carlisle, MarkGilmour, Sir John (Fife, E.)Kitson, Timothy
Cary, Sir RobertGlover, Sir DouglasKnight, Mrs. Jill
Clegg, WalterGower, RaymondLloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Cooke, RobertGrant, AnthonyLloyd, Ian (P'tsm'th, Langstone)
Cooper-Key, Sir NeillGresham Cooke, R.Loveys, W. H.
Corfield, F. V.Grieve, PercyMaclean, Sir Fitzroy
Costain, A. P.Hall, John (Wycombe)Macleod, Rt. Hn. Iain
Craddock, Sir Beresford (Spelthorne)Hamilton, Michael (Salisbury)McMaster, Stanley
Maddan, MartinPeyton, JohnThatcher, Mrs. Margaret
Maginnis, John E.Pink, R. BonnerTurton, Rt. Hn. R. H.
Maxwell-Hyslop, R. J.Pounder, Raftonvan Straubenzee, W. R.
Maydon, Lt.-Cmdr. S. L. C.Powell, Rt. Hn. J. EnochVaughan-Morgan, Rt, Hn. Sir John
Mills, Peter (Torrington)Prior, J. M. L.Vickers, Dame Joan
Mills, Stratton (Belfast, N.)Pym, FrancisWainwright, Richard (Colne Valley)
Miscampbell, NormanRamsden, Rt. Hn. JamesWalker, Peter (Worcester)
Mitchell, David (Basingstoke)Ronton, Rt. Hn. Sir DavidWalker-Smith, Rt. Hn. Sir Derek
Monro, HectorRossi, Hugh (Hornsey)Wall, Patrick
More, JasperScott, NicholasWard, Dame Irene
Morrison, Charles (Devizes)Sharples, RichardWeatherill, Bernard
Munro-Lucas-Tooth, Sir HughShaw, Michael (Sc'b'gh & Whitby)Webster, David
Murton, OscarSinclair, Sir GeorgeWells, John (Maidstone)
Nabarro, Sir GeraldSmith, JohnWhitelaw, William
Neave, AireySteel, David (Roxburgh)Wilson, Geoffrey (Truro)
Orr-Ewing, Sir IanStodart, AnthonyWoodnutt, Mark
Page, Graham (Crosby)Stoddart-Scott, Col. Sir M. (Ripon)Worsley, Marcus
Pardoe, J.Summers, Sir SpencerYounger, Hn. George
Pearson, Sir Frank (Clitheroe)Taylor, Sir Charles (Eastbourne)
Peel, JohnTaylor, Frank (Moss Side)TELLERS FOR THE NOES:
Percival, IanTemple, John M.Mr. Russell Johnston and
Dr. M. P. Winstanley.

Amendment No. 302 proposed: In page 37, line 2, at end insert: (b) in so far as that expenditure is on road vehicles of a type not commonly used as private vehicles and unsuitable to be so used.—[Mr. Peter Walker.]

Question put, That those words be there inserted:—

The Committee divided: Ayes 134, Noes 212.

Division No. 47.]AYES[7.54 p.m.
Allason, James (Hemel Hempstead)Grant, AnthonyOrr-Ewing, Sir Ian
Atkins, Humphrey (M't'n & M'd'n)Gresham Cooke, R.Page, Graham (Crosby)
Awdry, DanielGrieve, PercyPardoe, J.
Baker, W. H. K.Hall, John (Wycombe)Pearson, Sir Frank (Clitheroe)
Barber, Rt. Hn. AnthonyHamilton, Michael (Salisbury)Peel, John
Batsford, BrianHarris, Reader (Heston)Percival, Ian
Beamish, Col. Sir TuftonHawkins, PaulPeyton, John
Bell, RonaldHeseltine, MichaelPink, R. Bonner
Bennett, Sir Frederic (Torquay)Higgins, Terence L.Pounder, Rafton
Bessell, PeterHiley, JosephPowell, Rt. Hn. J. Enoch
Birch, Rt. Hn. NigelHill, J. E. B.Prior, J. M. L.
Blaker, PeterHirst, GeoffreyPym, Francis
Bossom, Sir CliveHobson, Rt. Hn. Sir JohnRamsden, Rt. Hn. James
Boyd-Carpenter, Rt. Hn. JohnHolland, PhilipRenton, Rt. Hn. Sir David
Bryan, PaulHordern, PeterRossi, Hugh (Hornsey)
Buchanan-Smith, Alick (Angus, N&M)Hornby, RichardScott, Nicholas
Buck, Antony (Colchester)Howell, David (Guildford)Sharpies, Richard
Bullus, Sir EricHunt, JohnShaw, Michael (Sc'b'gh & Whitby)
Burden, F. A.Hutchison, Michael ClarkSinclair, Sir George
Carlisle, MarkJenkin, Patrick (Woodford)Smith, John
Cary, Sir RobertJohnston, Russell (Inverness)Steel, David (Roxburgh)
Clegg, WalterJopling, MichaelStodart, Anthony
Cooke, RobertJoseph, Rt. Hn. Sir KeithStoddart-Scott, Cot. Sir M. (Ripon)
Corfield, F. V.Kaberry, Sir DonaldSummers, Sir Spencer
Costain, A. P.Kershaw, AnthonyTaylor, Sir Charles (Eastbourne)
Craddock, Sir Beresford (Spelthorne)Kitson, TimothyTaylor, Frank (Moss Side)
Dalkeith, Earl ofKnight, Mrs. JillTemple, John M.
Dance, JamesLloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)Thatcher, Mrs. Margaret
Davidson, James (Aberdeenshire, W.)Lloyd, Ian (P'tsm'th, Langstone)Turton, Rt. Hn. R. H.
Digby, Simon WingfieldLoveys, W. H.van Straubenzee, W. R.
Doughty, CharlesMaclean, Sir FitzroyVickers, Dame Joan
Eden, Sir JohnMaoleod, Rt. Hn. IainWainwright, Richard (Colne Valley)
Elliot, Capt. Walter (Carshalton)Maddan, MartinWalker, Peter (Worcester)
Elliott, R. W. (N'c'tle-upon-Tyne, N.)Maginnis, John E.Walker-Smith, Rt. Hn. Sir Derek
Errington, Sir EricMaxwell-Hyslop, R. J.Ward, Dame Irene
Eyre, RegnaldMaydon, Lt.-Cmdr. S. L. C.Weatherill, Bernard
Farr, JohnMills, Peter (Torrington)Webster, David
Forrest, GeorgeMills, Stratton (Belfast, N.)Whitelaw, William
Fraser, Rt. Hn. Hugh (St'fford & Stone)Miscampbell, NormanWilson, Geoffrey (Truro)
Galbraith, Hn. T. G.Monro, HectorWinstanley, Dr. M. P.
Gibson-Watt, DavidMore, JasperWoodnutt, Mark
Giles, Rear-Adm. MorganMorrison, Charles (Devizes)Worsley, Marcus
Gilmour, Ian (Norfolk, C.)Munro-Lucas-Tooth, Sir Hugh
Gilmour, Sir John (Fife, E.)Murton, OscarTELLERS FOR THE AYES:
Glover, Sir DouglasNabarro, Sir GeraldMr. George Younger
Gower, RaymondNeave, Aireyand Mr. David Mitchell
NOES
Abse, LeoGarrett, W. E.Molloy, William
Albu, AustenGinsburg, DavidMorris, John (Aberavon)
Alldritt, WalterGourlay, HarryNeal, Harold
Archer, PeterGray, Dr. HughNewens, Stan
Atkins, Ronald (Preston, N.)Grey, CharlesNoel-Baker, Francis (Swindon)
Bacon, Rt. Hn. AliceGriffiths, David (Rother Valley)Oakes, Gordon
Barnett, JoelGriffiths, Rt. Hn. James (Llanelly)Ogden, Eric
Baxter, WilliamGriffiths, Will (Exchange)O'Malley, Brian
Beaney, AlanHale, Leslie (Oldham, W.)Oswald, Thomas
Bence, CyrilHamilton, William (Fife, W.)Owen, Will (Morpeth)
Benn, Rt. Hn. Anthony WedgwoodHannan, WilliamPage, Derek (King's Lynn)
Bennett, James (G'gow, Bridgeton)Hazell, BertPannell, Rt. Hn. Charles
Binns, JohnHeffer, Eric S.Park, Trevor
Blackburn, F.Henig, StanleyParker, John (Dagenham)
Blenkinsop, ArthurHerbison, Rt. Hn. MargaretParkyn, Brian (Bedford)
Boardman, H.Hobden, Dennis (Brighton, K'town)Pavitt, Laurence
Booth, AlbertHooley, FrankPentland, Norman
Bottomley, Rt. Hn. ArthurHorner, JohnPerry, George H. (Nottingham, S.)
Bowden, Rt. Hn. HerbertHoughton, Rt. Hn. DouglasPrice, Christopher (Perry Barr)
Boyden, JamesHowarth, Harry (Wellingborough)Price, Thomas (Westhoughton)
Braddock, Mrs. E. M.Howell, Denis (Small Heath)Price, William (Rugby)
Bradley, TomHowie, W.Probert, Arthur
Brooks, EdwinHoy, JamesRandall, Harry
Broughton, Dr. A. D. D.Hughes, Hector (Aberdeen, N.)Rees, Merlyn
Brown, Rt. Hn. George (Belper)Hughes, Roy (Newport)Rhodes, Geoffrey
Brown, Hugh D. (G'gow, Provan)Hunter, AdamRichard, Ivor
Brown, Bob (N'c'tle-upon-Tyne, W.)Hynd, JohnRoberts, Albert (Normanton)
Brown, R. W. (Shoreditch & F'bury)Irvine, A. J. (Edge Hill)Roberts, Gwilym (Bedfordshire, S.)
Buchan, NormanJackson, Colin (B'h'se & Spenb'gh)Robinson, W. O. J. (Walth'stow, E.)
Buchanan, Richard (G'gow, Sp'burn)Rose, Paul
Callaghan, Rt. Hn. JamesJanner, Sir BarnettRoss, Rt. Hn. William
Cant, R. B.Jay, Rt. Hn. DouglasRowlands, E. (Cardiff, N.)
Carmichael, NeilJeger, George (Goole)Shaw, Arnold (Ilford, S.)
Carter-Jones, LewisJeger, Mrs. Lena (H'b'n&St. P'cras, S.)Sheldon, Robert
Coleman, DonaldJenkins, Hugh (Putney)Shinwell, Rt. Hn. E.
Concannon, J. D.Johnson, Carol (Lewisham, S.)Shore, Peter (Stepney)
Conlan, BernardJones, Dan (Burnley)Short, Rt.Hn. Edward (N'c'tle-u-Tyne)
Craddock, George (Bradford, S.)Jones, Rt. Hn. Sir Elwyn(W. Ham, S.)Short, Mrs. Renée (W'hampton, N. E.)
Crawshaw, RichardJones, J. Idwal (Wrexham)Silkin, John (Deptford)
Cronin, JohnJudd, FrankSilkin, S. C. (Dulwich)
Culten, Mrs. AliceKenyon, CliffordSilverman, Julius (Aston)
Dalyell, TamKerr, Mrs. Anne (R'ter & Chatham)Silverman, Sydney (Nelson)
Davidson, Arthur (Accrington)Lawson, GeorgeSlater, Joseph
Davies, G. Elfed (Rhondda, E.)Leadbitter, TedSpriggs, Leslie
Davies, Harold (Leek)Ledger, RonSteele, Thomas (Dunbartonshire, W.)
Davies, Ifor (Gower)Lestor, Miss JoanStonehouse, John
de Freitas, Sir GeoffreyLever, L. M. (Ardwick)Thomas, Iorwerth (Rhondda, W.)
Delargy, HughLewis, Arthur (W. Ham, N.)Thornton, Ernest
Dell, EdmundLewis, Ron (Carlisle)Tinn, James
Dempsey, JamesLomas, KennethUrwin, T. W.
Dewar, DonaldLoughlin, CharlesVarley, Eric G.
Diamond, Rt. Hn. JohnLyon, Alexander W. (York)Wainwright, Edwin (Dearne Valley)
Dickens, JamesMcBride, NeilWalden, Brian (All Saints)
Doig, PeterMcCann, JohnWalker, Harold (Doncaster)
Donnelly, DesmondMacDermot, NiallWallace, George
Dunn, James A.Macdonald, A. H.Watkins, David (Consett)
Dunnett, JackMcGuire, MichaelWellbeloved, James
Dunwoody, Mrs. Gwyneth (Exeter)Mackenzie, Gregor (Rutherglen)Whitaker, Ben
Dunwoody, Dr. John (F'th & C'b'e)Mackie, JohnWhitlock, William
Eadie, AlexMaclennan, RobertWilliams, Alan (Swansea, W.)
Edwards, Robert (Bilston)MacMillan, Malcolm (Western Isles)Williams, Alan Lee (Hornchurch)
Edwards, William (Merioneth)McMillan, Tom (Glasgow, C.)Williams, Clifford (Abertillery)
English, MichaelMcNamara, J. KevinWillis, George (Edinburgh, E.)
Evans, Albert (Islington, S.W.)MacPherson, MalcolmWilson, William (Coventry, S.)
Evans, loan L.(Birm'h'm, Yardley)Mahon, Peter (Preston, S.)Winnick, David
Fletcher, Ted (Darlington)Mahon, Simon (Bootle)Winterbottom, R. E.
Foot, Michael (Ebbw Vale)Manuel, ArchieWoodburn, Rt. Hn. A.
Forrester, JohnMapp, CharlesWoof, Robert
Fowler, GerryMason, RoyYates, Victor
Fraser, Rt. Hn. Tom (Hamilton)Mendelson, J. J.
Freeson, ReginaldMiller, Dr. M. S.TELLERS FOR THE NOES:
Gardner, A. J.Mitchell, R. C. (S'th'pton, Test)Mr. Alan Fitch
and Mr. Charles R. Morris.

8.0 p.m.

Photo of Wing Commander Sir Robert Grant-Ferris Wing Commander Sir Robert Grant-Ferris , Nantwich

Before I propose the Question, "That the Clause stand part of the Bill", may I ask the Committee to be so kind as to bear with me for one moment. I am anxious to honour the undertaking given by my predecessor that he would allow a debate on this Question, but I am sure that the Committee realises that we have spent a very long time this afternoon discussing the Clause and I most sincerely hope that we shall now be favoured with short speeches. I know that the hon. Member for Worcestershire, South (Sir G. Nabarro) has deliberately refrained from speaking in order to have an opportunity to speak on this Question, and I shall certainly call him if he seeks to catch my eye, but I hope that hon. Members will try to make their speeches short in the general interests of the Committee.

Question proposed, That the Clause stand part of the Bill.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

I am sure that hon. Members on both sides of the Committee will be pleased to co-operate in the proposal which you have put, Mr. Grant-Ferris. It is true that we have been debating this Clause for more than four hours. But with great respect the main reason why we have had two such very long debates on these two sets of Amendments is the fact that we had such unsatisfactory answers from the Chief Secretary. It must also be borne in mind that this is a Clause of paramount importance. It merits a much longer debate than that which, I hope, in the general interest, it will have.

In view of the debates which we have had I propose to curtail what I would otherwise have said. The purpose of the Clause is simple—to abolish completely the whole scheme of investment allowances. As I said earlier, in our view this is a retrograde step. We oppose it and this is why we shall vote against the Clause. The policy is to abolish investment allowances and to replace them by a system of cash grants.

I shall put the objections to this proposal as briefly as I can. In abolishing investment allowances the Chancellor is, first, abolishing a system which gives industry an investment incentive as of right and he is replacing it with a system which is to be operated at the discretion of officials. Secondly, he is abolishing a system under which industry had the right to appeal to the courts and he is replacing it with a system under which the decision of a Government official is final and unchallengeable. Thirdly, he is abolishing a system in which the cash incentive was linked to profitability and he is replacing it with a system under which the grant of public money is not dependent upon the success of the investment. Fourthly, he is making the change against the advice of industry. Fifthly, and most important of all, for most of British industry and commerce the Chancellor is reducing the cash incentive to invest and to modernise.

When the Government first came to office in October, 1954, most of the leading figures in industry were impressed by the repeated statements of Ministers that a Labour Government would act to encourage the modernisation of industry and would provide the financial incentives to ensure that it happened. They are no longer under any such illusion. The latest industrial trends survey of the C.B.I. forecast an actual decline in investment by manufacturing industry over the next year to 18 months, and today we have the Press notice issued by the Board of Trade—I will not read all of it—which contains this paragraph, after an inquiry into industry's investment intentions: The results of the inquiry suggest that companies both in manufacturing industry and in the distributive and service trades now expect to spend on capital account in 1966 and in 1967 less than they had planned to spend at the end of last year. It is against this background that we have to consider the proposal to abolish investment allowances. I do not intend to detain the Committee long, because I spoke at length during a debate on the White Paper which foreshadowed this change and also on Second Reading of the Industrial Development Bill. I will content myself with reminding the Committee that I have given innumerable specific examples of the way in which British industry will be worse off as a result of this change. The figures which I gave were not mine. They were the result of discussions with accountants and tax advisers to some of the leading companies in the country. They were unanimous in their conclusion, and I have again and again asked Ministers, if they disagreed with my figures, to give their own. They have declined to do so, and the reason can be simply stated: the figures which I gave were accurate.

Let me sum up the financial consequences of this proposal to abolish investment allowances. If the Clause is allowed to pass, the result will be that outside development areas, which account for only one-fifth of manufacturing industry, in every single case, without exception, the cash value of the investment incentive will be much less than under the scheme which the Labour Government inherited.

In many cases the withdrawal of investment allowances, as we heard in earlier debates this afternoon, is not to be replaced by even the smaller cash grants. The hotel industry is to suffer this blow in addition to the burden of the new Selective Employment Tax, and so are the distributive trades and the transport industry. I remind the Committee that the Amendment on which we voted last proposed to exclude from this Clause and to retain investment allowances for buses and commercial vehicles.

I shall not weary the Committee with the figures I gave previously about the additional cost to the transport industry, because we had a full debate on that earlier. The consequences in these cases will be twofold, first to slow down improvement in efficiency and, secondly, to increase the cost of living. It is naive in the extreme to pretend that these increased burdens will not be passed on to the public. Neither the First Secretary nor the Chancellor can stop the increases in prices and fares which will follow the increases in costs. They may honestly believe that they can, but no one else in the country believes it.

The proposal to abolish investment allowances is another instance of the right hon. Gentleman's habit of abandoning one form of taxation and replacing it by another, hastily contrived, the consequences of which have not been thought through. This is a bad proposal which will hinder the modernisation of industry and we shall oppose it.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I am grateful to my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) for surveying so accurately the reason why the whole of my party, I am sure, will unanimously oppose Clause 33. I recall that during the 21 years since the end of the war there have been three systems of capital allowances for industry. The first was introduced by Sir John Anderson when he was Chancellor of the Exchequer at the end of the war. It was a system of initial allowances. I did not very much care for it. It was an interest-free loan, a weighting forward depreciation allowances, which were subsequently recouped by the Revenue by a smaller rate of depreciation allowance in each of the succeeding years until the asset became obsolescent and the obsolescence allowance was claimed. So the total of initial allowances, annual depreciation and obsolescence allowance equalled the historical amount of the asset. That was not much of an inducement to investment.

The Conservative Party in the middle 1950s devised and originated the investment allowance. Although complicated and difficult to compute, it has been singularly successful because the real attraction is that, taking the historical cost of an asset at £100, the investor ultimately recoups a total of £130 in respect of plant, machinery and equipment and £115 in respect of industrial buildings, based upon the investment allowances before their proposed abolition.

The third attempt at capital allowances was again inaugurated by a Conservative Government in 1963, the cash grant. The cash grant originated in the Local Employment Act, 1963, and in the Finance Act of that year and was confined only to development areas which, along with free depreciation gave an incentive to many firms to migrate, or transmigrate to development areas. I shall not argue the merits or demerits of the two systems of capital allowances compared with cash grants. My right hon. Friend has done that shortly and very accurately. What I am very concerned with is the fact that certain important industries attracted investment allowances and under the system of cash grants, due to proposed abolition of investment allowances under Clause 33, will no longer attract any capital allowances.

8.15 p.m.

I refer at once to the hotels and restaurants industry which is at the centre of our country's very large income from tourism. My hon. Friend the Member for Yeovil (Mr. Peyton) touched on this topic during discussion of an earlier Amendment and my right hon. Friend did likewise. This industry comes within the Ministerial ambit of the President of the Board of Trade. I am delighted to see him in his place listening to me. We have often debated these important matters on Finance Bills. I want to put the importance of this industry in correct perspective by giving a few figures.

The tourist industry of Great Britain earned last year, in terms of foreign exchange, a sum in excess of £300 million. The earnings of the hotel industry alone were of the order of £120 million, all in foreign exchange. Those are figures issued by the Hotels and Restaurants Association, I believe after consultation with the Treasury. In 1965, 2,165,000 tourists came to Britain, the highest figure in our history. It is estimated by the British Travel Association —a Government-sponsored body, so it is not likely to be inaccurate—that by 1970 4 million tourists will come to Britain and the income in foreign exchange from that great increase in tourism will be of the order of £500 million, all in foreign exchange, compared with £300 million last year.

This tourist trade will not continue to expand unless Britain is equipped with attractive, comfortable, well furnished hotels offering services, food, wine, and the remainder which are at least equivalent to those of our Continental competitors. I have never decried British hotels. I think they are generally as good as most of their Continental equivalents whether they are town hotels or country hotels. But the building of new hotels is relatively a rarity in Britain and the equipment, re-equipment and modernising of existing hotels is an extremely expensive process.

I refer to all classes of hotels which attract foreign tourists. It may be the Dorchester, the Savoy, Claridges or Grosvenor House in London——

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I am grateful to the President of the Board of Trade. There is also the Lygon Arms in Broadway, which I believe is the best country hotel in England—[HON. MEMBERS: "Hear, hear."]—I am delighted to have the approbation of both sides of the Committee in this important matter. The proprietor of the Lygon Arms has written me an important letter about the abolition of investment allowances because he is faced with the problem afflicting all hoteliers and restaurateurs today. That is the problem of how to find out of net income without the help of capital allowances a sum sufficient for the reequipment of his hotel or restaurant. Net profits after taxation are generally inadequate to enable him to do so.

There was a remarkable letter by my hon. Friend the Member for Eastbourne (Sir C. Taylor) in The Times on Wednesday 11th May. My hon. Friend, Chairman, Grosvenor House, Park Lane, W.1, said: For its size, Grosvenor House must be one of the biggest foreign currency earners in British industry. Last year 73·5 per cent. of our room lettings were to visitors from overseas including 56 per cent. from the United States and Canada. We have been disallowed investment allowances under Clause 33 of this Finance Bill, though these are given to other industries as cash grants and now we estimate that the selective employment tax will cost us £80,000 a year directly, in addition to which, of course, all our supplies of food and drink, laundry services, etc. will cost us more. It is less irksome, and probably more profitable, to run a bassoon factory".

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I am grateful to my hon. Friend. He anticipated my next words. It is more profitable to run an establishment making candy floss, or toffee apples, or bassoons which contribute not a jot or tittle to Britain's balance of payments, our exports or our foreign exchange earnings than it is to run a good hotel.

I appeal to the Chief Secretary and the President of the Board of Trade that this position should certainly be remedied. I doubt whether the Chief Secretary will be prepared to give any unilateral concessions in respect of the Government's proposal to abolish investment allowances. But the fact is that a hotel earning foreign exchange has capital equipment and re-equipment problems which are exactly analogous to those of an engineering company. The fixed assets installed in a hotel or restaurant for providing for the comfort, food and wines of its guests are as productive, in every sense of the term, as a machine tool is productive. It always seems to me a little incongruous that the Treasury can arrive at the conclusion that the capital equipment of manufacturing industry should attract a cash grant but that the capital equipment of hotels and restaurants which are today derogated to a second-class position as a service industry, should not attract a capital grant: in spite of its fixed assets contributing so largely and directly to foreign earnings.

This is a form of fiscal discrimination against hotels. This is what the loss of investment incentives will mean to hotels. They will receive no investment allowances as from 16th Janury, 1966, on their cooking equipment and refrigerators; furniture and carpets and soft furnishings; central heating systems, boilers and radiators; basins and baths and plumbing; linen and cutlery; and glass and china. All these fixed assets attracted 130 per cent. of historical cost while the investment allowance was at 30 per cent. I am sorry that the Chief Secretary is frowning. I ill explain further if he wishes me to do so, but I am trying to be brief.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

I am sure that the hon. Gentleman is trying to be brief and I did not want to interrupt him. I always listen very carefully to what he says. He uses words with knowledge and precision. I wondered why he called them all fixed assets.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I am sorry. That is perhaps a contradiction in terms. I would regard a boiler for the central heating system of a hotel as a fixed asset. I would regard a radiator or the plumbing as fixed assets. It might be argued that the furniture, linen, cutlery, glass and china are expendable, consumable assets. I agree that there is a division here. But I am informed—and perhaps the Chief Secretary will correct me if I am wrong —that investment allowances have been given in the hotel industry for linen, glass, china and cutlery, and therefore I am not generally inaccurate in my argument.

It is estimated that the loss of investment allowances to hotels and restaurants will raise the cost of equipment by 13·6 per cent., assuming Corporation Tax at 40 per cent. This is claimed to be a figure of material significance in the future arrangements of the industry.

I realise that the Chief Secretary will feel disinclined to ameliorate in any way, by unilateral relief, the withdrawal of investment allowances in respect of the assets of hotels and restaurants. But the presence of the President of the Board of Trade this evening gives me a little inspiration and hope for the future. I am glad to see him nodding assent. As an old friend of mine, although he and I have differences in politics, we have often found a wide measure of agreement on economic and financial matters. I say to him that the restaurant and hotel industry—tourism generally—should have his special attention during the next few months to see how he can replace what was formally a financial and fiscal benefit to the hotel and restaurant industry in the form of investment allowances, by some other kind of financial aid, be it cash grants, as in productive and manufacturing industry, or otherwise.

It is not without significance that Mr. Egon Ronay, known to the majority of us in the Committee for his excellent advice on hotels, restaurants, fine food and choice wines—[HON. MEMBERS: "Oh."] I am almost a teetotaller and therefore not a connoisseur of wines. But I recognise that Mr. Egon Ronay is well informed in these matters. He wrote in the Daily Telegraph a few days ago: I am appalled by the deterioration in the economic situation of the hotel and catering industry. Sixteen inspectors of my organisation, nearing the end of another year's research into many thousands of establishments, unanimously report a most alarming difference between their findings 12 months ago and now … One of our most important export industries is— inexplicably—…a stepchild of this Government. Politically it has always been much too well behaved. As a reward it was penalised by the short-sighted abolition of expense account allowances, resulting in a frightening reduction in takings even in many … small establishments. Plans for new hotels are now shelved by giant groups because of the Chancellor's stubbornness in disallowing new buildings for capital allowances, whereas factories get this benefit. Even the hitherto accepted investment allowance on equipment has now been stopped. Mr. Ronay goes on to talk about the coup de grâce —the payroll tax.

There is no doubt that the combination of those three factors—I apologise for straying slightly from the context of the Clause—the cancellation under Clause 33 of the investment allowances, the swingeing effect on the hotel and restaurant industry of the Selective Employment Tax, and the stringent rules in regard to business entertainment expenses and the taxation of them, have all had a most damaging effect on British hotels and restaurants.

For the reasons I have given, I oppose the Clause. I believe that it will react extremely detrimentally upon the proceeds and earnings of foreign exchange from tourism in Britain. I appeal to the right hon. Gentleman to try to ameliorate, to use his own term, this position in concert with his right hon. Friend the President of the Board of Trade by giving further consideration to my words tonight, pleading for fiscal help for hotels and restaurants.

8.30 p.m.

Photo of Mr John Eden Mr John Eden , Bournemouth West

I strongly support what has been said by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro). One of the worst features of the proposal in Clause 33 is that under the new system officials at the Board of Trade will be allowed a fairly wide discretion. The old system was mandatory on the Inland Revenue. The new system is at the discretion of officials. Civil servants will have to consider each claim for a grant and pay it if they think fit. There will be more work for civil servants, there will probably have to be more civil servants, and there will certainly be more uncertainty for businessmen generally. In addition, everyone in the Committee shares the concern expressed by my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) that anyone aggrieved by a decision of these officials has no course open to him for appeal.

There is an arbitrary discrimination against service industries. The new grants are to apply only to firms carrying out manufacturing processes. They are not to apply to services or distributive trades. Left out of the scheme altogether are transport, shops, hotels and catering.

My hon. Friend has gone in some detail and with great care into the position of the hotel trade and the Committee will not expect me to repeat what he said, but it is important to emphasise one or two points. Up to January this year, as he said, there were hotels receiving investment allowances which actively, to my knowledge, encouraged many improvements and extensions in our hotels. The loss of these investment allowances will raise considerably the cost to the hotel trade of its necessary equipment. It will certainly have a restrictive effect upon new hotel starts, upon the construction of new hotel buildings. As I have seen already in my own constituency, these proposals have had a retarding effect upon the extension of existing premises and upon the plans which hoteliers have already had for the further modernisation of their premises.

Why are both shipping and airlines to be exempt from the effects of the Selective Employment Tax and not to be subject to the withdrawal of the investment allowances while the hotel industry is to be subject to both these penalties? Cannot the Chief Secretary see that the hotel industry is just as important in this context as are the shipping and airline concerns? He must realise that foreign currency coming to this country is not attracted here solely by virtue of the transport facilities which are offered. Neither do people coming here stop at the point of arrival. They disperse to areas outside London and travel throughout the country.

Everywhere now, at this time of the year, the pressure of visitors from overseas is being felt and the demand for hotel places throughout the country is very great. As the standard of living improves, so the standard of demand for services rises. The Chief Secretary may believe that this in itself is a sufficient pressure to stimulate the industry to make whatever improvement, may be deemed necessary to retain existing customers and attract new ones. I wonder whether he fully understands the tremendous sense of frustration which many hoteliers now feel as a result of the Government's proposals and the way in which it appears to them, understandably, that their industry is picked out for the most unfair and discriminatory treatment. The hotel industry is just as important as the others I have mentioned, and I should have thought that the Government, in view of the foreign currency earnings record of the industry, were equally well aware of its importance.

It is no good the President of the Board of Trade paying lip-service to the industry. What it needs is practical support, positive help and encouragement. The Minister of Technology is the sponsor for a large number of industries. I would say, without in any way being unfair, I hope, to the President of the Board of Trade, that if the Minister of Technology looks after the interests of the industries for which his is the sponsoring Department with the same lack of care as appears to be the case with the hotel industry by the President of the Board of Trade, the country is in for a most unpleasant experience.

I very much support my right hon. Friend's strong opposition to the Clause. The new system is discriminatory. It should certainly not be seen in isolation from the Government's other proposals in the Bill. Together with the Selective Employment Tax, the proposals in Clause 33 make a formidable onslaught against certain sections of private industry and private enterprise. This appears to be a deliberate act on the part of the Government. I cannot see that any positive encouragement to modernisation is given by the removal of the old investment allowances and their replacement by the new system.

The right hon. Gentleman has a duty to defend the proposals and show exactly how it is that they will benefit our economy. As they stand, and as they are applied to certain special industries, particularly the hotel industry, they are grotesquely distorting and unfair, and I shall join my right hon. and hon. Friends in opposing them.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

I want to ask the Chief Secretary what is the reason for the animus of the Government against the hotel and catering industry? My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) gave some very fair illustrations of the value of the industry to the economy and included a graphic quotation from a letter from my hon. Friend the Member for Eastbourne (Sir C. Taylor) showing how one hotel is contributing enormously, in proportion to its size, to the export earnings of the country.

That contribution is not, of course, limited to one hotel. We have seen the figures produced by a number of groups in London. I am informed that the percentage of foreign exchange earnings in room charges alone by Associated Hotels is 40 per cent., by Grand Metropolitan Hotels, 55 per cent., by the Lyons group, 48 per cent., and by the Savoy group, 73 per cent. The right hon. Gentleman should reflect that, in some ways, this is an even stronger case than my hon. Friend the Member for Worcestershire, South adduced so forcibly.

In the case of physical, manufactured goods, there is the job of finding an overseas purchaser and conveying the goods overseas. In the case of the tourist industry, we merely have to provide here the services which the visitors need. In a sense the industry delivers the goods more directly than do the manufacturing industries. Indeed, it does not make the demands that many manufacturing industries do on imported raw materials. In most cases, the product is native, with the tourists coming to see the country. Many stay in London, but now tourists are beginning to visit other parts of the country. We want to encourage them to travel more widely in Britain.

One would have thought that the Secretaries of State for Scotland and Wales—[HON. MEMBERS: "Where are they?"]—yes, where are they?—would have resigned because of the vital importance of tourism to the economies of Scotland and Wales, as, indeed, it is important to the economies of Ulster and of the Lake District and other parts of England.

Some of those parts of the country which do not have heavy industry and perhaps not as much agricultural wealth as other parts rely enormously on the growth of tourism. But Government policy seems to be directed to the destruction of the tourist industry. Perhaps those are extravagant words, but this is an astonishing commentary on what has happened.

My hon. Friend the Member for Worcestershire, South said that hotels must provide reasonable and good quality food, good wines and so on. They also must provide better public rooms—better lounges—than do hotels in most competing countries because of the peculiarity of our climate. We have the sort of climate which demands better lounges, reading rooms and television rooms in our hotels more than is the case in Italy, France and Spain, whose tourist industries get magnificent help from their Governments.

The Government have gravely underestimated the importance of tourism to the economy—and I am sure that the only Liberal here, the hon. Member for Inverness (Mr. Russell Johnston), will testify to the importance of tourism to Scotland as well as to other parts of the country.

8.45 p.m.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Reverting to the broader question of the abandonment of investment allowances and the substitution of the new cash grants; in some respects, this is a very sombre occasion, a sad occasion. The Government are moving in completely the wrong direction. In the combination of investment allowances and cash grants in the development areas and free depreciation in certain areas, we had evolved a splendid system which needed only some modification to fulfil most of the requirements which could be foreseen for it.

But the Government have chosen to abandon a system which over a number of years had been well tried and which was giving increasing satisfaction in all parts of the country, and they have substituted for it a system of cash grants. One of the reasons is that the new system will be much cheaper to them in the long run.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

Mr. Diamond indicated dissent.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Considerably cheaper.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

Mr. Diamond indiciated dissent.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

The right hon. Gentleman shakes his head, but we cannot say, because it will be at the discretion of officials in the Board of Trade.

Under the old system, if a company came within certain qualifying rules, it qualified for grant. Under the new system, the Board of Trade will make the decision and a certain company with very good qualities might not get the grant which it had under the old system. As has been pointed out, the whole system of the cash grants has been narrowed and will not obtain in certain industries. Many hon. Members have referred to the tourist industry, but there are other ser- vice industries to which the new grants will not apply.

It would have been more difficult for the Government to reduce investment allowances. That would have been a much more positive political action which might have led to much more serious criticism. But to abandon the old system and bring in a new throws a veil of uncertainty over the whole operation. The former system, which was not based on the discretion of the Board of Trade, had manifest advantages in that respect.

To replace a system based on established profitability by one which is not is open to some criticism. To remove the right of appeal which existed under the old system is a bad step. One feels that the operation has been conducted hastily and without due consideration for all possible consequences. I hope that the right hon. Gentleman and his colleagues have not entirely closed their minds to extending the new grants at least to industries which are now excluded, and that if they have closed their minds to any retention of the system of investment allowances, they have not equally closed them against those industries. I will not ask the right hon. Gentleman to give that assurance now, but it would be encouraging if we could hear some indication that the minds of right hon. Gentlemen are not entirely closed on this matter which is of great consequence.

It would be wrong of me and I would be ruled out of order if I embarked on a detailed examination of the justification for the distinction between service and manufacturing industries which seems to motivate the Government's thinking, not only in this respect, but with the Selective Employment Tax. I would only say in passing that, as an economy becomes more sophisticated and as the standard of living in any country increases, these service industries, not least the tourist industry, become more and more important.

It is folly for a Government in such a country to suggest that they are of some inferior standard and that there is some superior merit in certain manufacturing industries. For those reasons I reiterate the misgivings which have already been expressed by my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) on the general principle, and the more specialised misgivings which have been expressed by my hon. Friend the Member for Worcestershire, South on the question of the tourist and holiday industries.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

The Government have done, and are doing, a number of things to encourage investment and efficient and increased production. They recognise that they have the supremely important task of increasing investment and efficiency so that we shall do what we have not yet succeeded in doing—earn our living as a country. One of the important steps which we took last year was the introduction of Corporation Tax, to give the greatest possible inducement to companies to plough back their profits by way of increased investment so as to achieve increased productivity.

The second method that we are adopting is to change the form of investment incentive after studying all the available evidence from the most authoritative sources. I am grateful to the hon. Gentleman the Member for Worthing (Mr. Higgins) for having confirmed as recently as this afternoon that business firms, not the best, not the most advanced, but large numbers of important business firms, were insufficiently aware of the benefits of the investment allowances, and the incentive was failing in its effect.

We therefore adopted a new method, which is in the process of being legislated so as to give the most direct form of incentive to businessmen, namely, a cash incentive. I would suggest that there is no more readily understood incentive in business than cash. I recognise that we are in the opening stages and have an 18 months delay with which to cope. This is a transitional problem which has to be taken into account. As the right hon. Gentleman the Member for Altrincham and Sale (Mr. Barber) said, this matter has been discussed in principle both on the White Paper and on the Industrial Development Bill.

The details of the Bill are being discussed now and the associated problem of the Selective Employment Tax is going to be discussed both on a Clause in the Finance Bill which we have not yet reached and again on the Second Reading of the Bill. I fully recognise that there are these associated problems, and that there are good reasons why one does not want to repeat, ad nauseam, arguments of principle.

It is clear that, whereas there has been widespread acceptance of the principle of a new and more direct form of investment incentive, there has been some dissatisfaction with the concentration of that investment incentive in certain areas. Why has there been some dissatisfaction? The answer lies in the simplest rule that every politician knows from the moment he puts himself up for election in the most modest rural district council—that, whatever one does in public life which concentrates or differentiates, one is bound to get silent approval from those who benefit and outspoken criticism from those who do not. This is always the case. It does not mean that one is without sympathy, or that it is not a proper democratic process that those who are put at a disadvantage should make their views fully known.

That is why I am here listening very carefully to everything that is being said on this topic. It is right that it should be understood that what is causing the dissatisfaction is not so much the new method but its concentration. As the hon. Member for Barry (Mr. Gower) and other hon. Members have said, it is the differentiation between one kind of activity and another, with disadvantage to the particular activity which one happens to be promoting at a given moment.

The right hon. Member for Altrincham and Sale asserted that in appropriate cases, where there is substitution of an investment grant for investment allowance, there is no benefit to the taxpayer. The right hon. Gentleman asked for the figures. My right hon. Friend the President of the Board of Trade gave the figures in a long Written Answer which is set out in cols 279–80 of HANSARD for 1st March, 1966. If the Committee will forgive me, I will read out just two of the figures. The figures I refer to are on a cash recovery discounted at 7 per cent.—a discounted cash flow basis—one under the investment allowance system and the other under the investment grant system. Under the investment allowance system for the nation as a whole—that is, not development districts—the figure is £39·43 per £100 invested; under the investment grant system the figure was £41·38. This is a small improvement. In development districts, under the old system the figure was £51·92. Under the new system, the figure is £55·20. That is a more marked advantage.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

All the protests which have come to me from industrialists have been to the effect that the cash value has been reduced as between the system which existed in October, 1964, when the Labour Party came to power, and the system which is now proposed. In other words, the true contrast—I have repeatedly asked for figures on this—is between the system before Corporation Tax with investment allowances and the system under Corporation Tax at 49 per cent. with a system of cash grants. These are the figures we want.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

I am obliged to my right hon. Friend for giving way. Will he say——

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

We shall get a little out of order if the hon. Gentleman continues, because I gave way only to the right hon. Member for Altrincham and Sale. I therefore hope that I shall be allowed to continue. I have been as helpful as I can in giving figures asked for by the right hon. Gentleman and which my right hon. Friend has supplied.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

I can only repeat that my right hon. Friend is satisfied that there is a fair comparison. It comes within his responsibility, and I share his view.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

We are not satisfied. I want to make this absolutely clear, as I and my hon. Friends have done time and time again.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

On Second Reading of the Industrial Development Bill, I gave a set of figures—I invite the right hon. Gentleman's attention to column 963 of HANSARD for 16th May, 1966—which I have checked with two chartered accountants and which were provided for me by a leading tax adviser of one of the biggest companies in the United Kingdom. They agree these figures on the most modern and sophisticated methods of discounted cash flow. They are all in entire agreement. I have asked again and again that, if any member of the Gov- ernment disagrees with these figures, he should give me his figures on the basis I have clearly set out. I have clearly asked for these figures. We cannot get them.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

The right hon. Gentleman is not saying that I am not giving him the figures. He is saying that he does not accept them.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

The right hon. Gentleman is saying that he does not accept these figures as being the relevant figures for the purpose of the true comparison which he seeks to draw. He has said that this matter has been debated. That was the only reason for my asking "Where?"

In fact, this matter has been debated many times. Therefore, I hope that I shall not be accused of discourtesy if I feel, as it has been debated many times, that we do not have to go over it so many times again. I am only too anxious to answer the questions put to me, but I feel that perhaps we coud make faster progress if we debated each proposition on the relevant Bill. We are dealing with three separate Bills.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Mr. Gower rose ——

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

Does the hon. Gentleman feel that he must intervene?

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Yes. To take a slightly different assessment, some time ago I asked a Parliamentary Question. It is my recollection that the information I received indicated that the cost of investment allowances globally for the last year for which figures are available would have been less had they been in the form of the new cash grant.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

I will repeat the figures, if necessary. They are on the record in HANSARD for 1st March. They show the comparison in the most relevant way.

Clearly, the Committee has been concerned not only with the general problem of discrimination, namely, the concentration of investment allowances in certain sectors. It has been concerned—the hon. Member for Worcestershire, South (Sir G. Nabarro) made an interesting speech on this topic—in particular with the hotel industry and its relationship to travel and tourism. The hon. Member for Worcestershire, South gave us many detailed figures with regard to the application of the investment allowance. I was discourteous enough to ask the hon. Gentleman to reconsider whether he was correctly calling them fixed assets. The hon. Gentleman shared my view that these were not really fixed assets. Therefore, the hon. Gentleman understands that it is possible to take the view that the extension of the investment allowance to knives, forks, spoons, teacloths and so on, was unexpected.

Indeed, this has been the case. Investment allowances have been galloping along and covering a wider and wider area. If we had retained the system of investment allowances, any Government would have had to take some very severe measures to restrict the application of investment allowances in the way which the legislature and the Conservative Government originally intended but which was not being interpreted in that way in the courts and elsewhere. The comparison is not with the present application of investment allowances but with what was originally intended, and if there is a sudden change, it is felt. When each year one has been adding to the number of assets attracting the investment allowance, and in one year there is a sudden change, it is felt.

9.0 p.m.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I accept that there is common ground between us here. The equipping of hotels contains items which are fixed assets and capital equipment in the true sense of the word—the boiler for the central heating or the refrigerator in the kitchen. But there are also all those marginal items such as knives, forks, spoons, cutlery and carpets. Surely the right hon. Gentleman is not telling the Committee that the reason for excluding the capital equipment of hotels is the existence of these marginal items.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

Of course not. I was telling the Committee—and this is why I used precise words—that had the system not been altered it would nevertheless have been necessary for any Government to take steps to limit the application of investment allowances because of the way in which it had been widening and in which it had been applied over the most extraordinary items—much more extraordinary than knives, forks and spoons in the hotel industry. Every practitioner in this field is aware of what has been happening. This is why in certain cases the comparison is more acutely felt than would otherwise have been the case.

Those who are interested in the hotel industry and particularly in tourism know that the combination of all the acts which have been referred to create a problem for tourism. The President of the Board of Trade is fully aware of that and he is at the moment engaged in discussions with the British Travel Association to see to what extent amelioration—the hon. Gentleman asked me to use that word—can take place. It is too early to say anything more than to advise the Committee that we are aware of the problem and are in the process of discussing it.

Inasmuch as the debates on the principle of the Clause have already taken place on several other occasions, and the details have been discussed in the very lengthy debates which we had on the Amendments, I hope that the Committee will now feel that we have had a very good discussion on the Clause and can come to a conclusion.

Photo of Hon. John Silkin Hon. John Silkin , Deptford

The Treasurer of Her Majesty's Household (Mr. John Silkin) rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put:—

The Committee divided: Ayes 213, Noes 138.

Division No. 48.]AYES[9.5 p.m
Alldritt, WalterBlenkinsop, ArthurBrown, Bob (N'c'tle-upon-Tyne, W.)
Archer, PeterBoardman, H.Brown, R. W. (Shoreditch & F'bury)
Atkins, Ronald (Preston, N.)Booth, AlbertBuchan, Norman
Bacon, Rt. Hn. AliceBottomley, Rt. Hn. ArthurBuchanan, Richard (C'gow, Sp'burn)
Barrett, JoelBowden, Rt. Hn. HerbertCallaghan, Rt. Hn. James
Baxter, WilliamBoyden, JamesCant, R. B.
Beaney, AlanBraddock, Mrs. E. M.Carmichael, Neil
Bence, CyrilBradley, TomCarter-Jones, Lewis
Benn, Rt. Hn. Anthony WedgwoodBrooks, EdwinColeman, Donald
Bennett, James (G'gow, Bridgeton)Broughton, Dr. A. D. D.Concannon, J. D.
Binns, JohnBrown, Rt. Hn. George (Belper)Conlan, Bernard
Blackburn, F.Brown, Hugh D. (G'gow, Provan)Craddock, George (Bradford S.)
Crawshaw, RichardHynd, JohnPannell, Rt. Hn. Charles
Cronin, JohnIrvine, A. J. (Edge Hill)Park, Trevor
Cullen, Mrs. AliceJackson, Colin (B'h'se & Spenb'gh)Parker, John (Dagenham)
Dalyell, TamJanner, Sir BarnettParkyn, Brian (Bedford)
Darling, Rt. Hn. GeorgeJay, Rt. Hn. DouglasPavltt, Laurence
Davidson, Arthur (Accrington)Jeger, George (Goole)Pentland, Norman
Davies, C. Elfed Rhondda, E.)Jeger, Mrs. Lena (H'b'n&St. P'cras, S.)Perry, George H. (Nottingham, S.)
Davies Harold (Leek)Jenkins, Hugh (Putney)Price, Christopher (Perry Barr)
de Freitas, Sir GeoffreyJohnson, Carol (Lewisham, S.)Price, Thomas (Westhoughton)
Delargy, HughJones, Dan (Burnley)Price, William (Rugby)
Dell, EdmundJones, Rt. Hn. Sir Elwyn (W. Ham, S.)Randall, Harry
Dempsey, JamesJones, J. Idwal (Wrexham)Redhead, Edward
Dewar, DonaldJudd, FrankRees, Merlyn
Diamond, Rt. Hn. JohnKenyon, CliffordRhodes, Geoffrey
Dickens, JamesKerr, Mrs. Anne (R'ter & Chatham)Richard, Ivor
Doig, PeterLawson, GeorgeRoberts, Albert (Normanton)
Donnelly, DesmondLeadbitter, TedRoberts, Gwilym (Bedfordshire, S.)
Dunn, James A.Ledger, RonRobinson, W. O. J. (Walth'stow, E.)
Dunnett, JackLestor, Miss JoanRose, Paul
Dunwoody, Mrs. Gwyneth (Exeter)Lever, L. M. (Ardwick)Ross, Rt. Hn. William
Dunwoody, Dr. John (F'th & C'b'e)Lewis, Arthur (W. Ham, N.)Rowlands, E. (Cardiff, N.)
Eadie, AlexLewis, Ron (Carlisle)Shaw, Arnold (Ilford, S.)
Edwards, Robert (Bilston)Lomas, KennethSheldon, Robert
Edwards, William (Merioneth)Loughlin, CharlesShinwell, Rt. Hn. E.
English, MichaelLyon, Alexander W. (York)Shore, Peter (Stepney)
Evans, Ioan L. (Birm'h'm, Yardley)Lyons, Edward (Bradford, E.)Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Faulds, AndrewMcCann, JohnShort, Mrs. Renée (W'hampton, N. E.)
Fletcher, Ted (Darlington)MacDcrmot, NiallSilkin, John (Deptford)
Foot, Michael (Ebbw Vale)Macdonald, A. H.Silkin, S. C. (Dulwich)
Forrester, JohnMcGuire, MichaelSilverman, Julius (Aston)
Fowler, GerryMackenzie, Gregor (Rutherglen)Slater, Joseph
Fraser, Rt. Hn. Tom (Hamilton)Mackie, JohnSpriggs, Leslie
Freeson, ReginaldMackintosh, John P.Steele, Thomas (Dunbartonshire, W.)
Gardner, A. J.Maclennan, RobertStonehouse, John
Garrett, W. E.MacMillan, Malcolm (Western Isles)Thomas, Iorwerth (Rhondda, W.)
Ginsburg, DavidMcMillan, Tom (Glasgow, C.)Thornton, Ernest
Gourlay, HarryMcNamara, J. KevinTinn, James
Gray, Dr. Hugh (Yarmouth)MacPherson, MalcolmUrwin, T. W.
Grey, CharlesMahon, Peter (Preston, S.)Varley, Eric G.
Griffiths, David (Rother Valley)Mahon, Simon (Bootle)Wainwright, Edwin (Dearne Valley)
Griffiths, Ft. Hn. James (Llanelly)Manuel, ArchieWalden, Brian (All Saints)
Griffiths, Will (Exchange)Mapp, CharlesWalker, Harold (Doncaster)
Hale, Leslie (Oldham, W.)Marsh, Rt. Hn. RichardWallace, George
Hamilton, William (Fife, W.)Mason, RoyWatkins, David (Consett)
Hannan, WilliamMendelson, J. J.Wellbeloved, James
Hazell BertMiller, Dr. M. S.Whitaker, Ben
Hoffer, Eric S.Mitchell, R. C. (S'th'pton, Test)Whitlock, William
Henig, StanleyMolloy, WilliamWilliams, Alan (Swansea, W.)
Herbison, Rt. Hn. MargaretMorris, Charles R. (Openshaw)Williams, Alan Lee (Hornchurch)
Hobden, Dennis (Brighton, K'town)Morris, John (Aberavon)Williams, Clifford (Abertillery)
Hooley, FrankNeal, HaroldWillis, George (Edinburgh, E.)
Horner, JohnNewens, StanWilson, William (Coventry, S.)
Houghton, Rt. Hn. DouglasNoel-Baker, Francis (Swindon)Winnick, David
Howarth, Harry (Wellingborough)Oakes, GordonWinterbottom, R. E.
Howell, Denis (Small Heath)Ogden, EricWoodburn, Rt. Hn. A.
Howie, W.O'Malley, BrianWoof, Robert
Hoy, JamesOram, Albert E.Yates, Victor
Hughes, Hector (Aberdeen, N.)Oswald, Thomas
Hughes, Roy (Newport)Owen, Will (Morpeth)TELLERS FOR THE AYES:
Hunter, AdamPage, Derek (King's Lynn)Mr. Alan Fitch and
Mr. Neil McBride.
NOES
Alison, Michael (Barkston Ash)Cary, Sir RobertGibson-Watt, David
Allason, James (Hemel Hempstead)Clegg, WalterGiles, Rear-Adm, Morgan
Atkins, Humphrey (M't'n & M'd'n)Cooke, RobertGilmour, Ian (Norfolk, C.)
Awdry, DanielCooper-Key, Sir NeillGilmour, Sir John (Fife, E.)
Baker, W. H. K.Corfield, F. V.Glover, Sir Douglas
Barber, Rt. Hn. AnthonyCostain, A. P.Gower, Raymond
Batsford, BrianCraddock, Sir Beresford (Spelthorne)Grant, Anthony
Beamish, Col. Sir TuftonDalkeith, Earl ofCresham Cooke, R.
Bell, RonaldDance, JamesGrieve, Percy
Bennett, Sir Frederic (Torquay)Davidson, James (Aberdeenshire, W.)Grimond, Rt. Hn. J.
Birch, Rt. Hn. NigelDigby, Simon WingfieldHall, John (Wycombe)
Blaker, PeterDodds-Parker, DouglasHall-Davis, A. C. F.
Bossom, Sir CliveDoughty, CharlesHarris, Reader (Heston)
Boyd-Carpenter, Rt. Hn. JohnEden, Sir JohnHarrison, Brian (Maldon)
Bryan, PaulElliot, Capt. Walter (Carshalton)Hawkins, Paul
Buchanan-Smith, Alick (Angus, N&M)Elliott, R. W. (N'c'tle. upon. Tyne, N.)Heseltine, Michael
Buck, Antony (Colchester)Eyre, ReginaldHiggins, Terence L.
Bullus, Sir EricFarr, JohnHiley, Joseph
Burden, F. A.Fraser, Rt. Hn, Hugh (St'fford & Stone)Hill, J. E. S.
Carlisle, MarkGalbraith, Hn. T. G.Hirst, Geoffrey
Hobson, Rt. Hn. Sir JohnMitchell, David (Basingstoke)Smith, John
Holland, PhilipMonro, HectorStodart, Anthony
Hooson, EmlynMorgan, W. G. (Denbigh)Stoddart-Scott, Col. Sir M. (Ripon)
Hornby, RichardMorrison, Charles (Devizes)Summers, Sir Spencer
Howell, David (Guildford)Munro-Lucas-Tooth, Sir HughTaylor, Sir Charles (Eastbourne)
Hunt, JohnMurton, OscarTaylor, Frank (Moss Side)
Hutchison, Michael ClarkNabarro, Sir GeraldTemple, John M.
Jenkin, Patrick (Woodford)Neave, AireyThatcher, Mrs. Margaret
Johnston, Russell (Inverness)Orr-Ewing, Sir IanTilney, John
Jopling, MichaelPage, Graham (Crosby)Turton, Rt. Hn. R. H.
Kaberry, Sir DonaldPardoe, J.van Straubenzee, W. R.
Kershaw, AnthonyPearson, Sir Frank (Clitheroe)Vaughan-Morgan, Rt. Hn. Sir John
Kitson, TimothyPeel, JohnVickers, Dame Joan
Knight, Mrs. JillPercival, IanWainwright, Richard (Colne Valley)
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)Peyton, JohnWalker, Peter (Worcester)
Lloyd, Ian (P'tsm'th, Langstone)Pink, R. BonnerWalker-Smith, Rt. Hn. Sir Derek
Loveys, W. H.Pounder, RaftonWard, Dame Irene
Lubbock, EricPowell, Rt, Hn. J. EnochWeatherill, Bernard
Macleod, Rt. Hn. IainPrior, J. M. L.Webster, David
Macmillan, Maurice (Farnham)Ramsden, Rt. Hn. JamesWilson, Geoffrey (Truro)
Maddan, MartinRenton, Rt. Hn. Sir DavidWinstanley, Dr. M. P.
Maginnis, John E.Ridsdale, JulianWoodnutt, Mark
Maxwell-Hyslop, R. J.Rossi, Hugh (Hornsey)Worsley, Marcus
Maydon, Lt.-Cmdr. S. L. C.Scott, NicholasYounger, Hn. George
Mills, Peter (Torrington)Sharples, Richard
Mills, Stratton (Belfast, N.)Shaw, Michael (Sc'b'gh & Whitby)TELLERS FOR THE NOES:
Miscampbell, NormanSinclair, Sir GeorgeMr. Francis Pym and
Mr. Jasper More.

Question put accordingly, That the Clause stand part of the Bill:—

The Committee divided: Ayes 211, Noes 138.

Division No. 49.]AYES[9.14 p.m.
Alldritt, WalterDiamond, Rt. Hn. JohnIrvine, A. J. (Edge Hill)
Archer, PeterDickens, JamesJackson, Colin (B'h'se & Spen'gh)
Atkins, Ronald (Preston, N.)Doig, PeterJanner, Sir Barnett
Bacon, Rt. Hn. AliceDonnelly, DesmondJay, Rt. Hon. Douglas
Barnett, JoelDunn, James A.Jeger, George (Goole)
Baxter, WilliamDunnett, JackJeger, Mrs. Lena (H'b'n&St. P'cras, S.)
Beaney, AlanDunwoody, Mrs. Gwyneth (Exeter)Jenkins, Hugh (Putney)
Bence, CyrilDunwoody, Dr. John (F'th & C'b'e)Johnson, Carol (Lewisham, S.)
Benn, Rt. Hn. Anthony WodgwoodEadie, AlexJones, Dan (Burnley)
Bennett, James (G'gow, Bridgeton)Edwards, Robert (Bilston)Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Binns, JohnEdwards, William (Merioneth)Jones, J. Idwal (Wrexham)
Blackburn, F.English, MichaelJudd, Frank
Blenkinsop, ArthurEvans, Ioan L. (Birm'h'm, Yardley)Kenyon, Clifford
Boardman, H.Faulds, AndrewKerr, Mrs. Anne (R'ter & Chatham)
Booth, AlbertFitch, Alan (Wigan)Lawson, George
Bottomley, Rt. Hn. ArthurFletcher, Ted (Darlington)Leadbitter, Ted
Bowden, Rt. Hn. HerbertFoot, Michael (Ebbw Vale)Ledger, Ron
Boyden, JamesForrester, JohnLestor, Miss Joan
Braddock, Mrs. E. M.Fowler, GerryLever, L. M. (Ardwick)
Bradley, TomFraser, Rt. Hn. Tom (Hamilton)Lewie, Arthur (W. Ham, N.)
Brooks, EdwinFreeson, ReginaldLewis, Ron (Carlisle)
Broughton, Dr. A. D. D.Gardner, A. J.Lomas, Kenneth
Brown, Rt. Hn. George (Belper)Garrett, W. E.Loughlin, Charles
Brown, Hugh D. (G'gow, Provan)Ginsburg, DavidLyon, Alexander W. (York)
Brown, Bob (N'c'tle-upon-Tyne, W.)Gourlay, HarryLyons, Edward (Bradford, E.)
Brown, R. W. (Shoreditch & F'bury)Gray, Dr. Hugh (Yarmouth)McCann, John
Buchan, NormanGrey, Charles (Durham)MacDermot, Niall
Buchanan, Richard (G'gow, Sp'burn)Griffiths, David (Rother Valley)Macdonald, A, H.
Callaghan, Rt. Hn. JamesGriffiths, Rt. Hn. James (Llanelly)Mackenzie, Gregor (Rutherglen)
Cant, R. B.Griffiths, Will (Exchange)Mackie, John
Carmichael, NeilHale, Leslie (Oldham, w.)Mackintosh, John P.
Carter-Jones, LewisHamilton, William (Fife, W.)Maclennan, Robert
Coleman, DonaldHannan, WilliamMacMillan, Malcolm (Western Isles)
Concannon, J. D.Hazell, BertMcMillan, Tom (Glasgow, C.)
Conlan, BernardHeffer, Eric S.McNamara, J. Kevin
Craddock, George (Bradford, S.)Henig, StanleyMacPherson, Malcolm
Crawshaw, RichardHerbison, Rt. Hn. MargaretMahon, Peter (Preston, S.)
Cronin, JohnHobden, Dennis (Brighton, K'town)Mahon, Simon (Bootle)
Cullen, Mrs. AliceHooley, FrankManuel, Archie
Dalyell, TarnHorner, JohnMapp, Charles
Darling, Rt. Hn. GeorgeHoughton, Rt. Hn. DouglasMarsh, Rt. Hn. Richard
Davidson, Arthur (Accrington)Howarth, Harry (Wellingborough)Mason, Roy
Davies, G. Elfed (Rhondda, E.)Howell, Denis (Small Heath)Mendelson, J. J.
Davies, Harold (Leek)Howie, W.Miller, Dr. M. S.
de Freitas, Sir GeoffreyHoy, JamesMitchell, R. C. (S'th'pton, Test)
Dalargy, HughHughes, Hector (Aberdeen, N.)Molloy, William
Dell, EdmundHughes, Roy (Newport)Morris, Charles R. (Openshaw)
Dempsey, JamesHunter, AdamMorris, John (Aberavon)
Dewar, DonaldHynd, John
Neal, HaroldRhodes, GeoffreyUrwin, T. W.
Newens, StanRichard, IvorVarley, Eric G.
Noel-Baker, Francis (Swindon)Roberts, Albert (Normanton)Wainwright, Edwin (Dearne Valley)
Oakes, GordonRoberts, Gwllym (Bedfordshire, S.)Walden, Brian (All Saints)
Ogden, EricRobinson, W. O. J. (Walth'stow, E.)Walker, Harold (Doncaster)
O'Malley, BrianRose, PaulWallace, George
Oram, Albert E.Ross, Rt. Hn. WilliamWatkins, David (Consett)
Oswald, ThomasRowlands, E. (Cardiff, N.)Wellbeloved, James
Owen, Will (Morpeth)Shaw, Arnold (Ilford, S.)Whitaker, Ben
Page, Derek (King's Lynn)Sheldon, RobertWilliams, Alan (Swansea, W.)
Pannell, Rt. Hn. CharlesShinwell, Rt. Hn. E.Williams, Alan Lee (Hornchurch)
Park, TrevorShore, Peter (Stepney)Williams, Clifford (Abertillery)
Parker, John (Dagenham)Short, Rt.Hn. Edward (N'c'tle-u-Tyne)Willis, George (Edinburgh, E.)
Parkyn, Brian (Bedford)Short, Mrs. Renée (W'hampton, N. E.)Wilson, William (Coventry, S.)
Pavitt, LaurenceSilkin, John (Deptford)Winnick, David
Pentland, NormanSilkln, S. C. (Dulwich)Winterbottom, R. E.
Perry, George H. (Nottingham, S.)Silverman, Julius (Aston)Woodburn, Rt. Hn. A.
Price, Christopher (Perry Barr)Slater, JosephWoof, Robert
Price, Thomas (Westhoughton)Spriggs, LeslieYates, Victor
Price, William (Rugby)Stonehouse, John
Randall, HarryThomas, Iorwerth (Rhondda, W.)TELLERS FOR THE AYES:
Redhead, EdwardThornton, ErnestMr. William Whitlock and
Rees, MerlynTinn, JamesMr. Neil McBride
NOES
Allason, James (Hemel Hempstead)Hall-Davis, A. G. F.Page, Graham (Crosby)
Atkins, Humphrey (M't'n & M'd'n)Harris, Reader (Heston)Pardoe, J.
Awdrey, DanielHarrison, Brian (Maldon)Pearson, Sir Frank (Clitheroe)
Baker, W. H. K.Hawkins, PaulPeel, John
Barber, Rt. Hn, AnthonyHeald, Rt. Hn. Sir LionelPercival, Ian
Batsford, BrianHeseltine, MichaelPeyton, John
Beamish, Col. Sir TuftonHiggins, Terence L.Pink, R. Bonner
Bell, RonaldHiley, JosephPounder, Rafton
Bennett, Sir Frederic (Torquay)Hill, J. E. B.Powell, Rt. Hn. J. Enoch
Birch, Rt. Hn. NigelHirst, GeoffreyPrior, J. M. L.
Blaker, PeterHobson, Rt. Hn. Sir JohnPym, Francis
Bossom, Sir CliveHolland, PhilipRamsden, Rt. Hn. James
Boyd-Carpenter, Rt. Hn. JohnHooson, EmlynRenton, Rt. Hn. Sir David
Bryan, PaulHornby, RichardRidsdale, Julian
Buchanan-Smith, Alick (Angus, N&M)Howell, David (Guildford)Rossi, Hugh (Hornsey)
Buck, Antony (Colchester)Hunt, JohnScott, Nicholas
Bullus, Sir EricHutchison, Michael ClarkSharples, Richard
Burden, F. A.
Carlisle, MarkJenkin, Patrick (Woodford)Shaw, Michael (Sc'b'gh & Whitby)
Cary, Sir RobertJohnston, Russell (Inverness)Sinclair, Sir George
Clegg, WalterJopling, MichaelSmith, John
Cooke, RobertKaberry, Sir DonaldStodart, Anthony
Cooper-Key, Sir NeillKershaw, AnthonyStoddart-Scott, Col. Sir M. (Ripon)
Corfield, F. V..Kitson, TimothySummers, Sir Spencer
Costain, A. PKnight, Mrs. JillTaylor, Sir Charles (Eastbourne)
Craddock, Sir Beresford (Spelthorne)Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)Taylor, Frank (Moss Side)
Dalkeith, Earl ofLloyd, Ian (P'tsm'th, Langstone)Temple, John M.
Elliot, Capt. Walter (Carshalton)Loveys, W. H.Thatcher, Mrs. Margaret
Dance, JamesLubbock, EricTilney, John
Davidson, James (Aberdeenshire, W.)
Dlgby, Stmon WinglasMacleod, Rt. Hn. IainTurton, Rt. Hn. R. H.
Dodds-Parker, DouglasMacmillan, Maurice (Farnham)van Straubenzee, W. R.
Doughty, CharlesMaddan, MartinVaughan-Morgan, Rt. Hn. Sir John
Eden, Sir JohnMaginnis, John E.Vickers, Dame Joan
Elliot, Capt. Walter (Carshalton)Maxwell-Hyslop, R. J.Wainwright, Richard (Colne Valley)
Elliott, R. W. (N'c'tle-upon-Tyne, N.)Maydon, Lt.-Cmdr. S. L. C.Walker, Peter (Worcester)
Farr, JohnMills, Peter (Torrington)Walker-Smith, Rt. Hn. Sir Derek
Fraser, Rt. Hn. Hugh (St'fford & Stone)Mills, Stratton (Belfast, N.)Ward, Dame Irene
Galbralth, Hn. T. G.Miscampbell, NormanWeatherill, Bernard
Gibson-Watt, DavidMitchell, David (Basingstoke)Webster, David
Giles, Rear-Adm. MorganMonro, HectorWilson, Geoffrey (Truro)
Gilmour, Ian (Norfolk, C.)More, JasperWinstanley, Dr. M. P.
Gilmour, Sir John (Fife, E.)Morgan, W. G. (Denbigh)Woodnutt, Mark
Glover, Sir DouglasMorrison, Charles (Devizes)Worsley, Marcus
Gower, RaymondMunro-Lucas-Tooth, Sir HughYounger, Hn. George
Gresham Cooke, R.Morton, Oscar
Grieve, PercyNabarro, Sir GeraldTELLERS FOR THE NOES:
Grimond, Rt. Hn. J.Neave, AireyMr. Francis Pym and
Hall John (wycombe)Orr-Ewing, Sir IanMr. Jasper More.
Clause ordered to stand part of the Bill.