HC Deb 13 May 1959 vol 605 cc1341-81
Mr. John Diamond (Gloucester)

I beg to move, in page 14, line 48, at the end to insert: Provided that for the purposes of this section the said subsections (2) to (5) shall have effect as if in subsection (2) and subsection (5) there was substituted the word "one-eighth" for the word "one-tenth" and in subsection (3) and subsection (4) there were substituted the word "one-quarter" for the word "one-fifth". It might he convenient if I were first to indicate the purpose of the Amendment, then attempt to explain its effect, then deal with the cost, and finally give the reasons why the Government should accept the Amendment. The purpose is to assist the Chancellor in his objective of arresting …the prospective decline in private investment in the manufacturing sector."—[OFFICIAL REPORT, 7th April, 1959; Vol. 603, c. 58.] The way to do that, in the view of the Chancellor, is to introduce investment allowances which will, he thinks, give a fillip to increased investment in the private sector.

As the law stands at present, and before the Finance Bill becomes an Act, the position is that there are initial allowances —a method of expediting the allowance given to businesses in respect of plant and similar items. These initial allowances are given for three main categories—industrial and agricultural buildings, new plant and machinery, and mining works. The Chancellor has proposed in this Bill that instead of those initial allowances, there shall be (a) an investment allowance for some part of the plant or buildings and (b) an initial allowance for the balance.

In the case of industrial buildings, for example, instead of an initial allowance of 15 per cent., there is a reduced initial allowance of only 5 per cent. and the difference of 10 per cent. becomes an investment allowance, and so on throughout these different categories. The effect of what the Chancellor is proposing, quite simply, is to give a more attractive investment allowance in place of initial allowances to some extent. The purpose of the Amendment is to increase the attraction in order to make it a worth-while attraction.

Before one attempts to give reasons one should make an estimate of the cost of what one is proposing. We on this side of the Committee are always in great difficulty in estimating cost. Indeed, if I were to try to put an accurate figure on the cost, with my lack of information, I should probably be thrown out of the institute to which I have the honour to belong.

I have gone into this matter as carefully as I can, and have made appropriate calculations, and, having regard to the fact that the Amendment deals with it on a proportionate basis, I have come to the conclusion that, as the cost of the Chancellor's proposal in the current year is nil, the proportionate increase would also be nil. I think, therefore, that we are on common ground so far. I recognise that for a subsequent year the cost of the Chancellor's proposal would be some £9½ million and it is clear that the cost of these proposals would be perhaps £2 million, perhaps £3 million, more. At all events, we are dealing with a figure which is of no account in the current year and may be a small but not impossible figure to deal with in future years.

May I say why I do not think the Chancellor's proposals are sufficiently attractive? First, the Chancellor's proposal is a negligible one, in my opinion. It is true that an investment allowance is a form of subsidy. As the Committee will well understand, an investment allowance is something that is given in addition to anything else. It is something that is given early and taken back later on. An investment allowance is, therefore, something given in addition by way of bonus or subsidy, or whatever it is likely to be called, to encourage investment of this particular kind.

I say it is a negligible one because, even if we take the highest rate proposed by the Chancellor of 20 per cent., it is not more than sufficient to cover the erosion of inflation. Every director of a company or owner of a business who has to buy plant knows that when he comes to renew it, it costs more than did the plant which he had previously and which has become out of date. If we take an ordinary average case of an item of plant which lasts perhaps ten years, and take the simple figure of 2 per cent. for each year's reduction in the value of money, over a period of ten years we get a figure of 20 per cent. In short, anybody renewing plant which cost £100 would have to pay, in these circumstances, £120, because the cost of the item has become more expensive in the meantime. He pays £120 to get exactly the same piece of plant that he had in his works previously.

Under the proposals of the Chancellor, he will get an allowance of £20 additional investment allowance, and will get £100 in the ordinary way as initial allowance, capital allowance and so on, and will thus receive £120. The point I am making is that we should not compare the £120 which he receives with the £100 which the plant costs originally, but should compare the £120 which he receives with the £120 which it costs to replace the plant. I am making assumptions, but I have to make an assumption of some kind, and I am making it in favour of the Chancellor, because I am assuming that his figure is 20 per cent., when in fact the inflation may be of a very much higher order than 2 per cent. over ten years. It is difficult to think of any recent Conservative Government which has been in power for ten years and has kept inflation down to 20 per cent. over those ten years. I am there fore making these assumptions, which I think are reasonable.

The first point I make, therefore, is that this is a negligible inducement. The second point is that it is also a very remote inducement. Why is it going to cost the Chancellor nothing to give this inducement? The answer is, because the person receiving it does not get any benefit this year. A business man who receives this investment allowance receives it on plant bought this year, but he gets it at a time when his accounts for the year are completed and form the basis of his assessment for subsequent Income Tax years. Therefore, anybody who has been encouraged by the Finance Bill—and we want them to be encouraged to buy new plant, to modernise and make their works more efficient—on making inquiries will find that he is called upon to lay out his money now to get the benefit of the investment allowance in February, 1961, or later. February, 1961, would be the earliest date on which he would pay his 1960–61 Income Tax, based on his trading transactions when the machine is bought. He might pay his tax later, in March, April or May, and therefore there would be further delay.

My second point is that the inducement which the Chancellor is offering is remote, as well as negligible. My third point, and I have hinted at this before, is that it is also an unreliable one. The last time we had investment allowances, they lasted two years, and no sooner were people well under way in making arrangements for major reconstruction, on the basis of the inducements offered, than the investment allowance was withdrawn, with certain protection, I admit. The investment allowance was withdrawn, but expenditure contracted for was allowed for this purpose even if the expenditure itself came to be met after the date when it was withdrawn. Provided that it was contracted for, the expenditure was allowed.

I do not think this is sufficient, but I admit that though I have given the matter great thought, I cannot think of any other way in which the investment allowance can be withdrawn, and yet protection can be given to those who have taken considerable steps towards modernising their plant and yet have not entered into a contract before the date at which the investment was once more withdrawn. I must refer to this because, as the Chancellor indicated, he hoped that there would be circumstances in which it was no longer necessary to have investment allowances. I am particularly concerned about this, and the Chancellor knows that I am not alone in this, as I referred to it earlier and The Times referred to it in a leader, as I recollect, at the time.

I refer to this because it is a general concern, and the Chancellor has made it clear that the investment allowance will be withdrawn again. I admit that I can think of no satisfactory remedy for administrative purposes for dealing with this point. Therefore, one comes back to the main argument that this has to be an attractive proposition to induce the business man to do what we want him to do —to modernise, to become more efficient and to start productivity on the up grade, instead of on the down grade, as it has been for so long.

One is bound to recognise that just as last year, if I may refresh the Chancellor's memory, he was flexible-minded enough to recognise that the passage of time between his Budget speech and the finalisation of the Finance Bill was sufficient to make him change his mind as to the level of initial allowances at that time and to increase the rate of initial allowances, so I suggest to the right hon. Gentleman that if he reconsiders the facts of today as against the background of the Economic Survey, which, no doubt, was at the back of his mind at the time he made his Budget speech, he will realise that that was an unwarranted, optimistic Survey and that what has happened since has not justified that at all.

We have had statements from the Paymaster-General that we are now on the upgrade, but there is no evidence whatever for that in the figures. The figures indicate that productivity, which we are after, and production, which we are concerned with in the Amendment, have not gone up as they should have done and that something, therefore, is needed as compared with what the Chancellor thought was needed judging by the Treasury papers at that time.

8.30 p.m.

I suggest to the Chancellor, therefore, that as the inducement offered is negligible. remote and unreliable he ought to accept our Amendment, which would give just that little extra. That is what the Amendment would do. It transcends the sound barrier which the Chancellor has imposed of making investment allowances together with initial allowances the same as they would otherwise have been. The Amendment would give that little bit more.

Investment allowances and initial allowances are now to be a little more than they were. There is now to be a little attraction—not an enormous or expensive one—to those who are responsible for running businesses which involve plant, owning industrial and agricultural buildings and running mines. The Amendment would give them the necessary encouragement to do what the Chancellor wants and what we all want, namely, to bring into immediate consideration the plans for modernisation which they otherwise would not have brought into consideration until much later. For these reasons, I hope that the Chancellor will accept this modest Amendment.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory)

I enjoy following the hon. Member for Gloucester (Mr. Diamond) on a subject like this, because he speaks with a great and intimate knowledge of the problems involved. I find very little to quarrel with in the speech which the hon. Member has just made. I acknowledge that the right amount of encouragement to give in a matter like this is essentially a matter of judgment. I do not want to pontificate, or to be dogmatic that I have judged the matter aright. I want to try to explain why I cannot accept the Amendment, although, as I say, I do not quarrel with the statement that the hon. Member has made.

I have an estimate of what the Amendment would cost and I will give it to the Committee, because it would appear to be rather more than the hon. Member had in mind. We estimate that the cost of my proposals will be nothing this year, but in the year 1960–61 about £9½ million and in the year 1961–62 about £15 million. Our estimate is that the increases that the hon. Member proposes would cost nothing this year but in 1960–61 they would involve an extra cost of £13 million and in 1961–62 an increased cost of £23 million.

Those figures seem big. They arise, I think, from the fact, which the hon. Member has already pointed out, that my proposals, because the total remains the same, very largely replace the initial allowances in the earlier years by investment allowances, whereas the hon. Member's proposal would be something in addition to the present total of investment allowance and initial allowance.

I want to explain why I consider that my proposals will be sufficient. Again, however, I say, without being absolutely certain, that in the result they will turn out to be just right. The object, which the hon. Member has understood perfectly clearly, is to fortify a bit further the stimulus, and the steadiness following from it, which I gave last year in the Budget by increasing the initial allowances by 50 per cent., and to do something to encourage those who are planning investment expenditure to put that expenditure in hand now rather than a bit later, when there may not be as much spare capacity in industry as there has been recently and is likely to be in the immediate future.

Last year, in deciding on the stimulus, I had to be guided by the fact that at that time it was uncertain whether world trade was still receding, whether it had stabilised or whether it had begun to recover. Also, I was not certain—and the economists in general could not tell me—whether we had at that time got rid of our domestic inflation.

Thirdly, it was far from clear what precisely would be the course of private industrial investment, and private investment other than industrial investment, during the forthcoming 12 months. I then thought, and still think, that it was right to proceed in the matter, as in other matters, very cautiously, I gave a stimulus by increasing the initial allowances, but at that time right hon. and hon. Members opposite pointed out to me that I would have given a brisker stimulus if I had restored the investment allowances. For the reasons that I have given I did not feel able at that time to give a brisk encouragement but only a slight encouragement.

This year, in present circumstances—our balance of payments position is stronger and we can face some increase in imports —and, because of our internal position, with inflation having been eliminated, I felt that I could safely go a bit further in this direction, but not too far. I have therefore decided that the amount which I have proposed is about right, but time may show that the hon. Gentleman's proposals were nearer what was required than mine. I feel at present that I must back my own judgment, but, as I have said, if it turns out otherwise, the hon. Member is perfectly free to point it out to me, as I have no doubt he will. In addition, there is the question of the quite substantial difference in cost.

The hon. Member thought that my proposal to substitute an investment allowance for two-thirds of the present initial allowance, leaving the other one-third as an initial allowance, would not have much effect. He thinks that the effect will be negligible, remote and not reliable. I doubt whether it will be negligible. Psychologically, industrialists who are wondering what to do are influenced much more by something which they will receive in addition to the full cost of the plant concerned than by initial allowances. Psychologically, it will certainly have an effect on marginal cases where industrialists are hesitating. I doubt whether the fact that the cash, as it were, is not received now but later will be a severe disincentive, although it will certainly detract in some cases.

The hon. Gentleman also said that my proposal was not reliable. I agree that two views can be held about this. The question is whether the putting on and taking off of investment allowances is a reasonable instrument for the Government to use in influencing the level of industrial investment. Some people say that it is not, that it may create uncertainty in the minds of businessmen and that they would not know where they were. I appreciate that, but, on the other hand, it is very important that the Government should have some instrument of influencing industrial investment beyond influencing it through the money rates and monetary control.

After a good deal of consideration—I admit that I have sometimes thought that there was a good deal of force in the other view—I feel that it is a legitimate instrument for the Government to use, but they must not expect it to have dramatic effects. If they apply it with the kind of warning that I gave, that economic circumstances may arise where it would no longer be appropriate for the authorities deliberately to encourage and accelerate industrial development, and it might then be inappropriate any longer to retain the investment allowance and it would have to come off.

If and when that happened, I would think it right, as I said in reply to the hon. Gentleman the other day, for the Government to safeguard the position of those who have entered into contracts on the basis of the investment allowance. I would also agree that if it is put on and taken off too frequently—this applies to most instruments of control—it has an upsetting effect.

That is all I want to say to the Committee. I can only express my regret that, after considering the Amendment, its cost and its effects, I still feel that my proposal is about right this year. Therefore, my advice to the Committee must be not to accept the hon. Gentleman's suggestion, but, in saying that, I think it was entirely relevant that his view should have been put to the Committee.

Mr. E. Fletcher

I think that all of us on this side of the Committee agree with the Chancellor in his conclusion that it is right for the Government to use this instrument for increasing industrial and economic investment. I am afraid, however, that a good many people will be rather disturbed by the Chancellor's concluding remarks about the possibility of the investment allowances not being regarded as permanent or quasi-permanent.

I realise that there is a sense in which a Parliament cannot commit its successors and that a Chancellor of the Exchequer cannot commit his successors, but there is a very widespread feeling in industry, as was pointed out by my hon. Friend the Member for Gloucester (Mr. Diamond) on an earlier occasion and today, that if the use of this instrument is to have the desired effect of stimulating industry, as the Chancellor hopes and as we all hope, it is necessary that there should be some certainty in the minds of industrialists that investment allowances will not suddenly be withdrawn. It is reasonable to expect that there should be a fair measure of certainty about this.

As I understand the Chancellor's remarks, he has said that circumstances may change so dramatically that a different policy may become necessary in a different phase of our economic situation. Apart from that very proper reservation, I hoped that the Chancellor would have been able to go further than he has gone. He said that if at any time the investment allowances were withdrawn he hoped that the then Chancellor of the Exchequer would preserve the benefits of the investment allowances in respect of contracts already entered into. I do not think that that goes sufficiently far to allay the fears of the business community.

The mere entering into of a contract ought not to be the real test. A great many companies of various kinds will, on the strength of these investment allowances, make plans for capital expansion over a period of time, plans which may take two or three years to mature. As we all know, this will cost the Government nothing this year. One cannot measure this kind of commitment and this kind of contemplated expansion in a mere twelve months or even a period of two years. The plans have first to be made. Very often the time for entering into a contract comes at a relatively late date in the development plan which a company has to undertake.

8.45 p.m.

I hope that it will be recognised by both the Chancellor and the Committee that if, on the strength of the investment allowances now being enacted, a company prepares a scheme of capital development which may be spread over two, three or four years, it should be able to look forward with confidence to implementing that planning capital expansion in reliance on these investment allowances, without their being suddenly withdrawn, and with confidence that if for some reason there is subsequently a change and no future investment allowances are granted, there will be complete protection and complete safeguarding for all the steps taken as a result of the new policy upon which we are now embarking.

Mr. Diamond

Does not my hon. Friend agree that there may be circumstances—and, indeed, there are—in which a business finds itself absolutely committed to a redevelopment scheme without having literally contracted to an outside party in that way?

Mr. Fletcher

I am much obliged to my hon. Friend, who has put very succinctly the point I was trying to make.

The Chancellor suggested that the test would be the safeguarding of outstanding contracts. The point that my hon. Friend and I were trying to make is that that does not go far enough. If the business community is to be satisfied and reassured on this matter, there ought to be as binding an undertaking as one can constitutionally expect that all commitments and all plans for capital expansion which are undertaken in reliance on these new investment allowances will be allowed to proceed.

Mr. H. Rhodes (Ashton-under-Lyne)

I doubt very much whether investment allowances on their own will be sufficient to create a climate of business opinion strong enough to influence companies to undertake investment. Whenever investment allowances or initial allowances have been granted, the issue has always seemed to be clouded by something done previously which has either set off an expansion of production or worked towards its decline. To some extent, as a consequence of that, the virtue of investment allowances on their own remains unknown.

They are an interesting form of encouragement. Having put them on, the Chancellor should now take advantage of a method used in the last year or two for collecting business opinion. Directors of selected companies have been asked for their opinions on the state of their order books. If such a method has had any virtue, the results have been worth while.

Instead of asking businesses what they think about their prospects when a decline sets in. the Chancellor ought to reverse the procedure and ask them what they think of their prospects and what has induced them to invest in machines now. If this is not done the issue will always be confused. It has come after the relaxation of hire purchase and we ought to be able to sort it out now. We ought to be asking ourselves whether this later inducement of the investment allowance, coming behind the gamut of inducements to increase production, is doing what it should in connection with the right sort of investment.

There are two kinds of encouragement. The first is to increase production at a time when the economy is flagging, and the second to increase the productivity of the individual machine irrespective of an up or down movement in the economic life of the community or world trade. At some time or other we shall discover the real assistance needed from the Treasury to provide inducements to invest in productive machines. I mentioned this on Second Reading and I will not go over the ground again, but I think that we shall have to make up our minds about the type of encouragement that we should give for productivity.

There are two aspects of productivity. One is the making of new things with new techniques which in themselves attract money because of their profitability and very often the smaller amount of money needed for wages compared with the older industries with older techniques. The ability of older industries to get increased productivity runs down over the years, not because of the age of the machines but because of the age of the know-how and the technique which has been employed for so long. A time eventually comes in older industries when inventiveness is needed to set them going again to catch up with the countries which use the old techniques, but which are paying lower wages.

I am not pressing this point, but it is something to think about. These investment allowances should be geared to the kind of productivity that the purchases of the machines will yield. At so late a stage in an upsurge of production, I do not think it is much use encouraging people to buy more machines unless they are absolutely certain that the machines are the right ones.

After the Whitsun Recess, when we shall find ourselves confronted with the task of handing over sums of money to assist an old industry to buy new plant, we shall be faced with the danger that the machines which are secured may not be good enough, and it may well be that in ten years' time we shall have to go over the whole business again. I suggest to the Chancellor, therefore, that this thing needs thinking out in relation to productivity with which should be contrasted any allowances or inducements given by the Treasury.

I am not looking a gift horse in the mouth because I made my own arrangements some time before the Budget statement. But the extent of the value accruing from these inducements is something that we do not know, nor do we know the extent of the influence of a favourable climate of opinion in industry. We could gain a lot of information from people who have made decisions during the last few weeks, and I think that we should ask such people about the effect of this concession upon them.

Mr. Gordon Walker (Smethwick)

The right hon. Gentleman said that he found little to quarrel with in the speech of my hon. Friend the Member for Gloucester (Mr. Diamond). I wish I could say as much for my attitude to the remarks of the Minister. I agree with one thing that the right hon. Gentleman said. He admitted that a monetary policy was an inadequate instrument of control. That is something which we have been arguing for a long time. The right hon. Gentleman's predecessor always maintained that everything should be done by monetary control, and I was glad to hear the right hon. Gentleman say that a monetary policy needed to be reinforced by other instruments.

I was sorry to hear what the right hon. Gentleman had to say about this Amendment, which we take very seriously. It represents a continuance of the argument which we advanced this time last year, that the investment allowance should have been introduced then and that the Chancellor delayed the re-expansion of the economy for an inexcusably long time. But we have to deal with things as they are. so we have tabled this Amendment, which is designed to increase the encouragement to investment which, a year too late, the Chancellor has put into his Budget.

The reason we take this Amendment seriously is that we believe strongly in more investment. My hon. Friend the Member for Gloucester said that the effect of the Chancellor's proposals would be negligible. I do not think that the Chancellor understood the argument advanced by my hon. Friend, who maintained that it would be negligible because it would, in fact, do no more than meet the increased cost of replacement. In all probability there will be a rise in prices. Machines will cost more to replace in the end and the amount of the allowance which the Chancellor is giving—so my hon. Friend argued—would only offset the increase in the replacement costs.

I am sure that the right hon. Gentleman was impressed when my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) said that nobody really knows the effect of the investment allowances, taken by themselves. I hope that the right hon. Gentleman will consider favourably the proposal of my hon. Friend that an inquiry should be made to try to ascertain the motives which have led, or are likely to lead, managements to increase investment; how far it is due to the investment allowances: and how far to a reduction of hire purchase restrictions, and so forth.

9.0 p.m.

Our main argument is that we need more investment. I was very struck by the figures which the right hon. Gentleman gave for the cost of our proposals. It was £13 million extra, over and above what he has decided to give in this field in the period 1960–61, and £23 million in 1961–62. This seems an argument in favour of our Amendment. This shows that the Amendment would make a very great difference, and that there would be a real demand and use for these investment allowances. The right hon. Gentleman can only have worked out this cost on the assumption that the investment allowances would be used and would result in quicker and more modern machinery.

We regard the figures which he gave —they surprised us because we did not think that they were as high—as an argument in favour of what we are saying. It shows that there is a very great need for increased investment. So far from that being an argument against our proposal, it is one in favour of it. If the proposal would bring about this sort of difference the Chancellor should have arranged his Budget in such a way that he could find the extra £13 million and £23 million by a very slight marginal redistribution of the various reliefs. He should have rearranged things so as to find this marginal amount in the total reliefs which he was giving.

What is wrong with this country is that it does not get enough investment and that it is lagging behind the high-investment countries. In the last three or four years other countries which are comparable with us are getting ahead because they are really high-investment countries. Compared with them, we are a low-investment country. The right hon. Gentleman has talked a great deal about wages, the need for wage restraint, the effect that an increase of wages would have upon prices, and so forth. He forgets when he says this sort of thing that one can exaggerate the effect of wages upon the putting up of prices.

Wages have gone up at least as fast in Western Germany as in this country over the comparable period, but prices have not gone up as fast. The reason is that productivity has gone up in Western Germany much faster than in this country. The reason why productivity has gone up faster there is that the rate of investment has been much higher. That is why we lay so much stress and emphasis upon the need for increased investment in this country at a rate faster than is being done. That will not only help and enlarge our future wealth but will directly help to fight inflation. We must change this lagging behind other comparable countries in the rate of investment in Britain.

I was very disturbed to hear the Chancellor say again what he said in his Budget speech, namely, that the investment allowances might well come off again. That discloses an attitude of mind which I find alarming. It means that the right hon. Gentleman does not regard it as part of his duty and policy to create a steady drive of investment in this country but merely to have a little spurt now and then. He is looking forward to

the time, after the so-called slack in the economy has been taken up, when he can go into reverse.

Mr. Amory

indicated dissent.

Mr. Gordon Walker

If the right hon. Gentleman does not mean this, I hope he will tell us what he meant by saying that he must warn industry "not to reckon on them", and so forth?

All this gives a wholly wrong impression. The policy of Her Majesty's Government ought to be to stimulate a steady drive of high investment in this country; so that, instead of lagging behind countries like Western Germany we should, as we rightly ought, be ahead of her in this matter and in all the things that flow from it. We feel very strongly about it and we are very far from satisfied with the right hon. Gentleman's reply and with the attitude of mind that that reply disclosed.

If the Chancellor will not change his mind on this matter, I must ask my right hon. and hon. Friends to go into the Division Lobby to show that we have an utterly different approach to the whole policy of high investment in this country from that of this lagging, laggard and niggardly Government.

Question put, That those words be there inserted:—

The Committee divided: Ayes 170, Noes 213.

Division No. 113.] AYES [9.7 p.m.
Ainsley, J. W. Craddock, George (Bradford, S.) Hastings, S.
Albu, A. H. Cronin, J. D. Hayman, F. H.
Allen, Arthur (Bosworth) Crossman, R. H. S. Healey, Denis
Allen, Scholefleld (Crewe) Davies, Harold (Leek) Henderson, Rt. Hn. A. (Rwly Regis)
Awbery, S. S. Davies, Stephen (Merthyr) Herbison, Miss M.
Bacon, Miss Alice Deer, G. Hewitson, Capt. M.
Bence, C. R. (Dunbartonshire, E.) Delargy, H. J. Hobson, B. R. (Keighley)
Blackburn, F. Diamond, John Holman, P.
Blenkinsop, A. Ede, Rt Hon. J. C. Holmes, Horace
Blyton, W. R. Edelman, M. Houghton, Douglas
Boardman, H. Edwards, Rt. Hon. John (Brighouse) Hughes, Cledwyn (Anglesey)
Bottomley, Rt. Hon. A. G. Edwards, Rt. Hon. Ness (Caerphilly) Hughes, Emrys (S. Ayrshire)
Bowden, H. W. (Leicester, S.W.) Edwards, W. J. (Stepney) Hughes, Hector (Aberdeen, N.)
Bowles, F. G. Evans, Albert (Islington, S.W.) Hunter, A. E.
Braddock, Mrs. Elizabeth Evans, Edward (Lowestoft) Hynd, H. (Accrington)
Brockway, A. F. Fernyhough, E. Hynd, J. B. (Attercliffe)
Broughton, Dr. A. D. D. Fletcher, Eric Irvine, A. J. (Edge Hill)
Brown, Rt. Hon. George (Belper) Forman, J. C. Irving, Sydney (Dartford)
Brown, Thomas (Ince) Fraser, Thomas (Hamilton) Janner, B.
Burke, W. A. Gibson, C. W. Jay, Rt. Hon. D. P. T.
Burton, Miss F. E. Gordon Walker, Rt. Hon. P. C. Jeger, George (Goole)
Butler, Herbert (Hackney, C.) Greenwood, Anthony Jeger, Mrs. Lena(Holbn.& St. Pncs, S.)
Carmichael, J. Grenfell, Rt. Hon. D. R. Jones, Rt. Hn.A. Creech(Wakefield)
Castle, Mrs. B. A. Grey, C. F. Jones, Jack (Rotherham)
Champion, A. J. Griffiths, David (Bother Valley) Jones, J. Idwal (Wrexham)
Chapman, W. D. Griffiths, Rt. Hon. James (Lianelly) Kenyon, C.
Ghetwynd, G. R. Griffiths, William (Exchange) King, Dr. H. M.
Cliffe, Michael Hale, Leslie Lawson, C. M.
Coldrick, W. Hall, Rt. Hn. Glenvil (Colne Valley) Lee, Frederick (Newton)
Collick, P. H. (Birkenhead) Hamilton, W. W. Lee, Miss Jennie (Cannock)
Corbet. Mrs. Freda Hannan, W. Lindgren, G. S.
Mahon, Dr. J. Dickson Paton, John Soskice, Rt. Hon. Sir Frank
McAlister, Mrs. Mary Pearl, T. F. Spriggs, Leslie
McCann, J. Pentland, N. Stones, W. (Consett)
MacColl, J. E. Plummer, Sir Leslie Summerskill, Rt. Hon. E.
McInnes, J. Prentice, R. E. Sylvester, G. O.
McKay, John (Wallsend) Price, J. T. (Westhoughton) Taylor, Bernard (Mansfield)
MoLeavy, Frank Price, Philips (Gloucestershire, W.) Taylor, John (West Lothian)
MacPherson, Malcolm (Stirling) Probert, A. R. Thomas, lorwerth (Rhondda, W.)
Mahon, Simon Pursey, Cmdr. H. Thomson, George (Dundee, E.)
Marquand, Rt. Hon. H. A. Rankin, John Thornton, E.
Mason, Roy Redhead, E. C. Watkins, T. E.
Mayhew, C. P. Reeves, J. Wells, William (Walsall N.)
Moody, A. S. Reid, William Wheeldon, W. E.
Morris, Percy (Swansea, W.) Reynolds, G. W. White, Henry (Derbyshire, N.E.)
Mort, D. L. Rhodes, H. Wilkins, W. A.
Moss, R. Robinson, Kenneth (St. Pancras, N.) Willey, Frederick
Moyle, A. Rogers, George (Kensington, N.) Williams, Rt. Hon. T. (Don Valley)
Mulley, F. W. Ross, William Willis, Eustace (Edinburgh, E.)
Noel-Baker, Rt. Hon. P. (Derby, S.) Royle, C. Wilson, Rt. Hon. Harold (Huyton)
Olivet, G. H. Short, E. W. Winterbottom, Richard
Orem, A. E. Silverman, Julius (Aston) Woof, R. E.
Orhach, M. Silverman Sydney (Nelson) Yates, V. (Ladywood)
Oswald, T. Skeffington, A. M. Zilliaous, K.
Owen W. J. Slater, J. (Sedgefield)
Padley, W. E. Smith, Ellis (Stoke, S.)
Palmer, A. M. F. Snow, J. W. TELLERS FOR THE AYES:
Parker, J. Sorensen, R. W. Mr. Pearson and Mr. Simmons.
Agnew, Sir Peter Eden, J. B. (Bournemouth, West) Langford-Holt, J. A.
Aitken, W. T. Elliott, R. W.(Ne'eastle upon Tyne, N.) Leavey, J. A.
Amory, Rt. Hn. Heathcoat (Tiverton) Emmet, Hon. Mrs. Evelyn Legge-Bourke, Maj. E. A. H.
Anstruther-Gray, Major Sir William Errington, Sir Eric Legh, Hon. Peter (Petersfield)
Armstrong, C. W. Erroll, F. J. Lindsay, Hon. James (Devon, N.)
Ashton, H. Fell, A. Lindsay, Martin (Solihull)
Atkins, H. E. Finlay, Graeme Linstead, Sir H. N.
Baldock, Lt.-Cmdr. J. M. Fisher, Nigel Lloyd, Maj. Sir Guy (Renfrew, E.)
Baldwin, Sir Archer Fletcher-Cooke. C. Longden, Gilbert
Barber, Anthony Fort, R. Loveys, Walter H.
Barlow, Sir John Freeth, Denzil Lucas-Tooth, Sir Hugh
Barter, John Gammons, Lady Maodonald, Sir Peter
Botsford, Brian George, J. C. (Pollok) McLaughlin, Mrs. P.
Beamish, Col. Tufton Glover, D. Macleod, Rt. Hn. lain (Enfield, W.)
Bell, Philip (Bolton, E.) Glyn, Col. Richard H. McMaster, Stanley
Bevins, J. R. (Toxteth) Godher, J. B. Macmillan, Rt. Hn. Harold(Bromley)
Biggs-Davison, J. A. Goodhart, Philip Maitland, Cdr. J. F. W.(Horncastle)
Bingham, R. M. Gough, C. F. H. Maitland, Hon. Patrick (Lanark)
Birch, Rt. Hon. Nigel Gower, H. R. Markham, Major Sir Frank
Bishop, F. P. Graham, Sir Fergus Marlowe, A. A. H.
Black. Sir Cyril Green, A. Marples, Rt. Hon. A. E.
Body, R. F. Gresham Cooke, R. Marshall, Douglas
Bonham Carter, Mark Grimond, J. Mathew, R.
Bowen, E. R. (Cardigan) Gurden, Harold Mawby, R. L.
Boyd-Carpenter, Rt. Hon. J. A. Hall, John (Wycombe) Maydon, Lt.-Comdr. S. L. C.
Boyle, Sir Edward Harris, Reader (Heston) Medlicott, Sir Frank
Braine, B. R Harrison, A. B. C. (Maiden) Molson, Rt. Hon. Hugh
Brew's, John Harrison, Col. J. H. (Eye) Mott-Radclyffe, Sir Charles
Bromley-Davenport, Lt.-Col. W. H. Harvey, Sir Arthur Vere(Macciesf'd) Heave, Alrey
Brooman-White, R. C. Harvey, John (Walthamstow, E.) Nicholson, Sir Godfrey (Farnham)
Browne, J. Nixon (Craigton) Heald, Rt. Hon. Sir Lionel Nicolson, N.(B'n'm'th, E. & Chr'oh)
Burden, F. F. A. Heath, Rt. Hon. E. R. G. Noble, Michael (Argyll)
Butler, Rt. Hn. R. A. (Saffron Waiden) Henderson, John (Cathcart) Nugent, Richard
Campbell, Sir David Henderson-Stewart, Sir James Oakshott, H. D.
Carr, Robert Hill, Mrs. E. (Wythenshawe) Ormsby-Gore, Rt. Hon. W. D.
Cary, Sir Robert Hirst, Geoffrey Osborne, C.
Channon, H. P. G. Holland-Martin, C. J. Page, R. G.
Chichester-Clark, R. Holt, A. F. Partridge, E.
Clarke, Brig. Terence (Portsmth, W.) Hornby, R. P. Peel, W. J.
Conant, Maj. Sir Roger Horobin, Sir Ian Peyton, J. W. W.
Cooke, Robert Horsbrugh, Rt. Hon. Dame Florence Pickthorn, Sir Kenneth
Cordeaux, Lt.-Col. J. K. Howard, Hon. Creville (St. Ives) Pike, Miss Mervyn
Corfield, F. V. Howard, John (Test) Pilkington, Capt. R. A.
Craddock, Beresford (Spelthorne) Hughes, Hallett, Vice-Admiral J. Pitman, I. J.
Crosthwaite-Eyre, Col. O. E. Hughes. Young, M. H. C. Pitt, Miss E. M.
Crowder, Sir John (Finchley) Hurd, Sir Anthony Pott, H. P.
Cunningham, Knox HutchisomMichael Clark(E'b'gh, S) Powell, J. Enoch
Dance, J. C. G. Hylton-Foster, Rt. Hon. Sir Harry Price, David (Eastleigh)
Davidson, Viscountess Iremonger, T. L. Price, Henry (Lewisham, W.)
D'Avigdor-Goldsmid, Sir Henry Jenkins, Robert (Dulwich) Prior-Palmer, Brig. O. L.
tie Ferranti, Basil Jennings, Sir Roland (Hallam) Ramsden, J. E.
Doughty, C. J. A. Johnson, Eric (Blookley) Rawlinson, Peter
du Cam, E. D. L. Kerr, Sir Hamilton Redmayne, M.
Dugdale, Rt. Hn. Sir T. (Richmond) Kirk, P. M. Rees-Davies, W. R.
Duncan, Sir James Lancaster, Col. C. G. Remnant, Hon. P.
Rldsdale, J. E. Taylor, Sir Charles (Eastbourne) Walker-Smith, Rt. Hon. Derek
Roper, Sir Harold Taylor, William (Bradford, N.) Wall, Patrick
Ropner, Col. Sir Leonard Teeling, W. Ward, Rt. Hon. C. R. (Worcester)
Russell, R. S. Temple, John M. Ward, Dame Irene (Tynemouth)
Sharpies, R. C. Thomas, Leslie (Canterbury) Webbe, Sir H.
Shepherd, William Thompson, R. (Croydon, S.) Webster, David
Simon, J. E. S. (Middlesbrough, W. Thorneycroft, Rt. Hon. P. Whitelaw, W. S. I.
Spearman, Sir Alexander Thornton-Kemsley, Sir Colin Williams, Paul (Sunderland, S.)
Spens, Rt. Hn. Sir P. (Kens'gt'n, S Turner, H. F. L. Williams, R. Dudley (Exeter)
Stanley, Capt. Hon. Richard Turton, Rt. Hon. R. H. Wills, Sir Gerald (Bridgwater)
Stevens, Geoffrey Tweedsmuir, Lady Wilson, Geoffrey (Truro)
Steward, Harold (Stockport, S.) Vane, W. M. F. Woffige-Gordon, Patrick
Steward, Sir William (Woolwich, W.) Vaughan-Morgan, J. K. Woollam, John Victor
Stoddart-Scott, Col. Sir Malcolm Vickers, Miss Joan Yates, William (The Wrekin)
Storey, S. Vesper, Rt. Hon. D. F.
Studholme, Sir Henry Wade, D. W. TELLERS FOR THE NOES:
Summers, Sir Spenoer Wakefield, Edward (Derbyshire, W.) Mr. Bryan and Mr. J. E. B. Hill.

9.15 p.m.

Dame Irene Ward

I beg to move, in page 15, line 12, at the end to insert: (3) Notwithstanding subsections (1) and (2) of this section, an initial allowance shall be made of one-tenth of any expenditure incurred after the seventh day of April, nineteen hundred and fifty-nine, on the construction, extension or modification of dry docks in the United Kingdom; and on any expenditure incurred as aforesaid, the investment allowance made under subsection (1) of this section shall be increased from one-tenth to one-fifth of such expenditure. The purpose of the Amendment is to transfer dry docks for the purpose of investment and initial allowances from the category designated industrial buildings and structures into the category designated plant and machinery, thus attracting an increase in both investment and initial allowances.

I wish that my right hon. Friend the Chancellor went to sea in a tanker instead of in a yacht, because I cannot help feeling that his appreciation of dry docks is coloured by the part of the country from which he sails and the attitude of that part of the country to the repairing of yachts. In that part of the country we find charming little villages and men with consummate skill tinkering with the little boats which my right hon. Friend enjoys so much. We find sparkling rivers, the sun shining and everything pleasant and in no way related to the great industrial problems of dry docks which belong to the parts of the country concerned with shipbuilding in a big way. At any time I should welcome a visit from my right hon. Friend to the Tyne or any other great industrial river so that he may see what dry docks mean to the shipping and shipbuilding industry.

Part of the case for the acceptance of the Amendment is that we want the entire industry—shipping, shipbuilding and ship repairing—looked at as a whole. Dry docks are the garages of our merchant ships and naval ships, and I argue the Amendment from that point of view.

Curiously enough, investment in dry docks is a singularly unattractive form of investment, partly because the construction of the docks is extremely expensive and partly because, after their construction, there is a relatively long period, which the dry dock owners estimate may be as long as a decade, before the dock is used more than intermittently by ships of the size for Which it was constructed. Over that period, it is alleged—and I am sure with truth—that the rents of the dock are very little more than the interest charged on the loans for the construction of the dock.

I fully realise that I have to try to make a case to overcome the refusal which the dry dock owners and those who have supported their claims have met in the House on many occasions. If I remember rightly, I had a conversation with my right hon. Friend one day in which the old question of precedent cropped up. It seems to me that if we spent a little more time in our Parliamentary life looking up precedents we might get a little further in moving Amendments to the Finance Bill.

One of my colleagues has suggested to me that brick walls surrounding timber kilns attract investment and initial allowances as plant and machinery. It seemed to me that this was an analogy. I understand from further investigations that this rate of investment and initial allowance was not due to any insertion in any Finance Bill but that it has been a practice of the Inland Revenue to allow brick walls to be charged in the category of plant and machinery. That is a very valuable precedent with which to try to persuade the Chancellor to accept the Amendment.

May I, I hope not frivolously, express this point of view. We must have the brick walls for these timber kilns. If we took away the things that make a dry dock a dry dock, it would become a wet dock. I understand that part of my right hon. Friend's argument against accepting an Amendment of this kind is that the gate and certain parts of the machinery of the docks attract the higher investment allowance and the higher initial allowance. For some extraordinary reason, the part that makes the dock a dry dock does not seem to attract those higher allowances.

When I opened my newspaper this morning and saw that my right hon. Friend had suddenly decided to go into space, quite apart from the fact that he sails in yachts and not in tankers, I had a rather nostalgic feeling for that old jingle: The owl and the pussy cat went to sea In a beautiful pea green boat". I want to point out immediately to my right hon. Friend that "owl", as I must be the pussy cat, is synonymous with "wisdom". When I have outlined one of the reasons why it seems to me to be right and proper that dry docks should be in the category of plant and machinery, I hope that my right hon. Friend will agree that I have made out my case.

In Parliamentary and political life, as one moves about in the great industrial centres of the country quite a lot of information comes one's way, fortunately. Otherwise, one would never be able to persuade the Front Bench to accept any Amendment from the back bench. I have heard it suggested that, if it were possible to call a few Departments together in support of the argument which I am advancing, we might have a great ally in the Admiralty. On Tyneside we do not build great commercial ships only. We also build great naval ships. Great naval ships require dry docks just as much as great commercial ships.

It has been suggested to me from one source and another in my wanderings that a certain amount of pressure has been exercised on my right hon. Friend, I am afraid unsuccessfully up to date, but perhaps when the Navy and commerce join together we shall make an impression. I am told that the Admiralty also would welcome the Amendment.

It is obvious that, though I try to represent the big industrial North from which I come, I cannot have much technical knowledge of these subjects. I suggested yesterday, in arguing about Purchase Tax, that one of the difficulties is that, once one Government Department obtains a decision from the Cabinet to go ahead, it goes ahead. The Parliamentary Secretary to the Board of Trade has been very vigorous in going about the countryside in relation to the powers of the Board of Trade under D.A.T.A.C. I think that that is the correct description of one of his new functions.

It is true that in areas that are specially designated one might get some assistance for the construction of new dry docks through D.A.T.A.C., but one cannot deal with dry docks in the same way as one can deal with industrial buildings. That is why I think it very unfortunate that dry docks are in the category of industrial buildings and structures. We have to construct our dry docks in the places most suitable for their construction, and although I have no doubt that the Cabinet and my right hon. Friend have given the go-ahead to the Parliamentary Secretary to the Board of Trade, it is not a very satisfactory way of dealing with this great industry.

When we have been arguing about some of the difficulties that have arisen in our shipping, our shipbuilding or our ship-repairing industries—and they are, after all, the life blood of the nation—the answer has always been, "Of course, we want to do everything we can to help them, but they are so difficult to help. "I therefore suggest to my right hon. Friend that when one partner in the great unified whole of the shipbuilding industry makes a practical suggestion that will he helpful to shipping and shipbuilding, it should be seriousy considered. We are building larger and larger tankers, we are being called upon to build larger and larger merchant ships, and we cannot look after our very valuable shipping fleet unless there are proper maintenance arrangements.

In the aircraft industry, maintenance has attracted a great deal of the Government's attention, and I cannot understand why the maintenance of our great ships should not be of equal interest. My right hon. Friend says that he genuinely wants to help this industry, so, when one section of it puts forward a practical proposal, I beg of him to take advantage of this great opportunity and to give the industry what it desires so tremendously. On behalf of the dry dock owners and of all those who work in these great ship-repairing yards, I can tell the Committee that I have moved this Amendment with great confidence.

Mr. Stevens

I should like, very briefly but very emphatically, to support the Amendment moved by my hon. Friend the Member for Tynemouth (Dame Irene Ward). In doing so, I must declare an interest. Two years ago, the firm of which I am a partner was asked to carry out a factual investigation into the taxation treatment of dry dock owners and ship repairers, both here and in other countries. A very interesting series of facts resulted from that investigation.

It emerged, beyond any shadow of doubt that the taxation treatment of those who own dry docks, and who repair ships in every other country is on a very much more generous scale than it is here. In saying that, one must remember that shipping is unique in its competitive nature. It is obviously so easy for a ship to cross the Atlantic, and ii is equally obvious that the shipowner will have the vessel repaired where the repair facilities are not only the most convenient but also the cheapest.

To emphasise that point I should like to give a very few figures. Whereas, before the present Finance Bill, the cost of building a dry dock here could be written off for tax purposes over forty-five years, if we look at some other maritime competitors we find that in Sweden the cost is written off in only thirty-three years; in Holland, in twenty-five years, and in France, in twenty years. That is a tremendous handicap on our ship repairers.

It is perfectly true that Clause 17 somewhat improves the position of the ship repairers, but only to the extent of about 10 per cent. That tremendous tax handicap therefore remains. It seems to me that if those engaged in an industry as highly competitive as the ship-repairing industry have that handicap to compete with, it is impossible to expect them to maintain this country's position as the premier ship-repairing nation of the world.

With those few words, and on those solid grounds, I support with great pleasure the Amendment moved by my hon. Friend the Member for Tynemouth.

9.30 p.m.

Mr. Ede

I support this Amendment. We should remember that in recent years —and, looking into the future, the same tendency seems likely to persist—there has been a demand for bigger dry docks and that those which have been built in the past are now not suitable, owing to their restricted size, for dealing with the commercial craft, particularly tankers and similar vessels which exist today.

A few minutes ago I saw the right hon. Gentleman the Minister of Labour and National Service in the Chamber. I can well understand his interest in this issue because, wherever else in the labour situation he may find anything to cheer his heart, he has been quite frank in telling us that shipbuilding and ship repairing are the industries which now give him the most anxiety. I sincerely hope that the Government will realise that this is a matter of vital concern not merely to the dry dock owners but to the large number of people in this country who are engaged in ship repairing.

We made a tremendous mistake in the years immediately before the Second World War in allowing the teams of labour which had been built up in these firms on the Tyneside and elsewhere to disintegrate, and even during the worst period of the war we were never able to reassemble those teams.

A peculiarity of this industry is that the firms seem to build up a body of men capable of dealing with their specific needs. The present plight of this industry is getting far too near the situation which existed immediately before the Second World War for anyone to regard this plight with equanimity. If the necessary expansion of the docks and of their equipment is to take place, very considerable assistance will be required from those who control investment allowances and the other matters which are dealt with in this Amendment.

Mr. Peter Rawlinson (Epsom)

I am glad to be able to follow the right hon. Member for South Shields (Mr. Ede) whom I represent in the House of Commons, and to say that I support everything that he has said.

I must admit that my main interest is more in docks of a different nature than those which we are discussing tonight. I should first of all declare a personal interest, as I have already done on a previous occasion when a similar subject was under discussion, in that for hundreds of years there has been a family concern on the Merseyside, engaged formerly in shipbuilding but now in ship-repairing.

As an illustration of some of the arguments which have already been used, I would tell the Committee that this company on the Merseyside is at present engaged in the enlargement of a dry dock. That will take several years to complete, at a cost of about £1½ million, so that we shall be able to cater for the new type of ships, the tankers of up to 65,000 tons. That is a dock from which, as my hon. Friend has already said, the company cannot expect to receive any economic return for a period of eight to ten years. It is essential for the long-term efficiency of ship-repairing to have docks of this size, so as to be able to meet the foreign competition, which becomes more acute with every single day, and to provide for this revolution in shipbuilding which we have seen in the last decade.

I say with regret that this industry has received very little encouragement from the Government. Always there is this emphasis generally upon this great heritage of shipbuilding, and the great dependence of this country upon the sea and the trades and industries which are allied to the sea. We have continual assertions about the strategic importance of keeping a healthy and flourishing Merchant Navy and the ports and docks which serve such a Merchant Navy. Now, we have the new oil and fuel carriers of vastly greater size, and therefore we have to have the docks able to cater for them and to service them.

In 1957, I invited the then Chancellor to treat the dock as plant, as opposed to industrial buildings, and my right hon. Friend the Member for Flint, West (Mr. Birch), then Economic Secretary to the Treasury, said that we were claiming, as an industry, discriminatory tax relief. Surely, it is the duty of a Chancellor to be discriminatory, and while I would not associate my right hon. Friend particularly with 1984, I would say that some Chancellors are discriminatory, and that some seem to be even more discriminatory than others.

I hope my right hon. Friend will be more discriminatory in this instance, because I think there is a case for the docks, as there is not in many other industries, for a dock is not like an industrial building. One cannot build, supply or provide it, or put it in a certain place, to provide the answer to some labour problem which there exists. It cannot be used for any other purpose, as the premises of a factory can be. It is a hole in the ground which can be used for one purpose only, and it is a one-purpose asset. Therefore, as a one-purpose asset, in my submission, it is plant and not a building.

My right hon. Friend the Prime Minister, in 1957, talking about the demand and the need for oil services, spoke of the real sense of urgency which existed in the Government. I ask that a real sense of urgency should be reflected by giving this assistance to this industry, because its foreign competitors are almost given their ships by the foreign Governments, and they are given their docks. In the case of our foreign competitors, a floating dock is treated as plant, and therefore all we are asking here is for proper relief and re-assessment of the category in which docks are at present placed.

The hon. Member for Stechford (Mr. Roy Jenkins), when he spoke on a similar Amendment in 1957, rather pooh-poohed the arguments we had raised, saying that the industry faced a great period of prosperity. It certainly does not face it now, as the right hon. Gentleman the Member for South Shields has already said. There is grave unemployment, and there are difficulties facing this industry. There-force, I ask my right hon. Friend to make this concession not only for ordinary commercial reasons—for ordinary commercial justice in treating docks as plant rather than industrial buildings, because they are in an entirely different category—but also because, for national reasons of employment and also for strategic reasons, it is important to keep these docks and this industry in a healthy and vigorous position, so that they can meet the challenge from foreign competitors.

As I said at the beginning, I speak with a direct personal interest which I want to make perfectly clear, because it arises from an association with the industry and not from anything concerned with my constituency. After the various arguments which have been put before my right hon. Friend, this surely is an industry which needs stimulus and help of this kind and I hope that he will be able to accept the Amendment.

Mr. Frederick Willey (Sunderland, North)

I support my right hon. Friend the Member for South Shields (Mr. Ede) in supporting the Amendment. We are obliged to the hon. Lady the Member for Tynemouth (Dame Irene Ward) for taking the opportunity of raising this issue, which particularly affects us in the North-East. The North-East Coast is the greatest ship-repairing area in the world. When attempts are made to denigrate the workers in this industry, I say at once that ship-repairing workers are among the finest workers in the world.

I am surprised at the absence of the hon. Member for Sunderland, South (Mr. P. Williams). It is unfortunate that he has chosen to be absent on this occasion, because when, in the past, I have pleaded on behalf of these great shipbuilding and ship-repairing industries he has suggested that the proper approach is the very approach that the hon. Lady is proposing tonight, that there should be a taxation concession. Now that the issue is put and the matter may be tested by Division, however, the hon. Member is not with us. [An HON. MEMBER: "He may turn up"] I hope so. He has a responsibility here.

I join the plea for discriminating in favour of the ship-repairing industry. I agree that if the circumstances demand it, we are entitled to discriminate in favour of an industry. As I have said before, that is at least some measure of planning. We must realise that the ship-repairing industry is facing a real dilemma. It is facing enormous capital costs in extremely difficult circumstances. It is facing unavoidable substantial capital costs because it has to provide the facilities, as the hon. and learned Member for Epsom (Mr. Rawlinson) said, for the new tankers, the new ore carriers and the other large ships that are coming into world shipping.

We must do that to hold our own, but we have got to do it in circumstances which, to say the least are extremely difficult, because the shipbuilding and ship-repairing industries face a capacity in the world which is far too large. On the one hand, they cannot afford to prejudice themselves by not having the facilities that are required. If they do that, they will lose their place. I remind the Chancellor of what has happened to our great industries under the present Government. Liberia, which, ten years ago, had only one ship of 1,000 tons, now challenges us with the greatest mercantile fleet in the world. Shipbuilding capacity is three times what it was a few years ago. At least, the Government should recognise the difficulties of these two industries that have grown in the past few years.

We cannot afford to allow our great ship-repairing industry to be prejudiced by not having the requisite dry docks. On the other hand, we must realise that this industry faces a difficult future. This is aggravated by the fact, which the hon. Member for Portsmouth, Langstone (Mr. Stevens) mentioned, that in every country there is some form or other of discrimination in favour of the shipbuilding and ship-repairing industries.

9.45 p.m.

Today, ship repairing and shipbuilding are facing a real crisis. It would be better to recognise this now rather than to wait, as we did in the case of the cotton industry, until the industry faces conditions far worse than those obtaining now. We can see the future of these industries fairly plainly now. We can see the intense subsidised competition which they will both meet over the next few years. We can measure the intensification of that competition because of the over-capacity in the world.

Even though the hon. Member for Sunderland, South is not with us, I appeal to the Chancellor, whether he accepts the Amendment or not, to give a satisfactory undertaking to the Committee. He has failed to do this for the industry. It is an open secret that the shipping, ship- building and ship-repairing industries have made approaches to the Chancellor, but have failed to persuade him. Now that we are discussing the matter, I hope that we shall get an undertaking from the Chancellor that we shall not wait for these industries to fall into the conditions into which the cotton industry has fallen and that action will be taken now, while there is time.

Finally, I agree with the hon. Lady in what she said about the specially designated D.A.T.A.C. areas. My right hon. Friend the Member for South Shields (Mr. Ede) and I represent constituencies which have been specially designated, but I agree that it would be wrong that aid for dry docks should be determined by that factor. That is why I mentioned the North-East Coast as a whole. It is a district which is rightly proud of its prowess in ship repairing, but I should like to see any aid which comes to the North-East determined by the proposals put forward by those in the industry to build new dry docks rather than determined by D.A.T.A.C. considerations. Incidentally, we have had nothing so far from D.A.T.A.C., so that that is largely an academic question.

I hope that the Chancellor will give us a satisfactory assurance that there will be discrimination in favour of the ship-repairing industry.

Mr. Amory

I thought that my hon. Friend the Member for Tynemouth (Dame Irene Ward) gave a slightly over-coloured picture of my yachting activities. I should like to assure her that practically every time that I go sailing I go past the Isle of Grain oil refinery where there is usually a long row of large tankers which I study with interest. My hon. Friend has invited me to go to sea with her in a tanker. I would enjoy that very much, and if the Recess were to be longer I would issue an invitation to her to sail round to Tynemouth so that she could show me the sights.

Dame Irene Ward

I would accept it.

Mr. Amory

My hon. Friend quoted "The Owl and the Pussy Cat". I do not want to press that analogy too far, but if she had gone a bit further I seem to remember that The owl looked up to the stars above and sang to a small guitar, 'Oh beautiful pussy, oh pussy my love, what a beautiful pussy you are'.

Mr. John Edwards (Brighouse and Spenborough)

May I remind the Chancellor that in the end the owl married the pussy cat?

Mr. Amory

Being a cautious man, I said that I did not want to press the analogy too far this evening.

Seriously, because it is a serious proposition that my hon. Friends have made, I am sorry that I do not feel able to accept their proposal. I feel that the treatment that we are giving to docks at present, compared with anything else, is relatively favourable.

What are we doing? In some directions it is straining it rather to regard a dock as equivalent to an industrial building, but we are increasing the advantage there by substituting the investment allowance of 10 per cent. for 10 per cent. of the initial allowance. I would remind hon. Gentlemen that last year we increased the initial allowance and docks got the benefit of it. This year we are increasing the investment allowance, and docks will get the benefit of that. My hon. Friend also mentioned gates and the motivating machinery; they get the higher rate of investment allowance applicable to plant and machinery.

My hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) implied that most other countries, if not every other country, give better treatment in allowances on docks than we do; but, as far as I have been able to discover, only one other country has anything equivalent to the investment allowance applicable to docks.

My hon. and learned Friend the Member for Epsom (Mr. Rawlinson) said that docks were a special case because they were a one-purpose asset. If one thinks of it, that applies to a very great number of industrial buildings which are not adaptable for general purposes. Many of them are specialist buildings which attract only the industrial building rate of allowance. The kiln analogy is not a precise one because a kiln is in many respects analogous to a single bit of machinery.

My hon. and learned Friend also mentioned that in some countries floating docks attract the allowance appropriate to plant and machinery. I would remind him that in this country a floating dock would be treated as plant and machinery.

My hon. and learned Friend also implied that the shipbuilding industry had received very little help from the Government. I do not think that is quite fair. That industry has enjoyed the benefit of the increase in the initial allowances last year, the increase in investment allowances applicable to plant and machinery and their buildings this year and a considerable benefit also this year from the reduction in the standard rate. In addition to that, the Government are assisting, and are willing to assist, docks in D.A.T.A.C. areas, and the Government have already expressed their willingness to assist in a substantial way in the case of two applications. That helps with the unemployment problem at the same time.

I do not quarrel with what my hon. and learned Friend said about a discrimination in certain cases. That is fair; we already discriminate in certain cases. In brief, however, what I feel in this case is that it would be asking me to go beyond what is reasonable to treat the whole of the expenditure on a dry dock as if it were plant and machinery. The profitability of a dry dock has been mentioned. That cannot be considered in isolation. As far as profitability goes, a dry dock must surely be considered one among a number of different aspects inside the business of a shipbuilding concern, whether it is owned by the concern or whether its use is rented.

Therefore, I feel that at the present time with our present proposals we are extending the benefits which are available, and will be available, to dry docks and that it would not be reasonable to ask me to treat the whole of the expenditure on a dry dock as if it were plant and machinery. So with very great regret, I am afraid that I cannot see my way to accept the Amendment.

Mr. E. Fernyhough (Jarrow)

I am sure that the hon. Lady the Member for Tynemouth (Dame Irene Ward) and others who have taken part in the debate on this Amendment will be very disappointed with the Chancellor's miserable reply. The Chancellor should appreciate that what is now being asked is, in the words of the old proverb, a stitch in time to save nine. He is dealing with an industry which is facing more unfair competition than any other industry in this country. The competition is unfair because practically every other maritime nation finds some way, by subsidy or taxation relief, to assist its shipping industry.

The right hon. Gentleman said that he could not meet what the Amendment suggested in respect of dry docks. Does he not realise that unless we have those dry dock facilities available, the little he saves by turning down the Amendment will have to be paid out tenfold or even one hundred fold in increased unemployment benefit because of the Government's indifference and neglect of the claims of this industry?

The right hon. Gentleman said that under D.A.T.A.C. advances had already been made for two dry docks. One of them is in my constituency and I am glad that the Treasury found it possible to advance a considerable sum at an agreed rate of interest.

Mr. Ellis Smith (Stoke-on-Trent, South)

What about Salford?

Mr. Fernyhough

Unfortunately I do not think that there is room in Salford for a big dry dock of this character. Otherwise, I am sure that Salford's claim would be considered equally sympathetically.

The firm concerned and all the people in the industry were very glad that the Government decided to make this generous gesture, but the Government themselves should be delighted, because these dry docks are being constructed at a time when the Tyne is almost full of laid up ships because there is no work for them. The firm is prepared to spend its capital and run the risk involved in providing these facilities although at present it can see no future use for them.

The Chancellor should understand that what has been said about the increasing size of tankers and other ships is perfectly true, and that if we do not provide those facilities other countries will do so and get the ship-repairing business which should come to this country.

The shipbuilding and ship-repairing industries had a lean time for the best part of a generation, except during the war years. Everybody knows what happened from the end of the 1914-18 war until the 1939-45 war. As my right hon. Friend the Member far South Shields (Mr. Ede) said, men trained in those skills had to seek work elsewhere. We can all recall that immediately war broke out in 1939 there was a frenzied effort to get the men who had been discarded for lack of work to take up the work for which they had been trained. Such a state of affairs may happen again. Everybody hopes that that will not be the case, but it would be unfortunate if this skill and ability were lost to an industry simply because the Chancellor was not prepared to make this helpful concession.

10.0 p.m.

The Chancellor must know of the many difficulties confronting the industry. He must know that we are in an unfavourable position compared with other maritime nations. We are not asking him to give money away. I understand that this is not some money that he gives away, but merely postpones collecting until a later date. Why, in the name of fortune, with the ship-repairing industry in its present state, he should refuse to make this concession I do not know.

The Chancellor must face this fact, and it is as well that the Committee should face it, too. Unless we spend money to bring our industries up to date and give those employers who have the courage in this time of recession to go in for an expansionist policy we shall spend this sum a hundred times over, and probably a thousand times over, in paying out unemployment benefit to men who, if the Chancellor had been a little more farsighted, might have been engaged in work which would have provided them with wages and provided the country with the trade and income that everybody wants to see it enjoy.

Dr. Horace King (Southampton, Itchen)

The hon. Lady the Member for Tynemouth (Dame Irene Ward) and her hon. Friends who tabled the Amendment have done the Committee a service. Those of us who represent ship-repairing ports are exceedingly grateful to her. I speak for the trade unionists and the master men in the ship-repairing industry in the port of Southampton, which I represent together with the hon. Gentleman the Member for Southampton, Test (Mr. J. Howard).

The shipping and the ship-repairing industries are in a bad way. I hope that the two industries will get together. I hope that this debate will be the beginning of the time when the Government will get behind these industries in the problems that they face.

I am assured by my hon. Friends that the ship-repairing industry faces competition from abroad and is losing contracts abroad because many foreign countries, if not giving direct subsidies, are giving either concealed subsidies or other forms of Government aid to their own ship-repairing industries. If our own industry is to survive, aids of the kind mentioned in the Amendment might help in its struggle to keep going.

It is a truism to say that both shipping and ship-repairing play vital parts in a war. Every member of the Committee knows, from figures recently given by the Ministry of Labour, that while there has been an upturn in the employment position in almost every other industry in the country, that is not true of ship-repairing. In Southampton the figures are higher than they have been since the war. These men have highly specialised skills and they cannot be deflected into other industries.

If Southampton is not a D.A.T.A.C. area so far as this industry is concerned, unless help is given that possibility may arise. I ask the Chancellor to give a little more consideration to the plea which the hon. Lady the Member for Tynemouth made in proposing the Amendment.

Most of the ship-repairing industries suffer from lack of adequate docking facilities. In Southampton we have to provide facilities for passenger and commercial ships, and at the same time provide docking facilities for ship-repairing. We have not got them. Any help that the Chancellor can give towards providing these facilities will be a useful contribution to the industry.

We face competition from abroad on a scale unknown since the war. Both sides of industry must get together to seek ways of improving its efficiency. We cannot solve its problems without help from the Government. This may be a way in which help could be given. It might be regarded as a token action on the part of the Chancellor which could be followed by other Government Departments to help in the solution of those problems.

Question put, That those words be there inserted:—

The Committee divided: Ayes 158, Noes 199.

Division NO. 114.] AYES [10.7 p.m.
Ainsley, J. W. Griffiths, William (Exchange) Owen, W. J.
Albu, A. H. Hale, Leslie Padley, W. E.
Allen, Arthur (Bosworth) Hall, Rt. Hn. Glenvil (Coine Valley) Palmer, A. M. F.
Allen, Scholefield (Crewe) Hamilton, W. W. Parker, J.
Awbery, S. S. Hannan, W. Parkin, B. T.
Bacon, Miss Alice Hayman, F. H. Paton, John
Benn, Hn. Wedgwood (Bristol, S.E.) Healey, Denis Pearson, A.
Blackburn, F. Henderson, Rt. Hn. A. (Rwly Regis) Peart, T. F.
Blenkinsop, A. Herbison, Miss M. Pentland, N.
Blyton, W. R. Hewitson, Capt. M. Plummer, Sir Leslie
Boardman, H. Hobson, C. R. (Keighley) Prentice, R. E.
Bottomley, Rt. Hon. A. G. Holman, P. Price, J. T. (Westhoughton)
Bowden, H. W. (Leicester, S.W.) Holmes, Horace Price, Philips (Gloucestershire, W.)
Bowles, F. G. Houghton, Douglas Probert, A. R.
Braddock, Mrs. Elizabeth Hughes, Cledwyn (Anglesey) Pursey, Cmdr. H.
Brockway, A. F. Hughes, Emrys (S. Ayrshire) Rankin, John
Broughton, Dr. A. D. D. Hughes, Hector (Aberdeen, N.) Redhead, E. C.
Brown, Rt. Hon. George (Belper) Hunter, A, E. Reynolds, G. W.
Brown, Thomas (Ince) Hynd, H. (Accrington) Rhodes, H.
Burke, W. A. Hynd, J. B. (Attercliffe) Robinson, Kenneth (St. Pancras, N.)
Burton, Miss F. E. Irvine, A. J. (Edge Hill) Rogers, George (Kensington, N.)
Carmichael, J. Irving, Sydney (Dartford) Ross, William
Castle, Mrs. B. A. Janner, B. Short, E. W.
Champion, A. J. Jay, Rt. Hon. D. P. T. Silverman, Julius (Aston)
Chetwynd, G. R. Jeger, George (Goole) Silverman, Sydney (Nelson)
Cliffs, Michael Jeger, Mrs. Lena (Holbn & St. Pncs, S.) Skeffington, A. M.
Coldrick, W. Jones, Rt. Hon. A. Creech (Wakefield) Slater, J. (Sedgefield)
Corbet, Mrs. Freda Jones, Jack (Rotherham) Smith, Ellis (Stoke, S.)
Craddock, George (Bradford, S.) Jones, J. ldwal (Wrexham) Snow, J. W.
Cronin, J. D. Kenyon, C. Sorensen, R. W.
Croesman, R. H. S. King, Dr. H. M. Soskice, Rt. Hon. Sir Frank
Davies, Harold (Leek) Lawson, G. M. Spriggs, Leslie
Davies, Stephen (Merthyr) Lee, Frederick (Newton) Stones, W. (Consett)
Deer, G. Lee, Miss Jennie (Cannock) Summerskill, Rt. Hon. E.
Delargy, H. J. Lindgren, G. S. Sylvester, G. O.
Diamond, John Mahon, Dr. J. Dickson Taylor, Bernard (Mansfield)
Ede, Rt. Hon. J. C. McAlister, Mrs. Mary Taylor, John (West Lothian)
Edelman, M. McCann, J. Thomas, lorwerth (Rhondda, W.)
Edwards, Rt. Hon. John (Brighouse) MacColl, J. E. Thomson, George (Dundee, E.)
Edwards, Rt. Hon. Nese (Caerphilly) McInnes, J. Thornton, E.
Evans, Albert (Islington, S.W.) McKay, John (wallsend) Ward, Dame Irene (Tynemouth)
Evans, Edward (Lowestoft) MacPherson, Malcolm (Stirling) Watkins, T. E.
Fernyhough, E. Mahon, Simon Wells, William (Walsall, N.)
Fletcher, Eric Mann, Mrs. Jean Wheeldon, W. E.
Forman, J. C. Marquand, Rt. Hon. H. A. Willey, Frederick
Fraser, Thomas (Hamilton) Mitchison, G. R. Williams, Rt. Hon. T. (Don Valley)
Gibson, C. W. Morris, Percy (Swansea, W.) Willis, Eustace (Edinburgh, E.)
Gordon Walker, Rt. Hon. P. C. Moyle, A. Wilson, Rt. Hon. Harold (Huyton)
Greenwood, Anthony Mulley, F. W. Winterbottom, Richard
Grenfell, Rt. Hon. D. R. Noel-Baker, Rt. Hon. P. (Derby, S.) Woof, R. E.
Grey, C. F. Gram, A. E. Yates, V. (Ladywood)
Griffiths, David (Bother Valley) Orbach, M. Zilliacus, K.
Griffiths, Rt. Hon. James (Lianally) Oswald, T. TELLERS FOR THE AYES:
Mr. Simmons and Mr. Wilkins.
Agnew, Sir Peter Boyle, Sir Edward du Cann, E. D. L.
Aitken, W. T. Braine, B. R. Dugdale, Rt. Hn. Sir T. (Richmond)
Allan, R. A. (Paddington, S.) Brewis, John Duncan, Sir James
Amory, Rt. Hn. Heathcoat (Tiverton) Bromley-Davenport, Lt Col. W. H. Elliott, R.W.(Ne'castle upon Tyne, N.)
Armstrong, C. W. Browne, J. Nixon (Craigton) Emmet, Hon. Mrs. Evelyn
Ashton, H. Bryan, P. Errington, Sir Eric
Atkins, H. E. Burden, F. F. A. Erroll, F. J.
Baldock, Lt.-Cmdr. J. M. Butler, Rt. Hn. R.A.(Saffron Walden) Fell, A.
Baldwin, Sir Archer Carr, Robert Finlay, Graeme
Barber, Anthony Cary, Sir Robert Fisher, Nigel
Barlow, Sir John Channon, H. P. G. Fletcher-Cooke, C.
Barter, John Chichester-Clark, R. Fort, R.
Botsford, Brian Conant, Maj. Sir Roger Freeth, Denzil
Beamish, Col. Tufton Cooke, Robert Galbraith, Hon. T. G. D.
Bell, Philip (Bolton, E.) Cooper, A. E. Gammons, Lady
Bevins, J. R. (Toxteth) Cordeaux, Lt.-Col. J. K. George, J. C. (Pollok)
Biggs-Davison, J. A. Corfield, F. V. Glover, D.
Bingham, R. M. Craddock, Beresiord (Speithorne) Glyn, Col. Richard H.
Birch, Rt. Hon. Nigel Crosthwaite-Eyre, Col. O. E. Godber, J. B.
Bishop, F. P. Cunningham, Knox Goodhart, Philip
Black, Sir Cyril Dance, J. C. G. Gough, C. F. H.
Body, R. F. Davidson, Viscountess Gower, H. R.
Bonham Carter, Mark D'Avigclor-Goldsmid, Sir Henry Graham, Sir Fergus
Bowen, E. R. (Cardigan) de Ferranti, Basil Green, A.
Boyd-Carpenter, Rt. Hon. J. A, Doughty, C. J. A. Gresham Cooke, R.
Grimond, J. Loveys, Walter H. Russell, R. S.
Gurden, Harold Lucas-Tooth, Sir Hugh Sharpies, R. C.
Hall, John (Wycombe) Macdonald, Sir Peter Shepherd, William
Harris, Reader (Heston) McLaughlin, Mrs. P. Simon, J. E. S. (Middlesbrough, W.)
Harrison, Col. J. H. (Eye) McMaster, S. R. Spearman, Sir Alexander
Harvey, Sir Arthur Vere(Macclesf'd) Macmillan, Rt Hn. Harold(Bromley) Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Harvey, John (Walthamstow, E.) Maitland, Cdr. J. F. W.(Horncastle) Stanley, Capt. Hon. Richard
Heald, Rt. Hon. Sir Lionel Maitland, Hon. Patrick (Lanark) Steward, Harold (Stockport, S.)
Heath, Rt. Hon. E. R. G. Markham, Major Sir Frank Steward, Sir William (Woolwich, W.)
Henderson, John (Cathcart) Marples, Rt. Hon. A. E. Stoddart-Scott, Col. Sir Malcolm
Henderson-Stewart, Sir James Mathew, R. Storey, S.
Hill, Mrs. E. (Wythenshawe) Mawby, R. L. Studholme, Sir Henry
Hill, John (S. Norfolk) Maydon, Lt.-Comdr. S. L. C. Summers, Sir Spencer
Hinchingbrooke, Viscount Medllcott, Sir Frank Taylor, Sir Charles (Eastbourne)
Hirst, Geoffrey Molson, Rt. Hon. Hugh Teeling, W.
Holland-Martin, C. J. Mott-Radcliffe, Sir Charles Temple, John M.
Holt, A. F. Heave, Airey Thomas, Leslie (Canterbury)
Hornby, R. P. Nicholson, Sir Godfrey (Farnham) Thompson, R. (Croydon, S.)
Horobin, Sir Ian Nicolson, N. (B'n'm'th, E. & Chr'ch) Thorneycroft, Rt. Hon. P.
Horsbrugh, Rt. Hon. Dame Florence Noble, Michael (Argyll) Thornton-Kemsley, Sir Colin
Howard, Hon. Greville (St. Ives) Nugent, Richard Turner, H. F. L.
Howard, John (Test) Oakshott, H. D. Turton, Rt. Hon. R. H.
Hughes, Hallett, Vice-Admiral J. Ormsby-Gore, Rt. Hon. W. D. Vane, W. M. F.
Hughes-Young, M. H. C. Osborne, C. Vaughan-Morgan, J. K.
Hurd, Sir Anthony Page, R. G. Vickers, Miss Joan
Hutchison, Michael Clark (E'b'gh, S.) Partridge, E. Vesper, Rt. Hon. D. F.
Hylton-Foster, Rt. Hon. Sir Harry Peel, W. J. Wade, D. W.
Iremonger, T. L. Peyton, J. W. W. Wakefield, Edward (Derbyshire, W.)
Jenkins, Robert (Dulwich) Pickthorn, Sir Kenneth Wakefield, Sir Wavell (St. M'lebone)
Johnson, Eric (Blackleg) Pike, Miss Mervyn Walker-Smith, Rt. Hon. Derek
Kerr, Sir Hamilton Pilkington, Capt. R. A. W all, Patrick
Kirk, P. M. Pitman, I. J. Ward, Rt. Hon. G. R. (Worcester)
Lancaster, Col. C. G. Pitt, Miss E. M. Webbe, Sir H.
Langford-Holt, J. A. Pott, H. P. Webster, David
Leavey, J. A. Powell, J. Enoch Williams, Paul (Sunderland, S.)
Legge-Bourke, Maj. E. A. H. Price, David (Eastleigh) Wills, Sir Gerald (Bridgwater)
Legit, Hon. Peter (PetersfieId) Prior-Palmer, Brig. O. L. Wilson, Geoffrey (Truro)
Lindsay, Hon. James (Devon, N.) Ramsden, J. E. Wolrige-Gordon, Patrick
Lindsay, Martin (Solihull) Redmayne, M. Woollam, John Victor
Linstead, Sir H. N. Remnant, Hon. P.
Lloyd, Maj. Sir Guy (Renfrew, E.) Ridsdale, J. E. TELLERS FOR THE NOES:
Longden, Gilbert Roper, Sir Harold Mr. Brooman-White and
Ropner, Col. Sir Leonard Mr. Whitelaw

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

10.15 p.m.

Mr. John Peyton (Yeovil)

At the beginning of last month 183 British ships were laid up. I want to take this opportunity very briefly to express my surprise and regret that there is nothing in the Bill to deal with the problems of the shipping industry. I also express surprise that there is as yet no Amendment on the Notice Paper concerning this industry. There is no doubting the good will which has been shown by successive Governments, who have accorded it exceptional treatment, and no doubting the good will shown by Parliament. We give due credit to the Opposition here—

Mr. H. Wilson

Is it in order, Sir Charles, in a debate on the Question, That the Clause stand part of the Bill, to discuss what is not in the Clause?

The Chairman

One can deal only with what is in the Clause.

Mr. Peyton

With great respect, one of the points I am going to deal with is that of investment allowances. Am I not in order in expressing regret that the shipping industry is not benefiting from this Clause?

The Chairman

Only what is in the Clause can be debated on the Question, That the Clause stand part of the Bill. One cannot deal with Amendments which have not been called.

Mr. Diamond

At this very late hour one wants to make one's points extremely short and I shall endeavour to do so. The point I am arising comes under initial allowances. If we read the title of this Clause, we see that it is: Restoration of investment allowances, and additional grant of initial allowances in certain cases. We are dealing with initial allowances and I shall deal with initial allowances granted in respect of private motor cars. The first part of the Clause is careful to exclude private motor cars from the benefit of investment allowances. It is careful to exclude them because the Government recognise that it would be wholly improper and indefensible for private motor cars to get the benefit of investment allowances. Private cars get the benefit of initial allowances and it is to be regretted that initial allowances have not been withdrawn from private cars. This Clause gives an opportunity of pleading once more for that withdrawal.

The reasons are that the continuation of these allowances are both undesirable and unnecessary. It is undesirable because it provides much too great an inducement to people to buy cars when they receive an initial allowance of 30 per cent. and the ordinary wear and tear or depreciation allowance, so that anyone buying a new or secondhand car gets more than 50 per cent. allowed as an expense in the first year of purchase. That is far too great an inducement and quite an undesirable one. Indeed, it is unnecessary because, as we know, the motor car industry is flourishing and there is no reason why the sale of additional cars should be encouraged.

Perhaps this point is not always appreciated, but that the allowance is unnecessary is proved by the fact that it is not always claimed. In many cases it turns out that the allowance would be so great in the first year and so small in a subsequent year that, to make up for that, it suits people who own private cars and use them partly for professional or business purposes to spread the allowance and, therefore, not be subject to the disadvantage of paying it back at a later stage.

Because the continuation of initial allowances on private cars is both undesirable and unnecessary, I wish once more to call it to the attention of the Government in the hope that they will show their desire to stop what is a quite unnecessary allowance—almost a fiddle "—and encourage a proper appreciation of the rights of people as to their taxation responsibilities so that they do not have temptation put in their way by the enormous inducement to buy larger and more expensive cars.

Mr. John Howard (Southampton, Test)

I am pleased to see this Clause before the Committee, in particular since it continues investment allowance for the shipping industry, which my right hon. Friend singled out some years ago for special treatment. We have been debating the question of allowances for dry docks, but I feel that my right hon. Friend should tackle the problem of the shipping industry not merely by having investment allowances in the present form, but by making an arrangement whereby the industry can benefit through initial allowances, investment allowances and capital allowances already granted to firms in the industry through spreading such allowances backwards.

At present the industry is suffering severe depression and it is no use giving it investment allowances which it cannot use. It would be far better to make an arrangement whereby past profits could be used against any further and new investment allowances. We have talked about a recession in the shipbuilding and ship-repairing trade, but my contention is that we must tackle this at the right point and give the allowances to that part of the industry that needs it.

Mr. H. Wilson

On a point of order. Would it be possible to do this without legislation? If not, it would require legislation and that is not in the Clause as it now stands. How can it be done?

The Chairman

I was waiting for the hon. Gentleman to develop his argument. We can only deal with what is in the Clause.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Consideration of postponed Clauses 18 to 28 and of new Clauses further postponed till after consideration of Schedules 4 and 5.—[Mr. Amory.]

Mr. H. Wilson

I beg to move, That the Chairman do report Progress and ask leave to sit again.

I think that the Chancellor will agree that we have made fairly good progress today. Some of us rather hoped that it might have been possible to get further through the Bill before the Recess, so that the time left after the Recess could have been devoted more to the new Clauses. However, I think that we have made good progress and are only an hour or two behind that rather optimistic schedule.

Viscount Hinchingbrooke

What schedule?

Mr. Wilson

I have just used the phrase that some of us hoped that we might have dealt with more of the Bill before the Recess to enable us to use more time after the Recess, and I said that we were only an hour or two behind that schedule. If I had pronounced it "skedule" I could have understood the noble Lord being upset and I would have been upset, too. I think that we have made quite good progress. I am sure that the Chancellor will agree with this.

We have accepted the Chancellor's procedural Motion. I hope that we can get through the remaining Clauses of the Bill with that constructive criticism which, I am sure, the noble Lord, in common with my hon. Friends, desires, with suitable expedition, which I am quite sure the Chancellor desires, and that we shall be able to have plenty of time allotted to us after the Whitsun Recess for discussion of very important new Clauses on the Notice Paper, including one in the name of the noble Lord. I think that we have plenty of time for that, but that we have got as far as we can tonight. There is other business on the Order Paper.

Mr. Amory

I agree with the right hon. Gentleman. I think that we have made quite good progress, although perhaps not quite as good as we had hoped in our more optimistic moments. We have been discussing important matters and I have no quarrel with the amount of time which has been taken on them. The right hon. Gentleman's proposal that you do report Progress, Sir Charles, is perfectly reasonable; we can rest on the progress which we have made and come back, I hope, stimulated and refreshed from a short holiday and complete the remaining stages of our consideration of the Bill with exceptional expedition. I therefore support the Motion.

Question put and agreed to.

Committee report Progress; to sit again Tomorrow.