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House of Commons.—Is in touch with Glenvil Hall about the matter Pethick-Lawrence mentioned.

Has approved the draft minutes of the last (Cecil Houses) Finance Committee meeting. Encloses copies of correspondence with Mrs Gordon Phillips and Mrs Chesterton. He spent Christmas in Somerset, suffering from influenza.

Gives an account of yesterday’s (Cecil Houses) Finance Committee meeting, which concluded amicably.

Has settled his disagreement with Mrs Phillips and Mrs Chesterton, and has discovered the precise nature of Curry’s dealings with regard to certain stocks.

Encloses correspondence with Mrs Gordon Phillips (of the Cecil Houses Finance Committee). Is dissatisfied with her behaviour and that of Mrs Chesterton. Wishes to discuss the matter with him.

An attempt should be made before the general election to explain to the electorate how the profits of nationalised industries are calculated.

Reiterates his criticism of the method used to calculate death-duties (see 2/17).

Is broadly in support of the Government’s financial policy. Would like to hear his views on (1) further postponing the adjourned CPA meeting till the accounts are ready, and moving the room of the General Council’s secretary; (2) an anomaly in the calculation of estate duty; and (3) his own article in the Contemporary Review.

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Transcript

8th. April, 1949.

My dear Glenvil,

I listened to the Chancellor’s speech on Wednesday with great interest and with the admiration which he always commands for his pellucid exposition. I also attended the party meeting yesterday and now have read your speech of last night with my usual interest, pleasure and substantial agreement.

Broadly I find myself in full support of the Government’s standpoint, though naturally there are one or two small matters which I do not like quite so much. I though Mrs. Mann was particularly happy in what she said yesterday at the party meeting.

You are of course tremendously busy at the moment, but if you have a little leisure I should be interested to hear from you on three matters:—1) Sir Howard D’Egville told me that he had had a talk with you and explained to you that the accounts that were on the table at the C.P.A. meeting, only went up to the end of 1947. You will remember he interrupted me in the middle of my speech at the meeting and, incidentally, mislead† me as to the dates of the accounts. In all the circumstances I hope you agree that it is better to postpone the adjourned meeting of the members until we have got the 1948 accounts also to give to them. I am afraid it will not be until the end of June or the beginning of July. I daresay you and I shall be meeting one day in the House of Commons before then; and I would also like to discuss with you this question of whether the room for the General Council’s Secretary should be in future actually adjoining the rooms of the United Kingdom Branch or nearby.

2) I am rather sorry that when the Chancellor was tidying up the death duties (and incidentally making a considerable increase in the estate duty which will involve substantial alterations in wills of large testators who leave specified sums to various persons, and particularly to widows) that he did not rectify an anomaly which causes testators a good deal of inconvenience. I refer to the different method of dealing with slices of the gross amount for estate duty and surtax respectively. In the latter, the taxpayer has no particular interest in getting his gross figure below certain limits, whereas in the former the higher rate is charged not only on the slice but on the gross total so that a very small change makes a great deal of difference. I am aware of course that adjustments are made, but in view of the present high rates of taxation, this method is surely both inconvenient and unsatisfactory. Consider for instance the case of a man whose gross estate is in the neighbourhood of a hundred thousand pounds. If it is just below a hundred thousand pounds, he pays tax under the new scheme at 45% leaving him for distribution fifty-five thousand pounds. As I understand it, it is not until he reaches over a hundred and ten thousand pounds gross (which will pay 50%) that he obtains any larger sum for distribution. Similar anomalies occur on other marginal figures. The net result is surely not very healthy because a testator with assets close to one of the marginal figures is deprived of all incentive to save as the tax amounts to 100% on part of the capital.

Would it not be better to adopt the surtax method on slices for death duties? In any case will you consider this, and will you consider whether some explanation might be given of how the prospective tax works out on successive slices. It is quite true that the big fry might be alarmed at the very large proportion which the higher slices will have to pay, but some of our labour supporters may be equally satisfied that the rich are contributing so much. I hope however that if this is done next year the Chancellor will not take the opportunity of putting up still further the rates. Will you also consider, unless it has already been made fully clear, precisely when all the changes in death duties come into operation so that testators will know just what they have to face and when. For instance what about the case of A deceased in 1948 leaving a life interest to B who dies in 1950. What does C the remainderman have to pay?

3) When I last saw you, you were good enough to say that you would look at my article in the January issue of the “Contemporary Review”. If you have managed in your busy life to do so I should be interested to know how it struck you.

Yours sincerely,
[blank]

The Rt. Hon. W. Glenvil Hall, M.P.,
Financial Secretary to the Treasury,
Treasury Chambers,
S.W.1.

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† Sic.

House of Commons.—Thanks him for a copy of his poem.

14 Heath Mansions, Hampstead Grove, N.W.3.—Sends a wedding gift. The Cecil Houses Council has decided to implement Pethick-Lawrence’s suggestions.

Hampstead.—Sends good wishes (on their marriage).

14 Heath Mansions, Hampstead Grove, N.W.3.—Is glad that the last (Cecil Houses) Finance Committee meeting concluded amicably (see 2/31). Will attend on the 16th.

14 Heath Mansions, Hampstead Grove, N.W.3.—He may have to leave the (Cecil Houses) Finance Committee meeting early in order to attend a meeting of the Mermaid Theatre Trust.

14 Heath Mansions, Hampstead Grove, N.W.3.—Expresses support for Pethick-Lawrence’s outburst at the (Cecil Houses) Finance Committee meeting (see 2/30).

House of Commons.—Expresses sympathy on the death of Lady Pethick-Lawrence.

The Old Rectory, Harlton, Cambridge.—Will read the article by Croome in the Lloyd’s Bank Review. Has been running his job at the Treasury from Harlton. Cripps was in good spirits when he left for Washington.

Treasury Chambers.—Responds to Pethick-Lawrence’s remarks on estate duty (see 2/26), which he has discussed with the Chancellor (Cripps) and the Inland Revenue.

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Transcript

Treasury Chambers, | Great George Street, | S.W.1.
29 April, 1949.

My dear Pethick,

I promised to write you again on the Estate Duty points you raised in your letter to me, after I had consulted the Inland Revenue and the Chancellor on them.

As you point out, the Estate Duty scale has always been such that at a point where the rate increases there is a margin within which, whatever the value of the estate, the amount left after payment of duty is the same. At the new rates there will be a margin of £10,000 between £100,000 and £110,000. We have from time to time considered the possibility of changing, as you suggest, to a slice scale on the Sur-tax principle to avoid this particular difficulty, but the Inland Revenue tell me such a change would bring very considerable new difficulties of its own. It would for example add to the complexities of the administration of estates where property passed on a death under more than one title. Every time any adjustment were made in the value of the property passing under one of the titles the amount of duty payable on the property passing under each title would be affected.

The Chancellor proposes to increase the yield from death duties because, as he stated in his Budget statement, there is still a degree of inequality in the ownership of property which could be the subject of adjustment. The various changes in the death duties will not, of course, come into effect until the passing of the Finance Act. This will give testators some opportunity of altering their wills if they so wish. They will be able to see the detailed proposals in the Finance Bill—we have in mind, for example, the point you mention about the remainder-man—and they will be able to make their plans accordingly.

In the light of what I say above about the difficulties, you will gather that there seems little possibility of the suggestion you make about the slice system being adopted. Nevertheless you will like to know that the Chancellor is having the point looked at again, though, as I say, it appears that whatever system were adopted some anomalies are bound to occur.

With kind regards and all good wishes.

Yours sincerely,
W Glenvil Hall

The Rt. Hon. Lord Pethick-Lawrence of Peaslake,
11, Old Square,
Lincoln’s Inn,
W.C.2.

Treasury Chambers.—Acknowledges the receipt of his letter to the Financial Secretary to the Treasury (Glenvil Hall) (see 2/26).

(Signed as Private Secretary.)