Although it is a little late, unfortunately, to discuss this matter, I accept at once that both these new Clauses touch on a very important matter indeed. This I instantly accept. I think that the Committee will recall that earlier this year my right hon. Friend the Minister of Labour made a statement in which he said that this whole question of redundancy and, therefore, the related matters such as have been raised tonight, were being considered by the Government in consultation with the main interests involved.

I suggest to my hon. Friends that there is a fundamental point here, that it is probably wrong to legislate in a sense piecemeal—although they have intelligibly anticipated the points that are liable to be made—in advance of a clearer picture of how to deal with redundancy generally in which both sides of the Committee, I am sure, are thoroughly interested.

I can perhaps give a particular reason in the case of each of these two new Clauses as now drafted why I believe that it would be wrong to try to legislate piecemeal on this point. On new Clause No. 37, the real difficulty is that my hon. and learned Friend is quite right in saying that all redundancy payments made ex gratia—under the £5,000 limit—or made in lieu of notice, which I think covers the point which he raised on the Contracts of Employment Act in so far as we know it now to be applicable in such cases—are not treated as income in the ordinary sense for tax purposes. Therefore, he is quite right in saying that over the last part of the field the practice and application of the law are already what he seeks to make them. But if we go the whole hog, so to speak, and apply, as he wishes to apply, to all contracted redundancy payments at this moment in time this same application of the law, then I must tell him that as worded there is a real chance of avoidance which can be very simply contrived.

An employee, for example, gets taken on on a modest salary with a relatively handsome terminal payment if dismissed on redundancy grounds. The drafting of the Clause would lay us open to this. The employee is then dismissed at the end of the year and he collects his capital sum, instead of his income, in terms of the redundancy payment promised to him under the contract which he has. After a decent interval of time he re-emerges as an employee of that same company or of an associated company. This would be a genuine risk of avoidance inherent in the drafting of my hon. Friend's Clause,

It is for that reason that I am afraid that I cannot accept the Clause because it would not really tie in with what we all want to do subsequently, and that is to avoid the prospect of avoidance and to give a definitely better treatment to those who pursue the Government policy of producing better redundancy payments in their firms.