HC Deb 08 August 1940 vol 364 cc534-52

9.0 p.m.

Mr. Barnes (East Ham, South)

I beg to move, in page 13, line 40, to leave out "or second."

The purpose of the Amendment is to delete the items in the second column of the Schedule. On the last Clause I gave certain figures with regard to the relative yield of the second and first columns. Now I should like to put that into bulk figures. Probably those uninformed on the bulk of commodities in the industries and trades covered by these descriptions might be inclined to assume that the bulk of the revenue from the tax would be raised in the first column, but that is not so. Of the £110,000,000 which the Chancellor of the Exchequer is aiming to raise, I estimate that £88,000,000 will come from the groups of commodities covered in the second column. Therefore the pretence that the Chancellor is able to make a differential tax of a sixth and a third is seen to have no substance in fact and is merely a cover for an effort to raise the substantial sum of £88,000,000 out of items of ordinary domestic, daily use. Even in the first column many of the items are of a domestic character. I am, therefore, not over-stating the case when I say that the bulk of the taxation will be raised on ordinary items of domestic consumption.

It is significant that of the vast sums which have been raised since the outbreak of the war this is the first tax which has started a serious controversy. I am confident that the controversy is not on the issue as to whether this sum is to be raised, or whether the wage earners should contribute this sum, or any proportionate sum, in taxation. The controversy was begun, and I believe it will grow in volume, because of the inequity and the repercussions of this tax. The large amount of taxation which the Chancellor has imposed in the form of direct taxation on incomes and additional taxation on luxuries has been generally recognised to be fair, and even if the lower incomes had been included, I do not think there would have been the resistance which this tax has created. It is true that the British people may look at an increase in direct taxation rather ruefully, but on the whole they are prepared to grin and bear it. But the Purchase Tax—and especially the group of articles in the second column of the Schedule—is repugnant, and will become increasingly so as people become aware of its incidence. It is unfair and bureaucratic, and it is a wrong way of arising the sum that is required from the wage-earners. As was said in the discussion on Clause 18, it will have a vicious impact on prices and wages. Those of us who have had experience of the incidence of taxation of this sort on a large volume of employment and industry are certain that this taxation will dislocate employment—

The Deputy-Chairman

The hon. Member is now making an argument against the whole tax, the principle of which the Committee has just decided on in Clause 18. The hon. Member's Amendment is to omit the reduced rate of tax, and he must apply his arguments to that, and not to the whole tax.

Mr. Barnes

The Amendment which I am now moving affects the group of commodities in the second column, which will raise £80,000,000 of taxation. The Amendment covers garments and clothing, which the Chancellor himself admitted represent a spending power of £315,000,000. If you read down the second column, which covers articles of earthenware, semi-porcelain for table and kitchen use, sanitary ware, glassware for kitchen use, and so on, I think you will realise, Colonel Clifton Brown, that the Amendment touches the main field of employment which the Purchase Tax will affect. If you take that into consideration, I think you will see that my argument is not unconnected with the Amendment. I was pointing out that the impact on prices and wages, and the interference with these trades generally, will have a rather injurious effect on employment in these trades. The proof of that is to be found in the fact that as a result of the Measure limiting the production of these industries, particularly the textile industry, they have already been seriously affected in the matter of employment, and if a further heavy tax of this sort is imposed upon these goods, it will be bound to affect employment.

The Deputy-Chairman

If the hon. Member is arguing that because his Amendment covers a large field, he may argue the decision to which the Committee came on Clause 18, that is a contention which I cannot admit. I cannot allow him to go back to a Clause which the Committee has already passed.

Mr. Barnes

I am not arguing that point. I am arguing that the Committee is faced with a problem that by taxation imposed in this way we are in fact dislocating employment. Surely that is a material point to recognise, especially in view of the fact that there has been a recent increase in unemployment figures. It is bound to have repercussions on Government policy, and whereas the country may be prepared to see dislocation in employment if it arises out of direct war circumstances, public opinion will be by no means so generous in its attitude to the Government if unemployment is increased as a result of such taxation, especially occurring at a time when the Government are not absorbing displaced labour in munition production.

I wish to deal now with Government contracts and expenditure as a result of rising prices. This tax arises from the fact that the expenditure of the Government is reaching nearly one-half of the income of the nation. That means that the Government, in spending this money—

The Deputy-Chairman

I am afraid I must interrupt the hon. Member again. The Amendment is quite limited in character, namely, to omit the second column. We cannot therefore go into the whole financial policy of the Government. It is merely a question of whether this column should be omitted.

Mr. Barnes

In view of your generosity on the previous point that I raised, I do not propose to go further on this question of Government contracts, although I think it is a very material point. May I turn now to the direct effect of the tax in the second column on specific terms of clothing? The range of goods that I intend to quote are the cheaper type of goods. I do not wish to exaggerate my case, and therefore I am not choosing the higher-price range of articles. In the case of ladies' shoes the pre-war price was 6s. 9d—and no one would argue that 6s. 9d. for a pair of shoes represents an extravagance. The price has already risen to 9s., and this tax, as it falls in the second column of the Schedule, will impose an additional burden of one-sixth on the 9s., which brings the increase in price to 55 per cent. In the case of gentlemen's shoes the pre-war price was 12s. 6d. and is now 16s. 3d.—these are wholesale prices. The Purchase Tax in the second column will add 2s. 6½d., making a total increase in price of 52 per cent. Pre-war serge suits were selling at £2 7s. 6d. and are now selling wholesale at £3. With the tax at one-sixth, it will bring the price increase to 47 per cent. A cheap raincoat which was 14s. pre-war is now selling at £1s 1s. wholesale; the tax in this column will add 3s. 6d., bringing the total increase in price to 69 per cent. A galvanized bucket usually priced at 10d. is now 1s. 4½d., and the tax will be 2¾d., making the increase in price 92 per cent.

Let us see the effect of the second column on the average weekly budget of £4 a week. The average amount which a family of that kind allocated for clothing was 9s. 5d. a week. That amount has already increased to 13s. 1d., and the tax will bring it to 14s. 10d. A family of that kind before the war usually allocated £1 7s. 10d. a week for the general range of articles covered by the second column. It has already gone up to 1s. 16s. 11d., and the Purchase Tax will bring this expenditure to £2 3s. 9d. With regard to the retailer, he will have to carry this increased taxation into his charges. The figures I have given represent the bare addition of the tax. Every retailer, however, will have to find the capital for his business and will have to pay interest charges to his banker, and they will have to find their way ultimately to the prices of his goods.

My final point is with regard to the impact of this tax on prices generally and the larger issue of inflation. At a time when the Chancellor is concerned about whether prices move in the direction of inflation, it is a fatal mistake to impose on a vast range of items like those in the second column an addition of one-sixth to their cost. There is a gap between expenditure and revenue from taxation, and the Chancellor is doing a risky thing in giving such an impulse to a rise in prices over a vast field of working-class commodities. My Amendment covers all the domestic articles in the second column. There are other Amendments on the Paper which deal with specific things, and it is a selfish thing for many Indus- tries to seek relief from this tax because of its inconvenience to themselves and for hon. Members to overlook the problem of the great mass of housewives whom the tax vitally affects. This is essentially a housewife's problem. The items in the second column are the things the housewife has to consider in the daily expenditure of the weekly wage at her disposal. It is on the housewife that the irritations of food rationing and shortage of supplies fall with excessive severity, and I still claim that the Chancellor could have got the money required without adding to her burdens.

I do not often get the opportunity of listening to broadcast speeches by Ministers, but some time ago I heard the Minister of Labour addressing the housewives of this country over the wireless. His speech was one of the most moving recognitions of the services of the average housewife that I have ever heard broadcast. He said that housewives, and mothers generally, had stood up to the anxieties of the present time in a most remarkable way. I do not want to descend to sentiment or emotion in a debate of this kind, but I think every hon. Member will recognise that the sturdiness of the women of this country has played an important part in the determined, grim stand which the mass of the people are making. Without any emotion, but on the cold hard facts of the case, I say that this tax is a very poor reward to our women. I should like to make it clear that we intend to press this Amendment to a Division. We think that it goes to the heart of the issue we are debating, and I trust that we shall get such support in the Division Lobby as will indicate to the Chancellor that while we are prepared to assist him to get the requisite money we are not prepared to assist him in obtaining it in this way.

9.23 p.m.

Mr. R. C. Morrison

My hon. Friend has covered the ground so completely and so convincingly that I propose to add only a word or two in supporting this Amendment. The thing that, to use a common expression, "gets me beaten," is that we seem to be following no fixed policy in imposing this particular taxation. For the first few months of the war the policy of the Government was to keep prices down. That was expressed in the Price of Goods Act, which was in- tended to keep prices down, and also in the subsidy which the right hon. Gentleman's predecessor announced was being given to foodstuffs. We spend £53,000,000 a year in order to prevent the price of food rising. This new tax is a direct contradiction of that policy. I cannot see the consistency in subsidising foodstuffs by more than £50,000,000 a year in order to keep down prices and at the same time putting taxes to the amount of £110,000,000 a year upon food and clothing and the necessaries of life.

Hon. Members

Not food.

9.25 p.m.

Mr. Woods

The Chancellor of the Exchequer appears to be a little inconsistent with the Committee. We did not push the last Question to a Division because we might have put ourselves in the position of doing away with the tax altogether. That is not our attitude in the least. I think the Chancellor and the Committee understand that that is not our intention at all. We are satisfied that there is a vast area of consumption which is wasteful and extravagant in normal times and which amounts in war-time to crime. The Chancellor, in devising this second column, has said, as it were: "Let us see what is necessary, the purchase of which is inescapable in the average home, and we will put it into column 2." He has not succeeded in doing so. We shall, at a later stage, move that certain articles in the first column be transferred to column 2.

If we are defeated on this Amendment, and column 2 survives, the Chancellor will probably say that, by passing the Amendment, we should have been ruining the beautiful little scheme upon which he has been so much complimented. The scheme brought forward by his predecessor was a monotonous sort of thing. It had only one grade. We are so used to first, second and third classes that it seems only British practice to include most of the things in the second and third classes so that they can get through at half price. It must not be implied from the Amendment that we want to get back that one-grade railway. As I see it, if it is once conceded that there is justification for two grades there is no reason for not increasing, and having a whole range of taxation rates until you reach the point of practical extermination of the sales of imported commodities which consume foreign currency, and so forth.

It is not because we are enamoured of monotony, but because we feel that it is a bad principle to make people pay more than is necessary, that we support the Amendment. Any tax upon things that are vitally necessary for life is a tax upon life. I do not sec how anybody can get away from that conclusion. Things that can be dispensed with, can be taxed, and so can the things that are within the purchasing capacity of certain privileged classes only. This general principle is widely accepted, whether we realise it or not, by the people, in a vague and instinctive way. If that organisation now known as "Cooper's snoopers" go round after Budget time, they will find, in regard to the increased duties on tobacco, tea and sugar, the usual comment that if you do not want to pay the duties, you can do without the goods. In the present case we have a list of commodities which include things without which we could not continue to exist and from which there is no escape. I would point out that the old age pensioners have to have clothing. They must have some bedding, pots and pans.

Now let me get back to the argument that was used with regard to the slippery slope of exemptions. We did not have a reply on the previous discussion to the question, What is the ground for justifying the exemption of agricultural implements when the implements of every household will be taxed unless this Amendment is carried? If it is a sound principle to give exemption from taxation to the machinery which produces potatoes, then it follows that the pan in which those potatoes are cooked and which makes them available for personal use should also be exempted. I cannot see that there is any logic in taxing them. The Financial Secretary obviously has not an answer to it; he appears to have gone to look for one. I shall be interested if he can find an answer to that question. In his previous argument he said he wanted to be logical and consistent. We maintain that articles which are necessary for life should not be taxed.

Now let us take some of the consequences which will follow from this tax. I do not know to what extent I shall be in Order, so I shall feel my way gingerly. The bulk of the revenue from this tax will come from the items in this Schedule. As every dealer knows, column 2 covers those commodities which are known in trade as bread and butter commodities. They are the commodities which the average shopkeeper buys consistently month by month and year by year, because he knows that they are things which will be needed in every home throughout the length and breadth of the country and he is perfectly safe in purchasing them. These commodities represent pretty well the most stable interests in industry and the most consistent employers of labour, because they are so closely related to life and there is little speculation, about them. The interference to these commodities by the added taxation means that there will be a direct consequence in employment, and that while the Government are not in a position, even at the present time, to absorb or to reabsorb into industry those already thrown out by the dislocations caused by the war, I think that before there is any dislocation of industry as a direct consequence of the imposition of this tax upon these vital commodities the Government should ensure that the displaced labour will be re-absorbed and that the harden on the country will not be increased by additional taxation.

The point has been raised—and I do not want to stress it further, but I think that it is a matter that we should keep in mind—that if a charge of inconsistency is made, then the main cause is the Government's policy. The Government's policy has become a joke.

The Deputy-Chairman

On an Amendment to a Clause in the Finance Bill the hon. Member is going rather far when he discusses Government policy.

Mr. Woods

I was calling attention to the response that I received from the Front Bench opposite. You were looking elsewhere, Colonel Clifton Brown, and did not appreciate it. The point I was making was this: The Government have recognised the vital necessity of keeping down the cost of living and making it as easy as possible in war-time to go on living. Foods vital to life are being subsidised to the extent of over £50,000,000, but clothing, which is equally necessary to life, is to carry the burden which compensates for vital foodstuffs. Wiry should any Government set up elaborate and complicated machinery, on the one hand, to subsidise foodstuffs, and, on the other hand, set up elaborate machinery for the registration of all traders, and then finish up within a few millions of pounds of where they started? There is a sound and logical argument why, in the interests of national economy, in the interests of the will of the people to support the Government to secure victory, in the interests of employment, and in the interests of common decency, this Amendment should be supported.

9.36 p.m.

Sir K. Wood

I think it would be advisable for me to say a. few words now by way of reply. I know that hon. Members opposite want to go to a Division. I am rather disappointed at their attitude. I know their feelings in regard to this tax, but the differentiation in the tax has been made in response to a feeling which has actuated a good many of their colleagues opposite. My hon. Friends opposite will remember that when the original Purchase Tax Bill was brought in, it provided for a simple tax, making no differentiation of any kind. Representations were made to me that a good many difficulties, and perhaps injustices were involved and it was in response to that suggestion that the differentiation was made. It is a mistake to say that T described the first part of the Schedule as being confined simply to luxury goods. What I said was that goods subject to the full rate were either luxury goods or those which, in the hard circumstances of the war, we could do without, or of which we could postpone replacement.

As to the second column of the Schedule, I have endeavoured, I hope with some success, to place there goods which cannot absolutely comply with that description, but upon which some contribution should be made towards the cost of the war. I hesitate to differ on this matter from my hon. Friends opposite, but my own view is that the great majority of the people of this country will be willing to make the contribution asked for, in respect of both parts of the Schedule. I have not heard of anybody expressing the view that they would not be prepared, in the circumstances, to make some such contribution. We shall see when this tax goes through. There may be difficulties, there may be a certain measure of hardship, as with every tax, but I think it will be found that the Purchase Tax will be just as willingly paid by that section of the community as Income Tax and Surtax are paid by others. From my own point of view, this Amendment would entirely defeat the object of the proposal. This Amendment, if it were agreed to by the Committee, would cost something like £50,000,000 out of the £110,000,000 which is estimated as the total yield of the tax in a full year. I think my hon. Friend opposite said that in this particular case £88,000,000 would be the rate of the burden of the tax, but obviously that is not so.

Mr. Barnes

I took as much trouble as I could to check it, and I think my figure was correct.

Sir K. Wood

I am not criticising my hon. Friend in that respect. I suppose that only the Treasury are really in a position to give an estimate, and their estimate is fairly accurate and on the conservative side.

Mr. Barnes

The estimate of the Treasury is on the conservative side.

Sir K. Wood

I think, as a rule, when they prepare the figures at the end of the year and the Chancellor of the Exchequer makes his annual speech on the Budget, a tribute is due to the accuracy of the estimates. I do not think that it would be useful to go through all the statements which my hon. Friend has made. I know how he feels about this matter, but I suggest to the Committee as a whole tonight, that I am endeavouring, in this particular respect, to meet the requests that have been made by hon. Members opposite, and I feel that the people who will have to bear this imposition will just as cheerfully and gladly bear it as other sections of the community. It has to be remembered in connection with the statement of my hon. Friend with regard to the effect on the poorer households of the country, that a great deal has been done by the Government, particularly in the last few months, to mitigate the position in that respect, and therefore I feel to-night that I can confidently ask the Committee to support what I regard as a vitally important part of this tax.

9.43 p.m.

Mr. Naylor

I share, as many Members of the Committee will share, the regret of the Chancellor of the Exchequer that an agreement has not been found possible to enable us to secure the best possible results from this Bill. I note that the right hon. Gentleman said that he hesitated to disagree with the views expressed by my hon. Friends in favour of this Amendment. I will not inquire too closely into the cause of that hesitation. Is it that the right hon. Gentleman is not certain that he is doing the right thing in insisting upon retaining this second column? The Government have already admitted, in part, the principle for which we are contending. The Chancellor has separated the tax into two compartments. In the one case he considers that there will be no hardship at all in imposing the higher rate of tax, and in the other, where they may be included in the reduced tax, he admits that there would be hardship inflicted upon people in the event of their being called upon to pay the maximum amount. He gives us a second column.

I agree with my hon. Friend the Member for Finsbury (Mr. Woods) in expressing regret that the Chancellor of the Exchequer did not propose to separate the different classes of commodities into two or three more columns, carrying it, in fact, to use a general phrase, right up to the fifth column. We might, then, possibly have been able to accommodate ourselves to the application of the tax, if it were so modified. I feel, as so many others must feel, that there is a large mass of people whose view must be expressed in a matter of this kind. Even in this Committee to-night, as on many other occasions when the incidence of taxation has been discussed, we frequently hear hon. Members refer to the fact that as the result of an article being taxed the purchaser will have to pay more. If the tax is placed on food, the reproach goes out, "Your food will cost you more," but the incidence of the taxation does not work out in that way. Where food or any other article is affected men and women with a limited income do not pay more, or buy as much as before. They buy less, because they have not the wherewithal to pay the higher prices for the things they bought before. Therefore, the effect of this tax will mean that working people with fixed incomes and old age pensioners will get fewer of the things on which the tax has been imposed.

I represent a constituency where men and women are living from hand to mouth. It is one of the poorest divisions in London, where markets abound and where they have to be patronised for the reason that from them people can buy for consumption goods of almost every kind at the lowest minium prices. The effect of putting a tax on the goods which they consume and articles which they use means that those people will have to pay at least 25 per cent, more for everything they purchase. They will not be paying more for the same quantity as before; they will be paying more for less than they had before, and that is where injustice comes in and where the incidence of taxation is unfair. If you place a tax on the poor, they are obliged to consume and purchase less, but if you place a tax on the rich, it does not affect them at all. They have the same number of articles or goods, and the same quality, because their income is not limited so far as these purchases are concerned. Those who pay 100 guineas for a fur coat will willingly pay 150 guineas for the same fur coat if this Bill is passed. That is where the Chancellor will get his income, but on account of the diminution of the number of purchases by working people, he will be getting little or no revenue at all. I am sorry to see the Solicitor-General so occupied with con

versation with the Parliamentary Private Secretary to the Chancellor—

Sir Edward Campbell (Bromley)

My wife will not buy a fur coat at that price.

Mr. Naylor

Perhaps the wife of the Parliamentary Private Secretary will compare notes with the Chancellor of the Exchequer and come to a decision as to whether she will pay 150 guineas for a coat or buy a cheaper one at 100 guineas. The hon. Gentleman can take his choice of the two alternatives. I have lost all hope as far as the Chancellor of the Exchequer is concerned. I never knew a Minister of the Crown who could oppose an Amendment of this high principle so mildly and quietly and yet so determinedly. I do him the credit of saying that he does it from a sense of duty, because he believes that what he is doing is right, but he is in for a great disappointment if he thinks it will lead to financial success. Events will prove whether he is right or I am. I shall be quite willing to receive an apology from him 12 months hence if his estimates are wrong, and I shall be willing to tender one if they are right.

Question put, "That the words proposed to be left out, stand part of the Clause."

The Committee divided: Ayes, 124; Noes, 22.

Division No. 66.] AYES. [9.52 p.m.
Albery, Sir Irving Goldie, N. B. M'Connell, Sir J.
Allen, Lt.-Col. Sir W. J. (Armagh) Gower, Sir R. V. Macmillan, H. (Stockton-on-Tees)
Ammon, C. G. Granville, E. L. Maitland, Sir Adam
Anderson, Rt. Hn. Sir J. (Se'h Univ's) Greene, W. P. C. (Worcester) Makins, Brigadier-General Sir Ernesl
Beamish, Rear-Admiral T. P. H. Grenfell, D. R. Margesson, Capt. Rt. Hon. H. D. R.
Blair, Sir R. Grimston, R. V. Mayhew, Lt.-Col. J.
Boles, Lt.-Col. D. C. Gunston, Capt. Sir D. W. Milner, Major J.
Boulton, W. W. Hannah, I. C. Mitcheson, Sir G. G.
Bracken, B. Hannon, Sir P. J. H. Moore-Brabazon, Lt.-Col. J. T. C.
Broadbridge, Sir G. T. Haslam, Henry Morris, J. P. (Salford, N.)
Brooks, H. (Lewisham, W.) Headlam, Lieut.-Col. Sir C. M. Morris-Jones, Sir Henry
Butcher, H. W. Hely-Hutchinson, M. R. Munro, P.
Campbell, Sir E. T. Hill, Dr. A. V. (Cambridge U.) Nail, Sir J.
Cary, R. A. Hogg, Hon. Q. McG. Nield, B. E.
Christie, J. A. Hopkinson, A. Paling, W.
Calman, N. C. D. Horsbrugh, Florence Pethick-Lawrence, Rt. Hon. F. W.
Craven-Ellis, W. Howitt, Dr. A. B. Pickthorn, K. W. M.
Crookshank, Capt. Rt. Hon. H. F. C. Hudson, Capt. A. U. M. (Hack., N.) Price, M. P.
Crowder, J. F. E. Hume, Sir G. H. Procter, Major H. A.
Culverwell, C. T. Jones, Sir G. W. H. (S'k N'w'gt'n) Pym, L. R.
Dalton, H. Jowitt, Rt. Hon. Sir W. A. Radford, E. A.
Davies, Major Sir G. F. (Yeovil) Kerr, H. W. (Oldham) Rankin, Sir R.
Denman, Hon. R. D. King-Hall, Commander W. S. R. Reed, Sir H. S. (Aylesbury)
Doland, G. F. Lamb, Sir J. Q. Reid, W. Allan (Derby)
Ede, J. C. Law, R. K. (Hull, S.W.) Rickards, G. W. (Skipton)
Elliston, Capt. G. S. Lewis, O. Ridley, G.
Etherton, Ralph Lindsay, K. M. Ross Taylor, W. (Woodbridge)
Evans, D. 0. (Cardigan) Little, Dr. J. (Down) Rothschild, J. A. de
Evans, E. (Univ. of Wales) Llewellin, Colonel J. J. Russell, Sir Alexander
Foot, D. M. Lloyd, Major E. G. R. (Renfrew, E.) Samuel. M. R. A.
Frankel, D. Loftus, P. C. Scott, R. D.
Fraser, Captain Sir Ian Lucas, Major Sir J. M. Shaw, Captain W. T. (Forfar)
Fremantle, Sir F. E. Lyle, Sir C. E. Leonard Smiles, Sir W. D
George, Major G. Lloyd (Pembroke) McCallum, Major D Smith, Rt. Hon. H. B. Lees- (K'ly)
Semervell, Rt. Hon. Sir Donald Ward, Lieut.-Col. Sir A. L. (Hull) Womersley, Sir W. J.
Southby, Commander Sir A. R. J. Ward, Irene M. a. (Wallsend) Wood, Rt. Hon. Sir Kingsley
Storey, S. Waterhouse, Captain C. Woolley, W. E.
Strauss, H. G. (Norwich) Wells, Sir Sydney Young, A. S. L. (Partick)
Stuart, Rt. Hon. J. (Moray and Nairn) Weston, W. G. TELLERS FOR THE AYES.—
Thomas, J. P. L. Williams, C. (Torquay) Major Sir James Edmondson
Tinker, J. J. Williams, T. (Don Valley) and Mr. Whiteley.
Wakefield, W. W. Willink, H. U.
Walker-Smith, Sir J. Winterton, Rt. Hon. Earl
NOES.
Adams, D. (Consett) MacLaren, A. Sorensen, R. W.
Chater, D. MacMillan, M. (Western Isles) Stephen, C.
Cluse, W. S. Maxton, J. Stokes, R. R.
Cooks, F. S. Morgan, H. B. W. (Rochdate) Viant, S. P.
Gallacher, W. Morrison, R. C. (Tottenham, N.) Wilson, C. H. (Attercliffe)
Hall, W. G. (Colne Valley) Naylor, T. E. Windsor, W. (Hull, C.)
Harvey, T. E. Sexton, T. M. TELLERS FOR THE NOES.—
Isaacs, G. A. Smith, E. (Stoke) Mr. Barnes and Mr. Woods.

Question, "That the Clause stand part of the Bill," put, and agreed to.

10.0 p.m.

Sir Herbert Williams (Croydon, South)

I beg to move, in page 13, line 43, at the end, to insert: ."(2) Goods shall not be deemed to be chargeable goods if they are sold for the purpose of being used as parts or materials for the repair or renewal of goods which are not chargeable goods. The problem with which this Amendment seeks to deal seems to be clear. Spare parts ought not to be chargeable. T am told by those who have studied the Schedule that there are some doubts about the situation, and for that reason I move the Amendment and hope that the Chancellor will find it possible to accent it.

10.1 p.m.

Captain Crookshank

I am afraid that my right hon. Friend could not accept this Amendment. After all, the point at which the tax has to be paid is really when the goods pass from the wholesale stage to the retail stage, and at that stage it would be quite impossible to identify whether a particular article was being sold for use as parts or materials for the repair or renewal of goods which are not chargeable. To give a very simple illustration, which I think my right hon. Friend has already given, that of children's garments, they are not chargeable, but the trousers or shirts might be repaired at some stage, and the mother might buy some tissue or fabric for the purpose. At the time when the tissue or fabric passes from wholesale to retail, by no stretch of imagination could it be known that a particular bit or a particular yard of that cloth was to be used by this woman for that purpose, and therefore that it should be exempt. I think this illustration shows the practical difficulty of dealing with the problem from the point of view of the ultimate purchaser or user, as differentiated from the moment of time when it passes from wholesale to retail. In any case it is not a question of big things needing repair. Perhaps the hon. Member has not appreciated the change which has now been made in the Schedule as compared with the original Purchase Tax. There a great number of articles were to be taxed where frequently the question of renewal and spare parts might arise. But this Schedule deals more with domestic and household goods, where that situation does not very often arise. On practical grounds, and on reconsideration, I think it will be seen that it is not possible to accept the Amendment.

10.4 p.m.

Sir H. Williams

The right hon. and gallant Gentleman has convinced me that my Amendment as it stands goes too far, but he has not convinced me there is not a case to be made. Perhaps he will look at page 45 of the Bill, where it will be seen that amongst those things which are not chargeable are tramcars, omnibuses and char-a-bancs. There are not so many people who make vehicles of this kind. Is it suggested that I could buy a whole tramcar or a whole omnibus with no tax chargeable, but that if I wanted a new gear at some stage or another it is to be taxable? In many cases the municipalities and companies who run public service vehicles are bound to be involved in very considerable charges in buying for repair of vehicle; spare parts which quite obviously ought to be on the free list. The right hon. and gallant Gentleman has satisfied me that putting a patch on Willie's trousers should not come in my Amendment.

Captain Crookshank

In that case I think it will be covered by Clause 23, Sub-section (2), under which A manufacturer who is not required by the preceding Sub-section to be registered under this Part of this Act shall be registered thereunder if he satisfies the Commissioners in the prescribed manner that he uses chargeable goods in substantial quantities as materials. If it is a question of using large quantities for repairs by a large organisation it will probably come within that Sub-section.

Sir H. Williams

I agree that that may take us to a certain point, but materials as generally interpreted in the courts are not the same thing as manufactured spare parts. All I would ask is that that point should be looked into. I agree that the drafting of my Amendment is not satisfactory, but there is a point of substance in it and I would ask the Chancellor to look into the matter again.

Amendment, by leave, withdrawn.

10.7 p.m.

Sir H. Williams

I beg to move, in page 14, line 12, to leave out from "House," to "by," in line 13.

The purpose of this and the following Amendments in my name is simple. Under this Clause power is taken by the Treasury to issue lists which will enable the people concerned to decide what precise goods come under the general definition contained in the first and second columns of the Schedule. It is obvious that there are a great many items about which there may be doubt, and accordingly from time to time lists may-have to be issued. If the Treasury include in a list an article which many people think should be in column 1 and put it in column 2, or vice versa, and there is an article which most people think should be in column 2 but is put in column 1, the effect is to impose a charge. The House has been careful to make sure when charges are imposed on the subject that we should go through an elaborate procedure. As the Clause stands the Treasury have power to issue lists which may impose a tax which previously did not exist. The only control of this House is that of a Prayer, which is usually taken at 11 o'clock at night, and those who pray have to take elaborate precautions to make sure that there is a quorum present. If such a list were not operative unless the Government moved an affirmative Resolution, it would then be the duty of the Government to see that there was a House, and the protection would be much greater than if the procedure was that laid down in the Clause. The effect of the Amendment is to substitute an affirmative Resolution for a Prayer. This is a matter which has often been argued on other Bills, but this is the first time it has been argued on a Bill which involves taxation, and the House ought to be careful before it surrenders to the Treasury power to impose a tax in circumstances in which the only possibility of protest is by means of a Prayer.

10.9 p.m.

Sir K. Wood

I appreciate the point which my hon. Friend has made. Under Sub-section (2) of Clause 19: the Treasury may from time to time issue lists more particularly defining goods which are to be taken as failing within any class of goods specified in the Seventh Schedule. The procedure suggested is a convenient one. It is convenient to the traders, and I think that on examination most Members will agree that it gives a full safeguard so far as Parliament is concerned. I propose also to see what I can do by way of accepting a further Amendment which appears in the name of my hon. Friend and other Members regarding a period of notice under Clause 20.

A full safeguard has already been incorporated in this Bill because we have laid it down that no alterations can be made without an affirmative Resolution of the House. Where we are merely closely defining the goods which are either in the first or second part of the Schedule, we cannot be expected to set forth, either in this Bill or in any other form, a list which would be subject to an affirmative Resolution. The Treasury are strictly charged by the terms of the Measure to see that the list they issue must particularly define only the goods which are to be taken as falling within any particular class of goods mentioned in the Schedule.

There are two safeguards. It is true that one may object to a particular form of Parliamentary procedure, but I think it is convenient in this respect, that it does ensure matters being brought before Parliament, and, of course, if there were anything obviously wrong Parliament could challenge the position. Secondly, if there were incorporated in a particular list something that was quite obviously outside the definitions I am advised that there would be a remedy in the courts. I think hon. Members will see that it is impossible to make a long list of goods subject to an affirmative Resolution, but I am desirous of meeting my hon. Friend in the matter of giving due notice to trades concerned in changes proposed under the next Clause. In the Amendment to which I have referred my hon. Friend suggests a method by which due notice should be given to interested persons to enable them to make representations. While I do not want to see the period so long as four weeks I will consider what I can put down on the Report stage to meet my hon. Friend on that point. I suggest that if I do that it will amply meet the point he has in mind. Here we secure to Parliament a review of the list, and if there were an outrageous case there would be an opportunity of going to the courts.

10.13 p.m.

Sir H. Williams

I wish to thank the Chancellor of the Exchequer for what I call his "disorderly speech," because while we are considering Clause 19 he made a speech upon Clause 20, on which I have an Amendment to move, and I shall now know what to say. I must agree that the Chancellor has rather convinced me. The main reason for putting down this Amendment was to safeguard the future position. It is always dangerous when in a Finance Bill power is taken to impose a tax without going through the usual procedure, and in certain cases Clause 19 gives the Chancellor power to impose a tax without an affirmative Resolution. I thought that ought to be challenged in order that it may be put on record that this power is being given. This is the second time in our financial history that this power has been obtained. The first instance was in the Safeguarding of Industries Act. New organic chemicals were being produced at the rate of 100 a year, and lists had to be published, and it was obvious that something of this kind had to be done in that case. It is dangerous, and whenever it is desired to be done for a particular reason, the fact ought to be placed on record. Otherwise, a dangerous precedent may be created which, in the long run, we may very much regret. My hon.

Friends and myself put down the Amendment, not in the hope that it would be accepted, but to enter a caveat against the establishment of a dangerous precedent. Having listened to the statement of the Minister, I now beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.