HC Deb 18 June 1941 vol 372 cc741-6

The Seventh Schedule to the Finance (No. 2)Act, 1940 (relating to Purchase Tax) shall be amended by deleting paragraph 2—[Mr. Woods.)

Brought up, and read the First time.

Mr. Woods

I beg to move, "That the Clause be read a Second time."

The discussion on the previous Clause showed that there had been a misunderstanding in the Committee. When the Purchase Tax was being discussed in principle a concession was made that necessaries should be subject to a reduced tax of 16 2–3rds per cent. When it was finally introduced it was found that there was one class of necessaries which remained in the first column of the Schedule and was subject to 33 1–3rd per cent. tax. Paragraph (2) of the Seventh Schedule, which I am moving to delete by this new Clause, includes these necessaries and covers tissues and fabrics (other than jute fabric), whether in the piece, shaped or partly made up, except as specified in the third column. Oil baize, oil cloth, leather cloth. Textile articles of a kind used for domestic purposes, soft furnishings and bedding, and travelling rugs. There are various other items, including all kinds of floor covering. It was rather interesting to hear the misunderstanding that was shown in the discussion on the last proposed new Clause. Blankets figured in the discussion, and the assumption in the minds of those taking part was that blankets were subject to only 16⅔ per cent. They are, in fact, subject to 33⅓ per cent. Replacement, therefore, costs at least one-third as much as it should, and with the rising price of blankets they are outside the means of many people. We had a discussion on the question whether a person with a number of small children can afford to buy ready-made articles, and it was shown that he is compelled to purchase material and make up the small garments necessary for children. Although some sympathy was expressed it was argued that it was cheaper to buy ready-made articles, but subsequent events have proved that to be erroneous. Some of those articles if purchased are free of tax, and others of them carry a tax of 16⅔per cent. but the industrious mother who purchases material in lengths and makes up the clothing has to pay 33⅔ per cent. That is quite inequitable. Twill sheets were mentioned. Had the last proposed new Clause been adopted twill sheets would not have been cut out, because they would have remained in the first column carrying 33⅔per cent. tax.

The number of things which are essential in every home if any standard of decency is to be maintained which are subject to the 33⅔ per cent. tax is remarkable. The cheapest kind of floor covering procurable carries 33⅔ per cent. and bedding of all kinds including the very cheapest. After the experience we have had of this tax and the sufferings of the people in war-time, I suggest that if this Clause cannot be accepted the least the Treasury can do will be to introduce some consistency into the operations of the tax by removing these necessaries from the first column and putting them with the other necessaries of life which carry only 16⅔ per cent. tax. That would be a concession. My Clause is based on the sound principle that all the necessaries of life should be free from this tax, and I cannot understand why one class of commodities vitally necessary for the maintenance of life, let alone a standard of decency, should have to carry a duty of 16⅔ per cent. At the same time a lot of goods which are of no material or moral worth to the community, and which we indulge in merely from habit and tradition, are chargeable at the rate of only 16⅔per cent. Why a bottle of scent should carry no more tax than a bed I cannot understand.

I appeal to the Chancellor and the Financial Secretary to regard my new Clause as a reasonable and logical proposal, and in the last analysis as a human proposal. The constituency which I represent lies in the very heart of London. A number of wards have been blasted out of existence. As I go through the streets of what was a part of dear old London and see row after row of stark ruins I realise that practically all the furnishings of those houses, all the bedding and blankets as well as clothing, have gone. Those people have been asked to carry a far heavier burden than has fallen upon the bulk of us, and they have borne that burden. They have been blasted out of their homes and have lost the very elements of a furnished habitation.

The Deputy-Chairman

I must ask the hon. Member not to anticipate the new Clause in the name of the hon. Member for Stoke (Mr. Ellis Smith).

Mr. Woods

I apologise if I am impinging upon another Clause, but I am putting forward a perfectly sound case for my Clause. These people are without the means of securing rest and sleep. They have to replace beds, and if they can get a blanket, it is of inferior quality and at a high price, and on top of that high price they must pay 33⅓ per cent. tax. I ask that my proposal should not be looked at only from the Treasury point of view. The amount of money involved here is infinitesimal compared with the vast expenditure which is now going on and the opportunities there are for economy.

Captain Crookshank

I do not want to reopen the discussion we had on the last new Clause, which really covered the general field, and shall devote myself purely to what is involved in this Clause. As the hon. Member has pointed out, his Clause would remove from the list not only tissues and fabrics but also various textile articles of domestic use— soft furnishings, bedding, carpets and other floor coverings, and the like. When he says that to remove this range of articles from the scope of the Purchase Tax would mean the sacrifice by the Treasury of only an infinitesimal sum, he is using language which is not quite accurate, because it is estimated that the goods dealt with by this Clause will bring in to the Treasury something like £11,000,000 or £12,000,000 and if clothing were also exempted, it would mean a loss of something like another £20,000,000 making a total of between £31,000,000 and £32,000,000.

Mr. Woods

We are not really asking that those articles which because of their high price could be regarded as luxuries should come out. I was basing my argument on the articles included in the list which are common necessaries of life. That was the whole of my argument.

Captain Crookshank

That may be relevant as a consideration, but I am dealing with the hon. Member's Clause and with the general structure of the Purchase Tax. As was made clear at the time, it was never intended to be a luxury tax but was a tax on the whole range of articles and materials. The effect of this Clause would be a loss of £31,000,000 to £32,000,000 to the Exchequer, and that is exactly what the Chancellor was saying just now he could not ask the Committee to agree to. I think that is really a sufficient answer to the hon. Member's case, in view of the general Debate we have already had, but I would add this in reply to his argument that this concession is all the more necessary because people have had their homes bombed and are faced with difficulties in replacing their goods. I think he must have overlooked the point that since the Purchase Tax was introduced we have passed the War Damage Act, which very much alters the position for anyone who has lost the necessities of life. I am not going into all the arrangements which are open to people who have lost their property as a result of enemy action. In addition to the long-distance compensation which is corning to them, there are also provisions under which they can get immediate assistance from various sources to enable them to replace necessary articles— clothing, bedding, furniture and the rest. That immediate compensation is given to them on the basis of current replacement prices, and takes into account that the Purchase Tax is in the replacement price. To that extent, of course, the situation is different from what it was when we had the main discussions on the general proposals a year ago. I hope therefore, in view of the grave loss of revenue which is involved in this proposal and the fact that the actual point which he brought up has been covered in a quite different direction, that he will not think it necessary to divide the Committee on this occasion.

Sir I. Albery

May I ask my right hon. and gallant Friend one question about a matter on which I am not quite clear? I understood him to say that compensation was based on replacement value. I take it that that does not apply to insurance. If it does, I should really like to know.

Captain Crookshank

I am not talking about general war damage, which would be out of order. There are arrangements by which persons who are bombed out, and who ought to have replacements of necessities at once, can obtain them from the Assistance Board and various organisations. This is another subject from the general insurance. If persons have no coat, trousers or sheets, they have to have them, but they are not given these necessities in kind. They are given cash payments for the purpose, and what the payment is must, of course, be conditioned by the necessities which they require. This deals only with necessities, of course, but that was the point which the hon. Gentleman made.

Mr. Woods

I am not at all satisfied with the argument of the right hon. and gallant Gentleman, which seems to be that, once again, the Government find themselves faced with increases, and have to provide allowances to meet the cost of the increases, and so you go round and round the rugged rocks, which is a very annoying process. One of the few things exempt—and it interests the working class very much—is heavy industrial canvas. It is exempt altogether. In the last analysis, when we get into sackcloth and ashes, we shall be exempt, but not until we do arrive at that stage. I am only asking that there should be an intermediate stage, and that, in the light of experience, the right hon. and gallant Gentleman will look into this matter. It is very difficult to draft an Amendment to segregate things. I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.