PURCHASE TAX (CHARGES) (UTILITY FUR GARMENTS) (Hansard, 16 March 1945)

§ The Parliamentary Secretary to the Board of Trade (Captain Waterhouse)
I beg to move, That the Purchase Tax (Charges) (No. 1) Order, 1945, dated 14th February, 1945, made by the Treasury under Section 20 of the Finance (No. 2) Act. 1940, a copy of which Order was presented on 46th February, 1945, be approved. I would like the House to consider at the same time the Purchase Tax (Alteration of Rates) (Utility Fur Garments) Order which is also on the Paper. These two small Orders are presented at one and the same time, to do something for those who would like to buy inexpensive fur coats, and to help the, fur trade over a particularly difficult.period. The fur trade, although a small one, is one of considerable value to the general make-up of our industry. Before the war there was a bulk trade, import and export, of some £20,000,000 to £25,000,000, and the fur trade is now faced with a rather peculiar pair of difficulties. On the one hand, fur coats are subject to coupons, and on the other, they are subject to Purchase Tax at the rate of no less than too per cent. It has been represented to us that if we allowed some of the cheaper skins to be made into inexpensive coats it would enable some members of the fur trade to 578 tide over a very difficult period. Therefore, these two Orders are laid before the House. The first reduces the Purchase Tax on certain classes of fur coats from zoo per cent. to 16⅔ per cent. The class of coats so produced are to be marked "utility," but by an existing Order, any goods marked "utility" are altogether free of Purchase Tax. The Treasury are not prepared completely to free fur coats from Purchase Tax, because they feel they should pay 16⅔ per cent.

§ Mr. Shinwell (Seaham)
Why?

§ Captain Waterhouse
That is the view of the Treasury.

§ Mr. Shinwell
Why?

§ Captain Waterhouse
Because the Treasury think that a certain amount of revenue is due from those who will be able to pay for this class of fur coat. Therefore, the second of these Orders amends the existing Order by putting in a provision that certain classes of utility coats, to wit fur coats marked "utility," may be charged at a duty of 16 2/3 per cent. and shall not be duty free.

§ Mr. Shinwell
My right hon. and gallant Friend has explained this matter in his usual lucid fashion, but he has omitted to tell us why the Government have decided to make a precedent, for that is exactly what it is. All utility garments are exempt form Purchase Tax. That is the position. The Government now propose to depart from that principle, a very important one indeed and one that commended itself to hon. Members. No one likes the Purchase Tax. When the utility principle was adopted, hon. Members were gratified to learn that there was no Purchase Tax to be paid. Now we have the proposition to impose a Purchase Tax of 16⅔ per cent. on utility fur garments. We know that the more expensive articles—I do not know what they are called—skunk, mink, or sable—the furs are all familiar to the hon. Members opposite, to their wives and their lady friends—[interruption.] I do not think there is anything objectionable in that observation. Why should hon. Members not have lady friends? The Prime Minister said nothing about it in his speed' yesterday so we might regard it as quite permissible. These expensive fur garments are taxed 100 per cent. That un- 579 doubtedly brings revenue into the Exchequer, and of course the purchasers of these expensive garments, who are not always the wearers of the garments, as we know, have to pay very high prices, and those prices of course they can well afford. Now the Government propose to assist British industry, and—I presume this is part of the new industrial organisation the Government propose to assist—by enabling the people in the fur trade to utilise more inexpensive skins.
I should like to ask my right hon. and gallant Friend what are these-inexpensive skins. I think a little information on this subject would be very useful, not so much for hon. Members, but so that the general public, who may be the purchasers of these inexpensive garments, made of inexpensive skins, should know precisely what is their foundation, or derivation. The public should not be imposed upon particularly as they are to be asked to pay 16⅔ per cent. Purchase Tax. After all, what is this project, a Bill to assist the fur trade? Undoubtedly it will enable those women of the so-called lower classes who can afford it, to buy these less expensive fur garments. But there is another object and that is to provide revenue for the Exchequer. Why is the Chancellor of the Exchequer not here? Why does he leave it to the Parliamentary Secretary? This is almost like a Budget day; it is a Budget proposal. If I had ventured to ask the Chancellor of the Exchequer on an appropriate occasion whether he intended to impose further taxation, he would have reminded me that that would be anticipating his Budget Statement. But now, anticipating the Chancellor's statement, along comes the Parliamentary Secretary, fresh from the Board of Trade and his consultations with the fur trade, and asks us to accept a new principle, namely, the imposition of Purchase Tax on utility garments. It is a very serious proposal.
I must ask my right hon. and gallant Friend to furnish rather more elaborate explanations before expecting us to accept this proposal. Frankly I would venture on a general warning to the public to be very sceptical of the value of these utility fur garments. If my right hon. and gallant Friend can prove to hon. Members that these utility fur garments are really worth while, and it is better to produce them 580 than to heighten the length of the socks of the male sex—I do not know which is more important—he should tell us all about it. I feel that we are being imposed on by this important financial proposal being put forward on a Friday afternoon. It is the submission of a new principle, establishing a precedent which may extend. My right hon. and gallant Friend may come along next Friday afternoon, when not many are present, perhaps, except a few lynx-eyed and vigilant hon. Members, who are careful to safeguard the interests of the community, and he may seek to impose Purchase Tax on some other utility article. Thus in due course we may find ourselves, as a result of a succession of Friday afternoons with the exemption from Purchase Tax on utility articles completely destroyed, and the public mulcted in more indirect taxation. My right hon. and gallant Friend cannot, in his bland, urbane fashion, and with his innocent appearance, come along and seek to impose on hon. Members in this House. I think this important question deserves further explanation.

§ Mr. Mack (Newcastle-under-Lyme)
I was amazed at the versatility of my hon. Friend the Member for Seaham (Mr. Shinwell). I have heard him delight the House on many occasions with viewpoints and criticisms on a variety of subjects, but I scarcely thought he would be participating in this little discussion.

§ Mr. Shinwell
I was asked to do so by the party.

§ Mr. Mack
I understood that that distinction was conferred upon my hon. Friend from some other source, and I am surprised at the alacrity he has shown. I agree with him there ought not to be a distinction made between a utility coat and other utility goods. I understand these coats are to sell at £29 18s. 6d., which will include the 16⅔ per cent. Purchase Tax. I have learned a lot about fur coats in the last year or two, and I have been staggered by the revelations. The ladies of Mayfair do not to-day wear these very expensive fur coats, or if they do, they do not as a rule purchase them in a way which means the payment of Zoo per cent. tax. If they did, they would be paying up to £6,000 for a mink coat. The more expensive furs are mink, chinchillas—which are absolutely prohibitive and are being sold at Miami in Florida 581 at £10,000 each, which I regard as a disgraceful exhibition of luxury—Russian sables and furs of that description. Today a great deal of work—I do not know whether I am right in calling it illicit—is going on underground, in order to produce these garments. Money is being exchanged, usually in £1 notes. It is not unusual to find £I,000 or £2,000 in one pound notes changing hands, because no receipts are required or desired for these garments.
To-day the people who wear these luxury types of fur coats are wearing second-hand ones.

§ Captain Waterhouse
Is the hon. Member referring to these utility fur coats, at prices of £20 or £30, in connection with his statement that thousands of pounds are changing hands?

§ Mr. Mack
No, I was drawing a distinction, first, as to the very expensive coats, and, secondly, directing attention to the fact that the fur trade is not getting a living from thorn, because very few people can buy them. Thirdly, would point out they do not yield an economic profit to the people who manufacture them, owing to the difficulties of labour, which is highly technical and skilled, and other considerations. Now the skins of rats, cats, moles, ferrets and rabbits and other animals are being used, some of which make warm durable garments suitable for people of very limited means. It ought to be stated that the fur merchants —and London has always been one of the greatest centres of the trade in the world —have suffered very severely, in consequence of the fact that their trade has been restricted in all the higher priced garments. Now their only hope of any trade at all is to give to the ordinary working woman, the woman of limited means, a utility garment which has usefulness and a certain amount of appearance, is well made, and will wear fairly well.
If a garment is to be priced at under £30 I would like to know what the Chancellor estimates this tax is likely to yield in a full year. I think the type of coat to which I have just alluded is one that the average working woman would like to buy, because one cannot buy a well -tailored coat of non-utility cloth for under £15, £20 or£25 I quite agree that utility garments are cheaper, but in view of the labour involved, and the difficulty of getting 582 materials, the average woman finds herself hard-up for coupons and money to buy a decent garment to cover herself with a certain amount of respectability. Surely these cheap coats meet that requirement from the working-class woman's point of view. It is rather unkind, to use no stronger words, for the Chancellor to say, "I am going to intrude on this, and break all previous rules, and establish a precedent by taxing these utility garments to the extent of 16⅔ per cent." As my hon. Friend the Member for Sea-ham has said, the Chancellor is not here to defend a position which directly concerns his Department. What indication have we that this kind of thing will not be perpetrated upon us again in the very near future? I understand that these coats can be distributed in large measure, because the rabbit is an animal which reproduces itself very quickly and is relatively inexpensive. Though only certain types can be used for this purpose, it will be possible to manufacture a considerable number of these garments, which are very badly required. They will be eagerly snapped up and be a boon to women who like to have a fairly good-looking type of garment.

Commander Kinģ-Hall (Ormskirk)
One of the great mysteries is certainly the fur coat. I think it would be interesting if the Minister could indicate, broadly, what are the furs which will be used for utility fur garments. For instance, the rabbit and the cat will, presumably, be in the cheaper class. If a list is to be published, I would support the view that the list should really describe what the fur is, so that people may know what they are buying. I rise to support the view of the hon. Member for Seaham (Mr. Shinwell), that we should have a little more information as to what proportion of the fur trade will now be covered by the utility fur garments, so that we may know what we are doing; also, that if and when a description is given of these garments, it should be an accurate account, instead of the furs going under these fancy names, which mean nothing, but deceive the public.

§ Captain Waterhouse
I cannot give a precise answer on the exact proportion of the fur trade which will be utility because I do not know, but I can give a 583 certain amount of information as to the origin of the furs. They are such skins as sheepskins, lambskins, dingoskins, moleskins, coney, and genet, which may or may not be some relation to the electric rabbit, since it certainly is a form of cat. Principally, however, they are of the kind which is commonly known as rabbit, either tame or wild. As the House well knows, the prices for long coats will be between £16 £25. 6d. and £28 18s. 6d. retail. The 16⅔ per cent. tax is on the wholesale price. Therefore, all reference by the hon. Member for Newcastle-under-Lyme (Mr. Mack) to very expensive furs are really irrelevant. My hon. Friend said that he was sceptical about the value of these furs. I do not think he need be. He does not expect to get for £16 12s. 6d., or even for £28 18s. 6d., a fur coat which can be handed down as an heirloom to his great-grand-daughter. But if he chooses his lady friends with the care with which I am sure he does, they will look very well in these furs; and I hope that some of his lady friends may note my words, and ask my hon. Friend about it. There is no new principle in this matter. Taxes have been reduced before —it may be some time ago.

§ Mr. Shinwell
Is this a reduction of tax?

§ Captain Waterhouse
Yes, definitely; it is a reduction from 100 per cent. to 16⅔ per cent.

§ Mr. Shinwell
My right hon. and gallant Friend is quite wrong. I see that he now has the assistance of the Financial Secretary to the Treasury, so he is well fortified. We are dealing with utility articles. It is no use the Financial Secretary shaking his head disapprovingly. This is a utility garment, and he is proposing a tax on utility garments, for, I believe, the first time.

§ Captain Waterhouse
I do not accept that at all. We are dealing with fur coats, though we are going to call them utility fur coats. These fur coats have heretofore borne a tax of 100 per cent. on the wholesale price.

§ Mr. Shinwell
Not utility.

§ Captain Waterhouse
These fur coats made out of sheepskin, lambskin, dingo-skin, genet, rabbit, and all the rest of it, are now, owing to the kindness of my 584 right hon. Friends the Chancellor of the Exchequer and the Financial Secretary, going to bear a tax of only one-sixth that amount. We are very fortunate. That is the complete answer to that point. My hon. Friend stressed the utility question. He will probably remember the history of the utility concessions. In the first place, all clothes were subject to some Purchase Tax, at rates varying from 16i per cent. to 100 per cent. My right hon. Friend the President of the Board of Trade represented to my right hon. Friend the Chancellor of the Exchequer that it would be to the general advantage to have certain garments, which were needed in the homes of the less well-to-do, offered in the shops at as low a price as possible, in order to keep down the cost of living and avoid the dangers of inflation, which we know so well. Therefore, he asked the Chancellor of the Exchequer to forgo his Purchase Tax on some of these garments. Sir Kingsley Wood, who was then Chancellor of the Exchequer, agreed, and that was done. The intention then was to cover garments which cost pence or shillings, and the inclusion of a coat costing something like £30 was never contemplated.

§ Major Procter (Accrington)
Is it not true that there never has been a utility fur coat until now?

§ Captain Waterhouse
That is perfectly true. Now we are making a utility fur-coat. As I was saying, it was desirable to reduce the price of these things, which were needed in the homes of the less well-to-do, as low as possible. Therefore, the Chancellor agreed to abolish altogether the tax on utility garments. But when one says, "Will you consider as a utility garment a thing which costs a good many more, pounds than some of the other utility garments cost pence?" it is not surprising that he should say that he is prepared to make a concession for the benefit of the consumer, and, perhaps most of all, for the benefit of the fur trade, but that he is not prepared to make a concession of more than five-Sixths of the tax.

§ Mr. Shinwell
Is it proposed to control the prices of these utility garments to prevent the retailers or the wholesalers increasing the price because of the Purchase Tax?

§ Captain Waterhouse
I can assure my hon. Friend that all utility garments are specified and controlled as to the manufacturing price, the margin for the wholesalers, and the margin for the re[...]ailers. My right hon. Friend the Financial Secretary reminds me that even in this regard we are not working quite without precedent, for a little time ago he did the same thing with no less important an item of clothing than pearl studs.

§ Mr. Charleton (Leeds, South)
Some time ago, Sir Charles Wilson, who was Member for Central Leeds and was interested in the production of furs from rabbit skins, said that there was not a lady Member in this House at that time who was wearing a fur-coat, however expensive, made of anything but rabbit skin. Does this mean that all rabbit-skin furs will become utility?

§ Captain Waterhouse
Definitely not. These are furs made from certain skins, according to certain specifications, and sold within a certain price range. Quite clearly, the quality of rabbits, like everything else varies. There are rabbits and rabbits, and, if you get a superior rabbit, you may have to pay £28 for it.

§ Mr. Evelyn Walkden (Doncaster)
Can the Parliamentary Secretary tell us what other garments, worn either by women of men, and produced solely in the utility class and known as utility wear, marked with the label, "G.C."—Government Control—are carrying a 16⅔ per cent. tax? My second question is: Has the Minister himself seen the overcoats for men which have been made available in recent months? They are very excellent coats. Would my right hon. and gallant Friend look at this question, and compare the overcoat worn by a man, with a fur coat now to be made available for a woman; and will he tell us why a man should have the concession of having no tax on his utility overcoat while a woman, on her utility fur coat, should pay 16⅔per cent. tax? I think those two points are of some importance.

§ Captain Waterhouse
I think I can answer both these points. The answer to the first is, "None." There are no other utility garments which bear any tax at all. This is the first of the utility garments which will bear a tax, and the reason that it does bear a tax, in dis- 586 tinction to the ordinary man's overcoat, to which my hon. Friend referred, is the fact that this is a much more expensive coat. I do not carry all these prices in my mind, but I think the price of a man's utility overcoat is £8 or £10.

§ Mr. Walkden
The price of a utility overcoat is £5 12s. 6d.

§ Captain Waterhouse
Very well; that is capital. A utility coat is £5 12s. 6d. The prices of these utility fur coats range from £16 to £28. I do not think it is unreasonable that, when you get a coat at that sort of price, the buyer should be asked to make a contribution of some £2 or £3 to the General Exchequer at a time when money is needed as badly for fighting the war as it is to-day.

§ Major Procter
Can my right hon. Friend tell us why they are called "utility" coats when, in fact, they are luxury coats?