§ Third Resolution read a Second time.
§ Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
§ Mr. Osbert Peake (Leeds, North)
I wish to offer a few observations to the House and, in particular, to the Chancellor of the Exchequer, on this Resolution. We, on this side, welcome these exemptions from the operation of the Purchase Tax. Our only complaint about them would be that the Table is not sufficiently extensive, and that there is still a considerable number—I think I might say a large number—of articles which come into the field of necessities, and which are still subject to the operation of the Tax. The Purchase Tax, of course, had two objects when it was imposed. The first was to produce revenue, and in that respect it has been a very useful tax, and has produced, I think, £100,000,000 a year. The second object was to act as a deterrent to spending by the public. It is not among the best of our taxes, because 459 it weighs, undoubtedly, more heavily on the poor, than it does upon the more well-to-do. It is, therefore, desirable in the near future to achieve a substantial reduction, and a wider field of exemption from Purchase Tax.
At the same time, while we should all be agreed, I think, upon that, it is very important that the method by which the Chancellor proceeds, either to reduce the rate of tax or to make exemptions from the field of the tax, should not itself inflict injustice and hardship upon any section of the community. As the House knows, the Purchase Tax is leviedon the first sale of any article, as a rule, at the manufacturing stage, and it therefore follows that the stock in the hands of wholesalers and retailers includes in itself value in money which has been paid by way of Purchase Tax, and there is a danger that wholesale and retail traders may find themselves suffering a substantial loss upon the stocks that they hold, if the rate of Purchase Tax is substantially reduced upon any range of articles, without due notice. Moreover, not only may injustice be inflicted upon retailers and wholesalers, but inconvenience may be inflicted upon the general public, because, as the date of the Budget approaches, wholesalers and retailers may refrain from taking supplies, because of the fear of incurring a heavy loss when the reductions in tax are announced. In that way, the normal and smooth channels of distribution may be disturbed. There may be times, shortly before a Budget, when retail stocks are unduly run down, and there may be heavy purchases made immediately after the announcement of a reduction in Purchase Tax.
It may be said that wholesalers and retailers had an opportunity, when Purchase Tax was first imposed, of making a fortuitous profit, which should be available to meet any losses which may now fall upon them through a reduction in the rate of tax. But that, of course, is not so. As the right hon. Gentleman knows, price control regulations did, in fact, prevent retailers and wholesalers advancing their prices upon stock which they held at the time when the Purchase Tax was imposed, and it would, therefore, be a clear injustice if they were to be involved in heavy losses when the tax is reduced. It is not, as a rule, the sphere of the Opposition to 460 suggest ways and means to meet difficulties. As a rule they are content to pose the difficulty, and leave it to the Government to find, if they can, a remedy.
§ 4.45 p.m.
§ It is perfectly clear, I think, that it would not be possible to introduce a scheme of rebates to retailers and wholesalers to deal with this matter. Administratively, it would be far too complicated, and would involve an enormous amount of accountancy. Nor would it meet the case if long prior notice were to be given of impending reductions in the rate of Purchase Tax. A possible course the Chancellor might consider taking is, instead of maintaining the Purchase Tax at a high level and then suddenly, and without notice, reducing it or abolishing it altogether, he might devise a scheme by which the rate of Purchase Tax declined gradually over a period of, say, six months or a year. In that way the hardship inflicted upon traders would be mitigated, and the smooth channels of distribution would be maintained. This is a difficult subject. This case of hardship does not arise to any substantial extent in respect of the goods named in this Resolution, but it is bound to arise increasingly as the Purchase Tax is reduced over a wider field.
§ I would therefore ask the right hon. Gentleman and his advisers in this matter—I think they are the Board of Customs and Excise—to give careful consideration to what I have said, in order that all sections of the community, not only the retailers and wholesalers themselves, may be protected against heavy losses on their stocks, but also that the great purchasing public may be assured of getting a steady flow of goods. I hope therefore that the Chancellor, although I cannot expect him to give me a detailed answer this evening, will take carefully into consideration the views which I have placed before the House.
§ Lieut.-Colonel Sir Ian Fraser (Lonsdale)
I understand that the Amendment to include wallpaper in the Table is not being called. I am sorry, because British wallpaper is admirable, and its inclusion would give pleasure. In the circumstances I and my friends wish to present to the Chancellor the case why the wall paper industry should meet with special consideration from him. I am a director of a wallpaper company, and therefore 461 have an interest in this matter, which I would like the House to appreciate. That also gives me an opportunity of knowing something about it. [An Hon Member: "Not always."] I think in this case it does. In one of the broadcasts which may or may not have contributed something towards winning the Election, made, I think, by the right hon. Gentleman the First Lord of the Admiralty, he spoke of combines, and flourished the case of the wallpaper combine before the public. It struck me that he of all people might have kept silent about combines. The company I represent is not part of a combine but one of those small active personal British industries which have done so much to make our country rich, and to extend our export and home trade. There are many small companies in this industry competing with each other and with the big group, and no prejudice should exist against the industry on account of what the right hon. Gentleman said.
There seem to me to be two or three principles which should guide this question of taxation. One is the amount of money that will be obtained by taxing a particular commodity. By a coincidence the Purchase Tax was put on wall paper just about the time when wallpaper ceased to be manufactured. Wallpaper, together with carpets and certain other commodities, was completely put out of business by the war because it was not essential to the winning of the war. Because the machinery of the industry is not capable of being adapted to the manufacture of any other article, the makers had to embark on entirely new and strange methods of manufacture. They all did their best to help carry out war contracts and to make things strange to them. They did very well in their contribution to the war effort.
How much are they handicapped by comparison with other industries, which even when they went into war production, were making goods which they were accustomed to make, and retained the skill, knowledge and men necessary for them to start up again in peace time. This industry went completely out and had to make a fresh start. They have been helped by the enlightenment of the previous Government, which gave them allocations of paper, patted them on the back, and said, "Get on with the job. We want cheap wallpaper for the people 462 at home, and we want you to get back in your export markets, which were valuable and could be much more valuable in the future." A further point is that wallpaper goes into houses, and the right hon. Gentleman may be interested to know that before the war 95 per cent. of all the houses in this country used wall paper. It is, therefore, a very widespread commodity, and a very popular one. Not only does it go into new houses but it is particularly adaptable in making bright and gay and clean houses that have been damaged, because it covers all the cracks and presents a smooth surface, which no paint or distemper can do. Rich people use paint, which involves a great deal more labour in preparing the surface.
Here is a commodity, now becoming available by the action of the previous Government, now entering on this fresh lease of life and hoping to compete in the world's markets, handicapped for the first time by what is, to this industry, new taxation. Wallpaper has not been taxed because there has been no wallpaper. The Chancellor is in fact putting a new tax on this industry at the time of its rebirth. I suggest that that is grossly unfair on grounds of equity. The rival of wallpaper is, of course, distemper paint, upon which there is no tax, nor was it prevented during the war years from continuing its good and valuable work. If the question of equity between one industry and another is taken into account, there is, it seems to me, a very strong case for this particular commodity about which I am speaking. The whole industry has got together and has been to see the previous Government about supplies of paper. The manufacturers, the distributors and the two trade unions concerned are equally in it, and today I speak for all them in asking the Chancellor to take into account what I believe are very powerful arguments why this particular commodity should be freed from this tax, which is to the industry a new tax.
§ Mr. Renton (Huntingdon)
I have a short and simple point to put. I make it entirely from the point of view of the consumer. We are sometimes inclined to forget that there are several million people in this country who have no gas or electricity in their houses, and are entirely dependent on the paraffin lamp to lighten their darkness. At the present time there is Purchase Tax still on lamp glasses, the 463 ordinary glass with a bulge in it, which is used with paraffin lamps. The hundreds of thousands of people, particularly in rural areas and in bombed out places, are finding that having to buy these lamp glasses is a considerable item in their family budget, having, as those of us who use these lamp glasses know, to replace them rather frequently.
I regret, for several reasons, the omission of lamp glasses from the Table appended to this Resolution. First, I have been in correspondence with the Financial Secretary to the Treasury on the subject, and have received what I thought was rather a favourable reply, to the effect that the matter was being considered. I was surprised to see this omission from this Table, all the more so because it is quite clear, reading between the lines, that the purpose is to assist, in an ancillary way, the housing programme. All the other items mentioned are those which people will need when they start to fit out new houses which are to be built, or houses which have rather fallen out of supply during the war years. The fact that in many cases new houses are to be fitted with gas or electricity is no answer to the simple point I am making, for the reason that in many rural areas houses of a permanent nature will be built, we hope, without waiting for electricity lines to be brought to the particular spot where the houses are to be built. We shall, therefore, still have new houses in which paraffin lamps will be used. For those reasons I hope that the Chancellor will see his way to include lamp glasses before any finality is reached in regard to this Resolution.
§ Mr. House (St. Pancras, North)
I wish to support the case put forward by the hon. and gallant Member for Lonsdale (Sir I. Fraser) in regard to wallpaper. This is a commodity which will enter into poor homes. The Board of Trade can control the price and type of wallpaper, so if the Purchase Tax is taken off it will be a constructive move towards helping working-class homes. There must be millions of working-class people who take a pride in their home to the extent of doing their own redecorating. If wallpaper is cheap it will help those people, and give them an opportunity of brightening their homes. The object in removing the Purchase Tax from the commodities mentioned in the Table is to help 464 in cheapening housing essentials. There are some hundreds of thousands of working-class homes which are badly in need of improvement and brightening. It is only fair that opportunity should be given to those people, either by direct purchase themselves, where that is the practice, or with the assistance of the landlords, to carry out this work, or have it carried out by the landlord.
The hon. and gallant Member for Lonsdale has pointed out the significant fact that distemper paint does not carry Purchase Tax. On the other hand, wall paper does, and I suggest that there is a degree of inequality there that should be removed. It is also significant that the wallpaper industry has been practically closed down since October, 1941, which means the same as saying that the Chancellor has not been deriving any financial benefit from the continuance of that tax. Therefore, on financial grounds, the removal of this tax can very well be afforded and on grounds of equity that action ought to be taken. In the interests of raising the standard of brightness in the homes of the common people, I submit that this is a proposal which merits the favourable attention of the Chancellor, and I hope he will give it effective consideration.
§ 5.0 p.m.
§ Mr. I. J. Pitman (Bath)
I rise to request the inclusion of office machinery in this Table. Office machinery is, undoubtedly, an important factor in efficiency. I was Director of Organisation and Methods at the Treasury, and I am glad to say that under the Chancellor the Treasury has office machinery experts who are real leaders in this particular field. I would suggest that if the Chancellor wishes to know the degree to which office machinery, and what might be called efficiency systems and intelligence applied to the office, can contribute to the welfare of the common man, he only has to ask his own Department. Customs and Excise also possess the finest battery of office machines in existence anywhere. The other day there was published a report about the extremely efficient way in which the Civil Service was going to solve problems set them by the Royal Commission on population. If the Chancellor looks into that he will see the way in which literally years of man hours can be saved by a judicious use of office machinery. 465 It seems to me that the distinction between productive machinery which is tax free, and office machinery which is subject to a purchase tax of 33⅓ per cent., is most difficult to justify. It may be that nowadays so many firms pay E.P.T. that, in point of fact, it does not matter to them whether they pay more for machines or forms than the real market price, but, as the hon. Member for South Cardiff (Mr. Callaghan) pointed out in a very able speech the other day, the one thing which the Chancellor does not wish to do is to encourage what might be called a "trigger-happy" attitude about E.P.T., but rather the reverse. I think he will agree that, on the whole, firms have played the game extraordinarily well in maintaining their standards of price. Let us also not forget that there are a lot of coming-up firms not earning big profits which are thinking and acting in terms of true price rather than of the price after taking E.P.T. into consideration, deterred by this extra 33⅓ per cent. being clapped on to an expensive item. If the Chancellor is making the point that we are seeking to avoid inflation, I think there is an answer to that because at the Board of Trade there is the Directorate of Office Machinery which allots the very great under-availability of machines to those who can genuinely show the biggest saving from their use. The Chancellor, therefore, need have no fears that by extending the availability of price of machines he will be increasing the quantity used. All he would be doing would be to make available the machines to the small as well as to the big firms according to their real needs.
At present in the Finance Act there is a differentiation between industrial use and office use. In practice this has led to some curious anomalies. If a man picks up a sheet of emery paper it is free of Purchase Tax, but if he picks up a sheet of carbon paper he has to pay tax. Time clocks seem to come into all sorts of anomalies. If you use them in the factory they are free of tax but if you remove them into the office and use them you have topay tax. Steel tables with special fitments for the proper sorting of papers are free of tax in one form, but if you use them in the drawing office you have to pay tax. A production control device like the Colourdex system is regarded as a production tool, although in point of fact it never leaves the office. 466 Similarly, an ordinary production system of the Cardex kind in the office is treated like a lathe or any other production machinery. Time cards, although they originate in the factory—in fact all forms, whether they originate in the factory or in the office—are subject to tax. It seems to me that there is a mass of anomalies as well as a taxation on efficiency.
For those four reasons I think there is a good case for exempting from taxation of this kind the tools of the trade of the office as much the tools of the trade of the factory. It may be that the Chancellor can assure us that he will take it up at a later stage, but I would earnestly ask him to give the House an assurance that he will, either now or later, include some fresh categorisation for exempt items. I do not think that the categorisation at present in use is satisfactory. I do not think it would be difficult to get a new one. I suggest that we could get a ruling by the Directorate of Office of Machines at the Board of Trade which would be quite satisfactory. I admit that some people might want to sit on an office chair in their own homes, but nobody wants an enormous punched card tabulating machine in their bedroom. I think this problem is capable of being solved in a realistic way, and I hope the Chancellor will do so.
§ Sir Patrick Hannon (Birmingham, Moseley)
I endorse the plea which has been made by my hon. Friend on behalf of office equipment. I hope the Chancellor will take it to heart, as indeed he takes to heart all suggestions which have been made in this House. I wish to call the Chancellor's attention particularly to the grave effect of Purchase Tax on the sale of motor cars in this country—the car which the Chancellor wants to give to everybody in the country in the new era. The Chancellor knows more than anybody how much the export trade, which it is his positive purpose to develop and extend, depends on the ability to purchase in this country. Therefore, the cost of production in this country should be reduced as much as possible. Before the war, motor manufacturers in this country produced decent respectable cars, in which anybody would like to travel, for a cost of between £350 and £500. With the increasing cost of labour and of materials, and with the controls which the Chancellor and his colleagues are placing on production in 467 this country, such a car would cost £800. If you add to that Purchase Tax, what chance has the manufacturer to assist in the export trade? I know the Chancellor has the best of intentions, and no doubt he wishes to do the best he can in the days to come, but I would suggest that he should consider the extent to which he can modify the Purchase Tax which is now a burden on the producer of cars in the home market, and which consequently affects the export trade.
§ Sir W. Wakefield
I ask the Chancellor of the Exchequer to give sympathetic consideration to the remission of the Purchase Tax on London taxicabs. I hope that when I have put the case he will feel that there are good reasons for removing this tax. This Purchase Tax was imposed, as the Chancellor knows, and if I may be permitted to remind the House, by the Finance Act (No. 2), 1940, and it is one-thirdof the manufacturers' price of the vehicle. Taxicabs are chargeable with the tax in exactly the same way as private motor cars, but exemption is given in this Act to omnibuses and other classes of public service vehicles, and to commercial goods vehicles as well.
I submit to the Chancellor that the London taxicab is a very special class of road vehicle, and that it is easily distinguishable from any other vehicle, as I am sure the Chancellor will agree, having regard to the times which he has ridden in it. We all know that if a London taxicab strays into the country it is well recognised. No doubt, the same applies when one strays into Palace Yard. It is not easy for any other car to be mistaken for a London taxicab. The reason is that London taxicabs must comply with the Metropolitan Police conditions of fitness. These conditions produce a vehicle very different in many respects from the ordinary private motor car. I make this point because when this remission of tax was requested earlier this year, the right hon. Gentleman the former Chancellor of the Exchequer, in refusing to give this remission of tax, said that cars plying for hire are very often indistinguishable from cars in private use. He went on to say:Accordingly I could not exempt such cars as a class, nor could I contemplate special exemption from Purchase Tax of any limited class of special design, such as London taxicabs, which it might perhaps be possible to distinguish, while leaving the others subject 468 to tax."—[OFFICIAL REPORT, 12th April, 1945; Vol. 409, c. 1998.]But London taxicabs are subject to very strict regulations and the London cab owner cannot, as many provincial taxicab owners can, buy a second-class private car or limousine, license it and use it as a taxicab. It would not satisfy the strict conditions of the Metropolitan Police. Only new and specially-designed vehicles can be added to the existing number of London taxicabs. The demand for these vehicles is small, and consequently manufacturers' prices are high. The reasons are twofold. First, as we all know, because numbers are small, production cannot be great, and it is great production which tends to reduce cost. The second reason is that police conditions require a vehicle which would cost more to build than an ordinary private car, even though the builders had an order for an equal number of vehicles. Those points are worthy of consideration.
§ 5.15 p.m.
§ Before the war, the price of a London taxicab was about £400. I understand that it has now increased, without Purchase Tax, to something like £750. To put Purchase Tax upon a vehicle of that type brings it to about £1,000, which is a high figure for a small man to have to pay. Many ex-Servicemen may come back wanting to run their own taxicabs, and we ought to give every encouragement to the small man to do so, rather than to big organisations. For that reason the Chancellor of the Exchequer ought to consider favourably remitting this Tax. The amount of money obtained from the Tax is very small, but the disadvantages of obsolete taxicabs, the effect in raising the fares, etc., far outweigh the small amount of money which the Chancellor gets from continuing this tax. We want new designs. We want our London taxicabs to be the best in the world, but if the Purchase Tax is maintained upon them it will hinder that objective from being achieved and will be an obstacle to the small man owning his own cab. I suggest that it is not in the general public interest that this tax should be continued. I hope that the Chancellor will consider with sympathy what I have said and, when the proper time comes, remit this Tax, for the general public benefit.
§ Major Boyd-Carpenter (Kingston-on-Thames)
I rise to support the plea which 469 has been made from both sides of the House with respect to wallpaper. If one looks at the list of articles to which the Chancellor is ready to apply this most welcome concession, they all appear to support the rehousing problem, of which we hear so much and see so little. Wall paper would seem to fall within that category. The dialectical skill of the Chancellor is well known, and I shall be interested to see whether he is able to establish any differentiation in principle between wallpaper and the articles to which he is prepared to extend the concession. They are all actually required for the rehousing programme of which we hear so much and see so little.
An hon. Member has already mentioned distemper paint, which is free of Purchase Tax. Generally speaking, this paint is used in what one might describe as the luxury house, but wallpaper is more often used in the houses of the poor. It would be a trifle strange if in this first Socialist Budget hon. Members were not to support a proposal which was designed to soak the poor [Interruption]. I hope the hon. Member opposite will consequently support out appeal. It is in the light of that consideration that I would ask the Chancellor of the Exchequer to consider this matter. Wallpaper is a commodity which, if the housing programme develops, will require to be very freely used. In his academic days the Chancellor was very fond of referring to first principles. The first principle of the Purchase Tax is to limit and discourage consumption. It will be interesting to hear whether the right hon. Gentleman desires to discourage consumption of the articles required for rehousing. If it were so, it would cast an illuminating, if somewhat sombre, light upon the prospects of our people getting the houses which they so desperately need.
Lieut.-Commander Gurney Braith-waite: When the Chancellor last week announced this range of concessions to the Purchase Tax payer, I confess that I fell under his rhetorical spell, and I did not forbear to cheer, but there has since been time for reflection—sober reflection. After somewhat uneasy nights, considering the proposals made by the right hon. Gentleman, I have come to the conclusion that, not for the first time in my life or in the lives of other hon. Members, we have been witnesses of a performance 470 such as used to delight and mystify us in our early days, by the late Mr. J. N. Maskelyne, who was an expert in sleight of hand and illusion. The Chancellor will find himself portrayed with unerring accuracy in "David Copperfield," in the illustrations by Phiz. I do not know whether the right hon. Gentleman remembers when the hero of that book, young David Copperfield, was on, his way to school, and stopped at a country inn where his dinner had been ordered for him. The waiter, after placing before him mutton chops and a glass of beer, whisked them away from under the boy's nose, on the ground that they were injurious to the young, but perfectly suitable for consumption by the waiter himself. The Purchase Tax Resolution comes within the same category.
Yesterday, the right hon. and gallant Member for West Bristol (Colonel Stanley) described the business which we have before us now as not so much a Budget as a prophecy. The Chancellor of the Exchequer, he said, had laid before us certain hopeful eventualities in April next. This Resolution covers a concession, however, which we are going to receive here and now. The right hon. Gentleman made a great deal of the fact that Purchase Tax was now to be removed from certain articles essentially connected with the housing problem. I have had the opportunity of going through the Schedule, and I am able to congratulate the Chancellor of the Exchequer on the generosity which we always associate with Socialism, since he has swept away the whole of the Purchase Tax upon the unobtainable. It is a gesture. I do not know whether it is part of the tonic which is supposed to be applied to our national spirit, but there it is. The housewives of Great Britain will be able to place their hands on their hearts after they have read the report of this Debate tomorrow, and say unanimously to the right hon. Gentleman, "Thank you for nothing." Much more might have been done in removing the Purchase Tax upon essentials. Various suggestions have been put forward. My hon. and gallant Friend the Member for Lonsdale (Sir I. Fraser) and others have stressed the importance of wallpaper. I expected some hon. Gentleman to follow with a plea for linoleum, which is a very similar commodity. 471 My hon. Friend the Member for Bath (Mr. Pitman) pleaded for office machinery and my hon. Friend the Member for St. Marylebone (Sir W. Wakefield) put in a plea for the removal of Purchase Tax on London taxicabs, another commodity almost unobtainable. At any rate, here is a fairly wide range of suggestions. I know what the right hon. Gentleman will say in reply. I can anticipate the reply with reasonable accuracy. It will be that, worthy as all these suggestions are, and though without exception they have struck a sympathetic chord in the heart of the right hon. Gentleman—whose intentions are strictly honourable—yet the financial situation prevents him from making any further concessions.
I think I shall be in Order if I suggest a method by which much more could have been done in the way of easing our burdens, if the Government had concentrated not so much upon the incomings as upon the outgoings. Reduction of expenditure should have been tackled with the strenuousness with which some of these concessions are being made. The right hon. Gentleman will be familiar with demobilisation, yet we are holding unnecessarily in the Services many young men and women. That is one of the things which might be tackled between now and next April. Let it be done. When the right hon. Gentleman comes before us next April he must not have this Maskelyne and Devant attitude towards our burdens. The vanishing lady performance must vanish. Nobody can very well oppose this Resolution, because it contains nothing, and it is difficult to divide against nothing. I hope that we shall leave the world of illusion next April and that the Chancellor will then give us the substance instead of the shadow.
§ Mr. Woods (Mossley)
This Debate ought to be subject to Entertainments Duty. Those who opposed the Purchase Tax on the necessaries of life had very little support from hon. Gentlemen opposite, who have spoken in this Debate appealing for various concessions. The last hon. and gallant Member said, "Thank you for nothing." It is obvious that if things have a Purchase Tax on them, it is not so easy for manufacturers to produce them. In spite of what has been said, these articles are necessary for housing, and the removal of the Purchase 472 Tax will stimulate production of them and a flow of them in the country. It will also make things cheaper as well as more speedily available. I do not know that the average housewife is particularly concerned about wallpaper and motor cars, but I suggest that my right hon. Friend might consider removing the Purchase Tax from austerity crockery, which, merely because it is not called "utility," still carries the Purchase Tax. It is no use providing hot water in houses, unless there are vessels in which to carry it. One of the anomalies is that because this crockery is not called "utility" it is subject to tax. There is no justification for continuing this tax because most of the people who have to pay this additional charge on the necessaries of life are those who were subject to the blitz or young people who are coming back from the Forces and who want to get married and furnish their homes. I understand that such an exemption could be covered by an Order, and I hope that the Chancellor will make one.
I cannot conclude without paying my tribute to the Chancellor who, in spite of all that has been said on the opposite benches, did a valuable service to house wives when he was President of the Board of Trade by elaborating that system of controls which put on the market various ranges of utility goods which were liberated from the Purchase Tax. I hope that he will now listen to the pleas that have been made to him to extend the principle of removing the burdens on necessaries of life. In doing so he will have enthusiastic support not only from behind him, but, if one may judge from the tenor of the Debate, from those who confront him on the Opposition benches.
§ 5.30 p.m.
§ Mr. Wilson Harris (Cambridge University)
I want to express the distress with which I listened to the Chancellor say not only that he did not intend to remove the Purchase Tax from cars, but that he had no intention of doing so for many years to come. I do not speak from any kind of interest in the manufacturing industry and I have no solicitude for it. I am sure that it does not require any, and that it can quite well take care of itself. I am, however, deeply impressed with the social value of the cheap car, the realisation of which the Chancellor now proposes to banish 473 for several years. The cheap car before the war was an important social institution. The means of transport, particularly transport from town to country, was brought within the reach of many persons with comparatively small incomes who derived from it benefits of many kinds. I have in mind various classes of my constituents, particularly university lecturers and professors. I imagine that even the Chancellor will have a soft place in his hard heart for that meritorious and ill-remunerated class. There is another meritorious and ill-remunerated class in nurses, district nurses and persons of other types to whom the ownership of a small car makes an immense difference.
Then there is the family value of the car. I live in a beautiful country at a distance from a railway station. With the innate selfishness common to human beings, I would prefer to see that solitude remain a solitude, but when I observe the family parties that used to come in their cheap cars on Saturdays and Sundays, I realise what a contribution the cheap car has made to the happiness and health of large sections of the population. I believe that there will be a great sense of deprivation, which is not industrial or economic, in the prospect of the absence of the cheap car, not for one or two years, but, as the Chancellor in his minatory manner has intimated, for a great many years to come. I do not wish to hold up to my right hon. Friend the example of Adolf Hitler, but it will be remembered that some years before the war we had the spectacle of Herr Hitler introducing the idea of "the people's car" to the German people. The thing was a fraud from start to finish, a characteristic fraud of that perverse personality, but it was an intuition that struck home, as so many did. The response of the German people to the idea of a cheap car which would carry them from their homes to work and to the country was such that it met with general acceptance.
I view with great regret the prospect that for some years to come the motor car will be the rich man's luxury and an appanage of the well-to-do. It would be a national advantage if the small car could be brought within the reach of salary earners and the higher wage earners. In the United States the wage earner expects to have a car to take his family about at the weekends, and that is an advantage of which we are deprived 474 here. Although I am certain that no appeal of mine will move the right hon. Gentleman, I would ask him at least to consider whether he can reduce the term of the Purchase Tax on cars. Could he modify a little the heavy sentence he passed in his Budget speech which banished the most desirable attainment of the return of cheap cars for a number of years to come. If he would tell us that he will keep his mind open until next April, and let the arguments which have been voiced tonight sink into his mind, the distress which weighs so heavily on me will be lightened.
§ Captain Prescott (Darwen)
I wish to associate myself with the observations made by my hon. and gallant Friend the Member for Lonsdale (Sir I. Fraser) who opened the Debate on this Resolution. My hon. and gallant Friend and I had an Amendment on the Paper with regard to wallpaper. It has not been selected, but we still wish to address some observations to the right hon. Gentleman on the matter. While I in no way wish to derogate from the cases that have been put forward by my right hon. Friends for the freeing of articles and things in which they are particularly interested, I submit that the case of wallpaper is peculiar, particular and unique and worthy of the right hon. Gentleman's special consideration. This Debate has ranged over the question of the Purchase Tax on cars, crockery, glass for paraffin lamps, linoleum, office machinery and other matters. I want to refer to some of the observations which the right hon. Gentleman made in his Budget speech when he dealt with the Purchase Tax. He said:The Committee will have observed that all the principal taxation changes which I have mentioned so far will not come into force until next year. But there is one relief which I propose should take effect forthwith, and this lies in the field of the Purchase Tax. I propose to abolish the Purchase Tax completely over a certain range of articles of special importance in connection with the housing programme."—[OFFICIAL REPORT, 23rd October, 1945; Vol. 414, c. 1901.]It is my claim and the claim of my hon. Friends who support me in this matter that wallpaper is of particular importance in the housing programme. I have no financial interest in wallpaper concerns, although if the right hon. Gentleman is familiar with Darwen—nearly all his friends in the General Election were because we increased our majority—or if he were as familiar as his Friends in the 475 Government are, he will know that it is the home of the wallpaper industry. In the bad years of the cotton industry the wallpaper industry kept it going. We in Darwen, therefore, are gravely concerned about this matter. The mills which manufacture wallpaper were closed in 1941 and no wallpaper has been manufactured during the war. War contracts are now beginning to terminate, and the industry has to restart its economic life. It will play a great part in the rehousing programme and it will be grossly unfair and unjust if wallpaper is to be subject to Purchase Tax of 33⅓ per cent. while paint and distemper, the two main alternatives for finishing rooms, are subject to no tax.
The Amendment put down by my hon. and gallant Friend and me was on the Order Paper yesterday or the day before, so that it will have come to the notice of the right hon. Gentleman that we intended to raise the question. No doubt he will have ascertained what revenue would be lost if this concession were granted, and I shall be grateful if he will inform us what the sum is. I hazard a guess that not a very large sum would be lost to the Revenue if it were made. My main claim is that wallpaper which is used in 90 per cent. of the homes of the country, particularly the poorer class homes, is an essential for the new rehousing programme. As the right hon. Gentleman said that the concessions in the Purchase Tax were to help the housing programme, it would be in the interests of that programme that this concession should be made. It would be interesting to know whether the Chancellor has consulted the Minister of Health as to his view. It may well be that the Minister of Health would welcome any assistance he could obtain even in a small matter like this.
The second basis on which we put our plea is that this industry has been severely penalised during the war because it has had its production completely stopped. Our plea is not put on any profit basis, however; it is put on the basis that there will be discrimination against it if this concession is not granted. I am grateful to my hon. and gallant Friend the Member for Kingston-upon-Thames (Major Boyd-Carpenter), who supported our Amendment for drawing attention to the fact that this alone, of all the matters 476 which have been mentioned in this Debate, is vital to the rehousing programme. If the right hon. Gentleman must refuse the concession, I hope he will be able to give good reasons why he deems it in the national interest to do so. Wallpaper is in the homes of the poor. There may be different kinds of wall paper, but we claim this concession in the interest of the rehousing of the ordinary people.
§ Mr. Sidney Shephard (Newark)
I wish to support my hon. Friend's plea, but only partially, because I cannot see his point that all wallpapers should be exempted from Purchase Tax. Some wall papers are expensive and are undoubtedly luxuries, and my hon. Friend has not made a case for their exemption. Most wallpapers sold, however, are for working-class homes, and I suggest to the Chancellor that he should consider, in conjunction with the President of the Board of Trade, whether there cannot be some small utility range of wallpapers at fixed prices which should be exempt from Purchase Tax. If that could be done, most of the points raised will be met.
§ 5.45 p.m.
§ Squadron-Leader Hollis (Devizes)
I merely want to make one simple and largely sanitary plea, and that is for baths. One of my hon. Friends accused the Chancellor of a desire to soak the poor, but here is his chance to soak us all. Almost every household and building appliance is to be exempt from Purchase Tax except the humble bath. Every method of heating water is exempt, very properly, from Purchase Tax, but once the water gets into the bath it has to pay through the nose as much as ever. I need not keep the House long on this point; although the Chancellor may often say that he sympathises with a particular plea, it is clear that he nevertheless has to find a certain amount of money and must therefore harden his heart. But obviously there is no sense whatever from the financial point of view in charging Purchase Tax on a commodity which is to form part of something which is going to be subsidised. I appeal to him to round off his case and make it entirely logical by allowing us to have our baths again.
§ Mr. Dalton
We have had a long and interesting Debate on this Resolution and a number of very persuasive speeches have been made on behalf of a large num 477 ber of different commodities. All those who have pleaded for the Purchase Tax to be taken off that which they would prefer it to be taken off would nevertheless agree, I am sure, that at this stage of our financial history it would be quite impossible to accede to all the requests that have been put before me, and I hope therefore that I may have the support of many hon. Members who have spoken in resisting the claims made by others of their number. Broadly, the position is this: as I sought to explain in my Budget statement, a great inflationary danger is at the moment hanging over us. It is essential that people should not have more money until there are more goods to buy. Every reduction of Purchase Tax is in some degree, large or slight according to its importance, an inflationary operation. Every reduction in the price of articles now taxed releases part of the money that would otherwise have been spent on those articles to run after other goods. That is why I have reached the conclusion that at this moment I must confine the Purchase Tax reliefs to a very narrow range of articles and a very small sum of money, and that was why I concentrated the proposals for relief upon this small but clearly denned group of articles—domestic cooking, space heating, and water heating appliances, together also with refrigerators.
I consulted some of my colleagues on the matter and made it clear that I could only make a limited concession now, and it is the view of the Government as well as my own view that this concession is best concentrated, in the interests of the housing programme and of the community, on this particular group of articles. It is of course perfectly true that many other things go into a house besides a refrigerator and an electric stove, and some of those things are subject to the Tax, I admit. There is a very large range of articles entering into house construction, or rather into the proper equipment of a house when built, and the total of those articles goes far beyond the present possibilities of remission which I can offer to the House.
At the moment I cannot agree to any extension of this list, and indeed I am not quite sure whether I have not perhaps gone a little too far in making this early beginning with Purchase Tax remission. This, however, is an interim Budget, there will be another before long, and between 478 now and next April I will most certainly consider with very great attention at any rate those articles in regard to which it is easiest to make a strong case for the total remission or abatement of the existing rate of tax. I shall be disappointed if, when April comes, I cannot move a little further. I do not want to commit myself in detail, it would be wrong to do so now but I hope it will be possible to move a little further along the road of reducing Purchase Tax over a selected range of articles, and in deciding what that range, if any, shall be, I will naturally consider those which have been proposed for remission by various speakers today. In regard to wallpaper, the hon. and gallant Member for Darwen (Captain Prescott) asked how much we got from it now, and one speaker, advocating the remission of the tax on wallpaper, said he doubted whether we got anything.
§ Mr. Dalton
I think one hon. Member did say that I was getting nothing from it, and it was even said that no wallpaper was being made. But this year we are getting close on a quarter of a million pounds from the Purchase Tax on wallpaper when, admittedly, the rate of production is very low. I hope and believe the wallpaper industry will increase its production very quickly in the course of its reconversion from war to peace work and with the release of workers from munitions and from the Forces.
§ Mr. Dalton
I am answering the question as to what I am getting now, and the answer is that in the financial year 1944–45 we got £225,000. This year we shall certainly get more than that, and next year we shall get more still, assuming the tax remains, because we shall then be swinging back in the direction of full production. This only illustrates how one small article can help to feed the Revenue, and I wish to say quite bluntly that I can give no undertaking to sweep the whole Purchase Tax away. That would be a piece of financial stupidity of which I am sure the House would not wish me to be guilty. If we are to balance our accounts, if we are to meet necessary expenditure, whether in the field of social advancement or in the field of defence, we must keep this tax in such a way as to bring in a very substantial 479 revenue, and that revenue must be obtained from those articles which can not be described as being the necessities of life. That, however, does not exclude the possibility of looking forward a little to a substantial extension of the field of complete remission on the one hand and of reduction on the other. I will consider all the cases that have been put forward with every intention to do as much as I can next April, having regard to the needs of the Revenue and the danger of inflation, which will not have wholly disappeared next April but will still remain.
I was asked about the administration of the tax. Here ofcourse I am dealing with an inheritance; the whole Purchase Tax is inherited from the late Coalition Government, and that is true of the administration as well as of the rate of the tax. My right hon. Friend who used to be Financial Secretary to the Treasury, who put these points, will be aware that now, as when he was at the Treasury, there is provision whereby traders are able to charge tax-inclusive prices on tax-paid stocks. We do not propose to change that, but we will look into it and see whether the present arrangements, which are designed to prevent injustice to traders consequent upon a reduction of the tax, can be improved.
§ Mr. Peake
The point I was trying to make was this. When goods become more plentiful and it is announced that the Purchase Tax is either reduced or abolished over a certain range, the public will expect to buy the articles straight away at the reduced prices. The system which my right hon. Friend has just mentioned will not in fact be able to be operated under those conditions.
§ Mr. Dalton
I am not sure that it will not, but I undertake to look into it. I should have thought that this was a desirable provision in the interests of the traders, and to remove this safeguard would be widely held to be unjust. After all, it will not take very long for stocks held by traders on which tax has been paid to be cleared, it cannot be more than a matter of a month or two, and I should have thought that the present arrangement would have met future requirements. I will however see whether it can be improved in any way. 480 I do not think I should be justified in going into detail on the various cases that have been put, except that I should like to speak about motor cars. I have tried my best to please the motor industry. I sought their views, I longed for unanimity and I got divided opinions. I have to exercise my own judgment upon recommendations which are not unanimous. But on one thing they were unanimous: they said they wanted to know where they were about the Purchase Tax, they would much rather have a definite statement. I have tried to oblige them, and I have told them that so far as cars for home use are concerned it is not possible for me to take off the Purchase Tax yet. Cars which are exported of course pay no Purchase Tax. I was asked to give a definite statement and leave the motor industry in no doubt—
§ Mr. Wilson Harris
Has the right hon. Gentleman paid quite as much attention to the desires and wishes of the community as a whole as he has to those of the motor industry?
§ Mr. Dalton
I thought it best to say, quite frankly, that I do not rate the Purchase Tax on motor cars to be used in this country as at all high in the list for consideration of relief. There are a great many other things I would sooner take the tax off than motor cars. In speaking frankly about it I hope I have met the wishes of the motor industry and others who have made representations to me. It was better that I should say that I do not see my way now, and do not expect to do so for some while to come, to remove the Purchase Tax from motor cars, and I repeat that so far as the Purchase Tax in general is concerned I regard it as being, for the future, a most necessary and I hope a most prolific source of public revenue.
What it has brought in up to now is very little compared with what it may well bring in when we resume our production on a large scale, even if I am able, as I hope I will be, substantially to extend over the period that lies ahead the range of complete exemption and of reduction on the existing rates. I hope I shall be able both to reduce the tax and to get substantially more revenue, but for the moment I hope the Committee will not press me to make any further changes as far as the remaining few months of the present financial year are concerned, since 481 I give an undertaking that I will carefully and hopefully go into the matter between now and next April.
§ 6.0 p.m.
§ Colonel Stanley
While hon. Members on this side are grateful to the right hon. Gentleman for the manner of his reply, we are frankly disappointed at the matter. I quite agree with the right hon. Gentleman that this tax as a whole is one that it is quite essential to maintain, and I sympathise with him in the rebuke which he administered to his hon. Friend the Member for Mossley (Mr. Woods) for a suggestion which the right hon. Gentleman rightly described as great financial imprudence.
§ Colonel Stanley
That was my understanding of what the hon. Member said, and I am sure that when he has read in Hansard the report of the right hon. Gentleman's remarks, he will point out how mistaken that rebuke was.
§ Colonel Stanley
There is, I think, a difference between agreeing that the tax as a whole must remain and agreeing that under no circumstances at this moment can there be any further alteration. We on this side feel that the right hon. Gentleman having agreed to certain alterations, neither the amount of purchasing power which has to be mopped up nor the balancing of this year's Budget can be estimated so precisely that it is possible to say that the addition of one or other commodities, for which good reasons can be advanced, could upset that balance. I can quite see that when it is a question of motor cars, a big point is raised which would be likely to upset the balance. I appreciate the reason why the right hon. Gentleman made a very definite statement that motor cars would not be removed for some time. I realise that with the uncertainty a number of people who might otherwise have bought cars were holding off, and the situation was made extremely 482 difficult. Therefore, I should not press for motor cars to be removed now. All that worried me was the argument advanced by the hon. Member for West Islington (Mr. Montague), an argument to which I hope the right hon. Gentleman will not listen. The hon. Member said that he did not like motor cars, that he thought the increase in the number of motor cars was a bad thing, and for that reason he did not want the tax to be taken off.I am sure the Chancellor will not be influenced by that opinion, even when it comes from an hon. Member who has for so long represented in the House the views of the party opposite upon civil aviation.
But I think these considerations are rather different when we come to the commodities that have been mentioned, wallpaper and possibly utility frocks, or what an hon. Member called austerity frocks. I am today wearing a pair of what I have hitherto called utility socks, and certainly I shall refer to them in future as austerity socks. We on this side feel that a very good case has been made out for wallpaper, which is an essential part of our rebuilding programme, to be included in the list, and we feel there may be other commodities in that category. We do not propose today to take this matter to a Division owing to the fact that the Amendment has not been called. If we were to press the matter to a Division, we would have to divide against the omissions, of which we are all in favour; but I give the right hon. Gentleman notice now that when we come to the Finance Bill we shall move Amendments on which we hope the right hon. Gentleman will prove more yielding than he has been today and which we certainly shall press to their logical conclusion.
§ Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.
§ Fourth Resolution agreed to.