PURCHASE TAX (EXEMPTIONS) (UTILITY FURNITURE) (Hansard, 15 July 1946)

§ Mr. Osbert Peake (Leeds, North)
I do not think we Should pass this Order, at any rate without some words of explanation from some representative of the Treasury. This seems to me to offer a splendid opportunity for the Financial Secretary to use his great powers of exposition in the House. I do not suppose many hon. Members have a copy of this Order in their hands. It brings about the exemption from Purchase Tax of a. considerable class of what is known as utility furniture. There are two ways of making amendments in the incidence of Purchase Tax. The normal way is to do it through the Finance Bill, and many of our Debates on the Finance Bill have been concerned with alterations and reductions in the rates of Purchase Tax. There is an alternative method provided for by the Finance Act,' 1940; that is, to carry out the same process by means of a statutory Order. The business before the House now is of considerable moment, because it involves the abolition of the Purchase Tax over a wide range furniture.
If hon. Members will look at the Order they will see that furniture specified by 1003 certain words set out in the Schedule to the Order are to be a new class of exempted furniture. The Schedule reads as follows: Furniture and component parts of furniture, being goods to which the mark shown, in the Second Schedule to the Furniture (Control of Manufacture and Supply) (Consolidation) Order, 1946, is applied.… We then turn to the Furniture (Control of Manufacture and Supply) (Consolidation) Order, 1946, in order to discover what this furniture is, and to which this utility mark is attached, If hon. Members were to go to the Vote Office and ask for Statutory Rule and Order 225 of this year, they would find, on page 6, a Schedule and a mark—a very singular mark, consisting of two apparently more or less black circles with an incision into one side. That is the utility mark applied to this utility furniture, and the classes of furniture covered are set out in the earlier part of the Schedule. They are: 1. Any furniture of a kind commonly used for domestic purposes, including curbs and firescreens containing not more than 10 per cent. of metal calculated by weight, and wire and spring mattresses; 2. Bedsteads (not being aseptic hospital bed steads) made wholly or mainly of metal. 3. Office and other furniture made wholly or mainly of metal, including garden furniture and industrial storage racks and bins. During the Budget Debate, the Chancellor, with a great deal of reluctance, made a concession in relation to the Purchase Tax covering what he estimates to be £2 million of lost revenue in the course of a year. I really do not think that the House ought to pass this Order without having been given some idea, first of all, what is the quantity and volume of furniture affected by the Order. Is it going to be £2 million worth of furniture a year, £10 million worth or £20 million worth? I think we ought to be told approximately how much revenue the Chancellor is sacrificing, not only in the current financial year but in a full financial year, by the remission of Purchase Tax over this wide range of furniture.
Of course, there is a great deal to be said for the abolition of Purchase Tax upon this class of goods. Furniture has hitherto been in short supply. Many citizens, restored to their homes, are endeavouring to re-equip them, and, so far as we, on this side of the House are con- 1004 cerned, we shall not, I think, object to the contents of the Order, but we think that the House should be informed of the extent of the Order, the amount of revenue involved in it and the amount of furniture which is expected to be produced during the year of the classes mentioned in the First Schedule to the Order. We must not lose sight of the fact that an exemption from Purchase Tax of this character, as the Chancellor has reminded us many times during the Budget Debate, operates as a subsidy. It means that this sort of furniture is cheaper than it would be if the Purchase Tax was imposed. It is an encouragement to mass-produced furniture, and it is, in that way, a little unfair to the craftsmen who make more specialised furniture. We are living in a world of shortage, however, and, at the present time, we cannot take exception to the Order on those grounds.
Therefore, I am asking that we shall be given some explanation of this matter, which seems to us to be of much greater substance than many of the Amendments we discussed at considerable length during the Budget Debate, and, in particular, we should like to know why this method of Statutory Rule and Order has been followed rather than this matter being brought up by way of an addition to the Schedule in the Finance Bill.

§ The Parliamentary Secretary to the Board of Trade (Mr. Belcher)
I am sure the right hon. Gentleman appreciates that in respect of all utility goods Purchase Tax has never been applied. Certainly that is the case with furniture. When we first conceived the utility furniture scheme, when my right hon. Friend the Chancellor of the Exchequer was President of the Board of Trade, we conceived it in terms of furniture made of wood, and the furniture made of wood under the utility scheme was exempt from Purchase Tax. Now we have a shortage of timber and all we are doing is to extend to furniture made from different materials, the exemption from Purchase Tax which applied in the original case to furniture made from wood I am rather surprised that there should be any doubt at all about the wisdom of exempting something from a tax, particularly Purchase Tax, which I have always understood was regarded as undesirable and unpopular on all sides of the House.
1005 We are trying to protect those people who are endeavouring for the first time —or for the second time having lost their original home—to build up a home for themselves. We are trying to give them goods of a Government specified quality at the cheapest possible price. Therefore, the goods are excluded from Purchase Tax. The question was asked as to the amount of revenue involved. I am afraid it is impossible for anybody to say. Nobody could forecast with any degree of accuracy—not to satisfy this House, at any rate—how much will be produced or how much will be purchased. If one could do that, one could say precisely how much revenue was involved. In fact, we shall produce as much as we can and we shall sell, as hon. and right hon. Gentlemen know, all that we can produce, but what that quantity is I would not like to guess. It will be as great as we can possibly make it and I hope it will be very large indeed. With regard to the question as to why we are bringing it in in this fashion, it is because it is the simplest way to get this furniture on to the market in the shortest possible time and to make provision for the exemption of these articles from Purchase Tax. Hon. Members have had an opportunity, which they have taken this evening, of asking questions about the effect of this particular proposal. I really do not see that there can be any objection to this manner of doing it as there is opportunity for Debate. No other way of bringing this particular proposal before the House would afford any better opportunity of giving the same relief to the people who want to purchase this furniture. I sincerely hope that there will not be any trouble about this. We are not endeavouring to impose something upon people. We are endeavouring to make it possible for the people who need furniture quickly and cheaply to get that furniture.

§ Mr. Oliver Stanley (Bristol, West)
As far as I am concerned, there is not going to be any trouble about this. I do not think there has been much trouble taken about the reply which has been given. It certainly might have been concerted a little more closely with the view of the Chancellor of the Exchequer. When the Chancellor of the Exchequer sees on record in HANSARD tomorrow the view of the Parliamentary Secretary to the Board of Trade about Purchase Tax he will see that it is 1006 very different from his. Hon. Members will remember that the Chancellor of the Exchequer told us that the Purchase Tax is a valuable and almost permanent feature—if not a wholly permanent feature —of our fiscal policy. The Parliamentary Secretary has come along and said it is a bad tax which everybody wanted to get rid of—

§ Mr. Belcher
I thought I had made it plain, even to the Opposition, that it was the Chancellor of the Exchequer who exempted utility goods—and we are dealing particularly with utility furniture—from Purchase Tax. I fail to see any difference between the point of view which I expressed and the point of view which has been expressed in a most practical fashion by the Chancellor of the Exchequer.

§ Mr. Stanley
I think with tomorrow's breakfast, where he will for almost the last time be able to enjoy a couple of pieces of bread, the Parliamentary Secretary must look at what he said in HANSARD. He will see that although we are all certain that the action he is now proposing has the approval of the Chancellor of the Exchequer, it is very doubtful indeed whether the remarks that he made at large—I take it he was not following his brief—on Purchase Tax will have that approval. But there is a further extraordinary part of his speech. It seems incredible to us, who have had lengthy Debates on the Budget dealing with innumerable subjects and who have become accustomed, especially on the Purchase Tax, to the Chancellor of the Exchequer being able to give us an estimate, which we know by the experience of many years is a pretty accurate one when given by the Treasury, of what any particular concession is going to cost, that, in this case, the Board of Trade is unable to furnish us with any figures whatsoever.
When, on Wednesday, we come to deal with the Purchase Tax and the exemptions from that tax in, if I may say so, the normal way through the Budget procedure, and we ask the Chancellor any questions on the long list of exemptions which he is going to make, whether it is wigs, mousetraps, vermin destructors, or anything else, he will be able to say that the Treasury estimates that it is going to cost so much. The Chancellor is not making wigs, or mousetraps, but the Parliamentary Secretary to the Board of Trade is 1007 making this utility furniture. If the Chancellor can give an accurate estimate of the wigs that somebody else is making, surely the hon. Gentleman can give an estimate of the aseptic bedsteads which he himself controls?

§ Mr. Belcher
May I point out to the right hon. Gentleman that, just as the Chancellor of the Exchequer does not make mousetraps, neither does the Parliamentary Secretary to the Board of Trade make utility furniture? Both are made by private enterprise under licence and under specification from the Board of Trade.

§ Mr. Stanley
This is very curious because, usually, when I hear the manufacture of utility articles of any kind being discussed, I hear the Government Front Bench taking credit for it. It is their scheme, they give the licence, they arrange the labour, the priority and the raw materials, and they take all the credit.

§ Mr. Belcher
That is why it is successful.

§ Mr. Stanley
But when it comes to asking something about it they have nothing to do with it at all. There is nothing more between the hon. Gentleman and an aseptic bed than there is between the right hon. Gentleman and the wig. If I may say so, in that respect there is no connection at all. All that we have heard tonight confirms us in our regret that it was not possible to do this by the simple procedure of including it in the Finance Bill, or in one of the numerous Amendments which the right hon. Gentleman is making to the Third Schedule in response to discussions in all parts of the House. If it had been, I feel certain that we should have been saved the extremely unorthodox statement of the Parliamentary Secretary on the question of Purchase Tax as a whole, and that we should have got a definite and accurate answer as to what this was going to cost. Although we shall not oppose it tonight, we hope that, in future, it will be possible to follow the more normal practice and give us the particulars which the House expects.