Fifth Schedule.—(PURCHASE TAX (AMENDMENTS OF SCHEDULE OF CHARGEABLE GOODS).)

HC Deb 19 June 1951 vol 489 cc409-75

The Chairman

If the Committee would permit me for a moment, we now come to the Fifth Schedule, and if hon. Members will be so good as to refer to the Fifth Schedule in the Bill, they will see that the Schedule contains various groups beginning with Group 4, and going on to Group 5 and 6. If the Committee agree, I think it may be convenient to deal with the Amendments to that Schedule also by the same groups. If hon. Members will look at page 1484 of the Order Paper, they will see the first four Amendments in the names of the hon. Member for Thirsk and Malton (Mr. Turton), the hon. and gallant Member for Renfrew, East (Major Lloyd) and the hon. Member for Rushcliffe (Mr. Redmayne). All these four Amendments are included in Group 4 of the Fifth Schedule and, if the Committee would agree, we might perhaps discuss the selected Amendments in that group together. They are the second Amendment in the name of the hon. Member for Thirsk and Malton and the Amendment in the name of the hon. Member for Rushcliffe. May I take it that this is agreed?

Major Guy Lloyd (Renfrew, East)

On a point of order. Is there any real connection between lining socks for shoes and elastic? Would it not be better for each hon. Member to move his Amendment?

The Chairman

That Amendment is not in order. The only two Amendments in that particular group that are in order are the second Amendment in the name of the hon. Member for Thirsk and Malton and the Amendment in the name of the hon. Member for Rushcliffe.

Captain Duncan (Angus, South)

As it is your intention to take the two Amendments you have selected together, will you permit, if necessary, a Division to be taken on each Amendment?

The Chairman

I propose that they be taken together, and if a Division is desired in any part of the Committee, of course I am perfectly agreeable.

Mr. Turton

I beg to move, in page 45, line 12, at the end, to insert— (i elastic … … … … Exempt. I regret very much that the Chancellor of the Exchequer, on a previous Amendment, described this Purchase Tax as a revenue tax. In my view, it has a very great effect on the cost of living and on the community as a whole, and I would prefer the definition of this tax which the right hon. Gentleman gave in his Budget speech on 10th April, when he said that the aim of Purchase Tax was to a large extent the raising of revenue and the withdrawing of spending power to check inflationary tendencies.

I cannot believe that the Purchase Tax on elastic is in the category of a tax to check inflationary tendencies. I would have thought it was just the reverse. The right hon. Gentleman went on to say there was no overwhelming reason why we should not raise revenue by taxing certain types of expensive clothing. Again, I should not have thought that elastic came in the category of expensive clothing.

The facts of the case are that in 1939 and in the days before the war three yards of elastic could be bought for 1½d Three yards today cost 10½d. of which 1¾d. goes in Purchase Tax. I ask the Committee to remove the Purchase Tax on elastic which is surely, if anything is, a necessity of the home, and thereby reduce the cost of living by lad. on every three yards of elastic. I hope that will be agreeable to hon. Members on whichever side of the Committee they sit, and I hope that the Financial Secretary is not going to tell me that elastic is a luxury and should be taxed, for I cannot believe that will be agreeable either to his constituents or to the country at large.

Mr. Redmayne (Rushcliffe)

The Amendment which is in my name and the name of my hon. and gallant Friend the Member for Renfrew, East (Major Lloyd) seeks to exempt from Purchase Tax insoles, except insoles made wholly or partly of fur skin. Insoles are sometimes called shoe socks and are made of cork, wool, canvas, felt or sometimes loofah. They are not in any sense a luxury. They are also one of the few remaining items that are an accessory to boots and shoes that still bear tax. These insoles are in use constantly in industry, agriculture and fishing. In the case of rubber footwear, they are used in the form of felt to absorb perspiration and are very necessary for that purpose in that type of footwear. I do not know whether they absorb the perspiration of good will to which my right hon. Friend the Member for Woodford (Mr. Churchill) referred, because I do not know from where that is exuded.

Of all footwear soles 95 per cent. are utility, and therefore it can be said that since the other 5 per cent. are entirely in the luxury trade and are sold to the type of person who buys that 5 per cent. to fit, the question of insoles does not come into that 5 per cent. of the trade at all. Therefore, in the other 95 per cent. of cases these insoles are to be regarded as an absolute necessity for those persons who buy them. From the point of view of the general public, these insoles are more often than not bought to make a fit for shoes that are perhaps not sufficiently well made to be an exact fit, and are particularily bought by fathers and mothers who are pressed by the rising cost of living and who buy shoes sufficiently large to allow for the growth of their children's feet.

The other type of insole is that type which is known as lining socks and seat socks which are fitted into the shoe as a lining to prevent rivets, nails and sewing coming through, and they equally, unless they are made of leather, are subject to tax, and should in my opinion be free from tax. In many cases these are stamped with the utility mark applying to the shoe as a whole and it is absurd, therefore, that these should bear a tax. By accident it so happens that lining socks and seat socks are included in another group, but it is obviously an illogical argument to say that if one group for Purchase Tax in which insoles are included should be exempt from tax, therefore the same argument should apply to the other group.

12 midnight.

Major Lloyd

I wish to express my sympathy with and support for the remarks of my hon. Friend the Member for Rushcliffe (Mr. Redmayne). I was hoping very much that the Government would not lose a great deal of revenue by making this small and very reasonable concession, for One touch of nature makes the whole world kin … Those of us who have suffered from blisters on our feet as a result of not being able to have insoles in our shoes and boots may fully realise how very important to our comfort is this matter. Nor is it a matter in which one class only are interested. All people are equal here and in that respect I concede the Socialist principle of equality.

I hope the Government will be sympathetic to this very simple Amendment. Why on earth an insole, which to all intents and purposes is part and parcel of footwear, should have to bear an unnecessary and expensive Purchase Tax, I cannot conceive. Such a simple concession would give pleasure to millions. I appeal to the Government to make it on the basis of fair shares and equality for all.

Mrs. Jean Mann (Coatbridge and Airdrie)

I want to apologise to the Committee, and particularly to hon. and right hon. Members opposite, for keeping them out of their beds at this time of the night. I know they are not accustomed to facing the hard ways of life as we are on these benches. It comes rather hard and very difficult for them to face some of the hardships which to us are merely normal. However, I think the hon. and gallant Member for Renfrew, East (Major Lloyd) will be glad to know that I want to support his plea. I do not think that the Chancellor would want to do anything to discourage thrift, and I feel pleased that he has exempted paper patterns, for example, and needles and thread.

It is very necessary he should have another look at this matter. Indeed, I appeal to him to save our insoles. Hon. Members opposite have pointed out, quite rightly, that insoles extend the life of a pair of shoes. Very often the shoes that one buys and brings home are found to be too large, but they can be worn if a pair of insoles are bought. The life of the shoes is extended and that means a lot in a working-class home. I have noticed all over the country a great many notice boards over the windows of boot repairers. These notices intimate a half-hour's service for heels. I think that quite a lot of heels attend and have their shoes repaired in half an hour. This proposal may prevent, in quite a large number of homes, mothers having to go out and buy another pair of shoes that fit, and I hope my right hon. Friend will look at this very simple request, and if it is possible, grant it.

Mr. Jay

Perhaps at the outset to the Amendments to this Schedule I might just say this. I think we all agree that there have been difficulties in conducting this particular type of debate, and I would suggest that the best thing, at any rate as far as we are concerned on this bench, would be to do this. I suggest that we should listen to the arguments advanced by hon. Gentlemen on each individual commodity, and then at the end of the group of Amendments I or my hon. Friend should indicate in which, if any, of those matters we think that a case has been made for giving consideration to the matter before the Report stage. We would indicate clearly which falls into that category and which does not.

I should also say that clearly this year we have very little scope for relief. We have to see these individual Purchase Tax proposals in relation, of course, to the rest of the Budget, and as the hon. Member for Orkney and Shetland (Mr. Grimond) said earlier, this is not the moment radically to reduce the Purchase Tax. As, therefore, the total relief on the group of exemptions we proposed in the Budget this year was only £2,500,000, obviously there is only very small scope for any further possibilities.

If we look at the two Amendments before us, they both relate, of course, to the group known as haberdashery, which covers a remarkable number of commodities, which nevertheless all come within the rough trade classification of haberdashery. When we considered that group before the Budget, we decided that we could select two different types of goods in it on these principles. First of all, we selected boot and shoe laces because it so happened, as I think the hon. Gentleman said about the insoles, that there were no utility boot and shoe laces, although 90 per cent. of boots and shoes on the market are now utility. Secondly, we selected from the haberdashery group those tools—if one likes to call them that— used by the housewife in the course of making or repairing clothes in the home to which my hon. Friend referred.

If against those principles we examine these proposals, firstly for elastic, and secondly for insoles, the conclusion I come to is this. I do not think any case is made out for further consideration of elastic because it does not fall into either classification, and therefore if we were to extend the exemption to elastic we should be involving ourselves, within the haberdashery group, in more of those anomalies about which hon. Gentlemen opposite find it so easy to make such entertaining speeches.

On the other hand, as far as insoles are concerned, having listened to my hon. Friend and the hon. Gentleman opposite, it does seem to me, without too much stretching of the elastic, that there is some case for considering them in relation to the boot and shoe laces. I will therefore undertake to consider the case of insoles before the Report stage.

Mr. Selwyn Lloyd (Wirral)

In order that we may get the matter right—as the hon. Gentleman referred to the figure of £2,500,000—would he be good enough to tell the Committee how much the elastic concession would cost, how much the insole concession would cost, how much the laces concession has cost, and how much the sewing and darning and paper patterns concession has cost?

Mr. Jay

I cannot give the hon. and learned Gentleman all these figures. The elastic and insoles amount together to a very small sum, something under £100,000, but I was basing my argument here mainly on the classification rather than on the actual cost.

Mr. Lloyd

If we are to deal with these Schedules in a reasonable manner, we must know what the financial implications are. I should have thought it intolerable that the hon. Gentleman should come to the Committee without being able to say in regard to each of these items what the cost would be.

Mr. Jay

So far as elastic and insoles are concerned, the cost is exceedingly small.

Mr. Turton

The hon. Gentleman is asking the Committee to reject my Amendment on elastic, but has given no information on the financial implications. I hope he will get the information and give it to the Committee.

Mr. Charles Williams (Torquay)

My hon. Friends are quite justified in asking for this figure, but I cannot see why they are surprised at the Treasury not having it. It has been very rare, throughout our discussion, for the Treasury to know anything about any of these things, and why should we expect them to know now? We and the country have a right to them, but we are not having the normal method when the Budget is discussed of details being given so that we may know what a concession will cost. It is a new policy, and it is a Socialist policy.

Mr. Joynson-Hicks (Chichester)

May I have some clarification of this figure of £2,500,000? Was I right in understanding the hon. Gentleman to say that the concessions the Government have introduced into the Fifth Schedule as a whole are estimated to amount to £2,500,000? If that is so, what was the relevance of his remark that it was therefore only possible for the Government to contemplate making very minor concessions of further advantage? I should have thought that the logic was the other way round: that if the existing concessions were of such a comparatively insignificant total, there must be more money available for further exemptions to meet the Amendments which have been put down from this side of the Committee.

Mr. Jay

The point I was making was that if in our general view of the Budget we estimated that there was scope for relief of £2,500,000 in respect of Purchase Tax exemptions, it was clear that on that general principle there was little scope in terms of revenue for any further concessions.

Mr. Godfrey Nicholson (Farnham)

Can the hon. Gentleman say what that scope is? How much have we to play with? He must have some idea how much he can afford to give away.

Sir Ian Fraser (Morecambe and Lonsdale)

May I put the question in another way? How much of the £2,500,000 has gone already, and how much is available for the next Amendments?

Mr. Jay

The £2,500,000 has already been conceded in existing proposals included in the present Schedule.

Captain Crookshank

When the hon. Gentleman was replying to the original submission, he pointed out that these two, elastic and insoles, were not within the group which the Government had decided to relieve. Of course, that was quite obvious. Neither elastic nor insoles are boot laces or needles. The hon. Gentleman did not have to tell us, because we could have read that for ourselves. They are quite different commodities used for quite different purposes.

12.15 a.m.

I rise only to ask the hon. Gentleman if he will amplify what he said just now. To give these two concessions, he said, would cost £100,000 or thereabouts; but he could not say what either elastic or needles would cost separately. Well, it seems to me that if they have got a total for the two things, somebody must know what the sum for each of the two things is separately, otherwise how could they tell us of the total of £100,000. It was a perfectly legitimate question that my hon. Friends have asked, and I hope that the Financial Secretary can break up his £100,000 into two, so that we can decide for ourselves whether this matter is worth pursuing. It is the elastic point which he has not so far conceded.

Mr. Jay

I am only too anxious to help the right hon. and gallant Gentleman. I am sorry if I misunderstood the question. What I intended to say was that the cost of the proposal which I undertook to consider—that is to say, insoles —would be something under £100,000. The cost of the elastic, which I had excluded—and I intended to make it clear that I had excluded it—would be something over £250,000.

Captain Crookshank

I am much obliged to the hon. Gentleman for clearing up that point. I was not clear from what he said. I understood it was the total for the two. I apologise, but I think it was his own lack of clarity that led to the mistake.

Mr. Selwyn Lloyd

May I add to my right hon. and gallant Friend's question, however? I think it applies not only to this Amendment but also to all the others. The Financial Secretary started by saying that the Government had only £2,500,000 to give away, and that they had already given that away. That cannot be true, because the hon. Gentleman has already admitted to the Committee that he is going to consider the question of the £100,000 and insoles. May we be told now what are the financial limits within which we are going to discuss these matters? How much has the hon. Gentleman got within his discretion in these matters? Is the limit £100,000, or is he going to consider other items?

Mr. Jay

I do not know how long we should continue this. What I intended to convey by my original remarks was that I wished, if it was desirable, that we should conduct this debate otherwise than as an auction. I have no figure in my head—no precise figure. What I intended to say was that I would listen to the arguments and consider them on their merits; but I wanted to indicate roughly that, as the total relief we originally intended was something like £2,500,000, it was clear that we could not add to that reliefs running into millions of pounds. I do not think I can put it more precisely than that.

Captain Crookshank

I am much obliged to the hon. Gentleman for the explanation he has given. In view of the fact that elastic would cost as much as £250,000 I would hope that my hon. Friends would not press the matter further. However, I should like to ask, so that we may know for our future guidance when these matters are being discussed, whether we can take it that if the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) gets up and says, "This is a good thing," that is an indication that the Government are about to accept it?

Mr. Logan (Liverpool, Scotland Division)

I am very edified by the remarks of the right hon. and gallant Member for Gainsborough (Captain Crookshank), and I am also edified by the magnificent manner in which hon. Gentlemen opposite have dealt with elastic. We started this discussion at 11.40, and the Tory Party have been elastic in dealing with it, and with insoles. [HON. MEMBERS: "Why not?"] I am talking to all hon. Gentlemen opposite. My criticism of hon. Gentlemen's interventions is that all this is a waste of time, and that they have no right to carry on in this style in this Committee.

Lieut.-Commander Braithwaite

I am sure we all have great respect for the hon. Member for the Scotland Division of Liverpool (Mr. Logan), but his criticism is hardly fair. After all, we are discussing what is on the Order Paper, and it would be difficult for us to discuss anything else. Moreover, we endeavoured some time ago to ensure that this discussion took place at an hour which the hon. Gentleman might think more convenient. We are also working, as the hon. Gentleman is aware, under the new dispensation, which lays down that if the Sittings of the Committee continue until public transport has ceased to run, the right hon. Gentleman likes them to continue until breakfast time.

Mr. Logan

We can sit until tomorrow night.

Lieut.-Commander Braithwaite

By making speeches no doubt the hon. Gentleman can achieve that. But now that we have got back to a calmer atmosphere, I want to ask the Financial Secretary whether my understanding is correct, that all these discussions on which we are now embarking are to be laid in abeyance while the right hon. Gentleman reconsiders these proposals between now and Report stage? In other words, none of them will be acceptable at this stage, but those which find favour with the hon. Gentleman, if any, will appear on the Order Paper on Report stage as Government Amendments to ensure their discussion? If that is so, it clarifies the circumstances under which we are working. I hope he will allow me to say, in all good temper, that if this is not a Dutch auction, it is very like it.

Amendment negatived.

Mr. Fort (Clitheroe)

I beg to move, in page 45, line 24, after "cotton," to insert "or rayon."

The Deputy-Chairman

I think it will be for the convenience of the Committee if this Amendment were discussed with the subsequent Amendments standing in the name of the hon. Member in lines 26, 28 and 38.

Mr. Fort

In moving this Amendment, I hope to put up one of those cases which the Financial Secretary said he would undertake to consider on its merits. Perhaps there is little need to do more than move this formally, because I suspect that the omission of the words "or rayon" after cotton may be accidental.

When introducing the Budget some months ago, the Chancellor said that he would exempt from Purchase Tax the more necessary household articles, and in carrying out this pledge he has introduced into the exempt class under the Fifth Schedule a large range of washing and dusting cloths. But these have been confined to cloths made from cotton and the words "or rayon" were omitted. There are good reasons for including cloths made out of rayon. Housewives should have as wide a choice of cloths as possible, but certain rayon cloths are as suitable as and perhaps more suitable than those made out of cotton.

At the present time, and as far ahead as one can see, cloths made from cotton have a larger dollar content than those made from rayon, because most of these cloths have to be made from American cotton, although some substitution is possible, whereas those from rayon do not, because the pulp from which rayon is made comes to this country from many parts of the world but not from the United States of America. There is a feeling among those who weave the rayon cloth that they have been a little unfairly treated. The rayon industry has developed more recently than the cotton industry, and consequently about 240 cloths made from cotton have been included in the utility range free from Purchase Tax, compared with about 14 made from rayon. Therefore, there is a good chance that manufacturers of rayon cloths will be tempted to use cloths which are not really designed for these household purposes to try to benefit from Purchase Tax exemption.

Furthermore, there is a danger that unless rayon is exempt there will not be that development of proper household cloths made from rayon that those concerned with the industry hope to see. It is for these reasons that I hope the Financial Secretary, when he comes to consider this matter, will be able to see his way to include rayon with cotton among the cloths included in Group V of Schedule 5.

Mr. Jay

I am afraid that this time I am bound to disappoint the hon. Member for Clitheroe (Mr. Fort). We did consider this matter carefully before the Budget, and it was not by accident that we omitted rayon when we included cotton. The difficulty was simply that we wished, if we could, to exempt dusters, as they are generally used in the home, but if we were not careful in doing that we would exempt a large number of textile squares which could be used for other purposes, such as decorative scarves, which would have involved a loophole for evasion.

We came to the conclusion, after consultation with the trade, that the only possible way to administer this and make it workable was to confine the concession to cotton. I understand that the trade was quite satisfied, as were the Customs and Excise, that the concession would not be workable and could not be made workable if we went beyond cotton. In those circumstances, it would not be any use undertaking to consider this matter further.

Viscount Hinchingbrooke

Could you at this stage, Sir Charles, give us some guidance? If one wants to make a comment about an item in Group V, paragraph 2, which is not the subject of an actual Amendment, should one make it before the Financial Secretary makes his reply to each, as I understand he is going to do, or wait until the Motion that the Schedule be the Schedule to the Bill?

The Deputy-Chairman

I think it would be better to wait until the Motion.

Sir William Darling (Edinburgh, South)

Nothing could more justify the case recently made by my right hon. Friend the Member for Leeds, North (Mr. Peake), for an advisory committee to help the Chancellor of the Exchequer than the speech we have just heard from the Financial Secretary. In line 22 the advisers to the Government in this technical matter agree that scouring or dish cloths can be made from cotton or jute but not from cotton or rayon.

12.30 a.m.

When one comes to Clause 8, the argument of the Minister that squares which were made of cotton and rayon would be used for scarves, head coverings, and indeed for dresses, has not been fully met, because cotton dusters, woven in a single piece and having, except for a border on each of the four sides, an over-all check pattern of coloured yarns, and not exceeding 24 inches in length or width, will make an excellent washing frock. There the ingenuity of the Minister has been defeated. In his desire to avoid the sale of dusters for dress purposes, he has been unable to match the ingenuity which discloses itself in garments of squares in an over-all check pattern of coloured garments not exceeding 24 inches in length or width.

I have sympathy with the Minister as he flounders in this haberdashery world. He was obviously at sea in the world of elastic. He is obviously more at sea in the world of cotton and rayon. There is nothing to be ashamed of in being ignorant of this trade. Neither will he have anything to be ashamed of if he takes this matter back and gives it further consideration. I think he will then see that he is not achieving the object which he has in view, which is to prevent people making clothes out of dusters. I am glad that the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) is here to support me.

Mrs. Mann

I am sorry, but I cannot support the hon. Member on two counts. Firstly, on the ground that dress materials are 36 inches and 54 inches in width. Secondly, any housewife will tell him that rayon makes a most unsatisfactory duster, dish cloth or anything else mentioned in the Schedule. If the hon. Member had been doing his duty and helping with the washing up he would never hale made such a mistake.

Sir W. Darling

In talking about dress fabrics the hon. Lady is completely at sea. She said the widths of fabric are 36 and 54 inches, but the standard widths are 36 and 48 inches. I feel compelled to say that, as we are compelled to stay. after the plea made by the Leader of the Opposition that we should go home has been rejected, we must help the Minister to achieve his object. He is not doing that. My hon. Friends and I will be happy to tell him why he is not getting what he wants in this Schedule. We will still make garments out of 24 inch squares of cotton mixtures. and very pretty they will be too.

Mr. Fort

May I answer the hon. Lady the Member for Coatbridge and Airdrie about the rayon industry. I can supply to her rayon washing cloths which will be superior to those made from cotton. She is not keeping up-to-date with the latest developments in the rayon industry.

Amendment negatived

Mr. Turton

I beg to move, in page 45, line 38, at the beginning, to insert: "butter muslin and".

When the Chancellor introduced this Finance Bill, we found that among articles in Group 6 which were to be exempt from Purchase Tax, was knitted unbleached cotton cloth made with at least one needle omitted in every fifty needles. Now, it may be that many hon. Members, like myself, did not know what this meant, and so I tried to obtain a little information from those in the trade; and I was told that what the Chancellor is trying to exempt is cloth in which imported mutton was wrapped, when mutton used to be imported. That, of course, was in the days before the present Secretary of State for War, or the present Minister of Food, had any share in our administration.

But this decision is not satisfactory to the general body of citizens in this country. In this Group 6, the greatest injustice which I can find is this tax on butter muslin, for this is an essential fabric for keeping food clean. It is used in the rural areas in considerable quantities and before the war the price of it was 4d. a yard. Today, the price is 2s. 1d. a yard—an increase of 600 per cent. since 1939.

Mr. Hector Hughes (Aberdeen, North)

There has been a war since then.

Mr. Turton

The hon. and learned Gentleman is very aware of recent history; but apart from the war, the Treasury have been taking 8d. a yard in Purchase Tax; and butter muslin is not something used for extravagant purposes, but to prevent food deterioration. Yet the rate of Purchase Tax on this most essential article is 66⅓ per cent. I beg the Treasury to have regard to this fact, for here is one of the greatest of anomalies in Purchase Tax at the present time.

We are all anxious to do all that we can to preserve foodstuffs and prevent outbreaks of disease in them, and in rural areas—and in the towns—butter muslin is a most important adjunct to that purpose. Why, therefore, should it be taxed at the luxury rate of 66⅔ per cent.? Surely the case is that. rather than exempt this nonexistent mutton cloth, the Chancellor should exempt butter muslin.

I ask the Financial Secretary to advise the Committee to accept this Amendment or, in the alternative, to reduce the Purchase Tax from this very high rate of 66⅔ to 33⅓ per cent. If he does that, he will get the gratitude of all hon. Members who live in or represent rural areas and who wish to conserve our very valuable food supplies.

Mr. Macdonald

I should like to speak to my Amendment in page 45. line 39. at the end, to insert: (q) non-utility tweeds made in Scotland exceeding three inches in width … First. We wish to remove these cloths from the second rate of tax of 66⅔ per cent. to 33⅓ per cent. The Scottish tweed trade has for long had the unique honour of being one of the highest dollar producers per head of people employed throughout the whole country, but the success of this trade has been built on the high quality of the tweed. This is a result of the craftsmanship put into it, and because of the very delightful patterns that the material shows. Since the war, the bulk of the output, however, has been exported, but increasing sales resistance—

Viscount Hinchingbrooke

On a point of Order. Did you actually put the Amendment moved by my hon. Friend the Member for Thirsk and Malton (Mr. Turton)?

The Deputy-Chairman

Yes, I put that Amendment, but I do not think the hon. Gentleman understands the procedure. The hon. Gentleman the Member for Roxburgh and Selkirk (Mr. Macdonald) is talking on this Amendment now and if he wants a Division, it can be moved afterwards. We are on Group 6 now and this Amendment can be discussed with that dealing with butter muslin.

Mr. Macdonald

As I was stating, since the war the bulk of the output of this industry has been exported, but increasing sales resistance in the export markets is now being experienced due to the high price of wool and this leaves an increased amount of tweed available for sale in the home trade. The industry usually depends for its main support upon the home trade, and it is rapidly becoming apparent that, with the narrowing export trade, the industry may face serious unemployment unless it can sell these goods in the home market. This is practically impossible now due to the 66⅓ per cent. Purchase Tax on the already very high cost of production, and the home trade will almost certainly cease altogether when wool purchased at the present high prices comes into production.

Though these mills can make very high-quality utility cloth, their production methods are not geared for the type of cloth and as a result they cannot make it as economically as it is made in Yorkshire. It is the opinion of the trade that a lower Purchase Tax rate would yield more revenue by increasing production and making larger sales possible in the home market while catering for full export demands. By so doing, the continuance of this very valuable craft industry would be assured. I can assure the Financial Secretary that there is scope for greater production here for the home market without in any way denying sales to the export trade.

It is essential that this very valuable industry, this craft industry, should be encouraged to develop its home trade to the full, but unless some assistance can be given by substantially reducing the rate of Purchase Tax, things will be made quite impossible for it and as the result, as I have said before, serious unemployment may occur and these very valuable craftsmen may be lost to this country and this industry.

Mr. Grimond

As the question of tweeds is under discussion, I rise to put in yet another plea to the Financial Secretary on behalf of handwoven tweeds.

The Deputy-Chairman

I did not select that Amendment.

Mr. Grimond

I thought it was in order to discuss Purchase Tax on quality tweeds.

The Deputy-Chairman

I gathered from the hon. Gentleman's opening remarks that he was dealing with his Amendment, which has not been selected.

Mr. Grimond

No, Sir. I appreciate you have not selected that Amendment but I understood that this Amendment dealt with non-utility tweeds and that therefore I would be in order. I hope to get some support not only from Scotland but also from England, Wales and even Northern Ireland. In all those countries there is a certain amount of this handwoven tweed produced, though, of course, it is not as good as the tweed produced in Scotland, particularly in the North of Scotland.

This is a matter upon which I and other hon. Members have approached the Financial Secretary before and I am afraid I am pessimistic enough to believe that we may have to do it again. This matter is becoming more and more urgent owing to the very high prices which wool has now reached. I must say that if this industry, which has a very high reputation, were to be seriously endangered, it would be a very serious blow to one of the quality products for which this country is famed.

12.45 a.m.

The importance of handwoven tweed is, first of all, that this weaving gives employment in the more remote and thinly-populated areas of the country where it is extremely difficult to find anything for young men to do. It is an industry which relies on the local product, and the value of the finished product is greatly enhanced by the processes of manufacture. This is very important because, if you want to start up any industry in these areas, it is important you should find something of which the cost of buying and transporting the materials is not a very high proportion of the final cost. Otherwise you are killed by the freight. Freights are a subject on which I could dilate at some length, but I will spare the Committee as I should be out of order. It is also, I think, particularly useful in that it can be combined with the kind of agriculture carried on in these areas—in Scotland, in particular, crofting.

I urge upon the Financial Secretary if the Government are sincere, as I am sure they are, in their desire to increase the population of these areas and make them play a useful part in the economy of the country, that this is the sort of industry which should be encouraged. It has received a very serious setback owing to the increase of Purchase Tax, now some two or three years old.

The reasons against it, I know, are that, first it is difficult to distinguish handwoven tweed from any other sort of tweed. But I believe that the Financial Secretary and his advisers, with their great knowledge, if they really put their minds to this matter, would be able to find a way of distinguishing this tweed by a mark or some other method. If behind this industry there were really powerfully organized interests, some method would have been found long since. In the areas where this tweed is of importance, it is a vital industry, and although the total number of people employed may be small over the whole country, in some areas in which they live the weavers are the bulk of the population.

The other reason is that the Government would lose a certain amount of revenue. I do not know what the revenue might be. It may be £500,000, if sales remained at the present level. I am not suggesting the hon. Gentleman should abolish the Purchase Tax on this tweed, but if he were to reduce the Purchase Tax he would have greatly increased sales and therefore a greater revenue. He will no doubt argue it is desirable that this tweed should go to export as far as possible, and if the producers want to sell on the home market, they can produce a second category of utility tweed.

Certain producers have tried to bring this tweed into the utility category, but with the increasing price of wool, it is becoming increasingly difficult to do that. It is almost impossible for the weaver to weave two categories. He will rightly concentrate on the higher quality, because it is quality which counts in this matter. There is a great danger if you try to debase it, or bring it down to a lower category, that you will lose its name and reputation on which sales ultimately depend. I hope once again that the Financial Secretary will look at this matter and will possibly be able to say something favourable on it.

Mr. Malcolm MacMillan (Western Isles)

I should like to say a few words in support of the argument of the hon. Member for Orkney and Shetland (Mr. Grimond). This Harris tweed industry at present exports to the dollar area 80 per cent. of its production. I think that is a pretty reasonable percentage of its production, and I think that is a good export effort. Nobody could charge the industry with not having tried to earn dollars during the time when dollar earning was priority No. 1, and it is not unreasonable to ask for certain concessions or, as I view them, certain rights in respect of the home market.

It may be that difficulties will arise in respect of the American and Canadian markets in the future, and therefore the home market will become increasingly important to the people in this industry. Let us remember that we are dealing here, not with any big organisation, but with hundreds of small producers up and down the islands of the Western Isles, who are already in considerable difficulty through remoteness, high freight charges and other disabilities of various kinds.

Purchase Tax of 66⅔ is unquestionably a most unreasonable imposition on the products of a small cottage industry of this kind which is already labouring under these exorbitant freight charges, and I appeal to the Financial Secretary on behalf of these people who are trying to live in difficult conditions in areas where there is no alternative full-time employment and no other way of making a reasonable income and achieving a reasonable standard of living by present-day standards.

I am sure that if hon. Members on this side of the Committee knew the actual conditions under which the people have to work and try to earn their living by weaving as a supplementary income to difficult enough crofting, they would support the reduction of Purchase Tax on this type of non-utility tweed. The people have taken great pride in producing quality articles, as the hon. Member for Roxburgh and Selkirk (Mr. Macdonald) has said. The industry has this further advantage, that it can be carried on under conditions that enable it to comply with the Board of Trade's definition of Harris tweed and thus qualify for the Board of Trade hallmark, which requires that the weavers must make the cloth in their own homes. Therefore, it is an industry which is suitable to the way of life of people who like to combine fishing and crofting with weaving.

The people in the industry suffer from many disabilities, and even under our social security scheme these people are classified as out-workers and therefore do not qualify for Unemployment Insurance benefit. That is another of the disabilities from which they suffer along with the imposition of 66⅔ Purchase Tax as a deliberate act of policy.

According to a Treasury reply today to a Question I had on the Order Paper but which was not reached with other Oral Questions, about £1 million is taken out of Scotland annually— I am not going to say where it is taken; it might go back from—handwoven non-utility tweed. The Highlands of Scotland and the West-tern Isles produce about 90 per cent. of all the handwoven non-utility tweed of the United Kingdom, and the Transport and General Workers' Union representatives on this side of the Committee will be anxious to give some support to something like 1,300 or 1,400 paid-up members of that union who are the people who produce Harris tweed in the Western Isles. I appeal to them also to bring pressure to bear on the Treasury with regard to this 66⅔ imposition on the labours of their union members.

The hon. Member for Orkney and Shetland (Mr. Grimond), like myself, has gone into the homes of these people. It is not enough to quote Treasury statistics and tell us we are wrong about the total quantity of tweed going to export and to give us the production on paper. One must go into the homes of the people one knows to have been producing Harris tweed for years and find looms idle and people unemployed and denied Unemployment Insurance benefit, and having to search for jobs elsewhere in the United Kingdom and abroad, to know what is happening largely because of this exorbitant charge.

I beg the Treasury to have this matter re-examined. The Government are not really so very anxious to collect £900,000 out of the Highlands and Islands merely for the sake of collecting £900,000, because they must know that the result is to create unemployment and other problems to solve which they have to spend at least £900,000 again. The hon. Member for Orkney and Shetland referred to the number unemployed in the Highlands and. Islands. One can multiply that figure several times as far as the Western Isles are concerned. These people are not registered as unemployed, they are not classified as "Class A" unemployed and their unemployment is not reflected in any statistics the Treasury are able to produce or the Ministry of Labour able to produce for the Treasury. It is not enough for the Financial Secretary to the Treasury to say that the production. of Board of Trade marked tweed has not fallen by more than so many yards, for there was other tweed produced beside that marked by the Board, and that has now gone out of production.

The fact remains that hundreds of men and their families are deprived of their livelihood to a large extent through this heavy imposition. If it is not reasonable to ask that it be wholly abolished, it is at least reasonable to ask that it be reduced from 66⅔ to a very much lower and more reasonable figure. I ask the Treasury not merely to quote statistics but to think in human terms, in terms of unemployment and of the danger of migration from the Highlands and Islands which it is the policy of this Government to try to avoid.

Mr. Jay

First as to the Amendment of the hon. Member for Thirsk and Malton (Mr. Turton) relating to butter muslin, I fear there are two difficulties which seem to me inseparable from his proposal. In the first place, muslin is, of course, one of many various forms of wrapping for food. It may be that at a time when we had rather more scope a case could be made out for reliefs, or if it were possible to find definitions, for exempting all textile materials used for wrapping food and keeping it clean which, as the hon. Member suggested, is a very desirable objective. However, I do not think it would be possible simply to pick out one type of food wrapping and alter the Purchase Tax on that alone.

Secondly, there is the practical difficulty, of which I think the hon. Member knows, that I am assured by all who have looked into this that the phrase "butter muslin" is not in fact a definition sufficiently precise to enable a tax distinction to be made. I am afraid that various forms of textiles could be given that name, whether used for wrapping butter or not, and it would not be possible to operate the distinction effectively. That is the conclusion to which the experts have come, and for both those reasons we cannot entertain that particular suggestion.

1.0 a.m.

Mr. Turton

Is it a fact that the hon. Gentleman is suggesting that the Government's policy is that all food wrapping materials should be taxed at 66⅔ per cent.?

Mr. Jay

No, Sir. I was urging that if there was to be some special concession for one we would have to consider other materials also used for wrapping food.

Secondly, the hon. Member for Roxburgh and Selkirk (Mr. Macdonald) and two other hon. Gentlemen have raised this question of handwoven tweeds which we discussed in Committee three years ago. As I think those hon. Gentlemen know, there is no subject to which more time has been devoted by the Customs and the Board of Trade in the last three years. The difficulty, of course, arises from the fact that this is not a special Purchase Tax on Scottish handwoven tweeds. It is part of the 66⅔ Purchase Tax on non-utility cloth.

If, therefore, some relief by way of tax reduction were to be given to these particular tweeds, it is necessary to define and distinguish hand-woven tweeds as against other types of cloth. That problem, I can assure hon. Gentlemen, has proved an exceedingly difficult one. Now, this particular Amendment would seek to solve it simply by adopting the definition of non-utility tweeds made in Scotland exceeding three inches in width. Hon. Gentlemen would agree that there are very serious difficulties in principle and practice in basing one's tax definition on a geographical area. Of course, Scotland is not the only part of the United Kingdom in which handwoven tweeds are produced. There is production in Northern Ireland, in some parts of the North of England, and in Wales. It would be exceedingly difficult for that reason to base a distinction in that way.

The really insurmountable obstacle is that the tax is not paid by the weaver in the Orkneys or Hebrides but by the tailor, wholesaler or merchant in Leicester or Leeds, and at that point it is so difficult as to have proved impossible, precisely to distinguish handwoven from other types of tweed. I assure hon. Gentlemen that the eloquence of the speeches and representations made to us on this subject by Members of Parliament and others have been much more forcible than the high-powered pressure from other quarters, and that is why we have spent so much time on it.

Mr. M. MacMillan

But Harris tweed, which is about 90 per cent. of all the handwoven tweed, carries the hallmark awarded by the Board of Trade. It is a Board of Trade definition, and any infringement would cause the offender to be hailed before the courts. Do the Treasury trust the Board of Trade, and do the Board of Trade trust the Treasury? [HON. MEMBERS: "No."] If the answer is "no," I quite understand. If the answer is "yes," surely we have a Government-approved definition of what is Harris tweed. Surely a Board of Trade stamp, carrying a punishment for infringement, is definable in law?

Mr. Jay

I am fully aware of that, but the difficulty is that the hallmark applies only to Harris tweed and not to all Scottish handwoven tweed. That emphasises the difficulty with which I was dealing. It would also not meet the principle of not confining a tax to one particular area. When we considered this two years ago, the general conclusion was that if this industry, which we are all so anxious to maintain and foster, were seriously threatened with decline and collapse, it would probably be better to meet the position by way of subsidy rather than by way of tax exemptions which could not be worked in practice.

We felt that the export prospects of this industry were so good, and its record—particularly in the dollar area—so remarkable that no serious decline was threatened. There were admittedly difficulties in the period just before devaluation, but after that exports recovered. It is still true today, according to my figures—and I think the figures my hon. Friend gave coincided with them—that the quantity stamped by the Harris Tweed Association in the first months of this year shows that production is running at the same rate as last year. About 90 per cent. of the products of the industry are being exported, and as all exports are free of Purchase Tax it appears that the Purchase Tax on what is admittedly a rather specialised luxury product for the home market is not causing serious difficulties to the industry.

We and the Board of Trade—and we are entirely at one on this aspect as on others—have always thought that if there were any serious threat of a simultaneous decline in exports and in the home demand for these handwoven tweeds, the solution was for the industry to bring its products within the utility scheme. The Board of Trade have made arrangements to make that possible. So far the industry, for reasons which seem good to it, has not decided to accept that offer. We still think it a sound offer, which would be to the advantage of producers and consumers. For these reasons, it does not seem to us that any case has been made for altering the tax.

Mr. Macdonald

The hon. Gentleman has not replied to my Amendment, which does not deal with handwoven tweeds. The Scottish tweed industry about which I spoke has done its utmost to maintain a valuable export trade, which is now being reduced through sales resistance, and will continue to be further reduced because of the high price of wool. It normally depends on the home market, and it cannot retain that market because of the excessive Purchase Tax.

Is the hon. Gentleman going to do anything to assist the industry? For its total production to come within the utility scheme, as he suggests, would absolutely ruin the Scottish tweed trade, as it would the handwoven trade. I beg the hon. Gentleman to give further consideration to this Amendment, otherwise mass unemployment is likely through the restriction of its export trade and the inability of the manufacturers to sell in the home market.

Mr. Niall Macpherson (Dumfries)

I want to add a word because the reply that has been given by the Financial Secretary really will be extremely disheartening to the various areas concerned. It may be understood in the areas that, so far, there is something to be said for maintaining the higher Purchase Tax at the moment. But if the hon. Gentleman is going on to say that, when the time comes when sales abroad have fallen to a considerable extent, and when there is no sign of the extra supply so available being taken up by demand in this country, the only solution is to jettison all the skill and craftsmanship and pride in their work that there are in the tweed producing areas, and for them to go into utility schemes, then he is asking them to sacrifice all that they have stood for, and all that they have striven for, for a very long time.

If that is the only solution he can suggest, he must think again. I would say that he ought to think again now on this subject, because there is no doubt at all that, unless demand can be maintained in this country for high quality goods, those areas are doomed. Experience has proved in the past that they cannot compete on the cheap, mass production basis, and unless high quality demand can be maintained they are doomed.

There are indications already that that demand is not being maintained. Only the other day I received a circular from a well-known tailor in Edinburgh indicating that he had to change his policy entirely because demand for high-quality tweeds and other materials was no longer being maintained. If that decline spreads all over the country it will mean that the output will gradually fall in the high-quality materials. If that happens, we shall have the same kind of disaster in the Border tweed-producing areas and in the handloom areas in the Highlands as occurred before the war. I hope the hon. Gentleman will really consider this matter very seriously. I hope he will consider it again if and when the demand falls for the high-quality tweeds.

Amendment negatived.

The Deputy Chairman

Does the hon. Member for Roxburgh and Selkirk (Mr. Macdonald) wish to divide on his Amendment?

Mr. Macdonald

I feel so strongly on this matter, and I think the Government's reply was so inadequate, that I propose to take the Amendment to a Division.

Amendment proposed: In page 45, line 39, at the end, to insert: (q) non-utility tweeds made in Scotland exceeding three inches in width … First."—[Mr. Macdonald.]

Question put, "That those words be there inserted."

The Committee divided:

Mr. Churchill

(seated and covered): On a point of order. May I draw your attention, Sir Charles, to a flagrant and obstinate breach of the rules and regulations of the House by the hon. Gentleman the Member for Nelson and Colne (Mr. S. Silverman) who for a number of minutes stood stationary, and also draw your attention to the grave injury and danger that might arise if hon. Members took the opportunity of Divisions to stand about in fixed positions on the Floor of the House, whereby they might obstruct the movement of other hon. Members and lead very easily to a breach of the peace.

The Deputy-Chairman

Hon. Members, when they are standing, must keep on the move.

Ayes, 53; Noes, 264.

Division No. 146.]	AYES	[1.19 a.m.
Arbuthnot, John	Heald, Lionel	Peto, Brig. C. H. M
Baldwin, A. E.	Henderson, John (Cathcart)	Renton, D. L. M
Bennett, William (Woodside)	Higgs, J. M. C.	Roper, Sir Harold
Boothby, R	Hill, Dr. Charles (Luton)	Scott, Donald
Bullus, Wing Commander E. E.	Hill, Mrs. E. (Wythenshawe)	Stevens, G. P.
Butcher, H. W.	Hollis, M. C.	Stoddart-Scott, Col M
Craddock, Beresford (Spelthorne)	Howard, Greville (St. Ives)	Summers, G. S.
Crowder, Petre (Ruislip—Northwood)	Hutchison, Col. James (Glasgow)	Sutcliffe, H.
Cundiff, F. W.	Llewellyn, D.	Teeling, W.
Darling, Sir William (Edinburgh, S.)	Lockwood, Lt.-Col. J. C.	Turton, R. H.
Davidson, Viscountess	Longden, Gilbert (Herts, S.W.)	Tweedsmuir, Lady
Duthie, W. S.	McAdden, S. J.	Vaughan-Morgan, J. K.
Eccles, D. M.	McKibbin, A.	Wakefield, Edward (Derbyshire, W)
Fort, R.	McKie, J. H. (Galloway)	Ward, Miss I. (Tynemouth)
Fraser, Hon. Hugh (Stone)	Maclay, Hon. John	Wilson, Geoffrey (Truro)
George, Lady Megan Lloyd	Macpherson, Major Niall (Dumfries)
Gomme-Duncan, Col. A.	Marlowe, A. A. H.	TELLERS FOR THE AYES:
Harris, Frederic (Croydon, N.)	Mellor, Sir John	Mr. Grimond and
Harris, Reader (Heston)	Orr-Ewing, Charles Ian (Hendon, N,)	Mr. A.J.F. Macdonald.
NOES
Acland, Sir Richard	Gordon-Walker, Rt. Hon. P. C	Morley, R.
Adams, Richard	Greenwood, Anthony (Rossendale)	Morris, Percy (Swansea, W)
Albu, A. H.	Greenwood, Rt. Hon. Arthur (Wakefield)	Mort, D. L.
Allen, Arthur (Bosworth)	Grenfell, Rt. Hon. D. R.	Moyle, A.
Anderson, Frank (Whitehaven)	Grey, C. F.	Mulley, F. W.
Awbery, S. S.	Griffiths, David (Rother Valley)	Murray, J. D
Ayles, W. H.	Griffiths, Rt. Hon. James (Llanelly)	Nally, W
Bacon, Miss Alice	Gunter, R. J.	Heal, Harold (Bolsover)
Baird, J.	Haire, John E. (Wycombe)	Noel-Baker, Rt. Hon. P. J.
Balfour, A	Hale, Joseph (Rochdale)	O'Brien, T.
Bartley, P.	Hale, Leslie (Oldham, W.)	Oldfield, W. H.
Bellenger, Rt. Hon. F. J	Hall, Rt. Hon. Glenvil (Colne Valley)	Oliver, G. H.
Benn, Wedgwood	Hall, John (Gateshead, W.)	Orbach, M.
Benson, G.	Hamilton, W. W.	Padley, W. E
Beswick, F.	Hannan, W.	Paget, R. T.
Bevan, Rt. Hon. A. (Ebbw Vale)	Hardy, E. A.	Paling, Rt. Hon. W. (Dearne Valley)
Bing, G. H. C.	Hargreaves, A	Paling, Will T. (Dewsbury)
Blenkinsop, A.	Hastings, S.	Pannell, T. C
Blyton, W. R.	Hayman, F. H	Pargiter, G. A
Boardman, H.	Henderson, Rt. Hon. A. (Rowley Regis)	Parker, J.
Booth, A.	Herbison, Miss M.	Paton, J.
Bottomley, A. G.	Hewitson, Capt. M	Pearson, A.
Bowden, H. W.	Hobson. C. R.	Porter, G.
Bowles, F. G. (Nuneaton)	Holman, P.	Price, Philips (Gloucestershire, W.)
Braddock, Mrs. Elizabeth	Holmes, Horace (Hemsworth)	Proctor, W. T.
Brook, Dryden (Halifax)	Hoy, J.	Pryde, D. J.
Brooks, T. J. (Normanton)	Hudson, James (Ealing, N.)	Pursey, Cmdr. H
Broughton, Dr. A. D. D	Hughes, Emrys (S. Ayrshire)	Rankin, J.
Brown, Rt. Hon. George (Belper)	Hughes, Hector (Aberdeen, N.)	Rees, Mrs. D.
Brawn, Thomas (Ince)	Hynd, H. (Accrington)	Reeves, J.
Burke, W. A.	Hynd, J. B. (Attercliffe)	Reid, William (Camlachie)
Burton, Miss E.	Irvine, A. J. (Edge Hill)	Rhodes, H.
Butler, Herbert (Hackney, S.)	Irving, W. J. (Wood Green)	Richards, R.
Castle, Mrs. B. A.	Isaacs, Rt. Hon. G. A.	Roberts, Goronwy (Caernarvonshire)
Champion, A. J.	Jay, D. P. T.	Robertson, J. J. (Berwick)
Chetwynd, G. R	Jeger, George (Goole)	Robinson, Kenneth (St. Pancras, N.)
Cocks, F. S.	Jeger, Dr. Santo (St. Pancras, S.)	Rogers, George (Kensington, N.)
Collick, P.	Jenkins, R. H.	Ross, William
Cook, T. F.	Johnston, Douglas (Paisley)	Royle, C.
Cooper, Geoffrey (Middlesbrough, W.)	Jones, David (Hartlepool)	Shackleton, E. A. A.
Cooper, John (Deptford)	Jones, Frederick Elwyn (West Ham, S.)	Shawcross, Rt. Hon. Sir Hartley
Corbet, Mrs. Freda (Peckham)	Jones, Jack (Rotherham)	Shurmer, P. L. E.
Cove, W. G.	Jones, William Elwyn (Conway)	Silverman, Julius (Erdington)
Craddock, George (Bradford, S.)	Keenan, W.	Silverman, Sydney (Nelson)
Crawley, A.	Kenyon, C.	Simmons, C. J.
Crosland, C A. R.	Key, Rt. Hon. C. W.	Slater, J.
Cullen, Mrs A.	King, Dr. H. M.	Smith, Ellis (Stoke, S.)
Daines, P.	Kinghorn, Sqn. Ldr. E.	Smith, Norman (Nottingham, S.)
Dalton, Rt. Hon. H.	Kinley, J.	Snow, J. W.
Darling, George (Hillsborough)	Lang, Gordon	Sorensen, R. W.
Davies, A. Edward (Stoke, N.)	Lee, Frederick (Newton)	Soskice, Rt. Hon. Sir Frant
Davies, Harold (Leek)	Lee, Miss Jennie (Cannock)	Sparks, J. A.
de Freitas, Geoffrey	Lever, Harold (Cheetham)	Steele, T.
Deer, G.	Lever, Leslie (Ardwick)	Stewart, Michael (Fulham, E.)
Delargy, H. J.	Lewis, Arthur (West Ham, N.)	Stokes, Rt. Hon. R. R.
Diamond, J.	Lipton, Lt.-Col. M.	Strachey, Rt. Hon. J.
Donnelly, D.	Logan, D. G.	Strauss, Rt. Hon. George (Vauxhall)
Driberg, T. E. N.	Longden, Fred (Small Heath)	Stross, Dr. Barnett
Dugdale, Rt. Hon. John (W Bromwich)	McAllister, G.	Summerskill, Rt. Hon. Edith
Dye, S.	MacColl, J. E.	Sylvester, G. O.
Ede, Rt. Hon. J. C	McGhee, H. G.	Taylor, Bernard (Mansfield)
Edelman, M.	McInnes, J.	Taylor, Robert (Morpeth)
Edwards, John (Brighouse)	Mack, J. D.	Thomas, David (Aberdare)
Edwards, Rt. Hon. Ness (Caerphilly)	McLeavy, F.	Thomas, George (Cardiff)
Edwards, W J. (Stepney)	McNeil, Rt. Hon. H.	Thomas, Ivor Owen (Wrekin)
Evans, Abert (Islington, S. W.)	MacPherson, Malcolm (Stirling)	Thorneycroft, Harry (Clayton)
Evans, Stanley (Wednesbury)	Mainwaring, W. H.	Thurtle, Ernest
Ewart, R.	Mallalieu, E. L. (Brigg)	Timmons, J.
Fernyhough, E.	Mallalieu, J. P. W. (Huddersfield, E.)	Tomney, F.
Field, Capt. W J	Mann, Mrs. Jean	Ungoed-Thomas, Sir Lynn
Finch, H. J.	Manuel, A. C.	Usborne, H.
Fletcher, Eric (Islington, E)	Marquand, Rt. Hon. H. A	Viant, S. P.
Follick, M.	Mathers, Rt. Hon. G	Wallace, H. W
Foot, M. M	Mayhew, C. P.	Watkins, T. E.
Forman, J. C	Mellish, R. J	Webb, Rt. Hon. M. (Bradford, C.)
Fraser, Thomas (Hamilton)	Messer, F.	Weitzman, D.
Freeman, John (Watford)	Middleton, Mrs. L	Wells, Percy (Faversham)
Freeman, Peter (Newport)	Mikardo, Ian.	Wells, William (Walsall)
Gaitskell, Rt. Hon. H. T. N	Mitchison, G. R	West, D. G.
Ganley, Mrs. C. S	Moeran, E. W.	Wheatley, Rt. Ht. John (Edinb'gh, E.)
Gibson, C. W.	Monslow, W.	White, Mrs. Eirene (E. Flint)
Gilzean, A.	Moody, A. S.	White, Henry (Derbyshire, N. E.)
Gooch, E. G.	Morgan, Dr. H. B	Whiteley, Rt. Hon. W.

Wigg, G.	Williams, Rev. Llywelyn (Abertillery)	Wyatt, W. L.
Wilcock, Group Capt. C. A. B	Williams, Ronald (Wigan)	Yates, V. F.
Wilkes, L.	Williams, W. T. (Hammersmith, S.)	Younger, Rt. Hon K
Willey, Frederick (Sunderland)	Winterbottom, Ian (Nottingham, C)
Willey, Octavius (Cleveland)	Wise, F. J.	TELLERS FOR THE NOES:
Williams, David (Neath)	Woodburn, Rt. Hon. A	Mr. Popplewell and Mr. Wilkins.

Question put, and agreed to.

Colonel J. R. H. Hutchison

I beg to move, in page 46, line 26, to leave out "or gas".

I think that all Members will agree that one of the problems of today is undoubtedly to get coal. Some say that the economy of the country is being undermined because coal is not. Another problem running concurrently with it is how to save coal, and any modern method of cooking or space heating which will economise in fuel is something which we must consider with care.

I should like to read an excerpt from the report of the Scottish Gas Board for the year to March, 1950. It says: Unfortunately Purchase Tax remains chargeable on gas water heaters, refrigerators, and domestic heating appliances. There is no relief even in respect of appliances which are required for new housing schemes, so that local authorities and private builders are reluctant to give favourable consideration to proposals for gas space heating and water heating installations. Relief would seem likely to encourage an advance in smoke abatement and fuel conservancy, in view of the superiority of gas fired equipment in these respects. So that one of the bodies set up by this Government is, in fact, asking that Purchase Tax should be, if not eliminated, diminished for the type of articles which my Amendment seeks to bring to the Committee's notice. I must confess that it is extremely difficult to find out what exactly is covered, and some of us have puzzled over this for a long time. Whether the present proposals of the Government increase the tax upon any given article requires intensive and deep study.

The result of our study appears to show that the tax upon gas washing machines is to be raised from 33⅓ per cent. to 66⅔ per cent., putting them in the category of water heaters, space heaters and cookers, which are already at the 66⅔ per cent. level. That is far too high, particularly in view of the strictures which have been applied by the Scottish Gas Board.

I believe that technically the only Amendment I can move for the annul- ment, or alteration, of the rate of tax is the Amendment in respect of washing machines. The others are already at the 66⅔ per cent. level. These machines are being treated in this way through a misapprehension. They are commonly regarded, I believe, as semi-luxury articles. When they are mentioned, the minds of hon. Members turn at once to electric washing machines and electric refrigerators costing about £100. But, in fact, this gas washing machine is a poor man's article. It consists of a hand operated agitator, and a clothes wringer.

I know how popular agitators are on the benches opposite. Hon. Members will see that this is an article which in toto costs about £15, and there is no attempt to sell it in the West End of London. There is no agency for this purpose. It is clearly an apparatus not used in the highest income groups. Being a hand operated machine, it saves electricity, and it consequently has a measure of fuel economy in it. It only heats the water by gas. The Purchase Tax, which is to be raised to 66⅔ per cent. is, I believe, imposed upon this machine through a misapprehension.

It was never realised by those who drafted the Purchase Tax rates that this article was a very different affair from the electric washing machine. Here, of course, is a very good example of the value of an advisory committee which my right hon. and hon. Friends have suggested earlier tonight, for this is one of the detailed matters which must have ecaped the attention of the Chancellor. An Advisory Committee could have said that this was something in the category in which it should not be.

There is another aspect. Many of these machines are now getting old and going out of use. But they will continue to be used if this Amendment is not accepted, with a consequent waste of fuel. Spares are difficult to obtain. In the national interest more of these articles should be in use and those already in use should be modernised. For these reasons, I ask the Government to accept the Amendment.

1.30 a.m.

Mr. J. Edwards

I think that if times were normal one would have listened with great sympathy to what the hon. and gallant Gentleman has just said; but, as my right hon. Friend stated in the earlier stages of discussion on this Bill, it is essential that we should have a reduction in home demands if we are to maintain our re-armament programme and sustain our balance of payments. The increase of tax here is not for fiscal and revenue purposes, although if this change now proposed was brought about it would cost £500,000. We hope that such a practice will be the alternative to the more extreme method of physical control, for we believe that if we can find a means of taxation, it is better to use taxation than the control to restrict consumption.

The particular machines to which the hon. and gallant Member refers are, as he says, hand operated; but he will appreciate that under his Amendment would be included gas refrigerators. Granted that the washing machine is worked by hand, then this does not get over the fact that these products are heavy users of sheet steel and nickel. As hon. Members know, sheet steel has already been placed on an allocation basis, and nickel has only recently been the subject of further restriction. Therefore, it would be very difficult on economic grounds to agree to this proposal.

I am glad to hear the opinion that we must economise in the use of fuel, but the hon. and gallant Member is seeking to distinguish between gas and electrical appliances. A few weeks ago I had a long talk with the secretary of the Electrical Development Association about proposals for tax increases in the electrical field. I do not think that I could get away with it if I told him that we were letting gas off but not electricity.

Maintenance of exports and the defence programme are the over-riding considerations here, and unless it can be shown that we can achieve our object in some other way we really must try to use the tax machine to curtail and reduce home demands so that we can divert resources to the defence programme, at the same time maintaining our exports. That applies especially in the engineering field, which is going to be the most hard pressed by the defence and re-armament programme.

Miss Irene Ward (Tynemouth)

I have listened with very great interest to what the Economic Secretary has had to say on this matter, and I think he made one or two extremely good points. I rise to say, however, that the women of the country feel that sometimes, in taking decisions, the Government fail to take into account that if they are hoping to recruit female labour to help with the re-armament programme they should have some regard to allowing women to have some of these labour-saving devices in the home.

I wondered when the Economic Secretary said that he had had conversations with the secretary of the Electrical Development Association, if he had ever thought of having conversations with that section of the community which represents the Women's Electrical Association and the women on the gas councils, because they would both tell him a very great deal about how the women of the country are prepared to help with the re-armament programme if they can have a little consideration for their problems in the home from what is in the main a male-run Government.

Mr. J. Edwards

The secretary of the Electrical Development Association made this very point the hon. Lady is making, and made it very cogently to me, in the discussions we had.

Miss Ward

I am glad to hear that, because the Economic Secretary did not tell my hon. and gallant Friend, who moved this Amendment in very reasonable terms, that that particular point had been put forward. It would have been of very great interest if he had told the Committee that. But, of course, he was absolutely eliminating any consideration of the problems of the housewives of this country.

While I was listening to the Economic Secretary I was making up my mind whether I should intervene just to make these observations or not. I felt very strongly in the early stages of his speech that he did make one real point of substance, and that is the use of particular materials which are in short supply and are necessary for the re-armament programme. I think that point was a very reasonable one which I, as a mere Mem- ber of the Opposition, would not be in any position to make any observations on, but I say, in all sincerity, that when the Economic Secretary or his colleagues come along and perpetually refuse consideration on any matters in which the women of this country are interested, he will get less co-operation than if he frankly put the whole of his cards on the table; he will then get cooperation and not obstruction.

I am bound to say that I am extremely tired of always hearing the case argued from the general point of view with no relation to the needs of the housewife, T want these remarks to be on record so that if any other cases are brought forward by my hon. Friends the hon. Gentleman will deal with not one aspect but with the much wider field. I think if he were to consult some of the appropriate women's organisations in this connection, or if he had an advisory committee with one or two women on it, he would learn a little more about running a house. Then we might have some reduction in the cost of living in these materials which help housewives to get their work through more quickly. I want to draw the hon. Gentleman's attention to that aspect.

Mr. Logan

At this early hour in the morning, the Committee having had a dissertation on washing machines, the hon. Lady has just woken up. If she knew anything at all about washing, she would not be here—not at this hour in the morning.

Miss Ward

I think this is a most interesting discussion. I should be very interested if the hon. Member would develop that argument. I dare say I have done a good deal more washing in a very much wider field—[Interruption.]

Mr. Logan

I am not going into a discussion of the width of washing. Nothing about dimensions at all and I say to the hon. Lady that the finest labour-saving machine she could have in the house would be a husband.

Amendment negatived.

The Chairman

The next group is Group 18, and the next Amendment is that in the name of the hon. Member for Hendon, North (Mr. Charles Ian Orr-Ewing), in page 46, leave out lines 40 to 43.

Mr. Charles Ian Orr-Ewing (Hendon. North)

I beg to move, in page 46. to leave out lines 40 to 43.

This Amendment is associated with the two Amendments in line 46. The object of these Amendments is threefold. Firstly, we hope that the Economic Secretary's heart will be softened and that he will leave the Purchase Tax unchanged on radio and television sets and on radio valves and cathode ray tubes. The second Amendment asks him to relieve valves and cathode ray tubes from the increased Purchase Tax, and the third asks him, if he cannot do that, at any rate to relieve replacement valves and cathode ray tubes from increased Purchase Tax.

I think that, according to the custom of the Committee. I should declare an interest in the subject. I have always been associated with the trade, and I still am. I did hope that we should get some support—and perhaps we will—from the Government side of the Committee on these Amendments. It was, I think, the hon. Member for Itchen (Mr. Morley) who said earlier that, if the state of the parties in the Committee had not been so close. a number of hon. Gentlemen opposite would have put down Amendments. I hope similar sentiments will abide as far as these Amendments are concerned, and even if the lash of the Whips has scoured the names of some of the Government supporters from these Amendments that they will perhaps help us vocally in supporting the idea.

1.45 a.m.

The reasons given in the Budget speech for the increase in Purchase Tax in this field were threefold. They were first on the score of defence. It was said that it was necessary to discourage home sales in order to get the necessary defence equipment. The second reason was on the score of exports, and the third on the score of revenue. I should like first to deal with the question of defence. This year the Government are going to absorb only approximately 30 per cent. of the output of the radio industry. It is true that Government orders exist, but they exist for small numbers of high quality goods.

In the mass-production field, which is the field in which radio and television are made, the orders are very small. We have practically no orders for the expendable units. In fact, this year only 7½ per cent. of the mass-production side of the in- dustry will be absorbed by Government orders. Therefore, there is a grave danger that if the deflation which the Chancellor says is the object of his Budget takes place and throttles back demand we shall have unemployment and shall lose the trained labour force of women which will be badly needed when the large defence orders come along.

In the valve industry the position is even worse. We have heard a great deal about orders, and yet this year the Government will take only 5 per cent. of the output of the valve industry, and in the cathode ray tube industry they will take only 1 per cent. It cannot be on the score of defence that this Purchase Tax has been raised at this stage. In the last war the valve industry was required to expand its output enormously until it was producing 45 million valves in a year. Even with the extended field of police radio, V.H.F., television and many other spheres, we are still not absorbing full productive capacity of the valve industry.

Therefore, if the trained force of women is expended and tempted away to other re-armament industries we may be in a position never to meet the needs of defence when these bulk needs arise. During the last war this industry expanded its output fourfold, and it will do so again. It is not prepared to see a trained labour force slowly melt away like the snow in Summer. It is too early at this stage to say definitely whether home sales in television have been affected by the increased Purchase Tax, but if these sales are reduced there is no doubt that we are going to lose a labour force which will be needed later.

It may be thought by the Committee that I have a vested interest in this matter, and I have already declared my interest. May I quote Sir Archibald Rowlands, Permanent Secretary at the Ministry of Supply, who in giving evidence to the Select Committee on Estimates on this matter, said: We do not want really to close down any of their present level of capacity, because when we shall want an increasing percentage of their capacity they will have lost their labour … In two years time they will have to reduce the number of television sets they can sell in order to provide for the rearmament programme. The argument is that in two years time they may have to reduce the number of television sets; therefore, I ask the Economic Secretary why this tax has been applied at this stage.

Having dealt with his first argument on defence, I should like to cover two points on the export argument. The radio industry has expanded its exports from £2 million worth in 1939 to over £20 million a year today, so that it has at least pulled its weight if it has not done even better than the majority of industry in a tenfold expansion of exports. But today it is not difficult to sell goods anywhere.

In a time of inflation almost everywhere in the world one only has to make goods to sell them. But there is a feeling that when the inflationary tide recedes our goods must be left as high on the beach as possible, because at that time it may be very difficult to compete in the markets of the world. When that inflationary tide recedes our prices must be low and highly competitive and, what is perhaps even more important, the quality of our goods must be equal to that of any other goods in the world.

It is on this last score that I cannot help feeling the Chancellor and successive Chancellors have dealt the industry some very uncomfortable blows in the stomach. We have heard of various products on which the Purchase Tax has been put up and then put down, and certainly the record in this particular trade is a most unhappy one. At the end of the war we were allowed to make utility sets. In October, 1947, the Purchase Tax was increased from 33 per cent. to 50 per cent. In April, 1948, it was increased from 50 per cent. to 66⅔ per cent. In June, 1948, it was reduced from 66⅔ per cent. back to 33⅓ per cent. and in April, 1951, it was increased again from 33⅓ per cent. to 66⅔ per cent. I am sure any Chancellor would agree it is very difficult to keep a smooth production flow, which is essential to competitive prices, if one has an industry taxed, untaxed and then re-taxed in a short period of time.

Another point in connection with exports, which has been mentioned several times in this Committee tonight in all sorts of spheres from tweed to insoles, is that one must retain one's home market if one is to keep a healthy export market; and one must retain the quality of products at home if one is to retain that quality for export purposes. In this country with a tax of 66⅔ per cent., one is bound to produce television sets which are small and cheap. Television is not used by the rich people in this country. A B.B.C. analysis has shown that by and large it is used by the small people. Seventy-five per cent, of the sets are sold to people with incomes of less than £650 a year. It is to those people we have to offer the incentive of a television set, and it is those people who will not pay a tax of 66⅔ per cent. on top of the normal production cost of the equipment.

In the last few months we have started getting inquiries again from the Dominions, South America and all over the world, and the demand is not for the small cheap set but for the big tube set which gives a 16 inch or 19 inch picture. I ask the Economic Secretary to the Treasury, even if he cannot give way on complete sets, to look at the taxation on cathode ray tubes. The 16 inch tube costing £16 cost with the former Purchase Tax £20. At the increased Purchase Tax now operating it costs £24. It is really a little unnecessary to tax a new and progressive industry with a tax of this sort which will put it completely out of business and so place it that it will never regain its foothold in the markets of the world.

I think on the score of defence, on the score of maintaining the quality of our exports, and on the score of maintaining trade and employment for the work-people of this country the Chancellor has imposed this taxation not only unjustly but exactly at the wrong moment, and he is in danger of losing a trained labour force of which he would be in sore need if the time for mass production for war arrived.

Mr. McAdden (Southend, East)

I am delighted to have an opportunity of supporting this Amendment which deals with a matter of great importance. During the discussions we have had so far, mostly upon new Clauses moved from this side of the Committee, great stress has been laid by the Government on the fact that responsibility rests with us to prove our cases. However, when the Government suggest an alteration in Purchase Tax on radio and television from 33⅓ per cent. to 66⅔ per cent. responsibility rests no less on them to prove their case for stepping up the tax.

The Chancellor of the Exchequer, when he first mentioned this increase in his Budget, gave more than one reason for its introduction. [Interruption.] I am delighted to hear the observations of the hon. Gentleman who has arrived at so late an hour. Probably that accounts for the confused and muddled way in which he expresses himself. The Chancellor gave it as his view that not only was it necessary to increase the tax for the sordid purpose of extracting more money out of the pockets of those who purchased radio and television, but also to see that the production of the radio industry was diverted more and more to the needs of re-armament and the export trade.

In former times, in those days of alleged hit and miss forms of business, it might have been forgiven if taxes were introduced on those lines, but in these days of a planned economy I should have thought that it was possible for the Government, if they have a case here, to be able to produce the evidence to convince the Committee. Otherwise, we are entitled to hold the view that their proposals are not sound.

From the census of production figures available to the Government they should know, or at any rate have a shrewd idea, of the total productive capacity of the industry. If the figures are worthwhile. and if they are not it is a pity so much trouble has been taken to collect them, they must have a shrewd idea of the capacity of the industry. Having established that, they have a very sure estimate of the increased tax yield with which to form some idea of what proportion of the total production of the radio industry will in their opinion be available to the home trade in 1951–52.

It is also perfectly clear that the Government, if anyone knows, should know the proportion of the production of the industry which will be absorbed by production for re-armament during 1951–52. They should give us information on the amount of capacity of the industry which is going to be taken up by the home trade, based on the estimated increase yield of tax and the known productive capacity which is going to be taken up by rearmament based on their knowledge of the orders placed so far. Having added those two percentages together, will the Economic Secretary tell us what percentage is left which he optimistically imagines is going to be absorbed into the the export trade? It is important that before we come to a conclusion on this matter the hon. Gentleman should tell us the facts. If he is not able to do so, the whole census of production is not worth the paper it is printed on, and our time is being wasted.

2.0 a.m.

The modern method of production is not to take a radio set and build a tank round it, but to build the tank first and then install the radio. It seems reasonable to assume that the demands on the radio industry will come rather later than the demands for the other forms of equipment in which radio is to be fitted. If a large part of the industry is to be taken up with the re-armament programmed, one is entitled to assume that the aero planes, tanks, vehicles and other things into which products of the radio industry are to be fitted will be coming forward in numbers greater than the evidence so far available would lead us to expect.

The Economic Secretary must produce that evidence, otherwise he has no right to ask the Committee to support this increase of Purchase Tax which will affect a thriving and useful industry, providing employment for many thousands of people, in many cases in areas where work was needed and where unskilled labors was available. If he cannot produce it, we are entitled to assume that this increase in the price at which sets will have to be sold will affect the demand for the products of the industry, will have a consequential effect on employment in the industry, and will thus mean that when the full-scale demands of rearmament are made labor which would have been available will have gone elsewhere. At a later stage it may be necessary to step up this tax, for one reason or the other, but on the evidence so far no case has been made by the Chancellor.

Mr. J. Edwards

The hon. Gentleman began his speech by reaching a conclusion. Later on, he asked that information should be given on the basis of which he could reach a conclusion. He cannot have it both ways, and he ought not to prejudge the issue if he really wants the facts.

Mr. McAdden

The information in my possession lends colors to the belief that this proposal is not justified. I was hoping to get some information to prove I was wrong. I am still waiting.

Mr. Edwards

There must be a reduction in the home consumption of the products of the radio industry if the industry is to bear the growing load of defense work and also make a higher contribution, as I hope, to exports. I am quite sure that the industry cannot take on defense orders and expand exports and at the same time have home demand or home consumption running at current levels.

I should point out to the Committee that so far the Ministry of Supply has placed orders on the radio industry for about £50 million worth of products. I know that that is subject to qualification in the sense that the orders will run for more than one year and I know that there will be sub-contracting; but it is worth while noting in passing that the 1950 estimate of the total output of the industry was £80 million worth, and that orders have been already placed for £50 million worth of products. I know that that will spread over some years nevertheless, I think the figures are useful for purposes of comparison.

I would say to the hon. Gentleman, when he taunts us with not being planners. that he really should ask himself, and ask himself seriously, what he wants. What we are trying to do here is to use the tax machine. Would he prefer us to go in for limitation of supply orders? We may have to in the end, but we would do without them if we could. It would be possible to go in for limitation of supply orders in this field, but we hope that the damping off of demand because of the increased taxation will, at any rate for the time being, meet the situation.

The hon. Member for Hendon, North (Mr. C. I. Orr-Ewing), who moved the Amendment, said that he disposed of the defense argument. I suggest that he has not disposed of it. He was afraid that the industry would run into a kind of depression in which it would lose its labor. Time alone can show, but I think it extremely unlikely that with the rising demand of the defense programmed on this very important industry we shall reach no position like that; but if there were any signs that that was the position, that we were getting unemployment, then it would be, of course, our duty to arrest that tendency without any delay.

He also referred to exports. It is interesting to note what the exports have been. He suggested that in order to have exports we must have a good home market. Last year, the purchases at home of radio sets amounted to £ 18,500,000 worth; exports were worth £3,500,000; so I think that it can be agreed that there is a pretty firm home basis there. In the case of television sets, the home amount was £17,750,000; exports were quite negligible, and the figure for them so small it has not been put in. In general, I really feel that there is no likelihood that the industry will be in difficulty in developing export markets because it has not a firm home basis.

Mr. C. I. Orr-Ewing

How shall we produce the bigger and better sets required in the South American market, for instance—from which we have had inquiries only this week—and in Australia. when the enormous tax here makes us produce cheap, small sets, because people cannot afford to pay between £100 and £200, which would be the price of the bigger sets when tax of 66⅔ per cent. is added to other costs?

Mr. Edwards

We cannot possibly, in order to deal with what, as far as I know, is a mere prospect, relieve all the people who buy television sets of tax. That is really not possible.

Mr. Orr-Ewing

That is not what we are asking. It could be 33⅓ per cent.

Mr. Edwards

It is a measure of relief from tax, anyhow, that is asked for. I would point out, since inquiry was made earlier, that although the purpose of this tax is not fiscal, cancellation of this tax would cost £8,000,000 in a full year. That, of course, is a consideration.

The hon. Gentleman referred to the position of valves. I do not like to strike a discordant note, but it is my duty to do so. So far as I am aware, and so far as the Central Price Regulation Committee are aware, the high cost to the public of replacement valves is not due to tax but is primarily due to the price maintenance policy of the principal manu- facturers. If, as I understand, they sell valves at a loss to set makers and recoup themselves handsomely by charging much higher prices for sales for replacement purposes, the remedy would appear to be substantially in their own hands. But that is a relatively minor point.

The important point is that the overriding consideration in the valve field, as in the rest of the radio industry, is the vital necessity to meet defense needs and increase exports. We must curb the pressure of home demand. I suggest that they have to look at it from one angle only, from the point of view of the nation's needs at the present time. I am absolutely certain this is the right way to try to relieve the pressure of the civilian home demand. With increasing demands from defense and exports, the radio industry will not be able to sustain its production for all these fields.

Mr. Orr-Ewing

I cannot follow the hon. Gentleman's argument. Only 1 per cent. of the cathode ray tube production is taken for defense purposes, therefore the hon. Gentleman cannot say that he has to reduce home demand to make some available for the armament industry. Is it really fair to tax a person who bought a television set two or three years ago another £4 or £5 when he has to replace his cathode ray tube. When he bought his set there was no suggestion that he would have to pay for the rising cost of materials and this extra tax.

Mr. Edwards

I shall not argue on the technical details—it would obviously be stupid for me to do so. But we must not assume that the distribution of resources within the industry is static. I have no doubt that the demands of the defense programmed are going to mean movement from one type of production to another. It may well be that the effect of this tax will be to accelerate this movement, and if it is what the defense programmed requires, so much the better.

Mr. Hamilton Kerr (Cambridge)

I should like to support the plea advanced by my hon. Friend. Washington claimed never to have told a lie, but I cannot maintain so high a standard. I must confess that my constituency would benefit if this Amendment were accepted, as Members who have equipped themselves with a Pie radio set will know.

In the past few years the radio industry has conducted effective research with a view to the export drive. I believe the manufacturers are now ready for this export drive, but this tax will harm it and we shall lose our advantage against competitors, notably the Americans. The industry will be largely involved in the armament programmer. That will be effective in a year or 18 months from now. In the meantime, I am afraid that the skilled labor so requisite for the radio industry will be dispersed, if over-heavy taxation wrecks the industry.

Colonel Stoddart-Scott (Ripon)

In discussing an earlier Amendment, the Financial Secretary said that we could not have geographical taxation. But this is a geographical tax, because in the South of England and the Midlands we already have television stations and sets. But in your division, Major Milner, and I know you are not able to speak for your constituents in debates in the House, in Big house, Cleckheaton and Liver sedge in the division represented by the Economic Secretary and in my division, where we are to have television for the first time, we are to be called on to pay double when we buy our television sets. Therefore, I would like to support my hon. Friend in opposing this tax.

2.15 a.m.

Mr. Sutcliffe (Heywood and Royton)

I should like to reinforce the argument put forward by my hon. Friends. The reply of the Economic Secretary on this proposal in the Budget will give great disappointment to those in the north of England, especially those who live in Lancashire and Yorkshire.

Mrs. Mann

May I point out that there is no hon. Gentleman opposite to speak about how Scotland is affected?

Mr. Sutcliffe

That may be so, but Scotland is not so near to obtaining television—[Hon. Members:? Yes!?]—as is the North of England. The Holmen Moss station is nearly completed and about to operate. There has been so much delay in completing this northern transmitter—it is three years since it was first shown at the British Industries Fair—whereas in the south, people have been able to purchase television sets since 1946 at the lower rate of Purchase Tax, while those in the Midlands have been able to do so only for the last 18 months. It is causing great disappointment, and it will continue to do so, because everyone had come to look forward to the great advantage of television and many have ordered sets. It really is a great blow to people in these large industrial areas, because television is no longer a luxury.

It has been suggested to me that a system might be devised by which this northern part of the country could obtain television sets on something like the same terms as the rest of the country were able to obtain them. It would be an advantage if we could allow residents in the new service area covered by the Holme Moss station—an area which is very clearly defined by the B.B.C.—to buy their television sets at the old rates on signing a covenant that they would not sell outside the covenant area for, say, three years. I think that is a sensible suggestion, though I see there might be difficulties in its operation. If something on these lines could be devised and retailers made responsible for operating the plan, I think it would be of great help, and I ask the Treasury to give every consideration to it.

Amendment negative.

Mr. Redmayne

I beg to move, in page 47, line 4, at the end, to insert: (g) fishing bags, golf bags, cartridge bags, tennis racket holdalls, and similar receptacles of a kind used for sport … … … First. I must declare some small interest in this Amendment, which is designed to change from 66⅔ per. cent, to 33⅓ per cent. the tax on these bags which are part of the equipment for sport. This Amendment has already been attacked by the hon. Lady the Member for Blackburn, East (Mrs. Castle), who I am sorry to see is not in her place; but it arises logically from the Chancellor's Amendment to exempt from Purchase Tax school bags used to carry to school the equipment for mental exercise. This Amendment seeks to exempt bags used for carrying the equipment for physical exercise. It seems to me quite a logical cause to support.

I would hope that the hon. Lady, the Member for Coat bridge and Airdrop (Mrs. Mann), who has already supported me in one Amendment tonight, and persuaded the Financial Secretary by her eloquence, may be persuaded to do so again. A similar Amendment which has not been called, that relating to fishing tackle—which was also attacked by the hon. Lady the Member for Blackburn, East—is probably the soundest case in the interest of the export trade put to the Chancellor of the Exchequer in connection with Purchase Tax. The hon. Lady, in criticizing these things, ought perhaps to look before she leaps.

I am perfectly certain that the Financial Secretary will say that this Amendment is untimely and that it is not necessary at this moment; but I would suggest that it is never untimely to put right something which is simply an administrative anomaly. All sports equipment is, in fact, taxed under Group 20, and the wording of that group specifies accessories and requisites for sports and games, and used for gymnastics and athletics, including parts thereof and accessories thereto.

It seems to me obvious that it was the intention of the draftsmen that "accessories thereto" should include such things as golf bags and tennis hold alls, and so forth. But, by a ruling—and I think it is by a ruling only—of His Majesty's Customs and Excise, these bags are included in Group 23, which deals with trunks and bags, and wallets and similar receptacles, of a kind used for personal or domestic purposes, whether fitted or not.

That is an extraordinary ruling, because in that ruling are included simple things like golf club head covers, which are not used for any personal or domestic purpose. There are some exceptions for bags of various types which are used for vocational purposes; but in the class with which I am dealing is a great number of bags used for sporting purposes which obviously are purely accessories to sport— fishing bags, golf bags, cricket bags, tennis hold alls, and articles of that sort.

There are anomalies already in the interpretation of these Groups. One particular anomaly relates to gamekeepers' bags and to rabbit bags, which are already taxed at the rate of 33⅓ per cent., not because they are vocational, but I think purely because His Majesty's Customs and Excise have got themselves into a certain difficulty over distinguishing between a game bag used by a gamekeeper vocationally and one used by an amateur, and therefore they could only put them into Group 20 and not into their proper Group, namely, Group 23.

I shall not labor this point. It is obvious that there is an administrative anomaly. I do not believe that reduction of the tax from a rate of 66⅔ to a rate of 33⅓ per cent. will make any difference to the economy of the country. There is, I believe, a surplus of the type of leather and, to some extent, the accessories which are used for these purposes, and I am certain that this equipment, being equipment necessary to the various sports, will be bought by those who take part in the sports whatever the tax may be; but it is quite obviously unfair that the rates should be at the higher level.

There may be some small loss to the Revenue, although I do not think it can be very much. There is much common sense in this Amendment, although I know that the Financial Secretary will say that it is untimely, and that he cannot give preferential treatment to one article over another; but I beg him to think over this matter before the Report stage, because under the rules of the Committee it has been impossible to raise this point for some years past, and will quite probably prove impossible for some time in the future. Therefore, the hon. Gentleman might just as well deal with it now.

Mr. Jay

The hon. Member who moved the Amendment stated that he knew what I was going to say in advance, and that I must not say it, but despite that. I must tell him that it does not seem that this proposal really fits in with the general class of exemptions and reliefs which we have been able to make this year. The reliefs in Purchase Tax generally relate to household articles which most of us regard as necessities. It is true that we have included school satchels in the reliefs, but it has long been regarded that it was an unjustified anomaly that those bore Purchase Tax whereas receptacles used for any trade, profession or vocation, were exempt.

It seems to me that these fishing and golf bags, and tennis racquet hold alls, and so on, do not really come into the same class as receptacles used for professional or working purposes, or the same class as school satchels. The hon. Gentleman asks what the cost would be; while in this particular group it would, I agree, be small—although it is not easy to estimate exactly—I would remind the Committee that the total revenue from Purchase Tax on receptacles is as high as £8,250,000. If we accepted a reduction on this particular group, there would at once be a very good reason for it to be sought for others. This is not, therefore, one of the proposals which we can undertake to consider further.

Amendment negatived.

Amendment made: In page 47, leave out lines 5 to 14.—[Mr. Jay.]

Mr. Lindsay

I beg to move, in page 47, line 16, after "(b,) insert: after the word 'brushes' there shall be inserted the words 'other than toothbrushes. The purpose of this Amendment is to remove toot brushes from the incidence of Purchase Tax. The whole structure of Purchase Tax, it is agreed I think, is simply bristling with anomalies, and there is no greater, or more ridiculous anomaly than this. This essential item, which should be in every bedroom or bathroom in the land, is now subject to 33⅓ Purchase Tax. The Chancellor has already recognised that this article, with others, partly in the medical and partly in the toilet field, which are in constant use, should not be subject to Purchase Tax. Therefore, this Finance Bill provides for hot water bottles, urinals, commodes, toilet paper, air pillows, air cushions, waterbeds, and so on to be relieved of Purchase Tax.

2.30 a.m.

I suggest an essential difference between these items and a toothbrush because obviously one does not make frequent use of them unless one is so far gone that one does not care whether one pays Purchase Tax or not. A toothbrush is infinitely more essential and the case for relieving it from Purchase Tax is infinitely stronger. I always thought that it was the duty of parents to bring up their children to clean their teeth in the mornings. Apparently we have reached the stage now where a parent says to his children, "Do not brush your teeth too hard and do not use toothpaste because it costs too much money."

I suggest that today, and in future, because the populace are having to bear half the cost of their dentures, it is more important than ever that they should not feel inhibited against purchasing new toothbrushes. I understand that the annual consumption of toothbrushes is in the neighbourhood of 15 million and I suggest that even if one allowed for the fact that part of the populace's teeth have not grown and others have fallen out, it still means that the average person in England buys one new toothbrush every two years. This is a very frightening figure and one which should cause us all alarm. I have many extremely good jokes which I have been preparing for the last three weeks, but it is much too late in the morning to make them, and therefore I have moved the Amendment briefly.

Mr. Snow (Lichfield and Tamworth)

I was rather surprised on the Second Reading of this Bill that I was, in fact, the only Member of the House to raise this particular issue. I suppose it should give me some comfort that the Opposition have now woken up to this very important matter. I think this Amendment and its companion Amendment, should receive the very serious consideration of the Government.

I want to take this opportunity of correcting what was an error in my Second Reading speech, in that I rather implied that the Purchase Tax in question had been imposed during the lifetime of the last Parliament. I was corrected afterwards privately that it was imposed during the war.

One of my contentions is that the tax in question should never have been imposed and should not have been retained. I did give to the House on the occasion of my previous speech a list of the types of brushes which are, for the purposes of this tax, included with toothbrushes. If I may repeat that list again, it will demonstrate the false equation that has been made. We find that toilet brushes, bath brushes, clothes brushes, eyebrow brushes, hair brushes, hat brushes, nail brushes, shaving brushes, and animal toilet brushes are all equated with toothbrushes. Sir Charles, you and I may have different views about the value of these various sorts of brushes, but I think we would agree that toothbrushes cannot in any sense of the term be considered a luxury.

There is another rather important point. I think there has been an example recently where a tax has been reduced and where the benefit of that reduction has not been passed On to the public. I am given to understand that it was in 1949 that the price control on tooth brushes was in fact removed, it being thought that competition would do its proper job and keep prices down. I am not prepared to argue that there has been, in fact, a serious degree of profiteering in this commodity, but I did take steps to find out what was the history, so far as profits and dividends were concerned, of the three leading manufacturers of tooth brushes in this country. I found one of them was manufactured by a very large limited liability company, whose activities were so varied that you would not ascertain what profits they were making on tooth brushes.

The other two were private companies, and one of them, whom I approached for figures through a reputable agency, frankly refused to give me any information at all. [Interruption.] I heard hon. Gentleman opposite saying, "hear, hear." It seems rather a pity that when we are considering a reduction in tax with a view to assisting the consumer, they should applaud the business principle that we should not be given information to judge the issue properly.

Therefore, I do say to my hon. Friend that if in fact he can be convinced about the legitimacy of the argument, he should consider taking up with the trade the question of disclosing information that would enable us to judge whether or not a reduction of tax is going to be passed on properly, or he should consider the reimposition of Purchase Tax through a Statutory Instrument.

One other point I want to make is that I think it could be fairly argued that the present high cost of tooth brushes does result in a reduction in purchasing of this commodity. I took the precaution of consulting what is, I suppose, the greatest authority on dental hygiene in the country—namely, the Eastman Dental Clinic at Gray's Inn Road. If I may say so in parenthesis, it is worth the time of any hon. Member to go and see that clinic. I am authorised by the director to say that he would welcome any hon. Member there. I am advised by them that it is by no means uncommon for a mother of a family, when she is told she should be buying tooth brushes at three- or four-monthly intervals, to say "But that will mean laying out about 10s. every three or four months, and that is a serious financial consideration."

I think, in essence, one should only argue for the reduction of this tax on these lines: that it is wrong to consider a tooth brush in the same category as other sorts of brush I have described. Therefore, I urge that this particular Amendment should be accepted by the Government.

Mr. Jay

I must confess I was much impressed at the time by the eloquent speech made by the hon. Gentleman for Lichfield and Tamworth (Mr. Snow) on the Second Reading. I took the precaution, after that, of consulting my right hon. Friend the Minister of Health to obtain his view on the matter and I found, as I rather suspected, that he also was in favour of tooth brushes. I have listened tonight to the hon. Member for Solihull (Mr. M. Lindsay), whose speech bristled with wit, some of it apparently unspoken, and my hon.. Friend behind me, whose speech bristled with powerful argument.

The real reason why the Government in recent years have hesitated to exempt tooth brushes is mainly that it was felt to be doubtful whether a distinction could be made between the tooth brush and the other brushes my hon. Friend mentioned—hair brushes and so forth. [HON. MEMBERS: "Oh!"] I gather, however, from the comments from the Committee generally that it is now the view of the Committee that a perfectly firm distinction can be made between the tooth brush on the one hand and these other brushes on the other.

On that understanding, and if that is the view of the Committee, I think a clear case has been made for considering the exemption of tooth brushes from tax. I would only add, for the information of the hon. and learned Member for Wirral (Mr. Selwyn Lloyd), who displayed considerable curiosity about the figures but who has not stayed to hear the answer, that the cost of this exemption, if we were to decide to admit it, would be about £450,000.

Lieut.-Colonel Bromley-Davenport (Knutsford)

It seems to be my fate to rise to speak at that point in the proceedings when nobody wants to listen. Some six summers ago in the Chamber which is now the other place I made a special plea to the then Chancellor of the Exchequer to remove this tax from tooth brushes and tooth paste, and I hope the Committee will forgive me if I briefly repeat the gravamen of my pleadings on that occasion.

Surely social democracy has advanced sufficiently for tooth brushes to be regarded as a national necessity rather than as a luxury for the idle rich. The standard of the people's teeth has not been very high, and it was in order to try and remedy that defect that this Government, carrying out the policy of the Coalition Government, has embarked on this vast scheme of national expenditure to improve the supply and quality of dentists and to improve the health services. But I submit that a great deal of this expenditure could have been saved had the tax been taken off tooth brushes and tooth paste.

Surely it is paradoxical that this Government should spend hundreds of millions of pounds a year in subsidising the food for the people of this country and that they should then tax the brushes with which the people seek to preserve their teeth in order to consume that food. Surely it is more important now than ever it has been before to have stronger and cleaner teeth in order to consume the tough horse-flesh which the housewife has to buy. I think I shall carry the Committee with me when I say that it may well be that the Government envisage an even further lowering of the standard of the foodstuffs for the people of this country, and that therefore they seek to destroy the people's teeth in order to discourage their desire for eating.

Although this Finance Bill is a bad Bill and already has too many teeth in it, let us at least have tooth brushes in the Schedule. My final point is this. Surely it is ridiculous that the brushes with which the women of this country laboriously scrub their doorsteps should be free from tax while in some cases their unscrubbed teeth may be decaying because of the tax on tooth brushes.

Amendment negatived.

Mr. Geoffrey Lloyd (Birmingham, King's Norton)

I beg to move, in page 47, line 20, to leave out paragraph 11.

The Deputy-Chairman

Perhaps it would be convenient if we dealt at the same time with the following Amendments: In page 47, line 25, after "vehicles," insert: other than a vehicle without the use of which it can be shown by medical evidence that a person cannot conduct his means of livelihood, which shall be charged at the first rate"; in page 47, line 26, at the end, insert: (b) After paragraph (a) there shall be inserted the following paragraph:— (b) road vehicles, to which paragraph (a) of this group would apply but for the following reasons,

1. (i) the chassis of each such vehicle was purchased by a person (in this paragraph called? the purchaser') on a date before the eleventh day of April, nineteen hundred and fifty-one, and
2. (ii) additional superstructure is added on or after the eleventh day of April, nineteen hundred and fifty-one, on behalf of the purchaser by a person or persons not being the manufacturers of the chassis … … … First.";

in page 47, line 26, at the end, add: (b) After paragraph (a) there shall be inserted the following paragraph:— (b) road vehicles to which paragraph (a) of this group would apply but for the following reason, namely that they were purchased outside the United Kingdom by members of His Majesty's armed forces or departments of state while serving in the normal course of their duties, on a date preceding the eleventh day of April, nineteen hundred and fifty-one … … First."; and in page 47, line 37, at the end, add: Provided that mechanically-propelled vehicles and mechanically-propelled tricycles, being road vehicles, when purchased by persons who have not been supplied with a vehicle by the Ministry of Pensions and the nature of whose disability makes such transport indispensable, shall be charged at the first rate.

2.45 a.m.

Mr. Lloyd

The Financial Secretary when he was defending the Petrol Duty gave as one of its great virtues that it was spread widely and evenly over the whole population. I think we could agree with that, but he cannot bring forward that defence with regard to this tax, which I think I can say is concentrated fiercely on a relatively small number, that is, 80,000 people.

Perhaps I can sum up the case I want to make by saying that both the Chancel- lor and the Financial Secretary when they were dealing with the duty on petrol asked us to consider the conditions abroad with regard to the price of petrol. I might ask the Chancellor to glance for a moment at conditions with regard to the Purchase Tax on motorcars in those countries.

I understand the tax in Canada is about 30 to 35 per cent. But the number of cars absorbed into the home market in Canada in a year is 340,000. It will be seen, therefore, that the revenue from the tax in Canada, although broadly speaking it is at the old rate we had in this country and half the rate which the Chancellor proposes today, will yield revenue twice as great as the Chancellor will get from his increased tax. I would add, in passing, that the allocation per head in Canada is 16 times greater than in the mother Country at the present time, which is a rather startling fact.

Taking another country in a completely different situation, Germany, which is not a Dominion nor an ally, and where the population is a few millions less, the purchase or sales tax is 3 per cent., and the allocation of cars last year was 165,000. On a 3 per cent. basis one would hardly expect to get the revenue the Chancellor is expecting, but if there were an allocation of cars in this country equal to what the Germans are getting at the present time the Chancellor would be able to obtain the revenue he is expecting to get this year from double Purchase Tax by keeping the tax at the same level as it was before.

I do not want to carry that argument too far and I am not carrying this comparison quite as far as the Chancellor did over petrol. I do not think it is conclusive, but I think it is food for thought. The thought I want to put in the Chancellor's mind is that this tax is unique in that by his right hand he fixes the rate and by his left hand he fixes the number of articles on which tax is to fall, and in a sense he is doubly responsible for the revenue here. Is he satisfied that in striking the balance of the rate and number, which is at present 80,000, he has struck exactly the right balance with regard to cars allocated to the home market?

I am sure he will not think I am suggesting we have to override the needs of defence and of exports, but it is not just a question of black and white otherwise he would not have even an allocation of 80,000. I noticed that conditions are changed. There is, for example, the increased allocation of sheet steel announced today for the motor industry which might permit a larger production, and there is the Margam mill which is coming on later. If that larger production were forthcoming, would it be possible to tax it at a lower rate which would produce a similar revenue?

There is also the question whether the old car population we have at the moment is not making an extravagant demand on production and manpower in the making of spare parts. Would it not be better to use that production and manpower more for the building of new cars so that the Chancellor would have an extra proportion of Purchase Tax? If, for example, he were only able to revert to the quota of 110,000 as it was before February of this year, he would be getting, even if he kept the old rate of tax, nearly half way towards the extra revenue he is getting this year from his new and double tax.

When he is striking this balance, and perhaps listening to the case I am making, would the Chancellor also bear in mind the disadvantageous effect of double Purchase Tax on the second-hand price of cars? Before the war, and before the imposition of Purchase Tax, a 10 h.p. four-year old car could be bought for about £45. At the present time a 10 h.p. four-year old car costs about £690. That is a very severe disadvantage for those to whom we are looking to become motorcar owners, and I would conclude by asking the hon. Gentleman to consider the argument.

Sir W. Wakefield

The Chancellor of the Exchequer, the Financial Secretary, and the Economic Secretary have all at various times pointed out that the purpose of the Purchase Tax is to raise revenue. The Financial Secretary said earlier this evening that he did not have much money to play with, but that he would listen carefully to the representations which were being made to him.

The Chancellor will be glad to know that the proposals I am going to make will give him extra revenue, and this should help him to consider sympathetically some of the proposals put forward by my hon. Friends. The way in which extra revenue is going to be raised, if my proposals are adopted, is for the Chancellor to reduce the Purchase Tax on taxicabs. I have evidence which shows he has already lost, and will continue to lose, a great deal of revenue. I have a letter from one of the distributive agents of the manufacturers which states: Since the Budget was announced on the 10th April we have delivered only 30 new cabs subjected to the double Purchase Tax, which has brought in to the Exchequer a matter of £13,000. We have been delivering up to the time of the Budget an average of 90 cabs a month, or for the seven weeks intervening to date since the Budget, some 150, in spite of which we have delivered only 30. The single tax on these 150 would have amounted to £32,500.

The Deputy-Chairman

I think the Amendment relating to taxicabs was one I was not proposing to call.

Sir W. Wakefield

The point I am making, I submit, is included in the matter of Purchase Tax on vehicles which we are discussing. I am showing to the Chancellor that I have evidence that he is losing revenue, and if he reduces the tax he will get more money than he does now. I trust I am in order in doing that.

The single tax on these 150 taxicabs is worth £32,500 to the Exchequer so that the extra tax has already lost the Treasury £20,000. When the increased tax was announced, the immediate effect on this agent's sales was extremely drastic. Not only did the large proprietors hold up delivery, but the small owner-drivers held up or cancelled their orders to the extent of 85 per cent. I have also information from the London Taxicab Proprietors' Association that over 90 per cent. of orders placed with manufacturers have been cancelled.

Mr. Edelman (Coventry, North)

Are the reasons the hon. Member is advancing for the cancellation of orders supplementary to the fact that certain large manufacturers of taxicabs in Coventry have recently provoked a strike?

Sir W. Wakefield

I know nothing about strikes in Coventry. All I know is that this double tax is so severe that orders have been cancelled as a result. I am indebted to the hon. and gallant Member for Morecambe and Lonsdale (Sir I. Fraser) for the information that the British Legion, with which he is closely con- nected, runs a taxi school for ex-Service men, and that these men are deeply concerned about their prospects of ever being able to purchase a cab and run it themselves. What people do not understand is why these taxicabs, operating in London, Liverpool and Glasgow and specially constructed according to police requirements, should not be exempt from Purchase Tax in the same way as a variety of other vehicles, including omnibuses, coaches, travelling shops, canteens and horse boxes. There seems to me no reason whatever why this exemption should not be given. Greater revenue would be obtained by so doing.

The Chancellor was asked by the London Taxicab Proprietors' Association last April to receive a deputation. He replied that he would not do so because all the salient facts were before him when preparing his Budget proposals and he had decided that the increase in Purchase Tax and the duties on hydrocarbon oils were necessary to produce the extra revenue for defence. So far from producing extra revenue in this case, he is in fact losing substantial revenue. I hope he will reconsider the matter. Unless he does so, London is going to be left without taxis. According to police requirements, 1,524 cabs have to go off the streets this year and 1,103 next year. As over 90 per cent. of orders have been cancelled, there will be no replacements. The cost is quite prohibitive. The hire purchase cost is now £1,493, as against £471 before the war. The cash price is £1,210, of which £433 is Purchase Tax as against a pre-war price of £355.

For all these reasons I suggest that the Chancellor of the Exchequer reconsider his decision. If he will, I think, he gets what he wants, that is, obtain more instead of less revenue.

3.0 a.m.

Mr. Lionel Heald (Chertsey)

I am going to assume that the Committee has the same knowledge of this rather complicated matter of my Amendment in line 26 as, I am sure, the Economic Secretary has, and that I may put it quite shortly this way. The effect of the provision as it stands in the Bill at the moment is that if someone has purchased a chassis of a motor vehicle, paid for it and paid Purchase Tax on it, and subsequently has a body put upon it, he not only pays the increased tax on the body but the increased tax on the chassis which is already his property. That is, of course, an obvious anomaly of a serious character.

I quite appreciate the difficulties of making our Amendment. I want to say at once to the Economic Secretary—and I think he will be sympathetic to this being done—that the Amendment goes further than, I think, it should go, because as it is drawn it would exempt from the increase of tax not only the chassis—which is clearly right—but also the body, which, I think, is clearly wrong. I want to admit that the Amendment goes too far, but I should like the hon. Gentleman to consider the matter; and if he comes to the conclusion that it is possible to draft an Amendment in such a way as to give the relief that I think is justified, without going to an unjustifiable extent, then I should very much like to have an opportunity of discussing the matter with him before the Report stage, to see whether we can arrive at some conclusion.

It does seem to me to be a most remarkable thing that a man who has a separable and separate article in his possession, which he has paid for and paid Purchase Tax upon, should retrospectively be compelled to pay more Purchase Tax on it. That does seem to be a wrong thing. After all, although last year we had a most interesting discussion of what a chassisless vehicle was, there is not much doubt about what is a chassis. A chassis is a thing on which one can place a box and sit upon, and which one can drive away. Everybody knows what it is, and everybody knows it is one's property. I suggest that it should not be beyond the wit of man, and surely not beyond the wit of the Treasury, whose wit is greater than that of the average man, to provide some method by which that injustice can be relieved.

Mr. Wood (Bridlington)

At various times during the last fortnight my hon. Friends and I have put arguments before the Chancellor of the Exchequer and the Financial Secretary about various hardships which we believe people are suffering through the policy of this and the last Budget, and I hope that tonight I shall have greater success than I have had so far in finding a way to the kind heart of the Economic Secretary—if, indeed, he is to answer this case—in asking him if he will consider favourably the Amendment we have down to line 37.

So far we have considered the difficulty of disabled people through the rise in the tax on petrol. The rise in the running costs have been substantial, but that is, to use the word I think the Chancellor of the Exchequer used the other day, a "bagatelle" compared with the terrible difficulties that are facing disabled would-be buyers of new cars. I believe I am right in saying there are 2,000 vehicles which the Government have allowed to badly disabled ex-Service men and I suppose there is a rather larger number of mechanically-propelled vehicles of a smaller kind which are also allowed.

This Amendment claims nothing for these two categories. The people it claims to relieve are those who have tried to save up some money to buy a vehicle for themselves. Rightly or wrongly, it is the policy of the Government to allow no priority merely because of disability, and a great many people who have saved up and waited for some years to buy a car are extremely hard hit because the tax has gone up. The Economic Secretary may boggle at the words, the nature of whose disability makes such transport indispensable. I do not think my hon. Friends would be tied to that form of words. The Government recognise that certain categories need transport and they are provided with transport by the Ministry of Pensions.

I should like to ask whether persons in the category who have not been provided with vehicles by the Government could be eligible for this relief from the higher rate of Purchase Tax. Frankly, I have no idea of how many disabled ex-Service men who need this kind of transport will wish to buy motorcars in the next 12 months. I should be extremely surprised if it were more than a few hundreds. I have already heard of one case in which the person had to cancel an order for a car because of the increased tax. I wish the Economic Secretary to consider seriously whether this kind of thing can be prevented.

In conclusion, I should like to put these considerations before the hon. Gentleman. The increase in cost to the individual who is saving up for a car is enormous, while, if this Amendment were accepted, the loss of revenue would be negligible. The administrative difficulties of allowing a certain category of people to buy cars at the lower rate would not seem to be insuperable. Lastly, to forestall what has become a popular argument in resisting these Amendments, the granting of this concession to those who are unable to travel without it would seem to land the Treasury in no difficulty whatsoever. I hope the Economic Secretary will give favourable consideration to this Amendment.

Mr. Boyd-Carpenter

The Amendment in my name and the names of my hon. Friends the Members for Monmouth (Mr. P. Thorneycroft) and Hampstead (Mr. Brooke), in line 20, is designed to deal with a difficulty which has arisen affecting members of the Forces serving abroad. Such persons who purchase a car from this country obtain it in the first place without payment of Purchase Tax, but when they come back to this country and bring their car with them, they have to pay Purchase Tax.

As a result of the increase in Purchase Tax under this Schedule, a number of such people have been caught most unfortunately; that is to say, having obtained delivery of a car last year when serving abroad, if they return to this country they find that, instead of paying the rate of tax applicable to the date of purchase, they had to pay at the present rate. The matter was drawn to my attention by a constituent of mine, serving in the Royal Navy at Malta, and two paragraphs in his letter are relevant. In the past serving officers and men have been permitted to import British motorcars into the United Kingdom at the purchase tax which would have been charged if the car had been delivered to them in the United Kingdom—instead of abroad. To support this one had to produce a certificate from the manufacturers saying what that purchase tax would have been. Now, I am reliably informed, the purchase tax being charged on cars entering the United Kingdom is double this tax, i.e. at 66⅔ per cent. instead of 33⅓ per cent. This despite the fact that the cars were purchased 12 months or more before April of this year. In my particular case the car (a Morris Minor) was purchased in Malta and full Malta import duty paid in April, 1950. I shall be bringing the car back to the United Kingdom in June and it would appear that the total cost to me will be very nearly £600, of which £167 will be purchase tax and something of the order of £60 or £70 Malta duty. It seems unfair that a man who has purchased a car abroad should find subsequent to that purchase that when he returns to the United Kingdom he has to pay a different rate of Purchase Tax from that which he would have had to pay if he had lived in the United Kingdom at the time he bought the car. The Amendment is designed to deal with the men serving in the Forces abroad, and the reason my hon. Friends and I have made that distinction is that other people abroad are free to control their own movements, but the serving man has to move where he is instructed, and the timing of his movements is outside his control. If the Purchase Tax provisions remain as they are at the moment, these people may be involved in an appreciable financial loss.

I have been in touch with the Financial Secretary, and the last paragraph of his letter is material. He mentioned the name of my constituent, which I will not quote to the Committee. The letter states: So and So is unfortunate in getting caught by the higher tax; but I should imagine that there are a great many persons in this country who have been waiting a long time for a car, and would be only too glad to have a similar car at the same amount as it will have cost him when he brings it here. I hope that is not the attitude which the Government are going to adopt. It really does seem—and I hope I am not using too strong language—a shabby way to treat members of His Majesty's Forces serving abroad, and I hope that the Treasury will, on consideration, appreciate that there is here a real grievance which could be put right at an obviously trifling cost. I do not know whether the Economic Secretary can give the exact figure, but it is trifling.

As to administration, there is no difficulty in the case of a car, which is an easily identifiable article with a chassis number, etc. If the manufacturer could give a certificate of date of sale and delivery, a reduction in the Purchase Tax could be obtained only when the certificate was produced to satisfy the Customs that the car came within the concession. It seems that there is no other practical difficulty in doing it. If there is no other practical difficulty and the cost is trifling, I can see no reason why members of His Majesty's Forces serving abroad should not get relief from this unfortunate and accidental consequence of increased Purchase Tax.

Mr. Macdonald

In rising to speak to my Amendment in line 25, it is so much in line with that of the hon. Member for Bridlington (Mr. Wood) that there is no need for me to enlarge on it at all. But I add my appeal to the one he made to the Chancellor of the Exchequer that the right hon. Gentleman should give consideration to the small number of people who are suffering hardship by the increase in the tax on motor cars when they find it essential to have a car in order to gain their livelihood.

3.15 a.m.

I have had several letters from young ministers and others crippled with rheumatoid arthritis, and they complain that, having saved sufficient to buy a car carrying the old rate of Purchase Tax, they find it impossible to do so now unless they can get a loan from someone, or otherwise raise the money, to pay the additional amount. I think there will be no chance of any misuse of this privilege, if the Chancellor of the Exchequer will grant it, because the right hon. Gentleman can insist upon the necessary medical certificates to vouch that they need cars. I have great pleasure in supporting the remarks of the hon. Member for Bridlington.

Mr. Henry Brooke (Hampstead)

I promise to be brief at this hour of the morning, but I want to support the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), because he has called attention to a genuine, and remarkable, hardship. A constituent of mine was serving in Hong Kong, where he bought a British car and, having calculated the Purchase Tax to be paid on it at the old rate, he proposed to bring it home. He would have had it home before the Budget, but for the fact that the Board of Trade delayed his import licence, so that he was not able to get the car on board ship until March. It arrived in this country on 16th May.

While both he and the car were at sea the news came through, disastrous news for him, about the doubling of the tax. He was informed, when he reached this country a month after the Budget, that he would be required to pay about £500 Purchase Tax instead of the £250 for which he had bargained. He thought that was unjust, and in any case, he had not the money to pay the extra tax. The only alternative which appeared open to him was to sell the car. It then emerged that, under a rule made by another Government department, namely the Board of Trade, the import licence granted to him precluded his selling the car within two years of importation.

He is therefore in the position of a man—a serving officer—who has done everything in perfect good faith, not expecting a bombshell of this kind, and now finds that he can neither afford to pay the double Purchase Tax to get his car released for his own use, nor is he permitted to sell it. Is the car to be forfeit to the Crown, or is the Government going to see whether, in these cases, some way out can be discovered so that men who have been serving in the Forces abroad can be saved from this exceedingly unpleasant homecoming which the Chancellor of the Exchequer has, I am sure unwittingly, prepared for them?

Mr. J. Edwards

A number of different points has been raised in this discussion and the Committee will, I hope, forgive me if my reply is a little disjointed. May I begin with the Amendments in the names of the hon. Member for Bridlington (Mr. Wood) and the hon. Member for Roxburgh and Selkirk (Mr. Macdonald). I think that we listened sympathetically to their speeches, but I must say to the Committee, as the Chancellor of the Exchequer did on a similar topic earlier this week, that we and previous Governments have given great attention to this matter to see whether some further relief can be given for disabled persons who need their own road transport.

I have to tell the Committee that there has not been found any method which is really practicable and which can be administered. Although the case does raise sympathetic issues, we cannot accept either of these proposals because we should, thereby, adopt something which is administratively unworkable. It is a fact of which one has to take account, and no Government ought to agree to something which in practice it cannot carry out. With great respect to both hon. Members, I am sorry to have to say that we cannot proceed as they suggest.

So far as the hon. and learned Member for Chertsey (Mr. Heald) is concerned, I cannot give much hope for his view. After all, the number of cases to which he has referred must be very small, because the overwhelming majority must get their cars from the manufacturers, or from a person specialising in body building on the chassis; and the cases where a person buys a chassis and then places a contract for the building of the body, must be very few.

I do submit that the chassis by itself is useless until the body has been built on to it, and it does not seem to be a correct use of language to describe the purchase of the chassis as a complete transaction in itself. The hon. and learned Member was good enough to point out the fault in the draft, but I think it would be very difficult to justify a change of this kind. The cases must be very few indeed, and might even include those people seeking to forestall the payment of tax by this means; and, in all the circumstances, I am afraid that we cannot agree.

Turning to the Amendment moved by the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and supported by the hon. Member for Hampstead (Mr. H. Brooke), I say at once that I see the point of what both have said; but that point does raise a very great difficulty as a matter of principle. So far we have kept the invariable rule that importers must pay their tax or duty at the rate in force at the time of the importation and this rule we think is essential so that imported goods coming on to the home market bear the same tax as those goods being produced in this country. If we did not do this, the taxation would not be in proper balance. Generally speaking, it would be quite impossible to have import duties for the great majority of goods depending on the date of purchase.

A further difficulty, quite frankly, is that if we are to do this one way—that is to say, when Purchase Tax goes up, we amend the law—then we must do it the other way; and in respect of motor cars for these particular classes of people, the Purchase Tax must be the Purchase Tax in operation at the time of purchase.

Mr. Boyd-Carpenter

My case was not that at all, but that it should be no higher than at the time of purchase.

Mr. Edwards

Yes, but that, if I may say so, is absurd, for the hon. Gentleman wants it just one way. It would be impossible for anybody representing the Treasury to say, "Very well, whenever the tax is going the one way, you shall have the benefit, and if it is going the other way you shall also have the benefit." While I have a good deal of sympathy with the cases brought to our notice, these difficulties of principle are real. I am, however, prepared to consider it from the point of view of the individual difficulties that have arisen, but I forsee very great difficulty in dealing with the matter so that it would not raise a whole crop of anomalies and cause any Treasury spokesman great embarrassment in the future.

I come finally to the Amendment that has been moved by the—

An Hon. Member

What about taxicabs?

Mr. Edwards

The hon. Gentleman says taxicabs, but I understood. Sir Charles, that the Amendment dealing with taxicabs was not in order.

The Deputy-Chairman

That Amendment is not being called: it is in the wrong form.

Sir W. Wakefield

I did not speak to that Amendment but to the Amendment in the name of my right hon. Friend the Member for King's Norton (Mr. Lloyd).

Mr. Edwards

In reply to the hon. Member for St. Marylebone (Sir W. Wakefield), may I say that the right hon. Member for King's Norton based almost the whole of his case on the idea that the allocation of cars for the home market should be increased. I think that is not exaggerating the case he put—that if only we allowed more cars to go on the home market and kept the tax at the lower level, it would be all right. That argument overlooks a very important point and seems to suggest that the right hon. Gentleman is not aware that we have an export problem still with us. The record of the motor car industry in this matter has been very good, but we know, with the export market as it is at the moment, that we can still sell more cars abroad. It was therefore a deliberate act of policy to reduce the quota for the home market. If the motor car industry produces more cars, it will be the wish of the Government that we should not have more cars on the home market because we have to pay our way abroad and the contribution of the motor car industry is most important.

If we assume, as assume I must, that we cannot in present circumstances have a bigger allocation of cars on the home market, I think it will be agreed that in present circumstances we just cannot give up the £17 millions in a full year that would be involved if the tax were reduced in the way the Amendment suggests. Unlike most of the other cases I have handled this evening, this is one where the primary purpose is to raise money. I agree that it is bound up with the allocation to the home market, but I cannot concede the major point the right hon. Gentleman is putting. Therefore, not being able to concede that, I have to say that on the facts that £17 million is not a sum which can be given up in present circumstances. For these reasons, I hope the Amendment will be rejected.

Sir W. Wakefield

I made a very clear case to show that the Treasury were losing revenue by having this double Purchase Tax on taxicabs. Why not remove that and get more revenue?

Amendment negatived.

The Deputy-Chairman

Does any other hon. Member wish to divide on his Amendment? I think not.

Motion made, and Question proposed, "That the Schedule, as amended, be the Fifth Schedule to the Bill."

3.30 a.m.

Viscount Hinchingbrooke

I shall not keep the Committee for more than three minutes, but the Chancellor of the Exchequer, in his Budget speech, forecast most of what this Schedule would contain and, in particular, said that household goods in common use would be reduced to the exemption rate. That being the case, I cast my eyes down these two or three paragraphs to see whether they fulfilled that condition, and I noticed one item in paragraph 2 (e), that seems to me to be outside the range altogether, namely, air pillows, air cushions, water beds, water pillows, and water cushions. I should like to know what these are, and whether they are not in fact some kind of luxury article such as egregious persons might purchase for floating down the Thames during Henley week. They seem to me to be a very curious collection indeed. Perhaps a better explanation could be offered.

A little further down the Schedule one sees a number of items which are not even in common use in the home. They are much more particularly related to group homes, old persons' homes or hospitals. I want to know whether, on the advice of the Minister of Health, the Chancellor has put in this Schedule at the last minute certain items peculiar to hospital equipment and what is the reason for so doing, because it would appear that all the items now used in hospitals are not exempt from Purchase Tax. Beds and bedding and linoleum, for example, I gather carry the normal domestic rates even if they are used in hospitals. Surgical trollies are rated at 66⅔ per cent. and there are certain medical appliances that carry Purchase Tax.

If the idea is to free from Purchase Tax altogether what is in common use in hospitals and group homes in the country, that has not been achieved by the Schedule. What has been achieved is a special favour to certain types of industry which produce certain hospital accessories, notably in the sanitary-ware range, and I want to know what is the precise reason for introducing this rather peculiar range of accessories into the Schedule.

Mr. Arthur Lewis (West Ham, North)

Before the Chancellor replies, I hope he will bear in mind the fact that for the last two hours there have been less than 30 Tories in the whole of the Palace of Westminster and that therefore it is apparent they am not interested in the subject.

The Deputy-Chairman

That is not related to the Schedule.

Mr. Spearman (Scarborough and Whitby)

Before we pass from the Bill, I want to refer very briefly to the position of the retailer under this tax we have been discussing. He has already to bear the burden of an unpaid tax collector and the expense and trouble of it. He also has to bear the brunt of any reductions in Purchase Tax, and I hope that the Chancellor will concern himself to find some means by which this anomaly does not fall on one section of the community alone. He also has to bear the interest on the Purchase Tax.

As I understand it, the manufacturers and wholesalers only pay Purchase Tax after one month, whereas retailers have to pay Purchase Tax immediately after they buy the goods, although they may have to keep the goods weeks or months or even a year. The burden falls upon them. This has been much accentuated by the rise in prices because of the automatic increase in the Purchase Tax. I therefore ask the Chancellor whether he will see if something can be done about that, particularly in view of the fact that the burden falls upon the small shopkeepers who have not got the resources of the bigger ones, and for that reason for the first time in their lives they have had to have recourse to the banks. This is causing hardship which is quite inadequately realised.

Mr. Gaitskell

I must say to the hon. Member for Scarborough and Whitby (Mr. Spearman) that the problem has been most exhaustively examined in the past and I do not honestly think there is any practicable solution to it. If there were, we would certainly be ready to adopt it. The hon. Member knows the difficulties. It is quite impracticable to have an inventory of everything a trader has in his shop.

I would say to the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) that we included the articles to which he referred because they were invalids' requirements and we thought invalids deserved consideration.

Schedule, as amended, agreed to.