HC Deb 08 May 1952 vol 500 cc593-711
Mr. Austen Albu (Edmonton)

I beg to move, in page 8, line 19, after "articles," to insert: with the exception of furniture.

The Temporary Chairman (Colonel Sir Leonard Ropner)

This Amendment goes with the Amendments in page 9, line 8, at the end to insert: except in regard to furniture. Line 9, leave out from "section," to "shall," in line 10; line 11, leave out from "fifty-two," to the end of the subsection; Clause 8, page 9, line 25, leave out paragraph (c); and in page 10, leave out lines 9 and 10. The Amendment in page 8, line 19, has been selected, but discussion will not be allowed on the remainder. Discussion on the first Amendment will cover those.

Mr. E. Fletcher

I take it, Sir Leonard, that you are not now deciding anything about how the discussion on Clause 8 should take place? I gather that you are merely deciding how we should discuss Clause 7. Some of the Amendments to which you have referred apply to Clause 8.

The Temporary Chairman

My remarks do not in any way relate to any discussion on the question that the Clause stand part.

Mr. Albu

The purpose of this Amendment, as of the others to which attention has been drawn, is to exclude furniture altogether from the operation of the Clause. In the Budget debate the President of the Board of Trade, speaking on 13th March, said: … I propose to leave furniture as it is. It was referred to separately by the Douglas Committee. It provides a greater degree of quality specifications than others, and, for various other reasons, I propose to accept the Report of the Committee and to leave it for the moment—for the moment only—as it is while I conduct an inquiry to see what is the best to be done for the future."—[OFFICIAL REPORT, 13th March, 1952; Vol. 497, c. 1585.] We were, therefore, extremely surprised when we received the Bill to find that the Government had, in fact, taken powers in the Bill to introduce the D scheme and to destroy the present Utility scheme for furniture by Treasury order.

The position of furniture, as has been pointed out by the Douglas Committee and as was recognised by the President of the Board of Trade, is very different from that of most of the other commodities which are being dealt with in this Bill and for which the D scheme has been introduced. First of all, well over 90 per cent. of the total furniture manufactured in this country at the present time, and indeed manufactured since the end of the war, comes within the Utility specifications and is, therefore, tax free.

Although furniture is generally classed as among those articles which are consumer goods, it is of course different from clothing and easily consumable goods because it covers domestic articles which are purchased at very infrequent intervals. It is, in fact, in the nature of domestic capital. It is unlikely that the average family spend very much on furniture after the initial purchase when first setting up home after marriage. There may be some purchases later on, but, on the whole, it is a heavy capital outlay at one time in the family life.

An interesting feature of the post-war market for furniture, which is very relevant, is the very great increase in sale among what are normally considered middle and low income families. The existence of full employment for many years, apart altogether from the big backlog of demand after the war, and the relatively high wages and conditions have meant a bigger demand for furniture, not from those able to afford luxury furniture or expensive furniture but from those who are able to afford furniture at low prices. It is these people who have been most helped by the existence since the end of the war of the Utility scheme guaranteeing the quality of the furniture and ensuring that it can be provided at low prices particularly because it was tax free.

If the scheme is destroyed at the present time, and especially if nothing is put in its place, there is a very serious danger indeed that the great mass of people, who, as I say, are only able to buy furniture perhaps once in a lifetime and to whom it represents a very heavy outlay, will be forced into buying cheaper quality furniture and qualities which will not be subject to any guarantee whatever of standard specifications.

5.30 p.m.

The Utility scheme has meant, not just a guarantee for the consumer but almost, I think, a revolution in the trade. There is no doubt that for many years before the war in large parts of the furniture industry—not all of it, by any means, but large parts of it—it was a sweated industry, an industry with extremely bad working conditions, very often giving rise to shoddy products, and an industry in which the safeguards the consumer might expect to receive were certainly not present.

Since the war, in many parts of the country, the industry has become among the most up to date and progressive of our industries; it has become highly mechanised; production and productivity have increased at a very great rate; and at the same time the quality of the product has improved, due partly to standardisation and partly to the new methods employed. In the last few years this has been assisted by the existence of a progressive development council which is trying to improve the standard of quality, is conducting research into methods, and is generally assisting the industry in the progress it has been making.

The fact that the Utility scheme was a guarantee of quality—whatever it may have been in the last year or two in other industries—was recognised by the Douglas Committee, who said in paragraph 28: Enforcement of the specifications has, however, set a minimum standard of quality and has undoubtedly eliminated much of the very low quality cheap furniture which was made before the war. I think I am right in saying that the majority of manufacturers are opposed to any great change, certainly at the present time, until there has been at any rate a thorough investigation of what could be put in place of the Utility scheme. The chief trade union, the National Union of Furniture Trades Operatives, is certainly against any change being made at present.

I know the answer will be that discussions are going on between the trade and the President of the Board of Trade about what might be put in place of the present Utility scheme. The reason for our putting down these Amendments is to ensure that no drastic change is made in the existing scheme simply by Treasury order. This is not just a question of the alteration of a tax schedule, or the alteration of the articles in a tax schedule. The whole thing is tied up with the existence or otherwise of the Utility scheme. of guaranteeing qualities, as well as providing tax free furniture, and it would be quite wrong if at some time during the course of the year the whole of this scheme and of these arrangements in the furniture industry were to be swept aside simply by the imposition of a Treasury order.

There are very great difficulties, as I have no doubt the Treasury are finding, in defining articles of furniture for the purposes of introducing any alternative scheme to the present one. The items of furniture vary in size and in exact use, and very often not very easily understood terms are used to describe them. It has been pointed out to me that it would be difficult to distinguish between a hall wardrobe, a linen wardrobe and a linen cabinet; or between a china cabinet and a bookcase; or between a credence cupboard, a court cupboard and a sideboard. I do not even know what some of these terms mean. It would be extremely difficult to prevent articles being made in sections so that, by selling two sections separately, they would avoid paying any tax which would impose on them if they were sold joined together. These are only examples of the sorts of difficulties the Financial Secretary will run into if he tries to introduce a scheme of this sort too hurriedly.

The very widespread range of prices of tax free furniture at the present time would mean that if the D scheme were introduced and the tax fixed at anything like 50 per cent. of the present Utility production, the results could be very serious. It would mean that all the better class utility goods, for which there has been a considerable market recently, would come under a pretty heavy tax, with very serious results to the consumer. Let me give some examples of the widespread prices of retail Utility furniture: wardrobes vary from £15 15s. 6d. to £33 13s. 6d.; sideboards, from £15 15s. 6d. to £26 13s. 6d.; a dining room chair, from £3 2s. to £6 8s. 6d., and fireside chairs from £8 16s. to £11 10s. Unless there were some very complicated system and a very elaborate list of articles differentiating between those of different quality and different specification, any attempt to fix the level half-way in the price schedule would mean that a very large number of these articles, which are bought by people of moderate means, would be pretty heavily taxed. If there were any attempt to provide the multiplication of definitions which would otherwise be required, I think that the administrative expense would very much reduce the revenue the Treasury could hope to receive from the tax.

I do not need to remind the Committee that this trade, along with other consumer goods industries, has been suffering from a considerable slump. In these times, when competition is becoming pretty severe, attempts may be made to evade the specifications laid down, as in the old days. Those were the times when extremely shoddy, badly made furniture was produced in the less reputable workshops. An example of the sort of thing that goes on under these conditions is to be found in a report of a court case in "The Times" of 17th April, which says: Having opened a utility divan which was an exhibit at the Stratford Magistrates' Court yesterday, a Board of Trade inspector searched among the flock with which the mattress had been stuffed and produced a number of cigarette ends, ice cream papers, match sticks, string, pieces of rag, and several scraps of paper which included an old love letter. Of course, under the Utility scheme the manufacturer of that divan was brought to court and fined £50 on each of three summonses. But if the Utility scheme goes, there will be no means of preventing that sort of thing taking place. Where the Utility scheme has already been abolished, in the case of bedding, standards are already being lowered. The Trade journal, "Furniture Record." for 11th April says: There is already evidence of the jettisoning of decent standards that many of us have feared would follow the end of the utility scheme. It is, perhaps, only the beginning of the rot, but with the growing struggle for business it could spread like a forest fire. Already approaches have been made to spring makers to cut size and quality. … Already at least one spring interior filled entirely with flock without padding has re-appeared on the market, marking a return to one of the worst abuses of the competitive days of the middle 'thirties. I have been told that whereas the number of springs in a mattress under Utility specification is 288, one manufacturer has been putting a mattress on the market with only 180 springs in it. The reputable members of the trade are extremely worried about what is taking place under these conditions. I think that it would be a disaster for all those engaged in furniture manufacture, as well as for all those who have to buy furniture, if the present safeguards were destroyed overnight.

So far as I can see, there is no hurry about this matter. There is no reason at all why the Chancellor should take powers under this Bill to introduce such drastic changes by Treasury order. The trade estimates that it will take at least 12 months to work out any new scheme and, under those circumstances, it is extremely difficult to see, unless it is the intention of the Chancellor to introduce the scheme irrespective of the position which the discussions between the President of the Board of Trade and the industry have reached, why it is necessary for the Chancellor to take powers under this Bill.

Let them go on with the discussions by all means if they want to. Surely what the Government can do is to put the results of their discussions in a White Paper or to make them known in some other way, so that there is an opportunity for Members of the House to debate this matter, consult their constituents and find out what the effects would be; and then if it is necessary for a new scheme to be introduced it could be brought forward again next year.

The effect of these proposals at the present time will be to worsen the conditions under which the trade is operating, to increase the tendency to return to the standards of the past, which we all hoped had finally gone, and, undoubtedly, to increase the cost to young married couples of setting up homes.

I hope, therefore, that the Financial Secretary will indicate that the Chancellor of the Exchequer is willing to exclude furniture from the provisions of this Clause and the next Clause, and for discussions to be carried on between the President of the Board of Trade and the industry, and that in the meantime he will not make any sudden or drastic change which would undoubtedly be disastrous for the industry.

Mr. Harry Wallace (Walthamstow, East)

I should like to support what my hon. Friend the Member for Edmonton (Mr. Albu) has said. I hope that his appeal to the Chancellor of the Exchequer will not be ignored. I must confess at once that many of my constituents are concerned with this industry. The industry at present is not in good shape; there is much full-time unemployment and much part-time unemployment. The demand for the goods of the industry is falling, and all those engaged in the industry are very much concerned about the future.

In this particular industry there is no question of exports being damaged by the abolition of the Utility scheme. The exports of the industry are not very substantial, and will not affect the great mass of the products of the industry, some 90 per cent. of which is covered by the present Utility scheme.

I want to be very brief, but I also want to put it very frankly to the Financial Secretary and the Chancellor that a promise has been given to this industry which gave much satisfaction. The President of the Board of Trade said that he was going to hold an inquiry to find out what was best to be done. He intimated to the House that discussions would go on. If this Amendment is not accepted, it seems to me that the Chancellor is prejudging the results of the discussions, and he is not implementing the promise of the President of the Board of Trade to find out what is best to be done for this industry.

If the Government insist on abolishing the Utility scheme, then the trade expects the demand to be reduced still further and unemployment to increase. I really cannot think that the Government wish to maintain a policy, the outcome of which would be a reduction of demand and an increase of unemployment.

I want to conclude on this note: I hope that the Government will honour this pledge, will accept this Amendment, and will not prejudge the issue until these discussions have been completed and until the President of the Board of Trade has found out what is best to be done for this industry. It would be most unfair to abolish this Utility scheme merely because utility schemes generally are not liked. If the Utility scheme is good for this industry and good for the consumer, as I believe it to be, then surely the Government should not abolish it because it may not be a good scheme for other industries.

5.45 p.m.

Please do remember that we have about 34,000 marriages a month. These people wish to set up homes. We all know the difficulties today of finding a house, of paying the rent, of paying the increased fares, and of meeting the rising cost of living generally, and I think that it would be too much to increase the price of furniture and make it almost impossible for young people to set up homes. I hope that the Government will watch the outcome of the discussions, implement the pledge which has been given, find out what is best to be done for the industry, and then give us a White Paper and let us have a chance of discussing it.

Mr. William Shepherd (Cheadle)

I want to say a word or two on this Amendment, and I should like, at the outset, to declare a small interest in this matter as President of the Chair Frame-makers Association, so naturally I have some concern at the apparent intention at some time or another to eliminate the Utility scheme.

I do not know what the Minister is prepared to say this afternoon, but we are most anxious that what he should do is to clear the air of any uncertainty. It is uncertainty in relation to Purchase Tax and the Utility scheme which damages trade. Whatever he is able to say today, I hope that he gives a clear impression of what is likely to happen in the foreseeable future, so that buyers will not be dissuaded from buying in the hope that some change will come about. I do not think that it is strictly necessary to take these powers under the existing Bill. I think that it might have been for the convenience of the trade and the removal of uncertainty to have left them out on this occasion.

I agree with hon. Gentlemen opposite that the trade generally is in a pretty bad state, although I must point out the wonderful results achieved by the Minister of Housing and Local Government, which gives some hope to the trade that within the next month or so and in the months that follow trade will increase.

I do not subscribe for one moment to the view expressed by hon. Gentlemen opposite that the trade is necessarily wedded to the idea of the Utility scheme. The objection to the change is that it may increase the price of furniture at a time when the demand is already low. I want to assure the Committee that there is no anxiety on the part of manufacturers with whom I am associated to retain the Utility scheme for its own value as a scheme. It is quite conceivable that we can arrange standards and enforce those standards so that they will give us the advantages of the Utility scheme in that respect, without disadvantages in others. I would ask the Committee to believe me when I say that the Utility scheme has had quite considerable disadvantages in the furniture trade because it stereotyped design and stultified initiative in a very unfortunate manner.

If I may give a personal example, I would like to tell the Committee that, a few months ago, I was travelling back from Germany with a Swede, who was coming to this country to buy carpets from a firm in London specialising in oriental carpets. I said to him, "What do you buy from us, besides carpets?" and he said, "Nothing, but I used to buy furniture." I said to him, "Why do you not now buy furniture?" His reply was, "I am afraid that the designs in England today are not suitable for my trade."

That is an example of what is happening when production, to the extent of 90 per cent. is concentrated upon Utility, with, to some extent, stereotyped designs which do not present to foreign buyers sufficiently diverse and attractive articles for the export trade. I urge my hon. Friend not to accept the view which hon. Gentlemen opposite have put forward this afternoon that the trade is desperately anxious to retain the Utility scheme because of the inherent value of the scheme. They are anxious merely to avoid extra taxation at a time when trade is already bad.

Mr. Albu

The trade, or the better part of the trade, is anxious that there should be some statutory control of standards and specifications.

Mr. Shepherd

I think that is an entirely different argument. I concede the possibility of enforcing statutory standards outside the Utility scheme, but I am anxious to urge my hon. Friend to say that, in the next 12 months, there will be a standstill, during which time consideration will be given to the possibility of setting these standards, and, particularly, of enforcing them. If he does that, I am sure that my hon. Friend will find that the trade will be satisfied, and that, with the increasing number of houses to be built in the next 12 months, the trade itself will perhaps enjoy a happier time than it has had in the last 12 months.

Mr. Boyd - Carpenter

The three speeches made on this Amendment have all been very reasonable and constructive in tone, and, of course, it is the fact that the Douglas Report dealt with this particular industry in a rather special way. That is the reason why this industry was not included in the general proposals in this Measure, but is being treated in the special way outlined in this Clause.

The Committee will appreciate that the Douglas Committee, while it made a very special recommendation in paragraph 128 of its very valuable Report, did indicate: We are therefore of opinion that the Board of Trade should arrange that, with the introduction of a "D" Scheme, at least the present quality standards should be safeguarded. It is to some extent in implementation of that conclusion that the discussions which my right hon. Friend the President and my hon. and learned Friend the Parliamentary Secretary to the Board of Trade are having with this industry are taking place, and that is the ground which they are covering. That is also the reason why we are dealing with this industry rather differently from the way in which we dealt with other industries within the ambit of the Douglas Report.

I think it should be made clear to the Committee that the Douglas Report in no sense recommended treatment of this industry for Purchase Tax purposes on, in principle, any different basis to the other articles with which it dealt. I would remind the Committee of one very vivid example of the working of the present Utility scheme to which the Committee should give attention. It appears in paragraph 59, and perhaps the Committee will allow me to read it: Another example is taken from the evidence submitted to us on furniture. A firm recently produced chairs of a completely new design which are being used in the Royal Festival Concert Hall. Although this chair could have been sold within the Utility price for competitive chairs, it was not constructed in accordance with the general specification for such chairs, and so could not be included in the Utility scheme. Purchase Tax would have prevented it being sold on the home market, and so it could not be made in large enough quantities to make sales overseas a possibility. The Douglas Report also deals with certain of the anomalies in the application of the Utility scheme to this industry; in particular, the fact that, while covering certain classes of articles in common use, others of equally common use are not included, and are, therefore, subject to the full blast of the tax, not on any value above the D scheme, but on their total value. Therefore, the Committee were driven irresistibly to the conclusion that the present position is unsatisfactory, and, therefore, we think that the right thing to do, in the light of the recommendations of the Douglas Committee, is to carry on the discussions with the trade which are proceeding at this moment with a view to the implementation, as early as is reasonably possible, of some D scheme for this industry.

In this connection, I would say that I differ from the hon. Member for Walthamstow, East (Mr. Wallace), who was inclined, I think, to disregard the export aspect of the industry. I under stood—

Mr. Wallace

Will the hon. Gentleman allow me? I said it was not so important as the production for the domestic consumer, but I did not ignore it altogether.

Mr. Boyd-Carpenter

It is a matter of degree, but, from last year's figures, I find that we had furniture exports valued at over £1 million, a quarter of which went to the dollar area, so that the export aspect of this industry, which is very much affected by the so-called blind spot, is not wholly immaterial.

At any rate, the discussions are going on. Of course, I can reassure the hon. Member for Edmonton (Mr. Albu) that there is no intention to deal with them in too hurried a way. It is, obviously, and the debate has made this clear if it were not clear before, a complicated and difficult matter, and, with the best will in the world, discussions of that sort cannot be put through very hurriedly. When they have been put through, it seems to me that there really is a very strong case for putting them into effect as soon as is reasonably possible.

I was much struck by what my hon. Friend the Member for Cheadle (Mr. Shepherd) said when he indicated that, in these matters, uncertainty is one of the most harmful elements, and it is the fact that, when we have a change of tax impending, there are always risks of forced selling on the one hand and of buyers holding back on the other, and neither are good or healthy for the industry concerned.

Therefore, I submit to the Committee that, once these discussions have come to fruitful and constructive conclusions, as I hope they will, it really is in the interests of the industry to get on with the job, to end the uncertainty, and, at the same time, to end the anomalies which the Douglas Committee found are continuing to exist in this industry. It is, of course, quite impossible, without causing confusion of an excessive character, to alter these anomalies within the existing Utility scheme. When a scheme is almost being wound up, it is difficult to try to deal with little defects in it.

The chance of putting this industry on a more satisfactory basis in the reasonably near future is a chance which we ought to seize, but I can give the assurance that it is not intended, in a matter of this complexity, unduly to hurry those on either side of the industry who are now engaged in the discussions with my right hon. Friend the President and my hon. and learned Friend the Parliamentary Secretary.

6.0 p.m.

That is why we seek to deal with it in this way. If we did not, it would not be possible to deal with this until next year's Finance Bill. That would mean, if, as, I am sure, all hon. Members hope, these discussions are comparatively speedy and satisfactory, that, having come to a conclusion which, quite obviously, would be known throughout the industry, we should have to continue to operate the old Utility scheme, despite all the criticisms the Douglas Committee has made of it, until next year's Finance Bill. That would not be fair to the industry—to those who work in it and those who earn their living from it. Therefore, we have thought it much better to put into this Bill a provision which would enable us, when agreement is reached then to proceed with reasonable speed to put the scheme into effect.

I think that we can also claim that we have properly safeguarded the rights of this Committee in the matter. Once the scheme is formulated it can be put in a Treasury Order. That Order is subject to the affirmative Resolution procedure in the House, and, therefore, if the Committee gives us this Clause in its present form tonight, it will still retain the right to pass judgment on the particular proposals when they are embodied in that Order laid and brought forward under the affirmative Resolution procedure.

I would, therefore, suggest that the criticisms which hon. Members may have—or may think they have—of a scheme not yet formulated would probably be more conveniently put forward when that Order is made; with the reassurance that the Committee has that, by virtue of the affirmative Resolution procedure, the Government have still to come to Parliament and put the proposals before it.

That is the reason—and no other—why we have dealt with this matter in this particular way. The discussions—to sum up—can proceed; we all hope that they will be quick; the assurance I have given is that no undue haste will be pressed if difficulties arise; but if a successful solution is arrived at the industry and those concerned will not have uncertainty hanging over them for months; while an old system proceeds to be terminated a new one can be put into effect; the delay which my hon. Friend the Member for Cheadle so rightly fears will be able to be kept to a minimum and, at the same time, the rights of the House of Commons and of this Committee will be safeguarded.

Mr. Jay

I must say that I found the last speech of the Financial Secretary singularly unconvincing. He affected the same sweet reasonableness in manner that he did earlier, but there was really very little reasonableness in the substance of his argument. It seems to us that really no case has been made out at all for abolishing the Utility scheme in the case of furniture or for imposing Purchase Tax, as the Government seek to do by this Clause, on a large range of furniture which was Utility and which was previously never subject to tax.

We object to the whole of the Government's policy in the Budget of abolishing Utility schemes and taxing a large range of goods—furniture and other kinds—which were previously Utility on two main grounds which, of course, apply entirely to furniture as well as to the other goods concerned. Of those grounds the first, of course, is that the Government are proposing a new tax on the general consumer, and, by reducing the level of price at which the tax applies, they are extending the tax, as my hon. Friend said, to a large number of families, mainly with the middle and smaller incomes. It is a new burden on the housewife and a new addition to the cost of living.

Our second objection, as my hon. Friend also mentioned, is that, so far as we can see, this general weakening of the Utility scheme will impair the quality of a large range of British goods, including furniture, which we are now discussing. There is no doubt that Utility has given a very considerable guarantee which was of advantage to the consumer and to the community as a whole.

The whole case made by the Douglas Committee in reply to those two obvious objections to abolishing Utility was, of course, founded on the special argument relating to imported goods and to our obligations under the General Agreement on Tariffs and Trade. I think that the hon. Gentleman will agree with me that that is really the basis of the whole case—that Utility and tax exemption, though desirable, are no longer practicable because of this import problem. The case of the foreign importer is that, since the British authorities have not been able to apply the Utility mark and hence tax exemption to imported goods as they have to home produced goods, that is a discrimination against the foreigner and, therefore, a breach of our international undertakings.

The whole of that argument rested on the assumption, of course, that it was impossible to apply the Utility mark in actual administrative practice to imported goods as well as to goods produced at home. The Douglas Report, which the hon. Gentleman quoted—and, I thought, quoted rather tendentiously, since he picked out just a few passages, though understandably, perhaps—notably in paragraphs 69, 70 and 128, makes it quite clear that it has been found possible to apply the Utility scheme to imports of furniture. It gives in paragraph 69 three reasons why that can be done—because the specifications are mainly physical; because there is a smaller number of manufacturers abroad; and because importers … had the knowledge and the facilities to repair the imported furniture, or alter it to fit the specifications, before marking it as Utility. Then the Report goes on most specifically to say, in paragraph 72: We have been told that the arrangements for including imported furniture in the Utility scheme are, on the whole, working satisfactorily.… It says that that has not been so satisfactory in the case of textiles.

What emerges is that it is not only practicable to achieve this solution in the furniture industry, but that it has actually been put into force and is working perfectly satisfactorily. Therefore, the whole case on the grounds of G.A.T.T. and imports against Utility, and tax exemption based on Utility, completely falls to the ground for furniture on the evidence of the Douglas Report itself.

I think that the hon. Gentleman will agree with me that, although he gave instances about some awkward cases of furniture as illustrations, the Douglas Report does not anywhere positively recommend that the Utility scheme should he abolished in the furniture industry, or argue that it is impracticable to continue the present arrangements. Indeed, it does say, in paragraph 128, most categorically: In the particular case of furniture, the Utility scheme still provides some guarantee against ill-made and inferior articles", —whereas it was the opinion of the Committee, rightly or wrongly, that that was not so true of textiles and certain other industries.

That being so, we are here in a situation in which it seems to us that really no case has been made for hurrying on in this fashion and asking the Committee to give the Government powers to impose this new system of taxation with no further recourse to the Committee or the House—except, of course, the affirmative Resolution Orders which, I remember, the hon. Gentleman always used to think were an inferior sort of legislation in the last Parliament.

Mr. Boyd-Carpenter

I put down innumerable Amendments to introduce the affirmative Resolution procedure.

Mr. Jay

Yes, but the hon. Gentleman also frequently argued that we should have new legislation, and not delegated legislation at all—as, I think, he will agree.

However, to return to furniture. It seems now that there are these formidable objections against the application of the D scheme in this hurried fashion to furniture. First of all, it will impose Purchase Tax on a large range of furniture which has not hitherto borne it. That is an added burden, not merely on the ordinary family but on the newly-married couple, where the burden falls particularly severely.

We were also often told in the last Parliament, perhaps not by the hon. Gentleman himself—I have not looked it up—but by many hon. Gentlemen who used to sit on this side of the Committee, that it was wrong to tax household articles, and particularly wrong in the case of goods like linoleum, where the tax fell heavily on a family which had to furnish a new house. That argument applies with great force to this extension of the tax to furniture. That is the first objection. May I add, since the hon. Gentleman behind the Minister mentioned exports and showed a lot of knowledge on the subject, that the tax will not help exports? By extending the tax and raising the prices, we thereby limit the home market at a time of depression in the industry.

Second, by the abolition of the Utility scheme and its possible replacement by some other scheme of which we at present know very little indeed, such guarantees of quality as we have at present, and which are very important in this industry, will be inevitably weakened.

Mr. Shepherd

The right hon. Gentleman's argument is not entirely convincing. Much of the effect must hinge upon the level at which D is fixed. If it is fixed at a satisfactory level it may help the export trade, because tax on better-class articles in the export trade will be less than it is at present.

Mr. Jay

The abolition of the Utility scheme, unless there is some other guarantee of quality about which we at present know very little, will tend to weaken quality. The Financial Secretary is asking the Committee to agree to this proposal without our knowing what other guarantee of quality will be substituted. Third, it is admitted by everybody who has spoken that there is depression and unemployment in the industry. Extension of the tax and raising of the prices will tend to diminish demand still further, as in the case of textiles. The Government are here taking action which must intensify the depression and unemployment in this industry.

Fourth, we are told—and I do not think it is disputed—that representatives of the organised workers and some representative sections of the management in the industry are opposed to the change, for the reasons that my hon. Friend gave in moving the Amendment. Fifth, as I have tried to show, the basic argument about G.A.T.T. and imports does not apply at all to the furniture industry, which we are now discussing. Lastly, we are being asked to rush ahead, although a promise was given by the Board of Trade that there would be full discussion before final decisions were taken in this matter.

Those arguments seem to me to add up to a formidable case against the Government and the powers for which they ask this afternoon. I should have thought we need not hurry on in this way or legislate in this wholesale fashion until the whole matter had been examined and some case had been made out. I do not say that next year the hon. Gentleman might not be able to make out a case; he certainly has not done so up to now. Whether he will be able to do so next year, we do not know. Unless he can give us more satisfaction in a few minutes, or can undertake to think about this matter again, I unhesitatingly advise my hon. Friends to go into the Lobby in support of this Amendment.

We seek here essentially to defend the consumer and the ordinary housewife against the threatened imposition of a new tax and against the further forcing up of the price of furniture. Until the hon. Gentleman can make a better case than he has put forward for doing that, we shall feel compelled to press this matter further.

6.15 p.m.

Mr. Boyd-Carpenter

I do not feel disposed to make a case for doing that, because that is not what I meant to do. The right hon. Gentleman has based his whole argument on an entirely one-sided appreciation of how the D scheme operates. He called it "a new tax," and he referred to an imposition of the tax on articles which did not at present bear tax. He even brought in the argument about the hardship on the young, newly-wedded couple.

With great respect, I say that he has completely misapprehended how the D scheme works. It may be that some articles which do not now bear tax will in future bear it, but it may equally be that certain articles which now bear tax will be relieved; and that still others which now bear tax will bear it in a less degree. It is beside the point to ask me to justify the imposition of a new tax and heavier burdens on the housewife, when all that we are concerned with at the moment is the adjustment of Purchase Tax from the old system of Utility with, above it, the whole weight of tax, a Utility scheme which an independent committee appointed by the right hon. Member for Leeds, South (Mr. Gaitskell) has found to be ridden with anomalies; and the substitution for it of the D scheme, with the normal D principle of half the normal tax and above that the tax gently graduated. It is not accurate to describe that as "the imposition of new burdens."

Mr. Albu

I believe it is the case that 90 per cent. of all furniture at the present time is free of tax. By what method can we have a D scheme, unless the D has a level of 90 per cent., by which there is no extra burden on the consumer of furniture? The imposition of the D level, unless it is at 90 per cent., must impose a hard burden on the consumer. I do not see how we can mix furniture with boots and shoes, because it is something bought once in a lifetime. The scheme will undoubtedly mean higher costs for a large number of consumers.

Mr. Boyd-Carpenter

I think the hon. Gentleman will find that his 90 per cent. relates to only that part of furniture production to which the Utility specifications apply. The whole criticism of the Douglas Committee is that that is not the whole of the industry. It may be 90 per cent. tax free in a limited part of the industry. [HON. MEMBERS: "No."] Very well, let me come to what the Douglas Committee said.

In paragraph 47 the Committee pointed out among the anomalies that provision is made in the Utility scheme for chests of drawers but not for blanket chests, for cabinets to hold books but not for cabinets to hold china, and so on. Indeed, I have particulars of other articles, such as certain types of cupboard, emergency beds, linen baskets, and so on, for which there is no Utility scheme at all and which therefore, however cheap they may be or of whatever quality, do bear the full rate of Purchase Tax.

When we are discussing the merits of this matter it is fair to appreciate that while it is true to say, as the right hon. Gentleman does, that some articles will bear tax under the D scheme which do not at present, other articles, and by no means articles of the highest quality, will be relieved of it. Therefore, the question is not whether we are to have Purchase Tax on the industry at all—that is a separate question on which separate views might be expressed—but whether we are to apply the tax by a method which creates these clearly-set-out anomalies and which exposes to the full rate of tax simple articles just because they do not happen to be in the old Utility scheme. That is the basis.

Looking at the two systems fairly, I do not think it is possible to come to any other view than that as a matter of principle—I will come in a moment to the practical application—this is the better way to do it. The details of how best to do it are precisely the purpose of the discussions in which my right hon. Friend is taking part. Their purpose, if I may repeat it, is to carry out the recommendation of the Douglas Committee to provide that before the D scheme comes into operation, satisfactory provision for the preservation of quality shall be put into operation.

We fully appreciate the distinction that the Douglas Committee made between this and other articles within the Utility scheme, and that in this case, at any rate, under the old scheme the quality specifications had some value to the consumer. As the right hon. Member for Battersea, North (Mr. Jay) said, the Committee took the view, rightly or wrongly, that over most of the field the specifications were not much good, but that in this direction they were. That is why, in implementation of the words which follow very closely those quoted by the right hon. Gentleman from paragraph 128 of the Douglas Report, we are having these discussions to get the quality specifications satisfactorily worked out with the expert assistance of those engaged in this important industry.

When the right hon. Gentleman quoted from paragraph 128 of the Report, it was, perhaps, a little disingenuous when he quoted the passage whose substance I have just given—that is, that under the Utility scheme, in the case of furniture, there was some assistance to the consumer in respect of quality—and ignored the last sentence: We are therefore of opinion that the Board of Trade should arrange that, with the introduction of a D scheme, at least the present quality standards should be safeguarded. If words have any meaning, it surely follows from that that those who drafted the Report contemplated that it would be the inevitable consequence of the Report that a D scheme would be introduced, and, therefore, they went out of their way to make this very valuable and constructive suggestion as to how it should be done.

Mr. Jay

Surely, what those words amount to is not a recommendation by the Douglas Committee that there should be a D scheme for furniture, but a perfectly natural statement that if there should be such a scheme, there should be special safeguards for quality.

Mr. Boyd-Carpenter

Exactly; and as the tenor of the whole Report is in favour of a D scheme, and as it is implicit in those words that they assume that a D scheme is to be operated, surely the only possible construction is that, accepting, as they do accept, the desirability of ending the anomalies to which they referred in the paragraphs I have quoted, it is the right thing to introduce these quality safeguards.

That is one issue, but it is not perhaps the complete issue, because, as the right hon. Gentleman knows, the procedure which we have suggested provides that this matter shall not pass from the control of the House at this stage; that the scheme, with its details, shall be available to hon. Members to make up their minds when the Order is laid and when the Motion to approve it is moved. Therefore, it is not necessary at this stage to ask the Committee to prejudge whether such a scheme would be an improvement, but only to give us the possibility, if the discussions take place within a reasonable time, of having this matter before the House in rather less time than a full year. That is all that the Clause seeks to do.

Mr. David Weitzman (Stoke Newington and Hackney, North)

The Financial Secretary to the Treasury says that it is not necessary to prejudge this matter, but that is exactly what the Government are doing by saying that the Utility scheme shall go. They do not pretend to know what is to be in its place, yet they lay down as a cardinal principle that the Utility scheme must go.

My constituency contains a considerable number of people who are either manufacturers or employees in the furniture trade. As far as I understand it, their opinion is that the Utility scheme is a good- scheme and that it has worked very satisfactorily and ought to remain. They complain bitterly about the present unemployment and they assert, rightly or wrongly, that they are gravely afraid of the results of the abolition of the Utility scheme.

As I understand, the Utility scheme is admittedly very good in many respects, but there is a criticism that there are a number of anomalies. But at any rate, we have something which is satisfactory and which is working, and which manufacturers generally and employees want to remain. Why should it be done away with until we know what is to he in its place? It is an extraordinary state of affairs that the Government should present a Bill containing a Clause which, as I have said, prejudges the issue completely. It says, "Abolish the Utility scheme." The Financial Secretary says, "We hope to put something in its place which will be satisfactory and which will be put before the House, so that the House can judge it."

Surely the sensible thing is to let the Utility scheme remain and to let the trade have the benefits of it; and if the Government have a scheme that appears to be satisfactory and should take its place, to present that scheme to the House, and then the House may judge whether the Utility scheme ought to go.

It seems to me very ridiculous as the matter now stands that the Government should say, "Abolish the Utility scheme" and should put in its place something of which we know nothing. I can only urge, on behalf of a very considerable number of constituents, that they desire the Utility scheme to remain. I hope, therefore, that in these circumstances the Amendment will be accepted.

Mr. Harold Wilson (Huyton)

The Financial Secretary's speech left the situation in a very unsatisfactory state. I am quite certain that he has no desire whatever to mislead the Committee, and I know that he would not do so. I should put down the unsatisfactory nature of his concluding remarks to his lack of experience, perhaps, of the furniture Utility scheme, which is, after all, something for which the Board of Trade have been responsible for many years.

When he was talking about the effect on the cost of living, in reply to my right hon. Friend the Member for Battersea, North (Mr. Jay), the Financial Secretary seemed to give the impression—perhaps not deliberately—that the Government's proposals would have no effect at all, or very little effect, on the cost of furnishing a home. He said that some of the goods at present tax-free would carry tax—he gave no idea how much tax—but that other necessities which at present carry a substantial rate of tax would be tax free or would carry a much lesser rate of tax; and he gave the impression, at least, that perhaps at the end of the day these would all balance and cancel out.

The Government are asking for some rather wide powers without, as my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman), has said, telling us anything about the way in which the scheme is to be worked out. The only basis on which we can form any impression at all is on our experience of the D scheme for clothing and textiles, on which, of course, the Government have informed us of their intentions, and which we shall be debating later.

If the Government approach furniture, after discussion with the trade and all the rest, on anything like the same basis on which they have approached clothing and textiles, then, certainly, the cost of furnishing a home will go up very substantially. If they are to follow the median principle, a large proportion of the furniture which is now tax-free will carry a very substantial rate of tax, especially those goods nearest the top level of the Utility scheme.

6.30 p.m.

Although it is quite true there are apparent anomalies—there are bound to be in any tax exemptions—about the difference between a cabinet to hold books or a cabinet to hold china—that sounds anomalous, of course—in most of the things which people buy when setting up a home, particularly if they have not very much money, they tend to concentrate on beds, chairs and tables, which they must have, and leave china cabinets perhaps for some years. I have been married for some years and I have certainly not gone in for china cabinets. I have not gone in for china yet because. owing to the regulations made by the President of the Board of Trade and his two predecessors in office, including myself, it has not been possible to get that china.

Mr. F. J. Erroll (Altrincham and Sale)

Has the right hon. Gentleman been able to get a shoe locker yet?

Mr. Wilson

I have always had a shoe locker and I have always had shoes. I do not know what the hon. Member means, as I have never said anything to the contrary and I do not know the point of his interruption. If he believes some of the misstatements in the Tory Press, it would take a very long time to put him right.

Coming back to the point of the Amendment, I was saying that the average family setting up a home, particularly in these growingly difficult times, will concentrate on buying those things which are at present tax free and will leave by far the greater number of things to which the hon. Gentleman referred until they have more money, perhaps for very many years. I think it quite wrong to suggest, if the hon. Gentleman's taxes are anything like those applying to clothing and household textiles, that what he is saving on some items can he imposed on others which are subject to tax and others will be tax free. I hope that the hon. Gentleman will tell us more about it, on what level he intends to put the tax and whether he intends the same basis as in clothing and household textiles.

Mrs. Eirene White (Flint, East)

There is one aspect of this problem which I hope the Committee will consider before reaching a conclusion. We are being asked to consent today to measures concerning the furniture industry which shall be taken before next year's Budget. At present, in some parts of the country, including the constituency I represent, a number of young people are either working short time or are out of work. I should like to put that as one of the reasons why we should wait before we agree to any steps which would undoubtedly increase the price of the basic articles of furniture which people of limited means buy when they first marry.

We are also in a situation in which restrictions are being placed on hire purchase, a matter which I do not believe has been mentioned in this connection this afternoon, but one which is of considerable importance. I am not at the moment going into the pros and cons of restrictions on hire purchase, but I point out that if the price of furniture is increased and, at the same time, restrictions are put on hire purchase arrangements, it will make it exceedingly difficult for young people to set up a home with furniture of their own. It seems a most inappropriate time to be doing anything which would increase the price of obsolutely necessary furniture for a home and it will make it more difficult—I am speaking as one who married while the Utility scheme was in force—for a person to buy good quality furniture.

Any woman setting up a home wants to be sure that the investment—very often of her savings as well as those of her husband—in household goods will be to the permanent advantage of her family. She does not want to economise on articles such as bedding, chairs, tables, and so on, which she hopes will last for the greater part of her married life. It would be a very great pity if it were made more difficult for people setting up home to buy reasonably good quality furniture. After all, this is capital investment for the family and it is always poor economy to buy cheap things if they have to last for many years. I find the argument of my hon. Friend the Member for Edmonton (Mr. Albu) unanswerable. He says that approximately 90 per cent. of new furniture now made—we are not discussing expensive antiques—is tax free. It is clear that if we are to have anything approaching a D scheme on a median principle we shall very considerably increase the price of articles in common use.

I do not deny that there are other articles in common use which, perhaps, are not now in the Utility scheme; china cabinets and blanket chests and so on have been mentioned. I am not arguing particularly for those. There may be some anomalies which could be set straight in the existing scheme. It is the necessary articles, beds, chairs, tables, cupboards, and so on, required for young couples setting up home for which I am pleading. I feel that in the present economic circumstances in parts of the country and the restrictions on hire purchase arrangements which are important to the question of furniture it would be most undesirable for the Committee to commit itself to changes which should await next year's Finance Bill.

Mr. G. R. Mitchison (Kettering)

I have no personal interest in furniture and I do not even think I have a constituency interest in furniture, but I have for a long time been interested, from an outsider's point of view, in furniture design and I wish to say quite bluntly that in my view large parts of this trade stank before the war. They stank from two points of view: first, the furniture was shoddy and, second, the design was rotten.

Only since the introduction of the Utility scheme has it seemed to make the very marked improvement we have seen in the design of furniture. I say at once that everyone recognises that there have been designers and firms who consistently have sold good, well-designed furniture at reasonable prices. They are still there, but the point about these schemes has been that there has been a general improvement, from both points of view, in the ordinary furniture that the ordinary married couple buy.

I cannot claim, like my hon. Friend the Member for Flint, East (Mrs. White), to have been married so recently that it concerns me, but it concerns my children and I know how much difference it has made to them as it has made to young married couples all over the country by being able, for the first time, to get furniture about the soundness and design of which they could really be proud.

To the hon. Member for Cheadle (Mr. Shepherd) I would say that I want to know when the Swede he mentioned last visited the country. I suggest that what happened was that the Swede—they make some remarkably good furniture in Sweden—had formed the impression, from some of the more unfortunate prewar achievements of the furniture trade, that English furniture was only too often deficient both in quality and in design and that he had not had enough time nor experience to get rid of that idea. I hope that on the visit which began in the circumstances we have heard the final stage of the process of conviction was reached and that he came to the conclusion that now at last the English are making, not merely at the top of the scale but right down it, furniture of good quality and good design.

Mr. Shepherd

I wish to relieve the hon. and learned Member of his illusion; the man to whom I referred bought from this country before the war. I am not denying that there has been an increased interest in design. What I am saying is that if the trade could be freed from the grip of the Utility specifications we might see an even greater improvement in design than has taken place in the last few years.

Mr. Mitchison

I am not sure that that is so, and here I reply on the Douglas Report. At the end of paragraph 28 it is pointed out: Enforcement of the specifications"— I call the Committee's attention to "enforcement"— has … set a minimum standard of quality and has undoubtedly eliminated much of the very low quality cheap furniture which was made before the war. That is the kind of stuff I had in mind—and the kind of stuff a little better than that but which was not up to the standard which we get nowadays. As I say, this could be done not only because of the existence of a Utility scheme but because of its enforcement.

My objection to these Clauses of the Bill is that I regard them as premature. It is quite untrue to say that the approval or disapproval which the House can pronounce on the Treasury's action in the matter will give it an effective control. In these Clauses the Treasury has only the very limited power of description and pricing for the purposes of a D scheme; it has nothing else.

Negotiations are now going on with both sides of this industry. It seems to me that the Government are tying their hands, as has been pointed out already, by prescribing at this stage, before they know what may really be necessary, the frame into which their plans have to be fitted. It may be that in the course of the negotiations they will find that to deal with this trade properly they will need more than the very limited powers which have been given to the Treasury.

It is significant that it is the Treasury. This is a matter of description and pricing. I am concerned, as I believe is the trade itself and certainly the ordinary people who have to buy the furniture, not merely about the question of description and price but the question of how we are to enforce on this trade the standards which have recently been enforced under the Utility scheme to maintain decent quality and decent design.

I have no doubt that somebody can think up some kind of scheme which they regard as sufficient for the purposes which the Utility scheme was intended to serve, but I think that is quite impossible without the enforcement which has applied to the Utility scheme in the past, a monetary enforcement. I am not saying that it was a perfect Utility scheme in that respect. It is clear that it could have been corrected one way and another, but that is an entirely different point.

The point here is that the Government are dropping the Utility scheme and all that it has meant to the trade itself as well as to the buyer of ordinary furniture, and are putting nothing in its place which links up, whatever the intentions of the Government may prove to be, with the financial provisions of this Bill. It is for that reason that I say these Clauses seem to me to be premature.

6.45 p.m.

I should have thought it very foolish indeed to throw over what has been achieved up to this point in this trade. The Government might say that generally they dislike the Utility scheme—I do not agree with that—but in this trade there is an exceptionally strong case for at least having some scheme which can be enforced. Here the Government are throwing away the power of enforcement by separating the financial provisions and the requirements of quality and design.

It is for that kind of reason that I wonder why the Government have chosen to bring in at this stage this skeleton form of provision. I suspect that it is simply finance. When do we consider finance? That always happens about April Fool's Day; we must do it then. I think that the Government might have gone a little further. They should not throw aside a real success, a real achievement under the previous Government, simply on a matter of timing, simply through trying to fit the matter in with one particular Bill during the year.

How much wiser it would have been to have accepted this Amendment. No harm can be done by it. Let the Government leave their hands free in the negotiations so as to be able to achieve whatever may be best for the trade by way of amending standards and quality, and so make a proper job of it when the time comes, instead of taking their proposed action now.

Mr. Albu

I was shocked by the apparently complete misunderstanding of the Financial Secretary about the way the present Utility scheme operates. It is incredible if it is the intention to introduce a D scheme into this industry without any understanding of the extremely important part it plays in the lives of ordinary people at present. The idea that there is any possible D-level that could be introduced which would somehow or other give us much relief as it created extra burden to consumers is, as my right hon. Friend the Member for Huyton (Mr. H. Wilson) pointed out, complete nonsense. The main basic articles of furniture are all tax free.

I ask the Financial Secretary to direct his mind to the question of the margins under the Utility scheme. The retail and distributors' margins generally are controlled to an overall figure of 33⅓ per cent. It would be impossible to have such a control under the D scheme. It may well be that under present conditions competition will keep the overall margins down, but we have to have regard to the nature of this trade and to the nature of the retail distribution in this industry.

A great part is distributed under hire-purchase arrangements. Under the Hire Purchase Act, 1938, retail price and hire-purchase conditions must be shown separately, but if there is no overall control of margins and, as is frequently the case, the retailer does practically no cash trade, there is nothing to prevent him inflating his retail price by including in it a good deal of what should be really his hire-purchase conditions and then showing the regular hire-purchase conditions separately. That seems to me to be a very serious danger that might arise through the abolition of the Utility scheme, with its control of margins, and the introduction in its place of a D scheme.

Mr. Coldrick (Bristol, North-East)

There is a reputable firm producing furniture in my constituency, and when I last visited their premises I found that most of the people there, including the manufacturers themselves, were most eulogistic about the Utility scheme and were afraid that once the controls that were associated with it were removed there would be a debasement of quality.

I must admit that in subsequent discussions with a number of manufacturers outside my constituency I found that they were all in favour of maintaining the Utility standard but complained of a lack of flexibility. The main argument is that in consequence of certain limitations in force within the Utility scheme they occasionally call the designers together and after they have designed a piece of furniture they consult the foreman and workmen; and then, once they have produced a prototype, they discover that the cost is just outside the Utility range and, consequently, they make certain changes.

So far as I can gather from them the real remedy at this stage would be the granting of a little flexibility in the present scheme and not its abolition. My experience, particularly in connection with the Co-operative movement, is that in a large number of furniture shops—and, after all, we must have regard to what people themselves choose and not what we want to impose on them—the great mass of the people prefer to buy Utility furniture from medium grade upwards.

What is likely to happen if the Utility scheme is abolished and if we fix the D line, as is generally the case, round about 50 per cent.? We may take it for granted that the great mass of the people will seek to purchase furniture below the D line. That, of course, will mean that an increasing pressure will be placed on the lower quality furniture, and the manufacturers who comply with that demand will have to divert skilled labour and materials to the lower ranges.

Either we shall have a complete debasement in the quality, which will require some supervision, or we shall find that automatically far less of the higher quality furniture now being produced within the Utility scheme will be produced. It would seem to me that it would pay the Government to look at the scheme as a whole, and if there are certain restrictions to remove them within the Utility scheme, and not proceed to abolish it in accordance with the suggestion in the Douglas Report.

Mr. Shepherd

I think my hon. Friend could assist if he would say that in fixing the D line it is the intention of the Treasury not to take more tax from the sales of furniture under the new scheme than they have taken under the existing conditions. If he were to do that I am sure that everybody, including hon. Gentlemen opposite, would be very happy.

Mr. Jay

Before the hon. Gentleman replies may I assist him, since he seems to have so few friends in this debate? May I ask him if this scheme will involve any extra imposition on the consumer?

Mr. Boyd-Carpenter

Let us get this right. I dealt with the argument of the right hon. Member for Battersea, North (Mr. Jay) that this was solely a question of an extra imposition on the consumer by pointing out—and I think that, on reflection, he will agree—that it involves an extra imposition in one direction and an extra relief in the other; that there were two forces operating.

Mr. Jay

Then the hon. Gentleman cannot give us any assurance that there will be no additional tax from any scheme introduced by the Treasury on articles of furniture previously tax free?

Mr. Boyd-Carpenter

That must obviously await the scheme which will be laid.

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

The Committee divided: Ayes, 269; Noes, 291.

Sylvester, G. O. Wallace, H. W Williams, Ronald (Wigan)
Taylor, Bernard (Mansfield) Watkins, T. E, Williams, Rt. Hon. Thomas (Don V'll'y)
Taylor, John (West Lothian) Webb, Rt. Hon. M. (Bradford, C.) Williams, W. R. (Droylsden)
Taylor, Rt. Hon. Robert (Morpeth) Weitzman, D. Williams, W. T. (Hammersmith, S.)
Thomas, David (Aberdare) Wells, Percy (Faversham) Wilson, Rt. Hon. Harold (Huyton)
Thomas, George (Cardiff) Wells, William (Walsall) Winterbottom, Ian (Nottingham, C.)
Thomas, Ivor Owen (Wrekin) West, D. G. Winterbottom, Richard (Brightside)
Thorneycroft, Harry (Clayton) Wheatley, Rt. Hon. John Woodburn, Rt. Hon. A
Timmons, J. White, Mrs. Eirene (E. Flint) Wyatt, W L.
Tomlinson, Rt. Hon. G White, Henry (Derbyshire, N.E.) Yates, V. F.
Tomney, F Whiteley, Rt. Hon. W. Younger, Rt. Hon. K.,
Turner-Samuels, M. Willey, Frederick (Sunderland, N.)
Ungoed-Thomas, Sir Lynn Willey, Octavius (Cleveland) TELLERS FOR THE AYES:
Usborne, H. C. Williams, David (Neath) Mr. Wilkins and Mr. Wigg.
Viant, S P Williams, Rev. Llywelyn (Abertillery)
Division No. 117.] AYES [6.56 p.m.
Acland, Sir Richard Follick, M. Mallalieu, J. P. W. (Huddersfield, E.)
Adams, Richard Foot, M. M Mann, Mrs. Jean
Albu, A. H. Forman, J. C. Manuel, A. C.
Allen, Arthur (Bosworth) Fraser, Hon. Hugh (Stone) Marquand, Rt. Hon. H. A.
Anderson, Alexander (Motherwell) Freeman, John (Watford) Mayhew, C P.
Anderson, Frank (Whitehaven) Gaitskell, Rt. Hon. H. T. N Mellish, J
Attlee, Rt. Hon C R Gibson, C. W. Messer, F
Awbery, S. S. Glanville, James Mikardo, Ian
Ayles, W. H. Gooch, E. G. Mitchison, G. R
Bacon, Miss Alice Gordon Walker, Rt. Hon. P. C. Monslow, W.
Baird, J. Greenwood, Anthony (Rossendale) Moody, A. S.
Balfour, A. Greenwood, Rt. Hon. Arthur(Wakefield) Morgan, Dr. H B W
Barnes, Rt. Hon. A J Grey, C. F. Morley, R.
Bartley, P. Griffiths, David (Rother Valley) Morris, Percy (Swansea, W.)
Bellenger, Rt. Hon. F J. Griffiths, Rt. Hon. James (Llanelly) Morrison, Rt Hon H. (Lewisham. S.)
Bence, C. R. Griffiths, William (Exchange) Moyle, A
Benn, Wedgwood Hale, Leslie (Oldham, W.) Mulley, F. W.
Benson, G. Hall, Rt. Hon. Glenvil (Coine Valley) Murray, J. D.
Beswick, F Hall, John (Gateshead, W.) Nally, W.
Bevan, Rt. Hon A (Ebbw Vale) Hamilton, W. W. Neal, Harold (Bolsover)
Bing, G. H C. Hannan, W. Noel-Baker, Rt. Hon. P J.
Blackburn, F. Hardy, E. A. O'Brien, T.
Blyton, W. R. Hargreaves, A. Oldfield, W. H
Boardman, H. Harrison, J. (Nottingham, E.) Oliver, G. H.
Bottomley, Rt. Hon. A.C. Hastings, S. Orbach, M
Bowden, H W. Hayman, F. H. Oswald, T.
Brockway, A. F. Healey, Denis (Leeds, S.E.) Padley, W. E.
Brook, Dryden (Halifax) Healy, Cahir (Fermanagh) Paget, R. T
Broughton, Dr. A. D. D. Henderson, Rt. Hon. A. (Rowley Regis) Paling, Rt. Hon W. (Dearne Valley)
Brown, Rt. Hon. George (Belper) Herbison, Miss M. Paling, Will T. (Dewsbury)
Brown, Thomas (Ince) Hewitson, Capt. M Pannell, Charles
Burke, W. A. Hobson, C. R. Pargiter, G. A.
Burton, Miss F. E. Holman, P. Parker, J.
Butler, Herbert (Hackney, S) Holmes, Horace (Hemsworth) Paton, J.
Callaghan, L J Houghton, Douglas Pearson, A
Carmichael, J. Hoy, J. H Pearl, T. F.
Castle, Mrs. B A Hubbard, T. F. Plummer, Sir Leslie
Champion, A. J. Hudson, James (Ealing, N.) Porter, G.
Chapman, W D. Hughes, Cledwyn (Anglesey) Price, Joseph T (Westhoughton)
Chetwynd, G. R Hughes, Emrys (S. Ayrshire) Price, Philips (Gloucestershire, W.)
Clunie, J. Hynd, H. (Accrington) Proctor, W. T.
Cocks, F. S. Hynd, J. B. (Attercliffe) Pryde, D. J.
Coldrick, W. Irvine, A. J. (Edge Hill) Pursey, Cmdr. H
Collick, P. H. Irving, W. J. (Wood Green) Rankin, John
Cook, T. F. Isaacs, Rt. Hon. G. A. Reeves, J.
Corbet, Mrs. Freda Jay, Rt. Hon. D. P. T. Reid, Thomas (Swindon)
Cove, W. G. Jeger, George (Goole) Reid, William (Camlachie)
Craddock, George (Bradford, S.) Jenkins, R. H. (Stechford) Rhodes, H.
Crosland, C. A R Johnson, James (Rugby) Richards, R.
Cullen, Mrs. A. Jones, David (Hartlepool) Robens, Rt. Hon. A
Daines, P. Jones, Jack (Rotherham) Roberts, Albert (Normanton)
Dalton, Rt. Hon. H Jones, T. W (Merioneth) Roberta, Goronwy (Caernarvonshire)
Darling, George (Hillsborough) Keenan, W. Rogers, George (Kensington, N.)
Davies, E. Edward (Stoke, N.) Kenyon, C. Ross, William
Davies, Harold (Leek) Key, Rt. Hon. C. W. Royle, C.
de Freitas, Geoffrey King, Dr. H. M Schofield, S. (Barnsley)
Deer, G. Kinley, J. Shackleton, E. A. A
Delargy, H. J. Lee, Frederick (Newton) Shinwell, Rt. Hon. E
Dodds, N. N. Lee, Miss Jennie (Cannock) Short, E. W.
Donnelly, D. L. Lever, Harold (Cheetham) Shurmer, P. L. E.
Driberg, T. E. N. Lever, Leslie (Ardwick) Silverman, Julius (Erdington)
Dugdale, Rt. Hn. John (W. Bromwich) Lewis, Arthur Silverman, Sydney (Nelson)
Ede, Rt. Hon. J. C. Lindgren, G. S. Simmons, C J (Brierley Hill)
Edelman, M. Lipton, Lt-Col. M. Slater, J.
Edwards, John (Brighouse) Logan, D. G. Smith, Ellis (Stoke, S.)
Edwards, Rt. Hon. Ness (Caerphilly) MacColl, J. E. Smith, Norman (Nottingham, S.)
Edwards, W. J. (Stepney) McGhee, H. G. Sorensen, R. W
Evans, Albert (Islington, S.W.) McGovern, J. Soskice, Rt. Hon. Sir Frank
Evans, Edward (Lowestoft) McInnes, J. Sparks, J. A
Evans, Stanley (Wednesbury) McKay, John (Wallsend) Steele, T.
Ewart, R. McLeavy, F Stewart, Michael (Fulham, E.)
Fernyhough, E. MacMillan, M. K. (Western Isles) Stokes, Rt. Hon R. R.
Field, W. J. McNeil, Rt. Hon. H Strachey, Rt. Hon. J.
Fienburgh, W. MacPherson, Malcolm (Stirling) Strauss, Rt. Hon. George (Vauxhall)
Finch, H. J. Mainwaring, W. H. Summerskill, Rt. Hon. E.
Fletcher, Eric (Islington, E.) Mallalieu, E L. (Brigg) Swingler, S. T
Aitken, W. T. Darling, Sir William (Edinburgh, S.) Hutchinson, Sir Geoffrey (Ilford, N.)
Allan, R. A. (Paddington, S.) Davidson, Viscountess Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Alport, C. J. M. Davies, Rt. Hn. Clement (Montgomery) Hutchison, James (Scotstoun)
Amery, Julian (Preston, N.) Deedes, W. F. Hylton-Foster, H. B. H.
Amory, Heathcoat (Tiverton) Digby, S. Wingfield Jenkins, R. C, D. (Dulwich)
Anstruther-Gray, Maj. W. J. Dodds-Parker, A. D. Jennings, R.
Arbuthnot, John Donaldson, Cmdr. C. E. McA. Johnson, Eric (Blackleg)
Ashton, H. (Chelmsford) Donner, P. W. Johnson, Howard (Kemptown)
Assheton, Rt. Hon. R. (Blackburn, W) Doughty, C. J. A Jones, A. (Hall Green)
Astor, Hon. J. J. (Plymouth, Sutton) Douglas-Hamilton, Lord Malcolm Joynson-Hicks, Hon. L. W.
Astor, Hon. W, W. (Bucks, Wycombe) Drayson, G. B. Kaberry, D.
Baker, P. A. D. Dugdale, Maj. Rt. Hn. Sir T. (Richmond) Keeling, Sir Edward
Baldock, Lt-Cmdr. J M Duncan, Capt. J. A. L. Kerr, H. W. (Cambridge)
Baldwin, A E. Duthie, W. S. Lambert, Hon. G.
Banks, Col C. Eccles, Rt. Hon. D. M. Lambton, Viscount
Barber, A. P. L. Elliot, Rt. Hon. W. E Lancaster, Col. C. G.
Barlow, Sir John Erroll, F. J. Leather, E. H. C.
Baxter, A. B. Fell, A. Legge-Bourke, Maj. E. A. H
Beach, Maj Hicks Fisher, Nigel Legh, P. R. (Petersfield)
Beamish, Maj. Tufton Fleetwood-Hesketh, R. F Lennox-Boyd, Rt. Hon. A. T
Bell, Philip (Bolton, E.) Fletcher, Walter (Bury) Lindsay, Martin
Bell, Ronald (Bucks, S.) Fletcher-Cooke, C. Linstead, H. N.
Bennett, F. M. (Reading, N.) Fort, R. Lloyd, Rt, Hon. G. (King's Norton)
Bennett, Sir Peter (Edgbaston) Foster, John Lloyd, Maj. Guy (Renfrew, E.)
Bennett, Dr. Reginald (Gosport) Fraser, Sir Ian (Morecambe & Lonsdale) Lloyd, Rt. Hon. Selwyn (Wirral)
Bennett, Wiliam (Woodside) Fraser, Hon. Hugh (Stone) Lockwood, Lt.-Col. J. C.
Bevins, J. R. (Toxteth) Fyfe, Rt. Hon. Sir David Maxwell Longden, Gilbert (Herts, S.W.)
Birch, Nigel Gage, C. H. Low, A. R. W.
Bishop, F. P. Galbraith, Cmdr. T. D. (Pollok) Lucas, Sir Jocelyn (Portsmouth, S.)
Black, C. W. Galbraith, T. G. D. (Hillhead) Lucas, P. B. (Brantford)
Boothby, R. J. G Garner-Evans, E. H. Lucas-Tooth, Sir Hugh
Bossom, A. C. Glyn, Sir Ralph McAdden, S. J.
Bowen, E. R. Godber, J. B. McCorquodale, Rt. Hon M. S.
Boyd-Carpenter, J. A Gomme-Duncan, Col. A Macdonald, Sir Peter (I of Wight)
Boyle, Sir Edward Gower, H. R. Mackeson, Brig. H R
Braine, B. R. Graham, Sir Fergus McKibbin, A. J.
Braithwaite, Sir Albert (Harrow, W.) Gridley, Sir Arnold McKie, J. H. (Galloway)
Braithwaite, Lt.-Cdr. G. (Bristol, N.W.) Grimond, J. Maclean, Fitzroy
Bromley-Davenport, Lt.-Col. W. H. Grimston, Hon. John (St. Albans) MacLeod, Iain (Enfield, W.)
Brooke, Henry (Hampstead) Grimston, Sir Robert (Westbury) MacLeod, John (Ross and Cromarty)
Brooman-White, R. C. Harden, J. R. E. Macmillan, Rt. Hon. Harold (Bromley)
Browne, Jack (Govan) Hare, Hon. J. H. Macpherson, Maj. Niall (Dumfries)
Buchan-Hepburn, Rt. Hon. P G. T Harris, Frederic (Croydon, N.) Maitland, Comdr. J. F. W. (Horncastle)
Bullard, D. G. Harrison, Col. J. H. (Eye) Maitland, Patrick (Lanark)
Bullock, Cap M. Harvey, Air Cdre. A. V. (Macclesfield) Marmingham-Buller, Sir R. E
Bullus, Wing Commander E. E. Harvey, Ian (Harrow, E.) Markham, Major S. F.
Burden, F. F. A. Harvie-Watt, Sir George Marples, A. E.
Butcher, H. W. Hay, John Marshall, Douglas (Bodmin)
Butler, Rt. Han. R. A. (Saffron Walden) Head, Rt. Hon. A. H. Marshall, Sidney (Sutton)
Carr, Robert (Mitcham) Heald, Sir Lionel Maude, Angus
Carson, Hon. E. Henderson, John (Cathcart) Maudling, R.
Cary, Sir Robert Higgs, J. M. C. Maydon, Lt.-Cmdr S. L C
Channon, H. Hill, Dr. Charles (Luton) Medlicott, Brig. F.
Clarke, Col. Ralph (East Grinstead) Hinchingbrooke, Viscount Mellor, Sir John
Clarke, Brig. Terence (Portsmouth, W) Hirst, Geoffrey Molson, A. H. E.
Cole, Norman Holland-Martin, C. J Monckton, Rt. Hon. Sir Walter
Conant, Maj R. J. E. Hollis, M. C. Moore, Lt.-Col. Sir Thomas
Cooper, Sqn. Ldr. Albert Holmes, Sir Stanley (Harwich) Morrison, John (Salisbury)
Cooper-Key, E. M. Hope, Lord John Mott-Radclyffe, C. E.
Craddock, Beresford (Spelthorne) Hornsby-Smith, Miss M. P. Nabarro, G. D. N.
Cranborne, Viscount Horobin, I. M. Nicholls, Harmar
Crookshank, Capt. Rt. Hon. H. F. C Horsbrugh, Rt. Hon. Florence Nicholson, Godfrey (Farnham)
Crosthwaite-Eyre, Col. O. E. Howard, Greville (St. Ives) Nicolson, Nigel (Bournemouth. E.)
Crouch, R. F. Hudson, Sir Austin (Lewisham, N.) Noble, Cmdr. A. H. P.
Crowder, John E. (Finchley) Hudson, W. R. A. (Hull, N.) Nugent, G. R. H.
Crowder, Petre (Ruislip—Northwood) Hulbert, Wing Cmdr N. J Oakshott, H. D.
Chthbert, W. N. Hurd, A. R Odey, G. W
O'Neill, Rt. Hon. Sir H. (Antrim, N.) Salter, Rt. Hon. Sir Arthur Thompson, Lt.-Cdr. R. (Croydon, W.)
Ormsby-Gore, Hon. W D. Savory, Prof. Sir Douglas Thorneycroft, R. Hn. Peter (Monmouth)
Orr, Capt. L. P. S. Schofield, Lt.-Col. W. (Rochdale) Thornton-Kemsley, Col. C. N
Orr-Ewing, Charles Ian (Hendon, N.) Scott, R. Donald Tilney, John
Orr-Ewing Ian L. (Weston-super-Mare) Scott-Miller, Comdr. R Turner, H F. L.
Osborne, C. Shepherd, William Turton, R. H.
Partridge, E. Simon, J. E. S. (Middlesbrough, W.) Tweedsmuir, Lady
Peake, Rt. Hon. O Smiles, Lt.-Col. Sir Walter Vane, W. M. F
Perkins, W. R. D. Smithers, Peter (Winchester) Vaughan-Morgan, J K
Peto, Brig. C. H. M Smithers, Sir Waldron (Orpington) Vosper, D. F.
Peyton, J. W. W Smyth, Brig. J. G. (Norwood) Wakefield, Edward (Derbyshire, W.)
Pickthorn, K. W. M Snadden, W. McN Wakefield, Sir Wavell (Marylebone)
Pilkington, Capt. R. A Soames, Capt. C. Walker-Smith, D. C.
Pitman, I. J. Spearman, A. C. M. Ward, Hon. George (Worcester)
Powell, J. Enoch Speir, R. M. Ward, Miss I. (Tynemouth)
Price, Henry (Lewisham, W.) Spens, Sir Patrick (Kensington, S.) Waterhouse, Capt. Rt. Hon. C
Prior-Palmer, Brig. O. L Stanley, Capt. Hon. Richard Watkinson, H. A
Profumo, J. D. Stevens, G. P. Webbe, Sir H. (London & Westminster)
Raikes, H. V Steward, W. A. (Woolwich, W.) Wellwood, W.
Rayner, Brig. R Stewart, Henderson (Fife, E.) White, Baker (Canterbury)
Redmayne, E. Stoddart-Scott, Col. M. Williams, Rt. Hon. Charles (Torquay)
Remnant, Hon. P. Storey, S. Williams, Gerald (Tonbridge)
Renton, D. L. M. Strauss, Henry (Norwich, S.) Williams, Sir Herbert (Croydon, E)
Roberts, Peter (Heeley) Stuart, Rt. Hon. James (Moray) Williams, R. Dudley (Exeter)
Robertson, Sir David Studholme, H. G Wills, G.
Robinson, Roland (Blackpool, S.) Summers, G S Wilson, Geoffrey (Truro)
Robson-Brown, W. Sutcliffe, H. Wood, Hon. R.
Rodgers, John (Sevenoaks) Taylor, Charles (Eastbourne) York, C.
Roper, Sir Harold Taylor, William (Bradford, N.)
Russell, R. S. Teeling, W. TELLERS FOR THE NOES:
Ryder, Capt. R. E. D. Thompson, Kenneth (Walton) Mr. Drewe and Mr. Heath.

7.0 p.m.

Mr. Boyd-Carpenter

I beg to move, in page 8, line 22, to leave out subsection (2).

It would be convenient, at the same time, to consider the Amendment in line 35, at the end, to insert "paragraph 1 of." These are simply paving Amendments for the Government new Clause, on page 884 of the Order Paper, dealing with the reduction of Purchase Tax on fur-trimmed garments.

Mr. E. Fletcher

Before the Committee accept this Amendment, I hope that the Financial Secretary will say a little more about it. It appears to me to be highly inconvenient. I understand that the object of omitting this important subsection (2) is to enable the Chancellor to re-introduce the substance of it in a modified and extended form as a new Clause. That is all very well, but it is another illustration of the muddle in which the Government are involved with this Bill.

A number of my hon. Friends and myself were anxious to put down Amendments to subsection (2) and also to the Third Schedule, which contains a number of consequential provisions which derive from this subsection. I understood that there was some suggestion that after we had considered the three Clauses dealing with Purchase Tax the Chancellor would invite the Committee to deal with the Schedules which relate to Purchase Tax.

It will be seen that there is no proposal to delete subsection (3) of this Clause which starts with the word, "Accordingly." The Third Schedule, as drafted, contains a series of changes which depend upon the Committee accepting the principles laid down in subsection (1) and subsection (2). Can the Financial Secretary tell us whether we are to postpone consideration of the Third Schedule until we come to the Chancellor's new Clause which will be introduced later in substitution for subsection (2)? Shall we be able when we come to the Third Schedule to deal with the detailed alterations on the assumption that the Committee will accept the principle of the new Clause which will be moved later by the Chancellor?

Mr. Boyd-Carpenter

I am sorry if the Amendment is inconvenient to the hon. Member or to the Committee. It is proposed, as I am sure the hon. Gentleman is aware, to take out the provisions of subsection (2) which relate to certain concessions with respect to fur trimmings and to put them back as a separate Clause. It was thought that certain additional definitions of the word "trimming," necessary to prevent abuse, so inflated the subsection in length as to justify it being made into a separate Clause. That was the intention, and no more.

The point raised by the hon. Gentleman about the relationship of this new Clause to the Third Schedule is a new one. I do not think that the hon. Gentleman will expect me at this stage to be able to give him an answer. My right hon. Friend will look at the matter, because it is his object to conduct the Committee stage of this Bill with the minimum of inconvenience to the Committee.

Mr. E. Fletcher

I am much obliged to the hon. Gentleman, and also for the assurance that the Chancellor will consider it. May I, therefore, suggest that perhaps the course which would be of maximum convenience to the Committee would be that the new Clause which is to be introduced in substitution for subsection (2) of Clause 7 should be considered at an early stage, so that we might consider it in relation to the Schedule, which flows from it?

Mr. Hugh Gaitskell (Leeds, South)

We are all indebted to my hon. Friend the Member for Islington, East (Mr. E. Fletcher) for raising this point. It is quite clear that, if we cannot discuss the new Clause which replaces subsection (2) until after the Third Schedule has been considered, we might be in a very difficult position. Perhaps I might follow up my hon. Friend's suggestion by offering to the Chancellor, if it is found to be in order, the proposal that we should, in fact, consider the new Clause before we take the Third Schedule; that is to say, after Clause 9. If that could be done, I think it would solve the difficulty which has been mentioned by my hon. Friend.

Mr. R. A. Butler

The reason why my hon. Friend the Financial Secretary did not give a more definite answer was that, in my experience, in a Bill already complicated with many Schedules, one could not really give an answer without profound study and one might mislead the Committee. I will undertake to consider this proposal, in order that we are not upset by having the device of moving the new Clause and bringing up the Fourth Schedule and then taking the Third Schedule in the wrong place, and I will give an answer as soon as I can.

Amendment agreed to.

Further Amendment made: In page 8, line 35, at end, insert "paragraph 1 of."—[Mr. Boyd-Carpenter.] Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

Mr. H. Wilson

This Clause is one of the most important in the whole Bill, and it is right that, before we go on to another we should have some discussion upon it, because this is the Clause that raises the whole question of a new principle-the imposition of the Purchase Tax on Utility goods, and, of course, the D scheme.

Tonight, as it is the Finance Bill which we are considering, we are concerned purely with the imposition of the Purchase Tax on Utility goods, just as, on certain Prayers which we on this side of the Committee tabled a week ago, we were concerned then with the Utility scheme only and not with the tax on the Utility scheme. The Committee will recall that, a few days ago, we had a far-reaching but short debate on the question of Purchase Tax in relation to the textile and clothing industries on a Motion which stood in the names of some of my hon. and right hon. Friends and myself.

It may be that hon. Members of the Committee will be wondering why we have not brought up that Motion again tonight in the form of an Amendment to the Finance Bill. Certainly, the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton) would once more have been greatly embarrassed if an Amendment had been put down on the same lines as the Motion which was debated on 29th April.

The reason why we did not do so was, quite simply, that to have put it down in anything like that form, we were advised, would have been out of order. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) and others of my hon. Friends and myself have, in fact, tabled an Amendment which would have had the effect of exempting from the operation of the D scheme, as regards the imposition of taxation, those Utility goods which, up to this time, or, at least, up to the Chancellor's Budget, had not carried Purchase Tax. In fact, we have not sought to move that Amendment tonight because we felt—and I understand that this view was 'shared, at least, by some hon. Members opposite—that it would be more for the convenience of the Committee to have a wider debate on the Motion "That the Clause, as amended, stand part of the Bill," rather than limit ourselves to that particular Amendment.

On the 29th of April, in a debate of some three hours, we put to the Government a strong and, in my view, almost unanswerable case for the removal of the Purchase Tax on textiles and clothing, and we have not really had an answer, because, certainly, the speech of the Financial Secretary on that occasion was not an answer to the point raised by my hon. Friends and myself on the position of the textile trade at the present time.

We did have, however, both from the Financial Secretary and earlier from the Chancellor himself, some indication that something was going to be done about the Purchase Tax and the Utility scheme. In the debate on the Second Reading of the Finance Bill, the Chancellor said: … if uncertainty continues about what policy is or may be, that will be the worst possible thing for the cotton trade or the woollen trade. Then, the Chancellor proceeded to create more uncertainty by saying that he was not absolutely wedded or committed to the D level, and that he would have a look at it during the Committee stage of this Bill. He said: … when we come to the Committee stage it will be up to hon. Members to put down their Amendments, as I am sure they will—and there are ample opportunities for them. I think my hon. Friends and myself have put down something like 100 well thought out and constructive Amendments to the Fourth Schedule, and I hope that the Chancellor is not disappointed at the result of our energies. Equally, I trust that we shall not be disappointed at the response which he makes to these Amendments.

7.15 p.m.

But the right hon. Gentleman went much further. He said: I shall spend most of my time between now and then mastering the intricacies and details of the various fabrics and articles and the problems that arise. We shall then have to apply our minds to making the Bill a better thing and life a worthier thing again."—[OFFICIAL REPORT. 7th April, 1952; Vol. 498, c. 2447-49.] In those concluding words, I think the Chancellor was taking the Finance Bill a bit wide, but I trust that he has spent a great deal of his time in the last month mastering the intricacies and details of fabrics and articles, and I hope that we shall get the benefit of his work in what he is going to tell us tonight.

We were also promised by the Financial Secretary: We shall give during the debate on the Finance Bill … the fullest and most careful consideration to the points that are put. … But the undertaking I have given, of careful consideration of proposals as they come forward during the debate, indicates that our minds are open on this question."—[OFFICIAL REPORT, 29th April, 1952; Vol. 499, c. 1366.] So we must assume that the mind of the Government is open on this question, which is raised particularly in Clause 7 (1).

We have debated on more than one occasion the effect of Clause 7, or of the proposals enshrined in Clause 7, on the Lancashire cotton industry, the Yorkshire woollen industry and the rest of the textile and clothing industries of this country. Tonight, I want more to stress the position of the consumer as affected by these proposals in Clause 7. We have considered the position of the consumer from the point of view of providing protection against shoddy goods and against the production of inferior quality, because we recognised the dangers to which consumers will be subject as a result of the disappearance of the Utility scheme.

Tonight, at any rate, I want to seek to stress more particularly the effect on the cost of living and on consumers of inserting Purchase Tax on a whole range of goods which previously were tax free. I know that that is not the only important consideration about Clause 7. Indeed, the effect of Clause 7 on the textile and clothing industries and on employment in the textile trade is particularly important to hon. Members on both sides of the Committee.

What does the Clause do? In fact, it imposes Purchase Tax on something like half the Utility clothing and textile goods which were previously tax free. It of course raises the cost of living of those sections of the community—and this really covers the majority of the community—which previously bought Utility clothing and Utility household textiles.

Anyone who takes the trouble to go to shops which sell to the ordinary people of this country—I am not talking about the luxury shops—will find that a large proportion of their trade will be affected by Clause 7. For instance, one large Co-operative society in the South which serves a working-class and lower middle-class group of customers estimates that something like 30 per cent. of their normal sale of men's wear and 40 per cent. of their normal sale of women's wear will, as a result of this proposal, pay tax.

I have heard of other Co-operative societies in different parts of the country where 65 per cent. of men's wear which was previously tax free is now going to come into the tax paying group, and where 50 per cent. of the outfitting and 100 per cent. of all of the bespoke tailoring of these societies will now pay the tax. I have heard of others in South Wales where 80 per cent. of their whole previous tax-free trade in men's wear and 75 per cent. of their previous tax-free trade in women's wear is now going to pay tax.

I do not propose to go into details of the individual effects of this Clause, because that is a matter which it would be more appropriate to raise, as we hope to do, on the Fourth Schedule, and we are assuming from the various promises made by the Chancellor and the Financial Secretary that we shall be permitted a very full and searching examination of the proposals in that Schedule. It is quite clear that there are very many anomalies, and that these are inevitable as a result of having such a Clause as this. But it is not merely a question of anomalies. As I have said, there is also the very serious effect on the cost of living.

I have been looking at the figures of trade of a typical Co-operative society, and I can assure hon. Members opposite that I should have got exactly the same result had I been looking at the figures of a privately owned shop dealing with the same kind of trade. If we compare the D level proposed by the Chancellor with the cost of the cheapest lines previously stocked, we see what a tremendous proportion of their normal trade will now carry tax.

If we take casements and brocades, we find that the D level is 5s. 4d. and the cheapest line stocked by this Society is 6s. Down quilts: the D level is £2 10s. and the cheapest line stocked £5 11s. 6d. Wool gloves: the D level is 3s. and the cheapest line stocked is 5s. Men's vests of Class A material: 14s. is the D level proposed by the Chancellor and £1 4s. is the charge previously made. Class B material: the cheapest is 4s., and 8s. is the cost of the cheapest in stock. Similar figures could be given for other goods.

I am told that as a result of this Clause, to take one very broad example, all hair filled mattresses will now bear tax whereas before many were tax free. Up to now down quilts have been tax free, but, unless the Chancellor is going to make some fundamental proposals about changing the D level, only those quilts composed of inferior fillings are going to be tax free from now on.

A few minutes ago we were debating the question of the D scheme as it relates to furniture, and we now have to consider that as a result of the D proposals for household furnishings, quite apart from the furniture trade, the cost to young, newly married couples in setting up a home is going to be very greatly increased as a result of the Budget and the Chancellor's proposals unless he is going to come forward tonight with some message of hope for them, as we all trust he is.

To take one or two examples. The contrast between the present and the new cost of important clothing and household furnishing items when the Chancellor has added Purchase Tax will be as follows: casement curtains which now cost 15s 2d.—these are typically moderately priced articles—will be 18s. 11d., the difference going to the Chancellor in the form of tax. Men's woollen vests at £1 11s. go up to £1 14s. 4d., and men's cotton vests go up from 10s. 4d. to 11s. 8d.

These are substantial and serious differences in the cost of living, and they are the direct result of the right hon. Gentleman's Budget. Coming back to down quilts, they are going up from £7 8s. 8d. to £9 9s. 8d. The "Manchester Guardian" in a leading article on 4th April, some parts of which I quoted during our recent brief debate on the Purchase Tax in relation to the textile trade, commented that the D scheme has had some fantastic effects on the textile industry and that it has hit the hosiery trade badly. It says: It has made most curtain and furnishing fabrics of decent quality prohibitive for the ordinary purse. Is that what the Chancellor really set out to do in this Budget? If so, it accords very oddly with all the promises made last October by right hon. Gentlemen opposite about the cost of living and with those great posters which were disfiguring the walls with the picture of a purse with a hole in it which the Tory Party promised to mend, and bearing such slogans as, "The Conservatives will fight the rising cost of living." The "Manchester Guardian" said that the result of the Chancellor's first Budget—and we all hope it will be his last—was to make most curtain and furnishing fabrics prohibitive for the ordinary purse.

The article then goes on to point out: The tax free level has been put at 4s. a yard for all cotton and rayon fabrics, which means that all the better fabrics bear a heavy tax. It reminds its readers that the tax on piece goods still remains in the proposals at 66⅔ per cent., and points out quite rightly that this was a tax put on during the war to discourage consumption. It is still operating under this new D scheme at a time when there is extremely heavy unemployment in Lancashire.

This D scheme which is imposed under Clause 7 is, and is bound to be as worked out by the Chancellor, a redistributive tax which means that the lower income groups have to pay more for goods in order that to some extent the higher income groups can get some relief. That is the inevitable result of the D scheme.

Mr. R. A. Butler

The right hon. Gentleman is importing a political argument into his speech. Does not he agree that while the responsibility must rest on the Government of the day, this was an honourable attempt to implement the findings of a committee appointed by my predecessor of a different political party from my own and an honourable attempt to bring in a scheme thought at the time to be helpful?

7.30 p.m.

Mr. Wilson

I was going to come to the question of our international obligations and the undertaking given by my right hon. and learned Friend the Member for St. Helens (Sir H. Shawcross), which everyone on this side of the Committee is determined must be carried out. I quite agree with that, but I hope I can satisfy the Chancellor that it is possible to do that without at the same time redistributing income in this country on the whole in favour of the rich at the expense of the poor.

I do not think some hon. Members opposite realise the seriousness of this redistribution. The hon. Member for Cheadle (Mr. Shepherd), speaking about furniture, sounded as if he would be quite satisfied if the Financial Secretary gave an undertaking that when the Government finally produce their D scheme proposals there would be no more taxation taken from the furniture trade as a whole than is taken at the present time. I see that he confirms that himself.

If the result of a scheme of that kind is to make lower priced furniture dearer and some of the higher priced furniture, and indeed luxury furniture, cheaper, it is not equity at all. It may satisfy hon. Members opposite, but it is a redistribution measure hitting the poor and helping the rich. That is the result of Clause 7 as it affects clothing and textiles. I say nothing about furniture, because a great deal has been said about that on previous Amendments.

We all agree, of course, that we must honour our international obligations about non-discrimination in the matter of internal taxes on the one hand and taxes on imported goods on the other; but that does not mean the Chancellor has to tax the bulk of our good quality Utility goods. When the Douglas Report was first published and the Chancellor referred to it in his Budget speech on 11th March, I think it was my right hon. Friend the Member for Leeds, South who got up next day and said that we accepted the need to honour our international obligations and we accepted in some form the D scheme. I said the same thing the following day, but both of us said that, on the Committee stage of the Finance Bill, we should press for a far higher D level in order to remove the impact of Purchase Tax from the Utility goods which have so far been tax free.

I am sure that on reflection the Chancellor will agree it will be possible to honour our international obligations in full and at the same time exempt all, or nearly all, Utility goods which so far have been tax free. If the Chancellor is going to introduce a D scheme there are bound to be anomalies; and, of course, what might have been appropriate a year ago at the time of the establishment of the Douglas Committee can be and is completely inappropriate in the present condition of the textile industries of Yorkshire, Lancashire, Scotland and other areas and in the present condition of the clothing trade

In fact, the right hon. Gentleman will be well advised—and I still hope he will tell us he accepts our view—to sweep away the whole of this Purchase Tax from textiles and clothing if only in the interest of the textile industries themselves. We have asked him to do that before. If he is not going to say that, I trust he will say that he will raise the D levels to so high a figure that practically no goods which have been tax free under the Utility scheme will be paying tax under the D scheme.

I am sure some of my hon. Friends will want to develop particularly the relevance of Clause 7 to the textile industries and their great problems at the present time. But I would rest my argument on Clause 7 on this alone—without mentioning other points made before—that the effect of Clause 7 is to impose an intolerable burden on the housewives and consumers in this country and that the Government and the Committee should not proceed with a Clause which imposes such a burden and removes from the housewife the protection which the Utility scheme has given her for so many years.

Mr. Ralph Assheton (Blackburn, West)

The right hon. Gentleman the Member for Huyton (Mr. Wilson) referred to a debate which took place some days ago when a Motion was carried asking the Government to remove, reduce or amend the Purchase Tax on textiles. This Clause goes wider than the subject of textiles. On that occasion I developed some reasons why I thought a tax on textiles ought to be removed. I want to go rather further on this occasion and try and persuade the Chancellor that the Purchase Tax as a whole, as now imposed, is a had tax and ought to be removed.

One has great sympathy, of course, with the Chancellor of the Exchequer who has to raise the revenue. I know perfectly well that he receives something like £1 million every day from Purchase Tax—something like £360 million a year—and therefore it is a very important element in his Budget. But I want to draw the attention of the Committee once again to the size of the Budget and to point out that the total receipts budgeted for from taxes this year is at the alarming figure of £4,500 million.

That is to say, the Chancellor is budgeting for the very largest revenue any Chancellor has ever budgeted for in peace or war in this country. I suggest to the Committee that the total amount of taxes which are being levied by the Exchequer are grossly excessive and greater than the community can bear.

Mr. R. A. Butler

Is not my right hon. Friend aware of the immense defence burden on the community?

Hon. Members

And National Debt.

Mr. Assheton

I am fully aware of the defence burden and the National Debt burden. They amount to almost exactly £2,000 million, and the rest of the Budget, which is chiefly made up of the Civil Estimates, amounts to between £2,000 million and £2,500 million. I know the burden very well. I am only pointing out that this is the highest level taxation has ever reached in this country in peace or war. I have suggested before, and I suggest now, that that level of taxation must be reduced. It can only be reduced by reducing expenditure, a subject which, of course, I shall not be able to pursue on this occasion.

I want to point out why I think the Purchase Tax is a bad tax and, if I may, I want to call in aid a most interesting statement published yesterday by the Federation of British Industries and the comments made on that statement by "The Times" newspaper in the interesting article they had on the subject. I was interested to note that the Federation of British Industries, speaking for industry, acknowledge the value of the Douglas Committee Report. I should like to be one of those who pay tribute to Sir William Douglas for the work he did within a very narrow permitted field.

While the Federation of British Industries acknowledged the value of the Report, at the same time they did not favour the continuance of the Purchase Tax in its present form. They go on to point out the various objections to it. They point out that this tax was originally imposed for two reasons—to check consumption on the one hand and to raise revenue on the other. Of course, the more it succeeds in checking consumption the more it fails in raising revenue. Surely we have reached a stage when the Chancellor is only regarding this tax, at any rate as far as textiles are concerned, from the point of view of raising revenue. We can, I hope, ignore any possibility of using this tax for restricting consumption, and so I think I can devote my argument to the revenue aspect.

Is this a good method of raising money? I do not think it is. It is very damaging to the export trade because, as the F.B.I. pointed out, overseas markets which have alternative sources of supply refuse to submit to the influences imposed by the tax on the home market, as substantially the same sources of production provide for both markets. That is quite clear. If we are producing for the export market we want to have an overspill into the home market, and we manufacture goods which we hope to sell in both markets. We in England have got to sell our goods overseas by quality—

Sir W. Darling (Edinburgh, South)

And in Scotland.

Mr. Assheton

And I am sure in Scotland, too. Quality is what we depend on. There was a time, before the first war, when we were selling 7,000 million yards of cotton cloth all over the world, when quantity was what mattered, but now when every country in the world is producing its own goods of the cheaper kinds what we depend upon is quality. A tax which is levied at varying levels is absolutely inimical to quality. It must be so.

The argument which some hon. Members opposite have been using about the dangers of a tax which raises the price of goods to people in this country is a point which must be considered, but I should like hon. Members opposite, and particularly the right hon. Member for Huyton, to bear in mind that we should look after the quality goods which are manufactured in this country and that therefore a high level of tax on quality goods is wrong.

It may be easy for hon. Members opposite to suggest that because goods are of a high quality they should be taxed heavily, but that is most damaging to the workers of this country who are producing those goods, and in their interests we ought to consider whether or not that is a sound argument. We must remember that if quality goods which are produced in this country are heavily taxed, we shall lose our markets in the world and there will then be no reason to produce those goods.

I hope the Chancellor will be good enough to consider this point. If we have to raise revenue by taxes on consumption goods, I would rather see a much lower level of tax on a much wider sphere of goods. I should have thought that would be a wiser way of raising revenue, and it would be more advantageous to the trade of the country and likely to create more employment, particularly in Lancashire. one of whose divisions I have the honour to represent.

One point that I do not want to overlook is the fact that the uncertainty attached to Purchase Tax in its present form is most damaging to the markets. Every year we have this difficulty, and I should like to quote from a letter on this point. My correspondent, who is very knowledgeable, referring to the cotton trade, says: The industry has to plan its production six to nine months ahead of requirements. Yarn ordered in June may not become finished cloth for nine months or become a garment in the hands of the retailer for 12 months. The risks of a change in tax rate cannot be hedged or guarded against like a risk of a fall in the commodity, and from June onwards manufacturers, converters, wholesalers, makers-up and retailers are successively in a state of growing uncertainty, tending to keep their commitments as low as possible in case Budget changes force losses upon them. The Budget, in fact, comes at the very worst time when Spring and Summer goods should be moving forward in volume, and the intricacies of the D scheme are bound to make annual changes necessary, and the recurring uncertainty will do serious injury to an industry endeavouring to provide uniform employment throughout the year. 7.45 p.m.

Those two points of damage to quality production and uncertainty are important. Those are two of the most important criticisms of the Purchase Tax that can be made. I hope that the Chancellor will undertake seriously to examine the whole question of the Purchase Tax. I am not foolish enough to think that he can jettison the whole Purchase Tax in this Budget when he is budgeting for £360 million. All I pressed for the other night as an instalment was that he should remove the Purchase Tax on textiles, and he has indicated so far that he does not feel able to do it on account of the cost. But I want him to look ahead and see whether before next year he can remove the Purchase Tax altogether. If revenue is to be raised by some tax at this time, he should do it by means of a tax of a totally different character at a low, flat rate on a wide range of goods.

Mrs. Jean Mann (Coatbridge and Airdrie)

I am rather confused, and I think that the right hon. Member for Blackburn, West (Mr. Assheton), is also confused. I fear, too, that the housewives are confused. We ought to draw a very clear distinction between Purchase Tax as the housewife knows it, and this D tax which is about to be imposed by the Chancellor of the Exchequer, known as "the honest Chancellor," who, at Dunmow, on 1st October, assured the electorate that he would attack vigorously the cost of living.

The D tax will now be spread more equally among all members of the community. It is working in the very opposite direction to that of the Purchase Tax. We on this side of the Committee time and again removed Purchase Tax from almost all articles in daily use. If we take, for example, the range of cotton goods, sheets and pillow slips, it was only when a housewife bought very fine linen sheets at about six guineas a pair upwards that she paid tax. It was only when she bought a pair of hand embroidered pillow cases at about a guinea upwards that she paid tax.

Under "the honest Chancellor's" new D scheme she is going to pay tax on the humble pillow slip costing 5s. 11d.; I take 4s. as the wholesale price of the class "C" article, 6s. 6d. being the wholesale price of the class "A" article. She is to pay tax on gloves costing as little as 3s. a pair. The worker is to pay tax on suitings and overcoats. The housewife is to pay tax on all underwear.

When I go through the Fourth Schedule I find that everything is subject to tax unless it is the veriest of shoddy garments. Men's shirts which cost 17s. 6d. wholesale will be subject to tax. Even ankle socks at 2s. per pair will be subject to tax. It is a devastating attempt to increase the entire cost of living by taxing every article bought by ordinary working class people in their homes—table napery, sheets, blankets, pillowslips and even humble underwear such as a lady's slip as low as 8s. 4d.Every woman knows that that is merely a rayon garment. From that price upwards it will bear a tax. Even a pair of corsets at £1 will bear a tax.

If housewives could see this Schedule they would be appalled at what confronted them. Doubtless the news will not burst on them until after all the municipal and county council elections are over. I should like to quote from a newspaper which is not even a Liberal one—it is definitely Tory—the "Glasgow Herald." [HON. MEMBERS: "0h."] Yes, they are very proud of it. I may say that I have some respect for newspapers which definitely let it be known which party they support. When one reads the "Glasgow Herald" one knows just what to expect, and I much prefer that to the masquerading with which we are so well acquainted, whereby newspapers adopt the pose that their duty is to speak for the good of everyone. That newspaper says: Consignments of clothing subject to the new D scheme of pricing recommended by the Douglas Committee have been received in Glasgow. The general effect of the new rates is that the high grade non-utility garments will cost less and the utility wear will cost more. We are to benefit the same people as were benefited by the Chancellor in his Income Tax proposals. The £2,000 a year and upwards people are to benefit because the higher-costed garment will be subject to a reduction in tax, and the lower-costed garment will have an increased tax.

Sir William Darling

indicated dissent

Mrs. Mann

The hon. Member shakes his head. If we look at HANSARD for 29th January we find that the hon. Member was urging a sales tax on all goods at all levels because the Chamber of Commerce supported it.

Sir W. Darling

Will the hon. Lady indicate some of these high priced goods which have suffered a reduction of Purchase Tax?

Mrs. Mann

I shall be delighted to give the hon. Gentleman examples for the next half hour if he would like them. He seems to have a nice taste in ties. I can hardly see what he is wearing below his tie. Nevertheless, I must assume that he is interested in men's shirts. As an example of the effect on prices, a well-known make of non-Utility shirt costing 56s. 3d. will be reduced to 49s. 6d. under our honest Chancellor's new D scheme, and a top grade Utility shirt costing 37s. 9d. will cost 44s. 2d.

In another grade, a Utility shirt at 29s. 7d. will be increased to 35s. 5d. and a shirt at 21s. 6d. will also bear increased tax. Let us not confuse this with Purchase Tax. Would the hon. Gentleman like me to quote gent's suits and the increase which applies to them? Under the old tax a suit costing £20 bore a tax of 25 per cent., bringing the cost to £25; but now the suit will cost £25 less £2 8s. 8d. For whosoeer hath, to him shall be given, … but whosover hath not from him shall be taken away even that he hath. according to the Chancellor's D scheme.

Sir W. Darling

Even his shirt.

Mrs. Mann

I think the correct word for this is "inexcusable" In going through the Douglas Committee's Report one did feel that there was a strong argument for the reduction of the gap between the top Utility grade and the non-Utility grade. The reason advanced by that Committee was the difficulty of manufacturing and preserving the balance between the necessary home market and the export market, but surely everything has altered since they made their report.

Do hon. Members remember the posters: "Time for a change"? Well, there has been a change. "Get them out"—and they have gone out. There have been changes elsewhere. One would have thought that Australia, with its Tory Government—the friends, associates, close pals, shall I say, of hon. Members opposite—would have helped them a little. Instead of helping them it has been a case of dog eat dog. I regret that that analogy is not exactly what I mean; but at any rate Australia has cut her imports.

Everything has changed since the Douglas Committee were asked to bridge that gap. We are now faced with the loss of the Australian market. Those hon. Members representing Lancashire constituencies will speak of the difficulties they are experiencing. We must go after the home market. Now we are to make confusion worse confounded and double the number of unemployed by depriving even the home market of its sales, by introducing the D tax.

I have the greatest pleasure in speaking against this Clause, just as I have in explaining to housewives how what they and their husbands wear, even down to the most shoddy material at 4s. a yard, has to bear tax. Even children's clothes are affected, though we are told, at the beginning of Clause 7, that garments will, if a kind suitable for young children's wear, be exempt from purchase tax; We all know that children wear a coat set, which means a coat and a bonnet; but the bonnet, the little hat, if over 8s. will bear tax, so that even the children are being affected by the D tax.

I think it is too late to ask hon. Members opposite to change their minds. The die is cast, the writing is on the wall. Today will set the seal on the mistake which the electors made some months ago. I think hon. Members opposite see that they are racing down the hill, like certain animals referred to in the New Testament, to their own destruction. I ask them, in the interests of the housewives, to throw out the Clause.

8.0 p.m.

Sir W. Darling

As one of the New Testament animals who is rushing speedily to destruction, may I say that I am sure the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) will welcome, at any rate, a speech from me before I perish utterly in the abyss. I am sure she would not expect me to plunge to utter destruction without a protesting word. The hon. Lady and her right hon. Friends are not attacking the Clause; in fact, they are attacking the Douglas Report.

Mrs. Mann

Why implement it?

Sir W. Darling

I know that the Report has been studied with care, but I should like to draw the attention of the Committee, and in particular that of the hon. Lady, to Part IV of the Report, which says: We conclude that only a D scheme comes within all the requirements of the terms of reference laid down by your predecessor. I repeat that—"by your predecessor," being the predecessor of my right hon. Friend the Chancellor of the Exchequer, so that if the D scheme does not meet with the wishes of the public generally— and I agree that it does not—the responsibility must be laid upon the former Chancellor of the Exchequer who laid down the terms of reference.

Miss Alice Bacon (Leeds, North-East)


Sir W. Darling

If the Report is wrong, I shall be only too glad to have it contradicted, but I would repeat what the Report concludes— … that only a D scheme comes within all the requirements of the terms of reference laid down by your predecessor.

Miss Bacon

I might remind the hon. Gentleman that the level of the D scheme was not fixed by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), but by the present Chancellor of the Exchequer.

Sir W. Darling

May I repeat my quotation? It says: the terms of reference laid down by your predecessor. The phrase "your predecessor" cannot mean other than the previous Chancellor of the Exchequer. I think the hon. Lady will agree that that is so.

Mrs. Mann

May I put this question to the hon. Gentleman? Does he assume that every Government accepts the findings of a Commission? As your Government intend to set up a Royal Commission on the subject of Scottish Home Rule, will you tell us if you intend to accept the Report?

The Temporary Chairman (Mr. Frank Bowles)

I think that both the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) and the than. Member for Edinburgh, South (Sir W. Darling), are both addressing one another as if they were in the Chair.

Sir W. Darling

I am sure you will agree, Mr. Bowles, that the compelling character of the hon. Lady is such that it makes my error less inexcusable than hers. I will continue in safety by quoting the Report. This is why the attack is not upon my right hon. Friend but upon the D scheme. The Report says: We are conscious that a D scheme such as we have propounded is not an ideal solution of the many problems confronting British trade today. It perhaps offers least assistance to the production of high quality goods. If the hon. Lady does not like this, she should remember that I am only quoting the Report. It is not for me to defend the scheme, because, like the hon. Lady, I disagree with it. Like my hon. Friend the Member for Blackburn, West (Mr. Assheton), I share the view that the Government have inherited the Purchase Tax from the late Government, have inherited a great deal along with it and are compelled, in seeking their revenue, to continue the Purchase Tax. The Government have decided to do that under the D scheme, and I think they are mistaken to do so, but I intend to support them in the Division Lobby tonight, because, as I say, they have inherited the tax and there is no time to make a change.

I agree with hon. Gentlemen opposite that this is a most important part of the Bill and that we are adopting a new principle of taxation on Utility goods. I support that principle this year but I make it clear—and I think many hon. Members would be in agreement—that we shall get the best advice we can, and also learn from our experience, in order to put a better scheme into operation for the next Budget. It must be borne in mind that we have to get the revenue, and we aim to get it in the fairest way.

There is universal objection to this method of getting it. Perhaps I may quote from a report of one of the large middle-class, or lower middle-class distributive concerns, who set out at some length their view that the D scheme is entirely unsatisfactory to a business doing many millions of pounds worth of trade a year. This report says: The abolition of the Utility scheme and of a very considerable measure of price control are steps in the right direction, but there are many points in the Douglas Report upon which these changes have been based which are not in the interest either of the public or of the retail trade A large quantity of goods which used to be known as the ' top end of Utility' will now be subject to Purchase Tax, and furthermore it is clear from the notice issued by the Commissioners of Customs and Excise that it is their intention to apply their notorious system of uplift to the cost of this same merchandise. The hon. Lady protests against the tax in the name of the housewives. If she will have me, tie and all, she has an ally as passionate and as anxious as she is to see a better and fairer system of taxation.

Mr. Desmond Donnelly

(Pembroke): But only next year.

Sir W. Darling

The hon. Gentleman is aware that this taxation is urgently necessary to meet the crisis and the difficulties with which we were faced when we took over the Government. The money has to be found this year in such a measure as this country has never found it before, even in time of war.

Mr. Donnelly

I am grateful to the hon. Gentleman for giving way. May we presume, then, that he will give a firm guarantee that if conditions are exactly the same next year he will join us in the Division Lobby?

Sir W. Darling

The hon. Member for Pembroke (Mr. Donnelly) must not be too ready to make assumptions on my behalf. If he keeps his own conscience clear in this matter—and I notice that he has been straying in the Division Lobbies recently —he will have done enough.

Mr. Dryden Brook (Halifax)

Do we understand the right hon. Gentleman aright, that he intends to seek a revision of the tax next year?

Sir W. Darling

The hon. Gentleman heard me correctly.

Mr. Brook

If so, as a businessman will he address himself to this question? Is not one of the great troubles of the present situation the uncertainty in which the businessmen are placed? Is that uncertainty to be continued for 12 months? As a businessman, will he continue to carry stocks in the certain knowledge that at the end of 12 months he will lose the tax he has paid?

Sir W. Darling

I agree with the hon. Gentleman that one of the greatest evils which British business has to face is uncertainty, but for the last six years business has been accustomed to uncertainty. We have lived in conditions when we knew not, that day or hour, whether we should embark on another war, or lose another oilfield, or whether businesses which had long been managed successfully would be taken over by the State. The hon. Member for Halifax (Mr. Brook) is interested in giving confidence and comfort to those engaged in industry, but in protesting against this tax he speaks unfortunately as a member and ardent supporter of a party who have given uncertainty to the whole of the business community for the last six years. I am entirely with him on one thing, however, and I hope my right hon. Friend and, indeed, the whole Treasury Bench will agree, too, this is not a satisfactory tax.

To imply that shopkeepers, who are ill qualified for any other business, and who certainly are not qualified as tax collectors —to imply that shopkeepers should collect £1 million a day is not a satisfactory method of taxing the people. I am opposed to it, as I am opposed to the method by which the same shopkeepers and merchants have to keep books for the collection of Income Tax under P.A.Y.E. Both these things are to me anathema. Cannot the hon. Gentleman contain himself? No? Then I will give way.

Mr. Brook

The hon. Gentleman has said that business has had to face in the last six years a tremendous number of uncertainties. As a businessman along with myself, will he answer me this question? Have there been any six years in the history of British industry when every industry in our country has had greater certainty of profit than industry has had in the last six years?

Sir W. Darling

I am speaking for myself—and I am not suggesting that I am as good a businessman as the hon. Gentleman is, for that would be too much flattery for the hon. Gentleman, and one must not flatter—but these last six years have been more uncertain, more uneasy, than any year previous in the 40 years in which I have been engaged in business. [HON. MEMBERS: "Nonsense."] I am among those businessmen who, when they found that business was fairly good under a Socialist Government, knew that that was a phenomenon fraught with danger. I did not agree that everything in the garden was lovely, even though the hon. Member for Halifax (Mr. D. Brook) wore a rose in his buttonhole. I never believed that Socialism was other than a fraud. I believed that it was all too good to be true, and too good to last. However, let me return to my theme. If the right hon. Gentleman wants to interrupt I will give way.

Mr. H. Wilson

In support of the thesis he has just been maintaining will the hon. Gentleman reconcile what he has been saying with the figures of bankruptcies in the last six years, which have been fewer than was usual?

The Temporary Chairman

I think that this debate is going much too wide of the Question that the Clause stand part.

Sir W. Darling

I am glad to be protected by you, Mr. Bowles, but the right hon. Gentleman is scoring an easy point, because I cannot give him the figures. They are extremely small, but they are rising rapidly, and have been rising rapidly for the last three years.

I want to return to Clause 7, and say that my right hon. Friend is right to apply the terms of the D scheme, even with its many hardships, its many anomalies. As to that, I could not agree more readily with the hon. Lady the Member for Coatbridge and Airdrie. I agree that it is full of hardships, full of anomalies. I agree that it is full of trouble and detail, that it raises great difficulties for those engaged in the different businesses and trades. I agree with all that. But, after all, the D scheme is before the Committee, and it is that scheme which this Government must act upon, as any other Government sitting here this year would have had to act upon it.

That, however, does not prevent me from venturing to say that there are alternatives and better schemes, as the one referred to by my right hon. Friend the Member for Blackburn, West (Mr. Assheton) for a small universal tax on turnover on all the commodities in which we do business in this country. On all commodities—not women's clothing, not men's clothing, not furniture alone—but on all of the commodities: a small tax of 1 per cent. I am informed that it would give us £3,500 million a year. It would apply at every level, irrespective of price, covering all transactions; and the collection of that tax—I will not go into it at any length—but the collection of that tax would not be by the shopkeepers or the merchants or the manufacturers, but through the banks, as we handled the clothing coupons during the war.

It is true that the Government are pushing forward a tax which they recognise —better than the Opposition do—is an inconvenient one and a difficult one, and one which is full of anomalies; but what hon. Members opposite ought to have in mind is that we inherited not only Purchase Tax from them but a muddle of incalculable character, and it is a muddle that can be cleared up only by wading through muddles, and the D scheme is one of the muddles. We shall reach a better day when Purchase Tax is abolished altogether. The intermediate stage, in my opinion, should and must be a universal turnover tax at as low a figure as 1 per cent., which would give the Chancellor all the money he wants to pay for the extravagancies and absurdities of six years of Socialism.

8.15 p.m.

Mrs. Castle

The Committee has been delighted, as always, by the speech of the hon. Gentleman the Member for Edinburgh, South (Sir W. Darling), but it has contained a very strange new doctrine-the doctrine that any Government must continue what they inherit. I think we shall look forward with interest to seeing the application of that doctrine in the fields of steel and transport.

It really is rather a new one for hon. Members opposite, not one of whom tonight has yet been found to say a good word for the proposals in the Clause, and all of whom try to take refuge behind the fact that the previous Government, the Labour Government, set up a committee which issued a report, and that, therefore, they, like hypnotised rabbits must go along that same road. We know that the personality of the Labour Government was so compelling that it has left behind its dominant character in this Chamber, but we had not realised that it had gone quite so far as this.

I should like to help the hon. Gentleman in his assessment of the business position of the country. He said he had not got the figures of the latest failures. Let me refer—

Sir W. Darling

On a point of order. I said I could give the figures, but I understood that I should have been out of order, Mr. Bowles.

The Temporary Chairman

I told the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) that to quote the figures of bankruptcies was going too far from the Question before the Committee. That applies to the hon. Lady as well.

Mrs. Castle

But, Mr. Bowles, I am about to give textile figures, which are strictly related to this subject. They are figures which arise from the unemployment difficulties now being felt in the textile industry, and which, therefore, do relate to this Clause, which will, if passed, make those difficulties in the textile industry very much worse and will necessarily increase the number of business failures.

The Temporary Chairman

As I understood the right hon. Gentleman the Member for Huyton (Mr. H. Wilson), he was going to quote figures generally for the whole country. If the hon. Lady is quoting figures confined to the textile industry she will be in order.

Mrs. Castle

Yes, I wish merely to refer the hon. Gentleman the Member for Edinburgh, South (Sir W. Darling), to the City columns of "The Times"ߞI think of yesterday, though it may have been the day beforeߞin which was painted a very interesting though very gloomy picture of the growth of business failures now in the textile areas. It referred to the situation as one that has not been experienced since the war, and one in which firms are beginning to go to the wall. That City column moreover foresaw that that situation would be likely to get worse and not to get better.

I must say the speech of the hon. Gentleman tonight will not be welcome in the textile circles of this country, because he has done the very thing they have been begging this Committee not to doߞhe has perpetuated the uncertainty about Purchase Tax and the future levels of it. The hon. Gentleman's speech tonight, I am afraid, coupled with the speech of my colleague in the representation of Blackburn, the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton), will plunge the textile industry into confusion once again.

People in the textile industry do not know where the hon. Members opposite stand on this vital issue. They have had a statement from the hon. Gentleman the Member for Edinburgh, South, who is a trader and businessman himself, whom one would have expected to have appreciated their point of view and to have spoken rather more seriously than he has done tonight.

They have been told by him and by many Members on the other side of the Committee that this is a bad tax, that the D scheme is a bad scheme, that it is harmful to industry, and that they intend some time soon to do something about it. That is the very sort of statement which will do harm, and which will perpetuate that lack of confidence in the industry, robbing it of a basis on which it can plan for the future.

Sir W. Darling

Does not the hon. Lady underrate the toughness of fibre of the Lancashire people?

Mrs. Castle

It is very easy for the hon. Gentleman to speak like that, but he does not represent an area which is now darkened by serious unemployment. If he did represent a Lancashire constituency, he would have thought a little more carefully before he spoke. In his desperate attempt to get the best of both worlds he has given Lancashire the worst of them, neither certainty today nor certainty tomorrow.

Mr. Assheton

Perhaps the hon. Lady will recollect that I said that one of the greatest objections to this tax was its uncertainty and that I put forward alternative proposals which would have disposed of that uncertainty in the future.

Mrs. Castle

I am glad to see the right hon. Member for Blackburn, West, in his place. I warned him that I would answer his speech if I were called. I wanted to deal with the very point he is now putting forward as a virtue on his side. I agree that the right hon. Gentleman is a very skilful politician, more skilful than is sometimes realised. He has once again blurred the edges of an issue which, if it were kept clear, would compel hon. Gentlemen opposite to vote with this side of the Committee in opposing the Clause and this tax in its entirety.

The work of the right hon. Member for Blackburn, West, in the last two or three months has been the work of confusing the issue because he has been afraid to have a real, united front with us on this matter. On the one hand, he has talked of how Lancashire's need rose above party. On the other hand, every time we have tried to deal with the matter, not on the basis of any ideological Socialist assessment, but on the basis of what the trade and the industry themselves were asking, and when we have fought for the very remedies which every union, every manufacturer and every distributor in the industry, and the official organisation of the industry itself, the Cotton Board, have said were the only answer. the right hon. Gentleman has accused us of playing party politics and has refused to back us up on the issue, with the result that there have been some most astonishing confusions in his attitude.

Last week, he would not support our Motion to abolish the Purchase Tax on textiles because he said it went too far. Now he will not come out cleanly for the abolition of Purchase Tax on textiles, because, he says, it does not go far enough. Last week, when we wanted to concentrate the decision narrowly on the textile trades because of the unemployment in them, he weakened us by widening our Motion for the removal of Purchase Tax to include its reduction or something else, or something else. This week, when, again, we are trying to concentrate our request to the Government on the narrow, specific issue of removing Purchase Tax on textiles, the right hon. Gentleman comes along once again and weakens us by widening the issue.

Tonight, he says it is not enough to abolish the Purchase Tax on textiles; we have to abolish Purchase Tax on everything. A demand like that, as the right hon. Gentleman knows perfectly well, is financially impossible and impractical. That is why he advances it. The Chancellor has a very easy answer to that one. To sweep away all Purchase Tax on everythingߞon jewellery, furs, and motor carsߞregardless of the employment position or of the luxury nature of the article, would be folly and financial ruin to this country at this time of difficulty.

If we try, as we on this side have tried, to concentrate on the limited, specific issue of the position of the textile industry and the effects of the D scheme upon employment in it, we have a practical case which we can put to the Chancellor. This is something that we can ask for reasonably. We could, if we had really united on this, have compelled the Government to give it to us, but we have not had support from the right hon Gentleman.

Mr. Assheton

The action I have taken will do more good to Lancashire than the action which the hon. Lady is proposing.

Mrs. Castle

What is that action? The action which the right hon. Gentleman has taken has been, every time we have asked for what the trade is wanting, to find some reason for opposing it. Once again, tonight, the action which the right hon. Gentleman will take will be to go into the Division Lobby and vote for the Clause. I appreciate that he wishes to keep in office a Government that is perilously balanced on a narrow majority, but I still say that if he had fought with us unitedly and determinedly, and with his other colleagues from Lancashire, we could have compelled the Government to give us that which is essential to the survival of the industry.

When hon. Gentlemen opposite vote for this Clause they know that they will be sending a chill wind of despair through Lancashire and other areas where unemployment is mounting and where a depression is spreading whose end nobody can at present foresee. How ironical it is that it should be this Government which, when it was the Opposition, lost no opportunity of attacking Purchase Tax and of blaming the Government of the day for not taking more and more goods out of it, should, when it came into office at a time of textile depression, make one of its first acts the putting of Purchase Tax on to a range of textile articles which, under the Labour Government, were exempt.

That is the whole crux of our argument. That is why we are asking for the abolition of Purchase Tax. We know the financial difficulties of the country, and that it is no good coming along with a frivolous suggestion like that of the right hon. Gentleman to sweep away the tax altogether. We know that to rob the country of too much revenue would mean we should have to get what the right hon. Gentleman wants, slashing economies in Government expenditure and in the social services. We have weighed up the situation very carefully, and we are convinced of two things. We cannot get over the administrative and import and export difficulties of the Utility scheme on the lines suggested by the Douglas Committee without either putting tax for the first time on a range of goods which never carried it before, or recognising that we have to abolish Purchase Tax on these articles altogether.

Mr. Assheton

I am much obliged to the hon. Lady for giving way. She is a very good and gallant debater, but by voting against the Clause she will certainly do herself no good. If she votes against Clause 7 she will put back Purchase Tax just as it was before. We shall be in a far worse position without the D scheme than with it.

Mrs. Castle

There are several answers to that. I said a moment ago that the right hon. Gentleman was a tricky politician, and he is showing it now—[HON. MEMBERS: "0h."] Yes. Clearly, as everybody knows, this is only the beginning of a series of debates which add up to a demand from this side that Purchase Tax should be abolished or, failing that, that the evils of the D scheme should be removed.

What the Clause does—the right hon. Gentleman had better realise this when he votes for it—is to say quite specifically that goods which before were tax—free as Utility, shall now be taxed. That means a dropping of demand for clothing and other textile goods at a time when Lancashire is anxiously striving to stimulate demand. How any Lancashire M.P. can vote for that, I do not know—unless he has had some much better fights behind the scenes than he has put up on the Floor of the House.

8.30 p.m.

Mr. Ian Horobin

(Oldham, East): The hon. Lady has been arguing that it is unreasonable to try to sweep away all Purchase Tax because that would lead to legitimate demands for big cuts in social services, and so on, but that it is legitimate to attempt to get the tax off textiles because that is practical. That is how I understand her argument. Does she challenge that to take off the tax from textiles would cost about £80 million? If that is so, what cuts would she suggest to replace that £80 million, or what additional taxation should be imposed to raise that amount?

Mrs. Castle

Apart from the fact that we already have a surplus, I would point out that in the Budget we have given Income Tax concessions to the tune of £180 million under which a married man, without any family responsibilities, earning £2,500 a year is given £60 a year more by the Government. It is quite wrong—

Mr. Horobin


Mrs. Castle

I shall be up all night if I keep giving way.

I draw the hon. Member's attention to the fact that a very substantial part of the case against the Clause depends on the fact that as long as the textile depression continues, there is a loss of revenue from Income Tax and Profits Tax in the industry, because of the drop in purchasing and, therefore, in profits, and because of the drop in wages for the workers who pay the Income Tax. There is also additional expenditure for unemployment benefit, and if the depression continues and widens as a result of the uncertainty that hangs over the industry, and which the Clause makes worse, it is the belief of the industry that the Chancellor will lose as much as he gains by refusing to abolish Purchase Tax.

I should like, in this connection, to quote the memorandum of the Furnishing Fabric Association, which, as I think Members of the Committee know, has been most harshly hit by the operation of the D scheme. The Federation, having made a most impressive case for the complete abolition of Purchase Tax as the only way to end this uncertainty that hangs over the industry, point out that

a perpetual on of the incubus of Purchase Tax on textiles will defeat its own ends, less and less Purchase Tax will be collected and the reduction of trade will reduce traders' profits and liability to tax. We are not, therefore, in making this request to the Chancellor tonight, asking for something in the realms of unreality. We are asking for something which is financially practical and which is certainly desperately needed as a step to relieve depression in an important industry.

The way in which the Government have hung about on this matter and have messed about with the situation at a time when the industry said that one thing was needed above all else—swiftness of action, certainty of knowledge—has shocked many of their own supporters in Lancashire.

Members of firms came to me and said, "Well, Mrs. Castle, I am a Conservative, but I did think that this Government of business men would at least be businesslike." Instead, we have been left in the dark. When the most impressive deputation the cotton industry has ever sent to Whitehall went to the Minister of State for Economic Affairs a few weeks ago, they were told. "We will see what we can do on the Finance Bill." And we are still being told, "We will see what we can do tomorrow." With unemployment going up and firms going bankrupt it is too much to say, "We will see if we can do a little wingle on the D level, or a little something else here and there," when what we wanted is something dramatic and something definite.

Mr. Harold Davies

(Leek): Will my hon. Friend tell us if the word "wingle" is the diminutive of "wangle"?

Mrs. Castle

That is as good an explanation as any and I do not think I will try to better it; I think the Committee know perfectly well what I have in mind.

What the Government have to realise is that they are in a serious dilemma in trying to operate the Douglas scheme, especially when it is applied to the cloth which is Lancashire's staple industry. Either they have to draw the D level at a line which fatally cripples the more expensive section of the trade, or they have to give us a D line so high that, in effect, the largest proportion of apparel and other cloths is exempted from tax altogether. In that situation they might as well recognise that they have lost the revenue and abolish the tax and let us get a clean administrative position and finality on the matter.

It is quite impossible for the Government to allow this Bill to go through without doing something for the D level of class B material. My colleague from Blackburn knows perfectly well that the furnishing fabrics section of the industry is facing ruin unless something is done. It is facing ruin because out of 121 Utility curtain cloth specifications that were tax free under the Utility scheme, only three are tax free under the D scheme. Ninety—nine per cent. of the furnishing fabrics which were sold tax free as Utility in 1951 will now have to bear tax. In a situation like that the industry cannot carry on and firms will be closing if something is not done, and done quickly.

If the Chancellor of the Exchequer does what is necessary for the furnishing fabrics section of the industry he will, in effect, have to wipe out the Purchase Tax on fabrics altogether because we cannot discriminate under the D scheme as we could under the Utility scheme. There are no specifications enabling us to say that the tax will be so much on one quality cloth and less on another quality. We have to lump all class B material, all cotton and rayon cloth, together under one D line. Therefore, when we look at that line and decide to amend it, either we have to alter it here and there in a way that will lead to administrative confusion, or if we are to give the relief that the most expensive sections of the industry must have, we have to relieve almost everything.

It might as well be recognised that the revenue will not be what it was previously; and if the industry is to be saved why not, if there is to be a substantial loss of revenue in any event, do what the industry wants? Why not give it the finality, the certainty, the administrative cleanness that the abolition of Purchase Tax would give it? Why not recognise that since the Douglas Committee was set up the whole climate of Lancashire has changed?

The whole situation is different. Today, the textile industry is fighting for its very survival. It is still waiting for a sign of some decisive action from this Government. I say to the Chancellor that there is still time for an eleventh-hour repentance and for the sanity of getting up and telling us that he will lift Purchase Tax altogether.

Mr. F. J. Erroll

(Altrincham and Sale): I am very glad to have the opportunity of following the hon. Lady the Member for Blackburn, East (Mrs. Castle). She has made a number of statements with which we on this side of the Committee are of course in partial agreement. We recognise that the tax imposes some very real complications and difficulties upon the firms whose goods attract tax I think, however, that the hon Lady spoiled her case by palpable exaggeration at many points.

It is a great pity that she should say that large numbers of firms will have to close down simply because their goods may attract some tax—

Mrs. Castle

I made that remark in the context of my reference to the furnishing fabrics firms. It is those firms which, if this tax level is not drastically altered, will definitely have to close down.

Mr. Erroll

There is considerable scope for debate about individual tax levels, but it would be entirely wrong to suggest that because there is some element of tax in a sales price the public will not buy at all and that the firms will therefore have to close down.

Even if the public were not willing to buy an article that had an element of tax in its sale price it would in all probability be open to the firm to manufacture a different type of article which did not attract tax. I grant the point that furnishing fabrics provide a particularly difficult case but it is dangerous to generalise overmuch on one difficult case if one wishes to try to survey the picture as a whole, which is what I want to do tonight.

When the new scheme was first announced it met, generally speaking, with a wide measure of approval. It was considered to be a considerable step forward. It wiped out the blind spot, it introduced a more even graduation of tax, and it was generally regarded as a welcome measure by the trades most affected, namely, the textile trades which we have been discussing. There has, however, developed a considerable opposition to the incidence of Purchase Tax on textiles as distinct from the operation of the D scheme.

It would be appropriate to ask the Chancellor of the Exchequer what is his policy in regard to Purchase Tax levied on textiles. Does he propose to continue to use Purchase Tax on textiles as a planning instrument, as it was called by his predecessors, to discourage home consumption and thus automatically to encourage exports? Is it still to be the planning instrument that it was once designed and intended to be, or is it just a device to collect revenue?

8.45 p.m.

If it is a device to collect revenue it is not, so far as textiles are concerned, a very satisfactory or successful device. It is not satisfactory, because for some reason the public have a marked reluctance to pay tax on textile purchases. They seem to be quite prepared to pay tax on tobacco or cigarettes or beer, and when they go to the cinema. But it is a tremendous attraction for the public when they see goods displayed in a shop window with a notice, "All the goods in this window are tax free." That is a powerful factor which I think it would be wrong for any Chancellor to ignore.

I am sure that the Chancellor has been looking at this matter very carefully, and has received figures and statistics from his regional tax collecting officers. But I would put it to him that probably many of the figures on which he has been working out his calculations in the last few weeks are out of date; that they relate to those tax collecting periods before the impact of the D scheme began to be felt, and that much more up to date figures could be obtained from individual manufacturers and wholesalers. They can show exactly what has been the effect of the D scheme and of the consequential tax changes since the Budget resolutions were made public.

There is still a fair volume of sales and movement of textiles from the factories to the consumers in this country. What is particularly significant is that the volume of sales has gone up very considerably in relation to those goods which are now tax free under the new scheme, and that there has been a most marked falling off in the movement of goods which attract any form of tax. Rightly or wrongly, the wholesalers and retailers have decided that the public will not buy taxed articles and so they are not prepared to stock up their shelves with them. They have concentrated on the tax free articles and such signs of recovery as there have been are signs of movement in the lowest grades of goods which are now tax free.

It is, I suggest, a great pity that there should be this pronounced swing in the case of the consumer—who has to consider his purse very much—in favour of the cheapest quality goods. It is a great pity that quality should be taxed so heavily at the present time. Surely we all realise that it is best to buy the best one can. It is the best policy in many ways. Not only is it a benefit to the workers but it is a benefit to the national economy. It is far better to buy, for example, one good shirt, using one lot of cotton rather than to have to buy two bad shirts, or shoddy shirts, requiring the importation of twice as much raw cotton, even though the cottons may not be of comparable qualities. There is still the cost of moving the extra volume of cotton and the time of work-people taken in making up and distributing two shirts instead of one I consider it most important for us as a nation to realise that we should encourage our own people to buy the best quality articles and that there should be no device of taxation which will encourage them to buy the worst quality. I want to see the public buying the very best they can afford, because in the long run that will be the best thing for their interests as well as for the interests of the country. I hope that the Chancellor will look at the incidence of the tax from that point of view as well.

There are many other disadvantages in the Purchase Tax on textiles. The system of uplift bears particularly harshly and heavily on the distributors of textiles. The D scheme imposes very real complexities and difficulties on the work of the wholesalers, upon whom falls the main burden of the collection of this tax. They have to do extra work, and I have put down an Amendment to a later Clause which is designed to simplify their onerous and difficult task.

On the retailers there are further obligations. We have never yet been told what is the cost of operating the Personal Export scheme about which one sees notices in the shop windows of most retailers in London and the tourist centres. It is an elaborate administrative machine built up solely to enable foreigners visiting this country to avoid the Purchase Tax which we have to pay. It is recognised that the foreigner does not like paying Purchase Tax. It is about time that the Chancellor realised that the British public do not like paying the tax either and that people will do all they can to avoid it.

Mr. Arthur Moyle (Oldbury and Halesowen)

I should like to get this point clear. Does the hon. Gentleman contend that the old Utility scheme should be retained, because that scheme provided for textile goods without Purchase Tax at a guaranteed standard of quality?

Mr. Erroll

No, I do not contend that at all. The report of the Committee which recommended the D scheme was welcomed generally at the time, for very good reasons. I grant that circumstances have changed since then, but I do not think a reversion to the old Utility scheme would be of long-term benefit. It would impose an excessively heavy weight of taxation on a relatively small range of articles. It would have the disadvantage of creating a blind spot, and it would add to the difficulties of those manufacturers who have both home and export orders to fulfil.

To conclude the point which I was discussing, I would say that we have never been told how expensive it is to operate the Personal Export scheme. That probably costs £1 million a year, which should be offset against the income from this tax. Back at the mills, the incidence of the tax as at present designed has already led to some important examples of what I can only describe as taxation weaving, not weaving to produce the best cloth or furnishing fabric, but weaving special mixtures of fibres so that the cloth produced will not attract tax.

We have had many examples of this form of industrial activity among engine makers and users of transport vehicles, who have been compelled to go in for a good deal of taxation engineering to escape the worst effects of the duty on hydrocarbon oils. I am sorry to see the same distortion creeping into the textile industry by what I can only describe as taxation weaving.

I do not suppose that it would be possible to wipe out the tax in one sweep. The Chancellor's advisers are doubtless telling him that the tax is yielding a great deal of money. Naturally, the Chancellor must take heed of his advisers.

Mr. Sydney Silverman

(Nelson and Colne): When the hon. Gentleman says that, is he thinking of Purchase Tax on everything or only on textiles?

Mr. Erroll

I should be out of order if I were to speak on Purchase Tax as it affects everything. This Clause refers only to textiles and certain related articles.

Mr. Silverman

Is the hon. Gentleman now saying that he is not in favour of the abolition of Purchase Tax on textiles?

Mr. Erroll

The hon. Gentleman might give me an opportunity to complete my argument and then he will see clearly how I stand on the matter. I can well understand how the Chancellor himself may feel it impossible to abolish the tax on textiles because of the figures with which he is doubtless consoling himself just now. I put it to him, however, that during the current financial year he will experience a severe drop in the yield of this tax as it relates to textiles. It is no good counting on textiles to contribute much to the Revenue, because the tax is not coming in. Therefore, I submit that it would be much better for him to abolish the tax on textiles rather than to let the public abolish it for him.

Miss Bacon

We on this side of the Committee sympathise with many hon. Gentlemen opposite. A week or two ago they put down a Motion asking for the abolition of Purchase Tax on textiles. We, wishing to be co-operative, added our names to that Motion. Now, once again, they are faced, as they were last week, with having to go into the Division Lobby in opposition to the Motion which they put on the Order Paper.

Mr, Richard Fort (Clitheroe)

May I refresh the hon. Lady's memory? The first Motion we put down was to revise or reconsider, not reduce.

Miss Bacon

We have also proposed to revise, and it will be interesting to see how far hon. Members opposite will accompany us into the Division Lobby.

We heard tonight a new principle enunciated by the hon. Member for Edinburgh, South (Sir W. Darling), who said that because a previous Government had set up a committee, a subsequent Government was bound to accept the recommendations of that committee. Of course, it has never been accepted that any Government which did not set up a committee should accept the whole of the recommendations which it makes, and I feel quite certain that, if my party had formed the Government, we should not have accepted everything that was in the Douglas Report.

We have heard a great deal about the effect of the Purchase Tax on textiles and on employment in the textile industry. I would remind the Committee how serious the position is in the Lancashire cotton industry, the Yorkshire woollen industry and also in the clothing industry. We have been told, and I am quite sure we shall be told again tonight, by the Chancellor, that he cannot remove the Purchase Tax, and that, if he did, it would not cure unemployment in these areas.

I agree. I think that if we were to abolish Purchase Tax it would not entirely cure unemployment in Lancashire and Yorkshire, but what we on this side of the Committee say is that it would help the employment problem in those areas, and it would certainly help to remove the uncertainty which is being felt, not only by manufacturers of cloth. but also by manufacturers of clothing.

I should like to remind the Chancellor that we are not just asking him to remove a tax which is already there; we are also asking him tonight not to impose taxes which have never before been imposed, because, under the D scheme as it stands, the Chancellor is imposing taxes on many cloths which were before free of Purchase Tax. My hon. Friend the Member for Coatbridge and Airdrie (Mrs. Mann) has given a few examples of how this tax is going to affect lower-priced goods. I do not want to say too much about that tonight, because we shall have something more to say about it when we come to discuss the Schedule.

Before the Chancellor makes any pronouncement upon that, I would remind him that a coat the wholesale price of which used to be £6, and on which the retail price was £13 6s. 8d., will in future cost £14 18s. 5d., and that will be an increase of 32s. A woman's coat of which the former selling price was £10 will in future be £10 13s. 9d.

I should also like to point out to the Chancellor a curious fact which has been pointed out to me by members of the trade. The D figure for a woman's coat —the wholesale figure—is £6. The retail price—

Mr. F. A. Burden (Gillingham)

£6 10s.

9.0 p.m.

Miss Bacon

Well, £6 10s. The retail price will be about £8. The curious thing is that a coat which is within the D level on the wholesale price will have Purchase Tax levied on it because of the uplift which is applied. I hope the Chancellor of the Exchequer will look into this case, because it does mean that clothing which is supposed to be free of tax under this scheme will actually have taxation imposed upon it.

A woman's suit which had an old selling price of £13 8s. 4d. will have a new selling price of £15 1ls., and a dress of a very cheap kind—a moygashel—which had an old selling price of 81s. 7d., will have a new selling price of 87s. I am sure we shall have a great deal more to say about these prices when we come to the Schedules on another day, but I want to stress the fact that it is not only because of unemployment in Lancashire and Yorkshire that we are asking for a revision of the D scheme.

We believe that even if there were no unemployment in Lancashire and Yorkshire it would still be a great necessity for the consumers to have these D levels altered. I think that the consumer is, perhaps, being forgotten—understandably so—because of the unemployment position at the moment, but I believe that there is a very good case, even without any unemployment at all in Lancashire and Yorkshire, for lifting the D level to the old top Utility level so that the lower priced goods shall not in future be subject to Purchase Tax.

I would point out to the Chancellor, before we come to the Schedules, some of the anomalies and discrepancies which occur under his scheme. It seems to me that the figures were inserted in a most haphazard way, and it is very difficult to see how some of them were arrived at at all.

The Temporary Chairman

I think that part of the hon. Lady's speech should be postponed until we come to the Schedules. It is all right to discuss the scheme in general, but particulars should not be given now. They should be postponed until we come to the Schedules.

Miss Bacon

I bow to your Ruling, Mr. Bowles, but that was not the Ruling of the previous occupant of the Chair, who allowed discussion on these matters.

The Temporary Chairman

With great respect to the hon. Lady I was sitting here for the hon. Lady I was getting here for three-quarters of an hour before 8 O'clock and the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) did, I agree, give one or two examples, as the hon. Lady herself has done, about increases under the D scheme. But the hon. Lady must not go into details now on how those figures are arrived at, but must wait until we reach the Schedules.

Miss Bacon

here is one point I wish to raise which does not arise under one particular Schedule, but which is applicable to the Schedules as a whole. It is the discrepancy which occurs as between cloth and clothes, and I do not think that matter can be raised under a particular Schedule. Perhaps if I may be allowed to develop this, you, Mr. Bowles, could tell me whether or not it is in order.

It has been pointed out to me that there is a great discrepancy as between the price of cloth and the price of clothes, but whereas, for instance, the D level of a certain cloth has gone up under the D scheme from 21s. 1ld. to 22s. 2d.—

The Temporary Chairman

I think I have listened to enough of what the hon. Lady has to say on that point. What she has to say on this matter should be brought up in the debate on the Motion that the Fourth Schedule stand part of the Bill.

Miss Bacon

I have to bow to your Ruling, Mr. Bowles, and will therefore postpone most of my speech until next week. There are, however, certain points I should have liked to put to the Chancellor before he takes decisions on them, as I expect will happen in the next few days. At any rate, we have here an example in the whole of the D scheme of the Budget once again making the rich richer and the poor poorer.

I hope that the Chancellor will make some concessions tonight which will put an end to uncertainty in the trade. If he merely says that he will alter the D levels at some future date then, I am afraid, unemployment in Lancashire and Yorkshire will grow worse because people are waiting to see what will happen. I hope, therefore, that the announcement he will make will be one which will not only lead to cheaper goods, but will give some hope to the textile trade that the uncertainty in which they are at present will be ended.

Sir A. Salter

I wonder whether it might be for the convenience of the Committee if I make a few comments now. The debate which we have just had, ranging over a very wide ground, dealing with the particular and dealing also with a very wide principle, has shown that a good deal of what hon. Members have in mind and have argued in relation to the question that this Clause should stand part of the Bill, could relevantly and perhaps more appropriately be argued in relation to later Amendments or the appropriate Schedule.

The debate has ranged very wide indeed. Before we came to this question we dealt with furniture, and it has been indicated that we shall deal with fur-trimmed goods under the new Clause at a later stage. But quite a number of other arguments have been used and in some cases developed at considerable length that could be more appropriately argued in relation to the particular Schedule and the particular goods.

Putting those aside and turning to the general question raised and taking the widest proposal made, it is clearly not a proposal for today but a suggestion for the future. The disadvantages of Purchase Tax as a whole have been argued by my right hon. Friend the Member for Blackburn, West (Mr. Assheton). I think all of us realise that this tax, like indeed every tax of which I am aware, has certain disadvantages.

One of those disadvantages, of course, is the way it has to be re-argued in detail every year in the House and in this Committee, and the uncertainty and the greatly disturbing effect upon different industries that arises when both manufacturers and, to some extent, the purchasing public are speculating from time to time as to what changes in the Purchase Tax there may be. I think we all realise that, but, of course, nobody seriously thinks that the whole tax can be removed now. The arguments have ranged over the whole sphere of Purchase Tax and were not confined to those articles covered by the Douglas scheme. I think it is relevant to all that we are considering with regard to this or any other tax—and it is true—that the importance of uncertainty is a very serious factor indeed.

To take an analogy from a different sphere, I remember that when I was engaged at Geneva, dealing with external trade and the impediment of tariffs, I was struck by the fact that the risk of the instability of a tariff was sometimes a greater handicap to trade than the actual height of the tariff itself. I think the same applies in the home trade with regard to other taxes.

I do not propose to discuss any further any arguments relating to the whole of Purchase Tax. I come to what has occupied the bulk of interest in this debate—the proposals with regard to textiles. I should like to say here that I also am a Lancashire Member and that I have studied and considered this question in very close consultation with deputations from both the cotton and wool industries. I am sure the Committee will believe that if we are not able to do what we are being asked to do here it is not because we are not very acutely conscious of the troubles of the textile industry at present.

We do not think what has been proposed would be the best way of handling these difficulties. The proposals made to us from the Opposition Front Bench have varied considerably. The former Chancellor of the Exchequer suggested in the Budget debate that we should take off all Purchase Tax from textiles, but that it should be done temporarily. One thing, however, that was impressed upon me when I saw the cotton deputation was this: they said, "We do not want a tax holiday," and, above all, I gathered, they would not like a tax holiday for an uncertain period. If that was the right hon. Gentleman's idea, it has been modified a good deal since then. A little later his right hon. Friend the Member for Huyton (Mr. H. Wilson) said that nothing else would suffice than a complete scrapping of the tax on textiles.

Today a rather smaller proposal has been produced. It is, if I understand it aright, that the D level should be so arranged as to prevent any article which was not taxed before from now being brought under tax. If that proposal is examined closely it will be seen that, as regards the D scheme, it is, in effect, although not of logical necessity, a wrecking Amendment—an Amendment that would make it practically impossible to go on with the D scheme. It would mean a re-enactment of the thousand-odd pages of specifications; it would also mean a very great loss of revenue, and it would mean the introduction of a principle that could hardly in that form not extend to ranges outside textiles.

I come therefore to the question whether we really can or should contemplate what is practically the throwing over of the D scheme. I fully accept that the responsibility for the D scheme is that of the present Government. We cannot just say that because the Douglas Committee recommended it we have no responsibility. Of course we have. We have accepted it, and we have chosen the D levels. But it is worth remembering that the Douglas Committee was set up for very real and strong reasons. The old Purchase Tax had developed such difficulties and abuses that it could not go on in that form. For that reason the former Chancellor of the Exchequer appointed the Douglas Committee.

If hon. Members look at the composition of that Committee and bear in mind that its recommendations were unanimous, I feel sure that they will be confirmed in the views, which certainly most of us hold, that the advantages of the scheme in avoiding the blind spot, in giving in many respects better advantages to the consumer than the old scheme did, and in dealing with the international difficulty of discrimination against imports, on the whole outweigh any disadvantages.

Mr. S. Silverman

Would the right hon. Gentleman agree that whatever may be the truth about the Douglas Committee's Report, in the conditions of world trade that obtained when the Committee was appointed, the considerations which prevailed upon them are considerations which today in many respects, and certainly in the textile industry, do not apply any more?

Sir A. Salter

It is, of course, true that conditions of trade in the textile industry are different from those which applied at the time when the Douglas Committee were sitting. But I suggest that there is still left a very strong ground for retaining the advantages that the Douglas scheme proposes. We have had a great many instances of anomalies—of cases in which articles not previously under tax are brought under tax. Let us not forget two things. First, great anomalies which existed under the old system have now been removed and, secondly, there are articles such as rubber goods that were taxed at the full rate before but which now come under the much more lenient D scheme.

9.15 p.m.

Mr. Anthony Greenwood

(Rossendale): Would not the right hon. Gentleman agree that of the yield which is expected this year from Purchase Tax more than half will come from goods which were previously tax free?

Sir A. Salter

I could not assent to that without a great deal of thought. It involves a forecast of the future and many other considerations.

There is one other fallacy which has tended to get into the minds of some hon. Members. Great emphasis has been laid on the difference between the taxed articles and the non-taxed articles, as if the jump from one to the other was the same as under the old Utility scheme where, directly one got above the Utility point one jumped into the full rate of tax applicable to the particular article. But the very essence of the D scheme is that it shades up gradually, and although it is true that many articles which were not taxed before now come under the tax I think the effect of that is very often exaggerated.

I should like to give two instances. Under the D scheme, if one takes the case of a man's shirt with two collars, it is tax free up to £1 8s. retail. A shirt retailing at £1 15s. has a tax of 1s. 9d. It is true that that is a tax but it is a relatively small one.

Mr. Charles Pannell (Leeds, West)

Is it not with regard to shirts, almost more than any other article, that there has been trouble in relation to the new scheme? The trouble arises over the fact that all the articles are lumped together. I have made inquiries and I am informed that these are the very articles in relation to which there has been great discontent which has led to representations to the Government by the Shirt Manufacturers' Federation.

Mr. M. Follick (Loughborough)

The right hon. Gentleman says it is a small tax; but it is 5 per cent.

Sir A. Salter

I should not have thought that it was a great tax in relation to the article mentioned. These interventions have shown me that I was wise in suggesting that particular cases should be dealt with under the relevant Schedules instead of in a debate on a Clause.

I do not think the Committee will expect the Government to agree to a modification of this Clause as it now stands. It is obvious that we must go on with this scheme. [HON. MEMBERS: "Why?"] The case has been argued during the Budget debates, and hon. Members have in their minds the long and full arguments about the Douglas Committee Report. It is quite clear that I cannot here and now make any statement as to a change in the main system of Purchase Tax and D tax.

Mr. H. Wilson

When the right hon. Gentleman says he cannot here and now make any statement, does that mean that he is going to make a statement later, or does it mean that he is going to prolong this uncertainty from which trade and industry are suffering at present?

Sir A. Salter

No. In the nature of the case, while we are continuing the discussion of those parts of the Finance Bill relating to Purchase Tax, there must be some element of uncertainty. The Chancellor has said that he will look at the Amendments in turn as they come along, and that is one reason why I hope we shall get on as quickly as possible to those parts of the Bill on which consideration of that kind can be given and expressed.

I am only saying that in relation to this Clause, which we are asking to stand part, it is obvious that we cannot scrap Purhase Tax or the D scheme, as a scheme. We have been considering the problem of the textile industry and seeing what can be done. We were impressed not only by the fact that the causes of the recession were world-wide but by the fact that, as far as we could see from the evidence, the element of the tax played a very small part. We were anxious that, as far as possible, we should see that if we spent a certain amount of money it should have its maximum effect. In our opinion we got that effect by the policy announced of accelerated additional Government orders for the textile industry.

Mr. Anthony Greenwood

That does not help the furnishing fabrics industry.

Sir A. Salter

I do not say that it does everything to help everybody, but I do say that every £1's worth of accelerated expenditure has £l's worth of effect on the trade, whereas, on the evidence we had, a similar loss of revenue or expenditure in any other way would have had a relatively small effect.

I was a little surprised by what was said by my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) about the effect of the tax on the choice by the public of different goods. My evidence was not the same. When I saw the cotton deputation, I was struck by the fact that the recession in demand appeared to have affected the articles which were and always had been tax free almost as much as those above that line.

I would also remind the right hon. Gentleman, who pressed the proposal to exempt textile articles from tax, that a considerable number of goods in the shops at the moment, even above the level of those which were never taxed, are often exempt from tax because they were made before the Budget, or under contracts entered into before the Budget. They have, nevertheless, been lying in the shops, in spite of the fact that they are tax free.

Mr. S. Silverman

I am trying to follow the argument. Is it the serious argument of the right hon. Gentleman that because goods which are now untaxed cannot be sold, that is a good reason for putting a tax on some other goods?

Sir A. Salter

That was not my argument. I was dealing with the particular position of the textile industry at the moment, and I suggest that the facts I have produced as evidence tend to show two things: first, that the incidence of the tax was a relatively small factor in causing the recession in demand; and, second, that by the loss of a given amount of revenue for the expenditure of a given amount of money, we can get immensely more significant results in the way which we have chosen to adopt than by a remission of Purchase Tax or a change in the D level.

I do not pretend for a moment that that is a decisive or final argument. I am only saying that I think the case has been put too high and the argument pressed too far. We shall have later Amendments on the Schedule before us, but I trust the Committee will be prepared to allow this Clause to stand part and to devote their arguments to the Schedule and to later Amendments.

Mr. J. Grimond

(Orkney and Shetland): I wish to detain the Committee for only a short time, and I do so because there is a small textile industry in my constituency and also, as has been said by the hon. Lady the Member for Blackburn, East (Mrs. Castle), because this is a matter of widespread interest, as the tax imposed under this Clause will affect a great many people.

There are many people who will suffer somewhat as the result of the Budget and who will not benefit from the concessions which the Chancellor of the Exchequer has been able to make. Undoubtedly, they will look very closely at the new prices which they will have to pay for their clothing as the result of this tax.

I do not think that the Minister of State for Economic Affairs was a very enthusiastic defender of these proposals. [HON. MEMBERS "Where is he?"] The only arguments which he seemed to advance in their defence were, first, that it is proposed—

Mr. S. Silverman

On a point of order. Is it not in the highest degree discourteous for an official spokesman for the Government, speaking from the Government Front Bench, to leave the debate immediately after sitting down, without waiting for any comment that may be made directed to him by speakers on the other side?

The Temporary Chairman

That is not a point of order, though it may be a matter for the Chancellor of the Exchequer.

Hon. Members

Here is the right hon. Gentleman.

Mr. Grimond

Now that we have a full house from the Treasury I think I can go on with my speech.

I was saying that the arguments advanced in defence of the Clause were, first, that the proposals were, at least, less bad than the old Purchase Tax, and, second, that the Government, having committed themselves to the proposals, felt that they must continue with them. What I feel is one point with which the Government should deal is, that when the Budget was introduced one of the chief dangers rightly thought to be threatening the country was the danger of inflation. Is that still thought so today?

A good deal of the argument, for instance, of the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton), was addressed to distinguishing between the planning instrument aspect of this tax and the revenue raising aspect of the tax. I think that in this case both those considerations stand or fall together. That is to say, in so far as this is a planning instrument, it is a planning instrument to raise surplus revenue, which may be necessary in times of inflation; but it seems to me that the fact of the matter today is that the Chancellor has to make up his mind whether we are still facing an inflationary situation or not. If we are that is his main justification.

But I myself feel that in certain parts of the country, at any rate, we are passing from inflation to a lack of purchasing power, and, in certain commodities, that we are finding that the need now is not to curtail purchases of those commodities any longer but, if anything, to stimulate them. Will this new proposal lead to that? Personally, I do not think it will as it stands. I think that though it is preferable to the old form of Purchase Tax—certainly I am influenced in that opinion by the effect it has had on the hand weaving industry in my constituency—it will have to be a very much lower rate of tax.

I think there is something in the argument that it will encourage high quality production, and I think it is a powerful argument that it will help the export trade; but it will, undoubtedly, tend to make it harder for the poorer section of the community, who used to buy utility goods at less price than they will now have to pay for their clothes, and I think that it is being introduced at a time when the case for it at the proposed levels has not been made as regards textiles, at least. The danger of inflation still persists but not universally. On the contrary, the need may well be to stimulate demand for certain commodities.

What did alarm me rather in the remarks of the right hon. Gentleman was that—if I understood him aright—there is to be considerable resistance to any reasonably high rises in the D level. My own feeling about that is that the D scheme should not be jettisoned. I do not accept the view that we can afford to forgo all the revenue which it will bring in, because in many parts of the country there is an inflationary tendency and in certain trades an excess of home demand, but the remedy, I think, would be to raise the D level for textiles very considerably, and if that means forgoing a certain amount of revenue it will be justified by the changes which it may help to bring about in the next few months.

I hope that we shall hear from the Government not only that their mind is not closed to adjustments of the D level but not closed to a considerable rise in it. I know that some hon. Members think we could well do away with the whole scheme, but I should like to feel that the Government will give us a very considerable concession on the general level as it affects textiles in present circumstances. 9.30 p.m.

Mr. W. M. F. Vane

(Westmorland): I was very glad to hear my right hon. Friend say that the Chancellor would look at the different Amendments, one after the other, at a later stage. In a very few sentences I am going to add a criticism which, I hope, he will accept in the spirit intended and not as a criticism of the whole D scheme. I do not think it is a definite all round retrograde step.

It would be wrong if we closed the debate giving the impression that the scheme concerned the textile industry only. There are other industries concerned. I want to mention only one of them, and that very briefly. I am sure hon. Members will agree that it deserves mention, because it is so closely affected. It is the boot and shoe industry. Nor do I want to spoil my case by exaggeration, and I am not going to subscribe to the view that the level of tax proposed is likely to put any firms out of business, as the hon. Lady the Member for Blackburn, East (Mrs. Castle) said when referring to furnishing fabrics. It does, however, constitute so steep a rise that it is very hard to see that injustice is not being done.

I believe that the best calculation is that the boot and shoe trade last year paid something like £300,000 in Purchase Tax and that, under the proposals we are now considering, that figure is likely to rise into the neighbourhood of £5 million. That surely is far too steep a rise for us to accept without very close investigation. In addition, it should be put on record that there is little or no consultation with the boot and shoe trade on the lines of the consultation which, I believe, took place with various representatives of the textile trade.

Up to the end of last year, the Purchase Tax charged on boots and shoes was not only very small but it affected only the very top of the factory-made ranges. Now it is to be brought a long way down, and it is bound in the end to have an adverse effect on the standards of craftsmanship.

There is one last human point I want to mention. It is usual for a manufacturer to produce a range of shoes of a definite quality only. Therefore, in regard to employment, the tax will not be spread evenly over the towns where shoes are manufactured. It is to be a burden which some are to be asked to bear in its entirety while others will go free. I hope that the Chancellor will look at the Amendments we have on the Paper very sympathetically at a later stage and see whether he can arrange for at least half the shoes which were previously free of tax to be free in the future.

Mr. S. Silverman

I should like to begin by making an emphatic protest against the behaviour of the Minister of State for Economic Affairs. It is a long time since I have seen any Minister behave with such disrespect to the Committee. He comes in late in the debate. He makes a speech which is barely relevant to the discussion, and immediately after he sits down he slinks out behind your Chair, Mr. Bowles. without even waiting for any comment or any reply to any argument, as he would call it, that he had thought it worth while to put to the Committee.

Mr. R. A. Butler

My right hon. Friend has had no refreshment whatever since lunch, and went out entirely for the purpose of getting a little refreshment, which I think is perfectly reasonable. His other absences were purely for the sake of consultation upon an extremely complicated subject. I appeal to the hon. Gentleman to accept my word that no discourtesy is intended by my right hon. Friend.

Mr. Silverman

The Minister is not the only Member of the Committee who has had no refreshment for a long time. There are lots of people in Lancashire who have had no refreshment for many months, and there are some who will have no refreshment for many months to come. [HON. MEMBERS: "It is not true."] With every possible sympathy for the right hon. Gentleman, I think he could have delayed his refreshment at least for five minutes to hear one speech—[HON. MEMBERS: "Yours?"] No, the speech of the hon. Gentleman behind me, the Member for Orkney and Shetland (Mr. Grimond), who does not even belong to my party: but he could not even wait for that one speech before slinking out. The argument which he advanced to the Committee—[An HON. MEMBER: "Did the hon. Member say 'Slinking'?"] Yes. certainly—slinking.

Air Commodore A. V. Harvey (Macclesfield)

Will the hon. Member give way?

Mr. Silverman

No, not at this point.

The Chairman


Mr. Silverman

The hon. and gallant Member knows that I am never reluctant to give way, and I shall certainly be quite prepared to give way when I come to the argument which I want myself to address to the Committee if anybody wishes to comment upon it, but if anybody wishes to defend the Minister of State for Economic Affairs, he is now in his place and can do it himself.

Air Commodore Harvey

I think that the hon. Member has been most unfair. If he remembers, three or four years ago—I well remember it—there was an occasion when a right hon. Gentleman of the Labour Government was not in the Chamber when the debate started, but we did not hear any questions from the hon. Member on that occasion.

Mr. Silverman

I do not know why the hon. and gallant Member thought it worth while to intervene to make that point. I am not going to defend discourtesy on anybody's part, whether it is now or three years ago, but there is all the difference in the world between being present at the commencement of a debate and blowing in, blowing off and blowing out. [An HON. MEMBER: "Take your hands out of your pockets."] At least they are in my own pockets.

The Minister of State for Economic Affairs advanced a most extraordinary argument. He said that the Douglas Committee were appointed because there were a great many anomalies and that their Report was intended to cover or remove some of them. He agreed that so far as the textile industry is concerned, the situation in which the Government are proposing to apply the Douglas Committee's Report is a situation which the Douglas Committee never considered. All the considerations which influenced the Douglas Committee in making their Report are considerations which no longer govern the situation so far, at any rate as the textile trade is concerned—and that the right hon. Gentleman conceded to me when I intervened in his speech.

Therefore, whatever may be said about the Purchase Tax elsewhere, whatever may be said about the D scheme in other branches of industry, it is simply impossible to apply the argument of the Douglas Committee and the Douglas Report to these matters in connection with the textile trade, because in the textile trade there is a situation which the Douglas Committee were never able to contemplate. It has just nothing whatever to do with it.

Mr. Burden

Is it not a fact that the Report of the Douglas Committee came out this year but that if the Committee were as alive as we believe them to have been, the writing was already on the wall and the recession in the textile industry had already taken place? It is quite wrong to say that it was a situation that they did not, and could not, contemplate.

Mr. Silverman

If the hon. Member is right, the Minister of State for Economic Affairs and I are wrong together—

Mr. Burden


Mr. Silverman

—because he and I agreed in the Member's hearing less than a quarter of an hour ago that the situation was entirely different; and if it was entirely different, the considerations which influenced the Douglas Committee no longer apply in the existing circumstances. I should have thought that might be readily conceded. We have a great many matters about which we are seriously in dispute, and we do not need to waste time on matters which are not capable of serious controversy.

The right hon. Gentleman went on to say something which I thought more extraordinary still. He said that the market was falling, that there were a great many untaxed textile goods in the shops, that people were not buying any —not because they were not good textiles, not because they did not need them, not because they did not want them, but because they were too dear and beyond their power to purchase them, or they would have been purchased long ago

Mr. Beresford Craddock (Spelthorne)

indicated dissent.

Mr. Silverman

The hon. Member must accept the obvious facts and ought to exercise a little of his well known intelligence. If he will apply it to the obvious facts, I think he will agree that I am not inviting him to draw any unfair inference. The goods are in the shops, they are excellent goods, goods which people require, goods which people are not buying, and, in the absence of any other reason, one must assume that the goods are beyond their means to purchase.

Mr. Craddock

All I took exception to was that my right hon. Friend did not say that the goods were not being bought because people could not afford them, but simply stated the fact that they were there, untaxed and not being bought. The hon. Member is misquoting what my right hon. Friend said, and that is why I shook my head.

Mr. Silverman

I am bound to say that this is a matter again on which the Minister and I seem to be having what he, no doubt, would think is an unholy alliance against hon. Members who sit behind him.

Sir A. Salter

The hon. Member for Nelson and Colne (Mr. S. Silverman) is giving a rather wider extension to what I said. I said that if one examined the extent to which demand had fallen in the taxed and untaxed goods, it gave one reason to think that for the purpose of getting work going again a given amount of money would not best be used in remitting tax. We thought we got better value for money by the way we acted.

Mr. Silverman

This is only a restatement of the argument I heard and understood the first time, but it goes beyond that part of the speech of the right hon. Gentleman with which I happen to be dealing at the moment. I understand what he says about the use of the money and the advantages of doing this or that. It is exactly on that point that I shall make a comment in a moment, but what we are agreed on is that this is a falling market.

I ask the right hon. Gentleman what can there be more anomalous than to raise prices on a falling market, and that is what the right hon. Gentleman is recommending to the Committee. I really find that an extraordinary argument. The whole purpose of this D scheme is to raise prices on some articles and, if it is agreed that now—so very differently from what the situation was when the Douglas Committee first met—we have a falling market, I think it is the height of economic folly to raise the prices at this time.

I do not want to exaggerate the importance of this Purchase Tax matter.

Air Commodore Harvey

The Douglas Committee sat, I believe, originally last July and the recession started although it was not apparent, round about that time with travellers coming from North America with very few orders. By the end of September and in October it was quite apparent. Would it not have been possible for the Government of the day then to widen the terms of reference so that the Committee could have gone into the matter in greater detail?

Mr. Silverman

I should have thought it was possible, and if the late Government were at fault in not doing so that may be so. I am not here to argue about that at the moment. But how much greater folly it would be not to extend their terms of reference later still when the situation was much more obvious, and how ridiculous it would be to apply, in circumstances as we know them today, in February, 1952, recommendations made in those very different circumstances of July, 1951.

I do not want to exaggerate the importance of this matter. I am not one of those who believe that there is any permanent cure for the textile difficulties in this country on the lines of Purchase Tax remission alone. So far as I know, no one on this side of the Committee, nor indeed on the other side, has, in urging the lifting of Purchase Tax altogether on textile goods, ever regarded this as a permanent cure for the difficulties or any permanent remedy.

9.45 p.m.

We have to look elsewhere for permanent remedies. One of the things we complain of about the Government—it would be out of order to discuss it now——is that they have so far shown no sign whatever of any constructive thought at all about how this matter is to be dealt with. They do not know what the level of the industry is to be. [An HON. MEMBER: "Do you?"] If I were in order in doing so, I could offer certain permanent or long-term remedies, but I do not think it would be in order to do so now, and I do not want to pursue the point.

Mr. Pannell

On a point of order. Hon. Gentlemen opposite keep addressing the Chair. They keep on saying "Do you." Will you, Sir Charles, teach them some of the ordinary rules of debate? We do not want this unmannerly backchat; we want a proper and orderly debate

Mr. Silverman

I am quite sure, Sir Charles, that no one would complain of your conduct with regard to the textile industry or its difficulties. My complaint about the Government is that they have shown no sign whatever of doing any constructive or long-term thinking on this subject.

Though I agree at once that this Purchase Tax matter can be exaggerated, certainly in its bearing upon long-term or permanent remedies, nevertheless, it is very important indeed at this moment. There can be no help for the textile industry unless we can recapture old markets and win new ones. We can begin first with the market on our own doorstep, and it is in that regard that Purchase Tax is important. Much has been said about the reasons for imposing Purchase Tax and whether they were revenue reasons or economic planning reasons. The reasons why Purchase Tax was first imposed and why it was maintained are well known.

During the war Purchase Tax was imposed in order to discourage people from competing with one another in the purchase of goods that must be in short supply and must become in shorter supply. It was done as an anti-inflationary measure in order to keep prices down, not in order to raise them. In those circumstances nobody had any serious complaint against it.

Viscount Hinchingbrooke

(Dorset. South): The hon. Member is quite wrong.

Mr. Silverman

I thought it was. If the noble Lord thinks there were other objects, no doubt he can let us know what they are. One of the objects, and in my opinion the main object—

Viscount Hinchingbrooke

Purchase Tax put up the price and that reduced consumption.

Mr. Silverman

It put prices up and prevented a very much vaster increase of prices that would have followed had there been a free scramble among people for goods that were not being made. I thought that was perfectly plain. If the noble Lord differs, he will have his opportunity of saying so.

In the period following the war it was imposed to curtail home consumption at a time when our principal emphasis had to be on producing for foreign markets, and it was right to maintain it then. But, in the circumstances in which we now find ourselves, neither of these reasons are in the least important. They no longer exist. There is no reason whatever for maintaining Purchase Tax on textiles in the circumstances which now prevail. It seems to me that among Lancashire Members there is virtual unanimity on this issue. However we may differ about other things, and, Heaven knows, there are many things about which we do differ, I believe that if this question of whether Purchase Tax should remain or should be wholly removed from textile goods were left to the decision of the Lancashire Members, without distinction of party, there would be virtually a unanimous vote in favour of removing Purchase Tax wholly from textile goods.

I would willingly give way for a moment if there is any Lancashire Member who contests that.

Sir Ian Fraser

(Morecambe and Lonsdale): May I interrupt the hon. Member?

Mr. Silverman

I asked for a Lancashire Member.

Sir I. Fraser

I am one. I do not contest it. but it is great nonsense, because obviously every special interest or special county would vote for its own special interest.

Mr. Silverman

The hon. Member does not contest it, whatever his reasons are, because he thinks it great nonsense.

Mr. Horobin

I do not wish to interrupt the hon. Member at great length, but he issued a challenge to find a Lancashire Member who did not agree with him and who agreed with the Chancellor. I happen to be one.

Mr. Silverman

I am very much obliged. We now know that there is one Lancashire Member who does not agree that Purchase Tax should come off textiles—

Mr. Horobin


Mr. Silverman

—now, and there is another Lancashire Member who agrees that Purchase Tax should come off now, although he thinks it great nonsense. All the other Lancashire Members are in favour of taking it off now and taking it off completely; and they think it a very good thing to do.

Mr. Harold Davies

(Leek): Why only Lancashire? Staffordshire, too.

Mr. Silverman

If that is so, this places a very great responsibility upon the Lancashire Members sitting on the Government side, because if they wish they can have their way. Nothing prevents the removal of Purchase Tax altogether from textile goods except the unwillingness of Lancashire Conservative Members, who believe it ought to happen, to vote for it.

Mr. Cyril Osborne

(Louth): Does the hon. Gentleman think, and this is a serious question, that if Purchase Tax were taken off textiles it would materially increase their sales? [HON. MEMBERS: "Yes."] My own experience in one branch of textiles is that the cheaper stock is offered at the present time the less readiness there is on the part of the public to purchase. [Interruption.] The hon. Gentleman knows nothing about this issue. I am asking to what extent the hon. Member for Nelson and Colne thinks there would be an increase in the sale of textiles if Purchase Tax were taken off. May I ask him another question?

Mr. Silverman

If the hon. Member is quick?

Mr. Osborne

Does he not agree that he is exaggerating this in view of the statement in the United Nations Economic Report recently issued where, on page 25, it says: The solution of the Western European textile crisis is very closely connected with the outlook for world trade in textiles and Europe's competitive position in the world market. Does not that affect his point of view at all?

Mr. Silverman

The hon. Member will recall what I said earlier in my speech about long-term constructive remedies for the textile depression, and he will not expect me to return to it.

With regard to his question about the effect of removing the Purchase Tax from textiles, I would tell him that not only I but, as we have seen, all Lancashire Members and many Yorkshire Members and Staffordshire Members—with only one exception so far—believe that if we took off the Purchase Tax on textiles now we would immediately increase the home consumption of textiles. This would serve to help the clearance of stock and to get the mills working again—I do not say wholly, but to a significant extent.

The hon. Gentleman's argument that it is better to raise the price in order to increase consumption may be true. I found it rather an original suggestion. I am surprised that there is no Amendment on the Order Paper in the name of the hon. Member to double Purchase Tax on all these articles.

Mr. Osborne

The hon. Member is very clever at twisting words. I did not say—and it will be seen in the OFFICIAL REPORT tomorrow—that there should be an increase in the tax. I challenge hon. Members to go to their own tradespeople and make inquiries. Stocks are being offered in the textile industry today at below production costs, and they cannot be moved. I know, because I am trying to sell them. It is scandalous that the hon. Member, who is perhaps the cleverest man at twisting words, should do it in a way like this.

Mr. Silverman

I am sorry that the hon. Gentleman should be so indignant. I do not think that I twisted his words. He has himself just repeated the words to which he objected in my paraphrase of what he had to say. What he is objecting to is the inference which I draw from what he said. He thinks that that is unjustifiable, but I am not greatly distressed about that. I have spent all the years that I have spent in the House hearing hon. Members in the hon. Gentleman's party stumbling across great truths and then picking themselves up and going on as if nothing had happened.

It is perfectly true, as he said, that there are a great many goods which cannot be sold now. It is true that there are many goods which we cannot sell even at prices which are below cost. What I suggest to him, as a much better business man than I am, is that this is a proof that it is not wise to raise the prices which now obtain. I should not have thought that that was twisting anything. The hon. Gentleman is most anxious to he a good business man when he is in his office and to be a good Conservative when he comes down to support the Government, but he finds that the two functions do not fit.

Mr. Osborne

By being a good business man in my office I am producing the goods which the Chancellor wants to keep the Welfare State going.

Mr. Silverman

I am sure that that is very good of him. What I am trying to do, in company with virtually all the textile Members, is exactly the same thing.

Perhaps now I can come back to the point. The hon. Gentleman was most skilful in keeping me off it for so long. The point is that, since all the textile Members agree that Purchase Tax ought to come off, if they had the courage to stand by what they believe in, Purchase Tax on textiles can come off tonight. It will not take many of them. As I worked out the arithmetic, I think that it requires hardly any more than the number of righteous men who were not found to save Sodom and Gomorrah. I think in that case 10 good men were needed. Out obligation is greater. We need not 10 good men from among the Tory Members: we need 11. Is it too much to ask?

10.0 p.m.

If right hon. and hon. Members opposite had any doubt about the effectiveness of this Measure, if they had any doubt about its practicality, or even about its moral validity, if they had any reason whatever for questioning the rightness of the steps we are proposing, the matter would be different, but they have agreed already—all of them, and there are enough of them to, make it effective—that this is the right thing to do. If it is not done, the responsibility will be theirs, and theirs alone.

I can tell them how to do it. I have been in that position myself in other days, and so have other hon. Members.

Mr. David Ormsby-Gore (Oswestry)

The hon. Gentleman did not do that to try to prevent the re-armament programme being put through last year.

Mr. Silverman

It would have required far more than 11 righteous people to stop that one. We are not asking hon. Members opposite to do anything as heroic as that.

We are only asking that 11 of them shall vote for what they believe in on what, after all, is a minor administrative matter. No more than that. They would not even have to vote. It would not need so much courage as is needed to vote against their Government, especially when it has such a narrow majority; they would not stand it for a minute.

Let 11 Conservative Members tell the Chancellor of the Exchequer in the course of this debate that, unless he gives way on this issue, they will go into the Division Lobby with their comrades on this side of the Committee. Let us, at least, be fellow-travellers. We are not asking them to travel very far, or to keep company with us for very long.

We are not asking them to do any violence to their convictions or consciences. We are saying to them: "Do not be deterred from voting for what you believe in merely because the Labour Party does so too." No more than that. Or: "Do not be deterred from voting for what you believe in merely because you are afraid you might win."

We understand that the right hon. Gentleman the Prime Minister does not want to go to the country yet. If the Government were to be defeated on this issue, as it is a finance matter, after all, they would have to resign. There would have to be a General Election. The right hon. Gentleman the Member for Blackburn, West (Mr. Assheton) is in a stronger position than he has ever been in his life. He only has to get his comrades from Lancashire to support him. Why in the world Lancashire ever gave him any comrades I cannot understand, but they will never do it again.

However, he has got them now and, with that power, he could go to the Chancellor at this moment and say, "Lancashire needs this thing to be done." The right hon. Gentleman believes that Lancashire believes it ought to be done, and he knows that if he went to the Chancellor of the Exchequer and said, "I believe that Lancashire needs to have the Purchase Tax lifted now from textiles, and, whatever you say about it, I will vote for it tonight," the Chancellor would have to give way.

Mr. Assheton

It cannot have escaped the astute mind of the hon. Gentleman that to vote against this Clause would not have that effect at all. All that voting against this Clause would do would be to do away with the D scheme altogether and to put us back where we were before, which hon. Members opposite recognise would be a worse position.

Mr. Silverman

I do not think that is quite worthy of the right hon. Gentleman. We are not concerned, as the right hon. Gentleman knows very well and as his speech showed that he knows very well, with the niceties of the particular wording of the particular Clause. He made his contribution to this debate on the Question, "That the Clause stand part of the Bill," asking for exactly the same thing as I am asking. If he thought it was worthwhile to make his request for the removal of Purchase Tax from textiles in the context of the debate on the Motion, "That the Clause stand part of the Bill," then it is equally relevant when it comes to a vote as it was when he made his speech. He has been long enough in the House to know that I am right about that, and I am sure he would not contest it for a moment.

I say again that all he has to do is to tell the Chancellor that this thing has to be done, that his colleagues from Lancashire think so too, and that they are going to act with him, and the thing would be done. What would be lost if it were done? In the right hon. Gentleman's opinion nothing would be lost and a good deal would be gained. Not everything would be gained, of course, and I do not want to exaggerate that matter, but a great immediate alleviation of a tragic position would be effected within days, and the right hon. Gentleman and his colleagues know it very well. If they do not do it, then all their speeches are so much vainglorious vote catching, and they will be denouncing themselves to their own constituents as humbugs.

Mr. Walter Fletcher (Bury and Radcliffe)

The hon. Member for Nelson and Colne (Mr. S. Silverman) will fail in his effort to tempt me either to join him and his colleagues in the short honeymoon that he is suggesting or to follow him in the very interesting lesson in doubtful tactics he wishes to give us. The truth is—and I think that he and his companions know it well—that this matter has to be regarded, as he said in the short debate the other day, in the context of the whole Budget.

Has he asked himself, not the 64 dollar question, but the 64 million dollar question, whether, by voting for something which some of us may or may not believe to be a good short-term remedy, we should be shaking the foundations of the whole of the Budget which the Chancellor has presented?

Mrs. Castle

Would the hon. Gentleman do the useful act of asking his right hon. Friend the Member for Blackburn, West (Mr. Assheton), that question, because he has been asking for the same thing for which my hon. Friend asked?

Mr. Fletcher

I think I must retain the choice as to where I ask the question.

The hon. Gentleman has had a magnificent exercise, a wonderful gallop, along the rather zigzag course he always pursues, even when he thinks it is a straight one, but he has not asked himself the final, serious question on this matter.

It is really a matter of outside confidence in the firmness of the Chancellor in putting over a Budget which has undoubtedly restored to a very great extent confidence in our determination to put things right. Every part of this country can put forward for some local industry a special plea with great force, backing it up with figures and making it quite clear that the case for a small section, as it is, of our whole industrial life, is a very good one.

Mr. S. Silverman

If the hon. Member will allow me. I shall endeavour to go along a path which even the hon. Member would deem to be a straight one, I hope —if he is capable of knowing what is straight and what is not. Does the hon. Member know of any other industry which is suffering as the textile industry is now suffering? Is there any other industry with the same level of unemployment? Is there any other industry so important to our export trade?

Mr. Fletcher

I am quite willing to concede to the hon. Member that he is correct in saying that Lancashire is being much harder hit than almost anywhere. I know it for exactly the same reason as he does—that I happen to represent an industrial constituency in Lancashire and have done so for a few years. It is because of that that I take this point possibly rather more seriously than he does. It is not easy, when one's constituents are anxious day and night, and quite rightly, when one knows that hon. Members on all sides are looking for every sort of immediate alleviation we can possibly afford, to sit back and try to think objectively of what the total result will be of a concession which can be argued with great force.

Mr. Silverman

Can the hon. Member then explain why, only a few weeks ago, he put a Motion on the Order Paper asking for this very thing?

Mr. Fletcher

I can explain it with the greatest of ease.

Mr. Silverman

Because the hon. Member does not mean it.

Mr. Fletcher

The hon. Member may be content with that. It is entirely worthy of him that he should answer himself and nobody else.

It is a very difficult task to be objective if one is dead honest with oneself on an occasion like this. One knows perfectly well the real suffering that must follow from the continuation of the slump in Lancashire. If any means can be found it is the duty of any hon. Member of the constituency concerned to go into them very carefully and urge them upon the Government in this Chamber and elsewhere. But the final duty of the Member is not necessarily that. It is to ask himself, as I have done and as I do now, where is the long-term and real interest of the constituents whom he has the honour to represent. He must ask, "What course must I steer to achieve the greatest effect?"

It is so easy, and so cheaply easy, to taunt, in the way the hon. Member for Nelson and Colne (Mr. S. Silverman) has done, my hon. Friends on this side. I make him a present of every single forensic triumph and every single turn and twist he can take to make me and my hon. Friends on this side appear-as we may well be appearing at this moment—very ridiculous. I am willing to take that and to say to him and to hon. Members opposite, with whatever reputation I have had for putting things straight in the years I have been in the House of Commons, that it is a wrong action at this juncture to make the sort of speech the hon. Member has just made.

Mr. Harold Davies

What is wrong with it?

10.15 p.m.

Mr. Fletcher

It is wrong if every section of the community—the textile section and other sections which, in the aggregate, are just as important though, individually, they may not be so—takes that line and uses its power through us, which we undoubtedly possess as back benchers, to force the hand of the Government. If we all use it, what must be the effect on people outside this country whose confidence in us has been restored?

I believe that we are in for a much worse time in the textile industry in some ways, though for a much shorter time. We may have a fall in the market—an expression which has been used with some frequency. But we shall find that, in effect, the world's resources will come into play reasonably soon. We are now a platform on which the restoration of the textile industry can be built, but it can only be built if there is confidence that the Government will remain firm in protecting the value of the currency. One thing that will deter people overseas from buying textiles and delay the recovery of the textile industry is to shake that confidence.

I should like to reaffirm in all seriousness, as a Lancashire Member, that the easy way, the way which would give the easier relief and which would make us more popular in our constituencies, is the wrong way. I believe, therefore, that we should hope for a reasonable amount of concession, but that we should not take the advice of the hon. Member for Nelson and Colne, which was flung so lightly into the arena, and take action which can only shake the confidence of the world in the Government and, through them, in this country. On that depends the future of Lancashire more than anything else.

Mr. S. Silverman

What did the hon. Gentleman mean when he referred in his closing sentences to the wrong course? Is he now saying that to remove the Purchase Tax from textiles would be the wrong course?

Mr. Fletcher

It is a question of the short-term advantage against the possible long-term catastrophe.

Mr. D. Brook

My contribution to this debate arises out of the speech to which we have just listened. The hon. Member for Bury and Radcliffe (Mr. W. Fletcher) referred to the question of confidence in this Government. The right hon. and gallant Member for Blackburn, West (Mr. Assheton) referred to the harm that my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) had done to the textile industry by the advice which he had given. I want to put it on record that the present Chancellor has done more harm to the textile industry in the last month than anybody else. He has done it by destroying confidence in the textile industry.

The right hon. Gentleman said in his Second Reading speech that if all the retailers and wholesalers in this country would refrain from buying and putting into stock for a period, he would offer them a reward. He said, in effect, that on the Committee stage of the Finance Bill he would give consideration to specific items in the schedules of the D scheme. He was encouraging retailers to refrain from buying because they knew that if they did buy, any Purchase Tax which they had paid would be so much dead loss to them if there were any revision of the scheme.

I should like to give examples that I have come across in the West Riding of Yorkshire and Lancashire. A blanket manufacturer friend of mine told me a month ago of this state of affairs in the blanket industry. He said that when a customer went to retail shop-keepers in a big way of business, instead of buying as they usually did 100 or 200 pairs of blankets, they said, "We have no stock of blankets in the shop, but we will order you a pair." Blanket manufacturers and others are now finding that instead of getting bulk orders from their customers they are getting orders piecemeal. The reason for that is due solely to the uncertainty of the position in relation to Purchase Tax.

Mr. Burden

That is symptomatic of changing conditions. It is symptomatic of conditions where shopkeepers carry smaller stocks, and the first blow struck against shops continuing to carry heavy stocks was struck by the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton), who advised the public not to buy.

Mr. Brook

If the hon. Member had some knowledge of the textile industry he would realise that the advice given by the right hon. Gentleman the Member for Bishop Auckland was in entirely different circumstances from those which exist today. The advice given by the Chancellor was in relation to a situation of which I have personal knowledge.

> Mr. R. A. Butler

I respect the sincerity of the hon. Member, but I gave no advice. I simply maintained the rights of hon. Members and said that not to consider Amendments in the Committee stage of a Finance Bill would be an impossible position for any Government or any Chancellor of the Exchequer and would strike at the basis of the British Constitution.

Mr. Brook

The right hon. Gentleman cannot get out of his dilemma in that way. I am not talking about the advice he gave, but the action he took. He was offering them a reward for refusing to purchase. If he had known his own mind he would have realised that it would have been far better from the point of view of the textile industry if he had refused to consider any Amendments to the Schedule. The fact that he did not know his mind must inevitable result in shopkeepers refusing to carry stocks because of the knowledge they have.

The hon. Member for Gillingham (Mr. Burden) referred to the right hon. Gentleman the Member for Bishop Auckland in relation to the position of the textile industry. Part of the problem is the great difficulty of making the necessary adjustments as a result of the tremendous drop in the value of wool. The advice which my right hon. Friend gave was to that effect. The retail shopkeepers in many cases have not adjusted themselves to that position. My main purpose in taking part in this debate was simply to point out to the Committee that the action of the Chancellor of the Exchequer, due to the uncertainty which he has created in the industry, has aggravated rather than eased the tension of the wool and cotton industry.

Lieut.-Colonel Sir Walter Smiles (Down, North)

I am in agreement with the hon. Gentleman the Member for Nelson and Colne (Mr. S. Silverman) with regard to taxation. I am against any form of taxation—P.A.Y.E., Purchase Tax, petrol tax—any tax one likes to mention. But the Chancellor must have some money to keep the country running and also to save the British pound, which he has managed to do during the time that he has been in office.

A year or two ago we were all advising our friends to "Buy now." Whether it was a sheet, a blanket, or a bicycle, the advice was "Buy now. It is going up in price." We do not give the same advice today because the British £ has been saved and prices have gone down. It hurts a lot of us, but we have to grin and bear it because we have to save our currency. But I thought it a bit hard when the Minister of State for Economic Affairs said, "I am a Lancashire Member. I have studied very carefully the textile industry—wool and cotton." It reminded me of the notices we used to see outside hospitals—" Mother and child both doing well"; but not a single word about poor old father. What about the linen industry—the oldest textile industry in the world? I understand that when they opened the tomb of Tutankhamen in Egypt they found a piece of linen 4,000 or 5,000 years old. That is the textile fabric which my right hon. Friend has forgotten tonight.

Only a week ago the Chancellor of the Exchequer said we could get all the dollars we wanted if we had one-third of 1 per cent. of the total trade of the United States. The Northern Ireland linen trade is one of the best exporters to the United States today, but I was very glad, Mr. Bowles, when your predecessor in the Chair said we must not go into the different schedules and prices and details tonight. I was glad because this afternoon I was in the Lobby with three linen manufacturers and they left me with my head reeling with figures about linen trades, furnishing and fabrics. I simply cannot remember them all tonight.

The Douglas scheme has hit the linen industry very hard. The finest quality woollen blanket, dyed a delicate shade and bound with satin, is entirely Purchase Tax free, or D tax free. I do not know who buys blankets like that. I have never seen them. Possibly they are bought by the film magnates or film stars of Hollywood. In any event, not a single linen sheet is free of tax—and the film magnate and the film star have to have sheets as well as blankets. Not a single sheet of the lowest possible quality is free of tax, and I think that is a bit below the belt.

We cannot have a great export industry without at the same time having the cushion of the home trade. We want to be able to see these goods in Bond Street or Deansgate, in Manchester. I suppose that it is a case of what Manchester thinks or buys today, the United States will buy tomorrow. After all, we must try it on the dog. It is no good manufacturing entirely for the export trade. We must show the goods in the shops at home.

It is quite unfair to fix the lowest level of the D scheme far higher than the price at which linen sheets or tablecloths or fancy goods are made. When we discuss the Schedule, I hope to have an opportunity of moving some Amendments on the subject.

Mr. Anthony Greenwood

Why is it, then, that the hon. and gallant Gentleman and his Northern Ireland friends have not tabled a single Amendment to the Schedule in respect of linen?

Sir W. Smiles

The hon. Gentleman is quite wrong, because I have put down Amendments and—

The Chairman

Order. We cannot discuss the Schedule before we come to it.

10.30 p.m.

Mr. William Ross (Kilmarnock)

I was very interested to learn that the hon. and gallant Member for Down, North (Sir W. Smiles) is against taxation. I look forward to watching exactly into which Lobby he will go when the decision is taken on the Question that the Clause stand part.

Mr. Sydney Marshall (Sutton and Cheam)

It will not be the hon. Gentleman's Lobby.

Mr. Ross

I wonder where the hon. and gallant Member for Down, North gets the idea that woollen blankets were to be tax free? In the Schedule appropriate to this subject, he will find that blankets—and may I say here that the best blankets come from Ayrshire?—beyond 14s. 6d. a square yard will have to bear Purchase Tax. The only thing, so far as I can see, which he missed out, was one linen article; but evidently that is not marked, "Made in Northern Ireland."

I do not question that the Douglas Report was a sincere effort to analyse the difficulties and anomalies of the old Utility scheme within the terms of reference laid down; but the thing which the Financial Secretary, and the gentlemen at the Treasury have to remember, is that the Douglas Committee was set up in July of last year and that we are passing judgment on its Report in May of this year. I say that because entirely new considerations must come into our judgment, for the situation has changed very, very much; so much, that consideration of the Douglas Report is now quite academic.

It is all very well for the Minister of State for Economic Affairs to talk about goods which do not bear tax remaining in the shops, unsold, and to say that the tax had little relation to the depression. What we are considering is how to lift that depression, and putting a tax on those goods which have until now been tax free, will not only not help the situation, but will aggravate an already unhealthy position. Consumer considerations were within the terms of the Douglas Committee, but those considerations would have a far greater weight now than in July, 1951.

There is a lot of talk of keeping down the cost of living, and it is strange, surely, that one of the other planks of the Chancellor's Budget will be deliberately to increase the cost of living for millions of families; because the spread of this taxation, over a wide range of goods, will have immediate effects. The fact is that 90 per cent. of the sheets, and 70 per cent. of the domestic towels bought by ordinary householders were tax free; but are not now.

Mr. Burden

Will the hon. Member admit that, in the terms of reference to the Douglas Committee, it was laid down that any scheme put out must take into consideration that the revenue received from merchandise must be the same as obtained under the Utility scheme?

Mr. Ross

I think I said at the beginning of my remarks that the time when we are passing judgment is very different from the time when the Douglas Committee was set up; but if the hon. Gentleman claims that the recommendations of any Committee set up must be followed, then I would reply that the mines would have been nationalised in 1921. When we come to other matters, I hope that the hon. Gentleman, in view of his interjection, will give us his support.

Quite rightly, emphasis has been put on textiles; but let us leave aside textiles, and turn to footwear. We find that, under the old Utility scheme, 98 per cent. of the boots and shoes—practically every pair bought in this country apart from those hand-made—were free of Purchase Tax. Now, for the first time, we are to have Purchase Tax not only on the better quality but on the medium quality boots and shoes which people have been buying. There are thousands of workers in Kilmarnock who are very much concerned about the fate of this Clause and the D scheme.

The D level has been selected by the Chancellor in conjunction, I dare say, with the President of the Board of Trade. The Government are deliberately forcing up the price of boots and shoes. Boots and shoes will be dearer. The people of the Irvine Valley who work in lace manufacture, a vital part of the textile industry, are being laid off work. Someone said something about the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) stopping people from buying. If he will go to the Irvine Valley he will find that the people are very much more concerned about the fact that the people in Australia are stopping buying, and it certainly was not a member of the Opposition Front Bench who advised the Australians to stop buying British goods.

People are falling out of work. How will they be in a position to buy the goods being made in another part of my constituency, the prices of which are being increased? How will those employed in the boot and shoe industry be able to help the industry making curtains or the hosiery industry of Kilmarnock and Central Ayrshire? This problem is not confined to Lancashire. The cloth manufacturing area of Kilmarnock and that part of Glasgow represented by the hon. Member for Bridgeton (Mr. Carmichael) is in a desperate position. The responsibility on the Chancellor of the Exchequer is very much heavier than one would gather from the speech made by the Minister of State for Economic Affairs.

I sincerely hope that we shall get a prompt decision in this matter. The continued delay is aggravating the position. Millions of people are convinced that something must be done quickly to bring down the price of these goods, because there is a buying strike at present. Whatever the Chancellor proposes to do he must act quickly.

I have been interested to note since the Budget how hon. Members opposite have urged us to face the grim facts. They have all become apostles of realism. I remember what the Minister of Agriculture said when farm prices were increased. It was said that something must be done to create a more realistic view about the cost of food, so the subsidy was taken away and the cost was passed on to the consumer. I remember that the hon. Member for Edinburgh, South (Sir W. Darling), has been preaching for years, "Away with subsidies."

If this realism is right and if it is right to take away subsidies to get at the true price of an article, then equally it is right to take away Purchase Tax to get at the true price of an article. The true prices are being shrouded by Purchase Tax. If we are to face realities let us face them; and let us face those of unemployment, depression, the needs of the consumer and industry, by wiping out Purchase Tax altogether.

Mr. R. A. Butler

I am sure that we have been very much moved by the sincerity brought into this debate, which has now lasted for three and a half hours, and if we are to maintain our reputation as a Committee on the Finance Bill, we should now try to come to a decision on this Clause, because we have two other Clauses and a number of Schedules which will give the appropriate opportunity to the Government or anybody else for a detailed consideration of this matter.

I am most anxious that, during the two days next week—or whatever time we have then—we shall, without undue physical labour, deal with the detailed representations made to us by hon. and right hon. Gentlemen opposite. Therefore, I think it is reasonable that we should try to reach a decision on this single Clause, which is not one of the most vital Clauses in the Bill, and which is not one of the vital ones concerning Purchase Tax. I believed that one speech from this Front Bench would have been sufficient, but, if the Committee thinks it right, it might be reasonable for me to make a few observations.

It is remarkable that we have had no speech from the Front Bench opposite.

Mr. Gaitskell (Leeds, South)

The right hon. Gentleman will get it.

Mr. Butler

It is remarkable that in a debate lasting three and a half hours no statement should be made officially from the Opposition Front Bench. That shows what they think of this Clause, and of the debate. We have not had any explanation of what they want, and I am at a loss to know what it is. The hon. Gentleman the Member for Nelson and Colne (Mr. S. Silverman), is to be sympathised with more than usually, because he sits for a particularly distressed town in Lancashire, which, on my close examination, has not been able to profit by some of the measures we have been able to introduce. He said it had been laid down that the objective was to remove Purchase Tax on textiles. The right hon. Gentleman the Member for Huyton (Mr. H. Wilson) said: …nothing short of the complete abolition of the tax will suffice in the present desperate situation."—[OFFICIAL, REPORT, 29th April, 1952; Vol. 499, c. 1349.] Is that the argument developing on this Clause? If it is I will deal with it quite shortly.

If it is the argument there is a point which the Committee must get hold of, and it is that it is really impossible to differentiate in this matter between the textile portion of the tax and the other sections of the D scheme. There have been some speakers, including the hon. Gentleman the Member for Kilmarnock (Mr. Ross), who spoke last, and the hon. Gentleman the Member for Westmorland (Mr. Vane) who have referred to boots and shoes, but in my opinion, it is, as I have just said, impossible to differentiate as between one section of the D scheme and the rest. Therefore, I am forced to the conclusion that the sum of between £80 million and £100 million—that is about one—third of the whole Purchase Tax—is at stake.

The courageous and straightforward speech of my hon. Friend the Member for Bury and Radcliffe (Mr. W. Fletcher) represents the truth of this matter, and I hope it will be read and listened to in the Lancashire towns just as much as some of the extreme speeches made from the other side of the Committee. If I were to take action tonight to surrender voluntarily about £100 million of revenue in answer to a debate of this sort without a wide examination of the tax schedules, and the detailed points put forward by hon. and right hon. Gentlemen, I should, I think, be grossly irresponsible as Chancellor of the Exchequer. At any rate, I do not propose to do it under any pressure whatever. That deals with the first point.

I have listened to nearly all the three hours of this debate, and the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann), speaking earlier, poked fun at my alleged honesty. I can only say that in similar circumstances the honesty of one of my distinguished predecessors—Sir Stafford Cripps—was impugned, and that not only did he ignore such taunts, but his reputation has survived in the minds of us all as a man who did his best. I cannot aspire to the moral heights of his character, but I have tried to act absolutely honestly in this matter.

10.45 p.m.

What was the position I inherited? The Government and I inherited the report by the Douglas Committee, which was designed to meet one of our most important difficulties in the sphere of international trade. As I said in my Budget speech, the right hon. and learned Gentleman the previous President of the Board of Trade acknowledged that it was necessary for the sake of our international obligations not to continue a system in this country whereby we laid a tax on imports of certain foreign goods without an equivalent excise on similar internal goods. It was, therefore necessary to adjust the general scheme of Utility under the purchase tax and the imposition of Purchase Tax as well. As the Douglas Committee said: We have, therefore, taken as our starting point the over-riding need to propose a solu tion which will enable the Government fully to carry out the undertaking given at Geneva in September, 1951. This, then, is the second main point. Is it the intention of the Opposition to challenge the fact that some alteration was necessary on the lines of the D scheme to fulfil our international obligations? My first question was whether they propose to push away £100 million of revenue. Having answered that, do they propose not to carry out our international obligations? In facing up to our international obligations, what scheme can we adopt? Does anybody in the Committee imagine any Chancellor has welcomed putting into the Bill Clauses and Schedules of this intense complexity, exposing so much for comment and attack? It is an absolute gift to the Opposition, of which they are taking full advantage at every moment, in a most petty manner, to make us look as ridiculous as possible. I maintain that we are morally bound to a scheme of this sort.

The point arises that, even if it is accepted that we have inherited the Douglas Committee scheme, the need for a scheme of this sort, and an obligation to fulfil these international treaties—and there are more than the September, 1951, Geneva declaration—nevertheless, at the same time, it was our responsibility to fix the D levels. All I can say is that in fixing the D's we have been guided by paragraph 101 of the Douglas Committee Report, in which they recommend fixing the D would be by reference to the median price. That is precisely what we have done.

At least, it has not been done by us, but by our advisors, and in the most scientific and careful way. Much of the work was done in the period when we had just assumed office. Through the Social Survey a most careful investigation was made to fix the median price for these commodities, articles, goods and everything else.

I do not say that the result is entirely successful, but we shall have to consider details when we come to the Schedules. That is why this debate must be general and I cannot make any particular observations either for the trades or the Committee. I maintain that this work was carefully done, without the slightest contact with any politics or even Ministerial contact, but Ministers have taken full responsibility for it—and I believe it was done fairly. Where there have been mistakes, let us examine them on the Schedules, to which I hope we shall come as early as possible. I am not prepared to sacrifice the amount of revenue to the extent I have described. I do not think it would solve the problem; indeed, I believe it would undermine the Budget and our financial solvency.

I am not prepared to consider in detail, indeed, until we come to the Schedule which we are advancing—a particular manoeuvre adopted on purpose, with the agreement of right hon. and hon. Members opposite, so that we can consider them in the same sort of debate when it is resumed next week—I am not I say prepared to consider till then the detailed D's. Also I am not prepared to give way to the Opposition when they try to make us give up this scheme, that would leave us in a position which, I consider, would be contrary to our international obligations and which it would not be sound for this country to adopt.

If we do not pass this Clause—and we have had no guidance from the Opposition Front Bench—we go back to the position in which we shall not be fulfilling our international obligations and in which an attempt is made to recreate the old Utility scheme. That Utility position cannot be restored.

Let me take up the argument of the right hon. Gentleman, the Member for Huyton. He has stated that this is a deliberate attempt to redistribute income in the interests of the rich against the poor. That is not the opinion of the Douglas Committee, whose advice we have followed in detail in this matter. That Committee was appointed by right hon. Gentlemen opposite.

It says, in paragraph 119—and this is a direct answer to the right hon. Gentleman: It does not follow that there would be any transference of the burden from one individual to another since many people who can afford top quality Utility goods also buy some non-Utility goods. We have already expressed our opinion that, in a number of cases, the Utility exemptions extend far beyond the essential needs of the lower income groups. If, as we recommend, the opportunity were taken to remove certain anomalies, such as the tax on table oilcloth, plastic sheeting and rubber footwear, it might well improve the position of the poorest sections of the community. That is exactly the plan we have followed. We have brought into this scheme certain articles which now get tax exemption and did not get them under the administration of the party opposite, and we have, in fact, kept the large range of purchases that the poorer section of the community want to make free of tax under this scheme.

Therefore, we have tried to be fair, and that is the answer to the right hon. Gentleman the Member for Huyton. We have been as fair and impartial as possible and we shall try to fufil our international obligations.

Mr. Gaitskell

The Chancellor of the Exchequer complained that he was not sure what our objectives were in discussing this Clause. I should have thought that in view of the fact that the question of Purchase Tax in relation to the textile industries has been discussed in the House on more than one occasion recently he would really not have been in any doubt about the attitude of the Opposition. As for his complaint that no Front Bench spokesman has so far taken part in the debate, it is perfectly within our rights, especially in a debate on Clause stand part, to wait until the Opposition Front Bench spokesman has finished. [Laughter.] I beg pardon; I meant until the Government Front Bench spokesman has finished.

I agree that the Minister of State for Economic Affairs spoke a little earlier, and had he made a contribution that was relevant and fair I might, perhaps, have intervened earlier. I am sorry to have to tell him that it was not one of his best efforts, and it seemed to leave all of us in a complete fog about what the Government really wanted. The Chancellor of the Exchequer has put the matter rather more clearly and I think we now understand what the Government really are after.

The objectives we have are perfectly simple. We think that in present circumstances the Purchase Tax should be taken off the textile products. If the Chancellor will not do that, we think the value of D should all along the line be raised as high as possible, in particular to a level which secures that there will be no increased tax on any article, and no tax imposed on articles which hitherto were exempt from taxation.

I think the Chancellor will probably agree that in making up our minds on this important issue we had to take into consideration four different possible consequences. First, there is the international obligations; second, the cost of living; third, the revenue aspect; and, fourth, the condition of the industries affected, and I propose to say a few words about each of those. As to the international obligations, we accept that there is an international obligation; there is no dispute about that. My right hon. and hon. Friends have previously on a number of occasions made our position quite clear. We recognised that we had to do something to remove the discrimination about which complaints were made by foreign countries as a result of the previous arrangement. That is not in dispute at all.

But that does not mean that therefore everything that is suggested in the Douglas Committee Report must be accepted—of course not. After all, there are at least two other ways than the ways recommended by the Government by which one could fulfil the international obligations without getting into the difficulties into which the Government are getting. Those are, first, the removal of the tax altogether—that would satisfy the foreign complainants all right, there would be no difficulty at all about that. Second, we could fix the level wherever we liked. It could be as high as we liked and it would be perfectly satisfactory to foreign countries.

Now I turn to the cost of living argument and I must say that I think the Chancellor's defence of the effects of this new scheme with the level of D's proposed in the Bill extraordinarily weak. It really cannot be denied that there is a redistribution involved in this scheme. After all, we were levying tax over the whole range of non-Utility articles equivalent to 33⅓ per cent, that is, one-third of the value in each case. That came off every non-Utility article, however cheap or expensive it was. Now, we are imposing taxation on a large range of Utility articles. We get one of the worst cases of this, as one hon. Friend said, in the case of boots and shoes. Does the Chancellor really say there is no additional burden imposed on consumers of boots and shoes in this, when 98 per cent. of the industry was previously free of tax altogether, and now about 50 per cent. of it is to be taxed? Of course, there is bound to be an additional burden.

Mr. Butler

I did say—and I was respecting a previous Ruling of the Chair—that if we go into more detail on some of the more difficult classes, like boots and shoes, furnishing fabrics and fur gloves and other things, I would be out of order.

Mr. Gaitskell

I, too, remember the Ruling and I was not going into detail, but the Chancellor has made a completely "phoney" generalisation about this. We shall certainly continue to pull it to pieces in the course of the debates next week, but I must say just this, that there is really no basis in it whatever. The fact is that it does involve a redistribution. Hon. Members opposite know that perfectly well. They may say that it is not a very big one, but it is a redistribution and it does add to the cost of living of the working class and they cannot get away from that.

Let us turn to the revenue question. The Chancellor says he cannot afford to lose the revenue and other hon. Members say that the Committee were obliged to consider only schemes where there was no loss to the Revenue. I want to make it clear that it was never our view that it was the duty of the Douglas Committee to decide Revenue matters at all and that was why that particular condition was put in the terms of reference. The Chancellor may agree with me that in appointing a committee it is always rather a wise thing to say that they must leave revenue and get on with the rest of it. Otherwise, the committee will almost certainly report in favour of heavy reductions in taxation which may not be possible. I say that that was not a matter which they were asked to inquire into and the Chancellor must accept full responsibility himself.

11.0 p.m.

The Chancellor says that he cannot afford to meet our request. I must repeat an argument which I used on an earlier occasion. The real point is that the textile industries throughout the world are very depressed at the moment. There are some remedies which, because they are external, it is very difficult for us to apply. It is natural that we should tend to concentrate on things which can be done by the Government, one of which is to lift the burden of taxation. That cannot be questioned by anyone, unless the hon. Member for Louth (Mr. Osborne) still believes that that would induce people to buy less, rather than more.

I do not think he was really serious in that argument, and will not press him further. It will be interesting to see whether that is the case where there are proposals to reduce the tax on individual items. Apart from the hon. Member for Louth, I believe that everyone agrees on what the position is. In those circumstances, it is our view that if the Chancellor of the Exchequer says that he has to have the same amount of revenue he ought not to have given so much away in general reliefs on Income Tax, particularly on the higher incomes, but should have concentrated relief on this spot, so as to raise consumption of textiles. That is a logical argument.

What was the purpose of relief of taxation? It was in essence an anti-deflationary measure. We want an anti-deflationary measure at a particular point in our economy so that it affects our industries. Therefore, we cannot accept the view that, because there is a loss of revenue, the Chancellor cannot stand it. He can still, at this stage, introduce a new Money Resolution and modify the Income Tax Clauses so that he does not give away £50,000,000 to those who are getting more than £1,000 a year. We will give him every consideration if he is prepared to do this.

Mr. Osborne

If it is being argued that even if the Chancellor gave relief to the smaller income groups that money would be spent in the purchase of textiles, that cannot be proved.

Mr. Gaitskell

The hon. Gentleman seems to be getting sleepy—I was arguing exactly the opposite—or else, perhaps, that is the argument which the Chancellor must have had in mind. But it is not the one I have. To restore the demand for textiles the Chancellor must give relief of taxation on textiles.

Now I come, finally, to the condition of the industry. There is no doubt in

any part of the Committee about how serious this is. The argument which has been brought forward in relation to removal of the tax, that it is not going to solve the whole problem, is irrelevant. It is not going to solve the whole problem. But is that a reason for not doing something about it? Are we going to find it so easy to solve this problem that we can afford to neglect any remedy?

Even if it is the case that parts of the industry which produce articles which have been free from tax are also depressed that is no reason for maintaining the tax on those parts of the industry which have been subject to the tax and are depressed. Furnishing fabrics are particularly depressed and are subject to heavy taxation. As for the argument that if the tax is removed it must be removed for ever, that is not worth serious consideration. No Chancellor of the Exchequer can do that. We do not ask for that. I do not agree with the Minister of State for Economic Affairs that the industry is against anything but that. Of course, it was against what he said, namely, a Purchase Tax holiday with a specific date. That would be a foolish thing. I spoke to members of the industry when I was in Manchester, and when I explained our proposals they took a favourable view of them.

The case is an overwhelming one, and we are extremely disappointed with the Chancellor's attitude. I wish we could persuade those hon. Members who represent Lancashire constituencies—who, I know, share our view, whatever they may say—to have the courage to tell the Chancellor that they will come into the Division Lobby with us. If they did that we would achieve our objective, and would get rid of the Purchase Tax on textiles. There is still, of course, a chance for them to do this because we shall now most certainly divide on the Clause.

Question put, "That the Clause, as amended, stand part of the Bill."

The Committee divided: Ayes, 232; Noes, 204.

Division No.118.] AYES [11.7 p.m.
Aitken, W.T. Assheton, Rt. Hon. R. (Blackburn, W.) Baxter, A.B.
Allan, R.A (Paddington, s.) Astor, Hon. J.J (Plymouth, Sutton) Beach, Maj. Hicks
Alport, C.J.M. Astor, Hon. W.W. (Bucks, Wycombe) Beamish, Maj, Tufton
Amery, Julian (Preston, N.) Baldock, Lt.-Cmdr. J.M. Bell, Philip (Bolton, E.)
Amory, Heathcoat (Tiverton) Baldwin, A.E. Bell, Ronald (Bucks, S.)
Arbuthnot, John Barber, A. P. L. Bennett, F.M. (Reading. N.)
Ashton H. (Chelmsford) Barlow, Sir John Bennett, Dr. Reginald (Gosport)
Bennett, William (Woodside) Head, Rt. Hon. A. H. Orr-Ewing, Charles Ian (Hendon, N.)
Birch, Nigel Heald, Sir Lionel Orr-Ewing, Ian L.(Weston-super-Mare)
Bishop, F. P. Heath, Edward Osborne, C.
Black, C. W. Hill, Dr. Charles (Luton) Partridge, E.
Boothby, R. J. G. Hinchingbrooke, Viscount Peake, Rt. Hon. 0
Bowen, E. R. Hirst, Geoffrey Perkins, W. R. D.
Boyd-Carpenter, J. A. Holland-Martin, C. J. Peto, Brig, C. H. M
Boyle, Sir Edward Hollis, M. C. Peyton, J. W. W.
Braine, B. R. Hope, Lord John Pilkington, Capt. R. A.
Braithwaite, Sir Albert (Harrow, W.) Hornsby-Smith, Miss M. P. Pitman, I. J.
Braithwaite, Lt.-Cdr. G. (Bristol, N.W.) Horobin, I. M. Powell, J. Enoch
Bromley-Davenport, Lt.-Col. W. H. Howard, Gerald (Cambridgeshire) Price, Henry (Lewisham, W)
Brooke, Henry (Hampstead) Howard, Greville (St. Ives) Prior-Palmer, Brig. 0. L.
Brooman-White, R. C. Hudson, Sir Austin (Lewisham, N.) Profumo, J. D.
Buchan-Hepburn,Rt. Hon. P. G. T. Hudson, W. R. A. (Hull, N.) Raikes, H. V.
Bullard, D. G. Hutchison, Lt.-Com. Clark (E'b'rgh W.) Rayner, Brig. R.
Bullus, Wing Commander E. E. Hylton-Foster, H. B. H. Redmayne, E.
Burden, F. F. A. Jenkins, R. C. D. (Dulwich) Remnant, Hon. P.
Butcher, H. W. Johnson, Eric (Blackley) Renton, D. L. M.
Butler, Rt. Hon. R. A. (Saffron Walden) Johnson, Howard (Kemptown) Roberts, Peter (Heeley)
Carr, Robert (Mitcham) Jones, A. (Hall Green) Robinson, Roland (Blackpool, S)
Cary, Sir Robert Joynson-Hicks, Hon. L W. Robson Brown, W.
Channon, H. Kaberry, D. Roper, Sir Harold
Churchill, Rt. Hon. W. S. Keeling, Sir Edward Russell, R. S.
Clarke, Col. Ralph (East Grinstead) Kerr, H. W. (Cambridge) Ryder, Capt. R. E. D.
Clarke, Brig. Terence (Portsmouth. W.) Lambton, Viscount Salter, Rt. Hon. Sir Arthur
Cole, Norman Lancaster, Col. C. G. Schofield, Lt.-Col. W. (Rochdale)
Colegate, W. A. Law, Rt. Hon. R. K. Scott-Miller, Comdr. R.
Cooper-Key, E. M. Leather, E. H. C. Shepherd, William
Craddock, Beresford (Spelthorne) Legge-Bourke, Maj. E. A. H Simon, J. E. S. (Middlesbrough, W)
Cranborne, Viscount Legh, P. R. (Petersfield) Smithers, Peter (Winchester)
Crookshank, Capt. Rt. Hon. H. F. C. Lennox-Boyd, Rt. Hon. A. T Smyth, Brig. J. G (Norwood)
Crosthwaite-Eyre, Col. 0. E. Lindsay, Martin Soames, Capt. C.
Crouch, R. F. Linstead, H. N. Spearman, A. C. M
Crowder, John E. (Finchley) Lloyd, Maj. Guy (Renfrew, E.) Stevens, G. P.
Crowder, Petre (Ruislip-Northwood) Lloyd, Rt. Hon. Selwyn (Wirral) Steward, W. A. (Woolwich, W.)
Cuthbert, W. N. Lockwood, Lt.-Col. J. C. Stewart, Henderson (Fife, E.)
Darling, Sir William (Edinburgh, S.) Longden, Gilbert (Herts, S.W.) Storey, S.
Davidson, Viscountess Low, A. R. W. Strauss, Henry (Norwich, S.)
Deedes, W. F. Lucas, Sir Jocelyn (Portsmouth, S.) Summers, G. S
Dodds-Parker, A. D. Lucas, P. B. (Brentford) Sutcliffe, H.
Doughty, C. J. A. McAdden, S. J. Taylor, Charles (Eastbourne)
Douglas—Hamilton, Lord Malcolm Macdonald, Sir Peter (I. of Wight) Teeling, W.
Drayson, G. B. Mackeson, Brig. H. R. Thompson, Lt.-Cdr. R. (Croydon, W.)
Drewe, C. McKibbin, A. J. Thorneycroft, R Hn. Peter (Monmouth)
Duthie, W. S. MacLeod, lain (Enfield, W.) Thornton-Kemsley, Col. C. N.
Eccles, Rt. Hon. D. M. MacLeod, John (Ross and Cromarty) Tilney, John
Erroll, F. J. Macmillan, Rt. Hon. Harold (Bromley) Turner, H. F. L
Fell, A. Macpherson, Maj. Niall (Dumfries) Turton, R. H
Fisher, Nigel Maitland, Comdr. J. F. W. (Horncastle) Tweedsmuir, Lady
Fletcher, Walter (Bury) Markham, Major S. F. Vane, W M. F
Fletcher-Cooke, C. Marshall, Douglas (Bodmin) Vaughan-Morgan, J K
Fort, R. Marshall, Sidney (Sutton) Vosper, D F.
Foster, John Maude, Angus Wakefield, Edward (Derbyshire, W.)
Fraser, Hon. Hugh (Stone) Maudling, R. Wakefield, Sir Wavell (Marylebone)
Fraser, Sir Ian (Morecambe & Lonsdale) Maydon, Lt.-Cmdr. S. L. C Walker-Smith, D. C.
Gage, C. H. Medlicott, Brig. F. Ward, Miss I. (Tynemouth)
Galbraith, Cmdr. T. D. (Pollok) Mellor, Sir John Waterhouse, Capt. Rt. Hon. C
Garner-Evans, E. H. Molson, A. H. E. Watkinson, H. A.
Gower, H. R. Morrison, John (Salisbury) Webbe, Sir H. (London & Westminster)
Gridley, Sir Arnold Mott-Radclyffe, C. E. Wellwood, W.
Grimond, J. Nabarro, G. D. N. Williams, Rt. Hon. Charles (Torquay)
Grimston, Hon. John (St. Albans) Nicholls, Harmer Williams, Gerald (Tonbridge)
Grimston, Sir Robert (Westbury) Nicholson, Godfrey (Farnham) Williams, Sir Herbert (Croydon, E)
Harden, J. R. E. Nicolson, Nigel (Bournemouth, E.) Williams, R Dudley (Exeter)
Hare, Hon. J. H. Noble, Cmdr. A. H. P. Wills, G.
Harris, Frederic (Croydon, N.) Nugent, G. R. H. Wilson, Geoffrey (Truro)
Harrison, Col. J. H. (Eye) Nutting, Anthony Wood, Hon R.
Harvey, Air Cdre. A. V. (Macclesfield) Oakshott, H. D. York, C
Harvey, Ian (Harrow, E.) O'Neill, Rt. Hon. Sir H. (Antrim, N.)
Hay, John Ormsby-Gore, Hon. W. D. TELLERS FOR THE AYES:
Mr. Studholme and Major Conant.
Acland, Sir Richard Benson, G. Brown, Rt. Hon. George (Belper)
Adams, Richard Beswick, F. Burke, W. A.
Albu, A. H. Bevan, Rt. Hon. A. (Ebbw Vale) Burton, Miss F. E
Allen, Arthur (Bosworth) Bing, G. H. C. Butler, Herbert (Hackney, S.)
Attlee, Rt. Hon. C. R. Blackburn, F. Callaghan, L. J.
Awbery, S. S. Boardman, H. Castle, Mrs. B. A.
Bacon, Miss Alice Bottomley, Rt. Hon. A. G. Champion, A. J.
Baird, J. Bowden, H. W. Chapman, W. D
Barnes, Rt. Hon. A. J Brockway, A. F. Chetwynd, G. R.
Bellenger, Rt. Hon. F. J. Brook, Dryden (Halifax) Cocks, F. S.
Benn, Wedgwood Broughton, Dr. A D. D. Coldrick, W.
Collick, P. H. Irving, W. J. (Wood Green) Richards, R.
Corbet, Mrs. Freda Isaacs, Rt. Hon. G. A. Rebens, Rt. Hon. A.
Craddock, George (Bradford, S.) Janner, B. Roberts, Albert (Normanton)
Crosland, C. A. R. Jay, Rt. Hon. D. P. T. Roberts, Goronwy (Caernarvonshire)
Cullen, Mrs. A. Jeger, George (Goole) Rogers, George (Kensington, N.)
Daines, P. Jenkins, R. H. (Stechford) Ross, William
Dalton, Rt. Hon. H. Johnson, James (Rugby) Royle, C.
Darling, George (Hillsborough) Jones, David (Hartlepool) Schofield, S. (Barnsley)
Davies, A. Edward (Stoke, N.) Jones, Jack (Rotherham) Shackleton, E. A. A.
Davies, Ernest (Enfield, E.) Kenyon, C. Shawcross, Rt. Hon Sir Hattie.
Davies, Harold (Leek) Key, Rt. Hon. C. W Shurmer, P. L. E.
de Freitas, Geoffrey King, Dr. H. M. Silverman,Julius (Erdington)
Deer, G. Lee, Frederick (Newton) Silverman, Sydney (Nelson)
Delargy, H. J. Lee, Miss Jennie(Cannock) Simmons, C. J. (Brierley Hill)
Dodds, N. N. Lever, Harold (Cheetham) Smith, Ellis (Stoke, S.)
Driberg, T. E. N. Lever, Leslie (Ardwick) Snow, J. W
Dugdale, Rt. Hon. John (W. Bromwich) Lewis, Arthur Sorensen, R. W.
Ede, Rt. Hon. J. C. Lindgren, G. S. Soskice, Rt. Hon. Sir Frank
Edelman, M. MacColl, J. E. Sparks, J. A.
Edwards, John (Brighouse) McGhee, H. G. Stewart, Michael (Fulham, E.)
Edwards, Rt. Hon. Ness (Caerphilly) McLeavy, F. Stokes, Rt. Hon. R. R.
Edwards, W. J. (Stepney) McNeil, Rt. Hon.H. Strachey, Rt. Hon. J
Evans, Albert (Islington, S.W.) MacPherson, Malcolm (Stirling) Strauss, Rt. Hon. George (Vauxhall)
Evans, Stanley (Wednesbury) Mainwaring, W. H. Summerskill, Rt. Hon E
Fernyhough,E. Mallalieu, E. L. (Brigg) Swingler, S. T.
Field, W. J. Mallalieu, J. P. W. (Huddersfield. E) Sylvester, G. 0.
Fienburgh,W Marquand, Rt. Hon. H. A Taylor, Bernard (Mansfield)
Finch, H J Mayhew, C. P. Taylor, Rt. Hon. Robert (Morpeth)
Fletcher, Eric (Islington, E.) Mellish, R. J Thomas, David (Aberdare)
Follick, M. Mikardo, Ian Thomas, Ivor Owen (Wrekin)
Foot, M. M Mitchison. G R Thurtle, Ernest
Freeman, John (Watford) Moody, A. S. Tomney, F
Gaitskell, Rt. Hon. H. T. N. Morgan, Dr H. B W Turner-Samuels, M.
Gibson, C. W. Morley, R. Ungoed-Thomas, Sir Lynn
Gooch, E. G. Morris, Percy (Swansea, W.) Usborne, H. C.
Gordon Walker, Rt. Hon. P. C. Morrison, Rt. Hon. H. (Lewisham. S) Wallace, H. W.
Greenwood, Anthony (Rossendale) Moyle, A. Watkins, T. E.
Greenwood, Rt. Hon. Arthur (Wakefield) Nally, W. Weitzman, D.
Griffiths, David (Rother Valley) Neal, Harold (Bolsover) Wells, William (Walsall)
Griffiths, Rt. Hon. James (Llanelly) Noel-Baker, Rt. Hon. P J West, D. G.
Griffiths, William (Exchange) Oliver, G. H. Wheatley, Rt. Hon. John
Hall, Rt. Hon Glenvil (Colne Valley) Orbach, M. White, Mrs. Eirene (E. Flint)
Hamilton, W. W. Oswald, T. White, Henry (Derbyshire, N.E.)
Hastings, S. Padley, W. E Wilkins, W. A.
Hayman, F. H. Paget, R. T. Willey, Frederick (Sunderland, N.)
Healey, Denis (Leeds, S.E.) Pannell, Charles Williams, Rev. Llywelyn (Abertillery).
Henderson, Rt. Hon. A. (Rowley Regis) Pargiter, G. A. Williams, Ronald (Wigan)
Hewitson, Capt. M. Parker, J. Williams, W. R. (Droylsden)
Hobson, C. R. Paton, J. Williams, W. T. (Hammersmith, S.)
Holman, P. Pearl, T. F. Wilson, Rt. Hon. Harold (Huyton)
Houghton, Douglas Plummer, Sir Leslie Winterbottom, Ian (Nottingham, C.)
Hudson, James (Ealing, N.) Price, Joseph T. (Westhoughton) Winterbottom, Richard (Brightside)
Hughes, Cledwyn (Anglesey) Price, Philips (Gloucestershire, W.) Wyatt, W. L.
Hughes, Emrys (S. Ayrshire) Proctor, W. T. Yates, V. F.
Hughes, Hector (Aberdeen, N.) Pryde, D. J. Younger, Rt. Hon K
Hynd, H. (Accrington) Pursey, Cmdr. H.
Hynd, J. B. (Attercliffe) Reid, Thomas (Swindon) TELLERS FOR THE NOES:
Irvine, A. J. (Edge Hill) Rhodes, H. Mr. Pearson and Mr. Horace Holmes

Question put, and agreed to.

Mr. Gaitskell

I beg to move, "That the Chairman do report Progress, and ask leave to sit again."

I rise to ask the Chancellor of the Exchequer what his intentions are. I think he will agree that although we have had quite a long debate on the Question that Clause 7 stand part, it was a good debate and it was, in fact, the only general discussion on the Purchase Tax on textiles which we are likely to have. I hope that in the circumstances he feels that good progress has been made and that we might perhaps now adjourn for the time being and come back on Monday refreshed; I think there is only one important Amendment in Clause 8, and then there are the Amendments to the Fourth Schedule which will, no doubt, occupy the Committee some time.

Mr. Butler

My intentions are strictly honourable, and I have no wish to force the Committee to sit longer than they would wish. It so happens that the next debate is on outsize garments, and it is not likely to be unduly restricted. It also so happens—this is a serious point—that the debate on Clause 8 on outsize garments relates to men's wear, but all the Amendments concerning ladies' outsize garments are included in the Schedule. Therefore, it might be more convenient to take them in juxtaproximity to the Schedule so that men's and ladies' outsize garments could be considered in one debate. That would be a situation of great amity and friendliness to which we might repair on Monday.

I would also suggest that we have made reasonably good progress and that we should continue this progress on the next two Sitting days, so that we may attempt to finish the Schedules by the end of those two days, in view of the very great length of the Bill. If we cannot do anything on the basis of a definite understanding for that never works—it might at least be said that that is our aim. In those circumstances, I am glad to accede to the Motion.

Committee report Progress; to sit again To-morrow.

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