§ Considered in Committee.
§ [Colonel Sir CHARLES MACANDREW in the Chair]
§ 3.37 p.m.
§ The Chancellor of the Exchequer (Mr. R. A. Butler)
I beg to move,
§ Purchase Tax (intermediate rates)
§ That, in addition to the first, second and third rates of purchase tax, there shall be a first intermediate rate and a second intermediate rate which shall be respectively one-quarter and one-half of the wholesale value of the goods and —
- (a) in paragraph (a) of subsection (1) of section twenty-one of the Finance Act, 1948 (which gives the Treasury power to make orders as to purchase tax), the reference to the rates of purchase tax provided for by the enactments relating to purchase tax shall include the new rates above referred to; and
- (b) subject to any order made by the Treasury under the said section twenty-one after the passing of any Act giving effect to this Resolution, in Part I of the Eighth Schedule to the Finance Act, 1948 (as amended), references to the first intermediate rate and to the second intermediate rate shall respectively be substituted for references to the first and second rates in Groups 1 to 7 and in Group 9 (b) (iii);
I propose, if I may, to deal also with the second Resolution dealing with Purchase Tax on fur gloves:
That, subject to any order made by the Treasury under section twenty-one of the Finance Act, 1948, after the passing of any Act giving effect to this Resolution, gloves made wholly or partly of fur skin (including any skin with fur, hair or wool attached) shall be comprised in paragraph (a) of Group 3 in Part I of the Eighth Schedule to the Finance Act, 1948 (as amended) and paragraphs (b) and (c) of that Group shall accordingly be omitted; and effect shall be given to this Resolution as from the fourteenth day of May, nineteen hundred and fifty-two.
§ The purpose of the first Resolution was explained last night, and, therefore, I shall confine myself just to reminding the Committee of the details of the classes covered. The reduction will apply to the rates of 33⅓ per cent. and 66⅔ per cent. on garments, footwear, gloves, cloth, and household textiles; that is, all goods at present covered by the D scheme, except for furs, which we shall be considering later today in a separate category. I was 1116 asked yesterday if the Resolution applied to furniture, and the answer is "No," because, as I indicated yesterday, furniture is at present exempt from Purchase Tax under the Utility scheme, and the question, therefore, does not arise until or unless furniture is brought in under the D scheme.
§ Mr. F. Blackburn (Stalybridge and Hyde)
Could I clear up one point about headwear? In the list of goods the right hon. Gentleman has mentioned as being covered by this scheme, he did not mention headwear, which comes under group 2 of the 1948 Act, and therefore, I think, should fall within the scheme.
§ Mr. Butler
In so far as hats come within the D scheme, they are covered. That is the answer about hats; but, of course, hats are divided into two categories, some of which come into the scheme and some of which do not; and those which come within the scheme are covered.
The only thing which remains for me to say on this is that it is desirable that the change should operate as soon as possible, and, therefore, it is desirable that it should take effect tomorrow, as I announced last night: that is 14th May. I would remind hon. Members who feel that they are desirous of discussing this matter that this is not the last occasion that they will have. Our Parliamentary opportunities on the Purchase Tax are almost unlimited, and we have adopted the procedure, to conform with our usual practice, of putting down on the Order Paper a new Clause, and we are proposing to take that Clause with the other new Clauses when we come to them, and that will be a further opportunity, of which, I hope, hon. Members will not take undue advantage, of raising this matter again.
With regard to the second Resolution, dealing with gloves made of fur; this seemed the most convenient way of dealing with what would otherwise be an injustice as between gloves backed with sheepskin, which were taxable at a rate of 33⅓ per cent., and gloves backed with other skins, which would have been chargeable at the full rate of 100 per cent. Being a Ways and Means Resolution, this deals with this financial difficulty, which was one of the anomalies in our scheme, to which I referred in earlier remarks yesterday.
1117 The effect of the Resolution would be to make all gloves liable to the lower rate of tax, which will now be reduced as the result of the first part of the Resolution to only 25 per cent. I hope that will be of some help to hon. Members, and to the hon. Member for Yeovil (Mr. Peyton) in particular, who have put down Amendments which we come to later on dealing with gloves. It is a very considerable concession. This is parallel to the case of fur-trimmed garments, and the new Clause is proposing to cover both. Gloves will be discussed later in the debate.
I conclude by repeating that the Government feel that this one-quarter reduction is a step in the right direction and will, so far as it can, help to some degree with the cost of living. It is the limit to which we can go, subject to one or two anomalies which will come up later this evening, and which we shall discuss under their separate heads.
Certain suggestions have been made that this was designed to help this or that section of the population. That is not at all the desire or motive of the Government. Our desire is to help all, to give an opportunity to the trade to have certainty, and to give an opportunity to all workpeople, whether they be purchasers or workers who produce these high-quality grade stuffs, not only to see some hope of their employment returning and being made more stable but, in so far as they are not exempted under this scheme—as so many of them are in the lower grades of price—to feel that in some direction it would give some hope to them in their very difficult times in these various trades.
I would remind the Committee that the D scheme was introduced to fulfil certain of our international obligations. It has been a complicated matter, and although this may not go so far as some would wish, there are obvious reasons why we cannot move further at this time. This is a step in the right direction, and I very sincerely hope that it will help trade, help the workers in these industries, help production, and help exports.
§ The Chairman
I gather the Chancellor has no intention of introducing another Bill under Standing Order No. 86.
§ Mr. Blackburn
Under the Resolution headgear would be covered by groups 1 to 7. Group 2 of the 1948 Act covers headgear, and paragraph (a) refers to "Articles not comprised in any of the following paragraphs of this group."My contention is that the paragraph covers all felt hats and straw hats, which would therefore come within this Resolution.
§ Mr. Hugh Gaitskell (Leeds, South)
First of all, I should like to ask the Chancellor one or two questions. He pointed out that furniture was not covered by this Resolution, on the ground that it was not included in the D scheme, which, of course, is so. But under Clause 7 of the Bill there is at any rate a prospect that it should be brought within the D scheme, and I ask the Chancellor to give us an assurance that if furniture is brought within the D scheme the lower rates of Purchase Tax will apply in the case of furniture, exactly as they apply in the case of textiles. I think I should have said "lower rate," because there would not be a higher rate in the case of furniture. That is my first question, and we should be glad to have that assurance.
Secondly, he referred to the fact that a new Clause was being put on the Order Paper implementing the announcement made last night. I should like to know whether he proposes that that new Clause should be discussed in its place in the ordinary way, or whether he has any idea of bringing it forward, so to speak, in the Bill. I quite agree with him that if we have that further opportunity, it does lessen the need for a lengthy debate now. Last night we had an opportunity of expressing our views more or less immediately on the Chancellor's proposals, and on reading what was then said I am bound to say that I see little reason to change my mind.
This is, of course, in one sense an advance. We have been pressing for the removal of Purchase Tax in present circumstances from textiles, and to the extent that there is a reduction which costs the Chancellor £17 million, or relieves the trade of £17 million, that is obviously something which we welcome. But the Chancellor will have seen that it has not been received with any great enthusiasm by the industry; that those who, I think, are best qualified to speak on this subject do not take the view that 1119 it is likely to stimulate buying to any great extent—which, after all, is our main argument for the removal of Purchase Tax. We can only hope, if this is the last major concession the Chancellor is to make, that they are wrong. I am bound to say, though, that it coincides exactly with what we felt yesterday evening.
As I pointed out yesterday, if the Chancellor had this money to give away, we feel that it would have been very much better to have given it away by raising the value of D in specific cases, and to some extent all round. I do not think I need repeat the arguments; they are simply arithmetical. In the one place, where we raise the value of D we give the same absolute benefit to every purchaser. If it is put up by £1, then to that extent it is one-third of £1 if it is 33⅓ per cent., and 5s. if it is 25 per cent.
Every purchaser of the article in question, at whatever price it is sold, whatever the quality, whether it is more luxurious or whether it is more essential in type, gets the same advantage; whereas in the Chancellor's proposals they all get the same percentage gain, which means that those who buy the cheaper article get less gain in absolute terms. That is perhaps a rather elaborate way of saying what we said last night, that our method of doing this would give a great deal more benefit to people with lower incomes, and we are sorry that the right hon. Gentleman has not taken our advice on that matter.
My last point is this. My hon. Friend the Member for Dartford (Mr. Dodds), in a powerful speech which followed the Chancellor's last night, pointed out that when the Chancellor said that the concessions we were asking for would cost something in the neighbourhood of £30 million or £40 million, he was really admitting that the D scheme itself was imposing a tax of £30 million or £40 million on those who buy top-class Utility goods. That is precisely our criticism of the way the D scheme has been introduced, and for that reason we shall continue to press—not only for that reason, because there are special cases as well—for an increase in the value of D for the various articles concerned. Nevertheless, we do not intend to divide the Committee on the Resolution, and I would suggest to my hon. Friends that we might now proceed to further business.
§ Mr. Ralph Assheton (Blackburn, West)
I do not want to say more than a very few words, but it would be ungenerous if I did not thank the Chancellor for what he has done. He has given us only a quarter of what we asked for, but we are grateful to him. We think that, not only will it help trade to some extent, and therefore employment, but it will also be a valuable assistance to our export trade, which is perhaps the most important point of all. Any reduction of tax which lowers the cost of living must be welcome to every Member of this House. I was very glad to hear the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) say that he proposed to support this Resolution.
I do not agree with him that it would have been better to raise the D scheme levels all round, because that would not have helped the quality goods and the export trade as much as the present method helps them. Some months ago—it may be nine months ago now—the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) suggested that people ought to stop buying textile goods. I think that was a very unfortunate remark; let us forget about it now. I should like to say that I hope that people all over the country will decide that this is a good opportunity of buying such goods. The summer is coming on and people will be wanting new frocks and other clothes, and this is an opportunity for them to take advantage of the lower prices which are now to be made available.
§ Mr. George Porter (Leeds, Central)
May I ask the right hon. Gentleman, when he says that furniture does not come within the ambit of the Resolution and is, therefore, not liable to the concessions, am I right in assuming that the use of materials which are subject to Purchase Tax in the production of furniture will be subject to the concessions in the Resolution?
§ Mr. Dryden Brook (Halifax)
I should like to draw the attention of the Chancellor to a series of omissions from this Resolution. It has been mooted that this Resolution arises from a desire to help the unemployment situation in the textile industry, but the Resolution expressly takes out of the scheme one important section of the wool textile industry. The carpet grades are expressly omitted. Unemployment in the carpet section of the 1121 wool textile industry is as bad as, or worse than, in any other section at the present time, and I should like to know what are the Chancellor's intentions about rectifying this omission by applying this reduction of tax to carpets?
§ Mr. R. A. Butler
The right hon. Member for Leeds, South (Mr. Gaitskell), raised the question of the new Clause. Our intention is that it should be discussed in its normal place under the new Clauses. He also raised the question of furniture. I should not like to give any undertaking in advance of the scheme being made for furniture. That is to say, the matter is at present being discussed, as I have indicated, with the trade, and I think it would be irresponsible to say anything more in advance in answer to the point made by the right hon. Gentleman or by the hon. Member for Leeds, Central (Mr. Porter).
But we should certainly bear in mind not only the atmosphere in which these matters have been considered but also the concessions which have been made in relation to the D scheme, when we consider the position and nature of the furniture scheme; and as that scheme will have to come before the House in an Order, the position would be that hon. Members would have an opportunity of examining it at the time; but the fact that these representations have been made by the right hon. and hon. Members concerned will have its effect upon us when we are examining the nature of the furniture scheme and if and when we decide to make an Order.
§ Mr. Gaitskell
Has the right hon. Gentleman definitely decided that there shall be a D scheme for furniture?
§ Mr. Butler
No. As I indicated, that matter is at present being considered. If and when—to which careful words I will adhere—a decision is made, the fact that these representations have been made, including the right hon. Gentleman's reference to 33⅓ per cent., will be borne in mind.
I realise the difficulties to which the hon. Member for Leeds, Central, referred and also the difficulties raised by the hon. Member for Stalybridge and Hyde (Mr. Blackburn) in his reference to hats. The exact answer to that—I think I was on the whole right in my original answer—is that all hats chargeable under group 2 1122 will get this relief, and the only hats excepted are those made of fur and chargeable at 100 per cent. As it is not yet our general practice to wear such hats—although I know they exist—I hope this concession will be of some value to the common man.
The hon. Member for Halifax (Mr. D. Brook) raised the question of carpets which were outside the Utility scheme and which were, therefore, not considered in the D scheme, and are not under this general umbrella. I realise the difficulties in connection with them, and no doubt further reference to them will be made in the coming hours.
My right hon. Friend the Member for Blackburn, West (Mr. Assheton), made some remarks which I found very agreeable. I should like to repeat what I said last night. He has been of great service in putting forward the views of the textile industry and its difficulties, in company with many other hon. and right hon. Members. The position is, I believe—as he has rightly suggested—that he would have liked to have gone further. So would many of us have liked to have gone further, but I have always maintained to the Committee that this is not the only solution of the difficulties of the trades involved—and this is really the answer to the general remarks made by the right hon. Member for Leeds, South.
The right hon. Gentleman forgets in his general observations about this Ways and Means Resolution—which I do not wish to go over again in the light of day, since we referred to that last night—that the object of the scheme was to make a graded tax over the old blind spot of which all traders were complaining because they were not able to export or make their articles in that blind spot.
In overcoming that difficulty, we have had to lap over into the cheap Utility grades, but we have still attempted to keep a large proportion of the Utility grades free of tax. Whenever one makes reforms, it is bound to hurt someone, and I am only sorry that in regrading the tax it has had this effect. I believe that by keeping a large proportion of these goods outside we have still benefited those in the lower income groups.
§ Mr. David J. Pryde (Midlothian and Peebles)
I should like to draw the Chancellor's attention to the cheapest form of carpets—tapestry. This is a small section of the industry which requires particular consideration as a result of our relations with Australia and New Zealand. I hope that the Chancellor will consult with the President of the Board of Trade in regard to that section of the industry.
§ Question put, and agreed to.
§ Purchase Tax (fur gloves)
§ That, subject to any order made by the Treasury under section twenty-one of the Finance Act, 1948, after the passing of any Act giving effect to this Resolution, gloves made wholly or partly of fur skin (including any skin with fur, hair or wool attached) shall be comprised in paragraph (a) of Group 3 in Part I of the Eighth Schedule to the Finance Act, 1948 (as amended) and paragraphs (b) and (c) of that Group shall accordingly be omitted; and effect shall be given to this Resolution as from the fourteenth day of May, nineteen hundred and fifty-two.—[Mr. R. A. Butler.]
§ Resolutions to be reported Tomorrow.
§ Committee to sit again Tomorrow.