HC Deb 27 May 1952 vol 501 cc1280-96

(1) The Treasury may by regulations provide for mitigating the financial loss to persons who own goods for the purpose of resale where purchase tax has become chargeable in respect of those goods prior to, and of an amount exceeding the tax (if any) chargeable in respect of goods of the same description and wholesale value by reason of, effect being given to any changed provisions whereby—

  1. (a) goods of that description cease to be chargeable goods; or
  2. (b) the rate at which tax is chargeable in respect of goods of that description is reduced; or
  3. (c) goods of that description become included in a prescribed list for goods of that class; or
  4. (d) the amount specified in such list in relation to goods of that description is increased.

(2) Regulations under this section may contain incidental or supplementary provisions and may in particular provide—

  1. (a) for defining the classes of persons qualifying for payments;
  2. (b) for computing the quantity of goods of any description or wholesale value in respect of which payments are to be made;
  3. (c) for paying, to those persons and in respect of those goods, out of monies received by the Commissioners of Customs and Excise on account of purchase tax, sums not exceeding the amount of tax which was chargeable in respect of those goods less the amount of tax (if any) chargeable in respect of goods of the same description and wholesale value under the said changed provisions;
  4. (d) for requiring, as a condition precedent to receiving payment in respect of any goods, an undertaking from the recipient that he has reduced the price at which he offers for sale goods of the same description and wholesale value by an amount not less than that by which the tax chargeable in respect of goods of that description and wholesale value has been reduced;
  5. (e) for the imposition of penalties in respect of any contravention of or failure to comply with the regulations, so, however, that no person shall by virtue of this paragraph be liable for any offence to imprisonment for a term exceeding twelve months or to a fine exceeding five hundred pounds.

(3) This section shall be construed as one with Part V of the Finance (No. 2) Act, 1940.—[Mr. Osborne.]

Brought up, and read the First time.

9.30 p.m.

Mr. Cyril Osborne (Louth)

I beg to move, "That the Clause be read a Second time."

The Clause has been supported by more than 100 hon. Members. It proposes to give the Treasury power to grant a rebate on goods that are in stock and on which Purchase Tax has been paid, when Purchase Tax is altered or taken off. This is a matter upon which shopkeepers feel deeply. The justice of their claim has been admitted by previous Chancellors, and they want reassurance from the present Chancellor.

I would remind him that there are about 750,000 shops in the country of which about 425,000 sell goods that are subject to Purchase Tax. There are about half a million people affected by the proposal. My right hon. Friend will remember that shopkeepers are unpaid, and very often unthanked, tax collectors. Many of them find trade more difficult now than they did two years ago, and they feel that if they are not given reassurance in this way it may not be merely a matter of justice but of survival for some of them.

They are in a special class among taxpayers. I suppose there are no other local taxpayers who not only pay taxes in advance but actually go to the bank in many cases to do so. I plead very hard with my right hon. Friend to look favourably upon my proposal. If Purchase Tax were taken off or reduced, the public would expect prices to be reduced at once, and therefore if the shopkeepers have no rebate a reduction of the tax means a dead loss to little men who can ill afford to face it.

I should like to give one example from my constituency. About three months ago one of my constituents came to my political surgery and said he had goods in his shop on which he estimated he had paid £2,000 Purchase Tax. He owed the bank about £5,000. I assume that Purchase Tax will not come off straightaway, but if it were to do so that man would suffer a £2,000 dead loss which he could not afford. He is by no means an isolated case.

May I remind the Chancellor of the history of this case? In January, 1949, a deputation of four Members of Parliament and four trade representatives saw the then Financial Secretary to the Treasury the right hon. Member for Battersea, North (Mr. Jay), and they put their claim to him. He saw them on behalf of the then Chancellor, Sir Stafford Cripps. He was very sympathetic, and said that the Chancellor had promised that something should he done.

Mr. Jay

For the sake of accuracy I must point out that, as far as I remember the case, we said we would consider the matter and see whether something could be done. I do not think we made a promise of something positive.

Mr. Osborne

I propose to quote both the late Sir Stafford Cripps and the right hon. Gentleman. I shall not mislead him. He promised something to be done. It was a very definite promise three years ago. It is no good the right hon. Gentleman shaking his head because I have his words here.

These people were taken over the Customs and Excise to find a solution. The late Sir Stafford Cripps said: I recognise that there is a problem about retail stocks, when the time comes for a reduction in the level of the Purchase Tax. This is the definite promise: I shall do my best, therefore, to work out during this year"— Is that definite enough? some means for meeting this problem, and thus getting rid of, or at any rate diminishing, whatever hold-up of trade in articles subject to Purchase Tax can be attributed to the financial effect on traders of changes in the tax."—[OFFICIAL REPORT 6th April, 1949: Vol. 463, c. 2095.] I ask the present Chancellor to keep the promise made three years ago by the late Sir Stafford Cripps to the small traders. The justice of the claim is in no doubt. The then Chancellor merely said that we had to find ways and means of bringing it about.

As a result of that interview, the trade representatives went away rather hopeful and rather satisfied. They took the promise made to them in good faith. There were a series of meetings between the trade representatives and the Customs and Excise representatives, and two schemes were produced. One was the A scheme which the Government said it was prepared to accept. But the A scheme affects only articles bearing separate numbers or distinctive marks which can quite freely be traced individually and it covers only about 5 per cent. of the total trade and does not affect the real problem facing the trader, although the traders were very grateful for the promise under the A scheme.

Scheme B was rejected by the right hon. Gentleman. He said that he had made no definite promise, but when the right hon. Gentleman the Member for Battersea, North (Mr. Jay) was Financial Secretary, he said: Discussions have shown that over the greater part of the field the arrangements necessary for a rebate on the tax would be excessively complicated and would involve an inordinate amount of work for all concerned. Even when the task had been undertaken the results would bear no precise relations to the circumstances of individual traders and would give rise to many inequalities and complaints. There is, however, a limited field in which there seems to be a better chance of finding a practical solution. He was referring to the A Scheme, and I would remind the right hon. Gentleman of this when he says he gave no definite promise: The possibilities as well as the justification for a rebate are in my view to be found in this limited field. That is watering down very considerably the definite promise made by Sir Stafford Cripps to the traders and to the House in his Budget speech covering the whole field. The right hon. Gentleman went on: My right hon. Friend will await the outcome of further discussions before coming to a final decision."—[OFFICIAL REPORT, 20th October, 1949; Vol. 468, c. 53–4.] That promise was made three years ago, but nothing at all has been done. In the meantime the traders feel that this danger overhangs them and that it is something which threatens their very existence.

My complaint about the previous Chancellor and the previous Financial Secretary is that they accepted the justice of the claims of the traders but that they said that no scheme for carrying out that claim was feasible; and that they threw the onus of producing a scheme on to the traders.

My contention—and I put this to my right hon. Friend—is that once the House has admitted the justice of a case, a Department have no right to say that they cannot find a way of carrying out that justice. Departments will always say, "It is not easy." They are always conser- vative, they do not want changes. They are no different from the executives of many private businesses. They would rather have the devil they know than somebody they do not know.

The House having accepted the justice of the case, a Department have no right to override the decision of the House. It is their job to find a way. I am told that some years ago, when P.A.Y.E. was first discussed in the House, there was the same reaction by the Gentlemen at the Box, that "It is not possible."

Mr. Assheton

That was the Revenue.

Mr. Osborne

I do not care whether it was the Revenue, or what it was. The Departments' point of view was, "It is too difficult. We cannot find out equitable way of carrying out the decision of the House." Then one day, when the then Chancellor of the Exchequer was told that he had got to find a way of carrying it out, they found a bright boy in the Treasury who produced a scheme. The Chancellor ought to find another bright boy now who can find a way of carrying out the justice of the scheme for the small trader.

Again, following the discussions with the Customs and Excise, the Chairman said to the trade representatives that Scheme B was unworkable and, therefore, must be excluded for the time being. He added, however, that the then Chancellor did not exclude the possibility of finding a satisfactory solution to the whole problem. That was on 9th November, 1949. Again, however, he threw the onus of finding a proper scheme back on to the traders.

I submit to my right hon. Friend that scheme B, which is really the ante-dating scheme, could be worked. It does not give absolute justice it does not give perfect justice—there would be anomalies under it between one class of trader and another and between trade and trade, but at least it would be rough justice, and what the traders feel is that rough justice is better than no justice at all, and that once the Treasury were told that they had got to find a way of making rough justice into perfect justice, they could do so.

Because the traders were dissatisfied with the treatment they had received from the previous Financial Secretary to the Treasury, a Clause very similar to the present one was put down in 1950. Unfortunately, however, it was ruled out of order and was not discussed. Then, last year, there was put down an identical Clause except for the difference of the word "shall" for "may." I am fortified in my submission to the Chancellor in that no fewer than five Members of the present Government, including the Financial Secretary, supported that Clause. Unfortunately, it was not called, otherwise I should be quoting a much more brilliant speech from my hon. Friend in support of the Clause than I could make myself. To some extent I am, as it were, fathering his stepchild.

And so I ask the Chancellor to take these powers, so that when he thinks the time is appropriate—I am not asking him to reduce Purchase Tax at the moment—and when he can afford it, he will have the power to do justice to this small group of people.

9.45 p.m.

Mr. Joseph T. Price (Westhoughton)

The hon. Member is doing very well indeed. He is putting up a good case. But will he explain, when telling us about this formula which a bright boy in the back-woods—who has to be discovered—is to produce for the Government, how he is to draw the line between the small trader and the large trader? I understand that the hon. Member is directing his remarks to the case of the small trader.

Mr. Osborne

If I mentioned the small trader only I am sorry; I meant all traders, because I understand this Clause is supported by representatives of the Cooperative Society, and I should never call the Co-op a small trader. I am pleading for all traders, and I would remind the Committee that in the negotiations with the right hon. Member for Battersea, North, there were 26 national associations represented. They are still pressing today for what they consider to be justice for their members whether they are big or small traders.

I would plead especially for the little man, because he can least afford the financial danger. He has not the resources to meet the difficulty which faces him. I would beg the Chancellor to take the powers to do for traders both big and small what the previous Chancellor promised he would do three years ago. I am certain that if he does that he will be doing justice to a very good set of people who ought to be helped when he has the financial resources available to assist them.

Dr. Horace King (Southampton, Test)

I wish to support the principle of the Clause. It does a simple act of justice to a group of citizens. The chamber of commerce in my own town and most of the associations of traders have been concerned about this for the past two or three years. I raised the case of these men with the Financial Secretary in the last Government and I must confirm the statement made by the hon. Member for Louth (Mr. Osborne). My impression of my conversation with the Financial Secretary was that he accepted the justice of the case, and that the problem was one merely of the technique of carrying it out.

It would seem to me manifestly unfair that a group of people who have acted as unpaid tax collections for quite a long time should be penalised when the Purchase Tax is removed by having had to pay Purchase Tax and then having to sell goods later at a cheaper price, because the Purchase Tax has been removed. If, as seems likely, we are moving into a time when Purchase Tax may be reduced, hon. Members on both sides of the Committee should persuade the Chancellor to make preparations for that day, and to treat these people justly.

Captain J. A. L. Duncan (South Angus)

I support this new Clause. This is a standing grievance among both small and large traders in these days when Purchase Tax is tending to be reduced, rather than maintained. The position arose a couple of years ago when Purchase Tax was more or less static, but it arises more and more now, when Purchase Tax is tending year by year to be reduced, and when we hope that it will be further reduced in future years.

My hon. Friend the Member for Louth (Mr. Osborne) made an extremely able and persuasive speech, but I do not think he explained how the Purchase Tax works on the retail trader. Purchase Tax is payable by the wholesaler, and the goods purchased by the retailer have to be bought by him plus the Purchase Tax. If he can sell at the price plus Purchase Tax, he can get his tax back, but, if the goods are unsaleable, or if they have to be reduced in price, or the Purchase Tax itself is reduced after the goods have left the wholesaler, then it is almost impossible for the retailer to get the tax back. It is for those reasons that we are most anxious that a scheme should be found for compensating the retailer for what is the unavoidable loss which falls on him through no fault of his own.

I would add that the new Clause provides that the Treasury may by regulation provide for mitigating the financial losses to persons who own goods for the purpose of resale where Purchase Tax has become chargeable…. It leaves the matter open to the Treasury and the Government to approve a scheme and issue regulations. It is not obligatory on the Treasury to do so if they cannot find a scheme. It still leaves it open to the Treasury to produce a scheme in consultation with the National Chamber of Trade and other retail organisations. If one can be found, only in that case will the regulations be necessary to put it into immediate effect. We do not want to wait until next year before we get it; we want to get it as soon as possible, and as soon as a scheme can be worked out which will be practicable, fair and just to all sides. It is on those grounds that I support the new Clause.

Mrs. Barbara Castle (Blackburn, East)

I wish to support the Clause moved by the hon. Member for Louth (Mr. Osborne), and to say, first, that I am very grateful, despite my unobtrusiveness, that I have managed to catch your eye, Mr. Thomas.

I support this Clause because it seems to me to be based upon common justice, and also because this is an appropriate moment at which the Committee should think very seriously on this matter. During the proceedings on the Finance Bill, we have been discussing Purchase Tax in a context which was much more than a purely fiscal one. We have been discussing Purchase Tax in terms of all kinds of social and economic considerations, and particularly the problem of unemployment and how Purchase Tax might be reduced as a step towards relieving unemployment. In fact, we have in our discussions on Purchase Tax been giving one of the main arguments in favour of the demand for a tax rebate, because we have been proving that the Purchase Tax is in a special category.

It has sometimes been asked why a rebate scheme should be given in connection with Purchase Tax when it is not given in connection with, say, the beer or tobacco duties. The answer is that those duties are levied for purely revenue considerations, whereas very many other considerations affect the levying of the Purchase Tax. We therefore have a situation in which at any time and for all kinds of reasons a Chancellor may be compelled to alter the rate of the Purchase Tax, with disastrous effects on retailers.

We have recently had an example in the shops of what happens when we do not have a rebate scheme. The grave uncertainty as to what was going to happen regarding the Purchase Tax has meant that retailers have been afraid to carry stocks of any size because, failing the introduction of a rebate scheme, they stood to lose very heavily if Purchase Tax were suddenly to be decreased. We have had an absolutely ridiculous situation which we in the textile areas particularly deplore, a situation in which manufacturers' stocks have been piling up while stocks in retail shops have been very low.

Anybody who has visited retail shops recently to buy textile goods knows that, despite the so-called glut of textiles in this country, there has been a very poor choice in the shops. The possibility of stimulating demand has been reduced. Why? Because every retailer in the country knew that a great battle was going on in this Committee over Purchase Tax in relation to the unemployment problem in Lancashire, and that if that battle was won they stood to lose heavily in terms of the tax they had already paid on their stocks.

Just because I am one of those who has pressed both on social and employment grounds for Purchase Tax to be reduced in this Budget, I feel I have a special responsibility to those retailers who would have stood to suffer had I been successful in exerting the pressure which I and my colleagues have been bringing to bear. I therefore suggest to the Financial Secretary that we in this Committee have a special responsibility towards retailers.

If Parliament is to play about with the Purchase Tax, as we do play about with it, altering it a bit here one year and a bit somewhere else another year, and if Parliament is going to use this tax for other than revenue purposes, then Parliament is under a moral obligation not to place on the retailers the burden of always carrying the financial effects of such changes.

We know that Purchase Tax is not only changed in every Budget, but that it is sometimes changed even in the middle of a Finance Bill itself. What state of mind must retailers be in at the moment when they do not know whether some further change will even be made on the Report stage of this Bill? How can we get any confident buying in by retailers, and how can we hope to clear the pipeline as long as this uncertainty hangs over the heads of retailers?

I suggest that in the interests of the community as a whole we ought work out a scheme whereby if Parliament for its own purposes suddenly decides to make a change in the Purchase Tax, the retailer does not feel the draught of that sudden change. The introduction of the D Scheme also means that in every Budget we shall have new arguments about the level of the D line. There will be manoeuvres for changes here and there, and this will protract an uncertainty which will be extremely dangerous for the manufacturers, on the one hand, and unpleasant for the consumers on the other unless we give the retailers this safeguard.

10.0 p.m.

There is one other consideration. We are now very much in a buyers' market. We are now very much in a situation in which clearly it is quite impossible for any retailer not to pass on immediately to the consumer any reduction in tax which this Committee and the House may make. He must do it. He is already compelled to reduce charges here, there and everywhere, and in a buyers' market it is impossible for him to hope to recoup himself for the taxes he has paid on stocks he has already bought.

We are now in this dilemma, that any substantial relief we can give on Purchase Tax as a result of efforts on both sides of this Committee spells ruin for many retailers. I had a case brought to my notice by the chamber of trade in my own constituency in which it was pointed out that one member of the chamber had £5,000 worth of stock on 1st February. That was not a very large stock because of the uncertainty, but the tax he had paid on it amounted to nearly £2,000 and if our campaign to have Purchase Tax on textiles abolished had been successful he would not have been in a position to recoup himself.

Frankly, it is not fair to an important section of the community to chop and change on Purchase Tax and to put retailers in that position. I know that my right hon. Friend the Member for Battersea, North (Mr. Jay) always accepted the justice of the principle that the argument has been about the administrative possibilities. The advisers of the Treasury say it is administratively impossible. I suggest that the Committee should give one word in answer to that—"Nonsense." Civil servants are always being asked to do the administratively impossible. It has been done time and time again, and must be done. Three-quarters of government is the mastery of the impossible. It could be done here if this Committee insisted upon it.

During the war we had many examples of public officials paying out public money under conditions of great stress and urgency and having to do it without incurring too many abuses. The National Assistance Board had to make vast payments to thousands of people as the result of bomb damage. It was done successfully, though it might have been said that it was administratively impossible to avoid abuses in those cases.

If Parliament gave the word the administrative answer could be found to this problem, as it has been found to many other administratively difficult problems. The hon. Member for Louth has told us of the distinguished support that a Clause similar to this had in the debates of 1951. I turned up the Clause put forward in a debate on the Finance Bill of 1950 which, as the hon. Member for Louth said, was almost identical with the one we are pressing now. Of the six names put to that Clause in 1950 five are now very prominent members of the present Government.

The six were the right hon. Gentleman the Secretary of State for the Colonies, the right hon. Gentleman the Leader of the House, the right hon. Gentleman the Minister of National Insurance, the right hon. Gentleman the Minister of Works, the hon. Gentleman the Under-Secretary of State for Air, and the hon. and gallant Member for Lewes (Major Beamish). What a distinguished array of talent. Now they are enthroned in the seats of power and office and we can confidently ask the Financial Secretary today to do what he believed in yesterday.

Mr. Boyd-Carpenter

First of all, may I congratulate my hon. Friend the Member for Louth (Mr. Osborne) upon his good fortune in securing that this new Clause was actually moved on this occasion? I, of course, agree with him, and with a good many other hon. Members who have spoken, that this matter arouses outside the House of Commons a great deal of strong and very understandable feeling, because it is a fact that in the event of any substantial reduction being made in Purchase Tax, a considerable degree of hardship can follow to the retailers concerned. The difficulty which has so far prevented any action in the matter has been that to which several hon. Members have referred—of devising a practicable scheme for dealing with it.

As I understand it, the basis of the difficulty is the different turnover period which exists in respect of different types of goods, or in respect of the same type of goods in different periods. It is that difficulty that has so far eluded the capacity of the many people who have given their minds to consideration of the difficult matter of how to evolve a scheme which was not, in fact, so riddled with anomalies, injustices and unfairnesses as to make its application somewhat difficult to justify.

That has been the practical problem with which a good many people have been concerned over the last few years and that is the difficulty with which the hon. Lady the Member for Blackburn, East (Mrs. Castle), in her previous incarnation as Parliamentary Private Secretary to the President of the Board of Trade, must have come into contact in connection with her official duties.

As my hon. and gallant Friend the Member for Angus, South (Captain Duncan) pointed out, the Clause this year is not mandatory but permissive in its form. It does not compel the Treasury to make Regulations; it merely empowers them so to do. As I understand it, that would impose no obligations upon my right hon. Friend to make any Regulations at all and that, indeed, was my hon. and gallant Friend's argument, as I understood it.

On the other hand, it would be rather less than frank with the Committee to accept powers if one really had a serious doubt as to one's capacity to make use of them. It would be a little lacking in the honesty with which any Government ought to confront this Committee, to say, "We will take the powers. We do not believe that we can do anything with them: but we will take them." I do not think that would be quite the way in which a Government should conduct itself because, although there would be no legal obligation, many people in this Committee and outside would think there was a moral obligation.

All the same, my right hon. Friend is not content simply to leave the matter as it now stands. He has given a good deal of thought to this difficult problem on which—as hon. Members on both sides of the Committee are aware—a considerable number of representations have been made to us both by hon. Members and persons outside. Faced as he is with the practical problems to which I have referred, my right hon. Friend would like to deal with the matter in these ways; he would like to refer both the principle and the possibility of devising a satisfactory scheme for examination by an independent committee.

He has been considering the matter, and the committee's terms of reference—though I am not in a position to announce them tonight—would be so drafted as to cover both aspects of the matter to which I have referred, namely, the principle and the possibility of working out a satisfactory scheme. My right hon. Friend has had in mind the appointment of a wholly independent chairman. He is considering possible names, but I am afraid I cannot make a statement at the moment because the matter is still in the formative stage; though the decision to appoint a committee has already been taken, which is why I am in a position to make this statement to the Committee tonight. As soon as the precise terms of reference have been drafted and the selection and acceptance of their appointments by the independent members of the committee have been gone through, my right hon. Friend will take the earliest opportunity to make a statement.

Faced as he is with this very difficult issue—faced, also, with the real feeling on the matter and, indeed, with many of the aspects of the merits of the matter and with the difficulties which have been encountered over the last few years—my right hon. Friend considers that the best thing to do is to get it reconsidered in a fresh way by an outside committee under an independent chairman.

Mrs. Castle

The hon. Gentleman says that he wishes to refer to this committee both the principle and the administration sides of the problem. Does that mean that he does not accept the justice of the demand?

Mr. Boyd-Carpenter

Unless my right hon. Friend wanted to do something about this he would be wasting his time and that of this Committee in appointing the committee at all.

Mrs. Castle

What about the principle?

Mr. Boyd-Carpenter

The principle involved is somewhat complex in its applications, as the hon. Lady will know from her own official experience. We feel that it is much better to have the whole matter put before an independent committee, because, as the hon. Lady will appreciate, solutions cannot be arrived at independent of the principles of the problem which it is desired to solve. Indeed, if they were, they might be wholly irrelevant to the issue. It seems better that the whole matter should be before an independent committee. I can assure the hon. Lady that she is not on a good point there.

Mr. F. Harris

Could my hon. Friend say how long it will take this committee to report? Is it a matter of a few months or a very long time?

Mr. Boyd-Carpenter

Naturally, we want a solution as quickly as possible, but my hon. Friend, who is familiar with the problem, knows that it is not one to which it has been possible to find a snap solution.

Mr. Coldrick (Bristol, North-East)

In the first place, I should like to thank the Financial Secretary for the assurance he has given that something will be done in this matter. I was somewhat surprised by the great enthusiasm which seems to be displayed in certain quarters this evening, having regard to the fact that there was such a lack of enthusiasm in years gone by.

Mr. Osborne rose—

Mr. Coldrick

I am not referring to the hon. Member for Louth (Mr. Osborne).

Mr. Osborne

At least our enthusiasm has produced some result, which is what the hon. Gentleman's enthusiasm failed to produce.

Mr. Coldrick

The hon. Gentleman misunderstood me. In the first place, it is very seldom that I am in agreement with any proposition which he makes, but on this occasion I am in hearty agreement with the proposal which he has submitted. During his speech he spoke of the small trader and seemed to imagine that the Co-operative movement was something totally different. The only fundamental difference is that, whereas he was speaking of small traders, we are small people in big business. We have as much interest in this proposition as he has.

I admit that I have taken many deputations on behalf of the Co-operative movement and private traders' associations to our own Chancellor of the Exchequer and Financial Secretary upon this matter. In the assurances which they gave, as I understood them, they were prepared to admit the justice of our claim but they constantly indicated that the responsibility rested upon us of evolving a scheme which would be satisfactory. Unfortunately, we never succeeded in finding one which was generally acceptable.

The position, briefly, has been this. This is a tax upon the consumer, but in practice the retail trader proceeds to pay the tax to the wholesaler at the time when the wholesaler transfers the goods. We often find the anomalous position in which payment is made, but by the time the goods are received the tax has either been diminished or abolished, so that the retailer suffers and is compelled to pay the tax without the remotest possibility of re-claiming it.

10.15 p.m.

In addition, it has been abundantly clear to us that the trader, whether he is a large or a small trader, on a large number of goods upon which tax has been paid loses from the point of view of recovering the tax because the goods have been damaged or soiled, or fashions have changed. For some reason of that description it has been impossible to recover the tax from the consumer. Very often, as the hon. Gentleman pointed out, when the tax was paid it was impossible to sell the goods before the tax was removed or reduced.

I expect the Chancellor knows perfectly well that it is estimated that in the country there are about £60 million worth of goods that are carrying Purchase Tax, and in the Co-operative movement there are about £3 million worth of goods that are carrying Purchase Tax. Therefore, we are substantial losers. I would endorse this claim at this particular moment because the difficulties have been accentuated by the acceptance of the D line or the Douglas Scheme, because a large number of goods that have hitherto carried the full Purchase Tax have had the tax reduced by virtue of the new scheme.

I have made inquiries from Co-operative societies—small ones, medium ones. and comparatively large ones—and find that they sustain losses because of the adoption of the D Scheme ranging from £380 to £3,500. I submit that no Chancellor is justified in imposing this burden on the distributors when the distributors are not supposed to be the object of the tax.

The Financial Secretary has indicated that it is administratively difficult to carry this out, but it would be a very dangerous thing if that principle were applied to the criminal courts, because I could well imagine a judge saying that, although he did not believe in hanging innocent people, as it was difficult and cumbersome to prove innocence it would be easier to hang a man. It would seem to me that everybody is agreed that a grave injustice is being imposed on trade, and I sincerely hope that the Financial Secretary will be guided not only by people who deal in the abstractions of the Treasury when he sets up the committee—not merely by theoreticians—but by people who have found difficulties in carrying out the tax—difficulties far greater than those they would find in removing the difficulties of administration.

Mr. Assheton

I rise to congratulate my hon. Friend the Member for Louth (Mr. Osborne) in bringing forward this admirable new Clause, and I should like to congratulate the hon. Lady the Member for Blackburn, East (Mrs. Castle) for having the wisdom and good sense to add her name to such a sound Conservative new Clause. I should, finally, like to thank the Financial Secretary for what he said on behalf of the Chancellor.

Mr. J. Hudson

Will the committee that is to be set up in its findings take the evidence of the Co-operative movement into account? Will any attempt be made to include the Co-operative movement in the committee?

Mr. Sidney Marshall (Sutton and Cheam)

Is it different from anybody else?

Mr. Boyd-Carpenter

I cannot say anything more about the membership of the committee, but, obviously, the Cooperative movement is concerned in this matter.

Mr. Osborne

In view of the submission made by the Financial Secretary, and on the understanding and in the hope that, if it is to be done, it is done quickly, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.