HC Deb 28 October 1952 vol 505 cc1880-7

10.37 p.m.

The Financial Secretary to the Treasury(Mr. John Boyd-Carpenter)

I beg to move, That the Purchase Tax (No. 2) Order, 1952 (S.I., 1952, No. 1423), dated 29th July, 1952, a copy of which was laid before this House on 31st July, be approved. This is a Purchase Tax Order, and, therefore, one subject to the affirmative Resolution procedure. The effect of it is to place beyond doubt the fact that radio relay apparatus is treated in the same way, for Purchase Tax purposes, as the ordinary wireless receiving set or the radio-gramophone.

There has been a great development of radio relay reception apparatus in recent years, particularly in large blocks of flats. The ordinary type of relay reception apparatus has been treated as being subject to the same rate of tax as the ordinary receiving set, but some doubt has arisen as to whether certain developments of this relay apparatus are covered by the law. One part of this Order is, therefore, designed to put the matter beyond doubt and to make clear that what has been assumed to be the law is, in fact the law.

But on one point the Order goes beyond that, by including the loud speaker. The reason for that inclusion is that radio relay reception apparatus can, I am informed, consist of a piece of machinery amounting to no more than a loud speaker and the necessary switches. It is, in performance and effect, a means of receiving radio transmissions and, therefore, when we are here putting beyond doubt the position of one type of relay reception apparatus, we thought it right to include also this particular type.

The effect of the Order, therefore, is to ensure that this type of apparatus is treated for Purchase Tax purposes in the same way as the ordinary wireless set. The technical difficulty arising is that radio loud speakers can be used not only for ordinary domestic radio reception, but can also be included, as, of course, they are, in the public address systems often installed in factories and public halls.

After discussions with the trade we have come to the conclusion that the best practical way of distinguishing between the types of loud speaker with a view to including within the purview of the tax that which is essentially a domestic radio set or part of it and excluding that which is part of a general public address system is to define it as the Order does, namely in this way. It provides that in respect of what is technically called the cone type of loud speaker, that is to say the ordinary common or garden radio loud speaker, the line of demarcation shall be a diameter of 12 inches. A loud speaker of a diameter of less than 12 inches shall be treated as a domestic set and shall be liable to tax. That of a diameter larger than 12 inches shall be treated as a public address system and so be immune.

The Order also provides that other types of loud speaker, notably that described as the pressure type, shall be treated as a public address system and so be tax free. After detailed discussion with the trade we have come to the conclusion that that is the most practical line of demarcation.

The effect of this Order in general, therefore, is to remove the possibility of a discrepancy and of unfairness between the different types of radio reception apparatus. Whatever hon. Members may think of the Purchase Tax in general—and it is not a tax which is likely to suffer from overdoses of popularity—it is essential that it should operate as fairly as possible between competing types of products. It is largely with that object that we have introduced this Order to treat radio reception for all purposes as subject to the same rate of tax.

10.42 p.m.

Mr. C. R. Hobson (Keighley)

I am sure that we on this side of the House are grateful for the Financial Secretary's lucid explanation of this Order, but there are one or two questions which we need to ask before we can agree to its being passed. As I understand, this Order lapses after 28 days by virtue of Section 21 (5) of the Finance Act, 1948. Therefore, time is running short in more ways than one for Her Majesty's Government, because there is not much time left for introducing this Order.

I assume that the reason why a negative Resolution was introduced originally in this Act was so that the provision might become operative immediately, otherwise it would have cleared the shelves of all apparatus that would become subject to Purchase Tax. Meanwhile, the Order is governed by the necessity arising from the Finance Act for an affirmative Resolution to be brought forward.

I want to ask one or two questions about the Order. It was made on 29th July, 1952, was laid before the House on 31st July and came into operation on 4th August, so it would appear that there was a gap of three days. It is true that those three days included the Bank Holiday weekend. Nevertheless, one can visualise circumstances where, if an Order did not become immediately operative, it would be possible for the sale to take place quickly of apparatus on which the Purchase Tax was to be increased. I should like to know, therefore, why there was that gap of three days.

The Preamble to the Order states the powers under which the Order was made. Paragraph 1, amends Group 18 in Part 1 of the Eighth Schedule to the Finance Act, 1948, which lists the apparatus to be taxed, and that certainly does not mention some of the apparatus which has been stated by the Financial Secretary to be subject to tax. Indeed, the Order itself does not mention the apparatus that is to be subject to tax. We should like to know the reason, particularly with regard to the 12 in. diameter loudspeaker of which the hon. Gentleman spoke.

Group 18 in the Schedule to the original Act mentions: (a) wireless sets of the domestic, portable or road vehicle types (including kits of parts, whether or not assembled and whether or not complete, of a kind used in the assembly of such sets) and valves suitable for use therewith. There is now to be included in that Schedule "loud speakers," and it is on that that we should like to have some clarification.

Before I pass on to that I presume that "wireless includes within the meaning of the Act "television." That is import- ant. I know that technically a television set is a wireless set, but we should like to know whether "wireless" governs "television," because the explanatory note to the Order mentions television. Is there any power in the Act to deal with television? I hope the hon. Gentleman sees my point.

Mr. Boyd-Carpenter


Mr. Hobson

In paragraph 6 of the Fifth Schedule to the Finance Act, 1951, there is now to be added "loud speaker." What does loud speaker mean? We can state the positive first: it means any branch from the domestic set. Is the whole of the loud speaker equipment to be increased from 33⅓ per cent. to 66⅔ per cent.? I gather that it is. Furthermore, is the whole of the equipment of the rediffusion companies used for the emission of programmes to be subject to the tax, because that is not made at all clear?

I can understand what the Order is doing: it is rectifying a loophole in the Act, and, as such, is amending legislation. Group 18 in the Schedule to the original Act stated specifically which items would rank for the tax of 33⅓ per cent. The Act of 1951 increased that tax to 66⅔ per cent., and it seems to me that it would have been far better, instead of having a recital, and a good recital, from the Financial Secretary about what is to be charged at 66⅔ per cent., to have had the apparatus actually stipulated in the Order.

One criticism I have of the Order is that it is far too widely drawn. We want to know precisely what apparatus is to be charged at 66⅔ per cent., because it was stated originally in the Act what was to be subject to Purchase Tax. What about the apparatus used in hotels? That is relay apparatus, and it is becoming common to have such relay sets in the bedrooms of hotels, even of the sort I can afford to visit. Will that be subject to the tax of 66⅔ per cent.?

Is the apparatus which rediffusion companies places in householders' premises also to be subject to the increased tax? It has come as a great surprise to me, even in reading the original Act, to find that the loud speaker unit which a re-diffusion company installs in a house is not subject to the tax. I was surprised because it is not only a question of the loud speaker itself, but of the valves, which are themselves subject to the tax of 66⅔ per cent. under the 1951 Act. That is quite a technical question.

We make one main criticism of the Order—that it is far too general. We appreciate its intention and make no criticism of the intention. Obviously, because of the demands of the rearmament industries upon electronics for such things as radar equipment, there is a prima facie case for bringing this equipment into line at 66⅔ per cent. But we do not like the looseness of the Order.

I have put many questions to the Financial Secretary, but it is incumbent upon those laying the Order before the House to let us know the list of articles involved. That is only fair to the traders and to those who purchase the apparatus. There should not be doubt. We cannot have an Order drafted in such general terms as these, and I hope that the Financial Secretary will be able to give us the information which we require. If he does, then as far as we are concerned, the Order can stand.

Mr. G. R. Mitchison (Kettering)

May I ask the Financial Secretary where, among the taxable goods, loud speakers are included? I understood him to say that they were included in order to remove doubt. Personally, I feel very doubtful whether they would have been included but for this Order. Can he tell us whether Purchase Tax was, in fact, charged and paid on these loud speakers before the Order was introduced?

10.52 p.m.

Mr. Boyd-Carpenter

Perhaps I may, first of all, answer the question put by the hon. and learned Member for Kettering (Mr. Mitchison). I think the hon. and learned Member must have misunderstood me, and I am certain that that was my fault: the removal of doubt relates to the other part of the Order, that part dealing with relay apparatus. The loud speaker is the new provision to which I referred and, as I mentioned in moving the Motion, it is included because certain types of rediffusion apparatus have been simplified so that there is no more than a loud speaker and the necessary switch with which to turn it on and, in the appropriate circumstances, to turn it off again.

Mr. Mitchison

Before the hon. Gentleman leaves that point, would he answer my question—and I will put it a little differently. Were any of the goods covered by this Order taxed before the Order was introduced?

Mr. Boyd-Carpenter

Yes. Everything except the loud speaker. I am sorry if I failed to make that clear to the hon. and learned Member, but perhaps I have done so now. The new part is the loud speaker; the part we have always assumed to be taxed, and on which tax has been paid, is the ordinary relay apparatus.

Perhaps I may next deal with the points raised by the hon. Member for Keighley (Mr. Hobson). In the first place, he dealt with the technicalities of the laying of an Order. The position is that this Order comes into force at such date as may be stated in the Order, in this case 4th August. It would lapse if no affirmative Resolution were carried by this House within 28 Sitting days. In point of fact, some 14 Sitting days have elapsed, so that we have not left it quite so fine as the hon. Member appeared to think.

He then asked why, although the Order was laid on 31st July, we brought it into operation on 4th August. He has, I think, no reason to fear that led to any evasion. In the first place, of course, it was August Bank Holiday week-end. In the second place, as I have already explained to the hon. and learned Member for Kettering, the ordinary relay equipment has throughout been treated as subject to tax and was being so treated at the relevant time. Thirdly, there have sometimes been complaints made—and justifiable complaints, with which, Mr. Deputy-Speaker, I think you may yourself have been not unfamiliar in another and previous capacity—of Orders coming into operation before they were laid before this House.

Although there may be occasions when that is necessary, I think it is a better practice to lay an Order before Parliament on the day before it comes into operation—at any rate, from the point of view of constitutional propriety—when it can be done without any disadvantage. In this case, it quite clearly could be done without any disadvantage.

Then the hon. Gentleman asked me about the loud speaker. That appears in paragraph (1, a) of the Order when the words and loud speakers are added in the relevant paragraphs of the Fifth Schedule of the 1951 Finance Act. Some of the complicated detail as to measurement was an indication to the House of the intention as to how that word should be defined. We place certain words in these Statutory Instruments and Acts of Parliament. They have to be defined and, as a working rule, that is the definition which it was intended to apply. That would seem to be well within the terms of the Order, because what it amounts to is not going as far as the terms of the Order permit us to go.

Mr. Hobson

Am Ito understand from that statement that if a loud speaker is less than 12 inches in diameter, it would only rank at 33⅓ per cent. and not 66⅔ per cent. tax, or vice versa?

Mr. Boyd-Carpenter

No. The Order applies only and fixes the tax only on loud speakers of the cone type which are 12 inches or less in diameter. Loud speakers of the cone type exceeding 12 inches in diameter, and loud speakers of other types, such as the pressure type, are treated as outside this Order.

Wireless apparatus, which I think was the hon. Gentleman's next point, does include television. That is treated for the purpose of the relevant Finance Acts as within that description and we should only cause confusion if we went out of our way to introduce a specific reference to television where it is not used elsewhere. The hon. Gentleman made some complaint of what he described as the lack of precision of the Order. If hon. Members will look at paragraph (1, b) it is, in my submission, perfectly clear: apparatus of the domestic type designed for receiving wireless programmes re-transmitted by wire. … That is a clear description, and it does apply to the sort of apparatus which exists in the hotels the hon. Gentleman frequents or does not frequent—I cannot remember which although, in view of his anxiety in the matter, I assume it must be the former. This has been very carefully discussed and I am advised there is no misunderstanding in the trade whatever as to the effect of the Order. I think I have dealt with the points the hon. Member and his hon. and learned Friend made, and I hope, as the hon. Gentleman has indicated that he agrees with the purposes of this Order, that the House will be prepared to give it its approval.

Mr. Mitchison

Is it now intended to tax the loud speakers used by the police for regulating traffic and by politicians for addressing the public?

Mr. Boyd-Carpenter

I tried to explain in moving the Order that the somewhat complicated measurements of the type of loud speaker to which it referred were designed to exclude from the ambit of this Order, and therefore from tax, the type of loud speaker apparatus which is used for other than domestic purposes; that is to say, for the public address system used in factories and, perhaps, to relay the words of the hon. and learned Gentleman to enthusiastic crowds.

Question put, and agreed to.

Resolved, That the Purchase Tax (No. 2) Order, 1952 (S.I., 1952, No. 1423), dated 29th July, 1952, a copy of which was laid before this House on 31st July, be approved.