HC Deb 11 November 1953 vol 520 cc1040-59

8.14 p.m.

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

I beg to move, That the Purchase Tax (No. 2) Order, 1953 (S.I., 1953, No. 1356), dated 8th September, 1953, a copy of which was laid before this House on 10th September, 1953, in the last Session of Parliament, be approved. The need to make this Order springs curiously enough from an error in the drafting of a Purchase Tax Schedule made as long as five years ago which only in the last two months has shown certain practical consequences and difficulties. The point is, I am afraid, a somewhat complicated one, as points in this particular subject matter are only too apt to be, but I will endeavour briefly to expound how this question has arisen.

As the right hon. Gentleman opposite will recall, from the beginning of the Purchase Tax, it fell generally on floor coverings, and in 1947 an Order was made under which certain fabrics used mainly for industrial purposes were exempted from the tax. The position then stood, as in substance it broadly stands today, that fabrics used for industrial purposes were exempted and fabrics used for floor coverings were subject to tax.

In 1948, the tax schedules were revised and redrafted, and though the figures have been altered since, they are, as the House may be aware, basically the Schedules which exist today. In the course of that recasting what apparently was intended to be done was to retain the pre-existing position, that is to say, the liability of floor coverings to pay tax and the exemption of industrial fabrics.

But in the course of the drafting of what was and still is Group 6 of the Schedule, certain specific exemptions were laid down which probably—I say "probably" advisedly because the matter is not wholly free from doubt-overrode in the case of certain individual fabrics the tax laid down under Group 9 in respect of floor coverings generally. In any event, nobody noticed that at the time, nor, apparendy, for many years afterwards. But in the course of the present summer the manufacturers of certain fabrics, in particular various forms of coir matting and jute floor coverings, on apparently examining the Schedules once again, came to the conclusion that there were exemptions in respect of these particular types of floor coverings.

The point was raised and it appeared that, on balance, they had been, probably wholly accidentally, exempted. In any event, certain manufacturers started to sell them tax-free. The trade generally asked to have the matter clarified, and my right hon. Friend came to the conclusion that the sensible thing to do was to put the matter beyond doubt by making clear in this Order that these floor coverings were and would continue to remain subject to tax.

So far so good. The complication which I think has perturbed one or two hon. Members really arises on another aspect of the matter. I do not think, judging from my correspondence, that anyone has really taken any serious exception to doing with respect to coir matting and jute floor coverings something to restore what in practice had until this summer always been presumed to be the position, and making it quite clear that tax should continue to be paid on fabrics in respect of which it always had been paid.

But it is also a fact that this Order affects another form of floor covering which was hardly of any practical significance when the tax Schedule was drafted in 1948, but which has developed quite rapidly in recent years. The fabric is known as needleloom felt. Its use as floor covering has grown rapidly in recent months, and I am advised that the output this year is more than double that of the whole of last year. It is undoubtedly covered by this Order.

It is a matter of some doubt whether felt floor coverings would in strict law have been covered by the 1948 Schedule. The point at that time was largely an academic one, because such coverings were very little used for that purpose. They are now increasingly so used, and we thought it right, in clearing up the position with regard to coir matting and jute floor covering, to secure that it is also put beyond doubt that this tax falls on needleloom felt.

The reason is simple. It is one of several floor coverings competing with many others, and I am sure it is the wish of the House that in the administration of the tax we should, so far as practicable, let it fall fairly and evenly upon all the competing commodities or articles concerned.

Mr. John Edwards (Brighouse and Spenborough)

Would the right hon. Gentleman be good enough to say whether the Order covers milled felts?

Mr. Boyd-Carpenter

I should not like to answer that question off the cuff, though I will make inquiries and see if I can give the right hon. Gentleman an answer. In a moment I shall be coming to the very difficult question to which I think his question relates of particular felts other than needleloom felts. I was taking the obvious and clear case first.

Mr. M. Follick (Loughborough)

Would that apply to underlay felt?

Mr. Boyd-Carpenter

May I give my reply to the hon. Gentleman in the same terms as I have used to the right hon. Gentleman?

As regards needleloom felt, this is a floor covering which competes with others. One or two hon. Members have been good enough to write to me on this aspect of the matter, and to suggest that it was wrong to impose the tax, because it was a cheap felt, and rather within the analogy of articles in the D Scheme, and that it should be left as a cheap floor covering for people of limited means. That is, I think, founded on a misapprehension, because I have compared the prices of floor coverings, and it appears that needleloom felt comes roughly in the middle, so I do not think there is any very strong argument under that head.

I appreciate that those concerned in the manufacture of an article which has been de facto clear of tax, at any rate during the last few months, naturally feel—they would be rather more than human if they did not—some discomfort through the incidence of the Tax. I noticed that one of them, with very proper commercial enterprise Which I cannot but approve, has taken advantage of the imposition of the tax upon the product by including in his most recent advertisements, apparently among the attractions of his products, that the price includes Purchase Tax at real carpet rates. I think it is a most commendable example of commercial enterprise and of the snatching of some advantage from adversity.

Broadly, the purpose of this is not to increase the scope of taxation. The revenue considerations involved are comparatively small, if one looks at it from the point of view of new tax, though not wholly negligible if looked upon from the point of view of articles which have previously paid tax perhaps coming out of it. All told, adding the two considerations together, there is perhaps £250,000 of revenue involved overall. But the purpose of this Order is to secure that the tax upon floor coverings shall fall evenly and equally upon the different, competing types of floor coverings—broadly, carpets, these types of matting felts, and linoleum.

The right hon. Gentleman opposite asked me a question, as did his friend next to him, the hon. Member for Enfield, East (Mr. Ernest Davies), about other kinds of felt. Needleloom felt is clearly a floor covering for ordinary use. There are, however, other felts—sometimes called hard felts, and sometimes, apparently, called art felts—whose main use, as I understand it at the moment, is not as a floor covering, though it is possible that they could be so used. As always in demarcation questions, there are difficult and complex boundary issues. The Customs and Excise are in touch with the trade associations concerned, and are discussing with them whether an exact line of demarcation in the zone of these fabrics can be defined.

So far as this Order is concerned, it falls upon needleloom felts—and I only say this lest those concerned in the manufacture of needleloom felt feel there is some disparity between their treatment and that of the manufacturers of other types of felt. There are, obviously, marginal felts whose main use is not as floor covering, but which could be so used. Those are the sort of subject matter which, I think, the House will agree are best and most sensibly discussed with the trade associations concerned, and, as I have indicated, my officials are so discussing it with them. I am grateful to the right hon. Gentleman for raising it, but I do not think it will give any serious difficulty. I have said what I have said in order to allay any anxiety on that matter, but the main point is to see that the tax falls equitably on these floor coverings.

8.28 p.m.

Mr. Douglas Jay (Battersea, North)

The Financial Secretary has defended this Order, in a reassuring tone of voice, on the ground that it is a purely innocuous plan for correcting what he called an error in drafting, and to remove doubts, and so forth. I do not think the House may have realised that what he is doing is to put a new Purchase Tax, at a rate, I think, of 25 per cent., on a number of commodities which have hitherto not borne tax. Indeed he candidly admitted that he is hoping to raise, as I understand, another £250,000 by the imposition of this tax.

Mr. Boyd-Carpenter

Not to raise an additional £250,000. There is £250,000 involved in this. If this article was not taxed other articles might not pay it. There is also the avoiding of such loss as there may have been.

Mr. Jay

Nevertheless I think that the consequence of the Order is to raise £250,000 of revenue.

Of course, we do not want to continue an error in drafting or an unnecessary anomaly in tax, or to encourage what might be described as tax avoidance through an unintended loophole. But there are two ways of getting rid of the anomalies. One is to adopt the Financial Secretary's plan and place this tax on certain articles not now paying it. The alternative would be to remove the Purchase Tax from, if not all these floor coverings, at any rate, the less expensive forms of them. I do think it is rather characteristic of the present Government's attitude to Purchase Tax that they have adopted the plan of extending, rather than restricting, the application of the tax.

It was our policy, in this matter of Purchase Tax, year by year to exempt from the tax altogether a number of household articles, particularly household necessities and other household goods, rather of this kind. We exempted a number in 1948, under the previous Government; a further batch in 1950, and a final one in 1951. Indeed, one of the exemptions which we had in mind for the future, together with cutlery and one or two other things, was precisely linoleum, which, of course, is taxed under this heading of floor coverings. Linoleum, together with coir matting, jute floor coverings, needleloom felts, and so on, is really an article of ordinary household use in working class homes, and I think there is a very strong case for exempting it from Purchase Tax altogether.

Therefore, though we would not defend an arrangement which would permit evasion or continue an unjustifiable anomaly, we must not be taken tonight as supporting the continuance of the tax on all these less expensive and more utility type of floor coverings. Nor can the Financial Secretary really maintain that this change has to be made because this is the one exception to the present tax on floor covering. Indeed, some of my hon. Friends will raise the question of certain other types of felt which, it appears, are still free of tax.

But if I am correct—and I ask the Financial Secretary to put me right if I am wrong—there is still an exemption to it under Group 9, dealing with floor coverings, which we introduced in the previous Government at the end of 1948, and which relates to tiles and strips. I note that when I had the privilege of introducing that exemption, the present Financial Secretary attacked the then Government for doing so. This is why I want him to correct the present position tonight. He described our action in exempting tiles and strips from tax as a thoroughly well-intentioned muddle on the part of the Treasury."—[OFFICIAL REPORT, 13th December, 1948; Vol. 459, c. 967.] —a state of affairs of which he disapproved.

At the end of the speech he threatened me with all sorts of deplorable consequences if I refused to admit an error out of sheer obstinacy. As far as I can understand, this error, "introduced out of sheer obstinacy," has remained in force not merely throughout the three subsequent years of the Labour Government, but is still in force today. At any rate, I want the Financial Secretary to tell me whether this is so or not.

The latest Customs and Excise leaflet setting out the present tax rates in force, which was sent from the Customs to the Library of the House of Commons as recently as 19th September, 1953, has the words "floor coverings" inserted in Group 6, which is what we are discussing tonight, so that it is up to date.

One finds under Group 9 (a) (ii) that tiles or strips not exceeding 450 square inches in area, irrespective of shape, are still exempt. Perhaps the Financial Secretary will confirm that that is true. If it is true, it shows that he is maintaining this error in operation, and also that there are already exemptions and anomalies under Group 9, which further weakens the Financial Secretary's case.

8.33 p.m.

Mr. Geoffrey Hirst (Shipley)

This is one of the occasions when a Member on this side of the House rises with some diffidence. My confidence in and respect for the Chancellor are unbounded, but, if I may say so, they are a little less for the Financial Secretary. As he well knows, I am a critic of this Order and I must say that I have not been very impressed with his argument tonight.

I brought this matter to his attention—if, indeed, it needed it—about four months ago. I do not intend to deploy the case, very largely because mine is a constituency interest, part shared by the right hon. Member for Brighouse and Spenborough (Mr. J. Edwards), who has a larger slice in the share of this interest, and I leave him largely to deploy this case.

I am concerned on one or two grounds. First, I do not quite understand why the needleloom industry association was not consulted. I am aware of the answer which the Financial Secretary wrote to my letter. I do not think I am going beyond what I ought to do in saying that he now says that certain other associations, if not this one, are to be consulted about other forms of felt. I just do not understand the procedure. If there is a case for considering the degree to which these floor coverings are to be used, as opposed to industrial purposes, it ought to take place before, and not after, an Order of this nature so as to discover the true facts.

The right hon. Member for Brighouse and Spenborough has already intervened on the question of dyed mill felts. The answer given by the Financial Secretary was that it is difficult to draw the line. He said that, in the main, they are not used as floor coverings. Quite frankly, nor is needleloom felt. I believe that only about 5 per cent. of it is so used. That rather destroys this case altogether. I should have thought that it would have been better to leave well alone for the time being.

I am very glad to feel that the present Government take the view that, in the main, Purchase Tax is a bad tax. They have made that clear. It is no use tinkering with a bad tax. We shall make just as many difficulties by these Amendments as we are trying to remove. I criticised hon. and right hon. Gentlemen opposite on the same point on a previous occasion. If the policy is to get rid of this singularly bad Purchase Tax, which has caused so many troubles, particularly to the textile industry, do not let us start tinkering about with the tax a few months before the Budget and trying to make things equal, because there is no fairness in it.

This is not a matter upon which we shall have deep consciences, and it is not a matter in respect of which I have a strong constituency interest, as I have in the normal textile industry. I shall not threaten to vote against the Government. It is, however, a matter upon which I say that I do not think the Government are right. I wish they would have second thoughts and not try to tinker with a tax which is wrong. They will not achieve anything by this Order, as far as I can see. As a matter of general policy I am against it, and from the particular point of view before us I do not think they will get anywhere with it.

If they had taken the trouble to investigate the point with the various interests concerned they would have realised that they were not closing the gap to which my hon. Friend has referred. They are not closing it; they are just having a dig at one industry because it is apparently in error to Government views in this matter. That is not fair. I am sorry that I cannot agree with the Government on this point. It is not a matter of conscience if the question is taken to a vote. It is not one of the major matters on which I should vote against the Government, but I protest against it.

8.38 p.m.

Mr. Edward Shackleton (Preston, South)

The hon. Member for Shipley (Mr. Hirst) has made a most useful contribution to this debate and I am sure that the whole House appreciates the difficulty of his position. I shall not develop the arguments as to what he should do with his vote. It is quite clear that on this occasion the Treasury have entered very light-heartedly into an arrangement which they thought would not arouse any real opposition, and they found themselves in difficulties of which even now they are not fully aware.

The Financial Secretary said that needleloom felt was not one of the cheaper grades of carpeting, or, at any rate, it was not the cheapest. I hope that he will tell us of cheaper kinds of floor covering of a kind that we would put in his own sitting room. He mentioned linoleum. I do not know whether he expects people to put linoleum in all their rooms. Needleloom felt is a type of floor covering which is not very expensive, because it is not of the highest quality, but none the less it is a kind that many people could afford, and there was a growing sale for this type of floor carpeting throughout the country, because it met the needs of the people who could not afford more expensive carpetings which bore Purchase Tax.

The Financial Secretary mentioned that he was seeking to correct an anomaly and right an injustice. He said he had consulted the people concerned—at least, I think he said that. Whether or not he did say it, it is obvious that the people concerned in the carpet industry made their representations abundantly clear.

It is equally apparent that those who were affected, on whom this Purchase Tax Order was to fall, were not consulted before it was introduced, and I should like to know what steps the Financial Secretary has taken to provide at least equality of treatment to the different sections of the industry. When he replies to the debate I hope he will say what steps he took to consult the needleloom felt industry. We should like to know whom he consulted.

One thing is apparent, that this Purchase Tax Order was generally anticipated by the trade for several weeks before it came in. I did communicate with the Chancellor on the propriety of this information being made officially available before the Purchase Tax Order was brought into force, and I am assured that it is customary to make orders available about three days before they are brought into force. However, this information was generally known in the trade at least a month before the Order came into force.

Mr. Hirst

Before.

Mr. Shackleton

The hon. Gentleman would say a great deal longer—four months, possibly. It is a most unsatisfactory state of affairs. The Financial Secretary may defend himself by saying this is a risk that must be taken if consultations are to take place, but here we have a position in which one-sided consultations took place, in which information regarding an important change in taxation was generally known amongst the interested parties. That had a depressing effect, it may be argued, on those people who wanted to buy carpeting. Indeed, a most unsatisfactory state of affairs developed.

There is another point of view. Did the hon. Gentleman or the Chancellor consult the Board of Trade before they introduced this Order? Did they consult the Board with regard to the effects on employment? I am told that there has been a very heavy reduction in the sales of this particular type of material since the Order came into force, and it is affecting the potential employment of people not only in the constituency of the hon. Gentleman the Member for Shipley but also in parts of Lancashire, in Rawtenstall and Burnley—indeed, in parts of a Development Area in Lancashire.

We have the Order brought gaily before this House merely with the argument that it is to right an anomaly. Since when has the Chancellor of the Exchequer seriously concerned himself in taxation policy with righting an odd anomaly? We know that the taxation law is full of anomalies, and here the Chancellor has gone about righting them in the wrong way. I would ask the Financial Secretary to speak to his right hon. Friend and consult him very seriously as to whether they have not taken a wrong step and whether they should not look again at the whole position of the taxation of floor coverings and carpeting.

In this action the hon. Gentleman and his right hon. Friend have struck a blow not only at those people who find it difficult at the present cost of living to furnish their houses adequately but also at the living and employment conditions of many people whose living and employment is already threatened. I hope that hon. Gentlemen on this side and, indeed, in all parts of the House, will show quite clearly that they disapprove of the action of the Government in this respect.

8.44 p.m.

Mr. John Edwards (Brighouse and Spenborough)

My interest in this matter was not derived from my time at the Treasury, when, fortunately, I had nothing whatever to do with the perplexities of Purchase Tax. I have a considerable constituency interest in this matter. Firms in my constituency are involved, and they employ many workers whose livelihood depends in part on this product.

I think it is a great pity that the Government have decided to impose Purchase Tax on this needleloom floor covering. The hon. Member for Shipley (Mr. Hirst) put the case extremely well, and although I do not always agree with him, on this matter I think we can say we are in complete accord, with the possible exception that I am a little freer than he is to go into the Lobby of my choice. When the hon. Member for Shipley spoke, we ought to have recognised that he did so with great experience and also reinforced by the views of his colleagues in the chambers of commerce. We have therefore to take account of what he says, because in this matter he can speak in a much more representative way than can many of us here.

The fact of the matter is that the effect of this Order is to impose tax on a product which has been free from tax hitherto and which is bought, in the main, by people with small incomes. I appreciate as well as anyone the argument about an anomaly. Goodness knows, I have deployed that argument myself on very many occasions when I have spoken from the Front Bench opposite. I submit, however, that when an anomaly has persisted for five and a half years, then as the years have passed it has become more and more part of the pattern of the market conditions both for the product concerned and for other products, too. I would never complain if a Government came along and said, "We did this; we made a mistake; it is only a few months ago; may we put it right? "But here we are talking about something which has continued for five and a half years.

Moreover, what the Government propose will not deal with the real anomaly. Only a fortnight ago I went round an institution with which I am connected, and I was interested in the floor covering in all the bedrooms. I found out that the floor covering, which was entirely satisfactory for this purpose, consisted of dyed mill felts—the kind often described as hard felts or, as the Financial Secretary has said, art felts. Here is a product freely obtainable and, in my experience, quite useful in the connection and free of tax.

It seems to me that there is no point in dealing with this matter piecemeal and in saying we are correcting one particular anomaly if we are already conscious of the existence of another anomaly. I had hoped that the Financial Secretary would stand by the brave and glorious speeches which he made when he was in Opposition and would seek a way out of his difficulty, not by putting tax on something, but by taking tax off. Only on Sunday I was speaking to some people in my constituency of Brighouse who told me how this needleloom floor covering had been such a help to very many people in the lower income groups, not least to the newly-wed. It will not do for the Financial Secretary to compare this product with linoleum. The uses are not the same.

I appeal to the hon. Gentleman to reconsider the matter in the light of the advice which he has had from both sides of the House, to withdraw the Order and to have another shot at doing something which will be more satisfactory from the point of view of all the producers concerned. Will he try to do something which does not make it more difficult for the people with small incomes to have floor coverings of the kind they desire? I hope he will take the Order back. For my part, I think it a mistake by the Government to have introduced this Order, for I am sure its effects will not be the kind which the Government want. They had very much better think again.

8.50 p.m.

Mr. Boyd-Carpenter

I will, if I may, reply to a number of points raised in the course of the debate. I was glad to hear the right hon. Gentleman the Member for Battersea, North (Mr. Jay), who followed me, accept the general proposition that we ought to right anomalies of this sort if we can. I do not think he was very serious in the suggestion that one way available to us to right this particular anomaly was to withdraw the tax altogether from all floor coverings. The cost of that would be £15 million a year, and I must point out that the tax at present imposed on these articles is, of course, at a lower level than it was when he occupied my position.

We have, I think, in this issue of the corrective power of procedure by Order, taken the most sensible way of remedying this anomalous position in which inequality can so quickly develop. In that context, the right hon. Gentleman drew my attention to the anomaly in connection with tiles and strips. I have been aware of that position for some considerable time. Although I am not able to say anything tonight, I can assure the House that I have not forgotten it. I hope that the right hon. Gentleman, when I say that, will not reiterate it by accusing me of sheer obstinacy.

Mr. Jay

Can the hon. Gentleman say whether he has any intention of removing it?

Mr. Boyd-Carpenter

If I were to answer that I would say that any intentions there might be would manifest themselves in the usual way.

I listened with interest to my hon. Friend the Member for Shipley (Mr. Hirst) who speaks, as the right hon. Gentleman the Member for Brighouse and Spenborough (Mr. J. Edwards) rightly said, with considerable authority on subjects affecting textiles. Let me deal, first, with his point about consultations. He objected that the needleloom felt industry was not consulted before the tax was imposed, and trusted that they would be in the consultations that I have indicated are taking place in the industries concerned in connection with the marginal classes of felts, which may or may not be widely used as floor covering. I would ask my hon. Friend to look at it in this way.

When we are dealing with marginal and technical questions such as that of these felts, it is helpful for a Government Department to have the advice and views of the trade associations concerned. That, I should have thought, required no argument. It is not quite the same situation as when we are deciding to deal with a particular situation by the imposition of a tax. It is obvious that, when we enter into discussions, if we start to enter into them about possible tax changes it is difficult to restrict those discussions and to prevent people from jumping to conclusions. Once the tax has been imposed it is a different matter and one on which it is extremely helpful to have consultations.

Mr. Hirst

I agree with the force of that argument, but it is a fact that this was known for several months. It may have been a rumour but it was a very strong one. I feel that there is a case in that instance for an important association like this to be given an opportunity of advancing their particular claims if the gap is to be completely closed. I do not dispute the advantage of that from the tax point of view so long as the tax remains, but they should be given an opportunity to advance their case to ensure that the gap is closed and my point is that the Treasury have not done that.

Mr. Boyd-Carpenter

I shall come to that point in a moment. I do not accept that this was known for months. But presumably there is no reason why the hon. Gentleman's intelligent anticipation—and it is very intelligent anticipation, I am sure—should not lead him to the conclusion that this was going to be done. If, indeed, it were known, I cannot see why those concerned should not have made representations on their own initiative. None of us can prevent various industries indulging in guesses, some of which turn out to be correct and some a great deal less correct.

Then my hon. Friend suggested that we ought really to have left this alone. With great respect to his experience, I would say that that was not possible. He did not deal much with that aspect of the Order which I dealt with in the earlier part of my speech. The fact is that in the case of matting floor coverings tax had been paid for years and the enterprise of one or two manufacturers in questioning the liability for tax did open up the whole question. It was, therefore, essential to put the matter beyond doubt one way or the other and to make it quite clear that they were taxable or not, otherwise those which continue to bear tax are put in a quite impossible competitive position. For that one reason it was impossible to leave the matter alone.

Equally, while I should never say that one had closed all the gaps, I would say that even in the felt sphere the needle-loom is the major competitor with other floor coverings, and although in this sphere, as in others, no one can claim to have achieved 100 per cent. perfection, I think we have closed the gap to a sufficient degree to justify taking the action. If we were in a position to do so and discovered a position like that, it is our responsibility, in view of Parliament's having entrusted us with this Order-making power for this precise purpose, to exercise those powers for that purpose.

The hon. Member for Preston, South (Mr. Shackleton) took up the question of the relative price of needleloom felt as compared with other floor coverings. I indicated in my opening observations that I had comparative prices available but did not wish at that stage to inflict them on the House, but as the hon. Member would like me to deal with that aspect I shall do so. As I understand, needle-loom felt is marketed, broadly, in two grades, the second grade at 16s. to the square yard and the first grade at 23s. These figures fit very well into the category of the other floor coverings, in respect of which I shall give broad figures. The commoner forms of carpet run, I gather, from 17s. to 35s. a square yard; of course, there are dearer luxury kinds.

Mr. Tom Brown (Ince)

Is the hon. Gentleman quoting retail or wholesale prices?

Mr. Boyd-Carpenter

Retail, tax paid.

Jute matting is at 10s. and coir matting is at 11s. 6d. a yard, and linoleum is cheaper at from 2s. 9d. to 11s. 6d. It is not right to suggest that needleloom felt could be singled out as a particularly basically cheap floor covering which on social grounds should be dealt with differently from all other forms of floor covering. I appreciate the force of that argument if the facts would support the hon. Member in making it, but the facts do not support him. This is a floor covering well in the zone of price of other floor coverings, and a very meritorious one no doubt, but not one which it is fair to the others to single out in the way that the hon. Member was good enough to suggest.

The hon. Member referred, as did my hon. Friend the Member for Shipley, to this having been known before the tax—

Mr. Shackleton

The hon. Gentleman gave a figure for the cheaper forms of carpeting. Could he give the figure without Purchase Tax? He mentioned one form of carpeting which retails at 17s. As far as I can gather from his figures, the type of carpeting or floor covering that we are discussing is the cheapest thing of its kind, which ordinary people would call carpeting. I do not think the hon. Gentleman is being fair in considering that matting or linoleum is in the same category.

Mr. Boyd-Carpenter

Those who manufacture needleloom felt would agree with the hon. Member, but I am not so sure that those who manufacture coir matting or linoleum would agree with him.

If the hon. Member is to deal with the matter fairly, as he always does, he must address himself to the point that these are competing fabrics, that they are used for the covering of floors of people's houses, and that the decision whether to buy one or the other, as in the case of most people—as, indeed, in the case of most hon. Members—is not unaffected by the price at which they can be purchased. If that is so, the hon. Member must look at these things together if he is to play fair, not only with the employment of the people he represents—I appreciate his interest in that—but with the employment of the people engaged in manufacturing the other and competing fabrics. I am sure he will realise that that is fair.

Then there was the point about this being known beforehand. As I said to my hon. Friend the Member for Shipley, I do not know whether there were rumours, but the hon. Gentleman put the specific point to my right hon. Friend when he wrote to him on 9th October. The hon. Gentleman said that this was known on 12th September, and the tax came into operation on the 14th. My right hon. Friend pointed out to him that the Order was laid in this House on the 10th, and it could have been legitimately known on the 12th. I think that should be given, because any suggestion that forthcoming tax changes are known in advance naturally causes a great deal of disturbance.

The right hon. Gentleman the Member for Brighouse and Spenborough said that in his time at the Treasury he was spared, by the intellectually august nature of his duties, from having to deal with the irritating complexities of Purchase Tax legislation. I am not saying whether I envy him the lack of that salutary experience or not, but when he mentioned the point about employment I am forced to remind him of what I said a moment ago to his hon. Friend.

I have no reason to believe that employment in this industry has been affected, but we must look at the matter from the point of view of employment throughout the industry. It is not a good way to deal with taxation to suggest it is a good thing to stimulate employment in one product at the expense of those who work at another product.

Then there is the other point with which I should like to deal, when hon. Members admit that this is an old anomaly ask, why not leave it alone? That, as I might add, is a very conservative argument. The difficulty is that though the anomaly itself is old—it flows from an error in the Purchase Tax Schedule attached to the Finance Bill of 1948, for which I certainly was not responsible—any substantial effect of the anomaly has only recently been seen. That is because during the course of this summer the difficulty arose in respect of coir matting, and, at the same time, the expansion of competition by needleloom felt took place. It then became necessary to deal with it.

Accepting the spirit of the right hon. Gentleman's argument, if we are to deal with an anomaly it is much the best thing to deal with it speedily before the pattern of trade has hardened in that particular direction. I think I can tell him that that is precisely what we have done. As soon as the anomaly became known and began to have appreciable effect, we took action to remedy the matter. The result will be, so far as most of these articles are concerned, to restore the position to what it was generally believed to be before somebody took to reading the Purchase Tax Schedule with a critical and intelligent eye.

I have tried to deal with the arguments that have been put and with the case for this Order itself. So long as floor covering remains subject to this tax it is right that it should, as far as possible, fall fairly upon them. Owing to a purely technical error of drafting years ago, this state of affairs arose, and my right hon.

Friend thought fit to exercise the powers which Parliament has given him for this very purpose in order to put it right.

Question put.

The House divided: Ayes, 176; Noes, 140.

Division No. 3.] AYES [9.5 p.m.
Aitken, W. T. Grimond, J. Noble, Cmdr. A. H. P.
Alport, C. J. M. Grimston, Hon. John (St. Albans) Oakshott, H. D.
Anstruther-Gray, Major W. J. Grimston, Sir Robert (Westbury) O'Neill, Phelim (Co. Antrim, N.)
Arbuthnot, John Hall, John (Wycombe) Ormsby-Gore, Hon. W. D.
Ashton, H. (Chelmsford) Hare, Hon. J. H. Orr-Ewing, Sir Ian (Weston-super-Mare)
Assheton, Rt. Hon. ft. (Blackburn, W.) Harrison, Col. J. H. (Eye) Perkins, W. R. D.
Baldwin, A. E. Hay, John Peto, Brig. C. H. M.
Banks, Col. C. Heald, Sir Lionel Pilkington, Capt. R. A.
Barber, Anthony Heath, Edward Pitman, I. J.
Barlow, Sir John Higgs, J. M. C. Powell, J. Enoch
Bell, Philip (Bolton, E.) Hill, Mrs. E. (Wythenshawe) Price, Henry (Lewisham, W.)
Bennett, F. M. (Reading, N.) Hirst, Geoffrey Profumo, J. D.
Bennett, Dr. Reginald (Gosport) Holland-Martin, C. J. Raikes, Sir Victor
Bennett, William (Woodside) Hollis, M. C. Redmayne, M.
Bevins, J. R. (Toxteth) Horobin, I. M. Rees-Davies, W. R.
Bishop, F. P. Howard, Hon. Greville (St. Ives) Renton, D. L. M.
Black, C. W. Hudson, W. R. A. (Hull, N.) Roper, Sir Harold
Boyd-Carpenter, J. A. Hurd, A. R. Ryder, Capt. R. E. D.
Bromley-Davenport, Lt.-Col W. H. Hutchinson, Sir Geoffrey (llford, N.) Savory, Prof. Sir Douglas
Buchan-Hepburn, Rt. Hon P. G. T. Hutchison, Lt.-Com. Clark (E'b'rgh, W.) Schofield, Lt.-Col. W.
Bullard, D. G. Hylton-Foster, H. B. H. Scott, R. Donald
Burden, F. F. A. Jenkins, Robert (Dulwich) Scott-Miller, Cmdr. R.
Butcher, Sir Herbert Johnson, Eric (Blackley) Shepherd, William
Campbell, Sir David Kerr, H. W. Simon, J. E. S. (Middlesbrough, W.)
Carr, Robert Lambert, Hon. G. Spearman, A. C. M.
Cary, Sir Robert Lancaster, Col. C. G. Speir, R. M.
Channon, H. Legge-Bourke, Maj. E. A. H. Stevens, G. P.
Clarke, Col. Ralph (East Grinstead) Legh, Hon. Peter (Petersfield) Steward, W. A. (Woolwich, W.)
Clarke, Brig. Terence (Portsmouth, W.) Lennox-Boyd, Rt. Hon. A. T. Stewart, Henderson (Fife, E.)
Clyde, Rt. Hon. J. L. Lindsay, Martin Stoddart-Scott, Col. M.
Cole, Norman Linstead, Sir H. N. Storey, S.
Colegate, W. A. Lloyd, Maj. Sir Guy (Renfrew, E.) Strauss, Henry (Norwich, S.)
Conant, Maj. R. J. E. Lockwood, Lt.-Col. J. C. Studholme, H. G.
Cooper, Sqn, Ldr. Albert Longden, Gilbert Summers, G. S.
Cooper-Key, E. M. Lucas-Tooth, Sir Hugh Taylor, William (Bradford, N.)
Craddock, Beresford (Spelthorne) McCallum, Major D. Thomas, Leslie (Canterbury)
Crosthwaite-Eyre, Col. O. E. Macdonald, Sir Peter Thompson, Kenneth (Walton)
Crouch, R. F. Mackeson, Brig. H. R.
Crowder, Sir John (Finchley) Mackie, J. H. (Galloway) Thompson, Lt.-Cdr. R. (Croydon, W.)
Darling, Sir William (Edinburgh, S.) Maclay, Rt. Hon. John Thorneycroft, Rt. Hn. Peter (Monmouth)
Doughty, C. J. A. Macleod, Rt. Hon. Iain (Enfield, W.) Thornton-Kemsley, Col. C. N.
Grayson, G. B. Macpherson, Niall (Dumfries) Tilney, John
Drewe, Sir C. Maitland, Comdr. J. F. W. (Horncastle) Turton, R. H.
Duncan, Capt. J. A. L Maitland, Patrick (Lanark) Tweedsmuir, Lady
Duthie, W. S. Manningham-Buller, Sir R. E. Vane, W. M. F.
Elliot, Rt. Hon. W. E. Markham, Major Sir Frank Vosper, D. F.
Fell, A. Marlowe, A. A. H. Wakefield, Edward (Derbyshire, W.)
Fisher, Nigel Marples, A. E. Ward, Miss I. (Tynemouth)
Fleetwood-Hesketh, R. F. Marshall, Douglas (Bodmin) Wellwood, W.
Fleteher-Cooke, C. Maude, Angus Williams, Gerald (Tonbridge)
Ford, Mrs. Patricia Maydon, Ll.-Comdr. S. L. C. Williams, Sir Herbert (Croydon, E.)
Fort, R. Medlicott, Brig, F. Williams. Paul (Sunderland, S.)
Frater, Hon. Hugh (Stone) Molson, A. H. E. Williams, R. Dudley (Exeter)
Frater, Sir Ian (Morecambe & Lonsdale) Morrison, John (Salisbury) Wilson, Geoffrey (Truro)
Gaibraith, Rt. Hon. T. D. (Pollek) Mort-Radclyfle, C. E. Wood, Hon. R.
Gatbraith, T. G. D. (Hillhead) Nabarro, G. D. N. York, C.
Godber, J. B. Neave, Airey
Gough, C. F. H. Nicholls, Harmar TELLERS FOR THE AYES:
Gower, H. R. Nicolson, Nigel (Bournemouth, E.) Mr. Kaberry and Mr. Wills.
Gridley, Sir Arnold Nield, Basil (Chester)
NOES
Allen, Scholefield (Crewe) Beswick, F. Callaghan, L. J.
Anderson, Alexander (Motherwell) Blackburn, F. Chetwynd, G. R.
Awbery, S. S. Blyton, W. R. Clunie, J.
Bacon, Miss Alice Brook, Dryden (Halifax) Coldrick, W.
Balfour, A. Broughton, Dr. A. D. D. Collick, P. H.
Barnes, Rt. Hon. A. J. Brown, Thomas (Ince) Craddock, George (Bradford, S.)
Bartley, P. Burke, W. A. Crosland, C. A. R.
Benson, G. Butler, Herbert (Hackney, S.) Cullen, Mrs. A.
Dalton, Rt. Hon. H. Jones, David (Hartlepool) Rhodes, H.
Davies, Ernest (Enfield, E.) Jones, Frederick Elwyn (West Ham, S.) Richards, R.
de Freitas, Geoffrey Jones, Jack (Rotherham) Roberts, Albert (Normanton)
Deer, G. Keenan, W. Roberts, Goronwy (Caernarvon)
Dodds, N. N. King, Dr. H. M. Ross, William
Ede, Rt. Hon. J. C. Lee, Frederick (Newton) Royle, C.
Edwards, Rt. Hon. John (Brighouse) Lindgren, G. S. Shackleton, E. A. A.
Edwards, Rt. Hon. Ness (Caerphilly) Logan, D. G. Short, E. W.
Evans, Stanley (Wednesbury) MacColl, J. E. Silverman, Julius (Erdington)
Fienburgh, W. McGhee, H. G. Simmons, C. J. (Brierley Hill)
Fletcher, Erie (Islington, E.) McGovern, J. Skeffington, A. M.
Follick, M. McInnes, J. Slater, Mrs. H. (Stoke-on-Trent)
Fraser, Thomas (Hamilton) McKay, John (Wallsend) Slater, J. (Durham, Sedgefield)
Glanville, James McLeavy, F. Smith, Ellis (Stoke, S.)
Gooch, E. G. MacPherson, Malcolm (Stirling) Sparks, J. A.
Grenfell, Rt. Hon. D. R. Mallalieu, E. L. (Brigg) Steele, T.
Grey, C. F. Mann, Mrs. Jean Stewart, Michael (Fulham, E.)
Griffiths, David (Rather Valley) Marquand, Rt. Hon. H. A. Sylvester, G. O.
Griffiths, Rt. Hon. James (Llanelly) Mason, Roy Taylor, John (West Lothian)
Hale, Leslie Mellish, R. J. Taylor, Rt. Hon. Robert (Merpeth)
Hall, John T. (Gateshead, W.) Mitchison, G. R. Thomas, George (Cardiff)
Hamilton, W. W. Moody, A. S. Thomas, Ivor Owen (Wrekin)
Hannan, W. Morley, R. Thornton, E.
Hargreaves, A. Morris, Percy (Swansea, W.) Wallace, H. W.
Hastings, S. Moyle, A. Wells, Percy (Faversham)
Hayman, F. H. Mulley, F. W.
Healey, Denis (Leeds, S. E.) Murray, J. D. Wells, William (Walsall)
Herbison, Miss M. Noel-Baker, Rt. Hon. P. J. Wheeldon, W. E.
Hobson, C. R. Oswald, T. Whiteley, Rt. Hon. W.
Holman, P. Padley, W. E. Wigg, George
Holmes, Horace (Hemsworth) Paget, R. T. Wilcock, Group Capt. C. A. B.
Houghton, Douglas Paling, Will T. (Dtwsbury) Wilkins, W. A.
Hoy, J. H. Paton, J. Willcy, F. T.
Hubbard, T. F. Peart, T. F. Williams, Rt. Hon. Thomas (Don V'll'y)
Hudson, James (Ealing, N.) Popplewell, E Williams, W. R. (Droylsden)
Hynd, J. B. (Attercliffe) Porter, G. Winterbottom, Ian (Nottingham, C.)
Isaacs, Rt. Hon. G. A. Price, Joseph T. (Westhoughton) Winterboltom, Richard (Brightskie)
Jay, Rt. Hon. D. P. T. Proctor, W. T. Woodburn, Rt. Hon. A.
Jenkins, R. H. (Stechford) Pryde, D. J.
Johnson, James (Rugby) Pursey, Cmdr. H. TELLERS FOR THE NOES:
Mr. Pearson and Mr. Arthur Allen.