HC Deb 28 April 1955 vol 540 cc1207-41

10.0 p.m.

Mr. Edward Shackleton (Preston South)

I beg to move, That an humble Address be presented to Her Majesty, praying that the Purchase Tax (No. 3) Order, 1955 (S.I. 1955, No. 581), dated 18th April, 1955, a copy of which was laid before this House on 19th April, be annulled.

Mr. Speaker

Order. Hon. Members leaving the Chamber should do so quietly.

Mr. Shackleton

For the benefit of excitable hon. Gentlemen opposite, I may as well begin my remarks by saying that, in moving this Motion, the Opposition are not intending to show their opposition to the reduction in Purchase Tax, and that, in fact, hon. Gentlemen opposite can safely go back to their constituencies now and try to regain some of the losses shown in the latest Gallup Poll.

The only means open to us to discuss the Government's offer to the textile industry is by praying against this Order, and I should like, first, to ask the Chancellor, if I may have his attention on this point, whether he is aware of any other occasion in the history of the financial affairs of this country when a change in taxation has been announced in the Budget Speech, and, in fact, carried out by regulations.

According to the information that I have, this is the only time it has ever been done in peacetime, although I believe it was done during the war, and if it was so urgent that this change in the Purchase Tax should be made, I want to ask the Chancellor why he did not make this change and this Order a month ago.

This action is, of course, part and parcel of the Government's general determination to prevent discussion of the budgetary proposals, and we know perfectly well why they have done it. It is because they know that there is no possibility of amendment, and because they also know that, by avoiding the general Finance Bill procedure, they are, in fact, saved an embarrassing debate on the whole subject of the Purchase Tax. Indeed, the Chancellor has, in effect, said that he would produce evidence of his "desire to help Lancashire," but that he would not permit a debate in which people could suggest how Lancashire could be helped. But Lancashire wants help and not merely evidence of a desire to help.

I should like to examine the exact meaning of this Order. I do not propose to go into the intricacies of the D Scheme, nor shall I discuss the textile industry generally. What I should like to do is to reinterpret what the Chancellor said it meant. In his speech on the Budget, the Chancellor said: I am proposing forthwith to reduce the rate of Purchase Tax by half from 50 per cent. to 25 per cent. on piece goods and sheets, towels and other household textile articles of cotton, linen, rayon and other non-wool materials."—[OFFICIAL REPORT. 19th April, 1955; Vol. 540, c. 57.] That sounds very fine, but does the Chancellor really think that the Purchase Tax is a bad thing for the Lancashire textile industry and other industries?

We had some rather obscure remarks from the Financial Secretary to the Treasury during the debate on the Finance Bill, in which he appeared to suggest that purchasers, especially when purchasing ladies' nightdresses and one thing and another, were unaware of the difference between commodities bearing Purchase Tax and those which did not. If the rather frivolous approach of the Chancellor and his assistant Ministers means that they do not think that the tax matters very much in Lancashire, I should like to tell them what we believe, and what Lancashire employers and workers believe, is the significance of this particular tax.

The Chancellor said that his proposal will, in a full year, represent a saving of £3 million; in other words, he is giving away £3 million out of the £6 million which is raised on this particular range. What he did not say is that this is only a very small part of the story. The principal outlet for Lancashire textiles is the made-up garment and these made-up garments get no benefit whatsoever. In particular, the effects of Purchase Tax on the better quality cotton is today producing that very distorting effect which is so damaging to the export trade which the Chancellor is always telling us he wants to encourage.

The Chancellor has already heard references to two-fold yarns and I want particularly to refer to three examples where the Purchase Tax is unchanged, namely, raincoats, fine shirtings and best dress fabrics, all of which are of considerable value in the export market and particularly in the dollar market. These are the very materials on which the Chancellor relies. Hon. Members opposite, in particular, have frequently lamented that the effect of modern development is to destroy craftsmanship. Lancashire depends for its very survival at present on its flexibility, its craftsmanship and its quality, and this Purchase Tax affects a very large number of textiles which gain no benefit from this particular Order and is still operating against that quality production.

I should like to deal with the position of one small section of the fine end of the trade. Hon. Members on both sides of the House who come from Lancashire know that the finest courts are spun on mules. Mule spinners, in particular, are having a hard time to keep their trade going. They are the very foundation of Lancashire's reputation for skill and fine fabrics, but they do have to face the competition of other techniques. They have to face not only the competition of the growing increase of ring spinning—indeed, there are those who believe that spinning can be as fine on rings as it is on mules. They have also to face this tax which is an additional handicap to them in preserving their craft.

The Chancellor told us that the troubles of Lancashire were due to many causes. Thanks to the skill of the Chancellor it is out of order for us to debate these further cases tonight. I cannot, within the rules of order, say anything about Indian imports or the failure of the Government to do anything about that.

Mr. Leslie Hale (Oldham, West)


Mr. Shackleton

That is what I am doing.

We know one step that the Chancellor could have taken, and that was to wipe out Purchase Tax entirely on piece goods in this particular scheme and, furthermore, reduce the Purchase Tax on made-up garments. He has completely failed to do that, and I should like to draw attention to the fact that the trade in Lancashire is anything but satisfied with what he has done. I am sure many hon. Members will have had a letter from the Cotton and Rayon Merchants' Association. I will not quote the details of it, but I will quote one passage: The fundamental problems of the industry have not been met by the decision and unless they are substantially amended during their passage through the House they will not go far to ease the difficulties of Lancashire. We cannot amend them. The Chancellor has denied us that right by this extraordinary step of amending taxation by Regulation at the time of the Budget. This action smacks of rather sharp practice and only shows the determination of the Government to go to the country before it is too late. I think they will find that it is too late for them already.

We have also several other opinions from Lancashire. I do not want to take too long about this, because other hon. Members on both sides want to say what they think, but this is probably the last chance we shall have before the Election to raise this matter. Lancashire has had this shot in the arm from the Chancellor. I can only say that it is a very ineffective shot in the arm. The official organ of the Manchester Cotton Association says this: There have been no signs of any improvement in the demand from overseas or home trade sources. It is, therefore, not surprising that the manpower available in the mills is still declining. We have had this further disturbing fall in exports during March, and altogether the evidence of the desire to help on the part of the Government is disappointing.

Mr. Hale

If my hon. Friend wants the reaction of Lancashire, I have heard by telephone this morning that two more mills in my constituency have had notice to close today.

Mr. Shackleton

The cotton unions have had a meeting today and I understand that some of the strongest resolutions have come from them, nearly as strong as those which have been emanating from the employers' side of the industry. We are faced with an extremely serious situation in Lancashire.

It is open to the Chancellor to take certain action. If he wishes, he can—I doubt whether he will—announce that he will take back these Orders and will make new ones tomorrow. It is open for him to do it since he has chosen this machinery instead of the ordinary budgetary machinery to announce this change. Let the right hon. Gentleman now take advantage of it and take off all Purchase Tax from this range and make other alterations to the Purchase Tax in so far as it affects garments made of non-wool textiles. My hon. Friends and I believe that this would go some way to helping Lancashire.

The problems are acute and they will not be easily resolved. All the Chancellor has done so far is to offer the equivalent not of a whole loaf of reform but of a mouldy cheese rind which certainly will not fill the bellies of the Lancashire workers. If the Chancellor has indicated as clearly as he has that it is the companies who are his favourite children, all I can say is that it must be evident in Lancashire that Lancashire, which was the originator of our great industrial wealth and the first-born of the Industrial Revolution, is now a cast-off child.

10.11 p.m.

Mrs. Barbara Castle (Blackburn, East)

I beg to second the Motion.

My hon. Friend the Member for Preston, South (Mr. Shackleton) has put his finger on the main issue before us tonight, which is: why has this concession been produced in the form of an Order at the time of the Budget? The answer is that this concession is not a serious attempt to help Lancashire at all, but is an electioneering manoeuvre designed in a form which will save the faces of the hon. Friends of the right hon. Gentleman sitting behind him who will have a struggle in their Lancashire constituencies. What the Government are doing tonight is to hide behind a procedural device to prevent us from putting constructive Amendments to the vote, and thus embarrassing his hon. Friends who have received, as we have all received, the letter from the Cotton and Rayon Merchants' Association calling for those Amendments to be made, in which the Association is supported by many other organisations in the cotton industry.

Why is the cotton trade, including many political supporters of the Government, thoroughly dissatisfied with the concession made in this Purchase Tax Order? It is not just a question of an industry wanting more. Of course every industry wants more. There is, however, a special reason in Lancashire which the Chancellor knows perfectly well. Here we have the case of an industry wanting room to breathe, an industry squeezed between the D Scheme and Purchase Tax on high quality goods at one end and unfair competition against its cheaper products at the other.

It is the case of an industry undermined in the home market by cheap Indian imports and hampered on the export side by the effects of Purchase Tax on high quality goods, and tonight Lancashire is asking the Government what future they see for the cotton industry and in what sphere? We think we have a right to get that answer tonight so that we can judge whether or not the Government have any serious concern for Lancashire.

When, on 9th March, we pressed the President of the Board of Trade about Indian imports, he said that the loss of exports was every bit as important to Lancashire as this import problem.

The Chancellor of the Exchequer (Mr. R. A. Butler)

On a point of order, Mr. Deputy-Speaker. If the hon. Lady is to talk about imports and exports, would I be in order in replying on the whole range of Lancashire interests?

Mr. Deputy-Speaker (Sir Charles MacAndrew)

No, I was just on the point of rising to say that this is quite a narrow Order. It merely reduces the Purchase Tax from 50 per cent. to 25 per cent. and—

Mr. Harold Wilson (Huyton)

Further to that point of order—

Mr. Deputy-Speaker

May I finish my sentence? It would not be in order to discuss the cotton industry on this Order.

Mr. Wilson

Further to that point of order, Mr. Deputy-Speaker. Last Friday, the Chancellor of the Exchequer, winding up a very full debate on the Budget, specifically refused to go in any detail into the question of Purchase Tax or, indeed, many other aspects of the cotton industry, saying that we were to have a debate today. It is he who is responsible for the procedure that we face tonight by doing this by Order. Since the only reference that he made in that debate to Purchase Tax related to exports, and since the whole basis of the change in Purchase Tax is the needs of the export trade, surely we should be in order, in debating this Motion, in suggesting that the needs of the export trade are not adequately met by the Chancellor's Order.

Mr. Deputy-Speaker

When that point arises, I will deal with it. At present, all I can say is that I thought that the hon. Lady was going much too wide, and I hope she will try to confine herself to what is before us and not deal with the cotton trade in general.

Mr. Hale

Further to that point of order. This is a matter which deeply concerns almost everyone in the Chamber. When, on Clause 1 of the Finance Bill yesterday, we debated the Question, "That the Clause stand part of the Bill," my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) rose and took the opportunity of dealing with the question of the situation of Lancashire and the effect of taxation on Lancashire and referred, in particular, to the question of Purchase Tax. No suggestion was made at any stage that he was out of order.

The Chancellor rose to reply and said that he had listened with interest to my hon. Friend's remarks and hoped that my hon. Friend would not press him to reply then because he would be dealing with the matter tonight. I sat next to my hon. Friend the Member for Nelson and Colne, and had it not been for the undertaking by the Chancellor, I should certainly have risen and spoken on the Question, "That the Clause stand part of the Bill." This is a matter which vitally affects employment in Oldham; indeed, it vitally affects the entire trade of Oldham. I have today had news, as I have just said, that two more mills have given notice to terminate employment.

Is the House now to be confronted with the situation that the Question which we debated yesterday was a deliberate subterfuge and that the whole of the debate upon it was deliberately whittled down by the Chancellor by his giving an undertaking which he had no intention of observing and knew that he would not observe? Is it now to be said that this mechanical procedure has been deliberately devised so that there has been a postponement in order to prevent there being any criticism on a matter which is absolutely vital at the moment?

Mr. Deputy-Speaker

I cannot say why a certain thing has been done. All I can do is deal with the rules of order as they arise. What happened yesterday in the other debate has nothing whatever to do with what is happening now. I think I have made myself clear to the hon. Lady. I believe she understood what I said.

Mrs. Castle

Yes, Mr. Deputy-Speaker.

Mr. R. A. Butler

Might I just answer the hon. Member for Oldham, West (Mr. Hale) by saying that I had every intention of trying to give the hon. Member for Nelson and Colne (Mr. S. Silverman) an answer on the subject of Purchase Tax, which I have already understood from the Chair is all that is in order tonight? I wanted to be sure that we did not have any misunderstanding. I should not be in order in giving a full statement about the Government's policy with regard to Lancashire. We must confine it to Purchase Tax. I agree with the right hon. Member for Huyton (Mr. H. Wilson) that the relationship of Purchase Tax to exports is very important; there is no doubt about that. All I want to be sure is that I shall not disappoint anybody by not being able to give the whole picture of imports-exports and the negotiations with India, and so forth. All I can do is to restrict myself to Purchase Tax, as I stated to the hon. Member for Nelson and Colne.

Mrs. Castle

It was a piece of gamesmanship on the part of the Chancellor to intervene when I was coming to the point of exports and imports and Purchase Tax—

Mr. Deputy-Speaker

The hon. Lady should not make an attack upon the Chancellor. Just as the right hon. Gentleman rose. I myself was just about to stop her.

Mrs. Castle

I could say more about it, but to save time, as so many other hon. Members wish to speak, I will pass on to the point which I was just reaching. I assure you, Mr. Deputy-Speaker, that I was directly relating my argument to the Purchase Tax Order, which must be judged as part of the Government's policy for helping Lancashire with its export problem. It was the President of the Board of Trade who told us on 9th March, when we raised the subject of Indian imports, that the export problem was really the important matter. He said: Indeed, in some respects, this is more of an export than an import problem."—[OFFICIAL REPORT, 9th March, 1955, Vol. 538, c. 467.] That is the answer which has been given by the Government to Lancashire, and it is in the light of that answer that we must tonight judge the Order, which represents the Government's much-boosted concession to help Lancashire with the export problem. However, when we say "Very well, let us look at the export side of the problem," we get this concession on Purchase Tax which has been described by the President of the Blackburn Chamber of Commerce as "niggardly and inadequate," words echoed by every trade organisation in the cotton industry.

My hon. Friend the Member for Preston, South referred to the Cotton and Rayon Merchants' Association's letter, and to the statement of the Cotton Board which has been published today. The Chancellor will agree that that is a body which would speak with a great sense of responsibility on this problem, and which would not make merely partisan points. The Cotton Board points out that by the very fact of making a Purchase Tax concession at all the Chancellor has, in fact, admitted the disastrous consequences of the D Scheme and Purchase Tax upon the export drive of the cotton industry. He has made the admission, but having made it, he has failed to deal with the problem adequately.

The Cotton Board goes on to point out that this concession will have very little effect, except on high quality furnishing fabrics and I admit that they are benefited and I am grateful, because I have a firm in my constituency which will directly benefit. But that is only a small part of the high quality end of the trade. The Cotton Board goes on to say: The bad point,"— referring to the Purchase Tax concession— which altogether outweighs the good points, is that the retention of the tax and the D Scheme and the failure to give any concession on appeal, continue the disincentive to the production of quality goods. The perpetuation of the reduction in the range and variety of quality goods on offer to overseas customers will continue to impede export trade. That is the view of the most responsible body in the cotton industry.

This is not a serious effort to help Lancashire. It is a purely electioneering manoeuvre produced at the last minute because of the difficulties of the right hon. Gentleman's friends. By limiting the concession to cloth instead of extending it to clothing as well the Chancellor has shown that he totally fails to understand Lancashire's problem, because we shall not encourage production of high quality cloth, which is presumably the point of making the concession, if, when the cloth is made into garments, the garments still carry the old tax.

That is the point which the Cotton and Rayon Merchants' Association clearly makes in the statement it has circulated to us all. The Association points out that Shirts, dresses, blouses, etc. are subject to tax, when made of the high quality cloths which it is necessary for Lancashire to produce in increasing quantities for the export trade, but the obstacle presented by the tax to sales in the home market will continue to act to the discouragement of exports. For example, Lancashire poplins, practically all of which are sold to garment manufacturers, remain practically unaffected by the Budget, and could be large dollar earners. I thought that the Chancellor was concerned about dollar earnings. Lancashire can make a contribution to our dollar trade export drive, but it cannot do it when we have this Purchase Tax Order. How can this concession encourage the production and export of the two-fold poplins for which Lancashire is famous? It will not encourage consumption on the home market of this cloth and so help to provide a cushion for the export trade. Wives do not buy this cloth in the piece because they do not make their husbands' shirts. They might make their own blouses, but not shirts, because we all know that men are harder to please than women.

So there will be no help to that important side of the industry. We must conclude that this is the best that the Government can do for Lancashire after all these months of pressure. We can only conclude, therefore, that the cotton industry is the unwanted child of the Government which is waiting for it to the of malnutrition. As the Burnley delegate to the annual conference of the National Chamber of Trade said: The Government of this country seems quite prepared to let us drift back to the awful days of the "20s. That is why we are protesting tonight. If we do not vote against the Order, it is because the Chancellor has deliberately put a gag upon us and has tied our hands.

10.25 p.m.

Sir Ian Horobin (Oldham, East)

I do not propose to waste any of the time of the House in discussing the merits of Purchase Tax as a tax. I am quite certain that when the Chancellor replies to the debate he, like everybody else on both sides of the House, will have no difficulty in making quite plain that it is a tax of all taxes at this time which has no merits at all except that it brings in money. I suggest that we need not waste any time on rehearsing the evil effects of Purchase Tax, especially on the cotton industry, but it really does not lie in the mouths of hon. and right hon. Members opposite to suggest that this is a peculiar iniquity of the Chancellor of the Exchequer.

The only thing that they ever did to Purchase Tax on cotton textiles was to double it. When they came into power Purchase Tax, not only on cotton textiles but on a lot of other goods which are now troubled with it, was bringing in about £100 million a year. When we eventually got rid of the Government of the party opposite, it was bringing in about £350 million a year. That is how much they got rid of Purchase Tax.

Mrs. Castle

Is not the hon. Gentleman forgetting that the cotton trade started to slump only after the present Government came into power?

Sir I. Horobin

I will deal with that, but do not let it be forgotten that the only thing the Socialist Government ever did was to double this wretched tax. We have consistently reduced it. I make no bones about it that we are not satisfied that all has been done. We shall not be satisfied, and I do not believe that the Chancellor will be satisfied, until this tax is got rid of altogether; but they doubled it, not in a fit of absence of mind, as they did so many bad financial things, for they took two bites at the cherry.

It was not even in one of their crises when they had to do something in a hurry. The right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) on two successive occasions boosted Purchase Tax on cotton textiles from 33⅓ per cent. to double.

Mr. Deputy-Speaker

I do not think that we can go over the history of Purchase Tax. We must deal with the Order.

Sir I. Horobin

I think I had already made the point, before I was told that I must not make it.

We have now consistently reduced Purchase Tax, and we are reducing it further. We certainly shall not be satisfied until another Order is laid which will get rid of it altogether. When we are dealing with the possibilities of reducing Purchase Tax we must also remind hon. and right hon. Members opposite that if we are to reduce taxation we must either make economies—and every time we have tried to do that we have not exactly had support from hon. Members opposite—or we must put on a new tax. What new tax are we to put on? This country is overtaxed right along the line, including Lancashire and the Lancashire cotton industry. It is no good taking a tax off one bit and putting it on another.

The short answer to this Prayer is that we must be thankful for small mercies. There is nothing to prevent a further Order being laid as soon as the money is available. It certainly will not be available if policies proposed by hon. and right hon. Members opposite are put into force. This is one further step in getting rid of this most mischievous tax which hinders the development of Lancashire. As far as it goes, we are grateful for it, but we are not satisfied, and the Chancellor knows it. Neither is he satisfied, I am quite sure, but we certainly have a better chance of getting rid of the rest through him than we had from the people who doubled it.

10.24 p.m.

Mr. Anthony Greenwood (Rossendale)

The hon. Member for Oldham, East (Sir I. Horobin) has imported a rather alien and strident note into this discussion. In textile debates we are in the habit of taking a reasonable and responsible attitude, on both sides of the House. Although we have on many occasions criticised the policy of the Chancellor of the Exchequer upon these matters we have tried to keep out of our discussions that note of excitement which the hon. Gentleman has just imported.

The hon. Member introduced into the discussion, perhaps erroneously, the record of the Labour Government. That is strictly relevant to this situation, because what the hon. Gentleman was forgetting is that that was done at the time when there was a sellers' market. We have criticised the imposition of Purchase Tax and the introduction of the D Scheme because it was done when the industry was moving into a buyers' market. At the time when the Labour Government took the action which the hon. Gentleman criticised, we were having to go up and down Lancashire recruiting workers for the industry, because the industry was unable to meet the tremendous demands which were being made upon it.

I do not blame the Government for the state of the textile industry throughout the world at that time, but when the textile industry in this country and in other parts of the world was getting into difficulties, the Chancellor chose that particular moment to introduce the D Scheme in spite of all the advice which he got from hon. Members on both sides of the House.

The hon. Member for Oldham, East said tonight that he dislikes this tax. Hon. Members opposite have had many opportunities in this Parliament of registering an effective protest against the tax. There have been a number of occasions when we have forced Divisions on this issue, but in spite of the strength of the convictions of hon. Members opposite, they have never been strong enough to force their weak knees into taking them into the Division Lobby. Lancashire will know perfectly well that if they had independent-minded representatives on the Conservative benches, it would have been possible to put an end to a situation which has done grave damage to the textile industry.

We told the Chancellor of the Exchequer when the D Scheme was introduced that it would distort the whole pattern of the industry and debase quality. We said that the effect would be to exclude the production of those quality goods which everybody, the Chancellor himself included, agreed must constitute the main trade of Lancashire in the future. Indeed, the Chancellor, in spite of all the warnings and the experience of the last three and a half years, still persists in his error.

Perhaps we have not been persuasive enough. Perhaps our arguments have not been as clear and convincing as they should have been. If that is a fault for which we are responsible, it is also one for which the leaders of the industry itself are equally responsible. It is a fault which is shared with the leaders of the textile deputation which met the Chancellor of the Exchequer upon this subject in February. It is shared with the Cotton Board, with the Manchester Chamber of Commerce, with the United Textile Factory Workers' Association, with the National Chamber of Trade, and, so far as I know, with all the employers' organisations in the textile industry.

It may be that the fault does not rest with hon. Members or with all these organisations, but it does rest with the Chancellor himself. I am glad, as are other hon. Members on this side of the House, that we have got this further opportunity of attempting to persuade the Chancellor of the Exchequer of the error of his ways before he completes the slow strangulation of the cotton industry.

The case that we are trying to persuade the Chancellor about is this. We have made it over and over again, and it has been put from both sides of the House during the last three and a half years, without any effective response from the Government. Our objection to this scheme is really twofold. In the first place, there is a reluctance on the part of the public to pay tax on the goods which they are buying, and it is a reluctance which is increased by the rather hit-and-miss estimates of both revenue and expenditure which have characterised the Chancellor's term of office, now rapidly drawing to a close.

The second objection is, I think, much more serious, and that is that because the tax is paid at the wholesale stage, there is a reluctance on the part of the retailers to hold tax-paid stocks. If a retailer has to pay a tax, let us say of 4s. a yard, upon a furnishing fabric in his shop, it means that he has to pay 4s. on every yard in a 60 yard bolt, which has the result of tying up £12 in taxation. If a retailer is in a fairly substantial way of business, it may mean that several thousands of pounds are tied up in this way. That in itself will be bad enough, but if the Chancellor reduces the tax as he has done on this occasion—and, as one hon. Member has said, we must be grateful for small mercies—it means that the retailer has to reduce the price at which he is selling his goods and large sums of money are lost.

Over and over again, year after year, until we are tired of the bland intransigeance of the Chancellor of the Exchequer and the studied neglect of the President of the Board of Trade, my hon. Friend the Member for Blackburn, East (Mrs. Castle) and myself have argued in favour of a rebate on tax paid goods. The Chancellor has consistently refused to meet the objections which we have raised to the present system, and it is because of his refusal to meet us upon this point that there is a continued reluctance on the part of retailers to hold stocks of goods upon which large amounts of taxation will be tied up.

Because of the reluctance to hold stocks of good-quality goods the pattern of the industry is being distorted. Manufacturers are tending to concentrate upon reducing the quality of their goods so that they fall below the D level; quality goods are not available for the export market, and, perhaps saddest of all, traditional skills are not being passed on to those who must produce the exports of the future.

Now, when we have this steady deterioration in the fortunes of the industry—through what I regard as lack of imagination and appreciation on the part of the Chancellor of the Exchequer—we get this rather meaningless gesture, in this rather trivial reduction of the tax. Welcome as it is, it is no substantial contribution to the problems of the industry. There is no wonder that the "Manchester Guardian" should have described the Chancellor's gesture as being "curiously mean"; that to the Cotton and Rayon Merchants' Association it should be "a grave disappointment"; to the President of the Manchester Chamber of Commerce "a bitter disappointment"; to the Apparel and Fashion Industry's Association "an acute disappointment," and to Mr. W. T. Winterbottom, who is known to most hon. Members who are interested in the textile industry, it proved that "the Chancellor of the Exchequer had missed the point."

Mr. Emrys Roberts, the Director of the Branded Textiles Group, said that the complete removal of the tax is now vital. In face of that unanimity of opinion on the part of the leaders of what is still one of the most important industries in this country—in spite of the Chancellor's efforts to reduce it from that position-surely the time has come for him to make some concession and announce, as my hon. Friends have suggested, that a new Order be laid tomorrow completely removing the tax upon these goods.

10.38 p.m.

Mr. Richard Fort (Clitheroe)

The hon. Member for Rossendale (Mr. Anthony Greenwood) has rehearsed at fair length arguments which must be familiar to every hon. Member against this really bad tax. In the course of his remarks he spoke as though his own party had consistently taken a long-term, sensible view about the tax. That argument was, in large measure, demolished by my hon. Friend the Member for Oldham, East (Sir I. Horobin), and I want to add one or two more nails to the coffin which he so ingeniously constructed.

It was hon. Members opposite who so fervently upheld the Utility clothing scheme, which produced even greater distortions than the scheme which is the subject of this Order. Its abolition was welcomed by everybody in the industry and although, as time has gone on, we have found undoubted weaknesses in Purchase Tax based upon the D level, from which we should like further relief, the Utility Scheme which it replaced was even more distorting to the industry.

The hon. Lady the Member for Blackburn, East (Mrs. Castle) really reminded me of Beelzebub.

Mr. Hale

As the hon. Gentleman made a reference to remarks made by myself, may I ask him one simple question? If he thinks things were so bad in these five years, why is it that employment rose to the optimum maximum of 319,000 by the time of the last Election and has dropped to 289,000 today, one man in ten having been driven from the industry?

Mr. Fort

The hon. Gentleman uses the word "drift"—

Mr. Hale


Mr. Fort

I would rather say that it was due to other employment brought to Lancashire by my hon. Friends on this side of the House.

I now come to the hon. Lady the Member for Blackburn, East. Casting her eyes virtuously round the Chamber, she said that the reduction made in the Purchase Tax was a purely electioneering move. I should be very surprised if I hear anything more like an electioneering speech in the forthcoming campaign than that of the hon. Lady and those of other hon. Members opposite. Not one of them mentioned the problem of the Purchase Tax affecting not only the Lancashire cotton industry, but the rayon industry there and also the linen industry in Northern Ireland. One of my hon. Friends reminds me that it affects the woollen industry, also. With the cotton, rayon and linen industry we should look at this problem far more widely.

Mr. W. R. Williams (Droylsden)

On a point of order. Would it be in order, Mr. Deputy-Speaker, to follow the hon. Gentleman's line of argument?

Mr. Deputy-Speaker

We do not want to deal with the matter on a wider basis than what is in the Order, the reduction from 50 to 25 per cent.

Mr. Fort

May I draw your attention, Mr. Deputy-Speaker, to the Schedule attached to the Order which, presumably, is in order? It says, in paragraph (1): (which comprises articles for domestic use and soft furnishings and paragraph (a) of which charges at 50 per cent. any goods not falling within the following paragraphs of that Group), and it then refers to woollen goods. Presumably, therefore, all textiles, other than woollen textiles, are included, and as wool is referred to that must also be included.

Mr. Deputy-Speaker

I was not taking objection to that, but only to going over the whole history, which would be out of order.

Mr. Fort

This Order applies to cloths made from all the fibres in the textile industry, and to ignore that is to show that hon. Members opposite, many of whom represent Lancashire constituencies, are merely trying to make electioneering points which they hope to find so useful.

Mr. H. Wilson

Since the hon. Gentleman has accused my hon. Friends, quite wrongly, of making electioneering speeches, will he give the House the evidence which supports his suggestion that his right hon. Friend has brought any industry to Oldham, East?

Mr. Fort

Engineering industries have certainly come into the Manchester area, and I have no doubt that people go from Oldham to Manchester to work in those industries. There has been an enormous expansion in the textile machinery industry, as the hon. Member for Oldham, West (Mr. Hale) knows.

Sir I. Horobin

I was in Oldham a few hours ago, and unemployment there at the moment is about .5 per cent. Those people are working somewhere, are they not?

Mr. Wilson

The hon. Member for Clitheroe (Mr. Fort) said that these workers had gone to the industries brought to Lancashire by the President of the Board of Trade.

Sir I. Horobin

If the right hon. Gentleman wants to know, Platts had a works in my constituency which, for reasons good or bad, closed, but it is now full of new industries working there. Whether that is desirable or not is another matter. That may not be in order, but they are there and they are working.

Mr. Fort

I really want to sit down; I cannot give way again, but I would like to add that I thank the Chair for having allowed me to go somewhat wide in speaking of this Order.

I hope that we shall hear from the Chancellor now that he has been able to develop the sympathetic understanding which he showed the other day to the industry when he referred to it as being the heart of the county; and, although he cannot bind any future Government, I hope that he will undertake, so far as it is within his power, to make it clear that this party, if returned to power at the forthcoming Election—as it will be—will have another look at this matter with a view to abolishing the Purchase Tax on all textiles, including apparel.

10.45 p.m.

Mr. Leslie Hale (Oldham, West)

For some months now the question of Purchase Tax has been raised in relation to the subject of unemployment in Lancashire, and the Chancellor has stolidly replied on each of the occasions when it has been raised that he could not anticipate his Budget or his Finance Bill. The right hon. Gentleman rested on that rectitude and said that no subject which had been represented to him was causing him more concern.

The right hon. Gentleman said, as has just been referred to by the hon. Member for Clitheroe (Mr. Fort), that his heart was bleeding, but for motives of rectitude he could not deal with the subject before the introduction of his Finance Bill. But when the Bill came along he left it out, probably because he could not stand the prospect of a debate on the whole question of the cotton industry. He found, however, that he had the means of having a discussion after ten o'clock at night, by which a good deal—in fact most—of the necessary debate, to which the House is most certainly entitled, and which the House has the right to demand, would inevitably be ruled out of order.

The hon. Member for Clitheroe made an extraordinary number of statements, and among them included a reference to Oldham. So far as I am aware, in relation to one specific point he made, the only thing that has happened in the last four years is that Platt Brothers have closed down a large factory and a colliery has closed down. What has happened is that half a dozen mills have closed, and a system has been devised of shoving up a notice each week so that employers will not have to pay if a mill suddenly closes because it cannot pay for its cotton. That has been the position for some time, and it is absolutely incredible that a Conservative hon. Member of this House should get up and say that these people have been found other employment and that therefore it does not matter very much. I wonder what hon. Members opposite would say if a Queen's Counsel were suddenly told that he was unemployed but that he could become a miner—

Mr. W. A. Burke (Burnley)

My hon. Friend says that these people have been found employment; but on 14th March there were 4,000 spinners out of work and 2,000 operatives in Lancashire.

Mr. Hale

Yes, I was coming to that. The expert committee which reported in the early years after the war put 320,000 employees as being the optimum for employment in the industry, and in October, 1951,—a significant date—the figure was actually 319,000. We had reached to within only a thousand short of the optimum. But today the figure is 289,000 with, as my hon. Friend has just said, 4,000 spinners and 2,000 weavers unemployed, and a very great deal of what might be termed unacknowledged short time.

I could say so much about this and quote so many examples, but I do not wish to get outside the bounds of order, and I will come to one or two of the considerations which arise. I must say that I have a considerable personal regard for the Chancellor, who is always most efficient; and he is always most courteous to us, and always most bland. The right hon. Gentleman is so bland that one feels almost a little shame in addressing to him the most temporate personal criticism. We have had from him almost the blandness of the heathen Chinese, but, nevertheless, it is a blandness that commands some affection in the House.

But when the hon. Member for Clitheroe, who has just given the Chancellor support which he probably did not welcome heartily, referred to electioneering speeches, did the Chancellor agree? Does the Chancellor agree that the Oldham Chamber of Commerce was making electioneering speeches, or Manchester Chamber of Commerce, or Mr. Cyril Lord, or the United Textile Workers' Association?

When a deputation saw the President of the Board of Trade, he said that he was making arrangements to see the Prime Minister. We have been told that for weeks past, but the President should have known, and the Chancellor certainly knew, that the Chancellor had given the then Prime Minister notice to quit before the deputation was received. The then Prime Minister no longer had any power to talk about anything. The then Prime Minister was given notice by the Chancellor and had to go. He had to go quite miserably—

Mr. Deputy-Speaker (Sir Charles MacAadrew)

I do not think that he went under this Order though, did he?

Mr. Hale

The point I am making is that there could not have been a more contemptuous act towards the great industry of Lancashire than to say, "We have arranged for you to see our great, distinguished leader", whom it was known would never be able to make an announcement to the House as a result of the discussion because he would not be here. That was known and was said in every newspaper. The Government never denied it.

Mr. Deputy-Speaker

I think that the hon. Member might leave that point and come to the Order.

Mr. Hale

I was trying very much to get to the Order. First of all, I was trying to go into the circumstances in which the Order was laid. It is a matter of importance to the House. Time and again in the past alterations in the Purchase Tax have been incorporated in the Finance Bill and we have had the fullest opportunity of full discussion. There can be no question that the present method is a deliberate method of avoiding a full discussion and stultifying reasoned criticism on this important issue.

It is an important issue. My hon. Friend the Member for Blackburn, East (Mrs. Castle) put the matter very fully indeed. There has been a continued state of uncertainty, and very naturally people have held up stocks and orders while they have been hoping for an abolition or reduction of the tax. The whole conduct of the Chancellor has aggravated the situation, and day after day news has come of the serious measures that were being taken in Lancashire. Does the Chancellor think that his concession will have materially affected employment in Lancashire and that it is sufficient? If he does, will he tell the House why the stocks of raw cotton in this country have been allowed to run down to the lowest level in the history of Parliament and in the history of the cotton industry since the American Civil War? Cotton stocks in January were about half what they were in October, 1951, when the General Election was held. If the Chancellor is serious about this problem, why has he not taken measures to induce the stocking of raw cotton?

We are not discussing this matter tonight by chance or because an Election is in the offing. We have discussed it time after time and have taken deputation after deputation to the President. In 1951 he said that he was thinking about it. He has gone on saying that he was thinking about it, that he has an open mind and is prepared to consider suggestions. He has said that from whatever quarter they come the Government will give them such attention and mental consideration as they are capable of giving. That is the only suggestion the right hon. Gentleman has made.

My right hon. Friend the Member for Huyton (Mr. H. Wilson) introduced many measures to help re-equipment and employment. As a result of our policy we stimulated trade and employment and brought the cotton industry to the highest position that it has reached since the war and for a considerable time. I have been ashamed to sit here and not find any hon. Member opposite prepared to rise in the House and say that this is a disgraceful state of affairs and that something more serious ought to be done.

I understood the Chancellor to say in an intervention that he would deal with Purchase Tax but could not undertake to announce the Government's full policy towards Lancashire's cotton industry at this moment. Can he tell us when he is going to announce it? Can he tell us whether the policy has been decided on? It would be a simple matter of courtesy to Lancashire Members—

Mr. Deputy-Speaker

These things are all very interesting, but I do not think they arise under this Order.

Mr. Hale

I agree entirely. I was at the moment talking to the Chancellor in parenthesis. It is one of the normal courtesies of the House, when some matter of extraordinary importance comes up, to ask for his indications on whether it will be dealt with. I gather that the Chancellor is nodding, and I would not for one moment say that when he nods his head there is nothing in it. I am sure that he will ask leave to reply to my questions.

But that has been the position. I am rather glad the Chancellor is dealing with this matter tonight and has not left it to the President of the Board of Trade, because we have addressed it to him over so many years. I think it was Lord Pembroke who said of Sam Johnson that if it were not for his bow-wow manner his observations would not be so very impressive. No one can accuse the President of the Board of Trade of a bow-wow manner, but there has been a bit of bah-bah, instead of observations. It tended to make them rather less impressive. Year after year on all these matters we have had no answer, and now tonight we are told that we may be told that there may be an answer, when they have made up their minds on it, when they have thought it over and when they have come to a conclusion whether it can be done, and if so when, and if so what.

10.56 p.m.

Mr. Philip Bell (Bolton, East)

George Orwell said that all animals were equal but that some animals were more equal than others. All hon. Members here are clever, but when we listen to these discussions one would have thought that some were more honourable and more clever than anyone else in the House. What we are discussing is this Order, which makes some reduction in a tax to which everyone objects. I am in favour of this reduction. I have the honour to represent a Lancashire constituency—Bolton—and one third of the employed people in Bolton are engaged in the textile industry.

Mr. Hale

Were engaged.

Mr. Bell

One third are engaged, and they are fine citizens. The last figures I have are very much as my hon. Friend said, somewhere about 1 per cent. on short time.

It is a popular thing for people discussing Purchase Tax on textiles to arrogate to themselves that they are talking for Lancashire. It sounds better and more impressive to be the champion of Lancashire. They might think more carefully when they do that, for only 13 per cent. of the persons in Lancashire are engaged in the textile trade, and it would not be such an electoral advantage to all Lancashire Members if, by some freak, they persuaded the economy to put all its eggs into the textile basket and then found that they were being blamed by the other industries for the effects of that.

One would have thought, discussing this Order, that hon. Gentlemen had never even heard of other industries. It would be the sort of childish nonsense that the most young politician brings up—whether it is the pedestrian essay that the hon. Member for Rossendale (Mr. Anthony Greenwood) rather unashamedly read, or the inconsequent torrent from the hon. Member for Oldham, West (Mr. Hale). One would have thought there was an easy problem, that Purchase Tax on textiles was simple, that the Chancellor really ought not to be detained here, but somewhere else, at Her Majesty's pleasure. It is interesting to see that in the pamphlet which, I think, is called "Challenge to Britain" it is suggested that a mere £2,000 million should be added to the Budget but that at the same time hon. Gentlemen opposite urge that the Chancellor ought to give away more revenue in addition to the £2,000 million which, no doubt, the Opposition think is available to throw away.

Mr. H. Wilson

On a point of order.

Mr. Speaker

Order. I have been listening to the hon. and learned Gentleman, but I cannot connect the remarks he is making with the contents of the Order before the House. This is a Prayer to annul an Order, and arguments on either side should be directed towards the advisability of either annulling it or leaving it to stand.

Mr. Bell

I am obliged. We have all been in a difficulty this evening over this. The point I was purporting to deal with was that the objection to the Order was that it was not good enough and that in effect the Government were miserly in not spending more. I was trying to make the point that the Bill was running up very considerably in imagination on the one side but that the hon. Gentleman opposite had no hesitation in running down the assets by saying "You do not need Purchase Tax; you can throw it away."

It is true that many of us would have liked the Order to go further. We accept the suggestions that a tax at this level has an adverse effect on the export trade, but we agree that that does not conclude the whole national argument. I hope that the Chancellor will be able to assure us that he accepts that the decision to deal with Purchase Tax is related very closely to the question of the export trade. I myself have no hesitation in telling my constituents, who are of a varied nature, that this is a difficult problem, not a simple one; and that, taking a large view, things of this nature must be carefully done because of their consequential effect.

One thing I certainly will not commit myself to do is to suggest, as it is quite clearly suggested now, that this industry is flourishing and strong and need do nothing but wait for Purchase Tax to be lifted entirely and then everything will be all right. That is malicious and untrue. It is propaganda which is being put forward.

11.3 p.m.

The Chancellor of the Exchequer (Mr. R. A. Butler)

First, we all have to accept that the debate is very limited. That, I understand, is the Ruling from the Chair, and that we quite understand. The Order deals only with Purchase Tax. Therefore, in answer to the hon. Member for Oldham, West (Mr. Hale), I say that it is impossible for me tonight to make any general statement about Lancashire as a whole. As I have said before, I hope that that will be made before we disperse. I think it is important that it should be made.

The second point raised by the hon. Member for Preston, South (Mr. Shackleton) was on the subject of a regulation—why did we do this by Order? The reason we did it by Order was that we have had a very great difficulty in getting business through in the very short time before the General Election. The precedents of 1929 and 1945 cover the drawing up of our Resolutions on the Budget, but they do not cover a procedure of this sort, as far as I am aware.

The reason I decided to do this by Order was that I thought it would give a separate debate and allow just as much time to hon. Members to discuss the Purchase Tax as would any other method. It should be remembered that I have under a previous Finance Act taken power to alter Purchase Tax by Order. I have taken power, approved by Parliament. Therefore, I am doing nothing unconstitutional in suggesting that this should be settled by Order. I did imagine—and this I think hon. Members can hold as a grievance against the House, not against me—that this debate would last from 9 until 11.30. I was informed that that was the arrangement, so there was to be a debate of 2½ hours. I am sorry that there was so much interest in the National Service question that this debate has been curtailed to that extent, as I have no wish to curtail discussion on this very important matter.

Having established that there is nothing unconstitutional in what has been done, powers having been given by Parliament to deal with Purchase Tax by Order, I should like to add that my distinguished predecessor, Sir Stafford Cripps, and my equally distinguished predecessor as a leader on finance in the Conservative Party, Mr. Oliver Stanley, both found in their day that Purchase Tax is a very big subject once it is put into a Finance Bill.

It would have been very difficult to cover the Purchase Tax in a Finance Bill of limited scope such as this, and if we had had the time that I had hoped I think the House and the Committee would have been able to consider the Purchase Tax at greater length. Confined as we are to the Purchase Tax, I address myself to the speeches that have been made.

I do not complain at all at the tone of the speeches which have been made from the other side of the House. The hon. Member for Preston, South, the hon. Lady the Member for Blackburn, East (Mrs. Castle), the hon. Member for Rossendale (Mr. Anthony Greenwood) and the hon. Member for Oldham, West, spoke with sincerity. The hon. Member for Oldham, West spoke with almost passionate sincerity. I quite understand that, for the position of Lancashire is not easy.

It is true, as has been pointed out by the hon. Member for Oldham, East (Sir I. Horobin) and other hon. Members from this side of the House, that there is in fact no big unemployment problem in Lancashire. That is because if the textile workers leave the mills there are so many new industries in Lancashire and they are more readily absorbed.

This does not mean that there is no textile problem. There is a very severe cotton problem, and that cotton problem is reflected in the short time working in some of the mills. I am sincerely sorry to hear the news the hon. Member for Oldham, West reports from his constituency. The Government are not at all unaware of this situation.

We have come across once more tonight the usual difficulty in dialectics between the two sides of the House as to whether this is electioneering or not. I cannot understand why, if this is such a mangy or stingy operation, it should be regarded as electioneering. I cannot understand why, when I put this forward in all sincerity to help the cotton industry, it is not regarded as a benefit and as eminently sensible. I put this forward as one of the ways in which the cotton industry can be helped. I have never claimed that the Purchase Tax covered the whole problem of the cotton industry.

I accept what has been said by the hon. Member for Preston, South that the method of levying the Purchase Tax does affect the craftmanship and quality of the goods. That was so before the D Scheme was introduced as a result of the recommendations made by the technical committee with a view to passing from the Utility Scheme into a different system of arrangement in which we could collect a proportion of the tax.

Therefore. I am much comforted that a member of the Douglas Committee, Sir Ernest Goodale, who is chairman of one of the firms most responsible for quality production of textiles in this country, has welcomed the concession which I have introduced. He is not only a man who knows all about the D Scheme, but also one of the leaders of quality textiles in this country.

In the "Furnishing World" of 22nd April he said: I welcome wholeheartedly the 50 per cent. reduction on non-wool furnishing fabrics. This is as far as the Chancellor is probably justified in going in one step before the final abolition of this thoroughly bad tax. No one, however, will be satisfied until all textiles are free from it. I particularly welcome the Chancellor's reflections on the need to help furnishing fabrics and quality textiles, and I think this reduction will be a help. Representations on these points and on the harm which Purchase Tax is doing in preventing fabrics required in the export markets from being produced, are at last beginning to bear fruit. I have read the whole quotation, which shows that Sir Ernest Goodale is not entirely satisfied, but it shows he finds that representations have borne fruit. He thinks we ought to go further; but he thinks this is as far as I am justified in going in one step before the abolition of the whole tax is possible. I know it. would have been more agreeable to hon. Members if I had been able to abolish the whole tax on textiles.

Now Sir Raymond Streat, the very ardent and able leader of the Cotton Board, has referred to the matter and the Government in terms with which we are quite familiar—that we have thrown the cotton trade a sop rather than a lifeline, that he was completely convinced that nothing less than the cancellation of Purchase Tax would enable the industry to succeed in the struggle for export trade. That means that the cotton trade has nailed its claim to the mast. It is not content with anything but £42 million out of the present Budget, and I must tell the cotton trade quite firmly that I cannot do that. It is very important that the Chancellor of the Exchequer of the day should state quite clearly what he can do and what he cannot do. I cannot give an extra £42 million of purchasing power out of the present Budget at the present time.

Mr. Shackleton

Would the Chancellor say how much of that £42 million is borne on the non-woollen textiles?

Mr. Butler

I can give rough figures to the hon. Member. A sum of £7 million is involved on the woollen and non-woollen sides of the cloth side, a sum of £27 million on clothing and head-wear, a sum of £6 million on the haberdashery, a sum of £2 million on footwear, and some £500,000 on mattresses, bolsters and so forth. The woollen side is only about £1 million and the cloth side £6 million of the sum of £7 million which I mentioned first.

That is the answer I give. I am sorry I cannot do it. Whether there is an Election or no Election, I do not think we on this side of the House will profit unless we are absolutely frank with whatever electors we have to face and unless I make myself absolutely clear in what we can do and what we cannot do. I cannot put an extra charge of £42 million on the Budget by the loss of this revenue, so what was it that was open to me to do?

I decided that I could make some reduction on the quality textiles, particularly cloth, and I am glad that Sir Ernest Goodale has recognised it is of value that we should do something for furnishing fabrics, quality textiles and so forth, which I understood in 1952, when we had all-night sittings and hon. Members opposite put the case with great sincerity, was what the country wanted. So I decided that I could reduce the tax on that by half. Some people say I ought to go further, and I have been waiting for this debate to hear from hon. Members whether they had constructive suggestions as to how I can go further. I must honestly say that, while I do not deny the sincerity of the points put by my hon. Members, I have missed the constructive suggestions as to how I could go further.

Hon. Members

It would be out of order.

Mr. Butler

It would not be out of order, because I wanted to hear why reduction by a half only is inadequate in dealing with the cloth aspect of the textile trade. My own position is this, that I am ready at any time to consider any method of helping the cotton industry by means of the Purchase Tax, which is only one aspect of this large problem, but I cannot do anything which will result in the destruction of this tax.

At the present moment we have a defence programme which is going to be enlarged by the German defence costs, and we have social services which, in respect of health and education, are going up. Therefore, we must depend upon the Purchase Tax as a revenue producer in our Budget. So any step I take on Purchase Tax now must be of a limited character, because if I were to destroy the structure of the tax, which is so easy to do by taking the wrong step, I should be destroying a source of revenue which we absolutely need in balancing our defence and social service payments and other things.

Mr. Burke

Does the right hon. Gentleman realise that the structure of this tax is inimical to the best quality trade, and can he tell us why it is that this is the only major industry that has an imposition of this kind upon it?

Mr. Butler

I would not say it was the only major industry, because a great many complaints come to me about this tax from furs, jewellery, motor cars and different sections of industry. I am afraid that it is an unpopular tax, but I need the revenue from it.

I was saying that I would be glad to listen to what hon. Members would have to suggest, but I must remind them that if we had tried to go very much further there would have been considerable difficulty in dealing with the wool aspect. The wool aspect is a very difficult one because there has always been a ratio between the cloth and the wool for made-up garments, which makes it important for the structure of the tax and its administration and collection.

I have put to the House some of the difficulties with which I am faced. Tonight's debate cannot be a final one on the question of Lancashire as a whole. It is only a question of getting a specific Order which is of a small extent and which does some good to the textile trade, as Sir Ernest Goodale has said.

Mrs. Castle

Could the right hon. Gentleman, in view of what was said yesterday and what he has said now, tell us when we are to get the further opportunity?

Mr. Butler

I said that I hoped it would be before we disperse—at least, it should be. I cannot give an actual date.

Mrs. Castle

I asked whether we were to have a debate.

Mr. Butler

That is a matter for the Opposition, who have the choice of debates. They have a very amenable and agreeable Leader of the House with whom to argue these matters, so I will leave it to him.

I have only one duty tonight, and that is to ask the House to pass this Order. I know that it is limited in scope. I know that it is in the interests of all parties, not least of the textile industry itself, that the problems of Lancashire should be dealt with comprehensively. The House can be assured that any further action which the Government can take to resolve the anxieties of Lancashire will be taken as soon as it is clear that it will be in the real interests of the textile trade.

I can go no further than that this evening. I have listened with care to the anxieties expressed by hon. Members. The interests of Lancashire are uppermost in all our hearts this evening, and that is as far as I can go in asking the House to pass this Order.

11.17 p.m.

Mr. Harold Wilson (Huyton)

I want to assure the Chancellor at once that, so far as I am concerned, I shall never accuse him of electioneering as regards this Purchase Tax change, because I think the speeches from both sides of the House have made it plain that its value to Lancashire in her hour of need is so small that no one could expect to win any votes by it.

It is difficult to deal with the points raised by the right hon. Gentleman without getting out of order quickly. The difficulty with which we are all faced, especially on this side of the House, is that it is impossible, and has been impossible, to debate the situation in the industry properly over the last few months. When we tried to have a general debate about it we could not say anything about Purchase Tax because we were waiting for the Budget. Then we were promised a statement, and now we are told that we shall get one before we disperse, and I cannot follow that point without getting out of order.

I submit to you, Mr. Speaker, and to the House that it is impossible for the House properly to judge the value of the concession without knowing what other things the Chancellor will do for Lancashire. We cannot form any clear impression of what level of unemployment we must expect to face in Lancashire until we know whether, and when, the Government will accept the advice which we gave them on 9th March.

Coming to this Order, my hon. Friends who moved and seconded the Motion—and, if I may say so, did it briefly to allow as many hon. Members on both sides of the House as possible to take part in the debate—complained about the procedural question, which the Chancellor has not answered. The real point about this procedure is that we cannot propose any amendments, and when the right hon. Gentleman says he has been waiting to hear what we have to suggest, the answer is that almost everything we could suggest as an alternative to this miserable little Order would be out of order tonight.

If we were to deal at any length with the vital need for a reduction of Purchase Tax on the garments embodying poplin shirtings etc—which are far more important as regards the export trade—we should be out of order, and therefore we shall not do it. If we were to deal with other aspects of the export problem which have been only barely touched upon, again we should be rapidly out of order.

I think that hon. Members on both sides of the House are, above all, concerned about the effect on our export trade of the present level of Purchase Tax, particularly on quality goods. That point has been made on both sides of the House in repeated debates and at Question Time, and the Chancellor showed in his brief reference to it last Friday that he had the point very much in mind. He said then: … it is that aspect of it that I am examining."—[OFFICIAL REPORT, 22nd April, 1955; Vol. 540, c. 567.] That is another matter on which I should like to question him. What does he mean when he says that he is examining the question of Purchase Tax on these quality fabrics? Does this mean that this is not a final decision? I am not referring to the possibilities of changes in Purchase Tax in any future Budget speech which the Chancellor may hope that he will some time have the opportunity to make.

Does he mean that he is examining the question here and now, and hopes to make further changes in Purchase Tax, perhaps in the next few days, or perhaps, if he is successful in being returned to office, in the next few weeks or months? Is that what he means, or does he mean that he is not examining the question at all but is closing the book, or leaving it open for consideration another year? Tonight he sounded definite, as if he were deferring his examination and had come to the conclusion that no more can be done.

The only part of his speech of which we would complain was his rather ill-tempered reference to Sir Raymond Streat and the Cotton Board. He seemed to be saying very clearly that it was not possible to contemplate any further change in Purchase Tax so far as the textile industries were concerned. Then he told us about the increases in Government expenditure that he has to meet.

Mr. R. A. Batter

My references to Sir Raymond Streat were certainly not intended to be ill-tempered. I was referring to the figure of £42 million, which is too much for me to place on the Budget as an extra charge.

Mr. Wilson

I am sure the right hon. Gentleman shares the high regard which we have on this side of the House for Sir Raymond Streat. But when he tries to tell us why he cannot afford the £42 million and talks about the German defence contribution and all the rest of it, obviously to follow him would put us out of order very quickly indeed. But perhaps it would be in order, or as much in order as the right hon. Gentleman was, to remind him that the £42 million that Lancashire and other textile areas are asking for is almost exactly equal to the amount of the concession which he has given to business companies the vast majority of which are not in as great a need as is Lancashire at the present time.

I made a fair point last Friday when I reminded the right hon. Gentleman that his concession to two big monopolies, Unilever and I.C.I., was almost as great as the total volume of his concession to the Lancashire textile industry, and he has not answered that point.

Sir I. Horobin

Both of them have large works in Lancashire. Why draw a distinction between the two cases?

Mr. Wilson

Because they happen to be the two largest beneficiaries in the right hon. Gentleman's Budget. If the hon. Gentleman wants to tell his constituents in Oldham that I.C.I. needs concessions more than the cotton industry, I wish him luck.

Before I conclude, I want to remind the Chancellor of one argument which will unite both sides of this House on this question. It was recently said by Mr. Winterbottom, who is recognised as a great authority on this question, that Lancashire in the past has avoided serious difficulties because of her adaptability and flexibility in being able to change production almost from one moment to another as market demands change, but that at the present time this flexibility and adaptability which are so essential to Lancashire are denied to the industry, because at the one end of the scale there is no flexibility in view of the large imports of grey cloth—I will not pursue that argument now—and at the other end of the scale Purchase Tax places real inhibitions on any further changes and developments there. We should all agree with that argument. I think that the Chancellor accepts it in principle, but he does very little about it in practice.

The right hon. Gentleman must be well aware that some of our best export lines are being frustrated at the present time because of Purchase Tax. I only wish that we had had an intervention from the President of the Board of Trade. He has been very quiet during the debate. The President, with his responsibility for Lancashire, cannot be satisfied with what the Chancellor has done. Surely, if he has anything about him at all, he has been putting strong pressure upon the Chancellor to do more in the matter of Purchase Tax. If he had succeeded he would have had the support of hon. Members on both sides of the House representing Lancashire constituencies—and many other hon. Members. It must be regarded as one of the President's greatest failures that he has not been able to succeed in persuading his right hon. Friend to do something more about this tax.

Because of the narrowness of the scope of this debate, no one can deploy the arguments he would have liked to. The Chancellor has followed a very doubtful procedure—and he had to admit that there was no precedent for it—which has meant that he has been spared the debate that he ought to have had to face because of his treatment of the cotton industry. The most that we can hope for now is a statement. Goodness knows when we shall get it. It would be difficult to arrange the business of the House so that we could debate it. We are to debate the question of Development Areas, but we do not know whether we shall get a statement on cotton before that.

This is an extraordinary way to treat the House and a great industry. If the Chancellor has managed to avoid a debate upon this issue tonight because of the rules of order, it is our duty to remind him that he will not be able to run away from that debate in the next few weeks in Lancashire.

Question put and negatived.