HC Deb 15 November 1955 vol 546 cc211-371

3.42 p.m.

The Chairman

I think that it will be for the convenience of the Committee if we discuss with the first Amendment in the name of the right hon. Member for Leeds, South (Mr. Gaitskell) the third Amendment, also to page 1, line 19, in the name of the hon. and learned Member for West Ham, South (Mr. Elwyn Jones).

Mr. Elwyn Jones (West Ham, South)

I beg to move, in page 1, line 19, at the end to insert: except insofar as it applies to articles made wholly or partly of rabbit fur skin. and also in line 19, at the end to insert—

The Chairman

The hon. and learned Gentleman can move only one Amendment at a time, though the two Amendments may be discussed together. If a Division is required on the second Amendment, in due course I will put the Question on that Amendment.

Mr. Elwyn Jones

I am very sorry, Sir Charles, but the noise was such that I did not hear your Ruling when you announced your decision on this matter. I am very happy that it falls to me at this stage only to deal with the first Amendment on the Order Paper. The purpose of this Amendment—

The Chairman

I do not think the hon. and learned Gentleman has understood me. Now we will discuss both rabbit skins and other skins on the first Amendment, which deals with rabbit skins only, and, when the time comes, if necessary, I will call the other Amendment, and there could be a Division if the Committee so desires.

Mr. Elwyn Jones

I am much obliged. I must confess that my particular interest, and, I am glad to say, the principal interest of my right hon. and hon. Friends, is in the first Amendment, and the purpose of it is to remove what we on this side of the Committee regard as a palpable harshness and injustice.

The purpose of the first Amendment is this. Under the D Scheme, rabbit skin garments in the main were free of Purchase Tax. In the case of coats of rabbit skin fur the wholesale prices ranged from £6 to £16, with the bulk selling at £12, which was the D line limit. The effect of Clause 1, therefore, is to impose generally a 50 per cent. tax where none was chargeable before, and means, in effect, an increase of £9 on the retail price of coney fur coats hitherto selling at £18. In the case of garments of this type selling at £16, which hitherto bore a Purchase Tax of £1, the tax now becomes £7, which is a tax increase of 700 per cent., and which must be a high record for any Chancellor of the Exchequer to have achieved. This rate of tax compares with a rate of only 5 per cent. for all other articles of apparel of comparable value previously covered by the D Scheme.

This tax has already proved to be a most disastrous one for this small industry. The announcement was made in the Budget at the height of the season for this trade, when normally the bulk of the orders are placed, and, as a result of the Chancellor's announcement, orders for hundreds of these garments have been cancelled and a large quantity of goods of this type in preparation have, in effect, become unsaleable overnight. Already, many small men are in grave danger of being ruined by this Purchase Tax, and there is little doubt that unless something is done very quickly, many bankruptcies will result from this crippling measure of taxation.

A curious feature of this 50 per cent. tax is that it appears to be quite contrary to what are the avowed objects of the Budget, and, indeed, quite contrary also to the assurances of the Chancellor. The Chancellor assured the House, when abolishing the D Scheme: I am not proposing to apply the full rigour of the new rates of Purchase Tax to the articles affected."—[OFFICIAL REPORT. 26th October, 1955; Vol. 545, c. 222.] I do not know how the Chancellor designates the rigour of a tax of 50 per cent., but I would describe it as achieving a rigor mortis certainly for this industry, if the tax is not to be abolished or very substantially reduced. Indeed, the Chancellor will by this tax achieve for the rabbit skin industry what even myxomatosis failed to do for the ordinary rabbit. It will probably kill it altogether.

None of the ostensible reasons for the introduction of this wretched Budget really applies to this particular case. First of all, it cannot in any circumstances be claimed by the Chancellor that there has been an inflationary upsurge of home consumption, if I may be permitted to use the language of the Treasury Bench in dealing with this matter. In fact, home consumption of these rabbit fur garments has diminished. Nor can it be said that capital investment in the form of new buildings or machinery has taken place in this little industry. Nor does this industry call for the use of coal and steel or any of the other vitally essential materials.

Then, dealing with another of the excuses for the Budget, there is no possibility, at any rate at present, of a diversion from home to export markets of this particular commodity. I understand that there is no market of any importance abroad for these rabbit fur garments except, for some extraordinary reason, in Brazil. It was with a view to developing the possibility of an overseas trade for this industry that recently the British Coney Fur Association held the International Coney Fashion Show, in London. It was a remarkable success, especially for the British manufacturer. The show indicated quite clearly that fashion from time to time covers a multitude of skins. The British fur industry, as represented in this exhibition, competed successfully with foreign producers.

The ability of the British trade to compete in this way was really created by the development since the war of the small but stable home market for this rabbit skin apparel which, because it has been largely free of Purchase Tax, could sell at reasonable prices to suit the small income group willing to wear the articles which this industry has produced. The elimination of rabbit skin garments from the home market, owing to this crippling Purchase Tax—

Mr. David Griffiths (Rother Valley)

On a point of order, Sir Charles. May we appeal for a little decency from the Chancellor of the Exchequer? Instead of lounging about and talking to the Government Chief Whip, will he listen to my hon. and learned Friend explaining his Amendment?

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

I had just been observing what an excellent speech the hon. and learned Member was making, an observation with which the Government Chief Whip warmly agreed.

Mr. Elwyn Jones

I hope that those most kindly and gracious words indicate benefits to come in the shape of an early announcement from the Treasury Bench that this Amendment will be accepted. If the Chancellor is prepared now to rise and say so, I shall most gladly discontinue a speech which I confess is about a branch of both law and politics upon which I cannot claim any expertness. Nevertheless, I make these representations on behalf of some constituents who are gravely affected, and who will be ruined if the Chancellor does not move in this matter.

I was venturing to say that the elimination of rabbit skin garments from the home market, owing to the imposition of this 50 per cent. tax, can have only one effect, and that quite contrary to the alleged objects of the Budget; that is to say, it will result in the diversion of spending from an article of apparel which is not at present exportable, to other articles of apparel, made of wool, nylon or cotton, which are exportable, and which, under the new Purchase Tax regulations bear a tax of only 5 per cent. and will, therefore, of course, be very much cheaper. This 50 per cent. tax will increase the domestic consumption of exportable goods, which cannot possibly be the wish or the intention of the Chancellor.

Concerning the Chancellor's argument about the restricting effect the D Scheme on quality and design of manufacture—a matter to which I understood he attached importance—I believe, and I have seen some evidence of it at the fashion show which I was privileged to attend, that the exact opposite has been the case in the rabbit skin apparel industry. Since the introduction of the D Scheme, which placed almost the whole range of these rabbit skin garments in the tax-free category, the standards of quality and design of these things have improved very considerably; and the British manufacturer is able to compete very well in standards with any country and any fashion centre in the world. This tax, if it really is to be imposed, will have the effect of driving out of the industry this small number of skilled craftsmen who, at the moment, are doing such admirable work. I cannot believe that the Chancellor intends that to happen.

Another objection to this tax is that it will add to the already disturbing collection of anomalies connected with the Purchase Tax. There are some new gems created by the current proposals. For instance, rabbit skin when used as a cape collar for a cloth coat are part of a garment bearing a 5 per cent tax. It matters not if the fur trimming is a mink trimming. It still bears a 5 per cent. Purchase Tax. But a rabbit skin, even of identical value with that used as a trimming, when turned out as a cape lined with some textile material, will bear a tax of 50 per cent. Rabbit skin gloves will bear a tax of 5 per cent. but a rabbit skin coat will carry a tax burden of 50 per cent. Garments made of nylon fur, that astonishing product of modern science, are to be subject to the 5 per cent. rate, but the poor rabbit skin garment is, for some reason, selected for a 50 per cent. tax.

Perhaps the sublimest achievement of the great intellect of the Treasury Bench is this. It may be said that, at least, this tax is equal. The mink coat selling at £1,500 will go up by £9, as well as the rabbit skin coat selling at £12. I suppose that this could be described as the cream of Tory social justice—equal sacrifice for all, putting the national burden equally on all shoulders; £9 on the £1,500 mink coat, £9 on the £12 rabbit skin coat. This is a new cry; this is the Tory answer to the challenge of Communism, Socialism and everything else.

I have been delighted to see that certain hon. Gentlemen opposite have put their names to an Amendment to the First Schedule which is designed to have the same effect as the first Amendment in the names of my right hon. and hon. Friends and myself. If, despite the kindly words which the Chancellor has addressed to me, he feels unable to concede that for which we ask, and a Division is necessary, I sincerely trust that those hon. Members will take their courage in both feet and march with us into the Division Lobby. We regard this as a serious matter, and the tax as an unjust and inequitable one.

4.0 p.m.

Mrs. Eirene White (Flint, East)

I support the Amendment, because I cannot see why persons wishing to buy these hitherto cheaper fur garments should be penalised in this very drastic way. There was a time when it was said that no self-respecting woman would be seen dead in rabbit, but in the last few years immense improvements have been made in the rabbit fur industry. It is a home industry. We rely to a considerable degree upon domestic rabbits. [Interruption.] It is the wild rabbits which have been affected by myxomatosis.

This tax is a hardship upon those who, up to now, have been able to buy a reasonably cheap, good-looking, warm and comfortable fur coat. It will adversely affect one of our industries which, although not a great industry, is quite an important one in certain localities. It is an industry which I should have supposed the Chancellor would have wished to encourage. It is not only the firms which make these fur coats, capes, stoles, and so forth, which will be affected; this rather peculiar tax will have anomalous effects upon other industries.

One industry which has already been adversely affected by the sudden increase in Purchase Tax upon rabbit skins is the slipper industry. I am quite sure that many hon. Members, when faced with the problem of what to buy their wives for a Christmas present, turn to slippers. If that is in their minds, I hope that they will remember that, with the present rate of tax, on no account should they consider buying slippers which are trimmed with rabbit skin. Owing to the incidence of the tax as now proposed in the Bill, the purchaser of a pair of bedroom slippers with a little trimming of rabbit skin will have to pay a tax of 50 per cent. If, on the other hand, he should be attracted by a slipper which, though identical in every other respect, has a trimming of lambswool, he will have to pay only 5 per cent. tax on the slipper as a whole.

I have brought with me one of each type of slipper. They are not cheap. The one which is trimmed with rabbit fur bears a 50 per cent. tax, and that trimmed with sheared lambswool a tax of only 5 per cent. In all other respects the slippers are identical. The curious thing is that of the two trimmings the rabbit fur is the cheaper. For this type of trimming—1¼in, wide—one has to pay 2s. 1d. a yard for rabbit and 2s. 5d. a yard for wool. The lower tax is imposed upon the dearer trimming.

Hon. Members opposite may think that this is just an amusing little joke, but it is far from it. In certain parts of the country there is a fairly concentrated industry which produces shoes and slippers, especially in certain parts of Lancashire. I have obtained particulars relating to the persons engaged in this trade, which has been most seriously affected by the sudden increase in tax at a time of year when it has the maximum impact upon Christmas trade. It is perfectly true that slippers are one of the most popular items in the Christmas trade, and in this area of Lancashire—there are other such areas, but I have not particulars in respect of them—no fewer than 56 firms are engaged partly in the manufacture of slippers such as I have just shown to the Committee. Of these firms, 27 are concentrated in one locality—the Rossendale Valley—and they employ about 12,000 operatives.

At this very moment one firm has had to hold up 15,000 pairs of rabbit fur trimmed slippers because the retailers have said, "We are very sorry. We had intended to order these slippers for our Christmas trade, but now that the Chancellor has imposed a 50 per cent. tax upon rabbit fur trimmings we are no longer likely to be able to sell them, because the increase in price will be so considerable. We regret that we shall not be able to complete these orders." This extra difficulty has arisen at this most inconvenient time of the year. These slippers retail in the shops from about 16s. 11d. to 26s. 11d., and those prices will be increased by 50 per cent. if the slippers are trimmed with rabbit fur; but not if they are trimmed with lambswool.

Another peculiar fact is that no such anomaly arises in the case of gloves. If someone is thinking of buying gloves for his wife at Christmas time he need not worry, because it does not matter whether the gloves are trimmed with lambswool or rabbit fur; the tax is 5 per cent. in either case. The difference in relation to slippers is a ridiculous anomaly, and I hope that the Chancellor will be able to clear up the matter. It may seem to be a trivial matter, but for the areas concerned it is quite a serious one.

Another peculiarity arises in connection with children's slippers. The smallest sizes are tax free, but the moment a little rabbit fur trimming is added they become liable to a 50 per cent. tax. That also seems to be a ludicrous anomaly. I seriously ask the Chancellor to have second thoughts in this matter. The tax hits one section of an industry in a quite unnecessary way. I cannot see why, if a slipper has a little lambswool round it, the tax should be 5 per cent. whereas if it has a little rabbit fur round it, the tax should be 50 per cent. I cannot appreciate the distinction which the Chancellor draws between lambs and rabbits. Perhaps he will be able to explain it later. One would have supposed that he would have been able to put the two on the same footing, and I very much hope that he will do so.

The Financial Secretary to the Treasury (Mr. Henry Brooke)

If the hon. Lady the Member for Flint, East (Mrs. White) will kindly lend me her slippers—I see that they are odd ones, so I promise not to give them to my wife or children—I will give consideration willingly to the point she has raised. She will appreciate that I cannot give an answer to her on the spur of the moment. The Amendment does not single out slippers, but is a general Amendment concerning rabbit fur. If she will accept my suggestion I will gladly look into the matter further. She will also, of course, realise that I am giving no undertaking to remedy the matters to which she has drawn attention, but they will certainly receive consideration.

The hon. and learned Member for West Ham, South (Mr. Elwyn Jones), who moved the Amendment in a speech which my right hon. Friend the Chancellor of the Exchequer was given an unexpected opportunity to praise, and which we all enjoyed, made it clear that the principal interest of the Opposition was in the first of the Amendments to Clause 1 though the debate is ranging over the first and the third. Perhaps I may begin with the third, which would exempt furs generally from the abolition of the D Scheme.

An object of the Bill is to abolish the D Scheme universally. Experience has shown that the scheme does not work satisfactorily. It operates against quality goods, causes a good many administrative difficulties and discourages the production of the best goods for export purposes.

The D level for furs is fixed at £12. The tax has hitherto been at the rate of 50 per cent. on the wholesale value in excess of £12. The result of the Chancellor's scheme will be to increase by £6 the tax on all furs above a wholesale value of £12 and, of course, by 50 per cent. of the wholesale value if that value is below £12. The hon. and learned Member spoke of an increase of £9 in the retail price. I think he was assuming that the retailer would add on another £3.

Furs are also the only article hitherto taxable at 50 per cent. which has been exempted from the increase from 50 per cent. to 60 per cent. I made it clear in a previous debate that it was felt that if the fur trade simultaneously lost its D exemption and suffered an increase in the main rate, it, alone of all industries, would be hit twice. That is why it was decided to leave the rate at 50 per cent. but to abolish the D level.

The hon. and learned Member sought to convince the Committee that we were being extraordinarily kind to expensive mink coats. He did not quite bring out the point that a mink coat of £1,000 wholesale value will be already paying £500 in Purchase Tax, so that the taxation will continue to be very heavy on expensive articles.

Those are the reasons why the Chancellor's action has been taken on this basis of simply abolishing the D exemption. The case made by the hon. and learned Member and supported by the hon. Lady is that the proposal will operate particularly harshly on the cheaper furs. The Opposition, in its first Amendment, has singled out rabbit fur alone among the cheaper furs. It is not, of course, the only one. One reason why I could not advise the Committee to accept the Amendment is that the Amendment would create fresh anomalies by giving special advantage to rabbit skins as against, for instance, moleskins or sheepskins. In a tax about which the Committee complains with some frequency that anomalies exist we should he most unwise to add to the anomalies.

4.15 p.m.

Moreover, in the former days, the 33⅓ per cent. rate of tax on Utility furs and 100 per cent. on other furs, created difficulties, caused distortion of the trade and operated as a temptation to manufacturers to make and sell cheap goods which were sometimes of not very high quality. I am afraid that it might have just that effect if we were now to grant specially favourable terms to the cheap articles.

I accept at once that this is bound to be an unpleasant blow to the cheaper end of the trade, but I cannot accept the suggestion that it will render those goods unsaleable. They are not what are called "fixed-price" goods. People do not go along to the shops expecting to see fur coats at a particular price. The public will soon accustom itself to the adjusted prices that will follow. [HON. MEMBERS: "Oh."] We shall certainly see what happens.

There is very considerable buying power in the nation; more, perhaps, than the hon. and learned Member realises. I do not believe for one moment that the provision will put rabbit-fur goods beyond the reach of the public or will produce a situation in which the public will cease to buy.

Viscount Hinchingbrooke (Dorset, South)

Is not my right hon. Friend now, in a sense, conceding the whole argument which has been put forward by some of us that these changes will raise the general price level and will produce a new degree of inflation?

Mr. Brooke

My noble Friend may have opportunities to put that particular viewpoint when we discuss the rates of tax. I certainly cannot accept here the suggestion that to put a tax on cheap fur coats is an inflationary action. It is most important, in the view of the Government—

Mr. M. Turner-Samuels (Gloucester)

Does not the right hon. Gentleman agree that it would not be worth dealing with this matter unless there were a substantial sale on? Does it not follow that if the price is going higher it is making for inflation?

Mr. Brooke

If the price goes higher and if people decide, after pausing to think, that they will buy all the same, they will find that they have less money to spend on other things. That is precisely one of the objects of the Bill. If we single out goods of rabbit fur for a special concession we shall introduce once again an artificial distortion into the fur trade.

I must advise the Committee that it will be much wiser to stand by the Chancellor's proposal of abolishing the D Scheme. The trade will adapt itself to the new situation. This will take a bit of time, but will happen in the long run. The change will be of great advantage to the whole of the fur trade in that there will be no special tax incentive towards the production of specially cheap goods.

Mr. R. T. Paget (Northampton)

I am somewhat confused. Could the Financial Secretary tell us when an increased price is inflationary and when it is deflationary?

Mr. Brooke

I have already told the Committee that when someone, having stopped to think whether to buy at the higher price decides, even so, to buy, that person will have less to spend on other things.

Mr. F. Beswick (Uxbridge)

My hon. Friend the Member for Flint, East (Mrs. White) put an unanswerable case about footwear—fur-trimmed slippers and children's bootees. The Financial Secretary replied that he needed further time to consider this matter, as the Amendment was but newly upon the Order Paper and he was not aware of the details and anomalies disclosed by my hon. Friend. Here I have a copy of a letter, dated 3rd November, from the Federated Associations of Boot and Shoe Manufacturers and the Footwear Distributors' Federation. It is addressed to the Chancellor and it makes precisely those points. Not only that, but they say that their officials have had prolonged discussions with Treasury officials about the anomalies which will be created if this tax is imposed.

Are we to understand from the Financial Secretary that those representations made by officials of reputable trade organisations have not, in fact, been given any consideration at all? Does he mean that Treasury officials went through all the form of having discussions with the officials of these federations but that he is still unaware of their case? If he did give any consideration at all to the detailed case put before him by these two bodies he should be able to give the answer today. It seems surprising, indeed, discourteous to the responsible organisations concerned. The right hon. Gentleman owes the Committee an explanation.

Mr. Austen Albu (Edmonton)

The Financial Secretary's defence of the Clause is that if people have to pay more for those articles on which the tax has been increased that will leave less money in their pockets. I suppose that will be the reply from the Treasury Bench to every Amendment. It would have been more honest had the Government sought to reduce the amount of money in people's pockets by raising Income Tax, instead of reducing it. It is rather extraordinary to reduce Income Tax in April so as to give people more money to spend, and now to decide that they should have less. I fully understand that in the course of the change the money has passed from one set of pockets to the other.

In contending that this increase would not have a serious effect on the trade concerned—which seems to contradict his previous argument—the right hon. Gentleman said that people will gradually accustom themselves to the higher prices; that, in this trade, the goods are not branded and fixed price arrangements do not operate; that prices vary. Our experience over the last few years has been that people's reaction to higher prices is to demand higher incomes. There is no reason to think that if the object here is not to assist—or to force—the industry to export, it will not have the general effect of raising the cost of living. The proposal could have no other than an inflationary effect, as my hon. Friend the Member for Flint, East said just now.

People may forget the prices at which the same goods were previously sold, but, of course, they compare the prices of the goods on which the tax is substantially increased with those of goods which have not been so affected. In the case of outer garments, for instance, the price on goods made of wool will not go up so much, but it will have a much more substantial effect on the industry which we are now discussing. That may make for unemployment in some areas and will certainly cause some dislocation of trade. When the price level slowly rises people may forget, but they will take note of a drastic rise in the price of one particular class of goods.

We should, of course, prefer our first Amendment to be accepted, but if the Chancellor cannot do that, perhaps the Amendment in the same page and line, at the end to insert: except only that the said section nine shall continue to apply to garments made wholly or partly of fur skin as defined in Part I of the eighth Schedule to the Finance Act, 1948. would have something of the same effect and meet the difficulty mentioned by the Financial Secretary, of singling out rabbit skin fur from other classes of cheap furs and skins.

That would restore the position established during the war, when some sort of Utility fur coat was a new thing. The wearing of some kind of fur coat has become not quite such a sign of great affluence—and not everyone can distinguish mink from other furs. The existence of a coat made from relatively cheap skins, and on which there was very little tax, has been useful in providing an amenity for a large part of the population. This very drastic increase in the tax by the abolition of the D Scheme has killed that, and I imagine that this trade will very largely have to go out of business. It seems extraordinary that, by dealing in this way with types of exemptions that have existed for so many years, the Chancellor should be able to wipe out a class of wearing apparel which has given a large number of people pleasure, with utility.

Mr. F. A. Burden (Gillingham)

One matter which has not been raised so far—and which may or may not be valid—is the relationship of the processing and dyeing of rabbit skins to our general export trade in furs, which is very considerable. The need is to keep the dyeing and processing firms employed for the major part of the year. Though there are not many of these firms, they do need this cheap trade so as to maintain their high-quality work in the more expensive skins which are sent abroad in considerable quantities, and which earn a great deal of foreign exchange. As the hon. Lady the Member for Flint, East (Mrs. White) has pointed out, there is an anomaly here, and its correction might give considerable relief to the dyers and processers by enabling them to have a sufficiency of trade during the slack of one particular class period by processing these furs.

I would particularly draw my right hon. Friend's attention to the use of rabbit skins in children's clothing, shoes and headgear. I should be grateful if he would pay particular attention to the effect there will be upon the well-being of the fur trade in general if its ability to use rabbit skins during the slack period is allowed to lapse.

4.30 p.m.

Mr. Eric Fletcher (Islington, East)

I was very disappointed at the speech of the Financial Secretary. As I understand, the whole object of discussing the Finance Bill in Committee is to draw the attention of the Treasury to the various anomalies and injustices which occur as the result of the detailed application of the Budget proposals. I do not think that we will be able to make very much progress if the Financial Secretary intends to fob us off every time that a perfectly sensible, straightforward Amendment of this kind is proposed by his stating that he has not had time to consider it.

I do not think that his statement is accurate. It may well be that this Amendment has not been on the Order Paper for very long, but since the Budget the industry concerned has made representations to the Treasury. The Treasury has had abundant opportunity of considering the unjust effects which the Finance Bill will have on the whole of the rabbit fur skin trade, and, in particular, in the application of rabbit fur to children's bootees. Before we finish with this Amendment I hope that we shall have an answer to one or two questions which I want to put to the Chancellor of the Exchequer.

We can all understand, although we do not agree with him, his broad general approach to the Budget. He wants to save the £, improve sterling and implement some of the assurances which he gave at Istanbul. Is it really necessary for that purpose to put this tax on children's bootees? Is that necessary for the Chancellor's Budget? Are we to be told throughout this Committee stage that these matters of detail cannot be dealt with?

I thought that the case presented by my hon. Friend the Member for Uxbridge (Mr. Beswick) was completely unanswerable. The rabbit skin industry is in a category quite different from that of expensive furs. We all know what will be the result of the Chancellor's suggestion about mink and ermine, but the rabbit skin trade has benefited from the D Scheme. Here an industry has grown up under the protection of the D Scheme. It has thrived and prospered and, because the home market has been unsuitable in recent years, it has been able to develop a flourishing export trade. As my hon. Friend pointed out, the effect of taking away this protection from the rabbit fur skin trade will be twofold.

First, as has already been made apparent, the industry will be dealt a body blow. The manufacturers say that this will have a crippling effect and orders will be cancelled because they will be unable to supply at low prices. Prices are now very nearly doubled by a tax which has gone up in some cases by 700 per cent. There will be two indirect results. First, it will completely wipe out the export market which the industry had been developing, because it cannot expect to have any kind of export trade unless it is based on the home trade. Secondly, it will drive those no longer able or willing to buy rabbit fur skin to buy other skins of a more expensive kind, and this will have an additional inflationary effect.

It is not good enough for the Financial Secretary to say that children's bootees would introduce an anomaly. I have no doubt that during the course of these debates the word "anomaly" will be bandied about a great deal. We must recognise at the outset that we cannot get a perfect Purchase Tax system which is free from all anomalies, and, therefore, it is not good enough to give that as an excuse for not dealing with one particular suggestion on its merits.

It is quite intolerable to introduce into Purchase Tax legislation a system whereby a pair of children's bootees lined with rabbit attracts a 50 per cent. tax, whereas when lined with lambswool the tax is only 5 per cent. There is no necessity for such an arrangement. It is contrary to common sense and it introduces an anomaly. I hope that, in order that we may make some progress with even more important Amendments on the Order Paper, the Chancellor will be able to give us an assurance that he will accept the principles in this Amendment, and give effect to what we have in mind.

Mr. Bernard Braine (Essex, South-East)

I hope I shall be in order, Sir Charles, if I address myself principally to the third Amendment on the Order Paper.

The Chairman


Mr. Braine

Anyone listening to the hon. Member for Islington, East (Mr. E. Fletcher) and the hon. Member for Edmonton (Mr. Albu) would imagine that the rabbit side of the fur trade industry contributed something of substantial importance to the trade and, therefore, to the economy of the country as a whole. I assure the Committee that that is not so.

The hon. Lady the Member for Flint, East (Mrs. White) made a most engaging speech with the larger part of which I was in complete agreement, but she was wrong in telling the Committee, if she will permit me to say so, that domestic rabbit skins are used by the trade. On the contrary, as the Financial Secretary knows, the rabbit trade imports these skins, and only a proportion of them are processed and dyed in this country. A high proportion are processed and dyed in France and Belgium and imported here. The export contribution is negligible. The rabbit argument is the weakest part of the case. That does not vitiate the arguments the hon. Lady was making, but I think that the Committee should know the facts and see the case in perspective.

Mrs. White

Some of the hon. Gentleman's hon. Friends suggested that myxomatosis had disposed of all the rabbits in this country, and I was saying that it was the domestic, cultivated rabbit that was not being affected as opposed to the wild rabbit.

Mr. Braine

The English rabbit skin makes little or no contribution to this trade. I do not wish in any way to upset my right hon. Friend the Financial Secretary. He sounded a most hopeful note when he was at the Box. I was, however, a little puzzled by part of his argument, because he said that we might find that sales would not be affected. He said that people might be prepared to pay a little more for these articles and argued that that might not be inflationary. With regard to rabbit skins, I cannot see the force of that argument because there is practically no export and the raw materials in this case are imported. Surely purchases here would be inflationary.

Over the whole range of fur skins, however, we import and then re-export and, as I will endeavour to show the Committee, that the country benefits from the process. If my right hon. Friend's optimism is false, and sales decline, I wonder whether the Treasury have estimated what the effect will be not only upon the trade but upon the economy as a whole. It is bound to be considerable. As one who has been engaged in the trade for a good number of years, as, I think, the Committee know, I welcome the conversion of right hon. and hon. Gentlemen opposite who used to assail the fur trade as a symbol of wealth and something to be taxed.

True, my right hon. Friend is the first Chancellor to recognise the importance of the trade to the national economy. Last year, we urged him to take action. The tax was lightened last January, and I told him then that I thought that as a consequence of that kind of action the revenue would not suffer. I have noticed that from January to September this year, the exports of fur and fur skins were £17,806,000 compared with £13,906,000 in the comparable nine months of 1954. In other words, reducing the tax burden resulted in a boosting of exports and an increasing yield to the Revenue. I am hopeful that this lesson will not have been lost on the Chancellor and that he will have second thoughts on this occasion.

It is unfortunately true that the removal of the D-line on the more popularly-priced garments is likely to have a serious effect upon one section of the trade. Taking wholesale prices, for example, the increase on a £13 fur coat is as much as 1,200 per cent., rising from 10s. to £6 10s. I ask the Committee whether that is fair when it is compared with the relatively minor increase on a cheap cloth coat or the considerable reduction effected on coats selling at £8 10s. wholesale and above.

Why this discrimination? Where is the fairness and equity, when one bears in mind what has been said about nylon fur? An hon. Member opposite has referred to nylon fur coats. There is no such thing as nylon fur; there is a nylon fabric which has nothing like the quality of fur. Nevertheless, it is an excellent article which could constitute a serious attack upon the normal fur trade which earns a very substantial foreign currency for this country. Why favour it in this way?

Mr. Elwyn Jones

Is there not a commercial article on the market known as nylon fur, even though the hon. Gentleman does not think it worthy of the name?

Mr. Braine

That sounds to me very much like sharp practice. How can one describe a chemical product as an animal fur? Fur being a desirable object, the manufacturers of nylon fabric call it a fur.

Mr. B. T. Parkin (Paddington, North)

If it is rabbit, is it always called rabbit?

Mr. Braine

To call nylon fabric a fur is not the sort of thing we should seriously encourage.

I believe that the trade as a whole welcomes the removal of the D-line except that it is filled with apprehension about the effect on the lower ranges. Here, I want to make a comment, not on the purely rabbit fur aspect of the argument but on the trade generally. There is no trade in this country of which I can think where the home market is of greater importance, for a variety of reasons. Those who import furs into the country bring them from all over the world and show their collections to buyers from all over the world. By historical accident London has become the centre of the world's fur trade. We do not produce furs of any value in this country, but the trade is centred here because the world buyers know that we can produce the finest collections for their inspection.

Fur being a natural product, some skins are good and some are not so good, and it is very important that when the skins of the highest quality have been sold we should have an outlet for those of inferior grade. If, as a result of fiscal measures, the home market is damped down or closed, then the export task is made infinitely more difficult. Although my right hon. Friend has been fairer to the trade than any other Chancellor, since the war Chancellors of the Exchequer have played ducks and drakes with the trade. The tax has gone up and down and there has never been stability from year to year. Now, when we thought we were at last moving into clear water, my right hon. Friend has obscured it for us.

Fiscal tricks of this kind may be justified if they are intended as a discipline to the home market, but I suggest that there is no justification whatever for them where they are likely to affect exports, as they will do in this case. I can quite well understand my right hon. Friend's objective and his desire to damp down unnecessary imports and unnecessary home demand. With that I have every sympathy, but I suggest that in this instance the effect of the tax must be to depress the home market in circumstances which will make it more and more difficult for our exporters to sell abroad. For those reasons, I ask my right hon. Friend to look at the whole matter again.

4.45 p.m.

Mrs. Harriet Slater (Stoke-on-Trent, North)

Later in our discussions in Committee other hon. Members, certainly on this side, will explain why the home market is essential to the export trade in the industry with which we are particularly concerned, but I want now to emphasise the arguments used by my hon. Friend the Member for Flint, East (Mrs. White) about the fur trimming on slippers.

I am sure that we were all astonished to hear the Financial Secretary say this afternoon that the public would soon get accustomed to the higher prices. In the Chancellor's Budget speech we were told that the purpose of the new Purchase Tax provisions was to restrict people spending money. Now we are told that it does not matter whether they are introduced or not, for people will go on spending the money just the same and will soon get accustomed to the higher prices. That does not sound very logical to me.

I think the case put by my hon. Friend on the question of fur trimmings on slippers was a very good one. We are right in the middle of the Christmas trade and most people hope that they will get a pair of slippers for Christmas. Many people think of slippers as a present they hope to buy. Will the Financial Secretary ask his right hon. Friend to give a definite answer on this point before the Committee stage ends?

It has been suggested that it is untrue to say that the tax comes as a shock because, on 3rd November, the trade wrote a letter to the Chancellor on this issue, so that the matter has had some consideration, even if it has been limited to the Chancellor being made aware of the problems. It is important, however, that in these last weeks before Christmas the trade should know exactly where it stands. This is perhaps not a large issue, but it is very important to the trade and for those who hope to buy slippers with fur trimmings for Christmas, and it would be helpful if an answer could be given on this issue today. I appeal to the right hon. Gentleman to look at this problem very quickly and to see whether he cannot give a definite answer.

May I emphasise the comment of the hon. Member for Gillingham (Mr. Burden), that it is essential that there should be a home market in these cheap lines in order that experimentation may be made in connection with the export trade and that people may be kept in employment? I ask the Chancellor to reconsider these two issues.

Mr. Turner-Samuels

It is very noticeable this afternoon that we have on the Treasury Bench a very strong representation. We have the Chancellor of the Exchequer, the Financial Secretary to the Treasury and the Economic Secretary to the Treasury. It seems extraordinary that in those circumstances the Financial Secretary should have been allowed to present to the Committee what he could not for a moment have thought to be a serious argument. It really was an astonishing piece of verbal acrobatics for the Financial Secretary to say what he did say to us this afternoon.

Now, the discussion does not turn so much from the serious point of view on the question of the fur industry, but upon the new doctrine the Financial Secretary has thought it worth while to propound to the Committee this afternoon, with the result that the Committee now has in front of it an issue concerning a very major principle. This Amendment is, of course, only a point in the Budget—a fugitive point. The Budget is primarily concerned with what is said to be the serious economic situation in which it has become necessary to do a most unusual thing—to bring in an autumn Budget—and the gravamen of the reason for which it had to be brought in is that the financial situation of the country imposes upon us the necessity of checking inflation.

In those circumstances the House was told in the debate on the Budget and the Finance Bill that these provisions are essentially directed towards checking inflation, but what, in fact, do we get this afternoon? The Chancellor of the Exchequer and the Economic Secretary, both reclining much lower than the Box at which the Financial Secretary was standing, and both of whom sat and listened while the doctrine I have referred to was propounded by the Financial Secretary, who says, "Of course, I can recognise that we are adding to the price of furs," all sorts of furs, fur coats, fur necklaces, fur slippers, and so forth. "But," he adds, "people will get used to the increased prices; people will get accustomed to that."

I think the Committee should look at this extraordinary doctrine. I ask the right hon. Gentleman to contradict me if this is not right. Was he not saying that it is true these prices are going up and the articles will cost more and we shall, therefore, make people spend more, and it is equally true, in consequence by inference, that we are thereby adding to inflation? If that is correct one wonders how the Chancellor of the Exchequer could ever have pretended that his autumn Budget was one to cut down inflation. Here in this Clause we have a provision which, probably, is representative of most of the other provisions in the Bill in which prices are being raised with the direct result that we are getting the very thing the Budget was said to be designed to cut out—inflation.

That really is quite indefensible. I do not know whether the Chancellor is to take part in this discussion, but I would ask him, if we are to have these species of increments to prices, does it not mean that inflation is being made worse and the extent of inflation is going to increase? That means we shall get still more and more financial crises. Is the Chancellor then going to bring in additional measures which will send prices up further and multiply these crises? Where shall we end if we have that sort of thing? The Financial Secretary should not come to the Committee and treat this matter as flippantly as he did. The central, serious point of this matter is that the effect of this further charge will certainly cause further inflation.

We want to hear from the Treasury—whether from the Chancellor of the Exchequer or anyone else—how they justify this action of this Government in face of the fact that they said these provisions were intended to stop inflation and now the only effect is to give us more of it.

Mr. Ronald Williams (Wigan)

I have been waiting during the debate for the Financial Secretary to get on his feet and apologise to the Committee for the fact that he addressed us from the wrong brief: otherwise it is extremely difficult to understand how he could have put the arguments he put.

It seems that the idea underlying the imposition of this tax, and very clearly expressed many times by the Chancellor, was that there must be a damping down of purchasing power. In execution of that policy, the Government come along with this Bill and these proposals. One of the proposals introduces a swingeing tax of 50 per cent. Following that, my hon. and learned Friend the Member for West Ham, South (Mr. Elwyn Jones) has proposed an Amendment and told us that already under the threat of what the Chancellor has proposed there have been cancellations of orders and there is a crisis in a certain part of this trade.

The response of the Government Front Bench if they are consistent must be, "We told you someone was going to be hurt. We told you purchasing power would have to be damped down and it would result in certain unfortunate pressures on many people, and here it is happening. We cannot pretend we are delighted that these orders are being cancelled, but cancellation of orders must surely logically follow the effective damping down of purchasing power."

Instead of telling us that this was an indication that even before the Bill was passed the Chancellor was being supported by the people, who, feeling this was the right thing for the country, were deciding not to buy these things—what a nice pat on the back for the Chancellor—the Financial Secretary said what appeared to be the opposite. He said, "This really does not matter; this is an interim position. The position is now developing in such a way that very soon the trade will have adjusted itself to the new situation and then there will be no difficulties at all."

I do not think hon. Members on either side of the Committee could allow the Financial Secretary to get away with that. There have been certain protests from hon. Members opposite, and I hope there will be more. After all, a Committee such as this is entitled to a certain standard of debate. I do not mind a little hypocrisy from the Government Front Bench—we have had it many times—but I do not like it accompanied with blundering. They said, "We are going to damp down purchasing power, but that does not matter because quite soon the position will have adjusted itself."

What are the consequences of the readjustment? Surely one of the consequences will be quite different from what the right hon. Gentleman said. Beaming across at us in a most naive fashion, he said, "If there is an adjustment, it means that there may be lots of purchasing power going into this particular item and not so much to spend on other items," as if the matter ended there. Are constituents of ours to say: "The Chancellor is a fine fellow. His appeal is based on logical grounds and we are not going to purchase. We can see that the Financial Secretary is right and, having elected to pay this very substantial tax for this particular item, we shall have that much less to spend on something else"? Following the words of the Financial Secretary, people are bound to say that it does not matter and that all the right hon. Gentleman seeks to achieve is not a reduction in purchasing power but a temporary adjustment to a new situation in the trade.

5.0 p.m.

If they are intelligent, people surely will ask, "How are we to make ourselves adaptable to this changed situation? If my purchasing power is now made relatively low as a result of the Budget, and if it is the Financial Secretary who is right and not the Chancellor of the Exchequer, I will say that my patriotic duty is not simply to abstain from purchasing but that my purchasing power is increased; so that what has happened to me as well as to the trade has been a temporary adjustment in the situation and not a permanent reduction in purchasing power." In other words, the Financial Secretary today presented an argument which was a direct incitement to inflation and a direct request almost for people whose purchasing power had been worsened to ask for wage increases and to make the adjustments themselves. That is a shocking viewpoint to put forward, and the Financial Secretary was quite inconsistent with what the Chancellor put forward earlier.

I ask the Financial Secretary not to be quite so silent on the question of repercussions on an industry or part of an industry of rare skills, and not to be so silent about the displacement of labour. It may well be that it is not the Financial Secretary who is right in this but that my hon. and learned Friend is right in saying that cancellations of orders have had, and are having, this effect.

It is for the Chancellor of the Exchequer and his advisers to tell the Committee whether they took into account the fact that in particular cases they are imposing a high level of Purchase Tax and whether they took into account the repercussions in a particular industry so far as employment is concerned. Do the Chancellor and the Financial Secretary mean that in respect to the damping down of purchasing power, if it is effective, the Government have faced the fact of unemployment and the fact that there may be the smashing of an industry or part of an industry? If so, let the Chancellor say so frankly. Let him then say that part of the price we have to pay for economic stability is that the little skilled trades here and there throughout the country will be picked off and destroyed.

Hundreds of people in my constituency are affected by the shocking and dishonest proposals which have been brought forward. I prefer the Chancellor to say quite openly and honestly that the Government have decided that these little trades have lasted too long and that in the interests of the national economy these little men must go rather than that he should put one argument and then get the Financial Secretary to put forward an entirely inconsistent argument on precisely the same point.

Mr. R. A. Butler

It is sometimes valuable at this stage of our proceedings if I give an indication how business might go. We are having a debate upon two Amendments. One relates to rabbit fur and the other to fur generally. Most of the interest of hon. and right hon. Members opposite has been on the subject of rabbit fur. That is natural, for they want to take an interest in a section of the industry concerned with what may be called the cheaper types of fur coat. At the same time, we are considering also the other Amendment.

It would be very convenient if we could maintain our usual procedure and come to an end of our discussion by agreement. Even though we have had a period of controversy, I do not see why we should not try to maintain our Parliamentary habits as best we can. Certainly, the spirit in which the Amendments have been moved from the other side indicates that hon. Members are quite ready to play along those lines

I do not doubt that other hon. Members will want to intervene. If so, a Finance Bill debate is a time when they certainly should intervene, and everything that they say will be noted by Her Majesty's Ministers. But I make an appeal that we should come to a fairly early decision on the fur question after I have said a few words and perhaps one or two other hon. and right hon. Members have said a few words. We have the debate on furniture to follow, which is an important one, and we then have a debate on each of the tax rates before we come to any consideration of the endless details which will arise on the Schedules. It is on the Schedules that so many individual points will be raised by hon. Members about their own constituencies. If we are to sit for reasonable hours, it is up to hon. Members to try to restrain their speeches and come to decisions on each particular issue so that we can move fairly rapidly from one subject to another.

On the question of furs—first, on the Amendment moved so ably by the hon. and learned Member for West Ham, South (Mr. Elwyn Jones)—I do not think the Amendment is acceptable, one main reason being that it deals only with rabbit fur. It does not deal with what is known in the trade as coney. It does not deal with sheepskin, which very often is known in the trade and can be described as beaver lamb. It does not deal with moleskin, marmot, dingo or what is sometimes known as genet—or, I believe, in plain English, cat. That is the name that has been given to me officially.

The Amendment does not deal with any of those types of fur. It deals only with rabbit fur. It is, therefore, an Amendment which is not in itself a fair one, although I understand the motives behind it, because other animals and their skins are omitted from the Committee's consideration. Therefore, for that reason alone, the Government could not accept the Amendment.

The Government also do not propose to alter their decision on the subject of furs generally. It is better for me to be quite explicit on this subject. Otherwise, as hon. Members have said, it is not fair on the trade; people will not know where they are. A particular issue has been raised by the hon. Lady the Member for Flint, East (Mrs. White) about slippers. This was drawn to our attention a few days ago following representations by the trade, who approached the Customs and Excise, although the Treasury has been mentioned. Ministers were, of course, aware of this difficulty before the hon. Lady brought her slippers into the Committee. We would be glad to have the slippers and look at them ourselves, as my right hon. Friend the Financial Secretary has said.

The position is very difficult. It is not at all clear whether under the Resolution as drawn—after taking opinion, I really am not clear—it would be possible to put down an Amendment which would satisfy the hon. Lady about her slippers. Therefore, the suggestion by my right hon. Friend the Financial Secretary, made in all sincerity, is really the best: that whatever the result of the Divisions on rabbit fur and on the next Amendment on fur, we must be given a little more time before I can give a sincere opinion as to whether an Amendment can be put down under the Resolution.

To show the hon. Lady the Member for Flint, East that we had taken trouble about her slippers before she spoke, I will tell her that if an Amendment cannot he put down under this Resolution, as to which I am in doubt, it would have to be done by a separate Order apart from the Bill. It is a peculiar situation and one which was brought to our attention before it was so graphically and ably put by the hon. Lady—who, I see, now wishes to intervene.

Mrs. White

I intervene only to say it is a great pity that the right hon. Gentleman drew his Resolution in such a narrow fashion as to place himself in this difficulty, not only in this instance, but in a number of other instances. Nevertheless, I appreciate that he is now trying to extricate himself from the difficult position in which he has placed himself. We shall be grateful for anything he can do, but I reinforce the plea by my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) that the question of time is of great importance. I hope, therefore, that this matter will be treated as one of urgency for the trade.

Mrs. Slater

I understood the Chancellor of the Exchequer to say that only the Customs and Excise people were approached. I understand that the trade sent a letter, dated 3rd November, to the Chancellor himself. There has, therefore, been plenty of time, almost 15 days—certainly 12 days—for the Chancellor to look at the problem in relation to slippers.

Mr. Butler

The hon. Lady is making no allowance for the very considerable pressure of correspondence which there has been, so I am informed. The facts of the matter were brought to my attention. A letter was addressed to me. It came to me through the appropriate channels. So there has been no abuse or scandal on the subject. I was aware of the difficulties to which the hon. Ladies have drawn my attention, and my right hon. Friend was aware of them when he replied previously.

Mr. Paget

Perhaps, then, I misunderstood what the Financial Secretary said. What the Financial Secretary said was that we should not expect him to answer the point put by my hon. Friend the Member for Flint, East (Mrs. White) because it was the first time it had come to his attention.

Mr. Butler

My right hon. Friend himself informed me of this difficulty and I think he was aware of it. What, I think, he must have been intending to say was that it had been brought to his attention graphically and with physical examples such as those which the hon. Lady brought. I have a file of representations before me. I have representations in my possession from the trade, and I am aware of this difficulty.

The hon. Lady the Member for Flint, East is critical of the drafting of the provisions, but if she were aware of the immense complexities of the Purchase Tax and of the anomalies which were left by the Government of her own party, and which we found when we came into office, and of which, no doubt, we shall hear a great deal more before the end of our debates, she would realise how much improvement there has been and how many of those anomalies we have removed, and shall remove.

If there has been any difficulty, I am sorry because the point made by the hon. Lady is a perfectly sincere one. In dealing with furs we had to decide whether to transfer furs to 60 per cent. as we have done with the other group or to keep them at 50 per cent. The net result of our action is that no coat will pay a tax of more than £6 more than it did before. That is the answer to the calculations of the hon. and learned Gentleman the Member for West Ham, South. It is the case, however, that the expensive fur coat, which, I think, is a subject which certainly should bear a heavy tax, especially in an inflationary period, will bear 50 per cent. tax.

Therefore, if anybody can afford to buy a fur coat whose price runs into four figures he will have to pay the best part of £500 in tax on it. But no coat will have more than £6 more tax. The tax on high quality, expensive coats still stands. The hon. and learned Gentleman the Member for West Ham, South said in his speech that there would be £9 to pay, but that is not the case with the expensive coat which is taxed at 50 per cent. of its value. That shows that we have been trying to be fair.

The difficulty arises only in the case of the cheaper coat. It arises only in so far as the D-level has been removed. Furs were previously on a D-level of £12. There is, therefore, only a minor change, which does, however, affect people severely who buy cheaper furs. I quite agree about that. It makes a considerable difference to tax. However, from our point of view, from the point of view of the Revenue and from the point of view of inflation it was thought wiser to keep the tax on furs generally at 50 per cent. than to reduce it to the lower rate.

This in itself would have resulted in anomalies at the upper end, namely, the expensive coats, which hon. and right hon. Members opposite would have been the first to attack on grounds of social inequality and everything else. Therefore, we have kept the figure of 50 per cent. on the expensive coats and we have been obliged to cause a slight extra tax all round on all coats and we have not put furs up to 60 per cent.

5.15 p.m.

A certain amount of play was made by the hon. Member for Wigan (Mr. R. Williams) and others with the subject of inflation. No two people will ever agree about what is right for the British economy. Of that I am quite convinced. I am equally certain that this Budget, unpopular and unpleasant as it has been, has already had some good effect on our currency, on our reserves, and on our financial position

Mr. Hugh Dalton (Bishop Auckland)

It is going down.

Mr. Butler

It is not going down.

The position in every way has improved. That is the justification for the financial action which we have been obliged to take. In the taking of that financial action there is bound to be difficulty and misunderstanding. It is a mixture of psychology and the financial action we have decided to take.

I know that there is a variety of economists. The right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) himself is not a bad economist. Really, he is quite a good one. The right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton), who sits by him, is quite a passable economist. I know that there are very few who would not agree that if we have to deal with the problem of home demand one of the quickest weapons of dealing with it is the Purchase Tax; a very unpopular one, but a widely effective and immediate one, one which is very much disliked by many of my right hon. and hon. Friends on this side of the Committee—very much disliked.

I was fully aware of what they would think when I decided to use this weapon immediately to deal with the question of inflation. Practically no economist in this country would deny that if we have to deal with the menace of inflation here is one weapon ready to hand, which I have used and which we shall propose to go on using until such time as we have got the situation right.

Another aspect of the inflationary difficulty is dealt with in another part of the Bill by the Profits Tax, but, as most economists, would agree the ordinary, the common sense cure of this disease is by a curbing of expenditure in the public and other sectors, which I am doing, I hope, with success.

This small debate is one which I should like to see shortly brought to an end with a full understanding of the human considerations involved. We will look into the anomalies pointed out by the hon. Lady, but I cannot alter the fundamental 50 per cent. rule. With this answer, I hope, hon. Members will see that, however much they disagree, we are at least sincere in our attempts to meet the Committee.

Mr. Hugh Gaitskell (Leeds, South)

I supposed when the Chancellor of the Exchequer got up to speak that he was going to tell us that he had accepted our arguments, if not the actual wording of the Amendment—that he had accepted the principle and that he would put the matter of the wording right at a later stage of the Bill; or, at least, that he was going to give convincing reasons why he could not accept our arguments. He did neither of those things. He has made a very odd speech.

The first part of it was about the next Amendments. I did not feel he added a great deal to our knowledge. It is true that the next relates to furniture, but I thought it was rather early to start discussing the pace at which we were going. We have not yet asked him what his intentions are. We may have to do that later in the evening or the night, but if he wishes to proceed faster he has a simple way of doing it. That is, of course, to accept many of the Amendments we have put down. If he does not do that we are bound to explain to him why we think they are such good Amendments. I propose to do that still with this one.

I would say, in passing, that the last part of his speech, interesting as it was, about economists and inflation—we are very flattered by his kind remarks, though a little suspicious when he makes them—did not relate closely to the Amendment we are now considering. I must, I am afraid, press him farther on this matter. I do believe that our case on the principle of these Amendments is really a very strong one indeed.

The answer given by the Finance Secretary was quite inadequate. What did he say? He said first of all that the Treasury was to get rid of the D Scheme—and furs had been under the D Scheme—because the D Scheme, as it worked, was discouraging the production of quality goods.

I think that we are all familiar with the argument that above the D-line the tax increases and therefore there is an encouragement to manufacturers to produce the cheaper articles. Very much the same arguments were used in the past about the Utility scheme and the attraction, because it was tax-free, it also had for manufacturers. How exactly does the argument apply here? In the case of textiles generally, the Government have abolished the D Scheme and substituted a low tax. I can understand that in that case there is probably some advantage with regard to the higher quality goods. We on this side of the Committee believe, and I hope that we shall have an opportunity of explaining why, that it would have been better to have removed the tax altogether.

Leaving that on one side, one must concede that in the case of high-quality textile articles the reduction of tax from 25 per cent. to 5 per cent. certainly fits in with the argument used by the right hon. Gentleman. But what have we here? There is no reduction of tax on these quality goods. None whatever. All that happens is that every fur coat that sells wholesale at £12 or over now has to bear £6 more tax. I cannot see how the argument about quality conceivably applies in these cases.

The second argument of the right hon. Gentleman was the strange one that everything was perfectly all right because the Government had been kind enough not to increase the tax to 60 per cent. It is a pretty dusty answer to the fur trade, which is invited to pay £6 tax, merely to say, "We have been very nice to them not to add another 10 per cent." That is not an explanation of why the £6 has been added in the first instance.

The only other argument that I have been able to discover which has been put forward is the one which was mentioned by the hon. Member for Essex, South-East (Mr. Braine), and that was that these skins, or at any rate a large part of them, were imported. I can well understand that as an argument if it was felt necessary to restrict imports. Then, of course, the appropriate action was to have done it directly or by means of a tariff, but it does not apply to the imposition of Purchase Tax such as we have here. In any case, the Government have not advanced that argument.

I am sorry to have to remind the Chancellor of the history of these fur coats, but it is necessary. Even during the war, when Utility schemes were in operation, and in the post-war years, it was always well understood that these cheaper fur coats bore a lower rate of tax. We thought that that was right. We thought it was quite in order and quite sensible that a trade which was producing good but cheap fur coats should have that degree of encouragement and that the burden of tax should be correspondingly lightened for those who bought this kind of article. That was continued under the D Scheme.

As was pointed out by my hon. and learned Friend the Member for West Ham, South (Mr. Elwyn Jones) in his excellent speech, the effect of the D Scheme was to leave most of the rabbit-skin coats free of tax altogether. As he said, most of them had a wholesale price of about £12, which is exactly on the D-line, and therefore retailed perhaps at £18 and bore no tax at all. Therefore, it is only now that we have a reversal of a policy going back at least 12 or 18 years. We think it a thoroughly bad reversal and a very reactionary move.

I put it to the Chancellor that this is the only case in the Budget where such an extraordinary increase in tax takes place on a particular article, and an increase in tax which is in sharp contrast to the actual reduction in tax on the articles with which it competes. We are making a mistake in thinking of fur coats as being all luxury articles. One cannot regard the cheap fur coats, probably made from rabbit skins, as falling into that category at all. The price of a rabbit-skin coat which previously retailed at £18 will go up to at least £24 retail. There is no question about it. The retailers may add their margin to the tax as well. If they do, the price will be £27. In any case it is £24, a tremendous increase for an article of this kind.

This coat sells in competition with woollen coats. What is the position in their case? A woollen coat previously selling at £19 2s. is now actually reduced in price, as a result of the change in the textile D Scheme, to £18 only. Therefore, the people who produce rabbit-skin coats have not only to pay an enormously increased tax themselves but, at the same time, their competitors are paying substantially less. I cannot honestly see how that can be defended on any ground of fairness whatsoever, and I ask the Chancellor to look at the problem again.

Why has the right hon. Gentleman singled out this particular branch of a trade for such penal taxation? Is it simply that he cannot be bothered to make this distinction and the Customs and Excise officers have said that they are tired of administering differential taxes between groups? Or is it really, as I have suggested in our debates on other parts of the Budget, that the right hon. Gentleman is hankering after a general sales tax, not a tax imposed at retail level but a general flat rate of tax imposed on everything? One is driven to the suspicion, if not to the conclusion, that that must be so when one takes all the various parts of the Budget which seem to move in that direction.

Reference has already been made to the trade in fur-trimmed slippers. In the case of all of them, and particularly in the case of children's wear, we have a most absurd situation. Most of us understood that children's wear was exempt from tax. It has been so for years, but now we have the position that these fur-trimmed shoes will carry a 50 per cent. tax. I had not intended to present the Chancellor with more articles, but he seemed so interested in the one presented to him by my hon. Friend the Member for Flint, East (Mrs. White) that I thought that I would produce something which is not as large or perhaps as elegant as the one my hon. Friend produced, but the blue colour of which may perhaps appeal to the right hon. Gentleman.

This is a child's bootee. It previously retailed at about 10s., but the increased tax on retail must be at least another 3s. 4d. I am told by a correspondent who has written to me about it that the tax has had a very serious effect on this trade, which is no doubt comparatively small but is one which is important to those who are engaged in it.

My correspondent writes: I must tell you that rabbit skins are used extensively in the infants' footwear industry for trimming bootees and slippers, this giving them a nice wintry and Christmassy appearance. It is, therefore, not surprising that, at the present period of the year, factories specialising in this merchandise have tens of thousands of pairs coming out of production and, owing to this new tax, both manufacturers and retailers are completely disorganised. I ask the Chancellor to look into this matter as something of absolute urgency.

I am sure that we accept the right hon. Gentleman's apology on behalf of his right hon. Friend the Financial Secretary about what has been done in the matter up to now. I gather from what the right hon. Gentleman said that the Treasury is seized of the problem and that he has it under consideration. I only hope that at any rate we may have an answer. If it is not possible to give it in the course of this week's debate, no doubt there will be an opportunity for the right hon. Gentleman to make a statement when we come to the Question, "That the Clause stand part of the Bill."

5.30 p.m.

The only other point to which I wish to refer is the nature of the Amendments. The Chancellor has rejected our first Amendment on the ground that it is not possible to confine a concession of this kind to rabbit skins only. That may be so, and I am certainly not competent enough to argue exactly where the line can be drawn, but I would merely say that we are inevitably limited here by the rules of order and by the nature of the Chancellor's Resolution. Whereas I was fairly sure that the Amendment would be in order, I think it is much more doubtful that it would have been if we had tried to cover all the other things. If this is the only difficulty, I can say for my right hon. and hon. Friends that we would not mind in the least if our Amendment were extended to cover the other cheap furs as well. We hope the Chancellor will consider that matter very seriously.

If, on the other hand, the Chancellor feels that it is impossible to draw the line here, we should fall back on the next Amendment in the name of my hon. and learned Friend the Member for West Ham, South which retains the D Scheme for furs. It has, from the Chancellor's point of view, the disadvantage that it does not impose an additional tax of £6 on mink coats and the rest, but, when all is said and done, as he himself has said, they are already very heavily taxed. If it were the only way, I would consider it worth while keeping the D Scheme and leaving the tax as it is for the fur trade as a whole so that we might retain the industry which produces cheap coats and so that consumers might continue to buy them.

Mr. Victor Collins (Shoreditch and Finsbury)

I hope that, arising out of the discussion, the Chancellor will have regard to what has been said about urgency. If one thing is quite certain, it is that no trader will sell any of the goods that we have been discussing until this point is settled. The trade is absolutely at a standstill.

I know nothing whatever about the manufacture of bootees or fur coats, but I do know something about industry in general. I have intervened only because of a remark made by the Financial Secretary, which I regard as of considerable gravity. Commenting on the effect of these changes, he said at the close of his speech that the trade will adapt itself to the new situation. Those are very serious words. They are words of a kind which I hope we shall not hear again during our discussions about the effect on various industries of the Chancellor's proposals.

What did the Financial Secretary mean by those words? To what has the trade to adapt itself? My hon. Friends and I think it would be appropriate if we asked the trade to adapt itself to very considerably increased Profits Tax or, if there was a shortage of materials, if we asked it to adapt itself to regulation of supplies. Nevertheless, we think it utterly wrong that, by a purely arbitrary decision, a decision regarded in many trades as just this side of insanity, a trade should in one day be completely cut off from the prosspects of doing business. In the case of some industries, that arbitrary decision has been arrived at before there has been any discussion, not with an individual industry—we do not expect that—but with people such as Customs officials who would be in a position to advise whether or not a decision was a practical one.

I do not know whether right hon. and hon. Gentlemen on the Government Front Bench have had any active experience in industry. I know that some of them have in the past been directors of banks and insurance companies, but I do not mean that kind of experience. Have any of them had experience in, for example, the management of men? Have they had the task of sitting down and thinking out a design, and going to the bank to raise a loan to buy machinery and secure the credit which they will need? Have they had the experience of pricing goods, getting out catalogues, devising a production schedule, sending out representatives to do business, and then engaging people—

Mr. Burden

On a point of order, Sir Rhys. Is not the hon. Gentleman going a little wide of the debate?

The Deputy-Chairman (Sir Rhys Hopkin Morris)

I was wondering what the hon. Member for Shoreditch and Finsbury (Mr. Collins) was leading up to.

Mr. Collins

I should have thought it would have been obvious to the hon. Member, as I am sure it is obvious to you, Sir Rhys, that I was leading up to the point that the decisions that we are now discussing are of vital importance to industry. I was dealing with the Financial Secretary's words about the trade adapting itself. I thought I should be in order in stating some of the things to which trades will have to adapt themselves arising out of the Chancellor's decisions.

Mr. Leslie Hale (Oldham, West)

Further to the point of order, Sir Rhys. Your Ruling will affect the rest of the debate. Might I refer your attention to the fact that in the discussion, which until then had been limited to rabbit skins and ducks and drakes, the Chancellor was allowed to open the whole question of home demand, how home demand arose, what created it, and what restrictions should be put on it, and the whole question of a series of conflicting economic theories, without any objection from this side of the Committee? Indeed, the absence of objection from me arose because I hope to follow those points.

Mr. Collins

If I might resume, I was addressing myself to the words uttered by the Financial Secretary. I am sure he did not expect them to have the effect which they have had. I ask the Chancellor to realise that decisions of this kind affect an enormous number of people. If people in the rabbit skin and similar industries fail in their forecasts, if their designs are no good, and if their prices are too high so that they cannot sell their goods, that is a risk which they must take and which they accept. However, they ought not to have to expect the House of Commons arbitrarily, without apparent thought, to interfere with their lives for no good cause at all. We are entitled to expect the people of the country, whether management or workers, to respect the decisions which we make, but we can continue to have the right to expect that only if our decisions are reasonable.

A decision is wrong when it results in one worker continuing at work, and probably working overtime, because he is putting lambs-wool trimmings on slippers and another worker being completely out of work simply because, by blind chance, he is putting rabbit skin trimmings on slippers.

The Financial Secretary gave us the reasons why the Government have abandoned the D Scheme. One point is that this has removed many anomalies. We shall find in our discussion of all the Amendment that, whatever anomalies have been wiped out, a new crop of ridiculous ones has sprung up, and there is no exception in this case.

I hope that we shall not again hear in this context words to the effect that the trade will adapt itself. I also hope that the Chancellor will realise that men and women in industry are awaiting the outcome of our discussion, and that he will speedily decide in favour of something on the lines that we suggest even if he cannot accept our precise Amendment.

Mr. Rankin

I am sorry—

Sir Beverley Baxter (Southgate)

On a point of order. Is it not customary as far as possible to call an hon. Member from one side and then from the other?

The Deputy-Chairman

I apologise to the hon. Member for Southgate (Sir B. Baxter). I did not see him in time.

Mr. Rankin

I am sorry that I have no piece of rabbit to produce from my sleeve, but the point on which I want to concentrate in no way requires graphic illustration. The Chancellor said that the Amendment was unfair. In my view, it is perfectly fair. It is an important Amendment, because it pinpoints what has been emphasised all along to be Government policy.

My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) indicated that the Government's proposals would mean that the price of a coat made of rabbit skin would increase from £18 to £27. During the Budget debate the Economic Secretary made it perfectly clear that there was nothing to prevent people from having a coat of rabbit skin at that price because if they wanted to get it they would do so by reducing their purchasing power on other goods. The Amendment is important, because it enables us to pinpoint that aspect of Government policy. There is not the slightest doubt that the increase in the price of a rabbit fur coat will have an inflationary effect, but it has been made clear time and again during these debates that the Government's attitude is that in another sector of industry they will carry out a deflationary policy. I assume that the overall argument is that one will balance the other.

I take it that that is the only reason for the Economic Secretary having taken the attitude he has adopted. It is the result of that policy which we are perfectly entitled to argue. There is no doubt that if a woman decides to have a fur coat made of rabbit skin she will get it. Any woman who has made up her mind to get a fur coat will get it, very often irrespective of the price, be it £27 instead of £18. The cold, callous attitude of the Treasury Bench is that she will spend less on other goods. Purchasing power is to be reduced. If purchasing power is reduced, the general effect on the economy will be that fewer of those goods will require to be produced; if fewer goods have to be produced, fewer men will be required to produce them, and that will fit into the other aspect of Government policy.

Many of us feel that unemployment will be produced as an outcome of these proposals. It can easily arise in other sectors of industry as a result of the decision to increase taxes on industries of this nature. If that happens, the Government will hope that by creating a pool of unemployed in certain industries they will prevent, or at least temper, the demand for increased wages that will naturally result from the policy they are pursuing. There is an element almost of malevolence in that attitude, and that is why it is most important we should pinpoint the attitude of the Government on employment and on the increasing of taxation on commodities of this type. I hope that that will be challenged, because that theme runs through the whole debate. I hope that we shall divide the Committee and do our best to destroy this policy.

5.45 p.m.

Sir B. Baxterrose

Hon. Members


Sir B. Baxter

In spite of encouragement from the wrong side of the Committee and discouragement from the right side, including a recent rebel in our ranks, I intend to speak for only a few minutes, and I am sure that that will be appreciated even by the Liberal Party. [HON. MEMBERS: "Where are they?"] I want to put to the Chancellor only one point. Those of us who have sat in the House for a great number of years have become accustomed to being lobbied, and we expect the lobbyist to put his case beyond the truth. He would be a poor lobbyist if he did not. We listen with discretion and such concentration as we can give to him. However, I have been deeply impressed by the anger and resentment of the men in the fur business who came to see me about this tax.

They did not exaggerate. They are deeply hurt. They are deeply shocked. A moment ago a former Chancellor of the Exchequer made a presentation of a little bootee. That is a matter of sentiment to some and an instrument of fun to others, but when it is a man's business that is quite another thing. Last night a man who was not a constituent of mine but who was accompanied by a constituent of mine showed me a box of these little bootees and said, "They will not take them. I cannot sell them. I cannot sell them at their price. They are back on my hands and I cannot move them."

If that is true, it is a terrible thing. These men are decent fellows. If there had been time to prepare, the case might have been different, but this is a Christmas trade and there are cancellations on every hand. I know that my right hon. Friend the Chancellor of the Exchequer does not like this any more than does anybody else, but it seems to me that having administered the first shock of the 50 per cent., supposing on consideration he would reduce it to 25 per cent. now, with the understanding that later on an adjustment would be made, the shock would be less. That suggestion did not come from the representatives who met me.

I know that everybody who occupies the trying position of Chancellor of the Exchequer feels that he must be an Iron Chancellor and that to give way is to show weakness. That would not be true, unless it were done too much. We owe very much to the Chancellor for what he has done for the country in recent years. He has done so much that he can now afford to show a little humanity. I do not know whether the Prime Minister is nodding his head in favour of my last remark. I hope that he was supporting my plea. It will be easier for us to stay up tonight and easier to follow the Chancellor into the Lobby. On that point, like my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke), I would rather vote for an increase in these taxes from 50 per cent. to 100 per cent. than see the finances of the country handed over to hon. Gentlemen opposite.

Mr. W. A. Wilkins (Bristol, South)

Like the hon. Member for Southgate (Sir B. Baxter), I do not wish to delay the Committee for any great length of time, but I think we are entitled to a far better explanation from either the Chancellor or the Financial Secretary to the Treasury of the proposal we now have before us.

Some of us in this Committee have long memories, and I want to recall to hon. Members the occasion when, on 7th February this year, the Financial Secretary to the Treasury came along with a Statutory Instrument in which the proposal was to reduce the Purchase Tax on the more expensive fur coats—indeed, the most expensive fur coats—from 75 to 50 per cent. I remember at that time the House was very annoyed with me for calling attention to the fact that, while doing so, the Financial Secretary was also putting a £5 tax on the little motor that goes on the back of bicycles. Some hon. Members were very annoyed about it.

I think we are entitled to an explanation from the Chancellor today of why it was that, having decided to reduce the tax on these very highly priced fur coats—because, as he said, it was necessary to stimulate the industry, since the craft was a dying craft—he is placing a repressive tax on the cheaper quality fur coats, as he now proposes to do. In effect, the Chancellor is saying that he still wants these most expensive fur coats to be purchased, although he may not intend that to be the case. There is every reason why he should reconsider the attitude of the Government and himself to this additional tax, which is an imposition on those fur coats that are available only to the poorer sections of the community. I should like to know if the Chancellor can offer any sort of explanation why there is this difference in tax between the two classes of goods, which he is supporting today.

Mr. Coldrick (Bristol, North-East)

I intervene for a short while because of statements that have been made by the Chancellor, but let me say in passing that I greatly admire the contribution which has just been made by the hon. Member for Southgate (Sir B. Baxter), because I think that it was the authentic voice of experience rather than that of theory.

The Chancellor has indicated that every economist in the Committee, and presumably in the country, would agree with him that the use of the Purchase Tax as a deflationary instrument is effective, but I think we have to agree, without laying any pretensions to being economists, that we cannot consider the question of inflation in a vacuum. Everybody clearly understands the theory that if we apply Purchase Tax to the extent of about £300 million and mop that up, and then utilise it for the purposes of reducing the National Debt, we have then taken that much out of circulation. That is clear, but if in so doing we set in motion forces that will tend to increase the volume in circulation, then we nullify the very things which we are intending to do.

Consequently, I submit that that is actually what the Chancellor is doing at the present time. While he is attempting to increase the amount which is collected in Purchase Tax, he is nevertheless creating a great disposition on the part of other people to claim more purchasing power in order to cope with increased prices brought about by the tax. Secondly, I would remind the right hon. Gentleman and the Treasury that for a very long period of time they have given considerable support to the principle of National Savings.

The Deputy-Chairman

The hon. Member's argument seems to me to be more directed to the Question, "That the Clause stand part of the Bill," than to this particular Amendment.

Mr. Coldrick

I submit that the Chancellor himself raised this question of inflation, and that, consequently, it comes within the ambit of this discussion. However, I do not intend to labour that point, other than to say, as one who has been associated with the National Savings movement for a very considerable period of time, that I want to remind the Chancellor particularly that there is no point in appealing to people to save their money over a certain period of time in the hope that they will be able to secure commodities at cheaper rates, and then, when they have withheld their spending for a considerable time, find that money purchases less, so that consequently in that direction a great disservice is rendered to the National Savings movement in the country.

Specifically on this issue, I say that the Government have landed themselves in this difficulty primarily because they tinkered about with Purchase Tax by introducing the D Scheme itself. My right hon. Friend has dealt with bootees, and we have heard a lot about fur coats and so forth. It was always our custom to exempt a very considerable number of goods from the Purchase Tax, because we believe that in social justice it would be wrong to charge a large number of people who can ill afford it any Purchase Tax on goods which they consider to be necessary. This Government introduced the D Scheme. [Interruption.] Yes, that is perfectly correct, and it was when they introduced it that they proceeded to raise this tax to 50 per cent. on fur coats and so forth. Everybody knows that the cheaper articles were practically exempt.

Now, for some reason which it is extremely difficult to fathom, we find that the Government have eliminated the D Scheme and have retained in this particular case the whole of the 50 per cent., whereas with a large range of other goods, having eliminated the D Scheme, they have lowered the tax to 5 per cent. I submit that they are dealing a devastating blow at those who have a special interest in this direction.

Furthermore, I should like to put in a word for those who are attempting to carry on trade and manufacture in this country. We have heard a lot of argument about the Purchase Tax being an effective planning instrument, but I think the Committee will readily agree that for a plan to be effective we must have the co-operation of the people carrying it out. But what happens in this regard? Speaking from personal experience, I know perfectly well that if we expect the Chancellor to raise or lower a tax, as the case may be, when the Budget is approaching, we give definite instructions to buyers to withhold from buying, and the result is that the shops become empty, the warehouses fill up and the workshops remain idle. Consequently, we nullify the very purpose which we are attempting to accomplish.

Therefore, in the interests of trade generally and in the interests of industry, if we want more production, if we want to have more effective control over our resources so that we shall utilise them in the national interest and not in the interests of a particular section, I would appeal to the Chancellor to think again before penalising the people who are anxious in the country's interests to do what they can, and to repeal, or reduce very substantially, this tax on the articles which we are now discussing.

Mr. F. Blackburn (Stalybridge and Hyde)

Will not my hon. Friend make clear to which hon. Gentleman on the other side of the Committee he was referring, because I think there may be some misunderstanding? As I understood the last remark from the hon. Member for Southgate (Sir B. Baxter), it should be taken as a statement of Conservative policy that they would prefer the destruction of the industry rather than there should be a Labour Government, and I think my hon. Friend should make clear to which hon. Gentleman he was referring.

6.0 p.m.

Dr. Barnett Stross (Stoke-on-Trent, Central)

I shall be very brief. The Chancellor knows that the purpose of our appeal is that he should temper the wind to the shorn lamb, or the rabbit, or whatever it may be. I wish to ask whether full consideration has been given to the effect on the industry as a whole if Purchase Tax is imposed on these cheaper fur coats.

I think it is the fact that London is the centre of the fur trade for the world. It used to be in Leipzig, but we know why it came to London—Hitler had something to do with it. There is a need in the trade for special skills which are not born into people but have to be practised. People practice on the cheaper furs before they are allowed to handle the more expensive types. Skill is obtained by practising on rabbit skins, and that skill is ultimately used on mink and Russian sable. If we are to make ordinary cloth coats of excellent material very much cheaper than the cheapest fur coat, it may well be that this part of the trade, the cheap fur trade, will receive a mortal blow.

If that proves the case, it means that we shall not have a proper recruiting school in which to train our craftsmen and our craftswomen. I think that an essential point. During the debate on Second Reading, the Financial Secretary made special reference to the need to conserve our craftsmen in certain industries. He said that we were in danger of losing them. He mentioned two trades—not this trade—but the cut glass and silverware trades. No doubt the right hon. Gentleman will hear about a number of others as time goes on. To handle a £3,000 mink or a £6,000, £8,000, or £10,000 Russian sable requires special skill, and if we are not to have a recruiting school, and the training of sufficient personnel, the trade itself will suffer serious harm.

That was the point I wished to make, and I do not think it wide of this debate. I appeal to the Chancellor to continue to think again about this matter, and, so far as possible, to remit this tax.

Question put, That those words be there inserted:—

The Committee divided: Ayes 237, Noes 287.

Division No. 41. AYES [6.3 p.m.
Ainsley, J. W. Grimond, J. Paling, Will T. (Dewsbury)
Albu, A. H. Hale, Leslie Palmer, A. M, F.
Allaun, Frank (Salford, E.) Hall, Rt. Hn. Glenvil (Colne Valley) Pannell, Charles (Leeds, W.)
Allen, Arthur (Bosworth) Hamilton, W. W. Parker, J.
Allen, Scholefield (Crewe) Hannan, W. Parkin, B. T.
Anderson, Frank Harrison, J. (Nottingham, N.) Paton, J.
Attlee, Rt. Hon. C. R. Hastings, S. Pearson, A.
Awbery, S. S. Hayman, F. H. Peart, T. F.
Bacon, Miss Alice Healey, Denis Plummer, Sir Leslie
Balfour, A. Henderson, Rt. Hn. A. (Rwly Regis) Popplewell, E.
Bartley, P. Herbison, Miss M. Price, J. T. (Westhoughton)
Bence, C. R. (Dunbartonshire, E.) Hobson, C. R. Price, Philips (Gloucestershire, W.)
Benn, Hn. Wedgwood (Bristol, S.E.) Holman, P. Probert, A. R.
Benson, G. Holmes, Horace Proctor, W. T.
Beswick, F. Holt, A. F. Pryde, D. J.
Bevan, Rt. Hon. A. (Ebbw Vale) Houghton, Douglas Pursey, Cmdr. H.
Blackburn, F. Howell, Denis (All Saints) Rankin, John
Blenkinsop, A. Hoy, J. H. Reeves, J.
Blyton, W. R, Hubbard, T. F. Reid, William
Boardman, H. Hughes, Ctedwyn (Anglesey) Rhodes, H.
Bottomley, Rt. Hon. A. C. Hughes, Hector (Aberdeen, N.) Robens, Rt. Hon. A.
Bowden, H. W. (Leicester, S.W.) Hunter, A. E. Roberts, Albert (Normanton)
Bowles, F. G. Hynd, H. (Accrington) Robinson, Kenneth (St.Pancras,N.)
Boyd, F. C. Hynd, J. B. (Attercliffe) Ross, William
Braddock, Mrs. Elizabeth Irvine, A. J. (Edge Hill) Royle, C.
Brockway, A. F. Irving, S. (Dartford) Shinwell, Rt. Hon. E.
Broughton, Dr. A. D. D. Isaacs, Rt. Hon. G. A. Shurmer, P. L. E.
Brown, Rt. Hon. George (Belper) Janner, B. Silverman, Julius (Aston)
Brown, Thomas (Ince) Jeger, George (Goole) Silverman, Sydney (Nelson)
Burke, W. A. Jeger, Mrs. Lena(Holbn & St.Pncs,S.) Simmons, C. J. (Brierley Hill)
Burton, Miss F. E. Jenkins, Roy (Stechford) Skeffington, A. M.
Butler, Herbert (Hackney, C.) Johnson, James (Rugby) Slater, Mrs. H. (Stoke, N.)
Butler, Mrs. Joyce (Wood Green) Jones, Rt. Hon. A. Creech (Wakefield) Slater, J. (Sedgefield)
Callaghan, L. J. Jones, David (The Hartlepools) Smith, Ellis (Stoke, S.)
Carmichael, J. Jones, Elwyn (W. Ham, S.) Snow, J. W.
Champion, A. J. Jones, Jack (Rotherham) Sorensen, R. W.
Chapman, W. D. Jones J. Idwal (Wrexham) Sparks, J. A.
Chetwynd, G. R. Jones, T. W. (Merioneth) Steele, T.
Clunie, J. Kenyon, C. Stewart, Michael (Fulham)
Coldrick, W. Key, Rt. Hon. C. W. Stones, W. (Consett)
Collick, P. H. (Birkenhead) King, Dr. H. M. Strauss, Rt. Hon. George (Vauxhall)
Collins, V. J. (Shoredltch & Finsbury) Lawson, G. M. Stross, Dr. Barnett (Stoke-on-Trent, C.)
Corbet, Mrs. Freda Ledger, R. J. Summerskill, Rt. Hon. E.
Cove, W. G. Lee, Frederick (Newton) Swingier, S. T.
Craddock, George (Bradford, S.) Lee, Miss Jennie (Cannock) Sylvester, G. O.
Cronin, J. D. Lever, Harold (Cheetham) Taylor, Bernard (Mansfield)
Crossman, R. H. S. Lever, Leslie (Ardwick) Taylor, John (West Lothian)
Cullen, Mrs. A. Lipton, Lt.-Col. M. Thomson, George (Dundee, E.)
Daines, P. Logan, D. G. Thornton, E.
Dalton, Rt. Hon. H. MacColl, J. E. Timmons, J.
Davies, Ernest (Enfield, E.) MoGhee, H. G. Turner-Samuels, M.
Davies, Harold (Leek) MoInnes, J. Ungoed-Thomas, Sir Lynn
Davies, Stephen (Merthyr) McKay, John (Wallsend) Usborne, H. C.
Deer, G. McLeavy, Frank Viant, S. P.
Delargy, H. J. MacMillan, M. K. (Western Isles) Wade, D. W.
Dodds, N. N. MacPherson, Malcolm (Stirling) Warbey, W. N.
Donnelly, D. L. Mahon, S. Watkins, T. E.
Dugdale, Rt. Hn. John (W. Brmwch) Mainwaring, W. H. Weitzman, D.
Dye, S. Mallalieu, E. L. (Brigg) Wells, Percy (Faversham)
Ede, Rt. Hon. J. C. Mallalieu, J. P. W. (Huddersfield, E.) Wells, William (Walsall, N.)
Edwards, Rt. Hon. John (Brighouse) Mann, Mrs. Jean West, D. G.
Edwards, Rt. Hon. Ness (Caerphilly) Marquand, Rt. Hon. H. A. Wheeldon, W. E.
Edwards, Robert (Bilston) Mason, Roy White, Mrs. Eirene (E. Flint)
Evans, Albert (Islington, S.W.) Mayhew, C. P. White, Henry (Derbyshire, N.E.)
Evans, Stanley (Wednesbury) Mellish, R. J. Wigg, George
Fernyhough, E. Mikardo, Ian Wilcock, Group Capt. C. A. B.
Fletcher, Eric Mitchison, G. R. Wilkins, W. A.
Forman, J. C. Monslow, W. Williams, Ronald (Wigan)
Fraser, Thomas (Hamilton) Morris, Percy (Swansea, W.) Williams, W. R. (Openshaw)
Freeman, Peter Moss, R. Williams, W. T. (Barons Court)
Galtskell, Rt. Hon. H. T. N. Moyle, A. Willis, Eustace (Edinburgh, E.)
Gibson, C. W. Mulley, F. W. Wilson, Rt. Hon. Harold (Huyton)
Gooch, E. G. Neal, Harold (Bolsover) Winterbottom, Richard
Cordon Walker, Rt. Hon. P. C. Noel-Baker, Francis (Swindon) Woodburn, Rt. Hon. A.
Greenwood, Anthony Oliver, G. H. Yates, V. (Ladywood)
Grenfell, Rt. Hon. D. R. Oram, A. E. Younger, Rt. Hon. K.
Grey, C. F. Oswald, T. Zilliacus, K.
Griffiths, David (Rother Valley) Owen, W. J.
Griffiths, Rt. Hon. James (Llanelly) Padley, W. E. TELLERS FOR THE AYES
Griffiths, William (Exchange) Paget, R. T. Mr. Short and
Mr G. H. R. Rogers.
Agnew, Cmdr. P. G. Fort, R. Macdonald, Sir Peter
Aitken, W. T. Foster, John Mackeson, Brig. Sir Harry
Alport, C. J. M. Fraser, Hon. Hugh (Stone) McKibbin, A. J.
Amery, Julian (Preston, N.) Freeth, D. K. Mackie, J. H. (Galloway)
Amory, Rt. Hn. Heathcoat (Tiverton) Galbraith, Hon. T. C. D. Maclay, Rt. Hon. John
Anstruther-Gray, Major W. J. Gammans, L. D. Maclean, Fitroy (Lancaster)
Arbuthnot, John Garner-Evans, E. H. McLean, Neil (Inverness)
Armstrong, C. W. George, J. C. (Pollok) Macleod, Rt. Hn. Iain (Enfield, W.)
Ashton, H. Glover, D. MacLeod, John (Ross & Cromarty)
Astor, Hon. J. J. Godber, J. B. Macmillan, Maurice (Halifax)
Atkins, H. E. Gomme-Duncan, Col. A. Macpherson, Niall (Dumfries)
Baldock, Lt.-Cmdr. J. M. Gower, H. R. Maddan, Martin
Baldwin, A. E. Grant, W. (Woodside) Maitland, Cdr. J. F. W. (Horncastle)
Balniel, Lord Grant-Ferris, Wg Cdr. R. (Nantwich) Maitland, Hon. Patrick (Lanark)
Banks, Col. C. Green, A. Manningham-Buller, Rt. Hn. Sir R.
Barlow, Sir John Gresham Cooke, R. Markham, Major Sir Frank
Barter, John Grimston, Hon. John (St. Albans) Marlowe, A. A. H.
Baxter, Sir Beverley Grimston, Sir Robert (Westbury) Marples, A. E.
Beattie, C. Gurden, Harold Marshall, Douglas
Bell, Ronald (Bucks, S.) Harris, Frederic (Croydon, N.W.) Mathew, R.
Bennett, Dr. Reginald Harris, Reader (Heston) Maude, Angus
Bevins, J. R. (Toxteth) Harrison, A. B. C. (Maldon) Maudling, Rt. Hon. R.
Bidgood, J. C. Harrison, Col. J. H. (Eye) Mawby, R. L.
Biggs-Davison, J. A. Harvey, Air Cdre. A. V. (Macclesfd) Maydon, Lt.-Comdr. S. L. C.
Birch, Rt. Hon. Nigel Harvey, Ian (Harrow, E.) Medlicott, Sir Frank
Bishop, F. P. Harvey, John (Walthamstow, E.) Milligan, Rt. Hon. W. R.
Body, R. F. Harvie-Watt, Sir George Molson, A. H. E.
Bossom, Sir A. C. Hay, John Monckton, Rt. Hon. Sir Walter
Boyd-Carpenter, Rt. Hon. J. A. Head, Rt. Hon. A. H. Mott-Radclyffe, C. E.
Boyle, Sir Edward Heald, Rt. Hon. Sir Lionel Nabarro, G. D. N.
Braine, B. R. Heath, Edward Nairn, D. L. S.
Braithwaite, Sir Albert (Harrow, W.) Henderson, John (Cathcart) Neave, Airey
Brooke, Rt. Hon. Henry Hill, Mrs. E. (Wythenshawe) Nicholls, Harmar
Brooman-White, R. C. Hill, John (S. Norfolk) Nicholson, Godfrey (Farnham)
Browne, J. Nixon (Craigton) Hirst, Geoffrey Nicolson, N. (B'n'm'th, E. & Chr'ch)
Bryan, P. Holland-Martin, C. J. Nield, Basil (Chester)
Buchan-Hepburn, Rt. Hon. P. G. T. Hope, Lord John Noble, Comdr. A. H. P.
Burden, F. F. A. Hopkinson, Rt. Hon. Henry Nugent, G. R. H.
Butcher, Sir Herbert Hornsby-Smith, Miss M. P. Nutting, Rt. Hon. Anthony
Butler, Rt. Hn. R.A. (SaffronWalden) Horobin, Sir Ian Oakshott, H. D.
Campbell, Sir David Horsbrugh, Rt. Hon.Dame Florence O'Neill, Hn. Phelim (Co.Antrim, N.)
Carr, Robert Howard, Hon. Greville (St. Ives) Orr, Capt. L. P. S.
Cary, Sir Robert Howard, John (Test) Orr-Ewing, Charles Ian (Hendon, N.)
Channon, H. Hudson, Sir Austin (Lewisham, N.) Orr-Ewing, Sir Ian (Weston-S-Mare)
Clarke, Brig. Terence (Portsmth, W.) Hughes Hallett, Vice-Admiral J. Page, R. G.
Cole, Norman Hughes-Young, M. H. C. Pannell, N. A. (Kirkdale)
Conant, Maj. Sir Roger Hurd, A. R. Partridge, E.
Cooper, Sqn. Ldr. Albert Hutchison, Sir Ian Clark (E'b'gh, W) Peake, Rt. Hon. O.
Cordeaux, Lt.-Col. J. K. Hutchison, James (Scotstoun) Peyton, J. W. W.
Corfield, Capt. F. V. Hyde, Montgomery Pickthorn, K. W. M.
Craddock, Beresford (Spelthorne) Hylton-Foster, Sir H. B. H. Pilkington, Capt. R. A.
Crockshank, Capt. Rt. Hn. H. F. G. Iremonger, T. L. Pitman, I. J.
Crouch, R. F. Irvine, Bryant Godman (Rye) Pitt, Miss E. M.
Crowder, Sir John (Finchley) Jennings, J. C. (Burton) Pott, H. P.
Crowder, Petre (Ruislip—Northwood) Jennings, Sir Roland (Hallam) Powell, J. Enoch
Cunningham, Knox Johnson, Dr. Donald (Carlisle) Price, David (Eastleigh)
Currie, G. B. H. Johnson, Eric (Blackley) Price, Henry (Lewisham, W.>
Dance, J. C. G. Jones, A. (Hall Creen) Prior-Palmer, Brig. O. L.
Davidson, Viscountess Joynson-Hicks, Hon. L. W. Profumo, J. D.
D'Avigdor-Goldsmid, Sir Henry Keegan, D. Raikes, Sir Victor
Deedes, W. F. Kerr, H. W. Ramsden, J. E.
Digby, Simon Wingfield Kershaw, J. A. Rawlinson, P. A. G.
Dodds-Parker, A. D. Lagden, G. W. Redmayne, M.
Donaldson, Cmdr. C. E. McA. Lambert, Hon. G. Rees-Davies, W. R.
Doughty, C. J. A. Lancaster, Col. C. G. Remnant, Hon. P.
Drayson, G. B. Langford-Holt, J. A. Renton, D. L. M.
Dugdale, Rt. Hn. Sir T. (Richmond) Leather, E. H. C. Ridsdale, J. E.
Duncan, Capt. J. A. L. Leavey, J. A. Rippon, A. G. F.
Duthie, W. S. Leburn, W. G. Roberts, Peter (Heeley)
Eccles, Rt. Hon. Sir David Legh, Hon. Peter (Petersfteld) Robertson, Sir David
Eden, Rt. Hn. SirA.(Warwick & L'm'tn) Lennox-Boyd, Rt. Hon. A. T. Robinson, Sir Roland (Blackpool, S.)
Eden, J, B. (Bournemouth, West) Lindsay, Hon. James (Devon, N.) Robson-Brown, W.
Elliot, Rt. Hon. W. E. Lindsay, Martin (Solihull) Rodgers, John (Sevenoaks)
Emmet, Hon. Mrs. Evelyn Linstead, Sir H. N. Roper, Sir Harold
Errington, Sir Eric Lloyd, Maj. Sir Guy (Renfrew, E.) Ropner, Col. Sir Leonard
Erroll, F. J. Lloyd, Rt. Hon. Selwyn (Wirral) Russell, R. S.
Farey-Jones, F. W. Lloyd-George, Maj. Rt. Hon. G. Sandys, Rt. Hon. D.
Fell, A. Longden, Gilbert Schofield, Lt.-Col. W.
Finlay, Graeme Low, Rt. Hon. A. R. W. Scott-Miller, Cmdr. R.
Fisher, Nigel Lucas, Sir Jocelyn (Portsmouth, S.) Sharples, Maj. R. C.
Fleetwood-Hesketh, R. F. Lucas-Tooth, Sir Hugh Shepherd, William
Fletcher-Cooke, C. McAdden, S. J. Simon, J. E. S. (Middlesbrough, W.)
Smithers, Peter (Winchester) Thomas, Leslie (Canterbury) Waterhouse, Capt. Rt. Hon. C.
Smyth, Brig. J. G. (Norwood) Thomas, P. J. M. (Conway) Watkinson, H. A.
Soames, Capt. C. Thompson, Kenneth (Walton) Whitelaw, W.S.I.(Penrith & Border)
Spearman, A. C. M. Thorneyoroft, Rt. Hon. P. Williams, Gerald (Tonbridge)
Speir, R. M. Thornton-Kemsleyl, C. N. Williams, Paul (Sunderland, S.)
Stevens, Geoffrey Tiley, A. (Bradford, W.) Williams, R. Dudley (Exeter)
Steward, Harold (Stockport, S.) Turton, Rt. Hon. R. H. Wills, G. (Bridgwater)
Steward, Sir William (Woolwich, W.) Tweedsmuir, Lady Wilson, Geoffrey (Truro)
Stoddart-Scott, Col. M. Vaughan-Morgan, J. K. Wood, Hon. R.
Storey, S. Vickers, Miss J. H. Woollam, John Victor
Stuart, Rt. Hon. James (Moray) Vosper, D. F. Yates, William (The Wrekin)
Studholme, H. G. Wakefield, Edward (Derbyshire, W.)
Summers, G. S. (Aylesbury) Walker-Smith, D. C. TELLERS FOR THE NOES
Sumner, W. D. M. (Orpington) Wall, Major Patrick Mr. R. Thompson and
Teeling, W. Ward, Dame Irene (Tynemouth) Mr. R. Allan.

6.15 p.m.

Mr. Alba

I beg to move, in page 1, line 19, at the end to insert: with the exception of paragraph (c) of subsection (1) and subsections (4) to (12) thereof. The object of the Amendment is to retain the D Scheme for furniture. The Chancellor's proposals would abolish that scheme for furniture in the same way that it has been abolished in respect of textiles, clothing and such other goods to which it applied. Hon. Members on this side of the Committee have no special love for the D Scheme, as such—as has been made quite clear by a number of my hon. Friends who spoke during the debate upon the previous Amendment—but in the case of furniture, although there have been a number of anomalies, the D Scheme seems to have worked fairly well and without a great deal of difficulty. I have not had many complaints from manufacturers since it was introduced. That may be because we had a thorough discussion of the scheme at the time of its introduction and managed to correct some of the anomalies then.

I believe that Members would prefer that taxation upon furniture should be removed altogether, but if that cannot be done it is very important to recognise that what the Chancellor is now doing by abolishing the D Scheme and applying a tax of 5 per cent. upon all furniture is, for the first time in its history, subjecting all furniture—of whatever class, price or quality—to a tax. Up to now a large proportion of furniture, especially that which is made in the area I represent, in north London—the mass-produced furniture which goes into the homes of a large part of our population—has been completely free of tax.

The trade is extremely worried at this new arrangement, because it is creating the very dangerous precedent of giving power to the Treasury to vary the rate of tax by order, without having to introduce a Budget or a Finance Bill. It certainly would be extremely dangerous for a trade of this nature, and especially the mass-production section of it, if the rate of tax were to be suddenly varied from time to time over the whole range of manufacture—which, as far as I can understand the position, would be possible under the present arrangements.

The total revenue derived from the Purchase Tax upon furniture has already been increased once by the Government, in 1952, when they changed from the Utility to the D Scheme. The extra revenue derived from that change in respect of furniture was about £3 million. It is difficult to tell what effect the new changes in the tax will have, and the Financial Secretary seemed to find some difficulty in fully explaining those effects during the Second Reading debate.

In view of the fact that the object of the Government is partly to restrain expenditure, that may not be surprising, but it is likely that the amount of money raised by this tax in relation to furniture will be roughly doubled. It will probably amount to about half the total of £8 million which the Financial Secretary told us was the amount which the change-over from the D Scheme to the 5 per cent. general tax upon all articles is likely to bring. I calculate that when all the changes are taken into account the tax revenue derived from furniture will amount to £7 million or £8 million. That is rather more than one would calculate by taking 5 per cent. of the wholesale turnover of the trade—which is about £120 million—but that is because some articles which will be subject to the full rate of tax—it was 25 per cent. and is now 30 per cent.—never were subject to tax under the D Scheme One very peculiar example, which shows the unfairness of these arrangements, is the hall-stand, which is still taxed at the full rate of 25 per cent., which is to be put up to 30 per cent. On the other hand, the hall wardrobe is only subject to a 5 per cent. tax. One would expect a hall-stand to be used by people of smaller means than those who use a hall wardrobe. That is an illustration of how the scheme operates in a regressive way in favour of people with higher incomes. It is one of the anomalies which raise the total revenue above what appears to be the income of 5 per cent. on the total turnover.

The Financial Secretary said during the Second Reading debate that what moved his right hon. Friend to abolish the D Scheme was that it was a handicap to the export trade. If I understood him aright today, he said that the object of the tax changes was to reduce the spending power of the public. I noticed that the Economic Secretary to the Treasury was nodding his head in vigorous approval of those words. The Financial Secretary went on to say that we must leave open the door to the exporting of high-quality goods. Does he think that that applies in any way to furniture?

Most furniture is wooden and is not really exportable. There may be a very small amount of imitation antiques and furniture of that type which is exported, but the proportion of furniture exports is very small. Furniture is bulky in relation to value, and very often is made for our own climate and is not suitable for other climates. Furniture is not the type of article the export of which one could encourage by fiscal means.

On the other Amendments, we might have something to say about the export of high-quality goods, but except for a very few cases a lot of what has been said on this subject is so much waffle. I hope to bring arguments to bear on this point in the discussion on later Amendments. It does not apply necessarily to products like textiles, it is a specious argument in relation to a large number of goods, and it cannot be supported by facts and figures. I do not think it applies to furniture, or that the Financial Secretary would attempt to argue that it does. We must take the second set of arguments that we have heard used today, and not the arguments that were used in the Second Reading debate.

The truth is, as has been pointed out by my right hon. and hon. Friends, both in the Second Reading debate and today, that this tax is the beginning of a sales tax. It is a blatant sales tax on furniture. Some people do not believe that a tax applied at the wholesale stage is a sales tax. I noticed that Mr. Gamage, writing in a paper, said that the difference between the Purchase Tax and a sales tax is that one was applied at the wholesale stage and the other at the retail stage. One of the reasons why a tax like Purchase Tax cannot be applied at the retail stage is the complications that arise. If we move towards a single-level tax, or a tax at one or two levels, on a whole range of goods, we are moving in the direction of a sales tax and making it administratively possible to apply it at retail level.

Perhaps, from the point of view of the customer, it does not make any difference. He has to pay the tax anyway. A sales tax is applied on goods of all classes. It is regressive, whereas Purchase Tax, we have discovered, can be made progressive. This tax has complications and difficulties, but it can be applied as Income Tax is applied, at an increasingly steep rate in the higher quality and more expensive articles, and therefore be made to bear on people with higher incomes or with higher expenditure, which is the point with which we are most concerned at the present time. It is fair that those who do the highest spending should have to bear proportionately higher taxation to reduce their expenditure.

A sales tax is like a poll tax and is spread out at an equal rate over everybody. On this side of the Committee we are completely opposed to it. The changes now taking place in the tax on furniture, whatever the arguments may be in the case of other goods, can have no other basis, and are the beginning of a move, even if not a complete move, towards a sales tax on furniture. It hits people at one of the most difficult times in their lives, when they have just got married, are setting up house for the first time and have very heavy expenditure on furniture, on top of the increased rents which will result from other aspects of Government policy and the much more difficult hire-purchase arrangements which have been imposed since the beginning of the year.

Another factor in regard to furniture which is frequently argued here is the difficulty of making comparisons of price and quality, and the ease with which any small increase in the wholesale or manufacturing price can be multiplied and passed on to the consumer. We have had many examples of that. My hon. Friend the Member for Coventry, South (Miss Burton) has frequently drawn the attention of hon. Members to these matters and has put questions to the President of the Board of Trade. It appears to be very difficult to bring these matters under control.

The effect of this tax on the wholesale price of furniture will be multiplied by the enormous profit margins already put on by one or two extremely large firms who completely dominate the hire-purchase side of the trade. One firm which does about one-third of the retail trade and, I suspect, about half the hire-purchase trade, is already giving evidence that it is grossly inflating the profit margins put on furniture sold under hire-purchase arrangements. I do not doubt that it will use the tax as an excuse for putting the price up further.

I hope that we shall not be drawn into arguments about competition, which can be easily answered by reference to the methods used by this trade, sometimes not very reputable methods, which make it extremely difficult for the ordinary customer to compare goods when shopping. There is no doubt in my mind that the tax will be an additional burden on young people setting up home for the first time and will, to that extent, have the sort of inflationary effect that we were discussing, because of the resultant demands for higher wages and salaries.

If, on the other hand, this tax has the effect of reducing output by reducing demand, it will affect not the high-quality end of the trade but the great mass-producing firms who rely on a high utilisation of productive capacity to keep their costs down. If the tax has the effect of reducing their output it will lower productivity and furnish another cause for the increase in prices which, I believe, will take place. The tax may well have a spiralling effect on prices and, no doubt, on wages and salaries.

6.30 p.m.

We are against this change in principle, because it is the first time that a sales tax has been applied to the ordinary necessities of life. Though there are other examples which we will have to debate, this is a very simple and clear example of fairly easily-defined classes of goods which no one could possibly say are luxuries—especially that class which, by the abolition of the D Scheme, is being brought into tax for the first time. We realise that, by the terms of his Budget Resolution, the Chancellor has linked the reduction of the tax to 5 per cent. with the ending of the D Scheme. I say at once that for the time being we prefer to keep the existing arrangements, with the higher tax and a D Scheme which exempts about 80 per cent. of all furniture from all tax, rather than to have the proposed arrangement. Of course, we should far prefer that D Scheme and 5 per cent., or no D Scheme and no tax at all.

If the Financial Secretary asks—as I think he would like to ask—whether we prefer to retain the present arrangements, I would say that we do, although I know that there is a small minority in the trade which would prefer the sort of arrangements which the Chancellor is introducing. I am speaking for the large range of mass-production manufacturers, and for the large majority of people who are their customers who will be hit. For that reason we on this side of the Committee are definitely against this change, with all the dangerous implications which it seems to us are involved.

As I say, this is the first time—I think in the whole of our fiscal history—that a sales tax has been introduced on articles of necessity. I do not know whether one counts beer and tobacco as articles of necessity, but I suppose Excise duties are a sales tax of that kind. Furniture, of course, cannot be compared with such items. Now we have this extremely regressive tax, introduced under the guise of making things easier for the export trade by abolishing the D Scheme. Though they may apply to the textile field—and many of my hon. Friends will be speaking about that when the time comes—none of the arguments used about the anomalies of the D Scheme in relation to textiles can apply to furniture. I hope, therefore, that the Financial Secretary will realise what a serious change in our arrangements this proposal is, and will be prepared to accept the Amendment.

Mr. Hale

If there was any social principle which could have been accepted by the great majority of hon. Members—and certainly by the great majority of English people—I should have thought it was the principle that it ought to be the object of Government to see that people embarking on married life should have the best possible opportunities of having a decently-furnished home in which to live and bring up a family in decency, security and comfort. I should have thought that to be a basic principle of politics transcending almost every other principle, because it is the foundation of our form of life and our way of life.

Brigadier O. L. Prior-Palmer (Worthing)

It is also useful to have a house in which to put it.

Mr. Hale

Once a month, in Oldham, I interview people. Three weeks ago, I interviewed a woman with five children living in one, single room in one of the wretched houses people represented by hon. Members opposite built in Oldham years before the war, which have never been pulled down and, I am afraid, never will be.

Brigadier Prior-Palmerrose

Mr. Hale

The hon. and gallant Member intervened with an irrelevant observation and we do not expect a member of his Service to show annoyance when he is answered.

I speak subject to correction by my hon. Friend who is much more informed about this, but furniture prices have increased rather out of proportion to the majority of prices. I look back thirty years to the time when my wife and I spent our very limited means on the furniture which we could then afford for the little house we had built. The dining table cost £3. It was 3 ft. by 3 ft., and had two leaves. It is still at my flat in London, and I shall dine at it tonight if I get home—which seems unlikely. The dining chairs cost 10s. 6d. each, and they are still there. The very "posh" coal scuttle cost 2 guineas—I could give other examples.

Those prices will be regarded as astounding today, but they show that people who now embark on married life do so in circumstances of very special difficulty. They have, as my hon. Friend has said, to face the prospect of going, perhaps, into a council house at a fantastically high rent, now out of all proportion to their income.

Mr. Slater

And they may not get one of those very easily in the future.

Mr. Hale

And they can only do that if they have been intelligent enough to anticipate the possibility of marriage for a great deal longer than most engagements last. But it as well to ask ourselves, quite seriously, just what the effect of the Chancellor's proposal is, economically and socially speaking.

Socially speaking, the tax puts about the last obstacle in the way of these people getting a home at all. Socially speaking, they have to buy at all times on the "Kathleen Mavourneen"—and anyone who knows anything about the "Kathleen Mavourneen" before the war knows that it was a pretty sticky business. Furniture used to come and go. There was an internal export and import trade in my own village. Under the restrictions now proposed such people will have the greatest difficulty in getting an adequate supply of furniture—and then they have to face these fantastically high prices and the difficulty of getting a home at all.

It is fair that we should look at the problem quite simply to see what happens. If a couple have decided to get married, they do so—it is extremely unlikely that they will decide to put it off for three or four years in the hope that, by then, the Tory Government will have produced so much prosperity, and the Chancellor's battle with the £ will have met with such a measure of success, that they will be able to face the future with more confidence. They get married. If they can get a home they will do so, and they will have to economise on furniture. They will either have to do without a spare bed or buy something pretty shoddy or second-hand.

Generally speaking, it means that when the time comes to have a family they have not sufficient furniture either to accommodate the child when it arrives or to accommodate the relative or friendly neighbour attending at the confinement. I can assure hon. Members opposite— whom I regard as perfectly decent but not very bright chaps—that if they came into touch with these problems as we on this side of the Committee do, they would not regard them as matters of levity.

What is the explanation that is given? I thought that one of my hon. Friends was being a little ungenerous to the Financial Secretary by constantly referring to the observations which he made today on the subject of inflation, or deterrents, or getting used to the Purchase Tax, and so on. Everyone knows that he never meant to say that, and the only reason he did so was because this Budget could no longer be defended on logical grounds.

It cannot be defended in isolation. If this were the Chancellor's first and lest Budget—and there is every reason why it should be his last—then, of course, there is a clear case. It is brought forward metaphorically on the theory of Lady Docker making the patriotic sacrifice of having zebra instead of mink, and by applying that to other classes, the tendency should be to diminish one's purchases by ever so little and thereby achieve deflation.

But furniture, of all things! The Financial Secretary knows that behind him is always the nightmare that when all these tricks have been done, and all these prices have gone up, the workers will say, "If we have to pay more, you have got to pay us more." In this connection, we are entitled to say that the problem which the Chancellor is now facing—and no one on this side of the Committee would deny that there is the balance of payments problem—is a serious one. We had the responsibility of battling against it for years. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) was dealing with it. I know that he will not mind my saying that perhaps the problem is more closely associated with his predecessor, the late Sir Stafford Cripps, who was bitterly assailed in the Tory Press and sneered at as one who wanted austerity for its own sake.

The health of Sir Stafford Cripps was jeopardised by the bitterness and malice of the attacks made upon him for trying to introduce the same type of procedure which the Chancellor says that he has now to try to introduce. It was "Austerity Cripps" then, and the same Tory papers, which are now saying that we have to rally behind the Chancellor to reduce our purchasing power, and which are offering free motor cars to their readers for answering their silly questions, are saying that we have to behave in a statesmanlike manner and support the Chancellor in his endeavours.

How do we do it on this Budget? The Chancellor has increased the price of the relatively cheap furniture, the sort of furniture which has to be bought to furnish a new working-class home. Where is the money to come from? Is the Financial Secretary saying that a person will, after half a dozen marriages and a new set of furniture every time, become accustomed to the fact that furniture costs more? I suppose that one can become accustomed to hire-purchase instalments if they last over a long enough period. But how does getting accustomed to it help? How does it help the battle against inflation?

If one thing is clear, it is that if there are any two items which affect the claims for wages more than any others, they are rent and hire-purchase instalments. Those are the things which people have got to pay. They affect the amount spent on food. When a man comes on Monday to collect a 15s. instalment on the washing machine or the hall-stand, with Purchase Tax included, he has to be paid. That is the problem. It is always the rent and the instalments on furniture—and the little bit of insurance which used to be paid to get a decent burial—which are the basic charges. People have to say, "Here is my income, and this is what has got to go out; only then can I think about the question of food and the possibility of a drink and a bob to spare to see Rita Hayworth."

I ask the Financial Secretary to look at this matter again. It is really nonsense to say that we are battling with inflation by adding to the ordinary living charges of the young married couple. It is nonsense to say that they will get used to making a purchase which they normally make only once in their lives. If these are the right hon. Gentleman's two points, what is the other point? What is his defence of this tax? One sometimes wonders—and it may be the explanation—if the Chancellor gets so much pressure put upon him by various interests that he thinks that he has got to soak everybody for fear that someone says he is doing a favour to the one whom he does not soak.

I should be happy to think that that was an effective explanation for this vicious tax. It is no good to anyone or to the economy. It has nothing to do with inflation or with exports and imports. I can think of no other argument to justify this tax. We used to talk here about homes for heroes. It requires a hero to go into a furniture shop today and talk about getting married after he has seen the prices. If he is going to be married, he will want a lot more heroism before he embarks upon his purchases.

I suggest to the Committee that there has been no economic defence of this tax at all, and that if there is any tax in the whole of the Budget which could be jettisoned without hurting anyone, while bringing genuine benefit to the people whom this Committee ought to seek to benefit, it is this iniquitous increase in Purchase Tax.

6.45 p.m.

Mr. Parkin

As one who was engaged in the furnishing industry during the brief time I was recently out of this House, and as one actively interested in it today, I am glad to associate myself with the Amendment moved by my hon. Friend the Member for Edmonton (Mr. Albu), to resist this attack upon all the progress that has been made by the furniture industry in the last ten years. I hope, without overstating the case, to demonstrate to the Committee what a very serious problem is involved in the proposal to impose what looks like quite a small tax.

It is not quite certain what is the volume of trade in the furniture industry. My hon. Friend quoted an output of £120 million. It is rather interesting that the Census of Production quoted an output of £110 million. Sales were £180 million. That implies that someone was making more profit than they should make upon the turnover.

It is clear that there is a very large turnover. When 5 per cent. is added to prices, it will make a considerable difference to the amount of profit made in the industry. Let there be no doubt in the mind of the Financial Secretary that this tax will not only be passed on but boosted by the equivalent amount of profit which the retailer always puts on his articles.

There was a time when we had price control. When Purchase Tax was first introduced it had to be shown on all invoices, and the retailer was unable to make the consumer pay profit on the Purchase Tax. There is nothing now to prevent the retailer from slapping his percentage on the invoice price. He is going to say, "Why should I abstain from making a profit on this? It is of no interest to me how the manufacturer's price builds up." Some part of it is built up by the tax on petrol. Prices, therefore, will go up, and they will go up for another reason. When there was price control the retailer had no objection to the public knowing how much profit he was making. If he revealed now how much Purchase Tax was paid on any given article the public could work out the net rate of profit.

So we are faced with the fact that on £180 million of sales the gross profit to the industry will rise with the gross turnover. If we were to ignore the apparent discrepancy between the value of the manufacturers' output and that of the sales given in the Census of Production, and assumed that every retailer charged only what his federation told him to charge when the Conservatives abolished price control, and only put up the price by another 1s. in the £—added only 40 per cent., in other words, to the manufacturer's profit—working backwards, that amounts to twenty-nine point something per cent. of the retail price.

That means that there is a gross profit in the furniture industry at present of about £52 million a year. That, of course, will be increased by the amount of this tax because the turnover is proportionately increased. Therefore, the Chancellor is giving away some £2½ million to £3 million in extra profits to retailers by way of discouraging them from buying motor cars or otherwise upsetting the export trade.

No doubt someone will say, as my hon. Friends have already indicated, that many organisations are making vastly greater profits than that. The general public knows very little about the furniture trade. But it knows about Great Universal Stores because people engaged on the Stock Exchange keep telling the public about it, and there are forecasts that Mr. Wolfson is going to make £20 million profit. On that basis he will make another £1 million this year as a result of the assistance of the Chancellor. When we consider the increased turnover as a result of this tax, which involves no extra overheads, we can add the additional amount of profit, and it will be very interesting to see how much Great Universal Stores will in fact make this year.

I hope that I shall not embarrass Mr. Wolfson if I say that I am not attacking him. I do not think it is clever to attack one successful figure and pretend that all the difficulties and anomalies in the trade are attached to him. Indeed I am not here to join in the altogether too popular practice of denouncing all the manufacturers and retailers as a bunch of shady crooks. What I want to demonstrate is some of the difficulties that manufacturers are in as a result of this tax. Not only is the good manufacturer the hostage of the bad, but he is the hostage of the weak one, who is forced into an impossible position as a result of this Budget. Mr. Wolfson was not the first to increase his rate of profit. It was done by one of his competitors with a most respectable name who adopted the 50 per cent. mark-up soon after the Conservatives abandoned price control.

Mr. Wolfson has managed to rub along quite well without being a customer of mine. I am not speaking from personal experience, but I know that in his department he is very often able to insist on minimum qualities when arranging contracts. I wish that more retailers were in a position to do that now that the Government have abandoned that protection so carefully, scientifically and loyally built up by the furniture industry before it was so wantonly thrown away at the time of the D Scheme.

Some hon. Members have today brought into the Chamber articles illustrating the difficulties and anomalies caused by the introduction of this tax. The first article to be shown caused some hilarity on the Opposition side of the Chamber. I have sometimes thought that in these discussions it is a pity that the Committee has not the powers which the Committee on National Expenditure had during the war to go from place to place. It might be revealing if discussions could take place in a department store after closing time, and if we could have a look at what is involved there. I am disposed to carry the Committee to have a look at the only "shop window" from which many hundreds of thousands in this country buy. I hold in my hand a couple of catalogues from two of the largest mail order firms. A tremendous amount of trade is done through mail order firms.

I should like to ask the Committee to consider some of the difficulties which are facing the manufacturer at present when he deals with these stores. In the first place, we can assume that these catalogues are sent out in enormous quantities. I do not know how many the largest firms distribute, but I do know that even moderate-sized firms print 100,000 at a time. Manufacturers supply the article and dispatch it to the customer's address given by the firm. The mail order firms are in this difficulty. They can either say, "All prices advanced by 5 per cent."—which is unlikely; or they can say "All prices advanced by the amount of the Purchase Tax"—and that is extremely unlikely because it would reveal the wholesale price of the article. Or they can say—this will happen and indeed is already happening—"No change in prices."

The usual custom in a large firm of this kind is for several manufacturers to supply the same article. It is described and photographed and to some extent has a specification. They are being asked to say if, in spite of the increase, they will be able to continue to supply the article at the same price, including tax. In other words, they say that "Mr. Five Per Cent." is to have his cut, and his chief assistant has told the House of Commons that the trade has to adapt itself, and will the firm please get busy adapting itself?

Let me try to take the Committee through the sort of discussion which the manufacturer must now have about his costings. We find in this catalogue something described as: A fully-sprung three-piece suite, covered brown leather cloth and tapestry, complete for £30. The first thing to establish is how much the manufacturer gets for that suite. In all probability there is about 30s. for carriage—

Mr. Butler

indicated assent.

Mr. Parkin

I am glad that the Chancellor is agreeing with me because sometimes I have suspected that he is not so informed on detail by his right hon. Friend the President of the Board of Trade as he ought to be.

I assume that about 30s. represents carriage. If we work backwards, that would mean that the manufacturer would have been paid about £18, less discount, for that particular suite. There would be an argument about the discount, and I have no doubt that the Chancellor, in his Department, and the Customs and Excise, will be involved in all kinds of arguments about whether one pays tax on discount, but between 17s. and 18s. tax will be paid on this article which is sold for £30.

No retailer is going to reveal that figure because it would reveal the amount of profit made even if it is only that recommended as the minimum by the National Association of Retail Furnishers. The manufacturer has to reconsider the question and go through the costings. Here I want very seriously to suggest to the Chancellor that he is doing a great deal of damage to the industry for very small gain to himself. He is putting temptation in the way of the manufacturer, who has already designed and costed his article on existing prices, and is now asked to take out some of the value.

The first thing which this manufacturer of upholstery has to make is the frame. The catalogue describes this suite as "charming and practical"—that does not give away much—and says that it is of convenient size and comfortable design, and the sides and back are constructed of a sturdy hardwood frame. Everyone knows that that should mean good old British hardwoods or timbers from deciduous trees, but the meaning of those words has changed since the war. Before the war softwood was often put into this furniture, but that softwood was at least good healthy stuff from Canada or Siberia, which ought to have been used for building and for floorboards, and we knew what it was.

7.0 p.m.

We certainly do not know enough about some of these mysterious things called hardwoods which are imported and about which insufficient experience has been gained. Some of them are much softer than what is called softwood. All those things the manufacturer knew about; he was protected under the Utility scheme. It was laid down which woods were suitable. Now, the manufacturer is tempted to say, "If I can save 1s. per cu. ft. on the timber, I can meet some of the 18s. that I am asked to find." And so he might be tempted to use one of these other timbers about which nobody will know anything because it will all be covered up—perhaps one of those Chilian laurels that bleed green oil as soon as they are put through the saw, or some of those African woods which can only be used for cigar boxes and crumble to powder in a few years' time.

Remember, there are still people who say, "I want this article to be good. Remember that it must stand up to two years' hire purchase." In later years we shall find out. It is a great temptation to save two or three shillings in that way. What a tragic waste and lowering of our standards to save a shilling or two on a £30 article for that reason.

What will then happen to the timber? Under the Utility scheme, every piece of timber inside upholstery was planed on all four sides. Under the Regulations it was machined so that the joints could be more accurate and so that any defects, cracks and knots would be visible in the wood and a faulty piece could be rejected. Is it not now a great temptation to skip that machining and that work and to put in the wood in the rough as it comes straight from the saw? Nobody will see it.

Step by step we have to go through the list of costings, and the next thing that we come to is the springs. When right hon. Gentlemen opposite abolished the Utility scheme, every manufacturer of repute tried to maintain the standards. It was laid down from experience what was the best kind of wire to use, and how many springs there should be in a seat. I remember that a traveller came to me—I do not deal with the firm now—and said, out of the side of his mouth, at the time when a set of springs for a Utility suite cost 23s., "Are you doing much in rexine? We have a good set at 7s. 9d. We are selling a lot in South Wales." That was within weeks of the abandonment of the Utility scheme—7s. 9d. as against 23s. If one has to save only 18s., it is a temptation.

I could go through the list of components, but it is a big catalogue. The same kind of problem faces the manufacturer throughout. With every item in the catalogue there is the same kind of temptation. In some cases he can save much more than 18s. If he has given way on one point, why should he not give way on another? If he has made the decision to use the cheap timber, why bother about the springs and why not make another 15s.? After that, why trouble to cover the springs with hessian, because the furniture will not last anyway? The springs should be covered with hessian and lashed in, the springs having been nailed in. The experienced craftsman ties a piece of string at each corner and nails the string to the back of the frame so that the springs cannot shift.

What will happen to the apprentices in the industry if this deterioration takes place? [Interruption.] This is a serious point and I should like to bring it to the attention of the hon. Member for Croydon, North-West (Mr. F. Harris). Over the last ten years, tremendous efforts have been made to build up the standards of training in the furniture industry. There is no doubt that great improvements have been made, and people have known what it is safe to do and what is unsafe in economising in the internal structure of articles of furniture.

Now the boy apprentice is not to be shown these things. He is not to know. Generations ago, the quality of consumer goods in items such as furniture in a whole rural area could depend upon how the land owners or nabobs were doing in their overseas adventures and how much money was coming back to be invested in the great houses, because the skills were learnt for a generation in those big projects throughout the land. Those days are over. Now we have to depend upon a steady continuity of accepted standards. It is sad enough to see, in different parts of the world, people whose standard of living is lower than it need be because they have never acquired the skills. It is much sadder still to observe a standard of living go down because people have forgotten and neglected their skills, because their crafts and industries have been corrupted in an insidious way.

I must detain the Committee no longer on this point. I hope that I have made it clear that there is a temptation, once having broken faith with oneself, to meet a request to do something against the standard to save a miserable 18s. on an article costing £30 in order to suit the political devices of the Government in power. The effect can be disastrous.

There are other items in the processes of manufacture that I should like to discuss. I have not dealt with the question of labour. Let us discuss morale, for instance. From time to time in the debates on these Amendments the economists get busy, and we have explanations of what inflation consists of and how the increase in furniture prices will cause inflation. Some three or four million workers belong to trade unions which have had the prudence to arrange that their wages depend upon the cost of living. Among them are the workers in the furniture industry.

Among the items of which account is taken in fixing the cost-of-living index is furniture. Perhaps the economists will tell me the answer to this one. The Government throw in a new factor of a 5 per cent. increase in costs. When the increase has worked itself through, the retail prices go up. That affects the cost of living and so the wages go up. Consequently, the cost of the next lot of furniture is up by the amount of the increase in wages, which were increased by the cost of living bonus. The Chancellor of the Exchequer gets his 5 per cent. on that as well, and up goes the price still more. That again sends up the price of furniture, which sends up the cost of living index once more. That sends up the furniture industry wages, without anybody arguing or calling strikes or waving banners. That is automation in the field of economics. It is really something that works automatically over a steady period. Of course, that is an argument which can apply to very many of the discussions which we shall have in the course of our debates on the Bill.

I make this plea for a last-minute consideration of whether what the Chancellor is doing is really worth it. After all, the right hon. Gentleman belongs to the party which threw away chances of maintaining by controls the standards which have been worked out. Now he is breaking the hearts of the workers as well as of the manufacturers.

Just across the road from where my men work, Peter Waals made his tables at the time when he and Gordon Russell were leading the campaign to get a better respect for wood. The time came when Gordon Russell was quite outstanding among the manufacturers, and he said, "Utility scheme, working-class furniture—of course it suits us. We can compete with anybody, provided the competition is fair. The price is guaranteed. The specifications are guaranteed. Within that framework I will make a better article than the next man." And he did. He made a beautiful article. He respected his own principles and his timber, and he got splendid results.

Now such manufacturers will be tempted to withdraw from the lowest price levels because there will be too much deterioration, and that will have its effect, quite naturally, of course, upon the standard of living; but it will have a much more serious, long-term effect, because there will be worthless articles, and we shall demoralise the people who make them and the people who buy them.

Mr. Percy Holman (Bethnal Green)

I would add my word of protest against this proposed sales tax. There are a good many furniture manufacturers in my part of East London. I have yet to meet one who approves of the suggestion in this Bill. The better-class furniture manufacturers found the D Scheme an improvement from their point of view on the older system of the Purchase Tax, and for obvious reasons they therefore do not wish to express this time any views contrary to those they expressed so recently. However, I find that one and all of them are against the proposals of the Chancellor.

The largest buyers of furniture are the young. I have a daughter who is to move into a new home next month. Today it is the older people, like so many of us here, who have the largest incomes, but it is the young married folk with young children who should have the largest incomes, which should be reduced steadily as their age increases. To achieve that would be the correct economic function of governmental direction over incomes. There has been no time in our history when the economic position of those in the 25 to 35 year-old age group has been relatively worse, compared with that of those in middle age, than it has been in the last few years. If they are to get a home at all they have to take very expensively rented homes, and the present Government are forcing more and more of them to buy their homes at enormous cost to themselves, sometimes amounting to as much as one-third of their income. Now the Government are trying to do their best to prevent them from furnishing their homes.

We are told that this is part of a wider policy, and that the Government must suck up some of the surplus income. It is not to be found amongst those in that age group, who do most of the furniture buying today. They are those who are suffering from a serious shortage of income on the whole. We are told that other methods of putting more money into the pockets of those who have inherited wealth, those who have reached their maximum income and so on, were adopted in the April Budget; but now in the autumn Budget we take some of the money out of those purses which are well-nigh empty.

I have yet to find a businessman or a trade organisation that does not regard this autumn Budget as inflationary. I have asked person after person actively engaged in trade what will be its effect. Almost unanimously, they have said that it is bound to be inflationary. I would prophesy that in sucking up about £85 million from the consumers we shall add many times to that figure in wage and salary costs during the next few months. It is a really serious position. Already I have myself been asked for more money by some of the younger members of my firm because of the position in which they have been placed by their inevitable commitments, and because they have no chance of getting either a subsidised place to live in or reasonably priced goods of an adequate character with which to furnish their homes.

7.15 p.m.

This tax is more inflationary than any other. There is still time for the Chancellor to withdraw it. It is inflationary and bound to be inflationary. I hope that some of the Conservative economists who say that the causes of inflation are complex will acknowledge that inflation is certain when there is increasing Government expenditure and increasing taxation in conditions of full employment. That is a simple thesis which I believe to be incontrovertible. Apart from those on the Treasury Bench, there are very few who really think that the present taxation proposals are anything but inflationary. I think that every big manufacturer and trade organisation that has expressed any views on this subject in the last two or three years has said, "Reduce taxation. Reduce costs." That is the only way to stop inflation.

Mr. H. Brooke

I always listen to the speeches of the hon. Member for Bethnal Green (Mr. Holman) with great respect. He and I have it in common that we are both London Members. I hope we have other things in common, too. However, with the greatest respect to him, I really cannot accept his statement that at the present time the young people are suffering greater difficulties than the old.

Mr. Holman

Not the old. I said the middle aged.

Mr. Brooke

It is among the younger people that the freest amount of spending is going on at the present time. I am not for a moment suggesting that things are easy for every young couple, but we should create a false impression if we suggested that it is the young rather than the old who are at present suffering from high prices.

Mr. Albu

I am sure the right hon. Gentleman does not wish to mislead the Committee. He is wrong in saying that we were speaking of the young unmarried people. We were speaking of the young married people with children who have to find homes and have to buy furniture.

Mr. Brooke

I hope that young married couples buy their furniture before the children begin to arrive. I accept at once that things will become more difficult for a married couple when once they have children, but my right hon. Friend has already helped couples with children by his Budget earlier in the year.

It is entirely right that we should have a debate on the matter of this Amendment, because the treatment of furniture is an important subject. However, it is not entirely clear to me what the Opposition want. The hon. Member for Edmonton (Mr. Albu), who moved the Amendment in a very reasonable speech, said that he had no special love for the D Scheme as such, but he went on to say that he liked the D Scheme more than the Government proposals, and, therefore, was moving an Amendment to restore the D Scheme; but he did not like the D Scheme. He was dissatisfied with everything and everybody, dissatisfied with what the Government are doing and dissatisfied with what he was trying to do. What, I think, he would really like is the removal altogether of tax on furniture.

Mr. Albu

Hear, hear.

Mr. Brooke

That raises the question whether one could have an effective Purchase Tax with no tax on furniture whatever. There are many people who would argue, and I am sometimes tempted to join them, that it would be nice to see the Purchase Tax disappear altogether. But at present we have to raise very large sums in revenue and nobody within my hearing has suggested a better way of raising £400 million if the Purchase Tax disappeared. We therefore have to have Purchase Tax. If we have it, we cannot have yawning gaps in it, and there would be quite an anomalous gap if there were no tax at all on furniture.

Up to the present the arrangement has been a tax at the rate of 25 per cent., to which it was reduced from 33⅓ per cent. by my right hon. Friend some years ago, on goods above the D-line. I hope that those hon. Members who are engaged in or concerned with the furniture trade will grant that the D Scheme as applied to furniture is excessively complicated. When I heard hon. Members say that the furniture manufacturers they knew would much rather stick to the old arrangement, I could not help thinking that they must have been manufacturers who exclusively manufactured below the D-line. I cannot believe that any sensible person would wish to operate the complications of the D Scheme in furniture—

Mr. Hale

I am grateful to the right hon. Gentleman for giving way and for his explanation. I am sure that it has enlightened the Committee very much. I am particularly grateful to him because his explanation corroborates precisely what I said—that what was probably in the Chancellor's mind was that some manufacturers would feel that they had been bundled in and others left out in what I understand the Financial Secretary to describe as a "yawning gap." Therefore, one has to sock everybody for fear that someone would say, "You have not socked Bill Jones." I am afraid that my theory aroused some astonishment on this side of the Committee when I put it forward. At the same time, with respect, the Financial Secretary's argument is not quite sound. There are yawning gaps. We have subsidies on some prices. We have yawning gaps on tinned salmon, and furniture is just as much a necessity as tinned salmon or mink coats and various other things. Therefore, there is really no argument in all this. Is the Financial Secretary really saying that the yawning gap is a blank form in the Schedule which someone has noticed?

The Chairman

The hon. Member is quite entitled in Committee to make a second speech, but I think that this is rather lengthy for an interruption.

Mr. Hale

I think so too, Sir Charles, but it was rather difficult for me to develop the point.

Mr. Brooke

The hon. Member has addressed the Committee for about half an hour, and I hope that he will forgive me if I do not follow him on the subject of tinned salmon but return to Purchase Tax.

The Opposition is protesting against Purchase Tax being imposed on furniture at the very low rate of 5 per cent. No hon. Member opposite has mentioned that other trades are looking very enviously at the furniture trade because they are paying a higher rate than 5 per cent. I understand that later in the debate hon. Members opposite will criticise some of those higher rates. Here the Government are proposing a lower rate, the lowest that has ever operated under the Purchase Tax arrangements. It seems to me that the hon. Member for Edmonton is seeking some device for criticising it and at the same time concealing the low level of the rate by suggesting that the Chancellor was here introducing a sales tax, which the hon. Member hates so much.

If the hon. Member for Edmonton is arguing that Purchase Tax is on the whole too high, surely he cannot at the same time argue that a 5 per cent, tax is unreasonable because it is a sales tax. It must come somewhere, and I really must put to the Committee the point which has not been adequately put up to the present—that the furniture trade is being treated in an extremely fortunate way relative to most other trades in my right hon. Friend's proposals.

I quite agree that any tax on furniture bears heavily on young couples who are getting married. We must accept that. I do not attempt to deny it for a moment. It will mean that they will have to buy their things more slowly. Nobody when getting married, at least within my range of acquaintances, ever dreams of trying to buy everything he may possibly need. When we are getting married we are all aware that we have to build up our household goods by degrees. In this case it may be that people will have to go more slowly, but a tax of 5 per cent. will certainly not prevent their providing themselves with all the necessary articles of a home.

I have heard people outside this Chamber making quite fantastic suggestions about the difference which this 5 per cent. tax may make. It will, of course, be realised here in the Committee that the article which will bear the maximum additional tax is the article just at the D-level. It might interest the Committee if I gave one or two illustrations of the maximum additional tax that any article of certain type could bear.

A dining room table sold at £17 would bear an additional tax of 12s. and, of course, the additional tax would be proportionately less if one bought a cheaper table. A double bed, selling at £19 15s., would bear a maximum tax increase of 14s., and if one bought a cheaper bed the tax would be lower. A large wardrobe selling at £43 would bear a maximum tax increase of 31s. These illustrations entirely demolish the kind of allegations one has heard from less responsible people about the crippling effect that the tax will have on prices.

Mr. Parkin

Since the Financial Secretary has now no authority whatever over the retail price of furniture, how can he state with such confidence what the tax on the retail price will be?

Mr. Brooke

I am saying that the articles which have been selling at these prices will bear a certain tax and that these are the maximum rates of additional tax that can be borne because, if these articles had been more expensive they would have been above the D-level in the past and would have been subject to tax.

I thought that the hon. Member for Paddington, North (Mr. Parkin) paid no high compliments to the morality of his own trade, and I really do not think that everybody in the furniture trade will be as anxious to cheat the customer on account of a 5 per cent. tax as the hon. Member suggested. He will have noted too, and so will the Committee, that by abolishing the D Scheme we are removing the fiscal incentive to make not quite such good articles so as to get below the D-level. I believe it is universally recognised that, wherever the D Scheme applies, one of its dangers is that it puts a temptation on manufacturers to produce things that are not quite so good as they might be in order to get below the D-level. It is one of my right hon. Friend's main purposes in abolishing the D Scheme that we shall no longer be giving any artificial inducement to manufacturers to depart from their normal objects and purposes and ranges of their trade in order to seize some tax advantage. It is entirely true that in future all these articles will bear the low rate of tax.

7.30 p.m.

When it is suggested that my right hon. Friend is heartless towards young married couples, it is only fair that I should point out that in April he removed Purchase Tax entirely from all cotton and other non-woollen household goods, tablecloths, sheets and so forth.

Mr. Hale

Just before the General Election.

Mr. Brooke

My right hon. Friend did that in April, and now he has gone further, when there is no General Election pending, and has removed the tax from blankets and all woollen soft furnishings. Thus, there are gains in this as well as losses. I must advise hon. Members that to exempt furniture alone from tax would create a serious gap in Purchase Tax. I must warn hon. Members that, according to my information, most people in the trade have no wish to see the Amendment accepted and the D Scheme retained. Most people wish to get rid of the D Scheme. I cannot believe that the very low rate of tax of 5 per cent. will be a hardship to anybody, and I advise the Committee to reject the Amendment.

Mr. Collins

The right hon. Gentleman has just stated that, according to his information, no one in the trade wants to retain the D Scheme. I am the president of a trade federation, but my federation has made no representations to the Treasury. Which trade organisation has recently made representations to the Treasury asking for the removal of the D Scheme in respect of furniture?

Mr. Brooke

What I said was that I do not think anybody in the trade desires the D Scheme to be retained as such.

Mr. Sidney Dye (Norfolk, South-West)

It would be a great mistake to think that only hon. Members representing London constituencies are interested in this subject. So far the debate has been largely conducted by such hon. Members, with the addition of my hon. Friend the Member for Oldham, West (Mr. Hale).

I rise to support the Amendment because, on Budget day, I received a letter from the chairman of a furniture manufacturing company in my constituency asking me to vote against the Purchase Tax on furniture. Thus, it was anticipated that something of this nature would happen. It so happened that my political opponent had a photograph of the factory in his address at the last General Election in order to indicate the developments which had taken place at East Dereham in recent years. The chairman of the company who wrote to me in anticipation of the Budget, asking me to vote against this Measure, is a leading Conservative. I had a conversation with him after Budget day, and what has recently been said in the debate is an indication of the fears that exist.

What is the argument that has been used about the 5 per cent. tax? It is that the manufacturers of other articles will look enviously at the makers of furniture because their tax is only 5 per cent. 1s that not almost as good as arguing that we are starting with a 5 per cent. tax. we may next time add another 5 per cent., and soon it will be on a level with all other Purchase Tax, and that we should abolish these yawning gaps now that the Conservative Party, having reduced Income Tax and needing more money, has made up its mind to spread the net wider.

As has been pointed out, the tax falls most heavily on those who are about to marry and want to get a home together. Why should furniture forming the home of a newly-married couple be subject to tax? In the past our reasoning has been in favour of subsidising house building, but now we are introducing a general tax on all furniture.

One thing which has bolstered the moral and pride of young people, at least in agricultural areas, in recent years has been that they could go into a furniture shop and buy new furniture. Their forebears had to go to secondhand shops or auction sales and buy furniture which had been used by others. The greatest pride of a young woman about to make her own home is to have in it something new, which no one else has used, and which will probably remain in the home all her life. It is wrong that that should be subject to tax. It is wrong to begin with a tax of 5 per cent. knowing full well that in a very short time there will be agitation for it to be increased. The hon. Gentleman has indicated that that is the likely line in the future. Why should he anticipate that in future all our furniture and household utensils will be subject to tax because we are not able to balance our overseas trade with other countries?

It does not seem to me to be logical or sound that we should impose a penal tax where we want to boost our people most, when we want them to have pride in their homes. I should have thought that the hon. Gentleman and the Chancellor of the Exchequer, who have in the past taken a great interest in the welfare of people in rural areas, would have looked with pride upon the developments which have taken place in their homes in recent years and would have done nothing to discourage them.

Here we have full grounds for opposing the tax and for asking, for the time being at any rate, that the D Scheme should remain in being. Do the Government anticipate that people who are setting up homes will not want so much furniture because fewer houses will be built and they will have to pay a greater rent for those houses? All those things are looming before us and are proving a definite check on the country's progress and upon the younger married people. We should vote against the changes and endeavour to maintain the freedom from taxation of these things that mean so much more than pounds, shillings and pence in sentimental value.

Squadron Leader A. E. Cooper (Ilford, South)

I shall not detain the House for more than a moment or two. Whatever may be one's individual feelings about other parts of the Finance Bill, this is one part that fair-minded people can wholeheartedly support. It is a fact that the furniture industry as a whole supports this particular alteration. [HON. MEMBERS: "Nonsense."] I happen to have some connection with the furniture industry, and I am assured that in the main the industry welcomes the proposals made by the Chancellor. It must be borne in mind that we ought not all to be apostles of mediocrity, as would appear to be the lot of the hon. Member for Edmonton (Mr. Albu).

I remind the Committee that it was not very long ago that the D Scheme was introduced and hon. Gentlemen opposite took an attitude entirely contrary to that which they now take. Then they said that the D Scheme was everything that was bad; that it would promote unemployment in all industries to which it applied. Now the D Scheme is being taken away and, because it is being taken away, the hon. Member for Edmonton and others of his hon. Friends say what a wonderful thing it was and what a shame it is that it is being taken away.

Mr. Albu

There is one simple objection to the changes being made, and that is that 80 per cent. of furniture which was previously tax-free will now bear tax. That is why the manufacturers to whom I have spoken object to the change.

Squadron Leader Cooper

The furniture manufacturers to whom I have spoken all say that this is one of the finest things that could have happened to the industry. It may not generally be realised that in this country we have a fair export trade in furniture of very high quality. [HON. MEMBERS: "What the percentage?"] The firm of Frederick Tibbenham Limited, for example, has a very substantial factory in Ipswich and employs a considerable number of people. I am sure that the right hon. Member for Ipswich (Mr. Stokes) has no desire to see that company go out of existence. The company is a very substantial dollar earner, but it has not been able to produce the type of first quality furniture which it would like to produce in quantity because of the high level of taxation to which that furniture has been subject.

It is common knowledge that one can develop a substantial export market only if one has a firmly based home market. Firms like Frederick Tibbenham have not been able to develop a substantial market in this country for their high quality reproduction furniture of the Sheraton and Chippendale type. It is a firm which employs some of the finest craftsmen in the country. Those men in Ipswich now have a real opportunity of demonstrating their skill and finding new markets here at home, thereby enabling their firm to sell goods at more competitive prices in overseas markets.

7.45 p.m.

I should like the hon. Member for Edmonton to try to be fair about this. Wherever the D-line has operated, whether in furniture or in any other type of commodity, the effect has been that the manufacturers have endeavoured to produce down to a quality which would keep them outside the D-level and away from tax.

Mr. H. Rhodes (Ashton-under-Lyne)

That is absolute nonsense. That is an old fallacy, and anybody who listens to that now should have it debunked, and I will do it. During the last two years the terms of trade have been moving in our favour. The basis of the D Scheme and the revenue that the Treasury got was the keeping up of prices, because the D-line was fixed; but if one's materials were coming in cheaper—and I can say for the woollen industry that we have taken wage increases during the last year in our stride—

The Temporary Chairman (Mr. George Thomas)

It might be helpful if the hon. Member for Ashton-under-Lyne (Mr. Rhodes) would develop his point later, if he so wishes.

Squadron Leader Cooper

I repeat, Mr. Thomas, and I think that it is unchallengeable, that the effect of the D Scheme in practically every branch of industry has been that manufacturers have produced down to a quality to avoid tax. That is a very natural attitude for manufacturers to take, but one must bear in mind that, if the country is to survive at all, it will be by our ability, to produce high quality goods and not simply mediocre mass-produced lines. That is why in abolishing the D-line and putting the emphasis more on quality we are in the long term doing a great service to the interests of the country.

Mr. Hale

Three years ago I was making that speech and the hon and gallant Member for Ilford, South (Squadron Leader Cooper) was voting against it. This is a recantation of his vote three years ago when the Government introduced the scheme, because his is precisely the criticism I was making three years ago when the hon. Member went into the Lobby and said, "No more Utility clothing, no more anything. Let us introduce this rigid proposal." We opposed that on these very grounds.

Squadron Leader Cooper

The interesting thing that arises from that is knowing what the hon. Member for Oldham, West (Mr. Hale) will do in the Lobby tonight. He will be doing something quite contrary to what he did three years ago. The hon. Member was very much in favour of the Utility scheme and did not want to end it. We introduced the D Scheme which we thought was better.

The difference is that the Utility scheme was itself of very low standard. [HON. MEMBERS: "No."] It was uniform. It gave no opportunity for manufacturers to express individuality. The D Scheme gave manufacturers an opportunity to get away from the drab uniformity which was, perhaps quite naturally, imposed upon them as the result of war-time restrictions and postwar conditions. But the position now is that three years afterwards we have seen the D Scheme in operation and we can see its many weaknesses.

Whatever the hon. Member for Oldham, West may think about the advantages of the D Scheme, or overriding Purchase Tax and so on, a simple low level of what is in effect a sales tax—[HON. MEMBERS: "Hear, hear."] I am very pleased indeed to hear so much support for a sales tax. [Interruption.] I am not letting any cats out of the bag. I have been in favour of a sales tax for years. I think that a Purchase Tax in any form is a most stupid, pernicious and vicious tax which distorts the whole economy of the country. I believe that if we can substitute for the Purchase Tax, with all the anomalies and anachronisms which it creates, a simple sales tax, we will do great benefit to our country.

Mrs. Slater

As the debate goes on, the differences between hon. and right hon. Members opposite and hon. and right hon. Members on this side of the Committee become more obvious, and the hon. and gallant Member for Ilford, South (Squadron Leader Cooper) has pointed out at least two of these differences. The simple difference between the furniture to which he has been referring and the furniture about which we are concerned is that the hon. and gallant Gentleman represents the very exclusive and expensive furniture produced by the firm to which he referred, and which I understand—

Squadron Leader Cooper

I want to make it perfectly clear that I represent nobody.

Mrs. Slater

I am sure that, after that brick has been dropped, at least the constituents of the hon. and gallant Member will be grateful to know that he does not really represent them.

What I was saying was that the furniture to which he was referring is the exclusive and expensive products which are bought only by a very small number of people in this country. The furniture about which we are concerned is that bought by the large masses of working men and women of this country. The difference between the two represents the very fundamental difference between this side of the Committee and hon. Members on the Government benches.

I am sure that we were also very grateful to the Financial Secretary to the Treasury for the examples which he gave, and again I should like to point out that those examples were, in the main, examples of expensive furniture.

Mr. H. Brooke

May I point out to the hon. Lady that I was indicating the maximum increases? I was not giving typical cases.

Mrs. Slater

That will only bear out what I shall be saying in a moment. On the expensive furniture, there is in fact a reduction, but those people who are compelled to buy the cheaper furniture because of their economic circumstances will in fact be paying an increase.

I will give some examples. The cost of a whitewood kitchen table will be increased from £5 6s. 9d. to £5 12s. 6d., and the women in working-class homes have to have a kitchen table on which to do their cooking and ordinary housework.

Mr. Ross

They can wait a little longer.

Mrs. Slater

The price of a kitchen chair will increase from £5 10s. to £5 15s. 6d., and that of the kitchen cabinet will go up by 15s. The price of an expensive dining-room suite such as one sees in many shops today priced at £65 13s. 3d. will in fact be decreased to £64 15s. So that the answer is that if one can afford to pay, one will pay a little less in proportion, but, if one cannot, one must pay a little more.

Again, we were told by the Financial Secretary that this tax represents no hardship; that was the phrase which he used. I am quite sure that the Conservative women who rebelled yesterday at the meeting with the Economic Secretary to the Treasury will offer up a prayer to heaven that at least he will give them an answer which they may use on the doorsteps to the people whom they canvassed at the Election and told "If you vote Tory, prices will come down." Yesterday, or a day or two ago, they said "Now, we can no longer go and tell that story; please give us an answer."

Gradually, we are being told the answers. We are told that the tax does not represent any hardship. At least, they will be able to go to the doorstep and say, "Well, you can get accustomed to it if you wait long enough." Again, in the Tory paper the Recorder this week, there is an important article by Gwen Robyns, which points out that Tory women and other housewives do not need kitchen luxuries but household furniture. She says: If the housewives were really smart they could take a hint from the mothers of New Zealand. There the Housewives' Association got together and threatened the Labour Government which was then in power that they would not get a single woman's vote unless purchase tax was removed on all household equipment. There we have it in a nutshell—even Tory women have at long last realised that the promises made during the Election at the beginning of the year are dispelled and broken completely in the provisions made in this Budget.

This tax on furniture, as several of my hon. Friends have said, bears heaviest on the people least able to bear it. The young couple getting married today are faced with the prospect of paying a very high price for a house and putting round their necks a very heavy burden for at least twenty years because of the increased interest rates imposed by the Chancellor. They are also faced with another heavy burden through the tax on the furniture which they will want to place within the four walls of their house. Every couple who get married must have a minimum amount of furniture. They have to have a room in which to sleep, a kitchen in which to cook and wash, and they also need a room in which they spend the greater part of their day. To these people we are now saying that, in spite of all the promises which were made to them at the beginning of the year, they will pay more for their house, pay more for their food and now pay more for their furniture.

Mr. Rhodes

In reply to the hon. and gallant Member for Ilford, South (Squadron Leader Cooper), may I point out that the Utility scheme represented price allied to quality, and that it was quite flexible and could be discriminatory. Having said that, I am not going to defend it.

Dame Irene Ward (Tynemouth)

The hon. Gentleman cannot do so.

Mr. Rhodes

It served its purpose at the time.

What I am pointing out is the difference between the flexibility which we could have in a scheme like that and the position under the present scheme. Under that scheme, it was possible to have Utility fur coats free of tax, but not under this scheme, because this scheme is most inflexible, and we cannot discriminate.

Who can deny that there are, in the jewellery field for instance, articles which warrant a tax just as much as do any of the other products that come under the present provisions? Yet we cannot make that provision; the scheme is inflexible. One cannot discriminate under this system of a sales tax, but one could do so under the old Utility scheme and also under the D Scheme, because if the D-line was high enough, quite a lot of articles could be made below that level. That system would serve the purpose, and we should be able to discriminate.

This is a very dangerous tax to introduce. Hon. Gentlemen opposite have admitted, and know full well, that it is a sales tax. It is dangerous, and at a later stage in our discussions perhaps I shall have something to say about it. But I wanted to say what I have said to put the hon. and gallant Member for Ilford, South right on that point.

8.0 p.m.

Mr. Collins

Replying to the debate at an interim stage, the Financial Secretary told us that so far as he was aware furniture manufacturers wished to get rid of the D Scheme. I intervened to ask for evidence of that. Here I must declare an interest, as I happen to be the president of an employers' federation which includes furniture manufacturers among its members. We have made no such representations, and I do not think that the British Furniture Manufacturers' Federation has made any—certainly not within the last three months. If I am wrong, I will gladly sit down so that the Financial Secretary may correct me. Apparently he does not wish to do so, so I must take it that I am right and that no such representations have been made. Therefore, that demolishes to a great extent what he had to say about this scheme.

Obviously, when the D Scheme was introduced, it involved new regulations, new price lists and a lot of paper work, and it was not welcomed. No one likes paying taxes, and no one wants a complicated scheme. Our point today is that the new situation created by this sales tax, as the hon. and gallant Member for Ilford, South (Squadron Leader Cooper) called it, is far less satisfactory to the furniture trade as a whole than was the D Scheme.

I took the trouble this morning to ask my accountant what were the tax figures for the first fourteen days of this month—I know that it is a very small sampling— compared with the figures for the first fourteen days of November of last year. I found that the tax collected, or rather the tax so far charged this year on furniture, is four times as much as the tax charged last year. I know that is not necessarily representative of the whole, but it is a symbol, and I believe that it may well prove that this 5 per cent. sales tax will bring in a considerably larger amount than we have been allowed to suppose.

I wish to submit to the Committee what has happened to the furniture industry in these last eight or ten months. First, we had in February the change in the hire-purchase arrangements which within a month or two led to quite an appreciable amount of unemployment—some 10 per cent.—and about another 25 per cent. of short-time working. That, in a period when most of industry is fully employed—hon. Members opposite say more than fully employed—is quite an exception and a remarkable thing. The seasonal period of demand followed and trade picked up, and now there is this fresh tax.

As has been mentioned by one of my hon. Friends, there is a sliding scale for wages in the furniture industry which is tied to the cost of living, and recently we have had quite a considerable wage increase which, of course, was justified by the increase in the cost of living. That has meant an increase in prices already from 5 per cent. to 7½ per cent. Now, in addition, there is another 1s. in the £ which my hon. Friend the Member for Paddington, North (Mr. Parkin) has pointed out is cumulative, and spiralling all the time towards inflation. I hope that the Financial Secretary will not just dismiss this and say that it is only another 5 per cent. It is an important addition to the cost of living. It is inflationary and imposes a very real hardship.

It is the case that the Government have indicated that so far as general housing is concerned they propose shortly to put the local authorities out of business so that young people will not get houses and flats to occupy. I suppose, by the usual Tory process of arithmetic, they propose to balance that by making it that much more difficult for people to buy furniture for houses which they cannot get.

I wish to mention one or two of the reasons, given earlier this afternoon by the Financial Secretary, which prompted the Government to abandon the D Scheme. The right hon. Gentleman said that it was difficult to administer. Once the thing had settled down, I cannot remember any occasion in the last two or three years when any really difficult problem was brought to me from any of several hundred manufacturers. In other words, we had become used to it. That is the phrase of the Financial Secretary—we had become accustomed to it. Now we have to scrap our catalogues, write to our customers and retailers, change our price tickets and become involved in thousands of pounds of expenditure in order to change it. We are driving our staffs silly, because it is becoming more and more difficult to administer as new problems crop up.

The Financial Secretary said the Government had dropped the D Scheme because it created anomalies. But a whole fresh crop of anomalies has grown up. This afternoon I received a letter from the private secretary to the Chancellor of the Exchequer. I had had occasion to telephone him a few days ago in order to clear up one or two questions about the Purchase Tax, most of which we were able to settle at once. But one question we were not able to settle, and he was kind enough to write to me referring to that query. Here is the answer, and we can see how this new arrangement clears up the anomalies. It relates to baby hampers and baskets. It will be remembered that cots and cradles have been especially exempted from tax.

Baby hampers and baskets (that is lidded and unlidded containers for the layette) are chargeable under Group 23 (a) or (c) in accordance with the material of which they are made, with the following exceptions:— The exceptions are the types of baby hamper and basket which have castors or legs intended to stand upon the floor. These are chargeable under group 11 at 5 per cent. if lidded and otherwise at 30 per cent. How beautifully the anomalies have been cleared up. They have absolutely put the lid on it. If the lid is on, it is only 5 per cent., but if the lid is off, it is 30 per cent. One pays less for a basket with a lid than without one, and yet we have been told that the Government gave up the D Scheme because of the anomalies which it created. That is only one example and I am quite sure that there will be very many more.

The Government have also given up the D Scheme because its removal would assist the production of high quality goods. I think that argument is nonsense. I am sorry that the hon. and gallant Member for Ilford, South is not present, because I should have liked him to hear what I have to say. I do not think that I am doing him any injustice if I say that he alleged that the Utility scheme produced low quality goods. That, in my experience, is quite untrue. I and my colleagues in the industry fought hard to raise the quality. We realised how, before the war, the public were exploited and the industry was ruined because of low quality goods.

We welcomed the Utility scheme. It gave us standards of quality, not standards of bad quality; and Utility standards and patterns in furniture under the same numbers are still quoted and still made wilthout any alterations at all. It is nonsense, therefore, to say that the Utility scheme produced bad quality goods, and it is not true to say that this change will assist in the production of high quality goods. Expensive goods are not necessarily high quality goods. My hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) mentioned high-priced goods. It is possible to make an expensive thing, a fancy article, which commands a high price but that is not necessarily a very good article.

I can quote a much more extreme case from my own experience. We make chairs for a wholesale price of £2 or £3 each. Formerly they did not bear any tax, but they now bear a tax of 2s. or 3s. We also make a cocktail bar for the home, which sells in the shops at about 50 guineas. The tax on that was £7, and is now 30s., and it will be sold for about £5 less. During the Second Reading debate the Financial Secretary committed himself to the statement that the Budget ensured that the more expensive goods bear a higher rate of tax, but that will not be the effect of the new proposals. That is a very great injustice to the furniture trade.

I am quite sure that when this new arrangement is fully understood by the people, and the effect of the extra cost is felt in the reduced demand for furniture, renewed unemployment and short-time working, the organised sections of the furniture industry will be coming to the Chancellor and telling him in no uncertain voice, not that they welcome the removal of the D Scheme, but that it was very much better than the arrangements which we are now offered.

Mr. Barnett Janner (Leicester, North-West)

I intervene in order to make a fresh appeal to the right hon. Gentleman to reconsider this matter from a somewhat different angle than that which has been presented by the last few speakers. I ask him, with his vast experience of social work, to realise what he is doing. It is no use saying that a 5 per cent. tax means nothing. If only furniture were involved, such a tax might mean little, but a 5 per cent. tax on furniture, in addition to all the other taxes that are being piled on, will mean something of considerable importance to the householder.

To the newly-married couple it means a very great deal. The Financial Secretary talks about yawning gaps, and I agree that there will be plenty in the homes of newly-married couples when they have first to pay for the home and afterwards for the utensils which they will use in it, and when they have to pay the larger amount that the Conservative Government, who were going to preserve their living standards for them, have now piled on their shoulders.

It is not only the newly-married couple, however, who will be affected; the effect will be felt in the average home throughout the country. Social workers know very well what is the significance of the home. For many years I have tried to indicate to the House and to people outside it the importance of people having a roof over their head, and of a family having a proper home—not merely a house—for their children and in which the young people can find the ordinary amenities, so that they will not be driven into the streets, away from the place which protects them against vice and from falling under bad influences.

It is well to talk about clubs and such amenities. They are highly necessary, but anybody who has to handle young people knows very well—and frequently expresses that knowledge—that the home is the main place in which to build up young children in order to prevent their falling into bad ways. Anything which is done to remove this important influence upon the lives of young people, especially in the poorer districts—those districts from which come many of the victims who ultimately find themselves in the juvenile courts—is to be deprecated.

8.15 p.m.

Mr. William Shepherd (Cheadle)

Can the hon. Member estimate what percentage increase in juvenile delinquency he expects to result from the 5 per cent. tax upon furniture?

Mr. Janner

Is not that a silly question? The hon. Member knows as well as I do that every magistrate in our juvenile courts expresses the view which I am now putting forward, namely, that the good home is more important in the prevention of juvenile crime than anything else. Therefore, anything—no matter what it may be—which tends to reduce the facilities available in a home is doing a disservice not only to the individuals concerned but to society as a whole.

This is not a trivial matter; it is one of importance, despite the plea that it is being placed before us as a mere 5 per cent. increase. As I said earlier, if it had been merely a question of this 5 per cent. increase, it might not have meant as much as I have indicated, but Mony a mickle makes a muckle, and a fine mess the Tory Government are making of the lives of our people with the kind of taxes being introduced at present—

The Temporary Chairman

Order. The hon. Member would be well advised to discuss the Amendment.

Mr. Janner

I bow to your Ruling, Mr. Thomas, and accept the good advice which you give. I am merely using these illustrations to show that this is only part of a shocking arrangement which is now being introduced.

I hope that you will not consider me out of order if I say that we are shortly going to discuss another phase of home life, when we deal with the question of the place in which this furniture will find itself—or, rather, the yawning gaps which are going to be found in respect of the furniture which should be there and which will not be there.

We have heard the arguments which have been put forward in relation to the furniture trade itself. I do not think that hon. Members opposite realise what the people think about this type of tax. They will find it out soon enough, when people are unable to buy the furniture they need out of the scanty means which they possess. [Laughter.]

Mr. J. T. Price (Westhoughton)

I am in no difficulty in understanding why hon. Members opposite laugh. It is because they are hoping that the people will have four years in which to forget what they are doing in the Bill.

Mr. Janner

Yes. I am indebted to my hon. Friend for his intervention. We know exactly what will happen. In four years' time—

The Temporary Chairman

Order. The hon. Member is not merely anticipating the next Amendment; he is anticipating a great deal more. It would help the Committee if he now referred to the Amendment.

Mr. Janner

It may have been intelligent anticipation.

When it is clear that people will not accept this imposition, concessions will be made at a later stage by reductions in the tax. We ought to see these impositions in their proper perspective. This tax will not help the production of the better furniture that people need in their homes. It will not help people to make their homes more comfortable for their children to live in. It is consistent with Conservative policy, and that is the only ground on which Government supporters can vote for it. It is a bad ground. Because it may destroy something good in the lives of our people, Government supporters should vote with us, if there is a Division on the Amendment.

Mr. H. Brooke

We have been discussing this important matter for more than two hours. I have listened with great interest to the various views, often excellently and lucidly expressed. I rise now to try to define the issues and to see whether the Committee feel inclined to come to a conclusion upon them. We have important business ahead, especially the very important Amendment just ahead of us on the subject of the 25 per cent. rate.

The hon. Member for Oldham, West (Mr. Hale) said that no one on his side could deny that the economic problem was serious. We start therefore with that degree of agreement. The question is what action should be taken. If we were to allow inflation to continue and to worsen, everybody would suffer far more harshly from rising prices than from anything that could happen under this furniture proposal.

Hon. Gentlemen opposite started by saying that they had no love for the D Scheme. I have said, and nobody can challenge it, that the D Scheme for furniture is excessively complicated. We therefore propose a method of dealing with the situation. So far as I understand the case put from the other side, hon. Members there would prefer to keep the D Scheme rather than have our solution, but they would like best to take furniture right out of the tax. That would be no contribution to the solution of the economic problem that hon. Gentlemen opposite recognise as serious. We therefore put that issue before the Committee.

Mr. Gaitskell

The right hon. Gentleman referred to inflation, but he has not told us how much revenue he hopes to get out of this change. Would he give us the figures for abolishing the D Scheme on the one hand and for the imposition of the 5 per cent. tax on the other, say whether it is a net increase and, if so, of how much?

Mr. Brooke

In a speech on the Second Reading, I gave the figure £8 million as the total result of the Chancellor's proposals for abolishing the D Scheme. In answer to the right hon. Gentleman, I mentioned that the increased tax on furs would bring in £1¼ million. The furniture proposal will bring in £3¼. million or £3½ million.

Mr. W. T. Williams (Barons Court)

To intervene in this debate must be somewhat depressing for the Chancellor who, before the debate began, must have examined every avenue, left no stone unturned, and come to a decision that was in every way right and fair. The Chancellor has had a rude awakening, for this is a most unpopular Budget from every point of view. For a moment it seemed that he was walking quite alone, out of step even with his own party. He has had an opportunity of recovering from his first shock, and this evening he revealed a kind of masochistic satisfaction in being the only one in step.

That seems to be his position. He is alone in his conviction that he knows what is right, even to the extent of being separated from his own Financial Secretary. From their speeches, it appears that they approach the problem faced by the Budget from two completely different and contradictory points of view. I will not add to the burdens of the Financial Secretary by referring again to the unfortunate speech he made earlier this evening about rabbit skins. If he could have found a tent of rabbit skins in which to hide I think he would have crept into it.

The Temporary Chairman

Order. I have allowed the hon. Gentleman to go on because I thought it was an introduction to a speech on the Amendment. He must come to the Amendment.

Mr. Williams

It was intended to be an introduction to the Amendment. The experience that we have had of differences between the two right hon. Gentlemen has been repeated. In his earlier speech the Financial Secretary spoke about the unimportance of the abolition of the D Scheme from the economic point of view, stressed that this small tax of 5 per cent. could make little difference, and indicated that he found it difficult to understand what all the fuss was about from this side of the Committee. The impression he left on my mind was that he thought we were much overstating our case.

An hour or so later, he talks about the way in which the Government have tackled this problem of furniture as making a solution to the economic problems with which we are faced. In answer to my right hon. Friend he went on to make a speech as ludicrous as his last. The only solution this tax makes to our balance-of-payments problem—if it makes any—is to the extent of about £3¼ million or £3½ million.

8.30 p.m.

I want to speak about the tax, not from the point of view of the manufacturers, for whom I have no particular love, but from that of the ordinary people upon whom it will fall most heavily. In the earlier Amendment we on this side tried to rescue the cheap fur trade for the sake of the trade. I believe that I speak for all my hon. and right hon. Friends in saying our attitude to the furniture trade is not one of concern for the manufacturers and distributors. My hon. Friend the Member for Paddington, North (Mr. Parkin) revealed some of the dangers and temptations to which manufacturers would be subject as a result of the abolition of the D Scheme. Looking in from the outside, my attitude is one of equal pessimism about the furniture industry.

In my view that industry is rigged from top to bottom and already exercises a far from beneficial effect upon our economy. The greater part of it is run by a relatively small section of manufacturers. In spite of all the different names under which the furniture shops trade, it is certain that they are almost—though not quite—exclusively controlled by the same set of directors. It is also true that furniture profits have been exceedingly inflated over the last few years, certainly since the Utility scheme was abolished. I would not be surprised, therefore, if the total effect of this further imposition would be to increase the price of furniture and to decrease its quality at a rate even faster than hitherto.

I have here a letter written on behalf of manufacturers and wholesalers generally—not particularly those in the furniture trade, although I take it that it is true of that trade also—which states that the extra cost of collecting a 5 per cent. tax would be greatly above the value of the tax itself. It says that it would probably add about 2½ per cent. to the burden which, according to the writer, would be borne by the wholesaler. I dare to suggest that that is probably unlikely. It is more likely that the cost of collecting the tax would be passed on to the consumer. We have already heard of the way in which, in addition to that increase in costs which would be passed on by the wholesaler, there is a further increase which would be passed on by the retailer as part of his profit upon the wholesale price. The inflationary result is obvious.

No hon. Member can really doubt that these constant increases must be inflationary, and will cost far more than any benefit the Treasury will receive, but more immediately important than the long-term inflationary effect of this tax is its effect on ordinary people who, on very small incomes, are trying to get together a home. It seems so unfair, so unreal for the spokesmen on the Treasury Bench to affirm—as they have done throughout this debate and the debates on the Budget—that there is anything like equality of sacrifice. It is not real to suggest that an increase of five per cent. at a high level of purchase means as much to the purchaser as does 5 per cent. at the £30 or £40 level of purchase.

It is the people with low incomes who will buy the cheap furniture and who will most bitterly feel the weight of this tax. Although I have no confidence that the Treasury, which resisted so powerfully the last appeal that was made, will be any more yielding on this one, I feel that it is right and proper that every protest should be made from this side of the Committee against the imposition of a tax so unfair to the manufacturers and to the consumers.

This tax is pointless so far as the Exchequer is concerned, and, added to the other taxes, it will undoubtedly prove, inflationary. It is manifestly contrary to the promises made by the Government when they came into office. They implied that the Government loved the people of this country and aimed at a property-owning democracy, but they are rapidly ensuring that unless people are very well off they will never own their houses, and that if they are well enough off to own their houses, they will sit in those houses empty of furniture.

Mr. A. Blenkinsop (Newcastle-upon-Tyne, East)

I do not propose to take up much of the time of the Committee but I want the Financial Secretary to clear up a point about which our minds have been left very hazy. I have listened to each of the right hon. Gentlemen's speeches on this matter, and I cannot say that he has cleared up the issue for us.

I was particularly concerned when I heard him say that the result of not passing this legislation, which I understand imposes a 5 per cent. tax on certain ranges of furniture which were previously free of tax, might well be that people would suffer from inflationary prices.

Surely the object of this tax is to increase prices. Indeed, the argument which the right hon. Gentleman put before the Committee was that this "small increase," as he claimed it to be, would help to mop up purchasing power, so that it would not be available for other goods. How can the right hon. Gentleman, at one and the same time, say that we should suffer from high prices if we did not accept this proposal and suggest that his declared object in putting forward the proposal is to raise extra revenue?

It is true that one of his hon. Friends put forward the other view, that the object was not so much to obtain revenue as to divert certain classes of furniture into the export trade. We had an interesting, though perhaps a slightly misjudged, speech from one of the right hon. Gentleman's hon. Friends, and, as I understood it, the argument was that the value of this proposal, which he welcomed wholeheartedly, was that it would encourage firms to export more goods than they were able to do today. Therefore, his view would appear to be that we should be actually discouraging people from buying, rather than mopping up extra revenue.

It seems that we have here certain very important conflicts of view as to the whole reason for, and object of, the proposal. It would obviously be wrong for the Committee to leave the proposal as it stands, without getting a clear statement from the Government as to what they are really seeking to do. I think that we are also entitled, in view of the remarks of an hon. Member opposite, which received a lot of support from the benches opposite, that this was a form of sales tax, to press the Government Front Bench for an explicit statement as to whether they intend this proposal as part of a move towards a general sales tax, upon which various views have been expressed.

I am rather sorry that the hon. Member foy Tynemouth (Dame Irene Ward), who is usually very vocal in our debates, is not with us at the moment. I am sorry that I should be rising at a time when she has left the Chamber. The hon. Lady usually lets us know her views on all matters, particularly on the question of furniture, which is very close to her heart, as there is a considerable furniture factory in her constituency. It would have helped the Committee a great deal if we could have heard from her, as lucidly as she usually expresses her views on this question, what effect this proposal will have upon the industry in her area, particularly in view of the comments of my hon. Friend the Member for Barons Court (Mr. W. T. Williams).

It is well known that that firm plays a very large part in hire-purchase transactions, I know that earlier actions of the Government have been most unfair to it. It would have been interesting to know whether that firm was being singled out for attack. I am afraid we may not have the opportunity of getting that expression of view now, but I hope that if there is an opportunity the hon. Lady will be able to give us the benefit of her views at a later stage of the proceedings.

I certainly think that the Government should now say which of the many speeches we have heard from the Government Front Bench and the other Government benches we are to believe. What is the reason for this imposition? Is it for revenue, to mop up purchasing power, or to divert goods for export? It is right that the Committee should at least know that before passing on to other matters.

Mr. R. Williams

Like my hon Friend the Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) I find myself in a difficulty. That difficulty has been contributed to by the observations of the Financial Secretary.

I know that some harsh things have been said today about the Financial Secretary, and I quite frankly appeal to my right hon. and hon. Friends to put a stop to it for a little time, because the Financial Secretary is in a position of astonishing, if not appalling, difficulty. Even the brilliant eloquence of which he is capable when putting an argument has failed to ease the difficulties from which he suffers. He has not brought those difficulties on himself, but has a job to do and a case to put. It does not follow that because we are in difficulty it is his fault. I put it as clearly and sympathetically as I can, that although I am obliged to express myself with what may appear to be faint criticism of some of his observations, I hope he will not feel too upset about it when, without pulling my punches, I try to be as fair-minded about it as possible.

I was in difficulty when the right hon. Gentleman started talking about the effect of Purchase Tax as a revenue-producer. If Purchase Tax be regarded as a revenue-producer, the implication behind the argument is that there must be as much encouragement as possible given to the persons who are purchasing these things because it is their patriotic duty to supply as much revenue as possible. It must flow from that—if one considers only that aspect of the matter—that a revenue-producing Purchase Tax must be kept as low as possible. If it is pushed to the heights of some of the other taxes that we may or may not be discussing later, one is involved in the argument that we are not concerned with the revenue-producing effect of the tax but with the damping down of purchasing power.

8.45 p.m.

Here, then, we have a policy which as soon as it is enunciated results in an almost staggering divergence of view. The Government are obliged at one and the same time to say, "For heaven's sake let us have as much revenue as we can from the revenue-producing side of this tax, but let us damp down the purchasing power—"—

The Deputy-Chairman (Sir Rhys Hopkin Morris)

The hon. Member is in order as long as he connects his general argument with the Amendment. We are not, however, dealing with the effect of Purchase Tax in general, but with this specific Amendment.

Mr. Williams

I am indebted to you, Sir Rhys. The connection between my submission and the Amendment has been pointed out by the Financial Secretary himself. I submit that it is impossible to discuss the Amendment without at the same time taking into account whether it be a revenue-producing incident or a damping down of consumer power. We on this side of the Committee would be greatly influenced by the determination of whether it is the one or the other. It must follow that we should put an entirely different view to our constituents if the Government case is that it is our patriotic duty to buy as much furniture as we can as quickly as possible than if we were told that it was our patriotic duty not to purchase but to damp down purchasing power as much as possible.

There is no real inconsistency. In a mixed economy like ours it is possible to have an argument which may at first sight appear inconsistent but which in relation to this or that part of the economy may be relevant. In relation to furniture the proper thing might be to buy and in relation to something which is not furniture it may be the proper thing to abstain from buying. In those circumstances, while I concede the brilliance of mind which came to these conclusions behind the scenes before these arguments were put, my heart goes out to the Financial Secretary when he has to put these contradictory viewpoints before the Committee.

The most difficult argument to deploy must be the argument de mininns. When the Financial Secretary said, "Do not make such a fuss on the other side of the Committee. This is not an important matter; it is a very small matter. For you to make speeches about the hardship which is caused to young people is monstrously wrong," one felt the glow of indignation coming from the other side of the Chamber. It was most uncomfortable at this distance.

The Financial Secretary cannot have it both ways. When, in response to a most pertinent inquiry by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), the Financial Secretary began to talk about the revenue-producing effect of the tax, it became obvious to me that if there were any argument about its being a very small matter, that must recoil on the right hon. Gentleman's own head, since if it be a very small matter from the standpoint of the arguments that we on this side were putting, it must be an even smaller matter in relation to the financial resources of this great nation, so prosperous, so it is asserted, under Tory rule.

Mr. H. Brooke

I do not remember ever using any phrase about "revenue-producing effect." The right hon. Member for Leeds, South (Mr. Gaitskell) asked me a question and I answered him as courteously and as accurately as I could. I did not develop an argument.

Mr. Williams

My point is that the Financial Secretary himself, long before the intervention of my right hon. Friend the Member for Leeds, South, referred to the virtue of Purchase Tax in relation to the £400 million that it was producing. He implied that any of us who cared to criticise any aspect of Purchase Tax would be involved in the difficulty of showing where we were to produce the revenue.

The Deputy-Chairman

I must remind the hon. Member that we are not now dealing with the general effect of Purchase Tax but with a specific Amendment.

Mr. Williams

I apologise to you, Sir Rhys. I think that in defence of myself I should say that when the Financial Secretary was making his point I realised that I should be in great difficulties in relation to order if I replied to it. I hope you will forgive me for making the attempt to do so, if I have transgressed.

My point is that the proposal is de minims from the standpoint of the Government. From their standpoint it is a very small matter. Then why do it and cause all the irritation and upset? If it is to be so ineffective from the standpoint of producing Revenue, if the Financial Secretary is so hypersensitive on the revenue-producing argument, let him depend upon the only other argument he has, that it damps down purchasing power; but then he is in a worse position still, and I feel even greater sympathy for him. If it be a small matter in relation to damping down purchasing power he is in difficulty even on that score in putting his case.

In the putting of his case the Financial Secretary has demonstrated more convincingly than anybody else has or, in my submission, could, that he is really frustrating the effect of his own submissions, and that the arguments that he is putting are mutually contradictory. In these circumstances it is absolutely monstrous that he should expect the support of the Committee for such an outrageous proposition.

Mr. Gaitskell

My hon. Friend the Member for Wigan (Mr. R. Williams) has made a very attractive and interesting speech. Apart from his philosophical reflections on the relationship between inflation and the Purchase Tax on furniture, he showed great sympathy with the Financial Secretary in the situation in which the right hon. Gentleman finds himself. I also am sympathetic to the Financial Secretary. I understand that as the junior Minister he is put in on a difficult wicket to make an impossible defence. However, I have to tell him that once again his replies have been extremely disappointing to us.

I felt that the right hon. Gentleman was rather unwise in referring rather dis- paragingly to the fact that we had already spent two hours on this Amendment. Two hours—two and a half hours—is by no means too long for the discussion of an extremely important change in the principle of our taxation, and I can assure him that not only the trade but all the purchasers of furniture will by no means regard it as an excessive amount of time to discuss their affairs.

The purpose of the Amendment is to exclude furniture from the general abolition of the D Scheme. I must make it plain that we are at this stage limited to that because any Amendment to eliminate the 5 per cent. tax would, of course, not be in order at this stage If it is in order, it will be in order only when we reach the Schedule. It is for that reason that we are bound to discuss the significance of the removal of the D Scheme, without giving special attention to the removal of the 5 per cent. tax.

We are bound to ask ourselves, first of all, why the Government have decided upon this move. What is the real reason for their decision to make this change, to take furniture out of the D Scheme, to abolish the D Scheme on furniture, while at the same time imposing a 5 per cent. tax? Before we do that, perhaps we had better be clear about the exact consequences of this proposition. I do not think that they are very much in doubt. The Financial Secretary gave us some figures of the maximum price increases for three articles. A dining table retailing at £17 would have a price increase of 12s. due to tax, he thought; a double-bed retailing at £19 15s., an increase of 14s.; a wardrobe retailing at £43, an increase of 31s.

I do not think that the right hon. Gentleman quite grasped the intervention of my hon. Friend the Member for Paddington, North (Mr. Parkin). What he was asking was how the right hon. Gentleman was sure that those figures were correct, unless he was making certain assumptions about retail margins. The right hon. Gentleman did not explain to us what margin he was assuming. I have made some rough calculations and, although there is not a great deal in this, my impression is that he is assuming a margin rather lower than that sometimes adopted in the retail trade. However, we do not dispute that now, and I could quote figures relating to some other articles where the increase is of the same order proportionately, but I do not think that we can accept the implied conclusion of the right hon. Gentleman that these increases are really insignificant.

It is all very well to say that 12s. on a dining-room table is not very much. Five per cent. on the wholesale value, or 3½ per cent. on the retail value, is, of course, not a great deal, but when one talks about specific sums of money—and specific sums of money are involved when a newly married couple furnish a house—the amounts are quite considerable. If one is spending £200, which would certainly be a low figure for furnishing a house nowadays, 5 per cent. on that is an extra £10, and that is something which matters a good deal. It matters all the more because of all the other difficulties which people are struggling against at present. There are the recent increases in rent, the further increases that are threatened and the hire-purchase restrictions on furniture, which make great difficulties for these people. Therefore, we cannot accept that argument for one moment.

In reply to my question, the right hon. Gentleman referred to the amount of increased revenue. He said that it was £¼ million. That was an interesting figure because, of course, it shows that the amount of increased tax paid by those who are paying increased taxes must be substantially more than that. Obviously, the right hon. Gentleman is losing revenue in the case of the more expensive furniture. I do not know whether he can give us the figure to show what will be the true increased taxation to be paid by those who buy the furniture which was previously exempt from tax. It will certainly be a good deal more than £3 million. I do not know whether it will be £4 million or £5 million or £6 million. Could the right hon. Gentleman give the Committee any information on this point—it is very relevant to our discussion?

Mr. H. Brooke

indicated dissent.

Mr. Gaitskell

The right hon. Gentleman shakes his head, therefore I gather that he does not know.

I am sure that if he had the information he would give it to us, but it is a little surprising that a matter of this importance should not have been investigated by the Treasury, and that the Treasury should have no idea at all of what the increase will be. Is the right hon. Gentleman really saying that he has no conception of it at all? I am sure that he would not wish to remain silent. I am very willing to give way to him if he would care to speak. He appears to be receiving a lot of advice from hon. Friends behind him but, of course, I cannot force him to his feet. It is a very bad thing indeed that the Treasury should not have that information, but it is still worse if the Treasury has it and will not give it to us.

What are the other arguments which the right hon. Gentleman has put forward? The general argument in favour of abolishing the D Scheme is that it is bad for quality production and exports, but the right hon. Gentleman has not produced a single argument in favour of that. The hon. and gallant Member for Ilford, South (Squadron Leader Cooper) instanced one firm he knew which produced expensive reproduction furniture for export, but one cannot use the argument here that no doubt applies to some firms in the textile industry, because furniture is predominantly produced for the home market and the high-quality trade is not extensive. There is no suggestion that there is any depression in that section of the trade. Therefore, that argument does not stand up to investigation.

9.0 p.m.

Then we were told by the right hon. Gentleman that there were difficulties about the D Scheme. What difficulties? We have not heard a single instance of a difficulty. My hon. Friend the Member for Shoreditch and Finsbury (Mr. Collins) has a great personal knowledge of the trade, being the president of one of the federations, but he has told us that he knows of no such difficulties. We are told that the trade is satisfied. There is no evidence of that either.

The truth is that the right hon. Gentleman has no real argument to put forward in favour of the Government's proposal. I strongly suspect that the real reason is the old familiar one that if the D Scheme is to be abolished for textiles, it would be tidier for the Treasury if it were also abolished for furniture, furs and everything else. That argument is most unconvincing.

I come to the arguments about the 5 per cent. tax, which, as I have said, we have not been able to go into in great detail. The right hon. Gentleman told us that it was impossible to exempt furniture altogether from tax because it would create a yawning gap in the Purchase Tax system. Will he tell the Committee whether he thinks that the omission from Purchase Tax of all cotton textiles creates a yawning gap? If it is possible to omit cotton textiles, should it not be possible to omit furniture? How can he object to the omission of furniture and at one and the same moment claim credit for the omission of blankets? There must be another yawning gap there. Nor can we accept the argument that 5 per cent. is the lowest tax ever. It is not. On the greater part of furniture there was no tax at all.

That brings me to the final, and most important, point which has emerged from the debate. It is becoming clearer and clearer that what the right hon. Gentleman and his hon. Friends want is to get rid of the fiscal arrangements which have been deliberately designed to assist people with lower incomes. They call those arrangements "distortions" and say they give artificial encouragement to manufacturers to produce cheap goods.

I would remind the right hon. Gentleman of what those arrangements were. We did not introduce the Utility scheme, but we believed in it. We thought that the provision of cheap but good quality, well-designed furniture, subject to proper controls as to quality and price, was of great benefit to people with lower incomes. It was something that we felt it was right for the Government to encourage. That was why we approved of a tax exemption or lower tax rates. It was the same with the Utility fur coats, which we discussed earlier.

Although the D Scheme was in many respects far less satisfactory than the Utility scheme, it at least preserved the principle of discrimination in favour of the cheaper articles which the poorer people would buy. It is precisely that principle that the right hon. Gentleman and his hon. Friends are destroying. We think that is absolutely wrong and are utterly opposed to it, and we shall vote in favour of our Amendment.

Question put, That those words be there inserted:—

The Committee divided: Ayes 228, Noes 277.

Division No. 42.] AYES [9.3 p.m.
Ainsley, J. W. Coldrick, W. Griffiths, William (Exchange)
Albu, A. H. Collick, P. H. (Birkenhead) Grimond, J.
Allaun, Frank (Salford, E.) Collins, V.J. (Shoreditch & Finsbury) Hale, Leslie
Allen, Arthur (Bosworth) Corbet, Mrs. Freda Hall, Rt. Hn. Glenvil (Colne Valley)
Allen, Scholefield (Crewe) Cove, W. G. Hamilton, W. W.
Anderson, Frank Craddock, George (Bradford, S.) Hannan, W.
Attlee, Rt. Hon. C. R. Cronin, J. D. Harrison, J. (Nottingham, N.)
Awbery, S. S. Crossman, R. H. S. Hastings, S.
Bacon, Miss Alice Cullen, Mrs. A. Hayman, F. H.
Baird, J. Daines, P. Henderson, Rt. Hn. A. (Rwly Regis)
Balfour, A. Dalton, Rt. Hon. H. Herbison, Miss M.
Bartley, P. Davies, Rt. Hn. Clement (Montgomery) Hobson, C. R.
Bence, C. R. (Dunbartonshire, E.) Davies, Harold (Leek) Holman, P.
Benn, Hn, Wedgwood (Bristol, S.E.) Davies, Stephen (Merthyr) Holmes, Horace
Benson, G. Deer, G. Holt, A. F.
Beswick, F. Delargy, H. J. Houghton, Douglas
Bevan, Rt. Hon. A. (Ebbw Vale) Dodds, N. N. Howell, Denis (All Saints)
Blackburn, F. Dugdale, Rt. Hn. John (W.Brmwch) Hoy, J. H.
Blenkinsop, A. Dye, S. Hubbard, T. F.
Blyton, w. R. Ede, Rt. Hon. J. C. Hughes, Cledwyn (Anglesey)
Boardman, H. Edelman, M. Hughes, Emrys (S. Ayrshire)
Bottomley, Rt. Hon. A. G. Edwards, Rt. Hon. John (Brighouse) Hughes, Hector (Aberdeen, N.)
Bowdan, H. w. (Leicester, S.W.) Edwards, Rt. Hon. Ness (Caerphilly) Hunter, A. E.
Bowles, F. G. Edwards, Robert (Bilston) Hynd, J. B. (Attercliffe)
Boyd, T. C. Evans, Albert (Islington, S.W.) Irvine, A. J. (Edge Hill)
Braddock, Mrs. Elizabeth Evans, Stanley (Wednesbury) Irving, S. (Dartford)
Brockway, A. F. Fernyhough, E. Isaacs, Rt. Hon. G. A.
Broughton, Dr. A. D. D. Fienburgh, W. Janner, B.
Brown, Rt. Hon. George (Belper) Fletcher, Eric Jeger, George (Goole)
Brown, Thomas (Ince) Forman, J. C. Jeger, Mrs. Lena (Holbn & S.Pncs, S.)
Burke, w. A. Fraser, Thomas (Hamilton) Jenkins, Roy (Stechford)
Burton, Miss F. E. Gaitskell, Rt. Hon. H. T. N. Jones, Rt. Hn. A. Creech (Wakefield)
Butler, Herbert (Hackney, C.) Gibson, C. W. Jones, David (The Hartlepools)
Butler, Mrs. Joyce (Wood Green) Gooch, E. G. Jones, Elwyn (W. Ham, S.)
Carmichael, J. Gordon Walker, Rt. Hon. P. C. Jones, Jack (Rotherham)
Champion, A. J. Greenwood, Anthony Jones, J. Idwal (Wrexham)
Chapman, W. D. Grenfell, Rt. Hon. D. R. Jones, T. W. (Merioneth)
Chetwynd, G. R. Grey, C. F. Kenyon, c.
Clunie, J. Griffiths, David (Rother Valley) Key, Rt. Hon. C. W.
King, Dr. H. M. Owen, W. J. Strauss, Rt. Hon. George (Vauxhall)
Lawson, G. M. Padley, W. E. Stross, Dr. Barnett (Stoke-on-Trent, C.)
Ledger, R. J. Paling, Will T. (Dewsbury) Summerskill, Rt. Hon. E.
Lee, Frederick (Newton) Painter, A. M. F. Swingler, S. T.
Lee, Miss Jennie (Cannock) Panned, Charles (Leeds, W.) Sylvester, C. O.
Lever, Leslie (Ardwick) Parker, J. Taylor, Bernard (Mansfield)
Lindgren, G. S. Parkin, B. T. Taylor, John (West Lothian)
Lipton, Lt.-Col. M. Paton, J. Thomson, George (Dundee, E.)
Logan, D. G. Peart, T. F. Thornton, E.
MacColl, J. E. Plummer, Sir Leslie Timmons, J.
McGhee, H. G. Popplewell, E. Turner-Samuels, M.
McInnes, J. Price, J. T. (Westhoughton) Ungoed-Thomas, Sir Lynn
McKay, John (Wallsend) Probert, A. R. Viant, S. P.
McLeavy, Frank Proctor, W. T. Wade, D. W.
MacMillan, M, K. (Western Isles) Pryde, D. J. Warbey, W. N.
MacPherson, Malcolm (Stirling) Pursey, Cmdr. H. Watkins, T. E.
Mahon, S. Rankin, John Weitzman, D.
Mallalieu, E. L. (Brigg) Reeves, J. Wells, Percy (Faversham)
Mallalieu, J. P. w. (Huddersfd, E.) Reid, William Wells, William (Walsall, N.)
Mann, Mrs. Jean Rhodes, H. West, D. G.
Marquand, Rt. Hon. H. A. Robens, Rt. Hon. A. Wheeldon, W. E.
Mason, Roy Roberts, Albert (Normanton) White, Mrs. Eirene (E. Flint)
Mayhew, C. P. Robinson, Kenneth (St. Pancras, N.) White, Henry (Derbyshire, N.E.)
Mellish, R. J. Ross, William Wigg, George
Mikardo, Ian Royle, C. Wilcock, Group Capt. C. A. B.
Mitchison, G. R. Short, E. W. Wilkins, W. A.
Monslow, W. Silverman, Julius (Aston) Williams, Ronald (Wigan)
Morris, Percy (Swansea, W.) Silverman, Sydney (Nelson) Williams, W. R. (Openshaw)
Mort, D. L. Simmons, C. J. (Brierley Hill) Williams, W. T. (Barons Court)
Moss, R. Skeffington, A. M. Wilis, E. G. (Edinburgh, E.)
Moyle, A. Slater, Mrs. H. (Stoke, N.) Wilson, Rt. Hon. Harold (Huyton)
Mulley, F. W. Slater, J. (Sedgefield) Winterbottom, Richard
Neal, Harold (Bolsover) Smith, Ellis (Stoke, S.) Woodburn, Rt. Hon. A.
Noel-Baker, Francis (Swindon) Snow, J. W. Yates, V. (Ladywood)
O'Brien, T. Sparks, J. A. Zilliacus, K.
Oliver, G. H. Steele, T.
Oram, A. E. Stewart, Michael (Fulham) TELLERS FOR THE AYES:
Oswald, T. Stones, W. (Consett) Mr. Pearson and Mr. J. Johnson.
Agnew, Cmdr. P. G. Clarke, Brig. Terence (Portsmouth, W.) Garner-Evans, E. H.
Aitken, w. T. Cole, Norman George, J. C. (Pollok)
Allan, R. A. (Paddington, S.) Conant, Maj. Sir Roger Glover, D.
Alport, C. J. M. Cooper, Sqn. Ldr. Albert Gomme-Duncan, Col. A.
Amory, Rt. Hn. Heathcoat (Tiverton) Cooper-Key, E. M. Gower, H. R.
Anstruther-Gray, Major W. J. Cordeaux, Lt.-Col. J. K. Graham, Sir Fergus
Arbuthnot, John Corfield, Capt. F. V. Grant, W. (Woodside)
Armstrong, C. W. Craddock, Beresford (Spelthorne) Grant-Ferris, Wg Cdr. R. (Nantwich)
Ashton, H. Crookshank, Capt. Rt. Hn. H. F. C. Green, A.
Astor, Hon. J. J. Crouch, R. F. Gresham Cooke, R.
Atkins, H. E. Crowder, Sir John (Finchley) Grimston, Hon. John (St. Albans)
Baldock, Lt.-Cmdr. J. M. Crowder, Petre (Rulslip—Northwood) Grimston, Sir Robert (Westbury)
Baldwin, A. E. Cunningham, Knox Gurden, Harold
Balniel, Lord Currie, G. B. H. Harris, Frederic (Croydon, N.W.)
Banks, Col. C. Dance, J. C. G. Harris, Reader (Heston)
Barber, Anthony Davidson, Viscountess Harrison, A. B. C. (Maldon)
Barlow, Sir John D'Avigdor-Goldsmid, Sir Henry Harvey, Air Cdre. A. V. (Macclesfd)
Barter, John Deedes, W. F. Harvey, Ian (Harrow, E.)
Baxter, Sir Beverley Digby, Simon Wingfield Harvey, John (Walthamstow, E.)
Beattie, c. Dodds-Parker, A. D. Harvie-Watt, Sir George
Bell, Ronald (Bucks, S.) Donaldson, Cmdr, C. E. McA. Hay, John
Bennett, Dr. Reginald Doughty, C. J. A. Heald, Rt. Hon. Sir Lionel
Bevins, J. R. (Toxteth) Drayson, G. B. Heath, Edward
Bidgood, J. C. Dugdale, Rt. Hn. Sir T. (Richmond) Henderson, John (Cathcart)
Biggs-Davison, J. A. Duncan, Capt. J. A. L. Hicks-Beach, Maj. W. W.
Bishop, F. P. Duthie W. S. Hill, Mrs. E. (Wythenshawe)
Body, R. F. Eccles, Rt. Hon. Sir David Hill, John (S. Norfolk)
Bossom, Sir A. C. Eden, Rt. Hn. SirA. (Warwick & L'm'tn) Hinchingbrooke, Viscount
Boyd-Carpenter, Rt. Hon. J. A. Eden, J. B. (Bournemouth, West) Hirst, Geoffrey
Boyle, Sir Edward Elliot, Rt. Hon. W. E. Holland-Martin, C. J.
Braine, B. R. Emmet, Hon. Mrs. Evelyn Hornsby-Smith, Miss M. P.
Braithwaite, Sir Albert (Harrow, w.) Errington, Sir Eric Horobin, Sir Ian
Brooke, Rt. Hon. Henry Farey-Jones, F. W, Horsbrugh, Rt. Hon. Dame Florence
Brooman-White, R. C. Fell, A. Howard, Hon. Greville (St. Ives)
Browne, J. Nixon (Craigton) Finlay, Graeme Howard, John (Test)
Bryan, P. Fisher, Nigel Hudson, Sir Austin (Lewisham, N.)
Buchan-Hepburn, Rt. Hon. P. G. T. Fleetwood-Hesketh, R. F. Hughes Hallett, Vice-Admiral J.
Burden, F. F. A. Fort, R. Hughes-Young, M. H. C.
Butcher, Sir Herbert Foster, John Hurd, A. R.
Butler, Rt. Hn. R.A. (Saffron Walden) Fraser, Hon. Hugh (Stone) Hutchison, Sir Ian Clark (E'b'gh, W.)
Campbell, Sir David Freeth, D. K. Hutchison, James (Scotstoun)
Carr, Robert Galbraith, Hon. T. G. D. Hyde, Montgomery
Cary, Sir Robert Gammans, L. D. Hylton-Foster, Sir H. B. H.
Iremonger, T. L. Mawby, R. L. Sharples, Maj. R. C.
Irvine, Bryant Godman (Rye) Maydon, Lt-Comdr. S. L. C. Shepherd, William
Jennings, J. C. (Burton) Medlicott, Sir Frank Simon, J. E. S. (Middlesbrough, W.)
Jennings, Sir Roland (Hallam) Milligan, Rt. Hon. W. R. Smithers, Peter (Winchester)
Johnson, Dr. Donald (Carlisle) Molson, A. H. E. Soames, Capt. C.
Johnson, Eric (Blackley) Monckton, Rt. Hon. Sir Walter Spearman, A. C. M.
Jones, A. (Hall Green) Nabarro, G. D. N. Speir, R. M.
Joynson-Hicks, Hon. L. W. Nairn, D. L. S. Stevens, Geoffrey
Kaberry, D. Neave, Airey Steward, Harold (Stockport, S.)
Keegan, D. Nicholls, Harmar Steward, Sir William (Woolwich, W.)
Kerr, H. W. Nicolson, N. (B'n'm'th, E. & Chr'ch) Stewart, Henderson (Fife, E.)
Kershaw, J. A. Nield, Basil (Chester) Stoddart-Scott, Col. M.
Kirk, P. M. Nugent, G. R. H. Storey, S.
Lagden, G. W. Nutting, Rt. Hon. Anthony Studholme, H. G.
Lambert, Hon. G. Oakshott, H. D. Summers, G. S. (Aylesbury)
Lancaster, Col. C. G. O'Neill, Hn. Phelim (Co. Antrim, N.) Sumner, W. D. M. (Orpington)
Langford-Holt, J. A. Orr, Capt, L. P. S. Taylor, Sir Charles (Eastbourne)
Leather, E. H. C. Orr-Ewing, Charles Ian (Hendon, N.) Teeling, W.
Leavey, J. A. Orr-Ewing, Sir Ian (Weston-S-Mare) Thomas, Leslie (Canterbury)
Leburn, W. G. Page, R. G. Thomas, P. J. M. (Conway)
Legh, Hon. Peter (Petersfield) Pannell, N. A. (Kirkdale) Thompson, Kenneth (Walton)
Lennox-Boyd, Rt. Hon. A. T. Partridge, E. Thompson, Lt.-Cdr. R.(Croydon, S.)
Lindsay, Hon. James (Devon, N.) Peake, Rt. Hon. O. Thorneycroft, Rt. Hon. P.
Lindsay, Martin (Solihull) Peyton, J. W. W. Thornton-Kemsley, C. N.
Linstead, Sir H. N. Pickthorn, K. W. M. Tiley, A. (Bradford, W.)
Lloyd, Maj. Sir Guy (Renfrew, E.) Pilkington, Capt. R. A. Tilney, John (Wavertree)
Lloyd, Rt. Hon. Selwyn (Wirral) Pitt, Miss E. M. Turton, Rt. Hon. R. H.
Lloyd-George, Maj. Rt. Hon. G. Pott, H. P. Tweedsmuir, Lady
Low, Rt. Hon. A. R. W. Powell, J. Enoch Vaughan-Morgan, J. K.
Lucas, Sir Jocelyn (Portsmouth, S.) Price, David (Eastleigh) Vickers, Miss J. H.
Lucas-Tooth, Sir Hugh Price, Henry (Lewisham, W.) Vosper, D. F.
Macdonald, Sir Peter Prior-Palmer, Brig. O. L. Wakefield, Edward (Derbyshire, W.)
McKibbin, A. J. Profumo, J. D. Walker-Smith, D. C.
Mackie, J. H. (Galloway) Raikes, Sir Victor Wall, Major Patrick
Maclay, Rt. Hon. John Ramsden, J. E. Ward, Dame Irene (Tynemouth)
Maclean, Fitzroy (Lancaster) Rawlinson, P. A. G. Waterhouse, Capt. Rt. Hon. C.
McLean, Neil (Inverness) Redmayne, M. Watkinson, H. A.
Macleod, Rt. Hn. Iain (Enfield, W.) Rees-Davies, W. R. Webbe, Sir H.
MacLeod, John (Ross & Cromarty) Renton, D. L. M. Whitelaw, W.S.I.(Penrith & Border)
Macmillan, Maurice (Halifax) Ridsdale, J. E. Williams, Gerald (Tonbridge)
Macpherson, Niall (Dumfries) Rippon, A. G. F. Williams, Paul (Sunderland, S.)
Maddan, Martin Roberts, Peter (Heeley) Williams, R. Dudley (Exeter)
Maitland, Cdr. J. F. W. (Horncastle) Robertson, Sir David Wills, G. (Bridgwater)
Maitland, Hon. Patrick (Lanark) Robinson, Sir Roland (Blackpool, S.) Wilson, Geoffrey (Truro)
Manningham-Buller, Rt. Hn. Sir R. Robson-Brown, W. Wood, Hon. R.
Markham, Major Sir Frank Rodgers, John (Sevenoaks) Woollam, John Victor
Marlowe, A. A. H. Roper, Sir Harold
Marshall, Douglas Ropner, Col. Sir Leonard TELLERS FOR THE NOES:
Mathew, R. Russell, R. S. Colonel J. H. Harrison and
Maude, Angus Sohofield, Lt.-Col. W. Mr. Godber.
Maudling, Rt. Hon. R. Scott-Miller, Cmdr. R.

Amendment proposed: In page 1, line 19, at end insert: except only that the said section nine shall continue to apply to garments made wholly or partly of fur skin as defined in Part I of the Eighth Schedule to the Finance Act, 1948."—[Mr. E. Fletcher.]

Question put, That those words be there inserted:—

The Committee divided: Ayes 226, Noes 273.

Division No. 43.] AYES [9.12 p.m.
Ainsley, J. W. Boardman, H. Collick, P. H. (Birkenhead)
Albu, A. H. Bottomley, Rt. Hon. A. G. Collins, V. J.(Shoreditch & Finsbury)
Allaun, Frank (Salford, E.) Bowden, H. W. (Leicester, S.W.) Corbet, Mrs. Freda
Allen, Arthur (Bosworth) Bowles, F. G. Cove, W. G.
Allen, Scholefield (Crewe) Boyd, T. C. Craddock, George (Bradford, S.)
Anderson, Frank Braddock, Mrs. Elizabeth Cronin, J. D.
Attlee, Rt. Hon. C. R. Brockway, A. F. Crossman, R. H. S.
Awbery, S. S. Broughton, Dr. A. D. D. Cullen, Mrs. A.
Bacon, Miss Alice Brown, Rt. Hon. George (Belper) Daines, P.
Baird, J. Brown, Thomas (Ince) Dalton, Rt. Hon. H.
Balfour, A. Burke, W. A. Davies, Harold (Leek)
Bartley, P. Burton, Miss F. E. Davies, Stephen (Merthyr)
Bence, C. R. (Dunbartonshire, E.) Butler, Herbert (Hackney, C.) Deer, G.
Benn, Hn. Wedgwood (Bristol, S.E.) Butler, Mrs. Joyce (Wood Green) Delargy, H. J.
Benson, G. Carmichael, J. Dodds, N. N.
Beswick, F. Champion, A. J. Dugdale, Rt. Hn. John (W. Brmwch)
Bevan, Rt. Hon. A. (Ebbw Vale) Chapman, W. D. Dye, S.
Blackburn, F. Chetwynd, G. R. Ede, Rt. Hon. J. C.
Blenkinsop, A. Clunie, J. Edelman, M.
Blyton, W. R. Coldrick, W. Edwards, Rt. Hon. John (Brighouse)
Edwards, Rt. Hon. Ness (Caerphilly) King, Dr. H. M. Reid, William
Edwards, Robert (Bilston) Lawson, G. M. Rhodes, H.
Evans, Albert (Islington, S.W.) Ledger, R. J. Robens, Rt. Hon. A.
Evans, Stanley (Wednesbury) Lee, Frederick (Newton) Roberts, Albert (Normanton)
Fernyhough, E. Lee, Miss Jennie (Cannock) Robinson, Kenneth (St. Pancras, N.)
Fienburgh, W. Lever, Harold (Cheetham) Ross, William
Fletcher, Eric Lever, Leslie (Ardwick) Royle, C.
Forman J. C. Lindgren, G. S. Short, E. W.
Fraser, Thomas (Hamilton) Lipton, Lt.-Col. M. Silverman, Julius (Aston)
Gaitskell, Rt. Hon. H. T. N. Logan, D. G. Silverman, Sydney (Nelson)
Gibson, C. W. MacColl, J. E. Simmons, C. J. (Brierley Hill)
Gooch, E. G. McGhee, H. G. Skeffington, A. M.
Gordon Walker, Rt. Hon. P. C. McInnes, J. Slater, Mrs. H. (Stoke, N.)
Greenwood, Anthony McKay, John (Wallsend) Slater, J. (Sedgefield)
Grenfell, Rt. Hon. D. R. McLeavy, Frank Smith, Ellis (Stoke, S.)
Grey, C. F. MacMillan, M. K. (Western Isles) Snow, J. W.
Griffiths, David (Rother Valley) MacPherson, Malcolm (Stirling) Sparks, J. A.
Griffiths, William (Exchange) Mahon, S. Steele, T.
Grimond, J. Mallalieu, E. L. (Brigg) Stewart, Michael (Fulham)
Hale, Leslie Mallalieu, J. P. W. (Huddersfd, E.) Stones, W. (Consett)
Hall, Rt. Hn. Glenvil (Colne Valley) Mann, Mrs. Jean Strauss, Rt. Hon. George (Vauxhall)
Hamilton, W. W. Marquand, Rt. Hon. H. A. Stross, Dr. Barnett (Stoke-on-Trent, C)
Hannan, W. Mason, Roy Summerskill, Rt. Hon. E.
Harrison, J. (Nottingham, N.) Mayhew, C. P. Swingler, S. T.
Hastings, S. Mellish, R. J. Sylvester, G. O.
Hayman, F. H. Mikardo, Ian Taylor, Bernard (Mansfield)
Henderson, Rt. Hn. A. (Rwly Regis) Mitchison, G. R. Taylor, John (West Lothian)
Herbison, Miss M. Monslow, W. Thomson, George (Dundee, E.)
Hobson, C. R. Morris, Percy (Swansea, W.) Thornton, E.
Holman, P. Mort, D. L. Timmons, J.
Holmes, Horace Moss, R. Turner-Samuels, M.
Holt, A. F. Moyle, A. Ungoed-Thomas, Sir Lynn
Houghton, Douglas Mulley, F. W. Viant, S. P.
Howell, Denis (All Saints) Neal, Harold (Bolsover) Warbey, W. N.
Hoy, J. H. Noel-Baker, Francis (Swindon) Watkins, T. E.
Hubbard, T. F. Oliver, G. H. Weitzman, D.
Hughes, Cledwyn (Anglesey) Oram, A. E. Wells, Percy (Faversham)
Hughes, Emrys (S. Ayrshire) Oswald, T. Wells, William (Walsall, N.)
Hughes, Hector (Aberdeen, N.) Owen, W. J. West, D. G.
Hunter, A. E. Padley, W. E. Wheeldon, W. E.
Hynd, J. B. (Attercliffe) Paling, Will T. (Dewsbury) White, Mrs. Eirene (E. Flint)
Irvine, A. J. (Edge Hill) Palmer, A. M. F. White, Henry (Derbyshire, N.E.)
Irving, S. (Dartford) Panned, Charles (Leeds, W.) Wigg, George
Isaacs, Rt. Hon. G. A. Parker, J. Wilcock, Group Capt. C. A. B.
Janner, B. Parkin, B. T. Wilkins, W. A.
Jeger, George (Goole) Paton, J. Williams, Ronald (Wigan)
Jeger, Mrs. Lens (Holbn & St. Pncs, S). Peart, T. F. Williams, W. R. (Openshaw)
Jenkins, Roy (Stechford) Plummer, Sir Leslie Williams, W. T. (Barons Court)
Jones, Rt. Hon. A. Creech(Wakefield) Popplewell, E. Willis, Eustace (Edinburgh, E.)
Jones, David (The Hartlepools) Price, J. T. (Westhoughton) Wilson, Rt. Hon. Harold (Huyton)
Jones, Elwyn (W. Ham, S.) Probert, A. R. Winterbottom, Richard
Jones, Jack (Rotherham) Proctor, W. T. Woodburn, Rt. Hon. A.
Jones, J. Idwal (Wrexham) Pryde, D. J. Yates, V. (Ladywood)
Jones, T. W. (Merioneth) Pursey, Cmdr. H. Zilliacus, K.
Kenyon, C. Rankin, John
Key, Rt. Hon. C. W. Reeves, J. TELLERS FOR THE AYES:
Mr. Pearson and Mr. J. Johnson
Agnew, Cmdr. P. G. Bishop, F. P. Corfield, Capt. F. V.
Aitken, W. T. Body, R. F. Craddock, Beresford (Spelthorne)
Allan, R. A. (Paddington, S.) Bossom, Sir A. C. Crookshank, Capt. Rt. Hn. H. F. C.
Alport, C. J. M. Boyd-Carpenter, Rt. Hon. J. A. Crouch, R. F.
Amory, Rt. Hn. Heathcoat (Tiverton) Boyle, Sir Edward Crowder, Sir John (Finchley)
Anstruther-Gray, Major W. J. Braine, B, R. Crowder, Petre (Ruislip—Northwood)
Arbuthnot, John Braithwaite, Sir Albert (Harrow, W.) Cunningham, Knox
Armstrong, C. W. Brooke, Rt. Hon. Henry Currie, G. B. H.
Ashton, H. Brooman-White, R, C. Dance, J. C. G.
Astor, Hon. J. J. Browne, J. Nixon (Craigton) Davidson, Viscountess
Atkins, H. E. Bryan, P. O'Avigdor-Goldsmid, Sir Henry
Baldock, Lt.-Cmdr. J. M. Buchan-Hepburn, Rt. Hon. P. G. T. Deedes, W. F.
Balniel, Lord Burden, F. F. A. Digby, Simon Wingfield
Banks, Col. C. Butcher, Sir Herbert Dodds-Parker, A. D.
Barber, Anthony Butler, Rt. Hn. R. A.(Saffron Walden) Donaldson, Cmdr. C. E. McA.
Barlow, Sir John Campbell, Sir David Doughty, C. J. A.
Barter, John Carr, Robert Drayson, G. B.
Baxter, Sir Beverley Cary, Sir Robert Dugdale, Rt. Hn. Sir T. (Richmond)
Beattie, C. Clarke, Brig. Terence (Portsmth, W.) Duncan, Capt. J. A. L.
Bell, Ronald (Bucks, S.) Cole, Norman Duthie, W. S.
Bennett, Dr. Reginald Conant, Maj. Sir Roger Eccles, Rt. Hon. Sir David
Bevins, J. R. (Toxteth) Cooper, Sqn. Ldr. Albert Eden, Rt. Hn. SirA. (Warwick & L'm'tn)
Bidgood, J. C. Cooper-Key, E. M. Eden, J. B. (Bournemouth, West)
Biggs-Davison, J. A. Cordeaux, Lt.-Col. J. K. Elliot, Rt. Hon. W. E.
Emmet, Hon. Mrs. Evelyn Kirk, P. M. Prior-Palmer, Brig. O. L.
Errington, Sir Eric Lagden, G. W. Profumo, J. D.
Farey-Jones, F. W. Lambert, Hon. G. Raikes, Sir Victor
Fell, A. Lancaster, Col. C. G. Ramsden, J. E.
Finlay, Graeme Langford-Holt, J. A. Rawlinson, P. A. G.
Fisher, Nigel Leather, E. H. C. Redmayne, M.
Fleetwood-Hesketh, R. F. Leavey, J. A. Rees-Davies, W. R.
Fort, R. Leburn, W. G. Renton, D. L. M.
Foster, John Legh, Hon. Peter (Petersfield) Ridsdale, J. E.
Fraser, Hon. Hugh (Stone) Lennox-Boyd, Rt. Hon. A. T. Rippon, A. G. F.
Freeth, D. K. Lindsay, Hon. James (Devon, N.) Roberts, Peter (Heeley)
Galbraith, Hon. T. G. D. Lindsay, Martin (Solihull) Robertson, Sir David
Gammans, L. D. Linstead, Sir H. N. Robinson, Sir Roland (Blackpool, S.)
Garner-Evans, E. H. Lloyd, Maj. Sir Guy (Renfrew, E.) Robson-Brown, W.
George, J. C. (Pollok) Lloyd, Rt. Hon. Selwyn (Wirral) Rodgers, John (Sevenoaks)
Glover, D. Lloyd-George, Maj. Rt. Hon. G. Roper, Sir Harold
Gomme-Duncan, Col. A. Low, Rt. Hon. A. R. W. Ropner, Col. Sir Leonard
Gower, H. R. Lucas, Sir Jocelyn (Portsmouth, S.) Russell, R. S.
Graham, Sir Fergus Lucas-Tooth, Sir Hugh Schofield, Lt.-Col. W
Grant, W. (Woodside) McKibbin, A. J. Scott-Miller, Cmdr. R.
Grant-Ferris, Wg Cdr. R. (Nantwich) Mackie, J. H. (Galloway) Sharpies, Maj. R. C.
Green, A. Maclay, Rt. Hon. John Shepherd, William
Cresham Cooke, R. Maclean, Fitzroy (Lancaster) Simon, J. E. S. (Middlesbrough, W.)
Grimston, Hon. John (St. Albans) McLean, Neil (Inverness) Smithers, Peter (Winchester)
Grimston, Sir Robert (Westbury) Macleod, Rt. Hn. Iain (Enfield, W.) Soames, Capt. C.
Gurden, Harold Macleod, John (Ross & Cromarty) Spearman, A. C. M.
Harris, Frederic (Croydon, N.W.) Macmillan, Maurice (Halifax) Speir, R. M.
Harris, Reader (Heston) Macpherson, Niall (Dumfries) Stevens, Geoffrey
Harrison, A. B. C. (Maidon) Maddan, Martin Steward, Harold (Stockport, S.)
Harrison, Col. J. H, (Eye) Maitland, Cdr. J. F. W. (Horncastle) Steward, Sir William (Woolwich, W.)
Harvey, Air Cdre. A. V. (Macclesfd) Maitland, Hon. Patrick (Lanark) Stewart, Henderson (Fife, E.)
Harvey, Ian (Harrow, E.) Manningham-Buller, Rt. Hn. Sir R. Stoddart-Scott, Col. M.
Harvey, John (Walthamstow, E.) Markham, Major Sir Frank Storey, S.
Harvie-Watt, Sir George Marlowe, A. A. H. Studholme, H. G.
Hay, John Marshall, Douglas Summers, G. S. (Aylesbury)
Heald, Rt. Hon. Sir Lionel Mathew, R. Sumner, W. D. M. (Orpington)
Heath, Edward Maude, Angus Taylor, Sir Charles (Eastbourne)
Henderson, John (Cathcart) Maudling, Rt. Hon. R. Teeling, W.
Hicks-Beach, Maj. W. w. Mawby, R. L. Thomas, Leslie (Canterbury)
Hill, Mrs. E. (Wythenshawe) Maydon, Lt.-Comdr. S. L. C. Thomas, P. J. M. (Conway)
Hill, John (S. Norfolk) Medlicott, Sir Frank Thompson, Kenneth (Walton)
Hirst, Geoffrey Milligan, Rt. Hon. W. R. Thompson, Lt.-Cdr. R.(Croydon, S.)
Holland-Martin, C. J. Molson, A. H. E. Thorneycroft, Rt. Hon. P.
Hornsby-Smith, Miss M. P. Monckton, Rt. Hon. Sir Walter Thornton-Kemsley, C. N.
Horobin, Sir Ian Nabarro, G. D. N. Tiley, A. (Bradford, W.)
Horsbrugh, Rt. Hon. Dame Florence Nairn, D. L. S. Tilney, John (Wavertree)
Howard, Hon. Greville (St. Ives) Neave, Airey Turton, Rt. Hon. R. H.
Howard, John (Test) Nicholls, Harmar Tweedsmuir, Lady
Hudson, Sir Austin (Lewisham, N.) Nicolson, N. (B'n'm'th, E. & Chr'ch) Vaughan-Morgan, J. K.
Hughes Hallett, Vice-Admiral J. Nield, Basil (Chester) Vickers, Miss J. H.
Hughes-Young, M. H. C. Nugent, G. R. H. Vosper, D. F.
Hurd, A. R. Nutting, Rt. Hon. Anthony Wakefield, Edward (Derbyshire, W.)
Hutchison, Sir Ian Clark (E'b'gh, W.) O'Neill, Hn. Phelim (Co. Antrim, N). Walker-Smith, D. C.
Hutchison, James (Scotstoun) Orr, Capt. L. P. S. Wall, Major Patrick
Hyde, Montgomery Orr-Ewing, Charles Ian (Hendon, N.) Ward, Dame Irene (Tynemouth)
Hylton-Foster, Sir H. B. H. Orr-Ewing, Sir Ian (Weston-S-Mare) Watkinson, H. A.
Iremonger, T. L. Page, R. G. Webbe, Sir H.
Irvine, Bryant Codman (Rye) Pannell, N. A. (Kirkdale) Whitelaw, W.S.I.(Penrth & Border)
Jennings, J. C. (Burton) Partridge, E. Williams, Gerald (Tonbridge)
Jennings, Sir Roland (Hallam) Peake, Rt. Hon. O. Williams, Paul (Sunderland, S.)
Johnson, Dr. Donald (Carlisle) Peyton, J. W. W. Williams, R. Dudley (Exeter)
Johnson, Eric (Blackley) Pickthorn, K. W. M. Wills, G. (Bridgwater)
Jones, A. (Hall Green) Pilkington, Capt. R. A. Wilson, Geoffrey (Truro)
Joynson-Hicks, Hon. L. w. Pitt, Miss E. M. Wood, Hon. R.
Kaberry, D. Pott, H. P. Woollam, John Victor
Keegan, D. Powell, J. Enoch
Kerr, H. W. Price, David (Eastleigh) TELLERS FOR THE NOES:
Kershaw, J. A. Price, Henry (Lewisham, W.) Mr. Oaksbott and Mr. Godber
Mr. Anthony Greenwood (Rossendale)

I beg to move, in page 1, to leave out lines 27 and 28.

Viscount Hinchingbrooke

On a point of order. The Amendment starts a new series of Amendments designed to make fundamental changes in the structure of Purchase Tax. Would it not be proper, Sir Rhys, to have a general debate on Purchase Tax, such as we have been able to have so far, in the hope that the main arguments can be adduced and that the more detailed Amendments can follow? On the Question, That the Clause stand part of the Bill, it would not be necessary to have so wide-ranging a debate. It is for you to say, Sir Rhys, how wide you wish the debate to run.

The Deputy-Chairman

I can only call the Amendment which is on the Paper. I am in the hands of the Committee. If the Committee agrees that a general debate be taken on the Clause, it is another matter.

Mr. Gaitskell

I do not think my hon. Friends object to the debate going fairly wide, so long as it is clear that we are free to raise what we like on the Clause.

Mr. R. A. Butler

It would be agreeable to us to let our debate range rather wide on just this one rate. If it were possible we could take the Amendment in page 2, to leave out lines 1 and 2, and the next one to be called, so that we could have a general debate. I was not precluding the idea of dividing as much as we like, if hon. Gentlemen wish to discuss details.

The Deputy-Chairman

In the absence of agreement, I can only call the Amendment which is on the Order Paper.

Mr. Greenwood

In the last three years we have discussed the Purchase Tax on a number of occasions. This is the first time that we have discussed it without the benefit of the advice of one of our Members who was known here as Mr. Henry Strauss and is now in another place as Lord Conesford. He was always most anxious to help on these occasions and most courteous to Members of the Committee. Now that he has been translated to a higher sphere he is able to debate with rather more elasticity of outlook on the Purchase Tax than was allowed him when he was Parliamentary Secretary to the Board of Trade. In his maiden speech in another place Lord Conesford said, "You do not make a bad tax better by making it bigger."

The Deputy-Chairman

I do not know whether the hon. Gentleman is quoting a speech made in another place in the present Session.

Mr. Greenwood

Perhaps I could paraphrase by saying that the view has been expressed that it is not possible to make a bad tax better by making it bigger. That is the point of view that we are advancing on our side of the Committee tonight.

The Government propose to raise an additional £75 million from a tax which most of us on this side feel to be bad and which we hoped would have been steadily reduced in the years after the war and not merely reduced spasmodically on the eve of every General Election. That is the only basis on which manufacturers and retailers have proceeded and was, I think, the basis upon which the Hutton Committee made its report on the Purchase Tax.

The £75 million is allocated between the various categories of goods which are subject to Purchase Tax. I would remind the Committee of the figures which the Financial Secretary gave on a previous occasion. They showed that only 12 million of the £75 million will come from goods chargeable at the highest rate; that £30 million will come from goods in the middle category, including motor cars and television sets, and that £8 million will come from alterations in the D Scheme. That leaves £35 million to come from the lowest category. There will be £20 million from the existing list of goods chargeable with Purchase Tax and £15 million from what we regard as the monstrous new proposals which the Chancellor of the Exchequer has put forward 9.30 p.m.

Indeed, to increase Purchase Tax on the existing range of goods would be bad enough, and I should like to refresh the memory of the Committee as to the range of goods at present subject to tax at 25 per cent. It includes haberdashery and most head gear, carpets and linoleum, wallpaper, office and garden furniture, sewing machines and hand-operated domestic appliances, cutlery, spoons, forks, etc., lighting fittings, bulbs and mantles, lawn mowers and rollers, clocks and watches not of precious metals, toys and sports requisites, umbrellas, certain toilet requisites and preparations, drugs and medicines, stationery and office requisites, bicycles, motor cycles, light tri-cars and the chassis of goods vehicles.

It is not only that range of goods which is affected, of course, because, by this Clause, we are extending the new rate of tax to the list of goods in the Eighth Schedule as amended by the First Schedule. That brings in a whole new range of goods, many of which have not previously been chargeable to Purchase Tax. I should like to refer to the list given in the notice issued by the Commissioners of Customs and Excise. There we read that the goods now to be chargeable at the rate of 30 per cent. include: —vessels designed for use primarily as containers for food or drink in the course of its storage, preparation or consumption, lids for use with vessels so designed, serving trays, bread boards, bowls and jugs and ewers; … household brushes, brooms and mops; … … dustbins, buckets, pails and lids therefor, pedal-operated sanitary bins, coal hods and coal scuttles. … —baths (portable), wash tubs, wash boards, ironing boards, shields and stands for smoothing irons or pressing irons, clothes line posts, clothes pegs, clothes props and clothes airers. … —pot scourers and steel wool; —pastry boards and rolling pins; —coal or cinder sieves and sifters; —electric kettles and other cooking utensils incorporating heating elements; —smoothing irons and pressing irons; —interval timers incorporating an alarum mechanism; —kitchen scales and weights therefor, kitchen weighing machines, hand operated wringers and hand operated mangles; —shopping-baskets and shopping-bags, not being baskets or bags fitted with lids or any other means of closing them. The new 30 per cent. rate, therefore, will apply to a very wide range of goods. We think that it is intolerable. There are many objections that can be advanced to Purchase Tax—objections of principle—and one of the most important is that it makes it impossible for an industry or a retailer to plan its or his activities. It is particularly difficult for them to plan when, from time to time, there are rumours and hints in the Press about what are or are not the intentions of the Chancellor in these respects.

A story was widely published in the Press the other day that the Chancellor was to make certain concessions during the Committee stage. I do not want to go into that in detail now, but what is the result of rumours and the uncertainty which rumours of that kind create? I thought that it was admirably expressed in the Second Reading debate by my hon. Friend the Member for Paddington, North (Mr. Parkin) when he told us that under such conditions retailers urge the public to buy before the tax goes up. There is then a run on all goods on which Purchase Tax is being increased, or which are to be subject to Purchase Tax, but, of course, while the retailers are clearing their own stocks they are not restocking and placing orders with the wholesalers until the uncertainty is removed.

How can manufacturers plan under conditions of that kind? We can read of the reaction of the public to the Budget in an article in the Manchester Guardian of 28th October, which says: London stores had a busy day yesterday, with shoppers queueing to buy stocks that are still being offered at pre-Budget rates. The demand was for hardware, electrical appliances, radio and television, pots and pans, and kitchen furniture. But the rush has been on in some lines for a fortnight now, having started in anticipation of the Budget. Sellers of electrical goods, for example, estimate that their sales last week were about 35 per cent. above normal. We believe that that kind of uncertainty is inseparable from Purchase Tax. Now, because the range of the tax is being extended, scores more industries are to be subject to the handicap which uncertainty of this kind produces.

In my own constituency we are dependent almost entirely upon two industries—the textile industry, which we shall be discussing later in the Committee stage, and the slipper industry, which played quite a prominent part in our discussions this afternoon. Those are two industries which, at one time or another, have been brought almost to the verge of disaster by the uncertainty which the Purchase Tax can create. I do not want to see that uncertainty extended to the wide range of industries which will now be affected by the Chancellor's proposals.

I suggest that the timing of these proposals is particularly unfortunate, because, in fact, the proposals have stimulated consumption. Instead of introducing them in the off-season, as the various retail organisations urged upon the Government over and over again, so that the new rates of tax could be announced when stocks are at their lowest, the Chancellor had this autumn Budget and altered the Purchase Tax rates just at the time when the shops are piled high with goods. For many weeks now, the public have been buying in anticipation of the autumn Budget.

Mr. Burden

That makes no difference to the stocks already in the shops. They have paid the rate of Purchase Tax that already existed before the Budget. Therefore, it imposes no extra strain upon the country's economy.

Mr. Greenwood

Perhaps the hon. Gentleman will wait for me to develop my argument, because if that is the case it seems largely to undo the good that the Chancellor was intending to do.

Since the middle of October, retail sales have been running at 10 per cent. higher than the increase level throughout the year. I do not think that there is much doubt that these retail sales have been running at that rate in anticipation of the autumn Budget. In these circumstances—and I think that this is the reply to the hon. Member for Gillingham (Mr. Burden)—higher rates can hardly be a deterrent, at any rate until the early spring, and by that time no doubt the organised worker, but not, of course, the old-age pensioners and disabled, will have had increases in order to compensate them for the higher prices.

Mr. R. A. Butler

The hon. Gentleman said that retail prices had been running at a higher rate in anticipation of an autumn Budget. So far as I know, there was no anticipation of an autumn Budget beyond about six days before the Budget came about.

Mr. Greenwood

Many hon. Members on this side of the Committee prophesied a Budget in their Election speeches, and there has been a good deal of speculation in the Press over the last few weeks as to whether the Chancellor would do what he failed to do in the spring and have a Budget which really got down to the requirements of the situation.

Mr. Butler

I was not going on the political anticipation to which the hon. Gentleman has referred. I was going on the facts in our possession, which do not bear out what he said about the retail sales.

Mr. Greenwood

They certainly bear out the fact that retail prices had been running at about 10 per cent. higher than the general average of the year. That is the figure which was given to me by the various organisations which are concerned, and I would be prepared to discuss it with the Chancellor outside the Committee. [AN HON. MEMBER: "Take him outside."]

There are various other objections in principle which make us refuse to make the burden of this tax even heavier than it is. In the first place, we regard it—and we have said so on many occasions—as a regressive tax. We dislike it because it affects most those members of the community least able to bear the burden which it imposes. Purchase Tax imposes a heavier burden upon those with lower incomes than it does upon those who are rather better off. To that extent it is the very reverse of Income Tax, because it affects the working-class housewife and pensioner much more severely than it does the Surtax payer. If one accepts that general principle, the increases we are making tonight can only exacerbate the injustice which already exists.

Our next objection is the burden it places upon the trading community. In the first place, the Purchase Tax means that traders require a larger capital to carry on their businesses. Now we are to make it necessary for them to have more capital at their disposal by raising the Purchase Tax at the time when credit facilities are being reduced. I thought the point was put admirably by my hon. Friend the Member for Bristol, North-East (Mr. Coldrick) in our debate the other day.

Secondly, we say it places a burden upon traders because it means that they have to have members of their staff seconded for the duty of looking after complications of the Purchase Tax. Incidentally, a tax running at 30 per cent. is more difficult to operate than one which is at the more simple figure of 25 per cent. It seems a pity that when 12 per cent. of our working population are engaged in distribution we should do anything which would add to the number of people in the community engaged on unproductive work of that kind, especially in view of the small return which apparently the Government expect to get.

We say it imposes a burden on the trading community for a third reason. When the tax is reduced traders get no compensation for the money they have laid out in Purchase Tax. Over and over again on previous occasions in this Committee we have tried to get some compensation for retailers for losses on Purchase Tax incurred in that way. It is really equivalent to a capital levy on retailers. The effect, of course, is to make them reluctant to hold stocks. The wider the tax is spread the more serious those effects on the trading community become.

The last reason why we say it places a burden on the traders is that it involves them in a great deal of dislocation. In earlier debates today hon. Members have referred to the printing of catalogues. Most firms send out their catalogues about this time of the year. Many firms have their catalogues printed for the Christmas market, giving the prices of the goods they have for sale. Now, of course, all that work has had to go by the board. I notice that on 31st October the chairman of Robinson and Cleaver, for example, wrote to The Times saying: millions of leaflets and catalogues have been printed in anticipation of the Christmas trade with prices based on the pre-Budget rates of purchase tax … He went on to say: adjustments will have to be made to thousands of list prices … He ended the letter by saying: Must the retailer always be treated in this shabby fashion? Similar criticism of the proposals has been made in the Drapers' Record and other papers.

Our next objection of principle is that we believe this is an ineffective tax. I do not believe for a moment that it is going to contribute to the extension of our export trade. The Government appear to think that by increasing the price of bicycles by 5 per cent. more bicycles will be exported. Of course the reason why bicycles are not being exported as much as we might hope at the moment is largely the tariff policy of other countries, but the Government have chosen to put an increased Purchase Tax on bicycles for the home market just at the time when the United States Government have increased their tariff on bicycles by 50 per cent. I understood from the Press that a great deal of criticism is being expressed by the British Government about the policy of the United States in this respect.

Is it seriously suggested that a single extra bicycle will penetrate the tariff wall of the United States because the Purchase Tax in this country is being increased from 25 per cent. to 35 per cent.? I do not think there is any evidence at all for supposing that this tax will help us in export markets overseas. Indeed, I doubt very much if increases in this range will reduce home consumption of most of the articles which are included in the list because most of the articles which are covered are in fact necessities.

9.45 p.m.

No woman buys a baby's bath unless she has a baby. I hope that the Chancellor of the Exchequer read the cri de coeur in the News Chronicle this morning. Mrs. V. Chandler, writing from Edenbridge, Kent, says: I appreciate the Prime Minister's statement that purchase tax has been reimposed on certain articles to make people think twice before buying, but it seems to me that a mother-to-be cannot think twice about buying a baby bath—it is a necessity—and she is, therefore, being unfairly penalised. Very few people amuse themselves by recklessly and prodigally buying chassis for goods vehicles. Very few people buy linoleum, cutlery or wallpaper unless they really need them. And when the electric light bulb in the single room of an old-age pensioner gives out, are we seriously to expect the old-age pensioner to sit for an extra few days or weeks without the light that he needs?

I know what the Financial Secretary said this afternoon—that the tax is being imposed on necessities of this kind because if people pay tax upon them they will have less money to spend on other goods—but people like old-age pensioners do not have very much room for manoeuvre and it is not possible to them to cut back on expenditure on other goods. We know that the Chancellor of the Exchequer wants them to go easy on port and overripe pheasant, but otherwise it is difficult to see what further economies the old-age pensioner can make.

The truth of the matter is that people buy these things when they need them and that the Government are only penalising people for buying the things they need. It was admirably summed up by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) when he said: Let hon. Members ask every consumer of good subject to Purchase Tax what they do about it. It will be found that they pay the tax in the end and go on buying the goods." [OFFICIAL REPORT 28th October, 1955; Vol. 545, c. 582.] It is for that reason that we do not believe that this proposal will seriously restrict home consumption. But if we are wrong and if Purchase Tax does reduce home consumption, it means that the Government have failed to learn the lesson that a thriving export trade depends upon a healthy home market. That is the point of view which the British Pottery Manufacturers Association has put to the Chancellor of the Exchequer and it is a point which has been put by other organisations also.

Purchase Tax will not, of course, help the export trade. Indeed, I believe that one of the effects of the new Purchase Tax and the increased rates of the tax will be that instead of helping exporters, we shall be helping the importers of cheap goods. One of our main problems today is the cheap imports, especially in industries like cotton and pottery. The effect Purchase Tax, being an ad valorem tax, is to favour the cheaper goods which are imported at the expense of the more expensive goods in this country. One of the effects of the new Purchase Tax will be further to widen the gap between the cost of things we are producing and the price of articles imported from overseas.

I have dealt with a number of our general objections in principle to this tax and I should like now to turn to certain specific objections in practice. First, the tax will place a heavy new burden on the ordinary householder; I hope that my hon. Friends on this side of the Committee will expand this point a good deal. I content myself by quoting from speeches made yesterday at the London Conservative Union Women's Conference, which was addressed by the Economic Secretary to the Treasury, whose speech provoked from Mrs. E. B. Bromfield of Shoreditch the complaint: It is no use talking to the working class housewives of my area in such terms. They want to know why prices are going up, and I want to have some simple answer to give them. As it is, a lot of old-age pensioners just cannot manage. Mrs. Catherine Ackland, of Chelsea, said: Most electors who voted Conservative did so in the genuine belief that the party would keep the cost of living down. But we all know that their housekeeping books are rising week by week. Mrs. E. L. Eales of South Battersea was still more encouraging. She said: Between May and October I have visited five counties, and everywhere I have found people incensed with the cost of living and losing faith in the Conservatives.

The Economic Secretary to the Treasury (Sir Edward Boyle)

I hope the hon. Gentleman also noticed that my speech provoked an amendment expressing full confidence in the Government in general and the Chancellor in particular.

Mr. Wilkins

Who inspired it?

Mr. Greenwood

I am afraid that the hon. Baronet has more confidence in the democratic machinery of the Conservative Party than we have on this side of the Committee.

Apart from the legitimate complaints from the housewives, there have been complaints from the hotel industry. The chairman of the Savoy Hotel, for example, wrote to complain of the heavy taxation which the hotel industry had to bear, and reminded us of the fact that at the time of the Festival of Britain under Board of Trade supervision there was a remission of this tax to encourage hotels to re-equip themselves to meet the requirements of the tourist traffic. A similar point of view has been put by other hoteliers. The editor of the Hotel Management and Restaurant Trade Journal, addressing a conference of the British Federation of Hotel and Boarding House Associations, said he was beginning to think that the Government would like to see the hotel industry fail altogether. It is a remarkable thing that one of the most important industries of invisible exports of our country should have additional burdens put upon it at this time.

The same point of view from a rather different angle was put by Commissioner Owen Culshaw of the Salvation Army, who is responsible for a chain of Salvation Army hostels throughout the United Kingdom. The hostels over which he presides accommodate nightly 10,000 needy men, and he wrote to The Times on 4th November: The proposed new purchase taxes on household and culinary articles will add considerably to our already heavy burden and the difficult task of providing bed and food at a price within the reach of those who sorely need it. He supported the complaint which had been made by the chairman of the Savoy Hotel.

My hon. Friend the Member for Liverpool, Exchange (Mrs. Braddock) also stressed in our debate the other day the difficulty which hospital management committees will be faced with, and I hope she will expand upon that in this debate. The management committee of which she is a member will have to find an extra £2,500 this year as a result of the alteration in the Purchase Tax. The point which she put was supported by the hon. Lady the Member for Aberdeen, South (Lady Tweedsmuir), who commented on how odd it was that the Government should be demanding economies from bodies of this kind and adding to their financial burdens at the same time.

I was glad to see in The Times in October a letter from the chairman of the Kent County Finance Committee, Mr. E. V. Mills, who is not a member of the Labour Party. Mr. Mills wrote to The Times: Mr. Butler says that he wishes our expenditure and especially that defrayed from loans to be reduced … At the same time he increases all our costs to be incurred in performing our duties by the imposition of purchase taxes and by making us pay higher interest on our loans. Is it not clear that unless services are to be curtailed expenditure cannot be substantially reduced and will only be increased by the steps which are now being taken That is an attitude which is held also by local authorities throughout the country. My hon. Friend the Member for Salford, East (Mr. Allaun) has told the Committee that the additional charge for dustbins alone will cost Salford Corporation £3,000 in a financial year. It really is ludicrous for the Chancellor to be urging economy upon local authorities and at the same time to be adding to their burdens in this way.

There are all sorts of inconsistencies in the Purchase Tax, which we shall have more opportunity to discuss, perhaps, when the Schedule is under consideration, but I should like to mention two now because they show the kind of inconsistencies and anomalies created by a tax of this kind. Ties, under the new proposals, are to bear increased Purchase Tax of 30 per cent. Purchase Tax on scarves is to be put down to 5 per cent.

My hon. Friend the Member for Shore-ditch and Finsbury (Mr. Collins) told us about the absurd anomaly in the case of baskets on wheels. He spoke of how a brown wicker basket on wheels, called a weeding basket, is free from tax but an identical basket which is white is subject to the new 30 per cent. tax and how the Commissioners of Customs and Excise have kindly agreed that in the case of the brown basket it is perfectly all right to put white lines round it without bringing it within the scope of Purchase Tax.

Another matter which I should like to bring to the attention of the Chancellor is how unfortunate it is that we should bring into the tax range baskets and brushes which, to a large extent, are made by blind and disabled persons. The various organisations like St. Dunstans, the Lord Roberts workshops and other workshops for the blind all over the country specialise in this type of products which the Chancellor has now singled out for a penalty of this kind.

In Committee we are seeking to improve the Bill, but even if it is corrected and improved in the way we want it improved we believe that this will still be a bad tax. We dislike the extension of the tax to a new range of goods and the fact that the tax is being increased at this stage. We believe that it hits hardest the poorest members of the community, that it places an unfair burden on the trading community because it makes it impossible for manufacturers to plan production, and that it renders nugatory any economy proposals which local authorities may have evolved. We express our implacable opposition to what the Economic Secretary no doubt would describe as "a complexus of inter-related problems" but what we regard as a hotch-potch of ill-considered and ill-timed proposals brought before the House of Commons. It is for these reasons that we shall press the Amendment.

Major H. Legge-Bourke (Isle of Ely)

The remarks which have been made in Committee since our proceedings began seem to amount to these facts—that no one likes the Purchase Tax, that whatever form of Purchase Tax one has it is bound to be productive of anomalies and that the sooner we can get rid of it the better. The hon. Member for Rossendale (Mr. Anthony Greenwood) was perfectly right when he suggested that this group of articles comprises goods which are essential to practically all households and that, therefore, Purchase Tax on them has an effect on the country as a whole not matched in intensity by the effect of tax on any other items.

If, as I hope is the case, the Chancellor is really anxious to curb inflation, if it is accepted that the use of Purchase Tax is the way to curb inflation and if my right hon. Friend is going to impose Purchase tax in order to curb inflation, it seems to me absolutely necessary that he should tax not only the non-essentials but also the essentials. If I believed that to impose Purchase Tax was the right way to curb inflation, I would certainly oppose the Amendment because I think it wrong co exclude essential articles if one is going to use Purchase Tax as a means to that end.

10.0 p.m.

That, of course, begs the whole question of whether or not Purchase Tax is the best remedy to use. I agree with hon. Members who have said that Purchase Tax tends to be more inflationary than disinflationary. Nevertheless, hon. Members opposite ought to remember something said in this House a very long time ago about political tergiversation, because right hon. and hon. Gentlemen opposite who were in the House between 1945 and 1950 are, of all people, least entitled to criticise the present Chancellor for altering the rates of Purchase Tax.

I heard an hon. Member refer earlier, somewhat derogatively, to the description of the "austerity" of Sir Stafford Cripps given in what hon. Members opposite are pleased to call the "Tory Press." One of the troubles from which the Chancellor and other Ministers are today suffering is that the melody—if such a eulogistic term can be applied—of Sir Stafford Cripps has lingered on all too forcibly in the minds of Treasury officials. What has been preached about austerity, whether in the lucid terms of my right hon. Friend or in the rather grimmer terms of previous Chancellors, even those with songs in their hearts, does not alter the fact that they have all really been doing the same thing, saying "Take a pull, everybody; we are going a little too fast at the moment."

I honestly think that the country is heartily sick of being told that. The country finds it very difficult to understand that today in the light of all that has been said about British recovery. Hon. Members on both sides of the Committee must sympathise with the electorate, who seem somewhat bemused as to why, if we have this prosperity it is necessary to pull up so much.

One thing that has emerged from our debates today is that Purchase Tax may very easily prove to be just the wrong remedy to apply at the present time. Apart from the fact that it fails to curb inflation, it may do something worse. It may damage our exports rather than help them. I agree with the Chancellor, and appreciate his argument, that we must economise on metal if we can export it, but is it really true that an industry can be denied its regular home market and simply divert to export what it would otherwise have sold at home? The information that I get from industries manufacturing thermos flasks, rubber-roller wringers and other articles is that that is not so, and that if the home market is closed, the price of exports will rise to such an extent that exports will not be able to maintain their present level, let alone increase.

All these things are arguable both ways. It is obvious that the Chancellor has taken what he regards as the best advice that he can get—perhaps on nicely balanced arguments—and has agreed with those who say that the imposing of Purchase Tax on the home market will curb home consumption and allow more articles to be exported. All who know the Chancellor now know him well enough to realise that he would not have done anything dishonest and would not have recommended something which he knows in his heart of hearts to be wrong: we can be absolutely satisfied about that.

The Purchase Tax argument is a nicely balanced economic argument, but what is rather disturbing about it is this. It bears a very close relationship to the Budget of April. Hon. Members will notice two rather strange things in the Financial Statement issued in April last year. One is that the estimated Budget surplus in that year above the line was likely to be very slightly less than the sum expected to come in from Purchase Tax; and if one takes above and below the line together the Purchase Tax revenue expected in that year was approximately half the deficit.

It may be that as a result of what happened at Istanbul, the Chancellor has come to the conclusion that the one thing which would restore confidence in the £ is for him to secure a balance above and below the line, and that he must therefore try to get more from Purchase Tax to try to help him do that. If he can get another £112 million from Purchase Tax and Profits Tax in a full year it will bring him much nearer his objective; and if he achieves that it will be the first time that there has been a balance above and below the line since the war.

I do not know whether that is what he has in mind but what is important is that when we talk about financial soundness and ways of reaching it we should all know what we mean by financial soundness. One definition written before the war and which I think is still good is this: financial soundness is a state in which the net assets, in the wider sense, of the State are in the long run to be increased by the amount by which the value of new capital assets not yielding a money income exceeds depreciation of old assets of the same type plus a certain amortisation of public debt; and the most important sentence: capital investment must therefore be financed to this extent by current revenue and not by loan.

I do not know whether the Chancellor's advisers or he himself would accept that definition of financial soundness, but he ought to be able to tell us whether it is now his aim to finance the deficits out of current revenue and not out of loans. If he were to say that, there would be a very much greater case for his proposals about Purchase Tax than there now is. Failing some assurance about that, my own feeling is that I really cannot support the idea of using Purchase Tax for the purposes for which it has been declared it is to be used, because it is an inflationary tax.

What really appals me about the alteration of the tax at this time is that whereas it may be possible to alter it in April without completely upsetting industry, doing it now is choosing the most inconvenient moment for those who have to alter all their rates in the stores. A good many tears have been shed as a result of this change coming at this moment.

Today there has been mentioned the possibility that we are moving from one type of tax into another type of tax. The hon. Member for Rossendale referred to an old friend from this side of the Committee, Lord Conesford, who thought that a sales tax would be preferable to Purchase Tax. I regard as bad taxes all taxes which tend to make people pay prices which are not the real prices for the goods that they are buying.

The Financial Secretary to the Treasury today referred to the possible distortion of the Purchase Tax if a certain Amendment were accepted. Purchase Tax is itself a monstrous distortion, and the sooner we get rid of it the better, but are we now really paving the way for a sales tax to be substituted for it? Although it may be easier to collect and may be fairer in its imposition, what it will not do is to bring back any more reality into our economy in helping people to know what is the real value of what they are buying. My dislike of Purchase Tax is based on the same reason as my dislike of a sales tax, in that both mean that people are buying things at a distorted value and not their true value, and the sooner we get back in our economy to buying the goods at the prices which they actually cost the better.

It is not for me at this stage in Committee to embark upon alternative methods by which the equivalent amount of money could be found, or the methods by which Government spending could be reduced. What I am quite convinced of is that all the money which the Chancellor now requires from the Purchase Tax, and may be planning to get by means of a sales tax in future, could either be saved now by proper economies in Government administration, or, alternatively, obtained in better ways that do not tend to distort our economy.

For that reason, I cannot possibly support this Clause, and I have not supported the Government in voting against any of the Amendments which have been moved by the Opposition today. Throughout this Committee stage, I shall not support the Government in operating this increase of taxation, but I am not going to vote with the Opposition. My reason for that is that I know perfectly well that if the Government were defeated, what would be brought into our economy today would be something far worse than the Purchase Tax proposals put forward by my right hon. Friend.

It is for that reason that I feel obliged to abstain regarding any proposals for increased taxation at present, such as those now proposed by the Government. I regret having to do so, but I hope that the Government and my hon. Friends will accept my assurance that I do it out of no personal spite whatever. It is simply because I think the arguments being used are the wrong arguments, and because I hope that one day the Government will realise why they are wrong.

Mrs. Slater

During his speech, the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) spoke about balancing the Budget. Some of my right hon. and hon. Friends on this side of the Committee suggested at the beginning of this year that, had £140 million not been given away then, there would have been no need for this Budget at the present time.

Concerning the section of the Budget proposals which we are now discussing—the 30 per cent. Purchase Tax—I remember, when the Budget speech was being made, hearing one of my hon. Friends at the back of the Chamber say that everything in this section was being put in which should go into the butler's pantry, and I think that is fairly true. If we look at the list, we find that we are now including not only the things which would normally be included in the butler's pantry. Tomorrow, I shall be speaking to a demonstration by an organisation of women whose banner bears upon it the emblem of a woman with a basket. [Interruption.] It is an illustration on the banner of the organisation known as the Co-operative Women's Guild, and it shows a woman with a basket. I suggest that it is the woman who does her own shopping who is going to be most affected by the increase in the Purchase Tax.

10.15 p.m.

The basket which the housewife takes with her when she goes shopping will go up in price from 7s. 6d. to 8s. 6d., so that before she enters a shop the housewife must pay more, because of the increased tax on her shopping basket. There are a whole host of other commodities which will now bear tax which previously did not. I am sure that the male Members of this House will agree with the old saying that if you want to keep a man happy, you look after his "tummy"—you feed him well. At least that is what the working-class women believe, and so they learn to cook and they put good meals on the kitchen table. But now the dish in which a woman prepares a pie will bear increased tax and its price will rise from 5s. 6d. to 6s. 7d. Not only will the food cost more, but the pie dish in which it is cooked will also cost more.

During the Budget debate I referred to a list of articles which were included in a little blue book. Among them was the simple pot scourer. No longer will the Chancellor be able to say that the pot scourer has decreased in price, because now even the simple pot scourer will cost 1s. 5d. instead of Is. 3d. Saucepans and pressure cookers will be affected. The Government expect women to go out to work in order to keep up production, and to ensure that our export trade does not flag. The pressure cooker is no longer a luxury, but a real necessity in a home where the woman goes out to work. The price of it will go up under the taxes which will now be imposed.

Apart from all this, there is the question of the tax which local authorities will be called upon to pay. I obtained figures from my own local authority, and I found that, taking education alone, about £7,000 to £8,000 will be paid for commodities which are used in connection with school meals, including cleaning materials, mops, brushes and buckets. The irony of all this is that on commodities needed in connection with school meals the Ministry of Education pays a grant of 100 per cent. so that nothing is taken from the rate fund. But all the other tax increases will have to be found by the local authority. Not only is a burden being placed on the housewife by reason of increased tax upon the things which she uses in the home, but also in an indirect way she will be paying for these other things through the rate fund.

The catering trade will be affected by these proposals. Recently we discussed the necessity for clean food, but under these proposals we shall be forcing the catering trade to pay much more for many things which we now expect them to use more than they have ever done before in order to make sure that clean food is supplied in cafes and restaurants.

This proposal is a continuance of the policy which we have been discussing repeatedly this afternoon, which places the burden upon the housewife—the woman with the basket—who can least afford to bear it. I am quite sure that the demonstration of the Co-operative Women's Guild tomorrow will not pass a resolution such as that passed by the Conservative Women's Organisation, supporting the Government, but will condemn them for continuing this kind of policy.

Brigadier O. L. Prior-Palmer (Worthing)

I wish to address the Committee only for a few moments. It is not often that I address it upon a Finance Bill, or upon economic matters generally, and I do not propose to make a very erudite speech. I want to draw the attention of the Chancellor to some of the effects of the Purchase Tax measures which he is introducing. He described Purchase Tax as a weapon in his hands. I regard it as a very vicious weapon, because only in the field of necessities does it affect both rich and poor equally, and any tax which does that has my disapprobation.

The Chancellor has done a great deal to assist our economy, but I had hoped that Purchase Tax would be gradually decreased from one Budget to the next, until it was finally abolished altogether. I regard it as a pernicious tax, which is inflationary in its effects. It should be noted that the hotel industry is the only trade which has its tools taxed. It is one of the trades which greatly assists in our balance of payments problem, and I consider that we should consider the matter very carefully before placing any added burden upon it.

I wish to mention two other classes of people which are affected by Purchase Tax. I know of one family which, because its members are working extremely hard—producing the finest steel in the world at the cheapest price—and are living in a council house, is earning about £45 a week. Good luck to them. Having bought a wireless set and a television set—and they probably have a small radiogram—they are finding it rather difficult to know how to spend all that money, living as they now live.

There is a certain amount of inflation there, but I am sure that hon. Members on both sides of the Committee will agree that what really causes inflation is the vast quantity of money which is spent by the Government and local authorities. If the family to which I have referred could be persuaded to save even £1 a week out of the wages coming into it, it would help, but such families are not those to which I particularly wish to refer.

I want to talk about the man with two children who is earning £8 a week. I should like the Chancellor to see the weekly budget of such a man's family. [HON. MEMBERS: "Hear, hear."] Those cheers do not encourage me in the least. I know the mess we should get into if hon. Members opposite were returned to power. The £8 a week man is living from hand to mouth, and when 1s. or 2s. is added to the cost of his necessities of life it bears extremely hardly upon him.

There is another class of person which, as far as I know, has been completely ignored up to now, both by hon. Members opposite when they were in power and, very largely, by the Chancellor since this Government have been in power. I refer to the older people who are living on small fixed incomes. They have done no harm to the Socialist cause or to the Conservative cause. They have done nothing but good for their country. They have worked hard all their lives. In the days when they were working it was the fashion for people to save money against their old age, and not to become involved in various insurance schemes. Saving money was their own insurance scheme. They saved their money for their old age. Sometimes they invested it in house property like a couple of bungalows, or in railway shares, or something of that sort.

The fall in the value of the £ and the rising cost of living—it rose very much more rapidly when the Opposition were in power than under the present Administration—have made their incomes gradually diminish in value. I could cite hundreds of cases in which there is a race between the end of their little savings and the end of their lives, as to which comes first. That is a very serious position. I do not suppose there are many hon. Members who know what it is like to try to live in these days upon £100 a year, but I know lots of people who are attempting to do so. They are going without a meal, without coal, or something, in order to live.

Those people are very hard hit by the proposals in the Budget. They have not been assisted by Budget concessions in Income Tax, because they do not pay Income Tax of any kind. My right hon. Friend may not be able to do anything about this matter now. If he has made up his mind not to reduce these additions to Purchase Tax which he has introduced in this Budget, I hope and pray that be- tween now and the spring Budget he will realise the position of the people for whom I am pleading and do something for them.

Mr. Coldrick

We have listened with great interest to the speech that has just been made by the hon. Member for Worthing (Brigadier Prior-Palmer), with much of which we agreed. It is difficult to find justification for his argument that the party on this side of the Committee never did anything for the old people to whom he referred. Although we agreed to the Purchase Tax, the Labour Government at no period in their history imposed a tax upon a whole range of articles deemed indispensable to young and old people alike. Now it is proposed not merely to raise the current rate of tax from 25 per cent. to 30 per cent., but to bring within the range of taxation things that are indispensable to every household.

The Government are imposing a hardship on the people that was never imposed upon them even in the darkest days of the war. We are entitled to protest most strongly against the proposals in the Clause. We have reached the stage where, by a supreme irony, a tax which was introduced to mop up extra purchasing power is landing us with a tax on the very mop itself. I hope that Government supporters will not only have the courage to resist the Chancellor and the Financial Secretary to the Treasury by abstaining from supporting this taxation but will come into the Lobby with hon. Members on this side of the Committee and vote for the Amendment.

Apart from the justice of the case, I appeal to the Chancellor to have regard to the practical application of the tax. At various stages of the development of Purchase Tax we have always had an easily calculated fraction. Originally the percentage was 16⅔; then it became 33⅓ and 66⅔. These were fairly easy to calculate. When the Chancellor reduced the figures to 25 per cent., 50 per cent. and 70 per cent., they were also easily calculated. Now that he is introducing taxes of 30 per cent., 60 per cent. and 90 per cent., it will involve endless strain and labour in administration upon all the shops and wholesalers in the country.

10.30 p.m.

I would remind the Chancellor that one of our great difficulties today is the shortage of labour, upon which I think the whole Committee is agreed. In fact, the distributive trades are confronted with a situation in which there would be a complete breakdown if married women were not employed, and a high percentage of those engaged in the distributive trades are part-time workers. I do not suggest for a single moment that they are less intelligent than other people, but the plain fact is that neither they nor those who employ them have the time or the opportunity to devote the attention that will be needed to calculate the fractions applying to the thousand-andone prices of wholesale articles. That is another score upon which I appeal to the Chancellor.

Finally, without going into it at length, I would urge that in these enlightened days, having regard to the shortage of labour to which I have referred, the use of labour-saving devices in the home should be encouraged. Unfortunately, this tax will apply not only to the tools of the trades to which the hon. and gallant Gentleman for Worthing referred, but also literally to the tools every housewife must use in order to run her home efficiently, and to the extent to which the housewife is penalised in that way it is made increasingly difficult for married women, particularly, to devote any part of their time to augmenting the labour force which is indispensable to this country. On the grounds, therefore, of humanity, administration and assisting the national effort, I sincerely hope hon. Members will support this Amendment.

Mr. John Dugdale (West Bromwich)

I rise for a few moments to speak of the effects of this tax not on the consumers but the producers of the articles under discussion. I do so particularly because in my own division there are three factories producing the kinds of kitchen utensils in question. What will be the effect of the Chancellor's proposals upon producers? I know that what the Chancellor wants to do is to reduce consumption in the home market, because he thinks that by doing so he will increase exports, and I wish to discuss whether the Chancellor will in fact achieve what he is setting out to achieve, whether he is likely to increase exports by these taxes.

What is the position? At the present moment this industry is able to carry on a certain amount of export. [Interruption.] I know that hon. Members opposite are not particularly interested in this matter from the point of view of exports, but many people in my constituency think they are likely to lose their livelihood as a result of the Chancellor's present proposals. The factories to which I refer produce goods for export and for the home market, but they are extremely likely to lose the home market. The price of saucepans for instance, is to go up considerably and people in this country who previously ordered saucepans are ceasing to do so; orders given are being cancelled and further orders are no longer coming in. Not only that, but this is the season when these factories expect most orders, yet few are coming in, and they are likely to lose a great deal of their home trade. Are they likely as a result of this proposal to have an increased export trade? That is the point with which the Chancellor is concerned.

The position at the moment is that the export trade is fighting against very great odds. Producers in Belgium can send goods of this type to South America, for instance, at prices which are equal to the cost of the raw material and the wages involved in producing similar goods in this country. That is a very serious position which will not be helped at all by the Chancellor's proposals.

What will the Chancellor's proposals do? They will, in the first place, slow down the home trade. If they do not correspondingly increase the export trade that will mean that quite a number of men will lose their jobs in the industry. The Chancellor will say, "That is all very well. That is fine. They will then go elsewhere and produce something for export." But who are these men? Most of them are old men who are skilled in this trade and in no other. They will either have to do unskilled work elsewhere or, more likely, they will be thrown out of work altogether, and that will not help the export trade in any way.

Worse than that may happen. Since the home trade plays a large part in this business, it may well be that if the home trade is seriously hurt some firms will have to close down altogether and thus we will lose not only the home trade but the export trade as well. If that happens it may well be that not only will we lose the export trade but we will find that the people of Belgium and Sweden who are producing goods there at prices with which we cannot compete may actually send goods for consumption in this country. Thus not only may we not gain further exports but we may actually lose our own home trade to foreign competition.

Such is the folly of the Chancellor's proposals that, far from helping the export trade, they will mean that we shall lose markets in this country. We shall do nothing whatever to help the export trade and in fact shall throw out of employment men who will be unable to gain other work.

Mr. S. O. Davies (Merthyr Tydvil)

That is what the Tories want. That remark summed up the philosophy of the Tory Government. They want an army of unemployed in this country.

Mr. Dugdale

There is a good deal in what my hon. Friend says. That may be just one small example of what the Chancellor is doing by his policy, little by little, to produce a state of affairs when there is a sufficient number of unemployed to make conditions much easier for those employers who would like to see what they call a "suitable number" of unemployed. That is the road which the Chancellor is beginning to travel. This is one small example of what he is doing. I hope my hon. and right hon. Friends on this side of the Committee will oppose him in this action as we will oppose him in others.

Mr. Burden

I cannot help thinking that some hon. Gentlemen opposite have been talking with their tongues in their cheeks tonight. I quite understand why the hon. Member for Stoke-on-Trent, North (Mrs. Slater) feels so strongly about Purchase Tax. She came into the House at the last Election. In fact she, with other hon. Members, is appealing against what was the policy of the Labour Government. Many of us were here in 1950 and 1951 and we remember the savage increases in Purchase Tax imposed in the 1951 Budget.

The hon. Member for Rossendale (Mr. Anthony Greenwood) referred to the effect of the pre-Budget discussions and the anticipation of an autumn Budget. He stated that retail sales had increased by 10 per cent, prior to the Budget. He then indicated that a great deal of damage had been done by introducing the Budget at this stage, and he referred to a firm which had sent out its prices based upon the supposition that there would be no Budget. The hon. Gentleman cannot have it both ways. Surely, that is an indication that there was no expectation of a Budget, or else that sales had not increased as has been stated.

There is, however, one point about this Budget about which many of us are worried. There is no doubt that it has increased the cost of living of old-age pensioners and those living on fixed incomes. There are many people in my constituency in that position. It is a constituency where many people are living on Service pensions and small fixed incomes, and I hope that my right hon. Friend will do everything possible to ensure that these people receive some compensation.

I have found one aspect of this debate difficult to follow. There has been a great deal of criticism from the benches opposite of my right hon. Friend for doing precisely what the Labour Government did in 1950 and 1951. It was Sir Stafford Cripps who, in his 1950 Budget, described Purchase Tax as an invaluable fiscal weapon, and he proceeded to use it, as did the right hon. Member for Leeds, South (Mr. Gaitskell) in 1951. It is as well to remember that my right hon. Friend has consistently reduced Purchase Tax until now. It is today at a far lower level than it was in 1951.

One feature of this Budget which has been accepted with acclamation among stores and business people to whom I have talked is the removal of the D-level, which has disposed of a large number of anomalies—

The Chairman

We are not dealing with the D Scheme now. We are dealing with the proposal to increase the 25 per cent. rate to 30 per cent.

Mr. Burden

I appreciate that, Sir Charles, but I submit that the removal of the D level is coincidental with the Budget.

May I say in conclusion that I and some of my hon. Friends on this side of the Committee have been absolutely consistent in our opposition to Purchase Tax, which cannot be said of many hon. Members opposite who have spoken strongly against it tonight, and we shall continue to press for its abolition.

10.45 p.m.

Mr. Roy Jenkins (Birmingham, Stechford)

This debate has been rather different from some that we have had today, in that we have had a number of speeches from the benches behind the Chancellor, but I am sure that he will recognise that the support he has had has been very equivocal indeed. I think that if he is to get any vote of confidence at all we shall need another inspiring speech from the Economic Secretary, such as we had the other day. I hope that we shall have it at a later stage.

Unfortunately, almost all of those hon. Gentlemen opposite who have given equivocal support to the right hon. Gentleman left the Chamber almost immediately after they had spoken, so it is not as easy to reply to the hon. and gallant Members for the Isle of Ely (Major Legge-Bourke) and for Worthing (Brigadier Prior-Palmer) as it would otherwise have been. I should, however, like to refer to what the hon. and gallant Member for Worthing said in the course of some very strong attacks on his right hon. Friend.

As far as I understood him, he argued that there was one category of people which might be beneficially dealt with by the Purchase Tax from a disinflationary point of view. He mentioned families with £45 a week coming in and not knowing what to do with the money. All I can say—and I think that the Chancellor will agree—is that if such people exist it is awfully difficult to see how, in their case, this tax will achieve what the right hon. Gentleman seeks to achieve.

Mr. Kenneth Thompson (Liverpool, Walton)

In the absence of my hon. and gallant Friend—and I am sure the hon. Member for Stechford does not wish to be unfair—my hon. and gallant Friend rested his case on the family with two children and about £8 a week.

Mr. Jenkins

I wish the hon. and gallant Member had been here to speak for himself, but what I said was not, I think, at all unfair to him. It was that while for the greater part of his speech he attacked his right hon. Friend—I thought reasonably—on the basis of the experience of the family with £8 a week, he also said that there might be another category on whom this Purchase Tax would have not beneficial effects because those people did not know what to do with their money. If there are such people, then clearly their expenditure will not be discouraged by this increase in the tax; they will buy in exactly the same way as before.

As far as I understand the speech of the hon. Member for Gillingham (Mr. Burden), it appears that the only thing that the other side can say for the Chancellor's policy is that the Labour Government did it also, but, of course, the hon. Member is not correct in the way he took his point. What my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) did with regard to Purchase Tax in 1951 was quite different from what the right hon. Gentleman is proposing here. What was done in 1951 was to make certain selective increases in Purchase Tax which were directly related to certain particular priorities—

Mr. Burden

One of the selections which the then Chancellor made was to put a penny on school meals.

Mr. Jenkins

That intervention illustrates the weakness of the case put forward from the opposite benches with regard to Purchase Tax. But while on the subject which the hon. Member has raised, I should like to recall to the Committee and to the right hon. Gentleman certain words which the present Chancellor used in discussing the Budget of 1951. I think they will be of interest to the Committee at this present time. The Chancellor, speaking from the Opposition Front Bench, which he then adorned in 1951, said: … and, what is perhaps felt by every Member of the Committee, to whatever side he may belong, it has practically shelved—from the point of view of the ordinary citizen, not the economist—the whole question of the rising cost of living. The Chancellor has ignored the appeals of his supporters and the appeals of many people in the country to attempt to shield the public from the rising costs in one way or another. It is very small consolation to the housewife if she is told that the new taxes will check monetary inflation. What does the housewife know about monetary inflation? "—[OFFICIAL REPORT, 16th April, 1951; Vol. 486, c. 1574.] That was the present Chancellor of the Exchequer, speaking in 1951 about my right hon. Friend's Budget. But my right hon. Friend's Budget in 1951, in more difficult circumstances, was very much less harsh on the housewife than the present Budget. There was no question then of bringing into tax household necessities which had been free of tax for many years; yet those were the words of the present Chancellor.

We know perfectly well, from what has passed here this afternoon, that there is no attempt by the Government with these Purchase Tax increases to relate changes directly to particular needs in the economy. Indeed, the Financial Secretary—I do not know whether he was speaking after consultation with the Chancellor and with his right hon. Friend's authority—in an earlier debate which is relevant to the Amendment, went very far indeed in the direction of suggesting that we must move towards a sales tax as quickly as possible. His extraordinary phrase about the "yawning gap" which would be left if certain goods were not taxed was one of the most astonishing phrases we have heard in debate from the Government Front Bench for a long time, particularly coming from a Conservative Financial Secretary.

Hon. Members opposite have always spoken very strongly about what they thought they had detected as an attitude on this side of the Committee that, so far as direct taxation was concerned, the State had a right to take back whatever money it liked. The view has always been put very strongly from the other side of the Committee that the onus of proof for taking any penny of taxation away from the citizen, in any form, was strongly upon the Government. And yet we have heard the Financial Secretary, speaking, presumably, with all the authority of the Chancellor of the Exchequer, say that it was impossible to free a certain category of goods from tax because that would leave a "yawning gap," which, he implied, would be a great disgrace to our whole fiscal system.

We have not heard very much from the Chancellor during the day. If we could have a reply from him, in spite of the inspiring speech that we are no doubt to have from the Economic Secretary, we would be interested to know whether he shares the feeling expressed by the Financial Secretary that even if revenue were not necessary, for the sake of tidiness or whatever else the reason may be, he cannot leave the "yawning gap" so far as our taxation structure is concerned.

Sir E. Boylerose

Mrs. E. M. Braddock (Liverpool, Exchange)

On a point of order. May I ask whether an arrangement has been made between you, Sir Charles, and the Government Chief Whip that when the Economic Secretary has finished speaking you will accept the Closure from him? If so, I positively object to it.

The Chairman

That is a most improper question, but I am willing to answer it. No arrangement of any kind has been made with me or with anybody, and I am very sorry that that has been raised. It is not what I am in the habit of doing. I will conduct the Committee according to my lights, and that is not the way I do it.

Mrs. Braddock

Further to that point of order—

The Chairman

There is no point of order. It is a most improper suggestion, and I want to hear no more about it.

Mrs. Braddock

Am I to take it that the Chief Whip will not move the Closure as soon as the Financial Secretary has finished?

The Chairman

I have not the slightest idea what the Chief Whip is going to do, but the acceptance or refusal of the Closure Motion is entirely in my hands. Sir Edward Boyle.

Mr. Hector Hughes (Aberdeen, North)

Further to that point of order.

The Chairman

Is it or is it not a new point of order?

Mr. Hughes

I was seeking to put a point of order to you, Sir Charles, with the greatest respect. The point of order is this. Is it not clear that the House is entitled to know the order of business, and when this debate is to be closed?

The Chairman

First, it is not the House but the Committee. Second, the business is quite well understood.

Mr. Hughes

Further to that point of order. You correct me, Sir Charles, for using the word "House" when I should have said "Committee." Now I ask you. is the Committee not entitled to know the order of business and when the closure is to be moved or whether any other back benchers are to be accorded an opportunity to speak for the Amendment?

The Chairman

No, certainly not.

Sir E. Boyle

I thought it might be of convenience to the Committee if I rose now. I should like to say first that the Chancellor has asked me to say that he hopes the Committee will come to a conclusion on this Amendment tonight before we end our proceedings. He also hopes it may not be necessary to sit to an unreasonably late hour to do so. I shall do my best not to take an unreasonably fair share of the time myself. [HON. MEMBERS: "What does that mean?"] There will he a number of other opportunities for debates on the wider aspects of Purchase Tax.

This debate was opened with a very reasonable and moderate speech by the hon. Gentleman the Member for Rossendale (Mr. Anthony Greenwood). I shall do my very best to answer it in the same spirit. I was glad to notice that the hon. Gentleman dealt with some of the wider issues, namely, the effect of Purchase Tax on home consumption and the effect of Purchase Tax on our export trade. I shall gladly answer what he said on that point. However, there are three things I should like to say before I do so.

The first is this. I had rather hoped, though there was no reason why it should have been so, to have seen the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison) here tonight. He is not here, but I shall say this none the less. Like many other hon. Members —I am myself a young Member—I have frequently experienced his courtesy and had the advantage of his very long experience, and the right hon. Gentleman has written a book which, I believe, will be of value to those interested in politics for a very long time to come. I had a certain exchange with him last week, and I meant to make those remarks on the next occasion on which I spoke in this Chamber.

The hon. Member for Merthyr Tydvil (Mr. S. O. Davies) said the Conservative Party was aiming at an army of unemployed. I can only say that that is one of the objectives which the Conservative Party has been unsuccessful in achieving. We have had a full level of employment throughout our four years of office, and we intend to go on having it.

Mrs. Braddock

The Conservative Party inherited it.

Sir E. Boyle

I take up a point made by the hon. Member for Stechford (Mr. Roy Jenkins). He said that in 1951 his right hon. Friend the Member for Leeds, South (Mr. Gaitskell) was careful in his Budget tax proposals not to impose too great hardships on the housewives. Goodness me, the housewives had to suffer for it later, because the Budget in 1951, which—as many of us thought at the time—was not adequate, meant that the present Government had to take severe steps when we came back to office which greatly affected the housewives. At any rate, as a result of this Budget it will not be necessary, for example, to stop the Christmas food bonus, as was necessary when we got back to power in 1951.

11.0 p.m.

I want to say some words about the effect of Purchase Tax on demand and the effect of Purchase Tax in combating inflation, because these are points which have been frequently raised during the debate. First of all—I put this as honestly and fairly as I possibly can—I do not think that many hon. Members will seriously dispute that there are certain goods in the higher ranges of Purchase Tax where increased tax will result in some falling off of demand. We are not discussing these goods at this moment, but I do not dispute that there is a wide range of goods among those which we are considering for which the demand will not be greatly affected either one way or the other by a change in Purchase Tax. I do not dispute that people will go on buying approximately the same proportion of brooms, brushes, and saucepans as they might have done before. But, as my right hon. Friend the Financial Secretary pointed out earlier today, as a result of the tax having been increased, or re-imposed, over a wide range, there will be less purchasing power available for other things; and it is for this reason that I am sure the Budget will bring about some curtailment in consumer demand with, in the long run, a good result in relation to our balance of payments position.

I should like to say a word about our balance of payments and to point out to hon. Members that one must not only think in terms of exports when considering that balance. Not only will the curtailment of consumer demand help our exports—and that is obvious—but it will also mean that our imports bill will not be so great; and let us remember that the imports bill is one of the most important problems facing our economy at present. We prefer the method which we are adopting to the imposition of physical import controls.

Mr. F. Beswick (Uxbridge)

Would the Economic Secretary be good enough to direct himself to the question which has just been put by his hon. and gallant Friend the Member for Worthing (Brigadier Prior-Palmer) about the man with two children who earns £8 a week? Which other goods will he be able to buy?

Sir E. Boyle

I cannot be drawn into answering specific examples. I will choose the questions which hon. Members have put and answer them. What I am saying is that hon. Members cannot seriously dispute that, by the wider imposition of tax, there will be some reduction in consumer demand.

Mr. Donald Chapman (Birmingham, Northfield)

How does the hon. Gentleman square that remark with what he has been saying earlier, namely, that of course everyone knows that the trouble at the moment in an inflationary period is not an increase in consumer demand? He has been at great pains to make the point that consumption is going exactly as the Government forecast.

Sir E. Boyle

I do not want to waste the time of the Committee, but I should like the hon. Member to look at what I said in my speech during the Second Reading of the Bill. I then said: If we are agreed … that investment should not bear the brunt of all the corrective action that is needed, then it seems to me to follow quite inevitably that the Government had to take steps to reduce consumption."—[OFFICIAL REPORT, 8th November, 1955; Vol. 545. cols. 1797–1798.] I could not have made the point more explicit.

Mr. Collinsrose

Sir E. Boyle

I cannot give way again because there are many hon. Members who wish to speak. The only other point is this question of Purchase Tax and inflation, and I should like to answer those hon. Members who say that the increase in this tax will be inflationary. Many people appear to think that the words "inflation" and "rising prices" mean the same thing. They cannot understand how the rise in Purchase Tax can cure inflation. But rising prices are the inevitable result of an inflationary situation where there is too much money chasing too few goods and the right action is to curtail demand. That is what Her Majesty's Government are trying to do. We are aiming at trying to slow down the tempo, to some degree, of new investment, and curtail consumer demand by increased taxes. Some people think that increases in indirect taxation must be inflationary, but I honestly disagree with them; and I should like to explain why.

The object of Purchase Tax is to curtail consumer demand, and to the extent that this demand is diminished it will become correspondingly harder for businessmen to earn quite such a high level of gross trading profits. I do not think any hon. Member will really dispute that it is exactly in a climate where gross trading profits become too easy to earn that one runs the biggest risk of a wage-price spiral. My hon. Friend the Member for Ealing, South (Mr. Maude) made that point very strongly in one of our earlier debates.

There is, secondly, this point. If we have some curtailing of consumer demand, there will then be increased competition among manufacturers, so that it will no longer be quite so easy to pass on the increased cost to the consumer in the form of higher prices.

Those are the reasons why I honestly believe we are quite right in using this weapon of Purchase Tax to help to keep us within the inflationary situation. To my hon. and gallant Friend the Member for the Isle of Ely (Major Legge-Bourke), who says that we in the Treasury are all wrong about this, I would only say that I have put quite sincerely the views with which I honestly agree. While I value my own intellectual liberty as much as anyone, I claim the right to agree with a point of view when I honestly think it is correct.

Mr. Harold Wilson (Huyton)

I rise, not with any idea of suggesting to my hon. Friends that it is time that the debate should be ended, because I am sure that the whole Committee will agree that this is one of the most important Amendments that will be debated in the course of the Committee stage. I understood from the Economic Secretary that it is the Chancellor's view, and the Government's hope, that they will at any rate reach the end of the debate on this Amendment before the Government move to report Progress. It may be their desire and intention, but I am sure that the Chancellor would be the last person to want to suggest to the Committee that we could let this Amendment be decided before it had been really adequately debated.

Mr. R. A. Butler

What I said was that it so happens that every detail which is raised on this Amendment can also be raised on the First Schedule which is to be discussed after the Clause has been considered. Most of the points can also be raised on the Motion "That the Clause stand part of the Bill". Therefore this debate can in fact take place twice again: once in general on the Motion "That the Clause stand part of the Bill" and then in detail on every single point in the First Schedule, in respect of which hon. Members have Amendments dealing with the subjects to be raised. I do not think it is unreasonable, in view of the desire that hon. Members should catch their transport before it is too late for them to do so, that we should end our consideration of this particular Amendment tonight, leaving the immense range of discussion on Purchase Tax for tomorrow in every respect. I do not think it unreasonable that the Government should ask the Committee to go as far as that.

Mr. Wilson

I am surprised to hear the Chancellor's argument. While we may agree that it may be possible in the debate on the First Schedule to discuss those individual items which come into the tax schedule for the first time, I should certainly have thought that it was not possible, on the First Schedule, to debate those items already carrying the rate of 25 per cent., and which will carry the rate of 30 per cent. under the Chancellor's proposals. Therefore, if the Committee is to have any opportunity of debating this very important range of goods, which was listed or summarised by my hon. Friend the Member for Rossendale (Mr. Anthony Greenwood), that must be before there is a vote on the Amendment which is at present before the Committee.

My reason for rising at this stage is not to suggest that the Committee is anywhere near the end of the debate on the Amendment, but to deal with some of the fallacies of the Economic Secretary, and to put them in the right perspective, at the same time pointing out to the Chancellor that most of the points raised by my hon. Friends in the past hour and a half were not dealt with by the Economic Secretary, and we hope the Chancellor is to deal with them before we proceed further. The Committee has had a whole succession of speeches from ex-futurejunior Ministers on the other side of the Committee, and practically every speaker on that side has strongly attacked the Chancellor's Purchase Tax proposals.

The Economic Secretary was, I thought, very cavalier in attempting to deal with the arguments put forward even from his own side of the Committee. One thing is becoming clear from the Government's proposals on this particular range of Purchase Tax—I cannot at this stage talk more generally—and that is the admission, in the mind of the Government, that Purchase Tax is to be regarded as a permanent tax; as a permanent weapon in the Chancellor's armoury.

What we on this side of the Committee are worried about is that the Chancellor is beginning to use Purchase Tax as a line of least resistance. At the slightest economic difficulty the first thing he does is to increase Purchase Tax on the general range and to bring new goods into the range of tax, some of which have never been taxed before in all our national fiscal history; and to bring in others which were taken out of it as early after the war as 1946 and 1947.

Now, when the Chancellor finds that he is getting into a bit of a mess economically, the first thing he does in a supplementary Budget—by the first Clause of this Finance Bill—is to increase not only the rate, but the extent, of Purchase Tax. This represents, of course, a big change in the thinking and speaking of right hon. and hon. Gentlemen opposite. We remember the Purchase Tax debates which took place in the lifetime of a previous Government. In 1950, for example, we had a long debate on an Amendment similar to this one, when the then Mr. Lyttelton, now Lord Chandos, moved an Amendment to reduce the rate of Purchase Tax on this particular range of goods, then standing at 33⅓ per cent., to, I think, 25 per cent. This is what he said, as official spokesman of the Conservative Party: … we hold that it is an objectionable tax. at least in its present form, as a permanent part of the fiscal system … much of the original object in curbing spending on luxuries has been lost sight of in the desire for revenue. I hesitate to embark on any definition of what is a luxury, because luxury spending was what the tax was originally designed to prevent, … Then the present Leader of the House, whom we are glad to see with us during the debate on this Amendment, said, when winding up the same debate in 1950: We feel that the time has come to make a start in reducing the Purchase Tax. We do not know whether it is the Government's intention that it should stay on for ever. But we say that it should not, and we want to start reducing it. Obviously, a tax of this magnitude cannot be swept away in one Finance Bill. We see that, of course, but we do think that a start can be made by chipping pieces off it."—[OFFICIAL REPORT, 20th June, 1950; Vol. 476, c. 1196 and 1231.] That is what this Amendment is designed to do—we are "chipping pieces off it." Here we have the Chancellor, five years after the Leader of the House made that inspiring speech, instead of chipping pieces off, adding a wide range of goods in his supplementary Budget.

A great part of the debate so far has been on the question whether Purchase Tax increases the cost of living. The Economic Secretary just now drew a distinction between measures which increase the cost of living and measures which are inflationary, and so far as it went it was a valid distinction, but again it showed that the Economic Secretary had not been listening to some of the educative pronouncements of some of his right hon. Friends.

Let us return to the words of Lord Chandos, who said of Purchase Tax: … it falls very hard upon the consumer and leads to a direct increase in the true cost of living, whatever the statisticians say. It includes within its grasp many things which only a jaundiced imagination could possibly describe as other than indispensable. He went on to put this question: Is it really an anti-inflationary measure to try to deter people from buying soap and toothbrushes? That was at the time when the range of goods included in the lower belt of Purchase Tax was considerably narrower than it will now be as a result of the Chancellor's activities.

11.15 p.m.

Indeed, while we are contributing to the hon. Gentleman's education, we could not do better than turn his attention to the words of the present Minister of Education himself in the same debate. He said: We are slowly learning that the problem of the balance of payments and our domestic policies cannot be kept in watertight compartments. That was true. He was slowly learning it, but Sir Stafford Cripps had been emphasising it for some years. The Minister of Education went on: To maintain a tax which increases the cost of living and stimulates wage demands is likely to damage our competitive power, and, similarly, to maintain a tax which discourages production of goods which we can sell abroad must certainly have the same damaging effect."—[OFFICIAL REPORT, 20th June, 1950; Vol. 476, c. 1204 and 1205.] That is what my hon. Friends have been saying this evening, and we have had no effective reply from the Economic Secretary.

It is two and a half years since the Chancellor of the Exchequer put before the House proposals to reduce the particular range of Purchase Tax which we are now debating in the Amendment.

At that time he introduced measures to reduce the tax from 33⅓ per cent. to 25 per cent. with the exception of textiles, which had, of course, been reduced to 25 per cent. in the 1952 Budget. This is what the Chancellor said in commending to the House his proposals on this particular rate of tax two and a half years ago: With the return of more normal conditions the burden of Purchase Tax at very high rates now presses almost unbearably on trade and on the community as a whole … the fact of the matter is that the present rates are too high. and the margins between rates too wide."—[OFFICIAL REPORT, 14th April, 1953; Vol. 514, c. 52.] In the present Finance Bill he is increasing those rates.

In the course of the debates at that time, the then Economic Secretary to the Treasury, who is now the Minister of Supply, claimed that the Purchase Tax at that time was very largely confined to less essential goods. He made a great point of that in the debate. He said: It is, on the whole, true that most of the necessities of life have now been exempted from Purchase Tax. That was what he said in 1952. He had a little quarrel with my hon. Friend the Member for Blackburn (Mrs. Castle), and he said: The hon. Member for Blackburn, East (Mrs. Castle) rightly said that Labour Chancellors had removed Purchase Tax from articles of necessity like pots and pans. I do not see how she can now blame my right hon. Friend for not removing the tax from them again."—[OFFICIAL REPORT, 10th June, 1953; Vol. 516, c. 291.] We can certainly blame him for putting the tax back on them again two and a half years afterwards.

We still have not had an answer to this question: do these increases in tax increase prices? Certainly two and a half years ago the then Financial Secretary to the Treasury, now the Minister of Transport, said that the cuts in Purchase Tax would lower prices. These were the words he used: … it is a fact that this cut is a contribution to a steady reduction in prices, which must be a peculiar and special benefit to those whose incomes are lowest …"—[OFFICIAL REPORT, 15th April, 1953; 514, c. 256.] If it is a fact that a cut from 33⅓ per cent. to 25 per cent. lowered prices and was therefore a peculiar and special benefit to those whose incomes were lowest, it is disingenuous of the Government and the Economic Secretary to pretend that the same rate of increase will not raise prices.

If we cannot convince the hon. Gentleman of the truth of that very simple proposition, perhaps some of his hon. Friends who have been so eloquent tonight may succeed in doing so. In fact, what happened in 1953 was that Purchase Tax was cut and yet the cost of living continued to increase. If the cost of living continued to increase in 1953 when Purchase Tax was cut, goodness knows how much more it will increase now, when Purchase Tax is increased.

Another question which has already been raised, but which I think a number of my hon. Friends will want to pursue further, is whether the list of goods at present liable to 25 per cent. Purchase Tax which under the Bill will rise to 30 per cent. can be regarded as luxuries, or whether they are essentials of life. My hon. Friend the Member for Rossendale quoted an enormous list of goods, including wallpaper, lawn mowers, bicycles, stationery, office furniture and all the rest. We have the remarkable situation 'in which in one year the Chancellor gives an investment allowance so that people can buy more of these goods and then in the following year increases the Purchase Tax on them.

Lord Chandos referred, in another place, to soap when dealing with luxuries, and said he did not consider that soap, or toothbrushes, razor blades, dusters or face cloths fell within the luxury class; he regarded soap as an essential. We have yet to hear whether the Government regard soap as an essential. [An HON. MEMBER: "Soft soap."] So essential did Lord Chandos regard soap that he gave a very graphic account of a large United States soap and cosmetic firm which, he said, offered a prize for the best slogan submitted by any member of the general public, and the prize was awarded for the following slogan, although they did not use it: "If you don't use our soap, for heaven's sake use out perfume." That was Lord Chandos's view—that soap was very desirable, indeed essential, and that if it was not used then perfume should be used. Under the Budget—although I should be out of order in pursuing this point very far—the tax on cosmetics has been increased from 75 per cent. to 90 per cent. Soap is in the 30 per cent. category, the Chancellor having raised the tax.

We are getting a little too used, in some of these debates, to Treasury spokesmen not answering specific questions which are put to them. I would say to the Economic Secretary, who vastly entertained the House in his last two winding-up speeches, on the Budget and on Second Reading of the Finance Bill, that while this is all right as far as it goes, we should like answers to some of our questions. I say to him, with all respect, that his predecessor, the present Minister of Supply, and the former Financial Secretary to the Treasury, did set a very high standard in answering questions put to them from both sides of the Committee on matters of taxation, and I hope that the hon. Gentleman will follow their example.

There was one question which I put to the hon. Gentleman during the Second Reading debate, which I hope will be answered this evening, because it concerns soap, which so greatly interested Lord Chandos. I mentioned a report that, as a result of the Budget, a number of soap firms, particularly the biggest manufacturer in the trade, were raising their prices to a greater extent than was justified by the increased tax. The tax went up ½d. and they were increasing their prices by 1d. and 1½d., using the Budget as an excuse. I want to know whether the Chancellor has taken any action about that, and whether he thinks that is the way to bring prices down, when as a result of the removal of price control prices rise more than the increase in tax.

The other question discussed in this debate has been whether exports will be increased by this rise in the rate of Purchase Tax. Directly, of course, there will be no increase in exports, as I think the Economic Secretary conceded. We shall not suddenly export more kettles, pans, coal hods and all these other articles in the list; we shall not export more bicycles, office stationery and furniture simply because the tax on these articles is increased. I was rather interested to hear the Economic Secretary's argument that this will decrease imports, because my hon. Friend the Member for Rossendale gave one specific example where it will increase imports. As he said, on the cheaper imported goods, such as the relatively low-quality textiles flooding into this country at present, the present proposals for taxation will give a differential advantage to those imports. However, I know that I should be out of order if I pursued the question of textiles very far on this Amendment.

The Economic Secretary comes back to the argument that exports will be increased as a result of the general restraint of what is at present an excessive rate of activity. He says that the country is doing too much—we are consuming too much; we are spending too much and, as a result of restricting spending, exports will be increased. He went so far as to suggest that it will not be in the items whose cost is increased by the increased Purchase Tax that we shall find the exports, but somehow generally—

Sir E. Boyle

What I said was that there might well be a direct connection with the goods bearing the higher rates of tax which we were not discussing now, and I therefore confined myself to goods now under consideration.

Mr. Wilson

That was the point I was making, that if people have less money to spend as a result of being taxed more heavily on essentials they will have less money to spend on inessentials, which will then be driven into the export market. That, I think, is the hon. Gentleman's argument, and in so far as it is his argument it is an admission that this change is increasing the tax on essentials. Of course, if he says that the way to get more exports of inessential goods is to tax essentials, the logical conclusion of all that would be to introduce a tax on bread, because if he did that then obviously families would have less money left over to buy inessentials, and more would be exported. We understand that in the spring the Chancellor is contemplating a reduction in the subsidy—or the abolition of the subsidy—on bread.

The Economic Secretary said, in the Second Reading debate—I have not got the exact words, but he was so pleased with them that he read them again tonight—that if investment is not to bear the brunt of the restriction then we must be prepared to restrict consumption to the same extent. He said tonight that he could not have been more explicit in his reply to the Second Reading debate. I suggest that he could have been more explicit.

The plain fact is that, with the exception of investment by nationalised industries and the local authorities, there is relatively little restriction, if any, on the level of investment. I should be out of order if I pursued that matter any further, and I have already suggested a number of means by which investment could be safely and harmlessly reduced. I will not repeat them again tonight or follow that point any further, as I certainly should be getting wide of the Amendment if I did so. I suggest that when the Government have manifestly failed to take measures which are open to them in the field of inessential private investment, then their case for increasing the tax on essential consumer goods is very much weakened, and that is an additional reason we on this side of the Committee feel that the Amendment must be pressed.

Finally, I want to recall to the Committee what the spokesman of the party opposite said, when a precisely similar Amendment was debated in 1950—the proposal to reduce the then 33⅓ per cent. range. We had an ominous warning from Mr. Oliver Lyttelton on that occasion, a warning that the Conservative Party would make political capital out of our failure to agree with them on this question. He said: I want very politely to issue a warning to hon. Members opposite. If they vote against this Clause I intend to make quite clear—and so will my hon. Friends—exactly what are the effects of their vote. It will be a vote against reducing the Purchase Tax on a number of absolutely essential articles and upon a number of others which I regard as semi-necessities. But this 33⅓ per cent. tax is levied upon many things which appear to me to be absolute necessities"— and he then gave a list of them. …If hon. Members opposite"— the Labour Party— vote against this Clause I shall make use of their vote, and shall show that they voted against a reduction in the case of these articles which, I think, all of us in our non-political moments—as when we are using our toothbrushes and wearing our pyjamas—would really allow are absolute necessities."—[OFFICIAL REPORT, 20th June, 1950; Vol. 476, c. 1202 and 1203.] 11.30 p.m.

That is what the Conservative Party said in 1950 about a similar Amendment. They said they would make political capital out of it, and they certainly kept that promise, because in the 1950 Election we heard a lot about their proposals to reduce Purchase Tax and our failure to reduce it as they wanted us to do.

Only a few months ago, when the General Election was in progress, a statement was made by the hon. Lady the Member for Edgbaston (Miss Pitt), in a political broadcast. She was talking about the improvement in living standards, and she said: When the Conservatives were elected we gave a promise that we would reduce taxation. Purchase Tax has been reduced on all the goods we buy, and on many things it has been abolished altogether, and so far as Income Tax is concerned, the Chancellor, Mr. Butler, has certainly made good this promise. That was the kind of electioneering statement we heard about the Purchase Tax as recently as last May, and yet at the first opportunity that the Chancellor has had he has increased the Purchase Tax on this very wide range of essentials—the same Chancellor who said that when he died he hoped that there would be on his tombstone the statement that he had reduced the tax on beer.

Now we have not only an increase in this rate of tax, but an inclusion within this rate of a number of items which were relieved of tax years ago and some which have never borne tax at all. Unless the Chancellor or the Economic Secretary to the Treasury can produce far better reasons than we have so far heard in support of the proposal to increase Purchase Tax on this range of items, my hon. Friends will certainly want to challenger him to a Division.

Mr. R. A. Butler

I do not want to make a formal speech or interfere with other hon. Members who want to speak. I want hon. Members to know where they stand in regard to business.

The Government were not intending to detain hon. Members too late for their

transport. I have always been informed, on previous Finance Bills, that that time should be round about this hour. Therefore, we have not expected to go further than the Amendment which we are now discussing. As I have said before, hon. Members will have another opportunity of raising all the points that they desire to raise to their hearts' content, and representing their constituents' points of view.

I therefore think that it would be reasonable to give hon. Members an opportunity to get home at a reasonable hour tonight, having come to a decision on this Amendment, leaving the whole of the rest of the debate to another occasion. I will confine myself to stating that that is the opinion of the Government, and, for the rest, hon. Members can decide for themselves.

Mr. Gaitskell

I do not think the Chancellor has yet moved to report Progress, so presumably we are speaking on the Amendment. It is true, of course, that subject to any Ruling of yours, Sir Charles, most of the things that could still be said on this Amendment would be in order on the Question "That the Clause stand part of the Bill", and therefore any other speeches can be made on a future occasion.

As the Chancellor said, the specific items which are brought under Purchase Tax for the first time can certainly be covered in the debate on the Schedule. I do not wish to prevent anybody from speaking, but I would myself think that the Chancellor's statement was reasonable, and if he is prepared to move to report Progress, I would not advise my hon. Friends to oppose it.

Question put, That the words proposed to be left out stand part of the Clause: —

The Committee divided: Ayes 251, Noes 200.

Division No. 44.] AYES [11.35 p.m.
Agnew, Cmdr. P. G. Balniel, Lord Bishop, F. P.
Aitken, W. T. Banks, Col. C. Body, R. F.
Alport, C. J. M. Barber, Anthony Boyd-Carpenter, Rt. Hon. J. A.
Amery, Julian (Preston, N.) Barlow, Sir John Boyle, Sir Edward
Amory, Rt. Hn. Heathcoat (Tiverton) Barter, John Braithwaite, Sir Albert (Harrow, W.)
Anstruther-Gray, Major W. J. Baxter, Sir Beverley Brooke, Rt. Hon. Henry
Arbuthnot, John Beattie, C. Brooman-White, R. C.
Armstrong, C. W. Bennett, Dr. Reginald Browne, J. Nixon (Craigton)
Ashton, H, Bevins, J. R. (Toxteth) Bryan, P.
Atkins, H. E. Bidgood, J. C. Buchan-Hepburn, Rt. Hon. P. G. T.
Baldock, Lt.-Cmdr. J. M. Biggs-Davison, J. A. Burden, F. F. A.
Baldwin, A. E. Birch, Rt. Hon. Nigel Butcher, Sir Herbert
Butler, Rt. Hn. R. A. (Saffron Walden) Hudson, Sir Austin (Lewisham, N.) Pannell, N. A. (Kirkdale)
Carr, Robert Hughes Hallett, Vice-Admiral J. Peyton, J. W. W.
Clarke, Brig. Terence (Portsmth, W.) Hughes-Voung, M. H. C. Pickthorn, K. W. M.
Cole, Norman Hurd, A. R. Pilkington, Capt. R. A.
Conant, Maj. Sir Roger Hutchison, Sir Ian Clark (E'b'gh,W.) Pitman, I. J.
Cooper, Sqn. Ldr. Albert Hutchison, James (Scotstoun) Pitt, Miss E. M.
Cooper-Key, E. M. Hyde, Montgomery Pott, H. P.
Cordeaux, Lt.-Col. J. K. Hylton-Foster, Sir H. B. H. Powell, J. Enoch
Corfield, Capt. F. V. Iremonger, T. L. Price, David (Eastleigh)
Craddock, Beresford (Spelthorne) Irvine, Bryant Godman (Rye) Prior-Palmer, Brig. O. L.
Crookshank, Capt. Rt. Hn. H. F. C. Jennings, J. c (Burton) Raikes, Sir Victor
Crouch, R. F. Johnson, Or. Donald (Carlisle) Ramsden, J. E.
Crowder, Petre (Ruislip-Northwood) Johnson, Eric (Blackley) Rawlinson, P. A. G.
Cunningham, Knox Joynson-Hicks. Hon. L, W. Redmayne, M.
Currie, G. B. H. Keegan, D. Hees-Davies, W. R.
Dance, J. C. G. Kerr, H. W. Ridsdale, J. E.
Davidson, Viscountess Kershaw, J. A. Roberts, Peter (Heeley)
D'Avigdor-Goldsmid, Sir Henry Kirk, P. M. Robinson, Sir Roland (Blackpool, S.)
Deedes, W. F. Lagden, G. W. Robson-Brown, W.
Digby, Simon Wingfield Lambert, Hon. G. Rodgers, John (Sevenoaks)
Dodds-Parker, A. D. Lancaster, col. C. G. Roper, Sir Harold
Donaldson, Cmdr. C. E. McA. Leather, E. H. C. Ropner, Col. Sir Leonard
Doughty, C J. A. Leavey, J. A. Russell, R. S.
Drayson, G. B. Leburn, W. G. Schofield, Lt.-Col. W.
Dugdale, Rt. Hn. Sir T. (Richmond) Legh, Hon. Peter (Petersfield) Scott-Miller, Cmdr, R.
Duncan, Capt. J. A. L. Lennox-Boyd, Rt. Hon. A. T. Sharpies, Maj. R. C.
Eden, Rt.Hn.SirA.(Warwick&L'm'tn) Lindsey, Hon. James (Devon, N.) Shepherd, William
Eden, J. B. (Bournemouth, West) Linstead, Sir H. N. Simon, J. E. S. (Middlesbrough, W.)
Elliot, Rt. Hon. W. E. Lloyd, Maj. Sir Guy (Renfrew, E.) Smithers, Peter (Winchester)
Emmet, Hon. Mrs. Evelyn Lloyd, Rt. Hon. Selwyn (Wirral) Spearman, A. C. M.
Errington, Sir Eric Lloyd-George, Maj. Rt. Hon. G. Speir, R. M.
Farey-Jones, F. W. Low, Rt. Hon. A. R. W. Stevens, Geoffrey
Fell, A. Lucas, Sir Jocelyn (Portsmouth, S.) Steward, Harold (Stockport, S.)
Finlay, Graeme Lucas-Tooth, Sir Hugh Steward, Sir William (Woolwich, W.)
Fisher, Nigel Macdonald, Sir Peter Stewart, Henderson (Fife, E.)
Fleetwood-Hesketh, R. F. Mackeson, Brig, sir Harry Stoddart-Scott, Col. M.
Fletcher-Cooke, C Mackie, J. H. (Galloway) Storey, S.
Fort, R. Maclay, Rt. Hon. John Studholme, H. G.
Foster, John Maclean, Fitzroy (Lancaster) Summers, G. S. (Aylesbury)
Freeth, D. K. McLean, Neil (Inverness) Sumner, W. D. M. (Orpington)
Galbraith, Hon. T. G. D. Macleod, Rt. Hn. Iain (Enfield, W.) Thomas, Leslie (Canterbury)
Gammans, L. D. MacLeod, John (Ross St Cromarty) Thomas, P. J. M. (Conway)
Garner-Evans, E. H. Macmillan, Maurice (Halifax) Thompson, Kenneth (Walton)
Glover, D. Macpherson, Niall (Dumfries) Thompson, Lt.-Cdr. R. (Croydon,S.)
Godber, J. B. Maddan, Martin Thorneycroft, Rt. Hon. P.
Gomme-Duncan, Col. A. Maitland, Cdr. J. F. w. (Horncastle) Thornton-Kemsley, C. N.
Gough, C. F. H. Maltland, Hon. Patrick (Lanark) Tifey, A. (Bradford, W.)
Gower, H. R. Manningham-Buller, Rt. Hon. Sir R. Tilney, John (Wavertree)
Graham, Sir Fergus Markham, Major Sir Frank Turton, Rt. Hon. R. H.
Grant, W. (Woodside) Marlowe, A. A, H. Tweedsmuir, Lady
Grant-Ferris, Wg. Cdr. R. (Nantwich) Marshall, Douglas Vaughan-Morgan, J. K.
Green, A. Mathew, R. Vickers, Miss J. H.
Grimston, Hon. John (St. Albans) Maude, Angus Vosper, D. F.
Grimston, Sir Robert (Westbury) Maudling, Rt. Hon. R. Wakefield, Edward (Derbyshire, W.)
Gurden, Harold Mawby, R. L. Walker-Smith, D. C.
Harris, Frederic (Croydon, N.W.) Maydon, Lt.-Comdr. S. L. C. Wall, Major Patrick
Harrison, A. B. C. (Maldon) Medlicott, Sir Frank Ward, Dame Irene (Tynemouth)
Harrison, Col. J. H. (Eye) Milligan, Rt. Hon. W. R. Waterhouse, Capt. Rt. Hon. C.
Harvey, Ian (Harrow, E.) Molson, A. H. E. Watkinson, H. A.
Harvey, John (Walthamstow, E.) Monckton, Rt. Hon. Sir Walter Webbe, Sir H.
Hay, John Nabarro, G. D. N. Whitelaw, W. S. I. (Penrith & Border)
Head, Rt. Hon. A. H. Nairn, D. L. S. Williams, Gerald (Tonbridge)
Heald, Rt. Hon. Sir Lionel Neave, Airey Williams, Paul (Sunderland, S.)
Heath, Edward Nicholls, Harmar Williams, R. Dudley (Exeter)
Hill, Mrs. E. (Wythenshawe) Nicholson, Godfrey (Farnnam) Wills, G. (Bridgwater)
Hill, John (S. Norfolk) Nicolson, N. (B'n'm'th, E. & Chr'ch) Wilson, Geoffrey (Truro)
Hirst, Geoffrey Nugent, G. R. H. Wood, Hon. R.
Holland-Martin, C, J. Nutting, Rt. Hon. Anthony Woollam, John Victor
Hope, Lord John O'Neill, Hn. Phelim (Co. Antrim, N.) Vates, William (The Wrekin)
Hornsby-Smith, Miss M. P. Orr, Capt. L. P. S.
Horobin, Sir Ian Orr-Ewing, Charles Ian (Hendon, N.) TELLERS FOR THE AYES:
Howard, Hon. Grevflle (St. Ives) Orr-Ewing, Sir Ian (Weston-S-Mare) Mr. Oakshott and Mr. Robert Allan.
Howard, John (Test) Page, R. G.
Ainsley, J. W. Bence, C. R. (Dunbartonshire, E.) Bottomley, Rt. Hon. A. G.
Albu, A. H. Benn, Hn. Wedgwood (Bristol,S.E.) Bowden, H. W. (Leicester, S.W.)
Allaun, Frank (Salford, E.) Benson, G. Bowles, F. G.
Allen, Scholefield (Crewe) Beswick, F. Boyd, T. C.
Awbery, S. S. Bevan, Rt. Hon. A. (Ebbw Vale) Braddock, Mrs. Elizabeth
Bacon, Miss Alice Blackburn, F. Brockway, A. F.
Baird, J. Blenkinsop, A. Broughton, Dr. A. D. D.
Balfour, A. Blyton, W. R. Brown, Rt. Hon. George (Belper)
Burke, W. A. Houghton, Douglas Plummer, Sir Leslle
Burton, Miss F. E. Howell, Denis (All Saints) Popplewell, E.
Butler, Herbert (Hackney, C.) Hoy, J. H. Price, J. T. (Westhoughton)
Butler, Mrs. Joyce (Wood Green) Hughes, Cledwyn (Anglesey) Price, Philips (Gloucestershire, W.)
Carmichael, J. Hughes, Entry (S. Ayrshire) Probert, A. R.
Champion, A. J. Hughes, Hector (Aberdeen, N.) Proctor, W. T.
Chapman, W. D. Hunter, A. E. Pryde, D. J.
Chetwynd, G. R. Hynd, J. B. (Attercliffe) Pursey, Cmdr. H.
Coldrick, W. Irvine, A. J. (Edge Hill) Rankin, John
Collick, P. H. (Birkenhead) Irving, S. (Dartford) Rhodes, H.
Collins, V.J. (Shoreditch&Finsbury) Janner, B. Robens, Rt. Hon. A.
Corbet, Mrs. Freda Jeger, George (Goole) Roberts, Albert (Normanton)
Craddock, George (Bradford, S.) Jeger, Mrs. Lena(Holbn &st.Pncs.S.) Ross, William
Cronin, J. D. Jenkins, Roy (Stechford) Short, E. W.
Grossman, R. H. S. Johnson, James (Rugby) Silverman, Julius (Aston)
Cullen, Mrs. A. Jones, Elwyn (W. Ham, S.) Silverman, Sydney (Nelson)
Dalton, Rt. Hon. H. Jones, Jack (Rotherham) Simmons, C. J. (Brierley Hill)
Davies, Ernest (Enfield, E.) Jones, J. Idwal (Wrexham) Skeffington, A. M.
Davies, Harold (Leek) Jones, T. W. (Merioneth) Slater, Mrs. H. (Stoke, N.)
Davies, Stephen (Merthyr) Kenyon, C. Slater, J. (Sedgefield)
Deer, G. King, Dr. H. M. Smith, Ellis (Stoke, S.)
Delargy, H. J. Lawson, G. M. Sorensen, R. W.
Dodds, N. N. Ledger, R. J. Sparks, J. A.
Dugdale, Rt. Hn. John (W. Brmwch) Lee, Frederick (Newton) Steele, T.
Dye, S. Lee, Miss Jennie (Cannock) Stewart, Michael (Fulham)
Edelman, M. Lever, Harold (Cheetham) Strauss, Rt. Hon. George (Vauxhall)
Edwards, Rt. Hon. John (Brighouse) Lever, Leslie (Ardwick) Stross,Dr. Barnett(Stoke-on-Trent,C.)
Edwards, Rt. Hon. Ness (Caerphilly) Logan, D. G. Summerskill, Rt. Hon. E.
Edwards, Robert (Bilston) MacColl, J. E. Swingler, S. T.
Edwards, W. J. (Stepney) McInnes, J. Sylvester, G. O.
Evans, Albert (Islington, S.W.) McKay, John (Wallsend) Taylor, Bernard (Mansfield)
Evans, Stanley (Wednesbury) MacMillan, M. K. (Western Isles) Taylor, John (West Lothian)
Fernyhough, E. MacPherson, Malcolm (Stirling) Thomson, George (Dundee, E.)
Fienburgh, w. Mahon, S. Thornton, E.
Fletcher, Eric Mallalieu, E. L. (Brigg) Timmons, J.
Forman, J. C. Mallalieu, J. P. W. (Hudderefd, E.) Ungoed-Thomas, Sir Lynn
Fraser, Thomas (Hamilton) Mann, Mrs. Jean Usborne, H. C.
Gaitskell, Rt. Hon. H. T. N. Marquand, Rt. Hon. H. A. Warbey, W. N.
Gibson, C. W. Mason, Roy Watkins, T. E.
Gordon Walker, Rt. Hon. P. C. Mayhew, C. P. Weitzman, D.
Greenwood, Anthony Mellish, R. J. Wells, William (Walsall, N.)
Grentell, Rt. Hon. D. R. Mikardo, Ian West, D. G.
Grey, C. F. Mitchison, G. R. Wheeldon, W. E.
Griffiths, David (Rother Valley) Monslow, W. White, Mrs. Eirene (E. Flint)
Griffiths, William (Exchange) Morris, Percy (Swansea, W.) White, Henry (Derbyshire, N.E.)
Grimond, J. Mort, D. L. Wilkins, W. A.
Hale, Leslie Moss, R. Williams, Ronald (Wigan)
Hall, Rt. Hn. Glenvil (Colne Valley) Mulley, F. W. Williams, w. R. (Openshaw)
Hamilton, W. W. Neal, Harold (Bolsover) Williams, W. T. (Barons Court)
Hannan, W. Noel-Baker, Francis (Swindon) Willis, Eustace (Edinburgh, E.)
Harrison, J. (Nottingham, N.) Oswald, T. Wilson, Rt. Hon. Harold (Huyton)
Hayman, F. H. Owen, W.J. Winterbottom, Richard
Healey, Denis Padley, W. E. Woodburn, Rt. Hon. A.
Henderson, Rt. Hn. A. (Rwly Regis) Paget, R. T. Yates, v. (Ladywood)
Herbison, Miss M. Paling, Will T. (Dewsbury) Younger, Rt. Hon. K.
Hewitson, Capt. M. Palmer, A. M. F. Zilliacus, K.
Hobson, C. R. Parker, J.
Holman, P. Parkin, B. T. TELLERS FOR THE NOES:
Holmes, Horaoe Pearson, A. Mr. Rogers and Mr. Arthur Allen.
Holt, A. F. Peart, T. F.

Resolution agreed to.

11.45 p.m.

Mr. Butler

I beg to move, That the Chairman do report Progress and ask leave to sit again.

Mrs. Braddock

I object as a back bencher, to arrangements being made between the two Front Benches about how long debates should go on, especially on financial matters. There are many of my hon. Friends on this side of the Committee who have sat here since 7.20 p.m. on the understanding that this debate would go on for quite a while and that we should have an opportunity of putting our points of view. I think that on a matter of such great importance, and when such an attitude is being adopted by the Government towards the ordinary people of this country, there ought to be ample opportunity for the back benchers to express their constituents' opinions. I object to this Motion for that reason.

It may be said that tomorrow we can say all that we want to say, and that we can say tomorrow exactly what we can say tonight, but it does not always work out like that. I have been a Member of this Committee for ten years now, and I have watched these things. A little while ago I seemed to be disrespectful to you, Sir Charles. I am always terribly suspicious of the Tory Front Bench—

The Chairman

I thank the hon. Lady for her apology. I have no objection to her being suspicious of any bench, but to her being suspicious of me.

Mrs. Braddock

I will tell you why, Sir Charles. When the Chief Whip has been out of the Chamber for about two hours and suddenly comes in and has a word with his chiefs on the Front Bench, and then very cautiously sneaks up to you and has a conversation with you, nods his head, goes back, speaks to the Economic Secretary and gives another nod, and then sits down in his usual place, I am always suspicious.

There are visual expressions I have seen in this Chamber and noted during the past ten years, from which one can guess what is happening, and deduce that the Chief Whip has made an arrangement with the Chair to move the Closure. If I am wrong—

The Chairman

I cannot allow the hon. Lady to say that. It is most unfair. I told her a little while ago that the Closure was not mentioned at all in the conversation. I have conversations with hon. and right hon. Members on both sides of the Committee. The hon. Lady must not say that.

Mrs. Braddock

I am not saying that, Sir Charles, but only telling you what my suspicions were. I think it is most unfair, when most hon. Members have missed their trains or buses, and quite a number will have to stop in the building all night, that just at the time when they know they must stay there should be an agreement reached between the two Front Benches without the back benchers being considered at all.

I am not the only one concerned. I am making the complaint because I can generally do this sort of thing and be perfectly honest about it; but I am making it on behalf of quite a number of my hon. Friends on this side of the Committee. We really object to this procedure. We think it is wrong. I am sure many hon. Members opposite feel about it as we do. I hope that this sort of thing will stop.

When there are under discussion financial matters, about which, obviously, very many back benchers wish to speak, I say there should be some consideration as to how long they want to stay. It should not be left as a matter only for the Front Benches—and here I accuse my own Front Bench just as much as the other. This sort of thing is done far too often and, whatever may be said tonight, some of us were asked to remain in order to speak. We have remained, and we are very disgusted that there is no arrangement whereby we can perform the duty which we were asked to do or, alternatively, that we were not told that we were not required here tonight.

Mr. Gaitskell

We all sympathise with my hon. Friend—

Mrs. Braddock

I do not want sympathy.

Mr. Gaitskell

I am sorry, but my hon. Friend will have to have it. Seriously, I do agree with her that it is very tiresome to sit here hoping to speak and finding oneself not called, but I do assure her that there has been no arrangement between the Front Benches.

Mrs. Braddock

Something funny happened.

Mr. Gaitskell

Not unless my hon. Friend thinks that the Chancellor's statement was funny. After my right hon. Friend the Member for Huyton (Mr. H. Wilson) sat down, the Chancellor rose and suggested that anybody who wanted could make a speech on the Motion, "That the Clause stand part of the Bill," tomorrow. There was no particular advantage in staying here now, since we could defer the whole of that discussion until tomorrow, and I did not think that it would have been appropriate for me to have sat still and said nothing to that proposition.

We are all entrusted with the task of speaking for the party, and after the Chancellor's statement we had to make up our minds as to what attitude to adopt. We thought that the right hon. Gentleman's attitude was reasonable, because we were losing nothing by it. Of course, this will prolong the discussion, but we know that the Chancellor does not mind that. I thought it a reasonable proposal, and I do assure my hon. Friend that there was no arrangement between the Front Benches. She can speak tomorrow, and I hope that then we shall hear from her that forceful speech which, I am sure, she will contribute on this subject of Purchase Tax.

Question put and agreed to.

Committee report Progress; to sit again Tomorrow.

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