FINANCE BILL (Hansard, 16 November 1955)

§ Squadron Leader Cooper
I doubt whether, if I remain in the House for many years, I shall catch the Chairman's eye as often in such a short period as I have caught your eye, Major Anstruther-Gray, in the last half-hour.
I hope I am within the recollection of the Committee when I say that I was making reference to a speech by the hon. Member for Edmonton and that we were discussing silverware and glass. The hon. Member thought that these two industries had a very small home market and thought that practically the whole of their production was exported. Furthermore, he thought it was not necessary for them to have a soundly based home market and questioned whether it was necessary to do anything for them. I should like to draw his attention to a speech which he made in 1951 on the same subject. He said: I welcome the concession given to the small owner-managed business, and I am not sure whether we should not do a little more for the people who run these businesses."—[OFFICIAL REPORT, 16th April, 1951; Vol. 486, c. 1508–9.] That is precisely what my right hon. Friend is doing; he is giving concessions for certain specialised industries which are small in character and have an important contribution to make to our wellbeing.

§ Mr. Albu
I think the hon. and gallant Member has completely misunderstood me. The speech to which he refers had nothing to do with Purchase Tax. I believe it had to do with Profits Tax or Income Tax. I was referring to the encouragement of small businesses which were developing com- 466 pletely new industrial processes or new products. The speech which I have just made was to the effect that it seems to me completely illogical on the one hand to suggest that industries which have no heavy capital charges should have their taxation reduced and must have a home market, whereas industries with very heavy capital charges have their taxation increased.

§ Squadron Leader Cooper
It is not open to the hon. Member to divide these things into watertight categories. We either help an industry or we do not, and I am suggesting that in assisting these two industries in the way he has done, my right hon. Friend is making a major contribution to our affairs.

§ Squadron Leader Cooper
I hope the right hon. Gentleman will not ask me to give way. I have been on my feet for the best part of half-an-hour—or, rather. I have been standing up and sitting down for the best part of half-an-hour.

Mr. Wilson
Some of my hon. Friends have been subject to quite strict Rulings from the Chair. The hon. and gallant Gentleman is saying that the Chancellor is giving a concession to these industries. We are debating a proposal to increase the tax from 50 per cent. to 60 per cent. If that is all we are debating—and I understand that that is so—how can the Chancellor be making a concession to two industries when all he is doing is increasing the rate of Purchase Tax from 50 per cent. to 60 per cent.?

§ Squadron Leader Cooper
The right hon. Gentleman is quite correct, but a certain amount of latitude was allowed to the hon. Member for Edmonton by the Chair and I was replying to him.

§ The Deputy-Chairman (Sir Rhys Hopkin Morris)
I hope hon. Members will not widen the discussion too far but will keep strictly to the Amendments.

§ Squadron Leader Cooper
I do not believe that an increase from 50 per cent. to 60 per cent. in this range of articles will have the effect which the Chancellor expects. It works out at about one-third of 1 per cent. of the national product and that does not seems to me to be a significant increase to make. We have to consider whether this will affect exports in any way, and I do not believe it is likely 467 to affect them. It seems to me that to increase the tax in this way will have an inflationary effect.
The Economic Secretary, in the speech to which I have referred, admits that that is likely to be the case and that the higher the taxation the more inflationary it tends to become. I think the increase from 50 per cent. to 60 per cent. is likely to accentuate the inflationary tendency rather than to bring about the cure which we all seek. It is interesting to note that opposition to Purchase Tax comes from both sides of the House in every Parliament irrespective of the party in power.

§ The Deputy-Chairman
The hon. Member is now widening the argument to include the effects of Purchase Tax in general. This is a narrow Amendment dealing with a specific range of taxation.

§ Mr. H. Lever
Surely the argument which says that the whole of Purchase Tax is bad is bound to embrace that part of the Purchase Tax which we are discussing at the moment. Apart from the unbreakable logic of the argument I have just advanced, I would draw your attention, Sir Rhys, to the fact that hon. Members were widely encouraged by the Chancellor last night to believe—I think when you were in the Chair—that we should be allowed on all these Clauses to have a certain amount of general discussion.

§ The Deputy-Chairman
The hon. Member's logic may be all right in the sense that everything is related to everything else, but it is a little wide of the mark to raise the same general argument upon every specific Amendment.

§ Squadron Leader Cooper
My last point is this. A 60 per cent. tax on any article cannot be right, for whatever reason it is imposed. It must have a distorting effect on the trade and so on the economy. I should have thought that it was the duty of the Government, of whatever party, whether of the Labour or the Conservative Party, to do everything in their power to encourage the maximum of production in this country. I should have thought that to attempt to limit home consumption as this increase seeks to do must slow down production and do the very thing we do not want to do. I remind my right hon. Friend that although we may succeed by these measures at the 468 moment in stemming demand, the demand in this country for this class of goods will increase, as will also the need for exports. Therefore, my right hon. Friend must address himself to the simple question how to increase production, not how to stop consumption.

§ Mr. Hunter
I welcome the opportunity of giving some reasons why I support the Amendment. The Economic Secretary was good enough to give way to me when I interjected a remark about vacuum cleaners. It is always a pleasure to listen to the Economic Secretary, who is very civil; if his replies are not always satisfactory, at least he is always very civil and courteous when he replies to debates.
I have heard the point of view expressed on the opposite side of the Committee that vacuum cleaners and electric washing machines are luxury goods. I most strongly deny that they are in this modern age. In this modern age, which has produced these machines to help the housewives with their work, they ought not to be listed by the Economic Secretary or by any other hon. Member on that side of the Committee as luxury goods. Every woman in the country would like a vacuum cleaner. The only reason housewives cannot all buy vacuum cleaners is that they cannot all afford them. The action of the Chancellor of the Exchequer in raising the Purchase Tax on vacuum cleaners and electric washing machines hits the people in the lower income group.
I cannot accept the statement, whether it is made by hon. Members on that side of the Committee or my hon. Friends on this side, that people will buy these things even if they cost £5 or £8 or £10 more. People save for such articles. They have to if they are to buy them, and the action of the Chancellor in raising the Purchase Tax on vacuum cleaners and on electric washing machines from 50 per cent. to 60 per cent. will hit those with the smaller incomes. The Economic Secretary represents a Birmingham constituency, but I do not know whether he represents people who are in the higher income group or the lower income group; but if he represents housewives in the lower income group I can tell him that they are the sort of people who will be hit by this increase in the Purchase Tax on vacuum cleaners and electric washing machines.
469 Manufacturers of vacuum cleaners or electric washing machines or refrigerators can keep down their costs of production only if there is a consistent and heavy demand for those articles. In the early days of television the television sets were much dearer, but as the range of television spread from London to the Midlands and to Yorkshire and to Lancashire and the demand for the sets grew, the manufacturers were able to increase their production of the sets and so to lower their production costs.
A vacuum cleaner saves a housewife many hours of hard work. In industrial towns—in my constituency—there are part-time workers. If we enable the housewives to do their cleaning with vacuum cleaners, and enable them to do their washing with electric washing machines, we save them many hours of hard work at home, and then they can go into the factories and so increase the industrial production of the country, and that, in turn, helps the Chancellor of the Exchequer with his problem to deal with the Economic situation.
5.45 p.m.
In conclusion, I make a strong appeal to the Economic Secretary and to the Chancellor of the Exchequer to reconsider this increase on these two sorts of articles. I do not regard them as luxury goods in this modern age. They are wanted by the housewives. I appeal to the Chancellor and to the Economic Secretary kindly to reconsider the tax on these items.

§ Mr. Alan McKibbin (Belfast, East)
I wish to make an appeal on behalf of limbless ex-Service men of 55 years of age and over who are living on a 50 per cent. disability pension. The appeal I make is that they should be permitted to have motor cars free of Purchase Tax to enable them to get to and from their work, subject, of course, to safeguards concerning the sale and disposal of such motor cars if and when their owners have no more use for them.