New Clause.—(REDUCTION OF PURCHASE TAX FROM 5 PER CENT. TO ¼ OF 1 PER CENT.)

HC Deb 26 June 1956 vol 555 cc382-425

Part I of the Eighth Schedule to the Finance Act, 1948 (as amended by subsequent enactments and by order of the Treasury under section twenty-one of that Act) shall have effect with the substitution for the words "5 per cent", whenever those words occur, of the words "one-quarter of one per cent".—[Mr. Albu.]

Brought up, and read the First time.

Mr. Albu

I beg to move, That the Clause be read a Second time.

The Chairman

It might be convenient if, with this new Clause, we discussed the one immediately following in page 3806 and the three in the middle of page 3808, all of which go together, namely, "Reduction of purchase tax from 10 per cent. to ¼ of 1 per cent.", and "Reduction of purchase tax from 30 to 20 per cent.", in the name of the right hon. Member for Huyton (Mr. H. Wilson) "Reduction of purchase tax from 60 to 50 per cent.", in the name of the hon. Member for Stechford (Mr. Roy Jenkins); and "Reduction of purchase tax from 90 to 75 per cent.", in the name of the hon. Member for Hammersmith, North (Mr. Tomney).

Mr. Albu

This new Clause proposes a reduction of Purchase Tax from 5 per cent. to one quarter of 1 per cent. and we agree that it should be taken together with other new Clauses which deal with a reduction in the rates of Purchase Tax. I shall deal with this and the following new Clause which deals with a reduction of Purchase Tax from 10 per cent. to one quarter of 1 per cent. and a number of my hon. Friends will deal with the other rates of tax. I suppose that it is perfectly clear to those who are experienced in the ways of this Committee that the new Clause to amend Purchase Tax is intended to have the effect of abolishing it in these cases, but, under the Money Resolution, it would have been out of order to have moved that.

These two rates of 10 per cent. and 5 per cent. were introduced by the Chancellor's predecessor in that famous post-Election Budget, last autumn. The contribution of the Lord Privy Seal towards our economic progress at that time—and, presumably, this policy continues—was the introduction of Purchase Tax on all articles of clothing and all articles of furniture.

Previously, many of these essential items had been altogether free of tax. I remember that as soon as the then Chancellor came to this part of his Budget statement, I turned to one of my hon. Friends and said that this proposal meant a sales tax and as the debates on the Finance Bill proceeded last year it became clearer and clearer that the Lord Privy Seal was moving in that direction. Subsequently, there were speeches from Government spokesmen and others clearly indicating the Government's intention to move as fast as they could towards a sales tax.

It is not very easy to follow the policies which the large number of successive Ministers in the Government have introduced and I do not know whether the present Chancellor of the Exchequer intends to continue his predecessor's policy of moving towards a tax on all articles purchased by the consumer, however necessary they may be. This is what we are dealing with in the first two of the proposed new Clauses now under discussion. The two levels of Purchase Tax dealt with in the two Clauses cover the basic essentials of ordinary domestic life, other than fuel and power and housing. They cover practically all clothing, boots, shoes, handkerchiefs, braces, furniture, pillows and mattresses.

I want to make it clear that I am not arguing against Purchase Tax as a whole. I know that there are differences of opinion upon this matter, but I am not against Purchase Tax as it has been applied in the past. I can see that under certain conditions there is a case for a high Purchase Tax on luxury goods, and I am not against the use of the tax when it is necessary to encourage the export of certain types of goods or to release resources which might be needed for export purposes. But I must tell the Economic Secretary that this is a very clumsy method of planning, and it has to be used with very great care.

I do not want to keep going back to what the Economic Secretary may consider to be my "King Charles's head". but the method of allowing an industry—especially a mass production industry—to expand and consume a very large part of our economic resources, and then to clamp down upon it an enormous increase of Purchase Tax afterwards, is an extraordinary way to run a railway or an economic system. That is exactly what the right hon. Gentleman and his hon. Friends did with the motor industry and many of the other consumer goods industries. My hon. Friends who represent Stoke constituencies will have something to say about what was done very suddenly in the case of the pottery industry.

I am not against changes if they can be made in such a way as to enable an industry to adjust itself in time, but how an industry can be expected to foresee unexpected shifts of Government economic policy I do not know. In modern industrial conditions, with the high cost of capital equipment required, especially in mass production industries, it is certainly quite impossible for industry to adjust itself as rapidly as hon. and right hon. Members opposite apparently expect.

At the moment I wish to concentrate my remarks upon what I call the sales tax—the 10 per cent. and 5 per cent. tax upon essential goods. The Economic Secretary will be aware that some of us who are concerned with the furniture industry have had discussions with the President of the Board of Trade upon the matter. I would remind him that the Government's actions towards this industry have taken place not only in the realm of Purchase Tax but also in extremely severe changes in the hire-purchase regulations. This has had a particularly serious effect upon the furniture industry, because of the abolition of the consolidated agreement, by means of which a purchaser could continue to furnish his house without having to pay another down payment.

The young married couple, now furnishing their home for the first time, find themselves in the serious position, first, of being faced with a very heavy down payment and a shorter period of repayment, so that they cannot do what many working-class families have done hitherto, namely, furnish one or two rooms year by year until their house is full without having to find money for a further down payment, and, secondly, of being subject to a tax which certainly never existed in the period of the Labour Government, a tax upon furniture of the type mainly bought by ordinary working-class people. As soon as these young couples start to have children they will find that they are paying a great deal for their children's clothing, and if they make the clothes themselves they will have to pay a 10 per cent. tax upon the fabric.

9.15 p.m.

I sometimes wonder whether the middle-class grumblers—who have been abstaining at Tonbridge, writing to the Press, and forming the various sorts of Poujadist bodies which we now see spending someone's expense accounts to advertise in the papers—realise that they are paying a 5 per cent. tax on practically every piece of ordinary domestic equipment or clothing which they buy; and that this tax was put on by the present Government as part of the Economic Secretary's policy of filling up the "yawning gap" in taxation of which we were reminded last year, and lowering the cost of living by raising the price of goods.

The Economic Secretary to the Treasury (Sir Edward Boyle)

The hon. Gentleman is muddling up "the yawning gap" with "Boyle's law," but I will correct that later.

Mr. Albu

I thought that I was, and it might have been the Financial Secretary's policy. Whether it was "Boyle's law" or the filling of a vacuum I am not certain. Nevertheless, it was clear that the Economic Secretary agreed with the idea that if there were a lot of goods on which there was no tax, then there ought to be a tax, and one was put on.

It is extraordinary that if one goes into a shop to buy an article of clothing [...] a piece of furniture—although one will not discover it, because there is nothing in the price to indicate it—there is, in fact, a tax on every piece of furniture and article of clothing or item of footwear, and even on the braces and handkerchiefs which, at any rate, gentlemen carry about with them. They are all subject to tax, and the price of these essential goods, and, therefore, the cost of living, to that extent was put up by this Government. It is just as well that people should understand that.

The arguments for the removal of the tax on these essentials are overwhelming. I will not tear the heart strings of hon. Members—indeed, I am not sure that I am capable of doing so—but it is absolutely obvious that a tax on essentials such as this, which we have never had before, is a tax which only a Conservative Government could impose, and it is time that it was removed. It is obvious that it has not stopped inflation or in any way cured the serious economic situation which led us to a number of Budgets last year.

Undoubtedly, together with the other changes which have been made in subsidies, and so on, it has had the effect of stimulating demands for wage increases. Therefore, it is no use arguing that the effect of removing a subsidy amounts to only a 1s. or 2s. or 3s. a week, because the point is that small changes of this sort often set off large demands.

Mr. C. R. Hobson (Keighley)

A chain reaction.

Mr. Albu

And as my hon. Friend says, there is a chain reaction.

There is no doubt that what the Government did last year—when the Lord Privy Seal obviously got into a complete panic and realised that he would have to recover from the situation into which he put himself before the General Election —has done enormous harm. Of course, it would be impossible now to distinguish between items, but, so far as I can see, the items which come under the 10 per cent. and 5 per cent. section are all essential items in household consumption and on those I hope that the Purchase Tax may be abolished. It never existed previously, because there was never before such a tax on those articles, over during the war.

I suggest to the Economic Secretary that he could do more good for the economic situation by trying to reduce the cost of living in this way than by continuing a tax which is an affront to almost every consumer.

Mr. Geoffrey Hirst (Shipley)

I am glad of the opportunity to follow the hon. Member for Edmonton (Mr. Albu), as I have often done in these debates. I wish to refer to the second of the Clauses which we are discussing, that in the name of the right hon. Member for Huyton (Mr. H. Wilson) and his hon. Friends, which is in line, except for one-quarter of 1 per cent., with one which I put down that was not selected. It was put down in that form for the same reason as was the Clause to which the hon. Member for Edmonton was addressing himself, in order to conform with the Money Resolution. Connected with a woollen textile industry constituency, as I am, I felt somewhat hurt in this battle of the Purchase Tax.

The problem dates back to 19th April last year when the then Chancellor of the Exchequer announced the great concession of a reduction from 50 per cent. to 25 per cent. Purchase Tax on piece goods and household textiles of a non-wool character. That was clearly done to help the cotton and Northern Ireland linen industries, but it extended much wider than that.

It is important to remember that the D scheme was then in force. The Wool Textile Delegation, the senior federation representing about eight associations in the industry, not only in Yorkshire, where my constituency lies, but in other areas such as the West Country and Scotland, drew the attention of the Chancellor to this situation. It was said at the time by my right hon. Friend the Financial Secretary to the Treasury that the concession to non-wool cloth could not be extended. We were all somewhat amazed when, only two weeks later, the Purchase Tax in respect of that group was removed altogether at quite a large cost.

We naturally expressed our disappointment at the exclusion of wool, and I did so personally by writing to the Prime Minister at the time. That disappointment was shared very wide and far, because the wool-growing Dominions expressed their disturbance of mind at the same time and urged the removal of the discrimination. In the debates that we had on the autumn Finance Bill about last October, I naturally drew attention to the facts. Steps for the removal of the D scheme and for alteration in the Purchase-Tax rate in this group were then taken, whereby the rate for made-up clothing became 5 per cent.—and I believe for furniture too—and the rate for wool cloth sold as piece goods became 10 per cent. All non-wool cloth remained exempt altogether.

That is the whole bone of contention, which has been mentioned more than once in the Committee. Naturally I drew attention to the discrimination against wool in the Committee stage of that Finance Bill, when, on 16th November, I am sorry to say, I got rather a dusty answer—[HON. MEMBERS: "Oh."]—yes, a very dusty answer to which I referred when I raised the matter again in the Budget debate on 18th April this year. Let me remind the Committee that the then Chancellor of the Exchequer, on the earlier occasion, replied to my appeal for fair treatment for the woollen industry by saying: We find a complete difference between the cotton and wool situation, Owing to the numerous small tailors who make up the wool cloth."—[OFFICIAL REPORT, 16th November, 1955; Vol. 546, c. 623.] Then I asked—and I must ask the question again tonight—why so little account has been taken of the tailors and dressmakers who make up the non-wool cloth. The Chancellor of the Exchequer and I suppose the Customs and Excise Department always make great play with the danger of treating wool equally, because of the vast number of small tailors.

To get nearer the centre of this argument I put down on 17th May this year a whole range of Questions for written answer to the Financial Secretary to the Treasury. They are in Vol. 552 of HANSARD, C. 183. I will not repeat them now.

Mr. Donald Chapman (Birmingham, Northfield)

Why not?

Mr. Hirst

Because I have given the HANSARD reference, and I am trying to give quickly the facts of the case. I asked the number of firms carrying on business as tailors as well as dressmakers, how many were required to be registered for Purchase Tax and how many had not been required to be registered. I got a very vague reply. [HON. MEMBERS: "Shame."] This is very important, as I think hon. Members will agree. We must have facts.

The reply indicated, as I had already reason to believe, that a strong case for discrimination did not and does not exist. The Answer was involved and no better source was given me than the Census of Production, 1951. Even that source was conveyed to me after the cautionary words, "no precise figures are available." That source of all knowledge—or is it guesswork?—apparently estimated that the number of firms or persons carrying on the type of business in the group which we are discussing tonight—bespoke tailors and dressmakers—was 10,000. Firms with more than ten employees numbered 2,500 in tailoring and there were 1,200 in dressmaking.

I was informed: it is not possible to make a similar division in the case of the smaller firms. Of the total about half are registered for Purchase Tax. The rest consist mainly of the smaller tailors. The number of dressmakers liable to registration who have not been registered is very small."—[OFFICIAL REPORT, 17th May, 1956; Vol. 552, c. 183.] I suggest that is a colander-like case to have produced to sustain this inexorable attitude to the wool trade. Incidentally, it is the very best individual dollar-earning trade.

I was so concerned about this matter that I explored it further by sending a letter to the Financial Secretary on 1st June asking for information. I got a reply this morning which I will not read to the Committee, but an extract from that letter states: The picture as regards registration is drawn from a quite unrelated source. It is necessarily rather vague, as here again precise figures arc not available. The registration of persons for purchase tax is dealt with locally, and sufficient information is not available centrally to enable the number of registered tailors or dressmakers to be extracted. I am sorry to bring up this Question and to embarrass my right hon. and hon. Friends—[HON. MEMBERS: "Go ahead."]—but it is not good enough. It is not good enough for a delegation from the textile trade—people who are highly respected at the Treasury and the Board of Trade—to be told that it is impossible to do anything about this quite inexplicable discrimination against this group. I am sure the hon. Member for Keighley (Mr. Hobson) will agree that it is quite inexplicable that the Treasury should argue that it is not possible to do anything because of some enormous difficulty in segregating tailors and dressmakers from the rest.

At the end of this quite appalling letter, I got the pontifical exuberance: It is for this reason that, although precise figures are not available, it can be said with assurance that the number of such firms which are liable for registration but have not been registered is very small. There is not a shred of evidence either in that letter or in the dozens of communications—I have files full of telegrams and letters from Ministries, textile firms and the Wool Textile Delegation and about meetings with the President of the Board of Trade, with this Chancellor and that Chancellor, this Financial Secretary and the other Financial Secretary—which can possibly produce a single iota of evidence—nor can the Economic Secretary—which indicates to the wool textile trade that it is getting justice in this group.

My right hon. Friend and his helpers must forgive some strongish protests from me on this matter. It is a burning question in all the wool areas—not only in Yorkshire, but in Scotland, the West Country and everywhere else where this industry flourishes, to the great benefit of our country. The importance of the question is not to be measured in terms of money alone; it is a matter of principle and of fairness.

9.30 p.m.

I put down another Question which my right hon. Friend answered on 17th May, 1956, in which he told me that the estimated yield of Purchase Tax on sales of wool piece-goods in group 6—that is the group we are discussing—for the year ended 31st March, 1956, was only about £2 million. That is what they get from the whole shooting match. It does not relate to this case which I have always argued—this small amount which would not be paid if this product were placed on the same basis as others in the same group. Less than half that sum is involved—probably much less than half, if more attention is given to the views of the trade, which it has offered to the Chancellor and to the Treasury, but to which, I assume, under pressure from the Customs and Excise, they are unwilling to listen.

That is not good enough. May I urge a further and fuller consultation with the trade—provided that such consultation is based upon a genuine aim to remove this discrimination? I am not satisfied that that aim and object has ever been present, at any rate in the minds of officials when they have investigated this matter. I object to the Iron Curtain attitude of my right hon. Friend in this matter, and ask that it should be raised.

Had it been possible tonight to have tabled a new Clause on this subject alone I should have done so and supported it, if necessary in the Lobby against the Government. Party loyalty is all very well, but it is intolerable that anyone should be pressed to party loyalty in a matter where the Government cannot be supported by a shred of evidence which any member of the trade, with his knowledge, can accept as reasonable.

I do not think anybody has been more reasonable than the Wool Textile Delegation. My right hon. Friends cannot be unmindful of the helpful attitude to the Treasury and the Board of Trade of the association to which I referred and of the absence of a strong Parliamentary lobby forever plaguing their lives. We feel that the trade should be given some encouragement by the Government meeting this matter of a few hundred thousand pounds and not niggling away at an industry which has served the country well. I have no hesitation in pressing this matter, and I am only sorry that the width of the new Clause, involving many millions of pounds, which I could not call upon my right hon. Friend to accept, prevents me from supporting my attitude, as I wish and desire, in the Lobby.

Mr. Frank Tomney (Hammersmith, North)

When I listened to the hon. Member for Shipley (Mr. Hirst) I was reminded of some words I read somewhere to this effect, that persuasion seeks its objects when force is inadmissible and reason ineffective.

I want to persuade the Economic Secretary tonight to accept the new Clause standing in the name of my hon. Friend the Member for Keighley (Mr. Hobson) and myself, which is worded in very moderate terms, deliberately, in an effort to afford some relief to an industry which can by no means be termed a luxury industry. It suffers from the highest rate of tax—a penal tax of 90 per cent. on the industry manufacturing articles in Group 31; and it has been afforded no relief at all, despite the fact that when a few years ago overtures were made by the Goldsmiths' and Silversmiths' Association, by the cutlery trade of Sheffield and by the jewellery and fancy trade of Birmingham, certain reliefs were afforded to them. At that time this industry, manufacturing the articles in this group, was afforded no relief at all, and when, in the autumn Budget last year, the additional tax was reimposed on certain articles of costume jewellery, the tax on these articles was raised to 90 per cent.

This industry is quite new to this country. It was brought to us from the Continent during the war and, like many such other industries, it has prospered since. It has proved a very valuable dollar earner and has also proved of great value to the sterling area because of the amount of capital invested in it, the number of men it employs and its capital turnover. In the search for new markets and in the changing trade conditions which we will be forced continually to face it would be silly to ignore this industry.

The new skills which have been developed, the apprenticeship systems which have been inaugurated and the recent developments in and observance of trade union conditions are all matters which affect some of my constituents who are in this industry, and who are now faced with unemployment as a result of the penal code of taxation. I ask the Economic Secretary to listen carefully to my argument, and to afford this modest relief by reducing the tax to 75 per cent. so that this section of the industry has a chance to live.

This is a tax not only on British skill, ingenuity and design, but also upon our women, especially our young women. The articles made by this industry are selling in the range of 5s. to about £5. They are by no means luxury articles. A powder compact is an absolute necessity for any woman. The Economic Secretary, as a bachelor, may not understand this, but many people do, and if he wants consultation he could consult his hon. Friend the Member for Belfast, West (Mrs. McLaughlin). In some cases it takes 12 months to complete the designs and patterns, and the necessary etching and the draughtsmanship sometimes take two years to complete, during which period there is no financial return on the article concerned.

If the industry is to hold its own in the export field a stable home market is essential, but figures supplied by the trade indicate that British home sales have fallen by 70 per cent. Export sales, which have to compete with the products of America, Germany and Japan, have fallen by 30 per cent. The trade requires some guarantee of stability in the home market in order to keep its technical and engineering staff fully employed year in and year out while turnover is being built up. A survey of the great United States market west of Chicago, and in Kansas City and other centres of population where there are about 35 million people, all anxious to buy British goods, shows that in the departmental stores very few British goods of any character at all are on sale.

The Economic Secretary must be aware of the great difficulty of getting British capital goods into the United States, because of the insistence of the American manufacturers, under the Battle Act and other legislation, that the American public should buy from American manufacturers. These articles are important dollar earners for this country. In the changing circumstances of world trade, it is important for us to secure and maintain any opportunities for trade that we can.

This concession will amount to a modest reduction of 15 per cent. Exact figures are not available to the Chancellor. I put a Question down, asking what would be the amount the Treasury would lose by making this concession, but the right hon. Gentleman could not sub-divide the various categories and give me the exact figures. From figures available to me, it does appear that the figure is no less than £300,000 a year. This industry is a small one. It needs a stimulus to keep it growing. Its sterling and dollar earning capacity bears no relation to its size. Its work is well worth while, and relief to it is long overdue, particularly having regard to the fact that it has had no relief when other sections of industry wore granted some concession.

The position now is that retailers, jewellers and fancy goods retailers are refusing to tie up capital in stocks carrying 90 per cent. tax on their shelves. That is understandable; no man in business will be persuaded to tie up stocks carrying 90 per cent. Purchase Tax.

There is no longer any justification for this level of taxation. If the Economic Secretary likes, I am prepared to argue that he should remove this particular tax to paragraph (b) at the rate of 30 per cent., which, in my opinion, would be a better thing to do. In any event, I appeal to him quite seriously to reduce this tax to 75 per cent. This industry is a growing one; it is getting on its feet; it employs British skilled tradesmen and engineers, die-sinkers, designers, engravers and enamellers. It is putting into operation a pension scheme, and it gives good rates and conditions. Having regard to conditions throughout other sections of British industry, notably the motor car trade, it is particularly important for us as a nation to have other jobs in which our skilled men may work.

We cannot afford to lose a single industry, particularly in engineering. In places like Coventry, Birmingham, or Sheffield where engineering is more concentrated than, for instance, in London, conditions may well become more difficult. In London, there is a multiplicity of small industries, though not all of them are working at the same level. This industry has been making great headway; it has valuable dollar markets to explore, but it cannot explore them unless there is a stable home demand and a lower level of this penal tax. If the Chancellor is really serious about promoting prospects for British industry and trade, he should grant the modest relief for which we ask.

Mr. F. A. Burden (Gillingham)

Most hon. Members on both sides of the Committee have for some time now taken part in these Purchase Tax debates. Through the years, the main purpose of our debates, whether they have been when hon. Gentlemen opposite were in office or during the present Government's period of office, have been to get Purchase Tax reduced as much as possible. Indeed, anyone who knows anything about this tax would, I think, agree that it would be probably the most popular measure any Government could introduce. These new Clauses are obviously aimed at its removal.

I would like again to state my own position quite clearly. I believe Purchase Tax to be fundamentally an extremely bad tax and I shall certainly go on hoping that it will ultimately be completely removed. I know that hon. Members on both sides will hope for the same thing, and will press for that result to be brought about. But that is just not possible at this time. Hon. Members opposite know that just as well as hon. Members on this side of the Committee. It may be possible to bring about some adjustments, and here I would certainly agree with the hon. Gentleman the Member for Hammersmith, North (Mr. Tomney), who asked that the Treasury and my right hon. Friend the Chancellor of the Exchequer should watch very carefully the high taxes which may from time to time be operating to the detriment of certain small-scale industries.

9.45 p.m.

The hon. Member for Hammersmith, North referred particularly to the type of manufacturer who is engaged in the production of compacts, and so on. He stated that today these articles are necessities but they carry 90 per cent. Purchase Tax. I would point out that when hon. Members opposite were in power they carried 100 per cent. Purchase Tax. I know the difference is only 10 per cent., but it is less than when they were in power. I make no quarrel with the fact that they have tried to get the Purchase Tax reduced still further, and, of course, I would like to do the same.

I think that the hon. Gentleman was on weak ground when he said that because the Economic Secretary is a bachelor he probably would not know very much about the use that is made of compacts. It is true that married men know the reason for their use, but, equally, I am sure that when I was a bachelor I was very interested in the benefit which their use gave to ladies' cheeks. I am quite sure that my hon. Friend is no less interested than I was when I was his age.

The hon. Gentleman also said that in certain industries the home sale of goods which could be exported had fallen. One of the purposes of the Chancellor's present policy is to cut down and reduce as far as possible the home demand for articles that can be sold in the export markets. It may be that there is increased competition abroad also in some commodities and that their sales overseas too have gone down. The difficulty is this. As soon as some manufacturers found intensified competition by German and Japanese and other foreign manufacturers they would switch their production to, and concentrate much more upon, commodities for home consumption, thereby losing still more exports if this tax were not maintained. I must fundamentally disagree with him when he said that in America he had found it very difficult to find a great many goods of character in the shops there. I happen to have quite a lot of knowledge of the American export market and the consumer goods going there. When he and other hon. Gentlemen go to America I suggest that they should look through the stores and see the Wedgwood and Minton china and the British knitwear and shoes and woollens that are there, and which are successfully competing with other manufacturers.

Mr. Tomney

I referred specifically to those areas in the Middle West of America. Unfortunately, most British salesmen seem to go no further than New York, when they should be concentrating on Chicago and Kansas City. I referred to the fact that there was a vast market among the 35 million people in the Middle West. I went into store after store and found very few British goods of any type when I inquired for them.

Mr. Burden

If that is so, then the hon. Gentleman is making the Chancellor's case for enforcing his policy. If this enormous market exists in America and in the Middle West, where our goods are wanted, I suggest that if manufacturers cannot sell their goods freely at home the hon. Gentleman and others should tell them that this vast export market exists and encourage them to go there, and improve our export position.

Mr. Tomney

I suggested that the design and manufacture of these products from the time of development to sale in the shops sometimes took 12 months or longer, which involves a tie-up of capital for that period. It is on that stable demand that the banks in this country would advance the money to pay workmen and designers. The American banks would not advance it. They depend on direct sales. It is their home market which keeps the American factories in being.

Mr. Burden

I should be out of order in explaining in detail that the Export Credit Guarantees Department exists to provide the credit and that the money is available quickly.

The hon. Member for Edmonton (Mr. Albu) suggested that by accepting these Clauses the Government should remove the Purchase Tax on necessities. He talked about the tax on clothing of 5 per cent. and on cloth bought by the yard of 10 per cent. and said that these taxes on necessities had been introduced only by this Government. I regret to have to tell the hon. Member that he is quite wrong. The Purchase Tax of 5 per cent. on general clothes is now lower than it has ever been. When hon. Gentlemen opposite were in office, it was 33⅓ per cent., apart from the Utility Scheme, and cloth bought by the yard bore tax of 66⅔ per cent. There has, therefore, been a considerable reduction.

Mr. Albu

The hon. Member knows perfectly well that he is misleading the Committee. What I said was that this was the first time there had been no tax-free furniture or clothing, which the hon. Member knows is correct.

Mr. Burden

It is not true that there was no tax on clothing. The tax on clothing generally was 33⅓ per cent. I quite appreciate the hon. Member's reason—we all want to get Purchase Tax down—but let us look at the matter squarely.

Mr. Douglas Jay (Battersea, North)

rose—

Mr. Burden

I have given way several times. I am sorry that I cannot do so again.

When hon. Members opposite were in power, the tax was very high—higher in most cases than at present. When hon. Members opposite talk about introducing taxes on necessities for the first time, I would ask them, without any acrimony, to look at the last Budget presented by the present Leader of the Opposition in 1951. He it was who, for the first time, put a tax on pastry boards, needles, pins and the like.

Mr. Jay

rose—

Mr. Burden

I am sorry, but I cannot give way.

Therefore, while we should all press for the reduction and removal of Purchase Tax as quickly as possible, most hon. Members, if they were honest, would agree that both Front Benches have been guilty of imposing taxes and not reducing them as quickly as most of us would wish. We should be realistic and agree that we would all like to see these taxes completely abolished as soon as possible, and should work for the time when the circumstances of the country will enable us to remove them.

Mr. Hobson

I am amazed by the remarks which the hon. Member for Gillingham (Mr. Burden) has made to the Committee tonight. I think that he has been completely disingenuous. My hon. Friend the Member for Edmonton (Mr. Albu) made perfectly clear, as the hon. Member for Gillingham knows, that when we were the Government there was a whole range of Utility goods free of tax, including a large amount of furniture. For the hon. Member to try to imply, as he did, despite my hon. Friend's corrective intervention for which the hon. Member courteously gave way during his speech, that everything was subject to Purchase Tax is unfair, and not only unfair but wrong in fact.

Mr. Burden

I know that the hon. Member for Keighley (Mr. Hobson) is fair, and he will allow that I did say "apart from the D Scheme, apart from the Utility Scheme." [HON. MEMBERS: "No."] If I did not make that perfectly clear, I apologise to the Committee. I had no intention whatsoever of misleading the Committee.

Mr. Hobson

We are very pleased to have that tardy admission that there was no attempt to mislead the Committee.

The fact is that 40 per cent. of clothing and 90 per cent. of furniture were free of tax when the Labour Party was in power, and nobody knows it better than the hon. Member. The fact that he has now sought to put himself right makes me wonder whether the word "disingenuous" I used about him was the right one, and whether I should not have used a far stronger term.

However, my object is to support what the hon. Member for Shipley (Mr. Hirst) said about the woollen trade. I agree with his remarks. I regret that the Patronage Secretary and the Chancellor were not present to hear his strictures of the Treasury Bench. I am sure that I could not have made such criticisms with the same eloquence as did the hon. Member for Shipley. I am sure his card will have been well marked by the powers that be on hearing what he really thinks of the Government which he helps to support on occasion.

I am in some difficulty because all these new Clauses refer to a tax Schedule, and I am not a lawyer. I am very pleased I am not, but I have to keep asking my hon. Friends what exactly the proposed new Clauses mean by reference to that Schedule. I have to do so even though I have a little Parliamentary experience, as I have been a Member of the House for eleven years. I think it is the bounden duty of the Government to have the Attorney-General present on occasions like this to help us and guide us through these mazes. [HON. MEMBERS: "And the Solicitor-General."] Yes, and the Solicitor-General.

Miss Margaret Herbison (Lanarkshire, North)

And the Lord Advocate.

Mr. Hobson

I have followed the Committee's proceedings on the Bill very carefully, but on many occasions, upon coming into the Committee, I have had to ask my right hon. Friend the Member for Huyton (Mr. H. Wilson) to help me to understand what all these legislative references mean, and I think that the Attorney-General ought to be present on occasions like this to help us with these complexities. [Interruption.] I want—

Sir E. Boyle

The hon. Gentleman should be able to get his legal advice now.

Mr. Hobson

I am very grateful to the Economic Secretary for drawing my attention to the entry of my hon. and learned Friend the Member for Gloucester (Mr. Turner-Samuels), and I am sure that he will be only too pleased to intervene if I need any help.

I want to support the plea made by my hon. Friend the Member for Hammersmith, North (Mr. Tomney) about the manufacture of these compacts in the way sought by the new Clause, to reduce the tax from 90 per cent. to 75 per cent. I do not think it is sufficiently appreciated that this is a new industry in this country. Before the war we imported about 98 per cent. of the compacts we had here, principally from Japan and Germany. Today we are able to make them for ourselves, and not only to make them but to export them.

The making of these compacts is quite an engineering process. I speak with knowledge because one of the firms concerned is in the constituency in which I have lived for a good many years. The making of the compacts is a precision engineering job, and it takes a long time to tool up a factory to make them. It is absolutely essential that there should be a good, efficient production line. If we tax the production of compacts out of existence we shall have to begin to import them again. Not only that, but we shall lose the export market which we have gained since the end of the war.

10.0 p.m.

I fail to see why consideration cannot be given to this industry. The same arguments were used by the Chancellor of the Exchequer when he reduced the tax on silverware to 60 per cent. in the last Budget. The fact was that it was essential to preserve the craft, and it was also necessary to preserve the manufacture of silverware, which made a certain contribution to the export market. The same arguments have been deployed by my hon. Friend the Member for Hammersmith, North and myself for special consideration regarding this small industry.

As far as the home effect is concerned, there is not the slightest doubt that, in the second half of the twentieth century, a compact is essential to the modern woman. Of that there can be no doubt at all, and, in this climate, I regard it as a social duty on the part of a woman to possess one. There is a tendency on the part of the Treasury Bench to ignore this small industry which has grown up since the war, but I think a duty is placed upon the Government to see that the industry enjoys conditions of stability in which it can carry on satisfactorily and expand. I hope that the Economic Secretary will be able to give some hope to this at present struggling industry.

Air Commodore A. V. Harvey (Macclesfield)

We have listened to special pleadings tonight on behalf of the ladies, but I wish to put in a plea on behalf of gentlemen's ties. There is a complete anomaly in regard to taxation on this part of clothing, and I am very grateful that this new Clause has been called, because I was unfortunate enough to have one on the Notice Paper which has not been selected.

A week or two ago, my hon. Friend the Member for Belfast, West (Mrs. McLaughlin) and I saw the Financial Secretary to the Treasury and put this case to him. He listened very attentively, and I thought he was sympathetic, but he said that there was not very much hardship in the tie industry. In the few moments available to me I want to disillusion my right hon. Friend on that point, because the fact is that, in the schedule of taxable goods, ties are classified in Group V as articles of haberdashery, along with hatpins, hairnets, badges, finger stalls and buckles, and are subject to the same rate of tax, 30 per cent.

I think we would all agree that today a tie is a necessary item of clothing for almost any man. In fact, in the eleven years that I have been in this House, I have seen only one hon. Member in the Chamber without a tie. It was soon after the war, and he was sitting below the Gangway. It was a very hot day, I agree; nevertheless, invariably we wear ties. I contend that a tie is not a piece of haberdashery; neither is it so regarded by either wholesalers or retailers. They look upon it as an item of clothing.

According to Notice No. 78 issued by the Customs and Excise, Group 5 also includes many articles of apparel as well as haberdashery. Apart from certain items, ties are the only items of clothing not subject to the 5 per cent. tax, and the only other case of a 10 per cent. tax is that of headwear. Last autumn, during the Committee stage of the Finance Bill, when the tax on clothing generally was reduced to 5 per cent., haberdashery went from 25 per cent. to 30 per cent., so that ties lost 5 per cent. on the deal. The items of haberdashery for Purchase Tax purposes included handkerchiefs, scarves, shawls and braces, which were given special treatment, although remaining in Group 5, but not ties. A tie is almost as important as a pair of braces; not quite, but very nearly, and there could be no justification for not extending the same treatment to ties.

The probable reason for the discrimination, as I see it, is that ties were never included in the Utility Scheme. Why, I do not know. Perhaps it would have been a good thing if they had been included, although the Tie Association made representations that they should be included in the D Scheme. It is said that hardship should be proved I can give proof from my own constituency, Macclesfield. One or two firms there are about to close down. Hon. Gentlemen may ask why. The fact is that wholesalers and retailers do not carry the stocks of ties that they did. There is a very large export trade, especially to North America. I have seen Macclesfield ties in all parts of America. There is a tremendous trade which must be backed up by a home market.

I hope that the Chancellor, through the Economic Secretary, will do something about this anomaly. I am told that to remedy it might cost £800,000 in a full year. I should like to see the tax reduced from 30 per cent. to 5 per cent. I am glad to see that my right hon. Friend the Chancellor is present. He has paid great attention to all our problems and I would say to him that this is a most important matter for Macclesfield. A number of weavers are short of work. This difficulty affects many of the mills that weave, and the makers-up.

I ask the Chancellor not to wait until the industry is more depressed but to give it encouragement now to carry on with the home market, and, at the same time, to export to hard currency areas. I ask him to see that this anomaly disappears. It is particularly hard on one industry to be selected for this treatment, and I hope that an assurance will be given that something will be done.

Mr. Chapman

I think that we ought to welcome the Economic Secretary to this debate, which is reminiscent of the debates which we had last October when a few of us on this side of the Committee argued, primarily with the Economic Secretary, about the impact of Purchase Tax. It is surprising that when the flood engulfed the then Chancellor of the Exchequer the Economic Secretary withstood it. He survived, even though he was one of the architects of the great disaster of Purchase Tax of last October. Not only did he survive the flood but he survived the cascade of wage demands which followed all the Purchase Tax impositions of last October.

Now we find him, as happy as ever, about to reply to a similar debate. I hope that he does not make the same speech that he made on about six occasions last October. We heard the same reply several times. I do not know whether it was Boyle's Law, but we heard it many times without any of the real issues being faced.

One of the first things he ought to do when he replies to the debate is to tell us the effect of the Purchase Tax impositions so far as it can be seen—and as we warned him—on wage demands in the months since that disastrous emergency Budget. Secondly, he ought to be able to produce new figures to show some justification, as he would see it, for the Purchase Tax impositions, in the diversion of goods to export, in the lesser use of washing boards, scrubbing brushes, and all the other things that he said would flood into the world's markets as a result of the decision last October. I say again that it is surprising that he has not been cast aside as his right hon. Friend was, because he was equally responsible for the disaster that followed that emergency Budget.

Nevertheless, we like his friendly face, and we hope that we shall get some information from him to show just what the effect of the impositions last October has been. I want to speak about the motor car industry. It is a primary subject of one of the new Clauses, that in which it is proposed to reduce the tax from 60 per cent. to 50 per cent. The Economic Secretary has a lot to explain about the situation in the motor car industry today. In the first five months of this calendar year, the production of all vehicles, cars, commercial vehicles and tractors, did not continue as in previous years, with more cars competing in the world markets. Our production was down by 49,000 vehicles, or about 10 per cent.

The hon. Gentleman said that exports would flood into the world markets because of his right hon. Friend's impositions of last October. They are not up, but down by 43,000, or about 15 per cent. compared with the corresponding period of last year—in one year a bigger disaster than has ever hit the motor car industry in the last ten years.

Air Commodore Harvey

Will the hon. Member be quite fair, and give the position for last month, and not merely for the worst months?

Mr. Chapman

The figures were still below those for the corresponding month of last year. If hon. Gentlemen opposite have alternative figures, let them give them.

The position is that the coming weeks and months of this year will be an all-time disaster for the industry in its exports. Meanwhile, the right hon. Gentleman the Minister of Labour is crowing very happily at the situation of short-time working in the industry. I have been following the situation for some time. The figures which he has given to me have been 38,000 people on short-time in March and 27,000 in April. He is now happy and cock-a-hoop, because the figure for June is 22,000.

When I asked him whether this was not a disaster for this time of year and pointed out that he had said that the troubles in the industry would go in the spring and summer, when there would be a wonderful recovery, he said that that only showed my pessimism. If he is optimistic about a figure of 22,000 on short-time in June, I should like to know what sort of figures he is expecting for November, December and January next year. The industry is in a dire situation and none of the right hon. Gentleman's remedies of last October has paid off in the slightest degree so far. It is time the Economic Secretary did a good deal of explaining about the situation.

Mr. Burden

rose—

Mr. Chapman

I will not give way to the hon. Member, who did not once give way during his speech.

Why is the situation so particularly serious? It is not just that production is down, exports are down, and short time is reaching frightening levels, even at a time when the industry should be at its best. The real trouble with the industry is that the motor car industry of the world is expanding at a very rapid rate. Unless we are to bring down our costs and be able to export in competition, Opel and Volkswagen and similar firms in other countries, which are successfully selling more rapidly, will bring down their costs, whereas ours will continue to rise because of the shrinking total market and shrinking production.

I have received a letter from one of the leading figures in the industry. The letter says: A certain reduction in production is, therefore, inevitable"— because of the credit restrictions and so on— and whereas a year ago the industry was gearing itself for expansion, it now finds itself having to operate at less than full potential and there has been short-time working and even redundancy in some cases. Reduced home demand, if continued, will inevitably affect the export trade and with other factors such as rising costs for materials and higher wages, may force our export prices beyond a competitive level. That is a frightening situation facing the industry. If our production goes down while other countries are lowering the unit cost of production by expansion, we shall lose our competitive position more and more.

10.15 p.m.

Secondly, it is an example of the shocking waste of investment that went on under this Government. About £250 million was put in to expand production, and now, in the first five months of this year, production is going down, and down, and down. It is a most formidable indictment, and is an example of the sort of thing which this Government have allowed to happen.

There is another thing which scares us. The policy of the Chancellor in relation to the motor car industry is to say, "We realise that it must not draw in so much foreign steel; it has to make a greater contribution to our exports"—I shall be reverting to that point—" and we must have a redeployment of labour if the industry cannot use all its labour to the advantage for exports." The situation in the motor car industry is not one which makes it so easy as he thinks to redeploy labour. Much of its production is carried out on the track or the assembly line. Every man on an assembly line—and this applies to the production of all parts; the engine, the final assembly of the body and so on—has to be there whether 20 or 200 cars are coming along the track on any one day, because every man has a particular job to do and every part of the motor car has to be put together separately.

The Chancellor cannot get a vast redeployment of labour from the motor car industry by cutting down its sales. That will result, as is now happening, not in men being sacked and moved to other jobs, but simply in short-time working. It is not merely a question of the 22,000 men who are now on short-time work. In any department in the Austin Motor Company today the work is finished by half-past three. No more cars are coming along the track, and they might as well pack up for the day then instead of at five o'clock. The Chancellor must not expect to obtain a vast redeployment of labour from an industry whose labour is of the specialised kind needed in different parts of the assembly line.

Another harmful fact is that in Birmingham, nowadays, many married women have been sacked from the industry. They have not got other jobs, so they stay at home. There is no redeployment in their case. They are just staying at home and ceasing to earn. The same thing applies in the case of the Austin Motor Company where, today, men over 70 years of age have been sacked. It has been said that they have to go first, That, again, is a totally unnecessary loss of working potential.

The Economic Secretary may ask what I propose to do about it, and what justification I have for suggesting a reduction in Purchase Tax to assist this industry. I would say that what the industry now requires is some flexibility in the application of Purchase Tax rates. The letter from which I have just quoted goes on to say that it is not always easy simply to switch cars produced for the home market at once to the export market. What we must have is flexibility in the use of Purchase Tax, so that more motor cars can be allowed on to the home market when cars are piling up and there is both disguised and open short-time working, which is doing nobody any good and which cannot result in any extra imports of steel harming our balance of payments.

We should allow a reduction of Purchase Tax and an easing of the problems facing the industry so long as such an action does no harm to our export market, and helps the industry both upon the road to expansion and in its endeavour to maintain full employment and produce the goods in the way I have been suggesting.

Let me say this in a further plea for flexibility in Purchase Tax. One of the ludicrous things about the situation in the motor car industry today is the incidence of Purchase Tax on different kinds of vehicles. In the last five months the one bright spot on the horizon has been that commercial vehicles have gone up in production by 9,000 while the production of other vehicles has been falling very substantially. In exports, commercial vehicles are the only ones which have gone at all. The strange thing is, and hon. Members will know this from personal experience, that a large number of commercial vehicles are being sucked on to the home market when they should be exported.

There is a vast market for commercial vehicles which is expanding year by year. We ought to be discriminating in Purchase Tax not, if at all, against passenger cars, but against the use of commercial vehicles on the home market. The situation is that commercial vehicles attract a tiny amount of tax compared with passenger cars.

The whole thing is topsy-turvy and I hope that in the coming year there will be some attempt made to look at this side of the problem and to try to force more commercial goods into export instead of allowing so many to be sucked into the home market. I have friends who today, instead of buying a new passenger car, order a new Ford or Austin van and use it as a runabout instead of a passenger car. They can buy such a vehicle for £400, but if they want the same engine in a passenger car, they have to pay £600 or £700. That is a ludicrous situation, when those are the vehicles which we are selling all the time and more and more in the export market; and they should be pushed abroad at all costs.

I hope, therefore, that there will be more flexibility and some rethinking about the actual incidence of Purchase Tax as between different kinds of cars. There has not yet been any proof that the sort of measures which the Economic Secretary advocated last October have done anything but harm to the motor car industry. In my view they have done so much harm that the coming winter will be the worst for the industry for many years.

I hope that the hon. Gentleman will at least give a pledge that if Purchase Tax cannot be reduced, at least it will be borne in mind that it is not a wooden implement, and that it can be used with flexibility; and that if the situation gets really out of hand, as may well happen, it will be reduced, in an effort to permit of some home sales, so long as no harm is done to Britain's balance of payments.

Mrs. Patricia McLaughlin (Belfast, West)

I shall not detain the Committee long at this late hour, but I am grateful for the opportunity to support my hon. and gallant Friend the Member for Macclesfield (Air Commodore Harvey) in his plea for the reduction of the tax on ties. We have heard a great deal from hon. Gentlemen opposite about ladies' compacts. I feel certain that most people will have more sympathy towards a reduction of tax on a gentleman's tie, which is definitely an article of apparel.

I have made inquiries and have discovered that in no reputable hotel is it possible for a gentleman to sit in the dining room after six o'clock in the evening—why that particular hour I do not know—without a tie. That would seem to lend a definiteness to the argument that a tie is an article of wearing apparel and should not be included, as it is, in Notice No. 78 issued by the Excise and Customs with ladies' hair nets, slumber nets, boudoir caps, ladies' fronts and modesty vests and other peculiar items of haberdashery.

Seriously, this is a difficulty which those firms who are manufacturing good quality ties of great value in our export market are experiencing in supporting their home market. They find that the little extra to pay on these items makes it impossible to keep up the standard in the home market which is necessary to support their market overseas.

In the past, ties were not subject to Purchase Tax. They did not come under certain schedules during the war. The manufacturers who make up material did not get the raw material during the war because it was impossible to obtain pure silk. They had to put up with many difficulties. Now they are endeavouring to keep up the standard of British goods and it is important that they should receive every possible support.

I hope that the Chancellor will be able very soon to give us an opportunity to say "Thank you" because he has recognised that the gentleman's tie is an essential article of apparel which merits a reduction in Purchase Tax. It should be a considerable reduction, to help the home trade and to further the export trade.

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

The more we talk tonight about Purchase Tax the more we realise that most of us were saying almost exactly the same things after the presentation of the previous Budget. I take the view that Purchase Tax is wrong in principle. Originally, it was introduced to prevent people from buying luxury goods, and it never did that. Lady Docker could still afford to buy a gold-plated car. [An HON. MEMBER: "She did not buy it."] It was a case of someone who already had wealth being able to charge an item like that on his expenses account to the firm. Perhaps I could apply it to other people who can afford expensive fur coats, washing machines, refrigerators and other things.

I want to speak about the industry in which I and some of my hon. Friends are particularly concerned, the pottery industry, not from the point of view of the industry but of the effect of Purchase Tax on the housewife, on the home, and on the people who work in the industry. After the previous Budget, trade unionists in the industry and some of my hon. Friends met the Financial Secretary to the Treasury. We warned him that if Purchase Tax was maintained at its existing rate the home market and the export market would be inevitably affected, and the industry would lose valuable craftsmen.

That is exactly what is happening. The industry has made a survey over the last few months. The export promotion committee asked for returns from 102 firms. The returns show that from Octo- ber, 1955, to February, 1956, the labour force of those firms dealing with domestic ware was reduced by 251 men and 583 women. Since February, those numbers have considerably increased because some factories are almost closed down and some are almost without orders on their books for the next few months. The people on short time are 10 per cent. of the labour force of those 102 firms.

10.30 p.m.

We may be told in reply that the figure of 2,367 women on short time does not correspond with the number of vacancies registered at the employment exchange. But the pottery industry, like the textile industry, has many married women working in it. Unfortunately, many married women have not been very wise; they have not paid their full National Insurance contributions. That means that when they are on short time, are unemployed or are ill they are unable to claim any benefit and therefore need not register at the employment exchange. Therefore this figure is really very much higher owing to the fact that many married women, as I say, have not paid their full National Insurance contributions and consequently are not registered at the employment exchange as unemployed.

If we take the figures of orders, which, after all, are the figures that really count, we find that firm after firm, particularly those engaged in the manufacture of expensive china, have fewer and fewer orders on their books. About a fortnight ago I went to one of the china factories in the constituency of my hon. Friend to buy a tea service. I was told that there were only certain patterns from which I could choose owing to the fact that the firm had no orders on its books for the American market. In some cases the firm was unable to keep its work-people engaged on producing and decorating designs which previously had been among the best designs for the export trade.

Some 82 firms manufacturing domestic ware were asked to submit figures. Of those firms, 29 had orders on their books representing four weeks' or less work. Thirty-two of the firms had orders representing five to nine weeks' work, and there were only 21 firms with orders which represented 10 weeks' work. That is a really serious situation because in the past the industry has always considered that it was necessary to have orders for six months' work ahead in order to keep the industry fully employed.

Coming to the question of export figures, again we see that what we said after the previous Budget is actually happening at the present time. In December, 1954, we were exporting earthenware to the value of £816,297. In February this year that figure had fallen to £763,971. In December, 1954, the value of our exports of china, which represents one of our most valuable exports, was £459,542, but in February of this year that figure had fallen to £381,843.

These figures show that there has been a steady reduction in the number of orders, a steady reduction in the amount of our exports and a steady reduction in the number of people employed in the industry. We cannot go on like that for ever. If that position continues it means that eventually we shall cut off our nose to spite our face, because we are losing some of our most valuable exports, on which we depend to such a great extent.

The other point I want to make concerns the housewife. Every housewife, and most husbands, when they do the washing up, break crockery which has to be replaced. It is a considerable burden. Every housewife who now has to buy new crockery finds that Purchase Tax makes a real difference to the price which she has to pay. For half a china tea service one pays about £1 8s. 4d. It is a very large item. Purchase Tax on the goods needed in the home market represents a real increase in the cost of living for ordinary housewives.

I want to add my plea on behalf of the industry and, in particular, of the workers in it. It has served the country well during the difficult post-war years. I say emphatically that if we allow the present position to continue we shall lose more and more of our best craftsmen and craftswomen. Then if we want to step up the industry again we shall find that we have lost the people who can produce the goods we need most.

Dr. A. D. D. Broughton (Batley and Morley)

I wish to speak in support of the proposed new Clause in the names of my right hon. Friend the Member for Huyton (Mr. H. Wilson), other hon. Friends, and myself, the purpose of which is to reduce Purchase Tax on goods which now carry 10 per cent. from that percentage to ¼ of 1 per cent. I shall address my remarks particularly to the tax as it falls on wool cloth.

Hon. Friends will agree that it would be better if the tax were abolished altogether, but apparently it would be out of order for us to propose a new Clause to that effect, so we seek to have it reduced to a negligible amount. I suggest to the Chancellor, the Economic Secretary, or whoever is to reply to the debate that there is no doubt that Purchase Tax can be very substantially reduced. Early last year the tax on non-wool cloth was reduced from 50 per cent. to 25 per cent. but, on 20th April, the Financial Secretary gave us to understand that there were administrative difficulties preventing still further reduction, yet on 4th May, 1955, Purchase Tax was removed altogether from non-wool cloths.

The fact was that the state of the Lancashire cotton industry and Parliamentary pressure brought to bear on the Government was such that Purchase Tax on piece goods and household textiles made from non-wool materials was brought down from 50 per cent. to nil in two stages. I suggest that there may have been another reason why the Government granted that concession early in May last year. That was because there was a General Election later in the month and the Tory Government wished to have some Lancashire votes.

At present there is no Purchase Tax on non-wool fabrics. Yet there is a 10 per cent. tax on wool cloth. I should like the Government spokesman to let us know why there should be this discrimination against wool, and for how long it is to last. Is it that the Government intend to keep this tax on wool cloth until such time, if it ever comes, as the wool textile industry falls upon bad days?

I would remind the Government that this is one of our very old industries. It is a very important one, and one that is taking a useful part in the nation's export drive. It is one of the dollar earners. I am informed by industrialists that an industry which is manufacturing for export requires to have a stable and a prosperous home market, and that this tax is impeding progress at home. The industry requires encouragement and expects help from the Government. The Government can give that help by removing Purchase Tax, and by doing so also help the housewife—to whose problems my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) has referred—because the price of wool cloth will thereby be reduced.

The Prime Minister is reported in the Observer as having said at Leamington, last Saturday: The Government was trying by every means to bring an end to the dangerous spiral of rising costs and prices. If he really meant what he said, here is his opportunity. The Government have the opportunity of reducing prices by reducing the Purchase Tax on wool cloth.

I am glad that the Chancellor of the Exchequer is here, because he will know that he has received representations from the wool textile industry and also from the wool growers of the Dominions. Up to the moment, nothing has been done about the matter, but I hope that whoever replies for the Government will give a favourable answer to this request. Wool cloth is at a competitive disadvantage because of this tax. Recently there has been some falling off in the trade. There has been less overtime worked and there has even been a little unemployment.

We in this country make the best wool textiles in the world and have done for centuries, but we have to sell our goods in a highly competitive market, and conditions in this market have been made no easier, I would remind the Government, by the increasing amount of wool cloth that has recently been imported from Italy. I therefore ask the Government to abolish, or, as that request would be out of order, to reduce this ridiculous tax, and so to put an end to an unjust discrimination. I ask the Government to do for wool no more than has been done for cotton and synthetic fibres by removing this tax, which is inflationary in effect and is an obstacle to progress. I ask the Government to help the wool textile industry, particularly in the West Riding of Yorkshire but also in other parts of the country, and so to help it to make a still greater contribution towards expanding the nation's commerce.

10.45 p.m.

Sir E. Boyle

I think it might be for the convenience of the Committee if I now attempted to reply to some of the many matters which have been raised in this debate. After very nearly eight days of very pleasant debate on this Finance Bill, it has been not altogether disagreeable to have had a two-hour debate on the last Finance Bill.

I would at the very outset of my speech, I hope, earn the good graces of the right hon. Gentleman the Member for South Shields (Mr. Ede) by making the Government's position on these new Clauses perfectly clear before I answer some of the points of detail. The right hon. Gentleman earlier complained that Government spokesmen sometimes took rather a long time to make their intentions clear. I shall try to do that straight away, and I will pronounce the word "No" without further ado.

I will give the Committee these figures. The first of the new Clauses, that is to say, the exemption—because that is what hon. Members are really asking for, though I realise the difficulty of tabling a Clause which is in order—of the goods at present charged at 5 per cent. would cost £39 million in a full year. Exemption of the goods charged at 10 per cent. would cost £4 million in a full year. The reduction of the 30 per cent. rate to 20 per cent. would cost £51 million. The reduction of the 60 per cent. to 50 per cent. would cost £28 million. The reduction of the 90 per cent. to 75 per cent. would cost £2½ million.

I do not think that I need repeat the arguments which were used by the Chancellor today in connection with an earlier new Clause. I simply say that to make reductions of this kind, still more to make exemptions of the kind proposed in, for example, the new Clause of the hon. Member for Edmonton (Mr. Albu), would go right outside the whole scope and plan of my right hon. Friend's Budget this year.

I take up the argument which the hon. Member for Hammersmith, North (Mr. Tomney) made about compacts. I can assure hon. Members that even if I have no marital interest in compacts I do not think any Member for Birmingham could avoid having a certain cultural interest in compacts. I take some pride in the fact that I was, perhaps, instrumental in suggesting that the tax on craft silverware should be reduced to the same level as the tax on electro-plated nickel silver. I can assure the hon. Member for Hammersmith, North that we shall take very careful note of what he said on the subject of compacts. I have taken a full note of the points which he raised tonight, and, in particular, of those about exports. I cannot go further than that tonight. The hon. Member made, as he always does, a helpful and thoughtful speech on this matter, and we on this side of the Committee are very grateful to him.

I see my hon. Friend the Member for Belfast, West (Mrs. McLaughlin) in her place. She and my hon. and gallant Friend the Member for Macclesfield (Air Commodore Harvey) raised the question of ties. I cannot add tonight to what my hon. Friend the Member for Belfast, West already knows on that subject. My hon. and gallant Friend thought that it was unfair that ties should be regarded as haberdashery and suggested that if they were to be treated as haberdashery they ought to be treated in the same way as handkerchiefs, scarves and braces. The answer to that argument is a perfectly straightforward one. I think that my hon. and gallant Friend really knows it himself. The answer is that the 5 per cent. rate is reserved to those articles of haberdashery which previously bore a D relief. As to the question whether it is right to regard ties as haberdashery in the first place, my right hon. Friend proposes at the moment to keep that classification, but, of course, we shall certainly keep the question of ties under review. I cannot go further tonight than to repeat the answer which my hon. Friends have had on earlier occasions.

My hon. Friend the Member for Shipley (Mr. Hirst) and the hon. Member for Keighley (Mr. Hobson) both raised the question of the woollen industry. My hon. Friend complained, in a very interesting speech, that he had had a very dusty answer from the Government. I must say that he returned the dust with some vigour tonight. My hon. Friend almost reminded me of my hon. Friend the Member for Tynemouth (Dame Irene Ward) and her hammers. There are two things that I would say to my hon. Friend. The first is that, of course, we realise the importance of the woollen industry, but I think that my hon. Friend was a little unreasonable in complaining, because no precise figures are available, that we do not give any precise figures. There are times when it really is not accurate to be more precise than the evidence warrants.

I would remind my hon. Friend of a very wise remark made by a distinguished philosopher, F. P. Ramsey, the brother of the present Archbishop of York, who said that one of the dangers of inexact thinking was treating ideas which were necessarily vague as though they were precise. That is extremely true. I apologise that we have not gone on the principle that when accurate figures do not exist they ought to be invented.

Mr. Hirst

I did not ask my hon. Friend to invent any statistics. It has always been argued that this matter is so serious and that these figures roughly support the Government's contention, and they do not. My hon. Friend is being extremely clever, and I admire him for that, but he is not answering the point.

Sir E. Boyle

We fully realise the importance of the wool industry. That point was made by other hon. Members as well.

There is one other thing that I should like to say to my hon. Friend. He talked about loyalties being strained. He came very close to suggesting that my right hon. Friends were being too loyal to their advisers. May I say that we take absolutely full responsibility for the views which we express to my hon. Friend? It would be quite wrong to suggest anything else.

A number of hon. Members talked about the car industry. The hon. Member for Edmonton and the hon. Member for Northfield (Mr. Chapman), who told me that he could not be here to hear my reply, both spoke about the motor industry. I do not want to go back too much into past history or to take too much notice of the hon. Member's King Charles's head, but I will say that to hear the hon. Gentleman speaking one would think that in Budget debates some years ago hon. Members opposite were saying, "Do not let the motor industry expand too fast; do be careful about expansion."

On the contrary, we were not hearing speeches like that from the opposite benches. In 1954 we were hearing exactly the reverse. We were hearing the right hon. Member for Bishop Auckland (Mr. Dalton) saying what a disgraceful thing it was that the nationalised sector was expanding so fast and the private sector so slowly. It is quite a new idea that we should be blamed because private industry has expanded as fast as it has done. I put it to the hon. Member that it would have been very difficult for the Government plausibly to have prevented that expansion.

Mr. Albu

I am sure the hon. Gentleman will do me the justice of saying that for eighteen months or two years I have been warning the Government about the dangers of expansion in the industry.

Sir E. Boyle

I agree. The hon. Member has always taken a special interest, but it would not be fair to say that his views are always echoed by his own Front Bench.

The hon. Member for Northfield talked about the need for flexibility in the use of the Purchase Tax. That cuts both ways. Hon. Members frequently tell us that it is very disturbing for industry to have Purchase Tax rates constantly changing. There are limits to the ways in which the tax can easily be used as a flexible instrument. We have, of course, another instrument to our hand that is very closely associated with Purchase Tax, and that is hire purchase. That certainly is an instrument which can be used in a flexible way. Indeed, whenever suitable and appropriate, this Government will not hesitate to use it.

I revert now to the main point, which is the general question of the effect of using Purchase Tax changes. A number of hon. Members have discussed the general issue of the desirability of the tax. It fell to me, in the debates on the autumn Budget last year, on a number of occasions to justify the Purchase Tax as a disinflationary measure. We have had so many rather bowdlerised versions of "Boyle's Law" from the opposite side of the Committee that perhaps I may be forgiven if I read out what I might call the authorised version which I first stated on the Second Reading of the Finance Bill last year. I said this, and I still hold to these words and believe that they were absolutely true: If Purchase Tax is increased, for example, on durable consumer goods—motor cars and so on—it is likely in many cases that there will be a slightly contracted home market. … In any case, however, if, as we have done, we make a Purchase Tax increase over a very wide field, there will be an indirect connection …"— that is, with our balance of payments— … as well, because the fact that the tax is put up means that there is less purchasing power available for other things. …"—[OFFICIAL REPORT, 8th November, 1955; Vol. 545, c. 1795.] That I believe to be perfectly true.

Hon. Members opposite ask, what about the effects of that Budget? May I put this to the Committee? We have used monetary policy during the past year to regulate the economy. We have also made considerable use of budgetary policy, and certainly nobody listening to the debate tonight could take at all seriously the idea, which is sometimes put up by right hon. Gentlemen opposite, that the Government have had a doctrinaire adherence to one instrument only, that is to say, the monetary instrument, because we have certainly used budgetary policy as well.

May I briefly give the Committee these quite interesting figures? During the first five months of this year, the value of imports was 1½ per cent. higher than the value of imports during the corresponding period last year. The value of exports, on the other hand, was 6 per cent. higher than in the corresponding period last year. Taking consumption and investment, two important home indicators, it surely is not altogether without significance that consumption today is running at almost exactly the same level as during the second half of last year. There is a considerable falling off in demand for durable consumer goods. There is some increase, though not very big, in the demand for food and drink, which from the point of view of our balance of payments is, as it were, a desirable switch-over.

What is much more significant, however, is that while the total level of consumer expenditure is more or less the same as in the second half of last year, it still looks as though private industry—companies—will invest 17 per cent. more than last year. In other words, exports are going up substantially faster than imports, and productive investment is rising much faster than consumption. I should have thought that by any standards those were fairly satisfactory indicators of the economy. Therefore, I do not think it is fair to say that the effects of my right hon. Friend the Lord Privy Seal's Budget have turned out unfortunately. On the contrary, they have been one very important part of our general economic strategy.

A number of hon. Members have talked about the future of the Purchase Tax. I cannot say anything about this tonight except that hon. Members would be deluding themselves if they thought that we should be making vast reductions in indirect taxation over the next year or two. That seems to me to be a completely unrealistic view. I shall not talk tonight about the respective merits of Purchase Tax or a sales tax. These are complicated subjects, even within the ranks of supporters of hon. Members opposite. Few things would give me more intellectual stimulation than to hear a debate between two distinguished economists, supporters of the party opposite—Dr. Balogh and Professor Arthur Lewis—who hold diametrically opposing views on this complicated question.

We are determined to continue our policy of seeing that total demand is kept within the bounds of our resources, and at the same time we are trying to pursue a policy whereby investment rises at a faster rate than consumption, because we believe that that is vital for our economy in our present state. We believe that Purchase Tax and the increases in Purchase Tax last year have contributed to the favourable indicators which I have mentioned. For those reasons, however unpopular last autumn's Budget may be, we on this side of the Committee make no apology for it whatever. We still believe that we were absolutely right to see that consumption bore its fair share of the corrective action that was needed.

Mr. Jay

In the course of this debate we have had some very good speeches from hon. Members behind me and from the hon. Member for Shipley (Mr. Hirst), and we have had a very bad speech from the hon. Member for Gillingham (Mr. Burden). The hon. Member for Gillingham uttered some wild misrepresentations and then refused to give way. The hon. Member ought to know that in the period of the Labour Government—

Mr. Burden

The right hon. Gentleman is not correct. I gave way three times.

Mr. Jay

We will leave that aspect aside.

The hon. Member ought to know that under the Labour Government, over 50 per cent. of clothes and textiles and about 90 per cent. of boots, shoes and furniture were Utility products and tax-free.

11.0 p.m.

In those days, in 1951 and before, we used to hear from hon. Members of the party opposite two statements about what they would do with Purchase Tax if they came to power. First, we were told that they would reduce the total burden of tax and give great alleviation to the housewife. Secondly, we were always told that there would be a simplification of the structure, so that the tax would be much easier to understand. All I want to say tonight is that, so far as reducing the total burden of tax is concerned, the revenue raised in 1951 was under £300 million, and the revenue from Purchase Tax which the Chancellor proposes to raise in the present year is actually £510 million. The Purchase Tax revenue has risen by £200 million in the last two years, and now amounts to almost as much as the total Income Tax revenue from Schedule E.

As to simplification, in 1951 there were three rates of tax: now we have reached a position, after all these changes, in which there are rates of 90 per cent., 60, 50, 30, 10 and 5 per cent. It reads almost like a cricket score. And just because we now have this multiplicity of rates, we have all these complications and discriminations of which we have heard tonight, and, in addition, the discrimination against wool products described both by the hon. Member for Shipley and by other hon. Members from Yorkshire. What the present Government have really done, and what we are protesting against here, is to extend Purchase Tax to a very large range of goods, particularly textiles, clothing, furniture and household goods, which were previously wholly exempt. I believe that if the Economic Secretary could give us the figures, which I am sure he cannot, he would find that a large proportion of this increase to £500 million is due to the imposition of this tax on the ordinary necessities of life.

On the subject of "Boyle's Law," I would agree with the Economic Secretary. I think there is some validity in "Boyle's Law" when one applies it to the luxury type of goods, but the Economic Secretary is making the mistake of applying this argument to all those ordinary necessities of life, raising their price for that reason, and then forgetting that it is bound to lead to increases in wages and a further twist to the whole inflationary process.

Sir E. Boyle

May I just ask the right hon. Gentleman if it is his view that his right hon. Friend the Member for Bishop Auckland (Mr. Dalton), was making a similar mistake when he used an exactly similar argument when he was increasing Purchase Tax, by no means on only luxury goods?

Mr. Jay

My right hon. Friend put much the greater weight of tax on what the Minister of Supply used to call the "luxuries and the amenities." That remains our policy today, but the hon.

Gentleman is extending the tax to these necessities, and, as a result, we have had an accentuation of the inflationary process over these latter months. It has meant not merely a further rise in wages, but has also resulted in a protest, as we all know, at Tonbridge from many of the hon. Gentleman's own supporters.

What we would propose, when we reform this tax, is to reduce the burden on ordinary commodities, thereby making a real contribution to reducing the cost of living, and getting back much more nearly to the system of exemption that we had before, and which so wholly escaped the notice of the hon. Member for Gillingham.

Mr. Burden

rose—

Mr. Jay

No, I cannot give way.

I believe that is the right way in which to move the tax in future. It is wholly contrary to the direction which the present Government is taking, and I think that the case against them has been so overwhelmingly made out in this debate that we can now proceed immediately to a Division.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 155, Noes 203.

Division No. 238]	AYES	[11.4 p.m.
Ainsley, J. W.	Edelman, M.	Irving, S. (Dartford)
Albu, A. H.	Edwards, Rt. Hon. John (Brighouse)	Janner, B.
Allaun, Frank (Salford, E.)	Edwards, Rt. Hon. Ness (Caerphilly)	Jay, Rt. Hon. D. P. T.
Awbery, S. S.	Edwards, Robert (Bilston)	Jager, George (Goole)
Bacon, Miss Alice	Edwards, W. J. (Stepney)	Jeger, Mrs. Lena (Holbn & St. Pncs, S.)
Baird, J.	Evans, Albert (Islington, S. W.)	Jenkins, Roy (Stechford)
Benson, G.	Evans, Edward (Lowestoft)	Johnson, James (Rugby)
Beswick, F.	Evans, Stanley (Wednesbury)	Johnston, Douglas (Paisley)
Blackburn, F.	Fernyhough, E.	Jones, Elwyn (W. Ham, S.)
Blenkinsop, A.	Finch, H. J.	Jones, Jack (Rotherham)
Blyton, W. R.	Fletcher, Eric	Jones, J. Idwal (Wrexham)
Bottomley, Rt. Hon. A. G.	Forman, J. C.	Jones, T. W. (Merioneth)
Bowden, H. W. (Leicester, S. W.)	Fraser, Thomas (Hamilton)	Kenyon, C.
Braddock, Mrs. Elizabeth	Gaitskell, Rt. Hon. H. T. N.	King, Dr. H. M.
Brockway, A. F.	Gibson, C. W.	Lee, Miss Jennie (Cannock)
Broughton, Dr. A. D. D.	Gooch, E. G.	Lever, Leslie (Ardwick)
Brown, Rt. Hon. George (Belper)	Gordon Walker, Rt. Hon. P. C.	Logan, D. G.
Brown, Thomas (Ince)	Grey, C. F.	Mabon, Dr. J. Dickson
Burke, W. A.	Griffiths, David (Rother Valley)	MacColl, J. E.
Butler, Herbert (Hackney, C.)	Griffiths, Rt. Hon. James (Llanelly)	McGhee, H. G.
Butler, Mrs. Joyce (Wood Green)	Hall, Rt. Hn. Glenvil (Colne Valley)	McInnes, J.
Callaghan, L. J.	Hamilton, W. W.	McLeavy, Frank
Castle, Mrs. B. A.	Hannan, W.	MacMillan, M. K. (Western Isles)
Coldrick, W.	Hayman, F. H.	Mahon, Simon
Collick, P. H. (Birkenhead)	Herbison, Miss M.	Mallalieu, E. L. (Brigg)
Corbet, Mrs. Freda	Hobson, C. R.	Mann, Mrs. Jean
Craddock, George (Bradford, S.)	Holman, P.	Marquand, Rt. Hon. H. A.
Crossman, R. H. S.	Holmes, Horace	Mason, Roy
Davies, Ernest (Enfield, E.)	Howell, Charles (Perry Barr)	Mayhew, C. P.
Deer, G.	Hoy, J. H.	Mikardo, Ian
Donnelly, D. L.	Hughes, Emrys (S. Ayrshire)	Mitohison, G. R.
Dugdale, Rt. Hn. John (W. Brmwch)	Hunter, A. E.	Monslow, W.
Ede, Rt, Hon. J. C.	Irvine, A. J. (Edge Hill)	Moody, A. S.
Moyle, A.	Redhead, E. C.	Thornton, E.
Mulley, F. W.	Robens, Rt. Hon. A.	Timmons, J.
Neal, Harold (Bolsover)	Roberts, Albert (Normanton)	Tomney, F.
O'Brien, Sir Thomas	Roberts, Goronwy (Caernarvon)	Turner-Samuels, M.
Oliver, G. H.	Shurmer, P. L. E.	Ungoed-Thomas, Sir Lynn
Oram, A. E.	Silverman, Julius (Aston)	Usborne, H. C.
Orbach, M.	Simmons, C. J. (Brierley Hill)	Weitzman, D.
Oswald, T.	Slater, Mrs. H. (Stoke, N.)	Wheeldon, W. E.
Owen, W. J.	Smith, Ellis (Stoke, S.)	Wilkins, W. A.
Paget, R. T.	Sorensen, R. W.	Williams, W. R. (Openshaw)
Palmer, A. M. F.	Sparks, J. A.	Wilson, Rt. Hon. Harold (Huyton)
Pargiter, G. A.	Stones, W. (Consett)	Winterbottom, Richard
Parker, J.	Stross, Dr. Barnett (Stoke-on-Trent, C.)	Woof, R. E.
Parkin, B. T.	Summerskill, Rt. Hon. E.	Yates, V. (Ladywood)
Pearson, A.	Swingler, S. T.	Younger, Rt. Hon. K.
Peart, T. F.	Sylvester, G. O.	Zilliacus, K.
Price, J. T. (Westhoughton)	Taylor, Bernard (Mansfield)
Probert, A. R.	Taylor, John (West Lothian)	TELLERS FOR THE AYES:
Randall, H. E.	Thomas, George (Cardiff)	Mr. George Rogers and Mr. Short
Rankin, John	Thomson, George (Dundee, E.)
NOES
Aitken, W. T.	Garner-Evans, E. H.	Mackie, J. H. (Galloway)
Allan, R. A. (Paddington, S.)	George, J. C. (Pollok)	McLaughlin, Mrs. P.
Amery, Julian (Preston, N.)	Gibson-Watt, D.	Maclay, Rt. Hon. John
Amory, Rt. Hn. Heathcoat (Tiverton)	Gower, H. R.	McLean, Neil (Inverness)
Anstruther-Gray, Major Sir William	Graham, Sir Fergus	Macleod, Rt. Hn. Iain (Enfield, W.)
Arbuthnot, John	Grant-Ferris, Wg. Cdr. R. (Nantwich)	Macleod, John (Ross & Cromarty)
Armstrong, C. W.	Green, A.	Macmillan, Rt. Hn. Harold (Bromley)
Ashton, H.	Gresham Cooke, R.	Maddan, Martin
Atkins, H. E.	Grimston, Hon. John (St. Albans)	Maitland, Hon. Patrick (Lanark)
Baldock, Lt.-Cmdr. J. M.	Grimston, Sir Robert (Weetbury)	Manningham-Buller, Rt. Hn. Sir R.
Baldwin, A. E.	Grosvenor, Lt.-Col. R. G.	Markham, Major Sir Frank
Balniel, Lord	Gurden, Harold	Marlowe, A. A. H.
Barlow, Sir John	Hall, John (Wycombe)	Marples, A. E.
Barter, John	Harris, Frederic (Croydon, N. W.)	Mathew, R.
Baxter, Sir Beverley	Harrison, A. B. C. (Maldon)	Maude, Angus
Bell, Philip (Bolton, E.)	Harrison, Col. J. H. (Eye)	Mawby, R. L.
Bennett, F. M. (Torquay)	Harvey, Air Cdre. A. V. (Macclesfd)	Maydon, Lt.-Comdr. S. L. C.
Bidgood, J. C.	Harvey, John (Walthamstow, E.)	Molson, Rt. Hon. Hugh
Biggs-Davison, J. A.	Heald, Rt. Hon. Sir Lionel	Mott-Radclyffe, C. E.
Bishop, F. P.	Heath, Rt. Hon. E. R. G.	Nabarro, G. D. N.
Black, C. W.	Hill, Mrs. E. (Wythenshawe)	Nairn, D. L. S.
Body, R. F.	Holland-Martin, C. J.	Neave, Airey
Bossom, Sir Alfred	Holt, A. F.	Nicholls, Harmar
Boyle, Sir Edward	Hornby, R. P.	Nicolson, N. (B'n'm'th, E. & Chr'ch)
Braine, B. R.	Hornsby-Smith, Miss M. P.	Nield, Basil (Chester)
Brooke, Rt. Hon. Henry	Horobin, Sir Ian	Nugent, G. R. H.
Browne, J. Nixon (Craigton)	Howard, Hon. Greville (St. Ives)	Oakshott, H. D.
Bryan, P.	Hudson, Sir Austin (Lewisham, N.)	O'Neill, Hn. Phelim (Co. Antrim, N.)
Burden, F. F. A.	Hudson, W. R. A. (Hull, N.)	Orr-Ewing, Charles Ian (Hendon, N.)
Butler, Rt. Hn. R. A. (Saffron Walden)	Hughes Hallett, Vice-Admiral J.	Page, R. G.
Carr, Robert	Hughes-Young, M. H. C.	Pannell, N. A. (Kirkdale)
Chichester-Clark, R.	Hylton-Foster, Sir H. B. H.	Peyton, J. W. W.
Cole, Norman	Irvine, Bryant Godman (Rye)	Pilkington, Capt. R. A.
Conant, Maj. Sir Roger	Jenkins, Robert (Dulwich)	Pitman, I. J.
Cooper, Sqn. Ldr. Albert	Jennings, J. C. (Burton)	Pitt, Miss E. M.
Cooper-Key, E. M.	Jennings, Sir Roland (Hallam)	Powell, J. Enoch
Cordeaux, Lt.-Col. J. K.	Johnson, Dr. Donald (Carlisle)	Price, Henry (Lewisham, W.)
Corfield, Capt. F. V.	Johnson, Eric (Blackley)	Prior-Palmer, Brig. O. L.
Crouch, R. F.	Jones, Rt. Hon. Aubrey (Hall Green)	Raikes, Sir Victor
Cunningham, Knox	Joseph, Sir Keith	Ramsden, J. E.
Currie, G. B. H.	Kaberry, D.	Redmayne, M.
Dance, J. C. G.	Keegan, D.	Rees-Davies, W. R.
Davidson, Viscountess	Kerby, Capt. H. B.	Remnant, Hon. P.
D'Avigdor-Goldsmid, Sir Henry	Kerr, H. W.	Renton, D. L. M.
Deedes, W. F.	Kershaw, J. A.	Ridsdale, J. E.
Digby, Simon Wingfield	Kimball, M.	Rippon, A. G. F.
Donaldson, Cmdr. C. E. McA.	Kirk, P. M.	Roberts, Sir Peter (Heeley)
Doughty, C. J. A.	Lambert, Hon. G.	Robertson, Sir David
Drayson, G. B.	Lancaster, Col. C. G.	Robinson, Sir Roland (Blackpool, S.)
du Cann, E. D. L.	Leavey, J. A.	Schofield, Lt.-Col. W.
Eden, J. B. (Bournemouth, West)	Legge-Bourke, Maj. E. A. H.	Shepherd, William
Errington, Sir Eric	Legh, Hon. Peter (Petersfield)	Simon, J. E. S. (Middlesbrough, W.)
Farey-Jones, F. W.	Lindsay, Hon. James (Devon, N.)	Smithers, Peter (Winchester)
Fell, A.	Lindsay, Martin (Solihull)	Spearman, Sir Alexander
Fisher, Nigel	Linstead, Sir H. N.	Speir, R. M.
Fleetwood-Hesketh, R. F.	Lloyd, Maj. Sir Guy (Renfrew, E.)	Spence, H. R. (Aberdeen, W.)
Fletcher-Cooke. C.	Longden, Gilbert	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Fraser, Sir Ian (M'cmbe & Lonsdale)	Lucas-Tooth, Sir Hugh	Stanley, Capt. Hon. Richard
Freeth, D. K.	McAdden, S. J.	Steward, Harold (Stockport, S.)
Galbraith, Hon. T. G. D.	Macdonald, Sir Peter	Stoddart-Scott, Col. M.
Gammans, Sir David	McKibbin, A. J.	Studholme, Sir Henry
		Summers, Sir Spencer
Taylor, Sir Charles (Eastbourne)	Vane, W. M. F.	Williams, Paul (Sunderland, S.)
Taylor, William (Bradford, N.)	Vickers, Miss J. H.	Wills, G. (Bridgwater)
Thompson, Kenneth (Walton)	Vosper, D. F.	Wilson, Geoffrey (Truro)
Thompson, Lt.-Cdr. R. (Croydon, S.)	Wall, Major Patrick	Wood, Hon. R.
Thornton-Kemsley, C. N.	Ward, Hon. George (Worcester)	Woollam, John Victor
Tilney, John (Wavertree)	Ward, Dame Irene (Tynemouth)
Turner, H. F. L.	Waterhouse, Capt. Rt. Hon. C.	TELLERS FOR THE NOES:
		Mr. Godber and Mr. Anthony Barber.