Clause 5.—(DUTIES AND DRAWBACKS ON COMPOSITE GOODS.) (Hansard, 23 May 1957)

§ Mr. Hale
This is an innocuous Clause. It is a curiosity of our procedure that we pass a Clause which empowers one to use a Schedule, and then, in a week or two, we come to a complicated Schedule. Although we all understand the necessity for the Clause and understand that if there is a combined material such as a hair oil which consists of 99 per cent. alcohol, one has to do something about it, because, otherwise, a lot of hair oil would have that alcoholic content.
This goes back to our old friend the Provisional Collection of Taxes Act, 1913. Under that Act we have to pass the Resolutions within four days, the Second Reading within ten Parliamentary days of the introduction of the Budget, 1556 and the Finance Bill within four months of the Budget, because, otherwise, the implementation by the Statute of the Ways and Means Resolution that we pass on the day of the Budget will cease to have effect. We should have the difficulty of sitting during the grouse and salmon season and enacting the respective financial legislation to correct the difficulties.

Mr. P. Thomeycroft
Is this on Clause 7?

§ Mr. Hale
I am on Clause 5, which provides for the collection of a combined tax.
I know that I am out of order in referring to the Schedule —

Mr. Thomeycroft
I apologise to the hon. Gentleman.

§ Mr. Hale
I accept the right hon. Gentleman's apology with the magnanimity that I always like to extend to him in these circumstances.
All I want to ask—because we do not know to what extent this procedure is now used—is to what extent are Statutory Instruments passed in accordance with this Clause to provide for the special measure of collecting combined taxes. I gather from the expressions on the faces of the Financial Secretary and the Chancellor of the Exchequer that they do not know. If they do not, then that is a good reason for adjourning the debate now.

§ Mr. Powell
The purpose of the Clause and the Schedule is to bring this procedure into force for the first time for a whole range of goods, but—and this answers the question—a similar procedure is already in force in respect to sugar which was effected by Section (9) of the Sugar Act, 1956, and that special case is also operated by means of Orders in the same way as this general machinery.

Mr. H. Wilson
Although the hon. Member has explained the purpose of the Clause, there is one important constitutional point which should be raised even at this time of night. I apologise for having to raise it at this time of night, but it is a very important constitutional point which at other times could well occupy the House for many hours. I hope it will not tonight, and I hope that I shall be given the assurances for which I shall ask.
1557 On the Notice Paper there are two Amendments in the name of my hon. Friend the Member for Walthamstow, West (Mr. Redhead). I gather that these have not been selected and that my hon. Friend has been so informed. That is why he was not here to attempt to move them. But the principle contained in them is important constitutionally.
The House has always been extremely jealous of its rights in relation to the taxing power. It has been a cardinal principle of British democracy for hundreds of years that the House of Commons, and only the House of Commons, can initiate taxation, and that no tax may be levied or collected except by the express decision of the House of Commons, nowadays, of course, on the recommendation of one of Her Majesty's Ministers.
Under the Clause, as I understand it, the Treasury may make an appointment by Order. The words are: As from such date as the Treasury may appoint by order made by statutory instrument, the Second Schedule to this Act shall have effect. It would be out of order to debate the Second Schedule, as my hon. Friend the Member for Oldham, West (Mr. Hale) rightly said, but that Schedule would come into force, and that would affect taxation.
We submit that when the day is nominated by the Treasury for this Order to come into force, a new tax system will be in operation over a very wide range of goods. It would not matter if it were only a narrow range of goods. Even if it were only the hair oil to which my hon. Friend the Member for Oldham, West referred, and which he uses so much, the point would still be the same. Whether it covers a wide or a narrow range of goods, if a new system of taxation is to come into force then it should come into force only by the authority of the House of Commons.

§ Mr. Hale
It would also incorporate Section 59 of the Customs and Excise Act, 1952, which provides that the Commissioners of Customs and Excise can appoint that the tax can be collected anywhere. The Commissioners could lay down the method of collection and payment of the tax by their own order, outside the Statutory Instrument.

Mr. Wilson
I am obliged to my hon. Friend for that point, which had escaped me and I am sure had escaped most hon. Members. It is certainly the case that under this Clause, if it is not amended, virtually a new taxation system will be introduced without the authority of the House. I am sure that that is the last thing that hon. Members in all parts of the Committee want to see occur, and I am quite sure that if we were in office and made this proposal, there would have been a very large number of Conservative hon. Members saying that British constitutional rights were in danger—rights going back to the Magna Carta. They would have thought nothing of keeping the Labour Government up until five or six o'clock in the morning discussing this point. We show much more consideration to Her Majesty's Ministers, knowing how overburdened they are, than to keep them up, even on a point of this kind.
I hope that the Chancellor will tell us that he will look at this again. He has not had an opportunity of replying to the Amendments. I have no doubt that very adequate briefs were prepared for him in the Treasury. We shall certainly want to come back to the matter later, but we will be prepared to let the Clause go now if the Chancellor will give us an assurance that he will consider the point. I am sure that he is as jealous as anyone else for the constitutional rights of the House of Commons and that he will consider the matter again and will, if he feels that the point is substantial, introduce an appropriate Amendment on Report.

§ Mr. Powell
There is no question of the Clause or the Schedule introducing a new taxation system otherwise than by the express authority of the House of Commons, or introducing a change of taxation otherwise than by that authority. It is true that a change in the taxation system, a minor but useful change, is embodied in the Second Schedule, but the Schedule is given its effect by the Bill.
All that the Treasury Order, to which Clause 5 refers, does is to appoint a date on which the new system incorporated in the Bill will come into force. That is all the Order does. It is convenient to be able to know the date on which this will become operative, rather than be dependent on the chance date of a Royal 1559 Assent. Under the Second Schedule the composite rates and the simplified duties are to be prescribed by Treasury Order, but it is specifically laid down that resultant revenue collected and the resultant duties shall not differ in any substantial way from those enacted by Parliament.

§ Mr. Hale
indicated dissent.

§ Mr. Powell
If the hon. Member will look at the first paragraph of the Second Schedule he will find that it is very closely defined with a view to ensuring that the net effect of the new system is not to vary the weight of the duty to any appreciable extent. I refer him to the wording of the first paragraph. The Orders are subject, exactly like the Orders which I have already mentioned under Section 9 of the Sugar Act, 1956, to annulment by the House. I suggest to the Committee that the constitutional proprieties have been preserved by the manner in which the Schedule and the Clause are drawn.

Mr. H. Wilson
We cannot debate the Second Schedule, but merely make passing references to it. It appears to us that there are several ways in which the Treasury could make an Order affecting this or that trade. I agree that some are circumscribed in saying that where it is more convenient to do it, and where there is no material advantage to the Revenue, of the persons involved, and so on and so forth. But the Orders which can be made certainly appear to alter the taxation system.

§ Mr. Powell
indicated dissent.

Mr. Wilson
We shall want to be satisfied on this and that may take a long time. I am sure that my hon. Friend the Member for Oldham, West (Mr. Hale) will take a long time to satisfy.
I should much prefer the Government to agree to look again at the matter to make absolutely certain that there is nothing in our case. Perhaps they would be prepared to make a fuller statement at a later date. I am sure that the Financial Secretary is sincere and genuine when he says that he is convinced that there is no change, but we would like to be satisfied about it. I know that we shall be able to debate the Schedule, but it 1560 will not be as easy to move Amendments to the Schedule as to move Amendments to Clause 5 to require positive and affirmative Resolution of the House of Commons.

§ Mr. Powell
The negative procedure for the Orders we are talking about is laid down in the Schedule itself, so that we shall have the opportunity of discussing that again, if the Committee desires, when we come to the Schedule.