Clause 6.—(REDUCTION OF PURCHASE TAX ON CERTAIN HOUSEHOLD GOODS.)

HC Deb 28 May 1957 vol 571 cc221-344

3.34 p.m.

Mr. John Hall (Wycombe)

I beg to move, in page 6, line 23, at the end to insert: (a) a rate of tax of five per cent. were substituted for any rate of thirty per cent. in Group 11 (which comprises furniture, hardware, ironmongery, turnery, tableware, kitchenware and toilet ware, of kinds used for domestic or office purposes).

The Chairman

It might be for the convenience of the Committee if this Amendment were taken with four others dealing with the same subject. They are the Amendments in page 6, line 23, at end insert: (a) the words "not chargeable under this Group" were substituted for any rate of tax of thirty per cent. in Group 11 (which comprises furniture, hardware, ironmongery, turnery. table-ware, kitchen-ware:and toilet ware of kinds used for domestic or office purposes).

In page 6, line 24, leave out from beginning to "were" and insert: the words 'not chargeable under this Group'".

In page 6, line 24, leave out "fifteen" and insert "five",

and in page 6, line 29, leave out subparagraph (ii).

Mr. Hall

Although it is true that these Amendments cover the whole range of items charged under Group 11, I am primarily concerned with furniture charged under that group and, appropriately enough, with hall furniture such as hat and coat stands, umbrella stands, and racks. I should have preferred to have moved the Amendment in my name in page 6, line 43, at the end to insert: (c) the following articles were added to the list of furniture of a kind used for domestic purposes comprised in paragraph (b) of Group 11—" hat, coat and umbrella stands and racks". but I understand that it is out of order because of the narrow wording of the Ways and Means Resolution. That is why I have to move this more omnibus Amendment.

Perhaps it would be convenient if I gave the Committee a short, potted history of this taxation. Under Group 11 most domestic furniture has been chargeable at 5 per cent. since 1st April, 1956, but hall furniture, and, indeed, office furniture, has been chargeable at 30 per cent. during that time. Now we are delighted to see that the charge is reduced to 15 per cent. I can perhaps see a case for charging a slightly higher rate of Purchase Tax on office furniture, if only because one can reclaim a part of the cost of office furniture under depreciation allowance. I can see that slight argument, but I see no logical case for charging hall furniture at a rate different from that charged on domestic furniture. It is neither logical nor equitable, though I appreciate that logicality and equity are not synonymous with tax law.

Hall furniture was originally outside the utility scheme and bore the full rate of tax. When the D scheme was introduced, some hall furniture, that is, furniture with storage space, qualified for relief under the scheme but other furniture did not. That led to the disadvantage that an expensive hall stand with a cupboard or drawer qualified for relief whereas a simpler and cheaper item of furniture bore the full rate of tax.

The trade pointed out that and similar anomalies to the Treasury at the time, and it was promised that the matter would be borne in mind when the D scheme was reviewed. On 26th October, 1955, when certain Purchase Tax was introduced, including a tax on household furniture, the present Leader of the House, who was then Chancellor of the Exchequer, said: While abolishing the D schemes, however. I am not proposing to apply the full rigour of the new rates of Purchase Tax to the articles affected. Apart from fur garments, which will remain chargeable at 50 per cent. but with no D allowance, the whole range of articles now affected by D schemes will be made liable to tax at rates of 5 per cent. or 10 per cent., corresponding broadly to the previous rates of 25 per cent. or 50 per cent. without D allowances."—[OFFICIAL. REPORT, 26th October. 1955; Vol. 545, c. 222.] This applied to the whole range of articles affected by D schemes.

It was very understandable that the trade should think that it applied to all items of furniture then qualified for relief under D schemes, which included hall-stands with storage accommodation. I believe that that was my right hon. Friend's intention at that time, but Customs and Excise thought rather differently. The authorities there pointed out that in the classification of furniture under the original D scheme the words …other furniture comprising storage space … had appeared but in the new list, in the new Group 11, these words had been omitted.

They claimed, therefore, that hall furniture was no longer subject to relief and did not come within the group charged at 5 per cent. They claimed that items of hall furniture previously entitled to relief should come in with the whole category of hall furniture that did not qualify for such relief. That might have been logical, but it would have been equally logical to have treated all at the lower rate rather than to take one or two items out of relief and charge them at a higher rate of tax.

It is illogical that this one small group of furniture should bear higher tax. I can put a book on a bookshelf and pay 5 per cent. tax, but if I put my hat on the hallstand I pay 15 per cent. Hats are expensive enough as it is, especially by the time one pays a tip to a cloakroom attendant or every time it is recovered from wherever one last left it. To say that one must pay an extra 10 per cent. for hanging it up in one's own home is asking too much. I can put my gloves in a chest of drawers and pay 5 per cent. Purchase Tax for the privilege, but if I put them in a more appropriate place, such as in the drawer of a hatstand, I pay 15 per cent. I can stand a wet umbrella in the wardrobe and pay 5 per cent. tax, but if I put it in the umbrella stand, the proper receptacle designed for it, I pay 15 per cent. That seems ludicrous and an Alice in Wonderland kind of economics.

As I believe that it was my right hon. Friend's intention when he was Chancellor of the Exchequer that these items should be all included in the general Group 11 (b) of 5 per cent., and hall furniture somehow inadvertently slipped into the higher rate, I hope that my argument will be accepted with sympathy and that some way will be found to give this relief.

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

Would I be in order, Sir Charles, at this stage to speak to the Amendment standing in the name of my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater)?

The Chairman

Yes, certainly.

Dr. Stross

I am grateful to you, Sir Charles. I am sure that the Committee will not be unaware that those of us who have appended our names to this Amendment are Members from Stoke-on-Trent and North Staffordshire and have a special interest in pottery manufacture. The largest number of people in the world who work together in the ceramic industry are located in North Staffordshire. It is fitting, therefore, that we should take a specific interest.

We debated this matter at length in November, 1955, when Purchase Tax of 30 per cent. was imposed. We pleaded then that it should be entirely remitted, but we were not successful. At that time, the Chancellor of the Exchequer, now the Leader of the House, thought fit to suggest that we had put a case with which he had some sympathy. He called our speeches successful, I do not know why, because he made it clear that he wanted the money, that he needed £7 million. That was why it had to be a 30 per cent. imposition on this commodity for the first time, that is, on domestic china and earthenware.

Now we are faced with the fact that the tax has been cut to 15 per cent. However critical I shall be—and I shall try to be as critical as possible—I must say, first, that we are very grateful that it has been cut from 30 per cent. to 15 per cent. This will certainly make a difference and will alleviate some of the disasters—I must use that word—which have fallen upon us as a result of the original act.

It must be known to the Chancellor that the original amount of money by way of tax which it was hoped the Treasury would receive, namely, £7 million in a full year, was not realised; that in fact, it was a little over £5½ million. The reason it was £5½ million and not £7 million was because of the ill effects of the tax upon the industry, and the way that the industry literally was compelled to shrink in size, losing workers and losing customers. It was exactly as if one had done some excessive blood-letting upon a patient, the patient became anaemic, his heart slowed, he became puffy and oedematous. That was done to this virile and buoyant industry by the one act of legislation which we deplored so much.

We can offer a prophecy today as to the amount the Chancellor will receive from a tax at the rate of 15 per cent. Instead of getting half of £5½ million, we fear that he will get much less. It would please us enormously if the right hon. Gentleman received a great deal more, because the more he gets the more it will mean that I am wrong in my forebodings, namely, that the tax is bad for the industry and militates against us. In this respect, the Chancellor and ourselves are, or should be, in partnership. If he can get a lot of money from us it means that we are still healthy, able to survive and able to face competition from abroad equably and well. If, however, the revenue shrinks, it means he has done us serious damage, or at least it is evidence that damage has been done.

The fears we had in November, 1955, and which we expressed at some length on the Floor of the House, were well founded. Indeed, we think now that we underestimated the crippling effect of the tax at 30 per cent. Today, we have lost roughly 10 per cent. of the craftsmen in the industry compared with the date to which I have referred, when we last debated this matter. Losing craftsmen from the pottery industry is a serious matter, as I hope the Committee will accept, for they are not easy to get back, they are difficult to train and it takes a long time to do so. In North Staffordshire they do not go essentially into exporting industries and, therefore, they are not as valuable to the country's economy when they leave the pottery industry as when they are with it. Exporting, as it does, roughly 50 per cent. of what it manufactures, the industry may well be said to be a valuable exporting one, and it is export conscious.

3.45 p.m.

In addition to having lost labour, about one-third of the total number of people are working involuntary short-time. That information applies to the month of January, 1957; I have not got the figure for this month. The stock position is bad, also. The warehouses are crammed with stock and, bye and large, the industry is manufacturing to put into stock, although this does not apply to every firm. There are still 200 or 300 firms, although about 30 have ceased to manufacture in the last eighteen months. However, many firms find it difficult to store any further manufactured material.

Orders in hand have been falling, and sales have seriously diminished, both at home and abroad. I will quote one or two figures. In the first nine months of 1956, compared with the year before, the fall of sales in the home market amounted to 14 per cent. and in the first quarter of this year, as compared with last year, there was a further fall of 6 per cent., so it is reasonable to say that there has been a contraction of sales in the home market by one-fifth. Sales abroad, in 1956, decreased on 1955 by £1¼ million, and again in the first quarter of this year, compared with last year, there was a further deterioration. The last figures I obtained were received this morning and confirm that this is so, if we take the first four months of this year, not three months, and compare them with last year.

I do not have to tell the Chancellor of the Exchequer, who is a Staffordshire man, that restriction in the home market for us in the industry means that we really have not got the means to carry out research to evolve new patterns, to bring out new designs, and to face competition from abroad. There are plenty of other pottery concerns in other countries, and some of them are very good. There was a time when we looked upon pottery from Western Germany and Italy as being derisory stuff. It is not so now. It is good and cheap. Why it is cheaper than ours is difficult to say, but it may well be that the standard of life that their potters enjoy is nothing like as good as our own.

We are proud of the fact that our pottery workers, until recently, when so many of them were forced on to short-time working, were enjoying a standard of life which, while it was not the highest in the country, was higher than they had been accustomed to in the past, when wages were really bad. Then the pottery industry was always a badly paid industry—

Mr. Ellis Smith (Stoke-on-Trent, South)

Very bad.

Dr. Stross

My hon. Friend, who confirms what I say, has represented his constituency for over twenty-one years and knows that this was true.

If we cannot try out new patterns on the home market, it is not easy to expand our export market. I will not enlarge upon this matter—it has been said by so many hon. Members on both sides of the Committee every year when we have discussed this 'and similar matters—except to say that I remember the right hon. Member for Woodford (Sir W. Churchill) making a very strong argument on this basis which is absolutely true.

If one has a healthy and reasonable home market, one has something to spare which allows one to carry out research and try out new patterns, and if those patterns are found to be successful, one is then able to offer them in the export market. Therefore, it must be apparent that if there is not a healthy home market, exports must decline. They have been declining as we feared they would. They have been declining ever since the first imposition of Purchase Tax at the original rate of 30 per cent.

The Chancellor may say that he has gone as far as he can by halving Purchase Tax. I am sure that he will not deny that at 30 per cent. it did the industry harm; otherwise he would not have halved it. I am sure that all the evidence brought before him, and perhaps some of the persuasive speeches made by hon. Members on both sides of the Committee eighteen months ago, influenced him.

I would remind the Chancellor that we have special claims when we ask for understanding, sympathy and special treatment for the industry. One of the reasons is that only 1 per cent. of the material used by the industry has to be bought abroad,. which is a very important factor. The industry is a real money spinner with its exports. All that it uses is a little pinch of dust or clay, and some glaze, and apart from that there is a little gold, which is used for decorating ware—ware that we cannot afford to have in the House of Commons. The pottery in the House of Commons is absolutely dreadful. Apart from a little gold dust or a little gold on a rag, almost everything used in the industry is indigenous.

As we export more than half the amount of ware that we manufacture, surely we have a right to demand some special consideration. The people in the industry are working for the country as well as for themselves. Not only do the workers obtain their livelihood in the industry, but they help the country, and they are proud to do so. All they ask is that they should be given an "open door", and "open door" means no Purchase Tax at all, and then they will be able to help the country as fully as possible.

Once upon a time people looked upon finely decorated ware on their tables as a necessity rather than a luxury, no matter how few pieces they had. Today, most of our people, especially the young ones, do not remember what it looks like. We have had a degrading experience over many years—lumps of white earthenware, the cheapest sort of stuff, which no one would have looked at in years gone by. Our people have forgotten what really fine china on the table looks like.

I have said that it has even affected us in the Palace of Westminster. No one seems to complain. We have put up with it for so long that we are brain-washed to accept it as if it were for ever. It is a pity, and it is bad for the industry. If we make the ware more expensive by imposing even 15 per cent. Purchase Tax, it militates against the new generation learning to appreciate fine china on their tables.

Excellent material is manufactured in the constituency of the hon. Lady the Member for Melton (Miss Pike). She knows that we are right in what we say on this subject. I hope that I shall later hear her voice in support of our case. We are not putting up a case merely because we want to put up a case. In speaking in the way we do, we are putting up a case which is true and reasonable.

The Chancellor would lose nothing—indeed, he would gain—if he gave way to us. He must recognise that Purchase Tax, even at 15 per cent. acts in another way against his interests in collecting revenue. Last year, the total number of tourists visiting the country increased by 6 per cent., but the sales of pottery to Canadian visitors decreased by 38 per cent. and to American visitors by 29 per cent. There is a reason for that. The great stores in London can operate personal export schemes, being able to finance the 15 per cent., but the much smaller shops in the provincial centres are unable and, very often, unwilling to take the risk of running such a scheme.

A great deal of pottery is taken out of the country by tourists, especially Canadians, and they do not always buy it in London. If they saw our material displayed in the provinces without Purchase Tax, they could buy it and take it home with them; but when they find they have to pay Purchase Tax on it that works against us. That is why there has been such a fall in sales to Americans and Canadians.

I have tried to be brief. As the Purchase Tax is now 15 per cent., I was determined to spend only half the time I took when we debated this matter on the previous occasion, when the rate was 30 per cent.

Ours is a very vulnerable industry. It is a very old one and a very honourable one. I am sure it is not special pleading when we say that the country will gain, as the industry will gain, if the Chancellor will have second thoughts and get rid altogether of this very bad tax.

Mr. A. E. Cooper (Ilford, South)

I hope that we shall not find the Chancellor stony-hearted in considering this subject. I propose to deal not with the specific points which have been raised, but with the general principle of the Purchase Tax as a whole.

I am one of those who have campaigned for years against Purchase Tax and in favour of a general sales tax. So long as we have Purchase Tax with varying rates and various groups we shall continue to have anomalies. The whole system of Purchase Tax is riddled with anomalies which cannot be defended on any grounds of logic. What is more, the Treasury does not attempt to defend them on grounds of logic.

If we could hear from the Chancellor that there is some movement within the Treasury to do away with Purchase Tax and substitute a general sales tax, perhaps in a year or two, we might be prepared to continue with the existing system, knowing that it takes a long time to work out a great comprehensive scheme such as a general sales tax. To deal with the matter as we are dealing with it puts everybody in a state of uncertainty. What is more, as the hon. Member for Stoke-on-Trent, Central (Dr. Stross) has said, it does great damage to our industry.

We must never forgot that Purchase Tax was levied in war for a specific object, to restrict production so that we could devote our energies to the manufacture of munitions. At the end of the war, as with so many taxes, it was found to be a great revenue producer. The Labour Party has been just as much to blame in this matter as the Conservative Party.

Without wishing to be controversial, it was easier for the Labour Party, at the end of the war, to alter the system rather than to perpetuate Purchase Tax, but the Treasury had found a means of raising £300 million a year and that was not to be denied very easily. It is, of course, difficult to raise £300 million or £400 million by any other means, but if, in raising that money under the existing system, we are damaging our industrial life and our economy, then something ought to be done about it, and done quickly.

4.0 p.m.

The Amendments are largely concerned with what, in 1955, were known as the "pots and pans Amendments". I spoke strongly against them at the time and abstained from voting. We are now moving in the right direction by cutting the tax in half. I should be quite happy if the tax were brought down to 5 per cent., although I should like to see it eliminated altogether. However, if one accepts the general principle of a sales tax, there will have to be a flat rate of tax for commodities such as these, and 5 per cent, would be a fair rate to levy.

All the goods covered by the Amendments are products which are in ordinary household use, plus some office furniture, and cannot in any way be considered items of luxury. If the Amendments were conceded, there would not be a great rush by the consuming public to buy these goods. Having regard to the benefits which Would accrue to industry generally, and which would probably result in the end in more revenue going to the Chancellor, I hope that my right hon. Friend will find it possible to accept the Amendments.

Mr. Victor Collins (Shoreditch and Finsbury)

I want to concentrate on the Amendment in page 6, line 24, to leave out from beginning to "were" and to insert: the words 'not chargeable under this Group' ". This Amendment does not conflict with, but rather embraces the Amendment of my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross) which he argued so convincingly and with so much knowledge. Nor does it conflict with that of the hon. Member for Wycombe (Mr. John Hall). We want the whole of the tax removed, whereas he asked for it to be reduced to 5 per cent. He was right in saying that there is nothing logical about this and no reason why one item of domestic furniture should be taxed at 5 per cent. and another at 15 per cent.

In his amusing discourse on hall stands and the things that hang on them, the hon. Member for Wycombe was wrong in saying that hats were taxed at 15 per cent. The rate is 10 per cent., but I forgive him for that mistake, because it is extremely difficult to understand the 96-page booklet, "Notice by the Commissioners of Customs and Excise, No. 78."

Mr. John Hall

I was referring to hat racks being charged at 15 per cent. and not to hats themselves.

Mr. Collins

You will see, Sir Charles, how easy it is to misunderstand a thing of this kind.

I want strongly to protest to the Chancellor against what I can best describe as the exclusion or remainder method used in the Customs and Excise Notice for describing goods on which Purchase Tax is chargeable. The hon. Member for Ilford, South (Mr. Cooper) mentioned damage done to industry, but I do not suppose that anybody who has not actually to deal with this pernicious tax really understands the frustration and unnecessary trouble caused to people who have to work with it. That is immensely costly to the country and adds to the price of goods, quite apart from the extra cost of Purchase Tax.

The present system—and I agree that this is the way it has always been done —leads to the maximum of doubt, difficulty and frustration. It also creates a great deal of unnecessary work for Customs officials. Group 11 is a typical example. It covers 12 pages in the booklet. Instead of setting out in each group a list of articles with the definite rate of Purchase Tax applicable to them, the Notice says: Articles not comprised in any of the following paragraphs of this group… are subject to 30 per cent. tax, now reduced to 15 per cent.

Then follows the list of 12 sub-groups, as it were, of articles either subject to a greater or lesser rate of tax, or altogether exempted from tax. There are 12 pages, mostly in small print, of exemptions, explanations, classifications in other groups, which I defy anyone wholly to master. They include many items where the meaning is as obscure as masters of obscurity can make it.

I very much doubt whether the Chancellor has thoroughly read the 96-page booklet. If he had, he would not have allowed this present method to continue. It is absolutely preposterous to foist this on industry and to say that it is a method by which industry is to determine whether goods are subject to tax and, if so, the rate of tax to which they are subject. If the Chancellor merely printed a list of goods and stated the rates to which they were subject, the 12 pages could be boiled down to about 1½ pages. Irrespective of any decision he may make about the rates of tax, I ask him to insist on making that change. If he really studies the booklet: he must alter the procedure. If the Commissioners do not know how to alter or improve it, any businessman with experience of this tax can soon show them.

Group 11 first refers to: Furniture, hardware, ironmongery, turnery, table-ware, kitchen-ware and toilet-ware, being articles of a kind used for domestic or office purposes…. Then follow the 12 sub-groups of exemptions. Group (c) is: Mirrors whether framed or not", which are taxed at 60 per cent. Group (e) includes invalid chairs. I know of discussions which have gone on with the Commissioners of Customs and Excise for years about precisely what was an invalid chair, and whether an ordinary chair could be turned into an invalid chair merely by having wheels put on it and then having somebody push it.

After dealing with the general scope of the group, we have 2½ pages of exemptions. We find that the exemption applies to …infants' chairs having a feeding tray, irrespective of the seat height. That means that other infant chairs are not exempt. Lockers are exempt if they are …equipped for hanging clothes, not exceeding 18 inches in width and 18 inches in depth… What kind of clothes can be hung in lockers which must not exceed 18 inches in depth or 18 inches in width?

Other lockers are exempt provided that they are not of the kind which we have in the House of Commons, because in the House of Commons there are shelves and, being more useful than the other kind, are not exempt. These absurdities are continued over almost every sub-group. For example, there is an exemption for trivets, including false hobs and hearth stools, but not hearth companion stands which incorporate a trivet. Of course, it would be wholly wrong to exempt those from tax. Firebricks are exempt, and the exemption extends to cast-iron grids, but grids for attaching to grates to prevent live coals from dropping out remain chargeable to tax.

The pages go on to deal with the scope of the exclusion and these sub-groups are repeated with further details, which have to be waded through to find out whether the articles in which one is particularly interested are subject to tax. After another page or so, one comes again to the goods chargeable under other groups at 5 per cent., 60 per cent., and so on. There, the absurdities increase. A mirror is chargeable at 60 per cent., but a splash-back with a mirror in it, provided that there is an area of 16 sq. in. of unmirrored space, is chargeable at only 30 per cent.

Mr. Donald Chapman (Birmingham, Northfield)

Can my hon. Friend tell me what point he has reached in this magnificent booklet? I am lost at this point.

Mr. Collins

I am reading from Notice No. 7868 by the Commissioners of Customs and Excise, under Group 11, and working through from page 23 onwards.

Mr. Chapman

But which page has my hon. Friend reached? I have been following him, but I have lost the page.

Mr. Collins

I thought it would be even more tedious if I quoted every page and every reference. At the moment, I am quoting from page 28, which refers to goods chargeable at 5 per cent.

Mr. John Rankin (Glasgow, Govan)

I hope that my hon. Friend will not forget to deal with toilet-ware, on page 33. That is most interesting.

Mr. Collins

I am most grateful to my hon. Friend. I will endeavour to deal at least briefly with a number of matters which have occurred to me, and I am quite sure that my hon. Friends will be able to fill in any gaps which I may leave.

In page 28 the Commissioners have set out, helpfully, in two columns, those goods which are liable to 5 per cent. tax, and contrasted them with goods liable to 30 per cent. tax—presumably now reduced to 15 per cent. The hon. Member for Wycombe mentioned wooden desks. The page lists those which are liable to a higher rate of tax. For example, a wooden desk specially designed to seat more than one person is an obvious iniquity in the mind of the Chancellor, because it has to bear a higher rate of tax.

Folding chairs are shown as being subject to only 5 per cent. tax, but deck chairs are at a higher rate because they include canvas. Later, it is explained why canvas makes them chargeable at the higher rate. We are then given a further explanation of goods chargeable at 30 per cent., to make it absolutely as clear as mud. By that time anybody reading through the booklet is hopelessly confused, and an extra and very long list is given. The list includes boot scrapers; buckets weighing less than 60 lb. a dozen; candlesticks; carpet beaters; clothes posts and props of any material; coal bunkers, coal hods and scuttles; curtain rails or rods, and many variations of these articles.

Mr. Douglas Glover (Ormskirk)

Will it not be more convenient to the Committee if we have the whole of this schedule published verbatim in HANSARD? It seems to me that the hon. Member is reading it page by page.

The Chairman

The publication is available in the Vote Office if the hon. Member wants to read it.

Mr. Collins

I am sorry if this wearies the hon. Member, but I can assure him that it is far more wearying to those in industry who have to carry out these provisions, and to housewives who have to suffer from their effects.

Mr. Gerald Nabarro (Kidderminster)

A crashing bore.

Mr. Collins

If the hon. Member is accusing me of boring the Committee—

Mr. Rankin

The hon. Member for Kidderminster (Mr. Nabarro) is a crashing bore.

Mr. Collins

—I can assure him that he has done this far more often.

Mr. Nabarro

What I said was that the hon. Member was a crashing bore.

4.15 p.m.

Mr. Collins

I am sorry if this sort of thing bores the hon. Member, but I honestly believe that it is important to people in industry who have to go through this procedure. They have to get their livelihood by it and are obstructed by this kind of thing, quite apart from paying hopelessly unnecessary high prices for these goods.

After all those pages there follow another 2½ pages referring to non-chargeable goods. Whatever else hon. Members may think about this matter I submit that it is a ridiculous and unnecessarily complicated way of doing the job, and that the whole process should be looked at to see if it can be altered. I am strengthened in my doubt that the Chancellor has studied the matter by the enormous number of anomalies which occur. I have mentioned one or two, and I hope that the Chancellor will give us the reason for these anomalies.

For example, tables are chargeable at 5 per cent.; table tops at 15 per cent., and table legs are exempt. I will give way at once if the Chancellor can tell me the justification for that, which I regard as a piece of indefensible nonsense. If it is argued that table legs can be used to do repairs, table tops can be used in exactly the same way. Incidentally, chair legs are tax free, but chairs are subject to 5 per cent. and the plywood seats for them to 15 per cent. tax.

Babies' cots are exempt, but cot fittings are chargeable at 15 per cent. Baby hampers with lids are subject to a 5 per cent. tax, but if they are without lids the tax is 15 per cent. If legs or castors are put on them they revert to a 5 per cent. tax, so that the housewife can often buy the hamper more cheaply with a lid or with legs than without. I can assure the Chancellor that I am talking about precisely the same article, except for the absence or presence of a lid or legs. What possible justification can there be for a different rate of tax, or for any tax at all, on these articles, since they are babies' requisites and the Government have decided that almost the whole range of goods, clothing and requisites for babies and young children should be tax free?

I ask the Chancellor to get somebody on his staff with a little common sense to go through this booklet with instructions that these absurdities and contradictions should be tabulated, to see whether, between now and the Report stage, we can provide something better. As the hon. Member for Wycombe suggested, some of these absurdities are surviving relics of the D scheme. The item referring to baby hampers without lids is an example. Under the D scheme tax was calculated by the cubic content, and an article without a lid was held not to have any cubic content and it therefore did not come within the range of the D scheme. Even those which did paid scarcely any tax at all. When the scheme was abolished some were taxed at 5 per cent. and some at 30 per cent.—now reduced to 15 per cent.

These variations are quite inexplicable to the people who make these goods and the mothers who buy them. Can the Chancellor explain why oval washing baskets are subject to tax while oblong ones are free of tax? They are exactly the same articles except for their shape. Further, can he say why washing requisites, such as wash boards, draining boards, clothes lines, clothes props, clothes pegs and all the drudging paraphernalia of the poorer housewives are taxed at all? Will he give a scientific explanation of the 15 per cent. tax on a cutlery canteen when the same canteen with legs is chargeable at only 5 per cent.?

According to their temperament, hon. Members may find these things either boring or amusing. But they are not funny to the workers who suffer under them, or to managements who have to spend long, wasted, frustrated hours in trying to run their business under such handicaps. They have resulted in loss to the country and they rouse anger and contempt for a stupid law and the people who make it.

In November, 1955, when this tax of 30 per cent. was first placed on a wide variety of household goods which had formerly been tax free, I moved Amendments to abolish the proposed taxes on brushes and on shopping baskets. I quoted facts and figures as to the likely effect on the employment of blind and disabled workers. The then Chancellor accepted those arguments and abolished the tax. Now the articles are exempt. The same arguments apply with equal force to the remaining long list of goods, and although we are grateful that the tax has been halved, there is an urgent need for it to be abolished altogether.

As was said by the hon. Member for Wycombe, this is particularly the case in the furniture trade. The Committee will be aware that this industry has been singled out in the last three years for constant attack by the Government. It was the first to be subjected to hire-purchase restrictions and these are still heavy and crippling. Each year at certain periods more than half the workers in the industry have been unemployed or put on short-time. Some firms have scarcely worked a full week in a whole year. Many thousands of workers have left the industry and this year the trouble is recurring.

In my own constituency one firm employing over 300 workers is working one week and laying off for two weeks. Another is working only one' day a week. In one trade union branch with 3,500 members there are 2,500 who are on short-time. That situation is developing throughout the country. I ask the Chancellor—who has met members of the industry more than once and knows that they are reasonable people—to help the industry by reducing the tax still being charged.

I ask him to realise that this tax does not end at 15 per cent—3s. in the £. For the retailers, who have to pay this money, it is money at risk. If the tax is changed they have, in the main, to lose it, and so, in most cases, they add their own bit. I know that used to be forbidden by controls, but that is so no longer. The retailers regard the risk of tax payment on the uplifted price as a cost, and add on their bit. So it is not just 3s. in the £ by the time it reaches the housewife. It is considerably more.

Moreover, there is the considerable cost to manufacturers caused by their staff acting as unpaid tax gatherers. Eventually, that cost, also, is added. I do not believe that it would be an over-estimation to say that whatever Purchase Tax is imposed by the Chancellor, with the additions I have mentioned, the amount is nearly doubled by the time it reaches the general public. Therefore, do not let us imagine that it is only 15 per cent., or 3s. in the £ which is added to the price charged by the manufacturer or the wholesaler to the retailer. The amount is considerably more than that, and it has a far greater impact on prices.

If the Government are sincere in their efforts to stabilise and eventually to reduce the cost of living, the best way to indicate that would be by removing this tax. Because of its anomalies and absurdities, and the very bad effect on industry and employment, and also because of the unnecessarily high prices charged to the housewife on absolutely essential goods, I hope that the Chancellor will review this matter and remove the tax.

Mr. Ellis Smith

The Chancellor of the Exchequer made an appeal to the National Production Advisory Council to increase exports, and all engaged in industry desire to respond to that plea. The margin between retaining our standard of living in this country and catastrophe is so narrow that it behoves us all to respond to an appeal of that character.

This morning figures were made available relating to the industry with which workers in my constituency are concerned. Because of their seriousness, we desire to underline the plea which is made to abolish this restrictive revenue tax on the export trade. I remember when this tax was introduced for the purpose of restricting consumption. It is no longer imposed for that purpose; it is now a revenue tax, and it ought to be regarded as such.

The following figures will reveal the worsening trading position in relation to industry in my constituency. For stoneware, brown earthenware and other colours, the total exported for the first four months of 1955 was approximately 201,000 cwt. In 1957 the figure was approximately 187,000 cwt. The total of china—and this particularly affects my constituency—which was exported in 1955 amounted approximately to 32,000 cwt. For the first four months of this year the figure was 22,000 cwt.

Because of the seriousness of these figures, and knowing the potential of this industry and what an enormously increased contribution it could make to the export trade, we wish to urge the importance of this matter upon the Chancellor. We speak not only on behalf of those engaged in industry, irrespective of their political differences, but also for all well-informed people in the areas we represent.

At the beginning of 1940, when this tax was first imposed, I was strongly opposed to it. Members of my party also were against it, and I remember that my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) pleaded at a party meeting that we should agree to the imposition of this tax. Because of our desire to put aside everything else in an effort to make a maximum contribution to winning the war, and against our ideas, we agreed to the imposition of this tax for the purpose of restricting consumption. But that is no longer its purpose. The Chancellor himself has admitted that in answer to Questions asked in the House.

4.30 p.m.

This is putting industry into a terrible position. It was most unfair of Governments, irrespective of political complexion, to put an industry into this position. It is easy for us all to talk, but when we are put to the test it is our constructive contributions to the economic affairs of the country that matter, because they increase output and stimulate exports. It is most unfair to be constantly putting productive industry into a position of uncertainty. Governments are responsible for determining the economic position of the country, yet no industries have been put more into uncertainty than the cotton industry and that which I am privileged to represent, the pottery industry. No industries could make a greater contribution to increasing Britain's exports than those two. I am speaking for the pottery industry and shall limit myself in that way on the Amendment.

In the First World War we were subject to concentration, which introduced uncertainty. From 1930 to 1940 we were subject to severe and unfair foreign competition. In 1940, two huge R. A. F. stations were built on the fringe of our city, and as a result the industry was concentrated so that the area could make a greater contribution to winning the war. In 1945, Sir Stafford Cripps came to Stoke and appealed to the industry not to be discouraged by the uncertainties of the past. He undertook that from then onwards, owing to the country's serious economic difficulties, exports would be expanded and output increased and a situation would be created in the industry in which there would never be uncertainty again.

The people believed that and accepted it. Never have I known greater good will in any industrial area in peace time. The result was that managements had no labour difficulties. The whole industrial machine worked like a conveyor belt. Output increased and people were eager to be trained. They went to evening schools to adapt themselves to become better decorators. The industry was able to increase its exports. Nobody knows this better than the Chancellor of the Exchequer because he was President of the Board of Trade at the time, and he once had the privilege of representing Stafford. He knows the enormous good will that existed.

We were given an undertaking that Purchase Tax would be removed. Instead of that, approximately eighteen months later the tax was raised. My hon. Friends were very concerned, because they saw uncertainty again creeping in. We were again being affected by severe foreign competition from Japan and Germany, and the industry began to feel discouraged. We have had this fiddling time after time. The Chancellor of the Exchequer, quite rightly, went to the National Production Council and appealed for increased output. Representatives who were present went back to their areas and gave a report, but in some cases were met with scepticism because of the fiddling and the uncertainty.

It is time all this was stopped. Let me state the position of one firm, Wedgwoods. I thank my noble Friend. I speak of him in that way because he was a great man and I have a lot to thank him for. He was Colonel Josiah Wedgwood, a very courageous man. The firm embarked upon large capital expenditure. Wedgwoods built a new factory in a beautiful environment which had to be seen to be believed. It is a credit to the Wedgwoods, to the district and to the country. They increased their output per person by 50 per cent., although in the pottery industry generally output has increased by only 15 per cent. since 1946. What were the thanks of the Government for all this effort? A continuation of this restrictive revenue tax on the export trade, which has resulted in a reduction of employees in the industry from about 76,000 to about 70,000.

I admit that I differ from a number of my hon. Friends in what I am going to say now, which is that I feel uneasy about the Government's proposals relating to the European Free Trade Area.

Mr. Nabarro

Hear, hear.

Mr. Ellis Smith

I do not go as far as many people do in this matter, and I must express my reasons, because the issue is becoming urgent now. All these taxes should be taken off in order that we might compete upon an equal basis with those whom we expect to be our competitors. We must prepare for the future severe competition when the European Free Trade Area—the alleged free market—begins to work.

Those who are well informed tell me that the industry requires a large home market. The purchase of chinaware for table use is lower in Britain than in the United States, Canada or New Zealand, yet we make the pottery which is admired throughout the world. My hon. Friend the Member for Shoreditch and Finsbury (Mr. Collins) has referred to the backwardness that exists even in the House of Commons in regard to pottery, and that applies throughout the country. I would like the Chancellor of the Exchequer to listen to this point with special care.

I do not agree with his policy, but I understand it. There is nothing inconsistent with the Chancellor's policy in the plea that we now make for an increased home market for our trade. We claim that we need no imports for this industry and that therefore the industry is all exports. It is therefore quite consistent with the Chancellor's policy. I am pleased to see that the Economic Secretary to the Treasury is present. If he can point out any economic contradictions in the case that I am presenting I shall be glad to hear them. A relatively large home market would increase our export trade. Does the Economic Secretary accept that statement? What is there against taking this discouraging revenue-raising tax off the pottery industry? It is no longer a Purchase Tax in the usually accepted interpretation of the term for restricting consumption, but remains for the purpose of raising revenue and no other purpose.

If we go into the West End we see the standard of living of people there. We have to increase our exports so as to increase our output to increase our exports so that they can go on living like that. [Laughter] If anyone doubts the logic of that they should interrupt. In the industrial areas wages have not gone up relatively in proportion to the increase in the standard of living of those people. It is true that our earnings have gone up. but employers are beginning to repudiate the assurances given to us in the last twenty years. They have told us year after year to increase output to the ceiling. They have said, "No matter how you increase output, your earnings will go up." Now they are beginning to say, especially in the engineering industry, that our income must be calculated on the basis of earnings and not upon the calculation of our wages. The logic of the position is that we are working in the export trade to maintain the increasing parasitical position of those living in the Dorchesters of the West End of London and other large cities.

The Temporary Chairman (Sir Norman Hulbert)

I must remind the hon. Member that there is nothing in this Amendment dealing with wages or with the Dorchester.

Mr. Ellis Smith

We are asking for the Purchase Tax to be removed. Those engaged in industry are working to increase exports and they could be increased much more if Purchase Tax were taken off. [Interruption.] The hon. Member for Kidderminster (Mr. Nabarro) may be upset by the word "Dorchester" as he may frequent that hotel, but I have never been there.

Mr. Nabarro

I am not upset at all. I made a constructive observation that the Dorchester Hotel in Park Lane happens to be a very big dollar earner.

Mr. Ellis Smith

I did not hear the observation.

Mr. Nabarro

It was important and highly constructive.

Mr. Ellis Smith

If those who frequent the Dorchester would accept work in the pottery industry they might increase dollar earnings even more. If I pursue this, Sir Norman will rule me out of order, and I do not want to get out of order.

This country is putting itself in a very vulnerable position. We are putting too many of our eggs in one basket. Speaking from memory. I believe that 80 per cent of our exports come from the engineering industry. We are neglecting pottery and similar industries by concentrating on the engineering industry. The pottery industry could increase its output and increase its exports if only it were given the encouragement it should have. That would be consistent with the alleged policy of the Government of increasing backward areas because, by increasing exports—

Mr. Cooper

We do not want to increase backward areas but to decrease them.

Mr. Ellis Smith

I thank hon. Members opposite for their interjections, but they only emphasise that if we did as I suggest, instead of drinking tea from jam jars, as people have to do in too many parts of the world, they would be drinking tea from our beautiful pottery. The case we are making is so unanswerable that one cannot understand even this Government continuing their policy.

4.45 p.m.

The first essential step is to take off all restrictions on exports. This is a restriction on exports. The Government are constantly saying that we should remove all restrictions on industry, and we agree with that. Relatively speaking, the workers put no restrictions on industry. We support the plea and, therefore, say: remove this restriction on our export trade. If the Government did that it would be a big step in the direction in which we want to travel.

Ministers have given many assurances about the economic Free Trade Area. The logic of those assurances is that these restrictions at home should be removed. Will the Chancellor give an assurance that this restrictive tax on pottery will be removed as soon as possible? We are hoping that he will remove it today. If he cannot do so today, in order to remove some of the uncertainty from the industry, will he give an undertaking to re-examine this restrictive tax on the export trade so as to encourage the industry to a greater extent than it has been encouraged in the last few years?

Mr. Nabarro

I speak for one moment only in this interesting debate. Two powerful pleas have been made to my right hon. Friend to reduce Purchase Tax on pottery. They were in extenuation of pleas made to the then Chancellor of the Exchequer at Question Time on many occasions since November. I have repeatedly made the point, and make it shortly this afternoon, that it would be a very damaging and discriminatory policy to give any relief from Purchase Tax to the pottery industry which was not equally applied to the carpet industry of Kidderminster.

Mrs. Jean Mann (Coatbridge and Airdrie)

I wish to support the third Amendment relating to Group 11, with special reference to Purchase Tax which, for the first time, has been levied by any Chancellor on a safety device in the home. I believe that this comes under ironmongery. I tried to elicit information in a Question I put on 23rd May, when I asked the Chancellor when Purchase Tax was first imposed on the Crayleigh safeguard for gas and electric cookers; and how much has been collected…. Here is the astonishing perversion of a reply I received: Articles of this kind have been chargeable with Purchase Tax since October. 1940. That is simply incorrect. The reply further stated that The amount of tax collected on them is not separately known."—[OFFICIAL REPORT, 23rd May, 1957; Vol. 570, c. 1380.] I wish to point out that there never has been a tax imposed on a gas or electric cooker but now that an invention, which won the Inventors' Club of Great Britain and Overseas Award of £200 on the B. B. C., has arrived, the Chancellor immediately imposes a 30 per cent. Purchase Tax on it. That was about three months before the Budget. There could not, therefore, have been very much collected on this cooker. It is a strange anomaly that while a cooker which is unsafe is not taxed, immediately it is made safe it is taxed.

Surely I do not need to remind the Committee that deaths from accidents in the home far outnumber deaths from accidents on the roads. The death rate from such accidents is highest from accidents with the open fire, secondly, from accidents with electric and gas radiators, and, thirdly, from scalds. The greatest number of those accidents are caused from catching a pot handle on a cooker. There has never been a tax on the fireguard. There were enough of us in the House at that time to have our plea accepted by Sir Stafford Cripps, and his predecessor in the so-called "pots and pans Budget" refrained from imposing a tax on the fire-guard. So we had the very article which gives protection from the greatest number of deaths completely exempt from Purchase Tax.

The second highest number of accidents comes from the open elements of the gas and electric cooker. Again, there came to the rescue a device, the protective netting that is fixed over these elements by either the gas or the electricity board. It is entirely free of tax. Just three months before the Budget, and after this prize had been won by this young inventor, competing with other inventors in Britain and overseas, the North Thames Gas Board very generously undertook to perfect this device.

After working on it for six months, the board was completely satisfied about its efficiency. It is extremely valuable in that it prevents a child from pulling a pot by its handle off the cooker. It is also valuable to a disabled person, or someone who has only one hand. It is, even more valuable to the blind person who gropes over the top of the cooker.

I would remind the Financial Secretary of his right hon. Friend's reply to me that the amount recovered in Purchase Tax was not known. May I point out that the amount spent in hospital treatment as a result of scalds is even more than that spent in treatment as a result of the deadly accident caused by the nightdress? The nightdress is so deadly that very often there is no cure for injury through accidents caused in that way. The scald is not so deadly, but requires much more prolonged hospital treatment.

I know that there is a home safety group in the House, composed of hon. Members on both sides who have agreed that this tax should be removed. I had a letter from the Chancellor, confirming that he had received letters from his own side of the Committee as well as from this side at a time when we had a report from the British Standards Institution urging that the Government should go forward in a great drive towards home safety. This is the last time we should think of imposing a tax the removal of which we have looked forward to for many years.

The Minister of Health has issued leaflets which have been sent to hospitals, clinics and health centres throughout the country pointing out the danger of the unprotected and unguarded cooker. These leaflets, which are very expensive and well prepared, would be quite needless if the cooker were fitted with a safety device. I beg the right hon. Gentleman not to depart from the principle established by his predecessors in regard to safety in the home and especially in respect of appliances which would prevent many accidents every day.

Dame Irene Ward (Tynemouth)

I want to add my plea to the proposals which have been put forward by the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann). I think that she made a most practical and useful speech. I feel that there is something positively revolting in applying Purchase Tax to anything which will help in the prevention of accidents. I can only assume, as I attempted to say when the hon Lady raised this matter by way of question and answer at Question Time, that it has not been gone into sufficiently by my right hon. Friend and by the Financial Secretary to the Treasury. If it had been, I cannot imagine that steps would not have been taken to eliminate this anomaly.

I have had a letter signed by the Financial Secretary in which he points out that the main purpose of Purchase Tax is revenue-raising. Of course, quite apart from what I would call the accident side and the human side of this subject, there is the question of assessing properly whether we are losing or gaining by the imposition of this tax. It is one of my objections to Governments of all kinds that they work departmentally. They do not seem to be capable on small levels of getting together and really finding out whether in the last analysis the country is losing money or gaining money.

I take the one point about hospitals and the hospital treatment necessary after accidents have been caused due to insufficient care being taken in the home. If we assess the amount that is spent in the hospitals and set that against the Purchase Tax collected on safety devices, I imagine—I am not a very good mathematician—that there would be a saving of expenditure by encouraging people to use safety devices. We would save on hospital expenditure the amount which now has to be spent in treating people as a result of accidents.

From the woman's point of view, there is nothing more exasperating than to have a lot of men sitting on the Front Bench who are not particularly interested in how a home is run, except as it affects their own comfort. That is really the most exasperating thing in the world.

The medical service is composed both of men and women, but the nursing service in the main is provided by my own sex. It is more than one can bear to have to use this kind of pressure in order to get a little bit of common sense knocked into the heads of those on the Treasury Front Bench. [HON. MEMBERS: "Hear, hear."] I know that hon. Members cheer, but they did not pay much attention to some of the practical suggestions which were made when they were in Government.

It is something that happens to people in Government. They do not like detail. They like declaiming on a large scale, but they are not at all good when it comes down to discussing detail. Those who are responsible for advising the Ministers keep saying to them—I can see it happening—"Administratively this would be so difficult and so complicated, and it would make it much more difficult to collect the tax if we did something on the lines suggested by the hon. Lady ".

5.0 p.m.

I want to extend what I am saying to another matter, because, as I have said, I recently received a letter from the Financial Secretary about a point which I raised on behalf of the Electrical Association for Women. As I have said, he replied, of course, that this is a revenue-raising tax.

Mr. Sydney Silverman (Nelson and Colne)

I wonder why the hon. Lady introduced the words "of course" into that sentence. I do not regard is as a matter of course that the Government regard Purchase Tax chiefly as a revenue tax. There has always been considerable doubt about that. Without making a long story of it in an intervention, I remember that when the present Home Secretary, then Chancellor of the Exchequer, introduced his famous autumn Budget and put heavy Purchase Tax on trivial household articles, he expressly said that he did not want the money at all and that what he wanted was to prevent people from buying them.

Dame Irene Ward

I was very interested in that intervention. It is not often that I find myself in the happy position of being able to teach the hon. Member for Nelson and Colne (Mr. S. Silverman) something. I will just read the sentence which has been written to me by the Financial Secretary and then I will make the point to the Financial Secretary, for I do not intend to let either hon. Member off. He wrote: The main purpose of the Purchase Tax generally is its important contribution to the revenue. That is what the Financial Secretary has written to me.

Although I hardly ever agree with the hon. Member for Nelson and Colne, I would say that he has quite a flair for psychology. He probably knows that when we change Financial Secretaries or Chancellors of the Exchequer, the new occupants of those offices put different interpretations on these matters. That is another of those maddening things which infuriate women like me. I like to think of myself as a very logical creature. One of the fallacies in which the general public are led to believe is that men are more logical than women. There could be no greater fallacy.

I wrote to the Financial Secretary and asked why there was no tax on electric radiators when there was a tax on oil radiators.

Mr. Nabarro

Surely the hon. Lady has exactly reversed the facts. There is no Purchase Tax on oil radiators but there is a 60 per cent. Purchase Tax on electric radiators.

Dame Irene Ward

I am delighted, again, at that intervention, because I should like to tell my hon. Friend the Member for Kidderminster (Mr. Nabarro) something, too. He is so quick at popping up. He does not quite understand that the Financial Secretary is so sparing in his words that he does not repeat in the letter the point made by the Association. In order to save time I did not intend to read it all. By the time I reached the end of the sentence I had realised that I had stated the position the wrong way round. If my hon. Friend would allow others occasionally to think that they know something, it would be a help.

I sent to the Financial Secretary a very logically composed letter from the Electrical Association for Women. I will spare the Committee by not reading it, but it was a very logical letter to the Financial Secretary asking whether he would kindly explain why there was this discrimination. That was all: why this discrimination? If the Financial Secretary had taken the trouble to answer he might not have had this attack made on him this afternoon. I do no like taking the trouble to send letters only to get idiotic answers. In his letter the Financial Secretary does not refer to the question at all, except by the way. He writes: You sent me on 20th May this letter from the Electrical Association for Women about the Purchase Tax on electrical appliances. It also mentioned oil heaters. That is the whole point. The Financial Secretary does it so, badly, yet, after all, he is supposed to be first class.

Mr. Nabarro

On a point of order. Although this is highly entertaining, you will recall, Sir Norman, that I had consultations with the Table before the Purchase Tax debate whether it would be in order for me to raise the question of differential rates on gas and electricity appliances, the very question now being raised by my hon. Friend the Member for Tynemouth (Dame Irene Ward). It was ruled that that was completely out of order in this context, and that the only way in which it could be associated with our Purchase Tax debate was in connection with the Question, "That the Clause stand part of the Bill." A subsection of the Clause, as it is drafted, deals with hand appliances but specifically excludes gas and electricity. The shadow Chancellor of the Exchequer, at Question Time, supported that Ruling given by the Table. In those circumstances, is any of this discussion in order?

Dame Irene Ward

Further to that point of order. I ask my hon. Friend not to be so pompous. Before you give me your Ruling, Sir Norman, I would point out that I am following exactly the same lines as those followed by the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) on Purchase Tax being applied to some safety devices when other safety devices are free of tax. I have made my speech and I have found a great deal of pleasure in explaining what I wanted to say. I therefore do not mind whether I am ruled out of order. Being logical, however, I wonder why the hon. Lady was allowed to make her speech, if the point of order raised by my hon. Friend the Member for Kidderminster is legitimate.

Mr. S. Silverman

Before you finally rule on this most interesting question, Sir Norman, and since you have not yet ruled the hon. Lady the Member for Tynemouth (Dame Irene Ward) out of order—and, for my part, I hope you will not—may I ask how it is in order for the hon. Member for Kidderminster (Mr. Nabarro) to make a long speech on a point of order claiming that his hon. Friend is doing exactly what he himself wanted to do?

The Temporary Chairman (Sir Norman Hulbert)

I was rather apprehensive when the hon. Lady the Member for Tyne-mouth (Dame Irene Ward) announced her intention of reading a letter. I understood her to say that it did not refer to Purchase Tax.

Dame Irene Ward

It refers to Purchase Tax.

The Temporary Chairman

I thought the hon. Lady was complaining that the Minister's letter did not refer to the matter.

Hon. Members

The hon. Lady should read the letter.

Dame Irene Ward

It refers to Purchase Tax.

The Temporary Chairman

The hon. Lady is reasonably in order so far.

Dame Irene Ward

I will spare my hon. Friend the Member for Kidderminster any comment and continue with the letter: The main purpose of the Purchase Tax generally is its important contribution to the revenue; but I have noted your correspondent's representations about the tax on these appliances and will bear them in mind together with the point she makes about oil heaters. I return to my basic theme. I really am most anxious, as a logical Member of Parliament, to get to the bottom of this discrimination. I suggest to the Treasury that we women—and I represent many women as well as men voters—want to know what is at the bottom of this discriminatory tax. It covers a very wide field, and I suggest to my right hon. Friend that before he presents his next Budget, to which I look forward, he will take the opportunity to go through the whole of the Purchase Tax procedure in detail.

I know that he will not take what I have said amiss. I have known him for a long time, and he knows that from time to time when I become exasperated I exercise my rights and privileges as Member of Parliament to attack all Governments. I should like to ask him whether he would like to substitute for some of his advisers in the Treasury, who are very learned but not necessarily human, some of the women members of the House of Commons who could advise him on the details which we have been discussing today. I am sure that he could get an all-party deputation which would sit hour after hour doing the detailed work. That would be in the interests of good government, and the Chancellor is interested, as I am, in good government. I say at once that we get good government from the Conservatives and that very often we get bad government from the Socialists.

I should like my right hon. Friend to take the matter seriously. Let us get away from the interminable, idiotic discussions which have to take place at Budget time on details of this kind. If the Financial Secretary is to reply to the debate, I am looking forward to see whether he can, out of his great classical brain, bring this matter down to the details of home life and let me know the answer which he should have given me in the letter.

Mr. Tom Brown (Ince)

I support what was said by my hon. Friend the Member for Coatbridge and Airdrie (Mrs. Mann), who advocated that Purchase Tax on safety appliances should be cancelled forthwith. I do so because there are many safety appliances used in the homes and in the pits, and I regret that many of them carry Purchase Tax. It is generally agreed that we should do all we can to make it easier for people to be able to buy and use safety appliances. My hon. Friend the Member for Coatbridge and Airdrie is a strong advocate of their use wherever possible, and especially in the homes. It is the duty of the Government to look after not only the comfort but the safety of the citizen.

However much may be the revenue from a tax upon safety appliances, it is criminal folly to tax them. Many conferences held in the last year or so have expressed approval, without a dissentient voice, of proposals that Purchase Tax on safety appliances should be cancelled forthwith. Let us examine the figures. There were 7,500 deaths by accident in the home last year, mostly of people over the age of 65 or under five, and over 6,000 on the roads. One might say that children under five are being hurled to death and that old people are dying just because they cannot afford to purchase safety appliances. We know that in the pits appliances have been the means of preventing loss of life. If we can prevent loss of life or injury by making it easier for safety appliances to be purchased then we should do so. 5.15 p.m

It will have been gathered from the speeches from this side of the Committee and from the hon. Member for Ilford, South (Mr. Cooper) that these Amendments seek, in the main, to do two things. One is to help our export trade, and the other is to help our home markets. Hon. Members are anxious that the decline in exports, especially from the pottery industry, should be arrested. We are told that since Purchase Tax was levied on pottery two or three years ago the decline in the export trade has reached distressing proportions. Therefore, I repeat that if we can do anything to increase the exports of one of our oldest industries we should do so.

A big point was made by the hon. Member for Ormskirk (Mr. Glover) a few days ago. when I took him to task and he reciprocated. He was talking about increased productivity. We hear a lot about that. We cannot increase productivity by reducing the personnel of an industry, and that is what we are doing. The number employed in the pottery industry has been declining. We have trained men and women who can perform a skilled job and compete with the Japanese and the Germans, but they are prevented because their product cannot be sold. If the Financial Secretary wishes to increase productivity, he ought to cancel Purchase Tax.

Mr. Cyril Osborne (Louth)

The hon. Gentleman says that we cannot increase the production of an industry and, at the same time, reduce the number employed in it.

Mr. S. Silverman

He did not say that.

Mr. Osborne

The hon. Gentleman is always right. What he will do in the next world, I do not know; but the hon. Member for Ince (Mr. T. Brown) did say that, and he overlooked that we have installed machinery to get greater production from fewer workers.

Mr. Brown

The hon. Member, whose economics are very often wrong except in replying to the business side of it and not to the workers' side, perhaps does not know that there is very little machinery in the pottery industry. He had better get his facts right. I agree that by the introduction of labour-saving machines in industry we increase to some extent productivity and employ a smaller number of people.

Dr. Stross

Would my hon. Friend instruct the hon. Member for Louth (Mr. Osborne) that the prime tool of the potter is his hand and that there is no machine tool in the world to compare with it for this industry? The industry in North Staffordshire is the most rationalised in the world. We do not need anyone who is unskilled, and does not know it, to tell us how to get production.

Mr. Brown

My hon. Friend has conveyed the information to the hon. Member for Louth (Mr. Osborne), so I do not need to tell him anything further.

Let us examine the history of the Purchase Tax. It has been truly said that it was never intended to continue as a revenue-raising tax after the war. As my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) said, both inside and outside this House, at trade union meetings and at conferences, the plea was made to the industrial workers to do this as our contribution to winning the war. The response was magnificent. No people in any country in the world made a greater response to that plea for them to accept Purchase Tax.

The tax was levied on 21st October, 1940. The rate at that time was 16⅔ per cent. as against 33⅓ per cent. on other types of domestic pottery. The tax was repealed in 1946, and was reinstituted at a rate of 30 per cent. in the supplementary Budget of 1955—the Finance Act (No. 2). I spoke against it then. I speak against it now. I believe that Purchase Tax is the wrong way of raising revenue. There are other ways. The hon. Member for Ilford, South has always been an advocate of a sales tax, and though I am not prepared to accept that 100 per cent. there is something in the suggestion that a sales tax would be better than the Purchase Tax, with its anomalies. No right hon. or hon. Gentleman can examine the Purchase Tax on many articles without finding, in the case of almost every one of them, anomalies of some kind.

I appeal to the Chancellor to give very serious consideration to the amount involved. if he cancels Purchase Tax on pottery completely, how much will he lose? We talk sometimes about saving £1,000 here and £1,000 there, but this year the right hon. Gentleman has budgeted for approximately £5,000 million. If he cancels the Purchase Tax now under consideration, he will stand to lose only about £2¾ million in pottery. What does that mean? It represents about one-twentieth part of 1 per cent. of his Budget total.

Surely we are not so poor as not to be able to afford that. Think of the benefits that would accrue to the industry, and to the home market. I beg the Chancellor to listen to the plea made from this side, and to make up his mind once and for all—to be courageous enough—to cancel Purchase Tax; and to say that the goods on which the tax was put in years gone by shall be tax free. If he does that, he will win the approbation of all our citizens.

The Financial Secretary to the Treasury (Mr. J. Enoch Powell)

The Amendments which the Committee is considering together would respectively have the effect of removing Purchase Tax altogether upon the four groups mentioned in the Clause, of reducing it to 5 per cent., of removing it from Group 11, or of reducing the tax upon Group 11 to 5 per cent. The cost in estimated loss of revenue of these four proposals is respectively £24 million, £16 million, £9 million and £6 million.

The Committee will no doubt recall that on the Second Reading of this Bill my right hon. Friend the Chancellor of the Exchequer made it clear that he did not feel himself able to go far beyond the limit of about £100 million in tax concessions contained in the Budget. It will, therefore, be evident to the Committee that reductions in Purchase Tax upon the scale suggested by any of these Amendments would be outside the limit within which the Chancellor feels it necessary to remain—

Mrs. Mann

Surely, that does not apply to the safety cooker device. It was unknown a year ago.

Mr. Powell

I will come to the point which the hon. Lady and my hon. Friend the Member for Tynemouth (Dame Irene Ward) made, but I am here dealing with the Amendments which are being discussed by the Committee.

The accusation has been made from the opposite side of the Committee that this is an inflationary Budget. It would certainly be inflationary to release further purchasing power to that extent by way of further relief in Purchase Tax—

Mr. Frank Beswick (Uxbridge)

We want to follow this argument. In most years when we have had what I may, perhaps, call a rather boring debate on Purchase Tax, this argument has been accepted. This year, however, there is a new feature. Never before has there been a concession of £30 million to the Surtax payer, such as is contained in this Budget. How can what the hon. Gentleman says be justified in that situation?

Mr. Powell

At the moment, the Committee is considering Purchase Tax, and whether it will be right, within its scope, to make several remissions of taxation of the order that I have indicated which would certainly go direct to consumption. I want to make clear that such remissions would be quite outside the scope which my right hon. Friend has set for himself in this Budget.

Perhaps I may now take the individual points which have been made in the course of the debate. My hon. Friend the Member for Wycombe (Mr. John Hall) referred to the apparent anomaly of the domestic furniture which is taxed at 5 per cent., and the articles of furniture, which he mentioned, which may equally be domestic or office furniture and which will, in future, be taxed at 15 per cent. instead of 30 per cent. Of course, he realises that in the group concerned—Group 11—a distinction is drawn between furniture used for domestic purposes, and other furniture. The great difficulty about the type of articles to which my hon. Friend referred is that it is really impracticable to distinguish them according to whether they are used for domestic or for non-domestic purposes. It is really that difficulty that virtually necessitates their being left outside the 5 per cent. Group—

Mr. John Hall

Does the Financial Secretary think that hat racks and umbrella stands will be used very much for non-domestic purposes?

Mr. Powell

They are certainly articles of office furniture—

Mr. Cooper

And in normal houses.

Mr. Powell

They are not specifically for domestic purposes, and it is articles of furniture for domestic purposes which attract the 5 per cent. rate. Indeed, it is this type of difficulty in making the distinctions involved in the groups which leads to the difficulties of definition to which the hon. Member for Shoreditch and Finsbury (Mr. Collins) referred—

Mr. Chapman

But is it not the case that bookcases are in an exactly similar category and can equally well be both industrial and domestic, but they are, in fact, taxed at only 5 per cent.?

Mr. John Hall

I hope my hon. Friend will forgive my further interruption, but if that is the point that he is making, would he look down the list of domestic items, where we have tables, chairs, trolleys and writing tables, all of which have an application outside the home?

Mr. Powell

But, in the first place, those are specified in Group 11 (b), and, in the second place, if my hon. Friend will look at the detailed notices, he will see that great care is taken to distinguish the domestic from the office type in the application of Purchase Tax.

The hon. Members for Stoke-on-Trent, Central (Dr. Stross), and for Stoke-on-Trent, South (Mr. Ellis Smith) referred to Purchase Tax on pottery, and drew attention to the fall in employment in the pottery industry that has taken place in the last year or two. I do not accept that the changes which they mention are necessarily entirely or even largely connected with the Purchase Tax, but it will be clear that even if it is not possible at present to go further than my right hon. Friend has done, the halving of the Purchase Tax upon those articles must bring very substantial relief, and I would not be so pessimistic as to suggest that the revenue will be more than halved, as was the conjecture of the hon. Member for Stoke-on-Trent, Central.

5.30 p.m.

My hon. Friend the Member for Ilford, South (Mr. Cooper) discussed the alternative of a sales tax to the Purchase Tax. He argued that the tax in its present form, if I may use his words, "puts everybody into a state of complete uncertainty ". I am sure that he will appreciate that for that reason it would be quite impossible for me to comment one way or the other upon the remarks which he has made, but he has made his point and it has, of course, been noted.

I now come to the question raised by the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) and my hon. Friend the Member for Tynemouth. There is a great range of articles which incorporate some form of safety device or other or are to some degree or other protective in their nature, and I think it is recognised that it would be impracticable for Purchase Tax purposes to distinguish between an article which has or has not a safety device or an article with a more or less effective safety device. Accordingly, articles which embody safety devices follow the Purchase Tax of the article in question. That is why, as the hon. Lady pointed out, a safety device incorporated in a cooker does not attract Purchase Tax, since the cooker itself is not liable to Purchase Tax.

The difficulty in the case of this appliance which the hon. Lady mentioned is that, being a separate article from the cooker, it falls inevitably to be classified as ironmongery which, as I quite correctly informed the hon. Lady, has been subject to Purchase Tax ever since the inception of the tax.

Mrs. Mann rose—

Mr. Powell

May I carry on for one sentence more?

Dame Irene Ward

Let the hon. Lady have her say.

Mr. Powell

The great difficulty is in accurately describing this particular safety device or this class of safety device so that it can be distinguished as against other types of ironmongery. Nevertheless, my right hon. Friend will consider whether a satisfactory definition for that purpose can be devised. The hon. Lady will appreciate that it would be impossible within the scope of order to make an amendment to that effect in the Finance Bill, but my right hon. Friend will without commitment consider whether this difficulty of a sufficiently accurate definition within the scope of ironmongery can be overcome.

Mr. Collins

While the Chancellor is considering that, will he also look at other examples where there is no difficulty in deciding that articles are for domestic use? For example, baby hampers cannot be other than domestic. Why should there be two different rates of tax depending on whether they have lids or not?

Mr. Powell

I am not sure that there are not some difficulties which the hon Gentleman has failed to see, but obviously the points which he has brought out will be looked at.

Dr. Stross

Would the hon. Gentleman not agree that from a practical and an ethical point of view, we would do best if we were to tax all dangerous instruments of the kind referred to if they had no safety device attached, and free them entirely if there were a safety device?

Mr. Powell

If the hon. Gentleman were to apply that in practice, he would find great difficulty with whole ranges of articles in deciding just at what stage they could properly be regarded as being fitted with an effective safety device. Very arbitrary decisions would be taken by those collecting the Purchase Tax. Anyway, I think the Committee realises the difficulty. My right hon. Friend will consider whether it can be solved in this case by the definition which would be necessary.

We have to look at all these points within the general context, not only of the fact that a reduction in Purchase Tax of £24 million in a full year has been made within the framework of this Budget, but that the relief which the Budget brings has been spread over a much wider range of articles, in fact, over a range of goods the trade in which is three times greater than that on which the tax was imposed eighteen months ago. Two of the groups on which tax is now being reduced from 30 per cent. to 15 per cent. carried tax at 331 per cent. when the party opposite went out of office.

I would, therefore, suggest to the Committee that within the scope of the resources which were available in the Budget for this purpose, it was right to distribute the relief over these four groups in the way in which that has been done.

Mr. Douglas Jay (Battersea, North)

The Financial Secretary has given a rather timid and unconvincing reply to a most powerful attack on the Government by the hon. Lady the Member for Tyne-mouth (Dame Irene Ward).

Mr. Nabarro

Thoroughly misguided.

Mr. Jay

The hon. Lady will class the Financial Secretary as hardly human from now on.

I thought that he was equally unresponsive to the very strong case made by hon. Members on behalf of the furniture and pottery industries. After all, if he is going to answer every request for relief by saying that the Chancellor has made up his mind not to remit any more revenue, it is hardly any use debating these matters in detail whatever. In any case, we on this side of the Committee take the view that much more revenue has been relinquished to Surtax payers than is necessary, and that it might much better be used to permit of some of the Amendments that we have put forward.

This group of Amendments in effect proposes to reduce the 15 per cent. proposed by the Government on various goods, going more widely than pottery and furniture, either to 5 per cent. or to nil. As the hon. Lady urged us all to come down to details, I will ask the Financial Secretary one or two detailed questions First, can he assure me that the Financial Statement relating to the Budget which appears in his name is guilty of a misprint when it says, in page 19, that Group 8, including floor covering, is to have the Purchase "fax reduced? I take it that that is a misprint for Group 9. These matters are so difficult already that if in addition we have misprints in the Financial Statement, it really is a little hard to find out where we are going.

Secondly, can the Financial Secretary tell us, either now or at some later stage, why the Government omit wallpaper—that is to say, Group 10—from these reliefs? Broadly speaking, there are reductions from 30 per cent. to 15 per cent. on various household necessities. Surely wallpaper is a normal household necessity. Apparently the Purchase Tax on wallpaper is to remain at 30 per cent. Presumably the Government have some reason for excluding it.

Thirdly, why in the middle of Group 11 which we are dealing with—

Mr. Nabarro

On a point of order. Many of us have been anxious to raise in this debate the question of those items which are excluded from Purchase Tax relief, and the Ruling has been given to many of us in precise terms that as the Budget Resolutions have been drawn, it is not in order to deal in these debates with any item not referred to in the groups set out in Clause 6. How can it therefore be in order to talk about such items as wallpaper, in Group 10. which does not come under Clause 6?

The Deputy-Chairman (Sir Gordon Touche)

It is permissible to refer to it passing, but it is out of order to deal with it in any detail.

Mr. Jay

Why the hon. Member for Kidderminster (Mr. Nabarro) should so anxiously want to limit our debate, I do not know. I was going to refer to an item in Group 11 which is covered by the Clause, that is to say mirrors. The hon. Member for Wycombe (Mr. John Hall) pointed out that there are two rates of tax in the case of furniture, 5 per cent. and 15 per cent. Why do we have mirrors in solitary glory in this Group, taxed as high, I understand, as 60 per cent.? Is there some difficulty of administration, or do the Government think that there is something particularly vicious or subversive about mirrors?

On the main issue, why is it that the Financial Secretary first decides to make this reduction from 30 to 15 per cent. and then refuses to go further, to 5 per cent. or a figure below that? Does this reduction mean that the Government have now completely abandoned the doctrine of the Lord Privy Seal in October, 1955, that one had to tax these household goods in order to stop people spending on other things? It would be a relief to the Committee to know that that policy had been definitely abandoned. If it has not, what other reason have the Government adopted for making this change now?

The Committee will recall that the Lord Privy Seal and the present Parliamentary Secretary to the Ministry of Education held the doctrine that one had to raise the price of these household goods in order to stop people from spending money on other things. That was "Boyle's law", which has guided the Government's economic policy over the last two years. Are we now to understand that "Boyle's law" has been repealed or abandoned by the Government? We have, of course, a sort of "Powell's law" introduced in this Budget. The present Financial Secretary told us the other day that there was no harm in having television duty because television sets cost so much already. "Powell's law" seems to be that, if one tax is already heavy, one is justified in putting another heavy tax upon it; and that, indeed, has some rather alarming implications for some of our debates yet to come.

I hope that, when the Financial Secretary is considering Purchase Tax, he will recognise that, if one raises the tax on necessities, on the sort of goods the price of which is taken into account in wage negotiations, that is really not disinflationary, as the Lord Privy Seal thought, but it is directly inflationary. That has been the fallacy of Government policy over the last two years. If the Purchase Tax is raised on goods in the amenity or luxury class, whatever it may be, which do not affect wage negotiations, then, I agree, that may in some respects be disinflationary. I hope that the hon. Gentleman will, in future meditation on this subject, take into account that vital distinction.

Since the whole of the Purchase Tax has got into such complication and confusion. will the Government say whether they are now taking this 30 per cent. tax off all the goods on which the Lord Privy Seal placed it in October, 1955? I have here the complete list of goods on which he placed the 30 per cent. tax then, though I will not read it unless the hon. Gentleman wishes me to do so. It is quite clear from the Financial Statement of that date that all goods on which the 30 per cent. tax was placed were exempt up to that moment. I hope that the hon. Lady the Member for Tynemouth will take note that, under the Labour Government, these household goods, housewife's kitchen goods and the rest, were altogether exempt from Purchase Tax, and a 30 per cent. tax was then imposed by the Lord Privy Seal.

One thing is clear. First, the 30 per cent, is, in any case, only being reduced to 15 per cent.; it is not being swept away altogether, as we should like to see it. What is very difficult to gather from the various Purchase Tax schedules and documents that we have is whether some of the goods on which the Lord Privy Seal put this 30 per cent. still have a tax imposed on them at that rate. I wonder whether the Financial Secretary could tell us whether, in every case, the goods are now exempt, or, alternatively, that the tax has been reduced to 15 per cent. or some other rate.

In any case, we are not satisfied with leaving the tax on this range of household necessities at 15 per cent. We think that the reduction should go much farther, and that such a step would make a valuable contribution towards checking inflation and reducing the cost of living. If the Government cannot even now respond to the proposal, I hope that my hon. Friends will press this first Amendment to a Division.

5.45 p.m.

Mr. Chapman

Without going into the wider details mentioned by the Financial Secretary of the amounts of taxation he would be remitting by accepting some of these Amendments, I wish to express great disappointment at some of the things he had to say. What he has flatly refused to consider or omitted even to talk about in any detail is the very grave danger arising from the anomalies which have occurred in Group 11. I hope that he will, if he is to say a further word, reply to the hon. Member for Wycombe (Mr. John Hall) and to one or two points which I wish to put, giving a categorical assurance that, even apart from big policy questions, he will look into these anomalies very carefully, because the situation has become quite ridiculous.

We all know what happened. The Government, in 1955, wanted to put on a total tax of 30 per cent., but, largely because of representations by hon. Members on this side of the Committee who foresaw dangers of unemployment in the furniture making industry, the Government altered that part of the schedule and imposed a 5 per cent. tax. The inevitable consequence has followed. Immediately one starts splitting categories and making exceptions, one gets into the sort or mess that Group 11 is in now. The thing is quite ridiculous, as we have been trying to point out this afternoon. The Financial Secretary argues that he must retain a tax at 30 per cent. on hall stands and hat racks because they may be used in offices. On the other hand, a bookshelf or bookcase, which may well be used in an office, is singled out to remain at 5 per cent. The thing is topsy-turvy.

The Financial Secretary tells us that great pains have been taken to make sure that what are office things are separated from domestic things, but when we come to tables, that is not so at all. The only feature which is chosen as indicating a difference for the purpose of applying either 30 per cent. or 5 per cent. is the material of which they are made, metal or wood. If a man in an office is fortunate enough or sensible enough to buy a wooden table, he can do very nicely by paying 5 per cent., whereas the more stupid people buying metal tables will pay 30 per cent. This is really quite silly. The Financial Secretary says that there is logic in it and great pains have been taken to sort all these things out, but, in fact, quite the contrary is the case.

We are told that a great effort has been made to except the domestic items and leave them at 5 per cent., but in page 29 one finds that things like deckchairs, seats for the garden, tables designed for garden umbrellas and camping or fishing stools. all of which, in this general category are really domestic and certainly have nothing to do with offices or industry, attract tax at 30 per cent., the industrial rate, instead of the domestic rate of 5 per cent. This goes on and on.

I do not want to bore the Committee by going into more detail, but the fact remains that the hon. Gentleman's explanation was most unconvincing. It simply is not true that the schedule of Group 11 effectively sorts out industrial from domestic items and maintains a proper differentiation between the 5 per cent. and 30 per cent. rates accordingly. Without going into any of the great policy questions which some of the Amendments involve, I hope that if we cannot get any concession from the hon. Gentleman in terms of £ s. d., we can at least get a concession in terms of common sense and that he will put his officials on to the job of examining again the whole of the schedule. In the end, what the hon. Gentleman will have to do is to say that where any doubt exists, he had better put the items under the domestic level of 5 per cent. otherwise the whole thing will remain chaotic, as it is at the moment.

Leaving aside the fact that many of us challenge the policy, there is a legitimate grievance on both sides that the position makes complete nonsense. The Financial Secretary should guarantee to clear it up.

Mr. Beswick

I doubt whether we have ever heard a less satisfactory reply to a Purchase Tax debate than the reply we have just had from the Financial Secretary. He has so much Parliamentary skill and debating ability that the fact that he cannot put up a more convincing argument indicates that his case is indeed a bad one.

How can the hon. Gentleman stand at the Dispatch Box and say that it would be inflationary to remove the 15 per cent. tax from a frying pan at a time when we are giving away £500 or £600 in tax reliefs to the Surtax payer?

Mr. Osborne

We are not giving it to them.

Mr. Beswick

I think the phrase was "releasing purchasing power". The fact is that it is a release of purchasing power, and I find it impossible to accept that the Financial Secretary believes what he said when he told us that it would be impossible in the present situation to release this purchasing power by taking the tax off kitchen utensils.

Every hon. Member who has spoken has emphasised that there was no tax upon these kitchen items until two years ago. Not even during the war, when things were difficult for us, or in the days when we were building up our reserves after the war, did we have to resort to a tax of this kind. Then in 1955 the 30 per cent. was clamped on. I should have thought that this year, if we were to reduce the tax at all, we could have wiped it right out.

If there had been an economic crisis and things were going badly, if there had been a demand for sacrifices all round and the Chancellor had said that he must keep a tax of 15 per cent. on these kitchen items, we might have accepted it. When, however, in this same Finace Bill, he is making concessions to the Surtax payers amounting to £30 million, he cannot use the argument about inflation concerning this tax on essential items of household use.

For the Financial Secretary to have to say to his hon. Friends that he cannot correct an anomaly because the mass of confusion is now so great and the attempt to right other anomalies has created further anomalies, suggests that he is getting somewhere near to the madhouse stage. If the situation is as confused and chaotic as all this, if the hon. Gentleman accepts that it is unfair, unjust and anomalous to have these taxes on certain items in domestic use, and that the administrative difficulties are great, cannot he give an assurance that in the next few months he will clean up the whole business of the levying of Purchase Tax? Cannot we have an indication that he accepts these arguments and will do something about them in the future?

Mr Rankin

When the Financial Secretary replied to the hon. Member for Wycombe (Mr. John Hall) concerning steel furniture, he said that the reason for the discrimination in tax was because steel furniture was not classified as domestic and was not being used in the home. On what assumption does the hon. Gentleman base that statement? The only reason he gives is that steel chairs, writing desks and a whole host of other things, which are now made in factories like Howden's in my constituency, are used exclusively in offices because that is what the Customs and Excise people say. That was the only basis on which the hon. Gentleman founded his case for excluding steel furniture from the operation of the 5 per cent, tax. That is the only ground on which he can justify the discrimination between steel and wood.

Mr. Nabarro

On a point of order. As Group 11 does not include steel furniture, how can this reference conceivably be in order, Sir Gordon?

The Deputy-Chairman

I was waiting to hear what the hon. Member had to say. I hope he will soon finish on that point.

Mr. Chapman

Further to that point of order. Group 11, on page 29, specifically refers to steel furniture.

Mr. Frederick Mulley (Sheffield, Park)

I understood, Sir Gordon, that an Amendment was called to reduce the rate of tax from 15 to 5 per cent., which would cover all the items in Clause 6.

Mr. Rankin

My reading of Group 11 led me to believe that we could debate the issue on these Amendments. Before venturing to raise it, I sought assurance and was told that it would be quite in order.

The reason I asked about the discrimination is that until 1952, when the D scheme was introduced, there was no discrimination between wooden and steel furniture. They were both on the same level of taxation. If there was no argument against both types of furniture being on the same level of taxation prior to the introduction of the D scheme in 1952, it seems difficult for the Treasury now to establish an argument that in 1957 there should be discrimination.

Prior to the Budget, the tax on steel furniture was 30 per cent. and on wooden furniture 5 per cent. By reducing the 30 per cent. to 15 per cent., as they have done, the Government have said that it was wrong to discriminate so severely, and that therefore they would reduce the difference. In effect they have said that they want to lessen discrimination. Their argument leads to one conclusion, that if it is bad to have discrimination at the 30 per cent. level it is just as bad to have it at the 15 per cent. level. Their own attitude towards the tax reinforces the argument which I seek to make, that there ought to be no discrimination between steel furniture and wooden furniture so far as tax is concerned.

6.0 p.m.

I say that because steel furniture is coming more and more into domestic use. I have seen it in people's homes—chairs that are as comfortable and safe as wooden ones, steel writing desks which are just as good as any made of wood. The price of the steel article is comparable with the price of the wooden ones, if one excludes the tax differential.

The firm in my division, which has been making quite a good job of this business, which was started largely as an experiment, is now developing in the Middle East a very useful export trade. We want to encourage exports, and countries such as those in the Middle East are good markets for steel exports of this character. The Government ought to be considering this matter from the export trade point of view. If the tax on both types of furniture were at the same lower level the steel furniture makers would have a better chance of selling more at home, and so could create a home market from which to back their export market, which they could exploit more keenly than they can at present.

I hope that the hon. Gentleman will not leave the matter as it is, and that he will accept the invitation which has been extended to him to say a further word upon it. The Government's attitude to the question of steel furniture is completely illogical. If I am wrong about that I should like the hon. Gentleman to show me now where I am wrong.

Mr. Powell

The right hon. Gentleman the Member for Battersea, North (Mr. Jay) was quite right in thinking that there is a misprint of "8" for "9" on page 18 of the Financial Statement.

A good deal has been said about anomalies. Of course, to revert to the position before October, 1955, would call back into existence a host of anomalies which have disappeared. It would be to restore the contrast between bread bins and meat safes, cake tins and cake stands, and so forth. The desire to avoid anomalies and difficulties of definition is the answer to the question which the right hon. Gentleman asked about mirrors, because mirrors are subject to Purchase Tax not only under Group 11, but also as toilet requisites under Group 31—also at 60 per cent. We should find ourselves opening a new line of demarcation there, if we attempted to take out toilet mirrors. The Clause therefore deals with the 30 per cent. articles in Group 11 cleanly without opening up the tax on other articles in the same group. That is why mirrors were left at 60 per cent.

Mr. Jay

That was the sole reason for the 60 per cent.? It had nothing to do with the merits of mirrors?

Mr. Powell

That was the reason it was impracticable to deal with that item which at present stands for that reason at 60 per cent. in Group 11.

Mr. Chapman

In Group 31 mirrors are the only items at 60 per cent. Everything else is at 90 per cent. or 30 per cent. and that makes nonsense of the hon. Gentleman's argument.

Mr. Powell

Oh, no, it does not, because if the hon. Gentleman endeavoured to take mirrors out of toilet requisites he would find himself in the midst of a new sea of troubles in distinguishing between different kinds of toilet requisites.

I agree that there are in the scheme real anomalies and difficulties of definition, and I will undertake that the anomalies in definitions of furniture will be looked at again with a view to seeing whether some or all of them can be eliminated.

The right hon. Gentleman asked me whether all goods which had been first subject to tax in 1955—at 30 per cent—have now been reduced to 15 per cent.

Mr. Jay

At least.

Mr. Powell

At least. That is correct. None of the goods first subject to tax at 30 per cent. in 1955 now remains at 30 per cent.

He asked me why wall coverings in Group 10 had been left outside the scope of this. As I pointed out earlier, the Chancellor of the Exchequer thought it right to go beyond the scope of the articles first taxed in 1955 and to make reduction; in a wider range of articles of general domestic use, and he had to decide whether it was better for this purpose to extend them, for example, to Group 9 floor coverings or to Group 10 wall coverings. I submit to the Committee that it really must bring much greater relief to those setting up a home to have the tax reduced Ripon floor coverings than to have relief extended to wall coverings.

Mr. S. Silverman

Would the hon. Gentleman agree that possibly the very easily understandable rationalisation of the Government's proposals is that if they put tax on articles of this kind immediately after one Election it is wise to take it off immediately before the next?

Mr. Osborne

That is what the Labour Party did.

Mr. Powell

As three times the articles first taxed in 1955 are being relieved of tax by this Clause I fail to see the relevance of what the hon. Gentleman the Member for Nelson and Colne (Mr. S. Silverman) has just said.

There is obviously a limit to the amount of purchasing power within the

scope of this Budget which it would be right to release and the exemption of Group 11, as I have pointed out, would involve release of a further £9 million worth of purchasing power, the greater part or the whole of which would certainly go straight into consumption. So bearing in mind that £24 million from reduction of Purchase Tax has been released and bearing in mind the scope and scale of the Budget reliefs as a whole. I would ask the Committee to agree that the reliefs in these four groups are correctly and wisely selected

Mr. Mulley

I do not wish to detain the Committee for more than a few moments, because I sense some impatience on both sides of the Committee to come to a decision in the Division Lobby on the Government's policy in this matter. I wish, however, to refer to cutlery, because although we have heard a good deal about the anomalies affecting steel furniture we have not heard so much of how some of these apply to cutlery in Group 13. We are, indeed, grateful that there has been a reduction in tax from 30 per cent. to 15 per cent., but a number of complications arise, of which the Financial Secretary has been informed, so I hope that he will consider that group of articles at the same time as he carries out his review of Group 11.

I will put one example to him. An ordinary pair of scissors is listed in three separate groups. I am told by people in the trade that even experts take a long time to decide whether a pair of scissors will be used for embroidery, for cutting nails, or for opening things in an office. So I hope that the hon. Gentleman will agree to look at the anomalies of the Purchase Tax upon cutlery as well as other Purchase Tax anomalies.

Question put,That those words be there inserted:—

The Committee divided:Ayes 212, Noes 248.

Division No. 119.]	AYES	[6.10 p.m.
Ainsley, J. W.	Benson, G.	Boyd, T. C.
Albu, A, H.	Beswick, Frank	Braddock, Mrs. Elizabeth
Allen, Arthur (Bosworth)	Bevan, Rt. Hon. A. (Ebbw Vale)	Brockway, A. F.
Allen, Scholefield (Crewe)	Blackburn, F.	Broughton, Dr. A. D. D.
Awbery, S. S.	Blenkinsop, A.	Brown, Thomas (Ince)
Bacon, Miss Alice	Blyton, W. R.	Burke, W. A.
Baird, J.	Boardman, H.	Butler, Herbert (Hackney, C.)
Balfour, A.	Bowden, H. W. (Leicester, S.W.)	Butler, Mrs. Joyce (Wood Green)
Beilenger, Rt. Hon. F. J	Bowen, E. R. (Cardigan)	Carmichael, J.
Benn, Hn. Wedgwood (Bristol, S.E.)	Bowles, F. G.	Champion, A. J.
Chapman, W. D.	Irvine, A. J. (Edge Hill)	Randall, H. E.
Chetwynd, G. R.	Irving, Sydney (Dartford)	Rankin, John
Clunie, J.	Isaacs, Rt. Hon. G. A.	Redhead, E. C.
Coldrlck, W.	Janner, B.	Reeves, J.
Collick, P. H. (Birkenhead)	Jay, Rt. Hon. D. P. T.	Reid, William
Collins, V. J. (Shoreditch & Finsbury)	Jeger, George (Goole)	Rhodes, H.
Craddock, George (Bradford, S.)	Jenkins, Roy (Stechford)	Robens, Rt. Hon. A.
Cronin, J. D.	Johnson, James (Rugby)	Roberts, Albert (Normanton)
Crossman, R. H. S.	Jones, David (The Hartiepools)	Roberts, Goronwy (Caernarvon)
Cullen, Mrs. A.	Jones, Elwyn (W. Ham, S.)	Robinson, Kenneth (St. Pancras, N.)
Darling, George (Hillsborough)	Key, Rt. Hon. C. W.	Ross, William
Davles, Rt. Hon. Clement(Montgomery)	King, Dr. H. M.	Shin well, Rt. Hon. E.
Davies, Stephen (Merthyr)	Lawson, G. M.	Silverman, Julius (Aston)
Dodds, N. N.	Lee, Frederick (Newton)	Silverman, Sydney (Nelson)
Donnelly, D. L.	Lee, Miss Jennie (Cannock)	Simmons, C. J. (Brierley Hill)
Dugdale, Rt. Hn. John (W. Brmwch)	Logan, D. G.	Slater, J. (Sedgefield)
Dye, S.	Mabon, Dr. J. Dickson	Smith, Ellis (Stoke, S.)
Ede, Rt. Hon. J. C.	MacDermot, Niall	Sorensen, R. W.
Edelman, M.	MoGhee, H. G.	Soskice, Rt. Hon. Sir Frank
Edwards, Rt. Hon. John (Brighouse)	Mcinnes, J.	Sparks, J. A.
Edwards, Rt. Hon. Ness (Caerphilly)	McKay, John (Wallsend)	Steele, T.
Edwards, Robert (Bilston)	MacMillan, M. K. (Western Isfes)	Stewart, Michael (Fulham)
Edwards, W. J. (Stepney)	Mahon, Simon	Stokes, Rt. Hon. R. R. (Ipswich)
Evans, Albert (Islington, S.W.)	Mainwarlng, W. H.	Stonehouse, John
Fernyhough, E.	Mallalieu, J. P. W. (Huddersfd, E.)	Stones, W, (Consett)
Fienburgh, W.	Mann, Mrs. Jean	Strauss, Rt. Hon. George (Vauxhall)
Finch, H. J.	Marquand, Rt. Hon. H. A.	Stross, Dr. Barnett(Stoke-on-Trent,C.)
Fletcher, Eric	Mason, Roy	Summerskill, Rt. Hon. E.
Forman, J. C.	Mayhew, C. P.	Sylvester, G. O.
Fraser, Thomas (Hamilton)	Mellish, R. J.	Taylor, Bernard (Mansfield)
Gaitskell, Rt. Hon. H. T. N.	Messer, Sir F.	Taylor, John (West Lothian)
George, Lady Megan Lloyd(Car'then)	Mikardo, Ian	Thomas, George (Cardiff)
Gibson, C. W.	Mitchison, G. R.	Thomas, Iorwerth (Rhondda, W.)
Gooch, E. G.	Monslow, W.	Thomson, George (Dundee, E.)
Gordon Walker, Rt. Hon. P. C.	Moody, A. S.	Thornton, E.
Greenwood, Anthony	Morris, Percy (Swansea, W.)	Ungoed-Thomas, Sir Lynn
Grenfell, Rt. Hon. D. R.	Morrison, Rt. Hn. Herbert(Lewls'm,S.)	Usborne, H. C.
Grey, C. F.	Mort, D. L.	Viant, S. P.
Griffiths, David (Rother Valley)	Moyle, A.	Wade, D. W.
Griffiths, William (Exchange)	Mulley, F. W.	Weitzman, D.
Grimond, J.	Neal, Harold (Bolsover)	Wells, Percy (Faversham)
Hale, Leslie	Noel-Baker, Francis (Swindon)	Wells, William (Walsall, N.)
Hall, Rt. Hn. Glenvil (Colne Valley)	Noel-Baker, Rt. Hon. P. (Derby, S.)	West, D. G.
Hamilton, W. W.	Oliver, G. H.	Wheeldon, W. E.
Hannan, W.	Orbach, M.	Wigg, George
Harrison, J. (Nottingham, N.)	Owen, W. J.	Wilkins, W. A.
Hastings, S.	Paget, R. T.	Willey, Frederick
Hayman, F. H.	Paling, Rt. Hon. W. (Dearne Valley)	Williams, David (Neath)
Healey, Denis	Palmer, A. M. F.	Williams, Rev. Liywelyn (Ab'tillery)
Henderson, Rt. Hn. A. (Rwly Regis)	Pannell, Charles (Leeds, W.)	Williams, Ronald (Wigan)
Hewitson, Capt. M.	Pargiter, G. A.	Williams Rt. Hon. T. (Don valley)
Hobson, C. R. (Keighley)	Parker, J.	Williams, W. R. (Openshaw)
Holmes, Horace	Parkin, B. T.	Wilson, Rt. Hon. Harold (Huyton)
Holt, A. F.	Paton, John	Winterbottom, Richard
Houghton, Douglas	Pearson, A.	Woodburn, Rt. Hon. A.
Howell, Charles (Perry Barr)	Pentland, N.	Woof, R. E.
Howell, Denis (All Saints)	Plummer, Sir Leslie	Yates, V. (Ladywood)
Hubbard, T. F.	Prlce, J. T. (Westhoughton)	Younger, Rt. Hon. K.
Hughes, Cledwyn (Anglesey)	Price, Philips (Gloucestershire, W.)
Hughes, Emrys (S. Ayrshire)	Probert, A. R.	TELLERS FOR THE AYES:
Hunter, A. E.	Proctor, W. T.	Mr. G. H. R. Rogers and
Hynd, J. B. (Attercliffe)	Pursey, Cmdr. H.	Mr. Deer.
NOES
Agnew, Sir Peter	Bennett, Dr. Reginald	Carr, Robert
Aitken, W. T.	Bevins, J. R. (Toxteth)	Cary, Sir Robert
Allan, R. A. (Paddlngton, S.)	Bidgood, J. C.	Channon, Sir Henry
Amery, Julian (Preston, N.)	Biggs-Davison, J. A.	Chichester-Clark, R.
Anstruther-Gray, Major Sir William	Birch, Rt. Hon. Nigel	Clarke, Brig. Terence (Portsmth, W.)
Arbuthnot, John	Black, C. W.	Cole, Norman
Armstrong, C. W.	Body, R. F.	Conant, Maj. Sir Roger
Ashton, H.	Bossom, sir Alfred	Cooke, Robert C.
Astor, Hon. J. J.	Boyd-Carpenter, Rt. Hon. J. A.	Cooper, A. E.
Atkins, H. E.	Boyle, Sir Edward	Cordeaux, Lt.-Col. J. K.
Balniel, Lord	Braine, B. R.	Corfield, Capt. F. V.
Barber, Anthony	Braithwaite, Sir Albert (Harrow, W.)	Craddock, Beresford (Spelthorne)
Barlow, Sir John	Bromley-Davenport, Lt.-Col. W. H.	Crosthwaite-Eyre, Col. O. E.
Barter, John	Brooke, Rt. Hon. Henry	Crowder, Sir John (Finchley)
Beamish, Maj. Tufton	Brooman-White, R. C.	Cunningham, Knox
Bell, Philip (Bolton, E.)	Butcher, Sir Herbert	Currie, G. B. H.
Bell, Ronald (Bucks, S.)	Butler, Rt. Hn. R. A.(Saffron Walden)	Dance, J. C. G.
Bennett, F. M. (Torquay)	Campbell, Sir David	D'Avigdor-Goldsmid, Sir Henry

Deedes, W. F.	Joseph, Sir Keith	Pilklngton, Capt. R. A.
Digby, Simon Wingfield	Joynson-Hicks, Hon. Sir Lancelot	Pitman, I. J.
Donaldson, Cmdr. C. E. McA.	Keegan, D.	Pitt, Miss E. M.
Doughty, C. J. A.	Kerby, Capt. H. B.	Pott, H. P.
Drayson, G. B.	Kerr, H. W.	Powell, J. Enoch
du Cann, E. D. L.	Kershaw, J. A.	Price, Henry (Lewisham, W.)
Duthie, W. S.	Kimball, M.	Prior-Palmer, Brig. O. L.
Eden, J. B. (Bournemouth, West)	Kirk, P. M.	Ralkes, Sir Victor
Elliott, R. W.(N'castle upon Tyne. N.)	Lambton, Viscount	Rees-Davies, W. R.
Errington, Sir Eric	Lancaster, Col. C. G.	Remnant, Hon. P.
Farey-Jones, F. W.	Leather, E. H. C.	Renton, D. L. M.
Fell, A.	Leavey, J. A.	Rldsdale, J. E.
Finlay, Graeme	Leburn, W. G.	Robertson, Sir David
Fisher, Nigel	Legge-Bourke, Maj. E. A. H.	Robinson, Sir Roland (Blackpool, S.)
Fletcher-Cooke, C.	Legh, Hon. Peter (Petersfiled)	Robson-Brown, W.
Foster, John	Lennox-Boyd, Rt. Hon. A. T.	Rodgers, John (Sevenoaks)
Fraser, Hon. Hugh (Stone)	Lindsay, Hon. James (Devon, N.)	Roper, Sir Harold
Fraser, Sir Ian (M'cmbe & Lonsdale)	Linstead, Sir H. N.	Ropner, Col. Sir Leonard
Freeth, Denzil	Lloyd, Maj. Sir Guy (Renfrew, E.)	Russell, R. S.
Garner-Evans, E. H.	Longden, Gilbert	Schofield, Lt.-Col. W.
Gibson-Watt, D.	Low, Rt. Hon. A. R. W.	Scott-Miller, Cmdr. R.
Glover, D.	Lucas, Sir Jooelyn (Portsmouth, S.)	Sharpies, R. C.
Gomme-Duncan, Col. Sir Alan	Lucas, P. B. (Brentford & Chiswick)	Shepherd, William
Goodhart, Philip	Lucas-Tooth, Sir Hugh	Simon, J. E. S. (Middlesbrough, W.)
Cough, C. F. H.	Mckibbin, A. J.	Smithers, Peter (Winchester)
Gower, H. R.	Mackie, J. H. (Galloway)	Smyth, Brig. Sir John (Norwood)
Grant-Ferris, Wg Cdr. R. (Nantwich)	McLaughlin, Mrs. P.	Spearman, Sir Alexander
Green, A.	Maclean, Fitzroy (Lancaster)	Spence, H. R. (Aberdeen, W.)
Gresham Cooke, R.	Macleod, Rt. Hn. Iain (Enfield, W.)	Stanley, Capt. Hon. Richard
Grimston, Hon. John (St. Albans)	Macmillan, Rt. Hn. Harold(Bromley)	Stevens, Geoffrey
Grimston, Sir Robert (Westbury)	Macmillan, Maurice (Halifax)	Steward, Harold (Stockport, S.)
Gurden, Harold	Macpherson, Niall (Dumfries)	Steward, Sir William (Woolwich, W.)
Hall, John (Wycombe)	Maddan, Martin	Stoddart-Scott, Col. M.
Hare, Rt. Hon. J. H.	Maitland, Cdr. J. F. W. (Horncastle)	Storey, S.
Harris, Reader (Heston)	Maitland, Hon. Patrick (Lanark)	Studholme, Sir Henry
Harvey, Air Cdre. A. V. (Macclesfd)	Markham, Major Sir Frank	Sumner, W. D. M. (Orpington)
Harvey, Ian (Harrow, E.)	Marlowe, A. A. H.	Teeling, W.
Harvey, John (Walthamstow, E.)	Marshall, Douglas	Temple, John M.
Harvie-Watt, Sir George	Mathew, R.	Thomas, P. J. M. (Conway)
Hay, John	Maude, Angus	Thompson, Kenneth (Walton)
Heath, Rt. Hon. E. R. G.	Maudling, Rt. Hon. R.	Thompson, Lt.-Cdr. R. (Croydon, S.)
Henderson, John (Cathcart)	Mawby, R. L.	Thorneycroft, Rt. Hon. P.
Hesketh, R. F.	Metllicott, Sir Frank	Thornton-Kemsley, C. N.
Hicks-Beach, Maj. W. W.	Milligan, Rt. Hon. W. R.	Tiley, A. (Bradford, W.)
Hill, Mrs. E. (Wythenshawe)	Molson, Rt. Hon. Hugh	Tilney, John (Wavertree)
Hill, John (S. Norfolk)	Morrison, John (Salisbury)	Turton, Rt. Hon. R. H.
Hinchingbrooke, Viscount	Mott-Radclyffe, Sir Charles	Vane, W. M. F.
Hirst, Geoffrey	Nabarro, G. D. N.	Vaughan-Morgan, J. K.
Hope, Lord John	Nairn, D. L. S.	Vickers, Miss Joan
Hornby, R. P.	Neave, Airey	Vosper, Rt. Hon. D. F.
Hornsby-Smitti, Miss M. P.	Nicholson, Godfrey (Farnham)	Wakefield, Edward (Derbyshire, W.)
Horobin, Sir Ian	Nicolson, N. (B'n'm'th, E. & Chr'ch)	Wakefield, Sir Wavell (St. M'lebone)
Horsbrugh, Rt. Hon. Dame Florence	Noble, Comdr. Rt. Hon. Allan	Wall, Major Patrick
Howard, Gerald (Cambridgeshire)	Nugent, G. R. H.	Ward, Dame Irene (Tynemouth)
Howard, John (Test)	Oakshott, H. D.	Watkinson, Rt. Hon. Harold
Hudson, W. R. A. (Hull, N.)	O'Neill, Hn. Phelim (Co. Antrim, N.)	Webbe, Sir H.
Hughes-Young, M. H. C.	Ormsby-Gore, Rt. Hon. W. D.	Whitelaw, W. S. I
Hurd, A. R.	Orr, Capt. L. P. S.	Williams, Paul (Sunderland, S.)
Hyde, Montgomery	Orr-Ewing, Charles Ian (Hendon, N.)	Wills, G. (Bridgwater)
Hyiton-Foster, Rt. Hon. Sir Harry	Osborne, C.	Wood, Hon. R.
Iremonger, T. L.	Page, R. G.	Woollam, John Victor
Jenkins, Robert (Dulwich)	Pannell, N. A. (Kirkdale)	Yates, William (The Wrekin)
Jennings, J. C. (Burton)	Partridge, E.
Johnson, Dr. Donald (Carlisle)	Peyton, J. W. W.	TELLERS FOR THE NOES:
Johnson, Eric (Blackley)	Pickthorn, K. W. M.	Colonel J. H. Harrison and
Johnson, Howard (Kemptown)	Pike, Miss Mervyn	Mr. Bryan.

Amendment proposed:In page 6, line 24, leave out from beginning to "were" and insert:

"the words 'not chargeable under this Group' "—[Mr. H. Wilson.]

Question put,That the words proposed to be left out, to the word "fifteen", stand part of the Clause.

The Committee divided:Ayes 249, Noes 212.

Division No. 120.]	AYES	[6.20 p.m
Agnew, Sir Peter	Anstruther-Gray, Major Sir William	Balniel, Lord
Aitken, W. T.	Arbuthnot, John	Barber, Anthony
Allan, R. A. (Paddington, S.)	Armstrong, C. W.	Barlow, Sir John
Alport, C. J. M.	Ashton, H.	Barter, John
Amery, Julian (Preston, N.)	Astor, Hon. J. J.	Baxter, Sir Beverley
Amory, Rt. Hn. Heathcoat (Tiverton)	Atkins, H. E.	Beamish, Maj. Tufton
Bell, Philip (Bolton, E.)	Heath, Rt. Hon. E. R. G.	Noble, Comdr. Rt. Hon. Affan
Bell, Ronald (Bucks, S.)	Henderson, John (Catheart)	Nugent, G. R. H.
Bennett, F. M. (Torquay)	Hesketh, R. F.	Oakshott, H. D.
Bennett, Dr. Reginald	Hicks-Beach, Maj. W. W.	O'Neill, Hn. Phellm (Co. Antrim, N.)
Bevins, J. R. (Toxteth)	Hill, Mrs. E. (Wythenshawe)	Orrmby-Gore, Rt. Hon. W. D.
Bldgood, J. C.	Hill, John, (S. Norfolk)	Orr, Capt. L. P. S.
Blggs-Davison, J. A.	Hinchingbrooke, Viscount	Orr-Ewing, Charles Ian (Hendon, N.)
Birch, Rt. Hon. Nigel	Hirst, Geoffrey	Osborne, C.
Black, C. W.	Hope, Lord John	Page, R. G.
Body, R. F.	Hornby R. P.	Pannell, N. A. (Kirkdale)
Bossom, Sir Alfred	Hornsby-Smith, Miss M. P.	Partridge, E.
Boyd-Carpenter, Rt. Hon. J. A.	Horobin, Sir Ian	Peyton, J. W. W.
Boyle, Sir Edward	Horsbrugh, Rt. Hon. Dame Florenca	Pickthorn, K. W. M.
Branie, B. R.	Howard, Gerald (Cambridgeshire)	Pike, Miss Mervyn
Bralthwaite, Sir Albert (Harrow, W.)	Howard, Hon. Greville (St. Ives)	Pitllngton, Capt. R. A.
Bromley-Davenport, Lt.-Col. W. H.	Howard, John (Test)	Pitman, I. J.
Brooke, Rt. Hon. Henry	Hudson, W. R. A. (Hull, N.)	Pitt, Miss E. M.
Brooman-White, R. C.	Hughes-Young, M. H. C.	Pott, H. P.
Butcher, Sir Herbert	Hurd, A. R.	Powell, J. Enoch
Butler, Rt. Hn.R.A.(Safrron Walden)	Hylton-Foster, Rt. Hon. Sir Harry	Price, Henry (Lewisham, W.)
Campbell, Sir David	Iremonger, T. L.	Prior-Palmer, Brig. O. L.
Carr, Robert	Jenkins, Robert (Dulwich)	Raikes, Sir Victor
Cary, Sir Robert	Jennings, J. C. (Burton)	Rees-Davies, W. R.
Channon, Sir Henry	Johnson, Dr. Donald (Carlisle)	Remnant, Hon. P.
Chichester-Clark, R.	Johnson, Erio (Blackley)	Renton, D. L. M.
Clarke, Brig. Terence (Portsmth, W.)	Johnson, Howard (Kemptown)	Ridsdale, J. E.
Cole, Norman	Joseph, Sir Keith	Robertson, Sir David
Conant, Maj. Sir Roger	Joynson-Hicks, Hon. Sir Lancelot	Robson, Sir Roland (Blackpool, S.)
Cooke, Robert C.	Keegan, D.	Robson-Brown, W.
Cooper, A. E.	Kerby, Capt. H. B.	Roper, Sir Harold
Cordeaux, Lt.-Col. J. K.	Kerr, H. W.	Ropner, Col. Sir Leonard
Corfield, Capt. F. V.	Kershaw, J. A.	Russell R. S.
Craddock, Beresford (Spelthorne)	Kimball, M.	Schofield, Lt.-Col. W.
Crosthwaite-Eyre, Col. O. E.	Kirk, P. M.	Scott-Miller, Cmdr. R.
Crowder, Sir John (Finchley)	Lambton, Viscount	Sharples, R. C.
Cunningham, Knox	Lancaster, Col. C. C.	Shepherd, William
Currie, G. B. H.	Leather, E. H. C.	Simon, J. E. S. (Middlesbrough, W.)
Dance, J. C. G.	Leavey, J. A.	Smithers, Peter (Winchester)
D'Avigdor-Goldsmid, Sir Henry	Leburn, W. G.	Smyth, Brig. Sir John (Norwood)
Deedes, W. F.	Legge-Bourke, Maj. E. A. H.	Spearman, Sir Alexander
Digby, Simon Wingfield	Legh, Hon. Peter (Petersfield)	Spence, H. R. (Aberdeen, W.)
Donaldson, Cmdr. C. E. McA.	Lennox-Boyd, Rt. Hon. A. T.	Stanley, Capt. Hon. Richard
Doughty, C. J. A.	Lindsay, Hon. James (Devon, N.)	Stevens, Geoffrey
Drayson, G. B.	Linstead, Sir H. N.	Steward, Harold (Stockport, S.)
du Cann, E. D. L.	Lloyd, Maj. Sir Guy (Renfrew, S.)	Steward, Sir William (Woolwich, W.)
Duthie, W. S.	Longden, Gilbert	Stoddart-Scott, Col. M.
Eden, j. B. (Bournemouth, West)	Low, Rt. Hon. A. R. W.	Storey, S.
Eliott, R. W.(N'castle upon Tyne, N.)	Lucas, Sir Jocelyn (Portsmouth, S.)	Studhoime, Sir Henry
Errington, Sir Eric	Lucas, P. B. (Brentford & Chiswick)	Sumner, W. D. M. (Orpington)
Farey-jones, F. W.	Lucas-Tooth, Sir Hugh	Teeling, W.
Fell, A.	McKibbin, A. J.	Temple, John M.
Finlay, Graeme	Mackie, J. H. (Galloway)	Thomas, P. J. M. (Conway)
Fisher, Nigel	McLaughlin, Mrs. P.	Thompson, Kenneth (Walton)
Fletcher-Cooke, C.	Maclean, Fltzroy (Lancaster)	Thompson, Lt.-Cdr. R.(Croydon, S.)
Foster, John	Macleod, Rt. Hn. Iain (Enfleld, W.)	Thorneycroft, Rt. Hon. P.
Fraser, Hon. Hugh (Stone)	Macmillan, Rt. Hon. Harold(Bromley)	Thornton-Kemsley, C. N.
Fraser, Sir Ian (M'cmbe & Lonsdale)	Macmillan, Maurice (Halifax)	Tiley, A. (Bradford, W.)
Freeth, Denzil	Macpherson, Niall (Dumfries)	Tilney, John (Wavertree)
Garner-Evans, E. H.	Maddan, Martin	Turton, Rt. Hon. R. H.
Gibson-Watt, D.	Maitland, Cdr. J. F. W. (Horncastle)	Vane, W. M. F.
Clover, D.	Maitland, Hon. Patrick (Lanark)	Vaughan-Morgan, J. K.
Gomme-Duncan, Col. Sir Alan	Markham, Major Sir Frank	Vickers Miss Joan
Goodhart, Philip	Marlowe, A. A. H.	Vosper, Rt. Hon. D. F.
Cower, H. R.	Marshall, Douglas	Wakefield, Edward (Derbyshire, W.)
Grant-Ferris, Wg. Cdr. R. (Nantwich)	Mathew, R.	Wakefield, Sir Wavell (St. M'lebone)
Green, A.	Maude, Angus	Wall, Major Patrick
Gresham Cooke, R.	Maudling, Rt. Hon. R.	Ward, Dame Irene (Tynemouth)
Grimston. Hon. John (St. Albans)	Mawby, R. L.	Watkinson, Rt. Hon Harold
Grimston, Sir Robert (Westbury)	Medlicott, Sir Frank	Webbe, Sir H.
Gurden, Harold	Milligan, Rt. Hon. W. R.	Whitelaw, W. S. I
Hall, John (Wycombe)	Molson, Rt. Hon. Hugh	Williams, Paul (Sunderland, S.)
Hare, Rt. Hon. J. H.	Morrison, John (Salisbury)	Wills, C. (Bridgwater)
Harris, Reader (Heston)	Mott-Radclyffe, Sir Charles	Wood, Hon. R.
Harvey, Air Cdre- A. V. (Macclesfd)	Nabarrc, G. D. N.	Woollam, John Victor
Harvey, Ian (Harrow, E.)	Nairn, D. L. S.	Yates, William (The Wrekin)
Harvey, John (Walthamstow, E.)	Neave, Airey
Harvie-Watt, Sir George	Nicholson, Godfrey (Farnham)	TELLERS FOR THE AYES:
Hay, John	Nicolson, N. (Bn'm'th, E. A Chr'ch)	Colonel J. H. Harrisod and
		Mr. Bryan.

NOES
Alnsley, J. W.	Hall, Rt. Hn. Glenvil (Colne Valley)	Paton, John
Albu, A. H.	Hamilton, W. W.	Pearson, A.
Allen, Arthur (Bosworth)	Hannan, W.	Pentland, N.
Allen, Scholefield (Crewe)	Harrison, J. (Nottingham, N.)	Plummer, Sir Leslie
Awbery, S. S.	Hastings, S.	Price, J. T. (Westhoughton)
Bacon, Miss Alice	Hayman, F. H.	Price, Philips (Gloucestershire, W.)
Baird, J.	Healey, Denis	Probert, A. R.
Balfour, A.	Henderson, Rt. Hn. A. (Rwly Regis)	Proctor, W. T.
Bellenger, Rt. Hon. F. J.	Hewitson, Capt. M.	Pursey, Cmdr. H.
Benn, Hn. Wedgwood (Bristol, S.E.)	Hobson, C. R. (Keighley)	Randall, H. E.
Benson, G	Holt, A. F.	Rankin, John
Beswick, Frank	Houghton, Douglas	Redhead, E. C.
Bevan, Rt. Hon. A. (Ebbw Vale)	Howell, Charles (Perry Barr)	Reeves, J.
Blackburn, F.	Howell, Denis (All Saints)	Reid, William
Blenkinsop, A.	Hubbard, T. F.	Rhodes, H.
Blyton, W. R.	Hughes, Cledwyn (Anglesey)	Robens, Rt. Hon. A.
Boardman, H.	Hughes, Emrys (S. Ayrshire)	Roberts, Albert (Normanton)
Bowden, H. W. (Leicester, S.W.)	Hunter, A. E.	Roberts, Goronwy (Caernarvon)
Bowen, E. R. (Cardigan)	Hynd, J. B. (Attercliffe)	Robinson, Kenneth (St. Pancras, N.)
Bowles, F. G.	Irvine, A. J. (Edge Hill)	Ross, William
Boyd, T. C.	Irving, Sydney (Dartford)	Shinwell, Rt. Hon. E.
Braddock, Mrs., Elizabeth	Isaacs, Rt. Hon. G. A.	Silverman, Julius (Aston)
Brockway, A. F.	Janner, B.	Silverman, Sydney (Nelson)
Broughton, Dr. A. D. D.	Jay, Rt. Hon. D. P. T.	Simmons, C. J. (Brierley Hill)
Brown, Thomas (Ince)	Jegor, George (Goole)	Slater, J. (Sedgefield)
Burke, W. A.	Jenkins, Roy (Stechford)	Smith, Ellis (Stoke, S.)
Butler, Herbert (Hackney, C.)	Johnson, James (Rugby)	Snow, J. W.
Butler, Mrs. Joyce (Wood Green)	Jones, David (The Hartiepools)	Sorensen, R. W.
Carmichael, J.	Jones, Elwyn (W. Ham, S.)	Soskice, Rt. Hon. Sir Frank
Champion, A. J.	Key, Rt. Hon. C. W.	Sparks, J. A.
Chapman, W. D.	King, Dr. H. M.	Steele, T.
Chetwynd, G. R.	Lawson, G. M.	Stewart, Michael (Fulham)
Clunie, J.	Lee, Frederick (Newton)	Stokes, Rt. Hon. R. R. (Ipswich)
Coldrick, W.	Lee, Miss Jeannie (Cannock)	Stonehouse, John
Collick, P. H. (Birkenhead)	Logan, D. G.	Stones, W. (Consett)
Collins, V. J. (Shoreditch & Finsbury)	Mabon, Dr. J. Dickson	Strauss, Rt. Hon. George (Vauxhall)
Craddock, George (Bradford, S.)	MacDermot, Niall	Stross, Dr. Barnett(Stoke-on-Trent,C.)
Cronin, J. D.	McGhee, H. G.	Summerskill, Rt. Hon. E.
Crossman, R. H. S.	McInnes, J.	Sylvester, G. O.
Cullen, Mrs. A.	McKay, John (Wallsend)	Taylor, Bernard (Mansfield)
Darling, George (Hillsborough)	MacMillan, M. K. (Western Isles)	Taylor, John (West Lothian)
Davies, Rt. Hon. Clement(Montgomery)	Mahon, Simon	Thomas, lorwerth (Rhondda, W.)
Davies, Stephen (Merthyr)	Mainwaring, W. H.	Thomson, George (Dundee, E.)
Dodds, N. N.	Mallalleu, J. P. W. (Huddersfd, E.)	Thornton, E.
Donnelly, D. L.	Mann, Mrs. Jean	Ungoed-Thomas, Sir Lynn
Dugdale, Rt. Hn. John(W. Brmwch)	Marquand, Rt. Hon. H. A.	Usborne, H. C.
Dye, S.	Mason, Roy	Viant, S. P.
Ede, Rt. Hon. J. C.	Mayhew, C. P.	Wade, D. W.
Edelman, M.	Mellish, R. J.	Weitzman, D.
Edwards, Rt. Hon. John (Brighouse)	Messer, Sir F.	Wells, Percy (Faversham)
Edwards Rt. Hon. Ness (Caerphilly)	Mikardo, Ian	Wells, William (Walsall, N.)
Edwards, Robert (Bilston)	Mitchison, G. R.	West, D. G.
Edwards, W. J (Stepney)	Monslow, W.	Wheeldon, W. E.
Evans, Albert (Islington, S.W.)	Moody, A. S.	Wigg, George
Fernyhough, E.	Morris, Percy (Swansea, W.)	Wilcock, Group Capt. C. A. B.
Fienburgh, W.	Morrison, Rt. Hn. Herbert(Lewis'm,S.)	Wilkins, W. A.
Finch, H. J.	Mort, D. L.	Willey, Frederick
Fletcher, Eric	Moyle, A.	Williams, David (Neath)
Forman, J. C.	Mulley, F. W.	Williams, Rev. Llywelyn (Ab'tillery)
Fraser, Thomas (Hamilton)	Neal, Harold (Bolsover)	Williams, Ronald (Wigan)
Gaitskell, Rt. Hon. H. T. N.	Noel-Baker, Francis (Swindon)	Williams, Rt. Hon. T. (Don Valley)
George, Lady Megan Lloyd (Car'then)	Noel-Baker, Rt. Hon. P. (Derby, S.)	Williams, W. R. (Openshaw)
Gibson, C. W.	Oliver, G. H.	Wilson, Rt. Hon. Harold (Huyton)
Gooch, E. G.	Orbach, M.	Winterbottom, Richard
Gordon Walker, Rt. Hon. P. C.	Owen, W. J.	Woodburn, Rt. Hon. A.
Greenwood, Anthony	Paget, R. T.	Woof, R. E.
Grenfell, Rt. Hon. D. R.	Paling, Rt. Hon. W. (Dearne Valley)	Yates, V.(Ladywood)
Grey, C. F.	Palmer, A. M. F.	Younger, Rt. Hon. K.
Griffiths, David (Rother Valley)	Panned, Charles (Leeds, W.)
Griffiths, William (Exchange)	Pargiter, G. A.	TELLERS FOR THE NOES:
Grimond, J.	Parker, J.	Mr. Holmes and Mr. Deer.
Hale, Leslie	Parkin, B. T.

Amendment Proposed: In Page 6, line 24, leave out "fifteen" and insert "five".—[Mr. H. Wilison.]

Question put,That "fifteen" stand part of the Clause:—

The Committee divided:Ayes 246 Noes 213.

Division No. 121.]	AYES	[6.30 p.m.
Agnew, Sir Peter	Freeth, Denzil	McLaughlin, Mrs. P.
Aitken, W. T.	Garner-Evans, E. H.	Maclean, Fitzroy (Lancaster)
Allan, R. A. (Paddington, S.)	Gibson-Watt, D.	Macleod, Rt. Hn. Iain (Enfleld, W.)
Alport, C. J. M.	Glover, D.	Macmillan, Rt. Hn. Harold(Bromley)
Amery, Julian (Preston, N.)	Gonvne-Duncan, Col. Sir Alan	Macmillan, Maurice (Halifax)
Amory, Rt. Hn. Heathcoat (Tlverton)	Goodhart, Philip	Macpherson, Niall (Dumfries)
Anstruther-Gray, Major Sir William	Cough, C. F. H.	Maddan, Martin
Arbuthnot, John	Cower, H. R.	Maitland, Cdr. J. F. W. (Horncastle)
Armstrong, C. W.	Grant-Ferris, Wg Cdr. R. (Nantwich)	Maitland, Hon. Patrick (Lanark)
Aihton, H.	Green, A.	Markham, Major Sir Frank
Astor, Hen. J. J.	Gresham Cooke, R.	Marlowe, A. A. H.
Atkins, H. E.	Grimston, Hon. John (St. Albans)	Marshall, Douglas
Baldock, Lt.-Cmdr. J. M.	Grimston, Sir Robert (Westbury)	Mathew, R.
Balniel, Lord	Gurden, Harold	Maude, Angus
Barber, Anthony	Hall, John (Wycombe)	Maudling, Rt. Hon. R.
Barlow, Sir John	Hare, Rt. Hon. J. H.	Mawby, R. L.
Barter, John	Harris, Reader (Heston)	Medllcott, Sir Frank
Baxter, Sir Beverley	Harrison, Col. J. H. (Eye)	Milllgan, Rt. Hon. W. R.
Beamish, Maj. Tufton	Harvey, Air care. A. V. (Macclesfd)	Molson, Rt. Hon. Hugh
Bell, Philip (Bolton, E.)	Harvey, Ian (Harrow, E.)	Morrison, John (Salisbury)
Bennett, F. M. (Torquay)	Harvey, John (Walthamstow, E.)	Mott-Radclyffe, Sir Charles
Bennett, Dr. Reginald	Harvie-Watt, Sir George	Nabarro, G. D. N.
Bevins, j. R. (Toxteth)	Hay, John	Nairn, D. L. S.
Bidgood, J. C.	Heath, Rt. Hon. E. R. G.	Neave, Airey
Biggs-Davison, J. A.	Henderson, John (Cathcart)	Nicholson, Godfrey (Farnham)
Birch, Rt. Hon. Nigel	Hesketh, R. F.	Nicolson, N. (B'n'm'th, E. & Chr'ch)
Black, C. W.	Hioks-Beach, Maj. W. W.	Noble, Comdr. Rt. Hon. Allan
Body, R. F.	Hill, Mrs. E. (Wythenshawe)	Nugent, G. R. H.
Bossom, Sir Alfred	Hill, John (S. Norfolk)	Oakshott, H. D.
Boyd-Carpenter, Rt. Hon. J. A.	Hinchingbrooke, Viscount	O'Neill, Hn. Phelim (Co. Antrim, N.)
Boyle, Sir Edward	Hirst, Geoffrey	Ormsby-Gore, Rt. Hon. W. D.
Braine, B. R.	Hope, Lord John	Orr, Capt. L. P. S.
Bralthwaite, Sir Albert (Harrow, W.)	Hornby, R. P.	Orr-Ewing, Charles Ian (Hendon, N.)
Bromley-Davenport, Lt.-Col. W. H.	Hornsby-Smith, Miss M. P.	Osborne, C.
Brooke, Rt. Hon. Henry	Horobin, Sir Ian	Page, R. G.
Bryan, P.	Horsbrugh, Rt. Hon. Dame Florence	Panned, N. A. (Klrkdale)
Butcher, Sir Herbert	Howard, Gerald (Cambridgeshire)	Partridge, E.
Butler, Rt. Hn. R. A.(Saffron Walden)	Howard, Hon. Greville (St. Ives)	Peyton, J. W. W.
Campbell, Sir David	Howard, John (Test)	Pickthorn, K. W. M.
Carr, Robert	Hudson, W. R. A. (Hull, N.)	Pike, Miss Mervyn
Cary, Sir Robert	Hughes-Young, M. H. C.	Pilkington, Capt. R. A.
Channon, Sir Henry	Hurd, A. R.	Pitman, I. J.
Chichester-Clark, R.	Hylton-Foster, Rt. Hon. Sir Harry	Pitt, Miss E. M.
Clarke, Brig. Terence (Portsmth, W.)	Iremonger, T. L.	Pott, H. P.
Cole, Norman	Jenkins, Robert (Dulwich)	Powell, J. Enoch
Conant, Maj. Sir Roger	Jennings, J. C. (Burton)	Prior-Palmer, Brig. O. L.
Cooke, Robert G.	Johnson, Dr. Donald (Carlisle)	Raikes, Sir Victor
Cooper, A. E.	Johnson, Eric (Blackley)	Rees-Davies, W. R.
Cordeaux, Lt.-Col. J. K.	Johnson, Howard (Kemptown)	Remnant, Hon. P.
Corfieid, Capt. F. V.	Joseph, Sir Keith	Renton, D. L. M.
Craddock, Beresford (Spelthorne)	Joynson-Hicks, Hon. Sir Lancelot	Rldsdale, J. E.
Crosthwaite-Eyre, Col. O. E.	Keegan, D.	Robertson, Sir David
Crowder, Sir John (Finchley)	Kerby, Capt. H. B.	Robinson, Sir Roland (Blackpool, S.)
Cunningham, Knox	Kerr, H. W.	Robson-Brown, W.
Currie, G. B. H.	Kershaw, J. A.	Roper, Sir Harold
Dance, J. C. G.	Kimball, M.	Ropner, Col. Sir Leonard
D'Avigdor-Goldsmid, Sir Henry	Kirk, P. M.	Russell, R. S.
Deedes, W. F.	Lambton, Viscount	Schofield, Lt.-Col. W.
Digby, Simon Wingfield	Lancaster, col. C. G.	Scott-Miller, Cmdr. R.
Donaldson, cmdr. C. E. McA.	Leather, E. H. C.	Sharpies, R. C.
Doughty, C. J. A.	Leavey, J. A.	Shepherd, William
Dray son, G. B.	Leburn, W. G.	Simon, J. E. S. (Middlesbrough, W.)
du Cann, E. D. L.	Legge-Bourke, Maj. E. A. H.	Smithers, Peter (Winchester)
Duthie, W. S.	Legh, Hon. Peter (Petersfleid)	Smyth, Brig. Sir John (Norwood)
Eden, J. B. (Bournemouth, West)	Lindsay, Hon. James (Devon, N.)	Spearman, Sir Alexander
Elliott, R. W.(N'castle upon Tyne.N.)	Linstead, Sir H. N.	Stanley, Capt. Hon. Richard
Errington, Sir Eric	Lloyd, Maj. Sir Guy (Renfrew, E.)	Stevens, Geoffrey
Farey-Jones, F. W.	Longdon, Gilbert	Steward, Harold (Stockport, S.)
Fell, A.	Low, Rt. Hon. A. R. W.	Steward, Sir William (Woolwich, W.)
Finlay, Graeme	Lucas, Sir Jocelyn (Portsmouth, S.)	Stoddart-Scott, Col. M.
Fisher, Nigel	Lucas, P. B. (Brentford & Chiswick)	Storey, S.
Fletcher-Cooke, C.	Lucas-Tooth, Sir Hugh	Studholme, Sir Henry
Fort, R.	Mckibbin, A. J.	Sumner, W. D. M. (Orpington)
Fraser, Sir Ian (M'cmbe & Lonsdale)	Mackie, J. H. (Galloway)	Teeling, W.
Temple, John M.	Vane, W. M. F.	Webbe, Sir H.
Thomas, P. J. M. (Conway)	Vaughan-Morgan, J. K.	Whitelaw, W. S. I
Thompson, Kenneth (Walton)	Vickers, Miss Joan	Williams, Paul (Sunderland, S.)
Thompson, Lt.-Cdr. R. (Croydon, S.)	Vosper, Rt. Hon. D. F.	Wood, Hon. R.
Thorneycroft, Rt. Hon. P.	Wakefield, Edward (Derbyshire, W.)	Woollam, John Victer
Thornton-Kemsley, C. N.	Wakefield, Sir Wavell (St. M'lebone)	Yates, William (The Wrekin)
Tiley, A. (Bradford, W.)	Wall, Major Patrick
Tilney, John (Wavertree)	Ward, Dame Irene (Tynemouth)	TELLERS FOR THE AYES:
Turton, Rt. Hon. R. H.	Watklnson, Rt. Hon. Harold	Mr. Wills and Mr. Brooman-White.
NOES
Ainsley, J. W.	Hale, Leslie	Parkin, B. T.
Albu, A. H.	Hall, Rt. Hn. Glenvil (Colne Valley)	Paton, John
Allaun, Frank (Salford, E.)	Hamilton, W. W.	Pearson, A.
Allen, Arthur (Bosworth)	Hannan, W.	Pentland, N.
Allen, Scholefield (Crewe)	Harrison, J. (Nottingham, N.)	Plummer, Sir Leslie
Awbery, S. S.	Hastings, S.	Price, J. T. (Westhoughton)
Bacon, Miss Alice	Hayman, F. H.	Probert, A. R.
Baird, J.	Healey, Denis	Proctor, W. T.
Balfour, A.	Henderson, Rt. Hn. A. (Rwly Regis)	Pursey, Cmdr. H.
Benn, Hn. Wedgwood (Bristol, S.E.)	Hewitson, Capt. M.	Randall, H. E.
Benson, G.	Hobson, C. R. (Keighley)	Rankin, John
Beswick, Frank	Holt, A. F.	Redhead, E. C.
Bevan, Rt. Hon. A. (Ebbw Vale)	Houghton, Douglas	Reeves, J.
Blackburn, F.	Howell, Charles (Perry Barr)	Reid, William
Blenkinsop, A.	Howell, Denis (All Saints)	Rhodes, H.
Blyton, W. R.	Hubbard, T. F.	Robens, Rt. Hon. A.
Boardman, H.	Hughes, Cledwyn (Anglesey)	Roberts, Albert (Normanton)
Bowden, H. W. (Leicester, S.W.)	Hughes, Emrys (S. Ayrshire)	Roberts, Goronwy (Caernarvon)
Bowen, E. R. (Cardigan)	Hunter, A. E.	Robinson, Kenneth (St. Pancras, N.)
Bowles, F. G.	Hynd, J. B. (Atteroliffe)	Ross, William
Boyd, T. C.	Irvine, A. J. (Edge Hill)	Shinwell, Rt. Hon. E.
Braddock, Mrs. Elizabeth	Irving, Sydney (Dartford)	Silverman, Julius (Aston)
Brock way, A, F.	Isaaos, Rt. Hon. G. A.	Silverman, Sydney (Nelson)
Broughton, Or. A. D. D.	Janner, B.	Simmons, C. J. (Brierley Hill)
Brown, Thomas (Ince)	Jay, Rt. Hon. D. P. T.	Skefftngton, A. M.
Burke, W. A.	Jeger, George (Goole)	Slater, J. (Sedgefield)
Butler, Herbert (Hackney, C.)	Jenkins, Roy (Stechford)	Smith, Ellis (Stoke, S.)
Butler, Mrs. Joyce (Wood Green)	Johnson, James (Rugby)	Snow, J. W.
Carmichael, J.	Jones, David (The Hartlepools)	Sorensen, R. W.
Champion, A. J.	Jones, Elwyn (W. Ham, S.)	Soskice, Rt. Hon. Sir Frank
Chapman, W. D.	Key, Rt. Hon. C. W.	Sparks, J. A.
Chetwynd, G. R.	King, Dr. H. M.	Steele, T.
Clunle, J.	Lawson, G. M.	Stewart, Michael (Fulham)
Coldrick, W.	Leo, Frederick (Newton)	Stokes, Rt. Hon. R. R. (Ipswich)
Coilick, P. H. (Birkenhead)	Lee, Miss Jennie (Cannock)	Stonehouse, John
Collins, V. J. (Shoreditch & Finsbury)	Logan, D. G.	Stones, W. (Gonsett)
Craddock, George (Bradford, S.)	Mabon, Dr. J. Dickson	Strauss, Rt. Hon. George (Vauxhall)
Cronin, J. D.	MacDermot, Niall	Stross, Dr. Bamett(Stoke-on-Trent,C.)
Crossman, R. H. S.	McGhee, H. G.	Summerskill, Rt. Hon. E.
Cullen, Mrs. A.	McInnes, J.	Sylvester, G. O.
Darling, George (Hillsborough)	McKay, John (Wallsend)	Taylor, Bernard (Mansfield)
Davies, Rt. Hon. Clement(Montgomery)	MacMillan, M. K. (Western Isles)	Taylor, John (West Lothian)
Davies, Stephen (Merthyr)	Mahon, Simon	Thomas, Iorwerth (Rhondda, W.)
Dodds, N. N.	Mainwaring, W. H.	Thomson, George (Dundee, E.)
Donnelly, D. L.	Mallalieu, J. P. W. (Huddersfd, E.)	Thornton, E.
Dugdale, Rt. Hn. John (W. Brmwch)	Mann, Mrs. Jean	Ungoed-Thomas, Sir Lynn
Dye, S.	Marquand, Rt. Hon. H. A.	Usborne, H. C.
Ede, Rt. Hon. J. C.	Mason, Roy	Viant, S. P.
Edelman, M.	Mayhew. C. P.	Wade, D. W.
Edwards, Rt. Hon. John (Brighouse)	Melllsh, R. J.	Weitzman, D.
Edwards, Rt. Hon. Ness (Caerphilly)	Messer, Sir F.	Wells, Percy (Faversham)
Edwards, Robert (Bilston)	Mikardo, Ian	Wells, William (Walsall, N.)
Edwards, W. J. (Stepney)	Mltchlson, G. R.	West, D. G.
Evans, Albert (Islington, S.W.)	Mcnslow, W.	Wheeldon, W. E.
Evans, Edward (Lowestoft)	Moody, A. S.	Wigg, George
Fernyhough, E.	Morris, Percy (Swansea, W.)	Wlloock, Group Capt. C. A. B.
Fienburgh, W.	Morrison, Rt. Hn. Herbert(Lewls'm.S.)	Wilkins, W. A.
Flnch, H. J.	Mort, D. L.	Willey, Frederick
Fletcher, Eric	Moyle, A.	Williams, David (Neath)
Forman, J. C.	Mulley, F. W.	Williams, Rev. Llywelyn (Ab'tillery)
Fraser, Thomas (Hamilton)	Neal, Harold (Bolsover)	Williams, Ronald (Wigan)
Galtskell, Rt. Hon. H. T. N.	Noel-Baker, Francis (Swindon)	Williams, Rt. Hon. T. (Don Valley)
George, Lady Megan Lloyd(Car'then)	Noel-Baker, Rt. Hon. P. (Derby, S.)	Williams, W. R. (Openshaw)
Gibson, C. W.	Oliver, G. H.	Wilson, Rt. Hon. Harold (Huyton)
Gooch, E. G.	Orbaoh, M.	Winterbottom, Richard
Gordon Walker, Rt. Hon. P. C.	Owen, W. J.	Woodburn, Rt. Hon. A.
Greenwood, Anthony	Paget, R. T.	Woof, R. E.
Grenfeli, Rt. Hon. D. R.	Paling, Rt. Hon. W. (Dearne Valley)	Yates, V. (Ladywood)
Grey, C. F.	Palmer, A. M. F.	Younger, Rt. Hon. K.
Griffiths, David (Rother Valley)	Panned, Charles (Leeds, W.)
Griffiths, William (Exchange)	Pargiter, G. A.	TELLERS FOR THE NOES:
Crimond, J.	Parker, J.	Mr. Deer and Mr. Holmes.

Mr. Collins

I beg to move, in page 6, line 40, to leave out paragraph (b).

The paragraph deals with sewing machines which are not operated by electricity, not the commercial kinds which are already exempted from tax, but either hand or treadle machines used exclusively for domestic purposes. The Economic Secretary will be aware that Clause 6 reduces Purchase Tax on articles in Group 12 (a) from 30 per cent. to 15 per cent. The articles in that group are described in the Customs and Excise Notice as appliances and apparatus of a domestic character. There is no difficulty in saying whether an article in that group is of a domestic character. In our previous discussion the Financial Secretary told us that one of the great difficulties was in saying precisely what was for domestic use.

Group 12 (a) consists of domestic articles. There is, however, one exception, because the Chancellor has gone out of his way to say that Purchase Tax on sewing machines, which are domestic appliances, shall not be reduced to 15 per cent. with the rest of the group, but, for some extraordinary and inexplicable reason, will be maintained at 30 per cent. The purpose of the Amendment is to delete paragraph (b) to ensure that sewing machines are treated on terms similar to those applying to other domestic appliances in the group.

We would very much like to see Purchase Tax on sewing machines removed, but the Amendment merely restores the machines to the group and to having a tax of 15 per cent. I hope that the Economic Secretary will accept the Amendment, but, if that is not possible, that he will say why the Chancellor has singled out this item for victimisation. All other domestic articles have had Purchase Tax reduced, but on the humble sewing machine it is to be maintained at 30 per cent. In other words, it is relatively an increased tax.

It seems that the Chancellor occasionally pursues vendettas against particular objects and the sewing machine seems to be one of them. The Committee will remember that for nearly two years manufacturers have had to contend with all the difficulties arising from the penal 50 per cent. initial deposit on hire purchase of these machines. A very high proportion of sewing machines are sold to poor people and, therefore, through hire purchase. Sewing machines were one of the first things to be sold on hire-purchase agreements. Even during the war 10 per cent. of the output was set aside for such sales. The present 50 per cent. initial deposit almost put an end to that type of business and, consequently, in one of the leading manufacturing companies there has been considerable redundancy and unemployment.

The Chancellor has now gone out of his way to maintain this very high rate of Purchase Tax while reducing everything else in the same class. I put it to the Economic Secretary that the actual impost on these goods when they reach the customer is more than 30 per cent. Other margins are added because the tax is paid by the manufacturer, who has his own costs as a tax gatherer, and also by the retailer. It is, therefore, a considerable addition.

It cannot be argued that the 30 per cent. tax on sewing machines is being retained because they are being left with the same tax as vacuum cleaners and washing machines, which are electrically operated. We are here talking about hand sewing machines. Electrically operated machines are free of tax. The Economic Secretary will agree that home sewing machines are neither luxuries nor consumer goods. A sewing machine is of a domestic character and is an article capable of use over a lifetime, indeed, in some families extending over more than one lifetime. It is responsible for saving money in the home and labour in the factories.

6.45 p.m.

During the war it was featured in the Government's "Make do and mend" campaign. Certainly, working mothers with young children cannot do without their sewing machines. During the last seven years the Singer Company alone has trained nearly 250,000 customer students in the art of home dressmaking. A sewing machine enables economies to be made. It encourages thrift. What possible justification could there be for deliberately maintaining a 30 per cent. tax on this humble, essential, moneysaving machine which is such an encouragement to thrift?

The high tax will definitely affect exports. The biggest company is, of course, in an extremely strong position because it has been exporting about 90 per cent. of its total output, an extraordinarily high percentage which is probably unmatched in any other industry or by any other company. It cannot be argued that the tax will encourage exports. Other companies are not so well placed. About two years ago the second largest company was exporting about 45 per cent. of its output, but the penal hire-purchase deposits, to which I have referred, greatly reduce its export potentiality because, by reducing the company's output, it increased its costs and, therefore, the proportion of exports, affected by cheap German and Japanese machines, dropped to about 20 per cent. of output.

To meet the competition, the company embarked on an ambitious production programme with the object of reducing costs and prices, but that was defeated by the excessively high initial deposit, and the high rate of tax has so affected sales that the company has had to cut production and discharge highly skilled workers. The people who make and service sewing machines are very highly skilled workers whose replacement is a difficult and long process.

If the tax is removed or as the Amendment asks, at least reduced to 15 per cent., home demand will be stimulated with a consequent increase in production and reduction of costs, thus making possible increased exports. I hope that the Economic Secretary will answer that case. From every point of view it is a bad, unfair and totally unjustifiable tax. For the sake of the hardworking women who need these machines, for the sake of the continued employment of the workers who make them, and for the sake of the export trade, we ask that the Government will take the sensible and just step of accepting the Amendment.

Mrs. Alice Cullen (Glasgow, Gorbals)

I should like to say a few words on this question of the tax on sewing machines. In my submission, there should be no tax at all, because a sewing machine is essential to the housewife. Much concern has been expressed about women going out to work and leaving young children at home. Some women do not go out to work; they take in sewing work to augment their income and stay at home with their children. The Economic Secretary should take that fact into consideration. Housewives need sewing machines. If they have them they can do work and stay at home with their children at the same time. It would be better to have no tax at all on this very essential part of household equipment.

Mrs. Mann

I find it very difficult to understand why the homely, hand-driven or foot-pedalled sewing machine should be singled out for tax. As my hon. Friend has stated, we are thinking in terms of those women who take in sewing work and stay at home with their children, the mothers who are trying to make ends meet and who decide that they can make up little dresses for their children and even dresses for themselves. The Chancellor might give them some encouragement. because they are helping to prevent inflation by living within their incomes, and, at the same time, they are clothing their children fairly well.

I was astonished to hear the hon. Member for Tynemouth (Dame Irene Ward) cut her own Front Bench mercilessly when she stated that the right hon. Gentlemen thereon had no consideration whatever for women and the home. Far be it from me to come to the rescue of the Chancellor of the Exchequer. I recall a time when he had a great interest in mothers and when, for months, he plodded on making speeches upon the subject of analgesia, thereby showing that he knew something of the trials of the mother-to-be.

I would direct the right hon. Gentleman's attention to the fact that if there is one time in one's married life when the sewing machine is absolutely essential it is the time when the mother—whether or not she gets analgesia—is looking forward to an exciting event. Very few women go so far as to go out and buy the necessary garments ready made; they like to make them themselves, and the sewing machine is usually bought at that time.

When the Financial Secretary spoke on a previous Amendment he said that if he gave way it would mean a reduction in revenue of £9 million, which would go straight into consumption. These thrifty housewives who cannot even afford electric machines help to stop inflation and prevent extravagant consumption by doing all these little jobs themselves in their homes. I should have thought that a Chancellor who did so much to try to provide analgesia for housewives—so much so that he even went as far north as Coatbridge, where he ascertained the respective numbers of mothers who had gas and air and the number who had not—would have given way, but if he does not, am I to think that all the talking that he did on behalf of the mothers was merely gas and air, and that he did not have any genuine consideration for the struggle of the mothers? Or can it be that since the right hon, Gentleman became Chancellor he has had rather a heavy dose of analgesia himself and just does not know what he is doing?

At any rate, I join my hon. Friends in asking for the abolition of this tax upon the homely and humble sewing machine that is not run by electricity.

The Economic Secretary to the Treasury (Mr. Nigel Birch)

The hon. Member for Shoreditch and Finsbury (Mr. Collins) said that he feared that the Chancellor of the Exchequer had a vendetta against those who did their sewing at home. I can assure him that that is not true and that, contrary to what my hon. Friend the Member for Tynemouth (Dame Irene Ward) and the hon. Member for Coatbridge and Airdrie (Mrs. Mann) have said, he and his two assistants are highly domesticated. We see the point very acutely. The hon. Member very rightly asked why it was that sewing machines had been excepted in this special way, and he hazarded a number of guesses upon the subject.

The reason that all Governments have kept hand- and treadle-operated sewing machines and electrically-operated sewing machines together, taxing them at the same rate, is that it is extremely difficult to distinguish between the two. One can turn a hand-operated sewing machine into an electrically-driven sewing machine by fixing a final drive, which can be produced separately. Therefore, it has been the policy of all Governments to tax hand-operated and electrically-operated sewing machines at the same rate.

Mr. Collins

I hesitate to put this submission forward, and I do so with the utmost diffidence, but I think that the right hon. Gentleman is in error. Group 12 (a) refers to Appliances and apparatus not designed for operation by electricity or gas … I specifically pointed out that electrically-operated sewing machines, which are usually regarded as industrial machines, are not subject to tax at all. That is my understanding. I checked up on the matter before I spoke and I am certain that I am right. A very serious position is, therefore, created.

Mr. Birch

I think that the hon. Member is wrong. Obviously, an industrial sewing machine would be tax-free, but not a sewing machine for domestic use. I can assure him that that is taxed at the same rate of the hand-operated machine.

Mr. Collins

Will the right hon. Gentleman look at page 36 of the Notice issued by the Commissioners of Customs and Excise? Under the heading "Group 12", paragraph (a) specifically refers to Appliances and apparatus not designed for operation by electricity or gas … Can he tell me under which paragraph electric sewing machines are charged at a 30 per cent. tax or any other tax?

Mr. Birch

I have just checked up on the matter and I am assured that domestic sewing machines are charged at 30 per cent., as are domestic electric sewing machines. I will obtain the reference for the hon. Member in a moment.

The hon. Member for Gorbals (Mrs. Cullen) and the hon. Member for Coat-bridge and Airdrie were against any tax at all, whereas the Amendment merely seeks to reduce it to 15 per cent. I quite agree with the hon. Ladies. Like all the other items of Purchase Tax, it is something we would rather not have. But these things always have been taxed. I do not wish to make a point of this, but they were taxed at a higher rate under the Socialist Government than under these proposals. I am sorry, but I must resist this Amendment, though it is one with which the whole Committee might reasonably be in sympathy.

7.0 p.m.

Mr. Douglas Houghton (Sowerby)

As I understand it, these sewing machines were subject to a 25 per cent. Purchase Tax before the then Chancellor introduced his autumn Budget in 1955. Then the tax was increased to 30 per cent Now the Chancellor proposes to leave sewing machines out of the items for which he is making a reduction in Group 12 (a). It would appear as though the increase in the Purchase Tax made two years ago is to stay put on sewing machines, whereas it is to be reduced on all the other articles on which there was an increase in 1955.

A short while ago the Financial Secretary gave an assurance that the tax on all articles which were exempt before the autumn Budget of 1955 and were then made subject to a 30 per cent. tax is to be reduced to 15 per cent, or less, by the provisions of this Clause. That is the history of the matter and so it appears that sewing machines of both kinds may be the subject of a grievance. The tax on them has gone up and not come down. In 1955 the then Chancellor justified the additional Purchase Tax he was imposing on the ground that he wanted to reduce consumption. Already this afternoon there have been arguments about whether the purpose of Purchase Tax is to yield revenue or to restrict consumption. May I quote what the then Chancellor, now the Lord Privy Seal, said during his Budget statement on 26th October, 1955. I am satisfied, however, that some direct restraint on consumption is also required. For this purpose there is one revenue measure which lies ready to hand and is immediate in its effect—an increase in the Purchase Tax. I therefore propose a general increase in the existing rates of Purchase Tax. These are at present 25 per cent."— I believe that then sewing machines were taxed at 25 per cent.— 50 per cent. and 75 per cent.; and I propose that they should be 30 per cent., 60 per cent. and 90 per cent…."—[OFFICIAL REPORT, 26th October, 1955; Vol. 545, c. 221.] The Government are now able to relax the restraint imposed on consumption by this method in 1955. They have relaxed it in other directions by halving the Purchase Tax on appliances which have become subject to a 30 per cent. tax. We wish to know why sewing machines, hand and electrically propelled—if the separation presents any difficulty—cannot be included in the items for which a reduction is given on the Purchase Tax which was increased two years ago. We do not seem to have had an answer to that. In any case, Purchase Tax on all sewing machines is a miserable tax. It is penalising thrift and domestic endeavour and all the careful habits of our womenfolk, especially those with children who have to sew for their children or otherwise the expense of clothing might prove too high.

The right hon. Gentleman has heard moving appeals from two of my hon. Friends who speak with first-hand experience. We must ask him to be a little more forthcoming, if there is to be a constructive Committee stage of the Finance Bill, as the Chancellor of the Exchequer hoped that there would be. When are we to make a start? We are told that we cannot have the big things, because they are too big, and now, apparently, we are being told that we cannot have the little things because of those Treasury twins that bedevil the whole incidence of Purchase Tax, reaction and repercussion. We are told that if we exempt this from tax or reduce the tax, we shall be confronted with fresh difficulties, like the difficulty we heard about from the Financial Secretary a little while ago. We are told that if the tax on ordinary mirrors is reduced—mirrors which members of the Government do not like looking into—immediately we shall become ensnared by toilet articles—the mirrors that people do like looking into.

Here again, apparently, the problem about sewing machines is that if we buy one with a handle, we may get some mechanical device fitted to it, so that it then becomes a problem of tax evasion. I do not suggest that we should have inspectors to look at these sewing machines, but I do not think that the Chancellor of the Exchequer need worry unduly about the fitting by housewives of mechanical devices to their hand-propelled sewing machines. In any event, since both hand-propelled and mechanically-propelled sewing machines appear to be in the same zone of Purchase Tax, why cannot the Government reduce the tax which was increased in 1955 and apply that benefit to sewing machines, and so begin a constructive stage of these Committee discussions?

Mr. Collins

To save the Economic Secretary the trouble of looking it up, may I say that I have now discovered that domestically operated sewing machines which are electrically driven are subject to a 30 per cent. tax? It is equally true, however, that industrial machines which are electrically driven are not. If the officials of his Department are able to differentiate between an industrial and a domestic electrically-driven sewing machine, surely they can differentiate between a hand-propelled or treadle-operated sewing machine and others.

Mr. Birch

Of course they could, if they saw one. My point was that it is perfectly easy to buy a hand-operated machine and have it turned into an electrically-operated machine.

Of course this tax is not a nice one. All taxes are a "pain in the neck", and I entirely agree with the hon. Member for Sowerby (Mr. Houghton), but I thought that for an hon. Member who was, I understand, a very distinguished tax gatherer, he treated the question of repercussion and reaction rather lightly. The hon. Gentleman will realise that in the case of no electrically-operated devices has the tax been reduced this time. The trouble is that when we get into that sphere, which includes refrigerators, electrical washing machines and so on, the money gets very big indeed, and the Chancellor did not feel that he could

afford a reduction this year. I have given the reasons why the hand-operated sewing machines are classed with the electrically-operated sewing machines. They come into that group, and therefore we are unwilling to risk the repercussion which the hon. Gentleman treated so lightly and at this stage we cannot reduce the tax.

Mr. Jay

Can the Economic Secretary confirm that this is an exception to the principle which the Financial Secretary laid down, that all those items on which Purchase Tax was raised by the then Chancellor in October, 1955, have been reduced? Is not this a case where the tax went up and remains at a high level?

Mr. Birch

Yes. The Financial Secretary said that three times as many things as had the tax imposed on them last time had been reduced, but this is certainly an exception.

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

The Committee divided: Ayes 239, Noes 201.

Division No. 122.]	AYES	[7.10 p.m.
Agnew, Sir Peter	Clarke, Brig. Terence (Portsmth, W.)	Gresham Cooke, R.
Aitken, W. T.	Cole, Norman	Grimston, Hon. John (St. Albans)
Allan, R. A. (Paddington, S.)	Conant, Maj. Sir Roger	Grimston, Sir Robert (Westbury)
Alport, C. J. M.	Cooke, Robert C.	Gurden, Harold
Amery, Julian (Preston, N.)	Cooper, A. E.	Hall, John (Wycombe)
Anstruther-Gray, Major Sir William	Cordeaux, Lt.-Col. J. K.	Harris, Reader (Heston)
Arbuthnot, John	Corfield, Capt. F. V.	Harvey, Air Cdre. A. V. (Macclesfd)
Armstrong, C. W.	Craddock, Beresford (Spelthorne)	Harvey, John (Walthamstow, E.)
Ashton, H.	Crosthwaite-Eyre, Col. O. E.	Harvie-Watt, Sir George
Atkins, H. E.	Crowder, Sir John (Finchley)	Hay, John
Baldock, Lt.-Cmdr. J. M.	Cunningham, Knox	Heath, Rt. Hon. E. R. G.
Balniel, Lord	Currie, G. B. H.	Henderson, John (Cathcart)
Barber, Anthony	Dance, J. C. G.	Hesketh, R. F.
Barlow, Sir John	D'Avigdor-Goldsmid, Sir Henry	Hicks-Beach, Maj. W. W.
Barter, John	Deedes, W. F.	Hill, Mrs. E. (Wythenshawe)
Baxter, Sir Beverley	Digby, Simon Wingfield	Hill, John (S. Norfolk)
Beamish, Maj. Tufton	Donaldson, Cmdr. C. E. McA.	Hinchingbrooke, Viscount
Bell, Philip (Bolton, E.)	Doughty, C. J. A.	Hirst, Geoffrey
Bennett, F. M. (Torquay)	Drayson, G. B.	Hope, Lord John
Bennett, Dr. Reginald	du Cann, E. D. L.	Hornby, R. P.
Bevins, J. R. (Toxteth)	Duthle, W. S.	Hornsby-Smith, Miss M. P.
Bidgood, J. C.	Eden, J. B. (Bournemouth, West)	Horsbrugh, Rt. Hon. Dame Florence
Biggs-Davison, J. A.	Elliott, R. W. (N' castle-upon-Tyne, N.)	Howard, Gerald (Cambridgeshire)
Birch, Rt. Hon. Nigel	Errington, Sir Eric	Howard, Hon. Greville (St. Ives)
Black, C. W.	Farey-Jones, F. W.	Howard, John (Test)
Body, R. F.	Fell, A.	Hudson, W. R. A. (Hull, N.)
Bossom, Sir Alfred	Fisher, Nigel	Hughes-Young, M. H. C.
Boyd-Carpenter, Rt. Hon. J. A.	Fletcher-Cooke, C.	Hurd, A. R.
Boyle, Sir Edward	Fort, R.	Hylton-Foster, Rt. Hon. Sir Harry
Braine, B. R.	Fraser, Sir Ian (M'cmbe & Lonsdale)	Iremonger, T. L.
Braithwaite, Sir Albert (Harrow, W.)	Freeth, Denzil	Jennings, J. C. (Burton)
Brooke, Rt. Hon. Henry	Garner-Evans, E. H.	Johnson, Dr. Donald (Carlisle)
Brooman-White, R. C.	George, J. C. (Pollok)	Johnson, Eric (Blackley)
Bryan, P.	Gibson-Watt, D.	Johnson, Howard (Kemptown)
Bullus, Wing Commander E. E.	Glover, D.	Joseph, Sir Keith
Butcher, Sir Herbert	Gomme-Duncan, Col. Sir Alan	Joynson-Hicks, Hon. Sir Lancelot
Campbell, Sir David	Goodhart, Philip	Keegan, D.
Carr, Robert	Gough, C. F. H.	Kerby, Capt. H. B.
Cary, Sir Robert	Gower, H. R.	Kerr, H. W.
Channon, Sir Henry	Grant-Ferris, Wg Cdr. R. (Nantwich)	Kershaw, J. A.
Chichester-Clark, R.	Green, A.	Kimball, M.
Kirk, P. M.	Nicholson, Godfrey (Farnham)	Smithers, Peter (Winchester)
Lancaster, Col. C. G.	Nicolson, N. (B'n'm'th, E. & Chr'ch)	Smyth, Brig. Sir John (Norwood)
Leather, E. H. C.	Noble, Comdr. Rt. Hon. Allan	Spearman, Sir Alexander
Leavey, J. A.	Nugent, G. R. H.	Stanley, Capt. Hon. Richard
Leburn, W. G.	Oakshott, H. D.	Stevens, Geoffrey
Legge-Bourke, Maj. E. A. H.	O'Neill, Hn. Phelim (Co. Antrim, N.)	Steward, Harold (Stockport, S.)
Legh, Hon. Peter (Petersfield)	Ormsby-Gore, Rt. Hon. W. D.	Steward, Sir William (Woolwich, W.)
Lindsay, Hon. James (Devon, N.)	Orr, Capt. L. P. S.	Stoddart-Scott, Col. M.
Linstead, Sir H. N.	Orr-Ewing, Charles Ian (Hendon, N.)	Storey, S.
Lloyd, Maj. Sir Guy (Renfrew, E.)	Osborne, C.	Studholme, Sir Henry
Longden, Gilbert	Page, R. G.	Sumner, W. D. M. (Orpington)
Low, Rt. Hon. A. R. W.	Pannell, N. A. (Kirkdale)	Taylor, William (Bradford, N.)
Lucas, Sir Jocelyn (Portsmouth, S.)	Partridge, E.	Teeling, W.
Lucas, P. B. (Brentford & Chiswick)	Peyton, J. W. W.	Temple, John M.
Lucas-Tooth, Sir Hugh	Pickthorn, K. W. M.	Thomas, P. J. M. (Conway)
McKibbin, A. J.	Pike, Miss Mervyn	Thompson, Kenneth (Walton)
Mackie, J. H. (Galloway)	Pilkington, Capt. R. A.	Thompson. Lt.-Cdr.R.(Croydon, S.)
McLaughlin, Mrs. P.	Pitman, I. J.	Thorneycroft, Rt. Hon. P.
Maclay, Rt. Hon. John	Pitt, Miss E. M.	Thornton-Kemsley, C. N.
Maclean, Fitzroy (Lancaster)	Pott, H. P.	Tiley, A. (Bradford, W.)
Macmillan, Maurice (Halifax)	Powell, J. Enoch	Tilney, John (Wavertree)
Macpherson, Niall (Dumfries)	Price, Henry (Lewisham, W.)	Turton, Rt. Hon. R. H.
Maddan, Martin	Prior-Palmer, Brig. O. L.	Vane, W. M. F.
Maitland, Cdr, J. F. W. (Horncastle)	Raikes, Sir Victor	Vaughan-Morgan, J. K.
Maitland, Hon. Patrick (Lanark)	Ramsden, J. E.	Vickers, Miss Joan
Markham, Major Sir Frank	Rees-Davies, W. R.	Vosper, Rt. Hon. D. F.
Marlowe, A. A. H.	Remnant, Hon. P.	Wakefield, Edward (Derbyshire, W.)
Marshall, Douglas	Renton, D. L. M.	Wakefield, Sir Wavell (St. M'lebone)
Mathew, R.	Ridsdale, J. E.	Wall, Major Patrick
Maude, Angus	Robertson, Sir David	Ward, Dame Irene (Tynemouth)
Maudling, Rt. Hon. R.	Robinson, Sir Roland (Blackpool, S.)	Watkinson, Rt. Hon. Harold
Mawby, R. L.	Robson-Brown, W.	Webbe, Sir H.
Medlicott, Sir Frank	Roper, Sir Harold	Whitelaw, W. S. I.
Milligan, Rt. Hon. W. R.	Ropner, Col. Sir Leonard	Williams, Paul (Sunderland, S.)
Molson, Rt. Hon. Hugh	Russell, R. S.	Wills, G. (Bridgwater)
Morrison, John (Salisbury)	Schofield, Lt.-Col. W.	Woollam, John Victor
Mott-Radclyffe, Sir Charles	Scott-Miller, Cmdr. R.
Nabarro, G. D. N.	Sharples, R. C.	TELLERS FOR THE AYES:
Nairn, D. L. S.	Shepherd, William	Colonel J. H. Harrison and
Neave, Airey	Simon, J. E. S. (Middlesbrough, W.)	Mr. Finlay.
NOES
Ainsley, J. W.	Dye, S.	Hughes, Cledwyn (Anglesey)
Albu, A. H.	Ede, Rt. Hon. J. C.	Hughes, Emrys (S. Ayrshire)
Allaun, Frank (Salford, E.)	Edelman, M.	Hughes, Hector (Aberdeen, N.)
Allen, Scholefield (Crewe)	Edwards, Rt. Hon. John (Brighouse)	Hunter, A. E.
Awbery, S. S.	Edwards, Rt. Hon. Ness (Caerphilly)	Hynd, J. B. (Attercliffe)
Bacon, Miss Alice	Edwards, Robert (Bilston)	Irving, Sydney (Dartford)
Baird, J.	Edwards, W. J. (Stepney)	Janner, B.
Benn, Hn. Wedgwood (Bristol, S.E.)	Evans, Edward (Lowesoft)	Jay, Rt. Hon. D. P. T.
Benson, G.	Fernyhough, E.	Jeger, George (Goole)
Beswick, Frank	Fienburgh, W.	Jenkins, Roy (Stechford)
Bevan, Rt. Hon. A. (Ebbw Vale)	Finch, H. J.	Johnson, James (Rugby)
Blackburn, F.	Fletcher, Eric	Jones, David (The Hartlepools)
Blenkinsop, A.	Forman, J. C.	Jones, Elwyn (W. Ham, S.)
Blyton, W. R.	Fraser, Thomas (Hamilton)	Key, Rt. Hon. C. W.
Boardman, H.	George, Lady Megan Lfoyd (Car'then)	King, Dr. H. M.
Bowden, H. W. (Leicester, S.W.)	Gibson, C. W.	Lawson, G. M.
Bowen, E. R. (Cardigan)	Gooch, E. G.	Lee, Frederick (Newton)
Braddock, Mrs. Elizabeth	Gordon Walker, Rt. Hon. P. C.	Lee, Miss Jennie (Cannock)
Broughton, Dr. A. D. D.	Greenwood, Anthony	Lewis, Arthur
Brown, Thomas (Ince)	Grenfell, R. Hon. D. R.	Logan, D. G.
Burke, W. A.	Grey, C. F.	Mabon, Dr. J. Dickson
Butler, Herbert (Hackney, C.)	Griffiths, David (Rother Valley)	MacDermot, Niall
Butler, Mrs. Joyce (Wood Green)	Griffiths, William (Exchange)	McGhee, H. G.
Carmichael, J.	Grimond, J.	McInnes, J.
Champion, A. J.	Hale, Leslie	McKay, John (Wallsend)
Chapman, W. D.	Hall, Rt. Hn. Glenvil (Colne Valley)	MacMillan, M. K. (Western Isles)
Chetwynd, G. R.	Hamilton, W. W.	Mahon, Simon
Clunie, J.	Hannan, W.	Mainwaring, W. H.
Coldrick, W.	Harrison, J. (Nottingham, N.)	Mallalieu J. P. W. (Huddersfd, E.)
Collick, P. H. (Birkenhead)	Hastings, S.	Mann, Mrs. Jean
Collins, V.J.(Shoreditch & Finsbury)	Hayman, F. H.	Marquand, Rt. Hon. H. A.
Craddock, George (Bradford, S.)	Healey, Denis	Mason, Roy
Cronin, J. D.	Henderson, Rt. Hn. A. (Rwly Regis)	Mellish, R. J.
Cullen, Mrs. A.	Hewitson, Capt. M.	Messer, Sir F.
Darling, George (Hillsborough)	Hobson, C. R. (Keighley)	Mitchison, G. R.
Davies, Rt.Hon.Clement(Montgomery)	Holt, A. F.	Monslow, W.
Davies, Stephen (Merthyr)	Houghton, Douglas	Moody, A. S.
Dodds, N. N.	Howell, Charles (Perry Barr)	Morris, Percy (Swansea, W.)
Donnelly, D. L.	Howell, Denis (All Saints)	Morrison,Rt.Hn.Herbert(Lewis'm,S.)
Dugdale, Rt. Hn. John (W. Brmwch)	Hubbard, T. F.	Mort, D. L.

Moyle, A.	Reld, William	Thomson, George (Dundee, E.)
Mulley, F. W.	Rhodes, H.	Thornton, E.
Neal, Harold (Bolsover)	Robens, Rt. Hon. A.	Ungoed-Thomas, Sir Lynn
Noel-Baker, Francis (Swindon)	Roberts, Albert (Normanton)	Usborne, H, C.
Noel-Baker, Rt. Hon. P, (Darby, S.)	Roberts Goronwy (Caernarvon)	Viant, S. P.
Oliver, G. H.	Robinson, Kenneth (St. Pancras, N.)	Wade, D. W.
Orbach, M.	Ross, William	Weitzman, D.
Owen, W. J.	Shinwell, Rt. Hon. E.	Wells, Percy (Faversam)
Paget, R. T.	Silverman, Julius (Aston)	Wells, William (Walsall, N.)
Paling, Rt. Hon. W. (Dearne Valley)	Silverman, Sydney (Nelson)	West, D. G.
Palmer, A. M. F.	Simmons, C. J. (Brierley Hill)	Wheeldon, W. E.
Pannell, Charles (Leeds, W.)	Slater, J. (Sedgefield)	Wilkins, W. A.
Pargiter, G. A.	Smith, Ellis (Stoke, S.)	Willey, Frederick
Parker, J.	Snow, J. W.	Williams, David (Neath)
Parkin, B. T.	Sorensen, R. W.	Williams, Rev. Llywelyn (Ab'tillery)
Paton, John	Soskice, Rt. Hon. Sir Frank	Williams, Ronald (Wigan)
Pearson, A.	Sparks, J. A.	Williams, Rt. Hon. T. (Don Valley)
Pentland, N.	Steele, T.	Williams, W. R. (Openshaw)
Plummer, Sir Leslie	Stewart, Michael (Fulham)	Wilson, Rt. Hon. Harold (Huyton)
Price, J. T. (Westhoughton)	Stonehouse, John	Winterbottom, Richard
Price, Philips (Gloucestershire, W.)	Stones, W. (Consett)	Woodburn, Rt. Hon. A.
Probert, A. R.	Strauss, Rt. Hon. George (Vauxhall)	Woof, R. E.
Proctor, W. T.	Stross,Dr.Barnett(Stoke-on-Trent,C.)	Yates, V. (Ladywood)
Pursey, Cmdr. H.	Summerskill, Rt. Hon. E.	Younger, Rt. Hon. K.
Randall, H. E.	Sylvester, G. O.
Rankin, John	Taylor, Bernard (Mansfield)	TELLERS FOR THE NOES:
Redhead, E. C.	Taylor, John (West Lothian)	Mr. Holmes and Mr. Deer.
Reeves, J.	Thomas, Iorwerth (Rhondda, W.)

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. Jay

It is perhaps just worth taking a look at where the Clause leads us on Purchase Tax, and indeed, the direction in which this tax is now evolving as a result of the Bill.

Some hon. Members of the Committee may recall that in the 1948 Budget the Labour Government made—I was going to say "a heroic attempt"—at any rate, a strenuous attempt to simplify Purchase Tax by doing what Chancellors had often been asked to do, to review the whole tax and to reduce the number of rates. It was found possible in that Finance Bill to reduce the number of rates—the present Chancellor may perhaps remember this—to only three. I think that they were 33 per cent., 66⅔ per cent. and 100 per cent. That was something.

The effect of the Clause in this Bill, so far from simplifying the tax, is that the Chancellor is introducing yet another rate, that of 15 per cent., into the Schedule. He could have chosen to make this reduction from 30 per cent. to either 10 per cent. or 5 per cent. and could have left the other rates where they were. As the result of the decision to introduce the 15 per cent. rate, we now have seven rates—5, 10, 15, 30, 50, 60 and 90 per cent.—compared with three rates before. We did manage to streamline the tax in 1948.

It is the multiplicity of the rates that gives rise to all the anomalies, the confusions and the complications of the tax.

Each time we add an extra rate we must have a subtle definition for every type of article which is either on one storey or on the floor higher. It is consequent upon that that we have this astonishing document, which I hope the Chancellor studies, called "Notice No. 7". It is issued by the Customs and Excise, and is one of the most remarkable documents ever "moulded by the lips of man". I do not blame the Customs and Excise for it, because it is merely trying to carry out what the Government and Parliament lay upon the Department.

I want to illustrate the point which we have now reached by reading three quotations from this document. The first is fairly well known. It is in page 20 and concerns Group 9 (ii). This reads as follows: Tiles, strips and blocks of a kind suitable for laying on or fixing to floors or sub-floors, not of metal, and of a thickness (excluding any backing) of less than three-eighths of an inch, or, if of cork, of less than five-eighths of an inch. The rate for these is 30 per cent.

Secondly, I turn to the item, "Scissors", which appears in page 41. To save the time of the Chancellor, I shall not read all of it, but the paragraph starts by saying: Scissors exceeding 8 inches in length; nurses' dressing scissors designed for dismantling for sterilisation (e.g. those with Collins' joints) and scissors specially shaped for surgical use in connection with a particular operation;". If they are not for a particular operation they fall under a different range.

The paragraph goes on to say: scissors exceeding 5 inches in length with pronouncedly curved blades;". If they are not of "pronouncedly curved blades" they fall under another rate: … hairdressers' cockade scissors and thinning scissors: pinking scissors; scissors suitable only for docking and pruning; stub scissors with one or more serrated blades; lamp wick trimming scissors; electricians scissors commonly referred to as snips. When I read to that point I wondered whether the whole paragraph might have been comprised in the word "snips." I shall read only one other extract from this remarkable document from page 54, Group 20. I wonder whether the Chancellor has ever studied this one? It says: Conger eel hooks with or without swivels. Single spade-ended hooks having a shank diameter exceeding 25/1000ths (.025) of an inch. Single hooks with an eye or ring in line with the shank except eel hooks and hooks for big game fish (tope, tarpon, tunny, shark, etc.). When in our tax administration we get to the point of having to include definitions referring to sharks, it seems to be getting rather extravagant.

This document might be a remarkable verbal achievement, but I do not think it very good administration of Purchase Tax. In the coming year the Chancellor ought to give his attention to making a further effort, in the interests of the unfortunate Customs and Excise officials, industry and the taxpayer, to bring a little more simplification into this remarkable document. I have heard it suggested that it ought to have illustrations in future, but I think it would be better to avoid that need by carrying out some simplification.

The other thing which has happened to the tax under the administration of the present Government is that it has been extended to a huge range of objects compared with the period of the Labour Government and, although this is seldom mentioned in this Committee, the total revenue which the Government are collecting is very much higher than it was in 1951. The estimate for the total revenue from Purchase Tax in the last year of the Labour Government was £290 million. Even after these reductions, the Chancellor is now budgeting, if I am correct, to raise £460 million by Purchase Tax in the present financial year.

The main reason for this is that during the period of the Labour Government a very large range of clothing, boots and shoes and household necessities were completely exempted from the tax through the Utility scheme and by direct exemptions. The succeeding Government of 1952 abolished the Utility scheme and introduced the D scheme—which the Committee will remember—and thereby extended the tax to a very large range of new goods, particularly in the textile field. A few years later the Government changed their mind and swept away the D scheme, replacing it by this tax of 5 per cent. The net effect of all these alterations has been to extend the Purchase Tax over a very much wider area of ordinary common household necessities.

Mr. Nabarro

Would not the right hon. Member agree that the increase, as he alleges, from £290 million to a yield of £460 million is not only due to the cause he attributes, but also the fact that consumption and demand for all the articles subject to Purchase Tax have greatly increased as a result of rising living standards under a Tory Administration?

Mr. Jay

It is also due to the rise in prices which has gone on continuously under the present Government. Indeed, it is one of the complaints of the public that when the price of something rises as a result of the general policy of this Government a percentage—not an absolute, but a percentage—increase is added as a result of Purchase Tax. In contradistinction to that, I would remind the Chancellor that in the Budget of 1951 a whole further series of household goods were exempted from the tax, including sewing and darning needles, knitting needles, pins, tape measures, dish washers and things of that kind. It is perfectly possible if we follow that policy steadily to exempt household goods of that kind altogether from the tax.

Looking to the future, it may be that as a result of the changes the Chancellor is now asking us to approve we should consider for a few moments how most of us would like to see this tax evolve. I cannot agree with those of my hon. Friends or hon. Members opposite who think that we should talk in terms of sweeping the tax away immediately in the next year or two, because I do not think that that is realistic. Nor, I think, is there any unanswerable objection to an indirect tax of some kind falling on the less necessary and more luxury types of ordinary consumable goods.

I think that we want to do two things. First, we want to simplify the tax and get rid of the fantastic complications which give rise to the sort of document the Customs now has to operate. Secondly, we want to work towards exempting altogether a large range of goods which enter into the cost of living and where I think this tax is one of the causes of inflationary movements and inflationary tendencies in this country. If the Chancellor would follow that policy and set out, as we did in the years before 1951, step by step, year by year, to exempt altogether this type of goods, he would be giving practical help in the campaign to keep down living costs and preserve the value of the £.

7.30 p.m.

With these two objectives in mind, I should like to see the tax evolving in that way. First, I should like to see sweeping exemptions, at any rate over a period of time, on the more necessary types of goods, and, secondly, I should like to see a reduction in the number of rates to perhaps two or three, or at least to a much fewer number on different levels or on different storeys than we have at present.

I believe that if the Chancellor could contrive to sweep a whole lot of these present items out of Purchase Tax altogether and also reduce the number of rates, he would find that he would not lose enormously but would simplify the tax, both from the point of view of administration and of industry, and would, at the same time, raise—although, I agree, not the present level of revenue—quite a useful amount of revenue.

I think it is true to say, by way of example, that if he were to include motor vehicles, stationery, toilet preparations, radio and T.V. sets he would find, if he looked at the figures—I do not say that these are the right ones to keep in the long term—that these few items would include in the tax a very large amount of revenue, without the necessity of anything approaching the complications and difficulties that we have at present.

I am making these remarks in the general context of the Chancellor's decision to add yet another rate of 15 per cent. to the Purchase Tax as it stands today. I realise that on the Question, "That the Clause stand part of the Bill", we cannot go too far into the possibilities and desirabilities of the tax as it may evolve in future, but I suggest to the Chancellor, in passing, that if he could have some sort of aim such as that in mind rather than this, as it seems to me, completely arbitrary and incoherent chopping and changing from one to another, thereby creating more and more anomalies and more and more complications, and not making any contribution towards keeping the cost of living down, we should at least be making rather more rational use of what has become an extremely burdensome and illogical tax.

Mr. Nabarro

Indisputably the revenue from Purchase Tax has steadily risen year by year during the period since 1951. I quarrel with the right hon. Gentleman the Member for Battersea, North (Mr. Jay) when he attributes that almost entirely to the extension of the range of goods upon upon which Purchase Tax is levied. I should have thought that the greater proportion of the increase of revenue derived from this tax was due to the greater increase in consumption and the retail sales demand for the articles subject to Purchase Tax.

I do not believe that any detailed analysis is possible in a matter of this sort. As one example in support of my response to the right hon. Gentleman, which may not be entirely correct but which I believe is more correct than his analysis, I would point to television sets. There are approximately 7 million television sets in the country today as compared with only 1 million in 1951, and the Purchase Tax levied on the additional 6 million sets must have represented a pretty colossal sum.

Mr. Jay

Does the hon. Gentleman realise that in 1951 something like 80 or 90 per cent. of clothing, boots and shoes and furniture was exempt, whereas the greater part of those goods now bear tax at 5 per cent.? Surely, considering the magnitude of these items, a large part of the revenue must come from that.

Mr. Nabarro

I do not want to enter into a detailed argument. I respond at once to the right hon. Gentleman by saying that clothing was not entirely exempt from Purchase Tax under his administration. The silk lining, for example, in a gentlemen's suit was subject in those days to Purchase Tax and that formed an element in the cost of a suit of clothes. That is a rather detailed argument and you, Sir Charles, would rule me out of order if I pursued it. I am glad to see that you are nodding assent.

May I follow directly on what the right hon. Gentleman said in the opening passage of his speech? He wanted to know where this Clause had led us. I must say that I am deeply grateful to my right hon. Friend the Chancellor of the Exchequer, on behalf of my constituency interest, for cutting in half the Purchase Tax on carpets, represented under Group 9, which comprises floor coverings and rugs. That is a modicum of comfort compared with many of the anomalies which are aggravated and accentuated by the reduction in Purchase Tax from 30 per cent. to 15 per cent. on those articles in Group 12 which are shown as Appliances and apparatus …of a kind used for domestic purposes …but …not designed for operation by electricity or gas. It is interesting to study in some detail exactly "where this leads us," to use the words of the right hon. Gentleman. For example, the Chancellor has cut in half under that head Purchase Tax on a hand carpet sweeper, which no doubt the right hon. Gentleman will remember was in his boyhood referred to as a Bissell— an antediluvian appliance. The housewife used it to go up and down the carpet, expending a great deal of manual labour to sweep the dust off the carpet. The Chancellor has reduced the tax on that from 30 per cent. to 15 per cent., thereby encouraging the sale of an obsolete and obsolescent type of household article, whereas the Purchase Tax on the modern and progressive labour saving article, namely, the electric carpet sweeper, is 60 per cent. I will not pursue the electric carpet sweeper and the Purchase Tax on it because I should be out of order. I mention it in passing, Sir Charles, to emphasise the fact to the Committee, which is indisputable, that what the Chancellor has done is to place a premium on drudgery in the home.

May I pass from that to the next group which the Chancellor has cat in Purchase Tax—refrigerator boxes or domestic refrigerators operated by oil. These have been cut under Group 12 from 30 per cent. to 15 per cent., whereas the modern, propressive generally used type of refrigerator which is wanted in our home, namely, the domestic refrigerator operated by gas or electricity, is kept at four times the rate of Purchase Tax which is 60 per cent. That is again a premium on drudgery. Under Group 12 again the Purchase Tax on a toasting fork is 15 per cent. but if one goes to buy an electric toaster which is what we now need in our homes, and what the housewife wants, the rate is 30 per cent. If one goes to the ironmonger's shop—under Group 12—and buys a tin kettle, the Purchase Tax is reduced from 30 per cent. to 15 per cent., but if one wants to buy an electric kettle the Purchase Tax is double—30 per cent. Again there is a premium placed on drudgery in the home.

In the case of the non-electric iron, the type of iron which was widely used before the First World War—the flat iron used in the home which was the cause of so many accidents and which spoilt the fabrics of so many articles—my right hon. Friend reduces the Purchase Tax under this class to 15 per cent. but for the electric smoothing iron, the appliance which every progressive and modern housewife needs in her home and is anxious to have for labour-saving purposes, my right hon. Friend keeps the Purchase Tax at 30 per cent.

I have said enough in this context to demonstrate the point I have in mind. [HON. MEMBERS: "Go on".] I do not wish unnecessarily to detain the Committee, but perhaps I may give one more example. You know, Sir Charles, the hard manual labour entailed in using a hand-operated washing machine, a hand wringer or mangle, the machine which one laboriously turns round without any sort of electric power behind the elbow at all. That is an antediluvian appliance. It is the sort of thing which was generally used prior to the First World War. I would have hoped it had long since disappeared from the domestic scene. [HON. MEMBERS: "No."] I agree that it has not disappeared. I agree that these machines are still being sold, but I do not want them to be sold. I do not believe it is of any value to the housewife that they should be sold.

My right hon. Friend has reduced the Purchase Tax on these appliances from 30 per cent. to 15 per cent. What we want in our homes, what your wife wants, Sir Charles, and what my wife wants, although I cannot afford to give it to her is an electric or gas operated washing machine. My right hon. Friend keeps the Purchase Tax on those machines at no less than 60 per cent., or four times the tax on the very laborious hand wringer.

My right hon. Friend the Economic Secretary, in rejecting an earlier Amendment in connection with sewing machines, let slip the comment that the words are included in Clause 6 (1, a, iii) not designed for operation by electricity or gas because, in his words, a great deal of money would be entailed, were those words deleted.

I propose to support my right hon. Friend the Chancellor in the Lobby on this Clause tonight. [HON. MEMBERS: "Oh."] It is no good hon. Members saying "Oh". I cannot do otherwise, when my right hon. Friend is reducing the Purchase Tax on carpets. That is my primary consideration. To me in Kidderminster, carpets are even more important than labour-saving devices for housewives all over the country.

I therefore support my right hon. Friend in this Clause but, in the words of the right hon. Member for Battersea, North, I want to ask where this labyrinth, this disjointed raising and reduction of Purchase Tax rates, is leading us all. Surely it is leading directly to the type of anomaly which I have been describing in respect of domestic and household appliances, which is injurious to housewives all over the country and which is the opponent of progressive ideas in the home and the opponent of mechanisation in the kitchen and throughout the home of every hon. Member in the Committee, and of course in other homes.

This is a matter of very great importance. We are spending huge sums of money every year on the provision of electric generating facilities in this country and on new power stations. To derive the maximum value from that huge investment there must be diversification of load and there must be the highest possible load factor. Diversification of load in a power station means the greatest possible number and the greatest possible diversity of electrical appliances in the home in order to spread the load as evenly as possible over the greatest possible part of the twenty-four hours in each day. It also means the raising of the utility and the occupation of these immensely valuable national assets.

On all those grounds, I appeal to my right hon. Friend between this Committee Stage and the Finance Bill next year to scrutinise the effect of the whole of Purchase Tax upon labour-saving devices and appliances in our homes with a view to easing the housewives' burden and to placing the emphasis once again upon progress, which is traditionally associated with every Measure and every action of a Tory Government.

7.45 p.m.

Mr. Leslie Hale (Oldham, West)

In the course of what is already beginning to appear a rather long life, I have had a great many surprises. In the first place, I can never get over the surprise of finding myself here. One of the greatest surprises that I have had was that of listening to the hon. Member for Kidderminster (Mr. Nabarro) putting, with more ability than I could, precisely the point of view which I wish to put to the Committee.

I take the view, as I said when speaking on Clause 1, that the time has come when we should consider the principles of taxation and find out what our principles are. There are, in fact, three reasons for the Purchase Tax. Of course there are 10,000 reasons against the Purchase Tax. It is an evil tax, it is a bad tax. I think the Chancellor will agree that it is the sort of tax which every Chancellor would be glad to get rid of if he could.

The first reason for any tax, presumably, is to raise money. It is rather curious that, in a sense, one of the reasons why a Chancellor taxes the expensive products is that, these expensive products being out of the range of the great mass of electors, he is likely to be less popular than if he taxes something which everyone buys. There are, however, two other reasons which have always to be borne in mind in relation to social taxation. One is that it may be the Government's policy to discourage certain purchases. Indeed, in the early stages of the period of the Labour Government my right hon. Friends puts a swingeing tax on electricity consuming products because there was no electricity.

In the bad old days, to which I have no desire to make any extended reference now, because it is time to forget them, no provision had been made for sufficient electric power to support the industrial needs of full employment. We therefore had to discourage the purchase of electric appliances because we needed all the electricity we had, at a period when we were having power Cuts during the busy time of the day. The necessary power was not there. Now, thanks to the planning of my right hon. Friends, we do not have to confront that situation.

Mr. Nabarro

Oh.

Mr. Ellis Smith

We have seen real progress.

Mr. Hale

I think that this is a slightly psychopathic exhibition by the hon. Member for Kidderminster. If he wishes, will take him round and show him the power stations which we built. They are there to be seen. They are a prominent feature of the landscape. Provision for electrical power was made. It had to be made at the expense of the housing programme and of every other building programme because of the complete lack of planning in the years which had preceded the Labour Government. I do not want to develop that at great length.

Certainly any Government—and this should appeal to the hon. Member for Kidderminster, who I hope will now listen for two or three minutes with enthusiastic attention—must realise that one of the social necessities is to discourage the wastage of coal.

Mr. Nabarro

Hear, hear.

Mr. Hale

As a matter of social policy, therefore, one wants to encourage the use of electricity or of gas as an alternative to coal. One would have thought that that would have entered into the Chancellor's mind.

The third reason, of course, of social taxation is to discourage wasteful expenditure and to encourage useful expenditure. In the early days of the Russian Government they had to say, "We will not put up factories for the making of lipsticks until we have factories for constructing the machines which we need." One uses taxation as a method of discouraging wasteful expenditure and useless social expenditure, until one has been able to provide for the necessary planning of one's industry.

The problem does not confront us to that extent, but it must always be a matter in mind. I suggest that if we look at the events in the last few years a number of important things have happened in this sphere. I think that one of the most important inventions in my time, and one of the most useful, was the invention of the refrigerator. Those who lived in towns and have shops very handy perhaps did not need them quite as much as those who lived in the country and who found it extremely difficult to do their shopping because they had no motor cars available. When they did their shopping they wanted to be able to buy enough food to keep for some time.

I know that when I lived in a little house in the country the installation of a refrigerator, which was one of the first things I could afford to buy on hire purchase, was one of the things which helped to revolutionise the life of my wife. It saved useless journeys to a distant town and it enabled us to preserve a little food, if we were offering hospitality. It kept the food in a good condition. After all, it has a very reputable history, for it was a famous Lord Chancellor who conducted the first experiment—Francis Bacon, when he collected the snow and caught a cold in the process, a matter which we ought still to regret.

The curious thing is that we spend days discussing food and drugs Bills, we have a whole staff of civil servants dealing with pure food and drugs, and we lay down provisions that if we cut off a slice of a cow's backside, it must be wrapped in cellophane—presumably, to make it hygienic and useful. In the greenhouse, I now use polythene to grow seeds and I would think that as I can use polythene to grow seeds, cellophane might grow bacteria. That, however, is in the nature of a parenthesis, and I will not pursue that point, Sir Charles.

When we get that chunk of meat to the house, what happens? The Chancellor says that we can buy a bucket, a pail or a tin saucepan to put it in, but we cannot buy a refrigerator. I think it was Mr. Leo Huberman who dealt with this in a book published by an excellent society which used to be known as the Left Book Club. Actually, there is not much cost in making refrigerators. If they were sold by the million instead of by the ten thousand, the cost could be reduced enormously.

When the market for an article is kept on a restricted and limited basis, the inventor wants a big royalty, the patentees want big payments, there are exceptionally high overheads, and the result is that the refrigerator, a quite simple machine, is extremely expensive. As the hon. Member for Kidderminster said, the Chancellor is saying, "I am taking out of the scope of this prohibitive tax that form of refrigerator which is fairly useless, but I am having a swingeing tax on anything used in the kitchen to carry out my policy under the Food and Drugs Act."

That is a fantastic point of view. Any Chancellor of the Exchequer of a decent society would be giving a subsidy on these things. He would say, "For a time, I will give a subsidy. Make them by the million, because it is my policy that every house in the country should have a refrigerator."

I know that in 1945 my right hon. Friends had to face far different problems to those now facing the Chancellor. When we started to build Socialist houses, we wanted to have central heating in them, but we had scarcely the metal to provide baths. We had to cut out central heating because the metal was not available, the factories were not there, and the possibilities did not exist; but it was certainly always intended that central heating was a necessity in the modern house, and would help to save coal and enforce a sane planning policy on the part of the Government.

To come to the details of the Clause —[Laughter.] I have been dealing with them on what I thought were statesmanlike lines. The Chancellor says that in order to help people to wash up, he will remove the tax from a few of the little implements for washing up. There are now washing-up machines, and they are of great social importance. I do not know whether the Chancellor is ever called upon to wash up, but I can tell him that it is a rather frightful business and is not popular. Even if one is able to employ a staff in the house, it is not very popular with the staff.

A Dishmaster today costs £132, of which, I think, £30 is tax. The Dish-master is advertised at £100, but one must pay £30 for a booster to boost up the heat and to acquire the machine for the ordinary house one has to spend £132.

Mr. Nabarro

I am sure that the hon. Member would like me to underline his argument. The rate of Purchase Tax is 60 per cent. on the wholesale price. Therefore, the tax would be a good deal more than £30.

Mr. Hale

I am obliged to the hon. Member. I am wondering now whether he will reconsider his decision, although he might approve of the benefit of the Clause to carpets, and say that the Clause is so bad that he cannot support it; but those are the sort of personal difficulties that we all have to confront.

I am not trying to advertise the Dish-master or any one company. There is the Bendix machine for washing clothes which, I believe, also washes plates. If we had a sane policy, the Chancellor would be saying, "Here is something really worth while. We want to have a happy people, a people with leisure. Let us encourage these things." Instead of that, as the hon. Member for Kidderminster so forcefully said, the Chancellor is saying, "You can buy yourself a wire cleaner to scratch the plates, you can use all the old-fashioned implements that take all these wretched hours of miserable work, but if you want to buy a modern machine I shall not only give no encouragement, but I will put on a tax of 60 per cent. and make it available only to extremely well-to-do people."

Mr. Nabarro

The hon. Member need not look at me.

Mr. Hale

At least, the hon. Member is fortunate in the range of his cars. That, however, is not the voice of envy, but of congratulation.

It is the job of the Chancellor of the Exchequer so to mould his taxation as to give the greatest possible benefit to the greatest number. It is his job to say that the one thing that he will exempt from taxation is the thing that everybody needs. It is not the job of a Chancellor to tax necessities. It is his job to tax luxuries. A Chancellor who wanted to collect the maximum yield would take the tax off whisky and put it on water if he was simply considering yield.

The whole theme of Chancellors in the past has been to tax what are luxuries and to exempt the necessities. These things of which I have been speaking are becoming necessities. It would be a great social revolution if every house in Oldham had its chance of partaking more and more in the resources that modern science is placing at our disposal. That is why I object to the Clause and to this system of taxation.

I have been addressing the Chancellor, but I am quite sure that my right hon. Friend the Member for Huyton (Mr. R Wilson) has been taking notes, because it may well be that the next Budget will be introduced by him.

Mr. Nabarro

Certainly not.

Mr. Hale

The hon. Member for Kidderminster, apparently, has been reading the Tory Press. If he contents himself by looking at the votes in by-elections, he will find that a Government which is so rapidly losing the confidence of the country really cannot go on indefinitely. Therefore, it is tolerably clear that my right hon. Friend will be charged with this important duty at a fairly early date.

I hope that when my right hon. Friend undertakes that important duty, he will look at these things and say, as I know he will, because he is a sincere Socialist, that the time has come when we will encourage the sale of these things that the people need and use the system of taxation—

Mr. Ellis Smith

Put it on cars.

Mr. Hale

—to discourage the sale of things that are unnecessary, wasteful and luxurious. That is the job we ought to be doing, and that is why I hope that the Clause will be opposed.

8.0 p.m.

Mr. Ronald Bell (Buckinghamshire, South)

I do not suppose that the Chancellor realised, until he heard the last two speeches, the social havoc he caused by reducing Purchase Tax on household goods by one half. He may have thought that he was going to win widespread gratitude for that simple measure, but he seems to have exposed himself to a good deal of wide-ranging criticism in a fuel and power debate.

The range of household articles covered by the Clause is basically furniture and kitchen utensils. My right hon. Friend, in his Budget speech, said he proposed to reduce the tax from 30 per cent. to 15 per cent. on such furniture as was liable at the 30 per cent. rate. The history of the levy upon the articles comprised in subsection (1, a) is rather a chequered one. Originally, furniture was basically comprised in Group 6 by the 1948 Act, with a few special articles in Group 9. Among those special articles in Group 9 was garden furniture. In 1948 the basic furniture articles were put into Group 11. Kitchen utensils were added to Group 11 from Group 9, where they had been keeping company with, among other things, garden furniture, and garden furniture was put into a new Group 16.

We had the rather strange result of this redistribution that pots and pans moved closer to furniture, and garden furniture moved away from it, and the outcome of that shifting around has been that now by this Clause we find my right hon. Friend proposing to reduce from 30 per cent. to 15 per cent., as stated in subsection (1, a ii), tax on: Group 11 (which comprises furniture … used for domestic or office purposes)". Because of this redistribution of categories garden furniture is not now included as "furniture used for domestic purposes." Of course, I cannot on the Question, "That the Clause stand part of the Bill," pursue the regrettable features of that exclusion, and all I can say to my right hon. Friend, without transgressing the rules of order, is that I am sorry to see other kinds of furniture coming down from 30 per cent. to 15 per cent. if garden furniture is to remain at 30 per cent.

It is rather anomalous that while tax on ordinary furniture, for example in the dining room—dining chairs and so forth— is reduced from 30 per cent. to 15 per cent., that on a folding chair, which may be and probably is classed as garden furniture, and therefore comes under the new arrangement of Group 16, is to remain at 30 per cent. Most people would deem it a cheaper article, and if the guiding principle of the Clause is that articles of domestic use are to be relieved of the heavy duty one would have thought my right hon. Friend would have included it. I think that he probably intended to include it in the Clause when he made his Budget statement.

When in November, 1948, the rate of Purchase Tax on furniture had to be changed by administrative action the Treasury then made an order which included not only Group 11 but also the new Group 16, garden furniture. Therefore, I hope that my right hon. Friend will think again before the later stages of the Bill. I certainly will not expressly ask him to remove this Clause and put back the other furniture to 30 per cent., but I should like him to consider whether it is logical to put forward the proposals in the Clause if he does not intend to extend a similar relief of burden to that only category of furniture now excluded from the 15 per cent. rate, and still charged at 30 per cent" namely, garden furniture.

Mr. Donald Wade (Huddersfield, West)

This debate has shown once again the complexities of Purchase Tax provisions and the anomalies which seem to grow rather than diminish every time changes are made. That has been so clearly demonstrated in the debate that I do not think it is necessary for me to produce further illustrations either modern or antediluvian.

I would turn for a few moments to another aspect of this problem, the effect of Purchase ax and changes in Purchase Tax upon industry. Subsection (2) of the Clause provides: This section shall have effect subject to any Treasury order made under the said section twenty-one"— that is, of the Finance Act, 1948— after the passing of this Act, and may be amended or repealed by any such order accordingly. I do not propose to discuss the general principle of delegating the power to make orders. It is probably inevitable so long as we have Purchase Tax, to give the Government power to amend or repeal from time to time. I would, however, ask the Chancellor whether the Government have any definite policy for the timing of Purchase Tax changes. I am not asking him to anticipate his next Budget speech, but it would be helpful to know what is the policy as to the time when the changes are made.

As the Chancellor probably knows, there was a time when it was so customary for Purchase Tax changes to be made at the time of the Budget that there was a period of speculation lasting from about Christmas until the Budget statement, a period when there was so much uncertainty that industry was undoubtedly dislocated.

Shopkeepers were reluctant to stock up after Christmas. One cannot blame them for that. Shopkeepers suffer quite as much as if not more than their customers from the incidence of Purchase Tax. They are the unpaid tax collectors. They have to put up with a great deal of troublesome work over the calculations of Purchase Tax, and when it is reduced they generally suffer. They are expected by the customers to reduce the prices of their goods at once, but, of course, they have paid the higher rate of Purchase Tax, which they cannot recover. I think that that is a very understandable grouse on the part of shopkeepers, and so far no means has been discovered of dealing with that anomaly.

It is understandable that if there is a period of uncertainty and speculation about when Purchase Tax changes are to take place shopkeepers should allow their stocks to run down. If it is assumed that these changes will always take place at the time of the Budget, then roughly from January to April retailers will refrain from stocking up, and that in turn has an effect on the manufacturers, and there is a consequent interference with the normal flow of goods from the manufacturers to the retailers. My own view is that when changes are made it is preferable to announce them either in the autumn or in January.

In saying that I do not wish to suggest that I do not welcome the changes that have been made by the Clause. I wish that, having gone so far, the Chancellor had gone farther still while he was about it, but I welcome such changes as have been made. However, I draw his attention to the effect which these changes have on industry, particularly if they always take place at the time of the Budget. The one certain solution is to abolish Purchase Tax altogether. Whether I shall live to see that happen I do not know, but in the meantime I hope that the Chancellor or his successor will consider the very unfortunate effect which Purchase Tax and changes in Purchase Tax have upon industry as well as upon consumers.

Dr. Horace King (Southampton, Itchen)

I think that the Chancellor will appreciate the significance of the fact that so far this has been an all-party debate and yet nobody has been very enthusiastic about the Clause. Indeed, when his hon. Friend the Member for Kidderminster (Mr. Nabarro) was speaking, the right hon. Gentleman must have said to himself, "Heaven preserve me from my candid friends", and he must have realised that if it came to a vote, as it might do, the only people who would go enthusiastically into the Lobby in his support would be the Financial Secretary and the Parliamentary Private Secretaries, and possibly the right hon. Gentleman is doubtful even about them.

We should ask ourselves what the Clause has to do with the country's main problem today. We are in an inflationary situation. The burning question for everybody is the rise in the cost of living. The Chancellor and the Committee ask whether the Clause helps or hinders in the war against rising costs and, if it does help, whether it helps enough and, at the same time, whether it removes the shock-the anomalies that still remain in the structure of Purchase Tax. I do not feel that I should pursue this last point any further, the anomalies of Purchase Tax and their increase under this Clause having been so effectively stated by the hon. Member for Kidderminster.

We have a right to ask the Chancellor what is the Tory policy on Purchase Tax, because the Government speak on this with two voices. Probably the classic statement of the Government's view on Purchase Tax, in opposition, was that given by the noble Lord who is now Lord Chandos in 1950, and quoted in Committee on 15th November, 1955. He said: … it falls very hard upon the consumer and leads to a direct increase in the true cost of living … It includes within its grasp many things which only a jaundiced imagination could possibly describe as other than indispensable."—[OFFICIAL REPORT, 15th November, 1955; Vol. 546, c. 357.] I think that the noble Lord was stating the truth and I think that both sides of the Committee are becoming increasingly aware of the burden which Purchase Tax still imposes upon indispensable things.

On the other hand, I want to call attention to what the then Economic Secretary to the Treasury said, before he left the Government for six weeks only to become, after all that intervened, Parliamentary Secretary to the Ministry of Education. When the Government were busy imposing a new Purchase Tax, part of which they are now reducing the hon. Gentleman said: Some people think that increases in indirect taxation must be inflationary, but I honestly disagree with them; and I should like to explain why. It was on that occasion that the hon. Gentleman produced what has been referred to as "Boyle's Law," in which he said, among other things, that Purchase Tax would curtail consumer demand and because it curtailed consumer demand it would make merchants who were selling the things much more competitive among themselves, and because they were more competitive, they would not pass the increased Purchase Tax cost to the consumer. Therefore, Purchase Tax, he argued, was deflationary. If hon. Members think that I am unfairly representing the views of the hon. Gentleman they can turn up the debate and see his argument for themselves. He summed up his argument by saying: …we are quite right in using this weapon of Purchase Tax to help to keep us within the inflationary situation."—[OFFICIAL REPORT, 15th November, 1955; Vol. 546, c. 353–4] In a later stage of the same debates, the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) went so far as to say, on 28th November, … every tax which tends to make the price paid for an article in the shops more than its real price must be and always will be inflationary."—[OFFICIAL, REPORT, 28th November, 1955; Vol. 546, c. 2027.] Who is right? Is it the Parliamentary Secretary to the Ministry of Education or Lord Chandos, reinforced as he was by the hon. and gallant Member for the Isle of Ely? If Lord Chandos and the hon. and gallant Member are right, Purchase Tax ought to be removed.

8.15 p.m.

Yet instead of removing the tax, the Government imposed more Purchase Tax a year ago, and now the hon. Member for Buckinghamshire, South (Mr. Ronald Bell) takes credit for the fact that the Government have taken off half of what they put on. But if the present Parliamentary Secretary to the Ministry of Education was right, the Government are now doing something which is opposite to the policy they adumbrated a year ago to combat inflation.

We have a right to ask the Government whether they believe Purchase Tax to be inflationary or not inflationary. How can they reconcile the methods which they adopted a few months ago to combat inflation by imposing Purchase Tax with this reduction for which they claim credit? The Clause makes a welcome modification in Purchase Tax, and for that reason my hon. Friends will be in the same difficult position as the hon. Member for Kidderminster when it comes to voting. The Chancellor might expect us to say For this relief, much thanks. Indeed, some Conservative speakers in the country have been boasting about the Clause as one which reduces Purchase Tax, but the fact is that it simply reduces to half the level Purchase Tax newly imposed a year ago, and the Clause makes only a pitiful little group of concessions.

Purchase Tax may have been necessary in the war years and immediate war years to discourage people from buying things. I was glad to hear earlier in the debate a full-blooded denunciation of Purchase Tax in these days from the hon. Member for Ilford, South (Mr. A. E. Cooper), but if Purchase Tax was necessary then it was always a reactionary and regressive tax. It was always nearly a poll tax. The millionaire and the 10s. widow pay the same tax on an article, but the relative burden of the tax imposed is vastly different.

I am uneasy at the fact that Purchase Tax still produces so much revenue that Chancellors, whatever they may say when they are members of the Opposition, are very unwilling to throw away this easy way of making money for the Treasury. They are especially unwilling to throw it away if it would mean that they would have to impose further direct burdens on Income Tax payers. That is why I was glad to hear my right hon. Friend the Member for Battersea, North (Mr. Jay), in opening the debate, talk of the necessity for sweeping reductions in Purchase Tax.

I am glad also that previous speakers have called al tension to the fantastic anomalies in the guide book, Notice No 78, as it is called, which lists goods chargeable with Purchase Tax. For example, the Clause leaves untouched the tax which is imposed on music and on culture by Group 19—the tax on musical instruments. The index to this document is a revelation. It lists, on the one hand, those things which have attracted the mercenary attention of the Chancellor and his predecessors through the years and, on the other, those goods which have escaped from the net or come out of it in a modified way. As a result of this Clause, we shall have to have new index references to flood coverings, rugs. furniture, ironmongery and the rest of the objects in Groups 9, 11, 12 and 13 which benefit under the Clause—with the addition of non-electric sewing machines.

We shall still levy Purchase Tax, however, on nearly all musical instruments, except those mentioned in the index, that is pianos, organs, spinets, harpsichords, and virginals, all the keyboard instruments, and church bells. Even these were cut out not for any cultural reason. It was no love of the musical backroom boys of the Treasury for the harpsichord or the spinet that led them to redeem these and the virginal. The reason was purely an economic one—the dangerous state of the piano and organ industries. The other quaint and more ancient instruments slipped in while the Treasury was busy excluding the piano accordion from any benefit.

So the index to the next edition of the Purchase Tax book will lead an antiquarian of the future to imagine that the only musical instruments of 1956 were those I have mentioned, and another small group, this time chargeable, including castanets, chin rests, piano accordions, triangles and tuning forks. The glorious company of strings, woodwind and brass do not get a mention. We tax the violin, the flute, the piccolo and the harp. We did so before this Clause came before us, and we shall do so after the Clause has been added to the Finance Bill.

Hon. Members will remember that on Second Reading I pleaded for an end of all anti-cultural taxes. The Chancellor has turned a deaf ear to that plea—a tone deaf ear—so the musicians remain as the only professional group taxed on the tools of their trade, healthy little instrument industries continue to bear the economic and crippling burden of a tax which endangers their small export trade, and Britain continues to be the only Philistine country which taxes music. Other countries subsidise the arts; we tax them.

We are trying in our schools to foster instrumental music, to save young Britain from growing up as listeners rather than performers. But the young Kreisler, learning to play the fiddle in the school orchestra, will put his taxed violin with its taxed strings to his taxed chin rest, and will play on it with a taxed bow, possibly even using taxed resin.

I am disappointed with this Clause for many reasons. One is that the Chancellor has neglected an opportunity of doing a good service to real music and has left musical instruments still paying the same Purchase Tax as gramophones and wireless sets. I think that this Clause is a pitiful failure. It does not remove the anomalies in the Purchase Tax structure, but even adds new ones. Its contribution to the war against the rise in the cost of living is almost infinitesimal. I believe that the Chancellor has neglected a great opportunity to deal in a radical way with Purchase Tax and so alleviate the anxiety not only of the 2 million or 3 million people at the bottom end of the social scale, to whom the burden of the rise in the cost of living is very serious, but even of the Conservative women who, at their own recent conference, were anxious for their Government to make a legislative contribution towards reducing the cost of living.

Mr. Roy Jenkins (Birmingham, Stechford)

I agree with my hon. Friend the Member for Itchen (Dr. King) in thinking that the present state of the law relating to Purchase Tax, even after this Clause, is highly unsatisfactory, and that both as regards the spread and the weight of the burden it is excessive at present. I am not sure that I would go quite as far as my hon. Friend in thinking that one should necessarily sweep away the tax completely. He said that it was almost a poll tax, not a very progressive tax, and to some extent this may be true. But I, under the present Government at least, would be far from confident that any alternative tax brought in to replace the lost revenue would be any less regressive than the Purchase Tax. Indeed, I think there is a good chance that it would be a good deal more regressive, and not less.

The Chancellor has not had a very warm welcome or a great deal of support for the Clause this evening. He has not had vocal support and, indeed, until recently he has had practically no silent support on his side of the Committee, though attendance has improved in the last quarter of an hour. Indeed, the right hon. Gentleman has reason to feel disappointed with the remarks of his hon. Friend the Member for Kidderminster (Mr. Nabarro), because if he reduces the tax on carpets by about half, and cannot get more enthusiasm from his hon. Friend, it is a disappointing outlook for the Chancellor.

Mr. Nabarro

I congratulated him warmly.

Mr. Jenkins

Well, the general impact of the hon. Gentleman's speech was not, I thought, warmly congratulatory to the Chancellor, but I may have been mistaken.

The hon. Gentleman, however, became extremely eloquent about labour-saving devices for the housewife. After listening to him, I thought that it would be still better if he were to employ his great talents of speech in selling labour-saving devices to the housewife rather than in addressing the Chancellor because a Purchase Tax of 60 per cent. on sales reinforced by the hon. Gentleman's eloquence, his speed of delivery and his mastery of the advertising phrase, would be extremely buoyant.

Mr. S. Silverman

Did my hon. Friend ever know the hon. Member for Kidderminster (Mr. Nabarro) convince anybody?

Mr. Jenkins

That is perhaps a different point.

Mr. Osborne

May I point out that my lion. Friend must have convinced the majority of people in Kidderminster more than once?

Mr. Jenkins

If one were to go on that basis of reasoning, one would have to assume that the hon. Gentleman had convinced the majority of people in Louth, and I would be loath to proceed on that basis.

Mr. Osborne

I have convinced more people in my constituency for more years than the hon. Gentleman the Member for Stechford (Mr. Roy Jenkins) has done.

Mr. Jenkins

Maybe for more years, but we have to consider the future as well as the past.

We had an extremely powerful intervention from the hon. Member for Kidderminster, and I thought that he and many other hon. Members who have spoken made strong points in the sense of saying that there is a vast amount of confusion about the tax as it exists. It really is extraordinary that when Government spokesmen have been flying kites for the past two or three years, as has the Lord Privy Seal, if not the present Chancellor, and Government backbenchers have been doing it to an even greater extent—the hon. Gentleman the Member for Ilford, South (Mr. Cooper) did so this afternoon—in favour of moving directly towards a sales tax, apparently on the ground that it would be a much simpler tax; it is extraordinary, when the Government are talking in these terms, that what they should, in fact, have done is to introduce a situation in which there are seven different rates of Purchase Tax. That, I believe, is a situation which has never prevailed before.

As my right hon. Friend the Member for Battersea, North (Mr. Jay) suggested, it is the existence of this number of different rates which greatly multiplies and exacerbates the anomalies which, to some extent, are no doubt inseparable from the operation of any Purchase Tax. It would be a great help, therefore, if we could have guidance as to how the Chancellor's mind is moving on this matter. Does he want to move towards a sales tax? The position is extraordinarily confusing at the moment. We understand the general direction in which the Government desire to go, but, while realising that this is their general desire, they have introduced for the first time seven different rates, which might be regarded as moving as far away from a sales tax as possible.

There would be some advantages in a sales tax on grounds of simplicity. There would also be substantial advantages on grounds of equity. Whatever my hon. Friend the Member for Itchen may think about the regressive nature of Purchase Tax as it operates at present, a sales tax would undoubtedly be a good deal more regressive. I think that my hon. Friends would be most unlikely to welcome a sales tax in any circumstances. At the very least, if a sales tax were even to begin to be a matter for consideration it would need to be very widely extended to include, besides goods, many services which are sold. But even that would, on the whole, be still less desirable than the present Purchase Tax.

In one of his interventions, the Financial Secretary said that what we were doing in the Clause was really no more than to undo the damage done by the Lord Privy Seal in his 1955 autumn Budget. The hon. Gentleman said that not only were all things which were then charged at 30 per cent. being reduced to 15 per cent. but that many other goods which were not put up to 30 per cent. at that time but had previously been at a higher rate were now being brought down to 15 per cent.

8.30 p.m.

As I understood it, the impact of his argument was that we were now in a position in which Purchase Tax generally bore less heavily on the community than it did before the Lord Privy Seal's autumn Budget. I can hardly believe that is so. The Lord Privy Seal's autumn Budget not merely brought under tax for the first time a number of goods previously uncharged and charged them at the rate of 30 per cent, but it increased the rates of tax from 50 per cent. to 60 per cent. and from 75 per cent. to 90 per cent. In particular, the class of goods previously charged at 50 per cent. and charged at 60 per cent. after that Budget is one which produces a very large part of the revenue brought in by Purchase Tax as a whole.

Therefore, I should have thought there was no doubt—I hope the Chancellor can give us the official information—that, while the Clause somewhat improves the position from what it was immediately before the Budget, it certainly does not make the burden of Purchase Tax less than it was before the introduction of the Lord Privy Seal's autumn Budget.

I was surprised to hear the hon. Member for Kidderminster, referring to the earlier remarks of my right hon. Friend, announce that overwhelmingly the most important factor in the increase in revenue from Purchase Tax since 1951 was the great increase in the consumption of chargeable goods. I should be extremely surprised if that factor were nearly as important as the general increase in prices which has gone on since 1951 in producing the very substantial increase in revenue to which my right hon. Friend referred. I think the hon. Member was almost certainly mistaken on that point.

Mr. Nabarro

The fact is that figures are not available to enable one to analyse exactly where the increase in total revenue from Purchase Tax has come from, but what is indisputable—the hon. Gentleman surely cannot deny it at this stage in our debates—is that the items in Group 9, which comprises floor coverings and rugs, were not moved up in the Purchase Tax scale in October. 1955. They had unilaterally been selected by my right hon. Friend for reduction from the 30 per cent. rate to 15 per cent. Under the Labour Government, the charge on them stood at 33⅓ per cent.

Mr. Jenkins

They are most exceptional in this respect. It was because of that that I thought the hon. Member for Kidderminster was ungrateful to the Chancellor.

There is a very wide range of commodities which are just as important and just as necessary to the industrial well-being of parts of the country and to the consumption needs of the people generally as the products of the hon. Member's constituency, but he alone has been singled out for preferential treatment, taking the two Budgets as a whole. Yet, although he is in this position, he is hardly able to say a word in favour of the Chancellor of the Exchequer. This behaviour on the part of the hon. Gentleman appears to be rather shocking, at any rate to some of my hon. Friends and myself.

Mr. Nabarro

Very ungracious.

Mr. Jenkins

It is extremely ungracious of the hon. Gentleman. I am very glad that he recognises it at this stage.

This is the part of the Finance Bill which, I imagine, ties up most closely with the speech in the Budget debate of one of the Chancellor's hon. Friends, who described the Budget as a great piece of team work carried through by the Chancellor building on the work of his predecessors. I think that it was the hon. Member for Dover (Mr. Arbuthnot) who was extremely eloquent on the subject and who, in a very moving passage, said that the concessions which the Chancellor had been able to make were the result not only of his own work, although his own work had been very great indeed, but was the result of a piece of teamwork by the Lord Privy Seal, the Prime Minister and the Foreign Secretary—I am not sure whether the Foreign Secretary was mentioned, but certainly a large number of senior and distinguished members of the Government were said to have contributed to this piece of teamwork.

We can see this teamwork operating, because if it had not been for the very self-sacrificial action of the Lord Privy Seal in introducing that autumn Budget, which led to many personal difficulties for the Lord Privy Seal and much hard work for the Committee and the House, the Chancellor of the Exchequer would not now be in a position to announce that in a wide range of goods things would be only half as bad as they were before the Lord Privy Seal left office as Chancellor of the Exchequer.

Mr. Victor Yates (Birmingham, Ladywood)

I agree with much that my hon. Friend the Member for Stechford (Mr. Roy Jenkins) said, but I cannot agree with the suggested alternative to Purchase Tax, which is the most vicious tax ever introduced in this country. The debate on the Clause has shown the additional anomalies which will now be created. A glance at the Customs and Excise Notice will show how intricate this business will become.

I do not know how we shall get rid of the tax. One way would be to get rid of the Government, but I want to be sure that another Government will not do the same sort of things. I say to my right hon. Friend the Member for Huyton (Mr. H. Wilson), who will, I hope, one day become Chancellor of the Exchequer, that there is no tax which creates more frustration in industry. Beyond any doubt any chamber of commerce will say that the evil resulting from the tax is very considerable.

Naturally, we welcome any reduction in Purchase Tax, but reduction is not enough. I cannot understand the argument of the Financial Secretary, who said that our suggested reductions of Purchase Tax would be inflationary because of additional consumption, but there are some occasions when overall turnover must at least compensate for Purchase Tax reductions. The example of the pottery industry put by my hon. Friends from Stoke-on-Trent is such a case.

The Financial Secretary said that the 50 per cent. reduction for pottery was unrelated to the unemployment in the industry. However, on examination of the industry and what has been happening in the last few years, I must admit that Purchase Tax has had serious repercussions upon employment. That is bound to be the case with other industries and that is where we get further anomalies.

Two years ago I raised the question of pottery combined with jewellery. Many firms in Birmingham have been in the habit of purchasing pottery, such as teapots, and enclosing it in silver, but it has become impossible for them to do so because of the high rate of Purchase Tax on silverware, together with the tax on pottery. Many such firms have had to refuse to buy pottery. The Clause will mean that the tax on pottery is reduced, but I very much doubt whether it will be sufficient to enable these firms to continue to do this work.

The hon. Member for Wycombe (Mr. John Hall) mentioned the question of anomalies. I never thought that I would hear the Financial Secretary say, in effect, that a hall stand was not an item of domestic furniture. In Birmingham, one will be told that a mace is a necessity but a lord mayor's chain is a luxury, because the lord mayor's chain is taxed and the mace is not. There are many examples of such anomalies.

If we can show the Chancellor that the effect of the tax is to create unemployment in other directions than those which have been mentioned, will he agree to examine the matter very carefully once again? If I give him examples of firms that have been obliged to close in Birmingham in the last year, will he take some action? A number of firms have been obliged to close. A firm about which I was talking two years ago was then making a small profit, but during the last year it has made a loss of £3,000, and that firm was interested in producing goods for export.

I should have thought that if we had a more intelligent examination of the structure of Purchase Tax we could create a vast increase in production and in our export trade, and so assist all those manufacturers who are concerned in the matter. The present provision helps, but it will create further anomalies, and it is not sufficient. The time has arrived for an all-party consideration of this tax, with the object of abolishing or considerably reducing it, not on a few but on many lines.

The Chancellor of the Exchequer (Mr. Peter Thorneycroft)

It may be convenient if I say a few words about the Clause. I would remind the Committee that its object is to reduce taxation. It is as well to recall the Committee to that basic fact of our discussions. I would also say that the task of any Chancellor talking about Purchase Tax is always very difficult. If he says that there is nothing to be done, he is unimaginative and obstructive, and if he hints that something might be done, he does very considerable damage to British industry. On the whole, therefore, the less a Chancellor talks about Purchase Tax the better, and I shall certainly try to follow that course.

The right hon. Member for Battersea, North (Mr. Jay) said that the provision was no simplification. He is quite right. But faced with the alternatives of simplification and a reduction of taxation I preferred to reduce taxes. Even if the provision involves a new rate, at the same time it certainly halves the tax. The right hon. Gentleman went on to praise the Utility scheme. I have some recollection of the Utility scheme and the taxation system associated with it. I would say to the right hon. Gentleman that if today we gave the textile industry the choice of going back to the tax position under the Utility scheme, and all the complications associated with it, there is no doubt what the industry would choose. It would choose the existing situation. The textile industry does not want to go back to that position, when all its quality textiles, all the things it hoped to export, were under complicated formulae and high rates of taxation.

8.45 p.m.

Mr. Jay

Would the Chancellor agree that the Utility Scheme is not the only way to give tax exemption? He could easily give wholesale or partial exemption in many other ways.

Mr. Thorneycroft

I was saying that it was the most complicated, invidious, frustrating and awkward method that could have been adopted. The right hon. Gentleman praised it and I was pointing out that, if the textile industry was given the chance, it would not go back to that form of taxation.

My hon. Friend the Member for Kidderminster (Mr. Nabarro) will have to rely on the Bissell and flat-iron for a little longer. While he spoke with great fervour of the joys and hopes associated with a completely modernised kitchen and all the modern appliances which can go into the home, the truth is that to remove the tax from that range of items would mean entering into a range of tax relief far wider than anything which can be contemplated within the scope of this Finance Bill. I would mention that electric kettles and electric and gas irons are among those items which did bear tax and the tax is not reduced. An inaccurate answer has been given on that point. The tax on all the other items in that category was reduced, but not those two.

The hon. Member for Oldham, West (Mr. Hale) dealt with the purposes of Purchase Tax. To him, and to other hon. Members who spoke in the same strain, I would say that I do not believe Purchase Tax can be used for planning purposes in the sense which the hon. Gentleman indicated. I do not think that we can go through the whole range of human consumption in this country and tax those things which we think people should not buy and subsidise those things which we think they should purchase. It is better to regard Purchase Tax as a form of indirect taxation and to work by economies towards the reduction of that form of taxation as in the case of any form of taxation, and not try to plan too closely.

Mr. Beswick

Then can the Chancellor say how he justifies the different rates of taxation?

Mr. Thorneycroft

The hon. Gentleman's hon. Friend has been justifying it logically and saying that he preferred that those things which are regarded as luxuries should be taxed in the higher category. I do not wish to adopt that view of taxation. It is the argument advanced by the Socialist Party when in office and that is why we have these differentiations.

The hon. Member for Huddersfield, West (Mr. Wade) asked about the power to make Purchase Tax changes by Order. I think it a good thing that such power should exist, because it avoids a concentration of thought about Purchase Tax in those three months before the Chancellor of the Exchequer introduces his Budget. If everyone is thinking about Purchase Tax just at that time of the year, as the hon. Gentleman said, there is a very natural tendency for retailers to hold off from purchasing, in case they buy goods which are taxed and then find themselves landed with the responsibility of carrying that amount of tax themselves. For the same reason it would clearly be unwise to forecast or to speculate about what is to be in the Budget or what might happen at any other period of the year by using Orders of that kind.

The hon. Member for Itchen (Dr. King) asked whether the Clause helped in dealing with rising costs. The answer is, "Yes, it does". To the extent that it knocks 2s. in the £ off the price, it is undoubtedly a help in that direction. Does it help as much as one would wish? Probably most hon. Members would answer "No" to that. They would like it to go further. I do not think that a Chancellor who has been accused of having "an assignment with inflation" in his Budget can also be accused of not going further in remission of Purchase Tax. This is the right and proper course to take, at any rate this year.

The hon. Gentleman also spoke of Purchase Tax on musical instruments. It is true that for the time being people will have to bear with the fact that most musical instruments are being taxed. The violin will be taxed, and the bow, but the audience now will not be taxed. That is, at any rate, an advance which we have been able to make. I am glad to see my hon. Friend the Member for Kidderminster back in his place. I have just said that my hon. Friend will have to rely on the Bissell and the flat iron, and must look for better things in the future.

The hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) asked to what extent the Purchase Tax burden had been eased beyond what was generally called the "pots and pans" taxation in the Autumn Budget. As my hon. Friend the Member for Kidderminster pointed out, there has been reduction over a substantially wider field: carpets, linoleums and floor coverings, which, under the hon. Gentleman's Government, were taxed at 33⅓ per cent., and cutlery, which his Government taxed at 33⅓ per cent. All that wide range has come down with others to 15 per cent. That is a proper and useful reduction and it is rightly adjudged so in the compass of this Finance Bill.

Mr. Harold Wilson (Huyton)

The right hon. Gentleman has just said that he was faced with the choice between reduction of taxation and simplification, and preferred to reduce rather than to simplify. That was not the only choice he was facing because he could have both reduced and simplified at the same time. If he had reduced this range of articles to 10 per cent., as we suggested in our Amendment this afternoon, quite apart from the desirability of making them all tax-free, that would have been something of a simplification. It would in any case, have avoided the creation of this new tax rate which, as my hon. Friend the Member for Battersea, North (Mr. Jay) and other hon. Members have said, now involves no fewer than seven different Purchase Tax rates.

Another thing that struck us was the Chancellor's reference to the Utility scheme. The right hon. Gentleman said that he remembered it; he ought to, because he killed it. He was responsible for ending the Utility clothing scheme. He said this afternoon that if the textile trade had the choice today it would not want to go back to that scheme. It is not only the textile trade we have to think about; we have to think about the consumers. Most consumers would prefer the Utility system of taxation, whereby Utility goods were tax-free over practically the whole field, and they would certainly be very much happier if they had the quality guarantee that we gave to them under the old Utility scheme.

I know that the right hon. Gentleman held out high hopes in 1952 that the textile trade would itself introduce a system of quality guarantees as good as those we had under the Utility scheme. The right hon. Gentleman struggled on month after month, year after year—1952, 1953, 1954, 1955—and we did not get any of those guarantees. If I were to pursue this point I should be in danger of getting out of order, so I will deal with the Clause, which has now been debated for quite a considerable time.

The Clause is another chapter in the history of the many changes of Purchase Tax on this range of goods. My right hon. Friend the Member for Bishop Auckland (Mr. Dalton), when he was Chancellor, removed many of these goods from taxation altogether. My right hon. Friend the present Leader of the Opposition, even in the 1951 Budget—a very tough Budget which was associated with the beginning of the rearmament programme—even in that tough Budget, when Income Tax went up, removed many items of household essentials now covered in this Clause from the coverage of Purchase Tax. They were brought back into its scope in the autumn Budget of 1955, to which reference has been made.

That was a Budget which followed an Election Budget earlier in the year, which gave away £150 million of taxation. It was only after the Election that the present Lord Privy Seal, who had denied that there was an economic crisis, found that it was so serious that he had to introduce another Budget to get the £150 million back. He did not take it from those to whom he had given it in the Election Budget, but took it from different taxpayers, mainly by pots and pans taxation.

I know that it would be out of order for me to attempt to discuss that Budget in any detail, or even the blow which we can now see to have been probably a fatal blow to the hopes of the Lord Privy Seal in introducing that Budget. I think that most of the difficulties can be traced back to the blunder which he made in introducing that autumn Budget. Much more skilful was his successor, who introduced another autumn budget, although he did not call it a budget when for all practical purposes it was a budget. However, I should be equally out of order in discussing that.

I think I should be in order to discuss that part of this year's Budget enshrined in Clause 6, which we are now debating. We are very sorry that the Lord Privy Seal has not been here for this debate. I think that he has a very serious grievance against the Chancellor because the Chancellor has really rubbed the salt in with this Clause. He scrapped—or at any rate half scrapped—the policy of the Lord Privy Seal which, as the Committee will remember, we debated day after day, night after night and right through the night—

Mr. Osborne

Month after month?

Mr. Wilson

Not month after month, but I can remember that at one stage in the history of our legislation debate on the Finance Bill was killed at eight o'clock in the morning. It would be out of order to discuss that. What I think is significant is that the Chancellor has scrapped, or at any rate half scrapped, the policy of the Lord Privy Seal. I do not complain about that. If he had entirely scrapped it and got rid of the kitchen taxes introduced by the Lord Privy Seal, we should have given him our wholehearted support, because we opposed the Lord Privy Seal. The Chancellor did not oppose him, but voted with him time after time, and was one of the few faithful supporters of the Lord Privy Seal on that occasion.

Because this has a most important bearing on the economic policy of the Government of which we hear so little, we must ask why the Chancellor has thrown over his right hon. Friend in this way—or half thrown him over. I shall not ask whether he is going to complete the process in an autumn Budget, if he is still there, because the Chancellor has very wisely said that the less a Chancellor says of future intentions about Purchase Tax the better. The right hon. Gentleman should not be confused with his successor at the Board of Trade in that matter. I think it would be useful to know—I hope that the Chancellor will ponder this and perhaps tell us a little about it, as it does not involve any disclosure of future intentions—why he has thrown the Lord Privy Seal over in this way.

Is it that the right hon. Gentleman disagrees with what the Lord Privy Seal did? Did he then think, or has he come to think, that the Lord Privy Seal was wrong, as Chancellor, in the strategy of his autumn Budget? That is a possible explanation which, no doubt, will have occurred to the Committee. Or does the Chancellor think the Lord Privy Seal was right in what he did that autumn and that now the circumstances which then in the Chancellor's mind justified the Lord Privy Seal in introducing these taxes had eased sufficiently for the Chancellor to be able to say that whatever was needed in the grim days of autumn, 1955, just after that General Election, is no longer required today because things have eased so much, our balance of payments is looking so much rosier, we have had wonderful financial dividends from the Suez operations and the rest, and as a result of all that, whatever the Lord Privy Seal did in that autumn, can now be relaxed?

That may be a possible explanation. I suggest that one of these possible explanations must be the true one. It would be valuable to the Committee as a whole, and certainly to the country, if we knew which of those two had motivated the Chancellor in what he has done. Perhaps I might remind the Chancellor, because I am sure that he has not given enough study to this point, of what the Lord Privy Seal said in introducing his autumn Budget. I have a feeling that the Chancellor has not really thought about this. If he has, we should like to know what he thinks about it and also what the Lord Privy Seal said to him.

I am referring to what the Lord Privy Seal said during the Committee stage of the Finance Bill in 1955. I will not weary the Committee by quoting what he said on Second Reading, because it has been quoted by my hon. Friend the Member for Sowerby (Mr. Houghton). Instead I will take one of the very many speeches which the poor Lord Privy Seal had to make in Committee. He was almost entirely deserted by his hon. Friends; the only Tories present were bitterly criticising him.

He began to tell us about the developing economic crisis of 1955. By some Freudian lapse he forgot to mention the Election Budget or his Election speeches, but nevertheless he went on to say that this expansion in factory building and all the rest of it had taken place. Then he said: However, it became clear by this Autumn that measures were necessary to deal with this situation, that is, the urge to expansion and an inflationary tendency "—

9.0 p.m.

Mr. Osborne

Were not almost identical arguments used in both the crisis of 1947 and the crisis of 1949?

Mr. Wilson

If I felt that I should not weary the Committee, I should be glad to draw some very useful analogies between 1947 and 1957, but I am afraid that I might weary the Committee, and I should like to keep their attention directed on the very odd difference between the present Chancellor and the Lord Privy Seal.

The Lord Privy Seal went on to say: What we want to keep, as my hon. Friend the Member for Scarborough and Whitby said, is the right balance between the resources and money available. That is an impeccable commentary. If so you do not get rising prices, you get the benefit of prosperity and of full employment in this country. Having talked about the boom which had got out of hand—although he did not use that phrase—he went on to say: But what has resulted from our policies … has been this surge of expansion … It would be out of order for me to discuss some of the steps we have taken". Equally, it would be out of order for me to comment on them now. He went on to say: It would have been absolutely wrong not to use Purchase Tax as an instrument to deal with home demand at the present time."—[OFFICIAL REPORT, 16th November, 1955; Vol 546. c. 618–20.] That is what the Lord Privy Seal said in the autumn of 1955. Does the Chancellor agree with that? If so, does he think the situation has eased so much since the autumn of 1955 that it is now possible for him to relax?

Mr. Osborne

What did Cripps say in 1949?

Mr. Wilson

The hon. Member is obsessed by this idea. I hope he will follow me when I sit down and give the Committee the benefit of his views, because we should like to hear them in a considered and orderly manner. I must refer also to the various speeches made about the particular items which enter into Clause 6 made by the then Economic Secretary, now Parliamentary Secretary to the Ministry of Education. He had a most sophisticated form of argument. The Lord Privy Seal said, "I must do it because the £ is in danger and if I do not put up the tax on pot scourers, coal sifters and the like, the little gnomes of Zurich will start speculating against the £. Once I do that confidence will be restored and the £ will be saved." That was his argument. Then we heard from the Financial Secretary, now the Minister of Housing and Local Government, who kept telling us that there would be a yawning gap in the system of taxation if the Government did not tax this, that and the other item.

As I have said, the Economic Secretary was much more sophisticated. I think that it was his enunciation of a new economic principle which caused me to christen it "Boyle's law" about which we have not heard quite so much from the Chancellor recently. I want to quote something that we heard from the Economic Secretary. He said: I want to say some words about the effect of Purchase Tax on demand and the effect of Purchase Tax in combating inflation, because these are points which have been frequently raised …First of all …I do not think that many hon. Members will seriously dispute that there are certain goads in the higher ranges of Purchase Tax where increased tax will result in some falling off of demand"— He thought that it might deter the demand a little and that it would expand our exports and hold back our imports. At the same time, he did not dispute that it covered a very wide range of goods, mainly items in the class we are discussing— for which the demand will not be greatly affected either way. He did not expect that there would be any reduction in the demand for these household essential goods because people would have to buy them. If one has a baby one has to buy a baby's bath; and, in relation to households, that applies to brooms, brushes and saucepans and all the other things that I have mentioned. What he said—I will not quote all his speech, but the Committee will remember the burden of his argument—was this: that if these people have to buy these essentials and pay a little more for them by reason of an increase in Purchase Tax the result will be the siphoning off of a certain amount of purchasing power which would in itself be disinflationary. We heard that argument at least a hundred times during that time in the Finance Bill debates.

We did riot agree with him. We said, "On this argument you should tax bread". It was a dangerous thing to say. The next Chancellor—the one between the Lord Privy Seal and the present Chancellor—took us at our word and removed the bread subsidy. That was, of course, the full implementation of "Boyle's law", namely, that if one taxes an essential or removes the subsidy on an essential that will somehow cream off money from the people who have too much money to spend, namely the working class, which was the basis of his argument. That having been done, they will have less money to spend on things such as shirts and that, in the first place, will reduce our import bill for cotton and, secondly, increase our export of shirts, notwithstanding the fact that we could not export shirts anyway and that our textile exports are lower than at any time since 1840.

That was the sort of argument which was put up at that time. The Economic Secretary said: I should like to say a word about our balance of payments and to point out to hon. Members that one must not only think in terms of exports when considering that balance. Not only will the curtailment of consumer demand help our exports—and that is obvious—hut it will also mean that our imports bill will not be so great; and let us remember that the imports bill is one of the most important problems facing our economy at present."— [OFFICIAL REPORT, 15th November. 1955; Vol. 546, c. 351–2.] Are these not still enormous problems facing the economy? I am not saying that the Chancellor was wrong by any means to reduce this tax. I never accepted the argument—none of us did—of the present Lord Privy Seal and the then Economic Secretary.

We said that if prices were forced up and Purchase Tax increased one of the first results would be more demands for increased wages which would, of course, increase the inflationary pressure. The whole of last year we had this schizophrenic policy of the Government, with half the Ministers saying, "Let us have Boyle's law' and put up prices" in order to siphon off money, and the other half talking about the plateau and the stabilisation of prices, and saying that we must not put up railways rates or the prices of coal, gas and electricity. Then we had the then Chancellor, in alternative speeches, enunciating first the one and then the other. I will not go further into that, although I am tempted to do so.

One result of this policy of forcing up prices by removing subsidies and increasing Purchase Tax on essential goods was the unanimous decision by the T.U.C. last September to end wage restraint, which was a most serious thing for any Government to have to contemplate. The responsibility, however, lay with successive Chancellors in their cost of living policy.

I could—but I will not—quote at length the remarks of the then Economic Secretary bearing on this point, but to hon. Members opposite, who have shown such great interest in these debates on Purchase Tax this evening, I commend the speech of the then Economic Secretary on this question on 15th November, 1955. It would be right also to quote what he said in a subsequent debate on 23rd November. The hon. Gentleman was quite consistent—I will say that for him. He said: This Budget is an honest attempt by the Government to deal with the question of inflation, because we want to secure our position in world markets. If we fail to deal with it, then it will be precisely the poorest people who will suffer first. I do not deny that it is not easy to establish a direct connection between the tax on these particular items and our export trade. I do not dispute that at all, but the Amendment which we arc now discussing is related to the general Government policy of retraining demand over the whole field. We believe that restraint of demand is essential if we are to have a secure surplus in our balance of payments."—[OFFICIAL REPORT, 23rd November, 1955; Vol. 546, c. 1499] That was the then Economic Secretary to the Treasury, who was still in Her Majesty's Government. He was out for a short time later, but he is back again with the full confidence of the Prime Minister. Those were the views that he was expressing at that time.

Does the Chancellor believe that the Government were then wrong, or does he believe that circumstances have improved so much that those arguments no longer apply? Does he believe, for example, that our balance of payments problem is now, if not solved, so far on the road to solution that he does not need to reinforce our attack on the balance of payments problem by the kind of methods used by the Lord Privy Seal in that autumn Budget? The Chancellor obviously cannot be very happy about our gold and dollar reserves, which fell by one-quarter in 1955, as the Prime Minister reminded us, and then fell by one-third in 1956, as the Chancellor has not reminded us, under his predecessor.

Obviously, the balance of payments situation is still serious. I think that the Government's borrowing this year has been sufficient to avoid a serious balance of payments crisis this year, but surely the Government will agree—indeed, the Chancellor spoke in these terms in the Budget debat—that the situation is still such that we cannot afford to relax in any measures that are needed to strengthen our balance of payments surplus.

I think that the Chancellor was right to reduce this Purchase Tax. I wish he had gone further. I think that the Lord Privy Seal was wrong both to increase the rate of Purchase Tax on the lowest group and also wrong to widen the coverage of Purchase Tax by bringing in those items from which Purchase Tax had been taken off by my right hon. Friends in their Budgets between 1947 and 1951. If, however, the Chancellor is—as I say, rightly—reversing the policy of the Lord Privy Seal, I hope that on some subsequent occasion—he could not do it tonight, because it would be out of order—he will tell us what is his policy for countering inflation.

The day after the Budget, I described it as an assignment with inflation. I still believe that that warning will prove to have been right. Earlier this year, there was a certain element of disinflation in the system due to a whole number of factors—partly the effects of Suez and certainly the effects of the credit squeeze. There were many who said that a measure of reflation was needed in the Budget.

The Clause is a partially reflationary measure, but just before the Budget, of course, we had the new trend of affairs in the industrial field, with the wages claims. Since the Budget, we have had all the figures showing that investment, which we thought was being rather restricted and reduced, is booming ahead as fast as ever. Of course, the real reason why the Budget is inflationary and why the Clause is relevant to all this is that the more prices rise, the greater the continuance of inflation, the greater will be the right hon. Gentleman's Budget surplus.

9.15 p.m.

I am prepared to accept from the right hon. Gentleman that this Clause is an honest attempt to bring down the cost of living. If so, he ought to have gone a lot further. He ought to have accepted the Amendments moved with so much eloquence today. This half measure, I am afraid, does not make a substantial cut in the cost of living. What is the effect on the cost of living index? One-third or one-quarter of a point at most. At the same time, it gives the whole country the idea, if it did not have it already, that the Government just do not know what they are doing in the matter of their disinflationary policy, for first, we were told that the present Lord Privy Seal's measures were necessary; then they were continued by the present Prime Minister; and now the present Chancellor begins to reverse them, without substituting any new anti-inflationary ones in their place.

The last thing I want to say upon this matter relates to something touched upon by a number of hon. Members, not least by the Chancellor himself. It has been pointed out that we now have seven rates of Purchase Tax. We seem to be as far from simplification, certainly unification, as we have ever been, if not further. I do not think there is any doubt that the Lord Privy Seal, if he had lasted long enough as Chancellor, would have introduced a sales tax, a single tax covering the whole range of the Purchase Tax, and probably on a much wider basis even than the one which he bequeathed to his successor. I think that he would probably have extended it to consumer services, and possibly to soft drinks and commodities of that kind.

We warned him against that kind of policy. We warned him against a sales tax; but he did say this: I make bold to suggest that tax critics and tax experts in the future will not be ungrateful to me for the singularly disagreeable task I have undertaken in broadening the scope of this tax."—[OFFICIAL REPORT. 28th November, 1955; Vol. 546, c. 2062] He went on to hint at further simplification, which the whole country took to mean a unified sales tax.

I do not know whether the Chancellor is grateful to the Lord Privy Seal or not. I do not know whether he has thrown him over, or what the explanation is, but he has certainly not moved towards a sales tax. He has moved further away from it than any Chancellor who has preceded him. I hope that this means that the Government have now resolutely decided that we shall not have a single sales tax put equally upon the essentials of life such as household articles, on the one hand, and upon purely luxury articles, on the other. I hope that the right hon. Gentleman is not even considering it.

While we all regret that he has complicated his tax schedules so greatly by the system of seven rates of Purchase Tax, nevertheless if this means that he has finally rejected, for as long as he is Chancellor, the dangerous proposal with which the Lord Privy Seal was flirting, we congratulate him once again on that, and we say to him that at the earliest opportunity he must—he can do this by Order—complete the job which he has started with this Clause, and remove from the range of Purchase Tax the household essentials which were the victims of the autumn Budget of 1955.

Mr. Osborne

The right hon. Gentleman, the Member for Huyton (Mr. H. Wilson) a former Chancellor, the opposition's shadow Chancellor, said that the Chancellor 'was right by this Clause to reduce the Purchase Tax. It took the right hon. Gentleman a long time to say the one thing that really is true of the Clause. For the rest he played very cleverly with what is being done now and with what was done in 1955. He taunted my right hon Friend with the danger to the £. Any taunt of that kind comes ill, I think, from the right hon. Gentleman, because the Government he supported brought us back from our September holidays in 1947 because their policies forced us to devalue the £ from 4.03 to 3.80 dollars.

Mr. H. Wilson

It was not in 1947, but 1949. I really would not wish to follow the hon. Gentleman into this, quite apart from the fact that if I were to do so I should be grossly out of order. I really do not think that we should do well to bandy words across the Floor about devaluation, particularly when it should be remembered that, but for the emergency borrowings and all the pawnshop activities of the Prime Minister at the beginning of this year, the reserves would have been lower than they were at the time of devaluation in 1949.

Mr. Osborne

The right hon. Gentleman talked about pawnshop activities, but what about the pawnshop activities of his own party when it borrowed £1,000 million and wasted the whole lot within 12 months and forced us to come cap in hand like a lot of beggars to Westminster?

The Temporary Chairman (Sir Norman Hulbert)

The Clause refers to Purchase Tax and not to borrowing by Her Majesty's Government.

Mr. Osborne

I took the words down as the right hon. Member for Huyton used them in the course of a long speech. With respect, you, Sir Norman, never challenged him once, and I am now taking up the point that the right hon. Gentleman was making.

Mr. Wilson

On a point of order. I do not want to draw attention to the fact that the hon. Member for Louth (Mr. Osborne) is clearly challenging your Ruling, Sir Norman, but I really must draw attention to one fact. When I referred to the state of the £ in 1955 I was not talking about devaluation at all. I was quoting a speech of the Lord Privy Seal justifying the Purchase Tax on the items covered in Clause 6. which I humbly submit was in order, whereas the remarks of the hon. Member for Louth were not in order.

Mr. Osborne

I am quite content to rest on what HANSARD will show tomorrow as what the right hon. Gentleman said, which you, Sir Norman, with great respect, allowed him to say. The right hon. Gentleman criticised the present proposals by contrasting them with proposals in the autumn Budget of 1955. He made great play of that and took an awful long time about it. He used the actual phrase that it was done because he feared that the £ was in danger. I am content to rest on what HANSARD will show the right hon. Gentleman to have said on that point. My only comment, and I think a perfectly legitimate one, was that it came ill from the party which so put the £ in danger that it had to devalue.

The right hon. Gentleman also criticised the retention of half of the Purchase Tax. because of the so-called "Boyle's law" and the fact that purchasing power had to be mopped up. Once again I should like the right hon. Gentleman to look up speeches made in 1947, 1948, and 1949 by the then Chancellor, who I can remember quite well used the phrase "syphoning off excessive spending power" and talked about mopping up spending power which he did not want in the economy.

Mr. Chapman rose—

Mr. Osborne

No, I will not give way. Therefore, the very argument that the right hon. Member for Huyton used so cleverly and so long-windedly tonight, accusing my right hon. Friend, was in the very words which his own revered leader had used so many times with his support in the years 1947 to 1951. Furthermore, the right hon. Gentleman said that by claiming this amount of Purchase Tax in the Clause we were being hard on the poorest section of the people, because we were still putting up the cost of bare necessities. He said how unfair and antisocial it was, but may I remind him that Sir Stafford Cripps—

Mr. Hale

On a point of order. Sir Norman, may I seek your guidance? If I have the good fortune to catch your eye when I rise to address the Committee again, shall I be able to refer to Lord North's proposals to tax the American Colonies as an admirable previous historical contrast to the various Budgets we are now discussing?

The Temporary Chairman

That matter can best be decided by the then occupant of the Chair.

Mr. Osborne

I am much obliged, Sir Norman. It is surprising how touchy are hon. Gentlemen opposite.

In retaining the 15 per cent. tax here we are accused of making it more difficult for the poor to buy the bare necessities of life, and it is suggested that this is wickedly anti-social on the part of the Tories. But what did the Labour Party do when it was in power? Food subsidies were cut from £560 million to £400 million in one year—

The Temporary Chairman

Order. I must remind the hon. Member that the Clause deals with Purchase Tax and not with food subsidies.

Mr. Osborne

I was merely referring to them by way of illustration, Sir Norman, as the right hon. Gentleman has been allowed to do so many times. I say, therefore, that his speech was quite off the subject, except for one phrase which was worth listening to, when he said that my right hon. Friend was right to reduce Purchase Tax as he is doing now.

Now I come directly to the Clause. The hon. Gentleman the Member for Birmingham, Ladywood (Mr. V. Yates) made three points which I would like my right hon. Friend to bear in mind. He said that the chambers of commerce, the shopkeepers and the buyers hate Purchase Tax, partly because of its incidence. I agree that the quicker my right hon. Friend can get rid of some parts of the tax, the better, and the fewer changes there are, the better for traders.

On the other hand, the hon. Member for Southampton, Itchen (Dr. King) made a rather long speech in which he said that he wanted all Purchase Tax abolished. However, the hon. Gentleman did not say what he would put in its place. I put this point to hon. Members on both sides of the Committee. If money is not to be raised in this way, the alternative is greater taxation. I should prefer to tax spending, and in some way force saving, than put on an extra burden of direct taxation, which in many ways is a disincentive to production.

As has been said so many times during the debate, what is required is something to encourage greater production. It seems to me, therefore, that whichever party is in power, each in turn will have to face the following question. Will they increase Purchase Tax and so raise the necessary revenue for social services, defence and other purposes by that method or will they increase direct taxation?

Mr. Arthur Lewis (West Ham, North)

Surtax.

Mr. Osborne

The hon. Member for West Ham, North (Mr. Lewis) knows nothing about it. There is not sufficient scope for Surtax to raise a tithe of the amount required. What responsible hon. Gentlemen opposite must face—

Mr. Anthony Kershaw (Stroud)

Which one?

Mr. Osborne

I can see one—the hon. Member for Sowerby (Mr. Houghton). The question he would have to face if he were in power would be whether he would take the risk of reducing the productivity of the nation by increasing direct taxation or whether he would keep Purchase Tax, which tends to reduce spending power and therefore tends to force saving.

9.30 p.m.

Of the two, I think the hon. Gentleman would tend to keep Purchase Tax and obtain greater productivity and, therefore, less spending. To that extent, I think the hon. Member for Itchen was wrong when he said that we should abolish Purchase Tax altogether. In so far as the Clause has reduced what I call the "pots and pans taxation" by half, I am glad of it and will support it, and I hope that next year the Chancellor will remove the other half as well.

Mr. Chapman

Will the hon. Gentleman tell us what his solution is? Half way through his speech he said he would suggest an alternative to Purchase Tax. He then said that the alternative was not accetable to him. Does he end up by accepting Purchase Tax for ever?

Mr. Osborne

We are discussing the Clause, and I am supporting the reduction of taxation that it brings about.

Mr. Collins

We have, as usual, been diverted by the speech of the hon. Member for Louth (Mr. Osborne). I do not think that the hon. Member always intends to give the Committee as much amusement as he does. The important thing is not that we should be amused, but the effect upon the people outside of what we say and do.

We have this time, as for many years past, had the usual clever and amusing speeches about Purchase Tax anomalies. They are not difficult to pick out. They occur many times on every page of the booklet dealing with Purchase Tax. Picking them out is an exercise in which we have all taken part. I hope that this will be the last year when we shall take part in such an exercise, for it is about time that this farce was brought to an end.

I hope that the debate will at least have had the affect of making the Chancellor and the Financial Secretary look into the matter and consider what can be done, because the absurdities which are occurring under Purchase Tax bring the House of Commons into contempt and cause frustration and unnecessary difficulty. They may be amusing, but they mean that manufacturers, workers, and housewives suffer.

I know that this is an extremely difficult matter. The Financial Secretary said earlier—it is the only semi-concession that we have had all day—that he and his right hon. Friend would look into the question of defining domestic articles. He was taking up a point raised by his hon. Friend the Member for Wycombe (Mr. John Hall), who rightly pointed out the absurdities in respect of furniture. On that occasion and subsequently, the Financial Secretary said that he would look into the matter. I wish him luck. It is very important that he should succeed. A number of industries are interested in his effort. Unfortunately. I think that he will find that the further he ventures into that field the more he will find himself in a new morass of difficulties.

The booklet states, in page 59, that basketwork articles whose primary function is within the home are chargeable under Group 11, and it gives examples. In other words, being things within the home, these are obviously domestic articles by definition. Yet the articles in that group are specifically charged at 15 per cent., the higher rate of tax. That is an example of the kind of absurdity and anomaly which the Financial Secretary will find when he looks into the matter.

The more the hon. Gentleman grapples with it, the more he will come to the conclusion that the only thing which will do any good is a surgical operation, to start absolutely anew and, instead of having this facetiousness of the exemption or exception, to tell us bluntly, if the tax must continue, the classes to which it must apply, the actual amount of tax on each class, and that those things which are not specified are free of tax. That would be a supremely useful operation.

The other thing which is necessary is for the Chancellor to realise the relationship between what he gathers in tax and what the consumer pays as a result of that tax. I hope that the Financial Secretary will not run away with the idea that they are one and the same. I have shown the kind of extra costs to which a manufacturer is put as a result of the tax. There are days when he is visited by a Customs officer, in most cases not because there is anything wrong, but because that is the ritual which has to be carried out, the books have to be carefully examined to see whether there has been a tiny slip.

That invariably involves the services of one or more senior members of the staff. A tremendous amount of time is lost in that way, partly because of the very system under which it is conducted, the exemption system which gives everybody the maximum amount of trouble. All that is eventually added to the cost of the goods, in addition to the tax.

A bit more is added when the goods arrive at the retailers, so that there is a great disparity between the amount the Chancellor receives as a result of the tax and the amount which the housewife or consumer pays because of it. That is a very bad principle. If we are to have the tax, it should be arranged so that the Chancellor receives the amount which the consumer, the eventual taxpayer, pays, not something less than that amount. At the moment, the arrangement is grossly inflationary, far more inflationary than the Chancellor or the Committee intends.

Those are the two principal things which we have to consider. Certainly, it is right to draw attention to the fact that in some cases the tax has been reduced. Certainly, it is right to draw attention to the fact that many things which are taxed should not be taxed and to the fact that there are absurd anomalies. Above all, we are right to draw the Chancellor's attention to the fact that the tax is grossly inefficient and that a different method should be found. In matters affecting industry, we in the House of Commons seem seldom to realise the full extent on the end product of the actions we take. That is a very bad thing, because it is on the result of the actions we take that the prosperity of the lives of the people we represent depends.

From the viewpoint of its effect on production and living costs, this tax is by far the worse way of raising revenue and I hope that it will be reviewed.

Question put and agreed to.

Clause ordered to stand part of the Bill.