AMENDMENT OF LAW

HC Deb 15 April 1958 vol 586 cc130-8

That it is expedient to amend the law with respect to the National Debt and the public revenue, and to make further provision in connection with finance.

7.44 p.m.

Mr. Harold Davies

After that interesting interruption, I should like to draw the attention of the Committee again to the point which I was raising earlier.

The point that I made before the interruption took place was that I have discovered that, according to Table IX of the Financial Statement given to us by the Chancellor of the Exchequer, there are changes in the system of Purchase Tax. I want an explanation eventually of the following anomaly. Whereas before the Budget statement today Protective boots for miners, quarrymen or moulders; clogs and other wooden-soled footwear were entirely exempt from Purchase Tax, after today, or eventually by means of an order, British miners will have to pay 5 per cent. Purchase Tax on their boots. Anybody who knows anything about mining knows that boots are essential factors in the cutting of coal in the rough geological conditions which miners have to face.

We have the further item in Table IX showing that, not only is the Chancellor putting a 5 per cent. tax on miners' boots, but also a 5 per cent. tax on Protective helmets for miners or quarrymen. Here we have it in black and white. Whereas under the present system they are completely exempt, after today or on the Budget becoming law, British colliers will have to pay a 5 per cent. tax for their protective helmets, This is ridiculous; this is foolish.

Again in Table IX we find that fur garments which are at present liable to a rate of 50 per cent. are in future to be reduced to a rate of 30 per cent. Can the Chancellor of the Exchequer, in the name of common sense, justify to this Committee how he can drop the tax on fur garments from 50 per cent. to 30 per cent. while at the same time taxing a hitherto exempted essential tool in the production of coal? I shall certainly make it my duty to put down an Amendment to the proposal on consideration of the Finance Bill, and I hope that all my colleagues, especially those who come from mining areas or who represent mining areas, will let the Chancellor of the Exchequer see that he is not going to get this proposal in his Bill without a fight from our side.

The anomaly is further increased as a result of the increase, shown in Table X, in the initial allowances on plant and machinery to 25 per cent. and on industrial buildings to 12½ per cent. As a result of all this, the cost to the nation this year will be £16 million. I agree with the increase of the initial allowances, because that is an encouragement to investment, but I do not agree with the hint given by the Chancellor today that we should hold back our investment. If we hold back our investment, we cannot compete with Western Germany or with the high-powered methods of the U.S.S.R. or of the United States, but while the Chancellor is encouraging investment by companies and manufacturers by giving them a 25 per cent. initial allowance, he is increasing the cost of the colliers' boots by the imposition of a 5 per cent. Purchase Tax. Boots are essential. How in the name of common sense the Chancellor can justify this imposition of tax on protective helmets and boots for miners and quarrymen, while at the same time giving a 25 per cent. initial allowance to manufacturers and others who put down new plant and machinery, I fail to understand.

According to the Economic Survey, the amount of coal used in 1957 was less by 5 million tons than it was in 1956. There was an increase of 2 million tons in exports and stock changes of coke. The fact is that we used about 7 million tons less in Britain last year. I do not want to bore the Committee by quoting what every interested hon. Member makes it his duty to read and understand, namely, the Economic Survey. We have a growing problem in the mining industry and—I say it with all sincerity—we have a growing problem on the industrial front today. Yet, when there are these problems, this silly little thing is slipped into the Budget. It would have been noticed by my colleagues, of course; it would have been noticed when we came to deal with matters in full in Committee, but it is my duty now to point out to the Chancellor of the Exchequer and to right hon. and hon. Gentlemen opposite that we on this side will divide the Committee rather than let this absurd provision in regard to Purchase Tax go through.

It would be remiss of me to make a long, unprepared speech on what is really a serious issue confronting us about the nation's balance sheet in relation to the nation's production. Every one of us, on both sides of the Committee, has a great respect for the right hon. Gentleman who spoke this afternoon as Chancellor of the Exchequer. We believe in his sincerity, and I believe—I speak for myself—that he is as anxious as I am to see a prosperous nation and to solve our economic problems. To do these things, however, we need a little of the spirit of adventure. What worries me is that the right hon. Gentleman has been listening—it is evidenced by this silly provision about miners' boots and helmets—too readily to people in swivel chairs who are miles away from the realities at the point of production of the nation's goods, fuel, machines and wealth. I ask him to break through that sort of thing and to show some spirit of adventure. The right hon. Gentleman has spoken about this Elizabethan age before, when dealing with agriculture. I ask him now to approach his Budget in an adventurous spirit. At least, to save the Committee having to divide, he should withdraw this ridiculous provision adding a 5 per cent. tax on protective clothing for the colliers of Britain.

7.54 p.m.

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

I wish to reinforce the plea made by my hon. Friend the Member for Leek (Mr. Harold Davies). He has already pointed out that the mining industry is at a difficult stage. We want to introduce new machinery. We want as much coal as we can get. Also, we want the good will of the men working in the industry. I ask the Chancellor to look at the matter again not only from the point of view put by my hon. Friend but also from the point of view of the safety of miners. After all, protective boots and helmets were introduced in the mines to reduce the accident rate, and anyone living in a mining area knows how much their introduction has meant in reducing serious injuries to those working in the pits. As my hon. Friend pointed out, in a Budget where not many radical changes are made, this is a very reactionary step to take and one which will not have the support, at any rate, of the men who work in the industry or of their wives, who have to suffer when the men are injured if they have not these items of protective clothing. There is also the factor that men are taken out of work if they suffer injury through accident.

As a housewife, I welcome the very generous reduction of Purchase Tax on electrical goods. I have always argued that the person who needs the electric cleaner, the electric washer and refrigerator is the woman who has a family to look after, the working-class woman particularly, who has to do all the jobs herself and, in many cases, go out to work as well. I do not look upon the refrigerator as a luxury; it is very much a necessity, particularly to women who go out to work. The housewife will welcome the reduction in tax on all such household goods and equipment.

As a representative of north Staffordshire, I must say that I am convinced that people working in the pottery industry, both manufacturers and workers, will very much regret that the Chancellor has not been able to reduce the tax on pottery. Everyone knows the arguments we put twelve months ago and two years ago. In our industry, there has been some short-time working, and. if there is unemployment in America, our industry may well feel the brunt of it as much as any other industry in this country. We should like to think that the Chancellor will look at the matter again sympathetically.

I regretted very much the Chancellor's announcement that local authority spending is to be cut by £27 million on what it was last year. This seems to add insult to injury. After all, during the last two years local authorities have been told to cut back expenditure of all kinds. The Local Government Bill, which will force local authorities to face further possible cuts in essential expenditure, is still being discussed in Standing Committee. This further cut of £27 million will mean that many essential schemes will be delayed for another twelve months or, perhaps. much longer than that. I am thinking particularly of vital road improvement schemes and such things as sewage disposal schemes, particularly at the seaside. Seaside local authorities will be very reluctant to spend large amounts of money on sewage disposal schemes if, in other aspects of their work, they have to cut back. In the interests of health and safety, it is not wise policy to ask that major schemes of this kind should be further cut.

The Chancellor referred to what he called "patches of unemployment". Some areas have much more unemployment than others, but there is one industry where unemployment is growing as a result of Government policy, namely, the building industry. In almost every part of the country, building workers, both craftsmen and labourers, are now suffering a threat of insecurity such as they have not known since 1945. That aspect of unemployment, which is not peculiar to one area but to most, will be affected by a cutting back in local authority spending. I have house building specially in mind. Most local authorities, particularly in industrial areas, have seriously, drastically and, I think, dangerously cut down their house building programmes. This Budget means that the building workers and others concerned in the industry will again suffer a knock.

There is one other tax about which I thought the Chancellor might have done something—it is not the tax on wines; that is one which I would willingly have left alone—and that is the tax on petrol. Here was an opportunity to do something for industry as a whole, because the higher the petrol duty the higher the transport costs for industry. Almost every industry, especially those concerned with the export trade which have to get their goods to the ports, is affected by the petrol tax. If he is concerned to keep down the cost of living as much as possible, this is a tax about which the Chancellor should have done something. It affects transport costs, and the bus fares which workers have to pay. There is a real problem for many workers who, because of local authority extension and development, now live on the outskirts of cities and have to spend quite large amounts on bus fares.

We all welcome, as I am sure the cinema industry will welcome, the reduction in Entertainments Duty. This is a tax which has cried aloud for a reduction. This is an example where pressure has been brought to bear very forcibly; and I hope that before the Finance Bill reaches its final stages those of us who represent mining areas will find that our pressure has resulted in the withdrawal of the tax on miners' boots.

8.4 p.m.

Sir John Barlow (Middleton and Prestwich)

I had not intended to speak in the debate, and for that reason I shall not delay the Committee long. However, after listening to a number of speeches made by hon. Members opposite, I must say that when taking into account the natural opposition which one expects this Budget will be received remarkably well by the Opposition. If one analyses the arguments that we have heard, there is very little real ground for opposition. It is only too easy to say that we might have had a little more off Purchase Tax, or this, that and the other, and it is very easy to say that we might have had a little off the petrol duty, which we should all have liked. But we must realise that the cake is of very limited size and the amount available for distribution is very limited, also.

The Chancellor has done extraordinarily well in the Budget that he has put before us. The hon. Member for Leek (Mr. Harold Davies) complained that there was no spirit of adventure in the Budget. I think that a spirit of adventure at present is the last thing that we want in a Budget. We require a solid, sound Budget to put the country's financial resources on a proper equitable basis.

Mr. Harold Davies

When I was thinking of the spirit of adventure, I was thinking particularly of the Chancellor's remarks about the European Free Trade Area. A spirit of adventure would have encouraged and exploited to the full Asian and Far Eastern markets from which we have been withheld, not through the Government's policy, but through the policy of another Government, namely, the United States of America. A spirit of adventure would have hacked away those shackles and gone on to get honest trade wherever we could have had it.

Sir J. Barlow

We have had a very sound Budget, and I am glad that the Chancellor did not embark on as great a spirit of adventure as the hon. Gentleman wishes. The Budget has even been praised by hon. Members opposite. The reduction in the Entertainments Duty will benefit an enormous number of people, and apparently the Opposition agree that that is a good thing.

I should sincerely like to congratulate the Chancellor on his first Budget speech. It is a sound, practical, common sense Budget which the country requires very badly at present. Some people may say that it is not imaginative. I have no doubt that that will be said in the Press tomorrow. I say, thank God it is not. It is practical. We want practical finance and common sense at present above all things.

I am glad that the Chancellor laid great emphasis on the necessity to continue to control inflation. I am one of those who have consistently criticised the Government for two years for not grappling with the inflation problem long before they did. As we all know, the problem was not seriously tackled until the middle of September last year, when the Government put up the Bank Rate by 2 per cent. and imposed a further bank squeeze in addition to other remedial measures. That was the first time that the Government got to grips with inflation. I am glad that they did it then, although it was very late.

It was most interesting to see that the Chancellor did not think it was time to release the brakes and allow some measure of expansion. Personally, I entirely agree with him. If he releases the brakes and allows expansion too soon, it would be fatal to the economy and industry of the country. It is a very delicate point to decide exactly when to release the brakes. He obviously has far greater information in this matter than any of us. At the same time, the inclination of myself and very many of my hon. Friends is that the brakes should not be released just yet. They should be applied for a little longer.

The Chancellor went on to say that we could not buy ourselves out of the small recession which has shown itself in some quarters. It has been suggested that the United States, who are not so reliant on its export trade and are much more self contained, can buy themselves out of a normal recession. I entirely agree with the Chancellor. We cannot buy ourselves out of a recession, but we can and should work ourselves out of a recession. That is completely within our power. We have the technicians and the resources to do so, and I hope that that point will be emphasised during the rest of the debate.

The Chancellor emphasised the necessity for exports. This country relies far more on exports than any other similar country in the world. About 25 per cent. of our production has to be shipped overseas. Nearly half of our exports go to Commonwealth or colonial markets. It is important that we should retain and develop those Commonwealth markets. Sometimes I am led to think that we do not pay sufficient attention to the importance of those markets. Knowing the difficulties that many of those Commonwealth countries have owing to the diminishing price of their products, many of which are agricultural and some of which are mining products, they are in an increasingly embarrassing position because they do not have the wherewithal to buy the manufactured goods from this country that they so badly need. It is important that we should, as far as possible, support those Commonwealth countries and help them to develop. They are most anxious to develop and they require capital and machinery to do so. We can, and should, try to help them in that development.

In some cases, it would appear that certain colonial and Commonwealth countries may be trying to establish small local industries, to have a balanced economy, but which cannot be economic in any sense of the word. Taking the Commonwealth as a whole, it would be a great mistake if many of those countries tried to develop small uneconomic and comparatively unimportant industries. Each of the great countries of the Commonwealth should stick to the things which by nature, by climate and in every way it is most capable of producing economically. It is only too easy for different countries to start up small light engineering, textile and other businesses which cannot be economic in any sense of the word. That is one of the risks which I see in colonial and Commonwealth development. I hope that my right hon. Friend the Chancellor will do everything he can to support the Commonwealth countries in their primary industries, so that they can continue to take large quantities of those products which we can manufacture so well in this country.

I should like to refer to the position of Lancashire and her exports. Before the First World War, Lancashire produced cotton textiles to the extent of 8,000 million yards a year, 75 or 80 per cent. of which was exported to the ends of the world. The cotton textile industry has now diminished to about one-fifth of that, of which 80 per cent. is consumed in this country and only a small percentage shipped abroad. We have the technicians, the operatives, the mills and the machinery, and when the Government are crying out for increased exports it is very galling for Lancashire and Lancashire Members to see increasing quantities of textiles seeping in from various countries in the East.

I regard the Budget as a good one, because it is realistic, sound and full of common sense. The wealth which we have in this country is very limited. All too often we have been spending more than we have been creating. If we were to continue on those lines very long, the result could only be catastrophe. I feel sure that the Chancellor is getting a real grip of our economic position, and for that reason I wish him well.

One small criticism which I would, however, make about my right hon. Friend's proposals is the question of retrospective legislation on his reference to what he called "dividend stripping", as it is known in the City. Many people will feel that he is doing entirely the right thing in closing that loophole, but many will deplore his suggestion that it should be done retrospectively. We on this side regard retrospective legislation rather with horror. Retrospective legislation is unsound. We seldom, if ever, have it in this country and I hope that before the Finance Bill comes before us my right hon. Friend will think again on that one point.

Report of Resolutions to be received Tomorrow.

Committee also report Progress: to sit again Tomorrow.