HC Deb 26 March 1958 vol 585 cc546-60

Motion made, and Question proposed, That this House do now adjourn.—[Colonel J. H. Harrison.]

9.35 p.m.

Mr. Gerald Nabarro (Kidderminster)

It will not have escaped your attention, Mr. Speaker, that during the last few months I have been devoting a good deal of attention to the Purchase Tax Schedules, and in a sustained series of Parliamentary Questions, which will reach their century next Wednesday, I have been attempting to draw attention to the jungle of anomalies, inequalities and, indeed absurdities which exist in the present condition of the Schedules. Of course, this has attracted a lot of attention. It was intended to do so. It was intended to ridicule the Treasury, and in that respect it has achieved a good measure of success.

This evening I wish to raise a matter associated with Purchase Tax which is of a very serious character. It is perhaps complementary to the subject that I raised last December—that is, the placing of a 30 per cent. Purchase Tax on the chassis of commercial road vehicles—the only item of industrial capital equipment which is subject to Purchase Tax.

This evening I seek to draw attention to a matter of equal importance and magnitude, the 60 per cent. Purchase Tax on gas and electricity domestic space and water heating appliances, of which hundreds of thousands are sold annually, and they are, of course, in use in nearly every home in the country.

I seek to relate this matter to the background of four acclaimed aspects of Government policy. I shall deal with each in turn, giving references, and I do not think it will be disputed by the Financial Secretary to the Treasury that each of these matters truly reflect Government policy.

First, it is the acclaimed policy of Her Majesty's Government to employ to the maximum extent indigenous fuel—that is, home-produced fuel—and to reduce to a minimum the use of imported fuel for heating and power purposes in the United Kingdom. Second, it is the acclaimed policy of Her Majesty's Government to support clean air and to abate atmospheric pollution. Third, it is the acclaimed policy of Her Majesty's Government to expand to the maximum extent the export of all domestic appliances. Fourth, it is the acclaimed policy of Her Majesty's Government to encourage the most efficient use of fuel in the homes of Britain. The caption that I have employed on many occasions in this House is "Warmth without waste" which has subsequently been adopted by the Government as the title for their latest domestic fuel efficiency pamphlet.

I submit that the 60 per cent. rate of Purchase Tax on gas and electricity space and water heating appliances for the home is directly inimical to each of these acclaimed facets of Government policy. First, in the matter of the maximum use of indigenous or home-produced fuel and reducing to the minimum the employment of imported fuel, only last Monday the Parliamentary Secretary to the Ministry of Power used these words in responding to a Question by the hon. Member for Cleveland (Mr. Palmer): It is my noble Friend's policy to make the maximum use of indigenous resources of fuel provided this can be done economically and in conditions of fair competition between fuels whether native or imported. Shortly afterwards I was fortunate enough to catch your eye, Mr. Speaker, to put this supplementary question to him in preparation for this evening's Adjournment debate: If it is the policy of the Government to encourage the use of indigenous fuels can my hon. Friend say why the Treasury puts a Purchase Tax of 60 per cent. on gas and electrical space and water heating appliances using indigenous fuel but no Purchase Tax at all on equivalent oil appliances using imported fuels?"—[OFFICIAL REPORT, 24th March, 1958; Vol. 585, c. 21 and 22.] I have spent two years trying to extract from the Chancellor of the Exchequer, from the Minister of Fuel and Power and from other members of the Government a reasoned explanation why they consider it desirable to encourage the use of imported fuel, that is, oil and paraffin containing a substantial dollar element, by placing no Purchase Tax on the appliances using that fuel, and to discourage the employment of the lowest grade fuel we produce in this country, that is, low-grade coal burned in power stations, the means of generating electricity for space and water heaters in our homes. I have never succeeded in obtaining any explanation.

In this I am supported by the heads of the nationalised industries concerned. I thought that perhaps the most apposite statement was made by Sir Harold Smith, Chairman of the Gas Council. He is reported in The Times of 28th February as saying at the Ideal Homes Exhibition that What he wanted to emphasise was that the one sure way of being able to reduce the price of gas to the consumer was by increasing sales. Sir Harold continued: We should normally look to an expansion of from 2 to 3 per cent. a year. As it is, we are just about breaking even. One of the most important factors acting against us is the stupid Purchase Tax which is placed on many gas appliances and the restrictions placed upon hire purchase. Then he said—and these are strong words for the head of a nationalised industry appointed by the Minister of Power: Purchase Tax as it stands today is far more suited to a Gilbert and Sullivan opera than to any business or commercial undertaking. No doubt my hon. Friend the Financial Secretary had that quotation in mind when he referred recently, in replying to one of my Parliamentary Questions, to the observation made by Richter to the second flute at Covent Garden.

I should like to ask the Financial Secretary to tell the House, without in any way anticipating his right hon. Friend's Budget statement, why, for the last two years, this extraordinary inequality has existed, why oil space and water heaters are free of Purchase Tax, and why the penal rate of 60 per cent. is applied to electrical and gas heaters. I called that, on 26th November last, during the debate on the gas and electricity industries, the economics of the lunatic asylum".—[OFFICIAL REPORT, 26th November, 1957; Vol. 578, c. 1035.] I was warmly supported on both sides of the House. I asked the Minister replying to that debate, the then Parliamentary Secretary to the Ministry of Power, the present Joint Under-Secretary of State for the Home Department, whether he would give me the explanation I am asking for tonight, and, of course, he said it was not a matter for him, but was a matter for the Chancellor of the Exchequer. I hope that the Chancellor of the Exchequer's representative will reply tonight.

Secondly, I refer to the clean air policy. The Parliamentary Secretary to the Ministry of Housing and Local Government will readily confirm, as he has done on previous occasions, that an increasing number of applications are now being received from the so-called black areas of the country for the establishment of smoke-control areas under the Clean Air Act, 1956. It is, of course, well known that a variety of smokeless appliances will be available, but at the centre of those smoke-control areas, comprising not only dwellings but shops and offices as well, it will be necessary to instal large numbers of smokeless, solid fuel appliances, large numbers of gas and electricity appliances for heating rooms. In the terms of the provisions of the Clean Air Act up to 70 per cent. of the cost of these appliances may be paid by the local authority under subvention from the Treasury in the form of Exchequer aid.

What happens, therefore, to a limited extent at present but in hundreds of thousands of cases next year—probably in millions of cases during the next few years—is that the local authority will pay up to 70 per cent. of the cost of an electric or gas heating appliance to the wholesaler who supplies it. That cost will include a 60 per cent. Purchase Tax. The wholesaler will collect the tax, remitting it. of course, to the Customs and Excise. Thus, the tax will find its way back to the Treasury. But the Treasury will be paying to the local authority 70 per cent. of the cost of the appliance, and in that 70 per cent. will be the 60 per cent. Purchase Tax. Thus, the circumference of the circle is exactly complete. The money which the Treasury pays out of one pocket by a circuitous route finds its way back to the Treasury's other pocket.

This sort of thing is highly inefficient. It is offensive to my business acumen. It is offensive to my every desire to economise in the administration of financial and public affairs. It is a blot on the otherwise tolerably clean record of the Conservative Administration at the Treasury. It should be remedied at a very early date, and remedied in the context of the clean air legislation which will require huge numbers of these appliances to be installed, in respect of which up to 70 per cent. of the cost will be paid from public funds. It is, therefore, rather stupid to continue to levy Purchase Tax upon them for the sake of returning the same sum of money to the Treasury.

Further, while I deal with clean air matters, it is surely important to all the Ministries concerned that some attention should be paid to the kind of thing which is at present affecting those persons in smoke-control areas who are seeking to make their appliances in the home smokeless. I would quote a paragraph which appears in correspondence in the Journal of Smokeless Air, spring issue, 1958, published a few days ago. The paragraph reads: I am just now installing at home a gas-fired boiler to replace one which was fired with so-called anthracite. On this new boiler I have to pay a Purchase Tax of more than £30. If I were to buy a boiler which used anthracite or coke, I would not have to pay any Purchase Tax on it. By burning coke or anthracite, I would be producing about"— will my hon. and learned Friend the Financial Secretary please note this— 25–30 times more sulphur dioxide into the atmosphere than by burning gas. By burning coke or anthracite I should also be producing a certain amount of carbon monoxide which would not be produced from a gas boiler. I suggest to my hon. and learned Friend that, on technical grounds also, where domestic appliances are concerned, it is very important that he should encourage the use, by fiscal methods, of those appliances which put into the atmosphere the least impurities, namely, those appliances to which I am addressing myself tonight.

I mention, also, that we are concerned with the export trade in these appliances. Now that my hon. and learned Friend occupies the position of Financial Secretary to the Treasury, I suppose that he does not often have an opportunity to visit Germany. No doubt he reads the West German trade figures. It is very interesting to observe that the two major industries where the Germans have caught us up and, in some respects, are beating us, are motor vehicles and domestic appliances. Last year, the Germans actually beat us in the export of motor vehicles. We have now drawn level and gone ahead again very slightly; but, at present, the Germans are a very long way ahead of us in the export of domestic appliances, notably electrical appliances.

The cost of an electrical appliance from a manufacturer's standpoint depends very largely upon the bulk of production, upon the number of thousands of units he can put along his production lines in the course of a year. The Germans do not artificially depress their home market. They put a 4 per cent. turnover tax on electrical appliances. We put a 60 per cent. Purchase Tax upon them. We have artificially depressed the demand for a large number of domestic electrical appliances in this country, prominent among them, and most widely used in our homes, being space and water heaters.

Perhaps these figures might commend themselves to a Financial Secretary desperately interested in British balance of payments. The export value of British electrical water heaters in 1955 was £409,000 In 1956, it was £382,000. The figures are not available for last year, but I understand that they have declined further. Let us compare them with the German figures. In 1955, the German exports were £1,900,000 worth of electrical water heaters, a figure almost five times as great as that of our exports. In 1956, when our figures had declined to £382,000, the German figures had risen to £2,300,000, or more than six times as great as the British figures. Every electrical appliance manufacturer in the country will confirm this.

I appeal to my hon. and learned Friend to remember that the German export figures, hugely in advance of ours, are rising in this category of electrical appliances when ours are falling. That is not unrelated to the onerous and unnecessary rate of Purchase Tax which we put on those appliances at present. The situation is very similar with motor vehicles.

I want to say a word about capital investment in these two major fuel industries, electricity and gas. If I dwell on electricity it is because it is so much more expensive in terms of capital investment than is the gas industry. In the year which ends 31st March next, the estimated capital investment in electricity is £233 million. I expect that it will run at that figure, including the contribution to be made by nuclear energy, at today's prices, for each of the next seven or eight years. It is by far the most expensive of all our basic industries in terms of capital investment. It equals coal, transport and gas put together.

Does the Financial Secretary know that the load factor of our hugely expensive power stations today is only about 45 per cent., which is much lower than the figure for Western Germany and the figure for the United Sates? He will recognise at once that the load factor is the degree or the measure of occupation of the capital vested in these hugely expensive assets.

Why is it so low? The electricity experts will tell him why. Let him ask Sir Christopher Hinton. I recommend that my hon. and learned Friend should send a copy of my speech tomorrow to Sir Christopher and ask for his observations upon this facet. Sir Christopher will readily confirm to him the veracity of what I have said. The low load factor is in measure due to the lack of diversification of load. Yet we are deliberately depressing the domestic demand for electricity, which is largely an off-peak demand, by a stultifying rate of Purchase Tax at 60 per cent. on the two major appliances for water heating and space heating which could lead to a diversification of that load at off-peak times, both of great importance in the load factor, and therefore to increased occupation of these hugely expensive assets. We are depressing that demand and therefore using our capital much less ably than we should.

Finally, in this context, I draw my hon. and learned Friend's attention to an observation made by Sir James Bowman and reported in today's newspapers. Sir James suffers great embarrassment. He has millions and millions of tons of low-grade small coal lying around the country for which it is alleged that there is no demand. There is only one place in which it can be used effectively, and that is in the power stations for conversion into electricity. It will not be used unless the demand for electricity is more widely diversified and steadily increased, the greater part of which can come from building up the domestic electrical load. That should be achieved, in my view, at an early date by the Treasury making its contribution, by placing electrical space and water heaters on the same level for Purchase Tax as the equivalent oil heaters; that is to say, on a rate of no tax at all.

I will now summarise the case I have been putting to my hon. and learned Friend. This is a matter of the greatest financial and economic moment. The nation is losing large sums of money by this stupid Treasury policy, and I use the word "stupid" advisedly, knowing that it is all too readily confirmed by the heads of the nationalised industries concerned. First, if we must use more indigenous fuel and less imported fuel; this Purchase Tax rate on electrical and gas domestic space and water heating appliances must be removed. Secondly, if we are to develop fully, and gain all the advantages from a comprehensive policy for clean air, we must remove the Purchase Tax from these appliances.

Thirdly, we should not encourage our foreign competitors, most notably the Germans, to draw even further ahead of us in the sale of domestic electrical appliances abroad by artifically depressing our home market. We should boost that home market in these appliances in an effort to catch up the leeway and reduce the German lead. Fourthly, we should encourage greater fuel efficiency in the home by doing what I have submitted this evening under the caption, "Warm without waste". Finally, we should use to better advantage our hugely expensive fuel and power capital assets, notably power stations, by diversification and improvement of the load factor.

I do not ask my hon. and learned Friend to anticipate in any way his right hon. Friend's Budget Statement. I ask him to reply to my questions, and to tell me why this distinction between gas and electrical appliance Purchase Tax rates, as compared with oil, has existed for so long. I ask him to declare what are the criteria which have dictated a rate of Purchase Tax at 60 per cent. being paid on domestic gas and electrical space and water heating appliances and no Purchase Tax on the equivalent solid fuel and oil appliances.

My hon. and learned Friend must know these criteria, or will he confess that there are no such criteria, and that an obscure "boffin" in the Treasury decided, many years ago, that it would be a good thing to encourage imported fuel, and that this wretched system has been perpetuated right down to the present day? These are questions that he can answer, and which I think he should answer tonight, without in any way anticipating the Chancellor's Budget Statement on 15th April.

10.0 p.m.

Mr. David Price (Eastleigh)

I am sure that I can speak for all hon. Members of the House in saying that we welcome the initiative of my hon. Friend the Member for Kidderminster (Mr. Nabarro), who has, I think, made a very powerful case. This is part of his general campaign to show the absurdities of many of our present rates and definitions of Purchase Tax.

Of course, it is inevitable in any tax in which we have different rates that we should have a serious problem of demarcation and definition, but I believe that the case which my hon. Friend has made tonight is a very powerful one and goes further than the mere hazards of demarcation.

My hon. Friend is a great authority on fuel matters, and often in this House puts a powerful case to us. I feel that at times his very authority is part of his weakness, because sometimes he forgets the advice given to us by Saki when he said, "… In baiting a mouse trap with cheese, always leave room for the mouse."

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Colonel J. H. Harrison.]

Mr. Price

I suspect that my hon. Friend does not leave enough room for Ministers to reply. The case he has made tonight puts my hon. and learned Friend the Financial Secretary to the Treasury in rather a difficult position. First, he is in pre-Budget purdah and, secondly, he has in his present office inherited these taxes and rates from his predecessor. So in some ways it is a little hard to ask him to defend or, indeed, even to explain them.

I believe that this anomaly is something more than one of mere demarcation. As my hon. Friend has pointed out, space and water heaters when fired by oil or solid fuel bear no Purchase Tax, but when fired by gas or electricity they bear 60 per cent. Why is there this disparity between similar equipment merely because it is fired by gas and electricity? One asks oneself what has been the Treasury reasoning. It may be that the definition is between a luxury and a necessity, but when the use is precisely the same it seems difficult to make that distinction.

It is even more difficult to make it when one remembers that electrical space heaters are fired by electricity, which itself has been made either by solid fuel or by oil. To make a distinction there seems to me like trying to make a distinction in taxing, shall we say, whisky and soda water. It might take in the parallel state where whisky would not be taxed and soda water would not be taxed but, if both were mixed, they would be taxed at 60 per cent. That seems to me to be the logic of the Treasury's position.

Or is it claimed that gas and electricity are inefficient ways of using energy whereas oil and solid fuel are not? If my hon. and learned Friend really bases his defence of the present disparity in rates on those grounds, I am sure he will find that technically they are no grounds at all; but this disparity exists in the present law. I think one would remark with Mr. Bumble: "If the law supports that, the law is an ass and an idiot."

We want to go further and ask the Financial Secretary whether he can tell us what is the rational pattern behind the determination of Purchase Tax rates. My hon. Friend's campaign at Question Time has shown the glaring state of these anomalies. Do the Treasury try to set the same rate for similar articles? In their determination of rates, do they determine it by the end use of the article, by its import content or by the intrinsic nature of the article?

I am suggesting that my hon. Friend the Member for Kidderminster was correct when he made his case that the present disparity of rates is not only bad but is against the public interest and against the policy of the Government in many respects. Firstly, as my hon. Friend has shown, it offends the clean air policy. I do not know whether my hon. Friend can recall in the Beaver Report on Air Pollution the chapter on domestic smoke. It is paragraph 72, which reads as follows: We anticipate an increased contribution from the continued expansion in the use of gas and electricity, especially for cooking purposes. We consider that their use in place of house coal should be encouraged by the removal of the present Purchase Tax of 50 per cent. on gas and electric room and water heaters. The Government's contribution to the solution of the air pollution problem was to introduce a Clean Air Bill, which has since become an Act, but the Treasury's contribution has been not to take the advice of the Beaver Committee but to raise Purchase Tax from 50 per cent. to 60 per cent. on the very appliances that people must be encouraged to put in their homes if we are to deal with air pollution.

Secondly, this disparity in rates attempts too much. My hon. Friend the Member for Kidderminster has pointed out that because of mechanisation in the coal mines we shall get more small coal, a fact which troubles many of my constituents who prefer the old-fashioned large coal. My hon. Friend also pointed out that the most convenient way to deal with small coal is to burn it in power stations or in large factory furnaces where one can use it as pulverised fuel. Because of technical developments in the coal mining industry, there is a very strong case for encouraging people to electrify their houses, but the disparity in Purchase Tax rates is a discouragement to them to do so.

We have also to consider the great technical advances being made in our new nuclear power stations which are still under construction. The nuclear engineers are already worried about how to deal with the question of peak load. My hon. Friend said that electrification in the homes assists in spreading the load of our power stations; in terms of the economics of nuclear power, a solution to that problem will become increasingly important.

Reference has been made to the lower load factor here than in Germany and America. I do not know whether my right hon. and learned Friend the Financial Secretary to the Treasury saw the recent supplement in the Financial Tunes on the electricity industry, in which the director of British Electrical and Allied Manufacturers said that the load factor of Britain was only 45 per cent., while it was 70 per cent. in the United States of America. The best way to improve the load factor is by the use of electricity for domestic purposes. That would also help to achieve the purpose of the Clean Air Act, but that development is hindered by Purchase Tax and the housewife is being deprived of what is a necessity for her.

The disparity of rates is contrary to the public interest. It offends against cleanliness and mechanisation in the home. I am in a position to speak about this without being accused of vested interest. As a bachelor I cannot be accused of wanting to ease domestic burdens of my wife. It is clear that more could be done by way of modern mechanisation and automation to help our housewives. This means electrifying the home more, but the present disparity of rates is a fiscal disincentive to electrifying the home, especially in the matter of automatic washing machines which can be run only by electricity.

Many things can be done to ease the burden of the overworked housewife. I need hardly develop the cleanliness argument, because it is obvious that electricity is clean; but these simple facts sometimes escape the wise men who fix these Purchase Tax rates.

The present disparity offends against equity as between one taxpayer and another. Why should we penalise the user of gas and electricity in order to give privileges to oil and solid fuel? I believe that my right hon. and learned Friend should either abolish the Purchase Tax of 60 per cent. on gas and electrical appliances or, alternatively, impose taxation of 60 per cent. on the other types of appliance, or produce a middle rate between the two.

I know that my hon. and learned Friend is in a very difficult position tonight and can say little to us. Even if he could say more, I cannot help feeling that, on the evidence which my hon. Friend the Member for Kidderminster and I have deployed before him, my judgment in this case might be summed up in the words of Alice— I can't explain myself, I am afraid, Sir". said Alice, because I am not myself. I don't see", said the Caterpillar. I afraid that even after my hon. and learned Friend has spoken tonight, like the Caterpillar, I will remain not seeing.

10.11 p.m.

Mr. Ray Mawby (Totnes)

I do not wish to detain the House but I want to deal for a few moments with a very important factor in this question of Purchase Tax, especially in regard to electric space and water heating. My hon. Friend the Member for Kidderminster (Mr. Nabarro) has pointed out the terrific amount of capital development which is going on to make certain that we have a large amount of installed capacity, and if we achieve that capacity we must make as much use of it as possible. At present, since the load factor is less than 50 per cent. it means that there is a great waste of the capital involved.

There are ways of making certain that the low load factor is less of a problem. There is pump storage, and there are other methods, but the terrain of this country is not particularly adapted to any large development of pump storage. There should be more education to make certain that space heating is done by electricity, on the thermostatic principle, so that most of the domestic demands being made upon electricity come at other than peak periods.

One of the main problems of the electricity industry arises from the necessity to satisfy demand at peak periods while not being required to cope with anything like that demand at other periods during the twenty-four hours. Any education in this direction will certainly help the industry and the nation to make full use of the capital invested in the industry.

This education will not be effective if the circumstances are such that a person will say, "I can buy a paraffin stove without having to pay Purchase Tax on it, but if I carry out the Government's idea I shall have to pay it." I should be interested to know whether the basic idea of imposing Purchase Tax upon these articles in the past related not to their use of indigenous or imported fuels. but to the materials used in their components. It may be that the tax was imposed, in the first place, as a deterrent against using certain materials which might have to be imported. If that argument applied in the past it does not operate now, because the normal modern electric space heater uses materials similar to those which are used in other heating equipment which is free of Purchase Tax. I feel, therefore, that in the light of present-day conditions, and for reasons given tonight, particularly those advanced by my hon. Friend in a manner much better than I could do, a closer look at the situation would prove that it is time we had a change which would make us better off as a nation.

10.15 p.m.

The Financial Secretary to the Treasury (Mr. J. E. S. Simon)

This debate comes at the end, comparatively, of a long campaign which my hon. Friend the Member for Kidderminster (Mr. Nabarro) has been waging against this tax. I did not come in at the beginning, but I did come in at a point where practically the only answer which I, or my right hon. Friend, could make was that it was impossible to anticipate the Budget statement. But I have been forcibly, reminded as I stand at this Box tonight, of Burke's saying that to tax and to please no more than to love and be wise is not given to man. Certainly, I have been very conscious that Purchase Tax, at any rate, has not pleased my hon. Friend the Member for Kidderminster nor my hon. Friend the Member for Eastleigh (Mr. D. Price).

The hon. Member for Kidderminster mentioned the effect of Purchase Tax in producing carbon dioxide. Looking back at the vociferations of which I have been the object, I feel that he had something there.

My predecessor the hon. Member for Wolverhampton South-West (Mr. Powell) replied to a debate on the Purchase Tax initiated by my hon. Friend the Member for Kidderminster in July last and referred to the reply he must necessarily give. He said: I know that my hon. Friend realises that, for the very reason which makes it possible for him to raise this matter, namely, that Purchase Tax can at any time be adjusted by Treasury Order, it would be quite wrong for a Treasury Minister, or indeed any other Minister, at any time of the year to give the impression of anticipating any decision of the Chancellor by commenting in any way upon the case for or against any modification of Purchase Tax."—[OFFICIAL REPORT, 1st July, 1957; Vol. 572, c. 864.] If that were true as I think it was at the time it was said, it is certainly all the more true within three weeks of the Budget.

My hon. Friend the Member for Eastleigh referred to my being in purdah. That is true in its figurative sense. Certainly, it would be as improper for me to answer the questions which my how Friend asked me to answer as to give any prognostication about what if anything should be done regarding this tax in the context of the Budget. If one discusses the merit of any tax, it is to a great extent anticipating the discussion of it that the Chancellor is bound to inaugurate in his Budget statement. So there is very little that I can properly say in answer to this debate, except perhaps one thing.

My hon. Friend the Member for Kidderminster said that the Treasury put a 60 per cent. tax on the articles with which we are concerned. My hon. Friend the Member for Eastleigh said that the Treasury raised the tax from 50 per cent. to 60 per cent. He went on to refer sarcastically to the wise men who fixed the rate of Purchase Tax.

In point of fact, he is the wise man who fixed the rate of Purchase Tax, and so was my hon. Friend the Member for Kidderminster, and so was my hon. Friend the Member for Totnes (Mr. Mawby). It was they who raised the tax from 50 per cent. to 60 per cent., and they who voted for it—their names appear in the Division Lists. It is not the Treasury which does these things but the House of Commons, and particularly the majority of the House of Commons.

Mr. Nabarro

All fiscal arrangements must be related to the nation's economic position year by year. Because a certain rate of Purchase Tax was put on a certain article, two, three, four or five years ago, is it sane or reasonable to suggest that that rate must remain on that article in perpetuity, which seems to be the gravamen of what my hon. and learned Friend is suggesting?

Mr. Simon

My hon. Friend has not done me the courtesy of following my argument. I did not say for a moment that the tax once put on has to stay for all time. I said that it is constitutionally and factually incorrect to say that the Treasury puts on a tax and that the Treasury raised a tax and that in the Treasury were the wise men who fixed the rate of Purchase Tax. It is the House of Commons which does these things. It was the hon. Members themselves who, as part of the majority, raised the Purchase Tax from 50 per cent. to 60 per cent.

Having said that, there is very little I can add, except to congratulate my hon. Friends on the forcible and lucid way in which they put their argument, and to assure them that my right hon. Friend will take note of it.

Question put and agreed to.

Adjourned accordingly at twenty-one minutes past Ten o'clock.