Schedule 1.—(SUBSTANTIVE CHANGES IN PURCHASE TAX RATES, ETC.)

HC Deb 20 May 1958 vol 588 cc1101-247

3.34 p.m.

Mr. Gerald Nabarro (Kidderminster)

I beg to move, in page 29, line 16, after "etc.)", to insert: or Group 33 (drugs and medicines manufactured or prepared except toilet preparations)". The purpose of this Amendment is to reduce the rate of Purchase Tax from 30 per cent. to 15 per cent. on certain proprietary drugs and medicines. It has stood at 30 per cent. for several years and was originally part of the 33⅓ per cent. Schedule. There are several reasons why this matter merits close consideration.

Only a small part of the drugs and medicines which carry Purchase Tax fall within the ambit of "drugs and medicines". Therefore, the amount of Purchase Tax payable on that small part is not a tremendous consideration. So far as I can tell, by a figure given to me by the Minister of Health only a few weeks ago, only about £37 million worth of proprietary drugs and medicines attracts Purchase Tax. The figure is based upon the wholesale value. The amount of tax at 30 per cent. raises about £11 million, out of which about £1½ million is in respect of proprietary drugs and medicines prescribed within the National Health Service, and, therefore, subject to what is generally known as the circular transaction. This means that money is voted for drugs and medicines and such Purchase Tax as is then paid to the supplying wholesalers finds its way back, as a circular transaction, to the Treasury.

The Conservative Party has from the outset been strongly opposed to Purchase Tax on drugs and medicines. I have looked up the debate which took place on the Finance Bill, 1948. I find that Mr. Osbert Peake, who was then the hon. Member for Leeds, North, and is now Lord Ingleby, moved an Amendment from the Opposition benches, the purpose of which was to abolish altogether Purchase Tax on drugs and medicines. He said: What we propose in our Amendment, and in the remaining Amendments of the series, is that all drugs and medicines of whatever character should be exempted from Purchase Tax. He concluded by saying: We on these benches have been driven by what the Chancellor of the Exchequer has done to take up, without any form of qualification, the stand that the time has now come when all drugs and medicines should be freed of Purchase Tax altogether."—[OFFICIAL REPORT, 2nd June, 1948; Vol. 451, c. 1032–7.] A large number of hon. Members, some of whom are still Members of the House of Commons, supported Mr. Peake on that occasion.

The general case against Purchase Tax on drugs and medicines may be stated very simply. Many of those which attract Purchase Tax are generally known as household remedies. They are very well known proprietary brands readily available to the general public, and are found in nearly every household medicine chest. These remedies are generally asked for by their brand or trade name. The purchaser relies upon the high standard of quality which is generally associated with the reputations of the manufacturers concerned.

I claim that drugs and medicines are not a suitable subject for Purchase Tax because they are essential commodities for the general public and for the household, and that they may reasonably be compared with foodstuffs. To tax drugs and medicines of a proprietary character is to place a direct tax upon the promotion of good health or the avoidance of illness.

The position has been made very complicated indeed by the fact that a large number of proprietary drugs and medicines are exempt altogether from Purchase Tax. It has been found somewhat difficult to understand why certain proprietary drugs and medicines which have been put into dispensing packs under the National Health Service are free of Purchase Tax, yet when those same drugs and medicines are sold as proprietary articles, not in dispensing packs but over the chemist's counter, they attract Purchase Tax.

In that particular case, the matter really resolves itself into a consideration as to the method of supplying the patient. If he is supplied through the medium of a dispensing pack, the article carries no Purchase Tax, but, if the article is supplied over the chemist's counter, Purchase Tax is attracted. I suggest to the Financial Secretary that that is an unsatisfactory state of affairs.

I have endeavoured to do some research on this matter, which is extremely complicated. I find that these anomalies and difficulties originally arose from the Purchase Tax (No. 5) Order, which exempted certain drugs, in the main because they were regarded as essential and/or costly. Some of them were exempt when supplied without any admixture, whereas others, under Head III of the Schedule to the Order to which I have referred, were exempt separately, or combined with one another.

Official unbranded drugs and preparations, that is to say, drugs and medicines conforming to the provisions of Part 2 of the Eighth Schedule to the Finance Act, 1948, were exempt, but these drugs and medicines were required to consist solely of one or more substance described in the British Pharmacopœia, British Pharmaceutical Code or in the Formulary prescribed by the Ministry of Health for the purposes of the National Health Service. I think that hon. Members in all parts of the Committee will see how extraordinarily difficult it is to interpret the position in regard to Purchase Tax of any proprietary drug or medicine. Dispensing packs were specifically exempted and described as special packs of drugs or medicines for dispensing purposes, but the same product in a smaller or different size for sale to the public separately, and not in a pack, attracted the tax.

The time has now come to consider abolishing altogether—or at least going half-way this year, which is what my Amendment proposes—this unsatisfactory state of affairs and a Purchase Tax application which is wholly inimical to the interests of the Government and to the interests of the public at large. I am not a doctor, a druggist, pharmacist, or dispenser and I cannot speak with professional knowledge on what is a difficult matter, but I appeal to my right hon. Friend when I say that self-medication in the matter of minor ailments is something which every right hon. and hon. Member in all parts of the Committee ought to support. If everyone who suffered a minor cut or burn, or a minor disability or ailment, resorted at once to the National Health Service, I think that a state of affairs would be created in which doctors' surgeries would be unnecessarily cluttered up. Therefore, to put a Purchase Tax on those very articles which are best suited to self-medication, and which should be found in the first-aid box of every household and every factory, is inimical to our desires to maintain a healthy, efficient and economic National Health Service.

I want my hon. and learned Friend the Financial Secretary particularly to reply to this point. I dislike circular transactions—I had occasion to refer to one recently when talking about smokeless appliances under the Clean Air Act—whereby the Treasury, by subvention, pays funds to a local authority or, in the case of the National Health Service, for the provision of equipment which attracts Purchase Tax. The Purchase Tax is paid to the wholesaler and, after describing a circumference, it finds its way back to the Treasury to offset the original amount paid in respect of that original Purchase Tax item. It must be a very inefficient system, whether it is part of our arrangements for a clean air policy or part of the arrangements for the expenditure which the House votes for the National Health Service.

I commend to my right hon. Friend, as always in controversial matters of this kind, the Division List of the House. That on 2nd June, 1948 makes instructive reading. My right hon. Friend the present Chancellor of the Exchequer voted for the abolition of Purchase Tax on drugs and medicines. He was supported by the former Chancellor, my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft). [HON. MEMBERS: "Where is he?"] He will be here any moment now. He was supported by my right hon. Friend the Member for Flint, West (Mr. Birch). He was supported by the Home Secretary. He was supported by my right hon. Friend the Member for Woodford (Sir W. Churchill). He was supported by my right hon. Friend the present President of the Board of Trade. He was supported by my right hon. Friend the present Minister of Agriculture. He was supported by my right hon. Friend the present Secretary of State for the Colonies. He was supported by my right hon. Friend the present Secretary of State for Scotland. He was supported by my right hon. and learned Friend the present Foreign Secretary.

Mr. Harold Wilson (Huyton)

On a point of order, Sir Charles. Would not this possibly come under the heading of tedious repetition? Would it not be possible for the hon. Member for Kidderminster (Mr. Nabarro) to read a list of these rather inconsistent hon. Members, instead of introducing each of them with the phrase, "He was supported by my right hon. Friend"?

The Chairman

It is not out of order, but it is rather boring.

3.45 p.m.

Mr. Nabarro

Opinions may well differ on that; I have never known alliteration wasted on the House of Commons. The present Prime Minister similarly supported the abolition, as did the present Attorney-General, the present Minister of Works, the Secretary of State for Air, and many others.

Mr. Douglas Jay (Battersea, North)

Will the hon. Member for Kidderminster (Mr. Nabarro) give us an assurance that he will vote for his own Amendment this afternoon?

Mr. Nabarro

It depends what assurances are forthcoming.

When the right hon. Member for Battersea, North (Mr. Jay) was in office, he listened to very many pleas on this difficult and controversial matter and, as Financial Secretary to the Treasury, he invariably resisted them. One of my purposes in moving this Amendment is to find whether the views of Her Majesty's Government have in any way changed as a result of the admirable recommendations made by the Guillebaud Committee on the National Health Service, two or three years ago.

I have demonstrated to my right hon. Friend that overwhelmingly the Conservative Party, on 2nd June, 1948, supported the view that Purchase Tax should not be placed on any proprietary drugs and medicines of any description. If their views have changed in the last decade, we should be told why. It is my view that a step in the right direction could be taken by halving the rate of Purchase Tax. Under the formula I enunciated yesterday, I suggest that if we must have a Purchase Tax at all it should be at a flat, non-discriminatory, uniform rate of 15 per cent. It is my purpose today to reduce to 15 per cent. the tax on drugs and medicines, which are at present taxed at 30 per cent.

Mr. Elwyn Jones (West Ham, South)

Will the hon. Member tell us what the Guillebaud Committee recommended on this issue, as some of us are not aware that this matter came within its purview?

Mr. Nabarro

I repeat my words, subject to confirming them when I read them in HANSARD. I was anxious to ascertain whether my right hon. Friend had in any way changed his views about the imposition of Purchase Tax on proprietary drugs and medicines as a result of the admirable recommendations made by the Guillebaud Committee. [HON. MEMBERS: "What were they?"] It would be out of order to say exactly what they were and I would never be guilty of incurring your displeasure in that way, Sir Charles. What we ought to know is whether my right hon. Friend has changed his views as a result of the admirable recommendations of the Guillebaud Committee.

Mr. H. Wilson

On a point of order, Sir Charles. I think there is a little confusion in the Committee about our procedure at this point. We understood, perhaps wrongly, that while this was the only Amendment in this group to be moved there would be discussed with it the Amendment immediately following, in the name of my hon. Friend the Member for Bristol, North-East (Mr. Coldrick) and some other of my hon. Friends, in page 29, line 16, after "etc.)", to insert Group 34 (b)(stationery and office requisites)". We understood that the Amendment in the name of the hon. Member for Kidderminster was the only one which would be called, but that we could widen the discussion to cover stationery and office requisites, which form a subject far apart from the subject of this Amendment, to save the time of the Committee.

The Chairman

If the Committee so wishes, we can deal with stationery at the same time.

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

I understand that that Amendment is not selected, Sir Charles.

The Chairman

I understood that, too, but apparently I said something different at a conference with the Opposition, and perhaps if I allow a discussion to take place on that Amendment it will please everybody.

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

I should like to limit my remarks to the matter of drugs and medicines. I wish I could feel that the problem was as simple of solution as does the hon. Member for Kidderminster (Mr. Nabarro), but since 1940, when the tax was first imposed, it appears to have become a more complicated question each and every year. From time to time action has been taken by the Government, either through the Ministry of Health or the Treasury, which has resulted in a situation such as that appertaining today, when it is very difficult indeed to find one's way through the maze of problems associated with what the hon. Member for Kidderminster has now raised as if it was a very simple matter.

The hon. Member made it clear that he feels that there should be no tax at all on drugs, because such a tax is a tax on health and is a bar between the citizen and his right to self-medication. As he rightly said, so many prescriptions bear Purchase Tax today that the situation becomes confusing. Sometimes, the Minister of Health pays the tax, which is then returned to the Treasury, and it must be an unnecessarily costly business, as some of us would argue, that it should be imposed, on the one hand, and taken off, on the other. How expensive it is, I do not know, and what percentage of overhead charges is involved I cannot say, but it must be fairly considerable.

Further, this matter was debated before 1948. I think that the hon. Member for Putney (Sir H. Linstead) raised it in 1947, when he did not press an Amendment to a Division, but I remember that he discussed the anomalies that existed at that time. When Mr. Osbert Peake was speaking, in 1948, he gave one or two illustrations which were interesting. He pointed out that there was a tax on an effervescent aperient known as "Eno's Fruit Salts," but that on the ordinary effervescent sodium citro-tartrate, which is exactly the same material, there was no tax at all. All the examples of this type are interesting, and one could give many more, but there are some things, in my view, that certainly do merit taxation.

For example, if one can prescribe phenobarbitone, which is not taxed, I must have some sympathy with the Treasury if it feels that it must impose a tax on a substance which is exactly the same but which bears another name. It differs only because it bears another name, and if the Treasury wish to tax it—and, incidentally, one has to pay for it three or four times the price of phenobarbitone, which is untaxed—I find it difficult to deny the Treasury the right to say that it should be taxed.

If the Treasury were to tax petroleum jelly, which is really vaseline, I would be against it, but if it was proposed to tax vaseline, which is petroleum jelly under a proprietary name, very much more costly, but differing in no way whatever from the original substance, I should find it difficult to deny the Treasury the right to tax it. I wish it were all as simple as this.

As far as I know, there is no tax on aspirin prescribed by a doctor, but I am sure that if a doctor were to prescribe a form of aspirin sold under another name, he would merit some rebuke from those responsible for payment, and there would be a tax upon it. I have every sympathy with the Treasury in saying, "We are considering the money we must find. If we are to tax drugs at all let us take substances of this kind which are not taxed when sold by their normal names, but which are taxed when sold much more expensively and carrying another name."

It would, therefore, seem that if there is to be a tax at all it is reasonable to tax goods which are openly advertised to the public. The hon. Member for Kidderminster was quite right when he pointed out that a number of articles, which are normal drugs and medicines normally prescribed by the medical profession, are never advertised to the public but are also taxed. An attempt has been made to avoid this as far as possible by the work of the Cohen Committee. I think I am right in saying that that Committee divided drugs into different categories, and suggested that the first two categories should not bear Purchase Tax. That is the impression I have, but if I am wrong perhaps the Financial Secretary will advise me.

It seems that this was a method, or at least an attempt, to bring some order into this confusion, but I would suggest that it inevitably in itself creates another form of confusion. It means that these preparations which are not in categories 1 and 2 carry a sort of stigma because they are not free of Purchase Tax. At least, that is what some people think. By the way, I should tell the Committee that I have a personal interest in the matter, because I have an interest in a firm of manufacturers of drugs and medicines. This does not make me any more knowledgeable than otherwise I would be, or any more knowledgeable than anyone else in the Committee on this matter; but is customary to declare an interest, and I suppose that I do not know any the less for having this particular interest.

The situation, therefore, is that the drugs in the categories not exempt from Purchase Tax have, rightly or wrongly, may be considered to be inferior, because they have not received the stamp or hallmark of their quality. This is probably a wrong impression, but it does exist. When one looks at what has happened in extenso, it is very easy to find some very gross anomalies. I will not repeat what has already been said, how Group 33 is subdivided in Notice 78B, which is relevant to our discussion, and there are some very interesting things in it.

First, amongst things chargeable, I notice worm cakes. On the opposite side of the page, as non-chargeable, we see cocoa powder and chocolate. The cocoa powder, the chocolate, and the drug that destroys the worms are not, by themselves, chargeable, but if the drug is covered with chocolate or cocoa powder it becomes a worm cake and becomes chargeable——

4.0 p.m.

Mr. Charles Royle (Salford, West)

Does not the chocolate powder make the worm?

Mr. Elwyn Jones

Perhaps it catches the worm?

Dr. Stross

Yes, it is a bait, to make the worm eat the drug.

On page 4 of this interesting notice I see that medicated plasters are chargeable, and that means that medicated rings or plasters, of whatever material, for the treatment of all corns and bunions become chargeable. These really are articles that people rightly use by way of self-medication, if one might use the term. Some forms of self-medication are wrong, dangerous, because people not knowing better, may, by using them, become desperately ill before seeking proper treatment.

That cannot be said of the treatment of one's corn or bunion, and it seems rather absurd that because a ring is put round the corrosive material that will soften the corn, the pad or plaster becomes chargeable. Even the mustard leaf on a bandage becomes chargeable, whereas all ordinary forms of bandages, lint, etc., are not chargeable. One finds it hard to see the logic in all this. Nor do I like to see medicated soaps for the treatment of skin conditions being made chargeable.

Again, it seems incredible to me—and I am sure that the hon. Member for Kidderminster will find this interesting—that a farmer may purchase sheep dip and warble fly dressing to rid his sheep of infestation, but that if any hon. Member or citizen suffers an infestation of the scalp by lice, parasites, and so on, he must pay tax on any material that he uses to rid himself of his own infestation. Nobody can maintain that that is very sensible.

There are about 350 to 450 so-called simple drugs that are chargeable. Many of them are very complicated drugs, which no ordinary person would dream of buying because he would not know what they were and probably would never have heard of them. One is called diethyl leneglycolmonoethylether. I do not really think that it is at all likely, Sir Charles, that you would be tempted to buy an excessive amount of that. I have not the vaguest idea what it is for, so it is very unlikely that either you, or the average citizen, would know. Another thing on which one can be called to pay tax is uranium acetate. It may be that the Treasury wants to guard us against the sinister motives of citizens seeking to supply themselves with a uranium compound.

What are we to do about this, and what advice are we to give to the Financial Secretary? It does not seem to me that the contentions and arguments used by the hon. Member for Kidderminster are by any means completely valid. To argue that because the Tory Party in 1948, divided the House on this issue, must mean that after a lapse of ten years—when so many changes have occurred, some for the better and some for the worse—the present Government must abide by what they then tried to achieve in opposition is, I think, wrong, and shows a failure to understand the way we debate in this House, and what we have in mind in debates of this description.

I am indifferent as to whether or not the hon. Member divides the Committee, and I do not say whether or not I shall support him—he will have to take the chance himself—but one or two things are certain. When we must have revenue, we have the right to tax substances which, though available under their own proper name, are offered to the public, much more expensively, under another name. Therefore, all drugs or medicines which are advertised to the public at large in that way—especially when we have the National Health Service—should be looked at as being right for tax, if tax has to be imposed.

For the rest, I frankly think that there are so many anomalies that both the Minister of Health and the Treasury should look at them. How they can be straightened out, I do not know. Of course, if we were to do what the hon. Member for Kidderminster asks there would be no anomalies, but there would be much unfairness and injustice. I am told that if one spends enough money, one can so advertise bottles of clear water as to get a very high price for them, and we know that vast sums are poured out in advertisements in this industry so as to sell the product.

Here, I am speaking of advertising to the public generally. We should protect ourselves. I remember that when I was a young medical student my surgical tutor—later Lord Moynihan—described how rich was his neighbour, who was the man who, among other things, had invented and marketed Zambuk, and who lived next door to my tutor in a much bigger house. My surgical tutor said that his neighbour had made £1 million from Zambuk, which was, I think, boracic ointment with some green colouring matter added. The strange thing was, that like anything else, it would cure some people of some things when every real remedy had failed. These things happen in life.

I therefore hope that the Treasury will look again at this matter, consider it carefully, and try to bring a little more order into the obvious and gross anomalies, and the chaos that exists, but I am sure that if the Government were to seek to remit taxation on proprietary goods advertised to the public at large, the majority of the House would be completely against them.

Sir Hugh Linstead (Putney)

After the very well-informed speeches of my hon. Friend the Member for Kidderminster (Mr. Nabarro) and the hon. Member for Stoke-on-Trent, Central (Dr. Stross), not a great deal remains to be said, but, first, I should probably declare an interest. Although I have no financial concern with the medicine trade, I am secretary of the Pharmaceutical Society.

When my hon. Friend was talking about the debate in 1948 he seemed to suggest that there was likely to be a certain amount of inconsistency in the support of and opposition to his Amendment today. I think, however, that if he had looked a little further he would have found that steady consistency that we always have, which is that the Government take the same view today as did the Government in 1948, and the Opposition today take the same view as the Opposition took in 1948, which seems to be an admirable example of consistency——

Mr. H. Wilson

My right hon. and hon. Friends feel upset that the hon. Gentleman should arrogate to his hon. Friend the Member for Kidderminster (Mr. Nabarro) the title of Her Majesty's Opposition. We regard ourselves, far the time being, at any rate—and for not too long, we trust—as the Opposition. We are not taking the same view on this as did the Opposition in 1948, so the hon. Gentleman really must not identify his hon. Friend with the Parliamentary Opposition.

Sir H. Linstead

When one looks at the Notice Paper, one finds it difficult to separate the Opposition from supporters of the Government.

The great advantage of a brief debate such as this is that it enables Treasury Ministers to look at certain sections of the incidence of Purchase Tax and consider whether their administration is working satisfactorily or not. Among the many anomalies and injustices of the working of the Purchase Tax system this little group of substances probably shows as many as any other.

As was pointed out earlier by my hon. Friend, we have at present a list, published by the Ministry of Health, of expensive drugs, and of what one might call life-saving drugs, that are exempt from Purchase Tax. Then we have certain other medicines which, provided they are put up in a form not suitable for sale to the public but for use only in dispensing, are also exempt. The result is that, roughly speaking, the public do not pay Purchase Tax on any medicines supplied through the National Health Service, or on those medicines supplied privately on prescription, where the patient pays for the prescription. Nevertheless, Purchase Tax is still paid by the public on the general run of proprietary medicines bought over the chemists' or the grocers' counter.

In the administration of Purchase Tax, the question that the Treasury must ask itself is: are drugs and medicines a suitable item for taxation? I should have thought that, in principle, the answer would be, "No". Traditionally, we have taxed medicines for a couple of hundred years, but the original tax was only on the secret medicine. If a manufacturer kept his formula secret, he had to pay a tax. That dates back to the eighteenth century. Now that, by law, the contents of every medicine must be disclosed on the label, I would have said that that tax—which, after all, is a tax on ill-health—is something that is very difficult to justify——

Mr. Nabarro

Is it not the fact that the very same proprietary product sold in a dispensing pack will not attract Purchase Tax, whereas if sold over the counter, in a druggist's store, it will attract Purchase Tax? Will my hon. Friend apply himself to that point?

Sir H. Linstead

Yes, that is one of the clear anomalies to which I think it is good that the attention of the Treasury Ministers should, from time to time, be directed. I feel fairly certain that the only justification for the continuation of this tax at all is the fact that about £11 million of revenue accrues to the Treasury as a result, but I would have thought that, as it becomes possible to reduce taxation, so this particular taxation, which can be justified only on revenue grounds, should be one of the earliest items to be reduced. That is the object of the Amendment.

I want to ask my hon. and learned Friend the Financial Secretary the simple question: has not the time come when some of these anomalies and injustices that run through the whole field of Purchase Tax on drugs and medicines should be brought to an end? It can be done by the gradual extension of the list of exempted medicines; it can be done by a reduction in the rate of tax, as the Amendment proposes, but I should have thought that this particular item stood very high among those that compete for priority in the reduction of taxation.

It would be a great pity if proposals on the Notice Paper during the Committee stage of the Finance Bill for reducing Purchase Tax were always decided in advance by the Treasury as a matter of principle, before our debates began. I should have thought that we could with advantage have had a little more elasticity on the part of the Treasury and perhaps a notional sum of money put aside for the reduction of Purchase Tax and decisions taken not in advance but as the debate proceeded, as to whether allocations from the notional sum could be made for specific purposes. If that could be done, a very high priority should be afforded to these items.

Mr. Jay

Surely the hon. Member will recall that that procedure was followed during the Committee stage of the 1948 Bill.

4.15 p.m.

Dr. J. Dickson Mabon (Greenock)

I did not follow the argument of the hon. Member for Kidderminster (Mr. Nabarro) in respect of the Guillebaud Committee recommendations and how they would affect the position under the Amendment. I would appreciate it if he would draw my attention to the recommendation which so argues.

Mr. Nabarro

I did not say that there was a recommendation in the Report of the Guillebaud Committee. I inquired of the Treasury Bench—it was a very valid point—whether the Government's views on Purchase Tax on proprietary drugs and medicines had in any way changed as a result of the admirable recommendations made by the Guillebaud Committee. That is entirely different.

Dr. Dickson Mabon

I congratulate the hon. Gentleman on his subtlety. However, I want him to direct his attention to a recommendation on page 256 of the Report, to which he was no doubt making an allusion. It reads: … patients, in their turn, should, as far as possible, be educated out of the 'bottle of medicine habit'. Probably the hon. Gentleman was referring to that recommendation.

That is an excellent argument against the idea of self-medication. Yet that is precisely on what the hon. Gentleman has been basing his argument. He has said that the right of self-medication must be preserved and that taxation of this kind ought not to infringe it. It is a dangerous right in many ways. Whether the right hon. Gentleman applies it to himself in his hygienic—[HON. MEMBERS: "Not right hon."] I apologise for calling the hon. Gentleman a right hon. Gentleman; I realise that that is not accurate even in anticipation.

It is rather dangerous to argue the question of extending the field of self-medication. The hon. Member for Putney (Sir H. Linstead) will no doubt agree that there are many dangers in widening the use of drugs to ordinary persons who resort to them without medical advice. When the hon. Member for Kidderminster argues the case for the use of these drugs in respect of minor complaints, he does not realise the many tragedies which doctors find have occurred to persons who have treated themselves for so-called minor complaints and arrive in the surgery far too late for anything to be done. It is one of the great tragedies of medical practice. I should prefer that people did not resort to self-medication at all rather than to too much of it. That is why, while I am not arguing that we should impose penal taxation on drugs in order to cut down self-medication, I feel that the hon. Gentleman ought to keep the matter in balance and perspective.

While I do not wish to take sides at the moment—I should like to hear the other side of the argument—I feel that it was wrong of the hon. Gentleman to imply, however unintentionally, that the Guillebaud Committee blessed his Amendment or that self-medication was such a sound argument to be used in a matter like this.

Mr. Raymond Gower (Barry)

I think that the danger of self-medication would be appreciated by my right hon. Friend the Member for Kidderminster (Mr. Nabarro) and all of us who support the Amendment. The matter has to be treated reasonably. I think that the danger of preventing self-medication would be equally great. I recall words used by the late Lord Dawson of Penn in a statement that he made in 1939: Perhaps as a member of the medical profession I ought not to sit down without making perfectly clear that I am not against proprietary medicines as such. I think there are a very large number of proprietary medicines which are harmless, and, further than that, that there are some proprietary medicines which are very efficacious, and anything which would unduly restrict their use would be against the public interest. It is in that sense that I hope that my hon. and learned Friend will be able to declare the Treasury's attitude.

We are not concerned so much that my hon. and learned Friend should accept the particular Amendment put forward. We want to know whether the Treasury takes the view that these drugs are wholly undesirable and, therefore, should be taxed. We reject that view. It has been estimated that acceptance of the Amendment would cost about £5½ million a year, because it would be a halving of the present tax income. I submit that most of the tax is levied not on some of the more expensive proprietary medicines but on the less expensive proprietary medicines which have established their value over a very long period and now command a very large sale.

That kind of medicine is used particularly by the person faced with a sudden slight ailment or injury, for he knows that that medicine has been demonstrated over a long period as a reputable one and one which can relieve or, in some cases, cure his ailment or injury. The Treasury should take the view that that is preferable to such a person going immediately to a doctor and placing yet another burden on the medical profession and the National Health Service.

That is the point that we ask my hon. and learned Friend to consider. That is the point on which he should state the Government's view. We feel that medicines used in this way ought not to be subject to this kind of taxation. While we accept the view that a concession of £5½ million could not be entertained in the light of the background of the Budget, we hope that my hon. and learned Friend will be able to say that this is an object which the Government will have in mind as they progressively reduce taxation and that they contemplate the application of this principle in the very near future.

Mr. Eric Fletcher (Islington, East)

I did not propose to join in the debate about drugs and medicines, but we are discussing with the present Amendment the one which deals with stationery and office requisites other than furniture and machinery.

It is not obvious at first sight what the connection is between patent medicines and office stationery, but they have one thing in common, which is that at present they are subject to Purchase Tax at 30 per cent. Since they share that identity, it is apparently convenient that the two Amendments should be discussed together.

The hon. Member for Kidderminster (Mr. Nabarro) has put forward arguments for reducing Purchase Tax from 30 pet cent. to 15 per cent. on drugs and patent medicines. He has done it admirably, and for reasons which I have no doubt he will support in the Lobby. I hope I shall have his support in the somewhat similar arguments that I am putting forward about Purchase Tax on stationery and office requisites. No hon. Member can study the law relating to Purchase Tax without very considerable enlightenment and profit. In fact, the more one studies it the more mystified one becomes as a result of not merely the anomalies, but some of the complete absurdities in it.

Let us now turn to consider some of the refinements of the provisions of Group 34 (b), in respect of which we should like to see the Purchase Tax reduced from 30 per cent. to 15 per cent. I do not think that hon. Members will be able to appreciate the arguments for our proposition unless they are reminded of the articles which are included in Group 34 (b). The explanatory memorandum, Notice No. 78, gives some very detailed illustrations of the kind of goods which are now subject to Purchase Tax at 30 per cent. There is, first, notepaper and other stationery, paper and cards. I need hardly say that at the moment we are not dealing with such specialised kinds of literature as greetings cards and Christmas cards; we are dealing with ordinary material on which writing, whether in ink or type or print, appears.

We are dealing with writing, typewriting or duplicating paper, provided that it is of a size less than 229½ square inches in area; that is to say, 17 inches by 13½ inches in area. As my hon. Friend the Member for Oldham, West (Mr. Hale) appreciates, totally different considerations arise when one conies to a piece of paper which exceeds 229½ square inches in area. These provisions apply irrespective of the purpose for which the writing paper is used.

Mr. Leslie Hale (Oldham, West)

I follow what my hon. Friend the Member for Islington, East (Mr. E. Fletcher) says about paper 229½ square inches in area. I appreciate that if it went to 229¾ square inches in area it might be a disaster. But I do not follow—here I should be grateful for his help—why a memo pad must be 1½ inches by 3 inches at least and not more than 9⅞ inches by 12⅜ inches in area, and if it is below one it attracts tax and if it is above the other it attracts tax. G. K. Chesterton said that the only decent and sensible way of making notes was to lie on one's back in bed with a long piece of chalk and write them on the ceiling. It has always seemed to me that that is one of the ways in which one can impress a thing on one's mind in comfort and decency.

Mr. Fletcher

I am very much obliged to my hon. Friend. I will do my best to enlighten him on the very relevant point which he has introduced. I think he will find that if one uses either a crayon, other than a true pastel, or a piece of chalk to write on a bedroom ceiling one has to pay 30 per cent. Purchase Tax on the crayon or chalk, but if one uses a true pastel to make one's notes on the bedroom ceiling while lying in bed, apparently one is not subject to any Purchase Tax.

It seems to me that this is a differentiation introduced for the benefit of those who write on bedroom ceilings with true pastels. Why that should be so I do not know, but no doubt that is something that we shall be able to elucidate. Probably the more important point with which my hon. Friend is concerned is the relevance of pieces of paper of the size 1½ inches by 3 inches and 9⅞ inches by 12⅜ inches. I agree with my hon. Friend that one almost needs a magnifying glass to be sure that one is reading this document intelligently.

4.30 p.m.

Mr. Hale

I am sorry to interrupt my hon. Friend again, but what I am interested in is blotting paper, because there are so many blots on my book that I have to use rather an excessive amount of it.

Mr. Fletcher

Blotting paper is covered; all kinds of blotting paper, I think.

My hon. Friend will also appreciate that not only printers' cards but printers' blanks as well as blotting paper and carbon paper are covered, and, as my hon. Friend suggested, blotting paper is taxed at 30 per cent.; blotting paper, whether in roll, or flat, or in cut sizes; and not only blotters, but music manuscript paper as well.

This is really one of the most comprehensive Schedules in the whole of the Purchase Tax. It covers a very wide range indeed. For example, it includes pencils, including slate pencils, pens, including fountain pens, crayons and chalks, pen nibs, including fountain pen nibs, penholders and pencil holders.

The most extraordinary distinction is made with envelopes. Is the Committee aware that ordinary envelopes are subject to tax at 30 per cent.? One might well have thought that it would have been common sense, if there has to be Purchase Tax on envelopes at all, to have placed it on all of them. But that is not the case. Certain envelopes are exempt from the Purchase Tax, for example: Seed, counter and other envelopes for the packing of goods, if prominently printed on the face and identifiable as such, and not suitable for postal or office use. Further, charity collection envelopes are exempt if clearly identified. What is more surprising is this. Unprinted pack- ing envelopes are exempt provided that they are smaller than 4 inches by 2¾ inches in both dimensions Imagine the ingenuity involved, if one is a producer or seller of envelopes, in trying to bring oneself within the exemption of Purchase Tax on envelopes.

Then I notice, though I do not understand, that photographic envelopes are exempt but only if of light-proof black or red paper.

Mr. Hale

Not blue?

Mr. Fletcher

Not blue paper. Why that distinction is made is not clear.

Even more curious features occur in this group. We all know what takes place at election times. One notes this anomaly, that ballot papers are subject to Purchase Tax at 30 per cent.; on the other hand, election addresses and ballot cards are exempt from Purchase Tax. What could be the merit of levying Purchase Tax on ballot papers I do not know. Ballot papers are used by the State in Parliamentary elections and by local government authorities in local government elections and, broadly speaking, there are no users of ballot papers except for public official business.

Mr. Hale

And trade unions.

Mr. Fletcher

There may be special cases. For instance, I do not know whether the 1922 Committee has ballot papers.

However, it does seem to me odd that ballot papers should be subject to tax at 30 per cent. Voting by ballot is of the essence of democracy. It is one of the things that we really are trying to maintain by this Finance Bill, and it is not often that we have an opportunity of stating the case for freeing ballot papers from the Purchase Tax. That would be one of the incidental but also one of the most important changes effected if the other Amendment were carried.

The Committee will have observed that practically the whole range of these articles in Group 34 (b) enter into almost every kind of commercial, industrial and social activity. This tax is a tax on literature, a tax on writing, a tax on scholarship, a tax on knowledge. It is an imposition directed to penalise those who write letters. I cannot imagine anything less defensible. I should have thought that, in this age of civilisation and advancement, just as we exempt printed books and literature from tax, so we should have wanted to encourage the use of writing materials, pens, pencils, fountain pens and letters.

Mr. Hale

I do not know whether my hon. Friend will mind my helping him again—I am sure that he will deal with this more emotionally than I can—but the really criminal thing about this is that there is Purchase Tax on wedding cake bags and nothing on decrees nisi.

Mr. Fletcher

I am sure that my hon. Friend has analysed this in much greater detail than I. Is there a tax on wedding cakes? Certainly, on wedding cake bags, but I am not sure that he is right that there is no exemption in respect of a decree nisi. Why should such documents be charged with Purchase Tax at all?

Mr. H. Wilson

There is the Rent Act.

Mr. Fletcher

Yes, but why should medical records and temperature charts be? I should have thought that the hon. Member for Kidderminster (Mr. Nabarro) would have been at least as anxious about reducing Purchase Tax on medical records and temperature charts as he is about reducing Purchase Tax on proprietary drugs and medicines, because medical records and temperature charts enter into the whole apparatus of every hospital.

Mr. Hale

Guillebaud.

Mr. Fletcher

The National Health Service could not be conducted if it were not for medical records and temperature charts. Why, therefore, penalise the National Health Service by placing Purchase Tax on the most commonplace ingredients which they have to use every day in every hospital?

That is not the end of it. There is tax on blank stamp albums whether with plain or ruled pages and whether permanently bound or loose-leaf, refill sheets for such albums, and loose-leaf binders for stamp albums of any type. Why penalise those minded to collect stamps and to put their collections of stamps in stamp albums?

It seems to me that this Schedule not merely imposes a quite harsh and undue penalty on the whole of industry and commerce, but on every desirable form of educational effort. For example, requisites for typewriters and office machinery, blank cylinders for dictating machines, inked ribbons whether on spools, or in cut lengths, or in bulk, type for office printing, embossing or perforating machinery, developing fluids, and obliterating and other preparations of the kinds used in connection with office printing and duplicating". Every possible kind of article used in every office in the country labours under this pernicious tax at 30 per cent.: drawing pins, paper clips and fasteners; sample bags of cloth with labels attached…adhesive stationery requisites…adhesive paper…date boxes…Letter sealing waxes"— I do not want to weary the Committee——

Mr. Nabarro

Hear, hear.

Mr. Fletcher

—by reading this long Schedule. The burden of my complaint is that this is an imposition on this wide range of articles daily used in every office, in every home, in every school. The tax should be reduced from 30 per cent. to 15 per cent. as one stage in a general campaign to abolish it altogether.

I regard subjecting this range of articles to Purchase Tax as wholly unjustified. I believe that public opinion is against it, and I hope that we shall hear from the Chancellor that he is prepared to give us an assurance that tax on goods in this class will be drastically reduced from the present rate of 30 per cent.

Sir Peter Agnew (Worcestershire, South)

The hon. Member for Islington, East (Mr. E. Fletcher) has mentioned a very wide range of articles in the Schedule. I want to refer to only one. He addressed a query to the Committee about practice in the 1922 Committee and the use of ballot papers and envelopes. I can answer that without any risk either of breaking the rules of order or of being guilty of a leakage of the proceedings of that Committee. I would say without any hesitation that the solid unanimity within that Committee, born of the reasoned conviction of each and every one of its members, in support of the Conservative Government, has entirely obviated the need for any ballot papers in the conduct of its proceedings.

I address myself more particularly to the Amendment which has been so ably moved by my hon. Friend the Member for Kidderminster (Mr. Nabarro). I am strongly in support of it. Neither he nor any subsequent speaker has made it clear to the Committee that the drugs and medicines subject to Purchase Tax are not restricted to those which are used for human consumption. The National Farmers' Union has represented that the abatement is highly desirable at this time of the tax on drugs and medicines used by farmers in administering to their animals, sometimes, of course, as a direct prescription or order by a veterinary officer, but by no means always.

If the case can be made out, as I think it can, that every time a human being wants a dose of medicine he does not need to go to a doctor to get a prescription for it, then the case is even stronger when applied to farmers and their animals. Perhaps the farmer is a small man who is anxious to restrict as far as possible his bills for outside expenditure and fees on veterinary officers.

Being quite sure of the symptoms some of the animals have developed, and certainly being able to administer medicine to them, he will be the direct purchaser without prescription of the medicine, and will have to pay, under existing conditions, Purchase Tax upon it. It is at present the policy to assist, if methods can be devised, not only farmers but especially the small farmers, and I think that a reduction of Purchase Tax on these veterinary drugs and medicines would be a very definite way of assisting the small farmers at a time when they are not able to make very great profits. Therefore, I strongly support this Amendment, affecting, as it does, the administering of medicine to animals.

Mr. Percy Holman (Bethnal Green)

I support my hon. Friend the Member for Islington, East (Mr. E. Fletcher) in his comments on the Purchase Tax on stationery. It is the sixth or seventh time since 1945 that I have had to criticise the Government of the day for that. My right hon. Friend the Member for Battersea, North (Mr. Jay) has had to reply on behalf of the Government on more than one occasion on this matter. It is a subject on which there is almost complete unanimity outside the Front Benches. We shall never find a back bencher to support the present tax on stationery. It affects every man, woman and child.

4.45 p.m.

It was a tax imposed, I think, largely as a result of misunderstanding. Originally, the object of Purchase Tax was to reduce consumption during a period of shortage. It was a wartime Measure, but in later years it extended somewhat beyond the original concept. However, apart from its revenue-raising effect, it still has some elements of that original motive behind it. My hon. Friend the Member for Islington, East (Mr. E. Fletcher) referred to printed envelopes. The method he referred to was introduced by the Customs and Excise to prevent direct taxation of production.

The tax was a misconception from the very first; it always was a retrograde feature of the Purchase Tax. It did not restrict consumption. In fact, consumption of the taxed items of stationery inevitably increased in many ways in wartime conditions through the necessity to fill up more and more forms in industry, commerce, local government and so forth It is a tax which cannot be regarded as having much effect upon the ordinary private consumer. It now yields nearly £40 million, of which the private consumer contributes about £2 million. Thirty million pounds come from industry and commerce and the other £8 million come from education, administration and the rest. Those are round figures.

The oncost added to goods subject to the tax amounts to £30 million, plus a good deal more. There are the wages and salary cost involved in administering it, and there are very often further additions on top in both wholesale and retail distribution. It was, I think, orginally the only Purchase Tax of any consequence with a definite effect upon the costs of industry. Abolition has been advocated by the Federation of British Industries, by the National Chamber of Trade, and by the trade unions concerned in the printing and allied trades. They have all shown a remarkable unanimity throughout about this tax.

I had thought that the Government posed as the businessman's Government, as a Government anxious to reduce the costs of production. They said that they were anxious to help industry. This is one of the taxes which should have caught the eye of the Treasury Ministers first of all in looking at the Purchase Tax from the point of view of reducing the costs of industry and commerce in general, and, to a small extent, the costs of the private individual. Just as important, relatively, is the cost of administration, both central and local.

Although nothing can be done this afternoon in this respect, it is very important that the Government, in considering any further reduction in the Purchase Tax or its abolition, should take this as one of the first items needing attention. My contention is that this Tax is more important than the tax on drugs and the many other things which have been mentioned in recent debates.

It has been a fundamental fallacy of the Government of the day from 1940 onwards that this Purchase Tax had a reducing effect upon consumption. In fact, it was a tax on production. It was a tax on industry. It did not matter at all during times of paper shortage, but in the competitive conditions with which the country is now being faced, although it is relatively a small item, it is an important one in our costs of production, distribution and administration. I hope that the Chancellor of the Exchequer and the Financial Secretary will very carefully consider what should be done about it in the days to come.

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

I support all that my hon. Friends have said about the tax on stationery. My view is largely determined by the effect of the tax on stationery used not only in industry but in our schools. Perhaps the Financial Secretary will be able to explain why rubber stamps are not charged but the pad on which one puts a rubber stamp is charged. This seems to be an anomaly.

As regards drugs, could the Financial Secretary tell us why there is included in the list of things which are chargeable protective barrier preparations specially prepared for use in factories solely for the protection of the skin against occupational dermatitis. When we are doing so much in our factories to try to prevent this occupational disease, which can be a very distressing and protracted one, it seems quite wrong that we should charge to Purchase Tax such a product.

Stoke-on-Trent Members are usually found to be wholly in agreement in the House. The motto for our City is: "United Strength is Stronger." I have, however, one difference of opinion with my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross). I find it very difficult to understand why a drug which is nationally advertised should, according to his recommendation, be charged, whereas the simple aspirin should not be charged to Purchase Tax. A tremendous amount of money is spent on the nationally advertised drugs. One very large company, which used to advertise that its product was worth one guinea a box, during the last four years has doubled its 100 per cent. bonus to its shareholders and has paid out a dividend increased from 25 per cent. to 32½ per cent.

Dr. Stross

Will not my hon. Friend agree that she has now answered herself?

Mrs. Slater

No, I will not agree. At the same time, this firm has put up its cost to the consumer. Taking thirty-three items the total cost of which amounted to £4 5s. 9d. in 1954, those same items at the end of last year cost in total £5 8s. 11d. It seems to me that the Chancellor and the interested Government Departments should look at this not merely from the point of view of Purchase Tax but from the point of view of control of national advertising and the amount of money spent thereon which is allowable as a chargeable item. I ask that the Purchase Tax should be removed from all important drugs.

Mr. Douglas Marshall (Bodmin)

I wish to reinforce the arguments advanced by my hon. Friend the Member for Worcestershire, South (Sir P. Agnew). I trust that the Minister will look very keenly at the tax on drugs coming within the veterinary group. Her Majesty's Government have repeatedly stated that they are looking carefully at the position of the small farmer and the difficulties with which he has to contend. This tax directly affects the small farmer. Many small farmers doctor—if that is the right word—their own animals themselves and have to keep these drugs in their houses in order to do so. I think that there is no real difference of opinion between hon. Members on both sides of the Committee about the need to do our best to help the agricultural community as a whole, and it seems quite ludicrous at the same time to impose a tax on the drugs which the farmer has to use.

The Minister may well reply that these things are included because it would be difficult to separate one type of drug from another. This is the usual reply which we are all very used to hearing from the Treasury—this lovely desire for uniformity and for everything to be absolutely correct. Although, quite frankly, I do not expect my hon. and learned Friend to give a reply straight away saying that he will look at the matter to see whether what we ask can be done, I should like him to say that further consideration will be given to the matter before the Report stage and to write one of those little minutes on the sheets of paper which travel through the Treasury saying, "Let the difficulties speak for themselves". I urge upon him the need for excluding the drugs which come within this particular category.

Mr. Douglas Glover (Ormskirk)

We are all very sorry to see that my hon. and learned Friend has suffered an accident to his finger, but if those at the Treasury put their hands into too many tills they must not be surprised if they sometimes get them trapped. That sort of reflection occurs to one in regard to all these matters of Purchase Tax. The Purchase Tax is supposed to be a tax on consumption. In fact, in many cases it is a tax on health. In other cases, it is a tax on production. These taxes have an unsettling effect upon our whole national life.

I hope that the arguments which have been advanced from both sides of the Committee, particularly in regard to medicines, will be looked at in the Treasury with a view to seeing whether further concessions can be made, if not this year, then in the Budget next year. At the same time, I would only say to my hon. and right hon. Friends and to hon. and right hon. Gentlemen opposite that I wish that the same unanimity we show when we are discussing matters like Purchase Tax, in trying to have the levels of taxes reduced, could be shown when we come to consider cutting down the expenses of running the nation. If we did show the same measure of agreement on both occasions, the reduction of these taxes would be made very much easier.

There is no doubt that Purchase Tax is regarded as a very happy tax in the Treasury from the Department's point of view, because it is raised without quite the same animosity as is aroused by direct taxation. I am sure that everyone will agree that the idea of raising the level of direct taxation is unthinkable. We are left, therefore, with the problem of raising money by indirect means. Although I have much sympathy with all the arguments put forward today for a reduction of the taxes on drugs, stationery and all the other things, I realise that the Treasury has a great problem confronting it. I hope, therefore, that sympathy and understanding will be shown by our Treasury Ministers in their approach to the problems with which they are trying to cope.

5.0 p.m.

Mrs. Eirene White (Flint, East)

We have had a reasonably long and informative debate on two aspects of Purchase Tax, stationery and medicines. We have had arguments from both sides asking that reductions should be made in the tax on these commodities, although I must confess that the arguments in favour of reductions in the tax on medicines have come almost exclusively from the unofficial opposition sitting on the benches opposite.

Mr. Nabarro

A jolly good opposition.

Mrs. White

That is a matter of opinion.

The plea which has been eloquently made by my right hon. Friends for a reduction in the tax on stationery is, I think, very important and serious. It is one that we have had before in Committees on Finance Bills. This particular tax was condemned in the most absolute terms in the debates that we had in 1951, when Lord Clitheroe, better known in this House as Mr. Ralph Assheton, speaking at that time in Opposition, but a very authoritative voice of the party opposite, said: … this tax"— that is, the tax on stationery— is undoubtedly inflationary in its effect and is a direct tax on production. … We believe that this particular tax is a bad tax and that it should be removed."—[OFFCIAL REPORT, 14th February, 1951; Vol. 484, c. 575 and 577.] So the Financial Secretary must either meet us at least part way or completely disown a gentleman we have always believed to be an authoritative spokesman for the party opposite.

Nothing could be more definite than the quotation I have just given. Of course, this tax is a large revenue-raiser, and we accept that. It brings in about £40 million a year. Therefore, it might be unreasonable to expect the Chancellor to forgo even half that amount. But surely he could do something to modify the tax on some of the articles now included in the taxable section of the formidable list included in Notice No. 78, partly because of its undesirability for British commerce and public life, and partly because of the quite ridiculous anomalies, to some of which my hon. Friend the Member for Islington, East (Mr. E. Fletcher) drew attention. One can hardly mention an item in this list without finding a corresponding peculiarity between those articles which are taxed and those which are exempt. Glancing at the list, I observe that, whereas entry forms for competitions are taxed, fully printed lottery and sweepstake tickets are exempt. That seems to me to be entirely illogical. I will not weary the Committee by going into the extraordinary number of anomalies in the list. It is probably the most anomalous of all the groups of commodities which are now subject to tax.

I draw attention to the fact that the Purchase Tax Joint Standing Committee of the Paper, Printing, and Stationery Trades, which deals with this matter, points out that there have been very considerable difficulties with regard to definition. The Committee is constantly in disagreement with the Customs and Excise, not merely on the question of definition, but also valuation. There is a Government committee on Purchase Tax valuation, and it is recorded that this committee recognises that there are in this field special problems because of the complexity of the list and it has not been able to find any remedy. Surely one remedy might be to simplify the list.

Even though the Financial Secretary may not feel able to advise the Chancellor, following the debate, that he should remit the tax to the full extent for which we are asking, at least he should meet us part way, because this is a most complicated and onerous tax. As my hon. Friends have pointed out, it affects not only every business in the country but every local authority, public body and educational establishment. Therefore, we think that there is a very good case for action being taken.

When we consider the other group of taxable commodities, namely, medicines and veterinary supplies, the argument is nothing like so convincing. I say at once that I have much more sympathy with the arguments advanced by the hon. Members for Worcestershire, South (Sir P. Agnew) and Bodmin (Mr. D. Marshall) about veterinary supplies than I have with the arugments advanced by the hon. Member for Kidderminster (Mr. Nabarro). There may indeed be hypochondriac cows, but at least they cannot indulge in self-medication. On the other hand, I remind both hon. Members that some of the dangers which arise from medication of human beings might also arise where a farmer, with the best intentions but inadequate knowledge, may use a patent preparation on his animals when he would be much better advised to spend the small amount necessary on consulting a qualified vet.

Sir P. Agnew

An example where that danger would not arise but where the medicine concerned is subject to Purchase Tax is, I understand, sheep dip. One is not likely to drown the animals in it.

Mr. D. Marshall

I agree with the principle of the hon. Lady's argument, but there is no free health service within the veterinary service. Anything that is reduced in veterinary medicine would reduce the total cost to the farmer.

Dr. Stross

Will my hon. Friend bear in mind that sheep dip is exempt? It is substances that are needed for destroying parasites on human scalps which are not exempt.

Mrs. White

I am sure the hon. Member for Worcestershire, South is much easier in his mind now that he has learned that sheep dip is exempt from tax. On the other hand, I agree that the hon. Member for Bodmin has adduced a powerful argument in saying that there is no free health service for animals. In the case of veterinary production one does not have, as with medicine for human patients, an extremely lengthy list of articles which are exempt and of which the ordinary man or woman can take advantage. After all, that is the main difficulty about the proposal of the hon. Member for Kidderminster.

We have been informed that there is an extremely wide range of drugs and medicaments which are exempt from tax either under the National Health Service or as prescribed by a doctor treating a patient privately. There is no distinction in Purchase Tax between the National Health Service patient and the private patient. So there is no argument there. The tax falls on proprietary articles which people buy for themselves.

If the only alternative were to go to your doctor and obtain a prescription or to pay tax, then the argument would be very much stronger than it is; but that is not so. The truth is that with regard to all these medicines, as the hon. Member for Putney pointed out, we are not allowed by law to have secret formulæ. Medicines have to be compounded of ingredients which are well known, and therefore it is possible to obtain the therapeutic substances contained in these proprietary medicines by asking one's chemist to give one the preparation concerned. If a person is in any doubt, he should go to an intelligent and honest chemist and ask him for whatever he wants.

Why should one support firms that make large profits out of the gullible public by clever advertising and by selling preparations which do them no more good and, one trusts, no more harm than similar preparations which can be obtained without all this paraphernalia of advertising, and so on? May I give one simple example, which I am sure will appeal to all hon. Members? I do not know what quantity of aspirin is consumed in the United Kingdom, but I am sure that it is very considerable. Yet when one reads one of these extremely useful documents for the protection of consumers to which some of us now subscribe, we are informed that all aspirin, whatever else it is called, is essentially the same thing, and it goes on: The name 'aspirin'"— and I confess that I did not know this interesting fact— comes from spirœa', a botanical group which includes many well known plants like bridal wreath, which are natural sources of salicylic acid. Apart from this, the only material differences are in price. These, as can be seen from the table opposite"— from which I forbear to quote— are considerable. So that it is possible to obtain 25 aspirins for 4d. which will do just as much good as paying 1s. 2d., 1s. 3d., 1s. 8d. or 1s. 8½d. for tablets which are essentially the same but which have a different name and label and which are expensively advertised.

What I have said about aspirin applies to a large range of other materials which can be purchased from a chemist in their basic form if one trusts one's chemist. If a person requires something more elaborate than his chemist is able to advise him about, it is far safer for him to go to his medical adviser. I was interested to observe last night that the Financial Secretary did not trust to self-medication but took professional advice from one of my hon. Friends.

Mr. Gower

While not dissenting from the hon. Lady's main theme, would she not agree that in some cases the aspirin is associated with some other substance which is suitable for people who suffer from various digestive troubles which are accentuated by aspirin?

Mrs. White

Something can be added to aspirin to make it more easily soluble, but that is not worth the difference in price between 4d. and 1s. 8½d.

Where there are certain preparations, as my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross) said, which might be suitable for purchase and which are not proprietary in the ordinary sense of the word but which are not included in the tax-free list, that is a matter of adjustment of the list. Any of my medical hon. Friends would be happy to co-operate with the Financial Secretary with regard to things—medicated soap has been mentioned, and one or two others—which ought to be made free of tax without necessarily depriving the Treasury of tax in general on so many things which are sold to a gullible public at a highly inflated price and which ought, in our view, to be strongly discouraged.

Mr. Simon

We have had a careful and agreeable debate on quite two separate subjects—first, medicine and drugs, and secondly, stationery. I think the hon. Member for Islington, East (Mr. E. Fletcher) was quite right when he said that it is difficult to see what they have in common. They have this in common, that both medicine and drugs, on the one hand, and stationery, on the other, raise a great deal of revenue. That is not a matter than one can entirely disregard in these debates.

Mr. F. H. Hayman (Falmouth and Camborne)

Could the Financial Secretary make inquiries or say how much additional revenue has come in from the sales of aspirin since the Government have been suffering defeats in by-elections and county council elections, and so on?

5.15 p.m.

Mr. Simon

The revenue from the group which contains drugs and medicines is £11 million in all. As the hon. Member for Bethnal Green (Mr. Holman) said, that from stationery is approaching £40 million. It is against this background that I ask the Committee to view the problem as I think it has been viewed.

Turning now to the matter dealt with first, drugs and medicines, the fact is that the tax raises in a year £11 million in revenue and that the proposal contained in the Amendment would mean a loss of revenue of £5½ million.

Mr. Nabarro

Would my hon. Friend adjust the £11 million in respect of the £1½ million which the Minister of Health told me was the Purchase Tax charged as part of the National Health Service Vote, which makes a net loss to the revenue, if the whole of the tax were abated, of only £9½ million?

Mr. Simon

My hon. Friend specifically asked me for that information. I was going to give it to him, but as he has now given it to himself I am relieved of doing so later. Even £9½ million is quite a substantial sum of money.

The second point is that if our aim is really to approach something like a uniform tax on a wide range of goods, we ought to consider carefully before starting now to erode the width of base of Purchase Tax, and that is the proposal of my hon. Friend the Member for Kidderminster (Mr. Nabarro). He says that this year he only wishes to reduce it to half but that next year he wishes to see it abolished altogether. One is immediately starting to erode the width of base of this tax, and that seems to me dangerous in this sphere.

Having said that this is an important revenue-raiser, as all the Committee have borne in mind, I think we should be agreed again upon a second principle, namely, that nothing should be done which prevents any patient from receiving proper medication. I found myself entirely in agreement with the approach of the hon. Lady the Member for Flint, East (Mrs. White) that this tax, in its present form, combines the need to reconcile those two principles—first, the need to raise revenue, and secondly, to ensure that there is no deprivation of proper medication.

The hon. Gentleman the Member for Stoke-on-Trent, Central (Dr. Stross) gave a number of examples of anomalies in Notice No. 78B. It would be presumptuous on my part to attempt to answer his expertise on these matters, but I will gladly read his speech and consider all the specific matters to which he referred. Also I gladly accept the invitation of the hon. Lady and of my hon. Friend the Member for Putney (Sir H. Linstead), who made the same point; or if any other hon. Members have specific matters which they feel should be adjusted in the Notice, I will gladly consider them.

The hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater) mentioned barrier preparations. The Notice states specifically: … barrier preparations (whether or not sold for factory use against occupational dermatitis) perfumed or put up in a form comparable with cosmetics. I have no doubt that when it is the form substantially of a cosmetic tax is chargeable, but again I will gladly look into the matter.

Dr. Stross

We shall be grateful to the Financial Secretary if he will do so, because the wording in my copy of Notice 78B is as follows: Protective barrier 'preparations' unperfumed and specially prepared for use in factories solely for the protection of the skin against occupational dermatitis. That is under the heading of "chargeable".

Mr. Simon

I may be looking at the wrong Notice. I was looking at Notice No. 78. In any case, I will gladly look into that point now my attention has been drawn to it.

As I said, the scheme of the tax is obviously first to raise Revenue and, secondly, to see that no patient is deprived of proper medical treatment. The way it does this is through exemptions. If hon. Members will look at the exemptions in Group 33 they will see first Group (b) which exempts what are called the official drugs and medicines, that is to say those preparations which are composed of items which appear in certain standard publications, of which the British Pharmacopoeia is the principal one, if they are sold in a non-proprietary and unbranded form. The hon. Gentleman mentioned petroleum jelly. That is a good example of a non-proprietary article which is sold also under proprietary names. I will not mention its common names. The hon. Lady mentioned aspirin. Again we can think of the proprietary names under which such articles are sold. In all those cases a similar article can be obtained under its non-proprietary and unbranded name.

Secondly, that same Group 33 (b) exempts the official preparations in a branded or proprietary get-up when sold in special packs for dispensing purposes only. That was the point made by my hon. Friend the Member for Kidderminster. The intention there is that when such preparations are in dispensing packs, they are not to be sold across the counter to the individual customer, who may or may not require the article—by that I mean need it—for essential medical purposes, but are sold to the pharmacist, who breaks up the pack and retails it as in accordance with the dispensing of a doctor.

Thirdly, there are under Group 33 (c) a long list of essential drugs and medicines whether or not they are marketed in a proprietary form. This list is kept constantly up-to-date by Treasury Order, under constant advice from the experts who are available to advise the Minister of Health. My hon. Friends the Members for Worcestershire, South (Sir P. Agnew) and Bodmin (Mr. D. Marshall) particularly asked about veterinary preparations. I am advised that included in those essential drugs which are exempt from Purchase Tax are essential drugs which are needed for veterinary purposes. It was for this reason that the hon. Gentleman the Member for Stoke-on-Trent, Central was right when he said that sheep-dip was an exempt preparation.

Mr. D. Marshall

Would my hon. and learned Friend review this matter between now and the Report stage in case what he has just said does not include veterinary drugs to the extent he has stated to the House? The National Farmers' Union and other representatives of the farmers would not, I think, agree with the statement he has just made.

Mr. Simon

I need hardly say that I will gladly respond to my hon. Friend's invitation. There must always be some dispute about what is an essential drug or not, and I do not doubt that the N.F.U. would like to see the list extended. I will certainly look into that matter. In the end, one comes down to this, that anybody who needs it gets his medicine and drugs tax free, and yet there is a large residual expenditure on drugs and medicines of the kind described by the hon. Lady which are, in my submission, properly the subject for taxation and which result in a large revenue to the Exchequer that cannot at the moment be forgone.

Now I turn to the question of stationery. The hon. Gentleman the Member for Islington, East had a great deal of fun, as did other hon. Members, going through the list which is contained in Notice No. 78. The way it works is this: Parliament says that, for example, stationery shall be taxed. Now stationery is a vague term and its borders must, to some extent, be a matter of judgment. What happens, therefore, is that the Customs and Excise get into touch with representatives of the trade and go through individual items to determine what can normally be described as stationery and what is, for example, the raw material for printers.

For this reason, one gets these rather curious measurements that appear constantly in the Purchase Tax Schedule, or rather I should say in Notice No. 78. It is simply an agreement reached between the Board of Customs and Excise on the one hand and the trade on the other as to what items properly fall within the generic description that Parliament has laid down. I need only add that the Board is always willing, on trade representation or on representation through me by hon. and right hon. Members of this House, to review any particular item or group of items if they seem to be operating unfairly or anomalously.

In the end, as I have said, one comes down to the revenue question. It has been recognised that stationery brings in £36¾ million in a full year, and I could not possibly advise the Committee that it would be right to forgo half that amount by this Amendment.

Mr. Royle

I regret speaking after the hon. and learned Gentleman has wound up the debate. I have listened carefully to his arguments and particularly to the argument of my hon. Friend the Member for Flint, East (Mrs. White). I had the opportunity earlier of hearing the speech of the hon. Member for Kidderminster (Mr. Nabarro) and that of his hon. Friend the Member for Putney (Sir H. Linstead), and it seems to me that there are some

anomalies which should be cleared up. Under those circumstances, I am expressing the hope that the hon. Gentleman will give the Committee this opportunity to express itself in the Lobbies on this matter, so that the Treasury might know just where the Committee stands on these matters. If the hon. Gentleman does this, Sir Norman, I shall be compelled to give him some support.

Mr. Nabarro

In view of the assurance given by my hon. and learned Friend—[Laughter.] Listen. In view of the assurance given by my hon. and learned Friend that it is not desirable to erode the base, and the fact that he is desirous of making progress in the matter of the Nabarro formula for a uniform rate of tax, I beg to ask leave to withdraw the Amendment.

The Temporary Chairman (Sir Norman Hulbert)

Is it the Committee's pleasure that the Amendment be withdrawn?

Mr. Royle

No.

Question put, That those words be there inserted:—

The Committee divided: Ayes 0, Noes 233.

Division No. 131.]	AYES	[5.30 p.m.
	NIL
		TELLERS FOR THE AYES:
		Mr. Royle and Mr. A. Evans.
NOES
Agnew, Sir Peter	Bromley-Davenport, Lt.-Col. W. H.	Dugdale, Rt. Hn. Sir T. (Richmond)
Allan, R. A. (Paddington, S.)	Brooke, Rt. Hon. Henry	Duncan, Sir James
Amery, Julian (Preston, N.)	Browne, J. Nixon (Craigton)	Duthie, W. S.
Amory, Rt. Hn. Heathcoat (Tiverton)	Bryan, P.	Eccles, Rt. Hon. Sir David
Arbuthnot, John	Burden, F. F. A.	Elliott, R. W. (Ne'castle upon Tyne, N.)
Armstrong, C. W.	Butcher, Sir Herbert	Emmet, Hon. Mrs. Evelyn
Ashton, H.	Butler, Rt. Hn. R. A. (Saffron Walden)	Errington, Sir Eric
Astor, Hon. J. J.	Campbell, Sir David	Erroll, F. J.
Atkins, H. E.	Carr, Robert	Fell, A.
Baldock, Lt.-Cmdr. J. M.	Cary, Sir Robert	Finlay, Graeme
Baldwin, A. E.	Chichester-Clark, R.	Fletcher-Cooke, C.
Barlow, Sir John	Cole, Norman	Fort, R.
Barter, John	Conant, Maj. Sir Roger	Fraser, Hon. Hugh (Stone)
Beamish, Col. Tufton	Cooke, Robert	Fraser, Sir Ian (M'cmbe & Lonsdale)
Bell, Philip (Bolton, E.)	Cooper, A. E.	Freeth, Denzil
Bell, Ronald (Bucks, S.)	Cooper-Key, E. M.	Galbraith, Hon. T. G. D.
Benn, Hn. Wedgwood (Bristol, S. E.)	Cordeaux, Lt.-Col. J. K.	Gammans, Lady
Bennett, Dr. Reginald	Corfield, Capt. F. V.	Garner-Evans, E. H.
Bevins, J. R. (Toxteth)	Craddock, Beresford (Spelthorne)	Gibson-Watt, D.
Bidgood, J. C.	Crosthwaite-Eyre, Col. O. E.	Glover, D.
Biggs-Davison, J. A.	Cunningham, Knox	Glyn, Col. Richard H.
Bingham, R. M.	Dance, J. C. G.
Birch, Rt. Hon. Nigel	Davidson, Viscountess	Godber, J. B.
Bishop, F. P.	D'Avigdor-Goldsmid, Sir Henry	Goodhart, Philip
Body, R. F.	Deedes, W. F.	Gough, C. F. H.
Boothby, Sir Robert	Digby, Simon Wingfield	Gower, H. R.
Bossom, Sir Alfred	Dodds-Parker, A. D.	Graham, Sir Fergus
Boyd-Carpenter, Rt. Hon. J. A.	Donaldson, Cmdr. C. E. McA.	Green, A.
Boyle, Sir Edward	Doughty, C. J. A.	Grimston, Hon. John (St. Albans)
Braine, B. R.	Drayson, G. B.	Grimston, Sir Robert (Westbury)
Braithwaite, Sir Albert (Harrow, W.)	du Cann, E. D. L.	Grosvenor, Lt.-Col. R. G.
Hall, John (Wycombe)	Low, Rt. Hon. Sir Toby	Ridsdale, J. E.
Hare, Rt. Hon. J. H.	McAdden, S. J.	Roberts, Sir Peter (Heeley)
Harris, Frederic (Croydon, N. W.)	Macdonald, Sir Peter	Rodgers, John (Sevenoaks)
Harris, Reader (Heston)	McKibbin, Alan	Roper, Sir Harold
Harrison, A. B. C. (Maldon)	Mackie, J. H. (Galloway)	Ropner, Col. Sir Leonard
Harrison, Col. J. H. (Eye)	McLaughlin, Mrs. P.	Russell, R. S.
Harvey, Sir Arthur Vere (Macclesf'd)	Maclay, Rt. Hon. John	Scott-Miller, Cmdr. R.
Heald, Rt. Hon. Sir Lionel	MacLeod, John (Ross & Cromarty)	Sharples, R. C.
Heath, Rt. Hon. E. R. G.	Macmillan, Maurice (Halifax)	Shepherd, William
Henderson-Stewart, Sir James	Macpherson, Niall (Dumfries)	Simon, J. E. S. (Middlesbrough, W.)
Hesketh, R. F.	Maddan, Martin	Smithers, Peter (Winchester)
Hicks-Beach, Maj. W. W.	Maitland, Cdr. J. F. W. (Horncastle)	Smyth, Brig. Sir John (Norwood)
Hill, Mrs. E. (Wythenshawe)	Marlowe, A. A H.	Spearman, Sir Alexander
Hinchingbrooke, Viscount	Marshall, Douglas	Speir, R. M.
Hobson, John (Warwick & Leam'gt'n)	Mathew, R.	Stanley, Capt. Hon. Richard
Holland-Martin, C. J.	Maudling, Rt. Hon. R.	Stevens, Geoffrey
Hope, Lord John	Mawby, R. L.	Steward, Harold (Stockport, S.)
Hornby, R. P.	Maydon, Lt.-Comdr. S. L. C.	Steward, Sir William (Woolwich, W.)
Hornsby-Smith, Miss M. P.	Medlicott, Sir Frank
Horobin, Sir Ian	Milligan, Rt. Hon. W. R.	Stoddart-Scott, Col. Sir Malcolm
Howard, Gerald (Cambridgeshire)	Morrison, John (Salisbury)	Storey, S.
Howard, John (Test)	Mott-Radclyffe, Sir Charles	Stuart, Rt. Hon. James (Moray)
Hudson, W. R. A. (Hull, N.)	Nabarro, G. D. N.	Studholme, Sir Henry
Hughes-Young, M. H. C.	Nairn, D. L. S.	Sumner, W. D. M. (Orpington)
Hurd, A. R.	Neave, Airey	Taylor, Sir Charles (Eastbourne)
Hutchison, Michael Clark (E'b'gh, S)	Nicholls, Harmar	Thomas, Leslie (Canterbury)
Hyde, Montgomery	Nicolson, N. (B'n'm'th, E. & Chr'ch)	Thompson, Kenneth (Walton)
Hylton-Foster, Rt. Hon. Sir Harry	O'Neill, Hn. Phelim (Co. Antrim, N.)	Thorneycroft, Rt. Hon. P.
Irvine, Bryant Godman (Rye)	Ormsby-Gore, Rt. Hon. W. D.	Thornton-Kemsley, Sir Colin
Jenkins, Robert (Dulwich)	Orr, Capt. L. P. S.	Turton, Rt. Hon. R. H.
Jennings, Sir Roland (Hallam)	Osborne, C.	Tweedsmuir, Lady
Johnson, Dr. Donald (Carlisle)	Page, R. G.	Vane, W. M. F.
Johnson, Eric (Blackley)	Pannell, N. A. (Kirkdale)	Vickers, Miss Joan
Jones, Rt. Hon. Aubrey (Hall Green)	Partridge, E.	Wakefield, Edward (Derbyshire, W.)
Joseph, Sir Keith	Peel, W. J.	Wall, Patrick
Kaberry, D.	Peyton, J. W. W.	Ward, Rt. Hon. G. R. (Worcester)
Kerr, Sir Hamilton	Pike, Miss Mervyn	Watkinson, Rt. Hon. Harold
Kershaw, J. A.	Pilkington, Capt. R. A.	Webbe, Sir H.
Kimball, M.	Pitt, Miss E. M.	Whitelaw, W. S. I.
Kirk, P. M.	Powell, J. Enoch	Williams, R. Dudley (Exeter)
Lancaster, Col. C. G.	Price, David (Eastleigh)	Wills, G. (Bridgwater)
Langford-Holt, J. A.	Price, Henry (Lewisham, W.)	Wilson, Geoffrey (Truro)
Leather, E. H. C.	Prior-Palmer, Brig. O. L.	Wood, Hon. R.
Leburn, W. G.	Profumo, J. D.	Woollam, John Victor
Legge-Bourke, Maj. E. A. H.	Ramsden, J. E.	Yates, William (The Wrekin)
Legh, Hon. Peter (Petersfield)	Rawlinson, Peter
Lindsay, Martin (Solihull)	Redmayne, M.	TELLERS FOR THE NOES:
Linstead, Sir H. N.	Remnant, Hon. P.	Mr. Oakshott and
Lloyd, Rt. Hon. Selwyn (Wirral)	Renton, D. L. M.	Mr. Brooman-White.

Mr. Roy Jenkins (Birmingham, Stechford)

I beg to move, in page 29, line 16, after "etc.)", to insert: Group 35 (b) (ii) (bicycles, etc.)". This Amendment, standing in the name of my hon. Friends and myself, would have the effect of reducing the Purchase Tax on bicycles in Group 35 from 30 per cent. to 15 per cent. I believe that the Amendment is important and that the case, too, is an important one.

Probably all hon. Members in the Committee have received a statement from the trade association with a copy of the statement which the association had previously sent to the Chancellor of the Exchequer. Yesterday, I received a further communication from the trade association—it was a cyclostyled letter, so I imagine that it went to most hon. Members—saying: With reference to my recent letter on this subject, I think you would like to know that I have heard this afternoon from Mr. Gerald Nabarro, M.P., that he has tabled an Amendment to the Finance Bill for next Tuesday in his name and that of Mr. Gower. I was interested to receive this latter and not entirely surprised that the trade association might have assumed that all the Amendments were tabled in the name of the hon. Member for Kidderminster (Mr. Nabarro). I was also interested to see that he had assumed responsibility not only for all the Amendments, but also for the timetable and was able to announce the time and date for which an Amendment had been put down. But I feel that in considering this question of Purchase Tax the Committee should resist its natural temptation to assume that the case so consistently advocated by the hon. Member for Kidderminster must be a bad case.

Mr. Nabarro

In fairness to the Committee, perhaps I might explain that my Amendment, to which the name of my hon. Friend the Member for Barry (Mr. Gower) is appended, deals not only with bicycles but with a whole range of goods of which bicycles is only one item.

Mr. Jenkins

It is perfectly true that the trade association, in writing, said it was by no means satisfied with the Amendment of the hon. Member for Kidderminster, and thought that in his eagerness to get it on the Notice Paper he might confuse the issue. I therefore gladly accept the statement of the hon. Member, as I am sure the Committee do, but I believe this is an important case so far as bicycles are concerned, and one where we should certainly consider a reduction to 15 per cent.

After all, the bicycle industry is and has been for some little time now a declining industry. It is one of the comparatively few durable consumer goods industries—as I suppose it could be called in a jargonised way—of whose products the British home market is now absorbing less than before the war. I understand that, in 1957, 1 million units were sold on the home market, whereas, in 1938, 1¼ million units were sold.

It is perfectly true that in the decade after the war exports were considerably up and were running appreciably above the pre-war level, so that, despite the decline in the home market demand, the total output of the industry was greater; but since the end of 1954 exports, too, have been declining and during the last three years the position has been that the home and the export demands and inevitably, as a result, the total output of the industry, have been going steadily down.

I believe that the Treasury should have greater sympathy for the position of the bicycle industry at present, because Her Majesty's Government and that industry have this in common: since the Lord Privy Seal's autumn Budget both have been in a state of steady decline. I very much hope, therefore, that Her Majesty's Government will consider whether they cannot do something to assist the plight of this industry, which is now operating at only 50 per cent. capacity and which clearly needs a certain amount of assistance so far as Purchase Tax is concerned.

5.45 p.m.

Although, for many exporting industries, one can argue, without being certain on which side the truth lies, about the effect of a fairly high rate of Purchase Tax on exports—I would not like to say what effect a greater rate of Purchase Tax would have on motor exports at present—and about whether an increase in Purchase Tax increases exports or whether a reduction decreases exports, because of the pull of the home market, nobody can regard those arguments as applying to bicycles. Clearly, there is no danger of an excessive pull of the home market so far as bicycles are concerned.

The bicycle industry is an important exporting industry which is meeting a smaller home market demand than it had before the war and, being most exceptional in this respect, producing a product which is of great importance to many people, the use of which it is desirable to encourage and which attracts a high rate of Purchase Tax, but which has been in steady decline in the past three years, I should have thought that there was a most powerful case for considering a reduction of Purchase Tax on bicycles.

Mr. Martin Lindsay (Solihull)

I am very pleased indeed to support the hon. Member for Stechford (Mr. Roy Jenkins) whom, but for our respective places, I would call my hon. Friend, not least because he is my Parliamentary neighbour and was my opponent in 1945, having left a very agreeable impression in my constituency.

Here is a very good case, and I hope that the Chancellor will consider it. I have always regarded Purchase Tax as an unpleasant tax, but one which has the big merit that it can be used as a shot in the arm when necessary. I believe that the cycle industry needs such a shot in the arm now. One of the difficulties is that tastes change and that people do not use bicycles as much as they used to do. They prefer other means of transport, and that is especially so on the Continent.

The chief difficulty is that nowadays bicycle manufacturing overseas has become merely a normal by-product of light engineering and many countries which were traditional export markets for the British cycle industry for decades no longer take British bicycles because they are making them for themselves. The most we can now get into many of those export markets is some bicycle parts, such as chains, hubs and so forth, which are rather more difficult to make. I hope the Chancellor will seriously consider the case of the cycle industry for some relief during the very difficult period through which it is now passing.

Mr. Victor Yates (Birmingham, Ladywood)

I support the Amendment. There is a very strong case for the industry being given special consideration by the Chancellor. As hon. Members know, Birmingham is an important centre of the bicycle industry. There we have 38 firms manufacturing bicycles and belonging to one trade association, and about 46 firms manufacturing bicycle components.

A serious situation has arisen, because many of the factories are not working to capacity. The position is such that the industry is not working to even 50 per cent. of its capacity. Short-time working is in operation in both the manufacturing and component sides of the industry. Although several of these factories are in the constituency of my hon. Friend the Member for Stechford (Mr. Roy Jenkins), about fifteen of them are in my constituency, and so I have an important constituency interest.

It has been rightly said that to get a good export trade it is important to have a solid home trade as a basis. The British cycle industry is certainly the world's principal supplier and I understand that it has been exporting between £20 million and £30 million worth of bicycles and components a year, including about £5 million worth to dollar areas.

The fact that the export trade with India, Pakistan, Argentina and Brazil has diminished is very serious. We must devote ourselves to seeing how we can restore the industry's capacity to produce and to export as it did before the slump began.

I was surprised to learn that the home market is not as large as it was before the war. I am told that in 1938 we produced 1¼ million units for the home market, whereas today only 1 million units a year are produced for the home market. In view of the prosperity which we are often told we are enjoying, it is surprising that fewer bicycles are being produced for the home market.

I return to an argument which I made yesterday, when I said that it was very difficult to decide what was a luxury and what was not. However, it cannot be argued that a bicycle is a luxury. It has become an important tool of the worker and in view of the greater travelling difficulties experienced by workers nowadays, especially when, as is often the case, they live some distance from their employment, bicycles have become valuable assets. They have also given workers a cheap form of transport.

Apart from that, bicycles have enabled many young people to see the countryside. The bicycle is a means of transport which should not be ignored and I hope that it will not be regarded as a luxury. It is important that we should encourage that which is vital to the economy, a healthy export trade, and that where we see difficulties, such as we are now experiencing in the bicycle industry, something should be done to remedy the situation.

It is deplorable that at least two factories in Birmingham have closed—the Hercules Cycle and Motor Company Limited at Rocky Lane, Aston, Birmingham and another firm—and also the Mercury Industries at Dudley. My hon. Friend the Member for Aston (Mr. J. Silverman) will no doubt have more to say about this matter. Where it has been necessary for a firm to close down a factory because it could not meet competition without more aid, it has been deplorable that that aid has not been forthcoming. The position in Birmingham, Nottingham and other areas must be remedied. We must restore the cycle industry to its previous capacity and this is where the Chancellor has an opportunity to act.

If the Chancellor reduces the tax on the industry, as the Amendment suggests, in the long run the country will derive more benefit than it receives from the tax. The industry will be restored and workers will be kept in employment instead of having to face serious short-time working and factories closing, as is now the case. I hope that the Government will review the matter in the light of the industry's urgent need and accept the principle of the Amendment.

Mr. Frederick Gough (Horsham)

I add my plea that my right hon. Friend should give serious consideration to the Amendment to deal with the matter, either in the present Bill or later. Each hon. Member who has spoken has represented a city or urban view. There is a new town in my constituency where the bicycle is essential for all workers. The average distance which has to be travelled by a man living in Crawley who has to work in the industrial area is about two miles, and in such circumstances bicycles are most important.

As a representative of an agricultural constituency, I am concerned with the interests of agricultural workers. For them bicycles are a necessity. It is the only way in which they and their wives can go to nearby towns to seek relaxation, or go about their business. Without bicycles, agricultural workers and their wives have the greatest difficulty in registering their votes at local government elections and General Elections, because of the distances involved. I ask my right hon. Friend to consider this Amendment sympathetically, since this is a most important matter.

6.0 p.m.

Mr. Donald Chapman (Birmingham, Northfield)

I wish to add my plea to that of my hon. Friend the Members for Stechford (Mr. Roy Jenkins) and my hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates), who is so active on behalf of industries in the centre of Birmingham.

The bicycle industry is a classic example of the kind of case that we were discussing when we debated the principles of Purchase Tax yesterday. It was agreed that when an industry fell on bad times there was a good case for flexibility in the use of the tax. If that be so, surely the situation in this year's Budget is little short of fantastic. Other industries, which are by no means in difficulties, though they may be able to present a case in favour of reducing the Purchase Tax on their products, are, so to speak, receiving tax reductions gratuitously. These products include clocks and watches made of precious metal, leather ware, photographic equipment, refrigerators, smokers' requisites—one could go through the whole list of articles where there are Purchase Tax reductions. But the bicycle industry, which is in great difficulty, is not being helped at all.

The situation in this industry is similar to what we have discussed as occurring in the cinema industry. Year after year we have said that it must never be the hand of the Government which finally slays any industry by keeping on a tax too long. If cinemas have to close, let it not be said that taxation killed them. The situation in the cycle industry presents an exact parallel with that in the cinema industry. Cycle firms which are going out of existence might have survived for a longer period but for the substantial tax burden. As has been said, the industry is working at only 50 per cent. capacity. All the major producers without exception are working on short time. Not only have a number of their workers been dismissed, and plant and factory space made idle, but those workers who have been retained are on short time, and that is a disastrous situation.

What can we say about the record of this industry? Has it reason to claim the sympathy of Parliament? As was said by my hon. Friend the Member for Ladywood, its export earnings have been between £20 million and £30 million and it has earned about £5 million a year in dollars. Another reason why this industry deserves the sympathy of Parliament is that its success in the American market has contributed to its present difficulties. American sales were built up from practically nil before the war to about 500,000 a year. This resulted in an outcry from American cycle manufacturers, and import quotas were imposed, so that current exports of British-made cycles to the United States have been cut to about 250,000.

There is a clear case for doing for the cycle industry what we have done in the case of cinemas, for reducing the tax because its present high rate presents a danger to the continued survival of the industry. This is not a small industry. There are over 30 firms in Birmingham. About 160 firms make both cycles and components and are active members of their trade association. About the same number of firms are associated with the industry in one form or another. The depression hitting the bicycle manufacturers affects every firm which provides components. The cycle industry has done its whack for Britain and it is time that Parliament rescued it from its difficulties.

Mr. James Harrison (Nottingham, North)

I wish to join in the chorus of pleas to the Chancellor to reduce the tax on the products of the cycle industry and to refer to the position in Nottingham, where we have the great Raleigh works which employs many thousands of workers.

Mr. Gordon Walker (Smethwick)

We had it referred to this afternoon as "Rawleigh".

Mr. J. Harrison

We call it "Raleigh."

I do not wish to repeat the arguments which have already been advanced, but I desire to impress upon the Government the seriousness of the position in Nottingham. The Raleigh Company has spent thousands of pounds in modernising and extending its plant. The contribution of this industry to the export trade is reflected in our improved balance of payments position. Only a few weeks ago the local newspapers headlined the fact that workers at the Raleigh works were going on short time and that many would become redundant. That is a serious position.

I hope that the Chancellor will realise that the position in this industry is so serious that he must reflect carefully before refusing the requests so urgently made to provide a stimulus in the form of a reduction in Purchase Tax on home sales. With a good home market it is possible to substantiate a good export business.

Mr. Arthur Moyle (Oldbury and Halesowen)

I wish to support the Amendment. I happen to be an official of the National Union of Public Employees and I appreciated the plea advanced by the hon. Member for Horsham (Mr. Gough) regarding the necessity for bicycles in the rural areas. The bicycle is an essential means of locomotion for the country road work. There are about 300,000 public employees working in the uplands of Britain and in remote places where there are no bus services. They cannot afford motor cycles and the bicycle is their only means of getting to and from their place of employment. The same applies to the quarry workers, agricultural workers and the staffs at rural railway stations.

My right hon. Friend the Member for Smethwick (Mr. Gordon Walker) who represents a constituency contiguous to my own has a number of cycle factories in his constituency and many of the employees live in my constituency. Therefore, anything which the Chancellor can do to relieve the tax situation will be of great help to a number of my constituents. We have been told by the present Chancellor, and by his predecessors, that Purchase Tax is a revenue raising measure. No one would disagree with that, but the present rate of tax of 30 per cent. constitutes an economic disability on the cycle industry. Here in the last few years we have an example of a declining home market with an improving export trade. I am advised that had it not been for the success of the bicycle industry in the export market, particularly in the U.S.A., things would have gone hard for the British cycle industry.

I know that the right hon. and learned Member for Montgomery (Mr. C. Davies), who is not in the Chamber at the moment, will forgive me for mentioning that the industry has extended its activities in response to Government appeals and has established factories in Wales. At Newtown in Montgomeryshire the Phillips Company has a factory which employs some hundreds of men and women. If this firm closes down, it would mean that Montgomeryshire would be virtually a depressed area. Therefore, the plea for help for this industry is not a sentimental one but is based on solid economic grounds.

Mr. Julius Silverman (Birmingham, Aston)

A few weeks ago I could have said that I had a strong constituency interest in the cycle industry. There is still in my constituency a factory belonging to the Hercules Company which employs about 1,000 people, but within the next few weeks it is to close down. Even if we have a tax concession now, it will not save this factory. In Birmingham there are factories which only a few years ago employed more than 4,000 people and now they are closed down.

That is serious, not only for Birmingham but for the industry of the country. It means that industrial skills are being lost. Craftsmen are looking for other work. If it is possible in future to recapture some of the export markets; if the present decline is due to temporary difficulties such as currency matters, and the industry has an opportunity to expand again, it will be difficult for that to happen because the necessary industrial skills may not be available. This is a matter which must be remedied, otherwise we shall have an industry which is incapable of revival.

6.15 p.m.

I ask the Government to consider this as a very serious matter and to listen to the pleas which have been made from both sides of the Committee. The bicycle, as already pointed out, is a necessity. I think that the Government will concede that, and I do not think that it is one of the first articles that ought to be considered for taxation, especially when this taxation will have such a serious effect upon employment and upon the skills of those engaged in the industry—an effect which may, in the future, be detrimental to the export trade. I think that the case is strong enough for the Government to consider whether they can grant a concession to the industry.

Mr. Gordon Walker

It will not have escaped the attention of the Paymaster-General that every hon. Member who has spoken in this debate—and a good many have spoken on both sides of the Committee—is virtually unanimous in the view that there is a very strong case indeed for a concession on the Purchase Tax on bicycles.

There is no doubt that this is a declining industry. I think that 3½ million bicycles were produced in 1955, and that only 2½ million were produced in 1957. This is an extraordinarily sharp decline in the industry and some of its factories are closing—we have heard examples of that—and other factories are in danger of closing. As the hon. Member for Solihull (Mr. M. Lindsay) said, this decline may be in part due to a change in habit. It is very difficult to analyse why industries decline, and it may be that for various reasons people are not so inclined to use bicycles as they were in the past. Unquestionably, the high level of taxation on bicycles has played a very considerable part in bringing about this decline.

As my hon. Friend the Member for Northfield (Mr. Chapman) said, it is when a factory is in decline that a high tax like this is extremely damaging. My hon. Friend drew a very telling parallel with the cinema industry, which the Government have relieved from tax, on the very ground that what was once a flourishing industry is now in some decline and therefore its decline should not be hastened by the fiscal policy of the Government.

The home market is certainly shrinking. As my hon. Friend the Member for Ladywood (Mr. V. Yates) and my hon. Friend the Member for Stechford (Mr. Roy Jenkins) pointed out, this is a case where a relaxation of tax in order to increase the sales in the home market would really not detract from exports. The industry is working at only 50 per cent. capacity at the moment, a capacity where the unit cost must be beginning to go up unless factories shut down on a very great scale. With an industry working at 50 per cent. capacity, an increase of sales in the home market must help the export drive because an industry such as this must be able to create a substantial home market to form the basis for an export drive.

This is not an argument which I would apply to all cases. I do not think that it applies to all cases, but it seems to me to apply to bicycles. The British bicycle industry is important. It earned last year £24 million in exports, including some £5 million worth of dollars, but the export market has been shrinking. This may be due in part to the fact that a number of foreign countries which used to import our bicycles are now manufacturing their own. It is not a difficult thing to manufacture a simple form of bicycle. The United States tariff went up one-third a few years ago and I understand that there is some Japanese and Czechoslovak competition. It is important, therefore, that this industry should expand and be a means of earning foreign currency for us. It is in considerable difficulties and it should not have those difficulties added to by this very high level of tax.

The bicycle is certainly not a luxury; everyone is agreed on that. We have argued about what is a luxury and what is a necessity. The bicycle is certainly not a luxury. It is a tool of work and something which is primarily used by workers to get to and from work, as well as for pleasure. Bicycles are not only made at Smethwick; they are used there on an enormous scale. I do not know how people in my constituency could get to work if they had to rely on other means of transport, including public transport. At times when the factories open and close and during the dinner break it is almost impossible to get on the roads because of the vast number of people on bicycles moving to and from work. Many industries depend on bicycles for the transport of their workers to and from their homes up to a few miles away.

My hon. Friend the Member for Oldbury and Halesowen (Mr. Moyle) and the hon. Member for Horsham (Mr. Gough) said that this argument applies also to agricultural workers. They very greatly need bicycles to get about and do their work without a great waste of time or a great expenditure of energy. It is interesting that in West Germany there is a provision by which Income Tax rebate can be made to industrial workers who use bicycles and similar machines for getting themselves to and from work. The need for this has been recognised in West Germany and it is a very great encouragement to the manufacturers of bicycles for the home market in West Germany.

I hope that the hon. Member for Kidderminster (Mr. Nabarro) will support us on this. We are proposing that the tax should come down from 30 per cent. to 15 per cent., which is what I might call the "carpet level" of taxation. It is very convenient for the hon. Member, in propounding what he calls the Nabarro plan——

Mr. Nabarro

The Nabarro formula.

Mr. Gordon Walker

—that the percentage of tax which he suggests should be generalised happens to be the tax on carpets and does not cause him any constituency trouble.

Mr. Nabarro

I have not sought to catch your eye, Sir Gordon, during this debate on bicycles because my views on the matter are expressed in the Amendment in page 29, line 45, at the end to insert: 2. The following provisions shall have effect as respects articles comprised in Group 35 (road vehicles):— Road vehicles constructed or adapted solely or mainly for the carriage of passengers or having to the rear of the driver's seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows, shall be chargeable at 15 per cent. Bicycles, bicycle and sidecar combinations and tricycles constructed or adapted solely or mainly for the carriage of passengers, bicycle sidecars (including sidecar bodies without chassis) so constructed or adapted, and bicycle sidecar chassis, shall be chargeable at 15 per cent. Motor units (assembled or unassembled) suitable for fitting to pedal bicycles to equip them with a system of mechanical propulsion, shall be chargeable at 15 per cent. I should not regard it as equitable or reasonable for bicycles to be treated in isolation from the other forms of mechanically propelled road vehicles detailed in my one omnibus Amendment.

Mr. Gordon Walker

The hon. Member is extremely ingenious in finding reasons for not voting for things which he proposes in the House. If he expects people to take this great campaign of his seriously, he must now and then have the courage of his own convictions and vote for something, but over and over again he finds an ingenious way out at the end of the day.

Mr. Nabarro

It is all part of the Nabarro formula.

Mr. Gordon Walker

It certainly is and that is exactly what we object to. I think that some of his hon. Friends also object to it.

The hon. Member for Solihull made a very brilliant speech on this matter. We certainly propose to divide the Committee on it and we hope that the hon. Gentleman who has felt deeply on this matter will consider voting with us. The case which has been put from both sides has been extremely strong and powerful and if we have to divide the Committee we hope to have some support from hon. Members opposite.

The Paymaster-General (Mr. Reginald Maudling)

The subject matter of this Amendment has been very well raised and based on a close study of the bicycle industry. There will be no disagreement in the Committee as to the importance of this industry and the excellent work that it has done, particularly in the export field.

I am bound to say to the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) that when it comes to a question of dividing, this Amendment goes much further than bicycles. The effect of this Amendment would be to include bicycles, motor scooters, motor bicycles, motorcycle combinations and three-wheeled motor cars——

Mr. Gordon Walker

If this is the only difference between us, we should not object to a further Amendment at a later stage which would limit the effect to bicycles.

Mr. Maudling

The right hon. Gentleman must not jump to conclusions. I am pointing out the effects of this Amendment and there is no other Amendment before us. The cost of this concession would be £4½ million, which would be a very large sum indeed.

Mr. Gordon Walker

For bicycles?

Mr. Maudling

That would be the cost of this Amendment. I have not the figure for the cost of bicycles only. I have made inquiries and I am told that it would be very difficult to say how much bicycles alone would amount to, but it would be a very substantial proportion of the total sum. One would have to think a long while before picking out one particular form of transport as compared with other forms with which it may compete, to some extent at any rate, and which I understand have always been treated on the same basis.

I think that two arguments have been put forward solely reflecting on the bicycle industry in support of this Amendment. The first is that the bicycle industry is going through difficult times, and the second is that the bicycle is not a luxury. On the first point, there is no doubt that the bicycle industry is having a difficult time. There can be no question about that. It is a matter which the Government must bear in mind when considering the question of Purchase Tax. Certainly my right hon. Friend is well aware of that and will remain well aware of it. It is not, however, a conclusive argument. It would be wrong for the Committee to accept as a conclusive argument the fact that the industry is facing a time of decline in sales.

Mr. Niall MacDermot (Lewisham, North)

I should be greatly obliged if the right hon. Gentleman could explain where in Group 35 (b) there is any reference to motor units and motor scooters, as he has suggested. So far as I can see, there is reference only to Bicycles, bicycle and sidecar combinations and tricycles constructed or adapted solely or mainly for the carriage of passengers, bicycle sidecars (including sidecar bodies without chassis) so constructed or adapted, and bicycle sidecar chassis. Motor units are in Group 35 (c).

Mr. Maudling

I am advised that what I have said is correct, but I will have another look at it.

I was about to deal with the question of the bicycle industry, which is the substantial matter that has been raised. I think that it would be wrong to accept as a conclusive argument for a reduction of Purchase Tax the fact that an industry is suffering difficult times.

In the case of the cinema industry the argument has been that the cinemas have been bearing a substantial rate of taxation whereas their other competitors have been exempt from tax. I think that is a rather different case to this particular one.

Mr. Gordon Walker

Would not a closer parallel be the cotton textile industry, where the tax has been virtually removed on the ground that it was a declining industry?

Mr. Maudling

The point that I was making is that there is a distinction here. Here is a case where it is proposed that bicycles should be treated on a lower basis of tax than other things that compete with bicycles, such as motor scooters. That, I think, is not a sound analogy. If an industry is passing through difficult times there may be two reasons. There may be a permanent decline or there may be temporary difficulties.

My hon. Friend the Member for Solihull (Mr. M. Lindsay) referred to some of the more permanent features facing the bicycle industry where the demand may be falling and overseas markets becoming more difficult. If the demand for something is declining because of a permanent change in public demand it may be better for the industry as a whole to readapt itself as quickly as possible to that change. I am not saying that that is 100 per cent. doctrine. I am merely saying that it is perhaps unwise to go in the other direction and assume that art industry must always maintain the same level of production as it had in the past.

6.30 p.m.

If, on the other hand, the industry is facing temporary difficulties, I ought to refer to what my right hon. Friend said yesterday. He agreed that Purchase Tax in the aggregate yield, could legitimately be adjusted from time to time, but not frequently, according to whether one wants to stimulate or discourage the purchasing power of the community. That is because we must not allow, even in the aggregate, frequent changes in the total rate. What would not be a good plan would be to vary the individual rates often for any short-term change in circumstances."—[OFFICIAL REPORT, 19th May, 1958; Vol. 588, c. 994.] In so far as there is a temporary decline, that principle is one which we would wish to follow and to apply.

The position in the bicycle trade, according to statistics with which I have been furnished, is slightly different from what hon. Members have suggested. The main decline in the last year or so has been in exports. Production for export fell from 2,364,000 bicycles in 1955 to 1,596,000 in 1957, which is a very big fall. On the other hand, production in the home market, which fell sharply between 1955 and 1956, went up between 1956 and 1957. The figures which I have are that production in the home market was 864,000 in 1956 and 948,000 in 1957. There are signs of a picking up in the figures which I have been given in the home demand for bicycles.

Mr. Roy Jenkins

Can the right hon. Gentleman say whether the improvement has been maintained in the early months of 1958?

Mr. Maudling

I have not the figures for the early months of 1958. I was going on the 1957 figures. It may be that for production in the home market they are less optimistic than the figure which the hon. Gentleman quoted of 1 million, whereas I gave 948,000.

The bicycle industry is facing more difficult conditions overseas, whereas the home market is smaller than it was before the war; but a lot of industries are smaller than they were before the war. On the other hand, the home market for motor cars is larger than it was before. There must be changes in the pattern of demand for the things produced by industry. The case put forward on these grounds by hon. Members opposite is strong, but it is not conclusive.

Mr. Roy Jenkins

Can the right hon. Gentleman give us examples of comparable goods which are paying much heavier rates of taxation in the home market now than they were before the war?

Mr. Maudling

I cannot do so off-hand. This question of a heavy rate of Purchase Tax is a little misleading. The 30 per cent. rate for bicycles is the standard rate to which my right hon. Friend referred yesterday. I agree that 30 per cent. is much higher than 15 per cent. and is much heavier than nil but it is not right to describe it as a heavy rate of taxation. The argument for the Amendment, though strong, is not conclusive, particularly in view of the fact that it would be expensive for the revenue.

Mr. M. Lindsay

Would not my right hon. Friend agree that it is not a question of a short-term decline in the export market?

Mr. Maudling

One would not like to be certain about that. It depends upon commercial policy in some of the countries to which we export. The whole pattern of the export trade in Europe and the Commonwealth may change and extend, I hope, considerably in the next few years though the difficulties are very great. It would be unwise to make any prediction one way or the other.

On the question of luxuries there may be many metaphysical things to be said. Does the fact that a bicycle is often used to get people to work make it sometimes a necessity? On the other hand, it is a thing on which one sometimes enjoys oneself. Does this necessarily make it a luxury? I do not know. Certainly it is not treated as a luxury in our Purchase Tax Schedule. It is not taxed at the high rate of 60 per cent. which motor cars carry. It is taxed at the standard rate, which I should have thought was reasonable for something which is in pretty general use.

It is still very much used as a means of locomotion to get people to work, a fact which should help considerably to sustain the home market for bicycles. Reduction of Purchase Tax on bicycles would represent, I understand, a saving of not more than 10d. per week on a year's payment. That is not a very large disincentive to the buying of bicycles by people who really need them to get to work.

Let me sum up. The Amendment would cost £4½ million, a loss of revenue which could certainly not be accepted by my right hon. Friend the Chancellor of the Exchequer.

Mr. Chapman

I understood that that was the total yield of the taxation. If it is, I would point out that we are only proposing to cut half of it, and that if the Amendment is limited to bicycles the loss will come down to about £1 million.

Mr. Maudling

I said quite clearly that the cost of the Amendment would be £4½ million, and therefore would not be accepted by my right hon. Friend nor is it really what hon. Gentlemen opposite want. They want only bicycles to be exempt, and not the whole range of articles covered by the Amendment.

Mr. V. Yates

The right hon. Gentleman talks of a disincentive to the home market. Can he explain why the number of bicycles produced in the home market was 1½ million less than in 1938? Is not that a serious fall?

Mr. Maudling

The bicycle has become less of a necessity. If the bicycle is necessary to get people to work and if, as I have been informed, the reduction of Purchase Tax proposed in the Amendment means only 10d. a week difference over a year's hire-purchase

payments, the present rate of tax cannot, realistically speaking, be a severe disincentive to the purchase of bicycles.

I must advise the Committee to reject the Amendment, which, as I say, would cost £4½ million and would involve the removal of Purchase Tax from a wide range of articles, to which my right hon. Friend would not agree. Certainly my right hon. Friend will study carefully what has been said about the particular problems and about the bicycle trade, and will keep a close watch upon developments in that industry.

Mr. V. Yates

May we have the information which the hon. Gentleman said he was obtaining upon the coverage of the Amendment?

Mr. Maudling

I am assured that the information which I gave to the Committee about the coverage of the Amendment was correct.

Question put, That those words be there inserted:—

The Committee divided: Ayes 178, Noes 207.

Division No. 132.]	AYES	[6.38 p.m.
Ainsley, J. W.	Diamond, John	Jay, Rt. Hon. D. P. T.
Albu, A. H.	Dodds, N. N.	Jeger, Mrs. Lena (Holbn & St. Pncs, S.)
Allaun, Frank (Salford, E.)	Dugdale, Rt. Hn. John (W. Brmwch)	Jenkins, Roy (Stechford)
Allen, Arthur (Bosworth)	Dye, S.	Jones, J. Idwal (Wrexham)
Allen, Scholefield (Crewe)	Edwards, Rt. Hon. John (Brighouse)	Jones, T. W. (Merioneth)
Bacon, Miss Alice	Edwards, Robert (Bilston)	Kenyon, C.
Bence, C. R. (Dunbartonshire, E.)	Edwards, W. J. (Stepney)	Key, Rt. Hon. C. W.
Benson, Sir George	Evans, Albert (Islington, S. W.)	Lawson, G. M.
Beswick, Frank	Fernyhough, E.	Lee, Frederick (Newton)
Bevan, Rt. Hon. A. (Ebbw Vale)	Fletcher, Eric	Lee, Miss Jennie (Cannock)
Blackburn, F.	Foot, D. M.	Lindgren, G. S.
Boardman, H.	Forman, J. C.	Logan, D. G.
Bonham-Carter, Mark	Fraser, Thomas (Hamilton)	Mabon, Dr. J. Dickson
Bottomley, Rt. Hon. A. G.	Gaitskell, Rt. Hon. H. T. N.	McAlister, Mrs. Mary
Bowden, H. W. (Leicester, S. W.)	George, Lady Megan Lloyd (Car'then)	MacDermot, Niall
Bowen, E. R. (Cardigan)	Gordon Walker, Rt. Hon. P. C.	McGhee, H. G.
Boyd, T. C.	Grenfell, Rt. Hon. D. R.	McGovern, J.
Braddock, Mrs. Elizabeth	Grey, C. F.	McInnes, J.
Brockway, A. F.	Griffiths, David (Rother Valley)	McKay, John (Wallsend)
Broughton, Dr. A. D. D.	Griffiths, Rt Hon. James (Llanelly)	McLeavy, Frank
Brown, Rt. Hon. George (Belper)	Griffiths, William (Exchange)	MacMillan, M. K. (Western Isles)
Brown, Thomas (Ince)	Grimond, J.	MacPherson, Malcolm (Stirling)
Burke, W. A.	Hale, Leslie	Mahon, Simon
Burton, Miss F. E.	Hall, Rt. Hon. Glenvil (Colne Valley)	Mallalieu, E. L. (Brigg)
Butler, Herbert (Hackney, C.)	Hamilton, W. W.	Mann, Mrs. Jean
Butler, Mrs. Joyce (Wood Green)	Hannan, W.	Marquand, Rt. Hon. H. A.
Callaghan, L. J.	Harrison, J. (Nottingham, N.)	Mason, Roy
Carmichael, J.	Hastings, S.	Mayhew, C. P.
Castle, Mrs. B. A.	Hayman, F. H.	Mellish, R. J.
Champion, A. J.	Henderson, Hn. A. (Rwly Regis)	Mitchison, G. R.
Chapman, W. D.	Herbison, Miss M.	Monslow, W.
Clunie, J.	Hewitson, Capt. M.	Moody, A. S.
Coldrick, W.	Holman, P.	Morris, Percy (Swansea, W.)
Collick, P. H. (Birkenhead)	Holmes, Horace	Morrison, Rt. Hn. Herbert (Lewis'm, S.)
Collins, V. J. (Shoreditch & Finsbury)	Hoy, J. H.	Mort, D. L.
Cove, W. G.	Hubbard, T. F.	Moyle, A.
Craddock, George (Bradford, S.)	Hughes, Cledwyn (Anglesey)	Mulley, F. W.
Dalton, Rt. Hon. H.	Hughes, Emrys (S. Ayrshire)	Neal, Harold (Bolsover)
Davies, Ernest (Enfield, E.)	Hunter, A. E.	Oliver, G. H.
Davies, Stephen (Merthyr)	Hynd, J. B. (Attercliffe)	Paget, R. T.
de Freitas, Geoffrey	Irvine, A. J. (Edge Hill)	Paling, Rt. Hon. W. (Dearne Valley)
Delargy, H. J.	Irving, Sydney (Dartford)	Pannell, Charles (Leeds, W.)
Pargiter, G. A.	Ross, William	Tomney, F.
Parker, J.	Royle, C.	Ungoed-Thomas, Sir Lynn
Parkin, B. T.	Shinwell, Rt. Hon. E.	Viant, S. P.
Pearson, A.	Silverman, Julius (Aston)	Wade, D. W.
Pentland, N.	Simmons, C. J. (Brierley Hill)	Weitzman, D.
Popplewell, E.	Slater, Mrs. H. (Stoke, N.)	Wells, William (Walsall, N.)
Price, J. T. (Westhoughton)	Sorensen, R. W.	West, D. G.
Price, Philips (Gloucestershire, W.)	Steele, T.	Wheeldon, W. E.
Probert, A. R.	Stonehouse, John	White, Mrs. Eirene (E. Flint)
Randall, H. E.	Stones, W. (Consett)	Willey, Frederick
Rankin, John	Strachey, Rt. Hon. J.	Williams, David (Neath)
Redhead, E. C.	Stross, Dr. Barnett (Stoke-on-Trent, C.)	Williams, Rt. Hon. T. (Don Valley)
Reeves, J.	Summerskill, Rt. Hon. E.	Willis, Eustace (Edinburgh, E.)
Reid, William	Swingler, S. T.	Wilson, Rt. Hon. Harold (Huyton)
Rhodes, H.	Sylvester, G. O.	Woodburn, Rt. Hon. A.
Roberts, Albert (Normanton)	Taylor, Bernard (Mansfield)	Yates, V. (Ladywood)
Roberts, Goronwy (Caernarvon)	Taylor, John (West Lothian)
Robinson, Kenneth (St. Pancras, N.)	Thomas, George (Cardiff)	TELLERS FOR THE AYES:
Rogers, George (Kensington, N.)	Thornton, E.	Mr. Short and Mr. Deer.
NOES
Agnew, Sir Peter	Gammans, Lady	Longden, Gilbert
Aitken, W. T.	Garner-Evans, E. H.	Low, Rt. Hon. Sir Toby
Allan, R. A. (Paddington, S.)	Glover, D.	McAdden, S. J.
Amory, Rt. Hn. Heathcoat (Tiverton)	Glyn, Col. Richard H.	Macdonald, Sir Peter
Arbuthnot, John	Godber, J. B.	McKibbin, Alan
Armstrong, C. W.	Goodhart, Philip	Mackie, J. H. (Galloway)
Ashton, H.	Gough, C. F. H.	McLaughlin, Mrs. P.
Baldwin, A. E.	Gower, H. R.	Maclay, Rt. Hon. John
Barlow, Sir John	Graham, Sir Fergus	McLean, Neil (Inverness)
Barter, John	Green, A.	MacLeod, John (Ross & Cromarty)
Bell, Philip (Bolton, E.)	Grimston, Hon. John (St. Albans)	Macmillan, Maurice (Halifax)
Bell, Ronald (Bucks, S.)	Grimston, Sir Robert (Westbury)	Macpherson, Niall (Dumfries)
Bevins, J. R. (Toxteth)	Grosvenor, Lt.-Col. R. G.	Maddan, Martin
Biggs-Davison, J. A.	Hall, John (Wycombe)	Maitland, Cdr. J. F. W. (Horncastle)
Bingham, R. M.	Hare, Rt. Hon. J. H.	Marlowe, A. A. H.
Bishop, F. P.	Harris, Frederic (Croydon, N. W.)	Marshall, Douglas
Body, R. F.	Harris, Reader (Heston)	Mathew, R.
Boothby, Sir Robert	Harvey, Sir Arthur Vere (Macclesf'd)	Maudling, Rt. Hon. R.
Boyd-Carpenter, Rt. Hon. J. A.	Harvey, John (Walthamstow, E.)	Mawby, R. L.
Boyle, Sir Edward	Heald, Rt. Hon Sir Lionel	Maydon, Lt.-Comdr. S. L. C.
Braine, B. R.	Heath, Rt. Hon. E. R. G.	Medlicott, Sir Frank
Brooman-White, R. C.	Hesketh, R. F.	Milligan, Rt. Hon. W. R.
Browne, J. Nixon (Craigton)	Hicks-Beach, Maj. W. W.	Morrison, John (Salisbury)
Bryan, P.	Hill, Mrs. E. (Wythenshawe)	Nabarro, G. D. N.
Burden, F. F. A.	Hinchingbrooke, Viscount	Nairn, D. L. S.
Campbell, Sir David	Hobson, John (Warwick & Leam'gt'n)	Neave, Airey
Carr, Robert	Holland-Martin, C. J.	Nicholls, Harmar
Cary, Sir Robert	Hope, Lord John	Nicolson, N. (B'n'm'th, E. & Chr'ch)
Chichester-Clarke, R.	Hornby, R. P.	O'Neill, Hn. Phelim (Co. Antrim, N.)
Clarke, Brig. Terence (Portsmth, W.)	Hornsby-Smith, Miss M. P.	Orr, Capt. L. P. S.
Cooke, Robert	Horobin, Sir Ian	Page, R. G.
Cooper, A. E.	Horsbrugh, Rt. Hon. Dame Florence	Pannell, N. A. (Kirkdale)
Cooper-Key, E. M.	Howard, Gerald (Cambridgeshire)	Partridge, E.
Cordeaux, Lt.-Col. J. K.	Howard, John (Test)	Peel, W. J.
Corfield, Capt. F. V.	Hudson, W. R. A. (Hull, N.)	Peyton, J. W. W.
Craddock, Beresford (Spelthorne)	Hughes-Young, M. H. C.	Pike, Miss Mervyn
Crosthwaite-Eyre, Col. O. E.		Pilkington, Capt. R. A.
Crowder, Petre (Ruislip—Northwood)	Hurd, A. R.	Pitt, Miss E. M.
Cunningham, Knox	Hutchison, Michael Clark (E'b'gh, S.)	Powell, J. Enoch
Currie, G. B. H.	Hutchison, Sir James (Scotstoun)	Price, David (Eastleigh)
Dance, J. C. G.	Hyde, Montgomery	Price, Henry (Lewisham, W.)
Davidson, Viscountess	Hylton-Foster, Rt. Hon. Sir Harry	Prior-Palmer, Brig. O. L.
D'Avigdor-Goldsmid, Sir Henry	Irvine, Bryant Godman (Rye)	Ramsden, J. E.
Deedes, W. F.	Jenkins, Robert (Dulwich)	Redmayne, M.
Digby, Simon Wingfield	Jennings, Sir Roland (Hallam)	Renton, D. L. M.
Donaldson, Cmdr. C. E. McA.	Johnson, Sir Donald (Carlisle)	Ridsdale, J. E.
Doughty, C. J. A.	Johnson, Eric (Blackley)	Roper, Sir Harold
du Cann, E. D. L.	Jones, Rt. Hon. Aubrey (Hall Green)	Ropner, Col. Sir Leonard
Dugdale, R. Hn. Sir T. (Richmond)	Joseph, Sir Keith	Russell, R. S.
Duncan, Sir James	Kaberry, D.	Scott-Miller, Cmdr. R.
Eden, J. B. (Bournemouth, West)	Kerr, Sir Hamilton	Sharples, R. C.
Elliott, R. W. (Ne'castle upon Tyne, N.)	Kershaw, J. A.	Shepherd, William
Emmet, Hon. Mrs. Evelyn	Kimball, M.	Simon, J. E. S. (Middlesbrough, W.)
Errington, Sir Eric	Kirk, P. M.	Smithers, Peter (Winchester)
Erroll, F. J.	Lancaster, Col. C. G.	Spearman, Sir Alexander
Fell, A.	Leather, E. H. C.	Spear, R. M.
Finlay, Graeme	Leburn, W. G.	Stanley, Capt. Hon. Richard
Fort, R.	Legge-Bourke, Maj. E. A. H.	Stevens, Geoffrey
Fraser, Hon. Hugh (Stone)	Lindsay, Hon. James (Devon, N.)	Steward, Harold (Stockport, S.)
Fraser, Sir Ian (M'cmbe & Lonsdale)	Lindsay, Martin (Solihull)	Steward, Sir William (Woolwich, W.)
Freeth, Denzil	Linstead, Sir H. N.	Storey, S.
Galbraith, Hon. T. G. D.	Lloyd, Rt. Hon. Selwyn (Wirral)	Stuart, Rt. Hon. James (Moray)

Studholme, Sir Henry	Turton, Rt. Hon. R. H.	Whitelaw, W. S. I.
Sumner, W. D. M. (Orpington)	Tweedsmuir, Lady	Williams, R. Dudley (Exeter)
Taylor, Sir Charles (Eastbourne)	Vickers, Miss Joan	Wills, G. (Bridgwater)
Temple, John M.	Wakefield, Edward (Derbyshire, W.)	Wilson, Geoffrey (Truro)
Thomas, Leslie (Canterbury)	Wall, Patrick	Woollam, John Victor
Thompson, Kenneth (Walton)	Ward, Rt. Hon. G. R. (Worcester)	Yates, William (The Wrekin)
Thorneycroft, Rt. Hon. P.	Ward, Dame Irene (Tynemouth)
Thornton-Kemsley, Sir Colin	Webbe, Sir H.	TELLERS FOR THE NOES:
		Mr. Legh and Mr. Gibson-Watt.

Mr. Ernest Davies (Enfield, East)

I beg to move, in page 29, line 16, after "etc.)", to insert: Group 35 (d) (road vehicle chassis, mechanically propelled)". The effect of this Amendment would be to reduce Purchase Tax on commercial vehicle chassis from 30 per cent. to 15 per cent. In effect, it applies only to goods vehicles because all other vehicles are either taxed separately or exempt. Buses and coaches are exempt and in this class there remains out of the exemption only a goods vehicle.

It is, in our view, undesirable that this tax should remain on the commercial vehicle chassis, because it is a direct tax, either on production when the vehicle is used for transport and production purposes, or on distribution. On vehicles used by industry in the process of production by moving raw materials and semi-finished goods from factory to factory, the effect is to put up the cost on to production. That is because the capital investment involved has to be written off rather rapidly because depreciation is very heavy in the case of goods vehicles.

When they are used for distribution, which is the purpose of most of these vehicles, the cost of distribution is increased and that is most undesirable. The Purchase Tax on this item is practically the only one which is a direct tax on capital investment, because the vehicles must be considered as part of the capital investment of the firm employing them. It is true that some of this transport may be non-essential, particularly in the case of the ancillary user where, on occasion, public transport vehicles could be used instead, but, as the tax falls equally on essential and non-essential transport, it is unfair to maintain it as a disincentive, as it were, to the use of goods vehicles.

When the tax was first imposed, in 1950, the main reason given by the Chancellor for justifying it was that it would discourage excessive capital investment in the production of commercial vehicles. The second reason was that more of these vehicles would be exported if the tax were imposed. I contend that neither of those reasons stands today. Maintenance of the tax cannot be justified on those grounds. Production has gone up steadily over the years and much of this transport is essential. It is a modern development of road transport and will continue to develop whether the tax is imposed or not. Since the tax was imposed, the number of vehicles on the roads has gone up by half, from 840,000 to 1¼ million.

Also, the purpose was to encourage exports, but today the export market in these commercial vehicles has declined. It was a perfectly sound reason to impose the tax when it was desirable to encourage exports and to discourage production for the home market in a sellers' market, but that reason no longer stands now that there is a buyers' market. So far as it is possible to judge, there is not full production today in output of commercial vehicles.

The actual figures show that the tax encouraged exports in the early days when the industry was in full production and there was a sellers' market. From 1949 exports rose from 48 per cent. of the total production in the first year the tax was introduced, to 62 per cent. and remained at that figure until 1951. From then on the proportion of exported goods vehicles to total production has declined steadily and is now down to 42½ per cent., which is less than it was when the tax was imposed. So that reason for the tax no longer holds good.

So far as I understand, it was never intended when first imposed that this should be a permanent tax. In fact, my right hon. Friend the Member for Battersea, North (Mr. Jay), then Financial Secretary to the Treasury, said, on 15th June, 1950: of all sections of that programme… He was speaking of the investment programme— the excess investment in commercial vehicles is the one which, though, no doubt desirable in itself, can more easily be spared for the time being than anything else…this tax is not intended to be permanent. That made it quite clear at the time that it was considered desirable to have the tax for the purpose given, but that when that situation no longer held good the tax could be removed.

At that time hon. Members opposite strongly opposed the imposition of the tax. This is what one then Opposition right hon. Member said: It is a vicious and vindictive tax which is calculated to hit at the small man particularly…. It is a tax on capital goods. We say that a tax on capital goods in this country at the present time is thoroughly evil."—[OFFICIAL REPORT, 15th June, 1950; Vol. 476, c. 572, 578, 581.] The right hon. Member who said that was no other than the former Chancellor of the Exchequer, the right hon. Member for Monmouth (Mr. P. Thorneycroft).

For these reasons we put forward this Amendment to halve the tax, not to abolish it completely, because we want to act responsibly in this matter. The cost would not be excessive, so far as one can judge from figures given in answer to a Question asked by the hon. Member for Kidderminster (Mr. Nabarro) of the Financial Secretary on 5th May. Total Purchase Tax received in 1957–58 was £14.2 million, but, as there is a countervailing charge to the Inland Revenue in respect of initial allowances and depreciation on a large amount of this investment, the net amount received was only £10.9 million. The net cost of halving the tax would be in the neighbourhood of £5½ million, which is not a very great encroachment on the base to which the Chancellor would object being undertaken at this time.

For those reasons we think it undesirable that this tax on capital goods, which in effect it is, should continue. In view of the situation in the industry, and the desirability of assisting it to lower cost of production and distribution, it is desirable to reduce it.

Mr. Nabarro

It will not have escaped attention that there is a comparable Amendment on the Notice Paper in the names of my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke), my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) and my hon. Friend the Member for Barry (Mr. Gower), all of whom desire, with me, to see the total abolition of Purchase Tax on commercial goods vehicle chassis. The Amendment is in page 29, line 45, at the end to insert: 2. The following provisions shall have effect as respects articles comprised in Group 35:— Road vehicle chassis, mechanically propelled, shall be exempt from tax. I understand that that Amendment has not been selected. Therefore, I should be out of order in pursuing the question of total abolition, but, as the hon. Member for Enfield, East (Mr. Ernest Davies) has said shortly and very cogently, there is a powerful case for going half way to the point my hon. Friends and I seek to see achieved, by reducing to only 15 per cent. Purchase Tax on commercial vehicle chassis.

Any hon. Member, on either side of the Committee, who seeks a unilateral relief from Purchase Tax for a particular article always believes that there are special reasons why that commodity should have special consideration. This case, I claim, is absolutely unique. Not only is this item, the commercial goods vehicle chassis, the only item of industrial production capital equipment which attracts Purchase Tax—I stress the only one, but, also—the hon. Member lightly touched on this—it is the only item of industrial equipment subject to the Purchase Tax which attracts, on a generous scale, an annual depreciation allowance.

I want to go a great deal further than the hon. Member, as we are discussing taxation matters, and emphasise that in the case of commercial vehicle chassis the rate of annual depreciation is 25 per cent. per annum on the reducing balance. In addition, there is an initial allowance of 20 per cent. on the chassis. It means that in the first year of use a total of 45 per cent. of the capital cost is chargeable for Income Tax at the standard rate. That sum of money is, therefore, available, in effect, as a refund to the purchaser and owner of the vehicle.

As the cost of the vehicle is accepted by the Inland Revenue as being the aggregation of the basis cost plus the addition of 30 per cent. Purchase Tax, it follows that the whole of the 45 per cent., to which I referred, applies equally to the amount of the Purchase Tax paid, being 30 per cent. of the wholesale value of the commercial vehicle, as also to the basis price, excluding Purchase Tax.

7.0 p.m.

In matters of industrial depreciation, it is true to say that the aggregation of the annual depreciation allowance granted during the length of life of the asset and the obsolescence allowance granted when the asset is finally scrapped, equate themselves to the historic capital cost of the article. It follows that the amount of Purchase Tax which is paid by a buyer of one of these articles, namely, a chassis, gives what is in effect, an interest-free loan to the Treasury over a period of five years. In that five years, if the vehicle lasts so long—it may last less than five years, and generally does—in that five years the Treasury pay back to the owner of the vehicle the whole of the Purchase Tax which he had initially raid on the chassis.

I say, therefore, that this is a unique state of affairs, because it cannot be argued that it applies elsewhere. Also, it is a means of extracting money from businesses which should be employed as capital resources and sinews for the expansion of production. In 1950, when it was introduced, the whole of my right hon. and hon. Friends and myself voted en masse against the proposition, but we were defeated by 295 votes to 285. The vote was on 15th June, 1950.

As I do not wish to detain the Committee for any length of time on this Amendment, I need only refer to the speech which I was privileged to make on the Motion for the Adjournment on 1st July, 1957, when I set out in close detail all the arguments that then obtained, and still obtain, for doing away with this particular application of Purchase Tax.

It was my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) who, in the course of the leading speech from the Opposition Front Bench on the matter of this particular form of Purchase Tax on 15th June, 1950, coined the phrase that it would be just about as sensible to tax a railway locomotive or a freighter aircraft as it is to tax commercial vehicle chassis, because all these items are essential pieces of industrial transportation equipment of a capital character. I think it has been common ground between both parties in the House that it is undesirable either to place Purchase Tax on tools of trade or to seek to extend Purchase Tax to items of industrial capital equipment.

The right hon. Member for Brighouse and Spenborough (Mr. J. Edwards) will have observed from my earlier speeches on the subject of Purchase Tax, and my advocacy for a uniform non-discriminatory rate of tax, that I have always been careful to exclude items of capital equipment for industry. In such cases they cannot be considered against the same general background as items of consumer goods. All that happens if we charge Purchase Tax on vehicle chassis is that the money is paid back to the buyer by the Treasury over a period of a few years, in the form of initial, depreciation and obsolescence allowances.

I may add that my efforts in the matter of the removal of Purchase Tax from commercial vehicle chassis have now gone on for four years. I have made many speeches on this topic, and I have had the full support of the British Road Federation, the Society of Motor Manufacturers and Traders, the Federation of British Industries, the National Union of Manufacturers, and practically everybody in the country who is concerned with industrial production.

It would not be true to say, in my view, as the hon. Member for Enfield, East said a few moments ago, that the granting of the concession called for in this Amendment would cost the Treasury approximately £5 million per annum. I do not believe that it would cost the Treasury anything like that sum. If one takes into account the effect of the annual depreciation allowances at 25 per cent. on the reducing balance, added to the initial allowance of 20 per cent., it represents in the aggregate—for we have on the roads more than 1¼ million vehicles, of which 1,075,000 are C-licence vehicles—such a massive return to the buyer in the form of initial and depreciation allowances as almost to equate itself to the notional cost of granting this concession.

If my right hon. and learned Friend who is replying to the debate has any doubts on this point, I would recommend that he should read my Question on 15th May, which was designed to bring out information for the use of hon. Members in this debate. I quote from the OFFICIAL REPORT of that date, from the Written Answers, when I asked the Chancellor of the Exchequer if he will give approximate figures showing the net yield to the Exchequer of Purchase Tax on commercial vehicle chassis for each of the past five years, after allowing for the loss of direct taxes owing to initial and annual depreciation allowances on commercial vehicles. That is not the Parliamentary Question to which the hon. Member for Enfield, East referred. The Question I have quoted is much more precise. I put this second Question because I was not fully satisfied with the Answer given to my first Question. I did not regard it as relating the picture as accurately as I wanted to see it related. In reply, the Financial Secretary said: I regret that the information is not available."—[OFFICIAL REPORT, 15th May, 1958; Vol. 588, c. 43.] I think it ought to be available. There are 1,075,000 C-licensed vehicles on our roads today. The hon. Member opposite may be quite right in saying that many of them are small vans distributing goods in towns and in the countryside, but approximately half a million of them are long-distance vehicles, and they are capital equipment of industry.

I claim that the cost of the concession which I am advocating—I wish that I could advocate the reduction of the tax to nothing, but I am compelled by the rules of order to request a reduction of 15 per cent.—would be fully offset by the sums of money the Treasury would itself save year by year, in respect of depreciation allowances and initial allowances.

That is a unique and valid argument. I do not claim any special credit for it. The argument has been put to me very cogently by members of the chartered accountancy profession—who have proved to me arithmetically that it applied over a period of years—but it has not previously been voiced in this House as a major contributory factor in the desire to see this tax, which was imposed in June, 1950, swept away.

I shall be in a somewhat difficult and delicate position when the vote is taken on this matter. I do not desire to go into the Lobby with members of the Opposition. My purpose in putting down the Amendment was to ask my right hon. Friend the Chancellor again to review the rate of Purchase Tax having regard to the depreciation and initial allowances, and to endeavour to give me some satisfaction on the Report stage. The Treasury readily admit that they have not got the figures available to prove my case or otherwise, and they should between now and Report get these figures.

I believe, and the people in the accountancy profession who have been advising me also believe, that the cost of the concession, in the light of what I have said, would be practically nothing, for the total of the initial allowances and the annual depreciation allowances at 25 per cent. per annum would certainly equate themselves to any notional loss in respect of the Purchase Tax concession.

On all these grounds, I wish to support what has been said by the hon. Member for Enfield, East, and I hope that the Chancellor will be able to give me a crumb of comfort when he replies to this important debate.

Mr. Chapman

Before I come to what I have to say on the Amendment, without any disrespect to the learned Solicitor-General, I want to make a strong protest that we have no senior Minister from the Treasury to listen to this case. I do not make this protest in any party sense. I make it because those of us who are associated with the motor car industry and from time to time speak on it in this House, know that one of the grumbles of the industry is that it has had inadequate contact with the Treasury.

I know very well that there are various committees of one kind and another, but one of the grumbles of the industry has always been that the Treasury has never made an adequate study of the motor car industry, has never tried to appreciate its day-to-day problems, and that, in questions of Purchase Tax, as I have discovered by direct inquiry, they are never consulted about possible changes. It is too bad on an occasion like this, when the affairs of this industry are being debated, that there is no Treasury Minister present on the Government Front Bench.

This is an important matter for the further reason that this is an industry which is earning some £500 million in our exports. It is not very much of a compliment when we are debating the industry that neither the Chancellor of the Exchequer, the Financial Secretary to the Treasury nor the Paymaster-General, who have responsibilities in these fields, are on the Front Bench; but this is what we get, and I take a very poor view about it and hope that something can be done to remedy it before we come to the end of this short debate. [Laughter.] I see that hon. Gentlemen opposite are laughing, but I say this in no party spirit. This has been the trouble with the motor car industry from time immemorial, that inadequate attention has been given to it in the Treasury. The Treasury accepts very thankfully and with occasional words of praise the industry's magnificent export record, and this is all we get in return.

This is a notorious example of the way in which a tax once put on, however irrationally, cannot be got rid of. We have had it time and time again throughout the history of taxation in this country, and no matter how slender the original justification for its imposition may have been, we have to spend many years trying to get it off, even if the circumstances have changed. I think it is true today that there is no tax which is less defensible than this one.

I am not going to rehearse all the points that have been put by the two hon. Members who have preceded me. It is absolutely true, as my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) said, that it was never intended to be permanent. It is absolutely true that it was imposed in 1950 primarily in order to decrease the investment in the motor car industry at that time—that was the justification given by my right hon. Friend the Member for Battersea, North (Mr. Jay)—and, partly, to relieve the demands made by the metal-using industries in the rearmament drive of that period. It was part of that difficult situation, but now, when all those grounds have gone, we still have this tax. It is true, as both my hon. Friends and the hon. Gentleman opposite have said, that nearly all this is a direct tax on capital equipment. I do not want to plead my own special case concerning the equipment of the hotel industry——

Mr. Nabarro

The hon. Gentleman will appreciate that I dealt with industrial production capital equipment. I am sure that the hon. Gentleman would not pretend that the hotel business is industrial in character.

Mr. Chapman

No, I am not making any point about that. I am only saying that we must not go too far in this matter.

It is certainly true that it is a direct contributor to higher cost of living when it is such a direct imposition on the movement of goods throughout the country. It is also true that the figures of the last few years do not prove that the tax has in any way really heavily or substantially stimulated exports. Exports have been running at 100,000 to 150,000 vehicles per annum, and have ebbed and flowed with the fortunes of the motor car exporting industry generally. I do not think that the tax on commercial vehicles has had a direct or a substantially direct relationship to the number exported, but the fact that they have done so well is a credit to an industry which has been earning about £60 million to £100 million annually by way of exports.

7.15 p.m.

Having said that the case for the tax is quite indefensible, having supported all that has been said by the two hon. Gentlemen, I think that it might be helpful if I were just to try to consider what I think is in the mind of the Government. It is right that we should seek to be as responsible as possible and try to see what may be some of the difficulties in the way of relaxing this tax.

One of the first difficulties that has to be put in the scales against the arguments of speakers against the tax, including myself, is that if we leave a very great gap between the price of the small, light commercial vehicle and its opposite number among the smaller private cars we may be artificially channelling purchases into the commercial vehicle sector. We may be stimulating it, quite wrongly, in that way. This is undoubtedly a danger because of the following facts and figures.

The present retail price of a 5 cwt. commercial vehicle is probably of the order of £400 or £450. To buy its nearest equivalent in the passenger-carrying range will cost at least £500, and probably more than £550. On the other hand, the people buying these vehicles know that with the growth of our big motor car firms we have now reached the stage where the engines used in the small passenger cars and in light vans of the same manufacturer are probably identical. They therefore know that they are buying roughly the same thing, but at a considerable saving if they buy the small commercial vehicle.

When we inquire whether this is, in fact, taking place, I must say that the figures support the right hon. Gentleman's worries. It is true that in any normal quarter nowadays over half of the new registrations of vehicles are in this range of commercial vehicles of under one ton. I do not know how many of them are actually of the 5 cwt. type, where they would be so interchangeable with cars, but I suspect that it is a very large proportion indeed of the total.

Not only that, but we can appreciate the situation from the point of view of the small farmer or the small business man. He will say, rightly in my view, "I can save £100, £150 or even £200 if I just stick to the small 5 cwt. van. It is almost equally useful to me for pleasure. I can take the family away for the day in a small van. The wife can go shopping on market day. When the small business is closed, we can run about in a small van almost as though we were running about in a small car." I can see all that trouble ahead of the Government, and I can understand their fears on this issue.

I would add further that if this House, as I think would be the sensible thing to do, went further and abolished the speed restriction on these small trade vans outside built-up areas—because even outside the built-up area small vans are still limited by the Road Traffic Act to 30 miles an hour—then, indeed, we would have a situation in which we would be likely to see more and more use made of these vehicles, instead of the people concerned buying small passenger motor cars.

I can therefore see the right hon. Gentleman's fear that if to these present problems we add the fact that we might, by reducing the tax on a small commercial vehicle by £30 or £50, increase the differential still further, we would artificially stimulate the market for these vehicles as against their nearest equivalent in small passenger cars.

I put the Government case strongly, because I think that it is right that we should all be responsible on this matter. I concede that there is great force in that argument. I would only say to the right hon. Gentleman, to counterbalance what I have been saying, that we have at least to make a start. I do not mind the fact that we cannot, perhaps, reduce it enormously in the first go. I do not mind particularly, if I may be frank, if he just gives the assurance that we are to get some substantial, significant, reduction of tax in the whole range of motor cars next year, or the year after, but I do say that we must begin to get this matter right.

The arguments with which I started off are still true—that it is capital equipment that is being taxed; the effect on the cost of living, and the fact that it has not substantially affected exports. All those things are still true, and we have to make some compromise between the two points of view, and we must begin to reduce the tax on these vehicles.

I plead, and I shall plead again—and ask the Government to be good enough to give a direct answer—that we should have some proper consultation with the industry about the whole incidence of this taxation. It has really got into a disgraceful muddle now. It is wrong that this tax should be retained largely for revenue purposes long after its justification has disappeared. We should have an assurance that, in the months to come, the Treasury will be willing—as it has done in the case of the cinemas, for instance, in previous years—to argue at top level all the industry's complexities. I should be very happy if we could get that assurance.

Another thing that might influence the mind of the right hon. Gentleman is the danger that if the tax is reduced home sales will increase at the expense of exports, and that the industry might again begin to put less energy into its export drive. I have expressed at other times these fears about the attitude of the motor-car industry, but all that I have seen in the last few years—and I will pay the industry this tribute—leads me to believe that it has learned the lesson of 1955 and 1956.

That was a time when an artificial atmosphere was created by the then Chancellor of the Exchequer. the present Lord Privy Seal; when it was thought that all our economic problems were solved; when we had the Election Budget, and when everything was to be so easy. It was then that, like other industries, the motor-car industry was not on its mettle in the export drive. It was accepting a great deal of the false optimism that was propagated by the Lord Privy Seal. Since then, as I say, I think that it has largely learned its lesson.

The motor industry has done so much to improve its competitive position overseas; it has so improved its after-sales service and spares service; it has so wormed its way into markets all over the world and has spent so much money on expanding its overseas service that I think it has gained a new momentum that would not easily sag if it got this increased possibility of sales on the home market.

I, for one, do not feel that this danger is now so prevalent that there would be a reduction in export sales if the tax were reduced for home sales. The point is that if the average tax today of £100 on a commercial vehicle were halved, there would be an increase in home sales, but I think the industry would be able to expand its production to take care of that without eating into its export drive.

When I come to the final point on that issue, I return to what I was saying on the previous one, namely, that in all this the crucial thing is to consult the industry. If the Government were to get the industry round the table and say, "We are moving into a period when we must in all fairness begin to reduce the tax on articles like commercial vehicles. We want your assurance that you will go ahead as well as ever with the export drive", I believe the industry would give that assurance and respond the more for being consulted.

My final plea is that the industry, which has an export record totalling about £500 million a year, requires more consultation with the Treasury and a closer study by the Treasury of its taxation problems. Above all, it needs to feel that the Government realise that the arguments that we have been putting forward today are valid and that some day some of them must be met. I do not know how far the right hon. and learned Gentleman can go today, but if he can begin to give an assurance that the whole taxation field affecting motor cars will be rationalised, I, for one, although I do not secure a reduction in tax, shall be very thankful indeed that the Treasury is beginning to deal with the subject with some energy.

The Solicitor-General (Sir Harry Hylton-Foster)

I well understand that hon. Members dislike to have a mere lawyer answering a point of this kind. The hon. Member for Birmingham, Northfield (Mr. Chapman) has made his protest in very courteous terms. Though Treasury Ministers may be hard-hearted, they have other physical needs, and it is true that for some time they were absent from the Chamber. However, I am confident that I can give the Committee the assurance, if it needs it, that every word uttered in their absence will be studied by them and that no point will be missed through their physical absence from the Chamber while a speech was being delivered.

To answer the hon. Member for Northfield—I have taken the opportunity to seek Treasury support for what I say—if the industry desired to make representations inviting consultation on any point, my right hon. and learned Friend and the other Treasury Ministers would be very delighted to meet representatives of the industry, subject always to the fact that it is, of course, impossible, by reason of normal principles of Budget secrecy, to discuss even with this industry matters such as Purchase Tax or changes in Purchase Tax before the Budget.

If I give a short answer in respect of the Amendment, I hope that hon. Members will not think for a moment that I am doing anything but treating it with the utmost seriousness. Hon. Members will, I know, recognise that the arguments which have been advanced today have frequently been advanced previously. My hon. Friend the Member for Kidderminster (Mr. Nabarro) said that he had made many speeches on the subject. I assure him that he has done so, and that I have read them. I have, indeed, read what my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) said in 1950, and I read it repeated in my hon. Friend's speech in July, 1957, and I have heard it again today.

I dare say that it is certainly true, as the right hon. Member for Battersea, North (Mr. Jay) has said, that this tax was imposed as a temporary tax. Taxes have a way of getting imposed as temporary taxes, but, unhappily, they acquire certain permanent characteristics, and I regret to say that those characteristics are, in connection with this Budget, essentially important.

7.30 p.m.

The actual cost of the Amendment in terms of Purchase Tax would be £7½ million, and it really could not be accepted. Since my right hon. Friend has gone as far as he can in reorganising the Purchase Tax this year with his concession of £41 million for the whole year, he could scarcely be expected to accept a loss of that kind. My hon. Friend the Member for Kidderminster says——

Mr. Ernest Davies

Both the hon. Member for Kidderminster (Mr. Nabarro) and I pointed out that that is the gross cost of the relief of taxation by reason of halving it, but the Treasury gets back a large proportion of that figure in many other ways.

The Solicitor-General

I was coming to that point. The hon. Member, and, in a rather more sweeping form, my hon. Friend the Member for Kidderminster, raised the question of the balancing recovery by reason of reductions of claims on direct taxation. I do not propose to take on my hon. Friend and his chartered accountant supporters on the "technics" of the matter for the moment, but I would commend to him the view that it is extremely difficult to forecast with any precision what the effect of this kind of reduction would be in loss to the Revenue or, as he would put it, total absence of loss to the Revenue, because it all depends on what the effect will be on sales of the reduction in the tax.

If the commercial user, for instance, will be so encouraged by a reduction in the tax that he will buy more vehicles or renew his fleets at shorter intervals to such an extent as to result in the total expenditure on commercial vehicles remaining the same, then it would seem that the Exchequer must suffer loss of Purchase Tax, anyhow on my present view if that be the result of the reduction in tax, because the claims against direct taxation would remain the same in those circumstances.

Mr. John Edwards (Brighouse and Spenborough)

Is the right hon. and learned Gentleman assuming in the figure which he has given us that the production of chassis will remain unchanged and that all other things will remain equal, or has he made some calculation or assumption of the expansion in sales which would follow a reduction in tax?

The Solicitor-General

No, Sir. I was discussing, in connection with my hon. Friend's argument about allowances, the possible consequences of an expansion in sales which would follow a reduction in tax. I am submitting that if the effect of the reduction in tax were to increase sales up to a point where the total expenditure on commercial vehicles came to the same figure as it did previously despite the reduction in tax, it would seem that the Exchequer must, on any view, lose the whole reduction in Purchase Tax, even after allowance is made for the claims against direct taxation.

On the other hand, if the reduction in Purchase Tax did not have that effect and commercial users went on buying the same number of vehicles, I suppose the loss would be a net figure resulting from the loss of Purchase Tax, on the one hand, and the reduced amount of the claims against direct taxation, on the other. But it is not easy—this is the view which I present to the Committee—to see from a Revenue point of view exactly what the consequences of the reduction would be.

Mr. Jay

The right hon. and learned Gentleman will not doubt agree that the Chancellor's own forecast is that after all these reductions the total yield of Purchase Tax alone will be only £4 million less this year than last year.

The Solicitor-General

I do not follow how the right hon. Gentleman fits that on to my efforts to persuade my hon. Friend that he and his accountants had better look at that aspect of the situation before they deduce that no loss would result to the Revenue, which was the point as I saw it.

Mr. J. Edwards

If the right hon. and learned Gentleman could give us just one figure, I think we could begin to be more intelligent about this. Will he tell us what his or the Treasury's estimate for this purpose is of the production of commercial chassis in this financial year, and also the sales, if he has the figure? There must be some figure; otherwise, none of these calculations could have been made. If the right hon. and learned Gentleman can tell us that, I think that the hon. Member for Kidderminster and I and my hon. Friends would see the matter more clearly.

The Solicitor-General

I cannot give the right hon. Gentleman the figure offhand. I will endeavour to get it before I sit down.

The point which the hon. Member for Northfield was raising about competition between these commercial vehicles and equivalent small cars is a very sound one. I do not wish to put too much upon it, but, making a comparison of purchase prices, I find, for instance, that with the Austin A35 saloon and its equivalent van the difference in price, including Purchase Tax, is that the car is £569-odd and the van is £422-odd. So there is a very real danger there we should have to take note of.

Words are given us for numbers of purposes, one, I suppose, to convey ideas, the other to conceal thoughts, but whatever I were to say to the Committee about this I could not disguise the unpalatable fact that the hard and firm answer, on behalf of my right hon. Friend, must be that in this year he could not accept the loss involved in this Amendment.

Mr. J. Edwards

I should be the last person to want to criticise on the ground that the answer which had been given had been given by a lawyer. I should, however, wish to criticise on the ground of what was said or was not said; rather than on any ground of who said it. I must say outright that I think that the right hon. and learned Gentleman's reply tonight is wholly unsatisfactory and completely inadequate.

Mr. Chapman

Barren.

Mr. Edwards

What did the right hon. and learned Gentleman say? He said at the beginning, and I was glad to hear him say it, that of course the Treasury would be glad to receive representations from the industry at any time. He then quoted my right hon. Friend the Member for Battersea, North (Mr. Jay) speaking in 1950, when he said that the tax was not intended to be permanent. The right hon. and learned Gentleman then said that there are always special reasons why these things which are temporary become in a sense permanent.

However, there were special reasons in 1950, very compelling special reasons, completely in line with what I ventured to say to the Committee yesterday, if I may be permitted to draw attention to that. Sir Stafford Cripps and his colleagues then Members of the Government—I was not myself then involved, the vicissitudes of politics having kept me out of the Chamber a short time—took the view that they really had to do two things. First they had to cut down the total volume of investment, and secondly they had to promote exports in every way they could. The fact remains that the total of exports of commercial chassis which had been 107,000 in 1949 rose to 165,000 in 1950 and went to 162,000 the following year. I do not say there was just a simple relationship between Purchase Tax and exports, but what I claim is that the Chancellor then used this method among others to step up the volume of exports and to contract the volume of home investment.

Having explained that, I come back to the reply we have just been given. The reply rests upon one point only, the loss to the Revenue if this tax were reduced. I asked the right hon. and learned Gentleman if he could give us in more detail the basis on which he had reached this figure of £7½ million. He apparently was not able to do so, but there is some doubt, to put it no higher, that this £7½ million may not be exactly the figure. It may be a calculation made on certain assumptions, and one could make other assumptions in different circumstances. In an overall Budget of this kind, where Purchase Tax is accounting for some £500 million, in circumstances also in which the Government have felt able to reduce tax on luxury items quite considerably, there really ought not to be this great difficulty in finding even this £7½ million.

A quotation has already been made from what the right hon. Gentleman the Member for Monmouth (Mr. P. Thorneycroft) said when the matter was discussed in 1950. My hon. Friend the Member for Enfield, East (Mr. Ernest Davies) quoted part of what the right hon. Gentleman said. I quote again one or two of the words: We say that a tax on capital goods in this country at the present time is thoroughly evil."—[OFFICIAL REPORT, 15th June, 1950; Vol. 476, c. 572.] I emphasise the words "at the present time." If that view could be held at all in 1950 I do not for the life of me see how anybody speaking for the Government can say that at this present time this tax is justified.

For all these reasons I find the reply given us unsatisfactory in every way. I cannot see any ground, other than the ground of the £7½ million which has been advocated, for resistance to this Amendment. This must, I think, give very little comfort either to the industry or the people who work in the industry. The arguments which have been put forward moderately and cogently by my hon. Friends and by the hon. Member for Kidderminster (Mr. Nabarro) have not been met at all. The right hon. and learned Gentleman made no attempt to answer the arguments put forward. He rested solely upon this simple point of the £7½ million. For all these reasons, I shall advise my hon. Friends to divide the Committee.

Mr. Nabarro

Before the Division, and as the Chancellor has now returned to the Chamber, may I please make a final plea to him in this matter? In his absence I said that this was an absolutely unique case. Everybody claims, when seeking a Purchase Tax concession, that there is something unique about the case he is pleading, but this one is unique, because I just do not believe that there would be any loss to the Treasury in conceding this Amendment.

I made a mistake in my speech. [HON. MEMBERS: "Oh."] Yes, I made a mistake, because when I said to my right hon. Friend that the initial allowance was 20 per cent. and depreciation allowance was 25 per cent. I ought to have said to him that under this Budget the initial allowance on commercial vehicle chassis is being put up to 25 per cent. Therefore—I want to emphasise this—if a person buys a chassis in the very first year he gets 25 per cent. initial allowance plus 25 per cent. depreciation allowance, and so 50 per cent. goes against Income Tax in the first year, and the reducing balance, the remaining 50 per cent., is thus disposed of at the rate of 25 per cent per annum.

My right hon. Friend cannot give me figures, so he cannot controvert my argument tonight, and so I should be grateful, and I am sure most of my hon. Friends would be as well, if between now and Report my right hon. Friend would get these figures, because they must be obtainable from the Inland Revenue. On Report I propose in slightly varied form to put down another Amendment on this topic. One could easily seek an Amendment to the initial allowance Clause.

Mr. Frederick Willey (Sunderland, North)

The hon. Gentleman could divide now with the Opposition.

Mr. Nabarro

I shall not divide now with the Opposition because I want to give my right hon. Friend these few weeks to look into this valid point. If he disputes my figures I am perfectly prepared to produce chartered accountancy support for my contention that nothing like the loss mentioned by the Solicitor-General would be entailed in conceding to British industry this important Amendment.

7.45 p.m.

Mr. Chapman

May I support the plea that we should have at least a few words from the Chancellor? The right hon. Gentleman may know that I have already protested that the greater part of the debate took place in the absence of any Minister whatever from the Treasury. I mean no disrespect at all to the right hon. and learned Gentleman who had the job of replying, but I said then, and I repeat now, that it is not good that an industry contributing about £500 million to our exports should not have a Treasury Minister to hear some of its case on an occasion like this. Not only that, but the reply that we have had from the right hon. and learned Gentleman shows again exactly what we complain about, namely, that there is not an adequate study of the industry and its problems made in the Treasury. It is clear that the brief with which the right hon. and learned Gentleman was supplied was as barren as the speech which resulted from it, and I say, with great respect to him——

Mr. E. Partridge (Battersea, South)

The hon. Gentleman's arrogance is far too great today. He said something about arrogance yesterday, and that is what I say to him today.

Mr. Chapman

I am not being arrogant. I say it now, with great respect to the right hon. and learned Gentleman, and I have said it all the way through. Our criticism is that the Treasury Ministers have not made a thorough study of the industry and its taxation problems. When we debate the matter, it being of such importance to our national welfare and the export trade, we should be treated to a comprehensive reply on all the issues which we have raised, with the utmost courtesy, during the debate.

Even if we cannot have a promise that something will be done before the Report stage, many of us who try to study the industry and its problems would be grateful if we could think that, during the next twelve months, the Chancellor would be willing, as he was in the case of the cinema industry and other industries, to give special consideration to all the complexities of our industry's taxation problems. If we felt that, perhaps, a year from now we should be debating a thorough statement by the right hon. Gentleman about the taxation problems of the motor car industry—exactly as we were patient about the cinema industry—we should all be very much obliged.

I am sure that those concerned in the industry who have spoken to me from

time to time and have explained that they have never felt that the Government adequately understand their problems would be as grateful as I should be in those circumstances. I should be most obliged if the right hon. Gentleman would say at least a few words on what we regard as the non-party and very substantial case which has been put forward today.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory)

I am glad to say, of course, that, at any time, I am willing to receive representations from any industry on this kind of problem. Of course, during the succeeding year, I shall be glad to hear anything the industry has to say. But I must emphasise what my hon. and learned Friend has already said, that, on the present evidence we have, I have no grounds upon which I could accept the loss of revenue which would follow from accepting the Amendment.

Question put, That those words be there inserted:—

The Committee divided: Ayes 167, Noes 202.

Division No. 133.]	AYES	[7.49 p.m.
Ainsley, J. W.	Edwards, Rt. Hon. John (Brighouse)	Jones, J. Idwal (Wrexham)
Albu, A. H.	Edwards, Robert (Bilston)	Jones, T. W. (Merioneth)
Allaun, Frank (Salford, E.)	Edwards, W. J. (Stepney)	Kenyon, C.
Allen, Arthur (Bosworth)	Fletcher, Eric	Key, Rt. Hon. C. W.
Bacon, Miss Alice	Forman, J. C.	Lawson, G. M.
Benson, Sir George	Fraser, Thomas (Hamilton)	Lindgren, G. S.
Beswick, Frank	Gaitskell, Rt. Hon. H. T. N.	Logan, D. G.
Blackburn, F.	George, Lady Megan Lloyd (Car'then)	Mabon, Dr. J. Dickson
Boardman, H.	Gibson, C. W.	McAlister, Mrs. Mary
Bonham Carter, Mark	Gordon Walker, Rt. Hon. P. C.	McGhee, H. G.
Bottomley, Rt. Hon. A, G.	Grenfell, Rt. Hon. D. R.	McGovern, J.
Bowden, H. W. (Leicester, S. W.)	Grey, C. F.	McInnes, J.
Bowen, E. R. (Cardigan)	Griffiths, David (Rother Valley)	McKay, John (Wallsend)
Boyd, T. C.	Griffiths, Rt. Hon. James (Llanelly)	McLeavy, Frank
Brockway, A. F.	Griffiths, William (Exchange)	MacMillan, M. K. (Western Isles)
Brown, Rt. Hon. George (Belper)	Grimond, J.	MacPherson, Malcolm (Stirling)
Brown, Thomas (Ince)	Hale, Leslie	Mahon, Simon
Burke, W. A.	Hall, Rt. Hn. Glenvil (Colne Valley)	Mallalieu, E. L. (Brigg)
Burton, Miss F. E.	Hamilton, W. W.	Mann, Mrs. Jean
Butler, Herbert (Hackney, C.)	Hannan, W.	Marquand, Rt. Hon. H. A.
Butler, Mrs. Joyce (Wood Green)	Harrison, J. (Nottingham, N.)	Mason, Roy
Callaghan, L. J.	Hastings, S.	Mayhew, C. P.
Carmichael, J.	Hayman, F. H.	Mellish, R. J.
Castle, Mrs. B. A.	Herbison, Miss M.	Mitchison, G. R.
Chapman, W. D.	Hewitson, Capt. M.	Moody, A. S.
Clunie, J.	Holman, P.	Morris, Percy (Swansea, W.)
Coldrick, W.	Howell, Denis (All Saints)	Morrison, Rt. Hn. Herbert (Lewis'm, S.)
Collick, P. H. (Birkenhead)	Hoy, J. H.	Mort, D. L.
Collins, V. J. (Shoreditch & Finsbury)	Hubbard, T. F.	Moyle, A.
Cove, W. G.	Hughes, Cledwyn (Anglesey)	Mulley, F. W.
Craddock, George (Bradford, S.)	Hughes, Emrys (S. Ayrshire)	Neal, Harold (Bolsover)
Dalton, Rt. Hon. H.	Hunter, A. E.	Oliver, G. H.
Davies, Ernest (Enfield, E.)	Hynd, H. (Accrington)	Orbach, M.
de Freitas, Geoffrey	Irvine, A. J. (Edge Hill)	Paget, R. T.
Delargy, H. J.	Irving, Sydney (Dartford)	Paling, Rt. Hon. W. (Dearne Valley)
Diamond, John	Jay, Rt. Hon. D. P. T.	Palmer, A. M. F.
Dodds, N. N.	Jenkins, Roy (Stechford)	Pannell, Charles (Leeds, W.)
Dugdale, Rt. Hn. John (W. Brmwch)	Jones, David (The Hartlepools)	Pargiter, G. A.
Dye, S.	Jones, Elwyn (W. Ham, S.)	Parker, J.
Parkin, B. T.	Silverman, Julius (Aston)	Wade, D. W.
Pearson, A.	Silverman, Sydney (Nelson)	Weitzman, D.
Pentland, N.	Simmons, C. J. (Brierley Hill)	Wells, William (Walsall, N.)
Popplewell, E.	Slater, Mrs. H, (Stoke, N.)	West, D. G.
Price, J. T. (Westhoughton)	Sorensen, R. W.	Wheeldon, W. E.
Price, Philips (Gloucestershire, W.)	Steele, T.	White, Mrs. Eirene (E. Flint)
Probert, A. R.	Stewart, Michael (Fulham)	Wilcock, Group Capt. C. A. B.
Randall, H. E.	Stonehouse, John	Willey, Frederick
Rankin, John	Stones, W. (Consett)	Williams, David (Neath)
Redhead, E. C.	Strachey, Rt. Hon. J.	Williams, Rev. Llywelyn (Ab'tillery)
Reid, William	Stross, Dr. Barnett (Stoke-on-Trent, C.)	Williams, Rt. Hon. T. (Don Valley)
Rhodes, H.	Sylvester, G. O.	Willis, Eustace (Edinburgh, E.)
Robens, Rt. Hon. A.	Taylor, Bernard (Mansfield)	Woodburn, Rt. Hon. A.
Roberts, Albert (Normanton)	Taylor, John (West Lothian)	Yates, V. (Ladywood)
Roberts, Goronwy (Caernarvon)	Thomas, George (Cardiff)
Rogers, George (Kensington, N.)	Thornton, E.	TELLERS FOR THE AYES:
Ross, William	Tomney, F.	Mr. Holmes and Mr. Deer.
Royle, C.	Viant, S. P.
NOES
Agnew, Sir Peter	Glyn, Col. Richard H.	MacLeod, John (Ross & Cromarty)
Aitken, W. T.	Godber, J. B.	Macmillan, Maurice (Halifax)
Allan, R. A. (Paddington, S.)	Goodhart, Philip	Macpherson, Niall (Dumfries)
Amory, Rt. Hn. Heathcoat (Tiverton)	Gough, C. F. H.	Maddan, Martin
Arbuthnot, John	Gower, H. R.	Marlowe, A. A. H.
Armstrong, C. W.	Graham, Sir Fergus	Marshall, Douglas
Ashton, H.	Green, A.	Mathew, R.
Atkins, H. E.	Grimston, Hon. John (St. Albans)	Maudling, Rt. Hon. R.
Baldwin, A. E.	Grimston, Sir Robert (Westbury)	Mawby, R. L.
Barlow, Sir John	Hall, John (Wycombe)	Maydon, Lt.-Cmdr. S. L. C.
Barter, John	Hare, Rt. Hon. J. H.	Medlicott, Sir Frank
Bell, Philip (Bolton, E.)	Harris, Frederic (Croydon, N. W.)	Milligan, Rt. Hon. W. R.
Bell, Ronald (Bucks, S.)	Harris, Reader (Heston)	Morrison, John (Salisbury)
Bevins, J. R. (Toxteth)	Harrison, Col. J. H. (Eye)	Nabarro, G. D. N.
Biggs-Davison, J. A.	Harvey, Sir Arthur Vere (Macclesf'd)	Nairn, D. L. S.
Bingham, R. M.	Harvey, John (Walthamstow, E.)	Neave, Airey
Birch, Rt. Hon. Nigel	Heald, Rt. Hon. Sir Lionel	Nicholls, Harmar
Bishop, F. P.	Heath, Rt. Hon. E. R. G.	Nicolson, N. (B'n'm'th, E. & Chr'oh)
Body, R. F.	Hesketh, R. F.	Oakshott, H. D.
Boothby, Sir Robert	Hicks-Beach, Maj. W. W.	O'Neill, Hn. Phelim (Co. Antrim, N.)
Boyle, Sir Edward	Hill, Mrs. E. (Wythenshawe)	Orr, Capt. L. P. S.
Braine, B. R.	Hinchingbrooke, Viscount	Osborne, C.
Braithwaite, Sir Albert (Harrow, W.)	Hobson, John (Warwick & Leam'gt'n)	Page, R. G.
Browne, J. Nixon (Craigton)	Holland-Martin, C. J.	Pannell, N. A. (Kirkdale)
Burden, F. F. A.	Hope, Lord John	Partridge, E.
Butcher, Sir Herbert	Hornby, R. P.	Peel, W. J.
Campbell, Sir David	Hornsby-Smith, Miss M. P.	Peyton, J. W. W.
Carr, Robert	Horobin, Sir Ian	Pike, Miss Mervyn
Chichester-Clark, R.	Howard, Gerald (Cambridgeshire)	Pilkington, Capt. R. A.
Clarke, Brig. Terence (Portsmth, W.)	Howard, John (Test)	Pitman, I. J.
Cooke, Robert	Hudson, W. R. A. (Hull, N.)	Powell, J. Enoch
Cooper, A. E.	Hughes-Young, M. H. C.	Price, David (Eastleigh)
Cooper-Key, E. M.	Hurd, A. R.	Price, Henry (Lewisham, W.)
Cordeaux, Lt.-Col. J. K.	Hutchison, Michael Clark (E'b'gh, S.)	Prior-Palmer, Brig. O. L.
Corfield, Capt. F. V.	Hyde, Montgomery	Ramsden, J. E.
Craddock, Beresford (Spelthorne)	Hylton-Foster, Rt. Hon. Sir Harry	Redmayne, M.
Crosthwaite-Eyre, Col. O. E.	Irvine, Bryant Godman (Rye)	Renton, D. L. M.
Crowder, Petre (Ruislip—Northwood)	Jenkins, Robert (Dulwich)	Ridsdale, J. E.
Cunningham, Knox	Jennings, Sir Roland (Hallam)	Roberts, Sir Peter (Heeley)
Currie, G. B. H.	Johnson, Dr. Donald (Carlisle)	Rodgers, John (Sevenoaks)
Dance, J. C. G.	Johnson, Eric (Blackley)	Roper, Sir Harold
Davidson, Viscountess	Jones, Rt. Hon. Aubrey (Hall Green)	Ropner, Col. Sir Leonard
D'Avigdor-Goldsmid, Sir Henry	Joseph, Sir Keith	Russell, R. S.
Deedes, W. F.	Kerr, Sir Hamilton	Scott-Miller, Cmdr. R.
Digby, Simon Wingfield	Kershaw, J. A.	Sharples, R. C.
Donaldson, Cmdr. C. E. McA.	Kimball, M.	Shepherd, William
du Cann, E. D. L.	Kirk, P. M.	Simon, J. E. S. (Middlesbrough, W.)
Dugdale, Rt. Hn. Sir T. (Richmond)	Lancaster, Col. C. G.	Smithers, Peter (Winchester)
Duncan, Sir James	Langford-Holt, J. A.	Spearman, Sir Alexander
Duthie, W. S.	Leather, E. H. C.	Speir, R. M.
Eden, J. B. (Bournemouth, West)	Leburn, W. G.	Stanley, Capt. Hon. Richard
Emmet, Hon. Mrs. Evelyn	Legh, Hon. Peter (Petersfield)	Stevens, Geoffrey
		Steward, Harold (Stockport, S.)
Errington, Sir Eric	Lindsay, Hon. James (Devon, N.)	Steward, Sir William (Woolwich, W.)
Fell, A.	Lindsay, Martin (Solihull)	Storey, S.
Finlay, Graeme	Linstead, Sir H. N.	Studholme, Sir Henry
Fort, R.	Lloyd, Rt. Hon. Selwyn (Wirral)	Summers, Sir Spencer
Fraser, Hon. Hugh (Stone)	Low, Rt. Hon. Sir Toby	Sumner, W. D. M. (Orpington)
Fraser, Sir Ian (M'ombe & Lonsdale)	McAdden, S. J.	Taylor, Sir Charles (Eastbourne)
Freeth, Denzil	Macdonald, Sir Peter	Temple, John M.
Galbraith, Hon. T. G. D.	McKibbin, Alan	Thomas, Leslie (Canterbury)
Gammans, Lady	Mackie, J. H. (Galloway)	Thompson, Kenneth (Walton)
Gibson-Watt, D.	McLaughlin, Mrs. P.	Thorneycroft, Rt. Hon. P.
Glover, D.	McLean, Neil (Inverness)	Thornton-Kemsley, Sir Colin

Tiley, A. (Bradford, W.)	Ward, Dame Irene (Tynemouth)	Woollam, John Victor
Turton, Rt. Hon. R. H.	Whitelaw, W. S. I.	Yates, William (The Wrekin)
Vickers, Miss Joan	Williams, R. Dudley (Exeter)
Wakefield, Edward (Derbyshire, W.)	Wills, G. (Bridgwater)	TELLERS FOR THE NOES
Wall, Patrick	Wilson, Geoffrey (Truro)	Mr. Brooman-White and
		Mr. Bryan.

Mr. E. C. Redhead (Walthamstow, West)

I beg to move, in page 29, line 19, at the end to insert: (e) articles previously chargeable at 5 per cent. under Group I (garments) shall be exempt from charge. The object of the Amendment, together with those which are being discussed with it, is to seek entire exemption from tax in respect of garments under Group 1, footwear under Group 2, headgear under Group 3, gloves under Group 4 and handkerchiefs, which are the residue of the highly debatable haberdashery heading under Group 5, with the exception of such articles that fall within those categories which are manufactured of fur. We are going into a comprehensive field in seeking such wholesale exemption, but it is not quite so drastic as it may at first sight appear.

All these articles were chargeable at 5 per cent. before the Budget, with the exception of headgear, which, nevertheless, the Chancellor in the Budget and in the Bill seeks to reduce from 10 to 5 per cent. Articles of fur which are not affected by these Amendments have already been the subject of a substantial reduction in Purchase Tax by the Chancellor's own provisions in reducing the tax on those articles from 50 to 30 per cent., although there has been no corresponding reduction in respect of articles made of less pretentious materials.

Throughout our debates on Purchase Tax there has been an almost unanimous expression of dislike for the tax as such. Even the Chancellor himself has expressed no great degree of enthusiasm or affection for it in principle, although, like all Chancellors who have preceded him since the institution of the tax, he longingly looks forward to the substantial revenue which it produces. On a variety of grounds, the tax has been criticised as bad in principle and practice, and many hon. Members have expressed the hope that it will eventually disappear.

Everyone has recognised that taxes which, for instance, have been introduced during wartime supposedly for the duration of the war, such as Entertainments Duty, which was the product of the 1914–18 war, but which is still with us in a modified form, and general Excise duties, which, believe it or not, were first introduced in 1643 as a temporary wartime measure which was to cease at the end of the Civil War, but which are still with us in various forms, cannot be suddenly abandoned when they have proved to be so remunerative from the Chancellor's point of view. I recognise that the Chancellor cannot readily forgo the revenue that such a tax produces.

Most hon. Members have been reluctantly reconciled to the idea that the tax, if it is ultimately to disappear, can disappear only by general modification and reduction, first, in the number of rates and, then, in the level of those rates. In that direction, the Chancellor has made some small contribution in the Budget. It has been described as a faltering step in the right direction, and I do not want to rob the Chancellor of the credit in trying to simplify and bring about a greater degree of uniformity with regard to this tax. These Amendments are designed to carry those first faltering steps a stage further in the direction of easing the burden.

Throughout our discussions, despite the differences of opinion which have been manifest about what constitutes a luxury or what constitutes an essential, there has been a general disposition to lighten the load first in respect of what are commonly regarded as the common basis essentials where the application of the tax is most repugnant to the majority of hon. Members. No one would deny that the generality of the articles with which I am concerned in the Amendments of clothing and footwear are among those which can be regarded as the basic essentials in every personal budget. They constitute a not inconsiderable feature of the average personal budget. At today's ruling prices they are a major expense among the small and middle income groups, which are already pressed in many directions by the general rise in prices and diminished incomes which is their growing experience.

To the consumer the exemptions that I seek would be an admittedly small but welcome easement of the burden of ever-pressing demands upon the personal purse. But there is another reason which ought to commend itself to the Committee and make the Chancellor think again about the imposition of tax in this sphere, and it is of no less importance than that to which I have already referred. At the present moment, practically all branches of the clothing industry and the boot and shoe industry complain of a marked and sharp decline in trade.

I was talking this morning to a boot and shoe tradesman in my constituency who, when I asked him what the condition of his trade was at the moment, was inclined to be a little explosive. He told me that the general experience in the footwear industry was one of a very marked decline, particularly compared with the situation of twelve months ago. I am also told that the general effect is reflected in the trade Press of this industry and is leading to increasing difficulties even on the manufacturing side.

I hear, for example, of a leading boot and shoe manufacturer who supplies many retailers in the London area. He has now gone on to a four-day working week for the first time in many years in his experience. I also made some inquiries of a shirt manufacturer in my constituency who has normally a considerable trade. He tells me that the situation is one of grave alarm throughout that branch of the industry. I am told that this firm only yesterday made inquiry of a leading West End store as to when the manufacturer could expect the customary order for autumn stock, only to be greeted by "Good heavens man, don't talk about fresh orders. Our shelves are simply piled high with unsold goods for which there is a diminishing demand on the part of the usual customer."

I think I ought to say that when I explained the purpose of my inquiry this manufacturer said, "For heaven's sake, don't try to persuade the Committee that a 5 per cent. Purchase Tax is the real burden of our trouble. Do not let it be suggested"—and I am not suggesting it for the moment—"that removal of the tax will ease our problem to more than a very slight extent." He also said that the only solution he could see for his industry—and he said this with some expletives which I had better not repeat—was a quick and radical change of Government.

That perhaps is not strictly relevant to the Amendment, but I shall not be deterred on that account from addressing myself to the subject of providing some little elleviation, as I hope it would be, by securing exemption in this regard for these categories of goods.

Looking wider, one cannot help but observe that the examples I have chosen from my constituency are the common experience throughout all branches of the clothing and boot and shoe industry, for I turned to the Ministry of Labour Gazette and discovered that in the twelve months ended February this year, the latest figures available, there has been a decline of 19,000 employees in the clothing industry, which represents a loss of nearly 3 per cent. All the indications are that this process of decline is continuing, for there was a continuing sharp decline to an even greater degree in the last month of the period for which the figures account.

This is to be found true in respect of every branch of the industry—tailoring, dressmaking, overalls, shirts, hats, boots and shoes. All reflect the same slackening of demand, which, of course, is a reflection of the general shortage of money, the tightness of money, the reluctance of people now on short time or unemployed, or who have lost their overtime or who apprehend that they may be among those who suffer in that way before long, who are holding back on their purchases and thus causing a growing decline in these important industries.

From the total of approximately 450,000 operatives for whom returns were made to the Ministry of Labour, one discovers that nearly 18,000 of them, or 4 per cent. of the total, are now working short time in these industries, and in the boot and shoe industry the position is even worse, where there is a figure of about 10 per cent. short time. Again this is reflected, and is likely to go on being reflected to an increasing degree, in the textile industry, where about 4½ per cent. decline of employment is to be found in the same period and there is a similar percentage of short-time working in the various textile industries as a whole.

I am not suggesting for one moment that the removal of this 5 per cent. Purchase Tax would alone solve the problem of the recession of the industry. I am saying, however, that in the time of need of such an industry it would be a justifiable helping hand. If the Chancellor really wants to make a substantial start in the process towards a gradual modification of the Purchase Tax, with the hope of its eventual elimination, which appears to be the common desire of most hon. Members of this Committee, at some stage we shall have to start making wholesale exemption. I hope, therefore, that the right hon. Gentleman is persuaded that his ultimate purpose and the immediate need can be served by acceding to these Amendments.

Miss Alice Bacon (Leeds, South-East)

In supporting this Amendment, I want to reiterate what has been said by my hon. Friend the Member for Walthamstow, West (Mr. Redhead). There is a good case for removing the tax completely from these garments and other items. If we look back over the past few years at the history of the Purchase Tax on clothes, we remember that there was a time, even after the war, when certain cheaper and minimum priced clothes were not taxed at all. It was only when a general tax of 5 per cent. was imposed on all garments that cheaper ones were taxed, and this goes for many other goods as well. Therefore, the majority of lower-paid workers are today in a worse position as regards the payment of Purchase Tax on these necessary articles than they were some years ago, just after the war.

I have a particular constituency interest in this matter, especially in the tax on garments made of wool, because my constituency contains some big clothing factories, some whose names are household words throughout the country. Indeed, many hon. Members of this Committee may be wearing today garments made in the factories in my constituency. I would like to draw the attention of the Chancellor to what I regard as an anomaly in his present Budget which is rather misleading to the country. The right hon. Gentleman made great play in his Budget speech about the fact that he intended to remove the tax from wool cloth. That will be completely ineffective if, at the same time, tax remains on garments made from wool cloth.

Only last weekend I asked a manufacturer of cloth what proportion of wool cloth he estimated went into factories to be made into clothes, and what proportion he estimated found its way into shops to be sold by the yard. He estimated that 99 per cent. of the wool cloth he manufactured found its way into factories to be made up into clothing which would then be chargeable for Purchase Tax purposes, and that only 1 per cent. of his cloth would find its way into shops to be sold by the yard. In other words, the great concession made for wool cloth in the Budget statement applies only to about 1 per cent. of the woollen cloth which is manufactured in this country. The Chancellor should realise, therefore, that he has done nothing for the wool trade as long as he keeps the Purchase Tax on clothing.

I know that the right hon. Gentleman will say that this has brought wool into line with cotton, but by this Amendment we hope that all Purchase Tax will be removed from all garments, whether they are made of cotton, wool, or anything else. There is, however, this slight difference, that the Chancellor's concession was more of a concession to cotton than wool, because so much more cotton finds its way into the shops to be sold by the yard.

8.15 p.m.

Mr. Amory

Would the hon. Lady be good enough to allow me to interrupt, as I would like this matter kept in perspective? I do not think that I made a big business of this removal of the 10 per cent. rate on wool cloth. I have looked up what I said: Tax will be lifted altogether from wool cloth, now chargeable at 10 per cent., but clothing made from such cloth will, like other clothing, bear tax at 5 per cent."—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 72.]

Miss Bacon

It may be that the right hon. Gentleman was being a little more honest than were some of the accounts which I read in some newspapers, giving credit to his back benchers for "pulling off" the great feat of reducing Purchase Tax on wool cloth. Although it was a greater concession to cotton than to wool, because so much more cotton is sold by the yard, the right hon. Gentleman has not really encouraged housewives to buy either cotton or wool by the yard to make into garments, in retaining a 30 per cent. tax on sewing machines. Apart from that, however, I feel there is a very good case for taking off this Purchase Tax.

As my hon. Friend has said, there are fewer people engaged in the clothing trade and many fewer employed in the boot and shoe industry and I feel that the time has come when this tax could be lifted from these necessary articles. With the ever-growing increase in the cost of living, now is the time for the Chancellor of the Exchequer to make a gesture, particularly to lower-paid workers, by taking Purchase Tax from something which is so necessary a part of their weekly household bills.

Mr. F. A. Burden (Gillingham)

Again, one finds oneself on much common grounds with the hon. Gentleman the Member for Walthamstow, West (Mr. Redhead) and the hon. Lady who has just resumed her seat; and in view of my very close association with the hon. Member for Walthamstow, West at the last Election, when I was fortunate and he was not—and I was very happy to see him returned to the House—one would expect that his arguments in presenting his case would be closely reasoned and very moderate.

I believe that all of us here can say that we would all greatly welcome the removal of Purchase Tax from all clothing. As is customary on these occasions, I must declare an interest, because I am engaged in the manufacture of clothing. Although I would agree with a great deal of what the hon. Gentleman and the hon. Lady have said, I feel that in one or two cases they were a little misleading. I know that there has been a marked decline in the purchase in the shops, as well as in the manufacture, of clothing during the past few weeks and particularly during the spring, when it was expected that there would be a very good selling period for the trade.

I am glad that the hon. Gentleman, in his eminently fair way, made the point that that was certainly not due entirely nor even to any great degree to the fact that those garments bear 5 per cent. Purchase Tax; because, after all, tax is not levied on the sale price of the article. It is levied on the cost price less discount. So a garment costing the retailer £6 has first removed from it the discount shown, and the Purchase Tax is on the cost less that discount. On the garment costing £6, therefore, it is in fact less than 6s. on the selling price to the retail purchaser.

I believe that we are quite right in saying that that charge does not make any enormous difference to the sales of articles. It would really be quite unrealistic to say that it does. All of us would like to see it removed, for every little helps; and also, of course, it would assist in simplifying work considerably—and thus cutting costs—in counting houses; but I believe that the decline during this particular season is due much more to the inclement weather.

Mr. Frank Allaun (Salford, East)indicated dissent.

Mr. Burden

The hon. Member for Salford, East (Mr. Allaun) shakes his head, but I am in touch with the trade every day. I, alas, have suffered from it. Easter came very early and the weather was very cold. Usually, Easter stimulates trade, particularly the ladies' fashion trade. If it is warm, they buy garments in which to go out at Easter. That is the time when they come out in their spring finery; but a very early Easter, with cold weather, means that they do nothing of the sort.

In addition, there has been a very radical fashion change, and when fashions change as radically as they have changed this year ladies often take more than a few weeks deciding whether or not the new fashion will suit them. That, also, has been one of the reasons for the cutback in sales this year. A very good assessment of whether or not general trade has been good can be made from store figures. I believe that the figures of sales in stores will show that sales, and especially the spring trade, has been very much down.

Equally, I am convinced that most of the stores, until last year, have constantly increased their turnover. I would also say that in the last two years, there has been a fining-off of profits and of prices on a great many garments. Prices have been coming down and people are getting better value than they got three, four or five years ago. That is all to the good.

One other thing which is happening, and which is hitting our trade harder than a lot of people realise—and I believe this is within the terms of this Amendment, because we are asking for Purchase Tax to be removed to stimulate trade—is the fact to which the hon. Gentleman referred, that many more goods than before are being bought abroad. Buyers are going to the Continental markets and are implementing home products with those from other countries. Those pay the same rate of Purchase Tax, but those goods are not made here and do not give work in our factories. All those things should be taken into consideration.

Whatever may be said about the cut in Purchase Tax on wool cloth, it was welcomed by the trade. There was agitation for it. I believe that we are not on party ground here. Hon. Gentlemen opposite and my hon. Friends on this side, like myself, pressed for the removal of Purchase Tax from wool cloth. Yorkshire manufacturers were delighted when the tax came off; but, again, one can simplify these things.

The hon. Lady quoted a manufacturer who had told her that 99 per cent. of the cloth that he manufactured went into factories to be made into clothes. That may be so in his case, but I believe that that was over-simplifying the matter. I am sure that in many cases the ratio of cloth going to the shops compared with that going to the factories is much higher than 1 per cent. to the shops. It is difficult to assess. If the hon. Lady does not agree, I will say mainly so. We should be very unwise to take an isolated case as giving a true picture for the whole industry.

Miss Bacon

Does the hon. Member not know a man who has bought material to have it made into a suit?

Mr. Burden

I do that myself. I go to the cloth man and buy the cloth, and then have a little tailor make it up.

Miss Bacon

Surely the little tailor who makes it up is charged Purchase Tax?

Mr. Burden

Not if his turnover is not more than £500 a year, and that is up to the Purchase Tax people to assess.

On the other hand, when the hon. Lady is dealing with men's cloth she is dealing with a highly particularised garment, a man-tailored garment for a man. On the other hand, many ladies buy wool cloth in shops to make dresses—not suits or coats, although some of them make those, too.

Although I support the desire of hon. Members on both sides of the Committee entirely to remove Purchase Tax wherever it can be removed, I do not think that all the difficulties of the trade, if they exist as strongly as the hon. Gentleman and the hon. Lady said—and I do not accept that—are due in the main to the 5 per cent. Purchase Tax. There are other reasons which must be taken into consideration.

Mr. Frank Allaun

I support the powerful arguments of my hon. Friends and I wish to add several others. The clothing industry is undergoing a severe depression which is not due to the weather as the hon. Member for Gillingham (Mr. Burden) suggested, because it started before Christmas. As the hon. Member knows, the Manchester-Salford area is a centre of the clothing industry and I am especially concerned with tailors and small firms.

I am informed by many of my friends that this has been the worst winter for their industry since before the war. Highly skilled craftsmen were out of work the whole winter, skilled craftsmen who have never been out of work before. So the depression is not due to the weather if it started before Christmas.

Mr. Burden

Orders are placed before Christmas, especially in the ladies' trade, for delivery in the spring. The incidence of employment should then be reasonably high. I agree with the hon. Member there, but I do not think that the conditions he described are general merely because one man has been out of employment. There may be other reasons, and one has to take the general picture.

Mr. Allaun

I assure the hon. Member that I was speaking not of only one man, but of hundreds of men in that position. The point I am making is that the depressed state of the clothing industry is due not to the weather but to a very different reason. Nor do I suggest, in all fairness to the Chancellor, that it is due to Purchase Tax. The depressed state of the clothing industry is entirely due to workpeople having less money in their pockets to buy clothes.

Mr. Cyril Osborne (Louth)

I was on the T.V. programme "Under Fire" against a Lancashire audience and they attributed the depression not to Purchase Tax but to imports from Hong Kong.

Miss Bacon

That is cotton.

Mr. Victor Collins (Shoreditch and Finsbury)

I saw the broadcast of the hon. Member for Louth (Mr. Osborne) and noticed his discomfiture when his audience attributed their difficulties largely to the policy of the Government.

8.30 p.m.

Mr. Allaun

Because overtime in most other industries is ending and short-time is beginning, working men have less money in their pockets to spend on new suits or new overcoats. Consequently, the clothing industry is in a bad way. I repeat that I do not attribute the depression to Purchase Tax, but I do argue that if the 5 per cent. tax were removed, that would give a fillip to the clothing trade which would help it to recover, a fillip which it badly needs.

There is a remarkable fact which has not yet been brought out this evening. Previously, there was a 10 per cent. tax on a few hundred cloth manufactures. That has been replaced by a tax of 5 per cent. not on the cloth but on the total cost of the suit—which is roughly the same because of the labour and so on involved in making up the suit. The astonishing thing is that instead of levying the tax on a few hundred cloth merchants, the tax is now being levied on tens of thousands of small firms.

That is no exaggeration. The Chancellor must agree that there are many thousands, and in my view tens of thousands, of firms which are now involved. It is only common sense to say that there are many thousands of small tailoring and clothing firms in the country and I am told by my constituents that tax officers have visited those firms. I do not know how many officials are employed on the work, but I am certain that more will have to be employed, because there are so many tailors to visit.

Mr. Burden

The tax is not levied on the small firms, the wholesalers, the manufacturers, or the tailors. The tax is collected by those people from the retailers at the time that the goods are put into the hands of the retailers. In fact, it is only three months later that the tax is paid to the tax authorities..

Mr. Allaun

That does not alter the fact that tax officers are visiting small tailoring firms all over the country and asking to see their accounts. That is undeniable because I have seen it happen. I must admit that the accounting systems of some of these small firms are probably not as good——

Mr. Osborne

Those officers may be going to those establishments for purposes other than Purchase Tax. There are matters other than Purchase Tax which interest the Inland Revenue.

Mr. Allaun

The visits to which I am referring are visits purely to obtain the accounts of the Purchase Tax which these small firms have to pay. This letter I am holding, which has been supplied by my hon. Friends, will, I think, confirm the point I am making, that many of these small firms have accountancy systems which leave something to be desired.

It may be argued that they must keep proper accounts in order to pay Income Tax, but I can assure the Committee that the accounts which small firms are now required to keep are far more difficult, complicated and detailed than those needed to ascertain what they should pay in Income Tax. They will have to distinguish between certain suits made from their own material and suits made from material supplied by customers. This needs a very complicated accountancy system which small firms do not have.

Previously there was an exemption limit. Firms with a turnover of under approximately £2,000 a year did not need to be registered for Purchase Tax considerations. This limit has been reduced to a £500 a year turnover. Hon. Members will agree that a turnover of £500 a year is so small that every firm in the country is involved. Any firm with an annual turnover of less than £500 is not making a living, so that the smallest firms are now involved and tax officials are having to visit these firms to ascertain——

Mr. Burden

This has been the position ever since Purchase Tax was introduced.

Mr. Allaunindicated dissent.

Mr. Burden

The hon. Gentleman shakes his head, but I can assure him that it is so. Any firm with a turnover of more than £500 a year is subject to Purchase Tax. That has always been the case. The tax collectors pay their three-monthly visits to see exactly what the owner of the firm has to do, and every three months the collectors tot up the figures. It is no more arduous or difficult for them or for the firms than it was two, three or four years ago.

Mr. Allaun

There has been a change. The limit is now £500.

The Temporary Chairman (Sir Norman Hulbert)

Order. I must remind the Committee that this Amendment deals with the variation of tax on some garments. We cannot discuss the whole mechanics of Purchase Tax collection.

Mr. Allaun

Certainly not, Sir Norman. I will go on to another point—the staggering anomalies which have been introduced which will lead to all kinds of evasion of quite a serious nature.

If the right hon. Gentleman goes to a firm and buys his own cloth and then takes that cloth to his tailor, no tax will be paid on the suit made from that cloth. It appears to me a striking anomaly that on some suits there is no tax. Surely this is a fantastic situation. I see that the Chancellor is nodding his head and that he agrees that that is the position.

If a retail outfitter buys cloth and sends it out to be made up, no Purchase Tax is paid on the suits up to a limit of £500. That is a second way of avoiding tax. Finally, there is the general argument of the undesirability of paying Purchase Tax on a necessity. In a country like ours, with a climate such as ours, even the right hon. Gentleman will admit that clothing is a necessity.

Mrs. Jean Mann (Coatbridge and Airdrie)

I wish to draw attention to something new which really should not be introduced. I refer to headgear, in Group 3. The Appendix to Notice No. 78N states that The exemption for babies' headgear no longer applies to articles made of fur skin. Babies' headgear which is made wholly or partly of rabbit or woolled sheep or lambskin but no other fur or which is merely trimmed with fur skin, is not, however, affected. Last year articles suitable only for babies were exempt. For the past twelve or thirteen years we have striven to keep all children's goods free from Purchase Tax, and that included babies' goods. Now, for the first time, there is a new element creeping in. In the new revision of the tax Schedule it is clearly stated that exemption for babies' headgear no longer applies to articles made of fur skin. In Scotland, fur coats, that is, skin fur coats, are a necessity. Fur skin for babies' headgear is also a necessity, for babies in Scotland, at any rate, and probably that applies to the north of England, where the climate is cold, too.

I merely wish to point out to the Chancellor that he is introducing something that has never been introduced during the past thirteen years. There cannot be very much in it from the Chancellor's point of view, but if I and others do not make our protest, shall we be confronted with the situation next year that the tax will be extended and be told by the Chancellor, "I do not wish to discriminate," as we were told in regard to safety devices, which the Labour Government kept free of tax for so long?

I appeal to the right hon. Gentleman to grant this concession. After all, there was a big enough hullabaloo about the tax on miners' protective helmets, and quite properly so, and that tax was introduced for the first time. A very big principle is involved, and I appeal to the Chancellor to keep babies' and children's clothing and hats and shoes free from Purchase Tax.

Mr. Douglas Glover (Ormskirk)

I should like to reinforce the remarks of the hon. Lady the Member for Coat-bridge and Airdrie (Mrs. Mann). I see a great danger in making this one exception, particularly on children's clothing. I believe that it is a very wise principle that we have kept children's clothing of all sorts free of Purchase Tax during the last 15 years. It is so easy, particularly with taxation, once we introduce or break a principle to extend that in future years. The amount of tax which will be raised on this very narrow item on which tax is to be imposed is infinitesimal and I hope that before the Report stage my right hon. Friend will have another look at it.

The main point which I rise to speak about is whether my right hon. Friend, in considering Purchase Tax on clothing, the bulk of which is at the rate of 5 per cent., will take the opportunity in this Finance Bill to look into the question of uplift. I do not know if all hon. Members are aware of what is uplift. When a manufacturer is selling in large quantities he has to uplift his price to bring it into the wholesale price at which the goods are sold to shopkeepers for the purpose of calculating tax. That was a perfectly sensible thing when Purchase Tax was at the rate of 25 per cent. But does my right hon. Friend realise the amount of work that is involved and the negligible amount of difference that it makes in fact?

Let me give the example of a garment priced at £1. It has to be uplifted 10 per cent., which is 2s., and the increased tax at 5 per cent. is paid on that 2s. so that the difference in price, after all the calculation and clerical work that has to be gone into by the manufacturer, wholesaler and retailer, brings into the Treasury an extra 2d. in the £. It really is not worth the effort. It does not make any difference whatever to the selling price. It does not today protect the small shopkeeper against the competition of the chain stores. It is an administrative anachronism which creates wasteful expenditure, waste of time, and does not achieve any useful purpose. I hope that my right hon. Friend will take the opportunity to look into this point when he is considering these Amendments.

8.45 p.m.

Mr. Collins

I support what has just been said by the hon. Member for Ormskirk (Mr. Glover) on the subject of uplift, which wastes an enormous amount of time. These are small calculations which add about 50 per cent. to the time taken by the invoice clerk to calculate the amount of tax due, for very small aggregate benefits, particularly when calculating on a 5 per cent. Purchase Tax. I suggest that the authorities have been either unenterprising or complacent in this matter.

In my association, we had a similar difficulty with the Customs and Excise about three or four years ago. We were then uplifting by 5 per cent. and the Department suggested that we should uplift by 10 per cent. We discussed the matter for months and finally we told the Department that we were not going to uplift at all. Three months later, the Department wrote and said that it entirely agreed with our decision. We have not uplifted since. I make this suggestion as one that might be followed, but I emphasise that the decision followed upon a series of careful discussions. I am not suggesting that it should be done abruptly but that reasoned arguments should be put forward. Then comes the time for decision.

I apologise if I am intervening without having heard the whole of the debate. That sort of thing happens to all of us sometimes, and we all regret it. I am intervening to reinforce some of the remarks of my hon. Friend the Member for Salford, East (Mr. Frank Allaun) and to assure the Chancellor of the Exchequer that this problem is by no means confined to the North or to provincial areas.

As is well known, my division, Shoreditch and Finsbury, produces more furniture than any other area in the country. We also produce a great deal of clothing. A lot of my constituents are in the clothing trade, and particularly in the mantle and costume branch. There we have the main branch of the National Union of Tailors and Garment Workers.

It is beyond dispute that there is a severe depression in the industry, not of very recent origin. Seven or eight months ago I was raising with the Minister of Labour the unemployment in this industry, which was very severe. I was receiving deputations at the House. A number of important factories closed down temporarily, and one appeared to have closed permanently. It has since reopened, but it is carrying on under conditions of extreme difficulty.

There is a recession in that section of the mantle and costume trade which they call "ladies' outerwear". My information is that the spring season, on which it built its hopes, orders for which are placed prior to Christmas, well in advance, has collapsed utterly on the industry, which now has many unsold garments. It is now waiting for the autumn season, for which customers should be ordering now. I am informed that factories in places like South Wales and Halifax have temporarily closed down. The South Wales factories were among those which were put into Development Areas to bring new industries. Unfortunately, they have had temporarily to close down.

My information is that formerly orders for the autumn season were placed in May and June, but those orders have not been placed. They are not expected to be placed until September, and that will be the lot. Previously, orders were placed in May and June and repeats case in September, but the trade is so depressed that it will not get orders until September.

Mr. Burden

I am sure the hon. Member would not wish to give a false impression, but he is not quite right when he says that orders are not being placed. Orders are being placed now, and will be in June. If they were not placed until September they would not be in time for the season, but May is not out yet. There has been a tendency for manufacturers to get earlier every year, and the general buying time is from now until the middle of June.

Mr. Collins

I am quite prepared to accept what the hon. Member says, as his knowledge is greater and more intimate than mine, but my information came from the Secretary of the National Union of Tailors and Garment Workers as recently as yesterday. I am in constant touch and, because I like to be sure of my references, I checked them yesterday. Unfortunately, from my experience only last week, this seems to be the case. My factory is close to a labour exchange, and I have noted that the labour exchanges in Shoreditch, Hackney and Stepney have had so many men and women signing on for employment that they had to queue for hours. That seems sufficient evidence that orders are not being place in sufficient quantities.

It is not much comfort to men and women who are unemployed to say, "May is not out yet". The answer may be "I am—I am out of work". According to my information, from the same source—which is fairly reliable, because, after all, the people best able to say whether there are many out of work or on short time are these people—the situation is the toughest they have had since the early 'thirties.

Mr. Burdenindicated assent.

Mr. Collins

I am glad to see that the hon. Member for Gillingham (Mr. Burden) nods his head in assent. My hon. Friend the Member for Salford, East rightly said that this situation does not arise simply because of the 5 per cent. Purchase Tax. I am sure the Financial Secretary will agree with that. I want the hon. Gentleman to know that the position in the tailoring industry is becoming more and more alarming. More and more people are signing on at the employment exchanges, and at present I do not know of a single firm in London which is not on short time.

Reference has been made to small tailors. I quite understand the point which was made about minimum turnover for the purpose of registration for Purchase Tax. Equity is met when registration for Purchase Tax is at a very low turnover point, because many difficulties and evasions arise when it is at a higher level. If there is a lawful tax, I do not think it should be competent for anyone to have the means of evading it. What I am concerned about is that there is a tax at all.

The Chancellor rightly eschews taxes on food. Food must come first, but I should think that clothing must come a very close second. We should not be in so much trouble if we went without food as if we went about the streets without clothing. Clothing is an absolute essential, and the argument which the right hon. Gentleman has rightly adduced against taxes on food could be put with almost equal force against taxes on clothing.

I have a very large number of small master tailors in my constituency. Many of them are still masters only in the sense that they are working and selling the products of their own labour. They are not sufficiently affluent or have not sufficient business any longer to employ people. They are in considerable difficulties. I ask the Chancellor to look at this matter seriously. I do not expect him to come to the rescue of every industry which is in distress, but there is a case for the removal of this 5 per cent. tax. When he considers the Amendment, I ask him to let us know what the volume of this tax on garments is and whether, with all the expense of collection——

Mr. Simon

I did not catch what the hon. Member said. Did he say the volume of the tax, the revenue of the tax?

Mr. Collins

That was what I hoped the Chancellor would furnish—the volume of the tax derived from garments. I believe that several Amendments are under consideration, but I was thinking of garments in particular, and the tax is only 5 per cent. I am asking him to weigh that revenue against the difficulties and costs of collection, and to weigh it also against the possibility that there are costs in relation to unemployment and distress which cannot be measured in terms of pounds, shillings and pence. I hope he will answer the question, is it worth it? I very much doubt whether he can say yes. If he cannot, I hope he will accept the Amendment and remove the tax.

Mr. Tom Brown (Ince)

I will not detain the Committee for more than a few minutes, but there appears to be some misunderstanding, not in this Chamber, but in the country, concerning the reduction of Purchase Tax on woollen cloth.

I have received several letters and have had several interviews with people concerning the question whether the finished article made of woollen cloth should have the Purchase Tax of 10 per cent. reduced. The Chancellor has quoted from a speech he made and has intimated that the Purchase Tax of 5 per cent. upon finished garments remains as it was before the Budget. Is that true? Maybe I am getting confused, too, but I hope the Financial Secretary will explain the matter, because at the moment the small tailor or outfitter is being challenged that he is not carrying out the Chancellor's promise in his Budget statement. Therefore, I think the whole thing should be clarified. Heaven knows, it is complicated and confusing enough.

Mr. Glover

Will the hon. Gentleman allow me? I have some experience of this matter, because I have been in this trade all my life. Woollen dresses have always incurred a tax of 5 per cent., and there is no alteration in the Budget of the Purchase Tax paid on these dresses. It is exactly the same as it was before the Budget.

Mr. Brown

I do not dispute that statement at all, but what I am trying to ensure is that people in the country shall understand what is the exact position. I know that the finished garment has carried a 5 per cent. Purchase Tax since the last Budget, if not before, but now the Chancellor has made a change. This change is applied only to woollen cloth, and he has reduced the rate of Purchase Tax by 10 per cent. There is some confusion here. [HON. MEMBERS: "No."] It is undeniable, because representations have been made to me, both verbally and by letter, and I want to read part of a letter which I have received from an outfitter who is voicing the opinions of his colleagues in the trade in the following terms: Dear Sir, I wish to draw your attention to the deceit in the announcement by the Chancellor during his Budget proposals about the abolition of the Purchase Tax on wool cloth. Tax has in fact been dropped, but the deceit lies in the fact that extra tax has been placed upon the making of articles from it.

Hon. Members

No.

Mr. Brown

Evidently, back benchers on the Government side are also a little bit confused. I am reading from a letter illustrating a point which I want the Chancellor or the Financial Secretary to clear up when replying to the debate.

The writer goes on to say: As a result a suit remains virtually the same price as it does before Budget day. But my customers are of the opinion that I am not passing on to them the 10 per cent. reduction announced on 15th April. We want a categorical assurance from either the Chancellor or the Financial Secretary that though there is a change in the Purchase Tax on woollen cloth, the 5 per cent. Purchase Tax remains on the finished article.

9.0 p.m.

Mrs. White

We have had an important debate on an industry that is passing through a very difficult time, and there are several points on which I should like a reply from the Treasury spokesman.

My hon. Friend the Member for Walthamstow, West (Mr. Redhead), who moved the Amendment with, as usual, great lucidity, said that we recognise that the fact that there is 5 per cent. Purchase Tax on garments of all descriptions, including some of the minor items mentioned in some of the other Amendments, is not the whole explanation of the difficulties of the trade. Rather to my surprise, hon. Members opposite cheered that. They have nothing whatever on which to congratulate themselves if the general economic state of the country is such that the clothing industry is in serious difficulties, and I think that the experience of all of us confirms that that is so.

I must plead a constituency interest in this trade, at an earlier stage of manufacture. In my constituency, I have four very large rayon factories. The material that they make is used, in part, for furnishing fabrics, which we are not now discussing, but a considerable proportion is used for making rayon cloth for lining women's outerwear, as it is called in the trade. Owing to the very sharp decline in that section of the trade, one factory, employing nearly 2,000 workers, has closed entirely, another very large factory is closed for one week out of every gve, and only recently I heard that a number of women and old-age pensioners were being put off from a third factory owing, again, to recession in the industry.

We have had confirmation from all parts of the Committee that the clothing industry is in a very difficult position. The hon. Member for Gillingham (Mr. Burden) made great play of our chilly weather, but it is not the first time that we have had a cold spring, or an early Easter. He also said that there had been a radical change in fashion. My experience is that if there has been a change in fashion most women try to keep it, and are more encouraged to buy new garments, but even if some women are somewhat more conservative-minded and take longer to follow the trapeze line, or even the kangaroo line, which is exemplified by one of the hon. Ladies in the House——

Mr. Glover

If we are to enter upon a dissertation on fashion, surely the hon. Lady is aware that a coat is nearly always fully lined and takes a lot of material, but that when the ladies wear suits only the coat is lined. Lining is not used in the skirt, so she must know that, as a result, not nearly so much lining is used.

Mrs. White

With great respect to the hon. Member for Ormskirk (Mr. Glover), who, I know, has some experience of this trade, our women have worn suits for many years. In fact, the Englishwoman in a tailor-made suit has been a characteristic of this country for as long as any of us can remember and, as the hon. Member for Gillingham has pointed out, our climate is still sufficiently cold for it to be necessary for women to wear a top coat as well as a suit for the greater part of the year. I cannot think that that argument has any substance in it.

The point of the argument is that for one reason or another the clothing trades are in very sharp decline. That being so, it is not unreasonable that we should ask the Chancellor to consider whether in those circumstances it is advisable to retain even a relatively small tax on the industry. There are, of course, other arguments that one can adduce. My hon. Friend the Member for Leeds, South-East (Miss Bacon) rightly reminded us that it is only a relatively recent development that there should be any tax at all on the kind of garments which used to be in the Utility ranges; in other words, the more necessary garments for everyone.

It is true that children's clothing has been exempt. The hon. Member for Ormskirk and my hon. Friend the Member for Coatbridge and Airdrie (Mrs. Mann) are right to protest that—in a very minor sector, I admit—children's wear has been brought back into the scope of the tax. I will not discuss the question of baby minks at this stage. It is a minor matter of principle, but it is right that we should protest that the Chancellor has decided to tax even one small item of children's clothing for what must be an infinitesimal amount of revenue.

We have had representations made about the foolishness of continuing uplift in the industry. I will be frank with the Committee. I have always found it extraordinary difficult to understand uplift, at least as it applies to trade. Having been brought up as a good Welsh Calvinist, uplift in one sense is second nature to me, but I find the technical matter of uplift always a little difficult to follow. I have no doubt that it is child's play to the Financial Secretary. Therefore, I am convinced that he will have listened with very great attention to the argument put forward by the hon. Member for Ormskirk and my hon. Friend the Member for Shoreditch and Finsbury, who have great experience in these matters.

In the light of the Chancellor's streamlining policy, if—as we are assured by the hon. Gentlemen who have considerable experience in trade, and also by the hon. Member for Gillingham, who, I gather, entirely endorses this—the matter of uplift when we have such a low rate of tax is simply not worth the time and energy spent both by the trade and the Customs and Excise in working it out, checking the sums, and so on, surely this is a very good opportunity for a concession.

Finally, we must refer to wool cloth and the garments made therefrom. It is perfectly clear from the reports that we have been receiving from both Lancashire and Yorkshire, and also from the London area—in other words, from all parts of the country where there are major manufacturing districts for clothing, particularly men's clothing—the change has caused much confusion.

The Chancellor said—I grant him this; he is justified in having made the intervention from his personal point of view—that he made a little more of some of his other concessions than he did of the one in respect of wool cloth. But that did not apply to his supporters. There was a very eloquent intervention by the hon. Member for Shipley (Mr. Hirst), who most warmly congratulated his right hon. Friend on this "great advance". Therefore, the Chancellor cannot complain if we quote the representations that we have had on the matter. Tailors are finding it extremely difficult to explain to their customers the fact that men's suits still cost the same although the Chancellor has made the concession in respect of wool cloth.

There is also the difference now in the method of collection. I hope that the Financial Secretary will now make it crystal clear to everyone concerned, including the constituents of my hon. Friends the Members for Salford, East (Mr. Frank Allaun) and Ince (Mr. T. Brown), exactly where they stand.

I have a letter here from a tailor in Lancashire. He complains about the difficulty of explaining to his customers exactly what happens, and he adds: Another aspect is the extra work involved, both to the thousands of small shopkeepers like myself who have to become tax collectors and to the Customs and Excise Department. On Wednesday an officer from the Customs and Excise spent two hours with me explaining the new part I have to play in collecting this tax. He said he would have to spend a similar amount of time with all the small shops in his area. This plus a quarterly inspection of the books of small shopkeepers will cost the country many thousands of pounds. I quote that because it comes from somebody who has written to us and is representative of small tailors in Lancashire generally.

It is most necessary that—for the benefit of the public—we should be clearly told exactly where these people stand in the matter of the prices of the articles. It would be as well that we should have a defence, if it is possible to have one, of this new arrangement of tax collection, which will lead to a great deal of work for a number of small people.

Then there is the anomaly, which has been pointed out by my hon. Friends, that if one purchases cloth and takes it to one's tailor one pays nothing in tax, whereas if one buys a suit already made one pays tax. That is surely the sort of anomaly which must distress the Chancellor of the Exchequer. I should have thought he would have wished to avoid it if possible.

These are the main arguments in support of these Amendments, though there are others we may yet discuss, particularly about footwear. I myself have always felt it wrong to tax footwear. Since footwear is so important to health, it really ought not to be taxed at all. However, I do not wish to detain the Committee any longer, as we are all anxious to hear the explanation of the Financial Secretary.

Mr. Simon

This has been, at any rate for me, a very interesting debate, because we have had a good deal of expertise. My hon. Friend the Member for Gillingham (Mr. Burden) speaks with great authority of one of the trades we have been discussing, and a number of other hon. Gentlemen, and the hon. Lady the Member for Flint, East (Mrs. White), have a very close constituency interest in this matter. My hon. Friend the Member for Ormskirk (Mr. Glover) has spent most of his life in the industry.

Both the hon. Lady the Member for Flint, East and my hon. Friend the Member for Gillingham quite rightly paid a tribute to the hon. Gentleman the Member for Walthamstow, West (Mr. Redhead) on his introduction of this debate. My hon. Friend actually called it a closely reasoned and very moderate speech. I thought it was in its expression, but on the other hand I could not help remarking that the hon. Gentleman said that his purpose in moving the Amendment was the gradual elimination of the Purchase Tax on these articles. For a gradual elimination this is not a bad first bite. It amounts to very nearly £50 million on all the articles concerned.

The hon. Gentleman the Member for Shoreditch and Finsbury (Mr. Collins) asked me for a breakdown of cost. The amount involved in the Amendment immediately before us relating to garments is £35½ million. The amount on footwear, headgear and gloves comes in total to £9½ million. The amount on haberdashery is £1½ million. I can break these figures down if it is wished.

9.15 p.m.

Mr. Redhead

Will the hon. and learned Gentleman state whether, in arriving at these figures, due allowance has been taken of the fact that the revenue yield under these headings has hitherto included the tax revenue on fur items, which have been taxed at a much higher rate?

Mr. Simon

No. The loss of revenue that I have given is that which would be involved in the acceptance of the Amendments. Fur has been taxed under a different part of the Schedule.

Mr. H. Wilson

I think that the hon. and learned Gentleman referred to the total revenue which would be lost by the acceptance of the Amendments. Am I right in thinking that he is referring not to the single Amendment which has been moved, but to all the Amendments we are taking together?

Mr. Simon

Yes, that is right. The amount involved in all the Amendments is £46½ million, but on the main Amendment dealing with garments the amount is £35½ million. I gave the further breakdown, to some extent.

The Committee will appreciate that, since this sort of figure is concerned, my right hon. Friend will be unable to accept the Amendment. But the debate gives us a chance, first, to look at the clothing industry and, second, to deal with the point raised specifically by the hon. Member for Ince (Mr. T. Brown) and the hon. Member for Flint, East on the change in the method of collection of the tax, or the remission of the tax, on wool clothing.

The hon. Member for Leeds, South-East (Miss Bacon) said, quite correctly, that during the war there was a differential in the tax on clothing. Utility clothing was exempt, and later roughly the equivalent of Utility clothing was exempt under the D scheme.

Mr. Wilson

The hon. and learned Gentleman was not involved in the debates we had at that time, but if he will read the debates on the Bill, which was introduced by the Lord Privy Seal, he will find that we spent two nights running on the subject—which I hope will not establish a precedent which the Chancellor wants to follow. As my hon. Friend the Member for Leeds, South-East will probably remember, during those debates we moved between 80 and 90 Amendments, the purpose of each of which was to set the D line at that level which would exempt all clothing of up to approximately the Utility standard. In every case our Amendments were defeated—except in the case of furnishing fabrics, where the question was considered. But we were defeated on every other occasion, because the Government insisted on fixing the D line at a point lower than the top Utility level.

Mr. Simon

I am obliged to the right hon. Gentleman for that correction, but I was merely trying to make the point that there was a differential in clothing, and that it was removed in 1955, when a flat 5 per cent. tax on all clothing was introduced which brought in roughly the same amount of revenue as the previous tax. Whatever else may be said, that undoubtedly obviated many anomalies and a number of distortions in trade which the previous incidence of the tax had caused.

Mr. Wilson

Since the hon. and learned Member has been giving the figures of tax revenue, will he now state the total amount of revenue from this group of items, as compared with the total amount obtained during the period, first, of the D scheme and, secondly, the Utility scheme?

Mr. Simon

I am sorry; I cannot do that without notice, but I shall try to obtain that information and give it to the right hon. Gentleman.

With all these changes in tax, I think the Committee will agree that clothing prices have remained remarkably stable. They have shown an almost unique stability over the last decade or so—certainly over the last seven years. That suggests that this has always been a highly competitive industry. That is the first thing one must look at in discussing the general state of the industry. The second is the point made by the hon. Member for Shoreditch and Finsbury, that the recession is not of recent origin. When one considers that together with the great increase in purchasing power which took place last year it will be seen that in considering this recession one must look to other factors than those which may be operating in some other parts of the economy.

The next point, which was generally agreed in all parts of the Committee, especially by those who spoke with particular authority about the industry, is that whatever recession or short working there may be, Purchase Tax is not really an operative factor. I know that it is perfectly arguable to say that Purchase Tax should nevertheless be removed, but it was nevertheless agreed by every hon. Member who spoke on this matter that Purchase Tax was not even an operative factor.

The other point which I should like to make is that not only was consumer expenditure high last year—indeed, higher than it had been before—but, as my right hon. Friend estimated in his Budget statement, consumer expenditure is likely to keep up this year. This leads me to suggest that one must look elsewhere than to the fall in consumer spending for such ills as are at the moment afflicting the industry. It may be that this industry, originally competitive, is now subject to even more acute competition from outside the industry. There are competing attractions for the expenditure of the people who were probably restocking their wardrobes after the war.

It is against the background of these facts that I ask the Committee to view this tax: first, that the Purchase Tax is not an operative factor in such misfortunes as the industry is undergoing; and, second, that a number of the deep-lying causes of these misfortunes do not lie within the fiscal manipulation of this Committee of or the House but are to be found in alternative attractions to spending, such as television sets, which are still bought at an increasing rate, and record players and records, all big revenue producers which for that very reason are still taxed at the higher rate of 60 per cent.

Mr. Jay

Could the hon. and learned Gentleman's argument not be used with almost equally exact truth about the film industry, which has become depressed not mainly because of Entertainments Duty, but precisely because of this sort of competition? Have not the Government nevertheless accepted the argument for reducing the tax in order to assist the cinema industry?

Mr. Simon

So far as the cinema industry is concerned, I do not doubt that the right hon. Gentleman is correct. My right hon. Friend made that very point in his Budget statement. Certainly, one could not ascribe to the Entertainments Duty all the misfortunes of the cinema industry, because there were these alternative attractions, particularly television. Nevertheless, that can be seen to be a different case when one considers the difference in the rate of tax and the fact that the cinema was isolated in having to pay Entertainments Duty at that high rate. I am grateful, Sir Norman, to have been enabled to get away with that, and I hope that I have answered the right hon. Gentleman.

Having said that about the general background of the tax, and before answering some of the specific points made during the debate, I will try to answer what was said by the hon. Member for Ince and, in that connection, try to reply also to the points made by the hon. Member for Salford, East (Mr. Allaun) about the change in the tax on wool cloth. My right hon. Friend reminded the Committee of what he had said during the Budget debate, and I think that everyone accepted that as a perfectly fair and candid statement of the change which had taken place.

There is no change in the tax on clothing, either on suits or dresses. It remains at 5 per cent. Before the Budget, there was a tax on wool cloth of 10 per cent., whereas there was no such tax on cotton cloth or cloth made from artificial fibres. As I understand it, the change is this. What determines liability to tax is not merely the fact that the goods a person is selling are stated in the Purchase Tax Schedule to be liable to tax, but whether or not the person is registered.

What was done in the clothing trade was to register the manufacturer of the woollen cloth and to collect from him tax at 10 per cent. My right hon. Friend reminds me that it is the manufacturer or the wholesaler. This being so, a tax at the wholesale level of 10 per cent. is roughly equivalent to a tax of 5 per cent. on the finished article at the retail outlet. Since the wool cloth was taxed at 10 per cent. at the wholesale or manufacturing point, it was quite unnecessary to register and collect the tax from the retailer. To have done so would have been to collect the tax twice.

My right hon. Friend received very strong representations from the wool industry, which said that it felt itself to be unfairly treated by what it regarded as a discrimination against it. Those concerned in the industry asked why wool cloth should be treated in this way and, uniquely, have to bear a tax of 10 per cent., whereas cotton cloth and cloth made from artificial fibres bore no such tax. It was found impossible to controvert those arguments. For that reason, my right hon. Friend made the change he did in his Budget statement and relieved the manufacturers of wool cloth from the 10 per cent. Purchase Tax, bringing them into line with the manufacturers of the other cloth. But, as he made quite clear at the time, that involved the corollary that the retail outlets then became registrable.

Mr. Glover

Will my hon. and learned Friend clear up one point, because it is very important? It is not the ordinary retailer but the bespoke tailor who is here concerned. If the impression goes out from here that my hon. and learned Friend is talking about the ordinary retailer, there will be a misapprehension. We are here concerned with the establishment where a person actually makes a suit on the premises.

Mr. Simon

I am very grateful to my hon. Friend; he is perfectly right. I was imprecise in my language. It is the bespoke tailor who now becomes registrable and the tax is to be collected from him. Otherwise, it would be grossly unfair on the big manufacturing tailor.

The hon. Member for Salford, East pointed out that this situation is likely to lead to evasion. I think that he is perfectly right. It was a decision that had to be balanced, but in view of the representations that we received from Yorkshire it was felt that that was a risk that ought to be taken. I assure the hon.

Gentleman that we have very much in mind the points that he put so lucidly and fairly, and if abuse is found to be developing there are measures that can be taken, and we shall step in.

Mr. Allaun

rose——

9.30 p.m.

The Temporary Chairman (Sir Norman Hulbert)

The Question is——

Mr. H. Wilson

I understand that the Financial Secretary is giving way to my hon. Friend.

Mr. Simon

I am conscious of having spoken at some length. There are one or two small points with which I want to deal, but I was giving way to the hon. Member for Salford, East.

Mr. Allaun

I am much obliged to the hon. Gentleman. The question I wanted to ask is this. It is true that the Financial Secretary has dealt with the question of evasion, but he has not answered the criticism that instead of his tax officers having to visit a few hundred cloth manufacturers and merchants they will now have to visit tens of thousands of small firms, which will surely involve the country in much additional expenditure in collecting the tax.

Mr. Simon

I was proposing to deal with that point next; I had it in mind. In the first place, the hon. Gentleman is misinformed when he says that there are tens of thousands of bespoke tailors concerned. Considering those who are exempt, I am told that there is nothing like so great a number. I cannot give a precise number, but it is certainly well under 10,000, according to my information. What is happening there is no different from what has been happening ever since, I think, 1955 in the sphere of cotton and artificial rayons.

May I finally deal with one or two minor points which were raised in the course of the debate? The hon. Member for Coatbridge and Airdrie (Mrs. Mann) referred to children's headgear. She said that fur skin is a necessity for Scottish babies, and I think she added that for all she knew it might be the same in other parts of the Kingdom.

I should like to make the position about fur headgear absolutely clear, because I think there has been some misunderstanding. The normal fur headgear that is made for babies is, I am told, made from sheep's wool, lamb's wool or rabbit wool. That has always been exempt and remains exempt. Equally, headgear trimmed with fur which is made for babies is exempt. It has been exempt and remains exempt. The only change is that if some very wealthy parent wishes to put his or her child into a sable hat, a mink hat, a chinchilla hat, or whatever it is, he or she pays the rate of tax which is appropriate to a fur tax. There is no reason why that should not be so, but I re-emphasise the point that babies' headgear, including babies' fur skin headgear remains exempt except for these very expensive furs.

The hon. Member for Coatbridge and Airdrie also said that fur coats are a necessity in Scotland. Again, I merely emphasise that the tax on fur garments has been reduced in this Budget from 50 per cent. to 30 per cent.

Mrs. Mann

I did not ask that fur coats should be reduced at all.

Mr. Simon

They have been reduced, whether the hon. Lady asked or not.

Finally, I think I ought to deal with a point referred to by my hon. Friend the Member for Ormskirk, the hon. Member for Shoreditch and Finsbury and the hon. Member for Airdrie and Coatbridge, which is the question of uplift. I do not think this is an appropriate moment to go into the technicalities of uplift. It is sufficient for me to say that my right hon. Friend does not see any reason to alter the present system. On the other hand, he will read in the OFFICIAL REPORT what has been said and I am, as always I hope, entirely at the disposal of any hon. Member who wishes to make representations about this. I have not myself received any evidence to make me think that the present system is operating unfairly, but I agree with what my hon. and gallant Friend said about the possibility of this operating uneconomically, and I am certainly willing to read what has been said in this debate.

Mr. Collins

When the Minister reads the report of the debate on this point, will he have regard to the fact that the 5 per cent. uplift on a 5 per cent. tax is less than one-quarter of one per cent., because the manufacturer is entitled to deduct 3¾ per cent. from the wholesale value before calculating the tax? Less than one-quarter of 1 per cent. of £35½ million, which he said was the tax collected on the garments, is approximately £78,000, and £78,000 is far less than the cost to the manufacturing traders of working out those endless calculations, week after week, month after month, and year after year.

Mr. Simon

I would like to consider those figures carefully before committing myself to consenting to them.

Ultimately, we come down to the cost of the concession asked for in these Amendments. That is the reason which must finally determine my right hon. Friend in asking the Committee to reject the Amendment. I hope I have satisfied the Committee that the present system operates not unfairly and, as has been generally admitted, the Purchase Tax is not an operative factor in such misfortunes as these industries are suffering at the moment.

Mr. H. Wilson

I would not have intervened at this stage had it not been for certain remarks of the Financial Secretary. May I say, however—and I am sure that I am speaking for all my right hon. and hon. Friends—that it is an agreeable experience to hear the hon. and learned Gentleman wind up a debate of this kind. I hope I am not upsetting anyone when I say that he appears to us to be a great improvement on some of his recent predecessors in that position, because he addresses himself to the arguments that have been used and deals with them with great courtesy.

I remember once paying the same tribute to the present Minister of Pensions and National Insurance, who was characteristic for the same quality. This will, I hope, lighten our labours considerably during what appears likely to be a lengthy stage of the Finance Bill. We hope that the hon. and learned Gentleman will continue as he has begun.

With many of the things that the hon. and learned Gentleman said, I am sure the Committee will be in agreement. Certainly, we have all been instructed by the expertise produced by certain hon. Gentlemen opposite, by my hon. Friend the Member for Shoreditch and Finsbury (Mr. Collins) and by my other hon. Friends. We have learned a lot, and I am sure the Treasury Bench has also learned quite a lot during the past few minutes about the mechanism and statistics and accountancy of the uplift operation.

When the hon. and learned Gentleman said also that the clothing trade is a highly competitive one, I am sure we all agreed. That is one of the factors in the relative stability of clothing prices, although there are others. One is the very heavy volume of imports of clothing of various kinds, particularly of clothing made from cotton, silk and rayon goods from Hong Kong, India and other places. That has had a most depressing influence on certain sections of the clothing trade, as Lancashire knows very well to her cost.

I am sure that the hon. and learned Gentleman is also right in saying that the main factor at work has been a switch in consumer buying habits from clothing to other things in the past year or so. The hon. and learned Gentleman said things were more attractive. He must not forget the important effect of higher rents of both council and privately rented houses, because when a family of limited means find that they have to pay 5s., 10s. or 15s. a week more in rent they have to count every penny that is going on things like clothing; and as we have seen over the past few years, clothing tends to be a residuary item in the household budget.

In 1952 and 1953, when prices for food were rising sharply, it was mostly textiles which suffered from the effects of the "squeeze" on household finance—a "squeeze" which hon. Gentlemen opposite have put on household finance with their various manoeuvrings on rent and which has had a serious and direct effect on purchases of the kind of clothing that we have been discussing.

We are glad that the right hon. and learned Gentleman the Chancellor of the Exchequer has removed the tax on wool, not only because it was high by comparison with the position of cotton, synthetics, linen, and so on, but also because Yorkshire is at present depressed to an extremely grave state. I speak with great delicacy and care, being a Yorkshireman with a Lancashire constituency. On the whole, the Yorkshire textile trade does not publicise its difficulties as much as Lancashire. Yorkshire can suffer grievously in matters of short-time working and unemployment and we in this House do not hear so much of it as, inevitably and rightly, we hear of the Lancashire cotton industry.

The causes are very different. I have heard my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes), who has a lifetime of experience in this industry, say in the House that he has never known the wool industry as depressed as it is at present; and it is no good talking to him of inflation, and so on, because he sees here acute depression, worse than that at some times during the 1930s, during the great depression. So it was right to do this; but we want to press on the hon. and learned Gentleman the consequences of removing the 10 per cent. from wool while leaving 5 per cent. on cloth. Various possibilities have been put by my hon. Friends, especially by the hon. Member for Shoreditch and Finsbury, and it looks as though there are to be chronic forms of evasion and tax avoidance, much of it legal, by the kind of example that he gave. Are we right, in supposing, as he informed the Committee, that if a customer gives a suit length to a tailor he does not have to pay tax?

Mr. Glover

The customer pays the retail price for the cloth before he goes along to the tailor.

Hon. Members

No.

Mr. Wilson

It looks as though the hon. Member is confused.

Mr. Glover

I was pointing out to the right hon. Gentleman that a person is not likely to do that because the suit will cost him more, for he must pay the retail price for the cloth instead of getting it at the wholesale cost from the tailor.

Mr. Wilson

I do not know as much of this trade as does the hon. Member, but I have heard of people being given suit lengths. I think that it is not unusual in Yorkshire. No tax is then paid.

Mr. Burden

I do not know whether the right hon. Gentleman was given it, but I remember that he came to the House, some time ago, with a suit which was manufactured from synthetic fibre. I am not being objectionable, but I would ask: what applied there?

Mr. Wilson

If I must refer to that suit, it did not last as long as I would have liked. It was made of Ardil fibre—one of the earliest ventures in synthetic cloth. It was sent to the President of the Board of Trade by the manufacturers. I insisted on paying for it. I got in touch with Lord McGowan and paid for that suit—and I am not sure that I did not overpay. It is most unlikely that the gift will be repeated. Nevertheless, I was grateful for the opportunity of being able to subject that particular new and interesting fibre to the hard wear that I was able to give it.

As I understand the position, someone who comes with a suit length does not have to pay tax and surely my hon. Friend is right in saying that all kinds of "rackets" might start, particularly in large stores where a customer can get cloth in one part of the store and take it to another part and, by that means, avoid the tax. I hope that the hon. and learned Gentleman will look at that very carefully.

9.45 p.m.

The real issue—and I think that the hon. and learned Gentleman recognises it, although he has done nothing about it—is the difficulty mentioned by my hon. Friend the Member for Salford, East (Mr. Frank Allaun), my hon. Friend the Member for Ince (Mr. T. Brown) and other hon. Members, that as a result of the Chancellor's half-hearted decision about wool all kinds of people who have never been in the habit of doing so, will now have to keep records, even though many of them are incapable of doing so. The hand-made tailors and front street tailors, and so on, will have to deal with all these complications.

The Chancellor would never think of asking the proprietor of a village sweet shop to keep records for Purchase Tax purposes. That would have been one of the results of the Kidderminster sales tax proposal and the right hon. Gentleman was right about that. I am not sure that he is not making the whole thing unworkable. The revenue will be very small in comparison with the trouble involved and with the miserable and squalid prosecutions, and so on, which will result. It would have been better if the Chancellor had taken his courage in both hands and removed the tax on the items of clothing as well.

The hon. and learned Gentleman gave the figures of the cost of the Amendment and we owe it to the Committee to explain why we intend to go into the Division Lobby on this matter. It is our very strong impression—the hon. and learned Gentleman, quite understandably, did not have the figures readily available—that over the clothing range, as a result of the 5 per cent. tax, the Government will be getting more than they were getting in the times of the Utility scheme, when there was a high proportion of Utility wear, and probably more in total revenue than at the time of the D scheme. We may be wrong about that, but the hon. and learned Gentleman does not seem to have any figures to disprove that, and it remains a very strong impression in many quarters.

Mr. Burden

This is not a comparable argument, because at the time of the D scheme and the Utility scheme there was a shortage of clothing and those schemes were a form of restriction of rationing, whereas today there is none of that and there is a much wider choice.

Mr. Wilson

Despite his trade expertise, the hon. Member is wide of the mark. Clothes rationing was removed on 14th March, 1949—I remember the occasion very well—although the Utility scheme continued long after 14th March, 1949. The ration was removed only when it was possible to do so safely without a shortage of supplies. There was no scarcity and the D scheme came in in 1952 and lasted another three years, so that the hon. Gentleman was not up to his usual standard of expertise. As the hon. and learned Gentleman said, total demand has not markedly increased over the past few years. It seems that the Government are taking, relative to those days, an excessive proportion in Purchase Tax.

The Committee will recognise our difficulty in that we do not want to remove the whole scope of the tax. We are not interested in mink babies, or baby minks—I will not be thrown by any Member into pursuing that any further, because I know the joke as well as hon. Members do.

Mr. Nabarro

Who, me?

Mr. Wilson

There are other hon. Members in the Chamber.

Nevertheless, it seems to us that here are many items within this range which ought to be tax-exempt—although perhaps not all. It is impossible, within the usual rules of order, for the convenience of the Committee to single out each and every one, and we have had to put down the somewhat omnibus Amendment which was moved by my hon. Friend the Member for Walthamstow, West (Mr. Redhead).

We shall vote for that Amendment, but we do not intend to vote for the others. That does not mean that we are necessarily in favour of removing from tax the whole range covered by that Amendment. If the hon. and learned

Gentleman had been willing to say that the Government were prepared to remove this and that item while keeping the tax on the others, we would have been only too ready to abstain from voting, but despite the courteousness and very agreeable speech of the hon. and learned Gentleman he showed no flexibility on this matter and we have no alternative but to divide the Committee.

Question put, That those words be there inserted:—

The Committee divided: Ayes 181, Noes 204.

Division No. 134.]	AYES	[9.50 p.m.
Ainsley, J. W.	Griffiths, Rt. Hon. James (Llanelly)	Mort, D. L.
Albu, A. H.	Griffiths, William (Exchange)	Moyle, A.
Allen, Scholefield (Crewe)	Grimond, J.	Neal, Harold (Bolsover)
Bacon, Miss Alice	Hale, Leslie	Noel-Baker, Francis (Swindon)
Baird, J.	Hall, Rt. Hn. Glenvil (Colne Valley)	Oliver, G. H.
Benson, Sir George	Hamilton, W. W.	Oram, A. E.
Beswick, Frank	Hannan, W.	Orbach, M.
Blackburn, F.	Harrison, J. (Nottingham, N.)	Paget, R. T.
Boardman, H.	Hastings, S.	Paling, Rt. Hon. W. (Dearne Valley)
Bonham Carter, Mark	Hayman, F. H.	Palmer, A. M. F.
Bottomley, Rt. Hon. A. G.	Henderson, Rt. Hn. A. (Rwly Regis)	Pannell, Charles (Leeds, W.)
Bowden, H. W. (Leicester, S. W.)	Herbison, Miss M.	Pargiter, G. A.
Bowen, E. R. (Cardigan)	Hewitson, Capt. M.	Parker, J.
Boyd, T. C.	Holman, P.	Parkin, B. T.
Brockway, A. F.	Holmes, Horace	Pentland, N.
Brown, Rt. Hon. George (Belper)	Howell, Denis (All Saints)	Popplewell, E.
Brown, Thomas (Ince)	Hoy, J. H.	Prentice, R. E.
Burke, W. A.	Hubbard, T. F.	Price, J. T. (Westhoughton)
Burton, Miss F. E.	Hughes, Cledwyn (Anglesey)	Price, Philips (Gloucestershire, W.)
Butler, Herbert (Hackney, C.)	Hughes, Emrys (S. Ayrshire)	Probert, A. R.
Butler, Mrs. Joyce (Wood Green)	Hunter, A. E.	Randall, H. E.
Callaghan, L. J.	Hynd, H. (Accrington)	Rankin, John
Carmichael, J.	Hynd, J. B. (Attercliffe)	Redhead, E. C.
Castle, Mrs. B. A.	Irvine, A. J. (Edge Hill)	Rhodes, H.
Chapman, W. D.	Irving, Sydney (Dartford)	Robens, Rt. Hon. A.
Chetwynd, G. R.	Isaacs, Rt. Hon. G. A.	Roberts, Albert (Normanton)
Clunie, J.	Jay, Rt. Hon. D. P. T.	Roberts, Goronwy (Caernarvon)
Coldrick, W.	Jeger, Mrs. Lena (Holbn & St. Pncs, S.)	Robinson, Kenneth (St. Pancras, N.)
		Rogers, George (Kensington, N.)
Collick, P. H. (Birkenhead)	Jenkins, Roy (Stechford)	Ross, William
Collins, V. J. (Shoreditch & Finsbury)	Jones, David (The Hartlepools)	Royle, C.
Corbet, Mrs. Freda	Jones, Elwyn (W. Ham, S.)	Short, E. W.
Craddock, George (Bradford, S.)	Jones, J. Idwal (Wrexham)	Silverman, Julius (Aston)
Dalton, Rt. Hon. H.	Jones, T. W. (Merioneth)	Silverman, Sydney (Nelson)
Davies, Ernest (Enfield, E.)	Kenyon, C.	Slater, Mrs. H. (Stoke, N.)
Davies, Stephen (Merthyr)	Key, Rt. Hon. C. W.	Sorensen, R. W.
Deer, G.	Lawson, G. M.	Steele, T.
de Freitas, Geoffrey	Lindgren, G. S.	Stewart, Michael (Fulham)
Delargy, H. J.	Logan, D. G.	Stonehouse, John
Diamond, John	Mabon, Dr. J. Dickson	Stones, W. (Consett)
Dodds, N. N.	McAlister, Mrs. Mary	Strachey, Rt. Hon. J.
Dugdale, Rt. Hn. John (W. Brmwch)	MacDermot, Niall	Stross, Dr. Barnett (Stoke-on-Trent, C.)
Dye, S.	McGhee, H. G.	Sylvester, G. O.
Ede, Rt. Hon. J. C.	McGovern, J.	Taylor, Bernard (Mansfield)
Edwards, Rt. Hon. John (Brighouse)	McInnes, J.	Taylor, John (West Lothian)
Edwards, Robert (Bilston)	McKay, John (Wallsend)	Thornton, E.
Edwards, W. J. (Stepney)	McLeavy, Frank	Tomney, F.
Evans, Albert (Islington, S. W.)
Fernyhough, E.	MacMillan, M. K. (Western Isles)	Viant, S. P.
Fletcher, Eric	MacPherson, Malcolm (Stirling)	Wade, D. W.
Foot, D. M.	Mallalieu, E. L. (Brigg)	Weitzman, D.
Forman, J. C.	Mann, Mrs. Jean	Wells, William (Walsall, N.)
Fraser, Thomas (Hamilton)	Marquand, Rt. Hon. H. A.	West, D. G.
Gaitskell, Rt. Hon. H. T. N.	Mason, Roy	Wheeldon, W. E.
George, Lady Megan Lloyd (Car'then)	Mayhew, C. P.	White, Mrs. Eirene (E. Flint)
Gibson, C. W.	Mellish, R. J.	Wilcock, Group Capt. C. A. B.
Gordon Walker, Rt. Hon. P. C.	Mitchison, G. R.	Willey, Frederick
Grenfell, Rt. Hon. D. R.	Moody, A. S.	Williams, David (Neath)
Grey, C. F.	Morris, Percy (Swansea, W.)	Williams, Rev. Llywelyn (Ab'tillery)
Griffiths, David (Rother Valley)	Morrison, Rt. Hn. Herbert (Lewis'm, S.)	Williams, Rt. Hon. T. (Don Valley)
Willis, Eustace (Edinburgh, E.)	Woof, R. E.	TELLERS FOR THE AYES:
Wilson, Rt. Hon. Harold (Huyton)	Yates, V. (Ladywood)	Mr. Pearson and Mr. Simmons.
Woodburn, Rt. Hon. A.
NOES
Agnew, Sir Peter	Graham, Sir Fergus	Nabarro, G. D. N.
Aitken, W. T.	Green, A.	Nairn, D. L. S.
Allan, R. A. (Paddington, S.)	Grimston, Hon. John (St. Albans)	Neave, Airey
Amory, Rt. Hn. Heathcoat (Tiverton)	Grimston, Sir Robert (Westbury)	Nicholls, Harmar
Arbuthnot, John	Grosvenor, Lt.-Col. R. G.	Nicolson, N. (B'n'm'th, E. & Chr'ch)
Armstrong, C. W.	Hall, John (Wycombe)	Oakshott, H. D.
Ashton, H.	Harris, Frederic (Croydon, N. W.)	O'Neill, Hn. Phelim (Co. Antrim, N.)
Atkins, H. E.	Harris, Reader (Heston)	Orr, Capt. L. P. S.
Baldwin, A. E.	Harvey, John (Walthamstow, E.)	Osborne, C.
Balniel, Lord	Heald, Rt. Hon. Sir Lionel	Page, R. G.
Barlow, Sir John	Hesketh, R. F.	Pannell, N. A. (Kirkdale)
Barter, John	Hicks-Beach, Maj. W. W.	Partridge, E.
Beamish, Col. Tufton	Hill, Mrs. E. (Wythenshawe)	Peel, W. J.
Bell, Philip (Bolton, E.)	Hobson, John (Warwick & Leam'gt'n)	Peyton, J. W. W.
Bell, Ronald (Bucks, S.)	Holland-Martin, C. J.	Pike, Miss Mervyn
Bennett, Dr. Reginald	Hope, Lord John	Pilkington, Capt. R. A.
Bevins, J. R. (Toxteth)	Hornby, R. P.	Pitman, I. J.
Bingham, R. M.	Hornsby-Smith, Miss M. P.	Powell, J. Enoch
Birch, Rt. Hon. Nigel	Horobin, Sir Ian	Price, David (Eastleigh)
Bishop, F. P.	Howard, Gerald (Cambridgeshire)	Price, Henry (Lewisham, W.)
Body, R. F.	Howard, John (Test)	Prior-Palmer, Brig. O. L.
Boothby, Sir Robert	Hudson, W. R. A. (Hull, N.)	Profumo, J. D.
Boyle, Sir Edward	Hughes Hallett, Vice-Admiral J.	Ramsden, J. E.
Braine, B. R.	Hughes-Young, M. H. C.	Rawlinson, Peter
Braithwaite, Sir Albert (Harrow, W.)	Hurd, A. R.	Redmayne, M.
Brooman-White, R. C.	Hutchison, Michael Clark (E'b'gh, S.)	Renton, D. L. M.
Browne, J. Nixon (Craigton)	Hyde, Montgomery	Ridsdale, J. E.
Burden, F. F. A.	Hylton-Foster, Rt. Hon. Sir Harry	Rippon, A. G. F.
Butcher, Sir Herbert	Irvine, Bryant Godman (Rye)	Roberts, Sir Peter (Heeley)
Carr, Robert	Jenkins, Robert (Dulwich)	Rodgers, John (Sevenoaks)
Chichester-Clark, R.	Jennings, Sir Roland (Hallam)	Roper, Sir Harold
Clarke, Brig. Terence (Portsmth, W.)	Johnson, Dr. Donald (Carlisle)	Ropner, Col. Sir Leonard
Cooke, Robert	Johnson, Eric (Blackley)	Russell, R. S.
Cooper-Key, E. M.	Jones, Rt. Hon. Aubrey (Hall Green)	Scott-Miller, Cmdr. R.
Cordeaux, Lt.-Col. J. K.	Joseph, Sir Keith	Sharples, R. C.
Corfield, Capt. F. V.	Kerr, Sir Hamilton	Shepherd, William
Craddock, Beresford (Spelthorne)	Kershaw, J. A.	Simon, J. E. S. (Middlesbrough, W.)
Crosthwaite-Eyre, Col. O. E.	Kimball, M.	Smithers, Peter (Winchester)
Crowder, Petre (Ruislip—Northwood)	Kirk, P. M.	Speir, R. M.
Cunningham, Knox	Lancaster, Col. C. G.	Stanley, Capt. Hon. Richard
Currie, G. B. H.	Langford-Holt, J. A.	Steward, Harold (Stockport, S.)
Davidson, Viscountess	Leather, E. H. C.	Steward, Sir William (Woolwich, W.)
D'Avigdor-Goldsmid, Sir Henry	Leburn, W. G.	Storey, S.
Deedes, W. F.	Legh, Hon. Peter (Petersfield)	Studholme, Sir Henry
Digby, Simon Wingfield	Lindsay, Hon. James (Devon, N.)	Summers, Sir Spencer
Dodds-Parker, A. D.	Lindsay, Martin (Solihull)	Sumner, W. D. M. (Orpington)
Donaldson, Cmdr. C. E. McA.	Linstead, Sir H. N.	Taylor, Sir Charles (Eastbourne)
du Cann, E. D. L.	Lloyd, Rt. Hon. Selwyn (Wirral)	Temple, John M.
Dugdale, Rt. Hn. Sir T. (Richmond)	Longden, Gilbert	Thomas, Leslie (Canterbury)
Duncan, Sir James	Low, Rt. Hon. Sir Toby	Thompson, Kenneth (Walton)
Duthie, W. S.	McAdden, S. J.	Thornton-Kemsley, Sir Colin
Eden, J. B. (Bournemouth, West)		Tiley, A. (Bradford, W.)
Elliott, R. W. (Ne'castle upon Tyne, N.)	Macdonald, Sir Peter	Turton, Rt. Hon. R. H.
Emmet, Hon. Mrs. Evelyn	McKibbin, Alan	Vane, W. M. F.
Errington, Sir Eric	Mackie, J. H. (Galloway)	Vickers, Miss Joan
Finlay, Graeme	McLaughlin, Mrs. P.	Wakefield, Edward (Derbyshire, W.)
Fletcher-Cooke, C.	McLean, Neil (Inverness)	Wall, Patrick
Fort, R.	MacLeod, John (Ross & Cromarty)	Ward, Rt. Hon. G. R. (Worcester)
Fraser, Hon. Hugh (Stone)	Macmillan, Maurice (Halifax)	Ward, Dame Irene (Tynemouth)
Fraser, Sir Ian (M'cmbe & Lonsdale)	Macpherson, Niall (Dumfries)	Whitelaw, W. S. I.
Freeth, Denzil	Maddan, Martin	Williams, R. Dudley (Exeter)
Galbraith, Hon. T. G. D.	Manningham-Buller, Rt. Hn. Sir R.	Wills, G. (Bridgwater)
Gammans, Lady	Marlowe, A. A. H.	Wilson, Geoffrey (Truro)
Gibson-Watt, D.	Marshall, Douglas	Woollam, John Victor
Glover, D.	Mathew, R.	Yates, William (The Wrekin)
Glyn, Col. Richard H.	Maudling, Rt. Hon. R.
Godber, J. B.	Mawby, R. L.	TELLERS FOR THE NOES:
Goodhart, Philip	Medlicott, Sir Frank	Colonel J. H. Harrison and
Gough, C. F. H.	Milligan, Rt. Hon. W. R.	Mr. Bryan.
Gower, H. R.	Morrison, John (Salisbury)

Mr. H. Wilson

I beg to move, That the Chairman do report Progress and ask leave to sit again.

The reason for moving this Motion is not the smallness of the Government majority, although obviously in the interests of the Government it would be wiser for us to adjourn now before their majority entirely disappears. However, that is not the purpose of my intervention. It is that I thought this might give the Chancellor an opportunity to explain what are his intentions about the length of this sitting.

10.0 p.m.

Mr. Amory

I am grateful to the right hon. Member for Huyton (Mr. H. Wilson) for raising this question and for being so solicitous about our majority. I am getting a bit worried about the rate of progress we are making. I have no complaint to make whatever about any of the speeches that hon. Gentlemen or hon. Ladies have made on either side of the Committee. They all seem to have been relevant to the subjects we are discussing. However, time is going and a tremendous lot of Amendments are ahead of us.

I do not want to have more late night sittings if we can possibly avoid it. I know the inconvenience that is caused to hon. Gentlemen, especially at what I might call an "intermediate" hour. We must among us try to make more rapid progress than we have been making recently. It would probably be for the convenience of hon. Members, if we must sit late, to sit during one night instead of two nights. I am hoping that we can get two more Amendments done before we go tonight. We must see how we get along. I would ask hon. Gentlemen and hon. Ladies, as well as right hon. Gentlemen, to bear in mind that, at the present rate of progress, we shall inevitably have a very long Sitting tomorrow. I do not want to say more than that at the present stage. I hope hon. Members generally will try to keep their remarks as short as they feel they can in covering the case they are presenting, and we on our side in replying to the debates will try to do the same.

Mr. Wilson

We have been warned that the night is passing and of what may lie in store for us tomorrow evening, when we shall be quite ready to continue the debate until whatever time is required. The Chancellor of the Exchequer was quite fair in saying that there has been no waste of time, particularly yesterday when the debate was shared between both sides of the Committee, and especially upon issues involving a considerable amount of expertise.

We spent two hours today debating an Amendment moved by the hon. Member for Kidderminster (Mr. Nabarro), whose fighting qualities are now becoming a little more obvious to the Committee than they were before the debate today. If ever there were a warrior who wished to wound but feared to strike, it is the hon. Member for Kiddermintser. If he is to go on like this there might be a means of saving Government time by his moving only those Amendments about which he feels sufficiently strongly to support in the Lobby. I do not want to put any ideas into his head. That might be one way of giving effect to what the Chancellor has in mind.

The debate has certainly been economical in time. The main speeches have been very short. We welcome the suggestion that we do not want to sit late tonight. I do not know whether we can get the two Amendments at a reasonable hour, but we shall see. I hope that in planning the rest of the Finance Bill debate the Chancellor of the Exchequer will remember that there are transport difficulties, not simply those arising out of the situation in the bus industry, but generally. I will try, and I hope that the right hon. Gentleman will try, to adjust our timing, so far as it lies within our control, to those considerations. I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

Mr. John Rankin (Glasgow, Govan)

I beg to move, in page 29, line 21, after "apparatus)", to insert: other than tax in respect of cathode ray tubes".

The Deputy-Chairman (Sir Gordon Touche)

I think it would for the convenience of the Committee also to discuss the four following Amendments: in page 29, line 22, to leave out "gramophones"; in line 22, to leave out "radio-gramophones"; in line 23, to leave out "player pianos"; and in line 24, to leave out from "thereto" to "or" in line 25.

Mr. Rankin

Your suggestion, Sir Gordon, is quite convenient to us. I shall seek to address myself solely to the first Amendment on cathode ray tubes, and my hon. Friends will in succession deal with the four Amendments that follow.

I think the Chancellor should note that there was much dismay in many homes when he failed to reduce the tax on cathode ray tubes. Television, as the Financial Secretary indicated in his reply to a previous debate, is growing more and more rapidly, and the apparatus is very costly to install. The chief difficulty is the maintenance of the apparatus. The cathode ray tube has no guarantee of extended life. Most manufacturers do not offer a guarantee extending beyond six months. Most people who get two or three years' service from the tube feel rather lucky.

The maintenance of a television set is a fairly costly item, because even with the reductions which were forced as a result of the Monopolies Commission Report, the 17-inch cathode ray tube remains at the fairly high price of £21. Most people were thinking that there might be some concession from the Chancellor in regard to the high tax of 60 per cent. levied on these tubes. Therefore, his decision not to reduce the tax was received with a great deal of dismay in many homes. We hope that when he has heard what is to be said in this debate he will come to the conclusion that he ought to adopt the Amendment and reduce the tax from 60 per cent. to 30 per cent.

The proceedings of the Monopolies Commission gave us an insight into what goes on in the manufacture of these tubes. I shall give some figures which were established by the Financial Times last year. I wish first to refer to the cathode ray replacement tube produced by Messrs. Mullard who, I think, are the largest individual producers of cathode ray tubes in the country and who supply 37 per cent. of the total output. In 1954, the manufacturers' cost of the 14-inch tube was £5 6s., and on that there was a profit of £4 9s., which is an enormous, almost unbelievable, profit, giving a wholesale price of £9 15s. When the Commission was nearing the end of its inquiry and after it had heard a great deal of evidence from manufacturers and carried out considerable inquiries, action was taken by all the producers, including Messrs. Mullard, to reduce the £5 6s. tube to £4 6s. and reduce the profit from £4 9s. on each tube to £2 13s. That was a considerable cut.

That action reminded me of words I had used in the House when speaking in the debate on monopolies in 1955. I said that from an assessment which I had made, guided by people who were expert in business: the manufacturing cost of the tube will be about £3 10s."—[OFFICIAL REPORT, 24th February, 1955; Vol. 537, c. 1552.] That was the 14-inch tube. Subsequent action confirmed, fairly adequately, the statement which I made in this House in 1955.

10.15 p.m.

As a result of these changes, the price of the 14-inch tube, which was £20 10s. in 1954, is now £17 5s., and that is not an unreasonable reduction; but I shall have more to say about it later. I want to establish a rather interesting point from that. The manufacturer has reduced the profit which he was getting from £4 9s. to £2 13s. The wholesaler has reduced his profit from £1 15s. to £1 6s. The retailer, for some reason that I cannot explain, keeps his profit at £3 5s., and the Government have reduced the Purchase Tax from £5 15s. to £5 5s.

Here is the interesting point. If we take all the margins and add them up and get the total margin of profit that is created as we go through the various grades, we find that in 1954 the Government were extracting from the sale of a tube a profit of 37 per cent., but today they are extracting a profit of 42 per cent. The Government which instituted the inquiry in order to force reductions in the prices of television tubes are the same people who are shoving up their profit from 37 per cent. to 42 per cent. I hope that they can justify that.

Why should the Government put up their percentage of cut, if I may use that word, by the considerable amount of 5 per cent., at a time when, as has been shown in the previous debate, money has become scarcer and when people in many grades of society are finding it harder and harder to make ends meet. The Government which advocate cutting for others are the same people who take more for themselves.

I now turn to the 17-inch tube, where the figures are even more interesting. Again, we find that as a result of the Monopolies Commission the price of the 17-inch tube, which in 1954 was £24 13s., is now £21 4s., a reduction in price which, of course, we welcome. Again, if we take the margins of profit right through the whole process, we find that the margin of profit for the manufacturer has been reduced from £4 5s. to £2 5s. A profit of £4 5s. on an article costing £7 10s. is a good profit, and that was the profit that was being derived in 1954. However, again on the urging of the Monopolies Commission, that has been reduced by £2 to £2 5s. The wholesalers' margin has been reduced from £2 2s. to £1 12s. Unfortunately, the retail margin has been increased by 2s.—from £3 18s. to £4.

If, however, we take all the margins of profit that are created throughout the process of making and distributing this tube, we find that the Government, which in 1954 was getting from this Purchase Tax 37 per cent. profit, if we can call it that—[HON. MEMBERS: "No."] Very well, we will not call it so, although the person who buys the tube has to pay that £6 extra to the Government just as he has to pay the £2 5s. extra to the manufacturer. Therefore, I regard it as the "cut" that the Government are making on the process. In 1954, it was 37 per cent. This year it is 45 per cent. It has gone up by 8 per cent.

It really is very difficult to justify that. Surely, it is not too much to hope that the Government will not, in 1958, take more out of the process of getting the tube from the manufacturer into the home than they did in 1954. Surely, we might have expected that when they were urging all the others engaged in the business to reduce their margin, the Government might themselves have considered the advisability of reducing the Purchase Tax which they inflicted on the purchaser.

There is another aspect of this. We feel that these tubes could come down still further in price. Despite the reductions that have been made as a result of the inquiry, Associated Electrical Industries which, in 1953, made a profit of £12,456,000 odd, in the first six months of 1956–57 made a profit of £6,760,000 which, on a yearly rate, represents a profit of over £13½ million. Therefore, that firm can produce at a lower price and still make a greater profit than it did in previous years, and we feel that there is reason for arguing that still further reductions in price could be made. But how can we add to the strength of our argument when such firms say to us: "While we reduce our price, the Government simply put up the Purchase Tax margin still further"?

In June, 1954, Electrical and Musical Industries made a profit of £1,428,000. In 1956–57 its profit was £6 million. There is room for still further reductions. The General Electric Company which, in 1953, made a profit of £6½ million and in 1954 a profit of £8¼ million, made a profit in 1956–57 of £9,700,000. There is room for further reductions in the price of the cathode ray tube which, I hope, if we succeeded in getting, would be welcomed by all parties. But we shall not be helped in achieving it so long as the Government do nothing about making a contribution on their side, and so help to reduce the price at the same time as they urge the manufacturers to do so.

I will not enter into an argument whether television is a luxury, an essential or an amenity. I think that most people regard it as an essential. Apart from its entertainment value, it has a cultural value. It introduces millions of people to scenes, countries and persons which they would otherwise never see. It introduces people to specific topics apart from its general value. It introduces them to political life and political arguments in a vivid and interesting fashion. It lets them see political personalities and persons prominent in all spheres of life. Consequently, it is something that we want to make available to as many people as possible as cheaply as possible.

At present prices, it is very difficult to do that. A television set is a fairly costly piece of apparatus, not only to purchase but to maintain. The cathode ray tube costs a sum of money which people do not spend easily. Consequently, it is our business to reduce the price not merely of the set but of the tube. Many people are contributing towards doing that, and the only people who seem to be refusing to line up are the Government. I hope the Government will listen to the argument which I have set forth, which will be substantiated by hon. Friends of mine, that there is a real case for reducing the tax on the cathode ray tube from 60 per cent. to 30 per cent. I hope the right hon. Gentleman will give careful consideration to that plea.

Dr. Stross

My interest is in the last of these Amendments, the one referring to gramophone records. I take this matter very seriously, and I think I shall have the sympathy and ear of hon. Members on all sides of the Committee when I state my case.

We were all surprised to find that gramophone records had been left subject to tax at the rate of 60 per cent. We welcome the reduction in the number of rates, but we cannot understand why there should be discrimination against gramophone records in that they are taxed at 60 per cent. when certain goods which are accepted by all of us as being in the luxury class are taxed at 30 per cent.

The gramophone record at its best is part of our community's cultural life now. When we ask for information about the sort of records now being made, we find that 20 per cent. are recordings of classical and serious music of the highest level. The remaining 80 per cent. are a mixture of what might be termed middle-brow and popular or light music. I hope that right hon. Gentlemen opposite will not in any way attempt to denigrate light, popular or middle-brow music. They do not discriminate against the popular novel by taxing it. We do not discriminate against the living theatre now by taxing it. What the living theatre presents on the stage is often a very light form of entertainment. We do not discriminate there, so we should not discriminate against records either.

I am personally, by addiction, more interested in the most serious type of music, and it is that which, in the main, I have in mind. The anomalies which are created by this action of the Treasury in imposing the 60 per cent. tax on records can be seen when one studies the position in this way. The tax on the musical instrument is now reduced to 30 per cent. When the musician uses it in the Albert Hall, or the Festival Hall, his work is not subject to tax. When he uses it in the recording studio to make records in order that that which he does may go into the homes of our citizens, then tax is imposed at the rate of 60 per cent. It does not seem very sensible. Nor is it very logical.

No one in this Committee now denies, or has at any time denied, the continuous need of the Treasury to find the money for its purposes. Revenue must be got, but we have a right as citizens, and as representatives of the citizens, to discriminate in how we get our revenue. Certainly, there should be no attack upon the cultural life of the community.

Interest in what is called, for want of a better term, good music—rather a poor term—in serious music in this country has in the post-war years grown very considerably indeed. Some of the figures given by my hon. Friend the Member for Govan (Mr. Rankin), describing the increase in profits made by some of the great companies, is, in part, evidence of what I am now saying. For a time before the war, during the 'thirties, there was a fall in the sales of recordings. Towards 1939 they began to improve. Since the war the sales have increased considerably. They are now well up to what they were in, say, the late 'twenties, when records in record making appeared to be made.

The impact of this Purchase Tax upon records is that the price of them is, roughly, 40 per cent. higher than if there were no Purchase Tax. This must have some impact on sales. I have made inquiries. I asked one of the large firms which make these records what its views were. The firm referred me to its annual review for the year ended June, 1956. This is Electrical and Musical Industries. This is what it said: If the burden of Purchase Tax were removed from the United Kingdom gramophone record there is every indication that the increased sales would enable us within five years to put the best recordings of the greatest masterpieces of music within the reach of all but the most restricted family budgets. We as legislators should take note of that, and if we accept it we should do everything in our power to bring it about.

10.30 p.m.

I myself do not find it possible to separate any of the fine arts. Nor is it easy to grade them in importance. Only a pedantic art historian would separate painting from sculpture, sculpture from architecture, architecture from music, music from poetry or drama. To me, they are part of one family, and I find it impossible to separate them. The only difference that I can think of is that to appreciate some we use the ear and to appreciate others we use our eyes.

But of all the arts, perhaps the most persuasive and pervasive, which has the greatest influence all over the world, is the art of music. I do not want to be sentimental or sententious, but it is impossible to believe that there is any higher form of art than, say, one of the late quartets of Beethoven. It is a fact that in listening to works of art of this type it is not only the direct sensuous impressions that we appreciate, but that behind these there is a whole host of impressions belonging to us ourselves individually. Such impressions vary from person to person, and they vary from time to time. They are as illimitable as the music itself is. No one should be denied the consolation that this type of inspiration offers to us. Unfortunate is the person who is unused to it and does not like it.

The vast majority of people in the world easily become addicted to the greatest form of music, and it happens to be music in our mode, the Western mode, invented in Europe. It has conquered not only Europe as time has gone by, but nearly all parts of the world. It is now making its way throughout China. It forms a sort of universal language. It never separates one man from his neighbour, but it seems to join us.

It may well be that in another generation or two this invention of the West will be the normal and common mode of music practised in every part of the world and so accepted. If this should happen it will be a matter of the highest importance. In the past, philosophers like Plato and Aristotle considered that this was of the greatest significance. They thought that man became assimilated to tie music to which he listened, that as men listened to music their own character changed. It will be remembered that even a tyrant like Hitler was terrified of the music that was coming into his country before and during the war and that he forbade his people to listen to it for fear that he would not be able to mould them in the way he wished. He may well have believed in the views of Aristotle.

A universal language based upon an invention that we have given to the world, together with one or perhaps only two other things—our great Gothic architecture and our own Western form of mathematics from Descartes to Einstein—is something to be proud of. To deny a citizen opportunities to listen to recordings as easily as possible and bought as cheaply as possible would be a tremendous mistake.

Lastly, may I do what I rarely do, and that is to quote Shakespeare on the subject of music. In "The Merchant of Venice", Act V, scene 1, Lorenzo says: The man that hath no music in himself, Nor is not mov'd with concord of sweet sounds, Is fit for treasons, stratagems, and spoils; The motions of his spirit are dull as night. And his affections dark as Erebus; Let no such man be trusted … Dare I suggest that citizens should not trust any Government that stands between themselves and the enjoyment of the fine arts? As I am speaking of music and recordings. I think that this quotation is apt.

Mr. Chapman

There is little that anyone can add to such an eloquent plea as that made by my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross). It is an appropriate moment to say that many of us on this side of the Committee feel that a tribute should be paid to my hon. Friend's continual activity on behalf of cultural amenities generally. We all admire very much his work in that direction. The obvious sincerity with which he put his case tonight showed how deeply he feels as well as how actively he works on this issue.

I want to say only a few words about gramophone records, although I feel almost as strongly about them as my hon. Friend. It is a strange situation when we reflect that over the years we have freed from Purchase Tax things like books and we have freed the living theatre from tax, and that rather than tax things like orchestras we nowadays provide subsidies for them, but that we now have a final tax remaining on something cultural, on musical records, at the very highest rate of Purchase Tax. It makes me think that we must have got things the wrong way round if we are in that situation today.

My first question to the Solicitor-General is to ask why, at a time when, in the Budget, we are reducing the tax on musical instruments, we are nevertheless maintaining it on gramophones and gramophone records? I should have thought that if other musical instruments have a case for reduction of tax, we could equally well apply it to gramophones and gramophone records. It is an extraordinary decision that our highest rate of taxation should remain on these things.

My hon. Friend said that from what he could gather, about 10 or 20 per cent.—my information is that the figure is smaller than that—of sales of records are of classical records. This is rather a scandal. I am assured by the chairman of one of our biggest gramophone record firms that experience shows that this is not due to any lack of interest by the general public, but is entirely a function of the fact that nowadays, to get a proper recording of most classical works, one has to buy a long-playing record, which involves a cost of about £2, between 10s. and 15s. of which is Purchase Tax. It is fantastic if we have now cut down, as seems to be the case, a great audience to classical musical recordings by a penal rate of taxation which amounts to between 10s. and 15s. out of a total of about £2.

Can the Solicitor-General tell us what information the Treasury has about the impact of this tax on the cost of gramophone records? Those of us who watch American newspapers frequently see long-playing records advertised at 2 dollars 90 cents., or approximately £1, but we know that the cost in this country is nearly always double that figure. Is it because our home sales are so restricted by this tax that, in terms of industrial production, it is impossible to get a long enough run to bring these prices down? Is it due totally to Purchase Tax or is it due, in addition, to the fact that if more records could be made the price could be reduced? If so, again we have an additional case for asking for a reduction in the tax.

I understand that the recording companies spend about 75 per cent. of their total outgoings on classical recordings. This is an extraordinarily high figure, and I think that it is, to some extent, a tribute to them that they undertake a great deal of this less remunerative expenditure in order to make these recordings available, when they yield only a relatively small part of their total revenue.

The companies tell me that their largest export market for records is the United States. They find that it is only because of the huge sales in the United States that they are able to keep going their heavy recording programmes of classical works. Is this the fact? Are we in the fantastic situation now of being dependent, very largely, on a large export market in America in order to keep going classical recordings in this country? If this be so, it provides a third reason for saying that the tax has now reached a ridiculous stage.

The chairman of one company says in his letter: The continuation of Purchase Tax at the present rate may well, in the next year or two, jeopardise this activity"— he means classical recording— particularly if the general level of the industry declines, as it may well do with the lessened industrial activity in the country which would appear to be developing at the present time. It has always seemed anomalous that, whilst books have never been subject to Purchase Tax, records have been taxed at nearly the highest, and now"— in this Budget— at the highest rate of tax. There is a great deal in this case. When I began to look into it, I did not think that the case would prove to be so strong as I find it to be.

I have added only one or two points to what was said by my hon. Friend in his very eloquent speech. It is a formidable case. I hope that we shall never reach the stage when it can be said that the British Parliament is legislating for a tax on culture. If the facts which we on this side have put before the Committee are correct, it will be possible to level that accusation against us. I hope that the right hon. and learned Gentleman can promise some relief and that we shall not be in danger of being in the dock and hearing the dreadful accusation laid against us that we are the taxers of culture.

The Solicitor-General

This series of debates has effected some very strange marriages. I cannot at the moment bring to mind the right way to marry the gramophone record and the cathode ray tube, because, in this fiscal context, they appear to depend on entirely different considerations.

I listened with the greatest interest to the speech of the hon. Member for Glasgow, Govan (Mr. Rankin). As regards any way in which the price of a cathode ray tube or a television set could be reduced, one would be eager to be allied with him, but I did not altogether follow how he directed what he was saying to the quite different problem which arises on his Amendment, namely, what is the right rate in terms of Purchase Tax, in the public interest, at which to tax cathode ray tubes?

I ask the Committee to take the view that there are the soundest possible reasons for taxing cathode ray tubes at the same rate as the television sets into which they go. The Amendment moved by the hon. Gentleman the Member for Govan does not touch the question of what should be the right rate of Purchase Tax for a television set, and, if the hon. Gentleman will allow me to continue for a moment, I will seek to put to him the reason that we say that one must keep the rate on the set and the rate on the cathode ray tube the same.

10.45 p.m.

Mr. Rankin

Surely I made the point, although perhaps not clearly enough, that in the case of the television set there was one fixed payment. In the case of the cathode ray tube there might be recurring payments. Because of that, there is a difference, and, therefore, there should be a difference in the tax, also.

The Solicitor-General

I was endeavouring to explain the grounds on which it seemed desirable to have the same rate of tax on the cathode ray tubes as on the set. It is for the protection of the Revenue. The hon. Gentleman and the Committee will follow the argument that if the cathode ray tube could be sold separately from the set and then attached to the set at some later stage, there could quite easily be a process of avoiding Purchase Tax if the rates were different. It is necessary to protect the Revenue against that.

I do not wish to appear to claim a skill which I do not possess, but I understand that to mortals more skilled than I the assembling of a television set is a relatively easy affair. A lot of so-called "kits" are sold and it would be possible to assemble a television set containing a cathode ray on which a separate rate of Purchase Tax was paid for the cathode ray tube.

Mr. Rankin

The right hon. and learned Gentleman is introducing another argument. I attacked the manufacturers on the ground that they were extracting too much profit. He is attacking them for their moral attitude. He does not trust them.

The Solicitor-General

It is difficult to follow how the hon. Gentleman attaches his attack on the manufacturers to the Amendment to which I am compelled to address myself.

What is involved in the Amendment is what is the right rate at which to charge tax on the cathode ray tube. Should we take it out of the category in which the set is charged? That is the problem. I am answering the hon. Gentleman, in the only way I can, by giving the reason for rejecting the Amendment and explaining what we think are the right reasons for keeping the tube taxed as it is at the same rate as the set.

If I may now pass to gramophone records—

Mr. H. Wilson

Before leaving that point, will the right hon. and learned Member address himself to this question? As I understand, he is saying that because of the "do it yourself" boom, or whatever is the right thing to call it, it would be wrong to have a different rate of tax for cathode ray tubes than for television sets. After all, the tubes are only one part of the set. How does he reconcile that argument with the one we have just heard from the Financial Secretary, who justified wool cloth being tax-free while tax was paid on wool clothing? On that argument it would, and it does, pay people to make their own clothes from wool cloth and thus avoid tax. What is the difference between making up wool garments and making up television sets?

The Solicitor-General

It is the right hon. Gentleman's own experience that he has come to this House in funny suits which did not wear so well. I should say that making a television set would be extremely difficult, but that making a suit would be abominably difficult. Without going into the relationship between bespoke tailoring and television sets, where the matter is made as easy as possible for the components to be assembled, I should have thought there would be more risk to the Revenue where a series of components could be bought separately and made up into a complete television set than to assemble a suit from separate parts, which would be a very difficult matter.

Mr. Wilson

Does the right hon. and learned Gentleman realise that he is laying the Revenue open to the most wholesale possible avoidance? From next Friday morning we shall be seeing advertisements in the Press for assembling "do it yourself" suits, where the suit will be all ready cut out and all one need do is to stitch it together.

The Solicitor-General

If the right hon. Gentleman's modesty will permit him to wear a suit made by me I will be content to wear the risk. I must move on to the gramophone record.

If I were to compete with the lyrical description of the cultural value of music and go back to Plato and Aristotle with the hon. Member for Stoke-on-Trent, Central (Dr. Stross), I should lose the battle. I would not attempt it. The problem is not, as I see it, the exclusively cultural and enjoyment value of music, but the right way to bring into and govern under Purchase Tax this distinct class of music, which is distinguished from the musical instruments to which the hon. Member for Birmingham, Northfield (Mr. Chapman) referred. With the musical instrument, the musician tries, and sometimes succeeds, himself to produce the music. With all the rest of the range of the disc group, Group 19, we are dealing with instruments which reproduce music already made and not produced by the musician on the spot.

I am sure that the Committee will realise how difficult it is fiscally to separate gramophone records, radio gramophones and television sets which are sometimes built into the same instrument or equipment. From a fiscal point of view to pick them out and treat them in a different category would be very difficult. I fully appreciate that we can get the most glorious records of classical music, but I say at once, in answer to the hon. Member for Northfield, that we have no reliable evidence that the production and sales of the best classical records are adversely affected by Purchase Tax in any way. We do not seem to have that evidence at the moment. I was listening with great attention to what he said about his fears on that account. I can only say that at the moment we have nothing to justify any suspicion that that is going on.

Dr. Stross

Would not the Solicitor-General agree that, where there is no tax, as in the United States, for what is described as the price of a meal long-playing 12 inch records are available and that it is there accepted completely that the cheaper they are the more popular they are, and that more people are listening to the best music than ever before in history?

The Solicitor-General

The hon. Gentleman, who so eloquently states his reasons for appreciating good classical records, will surely appreciate the fiscal difficulty about this. How could we try to treat differently the records from the other objects that are in the group? The hon. Member will see that the feature of this group is reproduced music as opposed to the musical instrument, where the musician makes music himself. If we were to admit gramophones to a special rate, or exempt them, we should have to let the rest of the group go. It is too costly a proposition to produce that result with a whole group. That is what I was at pains to say that we cannot accept.

The hon. Gentleman was putting the point that about 20 per cent. of gramophone record sales in this country are of what he would call good music. I do not desire to be snobbish about this at all, but the bulk of the gramophone record returns to the Revenue in this field come from records that I suspect the hon. Member for Northfield would think were not exactly good. I think they are described as "popular" discs.

Mr. Nabarro

Skiffle.

The Solicitor-General

My hon. Friend no doubt is more familiar with skiffle than I am. If, on a purely cultural basis, if that were fiscally possible, we desired to make a special exception in this field, there would be the greatest difficulty in taxing that which was not gold in the disc field and eliminating in a special way that which was cultural and essential. Clearly, that would be a difficult fiscal matter.

Dr. Stross

That would be a dreadful thing to try to do and I am sure that no one would attempt it. It would not succeed. All of us when we were very young were fed on pap, but we learned to eat meat when we grew up. We should not be afraid of skiffle, even if the hon. Member for Kidderminster thinks it is music.

The Solicitor-General

I was not for a moment sneering at the word "skiffle" but I was envious of the eternal youth of my hon. Friend the Member for Kidderminster and his remarkable vigour at a late hour of the night.

From what I have been saying I hope the Committee will understand that there are sensible reasons, in no way opposed to the enjoyment of music and culture, which compel my right hon. Friend to say that he cannot accept this Amendment.

Mr. H. Wilson

The Committee will want to offer every sympathy to the Solicitor-General, whose interventions in past year's debates have always been helpful on legal matters on which he is called upon to advise us, but I think it very unusual to employ a Law Officer for discharging a task which, normally, is discharged by one of the Treasury Ministers. The Paymaster-General has been sitting here for some time. I am surprised that he did not bring his great knowledge of these tax questions to bear on this debate, instead of the unfortunate Solicitor-General having to do so.

I say to the Solicitor-General that, despite his new-found association with the City of London—I am sure that he hopes to be associated with the City of London—on his showing tonight he will not make a very good financial Minister. [An HON. MEMBER: "Ask him why he left York."] Certainly not. I am not going to ask him why he left York. It would be strictly out of order to do so. The burden of his argument was that he cannot alter the rate of tax because everything is in and it must be formal and tidy. He will be the absolute dismay of the hon. Member for Kidderminster (Mr. Nabarro).

Mr. Nabarro

I am sorry, I did not get that.

Mr. Wilson

The hon. Member has not got anything all day. He can read it in the OFFICIAL REPORT. I am sure he will find it very illuminating.

Like other hon. Members who have spoken, I feel that this debate has been lifted higher than the normal level of Finance Bill Committee debates by the speech of my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross). The small number of hon. Members in the Chamber at that time were deeply impressed by what he said. Like the Solicitor-General, I could not compete with my hon. Friend. I do not propose to address myself to the questions raised by the tax on gramophone records and I can tell the Chancellor that we do not intend to divide the Committee on that Amendment.

I want to say a word or two on the cathode-ray tubes, on which my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) made such a weighty speech. We all remember how, in past debates, my hon. Friend has dealt with the monopoly aspects of cathode-ray tubes. He has been very persistent. Indeed, I think I can say that it was largely due to his persistence that the matter was originally referred to the Monopolies Commission.

11.0 p.m.

It is possible to produce arguments against reducing the tax on cathode-ray tubes, although I did not think that those of the Solicitor-General were very convincing. He had obviously read his brief with great skill. I do not think that he had applied himself very much to the problem before he saw his brief, but he dished up his Departmental brief very agreeably, but, as I say, not very convincingly.

It is a fact, as my hon. Friend proved, I think, to the satisfaction of most hon. Members who heard him, that the cathode-ray business involves, even today, excessive prices and excessive profits. He made a very weighty point when he was able to show the Committee that the Treasury now takes a higher proportion in Purchase Tax than before the changes were made two or three years ago—

Mr. Rankin

And I got no reply.

Mr. Wilson

And that point was not dealt with by the Solicitor-General.

Our reason for pressing this Amendment is rather wider, and, in a sense, our vote on it will be a token vote, because we feel that the Government should deal with the question of cathode-ray tubes and television servicing, which is becoming a major racket here. We all know what happens. Unless one is an expert on television matters—and my degree of expertise rivals that of the Solicitor-General, and no more—and anything goes wrong with the set, one sends for someone to look at it, and one is invariably told that one needs a new tube. Who knows differently? Who can tell the difference? As often as not if they put in a "new" tube it is not a new tube at all, but a reconditioned one—and heaven knows what happens to the tube taken from the set. It probably needs only a pound or two spent on it and is then put into another set. One has only to think what happens to the old people, the bedridden people, the lonely people—the old-age pensioners, whose relatives may have given them a set. There is a major racket going on, and, on the racket, the Treasury exacts this high rate of Purchase Tax.

I am not suggesting that the reduction that the Amendment proposes would deal with that racket, but I do suggest to the Chancellor that he should say to the manufacturers that he is prepared to reduce the rate of the tax if they will put their house in order in the matter of television servicing. I recall buying a television set some three years ago. The tube "went" wrong within the period of guarantee, and when I asked the firm to look at it I was told that there was nothing wrong with it—until the set was out of guarantee, when I was told that I needed a new tube. I complained. The man looked at it for about half a minute, and told me that it would cost me 30 guineas for a new tube, plus a guinea for his looking at it.

As it happened, I knew the chairman of the firm that made the set and I complained to him. He sent an inspector round, who looked at the set, laughed, and said, "A connection has slipped." He put that right and I had no more trouble. Had I done it through the retail shop I would have paid the 30 guineas, plus the Purchase Tax to which I am now addressing myself. As I say, I was fortunate in that I was able to ask the chairman of the firm to have the matter dealt with.

How many people are in that position? I think especially of old-age pensioners, or, perhaps, an old lady living by herself and having a television set. She is told that she needs a new tube for the set. What can she do? She has to pay the guinea inspection fee, and this sort of thing happens. Therefore, I hope that the Chancellor will look again at this matter. I hope that he will say to the television manufacturers that he wants

them to set up in each area an independent inspector who has no vested interest in the repairs that might be needed.

The private firms have such a vested interest. The retailers have every incentive to say the set needs a new tube, the cost including this 60 per cent. tax. I therefore hope that the Chancellor will say, "I am prepared to look at this, and to reduce the tax on the tube, provided the industry will appoint independent inspectors who can be called in and paid, say, 15s. for a second and independent opinion, which is not affected by people who have any financial interest in the outcome of the inspection".

I should be out of order if I were to relate this to hire purchase, and I will not do so, but there is an obvious connection there between the facilities for hire purchase and the servicing business.

Therefore, knowing what a racket there is, especially in the disposal of secondhand television tubes, I hope that the Chancellor will ensure that people do not pay tax on what are, in effect, secondhand tubes, which ought not to be taxable, and will also deal with the problem of the racket in television servicing. If he does he will earn the gratitude of very many people. I could give the right hon. Gentleman details of old-age pensioners who did not have their television sets right throughout last winter because they were told that they needed new tubes—whether they really did or not I do not know—and could not afford them.

The Chancellor will earn their gratitude and that of many other families if he deals with the racket, and we suggest that one way in which he can deal with it is by making a conditional reduction in Purchase Tax.

Question put, That those words be there inserted:—

The Committee divided: Ayes 138, Noes 179.

Division No. 135.]	AYES	[11.6 p.m.
Ainsley, J. W.	Butler, Mrs. Joyce (Wood Green)	Delargy, H. J.
Albu, A. H.	Callaghan, L. J.	Diamond, John
Bacon, Miss Alice	Champion, A. J.	Dodds, N. N.
Baird, J.	Chapman, W. D.	Dugdale, Rt. Hn. John (W. Brmwch)
Bence, C. R. (Dunbartonshire, E.)	Chetwynd, G. R.	Dye, S.
Benson, Sir George	Coldrick, W.	Ede, Rt. Hon. J. C.
Blackburn, F.	Collins, V. J. (Shoreditch & Finsbury)	Edwards, Rt. Hon. John (Brighouse)
Boardman, H.	Corbet, Mrs. Freda	Edwards, W. J. (Stepney)
Bottomley, Rt. Hon. A. G.	Craddock, George (Bradford, S.)	Evans, Albert (Islington, S. W.)
Bowden, H. W. (Leicester, S. W.)	Dalton, Rt. Hon. H.	Fernyhough, E.
Boyd, T. C.	Davies, Ernest (Enfield, E.)	Fletcher, Eric
Brockway, A. F.	Deer, G.	Foot, D. M.
Brown, Rt. Hon. George (Belper)	de Freitas, Geoffrey	Forman, J. C.
Fraser, Thomas (Hamilton)	Kenyon, C.	Redhead, E. C.
Gaitskell, Rt. Hon. H. T. N.	Lawson, G. M.	Rhodes, H.
George, Lady Megan Lloyd (Car'then)	Logan, D. G.	Robens, Rt. Hon. A.
Gibson, C. W.	Mabon, Dr. J. Dickson	Roberts, Albert (Normanton)
Gordon Walker, Rt. Hon. P. C.	McGhee, H. G.	Roberts, Goronwy (Caernarvon)
Greenwood, Anthony	McInnes, J.	Rogers, George (Kensington, N.)
Grey, C. F.	MacMillan, M. K. (Western Isles)	Ross, William
Grimond, J.	MacPherson, Malcolm (Stirling)	Short, E. W.
Hale, Leslie	Mallalieu, E. L. (Brigg)	Silverman, Julius (Aston)
Hall, Rt. Hn. Glenvil (Colne Valley)	Mann, Mrs. Jean	Silverman, Sydney (Nelson)
Hannan, W.	Mason, Roy	Slater, Mrs. H. (Stoke, N.)
Harrison, J. (Nottingham, N.)	Mayhew, C. P.	Steele, T.
Hayman, F. H.	Mellish, R. J.	Stewart, Michael (Fulham)
Henderson, Rt. Hn. A. (Rwly Regis)	Mitchison, G. R.	Stonehouse, John
Herbison, Miss M.	Moyle, A.	Stones, W. (Consett)
Holman, P.	Neal, Harold (Bolsover)	Strachey, Rt. Hon. J.
Howell, Denis (All Saints)	Noel-Baker, Francis (Swindon)	Stross, Dr. Barnett (Stoke-on-Trent, C.)
Hoy, J. H.	Noel-Baker, Rt. Hon. P. (Derby, S.)	Taylor, Bernard (Mansfield)
Hubbard, T. F.	Oram, A. E.	Thornton, E.
Hughes, Cledwyn (Anglesey)	Orbach, M.	Tomney, F.
Hughes, Emrys (S. Ayrshire)	Oswald, T.	Weitzman, D.
Hunter, A. E.	Paget, R. T.	Wells, William (Walsall, N.)
Hynd, H. (Accrington)	Palmer, A. M. F.	West, D. G.
Hynd, J. B. (Attercliffe)	Pargiter, G. A.	Wheeldon, W. E.
Irvine, A. J. (Edge Hill)	Parkin, B. T.	White, Mrs. Eirene (E. Flint)
Irving, Sydney (Dartford)	Pearson, A.	Williams, Rev. Llywelyn (Ab'tillery)
Isaacs, Rt. Hon. G. A.	Pentland, N.	Willis, Eustace (Edinburgh, E.)
Jay, Rt. Hon. D. P. T.	Popplewell, E.	Wilson, Rt. Hon. Harold (Huyton)
Jeger, Mrs. Lena (Holbn & St. Pacs, S.)	Prentice, R. E.	Woodburn, Rt. Hon. A.
Jenkins, Roy (Stechford)	Price, J. T. (Westhoughton)	Woof, R. E.
Jones, David (The Hartlepools)	Price, Philips (Gloucestershire, W.)	Yates, V. (Ladywood)
Jones, Elwyn (W. Ham, S.)	Probert, A. R.
Jones, J. Idwal (Wrexham)	Randall, H. E.	TELLERS FOR THE AYES:
Jones, T. W. (Merioneth)	Rankin, John	Mr. John Taylor and Mr. Simmons.
NOES
Agnew, Sir Peter	Errington, Sir Eric	Lindsay, Martin (Solihull)
Aitken, W. T.	Finlay, Graeme	Linstead, Sir H. N.
Allan, R. A. (Paddington, S.)	Fletcher-Cooke, C.	Lloyd, Rt. Hon. Selwyn (Wirral)
Amory, Rt. Hn. Heathcoat (Tiverton)	Fort, R.	Longden, Gilbert
Arbuthnot, John	Freeth, Denzil	Low, Rt. Hon. Sir Toby
Armstrong, C. W.	Gammans, Lady	Macdonald, Sir Peter
Ashton, H.	Glover, D.	McKibbin, Alan
Atkins, H. E.	Glyn, Col. Richard H.	Mackie, J. H. (Galloway)
Baldwin, A. E.	Godber, J. B.	Maclay, Rt. Hon. John
Balniel, Lord	Goodhart, Philip	McLean, Neil (Inverness)
Barlow, Sir John	Gough, C. F. H.	Macmillan, Maurice (Halifax)
Barter, John	Graham, Sir Fergus	Macpherson, Niall (Dumfries)
Bell, Philip (Bolton, E.)	Green, A.	Maddan, Martin
Bevins, J. R. (Toxteth)	Grimston, Sir Robert (Westbury)	Marlowe, A. A. H.
Bingham, R. M.	Grosvenor, Lt.-Col. R. G.	Mathew, R.
Birch, Rt. Hon. Nigel	Hall, John (Wycombe)	Maudling, Rt. Hon. R.
Bishop, F. P.	Harrison, Col. J. H. (Eye)	Mawby, R. L.
Body, R. F.	Harvey, John (Walthamstow, E.)	Medlicott, Sir Frank
Boothby, Sir Robert	Heald, Rt. Hon. Sir Lionel	Milligan, Rt. Hon. W. R.
Boyle, Sir Edward	Heath, Rt. Hon. E. R. G.	Nabarro, G. D. N.
Braine, B. R.	Hill, Mrs. E. (Wythenshawe)	Nairn, D. L. S.
Braithwaite, Sir Albert (Harrow, W.)	Hobson, John (Warwick & L'm'gt'n)	Neave, Airey
Brooman-White, R. C.	Holland-Martin, C. J.	Nicolson, N. (B'n'm'th, E. & Chr'ch)
Browne, J. Nixon (Craigton)	Hope, Lord John	Oakshott, H. D.
Bryan, P.	Hornby, R. P.	O'Neill, Hn. Phelim (Co. Antrim, N.)
Burden, F. F. A.	Hornsby-Smith, Miss M. P.	Osborne, C.
Carr, Robert	Howard, Gerald (Cambridgeshire)	Page, R. G.
Chichester-Clark, R.	Howard, John (Test)	Pannell, N. A. (Kirkdale)
Clarke, Brig. Terence (Portsmth, W.)	Hughes Hallett, Vice-Admiral J.	Partridge, E.
Cooke, Robert	Hurd, A. R.	Peel, W. J.
Cooper, A. E.	Hutchison, Michael Clark (E'b'gh, S.)	Peyton, J. W. W.
Cooper-Key, E. M.	Hyde, Montgomery	Pike, Miss Mervyn
Cordeaux, Lt.-Col. J. K.	Hylton-Foster, Rt. Hon. Sir Harry	Pilkington, Capt. R. A.
Corfield, Capt. F. V.	Irvine, Bryant Godman (Rye)	Pitman, I. J.
Craddock, Beresford (Spelthorne)	Jenkins, Robert (Dulwich)	Powell, J. Enoch
Crosthwaite-Eyre, Col. O. E.	Johnson, Dr. Donald (Carlisle)	Price, David (Eastleigh)
Cunningham, Knox	Johnson, Eric (Blackley)	Prior-Palmer, Brig. O. L.
Currie, G. B. H.	Jones, Rt. Hon. Aubrey (Hall Green)	Profumo, J. D.
Davidson, Viscountess	Joseph, Sir Keith	Rawlinson, Peter
D'Avigdor-Goldsmid, Sir Henry	Kerr, Sir Hamilton	Redmayne, M.
Deedes, W. F.	Kershaw, J. A.	Renton, D. L. M.
Digby, Simon Wingfield	Kimball, M.	Ridsdale, J. E.
Dodds-Parker, A. D.	Kirk, P. M.	Rippon, A. G. F.
Donaldson, Cmdr. C. E. McA.	Lancaster, Col. C. G.	Roberts, Sir Peter (Heeley)
du Cann, E. D. L.	Langford-Holt, J. A.	Rodgers, John (Sevenoaks)
Duncan, Sir James	Leather, E. H. C.	Roper, Sir Harold
Duthie, W. S.	Leburn, W. G.	Ropner, Col. Sir Leonard
Eden, J. B. (Bournemouth, West)	Legh, Hon. Peter (Petersfield)	Scott-Miller, Cmdr. R.
Elliott, R. W. (N'castle upon Tyne, N.)	Lindsay, Hon. James (Devon, N.)	Sharples, R. C.

Shepherd, William	Taylor, Sir Charles (Eastbourne)	Ward, Dame Irene (Tynemouth)
Simon, J. E. S. (Middlesbrough, W.)	Temple, John M.	Whitelaw, W. S. I.
Smithers, Peter (Winchester)	Thompson, Kenneth (Walton)	Williams, Paul (Sunderland, S.)
Spearman, Sir Alexander	Thorneycroft, Rt. Hon. P.	Williams, R. Dudley (Exeter)
Speir, R. M.	Thornton-Kemsley, Sir Colin	Wills, G. (Bridgwater)
Steward, Harold (Stockport, S.)	Tiley, A. (Bradford, W.)	Wilson, Geoffrey (Truro)
Steward, Sir William (Woolwich, W.)	Turton, Rt. Hon. R. H.	Woollam, John Victor
Stoddart-Scott, Col. Sir Malcolm	Vane, W. M. F.	Yates, William (The Wrekin)
Storey, S.	Vickers, Miss Joan
Studholme, Sir Henry	Wakefield, Edward (Derbyshire, W.)	TELLERS FOR THE NOES:
Summers, Sir Spencer	Wall, Patrick	Mr. Hughes Young and Mr. Gibson-Watt.
Sumner, W. D. M. (Orpington)	Ward, Rt. Hon. G. R. (Worcester)

To report Progress and ask leave to sit again.—[Mr. Amory.]