HC Deb 05 February 1959 vol 599 cc549-55
8. Mr. Hale

asked the Chancellor of the Exchequer whether, in view of the state of the cotton textile industry, he is prepared to remove the Purchase Tax of 5 per cent. on clothing made with cotton textiles.

Mr. Erroll

My right hon. Friend cannot anticipate his Budget decisions.

Mr. Hale

In view of the fact that it has been said from both sides of the House that it is beneficial to deal with Purchase Tax outside the Budget discussions, and in view of the deplorable state of the cotton industry and the fact that even the slight reductions which have already resulted from the withdrawal of the Yarn Agreement are said to have stimulated purchasing power, is not this at least one small step which even this Government could take straight away?

Mr. Erroll

There are other Questions on the Order Paper about Purchase Tax changes in advance of the Budget. As to opinion in the House, I would remind the hon. Member that during debates on the Finance Bill only last year there was general agreement that Purchase Tax is not an operative factor on short-time working.

Mr. H. Wilson

While we all recognise that the Chancellor, if not the President of the Board of Trade, cannot anticipate the Budget statement, would the Economic Secretary at any rate warn his right hon. Friend to avoid the gross blunders made by the then Chancellor—now the Lord Privy Seal—in 1955, when 'le refused to lift Purchase Tax on textiles, said in this House in the Financial Bill debates that it would be dishonest to do so, and then—realising that an Election was coming on—removed the tax? If the Chancellor is to do it, will he do it quickly?

Mr. Erroll

My right hon. Friend is always grateful for the voluminous advice tendered by the right hon. Member.

11. Mr. Nabarro

asked the Chancellor of the Exchequer, having regard to Purchase Tax revenue in 1957–58 at £494 million and his Budget estimate for the current year of Purchase Tax revenue at £491 million notwithstanding reductions in rates, what revised estimate for Purchase Tax revenue for 1958–59 he has now made consequent upon stimulated demand following the ending of hire-purchase restrictions and the credit squeeze.

Mr. Erroll

As my right hon. Friend said on 25th November last, it is not the practice to publish any revision of the Budget estimates during the course of the financial year.

Mr. Nabarro

Has not my hon. Friend perceived that yesterday the Chancellor substantially abolished the Capital Issues Committee, as I have been pressing upon him in my advice during the last two years? Would he not now take even more apposite advice and abolish the present discriminatory system of Purchase Tax, put in its place a single fiat-rate of tax, non-discriminatory in incidence, and thereby directly help our export trade?

Mr. Erroll

My right hon. Friend always pays great attention to advice received from hon. Members of this House.

Mr. H. Wilson

Would he not pay greater attention to advice, apposite or otherwise, from his hon. Friend the Member for Kidderminster (Mr. Nabarro) if once in a while the hon. Member went into the Division Lobby with us in support of what he is advocating?

12. Mr. Nabarro

asked the Chancellor of the Exchequer whether he is aware that pre-war Great Britain dominated export markets for ladies' compacts, lipstick holders, powder bowls and similar accessories to cosmetics, whereas today export trade is dominated by Western Germany, and Great Britain's share has fallen to small proportions; what steps he has taken to investigate the bearing which the present 60 per cent. rate of Purchase Tax for such accessories on the home market has on the export trade; and what would be the cost to the Exchequer of reclassifying in Group 23 all receptacles for personal or domestic purposes instead of Group 31 as at present.

Mr. Erroll

I would remind my hon. Friend that my right hon. Friend has to consider not only export aspects but also the yield and the internal logic of the Purchase Tax structure. The information asked for in the last part of the Question is not available.

Mr. Nabarro

My hon. Friend has just said that the need for exports is paramount. Those are the words which he used. Is it not a fact that on cosmetics and the receptacles referred to in the Question a sum of only £6½ million is collected in Purchase Tax and that three or four times that sum of revenue from exports may be lost as a result of the penal Purchase Tax? Why will not my hon. Friend restore some equity to this position?

Mr. Erroll

Articles exported through normal commercial channels are not normally subject to Purchase Tax.

14. Mr. Dance

asked the Chancellor of the Exchequer whether he is aware that the fishing tackle industry, which is largely a craft industry, is suffering a serious decline on account of the high rate of Purchase Tax levied on its products; and, in view of this, whether he will give sympathetic consideration to the reduction of Purchase Tax so levied.

Mr. Erroll

Commercial fishing gear is not taxed, but sports fishing tackle, like other sports requisites is taxable at the standard rate of 30 per cent. My right hon. Friend will bear my hon. Friend's point in mind, but I must not anticipate his Budget decisions.

Mr. Dance

While thanking my hon. Friend for that answer, may I ask him to convey to his right hon. Friend the grave anxiety which exists at present in Redditch, a town which has been famous for manufacturing fishing tackle for some time, as to the future of this craft trade?

Mr. Erroll

My right hon. Friend has received no representations from the trade that the industry is suffering a serious decline as a result of the tax, but he will take into account what my hon. Friend has just said.

15. Mr. Nabarro

asked the Chancellor of the Exchequer whether he is aware that a horn regarded as a wind musical instrument is subject to Purchase Tax at 30 per cent. whereas a musical motor car horn of electrical type, or with hand rubber bulb for squeezing wind into the horn, does not attract Purchase Tax even if used occasionally for theatrical performances; what rate of tax is applicable to a hunting horn and to a child's toy trumpet; what particular considerations guide his decisions as to the rate of Purchase Tax applicable to particular horns; and to what extent he is influenced in his decision by the volume or by the melodious quality of noise produced.

Mr. Chetwynd

On a point of order. Should not the hon. Member for Kidderminster (Mr. Nabarro) declare an interest in this Question since he is always blowing his own trumpet?

Mr. Nabarro

Is an opprobrious comment of that kind from the other side of the House in order, in view of the legitimacy of the Question and the reference to musical instruments, notably French horns?

Mr. Speaker

The two horns mentioned in the Question are a hunting horn and a child's toy trumpet. I do not know that either of those applies to the hon. Member for Kidderminster.

Mr. Erroll

Perhaps I may now be allowed to reply to the Question. The answer is: Yes, Sir; 30 per cent.; the tax Schedule and common sense; while the answer to the last part is, not at all, but personally I rate quality above volume, even in Parliamentary Questions.

Mr. Nabarro

Is it not a fact that a motor horn makes a harsh, raucous and unmelodious noise? Having regard to the fact that a 30 per cent. Purchase Tax is placed on musical instruments, including a French horn, which produces melodious music and contributes to the arts and culture, why should my right hon. Friend the Chancellor be depressing the arts by this vicious impost and encouraging raucous noises by removing the instruments which produce them from the Purchase Tax Schedule? Is there any equity in that position?

Sir G. Nicholson

Is it not a fact that the Treasury is on the horns of a dilemma?

Mr. Nabarro

On a point of order. I have not had an answer to my supplementary question.

Mr. Speaker

I cannot help that.

20. Mrs. White

asked the Chancellor of the Exchequer what representations he has received on the desirability of making an announcement on Purchase Tax prior to his Budget statement.

22. Mr. J. Hynd

asked the Chancellor of the Exchequer whether he is aware that retailers of household utensils, and similar goods, are now engaged in reducing stocks to a minimum through uncertainty as to the Government's intentions concerning Purchase Tax on such articles; and whether he is now in a position to make a statement to clarify the position.

29. Mr. Oram

asked the Chancellor of the Exchequer what steps he proposes to take to avoid the uncertainty in trade and industry arising from speculation about Purchase Tax changes.

Mr. Erroll

I would refer the hon. Members to the reply which I gave to my hon. Friend the Member for Solihull (Mr. M. Lindsay) and other hon. Members on Thursday, 29th January.

Mrs. White

That reply refers to another reply given to the hon. Member for Twickenham (Mr. Gresham Cooke) on 26th January, and that reply was ambiguous; it did not make clear whether the Chancellor was saying that there would be no statement before the Budget or that he might or might not make a statement before the Budget. Is not the hon. Member aware that it would save himself, the House and the Official Reporters a great deal of work if we could eliminate from the Order Paper all Questions on this matter by the hon. Member for Kidderminster (Mr. Nabarro)?

Mr. Erroll

The answer was perfectly clear. My right hon. Friend said that he had no statement to make and added that he must be free to consider the possibility of such changes in the context of his Budget.

Mr. J. Hynd

Is there not precedent for the Chancellor relieving the uncertainty in business on these matters before the Budget? In view of the fact that traders have come to expect some clarification of the position before the Budget, is there any special reason why the Chancellor cannot give some indication, at least in particular instances? I make special reference to the point made in my Question about household utensils, in view of the great difficulties arising in many of the small shops.

Mr. Erroll

There are also very good precedents for not making a statement about Purchase Tax in advance of the Budget, and my right hon. Friend has had regard to those precedents.

Mr. Oram

Is the Minister not aware that when the Home Secretary was Chancellor of the Exchequer he made a statement on his Purchase Tax intentions in February and then said that he considered it a more honest and honourable way of informing the country? Would he not urge the present Chancellor to follow that precedent of honesty and honour?

Mr. Erroll

The hon. Member's Question referred to speculation. It is therefore appropriate to point out that while the intentions were honest and honourable, as he said, the statement then made did not, in fact, remove speculation.

30. Mr. Chapman

asked the Chancellor of the Exchequer if he is now in a position to make a statement about the nature of the discussions which he has had recently with the motor industry about Purchase Tax on motor cars and particularly on commercial vehicles chassis.

Mr. Erroll

No, Sir. My right hon. Friend cannot comment on any representations which he may receive at this time of year.

Mr. Chapman

I am referring particularly to chassis. Does the hon. Gentleman realise that it was a pledge given by the Chancellor last year to meet the industry this winter, which probably avoided an all-party revolt on the issue during the passage of the Finance Bill? Would he be good enough to pass on to his right hon. Friend the suggestion that it would not be easy to get out of a revolt this year if he has nothing to offer in the Budget?

Mr. Erroll

That is quite another matter. The fact is that I am sure the hon. Gentleman would not wish my right hon. Friend to break the confidentiality of this particular meeting.

43. Sir A. Hurd

asked the Chancellor of the Exchequer to what extent he has approved arrangements between manufacturers, wholesalers and retailers to forestall changes in Purchase Tax rates which may be made in this year's Budget; and if he will readily allow the extension of such loss-sharing arrangements, designed to maintain the flow of goods from factories to shops during this period of uncertainty.

Mr. Erroll

I take it my hon. Friend has in mind "sale or return" and similar arrangements. These do not require my right hon. Friend's approval. The question whether a particular arrangement succeeds in the object of deferring the tax charge is one of law.

Sir A. Hurd

I had not in mind that arrangement. Will my hon. Friend inquire of the President of the Board of Trade about this current loss-sharing arrangement by which manufacturers are to bear part of the loss which would otherwise fall on retailers on stocks which may be subject to Purchase Tax reduction?

Mr. Erroll

Yes, Sir, I will certainly make inquiries, but I should like to remind my hon. Friend that the deferment of the tax charge, if it is to succeed, is a matter for the law.