Clause 12.—(CHANGES IN RATES OF PURCHASE TAX.)

HC Deb 12 May 1959 vol 605 cc1052-203

3.33 p.m.

Mr. Harold Wilson (Huyton)

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

The reason for moving this Motion will be well known to hon. Members who were present for the last hour of the Committee's proceedings last night when I drew attention to the very serious situation which has developed owing to the wording of the Financial Resolution, which, for the first time for ten years, apart from the General Election Budget of 1955, which allowed no debate at all, prevents the Committee from debating the general rates of Purchase Tax.

I do not want to repeat the arguments used last night, or the quotations of the very fair comments made by the Lord Privy Seal when we discussed this matter on 22nd November, 1955, but I want to draw a distinction between a completely free debate on Purchase Tax, which the Chancellor did not want to have—a Dutch auction, as it has been called; we understand his view and it is not what we are complaining about—and the present position.

It has been the position in other Finance Bills since the important consultations in 1949 that hon. Members were free to move Amendments to reduce or abolish any group rate of tax. On this occasion, owing to the Financial Resolution, this is, unfortunately, not possible. We believe that the Committee is being denied certain rights. I will not call them traditional rights, because the practice has been in existence for only nine or ten years. Nevertheless, it is being denied a custom which I think has become accepted on both sides of the House and which, I think, the Lord Privy Seal to some extent hallowed with the remarks which he made about it in 1955.

From what was said last night it is clear that the Chancellor, wittingly or unwittingly—and it was a little difficult from his different speeches to decide whether it was wittingly or unwittingly—introduced a Financial Resolution the purport of which was not noticed by any hon. Member on either side of the Committee, including, probably, the Chancellor himself. I do not know whether he deliberately gagged the Committee in this way, or whether he did not know what he was doing, and I am not sure which is the more charitable interpretation.

I asked last night whether the Chancellor would consider the question and see whether, within the rules of order, he could put the matter right, perhaps by introducing a new Financial Resolution, on recommittal, before Report, which would enable the Committee to enjoy its usual rights. The Chancellor has, I hope, had a few hours' sleep and a few hours in which to think about this matter and to take advice on it. I am sure that hon. Members are anxious to know whether he can find some way of putting right this action which he took, wittingly or unwittingly.

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

We had a fairly full discussion on this problem last night when the Opposition put forward their view that they would have wished to have freedom to propose Amendments to the reductions which the Government have proposed in the group rates of Purchase Tax. I presume that these would have been Amendments for further reductions, because under the present procedure other her Amendments would have been in order.

I explained that I believed—and I still believe—that there is general acceptance in all parts of the Committee that this year the freedom to debate at any rate individual changes in Purchase Tax should be restricted. My main object in the restrictive Financial Resolution was to avoid opening the way to a wide debate of the nature we had last year on individual changes in respect of particular articles or groups of articles within a group. I think that it was the sense of the Committee that this year such a debate would not be appropriate, although in some years, now and then, at any rate, it is appropriate.

I was not aware, and still am not aware, of any understanding reached between the parties that Amendments on group changes of the kind which I have described should always be permitted, but in preparing this Resolution it was not my deliberate object to exclude such considerations and I am sorry that, in effect, while permitting a general debate, the Resolution excludes Amendments for further reductions in the individual rates. When I became aware that that was the effect, I considered that the degree of restriction which was proposed, and which would still permit a general debate, would nevertheless, in the circumstances of this year, be acceptable to the Committee, as hon. Members wished considerable restriction of last year's debating power.

I have considered whether there is any technical procedure which we could adopt to make discussion of such Amendments in order this year, and I regret that I have had to conclude that at this stage we ought not to change any of the main Budget Resolutions which have been adopted by the House.

It is, of course, the practice of the House from time to time to add new Resolutions when new proposals are brought forward for discussion which require such a cover, but in the time I have had available to me I have not found a precedent for altering a main Budget Resolution during the course of discussion on the Bill. I suggest that to create such a precedent would not be a course of action that we ought to adopt lightly. If I had been able to find a way of meeting the Opposition's wishes on this matter without doing violence to Resolutions which have already been passed by the Committee, I should have gladly adopted that course. It is not my wish to suppress reasonable discussion.

Mr. H. Wilson

Is the Chancellor saying that he could not find a precedent? Has he given consideration to the action of the Lord Privy Seal on 12th May, 1952, which was, I think, seven years ago today, when he introduced a "Blue Paper" Amendment, as he called it, to one of the main Resolutions in the Finance Bill so as to enable a debate to he held in Committee the next day?

Mr. Amory

I am not familiar with the precise details of that occasion, but I understand that there is no precedent in that year, or any other recent year, for a change of this kind which would, in effect, directly negative part of one of these Resolutions.

I regret my inability to find a course that I could recommend to the Committee to adopt as appropriate, particularly because of the helpful attitude of the Opposition yesterday in facilitating the course of our business. I should be very sorry if any action of mine were to create unnecessary controversy. While I think that we must accept the limitations imposed this year by the Resolution, were it the wish of the Committee to agree on arrangements for the future to ensure that hon. Members will always have the right to propose further reductions on individual rates of Purchase Tax, my right hon. Friends and I would be very glad to endeavour to reach such an understanding.

Mr. G. R. Mitchison (Kettering)

As I understand, there is no question of Amendments about individual articles. A discussion can take place on the Question, That the Clause stand part of the Bill which will no doubt cover a good deal of the ground which might have been covered by the Amendments made under a different Resolution. The question is whether we ought to have been allowed to discuss the lowering of rates other than the 5 per cent. rate.

Yesterday, the right hon. Gentleman said: I admit that I did not consider whether the Resolution would have precluded what, in fact, it has precluded."—[OFFICIAL REPORT, 11th May, 1959; Vol. 605, c. 994.] The right hon. Gentleman has repeated that today. He went on to say that he thought that it would not be feasible or desirable to alter that Resolution for our discussions this year. He has now said that he agrees that it would be desirable if it could be done, but that it cannot be done.

3.45 p.m.

I am not convinced by that reply, for two reasons. First, because I find, at page 799 of Erskine May, that where there is no question of new taxes or charges, as there would not be in this case, an instruction to the Committee to enable it to consider those provisions has been allowed. Secondly, there was the case in 1952—I agree it was a different and rather complicated Resolution—in which in the course of the Committee discussions the Lord Privy Seal introduced some entirely new changes in Purchase Tax.

On 12th May, 1952, the Lord Privy Seal said that the Government had decided to reduce certain specific rates, which he described. He then said that he could have done it on the spot, according to Budget practice; that is to say, that no Resolution was formally required other than one moved there and then as a "Blue Paper" Amendment in the ordinary course of dealing with Financial Resolutions. But he thought it tidier—I am summarising what the right hon. Gentleman said—to put it on the Notice Paper and so enable it to appear the next day in the OFFICIAL REPORT.

There were in that case, as in this, specific Resolutions about Purchase Tax, and they were entirely new changes. I do not accept the argument that the Resolution to reduce the tax from, let us say, 50 per cent. to 49 per cent. is a contradiction of a Resolution to reduce it to 50 per cent. It seems to me to enlarge the relief offered, and to be substantially the same point. Whether it could have been done by way of an instruction, or whether the precedent I have mentioned is sufficient, or whether I am right in thinking that this does not introduce something quite new and contradictory but is merely an enlargement of the relief that the Chancellor is already giving, it still seems to me that it is impossible to say that this course is quite impracticable.

Mr. Amory

I am obliged to the hon. and learned Gentleman. I think that my main difficulty is the main general Resolution. It struck me that the hon. and learned Gentleman was referring to the other Resolution.

Mr. Mitchison

I am referring to both. I take it that the right hon. Gentleman means the Resolution at the end of the Resolutions. That would have applied equally to the case in 1952.

Again, it leaves open the question whether an instruction is not sufficient, and one seems to have been given in 1914 and there is the further question of whether this is any more than an enlargement of the relief given.

Although standing in the Committee in a much junior position to the Chancellor, I say with all respect that it seems to me that the right of the Opposition to move for a reduction of taxation is one which ought not lightly to be omitted. If this were done by accident, it was a very regrettable accident indeed. It is the duty of the Chancellor of the Exchequer of the day, with all the technical advice he has, to make sure that by the form of Financial Resolutions he does not deprive the Opposition of this substantial right. It is not, I agree, a right to discuss. It is a right to move and a right to have a vote. In this instance, if we desired to deal with one of these rates separately we could do so only by moving a Resolution in the exactly opposite sense of what we really intend.

We have the right, unless we are precluded by Financial Resolutions, to move for the reduction of a rate of Purchase Tax and that is the right which we have been deprived of by the form of the Financial Resolution. This question about the Financial Resolution comes up again and again, not only in connection with the Budget. The same thing happens every time. The Government of the day encroach on the rights of the House. The point is brought home to them. They express repentance and repent temporarily. We all know perfectly well that the root of the matter is that the Treasury, in drafting these Resolutions, tends only too naturally to draft them too tight and to deprive the Committee, and, in particular, the Opposition, of their fundamental constitutional rights. That is exactly what has happened in this case and I regret it profoundly.

Mr. Donald Wade (Huddersfield, West)

As one who was present during the last hour of the Committee's debate last night, I wish to make the point that this subject is one of great interest to the general public. I think it fair to say that the limitation created by the Resolution has come as a surprise to many hon. Members. It would be even more difficult to explain to the general public.

I understand that if hon. Members wish to propose that the 30 per cent. rate be reduced to, say, 15 per cent., that would be as out of order; but it would be in order to propose that it be increased. It would be difficult to explain to the general public that the only way to advocate a reduction is to propose an increase. Similarly, regarding the 5 per cent. rate, in which I have indicated some interest, by tabling an Amendment, I understand that it would be out of order to propose the abolition of that rate, but that it would be in order to propose that it be decreased to 1 per cent.

Some articles coming within the 5 per cent. schedule are of such small value that 5 per cent. is scarcely worth while calculating. A great deal of trouble, time and expense is involved for retailers and manufacturers over some items of no great value upon which a tax of 5 per cent, is imposed. It would be no solution to reduce the tax to 1 per cent., but it would be in order to make that proposition, although it would be out of order to propose the abolition of the tax.

We seem to be in an anomalous position. I should have thought that this was a case where the maxim, "Where there's a will there's a way" might be applied. If that be not so, I hope that this difficulty will be remembered for the future. An unfortunate precedent is being set in making the Resolution so restrictive.

Mr. Eric Fletcher (Islington, East)

Today, the Chancellor of the Exchequer said, as he also said last night, that if he thought the Committee desired to express a general view about how Financial Resolutions should be framed in future years, to enable the Committee to have the kind of debate on Purchase Tax which it desired to have, he would be prepared to listen to the views of hon. Members about the future procedure. In saying that, I think that the right hon. Gentleman recognised that the Committee has always taken the view that in these days debates on Purchase Tax represent a major part of our discussions on national taxation.

I am glad the right hon. Gentleman said that, and in view of the speeches which have been made today and yesterday he will have no doubt that the general view of the Committee is that we should always have the opportunity—this applies not only to hon. Members on this side of the Committee, but to Government supporters as well—to be able to move to reduce whatever rates of Purchase Tax are suggested by the Government. I hope, therefore, that there will be no further argument about this in the future.

What grieves my right hon. and hon. Friends is that we thought—we had every reason to believe—that this principle had been established in 1955. The debates in that year were quoted by my right hon. Friend, last year. I have here the OFFICIAL REPORT for November, 1955, but I do not propose to quote from it. The Lord Privy Seal, who was then Chancellor of the Exchequer, will remember that we had long debates on this problem. We always assumed—it was never denied—that it had become a matter of policy and accepted by everyone that the Financial Resolutions should always be so drawn as to enable the Opposition or Government supporters to propose further reductions of Purchase Tax.

The burden of our criticism is that this year there has been a serious departure from the precedents set up then. Having read carefully what the Chancellor said last night and having listened to what he said this afternoon, I am sorry to say that I find he has failed to give a clear and categorical reply to the plain question, put to him by my right hon. Friends the Members for Huyton (Mr. H. Wilson) and Battersea. North (Mr. Jay), namely: was the Financial Resolution, the last Budget Resolution, drawn in its present form deliberately or inadvertently?

Before we part with this Motion we must have a clear reply to that question because the honour and integrity of the Chancellor are at stake—[HON. MEMBERS: "Oh."] Oh yes. I am sorry to say so, but we have two completely contradictory answers to the simple question: was this Resolution drafted in this form deliberately by the Chancellor, or inadvertently?

Mr. Amory

I answered that question just now, when I said that it was not my object, by means of this restrictive Resolution, deliberately and specifically to exclude all discussion on these matters.

Mr. Fletcher

I am obliged to the right hon. Gentleman. I understand that now the Chancellor is saying that the Resolution was drawn up inadvertently—[HON. MEMBERS: "Withdraw."] I must pursue this matter. Last night the question was raised whether it was drawn in this form deliberately or inadvertently and the Chancellor gave two contradictory answers. He attempted to justify the terms of the Resolution and, by clear implication, if not by expressed words, he took credit for the fact. This is what the right hon. Gentleman said: I thought that would be the degree o. restriction that the Committee would wish for this year … If I had considered that, it would have been possible to have drawn the Resolution slightly less strictly so as to have permitted that to have happened, but I am not convinced even now that the Committee as a whole would have wished for that increased power."—[OFFICIAL REPORT, 11th May, 1959; Vol. 605, c. 989.] The Chancellor not only took credit to himself for having drawn the Resolution in such a form to exclude Amendments which we wanted to put down, but he went on to criticise the Opposition for not having noticed the restrictive form of the Resolution at an earlier stage. He went on, further, to justify himself by saying that had the Opposition wished to criticise the Resolution they should have done so either during the debate on the Budget statement or during the Second Reading debate on the Finance Bill. That was the burden of the argument advanced yesterday by the right hon. Gentleman.

There was no suggestion of apology or regret for the way in which the Resolution had been drawn. Now we must accept what the right hon. Gentleman has said. I understand that now he is telling us that the Resolution was drawn in this way by inadvertence and not deliberately, and I accept that. As was said by my right hon. Friend the Member for Huyton, that is the more charitable view to take. But it would have been far better had the Chancellor acknowledged that last night. Then he could have responded to the invitation of my right hon. Friends to vary the Resolution and so enable the Committee to have the kind of debate which hon. Members wished to have.

The Chancellor cannot have it both ways. We are prepared to accept that the Resolution was drawn up in this way either by inadvertence or carelessness or incompetence—I do not say stupidity. I think probably it was because of guile on the part of Treasury officials which hoodwinked the Chancellor—[HON. MEMBERS: "Order."] I am not criticising anyone—[HON. MEMBERS: "0h."] I can only attack the Chancellor. The right hon. Gentleman has now taken—

4.0 p.m.

Mr. Amory

I hope that the hon. Gentleman will allow me to say that I shall never hesitate to take personal responsibility for any actions that are carried out in my name.

Mr. Fletcher

I accept that. I am sure that every hon. Member of this Committee would have done the same. One of the difficulties in which the Chancellor is placed is that if he had told us that last night we could have met the situation and have pressed him to cure the defect for which he now admits responsibility. This afternoon, he went out of his way to argue that it is too late to cure the defect, but last night it could have been cured.

Mr. Amory

indicated dissent.

Mr. Fletcher

The Chancellor shakes his head, but, as my right hon. Friend said, there are precedents for curing it. When the Lord Privy Seal was Chancellor of the Exchequer, he found, in 1954 and 1955, that the House had not been given the fullest opportunity which it wanted, and he proceeded to cure the defect.

I am very sorry to have to say this to the Chancellor, but what we are complaining about here, I think with justice, is that if the Chancellor had admitted quite candidly last night, as he was invited to do by my right hon. Friend the Member for Battersea, North, that he had made a mistake—and there is no objection to admitting that one has made a mistake; we all make mistakes—he could have taken the natural corollary and, this afternoon, could have introduced, by recommittal or otherwise, a simple Amendment to the final Budget Resolution, so that we in this Committee could have had the opportunity of discussing Amendments to the Purchase Tax, which, as I understand, the Chancellor now recognises we ought to have, which the Lord Privy Seal conceded in 1955 that we should have, and which the Chancellor has been saying we should have.

Mr. Amory

There is nothing that I know of that was possible last night that is not possible today. There is no distinction in timing.

Mr. Fletcher

Surely, the position is that my right hon. Friend has moved to report Progress. If the Chancellor is serious in what he is saying, if he now wants us to have the opportunities which we should have had last night, surely his right course is to accept this Motion, so that the Committee may report Progress. He can then put down a new Financial Resolution amending this one, so that we can proceed to discuss what the rates of Purchase Tax should be.

The reason why we pressed this last night was that, obviously, if the Chancellor had given a reply last night and had made the confession and admission which he had made this afternoon, he would have had last night in which to put down on today's Notice Paper the necessary Financial Resolution so that we could then have proceeded to have a discussion on the Purchase Tax in the way which it is now conceded by everybody that we ought to be able to have. The reason why we complain of what the Chancellor did last night is that he now says that we can still do it, but the only way in which we can do it is by losing a day's progress. If the Chancellor accepts this Motion, he will have the opportunity tomorrow of putting down an Amendment to enable us to do what we want to do and what he now concedes we have the right to do.

I think that in fairness to every hon. Member of the Committee, as my right hon. Friend said, in a matter of great constitutional importance—because we are all vitally interested in the rates of Purchase Tax, which affect every household to a much greater degree than the level of Income Tax—this question of the various rates of Purchase Tax, in so far as they affect a whole range of goods, should be regarded as of vital importance to every taxpayer. All we are asking for is the basic constitutional right of right hon. and hon. Members of the Committee, in discussing the Finance Bill, to be able to discuss these matters, which we always have done previously regularly and thoroughly. The complaint is that the Chancellor is denying us that opportunity.

Mr. H. Wilson

I am sure that it is probably the wish of the Committee generally that we should bring this matter to a conclusion as quickly as possible. Having moved this Motion, I should like to say that while, of course, we welcome the fact that the Chancellor is showing a little more contrition today than be did last night, and while we welcome, as far as it goes, his proposal for consultations, which, in effect, will merely bind the hands of his Labour successors, this has been an unhappy and somewhat discreditable episode, which has not been helped by the Chancellor's attempt to ride it off last night.

Last night, the right hon. Gentleman appeared to be glorying in the fact that he had been so clever. At any rate, that was the impression formed by anyone who heard his speech, as well as that of anyone who has read it today. It may not have been his intention. Today, his line is that he did not know what he was

doing, and that he would like to put it right. We are not concerned with this particular argument. We are concerned only with the result.

Whether, as one might have felt last night from his speech, it was bad faith or whether it is, as we now know, incompetence that has caused this, we propose, as a protest and to draw attention to the accepted rights of the Committee to move and press Amendments to reduce taxation, to divide the House on this Motion.

Question put:—

The Committee divided:Ayes 203, Noes 249.

Division No. 105.]	AYES	[4.7 p.m.
Ainsley, J. W.	Fletcher, Eric	mallalieu, E. L. (Brigg)
Albu, A. H.	Forman, J. C.	Mallalieu, J. P. W. (Huddersfd, E.)
Allaun. Frank (Salford, E.)	Fraser, Thomas (Hamilton)	Mann, Mrs. Jean
Allen, Arthur (Bosworth)	Gaitskell, Rt. Hon. H. T. N.	Marquand, Rt. Hon. H. A.
Allen, Scholefield(Crewe)	George, Lady Megan Lloyd(Car'then)	Mason, Roy
Awbery, S. S.	Gibson, C. W.	Mitchison, G. R.
Bacon, Miss Alice	Gordon Walker, Rt. Hon. P. C.	Monslow, W.
Balfour, A.	Greenwood, Anthony	Morris, Percy (Swansea, W.)
Bence, C. R. (Dunbartonshire, E.)	Grenfell, Rt. Hon. D. R.	Morrison, Rt. Hn. Herbert(Lewis'm, S)
Benn, Hn. Wedgwood (Bristol, S.E.)	Grey, C. F.	Mort, D. L.
Benson, Sir George	Griffiths, David (Rother Valley)	Moss, R.
Beswick, Frank	Griffiths, William (Exchange)	Moyle, A.
Bevan, Rt. Hon. A. (Ebbw Vale)	Grimond, J.	Mulley, F. W.
Blenkinsop, A.	Hall, Rt. Hn. Glenvil (Colne Valley)	Neal, Harold (Bolsover)
Blyton, W. R.	Hannan, W.	Noel-Baker, Francis (Swindon)
Boardman, H.	Hastings, S.	Noel-Baker, Rt. Hon. P. (Derby, S.)
Bonham Carter, Mark	Hayman, F. H.	Oliver, G. H.
Bottomley, Rt. Hon. A. G.	Henderson, Rt. Hn. A. (Rwly Regis)	Orbach, M.
Bowden, H. W. (Leicester, S.W.)	Herbison, Miss M.	Oswald, T.
Bowen, E. R. (Cardigan)	Hilton, A. V.	Owen, W. J.
Bowies, F. G.	Hobson, C. R. (Keighley)	Paling, Rt. Hn. W. (Dearne Valley)
Braddock, Mrs. Elizabeth	Holman, P.	Parkin, B. T.
Brockway, A. F.	Holmes, Horace	Paton, John
Broughton, Dr. A. D. D.	Holt, A. F.	Peart, T. F.
Brown, Rt. Hon. George (Belper)	Houghton, Douglas	Pentland, N.
Brown, Thomas (Ince)	Howell, Charles (Perry Barr)	Plummer, Sir Lesile
Burke, W. A.	Hughes, Cledwyn (Anglesey)	Popplewell, E.
Burton, Miss F. E.	Hughes, Emrys (S. Ayrshire)	Prentice, R. E.
Butler, Herbert (Hackney, C.)	Hughes, Hector (Aberdeen, N.)	Price, J. T. (Westhoughton)
Butler, Mrs. Joyce (Wood Green)	Hunter, A. E.	Price, Philips (Gloucestershire, W.)
Callaghan, L. J.	Hynd, H. (Accrington)	Probert, A. R.
Carmichael, J.	Hynd, J. B. (Attercliffe)	Rankin, John
Castle, Mrs. B. A.	Irving, Sydney (Dartford)	Redhead, E. C.
Champion, A. J.	Isaacs, Rt. Hon. G. A.	Reid, William
Chetwynd, G. R.	Janner, B.	Robens, Rt. Hon. A.
Cliffe, Michael	Jay, Rt. Hon. D. P. T.	Roberts, Albert (Normanton)
Collick, P. H. (Birkenhead)	Jeger, Mrs. Lena(Holbn & St. Pncs, S.)	Robinson, Kenneth (St. Pancras, N.)
Craddock, George (Bradford, S.)	Jenkins, Roy (Stechford)	Ross, William
Cronin, J. D.	Johnson, James (Rugby)	Shinwell, Rt. Hon. E.
Cullen, Mrs. A.	Jones, David (The Hartlepools)	Short, E. W.
Darling, George (Hillsborough)	Jones, Jack (Rotherham)	Silverman, Julius (Aston)
Davies, Ernest (Enfield, E.)	Jones, T. W. (Merioneth)	Silverman, Sydney (Nelson)
Davies, Stephen (Merthyr)	Key, Rt. Hon. C. W.	Simmons, C. J. (Brierley Hill)
Deer, G.	King, Dr. H. M.	Skeffington, A. M.
de Freitas, Geoffrey	Lawson, G. M.	Slater, Mrs. H. (Stoke, N.)
Delargy, H. J.	Lee, Frederick (Newton)	Slater, J. (Sedgefield)
Diamond, John	Lee, Miss Jennie (Cannock)	Smith, Ellis (Stoke, S.)
Dodds, N. N.	Lewis, Arthur	Sorensen, R. W.
Dugdale, Rt. Hn. John (W. Brmwch)	Lindgren, G. S.	Soskice, Rt. Hon. Sir Frank
Ede, Rt. Hon. J. C.	Lipton, Marcus	Sparks, J. A.
Edelman, M.	Logan, D. G.	Spriggs, Leslie
Edwards, Rt. Hon. John (Brighouse)	Mabon, Dr. J. Dickson	Steele, T.
Edwards, Rt. Hon. Ness (Caerphilly)	McAlister, Mrs. Mary	Stonehouse, John
Edwards, Robert (Bliston)	McCann, J.	Stones, W. (Consett)
Edwards, W. J. (Stepney)	MacColl, J. E.	Strauss, Rt. Hon. George (Vauxhall)
Evans, Albert (Islington, S.W.)	McInnes, J.	Stross, Dr. Barnett(Stoke-on-Trent, C.)
Evans, Edward (Lowestoft)	McKay, John (Walisend)	Summerskill, Rt. Hon. E.
Fernyhough, E.	MacPherson, Malcolm (Stirling)	Swingler, S. T.
Finch, H. J. (Bedwelity)	Mahon, Simon	Sylvester, G. O.
Fitch, A. E. (Wigan)
Taylor, Bernard (Mansfield)	Wells, Percy (Faversham)	Wilson, Rt. Hon. Harold (Huyton)
Thomson, George (Dundee, E.)	Wells, William (Walsall, N.)	Winterbottom, Richard
Thornton, E.	White, Mrs. Eirene (E. Flint)	Woodburn, Rt. Hon. A.
Timmons, J.	White, Henry (Derbyshire, N.E.)	Woof, R. E.
Tomney, F.	Wilkins, W. A.	Yates, V. (Ladywood)
Ungoed-Thomas, Sir Lynn	Willey, Frederick
Usborne, H. C.	Williams, David (Neath)	TELLERS FOR THE AYES:
Viant, S. P.	Williams, Rev. Llywelyn (Ab'tillery)	Mr. J. Taylor and
Wade, D. W.	Williams, Rt. Hon. T. (Don Valley)	Mr. G. H. R. Rogers.
Warbey, W N.	Willis, Eustace (Edinburgh, E.)
NOES
Agnew, Sir Peter	Gammans, Lady	McMaster, S. R.
Aitken, W. T.	George, J. C. (Pollok)	Macmillan, Rt. Hn. Harold(Bromley)
Allan, R. A. (Paddington, S.)	Gibson-Watt, D.	Macmillan, Maurice (Halifax)
Amery, Julian (Preston, N.)	Glover, D.	Macpherson, Niall (Dumfries)
Amory, Rt. Hn. Heathcoat (Tiverton)	Glyn, Col. Richard H.	Maitland, Cdr.J.F.W.(Horncastle)
Arbuthnot, John	Godber, J. B.	Maitland, Hon. Patrick (Lanark)
Armstrong, C. W.	Goodhart, Philip	Manningham-Buller, Rt Hn. Sir R.
Ashton, H.	Gower, H. R.	Markham, Major Sir Frank
Atkins, H. E.	Graham, Sir Fergus	Marples, Rt. Hon. A. E.
Baldock, Lt.-Cmdr. J. M.	Grant, Rt. Hon. W. (Woodside)	Marshall, Douglas
Baldwin, Sir Archer	Grant-Ferris, Wg. Cdr. R. (Nantwich)	Mathew, R.
Barlow, Sir John	Green, A.	Maudling, Rt. Hon. R.
Barter, John	Gresham Cooke, R.	Mawby, R. L.
Batsford, Brian	Grimston, Sir Robert (Westbury)	Maydon, Lt.-Cmdr, S. L. C.
Baxter, Sir Beverley	Grosvenor, Lt.-Col. R. G.	Medlioott, Sir Frank
Beamish, Col. Tufton	Gurden, Harold	Milligan, Rt. Hon. W. R.
Bell, Philip (Bolton, E.)	Hall, John (Wycombe)	Molson, Rt. Hon. Hugh
Bennett, F. M. (Torquay)	Hare, Rt. Hon. J. H.	Morrison, John (Salisbury)
Biggs-Davison, J. A.	Harris, Reader (Heston)	Mott-Radclyffe, Sir Charles
Bingham, R. M.	Harrison, A. B. C. (Maldon)	Nairn, D. L. S.
Birch, Rt. Hon. Nigel	Hay, John	Neave, Airey
Bishop, F. P.	Heald, Rt. Hon. Sir Lionel	Nicholls, Harmar
Body, R. F.	Heath, Rt. Hon. E. R. G.	Nicholson, Sir Godfrey (Farnham)
Boyd-Carpenter, Rt. Hon. J. A.	Henderson, John (Carthcart)	Nicolson, N. (B'n'm'th, E. & Chr'ch)
Boyle, Sir Edward	Henderson-Stewart, Sir James	Noble, Comdr. Rt. Hon. Allan
Bralne, B. R.	Hicks-Beach, Maj. W. W.	Noble, Michael (Argyll)
Bromley-Davenport, Lt.-Col. W. H.	Hill, Mrs. E. (Wythenshawe)	Nugent, G. R. H.
Brooke, Rt. Hon. Henry	Hill, John (S. Norfolk)	Oakshott, H. D.
Browne, J. Nixon (Craigton)	Hirst, Geoffrey	O'Neill, Hn. Phelim (Co. Antrim, N.)
Bryan, P.	Holland-Martin, C. J.	Ormsby-Gore, Rt. Hon. W. D.
Bullus, Wing Commander E. E.	Hope, Lord John	Orr, Capt L. P. S.
Burden, F. F. A.	Hornby, R. P.	Orr-Ewing, C. Ian (Hendon, N.)
Butcher, Sir Herbert	Horobin, Sir Ian	Osborne, C.
Butler, Rt. Hn.R.A.(Saflron Walden)	Horsbrugh, Rt. Hon. Dame Florence	Page, R. G.
Campbell, Sir David	Howard, Hon Greville (St. Ives)	Partridge, E.
Carr, Robert	Howard, John (Test)	Peel, W. J.
Carey, Sir Robert	Hughes Hallett, Vice-Admiral J.	Peyton, J. W. W.
Channon, H. P. G.	Hutchison, Michael Clark(E'b'gh, S.)	Pickthorn, Sir Kenneth
Chichester-Clark, R.	Hutchison, Sir James (Scotstoun)	Pilkington, Capt. R. A.
Clarke, Brig. Terence (Portsmth, W.)	Hylton-Foster, Rt. Hon. Sir Harry	Pitman, I. J.
Cole, Norman	Iremonger, T. L.	Pitt, Miss E. M.
Conant, Maj. Sir Roger	Irvine, Bryant Godman (Rye)	Pott, H. P.
Cooke, Robert	Jenkins, Robert (Dulwich)	Powell, J. Enoch
Cooper, A. E.	Jennings, J. C. (Burton)	Price, David (Eastleigh)
Cordeaux, Lt.-Col. J. K.	Jennings, Sir Roland (Hallam)	Prior-Palmer, Brig. 0. L.
Corfield, F. V.	Johnson, Dr. Donald (Carlisle)	Ramsden, J. E.
Courtney, Cdr. Anthony	Johnson, Eric (Blackley)	Rawlinson, Peter
Craddock, Beresford (Spelthorne)	Keegan, D.	Redmayne, M.
Crosthwaite-Eyre, Col. 0. E.	Kerby, Capt. H. B.	Remnant, Hon. P.
Crowder, Sir John (Finchley)	Kerr, Sir Hamilton	Renton, D. L. M.
Cunningham, Knox	Kershaw, J. A.	Ridsdale, J. E.
Currie, G. B. H.	Kimball, M.	Rippon, A. G. F.
Dance, J. C. G.	Kirk, P. M.	Robertson, Sir David
Davidson, Viscountess	Lambton, Viscount	Robinson, Sir Roland (Blackpool, S.)
D'Avigdor-Goldsmid, Sir Henry	Lancaster, Col. C. G.	Roper, Sir Harold
de Ferranti, Basil	Langford-Holt, J. A.	Ropner, Col. Sir Leonard
Dodds-Parker, A. D.	Leavey, J. A.	Russell, R. S.
Donaldson, Cmdr. C. E. McA.	Leburn, W. G.	Scott-Miller, Cmdr. R.
du Cann, E. D. L.	Legge Bourke, Maj. E. A. H.	Sharples, R. C.
Dugdale, Rt. Hn. Sir T.(Richmond)	Legh, Hon. Peter (Petersfield)	Simon, J. E. S. (Middlesbrough, W.)
Duncan, Sir James	Lindsay, Hon. James (Devon, N.)	Smithers, Peter (Winchester)
Eden, J. B. (Bournemouth, West)	Linstead, Sir H. N.	Smyth, Brig. Sir John (Norwood)
Elliott, R. W (Ne'castle upon Tyne, N.)	Lloyd, Maj. Sir Guy (Renfrew, E.)	Spearman, Sir Alexander
Erroll, F. J.	Longden, Gilbert	Speir, R. M.
Farey-Jones, F. W.	Loveys, Walter H.	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Fell, A.	Low, Rt. Hon. Sir Toby	Stanley, Capt. Hon. Richard
Finlay, Graeme	Lucas, Sir Jocelyn (Portsmouth, S.)	Stevens, Geoffrey
Fisher, Nigel	Lucas-Tooth, Sir Hugh	Stoddart-Scott, Col. Sir Malcolm
Fletcher-Cooke, C.	Macdonald, Sir Peter	Storey, S.
Forrest, G.	Maclay, Rt. Hon. John	Stuart, Rt. Hon. James (Moray)
Fort, R.	Maclean, Sir Fitzroy (Lancaster)	Studholme, Sir Henry
Foster, John	McLean, Neil (Inverness)	Summers, Sir Spencer
Freeth, Denzil	MacLeod, John (Ross & Cromarty)

Sumner, W. D. M. (Orpington)	Vane, W. M. F.	Williams, Paul (Sunderland, S.)
Taylor, Sir Charles (Eastbourne)	Vickers, Miss Joan	Williams, R. Dudley (Exeter)
Taylor, William (Bradford, N.)	Vosper, Rt. Hon. D. F.	Wills, Sir Gerald (Bridgwater)
Temple, John M.	Wakefield, Edward (Derbyshire, W.)	Wilson, Geoffrey (Truro)
Thomas, Leslie (Canterbury)	Wakefield, Sir Wavell (St. M'lebone)	Wood, Hon. R.
Thompson, Kenneth (Walton)	Wall, Patrick	Woollam, John Victor
Thompson, R. (Croydon, S.)	Ward, Rt. Hon. G. R. (Worcester)	Yates, William (The Wrekin)
Thorneycroft, Rt. Hon. P.	Ward, Dame Irene (Tynemouth)
Thornton-Kemsley, Sir Colin	Watkinson, Rt. Hon. Harold
Turner, H. F. L.	Webbe, Slr H.	TELLERS FOR THE NOES:
Turton, Rt. Hon. R. H.	Webster, David	Colonel J. H. Harrison and
Tweedsmuir, Lady	Whitelaw, W. S. I.	Mr. Hughes-Young.

4.15 p.m.

Mr. Douglas Jay (Battersea, North)

I beg to move, in page 12, line 33, to leave out "and".

This Amendment, and some of the consequential Amendments, illustrate the extraordinary position in which the Chancellor placed the Committee by his remarkable blunder, as we now have to accept it to be, over the Financial Resolution. The effect of the Amendments would be to reduce the 5 per cent. rate of Purchase Tax to 1 per cent. That is what we are compelled by this Financial Resolution to move. What we would wish to move and wish to argue is that the 5 per cent. rate should be reduced to nil. It is our view that this 5 per cent. rate should be swept away altogether.

I agree with the spokesman of the Liberal Party, who intervened just now, that it exposes our debates to derision if we are compelled, in our Amendments, to move something quite different from what we wish to lay before the Committee. However, responsibility for that is upon the Chancellor of the Exchequer. In this case, there is at least some resemblance between what we wish to argue and what we are compelled to put upon the Notice Paper.

The 5 per cent. rate of Purchase Tax is perhaps the most important of all the rates because it covers a whole range of clothing, used in its widest sense, including gloves, hats, all footwear and all furniture. All these items, with few exceptions, now bear tax at the rate of 5 per cent. It is surprising that the hon Member for Kidderminster (Mr. Nabarro) is not here this afternoon to take part in our discussions on any item in the Purchase Tax range at all. The Chancellor of the Exchequer may have some explanation of this absence, but it has not been vouchsafed to me.

The 5 per cent. tax on these necessary household items amounts to a major tax on the cost of living which keeps the cost of living high. That can be said with more emphasis on this part of the Purchase Tax than on any of the other indirect taxes in our fiscal system. The simple fact is that clothes, boots and shoes are used by everyone. They are consumed not merely by every family, but by every member of every family in the land. They can very markedly be distinguished from beer, on which the Chancellor made a concession for which he takes so much credit.

We were told by the Financial Secretary to the Treasury that 20 million people consume beer. That would appear to be another way of saying that 30 million people do not consume beer. On the other hand, I do not think that it will be contested that, in the case of clothes, boots and shoes, there are 50 million people in this island who are compelled to purchase and use these items. The first thing that follows from that—this point is relevant to the discussion—is that this Purchase Tax on these necessary household items much more directly affects every old-age pensioner than does any of the other indirect taxes.

I wonder whether the Chancellor and the Financial Secretary, when they set out to justify their reduction in the beer tax, or the selection of that particular reduction as opposed to any other reduction of taxes, reflected that a very high percentage of the old-age pensioners are women. I believe that the percentage is about two-thirds of the total. It is more than half. I know that at the old-age pensioners' meetings that I go to in my constituency it always appears that at least three-quarters of the audience are women.

Although it would be quite untrue to say that no women drink beer, it is true that a very high proportion of old women who are old-age pensioners do not get any benefit from that reduction at all. If, instead, the Chancellor had taken the 5 per cent. tax—even though it is not a very heavy one—off clothes and footwear that would have been of direct benefit to every one of those old people, male and female.

In addition, a tax of this kind, falling directly on primary necessities, also falls more heavily on those with larger families. When we consider this in relation to the whole of our fiscal arrangements which still bear much more hardly on a family with one earner and many dependants than on a single person, it is quite clear that this is a very heavy imposition on those families, in particular on the not very highly-paid wage earner with three or four children who comes off badly in the rest of our fiscal and financial arrangements.

I know that it is said that we cannot distinguish in these matters between luxuries and necessities because the distinction is becoming more and more blurred and almost everybody now has a motor car and a television set—

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

We do not accept that.

Mr. Jay

I am not accepting it, but, even if we did accept it, even if those things were much more widely spread, nevertheless one does not need an extra motor car and an extra television set for each member of a family. Yet one needs extra clothing and extra boots and shoes and household textiles. That is a very important point which the Chancellor should bear in mind.

Mr. Douglas Glover (Ormskirk)

I am sure that the right hon. Member always wants to be fair. On the question of the size of a family, is he not forgetting that most children's clothing is exempt from Purchase Tax?

Mr. Jay

That is true only in the case of young children, not of all children as it was under the Utility scheme of the Labour Government. Therefore, that is not a sufficient answer.

This tax on clothing and boots and shoes is regressive in a double sense, first, because it falls on a necessity and tends to be a greater burden on those with the smallest incomes and, secondly, because it falls on every member of a family. I believe that in maintaining this tax on these items the Government are coming nearer towards a general sales tax than in any other part of our fiscal system. Indeed, quite apart from his manoeuvres and contrivances on the Financial Resolution, the Chancellor, by his refusal to make any reduction in the 5 per cent. rate while making reductions in other rates, increases our suspicion that he has it in mind to move steadily towards a general sales tax of an even more regressive kind than the present Purchase Tax.

It is important to get this clear for the purpose of these arguments. By a sales tax we do not mean a tax falling on the retail stage as opposed to the wholesale stage. I do not think that anyone seriously assumes that there would be any advantage in transferring the present Purchase Tax from the wholesale to the retail stage. What we mean is that instead of falling mainly on the less necessary items, as this has done hitherto, it would fall on a whole range of necessities—what the Paymaster-General once called amenities—at a common level. This retention of the 5 per cent. level increases our suspicion that the Chancellor has it in mind to move steadily towards that kind of tax.

Let us remember that the great majority of these items we are now considering were wholly exempt from Purchase Tax under the Labour Government, under the Utility scheme.

Mr. Glover

Oh.

Mr. Jay

If the hon. Member does not know that, he should learn it now. Under the Utility scheme 75 per cent., 80 per cent., 90 per cent. or even more of clothes, boots and shoes and furniture, on which this tax falls, were exempt.

Mr. Ellis Smith

And there was guaranteed quality.

Mr. Jay

And, incidentally, quality was guaranteed as well, but it might not be in order to discuss that on this Amendment. They were certainly exempt from tax.

Let us be perfectly clear that successive Tory Chancellors since those days have extended the Purchase Tax and put it on all these necessary items which did not bear it before. That is one of the reasons why the hon. Member for Kidderminster reminded us—and would remind us if he had managed to be here this afternoon—that the total revenue being collected in Purchase Tax now amounts to £471 million a year, whereas it was under £300 million in the last full year of the Labour Government.

I do not know whether the Committee quite realises this. The Chancellor told us that he was estimating £60 million, approximately, in Purchase Tax this year, although the amount he is to collect in this financial year is rather less than £30 million less than he collected last year. He collected just under £500 million last year and, after all these reductions, he is to collect £470 million in the present year.

Finally, in the case not so much of furniture and boots and shoes, but of clothing, I should have thought that there was an additional very strong reason for some relief at present on industrial as opposed to social grounds. No one will question that the textile industries are most acutely depressed at present. We all know the state of the cotton industry, which we have recently debated frequently, and will debate again. Cotton is extremely depressed and, in the opinion of many people, that is partly due to the policy of the present Government. In addition, the woollen industry has been very hard hit by the recent changes in the American tariff and it is feeling the effect of that policy. I should have thought that this would have been a notably appropriate time, for all these reasons, to give some tax relief to these depressed textile industries.

I wonder whether we could be told, by the Government spokesman, how much Purchase Tax revenue comes under the 5 per cent. heading and, in particular, how much is attributable to textile items? I should imagine that quite a large sum is still being collected in Purchase Tax on these depressed products of the textile industries. In respect of cotton it seems a most extraordinary operation. First, a tax is put on the goods and thereby the level of production is depressed. Then some of the public money so collected is used to pay the industry to contract the capacity made surplus. I should have thought that it would have been far wiser not to collect a tax in the first instance.

For all these reasons, social, economic, fiscal and the position in the textile industries, there seems the strongest possible case for giving relief to all these main items which are now suffering the 5 per cent. rate. I think that this is one of the first things the Chancellor should have done in the present Budget. He would show a more constructive approach to these things if he accepted our argument and accepted the Amendment now.

4.30 p.m.

Mr. Glover

I have rarely listened to so "tendacious" a speech as the right hon. Member for Battersea, North (Mr. Jay) has just made.

Mr. Jay

Could the hon. Gentleman make clear what the adjective was that he used?

Mr. Glover

Tendentious.

Mr. John Rankin (Glasgow, Govan)

The hon. Member has changed his mind.

Mr. Glover

I am sure that the right hon. Gentleman does not mind. I may slip again, because certain of my facts in this matter are not as firm as they might be.

The Utility scheme was done away with just after the Labour Party left office because it was breaking down. It no longer operated successfully or to the advantage of the people. [An HON. MEMBER: "Why? "] Because there was an artificial ceiling for each article. Let us consider, for instance, a woman's dress. [Interruption.] I have been in this trade all my life and I know what I am talking about. When one put a good button on a dress it was immediately pushed into the 25 per cent. Purchase Tax category. If a cheap button was put on the dress it did not pay that rate of tax, but it was not attractive to the woman. That was happening throughout the whole of the fashion trade. It was necessary, therefore, to do away with the Utility Scheme.

Mr. Jay

That was not what I was arguing. Let us assume for the purpose of this debate that the Utility scheme had to go. The question still remains whether a tax on all those types of goods which had previously been Utility goods should be imposed.

Mr. Glover

I am coming to that point.

A tax had to be introduced which would bring in roughly the same amount of revenue on a different basis. The 5 per cent. Purchase Tax was eventually worked out. I know a good deal about this trade and I am not trying to make party points. In a trade like the boot and shoe trade or the clothing trade, in which most of the goods are sold at a fixed retail price—I do not mean a price fixed by the manufacturer or somebody else—the public get the merchandise at almost the same price as they would get it if there were not a 5 per cent. Purchase Tax on it. The manufacturer pares his price by 3d. to get it into the right category and, likewise, the wholesaler pares his price by the same amount. I do not think that the 5 per cent. Purchase Tax makes much difference, if any, to the price at which goods are sold over the counter.

Everyone wants to see taxes abolished, but I should not like my right hon. Friend the Chancellor of the Exchequer to think that because of what I have said I am advocating the permanent continuation of taxation on clothing, boots and shoes. However, in a Budget in which the Chancellor has given away, or, shall we say, not taken from us, a greater sum than in any other Budget in almost living memory, it is asking a lot to ask for the removal of Purchase Tax from clothing, boots and shoes and other items.

Being a Lancashire Member, I am very concerned that the Lancashire textile industry should receive any benefit from any reduction in taxation that the State can afford, but for the reasons which I have given on the basis of which the retail trade is carried on, I do not believe that the 5 per cent. tax makes any difference to the production of textiles in Lancashire or Yorkshire. For that reason, the right hon. Member for Battersea, North and his hon. Friends have not divided on one of the Budget Resolutions.

During the debate on the Budget they said that the Chancellor's concessions were, in their view, about right in the total sum given to the public, but if they bring forward an Amendment, the effect of which would be to reduce the revenue by about £30 million more, obviously those two arguments cannot be balanced. If the amount given away so far is about right and if another £30 million is added, then the country's affairs will get out of balance. For those reasons, although I do not like taxes on consumer goods, I should have no difficulty in opposing the Amendment.

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

After listening to the hon. Member for Ormskirk (Mr. Glover) and other hon. Members opposite who spoke during the Budget debate, it makes me more than ever convinced that it pays us on this side to express our opposition on fundamental principles rather than to try to be nice and not vote on major issues.

Mr. Ede (South Shields)

They want to play rough.

Mrs. Slater

My right hon. Friend says that hon. Members opposite want to play rough. Perhaps the time will come when we shall have to play rough if we are to let the people know how strongly we feel in these matters.

I should like first to deal with the 5 per cent. tax on footwear. This includes all footwear for children except for very young children. Fortunately for us, since the war our children have been growing quicker and are bonnier and they take larger shoes than they used to take. The 5 per cent. tax applies, therefore, to more footwear at present than it would have done in pre-war years because the children are bigger and bonnier. Anyone who has a family knows how large a size in shoes young people take these days as compared with when we were children.

We should do nothing to discourage young people and adults from wearing good footwear. Any tax which makes it difficult for people, whether young or old, to get good footwear is bad. We should do something to remedy the fact that bad feet can he caused through wearing poor footwear. A tax on footwear makes it more difficult for people to buy good shoes. The 5 per cent. tax is especially hard on old people, because a new pair of shoes is not cheap. One has to pay at least £3 10s. before one can get a reasonable pair of shoes for a woman. Therefore, the 5 per cent. tax makes all the difference to old people between whether they buy a new pair of shoes or not.

I understand that the yield from the tax on footwear is not very large. It brings in about £6.4 million. In 1953–54, it brought in £16 million. That gives some indication how prices of footwear have gone up in the last few years. The tax increases as the price of the commodity increases. When one realises that the Government have made concessions in beer and other things, it seems very mean to continue the 5 per cent. tax on footwear.

The tax on clothes is another great factor. As my right hon. Friend the Member for Battersea, North (Mr. Jay) said, it falls heaviest on people with large families and those with low incomes. While we are proud that our children and young folk look gay and summery, it is an expensive job to change the clothes of the family from winter to summer wear and then back again in the late autumn. The 5 per cent. tax is a burden on those who suffer most.

The hon. Member for Kidderminster (Mr. Nabarro), the great advocate of reduction of Purchase Tax, who I observe is not here today—

Mr. H. Wilson

Is it in order to debate Purchase Tax in the absence of the hon. Member for Kidderminster?

Mrs. Slater

It makes it even worse if where I am told the hon. Member is is correct, because if he feels keenly about Purchase Tax he should be here to talk about it, possibly with new shoes on.

When the hon. Member for Kidderminster spoke about this recently, he said that it was very difficult for the Government to remove the 5 per cent. tax from clothing because, if they took it off a woman's woollen dress at 30s., they would have to take it off a Christian Dior dress at 200 guineas. I am not concerned with the woman who pays 200 guineas for a dress. I have a very strong feeling that she would be much better doing a job of work than having the opportunity and facilities always to be buying a 200 guineas dress to wear.

I am concerned about the woman with the young and growing family and the young folks who want to look respectable and make the best of themselves. I am concerned especially with the elderly lady who wants to buy herself a new coat and frock, perhaps new bedding also and a new easy chair to sit on in her old age. It is those people about whom my right hon. and hon. Friends and myself are concerned. It is not funny or something to laugh about. It is a serious matter that we should put a tax of 5 per cent. on the clothing of those folks who need it most. If the Chancellor finds it difficult to do something about the 5 per cent. on the clothes which those people buy because he would have to take 5 per cent. off dresses costing 200 guineas, let him think out a scheme whereby he may stop at a certain figure, if necessary, and thus benefit those in the lower income group and the older people.

Included in the items subject to 5 per cent. Purchase Tax is furniture. It is always the same people who are affected by this kind of indirect taxation. It is always the same group of our working people. It is the elderly, the woman with the growing family, the young people who perhaps are paying their board for the first time and are having to find out how to buy their own clothes, and the people in the lower income groups. When we consider the incidence of the 5 per cent. Purchase Tax on furniture, it is the same group of people struggling perhaps to buy their house and their furniture so that they can make their home decent to start with.

When I was married a 5 per cent. Purchase Tax on furniture would not have been a very large amount of money, but the cost of a bedroom suite and almost every item of essential furniture has more than trebled and is sometimes five times as much as it was years ago. These people must have a bed. They must have something in their dining room. They need an easy chair to sit on. The amount of Purchase Tax which they pay is considerable when it is reckoned up on the large items of furniture which they need.

The first reason why I support the Amendment is that I think that taxation of this kind is unjust and unnecessary, as this year the Government are very proud that they are able to give away large sums of money to certain groups of people. My second reason is that Purchase Tax affects those people whose need is greatest. I travelled down in a train on Monday with a good friend of the Government who said that one thing about the Budget was that it was a Tory Budget, because it had helped the friends of the Tory Government. This is a situation where the Tory Government could help some of those people whose need is great. The Government could be doing a decent job of work instead of handing out money on beer and tax relief for the higher income groups.

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

Whilst listening to the right hon. Member for Battersea, North (Mr. Jay) and the hon. Member for Stoke-on-Trent, North (Mrs. Slater), I began to wonder if I was at a sort of mad hatter's tea party. One would imagine that the five per cent. impost was all the difference in the world between prosperity and abject poverty. Nothing could be further from the truth. I assert without the slightest possibility of argument from right hon. and hon. Gentlemen opposite that this country today is better shod, better clothed and better housed than at any time in its history.

4.45 p.m.

It may have escaped the notice of the hon. Lady that in the past few days there have been elections up and down the country which have demonstrated the considerable confidence of the electorate of this country in the way in which affairs generally have been managed by the Conservative Party. We should not lose sight of that.

We can all find powerful arguments against every tax. We can find powerful arguments against Income Tax, Surtax, Schedule A and death duties. There are very powerful social arguments why none of the many taxes we have in this country should exist. But they have to exist. We have a Welfare State. We have a very extensive system of social services which has to be financed. Money must be found in one form or another. We must judge whether the method of obtaining the revenue is fair and is not retrograde in certain aspects. No one can possibly argue in this day and age that a 5 per cent. is regressive or in any way harmful to the general body of people.

The hon. Lady talked about furniture. The impression she left the Committee with was that there was just one section of the community that bought furniture.

Mrs. Slater

No.

Mr. Cooper

Or that just one income group bought furniture.

Furniture is bought by everybody, and Purchase Tax is paid by everybody. There is one difference which the hon. Lady did not mention. The person with a low income and perhaps with several children, having family allowances, may well be exempt from all forms of Income Tax, hut the person with a higher income, who still has to pay Purchase Tax, also has to pay substantial amounts in Income Tax and probably Surtax. Therefore, it is essential that we should keep in some sort of perspective not only the taxes which one section of the populace pays, but also the benefits which some sections of the community have.

Mr. H. Wilson

In order to put this matter into perspective, as the hon. Member for Ilford, South (Mr. Cooper) puts it, is it not also worth recalling that in the Budget there have been very substantial reductions in Income Tax for the income groups to which the hon. Member refers? As a result of the Purchase Tax concessions as well, those groups gain far more per head in Purchase Tax reductions than the kind of families about which my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) was talking.

Mr. Cooper

No one will attempt to deny that. It is obvious that if taxation is increased people with higher incomes will pay more tax. Equally, if taxation is reduced people earning more will pay less tax. No one can dispute that simple fact. No one has so far devised any system whereby that immutable fact can be altered.

Mr. Wilson

Surely the hon. Member will recall that the first Budget of this Parliament, in the autumn of 1955, for which I think the hon. Member voted, twisted the distribution of tax revenue against the lower income groups by "the pots and pans" Budget. This tax, instead of wiping out the iniquities of "the pots and pans" Budget, twists the tax concessions in the opposite direction.

Mr. Cooper

The right hon. Member is eloquent on so many subjects and knowledgeable on so few. If the right hon. Gentleman would be good enough to look back to "the pots and pans" Budget debate in 1955 he will find that on this subject of the pots and pans item I abstained from voting, for a quite different reason which I will explain to the right hon. Gentleman, if he will listen.

During the ten years that I have been in the House, I have taken the view that the policies pursued by various Chancellors since the war of increasing taxation to cure inflation have been wrong. That is the correct method only if one controls every facet of the economy, including wages, and that has never been the case since the end of the war. That being so, it seemed to me that to increase taxation—by Purchase Tax increases or any others—would simply mean a reduction in the general standards of the ordinary people who, through their trade unions, would then call for higher wages, so giving another twist to the inflationary spiral. It was for that reason that I abstained from voting in the "pots and pans" Budget of 1955.

For precisely the same reasons, I supported my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) in 1957 when he took steps to cut off the supply of money which, if one does not control every facet of the economy, is the only way to stop inflation. I submit that over the last eighteen months that policy has been proved to be absolutely right.

We now have to consider whether this 5 per cent. tax is harmful. If it can be shown to be harmful to ordinary people my right hon. Friend the Paymaster-General has a case to answer. However, I do not think that that is so, because I again assert that, as a nation, we are better shod, better housed, better clothed and better fed now than at any time in our history. To me, that seems the conclusive reason for rejecting the Amendment.

Mr. J. Grimond (Orkney and Shetland)

We may be, in fact we are, better shod, better clothed and better housed, but I cannot believe that that is the fault of the Treasury. I thought that the hon. Member for Ilford, South (Mr. Cooper) was agreeably tendentious—as I think all speeches ought to be, and as that of his hon. Friend the Member for Ormskirk (Mr. Glover) also was. I am not sure, however, that he tended in the right direction, because his main theme was that so long as the red-hot needle is only small and only makes you jump a little it does not matter if you are already on the rack and also having your eyes torn out with a red-hot poker.

Even before the era of the present Chancellors, there has been a demon in the Treasury who believes that the country should be composed of unmarried people living in sin, without children if possible, but if they have any children they should be stark naked; all living in the most primitive houses, without furniture and washing very old clothes in very old washtubs. To the Treasury, married life in the ordinary sense seems to be a luxurious, almost degrading pastime.

Purchase Tax is an example of this attitude. They tax marriage. They tax the housewife who tries to equip her house decently, and, except in the case of the smallest children, they also tax children's clothing—

The Paymaster-General (Mr. Reginald Maudling)

I must say I am rather surprised that the hon. Gentleman should think that the Treasury's ideal community is one in which no one is taxed.

Mr. Grimond

If the Treasury's policy is to tax all things that they think are fundamental and necessary, that is a new conception of their economics. There are arguments for it. It is one that would certainly bring a fresh and welcome breath of new ideas into our economic debates.

If I am thought to be eccentric in believing that married life is normal and to be encouraged and that wives should want to have children and see them nicely clothed. I would point out that Professor Cairncross says that continual taxation of the tools of the housewife's trade is bad and symptomatic. It is symptomatic of an odd attitude of the Treasury which we should do our best to exorcise.

Purchase Tax has obvious disadvantages. It puts up the cost of living and leads to extreme anomalies. Again, I think we should fight against the argument that when one puts on a tax that is full of anomalies and difficulties, it cannot be taken off, in spite of that, because if it is taken off one thing it will have to come off something else. That is really cutting off one's nose to spite one's face and demonstrates the folly of the tax. If one cannot remove it from ordinary coats without having to remove it from Dior fur coats, that alone brands it as a bad tax.

The Government may say that money has to be raised, and that everyone wants to see Income Tax down, petrol tax down—and now Purchase Tax down—and that it is not fun being the Chancellor of the Exchequer. I agree with that. But to begin with, we could do something about reducing Government expenditure—but that is said in parenthesis, and perhaps I should be out of order to pursue it; but that is the first thing to look at.

Purchase Tax was put on during the war to curb consumption. It was not strongly commended before the war as a means of raising revenue. It was put on as a war-time measure to curb consumption. Have we looked at other possibilities if we want now to raise revenue? I take the word of the Chancellor—up to a point—and the word of the PaymasterGeneral—up to a point—when they say that a sales tax that would cover a much larger range of commodities is impossible, or at least administratively difficult. That was as one possibility that seemed to have attractions because it seemed to get rid of the anomalies.

There have been suggestions of a tax on expenditure in various forms, and there is a good deal to be said for such suggestions if we want an indirect tax of this kind at all. There are various other things that seem to have slipped through the taxation system. There are land values, for example—an old friend of the Liberal Party. I certainly do not want to tax children's sweets, but no confectionery bears any tax. It is queer that we should tax children's clothing but let through a lot of things that I would have thought were no more essential than clothing. I do not want more taxes: but if the Government do, the base of our present tax system is narrow. Our tares are full of anomalies and should be reviewed.

This is a most anomalous tax. While I agree that 5 per cent. may not be very heavy, it is a symptom of the chaos into which I would say a lot of our taxation system is slipping. It falls on families with young children, on those who find it most difficult to make ends meet. Bearing in mind the state of the cotton industry at present, there is a great deal to be be said for examining the suggestion of the right hon. Gentleman the Member for Battersea, North (Mr. Jay) that whatever we do this year, we really should not consider Purchase Tax as being a permanent feature of our economy and thus keeping even a small tax—sometimes difficult to collect—on necessities of this kind at a time when we are trying to help the industries that make them.

Mr. Michael Cliffe (Shoreditch and Finsbury)

The hon. Member for Ormskirk (Mr. Glover) said that he had had a lifetime's experience of textiles, or of the clothing trade, and that for that reason he could not support this Amendment. On the other hand, I have here a document which, if I may, I shall read in a moment. It is the case submitted by practically every association connected with the manufacture of clothing, and this is one of the very few occasions on which I can say that my own organisation, the National Union of Tailors and Garment Workers, is marching in step with the manufacturers' associations.

5.0 p.m.

The document was submitted to the Chancellor by the various associations and says: On 22nd January, 1959, in company with the other clothing manufacturers' associations, comprising the Joint Standing Committee of Clothing Manufacturers' Associations, a letter was addressed…urging that Purchase Tax be removed from clothing at the earliest possible date. It gives these reasons:

1. "(a) Clothing is in a different category from most other classes of taxable goods. First, it is a basic essential; second, it is an expendable item requiring frequent replacing, and third, it is subject to seasonal considerations.
2. (b) Trading conditions throughout the clothing and textile industries have for some time been extremely difficult. That is shown by the official statistics of retail sales, numbers employed in the industry and short-time working.
3. (c) The steps so far taken by the Government in recent months to stimulate the national economy are helping some sections of industry but not the clothing industry. Indeed, official statistics show that consumer spending is being diverted to the products of other industries. In addition, hire purchase commitments have already mortgaged a substantial proportion of consumer spending power for the future, to the detriment of the clothing industry. The exemption of clothing from Purchase Tax would give a stimulus to the clothing and textile industries and help to offset this undesirable trend not only because of the direct effect it would have on retail prices of clothing but also because of the psychological effect on the public.
4. (d) No relief in taxation could be more widespread over the whole community than the removal of Purchase Tax from clothing."—

I think that is very true The figures of consumer spending in 1958 show an increase in cars and motor cycles and other durable goods of £145 million, as compared with 1957, whereas the expenditure on clothing, other than footwear, decreased by £1 million. Further, from figures published by the Board of Trade it would appear that from the end of January, 1958, to the end of January, 1959, hire purchase and other credit instalments outstanding increased by £135 million, mainly in the last few months, following the withdrawal of the credit restrictions. I interpret these figures, whilst appreciating that they cannot be entirely related one to the other as indicating that a large section of the public have been spending and committing themselves to the limit of their marginal buying power in acquiring consumer durable goods, motor cars and the like. I feel that the proposed reductions in Purchase Tax on these same goods will again attract buying powers to them to the detriment of the textile and clothing industries, industries which suffered considerably by the credit restrictions when they were imposed and which have not recovered. I hope the Chancellor will reconsider his proposals, and I urge Purchase Tax relief for the textile and clothing industries. Earlier removal of Purchase Tax from fabrics has been proved in practice not to have been sufficient; it should be followed through by taking off Purchase Tax from clothing. That is a resolution coming not only from the National Union of Tailor and Garment Workers but from practically 80 per cent. of the clothing manufacturers in this country, and if the hon. Member for Ormskirk, who represents a Lancashire division, cannot give any support to our Amendment, I say that he is not facing any of the realities of the situation and the extent to which people are suffering as a result of this 5 per cent. tax which is being imposed.

Concerning the Utility scheme, I am convinced that the hon. Member for Ilford, South (Mr. Cooper) knows nothing about Utility if he dares to say that it was rubbish. I have worked in the clothing industry nearly all my life, and I was extremely proud when the Utility scheme was introduced, firstly, because it controlled the texture itself and, secondly, because it controlled its manufacture. That was insisted upon. It was only in the later stages of the Utility scheme that clothing became shoddy; but the people responsible for that were not the workers and certainly not some of the people connected with the industry even on the other side.

I can say that the Utility scheme was something really worth while. When it was introduced by Sir Kingsley Wood, he stated that it was to try to stop the possibilities of an inflationary trend which was beginning to arise at that time. Nevertheless, it continued tax-free from 1942 to 1952, when we had the introduction of the D-scheme.

While the D-scheme took in a much wider range of goods, it did, in fact, leave out lower-priced goods which did not reach the category of the D-scheme itself.

We are continually talking about people being much better dressed and fed these days. People of my age and older are beginning to talk about how much better off they are than they were in the past and how much better the standard of living is today. Goodness help this country if we had not made any improvements at all during the last fifty years. That not only applies to this country but to other countries as well. Coloured people are still fighting for better conditions, and I hope that they get them. That is the trend in the world today, and it is utterly unnecessary repeatedly to say that we are living better—of course, we are.

Let us not forget when talking in terms of more cars, better homes and everything else that there are in this country, if we take the figures of the number of people in civil employment at 23½ million, of which roughly 18,100,000 are taxpayers, some 6 million people not paying Income Tax. The only reason they are not paying it is because they are not earning sufficient money to pay it. No doubt many of these 6 million people have family responsibilities. Since the Budget of 1958, I would say very definitely that they have been faced, in addition with having to meet this continuing 5 per cent., with rent increases and increases in the price of bread, milk and other commodities. That means that the difficulties for that section of the public have become even greater.

There was a surplus of £365 million. In my constituency, the two leading industries are those of clothing and furniture, and I am told by the manufacturers in those industries that they are left completely nonplussed by the fact that the furniture and clothing industries have been left completely out. Purchase Tax relief has been given to the motor car industry, even when customers are having to wait from one to four months to get any make of car in this country, and the motor car manufacturers have their order books full of export orders which they cannot complete. Why that should be necessary, I cannot understand. If I were in a position to buy a car for £1,000 I do not think that it would stop me buying it if I had to pay £30 or £40 more; but for the man who is not earning much, a penny or twopence on a garment is a serious matter.

These are the people whom the Chancellor has completely ignored. I can say from a reliable source that the £38 million which is got by way of this 5 per cent. tax does not in fact represent £38 million. Assuming the wholesale price is 100s. or £5 as submitted to the retailer and bears tax of 5s., the consumer has to pay on top of that whatever the market price is. That means that the £38 million can be £57 million for the consumers, in relation to the 5 per cent.

I hope that in the interest of the clothing and textile industries and in the interest of that section of the community which has had no assistance at all as the result of the £365 million surplus which has been distributed, this burden will be taken off them.

Mr. F. A. Burden (Gillingham)

I must declare an interest in this matter because I am a clothing manufacturer. I feel that the point is being rather heavily laboured. I have made inquiries from many buyers in big departmental stores in order to try to get this whole question of the tax on clothing put into true perspective. I have done so because I have the opportunity to go to the fountainhead.

So far, I have not met anyone dealing in the retailing of clothing who states that the 5 per cent. Purchase Tax is acting as a drag on sales, and that if it were removed there would be an immediate stimulus in sales. What does it amount to? If an article is sold at 12 guineas in a store—I give this figure, but it applies up and down the scale—it bears an average of 8s. Purchase Tax.

It is not true that all firms include their mark-up on the Purchase Tax. Indeed, because of the increased competition, it is a fact that the firms that have done so, or who tend to do so, are finding that they are priced out of the market. If this argument were true, then, of course, I would accept it willingly, because it would affect me and the sales that I make as well. If a person is paying 12 guineas for an article in a shop he is not going to ask whether that article bears 8s. Purchase Tax and, if it does, refuse to buy it. That 8s. is not going to make a difference on any large scale between a sale and a non-sale.

Mr. Cliffe

The prices of certain commodities such as motor cars are shown exclusive of Purchase Tax. The price of the car is given and the amount of Purchase Tax involved is also stated. It is shown as a separate item. As far as clothing is concerned, I have yet to see where the two things are itemised as far as the consumer is concerned.

Mr. Burden

That is perfectly true. I do not understand why many people who are engaged in the sale of clothing, and, indeed, hon. Gentlemen opposite who are arguing this matter, should say or imply that it is wrong to reduce Purchase Tax on articles that pay as much as 33 and 66 per cent. and that instead an article which carries 5 per cent.—and that 5 per cent. really has very little effect on its sale—should have its Purchase Tax reduced whilst criticism is levelled at the reduction of Purchase Tax on articles which are paying the very much higher levels of tax. Because of the very considerable sums of money involved a restriction is imposed on the sale of the higher priced goods by the very size of the Purchase Tax that each article carries.

I really think that hon. Gentlemen opposite and anyone who may have sectional interests must try to get this matter into perspective. If indeed a 5 per cent. tax on clothing is a drag on sales to the extent argued by the hon. Member for Shoreditch and Finsbury (Mr. Cliffe), then there can be no possible excuse for arguing in the same breath for raising Purchase Tax on articles carrying as much as 30 per cent. Purchase Tax. If there is a drag on sales of an article carrying 5 per cent. Purchase Tax, there must be a much bigger restriction on sale of articles which carry a very much higher rate of tax. That, in turn, must affect employment and turnover in these industries.

I thought that the hon. Member for Shored itch and Finsbury made heavy weather in going back to the war days or the immediate post-war period when we had the Utility scheme and the D-scheme. The hon. Gentleman said, and I would agree with him—indeed, I think everyone would—that it would he a very sad state of affairs for this country if we had not increased our standard of living in the last years. I believe that in the clothing industry very considerable progress has been made in the value now given and in the selection that presents itself. That has taken place certainly since this Government have been in power.

5.15 p.m.

Mr. Cliffe

I raised the point of the Utility scheme in answer to the hon. Member for Ilford, South (Mr. Cooper), who dared to say that Utility clothing was rubbish. I say that at no time in the history of this country has the general public had better value for money.

Mr. Burden

As a clothing manufacturer, I would completely disagree with the hon. Gentleman on that point. I would say emphatically that the public today has better value in the field of clothes than it has ever had in the history of the country. Good though the Utility scheme was at the time, and although I think that it effected a very useful purpose, it certainly made it possible for the least efficient manufacturers to make a profit and to be prosperous. Today many of the manufacturers who were prosperous under the Utility scheme are finding it extremely difficult and heavy going in the competition that exists today—the demand for good styling, for good fabrics and make and for keen prices and good production.

I have always felt, and I have expressed myself on the subject on many occasions, that Purchase Tax is altogether a bad tax because, whether it be 2½ per cent., 5 per cent., 25 per cent., 30 per cent. or whatever the rate may be, when imposed on the cost price it artificially inflates the prime cost of the commodity. I think that is a bad thing and not only as regards clothes.

An improved standard of life is something which we all want to see. The changing pattern today is such that people in all walks of life are taking into their homes and in their every day life new commodities, new machinery and comforts, and a luxury today becomes an essential of tomorrow. That is a very good thing. Therefore, I think that we must look at the whole field of Purchase Tax on that broad basis. I would like to see the higher rates of tax dropped as quickly as possible in order that the people who cannot afford many of the desirable articles available today which carry a high rate of tax may be able to buy them. The present Government have done much towards that.

Mr. Jay

rose—

Mr. Burden

I will give way to the right hon. Gentleman in a moment.

The present Government have done considerably more than the party opposite did because in 1951 the Labour Government raised all rates of Purchase Tax. If those rates are compared with those under the present Government, the public will be able to see exactly how much has been done by my party.

Mr. Jay

As the hon. Gentleman is so keen to get down the higher rates of tax, has he tried putting Amendments on the Notice Paper to that effect?

Mr. Burden

Whenever I have spoken on these subjects, I have tried to bring whatever pressure I could on this matter. It is extraordinary that the right hon. Gentleman should have such care for the public today, when in 1951 he and his colleagues took the opportunity to raise the rates of Purchase Tax to the heights which they reached at that time.

Mr. Jay

Does not the hon. Gentleman remember that, in spite of the difficulties, in that Budget many household items were completely exempted from tax?

Mr. Burden

Pins, pastry boards and the like, but, equally, the standard rate of Income Tax was raised by 6d. and the complete range of Purchase Tax rates was raised. I have no doubt that the public would rather have Purchase Tax rates on pastry boards, pins and needles remain high and not have to pay a higher rate on the many articles on which the tax was imposed by hon. Gentlemen opposite.

Mr. Frank Beswick (Uxbridge)

If we are to discuss what happened in 1951, we have an extremely good example of why this tax is wrong this year. In 1951, there were reasons for increasing taxation and those reasons were supported by hon. Gentlemen opposite. There were increases in defence expenditure for which hon. Gentlemen opposite had asked. That expenditure had to be met by taxation, and when that taxation was applied, it was applied fairly over the whole range of indirect and direct taxpayers.

Our criticism this year is precisely that there is no need to find increased revenue and that we are giving revenue away and cutting down taxation and that, despite that easement in the revenue situation, this tax on essentials is still maintained. The best I can say for the hon. Gentleman the Member for Gillingham (Mr. Burden) is that he was more plausible than some of his hon. Friends who earlier tried to justify this tax.

One of the most extraordinary speeches we had came from the hon. Gentleman the Member for Ilford, South (Mr. Cooper), who said that he abstained from supporting the Government in 1955 when some of the Purchase Tax rates were applied, but that he would nevertheless support the Government today although the Government are refusing to take off that taxation even though our economic situation had improved. The only explanation of the hon. Gentleman's activity which I can see is that in 1955 he abstained from supporting the Government two months after the Election, whereas we are now probably two months before an Election.

I agree with what the hon. Member for Gillingham said about the necessity to keep this Purchase Tax rate in perspective. I agree with him that there are some people, some of his customers, who can apparently afford a dress at 12 guineas or 15 guineas and who will not be prevented from purchasing a dress merely because the Purchase Tax on it increases the price by 8s. However, not everyone in the country is in the position of his customers and able to buy a dress at 12 or 15 guineas.

Mr. Burden

It might interest the hon. Gentleman to know that it has been estimated that prices in the wholesale clothing trade dropped last year by 5 per cent., which would wipe out any incidence of tax for this year.

Mr. Beswick

We know that that is because the primary producers of wool and cotton have been getting less for the raw materials. It does not in any way offset the argument which I am about to make. I accept what the hon. Gentleman said about some of his customers being able to afford the cost of 5 per cent. tax on garments such as those he mentioned. Some of those people will have received far more than 8s. or 10s. by way of rebate in direct taxation. There are many people in the country who will have a reduction in Income Tax liability of £100, £200, £300 or £400 a year. In such cases, they do not mind paying an extra 8s. or 10s. for a frock.

It is our case that there are many people who have not had an Income Tax reduction at all, that there are many who are so far down the economic scale that they do not have any liability for direct taxation. It is precisely those people whom the Government are now hitting by the retention of this Purchase Tax rate.

One of the most extraordinary arguments from the other side of the Committee was that Purchase Tax was justified because some people who pay Purchase Tax would not otherwise pay any taxation. These days, anyone who does not pay any direct tax has a very low income. It is a fact that in this year we are taxing people who would have been exempt from paying Income Tax in 1938—if one makes an adjustment for changes in money values. The level at which direct taxation is paid is lower than it has ever been.

Yet the argument is that those with incomes below that level, and it is virtually the subsistence level, must be caught in another way, with Purchase Tax. I cannot accept that argument. It is further argued that Purchase Tax is not regressive. I should have thought that that argument was so absurd as not to be worth putting before the Committee. A widow living on a widow's pension and who has to buy an electric light bulb pays precisely the same amount of tax as the wealthiest person in the land. In those circumstances, how can it be said that Purchase Tax is not regressive? Of course it is.

It is noticeable that during the whole course of the Budgets which we have had from Conservative Administrations the burden of taxation has been changed year by year from the direct taxpayer to the indirect taxpayer. There has been a lot of juggling with tax rates and from time to time we have been told of reductions. But the amount collected by Purchase Tax has gone up. I cannot go into the details on this Amendment, although I intend to refer to it later.

It is the fact that the amount collected by Purchase Tax has gone up each year since the present Government came to power. Another surprising fact is that within the total yield of Purchase Tax, the amount collected from essentials as compared with less essential things has also increased. I put a Question to the Chancellor the other day seeking information on this point and the right hon. Gentleman admitted that, whereas in 1957–58 the amount collected in this 5 per cent. bracket was £51 million, in 1958–59 it was £53½ million, while this year the estimated yield is £55 million.

The explanation I was given was that the amount from this group had increased because included in it were now articles which had previously been in a group subject to a higher rate of Purchase Tax. The argument was that we were admittedly taking more on the 5 per cent. group, but less on the 10 per cent. and 15 per cent. groups.

I took the trouble to check that and I found that it was not so. It is the fact that the amount collected on the 5 per cent. group has gone up. The amount collected from the 15 per cent. group also has gone up in the last two years. If one looks at the 30 per cent. rate, the amount there has increased. The groups from which the yield is now less are those on which taxation is levelled at the highest rates. The yield there has gone down, but of course, but it was precisely in those groups bearing the higher rate of tax that articles which were less essential for the ordinary housewife were placed.

5.30 p.m.

Mr. Burden

if that argument is correct, the hon. Gentleman must agree that it destroys the points which have been made because, if the Purchase Tax yield on clothing in the 5 per cent. range has gone up considerably, without taking into consideration other groups which have dropped within it, that shows that, despite the tax, more and more people are buying and the volume of trade has increased.

Mr. Beswick

It shows that the Government are taking more by indirect taxation than they were before. The total amount is more, and within that total they are taking rather less from the luxury items and rather more from the essential items. That is the fact. It is a trend which we ought to stop.

It has been said that we could not afford to do without the income yielded from this tax. Of course, if it were in order, one might go on to argue whether it was absolutely necessary to reduce the standard rate of Income Tax by 9d. instead of 6d. There were other ways of getting the same amount of money. When the hon. Member for Gillingham asks me whether I really think that it was causing any harm to put a 5 per cent. tax on a piece of clothing, I reply to him with another question. Did it really do any good and was it really essential, to reduce the tax on a motor car by £100 or £150? Was it really essential for the economy of our country that the Surtax payer should be relieved of tax to the tune of £300 or £400 a year? I do not think that it was good for the economy. It was not essential for the economy that those reductions should take place. The benefit to the individual housewife or consumer would have been much greater if this 5 per cent. Purchase Tax had been wiped out altogether. At this time, with our economic situation easier, the country ought to have been able to afford it.

Mrs. Mary McAlister (Glasgow, Kelvingrove)

At the risk of being accused of repetition, which, if the truth be told, I do not myself like very much, I wish to say a few words about the 5 per cent. Purchase Tax. Most of us know—at least, I think I know—that the Chancellor is a humane man. But I wonder whether he is out of touch with the realities of life in certain parts of the country. There is no doubt that in many areas north of the Border unemployment and short time are quite serious, to put it no higher. Five per cent. on essential articles of clothing is a quite serious matter for the housewife. She is less interested in what has come to be known as the cost-of-living index than in the actual cost of living. Perhaps she is rather simple and she does not see any connection between the two. It is certain that very often she does not.

Textiles are not the basis of our economy in Scotland. At least, they are not the basis of our economy in Glasgow. We depend and have always depended very much on heavy industry. This was one of the reasons why we ran into the great slump of the 'twenties. The heavy industries are not in such good shape in Glasgow, and the Chancellor and hon. Members opposite must know very well that 5 per cent. can be quite a serious matter for the woman who is struggling with children. Only very small children are exempt from the incidence of the tax. It is no exaggeration to say that it is a matter of importance, and I am surprised to hear hon. Members speak very coolly about it as though it did not matter very much.

As for the difficulty of removing the tax—the great difficulty in removing the tax from mink coats or suits at 100 guineas—that is plain poppycock. I hope that I am using Parliamentary language. Surely, it is not out with the imagination of the Treasury to evolve a method whereby luxury goods could be taxed, if necessary, and necessities should not have to bear 5 per cent. or any tax at all. I plead with the Chancellor again to take off the 5 per cent. Purchase Tax.

Mr. John Cronin (Loughborough)

The fact that the Chancellor has purposely retained the 5 per cent. Purchase Tax indicates the true nature of his Budget. The Budget is intended to be a marginal voter's harvest festival rather than an attempt to help the people with low incomes. One should try to make taxation as progressive as possible, in other words, to make sure that taxes are paid mostly by people with large incomes who can more easily pay them, but in the Purchase Tax we retain this regressive form of taxation particularly in its incidence on necessities. The 5 per cent. Purchase Tax is really a form of poll tax which is comparable in iniquity with the increased National Insurance contribution which was imposed last year.

The Government have adopted an extraordinary policy of redistribution of wealth in the course of the last few Budgets. The constant tendency has been to increase the purchasing power of the well-to-do and decrease the purchasing power of those with lower incomes. The first social priorities of which the average person thinks are, in this order, food, rent, clothing and furniture. Food was dealt with long ago by the abolition of food subsidies. Rent has been dealt with by the Rent Act. Now we have the retention of the 5 per cent. tax on clothing, footwear and furniture, all of which are necessities. I hope that the Paymaster-General will not use the argument that the Government recognise that these things are necessities by their graduation of the Purchase Tax scale. The same argument would be used for a tax on bread if one made a tax small enough.

The Chancellor suggested that the reduction of the duty on beer would cause a substantial decrease in the cost of living. We have before us now a much more suitable opportunity to reduce the cost of living and to do it, by and large, in a more even way throughout the whole community. A particularly unfortunate feature of the Purchase Tax is the way the burden becomes more severe with the progress of inflation. My right hon. Friend the Member for Battersea, North (Mr. Jay) said earlier that there had been an increase in the Purchase Tax yield from £300 million to £417 million in the last few years. This is an indication of how the burden has become more and more severe with the progress of inflation and, naturally, more severe on the people who have to pay the Purchase Tax on necessities. The Chancellor ought to realise that now is a particularly appropriate time to abolish the 5 per cent. Purchase Tax because the people who are suffering most today suffer also from short time, reduced overtime and unemployment. There could be no more appropriate occasion for reducing the tax.

The clothing and footwear tax, obviously, will bear very heavily on families and children. It has a very unfortunate effect on old and sick people who have to wear rather more clothes than others. It will have a continuous, disagreeable effect on the textile industries which are undergoing special difficulties today, particularly in face of competition from abroad.

The Chancellor's reduction of the higher rates of tax seems to me to be singularly inappropriate at present compared with this particular rate, because the higher rates are largely taxes on consumer durables. They tend to be bought once and not again for a considerable time, whereas clothing must be bought every year and a reduction in tax would have a continuous beneficial effect on industry.

The 5 per cent. tax on furniture and fabrics seems to me to be particularly disastrous to people who are setting up homes. I do not know why the Government have such a malignant attitude towards young people who get married and set up homes. They are the last people to have any consideration from the Government. Nobody has mentioned the effect on the hotel industry, the progress of which has a considerable and helpful effect on our balance of payments as more and more visitors come. A reduction of tax on furniture and fabrics could be particularly helpful to the hotel industry.

The furniture trade, which is substantially affected by this tax, has been going through difficulties for several years. It has had certain intrinsic difficulties in that it has high costs for transport, freight and packing. It has been having a rough time from competition from abroad. It would be of particular assistance if it had help from the Chancellor in his Budget.

I suggest, therefore, that the Chancellor should have further thoughts on this matter and should try to help us, certainly in the Budget, by abolishing the 5 per cent, tax. We do not want the right hon. Gentleman to have the reputation, which he is fast acquiring, of being a sort of inverted Mr. Micawber and always waiting for something to turn down.

Mrs. Alice Cullen (Glasgow, Gorbals)

I want to add my support for the Amendment to abolish the 5 per cent. tax on clothing, boots, shoes and essential furniture. As a grandmother with grandchildren who are on the verge of being married, I know that it is very difficult for these children to have the essential pieces of furniture to set up a home. It is not good enough to say, a s some people say, that hire purchase is the answer. To me, hire purchase only makes things worse.

On clothing, we all know that the same tax is carried on expensive clothing, but the folks who can afford expensive clothing can afford to pay the tax. Consider, for example, children's boots and shoes. Between the inferior quality of leather and the tax, the mothers are at their wits' end in trying to keep their children shod. My own daughters have shown me shoes for which they paid 35s. and £2 a pair for children aged nine and ten, but the inferior leather does not last a month and it carries a 5 per cent. tax.

Those are the things I wanted to say to the Chancellor. The Government have a habit of fixing taxes on the people who can least afford them. The people of whom I am speaking can least afford them. I hope that the Chancellor will have second thoughts and abolish this 5 per cent. tax in the interests of the ordinary people who do not have the means to get the essential items that are taxed.

5.45 p.m.

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

Listening to this afternoon's discussion, the arguments for the abolition of the tax seem to fall in two directions. In the first, it would be a logical and proper thing to assist Lancashire, which has fallen on hard times. Secondly, it would assist millions of homes in which the impact is of consequence although the rate of the tax is only 5 per cent.

I ask the Chancellor to consider a narrow point, but one which will particularly interest my hon. Friend the Member for Coatbridge and Airdrie (Mrs. Mann). Yesterday afternoon I received a communication from the British Medical Association asking me to intervene and try to persuade the Chancellor of the Exchequer at least to consider a new situation which has arisen with reference to inflammable clothing. At present, inflammable clothing and non-inflammable clothing are both treated alike and they both have to sustain Purchase Tax at 5 per cent. The Science Committee of the British Medical Association says that on examining the problem it is disappointed to find that the Chancellor has not found it possible to make any distinction in the Finance Bill between these two types of clothing.

The Science Committee states that a new British Standard, B.S.3121, was recently introduced concerning flame-resistant fabrics. Regulations have been tabled by the Government as from yesterday making it an offence to offer for sale flameproof fabrics which do not conform to this new British Standard. I am sure that my hon. Friend the Member for Coatbridge and Airdrie, who has fought a long battle and brought this matter to the attention of the House of Commons and of the country on so many occasions, will be glad that we are now moving in this direction.

Mrs. Jean Mann (Coatbridge and Airdrie)

May I say that I lost the battle, because the highly inflammable material is not to be marked at all? Only the safe material will be marked.

Dr. Stross

I hope that my hon. Friend is wrong in saying that she has lost the battle. Knowing how persistent she is, and will continue to be, I am sure that she will ultimately achieve success.

My hon. Friend has an ally, the Science Committee of the British Medical Association, which says firmly that it is quite wrong that, as my hon. Friend has just pointed out, any fabric which is potentially so dangerous should not be marked so that people may be warned. The Science Committee says that it is, perhaps, asking too much for manufacturers to be compelled to label their products "dangerous". The hon. Lady and myself, and, I think, all of us, would be content to see a dangerous fabric labeled "dangerous", for these fabrics have been essentially the cause of many deaths and severe burns among children.

It is astonishing to the British Medical Association to find that the Chancellor of the Exchequer and his advisers have not found time to give thought to this tiny fragment of legislation, which would cost the Government very little—hardly anything that can be computed—when it would be easy for them to make a gesture and say to the public, "If you buy this stuff, which is guaranteed by a new British Standard not to carry with it the risk of burning your children if they go near an unguarded flame, we will recognise it by making it free of Purchase Tax." T hone that the Chancellor will consider this point.

The Committee which has written to me is very fair. It admits that at the present stage of manufacture some of the fabrics are a little ungainly in appearance. That is a weakness that we gladly offer and admit, but it does not mean that for so very little cost the Government cannot come forward, after all the work which has been done by way of propaganda, to save men, women and particularly children from being injured and burnt, sometimes to death, in the home. I do not know why the Government do not come forward and say, "We agree with this venture. Now that a new British Standard has been evolved and we have brought in the Regulations, we will take off the 5 per cent." I hope that whoever replies to this discussion will tell me what answer I may send tomorrow to the Science Committee of the British Medical Association, which will be most interested to hear whether the Government really will take preventive action on this important issue.

Mr. Rankin

I should like to look at the effects of this tax from one of its narrower aspects. My name, along with the names of some of my hon. Friends, is associated with an Amendment which asks that industrial clothing shall be exempted from the tax. Perhaps that will recall to the Chancellor that we debated this aspect of the matter particularly last year and voted on it. This year, however, we are somewhat limited through no clear desire on the Chancellor's part, as he has already told us.

I want to refer particularly to the position of the dockers. Their attitude has now become a national one. The point of view which I expressed last year is largely endorsed by the dockers in all the ports of Scotland, England and Northern Ireland. The dockers' attitude is fortified by decisions already taken by the Government. The Government have accepted the idea that certain workers employed in certain jobs should have protective clothing. They have granted that part of the argument and have gone on to say that it is wrong that when men must wear protective clothing it should be taxed. They have said that in respect of the miners, the quarry workers, the foundry workers and the moulders. I ask the right hon. Gentleman today to say that of the dockers too.

When the Paymaster-General replied to the debate last year he rested his case largely on two points. If I misinterpret what he said I am sure that he will correct me, but my recollection is that he adopted the argument, which has been so largely employed in the course of this debate, that, after all, 8d. in the does not matter a great deal. That, of course, depends on the circumstances. My hon. Friend the Member for Glasgow, Kelvingrove (Mrs. McAlister) has taken the opportunity of reminding the right hon. Gentleman and his Front Bench colleagues that 8d. in the £ might mean a good deal in certain circumstances. She and I and certain other hon. Members think particularly of Glasgow.

Last Wednesday at a very interesting demonstration in London I had the privilege of meeting some of the shipbuilders in my area. They are really worried about the position of shipbuilding in the West of Scotland and particularly in the port of Glasgow. They were not so worried some months ago, but they took the opportunity of telling me that things were now really difficult. If anything goes wrong with shipbuilding in the city, one out of every eight workers in Glasgow will be prejudiced in his employment. That is a fact of tremendous significance. If that should happen, 8d. in the £ on the price of an article would mean a good deal. I hope, therefore, that in the general aspect the Chancellor will keep that in mind.

I do not, however, want to argue so much from the point of view of the mere cost. This is a question of whether it is right or wrong that we should say to men who are engaged in certain occupations that they require protective clothing, that employers should so inform them, and the Government encourage them, and then that the Government should tax the men on those clothes. It is very difficult to put forward that argument, and the Government have already refused to put it forward in respect of certain categories of industrial workers. Why select the dockers in Glasgow and others of our great cities for this type of preferential mistreatment? I hope that we shall have some defence of what is, from my point of view, an indefensible attitude.

Another matter which the Paymaster-General mentioned when he replied on that previous occasion was the difficulty of definition. I am sure that the right hon. Gentleman recollects that argument. It was said that if we took the tax off this type of protective clothing we would not know whether or not the men were wearing the clothes when they were not at work. I do not know whether the right hon. Gentleman has had the opportunity of coming within the reach of a foul cargo when it is being unloaded from a ship. That type of job is difficult and dangerous and men are often overpowered in the course of it. It is as a result of that type of work that they contract that lingering, incapacitating trouble called dermatitis. They get it because they are not protected. If they are protected they are taxed by the Government on the protective clothing which they wear to save them from the debilitating effect of that disease.

I hope that when the Paymaster-General replies to the debate he will not pursue that argument and say that we cannot define the type of clothing because, after working on a foul cargo all days, the men might walk about the streets in those clothes. The Paymaster-General knows perfectly well that it would not happen. The same applies to those men who have to deal with a ship when it is in port over the long weekend, the scalers and the trimmers, the men who clean the bilges, the boilers and the tubes, which is perhaps one of the dirtiest type of jobs in which men can be engaged. They need protective clothing and they wear it, but they should not be taxed on it. I hope that the Paymaster-General will not say that it is difficult to define that clothing and that the trimmers and the scalers might move about the streets of their native city still wearing that type of clothing after being engaged in that sort of work.

6.0 p.m.

Neither of the arguments put up by the Minister a year ago is sustained. Certainly the one on price cannot be fairly applied because the element of price is not the argument. The argument is whether or not it is right that protective clothing should be taxed. Having said that it is wrong that it should be taxed in certain cases, and for certain garments, I am asking the Government to take the next step and include those who work in docks within the category of workers who are already exempt. It is logical and fair to do so, and I do not think that the question of definition is one that should present any difficulty to the Paymaster-General if he has thought about the matter during the intervening year. I say that because men just will not wear away from the docks the type of protective clothing which they must wear when handling certain types of cargo.

Another aspect is that of the docker who has to handle clean cargoes, such as butter, fruit and other foodstuffs coming into our country. In my view on those occasions he should not be handling such cargoes in the clothing he would have used to handle other types of cargo. So he should be encouraged, to wear that type of clothing which the employer should be encouraged to provide, but if we are to do that, I suggest that it is necessary and fair to both employer and employees that it should be free of tax.

I hope that the Paymaster-General will be replying to the debate. Maybe he will not do so after he has heard my argument, but will try to "pass the buck" to one of his colleagues, who can say that he knows nothing about what the Paymaster-General said last year, and will try to engage on a different line of defence. I do not know what it could be. I see only two arguments against the proposition and neither is sustainable, so I hope that whoever replies will admit the justice of our case and will remove this tax.

Mrs. Mann

I am glad to have such strong support for the removal of Purchase Tax from certain clothing, and I particularly appreciate the source from which it comes. So far, we have achieved nothing, except labels on articles that will not burst into flame within three minutes, even with a Bunsen burner under them. Surgeons are strongly behind the drive to achieve labelling for danger. In fact, all the support has come from the surgeons in our hospitals who deal with these cases, including my own sons, and the pediatricians are sending resolutions about their work at the receiving end of these tragedies.

I congratulate my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross) in getting into the debate on that aspect of home safety. I had intended to ask that the Crayleigh safety device should be free of tax. It is now, I believe, in the 5 per cent. group. Scalds are not so terrible in their result as burning clothing, hut, nevertheless, they are tragic, accompanied by intense pain, and they give great anxiety to parents who may watch their child grasping a handle and pulling the pot over. These are common accidents, yet the young man who received the inventor's award of £200 from the B.B.C. for his invention has not had the encouragement he deserves. I believe that this device is now on sale in the gas showrooms of Great Britain. I know that Cliff Michelmore sets great store by it and that he objects to Purchase Tax on it, as do many others. I have pleaded for the removal of Purchase Tax time and again on this device. As it has now been reduced to 4s. 11d., I hope that it will be removed entirely.

Another safety device is children's reins with or without 'harness attached. Do right hon. Gentlemen on the Front Bench opposite think that children's reins are a toy and something to be taxed? They cannot have watched their own youngsters run to an unguarded fire, or out into the garden, or out of the front, door, or accompanying "mum" wheeling a pram with another youngster at her side. Children's reins are indispensable as a safety measure to any young mother. So I ask the Front Bench to put children's reins into the not-chargeable group, in which I notice that safety belts come first. That being so, why not put children's reins into the same group?

I am astonished when I look at the groups which are exempt. I see sewing thread and mending and knitting wool. Of course, we introduced exemption for these items. Then there are sewing and darning needles, knitting needles, bodkins, crochet hooks, pins, thimbles, finger shields for needlework and tape measures. They are all exempted to give the housewife a little boost. There is no tax for the woman who believes in do-it-yourself.

Now I find that the following are subject to tax: dress shields and shoulder pads, buckles, clasps and slides of the kinds used as dress accessories—the very things which should not be subject to tax. Then there are buttons and button moulds of the types suitable for covering by hand. Next come trouser pockets. What is the idea of making those subject to tax? Was the idea engendered by right hon. Gentlemen on the Front Bench opposite who wished to prevent their wives examining their trouser pockets?

After all, a thrifty woman who wants her husband's suit to last as long as possible will look at it inside and outside. Often she will find a hole in the pocket or that the seam has given way. It is useful, therefore, to be able to buy a new pocket in a shop, apart from the fact that sometimes this makes a reasonable excuse for looking in a pocket! If a trouser pocket is not a dress accessory, it is at least an accessory for repairing men's suits. It is all a part of keeping down inflation.

Then I find the Chancellor actually imposing a tax on ladies' modesty vests—

Dr. Stross

Shame.

Mrs. Mann

—and a nightdress top. To look at the Chancellor one would never for a moment imagine that he would single out modesty vests or nightdress tops bought by ladies. He does not look like a Jayne Mansfield or Marilyn Monroe "fan" at all, but, of course, appearances are always deceptive.

Then we come to expanding braces and shoulder supports. Surely, shoulder supports are very near to being surgical supports and very necessary indeed to some people. I would ask that shoulder supports and these other items I have mentioned should come into the not chargeable category. It is surely only a reasonable request that the Chancellor should drop the 5 per cent. tax and include them in the not chargeable group.

Mrs. Lena Jeger (Holborn and St. Pancras, South)

I want to make one or two points very briefly. The Treasury does not seem to be in a very generous mood today, but I would ask right hon. and hon. Gentlemen opposite at least to consider Purchase Tax on children's clothing again. At present, the exemption applies to small children's clothing, but there is ample evidence, and we are glad to know of it, that children are getting bigger and heavier art a younger and younger age. This makes very serious problems for families in the lower income groups.

I am thinking particularly of families who have such small incomes that they are paying no Income Tax at all, and therefore have benefited nothing from the Budget proposals affecting that tax, and who are faced with increasing expenditure as their children grow bigger. Take, for instance, a widowed mother with two children, and Whose gross income, including family allowances, is £4 10s. a week. It is £4 10s. a week whatever the size of the children. All hon. Members will realise that it costs very much more to clothe adolescent children than it does to clothe toddlers, for not only do they grow quickly but they are much harder on their clothes. It would be a very real help to thousands of families if the Chancellor could apply the exemption from the tax to the larger sizes of clothing, so that more and more parents with children who are reaching adolescence and staying at school would benefit in a small way.

It has been said in this debate already that, on the whole, our children are better shod and better clothed today. I should hope so. I am very glad to know that this is so, but it must be borne in mind that this good is achieved very often by very real sacrifices on the part of the parents. It is not always easy for parents in a low income group to decide between buying one of the children a new pair of shoes or replacing some essential item of household equipment, on which Purchase Tax is also payable.

6.15 p.m.

There is another group in the community to whom I would refer specially. I think that they have been rather neglected today. That is the group of the unmarried women who go out to work and who try to maintain their own homes. The average earnings of women in manual work, according to the Monthly Digest of Statistics, are only 67s. 4d. a week. I think that we have been talking today as though 5 per cent. on the range of goods we have been discussing does not represent very much of a problem to people setting out to make their purchases, but we must realise that for people with low incomes, of whom there are so many, the cumulative effect of an odd shilling of cost imposed here and there bears heavily indeed, and these things subject to tax are needed in the home or for wear.

We must bear in mind that if the figure which I have mentioned is that of the average earnings by these people, there must be many among them earning even less than that. These are people who have benefited not at all from the Budget, which has been so generous in so many ways. Moreover, they pay the full rate of National Insurance contributions, just as do other people who are getting very high incomes, and the people on the low incomes do particularly notice the small increases on essential goods, increases which many hon. Members may think can be absorbed without stress.

I hope that the Government will at least give an undertaking that they will look into this matter again, especially the question of children's clothing, in view of the fact, about which we are glad but for which they like to claim the credit, that children are growing bigger and heavier.

Mr. Mitchison

Shoes have a special claim to consideration because they have such an intimate and close connection with the Table from which I am speaking. They are at present subject to a tax of 5 per cent.

As the Economic Secretary observed just now, in Kettering and in neighbouring parts of Northamptonshire the difficulty at present is the rising price of leather. It is due to many things. The Argentinians, for reasons of their own, they being one of the main sources of supply, are killing about 25 per cent. fewer cattle than previously. Demand in the States is rising again. It is leather I am talking about, particularly hides.

In addition to that, there have been some large-scale and spasmodic purchases by Russia and other countries. In the result, hides and leather in general are rising in price, and the shoe industry will have to face either shoes of worse leather or higher prices for shoes. In addition to that, substitutes are being used to a considerable extent, some of them rather satisfactory, but they, too, put the tanners into difficulties, and they do not really relieve the problem of shoemakers.

The present position in Kettering I would describe in this way. Some of the smaller firms there and in the neighbouring districts are in real difficulty. Some have had to close. Others, larger firms I am thinking of now, are on the margin. As usual, it is the manufacturing firms most closely connected with the retail shops which are managing to carry the difficulties best, but I think that I may fairly describe the whole trade as being very shaky and uncertain. I would not say that there is unemployment, but there is already too much recourse to the guaranteed week in the trade, and the signs are threatening.

In those circumstances, small though it is, the 5 per cent. duty makes a very great deal of difference, and all I desire to put to the Government is that if they persist in this tax, it may have the effect of toppling over the brink a section of the trade which would otherwise have survived. It may have that effect for the reasons I have given, and particularly on account of the difficulties in the supply and cost of leather.

Mr. Maudling

We have had a long, interesting and wide-ranging debate on this important Amendment, and I will do my best to do justice to the various arguments which have been made. Broadly speaking, the Committee has been discussing an Amendment dealing with a general rate, the 5 per cent. rate on clothing, furniture and a few other items. One or two hon. Members, the hon. Member for Glasgow, Govan (Mr. Rankin) and the hon. Member for Stoke-on-Trent, Central (Dr. Stross), raised particular items. I should probably go beyond the rules of order if I dealt with the proposition that individual items mentioned in the speeches of those hon. Members and of the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) should or should not be exempted from tax.

I say, in reply to the hon. Member for Govan, that the argument on the general question of protective clothing remains exactly the same this year as last, and the difficulty of distinguishing has in no way changed in the past twelve months. Most of what the hon. Member said about flame-proof fabrics, although extremely interesting, was not exactly relevant to a Finance Bill and was more a matter for the Board of Trade or the Ministry of Health, and no doubt the Ministers concerned will take close note of what he said.

In general, the debate has been on an Amendment formally seeking to reduce the lowest rate of Purchase Tax from 5 per cent. to 1 per cent., but, as the right hon. Member for Battersea, North (Mr. Jay) made clear, the true purpose is that the whole rate should be abolished.

There was a good deal of talk about children's clothing. Some of the things said were a little misleading, because one or two hon. Gentlemen, and even the right hon. Gentleman himself, talked of the effect of this tax on large families with very young children. As I am advised, the facts are that the exemption of children's garments is based on size, and the size is estimated to be such, roughly speaking, as to correspond with the size of a normal child of about 14.

It was argued by the hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater) and by the hon. Lady the Member for Holborn and St. Pancras, South (Mrs. L. Jeger) that the average size of our children had been increasing. That is possibly some tribute to the Governments under which that has been taking place. No doubt the Customs and Excise will be glad to examine any evidence on that matter.

However, I can see difficulties arising. I cannot claim, like the hon. Lady the Member for Gorbals (Mrs. Cullen), to be a grandmother, but I have to provide the footwear for four children and I know a little about their cost. I noticed that when my son reached the age of 14 he was already able to wear my shoes. Thus, if we raised the criterion for the size of children's clothing to such an extent as to meet the needs of all children of 14, we would exempt all footwear. It is very difficult if there is a special exemption for children not to draw the line at a point at which it will exclude some children. I agree that these detailed matters should be studied, but it should be recorded that the general bulk of children's footwear is and is intended to be free of this 5 per cent. tax.

The next point is the weight of the tax. It is 5 per cent. of wholesale value which, roughly speaking, is 8d. in the £ on retail value. Several of my hon. Friends, including my hon. Friend the Member for Gillingham (Mr. Burden) and my hon. Friend the Member for Ilford, South (Mr. Cooper), pointed out that the effect on the purchaser of a garment, the effect on someone's decision whether to buy an overcoat, was not likely to be very great if the total effect of the tax was equivalent only to roughly 8d. in the £.

In comparing it with other things on which people spend their money one should bear in mind the effect of the tax on the industries concerned. The hon. Member for Shoreditch and Finsbury (Mr. Cliffe) talked of the textile trade, and the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) naturally referred to the shoe industry. It is true that the tax is 5 per cent., but the tax on beer, which has been mentioned several times, is equivalent to 150 per cent.

The hon Member for Shoreditch and Finsbury referred to the tendency of consumers to shift their expenditure from clothing to other things, such as television sets and refrigerators. These and other things to which they are shifting expenditure are subject to much higher rates of tax than are clothing and textiles. To that extent, the competitive position of clothing is quite good. As my hon. Friend the Member for Ormskirk (Mr. Glover) and others said, the effect of the tax upon the prospects of the industries concerned is very small, in fact, negligible. It was certainly my impression, when we discussed this matter last year, that it was generally accepted in the Committee that the removal of a tax equivalent to 8d. in the £ retail value would not have any noticeable effect on the level of sales of textiles, footwear and other things.

Thirdly, there is the cost of this proposal. If the total amount of the 5 per cent. duty were to be remitted, it would cost £55 million in the current year, as the hon. Member for Uxbridge (Mr. Beswick) said. The right hon. Member for Battersea, North asked about clothing and I think that he will find that the figure for clothing and footwear alone is just under £40 million of the total of £55 million. This is a very large sum, even within the context of the present year.

I should say this to the Opposition quite frankly at this stage. They have agreed with us that the total tax remissions in the Budget are about as much as it is safe to make. Therefore, if they wish to advocate large additional tax remissions, they should say where the money is to come from. One or two hon. Members opposite, including the right hon. Gentleman himself, answered this question not directly, but by implication, by referring to beer, for example. I think that the Committee and the country would treat that argument with more respect if the party opposite had the political courage to oppose the reduction in the beer duty. As they have not opposed that reduction, it is very difficult for them now to say that we should not have reduced the beer duty, but instead, should have reduced this tax. They cannot escape from that dilemma.

The hon. Member for Orkney and Shetland (Mr. Grimond), the Leader of the Liberal Party, in a rather gay speech, took a slightly different point of view. As far as I could judge, he was for abolishing Purchase Tax altogether, although I do not know where he would find the £471 million. He had one or two very nice ideas which we shall study with great interest, and I hope that those ideas for additional taxation will find their place in the Liberal Party election manifesto, although I doubt it.

Mr. Grimond

I raise no objection to a tax on luxuries, although there is a case for exempting some of those things which no one pretends to be luxuries, and in those cases where there are quite appalling anomalies in the lower ranges of Purchase Tax. That is a perfectly reasonable point of view and I think that the Government would be well advised to look into that.

Mr. Maudling

The point is whether those suggestions will appear in the Liberal Party manifesto. The question is whether the hon. Gentleman knows.

The hon. Gentleman produced the extraordinary argument that he was toying with the idea of a sales tax. To suggest a sales tax on the very Amendment on which he opposes a sales tax seems to me to be very odd indeed. If the hon. Member is in favour of a sales tax, he should be opposing and not supporting the Amendment. Of course, perhaps he was. I was not quite sure.

The basic argument for the Amendment which has been running through the speeches of hon. Members opposite has been that we should not tax necessities. That has been the fundamental argument and I want now to deal with it. The first answer is that it is by no means the case that all the items subject to the tax are necessities. It is true that everyone must have a certain amount of clothing, but it is not true that one can deduce from that that all clothing is a necessity—far from it. The argument has been made on many occasions that one can draw a distinction between necessary clothing and luxury clothing.

6.30 p.m.

I was very interested to hear the hon. Lady the Member for Glasgow, Kelvin-grove (Mrs. McAlister), the hon. Lady the Member for Stoke-on-Trent, North, the hon. Member for Shoreditch and Finsbury and other hon. Members say that we are harking back to the old days of the Utility and D-schemes. The logic of their arguments was that one must go back to some scheme of differential taxation for the textile and clothing industries. If that is the policy of the party opposite, we should know. If they want to go back to the Utility and D-schemes and to the differentials between luxury and necessity, they should say so. If they do not want to do that they cannot treat all the items under this Amendment as necessarily being necessities. They are far from it.

Mrs. Slater

May I correct the right hon. Gentleman and say that I did not hark back to the Utility scheme? Is not the whole point of my hon. Friend mentioning it that people were guaranteed at least a certain quality at a certain price without a tax being added? That was the only reason why it was mentioned.

Mr. Maudling

I apologise to the hon. Lady if I misinterpreted what she said. but she seems now to be harking back to the advantages of the Utility scheme. Do hon. Members opposite wish to see clothing taxed at separate and different rates? If they do, they can make the point that some articles are necessary and some are luxuries. If they want the same rate, they cannot argue that all the things subject to that rate are necessities.

In modern conditions one cannot raise al the revenue necessary by taxing luxuries. I think that it was the hon. Member for Orkney and Shetland who referred to Purchase Tax as being a wartime tax, but it has long been recognised as a major source of revenue, and it will continue to be so as far ahead as one can clearly see at present. In those circumstances I do not think that it would be possible to raise the revenue necessary for services in this country by concentrating on luxuries.

Mr. Beswick

The right hon. Gentleman keeps asking what we should do. What is the argument in favour of reducing Purchase Tax on motor cars or reducing Surtax at a time when we cannot afford to take tax off footwear?

Mr. Maudling

The arguments for reducing Purchase Tax on the ranges on which it has been reduced have been made fully in the course of the Budget debate. The point is that in modern conditions one cannot expect to get all the revenue needed in this country from luxuries alone.

The next point is whether one wishes to have a steeply graduated form of Purchase Tax, or a less steeply graduated form. I think that this is where the difference of principle rests. We believe, as my right hon. Friend made clear both last year and this, that a large number of rates with large disparities between them give rise to many difficulties. There are the anomalies that we constantly hear of from absent friends—and I am informed that my hon. Friend the Member for Kidderminster (Mr. Nabarro) is absent because of an engagement made a long time ago—if the rates are too wide.

We have seen the difficulties that arise for the holders of tax-paid stocks. Time and again we have seen the damage done to the quality of goods in this country if one insists on putting too much of a burden on certain articles at particularly high rates of tax. For these reasons we believe that a steeply graduated form of Purchase Tax is not in the national interest. It has been our policy, both last year and this year, to give trades a widely spread tax at moderate rates. It has not been our aim to move to a flat rate of Purchase Tax. That has never been the declared policy of my right hon. Friend. What he has said is that he wishes to see the tax spread at a moderate rate over a wide range of articles. We believe that to be the best way of continuing the imposition of a tax to which the country looks for the raising of large sums of revenue.

Because the Amendment would cost £55 million and we have not been told where the money would come from if this tax were abolished, and because it would be contrary to the attitude adopted by my right hon. Friend towards Purchase Tax, I must advise the Committee to reject the Amendment.

Mr. Jay

The Paymaster-General made some rather tendentious remarks. He argued that we cannot propose reliefs of something of the order of £40 million to £50 million because we have not said where we would obtain the alternative revenue. We have made that perfectly clear at every stage of the Budget debates. We do not believe that the Income Tax reduction which the Chancellor made need have extended to company profits, either distributed or undistributed, in addition to the concessions made on the investment allowance.

If the Paymaster-General adds up the relief in revenue from the 9 per cent. reduction in the standard rate of distributed and undistributed company profits he will find that it is at least £1 million a year. It is no good him asking why we did not vote against the Budget Resolution, because he knows that the Resolution is in the form of a 9d. reduction in the standard rate and it is not possible to vote against that part which falls on personal incomes separately from that part which falls on company profits. There is nothing in that argument.

Mr. Maudling

Why did not the party opposite vote against the reduction in the tax on beer yesterday?

Mr. Jay

Because, strangely enough, and if the Paymaster-General had listened he would know, we are saying that the relief to company profits, not the reduction in the tax on beer, need never have been given. There is no more in that argument.

The argument advanced against the Amendment is extraordinarily weak. The Paymaster-General said it was extremely difficult to differentiate between shoes for children of 14 and shoes for their parents, and that may be so. He also said that it would be difficult to differentiate between the less expensive and the more expensive clothes and that we do not want to go back to the difficulties of the Utility scheme. I am not disagreeing with that, but, if that is true, it is exactly the argument for the Amendment, that is to say, for sweeping away the 5 per cent. tax on all these commodities.

It was rather significant that two or three hon. Members opposite who welcomed the reduction in Income Tax in the Budget opposed this relief of tax on necessities that we have proposed. The hon. Member for Ilford, South (Mr. Cooper) who is now absent—and the hon. Member for Kidderminster (Mr. Nabarro) —really used a most extraordinary argument. The hon. Member for Ilford, South said that we are all better off than we ever were before and that, therefore, there is no need for this reduction in tax. Is the hon. Member really telling us that as the standard of living rises higher and higher we shall have to pay more and more taxation? Is that the view and the prospect which the Tory Party is holding out to the country? If that is not the case, and if the hon. Member thinks that it is right to make a reduction in Income Tax at a time when he says the country is better off, I do not see how he can advance that as a reason for not making a reduction in Purchase Tax.

Mr. Burden

If the right hon. Gentleman feels so strongly about this now, why did he not go into the Lobbies in 1951 and vote against the proposal to increase Purchase Tax?

Mr. Jay

The hon. Member for Gillingham (Mr. Burden) does not know which side he is on. He said he did not like Purchase Tax, but was against removing it, so I do not think we need take his view seriously.

Returning to the point made by the hon. Member for Ilford, South, I should have thought that the plain and simple conclusion is that the country is now so well off that it does not have to pay a tax on necessities. That is the conclusion that any ordinary person would draw.

The hon. Member for Ormskirk (Mr. Glover) who spoke particularly about textiles, advanced the curious argument against the Amendment that this 5 per cent. tax on textiles does not matter much because the consumer does not have to pay and the price is no higher than otherwise it would be. One is bound to ask, where does the £30 million we raise from this tax on textiles come from if it is not paid by the consumer? I presume that it could come only out of the profits of the textile industry, and if that is so, if this very large sum is being raised at the expense of an industry which is in distress, I do not see how the hon. Gentleman can argue that it would not help if the whole tax burden were removed.

The Paymaster-General seemed to me to fall into the same contradiction. He said that the 5 per cent. tax on textiles was so small that it was of no significance and not worth worrying about. On the other hand, the right hon. Gentleman said that the revenue of £40 million or £50 million which it raised was so high that were it forgone, the effect would be serious. Both arguments cannot be correct, and it is notable that the £30 million or so raised from the textile industry by way of this tax is almost exactly the same sum as the Government are offering in the form of grants out of public money to get the textile industry out of its difficulties.

The case for this Amendment seems stronger now than when we started to debate it. Whatever goes into the future Liberal Party manifesto I entirely agree with the Leader of the Liberal Party that this is a tax on necessities, and we cannot preserve a tax on necessities at this stage in our country's development.

Mr. Ellis Smith

Having sat in this Chamber for three hours and 12 minutes, I welcome the opportunity to speak in support of the Amendment. There are certain qualifications. Even I have to leave the Chamber to get a cup of tea and a piece of cake, but since returning I have had the pleasure of listening to some hon. Members who have made two speeches. Having reached a period of life when one regards such things philosophically, I do not say that in any complaining sense.

I wish to make out a close and reasoned case in support of the Amendment. I do so because I belong to the working classes; I have never had any aspiration to move out of the working classes and I wish to speak on behalf of its members. Many hon. Members have taken an uncompromising stand for the complete abolition of revenue-raising taxation on the members of the working classes. I wish to produce statistical evidence to prove my case. It has been prepared by some of the finest statisticians in the world, namely, those employed by the Inland Revenue and in the Civil Service. Men and women who are employed in our Government Departments are among the most conscientious of our people.

None of us would have much of a life today but for the efforts of those engaged in the export industry, yet this is a tax upon that industry. The Chancellor, for whom 1 have a great personal regard because of his life record and his work. apart from his political outlook which is inconsistent with his personal record, said last week at a meeting of the National Consultative Council—have I got the name correct?

Mr. Amory

indicated dissent.

Mr. Ellis Smith

Then perhaps the right hon. Gentleman will correct me.

Mr. Amory

It is the National Production Advisory Council.

6.45 p.m.

Mr. Ellis Smith

Thank you.

The Chancellor said to the National Production Advisory Council that Britain must not increase costs. There must be no increase in wages—always wages—and there must be no increase in costs. Knowing the Chancellor, I believe that he is a man of his word, and in my view he ought to have taken the initiative at the time of this Budget and given concrete evidence of his concern and the concern of the Government to reduce costs. I take it that we are in agreement up to this point. That means that instead of juggling backwards and forwards with things as we are doing—I do not wish to say anything which will reflect upon my hon. Friends—we should this afternoon be discussing the complete abolition of this tax, and with what we should replace it. I will accept the responsibility of making a constructive suggestion about what should be put in place of Purchase Tax.

The Labour Party is in a strong position to deal with the matter. The Labour Party—at the time it was the real Labour Party—was fundamentally opposed to the tax when it was introduced by the late Sir Kingsley Wood in 1940. My right hon. Friend the Member for Bishop Auckland (Mr. Dalton) came to a Labour Party meeting and pleaded with us to give way and so make a contribution to winning the war. At that time several of my hon. Friends were assisting in various Government Departments and after a long discussion we gave way, because we had to subordinate our individualities and ideas in order to win the war. That is why we acquiesced and accepted the Purchase Tax.

At that time it was a sound proposition because its main objective was to restrict consumption. We all agreed, in view of the serious situation at the time, that to restrict consumption was a good economic proposition, although many of us considered that the imposition of a Purchase Tax was not the best way to do it. Hon. Members might argue that in 1945 the Labour Party continued the tax and I plead guilty to being one who was a party to continuing it, although I never liked the tax. I thought that with each year that passed the tax would be gradually reduced until we arrived at a time when we could dispense with it.

The logic of my observations is that it was never intended that the Purchase Tax should develop into a revenue-raising tax. That is the first lesson I wish to draw. I wish to appeal particularly to hon. Members of my own party, as well as to hon. Members of the Conservative Party, to consider whether it would not be better in the interests of the country completely to abolish this tax on the necessities of the people. We might keep it within a narrow limit on nonessentials, or what might be interpreted as luxury goods, and use other means to raise the remainder of the necessary revenue. If anyone wishes to force me into a corner and make me admit where I would raise that revenue I would say by way of Income Tax.

Why do I say that? First, the working class people of our country, relatively speaking, are now being exploited more than the people of any other industrial country in the world. Does anyone doubt that? Secondly, we are, relatively speaking, subject to higher taxation than any other people, and I do not differentiate here between the working class and any other section of the community. Relatively speaking, we have higher taxes imposed upon our people than is the case in any other part of the world. Does anybody doubt that? Thirdly, this country depends upon its exports—could we have some order on the Front Bench, please?—more than any other country in the world. Therefore, one would think that a Government acting in the interests of the whole country and not of any particular section would so legislate that what was in the best interests of the country would be provided for.

That brings me to a personal point with the Chancellor. I had hoped that the Chancellor would have come forward this time—and seeing that he has not done it this time I hope that if he is still Chancellor he will do it next time—and taken the initiative in bringing forward proposals for a complete abolition of this revenue-raising tax on the people. The Chancellor said last week that we must keep our costs down. Yet what are the facts? These are not my figures, not a Socialist's figures, but figures taken from the Economic Bulletin for Europe dealing with the first quarter of 1958.

To take West Germany, Germany lost the war. Twice in my lifetime Germany has lost a war which we are supposed to have won. What are the facts? In West Germany, between 1955 and 1958, consumer prices rose by 7.3 per cent. and hourly earnings rose by 21.4 per cent. These figures are from the Economic Bulletin for Europe which was published in 1958 and can be checked by anyone in the Library. In France, consumer prices rose by 12.6 per cent. and hourly earnings by 24 per cent. I could go on giving figures if anyone wants them, but I will confine myself to our own country. Remembering the facts I have already given, we find that in Britain consumer prices in the same period rose by 11.3 per cent. and hourly earnings by 15.2 per cent. It is upon these official figures that I am basing the concrete proposal concerning our industrial workers which I made at the beginning of my observations.

It is against the background of these figures that, first, I want to make out a case for the complete abolition of this revenue-raising tax. Secondly, I am also stating that it is time that this House insisted that Ministers carried out the statements they have made in the country to the effect that prices and costs must be kept down. Therefore, I ask if we could have an explanation some time during this debate why prices have not been kept down, in comparison with what has taken place in other countries. Why is it that in our own country consumer prices have been rising like this, whereas in most other countries they have not risen to the same extent? Why is it that hourly earnings here have not risen in proportion to the rise in other countries?

I am arguing that we should be taking the initiative, and I am very pleased that the Chancellor and other Ministers are following me so closely, because they are personally involved, and I know that they mean business in their approach to this problem. I am making out a case that the time has come in Britain when we should re-examine what happened during the war, because, in my view, it is no longer economically applicable, from the best business point of view, 15 years after the war ended. That is the main point I am making, and I will accept the responsibility of saying why the situation is as I have described it.

First, there are no people in the world who suffer more from the effects of trade associations than the people in this country. These associations are so well organised and have such a grip upon raw materials that internal prices here are out of all relation to world prices. My second point is that the cost of living has not been reduced in relation to world prices. Why is it that the cost of living, including consumer prices, has not been reduced as it has been in West Germany, France, Belgium and Sweden? It is not the fault of the Government, except to the extent that I will show later on. It is not the fault of my right hon. Friends. It is because no Government up to this day has had the courage to deal with these trade associations which now have such a grip upon the internal situation in this country.

My third point is that business people do not mind the Purchase Tax because, relatively speaking, colossal profits, out of all relation to the effort, are now being made while the overhead charges here are greater than they are in any other part of the world. I see you watching me very carefully, Sir Charles, and I appreciate your attention. These are all points to show why this afternoon we are considering a very serious situation, and I am producing evidence to show that the time has arrived, not only to support this Amendment in the form in which it is presented, but, as the Minister replying interpreted it, for the complete abolition of Purchase Tax.

We in this country pay higher taxes, including the Purchase Tax, than anyone in the world. I have figures here, but I do not want to detain the Committee by giving one after another, which I could do if necessary. If anyone doubts what I am saying, I am quite prepared to give the figures to the Committee, subject to the acquiescence of the Chairman.

I have before me figures which I am quoting from the Daily Telegraph of 19th June, 1958, showing that both directly and indirectly, we are, relatively speaking, more highly taxed than people in any other part of the world. I know that we have some responsibility for it on this side of the Committee, and I accept it, but some of us are in a very strong position, and especially 158 of my hon. Friends, because we had courage. It is so easy to talk, but when we are put to the test, when we accept positions of responsibility or when we are tested by a vote, it is where we stand when the vote takes place that is important.

Some of my hon. Friends are in a strong position over the Japanese Peace Treaty and all that it has meant, and they are also in a strong position with regard to high taxation. We ought never to have agreed to that colossal expenditure on armaments, which has undermined industry in this country, to the extent of £1,500 million. Fundamentally, it is that which is responsible for the present high taxation in this country.

7.0 p.m.

I come to the next point, in which the Purchase Tax is involved. I can produce evidence, if necessary, for every item that I shall mention. I have said that trade associations have a firm grip upon raw materials and that those engaged in the trades are not being given a chance. I could give many examples of the enormous profits made in the building, distributive and other industries, but I do not want to detain the Committee any longer than is desirable. My hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross) will remember when we had the privilege of being very closely associated with Sir John Barbirolli. We sat in my small house having tea. A well-known journalist, who claimed to be so much on the Left that we were on the Right, is now playing his part in the Institute of Directors. Many people have been asking for the Evening Standard tonight. More people ought to go and read this.

What do we find? I see, from the Financial Times of 19th November that the directors of Messrs. E. S. & A. Robinson receive—each of the 14 of them, not all of them—£29,499 a year. The nine directors of Messrs. Turner and Newall each receive £27,522. The four directors of Imperial Chemicals receive £18,316 each and the twelve directors of Woolworth's each receive £18,196. I could go on giving example after example. I have a whole list of them.

The Chairman

It would perhaps be a little wide of the Amendment.

Mr. Ellis Smith

Sir Charles, you are retiring. I hope that whoever occupies the Chair in the Committee of Ways and Means in the future will be as wise as you. I have known some fast ones in the past, but I do not want to say too much about that. It is not altogether a question of political differences, so I had better say no more about that. Those who have known your record in the position you occupy, and all that it means behind the scenes away from this Committee and other Committees, must bow to your Ruling and accept it. You set an example, as another right hon. Gentleman does in his sphere, to those who are coming along. I hope that both you and Mr. Speaker—I shall have a further opportunity of saying this—will place on record before you leave your posts your views on these matters so that those who come along afterwards can benefit from your experience.

Having said that, Sir Charles, I want to admit that I was straying a little, but at the same time I would like you to see the interpretation that I am putting upon the emoluments, as they are called, that each of these directors is receiving.

I am talking about Purchase Tax, which is involved here. No wonder the Institute of Directors does not want any more nationalisation. No wonder it misinterprets modern Socialist ideas. Some of us knew at the time that if we had taken our stand on what is fundamentally right, then, no matter how they knocked us about, we should be proved right sooner or later. When we compromise to the extent that has been done we walk right into it, and we are up to the neck in it; and we suffer, as some of us are doing at the present time.

Some of us represent a great exporting industry and are bound to speak in regard to it. This is only the general case that would be presented. All hon. Members, even if they do not agree with the political line or political approach that we take to these problems, will, I hope, forgive me for a moment. Some of us have, to a certain extent, to carry on a fight on two fronts. If we could have most of my hon. Friends in a room, like Committee Room 14, and especially those who have come through one stage after another, and if we had time, we could convince 90 per cent. of them of the correctness of the line that I am taking.

Our next step is to try to convince those who do not accept our political approach. This is one of the best institutions in the world for this purpose. I will try to do it, quite apart from what I have said previously. All thinking people will now agree that this country cannot carry on without maximum exports. That means that all unnecessary costs and charges should be eliminated wherever possible. The overhead charges on productive industry are far too high in relation to the cost of the products. Either directly or indirectly, restrictionist taxes, like the Purchase Tax which has now become a revenue tax, are a burden upon productive industry. Is that fair?

If anyone differs from me I would remind him that we cannot settle it in here and that at some time, out there in the Lobby, we can have it out. The only way to win Divisions in this place is to win as many individual hon. Members to our support as we can. Between now and the next Budget, whether it be from my

right. hon. Friends now in opposition or from right hon. Gentlemen now in government, I hope that the whole House of Commons will say that the time has arrived when the logic of this Amendment should be applied, so as to take this revenue-raising tax from productive industries. If it is necessary to raise revenue, let us do so by some other means.

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

The Committee divided: Ayes 247, Noes 203.

Division No. 106.]	AYES	[7.10 p.m.
Agnew, Sir Peter	Doughty, C. J. A.	Jennings, Sir Roland (Hallam)
Aitken, W. T.	du Cann, E. D. L.	Johnson, Dr. Donald (Carlisle)
Allan, R. A. (Paddington, S.)	Dugdale, Rt. Hn. Sir T. (Richmond)	Johnson, Eric (Blackley)
Amory, Rt. Hn. Heathcoat (Tiverton)	Duncan, Sir James	Jones, Rt. Hon. Aubrey (Hall Green)
Arbuthnot, John	Eden, J. B. (Bournemouth, West)	Keegan, D.
Armstrong, C. W.	Elliott, R.W.(N'castle upon Tyne, N.)	Kerby, Capt. H. B.
Ashton, H.	Errington, Sir Eric	Kerr, Sir Hamilton
Atkins, H. E.	Erroll, F. J.	Kershaw, J. A.
Baldock, Lt.-Comdr J. M.	Farey-Jones, F. W.	Kimball, M.
Baldwin, Sir Archer	Fell, A.	Kirk, P. M.
Barlow, Sir John	Finlay, Graeme	Lancaster, Col. C. G.
Barter, John	Fisher, Nigel	Langford-Holt, J. A.
Batsford, Brian	Fletcher-Cooke, C.	Leather, E. H. C.
Baxter, Sir Beverley	Forrest, G.	Leavey, J. A.
Beamish, Col. Tufton	Fort, R.	Leburn, W. G.
Bell, Philip (Bolton, E.)	Freeth, Denzil	Legge-Bourke, Maj. E. A. H.
Bell, Ronald (Bucks, S.)	Gammans, Lady	Legh, Hon. Peter (Petersfield)
Bennett, F. M. (Torquay)	George, J. C. (Pollok)	Lindsay. Hon. James (Devon, N.)
Bennett, Dr. Reginald	Gibson-Watt, D.	Linstead, Sir H. N.
Bevins, J. R. (Toxteth)	Glover, D.	Lloyd, Maj. Sir Guy (Renfrew, E.)
Biggs-Davison, J. A.	Godber, J. B.	Longden, Gilbert
Bingham, R. M.	Goodhart, Philip	Loveys, Walter H.
Birch, Rt. Hon. Nigel	Gough, C. F. H.	Low, Rt. Hon. Sir Toby
Bishop, F. P.	Gower, H. R.	Lucas, Sir Jocelyn (Portsmouth,S.)
Body, R. F.	Graham, Sir Fergus	Lucas, P. B. (Brentford & Chiswick)
Bossom, Sir Alfred	Grant, Rt. Hon. W. (Woodside)	Lucas-Tooth, Sir Hugh
Boyd-Carpenter, Rt. Hon. J. A.	Grant-Ferris, Wg Cdr. R.(Nantwich)	Macdonald, Sir Peter
Boyle, Sir Edward	Green, A.	Maclay, Rt. Hon. John
Braine, B. R.	Gresham Cooke, R.	MacLeod, John (Ross & Cromarty)
Brewis, John	Grimston, Hon. John (St. Albans)	McMaster, Stanley
Brooman-White, R. C.	Grimston, Sir Robert (Westbury)	Macmillan, Maurice (Halifax)
Browne, J. Nixon (Craigton)	Grosvenor, Lt.-Col. R. G.	Macpherson, Niall (Dumfries)
Bryan, P.	Gurden, Harold	Maitland, Cdr. J. F. W. (Horncastle)
Bullus, Wing Commander E. E.	Hall, John (Wycombe)	Maitland, Hon. Patrick (Lanark)
Burden, F. F. A.	Harris, Reader (Heston)	Markham, Major Sir Frank
Butcher, Sir Herbert	Harrison, Col. J. H. (Eye)	Marlowe, A. A. H.
Butler, Rt.Hn.R.A.(Saffron Walden)	Harvey, John (Walthamstow, E.)	Marples, Rt. Hon. A. E.
Campbell, Sir David	Hay, John	Mathew, R.
Carr, Robert	Heald, Rt. Hon. Sir Lionel	Maudling, Rt. Hon. R.
Cary, Sir Robert	Heath, Rt. Hon. E. R. G.	Mawby, R. L.
Channon, H. P. G.	Henderson, John (Cathcart)	Medlicott, Sir Frank
Clarke, Brig. Terence (Portsmth, W.)	Henderson-Stewart, Sir James	Milligan, Rt. Hon. W. R.
Cole, Norman	Hicks-Beach, Maj. W. W.	Molson, Rt. Hon. Hugh
Conant, Maj. Sir Roger	Hill, Mrs. E. (Wythenshawe)	Morrison, John (Salisbury)
Cooke, Robert	Hill, John (S. Norfolk)	Mott-Radclyffe, Sir Charles
Cooper, A. E.	Hinchingbrooke, Viscount	Nairn, D. L. S.
Cordeaux, Lt.-Col. J. K.	Hirst, Geoffrey	Neave, Airey
Corfield, F. V.	Holland-Martin, C. J.	Nicholls, Harmar
Courtney, Cdr. Anthony	Hope, Lord John	Nicholson, Sir Godfrey (Farnham)
Craddock, Beresford (Spelthorne)	Horobin, Sir Ian	Nicolson, N.(B'n'm'th, E. & Ch'ch)
Crosthwaite-Eyre, Col. 0. E.	Howard, Hon. Grevitle (St. Ives)	Noble, Comdr. Rt. Hon. Allan
Crowder, Sir John (Finchley)	Howard, John (Test)	Noble, Michael (Argyll)
Crowder, Petro (Ruislip—Northwood)	Hughes Hallett, Vice Admiral J.	Nugent, G. R. H.
Cunningham, Knox	Hughes-Young, M. H. C.	Oakshott, H. D.
Currie, G. B. H.	Hutchison, Michael Clark (E'b'gh, S.)	O'Neill, Hn. Phelim (Co. Antrim, N.)
Dance, J. C. G.	Hutchison, Sir James (Scotstoun)	Orr, Capt. L. P. S.
Davidson, Viscountess	Hylton-Foster, Rt. Hon. Sir Harry	Osborne, C.
D'Avigdor-Goldsmid, Sir Henry	iremonger, T. L.	Page, R. G.
de Ferranti, Basil	Irvine, Bryant Gottman (Rye)	Pannell, N. A. (Kirkdale)
Dodds-Parker, A. D.	Jenkins, Robert (Dulwich)	Partridge, E.
Donaldson, Cmdr. C. E. McA.	Jennings, J. C. (Burton)	Peel, W. J.
Peyton, J. W. W.	Simon, J. E. S. (Middlesbrough, W.)	Tweedsmuir, Lady
Pickthorn, Sir Kenneth	Smithers, Peter (Winchester)	Vane, W. M. F.
Pilkington, Capt. R. A.	Smyth, Brig. Sir John (Norwood)	Vaughan-Morgan, J. K.
Pitman, I. J.	Spearman, Sir Alexander	Vickers, Miss Joan
Pitt, Miss E. M.	Speir, R. M.	Vosper, Rt. Hon. D. F.
Pott, H. P.	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)	Wakefield, Edward (Derbyshire, W.)
Powell, J. Enoch	Stanley, Capt. Hon. Richard	Wakefield, Sir Wavell (St. M'lebone)
Price, David (Eastleigh)	Stevens, Geoffrey	Wall, Patrick
Prior-Palmer, Brig. 0. L.	Stoddart-Scott, Col. Sir Malcolm	Ward, Dame Irene (Tynemouth)
Ramsden, J. E.	Studholme, Sir Henry	Webbe, Sir H.
Rawlinson, Peter	Summers, Sir Spencer	Webster, David
Redmayne, M.	Taylor, Sir Charles (Eastbourne)	Williams, Paul (Sunderland, S.)
Rees-Davies, W. R.	Taylor, William (Bradford, N.)	Williams, R. Dudley (Exeter)
Remnant, Hon. P.	Teeling, W.	Wills, Sir Gerald (Bridgwater)
Ridsdale, J. E.	Temple, John M.	Wilson, Geoffrey (Truro)
Nippon, A. G. F.	Thomas, Leslie (Canterbury)	Wood, Hon. R.
Roberts, Sir Peter (Heeley)	Thomas, P. J. M. (Conway)	Wooliam, John Victor
Robinson, Sir Roland (Blackpool, S.)	Thompson, Kenneth (Walton)	Yates, William (The Wrekin)
	Roper, Sir Harold	Thompson, R. (Croydon, S.)
	Russell, R. S.	Thorneycroft, Rt. Hon. P.
Scott-Miller, Cmdr. R.	Thornton-Kemsley, Sir Colin	TELLERS FOR THE AYES:
Sharpies, R. C.	Turner, H. F. L.	Mr. Chichester-Clark and
Shepherd, William	Turton, Rt. Hon. R. H.	Mr. Whitelaw.
NOES
Aineley, J. W.	Gibson, C. W.	Monslow, W.
Albu, A. H.	Gordon Walker, Rt. Hon. P. C.	Moody, A. S.
Al!sun, Frank (Salford, E.)	Greenwood, Anthony	Morris, Percy (Swansea, W.)
Allen, Arthur (Bosworth)	Cranial', Rt. Hon. D. R.	Mort, D. L.
Allen, Scholefield (Crewe)	Grey, C. F.	Moyle, A.
Awbery, S. S.	Griffiths, David (Rother Valley)	Mulley, F. W.
Bacon, Miss Alice	Griffiths, William (Exchange)	Neal, Harold (Bolsover)
Bence, C. R. (Dunbartonshire, E.)	Grimond, J.	Noel-Baker, Francis (Swindon)
Benson, Sir George	Hale, Leslie	Noel-Baker, Rt. Hon. P. (Derby, S.)
Beswick, Frank	Hall, Rt. Hn. Glenvil (Colne Valley)	Oliver, G. H.
Blenklnsop, A.	Hamilton, W. W.	Orbach, M.
Blyton, W. R.	Hannan, W.	Oswald, T.
Boardman, H.	Hastings, S.	Padley, W. E.
Bonham Carter, Mark	Hayman, F. H.	Paling, Rt. Hon. W. (Dearne Valley)
Bottomley, Rt. Hon. A. G.	Henderson, Rt. Hn. A. (Rwly Regis)	Palmer, A. M. F.
Bowden, H. W. (Leicester, S.W.)	Herbison, Miss M.	Pargiter, G. A.
Bowen, E. R. (Cardigan)	Hewitson, Capt. M.	Parker, J.
Bowles, F. G.	Hilton, A. V.	Parkin, B. T.
Broughton, Dr. A. D. D.	Hobson, C. R. (Keighley)	Paton, John
Brown, Thomas (Ince)	Houghton, Douglas	Pearson, A.
Burke, W. A.	Howell, Charles (Perry Barr)	Peart, T. F.
Burton, Miss F. E.	Hughes, Ciedwyn (Anglesey)	Pentland, N.
Butler, Herbert (Hackney, C.)	Hughes, Emrys (S. Ayrshire)	Popplewell, E.
Callaghan, L. J.	Hughes, Hector (Aberdeen, N.)	Prentice, R. E.
Carmichael, J.	Hunter, A. E.	Price, Philips (Gloucestershire, W.)
Champion, A. J.	Hynd, H. (Accrington)	Probert, A. R.
Chapman, W. D.	Hynd, J. B. (Attercliffe)	Rankin, John
Chetwynd, G. R.	Irvine, A. J. (Edge Hill)	Readhead, E. C.
Cliffe, Michael	Irving, Sydney (Dartford)	Reeves, J.
Coldrick, W.	Isaacs, Rt. Hon. G. A.	Reid, William
Co'lick, P. H. (Birkenhead)	Jay, Rt. Hon. D. P. T.	Rhodes, H.
Corbet, Mrs. Freda	Jager, Mrs. Lena(Holbn & St. Pncs, S.)	Robens, Rt. Hon. A.
Craddock, George (Bradford, S.)	Jenkins, Roy (Stechford)	Roberts, Albert (Normanton)
Cronin, J. D.	Johnson, James (Rugby)	Roberts, Goronwy (Caernarvon)
Grossman, R. H. S.	Jones, David (The Hartlepools)	Robinson, Kenneth (St. Pancras, N.)
Cullen, Mrs. A.	Jones, Jack (Rotherham)	Rogers, George (Kensington, N.)
Darling, George (Hillsborough)	Jones, J. Idwal (Wrexham)	Ross, William
Davies, Ernest (Enfield, E.)	Kenyon, C.	Shinwell, Rt. Hon. E.
Davies, Harold (Leek)	Key, Rt. Hon. C. W.	Short, E. W.
Davies, Stephen (Merthyr)	King, Dr. H. M.	Silverman, Julius (Aston)
Deer, G.	Lawson, G. M.	Silverman, Sydney (Nelson)
Delargy, H. J.	Lee, Frederick (Newton)	Simmons, C. J. (Brieriey Hill)
Diamond, John	Lever, Harold (Cheetham)	Skeffington, A. M.
Dodds, N. N.	Lewis, Arthur	Slater, Mrs. H. (Stoke, N.)
Donnelly, D. L.	Lindgren, G. S.	Slater, J. (Sedgefield)
Dugdale, Rt. Hn. John (W. Brmwch)	Lipton, Marcus	Smith, Ellis (Stoke, S.)
Ede, Rt. Hon. J. C.	Logan, D. G.	Snow, J. W.
Edelman, M.	Mabon, Dr. J. Dickson	Sorensen, R. W.
Edwards, Rt. Hon. John (Brighouse)	McAlister, Mrs. Mary	Soskice, Rt. Hon. Slr Frank
Edwards, Rt. Hon. Ness (Caerphilly)	MacColl, J. E.	Sparks, J. A.
Edwards, Robert (Bllston)	McInnes, J.	Spriggs, Leslie
Edwards, W. J. (Stepney)	MacPherson, Malcolm (Stirling)	Steele, T.
Evans, Albert (Islington, S.W.)	Mahon, Simon	Stonehouse, John
Evans, Edward (Lowestoft)	Mallalleu, E. L. (Brlgg)	Stones, W. (Consett)
Fernyhough, E.	Mallslieu, J.P. W. (Huddersfd, E.)	Stross, Dr. Barnett(Stoke-on-Trent, C.)
Fitch, A. E. (Wigan)	Mann, Mrs. Jean	Summerskill, Rt. Hon. E.
Fletcher, Eric	Marquand, Rt. Hon. H. A.	Swingler, S. T.
Forman, J. C.	Mason, Roy	Sylvester, G. 0.
Fraser, Thomas (Hamilton)	Messer, Sir F.	Taylor, Bernard (Mansfield)
George, Lady MeganLioyd(Car'then)	Mitchison, G. R.	Taylor, John (West Lothian)

Thomson, George (Dundee, E.)	Wheeldon, W. E.	Wilson, Rt. Hon. Harold (Huyton)
Thornton, E.	White, Mrs. Eirene (E. Flint)	Winterbottom, Richard
Timmons, J.	White, Henry (Derbyshire, N.E.)	Woodburn, Rt. Hon. A.
Tomney, F.	Wilkins, W. A.	Woof, R. E.
Usborne, H. C.	Willey, Frederick	Yates, V. (Ladywood)
	Viant, S. P.	Williams, David (Neath)
	Warbey, W. N.	Williams, Rec. Llywelyn (Ab'tillery)
Watkins, T. E.	Williams, Rt. Hon. T. (Don Valley)	TELLERS FOR THE NOES:
Weitzman, D.	Willis, Eustace (Edinburgh, E.)	Mr. Holmes and Mr. J. T. Price.

The Chairman

The other Amendments to this Clause are either out of order or fall.

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

Mrs. Eirene White (Flint, East)

I have been asked to say something from this side of the Committee on this Motion. As the Committee will appreciate, we have to take this step because it is the only one open to us in order to discuss the various items included in the rates of tax other than those chargeable at 5 per cent.

Naturally, I am not going into the arguments which have been already adduced about the undesirability of this method of procedure. We have already agreed that it is undesirable, should not have been done this year and should not be done on future occasions. As things are at the moment, we can discuss these various categories only on the Question, That the Clause stand part of the Bill. This means, of course, that we are unable, even if we wished to do so, to vote against any particular group because to do so would involve the entire range of items other than those chargeable to tax at 5 per cent.

We have had some interesting observations already on the whole theory of Purchase Tax, including the very interesting and slightly discursive speech we have just heard from my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith). My hon. Friend is against Purchase Tax altogether. I do not feel that we could go quite as far as that, but I wish to look for a moment at some of the considerations which arise in regard to the general structure of the Purchase Tax.

Last year, we had discussions on individual items, and these are not possible this year. We had a notable victory, as the Chancellor will recall, on the important matter of buttons. We secured justice as between braces and suspenders, as between cummerbunds and waistcoats, and in various other important matters. We left a few anomalies. For example, the chair on which one sits in the house is taxed at one rate and the chair on which one sits in the garden is taxed at a different rate. What is done about a chair on which one sits in a tent we are not quite certain.

The Chancellor has told us that his aim in respect of Purchase Tax is to raise revenue. That is natural enough. In the debates last year, he said that it was his purpose not to interfere with the individual's choice to spend his money as he thinks best. The right hon. Gentleman made great play of that. He said: I do not believe that one is justified in interfering more than is necessary with the free choice of an individual to spend his money as he likes."—[OFFICIAL REPORT, 19th May, 1958; Vol. 588, c. 982.] He uses this philosophy, presumably, as the basis for the action he has taken this year in making a very considerable reduction, 10 per cent., in the group previously taxed at 60 per cent., bringing it down to 50 per cent., in making a very much smaller reduction in what he previously called the standard rate of tax, which is now 25 per cent. instead of 30 per cent., in making a proportionately much smaller reduction of only 2½ per cent. in the next group, and, of course, making no reduction at all in the lowest group. He justifies this, I assume, on the ground that he is making it possible for the person with a high income to he unimpeded in his choice of buying a Rolls-Royce or a Jaguar rather than a cheaper motor car.

We on this side of the Committee do not entirely accept the philosophy of the Chancellor of the Exchequer. We feel very strongly that there is a social case for a fairly wide differentiation in tax as between articles which are relative luxuries and those which are such necessities that there is no question of any element of choice in the matter.

I wish to direction attention to the group of articles charged at 12½ per cent., on which there has been a very slight reduction. In this group are still included very many household necessities in regard to which there is no choice about whether one purchases them or not. They are articles which every household needs, and we on this side do not consider that they are suitable subjects for a Revenue tax. I will not weary the Committee by going into great detail—I should be out of order were I to attempt to do so—but, by way of illustration, I will remind the Committee that in this group we still have such things as dustbins, mats, clothes props, baking tins and all the other paraphernalia which the housewife needs in her kitchen, such as teapots, trays, wire utensils, and so forth. With one very small exception which was disposed of last year, there are still subject to a quite high rate of tax almost all the articles brought under tax in the famous, or, rather infamous. "pots and pans" Budget of the autumn of 1955.

One would have thought that, in a year in which the Chancellor was disposing of so much surplus income, he might have chosen the occasion to do justice to the housewives who, in our submission, have been very unjustly treated in Budgets since 1955.

It is true that retail price of some of the articles is not very great and the amount of tax on each individual item is not, therefore, very large. There was some discussion on a previous Amendment as to whether there was any deterrent effect in the relatively small amount of Purchase Tax on some articles in the lowest category, and it might fairly be argued that even some of the articles I have just mentioned are not, as individual items, taxed so heavily that one could safely say that the amount of tax can have a deterrent effect.

Our argument is not really directed to this point. Our argument is based on social justice. To this extent, I fully agree with my hon. Friend the Member for Stoke-on-Trent, South, when he says that there are pernicious elements in any sort of Purchase Tax unless it is confined to objects which are demonstrably luxuries. If it is not so confined, it becomes a regressive tax in its nature. That is really the burden of our argument.

In the lower Purchase Tax range, which includes very many articles of everday necessity, the tax on the articles taken collectively—not the few pence on each individual item—constitutes a specific and, proportionately, very heavy burden on persons with low incomes. Therefore, on an occasion such as this when much has been given to people with higher incomes and when the Purchase Tax concessions themselves benefit people able to make purchases involving large sums in the higher ranges of tax, the Chancellor should have brought into play not his own philosophy of choice but should have paid attention to the regressive nature of the tax when applied to necessities.

We feel fully justified in taking particular objection to the 12½ per cent. group just as we did in regard to the 5 per cent. group, though we are not able to put it in the same form, because this group also includes many articles of household necessity, and social considerations should have prevailed.

The amount of tax expected to be raised in this particular group is the smallest of the four groups concerned, about £40 million in the current financial year. When set against a total yield of £471 million, the yield from this particular group as a revenue-raiser is by no means the most important. Nevertheless, in addition to the minor items which I have mentioned, it includes such other items of extreme importance to any household as carpets and floor coverings, which I have always said are one of the greatest burdens on anyone having to set up house, as anyone with experience of doing so knows only too well.

7.30 p.m.

The group includes other articles such as crockery, cutlery, wallpaper and hand-operated domestic appliances, which from their nature are likely to be purchased by those who cannot afford to buy the articles in the more expensive ranges which are electrically or gas operated.

Therefore, this group, together with the one which we recently discussed, imposes a very heavy burden on people with smaller incomes. These two groups together account for rather less than £100 million out of the £471 million. From the point of view of revenue, they are less important than the tax on motor cars, television sets, and so forth. From the social point of view, on the other hand, we consider that they are extremely important and that the Chancellor should have borne this aspect of this tax in mind. Having stressed this group, because it is one on which I feel very strongly, I admit that there are articles in the other groups about which we feel some concern. I have no doubt that many of my hon. Friends who have especial knowledge of some of the matters in industries affected will wish to put in some detail their point of view on these items. I will mention one or two groups only which have caused us some concern.

I need hardly remind the Chancellor after the exchanges that we had last year how strongly my hon. Friends, and I understand some of his hon. Friends also, feel about musical instruments. Last year the Chancellor made one of his more regretful speeches and he reached a point when most of us expected that some greater concession was about to be made. I have been reading some of the material sent to hon. Members by societies concerned with this subject.

Included in some of the references made by hon. Members on both sides of the Committee is one by the noble Lady the Member for Hemel Hempstead (Viscountess Davidson)—I am sorry that she is not here now—in which she refers to a wonderful deputation to the Chancellor. I am sure that the Chancellor exercised all his charm, but to my mind the deputation was not so wonderful unless we are told today that the Chancellor has had further thoughts and is prepared to make one further exception at least. He has made two exceptions in the Budget by taking individual items out. He might at least on this item make another exception.

I need hardly remind the Chancellor that one of the two exceptions that he has made this year was in favour of television. He should at least balance that by making some gesture towards those who do not sit back passively looking at other people's efforts, but play instruments themselves. In general, it would not be in order to discuss individual items in great detail. However, as there is so much feeling in all parts of the Committee about this item I hope that we may be allowed at least to stress it, in the hope that the Chancellor will make a gesture, which would be very widely appreciated, towards those persons, especially children, who wish to have their own musical instruments. We know that the tax has been reduced, but it is still very heavy on these expensive items.

What steps are taken by the Chancellor to discover the degree to which his tax remissions are passed on to consumers? The Chancellor said in opening the Budget on 7th April: these reductions will give a material measure of relief to the consumer."—[OFFICIAL REPORT, 7th April, 1959; Vol. 603, c. 551 When we had some discussion on this point last year and the Chancellor was pressed, he said that he relied entirely on the forces of competition and that it was not to the long-term advantage of distributors not to pass on the full benefit of the tax.

It is my belief that in some ranges of articles the tax is definitely passed on. I am thinking of items such as motor cars or expensive durable consumer goods, as they are called—refrigerators, washing machines, and so forth—where as a rule the amount of Purchase Tax is indicated specifically in the shop. It is stated separately from the price of the article and in those circumstances it is probable that the full tax remission is passed on. I am equally convinced that with other articles—I think that some of my hon. Friends have instances they may like to mention by way of illustration; for example, cosmetics and one or two other little matters of interest to ladies—the tax is not passed on to the consumer.

We should be happier if we had from the Chancellor, instead of the pious hope expressed in his Budget speech, some specific information about what steps he takes to find out to what extent the concessions which he makes, which are intended to benefit the consumers, ultimately reached them.

If the concessions do not reach the consumer, many of the purposes of the Chancellor's remissions are frustrated and the heavy burden of tax—after all, nearly £500 million is not to be brushed aside—remains to a degree which must be injurious to our trade and economy.

Some of my right hon. and hon. Friends feel that the Chancellor has chosen the wrong balance in his tax remissions this year. The very large reduction from 60 per cent. to 50 per cent. was not required this year. I say that with the knowledge that there are some items in that group on which some of my hon. Friends may feel rather strongly. Broadly speaking, to many of us it did not seem judicious this year to make such a large reduction in that group, in which the major items are motor cars and television sets, which is by far the largest revenue group of the four, at a time when the motor industry at any rate appears to be flourishing and when there has been a considerable boost to some of the other industries owing to the loosening of hire purchase arrangements.

It might be asked why, if we feel, as some of us do, that this was an error of judgment by the Chancellor, we did not do the one thing which under the rules of procedure is open to us, namely to vote for an increase in, or for less remission of, the tax. We cannot do that because if we did we should still be entirely hampered in suggesting alternative remissions. It would, therefore, be very dangerous for us to suggest that certain sections of Purchase Tax might not have been remitted when, at the same time, we are entirely unfree to suggest other remissions. We cannot do that.

Nevertheless, we are well justified in suggesting that in this year, when the Chancellor had a very wide choice, and when his fiscal position was so much easier than it had been for some years, he might have made a different use of his freedom. As I have said, Purchase Tax is, in its lower range, regressive. It is extremely hard on those who receive no other benefits from the Budget. Notwithstanding that, the Chancellor chose to give much the higher relief to the articles that, on the whole, are bought by those who have more of this world's goods.

Clearly, we are not in a position to press to Division the various specific changes we would like to make in Purchase Tax. We are bound, therefore, to have a very general discussion, but I hope that we shall get replies to some of the points I and some of my hon. Friends raised.

Sir Hamilton Kerr (Cambridge)

Speaking on the last Amendment, the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) said that the only way to win Divisions in the House is to win opinions from all sides. I am not often in agreement with the hon. Member. I find myself more often in agreement with the hon. Member for Stoke-on-Trent, Central (Dr. Stross) when it comes to discussion of the arts. In fact, we have come to call ourselves—and I hope we do so without flattering ourselves unduly—the Heavenly Twins.

Today, therefore, I should like to add a small expression of disappointment at the fact that the Chancellor, who has been so very generous in a number of concessions, has not been able to lower the Purchase Tax on gramophone records. I do so for a very special reason, because I believe that an essential principle is involved.

7.45 p.m.

I happened to be a Member of the House in the spring and early summer of 1940, when Sir Kingsley Wood suggested a tax on books. There was an immediate outcry and, after several weeks of discussion, the proposal was withdrawn. It is of particular importance to consider the position. in which the country found itself when that proposal was made. At that time, France had asked for an armistice, Hitler was master of Europe and the Germans were already erecting long-range guns at Cap Gris Nez.

It was made at a time when we were desperately anxious to divert all possible labour and materials to essential war production; when we needed every square foot of shipping space, and when every man and woman not already in the Forces was needed to produce the guns, the tanks, the ships and the aeroplanes with which to fight the enemy on land and sea and in the air. Nevertheless, people felt, rightly, that an essential principle was at stake, and that in a fight against dictatorship such a principle was a vital weapon of war.

That proposal was withdrawn, but the proposal to place a 30 per cent. tax on gramophone records remained, and has since increased. It is one of the interesting facts of the age that the taste for good music has spread into almost every home, but the anomaly still exists that we can buy the works of Shakespeare, of Ben Johnson or of Marlowe without tax, but if we wish to hear the voice of Sir John Gielgud or of Dame Edith Evans reciting passages from those works, we have to pay the tax. We can buy the script of a symphony by Dr. Vaughan Williams without paying tax, but if we want to hear it produced by one of the finest orchestras we have to pay the very high Purchase Tax.

I believe that our gramophone record industry is for us an ambassador abroad equally as good as are our books. Not only does it achieve results at home; it achieves them also in the export market. When considering the position at home, we recognise that the leading orchestras, the Hallé, the London and the Birmingham Symphony Orchestras, and the Scottish National Orchestra—derive large portions of their revenue from the sale of records of their work, so that the support given to music is weakened by this heavy tax.

When considering the export position, I understand that no less than 80 per cent. of our records go overseas, of which 50 per cent. go to the United States of America, so producing valuable dollars. Each year we earn about £3½ million worth of valuable foreign exchange from the sale of gramophone records. I am, therefore, able to place before my right hon. Friend three reasons for a concession here: first, the cultural one—that much abused word; second, the support that is given to our home orchestras, and, third, the importance of getting valuable exchange from exports.

I believe that many of my hon. Friends and hon. Members throughout the House will feel that the issue is important, and we will recur to this theme again and again. I have often said that the walls of Jericho do not fall at the first blast of the trumpet. If one goes on blasting, perhaps an emissary will eventually appear and offer to parley, saying, "If you will just stop that infernal hooting we may come to terms." I am sure that we do not want to harass my right hon. Friend to that extent in backing up our case, but, if he is generous, we may play him a voluntary on our trumpet.

Mr. Arthur Henderson (Rowley Regis and Tipton)

The hon. Member for Cambridge (Sir H. Kerr) will forgive me if I do not follow him in his case for a concession on gramophone records, except to say that as one who is also a music lover I agree with everything he said, apart from his last rather weak words. I must now ask the Committee to switch to the more mundane subject of domestic utensils, and I do so because of the effects of the Purchase Tax upon the hollow-ware trade.

It is true that the Chancellor has remitted 2½ per cent. of the tax, but my hon. Friend the Member for Brierley Hill (Mr. Simmons) and I have in our constituencies two of the largest hollow-ware factories in the country. They have spent a great deal of capital in modernising their plant, but in the post-war years they have been seriously prejudiced by competition, which they regard as unfair, from Hong Kong, which has affected them in their overseas markets, principally in East and West Africa.

It would not be so bad were they able to make up for loss of overseas markets by maintaining their position in the domestic market, but they are not in that happy position and, once again, they are having to face limited unemployment in their trade. Therefore, I hope that the Chancellor will give the most careful consideration to the position, not only of the hollow-ware industry but others in like circumstances, and the effect of even a 12½ per cent. Purchase Tax upon their markets.

I should like to read an extract from a letter that I received from one of the employers. It says: The paltry reduction now proposed is a mere token, doing nothing to alleviate the clamour from consumer and employer alike, and serving only to prolong the recession in this trade. The resultant idle plant and unemployed hands of a once valuable exporting industry now testify to a shortsightedness which apparently fails to see that so much could be achieved by the relatively insignificant sacrifice of revenue which would arise from abolition of Purchase Tax on such products. I am well aware that any appeal I can make today cannot have, and could not have, the slightest effect upon the pronouncement of the Chancellor that he cannot do more than reduce from 15 per cent. to 12½ per cent. the Purchase Tax on domestic utensils. I hope that something can be done to alleviate the parlous plight in which the hollow-ware industry finds itself not only as regards the factories situated in the Midlands but also those situated in other parts of the country. I believe that one hon. Member has a very large hollow-ware factory in his constituency in Wales.

Quite frankly, I say to the Chancellor that this is, in a sense, special pleading because I realise that I am speaking directly on behalf of several thousand people who are employed in the two factories in my constituency and the neighbouring one of Brierley Hill. Nevertheless, I want to place on record that Purchase Tax, as it affects domestic utensils, is not only retrograde in so far as it affects the living conditions of the housewife, but is also having this indirect effect upon the industry on which my own Borough of Rowley Regis has largely based its prosperity in the past and which is now of great importance to the future welfare of the people of that borough.

Lady Tweedsmuir (Aberdeen, South)

I quite agree with the argument of the right hon. Gentleman the Member for Rowley Regis and Tipton (Mr. A. Henderson) about Purchase Tax on domestic utensils not only as it affects his own constituency but also on behalf of those women who run their households throughout the country. It may be that he was speaking from personal experience in helping, perhaps occasionally, with the washing-up.

I should like to speak specifically on two points. One is the individual effect of Purchase Tax and the other is the general question of Purchase Tax as a whole. I should like, first, to join with my hon. Friend the Member for Cambridge (Sir H. Kerr) and, believe, with a good many other hon. Members on both sides of the Committee, on the effect of the rate of Purchase Tax on gramophone records. I believe that a great number of hon. Members wish to make their voices heard on this issue, so I will be brief.

I recognise that the Chancellor is doing all that he can to try to tackle this jungle of Purchase Tax in reducing it to the more streamlined number of categories that we have now. I think that I should say at the start that all of us—at least, I hope all of us—are grateful for the reductions that have been made, including the 10 per cent. on gramophone records. Nevertheless, I wonder whether the Chancellor has really considered whether this particular section of Purchase Tax is the right one to apply to the gramophone record industry, which is lumped together with a great many things which can be described either as capital goods or in the luxury class.

I submit that gramophone records are not in the capital goods class and I question whether they can nowadays be considered in the luxury class of what was originally a wartime tax. We are supported in the view that they are no longer luxuries because the Chancellor has, in fact, abolished the Purchase Tax on television tubes. I remember very well hon. Members opposite, two years ago, questioning the Chancellor and asking whether he realised that television was now a necessity in every home. We all have our own views on that. I certainly would not say that every programme on television is pure culture. Nor, on the other hand, would I say that every record produced is also pure culture. I do not say that in tax matters we should distinguish between "pop" music and the classics any more than that we should try to distinguish between one television programme and another, or between trashy novels and the classics. I maintain, however, that the Chancellor would have met a strong feeling not only in this Committee, but in the country, if he had tried to remove this particular category of gramophone records into another category.

I should be out of order in suggesting a reduction of the tax in any particular way, but I suggest that at the earliest possible time we should try to remove it into another category altogether. There is, of course, always the argument of whether we want to try to stop spending by people on what are called consumer goods. In my submission, we will never stop young people spending money on music today. I think that it is one of the most encouraging features that more and more young people want to take their entertainment into the home and that is why I personally have always been in favour of television, because I think that everyone, from the grandmother down, in looking at television, has a common interest and a source of common discussion, and, indeed, often the grandmother is the most informed.

I do not see why, if we encourage television by abolishing the Purchase Tax on television tubes, we should not also encourage a real interest in music, which is taking place all over the country. It appears to me ridiculous that when one is sent a review copy of a book no tax is paid, but when there are test pressings of a record, perhaps 10 or 12 before the final copy is put into production, Purchase Tax is paid on them. If we consider the British Council, in which I have some interest, being chairman of the Scottish Panel, it appears to me ridiculous that one Department should tax another which has to subsidise its own records. If we take the year 1958–59, the British Council used records both for music and speech for instruction overseas—7,902 records altogether, on which it did not pay tax. It is quite true that at home in the same period it used only 209 records on which it did pay tax. The large total of practically 8,000 records which went overseas, however, was subsidised by the agreement of this House, yet it was taxed by another Department. That seems to me to be a most extraordinary way of making legislation.

Governments today exercise very great influence through their fiscal policy on the kind of society they want to see in the country. I should have thought that it was very unwise to try to encourage everything that goes with a materialistic society. Surely we always pride ourselves on being one of the most civilised nations. Therefore, I hope that on this specific matter the Chancellor will think again.

On Purchase Tax as a whole we always have, in this Committee, two conflicting opinions. One is that it is necessary to have it not only for purposes of revenue, but also positively to discourage consumer spending. On the other hand, we have the argument, which, I hope, is gaining prevalence now, that we have to do everything in our power to encourage employment and stimulate industrial activity. Here I would make a plea for the levels of Purchase Tax as a whole. We are trying, in dealing with our industrial problems in Scotland, to bring as many different industries as we can to the North, notably those concerned with consumer goods. I have always understood that an industry cannot start or expand satisfactorily unless it can do its experimenting and has a basic supply upon the home market.

Without doubt, the very high level of Purchase Tax on this wide variety of what we call consumer goods must have had a bad effect on the stimulus to trade internally on which the export trade is built. That being so and as Governments today exercise their guidance on the industrial activity of the country not only through the fiscal means of the Budget but through the economic policy of which it is a part, I hope that this Budget is the forerunner of several which will make a determined attack on a tax which was, after all, a wartime measure and has no place in time of peace.

8.0 p.m.

Mr. Philip Noel-Baker (Derby, South)

I want to express my warm agreement with what my hon. Friend the Member for Flint, East (Mrs. White) said about musical instruments. I believe that there are very few hon. Members who in their hearts do not endorse everything she said. My particular purpose tonight is to express my great regret that the Chancellor has not completely abolished the Purchase Tax on sports equipment. I have reason to know that the Chancellor and his colleagues have been made familiar with the arguments in favour of abolition. That fact only increases my regret that when they were making such great reductions of taxes as they have made this year, they should have retained what I believe to be this inequitable and pernicious charge.

The Federation of British Manufacturers of Sports and Games estimates that in the last financial year the sales of the products of its members amounted to a total of about £10 million, of which about £3 million was Purchase Tax, the normal rate payable on their goods being 30 per cent. Three million pounds was paid by those who bought the equipment with which they played their games and took their physical recreation. That means that £3 million was paid mainly by young people, by people of modest means, by sporting clubs of many kinds which provide equipment for their members and most of which are in permanent financial difficulties, and by clubs for boys and girls, many of which go out of existence every year for lack of funds.

Let me read a passage from a memorandum prepared by the Central Council for Physical Recreation, which puts the point with much greater authority than I can command. It states that for certain important sections of the community, particularly young people who have just left school, the present high cost of sports equipment constitutes a serious deterrent to the practice of active games and sports. Purchase Tax on such equipment might not unfairly he regarded as a tax on the instruments of health and fitness. The high cost of sports equipment affects of course not only the individual performer but the youth organisations and voluntary sports clubs faced with the problem of providing general equipment for their members. That is the view put by the Central Council for Physical Recreation. It is fully endorsed by the other great organisation which can speak with authority on the matter, the National Playing Fields Association.

I should like to call the attention of the Financial Secretary to the Treasury to some specific examples of the incidence of this tax, which, broadly, has now been reduced from 30 to 25 per cent. I am giving figures as I calculate them after the reduction has been made. This year, under the Clause, on a good quality cricket bat—I emphasise that it pays boys' clubs to buy good quality equipment, because it lasts longer—the tax is 15s. On a cricket ball it is 7s. On a tennis racket the tax is about 23s. and on a tennis ball 6d. or 7d. Let the Financial Secretary go to Battersea Park or to whatever public park is convenient to him and look at the hundreds of young people there who are playing tennis. He would then realise the real burden of this tax and on whom it falls.

The tax on gymnastic equipment is very heavy. On a vaulting box it is 100s. We need hundreds of additional gymnasia. Table tennis is a very popular game, particularly among the less well off young people. It is a magnificent form of recreation, available equally in summer and winter. It occupies very little space. Every young people's club needs not one table but a number of tables, and they are always fully used. Under the Clause, however, the tax on a table tennis table is 125s. On these facts, it is fair to say, in the words of the Central Council for Physical Recreation, that impositions such as these are a tax on the instruments of health and fitness. The policy of imposing this heavy burden on the physical recreation of the people, and particularly on the games of the boys and girls and of our young people, whose lifelong habits are being formed in the years after they leave school, is uneconomic and unwise. That is true both from the short-term point of view and from the longer period viewpoint also.

Everybody agrees that one of our most urgent social problems is juvenile delinquency and the lifelong crime to which it so often leads. It is a grievous social waste and it imposes a heavy annual expenditure on the nation for which the Chancellor has to provide in his annual Budget. I believe it to be true that in its various forms—gangsterism, hooliganism, the destruction of public and private property, Borstal institutions, court proceedings, and so on—it causes a loss to the nation amounting, perhaps, directly and indirectly, to tens of millions of pounds a year.

There is, however, universal evidence, of which if I wanted to detain the Committee I could give many practical examples, that where adequate facilities for physical recreation are provided juvenile delinquency goes down or disappears. I draw the conclusion, and I am sure it is sound, that there would be an almost immediate budgetary and social return on anything done by the Chancellor to help our young people to play games, to swim, to take part in various sports, to run, to do gymnastics, and so on.

From the longer period viewpoint, automation and nuclear power will. within decades, make the right use of leisure a matter of outstanding national importance. The sooner we begin preparing for greater leisure, the better for all concerned. This £2½ million which the Chancellor is taking this year from our young people and from our clubs for boys and girls is a small sum in his total Budget, but it is a very big sum to those who pay it. It causes grievous loss not only to them but to the nation as a whole.

Dame Irene Ward (Tynemouth)

As I listened to the discussion on the Clause, I felt some sympathy—I underline "some"—for my right hon. Friend the Chancellor of the Exchequer, because he must feel absolutely bewildered by the number of claims that are put forward for reductions of Purchase Tax in various directions. That reinforces the view which I have held for a long time, that when the annual Finance Bill is under discussion, the Treasury for some curious reason or other seems to be out of touch with life in general.

I fully understand that revenue must be raised. I do not, however, want to make this a politically controversial speech. [HON. MEMBERS: "Why not? "] I will not refer to what happened with Purchase Tax in the 1951 Budget. The same thing probably applied when there was a Socialist Chancellor of the Exchequer. He was also singularly out of touch with life in general in the country.

This all goes to prove that, on certain aspect of goods covered by the Clause, between one Finance Bill and another the Chancellor should make up his mind whether or not we are imposing Purchase Tax which is restrictive on the things which the nation as a whole requires to be developed. That has been very strongly brought out by my hon. Friend the Member for Aberdeen, South (Lady Tweedsmuir) and by the right hon. Gentlemen the Member for Derby, South (Mr. P. Noel-Baker), who has just spoken about sports equipment.

It is quite impossible in a debate on the Finance Bill and on a Clause with such a wide range as this to develop the arguments that have been rightly put forward. My complaint about the Treasury's attitude in this respect is that, somehow or other, it has never taken any advice from the Arts Council, from the symphony orchestras, from officers of the youth movements, from the Home Office and a whole range of people who are interested in certain aspects of the Purchase Tax. If I am wrong about that, I am sure that the Financial Secretary will correct me.

I do not know whether it will be the Chancellor or the Financial Secretary who will reply to the debate, but it will be interesting to hear whether any representations have been received from the Ministry of Education, the Home Office, and the Arts Council. In the case of the Arts Council, the Financial Secretary would be addressing himself, as it were, because the Council comes under the general guidance and direction of the Treasury.

I have visited many kinds of establishments and have tried to take a general view of the country's interesting life. I was extremely interested the other day, when I visited a modern school in my part of the country, to find a large number of small children, armed with music scores, listening to a music lesson broadcast by the B.B.C. I thought how interesting it was to see these children's taste for good music being developed at such an early age.

I would draw the Financial Secretary's attention to the question of the direct grants given to the Royal Schools of Music and the various sums of money which have been spent by one Government Department or another. My hon. Friend the Member for Aberdeen, South pointed out that the British Council, in a wide variety of activities, is spending money only to find that the Chancellor then comes along and insists that more money be spent to support the Finance Bill.

8.15 p.m.

I fail to understand how gramophone records ever got into this particularly high category of tax. Nobody has been able to explain it, though perhaps the Financial Secretary will be able to tell us something about it tonight. Because he speaks for the arts in the House of Commons, he has been under considerable pressure about the difficulties of the symphony orchestras. We know that they make a great deal of their income by recording for gramophone companies, and yet gramophone records are placed in this high category of tax. It does not make sense to me.

I shall not develop the argument about domestic utensils, because I believe that the Treasury is beyond being interested in them. The Treasury has such a burden to bear that it has ceased to be interested in whether a housewife does a good job or in how she spends her money. That is regrettable, but I want to concentrate tonight on the fact that the nation gains as a whole if we can develop good taste, good citizenship, and good citizens.

It seems to me, from the various points raised in the debate, that the Treasury is putting a tax on good citizenship. It is putting a tax on the development of good taste in the arts, and it is not helping the creation in the youth of the country an appreciation of many things which all citizens believe are essential to a sound and good national life. My criticism of all this is that between Finance Bills it is quite impossible to persuade the Chancellor of the Exchequer to set up a Royal Commission to examine problems of this kind relating to the arts. I am quite certain that if we had a report from a Royal Commission before us, it would draw attention to the situation arising from the high Purchase Tax imposed on gramophone records. But we have no such report, and we can speak only according to what we hear and believe.

My hon. Friend the Member for Cambridge (Sir H. Kerr) referred to what happened during the war, when it was suggested that there should be a tax on books. I went out to Italy in 1945 very soon after the war ended. I found there was an immense appreciation of good music among those who served in our armies, because they were able to attend the opera in Naples. In that time they had grown up to be first-class critics and they greatly appreciated the chance they had to hear good music. One has only to go to the mining villages in Northumberland, Durham, Wales and other parts of the country to realise what music means to people. I find it absolutely impossible to believe that this aspect of our national life leaves the Chancellor absolutely unmoved. What is the good of having Royal Schools of Music and of providing State scholarships to train people at those schools if, when they leave the schools, they find that the symphony orchestras are having all the time a greater and greater struggle to live? There is no balance. It is all fragmentation. If one Minister of the Crown manages to get into the Cabinet at a suitable moment when the Chancellor has not arrived, he may get some thing passed to his Department and he gets away with it. Nobody looks at the situation from the broad angle of the national interest.

I have no doubt that tonight we shall not get very much from the Chancellor or the Financial Secretary, but I hope that at least we can have a pledge from them. With that, I would be satisfied. And, although I do not for a moment believe that this would happen, if there is a General Election and we have a change of Government, I would like an assurance also from the other side of the Committee. [HON. MEMBERS: "Hear, hear."] It is all very well hon. Gentlemen opposite cheering, but I still remember the 1951 Budget. Do not forget that.

Tonight, I want an assurance that between now and the next Finance Bill the question of money spent through various Government Departments will be looked at with the idea of sustaining what we all believe is in the best interests of the life of the nation. I believe that we would then find that the tax on gramophone records would go. I also believe that it would go from musical instruments. In some villages we see youngsters learning to play in percussion bands and see the pleasure it gives them, and the new idea of leisure.

Then we are faced with the situation of the Minister of Education, having received a report, saying that all public library standards must be raised. Nobody minds how much is spent on public libraries because the Minister of Education has won his battle in the Cabinet. I want many other Ministers to win their battles with the Treasury.

All I am asking for tonight is that whoever replies to this debate will give us a firm pledge that between now and the next Finance Bill the question of the arts, the question of good music, the question of musical instruments, the question of sports equipment, and all those things which are linked with good citizenship, will be looked at from that angle, and that angle only.

I think that we would get a much greater advantage by removing the tax completely from gramophone records and sports equipment. There is also the point that people will make an enormous effort to buy anything new and modern. I am thinking of the number of television sets that have been sold, which is remarkable. So the Chancellor has got quite a lot from the sale of television sets. It is perhaps not so easy to sell other things, and the question is: which is it best to sell in the national interest? So could I have that pledge? I do not think we can get very much further than raising the case tonight.

Mr. Raymond Gower (Barry)

Is my hon. Friend really suggesting that the best judge of the national interest is the Chancellor?

Dame Irene Ward

No, I dream of suggesting it.

Mr. Gower

I hope not.

Dame Irene Ward

I am suggesting that in all the Government Departments there are distinguished people serving on voluntary bodies, and there are distinguished And knowledgeable civil servants who have a wide view on these matters, who can give good advice to my right hon. Friend. I therefore hope that between now and the next Finance Bill this advice will be sought, and that when we have a discussion on a Clause of this kind again it will be on the basis of what will be helpful to the general good of the country. Then we shall really have a field day.

Mr. John Dugdale (West Bromwich)

I am sure the Committee has been fascinated in listening to the hon. Lady the Member for Tynemouth (Dame Irene Ward) and to her revelations about how the Government prepare their Budget, which are most revealing. As a result of her speech, we on this side of the Committee know a great deal more about the inner workings of the Cabinet and generally as to how the mind of the Chancellor works.

I have the greatest pleasure in following the hon. Lady and her hon. Friend the Member for Aberdeen, South (Lady Tweedsmuir), and also the hon. Gentleman the Member for Cambridge (Sir H. Kerr), in supporting the movement that seems to have come from all sides of the Committee to reduce the Purchase Tax on gramophone records. It seems to me intolerable that there should be a tax of 50 per cent. on them. I speak subject to correction by the hon. Member for Tynemouth and her hon. Friend the Member for Aberdeen, South, because I am not an authority on these matters, but I think it is twice the tax on a mink coat. At any rate, it is very high indeed. This seems to me unreasonable and shows the peculiar working of the mind of the Chancellor.

I shall not devote much of my speech to the question of dance music and "pop" singers. I have two children and there are some "pop" singers upon whose records I would like to have a tax of 500 per cent. or 1,000 per cent. because it would save me a great deal of trouble in my home. There are also some books read by children and grown-ups on which we might like to have a heavy tax. However, we all agree that there should not be a tax on the written word, and if that is so, as the hon. Gentleman the Member for Cambridge asked, why should there be a tax on the spoken word?

It is extraordinary that we in the House of Commons, who depend more on the spoken word than anything else, whose whole work depends on the words we speak, should be responsible for a tax on the spoken word when we do not have a tax on the written word. I should like to see a big reduction in the tax on all gramophone records, but if the Chancellor cannot agree to that, I suggest that even now as a concession he might agree to a reduction of tax on long-playing records. I understand, that the greater number of long-playing records are classical and that some of the better types of non-classical records are included in the long-playing type.

Mr. Chapman

Twelve inches long.

Mr. Dugdale

I am not certain of the exact length, but long-playing records are, generally speaking, classical or of the better type, so if the Chancellor cannot make a general concession, which we would all like, he might make this concession.

Hon. Members have spoken very movingly about the effect this tax has on children who are being taught music in schools paid for by the nation. The schools, because of Purchase Tax, have to pay a higher rate for gramophone records which they need to teach the children. It seems to me ludicrous that the local authorities should be told, "You can have records not only for teaching music but languages as well in your schools, but you must, of course, pay a higher rate for them because there must be Purchase Tax on gramophone records." That seems to me a ludicrous state of affairs.

8.30 p.m.

The whole business of the tax is so ludicrous it passes comprehension. Hon. Members have spoken about the tax on pressings. As review copies of books are sent out free, so pressings of records are sent out free, but the pressings bear tax. I hope that the Economic Secretary will enlighten us about it, but I understand that the reason for this extraordinary procedure is that although there was an agreement, apparently, that there should be no tax on pressings, strange though it may seem the agreement was lost in the Treasury, and because the agreement was lost in the Treasury some seven years ago this tax remains on these items. That seems to me a very peculiar state of affairs, and I hope we may learn a little more about it. There seems to be complete chaos. [HoN. MEMBERS: "Who lost it?"]

Mr. William Ross (Kilmarnock)

The Chancellor seems to have gone away to find it.

Dr. Stross

Here he is back again.

Hon. Members

Where is the agreement?

Mr. Dugdale

I hope the Chancellor will consider this business of the lost document to which I was referring. He seems surprised. I was referring to an agreement made that there would be no tax on the pressings of gramophone records, and it seems that the document has been lost in the Treasury for seven years. It may be that the Chancellor will find it now. I hope he will find it. I do not say that he was responsible for its loss. This speech of mine is a nonparty speech, and I will say that it may have been lost in the days of a previous Chancellor of my own party. [HON. MEMBERS: "No."] However, I hope that it may be found.

There is so much that is ludicrous about this tax. Could anything be more ludicrous than this? When Her Majesty makes her Christmas broadcast the records of the broadcast, the money for the sale of which goes to charity, bear Purchase Tax. It seems to me ludicrous. When Prince Philip broadcasts an appeal for the playing fields the records made of the broadcast are taxed although they are the records of a broadcast designed to help to bring in money for playing fields and to persuade people that there ought to be better playing fields.

I do not know what the reason for these various extraordinary taxes is. I think that the main reason is that the Chancellor is thinking in entirely out-of-date terms, as he very often does. Let us imagine what might have happened about four hundred years ago—I think it would have been. Perhaps it would have been a little more, but hon. Members will enlighten me. A gentleman called Caxton invented the printing press. At that time there may have been a Chancellor who could have said, "Anything that is written out by hand is untaxed, but anything which is printed by this wicked new machine which has been invented must bear tax."

I think that is a fairly reasonable parallel with the kind of attitude which says that books must not be taxed but gramophone records must be taxed. It is an entirely untenable argument, and I hope that we shall hear from the Chancellor that he is at least beginning to think of doing something about it.

I am afraid I must detain the Committee upon two other matters. The first, to which I refer briefly, is the question of musical instruments. I support those hon. Members who have already spoken in favour of the abolition of the tax upon them, a tax which hurts so many people, not only those who listen to good music but also those who are learning it and playing it, amateurs and professionals. The wages of the professionals in the symphony orchestras are not all that large, and many of them have to buy their own instruments and have to pay Purchase Tax on them, and it seems to me grossly unfair that they should have to do so.

The other matter on which I must detain the Committee I must raise now owing to the very peculiar way in which we are forced by the Government to conduct this debate. I apologise for having to change the subject somewhat abruptly, but that is the reason. The second matter is that of kitchen utensils, which have already been referred to. The present Home Secretary in 1955 put a tax of 30 per cent. on kitchen utensils. Roughly speaking, what he said was, "The nation is in danger. We must turn to the housewives". He turned to the housewife, got a higher tax, and that was fine. Later, apparently, the nation was not in quite so much danger and so that rate of tax was reduced to 15 per cent. Today it is reduced to 12½ per cent., but apparently the nation is still in danger and the housewife must still pay.

An alternative explanation, which we hold is probably the correct one, is that the Chancellor used the cry that the nation was in danger in order to impose a tax which he would not otherwise have dared to impose on the housewife and has kept it on deliberately, because his original intention was to impose such a tax and keep it on indefinitely. Many of us have asked for that tax to be reduced, if not abolished. I have a particular reason for saying this and it is that some kitchen utensils are made in my constituency. For those hon. Members who do not know, I can say that the price of a frying pan or kettle is increased by 2s. as the result of Purchase Tax. It is difficult not only for the housewife, but for the people who make kitchen utensils. The result of imposing the tax originally was a drop of 20 per cent. in sales, a drop which had an effect on local employment. The Chancellor appears to think that it is perfectly right that it should continue to have that effect.

I know that the Midlands is not a hard hit area, but we can ill afford deliberate attacks on particular industries. This is a deliberate attack on a particular industry and I hope that the Chancellor will think again. I hope that he will tell us that he will do something about some of the taxes I have mentioned. My hopes arc not very great, but I join with other hon. Members in hoping that we may have a change in these important taxes.

Mr. Gower

The course of the debate must be somewhat bewildering to my right hon. Friend. Anyone listening to the debate would imagine that the Clause was designed to increase Purchase Tax by very large amounts. In fact, as the Committee recognises, the Clause reduces Purchase Tax over a very wide range by substantial amounts.

I agree with what has been said in many able speeches in support of reductions in various cases, and I recognise that some arguments are very strong, but it would be wrong if we did not comment on the fact that this is a very great step forward. I do not agree with the sweeping statements which have suggested that in every case this is a bad tax. I recognise that, in theory—and this case has been advanced before—there is obviously a big advantage in a direct tax, like Income Tax, but I fear that any Chancellor who attempted to raise all revenue with one tax of that kind would find that it was a very great disincentive to those who had to pay at even the middle rates, let alone the higher rates.

Successive Chancellors from both sides have recognised that the tax base must be spread very wide to sustain the many activities of the Government. I was surprised and startled when some of my hon. Friends and hon. Members opposite apparently wished to make my right hon. Friend a sort of arbiter of taste. I disagree with that proposition and with my hon. Friend the Member for Tynemouth (Dame Irene Ward), who represents her constituency so ably and sometimes so eloquently and who suggested that the Treasury or Chancellor of any Government was the best judge of what was the best activity to be condoned or punished by taxation.

Dame Irene Ward

Surely my hon. Friend is quite in error in suggesting I ever made that suggestion. I went out of my way to suggest that we ought to have a Royal Commission. This is one of the things I have agitated for and hope one day to achieve.

Mr. Victor Yates (Birmingham, Ladywood)

Is the hon. Member not aware that deputations have put forward points of view for the arts to the Chancellor on this matter? Surely the Chancellor is to some degree responsible and must be the arbiter after receiving those deputations.

Mr. Gower

The arguments I have heard have gone further than that. In some cases the implication has been that there is a special case for what some people describe as good music. I am fond of good music, but I hesitate to say that other people must enjoy that music too. There would be considerable difficulty and resentment if there were a higher tax on popular music than on symphony music. I do not say that anybody has said that, but that has been the implication in some of the speeches. I should not like to see my right hon. Friend becoming an arbiter of taste in that sense. I agree that it is desirable to try and encourage the enjoyment of those things that one considers better in quality, but it would be going dangerously far if we thereby applied a differential basis of taxation.

My hon. Friend may not have used the particular words, but she implied that my right hon. Friend should examine the activities of organisations which use things subject to Purchase Tax and find out which of those things are the most desirable. In my submission, it would not be proper for my right hon. Friend to carry out such an examination and arrive at that judgment.

It is true that organisations like the British Council use certain things which are subject to Purchase Tax, but the number of things is relatively small in the field of Purchase Tax. If it is the British Council in one case, it will be another Government organisation in another. If it is the Ministry of Education in one case, it will be another Ministry in another. To say that because that happens tax is in essence objectionable is going too far.

There may be a case for re-examining the method by which these accounts are ultimately balanced, but I do not regard it as an objection to a tax merely that the tax in the first place has to be paid and then possibly at some subsequent stage a larger grant has to be made. That is inevitable in the nature of things.

Finally, I feel that the hon. Lady, who very ably initiated this debate, was wrong in suggesting that we are the proper judges of what are luxuries. She did this with considerable restraint, but there was the suggestion that some things are in the nature of luxuries and others are not. We recognise that some things are more in the category of necessities, but it would be a very bold man who asserted that what we conceive tonight to be a luxury would be a luxury tomorrow. Society, and the behaviour of people, is changing more rapidly today than ever before. The luxuries of yesterday are not merely the necessities of today, but in many cases have shown themselves to be our biggest exports. It may be that the so-called luxuries of today will be the necessities of tomorrow and become some of our biggest dollar and other currency earners. For that reason I think that this Clause is valuable. It represents a great contribution to the broad design of my right hon. Friend's Budget, and I commend it to the Committee.

8.45 p.m.

Dr. Stross

I feel sure that the Chancellor is vastly relieved that at long last a voice, however confused, has been raised in his support in this matter of music. I agree with one statement of the hon. Member for Barry (Mr. Gower). He was afraid of his right hon. Friend being regarded as an arbiter of taste. Such a position would be most invidious far the Chancellor. The view expressed by one of my hon. Friends that 12-inch long-playing records are, in the main, of classical music is shared by Sir Malcolm Sargent and Sir Arthur Bliss. But I hope that the general view will be that any assistance regarding tax exemption for gramophone records should apply to all records. I hope the Chancellor will not expose himself to assaults from the public, especially the younger people, who will accuse him of not knowing what is good taste. Youngsters are sure that their teaste is better, and we must not interfere with their view. They will grow up in their own way.

The Chancellor will have noted the formidable confederation or coalition in the Committee on these matters. It has been formed recently and is growing. It is not a political or party political coalition, but consists of people who feel that there is some justice in making the good things of life easily available where so-called culture is concerned. I agree that that is a horrible word. It was once spelt with a "K" by a certain country and we suffered from it, and so there may be certain overtones about the word. But joy, happiness, brightness and recreation are all good things, and they ought not to be taxed in the form of a tax on musical instruments whether used by the great virtuoso or a schoolchild learning to play. Nor should there be a tax on the gramophone record, which allows people in places remote from great recreation halls like the Festival Hall or the Royal Albert Hall to hear the best of music.

I cannot speak with the fresh attractiveness of the hon. Lady the Member for Tynemouth (Dame Irene Ward). We all enjoyed her speech. I give her one assurance which she asked for, rather plaintively. When she received cheers from hon. Members on this side of the Committee she said that if next year the Chancellor of the Exchequer were a member of the present Opposition she hoped that what she was demanding would be guaranteed. Should such a thing occur, as I hope it will, I give her my word of honour to do my best to play the part which she has played tonight.

It is a good thing to have a coalition on behalf of the arts in this Committee. The other night some hon. Members were estimating how many people would make use of the Order Paper were hon. Members to band together to persuade the Chancellor to take a course of action between now and the time of the next Budget. I think I am right in saying that the Chancellor may move a group of articles from one tax category to another at any time of the year if he so wishes. In our discussions some thought that 200 hon. Members would sign a Motion, and others thought that perhaps 300 would sign. I am not sure what the figure would be, but I can tell the right hon. Gentleman that we shall know quite soon and he will he apprised of the feelings of hon. Members even more positively than he is learning about them tonight.

My hon. Friend who represents Flint, East (Mrs. White) seemed to raise in her opening speech the question whether the tax reduction would be passed on to the consumer. This is an important matter, which was referred to in our debates last year. I know that so far as gramophone records are concerned, the industry is very rightly grateful for the reduction from 60 to 50 per cent. that has taken place. The whole of that reduction has already been passed on to the consumer. If the Chancellor and the Economic Secretary are fully aware that if they are able to do something further, the whole of the reduction will go to the consumer, this enables us to make a better case than we could do otherwise, for what is the good of pleading that music should be made cheaper for everyone who buys these discs unless we can guarantee that the reduction of the tax will go entirely to the purchaser? Fortunately, this we can do.

Last year, when this matter was raised by my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman), whom I am delighted to see in his place, and myself, we had a most interesting reply. I do not know who will answer us tonight, but last year it was the Solicitor-General who was put up to answer us. We have not seen the Solicitor-General sitting on the Front Bench opposite today, so that it may well be that we shall not have a legal opinion on our case, but a common sense, considered opinion from either the Chancellor, the Economic Secretary or the Financial Secretary. We should be delighted to hear any or all of them on this important matter.

The Solicitor-General was very kind last year. He said that he would not deny our case at all on cultural grounds. He said that he could not do so. Indeed, he said that if he joined in a battle of this sort, he would lose immediately. He also said that there was only one reason why he could not give way to us last year; it was that he rested his case on the difficulty of exempting records, but not the gramophone itself and all the other articles in the group. What nonsense! I hope that no one is going to say that to us tonight. We have talked about it for a whole year, and it is not true. If we can take out television tubes and exempt them completely, why cannot we take the gramophone record off the gramophone and exempt it? It would be nonsense to use the argument which was used last year.

I do not blame the Solicitor-General for arguing in that way. He had nothing else to say, and he felt exactly like the Chancellor and the Economic Secretary would feel if they were now sitting here and not in high office. They would be doing exactly the same thing as we are doing, because they, like us, believe it passionately. Nor must the Chancellor think that we have no sympathy with him in what he has to do each year in order to get money. I know that he has also some sympathy with us when we plead for this sort of thing on these grounds. We are asking him to face the fact that he does not have to wait until next year to offer us a remedy.

We were most courteously received by the Economic Secretary and the Financial Secretary when we pleaded this case in the Treasury. I am not going to repeat what we said, or what was said in answer to us, because, obviously, we could not get a decision or a promise of any kind, but our reception was courteous, and for that we were very grateful. We spent a pleasant half-hour in the Treasury, but we do not want to go again. We want to get what we are asking for, so as not to trouble anybody any longer.

There is no logical argument against this case. I know that logic is not necessary for taxation, but it is curious that there should be this discrimination by the Treasury as between the eye and the ear. The eye is not taxed at all anywhere. One can look at a Rembrandt worth half a million pounds or at a Cézanne worth £250,000 free in the National Gallery, and the pictures are bought for the public and paid for by the Chancellor. The eye is not taxed at all, but if the ear is made use of it is, apparently, thought to be a guilty instrument, and the Treasury comes forward and says, "We must tax it; you must not listen to anything without taxation." Why is a child allowed to look at a television screen and see things that are associated with violence and terror, and there is no tax, but if its parents wish to keep the child occupied in another direction and buy it a record or two of nursery rhymes, tax has to be paid on those records?

I will not bore the Chancellor of the Exchequer with a long speech. There have been many attractive speeches made already. I am only sorry that the Chancellor missed some of them, particularly those that came from the benches behind him. The first and opening speech was from the hon. Member for Cambridge (Sir H. Kerr), made in terms that will never be equalled in a speech by anyone like myself.

Mr. Amory

I heard it.

Dr. Stross

In that case I hardly think that any of us needs to say much more about it. I hope that the right hon. Gentleman will give us our case. We say to him, "Why tax education or recreation?" That is what it really comes to in many directions. Why is it that in Britain, of all countries, the tax is twice as high as similar taxation in any other country in the world? In France, the next highest to ourselves, it is 27½ per cent.; in Western Germany, 4 per cent.; in Switzerland, which says this is a luxury tax, it is only 5 per cent.; in the United States, it is 3 per cent. Why should this thriving industry, which does so well for us, have to bear this kind of disability?

I am delighted to see my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) here. I am not sure whether he intends to speak on this subject or on an allied subject, pottery. My hon. Friend nods his head. I spoke on the subject on the Second Reading. I therefore need use only one or two sentences and say that the Chancellor should help the pottery industry, which is not unlike music, although it is a secondary art. The Chancellor could help the industry greatly in another way, if she will not reduce Purchase Tax. We feel that now the country has the money available the Purchase Tax should be abolished, but if the Chancellor of the Exchequer feels that he cannot abolish the tax he can help the industry tremendously by a simple administrative manoeuvre.

The Chancellor could do this by not waiting until March or April to declare Purchase Tax changes but by letting the public know them in January. This would make all the difference in the world, because from January to March, until we know what Purchase Tax rates are going to be, our stocks mount up in the pottery industry. It is well known that 48 per cent. of our costs are for labour. We have to pay wages during that period of stocking up, when we cannot sell anything because we are waiting for three months to find out what the Chancellor intends to do. When the Christmas rush is over, say in mid-January, would be the right time for the right hon. Gentleman to be good enough to tell us what he proposes to do. That change would be as valuable as some remission of Purchase Tax.

I think that I have said enough. I apologise. As we have a coalition or confederation on these matters, I felt that I was entitled to speak as I have.

9.0 p.m.

Dr. Donald Johnson (Carlisle)

I am intervening in this debate for one purpose only, that is, if I may be permitted, so to speak, to sort the grain from the chaff in the speeches made by hon. Members opposite. I should like to echo the plea made by the hon. Member for Stoke-on-Trent, Central (Dr. Stress), not in what he has just said so much as on the point he made earlier with reference to the removal of Purchase Tax from noninflammable clothing.

I should like to have followed him in his last remarks, but I think that, despite his impassioned plea for music and the arts, even he will agree that this purpose is more important than the one he has just been talking about. Many hon. Members know that we have a non-party Home Safety Committee studying accidents in the home. I have the honour to be one of the joint chairmen of that Committee. One of the main anxieties of that Committee is in regard to the inflammability of clothing material. We are hoping that perhaps our efforts have been partly responsible for the steps taken which the hon. Member mentioned when he quoted from the letter from the British Medical Association, which I also have received. Among our activities we have seen and taken part in striking demonstrations of the burning of fabrics and clothing material which show quite clearly the very marked difference in inflammability of different fabrics used for clothing. They convince us without any doubt whatsoever of the effect of different kinds of clothing on accidents in the home. Flimsy and inflammable materials easily catch alight from open fires or electric tires, and so on, causing fatal and nonfatal, but serious, accidents.

One of our main endeavours is to popularise and to get people to buy noninflammable clothing. One of our principal difficulties in this matter is the comparative expense of non-inflammable clothing compared with the more inflammable varieties of fabrics. Even such a small relief as taking off 5 per cent. would be of great help to us in our efforts. Even more than the actual effect on the price, it would help us in publicising the value of such clothing and generally help in our campaign. I hope that my right hon. Friend will very seriously consider removing this tax from non-inflammable clothing. If he cannot do so now, perhaps he will consider it very seriously on a future occasion.

Apart from this one question, I wish to say how very much I support the rest of the Clause. Despite anything that has been said in this debate, the reduction in Purchase Tax will be greatly appreciated by the people.

Mr. Tom Brown (Ince)

I have listened to practically all the speeches in this debate, which so far has been a warning to the present Chancellor or to his successor that unless there is a change of approach to the question of Purchase Tax on musical instruments and gramophone records there will be a first-class row on the next occasion.

In Lancashire, when a man is not so generous as he ought to be, we speak of him as being "skinny"—not thin physically but skinny. That is the word used if an individual does not act generously in the business which he or she is doing. The Chancellor. when he came to this part of his Budget, was in a skinny mood. He was not generous enough in reducing the tax upon gramophone records by 10 per cent.; he should have done more. Has the right hon. Gentleman ever thought of the effect on the life and culture of the community the abolition of the tax would have? I have had experience which has made me appreciate the importance of gramophone records for the mind and spirit of children in the schools. In 1927—I say this without any boast at all—I became chairman of a local education committee. This was long before anyone ever dreamed that there would be a tax on gramophone records. My job, apart from administration, was to control 11 elementary schools, a school population of 4,020, and a teaching staff of 109.

We wanted to introduce folk dancing for the children in our schools. We could do this only by buying a gramophone and gramophone records so that the children could dance folk dances to the tunes played on the gramophone. The change which came over those children was remarkable. I shall never forget it as long as I live. The introduction of the gramophone and gramophone records played a large part in brightening the lives of those children.

Today, in our booming prosperity, we continue to tax gramophone records. In my judgment, this is crazy. It reveals a lack of understanding of what people need. All of us who can afford it love to hear and enjoy good music, we love to hear great orchestras and bands which play from time to time to inspire us and fill us with enthusiasm. The only opportunity which some people in the industrial villages and towns of Lancashire and Yorkshire, and even farther a field, have of hearing good music comes through the gramophone. Yet we tax gramophone records. Although the Chancellor and the Economic Secretary may disagree with me, I know that what I say is true. If the Chancellor cannot do anything to help as we suggest, I hope that he or his successor will remember next April that there must be no tax at all on gramophone records.

I could mention other articles included in Group 19, but there are other hon. Members who wish to speak about the tax and the important effect it has. I wish to make a plea—I have done it before, and I make no apology for doing it again—on behalf of the old folk. They enjoy their gramophone records and the little entertainment they gain from them. I go to the "Darby and Joan" clubs, the "Over-Sixty" clubs and the social welfare clubs, and I find there the real enjoyment that is experienced by old people, because they can gather together and listen to music played on gramophone records, which lifts them from their monotonous lives.

There should never be a tax upon gramophone records. As I examine the commodities on which Purchase Tax is still imposed, I notice that the rate imposed on gramophone records is one of the highest. The highest Purchase Tax is upon culture and music. Never let it be said in this country that by our tax policy we will continue to tax the music that people enjoy.

It is a point which should be taken into consideration by the Chancellor and not brushed idly aside in an easy-going manner by saying that we will take 10 per cent. off the Purchase Tax on gramophone records and musical instruments. That is not the way in which this country ought to pursue its policy of taxation. The easier we can make it for people, whether they be young or old, to enjoy culture and to enjoy their lives, the better it will be for this country as a whole.

I want to refer to another section of the community, which I in my very humble way have tried to help to enjoy life. Perhaps there are not many hon. Members who have the fortune which I have of representing some people who have been victims of mining accidents. What about the paraplegic men? Arising from the terrible strain and dangers of work in the pits, nearly 600 paraplegic men in this country have to lie in bed. Those who are fortunate enough to rise from bed are wheeled about in wheelchairs. They cannot go to a theatre or go to hear a musical concert. The only way they can listen to good music is through the medium of gramophone records and the radiogram.

Are we to deny those men that opportunity? Are we to make it more difficult for them to enjoy life? In Heaven's name, their life is one of monotony and dreariness. We should rise to the heights and determine that we will do anything which we can to help those men to enjoy life. A tax upon gramophone records and radiograms makes it more difficult for those unfortunate victims to have a little enjoyment and brightness from life. It does not reflect any credit upon the Government or the statesmen of this country that things like that exist in this country.

I appeal to the right hon. Gentleman or his successor to seize the opportunity and determine once and for all that we will abolish this tax and put an end to the dissatisfaction and discontent which prevail in the minds of these people.

I will give an illustration. The paraplegic men who are fortunate enough to get out of bed have to be wheeled if they go to a football or cricket match. Every football club, every cricket club and every athletic association makes provision on their playing fields to receive these men if they can be carried or wheeled there. We have instances of all this unbounded generosity manifested towards these men because of their unfortunate circumstances, and yet the Government, with their financial and taxation policy, make it difficult for them to enjoy the life which they ought to lead.

In conclusion, the House of Commons ought never to stoop so low or be so mean as to tax the cultural and musical life of the people of this country. If we do, by a tax on musical instruments, we make a serious mistake, not only for the immediate present, but for the future and for the rising generation.

9.15 p.m.

Sir Wavell Wakefield (St. Marylebone)

I do not want to repeat the very strong arguments put to the Chancellor from all sides for a reduction in Purchase Tax on sports equipment, musical instruments and gramophone records, but rather to concentrate on just one thing. Very large sums are spent by the Ministry of Education on teaching our young people to enjoy music. Large sums are spent on teaching them to play games. Large sums are spent by local authorities on the provision of playing fields and buildings for physical training and the like.

What is the point of spending all this money on teaching young people to enjoy music, to play games and to take physical exercise, not only in their youth but as they grow older, if, at the same time, we are to make it as difficult as possible for them to do the very things that they have been urged to do, and trained to do, not only in their own interests but in the national interest?

My right hon. Friend is a very sensible and practical man. He has had great experience of industry. As an industrialist, what would he think if he set about producing a good article, took great trouble to produce it satisfactorily, and then found that his selling organisation, instead of selling the article, did its utmost to prevent its sale? That is exactly what is happening here. Any industrialist who did that would be thought to be mad, but that is exactly what the Government are now doing.

I therefore very strongly support my hon. Friend the Member for Tynemouth (Dame Irene Ward) who, in a most admirable speech, asked the Chancellor to reconsider the whole basis of Purchase Tax revenue in relation to Government expenditure. I suggest that a very real reconsideration of the whole position should now be made. In the light of the large sums of taxpayers' money spent by the Ministry of Education and other Government Departments in various well-known ways, the Chancellor should justify to this Committee his reasons for retaining this tax. There should be some justification for this great anomaly.

That is my only point, but I want to put it as forcefully as possible. I want to add my voice to the general plea made from all sides of the Committee for a review of this extremely anomalous Purchase Tax position.

Mr. V. Yates

I have listened to all the speeches on the Question "That the Clause stand part of the Bill." I hope that the hon. Member for St. Marylebone (Sir W. Wakefield) will forgive me if I do not follow up his remarks, although agree with practically all that he said. I am sure that if Shakespeare had been listening during these last two hours he would have reminded us of the words: If music be the food of love, play on. Give me excess of it; We have had a considerable debate on music, but I want to switch the mind of the Committee to another important subject. Before doing so, I thank the Chancellor for what he has done in regard to the reduction of Purchase Tax. He knows that during the past few years I have been trying to persuade him that jewellery was not a luxury, and Purchase Tax on jewellery has been reduced. We discussed buttons last year and I shall not cease to congratulate him on the efforts that he has so far made to reduce Purchase Tax.

There is, however, one case which I want to bring to his notice and which, I think, is of vital importance, because it concerns industry, employment and security of employment. The greater security we have in employment, the better will people be able to enjoy the pleasure afforded by the arts.

I do not want to raise tonight the general question of motor cars, although I must say that I do not regard a motor car as a luxury. I think that we have a completely wrong conception about vital production in this country which is in the nation's interest. Jewellery and motor cars are vital to Britain's trade. The motor car is not a luxury so far as Birmingham is concerned. Birmingham's life is geared to the motor car industry, and in the recent depression it would have been a serious matter if the motor car industry had been affected like other industries. Everything which increases the efficiency of the industry or lowers costs or makes it possible for British motor car manufacturers and others to compete in the markets of the world is of vital importance, and I believe will, in the end, recompense the Chancellor by increasing revenue.

I am making a special plea tonight for the cycle industry. I hope that the Chancellor, when he has to decide whether a bicycle is a luxury, will regard it in the same generous spirit as he did jewellery. On 20th May last year, I called the Chancellor's attention to the serious decline in the cycle industry and to the closing of factories which was a very serious matter for the Midlands, Birmingham, Smethwick and Nottingham. I then appealed for the need for some stimulus to production because of the declining export and home markets.

When I mentioned that the home sales of bicycles had fallen from 1¼ million to about 1 million, what did the Government reply? The Paymaster-General, replying to the debate on an Amendment to reduce the tax on bicycles from 30 per cent. to 15 per cent., said: 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 "—

Mr. Donald Chapman (Birmingham, Northfield)

Utter rubbish.

Mr. Yates

— which I have been given in the home demand for bicycles."—[OFFICIAL REPORT, 20th May, 1958; Vol. 588, c. 1155.] I ask the Chancellor to note that what the Paymaster-General was saying was that in 1957 the figure had gone up to 948,000 and that there were signs of a picking up.

What is the position today? Only this morning, hon. Members have received an authoritative statement from the British Cycle and Motor Cycle Industries Association that units of production, which in 1951 were 4 million and in 1955, 3,564,000, had fallen in 1958 to 2,156,000. The statement continues: The main reason for this decline has been the closing of many export markets, intense competition in others and a contraction in the home market. Home sales of bicycles are at present at a lower level than pre-war. The average figure for the immediate pre-war years was between 1¼ million and 1½ million. The 1958 figure was only 800,000. If the Chancellor and the Paymaster-General believe that the cycle industry was making progress, is it not a serious matter that it has gone right down?

The Question which is now before the Committee affords us no means whatever of rectifying the position. We cannot ask the Chancellor to give the industry a special "shot in the arm". It would be out of order to do so. Therefore, I have no alternative but to ask the Chancellor what he proposes to do. It cannot be argued that the Government were not later aware of the position, because on 20th January last the British Cycle and Motor Cycle Industries Association forwarded a letter to the Financial Secretary to the Treasury, who, I am sorry, is not in his place. That letter was perfectly clear and I will quote only two passages from it. It says: The decline in production and home sales has continued and the latest available figures show that the total bicycle production in the eleven months to 30th November, 1958, was 1,965,000 units, compared with 2,333,000 units in the same period of 1957. This represents a decrease of almost 16 per cent. The home sales figures show a very similar decline, being some 16½ per cent. down in 1958 compared with 1957. Those facts were put to the Chancellor in January.

The employment situation causes concern to myself, representing an industrial constituency that is affected, and to hon. Members who represent other constituencies in Birmingham.

9.30 p.m.

On the employment situation the letter states: &this continues to deteriorate and you will no doubt have seen announcements of fresh redundancies only last week. The depletion of executive staffs is in no sense complete, and in referring to redundancy I must respectfully draw your attention to the great and human problems involved. It would be quite wrong to imagine that these work-people are readily able to find comparable jobs in the vicinity, for in a great many cases redundancy has affected men with a lifetime of experience in the cycle industry and with little or no qualifications for other trades. The Chancellor had that information then about the serious position of the industry.

But even since the Budget another organisation, the National Organisation of Cycle Traders, has written to me and said: If ever an industry needed a 'shot in the arm ' at this particular time, it was surely the British bicycle industry, acutely depressed as it is in the home market and beset by the most intense and ever-increasing world competition in the export sphere & I regret to inform you that there are, as yet, no signs of real improvement, neither is it considered within the trade that the 5 per cent. reduction in Purchase Tax will be sufficient to give that stimulus which the trade so sorely needs in its home market and on which a healthier export business so vitally depends. The position of the industry remains desperately serious. That is the case I put to the Chancellor tonight.

The right hon. Gentleman must be aware that 90 per cent. of this home trade is not in luxuries. It is a vital necessity. We have been informed today that there are likely to be increases in railway fares. The average worker finds that his bicycle is a tool of his industry. It is a necessity and it should not be taxed. I ask the Chancellor for some undertaking in this matter. I do not think that we can wait until the next Budget. This is a case for emergency action, but the Chancellor has admitted that I cannot move an Amendment tonight.

I am certain that with these facts before him the right hon. Gentleman will give the matter the urgent and vital consideration that it warrants. I hope that he will be as big and generous as he has been on previous occasions and will come to the rescue of a vitally important industry. I hope that he will help us to prevent this recession going further, to do something to improve the livelihood of those who have spent years in the industry, and to make it possible for the workers to enjoy all the privileges of life to which they are entitled.

Mr. William Hannan (Glasgow, Mary-hill)

Much as I agree with what my hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates) has said, I should like to bring the debate back to the Purchase Tax on musical instruments. My hon. Friend said that last year the Chancellor had paid some attention to his plea on behalf of the jewellery trade. I am reminded of the Greek mother's reply to the Roman soldier who asked for her jewellery. Putting her arms round her children, she said, "These are my jewels".

It is for the children and their interest in music and musical instruments that I want to make a plea tonight. If the Chancellor had paid attention last year to representations made to him by a deputation of which I had the privilege to be a member he would have exempted musical instruments completely from Purchase Tax. In logic and in justice no case can be sustained for the tax on musical instruments.

During the Easter holidays I had the privilege of attending a school in Glasgow. I ask the Chancellor and the Committee to accept what I am about to say as being a fact. It was an experience which lifted me and charmed me and will remain with me for a long time. During the school holidays there was a complete orchestra of children who sacrificed their time, morning and afternoon in going to Hillhead High School and learning to play together on musical instruments.

This, in the first place, taught them some of the elementary facts of music and also how to co-operate in making beautiful sounds. Taken singly, not one of the instrumentalists would have found anyone in his home who would find enjoyment in listening to him practising by himself, but, in co-operation with his other young comrades at school, he was learning how to produce beautiful sounds.

Only last week, in Glasgow, every afternoon and evening, young people were going along to their musical festival. I wish the Chancellor could have heard the young man I listened to on Saturday night. He was 12 years of age and played magnificently one of Beethoven's sonatas, accompanied by his sister on the piano. This was sufficient to convince me that if it were only to allow one young boy not to be handicapped in the purchase of musical instruments, it would be worth while to do what we ask.

The Arts Council gives grants of £560,000 a year for musical appreciation and education, and much of that is going in the payment of Purchase Tax. So we give with the one hand and take back with the other. Last year, for a few moments, I attempted to explain to the House some of the more outstanding faults of the tax on musical instruments such as bridges for violins, violin strings and reeds for musical instruments, all of which bear tax out of all proportion to the great benefit which music can bring to the education of children.

Last year we also attempted to draw the attention of the Committee to the fact that whereas there is a tax on musical instruments, the finest and most delicate musical instrument of all is left untaxed —the human voice. I said then that I was not encouraging the Treasury to seek a new source of income, but was suggesting that because it takes as much skill to produce musical sounds from musical instruments as it does from the human voice at least the instruments should be exempted from tax.

Those who have listened in recent times to the national contest over the B.B.C. "Let the People Sing", will have recognised, as we who come from Scotland have been glad to realise, that three Scottish choirs have taken first place in the five classes in that competition. I mention this in the sense that there was an indication in that national contest of 140 choirs that young potential musicians will be encouraged or discouraged according to the amount they will have to pay by way of Purchase Tax on musical instruments.

I conclude by pleading most sincerely with the Chancellor to review Purchase Tax on musical instruments. Let the young people have access to that which will encourage the good and beautiful in life, putting aside the mean and sordid. As a civilised people this is surely a thing we want to achieve. It is to that that I implore the Chancellor to direct his attention.

Dr. Horace King (Southampton, Itchen)

This Clause continues, even if it reduces, some really indefensible impositions of Purchase Tax, and I want to address the Committee on two of these, one of which has not yet been mentioned. I want, then, first to refer to Purchase Tax on stationery.

I pray in aid for this supporters and Members of the present Government, including one sitting on the Treasury Bench now, who in the past have denounced Purchase Tax. In the debate we had on 14th February, 1951, the Economic Secretary, the hon. Gentleman the Member for Altrincham and Sale (Mr. Erroll), said: I think all of us, including the Chancellor, are agreed that the taxation of business stationery is inflationary & Some £23 million a year is added to the total cost of making industry function."—[OFFICIAL REPORT, 14th February, 1951; Vol. 484, c. 558.] The figure now is some £38 million a year.

In the same debate the then Member for Weston-super-Mare, called the Purchase Tax on stationery a tax on the raw materials of industry."—[OFFICIAL REPORT, 14th February, 1951: Vol. 484, c. 568.] Then another supporter of the present Government, who was at that time in the Opposition, a Member whom everybody in the Committee loved, Ralph Assheton, said that this tax is a great waste of manpower & is undoubtedly inflationary & and is a direct tax on production. We believe this particular Purchase tax is a bad tax and that it should be removed."—[OFFICIAL REPORT, 14th February, 1951; Vol. 484, c. 575–7.] After such representative opinion from the Government benches, it is hardly necessary to argue the case any further.

In the same debate my right hon. Friend the Member for Battersea, North (Mr. Jay), who was replying for us on our side, who were then in the Government, was not able to say a single word in defence of the principle of imposing Purchase Tax on stationery. I seriously doubt whether this particular Purchase Tax has a single supporter in the Committee, apart from Treasury Ministers. It is a burden on education and on local education authorities. It makes education costs heavier by artificially inflating those education expenses which are borne by the local authorities. Of the tax 95 per cent. is borne by the Government or by local government departments, by manufacturers, by the distributive trades, by financial business and by education, only 5 per cent. of it by private individuals. I would appeal to the Chancellor to give serious consideration to removing this utterly indefensible burden on many important aspects of British life.

Having said that, I want to return to what I am happy to find has been the main theme of this debate, the fact that we are still by this Clause continuing a tax on culture. This Chancellor, in spite of the pleas which many of us made to him last year, joins the long line of Philistine Chancellors. In this he has shown, by the concession he has given on beer, that he puts beer before Beethoven, and, if my right hon. Friend the Member for West Bromwich (Mr. Dugdale) is right, he has put mink before Mozart.

We are the only nation to tax music on this scale. Other nations subsidise it. I know that we pay a pitiful subsidy to the arts, I understand totalling about £1 million, but that £1 million comes out of the £50 million which we raise in Purchase Tax on music in one form and another.

9.45 p.m.

I share the pride expressed by speaker after speaker in the debate in the development and the increase throughout the land of appreciation of good music. I think, for example, of the hundreds of teenagers in raptures on the last night of the Promenade Concerts of last year. Many other examples have been mentioned during the debate. The British Broadcasting Corporation has played a magnificent part in building up the standard of musical appreciation. So have our schools, our school orchestras, our classes in musical appreciation throughout the educational system, local authorities which subsidise symphony orchestras, the gramophone companies whose records are one of the main topics of tonight's debate and which, incidentally, do what many distinguished actors have done in the past, subsidise themselves the production of good musical records by the profits which they make on much more popular bad musical records, so has the British composer and so has the average artisan musician, the workaday member of the symphony orchestra. All these have played a part in making Britain more musically educated than ever before and in giving to all our people a source of rich and deep wealth in their leisure time.

My hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates) brought Shakespeare into this. I know that the Chancellor is very fond of Shakespeare and quoted Shakespeare to us in his reply to last year's debate. An appropriate quotation from Shakespeare would be what Caliban said in The Tempest: The isle is full of noises, Sounds and sweet airs, that give delight, and hurt not. Unfortunately, every sound and sweet air which we have in our own beautiful island is taxed by the Chancellor.

I think that today more Britons know more about good music than ever in the history of the country, but they still have to pay too much for their gramophone records, largely because of this heavy imposition of 50 per cent. Purchase Tax. The only time in my life that I was really tempted to smuggle was when I was in East Berlin and saw the magnificent and cheap records produced by the Communist States, in their deliberate subsidising of good music for the people.

High fidelity reproduction is bringing real music of extraordinary quality into almost every home, and the great mass of our people are steadily accumulating record libraries. However, Purchase Tax is slowing the tremendously useful and educative process of building up the private libraries in the homes of our people. The first stage is obviously to hear good music. The second stage is to select and to buy for oneself so that one can enjoy again and again the performance of that piece of music which one had learned to love and appreciate, just like books in one's own library as compared with books in the public library. Purchase Tax is standing in the way of that enormous musical development.

Mr. J. T. Price (Westhoughton)

While there is no doubt a case for freeing musical recordings of real music, surely my hon. Friend is not suggesting that scores of millions of "pop" records, which are an abomination, should be free of tax. Personally, I would double the tax on some of them.

Dr. King

I rarely disagree with my hon. Friend, but I share the view expressed again and again in the debate that, just as one has the right to form one's own taste and to build up one's private library of books, so we must preserve the same right to build up one's musical library and enjoy one's music of one's own choice.

I share the personal dislike of my hon. Friend the Member for Westhoughton (Mr. J. T. Price) for much of the popular music of today. But that is my own business and those who like it have a similar right to enjoy the kind of music that they like. In many young folk that I know the beginning of a library has started with records by a crooner and has ended with a symphony or a concerto.

Our schools are teaching musical appreciation and our musical colleges are training young professional musicians. One of the most powerful and wonderful instruments for the teacher is the gramophone record which can be used as an illustration. I recently spoke to a member of one of the local authorities who had ordered a number of records for the schools in his area far its musical library. He placed an order for 1,000 records. It could have been an order for 1,500 long-playing records had it not been for the incidence of Purchase Tax.

I thought we had converted the Chancellor last year about the tax on musical instruments. Musicians today are struggling for a livelihood. It is true that in this field, as in so many others, the supreme artist can make a fortune. All the resources of modern 'mechanical reproduction help the supreme artists but they are a menace to the workaday musician and every ordinary performer in the world of instrumental music is almost fighting for his life. There is not an orchestra in the country which is out of the red, yet we seek in this Clause to continue to tax the tools with which the instrumentalist earns his living. Without the rank and file musician the whole edifice that we are building, thanks to modern mechanical aids, could collapse. The disappearance of the great symphony orchestras and the interference in training of young people who will ultimately go into these orchestras is something which the Chancellor ought to be worried about. I think that the wonderful gift of the sciences to the arts today is that in the most remote corner of Britain—and indeed, once in my own case even in a remote corner of Africa—one can sit down and hear on a record almost perfectly reproduced the music of the great masters. Purchase Tax stands in the way of a development which, in spite of Purchase Tax, will continue, but without the imposition of Purchase Tax it might take place at a much more rapid rate. If the House will do what I am certain hon. Members on both sides of the Committee want the Government to do and remove the tax on music, it may be that some poor young child buying his first violin today and paying tax on it may, when he becomes a Kreisler of another generation live to thank the Chancellor who removed the Purchase Tax on his first violin.

I pray in aid of the plea that we are moving tonight perhaps the greatest writer of our century who was also a great musical critic and tells us that at one time he might have become a musician—George Bernard Shaw. Appealing to the then Chancellor in 1942 he said: Musical instruments are among the first necessities of civilised life and not luxuries to be made unobtainable by Purchase Tax. In a peroration which any hon. Member except the right hon. Gentleman the Member for Woodford (Sir W. Churchill) would envy, he wrote in his letter to The Times: The notion that not only the players in the B.B.C. and the London Philharmonic Orchestras but in the brass bands of the Salvation Army and the factory and colliery bands which competed every year at the Crystal Palace. the best of them being of first-rate artistic qualities are extravagant voluptuaries whose instruments may be classed with blue diamond rings and dispensed on the smallest provocation betrays a breath-bereaving cultural and social ignorance. I hope that all the bands in London will hasten to Westminster Hall to do to the House of Commons what Joshua's trumpeters did to the walls of Jericho rather than let the Bill pass without protest. In that spirit hon. Members on both sides of the Committee make a protest to the Chancellor.

Mr. Paul Williams (Sunderland, South)

The Purchase Tax scales are nonsense and can be made to look nonsense by most people. One could drive a horse and cart through most of the provisions. The point of our debate is that these scales are a fact of life and it is necessary to balance the present situation with the probability of achieving tax reductions over the coming year. I hope that Purchase Tax reductions may be based on two assumptions; first, that they be made possible on those articles which are necessities of life, and secondly, that they can be effected where it will help to maintain a high and stable level of employment.

I take particular note of the Amendment referring to domestic tableware, kitchen ware and toilet ware. That is a category of goods of vital necessity in life. However much we may argue about bicycles, gramophone records, fiddles, euphoniums and the rest, and about footballs of whatever shape, there is nothing so important as some of those things mentioned in that Amendment. If this debate is to have any reality, we must think in terms of putting constructive points to the Chancellor which might form the basis of tax reductions in next year's Budget. That is why I hope that hon. Members will refer particularly to the necessities of life.

I have a constituency interest in that one of the manufacturers of domestic tableware operates in Sunderland. Messrs. Jobling manufacture Pyrex Glass, which is known throughout the world. This firm and others have been hit by the incidence of Purchase Tax and their sales restricted to a certain degree. By stressing the need to remove the tax from the necessities of life and the fact that this is a matter of great importance in the promotion of employment in my constituency, I hope that I have given sufficient warning to my right hon. Friend that this is a matter which must be thought about before next year's Budget statement. I have no great hopes about this year.

Mrs. Slater

We are grateful for the support of the hon. Member for Sunderland, South (Mr. P. Williams) in our plea for the reduction of the tax on household commodities. I can plead a constituency interest as I and my hon. Friends from Stoke-on-Trent represent the pottery area of North Staffordshire. We consider that some of the most beautiful china and crockery in the world is made in our district. Although the tax upon it has been reduced, it is still one we would much rather see removed altogether in the interests of the industry and also the housewives whom we wish to encourage to use the most beautiful crockery it is possible to get.

Next year is the jubilee year for the City of Stoke-on-Trent and we shall be receiving visitors, we hope, from all parts of the world, as well as hon. Members of this House. We had hoped that when we were showing our beautiful crockery, our civic ware, when our shops and factories will be on display to all the visitors who come to the city, we should have been able to say, after the Budget of this year, that the Government had recognised the need of the women in the home and of the industry itself and had removed the whole of the Purchase Tax.

10.0 p.m.

My hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross), who always makes beautiful speeches, referred on Second Reading to our civic china, and invited the Chancellor of the Exchequer to take lunch or dinner off it. We hope that he will do that. My hon. Friend also referred in his speech to some of the pottery which we use in this House, and here again I claim a vested interest, because it comes from my own constituency. I should like to point out that the designs and standards of that earthenware are dictated by how much this House, or the Kitchen Committee and the people responsible, are prepared to pay for it. I have here a list of designs of pottery which is produced in that factory, and it shows a wide variety of design and very high quality. I have a special interest in that firm, in so far as my own father was the fireman of the biscuit and gloss ovens in that particular factory for a number of years.

I should like to put on record the fact that we should like to see in the House of Commons, for use on very important occasions, some really first-class china, though we recognise that it would not be possible to have such china for everyday use. We should like to see, however, a slightly better design for the cups and saucers which we now use.

Dr. Stross

Would my hon. Friend agree that if we cannot afford the very best quality and design in pottery for ourselves in the Tea Room, or in our Dining Room, we might at least afford it where the whole world comes—the Strangers' Dining Room?

Mrs. Slater

I thought that that was the point that I was trying to make—that we should have some first-class china for special visitors and special occasions, just as in our City of Stoke-on-Trent we have our civic china which is used in the Town Hall.

I should also like to see a very much better design of the pottery which we ourselves have to use. After all, those of us who come from Stoke-on-Trent know how much better a cup of tea tastes if we have nice cups and saucers, rather than the somewhat thick, ordinary ones.

Sir Godfrey Nicholson (Farnham)

Perhaps the hon. Lady will get some for the House.

Mrs. Slater

I am not well enough off to afford it, but perhaps if I could encourage the hon. Gentleman to get me some money I might be able to do it.

May I say to the Chancellor that a reduction of 2½ per cent. in the tax on a china cup and saucer which one can see in any shop in London amounts to only 2d. or 2½d. on a cup and saucer priced at 7s. 6d., which is what the normal person would be likely to buy for everyday use.

The debate tonight on Purchase Tax has shown how very easy it is to get some sense of co-operation from both sides of the Committee when we come to discuss matters such as culture, and I have been greatly encouraged tonight by the attitude of mind of hon. Members on both sides in approaching the question of the Purchase Tax on musical instruments and gramophone records.

As one goes about the country, one realises, despite the Press and the B.B.C., that not every young person is a Teddy boy and not every child at school is irresponsible, but that among our young folks we have a large percentage who are doing their very best to appreciate good music, good art, good pictures, and good drama.

In winding up the debate on the Second Reading of the Bill the Chancellor said, in answer to my hon. Friend the Member for Stoke-on-Trent, South, that if he came to Stoke-on-Trent he hoped that the people of North Staffordshire would sing to him. I can assure the right hon. Gentleman that if he did so we could not only sing to him, but that our orchestra and our school children could put on a first-class concert for him. But these children cannot do it if they have not the facilities, such as instruments, which are necessary. If ever there was a real case for the abolition of Purchase. Tax it is in respect of musical instruments and gramophone records, on that side of culture which brings out the best in the lives of people.

I would mention one other matter briefly, to which my hon. Friend the Member for Flint, East (Mrs. White) referred, and that is the passing on of reductions in Purchase Tax to the consumer. I said something on this subject last year. I have a list, which has been supplied to me, of cosmetics. It shows that some firms making proprietary goods which are used by a large number of people have not passed on Purchase Tax reductions to the consumer.

There is one large firm which does much advertising in this country. Two of its most popular articles are a cream and powderpuff which women use, and a shaving cream, a lazy-shave or easy-shave preparation, for men. In neither of these cases has reduction in Purchase Tax been passed on to the consumer. I would like the Treasury to check up on this matter, because this is often happening where medical goods and goods of this sort are concerned. It is most unfair that the Chancellor should announce a reduction and that the chemists, after reducing prices on the day of the Budget and the next day, should then receive a notice from the suppliers showing that no reduction is to be made. The argument is that the cost of the goods went up just before the Budget. I hope that this argument will not be tolerated this year.

We plead for a reduction of Purchase Tax on things which create and encourage culture. We ask that the Chancellor shall be a little more ready to take the tax off household commodities such as crockery and other things which the housewife uses. We hope that she will be encouraged to use beautiful things so that she will not only have usefulness, but will enjoy beauty as well.

Mr. Julius Silverman (Birmingham, Aston)

I wish to make a brief speech on the subject of the cycle industry, to which my hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates) has already referred.

The Chancellor has in front of him a number of requests for reduction in Purchase Tax. I do not consider them to be competitive, because if he granted all the requests they would not cost him very much. The cycle industry is important. During the last two years it has declined and is now producing only about half of what it did. Factories have been closed and workers have gone into other industries. Skills and crafts have been dissipated. This is going on year by year. There is a continual reduction.

At present, production of bicycles for home use is less than it was before the war, and there is no doubt that the question of price, increased as it is by Purchase Tax, is the factor responsible. Here is an industry which I am sure a concession would do much to assist. It would be just for various reasons, and firstly because the industry needs it. It is an industry working at less than 50 per cent. of capacity. It is an industry which has added much to the export drive in the past and may in the future, provided it is based on a sound home trade. In the second case, people who would get the benefit of a tax reduction, those who ride bicycles, are the people who for the most part have not been touched by other benefits distributed to Income Tax payers and others in this Budget.

Here is a class of people comprising many hundreds of thousands, perhaps millions, many of whom are getting little out of the Budget, whom the Chancellor could benefit and at the same time help to stimulate the industry itself. As has already been said, the bicycle is in a category of its own in tax matters. It is a tool of the trade rather than an article used for sport or leisure. It is used for the purpose of getting to or from work. It is used in the same way as a worker uses a tool, as an accessory to a job. For all these reasons, this is a clear case in which there should be a reduction of tax.

If the Chancellor feels that he has any money to distribute, here is a case he should seriously consider. If he wants to stimulate British industry, it is this sort of industry in which a concession would do very much to give practical assistance and it would prevent a further recession in what, if we are not careful, may be a dying industry, losing ills plant and export trade in future. I hope the Chancellor will consider this question seriously to see whether he can reduce the tax to a low level, or preferably—I think there is a good ease for this—abolish the tax completely.

Mr. Chapman

After listening to seven or eight Budgets and sitting through the Purchase Tax debates on them, I have come to one conclusion, which is borne out by the one major concession given in this Clause—the concession to abolish Purchase Tax on commercial vehicle chassis.

I would say to the hon. Member for Sunderland, South (Mr. P. Williams) and the hon. Lady for Tynemouth (Dame Irene Ward), if she were back in her place, that the lesson of these debates throughout these years is that we shall not get concession in response to any of these major crying needs for Purchase Tax reduction until some hon. Members opposite are willing to threaten a revolt and to go into the Lobby with us. That is the whole lesson of the abolition of tax on the commercial vehicle chassis. We got the concession because, last year, it became quite clear that the Government could not hold their Lobby on that issue this year.

10.15 p.m.

We say to hon. Members opposite that theirs is the major responsibility in nearly all these difficult problems of Purchase Tax. If they would support some of the pleas which are made as far as the Division Lobby or, at least, threaten that they will not next year go into the Lobby for the Government, we should have some action. It is no good hon. Members opposite making pious pleas for this or that and then going into the Division Lobby for the Government afterwards. That does not out any ice with the Front Bench. We proved that with commercial vehicle chassis.

I want to say something about bicycles. The real person who should accept responsibility for the debate having to take place this year is the Paymaster-General. My hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates) pointed out what had been the argument we had from the right hon. Gentleman last year. He had a new brief, he had new facts; he knew about the industry. It was picking up again, and there was no need for the cry which had been raised from the Opposition benches. Things were much better, so he said, than our miserable speeches made out. On that ground, he said there would be no concessions from the Government.

The fact is that his figures were all wrong. He misled the House. I am sure it was not intentional, but goodness knows where he found his figures. He misled the House into believing that prosperity was returning to the industry and, on that ground, he told us not to press for a tax reduction. It is really disgraceful that this sort of thing should happen. He must have been aware of the decline in the industry. He must be aware now that four firms have gone into liquidation and that five others have been absorbed by competitors in an effort to keep their name going. He must be aware that the ones which are still in production have declared substantial redundancies and they are all on short time. This is the industry which the right hon. Gentleman told us last year was picking up. He said that we were making our miserable speeches for nothing. It is really too bad.

The fact is that the industry estimates that, if it could be freed from Purchase Tax, it would recover its home sales from the present 750,000 to 1¼ million to 1½ million. This is life and bread and butter to many people. If we could only have such a concession, a few more firms might be saved from liquidation. Moreover, if it is true, on the one hand, that the effect of relief from tax would give such a spurt in home sales, it is equally true, on the other hand, that the tax itself is murdering the industry. It ought to be put on record that the Government were complacent last year and said that the situation was improving, for some reason best known only to themselves.

I say again to the hon. Member for Sunderland, South that he ought to pick on one or two issues of this kind. There ought to be a few back benchers on both sides prepared to stand up for a cause of this sort as we did for commercial vehicle chassis. Let us pick something like bicycles or gramophone records and really force the Government to do something as they did for commercial vehicle chassis. Hon. Members should say that if nothing is done they will not go into the Lobby to support the Government. If they have that courage—I think many of them would have it if it were put to them straight—and we could pick out two or three cases of crying need, we should not have these dreary debates on Purchase Tax every year. We should have some concessions on one or two common sense subjects.

Mr. P. Williams

We have had some.

Mr. Chapman

That is not so. The hon. Gentleman should pick out one or two which really matter, if he says that. Can he tell me of any industry or commodity where it has been shown that sales are being killed in this way and something has been done?

Mr. Geoffrey Wilson (Truro)

What effect is the increased sale of mopeds and scooters having on the cycle industry? Is it not increased prosperity which is working to the detriment of the cycle industry rather than taxation?

Mr. P. Williams

The hon. Gentleman must not carry himself too far on the basis of his own evidence. There have been some Purchase Tax reductions this year.

Mr. Chapman

Of course there have, but what I am saying is that we shall not make any real impact on the industries in difficulties until we have some really substantial reductions in the tax which is now murdering them. After all, we have done it on commercial vehicle chassis, not that that industry was being murdered, but it was such an obvious case for us all to fight together.

To answer the hon. Member for Truro (Mr. G. Wilson), it is true that mopeds are having that effect. The cycle industry is aware of it and does not disguise it. The cycle industry says that even the introduction of its own moped, which is coming along now, will not be enough and that its export trade in ordinary cycles, for example, is in jeopardy because of the artificial reduction in the home market. If the industry could get it back to the £1¼ to £1½ million which it thinks the abolition of tax will mean, that would help it in the export market of ordinary cycles, which it is losing now, and in itself it would mean a better livelihood for many of the factories. The cycle industry does not dismiss the point raised by the hon. Gentleman, but it has its answer to it, and it is an answer which is well known to the Treasury bench.

Year after year we sit here and hear these pious pleas from the benches opposite. Only if some hon. Members on the Tory back benches will join with us on this side of the Committee in saying that we will pick on one or two, go for them this year and make up our minds to get a concession shall we get somewhere. Otherwise these debates go on every year and we are disappointed at the end of the day. It is time for a little courage to be shown on both sides on one or two of these issues.

Mr. James Simmons (Brierley Hill)

This has been a kind of liquorice all sorts debate. At one moment we were soaring up in the stratosphere of music and culture. We sounded the trumpet at the pearly gates. Then we came down to the humble bicycle. I want to get right down amongst the pots and pans.

The pots and pans are the one issue upon which the Committee ought to be throughly ashamed of itself. In 1955, after an election in which the Government told the housewife that, if only she would return them, they would make her £ buy more when she went shopping and they would mend the hole in her purse or pocket, they put a tax of 30 per cent. on pots and pans. That was for the housewives whom they had cajoled and kidded into voting for them on the plea that they would make life easier for them.

Then the tax was reduced to 15 per cent. Now we come to a further miserable Scrooge-like reduction of 2½ per cent., bringing the tax down to 12½ per cent., for which the Government expect the housewife to go on her knees and say, "Thank you very much." I hope that the housewives will tell the Government, in good housewifely language, what they think about them for continuing in operation this infamous tax upon these very important domestic articles.

I am concerned mainly about the enamel hollow-ware trade, and especially about the vitreous enamel hollow-ware trade, which is a very small industry. I do not think that because the industry is small we ought to overlook it in our Budget debates. Some of the small industries make a very great contribution to the life of the nation. There are only four sizable firms in the vitreous enamel hollow-ware industry. Two of them are in South Wales. One is in the constituency of my right hon. and learned Friend the Member for Rowley Regis and Tipton (Mr. A. Henderson). The other is in my own constituency. They are firms which have suffered as a result of carrying out Government instructions during the war and concentrating upon production for the export market. They are now trying to win back their home market, but regard this 2½ per cent. reduction as an insult.

An increase in the home market is essential to maintain full employment. It is a small industry, but the firms in it have tried to help themselves. When an industry does that it should receive further help from the Treasury. The firms have formed themselves into the hollowware division of the Vitreous Enamel Development Council, which has undertaken an extensive sales promotion and advertising scheme costing no less than £40,000 per annum. The initiative and enterprise shown in developing plastics, etc., has brought about a slight increase in employment in the last two years, and the Treasury apparently thought, "They are all right. Employment is going up." But redundancy is reappearing. Some reduction in the Purchase Tax is absolutely necessary if the full home market is to be regained.

Those of my hon. Friends who have spoken of the pottery industry have been talking about beautifying the home. I quite agree that we want beautiful things there. The kitchen is the housewife's workshop, and she should have the best tools to use in that workshop and the best surroundings in which to work. The day of the dull-looking enamel bucket, saucepan and frying pan has gone. These firms produce vitreous enamel utensils in different shades and the housewife can have them to tone with the colour scheme of her kitchen. They bring brightness to the home, and ease to the housewife's life. Therefore, we should seek to abolish the Purchase Tax on these domestic articles.

Not the least of the difficulties encountered by the industry is unfair competition from Hong Kong, that notorious place of which we should be thoroughly ashamed. During the year a very small quantity of vitreous enamel-ware has been imported into this country at fantastically low prices. I am not exaggerating this. It has been only a very small importation, but the trickle may become a flood, and that is what the industry fears. In 1950 imports of Hong Kong enamel-ware into Nigeria were negligible, but total imports of enamel-ware had, by 1958, grown to £2½ million of which £1¾ million worth came from Hong Kong. It should be remembered that Nigeria is one of the industry's export markets, but it has been largely taken away by Hong Kong's competition.

It is impossible for us to alter the Purchase Tax rate shown in this Finance Bill, but I understand that the imposition of Purchase Tax does not depend on the Finance Bill. It can be done by Order. Because we have to speak of all these problems en bloc on the Question, That the Clause stand part of the Bill, I ask the Chancellor, in his quieter moments, when the heat of battle is cooled arid he is resting in his tent—perhaps waiting for the next fray at the hustings—to read this debate carefully, and to see whether, in between Finance Bills, he cannot do something for those industries that have an especially urgent case.

10.30 p.m.

I believe that the hollow-ware trade is having consultations with the Board of Trade. We hope that there is proper liaison between Government Departments. Some doubt has been cast in the course of the debate on that being so in various instances. One wonders how much liaison there was between the Home Office, in its concern over juvenile delinquency, and the Chancellor of the Exchequer when he took 2d. off the price of a pint of beer. We certainly hope that there is proper liaison between Government Departments in this case.

I ask the Chancellor to watch the consultations which are now going on between the Board of Trade and the hollow-ware industry. If, after those consultations, he feels that there is a case for a reduction and even possibly the abolition of Purchase Tax on vitreous enamel hollow-ware I hope that he will not hesitate to bring in an order to that effect, which we should all support.

Mr. Ellis Smith

I want to confine my remarks to one commodity which is manufactured in an area where there are thousands of workers who are among the most hard-working and decent-living people in the country. There is complete unanimity among my hon. Friends, among hon. Members of all parties representing the North Staffordshire, and all sections of the community, on what I am about to say about the pottery industry.

We who represent that area have been elected for many years and have enjoyed the complete confidence of the working class, in particular, and of people who do not necessarily agree with us politically. We are determined so to conduct ourselves outside the House of Commons, and speak with courage on their behalf in this Committee, as to enjoy that confidence as long as we represent those who have elected us.

We should have been lacking in our duty had we not stated clearly and coolly, and in as simple language as possible, our grievance against all Governments who have perpetuated this Purchase Tax, which has developed into a revenue-raising tax, on the productive industry in the area which we represent. There has been complete agreement in the pottery industry for four years that Purchase Tax should have been removed long ago at least from domestic pottery.

We have been encouraged by support from hon. Members opposite and we do not complain that because of procedural limitations we are not permitted to move Amendments. We are not complaining, but acting within our Parliamentary rights in stating the case. We hope that between now and the next Budget that case may be given the consideration which is due to it. A newspaper circulating in the area with which I am concerned, and one which opposes this side of the Committee politically, has published excellent objective articles analysing the case in the way in which I shall present it and supporting our plea for the abolition of this revenue-raising tax. The present Minister of Labour, the Minister of Fuel and Power, the Economic Secretary to the Treasury and the Chancellor's immediate predecessor have visited the area.

They have all met their friends the manufacturers in that area in private, and, while we do not know what went on, according to reports in the local Press they all expressed their sympathy with the plea presented about the need for the abolition of Purchase Tax on pottery. We welcome their sympathy, but tonight we are asking: when will that sympathetic consideration be implemented by the abolition of the discouraging, discriminating tax upon the most lovely pottery manufactured in the world?

The Chancellor said last week that we must keep prices down, and, within limits, we accept that. It is, then, logical to ask the Chancellor when the Government intend to take the initiative by removing this discriminating revenue-raising tax. Let the Government take this revenue-raising tax off all goods manufactured by industries which export 40 per cent. of their products.

I want to ask the Chancellor two or three questions and I want him to answer them when he replies to the debate. Does he still desire that the pottery industry should export the maximum amount of pottery manufacturers? Does he want those exports increased? If so, if the industry gives an undertaking that it will carry through an intensified export drive, especially where our best markets are, in the United States, Canada, Australia, New Zealand, and all those countries which make up our Commonwealth, many of which are among our best friends, will he give an undertaking tonight that he will take the tax off the pottery industry?

It may be that there are hon. Members, especially on the other side of the Committee, who are not prepared to accept my line of reasoning. If there are, I want to give one or two quotations in support of the plea I am making by reading brief extracts from the Scotsman, which reported the speech of the chairman of the United Glass Company at its annual meeting on 7th May—last week. He said: We are deeply disappointed that the Budget proposals covered merely a small reduction in Purchase Tax. With such a low priced but essential domestic requirement a reduction of tax from 15 per cent. to 12½ per cent, has a negligible impact on price to the ultimate user. We feel strongly that it would be helpful to industry if changes in Purchase Tax were divorced from the Budget. When my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross), who has a great record in the area and is so well informed, was speaking I remembered that annual meeting which was addressed by political friends of the Chancellor and of right hon. and hon. Members opposite. I think that we ought to be given an undertaking upon these matters.

Twice in my lifetime I have seen the pottery and cotton industries concentrated for war purposes. I have not time tonight to speak for those people amid whom I have always lived and for whom my wife worked for so long, doing work that women ought never to have been called upon to do. Tonight, I am concentrating on the pottery industry. Twice during my lifetime I have seen the industry contracted. During the last war the industry had a terrible time. Many firms were completely closed. Many people who had put all their savings into it lost them. Thousands of workers were called up to serve in the Royal Ordnance factories.

Let me make it quite plain that I am not complaining about all this. I am speaking objectively and trying to sketch in the background to show that this industry deserves more encouragement than it is receiving at present. Immediately after the war, I remember my friend, the late Sir Stafford Cripps, and I going up to that area and pleading with the people concerned urgently to reorganise the industry and to make preparations for ensuring that there were maximum exports.

Capital was again put into the industry. Modernisation took place, and thousands of people received special training, many of them through the encouragement given to them by the Ministry of Labour and others. Young girls, daughters of middle-class people, received training at the hands of the Ministry of Labour and became the most beautiful decorators in the world. As a result of all that our exports went up.

Now we get the following facts, not as stated by me but from the manufacturers themselves. The industry's Export Promotion Committee reviewed the position of the domestic pottery industry in the middle of January this year. The figures proved to be the worst since December, 1956. The Federation of Pottery Manufacturers regarded the position as serious, and, as a consequence, requested that a deputation should be received by leading members of the Government so that the industry's representatives could produce evidence at first hand of the need for the complete removal of Purchase Tax on domestic pottery.

The Federation has always protested at the imposition of Purchase Tax on domestic pottery and now see no justification whatever for the continuation of the tax on articles which are household necessities. Surely that is reasonable pleading. Surely the time has arrived when the consideration due to it should be given to the matter. It is further evidence of the complete unanimity that exists behind our plea for the abolition of the discriminating, discouraging tax on pottery manufactures.

In my view, Purchase Tax was rightly imposed at the time, although I did not agree with it, but because we wanted to win the war we had to subordinate our individuality and our narrow sectional needs for the purpose of making the maximum contribution. But it is now fourteen years since that time. Purchase Tax is now a revenue-raising tax.

Given the expenditure, I agree that the revenue should be raised. But is it right to raise the revenue in this form upon exports? The cumulative economic consequences of Purchase Tax on the pottery export trade cannot be measured. All engaged in the industry—whether manufacturers, trade unions, artists and others who contribute to what most members of the Government will admit is a great export trade—are in complete agreement with the case that we have presented.

10.45 p.m.

The difficulties connected with the imposition of the Purchase Tax on domestic pottery can best be shown by referring to a survey which was carried out in January of this year. I have a few extracts from that survey which was carried out by the manufacturers. It shows that in 88 firms with a labour force of 9,590 males and 18,395 females, 1,485 males and 2,873 females, representing 15 per cent., were engaged on short-time work. I understand that there has been a further deterioration since that survey was carried out.

One can understand that this situation is deeply disturbing manufacturers, trade unions and employees in this area. The review further showed that 43 firms had less than four weeks orders on their books, 28 firms between five and nine weeks, and 12 firms with orders in excess of 10 weeks. As a result of this unfortunate position, the stocks have increased substantially. In fact, the stock position in January, 1959, was 40 per cent. higher than the stocks in 1958.

The Chancellor of the Exchequer and the Economic Secretary have had great experience in industry—one in large-scale industry and the other in Cornwall. They know the difficulties involved in productive industry. They know the difficulties of making products of the kind of which I am speaking. They are aware of the need to watch overheads, and they know that in the industries with which they are concerned there is no discriminating Purchase Tax upon manufactured commodities. Therefore, it is surely logical that the same should apply to all industries, especially those which manufacture for export. Is it not time that two experienced Ministers, who are listening to our reasoned case, should assert themselves and deal with this discriminating tax?

Industry is now capable of manufacturing on a mass-production basis. The higher the output, so the total overhead charges are reduced. Surely the time has come, therefore, when the mass of the people should be able to enjoy the benefits of mass-produced goods at minimum prices, so that the standard of living can be increased. Is it not reasonable that overhead charges should be reduced, so that we may increase our export trade?

Today industry, and particularly the industry to which I have been referring, possesses unused manufacturing capacity. As both Ministers know from experience, that adds to costs and export difficulties. It saps the morale of management, staff and workers because they are not able to work to full capacity. There is, therefore, a serious effect on the morale of those engaged in the industry in addition to the national effect.

Many hon. Members must have a guilty conscience on the subject with which I am about to deal, especially those who subordinated our export trade to the foreign policy of others. Some of us are in a strong position on this matter, and I will, therefore, not pursue it too far, but it is interesting to see what the industry itself has had to say. The industry has said that there have been no improvements in the export position for the industry as a whole. Unfortunately, the industry is still faced with serious quota restrictions in the majority of its export markets. The only substantial free markets are those in North America, where there is severe local competition as well as competition from Japan, whose sales to the United States alone account for 78 per cent. of the total consumption of domestic ware in America.

I take second place to no one in my admiration of the American people, but it has to be remembered that the people of this country have now fought in two world wars, that they spent twelve months alone resisting the mightiest military machine ever built, and had to dispose of all our securities, pawning them in America. We now have the right to remind the Americans of the Herculean efforts made by our people and—

The Deputy-Chairman (Sir Gordon Touche)

I am sorry to interrupt the hon. Gentleman, but we are getting very far from Purchase Tax.

Mr. Ellis Smith

I shall relate what I am saying to Purchase Tax in a moment. Perhaps I was developing that argument too much, but it is not my purpose to filibuster. Even when there was large-scale unemployment in this country we did not do that. But, so long as we can keep within order, we intend to state the case of the people we represent. I was making the point that the time has now arrived when the American people should remember, more than they have done lately, what they owe to the British.

The Economic Survey shows that a number of industries have reduced prices substantially, while others have not made changes and others have increased prices. Among those which have reduced prices is the china and earthenware industry. Is not that further evidence to strengthen the argument which I am putting to the Committee?

Do we still need maximum exports? Do we still need to be concerned about costs? If so, what do the Chancellor and the Economic Secretary propose to do about it? In 1958, there were over 1 million unemployed and our share of the world markets was 22 per cent. It is now 18 per cent. In my view that is due to the relatively high costs on productive industry, and among them I include Purchase Tax. We have heard a lot about the need to liberalise trade, yet we still have Purchase Tax which is a tax on exports. The export of pottery could be enormously increased by the removal of that tax.

Nearly all the raw material used in the pottery industry comes from a few miles from where the Chancellor has spent many years of his life. There is an excellent relationship between the people of Cornwall and the people of North Staffordshire. Not only do we use our own raw material, but it is worked on by highly skilled labourers and decorated by girls who have been trained in secondary schools and received an excellent education. What other export is there which is as valuable as pottery and to which the Purchase Tax still applies? Can the Chancellor say why pottery was exempt from tax in March, 1955, but not in May, 1959? Are not pottery exports as essential now as in 1955?

If we are to increase our exports, it must be done by giving more encouragement to the industry. It is a matter for Government policy and, in my view, there is an unanswerable case for the immediate abolition of this discriminating, revenue-raising tax.

Mr. Hector Hughes (Aberdeen, North)

I wish to make only two points. One relates to the fishing industry and I hope that it will appeal particularly to the Chancellor, because he is a seafaring man. I ask him to reduce or to abolish the Purchase Tax on the gear which fishermen have to use, on the ropes and tackle and other articles, because their present cost makes fishing more expensive than it should be, not only to the ship-owners and fishermen, but ultimately to the consumers of fish. The Chancellor knows that the fishing industry is the third largest industry in the United Kingdom. Our fishermen and their boats are spread all round our coasts. They are put to quite unnecessary costs by this Purchase Tax. It would be a great advantage—not only to the people in the industry, but to all citizens—if the Chancellor would reduce or abolish this tax.

11.0 p.m.

That is my first point and my second one I shall put equally succinctly. It relates to gramophone records. The Chancellor and the Committee have heard a lot about the music of gramophone records; they have heard very little about the music of the sea. What I have just said may be my excuse for putting one aspect of the gramophone industry which has not been put today. That is the industrial side of the question. When I was approached about Purchase Tax on gramophone records, being a reasonable person, I hope, asked for some evidence from the authorities about it. I got a letter signed jointly by two men who are regarded as the greatest authorities in the industry.

I have the letter here and I shall read some extracts from it. It is from the British Phonograph Committee and is signed by Mr. F. W. Lockwood, chairman of the Electric & Musical Industries Ltd., and Mr. E. R. Lewis, chairman of the Mecca Record Co., Ltd. It is quite a long letter and I shall not trouble the Committee with the whole of it. There are parts of it which touch the industrial side of the question and show how important the industry is, not only for the purpose of giving and maintaining employment, but also for the purpose of bringing to this country foreign currency which otherwise it would not have.

One paragraph says: The British gramophone record industry provides employment for many thousands of people. In that it resembles the other industry to which I have just referred, the fishing industry. It goes on: It has a story of achievement which is unequalled by the record industry of no other country; indeed, it was the British gramophone record industry which sustained and kept the gramophone record in being in the 1930s when the American industry almost completely closed down. Since the war we have been able to make a substantial contribution to British dollar earning capacity. Of every three records (units) produced in the United Kingdom, one is exported overseas. I skip the middle part of the letter, because I do not want to make a long speech or to weary the Committee, but I must bring this to the notice of the Chancellor. The letter says: The Government has no consistent policy in these matters. On the one hand it encourages the British Council to use records as a convenient means of demonstrating the British way of life abroad; on the other hand it subjects the gramophone record generally to a penalising tax. Gramophone records are, again like books, ambassadors for this country. It is obvious that I am not putting either of the two cases I am submitting on sentimental grounds. I am putting them on logical and industrial grounds. Both of these industries are big and very important to the people of the country—very important to all classes. The second one I have mentioned brings in foreign currency, which is valuable to the nation. On both grounds, I ask the hard-headed Chancellor, the hard-hearted Chancellor, not to be hard-hearted in this matter, but to realise that the argument I have ventured to put to him is sound and in the interests of the country. I hope that he will accept it.

Mr. Amory

I think that it was my hon. Friend the Member for Barry (Mr. Gower) who said that if a stranger had listened to this debate he would have left with the impression that I had proposed a range of savage increases in Purchase Tax applying to every single rate instead of proposing reliefs which amount to £80 million in a full year, after—I must remind the Committee—proposing reliefs amounting to about £40 million in a full year last year.

It was the hon. Member for Ince (Mr. T. Brown) who said that I should be called in Lancashire a "skinny" Chancellor. I wonder how many millions I should have to propose in reliefs to lose any claim to that epithet. From the point of view of our national economy, its affairs may be safer in the hands of a Chancellor with a modicum of "skinniness" about him. I ought, perhaps, to be proud of that designation as well as of the hardheadedness or hard-heartedness which the hon. and learned Gentleman the Member for Aberdeen North (Mr. Hector Hughes) has just ascribed to me.

I was criticised in the early part of the debate for making any reductions in the 60 per cent. rate. During the latter part of the debate, I have been criticised equally strongly for not making bigger reductions in the 60 per cent. rate feel that we have had an interesting and worthwhile debate, but I hope that, in view of the number of speeches which have been made, I shall be forgiven if I do not refer to them individually. I kept a list during the debate of the articles which I was advised to exempt from Purchase Tax entirely. It is not a complete list, but it included musical instruments, records, pottery, hollow-ware, textiles, jewellery, bicycles, sports requisites, furniture and fishing gear. Every one of these items, of course, was described as vitally important and quite exceptional.

If I were prepared to accept the advice offered to me, I should reduce the tax to utter and complete chaos. As I think I indicated in a previous debate, there is a complete difference of view between right hon. and hon. Gentlemen opposite and myself about the pattern of the tax. They believe that articles which are necessities or even articles which enter widely into everyday use should be exempt, and luxuries, on the other hand, should be saddled with penal rates which, when they were in office, rose, I think, to 100 per cent. or more. My right hon. and hon. Friends and I think that the tax should be composed of certain moderate rates over a very wide range, but not—I say this again to the hon. Member for Gloucester (Mr. Diamond)—a uniform rate. That is not our objective. We believe that such differentials as there are should be kept in perspective and not be unreasonable.

Why is this our view? First, a tax which must yield £400 or £500 a year—I believe that that is what it must yield at present —must have a broad base. Secondly, if differences between one article and another are too great, the result will be that the tax will be riddled with fantastic anomalies. Thirdly, I believe that it is only within reasonable limits that we are justified in deciding where the line should be drawn between luxuries and non-luxuries, and the less we have to use our judgment the better. We must remember, as my right hon. Friend the Paymaster-General said, that many of our high-quality products are of the very greatest importance to our export trade.

What I have said does not mean that we do not believe in the progressive principle for taxation. We do believe in it, but, like everything else, that principle must be kept within proper limits, and a sensible balance maintained. The progressive principle does not mean that all those with above-average means should pay all, and others nothing. It means that the burden must be graded and spread, so that it falls fairly in the light of all relevant circumstances.

My task this year was to decide what sum I could allocate to the relief of direct and what to indirect taxation, and then how much I could allocate to the relief of Purchase Tax. I decided that this year I could allocate about £60 million, or £80 million in a full year. Then I had to decide how that relief could most effectively be used. In that decision I was largely influenced by the need to get the tax into a sound shape—sound as a revenue-raising tax, fair in its effect on taxpayers, and sound in its effect on the economy.

I will not claim that the Purchase Tax is other than an imperfect instrument. I think that it was last year that I said that I was reminded of the Irishman who was asked the way to Roscommon and who replied, "If it was to Roscommon I would be going it is not from here that I would be starting." I had to start from the position in which I found myself. Some years ago, this tax badly needed attention. It was bursting with indefensible and increasing anomalies, stemming from the war. My predecessors carried out considerable improvements, and last year I proposed, and Parliament approved, a considerable reconstruction of the tax, reducing the number of rates from seven to four, and giving relief, in a full year, of about £40 million.

I said then that I believed it was getting into a form in which further improvements could be carried out without sharp changes, and this year that is precisely what I have tried to do—to continue this process of getting the tax into a more logical form. I say again, the aim is not a uniform rate, but a tax on moderate rates; a standard rate, and one rate higher and two rates lower.

There was, of course, a great temptation this year to make a lot of changes in individual items from one category to another, or to grant complete exemptions. Had I succumbed to that temptation, however, it would have been in direct conflict with the aim of ultimately achieving a broadly-based tax on moderate rates. For instance, had I proposed the removal of the 5 per cent. rate, at a cost of £50 million that would have militated directly against that aim. I think that hon. Members opposite made a good case for taxing clothing at the lowest rate, but not a good case for exempting it from tax altogether.

Hon. Members opposite implied that there was, perhaps, a case for reducing the 15 per cent, and 30 per cent. rates, but not the 60 per cent. rate. Again, we must keep this in perspective. There is justification for a considerably higher rate than normal for certain goods, but not for leaving those articles, as it were, right out on a limb at a rate as high as 60 per cent. for ever.

The argument has been advanced that reliefs should be given for the products of industries that are having a difficult time. That argument merits careful consideration. One could argue for long as to whether or not there is economic justification for such discrimination, but the practical aspect of that problem is that if that principle were followed it would, again, bring this tax into a state of chaos. It is perfectly easy to take off or reduce the tax when an industry runs into difficulties; it is far more difficult to find an industry which would justify deliberately increasing the rate of tax—and changes in industries occur wry quickly.

I cannot agree with the hon. Member for Birmingham, Northfield (Mr. Chapman) that the present rate of tax is murdering the bicycle trade. The trade is having a difficult time, but for reasons other than the incidence of this tax, which is lower today than it was three years ago, when the industry was highly flourishing.

11.15 p.m.

I enjoyed the speech of the hon. Lady the Member for Flint, East (Mrs. White), as I always do, because she always makes most practical contributions. Although, on musical instruments, I have not done so much with the tax as I did last year, I still have a soft spot in my heart for that claim, and I have, anyhow, made reductions for two years running. The hon. Lady asked whether we knew if the tax reductions were being passed on. We have no method of enforcement to ensure that they are passed on, and we have no way in which we can tell for certain how widely they are being passed on. But such tests as we have made indicate, as they did last year, that the reductions have been, or are in the process of being, passed on at present. Obviously, we cannot enforce it, because there are over 60,000 registered traders, with about 500,000 retailers concerned, but in a competitive economy such as ours I believe that we can safely rely on competition and the influence of customers in ensuring that these reductions are passed on.

My hon. Friend the Member for Cambridge (Sir H. Kerr) and the hon. Member for Stoke-on-Trent, Central (Dr. Stross), who claims heavenly twinship with my hon. Friend, started our discussion on records. Again, I have made a reduction of a sixth in the tax this year, which is more than any other Chancellor has done to date. It is curious that last year, when I did not reduce the tax, there was hardly a note of criticism, but this year, when I have, I am told that I am added to the long list of Phillistine Chancellors. One responsibility that I would not take on is to try to discriminate betwen records which are cultural and records which are not. I would not start arguing with young people on that subject.

The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) asked me whether I wished the pottery trade to continue with its excellent export effort. I do, and I hope that it will improve on it still further, for it has been a very good record. He then asked a question to which I do not believe he expected an answer, whether, if the industry said that it would go in for an export drive, I would give an assurance that Purchase Tax on pottery would be removed. Of course, I cannot give such an assurance. To do so would be to discriminate very unfairly between that industry, with its fine record of exports, and many other industries which are also subject to Purchase Tax, but which also have good records in this respect.

The hon. Gentleman also asked me whether, when changes are made, they could be made at some time other than in the Budget. One difficulty there is that it is only at the time of the Budget, when a full review of the country's and the Treasury's resources has been carried out, that I know whether I have resources to allot to the relief of Purchase Tax.

Mr. H. Wilson

Before the right hon. Gentleman leaves the question of pottery, will he answer this question? He will be aware that pottery was not subject to tax at the time of the last General Election. It has only been brought into Purchase Tax by the actions of Chancellors since the last election. Since that was done, as we were then told, to deal with a very critical inflationary situation, which the Chancellor is always telling us has now been removed, will the right hon. Gentleman tell us why, if it was necessary to bring it into tax in October, 1955, he still regards it as necessary to keep it in tax when it was not in tax before?

Mr. Amory

It is because I am trying to get this tax on to a sound, broad basis. [Horn. MEMBERS: "Ah."] That is the reason, and in accordance with the principle to which I was trying to work I was glad to make the reduction which applies this year to pottery.

I should have been delighted if I had been able to reconcile it with my conscience to remove the tax entirely from many items. It would have been most popular to do so, apart from anything else. I realise that I could have allotted the reliefs which I have allotted in ways which would have been more popular. But it would not have been the right course, because it would have left my successors with a mutilated, ineffective and highly illogical tax. I am sure that the reliefs which I have proposed have been the right ones from the point of view of getting the tax into a sounder, more defensible shape and that, more important, they have been right also from the point of view of the long-term interest of taxpayers and the interest of the national economy. I hope that the Committee will now allow the Clause to stand part of the Bill.

Mr. E C. Redhead (Walthamstow, West)

In attempting to discuss Purchase Tax at all, I am not sure whether I should appear in the role of a repentant sinner or that of the poacher turned game-keeper, for I have to confess that way back in 1940, when this tax was first introduced, I was a member of the initial staff of the Customs and Excise Department which had the responsibility for launching it upon the public. In the circumstances, my point of view may be regarded as a little biased or prejudiced from that experience.

I do not think, however, that we should close this debate without taking note that the Chancellor has failed to appreciate the real lesson of the debate. In the first instance, the right hon. Gentleman would have to concede that the nature of the debate has abundantly justified the Opposition's protest at its restrictive character, which we have been compelled to accept. While we have had ample demonstration of the desire of hon. Members to bring forward propositions for the modification of this tax, we have been denied, by the restrictive character of the Resolution, the opportunity of taking that view to the test of the Division Lobby.

The Chancellor has missed on this occasion a golden opportunity, whatever the difficulties may have been in earlier years, of taking an entirely fresh view of this Purchase Tax and of looking at it objectively. Instead of the process which has been true of it ever since its introduction of proceeding piece-meal and from hand to mouth, the Chancellor had the opportunity to look at it afresh in the more fortunate circumstances of this year and really try to make up his mind what should be the basis of the tax, if it is to persist, and what purpose it is intended to serve.

I would remind the Chancellor and the Committee that the tax was first introduced as a wartime measure, with the implication that at the end of the war it would cease. It is still with us, although it has undergone various changes in rates, numbers of rates, groupings and classifications. I am sadly reminded that the very first Excise taxation was introduced by the Long Parliament as long ago as 1643 to obtain money to support the Parliamentary forces in the Civil War. It was a war tax specifically introduced to end with the end of the Civil War, but in one form or another Excise taxation has continued until the present day. New taxes, I fear, once introduced, even though intended to be temporary, have a tendency to stick, and Purchase Tax still sticks to us.

It was brought in originally—and this has been said several times in the debate, hut I think it ought to be underlined in view of the manner in which the Chancellor is now approaching the tax—in a manner which suggested that its primary purpose was to discourage unnecessary spending during the war, revenue being very much a secondary consideration. Indeed, Sir Kingsley Wood, the then Chancellor, who introduced the proposition, said There will be a high rate of tax on the purchase of goods which… in the hard circumstances of war we can either do without or of which we can at least postpone the replacement. He went on to list the articles he had in mind, saying luxuries like furs, articles made with real silk, lace, china and porcelain articles—[OFFICIAL REPORT, 23rd July 1940; Vol. 363, c. 652.] were the categories he had in mind.

For the purpose of discouraging unnecessary expenditure or diverting or limiting expenditure in respect of certain articles or certain trades for sound economic reasons, there is a quite legitimate case for a modest tax properly constructed in that way. That has been followed in part in the years which have succeeded, but unhappily the tax scope has been very widely extended to include many articles which were not even in the original wartime Schedule. The legitimate use of the tax has been obscured by the emphasis which is now laid upon it not as an economic weapon but almost exclusively for raising revenue. Indeed, every argument which we have had in the attempt to rebut the claims which have been pressed upon the Chancellor has been based upon insistence that it would cost too much and the Chancellor cannot afford to lose the revenue involved.

This tax has been so lucrative a source of revenue that no Chancellor since its inauguration has been able to view with equanimity the prospect of foregoing such a weighty contribution to the Exchequer. It is worth bearing in mind that in the first full year after the war—I discount the war period—the total yield of this tax was £181 million. Today it is £490 million. It is worth noting also, particularly as there have been those who have been so anxious to lay claim to virtue in this Government in reducing this tax, that even after the remissions which are now proposed in the Clause under consideration the Chancellor will still he collecting from this source 00 million more than was the case in the last year for which the Labour Government were responsible.

Last year, I admit, the Chancellor introduced a recast of the structure. He reduced six rates to four with a measure of regrouping of the tax. It was a welcome move, but he has not substantially taken that process any further this year. We had hoped he would have done so and that he would have gone further in the process of rationalisation and taken off the tax entirely, as we have argued today, from the lowest tax range where so many of the clear necessities of life are to be found.

As it is, he has proposed reductions in the higher groups but left the lowest group untouched, and he has heightened the suspicion that what he really intends is the substitution for Purchase Tax of a sales tax. He has repudiated that suggestion, but one cannot help feeling that the more he responds to this tendency the more susceptible he will become to the pressures which will be exerted upon him to make that substitution, which will be viewed with the gravest disquiet on this side of the Committee.

11.30 p.m.

Whatever imperfections Purchase Tax may have—and there are many—it has one merit over a sales tax as operated in most countries where it exists, inasmuch as it is a once-for-all tax levied on transfer from wholesale to retail, and not, as is a sales tax, on each occasion goods change hands. Nevertheless, even in the modified structure of the tax it is in many respects still fundamentally had. It is not without significance—and I do not think that I am revealing any secrets at this distance in time—to say that when the tax was first inaugurated the Commissioners of Customs and Excise were not exactly enthusiastic at the prospect of taking responsibility for its administration which had been thrust upon them. They must have communicated their unhappiness to the Treasury for the Government of the day took the most unprecedented step of temporarily drafting into the Department an additional Commissioner specifically charged with directing the imposition of the tax.

The tax structure is still riddled with anomalies and apparent absurdities. Illogicalities abound even despite what ever the Chancellor succeeded in doing last year. The hon. Member for Kidderminster (Mr. Nabarro), whose absence has been most noteworthy today, has had a great deal of fun in publicising many of the anomalies that have occurred.

There must be many anomalies in a tax of this character with the multiplicity of groups and grades and classes that are still included in it to such an extent that it requires a booklet of over 100 pages to explain it to the traders with all its paraphernalia of artificial assessment of wholesale value, with a valuation department and a process of uplift and heaven knows what other impedimenta to make it operative. It is quite clear that such a tax is bound to be riddled with absurdities and illogicalities.

Let me say in passing that civil servants, like others, will sometimes make mistakes, but they are more often than not blamed for the mistakes of others than for their own errors. In this case any absurdity in the decisions given by the Customs and Excise Department stem not from the stupidity of that Department but from the incongruous character of the schedules which constitute a headache for those in the Department. One recalls the sort of headaches which the Department had in trying to determine when paper was stationery and when a raw material, and disputes as to whether or not paper baking cases were household paper goods or requisites for confectioners. One had the pretty picture of assistant secretaries going out buying chocolate eclairs from a bakery in order to determine the size which the customer used in the trade and taking it back solemnly to make measurements and to determine liability.

One also recalls trying to unravel the problem of whether rubber hot water bottles were chargeable under the tax although not mentioned in the schedule and finally deciding that they ought to be charged because hot water bottles made of metal or stone were chargeable, and the Department getting away with it on the ground, of all things, that they must be chargeable because they constituted soft hardware!

It is a bad tax and nothing which has been done has altered that fact. It is bad because the public seldom knows what part of the full retail price of an article is attributable to tax, and many a retailer has got away with it, when the customer has grimaced about the price, with the vague reply, "Well, it's the Purchase Tax, you know." With its present wide range, it sets up innumerable pressures on the Chancellor every year. It is irksome and irritating in its application, and it is burdensome in many respects.

What the Chancellor has done is to return an answer tonight which demonstrates once again the fundamental difference between the Opposition and the Government in their approach to the purpose of this Tax. If he is not responsive to the plea which, I think, is inherent in the whole of this debate, to take a fresh look at this tax and to relate it to the realities of today, we must wait—and I hope not wait too long—for another Chancellor who will take a more realistic view of the necessities of the situation.

Hon. Members

Divide.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 13 to 15 ordered to stand part of the Bill.

Mr. H. Wilson

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

I think we have made quite useful progress, even if the numbers now in the Chamber greatly exceed the numbers that have been on the other side of the Committee during the greater part of the debate. The number of Members present at the moment is only exceeded by the ignorance of the subject by some hon. Members opposite. Their suggestion to us that we should divide against the Question that Clause 12 stand part of the Bill only shows how little they know of the whole procedural situation in which the Committee has been placed by the Chancellor's action.

We have spent half an hour this afternoon and an hour last night pointing out that because of the Chancellor's Financial Resolution it was impossible either for the Opposition or for any one else to move Amendments to reduce the level of Purchase Tax. Most of the speeches made on this side of the Committee in the course of the last few hours have been in favour of individual remissions of Purchase Tax on particular items, but unfortunately, because of the Chancellor's action, we were not able to move Amendments to carry that out. Why, therefore, anyone on the benches opposite should think it would have been appropriate that we should have divided against the Clause standing part, I entirely fail to understand.

I think that in other circumstances we might have subjected Clauses 13, 14 and 15 to, at any rate, a short process of elucidation, but I think that the convenience of the Committee has been served by allowing hon. Members in all parts of the Committee to debate to the full, so far as the procedural position has allowed, this question of Purchase Tax. It may surprise some hon. Members to know that quite a number of Conservatives have made extremely important contributions to this debate.

We have now ended the indirect Purchase Tax parts of the Bill. It is a long time since we reached the Question that Clause 15 stand part of the Bill after only two days of a Committee stage. But I cannot let the occasion pass without commenting on the debut at the Box of my hon. Friend the Member for Waltham-stow, West (Mr. Redhead) who has brought to our Purchase Tax debates a very real and almost professional, or at any rate ex-professional, knowledge of this subject, and those hon. Members who have heard his earlier speeches will realise what a valuable contribution he has made.

Tomorrow, I presume, we shall go straight on with Clause 16, and, of course, from that point onwards I cannot promise the Chancellor, unless he shows himself a good deal more accommodating than is usual and than he has been today—

Viscount Hinchingbrooke (Dorset, South)

What about Clauses 14 and 15?

Mr. Wilson

Clauses 14 and 15 have been passed by this Committee. I am sorry if we have missed the opportunity of an important speech by the noble Lord. That was the decision of the Committee, Sir Charles, and you are as powerless as we are to put back the clock to enable the noble Lord to make a speech. As I was saying, we said that we would cooperate in getting the Bill to this stage by what we hoped would be a reasonable hour this evening, and we have done so.

I ought to warn the Chancellor that we hope to make fairly rapid progress tomorrow. How rapid will depend on how accommodating he is to the excellent and constructive Amendments which we have put on the Notice Paper. Should he prove less accommodating than we hope, it will be necessary to have quite a number of Divisions, but I cannot give any assurance about how far we shall get tomorrow night. I am sure that it is the wish of hon. Members on both sides of the Committee that we should make as much progress as possible with the actual Clauses of the Bill so that after the Recess we can have the maximum time available for the new Clauses.

Mr. Amory

I think that it would be entirely appropriate to report Progress. We have made excellent progress this evening, and I thank hon. Members in all parts of the Committee for their cooperation. We on this side of the Committee have been equally glad to listen to the hon. Member for Walthamstow, West (Mr. Redhead) speaking from the Box for the first time. If the Committee can make equally good progress tomorrow, we shall all go away for our Whitsun holiday feeling that that holiday has been well earned.

Question put and agreed to.

Committee report Progress; to sit again Tomorrow.