PURCHASE TAX (FIREWORKS)

HC Deb 12 February 1962 vol 653 cc1047-82

10.12 p.m.

The Economic Secretary to the Treasury (Mr. Anthony Barber)

I beg to move, That the Purchase Tax (No. 4) Order, 1961 (S.I. 1961, No. 2500), dated 29th December, 1961, a copy of which was laid before this House on 4th January, be approved. The effect of this Order is, as I think the House will appreciate, to add fireworks to the list of goods chargeable with Purchase Tax at the standard rate of tax, that is to say 25 per cent. of the wholesale value, and to include fireworks in the group which comprises toys, games, requisites for amusements and so on. The tax will apply to fireworks of the kinds sold over the retail counter for the celebration of 5th November and also to the kind used in set firework displays.

In answer to a point raised by my hon. Friend the Member for Kidderminster (Mr. Nabarro) at Question Time the other day, I should like to make it clear that the tax will not apply to fireworks which are made for either military or marine purposes, such as signal rockets or Very lights, nor will it apply to bird scarers as used by fruit farmers or to other commercial articles of that kind.

Mr. Gerald Nabarro (Kidderminster)

Before my hon. Friend goes any further, may I say that I am interested in the administrative machinery that the Treasury proposes to install to differentiate between the type of rocket used by a ship in distress at sea, or a lighthouse, or a Very light and those bought for the celebration of Guy Fawkes night on 5th November. What administrative machinery is my hon. Friend devising to prevent the illicit purchase of fireworks for use on Guy Fawkes night which otherwise would be sold for use by ships in distress at sea? This is a very important point.

Mr. Barber

The ways of Customs and Excise to prevent the avoidance of Purchase Tax are many and various. I doubt whether it would be appropriate or in the general interest were I to go into details on that particular matter. I would only say to my hon. Friend, in answer to his very reasonable question, that the reason why particular types of fireworks, such as signal rockets and Very lights, are excluded from this Purchase Tax Order is a question of construction. The point is, if I can put it very briefly, that the word "fireworks" appears in the new Order in the context of toys, games and so on, as set out in the Order. Therefore, as "fireworks" has to be read in that context I am advised that the exclusion of Very lights and the like is a matter of construction, which is of course a matter of law.

Mr. R. T. Paget (Northampton)

If we have rockets and Very lights on our boats we are excused Purchase Tax, but if we let them off on Cowes fireworks night we have to pay Purchase Tax. Is that how it works?

Mr. Barber

I think that the hon. and learned Member is not quite right there. What is important is the character of the firework.

Mr. Nabarro

I apologise to my hon. Friend for interrupting him, but I must pursue him on this important point. Would he please explain to me—because I am an amateur in this matter of pyrotechnics—whether the sparks or the stars emitted by a firework, such as a rocket, exploded on Guy Fawkes night for pleasurable purposes are different from the sparks or the stars emitted from a firework exploded at sea? Is there some difference in the construction of the pyrotechnic? Otherwise, how does the Treasury propose to differentiate and prevent abuse of the kind referred to by the hon. and learned Member for Northampton (Mr. Paget) whereby he buys a rocket for use on his boat and that is subsequently translated to use by his children on Guy Fawkes night for purely pleasurable and undesirable purposes?

Mr. Barber

If my hon. Friend the Member for Kidderminster were to purchase a number of Very lights and himself let them off on Guy Fawkes night it seems to me from a preliminary interpretation of the Order that in all probability those lights would not be subject to Purchase Tax, because in general in Purchase Tax matters it is not so much the purposes for which a particular article is used that is the most relevant consideration as the character of the article. The use may of course be relevant in the sense that the way goods are offered for sale is a consideration which must me taken into account, but I do not think that I can go further—unless I am sent a firework for me to give an opinion upon it—than I have gone tonight. In other words, one has to see whether the type of firework is the sort one would expect to be used for amusement or entertainment or for one of the serious purposes which my hon. Friend the Member for Kidderminster has in mind.

Mr. Donald Wade (Huddersfield, West)

If a rocket is fired from a ship for the entertainment of the passengers would Purchase Tax be payable or not?

Mr. Barber

That is the sort of point which I think will have to be considered when it arises, as no doubt it will. I would only say that in the administration of this new form of taxation that is the sort of point which the Commissioners of Customs and Excise would bear in mind.

Considered against the background of Purchase Tax as a whole, this Order represents only a minor extention of the scope of taxation. Nevertheless, it is a major change for the industry concerned, which is a small industry. The additional revenue expected as a result of the Order is between £500,000 and £750,000 in a full year. Because the tax is collected quarterly in arrear, the Order will have no effect on the yield of taxation in the current year. I know that some hon. Members on seeing the Order for the first time were surprised to learn that fireworks were not subject to taxation already. It seems a little anomalous that this should have been the case when toys, games and all other kinds of requisites for amusement were already within the scope of the Purchase Tax.

The reasons for the exclusion were, briefly, that while indoor fireworks such as, for example, magnesium ribbon, have always been subject to tax on the ground that they are a variety of toy, it was felt that the relevant statutory words in Group 20 of the Tax Schedule did not give a sufficiently unambiguous mandate for imposing the tax on all varieties of outdoor fireworks. As a result, outdoor fireworks were allowed to enjoy the benefit of the doubt. Against the background I have mentioned—that Purchase Tax extends to such a wide variety of the consumer's expenditure, including expenditure on toys and "other requisites for amusements," as they are described—it was increasingly difficult to justify the exclusion of fireworks. My right hon. and learned Friend therefore decided that the right course was to seek, by means of this Order, specific Parliamentary approval to bring them into the tax.

I should perhaps explain why it was decided to make the Order at this particular time of the year. The answer is that we are here dealing with a highly seasonal trade. Almost the whole of its annual production goes up in smoke in a day or two at the beginning of each November. Considered in the context of the Purchase Tax as a whole, this is a minor change and it is obviously sensible to make such minor changes at a time of the year when they are likely to cause least disturbance in the trade concerned. Having decided to impose tax on fireworks, the right time to do it was within a few weeks after the beginning of November, so that the manufacturers would have as much time as possible to make the adjustments in trading which were bound to be necessary as a result of the imposition of tax.

Mr. Nabarro

Are crackers fireworks or toys? Are they covered by this Order? [An HON. MEMBER: "Cream crackers?"] No, not cream crackers. I am sorry to be guilty of some levity in this matter, Mr. Deputy-Speaker, but I am referring to crackers in boxes, containing a mercurial strip pulled at children's parties—not to biscuits. Are they taxed as fireworks or were they previously taxed as toys?

Mr. F. M. Bennett (Torquay)

Can my hon. friend say whether the rockets sent up during the rescue of Jayne Mansfield come within this Order?

Mr. Barber

It is somewhat difficult to answer these detailed points, because the notice by the Commissioners of Customs and Excise runs, as my hon. Friend the Member for Kidderminster knows, for many pages. But Group 20, which is being amended, includes articles which may be sold as carnival goods, toys or requisities—for instance, false beards and moustaches and so on.

I do not wish to keep the House for long on this sort of point, although there are a number of other relevant points one could make. If I may give a preliminary view to my hon. Friend, I should have thought that crackers as used indoors, if they ever came within the description of a firework, would have been liable to tax, but again I would rather have notice of that question. I have dealt with all the general reasons why it is thought desirable to impose this tax, and also the particular reason as to why it was decided to do at this time of the year and not in the Budget.

For the reasons I have given, I would ask the House to approve the Order.

Mr. Glenvil Hall (Colne Valley)

Before the hon. Gentleman sits down, perhaps he would comment on the representations he has received from the fireworks industry. To my knowledge it put certain arguments to him, but he has not attempted to touch one of them tonight. Will he do so now?

Mr. Barber

I will do so now if it is convenient to the House. I had thought that one or two hon. Gentlemen would want to speak first and develop points of various kinds, but if hon. Members prefer me to deal with them now, I will certainly do so.

As I understand it, the two principal points which were raised by the fireworks industry and which we have considered very carefully concerned the getup of the goods, involving containers and labels which were already printed with retail prices. Many of those labels and containers are ordered a year before the date of the sale by the retailer to the consumer and they show the price exclusive of the tax, of course. The prices charged for fireworks in the shops next November may, therefore, be higher than the printed prices shown, and some formula will have to be worked out with the trade in order to indicate to retailers and customers what the difference is.

Somewhat similar problems do, of course, arise in other cases. In some cases manufacturers have ceased after a period—after the difficult transitional stage—to put a price on the article. But I understand from the representations that have been made by the fireworks manufacturers that that is something which they do not wish to do. This is a problem, but I should not have thought that it was insoluble. It would be possible for manufacturers to continue to print tax-exclusive prices on their fireworks to which the retailers would add an agreed mark-up of the equivalent of 2d. in the Is., or thereabouts, to take account of the tax.

Mr. Charles Loughlin (Gloucestershire, West)

What percentage Purchase Tax would go on a "penny banger"?

Mr. Barber

That is the sort of point which we have been considering, as the hon. Member must have known if he had followed our deliberations last year when the whole range of Customs and Excise duties was increased by 10 per cent. as a result of the announcement by my right hon. and learned Friend on 25th July. He will appreciate that that involved very small adjustments to prices which were so small that in some cases manufacturers and wholesalers in selling goods to retailers had to give some indication about how the tax might be passed on. A bar of soap which cost 6d., including 25 per cent. Purchase Tax, as a result of the 10 per cent. increase in Customs and Excise duties last July had an increase of tax equivalent to one-tenth of a penny. in such cases it is passed on in various ways. I recognise that these are practical difficulties, but they are by no means unique to the firework industry and they have been present over the whole range of Purchase Tax. It is hardly for me to advise a particular industry or a particular company how it should set about things, but as the hon. Member for Gloucestershire, West (Mr. Loughlin) referred to a penny banger, I will give him at any rate one answer to the problem.

As a result of this change in Purchase Tax, a penny banger could now he sold by the retailer at something more than the increase in Purchase Tax for which the Order provides, at, say, 1½d. or three for 2½. As frequently happens with other industries, other and somewhat more expensive goods would have a reduction in the increase paid on them so that over the whole range of goods the correct amount of Purchase Tax would be levied.

My hon. Friend the Member for Kidderminster has been saying "Hear hear". He took up this matter of Purchase Tax long before it was raised by the hon. Member for Gloucestershire, West, in connection with fireworks, and he recognises that this is not something new and that it is something with which the fireworks industry will be able to deal when it considers it.

Mr. G. R. Mitchison (Kettering)

When and how was the trade told about this change?

Mr. Nabarro

It should not be told five minutes ahead.

Mr. Barber

I do not know the actual machinery whereby the trade was told. All I can say is that it was not told before the Order was laid before the House of Commons. For reasons which the hon. and learned Gentleman realises, we could not do that.

Mr. David Weitzman (Stoke Newington and Hackney, North)

Were there consultations with the trade before the Order was decided on?

Mr. Nabarro

Certainly not.

Mr. Barber

So far as I know there were no consultations.

The right hon. Member for Colne Valley (Mr. Glenvil Hall) asked me to deal with the representations which had been made by the trade, and perhaps I might deal with a point which I know has concerned one or two hon. Members because they have written to me about it. This concerns the date of payment of the Purchase Tax. As I understand it, manufacturers send out almost all their fireworks between the end of June and the end of October of each year. Tax is payable quarterly within one month of the end of the quarter, so that on goods delivered to unregistered customers in the July-September quarter, tax will be payable on 31st October, but on goods delivered in October it will not be payable until 31st January. The manufacturers have asked that, because of the seasonable nature of their trade, and of the credit terms that they allow to retail customers, some later date for pay ment than 31st October might be considered.

We considered this request not only carefully, but sympathetically, but I am afraid that it is not possible to meet it. The dates for the payment of Purchase Tax are statutory. They apply to all Purchase Tax trades alike, including many trades which are seasonal, and it is not possible to make individual exceptions.

I shall be happy to deal with other points which may be raised in the course of this debate, but I have tried briefly to deal with the points put to me by hon. Members and by the trade.

10.32 p.m.

Mr. G. R. Mitchison (Kettering)

I want to get one or two things quite clear before we start. We are not dealing with any question of the safety of fireworks. It was not suggested by the hon. Gentleman that that was a reason for the tax. We are not dealing with the activities of Mr. Guy Fawkes, who I think has been rather unfairly condemned because all that he was really trying to do was to blow up another place, and not the Houses of Parliament as a whole.

This is a silly Order, and a very cheerless one. I can only explain it on the ground that the Government have had so many rockets, particularly from the hon. Member for Kidderminster (Mr. Nabarro) and other back benchers, that they feel that it is about time a tax was imposed on rockets. There is no other explanation for the Order.

The way in which the Order was introduced was enough to invite criticism. The trade was told only on or after 4th January. It was for the Government to decide what date the Order should come into operation, and the date they fixed was less than three weeks after the earliest date on which, by their own account, the trade was told.

This is a small trade, and it does nothing else. If someone makes fireworks, he cannot spend the rest of the year on some other activity. The consequence is that he begins making fireworks soon after 5th November in each year, and goes on making them for the occasion of their great consumption on 5th November the following year, and, I might add, for other occasions during practically the whole year.

The point, therefore, is not whether the tax ought to be introduced at any given moment, but how much time ought to be allowed to a small trade like this, occupied on only one matter, to make the necessary arrangements.

My second point is that representatives of the fireworks trade were summoned to the appropriate Government office and told that this tax was to be put on. They protested for the reason I have given and for other reasons to which I shall refer shortly. They seem to have been told, "The tax is being taken off lawn mowers, and we have to put it on something." The hon. Member for Kidderminster asked a Question the other day which seemed to indicate that the same bright idea had struck him. Whether or not that was what was said to these people, the fact remains that the tax came off lawn mowers at about the same time that it went on fireworks. I have never fully understood the workings of the Governmental mind in these matters, but although I am in favour of Purchase Tax as a necessary instrument as a whole, it seems a little strange to take the tax off lawn mowers and put it on fireworks at the same time.

Perhaps the hon. Member will explain exactly what lucubrations of Government intellect were required to produce this extraordinary combination. Why take the tax off lawn mowers? Why put it on fireworks? How is it that year after year fireworks have gone untaxed. Was it that the Government have never before had so many rockets, and finally though it necessary to tax them? What was the reason for choosing this moment? Is there nothing more than mere coincidence in the removal of the tax from lawn mowers and its imposition on fireworks? Did the lawn mower makers make some contribution to Government funds at the time? I cannot think that that could be the reason. Whatever the reason may be, it seems utterly irrational.

There is one other very serious grievance. The hon. Member told us that it was quite easy to collect this tax, in some way or other. The fireworks trade has been writing to its customers suggesting various devices for doing so—one of them being what the hon. Member himself suggested. The price tickets have already been issued for many fireworks which will be sold and will attract this tax. It was suggested to one of the larger London stores that it should keep the price tickets and display a notice to the effect that fireworks were subject to a surcharge of so much in the £ and then increase the amount on the customer's bill accordingly. I will read from the firm's reply. It said: I must, however, point out to you that one of the strictest rules of our business, and, indeed, of most reputable retail stores, is that we have one price and one price only marked on goods for sale, and we do in fact sell the goods for the prices there marked. The trade has printed all these price labels. The penny label has gone round. and the stores, or whoever they are, are being asked to collect an additional sum.

When we look to see what the additional sum required is in some cases the idiocy of this tax becomes even more apparent. Apparently, what must be collected on a penny banger is 25 per cent., plus a 10 per cent. surcharge. If I am wrong I hope that the hon. Member will tell me so. Perhaps he will explain how it is that the farthing was abolished as currency a short time ago, and how on earth anybody will be able to collect the ridiculous amount of tax which goes on to fireworks costing ld., 2d., 3d. and the rest, without doing what reputable stores regard as being quite improper, that is to say, marking goods at one price and making an addition afterwards.

What about the man who buys quite a small amount of fireworks? It is ridiculous to expect this kind of charge to be levied within the existing machinery. We were told that the ways of the Customs and Excise were many and devious. I do not know how it it will manage this one. We were given no intimation, except that which I have mentioned, as to how they should do it. If we are going to deal with a trade like this we must deal with it fairly. We must give it not three weeks' notice, but something very much longer. I should have said that we ought to have given it a year's notice, or the best part of it, before putting the tax on.

Secondly, we must not tax something which has never been taxed before and which is habitually sold in units of Id., 2d., 3d. and the rest. The Chancellor may think that he is looking for "golden rain" in the middle of all this but he will simply be regarded as "the devil among the tailors" by the fireworks trade.

It is a thoroughly ridiculous tax. The amount involved is quite small, and the Chancellor would do very much better to think of something else to tax. It is a cheerless sort of tax. What is the point of it? Fireworks represent a very small expenditure in any household—and in same households both parents and children look forward for a long time each year to something which is their bit of fun for the year. This is what the Government have been driven to taxing.

I say to the Government, "If you are as mean as that, if you wish to tax the kids' one and only beanfeast, the one occasion in many families in which they have a bit of fun without doing anyone any harm—because the vast majority of fireworks are let off in that way—you are a cheerless lot and you had much better think of something else to tax instead."

Mrs. Patricia McLaughlin (Belfast, West)

The hon. and learned Gentleman must be aware that the cheaper types of firework, often carried in children's pockets, cause a large number of serious accidents. It would be better still to ban them.

Mr. Mitchison

The point which I made at the beginning, and which I make now a little more definitely and clearly, is that I entirely agree with the hon. Lady that safety precautions are very necessary for fireworks. These precautions ere possibly inadequate at the moment. But we shall not make fireworks any safer by putting 35 per cent. of a penny on the price of a "banger." It is like cigarettes; we shall not get people to smoke any less by putting a tax on cigarettes. We are doing nothing, but mulct for the benefit of the Treasury the only beanfeast of a lot of children and their parents, for whom I am sure the hon. Lady the Member for Belfast, West (Mrs. McLaughlin) has much sympathy. This is a question not of safety but of fractions of a penny, on one side and on the other, of upsetting a quite small trade, which does no other business and which will be greatly inconvenienced and probably deprived of a large part of its business by this silly Order.

10.43 p.m.

Mr. James Allason (Hemel Hempstead)

In Hemel Hempstead we have the great firm of Brocks, which has been making fireworks for 250 years. If my hon. Friend the Member for Belfast, West (Mrs. McLaughlin) has any complaints about danger from fireworks, I can assure her that the industry will be very happy to look into them. A number of the more dangerous types of firework have already been taken off the market because of complaints.

I make no complaint about the fact that the trade has not been consulted about this Order. Naturally the Treasury has to produce such an Order as a bolt out of the blue for any trade when Purchase Tax is being imposed; the trade cannot be consulted. But I ask my hon. Friend to consider the great difficulty which arises under the Order and therefore not blindly to say that, having been made, the Order must be approved at all costs. I hope that he will listen to a description of the great difficulties which have arisen for the trade.

The Treasury may imagine that it has been extremely helpful in putting on the tax soon after 5th November, but if the trade had been consulted members of it would have told my hon. Friend that this is the worst date he could have chosen. As the hon. and learned Member for Kettering (Mr. Mitchison) said, the printing of the labels starts very much earlier in the year. The manufacturing plans are made in June. The printing of the labels starts in August, and soon afterwards the manufacture of the fireworks goes on, because fireworks have mostly been moved out in September and October and the manufacturers then start on the fresh production for the following year's fireworks. A very large number of the fireworks to be let off on 5th November this year have already been made and labelled with the prices.

The shops have very limited storage facilities and the Explosives Act applies to them, and consequently only a small amount of fireworks can be stored in them. The factory has to store as much as possible and only starts delivering in June. Thereafter, the factory continues to keep the shops stocked up until November when the great sales rush begins.

Sixty per cent. of the total sales of fireworks are in small items—1d., 1½d., 2d. and 3d.—and these are labelled with the prices, which is a great convenience to the public who know exactly what they are buying. A child can buy a ld. banger and know exactly what he is getting. This is for the protection of the public.

As to the effect of this 25 per cent. Purchase Tax plus 10 per cent. surcharge, I can do the whole sum for the hon. Member for Gloucestershire, West (Mr. Loughlin). It is quite complicated because one has to deduct varying rates of discount for wholesale prices before working out the Purchase Tax, but in effect, in round terms, it works out that a ld. banger will cost 1 3/16d.

Mr. Loughlin

I am grateful to the hon. Gentleman for working out this sum, but I did not need to know that. What I wanted to know was how one could put into effect the 25 per cent. plus 10 per cent. surcharge on a 1d. banger over the counter to a customer. It is no good telling the customer that the cost is so many sixteenths of a penny.

Mr. Allason

I am sorry. I misunderstood the hon. Gentleman. I understand that it is illegal for a shop to mark up the price so that it makes an additional profit, over and above what it ought to make. If the 1d. banger is sold for1½d.—½d. being the lowest item of currency now available—it would appear that the shop is making 5/16d. additional profit, which is very excessive. I should like to hear from my hon. Friend the Economic Secretary to the Treasury whether this is so, and that shops are not entitled to make this additional profit.

I have with me a letter from a large firm which is well known all over the country. It is from the central buying department, addressed to Brocks and puts the sales difficulty in a nutshell: Dear Sir, Your representative has explained the difficulties in which you find yourself over the recent imposition of Purchase Tax and surcharge on fireworks. May I point out that our difficulties are no less involved, and that unless some satisfactory arrangement can be made, it is possible that some of our stores may be discouraged from handling these goods at all. All your fireworks have the selling price clearly marked on them. Our sales people are now expected to charge more for them in order to cover the Purchase Tax. There are several objections to this. The tax is calculated on a basis of 25 per cent. and 10 per cent. surcharge on our cost price. Our cost price operates on two different levels for boxed and loose fireworks, and there are certain overriding discounts. Although the gross calculations on invoices are complicated, they are at least practicable, but what does become extremely difficult is the tax apportionment at counter level. In theory it is easy enough to work on a rule of thumb scale, such as 2d. or 3d. extra charge per 1s. worth of fireworks sold, but as you know, we have a great many sales to children worth less than Is. How much, for instance, do we charge for a 2d. banger purchased loose, on a basis of 33.3 per cent. discount, how much for the same banger taken from 'broken up' boxed goods bought at a discount of 25 per cent.? It is no use arguing that this kind of thing is a triviality. A large proportion of the firework trade consists of similar trivialities. You must also bear in mind that children, who form a large part of our customers, simply do not understand Purchase Tax. When they see a firework marked 6d. they expect to pay 6d. for it. When a sales girl says it is really 7d. or 8d., or whatever the rule of thumb scales make it to be, the juvenile customer is inclined to suspect that the shopkeeper is overcharging him. There is another point you must remember. Firework sales in our stores at least are fast sales, compressed into a very short trading period the sales people using cash registers. Your proposed scheme involves all our sales girls embarking on rapid pieces of mental arithmetic, which for many of them are not suitable. If you have any experience of the present standard of shop assistants, you will readily understand my alarm at the prospect of a vast number of over and undercharges—the overcharges mostly coming back to us in the form of dissatisfied, and I might add, suspicious customers. As the time is approaching when we shall need to order for the coming season, I sincerely hope that some more practical scheme can be evolved. I have other letters in a similar vein which show that things are extremely difficult. I tried to work out a suitable notice for display on the counter. It might state that Purchase Tax was to be added to the marked price at the rate of 25/144 per penny, or approximately 17.361 per cent. But then, unfortunately, I came across the fact that there is also a 25 per cent. discount and a 33⅓ per cent. discount, giving a fraction of 57/288, or approximately 19.76 per cent. So such a notice on the counter would not be of very great value.

It would be practical for the trade to make fresh arrangements this year for the November, 1963 season, and make up fresh sizes of fireworks with the prices marked on them. But that could not be done in time for the 1962 season. That is a point which the Treasury has not appreciated. If the trade is to reorganise and produce new sizes for 1963, the manufacturers would like to know now what the rate of Purchase Tax will be, and there would have to be some arrangement whereby it would remain at the same rate. I think that the trade would be prepared to work on whatever was the rate for 1962. But the manufacturers need to know that far in advance.

My hon. Friend mentioned the difficulty about the Purchase Tax. The sales in June have to be paid for at the end of July. But, of course, the payments back to the trade from the shops take place at the end of November. This means that the trade will have to carry a very heavy additional burden, an equivalent of about 10 per cent., on the burden which they already carry, remembering that the manufacturers have to finance the whole of their trade for the year before getting the cash in.

It would not be unreasonable to try to meet the trade on this matter. My hon. Friend said that this would have to run in the same way as other Purchase Tax impositions, but what I have said indicates that this is a very unusual matter, and I ask that some exception be made if this is to come within the limits of the tax. Alternatively, there is a good case for not bringing it within the Purchase Tax range at all. In saying that, I must make it clear that the trade does not want to give the impression that it is trying to get out of its obligation to contribute towards the Exchequer, but perhaps some other form of taxation should be imposed, possibly a turn-over tax.

Mr. Nabarro

Is my hon. Friend seriously suggesting that the Government should single out pyrotechnics for unilateral treatment in the field of taxation and that they alone should be subject to a turn-over tax while other consumer durables should be subject to Purchase Tax? Is he not aware that Purchase Tax has been applicable to a whole range of products for many years? Might I urge him to study the position of the cosmetics industry?

Mr. Allason

I am totally unaware that cosmetics are sold in 1d. packets. This industry is quite unique in the way it must make its preparations in June for sales which take place over a few months until November of the following year, all payment being received at the end of that November. This is quite a different trade altogether.

The Treasury instruction which accompanied this Purchase Tax Order also imposes a tax on displays of fireworks and this may be the answer to the query of my hon. Friend the Member for Kidderminster (Mr. Nabarro) about what would happen if one sent up a rocket which was really a Very light for the pleasure of a ship's company.

Mr. Nabarro

I raised the case of a rocket used by a ship in distress at sea, or a lighthouse. That is an entirely different matter to that raised by another hon. Member concerning the use of rockets or similar pyrotechnics for display purposes.

Mr. Allason

I am sorry. It was the hon. and learned Gentleman the Member for Northampton (Mr. Paget) who raised the other matter. I beg the pardon of the hon. Member for Kidderminster.

Mr. Nabarro

Readily granted.

Mr. Allason

The Treasury instruction said that these displays are also to be taxed to the extent of the content of the fireworks within the displays, wonder whether that is exactly within the scope of the Order, since it is designed to impose a Purchase Tax on fireworks sold at wholesale rates? I am talking about fireworks that are not sold to the public at all. The manufacturers make up special firework displays and then the whole show goes off with tremendous acclaim. These fireworks are something special and cannot be bought through the shops. It is illegal to do so. I doubt whether this question of the Treasury instruction is completely within the Order.

I hope that I have said enough to indicate that this is a thoroughly unsatisfactory Order, and I hope that the Minister will take special note of the grave difficulties Which have been raised by the trade and will, therefore, withdraw the Order and do something more practicable.

10.59 p.m.

Mr. Donald Wade (Huddersfield, West)

On many occasions I have drawn attention to the dislocation caused to industry by the imposition of Purchase Tax and changes in the rate of tax. It is not only the clerical work that is involved for manufacturers, wholesalers and retailers but also the interference that is caused to the normal flow of goods from manufacturer to retailer—sometimes leading almost to chaos.

From the facts that have already been presented tonight hon. Members are entitled to say that the effect of this Order on the trade will amount almost to chaos. The Economic Secretary said that this was not a major change. I accept that. There is no major issue of Government policy involved and we are not being asked to say that the Government are for the bomb and against the banger. Nor are we discussing safety, although, perhaps for the benefit of the hon. Member for Belfast, West (Mrs. McLaughlin), I should mention in passing that I understand that, in co-operation with the Home Office, the trade 'has stopped making flash bombs and very big rockets and has introduced less noisy bangers.

The effect of this Purchase Tax imposition is enough to reduce the purchase of fireworks. Even if that were the desire of the Government, I do not imagine that they would set about it in this way. The question is whether this is a suitable article on which to impose Purchase Tax and whether the timing is reasonable having regard to the exceptional circumstances of this trade. The circumstances are 'exceptional, as the hon. Member for Hemel Hempstead (Mr. Allason) pointed out. Manufacture is carried on throughout the year and the sale takes place within the space of a few months prior to November.

I am grateful for the fact that this tax will not apply to fireworks used other than for entertainment. That is a step in the right direction, but is this change worth while having regard to the very real trouble which is being caused? I have received representations from manufacturers, as have other hon. Members. They are greatly disturbed about the timing and the fact that the Treasury was apparently completely unaware of the practical difficulties.

I noticed that in the reply which the Financial Secretary gave to the hon. Member for Kidderminster (Mr. Nabarro) on 6th February, the Financial Secretary said, regarding removal of Purchase Tax from lawn mowers and its introduction for fireworks: Both trades are seasonal and this was an opportune time for the changes".—[OFFICIAL REPORT, 6th February, 1962; Vol. 653, c. 216.] That is the whole point; it is not opportune. I have already heard of unemployment created in some firms as a result of the announcement. It is a universal custom, I am told, for the price to be printed and fixed for more than a year before the time of sale. There are special reasons for this. The size of the firework is no guide to its value, it is a rushed trade prior to 1st November, and many of the customers are young people between the ages of 13 and 21. It is reasonable that they should be trusted.

It is true that this is a seasonal trade, but I do not think the Treasury appreciated that these plans have to be made not later than June for sale in the following year. Tubes have to be prepared and printed and boxes have to be made for each individual article. When the Purchase Tax Order was announced on 3rd January this year it was too late.

I have a letter from Standard Fireworks of Huddersfield, one of the large manufacturers in this trade, which I shall quote from briefly. The letter says: When the Purchase Tax Order was announced on 3rd January, we had very large stocks of goods brought over from the previous season and manufactured since 5th November, priced and, in many instances, packed ready for despatch. It was found to be quite impracticable to alter sizes and prices for this year because of that. There is also the difficulty of how this 25 per cent. tax is to be applied to articles priced from 1d. to 6d. Sixty per cent. Of these fireworks are retailed at prices not exceeding 6d. That is where the exception comes in from the cases quoted by the hon. Member for Kidderminster. I understand that an endeavour has been made to overcome this trouble and that traders have been asked to impose a surcharge of 2d. in the shilling. There have already been many objections. I have with me a few letters, but in view of the time——

Mr. Loughlin

Read them all.

Mr. Wade

I shall not read them all. I have one from Hull—

Mr. Nabarro

I quoted cosmetics as just one case, but there is another exact analogy with what the hon. Member is discussing. From a fiscal point of view, there is no difference in principle between a sparkler that sells for a modest price and a pipe cleaner. Pipe cleaners, for example, have always been subject to Purchase Tax, though they sell at 1d. or 2d. a bundle, and manufacturers have had to apply it to the wholesale level. There is no difference in principle.

Mr. Wade

There is one simple answer to the hon. Member. I know of no firm that manufactures pipe cleaners for a whole year and sells them all prior to 5th November. [An HON. MEMBER: "Or to schoolchildren."] I should like to have read from all these letters, but the hon. Member is taking up valuable time. I will quote, however, from one. It is from the Isle of Wight and is written to the manufacturers. It states: Thank you for your letter regarding Purchase Tax and my deepest sympathy in your predicament. Government interference with trade is on the increase and the results are always disastrous. For my part, I don't think I will be prepared to do what you ask—explain to each child that his bob's worth of bangers will be 1s. 2d. Unlike Her Majesty's Commissioners, children have logical minds and are inclined to be rather outspoken nowadays. If the position remains unchanged, I shall restrict my sales to boxed goods plus the oddments I have left over from last year. That is one of about half a dozen letters. It is a problem for the trade and I hope that the Government will appreciate it.

A suggestion has been put forward, and I think it reasonable, that if Purchase Tax is to be imposed, the charging of it should be deferred. I know quite well that that is exceptional and that it is unusual to announce Purchase Tax in advance, but this is an exceptional trade. I should like to give three reasons which are worth consideration. It is an important point to the trade that Purchase Tax should not be imposed without notice, without any opportunity of preparing for it.

The three reasons for deferment—this is from Standard Fireworks, from which I have already quoted—are these:

1. "(a) Traders would not on the whole buy more than they required for any one season because that would involve their carrying large dead stocks of fireworks on their premises for twelve months, until November, 1963, sale.
2. (b) We ourselves could not possibly increase our 1962 output to cope with an extra demand of this nature, and the same would apply to other manufacturers.

Furthermore, to do a big trade this year and then have no trade to do next year would be disastrous to any firework manufacturer. (c) Even if traders did overstock with a view to beating the tax, they could get no monetary advantage from it because they would still have to sell the goods the following year at the prices printed on them. I think that in the circumstances there is a reasonable case for withdrawing this Order.

11.10 p.m.

Mr. John Arbuthnot (Dover)

I have a constituency interest in this Order in that there is a firm which makes fireworks in my constituency. It employs some 500 people in all, 200 indoors and 300 out of doors. It has already had to dismiss thirty people as a result of this Order, and expects to have to dispense with the services of a good many more.

It will not have escaped the notice of my hon. Friend that so far there has been no friendly remark made about this Order. I want to make it perfectly clear that the reason for which I personally, and, I think, probably most other people who have spoken, dislike it so intensely is not that we object in any way to fireworks being subject to Purchase Tax that would seem a perfectly reasonable thing. The reason I object to this Order is the timing and the handling of it. The timing of it seems to indicate that the Treasury has no clue as to how the trade works.

As my hon. Friend the Member for Hemel Hempstead (Mr. Allason) pointed out, the plans for the production of fireworks to be sold this November started last June, and the labels have already been printed for all the fireworks made by the firm in my constituency to be sold in the shops in the three months leading up to this coming November, and the three months' of filling had already been done, when this Order was made. It may be suggested that the labels could be taken back and fresh labels put on those fireworks. This is just not a practical proposition, since if one starts to put a new label on a small firework, either a penny banger, or a twopenny or threepenny one, one must use some form of adhesive, which will result in the possibility of the adhesive going through the firework case and the firework becoming a damp squib. It therefore is not possible to relabel the three months' supply of fireworks already made for next November.

It seems to me that the right course for my hon. Friend is to withdraw this Order. I know the rules of the House prevent us from amending it. The thing to do, I suggest to him, is to withdraw it, and to give proper notice of his intention to introduce Purchase Tax as from 6th November next. My hon. Friend may suggest that that is an unusual practice. I agree, but this is an unusual trade. The reason the Treasury does not announce changes in Purchase Tax in advance is the fear that people will build up a stock of tax-free goods. That is not possible with the fireworks trade, because shopkeepers do not have magazines or storage capacity in which to store the fireworks. Since the trade is based on a steady production throughout the year, and the sales taking place in the three months immediately before November, it would not be a practical possibility for the fireworks trade to build up a stock of tax-free fireworks. This makes it possible for my hon. Friend to take the step, being urged on him from both sides of the House, and to show some sense of timing in this matter. I do not suggest that he should drop fireworks from the scope of Purchase Tax, but he should withdraw this Order and re-introduce it to operate from 6th November next, giving fair warning to the trade.

11.15 p.m.

Mr. Charles Loughlin (Gloucestershire, West)

We can all congratulate the Government on their breadth of imagination in presenting us with the Order. We have spent the greater part of the day discussing a Supplementary Estimate and we are now to spend the rest of the night—I hope until about six in the morning—talking about putting 25 per cent. Purchase Tax, plus 10 pet cent. on penny bangers. How crackers can one get?

Within three minutes of starting to introduce the Order, the Economic Secretary was conceding that rockets and Very lights would not be covered by the Order. He said that it depended on the character of the rocket and the Very light. A Very light or rocket used in a shipwreck would be outside the Order, but he could not explain what would be the position if such rockets or Very lights were used by his hon. Friends when they were entertaining themselves at Cowes. He has admitted that the Order cannot be applied universally and that when his hon. Friends are at Cowes enjoying themselves with rockets and Very lights, those rockets and Very lights, being a pleasurable occupation, will be outside the Order.

Mr. Nabarro

It is not a pleasurable occupation listening to a damp squib.

Mr. Loughlin

The hon. Member for Kidderminster is making sedentary interruptions. I do not object to his rising to his feet if he wants to.

Mr. Nabarro

What I said was that it was not a pleasurable occupation listening to a damp squib.

Mr. Arthur Lewis (West Ham, North)

The hon. Member far Kidderminster (Mr. Nabarro) was snoring.

Mr. Loughlin

Within three minutes of the Economic Secretary's opening I had used the gag about a damp squib. Perhaps the hon. Member for Kidderminster was asleep. While his hon. Friends play about at Cowes, Purchase Tax will have to be paid by little lads like mine who, before 5th November, save part of their pocket money to buy fireworks. My lad is prepared to do jobs and to save pocket money to buy fireworks, but he has to pay tax. The Government impose Purchase Tax on the pocket money of little lads and give additional subsidies in Supplementary Estimates to farmers. What a wonderful Government they are!—They cannot impose the Order in one direction, but they talk about imposing a 25 per cent. Purchase Tax, plus 10 per cent., on a penny banger.

Hon. Members opposite and one of my hon. Friends have been speaking for the trade. I do not think for a minute that that trade would object if 25 per cent. plus 10 per cent. were worked out on the basis of fractions, because the penny banger would be a 1½d. banger and the 1½d. one would cost 2d. Profit would be made.

Mr. Nabarro

What about the Coops? What about the "divi"?

Mr. Loughlin

Profit will be made on the basis of the increased Purchase Tax. I hope that my hon. Friends will pursue this issue. We ought not to be prepared to be parties to Orders of this kind even though the Economic Secretary has used his imagination in presenting it to us. We ought to say quite clearly that it is a load of nonsense. I know that the trade would have liked longer notice, but why should it have any notice at all? This trade is no different from any other.

Mr. Nabarro

Hear, hear.

Mr. Loughlin

This trade is not entitled to it, and here, unfortunately, I am being supported by the hon. Member for Kidderminster (Mr. Nabarro). Once we start giving advance notice to the firework makers—[Interruption.] The hon. Member for Kidderminster again mutters from a sedentary position. [Interruption.] Some of us, unlike the hon. Member for Kidderminster, did not have the advantage of a university education——

Mr. William Ross (Kilmarnock)

The hon. Member for Kidderminster (Mr. Nabarro) has not had the advantage of any education.

Mr. Loughlin

That is why the hon. Member for Kidderminster is such an extrovert. It is possibly the greatest pity that he did not have a university education. If he had we should not be pestered in the way we are being pestered at the moment.

Mr. Nabarro

I should have been over there, on that side of the House, with the hon. Member if I had.

Mr. Deputy-Speaker (Sir William Anstruther-Gray)

Order. The House will know that it is not in order to make remarks seated during the speeches of other hon. Members.

Mr. Nabarro

I apologise at once and withdraw that statement. It was intended to be sotto voce but the exuberance of the occasion caused me to speak a little louder than I had intended.

Mr. Loughlin

We are getting a little away from the subject of the debate. I was about to say that I saw no reason why this trade should have any preferential treatment over others to which Purchase Tax may be applied, but this is such a miserable Order that the Economic Secretary should take it away and bury it.

11.25 p.m.

Mr. Ian Percival (Southport)

My intervention is in the spirit of a squib rather than a rocket; a squib which I hope will move my hon. Friend at least to shift his ground on the dates on which payment is to be made, rather than on a rocket to try to blast him entirely from his intentions.

I, too, have a fireworks factory in my constituency, and as I also have a child-like delight in fireworks, it is perhaps natural that I have some knowledge of the industry. I think that it is most important to have some understanding of the special considerations which apply to this industry, certainly if one is to appreciate the point that I am going to make, and certainly if I am to persuade my hon. Friend that he should accede to my request.

There have been many references to some of the considerations which should be borne in mind, but there are some that have not been mentioned, and some of those that have been mentioned bear repeating after one or two of the speeches that have perhaps strayed from the point at issue.

The safety angle has been referred to, but one aspect of it has not, namely, that there is close co-operation between the Home Office and the industry. There is an annual meeting between representatives of the two to discuss what are and what are not desirable fireworks, and immediately that discussion has taken place the whale industry starts getting busy with its production for the following year.

Another special consideration is that price labels are used for this commodity. I think that these are the only items bearing Purchase Tax which have a price label on them. Also not specifically referred to is the fact that this industry, in which certainly the bulk of the home trade is built up to one day, must try to spread its efforts and its expense over the whole year.

Finally, one has these two special considerations. First, the majority of fireworks are distributed in July, August and September, and, secondly, I understand that the Home Office tries to discourage sales by retail except in the last fortnight before 5th November.

Those factors give rise to three consequences which I think bear summarising. First, this is an industry in which the manufacturers lay out money all the year round, up to a peak about the end of October. Secondly, because of the discouragement of retail sales until the last fortnight before 5th November—a very wise and proper precaution—and because many retailers are small concerns and cannot afford a large capital outlay, they have to be given extended credit. The result of those two factors is that 31st October in each year is the time at which the manufacturers are extended financially to the furthest point.

In those circumstances, the impact of this Order will be two-fold. First, it will create many technical difficulties for the industry. These have been so fully and lucidly put before the House by my hon. Friend the Member far Hemel Hempstead (Mr. Allason) that it would be odious for me to repeat them. Secondly, and I am more concerned about this, the tax payable in respect of goads distributed in July, August and September—which, as I have said, is the time when most of the fireworks are delivered—will fall to be paid on 31st October, the time when the Whole industry is fully extended financially.

If my hon. Friend the Economic Secretary decides that despite the very persuasive arguments put to him by my hon. Friend he must still go ahead with the tax, I submit that he should not allow the maximum burden to fall on the manufacturers at the very time when they are bound to be most fully ex- tended financially. That seems to be piling Pelion on Ossa. The firms have a justifiable moan. It is not that they cannot pay the tax; I submit that they should not be called upon to pay it at that time, in addition to coping with the problems and the expenses which will come with those problems, to which my hon. Friend the Member for Hemel Hempstead has referred.

In recent correspondence my hon. Friend has indicated to me—and he has made it clear to the House—that, although he is aware of these problems, matters must take their course. I ask him to reconsider that view. My request could easily be met administratively. The regulations which require payment on 31st October also require a general provision giving discretion. I can see no reason why, under this Order or some other provision, an administrative decision extending the period over which the tax is to be paid should not be made. This is a special case, and there are good grounds for making this exception, perhaps not regularly but at least for a start, until we see how it works out in the industry in this first year.

Even some indication that my hon. Friend will give further consideration to this request would give a grain of comfort to the industry—some confidence that individual problems like this receive individual consideration, and that we do not simply say, "There is the tax. We know it raises problems, but get an with them." I ask for little. I hope that my hon. Friend will now feel able to turn round gracefully and give some indication that he will reconsider acceding to this modest request. He may gain by doing so. If I were a manufacturer of fireworks I should say, He has done this much to help us; now we must get on with the rest." He could do it now without breaching any principle, establishing any precedent, or causing any difficulties. I hope that he will.

I started by saying that my intervention was in the spirit of a squib. I close by expressing the hope that my hon. Friend will not regard it as a damp squib, upon which he may sit utterly unmoved.

11.33 p.m.

Mr. David Weitzman (Stoke Newington and Hackney, North)

I have no desire to delay the House by repeating the arguments adduced by hon. Members on both sides. The Economic Secretary will recognise that not one voice has been raised in favour of the Order.

Mr. Nabarro

I am all in favour of it.

Mr. Weitzman

It may be that the Economic Secretary still awaits the eloquence of the hon. Member for Kidderminster (Mr. Nabarro). I interrupted the Minister to ask whether the trade had been consulted. I did not suggest for a moment that information with regard to the imposition of this tax ought to have been given to the trade, but having regard to what has been said, it looks as though the Treasury might have acted with a little common sense by making some inquiries from the trade and ascertaining some of the difficulties that would have arisen from the imposition of this tax.

I have had a letter from a company manufacturing fireworks stating that already, as a result of this provision, it has had to discharge thirty employees. The firm says that it will have to discharge many more as a result of the Order. In view of all that has been said, I hope that the Economic Secretary will at least withdraw the Order and reconsider the matter.

11.35 p.m.

Mr. Gerald Nabarro (Kidderminster)

I rise to support the Order. The hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) expected to hear at least one voice from the Government benches in support of the Order, and I support it as a matter of principle—and a very important principle, too. It is only a historical accident that fireworks were excluded from Purchase Tax in the first case. The manufacture of fireworks was stopped in the early days of the war, before Purchase Tax was introduced; that is why, historically, they escaped. Successive Governments omitted to put Purchase Tax on fireworks.

I see no reason at all why every form of manufactured consumer goods, including notably consumer durables, should attract Purchase Tax rates up to 55 per cent.—including a large number of articles which are essential to the daily life of the people of this nation —whereas fireworks, which are essentially a luxury article, whether used by children or by grown-ups, should escape Purchase Tax.

I must say at once that I have no sympathy at all with the arguments advanced by my hon. Friends the Members for Hemel Hempstead (Mr. Allason), Southport (Mr. Percival) and Dover (Mr. Arbuthnot) about the timing of this Order, about packaging and about pyrotechnics. There is not one of those arguments which cannot be multiplied a hundred times over in the context of thousands of manufactured articles which are already within the Purchase Tax schedule. Hard cases make very, very bad law in the context of this debate.

I believe that fireworks should always have been subject to Purchase Tax, save only for the important exception made by my hon. Friend the Economic Secretary. I asked a Parliamentary Question on the subject a fortnight ago. Rockets which are of a special construction for the use of ships in distress at sea or for use by lighthouses, and Very lights, as used for military and naval purposes, again distinguished by special construction, should be excluded from the Purchase Tax schedule. If there is any doubt, I suggest to my hon. Friend the Economic Secretary that a certificate of exemption may be submitted by the purchaser of rockets for distress purposes, or Very lights, which would easily be capable of identification by the Customs and Excise for purposes of exclusion.

As to the marking of all these thousands of packages of fireworks which have already been distributed, let me say to my hon. Friends who have raised the point so eloquently on briefs supplied to them by the fireworks manufacturers that, of course, we all——

Mr. Denis Howell (Birmingham, Small Heath)

Where is the hon. Member's brief?

Mr. Nabarro

They all wrote to me first expecting me to support them, but I have no fireworks manufacturers in my constituency.

Mr. Howell

A carpet bagger?

Mr. Nabarro

A man cannot be a carpet bagger after being elected four times. My possessions run to much more than that which is contained within a carpet bag.

I have no sympathy with this argument about the marking of the packages. Every firework has a price marked on it, but these are all in the channels of distribution at the moment, and from the date that this Order becomes operable it is necessary only for the external packing containing the fireworks to be marked with a label defining the amount of the emoluments to the price represented by the imposition of Purchase Tax.

It has been done a hundred times over in the last few years when Purchase Tax rates have been changed and when enormous quantities of goods have been within the channels of distribution. It is no good my hon. Friend the Member for Dover nodding his head. He is generally occupying a sedentary position in the Chair during these Purchase Tax debates.

Mr. Arbuthnot

I am not nodding my head. I am shaking it because the hon. Member talks so much nonsense.

Mr. Nabarro

There is no nonsense about the marking of packages. My hon. Friend does not normally take part in Purchase Tax debates on the Finance Bill. Had he done so in the last few years, he would have found that it is commonplace when Purchase Tax rates change for the exterior of the packages to be marked with the change in the Purchase Tax rates. My hon. Friend the Economic Secretary will readily confirm that. Purchase Tax rates have changed many times during the last few years, and notably with the imposition of the regulator on 25th July last. Is that nonsense? The fact is that my hon. Friend the Member for Dover knows little of Purchase Tax matters.

I support this Order. If a wide range of manufactured goods is to be heavily taxed within the Purchase Tax schedules, it is inequitable and anomalous that fireworks, which are a luxury article, should be excluded, and I support their inclusion in the Order notwithstanding the pleas of my hon. Friends who represent fireworks manufacturers in their respective constituencies.

11.41 p.m.

Mr. Glenvil Hall (Colne Valley)

It would be a pity if this debate ended on the note which has been introduced by the hon. Member for Kidderminster (Mr. Nabarro). To many of us on both sides of the House this is a very important matter. The livelihood of our constituents depends on what we do tonight, and I think it has been demonstrated beyond any possibility of doubt by speakers on both sides of the House that this industry is in a particular and peculiar position. Our criticism of the Government is that they did not take that fact into account when they produced this Statutory Instrument.

I think it was the hon. Member for Kidderminster who said that when a change of this kind is to be made and Purchase Tax imposed, the industry concerned is not told. That is true. But, so far as my knowledge and experience go, industries which have in the past been subjected to Purchase Tax have at some time had discussions with Customs and Excise or the Inland Revenue in order that they may make themselves familiar with the practices within the industry concerned.

It seems to me from all that I have heard in this debate and all that has been said to me by constituents and others that the Treasury or Customs and Excise have not informed themselves of the situation. Therefore, I hope that the Economic Secretary will realise that there is on both sides of the House a good deal of feeling in this matter and will be willing to take this Order back and look at the situation anew.

It is not that the industry feels that in no circumstances should it pay Purchase Tax on fireworks—nothing of the kind. What it objects to is the way in which this is sought to be done and the time at which the tax is being levied. I do not want to go over the arguments which have been put forward tonight, but I think—and surely the Economic Secretary should have informed himself of this—that there is everything to be said for those arguments for taking back this Order. In particular, I hope that the Economic Secretary will realise that to ride off, as he did, on the fact that it is general for Purchase Tax to be paid at quarterly intervals is not good enough for this industry. The millions that the industry will be collecting at the end of November from retailers and others represents its main income for the year. But, glibly and almost casually, the Economic Secretary indicated that the manufacturers would have to refund the tax due earlier than that, I think on 31st October. Surely in that respect at least the Treasury could meet the industry.

I hope that the Order will be withdrawn, but if it is not I hope that the Treasury will not expect the industry to produce many hundreds of thousands of pounds at a time when the manufacturers have not received the income from the sale of their fireworks.

11.47 p.m.

Mr. Barber

I am grateful to the right hon. Gentleman the Member for Colne Valley (Mr. Glenvil Hall) for having said that there is nothing objectionable in principle in the imposition of Purchase Tax on fireworks. After listening to speeches from both sides of the House, I think it fair to say that hon. Members have been concerned with the problems of financing, administration and timing and so on. When moving the Motion I went a little further than I had intended, as was the wish of hon. Members, and I anticipated some of the points which were likely to be raised. But in view of the way in which the debate has developed, I think that it would be most convenient if I dealt now with various points which have been raised.

The hon. and learned member for Kettering (Mr. Mitchison) thought it rather miserable of us to give three weeks notice before the Order comes into effect. The hon. and learned Gentleman would be the first to realise that normally, when Purchase Tax is imposed, or an alteration made in the rate of a tax, there is no notice given at all. I think it fair to say that, bearing in mind that the sales of fireworks at this time of the year are very small, what we should be concerned with regarding timing is not the period between the laying of the Order and its coming into operation, but the period between its coming into operation and the busy period of the year for the industry.

The hon. and learned Gentleman also referred to the Purchase Tax Order No. 3 concerning inter alia the removal of Purchase Tax from lawn mowers. It would be wrong for me to go now into the matter in detail, but since the hon. and learned Gentleman has asked me I will say that the reason for that change was developments in the design and the use of grass cutting machines which made it increasingly difficult to administer the tax equitably.

My hon. Friend the Member for Kidderminster (Mr. Nabarro) gave the answer to the question why fireworks were not originally included when Purchase Tax was imposed. In 1940, when the tax was first levied, no fireworks were being sold. The hon. and learned Member for Kettering went on to deal with the question of prices—

Mr. Mitchison

It has taken the hon. Gentleman some time to realise that the war is over.

Mr. Nabarro

But there was a Labour Government for seven years. Good gracious me!

Mr. Barber

If there is any blame to be attached to anyone for delaying the imposition of Purchase Tax on fireworks, I think that it can fairly be shared between us all. Having reached the conclusion that tax should be imposed I think it was right that we should take action.

On the question of prices, I dealt with this at some length in my opening remarks and, while some hon. Members have mentioned the difficulty of placing a 25 per cent. Purchase Tax on goods of a low price, it is relevant—and this is a fair point—to remember that this is not a problem which is new or unique to this industry. Consider a host of items which cost a very small amount; buttons, clothes pegs, curtain rings and, as has been mentioned, pipe cleaners. It is not fair to present this problem as though it is something unique to this particular industry.

Mr. Loughlin

One does not buy ld. worth of buttons. This whole question arises because each item costs 1d. That should be kept clearly in mind.

Mr. Barber

If the hon. Member for Gloucestershire, West (Mr. Loughlin) loses a button from his jacket and wants a new one sewn on he would normally have to buy one of the same colour or pattern.

Mr. Loughlin

It would cost more than 1d.

Mr. Barber

In any case——

Mr. Arbuthnot

It seems to be, firstly, that the item has the price label attached to it and, secondly, that one cannot change the price label once a firework has been filled because it would jeopardise the effectiveness of the firework. To change the label one would have to use some adhesive which might prevent it from going off.

Mr. Barber

I appreciate the point made by my hon. Friend the Member for Dover (Mr. Arbuthnot) about not being able to use an adhesive on a firework once it is filled. But surely it is relevant to point out, certainly when Purchase Tax was first imposed and also when changes have been made in the tax, that a number of manufacturers of articles which had prices marked on them decided, simply because of this difficulty, that in future they would not have the prices marked on the individual products.

Mr. Nabarro

Exactly.

Mr. Barber

Not only the hon. Member for Dover but also my hon. Friend the Member for Hemel Hempstead (Mr. Allason) and the hon. Gentleman the Member for Huddersfield, West (Mr. Wade) raised the question of labels. I tried to cover this point in my opening remarks to which I do not think I can add anything beyond saying that I cannot consider it to be reasonable—just because of a difficulty which is not unique to this industry, although it may be more onerous to it—to defer the imposition of the tax for an additional year.

I say that bearing in mind to the full the concern of the hon. Member for Dover who has spoken to me about this matter on a couple of occasions. The burden of financing Purchase Tax has also been mentioned by several hon. Members, particularly my hon. Friend the Member for Southport (Mr. Percival). It may well be that the fireworks manufacturers will have to modify the arrangements hitherto prevailing whereby generous credit is given. This is something which had to be faced by other manufacturers in the past and the difficulty is nothing unusual.

Consider Christmas cards sold in bulk shortly before Christmas. The tax on them becomes due at the end of January. In answer to the specific point made by my hon. Friend the Member for Southport concerning the dates for payment of the tax; these dates are statutory and it would not be possible, as he suggested, to make mere administrative changes.

Mr. Wade

Surely Christmas cards are not quite the same as fireworks. The suppliers are not called upon to pay the Purchase Tax at the end of November but in January—a very different matter.

Mr. Barber

I am trying to point out that other products are subject to seasonal factors as well as fireworks. In other words, there is nothing new in this.

I am grateful to my hon. Friend the Member for Kidderminster for making the fundamental point that there is nothing unique about the difficulties of this industry. Signal rockets and Very lights may be distinguished because they are differently constructed and the sale of fireworks is subject to Home Office control and, as a result, the Service and marine stores pass through different channels of trade from those channels for goods for 5th November. My hon. Friend the Member for Kidderminster also asked about Christmas crackers, and I find that these are already taxed as toys or requisites for amusement. I hope that my hon. Friend will appreciate that I am being purely factual when I point out that they come under the same heading as cardboard trumpets and hobby horses.

Mr. Allason

My hon. Friend has not dealt with the point I made. How on earth can one calculate the most fantastic fraction at a time when selling a great number of penny packets?

Mr. Barber

I can only tell my hon. Friend that this applies to other articles and the problem has been solved in other trades. I am sure that the fireworks industry will do the same.

Resolved, That the Purchase Tax (No. 4) Order, 1961 (S.I. 1961. No. 2500), dated 29th December,

Question put:—

The House divided: Ayes 107, Noes 56

Division No. 82.]	AYES	11.56 p.m.
Agnew, Sir Peter	Hamilton, Michael (Wellingborough)	Pym, Francis
Atkins, Humphrey	Harrison, Col. Sir Harwood (Eye)	Ramsden, James
Barber, Anthony	Harvey, John (Walthamstow, E.)	Rawlinson, Peter
Batsford, Brian	Hastings, Stephen	Redmayne, Rt. Hon. Martin
Biffen, John	Hendry, Forbes	Risdale, Julian
Biggs-Davison, John	Hill, J. E. B. (S. Norfolk)	Roberts, Sir Peter (Heeley)
Bishop, F. P.	Holland, Philip	Roots, William
Black, Sir Cyril	Hughes-Young, Michael	Scott-Hopkins, James
Bourne-Arton, A.	Johnson, Eric (Blackley)	Seymour, Leslie
Box, Donald	Legge-Bourke, Sir Harry	Shaw, M.
Boyle, Sir Edward	Lewis, Kenneth (Rutland)	Smith, Dudley (Br'ntf'rd & Chiswick)
Brewis, John	Linstead, Sir Hugh	Smithers, Peter
Brown, Alan (Tottenham)	Litchfield, Capt. John	Stodart, J. A.
Campbell, Gordon (Moray & Nairn)	Longbottom, Charles	Storey, Sir Samuel
Chataway, Christopher	McLaren, Martin	Summers, Sir Spencer (Aylesbury)
Clark, William (Nottingham, S.)	McLaughlin, Mrs. Patricia	Talbot, John E.
Clarke, Brig. Terence (Portsmth, W.)	Macleod, Rt. Hn. Iain (Enfield, W.)	Taylor, Sir Charles (Eastbourne)
Cordeaux, Lt.-Col. J. K.	Macmillan, Maurice (Halifax)	Taylor, Frank (M'ch'st'r, Moss Side)
Corfield, F. V.	Maddan, Martin	Thomas, Peter (Conway)
Coulson, Michael	Markham, Major Sir Frank	Tiley, Arthur (Bradford, W.)
Courtney, Cdr. Anthony	Mathew, Robert (Honiton)	Touche, Rt. Hon. Sir Gordon
Curran, Charles	Matthews, Gordon (Meriden)	Vickers, Miss Joan
Dance, James	Mawby, Ray	Walder, David
d'Avigdor-Goldsmid, Sir Henry	Maydon, Lt.-Cmdr. S. L. C	Walker, Peter
Doughty, Charles	Mills, Stratton	Wall, Patrick
du Cann, Edward	Morrison, John	Ward, Dame Irene
Elliot, Capt. Walter (Carshalton)	Nabarro, Gerald	Webster, David
Farey-Jones, F. W.	Osborn, John (Hallam)	Wells, John (Maidstone)
Fell, Anthony	Page, Graham (Crosby)	Williams, Dudley (Exeter)
Finlay, Graeme	Pannell, Norman (Kirkdale)	Wise, A. R.
Fisher, Nigel	Pearson, Frank (Clitheroe)	Wolrige-Cordon, Patrick
Fraser, Ian (Plymouth, Sutton)	Peel, John	Woollam, John
Gibson-Watt, David	Pitman, Sir James	Worsley, Marcus
Gilmour, Sir John	Pitt, Miss Edith
Grant, Rt. Hon. William	Pott, Percivall	TELLERS FOR THE AYES:
Green, Alan	Powell, Rt. Hon. J. Enoch	Mr. Edward Wakefield and
Gurden, Harold	Prior, J. M. L.	Mr. William Whitelaw.

NOES
Arbuthnot, John	Hayman, F. H.	Paget, R. T.
Beaney, Alan	Howell, Charles A. (Perry Barr)	Pavitt, Laurence
Blackburn, F.	Howell, Denis (Small Heath)	Redhead, E. C.
Bowden, Rt. Hn. H. W. (Leics, S. W.)	Jones, Elwyn (West Ham, S.)	Roberts, Goronwy (Caernarvon)
Brockway, A. Fenner	Kelley, Richard	Ross, William
Brown, Rt. Hon. George (Belper)	King, Dr. Horace	Small, William
Cliffe, Michael	Lawson, George	Spriggs, Leslie
Craddock, George (Bradford, S.)	Lever, L. M. (Ardwick)	Stones, William
Davies, Harold (Leek)	Lewis, Arthur (West Ham, N.)	Taylor, Bernard (Mansfield)
Delargy, Hugh	Loughlin, Charles	Wade, Donald
Diamond, John	Mabon, Dr. J. Dickson	Wainwright, Edwin
Driberg, Tom	MacColl, James	Watkins, Tudor
Forman, J. C.	McInnes, James	Weitzman, David
Fraser, Thomas (Hamilton)	Manuel, A. C.	Whitlock, William
Gaitskell, Rt. Hon. Hugh	Mason, Roy	Wilkins W. A.
Galpern, Sir Myer	Mendelson, J. J.	Willis, E. G. (Edinburgh, E.)
Gordon Walker, Rt. Hon. P. C.	Millan, Bruce
Gunter, Ray	Mitchison, G. R.	TELLERS FOR THE NOES:
Hall, Rt. Hn. Glenvil (Colne Valley)	Noel-Baker, Francis (Swindon)	Mr. Ifor Davies and
Hannan, William	Oram, A. E,	Mr. Sydney Irving.

1961, a copy of which was laid before this House on 4th January, be approved.