HC Deb 16 May 1962 vol 659 cc1359-488

4.25 p.m.

Mr. A. E. Oram (East Ham, South)

I beg to move, in page 7, line 31, to leave out "and" and to insert: for any reference to a rate of twenty-five per cent. a reference to a rate of twenty per cent. This Amendment covers a wide range of important domestic equipment. It would seem that the Chancellor of the Exchequer is missing an opportunity, if he does not accept the Amendment, of lending a helping hand to home-makers who have been through a particularly "sticky" time recently. The House has frequently discussed the handicaps under which newly-married couples, seeking to make a home for the first time, are suffering from increased rents, increased mortgage charges, cost of living, and other things. I suggest that the Chancellor ought seriously to consider accepting this Amendment and taking at least one step in the opposite direction to relieve some of the burden on such people.

The important list of articles covered by the present rate of 25 per cent. includes gas and electric water heaters, refrigerators, washing machines, vacuum cleaners, sewing machines, electric irons, light bulbs, stationery and toilet soap. I suggest that that is a list of articles which are very necessary for the effective running of a modern home. To tax them at the rate of 25 per cent. is unjustified. This modest Amendment, suggesting a reduction to 20 per cent., is entirely worthy of the support of the Committee.

We are in a position this year of having to put down Amendments relating to whole rates of tax; we are not able to move to reduce in relation to specific items. Therefore, I readily recognise that my Amendment covers other articles which I would not claim are nearly so essential in the home as those I have mentioned. I claim, however, that this rate of 25 per cent. covers such an important number of commodities of an essential kind that it will not matter if by accepting it we allow some other articles which many of us would not be so keen about to get in.

In discussing Purchase Tax we often make comparisons between one item and another. It is worth making one comparison between a set of articles which are entirely exempt from Purchase Tax, workmen's tools, and the set of articles to which I have referred, which are housewives' tools. Although, obviously, I very much welcome the fact that workmen's tools are exempt, I cannot see why the husband's equipment should not be taxed whereas the wife's equipment is taxed. I believe that a strong case could be made for the complete removal of Purchase Tax from some of the items to which I have referred, but we are not suggesting that.

All we are suggesting is that the 5 per cent. reduction should apply to this range of goods as it applies to other ranges under the Chancellor's proposals.

Take, for example, a vacuum cleaner. Surely that is an absolutely essential item of the housewives' equipment. It is taxed at 25 per cent. Spades and forks which husbands use in the garden are tax-free. I cannot see why one should be tax-free and the other taxed at this penal rate.

4.30 p.m.

Surely there is scarcely any item of domestic equipment which is more essential to every family than an electric iron, yet it comes within this range. If our Amendment were accepted, electric irons would be relieved of at least 5 per cent. of the tax.

The Chancellor of the Exchequer referred to refrigerators in his Budget speech. Although, perhaps, it is not absolutely essential to the running of a modern home, a refrigerator is certainly a most desirable piece of equipment. The Chancellor should be considering how he can encourage people to incorporate refrigerators in their homes rather than tax them at the present rate.

Water heating apparatus, although perhaps not as essential in the home as the other items to which I have referred, is essential in offices and shops, which are quite rightly required to install water heating equipment. Why require a small shopkeeper to install water heating apparatus by law and then impose a 25 per cent. tax on him for the privilege of conforming to the law?

Another item in this list is the ordinary, electric light bulb, which is also taxed at 25 per cent. It seems to me that this is completely unjustified. There was a time when there was a window tax in this country. The light which came in from outside used to be taxed, and a long campaign was necessary before that absurd tax was finally removed. I believe that the time will come when people will look back and will think it just as absurd to tax the means of getting electric light which is necessary in the evenings as it was to tax the daylight which comes through the window.

In this range of commodities is such an elementary necessity as toilet soap. We have a tax not only on light, but on keeping clean.

All these are items which, I am sure, the Chancellor of the Exchequer should, to some extent, be able to relieve of Purchase Tax. The Amendment does not seek, as I think we might be justified in seeking, the complete removal of Purchase Tax from these commodities. I therefore hope that we shall have a sympathetic reply from the Treasury Bench and that the Amendment will be accepted. Clause 6 gives us the opportunity to make important changes in the Purchase Tax structure, and I think that it would be wrong if we let this opportunity pass without removing the anomalies to which I have called attention.

Mr. Gerald Nabarro (Kidderminster)

I hope that my right hon. and learned Friend the Chancellor of the Exchequer will resist the Amendment for a number of reasons which I believe to be good and sound.

The first is a revenue reason. I believe that the cost of an Amendment of this kind, which was rather underestimated in its importance by the hon. Member for East Ham, South (Mr. Oram), would be £33 million in a full year. That is a substantial part of the total revenue which my right hon. and learned Friend expects to derive from Purchase Tax in the full year 1962–63, which was stated in his Budget speech to be £576 million. It would represent the abandonment of about 6 per cent. of his total Purchase Tax revenue. I would, therefore, oppose the Amendment on that ground alone.

But there is a second and, I conceive, a more important reason for opposing the Amendment, and that is from a fiscal point of view. No doubt it would be more appropriate broadly to deal with this aspect on the Question, "That the Clause stand part of the Bill". I content myself, on this Amendment, with saying that there is a powerful case for broadening the base of Purchase Tax to take in all manufactured articles which have in the past been subjected to this form of taxation and to add others, such as sweets, confectionery and soft drinks—and I would add general advertising—in order to achieve, after two consecutive Budgets, a low, overall, nondiscriminatory and uniform level of Purchase Tax which, in my opinion, should be 16⅔ per cent. of the wholesale price of the goods taxed, or a straight 2d. in the 1s.

Tinkering about with the tax by trying to establish that certain articles are more necessary to householders than others, or tinkering about with the tax on the hypothetical basis that some articles contain a greater element of luxury than others, is a wholly wrong approach to the problem. Some people may argue that electric irons, electric fires, gas fires or refrigerators are essential articles in a household. Other people may argue that they are luxury articles in a household. It depends on one's philosophy.

I should like to tax the hon. Member for East Ham, South with a valid and legitimate comparison. Why, after the Chancellor's proposals, are we still proposing to tax refrigerators at 25 per cent. and carpets at 10 per cent. when both articles are universally accepted as desirable in the modern household? I use that example at random. I believe that they are equal in their essentiality and that neither contains a substantial element which might be deemed luxurious in character.

This underlines my point that all manufactured goods contribute in the broadest economic sense to two important desiderata. First, they employ British men and women and, therefore, contribute to the policy of full employ- ment. Secondly, they contribute, directly or indirectly, to our export trade, and it is extremely harmful and injurious to discriminate between manufactured article and manufactured article on the home market by differential rates of tax.

Mrs. Barbara Castle (Blackburn)

Am I to take it that the hon. Gentleman is in favour of carpets being taxed at 16⅔ per cent.?

Mr. Nabarro

No. If the hon. Lady had listened, she would have heard me say that I am in favour of making progress towards a uniform and non-discriminatory level of taxation over a whole range of articles. I do not wish to make a speech which would be more appropriate on the Question, "That the Clause stand part of the Bill", because we are dealing with a relatively narrow issue. I promise the hon. Lady that I will deal comprehensively with her point later today if I catch your eye, Sir William.

It is quite wrong to select motor cars, cosmetics, radios, television sets, gramophones and gramophone records and say that they are so luxurious that they must carry a 55 per cent. tax before this Budget or a 45 per cent. tax after this Budget but that a Savile Row suiting is so non-luxurious that it should only be taxed at 5½ per cent. before this Budget or 10 per cent. after this Budget. The same considerations apply to furniture, in which my hon. Friend the Member for Wycombe (Mr. John Hall) is keenly interested.

If the Chancellor accepted the Amendment it would, as I say, diminish the revenue from Purchase Tax by £33 million in a full year, which is quite wrong having regard to the needs of the Revenue and the apportionment to a form of indirect taxation of this kind of about 9 per cent. of our total revenue requirements. The second and much more powerful reason is that it would be ethically wrong when my right hon. and learned Friend is endeavouring in this Budget, and, I hope, in the next, to compress the Purchase Tax rates and make progress towards the principles which I have constantly enunciated over the years, of a single uniform rate of Purchase Tax at wholesale level. I hope that for these reasons my right hon. and learned Friend will consider in his wisdom that he should resist the Amendment.

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

The hon. Member for Kidderminster (Mr. Nabarro) argues that we should not be tinkering about with an Amendment of this kind, but with this sort of Budget it is our only way of expressing our opposition to Purchase Tax on certain articles. The only other point that the hon. Member made means that he wants the Government to work towards a complete sales tax.

Mr. Nabarro


Mrs. Slater


Mr. Nabarro

A sales tax means a tax at retail level on the American model. I do not want that. It would mean 650,000 collection points compared with 160,000 for a wholesale tax at wholesale level, which is Purchase Tax.

Mrs. Slater

It is still a sales tax whether it is a collection at the retail or wholesale level, and the real purpose of the hon. Member's suggestion is that every single item should bear tax. I hope that housewives, and men, also, will notice the direction in which the minds of hon. Members like the hon. Member for Kidderminster are working and that they are really aiming at a tax on everything we buy.

Mr. Nabarro

We are in Committee, but I apologise for intervening again. The hon. Lady really must not twist the words I used. I deliberately spoke, as she will find if she looks at HANSARD, of the application of a uniform level of tax to all manufacture articles currently attracting tax. I do not want Purchase Tax put on food, fuel or transport services. I am talking only about manufactured articles currently attracting Purchase Tax.

Mrs. Slater

That is a little qualification, but it still means asking the Chancellor to work towards a tax on every manufactured article, because that is the logic of the argument. The articles which come within the Clause with which the Amendment seeks to deal are becoming almost hardy annuals with some of us, because in every debate on a Finance Bill we fail to relieve completely from Purchase Tax the tools used by the housewife.

Sometimes one is led to believe that among some hon. Members opposite there is an objection and almost a resistance to women having some of these articles. We know that some hon. Members opposite think that, because they put that argument up as a case against old-age pensions on the ground that too many people have vacuum cleaners and electric washing machines.

4.45 p.m.

As one who does a fair amount of housework, I consider that every one of these articles is absolutely essential in the home. One has only to imagine a woman today having to do without an electric iron. She would have to put the old-fashioned iron on the gas stove, for there are today not many ordinary fires capable of warming the old-fashioned iron as they were warmed in our grandmothers' day. Again, if we are to have the carpets which the hon. Member for Kidderminster is anxious that every housewife should have, the vacuum cleaner is an absolute "must". Cleaning a carpet without a vacuum cleaner is not only hard work, but it ruins the carpet.

This is the age of "do-it-yourself". Most men are persuaded by their wives to do jobs in the home, and for the woman the sewing machine is an essential article for the same purpose. The woman, with the aid of the sewing machine, makes clothes for the children and summer dresses and does the mending and patching. Anyone who has a sewing machine, particularly an electric sewing machine, knows what a difference it makes to jobs which otherwise would have to be done by the longwinded method of sewing by hand.

The refrigerator trade is having a particularly difficult time at the moment. One has only to go round the shops to see how refrigerators are now being sold at much lower prices because the industry is going through a "sticky" period. I regard it as absolutely vital that every household should have a refrigerator. We hope that we shall have a good summer this year, and in summer, particularly, a refrigerator is a godsend. A woman who has one can do her shopping in one go. This is particularly an advantage to the woman who goes out to work. She is spared having to rush home from work to do the shopping.

I hope that the Chancellor will say that he will look at these items again. These items have been a necessity in the households of hon. Members opposite for many years, but among many of the people whom we on this side of the Committee represent they are only beginning to be placed on the list of "musts" when young people get married.

Mr. Nabarro


Mrs. Slater

It is quite true. It is not rubbish at all. If the hon. Member thinks that what I am saying is not true, it is apparent that he does not go into many homes and does not realise how many are without a refrigerator, for example.

Mr. Nabarro

A bath.

Mrs. Slater

It is not a farce. That is a typical comment from the hon. Member.

Mr. Nabarro

I said "a bath" not "a farce".

Mrs. Slater

All right. I do not want to have any fun with the hon. Member. With that smile on his face, he tries to "take a rise" out of people. It makes me feel like doing the school teacher on him and looking at him very severely.

Mr. Charles Loughlin (Gloucestershire, West)

It would not make any difference.

Mrs. Slater

My hon. Friend must not be so sure.

It is typical of many hon. Members opposite that they think that everybody in the country has these articles in the home. I am sure that when young people get married, even when both are working, it is a real problem for them to find the money to furnish their homes with absolute essentials without even bothering to consider some of these commodities. I hope that the Chancellor will not he as hard-hearted as Chancellors have been for a long time and that he will consider the Amendment favourably. It proposes a small reduction, but, nevertheless, it is a step in the right direction.

Mrs. Castle

I should have been a great deal more impressed by the intervention of the hon. Member for Kidderminster (Mr. Nabarro), in which he lectured us on the need to have a coherent philosophy and economic policy about Purchase Tax, if I had heard him, during the Budget debate, express his disapproval of the Chancellor of the Exchequer's announcement that Purchase Tax on carpets was to be reduced from 12½ per cent. to 10 per cent.

Mr. Nabarro

The figure is wrong. The hon. Lady really ought to do her homework before she argues with me. Before the Budget, the Purchase Tax on carpets was 13¾ per cent., and, after the Budget, the Purchase Tax on carpets was only 10 per cent. The hon. Lady has got her arithmetic wrong.

Mrs. Castle

I have done my homework a little better than the hon. Gentleman has. I have the Customs and Excise documents in front of me. Group 9 at 12½ per cent. is now down to 10 per cent.

Mr. Nabarro

The hon. Lady forgets that the regulator was in force before the Budget and that the 12½ per cent. therefore became 13¾ per cent. and is now 10 per cent., a reduction of 3¾ per cent. Perhaps the hon. Lady will now withdraw her statement.

Mrs. Castle

I shall not. I was talking about Purchase Tax and the regulator is not Purchase Tax.

Mr. Nabarro

Do not be silly.

Mrs. Castle

The fact that the hon. Member now wishes to add the regulator to Purchase Tax strengthens my point, because it means that the reduction that the Chancellor has made on his behalf is even greater.

Surely the argument which the hon Member has just used against our Amendment applies with equal force against the Chancellor's reduction on carpets at 12½ per cent., or 13½ per cent., or whatever the hon. Member wants to call it, to 10 per cent. Is there not a loss of revenue involved in that reduction of Purchase Tax on carpets, and is not the hon. Member jeering at us for wanting a 5 per cent. reduction in tax on these groups on the ground that this would entail a loss of revenue?

What is more, does not the second argument that the hon. Member used against the Amendment also apply to the reduction of tax on carpets? Has he not just told us that it is time that we all moved towards a unifrom rate of tax on all manufactured articles currently bearing tax? Has he not told us that the goal towards which we ought to be moving is a tax of 2d. in 1s., or 16½ per cent., and was not the Chancellor, therefore, taking a step in the wrong direction, according to the hon. Member's argument, when he reduced Purchase Tax on carpets to 10 per cent.? Is not the hon. Member's argument against our Amendment therefore completely invalid?

When the hon. Member fails to protest against a reduction in tax on carpets and totally failed to answer my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater), I challenge him to say whether he believes that carpets ought to be included in this uniform higher rate of 16½ per cent. He was, of course, showing that he is quite prepared to philosophise at someone else's expense, but not at the expense of his own constituency's interests. It is very easy for the hon. Member to make a sweeping generalisation to the effect that what we need is a total lack of discrimination between manufactured articles, but he is very glad about tax discrimination in favour of his constituency's interests.

I also want to suggest to the hon. Member that he is again being illogical because he carefully qualified his statement when my hon. Friend the Member for Stoke-on-Trent, North intervened to say that this would mean telling the people that the hon. Member was in favour of putting a tax of 16½ per cent. on a wide range of essential articles not now carrying it. This he denied. That, he said, was a grave distortion of his argument. He will not deny, I hope, that it would mean increasing the tax on a large number of essential articles—and increasing it quite substantially.

Later, we shall protest at the increase of 5 per cent. to 10 per cent. The hon. Member does not think that that goes far enough. He wants an increase on a wide range of essential articles from 5 per cent. to 16½ per cent. He indignantly denied that he wished to include in the 16½ per cent. any manufactured goods not currently carrying tax. Surely that destroys the whole logic of the hon. Member's argument. He is saying that there is no basis on which he would discriminate between the validity of one manufactured article and another in its claim for preferential tax treatment, but what do we do in these Customs and Excise tables?

We can read in every group a long list of exemptions—which the hon. Gentleman apparently wishes to continue—because we have decided in the past that there are some articles which are so essential in their purpose and have such a special use that they ought to be exempted. They include such things as children's clothing, babies' cots and fireguards. On what ground have we exempted these articles? We exempted them on the ground that there was an overwhelming social argument for them to attract preferential tax treatment.

I am not surprised that the hon. Member for Kidderminster has ceased to listen to my argument, because it is totally unanswerable. It is part of his typical discourtesy, and a piece of untypical cowardice, for him to turn his back on me at the most telling point of my argument. I want the hon. Member to tell me quite categorically whether he is in favour of a 16½ per cent. tax on the following articles which are at present exempt: household brushes and brooms, mops, babies' high chairs, cradles, cots, playpens, invalid chairs, fireguards, children's clothes—I could go on indefinitely. Is it part of his philosophy that all these items, being manufactured goods between which no discrimination can be drawn, should carry tax at 16½ per cent.? Will he answer that?

Mr. Nabarro

Certainly. My two speeches on this topic, relating precisely to the Nabarro plan of Purchase Tax, were on 3rd July, 1961, and 10th April, 1962. I recommend that the hon. Lady goes away and does her homework by reading those speeches. Therein is contained an encyclopedic range of detailed information concerning Purchase Tax and how it should be reformed.

Mrs. Castle

It is not, thank goodness, compulsory homework on every Member of Parliament to have to read the hon. Gentleman's speeches. I am putting a simple question to him. Has he the courage to answer me now and say whether it is part of the Nabarro plan to put a 16½ per cent. tax on household brushes and brooms, mops, babies' high chairs, cradles, cots, playpens, invalid chairs, fireguards and children's clothes? Has he the courage to answer that categorically, or has he forgotten the content of his own speeches?

5.0 p.m.

Mr. Nabarro

That is a very impertinent suggestion. I must commend to the hon. Lady that she should do her homework with greater assiduity than she has in the past and read the two important speeches, both Parliamentary ones, to which I referred.

Mrs. Castle

In other words, the hon. Gentleman is running away. Because of that I must make one of two deductions, and the Committee can decide which is right. Either the hon. Gentleman is in favour of putting a tax of 16½ per cent. on a wide range of articles which even this Government think are so essential that they are tax-free, or he is not desirous of doing so, in which case he is accepting the principle of discriminating between the claims of one article as against another. This being so, his whole case against the Amendment fails, because our case is that we have discriminated in the past and that we ought to go on doing so.

There are many anomalies and injustices in the groups of Purchase Tax, and it is our duty every year to go through the different groups and decide whether, because of changed social conditions, the time has come to make changes here and there. As my hon. Friend the Member for Stoke-on-Trent, North said, the pattern of life in the home is changing all the time. Things that were not considered essential ten or twenty years ago are today part and parcel of every home, and this tendency ought to be encouraged.

We say that by refusing to review this group which attracts a tax of 25 per cent. the Chancellor has failed to do his homework and has failed to continue to do his job of sifting the more essention articles from the less essential ones and giving them preferential treatment. Because of the way in which the Bill is drafted, we on this side of the Committee are compelled to move to reduce the Purchase Tax by 5 per cent. on this whole group of articles.

If we had our way there are certain items that we would exempt from the 5 per cent. cut. For instance, I would exempt fur garments and precious jewellery from this cut but I would not exempt non-precious jewellery, which is now one of the most widely used decorative devices among my sex. There is a wide range of attractive and inexpensive jewellery, and young ladies in all walks of life ring the changes in their clothing and appearance by using it. Good luck to them. I hope that men will encourage women to look more attractive, and not try to discourage them from doing so.

There are surprisingly few of what one might call luxury or semi-luxury articles in this group of goods which carry 25 per cent. tax. It is overwhelmingly a group of essential, and increasingly essential, articles. As my hon. Friend the Member for Stoke-on-Trent, North said, we live in a "do-it-yourself" age. I suggest to the men in the Committee that they go through this group carefully. If they do, they will find that it consists of an overwhelming number of "do-it-yourself" commodities.

My hon. Friend referred to sewing machines. We know that today a large number of young women who have not a great deal of money to spend make a large number of their own garments at home. They ought to be encouraged to do this, because it helps to save money that would otherwise have to be paid by their husbands or parents, yet we tax the implements with which they make their own clothes. We tax sewing machines at 25 per cent.; scissors at 25 per cent.; electric irons, with which to press the garments, at the same figure; and a wide range of other articles which enable people to do things for themselves.

Laundry bills are exorbitant, and increasingly the modern housewife is doing her washing at home. The difficulty is that washing machines are taxed at 25 per cent., and so are appliances for heating water. Are we entitled to continue imposing this level of taxation on these essential articles? Ought not we to make a 5 per cent. reduction on these articles and thus encourage the kind of domestic activity to which I have referred?

Gardening implements also come within this group. We tax lawn mowers and rollers at this figure. These are implements of an essential form of domestic activity and are becoming of increasing importance in many homes. Catering implements carry this heavy tax, and so does everything from a vacuum cleaner to a gas poker. Today, it is almost impossible for a housewife to cater economically for her family unless she has a refrigerator. This is no longer a luxury and certainly ought not to be taxed at this rate.

Feminine adornment is becoming of increasing importance to many young women today. Many young girls and young wives carry out their own hairdressing at home, yet we levy a tax of 25 per cent. on articles which are essential to them. On such elementary items as hairpins, hair grips, hair curlers, shampoo, brushes, combs and soap we levy a tax of 25 per cent. This tax is also applied to hair drying machines used at home, but if the young girl goes in for hair waving and curling, she is faced with 50 per cent. tax on the materials used. To levy this tax is to fail to realise that there has been a social revolution. Today a girl feels as inadequately dressed without a smart hair-do as she used to feel ten years ago without lipstick.

Having a hair-do helps to boost women's morale, and this practice has largely done away with the wearing of hats. The tax on hats is 5 per cent., yet when a girl has a set and shampoo the implements for doing it are taxed at 25 per cent. I therefore say that this afternoon the Committee ought to look carefully at this group of taxable items, and having done so, and having done its job of once again weeding out those items which are more essential from those items which are less essential, should accept this modest reduction in the name of facing the social realities of today.

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

The issue which the hon. Member for East Ham, South (Mr. Oram) raises in this Amendment is clear-cut. It concerns what is known as the standard rate of Purchase Tax.

I ask the Committee to remember, first, something which is not immediately apparent from the terms of the Amendment. The hon. Member for East Ham, South said that the Chancellor of the Exchequer should give some relief to this category of goods, but in his Budget my right hon. and learned Friend has reduced the effective rate of Purchase Tax on the articles which are the subject of this Amendment from 27½ per cent. to 25 per cent., and he has done this at a cost of £12½ million to the Exchequer.

In yesterday's debate there was a good deal of criticism of my right hon. and learned Friend for using the economic regulator last year and following it up in this Budget by consolidation. I should have thought that those hon. Members who criticised my right hon. and learned Friend yesterday would at least have given him some credit for what he has done in the case of Purchase Tax.

Mr. Douglas Houghton (Sowerby)

Is this not a classic Tory story? First, the Government put up the tax, and then they claim credit for putting it back to where it was before.

Mr. Barber

If the hon. Gentleman would "hold his horses" for a moment I would remind him of one or two rates as they were a few years ago, which, in view of his observations, I think will surprise him.

This Amendment seeks to reduce the 25 per cent. standard rate to 20 per cent. This proposal, considered in isolation, is most desirable, but when one considers, as my hon. Friend the Member for Kidderminster (Mr. Nabarro) pointed out, that it would cost £33 million a year to concede it, it soon becomes apparent that it is quite impossible to consider it in isolation. To put it bluntly, it simply would not be "on" for my right hon. and learned Friend to accept an Amendment of this kind this year.

I am sure that nobody in this Committee would accuse the Government of not wanting to reduce Purchase Tax—

Mr. Ede (South Shields)

Good heavens.

Mr. Barber

The right hon. Gentleman says "Good heavens". Perhaps I may remind him, as well as the hon. Lady the Member for Blackburn (Mrs. Castle), of the great progress which the Government have made in the past ten years.

I do not intend to go all through the Purchase Tax schedules, as the hon. Lady did. It is very easy to do that, and there is a considerable amount that one could say from the other point of view, too. I shall limit myself to a few of the articles which have been mentioned in the debate and which are the subject of this Amendment.

In 1952—and the tax was no lower at the end of the period of office of the Labour Government—furs, jewellery, fancy Roods and even electric heaters were all taxed at 100 per cent. They are now taxed at 25 per cent. At the same time, in 1952, refrigerators, washing machines, vacuum cleaners and even gas fires were taxed at 66⅔ per cent. They are now taxed at 25 per cent. A host of other articles, including lighting fittings, stationery, bicycles and motor cycles were all taxed at 33⅓ per cent.—a rate which has now been reduced to 25 per cent.

At least, I am sure of one thing, and that is that we shall have the congratulations of the hon. Lady on what has been achieved by successive Governments during these past ten years.

Mr. Douglas Jay (Battersea, North)

If it is the Government's policy to bring down Purchase Tax, why are they raising the 5 per cent. rate to 10 per cent.?

Mr. Barber

The next Amendment deals with that very point, and I shall be very happy to explain then the reasons for the change.

The hon. Lady the Member for Blackburn referred to the difficulties of the housewife. It is perfectly true that if this Amendment were accepted it would involve a slight reduction in the cost of living, but I think that we should keep the matter in perspective. I myself was somewhat surprised to find that if the Amendment were accepted the consequence would be a reduction in the cost-of-living index of only one-tenth of a point. I am told that the average household spends about £1 a week on goods liable at this rate of 25 per cent. That includes 4s. Purchase Tax. It follows that this Amendment would benefit the average household by only about 9d, a week—in other words, 39s, a year for the average household, not even as much for each individual.

The hon. Member for East Ham, South referred to what I think he called the housewife's tools. But I should remind the Committee that the goods which are taxed at 25 per cent. are by no means all necessities. I mentioned a few moments ago furs and jewellery, and there are cameras, pictures and so on. I agree with my hon. Friend the Member for Kidderminster on something that I thought everybody knew, that there is no basic principle in the system of Purchase Tax that essentials should be exempt. This has never been a principle which has been held by either Labour or Conservative Governments.

Mrs. Castle

On what basis were the items to which I referred exempted? Why exempt a fireguard except on the ground that it has a social importance and that we want to make sure that every home has got something which will prevent a baby from getting into the fire? Is that not the purpose?

5.15 p.m.

Mr. Barber

All I can say is that if the hon. Lady looks back over the years she will find that it is not a sustainable proposition that essentials are not liable to Purchase Tax. Many essentials have been liable to Purchase Tax right from the beginning. One or two exceptions have been made for various reasons, but they do not come within this particular group. It is not a principle of Purchase Tax that essentials should be exempt.

Dr. J. Dickson Mabon (Greenock)

If one is trying to reduce the rate at which Purchase Tax is levied on certain articles, is it not reasonable to argue that there ought to be a basic principle of priorities and that certain groups ought to be treated in a certain way?

Mr. Barber

There is also one other principle which has been adhered to by successive Governments, and that is that certain goods are placed in a category which involves a higher rate of tax than others because they are, in fact, very considerable revenue raisers. For ex- ample, one that comes to mind immediately is the motor car and the television set. I think that I am right in saying that there are 11 million television sets in this country, yet they are still taxed, even with my right hon. and learned Friend's reductions, at the rate of 45 per cent. In the context of this year's Budget, my right hon. and learned Friend could not contemplate, in addition to the reductions in Purchase Tax which he has already made, this further reduction at a cost of £33 million.

I went over this particular ground at considerable length yesterday in the debate which we had on hydrocarbon oil duty—looking at the various Amendments in the context of the Budget, and I will not weary the Committee by going over it again. We had a useful debate marred only by the lack of any expression of a point of view by the Liberal Party.

Mr. Nabarro

Where are the Liberals? Would my hon. Friend send for the Liberal shadow Chancellor of the Exchequer?

The Temporary Chairman (Mr. F. Blackburn)

Order. This Amendment does not deal with the Liberal Party.

Mr. Nabarro

It was my hon. Friend the Economic Secretary who led me into that error.

Mr. Barber

I apologise, Mr. Blackburn, and bow to your Ruling.

No hon. Member of this Committee with any degree of responsibility would seriously suggest that this Amendment could be accepted this year. I therefore ask the Committee to reject it.

Mr. Jay

The Economic Secretary has given a very poor and perfunctory answer to the arguments of my hon. Friends. The hon. Gentleman's first argument is that the Chancellor can claim credit because he has already reduced this rate from 27½ per cent. to 25 per cent. It is worth considering what he has done. He found this rate of 25 per cent.; he raised it by the regulator to 27½ per cent. He found a 50 per cent. rate and raised it to 55 per cent. He now drops the 55 per cent., rate to 45 per cent. and he drops this rate back to 25 per cent. where it was before. We finish up with the higher rate having come down and the lower rate staying where it was a year ago. If that is not tinkering about with the rates, I do not know what it is. The total effect is that proportionately this rate is higher than the other.

I do not know why the Economic Secretary had to speak for the Labour Government, but he made the astonishing statement that it had never been the principle of any Government, Labour or Conservative, to exempt necessities from Purchase Tax. It was, of course, the policy and the practice of the Labour Government. The hon. Gentleman must know that the great bulk of clothing, boots and shoes and furniture were exempt as necessities.

Mr. John Peyton (Yeovil)

Would the right hon. Gentleman define what he means by "necessities"? According to his definition, we would live a very austere life indeed.

Mr. Jay

I quite agree with what the present Colonial Secretary once said in one of these debates—that though the distinctions may be difficult to make, we all recognise them when we see them.

The contribution of the hon. Member for Kidderminster (Mr. Nabarro) was very interesting. He makes it perfectly clear that he is in favour of moving towards a general flat-rate tax on every manufactured article whatever.

Mr. Nabarro

No. I do not say "every manufactured article whatever". I said every manufactured article which is currently attracting Purchase Tax. That is also one of the answers to the hon. Lady, who wanted to attribute to me a desire to put a tax on articles at present not attracting tax. What I said was that it should be a flat rate of Purchase Tax on all articles currently attracting Purchase Tax.

Mr. Jay

This is interesting, because it means that the hon. Member for Kidderminster is in favour of exempting certain things altogether. Presumably, he is in favour of exempting because they are, in some sense, necessities, and, in that case, he will perhaps agree with us and not with the arguments of the Economic Secretary. At any rate, we have managed to get that clear.

Mr. Barber

I should like to ask the right hon. Gentleman whether, in view of what he says, he thinks that vacuum cleaners, electric heaters, oil heaters and lighting fittings were not essentials or necessaries. They were all taxed under the Labour Government.

Mr. Jay

I take the view that in the long run, all these things should be exempt.

What we are asking today, to show that we are moderate and realistic, is that this tax should come down from 25 to 20 per cent. There are two principal arguments for this. The first is that many of these articles now on the 25 per cent. rate are articles of ordinary household equipment, like electric fires, lamps, gas-fires, oil heaters and sewing machines. I remind the hon. Gentleman, who talks about these things having been taxed at very high rates after the war, that one of the reasons why high rates were imposed on electric fires and other such equipment was because there was a shortage of coal and oil, and it was desired to economise in the use of these fuels, with, as far as I remember, the support of the hon. Member for Kidderminster. There is no longer a shortage of these fuels, and, naturally, the argument no longer applies.

Mr. Nabarro

It is a very valid point. In the conditions of 1950 and 1951, we had to use the fiscal weapon in this sense, but Tory Party good management over the last ten years has got rid of the fuel shortage and replaced it with an abundance of fuel.

Mr. Jay

What got rid of the oil shortage was the Suez expedition, but I do not know whether the hon. Gentleman considers that good management or not.

What I am arguing is, first, that it seems rather foolish, in addition to all the other burdens which the Government's policy imposes on householders, particularly on newly-married couples setting up house, in the matter of mortgage rates, high rents and all the other difficulties, to make things worse by imposing the tax on these articles of household equipment. Even if we admitted that the other two handicaps could not be avoided, I should have thought that the Chancellor would have done something here by imposing a lower rate of tax on these things, which hon. Members opposite apparently agree are necessities and have to be included in every household.

The second argument is that, in addition to articles of household equipment, there are others which are common, normal necessities of life, some of which have not been mentioned yet, but which are included in this rate, and which all contribute a little, though not much, I agree, to the cost of living. For instance, there is soap, which has already been mentioned. The hon. Gentleman talks about taxes having been reduced by a Conservative Government, but I remember a Conservative spokesman saying, ten years ago, that it was iniquitous to have soap included in the Purchase Tax, and that a Conservative Government would wholly exempt it from tax. That was the present Viscount Chandos, but it is still taxed and now carries 25 per cent.

There are certain other household requisites which have not been mentioned which, I am sure the hon. Member for Kidderminster will agree, are just as necessary in the home as refrigerators and washing machines. There are brushes, combs, scissors, knives, razors, razors, blades, razor strops, dry shavers, dry shaver heads, mirrors and sponges. I am sure that the hon. Gentleman would agree that these are necessities. I would ask the Chancellor if it is

sensible at present, after all the many other actions of the Government—it is not just this 0.1 per cent—which have been tending to raise the cost of living, particularly to the sort of households of which my hon. Friends have been speaking. We have had the Health Service charges, higher insurance contributions and higher rents, and all these things add up.

Therefore, I think that the right way to look at an issue like this is to ask whether it is desirable to impose a further burden of tax at this rate on all these necessities of ordinary household use. Here, I should have thought that, whatever we think of the rest of the Chancellor's economic policy, there was a chance to lighten the burden and to restrain the rise in living costs which, despite the so-called anti-inflationary policy of the Government last year, is still going on.

In view of the Government's failure to do that, and of the very casual and perfunctory reply of the Economic Secretary, I hope that my right hon. and hon. Friends will carry this Amendment to a Division.

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

The Committee divided: Ayes 246, Noes 179.

Division No. 187.] AYES [5.27 p.m.
Agnew, Sir Peter Carey, Sir Robert Finlay, Graeme
Aitken, W. T. Channon, H. P. G. Fletcher-Cooke, Charles
Allan, Robert (Paddington, S.) Chataway, Christopher Freeth, Denzil
Allason, James Chichester-Clark, R. Galbraith, Hon. T. G. D.
Atkins, Humphrey Clarke, Brig. Terence (Portsmth, W.) Gammans, Lady
Barber, Anthony Cleaver, Leonard Gardner, Edward
Barlow, Sir John Cole, Norman Gibson-Watt, David
Barter, John Collard, Richard Gilmour, Sir John
Batsford, Brian Cooke, Robert Glyn, Sir Richard (Dorset, N.)
Baxter, Sir Beverley (Southgate) Cordeaux, Lt.-Col. J. K. Goodhew, Victor
Beamish, Col. Sir Tufton Corfield, F. V. Gough, Frederick
Bevins, Rt. Hon. Reginald Costain, A. P. Gower, Raymond
Biffen, John Coulson, Michael Green, Alan
Biggs-Davison, John Courtney, Cdr. Anthony Gresham Cooke, R.
Birch, Rt. Hon. Nigel Craddock, Sir Beresford Grosvenor, Lt.-Col. R. G.
Bishop, F. P. Crosthwaite-Eyre, Col. Sir Oliver Gurden, Harold
Black, Sir Cyril Cunningham, Knox Hall, John (Wycombe)
Bourne-Arton, A. Curran, Charles Harris, Frederic (Croydon, N.W.)
Boyd-Carpenter, Rt. Hon. J. Dalkeith, Earl of Harris, Reader (Heston)
Boyle, Sir Edward Dance, James Harrison, Brian (Maldon)
Bromley-Davenport, Lt.-Col. Sir Walter de Ferranti, Basil Harrison, Col. Sir Harwood (Eye)
Brooke, Rt. Hon. Henry Donaldson, Cmdr. C. E. M. Harvey, Sir Arthur Vere (Macclesf'd)
Brooman-White, R. Doughty, Charles Harvie Anderson, Miss
Brown, Alan (Tottenham) Drayson, G. B. Hastings, Stephen
Bryan, Paul Duncan, Sir James Hay, John
Bullard, Denys Eden, John Heald, Rt. Hon. Sir Lionel
Bullus, Wing Commander Eric Elliot, Capt. Walter (Carshalton) Hendry, Forbes
Butcher, Sir Herbert Elliott, R.W. (Nwcastle-upon-Tyne, N.) Hiley, Joseph
Campbell, Sir David (Belfast, S.) Emery, Peter Hill, Dr. Rt. Hon. Charles (Luton)
Campbell, Gordon (Moray & Nairn) Emmet, Hon. Mrs. Evelyn Hill, Mrs. Eveline (Wythenshawe)
Carr, Compton (Barons Court) Farey-Jones, F. W. Hill, J. E. B. (S. Norfolk)
Carr, Robert (Mitcham) Farr, John Hinchingbrooke, Viscount
Hirst, Geoffrey Mawby, Ray Smyth, Brig. Sir John (Norwood)
Hobson, Sir John Maxwell-Hyslop, R. J. Spearman, Sir Alexander
Hocking, Philip N. Maydon, Lt.-Cmdr. S. L. C. Speir, Rupert
Holland, Philip Mills, Stratton Stanley, Hon. Richard
Hollingworth, John Miscampbell, Norman Stevens, Geoffrey
Hopkins, Alan Montgomery, Fergus Steward, Harold (Stockport, S.)
Hornby, R. P. Moore, Sir Thomas (Ayr) Stodart, J. A.
Hornsby Smith, Rt. Hon. Dame P. More, Jasper (Ludlow) Stoddart-Scott, Col. Sir Malcolm
Howard, Hon. G. R. (St. Ives) Morgan, William Studholme, Sir Henry
Howard, John (Southampton, Test) Nabarro, Gerald Summers, Sir Spencer
Hughes-Young, Michael Neave, Airey Talbot, John E.
Hulbert, Sir Norman Nicholls, Sir Harmar Tapsell, Peter
Hurd, Sir Anthony Nicholson, Sir Godfrey Taylor, Sir Charles (Eastbourne)
Hutchison, Michael Clark Noble, Michael Taylor, Frank (M'ch'st'r, Moss Side)
Irvine, Bryant Godman (Rye) Nugent, Rt. Hon. Sir Richard Taylor, W. J. (Bradford, N.)
James, David Oakshott, Sir Hendrie Teeling, Sir William
Jennings, J. C. Orr, Capt. L. P. S. Temple, John M.
Johnson, Eric (Blackley) Osborne, Sir Cyril (Louth) Thatcher, Mrs. Margaret
Johnson Smith, Geoffrey Page, Graham (Crosby) Thomas, Leslie (Canterbury)
Joseph, Sir Keith Page, John (Harrow, West) Thornton-Kemsley, Sir Colin
Kerr, Sir Hamilton Pannell, Norman (Kirkdale) Touche, Rt. Hon. Sir Gordon
Kimball, Marcus Partridge, E. van Straubenzee, W. R.
Kitson, Timothy Pearson, Frank (Clitheroe) Vane, W. M. F.
Lambton, Viscount Percival, Ian Vaughan-Morgan, Rt. Hon. Sir John
Leburn, Gilmour Peyton, John Vickers, Miss Joan
Legge-Bourke, Sir Harry Pickthorn, Sir Kenneth Vosper, Rt. Hon. Dennis
Lewis, Kenneth (Rutland) Pilkington, Sir Richard Wakefield, Sir Wavell
Lindsay, Sir Martin Pitman, Sir James Walder, David
Litchfield, Capt. John Pott, Percivall Walker, Peter
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield) Powell, Rt. Hon. J. Enoch
Lloyd, Rt. Hon. Selwyn (Wirral) Prior, J. M. L. Walker-Smith, Rt. Hon. Sir Derek
Longden, Gilbert Profumo, Rt. Hon. John Ward, Dame Irene
Lucas, Sir Jocelyn Proudfoot, Wilfred Watkinson, Rt. Hon. Harold
Lucas-Tooth, Sir Hugh Pym, Francis Webster, David
MacArthur, Ian Quennell, Miss J. M. Wells, John (Maidstone)
McLaren, Martin Ramsden, James Williams, Dudley (Exeter)
Maclean, Sir Fitzroy (Bute & N.Ayrs.) Redmayne, Rt. Hon. Martin Williams, Paul (Sunderland, S.)
Macleod, Rt. Hn. Iain (Enfield, W.) Rees-Davies, W. R. Wills, Sir Gerald (Bridgwater)
MacLeod, John (Ross & Cromarty) Ridsdale, Julian Wilson, Geoffrey (Truro)
McMaster, Stanley R. Rippon, Geoffrey Wise, A. R.
Macmillan, Rt. Hn. Harold (Bromley) Robinson, Rt. Hn. Sir R. (B'pool, S.) Wolrige-Gordon, Patrick
Macpherson, Niall (Dumfries) Rodgers, John (Sevenoaks) Wood, Rt. Hon. Richard
Maddan, Martin Roots, William Woodhouse, C. M.
Maginnis, John E. Ropner, Col. Sir Leonard Woodnutt, Mark
Maitland, Sir John Royle, Anthony (Richmond, Surrey) Woollam, John
Markham, Major Sir Frank Seymour, Leslie Worsley, Marcus
Marlowe, Anthony Sharples, Richard Yates, William (The Wrekin)
Marples, Rt. Hon. Ernest Shaw, M.
Marshall, Douglas Shepherd, William TELLERS FOR THE AYES.
Marten, Neil Skeet, T. H. H. Mr. Michael Hamilton and
Matthews, Gordon (Meriden) Smith, Dudley (Br'ntf'd & Chiswick) Mr. Ian Fraser.
Maudling, Rt. Hon. Reginald Smithers, Peter
Abse, Leo Davies, S. O. (Merthyr) Herbison, Miss Margaret
Ainsley, William Deer, George Hill, J. (Midlothian)
Albu, Austen Delargy, Hugh Hilton, A. V.
Allaun, Frank (Salford, E.) Dodds, Norman Holman, Percy
Allen, Scholefield (Crewe) Donnelly, Desmond Holt, Arthur
Bacon, Miss Alice Ede, Rt. Hon. C. Houghton, Douglas
Baxter, William (Stirlingshire, W.) Edelman, Maurice Howell, Denis (Small Heath)
Beaney, Alan Edwards, Rt. Hon. Ness (Caerphilly) Hughes, Emrys (S. Ayrshire)
Bellenger, Rt. Hon. F. J. Edwards, Robert (Bilston) Hunter, A. E.
Bence, Cyril Evans, Albert Hynd, H. (Accrington)
Benson, Sir George Fernyhough, E. Hynd, John (Attercliffe)
Blyton, William Fitch, Alan Irvine, A. J. (Edge Hill)
Bottomley, Rt. Hon. A. G. Foot, Michael (Ebbw Vale) Irving, Sydney (Dartford)
Bowden, Rt. Hn. H. W. (Leics. S.W.) Forman, J. C. Jay, Rt. Hon. Douglas
Bowles, Frank Fraser, Thomas (Hamilton) Jeger, George
Braddock, Mrs. E. M. Gaitskell, Rt. Hon. Hugh Jenkins, Roy (Stechford)
Brockway, A. Fenner Galpern, Sir Myer Jones, Dan (Burnley)
Broughton, Dr. A. D. D. Ginsburg, David Jones, Jack (Rotherham)
Brown, Rt. Hon. George (Belper) Gourlay, Harry Kelley, Richard
Butler, Mrs. Joyce (Wood Green) Grey, Charles Kenyon, Clifford
Castle, Mrs. Barbara Griffiths, David (Rother Valley) Key, Rt. Hon. C. W.
Chapman, Donald Griffiths, Rt. Hon. James (Llanelly) King, Dr. Horace
Collick, Percy Griffiths, W. (Exchange) Lee, Frederick (Newton)
Craddock, George (Bradford, S.) Grimond, Rt. Hon. J. Lee, Miss Jennie (Cannock)
Cronin, John Hale, Leslie (Oldham, W.) Lewis, Arthur (West Ham, N.)
Crossman, R. H. S. Hall, Rt. Hn. Glenvil (Colne Valley) Lipton, Marcus
Cullen, Mrs. Alice Hamilton, William (West Fife) Loughlin, Charles
Darling, George Harper, Joseph Lubbock, Eric
Davies, G. Elfed (Rhondda, E.) Hart, Mrs. Judith Mabon, Dr. J. Dickson
Davies, Harold (Leek) Hayman, F. H. McCann, John
Davies, Ifor (Gower) Henderson, Rt. Hn. Arthur (Rwy Regis) MacColl, James
McInnes, James Plummer, Sir Leslie Strauss, Rt. Hn. G. R. (Vauxhall)
McKay, John (Wallsend) Popplewell, Ernest Swain, Thomas
Mackie, John (Enfield, East) Price, J. T. (Westhoughton) Swingler, Stephen
McLeavy, Frank Probert, Arthur Taylor, Bernard (Mansfield)
MacPherson, Malcolm (Stirling) Pursey, Cmdr. Harry Thomas, Iorwerth (Rhondda, W.)
Mallalieu, E. L. (Brigg) Rankin, John Thompson, Dr. Alan (Dunfermline)
Mapp, Charles Reynolds, G. W. Thomson, G. M. (Dundee, E.)
Mason, Roy Rhodes, H. Thornton, Ernest
Mellish, R. J. Roberts, Albert (Normanton) Wade, Donald
Mendelson, J. J. Robertson, John (Paisley) Wainwright, Edwin
Milne, Edward Robinson, Kenneth (St. Pancras, N.) Warbey, William
Mitchison, G. R. Rodgers, W. T. (Stockton) Weitzman, David
Monslow, Walter Ross, William Wells, Percy (Faversham)
Moody, A. S. Royle, Charles (Salford, West) White, Mrs. Elrene
Morris, John Shinwell, Rt. Hon. E. Whitlock, William
Moyle, Arthur Short, Edward Wilkins, W. A.
Mulley, Frederick Silverman, Julius (Aston) Willey, Frederick
Neal, Harold Silverman, Sydney (Nelson) Williams, LI. (Abertillery)
Oliver, G. H. Skeffington, Arthur Williams, W. T. (Warrington)
Oram, A. E. Slater, Mrs. Harriet (Stoke, N.) Willis, E. G. (Edinburgh, E.)
Oswald, Thomas Slater, Joseph (Sedgefield) Wilson, Rt. Hon. Harold (Huyton)
Paget, R. T. Small, William Winterbottom, R. E.
Pannell, Charles (Leeds, W.) Smith, Ellis (Stoke, S.) Woodburn, Rt. Hon. A.
Pargiter, G. A. Sorensen, R. W. Woof, Robert
Parkin, B. T. Soskice, Rt. Hon. Sir Frank Yates, Victor (Ladywood)
Paton, John Spriggs, Leslie Zilliacus, K.
Pavitt, Laurence Steele, Thomas
Pearson, Arthur (Pontypridd) Stewart, Michael (Fulham) TELLERS FOR THE NOES:
Peart, Frederick Stones, William Mr. Lawson and
Pentland, Norman Strachey, Rt. Hon. John Mr. Charles A. Howell.

5.30 p.m.

Mr. Houghton

I beg to move, in page 7, line 32, to leave out: or of five per cent".

The Temporary Chairman

The Chairman of Ways and Means said that with this Amendment there could be discussed the following Amendments: In page 7, line 32, leave out from "cent." to "and" in line 33 and insert: a reference to a rate of ten per cent., and for any reference to a rate of five per cent., a reference to a rate of two per cent.". In line 33, at end insert: for any reference to a rate of five per cent. a reference to a rate of two and a half per cent. and". In page 7, leave out lines 34 to 36.

In line 38, leave out "Part II of".

The Amendment in the name of the hon. Member for Edmonton (Mr. Albu), in line 39, at end insert: (2) The foregoing subsection shall not apply to references to a rate of five per cent. in respect of Groups 6, 11 and 16 and for any such reference there shall be substituted a reference to a rate of one quarter of one per cent. The Amendment in the name of the hon. Member for Shoreditch and Finsbury (Mr. Cliffe), in line 39, at end insert: (2) The foregoing subsection shall not apply to references to a rate of five per cent. in respect of Groups 1, 2, 7 and 8 and for any such reference there shall be substituted a reference to a rate of one quarter of one per cent. In line 39, at end insert: (2) The foregoing subsection shall not apply to references to a rate of five per cent. in respect of Groups 6, 11 and 16 which shall be exempt. In Schedule 8, page 50, leave out lines 3 to 14.

In page 50, leave out lines 5 and 6.

In page 50, leave out lines 7 and 8.

In page 50, leave out lines 9 to 13.

The Chairman of Ways and Means also said that, if desired, a separate Division can be taken, when we come to them, on the Amendment in the name of the hon. Member for Edmonton and that in the name of the hon. Member for Shoreditch and Finsbury.

Mr. Houghton

The procedure which you have just announced to the Committee, Mr. Blackburn, is quite convenient to us, and we should wish, I think, when the time comes, to ask the Committee to take a decision on the two Amendments as you suggest.

This Amendment is intended simply to reject the Chancellor's proposal to increase the 5 per cent. rate of Purchase Tax to 10 per cent. That is the narrow purpose of the Amendment though, of course, it has to be looked at in relation to accompanying proposals on Purchase Tax as a whole. What the Chancellor has done is to reduce the top rate of Purchase Tax, to leave the next highest rate of 25 per cent. as it was and to merge what were the 12½ per cent. and 5 per cent. rates into a new 10 per cent. rate.

The right hon. and learned Gentleman has gone even further, of course, by introducing a new 15 per cent. rate which he is proposing to put on sweets, chocolate biscuits, soft drinks, and the rest, so that the pattern of Purchase Tax, if this Amendment is rejected, will be 45 per cent., the top rate, 25 per cent. the next rate, 15 per cent. the next rate, on the limited range of sweetmeats, and 10 per cent. the lowest rate. That will be the structure of the Purchase Tax as proposed in the Bill which we wish by the Amendment to change. What we want to do is to give the Committee an opportunity of rejecting the Chancellor's proposal to increase the lowest rate at 5 per cent. to 10 per cent.

I wonder what the Chancellor's intentions are in this reconstruction of the Purchase Tax. I am sure that he takes no particular delight in doubling the Purchase Tax on clothing, footwear, head-gear, or furniture. I am sure that he has an underlying purpose in the proposal he makes. Perhaps we can see it from what he said in his Budget speech. He referred to grasping the nettle, and he said that there must be unpleasant circumstances because some rates will have to go up, but I believe that we must begin to reform the structure of Purchase Tax, particularly if we are to go into Europe. I therefore intend to reduce the spread, or limits, of the rates."—[OFFICIAL REPORT, 9th April, 1962; Vol. 657, c. 991.] The right hon. and learned Gentleman then proposed the changes which I have described to the Committee.

In subsequent debates, the Chancellor was not very forthcoming as to how far or how fast he was proposing to move into the European pattern of indirect taxation. He was content to leave it at that. Yet most commentaries on that part of his Budget speech deduced from his remarks his intention to move towards a turnover or sales tax on the European model. At least, the Chancellor made no secret of his desire to flatten down the peak and to broaden the base of the tax at the bottom. That clearly seemed to be his intention.

The effect of the Chancellor's proposal to increase the 5 per cent. rate to 10 per cent. has to be looked at not only in relation to the broad purposes which he has in mind, but in relation to the items which the increased tax will affect. The right hon. and learned Gentleman himself gave some examples in his Budget speech. He said that £100 worth of furniture would have its price raised by £2 17s. 6d. A £12 suit would go up by 7s. 6d. A £20 suit would go up by 12s. 6d. On the other side, he said that, with the reductions in Purchase Tax proposed, the price of a £600 car would be reduced by £34, the price of a £65 television set would be reduced by £3 5s., the price of £50 worth of carpets would go down by £1 3s., and £20 worth of cutlery would go down by 8s. 6d, There are, therefore, debits and credits in the merging of the 12½ per cent. rate with the 5 per cent. rate to make a consolidated 10 per cent. rate of tax.

5.45 p.m.

The increased tax covers a wide range of miscellaneous articles, a lot of them quite unexciting, many of them essential; but I think that they can be divided into two main groups: clothing, including footwear, and furniture, that is to say, articles in Group I of the classification and in Group II.

It is very likely true—I cannot be absolutely certain about it—that the category of goods subject to Purchase Tax at the lowest rate of 5 per cent. has been yielding about £60 million a year. About £50 million of that £60 million comes from clothing. Clearly, therefore, the Chancellor's proposal means doubling the Purchase Tax on clothing and footwear, and the amount which those goods will yield to the Exchequer will rise from £50 million to £100 million a year. That seems to be the arithmetic. But, to be quite fair and to put the matter into perspective, I ought also to mention that the top rate of Purchase Tax has been yielding roughly £250 million a year. It has been contributing about one half of the total yield of the tax.

If one looks at it as an instrument of taxation and considers the structure of the tax, it seems on the face of it out of balance that the top rate should yield so much and the lower rate relatively little towards the Purchase Tax. But we have to consider what type of goods we are taxing at the high rate and what type of goods we are taxing at the lower rate.

In his Budget speech, the Chancellor said that the present Purchase Tax arrangements, by their disparity, implied a sort of moral judgment on what people should or should not buy. I do not think that there is any question of moral judgment in the matter at all. The Purchase Tax seems to me to be a tax on spending graduated according to individual desires for material things. Originally, it was a strong disincentive to the purchase of many things which people could do without in war time, or in a siege economy; but now the incidence of the tax is not so much a disincentive to the purchase of these desirable things as part of a contribution to national taxation which is made at the time of buying.

I suppose that, on the whole, the Purchase Tax is based on the principle, the greater the joy of buying the higher the tax, which is not a bad principle, really and truly, when one comes to look at it from either a fiscal or a social point of view.

Mr. Nabarro


Mr. Houghton

I say "on the whole". If one looks at the articles which are taxed at the highest rate and then at those which are taxed at the lowest rate, those at the highest rate are the nonessentials. I do not call them luxuries; they are desirable things, but they are not the necessities of life. What the Chancellor proposes to do is to step up the tax on the essential things, particularly clothing, footwear and furniture, and it is to this that we take exception.

I suppose that one can discuss the principles of Purchase Tax and get bogged down in economic theory, getting nowhere in the end, because the Chancellor will always look at what sort of revenue he wants and how best he can obtain it. But I think that there is a problem in the Purchase Tax which will plague successive Chancellors for some time to come.

Mr. Nabarro

Further reform will come next year.

Mr. Houghton

We must enter repeated dissent from the approach to the matter frequently expressed by the hon. Member for Kidderminster (Mr. Nabarro).

In trying to see what was in the mind of the Conservative Party about Purchase Tax, I turned to an interesting little booklet, published at 9d, by the Conservative Political Centre, entitled "The Reform of Purchase Tax". In it is given the classic answer which was given to the House of Commons by a previous Chancellor, now Lord Amory, against the idea of a universal sales tax.

Mr. Nabarro

indicated assent.

Mr. Houghton

The hon. Gentleman keeps nodding. Perhaps, one day, he will tell us what he is in favour of.

Mr. Nabarro

I will tell the hon. Gentleman later, when I should be in order in doing so.

Mr. Houghton

I will give the hon. Gentleman an opportunity in a minute. When my hon. Friend the Member for Blackburn (Mrs. Castle) pressed him to say whether he envisaged the extension of some kind of tax to all clothing, including babies' clothing and babies' footwear, and an extension of it over the whole range of foodstuffs or services, the hon. Gentleman declined to answer. What is the hon. Gentleman advocating in the broader context of a tax of this kind?

The Temporary Chairman

We must not start again, on this Amendment, what was out of order on the last Amendment. I hope that the hon. Member will not encourage the hon. Member for Kidderminster (Mr. Nabarro) to try to get out of order.

Mr. Nabarro

On a point of order, Mr. Blackburn. I have not been out of order at all while you have been in the Chair. Otherwise, you would have pulled me up. You did not pull me up.

The Temporary Chairman

I shall have to pull the hon. Member up if he does get out of order.

Mr. Houghton

I hope not to get out of order, whether the hon. Member for Kidderminster has been out of order or tries to get out of order.

It is difficult to keep to the narrow issue, on an Amendment of this kind, without looking at the accompanying circumstances of its purpose and the context of the proposal made in the Clause as a whole. I shall do my best because there will later be an opportunity of discussing the Question, "That the Clause stand part of the Bill", and that may be a more suitable time to look at the broader issues involved.

Meanwhile, I wish to express dissent from the idea that a reformed Purchase Tax should embrace a wider and wider range of essential articles. It follows from that that we dissent from a reformed Purchase Tax which increases the tax on those articles at present attracting the lowest rate. Any move with the Purchase Tax to meet with satisfaction on these benches will have to be for the gradual exemption of more and more of the articles now taxed at the lower rate from the scope of the tax altogether. That is what we want.

The Chancellor has been receiving many representations against the proposal to increase the 5 per cent. rate to 10 per cent. on essential clothing and footwear. I have here a copy of a letter sent to him in the last 24 hours from the British Footwear Manufacturers Federation and the Footwear Distributors Federation. They complain at the effect on their business and on the level of employment which even a small increase in tax of this kind will have, saying: Whereas there may be approval of your plan to reform the Purchase Tax by moving towards a uniform rate, we are concerned that a distinction should be maintained between essential and non-essential goods. We subscribe to that in general principle; in other words, a reduction in the scope of Purchase Tax as a whole, retaining some measure of graduation by reference to common usage—to those goods which are essential to modest living as distinct from those which are symbols of an affluent society and which constitute an important feature of enjoyment and entertainment.

6.0 p.m.

If tax must be paid on goods and commodities people will pay it more cheerfully when buying the things they like and want than when buying the goods which they must have. I always feel that entertainment is something where more exploitation takes place compared with many other fields of social spending. When people are out to enjoy themselves, or when something is desirable, they are generally prepared to spend more to get it, and, incidentally, are prepared to pay some tax to get it. That, from the Chancellor's point of view, is a fairly good basis on which to work.

Meanwhile, we must deal with the immediate issue of the rise from 5 per cent. to 10 per cent. on a wide range of goods which are so important, particularly to those living on small incomes. After all, nearly everything in the 5 per cent. range of tax represents goods which old-age pensioners and families with young children must have. The tax bears harder on them—the people who are struggling to live, to maintain decent standards and to do the best for themselves and their families than other sections of the community. That is why we object to it. We would like to see these things go out of the tax altogether.

That seems to be the conclusion drawn in the Conservative pamphlet to which I referred. It states: … the progressive simplification and reduction of this tax, as speedily as the inescapable needs of the revenue will permit, until by degrees we attain as nearly as possible the ideal of a flat-rate levy causing the minimum distortion to the allocation of our productive resources. There is nothing in that sentence about increasing Purchase Tax.

My hon. Friends and I fear that this is only the beginning, especially since a flat rate of tax over the same range of articles now covered by Purchase Tax would have to be a rate of about 20 per cent. That was the percentage mentioned by Lord Amory, when he was Chancellor of the Exchequer.

Mr. Nabarro

The hon. Member has omitted to observe that by the means of bringing in additional articles this year—soft drinks, confectionery and sweets—it will now be possible for the rate to be a good deal less than 20 per cent. Lord Amory made the comments to which the hon. Member has referred about two years ago, so that the present level would be about 17½ per cent.

Mr. Houghton

I was about to mention a figure concerning a flat rate of tax that I am sure that the hon. Member for Kidderminster will agree with; that it would certainly have to be substantially higher than 10 per cent.

The Temporary Chairman

I think that the hon. Member for Sowerby (Mr. Houghton) will agree that we are, once again, getting back to the subject of a sales tax. The hon. Member for Kidderminster (Mr. Nabarro) said that he had not been out of order whilst I was in the Chair, but he is out of order now.

Mr. Houghton

I was merely pointing out that my hon. Friends fear that the Chancellor's proposals to raise Purchase Tax from 5 per cent. to 10 per cent. is not the end of the story, but that it is really the beginning of a movement upwards affecting the lower ranges of Purchase Tax coming towards a flat rate which would be substantially higher than 10 per cent. If that is in the Chancellor's mind we must warn him once again about the dangers involved, because we would strongly oppose raising the Purchase Tax on the lower range of articles to achieve a flat rate of tax for Purchase Tax as a whole.

That is our case against the proposed increase from 5 per cent. to 10 per cent. We are against the increase because of the articles that are affected by it, because of the people who must purchase the things concerned, because we fear that it is the beginning of a trend which we shall strongly oppose—that of a flat rate of tax over a large range of articles which will take it to above 10 per cent. In short, we consider that the whole thing is wrong in its immediate application and ultimate intention.

Mr. John Hall (Wycombe)

It is not very often that I find myself in agreement with the hon. Member for Sowerby (Mr. Houghton), but I must confess that I have a great deal of sympathy with much of what he had to say. However, in my remarks, I wish to concentrate on a rather narrower group of goods, namely, furniture. The hon. Member for Sowerby referred to furniture as one of the necessities of life and I regret that he did not also include bedding, because even a golden bed is no use without some bedding and so the two go very much together.

It is more than nine years since I had the privilege of making my maiden speech in the House and on that occasion I was concerned with the D Scheme affecting furniture. I made a strong plea then for a reduction of taxation and for the total abolition of the D Scheme. It was abolished a little later, but we have certainly not had the complete abolition of Purchase Tax. It seemed to have steadied itself at 5 per cent., but it now appears that the wheel has turned almost a complete circle and again we are pleading for a reduction of this tax on one of the necessities, on furniture, to prevent it going up into a higher rate.

Tempted though I am to please my hon. Friend the Member for Kidderminster (Mr. Nabarro), who is moved towards a flat rate of tax, I am still reluctant to see Purchase Tax go up to achieve that objective. Listening to my hon. Friend suggesting that the Tax should be increased and opposing any reduction in Purchase Tax is like listening to Satan rebuking sin—an unusual experience in this connection.

Mr. Nabarro

With respect to my hon. Friend, that was not what I said at all. My hon. Friend tempts me to get out of order, but I will skate over the ice carefully. There might, of course, be an increase in the lower rate of Purchase Tax, but he must be fair and recognise that motor cars, cosmetics, radio and television, would come down from 45 per cent. to 16⅔ per cent., and electrical appliances, fur coats, etc., from 25 per cent. to 16⅔ per cent. That is of more importance to the nation's export trade than the furniture of High Wycombe.

Mr. Hall

My hon. Friend tempts me to get even further out of order and to develop an argument about the contribution of the furniture trade to our exports. One of the problems which will face the furniture industry concerns its exposure to the competition of the Common Market, should we enter it. The industry must make certain that it is in a competitive position and an increase in Purchase Tax does not help that end at all.

Over the last few years the industry has made great efforts to increase its exports and has not been unsuccessful in this attempt. But it is going to find itself at a slight disadvantage as a result of this increase. I do not want to be diverted into a discussion about the relative importance of certain sections of the economy or certain goods. I am talking about furniture and there are many other hon. Members who are much better qualified than I to stand up for their own pets—be they cars or carpets—and I will not infringe on their territory. I do not want to see furniture or, indeed, even carpets go up to 16⅔ per cent., which my hon. Friend the Member for Kidderminster has in mind.

One of the unfortunate consequences of this recent increase in the tax is the way it gets through to the consumer, because it often bears little relation to the annual increase in Purchase Tax. In his Budget speech my right hon. and learned Friend mentioned that the increase would mean an extra £2 17s. 6d. per £100 of furniture sold. In fact, instead of that figure, the National Association of Retail Furnishers has made it clear that the additional cost to the customer for every £100 of furniture sold on a cash price basis is £4 per £100. On carpets it has been assumed that it would mean an increase of £3 for every £100 sold, but I gather that carpets have gone up in price rather than down following the Budget.

If we are to have increases in Purchase Tax we should be able to ensure that retailers do not calculate their marked up prices on the Purchase Tax increment as well as on the cost of the goods. The Chancellor hoped that the Purchase Tax increase on furniture would amount to a total of 4½ per cent., but the figure is exactly 6½ per cent., and this is really disgraceful. On this basis the retailers should welcome every increase in Purchase Tax which enables them to add to their profit margins. This should be looked at by the Chancellor to see whether it is not possible for Purchase Tax to be isolated in the prices quoted in the shops so that only the actual Purchase Tax and the increase is added to the price and is not marked up along with the profit mark-up.

Mr. Loughlin

I am in absolute agreement with the hon. Member for Wycombe (Mr. John Hall), but has he considered the difficulty that a retailer or manufacturer is entitled to put up his prices any time he likes?

Mr. Hall

That is true, but at least the customer can see whether the increase represents an increase in the price of the goods or whether it is an increase in Purchase Tax disguised as an increase in the price of the goods. Many people are not able to calculate Purchase Tax variations and the effect they have on the prices of goods. It is easy for the manufacturer or retailer to say that the price has gone up but that Purchase Tax has also gone up recently. If it would not take me out of order I could quote a number of examples—quite outside the furniture industry—where this sort of thing has happened, where prices have increased far more than are justified by recent increases in Purchase Tax.

Some manufacturers have endeavoured to persuade retailers not to put their mark-up on the Purchase Tax, and while they have found that some retailers have been prepared to co-operate they have also come up against an undesirable feature. In some cases they have been threatened—if that is not too strong a word to use—that if they supply retailers who do not put the additional mark-up on the increased Purchase Tax the retailers proposing not to act like that will cease to give their trade to the manufacturers in question. I do not think that "threat" is too strong a word to use in this context. The effect is that if one retailer gets out of line from the policy decided by the majority and agrees not to increase his prices by any more than is absolutely necessary as a result of increased Purchase Tax, the manufacturer who supplies him will be penalised by losing his trade with the others. I hope that this tendency will be looked into by my right hon. and learned Friend.

It has been suggested by the Chancellor that although the Purchase Tax on furniture might slightly increase the cost, people setting up homes—the young married couples—will have the increase largely offset by a reduction in the Purchase Tax on floor coverings. This is really not true, because when setting up home one spends three or four times as much on furniture as one does on floor coverings. There is no Purchase Tax on houses, but one cannot turn a house into a home without furnishing it.

As I say, furniture is a necessity and young people setting up home have enough problems to worry about. Apart from the cost of a house which, heaven knows, is high enough, the cost of furnishing it—with hire-purchase rates as high as they are and with interest on top of that—is most difficult for them. We really ought not to make it more difficult for young people to set up homes than it is already. My own Amendment to the Clause goes much further than the one we are now discussing. I should like to see the tax on furniture abolished altogether. I regard furniture as one of the necessities of life which should not be taxed at all.

I am certain that hon. Members on both sides of the Committee would wish to support me, and therefore I do not want to take up more of their time, because I think I have made the point quite clear, but I should like to remind my hon. Friend the Economic Secretary, who, I imagine, will be replying to the debate, of a famous saying of Thomas Jefferson. I came across this saying in reading an article not long ago by Professor Parkinson. Professor Parkinson, as my hon. Friend the Member for Kidderminster knows only too well, is famous for the discovery of several important laws. I want to read this quotation which I came across in that article. Thomas Jefferson said: I place economy among the first and most important of virtues, and public debt as the greatest of dangers to be feared. To preserve our independence we must not let our rulers load us with public debt. If we run into such debts, we must be taxed in our meat and drink, in our necessities and in our comforts, in our labour and in our amusements. If we can prevent the Government from wasting the labour of the people, under the pretence of caring for them, they will be happy. I draw my hon. Friend's attention to those words and I commend them to him.

Mrs. Castle

I have been very interested in the speech of the hon. Member for Wycombe (Mr. John Hall) and I am particularly glad that he drew attention to this device of an excessive mark-up which is taking place in the furniture industry. I myself do not represent a constituency with a furniture industry in it, but I have been sent by a furniture buyer—who asks that his name should be kept confidential, and who does not live in my constituency—a circular letter which is being sent out by Messrs. Staples and Company. It says on the increase of Purchase Tax: We enclose copies of an amended retail price list which is calculated on a mark-up of 50 per cent. on the tax-inclusive wholesale price. This is just one example of the practice to which the hon. Gentleman has been drawing attention. Of course, we noticed on a previous occasion at Question Time that sweet manufacturers have been following exactly the same sort of principle. They have taken the increase in tax as an excuse for a mark-up generally in prices at the expense of the consumer. This shows us how very careful we ought to be in making any of these increases in taxation on essentials, not only because of the burden which the increases themselves put on the consumers but because they provide an opportunity for manufacturers and others to give another upward twist to the inflationary spiral and to pocket a little extra for themselves.

It is really rather incredible that at this time, when the Government are trying to enforce an incomes policy of wage restraint, they should in so many directions be giving a greater encouragement to the rise in the cost of living by imposing through this Budget tax upon the essentials of life. We discussed the fuel tax yesterday and the effect on bus fares and other essential items, and now in discussing this series of Amendments to this Clause we are discussing a group of commodities which we would all agree are ones which have been classified as essential and non-luxury articles. I entirely endorse what my hon. Friend the Member for Sowerby (Mr. Houghton) has said about the folly of increasing this range of tax from 5 per cent. to 10 per cent. He has been opposing the increase.

6.15 p.m.

In the Amendment in my name we want to go further. We want to reduce the existing 5 per cent. tax to one-quarter of 1 per cent. on a specific group of essential items, notably clothing, footwear, headgear, gloves, and certain minor articles of apparel like handkerchiefs, tissues and fabrics under 12 in. in width. We were all of us very alarmed when the hon. Member for Kidderminster (Mr. Nabarro) welcomed generally the Purchase Tax proposals of the Government as being a contribution towards the levelling of Purchase Tax. He has welcomed this increase on the grounds that some part of the process of levelling has got to be by levelling up.

Mr. Nabarro

Hear, hear.

Mrs. Castle

He says it quite openly and he has justified this on the ground that there ought to be a uniform rate of tax, and that we ought to gravitate towards it.

Those of us associated with my Amendment want to have the process of levelling in a different direction. We think that the time has come for an extension of the range of articles which are exempt from Purchase Tax altogether. I understand from the various rather confused and contradictory interruptions by the hon. Member for Kidderminster that he accepts the principle of exemption. He believes there is a case for exempting certain articles. I will give him an opportunity to correct me if I am wrong.

Mrs. Slater

My hon. Friend is quite right.

Mrs. Castle

He has contradicted himself. It is rather useful on occasions to do so, because one can then, as occasion necessitates, quote other statements one has made when certain statements are quoted against one. I have no doubt that at certain electoral moments certain of the hon. Gentleman's statements will be quoted against him and that he will be able to quote others which he has made. At any rate, he did say at one stage in this afternoon's proceedings that there should not be a tax on goods already exempt.

So there is a case for exemption, and the question we are discussing on my Amendment is whether the time has come to add to the list of exemptions, or rather, getting to as near to that as we may, whether we should reduce the tax from 5 per cent. to one-quarter of 1 per cent. I do not need to explain to hon. Members that under the procedure of the Finance Bill we could not move for the total exemption because we should be out of order, and, therefore, we have to move as near to the point of total exemption as we are allowed to under the procedure, and that is to one-quarter of 1 per cent. The reason is that we think that the items covered by my Amendment clearly rank for exemption as strongly as a number of the articles which have already been exempted, and for the same reason, because they are items of an essential nature. This country has not gone nudist yet and we all have to wear clothing, footwear and gloves and use handkerchiefs and the rest.

There is, of course, an additional argument here. The hon. Member for Kidderminster objects to our making moral judgments or social judgments about the imposition of a tax. I do not agree with him on that, but I should have thought, however, that even he would have agreed that we are entitled to make certain industrial judgments in the matter of the imposition of tax. From that point of view I want to make a very special plea here for urgently needed help to be given both to the textile and the footwear industries, and an obvious and very effective way of doing it by this Budget would have been to have abolished Purchase Tax on clothing and footwear and these others items altogether.

Indeed, I think it is really typical of the Government's attitude to the textile industries in general and the cotton industry in particular that at the very moment when the cotton industry is going through one of its worst crises since the end of the war the Government should introduce a Budget in which they propose to increase the tax on clothing and certain other textile articles from 5 per cent. to 10 per cent. It is really adding injury to the endless insults which the cotton industry has suffered at the hands of this Government. Therefore, I am most strongly opposing the increase in tax—I am asking for it to be abolished altogether.

The footwear industry is in a similar situation. I have a slipper factory in my constituency belonging to Messrs. Newman's. The firm has written to me pointing out most strongly the additional difficulties which this increase will place upon it at a time when it has been going through plenty of its own due to economic circumstances. It points out the effect which the recent recession has had on demand. It has lead to the accumulation of stocks. The firm says that buyers have been holding off ever since the autumn of 1961 and the weather has not helped. It never does help in this country. In addition, it, too, has been feeling the pressure of cheap imports from Hong Kong and from the Continent, and it points out: It is generally felt that the situation will only be relieved by a good summer in 1962, a general fillip in the national prosperity, and the consequent running down of retailers' stocks. The increase in Purchase Tax in the 1962 Budget will be an added burden on the industry. I am not pretending that the Government can control the weather which we shall have in 1962, but they are directly responsible for giving a fillip to the national economy, on the one hand, and for placing additional burdens on particular industries, on the other.

Of course, all these arguments apply with even greater force to the cotton industry. I had a most interesting letter the other day from a Preston firm which brought home the very real effect of the increase in tax. This is not hypothetical, and I hope that the Economic Secretary is not going to say that the consequence of this tax will be so minor that it will not have much effect. I want him to listen to this example which was sent to me by a firm dealing in men's wear and industrial overalls. It wrote as follows: Our associated manufacturing company … who supply us and many other industrial firms received a phone call yesterday from a Liverpool laundry, who do a clean overall service, cancelling all orders for overalls. Our associates supply them with about £800 worth of overalls each month. We know that they also buy from three other firms of overall manufacturers. The reason for the cancellation is the increase in Purchase Tax on these garments. They say that this will increase their costs by about £3,000 per annum, and they have decided to supply in the future only Empire or foreign made overalls. These imported garments are, of course, several shillings less in price than those made in this country, and this will more than cancel out the new Purchase Tax rates. As you will probably know, we in Lancashire have been fighting this problem for some years. It is a heavy blow to us to find that this competition will be intensified as a result of the Governments action in raising the precentage of Purchase Tax on industrial overalls. In the light of that letter, I ask the Economic Secretary to listen most seriously to our plea for the exemption of clothing and these other minor textile articles and footwear from the tax.

I am sure that he knows the desperate struggle which Lancashire is having to hold its own with cheap imports. It is madness for us to expect Lancashire in- dustrialists to meet this competition with one hand tied behind their backs, with the 5 per cent. tax, and for the Government now to tie their other hand behind their backs with an increase in that tax. On the contrary, I ask for its abolition.

Is it not absurd that industrial overalls should carry Purchase Tax at all? The firm which I have mentioned points out that it used to be exempt under the Utility Scheme and says: No man or woman buys or wears Industrial Overalls except from necessity and we feel that this is an imposition on Industrial Overall wearers and will be an additional incentive to wage increase demands. The tax on a Boiler-suit amounts now to about 3s. per garment and many wearers have to buy several in the course of twelve months. We think that there is a strong case for these garments to be exempt from this tax. Admittedly, this is a matter of only a few shillings here and there, and every time that we make a protest the Government say that the amount is minute. But all these things are cumulative and they are all in the same direction, the direction of imposing additional burdens on an industry or on an individual, with the net result that the problems of the industrialists are made more difficult and the cost of living for individuals is increased. This makes nonsense of the Government's incomes policy, and I hope that this afternoon they will make a more sensible approach.

6.30 p.m.

Mr. Geoffrey Hirst (Shipley)

My Amendment in page 7, line 32, to leave out from "cent." to "and" in line 33 and to insert: a reference to a rate of ten per cent., and for any reference to a rate of five per cent., a reference to a rate of two per cent.". has been selected by the Chair for discussion and I say at once that it goes somewhat further than the Opposition Amendment. That was my contribution, so far as a back bencher can make a contribution, to making sure that this matter was discussed. But in order to close the ranks between Her Majesty's Opposition and myself, by no means an easy task, I am prepared to accept the basis of their Amendment and not worry too much about my own. Their Amendment seeks to leave the tax where it is. I know that they have other ambitions later, but we will leave it at that for the moment. I am ready to accept their Amendment, and if my right hon. and learned Friend the Chancellor of the Exchequer can agree to it, I shall be perfectly satisfied and happy to withdraw any further opposition on this item.

It always seems to be my hon. Friend the Economic Secretary who is on the Front Bench when I come here with my armour-piercing bullets. I am sorry about that and I hope that he appreciates that I do not make inquiries beforehand. It is just a coincidence and I trust that he is prepared to receive these bullets.

I think nothing of this tax. There cannot be any excuse for it and I cannot find any in the Budget statement. My right hon. and learned Friend referred in his Budget speech rather jocularly to grasping the nettle. I do not know what that will profit him, because if he comes to the West Riding of Yorkshire, to my constituency of Shipley or to the neighbouring towns of Bradford or Leeds, which are concerned with the making-up end of the clothing trade, I can assure him that he will be "properly stung" on this matter.

Let us get this matter into proper perspective, because I am the first to acknowledge that the actual amount per garment is not very great. But the effect is substantially greater than the figures show. No doubt my hon. Friend the Economic Secretary has come with a perfect brief on this matter, but I hope that he will appreciate that the argument about shillings and pence per garment begs many questions. The trade to which the Amendment refers and with which I am most closely associated is having a difficult time. All the sections of it are experiencing difficulty, including man-made fibres, let alone natural fibres. The same is true of the furniture trade, as my hon. Friend the Member for Wycombe (Mr. John Hall) has said.

But this is the time which the Government have chosen for this so-called tidying-up operation. It is a completely irresponsible choice. Trade and custom in this country cannot be treated in the manner of tidying up a kitchen when friends are coming to dine. This is not a tidying-up matter at all, but fundamental and serious. If there were some purpose in this Finance Bill connected with tidying-up operations and to implement heaven only knows how many of the vague statements about turnover tax and similar things to which it would be wrong to do more than refer in passing, there might be some excuse for this so-called tidying-up operation. But we have had no more than vague statements and there has not been a scientific study of a turnover tax or any other method to be used as an alternative to Purchase Tax.

This blow has been dealt at a time when the wool textile trade is facing difficulties. The industry has a colossal export-earning record and has been one of the best industries in the matter of co-operation with all Governments, irrespective of party, in the export trade. It has been dealt a psychological blow. I am being careful not to use exaggeration. I know the figures per garment only too well and I do not want to have them quoted even from the Treasury Bench, unless that is essential, because they have no relevance.

What has a relevance is the timing of the tax. It is that which many people do not understand. I am sure that my hon. Friend the Member for Gillingham (Mr. Burden), with his knowledge of the trade, will confirm that people are saying that this is not the time to buy. The tax has been virtually doubled, although that has been done in a rather tricky manner with the use of regulators on and off!

I know that the tax is still a matter of shillings and pence, and nobody need tell me that again. In fact, I shall almost cry if I am told it again. I am not interested in that. Let me kill that part of the Treasury brief stone dead before it is uttered. We shall get it because the ammunition has already been sent from the Department; it is travelling over the air; it is not on target, but it is in the air somewhere.

But that has nothing to do with it. I am concerned with the psychological effect. People are saying that the tax has gone up and some say that it has doubled. Anyone who has any connection with these industries knows what has always been obvious—that the one thing which people can do without for a time is clothing. From our experience in the days of the war we have learned that one can do without buying clothes; one can make them last a little longer and be more shabby and cut down one's interest in fashion.

But what happens to the export trade? The home base is further inflicted with the sort of damage which means that firms are unable to spread costs and so keep their prices down to the point where they can compete in overseas markets. This tidying-up process, this grasping of some irresponsible nettle which should not be there, for my right hon. and learned Friend should have stuck to the garden path and not gone into the labyrinth of the trees to find this nettle, is damaging our export trade. I can do nothing but pour scorn on this measure, which is one of the greatest pieces of nonsense which I have ever seen perpetrated in a long time. I could have expressed myself much more strongly.

There is one other factor. I am not absolutely sure what liaison there is between the Treasury and the Board of Trade in these matters, although I am always hoping that it is fairly good—I keep my fingers crossed. I do not know whether anyone in the Treasury heard the whisper—my hon. Friend the Economic Secretary, who is a good, industrious Yorkshire Member, must have known and other members of the Government must have known—about what was going on in Yorkshire. My very good friend the hon. Member for Bradford, North (Mr. W. J. Taylor), I am sure, will have conveyed the whisper to the Treasury.

In Yorkshire we have been organising a wool promotion scheme to try to build up our section of the textile trade. It has been going for same time and it has taken some time to mount it. The scheme having been planned, along come the Government—I must use a suitable word—to mess it up with Purchase Tax. The whole background of the scheme went bang. This is precisely what has happened.

I have been begging and praying people in the textile trade to get together in sales promotion for years. I have been selling for most of my life and I have been playing my part in pushing the bits and pieces of the textile trade into getting together in this purpose. But this is' not an easy industry to organise, because it has so many individualists. What I wanted was a higher level of salesmanship so that we could promote the use of wool. A magnificent campaign was started and then, as a sort of third edition of the campaign, we had a double lift in Purchase Tax. What a time to choose. What a time for no purpose at all to choose to pinch a bit more revenue from a place from which it should not be pinched in order to use it somewhere else. I am sure that the brief will refer to the revenue being used somewhere else. I am sure that I know that brief as well as my hon. Friend—although I should find it more difficult to use because I should not be so sure of its capacity and sincerity as my hon. Friend is. I should not believe a word.

The time has come when I am not just prepared to be a speaker from this side of the Committee and not follow it to a conclusion. The point is absolutely clear. I am not in the least interested in the financial argument which I have heard repeatedly. I hope that some of us on both sides of the Committee will have convinced my right hon. and learned Friend of the necessity to "give the wink" to the Economic Secretary to give way on this Amendment, but I do not believe it for a moment. So much do I not believe it—and I am speaking perfectly clearly—that, my Amendment not having been selected for separate discussion, if the Labour Party presses its Amendment to a Division, I shall vote for it against the Government.

Mr. Austen Albu (Edmonton)

I only hope that there are other hon. Members opposite who feel as the hon. Member for Shipley (Mr. Hirst) does and who will carry their voices into the Lobby as he says that he will do.

He has been too long in this game and is too long experienced to believe that in these matters of taxation, particularly in Purchase Tax, there is any liaison between the Treasury and the Board of Trade. I have long reached the conclusion that in matters of taxation which affect industries, manufacturing or transport, the Treasury acts in an extraordinarily independent way even though the taxation may severely affect the cost of transport, which concerns the Ministry of Transport, or industrial promotion, which concerns the Board of Trade.

I am convinced that these taxes are adjusted in this way for Treasury reasons without taking account of their industrial and economic effects. On the other hand, there is a little more to it than a tidying-up operation to which the hon. Member referred. I agree with my hon. Friend the Member for Sowerby (Mr. Houghton) and others that there is a longer-term policy in this to which voice is given much more vigorously by the hon. Member for Kidderminster (Mr. Nabarro) than anybody else. That is the move of Purchase Tax towards some sort of sales tax or turnover tax at a flat rate. It is this policy of moving towards a flat rate to which we are opposed. It is, of course, only part of the argument with which we are supporting our Amendment.

The hon. Member for Wycombe (Mr. John Hall) referred to the increased tax on furniture. A lot of furniture is made in Wycombe, but he will agree that a great deal more is made in the boroughs of North London, one of which I represent. There is a great deal of complaint not only about the raising of the tax but, as in so many consumer goods industries, of which there are some in my constituency, about the continual changing of the levels of tax. It is difficult for manufacturers to maintain a constant level of production if they never know from one year to the next whether the tax is going up or down, and over the last few years almost every year there have been changes in the level of taxation on consumer goods which have been very confusing to manufacturers. It is extremely difficult to see what argument the Government can have for doubling the level of taxation on necessary consumer goods.

I make no apology for believing that one can distinguish some types of goods from some others. During the last few years the Government have altered the basis of direct taxation very much in favour of the better-off and against the less-well-off. The changes which are taking place now, however justified they might be at some other time, are only a further step towards altering the balance of taxation, I do not say in favour of the rich and against the poor but in favour of the better-off against the less-well-off. There is no doubt that the tax which is being put on clothing and furniture, which are essential articles, on the whole affects the less-well-off more than it affects those who are better-off.

Arguments have been adduced many times about the effect of taxation on furniture. Furniture is bought largely by young couples setting up house for the first time, and they buy it is comparatively large quantities. They nearly always have to buy on hire-purchase arrangement, which means that not only is there the increase in tax but there is also the increase in the retailer's profit and the increase in hire-purchase charges which are piled on top of the increase in Purchase Tax. There is no other way in which these young people can set up a home, and the effect of this tax on them, buying furniture on hire-purchase, is much greater than it would be in the case of articles which are bought in small quantities one or two at a time, at the cost of a few shillings.

The effects are particularly serious at a time when mortgage rates are high and are not being reduced even commensurate with the reduction in the Bank Rate. The cost for young people setting up homes is very high. It is extraordinary that at a time when the Government are trying to hold down wage increases they should take steps to increase the cost of living for young people—and it is the younger people who are likely to have the smaller incomes. It is almost impossible to understand why they do it at this time.

I know nothing about the textile industry other than that which I have read, but I recognise that a tax on this industry at present might be disastrous. The industry is going through very serious difficulties. I have no textile industry in my constituency, but I have a furniture industry and other consumer goods industries, and they are particularly affected by the changes. It is not only the consumer but also the producer who does not know from one year to the next what the level of tax will be and what will be the level of demand. It is very difficult to do market research, to study the likely sales and to determine production plans if taxes are continually changed.

There is a special point about furniture. I am glad that reference had been made to the insidious practices that are sometimes adopted by retailers, for retailers in this industry have not a very good reputation, and practices of the sort described by hon. Members have been going, on for many years. Because much furniture is bought on hire-purchase, it is difficult for the purchasers, who often do not have a great deal of business knowledge, to know what they are paying for the goods. I should have thought that the kind of practices which have been described would come under the survey of the Restrictive Practices Court, but of course they do not, because there is no written agreement, but there is no doubt that this is the sort of practice which should be condemned and on which legislation ought to be introduced, although I can hardly argue that now.

I plead with the Government to reconsider the tax on furniture, the effect of which has been described eloquently during the debate. I ask them to bear in mind the likely effect on wage demands and on young people who are getting married. I sincerely hope that the powerful arguments which have been used on both sides of the Committee will lead to the acceptance of some Amendment on this occasion at any rate.

6.45 p.m.

Sir Harry Legge-Bourke (Isle of Ely)

Most of us from time to time find it extremely difficult to be consistent over the years in all that we do, especially in matters concerning the Finance Bill. I am reminded of the Autumn Budget of 1955, which I have always called the "kitchen clatter" Budget, or the "pots and pans" Budget of my right hon. Friend the Home Secretary. The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) and I trooped into the Lobby on the Budget Resolution which had the effect of putting Purchase Tax on those items, and the hon. Member for Dudley (Mr. Wigg) was, I believe, overheard to say that the Socialist Party on that occasion had the last of the Tories and the last of the Whigs with them, although they were not quite certain which was which.

The one thing which the Government must keep in mind is that they are trying to operate a wage restraint policy. They must get it firmly into their heads, if they have not already done so, that they will not succeed with this policy or get the co-operation which they want for this policy over the long term unless they do their best to prevent prices from rising. I am grateful to the hon. Member for Sowerby (Mr. Houghton) for having done the arithmetic, because this has saved me from having to do it. Let us be blunt about it. This tax doubles a sum which has been running at £25 million a year. A sum of £50 million is to be raised from this tax, assuming that the rate is increased from 5 to 10 per cent.—and £50 million is a lot of money. It would more than cover the increase in nurses' salaries.

The Government must be very careful about how they adjust levels of Purchase Tax. Of all the financial policies of the Labour Party, I find myself most in sympathy with their contention that direct taxation is better than indirect taxation. I say that because I like everybody who pays tax to know how much tax he is paying. The trouble with indirect taxation such as this is that few people know how much they are paying at the time of purchase.

I accept the argument of my hon. Friend the Member for Wycombe (Mr. John Hall) about furniture and some of the points made by the hon. Member for Edmonton (Mr. Albu). This tax hits young, newly-married couples severely. But in this instance it is not the degree of the tax about which I am greatly worried but how many people who pay it yet do not know they are paying it. The Treasury has always had the reputation of trying to disguise as much as it possibly can that anybody is paying any tax and to get as many people other than the Inland Revenue to collect the tax, because it is cheaper for the Revenue if they do.

Many of us feel that the rates of tax are already too high, but I will not develop that case because it is not relevant in detail to the Amendment. I want to see the Government aiming at eliminating all forms of indirect taxation, especially Purchase Tax. I want it to go altogether. I will not elaborate the arguments in favour of that, but I want to see a graduated Income Tax for everybody so that nobody pays none. I want to see the tax system simplified a great deal.

This change proposed by the Chancellor is not a very bold step towards simplification, and I find it most inconsistent of the Government. They say that they are concerned about being accused of trying to exercise a code of morality concerning what is a good thing to buy and what is a bad thing to buy. But this change in taxation does not eliminate that. The Government are still in the position of taxing things which people buy; they raise the level of taxation on some things and lower it on others. It is an odd argument to say that they are doing it to avoid the accusation that they are trying to operate a code of morality over what people should buy and what they should not buy.

Had I not been in Berlin on Budget day I might have been seriously inclined to vote against the Budget Resolution upon which hangs this part of the Finance Bill. But as I was there and as I have not heard my right hon. Friend speak on the subject, nor has he had an opportunity to argue in my presence the case for doing this, I shall wait until I hear the Economic Secretary's reply before I decide what I shall do. It may be that I shall have to do what my hon. Friend the Member for Shipley (Mr. Hirst) has said that he will do, if only to be consistent with what I have done in the past.

It is nonsense to argue that this change is part of preparing to go into Europe. We are selling very successfully in Europe already, and exports are expanding month by month. We are in Europe already for trading. It is a very poor argument to say that this change is necessary as a preparation for going into Europe.

Mr. Hirst

Does not my hon. Friend agree that our entry into the Common Market is made more difficult by this action?

Sir H. Legge-Bourke

I entirely agree, and I am grateful to my hon. Friend for his support.

I want people to know the true price of things. I want to see us getting out of this shambles of indirect taxation which we have been in for too long. I pray in aid my hon. Friend the Member for Kidderminster (Mr. Nabarro) and something which he said at Bletchley in Buckinghamshire on 16th March, which was reported on 17th March. He is reported as having said: The party had been in office for eleven years and some of the leaders thought they were going to remain there for ever. They had become terribly smug and complacent about their behaviour and divorced from the realities of everyday life in their constituencies. I entirely agree with my hon. Friend. I only wish he had agreed with me a little more in February along the same lines.

Mr. Nabarro

What my hon. Friend said on the earlier occasion was that the Prime Minister should quit. What I said in the speech from which he has just quoted was that some of our leaders had become out of touch. That is a very different matter.

Sir H. Legge-Bourke

At least my hon. Friend is at one with me in this. Both he and I have one great object, to try to stop inflation. I do not believe that we can hope to stop inflation, unless we get the co-operation of those whom we are asking to be restrained in their demands for wages. I do not believe that we shall get that co-operation unless we do what we can to prevent prices rising. It appals me to see the Government in this Clause, and against this Amendment, doing that very thing, raising £25 million more from an indirect Purchase Tax. This is quite out of keeping with the general aim which I think they are right to pursue.

Mr. R. T. Paget (Northampton)

This is a debate in which I have had the rare experience of agreeing with almost every word that I have heard. The only disappointment to me so far has been the hon. Member for Kidderminster (Mr. Nabarro). He is one of my heroes in the House of Commons, a man who always speaks his mind. For him to hide behind the loose expression "some of my leaders", instead of pointing his finger at them and saying just who in the voice which we all know, is below his form. I am disappointed in him.

Mr. Nabarro

It is not fair. The hon. and learned Gentleman is another member of the Opposition who does not do his homework. Only a few weeks ago I pointed an accusing finger at the Minister of Power and said that he was a weak, weak Minister and should resign. That is just one example.

Mr. Paget

Is the poor Minister of Power some of our leaders"? Surely the hon. Gentleman can do better than that. We know. We can help him. Apart from that, there seems to be such happy agreement that I hope that when we meet later in the Lobby we shall be able to form a society for the abolition of indirect taxation on all-party lines.

I want to deal with boots and shoes. We have had furniture. We have had textiles. I am not at all certain that the case for the boot and shoe industry is not the strongest of all. The industry is in very considerable difficulties. They are to a considerable degree difficulties which have been created by the Government. It is an industry which even in times of very full employment like this finds itself on part-time. To increase taxation here seems the oddest thing to do.

7.0 p.m.

I do not know that the Chancellor of the Exchequer is everybody's favourite man, but he must at any rate be the civil servant's favourite man. Nobody who was not a civil servant, with the tidy-mindedness for which civil servants are well known, could give that priority to tidiness over every other consideration—over the question of who is hit most, over the question of where they look for capacity to pay and over the question of which industries are in difficulty and which are not. Over all these things this Chancellor gives priority to tidiness. I think it was a great Liberal Chancellor who said that the main function of Ministers was to tell civil servants what the people just would not stand. That is just what the Chancellor seems incapable of doing. He is always, at the behest of his civil servants, doing just the sort of things which the people ought not to stand. This is one such action.

The boot and shoe industry is the principal industry in my constituency. It is not that we have been a bad industry. It is not that we have been a badly run industry. Our industrial relations are model. We have not had a strike in our industry since 1887. Our performance with regard to prices has been very good. As against before the war, our increase in prices is more than one-third less than the country's average. Our increase in prices since 1956 is 11 per cent., as against a national average of 16 per cent. Nobody can say that the industry is doing badly.

It is also an industry which is not run at a low labour cost. Our product is just the sort of light consumer product in which, because we use a natural thing like leather, labour must always play a very considerable part. Leather comes from animals. It is not standard. No two skins are alike. Therefore, the extent to which the industry can be mechanised is limited.

It is also an industry which especially appeals to the newly industrialised countries. It is pre-eminently the type of industry favoured in India and Japan. Before long Africa will be going into this industry. It is the type of industry which suits them. Because these countries are developing this industry themselves and protecting their own industries, we have found ourselves excluded from one market after another. It is not that we have not been doing well in those export markets in which the door is left open. It is precisely for the reasons which I have mentioned—they are very natural reasons and we have no right to complain about them; they are valid reasons—that we have been finding doors closed to us. This is one of the causes, for which we are not to blame, which bring difficulties on us.

Another cause is European competition, which we should fairly meet. However, there is one factor in this competition which is very much resented. Leather is available to the European manufacturer cheaper than it is to the British manufacturer. On the whole, the best kids and calves are European. We can get those leathers only after paying a duty which is designed to protect the Commonwealth. The case for Commonwealth Preference may be quite a good one. However, there is a rather special consideration as regards leather, because Commonwealth leathers are not up to the standard of European leathers. In Africa there are the fly and thorn troubles. India, which used to produce good skins, is more and more using them herself. She is not allowing their export.

The Deputy-Chairman (Sir Robert Grimston)

The hon. and learned Member is going a little wide. I am trying to follow how he is relating this argument to the Amendment.

Mr. Paget

I am pointing out that the Government are doubling the taxation on this industry just at a time when it is in trouble. I am trying to tell the Committee what the industry is suffering from. It is suffering from being excluded from the old Commonwealth markets, markets of relatively backward areas which are now industrialising themselves. We are suffering from European competition in which we are put at a disadvantage because we have to pay an import duty on the best leathers from Europe to protect Commonwealth leathers which are being less available to us. My case here is that the Government already put a discriminatory tax on leather. It is not right for them now to double Purchase Tax. That is my case, but I will now pass from the point.

Another point is the very considerable threat that not only will the Japanese, particularly, go into our old markets but that they will be coming into this one. Some of the multiple stores which have been concerned in take-over bids appear to be negotiating in that direction. The industry is already in fairly serious trouble which it is not in a position to deal with itself. It is trouble which events have brought on to the industry.

In addition to Government taxation preference putting up the price of our goods, the same preference puts up the price of our machinery. For instance, only the other day the biggest tanner in my constituency wanted to import French machinery. He satisfied the Board of Trade that it was at least 5 per cent. better than the competitive British machinery. The Board of Trade still would not release him from the tax on importing a French machine because although the British machine was admittedly less efficient there still was an alternative British machine. This is yet another effect of the tax. The same tanner tells me that he has had this year, for all these reasons, a 50 per cent. fall making it the worst year he has ever had.

We have this admirable system of industrial relations. It is very largely because wages have been linked to the cost of living. The Government have put up the cost of living, with the result that they have put up the wages of the boot and shoe industry. By Government action again—through import duty on the leather, through import duty on the machinery and through increased wages—a heavy burden is put on the industry. The Government now take this action of increasing the Purchase Tax. It is beyond all rhyme or reason. And they do it for the sake of tidiness. Right through the ancient industry of the cobblers of Northampton when this is done to them and they go from short-time to unemployment—there is little difference between the two—all one can say to them is, "The Government did this to you because they are a tidy Government". It is a ludicrous thing to do and I ask the Government to have second thoughts about it.

Lieut.-Commander S. L. C. Maydon (Wells)

I think that all of us on both sides of the Committee object to any rate of taxation being increased, but I would not go with my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) in objecting to indirect taxation. It seems to me much more common sense, in order to steady the economy, to tax the spending rather than the earning. We are always trying to bolster up the nation's savings and if we were to tax earnings and not spendings it would seem to me to be the worst way of going about it.

It is not so much to the rise in this rate of taxation that I object as to the existing anomalies which will be accentuated thereby. The class of goods formerly taxed at 5½ per cent. and now to be taxed at 10 per cent. include a fairly wide range of industrial protective clothing of various kinds. These will rise with the others with two exceptions, protective boots and protective helmets. This therefore will widen the gap between the industrial protective clothing on which the taxes will be increased and the exempted articles. This does not seem to me to make sense.

I wrote shortly after the Budget to my hon. Friend the Economic Secretary and he, with his customary courtesy, replied on 4th May. I should like to read to the Committee one short passage from that reply. It is as follows: The possibility of exempting protective clothing from tax has in fact received repeated consideration but successive Governments have been forced to the conclusion that it is impossible to devise a comprehensive definition which would cover all items of clothing of that description without eroding the tax. I quite see the point about eroding the tax and I entirely agree with it, but how can it be that protective boots and protective helmets do not erode the tax when other forms of protective clothing do so? This seems to me not to make sense.

I understand that these two items have been exempted for many years but a class which I should like to see included with them is that of industrial safety gloves. It is difficult to see how this could be done without eroding the tax but these safety gloves are made for particular industries to precise specifications under the British Standards Institution. Firstly, therefore, it would be very easy to distinguish and define them from ordinary gloves or gauntlets.

It could be argued that they might be used for non-industrial purposes. It is true that there are a number of types which could be so used. I suggest that to prevent this dangerous erosion of the tax only the types orded by a bona fide manufacturing industry which would require gloves specified by the British Standards Institution to protect its work-people in processes generally recognised to be carried on within that industry should be allowed a rebate on the tax for such protective clothing.

7.15 p.m.

I am not asking for exemption for this class of goods. In the first place, that would not be in order and secondly, and a far better reason, a rebate of tax is much more manageable a device than the exemption from tax of a wide variety of articles. All I ask the Economic Secretary to consider is that the company requiring the industrial gloves must establish that it is engaged in processes where its workpeople require the protection of the kind afforded by the gloves, secondly, that the number of gloves ordered by the company is not excessive, and, thirdly, that they should be of a type conforming to the B.S.I. specifications.

This would mean that anybody who went to an ironmonger's store to buy gloves of such a type over the counter in one or two pairs at a time would not receive the rebate of tax. It would be granted only in cases where reasonably large orders were given by an industry to the glove-making industry itself. I am sure that this could be done and that it would be manageable to the Customs and Excise. I ask my hon. Friend the Economic Secretary to reconsider this proposition.

Dr. Dickson Mabon

I have heard the whole debate on this subject and every speech I have heard has been one of objection to the proposition which the Economic Secretary is about to defend. The hon. Member for Shipley (Mr. Hirst) seemed to know what was in the brief. I do not, but I hope that when the Economic Secretary speaks he will try to justify one of the assertions he made in an earlier debate which is apposite to this discussion.

As far as I could grasp it, the hon. Gentleman's earlier argument was that there was no principle involved in the selection of articles taxed and that no principle had been laid down by the Labour Government or this Government. The hon. Member for the Isle of Ely (Sir H. Legge-Bourke) mentioned that some articles untaxed by previous Governments had been taxed for the first time in the autumn of 1955 and that he had objected to those proposals and had voted against them. He mentioned pots and pans and other domestic essentials which were brought into tax by that autumn Budget. That answers the Economic Secretary.

At a time when the Chancellor of the Exchequer is talking about grasping the nettle, to dig up the past is relevant only in what one might argue about exemptions. It is pointless for the Government now to argue that they ought to receive credit for this, that and the other on the ground that they have altered the rates of Purchase Tax and made them simpler. The Government now derive over £500 million from Purchase Tax whereas when they came into power they received only £300 million. It is, therefore, hardly a matter of congratulation to them when they say that they are lowering and altering the various rates from time to time.

I do not represent particular interests in industry but I want to protest as a consumer about the way in which these matters are moving. My hon. Friend the Member for Sowerby (Mr. Houghton) argued this at length. I should like to take up one point which has been taken up earlier and say that I am extremely dissatisfied that in rationalising these rates we should be going from a lower to a higher rate. I should have thought that the wiser thing to do was to have looked at articles within the lower rates, decided whether the taxes on them were still a valid proposition and then put them in higher categories. That would seem to me to be a more sensible way of going about it than by moving articles at present in certain groups from one percentage to another.

The hon. and gallant Gentleman the Member for Wells (Lieut.-Colonel Maydon) argued the case—I do not agree with his argument—for rebates. I think that would mean imposing a very large administrative apparatus, which I think would be quite unnecessary. I think that it would be better to have a clear exemption system. I could define the exemptions very precisely if it were necessary. I think that the rebate system is a non-starter. I think, however, that his general argument that we ought to have wider groups of exemption is a very sound one: This is what I do not like about the proposition of the Chancellor of the Exchequer and the attitude of the Economic Secretary. I agree with the hon. Member for Shipley (Mr. Hirst) that the Chancellor has to make a rational case for what he is doing. We have had a most unscientific approach from the Chancellor to this whole proposition. If the nettle is to be grasped, we ought to have some explanation of how the Chancellor will grasp it in the future. I should like to ask him to justify the reason for keeping certain articles within the groups and not exempting them, and I should like him to tell us what he intends to do in the future.

There is a number of anomalies within the present Purchase Tax system. One can understand why, for example, we tax hats but not protective headgear. No doubt other hon. Members could argue that there are certain forms of protective headgear in use which are not exempted items but which are used in certain industries and should be exempt. Similarly, in the case of boots. We have a tax on boots but we also exempt from tax certain protective boots. Are we certain that we have exempted them all? We exempt photographic paper used with x-ray plates but we tax photographic paper as such. Are we sure that taxation of all photographic materials is a wise proposition? I would not say that I or any other hon. Member has the right to lay down in this debate what things should be exempted. I think that, as far as one can, one should be objective about this matter. I do not suggest that hon. Members who represent constituency interests are necessarily lacking in objectivity, but it may be said that they are indulging in special pleading for particular items.

I think that a Treasury committee or some independent body should advise the Chancellor about priorities of exemption on certain goods which are taxed at present. If we are to believe the hon. Member for Kidderminster (Mr. Nabarro)—there seems to be some contradiction about what he believed but no doubt he will expatiate at length on what he does believe on these matters—he is in favour of our having some general kind of turnover tax and perhaps that the Chancellor should make these three taxes into one.

I would object to this because it would involve taking in all the present articles cited in the Purchase Tax booklet which we have here. The objection which I have, and which I should like the Treasury spokesman to answer, to raising the rates of tax on the articles which are now carrying 5 per cent. and putting them up to 10 per cent. is first on the ground that no attempt has been made to work out whether these particular items should not be exempted.

Various arguments have been used against this in the past, and no doubt they will be used again in the future. In my own profession, we have Purchase Tax exemption for certain drugs. There is also a heavy tax of 25 per cent. on other drugs. There is no medical justification, in my opinion, for distinguishing between one set of drugs and another. I readily admit that one set of drugs is based on the National Formulary and has the blessing of the Cohen Committee, but that Committee would never suggest that other drugs do not have quite as good a pharmacological effect as the ones in the National Formulary.

There seems to be little rhyme or reason about the present exemptions and far too many anomalies. If the Chancellor intends to reject the Amendment, I hope that he will promise to take a closer look at these anomalies and agree that these groups are not permanent. If he nationalises the Purchase Tax rate it means that we are moving towards a permanent system of taxation with these groups ever embodied in the system. I hope that he will make some statement about that.

The hon. Member for the Isle of Ely said that he did not know whether he was one of the last of the Tories or the last of the Whigs, but he is the first of the single taxers.

Sir H. Legge-Bourke

I know which I am.

Dr. Mabon

Perhaps the hon. Member will tell his hon. Friend the Member for Dorset, South (Viscount Hinchingbrooke) what he is. The hon. Gentleman is the first of the single taxers. I cannot go with him that far. It seems to me that in these days it is very difficult to go as far as that. It is a direct contradiction of what the hon. Member for Kidderminster said about taxing earnings and taxing incomes. The basic defect of the Purchase Tax system is that it takes away money from those least able to afford it. It is a regressive tax unless it is imposed on items which are items of preference. Some items might be regarded as non-essential or as luxuries. But there are certain articles which the poorer family cannot avoid having to purchase. These, in my opinion, are essential things and ought not to carry any taxation.

Lieut.-Commander Maydon

Would not the hon. Gentleman agree that we all have a stake in this country and that the wider we can spread our responsibility for paying for the needs of the country the better we shall all be?

Dr. Mahon

I am quite willing to concede that there should be a wider responsibility for supporting taxation, but I am old-fashioned enough to believe that we should tax only those who can afford to pay. If we have to tax everybody those with smaller incomes obviously should pay less.

I do not believe that it is a good thing to have taxation on articles which one must purchase to live. If I were on the independent committee which I have suggested, I would include all the articles which were in that category and proceed from there to argue exemptions based on the standards of an affluent society. For example, my hon. Friend the Member for Blackburn (Mrs. Castle) said that it is economically necessary for every household to have a refrigerator. I cannot go as far as that, but there is no doubt a sense of logic in the argument based on the requirements of an affluent society. Apart from, in a sense, these exotic items, there are basic articles which are still taxed. I am frightened that, without anybody understanding this, these articles wil be permanently taxed under the system proposed by the hon. Member for Kidderminster to whom a lot of credit is given for this proposition, although it must not be forgotten that one of the main proponents of this, although he tends to hide its origins, is the right hon. Member for Orkney and Shetland (Mr. Grimond) who in a pamphlet called, "Let us get on with it", proposed a turnover tax of 16⅔ per cent. on the articles that are at present subject to Purchase Tax. No doubt the right hon. Gentleman will qualify that if he is called to speak—that is if we see him again.

The Treasury spokesman should try to convince those who are against the taxing of these items in the 5 per cent. range—and indeed many in the 12½ and 25 per cent. ranges—that there is not to be a freeze on these groups; that the Chancellor will look again at the various items which might be exempted, so that Purchase Tax falls less heavily on those who are unable to pay it.

7.30 p.m.

Mr. Nabarro

How kind it is of you Sir Samuel, to call me immediately you arrive in the Chair.

I am delighted to follow the hon. Member for Greenock (Dr. Dickson Mabon). He had a lot to say about an analysis of the articles that we are discussing in the major Amendment and deciding which of those articles should be entirely free from tax, that is, reduced from 5½ per cent. to nothing and exempted, and which of the articles should be left at 10 per cent. or taxed at an even higher rate on the ground that they have some kind of luxurious, or, as he styled it exotic, element.

We are talking about only two groups of manufactured goods—clothes and furniture—so I can only deduce from what he said that he would take each of these categories and sort out from each of them certain articles on which the rate should be raised, and certain articles on which it should be lowered.

Dr. Dickson Mabon

indicated dissent.

Mr. Nabarro

If the hon. Gentleman shakes his head in dissent, what did he mean? He said that these articles should be analysed and the tax on some of them should be reduced and on others increased according to their element of luxuriousness or otherwise.

Dr. Dickson Mabon

I am sorry that the hon. Gentleman did not apparently pay much attention to my rambling comments. I was arguing that within these two groups we should see again whether we could have further exemptions. I am not in favour of raising the tax on any of these items in the 5 per cent. range until that is done. I think that the Chancellor has to make a case why these items should remain in that range, and state whether he intends to keep them there.

If the hon. Gentleman intends to be one of the authors of a turnover or sales tax, he had better, for the sake of his political safety, make sure that he exempts the basic articles from such a tax, otherwise he will earn a great deal of political unpopularity.

Mr. Nabarro

I am sorry that the hon. Gentleman threatens me with political unpopularity. I happen to be one Member of the House of Commons who is not in the least concerned with political popularity or unpopularity. So long as the electors of Kidderminster like to vote for me, well and good. When they stop voting for me there will be lots of alternative and equally useful things to do to sitting in the House of Commons listening to endless blurb about Purchase Tax.

On this narrow Amendment I will not stray on to the general considerations of sales tax, turnover tax and Purchase Tax. If, later, I catch your eye, Sir Samuel, or that of your successor I shall deal comprehensively with all these matters in principle and in application at the proper time, which is on the Question "That the Clause stand part of the Bill."

I am delighted that the hon. Lady the Member for Blackburn (Mrs. Castle) has returned to the Chamber. I want to refer to a number of allegations that she made in her speech a couple of hours ago on this Amendment. I wrote down some of her words. It was a captivating speech for the hustings, but not particularly a scintillating one for the House of Commons. The hon. Lady said, among other things, that non-luxury articles such as clothes and furniture should be exempt from tax, and that it was folly to tax them.

I fasten at once on the operative words "non-luxury". Are clothes non-luxurious in character? Are all items of furniture non-luxurious in character? The hon. Lady is beautifully and attractively garbed. I cannot see from this great distance, and my eyes are dim—

Mr. Cyril Bence (Dunbartonshire, East)

The hon. Gentleman is courting popularity.

Mr. Nabarro

I am not courting popularity with the hon. Lady. I am good and soundly married and have four lusty children, and my wife will arrive in a minute to listen to me.

I cannot from this distance see whether the hon. Lady's dress is made of silk or very attractive cotton, but either way it is not a non-luxury article. To her it is an essential article in that it provides imperative covering for her body, but to say that it is a non-luxury article is manifest nonsense.

Mrs. Castle

I am glad that the hon. Gentleman thinks I am attractively garbed. I assure him that I am non-luxuriously garbed. The hon. Gentleman is clearly out of touch with modern developments in the British cotton industry or he would know that this is an inexpensive cotton dress, which I assure him is no more highly priced because it happens to be attractive.

Mr. Nabarro

Perhaps not. I would not for a moment suggest that any lady's garment made of cotton is unattractive because it is low in price, or the converse. Of course not. I said that the hon. Lady's attractive garb is not a non-luxury article. In my judgment it is a luxury article.

If the hon. Lady takes exception to my talking about her dress, let me draw attention to my suit. Both the hon. Lady and I are wearing essential garments, but there is a great difference between the £12 suit talked about by my right hon. and learned Friend the Chancellor in his Budget speech and the suit that I am wearing.

Mr. Bence

That one cost £10.

Mr. Nabarro

The hon. Gentleman is trying to be flippant about these things. I am trying to demonstrate that within the general ambit or definition of clothing there are very expensive items, there are less expensive items and there are cheap items. All are essential from the point of view of covering the body but some are very much more luxurious and higher in price than others.

The hon. Member for Dunbartonshire East (Mr. Bence) is having fun sitting on the bench and muttering. If he wants me to give way I will do so, but if not, will he please allow me to make my speech?

I am endeavouring to show that there is a great price range here, but administratively there is not a single member of the Committee who can say that the Treasury is in a position to distinguish among clothes or among items of furniture between those which are luxurious, those which are semi-luxurious and those which are non-luxurious, and then apply different rates of Purchase Tax. That would clearly be nonsense.

Mrs. Castle

Is not the hon. Gentleman saying that his definition of an essential garment is an unattractive one? He can take it from me that this dress is in the lower price range, and therefore if price is the definition the garment that I am wearing—since the hon. Gentleman agrees that I must wear something in this place—is an essential item.

Mr. Nabarro

I may have chosen one of the hon. Lady's unlucky days. I have seen her in very much more luxurious garments. I am not imputing anything to her for wearing them. I am saying that it is manifest nonsense for her to say that non-luxury articles such as clothes and furniture ought to be exempted from tax.

There is, of course, a special constituency interest in all these matters. The hon. and learned Member for Northampton (Mr. Paget) made a powerful plea for the boot and shoe industry centred in Northampton. My hon. Friend the Member for Wycombe (Mr. John Hall) made a powerful plea on behalf of the furniture industry centred in Wycombe. The hon. Lady the Member for Blackburn made a powerful plea on behalf of the textile industry centred in Lancashire. My hon. Friend the Member for Shipley (Mr. Hirst) made a powerful plea on behalf of the woollen and worsted industry centred in Yorkshire. On occasions, although I would be out of order in talking about it now—you will hear from me later, Sir Samuel—I have made a powerful plea, in the appropriate Purchase Tax brackets, for carpets centred for manufacturing purposes in the town of Kidderminster. I know all about these things.

What I believe is that it is impossible satisfactorily, in an affluent society and where there is an abundance of all manufactured goods, for any Member of this Committee, backed by any amount of Treasury expertise, to differentiate between articles deemed to be luxuries and articles deemed to be non-luxuries in character.

Mr. John Hall

Surely we do that very thing now in a range of goods which are exempted from Purchase Tax. At the moment we exempt from Purchase Tax a range of babies' clothing. There is a wide range from the cheapest to the most expensive babies' clothing. It is nonsense to say that we do not differentiate already. We do.

Mr. Nabarro

I want to refer to the articles to which the hon. Lady the Member for Blackburn referred as justifying exemption from Purchase Tax altogether. I have made my point. I passionately and fervently believe, as I have explained not only in this House on innumerable former occasions but elsewhere since all post-war shortages vanished, that it is fiscally wrong for the Treasury to try to decide upon a degree of luxuriousness for any manufactured goods. They should all be taxed at the same rate. The implications of doing that would mean that certain articles move up in the rates applicable to them. This year we have only seen the beginning of it. We are going to see more next year.

Mrs. Slater

Is the hon. Gentleman going to be Chancellor of the Exchequer next year?

Mr. Nabarro

I advise him closely in these matters. [Interruption.] My hon. Friend says "That is what is wrong with the Chancellor." I do not agree.

Mr. John Hall

My hon. Friend misheard me. I said, "That is what was wrong with the Budget."

Mr. Nabarro

No, it embraced a number of recommendations in connection with Purchase Tax and other matters which I thrust upon the Chancellor last year. I divided the House last year on Purchase Tax against my right hon. and learned Friend, as I did on Schedule A tax and the remainder.

I want to deal for a moment with these exempted items. If a plan were adopted for a standard uniform, nondiscriminatory and single level of Purchase Tax at 16⅔ per cent., or 2d. in the shilling, there would then effectively be two rates of tax. There would be those at 16⅔ per cent. and those at nothing. I recognise that. Successive Governments—and I do not blame them for it—have yielded to powerful pressure groups for the exemption on a very narrow front of a number of individually important items.

The first one which I name, because I had a lot to do with it myself five to seven years ago in concert with hon. Members opposite, was the exemption on crash helmets, or "skid lids", for road safety purposes, and that led to an equally clamant demand the following year for miners' helmets to be exempted. They are now so exempted. I am delighted to see my right hon. Friend the Minister of Pensions and National Insurance in the Chamber. He was the Financial Secretary to the Treasury at the time, and I am sure that he recalls those occasions. For individual reasons we agreed to exempt those articles.

7.45 p.m.

Now I come to the list given by the hon. Lady the Member for Blackburn. She was perfectly correct. Household brushes, brooms and mops, under Group 11, are currently exempt. Babies' high chairs, cradles, cots and play pens, under Group 11, are exempt. Invalid chairs, under Group 11, are exempt. Fireguards, under Group 11, are exempt. Each of them has been the subject of special pleading in the House. But I remind the hon. Lady, who I know from a long association in controversial debates in this House and outside is a fair-minded woman, of this fact. I said it twice in earlier speeches. I would only apply the standard, uniform and non-discriminatory single rate of Purchase Tax to all those articles currently subject to the tax. I am not suggesting bringing into the ambit of tax these items which, for special reasons and subject to special pressures, we have in the past exempted from the tax.

Dr. Dickson Mabon

Would the hon. Gentleman explain this to me? Why does he think that 1961 is the final year for arguing for the exemption of these articles? Has he exhausted all his own arguments and does he, therefore, presume that no one else has any arguments?

Mr. Nabarro

No. That is a very unkind thing for the hon. Gentleman to say.

Dr. Dickson Mabon

Will he say why, then?

Mr. Nabarro

I will tell the hon. Member why—for the very good reason that we are discussing at the moment a relatively narrow Amendment.

Mr. William Ross (Kilmarnock)

I had not noticed it so far.

Mr. Nabarro

The hon. Member for Kilmarnock (Mr. Ross) may not have noticed it, but he has only been in the Chamber for a short while. The fact is that when we come to the Question "That the Clause stand part of the Bill," all these broad considerations may be debated and it would not be in order to debate them now. Therefore, I leave this topic of exempted items and turn my attention to my hon. Friend the Member for Wycombe (Mr. John Hall). My hon. Friend has felt aggrieved with my right hon. and learned Friend the Chancellor for raising the level of Purchase Tax on furniture from 5½ per cent. to 10 per cent.

Mr. Bence

Quite rightly, too.

Mr. Nabarro

No, I do not agree. Let me give a homely example which the hon. Gentleman could not fail to recognise and understand. Carpets are as much part of domestic furnishing as a sideboard, a bed, a bedstead or bedding that goes on it. [HON. MEMBERS: "No."] Hon. Members opposite who are saying "No" fortunately do not include the hon. Member for Kilmarnock, because the second carpet manufacturing centre of Great Britain, after Kidderminster, is Kilmarnock. The hon. Member for Kilmarnock will not take the view of many of his hon. Friends that a carpet is a luxury. He would take the view, as I take it, that a carpet is an essential piece of domestic furniture and is equally important in the home as a bed or the bedding that goes with it, or linoleum or any other article. [Interruption.] Of course, hon. Members opposite prefer to wallow in the atmosphere of fifty years ago, when the ordinary industrial worker in this country had linoleum on the floor, if he had any floor covering at all.

As a result of eleven years of Tory rule and continuous improvement in living standards, the workers of this country overwhelmingly buy Kidderminster and Kilmarnock carpets to go on their floors. That is why employment in the carpet industry has remained at such a high level continuously since 1952, aided, of course, by the generous fiscal treatment of my right hon. and learned Friend and his predecessors who have successfully reduced Purchase Tax on carpets from 33⅓ per cent. when I started my campaign five years ago to 10 per cent. today. That is a pretty healthy rate of reduction.

What I want to say to my hon. Friend the Member for Wycombe is that his furniture has always been taxed at 5 per cent. Now it has gone up to 10 per cent. It has gone to the same level as the Purchase Tax on carpets and on linoleum. Surely it is common sense and logical to require in our fiscal arrangements that furniture, bedding, carpets, linoleum and other essential domestic furniture, as opposed to appliances, should be taxed at one and the same rate.

Mrs. Castle

Since the hon. Gentleman is applauding his right hon. and learned Friend for having reduced the Purchase Tax on carpets from 33⅓ to 10 per cent., why is he himself now propos- ing that the ideal level of such a tax should be 16½ per cent.?

Mr. Nabarro

The hon. Lady is constantly making the same mistake, which she made five times in her last speech. She must be accurate. The level which I recommend is 16⅔ per cent., because, I am a purist in these matters and 16⅔ per cent. is the one-sixth part of a shilling—2d. in the shilling. I do not want any rates which are difficult to apply other than by comptometers and similar machines in the case of the goods to which the tax is to apply.

Why do I want it? I want all Purchase Tax other than on a few exempted items, including pianos, placed on a flat rate of 16⅔ percent., and when we come to the Question "That the Clause stand part of the Bill" I shall dwell on the advantages that would derive from the whole of this 45 per cent. bracket coming down to 16⅔ per cent. Perhaps the hon. Lady would like to go and talk outside to the workers at Rubery and Longbridge, Birmingham, and justify and continue to advocate a motor car rate of tax in excess of 50 per cent. She will not be very popular with the motor car workers if she does, and this is where the bulk of the Purchase Tax revenue comes from. This tax will be 45 per cent. if we pass the Clause; otherwise, it will be 55 per cent. The proper time to deal with all these matters is in the discussion on the Question, "That the Clause stand part of the Bill," but I am not afraid of the political implications, and as I am going to West Derbyshire to inaugurate the proceedings next Monday, I thought I had better make reference to the simplification of the Purchase Tax and what can be done about it. [An HON. MEMBER: "More comforting."] It may be comforting to the Liberals, but at least I shall be going there as a pure and thorough-going Tory, not like some who sit here with Tory support calling themselves Liberals here and Tory Liberals in Bolton.

My hon. Friend the Member for Shipley had a good deal to say about clothing, and I sympathise with his point of view about the Purchase Tax on clothing in many respects. I believe that there are more important considerations here. Where I would dissent from him is when he says that there is a good deal of dissatisfaction in Yorkshire about the rate of Purchase Tax being increased to 10 per cent. By a curious coincidence, my speech last Friday evening at the 19th annual convention of the clothing manufacturers held at Ilkley—a good speech on this topic, which was widely reported next morning in the Yorkshire Post and other journals in that part of England—advocated a single flat rate of Purchase Tax right across the board involving, as it would do, an increase in the Purchase Tax on clothing, and there was no great dissent from my audience at all.

Mr. John Hall

Perhaps they could not get a word in.

Mr. Nabarro

My hon. Friend the Member for Wycombe is now trying to get a word in, but I am dealing with my hon. Friend the Member for Shipley. I say to him that, on the contrary, there was a good deal of support for that point of view, because not all clothing manufacturers are afflicted by this particular increase. For a long time, many of the makers of luxury clothes have believed that their rate of tax should be brought into line with the rates of tax on other articles of comparable luxuriousness.

Mr. Hirst

I have on another occasion addressed the same body, with an equal amount of publicity in the Yorkshire Post. I have lived in the area and know the trade, and these people are the fashion designers and are quite different from the mass makers-up who are not in favour of but very strongly against this tax. I really do know my own industry.

Mr. Nabarro

All right, no doubt my hon. Friend does know the industry, but the president at last Friday's function was himself a clothing manufacturer and the majority of those present were clothing manufacturers and did not get cross with me. Of course, every trade which suffers from an increase in tax however small, will protest to the Chancellor. I have in my hand a letter of the Clothing Manufacturers' Federation of the 17th April addressed to the Chancellor, which expresses quite mildly opposition to any increase of the tax. However, there are much better reasons, in my judgment for stabilising the tax on clothing at 10 per cent. far the forth- coming year than those advanced by trade associations.

Mr. F. A. Burden (Gillingham)


Mr. John Hall

I am grateful to my hon. Friend for giving way. In order that I can get into my mind quite clearly and fully understand what he is suggesting, I gather that he favours a flat rate for all articles now bearing Purchase Tax, which might come out at something like 16⅔ per cent. Am I, therefore, to say to my furniture manufacturers, and to the young people who are buying their furniture and setting up house, that we are committed to the idea of increasing the cost of furniture from a Purchase Tax of 5 per cent., as it will be when we have finished with this Clause, to one of 16⅔ per cent.?

Does my hon. Friend appreciate the very considerable increase in cost which this will impose upon young married people already living in a period of an over-stretched economy? Does he also appreciate that, where floor coverings are concerned, there is less demand or less need for them today than there was before? We have had eleven years of Tory good government, and today many new houses are being built with polished wood floors, which means that, very largely, people do not need floor coverings, but we have still not found anything to do away with the need for beds, chairs and tables which, as essentials, should be relieved of tax. If my hon. Friend would like to come to my constituency and talk about this great idea of a 16⅔ per cent. tax, he will get a very different reception from that which, apparently, he received in Yorkshire.

Mr. Nabarro

There is a technical difficulty in answering that at this stage, but I shall not hesitate to answer it on the Question "That the Clause stand part of the Bill". If I answered my hon. Friend thoroughly now I should be involved in talking about the present rates of 45 per cent. and 25 per cent., and he cannot be adequately answered without all these considerations being, brought in. However, I promise him that I will answer him. His interpretation of the position is exactly correct, but he will not lose his seat as a result. My hon. Friend will not be in any more trouble than I have been in on many occasions for advocating things that were parochially unpopular but nationally desirable. Does my hon. Friend wish to intervene?

Mr. Burden

I do not wish to make a point now, because the one point I wanted to make would have been relevant earlier had I been able to make it. However, in view of the delay I hope to make it later in my own speech.

Mr. Nabarro

My only comment on that is that it could not have been much of a point.

8.0 p.m.

Mr. Burden

My hon. Friend is usually arrogant and nearly always not accurate, but that comment ill becomes him—or perhaps we might expect it of him—but what he said was—

The Temporary Chairman (Sir Samuel Storey)

Order. I think we must get back to the Amendment.

Mr. Nabarro

I am trying to keep to the Amendment, Sir Samuel. I apologise for causing a little hilarity in the Committee.

Hon. Members opposite have grossly exaggerated the implications of increasing by such a small margin the Purchase Tax on clothes and on furniture. If these items of manufactured goods were entirely non-luxurious in character as well as being absolutely essential, then I might have a good deal more sympathy for what they say. But I cannot bring myself to believe that it is iniquitous to put a 10 per cent. Purchase Tax on a 60 guinea Savile Row suit or on a 400 guinea cocktail cabinet, all of which, prior to the Budget, were taxed at only 5½ per cent.

If we took to the logical conclusion all the arguments advanced from the other side of the Committee, as well as some from my own side, this would lead to a division in both clothing and furniture whereby certain expensive items were taxed and certain less expensive items were untaxed. That would be an intolerable position, and, as there is no shortage of manufactured goods of any kind today, as there is an abundance of all kinds of manufactured goods and as we live in a society which is fully employed and highly affluent after eleven years of Tory rule, I do not regard it as damaging to the economy or iniquitous, politically or otherwise, to put a reasonable level of Purchase Tax at 10 per cent. on these goods for the forthcoming year. I go no further than that—[Interruption.] It might go up further next year on these classes of goods, if there were complete standardisation. For the forthcoming year, I do not think it unreasonable that a rate of 10 per cent. should be applied to all furniture and to all clothing, which are the only two items we are allowed to discuss within the bounds of order on this Amendment.

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

About twenty minutes ago, the hon. Member for Kidderminster (Mr. Nabarro) looked at the clock and said that we had spent two hours talking blurb about the Purchase Tax. He has himself considerably contributed to that side of the discussion. Time and again, we have to listen to him boasting and bragging about the many Questions he has put about the Purchase Tax to Chancellors of the Exchequer over the years. The hon. Gentleman said that he was not afraid of losing his seat; he could find plenty of other jobs to do. Some of us could suggest jobs for him to do. If he thinks that he is a comedian in the House, he had better think again about the purpose of the business we are discussing today. One becomes absolutely weary of the hon. Gentleman's arrogance, his puffed-up attitude of mind, and his opinion that only he can advise the Chancellor and that the Chancellor will take note of his arrogant suggestions.

I have no constituency interest in this matter, fortunately, because the tax on pottery has come down.

Mr. Nabarro

Perhaps that is why the others have gone up.

Mrs. Slater

I am not arguing about a constituency matter. I approach this question as a consumer and as a housewife representing consumers not in the class which possesses £400 cocktail cabinets or £40 suits.

Mrs. Castle

It was a 60-guinea suit.

Mrs. Slater

Sixty guineas, was it? I do not know how much the braces underneath the suit are worth. We see them quite often. They are red today.

I am arguing on behalf of people in the low income groups. To suggest that for such people it is more important to have a carpet first is nonsense. In the lower income group, young people getting married do not think that buying a carpet is more important than buying a bed. What do ordinary people think of buying first?—the kitchen furniture, the table at which they will eat, the bedroom furniture, pots and pans, bedding and so forth. If they have not enough money, the carpet can wait. Not everybody has carpets today, because not everyone can afford the fabulous prices charged for some of them today. It is essential that the furniture which the ordinary young man and young woman needs to buy should not be subject even to a 5 per cent. rate of tax, let alone 10 per cent. It is an injustice to those who are setting up home.

After listening to the hon. Member for Kidderminster, one would imagine that in our affluent society today there was no one earning less than £9 or £10 a week, yet, when we ask the Minister of Pensions and National Insurance, we are told that there are many people who do not even qualify to come within the Tory Party's pension scheme because they earn less than £9 a week. Among people with the lower incomes, very often the woman has to go out to work in order to help to furnish the home when they get married. It is people of this sort that I am talking about, not the ones in the imagination of the hon. Member for Kidderminster. For a person earning £10, or even £20, a week, the 10 per cent. tax on furniture which he or she has to buy is a very much greater burden and injustice than it is to the hon. Member for Kidderminster in the manor house in which he lives.

I have old-age pensioners also in mind. They are entitled to a new chair occasionally. They have lived with what they have for donkey's years, and occasionally they want a new chair. Why should they have to pay this tax out of their very small pension?

In spite of eleven years of Tory rule—or because of it, in many cases—we have far too many people in the lower income group today. Ours is not the affluent society which the Tories would have us believe. In the country from which my hon. Friend the Member for Kilmarnock (Mr. Ross) comes, the cry one hears is that there is far too much unemployment. It is for those people, the unemployed in Scotland and poorer people everywhere, those who are having to suffer, that we are speaking. For them, a Purchase Tax rising from 5 per cent. to 10 per cent. is a very great injustice.

I come now to clothing. The hon. Member for Kidderminster tries to argue that it is sheer nonsense to exempt some things. We do exempt some things now. We exempt fur coats. I think that my hon. Friend the Member for Blackburn (Mrs. Castle) said that a fur coat is an essential.

Mrs. Castle


Mrs. Slater

I thought that my hon. Friend had said that that was not a luxury. In my view, there is a real argument for taxing the mink coat. After all, there was a reduction of tax on such things.

Mr. Nabarro

The hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater) has said that fur coats are exempt.

Mrs. Slater

No, I did not.

Mr. Nabarro

Then what did she say?

Mrs. Slater

I said that the hon. Member for Kidderminster had argued that it was ridiculous to set about exempting certain things.

Mr. Nabarro

I did not say anything of the sort. I said that I recognised that the articles in the list read out by the hon. Lady the Member for Blackburn (Mrs. Castle) had been the subject of special pressures and for special reasons had been exempted, and I would not dissent from it.

Mrs. Slater

All right. What I am saying is that even in regard to clothing we find that some sorts pay a higher Purchase Tax than 5 per cent. or 10 per cent. at present. I think that there is an argument for some of those paying the higher rate of tax.

It is ordinary clothes which concern me. After the long holidays, the woman of the family has to rig her children out for school. She has to buy shoes, to mention only one item. I am thinking particularly of the older children of 14 and 15 years of age. How many girls today take a woman's size of shoe, and how many boys take a man's size?

Mrs. Alice Cullen (Glasgow, Gorbals)

And they last only a short time.

Mrs. Slater

Yes, they last only a short time. Girls who are starting to go out to work have to be rigged out with shoes and clothes, and even only another 6d. per article presents a real problem. To people in the £10 or £12 a week group, it is a burden to have to pay Purchase Tax on such articles of clothing, and it is made worse by any increase.

Old-age pensioners need warm underclothing. It is essential that they should have warm overcoats. It is thoroughly unjust to put the tax up from 5 per cent. to 10 per cent., and to do so is indicative of the Tory approach to the problems of the people whose need is still great today.

Mr. Burden

I have been a Member of the House since 1950. Each year, I have seen the Purchase Tax used by successive Chancellors as a Budgetary yo-yo in the Finance Bill, and almost always the rising arc has been retained and there has been very little drop in the amount of tax at the other end. When there has been a lowering of one rate of tax, there has almost always been a compensating, or more than compensating, increase in others. I think that the public are growing very cynical about the so-called advantages of these changes in Purchase Tax, and I am certain that industry generally is thoroughly fed up with it. I shall be critical of my right hon. and learned Friend for his proposed increases and changes in the Purchase Tax.

I shall confine my attention principally to clothing. I must declare an interest, for I am a clothing manufacturer. Because of that, I know how completely wrong my hon. Friend the Member for Kidderminster (Mr. Nabarro) is when he says that clothing manufacturers would welcome the tax at 16⅔ per cent.

Mr. Nabarro

I did not say that.

Mr. Burden

Yes, my hon. Friend did.

Mr. Nabarro

No, I did not.

Mr. Burden

My hon. Friend should sit quiet and listen to other people for a change. He should show that he can take it as well as give it.

Mr. Nabarro

I gave way to my hon. Friend once. I did not say it.

Mr. Burden

I listened very carefully to what was said by my hon. Friend. He said that he had been in Yorkshire and, when he had made that proposal to an audience of people interested in clothing manufacture, there was not one word of dissent from the idea that the tax on clothing should be raised to 16⅔ per cent.

Mr. Nabarro

I did not say that at all.

Mr. Burden

Yes, my hon. Friend did. If he will look at HANSARD tomorrow, he will find what he said. A few seconds after making that statement, my hon. Friend quoted from a letter from the Clothing Manufacturers' Association, and then he said, "But, of course, they always bleat against rises in Purchase Tax on their particular commodities". So, for once, my hon. Friend was very inconsistent. I tried to put a question to him, and perhaps this may have accounted for his obviously unintentional rudeness when I said that I would put it off until later. However, I want, if I can, not to have a running commentary from my hon. Friend or anybody else trying to do the Economic Secretary's job for him in replying to the debate. I should prefer the Economic Secretary to do it rather than that my hon. Friend the Member for Kidderminster should attempt to reply to me when I am speaking.

My right hon. and learned Friend had very considerable success with the wage pause. I had great sympathy for my right hon. and learned Friend. I believe that most people felt that it was intended to try to hold prices, to ensure that we retained competitiveness in the markets of the world and, above all, to hold down inflationary trends. But I cannot for the life of me see why, having attained so much success and, at a rather late date, having got the sympathy and understanding of so many people, he decided to increase the cost of living for the least-well-off members of our community, as happened when the Purchase Tax on clothing rose from 5½ per cent.—with the additional regulator of ½ per cent.—to no less than 10 per cent.

8.15 p.m.

I really cannot believe that my right hon. and learned Friend knew the full impact of what he was doing on the cost of clothing to people having the lowest incomes. For instance, a woman's suit of clothes or any article costing, say, £5 under the old rate paid 5 per cent. tax. Now when the stores price these articles the percentage increase is based on the cost of the article including the cost of the Purchase Tax. The stores' share generally would be a profit of £2 12s. 6d. on an article costing £7 17s. 6d. to the customer. As a result of the new Purchase Tax rise, that article will now cost £8s. 5s. 0d.—although I believe that it will cost £8 7s. 6d.—and there will thus be an increase in price, resulting from the rise in Purchase Tax, of another 7s. 6d. to the retail customer.

That example applies not only to people to whom this will mean very little but to everyone, including those living on fixed incomes, to the old-age pensioners, and it will fall particularly hard on parents with young families. I urge hon. Members not to consider this matter in the same way as they consider furniture. Furniture is a durable article. Clothing is not. It is a non-durable essential and, leaving fashions aside, clothes wear out and, where children are concerned, they wear out particularly quickly. Unlike furniture, which is durable, clothes are not and they must be worn by us all every day of our lives.

I do not understand why my right hon. and learned Friend should have selected this time to have increased the cost of living by so much to so many people who can so ill afford to pay the extra. Many of them are living on incomes which are based on the cost of living and I fear that there will be further demands for wage and salary increases because of these increases.

We are told that this is a "levelling off" procedure; that the tax at the one end would be reduced from 13 per cent. to 10 per cent. and at the other end, increased from 5 per cent. to 10 per cent. The fact is that it is a very big levelling up because it is providing the Treasury with a further £25 million at least. In any case, was this extra money needed? If it was, why were we not told that? We should not have been told if it was just a very convenient method of levelling off in view of our entering the Common Market. Purchase Tax on this or any other level at home has nothing whatever to do with our possible entry into the Common Market, because every member country of the Common Market can impose whatever internal taxes it likes as long as its tariffs are not discriminatory against any of the other members.

If this argument is to hold good in the matter with which I am dealing and if it was to be a levelling up process, and to eliminate Purchase Tax categories, why did my right hon. and learned Friend introduce the new rate of 15 per cent. on sweets and confectionery? The clothing manufacturers of this country have been going through a difficult time. Because of the extremely bad weather many of them have been left with heavy stocks on their hands, and it is already evident that the purchases for next season will be very much below those of past seasons. This trend reflects not only on the clothing manufacturers but on the woollen mills of Yorkshire and elsewhere. It will, of course, help to restrict our competitive power in overseas markets.

Clothing manufacturers at home are making considerable efforts to extend their exports and the new rate of tax is not a particularly good way of thanking them for what they are trying to do and encouraging them to still greater efforts. As I said, I have had a great deal of sympathy for many of the things that my right hon. and learned Friend has tried to do. I have been steadfastly behind him on many of them. But I do not think that he has done anything to help his own case by this action or that this will do anything other than release a whole spate of demand for increased wages and salaries.

I beg him, even at this late hour, to look at this proposal again. I am afraid that unless he gives some undertaking to do so I shall find myself unable to support the Government and I shall either abstain from voting or have to go into the Lobby against the Government.

Mr. Barber

We have had on this series of Amendments a very full debate and it is right that we should have done so, because we are concerned with an important change in the rate of Surtax. I should, of course, have said Purchase Tax. The effect of the series of Amendments moved by the hon. Member for Sowerby (Mr. Houghton) would be to reduce the rate of Purchase Tax on clothing and furniture from the figure of 10 per cent. proposed by my right hon. and learned Friend the Chancellor of the Exchequer to 5 per cent., the pre-Budget rate, exclusive of surcharge.

In view of our previous debates on Amendments involving substantial sums of money I am surprised that there has been so little reference to the effect of this proposal on the Budget as a whole. I say that because although there has been criticism of individual aspects of the Budget, I believe that, generally speaking, outside the House, there has been general acceptance of the fundamental decision of my right hon. and learned Friend to maintain the general burden of taxation at about the same level.

I must therefore, tell the Committee that to accept this series of Amendments would cost more than any of the Amendments we have so far considered in Committee. It would cost £66 million a year. My hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) mentioned that he was not here when we had the general debate on the Budget, as he was abroad at the time, that he had not had an opportunity of expressing his views on the Budget and that he was waiting to hear what I now had to say.

I can say this straight away to my hon. Friend, because I believe that he has misunderstood one important consequence of the Clause. He said, in effect, that we were raising more revenue by the Clause. As I understood his comments, he argued that he thought that this was inconsistent with the incomes policy of my right hon. and learned Friend and that it was, therefore, not a sensible thing to do.

Sir H. Legge-Bourke

I think that I understand why the Economic Secretary thought that that was what I had intended to say. Actually, I was trying to say that it is this group of goods which have been subject to a tax of 5½ per cent. and which are to be subject to 10 per cent. which will be a source of revenue of something in excess of £20 million extra. That is my criticism.

Mr. Barber

Yes, but I hope that my hon. Friend will bear in mind that the effect of the various Purchase Tax proposals, taken together, will involve a reduction in Purchase Tax of £13 million in a full year. I assume that my hon. Friend—and hon. Gentlemen opposite—are not opposed to the reductions which my night hon. and learned Friend has suggested. If one takes into account that to keep those reductions and to accept this series of Amendments would cost in Purchase Tax no less than £79 million, one realises the full implications of the matter. I can only say to hon. Gentlemen opposite that if that is their policy in present circumstances, then it is fairly clear that they have abandoned all pretence of a policy to counter inflation.

Mr. Houghton

In his opening sentence the Economic Secretary made a slip and referred to Surtax. That reminded me of something, because last year he made a forward debit on the revenue for this year of £83 million, which is more than the relief.

Mr. Barber

The hon. Member surprises me. Some of his hon. Friends made slips and others do not always quite know what they are saying. The hon. Member knows very well, because it has been said time and again, that at the time when we provided the Surtax relief we also increased Profits Tax by a considerable amount which almost paid for the Surtax reliefs. That argument that is used by the hon. Member and some of his hon. Friends is, therefore, really invalid.

If the hon. Member for Sowerby is speaking on behalf of the Labour Party in his capacity as a member of the Front Bench, is he saying that should the Labour Party get back to power it will annul all the Surtax reliefs which my right hon. and learned Friend provided last year? If so, will that not take us back to the position where our rates of taxation were far higher than our principal overseas competitors, Western Germany, for instance? I hope that he will have the courage now to stand up and say that that is the policy of the Labour Party, otherwise I hope that we shall not hear that sort of argument used in the future.

Mr. Houghton

The Economic Secretary surely realises that I am not here to say what the Labour Party will do, when it becomes the Government, on Surtax or anything else. At least, we would not have Surtax reliefs at a time when we are still keeping taxation on the lower income groups at its present level.

Mr. Barber

We can all draw our own conclusions from that.

I now turn to the first point which was dealt with at some length by the hon. Member for Sowerby in his opening speech, his reference to the reform of the structure of Purchase Tax. The change we are considering in this series of Amendments is, of course, only part of the general reform of the structure. I do not suppose that it would be in order for me to deal with this subject at any length. It is, perhaps, more a matter for debate on the Clause as a whole. However, I do think that most hon. Members of the Committee will agree with me that at any rate there were many people who thought that the disparity between the highest and the lowest rates of Purchase Tax was far too great. Before this Budget this disparity amounted to this: the highest rate was ten times the lowest. Now, of course, the highest rate will only be four and a half times the lowest.

My hon. Friend the Member for Gillingham (Mr. Burden) and my hon. Friend the Member for the Isle of Ely and also the hon. Member for Sowerby referred to a reference which my right hon. and learned Friend made in his Budget speech to the possibility of our joining the European Economic Community. I would only say that this reform of the structure would, I believe, be an advantage if we were to do that, but it would be quite wrong to assume that my right hon. and learned Friend did not take the view that, even apart from that possibility, this reform of the structure was a highly desirable step forward.

8.30 p.m.

I should also like to draw the attention of the Committee to another fact which I believe to be very relevant. I hope that my hon. Friend will bear this in mind. I listened to him with great care when he made his speech. Last year, £1,800 million was spent on furniture and clothing and yet it brought in only £63 million in taxation. So that this modest increase from 4½ per cent. to 10 per cent. is not, I believe, unreasonable.

Mr. John Hall

Would my hon. Friend split that figure up as between clothing and furniture?

Mr. Barber

I cannot do that offhand. The total figure for the two is £1,800 million.

Reference was made by several hon. Members, by the hon. Member for Sowerby, and by my hon. Friend the Member for Gillingham in his speech a moment ago, to the burden which this increase in tax would place on families. The hon. Gentleman the Member for Sowerby said that it would fall in the main on what he called the poorer families.

The first thing I would say, with great respect to the hon. Member for Edmonton (Mr. Albu) and, I think, to the hon. and learned Gentleman the Member for Northampton (Mr. Paget), is that they are really quite wrong in suggesting that this particular tax is a regressive tax. It is not so. I say that because I think that the hon. Gentlemen who have contended that it is regressive have overlooked the fact that the poorer families spend about the same and sometimes an even smaller proportion of their total outlay on clothes and furniture as do the better off. [HON. MEMBERS: "No."] Well, I should like to give the figures.

If we take the case of a household with a gross income per week of between £8 and £10 the average expenditure on clothing, other than tax-exempt clothing, and furniture is 17s. 2d., that is 8.8 per cent. That is expenditure on that clothing and furniture as a percentage of expenditure on all goods and services. If we take the case of a household bringing in between £10 and £14, it is 8.6 per cent.; between £14 and £20 it is 9.3 per cent.; between £20 and £30—still for a whole household—it rises to 11.1 per cent.; between £30 and £50 it rises to 11.3 per cent.

My hon. Friend the Member for the Isle of Ely, as I understood him, said that he thought we ought to do away altogether with indirect taxation and rely solely on direct taxation. This was a proposal which was echoed by one or two hon. Gentlemen opposite. I think, therefore, that it is relevant, in considering whether or not what my right hon. and learned Friend is doing is fair, to bear in mind that the proportion which Customs and Excise revenue bears to total revenue in the forthcoming year is likely to be less than it was in the year 1950–51. In 1950–51, the proportion of Customs and Excise revenue to total revenue was 43.4 per cent. We expect that in this coming year it will be 41.4 per cent.

Sir H. Legge-Bourke

Will my hon. Friend break that figure down and say how much is Excise and how much is Customs duties?

Mr. Barber

No, I cannot. It relates, broadly speaking, I can tell my hon. Friend, to indirect taxation and direct taxation—

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

Does the hon. Member mean, by quoting these figures, that the poorer people are not to pay more as a result of the tax being increased? Otherwise, it is sheer nonsense.

Mr. Barber

I was answering the point, made by several of the hon. and learned Member's hon. Friends at a time when he was not in the Chamber, that this tax on clothing and furniture was a regressive tax. I was only saying that if we look at the facts—and that is all I am asking hon. Gentlemen opposite to consider—which come out from the Family Expenditure Survey made by the Ministry of Labour, they prove conclusively that this is not so in respect of this particular tax on clothing and furniture.

My hon. Friend the Member for Shipley (Mr. Hirst) said that he hoped that in my reply I would not refer to the likely burden which this tax would have on families as a result of the increase in retail prices. I am afraid that I must do so. This is surely a highly relevant consideration.

Mr. Hirst

It is not relevant at all.

Mr. Barber

The fact is that the increase in retail prices attributable to this increase in Purchase Tax from 5½ per cent. to 10 per cent. works out at only a matter of pence in the £. [HON. MEMBERS: "Oh."] It is a fact—about 7d. or 8d. in the £. Anyone setting up home today would also have the considerable advantage from the reductions in Purchase Tax which my right hon. and learned Friend has made on other goods.

Mr. Burden

This is all theory. No doubt my hon. Friend has been advised by Treasury officials, but if he had looked at the facts of life he would have found, as I said to him in my speech, that when Purchase Tax is accounted on the cost of the article, the percentage increase in selling price is based on the cost of the article plus Purchase Tax which has to be paid at the time it is received by the stores, with all the accounting which goes with it. It means they cannot get a rebate if they have to sell the goods at a low price at the end of a bad season, as now, and they have to account it.

Mr. Barber

I know that my hon. Friend has considerable personal knowledge of this because he told us he had an interest in this matter, and I am not saying that this is necessarily how prices might end up. All I am saying is that the increase in prices attributable to the increase in tax works out at between 7d. and 8d. in the £.

On the question of prices, I should like to deal with the point made at some length by the hon. Member for Wycombe (Mr. John Hall), who referred to the fact, as he understood it, that certain retail prices were being raised by an unnecesary amount. I say quite bluntly that my right hon. and learned Friend and I deplore excessive increases in retail prices which are not attributable to increases in Purchase Tax. [Interruption.] Hon. Members opposite may make these noises, but we do not have price control in this country, and when we had, when hon. Members opposite were in power, prices still continued to rise. That is something they should bear in mind.

Mr. John Hall

I appreciate that we do not have and probably do not want price control, but I should have thought that it would be within our power and very desirable to insist that Purchase Tax was always shown as a separate item and accounted for separately in all prices charged to the consumer, as that would enable the consumer to check whether an increase in price was fair.

Mr. Barber

I am sure that my right hon. and learned Friend will take note of what my hon. Friends have said, but he would not expect me—[HON. MEMBERS: "Oh."]—and nor would hon. Members opposite, on reflection, after Purchase Tax has been in existence for all these years without that having been an obligation on the retailer, to give my hon. Friend an "off-the-cuff" answer now.

Various hon. Members referred to the state of the clothing and furniture industries. My hon. Friend the Member for Shipley referred, in particular, to the clothing trade. I say at once that I appreciate his sincere and genuine concern. I know him well, because we come from constituencies which are not far apart. But nobody looking objectively at the figures would deny that the clothing and footwear industries taken together—I have figures only for the two—have been reasonably buoyant in recent years. There are exceptions in certain branches. The hon. and learned Member for Northampton (Mr. Paget) made some points about the circumstances of the boot and shoe industry, but the clothing and footwear industries taken together have been reasonably buoyant.

I remind the Committee—and these figures are relevant—that the Index of Industrial Production over the past years shows that whereas the total for manufacturing industries rose from 100 to 114.7, the clothing and footwear industries rose from 100 to 122. I know that the furniture industry has not been doing as well as the clothing industry—there was a drop between 1959 and 1960—but here again the figures of the Index of Industrial Production, which is the best indication we have, show an improvement between 1960 and 1961.

My hon. Friend the Member for Gillingham and my hon. Friend the Member for Shipley expressed considerable concern about the effect of the increase of tax on the clothing industry and particularly on exports. In fairness, I must frankly tell them that I do not follow their arguments. I am told that United Kingdom exports of clothing have been valued at between £40 million and £50 million in each of the last ten years while the size of the home market for clothing is enormously larger. Consumer expenditure on clothing in 1960 was more than £1,600 million. Comparing that enormous figure of home consumption with the £40 million or £50 million for exports, it is unlikely that exports will be materially affected by the very small increase in cost which would be brought about as the result of the new rate of tax.

Mr. Hirst

Of course, we realise that some of these trades have been fairly buoyant over recent years. I thought that one of the things we wanted to do was to keep them buoyant and not have the Treasury deflate that buoyancy. It must be obvious that any civilised nation—and we are a civilised nation—will make most of its own clothes, but unless there is a good home base, cultivated and helped and assisted and not hindered by unnecessary tax changes, costs cannot be kept down so that the export trade can be increased. That is obvious.

Mr. Barber

I can only repeat that if my hon. Friend is right the clothing industry must be in a fairly poor state if, with a home market involving £1,600 million a year, its exports of £40 million or £50 million are likely to be adversely affected by this increase in tax, which will work out in retail prices at about 7d. in the £.

My hon. and gallant Friend the Member for Wells (Lieut.-Commander Maydon) asked whether it would be possible to exempt protective clothing as a class from tax. Hon. Members opposite who were concerned with this subject at the time of the Labour Government will recall that that Government considered it on a number of occasions, and it has since been considered by my right hon. and hon. Friends. Every time it has been concluded that it was not possible, in practice, to draw a sufficiently clear distinction between protective and other clothing. There are great difficulties. My hon. and gallant Friend the Member for Wells made some constructive suggestions about the possibility of a rebate of tax in respect of this type of clothing. I will consider that suggestion, but I think that it would have major difficulties and I could not myself hold out any hope.

Dr. Dickson Mahon

Do I take it that, quite apart from that item, the Treasury is not rejecting the idea of further exemptions from those articles presently subject to Purchase Tax but is willing to listen to special cases about different articles in different categories?

Mr. Barber

It is most unlikely that we should be able to exempt any article on the ground that it was considered to be protective clothing. I say that because this has been considered so many times on previous occasions and we have always come up against practical difficulties, but if there is any particular type of clothing which the hon. Member has in mind, and he will let me have details, I shall be happy to look into it.

8.45 p.m.

To sum up, this is a very important matter on which strong feelings have been expressed from both sides of the Committee, but I do not think it right, in the context of this Budget, to accept an Amendment which would cost no less than £66 million a year. I should point out another factor which is surely highly relevant—that the two Amendments to insert subsection (2), on which the Opposition have said that they might wish to divide, taken together—and they are not mutually exclusive—would cost the Exchequer no less than £132 million a year. The only conceivable case for supporting Amendments like that would be that the Opposition had given up all hope of tackling the question of inflation. It seems to me to be inconceivable that they would put forward policies of that kind while, at the same time, welcoming the reductions in Purchase Tax which the Chancellor has proposed.

Mrs. Castle

What would be the cost of accepting the Amendment in line 39, at the end to insert: (2) The foregoing subsection shall not apply to references to a rate of five per cent. in respect of Groups 1, 2, 7 and 8 and for any such reference there shall be substituted a reference to a rate of one quarter of one per cent.?

Mr. Barber

The cost of accepting that by itself would be about £110 million.

Mr. Hirst

The Economic Secretary is grouping these together. I understand that the first Amendment of the official Opposition leaves the tax where it is at 5 per cent. Presumably, the cost of that would not be more than £25 million.

Mr. Barber

The cost of that Amendment and the others which are related to it, consequential upon it and necessary to implement it, is £66 million in a full year and £48 million this year. That is the Amendment which I understand that my hon. Friend the Member for Shipley has considered supporting. I hope that he realises that it would cost that sum of money.

I remind the Committee that the overall effect of the Chancellor's Purchase Tax changes is a reduction of Purchase Tax by £13 million a year. I contend that in the context of this Budget an increase of tax from 5 to 10 per cent. is not unreasonable, and I ask the Committee to reject the Amendment.

Mr. Ross

We did not expect a good speech from the Economic Secretary but, frankly, we did not expect one quite as bad as that. Turning to his hon. Friend the Member for Shipley (Mr. Hirst), the hon. Gentleman said that he hoped that he appreciated that the Amendment would cost £66 million a year. I hope that he appreciates that this is what it will cost the consumer. This is the extent of the increased taxation—£66 million. He may have justified all his figures in relation to the array of statistics about the Budget, but he did not justify increasing taxation on these categories by £66 million.

Until we had a burst from an hon. Member whose constituency I shall not even name, this sounded very much like a protest meeting, and there was not one supporter of the Government's case. The Economic Secretary, with all the anger and austerity of which he is capable, told us that this is a tremendous bill, but the next moment he told us that it was a modest increase. We must make up his mind. We are prepared to take our Amendment on its merits as it stands, and I do not think that it will break the Budget. It compels me to tell the Economic Secretary exactly where we could get the money to make up the revenue. When we hear an hon. Member telling us about a 60-guinea suit which he is wearing and on another occasion, through the Press, he tells us about the five cars which he has, I think that there are ways in which the Chancellor could get the money.

I do not think that the Economic Secretary appreciates the damage which he is doing. We are dealing with clothing, which includes footwear, and furniture. While within these categories there are fashion goods and some which may well be luxuries, in general they have one thing in common—they are essentials. Throughout all the debates we have had in the past we thought that we were moving towards the exemption of essential articles, but we are now £66 million a year further away from it. We have been told today, in effect, that this is only the start. It will be far easier to raise the tax to the 16⅔ per cent. about which we have heard than it will be to exempt the articles from tax. It is wrong in this day and age to tax essential items of furniture and equipment at the same rate as, say, motor cars or some other manufactured articles.

The Chancellor told us that he did not want to make a moral judgment about what people should buy. He is bound to agree that in taking this action he is passing financial judgment on what he should tax. To my mind, he should not be doubling the tax on ranges of goods which we had expected would be free of tax before long.

That is our judgment upon the Chancellor. Someone said—I think that it was the hon. Member for Gillingham (Mr. Burden)—that people were getting cynical about Purchase Tax. They are getting very angry about what the Government have done in doubling Purchase Tax at the lower range and what they have done in relation to other items, but I should be out of order if I spoke about that. My hon. Friend the Member for Edmonton (Mr. Albu) gave industrial reasons as well as social reasons why the Amendment should be accepted.

I, too, shall advance some industrial reasons. Amongst the bluff which we got from the hon. Gentleman who sits below the Gangway opposite was the statement that people are fully employed and very prosperous. We had the implication, too, in the speech of the Economic Secretary that the clothing and footwear industries were buoyant. This just is not true. The footwear industry now employs fewer people than it did a year ago. Nearly 9 per cent. of those employed in the industry are at present on short time. The Economic Secretary should know very well that there has been much paying off and redundancy in this industry over the year. The industry is not as buoyant as he seems to think.

The Economic Secretary should remember where parts of the industry are located. They are located in areas where it is very difficult to get jobs. That includes Scotland. In my part of Scotland there is a very well-known and highly respected branch of the industry—the Saxone Shoe Co. Ltd. This doubling of the Purchase Tax did not help us in any way. All that the trade unions seem to see in front of us is increased unemployment and short time. The industry has kept itself very efficient and as between employers and employees has done everything to increase productivity. I do not know whether the hon. Gentleman realises this.

In respect of this industry and other industries, to decide at this stage, for the sake of Treasury purity and getting the figures in a better progression, to double the tax is not good enough. It has industrial effects. Not all the shoes produced in Northampton, Kilmarnock and other places are fashion shoes. They are not all luxury items. They are not all shoes with stiletto heels and winkle-picker toes. In Ayrshire, there are what we call "kirk'n markets"—shoes for kirk and market. They are stout shoes. These are no more luxuries than the chair in the kitchen on which one sits on coming in from the fields or the factory. Why does the Chancellor go out of his way, in respect of these essential items, not only to make it industrially more difficult for the industry but also more expensive for the customers who are lowly paid and who are the general run of buyers?

Why does the Economic Secretary say that it will amount to only about 8d. in the £. Which £ is he talking about—the £ which is worth only 14s. 8d. now? Whose £? Is it the £ of the old-age pensioner who has not got three of these £s? In measuring the cost of living of the old-age pensioner all these Purchase Tax changes will be lumped together. They will not mean very much because we now have a new cost of living index. The cost of motor cars will be there as well as the cost of boots and shoes and the essential items of furniture and clothing. The old-age pensioner is not buying a motor car. The lowly paid worker is not buying a motor car. In respect of their cost of living it is very much more than a penny or two in the £.

The Economic Secretary should appreciate that. The arguments he advanced showed no justification for taking this action. Anyone who has been in the House of Commons for any length of time and sat through proceedings on Finance Bills sometimes thinks that this is a piece of political futility. The Government sit there having made up their mind. After the passage of a certain amount of time the Minister will rise and say, "No". The speeches may be very good. They may be very effective and persuasive, but we all know that the Government have already made up their minds.

The debate would become a farce unless we had more speeches such as that made by the Member for Shipley, who said that he would follow this through to its logical conclusions. He said that the Government were wrong and that he was prepared to say so in the Lobby. This makes the reality of Parliament. This makes the reality of expressing the feelings of the people outside. The Economic Secretary seems to think that the Budget is popular. He cannot have seen recent by-election results. I am sure that future by-elections, particularly one in Scotland, will amply demonstrate that in Scotland, too, the Government are far from popular. Unless the Government appreciate that in raising revenue they must exercise

great care and understand the social and industrial implications of what they do and their effect upon the whole nation, they do not properly govern in the interests of the nation. To increase by £66 million the cost of essential goods in clothing, footwear and furniture, and to put this down as something for which the Government should have support is asking for too much.

9.0 p.m.

Sir Wavell Wakefield (St. Marylebone)

I would remind the hon. Member that in the Finance (No. 2) Bill on 8th June, 1948, Sir Stafford Cripps as Chancellor of the Exchequer raised Purchase Tax on all these items from 50 per cent. to 66⅔ per cent., which makes nonsense of everything that the hon. Member is saying.

Mr. Ross

In 1948 I was only two years out of the Army. Some of my friends were still in the Army waiting to get out, and I can tell the hon. Member that the shape of the world and of the British Commonwealth and Empire was then slightly different from what it is today. We are talking about Britain in 1962, the Britain that never had it so good, a Britain to which the Leader of the House is going to give a new slogan, "We took you into the Common Market". Slogans, to be effective, must be short and slick and the right hon. Gentleman should take out the last three words and make it, "We took you in". We are dealing, with 1962 and it is regrettable that we should be finding ourselves increasing taxation with these disastrous effects. I sincerely hope that the Government will be defeated in the Lobby.

Question put, That the words "or of five per cent." stand part of the Clause:—

The Committee divided: Ayes 221, Noes 143.

Division No. 188.] AYES [9.2 p.m.
Agnew, Sir Peter Black, Sir Cyril Carr, Compton (Barons Court)
Aitken, W. T. Bourne-Arton, A. Carr, Robert (Mitcham)
Allason, James Box, Donald Cary, Sir Robert
Atkins, Humphrey Boyd-Carpenter, Rt. Hon. J. Channon, H. P. G.
Barber, Anthony Boyle, Sir Edward Chataway, Christopher
Barlow, Sir John Brooke, Rt. Hon. Henry Clark, William (Nottingham, S.)
Barter, John Brooman-White, R. Clarke, Brig. Terence (Portsmth, W.)
Batsford, Brian Brown, Alan (Tottenham) Cleaver, Leonard
Beamish, Col. Sir Tufton Browne, Percy (Torrington) Cole, Norman
Bevins, Rt. Hon. Reginald Bryan, Paul Collard, Richard
Biffen, John Buck, Antony Cooke, Robert
Biggs-Davison, John Bullard, Denys Cordeaux, Lt.-Col. J. K.
Birch, Rt. Hon. Nigel Bullus, Wing Commander Eric Corfield, F. V.
Bishop, F. P. Campbell, Gordon (Moray & Nairn) Costain, A. P.
Coulson, Michael Irvine, Bryant Godman (Rye) Redmayne, Rt. Hon. Martin
Craddock, Sir Beresford James, David Rees, Hugh
Critchley, Julian Johnson, Eric (Blackley) Rees-Davies, W. R.
Crosthwaite-Eyre, Col. Sir Oliver Kerans, Cdr. J. S. Renton, David
Cunningham, Knox Kerr, Sir Hamilton Robinson, Rt. Hn. Sir R. (B'pool, S.)
Curran, Charles Kimball, Marcus Robson Brown, Sir William
Dalkeith, Earl of Lambton, Viscount Roots, William
Dance, James Lewis, Kenneth (Rutland) Ropner, Col. Sir Leonard
d'Avigdor-Goldsmid, Sir Henry Litchfield, Capt. John Royle, Anthony (Richmond, Surrey)
Deedes, W. F. Lloyd, Rt. Hon. Selwyn (Wirral) Seymour, Leslie
de Ferranti, Basil Longden, Gilbert Sharples, Richard
Donaldson, Cmdr, C. E. M. Lubbock, Eric Shaw, M.
Doughty, Charles Lucas, Sir Jocelyn Shepherd, William
du Cann, Edward Lucas-Tooth, Sir Hugh Skeet, T. H. H.
Duncan, Sir James MacArthur, Ian Smith, Dudley (Br'ntf'd & Chiswick)
Duthie, Sir William McLaren, Martin Smithers, Peter
Eden, John Maclean, Sir Fitzroy (Bute & N. Ayrs.) Smyth, Brig. Sir John (Norwood)
Elliot, Capt. Walter (Carshalton) Macleod, Rt. Hn. Iain (Enfield, W.) Spearman, Sir Alexander
Elliott, R. W. (Nwcastle-upon-Tyne, N.) MacLeod, John (Ross & Cromarty) Speir, Rupert
Emery, Peter McMaster, Stanley R. Stanley, Hon. Richard
Errington, Sir Eric Macpherson, Niall (Dumfries) Steward, Harold (Stockport, S.)
Finlay, Graeme Madden, Martin Stodart, J. A.
Fletcher-Cooke, Charles Maginnis, John E. Stoddart-Scott, Col. Sir Malcolm
Galbraith, Hon. T. G. D. Maitland, Sir John Studholme, Sir Henry
Gammans, Lady Markham, Major Sir Frank Summers, Sir Spencer
Gardner, Edward Marlowe, Anthony Talbot, John E.
Gibson-Watt, David Marples, Rt. Hon. Ernest Taylor, Frank (M'ch'st'r, Moss Side)
Gilmour, Sir John Marshall, Douglas Taylor, W. J. (Bradford, N.)
Goodhew, Victor Marten, Neil Teeling, Sir William
Gower, Raymond Matthews, Gordon (Meriden) Temple, John M.
Grant, Rt. Hon. William Mawby, Ray Thatcher, Mrs. Margaret
Green, Alan Maxwell-Hyslop, R. J. Thomas, Leslie (Canterbury)
Gresham Cooke, R. Maydon, Lt.-Cmdr. S. L. C. Thomas, Peter (Conway)
Grimond, Rt. Hon. J. Mills, Stratton Thompson, Kenneth (Walton)
Gurden, Harold Miscampbell, Norman Thornton-Kemsley, Sir Colin
Hall, John (Wycombe) Morgan, William Vaughan-Morgan, Rt. Hon. Sir John
Hamilton, Michael (Wellingborough) Nabarro, Gerald Vickers, Miss Joan
Harris, Frederic (Croydon, N. W.) Neave, Airey Vosper, Rt. Hon. Dennis
Harris, Reader (Heston) Nicholls, Sir Harmer Wade, Donald
Harrison, Col. Sir Harwood (Eye) Nicholson, Sir Godfrey Warder, David
Harvey, Sir Arthur Vere (Macclesf'd) Noble, Michael Walker, Peter
Hay, John Nugent, Rt. Hon. Sir Richard Walker-Smith, Rt. Hon. Sir Derek
Heald, Rt. Hon. Sir Lionel Oakshott, Sir Hendrie Ward, Dame Irene
Heath, Rt. Hon. Edward Orr-Ewing, C. Ian Webster, David
Hendry, Forbes Page, Graham (Crosby) Wells, John (Maidstone)
Hiley, Joseph Page, John (Harrow, West) Williams, Dudley (Exeter)
Hill, Mrs. Eveline (Wythenshawe) Pannell, Norman (Kirkdale) Williams, Paul (Sunderland, S.)
Hill, J. E. B. (S. Norfolk) Partridge, E. Wills, Sir Gerald (Bridgwater)
Hobson, Sir John Pearson, Frank (Clitheroe) Wilson, Geoffrey (Truro)
Hocking, Philip N. Percival, Ian Wise, A. R.
Holland, Philip Peyton, John Wolrige-Gordon, Patrick
Hollingworth, John Pickthorn, Sir Kenneth Wood, Rt. Hon. Richard
Holt, Arthur Pilkington, Sir Richard Woodhouse, C. M.
Hopkins, Alan Pitman, Sir James Woodnutt, Mark
Hornby, R. P. Pott, Percivall Woollam, John
Hornsby-Smith, Rt. Hon. Dame P. Prior, J. M. L. Worsley, Marcus
Howard, Hon. G. R. (St. Ives) Profumo, Rt. Hon. John Yates, William (The Wrekin)
Howard, John (Southampton, Test) Proudfoot, Wilfred
Hughes-Young, Michael Pym, Francis TELLERS FOR THE AYES:
Hutchison, Michael Clark Quennell, Miss J. M. Mr. Chichester-Clark and Mr.
Iremonger, T. L. Ramsden, James Ian Fraser.
Abse, Leo Cullen, Mrs. Alice Gourlay, Harry
Ainsley, William Davies, G. Elfed (Rhondda, E.) Grey, Charles
Albu, Austen Deer, George Griffiths, Rt. Hon. James (Llanelly)
Allaun, Frank (Salford, E.) Delargy, Hugh Hall, Rt. Hn. Glenvil (Colne Valley)
Allen, Scholefield (Crewe) Diamond, John Hamilton, William (West Fife)
Bellenger, Rt. Hon. F. J. Dodds, Norman Harper, Joseph
Bence, Cyril Donnelly, Desmond Hart, Mrs. Judith
Benson, Sir George Ede, Rt. Hon. C. Hayman, F. H.
Blyton, William Edelman, Maurice Henderson, Rt. Hn. Arthur (Rwy Regis)
Bowden, Rt. Hn. H. W. (Leics. S. W.) Edwards, Rt. Hon. Ness (Caerphilly) Herbison, Miss Margaret
Bowles, Frank Edwards, Robert (Bilston) Hill, J. (Midlothian)
Braddock, Mrs. E. M. Evans, Albert Hirst, Geoffrey
Brockway, A. Fenner Finch, Harold Holman, Percy
Broughton, Dr. A. D. D. Fitch, Alan Houghton, Douglas
Brown, Rt. Hon. George (Belper) Fletcher, Eric Hoy, James H.
Butler, Mrs. Joyce (Wood Green) Foot, Dingle (Ipswich) Hunter, A. E.
Castle, Mrs. Barbara Foot, Michael (Ebbw Vale) Hynd, H. (Accrington)
Collick, Percy Forman, J. C. Hynd, John (Attercliffe)
Craddock, George (Bradford, S.) Fraser, Thomas (Hamilton) Irvine, A. J. (Edge Hill)
Cronin, John Galpern, Sir Myer Irving, Sydney (Dartford)
Crossman, R. H. S. Ginsburg, David Jay, Rt. Hon. Douglas
Jeger, George Morris, John Soskice, Rt. Hon. Sir Frank
Jenkins, Roy (Stechford) Moyle, Arthur Spriggs, Leslie
Jones, Rt. Hn. A. Creech (Wakefield) Neal, Harold Steele, Thomas
Jones, Dan (Burnley) Noel-Baker, Rt. Hn. Philip (Derby, S.) Stewart, Michael (Fulham)
Jones, Jack (Rotherham) Oliver, G. H. Strachey, Rt. Hon. John
Jones, J. Idwal (Wrexham) Oswald, Thomas Stross, Dr. Barnett (Stoke-on-Trent, C.)
Jones, T. W. (Merioneth) Padley, W. E. Swain, Thomas
Kelley, Richard Paget, R. T. Taylor, Bernard (Mansfield)
Kenyon, Clifford Pannell, Charles (Leeds, W.) Thomas, Iorwerth (Rhondda, W.)
Key, Rt. Hon. C. W. Parker, John Thompson, Dr. Alan (Dunfermline)
King, Dr. Horace Paton, John Thomson, G. M. (Dundee, E.)
Lawson, George Pearson, Arthur (Pontypridd) Thornton, Ernest
Lee, Frederick (Newton) Pentland, Norman Wainwright, Edwin
Loughlin, Charles Popplewell, Ernest Warbey, William
Mabon, Dr. J. Dickson Price, J. T. (Westhoughton) Weitzman, David
MacColl, James Pursey, Cmdr. Harry Wells, Percy (Faversham)
McInnes, James Rhodes, H. Whitlock, William
McKay, John (Wallsend) Robertson, John (Paisley) Wilkins, W. A.
Mackie, John (Enfield, East) Rodgers, W. T. (Stockton) Williams, W. T. (Warrington)
McLeavy, Frank Ross, William Willis, E. G. (Edinburgh, E.)
Mallalieu, E. L. (Brigg) Royle, Charles (Salford, West) Winterbottom, R. E.
Mapp, Charles Short, Edward Woodburn, Rt. Hon. A.
Marsh, Richard Skeffington, Arthur Woof, Robert
Mason, Roy Slater, Mrs. Harriet (Stoke, N.) Yates, Victor (Ladywood)
Milne, Edward Slater, Joseph (Sedgefield)
Mitchison, G. R. Small, William TELLERS FOR THE NOES:
Monslow, Walter Smith, Ellis (Stoke, S.) Mr. Allaun and Mr. McCann.
Moody, A. S. Sorensen R. W.
The Chairman

In calling the next Amendment in Clause 6, page 7, line 36, to leave out from "specified" to end of line 39, I should like to make it clear that this leaves open to the Committee the opportunity to vote if it so desires on the Amendment in page 7, line 39, at end insert: (2) The foregoing subsection shall not apply to references to a rate of five per cent. in respect of Groups 6, 11 and 16 and for any such reference there shall be substituted a reference to a rate of one quarter of one per cent. and in page 7, line 39, at end insert: (2) The foregoing subsection shall not apply to references to a rate of five per cent. in respect of Groups 1, 2, 7 and 8 and for any such reference there shall be substituted a reference to a rate of one quarter of one per cent. which have already been discussed, but which cannot be voted on until we reach them on the Notice Paper.

I think that it would be convenient to discuss also the following Amendments: In page 7, line 35, leave out "Part 1 of".

In Schedule 8, page 50, leave out line 3.

In page 50, leave out lines 14 to 48.

In line 22, leave out "15 per cent." and insert "12½ per cent.".

In line 29, leave out "15 per cent." and insert "12½ per cent.".

In line 34, leave out "15 per cent." and insert "12½ per cent.".

In line 46, leave out "15 per cent." and insert "12½ per cent.".

There could, if required, be a Division on the Amendment to Schedule 8, page 50, line 22, to leave out "15 per cent." and to insert "12½ per cent."

Mr. Mitchison

On a point of order. Would not the Division come on the Amendment to page 7, line 36, to leave out from "specified" to the end of line 39, rather than on the Amendment in Schedule 8, page 50, line 22, leave out "15 per cent." and insert "12½ per cent."?

The Chairman

The hon. and learned Gentleman is right. I had not intended to leave that matter in doubt. Certainly a Division can take place on the first Amendment to which the hon. Gentleman referred, but there is also starred on the provisional paper the second Amendment to which he referred, on which a second Division can be recorded if the Committee so desires.

Mr. Mitchison

Thank you, Sir William, and the Amendment in the name of the hon. Member for Edmonton (Mr. Albu), and that in the name of the hon. Member for Shoreditch and Finsbury (Mr. Cliffe) will come at the end of this debate in their order on the Notice Paper, and may be moved formally and divided on?

The Chairman

That is so.

Mr. Mitchison

I beg to move, in page 7, line 36, to leave out from "specified" to the end of line 39.

In effect, the Amendment proposes to leave out paragraph (b) which relates to sweets, soft drinks and the like. There are consequential Amendments to this, but perhaps I need not go into them at this stage. The substantial point is whether or not the Chancellor ought to make what is the largest charge made in this Budget at all.

9.15 p.m.

The charge sought to be put on confectionery, soft drinks and ice cream is estimated to amount to £30 million this year and £50 million in a full year. If I may take something to compare it with, the amount of changes estimated for direct taxation comes to between £8 and £9 million. This is emphatically a Budget in which the Chancellor has chosen to put the heavy charges by way of indirect taxation, and this, as it happens, is the heaviest of all of them. I am not referring to the ones on tobacco and so on, which occur earlier in the table, because they are in effect counter balanced by removals of the regulator tax, if I may so call it. They are really equivalent items. But this is a new and very heavy charge, the heaviest charge in a Budget which itself leans on indirect taxation almost to the total exclusion, so far as the Revenue is concerned, of any direct taxation relief. In those circumstances, I suggest that the Committee is entitled, and indeed bound, to look very closely at what is being done.

If I am told that the Revenue cannot afford it, I fall back on the arguments which we seem to have heard before in this Committee, that what we have to compare with the £30 million this year put upon confectionery, soft drinks and sweets, is the £83 million remitted to Surtax payers. I think that that comparison is perfectly sound on any broad view of what the object of taxation ought to be. Apparently the Tory Party, in all their majesty, fully armoured and equipped, are descending on the children and relying on confectionery, soft drinks and sweets, etc., to secure the national economy for another year. It is, at any rate, the largest matter upon which they rely. They will. I am sure, forgive me for saying, with all respect to their majesty and their opinions, that it is a little funny that they should come down in this way and look to this to keep us as good as we ever have been—or is it "better than we ever have been"? I forget the phrase that the Prime Minister is using at the moment. It appears that it depends mainly on getting a bit out of the kids in the matter of sweets and so on.

I do not want to lead the Committee into a flood of sentiment, and I do not think I need say very much more about it. But it is quite real. A great deal of this stuff upon which this Purchase Tax is being put is sold in 1d. and 2d. packets over the counters of small confectionery shops all over the country, and I should have thought that the effects of a tax of this sort were bound to go well beyond the tax itself. I would suppose that it is obvious that dealers having to attend to the provision of this tax would add a bit more on. They always do. We had exactly the same point the other day when the Tory Party, not having yet suffered from by-elections, chose fireworks as a suitable item to tax. I suppose they are a bit more shy about fireworks now and they have come down at long last to soft drinks.

What is the object of this? Is it in aid of the brewers, or what is it? Is it to secure provision for the next General Election? I thought the brewers provided the soft drinks themselves these days, so it cannot be that. What is the reason which, at this time of day, has led the Chancellor of the Exchequer to choose this extraordinary subject for his particular attention?

I invite the attention of the Committee to the Eighth Schedule, on page 50 of the Bill, and to the words: Chocolates, sweets and similar confectionery … What is "similar confectionery"? It also includes— drained, glacé or crystallised fruits); and chocolate biscuits"— I think somebody has a point about that— and other confectionery"— and so on. Then, for the same reason,— Chocolate couverture not prepared or put up for retail sale is exempt, and the Committee will be glad to note that so are drained cherries and candied peels. What rhyme or reason is there in these extraordinary distinctions? I cannot find any. I am sure there is some quite good trade reason. If we interfere with people's business in a matter of this sort in which there is so much small dealing and distribution through countless points, there are sure to be points that arise, and I suppose these are included to meet them.

We then get on to manufactured beverages—an enormous lot of them—and— crystals or other products for the preparation of beverages, This is the kind of thing that a small child goes into a shop and buys to drink when thirsty. Then, we come to— Containers of gas for the preparation of carbonated beverages. For some reason or another, we omit a good many other things. I am not saying that they should be taxed, but a good many of them are breakfast table items. I should have thought that a tax of this kind was certainly going to cause a lot of trouble if we distinguish between one item and another, and that it was a bad way of dealing with the channels of trade in a form of commerce which depends on the distribution of very small quantities in countless places all over the country.

It is not for me to advise the Government, but I should have thought that the amount of bad feeling which they create for themselves by this sort of tax is quite out of proportion to what the result would be, but I repeat that the result is pretty formidable. After all, it is £50 million in a full year, and I repeat that this is the largest item in the whole Budget. Taxing the kids' lollipops is the supreme achievement of the Chancellor in this Budget, but there it is.

I should like to say something from another point of view. I know quite well that a good many seriously-minded people have been trying to give up smoking lately for good health reasons. They are quite serious about it. A good many of my friends have done so. They then start eating more sweets. This happens regularly. I am not saying that this is a kind of governing point, but it is a point of some importance, and the moment when it is in the interests of the health of the nation that people should give up the excessive smoking of cigarettes is not quite the moment at which to charge a tax on the very thing which many of them find is a good substitute.

I have made my two points. There is not very much to be said about this matter, and I hope that it will not occupy the time of the Committee for very long. Repentance, I have always understood, is quite a sudden process. I should like to see the Chancellor stricken, not by a long array of arguments, but by a sudden flash of insight that it would be wholly ridiculous to start this and quite wrong to go on with it—to found his Budget on a silly tax like this, which would create a great deal of bad feeling and, if not actual hardship, a great deal of inconvenience. It is an unkind sort of tax, and for all these reasons I hope the Committee will turn it down.

I add only one thing. I am puzzled why the rate of 15 per cent. has been selected. As far as I know, it does not appear in otter parts of the Purchase Tax Schedule, but it may. I do not guarantee to have read all through it, though I have noticed that there are a great number of odd things taxed under it. For instance, "piggy banks" are taxed, in spite of what the Chancellor should be trying to do—to encourage thrift in the young. He is taxing their drinks and their "piggy banks". Gut revivers are taxed, too. The party opposite needs some of these at the moment, and the Government ought not to be taxing them.

I have not been all through the Schedules but I think I am right. Why 15 per cent.? Is this something to do with the Common Market? Has the Chancellor got up his sleeve a new tax which is to go on a whole lot of things? What is it? I wish that he would let us into the secret and tell us. Or is it just another example of what I suspect often happens in the Treasury? If the Treasury people are really puzzled about how to administer some of these taxes on logical lines, they go into a back room—they do not even have "Ernie" there—and they just toss up or draw lots out of a hat. I cannot help feeling that the tax on sweets, both as to the rate and to the object of it, is, no doubt, intended to produce revenue, but for that purpose it must have been drawn out of a hat by a Chancellor without too many human feelings at the moment.

Mr. Nabarro

I hope that my right hon. and learned Friend will resist the Amendment. This tax most certainly was not drawn out of a hat, as I conceive the situation.

Mr. Mitchison

How does the hon. Member know?

Mr. Nabarro

I will tell the hon. and learned Gentleman in a moment. I do not consider that it was drawn out of a hat. I trust and I hope that it is part of a developing pattern to rationalise our entire system of indirect taxation, notably the Purchase Tax. The Committee knows that I have devoted a good deal of attention at Question Time over the last few years to the quite ridiculous Purchase Tax anomalies which arise and the fact that the tax has not been levied on any consistent or rational basis over a wide field. On the Budget last year I asked my right hon. and learned Friend specifically to consider three aspects of the Purchase Tax in relation to items excluded from the tax which, in my view, ought to have been included. On the first occasion I said: There are three great sectors of consumer expenditure which have, so far, escaped taxation. They are firstly, soft drinks, secondly, sweets and confectionery and, thirdly, advertising. I hope that they will all be brought within the general ambit of reformed indirect taxation in the next two of my right hon. and learned Friend's Budget statements."—[OFFICIAL REPORT, 15th May, 1961; Vol. 640. c. 1021.] On the Report stage of the Finance Bill, on a proposal dealing with the general amendment of the Purchase Tax, I said: I would bring the whole of general advertising, the whole of soft drinks and the whole of confectionery and sweets into the ambit of Purchase Tax on one of the lower scales. That is a proposition which should be acceptable to the Chancellor and would not be unreasonable or inequitable in respect of the industries concerned. Above all, it would not inflict any harm whatever upon the nation's exporting industries."—[OFFICIAL REPORT, 3rd July, 1961; Vol. 643, c. 1146.] I wish to direct attention for a few moments to this proposition for the taxation of sweets, confectionery and soft drinks in the context of the nation's great exporting industries. We all agreed about this last year. The entire Labour Party voted with me—[Laughter.] The hon. Member for Gloucestershire, West (Mr. Loughlin), who is hooting with derision at that statement, should look up the record. He will find that I divided the House against my right hon. and learned Friend. The Labour Party voted with me on a proposal for the reduction of the Purchase Tax from the highest level of 50 per cent., notably on motor cans, the reason being the infinite damage done to the nation's export trade by the maintenance of taxation on cars at the highest level, an iniquitous level. In my Amendment and the Division I was warmly supported by, among others, the hon. Member for Birmingam, Northfield (Mr. Chapman).

The only way in which my right hon. and learned Friend could reduce the existing level of taxation was by broadening the base of the tax and bringing into the taxation Schedules these items to which I have alluded, notably soft drinks, sweets and confectionery, and, I believe, advertising as well. I hope that he will include advertising next year.

My right hon. and learned Friend made this perfecly clear in his Budget statement. The hon. and learned Member for Kettering (Mr. Mitchison) made no reference to this. It would have been fairer if he had referred to it.

Mr. Mitchison


9.30 p.m.

Mr. Nabarro

I will give way in a few moments. The hon. and learned Member should not be impetuous. My right hon. and learned Friend has said: There is a strong case for broadening the scope of the tax by including some articles which most people would consider just as suitable for taxation as those which are already included."—[OFFICIAL REPORT, 9th April, 1962; Vol. 657, c. 990.] That statement of policy and principle is an extension of what the previous Chancellor, Lord Amory, said in both 1958 and 1959, demonstrating consistency of policy on the part of successive Chancellors of the Exchequer.

Mr. Mitchison

I did not refer to the Chancellor's speech because the Chancellor is here to defend himself and perfectly capable of doing it. I wished to be economical in my demands on the time of the Committee.

Mr. Nabarro

I shall be equally economical if hon. Members opposite will allow me to proceed with my speech. Of course, the Chancellor can defend himself, but I happen to be a supporter of my right hon. and learned Friend in this important fiscal matter. He is doing what I asked him to do last year, the year before that, and the year before that, and, inasmuch as he is moving, by slow and faltering steps, in my direction, I am deeply grateful to him.

The application of Purchase Tax to soft drinks, sweets and confectionery is sumptuary but not offensive to fiscal ethics, and I am not original in advocating it.

For example, the Economist has stated for many years that a tax of this kind, if we are to have Purchase Tax, should be spread over the broadest possible field and, in my view, the broader the field it is spread over—while not touching food, for I do not classify sweets as food, or fuel or transport, which are dealt with under different tax headings—the more I believe we will reach a sound and equitable basis for taxation.

The hon. and learned Member for Kettering called in aid the rather disingenuous argument that to discourage people from smoking cigarettes one should encourage them to suck sweets. Lung cancer may be a grievous ailment and may afflict a rising percentage of our population in their prime years of life. That is true, it grieves me and I am in sympathy with that proposition. I have endeavoured, like many others, to cut down my smoking as a result of the report of the appropriate medical bodies. But the right hon. and learned Gentleman might in fairness, also have quoted the views of the dental surgeons who have pointed out the grievous increase in diseases and ailments of every description arising from the appalling condition of children's teeth.

I know that prevention is better than cure and I am aware of all the other arguments about the schools needing more dental surgeons and better dental services. But this nation is now consuming per 1,000 head of the population three times as many sweets in volume as they consumed in pre-war years and two and a half times as much "pop", or soft drinks, as pre-war. I do not mind them doing that, and I do not wish to arrest their natural desires in any way, but I do not think that militates in any way against my argument that these are essentially sumptuary articles should be judged as such and should be taxed in the correct taxation bracket, which, I believe, to be 15 per cent.

Certainly, I do not discard the cigarette argument altogether in this context, and I should say that by putting a small tax on sweets, we could only discourage marginally the level of cigarette consumption, but the health benefits would largely be offset if the sucking and chewing of sweets, thereby engendered, led to a decline in dental health.

Mr. Donald Wade (Huddersfield, West)

Why is the hon. Member for Kidderminster (Mr. Nabarro) in favour of the figure of 15 per cent., thereby increasing the number of categories?

Mr. Nabarro

I had intended to deal next with the 15 per cent. rate and why. The Chancellor has chosen wisely 15 per cent. because he will need only a very marginal adjustment—from 15 per cent. to 16⅔ per cent., or 2d in the 1s. Of course, we have four rates at present: 45 per cent., 25 per cent., 15 per cent. and 10 per cent. The Chancellor could have put the 5 per cent. rate straight up to 15 per cent. but that would have involved considerable trading hardships and I think that he was wise to do it in two steps—10 per cent. at first and then to reconsider the position next year.

Thus, 15 per cent., if we are to tax sweets, confectionery and soft drinks, is probably the accurate level to adopt.

Mr. Loughlin


Mr. Nabarro

Because next year, when further reform of Purchase Tax might be carried out, any further changes would be less severe than if my right hon. and learned Friend had set it at a lower rate.

I now refer, in a critical sense, to the behaviour of various traders in the handling of the imposition of tax on soft drinks, sweets and confectionery. [HON. MEMBERS: "Imposition?"] Do I hear hon. Gentlemen opposite chanting the word "imposition"? Of course it is an imposition. "Imposition" means putting a tax on. I recognise it as such, I admit it as being such and I support it as such. I deprecate the habits of some manufacturers of sweets and soft drinks in increasing their prices by very much more than the net increase in the Purchase Tax. The hon. Lady the Member for Blackburn (Mrs. Castle) was ques- tioning my right hon. Friend the Minister of Agriculture. Fisheries and Food last week about this very point and I supported her by saying that the amount of the increase in the price of sweets, confectionery and soft drinks was vastly in excess of the net amount of Purchase Tax imposed.

I have with me a letter telling of something which I deprecate as a nefarious practice. The letter came to me yesterday morning from Exeter, enclosing a leaflet from a soft drinks distributor in that City. The letter draws attention to the fact that some of our most popular soft drinks are being increased in price from 9d per bottle to 11d. That represents an increase in the retail price of 22 2/9 per cent.—equal to an increase in the wholesale price of about 28 per cent. But the amount of Purchase Tax imposed on the wholesale price is only 15 per cent.

It follows that this manufacturer and distributor has increased the price of his soft drinks by nearly twice as much—28 per cent. compared with 15 per cent. at the wholesale level—as the net amount of the Purchase Tax imposed on soft drinks. I regard that kind of thing as quite disgraceful. I regard it is as even more disgraceful the imputation that the Chancellor of the Exchequer is responsible for this increase. These are the words printed in the circular: Dear Customer, You will note that the Chancellor of the Exchequer has found it necessary to impose a Purchase Tax on sweets and ice cream to take effect on 8th May, 1962. We are now advising our regular customers of the new price which will apply from that date. It follows, sparkling drinks 11d. For the reasons I have explained arithmetically the amount of the increase in price is double the net imposition of Purchase Tax. There is no reason given for this other than the imputation that the Chancellor is responsible for the price increase, and the firm concerned has been pertinent to conclude its notice: We thank you for your valued custom in the past and look forward to bringing you a sparkle in the middle and a tickle at the top direct to your home for many years to come. Yours sincerely"— with the signature of the firm, Corona. I am conscious of giving the widest possible publicity to what is an entirely nefarious practice.

Mr. Thomas Steele (Dunbartonshire, West)

What was the wholesale price?

Mr. Nabarro

The margins normally worked on by a business of this kind are 33⅓ per cent., and the hon. Gentleman can work out for himself how I arrived at my figure. It is perfectly easy. I am not out of sympathy with many of the complaints made by his own side of the Committee. He should consult his hon. Friend the Member for Blackburn (Mrs. Castle), who was raising the same complaint in the context of sweets and confectionery.

Mr. Steele

I am only trying to arrive at the facts.

Mr. Nabarro

I have given the facts, and if the hon. Member examines them tomorrow I am sure that he will be almost entirely in agreement with them.

I hope that my right hon. and learned Friend, while he cannot prevent, by Statute, this sort of thing from happening, because manufacturers can always plead other reasons for differences in price, the difference between net Purchase Tax and the total increase in price levied on the consumer—while I recognise the competitive element in any particular trade, be it soft drinks, sweets or confectionery—should be held in check and not go beyond that of the total increase.

Still I hope that my right hon. and learned Friend or the Economic Secretary or the Financial Secretary, in replying to this debate, will express his view as being completely in sympathy with mine, that this kind of imputation, that steep price increases arise solely from Purchase Tax, ought to be refuted here in this Committee of the House of Commons and that traders are, in certain circumstances, taking an unfair advantage of the imposition of what is a relatively small margin of increase in the relative application of Purchase Tax to sweets, confectionery and soft drinks.

I support my right hon. and learned Friend. This is a sumptuary tax, which is justifiable. I wholly support it, and I hope that the Amendment will be resisted.

9.45 p.m.

Mr. Oram

It grieves me to have to say that to a certain extent I agree with the hon. Member for Kidderminster (Mr. Nabarro), not in welcoming the tax or the rate but in his interpretation of the tendency which is revealed in the Chancellor's mind in imposing this tax. I do not think that the rate of 15 per cent. was taken out of the hat in the Treasury. I think that the hon. Gentleman is probably right in thinking that there is more method in this than may appear on the surface.

It does seem, as my hon. and learned Friend the Member for Kettering (Mr. Mitchison) pointed out, a little odd that a new rate should be brought into the scheme at a time when, in other respects, the scheme is becoming simplified, but I believe that the 15 per cent. rate is intended to be a precedent for a flat rate of tax to which we can—I will not say look forward—expect next year. I believe it to be the intention of the Chancellor—I hope that if it is not his intention he will take the opportunity of denying it—that we shall go next year still further along the road of a flat rate of tax of the 15 per cent. order and extended over a wider range of commodities than that to which the present Purchase Tax extends.

There is significance, I believe, not only in the rate of 15 per cent. that has been chosen but in this new extension of Purchase Tax to a field which it has not hitherto covered, sweets and ice cream and the like. I would point out that it includes chocolate biscuits. Chocolate biscuits are very near to a definition of food. It may well be that this is a bridge to extend Purchase Tax still further to food. I am very much hoping that this is not the case, and I hope that the Chancellor will set my mind at rest, and the minds of my hon. Friends, when he replies, and deny that there is any intention on the part of the Government to extend Purchase Tax still further.

I think that the hon. Member for Kidderminster is also right in saying that the Chancellor is moving in the hon. Member's direction in his thoughts on Purchase Tax. The hon. Member, naturally, welcomes this, but I think that it is deplorable. It is deplorable that there should be this tendency to close the gap between the lowest and the highest rates. We have examples in a number of provisions of the Bill and I suspect that, just as we have seen an increase from 5 per cent. to 10 per cent. this year, so next year, we will see the increase go to 15 per cent., if the Chancellor can possibly get away with it.

That is the sort of thing which the hon. Member for Kidderminster welcomes. He wants the lowest rate to be stepped to about 15 per cent., but that would make this a far more regressive tax. My general objection to Purchase Tax is that it is far too regressive. It has certain features which commend it. It can be a fiscal planning instrument, but in its general effect upon the taxpayer it is regressive, and if it is changed in the direction which the hon. Member for Kidderminster wants, and of which we have more than a few hints in the Bill, it will become still more regressive and unjust.

Sir Arthur Vere Harvey (Macclesfield)

In principle, I agree with this tax. I do not see why those who smoke and drink should pay the bulk of the tax. It is right that everybody should pay something.

But I intervene in the debate to deal with a very small company in Bollington, in my constituency, which manufactures liquer chocolates. Many hon. Members will say that they are not necessities, and I am the first to recognise that they are luxury goods. This is a very small business into which a father and son put their life savings two or three years ago. There are only three firms making liqueur chocolates in this country, one in Bristol, one in London and one in Macclesfield. The hon. Member for Stalybridge and Hyde (Mr. Blackburn) has told me that a firm in his constituency which makes the cartons into which the chocolates are packed has found that orders have now ceased pending the outcome of the debate.

My constituents pay about 400 per cent. on the liqueurs inside the chocolates. This is a very complicated business, for practically all of the liqueur chocolates are made by hand, and now the company is to suffer an additional 15 per cent. tax. It is quite wrong that individuals or companies who pay 400 per cent. tax should be burdened with another 15 per cent. on the overall figure, and I ask my right hon. and learned Friend to have a look as this position.

This is not a vital matter, but there are only three firms in Britain and I am told that their products are used at weddings, for presents and at Christmas. The trade is very seasonal. This small firm in my constituency converted a cinema to meet all the conditions required for food manufacture. It is very satisfying to see a father and son building up a business, but this measure may destroy what they have struggled to build up, and I ask my right hon. and learned Friend to see whether something can be done to help such firms.

Mr. Loughlin

The hon. Member for Macclesfield (Sir A. V. Harvey) said that he agreed with the tax in principle and saw no reason why if people who drank and smoked had to pay tax, those who ate sweets should not also make a contribution to taxation. Can he say whether in this context he is referring to children being taxed?

Sir A. V. Harvey

The hon. Member for Gloucestershire, West (Mr. Loughlin) is deliberately trying to misunderstand what I was saying. I think that hon. Members on both sides of the Committee understood perfectly well what I meant. Of course, the children are paying the tax, but those of us with children do not mind. The children in this country eat far too many sweets. The people with whom I sympathise are the old-age pensioners who enjoy sweets. I think that the hon. Member was just trying to make trouble.

Mr. Loughlin

I am surprised that the hon. Member should take some exception to my intervention. I want to be clear about his attitude. He said that in general he agreed with children paying a 15 per cent. tax. The hon. Member for Kidderminster (Mr. Nabarro) said that the 15 per cent. tax should be extended and yet the hon. Member for Macclesfield appealed for the tax not to be applied to those who ate liqueur chocolates. That is the sort of double thinking we have in the Tory Party.

The hon. Member for Kidderminster boasted a great deal during his long speech about the Chancellor's conversion to the point of view which the hon. Member has argued for a long time. One thing which I like about the hon. Member is his modesty, but he should have a little more sympathy with us. It is bad enough to have to listen to the hon. Member making his speeches, but for him repeatedly to quote long extracts from his previous speeches becomes a little intolerable.

We are here dealing with a 15 per cent. tax the greater part of which, the greater part of £30 million in this year and £50 million in a full year, will be borne by the children.

Mr. A. R. Wise (Rugby)

Children do not pay tax.

Mr. Loughlin

The hon. Member for Rugby (Mr. Wise), who has just made a sedentary interruption, says that children do not pay tax. Let me illustrate how they do. The average child receives from his parents a given amount of pocket money. I have a boy who receives 2s. 6d. a week pocket money. [HON. MEMBERS: "Oh."] I think that is the right amount. He is entitled to it—as much entitled to it as he is to the food and clothing which we supply for him. But although the Chancellor has put a 15 per cent. tax on sweets, my boy has not had an increase in his pocket money. [HON. MEMBERS: "Shame."] In that sense he is paying the price of the Chancellor. I appreciate the barracking which I am having on this matter, but I put it seriously to hon. Members opposite that this is what applies in a large proportion of cases, and in that case the children are paying £30 million this year and £50 million next year for the Chancellor. It may well be that the hon. Member for Kidderminster is more generous in his approach in this matter, but the point which I make is that we are dealing with an action of the Chancellor and not an action of the hon. Member for Gloucestershire, West. The amount of time which the Chancellor has spent—

Mr. Ross

That is all that he has spent.

Mr. Loughlin

—in producing this tax is beyond me. A few short weeks ago he brought into the House a Purchase Tax Order in respect of penny bangers, and then in his Budget he doubled up on sweets, which shows that he has not much sympathy with children.

The hon. Member for Kidderminster referred to soft drinks. I am one of those hon. Members who in recent weeks have attempted to cut down cigarette smoking—many hon. Members are doing the same thing—and I have had a tendency to buy peppermints. The peppermints which I bought were normally retailed at 2d. Yesterday on Birmingham station I found that the purchase price of these mints—Polo mints—was 2½d., which was a 25 per cent. increase on the original price. This is happening in the case of Polo mints and Corona soft drinks and all types of sweets, chocolates, ice cream and soft drinks, which are all being increased by more than 15 per cent. in price.

This is not unusual for private enterprise, which has constantly taken advantage of every circumstance to increase the profit. [HON. MEMBERS: "What about the co-operative societies?"] It is not my responsibility to answer for the co-operative societies. I am talking about private enterprise. The co-operative societies do not produce Polo mints or Corona soft drinks. The profit here is determined by Corona, according to the letter read by the hon. Member for Kidderminster. We cannot complain about the co-operative societies. Every time we have this kind of increase in taxation private enterprise will take full advantage of it. If we bear in mind that they exist only to make profits and that they have no moral scruples at all, we can understand their attitude.

10.0 p.m.

Mr. Charles A. Howell (Birmingham, Perry Barr)


Hon. Members

Let the Chancellor speak.

Mr. Howell

I will let him speak when I have addressed a few words to him.

To what extent is this tax a conspiracy? I am concerned that earlier in the week we were talking about the pay pause. I read in a newspaper that a young girl had written to the Chancellor bitterly complaining about this tax, which seems to create much hilarity on the other side of the House. She said that she gets 1s. a week pocket money but that she cannot now buy one shilling's worth unless she has an increase in pocket money from her father. The Chancellor is reported as having replied that it requires an increase of only 1½d. to give her the same purchasing value. That is a newspaper report, and I see that the Chancellor shakes his head about it. I read it, but it may have been amusing reporting, arising from the reporter's imagination. It shows the figure which they thought was in the Chancellor's mind.

The hon. Member for Kidderminster is known for his opposition to nationalisation and State ownership. He does his best to advocate private enterprise against State ownership. But what would have happened if the State public houses had increased their prices of beer by twice as much as the increase in tax imposed by the Chancellor? This is not unusual. Hon. Members who were not present to hear last night's debate should read the report of the proceedings in the OFFICIAL REPORT. The Economic Secretary tried his hardest to exonerate the Chancellor for what he told us about sugar. The right hon. and learned Gentleman had told us that taking off the tax would reduce the price of sugar. The Economic Secretary tried to explain last night that what he took off sugar has now made it equal to what it would have gone up to. He could not possibly have known on that occasion that it would go up.

The hon. Member for Kidderminster (Mr. Nabarro) referred to soft drinks manufactured by Corona. Most ice cream firms have indicated that they are either putting up their 6d. bars to 7d. or are reducing the amount children will get for 6d. This is not confined to one "ginger pop" firm. Most private industry will take advantage of this. If the Chancellor had wanted to be honest with the country, he would have had the courage to come forward with 16⅔ per cent. so that he could have had the 2d. in the shilling rather than 1d. or 1½d. for himself and ½d. for private industry, unless he is hoping that some of it will come back, the same as the Surtax concession will come back, into Tory Party funds. The Institute of Directors will obviously recommend to its fellow directors where their contributions should go.

In my opinion, this is a conspiracy. The report to which I have referred mentions the child saying, "If I want another 1½ from my father he will want an increase in wages". We shall then come up against the pay pause. I ask hon. Members to bear in mind the effect this will have on railway workers. Before I came to the House I represented thousands of railwaymen who were getting less, and are still getting less, than many hon. Members opposite draw each week in expense accounts. [HON. MEMBERS: "Oh."] I have seen it in print that it is extremely doubtful if there are any hon. Members opposite who have to live on their Parliamentary salaries.

Mr. Nabarro

There are not many on the other side either.

Mr. Howell

The hon. Member for Kidderminster, who makes these intelligent interventions, has fallen by the wayside, because he has been supplied with a booklet which tells him how many Members on this side live on their bare salary.

Mr. Nabarro

Is it not the fact that the hon. Gentleman who has just confessed that he represents thousands of railwaymen, is subsidised by the N.U.R.?

Mr. Howell

Yes, and I am quite proud of the fact that my union makes a contribution towards my expenses of £100.

Mr. Nabarro

An expense account.

Mr. Howell

I am being honest about it. That is more than I can say for the other side.

The Deputy-Chairman (Sir R. Grimston)

The hon. Gentleman is getting very far from the Amendment.

Mr. Howell

I quite agree, Sir Robert, but it is very difficult, as you know, not to give an answer when one is asked a direct question. I am not ashamed to do that, but I apologise to you for transgressing the rules of order. These men who will have to pay their children's lollipop tax will now have the equivalent to a deduction in wages. There is no other prospect. Fifty million pounds must be found. It will not come out of the expense accounts. It will not come from the rich people—at least they will not notice if it is coming from the firm's accounts, apart from their expense accounts. Most of this tax will be paid by working men and women.

To return to my theme, railwaymen, who are not the best paid people in the country, can least afford this tax. I see no reason why low paid railwaymen should have to deny their children lollipops and ginger pop, whereas others who may be earning more money can afford it. This is a discrimination against the children of the lower paid workers. It is nothing unusual for the Tory Party to do such things. What is usual for the other side is for it to support private enterprise. This afternoon we were told from the Government Front Bench that something was deplorable. When we asked, "What are you going to do about it?" we were immediately told, "But we are not in favour of price control".

We have heard this before in Budget debates. The hon. Member for Kidderminster quoted his noble Friend who has gone to the other place. Lord Amory told us on two occasions in Budget debates that he would tighten things up and do something drastic if something was not done to stop the abuse of expense accounts. It has not been done yet. If the Chancellor had done that, as he threatened in his last Budget, this 15 per cent. on the children's lollipops would not have been necessary. In fact he would have reaped in much more if he had done that. There is not any doubt that he is doing this as a conspiracy to try to goad all the lower paid workers to ask for more increases in wages, knowing full well that the railwaymen and all those employed in the nationalised industries or by the State will come under his 2½ per cent. pay pause. He knows that this will cause friction. To what extent is he seeking to creat such friction between now and the next General Election?

There is only one other thing that one can assume. This is the position of the man who is found bashing his head against a brick wall and who, when asked why he does it, says, "It is so nice when I stop." I can only assume that these oppressive and mean taxes on children are being put on now so that the Chancellor can have the credit of taking them off in the Budget before the next General Election. If that is what he is doing he has nothing to take credit for. I believe that he is a married man and that on reflection he will agree that this is a mean tax to put on children. If he cannot find a way of obtaining revenue to keep us from becoming bankrupt without taxing children, it does not say much for the imagination which we were given to understand he would show in the Budget.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd)

As this is a new area of taxation proposed to the Committee, I think that it is right that I should speak on it and defend it. I have a good deal of sympathy with much that has been said today. I think that all taxes are odious, but the hon. and learned Member for Kettering (Mr. Mitchison) asked me the reasons for this tax. The answer is money. It is to obtain revenue. If we did not put this tax on we should have to put some other tax on to obtain the revenue in another way.

Mr. Mitchison

With respect, I offered the Chancellor the alternative of not remitting £83 million of Surtax.

Mr. Lloyd

The hon. and learned Member cannot get away with that. He has been told again and again that the 2½ per cent. increase in Profits Tax was put on, broadly, to pay for the Surtax concession. I know only too well that this is never mentioned by any hon. Member opposite. All hon. Members opposite claim that any tax of any sort leads to a Surtax concession. The plain fact is that if I did not propose this tax on sweets and confectionery £30 million would have had to be raised in another way this year and £50 million in a full year.

The reason why we have had to put taxes on is the expenditure pressed upon me from both sides of the Committee most of the time. I find the criticism of my hon. Friend the Member for Shipley (Mr. Hirst) much more tolerable because he at least is one of those who are always seeking to restrain and control public expenditure. Broadly speaking, the Committee is in favour of the policies and programmes to which we are committed. The money has to be found to pay for them and it is my duty to spread taxation as widely and fairly as possible. I submit that this proposal fits into the pattern of Purchase Tax which I have been seeking to establish.

The rates of Purchase Tax in 1952 were 33⅓ per cent., 66⅔ per cent. and 100 per cent. In the autumn of 1955 they were 30 per cent., 60 per cent. and 90 per cent. In 1958, they went down to 5 per cent., 15 per cent., 30 per cent., and 60 per cent. In 1959 they were 5 per cent., 12½ per cent., 25 per cent., and 50 per cent. In July 1961, as a result of the use of the regulator, they were 5½ per cent., 13¾ per cent., 27½ per cent., and 55 per cent. The articles governed by those rates are now subject to 10 per cent., 25 per cent., and 45 per cent.

This is a constructive attempt to get taxation in this field on a better basis, and within that conception and in the entirely new field with which we are dealing in the Amendment I submit that 15 per cent. is not out of line and not inappropriate. I was asked why it should be 15 per cent. The answer is that 10 per cent. would not have brought in enough money and that, in my view, 25 per cent. would have been too high a rate to fix in this area of taxation.

As to the question of passing on, I do not know the facts of the particular case, but I agree with the proposition put forward on both sides of the Committee. I think that if reductions are made in Purchase Tax, the reduction should be passed on, and, if additions are made, the addition, and no more, should be passed on. As a general principle, that is a duty upon those who deal in these goods; and their representations for a reduction in Purchase Tax will have to be considered in a rather different light if when reductions are made those are not passed on.

10.15 p.m.

Coming to the merits of the tax on sweets and confectionery, my hon. Friend the Member for Macclesfield (Sir A. V. Harvey) raised the question of liqueur chocolates. I am not quite certain how much sympathy one ought to give to consumers of liqueur chocolates, but I will look at that case to see whether they are subject to double taxation in any form. On the merits of the tax, I think that the hon. Member for Gloucestershire, West (Mr. Loughlin) was quite wrong in suggesting that it is only children who eat sweets. He did, in fact, state later that he himself was an addict to peppermints.

Mr. Loughlin

I thank the right hon. and learned Gentleman for giving way, because I want to get this on the record. I said that the greater proportion of the tax would come from the children.

Mr. Lloyd

I do not think that the hon. Gentleman is right even about that. I do not think that children, as a rule, consume these luxury type of chocolates, expensive chocolates and things of that sort. I think that he will find that, in practice, a great deal of this tax affects goods which are consumed by adults.

The health aspect has been mentioned. I think that we should face the fact that our consumption of sweets is the highest in the world. The United Kingdom consumes 8 oz. per person per week, the United States 5 oz. per person per week, and West Germany, 4 ozs. per person per week. It is just possible that there may be a healthy reaction from some dimunition of this consumption here.

I think that the case for this new tax has been made by almost every speech in the debate today. Hon. Members have asked why we tax necessities. I agreed

with a great deal that was said by the hon. Member for Stoke-on-Trent, North (Mrs. Slater). She talked about the articles in the 25 per cent. range which, by and large, are necessities, or which should be regarded as necessities for ordinary people. If they are to be taxed—if clothing, furniture, carpets, household utensils and all these things are to be taxed½is it not fair and reasonable that sweets, confectionery and ice cream should also bear their contribution?

I think that the tax is common sense, that it is fair, and that it is reasonable. As long as we have these taxes on the necessities or near necessities, I think that it is entirely right and proper that this very large field of consumption, which is not absolutely essential consumption, should also bear its share of the national burden. I therefore commend this tax to the Committee.

Question put, That the words proposed to be left out stand part of the Clause:—

The Committee divided: Ayes 203, Noes 143.

Division No. 189.] AYES [10.19 p.m.
Agnew, Sir Peter Crosthwaite-Eyre, Col. Sir Oliver Hobson, Sir John
Aitken W. T. Dalkeith, Earl of Hocking, Philip N.
Allason, James Dance, James Holland, Philip
Atkins, Humphrey d'Avigdor-Goldsmid, Sir Henry Hollingworth, John
Barber, Anthony Deedes, W. F. Hopkins, Alan
Barlow, Sir John de Ferranti, Basil Hornby, R. P.
Barter, John Donaldson, Cmdr. C. E. M. Hornsby-Smith, Rt. Hon. Dame P.
Batsford, Brian Doughty, Charles Howard, John (Southampton, Test)
Biffen, John Drayson, G. B. Hughes-Young, Michael
Biggs-Davison, John du Cann, Edward Hutchison, Michael Clark
Bishop, F. P. Duncan, Sir James Iremonger, T. L.
Black, Sir Cyril Elliot, Capt. Walter (Carshalton) Irvine, Bryant Godman (Rye)
Bourne-Arton, A. Elliott, R. W. (Nwcastle-upon-Tyne, N.) James, David
Box, Donald Emery, Peter Johnson, Eric (Blackley)
Boyd-Carpenter, Rt. Hon. J. Errington, Sir Eric Kaberry, Sir Donald
Boyle, Sir Edward Farey-Jones, F. W. Kerans, Cdr. J. S.
Bromley-Davenport, Lt.-Col. Sir Walter Finlay, Graeme Kerr, Sir Hamilton
Brooke, Rt. Hon. Henry Fraser, Ian (Plymouth, Sutton) Kimball, Marcus
Brown, Alan (Tottenham) Gammans, Lady Legge-Bourke, Sir Harry
Bryan, Paul Gardner, Edward Lewis, Kenneth (Rutland)
Buck, Anthony Gibson-Watt, David Litchfield, Capt. John
Bullard, Denys Gilmour, Sir John Lloyd, Rt. Hon. Selwyn (Wirral)
Bullus, Wing Commander Eric Glyn, Dr. Alan (Clapham) Longden, Gilbert
Carr, Compton (Barons Court) Goodhew, Victor Lucas, Sir Jocelyn
Carr, Robert (Mitcham) Gower, Raymond MacArthur, Ian
Cary, Sir Robert Green, Alan McLaren, Martin
Channon, H. P. G. Gresham Cooke, R. Maclean, Sir Fitzroy (Bute & N.Ayrs.)
Chataway, Christopher Gurden, Harold Macleod, Rt. Hn. Iain (Enfield, W.)
Chichester-Clark, R. Hall, John (Wycombe) MacLeod, John (Ross & Cromarty)
Clark, William (Nottingham, S.) Hamilton, Michael (Wellingborough) McMaster, Stanley R.
Clarke, Brig. Terence (Portsmth, W.) Harris, Frederic (Croydon. N. W.) Macpherson, Niall (Dumfries)
Cleaver, Leonard Harris, Reader (Heston) Madden, Martin
Collard, Richard Harrison, Col. Sir Harwood (Eye) Maitland, Sir John
Cooke, Robert Harvey, Sir Arthur Vere (Macclesf'd) Markham, Major Sir Frank
Cooper, A. E. Hay, John Marples, Rt. Hon. Ernest
Cordeaux, Lt.-Col. J. K. Heald, Rt. Hon. Sir Lionel Marten, Neil
Cordle, John Heath, Rt. Hon. Edward Matthews, Gordon (Meriden)
Corfield, F. V. Hendry, Forbes Mawby, Ray
Costain, A. P. Hiley, Joseph Maxwell-Hyslop, R. J.
Coulson, Michael Hill, Mrs. Eveline (Wythenshawe) Maydon, Lt.-Cmdr. S. L. C.
Craddock, Sir Beresford Hinchingbrooke, Viscount Mills, Stratton
Critchley, Julian Hirst, Geoffrey Miscampbell, Norman
Montgomery, Fergus Rees-Davies, W. R. Thornton-Kemsley, Sir Colin
Morgan, William Renton, David Vaughan-Morgan, Rt. Hon. Sir John
Nabarro, Gerald Robinson, Rt. Hn. Sir R. (B'pool, S.) Vickers, Miss Joan
Neave, Airey Roots, William Vosper, Rt. Hon. Dennis
Nicholson, Sir Godfrey Ropner, Col. Sir Leonard Wakefield, Sir Wavell
Noble, Michael Royle, Anthony (Richmond, Surrey) Walder, David
Nugent, Rt. Hon. Sir Richard Seymour, Leslie Walker, Peter
Oakshott, Sir Hendrie Sharples, Richard Walker-Smith, Rt. Hon. Sir Derek
Orr-Ewing, C. Ian Shaw, M. Ward, Dame Irene
Page, Graham (Crosby) Shepherd, William Webster, David
Page, John (Harrow, West) Skeet, T. H. H. Wells, John (Maidstone)
Pannell, Norman (Kirkdale) Smith, Dudley (Br'ntf'd & Chiswick) Williams, Dudley (Exeter)
Partridge, E. Smithers, Peter Williams, Paul (Sunderland, S.)
Pearson, Frank (Clitheroe) Smyth, Brig. Sir John (Norwood) Wills, Sir Gerald (Bridgwater)
Percival, Ian Speir, Rupert Wilson, Geoffrey (Truro)
Peyton, John Stanley, Hon. Richard Wise, A. R.
Pickthorn, Sir Kenneth Steward, Harold (Stockport, S.) Wolrige-Gordon, Patrick
Pitman, Sir James Stodart, J. A. Wood, Rt. Hon. Richard
Pott, Percivall Stoddart-Scott, Col. Sir Malcolm Woodhouse, C. M.
Prior, J. M. L. Studholme, Sir Henry Woodnut, Mark
Profumo, Rt. Hon. John Summers, Sir Spencer Woollam, John
Proudfoot, Wilfred Talbot, John E. Worsley, Marcus
Pym, Francis Taylor, Frank (M'ch'st'r, Moss Side) Yates, William (The Wrekin)
Quennell, Miss J. M. Taylor, W. J. (Bradford, N.)
Ramsden, James Temple, John M. TELLERS FOR THE AYES:
Redmayne, Rt. Hon. Martin Thomas, Leslie (Canterbury) Mr. J. E. B. Hill and
Rees, Hugh Thomas, Peter (Conway) Mr. Gordon Campbell.
Abse, Leo Hayman, F. H. Pearson, Arthur (Pontypridd)
Ainsley, William Henderson, Rt. Hn. Arthur (Rwly Regis) Pentland, Norman
Albu, Austen Herbison, Miss Margaret Popplewell, Ernest
Allen, Scholefield (Crewe) Hill, J. (Midlothian) Price, J. T. (Westhoughton)
Bellenger, Rt. Hon. F. J. Holman, Percy Probert, Arthur
Bence, Cyril Holt, Arthur Pursey, Cmdr. Harry
Benson, Sir George Houghton, Douglas Rhodes, H.
Blyton, William Hoy, James H. Robertson, John (Paisley)
Bowden, Rt. Hn. H. W. (Leics, S. W.) Hughes, Emrys (S. Ayrshire) Rodgers, W. T. (Stockton)
Bowles, Frank Hunter, A. E. Ross, William
Braddock, Mrs. E. M. Hynd, H. (Accrington) Short, Edward
Brockway, A. Fenner Hynd, John (Attercliffe) Skeffington, Arthur
Broughton, Dr. A. D. D. Irvine, A. J. (Edge Hill) Slater, Mrs. Harriet (Stoke, N.)
Brown, Rt. Hon. George (Belper) Irving, Sydney (Dartford) Slater, Joseph (Sedgefield)
Butler, Mrs. Joyce (Wood Green) Jay, Rt. Hon. Douglas Small, William
Castle, Mrs. Barbara Jeger, George Smith, Ellis (Stoke, S.)
Collick, Percy Jenkins, Roy (Stechford) Snow, Julian
Craddock, George (Bradford, S.) Jones, Dan (Burnley) Sorensen, R. W.
Cronin, John Jones, Jack (Rotherham) Soskice, Rt. Hon. Sir Frank
Davies, G. Elfed (Rhondda, E.) Jones, J. Idwal (Wrexham) Spriggs, Leslie
Davies, S. O. (Merthyr) Jones, T. W. (Merioneth) Steele, Thomas
Deer, George Kelley, Richard Stewart, Michael (Fulham)
Delargy, Hugh Kenyon, Clifford Stones, William
Diamond, John King, Dr. Horace Stross, Dr. Barnett (Stoke-on-Trent, C.)
Dodds, Norman Lawson, George Swain, Thomas
Donnelly, Desmond Lee, Frederick (Newton) Taverne, D.
Edelman, Maurice Lewis, Arthur (West Ham, N.) Taylor, Bernard (Mansfield)
Edwards, Rt. Hon. Ness (Caerphilly) Loughlin, Charles Thomas, Iorwerth (Rhondda, W.)
Edwards, Robert (Bilston) Mabon, Dr. J. Dickson Thompson, Dr. Alan (Dunfermline)
Evans, Albert MacColl, James Thomson, G. M. (Dundee, E.)
Fernyhough, E. McInnes, James Thornton, Ernest
Finch, Harold McKay, John (Wallsend) Wade, Donald
Fitch, Alan Mackie, John (Enfield, East) Wainwright, Edwin
Fletcher, Eric Mallalieu, E. L. (Brigg) Warbey, William
Foot, Dingle (Ipswich) Mapp, Charles Weitzman, David
Foot, Michael (Ebbw Vale) Marsh, Richard Whitlock, William
Forman, J. C. Mason, Roy Wilkins, W. A.
Fraser, Thomas (Hamilton) Milne, Edward Williams, LI. (Abertillery)
Galpern, Sir Myer Mitchison, G. R. Williams W. T. (Warrington)
Ginsburg, David Monslow, Walter Willis, E. G. (Edinburgh, E.)
Gourlay, Harry Morris, John Winterbottom, R. E.
Grey, Charles Neal, Harold Woodburn, Rt. Hon. A.
Griffiths, David (Rother Valley) Noel-Baker, Rt. Hn. Philip (Derby, S.) Woof, Robert
Grimond, Rt. Hon. J. Oram, A. E. Yates, Victor (Ladywood)
Hale, Leslie (Oldham, W.) Oswald, Thomas
Hail, Rt. Hn. Glenvil (Colne Valley) Padley, W. E. TELLERS FOR THE NOES:
Hamilton, William (West Fife) Paget, R. T. Mr. Charles A. Howell and
Harper, Joseph Pargiter, G. A. Mr. McCann.
Hart, Mrs. Judith Parker, John

Amendment proposed: In page 7, line 39, at end insert: (2) The foregoing subsection shall not apply to references to a rate of five per cent. in respect of Groups 6, 11 and 16 and for any such reference there shall be substituted a reference to a rate of one quarter of one per cent.—[Mr. Weitzman.]

Question put, That those words be there inserted:—

The Committee divided: Ayes 139, Noes 206.

Division No. 190.] AYES [10.29 p.m.
About, Leo Herbison, Miss Margaret Pentland, Norman
Ainsley, William Hill, J. (Midlothian) Popplewell, Ernest
Albu, Austen Hilton, A. V. Price, J. T. (Westhoughton)
Allen, Scholefield (Crewe) Holman, Fercy Probert, Arthur
Bellenger, Rt. Hon. F. J. Houghton, Douglas Pursey, Cmdr. Harry
Bence, Cyril Hoy James H. Rhodes, H.
Benson, Sir George Hughes, Emrys (S. Ayrshire) Roberts, Albert (Normanton)
Blyton, William Hunter, A. E. Robertson, John (Paisley)
Bowden, Rt. Hn. H.W. (Leics. S. W.) Hynd, H. (Accrington) Rodgers, W. T. (Stockton)
Bowles, Frank Hynd, John (Attercliffe) Ross, William
Braddock, Mrs. E. M. Irvine, A. J. (Edge Hill) Short, Edward
Brockway, A. Fenner Irving, Sydney (Dartford) Skeffington, Arthur
Broughton, Dr. A. D. D. Jay, Rt. Hon. Douglas Slater, Mrs. Harriet (Stoke, N.)
Brown, Rt. Hon. George (Belper) Jeger, George Slater, Joseph (Sedgefield)
Butler, Mrs. Joyce (Wood Green) Jenkins, Roy (Stechford) Small, William
Castle, Mrs. Barbara Jones, Dan (Burnley) Smith, Ellis (Stoke, S.)
Collick, Percy Jones, Jack (Rotherham) Snow, Julian
Craddock, George (Bradford, S.) Jones, J. Idwal (Wrexham) Sorensen, R. W.
Cronin, John Jones, T. W. (Merioneth) Soskice, Rt. Hon. Sir Frank
Cullen, Mrs. Alice Kelley, Richard Spriggs, Leslie
Davies, G. Elfed (Rhondda, E.) Kenyon, Clifford Steele, Thomas
Davies, S. O. (Merthyr) King, Dr. Horace Stewart, Michael (Fulham)
Deer, George Lawson, George Stones, William
Delargy, Hugh Lee, Frederick (Newton) Stross, Dr. Barnett (Stoke-on-Trent, C.)
Diamond, John Lewis, Arthur (West Ham, N.) Swain, Thomas
Donnelly, Desmond Loughlin, Charles Taverne, D.
Edelman, Maurice Mabon, Dr. J. Dickson Taylor, Bernard (Mansfield)
Edwards, Rt. Hon. Ness (Caerphilly) McCann, John Thomas, Iorwerth (Rhondda, W.)
Edwards, Robert (Bilston) MacColl, James Thompson, Dr. Alan (Dunfermline)
Evans, Albert McInnes, James Thomson, G. M. (Dundee, E.)
Fernyhough, E. Mackie, John (Enfield, East) Thornton, Ernest
Finch, Harold Mallalieu, E. L. (Brigg) Wainwright, Edwin
Fitch, Alan Mapp, Charles Warbey, William
Fletcher, Eric Marsh, Richard Weitzman, David
Foot, Dingle (Ipswich) Mason, Roy Whitlock, William
Foot, Michael (Ebbw Vale) Milne, Edward Wilkins, W. A.
Forman, J. C. Mitchison, G. R. Williams, LI. (Abertillery)
Fraser, Thomas (Hamilton) Monslow, Walter Williams, W. T. (Warrington)
Galpern, Sir Myer Morris, John Willis, E. G. (Edinburgh, E.)
Ginsburg, David Neal, Harold Winterbottom, R. E.
Gourlay, Harry Noel-Baker, Rt. Hn. Philip (Derby, S.) Woodburn, Rt. Hon. A.
Griffiths, David (Rother Valley) Oram, A. E. Woof, Robert
Hale, Leslie (Oldham, W.) Oswald, Thomas Yates, Victor (Ladywood)
Hall, Rt. Hn. Glenvil (Coins Valley) Padley, W. E.
Hamilton, William (West Fife) Paget, R. T. TELLERS FOR THE AYES:
Harper, Joseph Pargiter, G. A. Mr. Charles A. Howell and
Hayman, F. H. Parker, John Mr. Grey.
Henderson, Rt. Hn. Arthur (Rwly Regis) Pearson, Arthur (Pontypridd)
Agnew, Sir Peter Clark, William (Nottingham, S.) Farey-Jones, F. W.
Aitken, W. T. Clarke, Brig, Terence (Portsmth, W.) Farr, John
Allason, James Cleaver, Leonard Finlay, Graeme
Atkins, Humphrey Collard, Richard Fraser, Ian (Plymouth, Sutton)
Barber, Anthony Cooke, Robert Gammans, Lady
Barlow, Sir John Cooper, A. E. Gardner, Edward
Barter, John Cordeaux, Lt.-Col. J. K. Gibson-Watt, David
Batsford, Brian Cordle, John Gilmour, Sir John
Biffen, John Corfield, F. V. Glyn, Dr. Alan (Clapham)
Biggs-Davison, John Costain, A. P. Goodhew, Victor
Bishop, F. P. Coulson, Michael Gower, Raymond
Black, Sir Cyril Craddock, Sir Beresford Green, Alan
Bourne-Arton, A. Critchley, Julian Gresham Cooke, R.
Box, Donald Crosthwaite-Eyre, Col. Sir Oliver Grimond, Rt. Hon. J.
Boyd-Carpenter, Rt. Hon. J. Dalkeith, Earl of Gurden, Harold
Boyle, Sir Edward Dance, James Hall, John (Wycombe)
Bromley-Davenport, Lt.-Col. Sir Walter d'Avigdor-Goldsmid, Sir Henry Hamilton, Michael (Wellingborough)
Brooke, Rt. Hon. Henry Deedes, W. F. Harris, Frederic (Croydon, N. W.)
Brown, Alan (Tottenham) de Ferranti, Basil Harris, Reader (Heston)
Buck, Antony Donaldson, Cmdr. C. E. M. Harrison, Col. Sir Harwood (Eye)
Bullard, Denys Doughty, Charles Harvey, Sir Arthur Vere (Macclesf'd)
Bullus, Wing Commander Eric Drayson, G. B. Hay, John
Campbell, Gordon (Moray & Nairn) du Cann, Edward Heald, Rt. Hon. Sir Lionel
Carr, Compton (Barons Court) Duncan, Sir James Heath, Rt. Hon. Edward
Carr, Robert (Mitcham) Elliot, Capt. Walter (Carshalton) Hendry, Forbes
Cary, Sir Robert Elliott, R. W. (Nwcastle-upon-Tyne, N.) Hiley, Joseph
Channon, H. P. G. Emery, Peter Hill, Mrs. Eveline (Wythenshawe)
Chataway, Christopher Errington, Sir Eric Hinchingbrooke, Viscount
Hirst, Geoffrey Maydon, Lt.-Cmdr. S. L. C. Smyth, Brig. Sir John (Northwood)
Hobson, Sir John Mille, Stratton Speir, Rupert
Hocking, Philip N. Miscampbell, Norman Stanley, Hon. Richard
Holland, Philip Montgomery, Fergus Steward, Harold (Stockport, S.)
Hollingworth, John Morgan, William Stodart, J. A.
Holt, Arthur Nabarro, Gerald Stoddart-Scott, Col. Sir Malcolm
Hopkins, Alan Neave, Airey Studholme, Sir Henry
Hornby, R. P. Nicholson, Sir Godfrey Summers, Sir Spencer
Hornsby-Smith, Rt. Hon. Dame P. Noble, Michael Talbot, John E.
Howard, John (Southampton, Test) Nugent, Rt. Hon. Sir Richard Taylor, Frank (M'ch'st'r, Moss Side)
Hughes-Young, Michael Oakshott, Sir Hendrie Taylor, W. J. (Bradford, N.)
Hutchison, Michael Clark Orr-Ewing, C. Ian Temple, John M.
Iremonger, T. L. Page, Graham (Crosby) Thomas, Leslie (Canterbury)
Irvine, Bryant Godman (Rye) Pannell, Norman (Kirkdale) Thomas, Peter (Conway)
James, David Partridge, E. Thornton-Kemsley, Sir Colin
Johnson, Eric (Blackley) Pearson, Frank (Clitheroe) Vaughan-Morgan, Rt. Hon. Sir John
Kaberry, Sir Donald Percival, Ian Vickers, Miss Joan
Kerans, Cdr. J. S. Peyton, John Vosper, Rt. Hon. Dennis
Kerr, Sir Hamilton Pickthorn, Sir Kenneth Wade, Donald
Kimball, Marcus Pitman, Sir James Wakefield, Sir Wavell
Legge-Bourke, Sir Harry Pott, Percivall Walder, David
Lewis, Kenneth (Rutland) Prior, J. M. L. Walker, Peter
Litchfield, Capt. John Profumo, Rt. Hon. John Walker-Smith, Rt. Hon. Sir Derek
Lloyd, Rt. Hon. Selwyn (Wirral) Proudfoot, Wilfred Ward, Dame Irene
Longden, Gilbert Pym, Francis Webster, David
Lucas, Sir Jocelyn Quennell, Miss J. M. Wells, John (Maidstone)
MacArthur, Ian Ramsden, James Williams, Dudley (Exeter)
McKay, John (Wallsend) Redmayne, Rt. Hon. Martin Williams, Paul (Sunderland, S.)
McLaren, Martin Rees, Hugh Wills, Sir Gerald (Bridgwater)
Maclean, Sir Fitzroy (Bute & N. Ayrs.) Rees-Davies, W. R. Wilson, Geoffrey (Truro)
Macleod, Rt. Hn. Iain (Enfield, W.) Renton, David Wise, A. R.
MacLeod, John (Ross & Cromarty) Robinson, Rt. Hn. Sir R. (B'pool, S.) Wolrige-Gordon, Patrick
McMaster, Stanley R. Roots, William Wood, Rt. Hon. Richard
Macpherson, Niall (Dumfries) Ropner, Col. Sir Leonard Woodhouse, C. M.
Maddan, Martin Royle, Anthony (Richmond, Surrey) Woodnutt, Mark
Maitland, Sir John Seymour, Leslie Woollam, John
Markham, Major Sir Frank Sharples, Richard Worsley, Marcus
Marples, Rt. Hon. Ernest Shaw, M. Yates, William (The Wrekin)
Marten, Neil Shepherd, William
Matthews, Gordon (Meriden) Skeet, T. H. H. TELLERS FOR THE NOES:
Mawby, Ray Smith, Dudley (Br'ntf'd & Chiswick) Mr. Chichester-Clark and
Maxwell-Hyslop, R. J. Smithers, Peter Mr. J. E. B. Hill.

Amendment proposed: In page 7, line 39, at end insert: (2) The foregoing subsection shall not apply to references to a rate of five per cent. in respect of Groups 1,2,7 and 8 and for any such reference there shall be substituted a reference

to a rate of one quarter of one per cent—[Mrs. Castle.]

Question put, That those words be there inserted:—

The committee divided: Ayes 140, Noes 205.

Division No. 191.] AYES [10.39 p.m.
Abse, Leo Fernyhough, E. Jay, Rt. Hon. Douglas
Ainsley, William Finch, Harold Jeger, George
Albu, Austen Fitch, Alan Jenkins, Roy (Stechford)
Allen, Scholefield (Crewe) Fletcher, Eric Jones, Dan (Burnley)
Ballenger, Rt. Hon. F. J. Foot, Dingle (Ipswich) Jones, Jack (Rotherham)
Bence, Cyril Foot, Michael (Ebbw Vale) Jones, J. Idwal (Wrexham)
Benson, Sir George Forman, J. C. Jones, T. W. (Merloneth)
Blyton, William Fraser, Thomas (Hamilton) Kelley, Richard
Bowden, Rt. Hn. H. W. (Leics. S. W.) Galpern, Sir Myer Kenyon, Clifford
Bowles, Frank Ginsburg, David King, Dr. Horace
Braddock, Mrs. E. M. Gourlay, Harry Lawson, George
Brockway, A. Fenner Griffiths, David (Rother Valley) Lee, Frederick (Newton)
Broughton, Dr. A. D. D. Hale, Leslie (Oldham, W.) Lewis, Arthur (West Ham, N.)
Brown, Rt. Hon. George (Belper) Hall, Rt. Hn. Glenvil (Colne Valley) Loughlin, Charles
Butler, Mrs. Joyce (Wood Green) Hamilton, William (West Fife) Mabon, Dr. J. Dickson
Castle, Mrs. Barbara Harper, Joseph McCann, John
Collick, Percy Hayman, F. H. MacColl, James
Craddock, George (Bradford, S.) Henderson, Rt. Hn. Arthur (Rwly Regis) McInnes, James
Cronin, John Herbison, Miss Margaret McKay, John (Wallsend)
Cullen, Mrs. Alice Hill, J. (Midlothian) Mackie, John (Enfield, East)
Davies, G. Elfed (Rhondda, E.) Hilton, A. V. Mallalieu, E. L. (Brigg)
Davies, S. O. (Merthyr) Holman, Percy Mapp, Charles
Deer, George Houghton, Douglas Marsh, Richard
Delargy, Hugh Hoy, James H. Mason, Roy
Diamond, John Hughes, Emrys (S. Ayrshire) Milne, Edward
Donnelly, Desmond Hunter, A. E. Mitchison, G. R.
Edelman, Maurice Hynd, H. (Accrington) Monslow, Walter
Edwards, Rt. Hon. Ness (Caerphilly) Hynd, John (Attercliffe) Morris, John
Edwards, Robert (Bilston) Irvine, A. J. (Edge Hill) Neal, Harold
Evans, Albert Irving, Sydney (Dartford) Noel-Baker, Rt. Hn. Philip (Derby, S.)
Oram, A. E. Skeffington, Arthur Thomson, G. M. (Dundee, E.)
Oswald, Thomas Slater, Mrs. Harriet (Stoke, N.) Thornton, Ernest
Padley, W. E. Slater, Joseph (Sedgefield) Wainwright, Edwin
Paget, R. T. Small, William Warbey, William
Pargiter, G. A. Smith, Ellis (Stoke, S.) Weitzman, David
Parker, John Snow, Julian Whitlock, William
Pearson, Arthur (Pontypridd) Sorensen, R. W. Wilkins, W. A.
Pentland, Norman Soskice, Rt. Hon. Sir Frank Williams, LI. (Abertillery)
Popplewell, Ernest Spriggs, Leslie Williams, W. T. (Warrington)
Price, J. T. (Westhoughton) Steele, Thomas Willis, E. G. (Edinburgh, E.)
Probert, Arthur Stewart, Michael (Fulham) Winterbottom, R. E.
Pursey, Cmdr. Harry Stones, William Woodburn, Rt. Hon. A.
Rhodes, H. Stross, Dr. Barnett (Stoke-on-Trent, C.) Woof, Robert
Roberts, Albert (Normanton) Swain, Thomas Yates, Victor (Ladywood)
Robertson, John (Paisley) Taverne, D.
Rodgers, W. T. (Stockton) Taylor, Bernard (Mansfield) TELLERS FOR THE AYES:
Ross, William Thomas, Iorwerth (Rhondda, W.) Mr. Charles A. Howell and
Short, Edward Thompson, Dr. Alan (Dunfermline) Mr. Grey.
Agnew, Sir Peter Glyn, Dr. Alan (Clapham) Mills, Stratton
Aitken, W. T. Goodhew, Victor Miscampbell, Norman
Allason, James Gower, Raymond Montgomery, Fergus
Atkins, Humphrey Green, Alan Morgan, William
Barber, Anthony Gresham Cooke, R. Nabarro, Gerald
Barlow, Sir John Grimond, Rt. Hon. J. Neave, Alrey
Barter, Joseph Grosvenor, Lt.-Col. R. G. Nicholson, Sir Godfrey
Batsford, Brian Gurden, Harold Noble, Michael
Biffen, John Hall, John (Wycombe) Nugent, Rt. Hon. Sir Richard
Biggs-Davison, John Hamilton, Michael (Wellingborough) Orr-Ewing, C. Ian
Bishop, F. P. Harris, Frederic (Croydon, N. W.) Page, Graham (Crosby)
Black, Sir Cyril Harris, Reader (Heston) Pannell, Norman (Kirkdale)
Bourne-Arton, A. Harrison, Col. Sir Harwood (Eye) Partridge, E.
Box, Donald Harvey, Sir Arthur Vere (Macclesf'd) Pearson, Frank (Clitheroe)
Boyd-Carpenter, Rt. Hon. John Hay, John Percival, Ian
Boyle, Sir Edward Heald, Rt. Hon. Sir Lionel Pickthorn, Sir Kenneth
Bromley-Davenport, Lt.-Col. Sir Walter Heath, Rt. Hon. Edward Pitman, Sir James
Brooke, Rt. Hon. Henry Hendry, Forbes Pott, Percivall
Brown, Alan (Tottenham) Hiley, Joseph Prior, J. M. L.
Buck, Antony Hill, Mrs. Eveline (Wythenshawe) Profumo, Rt. Hon. John
Bullard, Denys Hill, J. E. B. (S. Norfolk) Proudfoot, Wilfred
Bullus, Wing Commander Eric Hinchingbrooke, Viscount Pym, Francis
Campbell, Gordon (Moray & Nairn) Hirst, Geoffrey Quennell, Miss J. M.
Carr, Compton (Barons Court) Hobson, Sir John Redmayne, Rt. Hon. Martin
Carr, Robert (Mitcham) Hocking, Philip N. Rees, Hugh
Cary, Sir Robert Holland, Philip Rees-Davies, W. R.
Channon, H. P. G. Hollingworth, John Renton, David
Chataway, Christopher Holt, Arthur Ridsdale, Julian
Chichester-Clark, R. Hopkins, Alan Robinson, Rt. Hn. Sir R. (B'pool, S.)
Clark, William (Nottingham, S.) Hornby, R. P. Roots, William
Clarke, Brig. Terence (Portsmth, W.) Hornsby-Smith, Rt. Hon. Dame P. Ropner, Col, Sir Leonard
Cleaver, Leonard Howard, John (Southampton, Test) Royle, Anthony (Richmond, Surrey)
Collard, Richard Hughes-Young, Michael Seymour, Leslie
Cooke, Robert Hutchison, Michael Clark Sharples, Richard
Cooper, A. E. Iremonger, T. L. Shaw, M.
Cordeaux, Lt.-Col. J. K. Irvine, Bryant Godman (Rye) Shepherd, William
Cordle, John James, David Skeet, T. H. H.
Corfield, F. V. Johnson, Eric (Blackley) Smith, Dudley (Br'ntf'd & Chiswick)
Costain, A. P. Kaberry, Sir Donald Smithers, Peter
Coulson, Michael Kerans, Cdr. J. S. Smyth, Brig. Sir John (Norwood)
Craddock, Sir Beresford Kerr, Sir Hamilton Speir, Rupert
Critchley, Julian Kimball, Marcus Stanley, Hon. Richard
Crosthwaite-Eyre, Col. Sir Oliver Legge-Bourke, Sir Harry Steward, Harold (Stockport, S.)
Dalkeith, Earl of Lewis, Kenneth (Rutland) Stodart, J. A.
Dance, James Litchfield, Capt. John Stoddart-Scott, Col. Sir Malcolm
d'Avigdor-Goldsmid, Sir Henry Lloyd, Rt. Hon. Selwyn (Wirral) Studholme, Sir Henry
Deedes, W. F. Longden, Gilbert Summers, Sir Spencer
de Ferranti, Basil Talbot, John E.
Donaldson, Cmdr. C. E. M. Lucas, Sir Jocelyn Taylor, Frank (M'ch'st'r, Moss Side)
Doughty, Charles MacArthur, Ian Taylor, W. J. (Bradford, N.)
Drayson, G. B. Maclean, Sir Fitzroy (Bute & N. Ayrs.) Temple, John M.
du Cann, Edward Macleod, Rt. Hn. Iain (Enfield, W.) Thomas, Leslie (Canterbury)
Duncan, Sir James MacLeod, John (Rosa & Cromarty) Thomas, Peter (Conway)
Elliot, Capt. Walter (Carshalton) McMaster, Stanley R. Thornton-Kemsley, Sir Colin
Elliott, R. W. (Nwcastle-upon-Tyne, N.) Macpherson, Niall (Dumfries) Vaughan-Morgan, Rt. Hon. Sir John
Emery, Peter Madden, Martin Vickers, Miss Joan
Errington, Sir Eric Maitland, Sir John Vosper, Rt. Hon. Dennis
Farey-Jones, F. W. Markham, Major Sir Frank Wade, Donald
Farr, John Marples, Rt. Hon. Ernest Wakefield, Sir Wavell
Fraser, Ian (Plymouth, Sutton) Marten, Neil Welder, David
Gammans, Lady Matthews, Gordon (Meriden) Walker, Peter
Gardner, Edward Mawby, Ray Walker-Smith, Rt. Hon. Sir Derek
Gibson-Watt, David Maxwell-Hyslop, R. J. Ward, Dame Irene
Gilmour, Sir John Maydon, Lt-Cmdr. S. L. C. Webster, David
Wells, John (Maidstone) Wise, A. R. Woollam, John
Williams, Dudley (Exeter) Wolrige-Gordon, Patrick Worsley, Marcus
Williams, Paul (Sunderland, S.) Wood, Rt. Hon. Richard Yates, William (The Wrekin)
Wills, Sir Gerald (Bridgwater) Woodhouse, C. M.
Wilson, Geoffrey (Truro) Woodnutt, Mark TELLERS FOR THE NOES:
Mr. Finlay and Mr. McLaren.

Question proposed, That the Clause stand part of the Bill.

Sir W. Wakefield

From time to time, the Government have exhorted industry and the country to increase exports so as to maintain and, if necessary, increase our standard of life. That is very right and proper. But it is one of the difficulties which face industry in increasing exports that Purchase Tax may sometimes prevent an industry from starting.

The Government know as well as hon. Members that an essential requirement for a flourishing and expanding export trade is a firm home basis of sales. I am president of the Electric Vehicles Association, which considers that the industry could develop a useful export trade if only it had some home trade on which it could get started. It recently asked Customs and Excise what the Purchase Tax would be on a product if production were started.

It was told that, provided a vehicle without a battery weighed 8 cwt. or less, the taxation classification would be 25 per cent. plus 10 per cent. surcharge and the Purchase Tax on the value of the batteries. The industry believes that it could produce a small urban electric passenger vehicle which, if there were reasonable sales in the home market, could be sold in quite considerable quantities abroad. Because of Purchase Tax, the cost of starting production is prohibitive, and this article will never be started while the tax is imposed.

When one starts making a small vehicle such as this in comparatively small numbers the costs are larger than when production gets under way and the vehicle becomes popular and has a large sale. At the moment there is no revenue from Purchase Tax in this case because the vehicle does not exist. Will the Government please not put Purchase Tax on such vehicles? If they do not, production can start, a valuable export trade can be built up and much-needed foreign currency can be earned. If, at the same time, a valuable home trade could be built up, there would be an opportunity for the Chancellor to impose the appropriate Purchase Tax if he thought fit. If help were given by not imposing tax at the start, there would be an opportunity for an export trade and future revenue to be created.

But that is not the only reason why it is desirable that such a small urban electric vehicle should be encouraged. It is silent, and we know the urgent need to try to reduce noise in towns. There is no emission of fumes, and we all know the increasing public anxiety about the effect of diesel and petrol fumes in urban areas.

A third important reason for the production of such a vehicle is that it does not use imported fuel and that the batteries can be recharged at night when the Central Electricity Board urgently needs electricity to be used. Quite apart from the export trade, those are three other valuable assets which would be of advantage to the community if the Government give some encouragement for this new form of industry to start.

While I do not expect a reply tonight from the Chancellor, I earnestly ask the Government to give an opportunity for this new industry to start, because it would bring benefits to the community and to our export trade. These advantages will surely arise if the opportunity is given to start the production of a small electric passenger vehicle to run about our towns and cities.

The Chief Secretary to the Treasury and Paymaster General (Mr. Henry Brooke)

I had only a minute or two's notice of the fact that my hon. Friend was going to raise the subject, so I am sure he was sincere in saying that he did not expect a reply from the appropriate Minister this evening. I have taken note of what he has said. I have no doubt that Customs and Excise will have informed the would-be manufacturers of this vehicle what the position would be under the law as it stands. I will take note of it, but I cannot anticipate my right hon. and learned Friend's next Budget.

Question put and agreed to.

Clause ordered to stand part of the Bill.