Subject to any order of the Treasury made after the passing of this Act under section 39 of the Purchase Tax Act 1963, all goods hitherto chargeable to purchase tax at the rate of 10 per cent. shall be exempt from purchase tax; and accordingly Part I of Schedule 1 to that Act shall be amended by substituting for the words "10 per cent.", wherever they occur, the word "exempt".—[Mr. Callaghan.]
§ Brought up, and read the First time.
§ Mr. James Callaghan (Cardiff. South-East)
I beg to move, That the Clause be read a Second time.
The effect of the new Clause is to reduce the Purchase Tax on goods which are chargeable at 10 per cent. to nil, and thus to exempt from Purchase Tax that list of commodities. The effect of the other new Clauses is similar, except that they would not exempt from Purchase Tax certain of the commodities, but would reduce the Purchase Tax on them.
There can be no doubt that we all feel that every time we go into a shop prices are going up, and that the £ is not going as far as it used to. This has been a consistent experience since the end of the war, but it is not one of which we have heard a great deal during the 1144 last two or three years. In fact, prices are still going up much too fast, and, in many households, this is causing real hardship, especially to elderly people and those on fixed incomes. The increased prices are hitting the groups of people who can least afford them. We are suffering again from a creeping price inflation, and the housewife is the first to feel, it. It is for this reason that we have moved to exempt from Purchase Tax a number of items which most clearly and immediately affect the home.
If I were asked why this is important, and why this new Clause has been tabled, I would refer to the increases which have taken place. Since January, 1962, there has been an increase in the Retail Price Index of about 4 per cent., or a little more. This is too much. It ought to be less, and, indeed, it would be, if it were not for the actions of the Government, or, in some cases, their failure to act.
For example, the increase in the price of sugar is a clear case where the Government have failed to act in time. Three months ago everyone knew that the price of sugar was going up, but the Government failed to take the necessary action which we are told they are to take this week. The price of bread is going up. We are promised that the price of meat is to go up. Over a wide range of food items there has undoubtedly been a substantial increase in price during the last eighteen months. We believe that a reduction in Purchase Tax, which is within the Government's control, would make a substantial contribution towards offsetting this increase.
§ Mr. Raymond Gower (Barry)
I am surprised that the hon. Gentleman should make such a sweeping statement about sugar. The price has gone up in many other countries, so presumably the Governments in these other countries have been equally negligent?
§ Mr. Callaghan
The hon. Gentleman should pursue his researches further. Thanks to the Labour Government, we devised a Commonwealth Sugar Agreement which has enabled us to purchase our sugar at a lower price than that paid by the rest of the world. If the Government had taken their opportunities they could have reduced the price of sugar at an earlier date, when we knew that the 1145 Russians had bought the Cuban sugar crop. This fact was brought to my notice three months ago.
If it was brought to my notice, I am sure that the Government must have known about it. I do not know why they did not take action earlier. But this is merely illustrative, and I should be out of order were I to proceed too far. I am sure that hon. Gentlemen do not wish to discuss rising prices, although this Clause indicates a way in which rising prices and the effect on the housewife and households could be offset.
My second point is that it is the Government's own actions which have forced up the cost of living. Their action in increasing Purchase Tax twelve months ago; their action in connection with the Rent Act; their action in connection with rates; their failure to act in the case of food, has resulted in the housewife having to endure a higher cost of living than she has ever had to endure before in the history of this country. In our view, therefore, it is very desirable that the Government should take what action is within their power to reduce the cost of living in the spheres for which they are responsible. It is upon that that we hinge our case.
I said earlier that it was the action of the Government which had put up the cost of living from the raising of the Purchase Tax last year. There were many items which were charged at the rate of 5 per cent. and upon which the tax was increased subsequently to 10 per cent. They include men's suits, women's dresses, shoes, boots, gloves, handkerchiefs, scarves, cushions, pillows, mattresses, domestic furniture, chairs, tables, beds, wardrobes, office furniture, garden furniture—all these were charged at the rate of 5 per cent. a year ago and that was increased in the Budget to 10 per cent. That action had a substantial effect on the cost-of-living index.
If any hon. Gentleman doubts this, I invite him to examine the cost-of-living index in respect of the items which I have mentioned. He will see how the index was stationary in respect of these items for a number of years and started to move up when the Purchase Tax was increased a year ago. This was foreseen by hon. Members on both sides of the Committee. If hon. Gentlemen refresh their memories 1146 by reading the debates of last year they will see how supporters of the Government prophesied that as a result of increasing Purchase Tax the cost of living would go up.
They commented on other aspects, too. They were certainly right. We were told that it was necessary that this should be done. But we must rub into the Government the fact that they are responsible for a substantial part of the increase in the cost of living. When buying any of these items every housewife may say, "Thanks to the Government of the day, the prices are higher than otherwise they would have been."
We propose to exempt these items from Purchase Tax and so reduce the financial burden on the housewife. The amount collected in Purchase Tax has gone up over the years in which the Government have been in office. About ten years ago it started at about £300 million. It is now over £500 million. This amount is being collected out of the consumers' pockets. I have no doubt that the Government will be putting it up again. But not before the election—after the election, if some hon. Gentlemen opposite have their way.
We had a long discussion a year ago in which a substantial case was made by hon. Members opposite for increasing all the ranges of Purchase Tax to 16⅔ per cent. The Government will probably shy away from that before the General Election. But I have no doubt that if those who are advocating a flat-rate Purchase Tax had their way, and if the country should be so unfortunate as to return this Government again, we shall see further moves in this direction once the General Election is over.
§ Mr. Callaghan
—that if the Government are returned we can look forward to further increases in the Purchase Tax and, therefore, to further increases in the cost of living.
The hon. Member for Kidderminster (Sir G. Nabarro) says that I have no 1147 guts. On the contrary, I know better than to give way to the hon. Gentleman who is so loud-mouthed that he will make any irrelevant interjection. Let him wait and make his speech when the time comes.
§ Mr. Callaghan
I would not bother with him.
There is no doubt that there is a substantial lobby in the Conservative party in favour of putting up prices through an increase in Purchase Tax. This should be clearly understood. I hope that we shall have a clear answer from the Government about what is their policy in this matter. A year ago the Financial Secretary, who was then the Economic Secretary, told us that the increase in Purchase Tax was a deliberate measure of Government policy, putting it up from 5 per cent. to 10 per cent., and representedonly part of the general reform…"—[OFFICIAL REPORT, 16th May, 1962; Vol. 659, c. 1441.]By that the hon. Gentleman meant reducing the Purchase Tax at the top and increasing it at the bottom of the scale.
§ Mr. Callaghan
I wish to ask the Chief Secretary what has happened to the next instalment of the general reform which we were promised, because that was only the first part. We were told that. But we have not seen any further steps this year. Has the new Chancellor lost interest in the whole idea of reforming Purchase Tax? Does he believe that there is nothing further to be done? Have the Government changed their mind over this, as over so many other issues? What are we to think about it?
Speaking of changing their mind, I do not know whether any of my hon. Friends have read the reports of last year's debate. If they have they may well remember with amusement—and hon. 1148 Members opposite will remember with chagrin—that we moved Amendments then to reduce Purchase Tax by about £100 million. That was the amount we were told by the Government Front Bench would be involved. At that time the Financial Secretary told us that the only conceivable case for a reduction of this size was thatthe Opposition had given up all hope of tackling the question of inflation".—[OFFICIAL REPORT, 16th May, 1962; Vol. 659, c. 1447.]This was in May. In October and November the Government reduced Purchase Tax to the extent of about £100 million by reducing the tax on motor cars and perfumery. So we have the measure of the priorities of the Government. Purchase Tax is put up on furniture, on suits and on dresses and it is reduced on perfumery. In the interval the Government explain that to do so would be to give up any hope of tackling inflation. Not only do they change their mind, but they are dishonest in explaining the reason for doing so.
It is incredible that a Government should so alter their own economic policy and still have no sense of shame. Having told us between the summer and autumn, that to reduce Purchase Tax would be giving up any hope of tackling inflation in the autumn they propose exactly the same amount of reduction that we had proposed three months earlier. Therefore, we should like to hear from the Chief Secretary whether there are further instalments of the general reform to come, or whether the statement of the Financial Secretary last year was a misquotation. Was it part of the general reform or not?
Last year, the Government were warned of the effect on employment of an increase in Purchase Tax. They were warned by hon. Members on both sides of the Committee. They shrugged off these difficulties. But is there any hon. Gentleman who represents a constituency in which furniture is made, or clothing manufactured, or where boots and shoes are made, who has not been told by his constituents that there are difficulties in the factories which have been added to as a result of the Purchase Tax increases?
If the representations made to me are any guide, many manufacturers have found that this increase from 5 per cent. 1149 to 10 per cent. has made a substantial difference. In fact, the increase was a little over 5 per cent. to a little over 10 per cent., because of the effect of the regulator. They have found those increased difficulties regarding employment and there is already a substantial amount of unemployment in industry which needs taking up and the position improving.
I said that it was the Government's responsibility, and so it is in a number of these fields. If we look at prices since the new index was introduced, we see that in men's clothing price rises have been of the order of 5 per cent., women's clothing of 3 per cent., and boots and shoes of 6 per cent. All these are directly the responsibility of the Government. The cost of housing, whether it be in rent or rates, has shown an increase since January, 1962, of over 6 per cent. In food prices generally, since January, 1962, the increase has been over 6 per cent.—between 6 per cent. and 7 per cent. Most of these things are within the control of the Government.
The Government have an incredible habit of allowing one section of their policy to fight against another. It is astonishing that the Chancellor of the Exchequer should go to Sheffield to address the Cutlers' Feast on 23rd May and tell us that the annual increase in incomes, that is to say, in wages, salaries, profits and dividends, should not exceed 3 per cent. to 3½; per cent. and that rises in real wages are based on rising living standards. Of course, he was right, but we are not having rising living standards at the moment and have not had them in the last couple of years.
There have been falling living standards. In so far as the Chancellor succeeds in keeping increases in wages down to 3½ per cent. and in so far as the increase in prices of food is 6 per cent., in housing 6 per cent., in men's clothing over 5 per cent., in books, newspapers and periodicals 4 per cent. and boots and shoes 6 per cent., he is undercutting the standard of living of the people.
The standard of living of the average working-class household today is not going up. Unless there is more than one income coming into the household, it is going down. The Amalgamated Union of Building Trade Workers made 1150 a very interesting investigation into this subject. It produced a memorandum which has been, or will be, sent to the Chancellor, showing the effect on the budgets of members of that union caused by the increase in retail prices. It showed, what we might expect, that the three largest items in the ordinary budgets of those members are food, the cost of housing in rent and rates and the cost of clothing and footwear. For not one of those items has the cost of living since January, 1962, not gone up by more than 6 per cent.
Yet the Chancellor told them that they can have an increase of only 3 per cent. to 3½per cent. Are the Government setting out deliberately to reduce the standard of living of these groups to solve the Government's economic problems? The Committee is entitled to know the Government's views on these matters. This memorandum concerns a group of workers, over 1 million, part of whose increases in wage rates is determined by a sliding scale based on increases in the Retail Price Index. They have made their analysis showing that of all the increases in basic rates in the building trades since the war at least 30 per cent. can be accounted for by increases in the Retail Price Index.
If the Government are concerned about an incomes policy they should make a really substantial contribution by themselves working for a reduction in the cost of living instead of putting it up. Where the Government by their actions put it up, it seems not only absurd, but also to have no logic, because they are responsible for so much of the increase in the retail price increases over the last twelve months.
I have no doubt that much of the ridiculous increase which took place last year was in anticipation of our early entry into the Common Market. The Government put it up from 5 per cent. to 10 per cent. because they thought that one way of easing ourselves into a general flat-rate sales tax spread over the whole range of consumer commodities. What the public were saved from as a result of the failure to get into the Common Market, whatever other merits that had, was a substantial increase in prices which would have been brought about partially by this attempt to adjust 1151 the Purchase Tax and to squeeze it both upwards and downwards.
I am not persuaded that this is the right way to tackle the problem. If they want to reform the Purchase Tax they should do so on a different basis. What I and my hon. Friends are utterly opposed to is any general conversion of the Purchase Tax into a sales tax covering the necessities of life by which every brick which goes into a new house and every loaf of bread which is bought pushes up the cost of living of the people of the country.
Such a system would, of course, reduce the price of perfumery. The Government did that last year. It would also reduce the price of a Rolls-Royce, or other car, but it would increase the cost of living of the ordinary wage-earning family. For that reason I am strongly opposed to it. I hope that we shall hear from the Government whether this is a first instalment of the policy and, if so, whether they intend to go further.
It is time that we brought this creeping towards inflation to an end. The Government have not only allowed it to go on too long, but have encouraged it and at times initiated increases. They themselves are responsible for a great deal of the difficulties in which housewives find themselves. A housewife should know when she goes to a shop and finds that prices have gone up that she can thank the Government for a financial and fiscal policy which has resulted in her having to pay higher prices. In turn, they result in increases in wages over a considerable section of the economy. The Government are fighting against their own policy on incomes to keep wages on a stable level and this is having an effect on unemployment. It has undoubtedly increased unemployment in some areas.
For all these reasons there is a substantial case now for reducing Purchase Tax on these essential commodities. Then the housewife may know that it is not as a direct result of Government action that her bills have gone up.
§ Sir G. Nabarro
The hon. Member far Cardiff, South-East (Mr. Callaghan) would not show me the courtesy of allowing me a single intervention in his speech. I shall reciprocate in kind, notwithstanding that we are in Committee 1152 on the Finance Bill and it is customary, or has been during the modest thirteen years that I have been in this House, for hon. Members to give way to one another in Committee. However, I will now permit no interventions from the hon. Member, in any circumstances.
§ Sir G. Nabarro
Having dealt with the hon. Member's discourtesy, I propose to get on with it.
The three new Clauses we are debating would, if accepted, result in a substantial reduction of indirect taxation. It is an extraordinary thing that a shadow Chancellor of the Exchequer can make a speech for 20 minutes advocating very large reductions in indirect taxation without having the perspicacity or intelligence to tell the Committee what the total cost of the concessions would be. I propose to do it for him. The hon. Gentleman accused my hon. Friends of dishonesty. I thought that his speech was not dishonest; it was disingenuous and naive. He deliberately omitted to tell the Com-tee the huge cost of what he was proposing.
The first of the new Clauses proposes the abolition of the 10 per cent. rate of Purchase Tax. The estimated revenue of the 10 per cent. rate of Purchase Tax in the current year 1963–64 is £170 million. Thus, the hon. Member proposes by his first new Clause to reduce indirect taxation by £170 million this year.
The second new Clause which we are discussing, to reduce the 25 per cent. rate of Purchase Tax to 20 per cent., would cost the Treasury £64 million in the current year. The reason is that the revenue estimated from the 25 per cent. rate of Purchase Tax in 1963–64 is £320 million. If the rate were reduced from 25 per cent. to 20 per cent., and assuming that the overall national purchases of goods covered by this rate remained the same, the abatement of the 25 per cent. rate in this context would be a sum of £64 million. The first new Clause would cost £170 million and the second would cost £64 million.
The proposal in the third new Clause which we are discussing is to reduce the 15 per cent. rate of Purchase Tax to 5 per cent. The revenue from the 15 per cent. rate in the year 1963–64 is £55 million, and it therefore follows by simple 1153 arithmetical processes that the cost of reducing that rate to 5 per cent. would be £37 mililon. Summarising, the first of the three new Clauses would cost £170 million, the second would cost £64, and the third would cost £37 million—a total, as an aggregation of the three proposals, of £271 million. The hon. Member for Cardiff, South-East is not very good at arithmetic. He need not go to Nuffield College at week-ends. It would be much better if he went to a secondary school evening class to learn to use a slide rule. He could then carry out the simple calculations which I have given to the Committee.
§ Sir G. Nabarro
The hon. Member for Cardiff, South-East would need a slide rule because he has not the mental capacity to work it out otherwise. Mine are the correct figures. Evidently the hon. Member has not taken the trouble to obtain a copy of my right hon. Friend's answer to my Question No. 64, which was answered today. It will be printed in HANSARD tomorrow and it gives all these figures.
It states that the yield on Purchase Tax in the current year is £170 million from the 10 per cent. Rate, £55 million from the 15 per cent. rate and £320 million from the 25 per cent. rate, making a total of £545 million. These figures have been published today for the first time, but they were available to the hon. Member for Burnley (Mr. D. Jones) on the letter rack and, failing that, as he knew that my Question was on the Order Paper, I would gratuitously have furnished him with a photocopy of my figures, on application.
The hon. Member for Cardiff, South-East not only accused my right hon. Friends of dishonesty, but made a further blunder. Not having done his homework, he said that the yield of Purchase Tax had risen year by year. The tendency has certainly been upwards, a reflection of the enormous increase in the consumption of durable and other goods subject to Purchase Tax, during the eleven years of Conservative administration. As an aside, I remind the hon. Member, who talked about the current price of sugar and how the Labour Government, prior to 1951, negotiated a Commonwealth Sugar Agreement, that, notwithstanding 1154 that agreement, the housewives of Britain were doomed under his Administration to a 2 oz sugar ration per week. That was the cost not only of a Labour Government, but of keeping prices down to an artificially low level.
The increasing yield of Purchase Tax in eleven years is a reflection of the enormous improvement in living standards in this country during the last eleven years of Conservative administration. Let me give one example at random. My right hon. Friend the First Secretary to the Treasury will confirm my figures readily. Today, there are 12½ million television sets in use. When the Conservative Government came into power in 1951 there were 1 million television sets in use.
Sir G. Nabanro
National Assistance is not dealt with in the new Clause. I will deal with it in a debate on the subject and will then knock the hon. Member over the fence for six, as usual.
The point which I am making is that whereas, eleven years ago, there were 1 million television sets, today there are 12½ million. The average cost of a television set, including Purchase Tax, has been £63 and 11½million additional television sets have been bought in those eleven years. Not only have they provided lively entertainment, leisure and happiness in the homes of the people, but they have been largely responsible for building up year by year the Chancellor's revenue from Purchase Tax.
I remind the Committee that in 1959 the Purchase Tax on a television set, as on a radio set, as on a motor car, as on a gramophone, as on a disc, as on perfumery and toilet waters, was 60 per cent. As a result of the Conservative Government's actions during the last four years, that rate of 60 per cent. first came down to 50 per cent., then to 45 per cent. and now to 25 per cent.; and the 25 per cent. rate of Purchase Tax on a motor car compares with the 100 per cent. rate during part of the period of years of the Labour Government, after the last war.
The big reduction of tax has been a very substantial advantage to the ordinary buyer of goods for which he has worked, and which he wishes to provide 1155 for his family to enjoy. Moreover, it has contributed to keeping down prices for these goods on the export markets.
§ Mr. Douglas Jay (Battersea, North)
Does the hon. Member mean that Purchase Tax was 100 per cent. on motor cars? It was never higher than 66⅔per cent.
§ Mr. Arthur Lewis (West Ham, North)
The hon. Member for Kidderminster (Sir G. Nabarro) is always wrong.
§ Sir G. Nabarro
The hon. Member for West Ham, North (Mr. A. Lewis) would be wise to listen to my figures rather than to those of the Co-op. At least mine are accurate, whereas those of the Co-op are Socialist propaganda. He would be wiser to listen to mine. The 100 per cent. rate of Purchase Tax was applicable at the tail end of the war, and for most of the period of the Labour Government it was 66⅔ per cent. The plain fact of the matter is that it is now 25 per cent.
It is all very well for the hon. Member for Cardiff, South-East to point out that the 5 per cent. rate has been doubled to 10 per cent. To try to give emphasis to the point, he read a long list of consumer articles, including mattresses and pillow cases. He would have been wiser had he stuck to the Purchase Tax terminology and simply stated that furniture and clothes were the two categories which were raised from 5 per cent to 10 per cent. last year by the Chancellor of the Exchequer who, in addition, put confectionery and soft drinks on a new special rate of 15 per cent.
I was the strongest possible supporter of the Chancellor's decision last year to double to 10 per cent. the rate of 5 per cent. on clothing and furniture. I was his strongest possible supporter in putting sweets, confectionery and soft drinks on a 15 per cent. rate of Purchase Tax. I asked him to do just that in my speeches on Purchase Tax in the Budget debates of 1961, all in pursuit of an important principle.
The hon. Member for Cardiff, South-East talked about substantial support on the Conservative benches for a flat rate of tax. I am the culprit in that regard. I have advocated every year for the last ten years that Purchase Tax should be placed 1156 on a uniform rate, non-discriminatory in character, because when there is a superabundance of consumer goods of every kind and description, from motor cars to clothes, to furniture, to cameras, to floor coverings, to a huge range of consumer goods, there is, in my philosophy, no such thing as a luxury. Neither is any article more essential than any other article.
It is fatuous to say that clothes are an essential of life and, therefore, should be free of Purchase Tax when the rich can buy a Saville Row suit at 60 guineas and the poor put up with a suit at 10 guineas. Luxuries are to be found in every bracket of consumer goods. There is expensive luxury furniture, as there is cheap furniture. Everybody in the Committee knows that it is virtually impossible to draw a dividing line for taxation purposes between a luxury article in a particular Purchase Tax category and a non-luxury article. It would be an impossible proposition for officers of Customs and Excise to be required to tax, for example, pottery up to a certain level of price at one rate and over that level of price at another rate. It would lead to endless complications, incongruities and anomalies and would worsen, by a great deal, in my opinion, the vicious difficulties that we already fall into by having only three Purchase Tax rates.
§ Mr. A. E. Oram (East Ham, South)
Would the hon. Gentleman, in advancing the theory that it is difficult to distinguish between luxuries and necessities, at least agree that there are some items which enter more into the purchasing of poorer families and others which enter more into the purchasing of richer families and that it helps the poorer families if the tax on the goods that they buy is kept low?
§ Sir G. Nabarro
No, I do not accept that proposition at all, for a variety of reasons. I will deal with most of them, I hope, in the remainder of my speech.
My reason for saying that in times of abundance there is no such thing as a luxury is simply that all manufactured goods, in my philosophy, contribute to two important things. The first is the employment of our people, because they are manufactured goods. The second is the building up of our export trade, because all classes and kinds of manufactured goods are exported in one way or another, practically without exception.
1157 In that set of circumstances it is, to my mind, nonsense to try to discriminate, article by article, on grounds of essentiality or otherwise to the consuming public. This is a sharp division of fiscal philosophy between Socialists and Conservatives—Conservatives of my type. I am perfectly well aware of the arguments of right hon. and hon. Members opposite in this matter of Purchase Tax. As I have argued publicly elsewhere and in this Chamber for ten years with them, they would try to segregate groups of goods which they consider are essential to the life of the community and they would try to remove Purchase Tax from them. Other goods they would try to segregate elsewhere and say that they are luxurious in character and should carry a high rate of Purchase Tax.
I believe that this is a totally wrong fiscal policy, and that good progress has been made by my right hon. and hon. Friends towards a single flat rate of Purchase Tax. It is to that that I wish now to apply myself for a few moments.
When this Purchase Tax campaign of mine started—
§ Sir G. Nabarro
Yes. It was started in a desultory and slapdash fashion by the hon. Lady, but she never really got down to the details of it. She never really learned what Purchase Tax was all about. She imagined that it was confined to pottery, but there are other things as well, such as carpets. They are all important. When the Purchase Tax campaign of mine started in 1958 the top level was 90 per cent. The bottom level was 5 per cent. There were seven rates of Purchase Tax in all.
We now have a situation, after various changes in 1958, 1959, 1961 and 1963, whereby, instead of seven rates, there are only three rates. The top rate, instead of being 90 per cent. is only 25 per cent. The bottom rate, instead of being 5 per cent., is 10 per cent. There is one intermediary rate put in at 15 per cent., 1158 but it applies only to the very narrow group of sweets, confectionery and soft drinks.
As I have explained earlier, on this basis of 25 per cent., 15 per cent. and 10 per cent., the total yield of Purchase Tax this year is £545 million. It compares with last year's yield of £571 million. So, actually, a reduction of £26 million is proposed in Purchase Tax over the whole field this year, as compared with last year. If the flat rate that I recommend of 16⅔ per cent. were initiated, the Chancellor's yield would be not very different. His yield would be £558 million were all articles currently subject to Purchase Tax standardised at 16⅔ per cent., or 2d. in the 1s. The yield would then be £558 million compared with his estimated yield on the three-rate current basis this year of £545 million. That is a difference of only slightly over 2 per cent. in order to eliminate discrimination altogether.
I hope that this steady process under a Conservative Government of compressing Purchase Tax rates towards the desirable goal, as I understand it, of a single and flat rate, non-discriminatory, a uniform rate of Purchase Tax of 16⅔ per cent., or 2d. in the Is., will be pursued by this Chancellor later this year and next year as well, until we arrive at the goal of a single flat rate. I am not dogmatic about the 16⅔ per cent. rate. If the Chancellor can afford it, let him make it a 15 per cent rate.
I am not alone in these thoughts, either. I will read to the Committee a recommendation from the National Institute Economic Review No. 23, February, 1963, which used these words as a means of injecting further purchasing power into the economy:there may be special social reasons for not concentrating so much of the tax reductions these,By "these" is meant tobacco, spirits and beer.
An alternative would be to consolidate all Purchase Tax rates at 10 per cent. This would release just over £200 million.In other words, if there were a single Purchase Tax rate of 10 per cent. instead of my proposed l6⅔ per cent. the yield from Purchase Tax would not be £558 million, but would be approximately £350 million.
1159 Again, the National Economic Development Council, in its publication "Conditions Favourable to Faster Growth", 1963, had these words to say about Purchase Tax, in paragraph 168:The coverage could be widened and its incidence made more uniform. The Purchase Tax has considerable advantages over the value-added tax in ease of collection, since it is collected at one stage and not several.There is a powerful body of thought in the country today which believes in nondiscrimination in Purchase Tax.
The hon. Member for Cardiff, South-East seems to think that a uniform rate of Purchase Tax is a sales tax. He displays his ignorance of taxation matters, for the sales tax as operated in the United States, on a wide basis, is a retail tax collected over the counter on retail sales. The tax at source as in Germany, is a turnover tax and is another alternative method of doing much the same thing. In Britain, we operate Purchase Tax at the wholesale level, the principal operational advantage being that we have only 160,000 collection points by that method instead of 680,000, which we would have with a retail or sales tax, over the counter.
As I say, a retail tax over the counter is a sales tax. I have never wanted that. I do not particularly want a turnover tax. Unless we have an added-value tax I want it to be continued as a tax at the wholesale level; but that is not a sales tax, I dislike having to repeat myself, but I must remind the hon. Member for Cardiff, South-East—because he is in a muddle—that it is not a sales tax. I am saying that the tax should be levied at the wholesale level, but at a single, uniform and non-discriminatory rate, as low as possible.
I would be content with it being 16⅔ per cent., or 2d. in the shilling, in the immediate future because that would be easy to operate. It would mean that those articles which are at present charged at 25 per cent.—motor cars, radios, television sets, cosmetics, cameras, gramophones and discs—would all come down from 25 per cent. to 16⅔ per cent. It would mean that the articles charged at 15 per cent.—sweets, confectionery and soft drinks—would go up from 15 per cent. to 16⅔ per cent. which is only a marginal increase. It would also mean that the whole of furniture, clothes, floor 1160 coverings, including carpets—and I represent Kidderminster—and pottery, glass and everything on the 10 per cent. level would go up to 16⅔ per cent.
If this were done we would have a simple, non-discriminatory system of indirect taxation. It would be equivalent to the continental systems. Such a system would require very little change if and when there were, in the future, an association—economic, political or otherwise—with Western Europe. I strongly believe that this is, as a broad philosophical and fiscal proposition, very important to the future of both manufacturers and consumers in this country.
I hope that my right hon. Friend will emphatically reject the spurious proposition of the shadow Chancellor of the Exchequer, who did not even have the guts or courage to tell the Committee that the cost of the three propositions he was supporting would be £271 million this year, or £2 million more than the whole of the Chancellor's P.A.Y.E. and Income Tax concessions of £269 million. This shows that the hon. Member for Cardiff, South-East does not want tax reductions this year of £269 million—which he has already voted through—but total tax reductions of £540 million.
The hon. Member has not the courage to tell the Committee that that is what he is proposing. He did not go to Nuffield College, Oxford, last weekend. He has not done his homework. His arithmetic is very poor and I hope that his propositions will be treated with the contempt they deserve, and that the new Clause will be voted down.
§ 5.15 p.m.
§ Mr. J. Grimond (Orkney and Shetland)
The discussion of the proposed new Clauses gives the Committee an opportunity of probing the Government's mind on two points. The first is whether the Government are satisfied with the general results of this year's Budget. In that Budget, in the coming year, they will, compared with last year, give a considerable stimulus to the economy and, naturally, they hope to have a response from it, to take up the under-employment of both men and machines and generally to increase productivity and overall production.
We are entitled to ask if they consider that the stimulus in the Budget is and 1161 will be sufficient. Will they be releasing enough purchasing power really to start the economy on an upward cycle? It is extremely important, when considering this point, that the Government should take firm and sufficient measures—and such measures are likely to be much more effective if they are given out with decision and not dribbled out in the coming months.
We have had an indication from the First Secretary that later in the summer the Government might be prepared to use the regulators to increase purchasing power. I believe that this way of attempting to solve the nation's problems would be a psychological and economic mistake. If they are discovering that they are not getting an adequate response from the economy, the Government should take this opportunity of reducing some of the indirect taxes we are discussing.
There are signs from economists and industry that the Government have not restored sufficient confidence by the proposed releases of purchasing power. Here again is an opportunity for them, if they feel that it is necessary to give an added incentive, to take action, because industry will respond above all if it is thought that markets will be found for their goods. Whatever is done by way of investment allowances and so on, it is essential to bear this in mind. Thus the first question I wish to discuss is whether or not the Government consider that the measures taken in the Budget will be sufficient, for I believe that, to date, the response generally to the Budget has been disappointing.
My second point leads me to follow up some of the questions asked by the hon. Member for Cardiff, South-East (Mr. Callaghan) regarding the Government's general policy towards Purchase Tax. This form of taxation has undergone considerable changes over the years. Lord Amory, when Chancellor of the Exchequer, turned down the idea of a Sales Tax. He said at the time that it had been examined and had been found to be impracticable, undesirable or both. I understand that that, among other possibilities as an alternative to Purchase Tax, is being considered again.
Last year there was an effort, of which I approved, to reduce the number of rates of Purchase Tax and to make the 1162 whole structure more rational. Nevertheless, an extra rate of 15 per cent. was brought in on sweets and soft drinks. Are the Government now saying that they will not formulate any policy or take any steps to alter the present structure of Purchase Tax until the Committee which has been set up to consider this matter has reported? This matter is of vital importance to the economy, because Purchase Tax must be looked upon not merely as a method of raising revenue, although that is important, but also on its effect on consumers and industry.
It is high time that the Government concluded their investigations into the various forms of indirect taxation and informed the country of their conclusion. I would like to know when the Committee of which I spoke is expected to report and whether we are likely to have to wait until, say, next year's Budget for action on its recommendations.
The hon. Member for Cardiff, South-East pointed out certain objections to either a single rate of Purchase Tax, a sales tax or an added-value tax. I do not deny that his objections have force in that there might be an increase in the cost of living for certain people and that there is a case for a sumptuary type of tax. But I would urge certain counter arguments, particularly in favour of an added-value tax. They are well known, but I think that they are worth placing on record again in view of the proposed new Clauses we are discussing.
It is generally considered that this would enable us to give some assistance to exports; an important matter on which we are all agreed. It is very often argued that if we give assistance to exports other countries will do the same, but most other countries have already gone considerably further than we have in giving this assistance. I am not convinced that this country should hold back because of possible retaliation—retaliation has, in most cases, already been taken.
Although I appreciate that an added-value tax might be more difficult to collect, it is, at least, likely that many stages of production would be prepared to absorb the tax and not to pass it on. To that extent, the results feared by the hon. Member for Cardiff, South-East might be less than expected. This form 1163 of tax would give an incentive to the efficient industry, and if it were combined with alterations in other forms of taxation it might make a considerable difference to the efficient industry that was using its materials, machinery and men to the best advantage, as against the less efficient industry that was being extravagant with comparatively scarce sources of production.
I hope that the Government have this type of taxation very much in mind. I hope, too, that they will remember that if it were to appear that there were certain valid objections to the tax, those objections might be met by concessions in other directions. I am not by any means putting the objections entirely aside. The committee set up by the Government will no doubt consider them very carefully, but this Committee on the Finance Bill should direct its mind particularly to the effect of taxation on efficiency, and to seeing whether we cannot so reform our system of Purchase Tax as to make it a positive encouragement to the efficient firm, and not a disincentive.
Many of the newer industries, the efficient industries of the type we want to encourage—indeed, the type of industries quoted by the hon. Member for Cardiff, South-East in his speech, I think, on the Budget, when he drew attention to an article by Professor Barna—are exactly the type that an added-value tax might encourage to some extent. That is to say, they are concerned, not so much with the basic necessities, as they are generally called, but with, if not exactly sumptuary goods, goods that are well above the level of basic necessities. This would seem an argument for the tax.
Whatever we may feel about the operations of Purchase Tax, we cannot wait indefinitely for a clear indication of the Government's mind, and a clear indication, also, that they will pursue a more consistent policy than has been the case over the last two or three years.
§ Mr. Peter Walker (Worcester)
One of the advantages that the right hon. Gentleman the Leader of the Liberal Party enjoys when he speaks about the proposals of his party is that if we want to compare them with his party's performance we have to go back for a long time. This is not an advantage shared 1164 by the hon. Member for Cardiff, South-East (Mr. Callaghan). Whilst I welcome the hon. Gentleman's return from Washington and his attendance here—because, if I may say so, I find his contributions both cogent and interesting—I found his argument today rather below his usual performance. He tended to try to concentrate on making a party political point that does not really stand very much examination from his own point of view.
The theme of his argument was that because there had been a rise in the cost of living it was the duty of the Government to reduce Purchase Tax in order to make some amends for that rise. I would remind him that, for example, in November, 1947—and 1947 was not a good year for falls in the cost of living but one in which it rose—the Labour Government doubled many items of Purchase Tax, including those on the lower levels, from 16⅔ per cent. to 33⅓ per cent.
During the period of office of the Labour Government from 1945 to 1951, the cost of living rose virtually every year, but there was no compensating reduction in Purchase Tax. Indeed, during that period, the tax was definitely increased—[Interruption.] In 1946, it increased. In 1947, it increased. In 1951 it was increased, and when the Labour Government went out of office the rates of Purchase Tax were 33⅓ per cent., 66⅔ per cent. and 100 per cent. Those have all been substantially reduced—
§ Mr. D. Jones
It is not quite fair of the hon. Member for Worcester (Mr. Walker) regularly to trot out this hoary tale. The position of the country at that time was vastly different from its position today.
§ The Temporary Chairman (Mr. F. Blackburn)
I hoped that the hon. Member for Worcester (Mr. Walker) would work round to 1963.
§ Mr. Walker
With respect, Mr. Blackburn, the argument was that it was correct to reduce Purchase Tax to meet the rise in the cost of living, and I was merely pointing out that the opposite course was pursued when the party opposite was in power. Under this Government, some form of reduction in Purchase Tax has taken place almost every year on many basic household items. Carpets, 1165 floor coverings, furniture and clothing have had the tax substantially reduced.
I want to make a specific point concerning a product that would come under the new Clause 26, because it is affected by the Purchase Tax level of 15 per cent. imposed on soft drinks and sweets. One of the most important facets of British horticulture is the soft fruit industry, and the section that produces blackcurrants has been very seriously affected by the imposition of this 15 per cent. tax. This section sells the bulk of its production to factories making blackcurrant syrup. I ask my right hon. Friend very carefully to consider the effects this tax has had on this section of British horticulture. During the past year, purchases of its production have been reduced by about 25 per cent.—and this was a growth section of British horticulture.
I know that in the past my right hon. and learned Friend the Member for the Wirral (Mr. Selwyn Lloyd), when he was Chancellor of the Exchequer, gave very careful consideration to the problems of our horticultural industry and made certain concessions to it, but, having undertaken considerable capital expenditure in preparing to increase the total acreage for the production of blackcurrants, the industry finds that the imposition of this tax has resulted in a serious decline in sales. Whereas, last year, the prices increased for almost every commodity under the heading of soft fruits, prices for blackcurrants came down because of surplus supplies. I ask my right hon. Friend to give very careful consideration to this problem.
§ Mr. Donald Chapman (Birmingham, Northfield)
The hon. Member for Kidderminster (Sir G. Nabarro) referred to the customs of the House, but, first he must know that the custom on an occasion like this is to put down as many new Clauses as possible in order to have, for example, a wide discussion on Purchase Tax. We are not committed to them all, or to them all at once. This is an attempt by the Opposition, quite rightly, to stage a full-scale debate on Purchase Tax. To add up the figures, as the hen Gentleman did, and to pretend to make a point of it, will only be laughed at by anyone who knows Parliamentary procedure.
1166 Secondly, although the hon. Gentleman treats us to a good deal of knowledge in such matters, and to a robust presentation of his case, it might be a good thing for him to use a little less personal offensiveness. Most of us are tempted entirely to disregard, or to write down, what he says because of the offensive tone he continually adopts. I wish that after his eleven years here the hon. Member had learned a little better.
I want to speak about the effect of the new Clause which proposes to reduce the 25 per cent. rate of Purchase Tax on motor cars. This gives me an opportunity which I have seized on previous occasions to talk about the effect of Purchase Tax on an industry which is making no mean contribution to our export drive and, indeed, to our livelihood as a whole. The industry is now exporting to the tune of £600 million worth of production a year, which is a considerable slice of our total. We have been pleading for years—and I was glad then to have the hon. Member for Kidderminster on our side—for a reduction of Purchase Tax on motor cars to that with the strength of a big and expanding home market behind it the industry could make a vigorous effort in the export trade.
I want to look at what has happened in recent years. When I made these pleas for the reduction of Purchase Tax on motor cars in the late 1950s, in speech after speech, year after year, I pointed to the dangerous trends which were facing us and to the dangers of Government policy as it was afflicting the motor industry at that time. I was saying then that here we were in the early 1950s, the undoubted world leaders in the production of motor cars. Even in the middle 1950s we were well ahead and there was no reason to believe that, given a vigorous effort, we could not stay well ahead. But if we look at the later years of the 1950s, as I said at that time, the danger which was creeping up on us—owing to Government policy, particularly on Purchase Tax—was that Germany was catching up and passing us; that France, which had started miles behind us, was beginning to be a notable competitor; and that Italy, from having been an also-ran, was beginning at last to challenge us very strongly throughout the world.
1167 I made plea after plea that Government policy should not show this prevarication on Purchase Tax which should be brought down to a level comparable with that of our main competitors in Europe so that our industry could say, "We can go ahead now and see whether we can beat our competitors." I made these pleas year after year, giving precise figures for the growth in production and exports among our competitors.
If we now bring these figures up-to-date, it will be seen that nothing illustrates more vividly or epitomises more clearly the failure of the Government's "stop-go" policies over the last few years. This is also what is brought out in the desperate possibilities for the industry in the future. This is the legacy of policies in the 1950s.
After giving this word of warning year after year, I should, then, like to note now where we have landed ourselves in 1963, as a result of those policies of the 1950s. The latest figures are for the complete year 1962. We were then producing about 1.2 million cars and exporting 500,000. But what happened to our competitors compared with only a few years previously? Germany, from being level-pegging with us, produced last year nearly twice as many motor cars as we did. She knocked us for six in world markets, and was selling double the number of cars that we sold in those markets. To our shame France, which was not a desperately important competitor in the middle 1950s, was ahead of us for the first time last year, producing 1.3 million compared with our 1.2 million and selling nearly as many as we did in the export market. Italy, from being of no importance and no challenge to us in world markets in the middle 1950s, was producing in 1962, 877,000 or more than two-thirds of our total production and selling abroad more than half as many as we sold.
These figures are important not only because of the totals reached but because they show the progress in our industry compared with the industries of our competitors. Year after year, given suitable economic conditions, including a coherent policy on Purchase Tax with it reduction to realistic levels over the home market, our competitors were not showing the 1168 swings shown in our production, the dropping back and the lurches forward, and worries every year as to what the figures would bring. They were showing a steady, gentle growth based upon the coherent economic policies of their Governments.
§ Mr. Chapman
I am in the middle of this argument. I will give way later.
While our industry was in danger of dropping back and was going through a very bad period, production in France went up steadily—from 600,000 to 700,000, then to 950,000, to 1,080,000 to 1,100,000 and finally to 1,340,000. This was the steady progress of an ordered economy, compared with the stop-go policies and the incoherence and largely reactionary policies on Purchase Tax from which our industry suffered.
One year our industry was told that if Purchase Tax on motor cars was reduced it would cause inflation and release too much purchasing power. The next year the industry was told, "We have got into difficulties in the export market and if we reduce Purchase Tax we shall have too many cars sold on the home market."
We never got anywhere until we had one big break-through last year and the rate of Purchase Tax was reduced to 25 per cent. All honour to the Government that they reached that stage, but hon. Members should consider how late all this is. It is done at a time when Germany is producing and selling twice as many cars, when France is way ahead of us, and Italy has nearly caught us up. In terms of population and industrial concentration we ought to be equal in production and exports with France and Germany. There is no good reason why we should have been beaten in this way.
Is it too late? We never had the momentum in the 1950s. Can we now capture enough momentum to begin to catch up with those who have a head start on us? This year things are going reasonably well and perhaps we shall produce 1.4 million or even 1.5 million cars. On present figures we should sell over 600,000 cars in the export market, compared with 500,000 last year. But we shall have to work very fast now to catch up with those who have this head start and this developed momentum. We shall have to continue this pressure for the 1169 reduction of Purchase Tax because we have such a leeway to make up. We are just at the highest level of Purchase Tax compared with our competitors. I think that one other competitor has a Purchase Tax level of 24 per cent., whereas some of the others have a tax of 19 per cent. and even 12 per cent. Those of us who represent constituencies where these things are matters of life and death must continue to insist that the time has come for a further reduction in the tax to help to make up for the lean years when our industry was so afflicted by what the Government did.
Much though I am happy to pay tribute to the reduction last year. I hope that the Chief Secretary will not take it that any of us are entirely satisfied. No doubt, he would reply that no one is ever entirely satisfied, so I will say, let him not even expect that many of us will be very satisfied. There is a good deal still to be done to help the industry forward now that, his Government have let it fall so far behind some of our main competitors. We shall be returning to this subject year after year to press our case yet again.
§ Mr. Gower
It may be desirable, as the hon. Member for Birmingham, Northfield (Mr. Chapman) said, that there should be greater continuity in the level of Purchase Tax, particularly as it affects the motor industry, but the hon. Gentleman exaggerated his case by speaking of the sensational increase during the early 1950s in production in Germany, Italy and France. That increase was not due either solely or largely to the incidence of Purchase Tax. The hon. Gentleman distorts the picture when he chooses to ignore the fact that those countries were countries which received a great deal of financial aid and new equipment immediately after the war, in many cases brand new factories, and were able to build up their production. When he spoke favourably of our ascendancy in 1950, he forgot that we were ascendant then because we had no competitors.
§ Mr. Chapman
The hon. Gentleman has got it entirely wrong. I did not begin my figures in 1950 deliberately for this reason. I started in 1955 and 1956 and spoke of the momentum since then. I did not once refer to the early 1950s.
§ Mr. Gower
I accept that correction. Reluctantly, in the end, the hon. Gentle- 1170 man admitted that there had been some improvement. He should know that one of the stops to which he referred has, during the past twelve months, occurred in the continental motor industry, too. For instance, when I was in Italy recently I found that during the past year or so German exports to Italy had taken a steep dive, while British exports to Italy had taken a steep rise. This has not occurred since the last Purchase Tax change. It happened before then.
In his opening remarks, the hon. Gentleman said that these new Clauses were merely intended to explore the position and not in any way to commit the Opposition to support of any reductions of Purchase Tax. But this was not the case put by his hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), who introduced the new Clauses, making clear that the main motive was to reduce the cost of living. They were not exploratory at all, according to him. I presume that the hon. Member for Cardiff, South-East wanted the Government to accept these new clauses and he wanted them to reduce the Purchase Tax levels. If so, he went about it in a strange way, and his case was less than persuasive and less than objective.
The hon. Member for Cardiff, South-East chose to concentrate on certain aspects of the cost of living, making no comment at all upon the standard of living. He commented only on the desirability of reducing the Purchase Tax and took no account of other reductions in other forms of taxation which have taken place in the last six months or so. One has to consider these proposals in the light of those reductions and consider what effect the reductions have had or are likely to have.
I do not wish to do him an injustice, but I was not clear whether the right hon. Member for Orkney and Shetland (Mr. Grimond) was warmly in favour of these proposed reductions or firmly opposed to them. On the other hand, I have the firm impression that the hon. Member for Cardiff, South-East was very firmly in favour.
What steps have been taken so far? The hon. Member for Northfield referred obliquely to one of them. There were the Purchase Tax reductions towards the end of last year. Also, there was the announcement in February by the 1171 Minister of Pensions and National Insurance of considerable increases in several benefits under the National Insurance Scheme, including retirement pensions, and, of course, lots of other things, too. In the Budget there was the announcement of considerable changes in direct taxation and Income Tax allowances and the announcement of special assistance to the development districts.
Some of these measures cannot yet have taken effect. Many of the benefits of the National Insurance changes are to apply for the first time this month.
§ Mr. Dempsey
Does the hon. Gentleman realise that the change in Income Tax applied, for instance, to a head teacher in Scotland produces an average of 2s. a week, which is already more than offset by increased National Insurance contributions, apart from all the other increased charges?
§ Mr. Gower
I was relating my argument to the Purchase Tax, Mr. Blackburn. I said that one could not consider the virtue or value of these new Clauses without taking into account all these other things. I hope that you will not regard that as outside the terms of the new Clauses.
It would be most unreasonable at this time to call for further reductions in tax by the very large amounts proposed in the new Clauses. It was notable—my hon. Friend the Member for Kidderminster (Sir G. Nabarro) made this very fair comment—that the hon. Member 1172 for Cardiff, South-East did not refer at all to the cost of the new Clauses. To add to the £269 million, which the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) seems to think is very small, another sum of about £270 million for these Amendments, on top of all the other items to which I have referred, is surely out of the question now. All these things could lead to what we do not desire, an excessive release of purchasing power in the autumn.
I submit that on those grounds it would be better at this stage to see to what extent the other concessions will take effect. The right hon. Member for Orkney and Shetland thought that these changes had shown themselves already to be inadequate. I respectfully submit to him that it is too early yet to arrive at any such conclusion. It would be much wiser on balance, to wait. Hon. Members opposite may say, "If you do not do this now. you have lost your power to act". They are wrong. My right hon. Friend still retains the regulator which he can use to effect some of the desirable aims implicit in the new Clauses if conditions are favourable. We should take time to assess the effect of the concessions made already. The changes proposed in the Finance Bill are very considerable.
There has already been a more than promising upturn in production. Despite some criticisms, there is an encouraging trend in exports. It would be most unwise at this stage to imperil the important changes which have been made and the encouraging trends which can be seen. My right hon. Friend has in reserve the power of the regulator and, if the changes which have already taken place show themselves to be inadequate, he can use that additional power. On those grounds, I urge that the new Clauses should be rejected.
§ Mr. Victor Yates (Birmingham, Lady-wood)
It seemed to me that the hon. Member for Barry (Mr. Gower) was terribly confused about this matter. He entirely ignored the fact that the action of the Chancellor of the Exchequer in reducing the tax on motor cars had led to an increase in the sale of motor cars. This is an argument which has been used in the past by the hon. Member for Kidderminster (Sir G. Nabarro). I am 1173 sorry that he is not in his place. His argument against my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) was that my hon. Friend had not stated what the cost of this proposal would be.
The hon. Member for Kidderminster has from time to time asked my hon. Friends and myself to support him in his demand for reductions in Purchase Tax. We have even had communications from the Society of Motor Manufacturers and Traders asking us to support the hon. Member. The measures which the hon. Gentleman proposed would have cost millions of pounds, but that did not alter the argument used by the motor car manufacturers, which I think was very legitimate. It was that if the tax were reduced it would lead to an increase in sales and, therefore, to an increase in Exchequer funds.
What I cannot understand is that the Chancellor of the Exchequer has made no concessions in respect of Purchase Tax in the Budget. If we can point to the fact that there is unemployment as the result of the imposition of Purchase Tax, that should be very carefully considered by the Government. I am very sorry that all the arguments which we have advanced on behalf of the motor car and bicycle industries have fallen on deaf ears. The tax on bicycles has led to the closure of at least six bicycle factories. Yet there is a wide market for bicycles. Where we can show that the imposition of this tax is adding to the unemployment difficulties, the Chancellor of the Exchequer should examine what we say very carefully.
My hon. Friend the Member for Cardiff, South-East referred to the effect of Purchase Tax on the cost of living. Increases in the cost of living restrict the demand for goods and services. If we restrict the demand for goods and services, the number of people in employment declines. I do not know that the result of a reduction in tax would be that worked out by the hon. Member for Kidderminster. I do not know how he worked out his figures. But if it can be shown that a reduction in tax leads to an increase in employment, there is a lot to be said for it.
I do not apologise for again referring to the tax on confectionery. I think 1174 that it was regrettable that this 15 per cent. tax should have been imposed a year ago. It is argued that there should be no discrimination, but I would certainly discriminate against a tax on the food of the people. I think that it was a calamitous action on the part of the previous Chancellor of the Exchequer when he taxed soft drinks, ice cream, lollipops, sweets, and so on. He also included chocolate biscuits, which form an essential part of the housewives' shopping. It is extremely difficult to discriminate between this type and other types of biscuit. If the Chancellor of the Exchequer had put a tax on every item of food, there would have been a greater outcry than there was.
In imposing this tax on confectionery, the Government included chocolate biscuits, a commodity which is made up of flour, fats, and so on. It is not made up of the same things as sweets. There is discrimination between the ordinary sweet biscuit and the chocolate biscuit. Chocolate biscuits, like ordinary sweet biscuits, are supplied by grocers. Seventy-six per cent. of them are sold in food shops, whereas the smaller single chocolate biscuit is sold as confectionery in confectioners' shops. Sweet biscuits are tax free. If a biscuit has chocolate on one side of it, it is tax-free. If it has chocolate in the middle as a sandwich, it is tax-free. Only if it is wholly covered with chocolate is there a tax on it.
I understand that in 1961 the output of biscuits was 480,000 tons, of which 40,000 tons were chocolate biscuits. The firm of Cadbury decided to take a factory in Moreton, in Cheshire, a development area, for the sole purpose of producing chocolate biscuits. It took the production of chocolate biscuits from Bournville, Birmingham, to Moreton, only to be told after it had got the factory going very well that a tax was to be put on chocolate biscuits.
The figures show very clearly that as a result of putting this tax on chocolate biscuits employment in the Moreton factory which on 1st April, 1962, stood at 2,940—a very important contribution to employment on Merseyside—went down as at 1st April, 1963, to 2,454, a drop of practically 500 in a development area. There was a reduction of 20 per cent. in employment among women and 11 per cent. among men.
1175 There is no sense or reason in asking a firm to take a factory in an area of unemployment and, when it gets there, impose a tax which brings down employment by 500 in a year. It is neither right nor fair. I think that this matter should be examined very carefully. I hope the Government have looked into it.
I want to give one other case. I wrote to the chairman of the directors of United Biscuits, who told the annual meeting of shareholders that this tax had had a serious effect upon the biscuit industry. In reply, Sir Peter Macdonald informed me that in the firm of Crawford's there had been a reduction of, I think, 30 per cent. in a year, and he said that this instance could be multiplied in a number of industries. A number of industries have shown a reduction in employment because of this tax.
I suppose that there has been a reduction also in the confectionery trade, although not to the same extent. I understand that the figure is more like 3 per cent. It is not quite as serious as the effect which the tax has had on the housewife in her choice of food.
Why should the chocolate biscuit be classed as sweets or confectionery when chocolate biscuits can be included in tins of mixed biscuits which are sold as sweet biscuits? This is unfair discrimination. I want the Chancellor to remove this discrimination and to make a big contribution to the employment situation by doing so.
§ Mr. D. Jones
I support the new Clauses because of the effect they would have on the cotton textile industry, which is an important industry in Lancashire and certainly in my constituency of Burnley. First, however, I hope that I may be forgiven in joining my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) and taking exception to the manner of the right hon. Member for Kidderminster (Sir G. Nabarro).
§ Mr. Jones
I stand corrected. Nevertheless, my point remains, and I shall be brief.
1176 I do not mind a good slamming in debate, nor do I mind the offensiveness with which the hon. Member treats the Committee. I object that he should treat the House of Commons as though he were on the stage at the Old Vic and we were nothing but an admiring or critical audience. Having said that, I will deal with our proposals, which, I hope, will influence the Minister in accepting the new Clause.
I repeat that my interest is confined to the cotton textile industry, but once again I might, perhaps, be permitted to refer to the amount of money that the hon. Member for Kidderminster said was involved in the new Clauses. He gave a figure of £271 million. I do not quarrel with his analysis or his arithmetic—I should like to accept it. I point out, however, that the £271 million to which the hon. Member objects is far less than the amount that Her Majesty's Government are preparing to spend in trying to convince the world that we are an independent nuclear Power. That should be noted not only by the hon. Member for Kidderminster but by the whole Committee and the Government.
While I do not want to go into all the points relating to the cotton textile industry, I will mention at least certain salient points. This industry has suffered hard at the hands of the Government. We know that there was a tremendous reorganisation in 1959. We know that Ministers assured the cotton textile industry that given co-operation, there was a period of stability and prosperity ahead. It is not strictly relevant to my argument that those views were expressed in the pre-election period. The point is that those statements were made and have been repeated. For that reason, the Government are under a moral obligation to the industry, which they could show by accepting the new Clause.
I should like to draw attention to the number of people who are entitled to have some new glad rags at least once a year. This appears to be a source of merriment to the Chief Secretary to the Treasury, but I dare say that his good lady and his daughter—
§ The Chief Secretary to the Treasury and Paymaster-General (Mr. Boyd-Carpenter)
I am sorry. I was amused by an interjection from one of the hon. 1177 Member's hon. Friends below the Gangway. If the hon. Member had heard it, he, too, would have been amused.
§ Mr. Jones
I accept the Minister's explanation. The wives, daughters and sons of Ministers would undoubtedly claim for themselves that elementary right. I have figures, in which the Committee might be interested, showing that there are 5,821,000 old-age pensioners, 2,046,000 people on National Assistance, 553,000 unemployed, 1,196,000 absent from work because of sickness and 64,000 absent from work because of injury—I notice your look of bewilderment, Mr. Blackburn—making a total of 7,737,000 people who would benefit from the new Clause.
§ Mr. Jones
I saw that you were puzzled, Mr. Blackburn, and, perhaps, rightly. Nevertheless, I want the Committee to appreciate that there are 7,737,000 people who, it could be claimed, are leading sub-standard lives.
The person who is away from work because of sickness, accident or unemployment has his income reduced by about two-thirds. I am arguing that if the Clause were accepted such persons would have an opportunity to adorn themselves far better than they can today. Some old-age pensioners have told me that they have not bought a new garment for themselves in ten years. That strikes me as distinctly unfair. If the position were altered, it would represent a great contribution to an industry which has been very hardly treated by the Government.
I want now to deal with certain observations made by the industry. There is 10 per cent. Purchase Tax on all cotton textile handkerchiefs but none on paper handkerchiefs. This is a further discrimination to which the industry objects. Notwithstanding that in 1959 Ministers said—and it has been repeated since—that the industry would quickly have an up—turn, I am reliably informed that the industry, which really expected an upturn in September, 1962, is still waiting in vain. The industry—in order to keep myself in order, I repeat that it would very much helped by the Clause—is ticking over on its present very unsatisfactory level because many mills are making 1178 a loss and choose to do that rather than go out of business. I ask the Government seriously to consider the Clause in relation to an industry to which the Government certainly owe something.
Before I close I want to refer briefly to an observation made by the President of the Board of Trade in our last debate about the cotton textile industry:I look forward to co-operating with the Co[...]on Board in future and to discussing with it the industry's plans for the future as soon as it is able to do so."—[OFFICIAL REPORT, 28th June, 1962; Vol. 661, c. 1386.]I am in a position to say that the Cotton Board and the trade unions would very much support the new Clause for the reasons which I have given, and I hope that it will be a very seriously considered for the purposes which I have outlined. It is the kind of co-operation that would be appreciated.
§ Mr. A. V. Hilton (Norfolk, South-West)
During the discussions on the Finance Bill I have often wondered why there is any need to have a Tory Chancellor of the Exchequer or anybody else on the Treasury Bench. To listen to the hon. Member for Kidderminster (Sir G. Nabarro). He created the impression in the Committee this afternoon that he alone is responsible for the Government's policy with regard to Purchase Tax and that it was his idea that Purchase Tax on furniture, clothing, shoes and other things should be increased a year ago and that 15 per cent. Purchase Tax should be imposed on soft drinks.
But the hon. Member is so obsessed with his own importance and his own words that, as he admitted this afternoon, he is unable to distinguish between essential and luxury goods. I suggest to him that there is a vast difference between the real necessities of old-age pensioners and other large groups in the country who desperately need a new suit, a new pair of boots or new furniture and those of persons requiring perfume or even a Rolls Royce. However, it is obvious that the hon. Member is not alone in his view that there is no difference between necessities and luxuries, and that is shown by the empty benches on the other side of the Committee. I am pleased to see that my hon. Friends are at least interested in the important matters that we are discussing and are present in large numbers.
1179 There are two matters to which I want specifically to refer. One is the tax on soft drinks, which includes blackcurrant juice.
§ Mr. Hilton
As the hon. Member says, blackcurrant juice is another name for Ribena. In my constituency agriculture is the most important industry, and for many years many large and small farmers have grown many acres of blackcurrants, and that crop represents the main income of the holding in many instances. The imposition of 15 per cent. Purchase Tax on soft drinks, which covers blackcurrant juice, has meant that the blackcurrant growing side of the horticultural industry has been very badly affected. As was mentioned by the hon. Member for Worcester (Mr. Walker), sales have gone down by 25 per cent. It is a serious matter for those who have been growing the important blackcurrant crop in recent years. Not only has the crop been a very useful source of revenue for farmers, but blackcurrant juice is a very valuable substance for children suffering from the usual ailments and for people with colds.
I hope that the Minister will take note of this plea in spite of the fact that he has the support of his hon. Friend the Member for Kidderminster on imposing the tax on blackcurrant juice, and I trust that he will reduce that tax on this and on all soft drinks.
§ Sir G. Nabarro
I am very much in sympathy with what the hon. Member has said. It was an accident that Ribena was taxed. Ribena is not a soft drink. It is a preparation principally for the use of infants and should not be regarded as a soft drink. For that reason the Purchase Tax on it should be removed.
§ Mr. Hilton
A moment ago the hon. Member for Kidderminster admitted that he, and he alone, was responsible for the tax on Ribena. Now he says it was an accident. I should like this cleared up one way or the other.
§ Mr. Hilton
I agree with the hon. Member when he says that the tax should be knocked off now. I am pleased that 1180 I now have his support. It is injurious to people in my constituency and in the County of Norfolk as a whole and in other areas where this crop is grown, and to the people who benefit by consuming it.
§ Mr. Hilton
I would remind the hon. Member that he was reluctant to give way to someone else. I heard him say that he refused to give way. However, unlike him, I will give way.
§ Sir G. Nabarro
I was merely reciprocating to the hon. Gentleman the Member for Cardiff, South-East (Mr. Callaghan). My constituency grows far more blackcurrants than does that of the hon. Member for Norfolk, South-West (Mr. Hilton). In the Dee Valley and the Vale of Evesham it is the centre of this branch of the horticulture industry. It is an accident that Ribena has been taxed at all. It is a mistake in classification. Ribena is not a soft drink but a preparation for children alone. The hon. Member does not drink it and nor do I. We drink ale. That is a different matter.
§ Mr. Hilton
I do not drink ale or Ribena. I drink orange squash, which also carries a 15 per cent. Purchase Tax. I hope that the hon. Member's constituents will remember at the General Election, which he says is coming in October, that it was he who imposed this iniquitous tax on blackcurrant juice. But I agree with him that it should never have been imposed and that it would be in the best interests of very many people in this country if it were removed.
My hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates) referred to the effect of Purchase Tax on bicycle manufacture. I want to refer to bicycles in another context. My constituency is completely rural. Some of the railway lines in Norfolk have already been taken from us. Dr. Beeching has certain proposals for the county, and if these are carried through, as we have every reason to believe that they will be quite soon, many more people in rural Norfolk will be deprived of public transport.
The main means of transport for the majority of people there is the bicycle. But the existing Purchase Tax on these 1181 machines means hardship for these people, the majority of whom are on the bottom rung of the wages ladder. Not long ago, I put a Question to the Chancellor about this, and I think he said that to remove the tax from bicycles altogether would lose him £1¼ million a year. This is really a very modest sum, and if it is correct, I am sure that the Committee will agree that this would neither make nor break the economy. It would hardly affect the Chancellor at all, but it would be a blessing to very many people. I hope that the right hon. Gentleman will look sympathetically at the problems of the many people in rural areas all over the country who have to rely on bicycles. If he cannot agree to removing the tax altogether, I hope that he will at least sympathetically consider its reduction.
§ Mrs. Harriet Slater (Stoke-on-Trent, North)
This debate has covered a number of subjects, ranging from chocolate biscuits—on which my hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates) put so strong a case—to bicycles, textiles, horticulture and general items under the Purchase Tax. I want to put the case from the point of view of the ordinary person affected by the large variety of items subject to Purchase Tax.
The hon. Member for Barry (Mr. Gower) said, in support of leaving things as they are, that we must weigh against Purchase Tax all the benefits which the Government have given to us in return. But I suggest that large numbers of people paying Purchase Tax on many necessities are not benefiting by one brass farthing. This can be seen when these benefits are weighed against the terrific increase in the cost of necessities.
Let us examine some of the items. Everyone has to wear clothes. This week the old-age pensioners will get an increase in benefit. That can be whittled away by having to buy a new coat or a new dress or new shoes. They may need new household commodities, such as pillow cases, blankets, sheets and curtains, in order to make their homes look presentable. They may want wallpaper to make their living rooms look a little better. But on all these things they must pay Purchase Tax.
Surely some of them are entitled to some new furniture occasionally. Their rocking chairs, mattresses and other 1182 articles of furniture all need replacing or repairing from time to time. But they will have to pay Purchase Tax. It is the same situation when we consider new floor coverings, new tiles and new cutlery. All these things affect ordinary people.
When the hon. Member for Kidderminster (Sir G. Nabarro) talks about Purchase Tax, he is very fond of referring to a 60-guinea suit. I am thinking of the person who can afford to pay at the most only 10 guineas for a suit. I think of the persons who can afford only the bare necessities of life, who must seek out the cheapest possible shops. It is they who are carrying the heaviest burden. Yet these are the very people to whom the Government, at the election, will say, "Look what a marvellous job we have done for you."
The Government say that they need the £271 millon involved in Purchase Tax. Admittedly, they would not want to lose that sum, but if I had to choose between various items, I would not cut Purchase Tax on expensive items but on those which matter most to ordinary people.
My hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) spoke of the effect of Purchase Tax on the motor car industry. I appreciate that. I have just bought a new car, so I myself have benefited from the cut in Purchase Tax on cars. But if I had to choose between paying more Purchase Tax on a new car and the Purchase Tax on necessities for old people, the man earning less than £10 a week, and the woman with a large family, I would willingly pay more Purchase Tax on the car.
Do not let the Government have their tongues in their cheek at the next election. Let them remember that they have not dealt justly with the ordinary consumer. They have maintained Purchase Tax an goods from which they could have removed it if they had had the will to do so. It is no good telling us that the standard of living has increased. We must judge them on the fact that if increases in wages or benefits are offset by increased taxation, the standard of living of these ordinary people does not go up one iota.
1183 I am also interested in pottery. The industry is not doing so well as it was a few years ago. Fewer people are employed in our area, because plants other than pottery factories have been forced to move to Northern Ireland and places like that. It means an awful lot whether the tax is kept on good china or good earthenware, and the home market might be considerably benefited by at least a reduction of Purchase Tax.
Another item is musical instruments. We have spoken about this time and time again. After all, we are entitled to a little culture in this country as well as having to work hard. To keep the tax on musical instruments is not good enough. The schools have never had it so good. They are doing a tremendous job in increasing the standard of culture in music and the appreciation of music. Yet when people want to buy a new violin, or a new recorder, or a new piano, they have to pay Purchase Tax. These are things from which the Minister might consider taking the tax.
The same applies to articles like trophies. The schools are doing a tremendous job in encouraging high standards both academically and physically. Yet when a school wants to buy a trophy—a cup or a bowl—or get some one generous enough to buy it, Purchase Tax has to be paid. I believe that shields are exempt, though I have never understood why there should be a distinction.
I ask the Minister to look at the question of Purchase Tax on clothing, furniture and essential commodities in the home, and to realise that if the Government mean what they say and are really concerned to give the shopper a fair deal, they should take Purchase Tax off these items which the ordinary person has to buy.
§ Mr. Brian O'Malley (Rotherham)
I support the new Clause because I believe that it would help that section of the community which most needs help. I refer to that section of the community which is not paying Income Tax at all. I particularly have regard to the desperate plight—it is a desperate plight—of the old-age pensioners. Their situation has been alleviated somewhat by the increases which, I think, come into effect this week, 1184 but nevertheless, their position is still extremely difficult.
We heard earlier this afternoon the hon. Member for Kidderminster (Sir G. Nabarro) saying, when talking about television sets, wireless sets, foodstuffs, shoes, clothing, carpets and so on, that one thing was not more important than another. I would tell him that my parents are old-age pensioners. I have practical experience and knowledge of this, and I wonder whether he has? Does he realise the difficulty of old-age pensioners when they want to buy a new carpet, or curtains or a new coat? I wonder whether he realises as fully as he should the difficulties of the poorer section of his own constituents, and particularly those of the family man with a very small income who finds the utmost difficulty in furnishing his house and in buying those things which are at the 10 per cent. rate. I think that the remarks we heard from the hon. Member for Kidderminster—I do not want to spend a great deal of time on them, but I feel bound to make some comments—were on the surface, facile, extremely superficial and inaccurate generalisations on sugar, television and all kinds of things.
In fact, the hon. Member for Kidderminster has the capacity, if it is something that is worth having, of making the economic problems of this country appear so simple that he can deal with them when practically no one else can. One sympathises and understands perhaps why the Government for lack of a Borgia has no alternative but to promote him to put him out of their way. I do not think that I need spend any more time on the facile generalisations and nonsense that we have heard from the hon. Member for Kidderminster.
§ Mr. O'Malley
I shall not give way for a moment, because I have not yet come to my important point. We are told that the Chancellor has decided, and I think rightly, although at a very late stage, that the economy needs stimulation. I would agree with him on that. He has looked at the overall economic situation and has come to a certain decision about how much he considers should be pumped into the economy to get what he describes as expansion without inflation. One feels, however, that he has neglected to consider sufficiently the large number 1185 of human problems which arise. I suggest that we have to consider these human problems when we are taking economic decisions. We have to look at the problems of the people who are very heavily affected by the 10 per cent., 15 per cent. and 25 per cent. Purchase Tax on all kinds of necessities.
I shall not say a great deal about protective clothing, because I understand that one of my hon. Friends intends to discuss it in more detail at a later stage. I realise that in the collieries and in the steel industries in and around my constituency the National Coal Board and the steel companies have done, and are doing, a great deal to try to solve the problem of accidents and to make their industries safer. However, we still have a situation, which is important particularly to many of the small firms, where the 10 per cent. Purchase Tax on protective clothing perhaps militates, even though marginally, against the standards of safety and the lowering of the accident rate which is desired by all hon. Members.
The main point that I wish to raise is on the question of musical instruments to which my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) referred. We all realise that music is of importance educationally, and is vital to the cultural life of the community. The case for the abolition of Purchase Tax on musical instruments, which, in my opinion, is overwhelming, has long been argued in this Chamber and elsewhere. I would not wish to bore the Committee by going into the history of it. The Purchase Tax on musical instruments is 25 per cent. on the wholesale price, and this means that the purchaser has to pay an added one-seventh on the retail price. However, we observe that pianos, organs—and presumably that includes electric organs, but if I am wrong I hope I shall be corrected—and musical stands are the exception to this 25 per cent. Purchase Tax.
I should like first to examine some of the anomalies which have arisen as a result of the present Purchase Tax rates on musical instruments. The parent who wishes to have his child trained as a pianist pays no Purchase Tax when he buys a piano. I agree that this is a good thing. On the other hand, the parent who wishes to have his child taught to play a violin, or a cello, or a trumpet, 1186 or a clarinet, has to pay 25 per cent. Purchase Tax.
Next let us look at this from the point of view of the professional musician, and by this I mean the musician who receives payment of £100 or more per year. He may be employed part-time or full-time in a dance hall. The trumpeter, the violinist, the saxophonist, the clarinetist, and the trombonist have to pay tax on their instruments, yet the pianist pays no tax on his piano. The individual musician has to pay 25 per cent. tax on his instrument, but the breweries, the large dance hall companies, and the owners of public houses do not have to pay tax on the electric organs they buy and which constitute a great threat to employment in the musical profession.
The second anomaly arises in connection with music stands. As a result of a ridiculous decision by the Board of Trade that music stands equal bandstands and that bandstands are another form of building, as a building is not subject to Purchase Tax, music stands are no subject to it either. One would have expected the Government to say something which made sense, and when I was a trade unionist in the Musicians' Union I had on a number of occasions to put forward this peculiar reason for there being no tax on music stands.
When, in 1940, because of the difficulties caused by the war the question of Purchase Tax was considered, the then Chancellor of the Exchequer proposed a Purchase Tax on books. There was a tremendous outcry, the argument being that books constituted part of the cultural pattern of the country and therefore should not be subjected to Purchase Tax or to tax of any kind. The Chancellor of the Exchequer yielded to that pressure. The result is that musical instruments are the only items concerned with culture which are subject to Purchase Tax. In fact, with the exception of Japan, and to a lesser extent the United States which imposes a small tax on musical instruments, we are the only country in the world which taxes musical instruments. And even in Japan educational authorities and youth associations can claim in rebate from the Government the full amount of tax paid on musical instruments.
next consider the position of the professional musician in relation to the 1187 imposition of this 25 per cent. Purchase Tax. When I talk about a professional musician, I mean the person who earns money working either part-time or full-time in the musical profession. The saxophone, the violin, and the various other musical instruments which are subject to this tax are the tools of a musician's trade. No other craftsmen or professional men have to pay Purchase Tax on the tools of their trade. The Purchase Tax on musical instruments is high because these tools of a man's trade are expensive. For example, the trumpet which the average musician might purchase in London today costs between £50 and £100. I am speaking of the average musician, buying the average instrument, and not the expensive instrument which some people like to use. If a saxophonist wished to buy a Selmer tenor saxophone, it would cost him £140. Of this figure, one-seventh is represented by Purchase Tax.
§ Mr. J. T. Price
I am following my hon. Friend's argument with interest and sympathy. I support the new Clause fox the general relief of tax on musical instruments, but does not my hon. Friend think that there is a case for doubling the Purchase Tax on saxophones?
§ Mr. O'Malley
A saxophone played well produces a very pleasant sound, and I am sorry that my hon. Friend has not learned to appreciate it.
Many people think that professional musicians are highly paid. Some are, but many of them are not, and having to buy an instrument costing £100 or more imposes a severe burden on them. I have employed many musicians during the last eight to ten years. They perform a useful public service. They work for perhaps three or four nights a week throughout the year, and are extremely busy throughout the winter season. They do not turn out until one or two o'clock in the morning for pleasure, although I agree that they get satisfaction from their work. If one does not get satisfaction from a job, one should not do it. Nevertheless, these musicians who do a job during the day, as I was doing before I came to this House—
§ Mr. Wilfred Proudfoot (Cleveland)
The hon. Gentleman said that he had 1188 an interest in this. Can he tell me whether a band gets an investment allowance on new instruments? It also occurs to me to ask what is the expected life of a saxophone?
§ Mr. O'Malley
I shall deal with that in a moment.
The musicians who work out several nights a week get some satisfaction from their work, but it is hard work to turn out until one and two o'clock in the morning. Their total income is about £300 to £350, a year and having to pay 25 per cent. Purchase Tax on their instruments is a heavy burden.
Turning to the question asked by the hon. Member for Cleveland (Mr. Proud-foot) about Income Tax—
§ Mr. O'Malley
I think I am right in saying that the hon. Member for Cleveland asked whether, when a musician buys a new instrument to replace one which has worn out, he gets an allowance for it.
§ Mr. Proudfoot
If an owner provided his band with new instruments, would he receive an investment allowance for them?
§ Mr. O'Malley
No. Band leaders do not buy musical instruments for their players. The members buy their own instruments and claim Income Tax refund for the replacement of their instruments. The point is that this does not help the situation. If one is to get even a 7s. 9d. in the £ rebate on £30 or £40 eight, ten or twelve months afterwards, it does not help with the purchase of these expensive instruments.
I think it relevant to a discussion on Purchase Tax on musical instruments to refer to the importance of music generally in society. It has a great deal to do with the cultural pattern of the country. Many people derive a great deal of enjoyment from music. There is a problem which will become increasingly difficult to solve in the future arising from the increased amount of leisure time resulting from automation and the use of modern industrial processes. As has been apparent in the first 60 years of this century, because of the kind of society in which we live, we are becoming increasingly a nation of passive listeners 1189 rather than active performers. When television programmes are abused, as sometimes they are, it is true that television is becoming the comic strip substitute for reading and a soporific alternative to performance. If people had the opportunity to acquire a musical training they would be more able to enjoy the kind of music to which they listen.
Some people maintain that the standard of popular music is lower than is desirable. Perhaps it is lower than almost anyone would desire. One reason is that far too few children are being trained to play musical instruments because education authorities cannot afford to buy the instruments. I was recently at a school where that kind of situation prevails and even there the situation is not so bad as in other places. In the United States there are far more school orchestras than exist in this country. According to statistics—I find this hard to believe, perhaps because of the kind of society we have in this country—one in six of the pupils in the United States plays a musical instrument.
This morning I was speaking on the telephone with a representative of Boosey & Hawkes, and he told me that 75 per cent. of the clarinets which his firm sells, the cheaper clarinets, are bought by young people between the ages of 10 and 15. I suggest that the 25 per cent. Purchase Tax on musical instruments is a drain on the future progress of culture in this country. We find a situation in which local authorities are handicapped by the imposition of Purchase Tax on musical instruments, and not sufficient numbers of young people are coming into the musical profession.
I come from a colliery area and it is a fact that the brass bands, a feature of these areas for a long time, are now declining. Mining communities derived a great deal of pleasure from the performances given by such bands, but now the bands are going out of existence because of the Purchase Tax imposed on the instruments. By means of the Arts Council the Government hand out money for the promotion of interest in and the development of knowledge and understanding of the fine arts. But, with the other hand, the Government are taking back the money in the form of Purchase Tax.
1190 I support the new Clauses. I regard a reduction from 25 per cent. to 20 per cent. in Purchase Tax as at least a step in the right direction and something which may enable us to keep a flourishing music industry in this country. If we could get rid of Purchase Tax, or reduce it, that would alleviate the difficulties facing the music profession in 1963.
§ Mr. J. T. Price
I hope that I may be expressing the feelings of all hon. Members if I say how much we enjoyed the speech of the hon. Member for Rotherham (Mr. O'Malley). He is a recent recruit to our counsels, although this was not his maiden speech, and we appreciated the lucid and well-informed manner in which he spoke.
I do not wish to refer to the matters which are usually dealt with in Purchase Tax debates, but rather to deal generally with the implications of what it is sought to achieve by introducing these Amendments. It would be a strange sort of discussion on the Finance Bill if we did not at some time have a debate on Purchase Tax. On such occasions as this hon. Members, quite rightly, take the opportunity to refer to matters which affect the employment of their constituents, and we appreciate the reason for the special emphasis placed by my hon. Friends the Members for Birmingham, Northfield (Mr. Chapman) and Birmingham, Lady-wood (Mr. V. Yates) on the motor car industry and the chocolate making industry.
If I wished to raise a constituency matter, I think I should be entitled to refer to the textile industry, because I represent a part of Lancashire where that industry has been largely destroyed by the foolish and stupid policy of the Government. But this is hardly the occasion on which to discuss that in detail. Unfortunately, some of the textile mills where formerly constituents of mine earned their livelihood now stand stark and empty. There is no one to make use of them for other purposes, and on a siutable occasion I shall deal at greater length with that situation.
We are glad to see the Chief Secretary of the Treasury again in the Committee. I wish to put it to the right hon. Gentleman that there was a time when the Government defended the existence of present Purchase Tax rates and even an 1191 increase in them. The right hon. Gentleman will recall that his right hon. Friend the present Minister of Education, when he was at the Treasury, maintained that the purpose of the Government in retaining Purchase Tax at its present high rates was not in order to produce revenue for the Treasury, but to mop up surplus purchasing power. This became known as "Boyle's Law". When I went to school, Boyle's Law was something entirely different and related to physics, but in this Committee "Boyle's Law" relates especially to the former Financial Secretary to the Treasury, who is now the Minister of Education. The right hon. Gentleman then argued most tenaciously and with great skill and erudition, and with all the other qualities for which we give him credit, that Purchase Tax was imposed in order to mop up the surplus purchasing power.
§ Mr. Chapman
Was not the "Boyle's Law" to which my hon. Friend refers that by increasing prices you brought prices down? That was what it became.
§ 7.0 p.m.
§ Mr. Price
I do not want to be deflected into that branch of metaphysics. I want to keep on the straight and narrow path. I think that the general purpose was as I have stated it.
This Government have had periods of blowing hot and blowing cold, of turning the tap on and turning it off, of stop start and go. All these things have been heavily criticised even by such reputable newspapers as The Times. Now we are told that in 1963 as we get nearer and nearer to a General Election, inflation has been brought under control by the wise policies of the last Chancellor of the Exchequer, who got the sack for those policies. Today we must reverse the engines and put more purchasing power into the economy. We are to have a period of expansion which we on these benches have been arguing for for many years. The Government have changed their pictures like a local cinema changes its programme twice a week.
This does not square with opposition to the new Clause. I am concerned, as my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) is concerned, with the domestic economy of ordinary people. I am not so much concerned with the academic high-falutin' arguments 1192 of politicians. I make no apology for batting on my own wicket. In parts of my constituency 6 per cent. of the electorate are unemployed as a result of the collapse of the cotton industry, the removal of industry from the district, the closure of coal mines and other industrial decay which has not been dealt with. If first-aid is to be brought to those who are suffering unemployment because of the wrong policies of this Government, I agree that long-term policies are needed to redistribute industry. We have argued tenaciously for that, but in the short-term what hits the ordinary person, particularly the unemployed, the old and those on low incomes, is the ever-rising cost of living.
I am very much honoured by the fact that the Minister of Education has now come to listen to our debate. We are always pleased to see him. As I look round the Chamber tonight and compare the present situation with that in the House last night, I think it is a commentary on the way in which our affairs are conducted that when we are discussing bread and butter problems, the standard of living of the people reflected in cost of living and difficulties of meeting weekly housekeeping bills, practically all the Government benches are empty. Yet last night when we were discussing the fate of a remote African chief the House was packed. I do not complain that the House was so full then because we were discussing questions of great importance and human decency. Nevertheless the subject tonight is something which affects ordinary people's housekeeping accounts.
Hon. Members opposite seem to regard it as a matter of little account which comes up year after year. No doubt when the Division bells ring Members on the Government side will come in and vote whichever way the Government wish. It is all right for the hon. Member for Kidderminster (Sir G. Nabarro), who has recently left the Chamber—
§ Sir K. Pickthorn
The hon. Member for Westhoughton (Mr. J. T. Price) is anxious for us to get on with the bread and butter matters, but he still has not got on the road there. The most definite thing he has said so far is that there are not so many on the back benches as there should be. I called attention to the fact that he has just lost one more.
§ Mr. Price
I am very much obliged to the hon. Member. It all adds to the joy of battle and I very much appreciate it.
On the merits of my statement that this is a matter of vital importance to ordinary people, the hon. Member for Kidderminster, who has recently left the Chamber, has argued blandly, naively and ignorantly that there is no distinction in the minds of most people because we are in the Welfare State and many are doing well from expense accounts and so on. He has suggested that they cannot tell the difference between ordinary necessities of life and luxuries. He should tell that to a young couple who want to get married and are faced with the problem of buying a house on a mortgage at 6 per cent. interest plus, the hire-purchase charges for furnishing the Purchase Tax at 10 per cent. We have not always had Purchase Tax on furniture at 10 per cent.
§ Mr. Price
That was when our Government were restoring the foundations of the country after the most devastating war in history. With great respect to the hon. Member for Worcester (Mr. Walker), who is usually very fair-minded, he does not know much about it except what he has read in books, but some of us here now lived through those days and know what the situation was.
This 10 per cent. is an important addition to the cost of living not only on necessities of life but on the capital goods which many people need to start a home. We are suggesting by this Clause that it should be removed from those goods. No one opposite would deny that for many years, with all the difficulties economic and otherwise, when clothing and textiles had to be strictly controlled by quality and price controls we did not have Purchase Tax at 10 per cent. on clothing. That has been introduced recently. I claim that the cost of clothing, particularly men's and children's clothing, is disgracefully high at present.
1194 Since many people cannot provide out of current income the payment necessary for such items as furniture and clothing, they are compelled to go into heavy debt by hire-purchase transactions to which 10 per cent. is added, making anything up to another 10 per cent. on the transaction. It is quite unreal to say in debates of this kind that if this new Clause were agreed to it would cost £170 million. I am prepared to accept that figure, but only about a fortnight ago I had some exchanges with the Chancellor of the Exchequer about business expenses allowed under Schedule E under existing legislation. There was a gasp of astonishment when the Chancellor revieled, what was not generally known, that last year they amounted to £263 million. Those business expenses were often based on bogus claims. It is wrong for any hon. Member to suggest that £170 million for this proposal would break the camel's back. If it is socially desirable to give this concession, the right hon. Gentleman and his right hon. Friends ought seriously to consider it.
From time to time we have heard statements from the Government Front Bench, from those in charge of Government policy, that they cannot deal adequately with the economic control of the country's affairs unless they have an incomes policy. They have set up machinery to that end. They have set up the National Economic Development Council, which in many ways is an excellent body, and they have set up the National Incomes Commission, which we on this side of the Committee have not seen fit to support, for various reasons with which hon. Members are familiar.
Where is the sense of trying to enforce a policy which will limit the rise in wages to 3½ per cent. when, as a result of increased interest charges, Purchase Tax and higher rent, there is a much bigger rise in the cost of living than 3½ per cent.? I believe that there is a difference of at least 3 per cent. between the amount to which the Government seek to limit wages, 3½ per cent., and the 6 or 7 per cent. rise in the cost of articles in common daily use. People find prices increasing every time they go into a shop.
Ingenious arguments are produced with all the polemics which all hon. Members can use if they are so minded, but the fact remains that if the cost of living 1195 rises more than do wages, there is a reduction in the standard of living. I was surprised earlier to hear hon. Members opposite intervene, perhaps in complete ignorance of the fact that we were discussing not the cast of living but the standard of living. The standard of living is being eroded for millions of people in this country, although many fortunate people are doing very well out of the system. Those who are taking this stand—and some of them are represented on the Conservative benches—are concerned not so much with wages and salaries as with having an unlimited expense account to which they can charge everything.
As long as the Government claim that we are in a period of expansion they should bear in mind that the easiest way to provide more purchasing power is to release some of it by relief of Purchase Tax. That is what we are asking. I hope that the Minister will at least give us the courtesy of a considered reply instead of the platitudes which we have had in previous years. In the past we have had all sorts of platitudes, and then they ring the bell and get all their available supporters in the Lobby to vote us down.
§ Mr. Denys Bullard (King's Lynn)
I hope that the hon. Member for West-houghton (Mr. J. T. Price) will not be offended by the fact that I have just come into the Chamber, but I have been on the Committee of the Water Resources Bill otherwise I would have not troubled this Committee at this late hour. I have a new Clause on the Order Paper dealing with the Purchase Tax on blackcurrant juice. I understand that it is not being called, and I thought it proper to take this opportunity to ask my right hon. Friend to give the matter very earnest consideration, for reasons which I will very shortly advance.
The blackcurrant industry is very important for the horticulturists in this country, being second in size to the strawberry industry. After a very depressed period, during which the acreage declined rapidly in the late 1950s, it has been staging a considerable recovery, and the figure has risen to 16,000 acres, compared with the original 16,800 acres in 1950. It has climbed back to a relatively large scale of fruit growing.
1196 7.15 p.m.
Now, as a result of the Purchase Tax imposed last year, there is a definite turn for the worse, so much so that the sale of blackcurrant concentrated syrups since the imposition of the 15 per cent. Purchase Tax has declined by 25 per cent. below the figure of 1961. This has led to a drop in the average price of blackcurrants from 168s. a cwt. on the contract to 161s. a cwt. This is at a time when, in general, the price of soft fruit is rising.
It is desirable that the industry should not suffer from the trade cycle which it has experienced in the past. Bushes take a long time to grow. When there is a depressed feeling in the industry, it leads to the grubbing up of bushes until plantations decrease in size to a point at which supplies become inadequate for the market, and a return then sets in and we have the type of cycle which affects other sides of agriculture and which is liable to occur with blackcurrants.
I plead with my right hon. Friend to see whether anything can be done about this, because this appears to be the kind of cycle into which we are liable to move with blackcurrant growing. The blackcurrant syrup industry is an important outlet for the fresh fruit trade and the Purchase Tax, which I should like to see removed altogether, is a very serious matter for blackcurrant growers. In Norfolk we grow a great acreage of the crop, and my growers have asked me to plead with my right hon. Friend to do what he can to exempt this very nutritious juice from the incidence of Purchase Tax and so prevent the recurrence of the troubles into which the industry is liable to sink if this Purchase Tax continues.
§ Mr. Norman Dodds (Erith and Crayford)
I hope that I shall persuade the Minister to be in a sympathetic mood by making my contribution in less than five minutes, by being to the point and by putting the case without too much detail. I support the new Clauses and in doing so I wish to make a particular plea for the footwear industry.
Various aspects of the footwear industry have been mentioned by my hon. Friends, but I want to draw to the Minister's attention—if he does not already know, and I think he does—that the footwear industry is passing through a 1197 very bad time. Despite what the hon. Member for Barry (Mr. Gower) said, there is no sign that the industry is moving out of the doldrums. Many people, the private trade as well as the co-operative trade, feel that the introduction of the Purchase Tax has had a serious effect on the industry and that if it were removed the industry would have a much better future than appears likely.
I said that private trade as well as co-operative trade was having a very bad time because there came into the footwear industry one of Britain's most successful business men, Mr. Clore. He has recently had to admit that the industry in which he is so prominent has had a very bad time, and there appears to be no sign that the boot and shoe trade will get out of this situation.
May I also put the human problem? Boot-and-shoe factories are to be found in many parts of Britain, and the amount of redundancy and short-time working in them is particularly severe for men and women who have given a life-time to the industry. It is a sad state of affairs when they have to go out of it because of redundancy and to try to find work in other areas.
The Treasury must have information about the severe redundancy and unemployment in the footwear industry. If there were any sign that there was likely to be an improvement, I should not be making a special plea for the industry. There are plans in hand to close a number of footwear factories. I ask the Minister to be particularly sympathetic. I hope that he will have some message tonight that will indicate to those working in the industry that there is some recognition in the Treasury and on the Government Front Bench of the human problems involved, which many believe have been made much worse because of the Purchase Tax.
It could be argued that we cannot continue to have an industry which obviously needs some retraction—in other words, that people are not walking as much as they used to and therefore not so many boots and shoes are required. If this is so, it is all the more reason why Purchase Tax should be removed. It is not a reason why it should be continued.
One or two of my hon. Friends have mentioned old-age pensioners, who above 1198 all need good footwear. They now find it very difficult—and the way things are going they will find it even more difficult—to maintain their footwear in a state which will prevent them having wet feet. Mention has not been made of the fact that the average child is now bigger, and that means that he has bigger feet. Many schoolchildren aged about 14 have feet as big as adult feet. Millions of people are not paying Income Tax and for many families it is difficult, and in some cases impossible, to acquire proper shoes.
I ask the Minister to bear in mind the fact that good footwear is essential for young people. Many people are now homebound largely because in the past they did not have good footwear. Bad footwear can cripple people. It is vital that good footwear should be available to young people as well as to the elderly.
I therefore ask the Minister to give some indication that the problem is understood by the Treasury. We hope that the Treasury is at least sympathetic. Better still, if there is to be some easement of the problems of the footwear industry, which the Treasury could easily bring about, it should abolish altogether the Purchase Tax—not on luxuries, but on essentials used by everyone. I hope that the Government will be sympathetic if for no other reason than that there is a likelihood of a General Election in the not-too-distant future and it would be helpful, for whatever purpose, if Purchase Tax were removed.
§ Mr. Cyril Bence (Dunbartonshire, East)
I wish to be brief. I make no apology for raising three specific cases of Purchase Tax affecting small industries in my constituency. The first is the Singer sewing machine industry. The sewing machine is a piece of essential capital equipment for the young housewife and, added to the other problems of the young couple about to marry—buying a house, getting a home together—the tax on a sewing machine is unjustified in a modern society.
Secondly, the Purchase Tax on soft drinks is unjustifiable, even on blackcurrant juice and orange juice. It is unjustifiable and stupid to put Purchase Tax on a form of refreshment which should be encouraged in the motoring age.
1199 I come to the case with which I am principally concerned. I have had sent to me from the Gymnastic Equipment Manufacturers Association its correspondence with the Treasury over the last ten years. To escape the wrath of right hon. and hon. Members, I have no intention of reading this correspondence between the Association and the Treasury which has lasted ten years. Right hon. and hon. Members will be delighted to hear that the pattern has been the same for ten years. There has been very little change. In every letter successive Chancellors of the Exchequer have expressed great sympathy for the manufacturers of gymnasium equipment but have unfortunately not seen their way clear to reduce or abolish the Purchase Tax. This is quite in keeping with tradition. One cannot expect tradition to change in ten years.
The Purchase Tax of 25 per cent. on gymnasium equipment comes under Group 20—toys—and there are extraordinary anomalies. The manufacturers tell me in this correspondence that 95 per cent. of the equipment they manufacture is sold to agencies of the State—education, the Forces and institutes of further education. Parallel bars, vaulting horses, ets., are all paid for by grant from the Treasury. The Purchase Tax of 25 per cent. goes back to the Treasury. All over the country clerks are working out the Purchase Tax at the wholesale stage in order to tell the Treasury the amount of Purchase Tax it must collect on the product. This is nonsense. If 95 per cent. of the product is bought by the State, the State obviously gains no revenue from the Purchase Tax. It pays it.
Under Group 20, swings, slides and roundabouts are excluded if they are not mechanically operated. Parallel bars, vaulting horses, vaulting boxes and vaulting saddles used in gymnasiums are taxed at 25 per cent. Swings and roundabouts hand manipulated are not taxed. This is absurd. These are exemptions from the tax. I could hardly believe this when it was pointed out to me. This shows how a Member of Parliament should follow in almost his every waking hour what is going on in Departments of State. The anomalies and stupidities perpetrated by bureaucracy would shock the people.
1200 Hon. Members will be interested to learn that—
Boats and other vessels large enough to carry human beings, and accessories for such boats and vesselsare exempt. A small bracket to fasten the side or the saddle on to a vaulting box is chargeable at 25 per cent. A factory makes brackets for catamarans and small boats. Brackets are made in the same process. If the brackets go on boats, they are exempt. Brackets for fastening sides and tops to vaulting boxes are taxed at 25 per cent.
This is nonsense. When this was pointed out to me in the Gymnasium Equipment Engineering Company in my constituency, I wondered whether I was in a madhouse. It reminded me of Bernard Shaw's essay, "The Political Madhouse in America and Nearer Home", written before the war.
Gliders large enough to carry human beings are exempt, while high parallel bars and adjustable parallel bars used for exercising one's muscles and ingenuity are taxed at the 25 per cent. rate. If one can afford to buy a glider and be towed by an aeroplane—and get the exercise of manipulating the craft in the air—one does not pay Purchase Tax. If one buys a set of parallel bars to exercise one's muscles and ingenuity one pays at the 25 per cent. rate.
For the Government to permit such an anomaly to continue is making the whole taxation system look ridiculous in the eyes of the community. Having listened for most of the afternoon to the debate, I have come to the conclusion that the sooner Purchase Tax is abolished the better. It might be worth while our going over to a turnover or other form of taxation, for the present system is absurd.
Each year when we discuss the Finance Bill we discover further anomalies in our Purchase Tax arrangements. As each year passes the system becomes more and more crazy. I hope that the proposed new Clauses will be accepted so that we can progressively get rid of Purchase Tax altogether. Every day millions of people are buying goods which are subject to Purchase Tax—soft drinks, boots and shoes and the rest—and the present system does not take into account 1201 the incomes of those least able to afford to pay the tax.
§ Mr. John Wells (Maidstone)
I support the plea of my hon. Friend the Member for King's Lynn (Mr. Bullard) regarding blackcurrant juice. I had a most unsatisfactory Answer from the Economic Secretary last Thursday on this very point, when my hon. Friend used the phrase:It is good to see that sales are recovering somewhat…".—[OFFICIAL REPORT, 23rd May, 1963; Vol. 678, c. 622.]The sales of blackcurrant and other juices may be recovering somewhat, but that is only due to the massive advertising campaign which has been undertaken by the natural fruit juice companies, but the harm done to this industry and the fruit growing community is indeed great.
My hon. Friend the Member for King's Lynn put forward some cogent arguments, and while I have no doubt that we shall not receive a long reply on this point from the Chief Secretary tonight, I hope that my right hon. Friend will remember that the signatories to the proposed new Clause, entitled "Purchase Tax: exemption for blackcurrant syrup", represent almost every horticultural constituency in the country. This is a nation-wide problem, and I am glad that the hon. Member for Dunbartonshire, East (Mr. Bence) has echoed this both in his remarks about the fruit juice industry today and at Question Time last week. I hope that the Government will reconsider this matter in the near future.
§ Mr. Oram
One after another of my hon. Friends have built up a devastating case in favour of the new Clauses. If it were not for the fact that we are used to exhibitions of stone-walling from the Dispatch Box, I would hope that when the Chief Secretary replies he would be able to make the shortest reply of all time and simply say "I agree" or "I submit", whichever he chooses.
My hon. Friends and I welcomed certain features in the Budget as soon as it was introduced. One glaring omission from it was the lack of any concessions in the present Purchase Tax arrangements. It seems, therefore, that the virtues of the previous year's Budget are only virtues in that they reverse the trend of the previous year's Budget. The new Clauses we are discussing give the Government an opportunity to reverse two of the major
1202 errors committed by the Chancellor's predecessor. I refer, first, to the doubling of the Purchase Tax on furniture and clothing, and, secondly, to the introduction of Purchase Tax at the 15 per cent. rate on a wide range of confectionery and soft drinks.
My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) rightly based his case largely on the effects of the increased rate on the cost of living. My hon. Friend gave instances from the cost-of-living index to show how the prices of clothing, furniture and many other items have taken an upward leap as a direct result of the Government's Purchase Tax moves last year. While my hon. Friend gave specific instances, I wish to concentrate on the breadth of the application of Purchase Tax on clothing and furniture.
Considering the weights in the cost-of-living index which apply to clothing and furniture, one finds that more than 100 points are applicable to these items from the range of 1,000 points in the weighting system. So the doubling of the tax was applied on one tenth of consumer expenditure. It was a flagrant act, deliberately designed to increase the cost of living at a time when everyone—Government, manufacturers, distributors, and so on—should have been concerned to do everything possible to reduce it.
Reference has been made to the possible intention of the Government regarding an alternative or alteration to the Purchase Tax structure. We are entitled to know more than we have been told about the Government's strategic intentions in this direction. I say "strategic" intentions because we have discussed the "tactical" side of this matter. Are the comments of the Chancellor's predecessor about the intention to take further steps to reform the whole structure of Purchase Tax still applicable? The hon. Member for Kidderminster (Sir G. Nabarro), in his usual self-confident way, claimed credit for having set the Government on what he regards as the right road in this matter. I agree with him that last year there was more than one hint to the effect that the Government intended to introduce one or other of the Continental systems, no doubt with a view to our entering the Common Market. That situation has changed. Have the Government changed 1203 their attitude in this matter? Do they now intend to bring about what seemed to be their intention last year; that is, one rate of indirect taxation, or are we to continue with the system we have and its accompanying series of Purchase Tax rates?
I am strongly opposed to what the hon. Member for Kidderminster called the important principle of one rate of Purchase Tax. The hon. Member said that he could not distinguish between luxuries and necessities and that, therefore, all consumer expenditure should be subjected to the one rate. Last year, like many of my hon. Friends, I was most uneasy about the extension of Purchase Tax to food and drink, commodities that had up to then been recognised by both sides as being inappropriate for indirect taxation. That was a step in the wrong direction and indicated the Government's intentions to spread the Purchase Tax net much more widely than hitherto. We ought to be told whether the Government intend to go further in that direction or to accept the policies suggested in the new Clauses.
The idea of one rate Purchase Tax, of not attempting to differentiate between necessary and less necessary goods, is all very well if, at the same time, we are moving to a situation in which incomes are more nearly equal. If there is equality of incomes we can have a one-rate Purchase Tax, but if, as is the case, the gap between rich and poor is widened, there is every reason to ensure that the poorer families do not pay increased amounts of Purchase Tax.
Constituency points have been made on all sides in this debate. Hon. Members from the textile areas, such as my hon. Friends the Members for Burnley (Mr. D. Jones) and Westhoughton (Mr. J. T. Price); those concerned with the manufacture of biscuits, as was my hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates), others concerned with the difficulties facing the footwear trade, and with unemployment in the furniture trade, have made their cases, and I want to speak of one special case that has been already mentioned.
The soft drinks industry illustrates the unfortunate effect that last year's taxation 1204 has had on the development of an industry. Soft drink production has gone down, as it has in other countries where this commodity has been taxed. I believe that production went down by nearly 30 per cent. in the third quarter of last year, and by about 15 per cent. in the fourth quarter. I hope that the Chief Secretary will not blame the weather for that because, if he casts his mind back, he will know that last year was as bad as the year before it—and this year looks like being the same. The right hon. Gentleman may not have the figure, but I should like to know whether the expectations of revenue from this tax and similar taxes have been fulfilled, or whether the slump in production has falsified the Chancellor's hopes.
By accepting these new Clauses the right hon. Gentleman the Chief Secretary has the opportunity to do three important things. First, he can make a very considerable contribution to reducing the cost of living—and, by reducing the tax on clothing and furniture in particular, he can give aid to many people who are in great need of it. Secondly, he can stimulate the economy in areas of special unemployment-the furniture industry and others have been mentioned—and the Government should be very much concerned with that aspect. Thirdly, he can make a considerable contribution to greater social justice in the tax structure. For those three reasons, I hope that the right hon. Gentleman will give a reasonable and very favourable reply.
§ 7.45 p.m.
§ Mr. Boyd-Carpenter
When I last took part in a Purchase Tax debate in relation to the Finance Bill, as Financial Secretary, we had the procedure, which some hon. Members will recall only too well, of what was colloquially called the "Dutch auction." That was an experience that those of us who have been through it would never wish to repeat. I must say that this debate today indicates how very much better is the Committee's present method of dealing with this very complicated subject.
We are debating new Clauses relating to the main rates of Purchase Tax, and the individual points affecting different commodities come into our discussion, 1205 not as being themselves the subject matter of Amendment but as being, I understand, Sir Robert, in a Ruling given by one of your predecessors, illustrative of the arguments in favour of the new Clauses. That has the advantage that one can listen, as I have listened to this debate, and my right hon. Friend and I and our associates can subsequently read in HANSARD what hon. Members have said, and give it, as we certainly shall, the fullest consideration, without prejudice to handling the debate itself as being on the main rates.
I can probably best serve the Committee, without unduly prolonging our proceedings, and we have a good deal of further business, by first replying-and I hope that the Committee will excuse brevity; it generally does—to some, but not all of the individual points raised, but subject to the general assurance I have already given that what has been said will be very carefully considered by my right hon. Friend during the course of the year.
The right hon. Member for Orkney and Shetland (Mr. Grimond) asked—and here I must tread warily, because I might lack his adroitness in treading the outer perimeter of the rules of order-about the added—value tax, and the Richardson inquiry. I cannot tell the right hon. Gentleman when that inquiry is likely to be completed. My right hon. Friend the Chancellor said in his Budget speech that it would be carried out urgently. As I am sure the right hon. Gentleman knows, this is an immensely complex subject, and I cannot yet foresee when we shall receive the report. I will come at another point to the right hon. Gentleman's question about the way in which my right hon. Friend's general measures are working out.
The hon. Member for Erith and Crayford (Mr. Dodds) most persuasively said that he thought that his remarks would gain force by their brevity. I noted what he said about footwear, and particularly about footwear suitable for young children. He will be aware that there is already an exemption in respect of footwear suitable for young children.
My hon. Friends the Members for Worcester (Mr. Walker) and King's Lynn (Mr. Bullard), and one or two other hon. Members, touched on the application of the tax to blackcurrant 1206 juice, or cordials, beverages, etc., made from it. We shall certainly watch the development of this industry, and hon. Members are quite right when they say that for one reason or another there has been some falling off in demand for the juice.
I cannot say very much more, for another reason. Two of the manufacturers have challenged the Purchase Tax classification and have claimed that this should not be treated as a beverage but as having medicinal properties. This is a highly complicated issue which they are discussing at the moment with the Customs. I should ill serve the Committee if I should seek to take it into the quite hideous complexities of that subject, but I will certainly note the general tone of the speeches.
§ Mr. Hilton
Will the right hon. Gentleman also bear in mind the valuable point made by the hon. Member for Kidderminster (Sir G. Nabarro) that this tax was put on blackcurrant juice by mistake or by accident?
§ Mr. Boyd-Carpenter
I do not think that I need assure the hon. Member that I always pay special attention to everything that my hon. Friend the Member for Kidderminster (Sir G. Nabarro) says.
§ Mr. Boyd-Carpenter
I thought that I dealt with that point by expressly saying that the exemption related to young children. It is fair to say that in his speech the hon. Member, although no doubt he knew it, did not indicate that this exemption existed.
The hon. Member for Birmingham, Ladywood (Mr. V. Yates) raised the next question about chocolate biscuits about which, if I may say so, he appeared to be extremely excited. This is a quite complicated problem which my hon. Friend the Economic Secretary has already discussed with representatives of the trade. The problem, briefly, is that there is a kind of chocolate biscuit sold in sweet shops which is very close to chocolate bars, with a different filling. There is 1207 also a type of chocolate biscuit which one buys at grocery shops and which to all intents and purposes is a biscuit. The difficulty, as so often with this tax, is to get the definition right. If we can find a definition with which the trade agrees and which we think workable, I think that we shall be able to make some progress, but I do not dispute that the hon. Member for Ladywood has made a point.
Then we had what one of his hon. Friends described as the musical interlude by the hon. Member for Rotherham (Mr. O'Malley) who made, as I agree with the hon. Member for Westhoughton (Mr. J. T. Price), a most agreeable speech and who recalled to us affectionate memories of his predecessor as Member for Rotherham for many years. The hon. Member was not quite right in his reference to the practice of other countries. I understand that musical instruments are charged under a general turnover tax in Germany and Italy and under the T.V.A. system in France. The hon. Member also referred by way of contrast to the exemption given to pianos. This was given some years ago because of the then desperate condition of the manufacturing industry.
The hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater) referred to the reduction some months ago of the tax on motor cars, and I was very glad to hear that she had benefited from it. The hon. Lady said that she would have far preferred the changes to have been made in respect of other articles chargeable with Purchase Tax which she felt were borne by old people, but it is pertinent to remember in this connection that the tax on motor cars, before my right hon. Friend reduced it, was 45 per cent. as opposed to 10 per cent. on the articles with which the hon. Lady was concerned. It should be remembered also that in connection with the tax on motor cars there is the question of employment in a very large and important industry. The hon. Member for Birmingham, Northfield (Mr. Chapman) represents a great many workers in that industry. I am sure that it was extremely important in the interest of both employment and the economy to give that relief.
I come now to one or two of the general problems, or the major issues. 1208 My hon. Friend the Member for Kidderminster made a valid point when he drew attention to the fact that the hon. Member for Cardiff, South-East (Mr. Callaghan), who moved the new Clause, at no stage in the course of his agreeable speech referred to the cost. I thought that the rebuke which my hon. Friend, in his inimitable manner, applied to the hon. Member was fair, because when we are dealing with new Clauses, which are not trifling but substantial in their financial effect, the Committee is entitled to have from a Shadow Chancellor of the Exchequer some indication of the cost of the remission.
My hon. Friend the Member for Kidderminster, in his calculation of the cost, got the figures very nearly right but I had better give the cost to the Committee now. The new Clause giving exemption to goods hitherto chargeable at 10 per cent. would cost £170 million. The new Clause to reduce Purchase Tax from 25 per cent. to 20 per cent. would cost £60 million, and the new Clause to reduce the 15 per cent. rate to 5 per cent. would cost £36 million, making a total cost of £266 million. This is a major factor, and whatever arguments may be adduced, however entertainingly, about the anomalies and irrelevancies of the tax, the Committee cannot responsibly adopt proposals for major changes of this sort and, indeed, the abolition of the 10 per cent. tax, without facing the fact that this would make a major change in the whole pattern of the Budget.
The hon. Member for Cardiff, South-East may say that that is right, because he thinks that my right hon. Friend ought to have gone further in releases of purchasing power. I come here to what the right hon. Member for Orkney and Shetland said about this. We argue that my right hon. Friends judgment about the amount of additional purchasing power required is proving to have been fully justified. The economy, in our view, is developing well. It is noteworthy in this connection, first, that the big infusion of purchasing power from the bulk of the increase in National Insurance benefits and retirement and widow's pension begins to operate only this week and that the large infusion in respect of Income Tax concessions does not begin to operate until the beginning of July. Given these various factors, we are fully satisfied with the 1209 way the economy is responding to my right hon. Friend's proposals.
§ Mr. Douglas Jay (Battersea, North)
Is the right hon. Gentleman aware that there is also a First Secretary in this Government, and that the First Secretary has recently expressed the opinion that further expansionist measures would probably be necessary? How are we to know which of these two Ministers is right?
§ Mr. Boyd-Carpenter
I do not know whether the right hon. Gentleman was in the House when the First Secretary answered a Question on this very point last Thursday and he pointed out that he had said nothing of the sort that the right hon. Gentleman alleges. If the right hon. Gentleman had thought that my right hon. Friend had said it, he could have been present and could have asked a supplementary question, but I do not think that he did.
This proposal, involving a forgoing of revenue of this sort, would have doubled the release of purchasing power proposed in the Budget. Therefore, in putting this forward, the hon. Member for Cardiff, South-East must either say that he would be virtually doubling the release of purchasing power or that these proposals for reduction in Purchase Tax ought to be substituted for the other main steps taken in reducing Income Tax. Which is the view of the Opposition?
§ 8.0 p.m.
§ Mr. Callaghan
I am a little influenced in my approach to this matter by the fact that exactly the same arguments were advanced from the Front Bench last year when I moved to incorporate concessions amounting to £100 million and was told that this would be grossly inflationary, but, six months later, the changes were made. So I really dismiss that argument because we do not know what the Government will say next. As to the rest, I have moved only the new Clause to abolish the 10 per cent. rate. That would make a difference of £170 million. If the right hon. Gentleman wants to know what off-setting I should do, I can tell him of one thing straight away, the Stamp Duty, a present to the Stock Exchange of £25 million, with no benefit whatever.
§ Mr. Boyd-Carpenter
Without going into the merits of the Stamp Duty—I think 1210 that I should get into trouble if I did—I can only say that £25 million even from the hon. Gentleman is a very poor off-set for £170 million. The fact that the hon. Gentleman has avoided answering my question about whether he would substitute this for the Income Tax concessions will enable all hon. Members to form their own view.
Taking the debate generally, the hon. Member for Cardiff, South-East and several hon. Members seriously exaggerated the effects of the Purchase Tax on the cost of living. The hon. Member for Cardiff, South-East, went into this at some length. He said that the Purchase Tax was putting up the cost of living, making substantial increases. I pass over, because it has already been dealt with, the fact that his own Government did not regard reductions in the Purchase Tax as a means of dealing with the cost of living, even though, when they left office, their lowest rate was 33⅓ per cent., which is higher than the highest rate maintained this year, 25 per cent. As a pure matter of fact, the Purchase Tax does not have any very substantial effect on the cost of living.
The effect of the first new Clause, the one to abolish the 10 per cent. rate, would be to take 0.75—three-quarters of a point—off the Index of Retail Prices, at a cost of £170 million. To abolish the Purchase Tax as a whole, going even further than hon. Members opposite, would make only a reduction of 1.8 in the index. I think that that puts the matter in proportion. It is not my purpose to argue that it has no effect that would obviously be nonsense—but it is right that the Committee should have the figures so that it can put in proportion the hon. Gentleman's views, expressed at considerable length, about the effect that a reduction of Purchase Tax would have in making a serious impact on the cost of living.
§ Mr. G. R. Mitchison (Kettering)
My hon. Friend referred also to the effect on employment. May we hear what the Government have to say about that? In Kettering, we are very conscious of the boot and shoe trade.
§ Mr. Boyd-Carpenter
I am obliged to the hon. and learned Gentleman. That brings me to what I had intended to be my next point. The first point in relation to employment is that the Purchase Tax 1211 at the relatively moderate rates now imposed is, quite obviously, a much less serious adverse factor on employment than it was at the time of which, no doubt, the hon. and learned Gentleman is thinking, when the rates were a great deal higher. It is one of the advantages of the flattening of the rates of Purchase Tax to the three we have at present, 25 per cent., 15 per cent., and 10 per cent., that one avoids the distortions of the economy and, therefore, the effects on employment which high rates of Purchase Tax have, with extremely difficult marginal cases in which, perhaps, a question of definition may make an enormous difference, depending on whether an article attracts a high or more moderate rate of tax.
§ Mr. Mitchison
I am sorry to correct the right hon. Gentleman, but there was no Purchase Tax on boots and shoes. The rate was so flat that it did not exist until the First Secretary of State put it on after the 1955 election.
§ Mr. Boyd-Carpenter
I am sorry to correct the hon. and learned Gentleman. He asked a question about employment generally.
§ Mr. Boyd-Carpenter
He added, perhaps superfluously—we all know that he is a very good constituency Member—a reference to the boot and shoe trade, but he put it as a general question and I am answering it as a general question.
This brings me to the question of the shape of the Purchase Tax, to which several hon. Members have referred. The three rates which we have now, all moderate and without a very great disparity between them, form a tax which, in our view, it a better and more efficient tax and one more conducive to the vigour of the economy than a Purchase Tax with a large number of rates and a wide spread between them, partly for the reason I have given already to the hon. and learned Member for Kettering (Mr. Mitchison).
I know that there is a clash, almost a doctrinal clash, between hon. and right hon. Gentlemen opposite and ourselves on this subject. I have no wish to stir up that clash, but it is a fact that they tend to believe in a wide spread of rates with a very high rate of tax on what they regard as luxuries. Those who advocate 1212 this must remember two things. First, the effect on the economy and employment. Nothing is a luxury to the people who earn their living making it. I say that in reply, partly, to the hon. Member who earlier interjected a reference to Rolls-Royce. Second, it is, in these days, increasingly difficult to define objectively what is a luxury.
§ Mr. Boyd-Carpenter
It used to be said that a motor car was a luxury. I do not know whether this is argued now that a motor car is a necessary tool of trade of the commercial traveller, the journalist, the country doctor and so on. A cynic once said that a luxury was something one happens not to like oneself. In fact, it is a very difficult problem and it is not one for the handling of which, I feel, taxation is a particularly useful and effective instrument.
Our view is that the present shape of the Purchase Tax is an enormous improvement on what we have had hitherto. I should be quite wrong if I were to respond to the temptation to speculate about the future. It is my purpose to commend to the Committee the tax as it now stands and to point out that, although there are individual points of difficulty—there always are individual points of difficulty in this tax, as I from my previous term at the Treasury, know and as other hon. Members know—it is a tax which produces a revenue of £545 million in a full year. We have this tax. We think it is in better shape than before. I am quite sure that it would be wrong to make the radical changes proposed in the new Clauses. To do so would seriously damage the whole pattern of my right hon. Friend's Budget, as I have explained. No argument has been produced to show that to do so would help the economy. In my view, it would hinder it. While we shall, of course, study with the greatest care, as we always have done, the points at which the shoe may be pinching, the points at which there may be a real case for improving the tax, I put it to the Committee that it would be wrong to make the sweeping changes which the new Clauses would make and I ask the Committee to reject them.
§ Mr. Neil McBride (Swansea, East)
The right hon. Gentleman spoke about 1213 the Chancellor's measures to promote the vigour of the economy. Has he considered that what he is saying is at variance with the article in the centre page of today's Financial Times, particularly the first paragraph? If he has studied that article, will the right hon. Gentleman give his view of the last sentence of that paragraph?
§ debate, I have not had the intellectual pleasure, which I usually enjoy at an earlier hour of the day, of reading that admirable paper. So far as it differs from what I have said, I think that it must be wrong.
§ Question put, That the Clause be read a Second time:—
§ The Committee divided: Ayes 175, Noes 230.1215
|Division No. 126.]||AYES||[8.9 p.m.|
|Ainsley, William||Hannan, William||Oram, A. E.|
|Albu, Austen||Harper, Joseph||Oswald, Thomas|
|Allaun, Frank (Salford, E.)||Hart, Mrs. Judith||Padley, W. E.|
|Allen, Scholefield (Crewe)||Henderson, Rt. Hn. Arthur(RwlyRegis)||Pannell, Charles (Leeds, W.)|
|Awbery, Stan (Bristol, Central)||Herbison, Miss Margaret||Pargiter, G. A.|
|Bacon, Miss Alice||Hill, J. (Midlothian)||Parkin, B. T.|
|Baird, John||Hilton, A. V.||Paton, John|
|Beaney, Alan||Holman, Percy||Pavitt, Laurence|
|Bence, Cyril||Houghton, Douglas||Pearson, Arthur (Pontypridd)|
|Bennett, J. (Glasgow, Bridgeton)||Howell, Charles A. (Perry Barr)||Pentland, Norman|
|Benson, Sir George||Howell, Denis (Small Heath)||Popplewell, Ernest|
|Blyton, William||Hoy, James H.||Prentice, R. E.|
|Boardman, H.||Hughes, Cledwyn (Anglesey)||Price, J. T. (Westhoughton)|
|Bowden, Rt. Hn. H. W. (Leics, S.W.)||Hughes, Hector (Aberdeen, N.)||Probert, Arthur|
|Bowles, Frank||Hunter, A. E.||Pursey, Cmdr. Harry|
|Braddock, Mrs. E. M.||Hynd, H. (Accrington)||Randall, Harry|
|Bradley, Tom||Hynd, John (Attercliffe)||Rankin, John|
|Bray, Dr. Jeremy||Irvine, A. J. (Edge Hill)||Redhead, E. C.|
|Broughton, Dr. A. D. D.||Irving, Sydney (Dartford)||Reynolds, G. W.|
|Butler, Herbert (Hackney, C.)||Janner, Sir Barnett||Rhodes, H.|
|Butler, Mrs. Joyce (Wood Green)||Jay, Rt. Hon. Douglas||Roberts, Albert (Normanton)|
|Callaghan, James||Jeger, George||Robertson, John (Paisley)|
|Carmichael, Neil||Jenkins, Roy (Stechford)||Rogers, G. H. R. (Kensington, N.)|
|Chapman, Donald||Jones, Dan (Burnley)||Ross, William|
|Collick, Percy||Jones, Elwyn (West Ham, S.)||Short, Edward|
|Corbet, Mrs. Freda||Jones, J. Idwal (Wrexham)||Silverman, Julius (Acton)|
|Craddock, George (Bradford, S.)||Jones, T. W. (Merioneth)||Silvennan, Sydney (Nelson)|
|Cronin, John||Kelley, Richard||Skeffington, Arthur|
|Crosland, Anthony||Kenyon, Clifford||Slater, Mrs. Harriet (Stoke, N.)|
|Cullen, Mrs. Alice||Key, Rt. Hon. C. W.||Slater, Joseph (Sedgefield)|
|Dalyell, Tam||Lawson, George||Small, William|
|Darling, George||Ledger, Ron||Smith, Ellis (Stoke, S.)|
|Davies, G. Elfed (Rhondda, E.)||Lee, Frederick (Newton)||Snow, Julian|
|Davies, Harold (Leek)||Lee, Miss Jennie (Cannock)||Soskice, Rt. Hon. Sir Frank|
|Davies, Ifor (Gower)||Lever, L. M, (Ardwick)||Spriggs, Leslie|
|Deer, George||Lewis, Arthur (West Ham, N.)||Stewart, Michael (Fulham)|
|Delargy, Hugh||Mabon, Dr. J. Dickson||Stones, William|
|Dempsey, James||McBride, N.||Strachey, Rt. Hon. John|
|Diamond, John||McCann, John||Swingler, Stephen|
|Dodds, Norman||MacDermot, Niall||Taverne, D.|
|Duffy, A. E. P.||McInnes, James||Thomas, Iorwerth (Rhondda, W.)|
|Edwards, Rt. Hon. Ness (Caerphilly)||McKay, John (Wallsend)||Thompson, Dr. Alan (Dunfermilne)|
|Edwards, Robert (Bilston)||McLeavy, Frank||Thornton, Ernest|
|Fernyhough, E.||MacPherson, Malcolm (Stirling)||Tomney, Frank|
|Finch, Harold||Mahon, Simon||Wainwright, Edwin|
|Fitch, Alan||Mallalieu, J.P.W. (Huddersfield, E.)||Warbey, William|
|Fletcher, Eric||Mapp, Charles||Watkins, Tudor|
|Foot, Dingle (Ipswich)||Mason, Roy||Wilkins, W. A.|
|Foot, Michael (Ebbw Vale)||Mayhew, Christopher||Williams, D. J. (Neath)|
|Forman, J. C.||Mendelson, J. J.||Williams, Ll. (Abertiltery)|
|Fraser, Thomas (Hamilton)||Millan, Bruce||Williams, W. R. (Openshaw)|
|Galpern, Sir Myer||Milne, Edward||Williams, W. T. (Warrington)|
|George, LadyMeganLloyd(Crmrthn)||Mitchison, G. R.||Willis, E. G. (Edinburgh, E.)|
|Ginsburg, David||Monslow, Walter||Winterbottom, R. E.|
|Gourlay, Harry||Morris, John||Woof, Robert|
|Griffiths, David (Rother Valley)||Moyle, Arthur||Yates, Victor (Ladywood)|
|Griffiths, W. (Exchange)||Neal, Harold||Zilliacus, K.|
|Hale, Leslie (Oldham, W)||Oliver, G. H.|
|Hamilton, William (West Fife)||O'Malley, B. K.||TELLERS FOR THE AYES:|
|Mr. Whitlock and Mr. Grey.|
|Agnew, Sir Peter||Ashton, Sir Hubert||Balniel, Lord|
|Allason, James||Atkins, Humphrey||Barber, Anthony|
|Arbuthnot, John||Awdry, Daniel (Chippenham)||Barlow, Sir John|
|Barter, John||Harrison, Brian (Maldon)||Pannell, Norman (Kirkdale)|
|Batsford, Brian||Harrison, Col. Sir Harwood (Eye)||Pearson, Frank (Clitheroe)|
|Baxter, Sir Beverley (Southgate)||Harvey, John (Walthamstow, E.)||Peel, John|
|Beamlah, Col. Sir Tufton||Harris Anderson, Miss||Pickthorn, Sir Kenneth|
|Bell, Ronald||Hastings, Stephen||Pilkington, Sir Richard|
|Berkeley, Humphry||Heald, Rt. Hon. Sir Lionel||Pitt, Dame Edith|
|Bidgood, John C.||Henderson, John (Cathcart)||Pott, Percivall|
|Biflen, John||Hendry, Forbes||Price, David (Eastleigh)|
|Bishop, F. P.||Hiley, Joseph||Profumo, Rt. Hon. John|
|Bossom, Hon. Olive||Hill, J. E. B. (S. Norfolk)||Proudfoot, Wilfred|
|Bourne-Arton, A.||Hirst, Geoffrey||Quenneil, Miss J. M.|
|Box, Donald||Hobson, Sir John||Rawlinson, Sir Peter|
|Boyd-Carpenter, Rt. Hon. John||Hocking, Philip N.||Redmayne, Rt. Hon. Martin|
|Braine, Bernard||Holland, Philip||Rees, Hugh|
|Brewis, John||Hollingworth, John||Rees-Davies, W. R.|
|Bromley Davenport, Lt.-Col. Sir Walter||Hopkins, Alan||Renton, Rt. Hon. David|
|Brooke, Rt. Hon. Henry||Hornsby-Smith, Rt. Hon. Dame P.||Ridley, Hon. Nicholas|
|Brooman-White, R.||Howard, Hon. G. R. (St. Ives)||Roberts, Sir Peter (Heeley)|
|Brown, Alan (Tottenham)||Howard, John (Southampton, Test)||Robinson, Rt. Hn. Sir R. (B'pool, S.)|
|Buck, Antony||Hughes Hallett, Vice-Admiral John||Roots, William|
|Bullard, Denys||Hughes-Young, Michael||Ropner, Col. Sir Leonard|
|Bullus, Wing Commander Eric||Hurd, Sir Anthony||Russell, Ronald|
|Burden, F. A.||Hutchison, Michael Clark||St. Clair, M.|
|Butcher, Sir Herbert||Iremonger, T. L.||Scott-Hopkins, James|
|Campbell, Gordon (Moray & Nairn)||Irvine, Bryant Godman (Rye)||Sharples, Richard|
|Carr, Robert (Mitcham)||James, David||Shaw, M.|
|Cary, Sir Robert||Jenkins, Robert (Dulwich)||Skeet, T. H. H.|
|Chataway, Christopher||Johnson, Or. Donald (Carlisle)||Smith, Dudley (Br'ntf'd & Chiswick)|
|Chichester-Clark, R.||Jones, Arthur (Northants, S.)||Smithers, Peter|
|Clark, Henry (Antrim, N.)||Kerby, Capt. Henry||Smyth, Rt. Hon. Brig. Sir John|
|Clark, William (Nottingham, S.)||Kerr, Sir Hamilton||Spearman, Sir Alexander|
|Cooke, Robert||Kershaw, Anthony||Stanley, Hon. Richard|
|Cooper, A. E.||Kimball, Marcus||Stodart, J. A.|
|Cooper-Key, Sir Neill||Lagden, Godfrey||Stoddart-Scott, Col. Sir Malcolm|
|Cordesux, Lt.-Col. J. K.||Langford-Holt, Sir John||Studholme, Sir Henry|
|Cotfield, F. V.||Leather, Sir Edwin||Summers, Sir Spencer|
|Coulson, Michael||Leavey, J. A.||Talbot, John E.|
|Courtney, Cdr. Anthony||Leburn, Gilmour||Tapsell, Peter|
|Crawley, Aidan||Legge-Bourke, Sir Harry||Taylor, Sir Charles (Eastbourne)|
|Critchley, Julian||Lewis, Kenneth (Rutland)||Taylor, Edwin (Bolton, E.)|
|Curran, Charles||Lilley, F. J. P.||Taylor, Frank (M'ch'et'r, Moss Side)|
|Currie, G. B. H.||Linstead, Sir Hugh||Teeling, Sir William|
|d'Avigdor-Goldsmid, Sir Henry||Litchfield, Capt. John||Temple, John M.|
|de Ferranti, Basil||Loveys, Walter H.||Thatcher, Mrs. Margaret|
|Donaldson, Cmdr. C. E. M.||Lucas-Tooth, Sir Hugh||Thompson, Sir Richard (Croydon, S.)|
|Drayson, G. B.||McLaren, Martin||Thornton-Kemsley, Sir Colin|
|du Cann, Edward||Macleod, Rt. Hn. Iain (Enfield, W.)||Tiley, Arthur (Bradford, W.)|
|Eden, Sir John||McMaster, Stanley R.||Touche, Rt. Hon. Sir Gordon|
|Elliot, Capt. Walter (Carshalton)||Macpherson, Rt. Hn. Niall(Dumfries)||Turner, Colin|
|Eillot, R.W. (Newc'tle-upon-Tyne, N.)||Maddan, Martin||Turton, Rt. Hon. R. H.|
|Emmet, Hon. Mrs. Evelyn||Maitland, Sir John||Tweedsmuir, Lady|
|Farey-Jones, F. W.||Markham, Major Sir Frank||van Straubenzee, W. R.|
|Farr, John||Marshall, Douglas||Vane, W. M. F.|
|Fell, Anthony||Marten, Nell||Vaughan-Morgan, Rt. Hon. Sir John|
|Finlay, Graeme||Mathew, Robert (Honiton)||Vickers, Miss Joan|
|Fletcher-Cooke, Charles||Matthews, Gordon (Meriden)||Vosper, Rt. Hon. Dennis|
|Forrest, George||Maudling, Rt. Hon. Reginald||Walder, David|
|Fraser, Ian (Plymouth, Button)||Mawby, Ray||Walker, Peter|
|Freeth, Denzil||Maxwell-Hyslop, R. J.||Walker-Smith, Rt. Hon. Sir Derek|
|Gammans, Lady||Maydon, Lt.-Cmdr. S. L. C.||Wall, Patrick|
|Gardner, Edward||Mills, Stratton||Ward, Dame Irene|
|Gibson-Watt, David||Miscampbell, Norman||Webster, David|
|Gilmour, Ian (Norfolk, Central)||Montgomery, Fergus||Wells, John (Maidstone)|
|Gilmour, Sir John (East Fife)||Morgan, William||Whitelaw, William|
|Glyn, Dr. Alan (Clapham)||Nabarro, Sir Gerald||Williams, Dudley (Exeter)|
|Glyn, Sir Richard (Dorset, N.)||Neave, Airey||Williams, Paul (Sunderland, S.)|
|Goodhew, Victor||Wilson, Geoffrey (Truro)|
|Gower, Raymond||Nicholls, Sir Harmar||Wise, A. R.|
|Grant-Ferris, R.||Nicholson, Sir Godfrey||Wolrige-Gordon, Patrick|
|Gresham Cooke, [...].||Oakshott, Sir Hendrie||Woodhouse, C. M.|
|Grosvenor, Lt. -Col. R. G.||Orr, Capt. L. P. S.||Woodnutt, Mark|
|Gurden, Harold||Osborn, John (Hallam)||Woollam, John|
|Hamilton, Michael (Wellingborough)||Osborne, Sir Cyril (Louth)|
|Harris, Frederic (Croydon, N.W.)||Page, Graham (Crosby)||TELLERS FOR THE NOES:|
|Harris, Reader (Heston)||Page, John (Harrow, West)||Mr. Pym and Mr. MacArthur.|