Selective Employment Tax (Hansard, 20 June 1966)

§ 3. Mr. Channon
asked the Minister of Public Building and Works what discussions he has had with the building and construction industry about the effect of the Selective Employment Tax.

§ 15. Mr. Carlisle
asked the Minister of Public Building and Works what representations he has received from the building and construction industries in regard to the Selective Employment Tax.

§ 16. Mr. Chichester-Clark
asked the Minister of Public Building and Works what representations he has received from the building and construction industries in regard to long-term fixed-price contracts as affected by the Selective Employment Tax; and whether he will make a statement.

§ 24. Mr. John Hall
asked the Minister of Public Building and Works what representations he has received from the National Federation of Building Trade Employers in regard to the Selective Employment Tax.

§ 30. Miss Harvie Anderson
asked the Minister of Public Building and Works what representations he has received from the Royal Institution of Chartered Surveyors in regard to the Selective Employment Tax; and what replies he has sent.

§ Mr. Prentice
Immediately after taking office, I arranged meetings with organisations representative of all sides of the construction industry. At many of these meetings the effect of the tax has been discussed.
I have also replied to a number of written representations regarding the tax.

§ Mr. Channon
Would the hon. Gentleman agree that the National Plan indicated that, if anything, the construction industry was too small? Why, therefore, do the Government think it necessary to penalise it for every man which it employs?

§ Mr. Prentice
I think it would be generally agreed that another feature of the construction industry is that its efficiency varies greatly and that there is much scope for more effective use of labour, and I hope that the tax will have an effect in that direction.

§ Mr. Carlisle
Has the hon. Gentleman's attention been drawn to the statement by the National Federation of Building Trade Employers, that the reasons why the housebuilding target of 400,000 will not be achieved are the widespread belief that there is deliberate Government discrimination against private house builders and the high cost of labour? Are not both these fears fully justified by the introduction of the tax?

§ Mr. Prentice
I know what the views of the National Federation of Building Trade Employers are on this matter, and I can well understand that it, like anyone else affected by a new tax, would protest against it. I think, however, that it is being too pessimistic. We are entitled to tell private builders that they could be doing better and could be getting on with the housing programme better and 5 that they must not use the tax as an excuse for some of their shortcomings.

§ Mr. Chichester-Clark
In view of the uncertainty and the rumours of the last few weeks, will the right hon. Gentleman say clearly whether local authorities are to be authorised to renegotiate long-term fixed price contracts or not? No one knows at the moment. Is not this another example of an ill-thought-out tax?

§ Mr. Prentice
As the hon. Gentleman knows, the Government are considering this and I hope to be able to make an announcement very soon.

§ Miss Harvie Anderson
Is the right hon. Gentleman aware that the Royal Institute of Chartered Surveyors is already over-pressed and will become more so with the imposition of Land Commission duties, and that, in the case of surveyors, the S.E.T. will not result in people moving to other industries but will simply mean an extra cost which can only be passed on?

§ Mr. Prentice
I am aware of the problem. But I do not accept that surveyors or anyone else connected with the construction industry must necessarily pass on the full effect of the tax. I hope that all concerned will do their best to make economies and avoid passing the extra cost on to the consumer.

§ Mr. Boyd-Carpenter
However that may be, surely the inevitable effect of the imposition of the S.E.T. on the building industry will be to increase the cost of housing. Is that the Government's policy?

§ Mr. Prentice
There will be an increase in costs, which we estimate at about 2 per cent., from the S.E.T. on its own. But I remind the right hon. Gentleman that other provisions in the Budget relieve building costs in other respects. I hope the House will agree that we want to see this extra cost absorbed by higher efficiency as far as possible and not automatically passed on.

§ 29. Mr. R. W. Elliott
asked the Minister of Public Building and Works if he will give an estimate of the increased cost of essential building in Newcastle-upon-Tyne caused by the effects of Selective Employment Tax.

§ Mr. Prentice
I estimate that if none of the increase were absorbed by the contractors 6 or offset by higher productivity or otherwise the tax would cause an average increase in the cost of building of about 2 per cent. It is not possible to make any useful estimates in respect of particular localities.

§ Mr. Elliott
Does the Minister realise that in cities where there is still a long waiting list for houses and a long housing programme for slum clearance and general purposes, the effects of this tax must eventually lead to a rise in rents'? Will he consider essential industrial building in development areas?

§ Mr. Prentice
The second question is for my right hon. Friend the Chancellor of the Exchequer or my right hon. Friend the Minister of Labour and will be discussed in the next week or two. As for the first question; we have already had Questions about this and I repeat that I hope that hon. Members opposite will encourage the view that there could be a considerable increase in productivity in order to offset the extra costs of the tax.