HC Deb 29 June 1966 vol 730 cc1821-2144

4.17 p.m.

The Chairman

The next Amendment selected is Amendment No. 34, page 48, line 27, at end insert: Provided always that the said amount shall be one penny in the case of those persons set out in Parts II and III of Schedule 10 to this Act. There is a series of Amendments which go with it:

Amendment No. 147, in page 48, line 27, at end insert: Provided that in respect of any person who is deaf, the tax shall be one shilling. Amendment No. 29, in page 48, line 27, at end insert: Provided that if that person worked less than twenty-one hours during that week, the amount shall be one shilling Amendment No. 30, in page 48, line 27, at end insert: Provided that if that person is aged over sixty-five if a man or over sixty if a woman the amount shall be one shilling. Amendment No. 31, in page 48, line 27, at end insert: Provided that in respect of any person who has reached the age of 65, the tax shall be one shilling. Amendment No. 32, in page 48, line 27, at end insert: Provided that in respect of any person who is registered as disabled the tax shall be one shilling. Amendment No. 33, in page 48, line 27, at end insert:

PART II
Employees of the following:—
5 1. Charities, namely organisations which are wholly charitable and exempt from income tax
2. Religious organisations
3. Educational establishments
4. (a) Nursing and convalescent homes
(b) Private hospitals
(c) Old people's homes
10 5. Disabled, incapacitated and similar persons requiring a whole or part-time nurse or help
6. Organisations for the promotion or study of science, literature or the arts.

Provided that in respect of any person who is employed for less than twelve hours in a week, the tax for that week shall be one shilling.

Amendment No. 35, in page 48, line 27, at end insert: Provided that in the case of disabled persons the foregoing amount shall be sixpence.

Amendment No. 37, in page 48, line 27, at end insert: Provided that in the case of persons who are employed for between eight and twenty hours a week the tax shall be at one-half of the above-mentioned amounts and in the case of persons employed between twenty and thirty hours a week the tax shall be at the rate of three-quarters of the above amounts.

Amendment No. 39, in page 48, line 27, at end insert: Provided that in the case of disabled persons within the meaning of the Disabled Persons Employment Act 1944, the tax shall be one penny.

Amendment No. 40, in page 48, line 27, at end insert: Provided that in respect of any person who is employed by a registered theatrical employer the tax shall two shillings.

Amendment No. 161, in page 48, line 27, at end insert: Provided that if that person worked less than twenty-one hours during that week, the foregoing amounts shall be halved.

Amendment No. 175, in page 48, line 27, at end insert: Provided that in respect to any person who is blind the tax shall be one shilling.

Amendment No. 220, in page 48, line 27, at end insert: Provided that in respect of any person who is employed by a registered theatrical employer in a theatre outside the Cities of London and Westminster the tax shall be eight shillings.

Amendment No. 361, in page 48, line 27, at end insert: Provided that in respect of any person who is employed by a club which is a registered society within the meaning of the Industrial and Provident Societies Act 1893 or the Friendly Societies Act 1896, the amount shall be one shilling.

Amendment No. 73, in Schedule 10, page 103, line 33, at end add:

PART III
The following employees:—
15 (a) Disabled and incapacitated persons
(b) Part-time workers for less than 20 hours per week
(c) Men over 65 years of age and women over 60 years.

Since those Amendments were selected, there has appeared on today's Notice Paper, on page 1020, an Amendment in the name of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter)—in page 48, line 27, at end insert: Provided always that the said amount shall be one penny in the case of a person who is in receipt of a relevant pension under the National Finance Acts 1946 to 1966— which inadvertently and inaccurately has been starred. I think that it would be appropriate for that Amendment, which, in fact supersedes an earlier Amendment, Amendment No. 109—in page 48, line 27, at end insert: Provided however that if that person is in receipt of a retirement pension under the National Insurance Acts 1946 to 1966, the tax shall not be payable in respect of that person— which was out of order, to be added to those which can be discussed with No. 34.

Mr. Geoffrey Rhodes (Newcastle-upon-Tyne, East)

On a point of order. In the course of the last meeting of the Committee, the hon. Member for Tynemouth (Dame Irene Ward) stated that I had attacked the Selective Employment Tax outside this Chamber but had refrained from doing so in this Chamber. It was further suggested by the hon. Lady that such behaviour was habitual on my part.

I wish to state that I have made no such speech on the tax outside this chamber. The one speech which I have made in this matter was made in the House last Thursday and is recorded in cols. 1013 to 1020 of HANSARD for 23rd June.

4.30 p.m.

Dame Irene Ward (Tynemouth)

I am grateful to the hon. Member for giving me notice that he would make this personal statement. [Interruption.] I was about to apologise and say how sorry I was. The hon. Member made his speech subsequent to the one which I read in a paper in the North of England some time ago.

I apologise. I did not notice that the hon. Member had spoken that night. I hope that he will accept this and will feel comforted by the fact that he is now one up on me. But he does this in the North of England quite often. I noted that he voted for the Selective Employment Tax in the specific Division. I am sorry that I had not noticed he had made the speech, and I hope that he will accept this apology——

The Chairman

Order.

Dame Irene Ward

I am only apologising, Sir Eric.

The Chairman

We cannot pursue the matter further.

Mr. Iain Macleod (Enfield, West)

On a point of order. You have called Amendment No. 34, Sir Eric, which I will shortly present to the Committee, but you have also said that 15, and now 16, other Amendments are to be discussed with it. The usual phrase is "for the convenience of the Committee". I would like to make it clear, Sir Eric, that it is most inconvenient, certainly to this side of the Committee, to discuss these Amendments in this way. There are Amendments for the blind, the deaf and the disabled, which certainly in our view should be separately discussed. Perhaps you would make it clear, Sir Eric, that this is a matter of selection by the Chair in which you have overruled the protests that have been put to you.

Perhaps you will take notice, Sir Eric, that we regard the selection of 10 new Clauses out of 60 on the Order Paper as quite unacceptable. [HON. MEMBERS: "Hear, hear."]

Mr. Paul Dean (Somerset, North)

Further to that point of order. I should like to say a brief word, Sir Eric, about the selection of the social service new Clauses. You will, I think, agree that this year, when there are no Clauses in the Bill dealing with social service matters but when Clause 42 adds burdens to many sections of the community, such as the old, there is a strong case for full opportunities being given to deploy new social service Clauses during discussion of the Bill.

I calculate that of 22 new Clauses which have been tabled five have been selected and two others have been selected for discussion with one of those five. I think you will agree, Sir Eric, that this is a very small proportion of social service Clauses. For example, there will be no opportunity whatever to discuss age relief, on which a number of new Clauses have been put down.

As for the disabled, the selection of new Clause 11 with new Clause 55 and of new Clause 30 will give only a very limited opportunity to debate specific aspects of tax relief for the elderly. May I respectfully ask you at least to give us a chance to deploy the full case under new Clause 12?

My final point concerns new Clause 10, which deals with tax relief on medical insurance schemes and which appears in the names of myself and a number of my hon. Friends, and also new Clause 48, which deals with family covenant schemes. New Clause 10 concerns a subject which has not been discussed for a good many years, and I think I am right in saying that new Clause 48 is something new which has not been discussed in this form in the House of Commons before. In view of these points, I hope that it will be possible, Sir Eric, for you to reconsider your selection of the social service new Clauses.

Mr. Geoffrey Hirst (Shipley)

Further to that point of order——

The Chairman

It might be convenient if I reply to those two points of order. As the Committee will be aware, the matter of selection of both Amendments and new Clauses is entirely for the Chair, and it is quite inappropriate to criticise the Chair's selection. At the same time, since the practice began of putting up a provisional selection, the Chair has always been prepared, between the time of putting up the notice in the Lobby and the sitting of the Committee, to listen to representations made by hon. Members.

I think that the right hon. Member for Enfield, West (Mr. Iain Macleod) is in error. Amendment No. 34, which is in his name and is being called, is, in my view, correctly associated with all the other Amendments, none of which are Official Opposition Amendments but are put down by Private Members, back benchers, on both sides of the Committee. I have not received any representation from any such Member that there was any inconvenience in their Amendments being discussed with Amendment No. 34. On the contrary, I am quite sure that it will provide a much more satisfactory debate if all those Amendments are discussed together and replied to. As I have said before, if any hon. Member wishes to have a separate Division and makes a good case for a separate Division for any of them, I shall be quite prepared to listen to such representations.

With regard to what the right hon. Member has said about new Clauses, he is again in error. The number of new Clauses provisionally selected this year bears precisely the same proportion to the total number of new Clauses on the Order Paper as was the case last year, the year before and in previous years. There is obviously the greatest difficulty in selecting new Clauses. Every hon. Member who puts one down attaches great importance to his own ideas. I will bear in mind what the hon. Member for Somerset, North (Mr. Dean) has said and consider whether any further selection in necessary, but I cannot allow the matter to be debated.

Mr. John Boyd-Carpenter (Kingston-upon-Thames)

On a point of order, Sir Eric. I refer to Amendment No. 363 which you were kind enough to indicate a moment or two ago you would be disposed to allow to be discussed with Amendment No. 34. As you have said, Sir Eric. Amendment No. 363 is erroneously starred, but I shall be grateful if I might at the same time draw your attention to the fact that it has also had an unhappy time in being misprinted in two words. "Relevant" in the second line should obviously be "retirement", and "Finance" should, equally obviously, be "Insurance". I acquit the Table of any blame. I am quite certain that the blame lies much nearer home in respect of my own calligraphy.

In view of what you have said in general, Sir Eric, may I submit that Amendment No. 363, which raises a distinct point and one of considerable importance, is one which you might see fit to select, if necessary, for Division?

The Chairman

I am obliged. It might be for the convenience of the Committee, while the right hon. Gentleman is correcting the phraseology of his Amendment, to mention one other correction that ought to be made. The dates are wrong. "1946 to 1966" should be "1965 and 1966".

Mr. Raymond Gower (Barry)

May I raise a slightly different point, Sir Eric? I appreciate that after discussion of so many Amendments together it would be without precedent for them to be followed by about 12 or more Divisions. On the other hand, you will note that some of these Amendments have only one thing in common, namely, a proposal to reduce the tax. They are widely divergent in the reasons for the suggested reductions of tax. To that extent, will there be a possibility at least of a number of Divisions? The fact that it has been agreed that a Division for one reason——

The Chairman

I have already said that when we come to the particular Amendments we can consider whether there should be a separate Division on any of them.

Mr. Hirst

Further to the point of order. I hope you will forgive me, Sir Eric, for just commenting on one point. I am naturally concerned in the Amendments which you have selected to be grouped together—as I understand it, for the convenience of the Committee. Having had a little experience in this matter of these procedures, I did not think it customary to come to plague the Chair, as it were, in advance, with a list of them. I have always supposed it to be for the convenience of the Committee that Amendments should be grouped and that that was not binding on the Chair. I thought that the selection and the procedures upon it were actually effective when the Chair announced the decision—as, indeed, you did, although your phraseology, if I may say so, speaking in a perfectly friendly way, omitted the phrase "for the convenience of the Committee", as my right hon. Friend mentioned.

I have had some experience in these matters and of arguing with many Chairmen of Committees over the years, and I remember, for instance, that one of them, although he was very polite to me, told me to go away and said, "I cannot discuss the provisional selection". So, quite frankly, it did not occur to me to come to plague you, though I should be delighted to do that on any other occasion, if this is to be the policy. However, it simply did not occur to me, because I thought that this was the proper time to raise points on this matter.

There is another point I must put, if I may. The Opposition as a whole, if I may humbly say so, has a distinct and definite responsibility to the public. It is common to all parties in the Opposition, and irrespective of party, and its individual Members have responsibilities to their constituents, and I have never been satisfied that the Amendments put down by Front Bench Members, whether in Opposition or in Government, necessarily contained my views. I think that my point on this would be shared by all Chief Whips.

On the other hand, though there are Amendments which have not official, Front Bench backing, by signature, some of us here on these benches know, being more privy to these things than yourself, that they have the fullest possible support of my right hon. Friends on the Front Bench. I do not bother necessarily to get their signatures. It is not necessary in this party at any rate, for everybody to sign everybody's Amendments to indicate everybody's preference. Many Amendments which I have put down in association with others, I happen to know have the support of my right hon. Friends on the Front Bench. We do not go splashing our signatures all over the place.

What we attempt to do is to express a case in relation to the policy of the Government of the day and we put our Amendments down as serious expressions of opinion and of policy in the public interest. When there is grouping of Amendments like this it is more difficult to ensure that every point is covered. I do not question the Ruling you have given, though joining my right hon. Friend in making the protest he has made, and hoping that we can have Divisions, as you have said, and that a subsequent occupant of the Chair, who has not had the benefit of hearing this discussion which has taken place now, will not refuse a Division on the basis that he has not knowledge of what has now taken place. Of course, we know that you will stick to what you have said and will accept a Division on any Amendment, if any hon. Member on either side of the Committee should wish to force a Division.

I am sorry to have been rather long, but this is an important point of principle, and may affect our procedures for a long time to come.

The Chairman

The hon. Member can rest assured that any other occupant of the Chair while I am not here will have learned of what has been said and will be in the same position as I am to allow a separate Division if called for on any of the Amendments which are being discussed with Amendment No. 34.

I think I should just add this. It is not only Members of the Opposition who are concerned with these Amendments. A large number of Amendments have been put down by back bench hon. Members on the other side of the Committee, too, and they are just as concerned as the hon. Member for Shipley (Mr. Hirst) and Members on his side of the Committee with raising particular points. I still think that it will be for the convenience of all Members of the Committee, regardless of where they sit and of which party they belong to and whether they sit on a Front Bench or a back bench, that there should be a general debate on these Amendments which have been grouped and which have a great deal in common, and then for separate Divisions to take place as hon. Members may respectively wish.

4.45 p.m.

Mr. Norman St. John-Stevas (Chelmsford)

We are concerned not only with the minority, the Opposition, in this Committee, but with the good progress of the whole debate, and as a result of this grouping which has been made of such disparate subjects being linked together as the position of the disabled—[HON. MEMBERS: "Oh."] Well, this is——

The Chairman

I am afraid I cannot allow the hon. Member to criticise——

Mr. St. John-Stevas

I am not.

The Chairman

—the selection which has been made or the way in which it has been made.

Mr. St. John-Stevas

I am not criticising at all, Sir Eric. I am pointing out that the result is—and I want your guidance on this question—that we shall be discussing at once the disabled, the blind, theatres, education, old people's homes, part-time workers, science, literature and the arts, and hotels, and my fear is—and this is the point on which I should like your guidance—that we shall move from point to point with different Members getting up and speaking on one subject or another so that the momentum of the debate will be dissipated. That will not be cured by a Division. The point on which I ask your guidance is whether it will be possible for you from the Chair to arrange for these points to be discussed point by point, by a grouping within the grouping, by your selecting certain Amendments which have something in common.

The Chairman

I think the hon. Member's fears are unfounded and that on the selection which has been made we can have a sensible debate.

Mr. Hirst

I am very grateful to you., Sir Eric, for what you have said, and I am sure the Committee appreciates it very much. There is just one other aspect of the matter. In the last debate I was prevented from speaking by the moving of the Closure. I am not criticising that, but, without now going into the details of the Amendments, which speak for themselves, it would be a very serious matter for the rights of the Opposition if by reason of the Chair considering the convenience of the Committee, or by reason of any other aspect, adequate discussion of a principle of an Amendment were not possible. This is a difficulty which arises in the grouping together of a large number of Amendments, that people may be denied opportunity to speak to the principle of any one of them because we are speaking of all of them. I hope we can have some assurance that you are not going to place us in that position.

The Chairman

I do not think that the hon. Member ought to imagine for one moment that the Chair is unconscious of the fact that a number of Amendments are grouped together. By taking the Amendments together we should have a much wider debate than otherwise there would be.

Mr. Iain Macleod

Clearly, we must agree to differ, and I wish to pass from the point of order. It is of obvious importance to the Committee. Perhaps at leisure you may reflect on the difference between us, but I cannot think it would help if I were to go round, as I easily could, adding my name to the myriads of Amendments tabled by both sides of the Committee in the expectation that there will be a more likely chance of their being called. I cannot think that that would be of advantage to the Committee. I pass from the new Clauses, too. We shall be able at another time to consider the precedents of other years.

I beg to move Amendment No. 34, in page 48, line 27, at the end to insert: Provided always that the said amount shall be one penny in the case of those persons set out in Parts II and III of Schedule 10 to this Act. The Amendments have been signed on the Notice Paper by about 20 members of the Conservative Party, rather more than 30 members on the Government Benches and six Liberals. Those are the names which appear, but a vastly greater number clearly have signed although their names are not necessarily carried forward from day to day.

Amendment No. 34 would reduce to 1d. the categories set out in Amendment No. 73, and it is to Amendment No. 73 that I shall direct my speech. The reason why we move to reduce the tax to 1d., as the Treasury will have naturally appreciated, is that, according to the Budget Resolutions, it is out or order to reduce the tax to nothing. That is why, I assume, a number of Amendments suggested by hon. Members from both sides of the Committee are out of order, although, no doubt, they could be put right for Report.

The first point to be made refers to charities. Under great pressure, which was certainly initiated from this side of the Committee, the Chancellor of the Exchequer has made a concession which is very welcome, that is to say, that in due course there is to be a refund to what one might call official charities which satisfy certain legal definitions. It remains true that the smaller the charity, the bigger the burden the tax will relatively be. Charities will still have to find the money for the interest-free loan from September to February, or March, of next year.

Naturally, we welcome that concession. However, I wish to draw to the Chan- cellor's attention the fact that a vast number of excellent organisations, which, in the sense in which we use the word, are wholly charitable, will not benefit from the concession which he has announced. He and I are at least agreed that it would be entirely undesirable for a Chancellor, or anyone else for that matter, to choose between charities and therefore they have to be all in, or all out, under some acceptable definition which can be presented to the Committee in some legal form.

Yet it remains true that many charities are charities in fact but not in law. I will give only one illustration in any detail. I take the example of the Hospital Saving Association. It has Her Majesty as patron and the chairman is Mr. Lesser, who is a man of enormous distinction in the Health Service, particularly on the voluntary side, and, I am sure, known to many hon. Members on both sides of the Committee. It is a non-profit-making hospital contributory scheme. It pays no tax on its contributions by a rather unofficial arrangement dating, I understand from a letter received, presumably from the Chancellor of the day, in 1931. But it pays tax on its investment income and, because it is not a charity in the legal sense of the word, it does not benefit from the Chancellor's announced concession. Therefore, it does not get any relief—I have checked these facts with the general secretary an hour or so ago—from S.E.T.

The Chancellor must find a way in which absolutely admirable associations of this sort, which are charities in everything except the legal definition of the word, can benefit from the relief from S.E.T. which he plans for the charities with which we are perhaps more familiar. The Hospital Saving Association has about 2,500,000 contributors. It has 10,500 honorary group secretaries. These people are not affected, because they do voluntary work. I give the figures merely as an illustration of how splendid this work is. Its aim has always been to encourage the weekly wage earning sections of the community to make extra provision for themselves and their families by voluntary health insurance. But the association also has no fewer than 200 whole-time staff and so it will have to pay £9,000 a year in S.E.T.

The point is that the H.S.A. tries to balance its contributions against its benefit payments each year, and it follows that a charge like £9,000 going into the Chancellor's pocket is taken directly out of the benefits which would otherwise accrue to the wage-earning sections of the community who contribute—2,500,000 of them—through H.S.A. to this sort of voluntary insurance.

I am sure that the Chancellor is sympathetic in principle, but he may say that there are many difficulties. I dare say that there are, but he ought to find a way in which organisations like the H.S.A.—and I give that one illustration, but other hon. Members could add 50 more—could benefit from the concession which has been given to charities.

I shall say nothing about religious organisations now, except that we have on the Notice Paper an Amendment to the S.E.T. Bill which will help them.

The third item is educational establishments. I draw the Chancellor's attention to the fact that we have put "educational establishments", just like that, and we mean all of them. We do not mean just the State provision alone; we do not mean just the private provision alone; and we do not mean a mixture of the two. We mean educational establishments, "approved" educational establishments, and if that word is needed, it can be added by all means.

It was clear in earlier debates that many hon. Members opposite welcomed the weakening of the private sector of education which was bound to flow from the imposition of S.E.T. The hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), trying to illustrate this, commented on the difference between the pupil-teacher ratio in boarding schools and that in the State system. Of course the ratios are different. In one case the teachers are looking after children for 24 hours a day and in the other for seven hours a day, so that the ratios are bound to be very different. The short point is that it would be undesirable for the prejudices of so many hon. Members opposite to be satisfied as a sort of by-product of this shabby tax.

Fourthly, we refer to health provision generally, and again I mean not just the National Health Service, but the many other forms of health provision through- out the country which are as truly part of our provision for health as are our hospitals and the Health Service itself. Again I hope that this tax will not in any way be used as a stick to push towards State provision those who wish to find provision individually or outside the State system.

5.0 p.m.

Hon. Members will be able to think of many examples. I take just one from my constituency and the place where I live. I know of an excellent private nursing home for old people. It is run with a competent staff, but I suppose that, technically, it is profit-making in that it is not part of the National Health Service and is owned by a man and his wife, the wife acting as matron. That sort of thing is very common. I dare say that there are some here and there which are not particularly satisfactory, but most of these old people's homes run in this way are a splendid and invaluable contribution towards the provision which the State has to make for the health of its citizens.

They should in no way be excluded from any benefits which the Chancellor feels that he can put forward just because they do not formally form part of the elaborate State provision for health which we have and of which I am a great admirer, particularly after the years which I spent as Minister of Health. I ask the right hon. Gentleman, in the same way as with education, to consider the contribution which can be made by organisations that are not part of the State service.

The fifth point which we make covers the vast field of the disabled, the blind and the deaf, in respect of whom my hon. Friends were pleading for separate debates a few moments ago.

I suppose that we can only refer to the other Bill in passing. It is one of the inconveniences of having to debate the two Bills separately. The other Bill makes some provision for employers who are elderly, disabled or whatever it may be, but it does nothing for the disabled, the part-time and elderly people who are employees. For some reason, Lord Montgomery's name is always associated with this because, quite properly, he draws a retirement pension. Heaven knows, he has earned it. Under the new Bill, he will be able to set off the tax for his batman, and I am not convinced that that is the first priority that we ought to be able to put forward. There is no requirement of hardship in the new Bill, and it does not meet many of the individual cases which are in the minds of us all and which we have put forward in a number of speeches.

The argument which the Government put forward about employees is that full employment looks after them. As far as it goes, that is a very good point. Full employment is the best safeguard for those who are not in the full stream of employment. Full employment helps the disabled person to find a niche somewhere which is not only rewarding to him financially but extremely satisfying from every point of view. The hon. Member for Bedwellty (Mr. Finch) will remember that over the years he and I have discussed the point on a number of occasions. It is important to keep these people in the stream of life, feeling that they are contributing as much as possible to the community.

The great danger which I see is this. There is now a tax on the employment of these people. Much of the work that they do is part-time work on Saturdays and Sundays. It may now be possible to find people for whom tax has already been paid in the week and perhaps for whom a premium has already been drawn in that week and who may be available without charge from the point of view of S.E.T. for jobs on Saturdays and Sundays which so far have so often gone to the part-time, the disabled, and the elderly. That is a particularly important point in relation to such matters as retail distribution and other forms of industry which rely particularly on part-time work on Saturdays and Sundays and have to build their organisations round it.

I hope that we shall not hear, just like that, the assertion that full employment looks after what might be called the difficult cases. That is too easy an assumption for us to make, and we must see whether we cannot look after these people much more satisfactorily than has been done.

I just mention in passing the sixth and last of our proposals in Amendment No. 73 to Schedule 10, dealing with the promotion of literature and the arts. Here the Government are giving with their left hand in grants and plan to take away with their right hand in Selective Employment Tax. At the best, some of these companies—and I use the word not in its industrial sense but in its theatrical and other senses—will break level. One knows the ways of the Treasury. Most of them are practically certain to lose, and I am surprised that the Minister concerned with the Arts—to whom I pay tribute for the work that she has done—has agreed, apparently, to the very unsatisfactory arrangements which so far have been put forward for recompense.

If I may bring my remarks to a close, at 7.45 yesterday morning when the Chancellor finally moved that we should adjourn, he suggested that the Opposition should find new arguments. With respect, there is no difficulty in doing that. The difficulty is in selecting from all the arguments and cases which have been put to us. I have used the example of the Hospital Saving Association largely because of my own affection for it. I assure the House that I could have found literally scores of other examples which have been put to me in the last few weeks. I do not ask the Chancellor to find new arguments. All I ask is that he should find one different word. In our discussions on Clause 42 so far, he has said "No", and nothing else. We have had it in many guises, sometimes charmingly and sometimes roughly, and in a number of different voices. Always the answer has been "No ".

I am sure that the real reason why the answer is "No" is because there is a perishing machine somewhere up in Newcastle which has all our records tabulated. Because the machine has neither eyes nor a heart, it cannot distinguish between one man and another, between a fit young man of 21 and a disabled person who may be years older than that and doing a part-time job. That is the difficulty. We are up against a machine. One of the functions of the House of Commons is to provide eyes, ears and, if necessary, a heart for the State machine. That is exactly what we are trying to do by the Amendment.

The truth is that there is no majority in the country for this proposal. The Liberal and Conservative Parties may differ in detail, but they are wholly united in their opposition to S.E.T. They alone polled more than 50 per cent. of the voters at the last General Election. I would have added the co-ops, if it had not been that the Co-operative Members have shown themselves willing to be docile poodles to the Patronage Secretary at all times throughout the debate. I say that with a great deal of regret. However, if they maintain that attitude, I hope that they will spare us the crocodile tears with which they explain their support of the Government in the Lobby.

In moving the Amendment and its related Schedule, I say nothing about the other 14 Amendments on the Order Paper. No doubt those who have put their names to them and others will speak for the propositions which they advance.

The short point is that, unless we show special consideration to those whom I have enumerated in Parts II and III of the Schedule, we will be left with a savagely cruel impost through S.E.T. on almost everything that is worth while in the quality of life in the country. We can make a good start to putting it right by accepting the Amendment and the Schedule.

Mrs. Joyce Butler (Wood Green)

This debate is so wide-ranging that I should like, if I may, to confine what I have to say to Amendments Nos. 147 and 29. The former is concerned with a group of people who I think are the forgotten people in our community, those who are hard of hearing or deaf. I think that they are forgotten because on the whole their disability is not obvious. They move about among us looking like people with normal hearing, but their great difficulty is that of communication. This makes for particular problems when they are seeking employment, because their difficulty of communication so often makes it much easier for people not to talk to them at all, and it makes it much easier for employers not to consider employing them.

I have had a number of letters from people who are hard of hearing. In one case a woman who had been through a number of interviews with employers was an expert at lip reading. She had carried off the interviews highly successfully. She had understood everything that was said to her. Everything that she said was satisfactory, but at the end each employer said, "The difficulty is that of communi- cation", and not one of them would employ her. A number of letters make the same point.

The man who was chairman of the youth section of the Association of the Hard of Hearing told me that over and over again young people, because they were deaf, could not find an employer to take them on. If those who are hard of hearing are employed in one of the services, where the employer will not get a refund of the Selective Employment Tax, they will, inevitably, find it difficult to maintain their employment if the employer decides that he has to cut down his staff. These are the people at whom he will look in those circumstances.

There may not be a large number of them, and this is one of the things which I should like the Chancellor to consider. I do not think that acceptance of the Amendment will cause him a serious loss of revenue, because, although there are thousands of people who are hard of hearing, a large number of them are already retired. Some of them are housewives, who are not in employment, and a considerable number of them are employed in industry where they can carry out mechanical work without any need to be able to hear what is going on.

I am concerned about the limited category of those who have other skills which they want to use in offices, in the distributive trades, and in other services of this kind. I do not think that their numbers are extremely large, but they are an important section of the community, and it is important that we do not equate deafness with lack of intelligence and lack of skill to do this different type of work.

We ought not to relegate, as we do at the moment, deaf people to unskilled mechanical work because this is all that employers are prepared to offer them. Employers today think twice about employing people who are deaf, and I am sure that with the Selective Employment Tax they will think not twice, but three or four times, before they take on an employee who is deaf.

I ask the Chancellor to look sympathetically at the Amendment. It is very difficult to give numbers. It is very difficult to categorise this group of people. Some of them are registered as disabled, but the great majority are not, and I have been wondering how the Chancellor could select people who are deaf, how he could as it were register them. I believe that if he looked at the National Health Service records of people who are registered for a Medresco hearing aid, this would give him the register that he would need to except these people from the application of the S.E.T. to the extent that employers will pay only 1s. a week for employing them.

The majority of those who are hard of hearing use a hearing aid. In the first place they usually go through the National Health Service machinery. To get a hearing aid through the National Health Service they have to be medically examined and certified by a doctor as being deaf. There would, therefore, be no question of evasion, and even if later on they were to use some other form of hearing aid, I think that this would give the Chancellor a pretty good idea of the people to whom I am referring in the Amendment, and I ask him to consider it sympathetically.

5.15 p.m.

I should like now to deal with the question of part-time workers, and particularly the large number of married women who work part-time. This is an enormous group of people, but even so there is a shortage of suitable part-time work. Some years ago I carried out a survey among a group of women. I found that there was great dissatisfaction among them because they could not get the part-time employment that they wanted.

It is a mistake to think, as people sometimes do, that women who undertake part-time work are doing it for some frivolous reason. In almost every case it is a real economic necessity. For the young couple with, say, two children, quite often it is only when the children go to school and the wife is able to take on a part-time job for three or four hours a day that the couple really begin to get on their feet and be able to cope adequately with their financial responsibilities.

For the older married woman, time and again her contribution from part-time work helps to meet the mortgage, to pay instalments on the house, to pay the rent, to keep older children at school after the official school-leaving age, and so on. For the retired woman who works part-time, and particularly those who do so much of the cleaning of this building and so many others, this part-time work is vitally necessary to enable them to manage with their retirement pension.

This is an important category of women, and I am not happy about the way we are treating it in regard to the S.E.T., because if this part-time work is to do what these women want it to do, which is to give them a real addition to their income, it has to be for more than eight hours a week. In practice, for most of them it is a question of three or four hours a day, which would be covered by the 21 hours mentioned in Amendment No. 29. If employers could be exempted to the extent of paying only 1s. for them it would be a great advantage from many points of view.

Employers who have so organised their employment that they can employ two or three women part-time to replace one full-time worker are performing a real social service. They are making very good use of available labour. They are probably at a slight disadvantage in doing so, but they are doing a valuable job. Those employers will be penalised under the S.E.T. arrangements. Quite near me there is a co-operative shop in which the manager employs three women—two for 15 hours a week and one for 12 hours a week. Those three women take the place of one full-time employee. For these three women he will have to pay 37s. 6d. in Selective Employment Tax.

Certain consequences are bound to follow. The employer will be penalised for employing part-time labour and he will have to do something about it. He may try to reduce the work of all those employees to eight hours a week. This will give them a serious cut in their wages, which will be a great hardship to them. It may also cause him to decide to reduce the number of hours during which the shop is open, which again would be contrary to the present demand for longer rather than shorter shopping hours.

If the employer does not do this he will have to find some means of meeting the additional bill, and inevitably the cost will be passed on to the customer in the form of higher prices. I am told that whereas the prices of groceries are pretty well known, and are watched closely by housewives, in other services and other types of shop there is less knowledge of what prices should be. In those cases price increases can be made without a great deal of public reaction. This will have serious effects on our prices and incomes policy.

In the case of co-operative shops there is a possibility that the tax will be met by cutting the dividend on purchases. I ask my hon. and right hon. Friends to realise that even today the dividend is very valuable to those who shop in cooperative shops. Many thousands of housewives use that dividend to buy necessities for their homes, their children and themselves—necessities which they could not otherwise afford. It is not a light matter for them for the dividend to be cut in this way. Furthermore, it is a matter of social policy which we ought to consider very carefully.

Many other hon. Members wish to speak on this subject, so I shall not proceed further on it. I hope that after the Chancellor has listened to all the points which have been and will be made he will be able to give us an assurance that he will consider the working of the Selective Employment Tax in respect of the categories of people which have been discussed this afternoon, and will be able to make a concession in respect of some of the very important social ones.

Mr. Boyd-Carpenter

The hon. Member for Wood Green (Mrs. Joyce Butler) has made a very powerful case in respect of the two matters to which her speech was devoted. As for the deaf, she brought out clearly the opportunity which the Government have so far failed to take to use S.E.T. as a means of giving specific encouragement to the employment of certain categories of handicapped people. I hope that in respect not only of the deaf but of other categories to whom I shall refer shortly the Committee will insist that within the framework of the tax and within the general economic policy, right or wrong, behind it, the Government, having decided on a tax of this kind, should make sure that it is used to help those categories of people whom everyone wants to see helped.

The hon. Lady raised the important question of part-time employment. I entirely agree with her that part-time employment, especially of women, is of very great social as well as economic importance. The trouble is that a rate of tax which may not bear very heavily relative to the sort of wage that full-time employment brings in is proportionately much more heavy and discouraging when seen against the background of the naturally lower rate of earning that goes with part-time employment.

The hon. Lady put her finger on a very weak spot in the Tax when she showed that an employer who employs three women part-time for more than eight-hours each in a week, instead of employing one person full-time, will pay three times as much tax as he would if he were employing only one person.

In the vast majority of these cases it is completely unrealistic to think that this Tax, or anything else, will drive people to work in factories. If they are driven out of their present employments they will be driven out of employment altogether—and what good does the Chancellor think that will do to anyone, and also to the economic and social life of the country?

My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) pointed out that the series of Amendments which have caught the favourable eye of the Chairman of Ways and Means all seek to reduce the tax in respect of this employment to 1d. rather than—as most would wish to see—excluding this employment wholly from the tax. My right hon. Friend explained that this was done because of the terms of the Budget Resolution. In these circumstances those terms are highly objectionable. When the Government intended to impose a tax of this sort it was wrong of them to take early steps to prevent a clear-cut decision by this Committee to take certain occupations out of the ambit of the tax.

I have not the slightest doubt that the Chancellor will be able to quote precedents. He will be able to quote the short-lived effort in this direction that was made in 1961 by the right hon. and learned Member for Wirrall (Mr. Selwyn Lloyd). But there is a distinction which will invalidate that as a precedent for consideration in this case. That was a new tax, and so is this; but that was a tax which, had it been imposed, would have been imposed not on a selective basis but right across the board. But the Chancellor, having taken upon himself to impose a tax which was deliberately selective, should have left it to the Committee to decide whether selectivity should run to the point—as the Americans would put it—of "selecting out" certain categories.

The offence is made worse by the fact that the Chancellor has himself selected out two categories. Subsection (2) provides that the tax shall not operate in respect of employment in the Armed Forces, or to mariners and airmen, for very good reasons. If, when the Chancellor has produced a tax which is, first of all, intended to be selective in its effects because of the repayment provisions, he himself then goes further and cuts out altogether two particular categories in respect of whom he says the tax should not be paid, that is an unfair diminution of the rights of the Committee in preventing hon. Members moving straightforward Amendments to eliminate the tax for other particular categories.

5.30 p.m.

The desirability of exempting charities, which is the intention behind the notional penny, has been made far greater by the right hon. Gentleman's rejection of the first Amendment to the Clause about the dates of collection and repayment. When he spoke in that debate, the right hon. Gentleman did not face the problem that this differentiation of dates means that every charity in this country will have to make an interest-free loan to the Government when the tax comes into operation in September until February.

If the right hon. Gentleman has studied this, as he must have, he will know that that will be a very great strain on certain of those charities. They might have to go to the banks and borrow—if they borrow at present rates of interest it will be extremely expensive, as no one knows better than the Chancellor—and they will lose the interest which they will have to pay for perhaps six months on those loans.

He has not guaranteed that they will all get their money back promptly on 6th February even if repayment starts then. I would guess that six months in respect of the repayment of the first money paid is an underestimate. Therefore, they will either have to borrow and be permanently worse off because of the interest or, as I am afraid many will do, they will have to cut back their charitable work in the latter part of this year.

This is absolutely wrong. The Chancellor having rejected our proposal that, at least, the tax should not fall until it can be repaid where he wants it to be repaid, then, particularly in respect of charities—though the argument is valid over a wider section—I would beg him to take the better course and exempt them from making payment at all. The Chancellor cannot want to take permanently from charities—that is what the interest on the money means—sums of money by way of this tax and so damage their work. He could avoid doing so by accepting the Amendment.

I now come to Amendment No. 363, which, as we were told earlier, can be discussed with my right hon. Friend's Amendment, No. 34, and which has suffered from a number of printers' and calligraphic errors. It should read: Provided that the said amount shall be one penny in the case of a person who is in receipt of a retirement pension under the National Insurance Acts 1946 to 1965. This Amendment is to be differentiated from all the others in one respect—its administrative practicability. My right hon. Friend referred in rather derogatory terms to a "perishing machine" at Newcastle. As I was responsible as Minister of Pensions for installing the physical machine to which he refers, I was not sure that for once his choice of adjectives was particularly happy, but the Chancellor made the point with which I will deal when he was winding up on Thursday night.

Interrupting the Leader of the Opposition, the Chancellor said: Time after time, the question I was asked was whether charities could be exempted from payment of the tax. I have been asked that about lots of groups. The answer is 'No', because the Insurance stamp is being used. This is an entirely different matter from whether there can be repayment of the tax."—[OFFICIAL REPORT, 23rd June, 1966; Vol. 730, c. 953–4.] In other words, what the right hon. Gentleman was saying is that one cannot exempt because one has to collect on the stamp and the National Insurance office could not know by whom the person is employed. I will not argue that general issue, though there is probably a case the other way, but in the case of Amendment 363 particularly a different stamp is concerned.

These people are not, as in my hon. Friend's Amendment, people over a particular age, but people in receipt of a National Insurance retirement pension. The Committee will know—you, Mr. Steele, will know in particular from your past experience—that those people receiving a retirement pension, either because they are over the age at which the retirement condition bites or because their earnings are below the earnings rule level, do not make their own contribution except for a few pennies in respect, I think, of industrial injuries. The contribution is the employer's.

Therefore, what is crucial on the administrative side is, that there is a different stamp, a stamp for the employer-only contribution in respect of pensions. Therefore, if the Chancellor wanted to accept this proposal, it would be administratively perfectly easy. He is going to increase, generally by a very large amount the cost of the National Insurance stamp. All he would need to do administratively if he accepted the Amendment would be to leave the present employer-only stamp in respect of pensioners as it is.

In fact, administratively, it would be easier, because the Ministry of Pensions and National Insurance would not have to change one stamp. This is perfectly practicable, too. I would ask the Chancellor to deal, at least on this Amendment, with the merits, social and economic, and not try to hide behind any administrative problem.

Mr. A. P. Costain (Folkestone and Hythe)

My right hon. Friend has made a strong case in this respect. Has he considered that charities which are well known and have to be established by the Chancellor should be issued with free stamps to save them from having to apply for this interest-free loan? The free stamps could have on them the name of the charity, so that there could be no question of fraud. This would follow up his example about the old-age retirement stamp.

Mr. Boyd-Carpenter

That is an interesting and forceful argument, but I do not want to dilute my argument by adding my hon. Friend's gin to the whisky in my own tumbler. They are both powerful and stimulating fluids, but the mixture might not be agreeable to the Chancellor, although they are both dutiable liquids——

The Chancellor of the Exchequer (Mr. James Callaghan)

Not together.

Mr. Boyd-Carpenter

I agree with the Chancellor, and I hope that on this point my hon. Friend will allow me to be an abstainer.

My proposition is administratively practicable. Why, then, does the Chancellor want to levy this tax on the employment of pensioners? Broadly, he produced two arguments for his tax—the traditional one of a Chancellor, that he wants the money, and the argument, good or bad, that he wants to divert labour from services to factories.

I asked him a Question not long ago about the cost of exempting pensioners and he told me that it would be £10 million. That is a not insubstantial figure, even against the background of the tax, but I wonder whether he really thinks that £10 million levied on the employment of pensioners is a worthy or creditable impost.

I do not know whether the national economy is so poised on a knife edge that this £10 million is essential to it. If the Chancellor tells me that it is, I would say to him with respect that he can make it up either by a small reduction in the 7s. 6d. repayment for industrial employment, or by bringing into full payment of the tax some of those nationalised industries which the Bill proposes to exempt. Either of those alternatives seems a less bad way of getting £10 million than putting this impost on the employment of pensioners.

Is it realistic to suppose that people of this age, at least 65 if they are men and at least 60 if they are women, will be diverted in substantial numbers to factory employment? I am glad to say from my experience in the Ministry of Pensions and National Insurance that some are still at work in factories over that age, but it seems unlikely that many would be diverted into them from a different kind of work after pension age. I do not think there is a case for imposing this tax in respect of pensioned workers.

I hope the right hon. Gentleman will not use the argument which he used the other night, and which the Parliamentary Secretary to the Ministry of Labour used in answer to a Parliamentary Question the other day, that the tax falls on the employer and therefore it is all right. That seems a foolish argument, because it confuses the administrative point at which the tax is imposed with its effect. It is just as much sense to say that tobacco tax does not fall on consumers of tobacco because it is levied at the point of production. Its effect is what matters. As to the effect, we come to the very important point which follows the point made by the hon. Lady the Member for Hackney——

Mrs. Joyce Butler

On a point of order, Wood Green.

Mr. Boyd-Carpenter

I beg the pardon of the hon. Lady and I congratulate Wood Green. There are many cases in which pensioners on small incomes do a few hours of work. There is a typical case in the countryside with which hon. Members will be familiar when a pensioner does 10, 12 or perhaps 14 hours a week working for a very modest wage in some one's garden or helping on a farm. Against the sort of earnings which that sort of man gets 25s. a week is a large and may be a decisive factor in deciding not to employ him. Can the Chancellor really want that?

As one who at one time was a social service Minister I know that social service Ministers of both parties have for years exerted themselves, not without success, to stimulate employment of older people. That has not been only or even necessarily because of the money those people may earn, but because, as many of us know and we have seen case after case, people fit for work when deprived of work begin to go to pieces and deteriorate as a result of that deprival. Let us not underrate also the economic contribution which pensioners can make by working. The contribution to the economy is very real at this time of shortage of labour.

I believe that for the fit older people suitable work, almost certainly not full-time work, is literally in many cases a life-saver. This is a matter of vital importance. If the Chancellor puts this 25s. a week on the employment of these older people, particularly in the country —in many cases their remuneration may not be more than twice that amount—he will probably cause quite a number of them to be turned away. What good will that do? They will not be likely to go into factories and he will not be likely to get the tax because if they are turned away the tax will not fall on them.

Therefore, both objects will fail, the getting of the money and the securing of diversion of workers to factories. I ask the Chancellor to look at this question carefully again. The proposal is administratively practicable. Although it would cost a certain amount, it would not be a large sum and it is a sum which he could recoup in other ways. It is not unfair, would not conflict with his idea of the redeployment of labour and what is more it is socially right, progressive and just.

5.45 p.m.

Mr. Peter Doig (Dundee, West)

I draw particular attention to Amendment No. 161 which is in my name. This seeks to halve the amount charged if the person concerned works less than 21 hours a week. This seems the easiest to administer of the proposals before us. For that reason it might commend itself to the Chancellor. It is also reasonably fair. Some of the other suggestions could be very unfair. For instance, a shop which employs two part-time workers as against a rival shop employing one full-time worker would have to pay double the amount of Selective Employment Tax for the two part-time workers. If my Amendment were accepted the two charges would be equal. If some of the other Amendments were accepted the emphasis would be on the part-time worker having the advantage.

I want hon. Members to look closely at the effects of this proposal. Many married women are employed in shops. I take the example of a chemist's shop. Chemists' shops perform an essential service to the public. If they cannot get part-time workers or they find it uneconomical to employ them, there is more than the question of the financial return to the Exchequer. If allowance is not made for this people such as chemists will have to recruit full-time staff who otherwise might be engaged in manufacturing industry.

If shopkeepers have to pay the extra amount they may have to increase prices.

Or shopkeepers might have to cut services rendered to the public and people will go without necessary medicines and so on. There are many other examples which could be given. If the loss of revenue would be too great were this proposal accepted, I suggest that the Chancellor should reconsider the question of premium payments. Money which could be handed back in this way would serve a more useful purpose than premium payments.

This Government have been very successful so far in their employment policy. There have been improvements in employment every month. If this continues, before long we shall be reaching a point at which it will be impossible to recruit new labour. If part-time workers are turned away because of the tax people who otherwise would go into manufacturing industry will be employed in their place in chemists' shops and so on. Then we shall have the opposite of what the Selective Employment Tax seeks to achieve. I ask the Chancellor to take this seriously into consideration.

Sir David Renton (Huntingdonshire)

Although I am opposed to the tax, I realise that, if used properly, it would give the Chancellor a great opportunity to reduce hardship. I hope that the right hon. Gentleman will heed what is said this afternoon, because it would be a great pity if that opportunity were missed. This is undoubtedly, as my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) mentioned at the close of our proceedings on Monday, the most important set of Amendments to the Bill. The reason why it is such an important group of Amendments is that every one of these Amendments deals with human problems.

My right hon. Friend mentioned the difference between those charities which are charities in law and which will benefit from the Chancellor's second thoughts and those which are charities in fact but not in law and which will not benefit. I want to mention, first, those charities which are strictly charities in law, because I hope that the Chancellor will have still further thoughts about them. Because of the forced interest-free loan which they will have to make, they will have to raise between £2 million and £3 million. Even their having to do this is entirely contrary to an established principle hitherto accepted by all parties, that charities should be excluded from direct taxation. The reason for this is the good one that charities are complementary to the State in providing welfare services. The Government confirmed this principle in last year's Finance Act, which provided that charities should be exempt from the Corporation Tax and from the Capital Gains Tax.

Mr. Hugh Jenkins (Putney)

What makes the right hon. and learned Gentleman think that this is direct taxation?

Sir D. Renton

It is taxation which comes into the Finance Bill and which is directly paid by the citizen. The employer pays it as a liability imposed upon him. Admittedly, he pays it in respect of an employee, but I would consider that this is a form of direct taxation. That is my answer to the hon. Gentleman's question. If the hon. Gentleman catches your eye, Mr. Steele, he will no doubt be able to express a contrary argument, although I do not think that there is a valid contrary argument.

The principle that charities should be excluded from direct taxation was well in the minds of all of us who took part in the lengthy discussions on the Charities Act, 1960, in which, incidentally, the Chairman of Ways and Means played a most valuable part. This principle was the foundation on which some of the discussions took place, especially the discussions with regard to the registration of charities.

Before breaching this principle, even to the extent of requiring a forced interest-free loan to be made in the guise of a payroll tax, which I maintain is a direct tax, the Government should justify their action. They have not done so. Rather than do so, I would hope that the Government would accept Amendments Nos. 34 and 73, or something on those lines.

My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said that charities will have two choices in having to pay this tax. One is to borrow from the bank. The other is to reduce the work which they do. These are two alternatives, but I think that there are others equally unsatisfactory. This is the first speech I have made on the Finance Bill, and if the Committee will bear with me I want to draw attention to the unsatisfactory character of all the courses open to charities.

Charities could pay out of readily available cash, but few of them have got it, because they find it hard enough to balance their books on current account. So this should not be considered as a serious possibility. No doubt it is the one which the Chancellor hoped would apply when imposing this tax on charities, but it is not a serious possibility.

Then there is the question of raising a loan from the bank. Charities would have to find security for that. Some charities, in order to raise capital for future charitable work, have already gone to the full extent of the security that they could possibly raise. Now, I do not know whether the Chancellor will allow bank advances to be made for the purpose of paying the tax. If he does allow them, it will be inflationary and, therefore, the tax will defeat its own object.

If the Chancellor does not let the banks make advances, charities which have no ready cash available will have to ask the trustees to sell their endowments, even though they would hope to buy them back or replace them some six or nine months later. This would be a harsh course in some cases, but, in any event, it would involve applications to the courts, because, although trustees always have power to make advances for the benefit of a charity and its charitable purposes, I doubt whether they have power to do so merely to enable the charity to pay tax. So, whichever way charities find the money, the whole position is fraught with trouble. I hope that the Chancellor will have second thoughts and accept something on the lines of Amendments Nos. 34 and 73.

I want now to turn shortly to the position which arises on Amendment No. 73, with particular relation to Items 1, 4 and 5 of the new Part II. There are many private homes and hospitals not making large profits, as my right hon. Friend the Member for Enfield, West mentioned, which help the National Health Service very greatly. They help the Service partly because in some cases they provide services which the Service has not got, but also because in any event they relieve pressure on the Service. Everyone knows that this is great enough already.

The purpose of the tax is to redistribute manpower. If any of these private hospitals, nursing homes, or the like, have to reduce their staff they will have to reduce the number of patients they take, and the burden on the Service will be heavier than ever.

I mention, as a particular example, private homes for mentally handicapped children, because these are playing a very vital part in what is acknowledged to be exceptionally difficult social work. The homes that I know of—and I know of a number of them—do not make much profit and they find it very hard to get staff. Whenever such a home closes down, as I know from my personal experience, immediately a harsh problem arises for the children and their parents.

On 10th May I wrote to the Chancellor about this and drew his attention to the valuable debate we had in the House of Commons on 18th February. I do not want to repeat to the Committee all the evidence that was then given of work done for these children by charities and by private organisations, as well as by the National Health Service. I will merely add that the Chancellor should be very careful indeed before he strikes even a moderate blow at this very fine work.

Then there is the problem of mentally handicapped young people who have had special training for work in industry. Not enough of them have done so. It is difficult work. There is such a training unit at Slough which takes only those young people with an I.Q. of 50 or less. This is a very severe degree of mental handicap. The unit trains such youngsters in simple manual tasks and in such things as travel to and from work, timekeeping, the value of money, drawing wages, and so on—all the essentials of a worker's life.

When trained, these young people have to be placed in industry. At the moment some employers are very good indeed. They are virtually treating themselves as charities in taking these young people on. These young people are engaged on a whole-time basis. It would be an unnecessarily severe punishment for them if their employers had to pay the Selective Employment Tax. In fact, I am afraid that many of them may not do so. The examples that could be given in support of the various categories in this Amendment are multitude but I will just choose one which has come from my own constituency——

6.0 p.m.

Mr. Callaghan

The right hon. and learned Gentleman says that manufacturers and industries take on these people and then regard themselves as charities. If that is the case, they will get an additional 7s. 6d. a week.

Sir D. Renton

I am grateful for that intervention because it enables me to say that I was perhaps using the words loosely when I said that they regarded themselves as charities. The point is that these young people do not always earn the full wages that other workers do. It is an act of generosity on the part of an employer when he takes them on. Obviously the employer is not technically a charity, but he is acting in a generous and charitable way. That is what I was trying to imply. That is why I say that I think it would be a great pity if such an employer were to be penalised by having to pay the Selective Employment Tax.

Mr. Callaghan

The right hon. and learned Gentleman said that these people had been taken on in industry. I was pointing out that to the extent to which this is true there is an additional payment. I agree that if they go into the services there is a tax payable on them, but in a great deal of this discussion, whatever categories we are discussing, there is a tendency to forget that large numbers of these people are employed in industry where there will be a premium.

Sir D. Renton

The Chancellor's intervention is beyond belief. He knows perfectly well that even manufacturing industry which is going to get the premium will think very carefully indeed about their payroll, as I understand it—I do not say always, but in many cases—because sometimes they will feel it undesirable to increase their bank overdrafts and their current outgoing commitments, even though they will get a premium at a later stage.

As I understand it, the Chancellor's approach to this matter has been all along that he hopes that even in manufacturing industry the Selective Employment Tax will make people careful about the employment of labour. If that is not so, why is he asking manufacturing industry to pay the tax at all, merely in order to get a premium at a later stage? It would be far simpler, administratively cheaper and better all round if he simply gave them the premium. I think the Chancellor's second intervention missed the whole point of the purpose of his tax on manufacturers. If I am still wrong, no doubt he will intervene again and I shall again endeavour to persuade him.

I should like to give an example from my own constituency. It is a simple example, but it happens to be an example of all three points mentioned in Part III of the proposed addition to Schedule 10 in Amendment No. 73. That Part deals with disabled people, part-time workers for less than 20 hours a week, men over 65 years of age and women over 60. The example is of an old lady who lives alone. She has got some small private means. She was terribly injured in an accident 20 years ago and is almost completely paralysed in both legs.

She cooks for herself. She has a daily help who comes in part-time for some hours each day, but I understand that it adds up to slightly more than 20 hours a week. Otherwise she is entirely dependent upon the part-time help of her old gardener whom she has employed for many years. He does all the fetching, carrying, messages and the shopping in the village. He carries in the fuel, he makes the fires and keeps them going, and so on. The gardener is also employed for more than 20 hours a week. This incapacitated old lady of moderate means, as I see it, under the Bill as it stands, will have to pay the Selective Employment Tax both for the part-time daily help and for the part-time gardener. If that is not severely harsh, I do not know what is.

I must apologise for detaining the Committee for some time, but this is the only attempt that I have made to persuade the Chancellor on this Bill. As he knows, I do not idly utter on these occasions. I earnestly implore him to regard this tax as a great opportunity for doing good, for relieving personal hardship instead of increasing it as it undoubtedly Will if the Bill remains as it is.

Mr. Callaghan

The right hon. and learned Gentleman is an old friend of mine of many years standing, and it was on that basis that I sought to interrupt him. I do not think he has understood the basic conception. As to the sad case that he has quoted, I would not judge it on the basis of what I have heard, but it seems to me that it comes exactly under Clause 6 of the Selective Employment Payments Bill under which she will get a refund.

Mr. Harold Finch (Bedwellty)

I support the Amendment in so far as it is concerned with the disabled. As the Clause stands at present, I believe that it will affect the employment of the disabled in the service industries and, that being so, I am afraid that it would tend to increase unemployment among these disabled people. I know my right hon. Friend the Chancellor of the Exchequer feels that one is inclined to exaggerate the situation, but even if one takes the most optimistic view there will certainly be some adverse effects upon the disabled in the service industries.

Therefore, I should like to put this question. Even if it has only a limited adverse effect, why include the employer of the lame, the blind and the handicapped? This section of the community always finds it difficult to get suitable employment. Apart from those employed in the manufacturing industries, quite a large number are employed in the service industries. If we strike the slightest trade recession, if firms find themselves in difficulty, if things do not go as they ought particularly with regard to industrial undertakings, they will seek to cut costs and economise. It is my experience—I have been in the trade union movement for many years—that it is the disabled man whose position will be placed in jeopardy and he will find himself unemployed. That is what is troubling me.

Once a disabled man is unemployed, it is difficult for him to get another suitable job. Once he is idle it is most difficult for him. There are organisations which have spent years finding suitable work for the disabled—ex-Service men's organisations, the British Legion, the trade unions and, indeed, the D.R.O.s at the Ministry of Labour. The function of these D.R.O.s in the Ministry of Labour is to resettle disabled men in industry. That is what they are employed to do. It is their function to do what they can to find suitable work for the disabled. But they will not stand much chance of getting disabled men into service industries when employers, whether we like it or not—and I shall not go into the merits—will have to pay 25s. for a disabled man who is perhaps doing only the lightest of work.

Difficulties are likely to arise, as I know from my own experience. An employer in most cases is bound to employ 3 per cent. disabled people, and a large number of employers take on more than 3 per cent. I have often gone to employers—and I shall not mention names—appealing to them to find jobs for disabled men and women. Yet often they have already been employing more than 3 per cent. For example, an ex-Service man maimed in the war may have been out of work for a long time. We have gone to an employer and said, "We know that you are employing at least 3 per cent. already, but can you squeeze this man in?" Time and again—and I must say this for the employers—they have been employing up to 5 or 6 per cent. in many industries but have found work for more. But it is a difficult matter and we still have thousands of disabled men unemployed.

The mining industry is passing through a serious phase. Pits are closing and more and more men are being declared redundant. The National Coal Board has done a great deal for disabled miners, but the time has come with the continual closure of pits when it is unable any longer to find suitable work for these men in such numbers. There is an increasing number of unemployed disabled men, particularly in South Wales. They are suffering from all kinds of disability, particularly pneumoconiosis. One of the principal activities of the National Union of Mineworkers these days is finding work for disabled men declared redundant.

What does this situation mean to the Exchequer financially? If a disabled man is not in work, he will get unemployment benefit. But if he is unemployed for a long time the maximum benefit he can receive is from seventeen to nineteen months. After that, the benefit ceases and he receives National Assistance. Thousands of disabled men in South Wales are on National Assistance because their benefit has expired. So, in the end, the Exchequer has to pay. From the point of view of taxation, my right hon. Friend will get nowhere if disabled men are unable to obtain employment.

A disabled man has no resources. We have been debating the Capital Gains Tax, investments and other resources upon which employers can draw to help meet the tax. But a disabled man has no such resources. He stands alone. A man disabled in the war has no other means than work. He cannot make up for his losses. I know many young men, skilled miners or engineers, who have been disabled through a fall of roof underground and are able to do only light work. They have to get it where they can. But there is nothing more soul-destroying for a disabled man than to find that he cannot get work.

6.15 p.m.

I know that my right hon. Friend is right in saying that the tax may encourage the switching of jobs, but it is not easy to switch a disabled man from a service to a manufacturing industry. We are dealing with men who, perhaps, must sit down to work and who may not bring in to their employer a remunerative return for their employment. I do not want to be a party to anything which would impair the employment of disabled men Or women, whether they be ex-Service people who have given up part of their lives to the country or men and women who have suffered accidents in industry through no fault of their own and only want to work.

I know that my right hon. Friend himself does not intend to do anything to impair the employment of the disabled, but I do not think that this proposal has been thoroughly gone into. Government Departments could not possibly have analysed the situation. If they had, I am sure that they would have given consideration to the position of the disabled.

In the country generally, unemployment is low, but in South Wales the unemployment figure for the disabled has gone up—not a great deal, but an increase nevertheless. In South Wales, 4,494 dis- abled men are unemployed compared with 4,297 last year. It is not a great increase but this is, after all, a time of full employment. I hope that my right hon. Friend will look at this problem again. I do not want to make a lengthy speech. We know the facts. All sorts of organisations are continually seeking work for the disabled, and I hope that my right hon. Friend will not put anything in the way of finding such employment. I ask him to see what he. can do in order to insure that the disabled are able to get work.

Sir Lionel Heald (Chertsey)

I support the hon. Member for Bedwellty (Mr. Finch), who speaks from such deep knowledge of this subject, as I know. It is a subject in which I, too, have been interested for many years. The example of the disabled is something that we should insist upon as showing that there is something fundamentally wrong with this tax.

I am afraid that we shall be told by the Chancellor that he is sorry—and we all know that he, as an ex-Service man himself, would indeed be sorry—if this tax should have the kind of effect the hon. Member for Bedwellty has outlined. Nevertheless, I think that the right hon. Gentleman will tell us that this is inevitable from the tax. It is a dreadful thing.

As the hon. Member for Bedwellty knows, better than I do, those of us interested in this matter have been battling ever since the First World War to get good treatment for disabled people. There have been difficulties—including opposition on official lines in making definitions, and so on.

We have had all these problems with invalid carriages and matters of that sort but we managed to make progress all the time, and there has been more consideration for these men, for ex-Service men—and I am glad that the hon. Member for Bedwellty (Mr. Finch) also mentioned the miners, with whom I had the great privilege of serving in the Royal Engineers during the First World War.

During these years we have been making progress, but with this tax we shall take a great step backwards. Owing to the policy which the Chancellor has been forced to accept—I do not think that he would have thought of initiating a scheme which would have these results, but he has found himself, apparently, bound to accept it—we shall do something that, in normal times, if we were not dealing with a tax provision, we should not think of doing.

We must all think about this very seriously. I do not bring it forward as a party matter. There are at least 12 different matters about which one could have spoken under the Amendment, which covers all the headings of the small private enterprise, the social services, and so on. This is, perhaps, the most striking one, at any rate to anyone who has ever had anything to do with disabled men and who knows how difficult it is, as the hon. Member for Bedwellty said, to get them into a job.

If it will be difficult to keep them in jobs, that will make the situation much worse. We are not speaking on sentimental lines, and still less on the line that we want a stick with which to beat the Chancellor. We want to alert the Government to the danger of what they are doing and its wrongness.

Mr. Hugh Jenkins

First, I take up a point made by the right hon. and learned Member for Huntingdonshire (Sir D. Renton) on the question of what sort of tax this is. It is not just a question of semantics. If this were a form of direct taxation, it would have certain characteristics which would deal in some degree with some of the points with which I want to deal. The distinction which is generally drawn, and which I draw, is that a direct tax is one that one pays directly to the Exchequer, and is unconnected with any other form of activity. An indirect tax is a tax that one pays arising from another transaction.

The distinction is that the indirect tax does not vary in relation to the income of the payer. One of the objections to our rating system is that it is not only a form of indirect taxation but that it is also, like most indirect 'taxation, regressive.

Sir D. Renton

I do not think that it would be right, in considering charities, for the hon. Gentleman and I to get down to a discussion on mere words. Would he not accept from me that it has been a general principle for many years, accepted on both sides of the House, that charities are excluded from direct taxation and exempted from rates, and, because of the special part which they play in the welfare services, should be treated in a special way from the financial point of view?

Mr. Jenkins

They are being treated in a special way in this piece of legislation, but I made the point for another reason. One of the problems about the tax is that the Chancellor has failed to vary it. It is on a standard rate basis, and one pays 25s. for a man, 12s. 6d. for a woman and for a boy under 18, and 8s. for a girl under 18. This is what one pays under any set of circumstances.

I want to draw attention to particular circumstances where there is a case for variation in the amount of the tax. It is, as I see it, one of the features of a direct tax that it varies, and this tax does not. It is a level payment, and as such it has characteristics of an indirect tax. I think that it should have a variation—I understand the Chancellor's point about it being necessary to levy a tax on all employees, or at least on almost all employees. Excluding certain sections from payment would be administratively a much more difficult problem than hon. Gentlemen suggested.

Therefore, I take the point that application of the tax must be general. But I do not think that this means that the same amount of tax must be paid for each category of employee.

I wish to draw attention to Amendment No. 40, which is in the names of myself and some of my hon. Friends, and Amendment No. 220, which is in the name of my right hon. Friend the Member for Vauxhall (Mr. Strauss) to which a larger number of names have been added. Some, including my own, have been squeezed off the Notice Paper, because only the names of the first five or six hon. Members appear in it.

These two Amendments are the same in principle. They seek to establish a lower rate of tax to be paid by registered theatrical employers. Under Amendment No. 40, any person employed by a registered theatrical employer would be taxed only at a rate of 2s. Amendment No. 220 provides that for any person employed by a registered theatrical employer in a theatre outside the Cities of London and Westminster the tax would be 8s.

I should be very happy not to press Amendment No. 40, and to withdraw it in favour of Amendment No. 220, which is, as it were, a refinement of it. There is an argument that the theatrical employer in the West End of London is probably not in need of any special amelioration of the tax. Therefore, I think that the point of my right hon. Friend in Amendment No. 220, that this partial relief for a theatrical employer should be operative only outside London, is reasonable. That it should be 8s. rather than the, perhaps, too nominal figure of 2s. which I suggested, would make the tax worth collecting.

I therefore address myself now to Amendment No. 220. Is it necessary to temper the wind to this particular type of employer? I think that it is. Very few employers nowadays are in danger of going out of business, other than through sheer incompetence. This sometimes happens, and I do not say that sheer incompetence is unknown in the world of theatrical employers. It sometimes exists, but it is possible for a theatrical employer to go out of business through no fault of his own, because the chances have been, and always will be, very evenly balanced in the position of the small theatrical entrepreneur in the provinces.

I have received a large number of letters from theatrical employers, and no doubt other hon. Members have also received such letters, asking us to intervene on their behalf and make the case that the theatres in the provinces are in a bad way, and that if we impose the full rate of tax upon them this will have the effect of taking the theatre away from quite a large section of the community in the provincial areas, and in Scotland and Wales.

The matter is serious, and I have had to determine in what degree the complaints which were made have been genuine and in what degree they have been false. I am fairly well qualified to make this sort of decision, because for 15 years I have been dealing on the opposite side of the table with employers, and I am fairly well skilled in detecting the man who is down to his last swimming pool and thus possibly can continue a little longer, and the man who is in the process of having to give up altogether.

6.30 p.m.

I asked for details. I have selected a few examples to show what I mean in speaking of theatrical employers in real difficulty. First, the Forbes Russell company, which puts out seven repertory companies. It engages about 77 artistes in these seven companies, and the additional cost will be £74 7s. 6d. a week. I think that that is just about the turnover for that company.

Mr. Joel Barnett (Heywood and Royton)

Is it not a fact that in many companies of this type the actors are self-employed? Could my hon. Friend say what percentage—I think that it is probably a large one—are self-employed and, therefore, not subject to the tax?

Mr. Jenkins

There are no self-employed actors. They are all employed persons. Self-employment is to be found only among variety artistes. The variety artiste is the only self-employed person in the entertainment world.

Mr. Barnett

No.

Mr. Jenkins

My hon. Friend must allow me to know best in this matter.

Mr. Barnett

I can only say that I have acted for people in this profession and submitted returns on their behalf as self-employed—[HON. MEMBERS: "Oh."]—and had them accepted.

Mr. Jenkins

I shall accept my hon. Friend's apology in due course.

I was saying that some of the complaints made by the employers are genuine and some are not. There was an operation mounted by the Howard and Wyndham company which seemed to me to be very much a public relations effort. I think that we need not treat that too seriously, because it is a large company unlikely to go out of business, but it remains the fact that it did make a loss last year of about £10,000. The impact of the tax, other things being equal, would increase the loss this year to about £30,000. Therefore, some changes will have to be made, reductions will have to come in its employment, or the business will have to improve if the company is to remain in being.

A company many of us will be concerned about is D'Oyly Carte. It has been operating on a profit-making basis, though in recent years the amount of profit has been reduced. The cost for this company in a year will be £5,700, and this will certainly have the effect of reducing the amount of touring done by the D'Oyly Carte company, if no more than that.

The man in real difficulty is the small manager in the provinces. I have taken one example here, David Kirk Productions. Here is what he says: The Ilfracombe Urban District Council have spent £58,000 in modernising a theatre. Having done which, they will not run it themselves, and so far from giving guarantees, they will not give even percentage terms. I have leased it for three summer seasons, putting in my own staff, and taking down a company to run a play policy. So far as I can see, this new tax suddenly drops on my budget another £20 a week for the last three weeks of the summer season, which is just 'not on'". He is talking about what he is already committed to, of course. What happens to those running summer shows with a line of 20 girls, before anything else, I cannot imagine. What is more, as I see it, the money is taken from us and then given as a bonus to those manufacturing cigarettes, contraceptives or armaments. Why am I suddenly the villain of the piece, and these gentlemen heroes to be given a Socialist incentive? As a manager, I have survived Entertainment Tax, which, in taxing the turnover, was bad enough. Now the basic assumption of this one seems to be that by employing actors per se I am committing a sin and to be penalised—a fiscal policy as far-sighted and forward-looking as the window tax or the poll tax. Do not mention the former to the Chancellor, or, with all those glass-fronted office blocks, he might feel that he was on to something. There is here an area of work which really cannot stand the tax. I think that similar arguments to the ones I have already advanced could reasonably be put in respect of films and television, but I have not put those arguments, although I have been pressed to do so, because, in my judgment, those employers can withstand the impact of the tax.

Mr. David Gibson-Watt (Hereford)

Although the ballet companies are not mentioned in the hon. Gentleman's Amendment, will he agree that certain ballet companies, such as the Harlequin company, which do a tremendous amount of travelling about the country, would also come under the umbrella of protection which he is urging should be provided for the people to whom he has specifically referred?

Mr. Jenkins

Yes, but there is another consideration there. Those companies which are in receipt of support from the Arts Council are charities and will receive the tax back. This is a matter which will, I hope, be confirmed and spelled out rather more clearly at the end of the debate. Nevertheless, although such companies receiving support from the Arts Council will have a refund, there will be the period of difficulty between payment and refund. Payments will start in September and the money will not come back until February, so that they will have to carry on for that time.

Companies in receipt of public support, the non-profit distributing companies, are now, as a result of the Chancellor's announcement, in a better position than the profit-distributing companies. I am not speaking on behalf of profit-distributing companies as such, and, in my view, the major profit-distributing companies can suffer the tax reasonably well. I am concerned about the smaller profit-distributing companies, the men who put on the summer shows, and so on. If as a result of the tax such companies can no longer carry on, the people in the various local communities will be likely to lose their theatre.

Dame Irene Ward

Has the Arts Council yet issued a schedule of companies and undertakings which will come under its umbrella? Last week, I asked the right hon. Lady the Minister responsible for the arts, and she said that the check had not yet been carried out. Do we now have a list so that we may know what we are talking about when we speak of those covered by the Arts Council umbrella?

Mr. Jenkins

There is no great difficulty about that. The Arts Council publishes in its annual report a list of the companies which had its support during the year, and those companies will get the return. I am sure that, if the hon. Lady has any particular company in mind, the Arts Council will give her an assurance about it. But we need not worry overmuch—not that we should be unconcerned—about companies in receipt of State support. We have to concern ourselves with the companies not in receipt of State support.

If my hon. and learned Friend cannot accept the Amendment, will he give the Committee an assurance that he will, with the Arts Council, investigate the possibility of creating a new category of help? I suggest that, in addition to its supporting function, the Arts Council should have open to it the possibility of an investment function so that the Council itself could invest in private theatrical companies on a profit and loss basis. The threatre is very short of capital. If the Chancellor found it possible to do what I suggest, he would ameliorate the effects which the tax will otherwise have upon the theatre in the provinces.

Dr. M. P. Winstanley (Cheadle)

I have no wish to make a blunderbuss type of speech to deal with all of the Amendments grouped together under this one head. I would say that while I and my hon. Friends on this bench are responsible for two of the Amendments, we are substantially in suport of the remainder. The right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod) said that the two parties on this side of the Committee were in agreement in wishing to see the end of this tax, or at least in wishing to improve it. I confirm that that is the case.

In particular, I want to draw the Committee's attention to a group of people to whom reference has already been made in this debate, and with whom I have been professionally concerned for many years—the disabled. As a doctor, I have been concerned with the working of the Disabled Persons (Employment) Act, in finding employment for disabled persons. The Disabled Persons (Employment) Acts of 1944 and 1958 were introduced to enable disabled persons to compete with fit persons for employment on equal terms.

Broadly speaking, they have worked, as a result of the quotas which industry and various establishments are required to take. They have also worked because many of these firms have co-operated to the point of exceeding their quotas. There have been difficulties and there are many firms, known to me personally, which do not take their quotas. They evade the Act by seeking to get on to the register many people whose disablements are more imaginary than real. There is the type of employer, who, to bring the total number of disabled persons up to the appropriate figure, will seek to get people, probably a mild diabetic, who have not been substantialy disabled, to go on to the register so as to keep his figures up.

Mr. Bernard Braine (Essex, South-East)

The hon. Gentleman has just made a rather serious charge. Surely no disabled man can be added to the register and kept on it without a medical certificate? Is he not aware that despite the workings of the Acts unemployment among disabled workers is five times the national average?

Dr. Winstanley

I am grateful to the hon. Gentleman. I entirely accept what he says.

Certainly, a medical certificate is required, but the criteria for being placed on the Disabled Persons Register are two. First, a person has to be considerably disabled in the performance of his duty and, secondly—and this is the category about which I was talking—it is also considered valid for a person to go on to the register if he would be substantially handicapped in obtaining other employment should he lose his present job.

I have had to fill in these certificates for persons in occupation and I have asked the first question on the form—"In what way are you handicapped in your present job?" They have said, "I am not handicapped at all, in any way." The fact is that they would be handicapped if they lost that job and had to seek employment in the open market.

I did not mean to criticise employers generally. Most of them operate this fairly and co-operatively and are a very great assistance.

Mr. R. E. Winterbottom (Sheffield, Brightside)

I am interested in what the hon. Gentleman says because I am a mild diabetic. I am a two-pill a day man, and presumably I would be able to be entered upon the register. Is it the case that a man taking two pills a day can be so certified, because if it is, then in terms of potential numbers, according to the information that I have, about 30 per cent. to 40 per cent. of the population is covered?

Dr. Winstanley

The hon. Member is entirely right—he does qualify for inclusion on the Disabled Persons Register. There is every reason why many of these people should be so included. It is a form of protection and an assistance to them if they should lose their employment at a later stage—which the hon. Gentleman may.

Mr. Boyd-Carpenter

What the hon. Member for Cheadle (Dr. Winstanley) is suggesting would be a very wise protection for the hon. Member for Sheffield, Brightside (Mr. Winterbottom), in case of electoral reverse.

Dr. Winstanley

The reason for my bringing up this point will become apparent in due course. What I am saying is that the Disabled Persons (Employment) Acts work up to a point and work very largely because some employers take a great deal more than their quota of disabled persons. At the moment, there are 47,000 persons on the Disabled Persons Register who are unemployed. The true figure might be even higher, because many of these people are sometimes in receipt of National Insurance certificates since the question often arises about whether they are certified as unemployed or unfit. This is rather a difficult line to draw. The Acts are only just working, and are. somewhat precariously balanced, and this even at a time of a labour shortage.

6.45 p.m.

Many of these disabled persons are employed in service occupations. The catering industry, which has come in for a great deal of notice during our discussions on the Selective Employment Tax, makes considerable use of disabled persons, because it can find employment which is suited to particular disabilities. There are organisations like the British Legion, which makes great use of disabled persons. Hon. Members will know that the associated company of the British Legion, the British Legion Attendants Company, employs many such persons for car parks. Similarly, they are employed as school traffic wardens and as staff of various kinds.

I want to direct the Committee's attention to what the position will be if this tax goes through, unamended, and if no special provision is made for disabled persons. First of all, the manager or the director in charge of a firm employing disabled persons will look with alarm at his increased wage bill and, in this, if I may have his attention, he will have the support of the Financial Secretary, because the Chancellor wants him to do this. Next, he will consider how to cut the bill, and when he gets to that point he will have proceeded exactly as the Chancellor wants him to do.

What will he next do? First, he will decide not to get rid of those people who could make the maximum contribution to a manufacturing industry. The probability is that he will come down finally in favour of eliminating the handicapped. If, in doing so, the number of disabled person falls below the quota, he will then do what I have known firms to do, and here we return to the point I was making earlier. He will go round the firm and find people whom he had not hitherto realised had various disabilities, which are not affecting them in their present occupation, and see to it that they go on to the register, which they are entitled to do, thus restoring his quota, and, at the same time, putting out of employment a number of disabled persons.

Mr. Winterbottom

This is not wholly right. The hon. Gentleman has specified the catering industry. In all of the four catering wages boards provision is made for those who are disabled, or are not as fit as others to be paid a rate of pay less than the minimum rates of pay provided under the Catering Wages Act. Therefore, it becomes a problem to the employer whether he should dismiss people and lose the amount of rebate that he is allowed. It would be a mathematical calculation to see whether there was any benefit in consequence.

Dr. Winstanley

I am grateful to the hon. Gentleman. I accept his point. But he has said himself that this is a specific point affecting a specific occupation in a specific situation. The general point which I made is still valid.

Mr. Gower

The hon. Gentleman has referred all the time to the quota, but he will acknowledge that companies and firms in the service industries are often small and employ fewer than 20 people. Such firms have no quota. They also employ disabled people and can get rid of them without there being a legal bar against their doing so.

Dr. Winstanley

I am grateful for the hon. Gentleman's assistance. Perhaps I am misleading some hon. Members because I was anticipating the Chancellor's answer that there is the quota to ensure the retention of these people. I fully accept that this does not apply to employers with fewer than 20 employees and that there is no quota for them.

I cannot believe that it is the wish of the Chancellor of the Exchequer to introduce a tax which will operate in this way. There is an acute shortage of labour and we want to make the maximum possible use of everybody, for humanitarian reasons as well as from economic considerations; but the economic considerations are sufficiently compelling. We cannot afford to place obstacles in the way of disabled people continuing to work and to make a contribution. I find it extremely difficult to believe that this is what the Chancellor wants to do.

There is not the slightest doubt that if this tax is not amended it will have the effects which I have outlined. As a doctor, I know that I shall find it very much more difficult to obtain employment for disabled people than I have found in the past; and I have not always found it easy in the past. I very much hope that when the Chancellor answers this debate he will tell us that he will do something about disabled people.

Mr. Laurence Pavitt (Willesden, West)

The hon. Member for Cheadle (Dr. Winstanley) has taken up extremely effectively a point made by a number of hon. Members opposite and by one of my hon. Friends concerning the disabled. The whole Committee, I am sure, agrees with the intention behind a number of the Amendments and wishes to put pressure on the Chancellor of the Exchequer to do something about those cases on whom in turn the pressure of this tax will be very severe. The most important point which the hon. Gentleman made was in differentiating between the number of disabled people employed in service in- dustries and the number employed in manufacture. I hope that the Financial Secretary, when he replies, will give us a little more information on this point because, with the records available, it should be possible to have something closer to reality than the vague idea that there may be more in manufacture than in services, or vice versa.

Should there be a large number of disabled people employed in manufacture, it may be a great advantage to have this tax as they attract the premium, and it may be an advantage which would persuade employers to employ more of them. On the other hand, as the hon. Member for Cheadle said, if it is weighted on the other side, we hope that the Chancellor will find a way of getting rid of an imposition which it would be a difficulty for us to accept. It is more likely that this kind of amelioration will be made under the Ministry of Labour Bill rather than under this Bill. Nevertheless, if we want to oppose this, now is the opportunity.

I should like to refer to the Amendment spoken to so ably by my hon. Friend the Member for Wood Green (Mrs. Joyce Butler). The Committee will know that I suffer from a hearing disability. Such a disability is not only difficult to cope with, but is very little understood. Everybody understands what it is like if a person has lost an arm, or is blind, or has some other disability. But people do not know very much about hearing disability and are usually very impatient with it. I hope, therefore, that the Chancellor of the Exchequer will be able to do something on the lines put forward by my hon. Friend the Member for Wood Green for those who are trying to cope with a hearing disability and yet seeking to be usefully employed in the community.

The right hon. Member for Enfield, West (Mr. Iain Macleod) has moved an omnibus Amendment covering a wide variety of people. I always enjoy listening to the right hon. Gentleman, even when I disagree with him most profoundly, because he has one of the clearest dictions and deliveries among hon. Members and I do not have to strain so much to hear him. I only wish that he would more frequently use his ability to talk to better advantage.

I should like to take up one point which he made because I feel sure that it has common interest. It was raised originally by the hon. Member for Worcestershire, South (Sir. G. Nabarro) in the debate which started, as it seemed to most of us, only a few hours ago, and which seems to be going on into eternity. He was concerned to prod those of my hon. Friends who, like myself, are Co-operative Members. I should like to repeat the very clear statement made by my hon. and learned Friend the Member for Warrington (Mr. W. T. Williams) that Co-operative Members are opposed to the way in which this tax bites in a number of different degrees. I should like to correct the right hon. Gentleman's statement about our position in the Lobbies. If he refers to the Division lists, he will see that Co-operative Members did not go into the Lobby with the Government in any of the debates which terminated at 8 a.m. yesterday.

I wish to talk mainly to the Amendment standing in my name and the names of a number of my hon. Friends, Amendment No. 29. For once in my life, I find myself very much in agreement with what the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) in the point he made about procedure. It is extremely difficult for us to find ourselves circumscribed by the Budget procedure. I hope that the Select Committee on Procedure, or any other body which considers the procedure of the House of Commons, will consider the position when hon. Members seek to make Amendments to a Finance Bill they find themselves pre-empted by what has happened previously when the relevant Budget Resolution was passed. We are inclined to agree with every tax which the Chancellor introduces in general, but never in particular when it affects us or a particular cause which we have at heart. One of the Committee's difficulties is that there are so many good causes lumped under Amendment No. 34 that not one of them is likely to get through the needle eye of the Treasury.

I assure the right hon. Member for Enfield, West that I am, in large measure, in agreement with the various categories with which he wishes to deal, but I want to speak mainly to my own Amendment and to put some arguments to the Treasury in order to get some ameliora- tion of the tax as it affects part-time workers. I differ slightly from the right hon. Gentleman in that my Amendment refers to 21 hours whereas his Amendment No. 34, which incorporates the Schedule, Amendment No. 73, refers to 20 hours. The difference between us is much smaller than usual. I take 21 hours only because it is the amount of part-time work usually referred to in Acts of Parliament dealing with relevant matters.

Although I speak as a Co-operative Member, I am not on this occasion putting forward a particularly Cooperative case for the part-time worker. There is a case for the Co-operative movement, but it is not the one which I seek to argue now, for the Co-operative movement, as a non-profit-making industrial provident society, is different from firms which are joint stock companies. I wish to refer mainly to retail distribution as a whole and the use of part-time labour in it, not only because of the incidence of this tax on the general economy, but because I regard a large amount of retail distribution as an essential part of our economy.

Where the application of this tax is not sufficiently selective is that it is not selective enough in deciding the desirable number of products which need to be encouraged and the undesirable ones which need not have that encouragement. Nor does it distinguish sufficiently between those services which are important, socially useful and valuable and services which might, perhaps, be regarded as not so important.

7.0 p.m.

I should like to quote the representations made by the "Little Neddy"—the N.E.D.C. for the retail distributive trades—in a letter sent to the Chancellor of the Exchequer stating that it was puzzled by the heavy fiscal discouragement which the Government is thought to be giving to the employment of part-time workers at a time when the Distribution E.D.C.—with its tripartite backing "— that is, support from all sides— has been encouraging the employment of part-time workers as a means of overcoming the national labour shortage. The use of part-time female labour broadly increases the activity rate and does not decrease the availability of labour to other industries. I am reinforced by a further quotation, one which is far away from the Cooperative movement. The Willesden Chamber of Commerce makes the similar point in representations to me that its members have suffered for many years from a shortage of suitable labour in the distributive trades and that the only way in which they can continue to give service in my constituency of Willesden is by the use of part-time labour. We thus have the general case which, I hope, the Committee will consider.

One of my hon. Friends has said that we must release more part-time labour so that the National Plan may be completed by 1970. Especially if female labour is used, shopping habits are an important consideration. This tax may mean that it is not possible to give convenient shopping times to consumers merely because, unless it is possible to obtain part-time labour, service cannot be given.

The National Plan requires more part-time workers in a number of specialties. As a doctor, the hon. Member for Cheadle will know that in his own specialty of general medicine, it would be a considerable service to the community if, in view of the shortage of doctors, especially in general practice, instead of employing a doctor to act as a filing clerk or to type letters, we could employ receptionists to give patients appointments and to do a number of things at present taking the doctor's time. This would help to overcome the shortage of doctors which, in any event, cannot be finished with in medicine until seven years' later, when the next batch of doctor trainees comes from the universities.

In education, we are crying out for smaller classes, which means that we must have more teachers. We are appealing strongly for married women who are qualified to come back again when their children pass the age of 5. Here is another direction in which, if a part-timer is taken out of services so that we cannot buttress and facilitate a person who wishes to give service in some of the ways in which the community needs so much, it will not be a good tax for the community, but a bad one.

In nursing, in spite of last year's excellent recruitment figures, we are in precisely the same position and hospitals in some areas would welcome the opportunity to employ married women who qualified as nurses, in the same way as consultants are employed, on a sessional basis.

In retail distribution, which is my main concern, although I recognise, and my right hon. Friend the Chancellor has made the point clearly, that the tax is a revenue-raiser and most of the other things that we are discussing are by-products from it, the fact is that not only is there no surplus of labour, but there is an acute shortage which can be compensated for only by employing people part-time.

Before I came to the House of Commons, I had the privilege for many years of working on trainee induction courses for youngsters leaving school. The situation for so long as I have known it in that direction was that before 1939 it was possible to get adequate labour in retail distribution. Youngsters were prepared to accept work in a grocer's shop as an honourable, safe career and pensioned at the end. Since 1945 the position has been entirely reversed. Youngsters find that they can go into a factory and earn twice as much as they will earn as a grocer, or as a milkman, or in retail distribution.

The result is that for 20 years retail distribution has had to accept for training and service those who are more or less unable to find their niche somewhere where the pay is better and conditions very often more favourable. Therefore, if milk and bread are to be delivered, and we are to give coverage of food that is necessary so that the consumer can be served, we are forced back to part-time labour.

Many shops are able to employ people and not only female labour, at weekends when trade is heaviest. I know that my right hon. Friend the Chancellor has tried to meet this problem by differentiating the tax between males and females in proportions different from their rates of insurance. A large number of 17-year-olds, however, are prepared to work on Fridays and Saturdays. This means that they work for more than eight hours and, therefore, become liable to the tax. They work only a few hours in excess of eight, however, so that each extra hour becomes a very impost. Very often one is paying something like 25s. for an extra two or three hours' work, which makes this arrangement practically impossible to operate.

I have drawn my examples from the Co-operative movement, and not from outside trade, because I have more ready access to it. The London Co-operative Society, for example, employs 2,457 part-timers. About 300 work less than 20 hours a week and 228 of these are females. In addition, an average of 1,000 are employed every week for less than eight hours. This is a quite large proportion of the labour force.

At Leighton Buzzard—I hope that nobody will ask me why I chose Leighton Buzzard; it is simply one of those names, like Chipping Norton or Chipping Sodbury, which catches the eye when scanning the list—one employee in three works part-time. At Basingstoke, the ratio is one in four.

I have done a little homework on this and have looked through a number of statistics and figures, with which I do not wish to weary the Committee. In the main, however my analysis confirms the point made by one of my hon. Friends that three part-timers are employed to do the job of one full-timer This means that the tax will work at a much higher rate than the Chancellor envisaged in his Budget speech. The fact that a trader has managed to modernise and convert his business into self-service to deal with the labour shortage means that it is still necessary to employ part-time labour. It seems, therefore, that the tax will be a disincentive rather than an incentive to more modern methods of retail distribution.

One hon. Member has claimed that in the House and in Committees we too frequently adopt a metropolitan view. We too frequently like to think in terms of London, Cardiff or Manchester. But when one considers retail distribution in rural areas and the large number of mobile shops which are used, I do not quite know what can be done to cut down the labour of a man who drives a mobile shop. Does one have simply one-third of a man driving or, as the only alternative, three men taking it in turns on a part-time basis? Once again, the incidence of the tax upon part-timers is far too swingeing to be fair to a distributor who is trying to do an equitable job in the community.

There are a number of other practical and technical points that I could raise. I have had the good fortune to be able to raise them privately with my right hon. Friend the Chancellor of the Exchequer. Whether I was able to be effective then, or will be effective now, is another proposition.

However, I recognise the Chancellor's difficulties. I have sought, as one always does when one feels strongly about a thing, as I do about this, and when one is fighting a cause, as I am this, to see the point of view of the man who will be defending the opposite case, and I have sought to see the Chancellor's difficulties and I recognise that there are two basic things the Chancellor is seeking to do. First, he wants to preserve simplicity in administration of the scheme. He does not want it to get too complicated. Secondly, he wants to take £230 million or so out of the economy.

My right hon. Friend is, therefore, concerned in case the Amendments to his Bill would, if they were accepted, amount to so much that they would destroy the purpose of the tax. I think that many of us may wish to debate this further on the Question, "That the Clause stand part of the Bill", and debate the whole tax, but that is not my purpose at the moment. I want to concentrate on the issue of the part-timers.

Looking, first, at the question of ease of collection and simplicity in adminsstration, already the Ministry of Pensions and National Insurance has, in connection with part-timers, about 30 different varieties of stamps. It would appear, therefore, that it would not be impossibly difficult to arrange for that number to be 31. There is the very real difficulty which the Ministry would face, and that is that it could not, as a physical possibility, have the job of printing completed by 5th September. I hope that you will forgive me, Mr. Godman Irvine, for harking back to the first Amendment debated on Clause 42, and the date, but there is no doubt about it that it is not possible for the job of printing to be done before 5th September. I am, however, sure that it could be done by February, and perhaps the Chancellor would look at that.

Again, if we are able to devise a scheme to take account of those who work for less than 21 hours and the differential between those who work for less than 21 hours and those who do full-time work, would the Post Office be able to cope with the additional work which would be put on its shoulders? As the Chancellor quite rightly said in his Budget speech, one of the great advantages to the Treasury of this tax is that other Ministries have to do most of the work rather than the Treasury; there is collection by the Ministry of Pensions and National Insurance and disbursement by the Ministry of Labour, and in between times the Post Office has the handling of any additional stamps to be sold. It would be useful to know, and I hope that the Financial Secretary, when he replies to the debate, will tell us, whether or not discussions have gone on with the Post Office to see whether or not it would be able to handle this difficulty.

7.15 p.m.

A further difficulty, I think, will be that of checking if we make a stipulation that a part-timer is one who works less than 21 hours. How do we know, if his employer says, "This man is doing only 21 hours", whether he is, in fact, doing 19 or 22? Of course, that question of the boundary line will arise in any case. But I would remind the Financial Secretary that there has been a similar case, payments through the Milk Marketing Board, where there was not adequate machinery for checking, and what the Government have done is to enable payments to be made on audited certificates.

Therefore it would seem that, if the Chancellor wants to do this, it would be a possible way of achieving the end of the Amendment if he would adopt some such procedure for the purpose of checking. If he wants to make some kind of concession in respect of part-timers for the sake of the economy it would be far easier to gear it not so much to hours, but to gear it to pay. It can be assumed that the payment of part-timers is within a certain sum and we could have a ceiling, at whatever may be the amount decided, to say that that should be exempt from payment of the payroll tax. This would, perhaps, be a way of meeting the problem of the part-timers.

The second objection the Treasury would have is, naturally, the one of cost and whether, if my right hon. Friend were to accept the Amendments under the very wide umbrella put up by the right horn. Gentleman the Member for Enfield, West (Mr. Iain Macleod) of all these various categories, including the one for which I am pleading, that of part-timers, the cost would be so great as to be destructive of my right hon. Friend's tax. The 1961 Census would show that there were at that time 1,160,000 part-timers of whom 90 per cent. were female. I work it out, therefore, that the probable total cost of this concession, if we were able to find a way of exempting part-timers, would be about £35 million. There are several ways, if my right hon. Friend needs to take £230 million or £240 million out of the economy, of recouping that amount. This is linked with the other Bill, but it would be possible to meet this problem on other financial grounds.

One way is the suggestion put forward in another Amendment which has not been called about the self-employed person. If the Chancellor is seeking to deploy labour more successfully in producing goods, rather than in providing services—and I hope to argue this case later on this evening, or it may be in the morning—it is because he thinks that too many people are employed uneconomically in distribution, but the fact remains that there is a large amount of uneconomic distribution because there are too many retail selling outlets which have not modernised their distribution sufficiently to do it with less labour and in less time. Therefore, should he find some way of making the self-employed person liable this would not only give him back his £35 million but would raise it by £40 million as well.

Mr. Arthur Palmer (Bristol, Central)

Could not the cost be offset by reducing the premiums on certain manufacturing industries?

Mr. Pavitt

That is another way. It would be possible, and there is the whole possibility of the grading of the premiums.

I would conclude by asking the Chancellor——

Dr. Winstanley

The hon. Member keeps repeating the figure of £35 million. I think that he must accept it as an illusory figure. The Chancellor cannot be under the illusion that we are to have the same number of part-time workers when this tax comes in as we have at the moment. It will get rid of part-timers. They will become full-timers.

So the cost would be very much less than £35 million.

Mr. Pavitt

I am most grateful for the help of the hon. Member for Cheadle. I am trying to state my case at its worst in order to be fair, but I accept what the hon. Member said, although the number could be much less for a number of reasons other than that.

I would conclude by asking the Committee to consider this matter seriously, and I ask the Chancellor to do so as well, although I accept that because of the mechanics of the way we are having this debate, with a number of Amendments grouped together, and because of the fact that the ameliorations are more likely to come in the second Bill than in this, we may not get the concessions now; but I do implore the Treasury to look at the whole effect of this, not only in financial terms but in the human terms argued by a number of hon. Members in this debate, to look at it from the point of view of what is best for the community as a whole.

If my right hon. Friend cannot, at this stage, accede to these suggestions, let us at least talk further, in the hope that at a later stage we may be able to refine what the Chancellor has recognised as being a very blunt instrument. Let us, then, give some amelioration so that part-timers may be exempt, for the sake of the economy and in the interest of good sense.

Mr. Braine

Like all who have spoken in this interesting debate, I am completely convinced that this tax will discriminate harshly against the disabled who have been described quite recently by Professor Titmuss as one of the weakest and most deprived groups in our affluent society.

I do not think that anybody who has listened to the debate today, or who listened to the debate in Committee on the Ministry of Social Security Bill on 17th June, can be left in any doubt as to the acute physical, psychological and financial difficulties of the disabled, whether they are working, whether they are confined in hospital beds, or whether they are eating their hearts out on National Assistance at home.

All who understand this problem, whether engaged in government, as medical men, or as social workers, are agreed that our aim should be to help the disabled to live as normal lives as their disabilities, whatever they may be, permit. This means encouraging them to overcome their physical handicaps, and the psychological and social difficulties which these always bring, by becoming self-supporting and self-respecting members of the community. That means, in short, encouraging them to work, as Member after Member has said in this debate.

At least, that was the aim before the Chancellor introduced this strangely un-selective tax. How right my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) was to say that we assumed all too easily that full employment had solved the problem of the disabled, of the weaker elements in our society. As the hon. Member for Sheffield, Brightside (Mr. Winterbottom) said, the difficulties of finding work for the handicapped are enormous both in regard to the placement of school leavers, as any youth employment officer can testify, and in the case of older persons, as any disablement resettlement officer knows.

I would like to reinforce the case which has been made so eloquently and in such compelling fashion by the hon. Lady the Member for Wood Green (Mrs. Joyce Butler). She dealt with the deaf, those who suffer from a disability which Dr. Johnson once described as "one of the most desperate of human calamities." Well he might. For I have been reading the summer edition of the Social Service Quarterly, in which Mr. Kenneth Lysons, in an extremely sensitive and well-informed article on the welfare of the deaf, says: Few people other than those who are personally or professionally involved understand that deafness is not an isolated disability but a chain reaction of disabilities affecting all aspects of life … The deleterious effects of deafness on personality, social growth, educational progress and emotional development are immeasurable. So it is that trying to fit the deaf into useful work and, what is more, trying to keep them in work presents formidable difficulties. The deaf are quite unlike the blind in one important respect. They can see what is going on, but so often it is as though they are looking through a glass window at a world with which they cannot communicate. It is because of this difficulty of language and communication that the deaf are generally limited in the choice of occupation. Often they are unable to take up work in which contact with other human beings forms an essential part.

Managers and foremen, as I know from my own personal experience, have not the time and have not the patience to explain adequately to deaf workers the various technical terms and processes involved in their work. Moreover, despite all that was said by the hon. Member for Cheadle (Mr. Winstanley) with most of which I fully agreed—he was speaking directly from experience—there are some employers who are, frankly, disinclined to employ a deaf person.

Then there is the case of those suffering from a wide variety of crippling handicaps who wish to work so as to overcome their disability, to prevent it from taking complete command of their lives. I am referring to those who are partially paralysed, the arthritics, epileptics and paraplegics. We have all had them coming to our consituency "surgeries" week after week and year after year with their difficulties.

One dedicated disablement resettlement officer who works in my constituency said to me recently that in many ways these people are not just disabled. They also endure discomfort in the same way as normal persons do who are unemployed through sickness. Advancing age, the nature of their handicap and the limitations which this puts on the kind of employment they can take—I should like to have the Financial Secretary's attention; we are dealing with a subject touching a small but gravely afflicted element in our society and though I am not all that hopeful that we shall get satisfaction from the Treasury Bench this afternoon, we ought to be listened to.

7.30 p.m.

The Financial Secretary to the Treasury (Mr. Niall MacDermot)

I assure the hon. Gentleman that I am listening to what he says. As the hon. Gentleman will appreciate, it is also the duty of those on the Treasury Bench to reply to debates and to do that one has to have some conversations directed to that end.

Mr. Braine

I fully accept what the hon. and learned Gentleman says. On the other hand, when one is deploying an argument, and has the ear of the rest of the Committee, it is annoying if there is a conversation on the Treasury Bench. It is disconcerting and it is discourteous

However, I fully accept what the hon. and learned Gentleman says. I am sure that he would be the first to agree that the very disabilities to which I am referring limit the kind of work which these people can do, the distance they can travel to work, and the opportunities open to them to get even light or part-time employment.

The point I am making is that unless these Amendments are accepted—and this is the message which has gone out in speech after speech—an additional discouragement will be imposed upon those employers who, out of goodness of heart or as a result of the pressures brought upon them by dedicated disablement resettlement officers of the kind I have quoted, employ disabled people. A tax of 25s. a week on a disabled man and 12s. a week on a disabled woman may make all the difference between having a job and complete despair. That is the message which we are trying to convey to the Treasury.

I do not apologise for having intervened in the very interesting speech of the hon. Member for Cheadle. Unemployment among disabled workers in this time of full employment is five times greater than the national average. In February, there were 659,000 people on the Disabled Persons Employment Register. The hon. Gentleman said that of those, 47,000 were unemployed. The figure ought to be broken down. About 7,000 were suitable only for employment under sheltered conditions. But that still meant that there were 40,000 disabled persons unemployed at a time of acute labour shortage.

As the hon. Gentleman said quite rightly, that is only a small proportion of the total number of disabled people in our community. Many work preferring to hide their disability if they can, or are fortunate in having sympathetic employers. But many are so discouraged that they have been forced to live on National Assistance.

I ask the Committee's permission to read a short extract from an article by Lady Hamilton, of the Central Council for the Disabled, in New Society, on 5th May, when she said: By making an outright attempt to get out and earn a living, a disabled person inevitably becomes involved in higher living costs. Difficulties of accessibility, accommodation and transport assail him at every turn. No income tax relief is allowed to meet these extra commitments. Present conditions encourage the handicapped to settle for the meagre safety net provided by the welfare state. Now at this moment comes this clumsy, ill-thought-out and iniquitous tax which will discourage employers from employing disabled workers over and above the 3 per cent. quota. That is the purpose of the tax. It is designed to cut down the number of persons in the service industries. That is the Government's declared intention. It will certainly discourage employers from helping the hard-pressed officers at the Ministry of Labour to place disabled persons in suitable employment.

It is incredible that this situation should not have been foreseen. If the Minister of Pensions and National Insurance, a lady with a large heart and a deep knowledge of these matters, had been in the Cabinet, or if the Minister of Health had been in the Cabinet, the Chancellor might have been told at the proper time that what he was going to do about charities and what he will be doing to the disabled was socially wrong and in complete opposition to everything that has been preached by all political parties and social thinkers in recent years.

Let me simply proclaim my philosophy on this. I think that is it is one which will have the support of every hon. Member in the Committee. One can see many parts of the world enduring poverty and indignity to human beings of a kind which we can hardly understand here and such as is not within the knowledge and experience of the man in the street. In this country we enjoy a high standard of living and I suggest that we should be moving in precisely the opposite direction from what the Government are doing by this tax. We should be setting an example by seeking to help our disabled fellow citizens by tax allowances, if they are working, and by constant attendance allowance, if they are chronically disabled. In a just society, we should be giving a conscious preference to the weaker element—the elderly, the sick and the disabled. I am sure that no one in the Committee would disagree with that.

I ask the Financial Secretary to convey to the Chancellor this message. The right hon. Gentleman heard the earlier part of the debate, and it is a pity that he has not been here to listen to all the speeches. In regard to the incidence of his tax upon our disabled fellow citizens he should reflect and relent. If, in this matter, he behaves magnanimously, he will add immeasurably to his stature.

Mr. G. R. Strauss (Vauxhall)

I hope that the hon. Member for Essex, South-East (Mr. Braine) will forgive me if I move away completely from the very important subject which he has put before the Committee to an entirely different one. It is the subject contained in Amendment No. 220, which is supported by a large number of my hon. Friends. The purpose of it is to prevent the damage which many of us fear will be done to our provincial theatres unless some action is taken by the Government.

There is no need for me to appeal to the Financial Secretary or to any other Member of the Government for sympathy. I think it is agreed on all sides that the present Administration has done great things for the arts. They not only believe in furthering the arts, but have provided far greater sums of money than ever before for that purpose. Through the Arts Council, they have gone out of their way to provide considerable additional sums for the theatres, in particular.

We have no fear that theatres which have been supported by the Arts Council up till now will be damaged as a result of the tax. They all come under the 1960 Charities Act and will in no way be damaged by the S.E.T. But there is one section of the theatre world which is very important culturally which has no protection and which we fear will suffer considerable harm. I am referring to the commercial theatre in the provinces. I have no qualms at all in putting forward the case for our provincial theatres, because they present a very important cultural service to their communities. If that service were withdrawn serious harm would be done to those communities.

The commercial theatres in the provinces receive no Arts Council grants. They are not protected because they are charities. However, they provide a very important cultural service in many towns. Not only do they put on light comedies and pantomimes—and it is as a result of the income which they get from their pantomimes that they are able to exist for the rest of the year—but serious and important plays which are very much appreciated by audiences and which make a real difference to the cultural life of those towns.

The unfortunate fact is that very few of these theatres pay their way in any substantial sense. They scrape along, some of them making practically no profit at all. One finds that most actors, technicians and managerial staff employed in them receive miserably poor salaries. They work there because they are dedicated to the theatre. Such theatres might increase their incomes by raising seat prices, but they know that in the face of competition from television and the cinemas there is a certain limit above which they cannot raise their prices.

Unfortunately, these theatres usually employ a large number of people and the tax will be a real burden to them. I know of one theatre which is doing an excellent job and making a real contibution to the life of the community. The tax will impose a burden of £5,000 a year on it, and it has no chance of getting it back. Unless some relief is given to many of these theatres, they will have to close down within a year or two because of the imposition of the tax.

Sir Harmar Nicholls (Peterborough)

I wonder whether the right hon. Gentleman has in mind the position of the theatre group which, according to the Financial Times, is talking about turning its theatres into business properties. Last year it showed a loss of £10,000, and the imposition of the tax will add another £23,000 to the loss which it will have to bear next year.

Mr. Strauss

I was not thinking so much of the big group to which the hon. Gentleman refers. I was thinking of the smaller theatres in many parts of the country which carry on as a result of the enthusiasm of the actors and staff and the support of small sections of the local population. Many of them will have to close down.

In my view, it is not reasonable to do what some of my hon. Friends would like and say that because these theatres provide culture they should be exempted altogether. I could not speak enthusiastically in support of exempting the London theatres. If there is to be a selective tax on services, I see no reason why musical comedies in the West End such as "Hello Dolly!" should not make their contribution.

In the great entertainment centre of the metropolis most of the plays offer amusement as well as enlightenment. I am happy to see any type of theatre exist and flourish. Whether it provides relaxation or mental stimulus is not so important. But one could say logically that in the provinces, where the situation is very different, where there is a dearth of cultural activities where theatres are few and far between and where they are struggling to keep alive, there should be some differentiation. I do not say that they should be exempted altogether, but the tax on those theatres should be at the lowest level contained in the category of taxes set out in the Bill. That is why we suggest that the rate of tax should be 8s. in the case of employees of those theatres rather than the larger sums which they would otherwise have to pay.

The case is very simple. It does not need arguing. I appreciate the difficulties, and I appreciate that the Financial Secretary would like to see some help given to these theatres. I do not know whether the way we have suggested is the best: way of dealing with it. There may be some other way which the Government; have in mind, but I put in a strong plea. to the Government that, either now or when we consider the other Bill connected with the Selective Employment Tax, they should provide some means whereby these theatres which are doing such an important job in the provinces are enabled to be kept alive, because it is certain that many of them will have to close unless some relief is given from this tax.

Mr. R. H. Turton (Thirsk and Malton)

One thing that is becoming clear from this debate is that so many hardships are being created by this tax, and the area of damage to the economy is becoming so wide, that it tends to make one speech not follow the preceding one in every detail. I feel strongly that each of us should try to concentrate on one or two points. Many hon. Members want to speak, and it is much better that we should deal with one or two points each.

I want to concentrate particularly on the problem of old people. I am very concerned about the effect which this tax will have on the problem of old age and of old people getting employment, particularly in the rural areas, where old people are usually in the service industries, and certainly not in the manufacturing industries, although there are a few in agriculture.

To a certain extent I thought that the hon. Member for Willesden, West (Mr. Pavitt) made a cogent speech about part-time workers. The problem of old people comes into the problem of part-time work, because quite often a retired person cannot do a full week's work. He probably works for two or three days a week or, alternatively, he works a very short day, and yet an employer will have to pay an additional stamp of 25s. for his services.

I ask the Government to reconsider this at an early date, because everyone who has worked with this problem of old age knows how difficult it is to secure employment for old people and how valuable some form of work is for someone living on a pension. It enables him to supplement his inadequate pension.

7.45 p.m.

The Chancellor has said that he wants simplicity of administration. It is in dealing with the problem of old age that he can make a simple and beneficial Amendment, because those who are receiving a pension but who are working have a different stamp from all other employed people. For them there is only the employer's contribution, plus the industrial injury contribution. Thus, with old people who have retired, it is possible to keep that stamp without any alteration at all. In other words, we can exempt old people who have retired from the provisions of the Bill, and I commend this suggestion to the Financial Secretary.

My proposal does not deal with the whole area mentioned in Amendment No. 73, which deals with all old people over 65 or 60. My proposal would not cover somebody who was delaying his retirement, but I submit that if we were to give pensioners special treatment and exempt them from this tax it could be done without any great difficulty.

My second point concerns educational establishments. I do not understand how the manufacture of intelligence can be regarded as a service industry. To my mind it is vitally important for the future of this country to encourage as many people as possible to teach. The effect of this tax on some establishments will be punitive, particularly those which employ a large number of part-time teachers.

As I see it, the position at the moment is that local authority educational establishments will pay the tax in September and it will be duly refunded to them. The educational establishments covered by section 4 of the Charities Act will pay the tax and have it refunded to them. But the other educational establishments which are not covered by section 4 of that Act will have to pay the tax without refund.

In a Written Answer on 21st June my hon. Friend the Member for Norfolk, South (Mr. J. E. B. Hill) was given information about the effect of this tax on direct grant schools and on independent schools which are recognised as efficient. We now know that 43 per cent. of direct grant schools will get a refund, while 57 per cent. will pay the tax and not get a refund. For independent schools recognised as efficient, 49 per cent. will pay the tax and get it refunded, while 51 per cent. will pay the tax without refund.

I submit to the Financial Secretary that this method of treating what is really a manufacturing industry, education, in such a way that we get this subdivision whereby some pay the tax and get it refunded while others get no refund, is making a nonsense of the whole matter, particularly because some of the establishments which will carry the burden of the tax are those which we want to help most.

I am thinking particularly of those independent schools which provide boarding education for the children of colonial and foreign servants, and overseas students. This form of boarding education is not available in many parts of the country in any form other than at these independent schools. I warn the Government that if they continue this tax on educational establishments, with this differentiation against certain of the efficient independent schools and direct grant schools, they will drive a great many of them out of business, particularly those smaller schools which have to rely on a great many part-time teachers.

I suggest that the Government must think again on this matter. If we are thinking of getting this country fit to cope with the problems of this new age of technology, it is vital not to discourage education in any form by this kind of Finance Bill. I am sure that the Financial Secretary recognises the great damage that is being done by this provision.

He should also realise that it is no good saying, "This is something that we can try to repair. We agree that we are doing a great deal of damage. This is rough justice, but we will try to ease it by later Orders." That will not do any good in the case of the two problems to which I have referred—the employment of the old and the position of educational establishments which give parents educational freedom of choice.

Mr. Palmer

Unfortunately, I was not able to take part in the earlier debate on this Clause, because I was away abroad, engaged usefully and selectively if indirectly in the business of the House. I am glad that I am here now and in a position to say a few words about part-time workers.

I am not one of those who have gone out of their way to condemn the Selective Employment Tax. In my constituency and elsewhere I have defended its broad application. I must confess, however, that I would have preferred to see more stress being given to it as an employment tax and not so much stress being put on its selectivity, because if that side is examined we find that the selectivity is so crude and deals out such rough justice that it tends to take away the value of what is in conception a good tax.

It would have been a particularly good tax if it had been introduced gradually. So I am not against its broad principles, but I am certainly very much against its operation in relation to the part-time worker.

Having listened to the arguments so far it seems to me that they fall into two categories. I hope that my hon. and learned Friend the Financial Secretary will have noticed this, and also that there has been universal endorsement of the points raised so far by hon. Members on both sides of the Committee.

The first argument is the argument of humanity. Part-time workers are often elderly people; they are often people whose health is not very good; they are often disabled people, or married women—sometimes with young children—who, of necessity must work. They may be married women, who, their children having grown up, are making a useful contribution to the country by returning to work in industry.

It is natural that workers of this kind should go into the distributive and retail services, because that is the kind of work which is often near their homes, and the sort of work for which their previous outside or domestic employment has trained them. It is unlikely that if they are unable to do this work they will transfer to work in the manufacturing industries.

Under conditions of full employment, and from the point of view of sheer humanity, many of these people, most of whom are women, have been encouraged to take on this part-time employment, and if they are forced out of it it will be very hard on them; they will be very discouraged—and I cannot believe that my right hon. and hon. Friends intend this to happen. I have received a great deal of correspondence on this issue. I can assure my right hon. and hon. Friends that tremendous public feeling is building up about the way in which the part-time worker will be treated by the operation of this tax. I ask them, therefore, to consider this question from a human point of view.

I turn now to the economic arguments. Because of my connections with my trade union which organises technical employees I have received a circular from the Ministry of Labour pointing out that trade unions, in co-operation with our employers, should do all they can to encourage part-time workers to continue in employment, because this is essential, it is argued, to the general health of the economy. Those part-time workers include pensioners, the circular adds. That is quite sensible and rational in present circumstances, but at the same time, by making life so difficult for part-time workers in the places where they are likely to be employed, my right horn. Friend the Chancellor is undoing the good which the Minister of Labour is attempting to do.

I speak also with extra feeling on this part-time issue economically, because I represent not only the Labour Party but the Co-operative Party, and through my connections with co-operative societies I realise of what value the employment of the part-time worker in the distributive trades is to the national life.

Co-operative societies, naturally, have a focal connection with life as it is found around them; if the part-time women workers who work in co-operative stores are forced out of that employment—as will undoubtedly happen in the case of the smaller societies—they will not go to work in factories. If the Chancellor of the Exchequer or his hon. Friends think that they will they are deluding themselves, as time will show.

There is no human justification for this attack on the part-time worker, and there is no economic justification for it. What, then, is the justification? It appears that the Chancellor needs money. But all Chancellors need money. In broad principle, I prefer a tax of this kind to financial measures which are deflationary, but I should have thought that an adjustment to take account of the loss to the revenue by giving relief for part-time workers would be quite simple. It could be made within the dual system which my right hon. Friend proposes to introduce.

It would be out of order now to discuss the Selective Employment Payments Bill under which premiums are to be paid to manufacturers, many of whom have not asked for them and in many cases do not need them. But it should be quite simple to reduce somewhat these unnecessary cash bonuses to manufacturing industry so as to make it possible for the part-time worker in distributive and service industries to continue in employment.

I do not know whether my right hon. Friend has convinced himself that what he is doing in this matter is right, but he has not convinced me. I am an engineer and not an economist but I am certain that it is better to allow part-time workers to continue to be employed in hotels or co-operative stores or in the offices of scientific societies, rather than encourage lavishly the makers of "one-armed bandits"; or gnomes for use in gardens, that could never be exported to Zurich. I should have thought that the first type of employment was generally complementary to the health of the economy and the second not.

8.0 p.m.

I hope that my hon. and right hon. Friends will not go the way of so many members of the Treasury Bench, who look upon arguments in the Committee, particularly when they are from both sides, as something which simply has to be endured, but which they hope will stop eventually, when they will push on in their own stubborn way. I suggest to my hon. Friends that the fact that there is a coincidence of opinion across the Committee is a very good reason for supposing that those of us on the Floor of the Committee have the better of the argument in this case.

At least, I hope that, when my right hon. Friend replies to the debate, he will do something by sheer force of argument to convince those such as myself who are not against the broad principle of an employment tax, that in this matter of part-time workers we are wrong and he is right. But it will not be easy for him.

Mr. Gower

The hon. Member for Bristol, Central (Mr. Palmer) said that the Floor of the Committee has had the better of the argument, but there has been no argument. Indeed, all the comments have been turned to one direction. The Chief Secretary must be aware now that the Selective Employment Tax in its present form appears to have no friends in the Chamber apart from Ministers. That is what he has to face——

Mr. Diamond

Surely the hon. Gentleman has not been absent from every Division?

Hon. Members

"In the Chamber".

Mr. Gower

I have left the Chamber for only a short time this evening. I have been here from the beginning of the debate. Every hon. Member who has spoken, from either side, has been very critical of the tax in its present form. Whatever the economic virtues of the tax, which we would be out of order in debating at present, it is obvious that in its present form, in the view of all who have spoken so far—and all who have been present, judging from the noise from both sides—except the Front Bench on the Government side, needs radical amendment.

It seems clear from the speeches so far what sort of amendment the Clause needs. The hon. Lady the Member for Wood Green (Mrs. Joyce Butler) admirably moved an Amendment dealing with one respect in which it could be amended, as it relates to the deaf. Without being sentimental about the condition of the deaf, I think that the Chief Secretary will admit that deafness can be a grave disability for a person seeking employment. Indeed, were I at this moment responsible to a company for engaging personnel, I would be less than human and probably not doing my duty efficiently if, in many cases, I engaged a deaf person rather than a person with good hearing, so great can this disability be.

Of course, we all know of deaf people who, by virtue of their diligence, can nevertheless do excellent work, but deafness is a severe disability. If he turns down this Amendment, he will be giving notice to all the deaf people in the country who are holding positions, perhaps tenuously, that the Government will make it more difficult for persons with considerable deafness either to retain their present employment or to obtain employment in future. This is a very serious matter, as I am sure the Chief Secretary will agree.

Another category which has been referred to is that of the disabled. Undoubtedly—the Chief Secretary and Chancellor of the Exchequer may make a good deal of this—the needs of the disabled are partially provided for by earlier legislation, under which certain factories with more than 20 employees have to employ a quota of people in this category. Nevertheless, of course, by the very nature of their disability, many of these people, willy-nilly, work in establishments which employ fewer than 20 employees and which thereby have no legal obligation to employ this quota. Because of their disability, as is the case with the deaf, these people are more likely to find the sort of work which they can do in the service industries than in the major productive industries.

The position of the disabled, in many parts of the country, is at best difficult. It is not easy for them to find employment within their capability and many employers—this happens in my part of the country, in South Wales—have done more than they are required by law to do. In some cases, they employ 4 per cent. and 5 per cent. instead of the required 3 per cent. However, if they are faced with an impost of this nature—some of them, of course have also very deep difficulties with their credit and liquidity—and if they have to wait a considerable time before they get the so-called premium, it is doubtful whether, during the interim period of nearly six months, they will be able to retain the extra persons beyond the quota. They will retain only the quota which they are required to retain.

Of course, it seems likely that the smaller organisations wil not even do that, when they are not obliged by law to do so. In a smaller organisation, employing fewer than 20, it is more difficult to employ disabled people.

Nobody in his right senses would minimise the awful disability which blind people suffer. It is only in a limited sphere that they can find any employment at all, but some have triumphed over their difficulties and are able to do something—mostly in a service industry of some kind or in an office, with the aid of Braille, and so on. To take any step which would make it more difficult for employers to employ disabled people is something which any Government would be ashamed of.

If the Amendments are not accepted, it will be noticed that the Government will make things more difficult in future for the deaf, for many of the disabled and for the few blind people who obtain employment either to retain their employment or to obtain such work in the future.

An extraordinarily powerful case was adduced by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), on behalf of retirement pensioners. He made it clear that some concession can be made for these people with great ease, administratively. He explained the existence of a distinctive stamp. It should be in accordance with the policy of the Government, as it has been for all previous Governments, to encourage the employment of the elderly. In many parts of the country, that employment will tend to be in service industries rather than in the major productive industries.

The Government are in a cleft stick. They say that they want to encourage people to go from the service industries into the productive ones, but these groups of people, in many cases, could not possibly move into productive industries. How can a person over retirement age suddenly contemplate moving from a service industry into a productive one? It is not feasible. Any measure framed on the assumption that it is possible, to put it frankly, is absolutely absurd.

I turn to the question of part-timers. Again, I do not want to be unduly sentimental.

Mr. Leslie Hale (Oldham, West)

What is wrong with being sentimental? We have had five or six days' discussion on economics and statistics without caring a damn about an individual. Why not mention an individual with kindness, with feeling and with sympathy?

Mr. Gower

All right, I will.

A great number of part-time workers are widows. Many of them are left with dependants for whom even the provision of a State pension supplemented with an extra allowance for children is quite inadequate. Many of them have to make provision for commitments entered into while their husbands were still alive. Should we do anything which will make it more difficult for these people to obtain work? It will be noticed by the Government that if they reject the Amendment it will be more difficult in future for these people to retain work or to obtain new employment.

Another reason why the Government should accept the Amendment is that most of these categories, if not all, are capable of identification. Some of the Amendments identify them by accurate description, those, for instance, who are on the Disabled Persons' Register and those who are in receipt of retirement pensions. Many blind people receive pensions. All these people are capable of easy and accurate identification.

A sophisticated society such as ours, like that of the United States or of most countries in Western Europe, whatever the Chancellor may do in future, will increasingly have a large proportion of service industries. Yugoslavia, Czechoslovakia and most Eastern European countries had very few service industries after the war. America has many more such industries than we have. We hope that the day will come when we shall have larger and better symphony orchestras and more people playing in them. That is a service. We hope that the day will come when more will be employed in museums, in art galleries, and providing better opera and ballet. All those are services and there will be more people working in such services in future.

The attitude of the Government towards this matter is completely out of date. They are looking backwards to the time when nine-tenths of the people worked in heavy productive industries. They should be looking forward to a new era when fewer and fewer people will be working in productive industries. They should look forward to a better society with a better standard of living. To this extent the Government are fighting against the tide, like King Canute.

The Government's economics are completely unsound. They have made an artificial distinction between services and production. The proposals we make are based on common humanity. The Government should give priority to examination of this. Their own supporters are deeply anxious about the nature of this tax as it stands. Their supporters do not want the deaf, the blind, the disabled, part-timers and widows to be prejudiced, as they surely will be if this Clause is not amended.

8.15 p.m.

Mr. Alfred Morris (Manchester, Wythenshawe)

The right hon. Member for Thirsk and Malton (Mr. Turton) suggested that we should each confine ourselves to two points during this debate. I hope that he will allow me the bonus point of saying that I was unusually disappointed by the speech of the right hon. Member for Enfield, West (Mr. Iain Macleod). I am always disappointed with his speeches, but I found this one unusually disappointing.

Mr. St. John-Stevas

That is a good sign.

Mr. Morris

I should soon be out of order if I were to respond to the hon. Member for Chelmsford (Mr. St. John-Stevas).

What I found most disappointing in the speech of the right hon. Gentleman was his reference to prejudice on this side of the Committee against independent fee-paying schools. Of course, to some extent, he was right. I am hopelessly biased in favour of the State system of education, and so I think are well over 90 per cent. of the people of the country. But, just as I am hopelessly biased in favour of the State system, so are many hon. Members opposite very strongly biased in favour of independent fee-paying schools. The right hon. Gentleman should not accuse us of great prejudice when, if he looks behind him, he will find prejudice quite as strong in favour of the private enterprise sector of the educational system.

Mr. Iain Macleod

The hon. Member has completely missed the point. If he heard what I said he would know that I stressed over and over again that we were concerned with, and had drawn the Amendment to cover, all educational establishments. I am not interested merely in the private sector nor merely in the public sector; I am interested in both. The reason for mentioning the private sector is that it will be discriminatorally affected by this tax while the public sector will not be. That is the reason I mentioned it.

Mr. Morris

I am addressing myself to the right hon. Gentleman's point that we on this side of the Committee are prejudiced against independent fee-paying schools. He knows very well that there is equal prejudice on his side of the Committee in favour of independent fee-paying schools. The point he has just made does nothing to alter my contention that conflicting prejudices are to be found on the two sides of the Committee.

I turn to the question of part-time labour. In recent speeches, it has been argued by many of my right hon. Friends that one of the most intractable and serious problems facing British industry is the problem of excessive overtime. It has been argued again and again that too many people are working unnecessary overtime. My fear about the effect of the Selective Employment Tax on part-time labour is that it will cause many employers to increase the amount of overtime worked by their full-time employees. It is by no means fanciful to assume that there will be many employers who will dismiss part-time employees and add to the hours of work of their full-time employees. This assumption is reinforced by the complete lack of evidence of labour hoarding in retail distribution. Indeed, I am told by people who are far more expert than I am in retail distribution that there is, if anything, a labour shortage.

Mr. Winterbottom

There is a labour shortage.

Mr. Morris

My hon. Friend the Member for Sheffield, Brightside (Mr. Winterbottom) agrees with me, but he will have an opportunity to develop his views by making a contribution to the debate.

Mr. Hale

My hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) assures us that hon. Members will have an opportunity later, but that might well depend upon whether another Privy Councillor pops in and pops out, because there must come a time when somebody moves the Closure. [HON. MEMBERS: "No."] This business of Privy Councillors popping in and popping out and being heard is becoming a real menace to our debates.

Mr. Morris

I was merely paying a tribute to the ingenuity of my hon. Friend the Member for Brightside. I am certain that he will catch your eye, Mr. Godman Irvine, as he has succeeded in catching the eye of other occupants of the Chair in previous debates on the Selective Employment Tax.

If one of the purposes of the tax is to encourage mobility of labour from distribution to manufacturing industry, I am certain that this will not happen in the circumstances of a labour shortage in the distributive trades. My hon. Friend the Member for Willesden, West (Mr. Pavitt) made a cogent and persuassive speech on behalf of the Co-operative movement.

Mr. Pavitt rose——

Mr. Morris

Or, rather, on behalf of retail distribution generally and of the Co-operative movement in particular. I was particularly interested in what my hon. Friend had to say about the effect of this tax upon co-operative societies. My hon. Friend should not be disappointed or upset by the jibes which have come from the other side of the Committee against him and against the Co-operative movement. The hon. Member for Chelmsford (Mr. St. John-Stevas) enjoyed himself in a previous debate at the expense, as he thought, of the Cooperative movement. There is, of course, no similarity whatever between the motives and aims of those who speak for the Co-operative movement and those who speak for the Conservative Party. There is a world of philosophical difference between my hon. Friend the Member for Willesden, West, who speaks for a non-profit-making organisation and who believes in the common ownership of distribution, and those who speak from the other side of the Committee from quite different motives.

Mr. Pavitt

I want to make it quite clear that when I made my contributions to the Committee I was not putting the case this evening for the Co-operative movement. I could do so and would be only too willing to do so, but I did not do so on this occasion.

Mr. Morris

I hope that my hon. friend will forgive me if I say that whenever I hear him speak about retail distribution I think of his service to the Co-operative movement and of the very great contribution he has made to the movement. He did the movement a great service this evening. But my hon. Friend is not, of course, the only person to have heard from his co-operative society.

Mr. Rhodes rose——

Mr. Iain Macleod rose——

Mr. Morris

I think I have already given way sufficiently, but I am willing to give way again whilst the right hon. Member for Enfield, West reads the letter he has received from a co-operative society.

Mr. Macleod

Can I read one sentence? The Enfield Highway Co-operative Society by letter of 19th May asked for my help, I replied on 23rd May saying that we would certainly table Amendments. The one sentence I want to read is this: I am sure you are aware, however, that the prospects of Mr. Callaghan giving way are remote and I hope we can rely on the support of Co-operative Members of Parliament.

Mr. Morris

It is quite clear from that letter that the Enfield Highway Co-operative Society was not expecting any support from the right hon. Gentleman, The motives of hon. Members opposite are quite different from those of my hon. Friend the Member for Willesden, West, and from the Co-operative movement.

I was saying that my hon. Friend the Member for Willesden, West is not the only member of the Committee to have heard from his co-operative society. I am rather proud, as the representative of a Manchester constituency, of the Manchester and Salford Co-operative Society, which has a great past and is deserving of a great future. Mr. D. H. Lewis, the very able chief executive officer of the society, has written to me in these terms: For your own information, and based upon the information currently available, the cost of this tax will amount to no less than £99,030 in a full year. When I tell you that the Society's net surplus for the whole of the year ended 15th January, 1966, amounted to £102,623, you will appreciate the gravity of the situation. Mr. Lewis went on to emphasise his difficulties concerning the problem of part-time employees. He hoped that hon. Members on this side would seek substantial relief for co-operative societies. I am certain that he has made no protest, as the Enfield Highway Society did, to hon. Members opposite.

Mr. Pavitt

Not yet.

Mr. Morris

There may be a considerable demonstration from the Co-operative movement, but as of now the Cooperative movement is clearly looking to hon. Members on this side to state its reservations about the effect of this tax.

Mr. St. John-Stevas rose——

Mr. Morris

I have already given way enough.

Mr. St. John-Stevas

The hon. Gentleman has not given way to me.

Mr. Morris

The hon. Gentleman himself did not give way very much in his speech to the Committee. I have very carefully studied the hon. Gentleman's behaviour in this Committee.

Mr. St. John-Stevas

I always give way.

Mr. Morris

The hon. Gentleman is not quick to give way to other hon. Members. I intend to make this point on behalf of my own co-operative society in Manchester. In January of this year when other retail distribution firms were increasing the price of bread, the Manchester and Salford Co-operative Society reduced its price. Indeed, anyone living in Manchester today can buy a loaf of bread from the Manchester and Salford Co-operative Society for 2d. less than one can buy it from any other bread retailer. [Interruption.] The hon. Member for Aldershot (Sir E. Errington), whom I very much respect, as he knows, has only recently joined us in the Committee. I was making the point that the Manchester and Salford Co-operative Society is selling bread at a lower price than other people.

8.30 p.m.

Sir Eric Errington (Aldershot)

I follow the hon. Gentleman's point. If there is a question of a profit of only £3,000 per annum, either this tax will have to be passed on in the form of increased prices by the co-operative society or else it will be making a loss. It is a matter for the co-operative society to decide what it will do.

Mr. Morris

The Co-operative movement, like the rest of the retail trades, will have to deal with the impact of the Selective Employment Tax. This is not one of the variables between the Cooperative movement and private trade. What is different is that the Co-operative movement in Manchester is selling bread at a lower price than is private trade.

I could give the Committee a whole list of commodities which the Manchester and Salford Society have not increased in price during the last 18 months. Moreover, the Co-operative movement throughout Britain has responded with great loyalty to the call for restraint in prices. I hope that fact will borne in mind by the Treasury Bench. One further point is that the Manchester and Salford Co- operative Society has been very successful in keeping down labour costs as a proportion of total costs. I hope it will, therefore, be felt that what has been said by the chief executive officer of the Manchester and Salford Co-operative Society is well worth listening to.

I now come to the question of elderly people. Hon. Members will recall that I introduced the topic of pre-retirement training in the last Parliament. I spoke in the House about the incidence of preventable illness, especially of mental illness, among those who have retired. I believe that the most healthy people among the elderly are those who decide that they will try to avoid a sharp break between full-time employment and retirement. It is emphasised in the National Plan that in the next few years we shall need more and more elderly people in part-time employment. If this tax as it is to be applied to part-time employees reduces the number of elderly people who are in part-time employment, I would consider this to be its worst consequence in social terms.

I hope that the speech of my hon. Friend the Member for Willesden, West, and other persuasive speeches from this side of the Committee about the effect of this tax on part-time employment, will be carefully and sympathetically considered by the Chief Secretary.

Mr. Dean

I thought that the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris) was going to be the first Member who has spoken in this Committee not to make substantial criticisms of this tax. But eventually as his speech went on it became clear that he, like every other hon. Member who has spoken, was going to put before the Government some very powerful criticisms indeed. They have come from all quarters of the Committee.

The aspects affecting the disabled, old people and part-timers have been well covered, but I want to make one comment. I hope that we shall not have from the Government the sort of argument we have heard in the past on this tax. They have tended to say, "Your arguments are exaggerated and there will not be the difficulties that you claim." I hope that the Government, having heard the substantial arguments which have been put, will not repeat that reply tonight.

The Government surely have a perfect instrument in the tax for encouraging the employment of the disabled, the elderly and the part-timer if only they will use it. Not only have powerful arguments been put forward in this Committee. They have been put forward by a good many other people who are well qualified to speak on it. For example, Professor Titmuss wrote a letter to The Times on 11th May. By no stretch of the imagination can Professor Titmuss be called a pillar of the Tory establishment. On many occasions the Labour Party has looked to him for inspiration and guidance in the formulation of social policy, and no doubt still does. Professor Titmuss wrote: Do we or do we not wish to encourage the employment, part-time or full-time, of older men and women and the rehabilitation of the disabled and the handicapped? Unless amendments are made to exclude these groups (administratively this would not present great difficulties) the social and psychological effects—as well as the purely financial—could be serious and far-reaching. I find it odd that at a time when a number of countries are becoming more conscious of the social aspects of budgetary and economic instruments, Britain would seem to be moving in a reverse direction. That is a sound letter from someone whom the Labour Party, quite rightly, regards highly and to whom it looks for assistance and guidance in the formulation of social policy.

I want to turn to two aspects which have not been mentioned a great deal in the debate so far, in particular to Amendment No. 73, which refers to nursing and convalescent homes, private hospitals and old people's homes. There is no doubt that the tax will be a severe impost on these institutions. The vast majority are not wealthy, merely providing for a small number of rich people, but are meeting a whole variety of needs. In many cases they are finding it exceedingly difficult to make ends meet, and the tax is bound to bear hardly on them because one cannot run a hospital or old people's home, or home for the chronic sick without a substantial amount of labour.

As my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) said, these institutions are helping to relieve pressure on the National Health Service; indeed they are its essential partners. If they did not exist the pressure on the N.H.S. would be even greater than to-day. It is necessary that these institutions should be exempted from what will otherwise be a crippling impost.

Secondly, the tax will be arbitrary and unfair as between them. I welcome the exclusion of charities from the tax, but, of course, some of these organisations are charities and others are not. It may be possible for some of them which are not now charities to change their arrangements so that they can become charities, but I am certain from the inquiries which I have made that in a good many cases it will be impossible for institutions of this kind to become exempt as charities. All these institutions have a common aim and purpose, to heal the sick and to relieve suffering, yet some will pay the tax and others will not. I hope, for this reason, too that the Government will find some means to relieve all institutions of this kind.

I now turn to the proposed Amendment to Amendment No. 73 which would exempt medical treatment insurance schemes. In many cases these provide the means whereby patients can pay for treatment in these private institutions. Here again, we are not dealing with a few wealthy people; we are dealing with a growing number of people who, very often with the help of their employers, are providing for themselves through provident associations. There is an essential link between the homes and the provident associations, which in many respects provide the means whereby the homes can remain in being.

The main insurance schemes of which I am thinking are the British United Provident Association, the London Association for Hospital Services and the Western Provident Association. There are others, but I believe that these are the main ones. They are all non-profit-making bodies, limited by guarantee, but they are not charities and they cannot become charities within the definition of the Charities Act.

The largest of these, the B.U.P.A., estimates that this tax will cost it £24,000 a year, a very substantial additional burden. The smallest, the Western Provident Association, estimates that it will cost it about £2,000.

One illustration will show the arbitrary nature of the tax. Running in harness with the B.U.P.A. is the Nuffield Nursing Homes Trust, which provides small hospitals and nursing homes for the treatment of the sick. Since the Trust was set up in 1957, it has spent no less than £2¼ million on providing hospitals and nursing homes. Half of this money has come from voluntary contributions in the areas in which the homes have been set up, and the rest has come from the funds of the B.U.P.A.

One of the main reasons why the B.U.P.A. felt that it was essential to set up these nursing homes was that in parts of the country there were not sufficient private beds for it to be able to ensure that it could fulfil its contracts with those who were insured with it. It felt that it was essenial to do this if its job was to be done properly. Yet we find that the parent organisation, the B.U.P.A., will pay the Selective Employment Tax, whereas the daughter organisations, the private hospitals, which are in this case charities, will not. It makes no sense that there should be this distinction between the two.

I hope that the Government will agree to find some way in which provident associations of this kind can be exempt because if, as a result of the tax, they could no longer continue, or had to reduce their services, the direct result would inevitably be greater pressure on the National Health Service. A significant feature of these organisations, which are spreading among growing sections of the community, is that they bring additional resources into the National Health Service, and are therefore valuable partners with it.

8.45 p.m.

I come now to another series of organisations, the British hospital contributory schemes. Here is a classic example of the tradition of thrift among weekly wage earners. In spite of the introduction of the National Health Service after the war and the introduction of comprehensive National Insurance benefits, these schemes still exist and prosper. But in the vast majority of cases they are not charities and they will, therefore, have to pay.

The British Hospital Contributory Schemes Association estimates that the cost of the Selective Employment Tax to these schemes will be about £40,000 a year. They provide mainly cash benefits for their members while in hospital. The contributions are seldom more than 6d. a week. They have over 4 million contributors and an income of about £3¼ million a year. With dependants, they cover about one-quarter of the population of England and Wales, who are eligible for cash benefits while undergoing hospital treatment.

Some of these schemes also provide their own convalescent homes, and this is one of the reasons, because of the staffing of those homes, why the tax will be so heavy on them. Not only do they provide benefit for their members in that way, but they have made substantial sums of money available to medical research and medical charities, well over £1 million since the National Health Service was set up.

These are essentially organisations of wage earners. Not only are they helping their members, but they are bringing additional resources to bear on the relief of suffering and hardship. Again, there is a case for finding a way to give relief from the tax.

hose are a few examples to add to the many already given by hon. Members on both sides. Together, they make an immensely strong case for the Government to think again and find some means of exempting these worthy organisations and individuals.

Mr. Winterbottom

I agree in large measure with what has been said by hon. Members opposite today. I wonder what is the matter. Are they wrong, or am I? A change has taken place somewhere. What I shall say tonight will be in line with principles and examples which I urged repeatedly from the Opposition benches. Tonight, I shall use them on the Government side. What a pity hon. Members opposite did not say in the past, when they sat on this side of the House, what they are saying now. Let us be consistent in these things.

I think that the motive and approach of the Opposition, even though I agree with much of what they have said, are quite different from mine. I approach this matter from a sentimental point of view. When it comes to questions such as the social welfare of old people, the disabled, the blind, the sick and all of those who are, by physical infirmity, at a disadvantage in society, I believe that a Government should do all that it can to bring aid and succour to them. I say to the Government that though they be the salt of the earth, if they are a Government who forget the fundamental purposes of social welfare, as it applies to the people enumerated in these Amendments, then they are as a salt that has lost its savour, and fit only to be cast into the depths of the sea.

Having said that, I want to deal principally with part-time workers. Someone mentioned the business of checking. Whether a person works eight hours or 21 hours, or whatever time one fixes to a part-time worker, there will always be the difficulty of checking. The one distinction which applies to part-time workers, that there is no payment of the tax in respect of those who work less than eight hours per week, is a means which will be used relentlessly. Indeed, many people will be forced to use it in this way by the circumstances in which they find themselves because of this tax.

In my city the damage is already being done and will develop. Students at the university there like to earn a little pocket money. Goodness knows, they do not get much. They work for two days a week in one of the retail establishments in the city, but already that two days a week has been cut to one day, to eight hours. It may be found that there will be an increase in the number of part-time workers, but the amount of work done, and the remuneration received, will be much less than before. The part-time workers who will work for eight hours will be at a premium.

What happens if they work for two employers, for two separate eight hours, or for three employers for three separate shifts of eight hours? How will we estimate whether the man has to work in one shop, two shops or three shops; whether he works for one firm or can be transferred to another firm; whether he works for a major firm or a subsidiary? All these things can happen, and I venture to prophesy that they will happen. They will make a mockery of the Bill.

Those Members who have tabled these Amendments know very well that there is not the slightest hope of their being accepted by the Government. If the Government were to accept them there would be no Bill left. The Government would have to start from scratch, and perhaps that would be a good thing, with the knowledge of what has transpired during the debate. Perhaps they would be able to evolve something in the nature of a payroll tax which would be equitable and patently equitable, to all.

Mr. Gower

I agree with much of what the hon. Gentleman is saying, but is not he carrying his argument a little far when he suggests that there would be nothing left of the Bill if these Amendments were accepted? Surely all the fit people of working age who were working full time would be included.

Mr. Winterbottom

For practical purposes, it would be a case of the administration not being worth the candle which would be necessary to collect what was left if all these people got the relief which everybody wants them to get. It would be a case of starting from scratch.

There is another point about part-time workers which has not been mentioned. It concerns the business of the travelling shop. I know about this matter because, as my hon. Friend the Member for Oldham, West (Mr. Hale) realises, I was the first man in the country to start a grocery shop on wheels.

Mr. Hale

I thank my hon. Friend for calling attention to my existence, because I have been worried about the fact that the consistent diet to which I have been subjected for the last two months might have rendered me wholly invisible.

Mr. Winterbottom

My hon. Friend may be invisible to some people, but he will never be invincible in their eyes.

Let me refer to the part-time worker in relation to travelling shops. The object of a travelling shop is to get the maximum number of hours on the road during the hours which shops are permitted to be open. The greater the number of hours within the week, the more the travelling shop can do the business for which it is intended. Therefore, the work of the travelling shop is not done in the shop; it is done in the warehouse, so that the travelling shop can go on the road first thing in the morning.

This work is done by part-time labour. If anything is done to take part-time labour from this field of operation, it will probably destroy the whole of the distribution process. Anything which drives the part-time worker out of industries in which part-time work is essential is a disservice to industry. The part-time worker is essential in certain occupations.

9.0 p.m.

I am proud of the fact that I am a trade unionist I am as much in love with my trade union today as I was on the first day that I joined it. I am proud that that trade union is probably one of the best unions dealing with research into distribution and the service industries generally. Its considered opinion, after long investigation, is that although it does not like the idea of part-time workers—such workers destroy the idea that negotiations can be brought to a speedy conclusion; they are a thorn in the flesh of successful negotiators on every occasion—the distributive trade would collapse completely if part-timers were not allowed to operate. If these people are essential, one has to question anything that drives them out of the occupation in which they are so necessary.

It is said that one cannot ride two horses at once, especially if they are going in opposite directions. Are not the Government riding two horses going in opposite directions? They say in the National Plan that they want to divert as much part-time labour as possible into the world of distribution to release full-time workers for productive industry. In the next voice, however, they say, "We will tax you until you cannot be employed." If anyone tries to ride two horses like that, there is an inevitable rupture. That rupture may destroy the distributive trades.

If it destroys the distributive trades, sheer force of logic tells me that it will destroy the other service industries as well. It will destroy the catering industry. A great deal has been said about part-timers in that industry that will not bear examination by those who know a great deal about it. There are a lot of part-timers in the catering industry that that industry cannot do without. Without mechanisation for washing-up, one has to have somebody who is either disabled or mentally deficient to do it. Nobody else will do it. The Catering Wages Act recognises this. It recognises that a social service is performed by employing those people. If we promote social welfare by employing them, anything that destroys the opportunity for employing them should be closely examined, and if it does not stand up to that examination it should be roundly condemned. That is why, in voice, I support these Amendments.—[HON. MEMBERS: "Only voice?"] In voice, I support these Amendments.

Mr. John Wells (Maidstone)

The Government have a majority of 100.

Mr. Winterbottom

Jesus Christ never taught me to be a saint and to go to Calvary to that extent. I am not going into the Division Lobby for the Amendments. I am not taking my objection to that length. I am taking it to the logical length I possibly can in terms of condemnation of the Government for a tax which is injurious, unfair and unjust. Those who blame me for not taking it to its logical conclusion should remember—as I have used a Biblical illustration—"Let him who is without sin cast the first stone." I will leave it at that.

This is my point, that part-timers are so important to the service industries that special consideration should be given to them by the Government before it is too late. If the application of the present proposals actually becomes law then the damage will have been done and it will take more than mere Amendments to correct the damage done.

For a Government to admit having made a mistake can be the salvation of the soul of that Government. I believe that they know they are wrong; I believe that they know they have made these mistakes; I believe that those people who know they have made mistakes should confess to those mistakes and try to make amends before it is too late.

I believe that these Amendments contain an idea which is in the minds of hon. Members on both sides of the Committee, an idea of which the Government should take notice before it is too late, and alter the Bill.

Mr. Hirst

The hon. Gentleman the Member for Sheffield, Brightside (Mr. Winterbottom) has made a very interesting and, if I may say so, very sincere and impressive speech, but it would, I think, have been a little bit more impressive, because, I know, he feels very strongly about this as he showed in an earlier speech—if I remember aright, it was on Second Reading—if he had been prepared to carry his view to a logical conclusion. I cannot see why he should not.

Some of my hon. and right hon. Friends will remember, and certainly the right hon. Gentleman the Member for Sowerby (Mr. Houghton), were he present on the Government Front Bench, would remember, the time when I supported him extremely strongly when we were debating the Finance Bill of that time and I was on the Government benches. In the matter of the disabled, which has represented a large amount of our discussion today, I personally supported the right hon. Member and went into the Lobby—yes, against the Government I generally supported, against the whole party. I did not just merely abstain. I did that because I had the courage of my convictions, and I stand by them.

I think that hon. Members on the other side who have consecutively made speeches in favour of these Amendments should have that courage. I know that one has certain responsibilities towards one's party and towards the Government one supports, and when the Government had a majority of five or six or three, hon. Members supporting the Government may indeed have had seriously to question where their loyalty lay, whether to the Government or to their party or to their constituents or their personal convictions, and I would not question that; but when the Government have their present majority I personally think that it is shameful if hon. Members on the other side do not have the courage of their convictions.

I was out of the Chamber for about half an hour, but otherwise I have been here the whole afternoon and evening, and, of course, I may have missed a speech, but the whole time I have been here I have not heard a single speech which did not condemn, in principle and in detail, this tax and its implications.

Mr. John Rankin (Glasgow, Govan)

Is the hon. Gentleman measuring the strength of a conviction by the size of the Government's majority?

Mr. Hirst

I do not know what the hon. Gentleman means by that. I know that he likes having his pipe and not smoking it.

Mr. Hale rose—

Mr. Hirst

The hon. Member for Oldham, West (Mr. Hale), whom I greatly respect, was probably not in the Chamber when something occurred and I know that the hon. Member or Glasgow, Govan (Mr. Rankin) will not have taken the slightest offence at my little friendly quip.

Mr. Rankin

I had a smoke before I came in and there is, therefore, no need to try again. If I misunderstood the hon. Gentleman, he will correct me, but I understood him to be arguing that if the Government majority were small it would not be very advisable to carry one's convictions into the Lobby against the Government, whereas if the majority were large, it would be easy to carry one's convictions into the Lobby against the Government.

Mr. Hirst

The hon. Member has a great capacity for making his point at considerable length; it is one of his endearing qualities. I put it perfectly clearly and I think that he understands. He knows perfectly well that one represents all the people of the constituency, but that the majority, which allows one to come here, has certain party views and expects one, in principle and in general, to serve that party.

If, by taking convictions into the Lobby, unless it is on an extremely strong moral issue, one thereby to that extent puts one's party in jeopardy, that must be different from when there is a majority of 100. The point is perfectly clear and nobody, least of all as experienced a Member as the hon. Member for Govan, should have questioned it.

We have had a considerable discussion about this serious matter, which is the deep bones of the Finance Bill and which has been debated throughout Monday and today, as the Chief Secretary knows only too well. Although, as he knows, the armistice between him and me is over, I do not want the engagement to be unnecessarily severe, provided that my right hon. Friends and I are reasonably allowed to attain our objectives, objectives which both sides of the Committee clearly wish to be attained as quickly as possible.

This is one of the most devastating taxes ever thought up. I do not think that anyone with experience of our country or knowledge of its circumstances would ever have proposed it. I have some measure of respect for the Chancellor of the Exchequer and, personally, I acquit him of the charge that the tax is his brain child. That would not be a very nice thing to think of him and, frankly, I do not think it tonight—I may tomorrow, but tonight is another day. I hope that that is fully understood, because the Committee is in a good mood and expects some help from right hon. Gentlemen opposite.

My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) very properly explained how the tax would be taken into consideration. If it had been the sort of tax which the Conservative Government of a few years ago envisaged but did not carry through—and on Second Reading I said that I did not mind a payroll tax right across the board—the position would have been quite different. But there is no hon. Member on either side of the Committee who imagines that a levy of 25s. a week on each male employee will not be considered. Some employers will take into account whether a person is what I call "tax-paid". There will be a considerable preference in shops and elsewhere where there is part-time working for the person who is already tax-paid. There is this great disadvantage which will accrue to shopkeepers in particular in relation to weekend working, and the rest of it.

9.15 p.m.

I personally thought that the hon. Member for Wood Green (Mrs. Joyce Butler) made a good speech, and she showed clearly how the tax can be very damaging to the part-time worker. She instanced a case where three part-time workers were employed in a shop, which is by no means unique, in respect of whom the tax would come to 37s. 6d., or three times the amount payable in respect of one full-time employee.

What are the Government trying to do, apart from making an unholy mess of the economy? We have known that for a long time. But what are they trying to do in social justice? The rest is taken for granted. The whole country knows that they are making a mess of the economy. We are concerned to know whether there is any merit in this legislation. There is no element here of something being absorbed at once just because one is not hit with a bat on the head and everyone thinks that it is a good show. Now we are finding that they are all hit on the back of the head.

There has been no voice raised in the Committee from anyone wanting to eke his way on to the Front Bench at the cheapest rate by coming to the assistance of the right hon. Gentlemen. There has not been a murmur from anyone, and that is something which I have never seen in any party. Not one weed, not one little clipped dandelion, as my hon. Friend the Member for Yeovil (Mr. Peyton) said recently, has come to their aid. That shows that the tax has no merit which could be scraped from a dirty dustbin and found edible by the lowest form of insanitary cat.

The hon. Member for Wood Green also spoke on a matter which is of deep concern to me when she referred to incapacitated people. She spoke particularly about the blind and the deaf, as did my hon. Friend the Member for Essex, South-East (Mr. Braine). There is a particular case for such people, and right hon. and hon. Gentlemen opposite cannot doubt at all. As we have heard from one or two hon. Members opposite, employers as a whole have been extremely good about the discretionary employment of incapacitated people. Many of them go beyond the statutory 3 per cent. Many of them lean over backwards when Members of Parliament approach them. My own experience has been no different from that of the hon. Member for Bedwellty (Mr. Finch) and other hon. Members.

One of the problems about which we feel particularly is that of the blind, deaf or incapacitated man with some guts and a sense of personal security who does not want to be a charge on the State. He has everything which I admire most of all—a willingness to overcome personal difficulties which he hardly likes to have referred to.

Are the Government trying to shoot that sort of man down in flames? I cannot believe that that is their purpose. No Government would be so inhuman. But that is the result of this legislation, and the right hon. Gentlemen on the Treasury Front Bench have to wear it. They cannot pass it over to the Opposition or to the Liberal Party, which is usually one of their scapegoats when they are in a jam. They have to wear it in the House and in the country.

Dr. Winstanley

Hon. Gentlemen opposite are not the only people who are apt to use the Liberal Party as their scapegoats and pass things on to us.

Mr. Hirst

That is an irrelevant remark, and I am sorry that I paid the Liberal Party the compliment that I did. I was trying to be helpful, but if my remarks are not going to be helpful I shall save the time of the Committee and not make them. I do not want frivolous interruptions, but if there is a genuine one I shall deal with it.

It is important that the Government should realise that they will have to carry the can, and deservedly so, for the inhuman effect which this tax will have. I do not say that the Government intentionally desire this effect. That is ridiculous, and I am not saying it. The Financial Secretary knows that I would not say such a thing, but that is what is going to happen.

I do not see how any Government can hold up its head for a moment and try to argue any financial gain for this tax. I know my figures too well for that. The Government cannot do that. It cannot be done that way, and it would be utterly contemptible if that were to be the end of this discussion tonight. Does the hon. Member for Oldham, West wish to intervene?

Mr. Hale

The hon. Gentleman has selected me for animadversion, having refused to give way when I wished to intervene on an observation relevant to what he had to say. If, after that, he expects that I shall be displaying any especial courtesy to him, let me tell him that I am not doing so. I was turning to my hon. Friend because I am slightly deaf and saying, "He must be talking rubbish, but I cannot hear every word".

Mr. Hirst

The hon. Gentleman knows me only too well to know that I would not try—I hope that he can hear me—to compete with him in courtesy in this House, but, on the other hand, as I have the Floor of the House, and the Chairman is listening to me, I rather dislike the idea of an accompaniment by the hon. Gentleman.

There is one other aspect to which I want to refer, and that is the question of charities and religious bodies, which have been mentioned today. I know that the decision has been taken with regard to charities, but I think that, as usual, the Government have not thought this out. They rushed in when the Opposition proved only too well how uncharitable they had been. But even now they are in a dilemma, or they ought to be in one, because they are not being fair. It is nonsense that charities, if the tax is to be refunded to them, should be expected to pay these ghastly sums of money for up to six months, and have to borrow money in the meantime, very often at a high rate of interest. We shall be lucky if we get away with 7 per cent. if the Government last for another three months. The alternative, as one hon. Member pointed out, is for the charities to cut down some of their activities to meet this monstrous charge. In other words, crippled children will have to pay for the Government's folly.

I do not think that the Government have woken up to how this will be interpreted in detail when this impost comes. I am prepared to say that people may think that I am exaggerating tonight. I do not mind. I have heard all this before, but so often I have found that what I have said has been only too well understood when the time has come. We are inclined to live from day to day, but the time will come when this will come home to people. That will be when the bill has to be met, and it will have to be met, because the Government can put on the screw. It is not something which we can pass to somebody else. The Government can put the bailiffs in.

The Government are putting the tax on charities, even though the money will be refunded, which will mean that they will have to get advances from the bank, and I agree with my hon. Friends that we have not had sufficient information about whether, having put on this impost, the Government will give charities facilities for dealing with it. But even if they are, the charge remains and the cost remains. The Government have the impertinence to take this sum interest-free. It is an insult. It is uncharitable in every conceivable Christian sense of the word.

I am interested in the question of part-time workers from a constituency point of view, because I represent one of the greatest wool textile constituencies in the country, whose firms depend enormously for their fantastically good export records upon the use of part-time workers. This is a very serious matter for these firms, and especially for many who work not as principals but on commission. Moreover, some are hit by this tax in a most illogical way.

I made a passing reference to this point during the Second Reading debate. Associations such as the Association of Exporters of Raw Materials and Yarns are engaged 100 per cent. in exports, and not one of them is a manufacturer. They are all exporters. They help to pay the bill that the Government want paying. They do not get this 7s. 6d., less all the costs of the services, and pay Corporation Tax and the other stuff that wipes it out. Do they get a refund? No. They pay the full tax because they are miserable distributors—nasty, dirty distributors. I am ashamed of the Government. I am disgusted with them.

The whole of Lancashire, the North of England and Scotland are disgusted with the Government. The West Country is disgusted with them. This is an unmitigated disaster. Those who are playing the greatest part in satisfying our economic needs are being hit, hit, hit by this tax, and not a single hon. or right hon. Gentleman opposite can deny that.

The Government have not advanced a single inch to meet this case. Not a single letter did I receive from the Government after my Second Reading speech, when I gave a full explanation of the point. I have not had even that courtesy. It is disgraceful. The association to which I have referred is utterly disgusted.

This amounts to biting the hand that is feeding us. It is a most unchristianlike act that any Government—even a Labour Government with all its manifestations of evil—could possibly conceive. I have nothing but unmitigated contempt for the Government in this matter. They can only repair a small portion of the damage that they are doing, and reduce slightly the hate which will be felt for them by the country in due course, if they meet some aspects of these human problems, let alone the commercial problems. If they cannot do that they will have abrogated any right, in human, social terms, to be the Government.

Mr. Hale

Perhaps I may, in gently intervening in the debate, express my thanks to the Chair, first, for recognition—after all, I have not been a very active Member for a long time, and I am very grateful to know that I am still remembered—secondly, for the privilege I have had in watching Privy Councillors pass through the Chamber for the last five hours—men whom I used to remember with affection and have so rarely seen—and. thirdly, although I am not sure about this, for being called after the hon. Member for Shipley (Mr. Hirst), which I thought was a slight indignity.

I must thank you, Sir Eric, for the selection of Amendments, which has left me in a slight difficulty. I have no criticism at all, as I appreciate your difficulty, but my Amendment about people who work 24 hours a week has not been selected, although somebody else's, about people who work 21 hours, has been selected. I know that it is difficult to keep the mathematical balance in the course of an impromptu day. My speech has been postponed already for five hours and therefore perhaps will not be quite so fresh as it could have been at about quarter past four; still I will try.

9.30 p.m.

First, I have to say something unkind to the Financial Secretary or the Chief Secretary—I am not sure which—because he has been wandering up and down the country describing my most distinguished constituent as a train robber. He did it at the 1964 election He did it at the last election. Yet this man is a gentle, kindly, distinguished bloke. His taste in modern art is somewhat defective, and I have said so, but he is one of the best employers in Oldham, an employer of many people in Oldham, thank God, and a very good employer. Yet the Financial Secretary calls him a train robber. Now he wants to give him a subsidy of 7s. 6d. a workman—and he employs 20,000 or 30,000 in Oldham. I think this is over-generous when one considers that this money will be skimmed off from the Oldham co-op and destroy their "divvy".

This is just a question of argument. What has St. Sebastian done to win the approval of the right hon. Gentleman who has been, one might say—I do not want to say, "vulgarly" rude, except that I would use the word in its technical and proper sense—commonly rude to him? He has been very rude to him and I thought that he disapproved of him. I like him very much.

I am not sure that he should have 7s. 6d. a head for everyone whom he employs at a time when he is still able to effect contracts on terms which lead to the display of more intelligence in Oldham than is normally displayed in Whitehall. I apologise for mentioning Oldham, which is west of Suez and perhaps out of order. But I am concerned to mention the older people in Oldham as well, of course, as the older people in the remoter parts of the world.

I encounter some problems in dealing with these people. Every time we have a Finance Bill, of course, we have these jolly debates in which everybody thoroughly enjoys himself until nine o'clock in the morning and we get observations about widows and one-legged hill farmers. The people whom I interview in Oldham very often have the misfortune now to be slightly older than I am. Not much—I am getting pretty near the pension stage, and jolly pleased I am at the prospect that I might be able to sneak out and forget these Communist denunciations and other things before I get involved myself.

I have to see old-age pensioners and disabled people of whom there are many in Oldham. There is an old history of malnutrition which contributes to disablement in Oldham, as anybody knows——

Dr. Winstanley indicated assent.

Mr. Hale

I notice the hon. Member for Cheadle (Dr. Winstanley) nodding his head. There is a history of rickets in the area. By God, one could see that the first time I went there fifty years ago. One could see the physical set-up indicative of rickets in youth among disabled people in Oldham. What are we to do about them? I want to know. I think that it is important that I should know.

With great respect, this Committee, with all its ability, sincerity and virtues, which I admire as much as most people, seldom transplants itself into the sense of really getting in touch with this sort of problem.

I had a letter 18 months or so ago from a charming and cultured lady in Oldham who, it transpired—she did not even say this in her letter—was one of the early adult thalidomide victims. She said, "My doctors say that I must do some work as a question of therapy." She had to acquire an invalid carriage and had to find specialised employment. She had to employ someone to look after her house. I suppose this is the case of the "one-legged hill farmer", I do not know. She said, "I have to pay National Insurance for my home help for two or three days. I have to pay National Insurance for the woman who looks after the house." What happens now if we say that that woman has to pay 25 bob or 12s. 6d. for the person who works in that house? What happens now if as an employer she has to pay 12s. 6d. for her help? It will not happen because she committed suicide a long time ago. She could not bear the burden of this sort of problem. Many of us cannot. Many of us get weak.

I constantly see old-age pensioners, usually widows. They come to me and say, "Leslie, they call me a single woman." I say "You are a single woman. What are you worrying about?" They say, "Leslie, you don't understand. I'm not a young girl paying 30 bob a week to her father who can dash off for weekends at Brighton or something like that; I am 66." I recall the precise figures of a case which came to me some weeks ago. The lady was 66 and she was getting £4 12s. a week old-age pension because she worked six years after she was 60 in order to get an extra four bob. Then she found she had run herself into Income Tax.

With great respect to the Chancellor, whom I love and like and do not wish to criticise, I point out that immensely generous concessions were given by a previous Government to Surtax payers years ago so that they do not pay Surtax on £5,000. How do we equate that with people who are getting eight quid and have to pay Income Tax? This woman was getting £4 12s. of which 12 bob was the supplement. She said, "That's about all they let me earn. If I earn any more I will lose my pension." I quote the facts as they were given to me and I am absolutely certain of them. She said, "Leslie, you don't understand. I'm living in a house built," as half Oldham was built, "100 years ago and I have to maintain it. My husband left this to me. It is the one thing he left. This is my home. What do I do, surrender and go to an old people's home, or keep the house?" There is a lot of sentiment attached to it. Damn it, if there is no roof to one's house, what can one do? She said, "How much will it cost out of my £9 4s. to keep the roof repaired and how much to have the plumber? Then they take a bit of Income Tax off me."

I say it is a monstrous scandal that a Socialist Government should never have permitted to exist. What is to happen now? She will get the sack—of course she will. Do not let us have any humbug about this. How many old people will be kept in spare-time employment? My hon. Friend the Member for Wood Green (Mrs. Joyce Butler) opened the debate with a magnificent speech and with deep and obvious sincerity, and she was supported by many other speakers in the earlier stages.

When I ventured to mention the Oldham Industrial Co-operative Society the hon. Member for Worcestershire, South (Sir G. Nabarro) became rather excited. I observed that he fitted the description of the appearance of an officer at the Battle of Sebastopol when he was rather excitedly denouncing over-full employment. The hon. Gentleman was shocked at the idea that we were keeping too many people in employment.

I say with deep sincerity that the Oldham Industrial Co-operative Society is the best co-operative society I have ever met. It is terrific. It is splendid. It has a sense of public duty. When I sat here on these benches arguing on behalf of the small retailer, I never got a word from the Oldham Industrial Cooperative Society. The society did not mind what I was doing. "Live and let live" is one of the maxims by which the society seeks to operate. It is a pretty good society. The society is not terribly worried. As I said, the society did not even approach me. I approached the society. It employs 135 people on Fridays and Saturdays. This is a good thing, because on those days shopping is terribly difficult.

Sir Gerald Nabarro (Worcestershire, South)

Hear, hear.

Mr. Hale

I should be delighted and surprised if I got the support of the hon. Member. Shopping is not easy on those days. The society takes on these extra staff on Fridays and Saturdays so as to make shopping easier. Naturally, the society tries to secure the services of older employees and give this opportunity to people who perhaps have had previous experience and who are now only too glad to supplement their old-age pensions. What happens?

Sir G. Nabarro

Eighty-five pounds a week.

Mr. Hale

I am not sure what that refers to.

Sir G. Nabarro

One hundred and thirty-five times 12s. 6d.

Mr. Hale

The hon. Gentleman is nearer to the result than I expected.

Sir G. Nabarro

One hundred and thirty-five people employed on Fridays and Saturdays times 12s. 6d. means £85, to the nearest £. That is the figure I named.

Mr. Hale

The correct figure, as I have worked it out quickly during the hon. Gentleman's intervention, is a little over £80 and a little less than £85; but that is not the point. The Oldham Industrial Co-operative Society will pay the £85 a week. The society is generous-hearted and a very good employer. Indeed, in Oldham we have very good employers. We do not have many disputes.

There must come a point at which the question arises whether this economic philosophy——

Hon. Members

Speak up.

Mr. Hale

I am sorry. It is many years since anybody in the House of Commons really wanted to hear me. This touches me. I am infinitely grateful for that interruption, which I welcome. I will try to respond to the injunction. These ambits of employment are limited. They are not replaceable. My hon. Friend the Member for Wood Green mentioned somebody who employed three part-time workers a week. One appreciates the possibility—three payments. But the person over 60 is not permitted to work other than part-time. I can understand the argument that part-time work, on the whole, is economically unviable. I can understand the Chancellor saying that we want to reduce part-time work—but not in a society where people over 60 are compelled to work part-time and are told that if they work an excess hour they may forfeit their old-age pension.

9.45 p.m.

I say sadly to the Chancellor, with respect, that that lady receiving £4 12s. a week made the sad discovery that by stopping on to work for six years, and who got an extra 12s., landed herself with Income Tax. I wonder how much it costs to collect that tax. Across the road I have a dozen piles of letters relating to tax liabilities which I have tried to sort out, from old people in Oldham who think they should not be paying tax at all. The amount of assistance that I get from the tax office in Oldham is magnificent. It goes to any amount of trouble to make clear that its computations are right. It certainly costs the community more to do this.

The Committee may have forgotten that there is no P.A.Y.E. on old-age pensions. One has to compute the old-age pensions and take the tax out of wages. There were cases of error, and they were corrected afterwards. People had lost the whole of their week's wages in tax because of tax accumulations. I knew of a man who during Christmas week did not draw £2 out of a full week's wages because of tax accumulations. We really ought to stop this.

To introduce a specialised individual tax directed against part-time labour is an iniquity. We have been asked to encourage part-time labour. We have been asked to make appeals to people to try to work and help the country. We have been asked to say that we would revise the provisions against pensioners and so on, so that they could work rather longer. All this has been going on, and suddenly we are told that we are to place a burden on them.

The right hon. Member for Enfield, West (Mr. Iain Macleod) introduced a number of Amendments which were comprehensive and extensive. May I briefly mention one institution of which I am a member and which I think should be mentioned—the London Library. It has not written to me, except to say that I have got some books which should be returned and which it had back weeks ago. I approached that institution some years ago. This is a very brief but interesting story. The London Library has been exempted from rates for many years under a curious Act which applied to the old-fashioned learned institutions, and some anti-Hampden had challenged all this. All these decent institutions were landed into law costs running into thousands of pounds contesting the question whether they should pay rates or not. I think they were badly advised. I would not have fought the action. I would have come to Parliament. I think they would have done better in the end had they done so.

I introduced a Ten-Minute Rule Bill, signed by Members of all parties, to exempt the Library. A deputation was received by the then Minister of Housing and Local Government, who is now a noble Lord and could be Lord Hampstead, though I do not think he is. However, he was very helpful. I am not one of his admirers, but I must say that on this matter he was helpful. He pointed out that legislation was impossible while litigation was taking place. In effect, it seemed that we would have to go on for years because once we had finished with the London Library case there would be the cases of the Royal College of Music and other decent institutions which were being assailed.

I introduced a Bill as a demonstration and withdrew it, by consent, when it was arranged that a Measure would be introduced later which would enable local authorities to provide special exemptions for associations of this kind. But the London Library, having spent thousands of pounds on litigation and in paying arrears of rates that had been claimed, found that Westminster City Council did not regard it as the type of institution which should be exempted and, as far as I know, it is still paying every penny of the rates.

Then, of course, the right hon. Member for Wallasey (Mr. Marples)—last heard of in Japan—introduced, as Minister of Transport, the horrid system of having people wandering about plastering tickets on cars. Every time I go to the London Library it costs me £2, paid at Bow Street months later. I think that I must be the most prosecuted Member of Parliament.

Now the S.E.T. is being levied on an institution of learning which makes not a penny profit and which provides scholarships for students and all kinds of special services. It is an institution almost without compare in the world. It was founded by Thomas Carlyle, more or less, after a row with the British Museum, which did not like him daubing comments on its books. I have a little sympathy with the Museum in that view.

The London Library is a great institution. If one is asked whether it is a charity, one must reply that it never started out to be one but it certainly never makes a profit. If the Government close it down it would be a beastly and unnecessary act, and I hope that the representations we are making on its behalf will be heard. Its closure would be a loss to authorship and to learning. It is a genuine public service which we ought to preserve.

I apologise for intervening, but I felt that I should try to say these few humble unsolicited and uncontroversial words.

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

I know that the hon. Member for Oldham, West (Mr. Hale) will forgive me if I do not follow him. He made a wide-ranging and interesting speech. But I want to return to the question of part-time workers. One of the objections that the Treasury will have to our proposals is the question of how to identify a part-time worker and how to draw the line between someone who, for example, works less than 20 hours and someone who works more than 21.

But this is already being done. They, at any rate, purport to separate those who work less than eight hours from those who work more than eight hours. If it is possible with the division drawn at the figure of eight, it is equally possible with the division drawn at the figure of 20, or any other number one likes to choose.

The question of part-time workers is particularly important in an area like the West Country, where there are no big cities or great conurbations. Most of our towns are comparatively small. Most of our industry is comparatively simple, and there are no large industrial complexes. It is very largely a seaside holiday area. One has only to look at the map to realise what a long sea coast we have and what great amenities and facilities there are for holiday makers. This is not unique to the West Country; there are many other parts of the country where the conditions are much the same.

We have great scope for employment of part-time workers in our shops. Chemists have been mentioned today, because they provide a useful—and, in fact, an indispensable—service. There is also scope for part-time secretarial help in offices, part-time domestic help in hotels, boarding houses and cafes, and part-time workers in hundreds of other non-industrial jobs in rural and seaside communities—such things as the care of sports grounds, playing fields, car parks, camp and caravan sites. They do not all belong to local authorities, and so they will not all be exempt from the tax. Many of these facilities and amenities give part-time employment to people, particularly to those who are disabled or incapacitated in one way or another.

I endorse everything that has been said tonight about the difficulties of deaf people, but there are many other people who are incapacitated in other ways, whose cases are equally deserving. Then there are the retired people who have given up their full-time work, but for whom continued activity is essential to maintain their health and vigour, and sometimes their mental stability as well. Elderly people who have given up work, whose families have grown up, married, and, in many cases, gone away, can be very lonely. Their friends and companions are those people whom they have been accustomed to meet at their daily work. If that companionship is suddenly cut off at the age of 60 or 65 the effect can be catastrophic, and it is intolerable and thoroughly inhuman to impose this additional burden on elderly people who want to continue in part-time employment after finishing the full vigour of their working life.

I am sure that this was careless thoughtlessness on the part of the Government, and that on second thoughts they must relent. They have heard nothing but criticism all this afternoon and evening, and for the past few weeks hardly a newspaper that any member of the Treasury Bench may have seen does not mention one aspect or another of this disastrous facet of this new tax.

10.0 p.m.

Now, education establishments. One hon. Member opposite made great play earlier of the division between private and State education. To me, this is quite immaterial. The one cannot do without the other. Both are essential. One has only to think for a moment of the intolerable burden which would suddenly be thrust upon State education if the independent side were closed down overnight. Far be it from any of us to decry either type of education. Both are essential to the country, as I say, and such speech about independent schools as we have recently heard from the Government benches is foolish speech indeed.

Many of the independent schools, thank goodness, are charitable institutions, but the ones which are not will suffer the impact of this foolish new tax. I ask the Treasury Bench, before it is too late, to think again.

Mr. Geoffrey Rhodes (Newcastle-upon-Tyne, East)

I have followed the tortuous path of this long debate on Clause 42 for more hours than I care to remember. The remarkable feature of it is that, throughout these many hours, there has been a sustained and substantial attack, frequently on a closely analysed and reasoned case, from both sides of the Committee. I think that I am right in saying that not for many hours has anyone spoken against some of the Amendments now before the Committee. I do not think that any hon. Member on this side has seen fit to support his own Government.

It seems to me that, when a debate takes place in which there appears to be virtual unanimity among back benchers across the Floor, whatever the party political motives may be behind some of the speeches made by hon. Members opposite—[HON. MEMBERS: "No."]—with a view to embarrassing the Government, if the criticism is equally sustained from this side, also, one must ask my right hon. and hon. Friends to ask themselves a question: could we not be wrong?

Those of us who have criticised the tax, and Clause 42 in particular, seeking to amend it, have not in every case argued that the principle behind the tax is wrong, or that the principle in the White Paper was wrong. The sustained attack has been on points of application, in the method by which the principle is being put into practice.

These Amendments cover special categories of people who, in the view of those moving or supporting them, should be dealt with specially and separately. During the last hour or so, I have been wondering what kind of reply will be given by the Treasury Bench to the very effective case which has been put on a whole variety of Amendments. I suppose that the answer will be that this is a rough and ready measure, that it is a blunt instrument, that this aircraft—the S.E.T.—must be got off the ground somehow and that it will take time to perfect it. But there is such a wide range of anomalies. We are constantly told that they will be ironed out later, though we are not told which of the anomalies the Government have in mind for ironing out.

I hope that we will have a clearer lead from the Treasury Bench before this debate finishes as to the points that it thinks are most acceptable with a view to the future improvement of the Tax. We will be told, and I made a speech in closely analytical detail on Thursday last about the application of this tax, that the points are valid but that it will take time. I would suggest that if we lacked the time to bring in a Measure more effective than this appears to me to be, we must ask ourselves why was there not more adequate preparation in the formation of the Bill or, alternatively, why the Bill was not brought in a year hence, when the details could have been thrashed out.

A further argument may be that if the Government give way to Amendment A or Amendment B or category C or category D, as one tots up the score the sum of money involved will be so substantial as to undermine the fiscal objectives of the Bill. But as has already been pointed out, the Government could have made a substantially greater revenue by not being so generous in their indiscriminate granting of premium subsidies to may manufacturers who have not asked for them and who do not need them.

Again, in terms of further sources of income, to compensate for the loss of revenue caused by accepting Amendments on particular categories, some of us have asked, why is it, in taxation upon the service industries, that self-employed people in those industries should not be included? I will give one case, retail distribution. It simply is not true that the least efficient elements in retail distribution are the co-operatives or the multiple and the larger firms. I understand that 90 per cent. of the grocery trade is being run on the basis of small man businesses, largely self-employed people who will be greatly helped by this tax to the detriment of other distributors. Yet these very parts of the distributive trade are, time and time again, the least economic and most inefficient units.

If we talk about the saving of money to pay for these special cases I would suggest that we have an extremely untidy method of collecting this form of taxation, with hundreds of millions of pounds being paid out by many people who will later recoup it, sometimes at a loss to themselves. For example, a substantial number of local authorities will have to pay a great sum of money in before it is repaid, and I imagine that it will cost them a great deal in terms of interest, and so on.

I would like to refer briefly to the elderly part-time employees. As I read the White Paper and see this point about surplus labour and services, and persuading people to come back into manufactur- ing trades, I would say that there are a considerable number of part-time employees who would seem to be extremely unlikely to come back to manufacturing, from which they have retired.

Take the catering industry as an example. It employs a large number of elderly people and housewives who, by reason of age or occupation, can only be part-time employees. To economise on their labour will not provide more labour for the manufacturing industries. It is not in the nature of the economy for this to happen. The part-time employment in our economy is not the soft under-belly of our economy. I would argue that it is the hoarding of surplus labour on the part of some manufacturers that might well be the key when considering the question of the soft under-belly of our economy.

These Amendments have sought to exempt certain groups, principally in the service industries. I have never argued that to tax services was wrong. I have argued that taxation will follow the consumer, and, in as much as more and more money is being spent on services, I would rather have this kind of new taxation than increased taxation on commodities, which are already extremely highly taxed.

We have to tax on the basis of social priorities, which means that we have to exempt certain categories of people from the tax because of the services which they render to the community and we have to include certain manufacturing industries in the tax because they do not serve the national economy or other manufacturing industries in their long-term objective of capturing the export markets. It is this untidy, inconsistent application which has brought objections from these benches, not the principle. It is wrong to tax certain services which are good, healthy, efficient or socially desirable and wrong to subsidise certain manufacturing industries, which, by no stretch of the imagination, contribute to the economy.

May I say a word of explanation about the Co-operative movement. There is a great deal of confusion. Co-operative Members have not come here to speak for special discrimination in favour of the Cooperative movement. We have come here to speak from our experience over many years in retail distribution and to tell the Government something about the distributive trades, which, at least in terms of the Bill, they do not seem to understand.

I made a speech on Thursday on the Selective Employment Payments Bill in which I analysed in great detail the nature of distribution and, I hope, showed the Government that some of the effects of the tax would be to penalise the efforts for streamlining warehousing, centralised distribution, centralised transport and the development of computers, thereby defeating the principles behind the tax. That speech was not answered by the Chancellor of the Exchequer. All he said at the end of the debate was, "As far as the co-operatives are concerned, we cannot exempt them". Yet the point for exemption was never put in that debate. It has not been put by any of my Co-operative colleagues in this debate.

What we say is that this tax has a special significance for the Co-operative movement, since in this country, unlike in many countries overseas, the movement is not predominantly a manufacturing movement; it is primarily a distributive movement which employs a substantial number of part-time staff. In the past, it has employed people in relatively uneconomic services because it wanted to continue door-to-door distribution to certain isolated villages as a service to its membership. We have continued to deliver goods when it has not been in the interests of the dividends of the society to deliver the goods. We felt that we had an obligation to the elderly and people in certain areas which would otherwise be isolated from retail distribution.

The purpose of the evidence presented to the Chancellor of the Exchequer by Co-operative Members and representatives of the Co-operative Union, based on their detailed knowledge of the trade, has been to show why there should be Amendments to the Bill, none of which has been conceded by the Government. It is because no concession has been made to the case which has never been answered but which has been put forward continuously that my Co-operative colleagues have refrained from supporting the Government throughout the debates on Clause 42 and will continue to refrain, I understand, from voting for the Government until we have finished with this Clause.

Let us look at this tax from the point of view of the ordinary, active member of, say, the Newcastle-upon-Tyne Cooperative Society. One of its members said to me, "It seems odd. Our society, which is providing a wide range of service for a mass of people in this city, will have to pay an extra £150,000 a year in taxation. We could see some justice in this if it were not for the fact that, for example, the Newcastle breweries will get a heavy subsidy under this tax which they do not need and for which they have not asked ".

It is this kind of contrast which is, in a sense, illogical. This is the kind of image which the Government are presenting in the country because they have persisted in standing firm against all the legitimate suggestions and reasonable points put to them by some of my hon. Friends and some hon. Members opposite.

It is because the tax is bad in implementation that we have sustained this attack. We cannot support this proposal because we feel that it does not achieve the objects that were set out for it. I appeal once again to the Government, as we have done many times and will continue as the years go by, to meet the reasonable requests of those who speak for the trade and who know that their case has not yet been accepted by the Treasury Bench.

10.15 p.m.

Mr. Nicholas Scott (Paddington, South)

I have listened to most of the debate from the time the hon. Lady the Member for Wood Green (Mrs. Joyce Butler) began right through to the speech of the hon. Member for Newcastle-upon-Tyne, East (Mr. Rhodes), who has just concluded. As a fairly new member of the Committee I was incredulous when I heard an hon. Member opposite sell the past by saying that in his case at least the vote would not follow the voice. How one can imagine that the pressure across the Floor of the Committee will have any notice taken of it by the Government when hon. Members announce even before the Division takes place that they do not intend to carry their views into the Division Lobby, I do not know.

I do not want to delay the Committee long, but I wish to raise a point which I do not think has yet been raised: that is, the effect that the Clause will have on the employment of married women. We know how crucial is the employment of married women in the economy. The Economist of 18th June said: Meanwhile, although the Chancellor has bowed to considerations of equity by entitling charities to claim refunds, nothing has yet been done about the far more important—in economic terms—case of part-time workers. This is not just a matter of chars and chauffeurs. The typical part-time worker of today (and even more so of tomorrow) is the married woman with young children—the only remaining pool of unutilised manpower that is now left for this overemployed country to draw upon. I hope that it is not too late to express the hope that the Chancellor may have second thoughts upon this aspect of the effect of his tax, because it is both economic and social nonsense in its unamended form.

The disincentives from which married women already suffer when considering going out to work were pointed out in the New Statesman of 16th April last year, which went into the case at great length. I will mention only one or two of the points that were made in that article. It stated: If a woman wants to work and has preschool age children, then she needs either a nursery school or domestic help. If a woman works when she has children at school she will still need … domestic help. Some at least of the load of cleaning and washing must be shed—and domestic help … is expensive. The author of the article reckoned that one professional woman to whom attention was drawn, having paid for that help, worked for a profit margin of 6d. an hour after paying Income Tax and the help that she needed at home. The article ended by saying: Society in considering the place of the professional woman today shows little sign of moving into the second half of the twentieth century. The married professional women are there and willing to return. It is up to the Government to think of something more imaginative and concrete than advertising to tempt them back. Instead of something "imaginative and concrete" we have the Selective Employment Tax, which is adding to the disincentives for women in this situation to go out to work and to make the contribution that they can make to the economic strength of the country. They are being subjected to a two-flanked attack. First, they will have to pay the Selective Employment Tax for the person who comes part-time, possibly for an old-age pensioner who comes to clean their home. Secondly, they will have to pay it for the part-time mother's help who comes to care for their children—the married woman's 12s. 6d. for her char and 12s. 6d. for her mother's help, 25s. in all, out of her taxed income, is a disincentive, and for her own employer there is the disincentive of the 12s. 6d. he has to pay per married woman, too heavy a disincentive to put upon the only remaining pool of unutilised manpower which is now left for this over employed country to draw upon.

If the Government really want to put this disincentive upon married women to come forward to work, let them say so, but if they do not, if they want them to come forward, for heaven's sake let them find a way even at this late stage of removing before it is too late the disincentive inherent in this tax. I am sure a way can be found to remove it. It is a marginal decision for these women whether to go out to work or not, and I would not have thought it beyond the invention of the Chancellor to find ways of putting an incentive before them rather than a disincentive.

Secondly, but very briefly, I want to add my voice to the many which have already been raised in this debate against the social implications of the tax in hitting those in our society least able to help themselves and whose hold on employment is, by definition, most tenuous, the old and disabled in particular. In Clause 6 of the other Bill, the Ministry of Labour's Bill—I know we shall be discussing that later—the provision is made to refund Selective Employment Tax to employers of the disabled.

It seems to me to be an anomaly that no provision is made for the disabled themselves, and that they will continue to be taxed, particularly when unemployment, as has already been said, among the disabled is at five times the rate of national unemployment, and it must be heartbreaking for those in the Ministry of Labour who fight so hard to place disabled workers to find that the Treasury is working in the opposite direction. It is the disabled, the old-age pensioners, working for a few hours, almost certainly in service industries, who will be hardest hit by this tax.

We listened on Monday of this week to the social security team at the Dispatch Box opposite telling us of the many high priorities which they have, and giving excuses for their inaction over a wide range of policy. I like to think that the reason why they have been unable in their own Department to act with more vigour is that they have been opposing the Chancellor behind the scenes because of the affects of his Selective Employment Tax. I like to think that, and I am only sad that, if that is true, they have not had more effect upon his policy.

There are other complaints which, at this hour, I shall not reiterate against this tax, but it is a tax which lacks economic logic and, I believe, common humanity, and the Amendments we are discussing now, while they would not make it a good tax, would at least give it a little of each of those two qualities.

Mr. Rankin

If my recollections are correct it seems to me that in this debate, ever since it started, we have been witnessing an expression of what has been called the Marxian analysis. We have the thesis as expounded and represented by the Government; we have the antithesis expressed on the other side; and tonight we have the phenomenon that the thesis and the antithesis are merging into the synthesis, and it is the synthesis we want to impress upon the Government, so that they will carry out the Marxist historical criticism and proceed with the combination of thesis and antithesis as determined tonight. I hope that my right hon. Friends on the Front Bench are listening to what we are saying, because in all my experience in the House of Commons, now going back nearly 21 years, this is the first occasion on which I have seen back benchers on my own and the Opposition sides uniting to make a common demand on the Government.

At this stage, I do not want to say anything which would appear to put my own Government in difficulty by threatening. I want to coax and induce them to come my way. As a Labour and Cooperative Member, like my colleagues I have been driven to abstain and to indicate clearly to the Government that we cannot support Clause 42. It is also a fact that we are here in process of providing Supply, which the Government must have if they are to pay the old folk and do all sorts of other things. But we are asking them to pause and to think that some of these things need not be done to the extent which they are being done.

The Government have said that there is a state of inflation and that for the well-being of Britain we have to try to get rid of it. They have, therefore, introduced this deflationary Budget. We are to abstract about £260 million net spending power from the economy to try to modify this state of inflation. But there are many of us on this side of the Committee and, I am sorry to say, only a few hon. Members opposite, who suggest that there is another way to produce this state of deflation. It is by reducing the numbers of our fellow citizens who are at present not employed in productive work and whose services are engaged in the far parts of the world helping to create the inflation which we seek to cure. We cannot have about 500,000 men, who could be adding to our wealth, situated east of Suez, and in other places, only consuming that wealth.

The Temporary Chairman (Mr. Thomas Steele)

Order. I hope that the hon. Gentleman will now relate his remarks to one of the Amendments.

Mr. Rankin

I agree, Mr. Steele—[Interruption.] I know that these views are not popular with hon. Members opposite, but they have to realise that what I have said is fact. However, I shall not go further with that part of my argument.

10.30 p.m.

Nevertheless, that part of my argument is basic to the financial situation which the Government are seeking to cure, and their action in doing so is putting a movement to which I have been long attached into serious difficulty. I have been a member of the co-operative society all my life, I come from a family of co-operators and the Co-operative movement has been part and parcel of our way of life for as far back as I can think.

Sir Harmar Nicholls

Which Amendment is the hon. Gentleman speaking to?

Mr. Rankin

If the hon. Gentleman will restrain his impatience, he will soon hear about the Amendment to which I am speaking. I am thinking of the part-time people who are concerned in this, the 11,000 in the Co-operative movement, a bigger number than has ever been mentioned by any hon. Member opposite in his speech. I shall come to all these things, and whether I reach them at twelve o'clock or one o'clock is immaterial to me. Time is of no consequence.

The Temporary Chairman

But being in order is. I hope that the hon. Gentleman will now put himself in order.

Mr. Rankin

As we are fellow Scots, Mr. Steele, there is no dispute between the Chair and me on that. I am merely looking at the general position at the moment, and I was developing my speech along lines which I hope will satisfy the hon. Gentleman opposite in due course.

I said that I was concerned chiefly with the impact of this tax on a movement which is very close to my heart. I am thinking in particular of the Cooperative movement in Scotland, which has not had much attention during this debate. My hon. Friend who spoke previously is not a Scottish Member and he dealt particularly with the tax as it applied in the part of England to which he belongs.

My hon. Friend said that the Co-operative movement was seriously affected by the tax because manufacturing was a very small part of its work but distribution was a very large part of it. But the Cooperative movement, although it has a small manufacturing industry and a large distributive industry, is much more than merely those two things. Throughout its history it has been a great social force in the life of Scotland.

The Temporary Chairman

Order. The hon. Gentleman must indicate the Amendment which he is discussing.

Mr. Rankin

Yes, Mr. Steele. I am dealing with Amendments No. 29 and No. 30, standing in the names of my fellow co-operators, and all that I am saying is, in my view, closely related to them. I was merely pointing out that the movement has been a great social force in Scotland. If it has stood——

The Temporary Chairman

Order. This is where the hon. Gentleman is going astray. We are not actually dealing with the Question, "That the Clause stand part of the Bill" at the moment. We are dealing with the specific point of the Amendment.

Mr. Rankin

I am coming to that point. I am going to deal with those who are employed part-time in the Cooperative movement.

As things stand at the moment, the tax will cost us £2¼ million in Scotland. There are 34,000 persons employed in the Co-operative movement on the distributive, manufacturing and educational sides——

The Temporary Chairman

Order. I must draw the hon. Gentleman's attention to the fact that the Amendment numbers which he has quoted deal with part-time workers or disabled people only.

Mr. Rankin

I am sorry that you interrupted me so quickly, Mr. Steele. I was going on to say that, of those 34,000, 11,000 are part-time employees in the Scottish movement, which is a very big number.

If the tax which is to be imposed on them has to be met, there will be an additional cost to the movement in Scotland of £364,000 per year. In view of the other costs which co-operative societies in Scotland face today, with keen competition from other distributive units and, as a result, the tendency for trade to decline and for dividend to decline, if the movement has to face this added charge it will be affected very seriously.

It is because this imposition placed on the societies in Scotland by the Government will hit them so severely that I am appealing to the Chancellor, through the Financial Secretary, to pause and reconsider the tax and its effect on part-time employees in the movement with which I am connected.

Sir Harmar Nicholls rose——

Mr. Rankin

There are plenty of hon. Members able to speak for other industries, and if the hon. Member for Peterborough (Sir Harmar Nicholls) has not already spoken, I hope that he will do so. I have made it clear that I am speaking for an industry in which I am keenly interested, though I am not saying anything that is not applicable to other industries in a similar position.

A plea for the part-time worker in the Co-operative movement is a plea for a part-time worker in any distributive trade.

Mr. John Biggs-Davison (Chigwell)

Then why does the Co-operative movement support the Labour Party?

Mr. Rankin

For the simple reason the worst enemy that the Co-operative Party has ever known has been the Tory Party.

Mr. Robert Cooke (Bristol, West)

Until now.

Mr. Rankin

The devil is sick at the moment, and the devil would like to appear as a saint. That is why the Tories are supporting the Co-operative movement. It was the Tory Party in Scotland that tried to prevent us from even getting land on the Island of Arran on which to build our co-operative shops, so why should we even dream of supporting the Tory Party or becoming affiliated to it?

This, however, is a special occasion—it may be a temporary one—on which the Opposition are showing a little sense, and we do not mind using them for our purposes. I hope that even now the Chancellor will think of doing something about the application of this tax to the Co-operative movement. If he accedes to my request, his name in Scotland will indeed be blessed.

Dame Joan Vickers (Plymouth, Devonport)

I am pleased to follow the hon. Member for Glasgow, Govan (Mr. Rankin). We have heard a great deal about co-operative societies today, but I should like him to know that in Plymouth a Conservative was head of the Cooperative movement for a long time. I do not know whether the hon. Gentleman has heard of the blue and white tickets?

Mr. Rankin

Not in Scotland.

Dame Joan Vickers

I am dealing with England. We hear too much from the Scots in comparison with their numbers in this House.

The Co-operative movement is not as badly off as it would like to pretend, because it includes manufacturing industry in its activities. One of the difficulties of the small baker in Plymouth is that as the co-operative society has its bakeries separate from its shops it will be able to get back the premium. Thus, the co-ops are not as badly hit as they are trying to make out, many smaller industries are much worse off than they are.

I support what was said by my hon. Friend the Member for Somerset, North (Mr. Dean) about insurance for medical treatment. It is essential to have a statement from the Government about this, because in the West Country there are 39,000 people on the hospital waiting list and if the schemes which operate at present cannot carry on the number on the waiting lists may be increased considerably. Some small homes have to pay £10 a week in tax while it costs only £9 5s. to keep a patient. This shows how out of proportion the amount of tax will be.

I support the plea made by my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) about independent schools. I do so from a different aspect. Many Service people overseas have to send their children to England to be educated. The schools referred to by my right hon. Friend may be the only places where they can be taught, because they may not be eligible to go to State schools, not having taken the necessary examinations. These schools provide a very necessary form of education, and they have to be boarding schools because the parents of the children who attend them have to be away from this country for most of the year, in such places as Singapore or Malta.

What I object to about this tax is that it raises money at the expense of the weakest people, those least able to look after themselves. No mention has been made so far of the single woman who looks after dependent relatives. This tax will hit her particularly hard, because, as I understand it, the average income of such a person is about £500 a year. With the insurance stamp she will have to pay £1 3s. 10d. a week which will cost about £60 13s. 4d. extra a year. Many of these women may not have bank accounts. How will they get this extra money to pay their tax? Many of them employ part-time workers to look after their dependent relatives. I know a clerical worker who has to pay £3 10s. a week for help for her old father. I realise that she will get this tax refunded, but how will she manage in the meantime? I should like to know from the Treasury Bench what arrangements the Government are making to help people in these circumstances, because if she has to pay this amount and wait six months for the tax to be refunded she will not be able to carry on. In many cases it will mean retiring from work and receiving National Assistance so that these women can stay at home and look after their relatives.

10.45 p.m.

Could not there be a system whereby it would be possible to go to the Ministry concerned and have the money paid back monthly, perhaps by producing their card? This tax will be a considerable drag on an income of £500 a year, especially as many of these people have not got a banking account or even a house on which they can raise a mortgage. I do not see how they can get this money to pay for the care of their relatives if they have to wait months.

I would also like to raise the question of part-time workers. I have gone into the question of the number of hours they work and the times at which they work. Many work between 6 a.m. and 9 a.m.—mostly cleaners—and they cannot possibly go to a factory at that time. Others work when their husbands come home, to look after the children, between 6 p.m. and 10 p.m. I do not think the Chancellor will suggest that these women will be able to find employment in factories at these particular times. They average about 15 hours a week, and the payment varies from £3 to £3 10s. according to the area in which they live.

I went into a shop yesterday, and the women serving me were over 65 and part-time workers. They said that they might lose their jobs and they were very worried about it.

Then there are women who have been deserted, wives who have been divorced, women with very large families, and those with sick husbands. None of these women could possibly work full-time. And in the West Country where we have such very low wages—lower than the national average—many women have to go out to work in order to get sufficient money to augment their husbands' incomes.

This will mean that most of them will be much better off if they give up their jobs and go on National Assistance, particularly with the new rates. So this will cost the Government considerably more money in the end than if they make concessions now. There are large numbers of self-respecting people who work now, and are anxious to work, but who will not be employed because their employers are not willing to pay this tax; so I hope this matter will be considered again.

In the contract cleaning business, window cleaning, the cleaning of offices, hospitals, private schools and so on, I gather that 75 per cent.—in some firms even 90 per cent.—of the labour force are part-time workers, and there is going to be enormous unemployment in these areas. This tax is also going to hit small shopkeepers very hard indeed. A number of small shops open from 6 a.m. to 8 p.m. People are anxious to get their newspapers early in the morning, and I suppose the Government are anxious to put over what they are doing, as well as other news. But if we are to get our papers in the morning, we are dependent on many part-time workers.

I have a letter here from the owners of a small shop, a newsagent and tobacconist's, which also sells fishing tackle, ladies' and children's wear. They say that because they have to keep the shop open between 6 a.m. and 8 p.m. the tax is going to cost them another £12 a week. They draw my attention to the fact that many items of stock that they sell have fixed prices; therefore it will not be possible for them to pass on the extra cost to the customer, as will be done, I regret to say, in most cases. They will therefore have no alternative but to dismiss a number of their staff.

This will also happen in the case of pharmacists. They depend to an enormous extent upon part-time workers, and they have very little chance of passing the cost on, or recouping themselves. They also sell goods which mainly have fixed prices, and they receive a National Health dispensation fee which is quite inadequate.

Mr. J. T. Price (Westhoughton)

Pharmacists are the worst example the hon. Lady could have picked. Their profit margins are much higher than in other retail establishments, for which a much better argument could be put forward. This is well known to anyone who knows anything about retail distribution.

Dame Joan Vickers

Many of the items that they sell have fixed prices, and their National Health dispensing fee is quite inadequate, in view of the long hours they work, the stocks they have to carry, and the tremendous responsibility they have. This is quite a good example, in my opinion, and in addition to this they are dependent on a great many part-time workers.

I want to deal for a moment with the catering trade. I come from the West Country, which has a special interest in this trade. It probably employs more part-time workers than any other industry, especially for what is known as the functional trade. Thirty million people in this country take holidays, and five million go abroad. The West Country caterers do a very good job as dollar earners, and if they are forced to put up their prices because they have to employ so many part-time workers, who normally work from 9 a.m. to 3 p.m., they will have to pass on the cost to the customer. This will make it much more expensive for him. The Chancellor has asked people not to go abroad for their holiday, but the imposition of this tax upon the catering industry will mean that many more people will do so.

In 1959 we had 4.9 per cent. unemployment in the West Country, until the Local Employment Act came into force. Now the position is much better, at least in the Plymouth area, but we have no I.D.Cs.

Mr. Geoffrey Wilson (Truro)

Will my hon. Friend bear in mind that in the West Country many establishments which are connected with the tourist trade are not only dependent on part-time workers but have an exceptionally short season—a maximum of four months—and that some establishments will not open at all because there will be no profit margin if they have to pay this tax?

Dame Joan Vickers

I am grateful to my hon. Friend for that intervention. The tax affects his part of the West Country more than mine, but I was talking of the West Country as a whole. We have no other employment incentive. Therefore, where will these people go if there is no part-time employment for them.

Further, much of our tourist trade goes to the retail shops, and if we do not have people serving behind the counter two things are likely to happen. First, people will not be able to complain if goods are not up to standard; they will have to take what they can get if it is a self-service shop, and the standard of goods is likely to get worse. Secondly, the already serious amount of shoplifting that goes on in these shops will be increased. It is a great pity that the Government, by doing away with many of these part-time workers, should increase crime at this time.

I hope that the Chancellor will particularly note my first point about single women with dependants, and that he will say how soon they will get their money back and whether the process will be made as easy as possible. I hope that the required form-filling will be as simple as possible. He might consider having a different coloured card for the part-time worker, with the amount of money concerned stated. They should have different and perhaps cheaper stamps.

If he cannot do what we have asked with regard to part-time workers, perhaps he would let the employer pay 50 per cent., which would encourage them to have part-time workers. I hope, mainly, that the Government will consider my first point.

Mr. MacDermot rose——

Mr. Iain Macleod

On a point of order. We are in Committee, and no hon. Member, as far as I know, has sought to speak twice, though it is within our rights to speak as often as we wish. We are debating 16 Amendments, and have, therefore, had, so far, an average of 20 to 25 minutes discussion per Amendment. There are hon. Members in the Committee on this side who have been waiting seven hours to be called and whose names are on these Amendments. May we therefore have an assurance from the Chair, Mr. Steele, that even though the Financial Secretary rises to curtail the debate, under no circumstances, on these Amendments, would the Chair accept a Motion for the Closure?

The Temporary Chairman

I cannot accept a Motion for the Closure. I have no authority to do so.

Mr. MacDermot

We have been debating these Amendments for over six hours and I hope that the Committee will not think that I am intruding unnecessarily if I seek to reply to some of the many points made in the debate——

Mr. Iain Macleod

Would the hon. and learned Gentleman then undertake to make a second reply when he has listened to the rest of the debate?

Mr. MacDermot

I give no undertakings at all. I have heard many arguments repeated already in this debate.

That was one of the things which led me to think that this might be a proper time for me to intervene.

The right hon. Member for Enfield, West (Mr. Iain Macleod) set an admirable example of brevity when he opened the debate. He moved an Amendment which itself covers a very wide field and embraces the subject matter of a very great number of the Amendments which we are discussing with it. Although there are 16 Amendments, there is, of course, a great variety in the subject matter of the Amendments. They reduce themselves to certain broad headings with which I shall seek to deal.

One has a difficult task in seeking to reply to a debate of this kind. If one seeks to reply to every point, one is told that one is, and builds up a reputation for being, lengthy and tedious and wearisome—a reputation which tends to survive, I find. If, on the other hand, one speaks too shortly, one is treating the Committee with contempt. It is difficult to strike a balance, but one can start off with the confidence that whatever one says one will be told that one's speech is the most unsatisfactory inhuman and heartless ever heard, even from the Treasury Bench.

I would begin by reminding the Committee that the Bill provides for the collection of this tax with the National Insurance stamp. The basis of it is the stamp on the Insurance card. This is a necessary feature of the tax, so that it may be introduced this year. My hon. Friend the Member for Newcastle, East (Mr. Rhodes) suggested that we should have deferred the tax to next year so that it could be brought forward in a more refined form. I would ask him and any other hon. Member who thinks that way to answer the question which we have put many times, but which has not been answered. If we do not introduce this kind of tax, what sort of tax with a similar effect would people prefer us to introduce?

11.0 p.m.

Dr. Winstanley

The hon. and learned Gentleman must be fair to hon. Members who have made specific suggestions for specific alternatives. I myself at some length put forward our proposals for an alternative, in pounds shillings and pence, and in detail. It is not that we have not put forward proposals. It is that they have not been answered by the Treasury Bench.

Mr. MacDermot

I did not hear any such argument from my hon. Friend the Member for Newcastle-upon-Tyne, East, who is the one Member in this debate who raised that issue.

The result is that it is not possible administratively to—[Interruption]. I would be grateful if hon. Members who wish to carry on conversations would do so outside the Chamber. It is not possible administratively to grant exemptions which are dependent upon the occupation of the employer or the employee. We cannot, for example, pick out theatrical employers, which was a case taken by my hon. Friend the Member for Putney (Mr. Hugh Jenkins) supported by my right hon. Friend the Member for Vauxhall (Mr. Strauss), or hotel proprietors or people in the catering trade, and give them special treatment, because they cannot be distinguished as a separate class within the National Insurance system.

We can only deal with categories of people who can be distinguished for the purposes of National Insurance. The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), supported among others by the right hon. Member for Thirsk and Malton (Mr. Turton), suggested that for this reason we should be able to give special treatment to retirement pensioners because, they pointed out, there is a different card for retirement pensioners compared with the card for other employees. Up to a point, that is true, but, unfortunately, the card which applies to them is not exclusive to them. It applies also to those married women and widows who do not elect to contribute. I think that the whole Committee will agree, on reflection, that it would be very undesirable to create an exemption which would result in pressure being brought to bear upon women to elect not to contribute and in that way to sacrifice their insurance cover.

Another of the main classes which we have discussed are the various categories of the disabled. My hon. Friend the Member for Bedwellty (Mr. Finch), who, of course, has enormous experience in the field of assisting the disabled, was the first to raise this matter, and many other hon. Members followed him. Again, there is no separate card for the disabled and there is no identification of disabled persons on their card. There is, of course, the disabled persons' register, which is a separate matter, not related to the National Insurance stamp and card system.

I do not say that it would never be possible under any circumstances to devise a system, if that was thought right and necessary, in order to distinguish other categories from those that exist at the moment within the National Insurance system. But I do say that it certainly is not possible to do that this year and in time for the implementation of the tax this year.

Mr. Percy Grieve (Solihull)

That deals with the point so far as it goes, but surely it is not beyond the wit of the Government to devise a system this year which will avoid a gross and terrible injustice to the disabled.

Mr. MacDermot

I will come to the merits of individual cases in a moment and give reasons why I think the hon. and learned Gentleman is mistaken in thinking that this is a gross and terrible injustice. I am now pointing out the administrative considerations.

Equally, in the case of the deaf, I was asked particularly by the hon. Member for Essex, South-East (Mr. Braine) whether there is a separate register for them. There is no such register; but I am not pretending that even if there were it would solve the problem, because it would not.

My hon. Friend the Member for Wood Green (Mrs. Joyce Butler) suggested that we could make use of the fact that many, if not most, deaf people have applied for hearing aids and that one could identify them as a class on that basis. Again, this is not something that is married to the National Insurance stamp system.

Mr. J. T. Price

I put it to my hon. and learned Friend seriously that the House of Commons has never accepted the argument of administrative convenience as being an adequate or valid reason for refusing to deal with a patent injustice which has been well argued from both sides.

Mr. MacDermot

I know that the House of Commons has never accepted it, but I am now stating what the position is. I am coming in a moment to the merits of the arguments in particular cases. But I would ask all those who take this attitude about administrative difficulties to remember it next time they criticise the growth of the Civil Service, as so many hon. Members opposite do.

The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said that in subsection (2) of the Clause there is an exemption for the Armed Forces and foreign-going mariners and suggested that this showed that we could, if we wanted, exempt a particular class of person. But that can be done in these cases for the precise reason that the employers pay a reduced rate of contribution, related to the fact that their employees do not enjoy many sickness benefits which would otherwise be provided under the National Health Service. The point is that they are an identifiable class within the National Insurance system.

My hon. Friend the Member for Willesden, West (Mr. Pavitt) criticised the tax, because, he said, we are not selecting as we should between socially more useful and socially less useful services, between the socially desirable and the socially less desirable. All I can do is to repeat that this is not a differentiation that it is possible for us to make having regard to the form of the tax.

Sir L. Heald rose——

Mr. MacDermot

I hope that the right hon. and learned Gentleman will allow me to go on. I think that it would be more convenient to let me pursue my argument and then seek to intervene later. I am making general observations now and will come to particular categories later. If I do not meet points put by right hon. and hon. Members, I will gladly give way and seek to do so.

My second general observation is to point out that provision is already made for refunds in certain of the categories referred to in Amendment No. 34. Indeed, that was acknowledged and welcomed by the right hon. Member for Enfield, West.

I would like, first, to deal with the question of charities and religious organisations. There is complete provision for refund to them. The right hon. Member for Enfield, West criticised us because we are limited to registered charities only under the legal definition of charities. But surely this is an inevitable consequence of the decision which my right hon. Friend took, with the agreement of the Committee, that it was not possible for him to distinguish between charities. Some of my hon. Friends would have felt that some bodies registered as charities were less deserving of special exemption than other bodies which are not registered as charities. This is not a distinction which my right hon. Friend can be expected. to make, and it would be considered invidious if he tried to do so.

The right hon. Gentleman the Member for Enfield, West in moving that Amendment, referred to one body, the Hospital Savings Association, which I think is, in effect, a form of mutual insurance organisation that provides certain sickness and other benefits for its members. It does not have the status of a charity, and the right hon. Gentleman told us that it has investment income which has for many years been taxed. I assume that if it had been able to bring itself within the legal definition of a charity it would have had an obvious economic incentive to do so. But I suppose that because its benefits were confined to its members it did not qualify.

I do not know the particulars of that organisation. There is another organisation—I do not want to mention its name, because I have no authority to do so—which made representations, and said that it would have to pay a tax of about £12,000 a year under these provisions. When that was looked into, it was found that the increase in members' contribution that would be required to pay that sum, if the whole tax was passed on in terms of increased contributions, would work out at approximately 8d. per member, per year. I do not know the particulars in the case of the Hospital Savings Association to which the right hon. Gentleman referred, but that example perhaps illustrates the exaggerated fears which some people have had about the incidence of the tax The point was made that even the charities which receive the exemptions will have a bridging difficulty, in finding the money to make what has been termed the interest-free loan to the Government until they receive the refund. But when the deputation of the National Council of Social Service and the Churches Main Committee came to see my right hon. Friend this was not the point that they made. Their concern was not so much with the burden of the tax. They were more eager and anxious to establish, or re-establish, the principle of exemption from tax for charities in general.

The Committee will remember that originally my right hon. Friend took the view that, this having the nature of an indirect tax, it should be equated with other indirect taxes, which charities pay. It is a matter for argument as to what is the true nature of the tax, whether it is to be regarded as direct or indirect. In any event, as is well known, my right hon. Friend has now decided that the refund should be made.

I do not believe that the bridging burden is the real concern to charities that has been suggested. The religious organisations will qualify for the refund, provided that they are ecclesiastical corporations under the Charities Act, and this will mean that all those ancillary employees about whom many hon. Members have received representations—the vergers and cleaners in local churches—will be employees in respect of whom the churches will be able to claim the refund.

This would seem to cover all the universities and university colleges. It would seem that all direct grant grammar schools should be able to claim the refund. Other grant-aided bodies will be able to have assistance of the kind which has been indicated, through the system of the grants. I shall come back to that. All the church schools which are not wholly supported already will be able to qualify, as will very many of the independent schools. As I have said, very many of those which have not done so already will, no doubt, take steps to have themselves formed into charities.

As regards those which do not, or do not wish to do so, there is a very real distinction in character between a body which is a commercial organisation and one which is a charity. It is a perfectly proper distinction to draw for the purposes of this tax. The same considerations apply to the various other health organisations referred to in item 4 of Amendment No. 73

11.15 p.m.

I come now to the class which has been the subject of the most discussion, the disabled. I have spoken of the difficulty in relation to the stamp. We have heard many speeches, some of them very moving, all speeches of great sincerity and many made by hon. Members with a great deal of knowledge and experience of assistance to the disabled.

Most of these speeches expressed very pessimistic prognostications of the effect of the tax upon the employment of the disabled. Speaking for myself, I feel that many of those fears will prove to have been unfounded, and I hope that I am right. But I say at once that my right hon. Friend will be watching and reviewing the working of this tax, particularly in its relation to the disabled, most anxiously and carefully. He will certainly not hesitate to take what steps he can to adjust the form of the tax if these fears prove to be better founded.

Turning to some of the points raised, I begin by answering the request that I should give what figures are known in this matter. There are about 600,000 registered disabled persons in employment. Roughly two-thirds of these, about 400,000, are either in the neutral sector, qualifying for the refund, or in manufacturing industry, enabling their employers to claim the premium in respect of their employment. This is a factor which has been overlooked in our debate. In the manufacturing industries there will be a positive incentive to employ these people, as also for the part-time workers, to whose care I shall come in a moment.

In effect, we are dealing with about 200,000 people, all of them still able to enjoy the protection of the quota of designated employment schemes, under the Disabled Persons (Employment) Act, where employers with 20 or more workpeople are bound to employ a minimum number of 3 per cent. of disabled persons in their labour force.

In addition, it is right to remind the Committee that the most severely dis- abled are nearly all employed in sheltered workshops, a kind of employment usually provided by the Government, or by Government agencies, which will otherwise attract the refund. Many of them are in the manufacturing sector and will attract the premium. Many hon. Members have taken a keen and active interest in the work of Remploy and they would apply to it.

Dame Irene Ward

Is not taxing the disabled the equivalent of taxing the sick, about which I thought hon. and right hon. Gentlemen opposite felt strongly?

Mr. MacDermot

No, we are not taxing the disabled. What we are doing is taxing employers. What I am seeking to do is to answer the argument that this tax will result in the employers being less willing to employ disabled persons, and inclined to dismiss them. I do not believe that it will. The effect of the tax, from the point of view of the employer, is the same as a wage increase. The employers of disabled persons have in past years faced many wage increases, considerably greater than this tax. The reaction of the employers has not been to turn round and dismiss disabled persons, or to say that they would not employ any more such persons.

Mr. Grieve rose——

The Temporary Chairman

Order. If the Financial Secretary does not give way, the hon. and learned Gentleman must resume his seat.

Mr. MacDermot

Those employers, and there are many of them, who employ more than the legal requirement of 3 per cent. do so out of an acute sense of social responsibility. I know that many hon. Members on both sides of the Committee have taken an active part in promoting this movement among employers. I do not believe that the introduction of this tax will suddenly make them change their attitude. The idea that disabled workers are people who need special help if they are to hold down jobs is a mistaken one which ought to be discouraged. The great bulk of them are able to perform a perfectly normal job. It is a matter of ensuring that they get the right job, which is within their more limited capacity by reason of their disablement. But having found the right job, the majority of them do that job equally as well as the next man, who is not disabled.

Dr. Winstanley

We have heard from the hon. Member for Sheffield, Brightside (Mr. Winterbottom) that, in the catering industry, under the Catering Wages Act there is specific provision to pay disabled persons at a rate yower than the standard rate. If this is not a concession, to induce these employers to employ disabled persons, what is it? The hon. and learned Gentleman said that wage increases have not had this effect——

The Temporary Chairman

Order. An interruption should be short.

Mr. MacDermot

The hon. Member has great experience in this matter as a doctor, and he knows that the great majority of these disabled persons who find work do it as well as a normal man. Special provision is made to enable disabled persons to find jobs. The argument which we have used about full employment is a valid one. A full employment society is the greatest protection and security to the disabled person in finding employment.

I repeat that my right hon. Friend will watch this position most carefully, and if it is found to be right and possible, he will consider what special treatment can and should be made in a more refined scheme to help the disabled.

Lieut.-Commander Maydon

The hon. and learned Gentleman has given an undertaking that his right hon. Friend will watch this; but, assuming that he is right and his right hon. Friend is wrong, will he tell us what he will then do? Can he immediately reverse what has been decided once the Bill is passed? What can he do?

Mr. MacDermot

Not immediately. The assumption he suggests is not one which we are prepared to make; but we will watch this to see how far the assumption is right and, if so, to see what elaborations and refinements can be made in the administrative machine.

Sir L. Heald

I apologise for interrupting, but this is a matter about which many hon. Members are deeply troubled. On 4th May last, my right hon. Friend, talking about the disabled, said: I do not believe that these matters—I put it as charitably as I can—have been thought out". The Chancellor replied: Yes, they have. and added: I can tell him now—I am sure that he will accept what I say—that I thought very carefully and am thinking now about the position of the disabled. It is an obvious point which occurs to anybody as soon as he considers a matter of this kind".—[OFFICIAL REPORT, 4th May, 1966; Vol. 728, c. 1651–2.] Does the hon. and learned Gentleman realise that the fact that the Chancellor is not prepared to address the Committee this evening on this subject is one which causes us deep concern?

Mr. MacDermot

I have not a copy of the relevant HANSARD here at the moment, but I think that the Chancellor was speaking of disabled employers, and they have been provided for in the Selective Employment Tax Bill. However, be that as it may——

Mr. Ian Macleod

I was speaking on the day after the Chancellor had presented his Budget—the 4th May. I was talking of the disabled, and not disabled employers. The context is absolutely clear.

Mr. MacDermot

I assure the right hon. Gentleman that the Chancellor has considered the position of both as carefully as he can and thought it right to take the action he has in the case of the disabled employers.

The last part refers to scientific, literary, and artistic organisations. This is not a class which is easily identifiable within either the National Insurance scheme or within the tax system. My hon. Friend the Member for Putney (Mr. Hugh Jenkins) has referred to the position of those bodies assisted by the Arts Council and other grant-aided bodies, but I can only refer the Committee again to the specific assurance which was given during the Second Reading of the Bill. Right hon. and hon. Members will find it in HANSARD for 25th May, where my right hon. Friend the Chief Secretary made the position quite clear.

There is also the question of theatrical people, but I will not detain the Committee by elaborating on that point; it can all be found in HANSARD. My right hon. Friend the Member for Vauxhall (Mr. Strauss) and my hon. Friend the Member for Putney spoke about commercial organisations, mostly in the provinces, which are not covered by Arts Council grants. I cannot answer the specific question raised about the scope of the Arts Council grants being extended to full-time theatrical organisations, but I will draw the attention of my right hon. Friend the Under-Secretary of State, Department of Education and Science, who has special responsibility for the arts, to that point.

I will turn now to the next major class of workers, namely, those who are employed part time. This has been the other main topic which has occupied our attention. I can see that there is a difference, and very special force in the argument on part-time workers. It is not like the argument in the case of the disabled and others: I appreciate that the effect on employers cannot be exactly equated with that of an ordinary wage increase for the reason that this tax, relatively speaking, bears more heavily in relation to the part-time worker than it does in relation to the full-time worker. This is the strength of the criticisms and arguments adduced under this heading.

11.30 p.m.

There is already an exemption in relation to the part-time workers employed for not more than eight hours a week in the sense that they do not come within the National Insurance Scheme and, therefore, their employers do not have the stamp or pay the tax. There would be very strong objections to trying to exclude from the scheme part-time workers who work for a greater period—say, up to 21 hours—because they would lose very many of their National Insurance benefits. I am sure that no one would want to press for that.

It was suggested, particularly by the hon. and gallant Member for Wells (Lieut.-Commander Maydon), that if it was possible administratively for the National Insurance scheme to distinguish between people working only up to eight hours and those working more, it should be equally possible administratively to distinguish between, say, people working over or under 21 hours. That is not right, for this reason. If an employer were to try to show a worker who is working for more than eight hours as a worker working fewer than eight hours and not return any insurance card for him, the protest would come from the worker, who would be deprived of his National Insurance benefits.

No such check would exist if we tried to draw a distinction, say, at 21 hours. The worker would have no reason not to agree to his employer falsely showing someone who was employed for more than 21 hours as being employed for less. There is no machinery in the present card system by which the National Insurance officials could know from the card the number of hours for which a person was employed or who his employer was in any particular week. Therefore, this is not a matter which is administratively simple, as has been suggested.

Nor would it be a matter merely of adding one extra category of stamp, as my hon. Friend for Willesden, West (Mr. Pavitt) suggested. Any alteration of this kind would involve at least 10 additional classes of stamp to deal with the existing different categories of employee.

Mr. A. P. Costain (Folkestone and Hythe)

The hon. and learned Gentleman claimed that people would lose their benefits. Would he explain what a married woman whose husband was in full employment would lose by not having a stamp?

Mr. MacDermot

The case of the woman who has opted out and deprived herself of benefits is different. We are being asked to consider a different form of exemption covering the whole field of part-time employees. For the reason I have given, that would not work.

As has been said many times, 90 per cent. of part-time employees are women. It is because of this, and because of the level of contribution which has to be paid, that the tax which has to be paid is related to the average earnings. This lower rate for women takes into account the very large incidence of part-time employment among women. [Laughter.] The hon. Gentleman may laugh, but this is the fact. I do not see why he should find facts so humourous. Perhaps he prefers prejudice to fact. I agree that the scheme is only based on averages and averages have a crudity about them, but this is one of the ways in which the rates allow for the fact that 90 per cent. of part-time workers are women.

Mrs. Margaret Thatcher (Finchley)

I gave some figures about this yesterday. The average earnings for men are about £20. The average earnings for women are £8 a week. The average earnings for women working part time are roughly £5 a week. If the argument the hon. and learned Gentleman is advancing now is correct, the rate for women should be a good deal lower than 12s. 6d.

Mr. MacDermot

I think that the hon. Lady's figures certainly for average earnings for men, are taken from earnings in industry. Of course, those people qualify for premium.

Mr. Eric Lubbock (Orpington) rose——

The Temporary Chairman

Order. The hon. Member must remain seated if the hon. and learned Member who has the Floor does not give way.

Mr. Lubbock

The hon. and learned Member did not see me, Mr. Steele. I am most grateful to him for giving way now.

I was going to ask him, if this is a good argument for charging the lower rate for women, that a large number are employed only part time, why does not the same argument apply to retired people, who are also, in many cases, employed only part time?

Mr. MacDermot

I am coming to the retired people in a moment. I am dealing with the part-time classification as such.

The real point here is whether the failure in the scheme to make a distinction specifically for part-time workers is going to provide a disincentive to employers to employ part-timers in the service industries. Obviously, it will not provide a disincentive in manufacturing industry. On the contrary, it provides an incentive, because if an employer in manufacturing industry employs two or three part-timers in place of a full-timer he will get two or three times the premium he would get for the single employee. So there is a very real incentive for employers in the manufacturing sector to recruit and employ as many part-time workers as they can.

But I think that the real answer I would give on this question in relation to service industries is contained in the phrase my hon. Friend the Member for Sheffield, Brightside (Mr. Winterbottom), who has enormous experience in this field, repeated over and over again in his speech, that is that it is absolutely essential—absolutely essential, he said—in the distributive trades to employ part-time workers.

I agree with him. That reflects the pressure which there is for employment of part-time workers, and I believe that, with the development of our economy, that pressure will remain, and that that incentive to employ part-time workers will remain, and that is why I believe, again, that the fears which have been expressed, and widely expressed, are ill founded.

But, again, I would respond to the appeal of my hon. Friend the Member for Willesden, West and of other hon. Members who have spoken from both sides, and say that we shall consider most carefully whether or not this tax is having the effect which it has been suggested that it will have upon the employment of part-time workers, and introduce what ameliorations we are able to do which are necessary to meet any such situation.

Mr. Palmer

If this is so, if my hon. and learned Friend is to watch this, how can he get over the administrative difficulties which, at the moment, he says it is impossible for him to get over?

Mr. MacDermot

I have already said that this is something which, at the moment, is based on the National Insurance scheme. It has to be introduced with that scheme as it is. It is not possible to carry out this kind of refinement which has been suggested to the scheme within the limit of time which we have to introduce this tax.

I turn to the question of retired persons. I apologise for having taken so long, but I have given way a good many times and in many directions. It was the right hon. Gentlemen the Members for Kingston-upon-Thames (Mr. Boyd-Carpenter) and for Thirsk and Malton (Mr. Turton) who, in the first instance, raised this problem, which has been discussed by many other hon. Members. I pointed out and dealt with a particular administrative problem. Again, I was asked to give what figures we have. There are about 438,000 men and 535,000 women retirement pensioners in employment, a strikingly high figure. Figures are not available of the numbers of those who are employed in the manufacturing sector and the number in services. If the assumption were made—I am not suggesting that it is necessarily the right one—that they are in the same proportions as for the total population, it would mean about 360,000 in the manufacturing industries, and, again, the employers of all those who are employed in the manufacturing sector will qualify for the premium. In conditions of full employment, there is little reason to think that the incidence of this tax will lead to their being at risk of losing their jobs.

If the Amendments were accepted, and we were to make an exemption for retirement pensioners, one of the side effects would be to lead to undesirable pressures being brought to bear on older workers to continue in employment but to continue as retirement pensioners and thereby forgo the extra pension which they would otherwise get on retirement.

Mr. Boyd-Carpenter

Surely the weakness of that argument is that for the younger ones the earnings rule would prevent that pressure being effective and the older ones could draw their pensions, anyhow.

Mr. MacDermot

The right hon. Gentleman has great experience in this field, far more than I have, but I think that he will find that there are still many of the older pensioners for whom such pressures could be effective. But I do not put this forward as a main point. I did not seek to. I described it as a side effect.

There is a difference of opinion within the Committee as to what the effect of the tax will be on the employment of retirement pensioners. As in the other cases, my right hon. Friend will watch the position most carefully and consider what, if any, action is necessary.

Finally, I would seek to answer the specific question put to me by the hon. Lady the Member for Plymouth, Devon-port (Dame Joan Vickers), who spoke of the position of the single woman with a dependent relative, who would become entitled to a refund under Clause 6 of the Selective Employment Payments Bill. Strictly speaking, this is a matter to be dealt with on that Bill, which we shall consider shortly. But, if I might seek to answer the point, in order to establish their rights such people will have to show that they come within the provisions of that Clause to the satisfaction of the Special Benefits Commission, and the Commission will have power to grant a discretionary allowance in the kind of case which the hon. Lady described, where there would be real hardship in the bridging period.

11.45 p.m.

Mr. Gibson-Watt

I am glad to be able to take part in this discussion because, like many other hon. Members, I have sat through the debate and listened to many excellent arguments produced on this side of the Committee and on the other side in favour of the Amendments.

The Financial Secretary made a very poor fist of trying to answer those Amendments. He did not produce a single tenable argument. Also, I do not believe that he has given us any concession at all. All he said was that the Chancellor would "watch", rather like Mr. Asquith, who said that he would "wait and see". We have been given nothing at all, in spite of this series of very important Amendments.

One of the points which the hon. and learned Gentleman made was that when the tax hit the employer of a part-time worker, the reaction of that employer would not be to get rid of his employee, but, rather, to treat it in exactly the same way as he would a wage increase. I do not know whether the hon. and learned Gentleman is himself an employer. If he is, he would expect the reaction of his employee to be as follows: "If my employer can afford to give 25s. a week to the Government because he employs me, then, in the same breath, he can afford to pay me the same amount".

We were told by the Chancellor earlier that the tax was deflationary. The point which I have just made is one reason why it will be very much the reverse. We shall never know why the Chancellor swallowed the idea of this tax. If he could have foreseen the difficulties into which he has got himself and the whole of the Treasury and the hornets' nest which he has stirred up, he would never have started out with this new tax. Indeed, the number of good amendments which have been put down on the Order Paper, particularly those which have been discussed today, are proof enough of that.

In winding up his remarks, my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) said that, unless we show special regard for those included in the Amendment, the tax will have a savagely cruel impact. I do not think that any hon. Member would disagree with those words. Unless the tax is changed in its incidence upon so many deserving sections of the community, it will be savagely cruel.

If I may, I want to underline two special problems, though I do not disregard the important arguments advanced by other hon. Gentlemen about the disabled, the deaf, the old, the blind, part-time workers, nursing homes and the other deserving cases. I want to underline the point made by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) when he said that there are charities in law and charities in fact. It will be very difficult for anyone, in all justice, to decide who is to get the relief and who is not.

In my own constituency, Hereford, there is an organisation called the Community Council. It is responsible for helping people in need, the old and the disabled. It is an umbrella organisation and, from what I have heard so far, that body and others like it will not be helped. Old people's homes which are run privately or by voluntary organisations will not be helped, either. What about the N.S.P.C.C, or the R.S.P.C.A., for that matter? All these organisations play a great part in the life of our country, particularly in local areas.

The Chancellor happens to represent a Welsh constituency. What about the organisations which cannot be called truly charities but which are truly Welsh?

What about the Welsh National Eisteddfod? How much money will that great national organisation have to pay to the Chancellor? What about the Welsh Youth Orchestra? How much will that pay? On the scientific side, what about the Royal Welsh Agricultural Show? What about the sporting activities for which the capital city of Wales, Cardiff, is itself so famous?

Mr. Hirst

He will be watching it.

Sir Douglas Glover (Ormskirk)

With a free ticket.

Mr. Gibson-Watt

Perhaps the Chancellor will be watching county cricket. Perhaps he will be watching Wales trying to win the triple crown, but he will have the itch at the back of his mind that he, and he alone, was responsible for bringing in the Selective Employment Tax which will hit the voluntary and sporting societies to which we are referring.

Sir Harmar Nicholls

Will my hon. Friend include the Peterborough Agricultural Show, which is going to a new and expensive ground?

Mr. Gibson-Watt

Willingly, if it is of any help to my hon. Friend to do so. I hope that the Chancellor will consider all the voluntary organisations which are not charities in law, to see how they can be helped.

If voluntary and local organisations which do so much work which is truly national were forced to close down, to draw in their tentacles, we would find that more and more of this work would devolve on the State. We on this side of the Committee do not believe that that would be a good thing. It may be that the Socialist Party would like to see the State taking over more and more of the work done by voluntary organisations. It may be that this is one of the essential differences between the two parties. I hope that I am wrong about that, but if I am not, I believe that this is a grave danger which is brought about by this tax, and it is a danger which these Amendments seek to alleviate.

Whether these voluntary organisations are charities in law, or charities in fact, both will be hit, one way or another. It is no good talking magnanimously about exempting people as though money is being given away. The charities in law will themselves have to borrow money from the bank, and the fact is that at the moment many of them are living on a shoestring. The reason for this is that many parts of the country are suffering from depopulation, and it is becoming more and more difficult for this sort of organisation to get support because of the dwindling number of people who are reasonably well off and able to support them.

I am entirely dissatisfied with the hon. and learned Gentleman's reply. After listening to the debate all afternoon, I had hoped to get something from the Treasury, some concession for the long list of positive criticisms which have come from both sides of the Committee, none stronger than those in the excellent and reasoned speech of the hon. Member for Newcastle-upon-Tyne, East (Mr. Rhodes) to which, apparently, the Treasury Bench has turned a deaf ear.

I hope that before the night is over, before it is too late, the Chancellor will at least be able to tell us that some concession will be given on one, two or even three, of the Amendments which have been tabled.

Mr. Richard Wainwright (Colne Valley)

I wish to speak to Amendment No. 37, in the name of my right hon. Friend the Leader of the Liberal Party and other of my hon. Friends, and to which a speech has not been addressed in the course of this debate.

The purpose of this Amendment is to insert two categories of tax between the nil rate and the full rate, namely, a half rate, and a three-quarter rate, to take care of various different types of part-time worker.

The facts and figures regarding the importance of part-time workers have been thoroughly deployed in this debate, and I do not wish to repeat them. I should like to say what comfort we on this bench have drawn from them, and from finding that for once the isolated bench, the lonely bench, is not this one, but the Government Front Bench, which has remained isolated and lonely throughout this long debate.

One of the virtues of having a scale for part-time workers is that there would be considerably less incentive to evasion. My hon. Friends and I take the view that nothing is more calculated to invite evasion than a crude tax in which the taxpayer jumps immediately from the nil rate to the full rate.

If the Government wants to discourage evasion we think it should introduce a scale, or if you like a principle of marginal relief, so that the taxpayer does not feel that by suppressing or altering figures he will change from the status of full taxpayer to nil taxpayer.

From what has already been said it seems to me that the Treasury Bench is living in a state of illusion about evasion. The suggestion has been made that workers, to make quite sure of preserving their benefits, are in the habit of chasing their employers vigorously to see that a card is stamped. This surely does not square with the facts of life as many of us see them.

There must be a very great number of people working more than eight hours in respect of whom a card is not at the moment returned, and when there is the additional liability of this tax to be taken into account surely evasion is likely to increase rather than decrease. But if the only burden for making a correct return were a comparatively low rate of tax, I think that we could expect a greater degree of compliance with the law.

For that reason, and also for the reason which has been so powerfully deployed during the whole of this debate—namely, the importance of doing nothing to hinder the employment of part-time people—we commend Amendment No. 37 and at the appropriate time I shall ask my hon. Friends to divide the Committee.

The Treasurer of Her Majesty's Household (Mr. John Silkin) rose in his place and claimed to move, That the Question be now put.

Mr. Hirst

On a point of order——

The Chairman

The Question is, That the Question be now put.

The Committee proceeded to a Division—

Mr. Grieve

(seated and covered): On a point of order. Many of my hon. Friends and I have been waiting seven hours to speak on this matter of vital national importance and we have not been heard. I ask the Chair to protect the interests of my hon. Friends and of the nation. Sixteen Amendments have been grouped together, and far too little time and far too little debate has been given to this matter of serious national importance.

Mr. Hirst

What is the answer?

Dame Irene Ward

On a point of order——

The Chairman

Order. The hon. Member knows perfectly well that the decision of the Chair whether or not to accept the Closure is not open to dispute.

Mr. Hirst

It is just gagging, gagging.

Dame Irene Ward

On a point of order——

Mr. Hirst

What do the assurances of the Chair mean?

Dame Irene Ward

On a point of order.

Sir D. Glover

(seated and covered): On a point of order. I wish to give notice that I shall put down a Motion of censure on you, Sir Eric, for not protecting the rights of back benchers.

The Chairman

The hon. Member is perfectly entitled to put down a Motion, but he is not entitled in the Committee to criticise the behaviour of the Chair.

Dame Irene Ward

(seated and covered): On a point of order. I wonder why we should have this alteration in procedure. I have been in the House for 30 years and I have never known it necessary for the Chair always to accept a Motion by a Chief Whip.

The Chairman

That is not a point of order.

Dame Irene Ward

Yes, it is. This is an alteration in procedure.

The House divided: Ayes 163, Noes 127.

Division No. 69.] AYES [11.58 p.m.
Abse, Leo Dunwoody, Dr. John (F'th — C'b'e) Kenyon, Clifford
Albu, Austen Edelman, Maurice Kerr, Russell (Feltham)
Alldritt, Walter Eden, Sir John Lawson, George
Allen, Scholefield Ellis, John Leadbitter, Ted
Anderson, Donald English, Michael Lee, Rt. Hn. Jennie (Cannock)
Armstrong, Ernest Ensor, David Lever, Harold (Cheetham)
Ashley, Jack Evans, Albert (Islington, S.W.) Lever, L. M. (Ardwick)
Atkins, Ronald (Preston, N.) Fernyhough, E. Lewis, Ron (Carlisle)
Atkinson, Norman (Tottenham) Fitch, Alan (Wigan) Luard, Evan
Barnett, Joel Fletcher, Raymond (Ilkeston) Lyon, Alexander W. (York)
Beaney, Alan Fletcher, Ted (Darlington) Lyons, Edward (Bradford, E.)
Bidwell, Sydney Floud, Bernard McBride, Neil
Bishop, E. S. Foot, Sir Dingle (Ipswich) McCann, John
Blackburn, P. Foot, Michael (Ebbw Vale) MacDermot, Niall
Blenkinsop, Arthur Ford, Ben Macdonald, A. H.
Boardman, H. Forrester, John Mackenzie, Gregor (Rutherglen)
Boston, Terence Fowler, Gerry McMillan, Tom (Glasgow, C.)
Bottomley, Rt. Hn. Arthur Fraser, Rt. Hn. Tom (Hamilton) MacPherson, Malcolm
Boyden, James Freeson, Reginald Mahon, Peter (Preston, S.)
Braddock, Mrs. E. M. Gardner, A. J. Mahon, Simon (Bootle)
Bradley, Tom Garrett, W. E. Manuel, Archie
Brooks, Edwin Garrow, Alex Mapp, Charles
Brown, R. W. (Shoreditch & F'bury)
Buchan, Norman Ginsburg, David Marsh, Rt. Hn. Richard
Buchanan, Richard (G'gow, Sp'burn) Gordon Walker, Rt. Hn. P. C. Mason, Roy
Callaghan, Rt. Hn. James Gregory, Arnold Mayhew, Christopher
Cant, R. B. Griffiths, David (Rother Valley) Mitchell, R. C. (S'th'pton, Test)
Carmichael, Neil Griffiths, Will (Exchange) Morris, Charles R. (Openshaw)
Carter-Jones, Lewis Hamilton, William (Fife, W.) Moyle, Roland
Coe, Denis Hannan, William Neal, Harold
Coleman, Donald Hattersley, Roy Newens, Stan
Concannon, J. D. Hobden, Dennis (Brighton, K'town) Noel-Baker,Rt.Hn.Philip (Derby,S.)
Conlan, Bernard Hooley, Frank Norwood, Christopher
Craddock, George (Bradford, S.) Horner, John Ogden, Eric
Crawshaw, Richard Howarth, Harry (Wellingborough) O'Malley, Brian
Davies, Dr. Ernest (Stretford) Howie, W. Orme, Stanley
de Freitas, Sir Geoffrey Hughes, Emrys (Ayrshire, S.) Owen, Dr. David (Plymouth, S'tn)
Dell, Edmund Hughes, Hector (Aberdeen, N.) Page, Derek (King's Lynn)
Dewar, Donald Hughes, Roy (Newport) Paget, R. T.
Diamond, Rt. Hn. John Jackson, Colin (B'h'se & Spenb'gh) Parker, John (Dagenham)
Dickens, James Jackson, Peter M. (High Peak) Parkyn, Brian (Bedford)
Doig, Peter Jones, Dan (Burnley) Pavitt, Laurence
Driberg, Tom Jones, J. Idwal (Wrexham) Peart, Rt. Hn. Fred
Dunn, James A. Kelley, Richard Pentland, Norman
Perry, George H. (Nottingham, S.) Rowland, Christopher (Meriden) Varley, Eric G.
Price, Christopher (Perry Barr) Rowiands, E. (Cardiff, N.) Wainwright, Edwin (Dearne Valley)
Price, William (Rugby) Shaw, Arnold (Ilford, S.) Walden, Brian (All Saints)
Rankin, John Sheldon, Robert Watkins, David (Consett)
Rees, Merlyn Silkin, John (Deptford) Weitzman, David
Rhodes, Geoffrey Slater, Joseph Wells, William (Walsall, N.)
Richard, Ivor Summerskill, Hn. Dr. Shirley Willis, George (Edinburgh, E.)
Roberts, Albert (Normanton) Swingler, Stephen Wyatt, Woodrow
Roberts, Goronwy (Caernarvon) Thomas, George (Cardiff, W.) Yates, Victor
Roberts, Gwilym (Bedfordshire, S.) Tinn, James TELLERS FOR THE AYES:
Robertson, John (Paisley) Tomney, Frank Mr. William Whitlock and
Rose, Paul Urwin, T. W. Mr. Harry Gourlay.
NOES
Alison, Michael (Barkston Ash) Grimond, Rt. Hn. J. Noble, Rt. Hn. Michael
Atkins, Humphrey (M't'n & M'd'n) Gurden, Harold Onslow, Cranley
Awdry, Daniel Hall-Davis, A. G. F. Orr, Capt. L. P. S.
Bennett, Sir Frederic (Torquay) Harrison, Col. Sir Harwood (Eye) Osborn, John (Hallam)
Bennett, Dr. Reginald (Gos. & Fhm) Harvey, Sir Arthur Vere Page, Graham (Crosby)
Berry, Hn. Anthony Hastings, Stephen Pardoe, John
Bessell, Peter Heald, Rt. Hon. Sir Lionel Pearson, Sir Frank (Clitheroe)
Biggs-Davison, John Heseltine, Michael Peel, John
Blaker, Peter Higgins, Terence L. Percival, Ian
Bossom, Sir Clive Hirst, Geoffrey Pike, Miss Mervyn
Boyd-Carpenter, Rt. Hn. John Hogg, Rt. Hn. Quintin Pink, R. Bonner
Boyle, Rt. Hn. Sir Edward Holland, Philip Powell, Rt. Hn. J. Enoch
Brinton, Sir Tatton Hooson, Emlyn Pym, Francis
Bryan, Paul Hornby, Richard Ramsden, Rt. Hn. James
Buchanan-Smith, Alick (Angus,N&M) Howell, David (Guildford) Rawlinson, Rt. Hn. Sir Peter
Buck, Antony (Colchester) Jenkin, Patrick (Woodford) Renton, Rt. Hn. Sir David
Campbell, Gordon Johnston, Russell (Inverness) St. John-Stevas, Norman
Carlisle, Mark Jopling, Michael Scott, Nicholas
Carr, Rt. Hn. Robert Joseph, Rt. Hn. Sir Keith Shaw, Michael (Sc'b'gh & Whitby)
Chichester-Clark, R. King, Evelyn (Dorset, S.) Smith, John
Clark, Henry Kirk, Peter Steel, David (Roxburgh)
Clegg, Walter Langford-Holt, Sir John
Cooke, Robert Legge-Bourke, Sir Harry Stoddart Scott, Col. Sir M. (Ripon)
Corfield, F. V. Lloyd, Ian (P'tsm'th, Langtone) Taylor, Frank (Moss Side)
Costain, A. P. Lubbock, Eric Teeling, Sir William
Crawley, Aidan MacArthur, Ian Thatcher, Mrs. Margaret
Crosthwaite-Eyre, Sir Oliver Maclean,Sir Fitzroy Thorpe, Jeremy
Crouch, David Macleod, Rt. Hn. Iain Tilney, John
Crowder, F. P. McMaster, Stanley van Straubenzee, W. R.
Currie, G. B. H. Macmillan, Maurice (Farnham) Vickers, Dame Joan
Doughty, Charles Maginnis, John E. Wainwright, Richard (Colne Valley)
Eden, Sir John Maude, Angus Walker-Smith, Rt. Hn. Sir Derek
Elliot, Capt. Walter (Carshalton) Mawby, Ray Ward, Dame Irene
Errington, Sir Eric Maydon, Lt.-Cmdr. S. L. C. Weatherill, Bernard
Farr, John Mills, Peter (Torrington) Whitelaw, William
Fortescue, Tim Mills, Stratton (Belfast, N.) Wilson, Geoffrey (Truro)
Foster, Sir John Miscampbell, Norman Winstanley, Dr. M. P.
Gilmour, Sir John (Fife, E.) Mitchell, David (Basingstoke) Wood, Rt. Hn. Richard
Glover, Sir Douglas Morrison, Charles (Devizes) Woodnutt, Mark
Gower, Raymond Munro-Lucas-Tooth, Sir Hugh Younger, Hn. George
Grant-Ferris, R. Murton, Oscar
Gresham Cooke, R. Nabarro, Sir Gerald TELLERS FOR THE NOES:
Grieve, Percy Neave, Airey Mr. R. W. Elliott and
Griffiths, Eldon (Bury St. Edmunds) Nicholls, Sir Harmar Mr. Reginald Eyre.

Question put accordingly, That the proposed words be there inserted:—

The Committee divided: Ayes 124, Noes 158.

Division No. 70.] AYES [12.07 a.m.
Alison, Michael (Barkston Ash) Carlisle, Mark Farr, John
Atkins, Humphrey (M't'n & M'd'n) Carr, Rt. Hn. Robert Fortescue, Tim
Awdry, Daniel Chichester-Clark, R. Foster, Sir John
Bennett, Sir Frederic (Torquay) Clark, Henry Gilmour, Sir John (Fife, E.)
Bennett, Dr. Reginald (Gos.& Fhm) Clegg, Walter Glover, Sir Douglas
Berry, Hn. Anthony Gower, Raymond
Bessell, Peter Cooke, Robert Grant-Ferris, R.
Biggs-Davison, John Corfield, F. V. Grieve, Percy
Blaker, Peter Costain, A. P. Griffiths, Eldon (Bury St. Edmunds)
Bossom, Sir Clive Crawley, Aidan Grimond, Rt. Hn. J.
Boyd-Carpenter, Rt. Hn. John Crosthwalte-Eyre, Sir Oliver Gurden, Harold
Boyle, Rt. Hn. Sir Edward Crouch, David Hall-Davis, A. G. F.
Brinton, Sir Tatton Crowder, F. P. Harrison, Col. Sir Harwood (Eye)
Bryan, Paul Doughty, Charles Harvey, Sir Arthur Vere
Buchanan-Smith, Alick (Angus,N—M) Elliot, Capt. Walter (Carshalton) Hastings, Stephen
Buck, Anhony (Colchester) Elliott, R.W. (N'c'tle-upon-Tyne,N.) Heald, Rt. Hn. Sir Lionel
Campbell, Gordon Errington, Sir Eric Heseltine, Michael
Higgins, Terence L. Mills, Peter (Torrington) St. John-Stevas, Norman
Hint, Geoffrey Mills, Stratton (Belfast, N.) Scott, Nicholas
Hogg, Rt. Hn. Quintin Miscampbell, Norman Shaw, Michael (Sc'b'gh — Whitby)
Holland, Philip Mitchell, David (Basingstoke) Smith, John
Hooson, Emlyn Morrison, Charles (Devizes) Steel, David (Roxburgh)
Hornby, Richard Munro-Lucas-Tooth, Sir Hugh Stoddart-Scott, Col. Sir M. (Ripon)
Howell, David (Guildford) Murton, Oscar Taylor, Frank (Moss Side)
Jenkin, Patrick (Woodford) Nabarro, Sir Gerald Teeling, Sir William
Johnston, Russell (Inverness) Neave, Airey Thatcher, Mrs. Margaret
Jopling, Michael Nicholls, Sir Harmar Thorpe, Jeremy
Joseph, Rt. Hn. Sir Keith Noble, Rt. Hn. Michael Tilney, John
King, Evelyn (Dorset, S.) Onslow, Cranley van Straubenzee, W. R.
Kirk, Peter Orr, Capt. L. P. S. Vickers, Dame Joan
Langford-Holt, Sir John Osborn, John (Hallam) Wainwright, Richard (Colne Valley)
Legge-Bourke, Sir Harry Page, Graham (Crosby) Walker-Smith, Rt. Hn. Sir Derek
Lloyd, Ian (P'tsm'th, Langstone) Pardoe, John Ward, Dame Irene
Lubbock, Eric Pearson, Sir Frank (Clitheroe) Weatherill, Bernard
MacArthur, Ian Peel, John Whitetaw, William
Maclean, Sir Fitzroy Percival, Ian Wilson, Geoffrey (Truro)
Macleod, Rt. Hn. lain Pike, Miss Mervyn Winstanley, Dr. M. P.
McMaster, Stanley Pink, R. Bonner Wood, Rt. Hn. Richard
Macmillan, Maurice (Farnham) Powell, Rt. Hn. J. Enoch Woodnutt, Mark
Maginnis, John E. Pym, Francis
Maude, Angus Ramsden, Rt. Hn. James TELLERS FOR THE AYES:
Mawby, Ray Rawlinson, Rt. Hn. Sir Peter Mr. George Younger and
Maydon, Lt.-Cmdr. S. L. C. Renton, Rt. Hn. Sir David Mr. Reginald Eyre.
NOES
Abse, Leo Floud, Bernard Mason, Roy
Albu, Austen Foot, Sir Dingle (Ipswich) Mayhew, Christopher
Alldritt, Walter Foot, Michael (Ebbw Vale) Mitchell, R. C. (S'th'pton, Test)
Allen, Scholefield Ford, Ben Morris, Charles R. (Openshaw)
Anderson, Donald Forrester, John Moyle, Roland
Armstrong, Ernest Fowler, Gerry Neal, Harold
Ashley, Jack Fraser, Rt. Hn. Tom (Hamilton) Newens, Stan
Atkins, Ronald (Preston, N.) Freeson, Reginald Noel-Baker,Rt.Hn.Phllip (Derby,S.)
Atkinson, Norman (Tottenham) Garrett, W. E. Norwood, Christopher
Barnett, Joel Garrow, Alex Ogden, Eric
Beaney, Alan Ginsburg, David O'Malley, Brian
Bidwell, Sydney Gordon Walker, Rt. Hn. P. C. Orme, Stanley
Bishop, E. S. Gregory, Arrnold Owen, Dr. David (Plymouth, S'tn)
Blackburn, F. Griffiths, David (Rother Valley) Page, Derek (King's Lynn)
Blenkinsop, Arthur Griffiths, Will (Exchange) Paget, R. T.
Boardman, H. Hamilton, William (Fife, W.) Parker, John (Dagenham)
Boston, Terence Hannan, William Parkyn, Brian (Bedford)
Bottomtey, Rt. Hn. Arthur Hattersley, Roy Peart, Rt. Hn. Fred
Boyden, James Hobden, Dennis (Brighton, K'town) Pentland, Norman
Braddock, Mrs. E. M. Hooley, Frank Perry, George H. (Nottingham, S.)
Bradley, Tom Horner, John Price, Christopher (Perry Barr)
Brooks, Edwin Howarth, Harry (Wellingborough) Price, William (Rugby)
Brown, R. W. (Shoreditch & F'bury) Howie, W. Rees, Merlyn
Buchan, Norman Hughes, Emrys (Ayrshire, S.) Richard, Ivor
Buchanan, Richard (G'gow, Sp'burn) Hughes, Hector (Aberdeen, N.) Roberts, Albert (Normanton)
Callaghan, Rt. Hn. James Hughes, Roy (Newport) Roberts, Goronwy (Caernarvon)
Cant, R. B. Jackson, Colin (B'h'se Spenb'gh) Roberts, Gwilym (Bedfordshire, S.)
Carmichael, Neil Jackson, Peter M. (High Peak) Robertson, John (Paisley)
Carter-Jones, Lewis Jones, Dan (Burnley) Rose, Paul
Coe, Denis Jones, J. Idwal (Wrexham) Rowland, Christopher (Meriden)
Coleman, Donald Kelley, Richard Rowlands, E. (Cardiff, N.)
Concannon, J. D. Kenyon, Clifford Shaw, Arnold (Ilford, S.)
Conlan, Bernard Kerr, Russell (Feitham) Sheldon, Robert
Craddock, George (Bradford, S.) Lawson, George Silkin, John (Deptford)
Crawshaw, Richard Leadbitter, Ted Slater, Joseph
Davies, Dr. Ernest (Stretford) Lee, Rt. Hn. Jennie (Cannock) Summerskill, Hn. Dr. Shirley
de Freitas, Sir Geoffrey Lever, Harold (Cheetham) Swingler, Stephen
Dell, Edmund Lever, L. M. (Ardwick) Thomas, George (Cardiff, W.)
Dewar, Donald Lewis, Ron (Carlisle) Tinn, James
Diamond, Rt. Hn. John Luard, Evan Tomney, Frank
Dickens, James Lyon, Alexander W. (York) Urwin, T. W.
Doig, Peter Lyons, Edward (Bradford, E.) Varley, Eric G.
Driberg, Tom McBride, Neil Wainwright, Edwin (Dearne Valley)
Dunn, James A. McCann, John Walden, Brian (All Saints)
Dunwoody, Dr. John (F'th & C'b'e) MacDermot, Niall Watkins, David (Consett)
Edelman, Maurice Macdonald, A. H. Weitzman, David
Ellis, John Mackenzie, Gregor (Rutherglen) Wells, William (Walsall, N.)
English, Michael McMillan, Tom (Glasgow, C.) Willis, George (Edinburgh, E.)
Ensor, David MacPherson, Malcolm Wyatt, Woodrow
Evans, Albert (Islington, S.W.) Mahon, Peter (Preston, S.) Yates, Victor
Fernyhough, E. Mahon, Simon (Bootle)
Pitch, Alan (Wigan) Manuel, Archie TELLERS FOR THE NOES:
Fletcher, Raymond (Ilkeston) Mapp, Charles Mr. William Whitlock and
Fletcher, Ted (Darlington) Marsh, Rt. Hn. Richard Mr. Harry Gourlay.
Mr. Iain Macleod

I beg to move, That the Chairman do report Progress and ask leave to sit again. I move this Motion with only one purpose in mind and I will be very brief. The way in which we should look at the last debate is not that it went on 7½ hours, but for about 25 minutes for each of the Amendments that the Committee was discussing. Perhaps I may mention one particular instance. My hon. Friend the Member for Farnham (Mr. Maurice Macmillan), who is a former Treasury Minister, put his name to one of the Amendments which we have been discussing. He sat here for seven hours, but was unable, unhappily, to catch your eye, Sir Eric.

There are other matters I would wish to bring before the Committee. We feel not only that we have been shabbily treated, but that what has happened is not in accordance with the conventions or understandings of the House of Commons. I must, therefore, make clear to you that: we on this side of the Committee have no confidence in you as Chairman of Ways and Means and that——

The Chairman

Order. I cannot allow the right hon. Gentleman or any other hon. Member of the Committee to criticise the conduct of the Chair in Committee. The right hon. Gentleman is perfectly well aware that if he wishes to do so he must put down a Motion on the Order Paper. I must ask him to withdraw anything that he has said by way of criticism of the Chair.

Mr. Macleod

I did not complete my sentence, Sir Eric. A formal Motion will be placed on the Order Paper which will put that matter right.

The Chairman

The Question is, That I do report——

Mr. Callaghan

On a point of order, Sir Eric. You have asked the right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod) to withdraw. He indicated quite clearly that it is his intention to put down a Motion of censure. That does not, with respect, I submit, bring him into order when you have asked him to withdraw words he used, in advance of putting down a substantive Motion. May I ask whether he now intends to withdraw?

The Chairman

I am waiting for the right hon. Gentleman to withdraw.

Mr. Macleod

Sir Eric, I know the rules of the House as well as you do. [HON. MEMBERS: "Name him."] It is in order to criticise the Chair only on a formal Motion, and I have given notice correctly of that Motion.

The Chairman

The right hon. Gentleman said that he had no confidence in the present occupant of the Chair. That is a criticism of the Chair made in Committee, and the right hon. Gentleman must withdraw that remark or leave the Chamber.

Mr. Macleod

Sir Eric, if you interpret the rules of the House in that way, of course I bow to you and withdraw. [Interruption.] Of course I do. I have been a member of the House long enough. I was under the impression that the right and correct thing to do—and I think, with respect, that I am right, but that is immaterial—was to warn you courteously of the Motion of censure.

The Chairman

I cannot allow the right hon. Gentleman to argue with the Chair. The right hon. Gentleman——

Mr. Hirst

For God's sake go home.

The Chairman

The right hon. Gentleman is wrong. He is entitled to put down any Motion that he likes, but he must withdraw criticism of the Chair made in the Committee.

Mr. Macleod

I have done that, Sir Eric.

The Chairman

The Question is, That I do report Progress and ask leave to sit again. As many as——

Mr. William Hamilton (Fife, West)

On a point of order, Sir Eric. It was distinctly within the hearing of the Committee that the hon. Member for Shipley (Mr. Hirst) said, "For God's sake go home", referring to you, Sir Eric. This, too, is a reflection on you, Sir Eric, and I would ask you to ask him to withdraw that remark.

Mr. Biggs-Davison rose——

The Chairman

Order. I am sure that it is the general wish of the Committee that we should make progress. The Question before the House is that I do report Progress and ask leave to sit again. As many as are of that opinion say "Aye"—

Hon. Members

No.

Mr. Biggs-Davison

On a point of order.

Sir John Eden (Bournemouth, West)

On a point of order.

Dame Irene Ward

You cannot do it like that.

The Chairman

Order.

Sir J. Eden

On a point of order, Sir Eric. I hope that I understand the position correctly. I take it that you have put the Motion to the Committee and that it is now in order to speak to the Motion. Unless there is any other point of order to interrupt me, that is what I propose to do. [Interruption.] I am speaking to the Question now before the Committee, namely, that the Chairman do report Progress and ask leave to sit again.

Mr. Biggs-Davison

On a point of order, Sir Eric. With respect, I was on my feet, drawing attention to a point of order, before some of the hon. Gentlemen whose points of order you have been good enough to pronounce upon. For the help of hon. Members who do not know the rules as you do, Sir Eric, certainly not as well as my right hon. Friend, may we have guidance, because we may need it, on the correct form in which we give notice that we shall be putting down a Motion of censure on the Chair? How is it possible to do that without expressing some dissatisfaction with the occupant of the Chair?

The Chairman

That is not a point of order.

Several hon. Members rose——

The Chairman

Sir John Eden.

Sir J. Eden

As my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) said, we have already had 7½ hours' debate on this series of Amendments, but I am quite certain that hon. and right hon. Members opposite will be the first to agree that it has been a thoroughly serious debate and that the points which were advanced have been points of substance, coming from both sides of the Committee. This has not in any sense been a filibustering debate.

Mr. Callaghan

Boo.

Sir J. Eden

The right hon. Gentleman the Chancellor says "Boo". Will he say that it has been a filibustering debate?

Mr. Callaghan

I heard the hon. Gentleman say, when we discussed a similar Motion some time ago, that is, a Motion to report Progress, that he intended to speak on every Amendment which came before the Committee on the Bill. [HON. MEMBERS: "Why not?"] He now intends also to speak on this Motion. I know how I view an attitude of that sort.

Sir J. Eden

I do not know how the right hon. Gentleman views any attitude. He seems to be responsible for doing a lot of viewing, or watching, as his hon. and learned Friend calls it. The fact remains that I did not catch the eye of the Chair on that group of Amendments we have just passed, and I do not now propose to speak to them. I propose to speak to the Motion now before the Committee. I am concerned because, once again, a serious debate has been cut short and not all the points have been put.

It was possible for any hon. Gentleman to speak to one of those Amendments and to make a totally different speech, bringing up points totally different from those which any other hon. Member had already discussed. The matter of concern to us is that there was such a wide variety of points to bring forward in the debate, but some of us had no opportunity.

No doubt, some hon. Members opposite, and right hon. Members, too, perhaps, feel that 7½ hours was quite long enough to devote to this series of Amendments. I do not. Full justice has not been done to the arguments which were advanced. We had a long speech from the Financial Secretary, but it contributed nothing whatever in reply to the debate. Some of the points raised, among them points put most forcibly by his hon. Friends, were not referred to even in passing.

Mr. Callaghan

On a point of order, Sir Eric. Notice has already been given to you, and the right hon. Member for Enfield, West (Mr. Iain Macleod) rose, as he said, briefly to move——

Dame Irene Ward

I rose, too.

Mr. Callaghan

—to report Progress, on the ground that he intended to put down a Motion critical of the Chair. He gave notice of that, at the end of his speech, with reference to your conduct in relation to the series of Amendments we have just disposed of.

May I submit this point to you, Sir Eric—and, with respect, to the hon. Member for Bournemouth, West (Sir J. Eden)—that it is not right or fair to the Chair or anyone else for hon. Members, no matter where they may sit, to carry on a debate about our proceedings on the last series of Amendments, which are to be the subject of one of the most serious Motions which can be put down, that is, in criticism of the Chair. I put it in the form of a point of order, Sir Eric. Is it right to carry on a debate at this time under the guise of discussing the Motion to report Progress? I put it to you, Sir Eric, as a point of order, and I put it to the hon. Gentleman as a point of good taste.

Several hon. Members rose——

12.30 a.m.

The Chairman

Order. A point of order has been put to me.

I think that it is, technically, in order. The Question before the Committee is that I do report Progress and ask leave to sit again. That Motion was moved for a specific purpose. In the ordinary course it would not admit of a wide debate. I am sure that it was the general feeling of the Committee that we should proceed to a Division on that Motion.

Hon. Members

No.

Mr. Iain Macleod

Further to that point of order. In fairness, I should say that there was some noise in the Chamber at the time, but I made it clear when I rose that I intended to make one brief point, which I did. If my hon. Friends wish to debate this Motion, it is, as you have said, now before the Committee and is in order. I join with the Chancellor on this. We have taken a most serious step, with a good deal of reflection on this side of the Committee—[HON. MEMBERS: "Oh".] Yes, we have, and it is perfectly in order for my hon. Friends to speak on this Motion. I would appeal to them to make this debate a fairly short one and to move on.

Sir J. Eden

I am grateful to you for ruling that I was not out of order in what I have been saying, Sir Eric.

In reply to the Chancellor, may I say that every hon. Member of the Committee on this side will note with interest his sudden determination to take part in the proceedings of the Committee. They will, no doubt, quite readily remember that one of the difficulties that we had in the earlier debate was to get him to take part. There was a time when he was very proud of the new Selective Employment Tax. Now, apparently, he finds it very difficult even to come forward in a debate to defend it.

The reason why I am supporting this Motion is that I do not see the point in proceeding with the Committee stage on the basis on which we are at present operating. We have a debate, long or short, according to which way one looks at it, but it is an extremely important debate, on a series of Amendments. We are then treated to a reply which amounted to stonewalling. Obviously, many Members wished to take up a point made by the Government spokesman in reply to the debate, which had, up to that point, taken place.

Only one hon. Member was called before the Closure was moved and accepted. I cannot believe that in this way the Committee will be able to do justice to the later proceedings of the Bill. There is a whole series of other Amendments on the Notice Paper about which all of us, on both sides of the Committee, are extremely concerned. We will obviously wish to do full justice to those Amendments. Under the circumstances which now appear to be operating, and according to the manner in which the Treasury Bench seems determined to operate the proceedings. I do not see the point in carrying this process any further tonight. I therefore hope that this Motion will be carried so that, once again, an opportunity will be given to the Chancellor and those with him to consider their attitude towards the conduct of the debate.

This is the point that I stress most strongly, because no one who has spoken in this debate so far has either reiterated points which had previously been made or deliberately filibustered. This is a thoroughly constructive, interesting and first-class debate which, most unfortunately has been interrupted before the ground had been fully covered, and before every point had been raised and considered. Under these circumstances, I hope that the Committee will agree to this Motion.

Mr. J. Grimond (Orkney and Shetland)

I rise briefly, simply to ask the Chancellor a routine question. He should give the Committee some indication of how far he hopes to get tonight and say what his intentions are about the remainder of the Bill.

This is a new tax, of great importance, and I do not believe that to sit continuously during the night is good either for the Committee or for legislation. For us to stay here once or twice while debating the Finance Bill may be excusable, but the habit of breakfasting in the House of Commons is one which should not be accepted as normal custom.

Mr. Maurice Macmillan (Farnham)

I rise to support this Motion very briefly, because it is quite clear that the Treasury bench is in a mood of contempt for the Committee and the Opposition in particular, and it would seem, in those circumstances, that we shall not get very far.

The Chancellor arrived here at the last moment; I make no great point of that, but I would tell him that the only repetitive speeches have come from those hon. Members who made quite justifiable, but prolonged references to the Cooperative movement.

The Financial Secretary to the Treasury treated us to a long speech in which he seemed to be disguising the facts, so there was no time for us to have an answer on some important points; no time, for instance, to answer the point made by my hon. Friend the Member for Somerset, North (Mr. Dean) about the medical treatment insurance scheme. I believe that it has about 1 million mem- bers, but apparently they are unworthy of the consideration of the Financial Secretary.

For these reasons, and because the Treasury Bench is in the mood it is, I feel that it would be better for once to heed the advice of the Leader of the Liberal Party and not to breakfast here, but to resume later for a longer, quieter, and more informative debate under different circumstances.

Mr. Callaghan

If I may reply, first, to the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond), there is no doubt that this long debate—it has lasted about eight hours now—has been on important subjects. It has been conducted seriously, and the discussion has been centred on the Amendment moved by the right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod). The next Amendment is on an important point, concerning payment of tax on employees abroad. Although I must be careful how I say this, I would not have thought that, normally, this would extend the debating power of the Committee for too long a period. Normally, I should have thought that that would have been so.

Then there is the Amendment on industrial training boards, and here, again, I should not have thought that we should be over-long. The next one, about hoteliers—[Interruption.] I thought that some hon. Members might receive my remarks in that way because we have heard much about hotels and catering, and I am sure that hon. Members will not lose an opportunity to put their case within the rules of order. The hon. Member will keep on putting his case, and may not be quite so short in his observations; and I must point out to the Committee that some hon. Members opposite do not lose any opportunity for putting the same case time after time and yet keeping quite within the rules of order.

Next, there is the Amendment about appeals to the courts. This is an important Amendment, but should not take over-long. The next deals with Northern Ireland. There has been considerable discussion about the tax between ourselves and the Government of Northern Ireland. Again, I see no reason why there should be a very long debate on this Amendment.

Beyond that, there is only one Amendment, and that is on Clause 45. We propose a concession of two years which the Opposition propose to make three years. Again, I should have thought that that was not a major issue of substance, although, no doubt, an interesting point of detail, on which we should have a view, as between two and three years.

Mr. James Ramsden (Harrogate)

The right hon. Gentleman has omitted from his consideration the possibility of a debate on the Question, "That the Clause stand part of the Bill". I hope that he will not dismiss this possibility, because a number of my hon. Friends were unable to make points which they would have wished to make or even to have the opportunity of catching the eye of the Chair on the last series of Amendments. I ask the right hon. Gentleman for an indication that if there were a debate on the Question, "That the Clause stand part of the Bill", he would not attempt unduly to curtail it.

Mr. Callaghan

It is not for me to comment on whether there will be a debate on the Question, "That the Clause stand part of the Bill". That is for you, Sir Eric, as I understand.

Referring to the Amendments we have just discussed, although there were 16 Amendments down, every one of them was embraced in the Schedule moved by the right hon. Member for Enfield, West except for two points. The debate ranged so widely that I do not know what the Chair will do when we come to the Question, "That the Clause stand part of the Bill".

Given good will in the Committee, there is no reason why we should not finish the Bill tonight and leave the new Clauses until tomorrow. That would be my view normally, and I have seen the passage of many Finance Bills. I know that the Committee is a model of rationality, and we should proceed on the basis that we are all rational beings and intend to finish the Bill tonight.

Mr. Robert Cooke

The Chancellor suggested that all aspects of the Clause will have been discussed on the various Amendments, but if there were to be certain aspects of the tax which had not been dealt with on the Amendments because of the cruel Closure forced on us would he be most careful not to prevent a discussion on the Question, "That the Clause stand part of the Bill"? Will he answer that question?

Dame Irene Ward

May I ask the right hon. Gentleman—who, of course, cooed very politely—whether he will give an assurance on the basis of the case which he put forward, namely, that over-much time would not be spent on the Amendments which had to be moved? Will he assure us that his Front Bench will not move the Closure?

The Chairman

Sir Harmar Nicholls.

Dame Irene Ward

May I have an answer?

Mr. Callaghan

The hon. Lady knows that she can always seduce me into giving her an answer. I do not see how I can speculate about hypothetical circumstances which may develop as the morning proceeds. I do not see any reason why, on the remaining Amendments or Clauses, the Government Front Bench should need to move the Closure. Therefore, I would hope that it will be possible to proceed without so doing.

Sir Harmar Nicholls

It is wrong of the Chancellor of the Exchequer to misuse the English language in the way that he has.

In answer to the very clear question of the right hon. Member for Orkney and Shetland (Mr. Grimond), whether he thought it right that we should go on with the Bill throughout the night and stay here until breakfast time, the Chancellor got up, supposedly to answer that question, and used such terms as "I do not think that we should be over-long on this group of Amendments", "We shall not be over-long on another group of Amendments", and "We shall not be over-long on a still further group of Amendments". If we add up all those "over-longs", it is clear that the answer which the right hon. Gentleman was giving to the Leader of the Liberal Party was that he wants us to stay here all night.

12.44 a.m.

The right hon. Gentleman thinks it right that this important Bill and these very important aspects of it should be debated through the night. Rather than misuse the English language by that over-long subterfuge he ought to have said that his intention is deliberately to keep the Committee here all night.

Question put, That the Chairman do report Progress and ask leave to sit again:—

The Committee divided: Ayes 120, Noes 156.

Division No. 71.] AYES [12.45 a.m.
Alison, Michael (Barkston Ash) Gurden, Harold Nicholls, Sir Harmar
Atkins, Humphrey (M't'n & M'd'n) Hall-Davis, A. G. F. Noble, Rt. Hn. Michael
Awdry, Daniel Harrison, Col. Sir Harwood (Eye) Onslow, Cranley
Bennett, Sir Frederic (Torquay) Harvey, Sir Arthur Vere Orr, Capt. L. P. S.
Bennett, Dr. Reginald (G. & Fhm) Hastings, Stephen Osborn, John (Hallam)
Berry, Hn. Anthony Heald, Rt. Hn. Sir Lionel Page, Graham (Crosby)
Bessell, Peter Heseltine, Michael Pardoe, John
Biggs-Davison, John Higgins, Terence L. Pearson, Sir Frank (Clitheroe)
Blaker, Peter Hirst, Geoffrey Peel, John
Bossom, Sir Clive Hogg, Rt. Hn. Quintin Pike, Miss Mervyn
Boyd-Carpenter, Rt. Hn. John Holland, Philip Pink, R. Bonner
Boyle, Rt. Hn. Sir Edward Hooson, Emlyn Powell, Rt. Hn. J. Enoch
Brinton, Sir Tatton Hornby, Richard Pym, Francis
Bryan, Paul Howell, David (Guildford) Ramsdon, Rt. Hn. James
Buchanan-Smith, Alick (Angus,N&M) Jenkin, Patrick (Woodford) Rawlinson, Rt. Hn. Sir Peter
Buck, Antony (Colchester) Johnston, Russell (Inverness) Ronton, Rt. Hn. Sir David
Campbell, Gordon Jopling, Michael St. John-Stevas, Norman
Carlisle, Mark Joseph, Rt. Hn. Sir Keith Scott, Nicholas
Carr, Rt. Hn. Robert King, Evelyn (Dorset, S.) Shaw, Michael (Sc'b'gh & Whitby)
Chichester-Clark, R. Kirk, Peter Smith, John
Clark, Henry Langford-Holt, Sir John Steel, David (Roxburgh)
Clegg, Walter Legge-Bourke, Sir Harry Stoddart-Scott, Col. Sir M. (Ripon)
Cooke, Robert Lloyd, Ian (P'tsm'th, Langstone) Taylor, Frank (Moss Side)
Corfield, F. V. Lubbock, Eric Teeling, Sir William
Crawley, Aidan MacArthur, Ian Thatcher, Mrs. Margaret
Crosthwaite-Eyre, Sir Oliver Maclean, Sir Fitzroy Thorpe, Jeremy
Crouch, David Macleod, Rt. Hn. Iain Tilney, John
Crowder, F. P. McMaster, Stanley van Straubenzee, W. R.
Doughty, Charles Macmillan, Maurice (Farnham) Vickers, Dame Joan
Elliot, Capt. Walter (Carshalton) Maginnis, John E. Wainwright, Richard (Colne Valley)
Errington, Sir Eric Maude, Angus Walker-Smith, Rt. Hn. Sir Derek
Eyre, Reginald Mawby, Ray Ward, Dame Irene
Farr, John Maydon, Lt.-Cmdr. S. L. C. Weatherill, Bernard
Fortescue, Tim Mills, Peter (Torrington) Whitelaw, William
Foster, Sir John Mills, Stratton (Belfast, N.) Wilson, Geoffrey (Truro)
Gilmour, Sir John (Fife, E.) Miscampbell, Norman Winstanley, Dr. M. P.
Glover, Sir Douglas Mitchell, David (Basingstoke) Wood, Rt. Hn. Richard
Grant-Ferris, R. Morrison, Charles (Devizes) Woodnutt, Mark
Grieve, Percy Munro-Lucas-Tooth, Sir Hugh TELLERS FOR THE AYES:
Griffiths, Eldon (Bury St. Edmunds) Murton, Oscar Mr. R. W. Elliott and
Grimond, Rt. Hn. J. Neave, Airey Mr. George Younger
NOES
Abse, Leo Carter-Jones, Lewis Freeson, Reginald
Albu, Austen Coe, Denis Gardner, A. J.
Alldritt, Walter Coleman, Donald Garrett, W. E.
Allen, Scholefield Concannon, J. D. Garrow, Alex
Anderson, Donald Crawshaw, Richard Ginsburg, David
Armstrong, Ernest Davies, Dr. Ernest (Stretford) Gordon Walker, Rt. Hn. P. C.
Ashley, Jack de Freitas, Sir Geoffrey Gregory, Arnold
Atkins, Ronald (Preston, N.) Dell, Edmund Griffiths, David (Rother Valley)
Atkinson, Norman (Tottenham) Dewar, Donald Griffiths, Will (Exchange)
Bagier, Gordon A. T. Diamond, Rt. Hn. John Hamilton, William (Fife, W.)
Dickens, James Hannan, William
Barnett, Joel Doig, Peter Hattersley, Roy
Beaney, Alan Dunn, James A. Hobden, Dennis (Brighton, K'town)
Bidwell, Sydney Dunwoody, Dr. John (F'th & C'b'e) Hooley, Frank
Bishop, E. S. Edelman, Maurice Horner, John
Blackburn, F. Ellis, John Howarth, Harry (Wellingborough)
Blenkinsop, Arthur English, Michael Howie, W.
Boardman, H. Ensor, David Hughes, Emrys (Ayrshire, S.)
Boston, Terence Evans, Albert (Islington, S.W.) Hughes, Hector (Aberdeen, N.)
Bottomley, Rt. Hn. Arthur Fernyhough, E. Hughes, Roy (Newport)
Boyden, James Fitch, Alan (Wigan) Jackson, Colin (B'h'se & Spenb'gh)
Braddock, Mrs. E. M. Fletcher, Ted (Darlington) Jackson, Peter M. (High Peak)
Bradley, Tom Floud, Bernard Jones, J. Idwal (Wrexham)
Brooks, Edwin Foot, Sir Dingle (Ipswich) Kelley, Richard
Brown, R. W. (Shoreditch & F'bury) Foot, Michael (Ebbw Vale) Kenyon, Clifford
Buchan, Norman Ford, Ben Kerr, Russell (Feltham)
Buchanan, Richard (G'gow, Sp'burn) Forrester, John Lawson, George
Callaghan, Rt. Hn. James Fowler, Gerry Leadbitter, Ted
Cant, R. B. Fraser, Rt. Hn, Tom (Hamilton) Lee, Rt. Hn. Jennie (Cannock)
Lever, Harold (Cheetham) Noel-Baker,Rt.Hn.Philip (Derby,S.) Rose, Paul
Lever, L. M. (Ardwick) Norwood, Christopher Rowland, Christopher (Meriden)
Lewis, Ron (Carlisle) Ogden, Eric Rowlands, E. (Cardiff, N.)
Luard, Evan O'Malley, Brian Shaw, Arnold (Ilford, S.)
Lyon, Alexander W. (York) Orme, Stanley Sheldon, Robert
Lyons, Edward (Bradford, E.) Owen, Dr. David (Plymouth, S'tn) Silkin, John (Deptford)
McBride, Neil Page, Derek (King's Lynn) Summerskill, Hn. Dr. Shirley
MacDermot, Niall Paget, R, T. Swingler, Stephen
Macdonald, A. H. Parker, John (Dagenham) Thomas, George (Cardiff, W.)
Mackenzie, Gregor (Rutherglen) Parkyn, Brian (Bedford) Tinn, James
McMillan, Tom (Glasgow, C.)<> Pavitt, Laurence Tomney, Frank
MacPherton, Malcolm Peart, Rt. Hn. Fred Urwin, T. W.
Mahon, Peter (Preston, S.) Pentland, Norman Varley, Eric G.
Mahon, Simon (Bootle) Perry, George H. (Nottingham, S.) Wainwright, Edwin (Dearne Valley)
Manuel, Archie Price, Christopher (Perry Barr) Walden, Brian (All Saints)
Mapp, Charles Price, William (Rugby) Watkins, David (Consett)
Marsh, Rt. Hn. Richard Rankin, John Weitzman, David
Mason, Roy Rees, Merlyn Wells, William (Walsall, N.)
Whitlock, William
Mayhew, Christopher Rhodes, Geoffrey Willis, George (Edinburgh, E.)
Mitchell, R. C. (S'th'pton, Test) Richard, Ivor Wyatt, Woodrow
Morris, Charles R. (Openshaw) Roberts, Albert (Normanton) Yates, Victor
Moyle, Roland Roberts, Goronwy (Caernarvon) TELLERS FOR THE NOES:
Neal, Harold Roberts, Gwilym (Bedfordshire, S.) Mr. John McCann and
Newens, Stan Robertson, John (Paisley) Mr. Harry Gourlay.
Mr. Lubbock

I beg to move Amendment No. 36, in page 48, line 27, at end insert:— Provided that for any contribution week in which that person is employed outside the United Kingdom for the whole of the week, the tax shall be one penny. It is clear that the Government's policy on the Selective Employment Tax has been torn to shreds by the Committee. When they cannot even persuade their own back benchers to vote in favour of their policy, is it not time that we thought seriously about whether we should continue to debate this series of Amendments?

In two debates, each lasting over seven hours, not a single speech has been made in favour of the Selective Employment Tax, and even if the last debate had been allowed to continue for another seven years I do not think that a single hon. Member on the other side of the Committee would have dared to speak up in favour of a tax which we know is wholly inequitable and will penalise those parts of the country and those sections of the community in favour of whom hon. Gentlemen opposite profess to act—the elderly, the disabled and the part-timers, whom we have just been discussing.

If the Government are deaf to the entreaties which have been made on behalf of those sections of the community, what hope is there for me in moving my Amendment, which has no such human appeal behind it, though I claim that it has very strong economic arguments which would commend it to the Committee? I move it with very little hope, seeing the stony heart with which the Financial Secretary answered the strong arguments which were put to him from both side on the previous series of Amendments.

In my Amendment, I am proposing an extremely attractive way of assisting the export trade. That is an objective to which the Government will be as blind and deaf as they were to the humanitarian pleas put to them during the last seven hours.

The Amendment would benefit industries such as oil companies with extensive operations overseas, the construction and civil engineering industries, the airlines, and any firm which undertakes work overseas requiring concentrated selling or personnel who have to be overseas for the whole of any contribution week.

I will not weary the Committee with figures of the contribution to our balance of payments which has been achieved during recent years by some of the industries that I have mentioned. However, I will quote some figures for the construction industry which have been supplied to me, because they are a striking example of the contribution which has been made. In the year to 31st March, 1965, £198 million worth of contracts were placed with the construction industry for work overseas, and, although I cannot ascertain how many of the persons working on those contracts overseas are normally resident in the United Kingdom and thus exempted from the tax by my Amendment, the number would be very small in relation to the total yield of the tax and a minute sum in relation to the contribution which these companies make to our balance of payments position.

1.0 a.m.

Acceptance of the Amendment would be an indication of the importance which the Government attach to any concession that could make some contribution to the export drive which is so vital to the future prosperity of the country. I claim that the Amendment is within the rules of the General Agreement on Tariffs and Trade.

I wrote to the Chief Secretary recently asking him whether he would be prepared to accept such an Amendment if I put one down, and he replied that for purely administrative reasons this was not possible. We heard a lot about administrative reasons in answer to the last series of Amendments, and this is about the most feeble answer which the Government could give to an Amendment which is Valid and good in itself.

The right hon. Gentleman did not say that my proposal would contravene the rules of G.A.T.T., and therefore it would, as I say, be an extremely simple means by which the Government could make a contribution towards exports, without in any way getting us into trouble with our foreign competitors.

One other argument which, I think, will perhaps commend itself to the Committee is that the Confederation of British Industry has said that this would be a valuable gesture, although it recognises that its effect would be small in relation to the scale of the effort by these industries which are making this contribution to our export potential.

I plead with the Financial Secretary, in answering my speech, not to rest on the trivial argument about a stamp. We were extremely distressed to hear him spend nearly half of the 40 minutes that he took to reply to the last debate on footling little details about which the Committee does not want to hear. The Committee wants to be told whether the Government admit that it would be a good idea to help exporters, or not. Do they think that these people who would benefit from the Amendment are entitled to this small concession? That is what we want to know, not whether it would be administratively difficult to have different kinds of cards or different kinds of stamps.

I am not interested in that. I think that the whole system of stamps and cards should be swept away. I hope that we will get round to this one day, and have a proper social security tax based on a percentage of payroll. But, meanwhile, if the Financial Secretary wants advice on how, within the National Insurance Scheme, we can deal with people who, he says, cannot be readily distinguished from other employees, I shall be glad to go to the Treasury and explain how this can be done. I shall not weary the Committee with the details of the scheme that I have in mind, because I am sure that everyone will agree that details of this kind are not those to which the Committee should address itself at this hour of the night.

What we are here to do is to decide on a general principle—do we, or do we not, believe that exports should be assisted by the Government? If we do, do we admit that this is one simple and relatively cheap way of doing so within the G.A.T.T.?

If those arguments are accepted, the Financial Secretary must, inevitably, accept the Amendment. I shall be very disappointed if he does not, but, bearing in mind the feebleness and inadequacy of his reply to the last series of Amendments, I do not think that we can expect much from the Government tonight.

Sir D. Glover

Mr. Godman Irvine, may I congratulate you, because this is the first time that I have had the privilege of speaking to the Committee under your chairmanship, and then may I congratulate the hon. Member for Orpington (Mr. Lubbock) on putting down this Amendment, and on the able way in which he moved it. He and I from time to time in this Committee have made acidulous remarks between ourselves, but on this occasion I thoroughly support him.

I view with great despondency the attitude adopted by the Treasury Bench. I have no doubt that in reply to this debate the Minister will say, once again, that the Government are seized of the point, that they will watch the situation carefully, and take no action.

The whole of this debate on the Clause and on the Amendments that we have discussed—and I am sure that the reply will be the same on this Amendment—shows a strange change on the part of the Treasury Bench from what they stood for at the General Election. The hon. and learned Gentleman replies to most of our debates—and I must say I think it rather strange that on Clause 42, which covers the major meat of the Bill, the Chancellor has not thought it right to give the Committee the benefit of his wisdom but has sat there rather like the generals in the 1914–18 war, sitting back on his comfortable leather seat, sending his junior officers into the battle line and watching them being destroyed in every debate.

The right hon. Gentleman never did win—he never fired a shot. I was able to get that in, Mr. Irving, because you were otherwise engaged. I do not think that it would have been in order if you had not been engaged in other ways.

All this about watching the situation carefully reminds me of the French Revolution, when Madame Defarge watched the revolution very carefully and the heads roll into the basket. In every Amendment on Clause 42 the Government are saying they will watch tragedy coming to all sorts of people, watch their election promises "going for a burton", and watch with great glee, like Madame Defarge, the heads roll into the basket.

The Government said that they would do everything they could to encourage exports. What does this tax do? It puts a burden on anybody who is trying to export, and that is why I support the hon. Member for Orpington. It is a very important Amendment.

Having listened all through the day to the debate on Clause 42, I must say that not a single one of the members of the party opposite who have supported the Government is not becoming increasingly cynical about the Government's policy. This was exemplified this afternoon by the hon. Member for Ebbw Vale (Mr. Michael Foot), when trying to move the Adjournment of the House on Government policy; and an excellent speech he made. This was also exemplified at a very distinguished meeting which did not take place on the Floor of the House, where the Prime Minister only got a bare majority of the vote. And, here again, Labour Members must be becoming increasingly cynical.

The Labour Party went round the hustings at the time of the General Election saying, "Return us to power. We are pledged to increase exports." Then the Chancellor produces this Bill, which results in a disincentive to exports. Everybody involved in the export machinery who is not a manufacturer, and is dealing with the export of goods in insurance, transport and packaging, will be hit by the Clause we are now debating. That is why I support the hon. Member for Orpington in wanting to get them exempted from the burden of this tax.

If the Chancellor is to view the speeches which have been made all day from the other side of the Committee, he will go down in history as the man who made it quite clear that he was the most soulless Chancellor we have had. He is like Torquemada, who would send you to the auto da fe in the most charming manner. He tried to persuade you to recant, he did all this with a smile on his face, was most conciliatory and said that it was for your own good.

The Chancellor is getting much the same reputation, even among his own back benchers, as the last Division showed us. There has been talk of putting down a Motion of censure against certain Members. I fear that that is what may happen upstairs when the next meeting takes place; the Chancellor may find a motion of censure put down against him because he has been completely adamant in not listening to the weight of argument in the Committee. [Interruption.] I can be left entirely to my own devices.

The Chair will call me to order if I go out of order, and if it does not call me to order I am entitled to talk about anything that I believe to be in order. So far, the Chair has not called me to order, and I do not think that the Chair will, because I am about to conclude my remarks.

I am sure that, deep down, many hon. Members opposite are very disillusioned as a result of what has gone on in the Bill, and at the knowledge of what sort of Government they are being asked to support.

The Government seem to have turned their backs on nearly everything that they were returned to do at the last election, and to have adopted a policy which is entirely contrary to the ethic that the Labour Party is supposed to have stood for when it was created at the end of the last century.

Here again, we have an example of the Government's turning their back on the proposal made by the Labour Party at the General Election, that it would provide every incentive to exports. We are discussing an Amendment because, under the Bill, the Labour Party is putting an increased burden on those who are trying to increase our exports. Many hon. Members opposite, although not having yet reached the point of going into the Lobby to oppose the Government, are becoming increasingly cynical about what the Government Front Bench now stand for. They are getting to the point of no return—and that will be a very good thing for the country.

Mr. MacDermot

The hon. Member for Orpington (Mr. Lubbock) moved his Amendment shortly and forcibly. It is one which, obviously, has considerable force. It proposes that we should grant an exemption in respect of workers employed outside the United Kingdom. It was not by deliberate design and intent that we decided to extend the tax to that class of employee. If we were completely free in the matter we would not have extended the tax to those employees. It is not our purpose to impose a tax on employees employed abroad.

The tax extends to them as a consequence of the form of the tax, which has been explained more times than I care to remember. It is a necessary incidence of the tax if we are to achieve our object this year. When my right hon. Friend the Chief Secretary said that the reasons for not excluding these employees were administrative reasons, that is what he had in mind. The hon. Member for Orpington said he would like to sweep away the system of stamps and cards. In a sense we share his wish. If he were able to do so and be freer of the trammels—and there are some trammels—of that system, we should be happy. But we cannot. If therefore we are to take the tax, we must operate it within this system.

1.15 a.m.

I will try to explain the difficulties. Under the National Insurance legislation, when an employee is working abroad, both the employer and the employee must continue to pay their contributions at the appropriate rate for one year of continuous employment abroad. At the end of that year, the employer's liability to contribute ends, but the employee can continue to contribute at a reduced rate, if he so chooses, in order to maintain his record. The risk of abuses and evasion derives from the fact that, if the tax did not have to be paid when the employee was abroad, there would have to be a lower rate of stamp for the National Insurance contribution only.

I think that the general rule would apply not merely for one lower rate of stamp but for several for different classes of employees. These stamps would be on sale publicly like other stamps and can be purchased and affixed to a card by anyone.

Then the difficulty arises that, when the M.P.N.I. officer receives the card at the end of the year, he would have no means of checking whether the employee had been working abroad for the period covered by the lower rate of stamps on the card. He would not know who the employer was and would have to contact the employee to find out who his employer was for that period. His only way of checking then would be to check back the employer's records for that period. Obviously, if that happened only once or twice, this would be possible. There is, however, a real risk that people who felt so disposed could put these stamps on, at least for short periods, and say that their employee was working abroad. There are many people, like sales representatives who go abroad for only a few weeks at a time.

I understand that the Amendment is directed more particularly to people who go abroad not on short visits, but in connection with, for instance, construction industry contracts, and are abroad for a substantial period. Oil company representatives are an example. If we could find a way of distinguishing these people without the risk of abuse, we should be happy to do so. I do not know if this can be done, since I have not had the opportunity to investigate. When listening to the hon. Member's arguments, however, it occurred to me that a possible solution might be to fix a minimum period to be served abroad before the person qualified for the lower rate of tax. Again, however, I see difficulties, because I think that the cards have to be stamped up at fairly short intervals and one could not defer the stamping in order to see whether the employee would be abroad for a longer period.

I do not know how rigorously those provisions are applied, but that is the legal position. As the hon. Member has spoken in such forcible terms, I would say that, if he is willing to withdraw the Amendment, we would certainly be willing to look further at this and see whether we can find a way to overcome these real difficulties. I want to make it clear that, in making this invitation, I am not giving any kind of assurance that we shall find a satisfactory way.

From the point of view of the Treasury, we are already imposing substantial burdens on the machinery of the Ministry of Pensions and National Insurance, and we cannot, in order to make life easier for ourselves at 1.20 in the morning, make promises which would impose additional and unworkable burdens likely to undermine the Ministry's scheme. But with that assurance, limited thought it is, I would be glad to look further at the matter if the hon. Gentleman is ready to withdraw his Amendment.

Mr. Stephen Hastings (Mid-Bedfordshire)

I congratulate the hon. Member for Orpington (Mr. Lubbock) on bringing forward this very important Amendment. In spite of what the Financial Secretary said, it seems to me that the hon. Gentleman's pessimism when he moved the Amendment was well justified, for he received very qualified encouragement.

The Financial Secretary said earlier that it was through no deliberate desire, and was not of his seeking, that exports in the category covered by this Amendment should be penalised in any way. He suggested that the Treasury was not completely free in the matter. The Government have brought in this Bill quite freely. Nobody invited them to do so. We are opposing it because we consider that it is damaging in so many ways. For the Financial Secretary to say that he is not free, and that in some way there are forces which he cannot describe but which make it impossible for him to meet the suggestion of the hon. Member for Orpington in this vital sector of exports, seems to me to be fairly near the limit.

Before the hon. Gentleman decides whether or not to withdraw the Amendment, I should like to draw attention to one other category which, it seems to me, may also be covered by this important Amendment. Let us consider a firm exporting capital goods, which maintains for perfectly viable and sensible economic reasons a division which may be moved abroad. Take, for example, a firm manufacturing capital goods in the Midlands, which maintains a subsidiary company in London which is responsible for exports and sales abroad.

There are many reasons, with which I will not weary the Committee, why this Amendment makes sense. The employees of the company in London might be required to go abroad for weeks at a time to pursue a sales campaign, quite unpredictably. One cannot say in these circumstances how long these people will be abroad. This seems to me to be a case in point.

Let me put forward another case. There are certain categories of capital goods—light aircraft, for example, with which I myself am not unconnected—in respect of which the most efficient and economic way to export is by employing distributors. Distributors have to pay this wretched tax. Yet for periods of weeks or perhaps months, if they are to do their job properly, they have to send a sales team abroad to pursue energetically the question of exports of British goods. Is this not another example which comes within the compass of this Amendment?

Why is it that the Government, who have preached exports in the most prosaic terms to us for months since they have been back in power, should resist the Amendment? I cannot see why there should be this sort of reluctance which the Financial Secretary made so plain when he answered the debate just now. Why does he have to be so pessimistic about it? Why cannot he give an assurance to the hon. Member for Orpington that something will be done? Is any hon. Member opposite prepared to say that it would not be a good idea to do something? It does not look as if anybody on the other side of the Committee is prepared to get up and say anything at all. This is all very well, but I cannot see why hon. Members opposite should appear to be so bored with these proceedings. This is a matter of British exports. It is a matter of importance to the party opposite.

The last debate was cut unnecessarily short on matters affecting human beings in more personal terms, but, from the point of view of the country's economy, this Amendment is of first importance. I hope that, before the hon. Member for Orpington decides whether to withdraw the Amendment—and I am not sure I would advise him to withdraw it—he will give further thought to the most unsatisfactory reply from the Financial Secretary.

Mr. Peter Hordern (Horsham)

The Committee has listened with great interest to the Financial Secretary. I congratulate the hon. Member for Orpington (Mr. Lubbock) on producing powerful arguments for the Amendment. He mentioned the cases of oil companies and construction companies with employees working overseas. The astonishing aspect of the Financial Secretary's reply was that the only reason he sought to adduce to thwart the Amendment was the one that the Government have put so often—the problem of fixing a stamp, the administrative problem. It is phenomenal that this was the only argument he could adduce.

Serious considerations have to be taken into account. There is the question of the E.F.T.A. Convention and whether or not the Amendment would go against the terms or spirit of G.A.T.T. So far as I can determine, it would not go against G.A.T.T., or at any rate Article XVI and the more recent report of the G.A.T.T. working party on subsidies, adopted at the 17th Session in November, 1960. According to that report, the measures which could be continued included remissions, calculated in relation to exports, of direct taxes or social welfare charges on industrial or commercial enterprises.

Whatever might be said of the Amendment, it cannot be claimed that the remissions proposed could be calculated only in relation to exports. It would be possible for employees to be working abroad in respect of imports as well. It is not a quantifiable amount, in terms of G.A.T.T., to say how much remission could be worth in relation solely to exports. So there is there a tenable argument for supporting the Amendment and saying that as far as we can see it would not go against the terms or spirit of G.A.T.T.

It could, however, be argued that it is difficult to distinguish between employees away on business and those on holiday. That difficulty might not be overcome by the wording of the Amendment, but we believe that it would be possible to alter it to ensure that only those on business were covered.

Then there is the question of what cost would be entailed. But the hon. and learned Gentleman did not seek to argue that point. We have to consider the cost in relation to the rebates already being allowed by the Government on the tax. Employers have had to bear a very heavy burden in the last two years. Quite recently, they have had to bear the burden of the Redundancy Payments Act and the Industrial Training Act, and these extra payments have been aggravated by the demand for the 40-hour week and increased wages.

1.30 a.m.

We on this side of the Committee have made it clear that we see no case for distinction between manufacturing and the service or any other industries. If there is to be a rebate, the Government should realise that firms under the rebate scheme as at present proposed will be rewarded in direct proportion to their inefficiency.

I understand that Tube Investments, for example, which has pre-tax profits of £318 per employee, would gain only another 6 per cent. by the rebate, whereas Vickers, which is not one of the most dynamic companies, earning only £58 10s. per employee, would have its profits boosted by nearly one-third. In other words, the effect of the tax is to provide more inefficient companies with more lavish reward. The more bone-headed the management, the more obtuse the unions, the more antique the product, the higher will be the taxpayer's contribution.

It is against the background of the rebate that we must consider the effect of the cost of the Amendment. We on this side of the Committee feel that, although the Amendment is not very significant in terms of incentives for exports, it nevertheless hits at a great weakness in exports at the moment. There are a variety of views on what constitutes a good incentive for exports. I do not seek to belittle in any way the work of the export councils, the excellent work done by trade missions and trade fairs, and the recent expeditions by Lord Erroll, which have been very helpful to the country. By their very nature, these missions can only be introductory, and although they are valuable they cannot remove the necessity for consistent contact at every level between the manufacturer and his customer. In however small a way, that is what the Amendment seeks to encourage.

There is a number of what I would term facile explanations of what is wrong with our export business. I think that there is no truth in the suggestion that the salaries of our export sales managers lag behind those of other countries. There is no evidence for that, nor is there any truth in the idea that trade and commercial representatives in our embassies do not have sufficient expertise. On a number of occasions there has been unwarranted criticism from one or two hon. Members opposite of the standards of those representatives.

I take this opportunity of commending the work of the trade and economic counsellors in our embassies, many of whom could earn about double what they are paid by the Government if they sought work in industry. I am certain that no criticism can be levelled at their work. They take a very close interest in every stage of export contracts on which they are engaged. All too often—I am sure that hon. Members opposite have experience of this—they are let down by the manufacturer, by the exporter himself.

Can we blame the manufacturer, with such a booming market at home? The comparative failure of our exports is a result of the Chancellor's complete failure to check demand sufficiently at home. There seems to be an assumption that all we have to do to improve our export performance is to talk about our export position in numerous councils and "Little Neddies", on the very comfortable assumptions included in the National Plan. We should be regarding the facts of competition from other countries, and our own balance of payments position. The Chancellor will know that the Bank of England has already given a warning about the balance of payments position, for the first quarter, which I understand, will be announced tomorrow. It is certainly not likely to be very encouraging.

We know from a recent report of the United Nations Economic and Social Council that although the growth of world trade increased by 5 per cent. last year we are, once again, at the bottom of the league table being bottom of the top 20 countries with a growth of only 2 per cent. We know from the O.E.C.D. figures of the rise in hourly earnings in manufacturing industry last year that this country showed the highest rise, 9.6 per cent. We know that wage costs per unit of output rose sharply last year, having been relatively stable between 1961 and 1965.

There is further evidence this morning that engineering orders are on the decline. The figures for April are the lowest for seven months.

Every hon. Member must have personal experience of the weight of demand and its effect on industry in the country now. In Crawley, in my constituency, where the unemployment ratio is 0.3 per cent., where there is one man unemployed for 13 vacancies, there is a company which carries on a large export business, and the women it employs on a piecework basis leave their work at two o'clock in the afternoon because they are earning so much. That company, instead of moving from Crawley to a development area, has decided to move its factory to Malta.

Mr. Emlyn Hooson (Montgomery)

On a point of order, Mr. Irving. We are listening with interest to what the hon. Gentleman says, but what relation it has to the Amendment is difficult to see. Surely, what he has been saying is completely out of order.

The Deputy Chairman (Mr. Sydney Irving)

The Chair has not yet heard anything out of order, although it is true that the debate has ranged rather wide. I am sure that the hon. Gentleman has heard what has been said.

Mr. Hordern

I have indeed, Mr. Irving. But the point is that what we have been discussing is entirely in line with the Amendment, because the Amendment is related to export subsidies.

Mr. Callaghan

Nothing of the sort.

Mr. Hordern

The Amendment is related to a subsidy——

Mr. MacDermot

I thought that the hon. Gentleman's first point in his interesting speech was that this was compatible with the G.A.T.T. It cannot, therefore, be a subsidy.

Sir D. Glover

On a point of order, Mr. Irving. Is it in order for the two Ministers to argue about whether your last Ruling was in order?

Mr. Hordern

May I put it in another way. It is an encouragement. It is not a subsidy to exporters, but it is a much-needed shot in the arm for those manufacturers and suppliers of services who happen to have export business.

Mr. MacDermot

I am sorry, but the hon. Gentleman is wrong again. Those exporters who are manufacturers will, under our present scheme, get the rebate. If the Amendment is carried, they will not.

Mr. Hordern

We are referring, of course, to a much wider range than manufacturers, to the construction industries and services. The hon. Member for Orpington referred to those in moving the Amendment.

We have had a thoroughly unsatisfactory reply from the Financial Secretary. All we sought to adduce was the old argument about administrative difficulties. Excuses of that kind are no longer tolerable. Although the Department may say that such action is not possible on the basis of what has happened in the past, the Government must realise that there have been many developments in administration in other countries. They ought to base their atti- rude on what is technically possible and what is going on in other countries.

The giving of administrative reasons for rejecting an Amendment is wholly unsatisfactory, and I advise my hon. Friends, in the absence of any weighty argument whatever against it, to support the hon. Member for Orpington in his Amendment.

Mr. Lubbock

It surprised me even to get the few faint words of encouragement that we had from the Financial Secretary. I thought that we could hope for nothing, but at least we did get an assurance from him that, if it had been possible to do something about this Amendment, it would have been done. What distresses me is that the Government have introduced this new tax with, out giving any thought to the effects that it might have upon the economy. No discussions have apparently taken place with the C.B.I., the National Federation of Building Trades Employers, and other trades organisations which would be interested in the sort of concessions that this Amendment would give.

We cannot be prepared to wait for a whole year while these discussions take place. Grateful as we are for the small mercies provided by the Financial Secretary, we think that this consideration should have been given to the suggestion contained in the Amendment before the Bill was introduced, and that proposals should have been brought forward in order to achieve the objective that we set out here, even if the Financial Secretary says that these administrative difficulties are involved. If I thought that these administrative difficulties should be taken seriously I would not have put down this Amendment, after the letter I received from the Chief Secretary, which was all about the administrative difficulties and how it was not practicable to have a stamp which excluded the tax appropriate for a particular category of employee.

This is what the Financial Secretary has told me again this evening and I do not accept that, because there are quite a large number of stamps already and a few more would not wreck the whole of the National Insurance Scheme. I quite appreciate that measures would have to be incorporated in the scheme for giving this rebate so as to ensure that no evasion took place, but I do not think that large numbers of employers, active in the export industry, are working out how they can "diddle" the Government out of 25s. a week by saying that someone was abroad for one week longer than he actually was.

People are not such big tax evaders as some of the Government Front Bench apparently think. We had this all through the Finance Bill last year, and we are having it again now. They think that all of the taxpayers of the country are busy working out how they can avoid paying these small sums. I agree that there has been a considerable amount of tax evasion, but I do not think, if we are

looking at the narrow terms of the Amendment, that that is likely to take place.

Having all of these considerations in mind, and bearing in mind that even should the Government decide to do something about the principle contained in the Amendment we should have to wait for at least a year, until the next Finance Bill, I must advise my hon. and right hon. Friends to divide against the Government on this occasion.

Question put, That those words be there inserted:—

The Committee divided: Ayes 109, Noes 141.

Division No. 72.] AYES [1.43 a.m.
Alison, Michael (Barkston Ash) Gurden, Harold Noble, Rt. Hn. Michael
Atkins, Humphrey (M't'n & M'd'n) Hall-Davis, A. G. F. Onslow, Cranley
Awdry, Daniel Harrison, Col. Sir Harwood (Eye) Orr, Capt. L. P. S.
Bennett, Sir Frederic (Torquay) Hastings, Stephen Osborn, John (Hallam)
Bennett, Dr. Reginald (Cos & Fhm) Heald, Rt. Hn. Sir Lionel Page, Graham (Crosby)
Berry, Hn. Anthony Heseltine, Michael Pardoe, John
Bessell, Peter Higgins, Terence L. Pearson, Sir Frank (Clitheroe)
Biggs-Davison, John Hirst, Geoffrey Peel, John
Blaker, Peter Holland, Philip Pike, Miss Mervyn
Bossom, Sir Clive Hooson, Emlyn Pink, R. Bonner
Boyle, Bt. Hn. Sir Edward Hornby, Richard Powell, Rt. Hn. J. Enoch
Brinton, Sir Tatton Howell, David (Guildford) Pym, Francis
Bryan, Paul Jenkln, Patrick (Woodford) Ramsden, Rt. Hn. James
Buchanan-Smith,Alick [Angus, N&M) Johnston, Russell (Inverness) St. John-Stevas, Norman
Buck, Antony (Colchester) Jopling, Michael Scott, Nicholas
Campbell, Gordon Joseph, Rt. Hn. Sir Keith Shaw, Michael (Sc'b'gh & Whitby)
Carlisle, Mark King, Evelyn (Dorset, S.) Smith, John
Carr, Rt, Hn Robert Kirk, Peter Stoddart-Scott, Col. Sir M. (Ripon)
Chichester-Clark, R. Langford-Holt, Sir John Taylor, Frank (Moss Side)
Clark, Henry Legge-Bourke, Sir Harry Teeling, Sir William
Clegg, Walter Lloyd, Ian (P'tsm'th, Langstone) Thatcher, Mrs. Margaret
Cooke, Robert MacArthur, Ian Thorpe, Jeremy
Cortield, F. V. Maclean, Sir Fitzroy Tilney, John
Crosthwaite-Eyre, Sir Oliver Macleod, Rt. Hn. lain van Straubenzee, W. R.
Crouch, David McMaster, Stanley Vickers, Dame Joan
Crowder, F. P. Macmillan, Maurice (Farnham) Wainwright, Richard (Colne Valley)
Elliot, Capt. Walter (Carshalton) Maginnis, John E. Ward, Dame Irene
Elliott, R. W [N'c'tle-upon-Tyne,N Maude, Angus Weatherill, Bernard
Errington, Sir Eric Maydon, Lt.-Cmdr. S. L. C. Whitelaw, William
Eyre, Reginald Mills, Peter (Torrington) Wilson, Geoffrey (Truro)
Farr, John Mills, Stratton (Belfast, N.) Winstanley, Dr. M. P.
Fortescue, Tim Miscampbell, Norman Wood, Rt. Hn. Richard
Gilmour,Sir John (Fife, E.) Mitchell, David (Basingstoke) Woodnutt, Mark
Glover, Sir Douglas Morrison, Charles (Devizes) Younger, Hn. George
Grant-Ferris, R. Munro-Lucas-Tooth, Sir Hugh
Grieve, Percy Murton, Oscar TELLERS FOR THE AYES:
Griffiths, Eldon (BurySt.Edmunds) Neave, Airey Mr. Eric Lubbock and Mr. David Steel.
Grimond, Rt. Hn. J.
NOES
Abse, Leo Boardman, H. Concannon, J. D.
Albu, Austen Boston, Terence Crawshaw, Richard
Alldritt, Walter Bottomley, Rt. Hn. Arthur Davies, Dr. Ernest (Stretford)
Allen, Scholedfield Boyden, James de Freitas, Sir Geoffrey
Anderson, Donald Braddock, Mrs. E. M. Dell, Edmund
Armstrong, Ernest Bradley, Tom Dewar, Donald
Ashley, Jack Brooks, Edwin Diamond, Rt. Hn. John
Atkins, Ronald (Preston, N.) Brown, R. W. (Shoreditch & F'bury) Dickens, James
Atkinson, Norman (Tottenham) Buchan, Norman Doig, Peter
Bagier, Gordon A. T. Buchanan, Richard (G'gow, Sp'burn) Dunn, James A.
Barnett, Joel Callaghan, Rt. Hn. James Dunwoody, Dr. John (F'th & C'b'e)
Beaney, Alan Cant, R. B. Edelman, Maurice
Bidwell, Sydney Carter-Jones, Lewis Ellis, John
Blackburn, F. Coe, Denis English, Michael
Blenkinsop, Arthur Coleman, Donald Ensor, David
Evans, Albert (Islington, S.W.) Kelley, Richard Page, Derek (King's Lynn)
Fernyhough, E. Kenyon, Clifford Parker, John (Dagenham)
Fitch, Alan (Wigan) Kerr, Russell (Feltham) Parkyn, Brian (Bedford)
Fletcher, Ted (Darlington) Leadbitter, Ted Pentland, Norman
Floud, Bernard Lee, Rt. Hn. Jennie (Cannock) Perry, George H. (Nottingham, S.)
Foot, Michael (Ebbw Vale) Lever, Harold (Cheetham) Price, Christopher (Perry Barr)
Ford, Ben Lever, L. M. (Ardwick] Price, William (Rugby)
Forrester, John Lewis, Ron (Carlisle) Rees, Merlyn
Fowler, Gerry Luard, Evan Richard, Ivor
Fraser, Rt. Hn. Tom (Hamilton) Lyon, Alexander W. (York) Roberts, Albert (Normanton)
Freeson, Reginald Lyons, Edward (Bradford, E.) Roberts, Goronwy (Caernarvon)
Gardner, A. J. McBride, Nell Roberts, Gwilym (Bedfordshire, S.)
Garrett, W. E. McCann, John Robertson, John (Paisley)
Garrow, Alex MacDermot, Niall Rose, Paul
Ginsburg, David Macdonald, A. H. Rowland, Christopher (Meriden)
Gordon Walker, Rt. Hn. P. C. Mackenzie, Gregor (Rutherglen) Rowlands, E. (Cardiff, N.)
Gourlay, Harry McMillan, Tom (Glasgow, C.) Shaw, Arnold (Ilford, S.)
Gregory, Arnold Macpherson, Malcolm Silkin, John (Deptford)
Griffiths, David (Rother Valley) Mahon, Peter (Preston, S.) Summerskill, Hn. Dr. Shirley
Griffiths, Will (Exchange) Mahon, Simon (Bootle) Swingler, Stephen
Hamilton, William (Fife, W.) Manuel, Archie Thomas, George (Cardiff, W.)
Hannan, William Mapp, Charles Tinn,James
Hattersley, Roy Mayhew, Christopher Urwin, T. W.
Hobden, Dennis (Brighton, K'town) Mitchell, R. C. (S'th'pton, Test) Varley, Eric G.
Hooley, Frank Morris, Charles R. (Openshaw) Wainwright, Edwin (Dearne Valley)
Horner, John Moyle, Roland Walden, Brian (All Saints)
Howarth, Harry (Wellingborough) Neal, Harold Watkins, David (Consett)
Howie, W. Newens, Stan Well, William (Walsall, N.)
Hughes, Emrys (Ayrshire, S.) Norwood, Christopher Whitlock, William
Hughes, Roy (Newport) Ogden, Eric Willis, George (Edinburgh, E.)
Jackson, Colin (B'h'se & Spenb'gh) O'Malley, Brian TELLERS FOR THE NOES:
Jackson, Peter M. (High Peak) Orme, Stanley Mr. George Lawson and
Jones, J. Idwal (Wrexham) Owen, Dr. David (Plymouth, S'tn) Mr. Edward Bishop.

Amendment proposed: In page 48, line 27, at end insert: Provided that in the case of persons who are employed for between eight and twenty hours a week the tax shall be at one-half of the above-mentioned amounts and in the case of persons employed between twenty and thirty hours a week the tax shall be at the rate of

three-quarters of the above amounts.—[Mr. Grimond.]

Question put, That those words be there inserted:—

The Committee divided: Ayes 105. Noes 139.

Division No. 73.] AYES [1.53 a.m.
Alison, Michael (Barkston Ash) Gurden, Harold Noble, Rt, Hn. Michael
Atkins, Humphrey (M't'n & M'd'n) Hall-Davie, A. G. F. Onslow, Cranley
Awdry, Daniel Harrison, Col. Sir Harwood (Eye) Orr, Capt. L. P. S.
Bennett, Sir Frederic (Torquay) Hastings, Stephen Osborn, John (Hall[...]am)
Bennett, Dr. Reginald (Gos. & Fhm) Heald, Rt. Hn. Sir Lionel Page, Graham (Crosby)
Berry, Hn. Anthony Heseltine, Michael Pardoe, John
Bessell, Peter Higgins, Terence L. Pearson, Sir Frank (Clitheroe)
Biggs-Davison, John Hirst, Geoffrey Peel, John
Blaker, Peter Holland, Philip Pink, R. Bonner
Bossom, Sir Clive Hooson, Emlyn Powell, Rt. Hn. J. Enoch
Boyle, Rt. Hn. Sir Edward Hornby, Richard Pym, Francis
Brinton, Sir Tatton Howell, David (Guildford) Ramsden, Rt. Hn. James
Bryan, Paul Jenkin, Patrick (Woodford) St. John-Stevas, Norman
Buchanan-Smith, Alick (Angus, N&M) Johnston, Russell (Inverness) Scott, Nicholas
Buck, Antony (Colchester) Jopling, Michael Shaw, Michael (Sc'b'gh & Whitby)
Campbell, Gordon Joseph, Rt. Hn. Sir Keith Smith, John
Carlisle, Mark King, Evelyn (Dorset, S.) Stoddart-Scott, Col. Sir M. (Ripon)
Carr, Rt. Hn. Robert Kirk, Peter Taylor, Frank (Moss Side)
Chichester-Clark, R. Legge-Bourke, Sir Harry Teeling, Sir William
Clark, Henry Lloyd, Ian (P'tsm'th, Langstone) Thatcher, Mrs. Margaret
Clegg, Walter MacArthur, Ian Thorpe, Jeremy
Cooke, Robert Maclean, Sir Fitzroy Tilney, John
Corfield, F. V. Macleod, Rt. Hn. Iain Vickers, Dame Joan
Crosthwaite-Eyre, Sir Oliver McMaster, Stanley Wainwright, Richard (Colne Valley)
Crouch, David MacMillan, Malcolm (Western Isles) Ward, Dame Irene
Elliot, Capt. Walter (Carshalton) Maginnis, John E. Weatherill, Bernard
Elliott, R.W. (N'c'tle-upon-Tyne,N.) Maude, Angus Whitelaw, William
Errington, Sir Eric Maydon, Lt.-Cmdr. S. L. C. Wilson, Geoffrey (Truro)
Eyre, Reginald Mills, Peter (Torrington) Winstanley, Dr. M. P.
Farr, John Mills, Stratton (Belfast, N.) Wood, Rt. Hn. Richard
Fortescue, Tim Miscampbell, Norman Woodnutt, Mark
Gilmour, Sir John (Fife, E.) Mitchell, David (Basingstoke) Younger, Hn. George
Glover, Sir Douglas Morrison, Charles (Devizes)
Grant-Ferris, R. Munro-Lucas-Tooth, Sir Hugh TELLERS FOR THE AYES:
Grieve, Percy Murton, Oscar Mr. Lubbock and
Griffiths, Eldon (Bury St. Edmunds) Heave, Airey Mr. David Steel.
Grimond, Rt. Hn. J.
NOES
Abse, Leo Fletcher, Ted (Darlington) Mahon, Simon (Bootle)
Albu, Austen Floud, Bernard Manuel, Archie
Alldritt, Walter Foot, Michael (Ebbw Vale) Mapp, Charles
Allen, Scholefield Ford, Ben Mayhew, Christopher
Anderson, Donald Forrester, John Mitchell, R. c (S'th'pton, Test)
Armstrong, Ernest Fowler, Gerry Morris, Charles R. (Openshaw)
Ashley, Jack Fraser, Rt. Hn. Tom (Hamilton) Moyle, Roland
Atkins, Ronald (Preston, N.) Freeson, Reginald Neal, Harold
Atkinson, Norman (Tottenham) Gardner, A. J. Newens, Stan
Bagier, Gordon A. T. Garrett, W. E. Norwood, Christopher
Barnett, Joel Garrow, Alex Ogden, Eric
Beaney, Alan Ginsburg, David O'Malley, Brian
Bidwell, Sydney Gordon Walker, Rt. Hn. P. C. Orme, Stanley
Bishop, E. S. Gourlay, Harry Owen, Dr. David (Plymouth, S'tn)
Blackburn, F. Gregory, Arnold Page, Derek (King's Lynn)
Blenkinsop, Arthur Griffiths, David (Bother Valley) Parkyn, Brian (Bedford)
Boardman, H. Griffiths, Will (Exchange) Pentland, Norman
Boston, Terence Hamilton, William (Fife, W.) Perry, George H. (Nottingham, S.)
Bottomley, Rt. Hn. Arthur Hannan, William Price, Christopher (Perry Barr)
Boyden, James Hattersley, Roy Price, William (Rugby)
Braddock, Mrs. E. M. Hobden, Dennis (Brighton, K'town) Rees, Merlyn
Bradley, Tom Hooley, Frank Richard, Ivor
Brooks, Edwin Horner, John Roberts, Albert (Normanton)
Brown, R. W. (Shoreditch & F'bury) Howarth, Harry (Wellingborough) Roberts, Goronwy (Caernarvon)
Buchan, Norman Howie, W. Roberts, Gwilym (Bedfordshire, S.)
Buchanan, Richard (G'gow, Sp'burn) Hughes, Emrys (Ayrshire, S.) Robertson, John (Paisley)
Callaghan, Rt. Hn. James Hughes, Roy (Newport) Rose, Paul
Cant, R. B. Jackson, Colin (B'h'se & Spenb'gh) Rowland, Christopher (Meriden)
Carter-Jones, Lewis Jackson, Peter M. (High Peak) Rowlands, E. (Cardiff, N.)
Cos, Denis Jones, J. l[...]dwal. (Wrexham) Shaw, Arnold (Ilford, S.)
Coleman, Donald Kelley, Richard Silkln, John (Deptford)
Concannon, J. D. Kenyon, Clifford Summerskill, Hn. Dr. Shirley
Crawshaw, Richard Kerr, Russell (Feltham) Swingler, Stephen
Davies, Dr. Ernest (Stretford) Leadbitter, Ted Thomas, George (Cardiff, W.)
de Freitas, Sir Geoffrey Lee, Rt. Hn. Jennie (Cannock) Tinn, James
Dell, Edmund Lever, L. M. (Ardwick) Urwin, T. W.
Dewar, Donald Lewis, Ron (Carlisle)
Diamond, Rt. Hn. John Luard, Evan Varley, Eric G.
Dickens, James Lyon, Alexander W. (York) Wainwright, Edwin (Dearne Valley)
Doig, Peter Lyons, Edward (Bradford, E.) Walden, Brian (All Saints)
Dunn, James A. McBride, Neil Watkins, David (Consett)
Dunwoody, Dr. John (F'th & C'b'e) McCann, John Weils, William (Walsall, N.)
Edelman, Maurice MacDermot, Niall Whitlock, William
Ellis, John Macdonald, A. H. Willis, George (Edinburgh, E.)
English, Michael Mackenzie, Gregor (Rutherglen)
Ensor, David McMillan, Tom (Glasgow, C.) TELLERS FOR THE NOES:
Evans, Albert (Islington, S.W.) MacPherson, Malcolm
Fernyhough, E. Mahon, Peter (Preston, S.) Mr. George Lawson and Mr. Alan Fitch.
Mr. David Steel (Roxburgh, Selkirk and Peebles)

I beg to move Amendment No. 38, in page 48, line 27, at the end to insert: Provided that in the case of persons attending courses provided or approved by an industrial training board the tax shall be one penny.

The Deputy Chairman

The Committee may discuss, at the same time, Amendment No. 23, in line 24, after "eighteen", insert "or an indentured apprentice", and Amendment No. 26, in line 26, after "eighteen", insert "or an indentured apprentice". Perhaps I ought to explain for the information of the Committee that these two Amendments have, technically, fallen—they were published in Monday's Notice Paper on pages 872 and 873—but it was felt that it would be for the convenience of the Committee if the substance of them was discussed on Amendment No. 38.

Mr. Steel

The purpose of the Amendment is that persons for whom the tax would normally be paid should not have it paid for them during the period when they are attending a course under an industrial training board. The other Amendments that we are discussing at the same time relate to exemptions for apprentices.

I submit that mine is a better Amendment since apprentices, by and large, would be covered by the exemption proposed under the age of 18. In any case, the scope of my Amendment is much wider. As the Central Training Council said in its Report to the Minister of Labour in November, 1965: The need for training does not end at 21 or at any other arbitrarily determined age. The concept of apprenticeship served in a man's teens which will enable him to pursue a sharply defined occupation for the rest of his working life is bound to become increasingly unrealistic. It is likely to become the rule rather than the exception that men and women will need retraining in adult life either to bring them up to date in their own occupation or to enable them to do a different kind of work altogether. That has precisely been the object of the Government, to encourage the use of the industrial training centres and to continue the establishment of further industrial training boards. If. we are to encourage this as a matter of public policy and modernise not only the machinery of our industries, but the working of them, we ought to produce every incentive for the facilities offered by the industrial training boards to be used.

As things stand at present, very few of those who make use of the facilities of the industrial training boards come from the service industries. By and large, the industrial training boards cover manufacturing industries. But that is not entirely true. The engineering industry, for example, may include people employed in a garage, which would be regarded by the Chancellor as subject to the Selective Employment Tax. Moreover, surely it is not the intention of the Government that the industrial training boards should be restricted to those at present in existence. There will be further training boards established in the future which are more likely to be relevant to the service industries.

I believe that our Amendment offers an incentive for the furtherance of the Government's own policy of encouraging the use of industrial training boards. For that reason, I suggest that it ought to be accepted by the Treasury Bench.

In speeches on previous Amendments, we have heard a great deal about administrative convenience. I suppose that it is now accepted that one has to spend part of one's speech arguing about administrative difficulties. However, I would have thought that they were not great in this case. People do not go to an industrial training centre for a couple of days at a time. They go for a longer period. If necessary, responsibility for their National Insurance cards could be transferred for that period to the industrial training board, so that the Chancellor could not argue that the Treasury would be deprived of revenue due to people arguing that their employees were at industrial training centres when they were not.

I do not see grave administrative difficulties. This is a sensible Amendment, and I hope that it can be accepted.

Dr. Reginald Bennett (Gosport and Fareham)

I wish to support the Amendment, because it is a most valuable provision. I think that it is one which we could all support with a will. It is designed to encourage industrial training and retraining, and surely it is the feeling of all that they should be encouraged.

It is quite incredible that we should seek to tax, punish and penalise industrial training. I do not know what can be going through the minds of a Government who want to do so, because I would have thought that it was Government policy to encourage it; yet, in the Bill, we have the actual discouragement of it.

Those who are receiving training or retraining are at a relatively unproductive stage in their careers. They are not producing the support for the companies which employ them which they would otherwise do. Why clap an extra fine on the employment of such people at a moment when they are particularly vulnerable? It seems to be inexorable that, if the tax is allowed to remain on people undergoing industrial training and retraining, employers will feel strongly inclined to chuck it.

To allow this to go out from Parliament as a possible mechanism encouraged by the Government in power is nothing less than disastrous. I add my strongest support to the Amendment.

Mr. A. G. F. Hall-Davis (Morecambe and Lonsdale)

I support strongly the Amendment which has just been moved by the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel).

The Industrial Training Act was one of the most important and constructive measures passed by the House in recent years, and perhaps also one of the least generally appreciated in the country, and one, the true value of which has not yet been fully understood. It has, however, placed a considerable obligation on industry to provide training facilities. It is an obligation which has called for a substantial effort of organisation as well as considerable financial outlay. Therefore, anything that we can do in the House from time to time, and, of course, particularly under the Bill, to encourage industry to press ahead with these schemes is, I believe, well worth the support of this Committee.

As the hon. Gentleman said, at the moment the majority of these boards relate to manufacturing industry, but I hope that the Government will not continue to follow this blind and shortsighted policy of focusing all their interest and encouragement only on manufacturing industry. I trust that this may be a passing phase of delusion, and that they will recognise increasingly in the months and years ahead the true importance of the service industries, and that we shall have a development of these training boards for the service industries such as I think is generally contemplated by these industries themselves.

I would also like to echo what the hon. Member fox Roxburgh, Selkirk and Peebles said about overcoming the argument from the Treasury Bench about administrative difficulties. When I reflect on this Amendment, when I consider the reams of paper which appeared on my desk in another capacity in connection with the Industrial Training Act, when I think of the levies by which money is to be raised to implement that Act, when I think of the suggestions as to how it should be dispersed to industries which are discharging their obligations so that an unfair burden is not cast on them, I wonder whether it will be possible for the Chief Secretary even to hint that there may be administrative difficulties which cannot be overcome in such a simple requirement as meeting the terms of this Amendment.

I hope that we shall get a favourable reply to the Amendment, and that at any rate this opportunity of encouraging a worthy cause will not be missed by the Government.

Mr. Maurice Macmillan

I support the Amendment. I think that the work of the industrial training boards and all other training, including the apprenticeship scheme referred to in one of the Liberal Amendments, should be supported in every possible way.

I ought perhaps to mention a faint interest which I have in this matter in a technical sense as an educational publisher. From that point of view, I know the fine work which the boards are beginning to do, not only directly with firms, but in research into training methods and new training techniques, and in the encouragement which they are giving to some of us who are experimenting in these matters.

The point was made that most of the boards are concerned with manufacturing industry. This is true for the time being, but even now I do not think that their training schemes are confined to firms which are engaged in manufacturing industry. I speak with diffidence at this hour of the morning, not quite trusting my memory, but I seem to recall a maintenance engineering firm using the training plans and schemes of, and working under, the engineering industrial training board, although none of its employees will qualify for a subsidy under this tax.

I am told that the training schemes operated by the boards will extend to marketing and allied techniques, and into such questions as consumer research, and that they are already blossoming into such trades as catering, but at the moment these are rather in their infancy.

There is one aspect to which I should like to refer specifically, and that is the extent to which training could be possible for firms whose primary rôle is one of consultation. Right hon. and hon. Gentlemen will have seen the description in the newspapers fairly recently of firms earning large figures in the export market although they do no manufacturing themselves but merely organise the manufacture of components, the assembly of those components into sub-assemblies, and into final assembly overseas.

2.15 a.m.

This is an increasing field of specialisation in the construction industry and in other industries, too, and I think it important that firms of that nature which at the moment, alas, do not attract the rebate or the subsidy, should at least be relieved of the tax when their employees are training with the training boards.

I would like to ask the Chief Secretary what is the position now for employees of firms in the service industries which do not get any rebate or subsidy who are retraining with the possibility as part of the redundancy plan of leaving that industry and going into manufacturing industry, and who are still on the payroll of the service industry during the training period.

I would ask the Chief Secretary whether he would kindly spare us the slightly thin argument about administrative difficulties which we have had repeatedly from the Financial Secretary. It is all very well suggesting that concessions are too difficult administratively, but I must remind him that his Government has caused most of the administrative burden he is complaining about and that he cannot use the confusion he has caused himself as an excuse for not righting some of the injustices he has helped to create.

It is a long time since the Financial Secretary thought that he might have sounded inhuman. I do not think that he did sound inhuman. He just showed that his Government is not all that concerned to will the means which alone can carry out the end.

I would also remind the Chancellor of the extent to which the Selective Employment Tax is leading the Government—not out of malice I think—inevitably into breaking their promises. Harking back for one second, the disabled were promised that their advance would be independent of our economic programme, and the tax has made nonsense of that. The Government made a great deal of how they would treat exporters, but have done little except damn with faint praise the Liberal Amendment and vote it down. Now, I suppose, their enthusiasm for modernising, retraining and all the rest of it will not go so far as accepting the Amendment and using the S.E.T. for once to help and not to hinder.

I see the difficulty which the Chancellor and the Chief Secretary are in. Once one gets as selective a tax as this it is very difficult to decide which of the Amendments one can accept, and I can see that once the Chancellor starts accepting them he has embarked upon a series of value judgments, and the Committee has shown that its values are totally different to those of the Treasury Bench.

A short while ago I accused the Chancellor of arrogance. I think that I was wrong and that rather he is helpless. He is caught up in the appalling logic of the incompetence of this Government, and it is that which is drifting him—and, if he is not careful, the country—to disaster.

Mr. Grieve

I support the Amendment, which is an important one because it is designed to encourage the use of industrial training boards and courses of a kind in our society, where they fulfil an increasingly important rôle—a rôle which need not be underlined, because it stands out in an age where technical education is becoming vital to the life of the nation and the manufactures by which we live.

I entirely agree with my hon. Friends the Members for Gosport and Fareham (Dr. Bennett), Morecambe and Lonsdale (Mr. Hall-Davis) and Farnham (Mr. Maurice Macmillan), who underlined the importance of the fact that men should go for courses and training of the kind, but I want to approach the problem which arises on any Amendment of this kind from the point of view of the employer. It is vitally important that the employer should be encouraged to let his men go to courses of this kind and to see that the men working for him increase their technical knowledge and aptitudes.

It would discourage him if, in addition to paying their salaries when they are away, he had to pay this heavy tax to the State. It would encourage him to see to their education if he did not have to bear this extra burden of tax.

For these reasons I submit that the Amendment should be supported. I hope that we shall hear from the Chief Secretary the expression which we heard nightly—and almost hourly—during the long watches of the night of last year's Finance Bill, when we were discussing Corporation Tax and Capital Gains Tax, when problems which appeared to us of great gravity were dismissed by the right hon. Gentleman with a smile on his face and with the words "Simplicity itself". Surely it will be simplicity itself for the Government to devise a means whereby employers sending their men to courses of this kind can be exempted from this tax. If it is not simplicity itself it is the fault of the Government.

Only a few minutes ago my hon. Friend the Member for Farnham said that they have brought on themselves the difficulties which have come out in Clause after Clause. They have forced this new tax into this Procrustean bed of collection through the Ministry of Labour, and they it is who are maiming and chopping the limbs of our national life in order to force this tax into that bed.

Mr. Alick Buchanan-Smith (North Angus and Mearns)

I support the Amendment. It is worth reminding ourselves of the purposes of the Industrial Training Act. I want to quote from the guide given to employers by the Ministry of Labour in April, 1964. On page 6 it says: The Industrial Training Act has three main objectives—to ensure an adequate supply of properly trained men and women at all levels of industry and to secure an improvement in the quality and efficiency of industrial training. There are two very worthwhile objectives, which it must be the duty of hon. Members to support. But if the tax is imposed as at present suggested it will hit at the achievement of these two objectives. The guide also pointed out that it is not just a question of the objectives, but of the kind of industries which will be helpd by the working of the industrial training boards.

For example, in a questionnaire prepared in this guide, on page 7, under the heading, "Does the Act apply only to manufacturing industries?", it says: The Act covers all activities of industry and commerce. That includes, for example, agriculture, distribution, finance, banking and insurance, in addition to the manufacturing industries. The guide, from the Ministry of Labour, stresses the breadth of the Act and the benefit to all sections of industry, not only manufacturing, but the service industries as well.

If the Government do not accept the Amendment, they will show that they want to put a check on training in the service industries as well as in the manufacturing industries. This is a particularly retrograde step when these industrial training boards are in their infancy and just getting under way. It puts a burden on the employer who lets his employees go on industrial training courses, which is added to the many burdens they already have to bear and a severe discouragement to employers to send men to training of this kind.

One example of this is the particular problem facing firms in some of the remoter areas, as I am sure many hon. Members representing such areas will testify.

One of the problems in training men for industry in the remoter areas is that after men are trained, whether they are apprentices or have received some form of further training, there is some wastage and people leave. In developed areas, where there is a fairly good complex of industry, firms are often compensated for the men they lose by gaining trained men from another firm or other apprentices who have completed their training. But in a town or area like the remote area which I represent in North-East Scotland, there may be only one firm of that type. When a person's training is finished, and he chooses to leave that firm or area, there is no other firm from which his present firm can get back another employee with similar training.

The result is that firms in areas like this are faced with far higher training costs than firms in areas where industry is more developed. A letter from an engineering firm in my constituency reads: This firm has been compelled for many years to train engineering apprentices and draughtsmen in quantities for beyond the number which would be normally required for an organisation of our size. This is mainly due to the constant migration of trained craftsmen and technicians to the south. This is the kind of problem faced by firms in constituencies like mine. They have particularly high costs of training men in their industries.

Unless the Chief Secretary is prepared to accept the Amendment, he will put a disproportionate burden on firms which already have to face a relatively greater burden than those in other, more developed areas. I therefore ask him to consider not only the general implications of the tax if applied in the way in which he seems to want to apply it, but its implication for the remoter areas, and to show more sympathy for these areas than he has shown in earlier stages of our debate on the Bill.

Mr. Pavitt

I have some sympathy with the Amendment so ably moved and supported by hon. Members opposite. I wish to address myself mainly to the Bill's impact on the retail distributive trades. The Industrial Training Act covers a wide field, and is just beginning to have its effect on the 800 or more Cooperative societies. It is particularly heavy because there is a long history in the Co-operative movement of attempting to raise professional standards in retail distribution.

In fact, the first co-operative society, in Rochdale in 1844, laid down a rule which has been followed by every society since, that 5 per cent. of the surplus should be spent on education. Although, in the early days, this meant mainly libraries and the start of things like the W.E.A., latterly this has gone to creating the Co-operative College at Loughborough, which carries out industrial training in retail distributive trades. So most co-operative societies, before the impact of the Industrial Training Act came into being, were finding quite a large sum in order to train retail staff to become efficient and more productive.

2.30 a.m.

I therefore have considerable sympathy with the mover of the Amendment. Nevertheless, I must say that this raises a question of priorities, and I plump for the issue on which I spoke previously. If we are to have any concession at all, I should like to see it granted to the part-timers and to the disabled and deaf. I am not prepared to press further on some of the other items, although I concede their importance and their difficulties. I have to accept the wide basis of the tax.

Accordingly, although I have a considerable amount of sympathy for many of the other items, and if I thought it were possible to obtain concessions for them I would be prepared to be a little more forceful on their behalf, I merely want to make these few comments to my right hon. Friend the Chief Secretary in the hope that he will bear them in mind, with the further refinements of this tax which we shall see, no doubt, in the next 25 to 50 years.

Dame Irene Ward

This is a very important Amendment. It is agreed on both sides of the Committee that industrial training is of the utmost importance to the economy of the country. Certainly, in my part of the country, industrial training is a development on which a stable and expanding economy really depends. During the time in which we have had the establishment of the industrial training centres and the introduction of the Industrial Training Act, many employers have recognised the need for industrial training with great enthusiasm, and we have always been delighted to commend those employers. On the other hand, we have been aware of many employers, perhaps not so well equipped for industrial training as some others, who have paid very little attention to the efforts that have been made by all parties to promote industrial training.

I have an uncomfortable feeling that this Amendment will not be accepted, and that the answer we will receive will be that in the manufacturing industries the money will be returned. However, I do not think that that is the most important issue raised by the Amendment. The most important issue is that if the Government do not accept the Amendment we are not saying to those employers who have helped, "Well done. We shall not put you to any further inconvenience." We shall be adding to the discouragement of those employers who have been prepared to take advantage of the industrial training facilities, and that would be regrettable. I would like some benefit to be derived by those who are co-operative and who make supreme efforts, often at great inconvenience to the internal management of industrial establishments.

I cannot help feeling that, all through the discussions on the Bill, there has been little discussion by Treasury Ministers with other Ministers. The Treasury tends to live in a white tower of its own. I do not think that it has the knowledge of industry and management that other Departments have. A lot of gossip comes down because there is a good grapevine in the House of Commons, and I get the impression that the whole problem of the tax was not known to other Ministers outside the Treasury.

Mr. Grieve

It was an Anglo-Hungarian secret, was it not?

Dame Irene Ward

I am reserving my views on the Hungarians for another time. I cannot wait for an opportunity to discuss Hungarian participation in the preparation of the Bill. But I shall not do so now because, fortunately, the Departments which deal with the problems of industrial training are not so influenced by Hungarians as is the Treasury. This is a British matter we are discussing at the moment.

Has the Chief Secretary discussed with other Ministers the whole process of the need to encourage industrial training? If he has, I am certain that he will have had an answer to the proposition that I am putting to the Committee—that we must give all the encouragement we can to those who have played no part so far in recent years in the industrial training programme.

I know that it is not supposed to be in order to discuss what one Minister does or does not say to another. That is a ridiculous part of our constitution. But we get on better in Parliament if we are able to get at the Treasury more often. Ministers are, I am sure, longing for some of the things being put forward by back benchers on both sides, but have to pretend that they are pleased to disagree with them. But they cannot say in public that it is the Treasury's fault that they cannot accept such proposals. I give a perfect example.

Has the Chief Secretary consulted the Minister of Labour? If so, what was the Minister's reaction? Would he have been pleased to accept the Amendment? If the right hon. Gentleman can say, with hand on heart, that the Minister of Labour would not like the Amendment, I would like to know the reason. I have a shrewd suspicion that the Minister of Labour would be thrilled to have the Amendment. I hope that the Chief Secretary will feel inclined to give a bit of sugar to the birds which have been sitting on the perch for a very long time.

Mr. Hastings

I congratulate the right hon. Gentleman the Leader of the Liberal Party on bringing this important Amendment forward. We have heard most forceful advocacy of it from my hon. Friend the Member for Tynemouth (Dame Irene Ward), who accused the Chief Secretary of being in an ivory tower. Anyone who has had any experience of the administration of this country for more than 20 minutes sees that the Treasury does reside in an ivory tower. This is as good a subject as any on which to invite the Chief Secretary to leave it to consider what can be done about this.

We have had two questions on the last three Amendments, all of supreme importance to the economy. First, there was the question of encouraging exports and now there is the question of encouraging industrial training. Can the Government turn their imagination to some method of seeing that an incentive can be produced through the Bill?

I do not know whether my hon. Friends would agree, but I think that the only conceivable advantage of this wretched measure so far is that it could perhaps be used in some sectors to provide an incentive by its removal. If that cannot be done, there is not a word to be said for it. We at least heard a speech from the other side of the Committee on this Amendment, and that was a change. When the hon. Member for Willesden, West (Mr. Pavitt) got up, I thought that he was going to make a forceful case in favour of something which must clearly make sense to everybody who sits in the Committee at the moment, but he finished by saying that because he failed to get the Government to agree to support the last Amendment, or series of Amendments, he saw no purpose in advocating that they should support this one.

If that is the best the Government supporters can do on a matter as important as industrial training, we shall not get very far in the Committee. The best we can do is to go on advocating these matters for as long as we can, however long it takes to get through. I suppose that I have an interest to declare, and I apologise for not doing so before, because I am on the board of a company which deals with industrial training. One cannot exaggerate the importance of encouraging industry to see the value of industrial training. One is always on an uphill struggle here, because it is almost impossible to prove at the end of a course of management training of any kind—many are available—that there has been direct commercial advantage.

We all know that industrial training makes sense, but the cost to a company of letting its managers or important executives attend a period of training is not readily appreciated. Somebody else has to take their place, it costs money; business is business, and where is the gain? This is a very real problem, not only for the sector which the Government more or less look after but also among those who take it into their own hands to do something about it commercially. I am sure that anybody who has been connected with the problem will support what I have been saying.

We hope for something more forthcoming from the Chief Secretary than we have had so far this evening, for some encouragement and some promise of a solution which will meet the purpose of the Amendment.

2.45 a.m.

Mr. Diamond

Every one of us must welcome the constructive speeches which have been made, without exception approving the principle of training and retraining. I am very grateful for everything that hon. Members have said on this topic, and I hope that the debate will succeed in encouraging more and more employers to see the wisdom of sending their employees or apprentices to be trained, because in that direction lies a possible solution to many of our difficulties.

I assure every hon. Member that we as a Government want to encourage training in every possible way and to see that it is carried more and more widely, both through the boards which are referred to here and through what the hon. Member for Mid-Bedfordshire (Mr. Hastings) referred to, training schemes which were not within the Bill, but which are, nevertheless, helpful and useful.

For those referred to in the Amendment there is a very real encouragement in the form of the grant which is paid to every employer according to the number of employees he sends to an industrial training establishment. That is the existing position. We want to encourage that. We are taking steps in the Bill to encourage the process of sending more and more people to be trained.

First, we are encouraging it by introducing a Bill which, for the first time, makes every employer think about the number of people he employs, which makes every employer realise more keenly than ever before that an employee is precious and that he must treat his labour as one of his most precious assets. Not only must he be economical in the use of labour, but he must get the best out of it. Getting the best out of his labour means training his employees to do jobs which are more skilled than they are capable of doing at present. It means training and retraining. This is something which the tax encourages.

I have said before that the reaction to the tax has in some measure been an indication of the attention to which employers are giving, in some cases for the first time, to this situation, recognising, again for the first time in many cases, perhaps, that the shortage of labour is a continuing one which they must cope with by being ever more efficient in the use of labour. This is one of the things we are doing by this very tax and this education, if I may put it in that way, to employers as a whole.

The encouragement here is to both manufacturing and services. It is quite wrong to think that we are married—I think that is what my hon. and learned Friend the Member for Solihull (Mr. Grieve) said—to manufacturing employers. It is of benefit to service employees as well as to manufacturing employees that they should train and become more skilled at whatever task they are carrying out. This is the way to the greater efficiency which is vital for the development of our country. The Bill gives encouragement, first, in that very general way.

Secondly, there is the concentration on manufacturing. As all hon. Members have said, there is at present, though it is not necessarily a permanent condition, considerably more likelihood that the trainee in question will be a trainee in manufacturing industry, for whom the refund will be payable. Here is a direct encouragement, if the S.E.T. can be said to have any effect of either an incentive or deterrent kind on training. I doubt that it has much effect either way, but, if it has an effect, inasmuch as more trainees will be in manufacturing than in the services, it will be an encouragement. It is in those two ways that the Bill itself is an encouragement to training.

Sir J. Eden

It is an abstruse argument if the Minister is saying that payment of the premium to manufacturing industry is in some way an encouragement to industrial training. How does he work that out? Does he claim that the existence of the Selective Employment Tax as at present proposed is an incentive to manufacturers to send people to industrial training when they might otherwise not wish to do so?

Mr. Diamond

Perhaps I could repeat the argument. What I am saying is that, in the first place the introduction of the Bill, with the attention it draws to the need to treat labour in a different way, and the attention it draws to the need for more economy and more efficiency in the use of labour, leads to the logical conclusion that what any intelligent employer, be he in services or manufacturing, should do is to get the best out of his labour, to use the potential of each employee to the full; and that can only be done by training, or further training if necessary.

Mr. Grieve rose——

Mr. Diamond

It would be more convenient if I answered one hon. Gentleman before there is another interruption.

The second point that I am making is that if it is said, and I do not accept this, that S.E.T. is a consideration more relevant than the payment of wages—which is said to be a relevant consideration, because if one pays a man wages one wants him to work, in the short-term rather than the long-term view—I am bound to say that inasmuch as there are more trainees who attract a premium than there are trainees who attract a burden on to the employer then it is an inducement rather than a deterrent. For both these reasons it would be an encouragement to training.

Mr. Grieve

Does the Chief Secretary really mean it when he says that this tax will encourage economy in labour? I concede that so far as the service industries are concerned that may be so, but the Bill will have the reverse effect on the manufacturing industries. Will he not say so? It will encourage the hoarding of labour.

Mr. Diamond

Yes, I am saying that one of the results of the Bill will be to encourage the more efficient use of labour, overall. Putting on a tax of £300 million this year and £200 million in future years is bound to result, overall, in the more economic use of labour. Continual debates by hon. Members are bound to draw the attention of employers to this situation. What the Bill is doing is to encourage a greater sense of the importance and scarcity of labour, and of the need to train labour to get the best out of one's employees.

It is then suggested that this represents a deterrent to the service industries, inasmuch as there will be full payment and neither refund nor premium. This is not an argument that I can fully accept. The payment of wages, to an employer who does not have a sufficient regard for the importance of training, is the major deterrence. If he is not to be deterred by the payment of wages, then he will not be deterred by the payment of the tax in addition. If he is not to be deterred by the payment of wages of £15 or £20 a week, then he will not be affected by the additional 12s. 6d. or 25s. I do not accept that argument at all.

The other Amendment which we are considering relates to apprentices. The same arguments apply there. So far as apprentices are concerned, surely it is right that the tax should fall on apprentices because we are here concerned with consideration at the point of recruitment, where employees' long-term interests lie. It has been the fact that, hitherto, there has been too little consideration given to recruitment in manufacturing and too much to the service trades; and I might tell the Committee that this fact is demonstrated by comparative figures for this and other countries. Therefore, more consideration should be given to recruitment for manufacturing as opposed to services.

I am happy to accede to what every hon. Member has asked me to do, and that is to say nothing at all about administration. There is no need to say anything, because until the merit of the argument is made clear there is no need to say whether this or that is administratively possible. I think that this Amendment would discourage, rather than encourage, training, and, for that reason, I cannot recommend the Committee to accept it.

Sir Keith Joseph (Leeds, North-East)

I really am taken aback by the sheer effrontery of the Chief Secretary's substitute for argument. He was very courteous, but it was so obvious that he thought that, by taking a few minutes to say nothing, he might be able to satisfy this side of the Committee.

I think that the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) should take some modest pride in having promoted a very useful discussion, if only to have an absolute lemon of a reply from the Government. If I may say so, I think that he put his very strong case rather too modestly, but that fault, if one may call it such, was put right by my hon. Friends the Members for Gosport (Dr. Bennett), Farnham (Mr. Maurice Macmillan), Morecambe and Lonsdale (Mr. Hall-Davis), Solihull (Mr. Grieve), Mid-Bedfordshire (Mr. Hastings), North Angus and Mearns (Mr. Buchanan-Smith), and Tynemouth (Dame Irene Ward), and the hon. Member for Willesden, West (Mr. Pavitt), all of whom intervened briefly but most effectively.

Even in this sceptical Committee I do not think that there is anybody who believes that the Government want actively to discourage training, but here we have another example of the by-products of the evil mess into which the Government have got themselves by putting forward this thoroughly bad and wrongly-thought-out proposal. The Chief Secretary put forward an argument—if that is what one could call it—so casuistic that I apologise for pointing out this error. If it is true that this tax does remind employers of the value of employees in the service industries then, by the same argument, it is active encouragement to employers in manufacturing industry to any propensity they may have to overmanning.

The Chief Secretary based any argument such as he had on the thesis that there is no evidence that this extra cost will discourage training. I think that my hon. Friend the Member for Farnham made briefly, but precisely, the right argument. The cost of training, he said, is made up not only of the contribution to the training costs, but by the expensive distortion of business in having to replace the men sent on training. So this is a labour as well as a cost. It involves more outlay of effort than might be understood by the Government; yet, as I have said, the Government we believe, want to encourage training. Therefore, do not let it imagine that an extra cost of this sort will be anything but a disincentive which reduces the propensity on the part of employers to send people for training. 3.0 a.m.

It is a far wider matter than the right hon. Gentleman suggested. A number of my hon. Friends seemed to speak as if training interests only manufacturers. But my hon. Friend the Member for North Angus and Mearns was surely right when he said that, under the Industrial Training Act, training already affects larger numbers of enterprises far outside manufacturing. I have the last annual report of the Central Training Council, under which there is a main committee called the Commercial and Clerical Training Committee. That exists to supervise the training of commercial and clerical employees in manufacturing and service industries. Here is an example far outside the manufacturing sphere where training is sought to be encouraged by the Government by their training policy—a continuation of Conservative policy—whereas the Bill, as a by-product, will discourage it.

In the heart of the service field there is already a Construction Industry Training Board. There is intended to be a distributive trades training board and a hotel and catering industry training board. It is intended that there shall be banks and insurance industry training boards. Therefore, the training activities, under the Industrial Training Act, already extend deep into the service field. The right hon. Gentleman and my hon. Friends must realise that the discouragement which we on this side and the hon. Member for Willesden, West apprehend will be one of the by-products of this tax will reach into services even if the manufacturers are exempt.

We would not choose on our own account to go in for any sort of selectivity in this type of taxation, but, the Government having based this tax on selection, we are forced to reply to make their blunt selection less unjust and less against the national interest by modifying selectivity by further selectivity.

I ask the Chief Secretary to consider again the Amendment proposed by the hon. Member for Roxburgh, Selkirk and Peebles. It has far more validity than the Government seem to accept. As my hon. and learned Friend the Member for Solihull said, training should not only not be discouraged, but should be actively encouraged; and the Government are actively discouraging it.

The Chief Secretary pretended to believe that there was no case to answer. I hope that, having been shown the width of the training arrangements and how deeply they already penetrate the services field, he will think again about that very inadequate excuse. I hope that he will consider whether refund arrangements could be made authenticated by the training board. He must recognise that if the object is the better redeployment of labour training is central to it.

I should like the right hon. Gentleman also to consider the position of the industrial training board staffs. This is not the place to go deeply into the parallel Bill, but, as far as I can see from the classification in the Bill, industrial training board staffs will have to pay the levy without any refund or premium. However, this is a separate question which I hope the Government will consider before we come to the other Bill. I ask the Chief Secretary to take more seriously the solid speeches of all hon. Members who have spoken in this brief but important debate.

I hope that the hon. Member for Roxburgh, Selkirk and Peebles will stick to his guns. If he does, we shall be delighted to support him.

Mr. David Steel

I must reply briefly to what the Chief Secretary said. I am very grateful for the support of the right hon. Member for Leeds, North-East (Sir K. Joseph), who has great experience in these matters. He said that I had put a strong case modestly. This was because I thought that I was making a very modest request of the Government compared with some of the previous requests made by the Committee. I would never have dreamt of straying into the arguments about the ease of administration had it not been that this was a particular fondness of the Government. As the Chief Secretary did not stray into this matter, I take it that the Government accept that there are no difficulties in this case. Therefore, I am even more surprised that they have rejected this Amendment on its merits.

It was very ominous that the Chief Secretary began his reply with praise and commendation of the industrial training boards, because it is a habit of Ministers to praise whatever section of the community is being discussed, whether part-time workers or cooperatives or whatever, and to devote half their speeches to saying how useful they are, and then to spend the other half to rejecting Amendments to help those people.

Another characteristic of Government replies, and one which the Chief Secretary adopted, is that a section is devoted to a catalogue of directions in which the Government are encouraging development policies, whether for development areas or industrial training boards or whatever. Even granting all that the Chief Secretary claimed, that was an irrelevant argument. That is not the point in relation to the Bill and these Amendments.

The Chief Secretary said that the tax as a whole encouraged thought about the use of manpower. I accept that that is true in the service industries, but it certainly is not true in the manufacturing industries. To suggest that even in manufacturing industries employers will be impressed by the fact that we have sat here night after night discussing this tax, and that that will weigh on their minds more than the fact that the Government are giving them 7s. 6d. a head, is really not an argument which carries much weight.

I should have thought that this Amendment, in particular, should and could have been accepted. The right hon. Gentleman the Member for Leeds, North-East outlined the boards which have yet to be set up, and the encouragement they will give to service industries. If one were to accept the Chief Secretary's argument that the tax encourages thought about the use of manpower, one can also surely say that the Amendment also encourages thought about training and retraining facilities. It was the Chief Secretary himself whom I heard the other night referring to the totality of Government policy. If there were totality in Government policy about training and retraining schemes, then I should have thought he would have seen that here, by this Amendment, is an excellent opportunity to make sure that in the Bill reference is made to such schemes and incentives given to them.

The whole tax has been introduced without sufficient thought as to its side effects. The interesting thing is that all three parties here support the idea of tax on employment, as a boost to raising revenue, but this one has been thrown in in such an ill-considered manner that it cannot but have unfortunate side effects on certain sections of the community, while the opportunities for doing good by such a tax are being lost.

Mr. Hooson

I want very briefly to refer to the manifestly absurd statement which the Chief Secretary made when he said that my hon. Friend, in moving his Amendment, did not make a case on merits. The Chief Secretary said that he did not, in answering the case, have to refer to any administrative difficulties. What do we have to do to prove to the Government that a tax of 25s. a week is a disincentive to employers to send men for training? Why do we have to prove that simple fact, which is obvious to everybody?

Quite clearly, the enlightened employer who is sending some of his employees for training does not mind paying them a weekly wage for their own benefit. What he objects to very much is paying to the State an additional 25s. in respect of men whose training is for the benefit not only of himself but of the country as a whole.

I would have thought the merits of the case to have been made out, and the

truth is that the Chief Secretary has no reply to this Amendment, and chooses, therefore, to ignore the merits of the argument.

Mr. Daniel Awdry (Chippenham)

Throughout the 10 hours that we have been here—I have sat here for seven hours—not a single concession has been given by the Government. If we achieve any purpose here—I sometimes wonder whether we do—surely the one we might achieve is to enable hon. Members with some outside experience to put their views to the Government and perhaps convince them that when they look into the tax more closely they will find certain evil effects.

The point was made well by the hon. Member for Newcastle-upon-Tyne, East (Mr. Rhodes), several hours ago. He made a most sincere speech. He said that he spoke not as a member of the Co-operative Party, but as someone with a knowledge of trade. Other hon. Members have spoken with considerable knowledge of industry. They put forward good arguments, but they have been treated with contempt by the Chief Secretary in his reply. I am certain that the Government did not think of all these repercussions when they thought up the tax at the start. I do not blame them for that, because when one devises a new tax it must be difficult to think of all the repercussions.

But in reply to a debate in which there were good speeches we have had a Treasury brief answer read out dealing with points which were not raised and trying to argue completely different points. We have not had the slightest suggestion from the Chief Secretary that we have a good point here, that there is justice on our side. I ask him to say, even at this late stage, that we have made a good point and that he will see whether the injustice can be removed.

Question put, That those words be there inserted:—

The Committee divided. Ayes 102, Noes 137.

Division No. 74.] AYES [3.12 a.m.
Alison, Michael (Barkston Ash) Bennett, Dr. Reginald (Gos. & Fhm) Blaker, Peter
Atkins, Humphrey (M't'n & M'd'n) Berry, Hn. Anthony Bossom, Sir Clive
Awdry, Daniel Bessell, Peter Boyle, Rt. Hn. Sir Edward
Bennett, Sir Frederic (Torquay) Biggs-Davison, John Brinton, Sir Tatton
Bryan, Paul Hirst, Geoffrey Orr, Capt. L. P. S.
Buchanan-Smith,Alick (Angus,N&M) Holland, Philip Osborn, John (Hallam)
Buck, Antony (Colchester) Hooson, Emlyn Page, Graham (Crosby)
Campbell, Gordon Hornby, Richard Pardoe, John
Carlisle, Mark Howell, David (Guildford) Pearson, Sir Frank (Clitheroe)
Carr, Rt. Hn. Robert Jenkin, Patrick (Woodford) Peel, John
Chichester-Clarke, R. Johnston, Russell (Inverness) Pink, R. Bonner
Clark, Henry Jopling, Michael Powell, Rt. Hn. J. Enoch
Clegg, Walter Joseph, Rt. Hn, Sir Keith Pym, Francis
Cooke, Robert King, Evelyn (Dorset, S.) Ramsden, Rt. Hn. James
Corfield, F. V. Kirk, Peter St. John-Stevas, Norman
Crosthwaite-Eyre, Sir Oliver Legge-Bourke, Sir Harry Scott, Nicholas
Crouch, David Lloyd, Ian (P'tsm'th, Langstone) Shaw, Michael (Sc'b'gh A Whitby)
Elliot, Capt. Walter (Carshalton) MacArthur, Ian Smith, John
Elliott, R.W. (N'c'tle-upon Tyne,N.) Maclean, Sir Fitzroy Taylor, Frank (Moss Side)
Errington, Sir Eric Macleod, Rt. Hn. Iain Thatcher, Mrs. Margaret
Eyre, Reginald McMaster, Stanley Thorpe, Jeremy
Farr, John Macmillan, Maurice (Farnham) van Straubenzee, W. R.
Fortescue, Tim Maginnis, John E. Vickers, Dame Joan
Gilmour Sir John (Fife, E.) Maude, Angus Wainwright, Richard (Colne Valley)
Glover, Sir Douglas Maydon, Lt.-Cmdr. S. L. C. Ward, Dame Irene
Grant-Ferris, R. Mills, Peter (Torrington) Weatherill, Bernard
Grieve, Percy Mills, Stratton (Belfast, N.) Whitelaw, William
Griffiths, Eldon (Bury St. Edmunds) Miscampbell, Norman Wilson, Geoffrey (Truro)
Grimond, Rt. Hn. J. Mitchell, David (Basingstoke) Winstanley, Dr. M. P.
Gurden, Harold Morrison, Charles (Devizes) Wood, Rt. Hn. Richard
Hall-Davis, A. G. F. Munro-Lucas-Tooth, Sir Hugh Woodnutt, Mark
Harrison, Col. Sir Harwood (Eye) Murton, Oscar Younger, Hn. George
Hastings, Stephen Neave, Airey TELLERS FOR THE AYES:
Heseltine, Michael Noble, Rt. Hn. Michael Mr. Eric Lubbock and
Higgins, Terence L. Onslow, Cranley Mr. David Steel.
NOES
Abse, Leo Fitt, Gerard (Belfast, W.) MacPherson, Malcolm
Albu, Austen Fletcher, Ted (Darlington) Mahon, Peter (Preston, S.)
Alldritt, Walter Floud, Bernard Mahon, Simon (Bootle)
Allen, Scholefield Foot, Michael (Ebbw Vale) Manuel, Archie
Anderson, Donald Ford, Ben Mapp, Charles
Armstrong, Ernest Forrester, John Mayhew, Christopher
Ashley, Jack Fowler, Gerry Mitchell, R. C. (S'th'pton, Test)
Atkins, Ronald (Preston, N.) Fraser, Rt. Hn, Tom (Hamilton) Moyie, Roland
Atkinson, Norman (Tottenham) Freeson, Reginald Neal, Harold
Bagier, Gordon A. T. Gardner, A. J. Newens, Stan
Barnett, Joel Garrett, W. E. Norwood, Christopher
Beaney, Alan Garrow, Alex Ogden, Eric
Bidwell, Sydney Ginsburg, David O'Malley, Brian
Bishop, E. S. Gordon Walker, Rt. Hn. P. C. Orme, Stanley
Blackburn, F. Gregory, Arnold Owen, Dr. David (Plymouth, S'tn)
Blenkinsop, Arthur Griffiths, David (Rother Valley) Page, Derek (King's Lynn)
Boardman, H. Griffiths, Will (Exchange) Parkyn, Brian (Bedford)
Boston, Terence Hamilton, William (Fife, W.) Pentland, Norman
Boyden, James Hannan, William Perry, George H. (Nottingham, S.)
Braddock, Mrs. E. M. Hattersley, Roy Price, Christopher (Perry Barr)
Bradley, Tom Hobden, Dennis (Brighton, K'town) Price, William (Rugby)
Brooks, Edwin Hooley, Frank Rees, Merlyn
Brown, R. W. (Shoreditch & F'bury) Horner, John Richard, Ivor
Buchan, Norman Howarth, Harry (Wellingborough) Roberts, Goronwy (Caernarvon)
Buchanan. Richard (G'gow, Sp'burn) Howie, W. Roberts, Gwilym (Bedfordshire, S.)
Callaghan, Rt. Hn. James Hughes, Emrys (Ayrshire, S.) Robertson, John (Paisley)
Cant, R. B. Hughes, Roy (Newport) Rose, Paul
Carter-Jones, Lewis Jackson, Colin (B'h'se & Spenb'gh) Rowland, Christopher (Meriden)
Coe, Denis Jackson, Peter M. (High Peak) Rowlands, E. (Cardiff, N.)
Coleman, Donald Jones, J. Idwal (Wrexham) Shaw, Arnold (Ilford, S.)
Concannon, J. D. Kelley, Richard Silkin, John (Deptford)
Crawshaw, Richard Kenyon, Clifford Summerskill, Hn. Dr. Shirley
Davies, Dr. Ernest (Stretford) Kerr, Russell (Feltham) Swingler, Stephen
Dell, Edmund Lawson, George Thomas, George (Cardiff, W.)
Dewar, Donald Leadbitter, Ted Tinn, James
Diamond, Rt. Hn. John Lee, Rt. Hn. Jennie (Cannock) Urwin, T. W.
Dickens, James Lever, L. M. (Ardwick) Varley, Eric G.
Doig, Peter Lewis, Ron (Carlisle) Wainwright, Edwin (Dearne Valley)
Dunn, James A. Luard, Evan Walden, Brian (All Saints)
Dunwoody, Dr. John (F'th & C'b'e) Lyon, Alexander W. (York) Watkins, David (Consett)
Edelman, Maurice Lyons, Edward (Bradford, E.) Wells, William (Walsall, N.)
Ellis, John McBride, Neil Whitlock, William
English, Michael McCann, John Willis, George (Edinburgh, E.)
Ensor, David MacDermot, Niall TELLERS FOR THE NOES:
Evans, Albert (Islington, S.W.) Macdonald, A. H. Mr. Gourlay and
Fernyhough, E. Mackenzie, Gregor (Rutherglen) Mr. Charles A. Morris.
Fitch, Alan (Wigan) McMillan, Tom (Glasgow, C.)

Amendment proposed: In page 48, line 27, at end insert: Provided that in the case of disabled persons within the meaning of the Disabled Persons Employment Act 1944, the tax shall be one penny.—[Mr. Grimond.]

Question put, That those words be there inserted:—

The Committee divided: Ayes 102, Noes 137.

Division No. 75.] AYES [3.22 a.m.
Alison, Michael (Barkston Ash) Grimond, Rt. Hn. J. Noble, Rt. Hn. Michael
Atkins, Humphrey (M't'n' & M'd'n) Gurden, Harold Onslow, Cranley
Awdry, Daniel Hall-Davit, A. G. F. Orr, Capt. L. P. S.
Bennett, Sir Frederic (Torquay) Harrison, Col. Sir Harwood (Eye) Osborn, John (Hallam)
Bennett, Dr. Reginald (Gos. & Fhm) Hastings, Stephen Page, Graham (Crosby)
Berry, Hn. Anthony Heseltine, Michael Pardoe, John
Bessell, Peter Higgins, Terence L. Pearson, Sir Frank (Clitheroe)
Biggs-Davison, John Hirst, Geoffrey Peel, John
Blaker, Peter Holland, Philip Pink, R. Bonner
Bottom, Sir Clive Hooson, Emlyn Powell, Rt. Hn. J. Enoch
Boyle, Rt. Hn. Sir Edward Hornby, Richard Pym, Francis
Brinton, Sir Tatton Howell, David (Guildford) Ramsden, Rt. Hn. James
Bryan, Paul Jenkin, Patrick (Woodford) St. John-Stevas, Norman
Buchanan-Smith, Alick (Angus,N&M) Johnston, Russell (Inverness) Scott, Nicholas
Buck, Antony (Colchester) Jopling, Michael Shaw, Michael (Sc'b'gh & Whitby)
Campbell, Gordon Joseph, Rt. Hn. Sir Keith Smith, John
Carlisle, Mark King, Evelyn (Dorset, S.) Taylor, Frank (Moss Side)
Carr, Rt. Hn. Robert Kirk, Peter Thatcher, Mrs. Margaret
Chichester-Clark, R. Legge-Bourke, Sir Harry Thorpe, Jeremy
Clark, Henry Lloyd, Ian (P'tsm'th, Langstone)
Clegg, Walter MacArthur, Ian van Straubenzee, W. R.
Cooke, Robert Maclean, Sir Fitzroy Vickers, Dame Joan
Corfield, F. V. Macleod, Rt. Hn. Iain Wainwright, Richard (Colne Valley)
Crosthwaite-Eyre, Sir Oliver McMaster, Stanley Ward, Dame Irene
Crouch, David Macmillan, Maurice (Farnham) Weatherill, Bernard
Elliot, Capt. Walter (Carshalton) Maginnis, John E. Whitelaw, William
Elliott,R.W. (N'c'tle-upon-Tyne,N.) Maude, Angus Wilson, Geoffrey (Truro)
Errington, Sir Eric Maydon, Lt.-Cmdr. S. L. C. Winstanley, Dr. M. P.
Eyre, Reginald Mills, Peter (Torrington) Wood, Rt. Hn. Richard
Farr, John Mills, Stratton (Belfast, N.) Woodnutt, Mark
Fortescue, Tim Miscampbell, Norman Younger, Hn. George
Gilmour, Sir John (Fife, E.) Mitchell, David (Basingstoke)
Glover, Sir Douglas Morrison, Charles (Devizes) TELLERS FOR THE AYES:
Grant-Ferris, R. Munro-Lucas-Tooth, Sir Hugh Mr. Eric Lubbock and
Grieve, Percy Murton, Oscar Mr. David Steel.
Griffiths, Eldon (Bury St. Edmunds) Neave, Airey
NOES
Abse, Leo Diamond, Rt. Hn. John Howarth, Harry (Wellingborough)
Albu, Austen Dickens, James Howie, W.
Alldritt, Walter Doig Peter Hughes, Emrys (Ayrshire, S.)
Allen, Scholefield Dunn, James A. Hughes, Roy (Newport)
Anderson, Donald Dunwoody, Dr. John (F'th & C'b'e) Jackson, Colin (B'h'se & Spenb'gh)
Armstrong, Ernest Edelman, Maurice Jackson, Peter M. (High Peak)
Ashley, Jack Ellis, John Jones, J. Idwal (Wrexham)
Atkins, Ronald (Preston, N.) English, Michael Kelley, Richard
Atkinson, Norman (Tottenham) Ensor, David Kenyon, Clifford
Bagier, Gordon A. T. Evans, Albert (Islington, S.W.) Kerr, Russell (Feltham)
Barnett, Joel Fernyhough, E. Lawson, George
Beaney, Alan Fitch, Alan (Wigan) Leadbitter, Ted
Bidwell, Sydney Fitt, Gerard (Belfast, W.) Lee, Rt. Hn. Jennie (Cannock)
Bishop, E. S. Fletcher, Ted (Darlington) Lever, L. M. (Ardwick)
Blackburn, F. Floud, Bernard Lewis, Ron (Carlisle)
Blenkinsop, Arthur Foot, Michael (Ebbw Vale) Luard, Evan
Boardman, H. Ford, Ben Lyon, Alexander W. (York)
Boston, Terence Forrester, John Lyons, Edward (Bradford, E.)
Boyden, James Fowler, Gerry McBride, Neil
Braddock, Mrs. E. M. Fraser, Rt. Hn. Tom (Hamilton) McCann, John
Bradley, Tom Freeson, Reginald MacDermot, Niall
Brooks, Edwin Gardner, A. J. Macdonald, A. H.
Brown, R. W. (Shoreditch & F'bury) Garrett, W. E. Mackenzie, Gregor (Rutherglen)
Buchan, Norman Garrow, Alex McMillan, Tom (Glasgow, C.)
Buchanan, Richard (G'gow, Sp'burn) Ginsburg, David MacPherson, Malcolm
Callaghan, Rt. Hn. James Gordon Walker, Rt. Hn. P. C. Mahon, Peter (Preston, S.)
Cant, R. B. Gregory, Arnold Mahon, Simon (Bootle)
Carter-Jones, Lewis Griffiths, David (Rother Valley) Manuel, Archie
Coe, Denis Griffiths, Will (Exchange) Mapp, Charles
Coleman, Donald Hamilton, William (Fife, W.) Mayhew, Christopher
Concannon, J. D. Hannan, William Mitchell. R. C. (S'th'pton, Test)
Crawahaw, Richard Hattersley, Roy Moyle, Roland
Davies, Dr. Ernest (Stretford) Hobden, Dennis (Brighton, K'town) Neal, Harold
Dell, Edmund Hooley, Frank Newens, Stan
Dewar, Donald Horner, John Norwood, Christopher
Ogden, Eric Roberts, Goronwy (Caernarvon) Urwin, T. W.
O'Malley, Brian Roberts, Gwilym (Bedfordshire, S.) Varley, Eric G.
Orme, Stanley Robertson, John (Paisley) Wainwright, Edwin (Dearne Valley)
Owen, Dr. David (Plymouth, S'tn) Rose, Paul Walden, Brian (All Saints)
Page, Derek (King's Lynn) Rowland, Christopher (Meriden) Watkins, David (Consett)
Parkyn, Brian (Bedford) Rowlands, E, (Cardiff, N.) Wells, William (Walsall, N.)
Pentland, Norman Shaw, Arnold (Ilford, S.) Whitlock, William
Perry, George H. (Nottingham, S.) Silkin, John (Deptford) Willis, George (Edinburgh, E.)
Price, Christopher (Perry Barr) Summerskill, Hn, Dr. Shirley
Price, William (Rugby) Swingler, Stephen TELLERS FOR THE NOES:
Rees, Merlyn Thomas, George (Cardiff, W.) Mr. Gourlay and
Richard, Ivor Tinn, James Mr. Charles A. Morris.

Amendment proposed: In page 48, line 27, at end insert: Provided that in respect to any person who is blind the tax shall be one shilling.—[Mr. Hirst.]

Question put, That those words be there inserted:—

The Committee divided: Ayes 102, Noes 136.

Division No. 76.] AYES [3.32 a.m.
Alison, Michael (Barkston Ash) Gurden, Harold Neave, Airey
Atkins, Humphrey (M't'n & M'd'n) Hall-Davis, A. G. F. Noble, Rt. Hn. Michael
Awdry, Daniel Harrison, Col. Sir Harwood (Eye) Onslow, Cranley
Bennett, Sir Frederic (Torquay) Hastings, Stephen Orr, Capt. L. P. S.
Bennett, Dr. Reginald (Gos. & Fhm) Heseltine, Michael Osborn, John (Hallam)
Berry, Hn. Anthony Higgins, Terence L. Page, Graham (Crosby)
Bessell, Petef Hirst, Geoffrey Pardoe, John
Biggs-Davison, John Holland, Philip Pearson, Sir Frank (Clitheroe)
Bessell, Peter Hooson, Emlyn Peel, John
Bossom, Sir Clive Hornby, Richard Pink, R. Bonner
Boyle, Rt. Hn. Sir Edward Howell, David (Guildford) Powell, Rt. Hn. J. Enoch
Brinton, Sir Tatton Jenkin, Patrick (Woodford) Pym, Francis
Bryan, Paul Johnston, Russell (Inverness) Ramsden, Rt. Hn. James
Buchanan-Smith,Alick (Angus,N&M.) Jopling, Michael St. John-Stevas, Norman
Buck, Antony (Colchester)
Campbell, Gordon Joseph, Rt. Hn. Sir Keith Scott, Nicholas
Carlisle, Mark King, Evelyn (Dorset, S.) Shaw, Michael (Sc'b'gh & Whitby)
Carr, Rt. Hn. Robert Kirk, Peter Smith, John
Chichester-Clark, R. Legge-Bourke, Sir Harry Steel, David (Roxburgh)
Clark, Henry Lloyd, Ian (P'tsm'th, Langstone) Taylor, Frank (Moss Side)
Clegg, Walter Lubbock, Eric Thatcher, Mrs. Margaret
Cooke, Robert MacArthur, Ian Thorpe, Jeremy
Corfield, F. V. Maclean, Sir Fitzroy van Straubenzee, W. R.
Crosthwaite-Eyre, Sir Oliver Macleod, Rt. Hn. Iain Vickers, Dame Joan
Crouch, David McMaster, Stanley Wainwright, Richard (Coins Valley)
Elliot, Capt. Walter (Carshalton) Macmillan, Maurice (Farnham) Ward, Dame Irene
Elliott,R.W. (N'c'tle-upon-Tyne,N.) Maginnis, John E. Weatherill, Bernard
Errington, Sir Eric Maude, Angus Whitelaw, William
Farr, John Maydon, Lt.-Cmdr. S. L. C. Wilson, Geoffrey (Truro)
Fortescue, Tim Mills, Peter (Torrington) Winstanley, Dr. M. P.
Gilmour, Sir John (Fife, E.) Mills, Stratton (Belfast, N.) Wood, Rt. Hn. Richard
Clover, Sir Douglas Miscampbell, Norman Woodnutt, Mark
Grant-Ferris, R. Mitchell, David (Basingstoke)
Grieve, Percy Morrison, Charles (Devizes) TELLERS FOR THE AYES:
Griffiths, Eldon (Bury St. Edmunds) Munro-Lucas-Tooth, Sir Hugh Mr. George Youger and
Grimond, Rt. Hn. J. Murton, Oscar Mr. Reginald Eyre.
NOES
Abse, Leo Brown, R. W. (Shoreditch & F'bury) Evans, Albert (Islington, S.W.)
Albu, Austen Buchan, Norman Fernyhough, E.
Alldritt, Walter Buchanan, Richard (G'gow, Sp'burn) Fletcher, Ted (Darlington)
Allen, Scholefield Callaghan, Rt. Hn. James Floud, Bernard
Anderson, Donald Cant, R. B. Foot, Michael (Ebbw Vale)
Armstrong, Ernest Carter-Jones, Lewis Ford, Ben
Ashley, Jack Coe, Denis Forrester, John
Atkins, Ronald (Preston, N.) Coleman, Donald Fowler, Gerry
Atkinson, Norman (Tottenham) Concannon, J. D. Fraser, Rt. Hn. Tom (Hamilton)
Bagier, Gordon A. T. Crawshaw, Richard Freeson, Reginald
Barnett, Joel Davies, Dr. Ernest (Stretford) Gardner, A. J.
Beaney, Alan Dell, Edmund Garrett, W. E.
Bidwell, Sydney Dewar Donald Garrow, Alex
Bishop, E. S. Diamond, Rt. Hn. John Ginsburg, David
Blackburn, F. Dickens, James Gordon Walker, Rt. Hn. P. C.
Blenkinsop, Arthur Doig, Peter Gourlay, Harry
Boardman, H. Dunn, James A. Gregory, Arnold
Boston, Terence Dunwoody, Dr. John (F'th & C'b'e) Griffiths, David (Rother Valley)
Boyden, James Edelman, Maurice Griffiths, Will (Exchange)
Braddock, Mrs. E. M. Ellis, John Hamilton, William (Fife, W.)
Bradley, Tom English, Michael Hannan, William
Brooks, Edwin Ensor, David Hattersley, Roy
Hobden, Dennis (Brighton, K'town) Mackenzie, Gregor (Rutherglen) Richard, Ivor
Hooley, Frank McMillan, Tom (Glasgow, C.) Roberts, Goronwy (Caernarvon)
Horner, John MacPherson, Malcolm Roberts, Gwilym (Bedfordshire, S.)
Howarth, Harry (Wellingborough) Mahon, Peter (Preston, S.) Robertson, John (Paisley)
Howie, W. Mahon, Simon (Bootle) Rose, Paul
Hughes, Emrys (Ayrshire, S.) Manuel, Archie Rowland, Christopher (Meriden)
Hughes, Roy (Newport) Mapp, Charles Rowlands, E. (Cardiff, N.)
Jackson, Colin (B'h'se & Spenb'gh) Mayhew, Christopher Shaw, Arnold (Ilford, S.)
Jackson, Peter M. (High Peak) Mitchell, R. C. (S'th'pton, Test) Silkin, John (Deptford)
Jones, J. Idwal (Wrexham) Morris, Charles R. (Openshaw) Summerskill, Hn. Dr. Shirley
Kelley, Richard Moyle, Roland Swingler, Stephen
Kenyon, Clifford Neal, Harold Thomas, George (Cardiff, W.)
Kerr, Russell (Feltham) Newens, Stan Tinn, James
Lawson, George Norwood, Christopher Urwin, T. W.
Leadbitter, Ted Ogden, Eric Varley, Eric G.
Lee, Rt. Hn. Jennie (Cannock) O'Malley, Brian Wainwright, Edwin (Dearne Valley)
Lever, L. M. (Ardwick) Orme, Stanley Walden, Brian (All Saints)
Lewis, Ron (Carlisle) Owen, Dr. David (Plymouth, S'tn) Watkins, David (Consett)
Luard, Evan Page, Derek (King's Lynn) Wells, William (Walsall, N.)
Lyon, Alexander W. (York) Parkyn, Brian (Bedford) Willis, George (Edinburgh, E.)
Lyons, Edward (Bradford, E.) Pentland, Norman
McBride, Neil Perry, George H. (Nottingham, S.) TELLERS FOR THE NOES:
McCann, John Price, Christopher (Perry Barr) Mr. William Whitlock and
MacDermot, Niall Price, William (Rugby) Mr. Alan Fitch.
Macdonald, A. H. Rees, Merlyn
Mr. Norman Miscampbell (Blackpool, North)

I beg to move Amendment No. 325, in page 48, line 27, at the end to insert: Provided that in respect of any person who is employed in the hotel and catering industry the tax shall be one penny. The Committee will be familiar with many of the arguments which they will hear during the next hour or so. That familiarity should not blind us to the persuasiveness of those arguments; equally, it should not dissuade us from looking for a moment or two at the background against which we are discussing the hotel and catering industry.

The facts, as I say, are familiar and I shall be brief. We are in a chronic economic and balance of payments crisis, and this industry which has been selected for taxation is the greatest dollar earner that we possess. It is the fourth largest earner of foreign currency and the largest earner of dollars. The import content is almost nil. To bring steaks into this country for a few shillings and to sell them for £1 is one of the most lucrative ways of earning foreign currency that one can think of. It is also an industry which is in direct competition with hotels abroad.

The basis of these dollars and foreign currency is our hotel and catering industry. Without it, nothing else will work. We can develop the beauties of the countryside; we can exhibit in New York pictures of beefeaters to our hearts' content, but in the end, if our hotels are not providing the accommodation and opportunities for people to come and stay, all will fail.

I have mentioned the positive returns from this industry. The figures are significant. Foreign earnings total £320 million a year, including dollar earnings of over £100 million. The growth rate, at about 13 per cent., is far in excess of the normal growth rate in British industry. Three million people come to Britain every year and their spending power more than balances to the 5 million people who go abroad from this country.

3.45 a.m.

It is in the number of Britons going abroad that the greatest warning exists, because there is a great difference between the growth rates of what we spend at home on holidays and what we spend abroad. On holidays in this country we spend in hotels and other holiday places about £450 million. The figure we spend on holidays abroad is now about £350 million and growing rapidly, whereas the rate of growth of the amount we spend on holidays in our own country shows no great increase.

What happened in France is a warning. The French largely priced themselves out of the market. Frenchmen now find it cheaper to go to Spain and elsewhere than to holiday in France. Not only is France failing to attract tourists, but—far worse—many French people are choosing to go abroad for holidays.

This is a warning to us, because the real competition with our holiday resorts comes from resorts abroad. The prices are highly competitive. In today's Daily Mail there is an article about a trip to the Costa Brava for under 30 guineas. One could hardly believe it possible.

Nevertheless, figures not much larger—45 guineas or 42 guineas—are quoted for 10 days or 14 days in Spain. Such figures are becoming comparable with what a person will spend on holiday here. If more people decide to go abroad, my argument is reinforced because we not only gain positively from attracting tourists from abroad but gain negatively by keeping our own people at home.

If a concession is made, I hope that it will not be a Government decision to look at each hotel to see how much foreign content it has in its earnings. That would not cure the difficulties. The great problem is to ensure not only that we attract tourists from abroad, but persuade our own people to stay in this country for holidays. Every £1 spent abroad is, in effect, another import.

What of the future? By 1970, 4½ million tourists are expected. They will come only if the hotel rooms are there; if they know that they can make a booking; if they do not have the experience, which, I understand, is occuring at present, of Americans who are trying to come to London and Southern England and cannot get accommodation. This is something which concerns the Government. I suspect that if these Americans tried to go to many other parts of the country they would find equal difficulty in getting hotel rooms of the standards which they require, to which they are accustomed, and which, I am sorry to say, some of our overseas competitors are providing more rapidly.

About 30,000 new hotel rooms are required in the next four to five years. What chance have we of getting such an increase in view of the restrictions that are at present being placed on the hotel industry? I shall not go into the question of the building restrictions, for I should be out of order. I just mention the investment allowances which are not available to hotels, another imposition on top of the tax that we are discussing.

Sir Geoffrey Crowther, head of one of our most distinguished groups of hotels, wrote a letter to The Times. He is listened to with respect and does not write letters to The Times in the hasty way in which they are sometimes written. Writing with care and deliberation, before this tax threatened to land on to the shoulders of the hotel industry, he said that he thought that Trust Houses Ltd. would not be able to continue its expansion, and that he could not see where new hotels were coming from.

If that was the position in February, how much worse must it be now, with an extra tax on the industry. It is difficult to make an accurate assessment of the likely burdens on the industry, because labour content of hotels varies. One cannot tell how the tax on the services that are used by the hotels will affect them, but the lowest figure which I have obtained from any responsible source is about 5 per cent.—and it may range as high as 8 per cent.—on the cost of hotel accommodation if the tax is imposed. One hotel thinks that the tax will increase its wages bill by 8.6 per cent., with a 5 per cent. overall cost increase. The figure of 8.6 per cent. on the wages bill is not surprising when one remembers the very high proportion of hotel outgoings that are inevitably occasioned by wages—side-effects will come as the tax bites on all other forms of services on which the hotels are so dependent.

It is inevitable that the hotel industry will be subject to seasonal variations in its bookings, especially in the tourist areas—not just the seaside areas but, say, the Scottish Highlands. Hopes for a new hotel in North Wales, and for new hotels in places like Canterbury and great tourist resorts, have been expressed.

The tax will bite most heavily on those who are in that unfortunate position because they must employ enough people in the summer to meet the peak demand, and then those taxed employees must be kept on through the leaner winter months so that they will be there in the following spring. Undoubtedly, the tax will be a severe burden, and it will be all the more severe on those paying for employees out of season.

Anyone who knows anything about hotels knows that in many cases part-time workers have to be used in large numbers. They have to come in at differing times. It is easy for the Government to say that part-time workers must come in under the new tax, but anyone having to employ a series of part-time workers will have the burden hot and heavy at the end of the day when he has to pay for each one of them.

Not only is there the present and proposed level of taxation, but our hotels have to bear the other imposts put on them during the last two years under Socialist Governments. It is proposed to put this tax upon an industry of great potential and great present foreign earnings. What were the two grounds on which the Chancellor recommended the tax to the House in his Budget speech? He has said recently that the raising of revenue was the most important. That was one of the reasons he gave. The second was the redistribution of workers from services to manufacturing industry. Can it possibly be said that it is sensible to impose this tax on the hotel industry? Is it sensible to raise revenue from our fourth greatest foreign currency earner and our biggest dollar earner? The answer be "No".

If one then asks—this was first put as the most important reason for the tax—whether it is likely to send workers from hotels into manufacturing, one is confronted by the paradoxical situation that at present, to man our hotels and keep them going at all, we are importing labour from abroad. Every hon. Member with any concentration of hotels in his constituency knows that one constant plea is, "We have a foreign worker. His work permit is coming to an end. Can you possibly do anything for him? We need him. We cannot run our establishment without him".

How can it be sensible to impose this tax on the ground that we want more people driven out of hotels and catering establishments and into manufacturing? It does not make sense from the standpoint of revenue raising. It does not make sense if the object is to drive people out of services and into manufacturing.

For these and other reasons which I have given, I hope that the Committee will reject this tax as it relates to the hotel industry and accept this Amendment.

4.0 a.m.

Mr. Pavitt

I rise only to emphasise the opening comments of the hon. Gentleman the Member for Blackpool, North (Mr. Miscampbell). If there is one subject which has been fully discussed in Committee it is that which we are now discussing. On the last occasion, we debated it from 1.46 a.m. to 4.58 a.m. We had an excellent opening by the hon. Member for Bodmin (Mr. Bessell), who made out a good case on lines similar to those employed by the hon. Gentleman the Member for Blackpool, North. I also remember an excellent contribution from the hon. Member for Dorset, North (Sir Richard Glyn).

Mr. Iain Macleod

On a point of order. I may be wrong, but I think that the Question before the Committee has not been proposed. Should it not be proposed, to bring us back in order?

The Temporary Chairman (Mr. Bryant Godman Irvine)

The Question is that in Clause 42, page 48, line 27, at the end insert the words on the Notice Paper.

Mr. Pavitt

I had hoped that the right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod) was intervening to make sure not only that the Question had been put, but was about to be voted upon. Unfortunately, we have not yet reached that stage.

The point that I am making is that not only did we discuss this matter from 1.46 a.m. to 4.58 a.m., but we then had a Scottish Grand Committee debate which went on from 5.2 a.m. until 7.30 a.m., in which the hon. Lady the Member for Tynemouth (Dame Irene Ward) was the only Sassenach who got into the debate. She was able to talk about the British Travel Association very effectively.

My plea, and I hope that it does not fall on deaf ears, is that, while hon. Gentlemen opposite will continue to put their case on this Amendment, we should not have a repetition which might spoil the excellent argument put to the Committee last time.

Mr. Peter Blaker (Blackpool, South)

I suppose that we should congratulate the Government tonight on having had one speaker on the subject of hotels and tourism, even if that hon. Gentleman did not say anything about the substance of the matter. My experience is that invariably, when the interests of the hotel and catering industry are discussed in this Committee, no interest is shown on the other side.

It also appears to me unfortunate that the Minister of State, Board of Trade, who is allegedly responsible for the tourist industry, has not seen fit to attend this debate. [An HON. MEMBER: "He is not interested."] That is one possible excuse. But it may be, and I hope that this is true, that he has made efforts to persuade his Treasury colleagues of their short-sightedness in the policies which they are pursuing, though without success.

Another excuse, and perhaps the most likely one, is that the Minister finds the whole subject too painful and cannot bear to attend. [An HON. MEMBER: "He has probably gone abroad."] The Government are imposing a tax on holidays in Britain, whether taken by people from overseas or by our own people, It is perfectly clear, in the light of what my hon. Friend the Member for Blackpool, North (Mr. Miscampbell) has said, that the Government cannot understand what this is all about. A little while ago the Chancellor told the Committee that he had heard a great deal of the arguments for the hotel and catering industry. He has not paid the slightest attention to them, and the Government and their advisers have not given the slightest indication that they have taken the point in.

One of the Government's principal advisers. Mr. Catherwood, the head of N.E.D.C, clearly does not understand what is going on as far as the tourist industry is concerned, because he said last month, in a speech about the Government's tax proposals, that one of the reasons for giving relief to manufacturing industry and discriminating against the tourist industry was that one can export manufactured goods, but one cannot export a hair cut.

This is complete nonsense. Of course we can export hair cuts. We also export the cost of hotel rooms, the cost of meals, and the many other services which visitors to this country buy, and I should have thought that they were equally as valuable as motor cars.

Dame Irene Ward

Was not Mr. Catherwood in British Aluminium, and is not that a manufacturing industry? Is that not perhaps the reason?

Mr. Blaker

That may be so. I thank my hon. Friend for her intervention. It may also be why Mr. Catherwood made his comment. I hope that the Chief Secretary will get together with Mr. Catherwood and explain a thing or two to him.

That is one thing, but what I wanted to emphasise is that we are concerned not only with holidays. There is also the conference business, which is becoming a major aspect of life for some parts of Britain. In my own constituency we have 200 conferences a year and, while they do not all bring visitors from overseas, many of them do. I recall that some months ago we had the International Fancy Goods Fair. Right hon. and hon. Members opposite may not think that is very important, but no fewer than 35,000 buyers came to it, of whom 6,000 were from overseas. The business done during one week at that Fair, in export orders alone, amounted to no less than £ 1½ million worth; and that did not include the orders placed subsequently, when the Fair had closed.

There are the international Rotary conferences, at which I suppose about 80 per cent. of the people attending are from overseas. If the cost of coming to Britain and the cost of living in Britain is compared with the cost in other countries, and it is unfavourable, then this conference business will be lost. This business will go to other countries.

The question of how many people go abroad from Britain is equally important, and here the trend is disquieting. The number of British people going abroad for holidays is double what it was five years ago, a rate of increase greater than that in the number of overseas visitors coming here. No fewer than 5 million people spent holidays overseas last year. Any slowing up in the number of people coming to this country or increase in those going abroad could have a most serious effect on the balance of payments.

That has been shown, as my hon. Friend has already pointed out, by the example of France. Up to 10 years ago France perhaps had the biggest tourist trade of any country in the world. The net value in 1956 to the French economy of that trade was 186 million dollars, after deducting expenditure, by the French people who went abroad. But, two years ago, that figure had dropped to only 23 million dollars, and that fall occurred in a country which had one of the greatest tourist potentials in the world.

There was a time when there were signs that the Government were taking an interest in the British tourist industry.

They appointed the Minister with special responsibility at the Board of Trade for it, but there has been no evidence at all that his efforts have had the slightest effect.

In January, at the International Boat Show, the Chancellor of the Exchequer called on the British people to spend their holidays in Britain—an admirable sentiment. Some of us interested in this subject thought that at last the Government were beginning to see the light. But what steps, as opposed to words, did the right hon. Gentleman take? Within a week he abolished investment allowances. The result of the treatment which the holiday industry received last year has been, as anybody interested in the subject knows, that hotels and restaurants with improvements and building projects in mind have been cancelling them. The big companies which had major projects for modernisation or building are concentrating their efforts abroad and, therefore, improving indirectly the facilities of our competitors overseas.

The factors which bring people to Britain, or which persuade British people to stay in Britain for holidays, are not numerous. We cannot rely on climate. We have to rely on price and quality. This is a very price-sensitive business. My hon. Friend suggested that the price of package tours to Spain was coming down to about the same figure as package tours by coach to, say, the Lake District. I will go further: I believe that the cost of package tours to certain parts of the Continent—say, the Rhine-land—is already no higher than the cost of package tours, with comparable accommodation and means of transport, to the Lake District. If the cost of holidays in this country goes up, we risk suffering the same fate as France.

This is not an industry which will be able to absorb the increase in costs which will be imposed on, because it is inevitably a labour-intensive industry. This is particularly true of the luxury or higher quality restaurants and hotels where good service is one of the essential elements in the attraction of the establish. In hotels of that kind labour costs are over 30 per cent. of the turnover. Therefore, it will be impossible to absorb any significant amount of this tax. It has been estimated by the British Hotels and Restaurants Association that the tax will add £20 million a year to hotel costs, and that will mean higher prices and less good service.

The second factor which influences people in deciding whether to come to or to stay in this country is accommodation. My hon. Friend said that Americans are known to be abandoning the idea of holidays in this country because of difficulties about accommodation. That is true. But there is another factor. Unless we expand our accommodation, visitors to this country will spend shorter holidays. It is a question not only of how many people come here, but of how long they stay.

Thirdly, there is the question of quality. The British Travel Association estimates that a quarter of the hotel accommodation available in this country is below the appropriate standard. It is undeniable that a great part of our hotel, catering and entertainment industry needs very elaborate modernisation. It is also undeniable that in the last few years that process of modernisation and improvement has been encouraged by the investment allowances introduced by the Conservative Government. But there is every indication that it is now coming to a halt.

I should like to examine the arguments which the Government have produced in favour of applying this tax to the hotel and catering industry. First, there is the point about economy of labour. This is quite untenable, as my hon. Friend has demonstrated. But I should like to add a point or two to what he said.

4.15 a.m.

This industry is already short of 46,000 men. We cannot mechanise most of the jobs which are done in the industry. We can mechanise manufacturing processes, which ought to be encouraged, but will not be encouraged by Government policy, but we cannot mechanise a waiter or a doorman. [An HON. MEMBER: "Yes."] Well, I should like to know how. I fancy that the Chief Secretary said that we can mechanise a waiter or a doorman. I doubt very much whether most of the overseas visitors who come to this country will be attracted by the British mechanised doorman or waiter——

Sir D. Glover

A fruit machine?

Mr. Blaker

—as contrasted with fruit machines.

The people who spend money at Claridge's—will they be the ones who will spend money on slot machines? I hope that the Chief Secretary will explain his views on this when he replies, because I see him nodding. It will require a very powerful explanation.

Moreover, the employees in this industry are not of the type who will readily go into manufacturing. Indeed, many of them work in areas where manufacturing industry does not exist. A large proportion of them are married women who want part-time work only, and others are elderly people who want part-time work only. Very many of the employees in this industry are disabled people. As is well known, the industry employs very much more than the 3 per cent. of disabled people, which is the recommended proportion, and the Government's policies will make it more difficult for these people to get work.

This is particularly true in those areas which rely on the seasonal trade. It may not be so true in London, perhaps, though it would be true to some extent there, but in the areas to which so many of the overseas visitors go, in the areas to which our own people go on holiday, for six months of the year at the most is there work to be found. In winter time the situation for the sort of people who work in the holiday industry will be very severely aggravated. In my own constituency, every winter regularly now we have unemployment for six months of the year at the rate of about 6 per cent. That situation will not be helped by Government policy.

Then there is the argument which the Government advance that hotels take only 10 per cent. of their takings in foreign currency, whereas manufacturing industry exports 25 per cent. of its product. This is a completely "phoney" argument; at any rate, it is completely fallacious. In the first place, the hotels are the anchor of the whole holiday business. One has to take account not only of the earnings of the hotels, but of the whole tourist industry, and if one does that the percentage is quite different. If the hotels are not up to standard, then the whole tourist industry will suffer.

The final Government argument I want to deal with is also and equally a fallacious argument—the argument that services have until now been lightly taxed. I have letters from Ministers repeating this argument time and again. It is completely unsound. First, the hotel and catering industries do not enjoy industrial building allowance. This is in spite of the recommendations of the Tucker Committee, the Royal Commission on the Taxation of Profits and Income, and of the "Little Neddy" on the distributive trades.

But, more important, these two industries pay Purchase Tax on the tools of their trade—carpets, cutlery, furniture, and so on. This is not true, in general, of manufacturing industry. Then the Government seem to assume that Purchase Tax is a burden on manufacturing industry. It is not. It is a burden on the consumer. But so far as it is a burden on business or industry, it is more of a burden on the retailer than on the manufacturer.

The Government's policies on the hotel and catering industry are wholly unsatisfactory. I hope that we shall get replies to the points raised from the Chief Secretary. In addition, I hope that he will tell the Committee what representations he has had from the British Travel Association, the British Hotel and Restaurant Association and the Catering Association of Great Britain about the tax, and how he has explained to them the justification, such as it may be, for the Government's policies, and what their reaction has been.

I believe that the Government's policies on this industry must be changed. Sooner or later their bad effects will become evident. It is important that they should be changed at once.

Mr. Terence L. Higgins (Worthing)

I am very glad to have the opportunity to say a few words on this subject, which is of vital importance to my constituents, and to support my hon. Friend the Member for Blackpool, North (Mr. Miscampbell), who moved the Amendment so ably.

Like my hon. Friend the Member for Blackpool, South (Mr. Blaker), I am somewhat puzzled by the fact that the Minister of State, Board of Trade, is not present to listen and reply to the debate, not least because I understand that representations that my constituents made to the Chancellor were passed to the President of the Board of Trade for reply. I am very sorry that we are not to have the views of the Board of Trade as well as those of the Chief Secretary.

My hon. Friends have quoted a large number of statistics, but one figure in particular deserves mention. Earnings from tourism rose by about three times between 1960 and 1964. This is of great importance to the economy as a whole. Can the Chief Secretary tell us how this three-fold increase compares with our export industries? I am sure he agrees that if we are to achieve the rate of economic growth that we all want it is important to do all we can to increase export earnings, and so we should encourage as far as possible the export industries and earners of foreign exchange which show real potentiality for growth. Surely the tourist and hotel industry has shown its capabilities in this respect and compares very favourably with the vast mass of manufacturing industry, creators of physical assets which have to be exported in order to obtain foreign exchange.

The very fast rate of growth in the tourist industry has created a considerable labour shortage in it. It now needs to bring in more labour. A recent survey of 316 hotels showed a very large deficit in kitchen staff—about 25 per cent. more are needed—chambermaids, receptionists, and so on. The figures were considerable. The industry is earning foreign exchange and needs to attract labour. Yet the Bill, if the Amendment is not accepted, will make it more difficult for the industry to recruit because it will have to pay the tax and so will be less able to attract new recruits by paying higher wages.

It is the Chancellor's avowed intention to achieve a redeployment of labour by the use of the tax, and apparently, for reasons which elude me, he feels that the hotel industry should have its labour encouraged to leave it although the pattern of demand from people in this country and overseas is that more labour should be brought into it. In that respect, it is important to consider the actual structure of the industry. We still rely to a large extent on our old stock of hotels, and the amount to which they can be adjusted to make up for the impact of the tax and economise in labour is very limited. The fact is that these hotels have already introduced labour-saving devices as far as possible.

In my constituency, I know that hotels were very quick to introduce electronic devices to call staff from different parts of the hotel, thereby managing to reduce staff and operate more efficiently. Everything that they can do, when labour costs are rising because of the general overfull employment in the economy, has already been done in hotels, and the tax is not likely to have the effect which the Chancellor suggests. Instead, it will merely raise the costs of the industry and make it less remunerative to be in it and more difficult to win export earnings.

I agree with the point that both my hon. Friends have made that we are not only concerned with earning foreign exchange. The hotel industry has people from this country spending their holidays at home who might otherwise go abroad.

The opportunities for saving labour as a result of the tax, even when building new hotels, will not be as great as might be supposed. I have spent some time looking into an investment proposal for a hotel company. I concluded that, if one started from scratch, one could build a very much more efficient hotel in terms of comparative labour/capital costs than if one started from old stock which was built when labour was very much cheaper. Even up-to-date hotels have been constructed on the basis of reasonable forecasts of labour costs, though, of course, with no anticipation of the tax. No hotelier could have expected a tax like this to be imposed, believing that the industry is a reasonable one, making a real contribution to the national economy.

Even if the hotels dispense with labour, in constituencies like my own the question then arises of what other industries will the people go into. The fact is that in many of the coastal areas where hotels tend to be concentrated, other available occupations are limited, often because successive Governments have deterred the construction of industry in those areas. It is true that the hotels employ a large amount of part-time labour, and a considerable number of elderly people are taken on on a part-time basis. If they are not given work in hotels and the hotels are deterred from employing them, they have no other occupations, and the standards of service in our hotels will worsen.

I am forced to the conclusion that it is difficult to understand why the Chancellor has not made an exception of the kind that we are proposing in the Amendment. It has been suggested that it might be because he would seem to be favouring export industries, which in some way would be contrary to the General Agreement on Tariffs and Trade. If that is so, I hope that we shall hear it from the Chief Secretary. In various exchanges across the Floor of the House on previous occasions, that has been mooted.

From my memory of the treaty, I can see no reason why the hotel industry should not be given neutral treatment in the Bill, though I personally see no reason why it should not be given a premium as well. I hope that the Chief Secretary will clarify that point, because it seems to be the only reason why the Chancellor should not accept the Amendment. It may be that the idea is that we will impose a tax on the tourist industry, and that we can make it clear to our colleagues in G.A.T.T. that we do not favour our fourth most important export earner and will not attempt to contravene the terms of G.A.T.T. If this is so, I think that the Chief Secretary should refer to an article written by Dr. Kaldor, in 1963, in which he expressed the view that the arrangement being made by a Government to subsidise industry on lines similar to those now proposed would not be contrary to G.A.T.T.

4.30 a.m.

I want now to turn to the vital question of investment. I do not propose to go into the question of investment allowances, because to do so would be out of order, but I think that we have to be clear that if this tax is imposed only two things can happen—either the price of hotel accommodation will go up, or profit margins will be squeezed. If the latter happens, it will become increasingly difficult for hotels to carry out improvements to existing premises, to raise their standards, to increase the number of bathrooms, and so on, which it is essential to do if we are to attract the tourist trade from overseas.

The Press in my constituency this week has carried a report that local hotels might find it necessary to raise prices by 10 per cent. or more. If this happens it will have a considerable effect on earnings. But even supposing that the increase in prices is nothing near that amount, that it is only 5 per cent., there is no doubt that the corresponding decrease in the tourist industry will be something of the same order. This means that foreign exchange earnings and the import substitution which I have mentioned will be considerably affected.

The Chief Secretary knows that estimates have been made that if we can save about £50 million in foreign exchange it is possible to work the economy at about £200 million a year higher in terms of gross domestic product. This is something which we ought to seek to achieve, but, for reasons which remain obscure, we find the Government deliberately curtailing and discouraging the earning of foreign exchange. This must have a bad effect on the growth of our gross domestic product, which in turn will result in a fall in receipts from Income Tax, and so on.

I hope, therefore, that we shall have a reasonable explanation from the Chief Secretary, even at half-past four in the morning, and that he will find it possible to accept the Amendment.

Mr. Walter Clegg (North Fylde)

I am particularly pleased to follow my neighbours on the Fylde coast, the hon. Members for Blackpool, South (Mr. Blaker) and Blackpool, North (Mr. Miscampbell). I do not intend to repeat the arguments which they used so effectively in connection with this tax.

I want to show the Committee the effect of the tax on the situation in my constituency. The towns of Thornton Cleveleys and Fleetwood are, in part, holiday resorts. They have an effective unemployment rate of 4.5 per cent. This area has been described by the Lancashire and Mersey Development Association as the worst unemployment black spot in Lancashire. This is a consistent rate, and it applied throughout the summer and winter of last year, and it is applying now. If, therefore, there were unemployment in the tourist industry in those towns, and this were to add to the unemployment figure, the result would be quite intolerable, because 60 per cent. of all the employment is in the service industries and we do not have the manufacturing industries to absorb any further unemployment.

We have had no help from the Government. We have pressed the Board of Trade to be included in a development area, but we have not been. In addition to having an unemployment rate of 4.5 per cent., we have been denied the incentive grant. We have less chance of getting capital for the development of either manufacturing or service industries than we had under the last Government. If, therefore, we are faced with further unemployment as a result of this tax, the situation in my constituency will be very serious indeed.

From everything that has been said in the debate—and I have listened very carefully—there is no hope for my constituents from this Government, no hope whatsoever. I have heard hon. Members from the other side, particularly those from Scotland, talk in terms of heavy unemployment in Scotland in the past and say what a wonderful job the Government have done in reducing that. Well, they are not doing a very good job for my constituents and this tax will make it much worse.

These are valid arguments, I think, to which the Chief Secretary should reply. He has said before that perhaps the unemployment that will result in the service industries is not as great as hon. Members on this side of the Committee are making out. But if further unemployment occurs in an area of 4.5 per cent. unemployment, higher than the tolerable limit talked of by the late Hugh Gaitskell, there will be great hardship on the Fylde Coast and I am sure that the Government will be held responsible for it.

Mr. John Pardoe (Cornwall, North)

I represent a constituency with a very considerable tourist industry which plays a major part in the economy of the country. I have faced the Chief Secretary on this subject at an early hour of the morning on another occasion, so I know his arguments, but I hope that he does not know the arguments I want to put today. I want to deal with one argument which he has used before, so that he does not use it again.

I know that this tax on the tourist industry, as in every other, is to raise revenue. The Chief Secretary has said that. But it is not levied on the tourist industry just to raise revenue, because, if so, there would be no selective element about it at all—it would be raised on every single industry and there would be no repayments and no premiums, and we would get a great deal of money and could lower the Income Tax rates or whatever else we like to do.

The tourist industry is being taxed in a different way from manufacturing industry for some purpose or other, and I want the Chief Secretary to tell us what that purpose is. I do not believe that he can give us a purpose that is satisfactory to my constituents, or to me.

The purpose must surely be to further the economic policies of the Government, and, therefore, we have to ask a certain number of questions. Why should the tourist industry be selected for this very special treatment? In the National Plan we are told that the overriding thing is to give priority to industries that can make the greatest contribution to the balance of payments.

Were hotels excluded from the rebate because they do not contribute to the balance of payments? The tourist industry is the fourth largest earner of foreign exchange and the largest earner of dollars. I know that the industry is not doing anything like enough to attract foreign visitors, but I do not think that the Government are, either. We need more hotels and more beds, but hotels are being built more slowly than in almost any other country in Europe. It is no good thinking we can rely on camping as a kind of substitute, because camping does not provide much revenue for areas like Cornwall, or from people coming into this country. Some countries, looking at the declining revenues derived from foreign tourists, are beginning to regard their tourists as a crowd of beatniks.

Therefore, we must build hotels, and the hotel industry must be able to earn sufficient profit to plough it back. It must be remembered that the industry is an important earner of foreign exchange and an important import-saving industry. Tourists are one of the imports that we desperately need to encourage.

If we cannot persuade people to holiday here they will go abroad. The point has already been made that the difference in cost between holidaying on the Costa Brava and in an English resort is not very great; and the weather is often against us, even in Cornwall. We must provide incentives for foreign tourists to come here, and for our own people to take their first and second holiday here.

In the National Plan we are told that priorities are given to growth industries. Has the hotel industry been singled out for special treatment because it is not a growth industry? The tourist industry of this country is, par excellence, a growth industry. Its growth has been staggering in terms of tourists coming here, in terms of holidays, and of turnover. We are told that the tax has been levied partly to stop labour-hoarding in certain service industries. Can the Chief Secretary demonstrate that the tourist industry is guilty of labour hoarding? I do not believe that he can.

Productivity in British manufacturing industry only 10 or 15 years ago was one of the highest in Europe, but it is now lower than in any country in Western Europe north of the Alps. It is not substantially above the productivity of the U.S.S.R. or Japan. Yet a whole mass of manufacturing industries will be given a premium of 7s. 6d. for the privilege of hoarding their labour, and the Chief Secretary cannot make out a case that the hotel industry is any worse than these others.

4.45 a.m.

In any case, there must be a fairly high proportion of employees in the upper grades in the hotel industry if we want to attract foreign tourists to this country. These tourists will stay mainly at upper grade hotels, which will have to offer upper grade service. Whatever we think of flunkeys—and this is something which we might expect a Socialist Government to shy away from—people who stay in these hotels want their shoes cleaned by people and not by robots. They want the individual service which human beings can give, and for which there is no substitute.

I would quote here from Sir Geoffrey Crowther's letter to The Times, because I have been saying that the tourist industry fits in with what the Labour Party wants of an industry in Britain today. He makes the point even more clearly when he says that his hotels … have been reinvesting more than our total profits in building new hotels and in modernizing old ones, although the returns on such investment are meagre and slow in fruition, especially outside London. The key point of the letter is this: We can thus claim to have been acting in exactly the way that, according to the Labour canon, all companies should act. We have been earning foreign exchange, ploughing back our profits and modernising. This industry should not be slapped in the face for having done this. Yet it has received a series of slaps. This is only one of a long line. The investment allowances were removed and there is the question of building licences. It is easy to get a building licence for a bingo card factory, but difficult to get one to build a hotel.

I do not believe that the hotel industry has been singled out for any of these reasons, but merely because it falls within a particular order of the Standard Industrial Classification. Are the Government so inflexible that they cannot see that this is a crashing mistake? Is this a selective tax or not?

There are problems in tourism in my part of the country. More than 2 million people visit Cornwall annually: not all come from abroad, but some do. From this source we get about £43 million a year. The whole of Cornwall, and particularly North Cornwall, is very dependent on this industry. The population of Newquay, one of the most go-ahead resorts in the country, is raised from an average of about 10,000 to 12,000 throughout the year to over 60,000 at the height of the season. This creates problems for some of us living near Newquay.

At a recent conference on the problems of tourism in Cornwall, one exasperated planner said to me, "If only they would send their money and stay at home, all our problems would be solved." Bude is probably the town most hard hit by the Selective Employment Tax in the whole country, primarily because it is dependent on the tourist industry.

What is the effect on prices? I am not in the hotel trade, and can only make calculations, although I have been a waiter in a hotel. I want to repeat the calculations of hoteliers in my constituency whose advice I have taken. The Chief Secretary may wish to refer some of these items, in due course, to the Prices and Incomes Board, but I do not believe that it will find that they are excessive, in view of the effects of the tax.

The best estimate which one large hotel is able to make of the effect on bar prices is that drinks will go up by 1d. or 2d. That may not be a vast sum, but worse is to come. They say that, on a 30s. meal prepared for a banquet, the wage element is 9s. and that the effect of the tax will be to increase the price of these meals by about 2s. 7d. each. When one takes into account additional services, one realises that this has a considerable effect across the length and breadth of services.

Mr. Diamond

Does the hon. Gentleman accept those figures of 2s. 7d. and 9s. an hour? Does he make himself responsible for those figures?

Mr. Pardoe

I did not say that it was 9s. an hour. I said that the wage element in a 30s. meal was 9s. I agree that these calculations are extremely difficult to make, but I am only saying that this is the best estimate that we in Cornwall have been able to arrive at, and I have no reason to suppose that the Chief Secretary has any greater experience of the hotel trade than my informants have.

My informants also say that it is almost certain that hotel room prices as a whole will have to go up by 5 per cent. and that the price of meals in restaurants will have to go up by 7½ per cent. The Chief Secretary may dispute those figures. I hope that if he does he will be able to justify his tax on other grounds, but I doubt it. The fact is that here is an industry which is of enormous importance to the nation in its import-saving qualities, in its earning of foreign exchange. It is an industry that is the lifeblood of my constituency and of many areas of Britain like Cornwall, and I do not believe that it should be singled out in this way for this very harsh treatment.

Mr. Grieve

It is with some diffidence that I intervene in this debate, representing a constituency right in the middle of England. I am fully aware that there are still many of my hon. Friends who represent constituencies on the coast of England——

Mr. Buchanan-Smith

And Scotland.

Mr. Grieve

—and Scotland, as my hon. Friend reminds me.

I intervene for two reasons, which I hope my hon. Friends will think are good. First, this is not only a constituency problem. It is a vital national problem. My hon. Friends the Members for Blackpool, North (Mr. Miscampbell) and for Blackpool, South (Mr. Blaker) emphasised their fears. They speak for themselves, and they show that here is an industry which is the greatest dollar earner we have, and which, as the hon. Member for Cornwall, North (Mr. Pardoe) said, is singled out for this treatment by the Government.

My second reason for intervening is that the constituency which I have the honour to represent, although in the middle of England and not heavily hotelled—if I may coin a word—is one where a very large number of people constantly use hotels. My constituents earn their living for the greater part in the great Midlands industries. In that connection they have to travel a good deal and for that reason they use hotels in this country and overseas. Earning their livelihoods as they do in the great Midlands industries, they are great dollar earners.

They take the good holidays to which I think we would all agree they are entitled. Where are they to go for those holidays? It is no use trying to gloss over the fact that to the people who live in our northern climes the sun is a great attraction. It always has been so, so people feel a great pull to go South, to France, Spain, Italy and the Mediterranean for their holidays.

Our hotels have got to compete with this. They can compete, given the old English fine day. We have just had one, and another is dawning. [An HON. MEMBER: "It has dawned."] The light that dawns through the windows of this Chamber may perhaps soften the heart of the Chief Secretary. Perhaps it will enlighten his mind a little so that he will see the necessity for making the concessions for which we on this side of the Committee are asking.

Our hotels have to compete with the increasing number of hotels along the Mediterranean coast. The only way to do so is by supplying comfort and service which our people often find they cannot get at hotels on the Continent. If they are to provide such comfort and service they must have the means to do so. They will not have the means if their investment allowances are taken away, if they are deprived of the new investment incentives and if, in addition, they have to pay this heavy tax.

There is no substitute for personal service in hotels. One can mechanise up to a point but when it comes to service at meals and the comfort of being looked after, and summoning someone to one's room, personal service is the only way. There is a limit beyond which one cannot cut down personal service in hotels. This is something to which the Government, in their adamant attitude, are completely blind.

Mr. Michael Noble (Argyll)

Unlike my hon. and learned Friend the Member for Solihull (Mr. Grieve), I live on the coast. Although tourism is a great part of the lives and prosperity of my constituents, I promise to speak only briefly on points which, broadly speaking, have not yet been raised. It is difficult to be certain what my hon. Friends have in mind to raise, for there are so many points of importance.

The hon. Member for Willesden, West (Mr. Pavitt), one of the few hon. Members opposite who have come in to listen to this debate and is the only one among them who has spoken, said that on Monday there was a debate in which a great many points about the tourist industry were raised. It was his intervention which made me want to say a few words to the Chief Secretary.

On Monday, the right hon. Gentleman and the Financial Secretary argued that one must not look at the effects of the tax but at the totality of wonderful measures the Government have taken for this, that or the other industry or area. That would be fair enough if the Government were, indeed, taking a lot of other action to help this, that, or the other industry or area. The right hon. Gentleman may be tempted to say the same thing again in this debate, but he has not one iota of evidence to show what the Government have done for tourism.

We happen to have been discussing this problem upstairs, in Committee on the Industrial Development Bill. The President of the Board of Trade and the Minister of State, Board of Trade, who have special responsibility for tourism, have not been able to tell us one single thing that they could do by the Bill to help the tourist industry, or to point to one single thing that the Government have done in any other way.

5.0 a.m.

Quite apart from the many other things which have been mentioned in the Committee, there has been a sharp increase, by the Government's own action, in the cost of petrol and diesel oil. This has had the effect, which affects the constituencies of many of my hon. Friends, of putting up very sharply the cost of travel, whether people are using their own cars, or travelling by aeroplane, railway or some other form of transport. This has been positive Government action against the interests of the tourist industry.

One point that has not been mentioned in the debate is that the incidence of the: tax will come in September, which is within a very few weeks of the end of the tourist season in Scotland. There have been arguments as to how much the tax will put up prices in hotels. One cannot calculate this by taking the increase in the cost of staff and simply applying it to the hotel. Anybody who has studied this knows that the effect will go right through the distribution chain. No hotel can be fortunate enough to be able to grow all its own food. The tax will hit the delivery of the food, drink and other things that the hotel uses at five or six different points before it gets on to the table or into the bedroom.

The hotel industry is faced with paying the tax—and I am speaking particularly of hotels in the rural areas—at a time when visitors have gone away for the winter and there is a long time to wait before they return in the spring. What does the Chief Secretary suggest that the hotels should do to make the money to pay the tax? I am sure that he will object if they suggest that they put up their prices now to have something extra in the kitty with which to pay it. His right hon. Friend, the First Secretary of State, would immediately want to refer such hotels to the Prices and Incomes Board for putting up their prices without due reason.

The small hotel keepers will have to finance themselves for perhaps four or five months without any hope of a large number of visitors, because so many of them keep open through the winter to help commercial travellers and have staff to pay. The Chief Secretary should consider that point.

I have a feeling that the Chief Secretary will not accept the Amendment in total, but I hope that when he replies he will think particularly of those hotels in the Western Isles which have been having a difficult time over the past six weeks or so because of the seamen's strike. They have had a very real problem, because they had to keep on staff or they would have lost them altogether. Many of them expected to take very considerable sums of money in May and June—this is perhaps the best time to visit the Western Isles—but this has been impossible for them, through no fault of their own. These people will be already very hard hit this summer, and they will be even worse hit when they have to start paying the tax.

A point that has been touched on by at least one hon. Member is that for people who are squeezed out of the industry from rural areas the only place to go is back into London, the one place we want to keep people out of. It is one place that has an all-year-round season. Hard hit though the London hotels will be, they will at least have a very much bigger turnover from which they can write off the extra imposition which the Government have put on them.

Mr. James Ramsden (Harrogate)

In connection with this Clause and, in particular, its incidence upon the hotel trade, I have had a correspondence heavier, more diverse and more indignant than any I can remember on any political issue during the whole time I have had the honour to represent Harrogate in the House. This is the first occasion when I have felt absolutely constrained to make what must, in the main, be a constituency speech on an issue of this kind. I say that to the Chief Secretary in all seriousness.

The volume of protest has come partly because there is in my constituency a large number of hotels, and the tourist trade in general, not confined to hotels but extending to conferences, is the key trade in the constituency. Another reason is that there is always a large number of people seeking part-time work, much of it being available only in hotels. If the Chief Secretary will consult his colleague at the Ministry of Labour and study the evidence produced by his local officers, he will learn that the provision of sufficient part-time work has been a chronic problem for that Ministry in and around my constituency.

The third reason for the volume of correspondence is that, apart from the hotel trade, there is in the constituency a large number of establishments connected with what the Treasury call the services in general, offices, shops, administrative headquarters of companies, and so on. But, even so, the volume and weight of the indignation generated by the tax, as manifested to me in correspondence, is remarkable.

Why should it have reached such a pitch on this issue? The basic reason is that people are genuinely indignant about the tax because they regard the method of levying it as unfair. The hotel trade feels this particularly keenly because it regards itself as as much a contributor to our export effort as manufacturing industry. People do not accept the justification for the tax put forward by Treasury Ministers, that what they term the services have not hitherto borne the same burden of taxation as the manufacturing sector. That argument does not carry weight or make sense to people who look at the question from a commonsense point of view.

Secondly, I believe that it is felt, perhaps particularly in the North of England, where people look at these things with a commonsense which is sometimes rather different from our more sophisticated approach, that the one essential about taxation is that its incidence should be uniform and fairly spread. They feel that this tax breaches that principle. It is the selective principle of the tax that offends against what is a true and reliable instinct as to the function of taxation and what is expected, what they are entitled to expect from the proposals put forward by the Treasury Ministers.

The Treasury Ministers are on very dangerous ground when they provoke this feeling among taxpayers who have hitherto been among the most complacent and co-operative in the world. The hotel industry is very labour-intensive, as I believe the jargon goes. If one is to give service in an hotel, one has to have a large number of pairs of hands and feet and one cannot replace hands and feet by machinery.

The hon. Member for Cornwall, North (Mr. Pardoe) talked about a robot machine for cleaning shoes. If he knows of one I hope that he will tell me about it, but I do not see any such machine being of service to the hotel trade. Where there are machines for washing glasses and dishes, they have already been installed, but there are no prospects of wholesale economy of labour in the industry as a whole.

Mr. Pardoe

In case the Chief Secretary gets the wrong idea, and answers the wrong point, I would point out that I did not say that there were not automatic machines for cleaning shoes. There are such machines. What I said was that people who stayed in first-class hotels liked to feel that their shoes are being cleaned by people, and not robots.

Mr. Ramsden

I accept that. If service is to be given, people simply have to be there. If the hotels are to be expected to cut down in the number of people available for service, then service will suffer. I hope that the reputation of our hotels for service is not reduced to what we are told is the condition prevailing as a result of years of Socialist government in Scandinavia. I have not been there, but I am told that service in hotels there is extremely difficult to obtain. Either standards will fall and the costs will rise, or service will not be given and standards will suffer. This is regrettable, coming as it does at the climax of a period when British hotels have been striving to raise their standards and improve service, with notable success.

5.15 a.m.

It is true to say that the hotel trade has not, in the past decade been the golden-headed boy of Chancellors of both parties. It has much to complain of. There was Purchase Tax, and recently, as a result of a decision by the Chancellor, it has had to complain about the removal of the investment allowances. There is still hanging over it the plan for it to pay the industrial training levy. This tax will be an added burden. The essential of this burden is the addition that it will make to the wage costs of the hotel industry.

My hon. Friend the Member for Blackpool, North (Mr. Miscampbell) based his argument, so far as I can remember, on the figure of 5 to 8 per cent., for the increase in wages. I thought that I detected a certain amount of doubt on the part of the Chief Secretary, but it so happens that I have a letter here from quite a large hotel in my constituency in which it is stated that the Selective Employment Tax will cost them £5,200 more in a full year for the permanent staff, and £500 for extra staff who are engaged in peak periods. They give the total annual wage bill as being £76,137 and, if my arithmetic is right—which it often is not, although I know the Chief Secretary will correct me—£5,000 or more, in relation to about £76,000, works out to rather more than 5 per cent.

So I think that these figures bear out the argument of my hon. Friend the Member for Blackpool, North and I hope that the Chief Secretary will think again about this Amendment. I hope he will not do what the Financial Secretary did in reply to our earlier Amendment on employment of part-time workers, namely, admit that unfairness existed and then brush aside its effect. I hope that we have made an impression that this part of the Bill will operate most unfairly against the hotel and catering trades and that the Chief Secretary has seen the wisdom of our argument.

Lieut.-Commander Maydon

I am one of those people who do not care two hoots who cleans my shoes—whether it be a robot or human hands—so long as they are cleaned. What the Chief Secretary has to remember is that whoever does the cleaning, shoes do not walk along by themselves to be cleaned. They have to be collected, cleaned, and redistributed, and there are literally thousands of little services in hotels and catering establishments where there may or may not be robots to do the work. Cups, saucers, knives, forks, shoes, and so on and so on have to be cleared and carried hither to the dining room or bedroom, and these are just some of the services requiring human hands.

Within the space of few minutes the Chancellor and his team have dealt two fatal blows to the British hotel and catering industries. First, they have withdrawn the investment allowances while excluding hotels and catering establishments from the incentive allowances, and now, there is the selective employment tax. Hotels are large employers of labour, and much of it is part-time labour. It has to be because they cannot get full-time workers. The hotels nationally in the United Kingdom at present are about 20 per cent. short of the labour force they would like to have; and now this tax will increase hotel costs by something between 8 and 10 per cent.

Personally, I think that that figure is low, and by the time that the incidental rather than the direct incidence of this tax is reckoned in the figure will be higher than that. The hotels have to provide a service over very long hours daily and seven days a week. The labour cost in their turnover is about 30 per cent. One can see, therefore, that, however well organised and mechanised a hotel or catering establishment may be, the labour content is very high.

We are fortunate in Britain in having a very beautiful country, with many fine historic and interesting things for visitors to look at. But, unfortunately, we have an abominable and unreliable climate. [HON. MEMBERS: "And Government."] And Government. It is essential, therefore, that the interiors of our hotels should be clean when people are driven indoors by bad weather, that the service should be good and that they should enjoy staying in them. If this extra imposition is put on hotel managements, we cannot be certain of the good service and staff required to make the hotels additionally attractive to compensation for the variation in the weather.

I wholeheartedly support the Amendment. I hope that the Chief Secretary will soften his hard heart and get that darkness out of his soul and will give us a favourable answer.

Sir Fitzroy Maclean (Bute and North Ayrshire)

Like other hon. Members who have spoken, I represent a constituency where the tourist industry is certainly one of the most important, if not the most important, industries. In declaring an interest, I have first-hand experience of the problems confronting hoteliers. Therefore, I am anxious to support the Amendment which has been so ably moved by my hon. Friend the Member for Blackpool, North (Mr. Miscampbell).

This tax provides yet another instance of the Government's schizophrenia. There is a discrepancy between what they say and what they do. The Government, like everybody else, seem to recognise the importance of the tourist industry. They seem to recognise that it is both an earner and a saver of foreign currency, particularly of dollars. They recognise that it is a good customer to a whole range of other industries and trades, many of which, incidentally, will also be hit by this tax and will pass it on to their customers. They recognise that in many parts of the country the tourist industry is one of the prime sources of employment. In Scotland, for example, the tourist industry, both directly and indirectly, gives a great deal of employment and will, we hope, give more.

This industry already labours under a whole series of disadvantages which some of my hon. Friends have mentioned. This tax will add to them still further and make them less able to compete with foreign rivals. The hotel and catering industries suffer very badly from a shortage of trained staff. There is over the country a shortfall of about 48,000 on a total labour force of about 250,000—that is, about 20 per cent. If it works, if it serves the mysterious purpose which the Government have assigned to it, S.E.T. will aggravate this shortage.

There has been a lot of use made this evening of the phrase "labour intensive". Certainly, hotels and restaurants are both very labour intensive. They have to employ, because of the long hours they work, disproportionately large numbers of staff, including part-time staff, and where they are seasonal hotels they have, in general, to try to carry these large staffs through the winter when they are not only not earning money but probably losing money in quite a big way. Labour costs amount, on the average, to about one-third of their turnover. That is a very high proportion indeed, and it is calculated that this tax will increase these labour costs by another 10 per cent.

As I have said, the tourist industry, in Scotland in particular, is highly seasonal; profits are highly marginal and precarious. Hotels, and catering establishments generally, are, therefore, confronted with the choice, of either reducing staff—and incidentally causing unemployment, because there is no industry, in a great many parts of the Highlands, for example, for the staff to go to, and hotel staff are not necessarily suited for manufacturing industry—and lowering their standards, or of carrying the staff through the winter, when they are losing money, and, therefore, of having to put up their prices. Either of those courses is calculated to make the tourist industry less competitive, and they are both courses which the hotel industry, and the tourist industry in general, is reluctant to take, reluctant to have forced upon it.

I hope that the Chief Secretary will consider very carefully whether he can do something to relieve this industry of the dilemma in which he seems to be about to place it.

Sir J. Eden

I am grateful for the fact that the Chief Secretary has sat nobly through the debate and has not made a move of any kind so far but, clearly, has been listening to the speeches. I hope that he will be able to wait a little longer, so that one or two of my hon. Friends who want to do so can still speak. I thought that I detected noises indicative of that perhaps not being the case, so I thought that I would put that word in.

Mr. Diamond

I was about to say that I was anxiously waiting to hear the hon. Gentleman.

Sir J. Eden

I shall be speaking on behalf of some of my hon. Friends in whom, I am certain, the right hon. Gentleman shows an equal interest. I shall keep my remarks very brief indeed. I certainly shall not go over the ground which has been already covered, because I think that this has been touched on very well, and I had the opportunity to speak on an earlier Amendment on this subject; and I shall certainly hope to catch the eye of the Chair in the proceedings on another Bill later.

During the debates we have been having the Chief Secretary has been rather apt to minimise the harmful effects of this tax. He and his right hon. and learned Friend the Financial Secretary both seemed to say—the hon. and learned Gentleman did, in fact, say—that the fears of the incidence of this tax were exaggerated. I do not think it is right. He may be right if he is thinking of this tax standing by itself; that may be so; but what he has to take into account, as has already been put to him, is the fact that this is part of the whole series of imposts and of rising costs which industries and this industry in particular, have to face up to at this time.

5.30 a.m.

The tax is cumulative in effect. It does not just cover those employed in the place of work, but affects the costs of the concern through the consequential effect that it has on the costs of the other organisations with which it has to trade. This applies particularly in the transportation of food. I do not think that any other country treats its hotels as badly as we do. No other country treats its hotels in this way—no interest advantages, no special investment allowances, no subsidy and no long-term credit.

Other countries give advantages to their tourist industry, with which ours has to compete. The right hon. Gentleman must know this fact. He may not welcome it, but it is a fact of life, and a fact with which we have to compete. I believe that he is aware of it because of what he said on an Amendment to Clause 33, when he referred to the fact that the President of the Board of Trade would discuss with the British Travel Association ways in which the position of the tourist industry could be ameliorated.

I tabled a Question to the President of the Board of Trade asking him to make a statement about his discussions with the Association about the effect of recent Government proposals on the hotel and tourist industry, and I received an answer yesterday. The right hon. Gentleman said: We are discussing whether some way can be found for assisting selected hotels to increase significantly their earnings from overseas visitors. I emphasise those words. How will that be done? How will the Government—that administrative machine so incompetent that it cannot single out a blind, deaf or disabled person or an old-aged pensioner—single out particular hotels to encourage them to increase significantly their earnings from overseas visitors?

The right hon. Gentleman has something to answer here. This is selectivity gone mad. If he can carry selectivity to such a fine point that he can pick out one hotel, surely he can turn to whole sections of industry, consider the whole range, for example, of private schools, and take account of the strong pleas made on behalf of cleaners, all kinds of industries, sporting clubs and athletic associations?

But, no. All those were brushed aside. Yet out comes one hotel, and it is to be encouraged to have more foreign visitors. I am delighted to hear it. But what are the criteria by which the operation will be judged? Who is to do the selection? How will the great National Insurance machine pick out a hotel which has a foreign visitor? If this is a tax on employers, how will the machine identitfy that employer in a hotel which has a large number of overseas visitors? It will be a very interesting exercise. So eager am I to hear the right hon. Gentleman reply, that I am almost tempted to sit down immediately.

As the right hon. Gentleman knows, I, also, represent a hotel constituency. There is general uncertainty about the intentions of the Government in the Bill. That uncertainty has been aggravated by the misfortune of the seamen's strike and has been intensified by the difficult balance of payments position in which we find ourselves.

The general atmosphere of uncertainty is already being reflected in hotel bookings for the current year. It is a very serious matter, and I hope that the right hon. Gentleman will treat it as such, and not brush it aside as he did on a pre- vious occasion, when he got up because he felt that he had to do so to bring the debate to an end.

We stress these points not for our own entertainment, nor for our own help, but because we believe in the vitally significant part which the hotel and tourist industry can and must continue to play in the economic life of the country, and we expect the Government to support it.

Mr. Diamond

We have had nearly two hours' discussion on what is a topic of extreme importance. As the hon. Member for Bournemouth, West (Sir John Eden) pointed out, this is not the first time that it has been debated. We had a lengthy discussion on it a short time ago, in which the hon. Gentleman participated.

It would be convenient now to give an indication of the Government's attitude to the Amendment. Having done that, I look forward to listening to any other hon. Member who cares to participate in the debate. I am sure that, with co-operation on both sides, we can conclude the matter fairly shortly.

I recognise that it is a matter of considerable interest in the constituencies of many hon. Members, and, of course, it is of considerable national interest, too. In view of that, I want to deal fairly fully with the points that have been made.

Perhaps it would be best if I began by making the Government's position clear on general principles. We are introducing a selective tax which bears on services. We have made clear time and time again why we think it right in the national interest that, when attempting to collect the revenue which is generally admitted to be necessary, we should turn towards a selective tax on services. It will go some way, but by no means the whole way, towards righting the existing imbalance between taxes on commodities which are manufactured and taxes on services.

I have said—and I am sure that I do not need to repeat this—that there is a marked imbalance at the moment of about 40 to 1 if we take into account everything that is manufactured. If it is thought unreasonable to include in the calculation things like beer and cigarettes, the ratio is reduced to about 15 to 1, but this, again, is what the position was before this year's Budget.

If it is agreed that we have to raise between £200 million and £250 million this year and that we cannot do so by an increase in Income Tax—this has been said from the Front Bench—we are driven to the conclusion that it is likely to be raised by Purchase Tax and similar methods. If it were done in the traditional way, the ratio would be not 40 to 1, but even greater. The Government are deliberately moving towards righting this imbalance by raising a tax on services. Hotels and catering are a service, and this is the major justification for bringing them within the scope of the tax.

Hon. Members from both the Conservative and Liberal Parties have spoken for an Amendment which seeks to exclude—the 1d. rate is put in to get the Amendment on the Notice Paper—the hotel and catering industry from the effects of this tax, although many of these hon. Members have said repeatedly that they would be in favour of a payroll tax right across the board, but at a lower rate obviously. [Interruption.] I wish that hon. Members would do me the courtesy of listening to me with one-tenth of the attention with which I listened to them.

Hon. Gentleman opposite have said that they would be in favour of a payroll tax right across the board, but on this occasion every speech has been in complete contradiction of that general principle which they were proposing as an alternative to this tax. They are now saying that because of its condition the hotel and catering industry should not bear any tax. I merely draw attention to the illogicality in the thinking of every hon. Member who has spoken compared with the rejection of the principle of selectivity.

I propose now to discuss the condition of the hotel industry. The hon. Member for Blackpool, North (Mr. Miscampbell), who, because of his constituency interest, has great knowledge of the hotel industry, told us that it was not possible to get booked into an hotel, not only in his constituency, but in the whole country. Every hotel is full.

The hon. Member for Worthing (Mr. Higgins), who, because of his constituency interest, also has great knowledge of this industry, told us that it had trebled its turnover in four years and that the rate of growth was very considerable indeed. There is, therefore, every indication that this industry is in an extremely healthy economic condition. Hotels throughout the country are fully booked, and turnover has trebled in four years.

Let us consider next what the Government are proposing in relation to this very healthy industry. It is a very important industry, for a variety of reasons, and one that is in a very healthy condition. I do not want to quote my own figures, but those which have been given to me by hon. Gentlemen opposite. The hon. Member for Cornwall, North (Mr. Pardoe) told us that on a 30s. meal the labour content was 9s. This proportion was confirmed by the hon. Member for Bute and North Ayrshire (Sir F. Maclean), who said that the labour content was about one-third.

One-third of 30s. is 10s. and the hon. Member for Cornwall, North tells us that in this particular example it is 9s. So we will accept his 9s. He goes on to say that the increased cost on the 9s. as a result of this tax is 2s. 7d. I would ask him if he is prepared to accept that figure and make himself responsible, as all Members of Parliament are responsible, for what he has said.

5.45 a.m.

It represents in fact an increase of 30 per cent. I hope that the hon. Member will forgive me for saying that I do not accept that increase of 2s. 7d. on the 9s. I am quite prepared to accept the 9s., which corresponds with other information given by hon. Members in the Committee and with my own information. Other hon. Members have put forward the view that the tax represents about 6 per cent. on hotel and catering wages, although it will, of course, vary from hotel to hotel. But having regard to the fact that it is 6 per cent. on what some hon. Members say—and this agrees with information which I have in the Treasury—I am bound to reject as ridiculous and extravagant the argument that it is 30 per cent.

Mr. Pardoe

I thought that the Chief Secretary would make this point. This figure is the best calculation of the chairman of a major chain of hotels, who has been a distinguished Member of this House. He has calculated the results of the Selective Employment Tax in his own chain of hotels, taking into account all the factors, in a special banqueting situation. I have no reason to disbelieve his figure. I am prepared to arrange a meeting between the chairman of this chain of hotels and the Chief Secretary to prove the point, if the right hon. Gentleman so wishes.

Mr. Diamond

I hope that the hon. Gentleman will not think me discourteous if I say that I am unable to accept that the tax would lead to an increase of 30 per cent. In fact, other hon. Members have said that it would be about 6 per cent., and if, therefore, the whole of the increase in the labour cost were added on to the price of a 30s. meal, that meal would cost 30s. 6d. And if, as one would hope, only half the cost were passed on, the other half being absorbed through greater efficiency, which is not asking a great deal, then a 30s. meal would become 30s. 3d.

Anyone telling them that it is necessary to put up the cost in the way that has been suggested in an industry that is packed out and growing at so fast a rate, anyone telling me that as a credible story, will find me a rather sceptical listener.

Mr. Hall-Davis

I hope that the Chief Secretary will not disregard the fact that independent correspondents from all parts of the country tell the same story. As one who has been chairman of a hotel company I must tell him that he must not delude himself on this matter. If prices are not raised by 5 per cent. the hotel industry in this country, as we know it now, will disintegrate.

Mr. Diamond

I would be only too glad to look at any figures that any hon. Gentleman cares to put to me—that is my job—or to consider any representations from the hotel industry.

On the figures that I have I would accept the figure of 9s. out of 30s. and 6 per cent. as the proportion of the increase which the tax would have generally on the labour content. As the labour content is about one-third we get an increase in the charge of about 2 per cent. That is much higher than the effect of the tax overall, but I agree that the hotel industry is to a greater extent than other industries labour-intensive, and, therefore, we would expect more than the average figure.

The average figure is in fact less than 1 per cent. I am prepared to accept that in the hotel industry it would be more than double that—say 2½ times that figure—and would be about 2 per cent. The effect would be that in the case of anybody coming here from, say, America, for every £10 that he would otherwise have spent in a hotel he would have to reckon on spending £10 4s. if the whole increase were passed on, or £10 2s. if less than half were passed on. I have listened carefully to every speech made on this and the previous occasion. I am here to help the hotel industry.

Mr. Eldon Griffiths (Bury St. Edmunds)

Humbug.

Mr. Diamond

The hon. Member is not compelled to believe that. He is entitled to call it humbug if he likes, but he wastes his time in listening to what I am saying in that case. I repeat that on the basis of the information put before me I am not prepared to accept the fears and anxieties of many hon. Members that this tax will have a very damaging effect on the hotel industry.

Sir F. Maclean

Has the right hon. Gentleman taken into account the indirect incidence of the tax—the increase which is passed on to the hotel industry by the various suppliers of services, and so on?

Mr. Diamond

Yes, I have. That is a more subtle calculation. We have however taken into account both the services which the hotel buys and which are likely to be somewhat increased, and also 'those commodities which the hotel buys which are likely to cost the same or perhaps be somewhat reduced as a result of the premiums paid to manufacturers. The overall figure is about what I said. That is what I believe will be the effect. There is no dispute between the two sides of the Committee on the present facts; the dispute is about future anxieties. I do not believe that those anxieties are well founded.

Dame Irene Ward

The right hon. Gentleman has said that he thinks that these costs will be reduced, on average, but in all his arguments he has never made one reference to the tremendous increases in the cost of heating, by coal, gas and electricity, which have been scheduled. We also have to remember the increased cost of laundry. Where are the costs decreasing? They will not come in for any rate rebate.

Mr. Diamond

This is a very difficult calculation and one that must be approximate, because hotels vary considerably in their status, their luxury, their charges and their make-up. We have, however, to try to discuss this matter with some objectivity—and the best information I have is that overall the increase will be about 2 per cent. This gives the figures that I have mentioned. But that is not the end of the story. It is not fair to compare that increase with nothing; the comparison should be between that increase and the situation which would have obtained had the revenue been raised in some other way.

Now we come directly back to what one hon. Gentleman said—I have listened with great care to all the speeches—claiming that the hotel industry has been badly treated, that it has had to pay Purchase Tax on its carpets, spoons, knives and forks, and so on. Exactly. And what if Purchase Tax had been increased to provide an additional revenue of £200 to £250 million? I have not worked it out and, therefore, am making a pure guess, but it is very likely that, if the increase had all been on Purchase Tax the cost and the overheads which would have been borne by any hotel would have been very much greater man the modest cost of the present tax.

That is the real comparison. I am, therefore, not satisfied—although, I repeat, I will gladly look at any figures which any hon. Gentleman or any representative of the trade interests concerned produce—that there is any cause for anxiety about the future health of the hotel industry——

Mr. Ramsden

The right hon. Gentleman has based his argument on a careful analysis of the likely increase in costs, for which the whole Committee is grateful. I am sure that he will like to get this cleared up, as his speech will be read with great attention by the industry.

As I understood him, he agreed with figures which I, in common with other hon. Members, produced, illustrating an increase in wage costs of about 6 per cent. He then took that same figure as the likely total increase in hotel costs, ignoring the indirect factors mentioned by my hon. Friend the Member for Bute and North Ayrshire (Sir F. Maclean) and my right hon. Friend the Member for Argyll (Mr. Noble).

Mr. Diamond

If the right hon. Member will read what I have said in HANSARD, he will see that I have got over it. He referred to this increase of 6 per cent. in wage costs, which I accept as being the likely figure in the hotel industry. The likely total increase in charges made by the hotelier or caterer would be 2 per cent.—[HON. MEMBERS: "In costs."] No, in charges. The increase in charges made by the hotelier and paid by the customer would be about 2 per cent.

That deals with the domestic situation. Now I turn to dollar and foreign excchange earning, which is of vital importance——

Mr. Lubbock

Since he has asked for them, may I give the right hon. Gentleman some figures which, I think, will show that his 6 per cent. is wrong, in spite of what has been said by the right hon. Member for Harrogate (Mr. Ramsden)? If he makes inquiries, he will find that the ladies who work in the tearoom in the House of Commons are paid 4s. 6d. an hour. In a 42-hour week, that comes out at 189s. If 12s. 6d. is placed on top of that, assuming that this were an outside restaurant, that would be an increase of 6.6 per cent. if all the employees worked full-time. But if a number of these ladies worked half the week, that would mean an increase of over 13 per cent. in wage costs alone, apart from indirect increases like laundry charges.

Mr. Diamond

It does not help to pick out one particular example. That is a very unreliable basis from which to argue. However, I repeat that I shall be glad to look at any figures which hon. Members may wish to send to me.

The right hon. Member for Harrogate (Mr. Ramsden)—my home town, incidentally—represents a constituency full of hotels and is speaking for the generality of hotels in Harrogate, some of which are fairly luxurious and some middle class. Other hon. Members have spoken from their own experience in the hotel industry, and know the figures generally. My information tallies with what has been said, and I would accept as valid the experiences which have been contributed to the discussion.

6.0 a.m.

May I now, therefore, turn to the question of foreign exchange. This is of enormous importance. A figure of 10 per cent., or perhaps a little less, has often been given for the hotel industry's earnings coming from overseas visitors. That is an important figure. But I hope nobody is suggesting that what we are proposing to the Committee is a subsidy on exports or in invisible exports. That is not so.

To make the point quite clear, let me say that services which are exclusively related to exports, such as an export merchant, are to be taxed under the Selective Employment Tax as services. It is true that the contribution of services to exports is far smaller proportionately than the contribution of manufactured goods to exports. But I am taking this opportunity not merely of accepting but of underlining what hon. Members opposite have said, that here is an example of taxing an invisible export which one would not be doing if one were introducing a subsidy on exports. One cannot introduce a subsidy on exports. This demonstrates, therefore, that the Government are in no way introducing a subsidy on exports. Therefore, as with other invisible exports, it is accepted that there will be a tax on this particular service.

A question that we have to consider is what will be the effect of the tax on our dollar and other foreign exchange earnings. The information and advice that I have is that they are not likely to be prejudiced by this tax, and may even increase. With the present economic health of the industry, there seems to be little doubt that such increases in prices as would arise and be charged to overseas visitors could well be carried without reducing the traffic at all. If it were not reduced at all there would result an increase in our foreign exchange earnings.

There is no anxiety on the part of the Government, therefore, that this tax will cause any falling off in the most important element of foreign exchange receipts. On the domestic side and on the foreign exchange side there arises no cause for anxiety as a result of this tax.

Mr. Higgins

I believe that the Chief Secretary misunderstood a point which I made earlier. I think that he will find when he looks at the record that he has misunderstood what I said. I said earlier that the rate of growth in the foreign exchange earnings compared with physical exports was three times as fast. It was over a period of 10 years, incidentally, and not four years as the right hon. Friend suggested. I think that he will find that I am correct. Surely, if this is so, and it is three times as fast as physical exports, we do not want to take any action such as this which will slow down this rate of growth.

Mr. Diamond

I have answered that point, and I repeat that my information is that there is no reason to believe that what we are doing with this tax is likely to lead to a reduction in foreign exchange earnings. If anything, it is likely to lead to an increase.

Mr. Blaker rose——

Mr. Eldon Griffiths rose——

Mr. Diamond

I have given way a dozen times already. I will give way just once more.

Mr. Blaker

The fact that the right hon. Gentleman has given way a dozen times reflects adversely on the content of his speech—

Mr. Diamond rose——

Hon. Members

Give way.

The Chairman

I think that the right hon. Gentleman had given way.

Mr. Blaker

Will the right hon. Gentleman now answer the question put by my hon. Friend the Member for Worthing (Mr. Higgins), which related to the rate of growth in overseas earnings? It is not a question whether or not they will fall off—let us hope they will not—but whether they will go on growing at the rate they should.

Mr. Diamond

I am glad to answer an intervention by way of question rather than by way of the kind of comment the hon. Gentleman made. I thought that I had answered that point twice. I did so carefully. If the hon. Gentleman will allow me to get to the end of my speech, his anxieties will also be somewhat relieved. I am saying in general terms that the anxieties which have been expressed both about domestic earnings and foreign exchange earnings are without secure foundation.

I was also told—and this I cannot believe—that the hotel industry has reached the end of the road in terms of efficiency, that no further labour-saving devices or increases in productivity can happen over the next 25 years—my own figure—because every single laboursaving device has already been adopted. That is something no one can accept. Every responsible and self-respecting hotel manager would expect to show an increase in productivity over the years and to incorporate more and more labour-saving devices. The S.E.T. is an appropriate encouragement to him to do so.

Mr. F. V. Corfield (Gloucestershire, South) rose——

Mr. Diamond

I hope that I will be allowed to get on. I dare say that the hon. Gentleman will have the good fortune to catch your eye, Sir Eric, after I have sat down.

Having said that on the broad issue of the tax, I recognise what was said by the right hon. Member for Argyll (Mr. Noble)—that one does not have to deal only with the effect of the tax, but also with the effect of every Government action affecting hotels. We recognise that there is a problem. My hon. Friend the Member for Willesden, West (Mr. Pavitt) reminded the Committee of what I said when we discussed this matter on 22nd June. I stated: Those who are interested in the hotel industry and particularly in tourism know that the combination of all the acts which have been referred to create a problem for tourism. The President of the Board of Trade is fully aware of that and he is at the moment engaged in discussions with the British Travel Association to see to what extent amelioration … can take place. It is too early to say anything more than to advise the Committee that we are aware of the problem and are in the process of discussing it."—[OFFICIAL REPORT, 22nd June, 1966; Vol. 730, c. 696.] The hon. Member for Bournemouth, West (Sir J. Eden) has told us that he understands from the President of the Board of Trade that the discussions are continuing and that my right hon. Friend has certain proposals which he hopes to put to the industry and about which he will no doubt inform the House in due course. It is not for me to anticipate those proposals.

I seek only to show that, although I cannot accept that the S.E.T. gives rise to any anxiety and although none of the arguments which has been used is empty of exaggeration, we recognise that this is an important industry and that its foreign exchange earning capacity is of great importance. We are in the process, therefore, of considering to what extent assistance can be provided.

I hope that I have made it clear that the Government regard this as an important industry which needs special consideration at the present time. I cannot, however, recommend the Amendment to the Committee because I do not believe that the tax will have any adverse effect upon the industry.

Mr. Peter Mills (Torrington)

I rise to support the Amendment, although I feel rather like a holiday myself after this long night's sitting. The Amendment is very important, and, in spite of what the Minister says, I believe that the tax will have a very serious effect on the tourist industry, and particularly on the South-West. The Minister is being rather complacent. I do not share his views on this, or his optimism for the future of the tourist industry.

I have no hesitation in going over some of the points that have already been raised—[HON. MEMBERS: "We have the hesitation."] Only by reiterating these points over and over again shall we get the Minister to see sense and reason in our case. He does not seem to understand that the industry is carrying many burdens, and that this is one more that it will have to bear. Managers and owners of hotels have told me that they are in serious difficulties, not only because of the tax but also because of the loss of their investment allowances, and because their rates and many other expenses have gone up very considerably under a Socialist Government.

I am glad to see that the Minister of State, Welsh Office, has woken up, because he should have a very great interest in this, as the holiday industry is a very great industry in Wales as it is in the South West.

The Minister of State, Welsh Office (Mr. G. Thomas)

I have been awake all the time.

Mr. Mills

I am not too sure about that. I saw the hon. Gentleman dropping off a moment ago. I am amazed how few hon. Members opposite are interested in this subject. I should have thought that the hon. Member for Falmouth and Camborne (Dr. John Dunwoody)—he has left the Chamber—would have been interested, as there are many hotels in his constituency, as would the hon. Member for Brighton, Kemptown (Mr. Hobden). What has happened to them? Does this not interest them? It interests me. I have received considerable representations from the hotel industry.

We in the South-West rely very much on the holiday trade for our total income within the region. We cannot afford to have this industry slip back. I wish that we did not rely so much on the industry, much as we like it and welcome visitors, but we have to rely on it, as we cannot turn to very much else. We are struggling to get other industries into the area, but at present we rely heavily on the industry. It is carrying burdens as a result of actions of the present Government, and it will carry increasing burdens because of the Selective Employment Tax.

Mr. Hirst

My hon. Friend rightly drew attention to the absence of interest among hon. Members opposite, particularly of hon. Members from seaside constituencies. But the Amendment, as he appreciates, concerns not only holiday resorts, but also the hotel and catering industry, which affects every hon. Member's constituency. I myself am very concerned.

6.15 a.m.

Mr. Mills

I am sorry for that slip. I fully agree with what my hon. Friend has said. I want to make two new points. [HON. MEMBERS: "Oh."] I thought that that would awaken hon. Members opposite.

Because of the higher costs which the tax will inevitably cause, many people will be turned away from hotel holidays to the caravan and chalet type of holiday. Do we want this? I am not sure that we do. I am not in favour of any great extension in the South-West of the vast sites with row after row of caravans which we see now. I am not in favour of more and more chalets. We should encourage people to go to hotels.

Dr. David Owen (Plymouth, Sutton)

Might that not be deemed an interference with a person's choice in how he wishes to spend a holiday?

Mr. Mills

That may be so. But my point is that we want to encourage people to take their holidays in hotels. After all, hotels pay their rates, which is more than the caravans and chalets do.

Mr. Pavitt

Does the hon. Gentleman think that he can persuade his hon. Friends who are members of the Caravan Club of the House of Commons on that point?

Mr. Mills

I am not against caravans. I said that we did not want an extension of the rows upon rows of caravans in the South-West. Not only are they unsightly, but it is not good for the local councils.

Dame Joan Vickers

My hon. Friend is making a good point, but he forgets that a better one still is that the housewife wants a holiday from doing all the cooking, shopping and cleaning.

Mr. Mills

I am grateful to my hon. Friend. My wife has made that point many times, and I regret not mentioning it.

The second new point is that, because of the higher charges in hotels and boarding houses which are bound to be caused by the tax, the bad practice of sleeping in cars will grow. It is quite prevalent in the South-West now. It is a practice which causes considerable concern in the South-West. There are all the problems of toilets, the leaving of litter and waste, and so on.

The Government are very short-sighted in what they are doing. I make a strong plea for the refund of the tax and the inclusion of hotels in the investment grant scheme. The Government must take the problem seriously. The hotel industry deserves that they should.

Mr. Corfield

I do not know whether my hon. Friend the Member for Torrington (Mr. Peter Mills), having put down the bad practice of sleeping in cars to the price of hotels, is attributing the sleepiness in this Committee to that same cause, but this sleepiness seems to have overcome the Chief Secretary, as the arguments in favour of these Amendments, which have been moved so persuasively, have simply not been adequately answered.

The only argument of the Chief Secretary was one which completely destroyed any conceivable argument he might ever have had for the tax in the first place. What he said was that 25s. a week for male employees and 12s. 6d. a week in the case of female employees was so negligible that it would have no effect at all, or that it would have such a marginal effect that it could be ignored. That in an industry which he recognises as being a labour-intensive industry. If this is a sound argument, what can be the good of all the administrative chaos and trouble in which he will find himself involved in order to pay the 7s. 6d. to manufacturing industry, which by definition, is less labour intensive?

If it is said that 25s. a week will have no noticeable effect, then the 7s. 6d. rebate is nonsense. It is up to the Chief Secretary to listen again to the arguments, which he has apparently failed to understand. I hope that the presence of the Deputy Chief Whip does not have any ominous overtones in relation to the Closure of the debate, which has not yet been appreciated by the Government Front Bench. Despite the little homily which the hon. Gentleman the Member for Willesden, West (Mr. Pavitt) gave us earlier, it is essential that a matter of this sort should be discussed, no matter what the hour, if only for the reason referred to by my right hon. Friend the Member for Harrogate (Mr. Ramsden) that this is a tax which is seen by the country to be unfair and ought therefore to be the concern of this House and of this Government.

The arguments of my hon. Friends have been so overwhelming and obvious that it has been difficult to put them forward without a feeling of incredulity that any Government should have failed to seem them in the first place, let alone dismiss them with the argument which the Chief Secretary used. I suspect that most of my hon. Friends will share the frustration that, despite this obvious economic nonsense, the Government remain wholly unconcerned and wholly unrepentant. I have never been particularly optimistic about the reception of this Amendment, for the one good reason that it reveals only one of the many anomalies arising from this Government's determination to draw a hard and fast line between the manufacturing industries, on the one side, and the service industries, on the other, with transport in some sort of "No Man's Land" in the middle, along with the Civil Service, in which "Parkinson's Law" is being exemplified day after day to the ninth degree.

At the same time, there is bound to be a diluting of the service, which has been the pride of the country in the past. The Chief Secretary argues that one is readjusting the balance between the tax on manufacturing industries, and the lack of tax on service industries. He has never given us any examples of a tax upon manufacturing industry. We know that there is plenty of Purchase Tax on manufactured goods, but this is something quite different. The tax on the manufactured goods is a tax which we all know falls upon the consumer and all that he is saying is, "Here is a collection of consumer taxes. Let us juggle them around and put some on services instead of increasing those on manufactured goods."

It is not a valid argument to say that Purchase Tax is a tax on the manufacturing employer. It is a tax on the consumer and one which, in so far as it falls upon the supplier of the article, the weight of it falls almost exclusively on the retailer. Generally, when there is a change of taxation he carries a great burden at Budget time. This is the same sort of argument that we have had, and for the same reason, in Committee on the Industrial Development Bill upstairs, which has been dealing with investment grants. Over and over again the sole answer which we receive is that the Government have decided to make this distinction, and that this is a service industry and that is that. It is abundantly clear that this distinction has never had any reference at all either to the value of a particular industry to the economy, or to its propensity, or its ability, to hoard labour.

The hotel and catering industries, apart from forming the whole infrastructure of the tourist industry, as has been pointed out, are a large earner of foreign exchange in its own right. That much at least is admitted by the Government. Yet, the Chancellor and his colleagues at the Board of Trade give different figures on different occasions to confuse the issue, and now they have confused the issue in relation to the G.A.T.T. This has suddenly been thrown across the Floor of the Committee. We are told that special provision cannot be made for the hotel industry because, by so doing, the Government would infringe the terms of the G.A.T.T.; but when one of my hon. Friends—I think the Member for Cheltenham (Mr. Dodds-Parker)—put down an Amendment on that subject, we were told that there was no provision in the G.A.T.T. which would make such action a contravention of the Agreement.

This is one more illustration of the complete lack of co-operative understanding between Ministers on this, as on every other subject. But without relying on figures which we have obtained from hotels, it is a matter of common observations that far from being hoarders of labour the hotel industry suffers from shortage of labour and has to provide service over much longer hours than what are accepted as normal "working hours" in industry. It compares very well with many manufacturing industries in that it has no restrictive practices. Nor is it an industry in which there are strikes or threat of strikes which produce inflationary increases in wages.

It has a shortage of manpower to the tune of something like 20 per cent., as my hon. and gallant Friend the Member for Wells (Lieut.-Commander Maydon) has pointed out. Even if there was an argument for saying that if there is any labour to be released from the hotel industry available to go elsewhere, is there any possible evidence for claiming that it would be likely to be used more effectively in some other way in relation to its possibility of earning foreign exchange? All the possibilities and likelihoods are the other way round.

If people do, in fact, become redundant because of this tax—and the Chancellor has said this was one of the objects of the exercise—will the people in the Highlands of Scotland, in the West Country, in Wales, and the other areas which depend more than others on the hotel industry go into some other industry which is likely to earn foreign exchange to the same extent that the hotel industry does? We have to remember that the Government have admitted that it does.

I will close on the purely domestic aspect of the situation which the Government are producing. One of the most important factors inhibiting industrialists from moving to the development areas is the lack of amenities and particularly lack of hotel accommodation. That is one of the most important aspects of the effect of this tax. It is hardly to be expected of this Government that they would carry their illogicality to a logical conclusion by excluding hotel building, for example, from investment grants in the development districts.

Although we do not complain about it, that merely underlines the absurdity of counteracting their own policy on the development districts, albeit a policy they have very half-heartedly taken over from us, of encouraging industry to move to those areas and then taxing the employment that the buildings on which they give the grants is likely to produce, thereby decreasing the ability of those hotels to afford the attraction that is so necessary to encourage other industries to move to those areas.

6.30 a.m.

The writer of a letter which appeared in the publication called Caterer and Hotel Keeper concludes by saying: Having spent some years of effort and investment to offer a standard we were told was necessary to equal that of continental hotels, have we now to hack-pedal to the self-service ' Would you kindly bring your bags this way, Sir? The vending machines are in the old dining room on the right'? Is that the way to compete with continental hotels, not only as the direct competitors for the British tourist whom the Chancellor is so anxious, when he goes to the Boat Show, should remain at home, but as the main competitor for the dollars of which the tourist industry is one of our largest earners?

We have not heard an argument which in any way shows that this is a sensible thing to do, even for the present Government. I urge the right hon. Gentleman to tell us that he will think again and will come back with something more helpful. Earlier this morning, or it may have been just before midnight, the Chancellor talked about good will. This is a two-sided operation. There should be a little good will on the Government side. Over the last two very long night sittings there has been precious little good will from the Government. I hope that the Chief Secretary will reflect and will read the very well-reasoned arguments put forward by my right hon. and hon. Friends and the hon. Member for Cornwall, North (Mr. Pardoe) and consider whether it is he and not the Committee who could be mistaken for once and come away from the arrogant idea that the Government have decided and therefore this must be right.

I hope that the Committee will continue to discuss this very important matter. Unless we get something helpful from the Chief Secretary, I must urge my hon. Friends to vote for the Amendment and against the view expressed by the right hon. Gentleman.

Mr. Michael Jopling (Westmorland)

I am grateful to have the chance to speak on this Amendment. We started at Blackpool and moved up through North Fylde, and then my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) had a brief say. I am sure the Committee hopes that my hon. Friend will be able to catch the eye of the Chair, because he has such a long and special interest and experience in this industry that what he will have to say about costs will go a long way to refuting the figures of the Chief Secretary. They are figures which I find impossible to understand. Having heard what my hon. Friend the Member for Worthing (Mr. Higgins) said, it seems to me that the right hon. Gentleman has completely failed to grasp the meaning of the hidden costs which my hon. Friend the Member for Tynemouth (Dame Irene Ward) mentioned.

I wish to talk about some of the difficulties which this tax will put on the tourist and hotel industry in my constituency and in the Lake District in general. This is a peculiar area, rather different from some of the holiday resorts where there is a large town, perhaps on the seaside, the problems of which we have heard quite a lot this morning. I hope that it will be possible for me to explain what the peculiar difficulties and peculiar implications of this tax will be on the scattered rural tourist areas.

In the Lake District there is, basically, a short season. There is at the same time this basic shortage of labour. Quite why this should be in the scattered rural tourist areas I am not quite sure, but I suppose it may be that people who work in the hotel industry are happier when working in tourist areas where there is a town where they can spend their recreation time and use it to better effect. I had the opportunity early on Tuesday morning of speaking on an Amendment concerning development areas, and I talked then of the impact through the hotel industry on the development areas. It is about the hotel and tourist industry I want to speak now. I promise not to take long, but I must begin by pointing out the difficulties which this tax will put on that industry.

As some of my hon. Friends have said, it will mean that expansion of the industry will be slowed down very seriously. It will mean, as my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) said, that we shall have closing down of restaurants and the emergence in many hotels of the glorified snack bar. On Tuesday morning I gave one example of one hotel proprietor in my constituency who was threatening to do this very thing. There will be at the same time a run down of the traditional restaurants and of the services they traditionally provide.

One thing which, I think, has not been mentioned in this debate, and which is of immense importance, is that travellers, people who spend their holidays in the more scattered rural tourist areas, make great use of the roadside services—the motels and motorway service areas. I am quite sure that the impact of this tax will be rather greater on those sorts of establishments, because there the accent is on quick service, and that means, naturally, that they have to have more staff; hence they are even more labour intensive than many of the hotels and restaurants of the traditional type. Moreover, many of them are far into the country, and that means that they have extra expenses of transport. This, again, is another part of the economy which is likely to be very seriously affected by the imposition of this tax. There will, I think, be a higher proportion of increased costs in the motels and service areas than in the larger part of the catering industry.

That will mean that many tourists using the tourist roads will become reluctant to stop at these places. Goodness knows, they are expensive enough already. A man taking his family to the Lake District or to South-West England is faced with a very large bill indeed if he stops for a meal at some of these places. The imposition of this tax, an extra cost, will mean we shall have a great deal more of the roadside picnicking and all the filth and litter which it causes.

Mr. Michael Shaw (Scarborough and Whitby)

Is my hon. Friend aware that already one of the chief complaints of these establishments at this time, as I know from making inquiries, is that they cannot get sufficient labour to man the restaurants?

Mr. Jopling

Exactly. It means that if they are to do this, they will have to get more labour than they are using now. There will be an even larger increase in costs because of the tax.

The tax will have a bad effect in scattered tourist areas. Many young people come to my constituency to walk and climb on the mountains and enjoy the amenities. They are very different from the teddy boys that we sometimes discuss. We spend far too little time doing things to encourage young people to go climbing and walking in the more beautiful parts of the country. Often they are people of limited means who try to get into the countryside on as many weekends in the year as they can, and they should be encouraged. The iniquities that the tax will impose on tourist areas will make life very much harder for young people.

I am worried by the effect that the tax will have on the behaviour and habits of tourists who come to my constituency.

In recent years the Lake District has become accessible to far more people, particularly day trippers. A few years ago only people from Lancashire and Yorkshire could go to the Lake District for the day. This applies to many other tourist areas, including the Highlands, I should think. But because of the better roads, built by the Conservative Government, the day trip orbit is very much extended. Already we have far more people from the Midlands coming to the Lake District on day trips.

This brings tremendous dangers. [Laughter.] It is all very well hon. Gentlemen opposite laughing. They would not do so if they had to put up with the problems that these people bring with them every weekend. [Laughter.] If hon. Gentleman opposite laugh at that, I invite them to come to Kendal to see the miles of queues all round the town every Saturday and Sunday. The Lake District in particular is in very serious danger of suffering a traffic thrombosis because of the increased numbers of people who are likely to go there.

The Lake District has a basic problem which bears on what my hon. Friend the Member for Torrington (Mr. Peter Mills) said about caravanners. It is all very well for hon. Members opposite to defend caravanners and campers, but one must have control over caravanning and fly-tenting, for they create dreadful eyesores in the national parks. It is all very well to say that we should allow people to go caravanning and camping, but our national parks policy must mean something and we must be prepared——

Mr. Eldon Griffiths

In view of his description of the Lake District, can my hon. Friend explain why these people bother to go there?

6.45 a.m.

Mr. Jopling

I think that that is a disgraceful proposal. I can only imagine that my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) has never been there. If he had, that question would not have come into his mind. It is, without question, the most beautiful part of England, and I hope that my hon. Friend will take the earliest opportunity to see it for himself.

Dame Irene Ward

Take him mountaineering.

Mr. Jopling

This is a most serious problem. The imposition of the tax will mean that many of the people who go to the Lake District on day trips will find that catering facilities particularly are very much more expensive. We expect to have to cope with more cars in the future, anyhow, but, in addition, there will be far more picnickers and fly-tenting all over the Lake District. What we should be trying to do is to channel tourists into existing hotels. Certainly we should not allow them to sleep in cars. On that latter point, if the Committee wanted to do something

about it, we could begin by putting a ban on reclining seats in motorcars.

For the reasons that I have given, I feel that the effect of the Selective Employment Tax will be disastrous on the scattered rural and tourist areas.

Mr. John Silkin rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put:—

The Committee divided: Ayes 130, Noes 92.

Division No. 77.] AYES [6.47 a.m.
Abse, Leo Fletcher, Ted (Darlington) Mapp, Charles
Albu, Austen Floud, Bernard Mayhew, Christopher
Alldritt, Walter Foot, Michael (Ebbw Vale) Mitchell, R. C. (S'th'pton, Test)
Allen, Scholefield Forrester, John Moyle, Roland
Anderson, Donald Fowler, Gerry Neal, Harold
Armstrong, Ernest Freeton, Reginald Newens, Stan
Ashley, Jack Gardner, A. J. Norwood, Christopher
Atkins, Ronald (Preston, N.) Garrett, W. E. Ogden, Eric
Atkinson, Norman (Tottenham) Garrow, Alex O'Malley, Brian
Bagier, Gordon A. T. Ginsburg, David Orme, Stanley
Beaney, Alan Gordon Walker, Rt. Hn. P. C. Owen, Dr. David (Plymouth, S'tn)
Bidwell, Sydney Gourlay, Harry Page, Derek (King's Lynn)
Bishop, E. Si. Gregory, Arnold Parkyn, Brian (Bedford)
Blackburn, F. Griffiths, David (Rother Valley) Pavitt, Laurence
Blenkinsop, Arthur Griffiths, Will (Exchange) Pentland, Norman
Boardman, H. Hamilton, William (Fife, W.)
Boston, Terence Hannan, William Perry, George H. (Nottingham, S.)
Boyden, James Hattersley, Roy Price, Christopher (Perry Barr)
Braddock, Mrs. E. M. Hobden, Dennis (Brighton, K'town) Price, William (Rugby)
Bradley, Tom Hooley, Frank Rees, Merlyn
Brooks, Edwin Horner, John Rhodes, Geoffrey
Brown, R. W. (Shoreditch & F'bury) Howarth, Harry (Wellingborough) Richard, Ivor
Buchan, Norman Howie, W. Roberts, Goronwy (Caernarvon)
Buchanan, Richard (G'gow, Sp'burn) Hughes, Emrys (Ayrshire, S.) Roberts, Gwilym (Bedfordshire, S.)
Callaghan, Rt. Hn. James Jackson, Colin (B'h'se & Spenb'gh) Robertson, John (Paisley)
Cant, R. B. Jackson, Peter M. (High Peak) Rose, Paul
Carter-Jones, Lewis Jones, J. Idwal (Wrexham) Rowland, Christopher (Meriden)
Coe, Denis Kelley, Richard Rowlands, E. (Cardiff, N.)
Coleman, Donald Kerry on, Clifford Shaw, Arnold (Ilford, S.)
Concannon, J. D. Lawson, George Silkin, John (Deptford)
Crawshaw, Richard Leadbitter, Ted Summerskill, Hn. Dr. Shirley
Davies, Dr. Ernest (Stretford) Lee, Rt. Hn. Jennie (Cannock) Swingler, Stephen
Dell, Edmund Lever, L. M. (Ardwick) Thomas, George (Cardiff, W.)
Dewar, Donald Lewis, Ron (Carlisle) Tinn, James
Diamond, Rt. Hn. John Luard, Evan Urwin, T. W.
Dickens, James Lyon, Alexander W. (York) Varley, Eric G.
Doig, Peter Lyons, Edward (Bradford, E.) Wainwright, Edin (Dearne Valley)
Dunn, James A. McCann, John Walden, Brian (All Saints)
Dunwoody, Dr. John (F'th & C'b's) MacDermot, Niall Watkins, David (Consett)
Edelman, Maurice Macdonald, A. H. Wells, William (Walsall, N.)
Ellis, John Mackenzie, Gregor (Rutherglen) Whitlock, William
English, Michael McMillan, Tom (Glasgow, C.)
Ensor, David MacPherson, Malcolm TELLERS FOR THE AYES:
Fernyhough, E. Mahon, Peter (Preston, S.) Mr. McBride and
Fitt, Gerard (Belfast, W.) Mahon, Simon (Bootle) Mr. Charles A. Morris
NOES
Alison, Michael (Barkston Ash) Buck, Antony (Colchester) Elliott, R. W. (N'c'tle-upon-Tyne.N.)
Atkins, Humphrey (M't'n & M'd'n) Campbell, Gordon Errington, Sir Eric
Awdry, Daniel Carlisle, Mark Eyre, Reginald
Bennett, Sir Frederic (Torquay) Carr, Rt. Hn. Robert Farr, John
Bennett, Dr. Reginald (Gos. & Fhm) Chichester-Clark, R. Fortescue, Tim
Berry, Hn. Anthony Clark, Henry Gilmour, Sir John (Fife, E.)
Biggs-Davison, John Clegg, Walter Glover, Sir Douglas
Bossom, Sir Clive Cooke, Robert Grieve, Percy
Boyle, Rt. Hn. Sir Edward Corfield, F. V. Griffiths, Eldon (Bury St. Edmunds)
Brinton, Sir Tatton Crosthwaite-Eyre, Sir Oliver Gurden, Harold
Bryan, Paul Crouch, David Hall-Davis, A. G. F.
Buchanan-Smith,Alick (Angus,N&M) Elliot, Capt. Walter (Carshalton) Hastings, Stephen
Heseltine, Michael Maginnis, John E. Ramsden, Rt. Hn. James
Higgins, Terence L. Maude, Angus Scott, Nicholas
Hirst, Geoffrey Maydon, Lt.-Cmdr. S. L. C. Shaw, Michael (Sc'b'gh & Whitby)
Holland, Philip Mills, Peter (Torrington) Smith, John
Hornby, Richard Mills, Stratton (Belfast, N.) Taylor, Frank (Moss Side)
Howell, David (Guildford) Miscampbell, Norman Thatcher, Mrs. Margaret
Jenkin, Patrick (Woodford) Mitchell, David (Basingstoke) Thorpe, Jeremy
Johnston, Russell (Inverness) Munro-Lucas-Tooth, Sir Hugh van Straubenzee, W. R.
Jopling, Michael Murton, Oscar Vickers, Dame Joan
Joseph, Rt. Hn. Sir Keith Neave, Airey Ward, Dame Irene
King, Evelyn (Dorset, S.) Noble, Rt. Hn. Michael Weatherill, Bernard
Kirk, Peter Onslow, Cranley Whitelaw, William
Legge-Bourke, Sir Harry Orr, Capt. L. P. S. Wilson, Geoffrey (Truro)
Lloyd, Ian (P'tsm'th, Langstone) Osborn, John (Hallam) Winstanley, Dr. M. P.
Lubbock, Eric Page, Graham (Crosby) Wood, Rt. Hn. Richard
MacArthur, Ian Pardoe, John Woodnutt, Mark
Maclean, Sir Fitzroy Pearson, Sir Frank (Clitheroe)
Macleod, Rt. Hn. Ilain Peel, John TELLERS FOR THE NOES:
McMaster, Stanley Pink, R. Bonner Mr. Younger and Mr. Blaker
Macmillan, Maurice (Farnham) Pym, Francis

Question put accordingly, That the proposed words be there inserted:—

The Committee divided: Ayes 92, Noes 130.

Division No. 78.] AYES [6.55 a.m.
Alison, Michael (Barkston Ash) Griffiths, Eldon (Bury St. Edmunds) Neave, Airey
Atkins, Humphrey (M't'n & M'd'n) Gurden, Harold Noble, Rt. Hn. Michael
Awdry, Daniel Hall-Davis, A. G. F. Onslow, Cranley
Bennett, Sir Frederic (Torquay) Hastings, Stephen Orr, Capt. L. P. S.
Bennett, Dr. Reginald (Gos & Fhm) Heseltine, Michael Osborn, John (Hallam)
Berry, Hn. Anthony Higgins, Terence L. Page, Graham (Crosby)
Biggs-Davison, John Hirst, Geoffrey Pardoe, John
Blaker, Peter Holland, Philip Pearson, Sir Frank (Clitheroe)
Bossom, Sir Clive Hornby, Richard Peel, John
Boyle, Rt. Hn. Sir Edward Howell, David (Guildford) Pink, R. Bonner
Brinton, Sir Tatton Jenkin, Patrick (Woodford) Pym, Francis
Bryan, Paul Johnston, Russell (Inverness) Ramsden, Rt. Hn. James
Buchanan-Smith, Alick (Angus,N&M) Jopling, Michael Scott, Nicholas
Buck, Antony (Colchester) Joseph, Rt. Hn. Sir Keith Shaw, Michael (Sc'b'gh & Whitby)
Campbell, Gordon King, Evelyn (Dorset, S.) Smith, John
Carlisle, Mark Kirk, Peter Taylor, Frank (Moss Side)
Carr, Rt. Hn. Robert Legge-Bourke, Sir Harry Thatcher, Mrs. Margaret
Chichester-Clark, R. Lloyd, Ian (P'tsm'th, Langstone) Thorpe, Jeremy
Clark, Henry Lubbock, Eric van Straubenzee, W. R.
Clegg, Walter MacArthur, Ian Vickers, Dame Joan
Cooke, Robert? Maclean, Sir Fitzroy Ward, Dame Irene
Corfield, F. V. Macleod, Rt. Hn. Iain Weatherill, Bernard
Crosthwaite-Eyre, Sir Oliver McMaster, Stanley Whitelaw, William
Crouch, David Macmillan, Maurice (Farnham) Wilson, Geoffrey (Truro)
Elliot, Capt. Walter (Carshalton) Maginnis, John E. Winstanley, Dr. M. P.
Errington, Sir Eric Maude, Angus Wood, Rt. Hn. Richard
Eyre, Reginald Maydon, Lt.-Cmdr. S. L. C. Woodnutt, Mark
Farr, John Mills, Peter (Torrington) Younger, Hn. George
Fortescue, Tim Mills, Stratton (Belfast, N.)
Gilmour, Sir John (Fife, E.) Miscampbell, Norman TELLERS FOR THE AYES:
Glover, Sir Douglas Munro-Lucas-Tooth, Sir Hugh Mr. R. W. Elliott and
Grieve, Percy Murton, Oscar Mr. David Mitchell.
NOES
Abse, Leo Brown, R. W. (Shoreditch & F'bury) Ensor, David
Albu, Austen Buchan. Norman Fernyhough, E.
Alldritt, Walter Buchanan, Richard (G'gow, Sp'burn) Fitt, Gerard (Belfast, W.)
Allen, Scholefield Callaghan, Rt. Hn. James Fletcher, Ted (Darlington)
Anderson, Donald Cant, R. B. Floud, Bernard
Armstrong, Ernest Carter Jones, Lewis Foot, Michael (Ebbw Vale)
Ashley, Jack Coe, Denis Forrester, John
Atkins, Ronald (Preston, N.) Coleman, Donald Fowler, Gerry
Atkinson, Norman (Tottenham) Concannon, J. D. Freeson, Reginald
Bagier, Gordon A. T. Crawshaw, Richard Gardner, A. J.
Beaney, Alan Davies, Dr. Ernest (Stretford) Garrett, W. E.
Bidwell, Sydney Dell, Edmund Garrow, Alex
Bishop, E. S. Dewar, Donald Ginsburg, David
Blackburn, F. Diamond, Rt. Hn, John Gordon Walker, Rt. Hn. P. C.
Blenkinsop, Arthur Dickens, James Gourlay, Harry
Boardman, H. Doig, Peter Gregory, Arnold
Boston, Terence Dunn, James A. Griffiths, David (Rother Valley)
Boyden, James Dunwoody, Dr. John (F'th & C'b'e) Griffiths, Will (Exchange)
Braddock, Mrs. E. M. Edelman, Maurice Hamilton, William (Fife, W.)
Bradley, Tom Ellis, John Hannan, William
Brooks, Edwin English, Michael Hattersley, Roy
Hobden, Dennis (Brighton, K'town) McMillan, Tom (Glasgow, C.) Roberts, Gwilym (Bedfordshire, S.)
Hooley, Frank MacPherson, Malcolm Robertson, John (Paisley)
Horner, John Mahon, Peter (Preston, S.) Rose, Paul
Howarth, Harry (Wellingborough) Mahon, Simon (Bootle) Rowland, Christopher (Meriden)
Howie, W. Mapp, Charles Rowlands, E. (Cardiff, N.)
Hughes, Emrys (Ayrshire, S.) Mayhew, Christopher Shaw, Arnold (Ilford, S.)
Hughes, Roy (Newport) Mitchell, R. C. (S'th'pton, Test) Silkin, John (Deptford)
Jackson, Colin (B'h'se & Spenb'gh) Moyle, Roland Summerskill, Hn. Dr. Shirley
Jackson, Peter M. (High Peak) Neal, Harold Swingler, Stephen
Jones, J. Idwal (Wrexham) Newens, Stan Thomas, George (Cardiff, W.)
Kelley, Richard Norwood, Christopher Tinn, James
Kenyon, Clifford Ogden, Eric Urwin, T. W.
Lawson, George O'Malley, Brian Varley, Eric G.
Leadbitter, Ted Orme, Stanley Wainwright, Edwin (Dearne Valley)
Lee, Rt. Hn. Jennie (Cannock) Owen, Dr. David (Plymouth, S'tn) Walden, Brian (All Saints)
Lever, L. M. (Ardwick) Page, Derek (King's Lynn) Watkins, David (Consett)
Lewis, Ron (Carlisle) Parkyn, Brian (Bedford) Weils, William (Walsall, N.)
Luard, Evan Pentland, Norman Whitlock, William
Lyon, Alexander W. (York) Perry, George H. (Nottingham, S.) Willis, George (Edinburgh, E.)
Lyons, Edward (Bradford, E.) Price, Christopher (Perry Barr)
McCann, John Price, William (Rugby) TELLERS FOR THE NOES
MacDermot, Niall Rees, Merlyn Mr. Charles R. Morris and
Macdonald, A. H. Richard, Ivor Mr. McBride.
Mackenzie, Gregor (Rutherglen) Roberts, Goronwy (Caernarvon)

Amendment proposed: In page 48, line 27, at end insert: Provided always that the said amount shall be one penny in the case of a person who is in receipt of a retirement pension under the National Insurance Acts 1946 to 1966.—[Mr. Hirst.]

Question put, That those words be there inserted:—

The Committee divided: Ayes 90, Noes 128.

Division No. 79.] AYES [7.5 a.m.
Alison, Michael (Barkston Ash) Griffiths, Eldon (Bury St. Edmunds) Noble, Rt. Hn. Michael
Atkins, Humphrey (M't'n & M'd'n) Gurden, Harold Onslow, Cranley
Awdry, Daniel Hall-Davis, A. G. F. Orr, Capt. L. P. S.
Bennet, Sir Frederic (Torquay) Hastings, Stephen Osborn, John (Hallam)
Bennett, Dr. Reginald (Gos & Fhm) Heseltine, Michael Page, Graham (Crosby)
Berry, Hn. Anthony Higgins, Terence L. Pardoe, J.
Biggs-Davison, John Hirst, Geoffrey Pearson, Sir Frank (Clitheroe)
Blaker, Peter Holland, Philip Peel, John
Bossom, Sir Clive Hornby, Richard Pink, R. Bonner
Boyle, Rt. Hn. Sir Edward Howell, David (Guildford) Pym, Francis
Brinton, Sir Tatton Jenkin, Patrick (Woodford) Ramsden, Rt. Hn. James
Bryan, Paul Johnston, Russell (Inverness) Scott, Nicholas
Buchanan-Smith, Alick (Angus,N&M) Jopling, Michael Shaw, Michael (Sc'b'gh & Whitby)
Buck, Antony (Colchester) Joseph, Rt. Hn. Sir Keith Smith, John
Campbell, Gordon King, Evelyn (Dorset, S.) Taylor, Frank (Moss Side)
Carlisle, Mark Kirk, Peter Thatcher, Mrs. Margaret
Carr, Rt. Hn. Robert Legge-Bourke, Sir Harry Thorpe, Jeremy
Chichester-Clark, R. Lloyd, Ian (P'tsm'th, Langstone) van Straubenzee, W. R.
Lubbock, Eric
Clark, Henry MacArthur, Ian Vickers, Dame Joan
Clegg, Walter Maclean, Sir Fitzroy Ward, Dame Irene
Cooke, Robert Macleod, Rt. Hn. lain Weatherill, Bernard
Corfield, F. V. McMaster, Stanley Whitelaw, William
Crosthwaite-Eyre, Sir Oliver Macmillan, Maurice (Farnham) Wilson, Geoffrey (Truro)
Crouch, David Maginnis, John E. Winstanley, Dr. M. P.
Elliot, Capt. Walter (Carshalton) Maude, Angus Wood, Rt. Hn. Richard
Eyre, Reginald Maydon, Lt.-Cmdr. S. L. C. Woodnutt, Mark
Farr, John Mills, Peter (Torrington) Younger, Hn. George
Forteseue, Tim Mills, Stratton (Belfast, N.)
Gilmour, Sir John (Fife, E.) Munro-Lucas-Tooth, Sir Hugh TELLERS FOR THE AYES:
Clover, Sir Douglas Murton, Oscar Mr. R. W. Elliott and
Grieve, Percy Neave, Airey Mr. David Mitchell.
NOES
Abse, Leo Bidwell, Sydney Buchan, Norman
Albu, Austen Bishop, E. S. Buchanan, Richard (G'gow, Sp'burn)
Alldritt, Walter Blackburn, F. Callaghan, Rt. Hn. James
Allen, Scholefield Blenkinsop, Arthur Cant, R. B.
Anderson, Donald Boardman, H. Carter-Jones, Lewis
Armstrong, Ernest Boston, Terence Coe, Denis
Ashley, Jack Boyden, James Crawshaw, Richard
Atkins, Ronald (Preston, N.) Braddock, Mrs. E. M. Davies, Dr. Ernest (Stretford)
Atkinson, Norman (Tottenham) Bradley, Tom Dell, Edmund
Bagier, Gordon A. T. Brooks, Edwin Coleman, Donald
Beaney, Alan Brown, R. W. (Shoreditch & F'bury) Concannon, J. D.
Dewar, Donald Howarth, Harry (Wellingborough) Owen, Dr. David (Plymouth, S'tn)
Diamond, Rt. Hn. John Howie, W. Page, Derek (King's Lynn)
Dickens, James Hughes, Emrys (Ayrshire, S.) Parkyn, Brian (Bedford)
Doig, Peter Hughes, Roy (Newport) Pentland, Norman
Dunn, James A. Jackson, Colin (B'h'se & Spenb'gh) Perry, George H. (Nottingham, S.)
Dunwoody, Dr. John (F'th & C'b's) Jackson, Peter M. (High Peak) Price, Christopher (Perry Barr)
Edelman, Maurice Kelley, Richard Price, William (Rugby)
Ellis, John Kenyon, Clifford Rees, Merlyn
English, Michael Lawson, George Richard, Ivor
Ensor, David Leadbitter, Ted Roberts, Goronwy (Caernarvon)
Fernyhough, E. Lee, Rt. Hn. Jennie (Cannock) Roberts, Gwilym (Bedfordshire, S.)
Fitt, Gerard (Belfast, W.) Lever, L. M. (Ardwick) Robertson, John (Paisley)
Fletcher, Ted (Darlington) Lewis Ron (Carlisle) Rose, Paul
Floud, Bernard Luard, Evan Rowland, Christopher (Meridan)
Foot, Michael (Ebbw Vale) Lyon, Alexander W. (York) Rowlands, E. (Cardiff, N.)
Forrester, John Lyons, Edward (Bradford, E.) Shaw, Arnold (Ilford, S.)
Fowler, Gerry McCann, John Silkin, John (Deptford)
Freeson, Reginald MacDermot, Niall Summerskill, Hn. Dr. Shirley
Gardner, A. J. Macdonald, A. H. Swingler, Stephen
Garrett, W. E. Mackenzie, Gregor (Rutherglen) Thomas, George (Cardiff, W.)
Garrow, Alex MacMillan, Tom (Glasgow, C.) Tinn, James
Ginsburg, David MacPherson, Malcolm Urwin, T. W.
Gordon Walker, Rt. Hn. P. C. Mahon, Peter (Preston, S.) Varley, Eric G.
Gourlay, Harry Mahon, Simon (Bootle) Wainwright, Edwin (Dearne Valley)
Gregory, Arnold Mapp, Charles Walden, Brian (All Saints)
Griffiths, David (Rother Valley) Mayhew, Christopher Watkins, David (Consett)
Griffiths, Will (Exchange) Mitchell, R. C. (S'th'pton, Test) Wells, William (Walsall, N.)
Hamilton, William (Fife, W.) Moyle, Roland Whitlock, William
Hannan, William Neal, Harold Willis, George (Edinburgh, E.)
Hattersley, Roy Newens, Stan
Hobden, Dennis (Brighton, K'town) Ogden, Eric TELLERS FOR THE NOES:
Hooley, Frank O'Malley, Brian Mr. Charles R. Morris and
Horner, John Orme, Stanley Mr. McBride.
Mr. Iain Macleod

I beg to move, That the Chairman do report Progress and ask leave to sit again. I move this Motion in my usual spirit of amiable inquiry as to what the heck we are doing here at this time of the morning. The Leader of the Liberal Party made a similar observation about six hours ago. It was right then, and it is much more right now. Since then we have got through three Amendments and, I think, about eight Divisions.

If I may say so to the Chancellor of the Exchequer, I thought earlier that he was a little optimistic about some of the Clauses after Clause 42. I do not think they will be lengthy, but I should say that there are one or two points that we shall want to raise on the Question "That the Clause stand part of the Bill" and there are other considerations that are beginning to give anxiety—for example, the meetings of Standing Committees upstairs. Therefore, I should like to know the Chancellor's intentions.

7.15 a.m.

Mr. Callaghan

Replying in the same spirit to the right hon. Gentleman's question as to what the heck we are doing here, I would say that we have made some painstaking progress during the night as the result of diligent work by Members on both sides of the Committee and that we are now at least within sight of the end of Clause 42. There are some rocks on the way in the shape of Northern Ireland, and likewise there is discussion about the position of the ports.

I would think, in view of the fact that the right hon. Gentleman says he desires to raise some questions on some of the subsequent Clauses which are not particularly contentious—and I think it will be agreed that inquiry should be made about them and answered—that if we were to get Clause 42 now this would at least mark an end of the day's work and we could then retire to wherever we intend to retire.

Sir D. Glover

Back here.

Mr. Callaghan

The hon. Gentleman has been most patient, sitting there all night, but I admire his tenacity. As I was saying, if we do what I propose, we could make progress on the rest of the Bill when we resume this afternoon.

Mr. Iain Macleod

I would prefer to stop now, but I did not move the Motion for delay but generally in a spirit of inquiry. I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

Mr. William Roots (Kensington, North)

I beg to move Amendment No. 210, in page 49, line 39, at the end to insert: Provided that—

  1. (a) proceedings for the determination of any question arising under this section or in connection with the tax aforesaid may be commenced in the county court or the high court
  2. (b) sums due under this section shall be recoverable only as civil debts due to the Crown and without prejudice to any other method may be recovered summarily as a civil debt.
  3. (c) sections 8 and 93 to 97 of the National Insurance Act 1965 shall not apply to contributions or tax under this section.
Clause 42, as the Committee will be all too well aware, introduces an entirely new form of taxation. We on this side and, perhaps, some hon. Members opposite find it amazing that there is no reference to the subject's right to defend himself against wrongful or mistaken taxing. Nor is any assistance given to him regarding the procedure to be adopted in determining the questions which must increasingly and inevitably arise.

As this is a Finance Bill, one might expect that matters arising under Clause 42 would come before the General or Special Commissioners, but I appreciate that they are Commissioners of Income Tax and it may be that the Government felt that this procedure would not be appropriate. In the light of Schedule 10, I would expect that matters of contention would come under the Minister of Pensions and National Insurance, but when one looks at the National Insurance Act, 1965, one finds a number of matters which, in our view, are quite unsuitable for a taxation Statute.

Under Section 8 of the Act, failure to pay could constitute a criminal offence and have to be proceeded against accordingly. It is true that there would be a right to determine a point of law, again by criminal means, but, according to my recollection, certainly of the Income Tax Acts, criminal proceedings are provided for where there has been something in the nature of fraud or criminal offence or something of that kind. But simply that a man who has a dispute as to whether he is liable to pay and, therefore, fails to pay should then be subject to criminal proceedings seems to us inappropriate.

There are other procedures in the Act. Other matters can be decided. For example, matters relating to liability to contributions would appear to come under Section 64 of the Act and fall to be decided by the Minister of Pensions and National Insurance. But under Section 65 one finds—and again in relation to taxation it is rather surprising to find it—a specific limitation of the subject's right of appeal to the High Court only. I can see no reason why in an important matter of Income Tax law the subject should not be able to appeal to the House of Lords if he has a case. It passes my understanding why, when it is a matter of the contributions under this Clause, his appeal should be severely limited in that way. I hope that we shall have an explanation. I find it difficult to believe that there is a satisfactory explanation, but it will be interesting to know what was in the minds of the Government in limiting this right of appeal.

If the matter relates to a question of benefit—and I suppose that it is arguable whether the subsequent premium provisions are a matter of benefit—it falls to be determined under quite a different system under Section 67 of the National Insurance Act concerning the local insurance officer and appeals from him. It seems to us on this side of the Committee that it cannot be right, when providing a fresh tax system, to leave the matter in that indeterminate way. There are certain other difficulties, because the inevitable Regulations, which are so popular nowadays, under the 1965 Act can apply quite different provisions again. Section 15 of that Act provided for contributions to be paid as and with Income Tax, and for the application of the provisions of the Income Tax Acts.

It looks as if we have come full circle, and no appeals being provided for under the Income Tax Acts, it may be that the National Insurance Act, 1965, may, by Regulations made thereunder, bring the whole thing under Income Tax again, while under Section 16 of the 1965 Act one finds that Regulations can provide which persons are to be treated as employers for the purposes of contributions. The question springs to mind as to whether the Regulations can provide who is to pay the tax, because the Regulations under Section 16 of the 1965 Act would appear to be inappropriate in the present case. Yet I can find nothing to exclude them.

Clearly, proper provision should be made in the Clause for legal matters to be decided under the legal system, under the courts, when a person would know what procedure to follow, and could have a procedure in which he could defend himself in respect of questions arising not merely under Clause 42, but questions which may arise under the related selective payments.

In my view—and I hope that the Financial Secretary will agree with this—the present Clause is an inadequate provision in a major taxation system. The first major need is that the taxpayer must be able to appeal to, and to know his rights before, the normal courts of the land, which are perfectly adequate to deal with this taxation system, as they deal with other matters under the taxation system. Second, recovery of tax, whether there be a dispute as to whether it is payable or whether it is payable but has not been paid, is a matter of civil debt to the Crown, as in other cases of non-payment of tax. Such recovery should be a civil matter like any other debt, and the second paragraph of the Amendment would provide for that.

That leaves aside the question of fraud or criminal proceeding. No one will question that, if a member of the public has been guilty of a criminal offence, for instance, fraud in some form, there should be provision to deal with that. If the Government thought it right to introduce a provision to that end, they would, I am sure, have our support.

7.30 a.m.

The Amendment is specifically designed to exclude Section 8 of the National Insurance Act, 1965, which makes failure to pay a crime, and Sections 93–97, the group of provisions relating to legal proceedings, for the reason that the appropriate and necessary legal proceedings should be provided for under the Clause. The Government must realise that an Amendment on these lines is required, and they should proceed accordingly.

Mr. Anthony Buck (Colchester)

We come now to the most important question of the enforcement of the Clause which we have been considering all night and the procedure for settling disputes.

But, before we consider what sanctions would be appropriate, it is right to pause for a moment and consider what it is we are supposed to enforce.

The Clause to be enforced is one which has received a more substantial, prolonged and effective mauling than almost any other provision can have had in any democratic assembly in recent times. When the Treasury Ministers the there will be engraved on their hearts, if they have hearts, which we sometimes doubted during the night, the words "Clause 43".

Mr. MacDermot

42.

Mr. Buck

Clause 42. [Laughter.] That only shows how one is affected by the long hours of debate which we have just gone through. Clause 42 has been mauled from all sides, without a word being said in its favour.

Bishop Morton had his fork with which he collected taxes from the affluent ostentatious and from the affluent miserly. The Chancellor has gone further and produced a new petard on which he seeks to hoist everyone from charities to dollar earners, right through the categories we were considering throughout the night. It is small consolation that, eventually, he will be hoist by it himself.

We are here considering the enforcement of this bad Clause, Clause 42. How is the Chancellor seeking to enforce payment of the sums which accrue under this Clause? He seeks to do this by the provision of Schedule 10, and to cause the payments to be made to be treated as if they were contributions payable under the National Insurance scheme, thus bringing into play the whole of the mechanism contained in the National Insurance Act, 1965, for the enforcement of the payment of contributions. It is wrong that the same system should be adopted for the collection of contributions as for taxation. The two things are very different, and the system of collection should be different.

The difficulties manifest themselves when one looks at the Act. Section 8 of the Act, which we seek to exclude, says in the first subsection: Subject to the provisions of this Act and of any regulations, no person shall be entitled to pay any contribution under this Act other than a contribution which he is liable to pay. That seems to be common sense, but it raises a point with which I would like the Financial Secretary to deal. Supposing a charity comes forward and says to an employer that if he employs a disabled person it will pay the employment tax it would be prevented from doing so by the provisions of Section 8 (1) of the Act. Subsection 2 of Section 8 provides that for a failure to pay this tax a person is liable for summary conviction. In other words, a person who did not pay this tax is a criminal. We believe that this is wrong. A person may be disputing the tax. This is surely without precedent and it is the most reprehensible part of the provisions which we are considering.

Section 64 of the 1965 Act raised a host of matters to be determined by the Minister. Is it right that the matters set out in the Section should be determined by the Minister, and that there should only be an appeal on a point of law, as I read it, to the High Court, with no right to appeal from there?

I am no tax lawyer, but I understand that the practice is that one has the right of appeal to the High Court and from there to the Court of Appeal and, when a point of public importance is involved, a right of appeal to the House of Lords. Why should the ordinary citizen, in a consideration of this reprehensible tax which has been condemned by both sides of the Committee, be deprived of the right of appeal which he has relative to his ordinary Income Tax affairs? A proper and effective explanation is needed from the Government as to why the ordinary citizen should be precluded from having the right to go to the Court of Appeal and the House of Lords.

The Amendment deals with the matter in a sensible and straightforward way. I admit that I am not entirely convinced about the need to exclude Section 93 of the National Insurance Act, but the Amendment covers the point admirably. It puts back fairly and squarely matters of dispute to the courts where they rightly belong. If the Amendment is accepted, as I am sure it will be, in the mellow light of dawn when tranquillity descends over the Committee and the Financial Secretary is in the mood to accept an Amendment so sensible and cogent as this one, the courts will deal with the matter and there will automatically be a right of appeal to the Court of Appeal and then, if necessary, to the House of Lords.

We clearly lay down that the payments which fall due under the Clause shall be recoverable as civil debts, which is what they are. There should be no question of a person being branded as a criminal if he defaults on payment and is in dispute with the Ministry as to whether payment is due.

Even Hampden, when he refused to pay ship money, was not branded as a criminal. It is wrong that someone who is in dispute about the payment of tax under this Clause, which has not had a word said in its favour all night, should be liable to conviction and be branded as a criminal, albeit he is subject only to a fine of £10 in the first instance.

Mr. MacDermot

I remind the hon. Member for Colchester (Mr. Buck) that a number of very persuasive and cogent speeches have been made in support of the Clause—all coming from the Treasury Bench.

I seek to persuade the Committee, first, why the proposals which the hon. and learned Member for Kensington, South (Mr. Roots) made would result in an unworkable system; and, secondly, why the system proposed in the Clause is logical, fair and sensible, according very closely with other provisions in purely taxation matters.

First, as to workability, the liability for the tax is imposed on the employer who is liable to pay a National Insurance contribution. That is how it is defined from the outset in the Clause. There cannot be any other person liable to pay the tax than the person liable to pay the National Insurance contribution. Secondly, the tax is to be paid with and under the same stamp and as if it were part of the National Insurance contribution. The elements get married by Schedule 10, just as in the same way that the liability to pay several different elements is already married in the existing National Insurance stamp, which includes contributions not just to one fund but to about four different funds.

Clearly, therefore, unless one is to get back to the sort of confusion between the different systems of tribunal which we had before the Judicature Act in the last century, it is necessary that the same courts should determine the same issues, whether in relation to the existing liability under the existing stamp or the additional liability which is added to that by the Clause in respect of this tax. It would, therefore, be unworkable if one had one court, one set of proceedings, to determine, for example, who was the employer, to determine the liability to pay in respect of the National Insurance element of the stamp, and another different set of proceedings and a different set of courts to determine exactly the same issue in relation to the employer's liability to pay this tax with the stamp. One could get conflicting decisions from different tribunals. That is something, as I say, which was familiar to our legal system when we had conflict of jurisdiction between the Chancery and Common Law courts prior to the Judicature Act. I do not think any lawyer or any hon. Member would want us to go back and try that sort of confusion again.

Mr. Patrick Jenkin (Wanstead and Woodford)

The hon. and learned Gentleman will no doubt bear in mind that under the old system which he is describing the rules of equity always prevailed?

Mr. MacDermot

That was the theory, of course, but the kind of proceedings which were sometimes taken to make it prevail included attachment and consigning parties to prison because they dared to try to exercise any different and legal jurisdiction. I do not know whether the hon. Member wants to return to those days, but I suspect not.

Secondly, may I just outline, and answer detailed points on it which were raised, what the procedure is and compare it with procedures under taxation Statutes. At the moment the employer's liability to pay a contribution—to deal with that aspect first, and enforcement afterwards—is first referred to a legal officer of the Ministry of Pensions and National Insurance, who would express his opinion; he cannot determine the issue, but he will give guidance. The employer, if the employer does not agree with his ruling, can then make application for a formal decision by the Minister. The Minister is then acting in a quasi judicial capacity in making that decision. If the Minister thinks right, he may, and frequently does, then order an inquiry to be held into the facts. It is conducted by a lawyer. The employer can be represented legally at that inquiry, and evidence is taken on oath. A report is then made to the Minister by the inspector who has held the inquiry on the findings of fact. The Minister then reaches his decision upon that report and makes the decision. There is then a right of appeal, by way of case stated, on points of law to the High Court, and this is an appeal to a High Court judge sitting alone, and he is the final tribunal in that determination.

With regard to the non-compliance proceedings for the recovery of the contribution, there are two types of proceedings, both criminal and civil. The criminal proceedings are regarded as appropriate where there is evidence that there has been deliberate evasion. The civil proceedings are normally taken in the ordinary case where there appears to have been some misunderstanding, or where, for example, there is an instalment arrangement which has been partly carried out but has subsequently broken down.

Mr. Grieve

This is, I take it, a purely Ministerial decision? It is for the Minister to decide whether to take criminal or civil proceedings? Is that accurate?

Mr. MacDermot

That is quite correct. Is is for the Minister to decide which proceedings to launch. I am stating what the practice is and the principle upon which that decision is made. Of course, this system has been operating now for a very considerable time—so far as I know, without criticism either from the courts or generally. In fact, the majority of cases which are taken against employers are taken by way of civil proceedings rather than by way of criminal proceedings.

7.45 a.m.

The civil proceedings are taken normally in the county court unless the amount involved exceeds the county court jurisdiction, in which case they have to be taken in the high court. The criminal procedings are in form criminal proceedings but they are in a very real sense proceedings for recovery of the amount outstanding. The form of the proceedings is a complaint as to the failure to pay a particular contribution within the time prescribed, which is an offence under the National Insurance Acts. The penalty is £10. That is the extent of the criminal jurisdiction to which the recovery proceedings are anchored, because the court may order payment of the amount of the National Insurance contribution in those proceedings if an appropriate notice has been served beforehand by the Minister upon the employer. That is then recoverable as if it were a penalty, so that the payment can be enforced as if the sum were a fine.

In the case of Leach v. Litchfield in 1960 the Lord Chief Justice emphasised that this procedure was civil in nature despite the provision that the amount of the order was recoverable as a penalty. This procedure, which in a sense combines criminal and civil aspects, was commended by Lord Goddard for its simplicity and effectiveness, and he commended it as a type of proceedings. I do not say that it is without precedent, but it has novel features in our system. So it is not merely that it has found general acceptance in practice from the public and employers, but it has been spoken of with approval by none other than the Lord Chief Justice.

Let us compare that with some of the procedures in relation to employers' liability on the Income Tax side and in relation to Purchase Tax. Dealing with P.A.Y.E. first, on the question of recovery of amounts outstanding, where the Inland Revenue decides to take proceedings against an employer for holding back an employee's tax which he has deducted, it is rather different. This is how the employer's liability arises on P.A.Y.E. These proceedings, which are civil proceedings, are taken in a Magistrates' Court where the sum is below £100, in the county court if it is within county court jurisdiction, or in the high court if ft is higher than that.

Any dispute about liability to pay the tax is not a dispute between the employer and the Revenue. It is a dispute between the employee and the Revenue. So there is no real analogy to this. But if the employer holds back from the Inland Revenue the return of employees and wages paid, the Inland Revenue then can take civil penalty proceedings in the high court, which imposes a statutory fine of £10 a day until the return is made, which, again, is something comparable to the penalty proceedings in the National Insurance Acts.

In relation to Purchase Tax, the question of liability again may arise. There may be a dispute with the employer in respect of the taxable class in which goods fall. The procedure is very similar. The wholesaler or manufacturer seeks a ruling first from the local office. If he disagrees with that, he can go to higher authority within the department, and if he is not satisfied with the ruling that he gets from the Commissioners, he can appeal to the high court on a point of law. There are various ways in which that can be done. In practice, the most normal way is by a motion for a declaration by the court, which can be in either the Chancery or the Queen's Bench Division. I understand that in practice applicants usually apply to the Chancery Division. There are also various informal procedures which can be adopted.

Mr. Buck

Is it not correct to say that the procedure which the hon. and learned Gentleman has outlined goes further—usually from the Chancery Division on appeal to the Court of Appeal, and then to the House of Lords?

Mr. MacDermot

That is correct. Experience shows, however, that the ability to appeal to the House of Lords or be carried to the House of Lords by the Revenue or the Commissioners by way of appeal is not quite so popular with the general public as it is among lawyers. There has certainly been no great agitation in the National Insurance field—and it is precisely the same issues which have to be decided—that the procedure should be altered so as to give a right of appeal to the House of Lords.

Where a trader or wholesaler does not pay the amount due, the legal proceedings take the form of an action for recovery of a civil debt. Again, there may be criminal proceedings, and they are taken where payment is not made by the due date. It is, in effect, the same formula as for the institution of criminal proceedings under the National Insurance Acts. Again, that form is adopted where there has been wilful refusal either to pay or, at an earlier stage, to cooperate, by refusing to put in a return, which is the basis for assessment. That is sometimes done as a means for putting off payment of tax.

I hope that the Committee will be satisfied that the National Insurance procedure, without the right of appeal to the House of Lords, follows very closely the accepted procedures in these other fields.

I was asked a point about Section 15 of the National Insurance Act, which gives power for regulations to be made for contributions to be collected with Income Tax. The Section is concerned primarily with the graduated contributions. The Selective Employment Tax is to be collected with the flat rate contributions, which are not paid with Income Tax. In theory, there could be the power to make regulations for the flat rate contributions to be collected with Income Tax. That has not been done, and no such arrangements could be made without very substantial alteration to and reorganisation of the National Insurance system. That is most unlikely to happen. If it did, we could look at any problems which might arise. I think that it is a contingency with which we need not trouble ourselves.

Section 16 deals with regulations to determine the persons to be treated as employers. For the reasons that I have given, we must accept the same proceedings and procedure as we have for the rest of the liabilities which already exist for the insurance stamp.

The hon. Member for Colchester raised the question of Section 8 of the National Insurance Act and invited us to consider the case where a charity said to an employer, "If you employ this disabled man, we will pay the tax element in the stamp." Of course, there is only one stamp, and one stamp has to be bought. Unless the charity also assumed liability for all the rest of the contributions that have to be paid in the National Insurance stamp, presumably it would refund the employer the amount of the Selective Employment Tax within the stamp. If it chose to pay the lot or wanted to pay for the employer, there is no legal reason why it should not,

by a simple agency. It could act as agent for the employer in order to pay it. The legal obligation must remain with the employer, and that would be so whether it was dealt with under Taxation law or under National Insurance law.

Mr. Buck

Perhaps the hon. and learned Gentleman could explain to me the purpose of Section 8 (1) of the National Insurance Act, 1965.

Mr. MacDermot

I think that any further questions on this should be referred to my right hon. Friend the Minister of Pensions and National Insurance. I am only pointing out that these provisions do not offer any obstruction to having a workable system for the purpose of this tax.

Mr. Roots

I have listened with care to the right hon. Gentleman's explanation. I agree that the same court should deal with the same issues, but my quarrel is that under this Bill, and what I hope I can with propriety refer to as the next Bill, this will not happen.

The Financial Secretary exercised the considerable persuasion of his advocacy to demonstrate that the law had got into such a muddle by having these special provisions for Purchase Tax and every other kind of liability that I cannot help thinking that the lay Members of the Committee must have been horrified at the complexity of it. Lawyers may be thought to welcome this, but it is my experience that they do not.

The major matter still remains that it is high time—and this may be a useful opportunity to do it—that we got back to one system of the established courts dealing with matters such as those arising under this Clause. Similarly, it should be clearly stated that in instances such as this recovery should be as a civil debt, which is what it is. I shall therefore advise my hon. Friends to take the matter to a Division.

Question put, That those words be there inserted:—

The Committee divided: Ayes 80, Noes 124.

Division No. 80.] AYES [7.58 a.m.
Alison, Michael (Barkston Ash) Biggs-Davison, John Bryan, Paul
Atkins, Humphrey (M't'n — M'd'n) Bossom, Sir Clive Buchanan-Smith, Alick (Angus,N&M)
Bennett, Dr. Reginald (Gos & Fhm) Boyle, Fit. Hn. Sir Edward Buck, Antony (Colchester)
Berry, Hn. Anthony Brinton, Sir Tatton Campbell, Gordon
Carlisle, Mark Howell, David (Guildford) Osborn, John (Hallam)
Carr, Rt. Hn. Robert Jenkin, Patrick (Woodford) Pardoe, John
Chichester-Clark, R. Johnston, Russell (Inverness) Pearson, Sir Frank (Clitheroe)
Clark, Henry Jopling, Michael Peel, John
Clegg, Walter Joseph, Rt. Hn. Sir Keith Pink, R. Bonner
Cooke, Robert King, Evelyn (Dorset, S.) Pym, Francis
Corfield, F. V. Lloyd, Ian (P'tsm'th, Langtone) Ramsden, Rt. Hn. James
Crosthwaite-Eyre, Sir Oliver Lubbock, Eric Scott, Nicholas
Crouch, David MacArthur, Ian Shaw, Michael (Sc'b'gh & Whitby)
Elliot, Capt. Walter (Carshalton) Macleod, Rt. Hn. Iain Smith, John
Elliott, R.W. (N'c'tle-upon-Tyne,N.) McMaster, Stanley Taylor, Frank (Moss Side)
Eyre, Reginald Macmillan, Maurice (Farnham) Thatcher, Mrs. Margaret
Farr, John Maginnis, John E. Vickers, Dame Joan
Fortescue, Tim Maude, Angus Ward, Dame Irene
Gilmour, Sir John (Fife, E.) Maydon, Lt.-Cmdr. S. L. C. Weatherill, Bernard
Glover, Sir Douglas Mills, Peter (Torrington) Whitelaw, William
Grieve, Percy Mills, Stratton (Belfast, N.) Wilson, Geoffrey (Truro)
Griffiths, Eldon (Bury St. Edmunds) Mitchell, David (Basingstoke) Winstanley, Dr. M. P.
Hastings, Stephen Munro-Lucas-Tooth, Sir Hugh Wood, Rt. Hn. Richard
Heseltine, Michael Murton, Oscar Woodnutt, Mark
Higgins, Terence L, Neave, Airey
Hirst, Geoffrey Noble, Rt. Hn. Michael TELLERS FOR THE AYES:
Holland, Philip Onslow, Cranley Mr. Younger and Mr. Blaker.
Hornby, Richard Orr, Capt. L. P. S.
NOES
Abse, Leo Fitt, Gerard (Belfast, W.) Mahon, Simon (Bootle)
Albu, Austen Fletcher, Ted (Darlington) Mapp, Charles
Alldritt, Walter Floud, Bernard Mitchell, R. C. (S'th'pton, Test)
Allen, Scholefield Foot, Michael (Ebbw Vale) Morris, Charles R. (Openshaw)
Anderson, Donald Forrester, John Moyle, Roland
Armstrong, Ernest Fowler, Gerry Neal, Harold
Ashley, Jack Freeson, Reginald Newens, Stan
Atkins, Ronald (Preston, N.) Gardner, A. J. Norwood, Christopher
Atkinson, Norman (Tottenham) Garrett, W. E. Ogden, Eric
Bagier, Gordon A. T. Ginsburg, David O'Malley, Brian
Beaney, Alan Gordon Walker, Rt. Hn. P. C. Orme, Stanley
Bidwell, Sydney Gourlay, Harry Owen, Dr. David (Plymouth, S'tn)
Blackburn, F. Gregory, Arnold Page, Derek (King's Lynn)
Blenkinsop, Arthur Griffiths, David (Rother Valley) Parkyn, Brian (Bedford)
Boardman, H. Griffiths, Will (Exchange) Pentland, Norman
Boston, Terence Hamilton, William (Fife, W.) Perry, George H. (Nottingham, S.)
Boyden, James Hannan, William Price, Christopher (Perry Barr)
Braddock, Mrs. E. M. Hattersley, Roy Price, William (Rugby)
Bradley, Tom Hobden, Dennis (Brighton, K'town) Rees, Merlyn
Brooks, Edwin Hooley, Frank Richard, Ivor
Brown, R. W. (Shoreditch & F'bury) Horner, John Roberts, Gwilym (Bedfordshire, S.)
Buchan, Norman Howarth, Harry (Wellingborough) Robertson, John (Paisley)
Buchanan, Richard (G'gow, Sp'burn) Howie, W. Rose, Paul
Callaghan, Rt. Hn. James Hughes, Emrys (Ayrshire, S.) Rowland, Christopher (Meriden)
Cant, R. B. Hughes, Roy (Newport) Rowlands, E. (Cardiff, N.)
Carter-Jones, Lewis Jackson, Colin (B'h'se & Spenb'gh) Shaw, Arnold (Ilford, S.)
Coe, Denis Jackson, Peter M. (High Peak) Silkin, John (Deptford)
Coleman, Donald Kelley, Richard Summerskill, Hn. Dr. Shirley
Concannon, J. D. Kenyon, Clifford Swingler, Stephen
Crawshaw, Richard Lee, Rt. Hn. Jennie (Cannock) Thomas, George (Cardiff, W.)
Davies, Dr. Ernest (Stretford) Lever, L. M. (Ardwick) Tinn, James
Dell, Edmund Lewis, Ron (Carlisle) Urwin, T. W.
Dewar, Donald Luard, Evan Varley, Eric G.
Lyon, Alexander W. (York) Wainwright, Edwin (Dearne Valley)
Diamond, Rt. Hn. John Lyons, Edward (Bradford, E.) Walden, Brian (All Saints)
Dickens, James McBride, Neil Watkins, David (Consett)
Doig, Peter McCann, John Wells, William (Walsall, N.)
Dunn, James A. MacDermot, Niall Whitlock, William
Dunwoody, Dr. John (F'th & C'b'e) Macdonald, A. H. Willis, George (Edinburgh, E.)
Ellis, John Mackenzie, Gregor (Rutherglen)
English, Michael McMillan, Tom (Glasgow, C.) TELLERS FOR THE NOES:
Ensor, David MacPherson, Malcolm Mr. Lawson and Mr. Bishop.
Fernyhough, E. Mahon, Peter (Preston, S.)
Captain L. P. S. Orr (Down, South)

I beg to move Amendment No. 355, in page 49, line 44, to leave out subsection (8) and to insert: (8) The provisions of the selective employment tax shall not apply to Northern Ireland.

The Deputy Chairman (Mr. Sydney Irving)

I think it would be for the convenience of the Committee to discuss with this Amendment Amendment No. 353, in page 48, line 35, leave out from "Act" to end of line 38, Amendment No. 354, in page 4, line 7, leave out paragraph (b), Amendment No. 356, in page 50, line 14, leave out paragraph (b), and Amendment No. 357, in page 50, line 23, leave out from 1965 to end of Clause.

Captain Orr

Yes, Mr. Irving. This is an unusual Amendment to a Finance Bill. As far as I know, since 1920 there has been only one precedent for it. It is a pity that a subject of this importance should have to be discussed at the end of 16 hours' solid debate, when the Treasury Ministers are obviously wilting and tired. I sympathise with the Chancellor. I have watched him throughout the night, and I admire his stamina, but it is a pity that he should inflict upon himself the task of considering anything of such great importance after such a long night.

But we must deploy the case, whatever the time, and it is a serious one. I want to put a serious argument to the Chancellor. I said that the Amendment was an unusual one. It is unusual in that ever since 1920, when the Government and Parliament of Northern Ireland was set up, we in Northern Ireland have accepted the view that, being an integral part of the United Kingdom, it was right that we should accept not only the benefits that accrued from that but also the obligation of the same taxation throughout the whole of the United Kingdom.

This principle has applied ever since to the provision of revenue. We have always resisted suggestions made, sometimes at home in Ulster, that Northern Ireland should be exempted from this or that tax, or that there should be a different rate of Income Tax in Northern Ireland from that which operates here. Ever since I have been in the House I have resisted any suggestion of a differential in taxation between one part of the Kingdom and another.

But when my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) introduced the payroll tax in his Budget we came to the conclusion, after considerable thought, that this was so peculiar in its effect upon Northern Ireland that it was inviting the people and the economy of Northern Ireland to pay not a fair share, with the rest of the United Kingdom, but a totally disproportionate share of the burden of taking the heat out of the economy. We came to the conclusion then that a tax upon the employment of labour was grotesque in Northern Ireland, where our problem is the problem of finding work for the people.

Unemployment at the time was running at the rate of 7 or 8 per cent We thought that to impose a tax on the employment of labour in an area where unemployment was running at 6 to 7 per cent. was the most appalling nonsense.

We conducted a long and sustained campaign, mostly behind the scenes, with my right hon. and learned Friend the Member for Wirral to convince him that it was inappropriate. After considerable argument we managed to persuade him that the tax was inappropriate and would damage the Northern Ireland economy. My right hon. and learned Friend finally agreed, and the precedent now exists that Northern Ireland should be exempted from a payroll tax. It was established then that, had that Payroll Tax come into operation, Northern Ireland would not have been included in it.

Now we are faced with the Selective Employment Tax. If the Payroll Tax of my right hon. and learned Friend the Member for Wirral was inappropriate and damaging to the economy of Northern Ireland, how much more damaging is this extraordinary tax. The object of the tax is not to raise revenue: its declared object is to redeploy labour from service industries into manufacturing industries. In Northern Ireland, this concept does not make sense, because, although the Northern Ireland Government, with the assistance of the Treasury, has made magnificent strides in finding new employment, diversifying our industry and making us less dependent on the old traditional industries which have been steadily running down, the fact remains that unemployment is still at about 6 per cent.

To suggest that, in a situation of that kind, one can do anything to induce anyone who employs labour, in whatever capacity, to release that labour is an extraordinary proposal. I find it hard to believe that the Chancellor—who has taken a great and benevolent interest in our affairs, which we have welcomed—really means this. For example, how could it make sense in Northern Ireland to impose the tax upon the employment of labour in the tourist industry, in hotels and seaside cafes? If the object of the exercise is to induce firms to release some labour, where will that labour go? There is simply not enough manufacturing industry for it to go to. Nothing would be gained for the national economy, let alone the economy of Northern Ireland.

My hon. Friends will no doubt advance detailed arguments about the detailed effect of the tax on our economy. I should like to meet in advance two arguments which I suspect the Financial Secretary will put forward. He may, first, say, "If we accept the Amendment, manufacturing industries in Northern Ireland will not get a rebate and would not have that advantage, and would therefore be at a disadvantage with their competitors across the Irish Sea."

8.15 a.m.

Of course, technically that would be the effect of carrying this Amendment. But if the Financial Secretary is going to argue that way, surely a better way can be found to provide some form of premium for Ulster manufacturing industries than to induce the Ulster service industries, the construction industry and so on, to provide the money. I should have thought that a better way could be found, and therefore I hope the Financial Secretary will not advance that argument by opposing this Amendment.

The Financial Secretary may also say that this Amendment is not received with great enthusiasm by the Government of Northern Ireland. That is quite possible. It is true that in this arrangement the Treasury has made a concession to us. It has conceded that while the tax is collected in this Finance Bill, the Northern Ireland Government, with the consent of the Northern Ireland Parliament, can produce their own Selective Employment Payments Bill. This will be introduced in the Parliament of Northern Ireland, and I understand that it is the intention of the Ulster Minister of Finance to see to it that there is a repayment right across the board of 12s. 6d.—half the tax.

Mr. Stratton Mills (Belfast, North)

A temporary payment.

Captain Orr

A temporary payment, yes. I was coming to that point. As my hon. Friend the Member for Belfast, North (Mr. Stratton Mills) says, it is a temporary arrangement, and for the first year the burden falling upon the service industries may be only 12s. 6d. per man employed. On the other hand, one does not know about the second or third or following years if this tax were to continue. We are grateful for the concession. The Northern Ireland Government, of course, are in a pleasant position. I have been in this House for 16 years and I do not remember the Northern Ireland Government—I am talking about Government, not Parliament—being very enthusiastic about a proposition to reduce taxation. If one thinks of it, one will appreciate that it would be unnatural for them to be very enthusiastic. The Northern Ireland Government are able to get the advantages of revenue to spend without the odium of having to impose the tax. As I say, that is perfectly understandable and nobody would criticise it. Nonetheless, that is the situation.

I hope the Financial Secretary will not say that this Amendment does not have the support of the Government of Northern Ireland because that is an argument which does not hold water. I can assure him that it has the support of the Northern Ireland taxpayer. It certainly has the support of the vast majority of the constituents of all of us who sit in this House. I am quite sure that it would have the support of the vast majority of the Members of Parliament of Northern Ireland, if it came to it. However, I hope the Financial Secretary will not use that argument against us.

The fact remains that this is a most extraordinary tax. We have listened for a long time to the arguments about its effect on the tourist, construction and other industries. All those arguments are doubly valid for Northern Ireland. The disabilities for hotels that have been mentioned apply equally to Northern Ireland. But there is the additional disability there in that the men made unemployed will not be able to find other work. Where 6 per cent. of the insured population is out of work, to put a tax upon labour is a grotesque nonsense.

I hope the Government will consider the Amendment very carefully. If they did accept it, we would expect that something would be done to see that our manufacturing industries were not put at a disadvantage vis-á -vis their competitors over here. It is all very well for the hon. Member for Liverpool, West Derby (Mr. Ogden) to laugh. We are dealing with the employment of people. He is laughing at a proposition that our manufacturing industries in Northern Ireland should not be placed at a disadvantage against their competitors in Great Britain. I am suggesting a better way of ensuring that than by putting a tax on service industries which can only lead to further unemployment.

Mr. Eric Ogden (Liverpool, West Derby)

The hon. Gentleman has not eyes in the back of his head. He could not have been looking in this direction when he made that remark about my laughing. Some of his hon. Friends may have been laughing, but I certainly was not. I was, however, expressing amusement that the hon. Gentleman should ask to be relieved of all responsibility but given all the advantages.

Captain Orr

If the hon. Gentleman tells me that he was not laughing, I accept it, but he certainly looked as if he was. I was careful at the beginning of my speech to say that the Northern Ireland people are perfectly prepared to accept their full liabilities as part of the United Kingdom as well as the advantages.

I recall that we also departed from the payroll tax introduced by my right hon. and learned Friend the Member for Wirral when he was Chancellor of the Exchequer. We did so because we considered that, with 6 per cent. unemployment, we were being asked to bear an unfair burden. Now we are again being asked to bear an unfair burden. We are willing to bear anything fair but this tax is unfair.

Mr. Emrys Hughes (South Ayrshire)

Would the hon. Gentleman apply this argument to Scotland?

Captain Orr

Yes, I would, if a way could be found to do it for parts of Scotland at any rate—I am not sure about the whole of the country. I have always thought that a payroll tax should be selective geographically, so as to induce and attract industries to go to development areas. I supported an Amendment related to development areas earlier in the Committee stage. The tax would be much better if it were selective geographically.

I do not want at this hour of the morning to labour the point. I hope that my hon. Friends will make the case in due course in some detail. I ask the Financial Secretary carefully to consider this matter.

Mr. Stanley R. McMaster (Belfast, East)

I have great pleasure in supporting the Amendment, which has been so ably moved by my hon. Friend the Member for Down, South (Captain Orr). I am particularly glad that he led for the Amendment today because it was a matter of great regret when I moved a similar Amendment in 1961 that my hon. and gallant Friend did not sign it and support it [HON. MEMBERS: "Oh. Oh."]. We were then fighting over a very small difference. Today I have some hope that the party opposite will support the Amendment.

My hon. Friend said, quite rightly, that he pressed for a special concession for Northern Ireland, and in the debate in 1961, the then Chancellor, the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd), agreed that the money should be paid back to Northern Ireland. This seemed to content quite a lot of my hon. Friends and the then Minister of Finance, who is now the Prime Minister for Northern Ireland. But I and my hon. Friend, Mrs. Patricia McLaughlin, and my hon. Friend the Member for Mid-Ulster (Mr. Forrest), were not satisfied with just that. We wanted to exclude Northern Ireland completely, as indeed we still do today. Therefore we pressed the matter firmly.

The party opposite, who gave me their full support at that time, will probably give me their full support today. When I read the Front Bench speeches that right hon. and hon. Gentlemen opposite on the Treasury Bench made then, I am sure that they were not insincere. I cannot believe that right hon. and hon. Gentlemen opposite would be so hypocritical that they would turn their backs on the many strong and convincing arguments for excluding Northern Ireland from the then comparatively modest payroll tax proposal of only four shillings.

Now that these same men are in office, I ask myself how the Treasury Front Bench could with dignity and honour completely turn about-face and deny the validity of all the arguments that they so recently advanced with such clear and convincing sincerity and conviction in 1961. I tell myself that the right hon. and hon. Gentlemen opposite are men of honour. They were returned by the electorate and entrusted with very high office of State. They once invited me to show my good faith by voting with them against my own party, and I did vote against my own party. Now, it is my turn to invite right hon. Gentlemen opposite to prove to the nation that they are not two-faced, that they are not the land of rogues who say one thing one day when in opposition and fighting for office and then, when they win a position of trust, turn round and do the opposite.

8.30 a.m.

Before turning to the speeches of the Prime Minister, the First Secretary of State, the President of the Board of Trade and other leading Ministers today, I quote first from the Chancellor's Budget: speech. It has been reported and, I expect, carefully checked by the right hon. Gentleman. Speaking of the economic situation and the balance of payments, he said: The improvement we made in 1965 must be sustained until we generate a surplus. It is my judgment that we shall not do this unless we take firm action at home to release more resources for exports and for the substitution of imports It is against this background that I have considered what additional taxation I should propose At this point I must come back once more to the need to moderate increases in incomes To some extent the answer to the question—'How much extra taxation?'—lies in the hands of those now preparing and negotiating new wage claims. I do not think enough people yet realise the extent to which they hold the key in their own hands If increases in incomes are related to productivity and do not outstrip it, my task is made more easy, and taxation needs to be less fierce."—[OFFICIAL REPORT, 3rd May, 1966; Vol. 728, c. 1451–2.] I am sure the Chancellor will agree that that is the key passage. It was on that that he based his Selective Employment Tax. It is clear from that passage that the Selective Employment Tax is intended as a regulator. It is intended to take the heat out of the economy. He says himself that the public have the answer in their own hands.

This is a tax designed to deflate the overheated British economy, to reduce the pressure of internal demand so that resources and labour will be diverted to boost exports, while, at the same time, our thirst for imports, at least our imports of consumer goods, will be deliberately restricted. Is not that the reasoning behind this payroll tax?

But the need for such a regulator can hardly be argued in a part of the country where there is no excessive consumer demand, where there is no shortage of labour to drive up wages and salaries in an inflationary spiral. For unemployment stands at a persistent 6 to 7 per cent. in Northern Ireland, and Government policies in regard to aircraft production are about to throw 4,000 more skilled men on to the labour market over the next 18 months. According to an Answer which the Minister of Aviation gave me recently, 4,000 more men are to be released by the end of next year from Short Brothers and Harland.

The Chancellor made very clear that one of the purposes of his regulator was to divert people from consumer and service industries to manufacturing industries. His reason is that there is a shortage of labour in manufacturing industry. But this shortage does not obtain in Northern Ireland. There is no shortage of labour there. There is a surplus in manufacturing, a surplus which will be substantially increased by the run-down of Short Brothers and Harland which the Government themselves have made part of their National Plan.

Clearly, against that background, there can be no need in Northern Ireland for such extra taxation to damp down an over-heated economy.

It may be asked whether Northern Ireland is an area sufficiently clearly defined to have separate treatment. Is it administratively possible to vary National Insurance payments in this part of the United Kingdom alone? The answer to these questions was established as a result of the arguments my hon. Friends and I put in 161. It is a clear, "Yes". We have separate National Insurance powers in Northern Ireland and the stamps are differently over-stamped. Hon. Members may ask why trouble to exempt Northern Ireland, and in reply I should like to draw the attention of the Committee to the severity of the tax. In 1961 the right hon. and learned Gentleman the Member for Wirral introduced a payroll tax of 4s. Today this payroll tax is 25s.—many times more than that introduced, in 1961, then so strongly opposed by the Labour Party. The Chancellor made it clear during his Budget speech that this tax raises the equivalent of either a shilling on income tax or almost double the present rate of purchase tax.

This is the weight of the tax, which will raise £300 million in the first year and about £240 million in succeeding years. Of that figure abut £8 million or £9 million is expected to come from Northern Ireland. The proportion of persons employed in the service industries in Northern Ireland is about 65 per cent. If one studies the statistics, one sees that the proportion employed in the service industries has been gradually increasing over the last 10 years, while the proportion employed in the manufacturing industries has been falling slightly. This is the mark of any advanced economy.

We are therefore going to impose this heavy burden on about 65 per cent. of the working population in Northern Ireland, and deliberately attempted to create unemployment among that percentage in the service industries. We have many industries in Northern Ireland which are already finding it difficult, with their higher transport costs—the cross-Channel cost—to compete with firms in the rest of the United Kingdom. Some firms are faced with fixed-price contracts which they are going to find very hard to fulfil.

I would like to single out the construction industry for particular comment. This industry will be greatly affected by the tax. It is an industry which we want to foster, to help provide new industry, clear our slums and build new housing. The Northern Ireland Minister of Finance, Mr. Herbert Kirk has made valiant efforts to mitigate the effects of the tax, but he said that the £2 million which has been received for Northern Ireland will only be a temporary rebate. This is reported in the Northern Ireland Official Report at col. 1684 on 31st May. Mr. Kirk said: Together these three schemes— referring to the three payments which have been mentioned— will use up the full allocation of £2 million. I cannot at present promise that I shall be able to continue the special refund concessions beyond 1966–67. It will almost certainly be impossible to continue them at the rates I have accepted for the first seven months of the Selective Employment Tax. The first seven months! We are getting a little mitigation for the first seven months. I am trying to look beyond that. I would refer the Committee, briefly, because I appreciate that other hon. Members want to speak, to the speeches of right hon. Gentlemen opposite made on the same subject. I will not repeat the ones which have been mentioned by my right hon. Friend the Leader of the Opposition; they are fully reported in HANSARD for 23rd June this year, columns 957 and 958. They show clearly that the late Hugh Gaitskell, the right hon. Member for Battersea, North (Mr. Jay), now President of the Board of Trade, the right hon. Member for Belper (Mr. G. Brown), now Secretary of State for Economic Affairs, the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), now Home Secretary, and the Prime Minister were opposed to applying the payroll tax to a development area, and all pointed out clearly in the speeches quoted by my right hon. Friend their doubts about this tax.

In addition to the speeches there quoted, the Secretary of State for the Colonies, the right hon. Member for Newton (Mr. Frederick Lee) said on 13th June, 1961, when the Amendment which I had down was being debated: I know that these are the problems facing the right hon. and learned Gentleman, and I do not wish to embarrass him too much. But we on this side of the Committee "—he was speaking for the whole Labour Party— are convinced that this Amendment is well worthy of our support. We shall support the hon. Gentleman and his friends in the Lobby at the end of this debate. A little later he said: The problem of Northern Ireland must not be shelved. The Government must never tried to meet the fact"— he was referring to the Conservative Government, unfairly— that consistently there has been a high rate of unemployment in Northern Ireland. From this side of the Committee we have tried to help … "—[OFFICIAL REPORT, 13th June, 1961; Vol. 642, c. 323.] I do not wish to weary the Committee by reading more extracts, but this gives the key to what a Front Bench spokesman for the then Opposition, now a member of the Government, felt in 1961. The present Prime Minister is reported as repeating similar sentiments. He concluded: We intend to support the Amendment in the Lobby, and I appeal to all my hon. Friends to go into the Lobby now."—[OFFICIAL REPORT, 13th June, 1961; Vol. 642, c. 331.] I hope that he will support the Amendment today. I am sure that he will not turn about and change his mind just like that.

On 18th April, 1961, the Prime Minister, referring to the payroll tax, said: The Government would be most likely to introduce this payroll tax at a time of balance of payments difficulties"— he was referring to the payroll tax of my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd)— Had the Government had power to do this at that time it is clear that it would have intensified the depression and the growth of unemployment which was already on the way. The idea amazes me. Later he said: Has the right hon. and learned Gentleman considered the effect of the proposed 4s. payroll tax on the different industries in Britain? How, for instance, will it affect the hospital service, or local authorities, or the other one hundred essential services and industries in this country which are quite incapable of introducing automation? ".—[OFFICIAL REPORT, 18th April, 1961; Vol. 638, cc. 985–7.] On 19th April, 1961, the right hon. Member for Battersea, North, speaking about Northern Ireland and the payroll tax, said: But, quite apart from all that, it surely is rather a monumental piece of cynicism that we have been told for years that rises in labour costs would be inflationary and price us out of export markets and all the rest and now we are suddenly told that a rise in labour costs, provided it does not come through an increase in wages but through this tax, will be beneficial after all because it will stimulate industrial development … The truth, of course is"— the right hon. Member for Battersea, North said— that any direct charge on costs of this kind, whether the National Insurance contribution or this surcharge, is a direct addition to financial costs and, therefore, to prices, including those of exports … "—[OFFICIAL REPORT, 19th April, 1961; Vol. 638, c. 1291.] 8.45 a.m.

These few quotations show quite clearly what leading members of the present Government felt about a 4s. payroll tax, and particularly what they felt about its application to Northern Ireland. I do sincerely appeal to the Chancellor of the Exchequer to consider this most carefully between now and Report, to see if he would be prepared to accept this Amendment. If he is not prepared to accept it in the words with which we have drafted it, perhaps he would be prepared to introduce his Amendment, along the same lines.

I have just one last point I should like to make. In Northern Ireland we are having a temporary repayment, but it must be remembered, with respect to manufacturing industries which my hon. and gallant Friend has referred to, that bank interest—overdraft—rates are higher than they are in the rest of the United Kingdom. Therefore, to our manufacturing industries the cost of meeting these tax payments and covering them for the three or four months before a repayment is made will be higher than it will be in the rest of the United Kingdom.

Why is Northern Ireland—why is the United Kingdom as a whole—being charged the cost of administering this tax when it is quite straightforward to exempt the whole of Northern Ireland from the tax? It seems to me a ridiculous suggestion that money should be gathered in one hand and held by the Government for a number of months and then refunded to those people who are making the payments. Where is the money to come from? If it is to come from banks, the overdraft rates will be 1 or 2 per cent. higher than those which manufacturers will have to pay here. I agree that there is a need to give subsidy to manufacturing industry in Northern Ireland, but I feel that this tax should be made part of the National Plan. It is, after all, a selective employment tax. Why should it not be selective regionally as well as between the two kinds of industry, manufacturing and servicing?

I suggest that the Chancellor has new talks with the Minister of Finance in Northern Ireland. I should like to make it clear—I think my hon. Friends agree with me, and they also support this Amendment—that we here are not acting as spokesmen of the Northern Ireland Government. We are acting as Ulster Unionist Members here. We have quite a different rôle to play. The right hon. Gentleman may say that the Minister of Finance in Northern Ireland is satisfied with the tax, but we have a responsibility to our constituents, and it is wider, I suggest, than that of the Minister of Finance. We have to look at the overall picture, the overall effect on our economy of this tax, and although the Minister of Finance in Northern Ireland may be satisfied in so far as he has been given a concession, as, indeed, his predecessor was in 1961, I believe—or at least, so the Chancellor at that time said in Committee on the Finance Bill then—though the Minister of Finance may be satisfied because he finds it adminstratively possible to raise the tax, and he is content with the concessions. I suggest that, viewing the country as a whole, looking at the National Plan and realising that our unemployment is more persistent and difficult than that in any other part of the United Kingdom, the Government should go further and, as in 1961 they suggested should be done, exempt Northern Ireland completely from the tax.

Mr. MacDermot

As one of the two Dublin-born Irishmen in the Committee, my national sense of irony is slightly provoked at finding myself in the position of having to reply to this debate which involves a tendentious issue between hon. Members who represent Northern Ireland constituencies and the Government.

The intention of the promoters of the Amendment is to exempt Northern Ireland from the scope of the tax. While the Amendment would be effective to do that, I suspect that it was not intentionally that the hon. Members also achieved the intention of requiring employers of foreign-going mariners and airmen in Great Britain and Northern Ireland to pay the tax in the same way as other employers. That is one of the pitfalls, of which I have had great personal experience in opposition, of trying to draft Amendments to complicated Statutes.

As to the general intention, I will deal first with the administrative argument. The hon. Member for Belfast, East (Mr. McMaster) stated that there would be no difficulty administratively in excluding Northern Ireland. I would quote to him from the speech by Mr. Kirk, Minister of Finance in Northern Ireland, which the hon. Member quoted, who said at the outset of his remarks: Under the National Insurance Scheme, contributions paid in Northern Ireland are completely interchangeable with those paid in Great Britain. We could not, therefore, have stamps of a different value in Northern Ireland without inviting evasion on a serious scale. We thus have a tax introduced as part of the United Kingdom tax system and which for practical purposes must apply in Northern Ireland. That proposition is entirely well founded. Although stamps in Northern Ireland may be over-printed "Northern Ireland", the fact is that any employer in this country would be perfectly free to purchase those stamps and then affix them to cards in this country, and when the Ministry of Pensions and National Insurance examined the cards at the end of the year there would be no way of checking whether or not the employee during the period had or had not been employed in Northern Ireland by a Northern Ireland employer, because none of these facts appears on the card. There are a great many workers who come from Northern Ireland, as from Southern Ireland, periodically for certain months of the year to work over here, then go back to their own country, and so on. So there would be nothing unusual in a card which had some Northern Ireland stamps on it as well as some British stamps.

I think I have said enough for hon. Members to see the reason why Mr. Kirk and the Northern Ireland Government accepted that it would not be possible administratively to exclude Northern Ireland from the scope of the tax without inviting evasion on a serious scale.

Mr. Henry Clark (Antrim, North)

I appreciate the hon. and learned Gentleman's statement that with the present system of raising National Insurance stamps there would be certain difficulties in having a differential rate in Northern Ireland and that there would be difficulties if the Government raised the tax differently in Northern Ireland from the way it was done in Great Britain. This is not surprising, because the Government are using the National Insurance stamp system for a purpose for which it was never designed. But is the hon. and learned Gentleman seriously suggesting 'that the mighty British Treasury is not capable of developing some simple administrative system whereby this could be done. Having been an administrative officer, I always reckoned that it was a challenge to the administrator, that one could always find a system to carry out almost anything. We have had far too many arguments throughout the Finance Bill to the affect that things are administratively difficult.

Mr. MacDermot

If we had had the pleasure of the hon. Member's company throughout the very interesting debates which we have had on the Clause, he would have heard it explained many times at considerable length why, in order to introduce the tax this year, it was necessary to tie it in this way to the National Insurance stamp system. The answer to his question, would it not have been practicable to devise some simple method of raising the tax this year other than through the National Insurance stamp, is no; it was not possible. That is why the tax is being raised in this form.

The hon. Member for Belfast, East has pointed out that he is not speaking for the Northern Ireland Government in this matter, but for his constituents in Northern Ireland. It was agreed by the hon. and gallant Member for Down, South (Captain Orr) at the outset of his speech that Northern Ireland accepts the obligations as well as the benefits of membership of the United Kingdom. Consequently, in general, it accepts its liability to pay United Kingdom taxes.

He raised a point about the legal rights of Northern Ireland and asked whether the tax does not fall within the scope of the transferred taxes. That position is accepted by both Governments, and specific provision is made for it in the Bill under subsection (8), which safeguards the legal position. There is no question about that. Theoretically, it would have been possible for the Northern Ireland Government themselves to have introduced a Bill for the raising of the tax in Northern Ireland separately, but it was obviously more convenient for them as well as for us if it was all covered by legislation from here, it being made clear in that legislation that the full rights of the Northern Ireland Government are preserved in this matter.

On the question as to whether Northern Ireland should have been exempted from the scope of the tax, once again I will quote Mr. Kirk's budget speech. Dealing with the point, he said: In considering the impact of the tax on Northern Ireland, we must not fall into the error of thinking that the alternative is no extra tax at all. It is quite obvious from the Chan- cellor's Budget speech that he had decided to raise additional taxation and would have increased other taxes if the Selective Employment Tax were not available. It is anyone's guess what the other taxes would have been, but most people seemed to be expecting increases on petrol, purchase tax, drink and tobacco, vehicle licences, or Income Tax. It is impossible to be precise, but for almost any likely combination of these taxes, the Northern Ireland taxpayer would contribute about the same as the net yield of the Selective Employment Tax, or perhaps rather more. I would cite that in answer to the suggestion that this is a form of tax which falls in an unduly burdensome way on Northern Ireland. There is reason to think that it falls rather less harshly on Northern Ireland than on other areas, again for a reason which was referred to by Mr. Kirk, when he went on: One reason for the comparatively light impact of the Selective Employment Tax in Northern Ireland is that it does not apply to the self-employed, who represent a high proportion of our working population compared with Great Britain. The hon. Member for Belfast, East asked why the selection in the Selective Employment Tax could not be operated regionally. The arguments which were adduced in support of the Amendment were arguments with which we are familiar and heard on those Amendments which were urging regional differentials. Northern Ireland is in a special and fortunate position in that respect. The effect of that and the special rates in relation to transferred taxes is that the tax is being operated regionally in a special way. The reason is that the equivalent Bill, the Selective Employment Payments Bill, is a matter which will be legislated upon by the Northern Ireland Parliament for Northern Ireland. It will be for them to decide in effect what to do with the gross yield of this tax from Northern Ireland. The yield will be about £ 6½ million, and, as has been pointed out, all this money will be made available to the Northern Ireland Exchequer.

The Northern Ireland Government have already taken their own decisions in relation to this matter, and they have decided to make refunds and payments beyond those which we are providing for under our Payments Bill. In effect these will take three forms, one of which has been referred to a number of times, namely, the additional payments which will be made to manufacturing employers. As has been stressed, this is a temporary scheme in order, as Mr. Kirk described it to soften the immediate impact of the tax and to give employers a breathing space in order to adjust themselves to the new tax." There will, in effect, be a 50 per cent. refund for them. 9.0 a.m.

The second way is by additional payments of 50 per cent. to local authorities to give them what Mr. Kirk described as some relief by providing them with what may perhaps best be described as some working capital. Thirdly, special payments are being made to employers in relation to apprentice training and to encourage apprentice training.

Because of the special problems of male employment and apprentice training in Northern Ireland, the Northern Ireland Government have decided, and have been in the fortunate position of being able to make a special repayment scheme beyond that which will apply throughout the rest of the United Kingdom.

Mr. Ian MacArthur (Perth and East Perthshire)

To assist us to assess the financial meaning of these figures, it would be helpful if the right hon. Gentleman could say what proportion of the gross yield of the tax in Northern Ireland will, as a result of these measures, be returned to individuals, and how this compares with the position in England. I ask this because of the large proportion of service industries and workers in the six counties.

Mr. MacDermot

The gross yield for Northern Ireland is £6½ million. The repayment scheme which the Northern Ireland Government have adopted will involve a total of £2 million out of that £6½ million being refunded. Of this, £150,000 will go to the local authorities under that part of the scheme which relates to them. The rest will go to the employers of male labour and of apprentices in the manufacturing sector.

Mr. McMaster

I am sure that the right hon. Gentleman does not wish to mislead the Committee. He has referred to Mr. Kirk's speech. If the right hon. Gentleman looks at column 1681 he will see that the figure of £6.5 million is not gross, but net yield. The gross yield is more like £8 million.

Mr. MacDermot

I was using the term "gross yield" as excluding the extra repayments. The hon. Gentleman is right if he refers to the gross yield as the yield before deducting the cost of collection, administrative expenses, and so on. The yield before these repayments are made is £6½ million.

Mr. John E. Maginnis (Armagh)

Is the figure of £2 million the total payable to manufacturing as well as to service industries?

Mr. MacDermot

Yes, as I understand it. The full details are set out in Mr. Kirk's speech. This is a matter for the Northern Ireland Government, but as it has been referred to I thought it right to state my understanding of the position.

Mr. MacArthur

From the figures which the right hon. Gentleman has given it appears that about 25 per cent. of the total yield from the tax will be repaid to individual employers, one way or another. How does this compare with the position in England and Wales?

Mr. MacDermot

I would need notice of that question. If the hon. Gentleman cares to put down a Question we can give the precise figures. But the sums which are returned are, of course, substantially higher in Northern Ireland than in the rest of the scheme in Great Britain.

In conclusion, I would point out that so far from manufacturers in Northern Ireland being at any disadvantage under this scheme compared with manufacturers in Great Britain, they will in fact as a result of the measures adopted by the Northern Ireland Government on the repayment side be at quite an appreciable advantage.

Mr. Rafton Pounder (Belfast, South)

I have listened with great care to the Financial Secretary's remarks, and just two points struck me initially as a little surprising.

First he referred to the large number of people who come from Northern Ire-land to Great Britain seasonal for employment. This comes as a surprise to me, as also does his statement that S.E.T. will fall less harshly on Northern Ireland owing to the high proportion of self-employed people. I presume agriculture must be included in this because we have a substantial number of farmers operating their own farms and who are not employees of anybody else.

I do not wish to duplicate any of the arguments of my hon. Friends, but I would like to make one or two additional points and concentrate on what in my view will be the most hard hit industry in Northern Ireland—the tourist trade. I did not participate in the debate on the hotels earlier in the night because I wanted to reserve my remarks on this subject for this debate.

Judging by the bias in the S.E.T. against the service industries and anything remotely connected with them, one would almost imagine there was something wrong with the concept of service industries. I would like to nail this impression from the outset. Development of the tourist trade in Northern Ireland has been one of our notable accomplishments in recent years. The great scenic beauty of the province has been progressively developed, and the development programme for the whole of the hotel and catering industry has ensured that it is now a flourishing industry by any standards. But the consequence of this tax can only be to penalise savagely an efficient and effective industry.

Tourist revenue in Northern Ireland now represents a major item of revenue. I think that the figure for the tourist trade for last year, and I speak from memory, topped £20 million. All that we have built up by hard work and enterprise is now going to be hit very savagely by the Chancellor's tax.

As with the Highlands of Scotland, so with Northern Ireland—tourism and agriculture are two of the major industries, and much effort has been expended in recent years in advertising the tourist potential of Northern Ireland. But the industry is going to be hit very seriously indeed by this tax. I know it will be argued that the tourist trade is seasonal and thus variable, but that is a reflection on the climate rather than on the tourist industry. There surely can be no argument whatever advanced against the effect which deflation, which is one of the objects of this tax, would unquestionably have on the level of employment in Northern Ireland.

As I understand it, the Chancellor and the Treasury Ministers who have spoken in debates on this tax have all argued in its support that they are disturbed by the drift of the working population into service rather than into manufacturing industries and that the economy is overheating and a measure of Treasury intervention is required. These are not contradictory arguments, but whichever of these arguments is applied to Northern Ireland I would have thought that they are both valid arguments for not imposing a tax on the Province.

Northern Ireland is still primarily an agricultural community, and that makes it wrong to steer people into other industries. One of the great problems of farming and agriculture in Northern Ireland, with its high proportion of small farms, has been the shortage of working capital. That has been the besetting problem for many years, and this tax, although it will ultimately be recouped by those engaged in farming, for example, after a time lag of three months, it will be bound to have injurious effects.

In America it has been argued that one of the hallmarks of a progressive community is a proper balance between the service and manufacturing industries. In Northern Ireland we have this balance, and it would be very serious if anything happened to upset the equilibrium between the two types of industry.

The argument about the overheating of the economy may be valid in the Midlands of England, but it is not valid in Northern Ireland. My hon. Friend the Member for Belfast, East (Mr. McMaster) and my hon. and gallant Friend the Member for Down, South (Captain Orr) have emphasised that deflation in Northern Ireland is bound to aggravate the already high level of unemployment. Surely it would be tragic, by any standards, if the Province, which at present is forging ahead economically as never before—with more people in employment than at any time in history—should receive a setback as a result of deliberate Government policy. I use the word "deliberate" advisedly, in the sense that it has been the general idea of the Treasury to apply this tax right across the board. That tax may have the desired effect in England, in the great conurbations, but it is bound to have an adverse effect in Northern Ireland, owing to its indiscriminate application regionally and geographically, and also in respect of the categories to which it applies.

My hon. Friends have argued that there should be some geographical variation in the tax, and it is also fair to argue that there should be some variation in respect of the categories affected. My hon. and gallant Friend the Member for Down, South handed me a letter during this debate which he received from a constituent engaged in the construction industry. It may interest the Committee if I cite one or two of the facts in support of the case for that industry. This gentleman is engaged on a contract valued at £4.2 million and the Selective Employment Tax on this contract will amount to £75,000. I accept that this will be reduced by half, as a temporary measure, over the first year, but expressed another way this represents five years' gross dividend of that company. I would have thought that this reflected the gravity of the effect of the tax on the construction industry.

My hon. Friend the Member for Belfast, East referred to the cost of borrowing money in Northern Ireland. Assuming that certain persons who will have to pay the tax will have to borrow the money from banks in order to pay it, even if it is subsequently refunded by the Treasury—if they are engaged in agriculture, for instance—the overdraft rate in Northern Ireland is higher than it is in England. It is indeed too high. It is roughly 1 per cent. above the English level. The English level is about 7 per cent., and the Northern Ireland rate is 8 per cent. and a bit. But to refer to a difference of 1 per cent. is misleading, because if we take the figure of 8 per cent. in relation to the figure of 7 per cent. we see that it is one-seventh, or 14 per cent. [Laughter.] This is a fair point. This is the effect which this will have on those people unfortunate enough to have to borrow the money.

For the reasons which I have given, I hope that, despite the interim statement of the Financial Secretary, he will give serious consideration to the situation which will develop in Northern Ireland because of the indiscriminate application of the tax.

9.15 a.m.

Mr. Srrafton Mills rose——

Hon. Members

Oh, no.

Mr. Mills

If the Treasury Bench can restrain their groans until the end of my speech, I should be obliged.

My hon. Friend the Member for Belfast, South (Mr. Pounder) said that Northern Ireland was forging ahead economically and the Treasury Bench seemed to think that they could take the credit. They would do well to reflect that the credit for this economic advance over a period belongs mainly to the Northern Ireland Government. I emphasise that when a Government, such as the present lot, move into the realms of theoretical taxation—which will have some benefits, I admit—they are bound to produce anomaly after anomaly.

My hon. and gallant Friend the Member for South Down (Captain Orr) has rightly pinpointed the anomaly in applying the Selective Employment Tax to an area with an abnormally high percentage of unemployment. Why has the Chancellor called the tax the "Selective" Employment Tax? What is selective about it? If the Treasury Ministers are prepared to divide industry between manufacturing and non-manufacturing—to be selective to that extent—I cannot see why they are not prepared to follow the logic of their own argument and go on in human terms to divide between the prosperous areas in the South-East and the Midlands, with a shortage of jobs, and the other parts of the country which are struggling all the time to maintain employment. I cannot understand why the Government should run so directly contrary to the many other things which, I accept, they are trying to do in their regional policy.

I listened to the speech of the Financial Secretary with growing horror. I appreciate that it is after his breakfast time and certainly after his bed time, and that he may not be putting the debating points with his usual sparkle to which we have become accustomed over the past two years, but I felt that his reply was completely irrelevant to the human problems which will be posed in an area like Northern Ireland by this tax.

He said that the tax would bear less harshly in Northern Ireland. Is it not clear that he thereby admitted that it will have a harsh effect in Northern Ireland? He used the words "less harshly", and that, he will admit——

Mr. MacDermot

I do not want the hon. Member to take a false point. It was being urged that the tax would fall more harshly. Taxpayers always consider that any imposition of tax is harsh. It falls more harshly on some and less harshly on others. Those who have the lighter burden are those on whom it falls less harshly.

Mr. Mills

That is a nicely balanced semantic point, but I reiterate that when the hon. and learned Gentleman reads his words in HANSARD—whenever he gets his HANSARD—he will see that the point which he was admitting was that it will have a harsh effect. I do not see how he can argue to the contrary when we are dealing with an area of high unemployment.

The Financial Secretary put very great stress on the administrative reasons for the tax. I followed him in the problems relating to National Insurance and the stamp system and the possibility of fraud. I would answer his point in this way. The whole system of the refunds has been geared to deal with this kind of problem, and I would have thought that if the Government had the will they could easily have fitted in a system of refunds to ensure that no fraudulent means were operating in the scheme.

The Financial Secretary has referred to the refund of 12s. 6d. which the Northern Ireland Minister of Finance is making to the service industries. As my hon. Friend the Member for Belfast, East (Mr. McMaster) pointed out, this is of a strictly temporary nature. The Financial Secretary could make an additional contribution to the debate by giving an assurance that there will be no pressure placed on the Northern Ireland Minister of Finance to stop that repayment while the Northern Ireland rate of unemployment remains at its present high level.

If one looks at the facts, one finds that the Northern Ireland Minister of Finance is in this difficulty, that he has to prepare his Budget on matters like this largely on guidance and pressure from the Treasury. If this matter could be considered while unemployment remains high, it would be a most valuable assurance from the Financial Secretary. I hope he will not feel unduly restrained from intervening before we divide this morning and giving some kind of assurance that pressure will not be exerted on the Northern Ireland Government to stop this system of refunds when they present their next Budget.

It is clear from the words of the Northern Ireland Minister of Finance that he envisages that those special refunds will only be of a temporary nature, and he always has the albatross from the Treasury in Whitehall hanging over his shoulder.

I am glad to see the hon. Member for Belfast, West (Mr. Fitt) in his place. I think all hon. Members know that he is of a very shy nature and is always embarrassed at intervening in debates like this. Of course, he is very lucky in that he represents a constituency at Stormont and at Westminster, and if there is an embarrassing debate at Stormont he can always come here to Westminster, while if there is an embarrassing debate at Westminster he can go to Stormont.

I would be very interested to hear the views of the hon. Member for Belfast, West on this tax because I noticed to my astonishment that he voted for the Government, presumably to ingratiate himself with them, on the Second Reading of the Bill on 25th May. When the Ways and Means Resolution on this tax was being considered he was absent, and while the Committee has been considering the whole principle of the Selective Employment Tax I find that he has voted on one occasion, in favour of the Tax but he has been absent on eight occasions, I know not where. That, of course, is only my tally up to half-past Ten last night. When we see the HANSARD report tomorrow it may show that he has been further supporting the Selective Employment Tax in the Lobby.

I hope the hon. Member will accept these remarks in a good-natured fashion and will not feel that he should sit quietly by and not let us hear his views. My constituency is next door to his and I know there will be many people in his constituency who will suffer very severely from this tax. I should have thought that he would have been wiser to pay attention to their interests rather than to engage in his perpetual task of ingratiating himself with the small noisy anti-Ulster wing in the party opposite.

Mr. Henry Clark

It is rather ironic that when the Financial Secretary opened his speech on this Amendment he told us that he was born and bred in Dublin, and then proceeded to make a speech without mentioning the unemployment problem in Northern Ireland in any way whatsoever. How right we have been in Northern Ireland for many years to resist the possibility of a Dublin Government.

The unemployment problem in Northern Ireland is often looked at rather cynically and superficially, particularly by those on the Treasury Bench. I want to make it clear that the areas I have in mind are not those with 5 per cent. or 6 per cent. unemployment. They are areas, forty or fifty miles from Belfast, where the unemployment levels run at about 14 or 15 per cent. in some parts and certainly at a fairly steady level of 12 per cent. If hon. Members opposite think that that level is a matter for hilarity, I do not.

In these areas, the one thing needed above all is new enterprises and industries, however small. I oppose this tax for Northern Ireland because it is basically deflationary and will make it much more difficult to get those new enterprises in manufacturing, tourism and services. They would help to bring down this appalling figure of unemployment in the small and fairly remote villages where it hits the population so hard and saps its moral fibre. But anyone who sits down to work out trial balances for new enterprises in the light of this tax will realise its effect upon profitability and incentives. A large number of those contemplating establishing new enterprises in these areas will decide against it because of the tax.

We have been told that the tax will not hit Northern Ireland harshly. That is ridiculous. The Financial Secretary knows as well as we do that the general level of wages in Northern Ireland is considerably lower than it is here. Therefore, the tax there will entail a much higher percentage of the wage bill than it will in most parts of Great Britain.

Mr. Ian MacArthur

On the same point about harshness, I would call my hon. Friend's attention to what the Financial Secreary said in reply to my intervention earlier. I understood the hon. and learned Gentleman to imply that Northern Ireland was being treated more generously than other parts of the United Kingdom in terms of the amount of money being paid. It looks as if about 25 per cent. is going back to the six counties whereas the figure is 68 per cent. for England.

Mr. MacDermot

I may have misled the hon. Member for Perth and East Perthshire (Mr. MacArthur) by not making it clear that the £2 million referred to by Mr. Kirk in his speech is additional to the repayments which we are providing for Great Britain. That is to say, over and above the 30 per cent. refund in the manufacturing sector, there will be additional refunds totalling £2 million out of the net yield of £6½ million for Northern Ireland.

Mr. MacArthur

That still is not equal to the 68 per cent. for England.

The Chairman

Order. We cannot have interruptions in interruptions.

Mr. Clark

The tax hits Northern Ireland harder than it does Great Britain. The wage level there is lower than it is here. One of the things that people over there smile at rather grimly is the boasting of both Governments that the average wage in England is £15. It is not so in Northern Ireland, so that the tax will be a considerable percentage of the average wage in most parts of my constituency. Thus, an industry in Northern Ireland will be much harder hit than its competitor in Great Britain.

Northern Ireland has a land frontier and across the border we face hot competition in tourism. Our tourist industry is in competition with County Louth and County Donegal in the Republic. There is there a highly subsidised industry with a rather lower level of wages, and against this we have fewer subsidies in Northern Ireland. Our tourist industry is in direct competition, resort against resort 20 miles apart—only five miles in some cases—and it is having to meet this tax. It is easy for the Financial Secretary to neglect this point. It would be interesting if he could produce a convincing argument about it.

9.30 a.m.

The complete inappropriateness of the tax in areas such as Northern Ireland is brought out finally in the preference that it gives to female employment. It is well known that in Northern Ireland, and in many areas of this sort, there is a higher proportion of employment for females than for men. We want more jobs for men, yet higher rates of tax are to apply to men than to women.

It will pay the owner of a petrol service station in a fairly remote area in my constituency, where there are no jobs for men, to sack the man who runs the station and employ a woman instead. Is that the kind of object that the tax is designed to achieve? There is an infinite number of points of inappropriateness and complete nonsense about the tax if applied to such an area as Northern Ireland.

If the Government cannot accept the Amendment, can we have an assurance, either now or on Report, on whether Mr. Kirk will be able to continue his relief after next April, and whether the Government will back Mr. Kirk when he introduces the rather quicker system of repayment than the five or six months which we have been promised?

We have talked in terms of £6 million or £8 million. The Chancellor is anxious to have the maximum amount of money taken out of the economy by 1st January, the date on which he has promised to balance the books. I do not think that £6 million or £8 million here will help the Chancellor to balance his books. Can we have an assurance that the repayment can be made rather quicker in Northern Ireland than elsewhere in the United Kingdom?

Following up the remarks of my hon. Friend the Member for Belfast, East (Mr. McMaster), I say that we would welcome hon. Members opposite in the Lobby when we divide on the Amendment, and we would particularly welcome the presence of the hon. Member for Belfast, West (Mr. Fitt).

Captain Orr

We have had a very good debate. My hon. Friends have put the case for this exemption with great cogency and skill. I am sorry that they have failed to persuade the Financial Secretary and the Treasury of the case, and I am also sorry that we have such a disappointing reply. None the less,

it might be a good thing to come to a conclusion on the matter fairly soon, and I so recommend to my hon. Friends.

My hon. Friend the Member for Belfast, East (Mr. McMaster) may inadvertently have given the impression that the Ulster Unionist hon. Members had not been from the very beginning opposed to the notion of a tax upon employment. The fact remains that we are absolutely united in opposition, both in the past and now, against any tax placed specifically upon employment as such. We think that it is totally irrelevant and grotesque to apply such a tax in Northern Ireland. Our difference in the past may have been about methods of achieving our object.

My second purpose is to express our disappointment at the Financial Secretary's reply. He did not meet our arguments at all. He used two arguments, as I thought he would, which were totally irrelevant. It is disappointing also that he did not respond to the request for an undertaking made by my hon. Friend the Member for Belfast, North (Mr. Stratton Mills). Will he now say something about that?

Mr. MacDermot

I gladly do so. I should have thought it almost unnecessary. It would be quite inappropriate for us to seek to bring any pressure one way or another upon the Northern Ireland Government in regard to how to deal with the question of refunds, how long to continue their present scheme, and so on. All that is entirely a matter within the determination of the Northern Ireland Government, and we would not seek to influence them in any way.

Captain Orr

We are very grateful to the hon. and learned Gentleman for that undertaking. However, in view of the Government's inflexible attitude towards the scheme as a whole and the exemption of Northern Ireland, I must advise my hon. Friends to go into the Lobby in support of the Amendment.

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

The Committee divided: Ayes 127, Noes 80.

Division No. 81.] AYES [9.35 a.m.
Abse, Leo Alldritt, Walter Anderson, Donald
Albu, Austen Allen, Scholefield Armstrong, Ernest
Ashley, Jack Forrester, John Mahon, Simon (Bootle)
Atkins, Ronald (Preston, N.) Fowler. Gerry Mapp, Charles
Atkinson, Norman (Tottenham) Freeson, Reginald Mason, Roy
Bacon, Rt. Hn. Alice Gardner, A. J. Mitchell, R. C. (S'th'pton, Test)
Bagier, Gordon A. T. Garrett, W. E. Moyle, Roland
Beaney, Alan Ginsburg, David Neal, Harold
Bidwell, Sydney Gordon Walker, Rt. Hn. P. C. Newens, Stan
Bishop, E. S. Gourlay, Harry Ogden, Eric
Blackburn, F. Greenwood, Rt. Hn. Anthony Orme, Stanley
Blenkinsop, Arthur Gregory, Arnold Owen, Dr. David (Plymouth, S'tn)
Boardman, H, Griffiths, David (Rother Valley) Page, Derek (King's Lynn)
Boston, Terence Griffiths, Will (Exchange) Parkyn, Brian (Bedford)
Boyden, James Hamilton, William (Fife, W.) Pentland, Norman
Braddock, Mrs. E. M. Hannan, William Perry, George H. (Nottingham, S.)
Bradley, Tom Harper, Joseph Price, Christopher (Perry Barr)
Brooks, Edwin Harrison, Walter (Wakefield) Price, William (Rugby)
Brown, R. W. (Shoreditch & F'bury) Hattersley, Roy Rees, Merlyn
Buchan, Norman Healey, Rt. Hn. Denis Richard, Ivor
Buchanan, Richard (G'gow, Sp'burn) Hooley, Frank Roberts, Gwilym (Bedfordshire, S.)
Cant, R. B. Homer, John Robertson, John (Paisley)
Carter-Jones, Lewis Howarth, Harry (Wellingborough) Rose, Paul
Coe, Denis Howie, W. Rowland, Christopher (Meriden)
Coleman, Donald Hughes, Emrys (Ayrshire, S.) Rowlands, E. (Cardiff, N.)
Concannon, J. D. Hughes, Roy (Newport) Shaw, Arnold (llford, S.)
Crawshaw, Richard Jackson, Colin (B'h'se & Spenb'gh) Silkin, John (Deptford)
Crossman, Rt. Hn. Richard Jackson, Peter M. (High Peak) Summerskill, Hn. Dr. Shirley
Davies, Dr. Ernest (Stretford) Kelley, Richard Swingler, Stephen
Davies, Ifor (Gower) Kenyon, Clifford Thomas, George (Cardiff, W.)
Dell, Edmund Lawson, George Tinn, James
Dewar, Donald Leadbitter, Ted Urwin, T. W.
Diamond, Rt. Hn. John Lee, Rt. Hn. Jennie (Cannock) Varley, Eric G.
Dickens, James Lever, L. M. (Ardwick) Wainwright, Edwin (Dearne Valley)
Doig, Peter Lewis, Ron (Carlisle) Walden, Brian (All Saints)
Dunn, James A. Lyon, Alexander W. (York) Watkins, David (Consett)
Dunwoody, Dr. John (F'th & C'b'e) Lyons, Edward (Bradford, E.) Wells, William (Walsall, N.)
Ellis, John McCann, John Whitlock, William
English, Michael MacDermot, Niall Willis, George (Edinburgh, E.)
Ensor, David Macdonald, A. H.
Fernyhough, E. Mackenzie, Gregor (Rutherglen) TELLERS FOR THE AYES:
Fletcher, Ted (Darlington) McMillan, Tom (Glasgow, C.) Mr. Charles R. Morris and
Floud, Bernard MacPherson, Malcolm Mr. McBride.
Foot, Michael (Ebbw Vale) Mahon, Peter (Preston, S.)
NOES
Alison, Michael (Barkston Ash) Grieve, Percy Orr, Capt. L. P. S.
Atkins, Humphrey (M't'n & M'd'n) Higgins, Terence L. Osborn, John (Hallam)
Bennett, Sir Frederic (Torquay) Hirst, Geoffrey Pardoe, J.
Bennett, Dr. Reginald (Gos. & Fhm) Holland, Philip Pearson, Sir Frank (Clitheroe)
Berry, Hn. Anthony Howell, David (Guildford) Peel, John
Biggs-Davison, John Jenkin, Patrick (Woodford) Pink, R. Bonner
Bossom, Sir Clive Johnston, Russell (Inverness) Prior, J. M. L.
Boyle, Rt. Hn. Sir Edward Jopling, Michael Pym, Francis
Brinton, Sir Tatton Joseph, Rt. Hn. Sir Keith Ramsden, Rt. Hn. James
Bryan, Paul King, Evelyn (Dorset, S.) Scott, Nicholas
Buchanan-Smith, Alick (Angus,N&M) Legge-Bourke, Sir Harry Shaw, Michael (Sc'b'gh & Whitby)
Buck, Antony (Colchester) Lloyd, Ian (P'tsm'th, Langstone) Smith, John
Campbell, Gordon Lubbock, Eric Taylor, Frank (Moss Side)
Carr, Rt. Hn. Robert MacArthur, Ian Thatcher, Mrs. Margaret
Chichester-Clark, R. Macleod, Rt. Hn. lain van Straubenzee, W. R.
Clark, Henry McMaster, Stanley Vickers, Dame Joan
Clegg, Walter Macmillan, Maurice (Farnham) Walker, Peter (Worcester)
Cooke, Robert Maginnis, John E. Ward, Dame Irene
Corfield, F. V. Maude, Angus Weatherill, Bernard
Crosthwaite-Eyre, Sir Oliver Maydon, Lt.-Cmdr. S. L. C. Whitelaw, William
Crouch, David Mills, Peter (Torrington) Wilson, Geoffrey (Truro)
Elliot, Capt. Walter (Carshalton) Mills, Stratton (Belfast, N.) Winstanley, Dr. M. P.
Elliott, R.W. (N'c'tle-upon-Tyne,N.) Mitchell, David (Basingstoke) Wood, Rt. Hn. Richard
Eyre, Reginald Munro-Lucas-Tooth, Sir Hugh Woodnutt, Mark
Farr, John Murton, Oscar
Fortescue, Tim Nabarro, Sir Gerald TELLERS FOR THE NOES:
Gilmour, Sir John (Fife, E.) Neave, Airey Mr. Younger and Mr. Blaker.
Glover, Sir Douglas Noble, Rt. Hn. Michael
The Chairman

Having given the matter the best consideration that I can, I have formed the opinion, to quote the word of Standing Order No. 47, that the principle of Clause 42 and any matters arising thereon have been adequately discussed in the course of debate on the amendments proposed thereto …

Several Hon. Members rose——

The Chairman

Order. I therefore, as required by Standing Order No. 47, put the Question.

Question put, That the Clause stand part of the Bill:—

Mr. David Mitchell (Basingstoke)

(seated and covered): On a point of order. I asked one of your colleagues earlier, Sir Eric, if he would allow speeches to be made on the Question, "That the Clause stand part of the Bill", and I was assured that this was likely to be so. I had not succeeded in catching your eye, nor had a number of my colleagues who had urgent matters which

had not been discussed to raise on the Clause. May I therefore ask you, Sir Eric, to reconsider your Ruling?

The Chairman

No. My Ruling is not debatable and cannot be reconsidered.

The Committee divided: Ayes 132, Noes 82.

Division No. 82.] AYES [9.45 a.m.
Abse, Leo Fitt, Gerard (Belfast, W.) Mackenzie, Gregor (Rutherglen)
Albu, Austen Fletcher, Ted (Darlington) McMillan, Tom (Glasgow, C.)
Allaun, Frank (Salford, E.) Floud, Bernard MacPherson, Malcolm
Alldritt, Walter Foley, Maurice Mahon, Peter (Preston, S.)
Allen, Scholefield Foot, Michael (Ebbw Vale) Mahon, Simon (Bootle)
Armstrong, Ernest Forrester, John Mapp, Charles
Ashley, Jack Fowler, Gerry Mason, Roy
Atkins, Ronald (Preston, N.) Freeson, Reginald Mitchell, R. C. (S'th'pton, Test)
Atkinson, Norman (Tottenham) Gardner, A. J. Moyle, Roland
Bacon, Rt. Hn. Alice Garrett, W. E. Neal, Harold
Bagier, Gordon A. T. Ginsburg, David Newens, Stan
Beamish, Col. Sir Tufton Gordon Walker, Rt. Hn. P. C. Ogden, Eric
Bessell, Peter Courlay, Harry Orme, Stanley
Bishop, E. S. Greenwood, Rt. Hn. Anthony Owen, Dr. David (Plymouth, S'tn)
Blackburn, F. Gregory, Arnold Page, Derek (King's Lynn)
Blenkinsop, Arthur Griffiths, David (Rother Valley) Parker, John (Dagenham)
Boardman, H. Griffiths, Will (Exchange) Parkyn, Brian (Bedford)
Boston, Terence Hamilton, William (Fife, W.) Pentland, Norman
Boyden, James Hannan, William Perry, George H. (Nottingham, S.)
Braddock, Mrs. E. M. Harper, Joseph Price, Christopher (Perry Barr)
Bradley, Tom Harrison, Walter (Wakefield) Price, William (Rugby)
Brooks, Edwin Hattersley, Roy Rees, Merlyn
Brown, Rt. Hn. George (Belper) Healey, Rt. Hn. Denis Richard, Ivor
Brown, R. W. (Shoreditch & F'bury) Hooley, Frank Roberts, Gwilym (Bedfordshire, S.)
Buchan, Norman Horner, John Robertson, John (Paisley)
Buchanan, Richard (G'gow, Sp'burn) Howarth, Harry (Wellingborough) Rose, Paul
Cant, R. B. Howie, W. Rowland, Christopher (Meriden)
Carter-Jones, Lewis Hughes, Emrys (Ayrshire, S.) Rowlands, E. (Cardiff, N.)
Coe, Denis Hughes, Roy (Newport) Shaw, Arnold (Ilford, S.)
Coleman, Donald Jackson, Colin (B'h'se & Spenb'gh) Silkin, John (Deptford)
Concannon, J. D. Jackson, Peter M. (High Peak) Summerskill, Hn. Dr. Shirley
Crawshaw, Richard Johnson, Carol (Lewisham, S.) Swingler, Stephen
Davies, Dr. Ernest (Stratford) Kelley, Richard Thomas, George (Cardiff, W.)
Davies, Ifor (Gower) Kenyon, Clifford Tinn, James
Dell, Edmund Lawson, George Urwin, T. W.
Dewar, Donald Leadbitter, Ted Varley, Eric G.
Diamond, Rt. Hn. John Lee, Rt. Hn. Jennie (Cannock) Wainwright, Edwin (Dearne Valley)
Dickens, James Lever, L. M. (Ardwick) Walden, Brian (All Saints)
Doig, Peter Lewis, Ron (Carlisle) Watkins, David (Consett)
Dunn, James A. Lyon, Alexander W. (York) Wells, William (Walsall, N.)
Dunwoody, Dr. John (F'th & C'b'e) Lyons, Edward (Bradford, E.) Whitlock, William
Ellis, John McCann, John Willis, George (Edinburgh, E.)
English, Michael MacColl, James
Ensor, David MacDermot, Niall TELLERS FOR THE AYES:
Fernyhough, E. Macdonald, A. H. Mr. Charles R. Morris and
Mr. McBride.
NOES
Alison, Michael (Barkston Ash) Clegg, Walter Howell, David (Guildford)
Atkins, Humphrey (M't'n & M'd'n) Cooke, Robert Jenkin, Patrick (Woodford)
Bennett, Sir Frederic (Torquay) Corfield, F. V. Johnston, Russell (Inverness)
Bennett, Dr. Reginald (Gos. & Fhm) Crosthwaite-Eyre, Sir Oliver Jopling, Michael
Berry, Hn. Anthony Crouch, David Joseph, Rt. Hn. Sir Keith
Biggs-Davison, John Elliot, Capt. Walter (Carshalton) King, Evelyn (Dorset, S.)
Blaker, Peter Eyre, Reginald Legge-Bourke, Sir Harry
Bossom, Sir Clive Farr, John Lloyd, Ian (P'tsm'th, Langstone)
Boyle, Rt. Hn. Sir Edward Fortescue, Tim Lubbock, Eric
Brinton, Sir Tatton Gilmour, Sir John (Fife, E.) MacArthur, Ian
Bryan, Paul Glover, Sir Douglas Macleod, Rt. Hn. lain
Buchanan-Smith, Alick (Angus,N&M) Grieve, Percy McMaster, Stanley
Buck, Antony (Colchester) Hastings, Stephen Macmillan, Maurice (Farnham)
Campbell, Gordon Higgins, Terence L. Maginnis, John E.
Carr, Rt. Hn. Robert Hirst, Geoffrey Maude, Angus
Chichester-Clark, R. Holland, Philip Maydon, Lt.-Cmdr. S. L. C.
Clark, Henry Hornby, Richard Mills, Peter (Torrington)
Mills, Stratton (Belfast, N.) Peel, John Vickers, Dame Joan
Mitchell, David (Basingstoke) Pink, R. Bonner Walker, Peter (Worcester)
Munro-Lucas-Tooth, Sir Hugh Prior, J. M. L. Ward, Dame Irene
Murton, Oscar Pym, Francis Weatherill, Bernard
Nabarro, Sir Gerald Ramsden, Rt. Hn. James Whitelaw, William
Neave, Airey Scott, Nicholas Wilson, Geoffrey (Truro)
Noble, Rt. Hn. Michael Shaw, Michael (Sc'b'gh & Whitby) Winstanley, Dr. M. P.
Orr, Capt. L. P. S. Smith, John Wood, Rt. Hn. Richard
Osborn, John (Hallam) Taylor, Frank (Moss Side) Woodnutt, Mark
Pardoe, J. Thatcher, Mrs. Margaret
Pearson, Sir Frank (Clitheroe) van Straubenzee, W. R. TELLERS FOR THE NOES:
Mr. R. W. Elliott and Mr. Younger.
Mr. Maurice Macmillan

On a point of order. I seek your guidance on a matter of procedure, Sir Eric. In view of the fact that we had no debate on the Question, "That Clause 42 stand part of the Bill"—which, I am bound to say, I find eminently reasonable—and as there was no reply from the Treasury Bench, after the long debate on Amendment No. 34, to the Amendment in the name of my hon. Friend the Member for Somerset, North (Mr. Dean) on the question of relieving from the Selective Employment Tax medical insurance schemes, and as I was myself unable to catch your eye in that debate, I wonder whether you would advise me what the correct procedure is for seeing, in view of the longer time we are going to have, that it is possible to get reinstated my hon. Friend's new

Clause 10, to which I have my name, and which deals not with Selective Employment Tax but Income Tax relief on medical insurance schemes?

The Chairman

In the first place. I am not responsible for what replies are or are not given from the Government Front Bench. Secondly, I will certainly consider the representations made by the hon. Member with regard to new Clause 10.