HC Deb 30 June 1966 vol 730 cc2178-80
32. Mr. Palmer

asked the First Secretary of State and Secretary of State for Economic Affairs what changes he will make in the National Plan forecasts for the distributive trades and the service industries to allow for the effect of the Selective Employment Tax.

Mr. William Rodgers

The effects of this tax are among the factors being considered in the review of the National Plan. It is too early to say what precise changes will be made.

Mr. Palmer

Is my hon. Friend aware that the distributive trades have cooperated very fully with him and his Department in working towards the fulfilment of the National Plan and that they have been much discouraged by the Selective Employment Tax? Could not he utter a word of encouragement to them?

Mr. Rodgers

I fully understand my hon. Friend's concern. I know that he has taken the opportunity to raise the matter in the debates on the Finance Bill. We shall watch the effects of this tax. We hope very much that it will not in any way prevent the distributive trades from reaching the targets which we set them in the National Plan.

33. Mr. Palmer

asked the First Secretary of State and Secretary of State for Economic Affairs what changes he proposes to make in regional development plans to allow for the effect of the Selective Employment Tax.

Mr. William Rodgers

None, Sir.

Mr. Palmer

Is my hon. Friend aware that the Selective Employment Tax will work very unevenly in relation to the regions and that the South-West, where there is already unemployment, will be very heavily hit by the contribution which it will have to make to other parts of the country? Is not some such action necessary to help the South-West?

Mr. Rodgers

It is certainly bound to have some effect, but we should not exaggerate this. Such estimates as we have suggest that the incidence will range only from about 1½ to 1¾ per cent. on the total wage and salary bill in the South-East and South-West to about ½ per cent. in the West Midlands. Of course, we shall watch the incidence of the tax.

Mr. Patrick Jenkin

Is it too late for the First Secretary to use his influence with the Chancellor of the Exchequer to try to introduce some element of regional bias into a tax which is particularly suited to bringing a regional influence to bear on our economic affairs?

Mr. Rodgers

We have introduced many means of securing balanced regional development in the last 18 months. As the Chancellor of the Exchequer has said on a number of occasions, this is a flexible tax which can be used for a number of good purposes.

Mr. Bessell

What representations has the hon. Gentleman received from the Chairman of the South-West Regional Economic Planning Council on the effects of this tax in areas like Devon and Cornwall? Would he state what he considers the effects will be in Scotland and Mid-Wales?

Mr. Rodgers

Advice which we receive from the Economic Planning Councils is confidential. We have looked at the incidence of the tax. It will vary between ½ per cent. and, at the most, 1¾ per cent.

Dr. Dunwoody

Would my hon. Friend assure us that the regional planning bodies, particularly during the first 12 months, will study very closely any possible effects in the regions so that when the time comes to review the working of this tax the enormous advantage of its flexibility can be used to help the hard-core areas of residual unemployment such as those in the South-West?

Mr. Rodgers

I will certainly give that assurance.