HC Deb 15 November 1966 vol 736 cc210-3
20. Mr. Braine

asked the Minister of Power what is the outcome of his request to area electricity and gas boards to put up their prices for contracting work by an amount equivalent to what they would have to pay if Selective Employment Tax were levied, in order thereby to offset the unfair incidence of the tax levied on contractors in the private sector.

30. Sir G. Nabarro

asked the Minister of Power whether he is aware that, following consultations between himself and area electricity boards and private enterprise electrical contractors, the area boards have agreed to raise their prices to consumers for electrical contracting work by a sum equal to the Selective Employment Tax which such boards do not pay, but private enterprise electrical contractors do pay, whereas this is contrary to Part IV of the Prices and Incomes Act; and what action he proposes to take in the matter.

32. Mr. Alison

asked the Minister of Power to what extent the arrangement he has made for nationalised electrical contracting concerns to take the Selective Employment Tax into account in costing projects will raise the prices of the services they offer; and whether he intends to make similar arrangements in the case of gas contracting and coal retailing.

42. Mr. Haseldine

asked the Minister of Power if he has completed his consultations with the electricity and gas industries concerning the effect of Selective Employment Tax on the terms of competition between electricity and gas showrooms, private contractors and retail firms; and if he will make a statement.

Mr. Marsh

I would refer the hon. Members to the Answers to Questions by the hon. Member for West Lothian (Mr. Dalyell) and the hon. Members for Lewisham, West (Mr. Dickens) and Shrewsbury (Sir J. Langford-Holt) on the 18th October [Vol. 734, c. 32] and 8th November [Vol. 735, c. 249] respectively. The arrangements I have proposed would only apply to the contracting activities of area electricity and gas boards.

Mr. Braine

The right hon. Gentleman will remember that he gave the House an undertaking in that Answer on 18th October. Would not he agree that a more sensible arrangement would have been to have exempted private contractors from paying this tax at the outset and thus avoided the charge of unfair competition by area boards, and indeed increased costs to the consumer? The right hon. Gentleman must fulfil his undertaking to Parliament.

Mr. Marsh

The undertaking was to find a way of trying to meet all the interests involved. Consumers have interests, and the public purse has an interest, too. These arrangements will not apply until 1st January, which is after the ending of the prices and incomes standstill. They provide electrical contractors with equality of competition. They leave the Exchequer's net cash outflow unaffected and they save the economy the burden of administration which would be imposed on the board and the Ministry by liability to the tax. It seems a good solution to me.

Sir G. Nabarro

Is it not a fact that what the right hon. Gentleman has done amounts to a conspiratorial alliance between himself and the area electricity boards deliberately to raise prices in contravention of the Prime Minister's statement? Why does he not take action to bring down prices, not to put them up?

Mr. Marsh

If the hon. Gentleman would produce his supplementaries after he has heard the Answers they would not be so repetitive. I said that this would not apply until 1st January, which is after the ending of the prices and incomes standstill.

Mr. Alison

The right hon. Gentleman did not make plain whether the full S.E.T. would be passed on or whether the nationalised electrical contracting firms would have to absorb a percentage of it in higher productivity. Can the right hon. Gentleman say whether a percentage has to be absorbed in higher productivity, and if so what percentage, or whether the full S.E.T. is to be passed on?

Mr. Marsh

One would expect all the contractors, public or private, to absorb as much as they can of this tax. This is not the amount which they have to charge to the consumer. The amounts involved are very small indeed. Direct labour costs amount to about 6 per cent. of the total revenue, which is only one-third of the industry's turnover. The amount involved is very small, and the more that can be absorbed the better.

Mr. Dalyell

Would not my hon. Friend agree that he has been generous, some may think over-generous, to the interests of private contractors?

Mr. Marsh

Until I heard hon. Gentlemen opposite, my hon. Friend's description completely described my own feelings.

Mrs. Knight

Is the right hon. Gentleman not aware that there is considerable justified anger among private electrical contractors, first, because they are having to put up their prices because of the S.E.T., and, secondly, because through their own tax they are helping their competitors against themselves?

Mr. Marsh

The hon. Lady's question has underlined the problem. If she would get together with the hon. Member for Worcestershire, South (Sir G. Nabarro)—

Sir G. Nabarro

I do not want my hon. Friend to get together with me.

Mr. Marsh

That demonstrates the hon. Gentleman's usual lack of appreciation of these things. There are two problems here. The hon. Gentleman is complaining about prices being raised. The hon. Lady is complaining because they have not been raised enough to cover contractors. This arrangement is being discussed with the Electrical Contractors' Association, and has been discussed with it, and all the interests have to be taken into account. This seems to be the best way of doing it.

Mr. Barber

Is the Minister aware that our complaint is simply that the effect of S.E.T., which was, after all, a Government measure, has been to put up prices all round?

Mr. Marsh

None of this change, so far as it relates to this industry, has put any prices up. Nor will it do so during the period of the freeze, and one would hope that after that the industry and everybody else will do what they can to absorb it.