HC Deb 05 June 1967 vol 747 cc599-603
7. Mr. Ridley

asked the Minister of Labour if he will now publish the study his Department is making into the effects of the Selective Employment Tax.

Mr. Hattersley

The Government are continuing to keep a watch on the effects of the Selective Employment Tax, but they are not proposing to produce a study in a form suitable for publication.

Mr. Ridley

In the debate last October the then Parliamentary Secretary said that the Ministry was making a study of this tax and that the results of the study would be laid before the House. In view of the very heavy criticism which this tax is coming under, will not the Government publish some report as to their own view about the wisdom of continuing this futile fiscal measure?

Mr. Hattersley

This Department is keeping the tax under review, as are the Departments of several of my right hon. Friends. I am sure that the hon. Gentleman will understand that the full effects of the Selective Employment Tax cannot be judged for some years. The publication for which he asks will be appropriate at the end of that period.

Mr. R. Carr

Will not the hon. Gentleman and his right hon. Friend think again about this, because, with the introduction of a major new economic instrument, which is what this is, it is important for the management of the economy, as well as in the general public interest, that we should have regular reports on how it is working?

Mr. Hattersley

I do not disagree with any of that. I simply reiterate that it was always the intention that the tax should have long-term implications. The Report will be appropriate when those long-term implications can be properly made clear.

Earl of Dalkeith

The Joint Parliamentary Secretary keeps saying that the Government are watching the position. Does he not think that he owes it to the House to reveal every now and again what the Government are seeing if they are watching it?

Mr. Hattersley

Perhaps the hon. Gentleman has overlooked the very substantial change in the tax which is embodied in Clause 24 of the Finance Bill. That is surely one of the fruits of the Government's investigation.

Sir J. Rodgers

Is the hon. Gentleman aware that I tabled a Question some time ago asking how many people have, as a result of the Selective Employment Tax, been transferred from service industries to manufacturing or export industries? The hon. Gentleman told me then that he would be able to give me the figures in a few months' time. It is surely essential, not that a period of years should elapse before we have the figures, but that they should be given to the House as soon as possible.

Mr. Hattersley

I think that I told the right hon. Gentleman at that time— I suspect that I shall be telling him the same later today—that an analysis of the transfer cannot be made at this time because there are many other factors than S.E.T. affecting the movement of labour. Until this sort of problem can be made clear we must wait for the final report.

11. Mr. Holland

asked the Minister of Labour what assessment he has now made of the impact of the Selective Employment Tax on the employment of the disabled.

Mr. Hattersley

Since the introduction of the Selective Employment Tax, unemployment among the disabled in the service and construction industries has risen at a much lower rate than the general rise in unemployment in these industries.

Mr. Holland

Does not the hon. Gentleman think that to tax the employment of the disabled is an affront to the nation's social conscience? What steps has his right hon. Friend taken to persuade the Chancellor to end this most unhappy situation?

Mr. Hattersley

I am not sure whether the hon. Gentleman means that taxation on the disabled in general is an affront to the nation; if he means that, he should address his question to the Chancellor of the Exchequer. My right hon. Friend is consoled to know that, in all aspects of the policy, the disabled have fared a good deal better than other sections of the community and their employment prospects are no less good than they were before the introduction of this tax. This is the essential factor.

Mr. R. Carr

If we are to give premiums for the employment of anyone, ought we not to give them for the employment of disabled people?

Mr. Hattersley

As I understood him, the right hon. Gentleman is not in favour of giving premiums on any account.

12. Sir J. Rodgers

asked the Minister of Labour what assessment he has made of the impact of the Selective Employment Tax on the distributive trades.

Mr. Hattersley

It is not possible to make a precise distinction between the effects of the Selective Employment Tax and the results of other items of Government economic policy. The available evidence suggests that in distribution the tax has led many firms to review their staffing and efficiency but has also contributed to some dismissals of part-time workers; the Government have taken this into account in proposing a partial refund in respect of part-time workers in establishments not otherwise entitled to premium or refund.

Sir J. Rodgers

Is the hon. Gentleman aware that the Economic Development Committee of the distributive trades has conducted an inquiry among firms employing over 300,000 people, and it has found, as he himself has said, that a great many part-timers have been sacked as a result of the S.E.T. and a great many other people have been taken on in full employment who have come from manufacturing industries? Does not this make nonsense of the claim for the Selective Employment Tax that it would lead to the redistribution of manpower, taking people from service industries to the manufacturing industries, particularly exporting industries, and does he not agree with Mr. Aubrey Jones, when he said that the Selective Employment Tax had had an effect on prices but none whatever in providing redistribution of manpower?

Mr. Speaker

Order. Supplementary questions must be reasonably brief.

Mr. Hattersley

The major proposal of the E.D.C. is incorporated in Clause 24 of the Finance Bill. As regards the movement from manufacturing to distribution, as is, I think, inevitable during a period when manufacturing has had certain Government policies directed towards it, there has been a falling off in demand for its services. I have no comment to make on Mr. Aubrey Jones's suggestions, save to reiterate that the Prices and Incomes Board is properly entitled to draw conclusions and make statements which are not in accordance with Government information.

Mr. Fletcher-Cooke

Is it not unfair of my right hon. and hon. Friends to attack Ministers at the Ministry of Labour on tins tax when it is obvious from their answers that they loathe its "guts"?

Mr. Hattersley

I am grateful for the hon. and learned Gentleman's compassion. His conclusions about my thoughts, however, are 100 per cent. inaccurate.

56. Mr. G. Campbell

asked the Minister of Labour if he will seek to amend the Selective Employment Payments Act so that packing of textiles into special bales for export qualifies for the premium.

Mr. Hattersley

The Government are keeping questions of S.E.T. classification under review, and the hon. Member's suggestion will be borne in mind.

Mr. Campbell

Is not this another example of the anomalies of this tax, which in this case is imposed on an operation which is closely associated with manufacture and exports in a hard-pressed industry?

Mr. Hattersley

The export criterion is quite invalid. Were the tax designed simply to subsidise exports, there would be a breach of our international obligations. The fact that the process is closely associated with manufacture is hardly more relevant. The tax requires it to be a part of manufacture and not merely associated with it.

Mr. Fletcher-Cooke

Is there not a greater anomaly in textiles in that a small company processing rags for textile purposes pays the tax, whereas a large company which happens to wash as well as process them does not?

Mr. Hattersley

If the hon. and learned Gentleman will put down a Question about that, I will answer it.