HC Deb 07 February 1968 vol 758 cc377-9
21. Sir Knox Cunningham

asked the President of the Board of Trade whether Her Majesty's Government will now reconsider their policy of discriminating against service industries and in favour of manufacturing.

Mr. Darling

If the hon. and learned Member is referring to investment grants and the Selective Employment Tax, no change in the Government's general policy in this respect is contemplated.

Sir Knox Cunningham

Now that the aim of the Selective Employment Tax to encourage manufacturing as opposed to service industries has proved to be a complete failure, when are we to get rid of this disastrous tax?

Mr. Darling

I certainly would not agree with the hon. Member's views. Employment in the service trades is bound to go on increasing as living standards rise and people want more and more services of one kind and another. What we have tried to do, and have succeeded to some extent in doing, is to check the excessive expansion of service industries which has gone on for many years at the expense of manufacturing industry.

Mr. Patrick Jenkin

Is not the Report of the Bland Committee on Overseas Earnings, on invisibles, a standing condemnation of the Government's policy in this regard? Why do the Government continue to regard as an export only something you can drop on your toes?

Mr. Darling

There is a Question on this subject later on the Order Paper.

Mr. Hirst

Surely the right hon. Gentleman must realise that since S.E.T. has been in operation, although its main purpose was to switch people from service industry to manufacturing industry, there are now 300,000 fewer employed in the manufacturing industries and the effect has been the exact opposite? This is what hour after hour, day after day, in Committee, we said would happen.

Mr. Darling

Whatever the figures the hon. Member has, I am certain that they do not support the argument he is trying to put forward.

Sir S. McAdden

Recognising that responsibility for taxation rests with the Chancellor of the Exchequer, is it not surely the job of the right hon. Gentleman to make representations in the interests of trade and industry to the Chancellor? Is it not abundantly clear that this iniquitous tax, instead of sending people from service to manufacturing industries, is working the other way and that the numbers are declining in manufacturing industry and increasing in the service industries and the Civil Service?

Mr. Darling

The intention was not to drive anyone out of anywhere—[HON. MEMBERS: "You said so."]—no, but to check the great increase year by year of those going into the service industries. What I think the hon. Member does not realise is that over a period of years of every 100 new jobs created in this country over 80 were in service industries and it is the manufacturing industries which are short of manufacturing workers.

Mr. Baxter

Will my right hon. Friend ask the Chancellor of the Exchequer to give further consideration to this tax because of the seeming misunderstanding about its purpose? I understood that its purpose was to help the export industry by giving it a hidden subsidy and all this nonsense about getting people out of service industries into manufacturing industry is totally wrong. Will my right hon. Friend give consideration to repeal of the tax because I do not think it serves the purpose for which it was introduced?

Mr. Darling

I am quite sure that no one has ever suggested that the purpose of the tax was to give a hidden subsidy to anybody. As to the first part of my hon. Friend's question, I shall see that the views he has expressed are conveyed to the Chancellor of the Exchequer.

Sir Knox Cunningham

Owing to the unsatisfactory nature of that reply, I will raise the matter again.