HC Deb 22 July 1968 vol 769 cc10-1
11. Mr. Hunt

asked the Minister of Public Building and Works whether he will now make a statement on his policy regarding the refund to contractors engaged on public sector contracts of the Selective Employment Tax as from September, 1968.

17. Mr. Speed

asked the Minister of Public Building and Works what representations he has received from builders regarding the refund of Selective Employment Tax to those contractors who engaged in a public contract after 4th May, 1966, but before the introduction of Supplementary Condition No. 62 in CCC/Wks/1 in November, 1967 and new Clause 31 in the Royal Institute of British Architects Form of Contract in October, 1967 and whose contracts will continue after 2nd September, 1968; and what replies he has sent.

Mr. Mellish

I have received representations from many sources that concessions should be made on construction contracts for the public sector where those contracts did not include provisions to enable contractors to reclaim the extra cost of the increased rate of Selective Employment Tax which will become operative in September next. The Government have considered this request but have decided not to grant it, since this is a change in an existing tax and not the introduction of a new one.

Mr. Hunt

Is the Minister aware that that Answer will be deplored throughout the country, particularly in the building industry? Is he further aware that it will completely undermine the construction industry's faith in the fixed-price contract system? Why has he capitulated to the Treasury in this cowardly way?

Mr. Mellish

Whatever else I am, I am not a coward. I understand the feelings of some of those involved. The truth is that for local authorities to have been able to apply thisex gratia payment legislation would have been necessary. The number of those having contracts with my Department is very small indeed. I very much hope that there will be no hardship.

Mr. Speed

Does the Minister recall that on 17th June he said: I want to see justice done."—[OFFICIAL REPORT, 17th June, 1968; Vol. 766, c. 685.] How does he reconcile this completely unhappy reply with that statement?

Mr. Mellish

I was then talking about the very few people involved having contracts with my Ministry. When one talks about this as a principle, one puts it right across all Government Departments and, therefore, the numbers involved are much more difficult and complex. As I explained, legislation would have to be introduced to enable local authorities to operate such a refund. It is for these reasons that the principle of this had to be denied.

Mr. Chichester-Clark

Is the Minister aware that this is utterly mean, shabby and confidence destroying for the industry—all the more so because the Government themselves accepted the fluctuation principle in CCC/Wks/1 and the R.I.B.A. form of contract?

Mr. Mellish

The hon. Member must not over-state this. The number of contracts involved is infinitesimal compared with the major number. This was a collective Government decision, for the reasons that I have given.