HC Deb 23 May 1968 vol 765 cc849-50
17. Captain W. Elliot

asked the Secretary of State for Economic Affairs what estimate he has made of the effect on the existing programme for the development areas of the changes in Selective Employment Tax contained in the Budget.

Mr. Urwin

The increase in Selective Employment Tax will have no appreciable effect on the programme and the S.E.T. relief to hotels in certain rural parts of the development areas should be of particular help where tourism is an important source of income.

Captain Elliot

Is the hon. Gentleman aware that that is rather a surprising reply? Would not he agree that, if development is to be balanced and permanent, service industries must be developed, and that the increase in the basic rate must affect that?

Mr. Urwin

With regard to the increase in the basic rate, the hon. and gallant Gentleman should remember that service industries have been lightly taxed compared with goods. Though taxes on goods and services have been increased, the unemployment rate is expected to fall. The Government's proposals for hotel development grants and loans, and the revision of the S.E.T. in respect of hotels in certain rural parts of development areas, will be of particular assistance to those areas in which the tourist industry is of great importance.

Dr. John Dunwoody

Does my hon. Friend agree that the S.E.T. concession to the tourist industry in parts of the development areas creates an important precedent? Will he follow that up and introduce much more selectivity and flexibility into the operation of this kind of tax so that the S.E.T. can become an instrument of regional planning?

Mr. Urwin

My hon. Friend will be aware that all tax is constantly being reviewed.