SELECTIVE EMPLOYMENT TAX: REFUND OF PAYMENTS IN RESPECT OF EMPLOYEES ON CAMPING OR CARAVAN SITES

HC Deb 23 June 1969 vol 785 cc1049-115

Amendment No. 32, in page 3, line 40, at end insert: (4) Without prejudice to the foregoing provisions of this section, a scheme under this section for encouraging the construction, extension or improvement of hotels may provide for the repayment by the relevant Minister to persons who have paid taxes in respect of hotels of a proportion of such taxes.

Mr. Emery

This is the Development of Tourism Bill, but if any individual or army of individuals connected with tourism were asked what would be of the greatest benefit to tourism and its development, I am sure that the answer would be the abolition of Selective Employment Tax for tourism in general and for hotels specifically. The weakness of the Bill, and it is a very severe weakness, is that it entirely ignores S.E.T. The Opposition feel it important to attempt at this late stage to rectify a situation which the Government blandly ignored and did not correct in Standing Committee.

I have two specific questions which I challenge the Minister to answer. First, in considering the tourist industry and hotels specifically, which are defined in the S.E.T. legislation as a service industry, will he tell me what service industry earns more foreign currency? He knows, and I know, that more than £300 million worth of foreign exchange came into the Exchequer last year from this source. That being so, how can he maintain that these industries fall into the normal Government definition of a service industry? Second, what other service industry achieved anything like the foreign currency savings achieved by the tourist trade and the hotel industry?

I refer the Minister of State to the fortieth annual report of the B.T.A. It says: It is worth emphasising here that far more of our own people spend their holidays in Britain than go abroad. In 1967 over 30 million British people spent their 'main' holidays in Britain … Expenditure by home holidaymakers amounted to £560 million …. This is an important way in which the tourist industry prevents a large amount of expenditure going abroad, by encouraging people to have their holidays here rather than using hard-earned foreign currency which the Exchequer needs. There needs to be rethinking by the Government about the way in which S.E.T. affects tourism.

The House may think that in debates on the Finance Bill and on the Second Reading of this Bill we have raised this point ad nauseam, but the Government pay no attention whatever. We intend to go on hammering at this because by our proposals there could be more of a benefit to assist the industry than all the financial grants and aids given by the Bill. The hotel industry has three vital rôles to play. It has to provide hotel accommodation adequate in quantity and quality, located in the right areas, for overseas visitors to Britain. It has to provide accommodation, again in the right locations and quantity, for home holidaymakers. It has to provide the facilities required throughout the country by business men.

When one considers those three requirements one sees that the hotels are just as important as any aspect of manufacturing industry, which does not have the burden of S.E.T. upon it. When the selective employment tax was introduced in 1966, it was stressed that the scheme was to move labour out of non-exporting industries to exporting industries. Does the hon. Gentleman suggest that S.E.T. should be used to move employees out of the hotel and tourist industry? The latest figures produced by the British Hotel and Restaurant Association show that in the hotel industry there is a labour force of approximately a quarter of a million at the moment. It is estimated that there is a shortfall of 46,000 jobs for skilled staff in the industry.

Surely the Government's argument falls by the wayside concerning the hotel industry. There is not a surplus of labour; there is an acute shortage of about 20 per cent. It was estimated that the effect of S.E.T. on the industry would mean an increase of approximately 10 per cent. on costs of labour, resulting overall in an extra £20 million being found by tourism and the hotel industry. We now find that with the new increase, which is being debated in the Standing Committee on the Finance Bill, the extra operating costs will be 3½ per cent. or 4½ per cent. This will be increased by 50 per cent. by the new imposition.

The Minister of State will accept that hotels are as important as shipping and airline companies, but those are exempt from S.E.T. Why not exempt hotels, which are providing the end product for those who come to this country by airline or ship? The hotel industry is the vital second stage. Fairness demands that the Government should give the industry the same treatment as they give to airlines and shipping. Frequently the President of the Board of Trade appears to neglect the heavy effect of S.E.T. on the hotel industry through its having to provide services for 24 hours a day. That is not the normal situation in manufacturing industry or transport services. The imposition of S.E.T. which hotels have to face means an increased charge or reduced services. Surely the Minister of State wishes to avoid reduced services which would be unacceptable to overseas visitors?

The hon. Gentleman knows that it is not possible to absorb the extra tax imposed on the industry. In present conditions of full employment within the hotel industry, the only alternative which operators have is either to decrease services, particularly in the evenings or at the weekends—which cannot be advantageous—or to put up the charges to be borne by foreign travellers. I stress the great growth there has been in tourism. This is what the Bill is seeking to encourage. In Western Europe in 1960 somewhat over three-quarters of a million tourists came to the United Kingdom. By last year the number had increased by 1,100,000 to slightly over 1,800,000. There has been a massive increase in the number of American tourists coming here. In total there has been a growth from 1.2 million to 3.1 million.

The Minister may say that that is not good enough and that the industry should be encouraged to do even better to obtain even greater foreign earnings. That is why there are specific provisions to provide grants in the region of £10 million. The dichotomy is that with one hand the Government give and with the other hand they take away. In the last eight months they have made a great song and dance about the extra benefit to the hotel and tourist industry given by grants and loans, but the Chancellor decided to take out of the industry by increased S.E.T. nearly £10 million, in addition to the £20 million already being taken from the industry.

6.0 p.m.

When I made this point in Committee the Government gave this deplorable reply: In reply to the question of S.E.T., may I say that the Bill represents an attempt to extend the already generous grants which the Government are giving to this industry, and which the Opposition failed to give during their period of office?"—[OFFICIAL REPORT, Standing Committee E, 17th April, 1969; c. 347.] It is important to put that into perspective. The Conservative Government did not take £30 million through this tax from the industry. The industry is, on balance £20 million worse off under a Socialist Government than it was under a Conservative Government.

Standard Industrial Classification 884 covers hotels, motels holiday camps, guest houses, boarding houses, hostels and similar establishments providing furnished accommodation with food and service for reward but excluding licensed or residential clubs, which come under a different heading. Many people would contend that we should seek to extend this, but we assert that the power and logic of the argument as it applies to hotels and guest houses in particular warrant the Government's reconsidering the matter.

It is important that this action should be taken now, because the new rate of tax comes into force on 7th July. This is particularly hard on smaller establishments which fixed their rates and accepted bookings six to nine months ago. They cannot have included clauses providing that the quoted tariff would be subject to revision if the Government once again increased this tax. These people, who entered into firm contracts as to the rates they will charge in July and September, will be forced by the Government to incur substantially higher operating costs, which they will be unable to recoup. If the tax is to be imposed on this industry, the Government should postpone the increase till the end of September.

The Clause seeks to abolish the tax, but if we cannot move the stony heart of the Chancellor or of the President of the Board of Trade, will the Government consider postponing the imposition of this increase? An increase of 3 per cent. on total operating costs eats up the total annual profit. I am not talking about the type of profit earned by large hotel groups. I am talking about small establishments in the West country, on the South Coast, at Blackpool, at Morecambe, at Scarborough, and in Scotland, whose proprietors expect to make a profit of only 3–5 per cent. on their total turnover for the season. This is what they live on for the rest of the year.

It is no use the Minister saying that these people do not matter. These are the people who provide the accommodation for English, Scottish and Welsh nationals who holiday in Britain instead of holidaying overseas. From the point of view of saving foreign currency they are just as important as the large hotels which cater for foreign visitors.

The Government are trying to have it both ways, as so frequently happens with this Government. They make a song and dance about something, but a few months later they reverse the whole procedure so that any of the advantages originally granted are taken away with interest. This happened in the Budget. The greatest contribution the Government could make to ensuring the fullest development of this industry would be to exempt this industry from the imposition of this tax.

Mr. Costain

I support the Clause. In accordance with the tradition of the House, I declare an interest in that I am a director of a London hotel. I do not want to plead the case on behalf of hotels, however. I want to plead it on behalf of my constituents. My hon. Friend the Member for Honiton (Mr. Emery) laid special emphasis on the effect this tax has on small and other hotels which have already booked their accommodation at a fixed price. The problem facing proprietors who have reached a firm agreement on prices is how to cope with this proposed increase. They will be able to do so only by reducing the number of employees. In small hotels any action taken in this respect will be only marginal.

What worries me most is the effect this will have on rising unemployment figures on the South Coast in general and in my constituency in particular. The length of the season is that all-important factor to hotels in seaside resorts. At each end of the season there is a time when it is just as wise to close a hotel as it is to keep it open. This proposed increase is the last straw. London and the more popular districts provide employment opportunities for people declared redundant when a hotel shuts for the winter season. In seaside resorts, particularly those on the South Coast, which is now suffering from its highest unemployment for some years, it is difficult for people put out of work at the end of the season to find other work. Therefore, from a mere cash flow point of view, by introducing this tax the Government are adding to their expenditure because of the increased amount of unemployment. It is a very stupid argument.

It has been said that hotels are experiencing a boom, and I do not deny that this is so with luxury hotels. In London there is a shortage of accommodation. There is a tendency, not by the best hotels but by the middle-class hotels, to make hay while the sun shines and cut down service. The results of this will not be apparent for a number of years, because not many people will complain at the time, but they will not return. Foreign vistors who have been disappointed over hotel service will probably go for their next holiday somewhere on the continent where they are not feeling the effects of reduced service.

The main point has been put so well by my hon. Friend the Member for Honiton (Mr. Emery) that I do not need to go over it. I wish only to stress that these local points are matters of which the President of the Board of Trade ought to take notice, and he should accept our new Clause.

Mr. Noble

I want to impress upon the President of the Board of Trade that there is another side to the picture presented by the Minister of State when moving new Clause 1. The hon. Gentleman said that he had been reading Lex, which gave a glowing account of the fortunes of two of the major and perhaps the best-run hotel groups in the country. I do not doubt that Lex was right. There are big groups of hotels brilliantly run, but such groups select hotels very carefully, to be in the areas where there is the largest number of tourists, and often manage to keep them open for about 11 months of the year. Such groups do not have hotels in my constituency, and probably not in any of the outlying parts of Wales or Cornwall.

My feeling, and I have been consistent about this since the introduction of S.E.T., is that the tax will have quite the opposite effect to that which the Government have always said they were aiming for. It will not help the areas needing the most help. I am not surprised that my hon. Friend the Member for Honiton (Mr. Emery) complained about the phraseology of the Minister of State for Scotland in Committee. Although it is true that there is no individual in Scotland—I will not deal with England because the Prime Minister would be included—who is less likely to be believed than the Secretary of State for Scotland, the Minister of State is at least his equal when he is talking about the hotel industry. He has said on a number of occasions, in my constituency and elsewhere, that S.E.T. is positively good for the hotels in the Highlands. He does not have a single supporter or admirer, and that is no wonder.

The whole point is that it should not operate against the interests of people living in country districts, or against service industries. My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) has made a good point about service in hotels. In my part of the country there is, and always will be, a very large percentage of service industries. The Government's record is lamentable. It is not only in this industry that they have allegedly helped by taking away more money than they have returned. Exactly the same thing has happened in the Highlands too.

6.15 p.m.

Only this afternoon, answering a Question in the House, the Chancellor said to these benches that we were always trying to oppose the Government in getting the balance of payments right. I am sure that the President of the Board of Trade would agree that two of the most important things in getting the balance of payments right are the contributions made by the hotel industry and that made by invisibles. If it were not for them we should be in a mess. Both are particularly hard hit by this tax.

I hope that the right hon. Gentleman will ignore the advice that he has been getting from the Minister of State for Scotland, and perhaps others Ministers in England, and will realise that there is a totally different problem once we move away from places such as Edinburgh, London, Stratford-upon-Avon—the big centres of the tourist industry. The country districts are exceedingly important to the tourist industry, and he must appreciate that something must be done to help these areas build up the necessary finance to carry out extensions and improvements which the industry demands and which many hotel-keepers want to achieve.

Mr. Pardoe

I should like to be able to divide on one of the new Clauses standing in my name, new Clauses 11 and 12.

Mr. Speaker

I will concede one. Perhaps the hon. Member will choose it later.

Mr. Pardoe

I do not want to speak at any great length to the Amendment that we are debating now, which has to do with S.E.T. and hotels. I am in the fortunate position of representing a part of the country which asked for hotels to be exempted from the tax and got its way. That does not mean that I am not an Oliver Twist asking for more. That is the guise in which I now appear.

The first of the new Clauses that I want to deal with is new Clause 10, dealing with the effect of S.E.T. in respect of lifeguards. This may be thought to be an extremely minor point, and I do not entirely deny it. I do not suppose there are many hon. Gentlemen who have any privately-employed lifeguards in their constituencies. I suspect that I am the only one, unless there are other Members from Cornwall in this position. Although this is a narrow point, it will not cost the Government very much to accept the new Clause. I am sure that they will at least be pleased with that.

Any tax on lifeguards is a tax on safety, and the Government would not wish to go down in history as having taxed safety. Many beaches in Cornwall, particularly on the North Cornish coast, have full-time lifeguards, in many cases two or three working a shift system. Most of the lifeguards are employed by local authorities, which do not have to pay selective employment tax in respect of them. But just a few of the beaches are in the hands of private owners or private entrepreneurs.

It is not often that the beach is actually owned by the person who provides the services, but there are often cases where a beach, such at Watergate Bay, has a café on the edge of it and the café proprietor is responsible not only for providing cups of tea and all the ancillary services but for supervising the beach. Out of his profit he voluntarily supplies two lifeguards. They are absolutely essential. The North Cornish coast has some fearful seas. Only in the past week we have read accounts of some people most unfortunately being swept away just a little way down the coast from Newquay.

The lifeguards are not there only to save life when people get into trouble, though it is quite easy to get into trouble there. They also ensure that the red flags are flying at times when they think the tide to be dangerous. Therefore, they are there more to provide preventive measures than for life-saving, though they do a great deal of life-saving. There has hardly been an occasion when I have been at a beach in Cornwall in the summer season when I have not seen the lifeguards having to take action to save life.

The tide turns very quickly; within three or four minutes it can go from being quite safe for toddlers to swim to being exceptionally dangerous even for very strong swimmers, and the change is unnoticeable to the untrained eye. The lifeguards are experienced people. Most of them in Cornwall seem to be Australians who have had a great deal of experience in the Australian surf, and they can judge whether the red flags should be flying.

These services should be widely encouraged, and I believe that the Government would want to go on record as encouraging the provision of safety services of this kind. Some local authorities in my constituency and elsewhere in Cornwall have gone out of their way to encourage them. Without giving very much money away—it cannot even be thousands of pounds—the Government could give a lead by accepting this rather narrow Amendment. By doing so they would show that they encouraged the provision of lifeguards on our beaches.

The second new Clause with which I am concerned primarily is new Clause 11, which seeks to exempt restaurants and cafés from the incidence of selective employment tax. I hope that hon. Members will forgive me if I emphasise the plight of the development areas because it is primarily with development areas that I am concerned. As I have said, we have obtained exemption for hotels in development areas. All the arguments which we put forward to obtain that exemption, and which swayed the Government to give it, are almost precisely the same as those one can make for exempting restaurants and cafés in those areas, although I would like the exemption to go much wider, across the whole country.

Tourism and the holiday trades are not just hotels and the provision of bedrooms. People go to a place to stay not just because it has a comfortable bedroom with a bath or shower, but because they like all the amenities and facilities that make up its attraction. I make no apology for saying that good food and good wine are an essential part of any good holiday. If I had to choose between a tour of the restaurants with four stars or more in the Michelin Guide, using a camp bed, or a first-class room in a comfortable hotel without the good food, I would opt for the camp bed and the good food.

Why will not the Government accede to my not extravagant request? I have had correspondence on the subject with various Departments, and the latest letter I have received comes from the Ministry of Agriculture, Fisheries and Food. It is comforting to note that the Ministry recognises for once in a while that it is also the Ministry of Food. I was rather surprised to receive a reply about restaurants from that quarter. In the letter, which is dated 4th June, the Joint Parliamentary Secretary told me that the Chancellor of the Exchequer gave his concessions to development areas because he recognised that … whilst the regional policies were doing a good deal to help industrial expansion the desired response might be much slower in certain development areas where there was not a very strong industrial base, and that in many of these places tourism provides the main source of income and it is the hotel industry that brings money into the areas from outside. I want to widen that to say that it is the tourist industry in the fullest sense of the phrase that brings money into these areas from outside.

The Parliamentary Secretary explained why the Government do not believe they could make the same concession in development areas or extend the total concession outside development areas and apply it to cafés and restaurants, and said: Cafes and restaurants which cater for the local population as well as for tourists were excluded. I do not see why. Hotels that cater for business people are not excluded if they are in development areas.

The hon. Gentleman said: It was not considered practicable to distinguish between cafés and restaurants that cater for tourists and those catering for the local population, even if such a distinction were desirable. But we do not distinguish in the development areas between hotels catering for tourists and those that do not.

The hon. Gentleman added: It is unlikely that cafés and restaurants would have the effect of attracting people into the region, even if these establishments were better and prices lower than those outside. I beg to differ. Good cafés and restaurants—if there is any class distinction between the two, I am not sure what it is—with these facilities have a substantial effect in attracting people into a region. If they are better, people will be more attracted into those regions than if they are worse. Therefore, the Government do not have a very strong case in differentiating between concessions for restaurants and cafés and concessions for hotels. Tourism is much more than hotels. We must improve all the facilities, and catering is one of the most important.

New Clause 11 links up to a certain extent with new Clause 12, in which I seek to exempt employees on camping and caravan sites, because it is clear that the extension of camping and caravan sites to self-catering holidays in their broadest aspect means that we must also provide adequate cafés and restaurants. Not all self-catering holidays are quite what they sound. A wife does not usually want to spend the whole day cooking when she is on such a holiday, so cafés and restaurants are essential. There has been a tremendous growth of self-catering holidays, and this is one of the most significant things about British tourism in the past few years.

6.30 p.m.

The South West Economic Planning Council, in its draft strategy for the South-West entitled, "A Region with a Future", emphasised this strongly, saying, Nearly one-third of visitors now make use of the newer forms of accommodation represented by camping, caravans, rented villas and flats". It said, also—this may find an echo in the Minister's mind— Moreover, the development of tourism represented by the growth in numbers of caravans, chalets, etc., has been in large measure in labour-saving directions". I accept that it has, but these facilities nevertheless require labour, and labour has to be paid for. I come now to the reasons why I think it important that even camping and caravan sites should have exemption.

The expansion of this part of the holiday trade makes good restaurants and cafes even more important than they would otherwise be, and service in such places is just as essential as it is in a hotel. Restaurants inevitably are labour-intensive. Restaurants in the development areas—though not, unfortunately, outside—are faced with unfair competition from the hotels alongside them because most hotels provide meals for non-residents. This seems to me to be unfair competition, and so it does to the restaurateurs and café proprietors.

Perhaps, as a commercial "plug", I could add that good food, even in spite of the incidence of S.E.T., has improved enormously in Cornwall in recent years, and we can now offer the very best. But our restaurateurs have to offer it on the basis of a short season. They have to provide all the facilities just as hoteliers do, and they have to earn their living in that short season, although many of the facilities, the investment in fixed equipment and so on, have to last throughout the year.

It is often accepted, I am sorry to say—it is sometimes accepted in my own constituency—that camping and caravanning are somehow slightly infra dig, something that, perhaps, the lower classes indulge in. It is sometimes said in my own constituency that it brings undesirable people to Newquay, and I receive many complaints about it. In my view, that is absolute nonsense. There is no class—

Mr. Speaker

Order. We are not debating the class consciousness of caravanners and campers.

Mr. Pardoe

I realise that, Mr. Speaker. I am merely trying to impress on the President of the Board of Trade the importance of caravanning and camping in the totality of the holiday trades.

I shall not labour the point. I only observe that, if camping and caravan sites cause social problems—and, to a certain extent, it might be true in some holiday areas—the difficulty can be overcome with an intensification of employment on the sites. There is no doubt that, where sites are adequately supervised, with sufficient staff employed, there are no problems. The problems arise on the unsupervised sites.

I hope, therefore, that the President of the Board of Trade will be prepared to accept all three new Clauses in my name. I fully support new Clause No. 3, although I have a slightly ambivalent attitude towards it as it gives my hoteliers a slight edge competitively over the rest of the country. I am sure that the Clauses would make a tremendous difference to Britain's holiday trades, and I invite the President of the Board of Trade to accept them.

Mr. Norman Miscampbell (Blackpool, North)

For those of us who represent seaside constituencies this has been a continuing debate for some years, and for my hon. Friend the Member for Blackpool, South (Mr. Blaker) and myself it has been a constant constituency problem.

It is worth looking back for a moment to the reason why the tax was introduced at all. It was suggested at the initial stage that it was to improve the tax system by reducing the imbalance between services and manufacturing—

Mr. Speaker

Order. We are not debating the selective employment tax. We are debating four specific Clauses. The hon. Gentleman must link what he has to say to the Clauses.

Mr. Miscampbell

I shall do that, Mr. Speaker. I accept your reprimand.

I link it straight away with the hotel problem in Blackpool and what was thought at the initial stage would be the result flowing from the imposition on the tax on such places as Blackpool. I sum up this part of my argument in this way. In so far as it was hoped that a constraint on the supply of labour would be removed, this has certainly not proved to be true in my constituency. By its nature, female labour does not move. Part-time labour cannot move. Even if other industries were available, which they are not, the Board of Trade is not disposed to give industrial development certificates to such places as Blackpool.

Hon. Members are aware of the recent study, published about six months ago by the N.E.D.C., which dealt with service in hotels. It pin-pointed one important factor which is now affecting our hotel trade. Having looked at the cost of services in hotels, it rightly recognised that there was large scope for improvement and for increased productivity. I accept that, but it noted also that the time was coming when customers would display a distinct unwillingness to pay the prices which hoteliers needed to recover their costs.

If there is one thing certain about our hotel trade, it is that it must face international competition, and our best hope is that we provide better standards and hotels than those abroad, not cutting our services or reducing the standards which we offer. Americans—some of our best customers—may well be used to a high standard of comfort in their hotels, but many American hotels do not supply the personal services which are a distinctive feature of the European hotel trade. We shall do ourselves nothing but harm if we cut down on the personal services provided by our hoteliers; to do so would severely handicap our own business in international competition.

It is a notable fact that, over the past few years, London has become one of the great entertainment and restaurant centres of the world. It would be a pity if we lost that advantage because of the imposition of S.E.T. However, it is not particularly of the international hotel in London that I speak today. I have in mind the much smaller establishments in seaside resorts such as my constituency. There is no doubt that, as each successive increase in tax has come, there has been little alternative but to increase prices. Present price levels give no scope to bear the increase in S.E.T.

It is particularly difficult for the small hotel to get rid of staff, for many reasons. It may not be possible to substitute machines for the limited staff employed in the hotel, and it should not be forgotten that the relationship between a hotelier and his staff may make it very difficult for him to get rid of old servants who have been with him for years.

Moreover, prices are fixed months ahead and brochures are sent out to old and valued clients who come back to the hotels year after year in my constituency. The imposition of the tax at the beginning of the season, when prices have been fixed and brochures printed, is particularly burdensome on the hotelier.

It has already been emphasised that the hotel industry at every level has become an industry of intense international competition, and it cannot be said too strongly that the direct competitor to the small Blackpool hotel is now the man on the Costa Brava. The cost of going on holiday to Spain is comparable to that of going on holiday to Blackpool. Only by providing better services at home can we prevent people from going abroad to spend their money.

The Minister will no doubt be aware that there has recently been discussion, at any rate in the Press, about the possibility of drastic reductions in price for short holidays taken abroad partly out of season, the result of which will be to reduce the cost of the holiday below the return air fare which is now the established minimum for packaged holidays abroad.

If the day should come when it is possible to go to the Costa Brava or Italy for four or five days at a price which is considerably below the return air fare, the competition will be severe and far more people will go abroad. I would expect the Minister would be reluctant to agree to this, although I would deprecate anything that prevented people from going abroad and enjoying themselves at the cheapest possible price.

If I may turn to Amendment No. 32, which I understand may be discussed with the new Clause, I would draw to the Minister's attention the problem which was raised in Committee of the betterment levy. Amendment No. 32 deals with the imposition of other taxes which have been imposed on hotel development or on the construction, extension or improvement of hotels. The pertinent questions on betterment levy—

Mr. Speaker

With respect, I would remind the hon. Gentleman that the Amendment on betterment levy is not selected.

Mr. Miscampbell

Mr. Speaker, I am seeking to keep within order. As I understand, Amendment No. 32 may be discussed with the new Clause, although I appreciate that the Amendment dealing with betterment levy was not chosen. Amendment No. 32 reads: Without prejudice to the foregoing provisions of this section, a scheme under this section for encouraging the construction, extension or improvement of hotels may provide for the repayment by the relevant Minister to persons who have paid taxes in respect of hotels of a proportion of such taxes.

Mr. Speaker

If the hon. Gentleman's argument is logical, we can discuss on this Amendment every tax which a hotelier pays if he happens to be constructing a new hotel.

Mr. Miscampbell

Yes, Mr. Speaker, I do not dissent from that view. I simply seek to say that the betterment levy is a tax which the hotelier has paid and, as such, it should at least be possible briefly to refer to it—

Mr. Speaker

Order. Reference must be brief, since I have rejected an Amendment which specifically asks for what the hon. Member is about to ask for.

Mr. Miscampbell

I appreciate the difficulty and will, therefore, be brief.

I hope that a reference will be made before the conclusion of the debate on the new Clause to the question which was put by my hon. Friend the Member for Blackpool, South, on the fourteenth sitting of the Committee, at columns 633–34 of the OFFICIAL REPORT. He asked about the possibility of the alleviation of levies which may have been imposed. The Minister will be aware of the undertakings which were given in Committee, and I have no doubt that at the appropriate time he will reply in terms of those undertakings.

6.45 p.m.

Sir Fitzroy Maclean (Bute and North Ayrshire)

I rise briefly to support the new Clause and also what my right hon. Friend the Member for Argyll (Mr. Noble) has said. I thought that he put his finger on the point when he said that if the selective employment tax is to make any sense at all it must be selective. We know that the idea behind it is to reallocate and redistribute labour as between industries in accordance with some clever bit of Socialist planning. Well, what industry have the Government selected as guinea pig in this instance? They have selected the tourist industry. Now, the two main characteristics of the tourist industry from the Government's point of view are, first, that it is a leading dollar earner which the Government should be encouraging and not penalizing, and secondly, that it is very short of labour. There is a present shortfall of 40,000 or 50,000 out of a total labour force of about 250,000 which is about 20 per cent. But instead of trying to channel more labour into this dollar earning industry, the Government deliberately try to force labour out of it.

Sometimes they succeed and sometimes they do not. In instances where hoteliers keep their labour up to strength, in order to recoup themselves, they are forced to increase prices. And here an example was set by British Railway hotels, which put up their prices immediately the tax was imposed, and said so quite clearly on the bills. That is how a State industry reacts to this bit of planning.

The alternative is to dismiss labour ruthlessly and, as my hon. Friend the Member for Blackpool, North (Mr. Miscampbell) said, this is not an easy thing for a hotelier to do with old and tried employees who have been with him for a long time and have no hope of finding jobs in a manufacturing industry.

There is another thing. If employees are dismissed, the result is bound to be a falling off in standards and a falling off in the service offered, and that is something we cannot afford in the hotel industry. There are many hotels in which the standards of service are already none too high, and we cannot afford any further deterioration. In other hotels the standards are high and should be kept high because, as the hon. Member for Cornwall, North (Mr. Pardoe) said, that is why people go to hotels. Naturally, the rich foreign tourists, whose custom we want to attract, go for a high standard of service. They like to be well looked after, well fed and well waited on. That may seem deplorable to the Minister, but it is a fact of life.

The Minister probably has very austere standards himself, but who is he to impose them upon others? And it is not only the rich foreign tourists who come here and from whom we want to extract as much money as we can. There are also the much more modest British tourists who want a fortnight's holiday, who want to enjoy themselves, to put their feet up and not be bothered with all the chores of domestic life. And who can blame them?

All that the Government do by forcing the hotel industry either to put up its prices or else to lower its standards is to drive away and discourage tourists in both the categories I have mentioned, and so to play right into the hands of our chief competitors, the hoteliers of the Costa Brava and foreign hoteliers in general. They are deliberately driving foreigners away from this country and at the same time driving the British holidaymaker abroad.

Finally, in my own constituency the Government have added insult to injury by deliberately, with their eyes wide open, discriminating against the hoteliers of North Ayrshire. While exempting their near neighbours in other parts of Ayrshire and in the neighbouring islands of the Clyde from the effects of S.E.T., they have left the hoteliers of North Ayrshire, of Skelmorlie, Fairlie, West Kilbride, Largs and the other North Ayrshire resorts to bear the full increased burden of the tax.

My right hon. Friend the Member for Argyll said that the Minister of State for Scotland had a way of getting things wrong. I can think of no better instance of this tendency on his part than the explanation he gave as to why the hotels in North Ayrshire, almost alone in Scotland, have not been exempted from S.E.T. He said that they were chiefly patronised by day trippers. That, as he well knows, is simply not true.

Incidentally, it seems to me most extraordinary that no Scottish Minister should be here today. Perhaps it is rather less extraordinary that no Scottish back benchers, are here either. I imagine that like most Government supporters they are elsewhere hanging their heads in shame, and one certainly cannot blame them for that.

Mr. George Younger (Ayr)

There have been so many speeches from this side of the House that I shall add only a few points to what has already been said. I start by reinforcing what was said by my hon. Friend the Member for Bute and North Ayrshire (Sir Fitzroy Maclean) about the amazing absence of Scottish Ministers from this debate. Surely in this debate, of all debates, they should have made a point of attending.

Scottish Ministers in their lack of sympathy towards people who have problems in regard to S.E.T. have a worse record than any other Department of the Government. They have consistently refused to recognise the problem and have sneered at anybody who has raised it. I record our great disappointment that none is present today to hear these speeches.

I wish to make three main points on this group of new Clauses. I wish, first, to refer to hotels. I give this information to the President of the Board of Trade. My constituency is fortunate enough to be one of the places whose hotels last year were exempted from S.E.T. The results of this exemption can actually be seen. When I was in an hotel in my constituency not very long ago I specifically asked the hotelier, "Has the refund of S.E.T. to you had any effect?"

I am delighted to see that a Scottish Minister has at last arrived. I should like him to note that there has been nobody here from the Scottish Office during this important debate. I hope that the Minister will undertake to read carefully every word that has been said.

The Under-Secretary of State for Scotland (Mr. Norman Buchan)

I hope that the hon. Member will withdraw that statement. My hon. Friend the Minister of State has been present during the debate.

Mr. Younger

The Minister is not correct. I am referring to this debate on S.E.T.

Mr. Speaker

Order. We are getting near to a manuscript Amendment. Perhaps the hon. Member will come to the Clause that we are now discussing.

Mr. Younger

I share with you, Mr. Speaker, a general distaste for manuscript Amendments, so I will go no further on that point.

I asked this particular hotelier whether he had had any benefit from the refund of the tax. He said that there had been two benefits. The first was that he had been able to bring down the cost of meals to people staying in the hotel. The second was that he had been able to keep two more people in employment during the winter months whom previously he had to lay off. I put that small example to the President of the Board of Trade, who, I am sure, is trying to do all he can for tourism. It is a typical case and points to the desperate need to take this tax off hoteliers, wherever they are, as quickly as possible. If the information I have given him is of value to him in his argument with the Treasury, I am glad to have been of some service.

To turn to new Clause 12, relating to camping and caravan sites, it is wrong to exclude such sites from the general category of assistance given to hotels. We should try to put the matter right.

Camping and caravan sites are not getting as much help as they should in the way of grants for permanent buildings set up in connection with the sites. The permanent buildings are important to a well-organised caravan site and deserve similar help to that which is given to hotels. If the sites do not get help in this way, it is an additional reason to exempt them from the imposition of S.E.T.

A considerable number of people are employed to carry out the ancillary services connected with camping and caravan sites. The sites contain shops, washing places, restaurants and other forms of services. The overhead costs imposed by S.E.T. put a considerable burden upon those who run these sites and I hope that the Minister will look sympathetically at the situation.

Thirdly, I should like to refer to cafes and restaurants. It is the height of absurdity, on the one hand, to exempt a hotel and, on the other, not to exempt a restaurant situated next door. What was thought to be the object of this by whoever thought it up in Whitehall? In my constituency there are numerous examples of hotels with dining-rooms serving meals which are not subject to S.E.T., but a few yards down the street there are restaurants paying S.E.T. on the meals they serve.

The Government may think that it makes sense, but I assure the President of the Board of Trade that there is no one in the tourist trade in Scotland who thinks that it is anything but the most fantastic anomaly of all; and to say that in respect of selective employment tax is a remarkable statement.

7.0 p.m.

Perhaps I might correct a misapprehension under which a number of hon. Members seem to be labouring. It is not hotels in development areas as such which are exempted from S.E.T., but some hotels in some parts of development areas. Most of Scotland is in a development area, but there are a number of parts of the country where the hotels are still paying full selective employment tax. My hon. Friend referred to his constituency of North Ayrshire, and that is one such part, but there are plenty of others, including the central belt, where hotels, restaurants and cafes still pay S.E.T.

If I may offer another piece of information about hotels and restaurants, a friend of mine runs a restaurant in my constituency, and I asked him recently whether he felt that S.E.T. was a burden having any visible effect on his business. He said, "I will answer your question by saying this", and he showed me his books to prove it. Before the recent increase, S.E.T. had been amounting to as much as half of his net profit. It is a small business, but it is labour-intensive and involves a considerable number of people. He employs as many females as he can because it reduces the cost of S.E.T.

It was plain from his accounts that the payment in S.E.T. that he made one year ago amounted to about half of his net profit. That is a terrible burden. I asked him why he had not put up his prices to make matters easier. He said, "I cannot, because I suffer competition from those who do not pay S.E.T. and who can provide meals at lower prices than I possibly can."

However good the intentions may have been, I hope that the right hon. Gentleman will take it from me that the effect of S.E.T. gives rise to the most ridiculous anomalies which should not be allowed to continue.

I then asked this same person about his staff. He replied, "What really gets me about the effect of the tax upon my employees is that it was supposed to change them over from employment in a service industry to work in heavy manufacturing industry. I invite you to interview each one of my staff. If you can find one who would have any chance of working in manufacturing industry, I will give you a free meal for a week."

I hope that the right hon. Gentleman will take it that the great abhorrence of S.E.T. among those running hotels, camping and caravan sites and restaurants is not merely a political exercise but a matter which is deeply felt by everyone connected with tourism. It is time that the Government acknowledged it and paid more attention to people who have been telling them so for years.

Mr. Gower

Like my hon. Friend the Member for Ayr (Mr. Younger), I want to emphasise the fact that this tax is playing havoc with our tourist industry, though, of course, I have more knowledge of its effect in Wales. In that connection, it is astonishing that there is no Minister from the Welsh Office here to listen to the debate.

I thought that my hon. Friend the Member for Honiton (Mr. Emery) posed an unanswerable case, but I have no doubt that the Minister will attempt to reply to it. One point made by my hon. Friend was that the size of the tax more that outweighs any benefits which have been conceded in the main grants and loans to be made under the Bill.

The other point which I would add to that is that whereas the help to be given by the Bill is concentrated upon the building of new hotels and alterations to existing ones, the burden of S.E.T. will fall sometimes not on the recipients of the aid but upon other persons who are least equipped to endure the tax. The impost will fall most harshly not on those hotels which can benefit by the Bill but possibly on those with smaller resources. In addition, there is no help for hotels which cannot contemplate new building or alterations.

My hon. Friend also emphasised the very large earnings of foreign currency which the hotel trade has been making in recent years. I am astonished at the Government wanting to hit an industry which is doing such an important job for the United Kingdom. After all, it makes comparatively few demands on imported products, and its raw materials are often its labour and the work which goes into the organisation of a hotel. In most cases, a hotel's imported material is limited to some food and wine. It is the sort of industry which the Government should be doing their utmost to encourage.

Then there is the other valuable saving. The saving in terms of its earnings in foreign currency is extremely valuable, but there is in addition the very useful saving in foreign currency which would be spent by persons who might otherwise go abroad. That, too, is a beneficial result from the growth of our hotel industry, and again one wonders why the Government choose to penalise it in this way.

Then there is the fact that hotels in some parts of the country provide for the needs of industry. My hon. Friend referred obliquely to the provision of accommodation for those in manufacturing industry up and down the country.

Several of my hon. Friends have referred to the fact that this is not business which makes vast demands on labour, although it is a labour-intensive industry employing a quarter of a million people and has a large shortfall in its requirements. It has very difficult technical problems. In many parts of the country, there are problems resulting from an extremely short opening season. The further that one gets from the large hotel in the Metropolis, the more the shortness of the season becomes an important consideration. Then there is the problem that it has to provide labour and services virtually for 24 hours a day.

It has a great many difficult problems, and it is fighting a much more desperate battle in some parts of the country like Scotland, Wales and the Lake District, where the effect of the climate and the shortness of the season is most felt. In London, the Home Counties and possibly a part of the South Coast, those problems are not always so apparent, but in Wales, Scotland and other parts of England, the shortness of the season, the rigours of the climate and many other difficulties place the industry in an almost impossible position.

On top of all the difficulties, the Government clobber the industry and increase their penal impost this year. The President of the Board of Trade is in an unfortunate position. I recognise that he felt that the Bill would confer useful benefits on the hotel industry, and I appreciate how he must have felt when the Chancellor of the Exchequer undid any good that the Bill can do.

I have spoken to many people in the industry, and they have a mood of disbelief and consternation. After hearing the Minister and his colleagues extolling the merits of the Bill, they could hardly believe it when they discovered that anything conferred by the Bill was to be undone by the addition to the selective employment tax. Tonight, we are giving the Government a chance to undo that evil, because an evil has been done to this industry. If they accept the Amendment at least they can mitigate the evil. I hope that they will at least accept the Amendment referring to hotels and the Amendment referring to restaurants.

Hotels and restaurants have a difficult job. In all conscience, we must make it easier for them. The Government are not doing so. We still need, as the Government have recognised, better and more up-to-date holiday hotel accommodation. We also desperately need better and more up-to-date restaurants. There has been a great improvement in recent years, but in the provinces there are many gaps to be filled. Some advance has been made, but we still need to go a long way. Only in this way can we compete with the tremendous attractions of parts of Spain, Italy and the Mediterranean with all their supreme advantages of colour and climate.

That is what we are fighting against. I believe that the Government should be taking steps to enable our hotel industry to fight this battle with some real chance of success. Our industry can do it, but not unless we give it the opportunity. Let the Government, therefore, accept these useful Amendments.

Mr. William Edwards (Merioneth)

I wish to make two brief contributions, the first dealing with selective employment tax and its effect on hotels and the second dealing with caravan sites.

Dealing with S.E.T., I, and I am sure many of my hon. Friends, would urge the Government to accept that the imposition of this tax generally is not the wisest course, and that it should be excluded within development areas.

Dealing with the specific effects of this tax upon the hotel industry, I have to take a selfish attitude, because it has operated to the great advantage of my constituency. By imposing the tax upon the hotels in the traditional holiday areas of Wales and exempting hotels in Merioneth, they have been given a competitive edge.

I can admire the concern of the hon. Member for Ayr (Mr. Younger) for the hotel industry in general. Mine is a specific concern. Hotels in my constituency have been put at an advantage compared with other hotels in Wales and other parts of Britain. My hoteliers find it easier to employ labour and to offer more competitive terms.

Another interesting effect on the hotel industry in my constituency is that the repayment of S.E.T. has had a marked effect on the net profit of companies. Brewery companies, for the first time, are beginning to show interest in building hotels in my constituency. They are showing interest in one particular project at present. In the past their only interest was in developing hotels in the metropolitan areas. Now they are looking to my constituency, because there is a particular advantage—a margin of profit to be made where no profit could be made in the past. Therefore, I am grateful for small mercies. The repayment of S.E.T. is of great benefit to the hotel industry in my constituency.

Mr. Younger

Does the hon. Gentleman agree that the most persuasive case that he is arguing is also conclusively proving the contrary, namely, that the hotels that are not getting it back are suffering a grave disadvantage?

7.15 p.m.

Mr. Edwards

Dealing with the position in this country, I do not accept that they are suffering a disadvantage, because most of the hotels that are paying selective employment tax are commercially better placed than the hotels in my constituency. Merioneth has an under-developed hotel industry. Therefore, its development is of great importance. Hotels there have a commercial disadvantage to overcome. This is why the Government have given them this competitive edge.

Comparing the cost of rooms in hotels in London compared with the cost of rooms in Paris, Rome or any other comparable European capital, we have about the cheapest accommodation in Western Europe. Therefore, it cannot be argued that we are discriminating against our hotel industry in comparison with similar countries. Thank goodness this country is not Spain, although some hon. Gentlemen opposite would perhaps like it to be like Spain. But we are not Spain, and we are competing with countries of a similar kind.

A great deal of nonsense is talked about the hotel industry. It cannot be denied that most hotel companies are doing well. The Opposition cannot escape from the fact that if they look at the profits of the large groups and those of the small groups it will be seen that hotel companies are doing well. Whatever party is in power, some tax or other will be imposed upon the hotel industry. We have had this exchange before, with the right hon. Member for Leeds, North-East (Sir K. Joseph). It cannot be denied by the Opposition that if they were in power they would impose a sales tax of some form or another on the hotel industry—

Mr Speaker

Order. We cannot discuss, on this Amendment, which is on selective employment tax for the hotel industry, all the other kinds of taxation which may occur to a future Chancellor in a weak moment.

Mr. Edwards

I bow to your Ruling, Mr. Speaker. You are quite right.

I turn now to the Amendments affecting caravan sites. I have expressed certain views about the development of the tourist industry. Investment in caravan sites is a very good form of investment. Nearly every other farmer in my constituency wants a caravan site on his land. Plenty of money is available for developing caravan sites. It is about the most profitable form of investment in the tourist industry that can be made. There is no need for the Government to give any kind of advantage, inducement or tax concession to this particular form of tourist development.

I do not want to see an imbalance being created within the tourist industry in my part of Wales. I do not wish to see the industry going for the short-term gain, the quick return, in its development. The quick return, the short-term gain, is to be made in the development of caravan sites, but, with respect to the hon. Member for Cornwall, North (Mr. Pardoe), I do not want to see Merioneth, which has a fine tourist industry, develop as many caravan sites as there are in some parts of Cornwall.

7.15 p.m.

Mr. Martin Maddan (Hove)

I am pleased to follow the hon. Member for Merioneth (Mr. William Edwards), and to say that the special case which he deployed in favour of the benefits of S.E.T. in Merioneth is not shared by his hon. Friend the Member for Brighton, Kemptown (Mr. Hobden) to whom I have sent a note saying that I intended to draw attention to his views about the effects of this tax on the hotel industry on the South Coast, an area with which the hon. Member for Merioneth was making a comparison. The hon. Gentleman said that S.E.T. had a good effect in Merioneth, and no harmful effects on the South Coast and similar areas.

A pleasure which the two hon. Members for Brighton and the hon. Member for Hove have every year is to go to the annual general meeting of the Brighton Hotel, Restaurant, and Guest Houses Association. The members of the association are very brave. They ask all three of us to make a speech. From me, they usually get a speech about the difficult economic circumstances in which they find themselves, and to that they listen with a sort of bored acquiescence. From my former colleague, Sir William Teeling, they were usually treated to some reminiscences about his experiences in hotels in Britain and other parts of the world, and that they always greatly enjoyed.

But then, at the end, comes the hon. Member for Kemptown, who always proclaims his utter opposition to the imposition of S.E.T. on the hotel industry. It always brings the house down, and I have, therefore, drawn his attention to his opportunity tonight to support by his vote on this Clause his frequent expressions of opinion on this issue.

It is not often that I am able to say that the hon. Member for Kemptown is right. His views on various matters may be held to be eccentric, or at least individualistic, but on this one he is right. The present level of the tax underlines, underscores, and increases the weight of every objection which has been raised to it in the past. It is this crippling level to which the tax has been raised which makes the Clause so crucial.

The standard of hotels on the South Coast is higher than in other parts of the country. Perhaps a long traditional history is the reason for that. Nevertheless, they have to compete not only with hotels in other parts of the United Kingdom, but with hotels on the Continent and on the islands off Europe. It is not very far across the Channel to Dieppe, or Rouen, or Deauville. Hotels on the South Coast must compete not only with hotels in those places, but with hotels in Spain, on the Mediterranean, and so on. They have to compete both in price, and in the quality of service they provide.

They have to compete not only for British customers, but for foreign visitors. Strolling along the front at Brighton and Hove, it is remarkable how, in the summer months, one meets substantial numbers of tourists from abroad, and the question we have to ask is how long they will continue to go there. We know that they have been helped recently by devaluation. I must not pursue that, and I shall not, except to say that the effects of that will not last for ever, and, therefore, we come back to the question of the effect of S.E.T. on the service and prices offered in those hotels.

It has been said time and again, but one cannot make a speech without repeating it, that the hotel business is labour-intensive. The high labour costs resulting from S.E.T. mean that it is difficult for hotels to provide the standard of service to which people in other parts of the world are accustomed. It is no good Ministers saying, "Drive all these people into factories", or something of that sort, because, as has rightly been said, that is a forlorn hope. Nor is it any good saying, "Let us have a lot of investment in labour-saving machinery, and that will enable us to dispense with the hotel porter".

That will not help, because when a tourist arrives at an hotel he does not want to be met with a dictaphone to speak into, or something of that sort. He wants personal service in his room, with his meals, with his drinks, and with other things. He wants personal service in the restaurant. He does not want to have to wait while waitresses or waiters are serving every table but his own. S.E.T. at its present level makes it particularly difficult for hotels to provide this kind of service.

The Bill sets out to provide help for certain listed improvements by providing grants for them, but that approach must, of necessity, be inflexible. In a particular hotel the sort of thing that may be needed to make it a better class hotel, and a more satisfactory one, may not be listed among the improvements set out in the Bill. If hotels were relieved of the burden of S.E.T., that inflexibility would be removed, because they would then be able to use their resources to provide what they want without it being necessary to have Government decisions and legislation of this sort. It would be possible for hotels to spend their money where the management thought it would produce the best result, and not have its investment forced into certain channels because of what is laid down in the Bill.

I strongly support the Amendment. I do not see the hon. Member for Kemptown in the Chamber, but I hope to see him in the Division Lobby in support of the Clause.

Mr. David Steel (Roxburgh, Selkirk and Peebles)

Like the hon. Member for Merioneth (Mr. William Edwards), I represent a part of the country to which the Chancellor made a concession by removing S.E.T. from hotels, following representations which were made to him. I therefore have no general interest in the debate on whether S.E.T. should be removed from hotels throughout the country, but I am interested in new Clause 11, because it seeks to remove S.E.T. from restaurants and cafes throughout the country.

The hon. Member for Ayr (Mr. Younger) was right to observe that those who represent those parts of the country where S.E.T. no longer applies to hotels find it most illogical that regardless of the general case for removing S.E.T., the same step was not taken in respect of cafes and restaurants in those areas, because by not doing that a further anomaly has been created.

One point which was not made by the hon. Member for Ayr, but with which I am sure he will agree, is that new Clause 11 is relevant to Scotland, because it is a general complaint among visitors to Scotland that it is very difficult to get a meal there late in the evening. In parts of Scotland it is regarded as verging on the sinful to eat after 6.30 p.m. Once I received a telephone call from a Member of the House, an English Member, not a member of my party. He telephoned me at about 8 p.m. to say, "My wife and I are passing through your constituency on holiday, and we cannot get a meal". I know a hint when I hear one. To save the reputation of the Scottish tourist industry, I invited him and his wife for a meal. They stayed the weekend. I wish to make it clear that I am not issuing a general invitation. I am anxious to set this situation right, so that others will not follow his example.

Mr. Speaker

Order. The hon. Gentleman cannot ask for exemption from S.E.T. for himself.

7.30 p.m.

Mr. Steel

That is, unfortunately, correct.

The point is serious and the criticism is justified. I know that in my own part of the country it is extremely difficult to get a meal late in the evening. This is generally true of Scotland as a whole, and may be of other parts of the country. At the same time, we have to sympathise with the reasons for this. Those who run, own or manage restaurants and cafés find it extremely difficult to retain the work force necessary to work later in the evening, supplying meals after 8 o'clock or thereabouts. Often these places are run by large quantities of part-time labour, and if the restaurant were open for meals later in the evening many people employed in them would be exceeding the number of hours permitted for part-timers and would be liable to S.E.T.

This is not a fallacious or superficial argument. There is a real connection between the fact that there is a heavy incidence of this tax—heavier as from next month—in restaurants and cafés and the fact that there is a direct disincentive towards improving tourist facilities, particularly in Scotland. There is tremendous scope for extending tourism in Britain, particularly Scotland, and I welcome the provisions of the Bill, which will go a long way towards meeting the tourist potential in my part of Scotland. This point about S.E.T. has been generally overlooked, even in the concessions which the Government have hitherto made on S.E.T. Hotels, restaurants and cafés have been largely ignored and I hope that the House will support the new Clause and the Amendment.

Mr. Kenneth Lewis (Rutland and Stamford)

At this time of the year Members of Parliament get two types of letter from their constituents, one asking for a reduction in the taxes which have just been imposed or increased and the other the letter that comes from the man who says that since he is paying the tax he might as well have the grant.

I do not believe that it is a good thing for a Government to increase grants. If taxes are not unduly increased, then we do not have to dole out a lot of money. I cannot accept that there is any need for providing grants for hotels and I support the Amendment, because if the burden of S.E.T. was removed from the whole of the hotel industry, we would not have to distribute money by way of grants.

There is no justification for taking tax from development areas in this context as against removing it from other areas which may not be development areas. In the tourist context, London is a development area. London and certain parts of the Midlands—Shakespeare country—attract tourists and are short of hotel accommodation. The same is true of Oxford and Cambridge. These places are not normally development areas, but in so far as they are burdened with the tax, they ask for the grant, provided by the Government at considerable financial and administrative expense.

It would be easier if the tax was removed. We are competing in two directions in the tourist industry. We are trying to bring people here from overseas, and persuade our own people to remain here, thus saving foreign currency. The Government are imposing taxes and restricting the amount of money people can spend abroad, yet they are really encouraging our own people to go overseas for their holidays. Hotel prices are being pulled down overseas because of what the Government are doing in restricting the currency allowance.

All of the package tour companies are pressurising hotels overseas to reduce the charges so that our own people can afford to pay them, even with the restrictions in force. They are also going abroad earlier. At the same time, the Government are putting up the price of hotel accommodation in this country through S.E.T. Those whom we hoped would visit our country find it much less expensive to go to others. For example, the Germans find it cheaper to go to Spain or Italy than to come here.

Mr. Robert Howarth (Bolton, East)

Naturally.

Mr. Lewis

Of course, it is normally cheaper. I accept the hon. Gentleman's intervention, but it is cheaper plus because of what the Government are doing. They are creating a situation where potential European visitors are deterred by rising hotel prices. The Government should look at the hotel industry as a whole, instead of dealing with it on the basis of development for non-development areas.

It has been said that new hotels of the "do-it-yourself" type may be built in London. Presumably one tucks oneself up in bed and gets a meal out of a packet. This is because of taxation imposed upon the industry. Financiers see the possibility of removing the labour-intensive character of the industry. If this trend grows and is not applied overseas, there will be even less incentive for people to visit us.

The hotel industry is a labour-intensive industry because it ought to be. People who come to stay want to be looked after. They spend 49 or 50 weeks of the year looking after themselves. A wife does the household chores during the year, and when she gets into an hotel she wants service which can be provided only by people. The tax is a disincentive to employ people. It is imposed on the wrong industry. It is too fierce and the Government, if they really want to help the industry, need not bother about the Bill, but, instead, get rid of S.E.T.

Mr. Ronald Atkins

I have been forced to intervene by the remarkable speeches of hon. Members opposite, particularly the last one. The hon. Member for Rutland and Stamford (Mr. Kenneth Lewis) said that not only because of S.E.T. but because of the Government's £50 holiday restriction, our citizens are forced to go abroad and the number of our visitors is limited. This is entirely contrary to the facts.

Last year, for the first time in our history, I think, there was a net surplus of exchange in our favour, and the figures for this year show a still more remarkable increase: the British Travel Association expects a bumper year. I sometimes wonder whether hon. Gentlemen opposite read anything more serious than Comic Cuts—

Mr. Kenneth Lewis

This may seem a plausible argument, but it is entirely untrue. The reason for our surplus is that we are restricting people in their spending abroad—not on whether they go abroad. That is quite different.

Mr. Atkins

When I mentioned the favourable balance I meant the money spent. I cannot understand that intervention.

I can understand some people criticising S.E.T. because it adds to the expenses of hotel catering, but the development areas which badly need it are helped. Those areas in the South, the Midlands and the South-East, because of the relative shortage of accommodation, for which no one can blame the Government who have been encouraging hotel expansion, are doing better than ever before. One has only to look at the profits and the efforts of hotel corporations from the United States and elsewhere to get into the British market.

Mr. Younger

Can the hon. Gentleman get one thing right? Development areas are not exempted from S.E.T. for hotels. Certain parts of certain areas are, but by no means all.

Mr. Atkins

I must accept that correction. Nevertheless, the Government have been giving considerable assistance to hotels which has never been given before. In those three areas, the South, the South-East and the Midlands, where many of the complaints come from, the industry is doing very well because of the Government's actions.

The remarkable thing is that hon. Members opposite claim that these actions, which have brought excellent results, are producing very bad results. That is quite contrary to the facts. The hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) seemed to blame S.E.T. for early closing hours in Scotland.

Mr. James Dempsey (Coatbridge and Airdrie)

Would my hon. Friend bear in mind that it is 20 years since many of us were refused meals in hotels and cafés in Scotland—long before the advent of S.E.T.?

Mr. Atkins

That is my very point.

The hon. Member said that it was almost regarded as sinful to have a late meal in Scotland, and it still is, I think. The fact that the closing hours are so early is largely because these things are dictated by local demand, in Scotland and anywhere else. I agree that it is a bad thing that they should be so early, but I beg hon. Members to have some sense of perspective, and try not to blame everything on S.E.T.

7.45 p.m.

Sir C. Taylor

The Bill is giving hotels something with one hand and taking it away with the other through the Government's increase of S.E.T. The Bill would not be necessary if four things were done to help the industry. First, purchase tax should be removed from the tools of the trade, like linen, carpets and curtains. Second, investment allowances should be restored. This is an exporting industry, and should be treated as a manufacturing industry. Third, planning consent should be easier to obtain and only one Minister responsible for planning consents. Fourth, of course, S.E.T. should be abolished. If these four things had been done, the Bill would not have been necessary.

It may be true that S.E.T. is passed on to hotel customers in many cases, and I am satisfied that it should be, and that hotels should add "S.E.T." to the bottom of their bills, showing that it is not their charge but an additional burden imposed by the Government.

Mr. Kenneth Lewis

Would my hon. Friend note that a foreign visitor who saw S.E.T. mentioned at the bottom of his hotel bill and asked what it meant was told that it meant "Socialist Enjoyment Tax"?

Sir C. Taylor

And that is not a bad interpretation.

In Committee, the Minister said that S.E.T. did not affect overseas visitors and mentioned, as an example, a couple of Americans who wanted to spend 1,000 dollars. He said that S.E.T. would mean only an additional five dollars on a fortnight's bill. But our hotels and restaurants do not rely solely on American visitors. There have to be some natives around: indeed, the Americans like to see some of the funny English at their hotels.

There is a shortage of trained hotel staff in the whole world. The industry has done everything possible to provide hotel schools for training, but there is still a shortage.

The purpose of S.E.T. was to put a squeeze on the distributive and non-manufacturing industries so that they released staff to make manufactured goods in Birmingham or Manchester, or wherever it might be. It is obvious that the tax will not get the hotel industry to release staff when there is already a world shortage of hotel staff. If an hotel manager finds that he has to cut down his staff, what will happen? The staff will be offered jobs elsewhere in the world where no S.E.T. is payable—

Mr. Leslie Spriggs (St. Helens)

The hon. Gentleman has just told the House that there is a shortage of hotel staff all over the world. He need not leave London to find out why: they are paying some of the worst wages in the world. That is one of the chief reasons for the shortage of staff.

Sir C. Taylor

That is not true at all. Wages are governed by the Catering Wages Act, the terms of which were agreed with the unions. [HON. MEMBERS: "No."] The hon. Gentleman has made a most unfortunate observation, and I believe it to be entirely untrue. I can tell the hon. Gentleman that a young man will find big opportunities in the hotel industry if he is prepared to work hard and learn his trade—

Mr. Spriggs

Poor wages.

Sir C. Taylor

When, during the sitting of the Standing Committee, S.E.T. was increased, we were all shocked and horrified. I think that the Minister there was also a little shocked. I do not know whether he was privy to the increase, but in the Standing Committee he referred to S.E.T. as chasing a hare and hoped that none of us would refer to it. My constituents do not regard it as a hare, nor do those in the industry. They regard it as a complete incubus that has been put on them by the Government.

Before the increase was announced, a lot of hotels had already circulated their tariffs for the coming season. Those tariffs are all now outrageously out of date. If anyone says "You have published your tariff of so much a night for a room", it is no good the hotel manager saying, "But the Government have put up S.E.T., so that we have had to put up the price of the room". The customer will tell him, "There is your published tariff, and that is what I am prepared to pay". If S.E.T. is not to be abolished for the hotel industry, as it should be. I hope that this increase will be delayed for a sufficient time to ensure that those who have played fair and published their tariffs shall not be penalised, as they otherwise will be.

Sir Douglas Glover (Ormskirk)

We are debating in microcosm the reason why the Government have got our affairs into such a mess. The tourist industry is a tragic example. I want to be fair, so I accept what has been said by the hon. Member for Preston, North (Mr. Ronald Atkins) about the improvement in the tourist industry. There has, of course, been an improvement. If in 1905 we had been debating electricity and saying what had happened since 1900, we could have shown an enormous increase in the development of electricity. The fact is that tourism is probably the world's biggest growth industry. Therefore, it is not a question whether our figures have gone up but how they compare with those of other countries. In this connection, the situation is by no means as happy as the Government and Ministers make out.

Mr. Ronald Atkins

Perhaps the hon. Member will look at the figures for France. They show a relative decline. The figures for most other countries show a growth not as great as that of Britain's in recent years, for the simple reason that for the first time we have moved into surplus.

Sir D. Glover

That we are this year in surplus does not alter the nature of the proposition I wish to put to the House which is that if we were wise we should take a much more positive view of tourism than perhaps any Government have so far taken. If we are right in our view of how society will develop throughout the world, more and more money will be spent each year on tourism than was spent in the past. It is in this light that I believe we are falling behind. It is therefore deplorable that the party opposite should show so little interest in this present debate, and I hope that the public will be made aware of that fact.

The present problem has been largely brought about by the mistaken policies of the Government, and this debate is valuable in showing how the Government have wrongly assessed the situation. During the last five years the Government have raised taxation, and that includes S.E.T., by over 50 per cent. In actual take off, and taking inflation into account, they are collecting about twice as much in taxation as was the case when they came to power. The result is that a great many activities become less and less profitable and show less and less growth. This applies to the tourist industry.

The Government, and it is typical of them, then become seized of the position. They say, "This industry needs help". They then begin to give grants for building or improving hotels, not realising that if they followed a more sensible economic policy they would not need to give capital grants at all. It is only because they have thrown away so much of the profitability of that particular activity that it becomes essential for the State to put something into the pool to make up the deficit and make the activity sufficiently attractive. This applies particularly to the tourist industry, but the Government have made the same mistake in other directions. One of the harsher burdens has been the imposition of S.E.T. on the tourist and catering industries, which are heavy employing industries.

The original, and ludicrous idea was that S.E.T. would get people out of the so-called service industries into manufacturing. But I cannot see someone who is rather proud of the fact that he is to become a chef suddenly deciding that he will make motor cars. There is a different attitude of mind. We must remember that a great number of those employed in this industry, particularly in the Metropolitan area, are probably of non-British stock.

8.0 p.m.

I am delighted to hear that we are now in surplus, or in balance; but does the Minister of State realise the growth which is taking place elsewhere? I have not been to Spain since 1934, but one of my relatives was there recently, on the Costa del Sol. He told me that on a strip of coastline 40 miles long 691 hotels had been built in the last few years. I am not arguing whether they have State grants, but that is a very strong magnet to people who might come to this country for their holidays or to people to go from this country to that area.

The Government do not take enough account of the very small margin of difference which decides where people might go to spend their holidays. I will give a little pastiche of a family discussing where to go. The wife does not like the sun very much, but she likes scenery. The husband is very fond of the sun and is not much interested in scenery, or he likes night life and is not interested in scenery or sun. There are many things which may influence their decision. If they are to holiday in Great Britain the wife may say, "I think it a good idea to go to Scotland and look at the lovely scenery there. It is four to five years since we went there."

The husband might point out, "We have not been to Wales for a very long time. I heard the other day that we can get special prices in Merionethshire". But then the husband says that it would mean too much driving about and he wants a rest "and anyway it will rain every day; I want to go to Spain or Majorca". The wife has a very powerful pull, but the casting vote is when the husband says, "I was talking in the pub to John Smith. They have been to Scotland, and he told me that with all this S.E.T. the damned service is so ruddy awful that I think we should go to Spain".

That is the kind of thing that can happen if we reduce the services offered in hotels in this country. The basic reason for many people wanting a holiday is to get away from housework. They want to go somewhere where, instead of having to get up to put the kettle on to make the tea, someone will do it for them. They want to have service, not only first thing in the morning but throughout the day.

Many people will go to good boarding houses where they are looked after as if they were long lost relatives. Even if it pours with rain every day, they will say they have had a good rest. This particularly to the housewife, is a very important part of the holiday. So-called superior brains are thinking about removing all that and having a computerised service whereby people on holiday get nothing but a sort of box and have to make their own beds, brew their own tea and clean their own shoes. That is exactly what people are trying to avoid.

Mr. Costain

Is my hon. Friend aware that one of the most popular hotels has a notice saying, "Come and stay with us; we will spoil your wife"?

Sir D. Glover

I am sure that is a very good advertisement, apart from the innuendoes which might be attached to it. If people cannot be provided with these facilities here, they will go on package tours. We are trying to persuade as many as possible to stay within these islands for their holidays and to persuade as many visitors as possible to come here. It is jolly good that 1,800,000 come from Western Europe, but that hardly compares with the 3½ million who go to the Costa del Sol. Our performance is not nearly so good in comparison with many nations.

I am not sure that we shall not have to go into this matter in a more dramatic way. We might perhaps have to reconstruct Kenilworth Castle and have a great charade there, showing the Earl of Leicester entertaining Queen Elizabeth I, and charge £1 per head to see it. That might bring many tourists. In North Cornwall in the summer season we might put an embargo on purchase tax so that people, instead of being tempted to go to Jersey because of the difference in taxation, could have the advantages of the short season in Cornwall. I should be out of order if I pursued that, but this matter needs to be looked at more imaginatively than it has been looked at so far.

A man and his wife, having had a discussion and decided to go to the beautiful, lovely, unspoiled heart of Wales and going to an hotel rebuilt by Government grant and not paying S.E.T., may tour about in their car and find when they go to cafes and restaurants that they close too early.

Mr. Deputy Speaker (Mr. Sydney Irving)

I am having great difficulty in discovering how the hon. Member is relating his remarks to the new Clause. Perhaps he will help me.

Sir D. Glover

I am merely following many previous speeches. Cafés and restaurants have closed because of the imposition of S.E.T.

Mr. Deputy Speaker

These establishments are not covered by the Clause.

Sir D. Glover

They are covered by new Clause 11, which says: With a view to promoting the development of tourism, where an employer has paid selective employment tax for any contribution week beginning after the coming into force of this Act in respect of a person employed in a café or restaurant the relevant Minister shall make to that employer in respect of that person on that week a payment of an amount equal to the tax paid.

Mr. Deputy Speaker

I beg the hon. Gentleman's pardon. I was not looking at new Clause 11.

Sir D. Glover

I have to apologise to the Chair so often that I welcome an apology from the Chair to me. I therefore decide that honour is satisfied on both sides.

These people, having gone to Merioneth to stay at cheap rates in a grant-built hotel not paying S.E.T., get into their motor car and tour Wales. In the evening they return to their hotel and have their subsidised meal at 6.0 or 6.30 p.m. Then they go out into the country and see sign after sign—"Closed"—because it is not economic for people to remain open because of S.E.T.: they cannot afford to keep their employees on.

Mr. William Edwards

I can assure the House that in Merioneth people would be in no such predicament. The restaurants are flourishing and would be open. There would be no shortage of entertainment. Merioneth is even providing the kind of mediaeval, costume entertainment for which people are prepared to pay not £1 but 47s. 6d. So successful are these entertainments that there is no problem about S.E.T.

Sir D. Glover

I am delighted that the hon. Member for Merioneth (Mr. William Edwards) has shown the House how prosperous his area is. No doubt the President of the Board of Trade will take note of what the hon. Gentleman has said and ensure that Merioneth ceases to be a privileged part of the country receiving benefits at the expense of the general taxpayer. I gather that the hon. Gentleman would be delighted if that happened.

Mr. Edwards

rose—

Sir D. Glover

No; I will not give way again.

Mr. Edwards

On a point of order, Mr. Deputy Speaker. I have been misquoted. I did not say that I should be delighted if that happened.

Mr. Deputy Speaker

Order. The hon. Gentleman must not use a point of order to enter into a debate.

Sir D. Glover

In discussing the question of S.E.T. and the hotel industry we continually refer to tourism; but it is not all tourism. Perhaps 50 per cent. of it is business. I am not necessarily still referring only to London, Birmingham or Manchester. A wise salesman who is entertaining some executives from, say, Germany or the United States who are here considering a business deal will be only too desirous of taking them to the Lake District and showing them the lovely scenery there. If, on arriving in the Lake District, because of S.E.T. and of hotels cutting down the German, American or Italian business men—

Mr. Deputy Speaker

Order. The hon. Gentleman is precluded from discussing this aspect of the matter by the fact that the Bill is entitled "Development of Tourism Bill" and not "Stimulation of Trade Bill".

8.15 p.m.

Sir D. Glover

I am sorry that I have not made the point quite clear, Mr. Deputy Speaker. A person could come from America on a business project, but his business host in Britain, hoping to sell him a great quantity of goods for export and wishing to give him a good impression of Britain, might say, "We have nearly finished our business. Can I take you for the weekend to the Lake District and show you some of our lovely scenery?" If on being taken to a restaurant in the Lake District the German or American business man does not get the kind of service that he would get in Germany or in America, and if the contract has not yet been signed, when they return to business he may no longer have as high an opinion of Britain and we may have lost the export order.

Mr. Deputy Speaker

The hon. Gentleman is very ingenious; it is a very fine point, but he is a little over the line.

Sir D. Glover

I come to the question of tourism and cities. These debates always seem to take place on the assumption that we are on some fine rolling moor in Cornwall, or are up in some glorious heather-covered mountainside in Scotland, or on some sunny beach in Eastbourne, whereas the majority of tourists do not go to Cornwall, Scotland or Eastbourne. Many tourists go to Stratford-on-Avon, but a great number do not.

The biggest tourist attraction is London, and I think that the biggest tourist attraction in London is the Palace of Westminster. Millions come to Britain every year, and millions of Britons come from the provinces to London each year, to look at the attractions of the city. They come also for a holiday. Having had the discussion to which I referred earlier, they decide that this year, instead of going to Spain, they will at last go and look at the Tower of London, the Houses of Parliament, Buckingham Palace and Westminster Abbey. They decide not to go on a package tour for £50 but to be good citizens and follow the recommendations and exhortations of the Government to spend their money in the United Kingdom; and they decide to come to London.

When they come here they will not find all that number of new hotels. I do not think they will find that the prices are higher than those they would pay anywhere else in Europe, except on a package tour. Constituents and friends who come to London have told me that since the operation of S.E.T. and other imposts brought in by this Government there is a tendency for the standard of service in hotels—not, perhaps, in hotels of the type with which my hon. Friend the Member for Eastbourne (Sir C. Taylor) is connected, but in small pensions and boarding houses—to fall because they find it increasingly difficult to make a profit. If they find it more and more difficult to make a profit, inevitably they begin to cheesepare thus making it less attractive for people to come.

If that applies to the people from whom we hear regularly, our constituents, it applies probably twice as strongly to those who come to this country and to London from Europe, America and elsewhere. If our own nationals are beginning to complain that the standard of service in the more moderately priced establishments is going down as a result of S.E.T., there must be tens of thousands of foreign tourists who go home after coming here and say to their friends, "I do not know what it is—whether it is their taxation structure or something else—but London is not as good as it was when we were there five years ago, and the service we had in our hotels was much inferior to what we can get on the Continent".

I want the President of the Board of Trade to note that. It is a slow process. It does not happen dramatically. Standards do not go down dramatically, and the complaints of customers returning home are not dramatic. It is a gradual attrition. But it is something of which the right hon. Gentleman ought to take far more note than, apparently, he has taken so far.

No one will grumble about grants and the like being given to the tourist trade for the building, extension or modernisation of hotels, but the Ministry ought to take into account that, even with the growth of tourism, there would not be all these complaints unless the shoe was beginning to pinch, and pinch pretty hard, in the tourist trade. It is no use offering grants for new hotels and for improvements if as a result of our taxation structure there is not an adequate profit, or, more important, there is not the expectation of adequate profit on turnover within the establishment when it is built or improved. Despite the Government's grants, a great many establishments will not be built and a great many improvements will not take place if there is not that expectation. The outside of a factory is important, but what goes on inside is vital. If as a result of Government policy there is not that adequate return on capital, if there is not an adequate profit for people who are thinking of putting their all into these activities, the grants will not be taken up at the rate and at the speed which the right hon. Gentleman would like to see.

There is no right hon. or hon. Member who does not want the tourist trade to prosper and flourish. It would be churlish to suggest that even the Government do not want that. But they have made some fundamental mistakes. To a degree, they have done right in putting this Bill to the House, but a good deal of it, as my hon. Friend the Member for Eastbourne said, would not be necessary if they had taken action on the four fundamental points which he raised.

Let no one run away with the idea that in dealing with this Bill or anything else to do with tourism we have a really great success story to tell. We have a success story only in relation to our own performance, not in relation to the whole world's tourist trade, which, as I said at the outset, is probably the biggest growth industry in the world. I do not want to see this country falling behind in the race.

The President of the Board of Trade (Mr. Anthony Crosland)

It may be convenient if I intervene briefly at this stage. We have had a thorough debate for 2½ hours now, and we are discussing a subject which has been exhaustively debated in Committee on the Bill, in Committee on the Finance Bill, and on many other occasions in the House.

Mr. Blaker

We did not discuss the S.E.T. on any Amendment in Committee. It was hardly mentioned at all.

Mr. Crosland

I read a number of columns this morning of one day's debate in Committee in which there were many references to the S.E.T. I repeat that this is a question which has been continually discussed in the House. For that reason, I am sure, I have not heard new or unfamiliar arguments today, and I doubt that hon. Members opposite will hear any new or unfamiliar arguments from me.

I have listened to a good many speeches—not including the last one from the hon. Member for Ormskirk (Sir D. Glover)—which seemed to me to bear only the most tenuous link with reality, speeches suggesting that the S.E.T. was clobbering the hotel industry and crippling the tourist trade. Many speeches were made in that vein. It is necessary, therefore, to reiterate one or two facts and give one or two figures, even though they may have been referred to before.

I take, first, the tourist industry as such and the question whether it has been ruined, or is in danger of being ruined, by the S.E.T. There have been many references to the danger that there will be fewer visitors coming to this country and to the possibility of attrition, as someone put it, of the number of visitors. In 1965—I shall not go back 60 years—the number of visitors coming here was about 3.5 million. In 1966, the year in which the S.E.T. was introduced, it rose to 3.9 million. In 1967 in rose again to 4.2 million, another year in which the S.E.T. was increased. Last year it rose to the provisional figure of 4.9 million, and in the first four months of this year the provisional figure suggests that there will be a further increase of 20 per cent.

As regards expenditure as opposed to the number of tourists, I shall not weary the House with figures. They have been published, and they show a comparable increase over the last three years.

I agree with the hon. Member for Ormskirk that one must test our performance against that of other countries, but I put it to the House that, however one looks at the figures and whatever comparisons one makes, international or historical, they all point to the fact that tourism is a thoroughly healthy and rapidly expanding industry in this country, and one which shows not the slightest sign of being crippled or clobbered by the S.E.T.

It is a remarkable fact, to which attention has already been drawn—I do so once again—that in 1968, for the first time since statistics of tourism were first kept, this country had a small positive surplus on tourism account. Certainly, the tourism industry as a whole has not been clobbered by the S.E.T.

Let us next consider whether the hotel industry has been or is being clobbered or crippled by the S.E.T. Reference has already been made to the very successful results published in the past few days by both Trust Houses and Grand Metropolitan Hotels. One or two hon. Members opposite have tried to decry this by saying that they are two untypical companies, which I do not accept. The results are not exceptional. Almost every quoted company dealing mainly in hotels is also going through a very successful period. The Investors Chronicle last week accurately referred, generally not simply in relation to Trust Houses and Grand Metropolitan, to buoyant reports from the hotel and catering industry. When we are discussing these companies we are discussing not simply, as one or two hon. Gentlemen suggested, a tiny number of luxury hotels in London but companies with widespread hotel interests in different parts of the country, in towns of different sizes—in other words, not an untypical sample.

8.30 p.m.

There is no doubt in my mind from all the evidence we have that the hotel industry generally is prosperous despite the S.E.T. It was suggested by one or two hon. Members that, even though hotels of substantial size are prosperous, very small establishments or boarding houses might be a great deal less prosperous and might be in danger of being badly hit by the S.E.T. There is no firm information to support this view. These are precisely the kind of establishments that gain most from the concession on part-time workers and workers aged over 65. In the resorts of which I have knowledge, they had an extremely successful year in 1968, and they are all looking to an even more successful year in 1969.

All the evidence is that we are having a higher rate of investment in new hotel accommodation than we have had for many years, on the part of both considerable British companies and a number of international companies which show themselves extremely anxious to step up their hotel investment in this country. The reason for this is the highly prosperous state of travel and tourism.

I think there is now no dispute in the House that in general the S.E.T. has been passed on to the customer, and therefore has not reduced profitability. I thought on Second Reading that there might be dispute about this, and I could quote this evening, as I did on Second Reading, from the "Little Neddy" Report which establishes that it has been passed on, but a number of hon. Members opposite have clearly accepted this, including the hon. Member for Eastbourne (Sir C. Taylor). Even the last increase in the S.E.T. in the recent Budget, which aroused a great deal of fury this afternoon, amounts only to another 3d. in the £ compared with an average tourist expenditure per week of about £22 and American tourist expenditure of over £40, so that I cannot believe that the increase will have a significant effect on tourism or the hotel industry.

When we are discussing the new Clauses, particularly No. 3, which is perhaps the central one, we must ask ourselves whether the abolition of the S.E.T. on hotels, when clearly the hotel industry is not declining or sick but is prosperous, would be a sensible way of increasing our balance of payments earnings. We must accept that that is probably the crux of the argument. I do not think that abolition would be a sensible way. It would be very much more expensive than the scheme of grants and loans proposed in the Bill. When public expenditure is under severe scrutiny, and we are constantly be urged by hon. Members opposite to scrutinise it even more severely, it is a highly relevant and central consideration that to abolish the S.E.T. on hotels would be more costly than the grant and loans scheme we propose in the Bill.

Let us leave on one side the question of cost, although I believe it to be a decisive argument, and ask ourselves whether the abolition of the S.E.T. would increase our balance of payments receipts from the hotel industry. I can see no evidence that it would. As I understand it, the assumption of most hon. Members opposite has been that if the S.E.T. were substantially reduced, the reduction would be passed on to the public. There has been a great deal of argument about prices of hotel accommodation in this country compared with other countries. I take it that the assumption is that, just as the tax has been passed on, a reduction in it would also be passed on. If it were, this certainly would not increase our foreign exchange receipts from foreign visitors. There is no evidence that this comparatively small sum in the £ is a deterrent to foreign visitors coming to this country. It is possible that if prices were reduced as a result of the tax falling, we should have the same number of foreign visitors paying less in foreign exchange I will not argue that point, but I have no evidence that what would be a very small reduction in hotel prices on average would significantly in crease the number of foreign visitors.

I now turn to the argument about import-saving, and British tourists deciding whether to go abroad or stay at home. I very much agree with the hon. Member for Ormskirk on this. One knows how in one's own family this decision becomes an intensely complicated argument which in the end is not settled on considerations of exact cost as between one country and another. I believe that the very large increase in the number of British tourists going abroad is nothing to do with the fivepence, sixpence or sevenpence in the £ in the cost of hotel accommodation but has to do with much deeper factors. For example, cheap air travel is a major factor; the hon. Gentleman himself referred to the huge growth of charter tours and the rest.

I believe that this increase is due to the greater desire now to go to new and particularly sunny countries. The sort of holiday previously confined to the upper and middle classes has now become general throughout the population. In the light of these underlying factors, I do not believe that a change in the price of British hotel accommodation of a few pence in the £ would make a significant difference to the number of British tourists going abroad. On the assumption, in particular, that a reduction in the S.E.T. would be passed on, I do not see how it could be argued that that would increase our foreign exchange earnings.

What we want to do—and I think that this is not in dispute—is to solve the critical problem that if the number of tourists coming here is to grow in the next two to five years as rapidly as in the last few years we must have more hotel accommodation of the right sort. In other words, what we have to get is an increase in investment and suitable capacity. I do not see how this would be achieved by taking the S.E.T. off the hotel industry on the assumption that the reduction would, generally speaking, be passed on. Even if some of it were passed on and some were retained for increased profitability, increased cash flow, and so forth, that would not be nearly so economical a way of increasing investment as Government grants, which are operated solely on the basis of new investment of the kind we want. The Government grant system is the most efficient and economical method of achieving the desired end, which is a significant increase in hotel capacity of the right kind.

I shall not go into more general points on the S.E.T., for I should be out of order. I will refer only to certain points made about it. The hon. Member for Honiton (Mr. Emery) said that we could legitimately take the S.E.T. off the hotel industry because of that industry's special contribution to our foreign exchange position. But I must repeat what has often been said in this House—that, although it makes an important contribution, only about 10 per cent. of our hotel rooms are occupied by foreign visitors, whereas the proportion of manufacturing output on average going to exports is over 30 per cent.

It is not correct to say that the hotel industry is the only service paying the S.E.T. and making a considerable contribution to our balance of payments. On the contrary, if one made this argument for hotels one would have to make it for insurance and export houses. Indeed, a strong and vocal group claim it for them. It is wrong to say that one could make such a concession for hotels and hold the line there.

Mr. Emery

I am sure that the right hon. Gentleman does not wish to misrepresent me. I did not say that the hotel industry was the only service making such a contribution. I asked whether the right hon. Gentleman would tell us which other service industry contributes more.

Mr. Crosland

I beg the hon. Gentleman's pardon. But I think I did, as it happens, inadvertently answer his question by referring to insurance and export houses, which claim to be in the same position. I do not think that the balance of payments argument alone justifies the exemption of the hotel and catering industry from the S.E.T.

Another point about which there has been discussion is that of a possible shortage of labour and a possible decline in the service. I do not think that I agree with the one or two rather gloomy hon. Members who said that foreign visitors have noticed a general decline. That has not been my experience generally. But it is important to say clearly that the hotel industry cannot be exempt from the pressure which the S.E.T. exerts on it to increase productivity; and I am sorry that no one, as far as I know, has mentioned this point throughout the debate. It is important to remember that in the "Little Neddy" report Service in Hotels there is considerable discussion of this matter on pages 16, 17 and 18. It says: This study of hotel and catering units suggested that the level of productivity in the industry could be raised by giving greater attention to such factors as … A list of factors follows. It is clear from this report that it could be not merely raised but raised very considerably. This aspect of the problem has been rather neglected in the debate today.

I will mention briefly the new Clauses and the Amendment. New Clause 3 I have dealt with in the whole of my argument so far. On new Clause 10, everybody has sympathy with what the hon. Member for Cornwall, North (Mr. Pardoe) said, and took a great deal of interest in his argument. A wide variety of services is provided by voluntary or non-profit-making bodies which can be said to be useful to the community. Examples of such services for which a refund of the S.E.T. has often been suggested range from nursing homes and private schools to the motoring organisations and registered driving instructors.

It would be impracticable and unacceptable to try to select particular services or organisations for refund. To do so for one would be bound to lead to accusations of unfair treatment. I have looked at this question on many occasions and, as the House will know, have decided that it is not possible to go beyond the concession to registered charities, a recognised and objective criterion for special treatment.

The House will not be surprised that I shall ask it to reject new Clauses 11 and 12. If we are not prepared to make an S.E.T. concession for hotels, it would be illogical to go on and make one for cafés and restaurants, and camping and caravan sites. For the same general reasons I must ask the House to reject these new Clauses.

Mr. Jopling

The Minister says that it would not be reasonable to exempt cafés and restaurants as he has refused to exempt hotels. Does not it therefore follow that where S.E.T. is refunded to hotels in certain development areas, restaurants and cafés in those areas should also have S.E.T. refunded? Surely that is an irrefutable argument?

Mr. Crosland

I do not find the argument irrefutable, and I do not think it follows from anything I said. On another occasion we could no doubt argue the development area point, but it is not covered in the new Clauses and the Amendment which we are considering.

The right hon. Member for Leeds, North-East (Sir K. Joseph) can hardly have intended Amendment No. 32 to be taken seriously, and I do not know whether to spend a great deal of time on it. It is obviously wholly unacceptable as it stands. It will permit the refund of any tax. No limit is suggested to the time over which such taxes may have been paid to qualify for refund. No limit is set to the time for which refunds may be made in the future, and no limit is set on the proportion which the Minister should refund. The Amendment is so vague as to be meaningless, and I ask the House to reject it.

Mr. W. R. Rees-Davies (Isle of Thanet)

The Amendment, Mr. Deputy Speaker, on which I have not previously risen to catch your eye, is concerned with a matter on which I have given notice to the Minister, and that is the question of a reply on the whole position of betterment levy. It is to that that the Amendment was adduced. It may be that it would be better for me to develop this by way of argument, if the Chair would allow the leave of the House to the Minister to deal with this point.

Mr. Deputy Speaker

That is not a matter for the Chair. Mr. Crosland.

Mr. Crosland

As I said, the Amendment goes far wider than the question of betterment levy, and would give the Minister power to refund any tax of any kind. That is no fault of the hon. Gentleman's.

Mr. Blaker

The Minister may be aware that his hon. Friend the Minister of State said several times in Committee that a full explanation would be given on Report or Third Reading. His hon. Friend the Under-Secretary of State for Scotland said that it would be given on Report. This is the only opportunity for that explanation to be given.

8.45 p.m.

Mr. Crosland

That matter does not arise on this Amendment. The Amendment covers all taxes and is not an Amendment on the betterment levy. I do not feel that this particular debate is the right one to deal with that matter.

Since we have already had a long debate, I conclude by saying that I am surprised by the continued agitation of the Opposition, and the continued statements which have been made by the industry, on this subject. The arguments used about the effect of the S.E.T. simply are not borne out in any way by the facts as they apply either to tourism or to the hotel industry. Indeed, the complaints that come from the industry sometimes suggest, although only as to certain sections of it, a lack of self-confidence, which, in practice, I believe not to be typical.

The Amendments proposed are inconsistent with all we hear from the Opposition on the subject of public expenditure, and I am certain that they would be less efficient than the methods which we propose for bringing about an increase in capital investment in hotels, which we should all like to see.

Mr. Rees-Davies

I do not intend to detain the House long in reply to what the Minister has said. I do not suggest that Amendment No. 32 is directed specifically to betterment levy, but it is a subject within the ambit of the Amendment and is a matter which was specifically raised and dealt with in Committee, with an undertaking that it would be dealt with on Report.

I quote the exact position. In Committee on 6th May, in a debate on this subject, which I then opened, I said this: I think that this is an appropriate time for the Minister to tell us whether, if one applies for a loan under this Clause, any betterment levy will have to be met in respect of development occasioned under the terms of this provision. If we find that people are to be encouraged to go in for substantial loan schemes and then find that, either in the provision of the new hotel or by altering or extending the character, they are to be liable for betterment levy, we are really removing all the benefit which we are seeking to give by the encouragement of the Government policy. I went on to develop that argument and to point out the various dangers inherent in it.

The Minister, in reply, referring to the developer, said, in column 625: If he had to pay, it would be 40 per cent. of the increase in the land value. Even this would be subject to a number of allowances. One must look at these as separate matters. Then come the important words: Anybody who chooses to take a grant or a loan must not believe that the benefit he gets will be thereby extinguished. That is simply not the case. I had some doubts as to the accuracy of that statement, but I realised that I was asking the Minister to give a reply "off the cuff". I intervened to say that the sum of money might well nullify the whole of the grant provision which is made. I said that it would not be fair to ask the Minister to go into great detail on it then and there, and I said that we would press the Minister on Report.

The Minister replied, in column 626: If the Committee wishes it, certainly I would make sure that something was said on Report and Third Reading. I would ask the Committee to recognise that these are distinct matters. He went on to say something that is of the greatest importance to the industry: I do not believe that members of the Committee would wish to lead hoteliers who might be interested in the provisions of the Bill into believing that, in some way, the separate provisions of the Land Commission Act represent an impediment to taking full advantage of what is offered here."—[OFFICIAL REPORT, Standing Committee E, 6th May, 1969; c. 620–6.] My hon. Friend the Member for Blackpool, South (Mr. Blaker) made some contributions, and we were given a further undertaking on the following day by the Under-Secretary for Scotland that the matter would be dealt with on Report.

I personally have not spoken on the S.E.T. debate. I will take up a few of the points which have been made and try to reply to them. In terms of the provisions of the Bill, the question of the betterment levy is of far greater importance than S.E.T. If one is to consider taking a substantial loan under Clause 13, especially to renovate and make substantial improvements upon existing buildings which may be caught by the betterment levy with a substantial tax element in it, with the difficulties of obtaining the loan at a reasonable interest. I suggest that the position will be that a great deal more will be lost than is gained. I believe that the true incentives under the Bill, both loan and grant, will be removed unless some provision is made in the sort of way set out in Amendment No. 32.

We did not draft that Amendment with any great professional ability. We put it down to ensure that in this debate the Government would take this opportunity, or undertake to give us another opportunity on or before Third Reading, to let us hear the full and exact position about S.E.T.

Supposing that someone was to develop a small new hotel and obtain a 20 per cent. grant on a building of £50,000—in other words, one-fifth of that, which is £10,000. Suppose, then, that he got a 40 per cent. loan—another two-fifths, which is £20,000. If he then put up £20,000 towards it, he might find himself faced with a 40 per cent. tax on the total sum of £50,000 which he has spent in securing the land on which he is to develop. He may find that the whole of the provisions that he has worked out will be lost because he will be unable to meet the heavy incursion of the iniquitous betterment levy.

That is the difficulty which I foresee unless there is a method of ensuring that, in making the grant and the loan, account will be taken of the existence of the liability for betterment levy and the Government will seek to undertake by some means to offset the disadvantages thereby incurred.

This is a matter upon which I felt that the Minister of State had not the authority nor perhaps the information to be able to reply when we dealt with it in Committee. It is of the greatest importance to the industry, which may have recognised that it was unlikely to get very much change out of the Minister on S.E.T. in this debate, but which will not have guessed that it may not get a fair deal in the future in considering the betterment levy position. We recognise that the Minister is sincere in wishing to give an incentive to build hotels, but we have very little time.

I want to refer to that part of the S.E.T. debate because my approach is not a financial one. It arises solely from what I like to think is a practical knowledge of the working of the industry. I am satisfied that S.E.T. harms the position of labour. It harms recruitment into the industry and makes it an industry which tends to be full of part-timers who are employed with a view to avoiding S.E.T.

People who run boarding-houses go to great lengths to use part-time employees rather than having to employ the young people who should be coming into the industry. They are building up with old people. We are losing valuable labour instead of taking the opportunity to bring in and train labour. It is to our labour training and employment that S.E.T. is of the greatest harm.

I do not believe that the President of the Board of Trade will save many "bucks". There will be no decrease in the number of overseas visitors staying at the Savoy or the Woburn because of S.E.T. That is not the argument, but it will stop the growth of the industry. My hon. Friend the Member for Folkestone and Hythe (Mr. Costain)has pointed out that as well as selective employment tax there are pensions and superannuation going on as part of the cost of labour which has to be employed.

This is a substantial burden upon an industry which should be seeking retraining in every possible way. We need schemes for the improvement of those engaged in the catering industry—chefs, cooks, waiters, the whole of the staff. We want to encourage them to go into what we call an industry. It is no less an industry than any other form of manufacturing. There is no reason to draw a distinction.

This is not a service; this is the development of an industry and of people who have acute skills and training in the catering industry no less than others may have in the manufacture of steel or other products which they work with their hands. Therefore, we say that it is wrong to draw a distinction between this industry and others. It is wrong to place impediments in the way of development and the training of labour.

We have had a full debate, but I am anxious to ensure that, in accordance with the undertaking which has been given, the President of the Board of Trade or the Minister of State will give us a clear reply about the betterment levy. If he says that he would like another 24 hours' notice, I am sure that we will be agreeable. But let us have this absolutely clear what industry will have to meet if they get its grant and what will be the position about the loans, so that it may understand exactly the burden, if any, which it will have to cover.

Mr. William Rodgers

The hon. Gentleman has referred to undertakings given in Committee. We are not responsible for the selection of Amendments. Had Amendment No. 158 been selected, there would have been an opportunity to reply as fully as the hon. Gentleman had in mind. This not being the position, we will endeavour to meet his wishes on Third Reading.

Sir Brandon Rhys Williams (Kensington, South)

I am glad that I have been able to catch your eye, Mr. Deputy Speaker, in this debate, which is of such great interest to so many people in South Kensington.

We heard from the President of the Board of Trade an able and extremely damaging account of all the arguments which the industry most dreads to hear. I am glad of this brief opportunity of explaining why I disagree with him.

Other hon. Members, besides the right hon. Gentleman, have expressed the view that hotels and restaurants in this country are doing extremely well. Therefore, I suppose they feel they can well afford to pay selective employment tax. Some hotels and restaurants are doing extremely well—including those belonging to the quoted companies which have managed, over a period of years, to collect the key sites in centres where visitors are obliged to pay whatever charges they choose to make. But it is not enough to judge the prosperity of the industry by observation of the prosperity of hotels and restaurants which are in a physical position to pass on higher prices.

I hope that the right hon. Gentleman will not consider that this unhealthy and patchy prosperity is a sign that all is well for the long term with the hotels and catering industry. Stretching a point on prices is not good policy in any form of industry. All hon. Members know that a man who finds at the end of his meal that he has been charged far more than he expected may not kick up a fuss at once or refuse to pay his bill, but he will not come back. We have the same situation on a larger scale. If people with international interests organise a conference in London and find that it has cost them more than they have paid when they have organised similar conferences in other centres they will strike London off their list for the future.

9.0 p.m.

We must consider the long-term interest, and not merely look at what is happening in the industry from day to day. One thing which the right hon. Gentleman did not mention was the sharp drop in employment in total in hotels and catering. In June, 1965, 611,000 people were employed in this industry. In June, 1968, that figure had dropped to 571,000, and no doubt as a result of the sharp increase in S.E.T. in this year's Budget that drop will accelerate.

We all welcome the figures given by the right hon. Gentleman, which seem to suggest that there has been a 50 per cent. increase in the number of visitors to this country since 1966. That is remarkable, but how long will this increase persist if it is accompanied by a corresponding drop in the number of people available—40,000 fewer—to service this very much larger number of visitors? And how many of the 40,000 who have been forced out of the hotel and catering industry since the imposition of S.E.T. are still unemployed? I believe that it is a disproportionately high number.

What this industry desperately needs is a long period of stable prosperity, possibly for the first time in this country. Some hon. Members may feel that wages in hotels and catering are not too low. I do not like to get dragged into a dispute of that kind, but there is no doubt that employers would be glad to pay higher wages if they could. But if they are obliged to pay more than £2 a week per head to the Exchequer in S.E.T., it is bound to make it more and more difficult for them to offer the sort of wages they would like to pay.

If they cannot pay adequate wages, they will be troubled as far ahead as they can see by the old bugbear of the industry, which is the rapid turn-round of labour. It is not possible to organise training in a modern context, as understood in personnel management today, in an industry where there is such a rapid turn-round of weekly-paid employees. And this applies just as much to junior management. If anybody has had experience, as I have, of advertising jobs in the hotel and catering industry to which junior and middle management are expected to reply, he can confirm my experience, which is that a large number of people will write in, in many cases out of curiosity. If they are asked to give the history of their previous employment, they will not attempt to disguise the fact—indeed they might make a point of it—that in the previous five to 10 years they have had five to 10 jobs. They quote an employment record like that because they think that breadth of experience will recommend them.

But in a modern industry, which is what we hope the hotel and catering industry will become, we want evidence of stability, evidence that there has been continuity of employment and loyalty. We shall never have that while this industry is regarded as a depressed industry from the point of view of remuneration.

Investment in new hotels is going on well, but if the tourist industry is exploding, as we believe it is, can we have confidence that we are investing sufficient, and providing enough accommodation in new hotels? I am afraid that the new hotels built in the late 'sixties will, in ten or twenty years, be regarded as shoddy affairs. They will be called the "S.E.T." hotels.

Mr. Deputy Speaker

Order. I am finding it difficult to discover how the hon. Member is relating his remarks to the Clause and the Amendment.

Sir B. Rhys Williams

It is a question of the profitability of the industry.

The right hon. Gentleman advanced the argument that profits were adequate, and that the hotels could afford to pay S.E.T. I feel, and I am sure many well-informed judges of what is happening in the industry will know, that a long period of prosperity is needed to make up for the generations of inadequate investment which are the background to this industry, and which have brought it into the unhappy state in which it is today.

We have to consider the modernisation of existing hotels as well. Although there are signs which visitors may notice of modernisation in the way of improved facilities, improved decor, and so on, if they could see through the swing doors, and find out what is happening in the kitchens, and see the conditions under which the staff work, they would realise that this industry is starved of capital. The Government should do much more about the industry's financial position. It is not enough to offer little bits of grant here and there, and to take away millions of pounds in S.E.T., as they are doing. If they care about this industry, the Government must give back to the hotels and caterers their own money to spend as they know best.

Mr. Emery

If I may speak again with the leave of the House, the President of the Board of Trade said at the start that he would not say anything new, and he was right. His argument was that S.E.T. is all right in the hotels because it is handed on and the customer is clobbered. He did not comment on the labour side, or on the speeches about the way that S.E.T. is forcing a shortening of the season, because it is at that time of marginal decisions about elongating the season that S.E.T. is an important factor. The Minister of State has taken part in conferences aimed at getting a longer season; yet no answer was given to this.

Nor did the right hon. Gentleman deal with any of the major points raised by Scottish hon. Members on this side, which was a slight on their extensive arguments. He entirely neglected the arguments about caravan sites, and dismissed the anomaly about restaurants in development areas where S.E.T. is rebated. This is the cavalier way in which he dealt with the debate.

Our basic position was put forward by my hon. Friend the Member for Ormskirk (Sir D. Glover)—that there would be no need for aid under the Bill if the Government had not sucked so much from tourism. The right hon. Gentleman suggested that our argument is wrong because we want a cut in public expenditure. But part of our argument is that we could do this with tourism if the money which it was making stayed in the industry instead of being taken out by S.E.T. The essence of the right hon. Gentleman's argument is that we are wrong, but he neglected to say that the hotels, boarding-houses and regional travel associations are also wrong.

Even the South-West Regional Economic Development Council, one of the right hon. Gentleman's own organisations, which has seen him about this, is wrong. Apparently, the only person in the House who is right is the Minister! That is typical of this Government's approach on

this type of issue. I urge my hon. Friends to divide on this matter.

Mr. John McCann (Lord Commissioner to the Treasury)

rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put:—

The House divided: Ayes 206, Noes 152.

Division No. 280.]	AYES	[9.10 p.m.
Abse, Leo	Fowler, Gerry	Mason, Rt. Hn. Roy
Albu, Austen	Fraser, John (Norwood)	Mayhew, Christopher
Alldritt, Walter	Freeson, Reginald	Mellish, Rt. Hn. Robert
Armstrong, Ernest	Gardner, Tony	Mendelson, John
Atkins, Ronald (Preston, N.)	Ginsburg, David	Millan, Bruce
Atkinson, Norman (Tottenham)	Gray, Dr. Hugh (Yarmouth)	Miller, Dr. M. S.
Bacon, Rt. Hn. Alice	Greenwood, Rt. Hn. Anthony	Milne, Edward (Blyth)
Bagier, Gordon A. T.	Griffiths, David (Rother Valley)	Mitchell, R. C. (S'th'pton, Test)
Barnett, Joel	Griffiths, Eddie (Brightside)	Moonman, Eric
Beaney, Alan	Griffiths, Will (Exchange)	Morgan, Elystan (Cardiganshire)
Benn, Rt. Hn. Anthony Wedgwood	Hamilton, James (Bothwell)	Morris, Charles R. (Openshaw)
Bidwell, Sydney	Hamilton, William (Fife, W.)	Moyle, Roland
Binns, John	Hamling, William	Murray, Albert
Bishop, E. S.	Hannan, William	Neal, Harold
Blackburn, F.	Harper, Joseph	Newens, Stan
Blenkinsop, Arthur	Harrison, Walter (Wakefield)	Norwood, Christopher
Booth, Albert	Hazell, Bert	Ogden, Eric
Boyden, James	Henig, Stanley	O'Malley, Brian
Bradley, Tom	Herbison, Rt. Hn. Margaret	Oram, Albert E.
Bray, Dr. Jeremy	Hooley, Frank	Orme, Stanley
Buchan, Norman	Howarth, Robert (Bolton, E.)	Oswald, Thomas
Buchanan, Richard (G'gow, Sp'burn)	Hoy, Rt. Hn. James	Owen, Will (Morpeth)
Butler, Mrs. Joyce (Wood Green)	Huckfield, Leslie	Padley, Walter
Callaghan, Rt. Hn. James	Hughes, Hector (Aberdeen, N.)	Pannell, Rt. Hn. Charles
Cant, R. B.	Hunter, Adam	Peart, Rt. Hn. Fred
Carmichael, Neil	Hynd, John	Pentland, Norman
Carter-Jones, Lewis	Irvine, Sir Arthur (Edge Hill)	Perry, George H. (Nottingham, S.)
Chapman, Donald	Jackson, Colin (B'h'se & spenb'gh)	Prentice, Rt. Hn. R. E.
Coe, Denis	Janner, Sir Barnett	Price, Christopher (Perry Barr)
Coleman, Donald	Jeger, George (Goole)	Price, Thomas (Westhoughton)
Concannon, J. D.	Jenkins, Hugh (Putney)	Probert, Arthur
Conlan, Bernard	Johnson, James (K'ston-on-Hull, W.)	Rankin, John
Crosland, Rt. Hn. Anthony	Jones, Dan (Burnley)	Rees, Merlyn
Dalyell, Tam	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)	Richard, Ivor
Davies, G. Elfed (Rhondda, E.)	Jones, J. Idwal (Wrexham)	Roberts, Albert (Normanton)
Davies, Dr. Ernest (Stretford)	Jones, T. Alec (Rhondda, West)	Roberts, Gwilym (Bedfordshire, S.)
Davies, Rt. Hn. Harold (Leek)	Kelley, Richard	Robertson, John (Paisley)
de Freitas, Rt. Hn. Sir Geoffrey	Kenyon, Clifford	Robinson, Rt. Hn. Kenneth (St. P'c'as)
Delargy, Hugh	Kerr, Russell (Feltham)	Rodgers, William (Stockton)
Dempsey, James	Lawson, George	Roebuck, Roy
Dewar, Donald	Leadbitter, Ted	Ross, Rt. Hn. William
Diamond, Rt. Hn. John	Lestor, Miss Joan	Rowlands, E.
Dickens, James	Lewis, Ron (Carlisle)	Ryan, John
Dobson, Ray	Lomas, Kenneth	Shaw, Arnold (Ilford, S.)
Doig, Peter	Loughlin, Charles	Shore, Rt. Hn. Peter (Stepney)
Driberg, Tom	Luard, Evan	Short, Mrs. Renée (W'hampton, N. E.)
Dunn, James A.	Lyon, Alexander W. (York)	Silkin, Rt. Hn. John (Deptford)
Dunwoody, Mrs. Gwyneth (Exeter)	Mabon, Dr. J. Dickson	Silkin, Hn. S. C. (Dulwich)
Dunwoody, Dr. John (F'th & C'b'e)	McBride, Neil	Slater, Joseph
		Small, William
Eadie, Alex	McCann, John	Spriggs, Leslie
Edelman, Maurice	MacColl, James	Steele, Thomas (Dunbartonshire, W.)
Edwards, Robert (Bilston)	Macdonald, A. H.	Summerskill, Hn. Dr. Shirley
Edwards, William (Merioneth)	McGuire, Michael	Symonds, J. B.
Ellis, John	McKay, Mrs. Margaret	Taverne, Dick
Ennals, David	Mackenzie, Gregor (Rutherglen)	Thornton, Ernest
Evans, Fred (Caerphilly)	Mackie, John	Tinn, James
Fernyhough, E.	Maclennan, Robert	Tomney, Frank
Finch, Harold	McMillan, Tom (Glasgow, C.)	Tuck, Raphael
Fitch, Alan (Wigan)	McNamara, J. Kevin	Urwin, T. W.
Fletcher, Rt. Hn. Sir Eric (Islington, E.)	MacPherson, Malcolm	Varley, Eric G.
Fletcher, Raymond (Ilkeston)	Manuel, Archie	Wainwright, Edwin (Dearne Valley)
Fletcher, Ted (Darlington)	Marks, Kenneth	Walker, Harold (Doncaster)
Foley, Maurice	Marquand, David	Wallace, George
Watkins, David (Consett)	Willey, Rt. Hn. Frederick	Wilson, William (Coventry, S.)
Weitzman, David	Williams, Alan (Swansea, W.)	Woof, Robert
Wellbeloved, James	Williams, Alan Lee (Hornchurch)
Wells, William (Walsall, N.)	Williams, Clifford (Abertillery)	TELLERS FOR THE AYES:
White, Mrs. Eirene	Williams, Mrs. Shirley (Hitchin)	Mr. Ioan L. Evans and
Whitlock, William	Williams, W. T. (Warrington)	Mr. Ernest G. Perry
Wilkins, W. A.	Willis, Rt. Hn. George
NOES
Alison, Michael (Barkston Ash)	Grieve, Percy	Pardoe, John
Allason, James (Hemel Hempstead)	Griffiths, Eldon (Bury St. Edmunds)	Pearson, Sir Frank (Clitheroe)
Astor, John	Gurden, Harold	Peel, John
Atkins, Humphrey (M't'n & M'd'n)	Hall, John (Wycombe)	Percival, Ian
Baker, Kenneth (Acton)	Hall-Davis, A. G. F.	Peyton, John
Baker, W. H. K. (Banff)	Harris, Reader (Heston)	Pike, Miss Mervyn
Beamish, Col. Sir Tufton	Harrison, Brian (Maldon)	Pounder, Rafton
Bell, Ronald	Hawkins, Paul	Powell, Rt. Hn. J. Enoch
Bennett, Sir Frederic (Torquay)	Heald, Rt. Hn. Sir Lionel	Price, David (Eastleigh)
Biffen, John	Higgins, Terence L.	Pym, Francis
Birch, Rt. Hn. Nigel	Hiley, Joseph	Ramsden, Rt. Hn. James
Blaker, Peter	Hill, J. E. B.	Rees-Davies, W. R.
Boardman, Tom (Leicester, S. W.)	Hogg, Rt. Hn. Quintin	Rhys Williams, Sir Brandon
Boyd-Carpenter, Rt. Hn. John	Holland, Philip	Ridsdale, Julian
Braine, Bernard	Hordern, Peter	Rippon, Rt. Hn. Geoffrey
Brewis, John	Howell, David (Guildford)	Rodgers, Sir John (Sevenoaks)
Buck, Antony (Colchester)	Hunt, John	Rossi, Hugh (Hornsey)
Bullus, Sir Eric	Hutchison, Michael Clark	Royle, Anthony
Campbell, B. (Oldham, W.)	Irvine, Bryant Godman (Rye)	Russell, Sir Ronald
Campbell, Gordon (Moray & Nairn)	Jenkin, Patrick (Woodford)	Scott, Nicholas
Chataway, Christopher	Jennings, J. C. (Burton)	Sharples, Richard
Chichester-Clark, R.	Jopling, Michael	Shaw, Michael (Sc'b'gh & Whitby)
Clark, Henry	Kaberry, Sir Donald	Silvester, Frederick
Cooper-Key, Sir Neil	Kirk, Peter	Sinclair, Sir George
Corfield, F. V.	Lambton, Viscount	Smith, John (London & W'minster)
Costain, A. P.	Lane, David	Speed, Keith
Cunningham, Sir Knox	Lewis, Kenneth (Rutland)	Stodart, Anthony
Currie, G. B. H.	Longden, Gilbert	Stoddart-Scott, Col. Sir M.
Dance, James	Lubbock, Eric	Summers, Sir Spencer
d'Avigdor-Goldsmid, Sir Henry	Maclean, Sir Fitzroy	Taylor, Sir Charles (Eastbourne)
Dean, Paul	Macleod, Rt. Hn. Iain	Taylor, Frank (Moss Side)
Digby, Simon Wingfield	McMaster, Stanley	Temple, John M.
Dodds-Parker, Douglas	McNair-Wilson, Michael	Turton, Rt. Hn. R. H.
Doughty, Charles	McNair-Wilson, Patrick (New Forest)	van Straubenzee, W. R.
Eden, Sir John	Maddan, Martin	Waddington, David
Elliot, Capt. Walter (Carshalton)	Maginnis, John E.	Wainwright, Richard (Colne Valley)
Elliott, R. W. (N'c'tle-upon-Tyne, N.)	Maude, Angus	Walker-Smith, Rt. Hn. Sir Derek
Emery, Peter	Mawby, Ray	Walters, Dennis
Errington, Sir Eric	Maxwell-Hyslop, R. J.	Ward, Dame Irene
Eyre, Reginald	Mills, Stratton (Belfast, N.)	Weatherill, Bernard
Farr, John	Miscampbell, Norman	Whitelaw, Rt. Hn. William
Fletcher-Cooke, Charles	Mitchell, David (Basingstoke)	Wiggin, A. W.
Fortescue, Tim	Monro, Hector	Williams, Donald (Dudley)
Foster, Sir John	Montgomery, Fergus	Wilson, Geoffrey (Truro)
Gibson-Watt, David	Morgan, Geraint (Denbigh)	Winstanley, Dr. M. P.
Gilmour, Sir John (Fife, E.)	Morrison, Charles (Devizes)	Woodnutt, Mark
		Wylie, N. R.
Glover, Sir Douglas	Munro-Lucas-Tooth, Sir Hugh	Younger, Hn. George
Goodhart, Philip	Nabarro, Sir Gerald
Goodhew, Victor	Noble, Rt. Hn. Michael	TELLERS FOR THE NOES:
Gower, Raymond	Nott, John	Mr. Jasper More and
Grant, Anthony	Osborn, John (Hallam)	Mr. Timothy Kitson.
Grant-Ferris, Sir Robert	Page, Graham (Crosby)

Question put accordingly, That the Clause be read a Second time:—

The House divided: Ayes 156, Noes 206.

Division No. 281.]	AYES	[9.21 p.m.
Alison, Michael (Barkston Ash)	Boyd-Carpenter, Rt. Hn. John	Cunningham, Sir Knox
Allison, James (Hemel Hempstead)	Braine, Bernard	Currie, G. B. H.
Astor, John	Brewis, John	Dance, James
Atkins, Humphrey (M't'n & M'd'n)	Buck, Antony (Colchester)	d'Avigdor-Goldsmid, Sir Henry
Baker, Kenneth (Acton)	Bullus, Sir Eric	Dean, Paul
Baker, W. H. K. (Banff)	Campbell, B. (Oldham, W.)	Digby, Simon Wingfield
Beamish, Col. Sir Tufton	Campbell, Gordon (Moray & Nairn)	Dodds-Parker, Douglas
Bell, Ronald	Chataway, Christopher	Doughty Charles
Bennett, Sir Frederic (Torquay)	Chichester-Clark, R.	Eden, Sir John
Biffen, John	Clark, Henry	Elliot, Capt. Walter (Carshalton)
Birch, Rt. Hn. Nigel	Cooper-Key, Sir Neill	Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Blaker, Peter	Corfield, F. V.	Emery, Peter
Boardman, Tom (Leicester, S. W.)	Costain, A. P.	Errington, Sir Eric
Eyre, Reginald	Lane, David	Rhys Williams, Sir Brandon
Farr, John	Lewis, Kenneth (Rutland)	Ridley, Hn. Nicholas
Fletcher-Cooke, Charles	Longden, Gilbert	Ridsdale, Julian
Fortescue, Tim	Lubbock, Eric	Rippon, Rt. Hn. Geoffrey
Foster, Sir John	Maclean, Sir Fitzroy	Rodgers, Sir John (Sevenoaks)
Gibson-Watt, David	Macleod, Rt. Hn. Iain	Rossi, Hugh (Hornsey)
Gilmour, Sir John (Fife, E.)	McMaster, Stanley	Royle, Anthony
Glover, Sir Douglas	McNair-Wilson, Michael	Russell, Sir Ronald
Goodhart, Philip	McNair-Wilson, Patrick (New Forest)	Scott, Nicholas
Goodhew, Victor	Maddan, Martin	Sharples, Richard
Gower, Raymond	Maginnis, John E.	Shaw, Michael (Sc'b'gh & Whiby)
Grant, Anthony	Maude, Angus	Silvester, Frederick
Grant-Ferris, Sir Robert	Mawby, Ray	Sinclair, Sir George
Grieve, Percy	Maxwell-Hyslop, R. J.	Smith, John (London & W'minster)
Griffiths, Eldon (Bury St. Edmunds)	Mills, Stratton (Belfast, N.)	Speed, Keith
Grimond, Rt. Hn. J.	Miscampbell, Norman	Stodart, Anthony
Gurden, Harold	Mitchell, David (Basingstoke)	Stoddart-Scott, Col. S. M.
Hall, John (Wycombe)	Monro, Hector	Summers, Sir Spencer
Hall-Davis, A. G. F.	Montgomery, Fergus	Taylor, Sir Charles (Eastbourne)
Harris, Reader (Heston)	More, Jasper	Taylor, Frank (Moss Side)
Harrison, Brian (Maldon)	Morgan, Geraint (Denbigh)	Temple, John M.
Hawkins, Paul	Morrison, Charles (Devizes)	Thorpe, Rt. Hn. Jeremy
Heald, Rt. Hn. Sir Lionel	Monro-Lucas-Tooth, Sir Hugh	Turton, Rt. Hn. R. H.
Higgins, Terence L.	Nabarro, Sir Gerald	van Straubenzee, W. R.
Hiley, Joseph	Noble, Rt. Hn. Michael	Waddington, David
Hill, J. E. B.	Nott, John	Wainwright, Richard (Colne Valley)
Hogg, Rt. Hn. Quintin	Osborn, John (Hallam)	Walker-Smith, Rt. Hn. Sir Derek
Holland, Philip	Page, Graham (Crosby)	Walters, Dennis
Hordern, Peter	Pardoe, John	Ward, Dame Irene
Howell, David (Guildford)	Pearson, Sir Frank (Clitheroe)	Whitelaw, Rt. Hn. William
		Wiggin, A. W.
Hunt, John	Peel, John	Williams, Donald (Dudley)
Hutchison, Michael Clark	Percival, Ian	Wilson, Geoffrey (Truro)
Irvine, Bryant Godman (Rye)	Peyton, John	Winstanley, Dr. M. P.
Jenkin, Patrick (Woodford)	Pike, Miss Mervyn	Woodnutt, Mark
Jennings, J. C. (Burton)	Pounder, Rafton	Wylie, N. R.
Jopling, Michael	Powell, Rt. Hn. J. Enoch	Younger, Hn. George
Kaberry, Sir Donald	Price, David (Eastleigh)
Kirk, Peter	Pym, Francis	TELLERS FOR THE AYES:
Knight, Mrs. Jill	Ramsden, Rt. Hn. James	Mr. Timothy Kitson and
Lambton, Viscount	Rees-Davies, W. R.	Mr. Bernard Weatherill.
NOES
Abse, Leo	Diamond, Rt. Hn. John	Herbison, Rt. Hn. Margaret
Albu, Austen	Dickens, James	Hooley, Frank
Alldritt, Walter	Dobson, Ray	Howarth, Robert (Bolton, E.)
Armstrong, Ernest	Doig, Peter	Hoy, Rt. Hn. James
Atkins, Ronald (Preston, N.)	Driberg, Tom	Huckfield, Leslie
Atkinson, Norman (Tottenham)	Dunn, James A.	Hughes, Hector (Aberdeen, N.)
Bacon, Rt. Hn. Alice	Dunwoody, Mrs. Gwyneth (Exeter)	Hunter, Adam
Bagier, Gordon A. T.	Dunwoody, Dr. John (F'th & C'b'e)	Hynd, John
Barnett, Joel	Eadie, Alex	Irvine, Sir Arthur (Edge Hill)
Beaney, Alan	Edelman, Maurice	Jackson, Colin (B'h'se & Spenb'gh)
Benn, Rt. Hn. Anthony Wedgwood	Edwards, Robert (Bilston)	Janner, Sir Barnett
Bidwell, Sydney	Edwards, William (Merioneth)	Jeger, George (Goole)
Binns, John	Ellis, John	Jenkins, Hugh (Putney)
Bishop, E. S.	Ennals, David	Johnson, James (K'ston-on-Hull, W.)
Blackburn, F.	Evans, Fred (Caerphilly)	Jones, Dan (Burnley)
Blenkinsop, Arthur	Fernyhough, E.	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Booth, Albert	Finch, Harold	Jones, J. Idwal (Wrexham)
Boyden, James	Fitch, Alan (Wigan)	Jones, T. Alec (Rhondda, West)
Bradley, Tom	Fletcher, Rt. Hn. Sir Eric (Islington, E.)	Kelley, Richard
Bray, Dr. Jeremy	Fletcher, Raymond (Ilkeston)	Kenyon, Clifford
Buchan, Norman	Fletcher, Ted (Darlington)	Kerr, Russell (Feltham)
Buchanan, Richard (G'gow, Sp'burn)	Foley, Maurice	Lawson, George
Butler, Mrs. Joyce (Wood Green)	Fowler, Gerry	Leadbitter, Ted
Callaghan, Rt. Hn. James	Fraser, John (Norwood)	Lester, Miss Joan
Cant, R. B.	Freeson, Reginald	Lewis, Ron (Carlisle)
Carmichael, Neil	Gardner, Tony	Lomas, Kenneth
Carter-Jones, Lewis	Ginsburg, David	Loughlin, Charles
Chapman, Donald	Gray, Dr. Hugh (Yarmouth)	Luard, Evan
Coe, Denis	Greenwood, Rt. Hn. Anthony	Lyon, Alexander W. (York)
Coleman, Donald	Griffiths, David (Rother Valley)	Mabon, Dr. J. Dickson
Concannon, J. D.	Griffiths, Eddie (Brightside)	McBride, Neil
Conlan, Bernard	Griffiths, Will (Exchange)	McCann, John
Crosland, Rt. Hn. Anthony	Hamilton, James (Bothwell)	MacColl, James
Dalyell, Tam	Hamilton, William (Fife, W.)	Macdonald, A. H.
Davies, G. Elfed (Rhondda, E.)	Hamling, William	McGuire, Michael
Davies, Dr. Ernest (Stretford)	Hannan, William	McKay, Mrs. Margaret
Davies, Rt. Hn. Harold (Leek)
de Freitas, Rt. Hn. Sir Geoffrey	Harper, Joseph	Mackenzie, Gregor (Rutherglen)
Delargy, Hugh	Harrison, Walter (Wakefield)	Mackie, John
Dempsey, James	Hazell, Bert	Maclennan, Robert
Dewar, Donald	Henig, Stanley	McMillan, Tom (Glasgow, C.)

McNamara, J. Kevin	Peart, Rt. Hn. Fred	Symonds, J. B.
MacPherson, Malcolm	Pentland, Norman	Taverne, Dick
Manuel, Archie	Perry, George H. (Nottingham, S.)	Thornton, Ernest
Marks, Kenneth	Prentice, Rt. Hn. R. E.	Tinn, James
Marquand, David	Price, Christopher (Perry Barr)	Tomney, Frank
Mason, Rt. Hn. Roy	Price, Thomas (Westhoughton)	Tuck, Raphael
Mayhew, Christopher	Probert, Arthur	Urwin, T. W.
Mellish, Rt. Hn. Robert	Rankin, John	Varley, Eric G.
Mendelson, John	Rees, Merlyn	Wainwright, Edwin (Dearne Valley)
Millan, Bruce	Richard, Ivor	Walker, Harold (Doncaster)
Miller, Dr. M. S.	Roberts, Albert (Normanton)	Wallace, George
Milne, Edward (Blyth)	Roberts, Gwilym (Bedfordshire, S.)	Watkins, David (Consett)
Mitchell, R. C. (S'th'pton, Test)	Robertson, John (Paisley)	Weitzman, David
Moonman, Eric	Robinson, Rt. Hn. Kenneth (St. P'c'as)	Wellbeloved, James
Morgan, Elystan (Cardiganshire)	Rodgers, William (Stockton)	Wells, William (Walsall, N.)
Morris, Charles R. (Openshaw)	Roebuck, Roy	White, Mrs. Eirene
Moyle, Roland	Ross, Rt. Hn. William	Wilkins, W. A.
Murray, Albert	Rowlands, E.	Willey, Rt. Hn. Frederick
Neal, Harold	Ryan, John	Williams, Alan (Swansea, W.)
Newens, Stan	Shaw, Arnold (Ilford, S.)	Williams, Alan Lee (Hornchurch)
Norwood, Christopher	Shore, Rt. Hn. Peter (Stepney)	Williams, Clifford (Abertillery)
Oakes, Gordon	Short, Mrs. Renée (W'hampton, N. E.)	Williams, Mrs. Shirley (Hitchin)
Ogden, Eric	Silkin, Rt. Hn. John (Deptford)	Williams, W. T. (Warrington)
O'Malley, Brian	Silkin, Hn. S. C. (Dulwich)	Willis, Rt. Hn. George
Oram, Albert E.	Slater, Joseph	Wilson, William (Coventry, S.)
		Woof, Robert
Orme, Stanley	Small, William
Oswald, Thomas	Spriggs, Leslie	TELLERS FOR THE NOES:
Owen, Will (Morpeth)	Steele, Thomas (Dunbartonshire, W.)	Mr. Ioan L. Evans and
Padley, Walter	Summerskill, Hn. Dr. Shirley	Mr. Ernest G. Perry.
Pannell, Rt. Hn. Charles

9.30 p.m.

Mr. Speaker

I promised a Division on new Clause 11, but that will come at its proper place on the Notice Paper.