SELECTIVE EMPLOYMENT PAYMENTS

HC Deb 20 May 1969 vol 784 cc355-91

Mr. John Biffen (Oswestry)

I beg to move Amendment No. 109, in page 63, line 1, leave out subsection 5.

The Committee has just spent rather more than five hours deciding that it will, unhappily, continue selective employment tax. I hope in a much briefer period that it will be possible for the Committee at least to minimise some of the harsh and arbitrary character of that tax on account of the moderate, but well-founded, case that I hope to put to the Financial Secretary.

The Amendment deals with S.E.T. continuing to apply to dairy roundsmen, as it will no longer apply to those engaged in milk processing. The Committee will recall that milk processing was originally not classified as a manufacturing industry under the Standard Industrial Classification. Therefore, those employed in milk processing were subject to the full rigours of the tax. The Government, after representation from both sides of the Committee, recognised the folly of that situation, and the Standard Industrial Classification for 1968 reclassified milk processing as a manufacturing industry. Clause 44(3) gives statutory effect to that welcome decision, but unhappily subsection (5) excludes the retail nature of milk processing establishments from the new provisions concerning S.E.T., the consequence of which is that dairy roundsmen will still bear this tax.

I base my argument—an argument which I hope will at least obtain from the Financial Secretary a willingness to reconsider this and to hold out some hope that it will be dealt with on Report—on three major propositions. First, this is an arbitrary decision. It is precisely the kind of decision which underlines the harsh and unfair working of this piece of legislation and this particular tax.

Transport activities at the manufacturing point generally qualify for a refund. If the Chancellor were here listening to this debate—and I make no complaint about his absence; he has been here for a good deal of the day—I would remind him that in his own city of Birmingham one of the slogans which adorns the hoardings is that "Beer at home means Davenports", and although the Chancellor in his Budget speech affirmed a strong personal predilection for wine, from time to time he may share the more robust working-class tipple of his constituents, and he might reflect that no S.E.T. is charged on those who deliver beer.

My hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) is not in his place, but I have cleared with him that I might make this reference. My hon. Friend is a robust teetotaller, and on a Saturday morning he might pay the milkman, the baker, and whoever delivers the soft drinks. No S.E.T. will have been charged in respect of the person who delivers the soft drinks, or the baker, but unless my Amendment is carried S.E.T. will be levied in respect of the milkman. It is this kind of discrimination which I feel should bring even the Band of Hope on to the street.

My second point is that this is an Amendment and a point of view which I believe has the general support of the Co-operative movement. I am glad to have confirmation of that from the hon. Member for Newcastle-upon-Tyne, East (Mr. Rhodes). I do not want to delve into the murky depths of the internal politics of the Labour Party, but we have just had a debate which concluded with a very interesting Government majority. I want to encourage the Co-operative Members that little step further. If they will indicate their support for this modest Amendment—and I do not think that even the Prime Minister could say that this was a major constitutional issue on which the Government would resign—and indicate—

The Temporary Chairman (Sir Beresford Craddock)

Order. I am sorry to interrupt the hon. Member, but there is an undercurrent of noise. I shall be grateful if hon. Members will allow the Chair and also our friends in the Press Gallery to hear what the hon. Member is saying.

Mr. Biffen

I was just encouraging hon. Gentlemen opposite from the Co-operative Party to take their demonstration of independence one stage further and indicate their preparedness to join my hon. Friends and myself in the Lobby on this issue should the Financial Secretary's answer prove so obdurate as perhaps almost to challenge us to put the matter to a Division. I hope that we may rely on their encouragement because they could result in a satisfactory answer being given.

The next proposition I make in support of the Amendment is that we are seeing a further example of Government by dereliction. Whereas S.E.T. is levied on milk roundsmen, because the milk industry is a costed industry—because a great deal of the cost is reimbursed to the dairy roundsmen, so to speak—the tax is eventually reflected in the higher price of milk. Indeed, I understand that about 90 per cent. of S.E.T. is eventually included in the measured cost and that the other 10 per cent. is included in the target margin, to use the jargon of the milk distributive trade.

We have witnessed endless examples of the Government handing out money with the right hand to compensate for what they have taken with the left. The Amendment offers them a chance for a late repentance so that the Treasury may ameliorate this evil and relieve the nation a little from the burdens which the Government have inflicted in generous measure through their discriminatory tax system. I have put moderate and compelling arguments with brevity which will, I hope, receive the cheerful acquiescence of the Government.

Mr. W. T. Williams

When discussing an earlier Clause I urged the Government to come to terms with the use of the word "services" in its separate sense. A number of my hon. Friends and I believe that they have fallen into the trap of including in the use of that word things that belong to the completion of the manufacturing process.

We were seeking earlier to make a special plea for the Government to consider how S.E.T. should be applied, and in that plea we urged them to distinguish distributive services from—and, therefore, treat them differently from—what I called pure services. In discussing the Amendment we come to the view I took in my earlier remarks, this time applying to milk distribution and the increase of taxation on milk roundsmen, to which we are opposed and in respect of which we seek concessions from the Government.

Under the 1958 S.I.C. list, milk processing was not regarded as a manufacturing industry. Thus, under the Selective Payments Act, 1966 milk processing did not qualify for either premium or refund. Not unnaturally, protests were made by the trade about this. Some remedy was given by the issue of the 1968 Standard Industrial Classification. In that, milk processing was reclassified as a manufacturing activity, and Clause 34(3) of the Finance Bill gives statutory effect to that classification. Let it never be said that we are not grateful for small mercies. I take this opportunity of expressing our thanks to the Government for the change which seems to us eminently reasonable and, as far as it goes, satisfactory.

9.45 p.m.

However, in the same Clause—subsection (5)—the Government, having given with one left hand, take away with another left hand. Subsection (5) seeks to exclude the transport activities of retail milk distribution from the processing establishments—to take away the distributive sector from the processing sector. The effect of that subsection will be that the increase in tax will be imposed on milk roundsmen. The practical effect will be that a tax which has already been found almost too onerous to bear will become finally unbearable.

The profit margin on retail milk distribution is already strictly limited by Government order. Milk distributors are not able, under present legislation, to recover any of the increased cost, except under the Ministry of Food costing system, which provides that a milk distributor is allowed 90 per cent. of the cost of S.E.T. as an item of cost and is permitted to recover it by grant from the Ministry of Agriculture. The remaining 10 per cent. is deemed to be included in a target margin. We understand—I hope that the Minister of State in his reply will confirm that this is so—that under the same provision it will be possible for 90 per cent. of the increased cost of S.E.T. to be recovered.

But that does not meet the problems with which milk distributors are faced. That is especially true in areas where milk distribution is more difficult than normal. Here I express my own personal interest, although by now it is well known in the House. In particular this imposition bears unduly onerously upon the Co-operative movement. The position generally is bad, but for the co-operatives it is particularly bad because, generally speaking, the larger milk distributors, other than the co-operatives, work from large centres, and the co-operatives and the self-employed milk distributors have almost a monopoly of the more difficult areas such as country areas, small villages and inaccessible places. Generally speaking, the large distributors do not go there. They leave it to the co-operatives, who do it as a service, or to the self-employed individual, who does not pay S.E.T. It must be clear that for milk distributors generally, and even more with those who have to deal with the more difficult areas of distribution, this is the last straw that could break the camel's back.

Profit margins are restricted, albeit with the increased allowance accompanying increased S.E.T. because the margins are so low and cannot be increased, but this is not a free market and the Government regard it as an essential service to be properly controlled. Unless some relief is given to milk roundsmen the inevitable consequence must be that in the more difficult areas, and possibly in many more areas, distribution of milk will be brought to an end. Then people will have to go to shops and dairies to buy milk.

The social cost is bound to be considerable and social resentment is bound to be considerable. One is always tempted when making speeches in this House to quote the infirm, the old, the widowed, and the orphaned, but it is the case that there are large numbers of people who because of one kind of infirmity or another would find it very difficult indeed to collect their milk supplies and who for many years have been accustomed to the daily, or alternate day, visit from the milkman.

I hope I speak temperately about this. The Government do not appear sufficiently to have had regard to the social consequences of this piece of legislation. They have done this for what appears to us to be insufficient return. Various figures have been quoted as the price which the Government would have to pay for making a concession on S.E.T. to milk roundsmen. We have heard from official sources that the amount would be between £7 million and £8 million. Unofficial statistics suggest that it would be nearer £5½ million, bearing in mind the proportion—a small proportion—of people who are self-employed milk roundsmen. When in addition it is realised that part at least of milk distribution would end it would appear that £7½ million is very much on the high side. The benefit which the Government might enjoy from the increase from this source would be considerably less than they expect.

Already 90 per cent. of the cost of S.E.T. in the form of which I have spoken finds its way back to the milk distributing industry. This makes the position foolish. The Government are taking the tax with one hand and giving 90 per cent. back with the other. In the process, to balance their books in the long-term, they will have to increase the cost of milk and allow an increase in the margins. If the argument were taken no further than that of social desirability and social cost, it should be sufficient to persuade the Government, if they are open to persuasion, that this is an undesirable tax.

There are other arguments. First, under the normal rules governing S.E.T., transport activities, either at the manufacturing point or from an outside transport depot, normally qualify for the refund of tax. In a food manufacturing industry which produces a perishable commodity, the practice has been that transport from the manufacturing centre to the point of retail sale has been allowed for refund of S.E.T. It is this which explains the fact that bread, confectionery and soft drink roundsmen, ice cream vendors, and deliverers of beers and ales qualify for refund of S.E.T. in respect of all their transport activities. For a reason which it is difficult for me to understand, the transport of bottled milk to customers has been specifically excluded from the provision of subsection (5).

We on these benches have always taken the view—I hope that the pun is not too unendurable at this time of night—that milk is a sacred cow. Governments—this Government not least among them—have always taken the view that it needed the control of Government to ensure that the people were fed this nourishing food of milk, which is possibly one of the most necessary of all foods and which is distributed to hospitals and to schools as well as to homes. It is, therefore, all the more inexplicable that the Government have gone out of their way to impose a tax on milk roundsmen which they do not impose upon people engaged in virtually the same activity.

Mr. Buchanan-Smith

Will the hon. and learned Gentleman also mention the important point that milk is delivered in the early hours of the morning? Therefore, by virtue of the time of delivery, the milk delivery service helps to lessen congestion on the roads at later hours, and for this reason, even more than in the manner he has suggested, is a real service to the community in a way which other services is not.

Mr. Williams

The hon. Gentleman has made the point better than I could, so I give him the point.

These are potent arguments which should open the door for the Government if they are disposed to do what we hope they will do and put milk roundsmen on all fours with those who already enjoy this privilege. We believe that the argument advanced by the Treasury that to remove the tax would be to take revenue from the Government is met by the contention that the Government could, by granting this concession, save themselves the increase of 90 per cent. on the costings margin.

[Mr. SYDNEY IRVING in the Chair]

10.0 p.m.

In the light of the strong feeling which now exists and the social need that we believe this activity meets, will the Government please give an undertaking that they will look at this matter again? We in the Co-operative group did not put down an Amendment on this Clause or put our names to the Amendments moved by the hon. Member for Oswestry (Mr. Biffen). This was in the hope—dare I say in the belief?—that the Government, having heard these arguments not only from myself but from others, will look at the matter again and see whether it is possible, even at this late date, to undo what we believe to be a harmful piece of legislation and give us the concession for which we are asking.

What we are asking for are nothing more than the normal rules affecting the selective employment tax regarding, manufacturing industries, and since the Government have gone so far as to apply to milk processors the position—one might say the legal fiction—of being manufacturers, they should allow the milk roundsmen also the same concession as they have allowed to transport establishments belonging to these other industries which are in the same category.

Mr. Peter Mills (Torrington)

I support the Amendment in the name of my hon. Friend the Member for Oswestry (Mr. Biffen). I support, too, the Milk Distributive Council which represents the milk industry, including the Co-operative movement. They are all opposed to Clause 44, and rightly so. There is no question that it is quite wrong, and we have a very strong case here. The Milk Distributive Council is a large body of people doing a very important job in the interests of the consumer. They are all united in their feeling that this provision is grossly unfair.

It is interesting to notice that the Co-operative movement is annoyed about this provision and is opposed to it. I only hope that the Co-operative Members will support us in the Lobby later, for this matter cuts right across party. This provision is grossly unfair to the milk distribution industry, and it is particularly ridiculous that at this time the industry should be selected to take further punishment. The margin of profit enjoyed by this industry is very small indeed, and the increased burden of selective employment tax is both wrong and unfair. If this extra burden is coupled with all the burdens with which the industry is already trying to cope, much of it a direct result of this Government's activities, it can only result in considerable hardship to the firms concerned, and eventually the consumer will suffer.

The industry supplies a service to the public which is the envy of the world. What other nation has its milk delivered in little bottles on the people's doorsteps seven times a week? It is a great industry, distributing 1,460 million gallons of milk a year, and it is nonsense to impose further burdens on it. The cost of S.E.T. is apparently £10,790,000, and there is to be a further burden of £2,360,000. The industry is already absorbing many of the costs directly resulting from Government action, and it is ridiculous for it to have to bear this further burden.

The Minister may put forward many arguments tonight. He may say that the transport of bottled milk direct to consumers is essentially just retail distribution. I do not think it is. I do not see why he should discriminate against the milk industry and milk itself as a product.

It is ridiculous that bread, confectionery, soft drinks and ice cream all qualify as manufacturers, and their producers receive a refund of S.E.T. for all their transport activities, when milk does not. Why discriminate against the milk industry? I put milk at the top of my list of priorities. What nonsense it is to put it after confectionery, soft drinks, pop, and all the other things! Milk is the basic food of life. It is what is given to young children at the start of their lives, and it is what one needs throughout life. How can it be considered less important than soft drinks, ice cream and confectionery? I agree that bread is vitally important.

The Minister will have to have a good argument to convince me that he is right in seeking to impose this burden on the industry. He could argue that it will be an additional cost to the Exchequer. We have heard how much of the burden passes from one Government Department to another.

It could be that the Government are seeking to reduce the number of employees in the industry. This would be very stupid. Having delivered milk as a roundsman in my early days, I know that the milk roundsman has an essential part to play. He has no time to spare, and his productivity record is pretty good. If the Government intend to reduce the number of employees in the industry by imposing the tax, they should think again.

This burden will undoubtedly lead to hardship to the dairy industry and the consumer in the end. Profit margins are very small, and any extra burden will be very serious. In some areas, particularly rural areas and small towns which do not have a large number of consumers, the additional burden could mean the withdrawal of distribution services. This would be very serious not only to the consumers but to the dairy industry as a whole. It would mean less milk being sold, and less money for agriculture and the dairy farmer in particular. The farmer would get a lower pool price. It is a chain reaction that could go on and on.

I hope that the Minister will take the Amendment seriously and be able to explain satisfactorily why the Government are pursuing this policy in spite of all that the trade has said, and all that we are saying tonight. I hope that he will present us with a pretty good argument as to why he should put milk, that priceless asset to both young and old, at the bottom of his list of priorities and put pop and other soft drinks before it.

This is a serious problem which has serious consequences to the industry. Some hon. Members may feel that we are making a mountain out of a molehill but that is not so. This straw could do untold damage to the industry. I hope that the Minister of State will reconsider the Government's attitude, otherwise I fear the consequences to this very great industry, which is providing a wholesome, clean and first-class product to the consumers.

Mr. Pavitt

The speeches of my hon. and learned Friend the Member for Warrington (Mr. W. T. Williams), the hon. Member for Oswestry (Mr. Biffen) and the hon. Member for Torrington (Mr. Peter Mills) were full of information, logic and understanding of the technicalities which many of us are not so familiar with. They have made an incontrovertible case for the Amendment, and if I resist the blandishments of the hon. Member for Oswestry with as much force as I resisted those of the hon. Member for Worcestershire, South (Sir G. Nabarro) earlier, I assure him that it involves no question of my being unsympathetic to the case.

Both our words and our actions in this Committee are designed to achieve a set purpose. The job of the Opposition is to oppose the Government. The purpose of my hon. and learned Friend and myself is to try to persuade the Government to a different course of action. What I am doing is part and parcel of that process, and the action I take will, I hope, maximise the amount of impact. It does not destroy the case put by my hon. and learned Friend and the two hon. Members opposite. My hon. and learned Friend marshalled the facts so succinctly and clearly that the Committee is spared the necessity for me to remarshal them.

The hon. Member for Torrington pointed out the problem involving bread. Perhaps I may argue illogically to the Government. Why not make an exceptional case of bread and milk? Why not recognise that these two staple commodities are exceptions in that they are basic to life and the needs of humanity? Why not, therefore, say "We shall make an exception of them. We are not seeking Treasury logicality step by step because there may be the possibility of creating a precedent."?

One of the greatest barriers to common sense in legislation is the idea of precedent—where one does not move one fraction off a given line in case a precedent is established. Bread and milk are so vital—and we are proud of the fact that, in this country, they are cheaper than anywhere else in Europe because our bakers and milkmen have done such a good job—that, instead of merely praising our bakers and milkmen when the cold weather comes and we see them pushing their floats through drifts of snow in Devonshire and Scotland, we should give them practical assistance. Let us recognise their worth-while job and decide that they should not bear this new impost of S.E.T.

10.15 p.m.

My hon. and learned Friend and the two hon. Members opposite have made a case for the old, the sick, the isolated. I go further. My right hon. Friend is seeking to get more and more production, which means more and more people in work and more and more female labour both in the services and distributive trades and in the production of goods. The whole pattern of life has changed since the last war. More and more women are in work. These women need the necessary supporting services so that they can look after their families and do the housekeeping. If there is to be an additional burden on the ordinary woman trying to do a job of work and to supplement the family income in that she does not know whether there will be enough milk for the children, then this is against all the ideas of redeployment of labour originally put forward for the introduction of S.E.T.

I would like the Minister of State to consider my arithmetic. As far as I can see, the Treasury figures of £7 million would represent 56,000 workers. Of that number 4,500 get refunds from concessions and there are another 4,500 self-employed. This leaves 47,000 workers, which is £5.8 million. When I examined the Milk Distributive Council's figures I find £5,625,000 for 45,000 workers, with 4,500 getting refunds. There are 4,500 self-employed, which brings us down not to £7 million but to £4,500,000. It is inconceivable that with all the wide variations in the Budget this £4,500,000 is so vital to the economy that a concession could not be made.

There is an opportunity here to show a little bit of commonsense, a little less rigidity. If the Government will reconsider this between now and Report, not only will it be a sign of their flexibility, but it will help to make their colleagues more flexible later. Without any threat of a question or promise, I plead with my hon. and learned Friend to look at this thoroughly in the hope that he can make these concessions, the case for which was so ably pleaded, on behalf of us all, by my hon. and learned Friend the Member for Warrington.

Mr. Geoffrey Rhodes (Newcastle-upon-Tyne)

What we are discussing is one of the consequences of the difficulties and anomalies arising out of the original legislation, which was so full of potential anomalies. When I speak to ordinary people in my constituency, those who work in distribution and those who do not, people in my local Co-operative movement, in my local Labour Party, they ask the simple question, which has never really been answered: why is it not possible to exempt from this burden the distribution of what we regard as a basic necessity of life?

In the past, through the regional employment premium or in other ways, we have subsidised or exempted the manufacturers of dog foods, beer, lemonade and a whole range of even less essential goods, goods which we thought the Prime Minister might be referring to when he talked about the candyfloss of our society, which were not basic to the needs of the community and should be dispensed with. This arises because of what I feel is, on the part of the Treasury, a thoroughly artificial discrimination between manufacturing and service trades.

It shows a lack of understanding of what a service industry really is. When milk has been processed and bottled it is not distributed to the retail service trades, but goes direct from the manufacturer to the consumer. The White Paper dealing with this tax spoke about the idea of a shake-up, striking at the soft under-belly of our economy, bringing more into the essential trades. I find it difficult to envisage the milk distributors of Newcastle-upon-Tyne, East, being shaken up by this legislation and flooding down in their thousands to work in the shipyards and the turbine generator producing plant in my constituency. It is too ludicrous for words.

In no sense can it be argued that the original objectives of this tax will be met by the Government's refusal to give way on this Amendment. We know the difficulty: this tax has become an easy way of raising revenue regardless of the social consequences. This levy on milk distribution, like many other aspects of the distribution of foodstuffs, is a penalty on the people's food and the consequent withdrawal of services which the Co-operative movement will be forced to undertake in the more remote areas which are often uneconomic but are provided as a service will be a great social loss.

This tax, which is levied in this case at the point of need with no reference to ability to pay, is devoid of any social principle and, it might be said, devoid of any Socialist fiscal principle. Those of us in the North who are aware that the per capita consumption of milk is markedly less in that part than in any other region—and some medical practitioners are distinctly worried about this—cannot view with any great joy the increased cost of distribution of this commodity which will arise as a result of the Government's failure to give way on this point.

Co-operative Members have been challenged time and again over the last few years by hon. Members opposite to say why, when we abstain even on votes of confidence in the Government, which I understand most Co-operative Members will be doing tonight, we do not go a stage further. It will not have escaped the notice of the Opposition Whips that in the last Division there was a very narrow Government majority. They do not need miraculous mathematicians to work out that, given the strength of the support which the Co-operative Members have gathered in their persistent campaign over the last few years against this tax, it would be possible to defeat the Government.

We do not wish to defeat the Government on this measure, and I will say why. As a delegate to the Council of Europe, I spend a great deal of time on the European Continent where they do not have a selective employment tax. Many European countries have a tax value added, which is precisely the policy of the Opposition Front Bench. If they got into power after the defeat of this Government they would introduce tax value added legislation which would have a far more disastrous effect on the price of milk and food—

Mr. Eldon Griffiths (Bury St. Edmunds)

indicated dissent.

Mr. Rhodes

The hon. Gentleman shakes his head, but he knows, as he often goes with me to Europe, how costly milk distribution and foodstuffs are on the Continent compared with the situation in this country. The Opposition's agricultural policy would have a far more disastrous effect on the cost of milk to the people about whom I am talking than even the unfortunate measure which the Government have brought forward tonight. This is why I shall not be tempted to support them; their alternative is far worse.

Mr. Biffen

I am sure that the hon. Gentleman and myself are both awaiting with pleasurable anticipation the sort of reply which will render a vote totally unnecessary. However, would he agree that, while it might be possible to take a vote on selective employment tax as one of confidence, it is stretching credibility beyond reason to suggest that this narrow Amendment can be treated as an issue of confidence?

Mr. Rhodes

That is a matter of judgment for the Government Whips. I am trying to be reasonable and not to make cheap party political capital against the Government. When the Government decide on a line of policy in principle, namely, to tax what they regard as the soft under-belly of the service trades, they have every right to pursue their policy and to request and demand the support of Labour back-bench Members. When the back-benchers, who know more about the distributive trades from their experience than the Government Front Bench, cannot accept that theory and the practical anomalies, they reserve the right occasionally not to support their Government. But if hon. Members opposite are saying that this issue is big enough for Co-operative Members of Parliament to seek to bring the Government down, their understanding of politics is much less than I give them credit for.

Mr. Eldon Griffiths

I will detain the Committee for no more than two minutes. I have a constituency matter arising from this point which I must put to the Chancellor lest it be thought that only hon. Members opposite recognise the problems of the Co-operative Wholesale Society. In one of the many villages of West Suffolk the C.W.S. supply, very well, a small milk round. When selective employment tax was first imposed it became necessary for the Haverhill Co-operative Society to cease to deliver milk to many elderly people in the small village of Assington Green in the Middle of Suffolk, and elderly men and women, some of them in their eighties, during the winter months found themselves no longer able to be supplied with milk at their cottage doors. They had to go long distances to collect their milk and very often had to tramp through the snow, for there are no bus services now that the Government have increased the cost of petrol for the local bus operator.

I want to put it very simply to the Chancellor in the two minutes I have vouchsafed myself that if he is not willing to make this small concession that is being sought from both sides of the Committee, then I and other hon. Members on both sides who represent remote agricultural constituencies will have coming to them many more of their constituents who live in cut-off hamlets who will not be receiving either from the C.W.S. or from other milk distributors the milk that they need. This is a concession which the Government could reasonably make without driving a coach and horses through their policy, and the Chancellor would do himself and his Government a power of good if he would now advise his hon. Friend to say that this is reasonable, the Government are persuaded and will make the concession.

10.30 p.m.

The Minister of State, Treasury (Mr. Dick Taverne)

Before coming to the particular points and questions that have been raised I will make a general comment. Although it may not have been immediately apparent from some of the speeches, this debate arises from a concession made on S.E.T. The Clause arises out of the agreement by the Government to give effect to the new 1968 Standard Industrial Classification and to make milk processing equivalent to manufacturing. When it was agreed to do this, it was made clear to the Milk Distributive Council that it was not intended to extend the concession to milk roundsmen. The concession extends to the delivery of milk in bulk and to shops, but it was never envisaged that it would extend to milk roundsmen. Those who go round from consumer to consumer selling milk are salesmen, and fall squarely within the service sector of industry. It was envisaged that the trade as a whole should be treated broadly in line with the trade of manufacturers generally.

I was asked about the position of the allowance of part of the increase in the costings. I can tell my hon. and learned Friend the Member for Warrington (Mr. W. T. Williams) that discussions are now going on with the Ministry of Agriculture and the Milk Distributive Council about the adjustments to be made to milk distributors' margins in the light of various cost changes, including the increase in S.E.T. It is hoped that these will come to a conclusion very shortly.

On the face of it, there is a lot of force in the point about the anomaly which exists compared with the bread roundsman and the soft drink roundsman, though the hon. Member for Torrington (Mr. Peter Mills) is wrong about ice cream and confectionery. It is true that the bread roundsman and the soft drink roundsman escape the tax, but the explanation for the anomaly is a simple one. The bread roundsman and the soft drink roundsman make deliveries to shops. They are not selling and, therefore, they are transport workers. It is true that a minority make deliveries for only part of their time and spend some time selling. In the case of the minority, they are engaged in activities similar to those of milk roundsmen. But the logical resolution of the anomaly in the case of those who are selling would be that they should be treated as salesmen, though, naturally, this is not a resolution of the anomaly which those concerned would welcome.

A point which has been stressed is the hardship that this would cause in rural areas and how far it would affect the distribution of milk which is, when it is carried out by the Co-op in those areas, in every sense a service, in that the profit involved is negligible and, in some cases, non-existent. My hon. and learned Friend the Member for Warrington made a moving speech on the subject. It is recognised that this is an extremely valuable service, and certainly the Government would like to help if it is possible.

However, there are considerable difficulties in proceeding on the lines suggested by some of my hon. Friends. One would get into appalling difficulties if one tried to grade services according to whether they were worth while, and imposed the tax on those one thought were somehow less worth while. This goes right against the criticism from the benches opposite about the Government treating services as a whole as less worth while by imposing the tax. If one tried to distinguish between services on the grounds that some were less worth while than others, one would increase the difficulties rather than decrease them. In any exercise which is concerned with the broadening of the base of taxation, as S.E.T. is, one is not concerned with value judgments. There is no question of the tax being imposed on services because they are regarded as less worth while.

The effect of the Amendment would not be that for which many hon. Members have contended. The effect would be to leave it to the courts to decide whether milk roundsmen were engaged primarily in selling or in transport. Before Report, I will consider carefully whether we can accept the Amendment to that extent. It has been put to me, for example, that in some respects some milk roundsmen are carrying out deliveries in accordance with orders which have previously been placed. That is a point which I would like to consider further, and I will let the hon. Member for Oswestry (Mr. Biffen) and his hon. Friends know of our decision on Report.

Mr. Patrick Jenkin (Wanstead and Woodford)

My hon. Friend the Member for Oswestry (Mr. Biffen) has amply justified the time that the Committee has taken on this important matter. I am sure I should express the appreciation of the whole Committee to the Minister of State for the conciliatory approach that he has made to the cogent case advanced from both sides.

It seemed to me, as I listened to the argument developed by my hon. Friend the Member for Oswestry—and the Minister of State rightly referred to the moving speech by the hon. and learned Member for Warrington (Mr. W. T. Williams) and other hon. Members who have spoken—that a very strong case was made out for exempting these workers in the distribution of milk from the imposition of selective employment tax.

Until the Minister of State had spoken, I had not appreciated the argument which he put about the bread roundsmen and the soft drinks roundsmen being regarded as transport workers. I do not want to prolong the debate, because we want to get to the next Amendment, but it illustrates some of the appalling difficulties which the Government have got into in attempting to draw lines of this sort in connection with S.E.T.

However, having heard the Minister of State's reply, I hope that my hon. Friend the Member for Oswestry will think it right to withdraw the Amendment so that we can see what is to be put down on the Order Paper on Report. In any event, we can return to it ourselves if the Government feel unable to make the concession which the Minister of State has promised to look at.

Mr. Biffen

I should like to join with my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) in thanking the Minister of State—and perhaps I should apologise for having referred to him as the Financial Secretary when moving the Amendment—for the spirit of conciliation that he has shown towards it. We are grateful for even the modest degrees of repentance that may be exhibited. I hope, in this general spirit of amity, we may proceed.

Therefore, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Michael Shaw (Scarborough and Whitby)

I beg to move Amendment No. 89, in page 64, line 9, at end insert: (12) With a view to the making by the Secretary of State for Employment and Productivity of payment by way of refund of selective employment tax in respect of persons seasonally employed in hotels, restaurants or similar establishments section 2 of the Selective Employment Payments Act 1966 shall have effect in respect of any contribution week beginning on or after 7th July 1969 with the following amendments, namely— (a) in subsection (2)(a) after the words 'paragraph (a) to (e)' there shall be inserted the words 'or in paragraph (f)'; (b) in subsection (3), at the end there shall be added the following paragraph— '(f) activities falling under minimum list heading 884 of the Standard Industrial Classification, insofar as those engaged in the said activities are seasonally employed. For the purposes of this subsection "seasonally employed" means employed either full time or part time for a period not more than six consecutive months in any year'. For the purposes of this subsection 'seasonally employed' means employed either full time or part time for a period not more than six months in any year.

The Chairman

With this Amendment it will be convenient to take the following Amendments: No. 85, in page 62, line 10, after 'if', insert: 'in paragraph (1)(a) after the entry "Hexham" there shall be inserted the entry "Guisborough"; after "Keswick"—"Loftus"; after "Scarborough"—"Saltburn, Stokesley, Teesside"'. No. 131, in page 62, line 10, after 'if', insert: 'in paragraph (1)(a) after the entry "Hexham" there were inserted the entry "Guisborough", after the entry "Keswick" there were inserted the entry "Loftus", and after the entry "Scarborough" there were inserted the entry "Saltburn, Stokesley"; and as if'. No. 133, in page 62, line 10, after 'if', insert: 'in paragraph (1)(a) after the entry "Amble" there shall be inserted the entry "Aspatria" after "Malton"—"Maryport"—after "Whitby"—"Whitehaven", "Wigton" and "Workington"; and'. No. 77, in page 62, line 10, at end insert: 'before the entry "Annan" there were inserted the entry "Alexandria"'. and No. 78, in page 62, line 12, at end insert: 'after the entry "Arbroath" were inserted the entry "Ardrossan and Saltcoats"; after the entry "Lanark" were inserted the entry "Largs"; after the entry "Oban" there were inserted the entry "Peebles" and after the entry "Sanquhar" there were inserted the entry "Stevenston"'.

Mr. Shaw

As has been said in debates before today, we have had to go to some trouble to frame our Amendments so that they are within the rules of order for these debates. Happily, however, there are several Amendments before us open for discussion, and I believe that all the points that have to be made on hotels can very largely be made tonight.

The main Amendment stresses the position of hotels that are seasonal in nature, not employing the majority, or even any, of their staff for the whole year.

Last year, in Section 47 of the Finance Act, the Government gave exemption to certain hotels in the rural parts of the development areas. It is significant that as each year goes by, as a result of pressure and debates, points are made bringing out the oddities—and I believe that to be a mild word—of this tax, but eventually the penny drops and concessions are made.

The concession last year, I freely confess, was very helpful to Scarborough and Whitby—my own constituency. But it would be idle to pretend that the arguments that were put forward when Section 47 of the Finance Act was being debated last year were applicable only to hotels in particular parts of the development areas. The arguments which were put forward could have been applied to many other hotels outside the development areas and indeed to other hotels within the development areas which were excluded, particularly several hotels in the North Riding of Yorkshire.

The arguments showed in large measure that S.E.T. should not apply to the hotel industry at all. If tourism is to be encouraged, surely it must be accepted that a general standard of hotels is vital throughout the country, and that that standard must grow and better itself each year because the standard of our hotels is compared with the standard of hotels in other countries? In other words, the hotel industry is an international industry, and we are judged not by the standard of our hotels in different parts of the country, but by the standard of hotels throughout the world.

Mr. James Ramsden (Harrogate)

Will my hon. Friend concede that even growth towards this standard on which he so rightly insists is all the more difficult so long as hotels in one district are treated differently from and more favourably than hotels in another district?

Mr. Shaw

I would handle that argument rather delicately. I concede that it was right last year to extend the relief to those hotels which received it, but I now seek to bring the other hotels, including those in Harrogate, up to an equal standard with regard to exemption from S.E.T.

It is inevitable in all these debates which take place each year on S.E.T. that many of the arguments are rehearsed year by year, and it has been proved time and again that these rehearsals of argument are not without value, because in subsequent years concessions are made. But when we seek concessions from the Minister with regard to hotels, or anything else, I think that we have to do as we did in our earlier debates and go back to the real reason why S.E.T. was set up, and why it was set up in the form that it was. The three main reasons have already been mentioned.

When the Chancellor originally brought forward this exercise in new taxation legislation, he admitted that he did not want to use any of the more traditional forms of taxation, but he then said that not using those meant that he had to find something else. There are three reasons why the Chancellor wanted something else. First, he wanted another tax to avoid the adverse effects of increases in purchase tax and income tax.

It is ironic that in that year, 1966, the Chancellor sought to avoid increasing purchase tax and so introduced S.E.T. The hoteliers can reflect that S.E.T. was introduced so that they would not have to pay purchase tax on the sheets, the blankets, the towels, the curtains, and so on, which they needed to equip their hotels. They can now reflect that this year not only have they to pay an increase in S.E.T., but they have to pay purchase tax on those articles. Where is that first principle which the Chancellor of that day and age set forth when he imposed this new tax?

11.45 p.m.

Secondly, he spoke about broadening the tax base. I will not dwell on that, except to point out that if one is broadening the tax system, it does not help to make it selective in the many unacceptable ways in which S.E.T. is selective.

Thirdly, he referred to the need for a positive contribution to the long-run structural changes that we needed to achieve a healthy balance of payments position. If S.E.T. were considered on that last count only, it would stand utterly condemned. Indeed, since its inception the economy has gone downhill. S.E.T. is not the only reason for this state of affairs. The whole strategy of the Government, of which S.E.T. is a part, is to blame.

The Government must accept that hotels have only short seasons and that they have many difficulties with which to contend. Their overheads, mainly annual overheads, must be met out of the income earned during those short seasons. Because staff can be employed for only a part of the year, it is difficult to obtain skilled employees. Yet these are the very hotels that play an important part in providing family holidays for our people and in catering for the tourist trade.

In my constituency—the same can be said of hotels elsewhere, including those in Bridlington and Filey where S.E.T. rebate is not enjoyed—the holiday season is short and the hoteliers are not doing well. I mentioned this in a similar debate last year, but the situation is still relevant. Because they are not doing well, they are finding it difficult to secure new and vigorous young management. When this happens standards are bound to decline. Even so, hotels in my area and elsewhere have a strong future because of the demand for the accommodation which they offer.

I raised this matter last year. I urge hon. Members to consider it again tonight. I hope that this year the verdict will be in favour of my proposal.

Sir F. Maclean

It has been pointed our time and again during our discussion of S.E.T. that it is an arbitrary and capricious tax. There is no better instance of its total irrationality than the way in which it discriminates deliberately against the hoteliers of North Ayrshire.

Last year a 50 per cent. increase in S.E.T. was imposed on them, while at the same time their immediate neighbours were exempted from the tax altogether, as were nearly all comparable hoteliers in Scotland. Now they have been hit by another 28 per cent. increase which has not hit their competitors.

The explanation of this extraordinary discrimination given by the Minister of State, Scottish Office, was that refunds are not being made in areas catering primarily for day trippers". That is nonsense. The Minister of State knows that well because he knows the area. Incidentally, I am surprised that there is no Scottish Minister on the Treasury Bench to listen to the debate. The Scottish Ministers know quite well, and the Treasury should know, too, that on the whole visitors to North Ayrshire go for much longer stays than that. And that applies more to North Ayrshire than to many resorts which have been exempted from this tax altogether. The resorts in my constituency, Skelmorlie, Largs, Fairlie, West Kilbride, Seamill, Ardrossan, Saltcoats and Stevenston, do not cater primarily for day trippers. All have a number of excellent hotels which welcome visitors from all over the world, and these visitors mostly stay for a week or two if not longer to enjoy while they still may the salubrious sea air and other amenities of the Lower Clyde. I ask you, Mr. Irving, why should these unfortunate hoteliers, who, incidentally, make a big contribution to our national economy be singled out from all other Scottish hoteliers and made to pay this discriminatory tax which is now being given a fresh edge by the addition of a further 28 per cent.?

Mr. Ednyfed Hudson Davies

I shall be brief, but I wish to draw attention to three points.

Once again I stress the severe disability under which the hotel industry labours as a result of being seasonal. Hotels in my constituency have perhaps a shorter season than most, in many areas not more than four months. Yet they are loaded with annual overheads—not just the physical overheads, but particularly and most important the specific overhead of having to maintain and keep staff throughout the year although they are able to use them only for a short time during the summer.

This situation is accentuated—and this is my second point—by the fact that increases of the type contemplated in the Finance Bill, following, naturally, the Budget, occur at the beginning of the season and at a time most likely to affect hoteliers detrimentally in that they are already committed to their tariffs. They have made their bookings and their prices are fixed—and then, as the Budget is introduced, they find that they have miscalculated in a way which they could not have predicted in advance. They have to carry their own increased costs on laundry and other services, and they are unable to cover their increased costs arising from S.E.T. I have discussed this with some hoteliers and have suggested that this would be a fair increase to prices, but their answer is, "We cannot say 'Subject to alteration' in our tariff publications, because that would make our prospective visitors hesitate. We have to carry this load".

The anomaly of the present situation and of the present arrangements for exemption is particularly brought out by the fact, which has been taken into account in the Amendment but is not taken into account in the present system of exemptions for hoteliers, that the problems of the seasonal hotel trade have nothing whatever to do with being within or without development areas. Their problems are to do with the seasonal nature of the business.

I have an extraordinary situation in my constituency, for most of it is in a development area and most of the towns and villages within the development area are exempt, and about that I am delighted, and yet one large town, the only large town outside the development area, Llandudno, is not exempt.

On 6th May, last year, my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh) asked for the figures of the percentage of employed population in manufacturing industries in all the areas within development areas which were given hotel exemption from S.E.T. The figures are interesting, for it clearly emerges that the reason for exemption is the low percentage of employees in manufacturing industries. But the Board of Trade cannot give separate figures for Llandudno to show whether they are as low as the average of 20 per cent. in all the exempted areas within the Welsh development area because the figures are not collected separately but are part of the figures relating to Conway. Yet, although the figures for Conway cannot be given separately, Conway is given exemption while Llandudno is not.

I contend that Llandudno would have about 50 per cent. employment in manufacturing industry. The nearest analogy would be with Aberystwyth, for which figures are given because it is in a development area, and yet a village like Beaumaris within the development area and with 50 per cent. of the working population in manufacturing industry is given exemption from S.E.T.

This is absolute nonsense and it simply means that development area boundaries are irrelevant to the problems of the hotel industry. I stress that the problems of this industry are not connected with incentives to the development of manufacturing industry but are due exclusively to the industry's seasonal nature.

Mr. James Tinn (Cleveland)

Sensitive as always to the feeling of the Committee, I have the impression that brevity on my part would be appreciated. [HON. MEMBERS: "Hear, hear."] I will try to oblige, and I hope that hon. Members will co-operate and not intervene.

I begin by referring to my Amendment, No. 131, which would seek to include certain parts of my constituency in the repayment scheme. I recognise the justification of the scheme—first, the essential qualification that an area must be within a development area; second, that it must be particularly dependent upon tourist traffic and the hotel industry, and have a lower than average dependency on industrial employment.

That is why my Amendment differs from Amendment No. 55 in the names of the hon. Member for Scarborough and Whitby (Mr. Michael Shaw) and his hon. Friends. Their Amendment would include Tees-side and while, representing part of Tees-side, I was strongly tempted to support that Amendment, I recognise that in terms of the scheme, intended as it is to benefit the rural parts of the development areas, Tees-side, despite its many attractions, can hardly claim to be included.

Accordingly, I should be very happy if my hon. and learned Friend the Minister of State would concede the point in regard to the rural parts of my constituency, which include a part of the country which is second to none in scenic attractions. He knows from representations I have made to him on several occasions that the constituency has a very serious unemployment rate. Brief though I have deliberately been, I hope my hon. and learned Friend will take into serious account the points I have made and will recall those which I have made at rather greater length on other occasions.

11.0 p.m.

Mr. J. Bruce-Gardyne (South Angus)

I endorse what has been said in support of these Amendments. I hope that the Committee will accept the whole group because they would benefit hotels in both areas such as that represented by my hon. Friend the Member for Bute and North Ayrshire (Sir F. Maclean) and other areas of Scotland which were haphazardly excluded when concessions were made last year.

I always find that the Government show themselves incredibly insensitive to the basic reason for the unpopularity of this tax. The Chancellor showed himself a little more understanding this afternoon. The basic reason for the unpopularity of this tax is that it contravenes the basic rule that people equally situated should be equally taxed. Precisely because that rule is not observed, when concessions are made as they were made last year in respect of hotels and S.E.T. refund, although some anomalies and unfairnesses are removed others are at the same time created. In Scotland today some areas such as Bute and North Ayrshire have been haphazardly excluded for no apparent reason. I hope that when he replies to the debate the Minister of State will at least explain why they were excluded, for no reason was given last year.

Parts of my constituency were excluded because by sheer chance they happen to fall within the limits of an employment exchange area attached to one of the four cities which were excluded. If Amendment No. 79 were accepted that would go a long way to help hotels in areas which were excluded with no reason being given for their exclusion.

Mr. Taverne

The short debate on hotels and related subjects has fallen into three parts. There have been general observations on the position regarding hotels, then on Amendments specifically related to seasonal employment, and lastly on particular areas.

Dealing in the spirit in which the debate has been conducted first with the position in regard to hotels, hon. Members opposite have told us on a number of occasions that they advocate as an alternative to S.E.T. something akin to value-added tax. If we had a value-added tax it is almost inconceivable that hotels would not be included. In Germany and Austria value-added tax is levied at the normal rate for services rendered by hotels. In France the tax is 15 per cent.—far higher than selective employment tax here. Hon. Members who complain that it is unjust that the tax should apply to hotels should bear in mind that a value-added tax would impose as high a burden.

Mr. Iain Macleod

If I may intervene for a moment, and for the record, the hon. and learned Gentleman is comparing the value-added tax—on which I made clear earlier that we have not yet announced a final decision—with selective employment tax. The hon. and learned Gentleman is leaving out altogether the fact that if a value-added tax is introduced it will replace not only selective employment tax but purchase tax as well, and purchase tax bears very heavily upon hotels.

Mr. Taverne

If one looks at the burdens as a whole, there is no doubt whatever that it would be a very considerable burden which a value-added tax would impose on hotels. However, when we see the final proposal we shall look at it.

Secondly, there is the question of seasonal employment, which the hon. Member for Scarborough and Whitby (Mr. Michael Shaw) referred to. This subject was dealt with at length last year, and I do not think I need elaborate on it tonight, but, of course, the first effect of the Amendment if it were passed would be that the refund would be available in parts of the country which are prosperous and which have many alternative sources of employment. The effect might well then be that seasonal employment would become comparatively more attractive and would withdraw labour from other fields.

In particular, there is no evidence at the moment one way or the other to show that small seasonal hotels are going out of business. According to the little Neddy on hotels, most hotels have raised their prices to cover the cost of S.E.T. This is one field in which the cost of S.E.T. is passed on. But the effect of the latest increase in S.E.T. should amount to only about an extra 3d. in the pound, or 1¼ per cent., on hotel costs. From the point of view of workers in hotels, if this Committee passed a measure which would favour seasonal workers to the extent that is envisaged, this would be bound to lead to an extension of seasonal employment and this would have very many undesirable consequences. There would be a temptation to take on seasonal staff at the expense of permanent staff. Not only would workers lose continuity of employment, but they would not be eligible for redundancy pay because they would not have been in the same employment for more than two years. An increase in the number of seasonal workers would also affect entitlement to unemployment benefit. From the Ministry point of view this would be impracticable. It would mean keeping a check on each individual worker to see how long he had worked in different establishments.

I hope that the movers of the seasonal employment Amendment will not press it. It would be quite unworkable and undesirable.

Mr. Rees-Davies

Would the Minister answer the real point? The tourist development areas of this country are quite different from the industrial development areas. Therefore, in considering a review, if they are carrying on in this way they should see that areas which are truly tourist areas are included in the ambit of this rebate.

Mr. Taverne

I am not sure whether the hon. Gentleman was here during the moving of this Amendment, but, of course, it does not relate to development areas. It is totally unrelated with the point which the hon. Gentleman is seeking to make.

Third, there is the point about concessions for particular areas. The case has not been developed at great length here, but it is important to remember what the intention and the design of this original concession was meant to do. It was meant to give an advantage to hotels in remote areas with little manufacturing employment, areas which do not get the benefit of the other measures relating to development areas by way of regional employment premium and so on. It was designed to enable hotels in these areas to attract tourists for the benefit of the areas as a whole, and to do so by giving these areas—compared with other areas—a marginal advantage in price, in service or in facilities.

In making a selective concession which applied to certain remote rural areas, it was inevitable that borderlines would have to be drawn which would be bitterly resented by those on the wrong side of the borderline. As the hon. Member for Angus, North and Mearns (Mr. Buchanan-Smith) said, quite rightly, each time the area of that concession is extended further resentment is created because new borderlines are drawn.

The difficulty about meeting some of the very real problems which have been mentioned is that if these inequities in some of the areas which are the subject of these Amendments were eliminated, all the time the marginal advantage of the remote areas for which the original concession was designed would be eroded. All the time the more areas that get the concession the less the special attractions that these remote and rural areas can present by way of an advantage in price, service or facilities.

The areas the subject of these Amendments may in some cases be like other areas where the concession is obtained, but by and large they are not areas which are remote and cut off or which have only a low degree of manufacturing. At present I am not convinced that it would serve the purpose of the original concession to extend it to the areas now proposed. I will, however, carefully consider the submissions which have been made and it may be that on Report there will be some way in which we can meet some of the points made. I must make it clear, however, that this is not an undertaking to make the concession. At the moment I am not convinced that the purpose of the original scheme would be served by such a concession. But the Government's mind is not completely closed on this and we will carefully consider the representations which have been made.

Mr. Higgins

My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) has already stressed the difficulty of framing Amendments within the terms of the Money Resolution. It is right to point out on this Amendment that we are in favour of the abolition of the selective employment tax for the whole of the tourist industry, because there has been some misunderstanding in the trade press with regard to the framing of some Amendments which have not been selected, framing which has arisen because of the difficulty of getting the Amendments within the rules of order if we covered the whole of the industry. The brewing trade, in particular, has been under a misapprehension on this score.

I am sure that my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw), who moved that Amendment, was absolutely right to lay stress on the importance of the question of season trade, because this is of very great significance to hotels which are open for only part of the year and to hotels which do a greater amount of business in a particular season. Therefore, this is the very least that one could hope for by way of concession from the Government.

The second point which has been made in the debate on these Amendments relates to the whole question of drawing lines between development areas and elsewhere and within parts of development areas. The point which I stressed earlier and which needs to be emphasised is that the selection of the particular places to be favoured or penalised is completely and utterly arbitrary. It is purely and simply the Government's whim whether this or that hotel is viable or is not. We believe that this is a totally wrong use of the Government's powers in fiscal measures.

The real, fundamental point which we make on the Amendment is that the Government's policy, which the Chancellor says is designed to improve the balance of payments, in very many aspects does no such thing. If the Government refuse, as apparently the Minister of State was refusing, to accept the Amendment, it is clear that they are not concerned with the very great contribution which the hotel industry makes to the balance of payments. The industry contributes to our balance of payment, first, because many people go to hotels in Britain rather than abroad providing that the hotels in Britain present value for money and are not penalised by fiscal measures, and, second, because the hotel industry makes a very great deal of foreign exchange—far greater, certainly

taking the tourist industry as a whole, than, for example, derives from the exports of motor cars. Therefore, we on this side believe that it is absurd that the Government should extend selective employment tax to this industry, whether or not it be for seasonal workers as my hon. Friend has mentioned, in some parts of the country and not others. We hope that the Committee will vote in favour of this Amendment and do something to help the balance of payments.

11.15 p.m.

Question put, That the Amendment be made:—

The Committee divided: Ayes 230, Noes 273.

Division No. 225.]	AYES	[11.15 p.m.
Alison, Michael (Barkston Ash)	Dean, Paul	Hunt, John
Allason, James (Hemel Hempstead)	Deedes, Rt. Hn. W. F. (Ashford)	Hutchison, Michael Clark
Amery, Rt. Hn. Julian	Digby, Simon Wingfield	Iremonger, T. L.
Astor, John	Dodds-Parker, Douglas	Jenkins, Patrick (Woodford)
Atkins, Humphrey (M't'n & M'd'n)	Doughty, Charles	Johnson Smith, G. (E. Grinstead)
Awdry, Daniel	Douglas-Home, Rt. Hn. Sir Alec	Jones, Arthur (Northants, S.)
Baker, Kenneth (Acton)	Drayson, G. B.	Jopling, Michael
Baker, W. H. K. (Banff)	du Cann, Rt. Hn. Edward	Joseph, Rt. Hn. Sir Keith
Balniel, Lord	Eden, Sir John	Kaberry, Sir Donald
Barber, Rt. Hn. Anthony	Elliot, Capt. Walter (Carshalton)	Kerby, Capt, Henry
Batsford, Brian	Elliott, R. W. (N'c'tle-upon-Tyne, N.)	Kershaw, Anthony
Beamish, Col. Sir Tufton	Emery, Peter	King, Evelyn (Dorset, S.)
Bell, Ronald	Errington, Sir Eric	Kirk, Peter
Bennett, Sir Frederic (Torquay)	Evans, Gwynfor (C'marthen)	Kitson, Timothy
Bennett, Dr. Reginald (Gos. & Fhm)	Ewing, Mrs. Winifred	Knight, Mrs. Jill
Berry, Hn. Anthony	Eyre, Reginald	Lambton, Viscount
Biffen, John	Farr, John	Lancaster, Col. C. G.
Biggs-Davison, John	Fisher, Nigel	Lane, David
Birch, Rt. Hn. Nigel	Fortescue, Tim	Lewis, Kenneth (Rutland)
Black, Sir Cyril	Foster, Sir John	Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield)
Blaker, Peter	Galbraith, Hn. T. G.	Lloyd, Ian (P'tsm'th, Langstone)
Boardman, Tom (Leicester, S. W.)	Gilmour, Ian (Norfolk, C.)	Lloyd, Rt. Hn. Selwyn (Wirral)
Body, Richard	Glover, Sir Douglas	Longden, Gilbert
Boyd-Carpenter, Rt. Hn. John	Glyn, Sir Richard	MacArthur, Ian
Boyle, Rt. Hn. Sir Edward	Godber, Rt. Hn. J. B.	Maclean, Sir Fitzroy
Braine, Bernard	Goodhart, Philip	Macleod, Rt. Hn. Iain
Brewis, John	Goodhew, Victor	McMaster, Stanley
Brinton, Sir Tatton	Gower, Raymond	Macmillan, Maurice (Farnham)
Bromley-Davenport, Lt.-Col. Sir Walter	Grant-Ferris, R.	McNair-Wilson, Michael
Brown, Sir Edward (Bath)	Gresham Cooke, R.	McNair-Wilson, Patrick (New Forest)
Bruce-Gardyne, J.	Grieve, Percy	Maddan, Martin
Buchanan-Smith, Alick (Angus, N & M)	Griffiths, Eldon (Bury St. Edmunds)	Maginnis, John E.
Buck, Antony (Colchester)	Gurden, Harold	Marples, Rt. Hn. Ernest
Bullus, Sir Eric	Hall, John (Wycombe)	Marten, Neil
Burden, F. A.	Hall-Davis, A. G. F.	Maude, Angus
Campbell, B. (Oldham, W.)	Hamilton, Lord (Fermanagh)	Mawby, Ray
Campbell, Gordon (Moray & Nairn)	Hamilton, Michael (Salisbury)	Maxwell-Hyslop, R. J.
Carlisle, Mark	Harris, Reader (Heston)	Maydon, Lt.-Cmdr. S. L. C.
Channon, H. P. G.	Harrison, Brian (Maldon)	Mills, Peter (Torrington)
Chichester-Clark, R.	Harrison, Col. Sir Harwood (Eye)	Mills, Stratton (Belfast, N.)
Clark, Henry	Harvey, Sir Arthur Vere	Miscampbell, Norman
Clegg, Walter	Harvie Anderson, Miss	Mitchell, David (Basingstoke)
Cooke, Robert	Hastings, Stephen	More, Jasper
Cooper-Key, Sir Neill	Hawkins, Paul	Morgan, Geraint (Denbigh)
Cordle, John	Hay, John	Morgan-Giles, Rear-Adm.
Corfield, F. V.	Heald, Rt. Hn. Sir Lionel	Morrison, Charles (Devizes)
Costain, A. P.	Heseltine, Michael	Munro-Lucas-Tooth, Sir Hugh
Crouch, David	Higgins, Terence L.	Murton, Oscar
Crowder, F. P.	Hiley, Joseph	Nabarro, Sir Gerald
Cunningham, Sir Knox	Hill, J. E. B.	Neave, Airey
Currie, G. B. H.	Holland, Philip	Nicholls, Sir Harmar
Dalkeith, Earl of	Hooson, Emlyn	Noble, Rt. Hn. Michael
Dance, James	Hordern, Peter	Nott, John
d'Avigdor-Goldsmid, Sir Henry	Hornby, Richard	Onslow, Cranley
Orr, Capt. L. P. S.	St. John-Stevas, Norman	van Straubenzee, W. R.
Orr-Ewing, Sir Ian	Scott, Nicholas	Vaughan-Morgan, Rt. Hn. Sir John
Osborn, John (Hallam)	Scott-Hopkins, James	Vickers, Dame Joan
Page, Graham (Crosby)	Sharples, Richard	Waddington, David
Page, John (Harrow, W.)	Shaw, Michael (Sc'b'gh & Whitby)	Wainwright, Richard (Colne Valley)
Peel, John	Silvester, Frederick	Walker-Smith, Rt. Hn. Sir Derek
Percival, Ian	Sinclair, Sir George	Wall, Patrick
Peyton, John	Smith, Dudley (W'wick & L'mington)	Walters, Dennis
Pike, Miss Mervyn	Smith, John (London & W'minster)	Ward, Dame Irene
Pounder, Rafton	Speed, Keith	Weatherill, Bernard
Price, David (Eastleigh)	Stainton, Keith	Wells, John (Maidstone)
Prior, J. M. L.	Steel, David (Roxburgh)	Whitelaw, Rt. Hn. William
Pym, Francis	Stodart, Anthony	Wiggin, A. W.
Quennell, Miss J, M.	Stoddart-Scott, Col. Sir M.	Williams, Donald (Dudley)
Ramsden, Rt. Hn. James	Summers, Sir Spencer	Wilson, Geoffrey (Truro)
Rawlinson, Rt. Hn. Sir Peter	Tapsell, Peter	Wood, Rt. Hn. Richard
Rees-Davies, W. R.	Taylor, Sir Charles (Eastbourne)	Woodnutt, Mark
Rhys Williams, Sir Brandon	Taylor, Edward M. (G'gow, Cathcart)	Worsley, Marcus
Ridley, Hn. Nicholas	Taylor, Frank (Moss Side)	Wright, Esmond
Ridsdale, Julian	Temple, John M.	Younger, Hn. George
Rodgers, Sir John (Sevenoaks)	Thatcher, Mrs. Margaret
Rossi, Hugh (Hornsey)	Thorpe, Rt. Hn. Jeremy	TELLERS FOR THE AYES:
Royle, Anthony	Tilney, John	Mr. Anthony Grant and
Russell, Sir Ronald	Turton, Rt. Hn. R. H.	Mr. Hector Monro.
NOES
Albu, Austen	Doig, Peter	Hoy, James
Allaun, Frank (Salford, E.)	Dunn, James A.	Huckfield, Leslie
Alldritt, Walter	Dunnett, Jack	Hughes, Rt. Hn. Cledwyn (Anglesey)
Anderson, Donald	Dunwoody, Mrs. Gwyneth (Exeter)	Hughes, Hector (Aberdeen, N.)
Archer, Peter	Dunwoody, Dr. John (F'th & C'b'e)	Hughes, Roy (Newport)
Ashton, Joe (Bassetlaw)	Eadie, Alex	Hunter, Adam
Atkins, Ronald (Preston, N.)	Edwards, William (Merioneth)	Hynd, John
Atkinson, Norman (Tottenham)	Ellis, John	Irvine, Sir Arthur (Edge Hill)
Bacon, Rt. Hn. Alice	English, Michael	Janner, Sir Barnett
Bagier, Gordon A. T.	Ennals, David	Jay, Rt. Hn. Douglas
Barnes, Michael	Ensor, David	Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)
Barnett, Joel	Evans, Fred (Caerphilly)	Jenkins, Hugh (Putney)
Beaney, Alan	Evans, Ioan L. (Birm'h'm, Yardley)	Jenkins, Rt. Hn. Roy (Stechford)
Bence, Cyril	Faulds, Andrew	Johnson, Carol (Lewisham, S.)
Benn, Rt. Hn. Anthony Wedgwood	Fernyhough, E.	Johnson, James (K'ston-on-Hull, W.)
Bidwell, Sydney	Finch, Harold	Jones, Dan (Burnley)
Binns, John	Fletcher, Rt. Hn. Sir Eric (Islington, E.)	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Bishop, E. S.	Fletcher, Raymond (Ilkeston)	Jones, J. Idwal (Wrexham)
Blackburn, F.	Fletcher, Ted (Darlington)	Jones, T. Alec (Rhondda, West)
Blenkinsop, Arthur	Foley, Maurice	Judd, Frank
Booth, Albert	Foot, Rt. Hn. Sir Dingle (Ipswich)	Kelley, Richard
Boston, Terence	Foot, Michael (Ebbw Vale)	Kerr, Dr. David (W'worth, Central)
Bottomley, Rt. Hn. Arthur	Ford, Ben	Kerr, Russell (Feltham)
Boyden, James	Forrester, John	Lawson, George
Bradley, Tom	Fowler, Gerry	Leadbitter, Ted
Bray, Dr. Jeremy	Fraser, John (Norwood)	Lee, Rt. Hn. Frederick (Newton)
Brooks, Edwin	Freeson, Reginald	Lee, Rt. Hn. Jennie (Cannock)
Brown, Rt. Hn. George (Belper)	Galpern, Sir Myer	Lee, John (Reading)
Brown, Hugh D. (G'gow, Provan)	Gardner, Tony	Lestor, Miss Joan
Brown, Bob (N'c'tle-upon-Tyne, W.)	Ginsburg, David	Lever, Harold (Cheetham)
Brown, R, W. (Shoreditch & F'bury)	Gordon Walker, Rt. Hn. P. C.	Lever, L. M. (Ardwick)
Buchan, Norman	Gray, Dr. Hugh (Yarmouth)	Lewis, Arthur (W, Ham, N.)
Buchanan, Richard (G'gow, Sp'burn)	Gregory, Arnold	Lewis, Ron (Carlisle)
Butler, Herbert (Hackney, C.)	Grey, Charles (Durham)	Lipton, Marcus
Callaghan, Rt. Hn. James	Griffiths, David (Rother Valley)	Lomas, Kenneth
Cant, R. B.	Griffiths, Eddie (Brightside)	Loughlin, Charles
Carmichael, Neil	Griffiths, Will (Exchange)	Luard, Evan
Carter-Jones, Lewis	Gunter, Rt. Hn. R. J.	Lyon, Aleander W. (York)
Castle, Rt. Hn. Barbara	Hamilton, James (Bothwell)	Lyons, Edward (Bradford, E.)
Chapman, Donald	Hamling, William	Mabon, Dr. J. Dickson
Coe, Denis	Hannan, William	McBride, Neil
Coleman, Donald	Harper, Joseph	MacColl, James
Corbet, Mrs. Freda	Harrison, Walter (Wakefield)	Macdonald, A. H.
Crawshaw, Richard	Hart, Rt. Hn. Judith	McGuire, Michael
Crosland, Rt. Hn. Anthony	Hattersley, Roy	McKay, Mrs. Margaret
Crossman, Rt. Hn. Richard	Hazell, Bert	Mackenie, Gregor (Rutherglen)
Davidson, Arthur (Accrington)	Healey, Rt. Hn. Denis	Mackie, John
Davies, G. Elfed (Rhondda, E.)	Heffer, Eric S.	Mackintosh, John P.
Davies, Dr. Ernest (Stretford)	Henig, Stanley	Maclennan, Robert
Davies, Rt. Hn. Harold (Leek)	Herbison, Rt, Hn. Margaret	MacMillan, Malcolm (Western Isles)
Davies, Ifor (Gower)	Hilton, W. S.	McMillan, Tom (Glasgow, C.)
de Freitas, Rt. Hn. Sir Geoffrey	Hobden, Dennis	McNamara, J. Kevin
Delargy, Hugh	Hooley, Frank	MacPherson, Malcolm
Dempsey, James	Horner, John	Mahon, Peter (Preston, s.)
Diamond, Rt. Hn. John	Houghton, Rt. Hn. Douglas	Mahon, Simon (Bootle)
Dickens, James	Howell, Denis (Small Heath)	Mallalieu, J. P. W. (Huddersfield, E.)
Dobson, Ray	Howie, W.	Manuel, Archie

Mapp, Charles	Pavitt, Laurence	Strauss, Rt. Hn. G. R.
Marks, Kenneth	Pearson, Arthur (Pontypridd)	Summerskill, Hn. Dr, Shirley
Marquand, David	Peart, Rt. Hn. Fred	Taverne, Dick
Marsh, Rt. Hn. Richard	Pentland, Norman	Thomas, Rt. Hn. George
Mason, Rt. Hn. Roy	Perry, George H. (Nottingham, S.)	Thomson, Rt. Hn. George
Maxwell, Robert	Prentice, Rt. Hn. R. E.	Thornton, Ernest
Mayhew, Christopher	Price, Christopher (Perry Barr)	Tinn, James
Mellish, Rt. Hn. Robert	Price, Thomas (Westhoughton)	Tuck, Raphael
Mendelson, John	Price, William (Rugby)	Urwin, T. W.
Mikardo, Ian	Probert, Arthur	Wainwright, Edwin (Dearne Valley)
Millan, Bruce	Rees, Merlyn	Walker, Harold (Doncaster)
Miller, Dr. M. S.	Rhodes, Geoffrey	Wallace, George
Milne, Edward (Blyth)	Richard, Ivor	Watkins, David (Consett)
Mitchell, R. C. (S'th'pton, Test)	Roberts, Albert (Normanton)	Watkins, Tudor (Brecon & Radnor)
Morgan, Elystan (Cardiganshire)	Roberts, Rt. Hn. Goronwy	Wellbeloved, James
Morris, Charles R. (Openshaw)	Roberts, Gwilym (Bedfordshire, S.)	Wells, William (Walsall, N.)
Morris, John (Aberavon)	Robertson, John (Paisley)	Whitaker, Ben
Moyle, Richard	Robinson, Rt. Hn. Kenneth (St. P'c'as)	White, Mrs. Eirene
Mulley, Rt. Hn. Frederick	Rodgers, William (Stockton)	Whitlock, William
Neal, Harold	Roebuck, Roy	Wilkins, W. A.
Newens, Stan	Rogers, George (Kensington, N.)	Willey, Rt. Hn. Frederick
Noel-Baker, Rt. Hn. Philip	Rose, Paul	Williams, Alan (Swansea, W.)
Oakes, Gordon	Ryan, John	Williams, Alan Lee (Hornchurch)
Ogden, Eric	Shaw, Arnold (Ilford, S.)	Williams, Clifford (Abertillery)
Oram, Albert E.	Sheldon, Robert	Williams, Mrs. Shirley (Hitchin)
Orbach, Maurice	Shore, Rt. Hn. Peter (Stepney)	Williams, W. T. (Warrington)
Orme, Stanley	Silkin, Rt. Hn. John (Deptford)	Willis, Rt. Hn. George
Oswald, Thomas	Silverman, Julius	Wilson, William (Coventry, S.)
Owen, Dr. David (Plymouth, S'tn)	Skeffington, Arthur	Winnick, David
Owen, Will (Morpeth)	Slater, Joseph	Woodburn, Rt. Hn. A.
Paget, R. T.	Small, William	Woof, Robert
Pannell, Rt. Hn. Charles	Snow, Julian
Park, Trevor	Spriggs, Leslie	TELLERS FOR THE NOES:
Parker, John (Dagenham)	Stewart, Rt. Hn. Michael	Mr. Alan Fitch and
Parkin, Ben (Paddington, N.)	Stonehouse, Rt. Hn. John	Mr. Ernest Perry.
Parkyn, Brian (Bedford)

To report Progress and ask leave to sit again.—[Mr. Roy Jenkins.]

Committee report Progress; to sit again Tomorrow.