HC Deb 21 May 1969 vol 784 cc527-614
Mr. Higgins

I beg to move Amendment No. 44, in page 74, line 20, leave out paragraph 1.

I think that it would be as well if I were to explain the precise content of the Amendment. Earlier today the Chief Secretary made a statement to the Committee about the provision of documents which are necessary in connection with the debates on which we are engaged on any particular day. We fully appreciate the right hon. Gentleman's desire to ensure that events outside Parliament should not prevent the provision of papers which are necessary to enable the Committee to carry out its duties.

However, we were right in questioning the right hon. Gentleman to ask him for an assurance, not merely that papers were available which were immediately current and relevant to a particular debate, but also that others papers which were connected with the matters we were debating were available. I asked the Chief Secretary whether the Purchase Tax Act, 1963, was available in the Vote Office. It transpired that it was not, even though the relevance of this Act to this Amendment and to the whole of the discussion we shall be having on purchase tax is clear. I am glad that, in subsequent discussion, the right hon. Gentleman assured me that he would bear the point closely in mind on any future occasion and ensure that both the immediate papers were available and also the other documents necessary for the interpretation of those papers.

As the Purchase Tax Act, 1963, particularly in its considerably amended form, is not generally available to the Committee, I shall explain the precise effect of Amendment No. 44. The paragraph which we wish to delete reads: In Group 2, paragraphs (1), (2) and (3) of the exemptions shall be omitted. Turning to Schedule 1 of the Purchase Tax Act, 1963, to which reference is there made, one finds that the following items would thus no longer be omitted from charge to purchase tax:

  1. "(1) Sewing thread, and mending and knitting wool.
  2. (2) Sewing and darning needles, knitting needles, bodkins, crochet hooks, pins of base metal … thimbles, finger shields for needlework and tape measures.
  3. (3) Paper patterns."
Thus, the Government now propose to bring those items into the purchase tax range. We oppose such a move. It was first alluded to by the Chancellor of the Exchequer in his Budget speech: To put the point more generally, I do not think that the distinction between floor coverings, mattresses, cushions, furniture and clothing—which are taxed—and household textiles and cloth—which are not taxed—is a valid one. I therefore propose to bring in the latter category, as well as plastic wall-covering, knitting wool and sewing and dressmaking requisites".—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1023.] There is something of a non sequitur there because the antithesis which the right hon. Gentleman initially drew between the items taxed and not taxed did not include the items the subject of the Amendment, and, in particular, knitting wool in all its forms and uses. We have had no justification yet from the Treasury Bench, either in the debates on the Budget or on Second Reading of the Bill, for the inclusion of these items.

We regard the Government's proposal as retrograde. Successive Chancellors have always recognised that items of this kind—which one may broadly describe as "do it yourself" items—should be exempt from purchase tax. That must be right, because many of the people who use knitting wool, sewing thread or paper patterns are in the lowest income groups, those who can least afford to bear taxation and who sometimes of necessity knit their own clothes or their children's clothes in order to economise.

It has been estimated that about 75 per cent. of the hand knitting yarn which is used goes to what are called in the jargon socio-economic classes C2, C1 and D, the lowest economic classes. This means that the Government, who are shedding crocodile tears about the lowest paid workers and those who are really suffering from inflation, are none the less imposing a tax which will fall severely on the lowest paid.

Among the lowest paid, young married couples will inevitably feel the effect of the tax most severely. Young married women knit for their children and for themselves both in order to economise and also, I think, because, to some extent, as the Americans would say, it personalises the objective. I hesitate to declare an interest here in my 9-month old daughter, but perhaps I should.

I was astounded by some of the statistics in this connection. I had not appreciated that about 60 million garments are hand-knitted annually in nonworking hours in the United Kingdom. That is a startling statistic. But there is another point to be made in the same connection. If all those people were to stop knitting tomorrow and the 60 million garments were not constructed—if that be the right expression—the gross national product would not alter one iota. Similarly, if they double their output, the gross national product would not alter one iota.

8.15 p.m.

I had occasion to say yesterday that the Chancellor is becoming more and more preoccupied with economic indicators and statistics and less and less with the realities of the situation. In the debates on the selective employment tax, I pointed out that his arguments about the cost of living really applied with any validity only to the cost of living index, not to the true cost of living. In this case now, the Government are imposing a burden which will leave the apparent growth, if there be any, in the gross national product where it is but will lead to a real deterioration in the personal satisfaction and actual well being of a large number of families.

The Financial Secretary to the Treasury is always sympathetic in this kind of matter. I hope that he will tell us that the Chancellor has had second thoughts and is prepared to accept our Amendment. I return to a theme which I pressed throughout our debates on the S.E.T. Despite the Chancellor's avowed intention to do everything he can to balance Britain's payments, almost every individual item in the Budget has an adverse effect on the balance of payments. The provision which we seek to delete now is no exception. If there is some reduction in the number of items knitted—one must, surely, assume that there will be some such reduction as a result of the tax—it is likely that instead of, say, children's clothes being knitted by their mothers, they will be imported as made-up goods from overseas for purchase by those women, thus adding to our import bill, and will not, I understand—the Financial Secretary will, no doubt, confirm it—be taxed.

Clearly, therefore, the balance of payments will suffer, and this is not something to be overlooked. There will be a deterioration in the overall position.

There will be an increase in the imports of other made-up goods, and there will be a reduction in the home demand for hand knitting yarns, a reduction which will not be offset by greater export sales because tariffs and import restrictions in overseas markets prevent manufacturers of wool yarn who might reasonably have sold in the home market from exporting it. Thus, we shall not find a corresponding increase in exports as a result of the depression of the home market, if that is what is in the back of the Chancellor's mind.

On all those grounds, the Amendment should be supported. The industry is an important one. There are about 250,000 people employed directly or indirectly in the production of hand knitting yarns, which has for many years been a staple item of our trade—perhaps going back to the Woolsack, I suppose. It has been of particular importance in the development areas, which the Government say they are trying to stimulate, and in the grey areas too, the problems of which have been analysed in the Hunt Report, although, apparently, the Government do not propose to do anything to take action in that matter.

There is a final anomaly. I understand that it will arise because purchase tax will be applicable to yarns used for the hand knitting of babies' and young children's garments whereas machine-made garments will not be subject to it.

The Financial Secretary to the Treasury (Mr. Harold Lever)

indicated assent.

Mr. Higgins

I am glad to have the hon. Gentleman's confirmation. There will thus be an anomaly as between children's garments which are hand knitted and subject to tax and those which are machine made and not subject to tax. That is an odd anomaly to create. We cannot understand the thinking which has gone on between the Chancellor and his colleagues on this matter. I hope that I have made a substantial case. My hon. Friend the Member for Pudsey (Mr. Hiley), who added his name to the Amendment and has both a constituency interest and great expertise in the matter, will no doubt make a more detailed and substantial case if he is fortunate enough to catch your eye, Mr. Gourlay, perhaps just before the hon. Gentleman replies. I hope the Committee appreciates that considerable interests are involved in this matter and we hope for a sympathetic reply.

The Deputy Chairman (Mr. Harry Gourlay)

Before I propose the Question, I should indicate that it may be convenient to the Committee to discuss with Amendment No. 44 the following three Amendments on the Order Paper: No. 118, in page 74, line 20, leave out '(2) and (3)' and insert 'and (2)' and No. 119, in line 20, after '(2)', insert: 'unless such materials are used by disabled persons or those undergoing courses of rehabilitation'; both standing in the name of the hon. Member for Bodmin (Mr. Bessell) and the names of his hon. Friends, and No. 100, in line 21, at end insert: 'and the following words inserted "sewing and darning needles, knitting needles, bodkins, crochet hooks, thimbles, finger shields for needlework, and tape measures"'; standing in the name of the hon. Member for Bromsgrove (Mr. Dance).

Mr. Peter Bessell (Bodmin)

I support Amendment No. 44, so ably moved by the hon. Member for Worthing (Mr. Higgins), who has established an argument which will be impossible for the Financial Secretary to refute. I do not propose to cover the ground he has dealt with so cogently. The purpose of Amendments No. 118 and 119 is quite evident and I need not waste much time of them. They were put down as a sort of step backwards from Amendment No. 44 in the hope that, if we cannot have a whole loaf, we may at least have two or three slices.

I am concerned, as the hon. Member for Worthing is, that paragraph 1 should be removed entirely and for the reasons he stated. To retain it would have an unfortunate result not only for the industry as a whole but in particular for certain persons in a special position. I have tried to set this out in Amendment No. 119 because the Financial Secretary will be aware that there are many occasions when knitting wool and similar materials, which are included in the Group 2 exemption in Schedule 1 of the 1963 Act, are used by people undergoing rehabilitation. They are used by persons who are blind or incapacitated in other ways.

Perhaps the hon. Member for Derbyshire, West (Mr. Scott-Hopkins) will recall the days when he was the Member for Cornwall, North and travelled by train from the West Country. He may remember seeing a gentleman who frequently travels on the train. This gentleman is elderly and blind and he knits throughout the journey. He is a charming old gentleman. He knits about 15 ozs. of wool a week and I believe that that is a large amount. It is the thing which keeps him occupied. I am sure that he is not alone in that. I am sure that many blind or disabled people, or people in old people's homes or who are confined to their houses, take up sewing or knitting as a recreation—quite apart from the fact that they contribute something of considerable use to society. Many Liberal, Conservative and Labour Party fetes would suffer were it not for the knitting and sewing done by worthy ladies. But, of course, much more important is the work done for charities.

The most significant aspect, however, is the rehabilitation of those who have suffered accidents have been victims of war or have suffered from serious illnesses, who find in this activity not just a recreation but a means whereby they can re-establish contact with the world. Any one who has seen some of the homes where knitting and sewing and so forth are done by men and women alike as part of a rehabilitation programme will think, as I do, that it is absurd, if not monstrous, that purchase tax should suddenly be charged on the materials these unfortunate people use and which help to make their life a little easier and simpler and to rehabilitate them and bring them back into society.

There is a serious objection to the entire proposal contained in this part of the Bill and it can be summed up by saying that, no matter what difficulties the country may be in economically—and I accept that the Government have to take strong action—it is simply playing with the problem to start scratching around in corners to find odd bits of dust or odd items which can be picked out.

No doubt the hon. Gentleman will tell us what is the total sum involved but it cannot be a sum sufficient to restore the economy or to have any lasting effect upon our balance of payments or to reduce the spending power of the public to the extent where there would be a massive improvement in our exports—indeed, in any of the things to which the Government must look if they are to resolve our deep rooted problems.

This proposal is an absurdity. It is not even taking financial matters seriously to start imposing purchase tax on items which in the past have been rightly exempt because they have a special social use or may have an even more important use in the sense that they can provide considerable help to certain people.

I notice that the exempt list in Group 2(4) will retain "Articles knitted or crocheted by hand without mechanical aid …" What is "mechanical aid"? I return to the blind man on the train. Because he is blind he is forced to use a machine to do his knitting. Will he be one of those who will therefore be required to pay purchase tax on the wool he uses? Will the woman in her own home who uses a knitting machine be required to pay purchase tax? Or will it transpire that there will be total exemption for those who knit entirely manually, while those who use special equipment in their own homes, or in hospitals for rehabilitation, will have to pay purchase tax? Or will it be confined to factories and other places where this work is done as a distinct industry? That is the important distinction which must be drawn.

It seems utterly absurd that purchase tax should be charged on a paper pattern. Will this mean that when one of the ladies' magazines which are sold on bookstalls chooses to give away a paper pattern in a weekly issue, if the normal charge for the magazine is 2s., it will have to be 2s. 1½d., or something like that, to cover the purchase tax on the paper pattern? This is the sort of question which must be answered. There are many other instances of paper patterns being virtually gifts, or being sold at low prices.

I support the Amendment of the hon. Member for Worthing, but if that cannot be accepted, and I trust that the Committee will accept it, I hope that serious consideration will be given to the two Amendments which I have mentioned, particularly No. 119. Without the Amendments this provision will cause needless suffering and expense to those who should be allowed the use of these materials for purposes which are social within themselves.

8.30 p.m.

Mr. James Scott-Hopkins (Derbyshire, West)

I support my hon. Friend the Member for Worthing (Mr. Higgins) and I join forces with the hon. Member for Bodmin (Mr. Bessell), whom I congratulate on the way in which he made his case. The Chancellor has incorporated an extraordinary provision into the Finance Bill and I find little reason for it.

Referring to Group 4 in the original Purchase Tax Act, 1963, the hon. Member for Bodmin asked for the definition of "mechanical aid" and asked whether articles knitted by hand without mechanical aid would retain their exemption from this extraordinary tax. As I understand it, it is the knitting wool which bears the tax while the article does not. If it is knitted by hand the wool which goes into the article bears purchase tax, but the article does not if it is not made with mechanical aid. That is an extraordinary anomaly.

I cannot help asking myself why the Chancellor is doing this. How much money does he reckon to raise by removing these three exemptions? Will it be a vast sum? As my hon. Friend said, there will be no difference to the G.N.P. and the effect on the balance of payments, miniscule though it may be, will be adverse and certainly not advantageous. Is this intended to be a tax on a particular sector? Is it believed that a sector is "getting away with it", making an absolute bonanza, so much money that the Chancellor must immediately tax it?

In my constituency there is a training college for the disabled where knitting wool is widely used in therapy. The price of that wool will go up. I cannot believe that the Chancellor intended that this type of therapeutic work should bear the tax. The Chancellor must have taken leave of his senses.

When the Financial Secretary gets up I know that he will give a spendid explanation, in the most delightful manner, as he invariably does, and we shall all laugh our heads off. We shall say that there is nothing so bad about it after all, but there is, and the Committee should take note of this. This is a bad principle, attacking by purchase tax, making those who are in great need bear the purchase tax. I am talking about the disabled, those who use this knitting wool for therapeutic purposes.

It is not beyond the ingenuity of the Financial Secretary to find some means, on Report, to exclude such use. Surely the whole of this tax should be scrapped? The amount of money coming in must be incredibly small. In my constituency there are several factories, if one can call them that, where sewing thread is made. The people there are extremely upset over the imposition of this tax. I find it quite extraordinary that the thread used for the mending of garments should now have to bear tax. Why, what is the purpose of this? Is someone getting away with something?

Why is it that while the Chancellor imposes Purchase Tax on sewing and darning needles he continues to exempt hairpins, hatpins and tiepins? Why is there such a difference here? There must be some splendid reason which we shall undoubtedly hear later. The Financial Secretary must see that the people who will bear the greatest burden are those in the lower income groups the "C's" and "D's". They are the ones who do the home knitting, who have to because of economic circumstances. I am unashamedly speaking for my constituents, and there are plenty of other hon. Members who can say the same. These less well-off people will have to bear this ridiculous imposition. This tax should be laughed out because it is stupid and idiotic. The poor people will have to pay it, and it will be significant for them, even though it may be a few pence or shillings. With the decline in the value of money during the regime of the Chancellor and his predecessor a few shillings today matters, particularly if these people are also unemployed.

What of the young married couples? My hon. Friend the Member for Worthing highlighted the idiocy of the situation whereby if a person knits a garment for a baby the wool in the garment bears purchase tax but if the same garment is bought then that wool does not bear the tax. Why? This is too stupid for words. So far there has been no explanation, either in the Chancellor's speech or in the Budget debate. This cannot raise a vast amount of money, it certainly will not be of any value whatever to our balance of payments.

It may increase them marginally, in that people will say that rather than pay the tax on goods that they make, they will buy garments in the shops. If those garments are imported then the Chancellor is losing. This is another self-defeating measure in conflict with the overall Budget strategy. How we hear about this Budget strategy! All the time it is brought up as a shibboleth dictating every action. I hope that my hon. Friend's will lend their support to this Amendment, which will help those in the lower income brackets who will be particularly hard hit by this tax. It is ridiculous in its application. Above all the handicapped will suffer.

I can understand that it would be difficult for any Financial Secretary, particularly a Financial Secretary of this Government, to accept an Opposition Amendment, but if the hon. Gentleman cannot do that I suggest that on Report he swallows his pride and abolishes this imposition. It cannot do any good. In fact, it must do harm to a great many people who do not deserve it.

Mr. Michael Shaw

I wish to make two brief points in support of the Amendment.

First, I take up the point about rehabilitation which has been mentioned several times. I well recall towards the end and after the war being in an establishment whose patients required a considerable amount of rehabilitation. I can say from my knowledge how valuable, and indeed indispensable, work such as rug-making, handicraft and sewing was for these people. It is essential. It is a desirable hobby. The advantage is that the work which people do in following it is not only useful but would not be done if it were not done at home during their own time. It is creative work which should be encouraged. Ever since purchase tax began, people have been encouraged to take up this work in their homes and during their spare time.

My second point is this. I have managed to get hold of a copy of the Purchase Tax Act, 1963, from the Library; I hope that nobody else is looking for it. The fourth exemption in Group 2 of Schedule 1 relates to Articles knitted or crocheted by hand without mechanical aid, including such articles embroidered by hand-needlework. If someone wants to knit an article, she will have to pay purchase tax on the raw materials, namely, the wool and the needles. I take it that knitting needles are not mechanical aids. I hope that that point will be cleared up. I assume that if, perhaps because of disability, a person earns a living by knitting garments and selling them, there will be no purchase tax on those articles. I assume that the raw material, namely, the wool, will have to bear purchase tax when the person buys it to make the garment for sale.

Mr. Bessell

Under the arrangements proposed by the Bill, if a disabled person knitted a garment but put it together with a sewing machine it might well be said that a mechanical aid had been used. I wonder whether that point has been considered by the Financial Secretary.

8.45 p.m.

Mr. Shaw

That certainly is another interesting point. The mechanical aid would not be bought particularly for that purpose. It would merely happen to be in the house and could be used for ease of process. It might even be that whilst the person could knit she could not sew and, therefore, another member of the household would use the machine to apply the finishing touch for her.

Mr. Higgins

We are put in great difficulty because we do not have copies of the Purchase Tax Act, 1963. If, however, I understand the position correctly, although purchase tax will be imposed on, for example, knitting yarn, articles which are knitted or crocheted by hand without mechanical aid will still be exempt. I presume—perhaps the Financial Secretary will confirm—that the knitting yarn which is used to make the articles will still be taxed. These matters, however, become extremely complicated when we do not have the Act before us.

Mr. Shaw

By means of my own queries and the valuable additional queries of my hon. Friends, I trust that the various points on this matter will have been clearly made so that the Financial Secretary in due course can elucidate them.

I return, as I began, to the simple proposition that these exemptions, which have stood the test of time over the years, are now called in question not on any great matter of principle, but simply because of the overriding and ever-growing need of a Socialist Government for more money. The Amendment should be supported and the exemptions continued.


Mr. Rafton Pounder (Belfast, South)

I intervene only briefly, more to ask questions than to seek to make observations or comments. Indeed, there is very little that one can add to the extremely cogent argument presented by my hon. Friend the Member for Worthing (Mr. Higgins). It is no discourtesy to the other and numerous items which are the subject matter of the Amendment if I concentrate my few remarks under two headings only.

The first concerns paper patterns. I seem to recall seeing my wife—and, indeed, my mother—stretched out on the floor with bits of paper in bygone days. Does this purchase tax on paper patterns also cover patterns for children's garments? My reason for asking is that most children's garments are still, mercifully, excluded from purchase tax. It seems slightly crazy to exclude the finished article and yet to place purchase tax on the paper cut-out for the material.

My second point concerns knitting wool. I seem to recall half a dozen principles of taxation, but one in particular relates to equity in taxation. How on earth it can be equitable to tax knitting wool is beyond comprehension. What sort of money does the Financial Secretary hope to raise by taxing knitting wool? Furthermore, what is likely to be the cost of collection? I suggest that the benefit to the Treasury is likely to be marginal.

I should, I suppose, declare an interest in that at home I have a 16-month-old son and I am just beginning to become conscious of the cost of children's clothing. It is obviously infinitely cheaper to knit a sweater or similar garment for a child than to go out and buy one, regardless of the fact that children's made-up garments are not subject to purchase tax. For many people, to go out and buy a sweater or jumper for a child which will be worn for only a few weeks is obviously an extremely expensive business. It is only fair that mothers sitting at home in the evenings should be able to knit garments for their children, and even more so that a mother-to-be should be able to knit for her baby without being penalised for doing so. Baby wool can be used only for one purpose; it cannot be used for knitting an Arran sweater. If the Financial Secretary finds it difficult to concede the principle of this new tax, surely out of the goodness of his heart he will exempt baby wool.

Mr. John Farr (Harborough)

I support the Amendments which have been so ably put forward by my hon. Friends on this iniquitous new tax. Hon. Members who have spoken from this side of the Committee have made every possible plea, and it may be that it is superfluous for me to add anything, but I feel that the Government should not get away with this. It is scandalous that the Government should put a tax on the initiative of people who are prepared to do a little extra work and knit garments for their families rather than buy them.

The new tax will hit three main categories. First, there are the very old. The next time the Minister visits the old perhaps he will look to see how many are knitting and what they are knitting with. How will they be able to pay the extra amount imposed by the tax? Secondly, the tax will hit the sick. People in hospital do not always wish to read the newspapers; they often prefer to occupy their minds and hands by knitting garments for the family. Thirdly, the tax will hit those people who train their daughters at an early age in the trade of dressmaking. It is a useful way for young girls to learn how to earn a living and by the imposition of this tax the Chancellor will put a stop to such activities.

I hope that the Financial Secretary is big enough to change his mind and to accept the Amendment. The tax will not improve the popularity of the Labour Party, and it will do a great disservice to the old, to the infirm and to the young who will be deprived of garments which might otherwise have been knitted for them.

Mr. James Dance (Bromsgrove)

I shall refer particularly to Amendment No. 100, although I entirely support the Amendments put down by my hon. Friends.

I wish to point out the iniquity of imposing purchase tax on the needle industry for the first time in its history, Redditch, in my constituency, has traditionally been the centre of the needle industry. Money has recently been collected to restore the Forge Mill, which is an old building of great historic interest in which needles were polished by the use of water power. I do not think the Minister will be surprised to know that when my constituents and the needle industry as a whole realised that this imposition was being put on them they were extremely angry, and the headline in a local newspaper was: Chancellor's wanton blow to needle industry. That is true.

The tax does not amount to a great deal. I gather that it amounts to about 2d. on a packet of needles. The amount of income which the Revenue will receive will be pretty small, and people in the industry feel that this is a weak move by the Government, that they are merely saying to the outside world, "We are so hard up that we have to tax needles".

Are surgical needles included in this tax? Apart from the pop groups who may use surgical needles illegally, these needles are used for health purposes, and surely it would be wrong to include them in this tax? Are needles used in manufacturing included? We are not clear whether they are. I do not know whether it is fully appreciated that the needle industry of Great Britain exports about 80 per cent. of its products. I do not suppose that any industry has a higher percentage of exports, most of which go to North America. This is a highly competitive trade, and any extra burden placed on needle manufacturers will certainly not help them in the fine job they are doing for our export trade.

I agree with my hon. Friend the Member for Harborough (Mr. Farr). He referred to the use of wool and materials, but they cannot be made into garments without needles. One cannot sew without needles. Again, as my hon. Friend said, a lot of needlework is done by old people who cannot afford to spend large sums of money on buying new clothes from the shops, and they therefore make their own clothes. Are these the people whom the Socialist Government want to penalise? I do not believe it, but that is what they will do if they carry on with this iniquitous form of taxation.

One cannot conceive that needles are a form of luxury. Admittedly in the past a certain amount of fine needlework was done by ladies of leisure, but few ladies nowadays have that amount of time to do this needlework, and unfortunately this is a dying art. Needlework and knitting are done chiefly by people who want to save money and to help themselves.

Again as my hon. Friend the Member for Harborough said, some young girls are being encouraged to do needlework in their homes. They may learn a trade and later on get a job because of that knowledge. We keep talking about apprenticeships and helping people to learn a trade. Why tax these young people when they are doing just that?

Mr. Michael Shaw

Does my hon. Friend realise that material of less than six inches does not count for tax? Perhaps with the modern trend of mini skirt they will escape.

Mr. Dance

I read in a newspaper the other day about a lady who was wearing a patchwork dress. If they make patchwork dresses they will not pay tax, but they will still have to pay tax on needles. In fact, they will need more needles to sew these patchwork pieces together.

I sincerely hope that the Government will think again about this wicked, useless, silly form of taxation which will bring in very little revenue. This tax will cause hardship in a minor way. I shall not enlarge on that, or be overdramatic, but I hope that the Government will think again and remove this very stupid and unnecessary form of taxation.

9.0 p.m.

Mr. Joseph Hiley (Pudsey)

It is significant, Mr. Godman Irvine, that all the hon. Members who have caught your eye and that of your predecessors in this debate have supported the Amendment. I take a certain pleasure in the thought that even the Minister himself may ultimately support it. My hon. Friend the Member for Worthing (Mr. Higgins) outlined the previous history of purchase tax and referred to previous Purchase Tax Acts. It is reasonable to assume that throughout the period of those Acts—and that period includes the Second World War and the very difficult years that followed—former Chancellors of the Exchequer, including former right hon. Friends of the Minister as well as his right hon. enemies, considered and ultimately rejected the idea of putting purchase tax on knitting wool, rug wool, sewing thread and mending wool. The arguments which influenced them in the early 1940s are as cogent today.

I must declare a personal interest in the production of knitting and rug wool. I also have a strong constituency interest in those two commodities, because large quantities of both are made in the Pudsey constituency. I hope that hon. Members will not, on that account, consider less sympathetically my plea to exclude these materials from the incidence of purchase tax.

Hon. Members are now listening to one who has spent his life in the production of wools of this kind, and in this instance I may be able to make a contribution of some value, because I shall be talking of something about which I know a good deal—and that rarely happens with speeches made here. I am referring to myself.

The annual production of knitting and rug wool is about 40 million lbs. My hon. Friend the Member for Worthing told us that it is estimated that 60 million garments or rugs will be produced by hand from this 40 million lb. The garments and rugs are made in leisure time, often by old or incapacitated people. It is not generally known that seafaring men also while away many of their less interesting hours in making rugs. All of these things are produced at no cost to the economy. I conclude that the savings made through the production of garments and rugs by hand is equivalent, in terms of wages, power and what generally comes under the heading of overheads to no less than £37 million a year.

No one knows what effect the 13¾ per cent. purchase tax will have, but it would not be unreasonable to assume that it may cause a decline in production of 25 per cent., so the saving of £37 million will fall by about £10 million. People knit and make rugs and garments because they want new garments or new rugs. If, as I estimate, the total falls, garments and rugs will have to be supplied by mechanical means. Some may be made in our hosiery factories or will probably be imported from low-cost countries like Hong Kong, Portugal and Italy. I hope that the fact that children's clothing is exempt will not induce the Chancellor to include it. If all the 15 million garments and rugs were imported, I think that that would raise the import bill by £10 million. That is not likely, but if half were imported and half made here, where they tend to be of a higher quality and more expensive, the loss to the economy would be greater still.

An increase in what is made at home must mean diversion from exports. Our hosiery factories are fully extended, so the capacity used would mean a decrease in exporting, which I think would cost about £12 million. So the total effect is likely to be that the balance of payments will be worse off by about £25 million a year—and all to secure £5 million in purchase tax. Other hon. Members were not sure of the figure, but I know it because I have tried to persuade the Government of the folly of this proposal already. It is not wise to pursue it now or in any circumstance.

Hand knitting wool and rug wool are used for therapy. They provide many less well-off people with a tremendous amount of pleasure and the satisfaction of knowing that they have produced something with their own hands. At the same time, they make a considerable contribution to the import-export balance.

I understand that the Chancellor's reason for introducing what I can only describe as this amazing proposal is that he is anxious to broaden the tax base. If he will study Early Day Motion No. 317, he will see from the signatures that a great number of hon. Members on both sides of the Committee support the case I am putting. If he succeeds in broadening the tax base in this way, he will merely be attempting to satisfy a doubtful principle, but he will be doing so in nobody's interest.

Last night the Chancellor pointed out that the greatest argument in favour of S.E.T. was its low cost of collection. However, to impose purchase tax on hand knitting and rug wool, not to mention sewing thread and mending wool, will cause hundreds of thousands of small accounts to be sent out by producers, which means that the cost to them of collecting these small sums will make this form of purchase tax the dearest tax imaginable to collect.

Considering the Chancellor's remarks about the need for taxes not to cost too much to collect, I trust that he will consider the imposition of purchase tax on knitting and rug wool in this context. Need he upset so many people and make his task more difficult? The case for the Amendment, which I have presented on practical grounds, is unanswerable, and I hope that I shall carry the whole Committee with me in getting it accepted.

Mr. Harold Lever

The hon. Member for Pudsey (Mr. Hiley) seemed refreshed by the unanimity of criticism of this tax. He can hardly have been present at many Budget Committee debates if this strikes him as being startlingly different from what is normal.

One of the great consolations of being in Opposition is that one can give full and uninhibited vent to the natural and human feeling that citizens have when faced with the taxpayer whose exactions are to be widened; and particularly when they are to be widened in forms which do not immediately strike one as palatable.

The hon. Gentleman crowned the series of arguments which we have had along the lines of the dire misfortune that will befall the country as the result of this tax by bringing a kind of econometric exactitude to the predictions of doom which might almost qualify him to come into the Treasury. The fact that he will be proved wildly wrong in his predictions need not totally disqualify him from making that journey.

Mr. Hiley

Surely the hon. Gentleman would not suggest that an assumption of a 25 per cent. reduction was excessive?

9.15 p.m.

Mr. Lever

I think that it is not merely excessive but that it is speculative pessimism at its most extended, and will in the event prove to be very much wide of the mark.

Nobody enjoys proposing a new tax. I do not want to quote the innumerable, traditional well-worded epigrams on the subject, including my own, but there is no way of introducing a new tax which will immediately arouse enthusiasm from any hon. Member, least of all myself, and certainly not from hon. Members opposite. The fact remains that when one has regard to the disciplines of fiscal policy, one has sometimes to bring in new taxes not immediately agreeable but for excellent reason.

Hon. Members have tried to play this wrongly in saying that these taxes will bring in trifling sums at each point; that needles will bring in very little; that knitting wool will bring in very little; that paper patterns will bring in very little. But that is the whole point of my right hon. Friend's argument. Most people now believe that we ought to broaden the base of tax, and that we ought to broaden the base of tax so as not to distort by tax patterns the normal human patterns of preference which will express themselves in the expenditure of a normal household budget. It is precisely because these small items bring in very little that they are more agreeable than would be the addition of a still further burden to areas of tax not so immediately susceptible of public appeal, so as to preserve from further distortion the normal patterns of consumption in the country.

So when I put forward the defence of these taxes it is because we are anxious to broaden the bases of tax, not merely to raise the same sums by further impacting on already highly taxed articles. We must act on the assumption that we need the £26 million which, in total, comes from these goods, and if any hon. Member can suggest where we might get the money to replace that—

Mr. Robert Cooke (Bristol, West)

Would not the Financial Secretary think of a very modest sales tax on practically everything?

Mr. Lever

The hon. Gentleman has given an immediate reply to the challenge. A very modest sales tax on practically everything would be so difficult and so expensive to collect that it would bring into being those hordes of officials that we have heard of—far more than would Purchase Tax on the items.

Mr. Bessell

The Financial Secretary must be aware of the sales tax which exists in New York State. Everything over one dollar is subject to a tax, except food items. It is collected very simply, and the Revenue benefits very directly.

Mr. Lever

I have the hon. Gentleman's assurance that the tax is collected very simply. I can only tell him that these things have all been looked at, and we have found that a general sales tax would produce hordes, literally hordes of collectors if it were to be universal throughout the country. But if the hon. Member in his examination of the tax system in New York, or even in his reflections on the subject, can offer us suggestions for collecting a general sales tax which would not involve great numbers of officials, I would be very interested to receive his comments.

Mr. Scott-Hopkins

Perhaps I can bring the hon. Gentleman back to his defence of this tax proposal. He mentioned a sum of £26 million. I presume that he was referring to all the textiles, and was not questioning the £5 mllion mentioned by my hon. Friends?

Mr. Lever

No. I was referring to the extension of this section. This money has to be found—

Mr. Cooke

Why did not the Financial Secretary consider the possibility of a system of stamps which could be stuck on a piece of paper in relation to each transaction?

The Temporary Chairman (Mr. Bryant Godman Irvine)

Order. The hon. Gentleman must relate his remarks to paragraph 1 of the Schedule.

Mr. Lever

I will merely say, so as to avoid discourtesy, that all the hon. Gentleman's suggestions, even though out of order, will be most rigorously scrutinised by me. Unhappily, the one which has just been urged has come too late to be included in the Bill.

It is not an argument against the tax, but rather in its favour, that it is small in size and in impact. That is exactly the kind of tax that hon. Gentlemen in a different way are urging. I recognise the sincerity with which hon. Members have sought to protect those members of the community who are most hard hit by any tax. The minds of hon. Members have ranged into the possibilities of the Revenue's recovering this loss elsewhere. It is right that hon. Members should have done so.

I am not being in the least unsympathetic when I say that, nevertheless, the aggregation of this presents a distorted picture of how the tax will bite, if taxes bite, or punch, or whatever they do. The impression any stranger from Lilliput would have gained on coming into the Committee tonight would have been that only the blind and disabled knit and that only people confined to bed with great sickness use domestic linen. Amendment No. 111 asks me to exempt—I am sure that this is a genuine and sincere attempt— sheets, pillow cases or blankets, used by persons confined to bed by sickness, and upon the certificate of a medical practitioner for a period in excess of two months". So for sickness lasting seven weeks the person must lie on taxed sheets. When he is in bed for eight weeks or longer, the Chancellor is supposed to inquire into his medical condition and, having ascertained that he has been confined for seven weeks in taxed sheets, grant an exemption from the eight weeks onwards. It would be difficult, because we should have to have a medical certificate.

Mr. Bessell

On a point of order. The Financial Secretary is replying to the next debate.

Mr. Lever

I am sorry. I will keep that pearl for a later occasion. I know that these suggestions are all very sincerely put forward, as I once put forward suggestions in relation to other tax matters. It is always right to test these taxes by their impact upon those who are most hard hit. This is a case of showing the minorities who are most hard hit sympathy by way of social services. I have no doubt that hon. Members will when we deal with increased old age pensions, increased sickness benefits, and increased assistance for disabled persons, share the general wish of the House of Commons that we take into account the cost of living, which includes the tax paid on these matters.

We cannot exempt all knitting wool because same people who knit are blind or are sick, although I have a strong predisposition to exempt knitting wool because some of the most romantic moments of my adolescence were spent winding wool for the mother in order to procure some more cordial reception by the daughter. I have no prejudices against this form of activity, but it would impose an impossible burden if we had to exempt all the hard cases that would be affected by the tax. Blind people use motor cars. Blind people use many other articles that are taxed. Much household equipment is taxed.

Mr. Bruce Campbell

Does the Financial Secretary agree that the only people who need coffins are dead people? The Chancellor by the Budget is putting a tax now on coffin linings.

Mr. Lever

That is one of the least compelling arguments against the tax, on two grounds. I am acutely sensitive to the emotional appeal in relation to those who are most hard hit, but it is rather difficult, even for one whose temperamental reflexes are so much with the taxpayer, to feel quite the same for the fact that the surroundings of corpses have borne a Revenue tax.

Mr. John Cordle (Bournemouth, East and Christchurch)

Does not the hon. Gentleman agree that there will be a further element of hardship caused by the removal of the exemptions, bcause by the time the knitting wool or rug wool comes on the counter and the customer pays for it it will be paid for not at an increase of 13 per cent. or thereabouts for purchase tax but probably at 20 or 25 per cent., because the retailer has the right to add his profit to the purchase tax before the article reaches the customer?

Mr. Lever

I am glad to say that the hon. Gentleman is wrong there. The tax on 2s. 6d. worth of wool will work out at about 3d., that is, an increase of about 10 per cent. The hon. Gentleman can be gratified to think that the tax which he will impose can be imposed with a little less enthusiasm because it will be something less than half of what he expected to hand on to the customer.

The right reaction in respect of disabled people and blind people in relation to these taxes is to take into account the cost of living, which includes such taxes, when we fix the assistance to them. Any other way would, of course, destroy all indirect taxation. Blind people are known to eat ice cream. Disabled people and children eat ice cream and enjoy it, but it is taxed. Those who are likely to be badly affected ought to be taken care of by the social services.

I do not accept the argument that we shall add to the import bill because people will stop knitting and take to buying imported children's garments or have them made on machines in England which would otherwise be used for exports. This modest tax will have a negligible effect on people's knitting habits. It will make a modest contribution to the revenue by broadening the base of the tax, and that is its object. I absolutely reject the view that people will significantly diminish so compulsive an occupation as knitting or dressmaking on account of the trifling sums involved for needles, thread and the like.

Mr. Dance

Are surgical needles exempt?

Mr. Lever

Having dealt with the question generally, I am just coming to some of the detailed points.

First, I take the case of the blind knitter who uses a mechanical device to knit garments. I assume that he is not commercially engaged in knitting, in which case he would not be affected. The wool would be taxed, whether the blind knitter used machinery or not, and, if he was not engaged in business in a commercial way, he would not be affected. The exemption to which reference was made refers to commercial knitting in another context. He would not be involved in tax on the garments themselves. No garment is taxed which is not made in the ordinary course of commerce.

The purpose of the exemption—this is related only indirectly to the Amendment—is to allow people who do hand knitting in the croft industry to be exempt from tax not on the wool but on the garments produced by their hand knitting, a totally different point. There will be no difficulty in establishing this relief, which has been wisely operated for a long time.

I was asked by the hon. Member for Bodmin (Mr. Bessell) whether a pattern given away with a newspaper or magazine would bear tax. Yes, it would, but we should collect the tax not from the shop or the man or woman who bought the magazine but from the manufacturer or through the wholesaler. Patterns of the kind given away in such circumstances are so trifling that the tax on them would, presumably, be a fraction of a penny. On the more complex patterns which people use, I think that the tax could come to as much as 6d. for a dress—not a very serious item and not likely to deter any of the more determined domestic dressmakers at that sort of level.

Surgical needles are exempt. We are proud of our needle industry and its export record, and I am confident that the 20 per cent. domestic production will not be significantly affected. The hon. Member for Bromsgrove (Mr. Dance) has a firm interest in this, and I hope that he will be in a position to give me warning if he finds any serious decline even in that fraction of the needle industry which goes to domestic production.

9.30 p.m.

Mr. Dance

I accept that, and I will.

Mr. Lever

I hardly think that dire effects on domestic production will arise, however.

For all these reasons, I commend this extension of the tax. It is not because we like taxing people but where so many people have to be taxed it is better to spread the burden wisely and try to get more light taxes and fewer heavy taxes, which distort the natural pattern of consumption. That is my right hon. Friend's aim. I endorse it and commend it to the Committee.

Mr. Higgins

I was inclined to say that the reply of the Financial Secretary was the worst I had heard on an emotional Amendment of this kind, but that would not be true since it is only as bad as anything that one has heard from the Government. It became clear that the

hon. Gentleman was using his all-purpose speech for the rejection of any Amendments dealing with this kind of tax. That speech applies more to the next Amendment than to this one.

Mr. Harold Lever

The argument in respect of the next Amendment to be considered is equally vivid on this one in relation to the claim made in almost every speech that this tax will affect the blind, the disabled or the sick. The hon. Gentleman may have preferred me to have used the argument on the next Amendment but I did not think that I should defer it from this one.

Mr. Higgins

The hon. Gentleman has made out no case. We are concerned with the disabled, the blind and the sick. We are concerned because these products, particularly knitting wool, are important in the context of these disabilities. Many of these people use knitting wool as a means of relaxation or rehabilitation, and there is also the second group, consisting of those with relatively low incomes and who knit in order to offset them. The best thing we can do is divide the Committee as a protest against that inadequate reply. I hope that the Committee will carry the Amendment.

Question put, That the Amendment be made:—

Committee divided: Ayes 210, Noes 269.

Division No. 228.] AYES [9.34 p.m.
Alison, Michael (Barkston Ash) Bullus, Sir Eric Eyre, Reginald
Allason, James (Hemel Hempstead) Burden, F. A. Farr, John
Amery, Rt. Hn. Julian Campbell, B. (Oldham, W.) Fortescue, Tim
Astor, John Campbell, Gordon (Moray & Nairn) Foster, Sir John
Awdry, Daniel Channon, H. P. G. Galbraith, Hn. T. G.
Baker, Kenneth (Acton) Clegg, Walter Gilmour, Ian (Norfolk, C.)
Baker, W. H. K. (Banff) Cooke, Robert Glover, Sir Douglas
Balniel, Lord Cordle, John Glyn, Sir Richard
Barber, Rt. Hn. Anthony Corfield, F. V. Goodhart, Philip
Batsford, Brian Costain, A. P. Goodhew, Victor
Beamish, Col. Sir Tufton Craddock, Sir Beresford (Spelthorne) Gower, Raymond
Bell, Ronald Crouch, David Grant-Ferris, R.
Bennett, Dr. Reginald (Gos. & Fhm) Crowder, F. P. Gresham Cooke, R.
Berry, Hn. Anthony Cunningham, Sir Knox Grieve, Percy
Bessell, Peter Dalkeith, Earl of Grimond, Rt. Hn. J.
Biffen, John Dance, James Gurden, Harold
Biggs-Davison, John d'Avigdor-Goldsmid, Sir Henry Hall, John (Wycombe)
Birch, Rt. Hn. Nigel Dean, Paul Hall-Davis, A. C. F.
Blaker, Peter Deedes, Rt. Hn. W. F. (Ashford) Hamilton, Lord (Fermanagh)
Boardman, Tom (Leicester, S. W.) Digby, Simon Wingfield Hamilton, Michael (Salisbury)
Body, Richard Dodds-Parker, Douglas Harrison, Brian (Maldon)
Boyle, Rt. Hn. Sir Edward Doughty, Charles Harrison, Col. Sir Harwood (Eye)
Braine, Bernard Drayson, G. B. Harvey, Sir Arthur Vere
Brewis, John du Cann, Rt. Hn. Edward Harvie, Anderson, Miss
Brinton, Sir Tatton Eden, Sir John Hastings, Stephen
Bromley-Davenport, Lt.-Col. Sir Walter Elliot, Capt. Walter (Carshalton) Hawkins, Paul
Brown, Sir Edward (Bath) Elliott, R. W. (N'c'tle-upon-Tyne, N.) Hay, John
Bruce-Gardyne, J. Emery, Peter Heseltine, Michael
Buchanan-Smith, Alick (Angus, N & M) Errington, Sir Eric Higgins, Terence L.
Buck, Antony (Colchester) Ewing, Mrs. Winifred Hiley, Joseph
Hill, J. E. B. Maydon, Lt.-Cmdr. S. L. C. Scott, Nicholas
Hogg, Rt. Hn. Quintin Mills, Peter (Torrington) Scott-Hopkins, James
Holland, Philip Mills, Stratton (Belfast, N.) Sharples, Richard
Hordern, Peter Miscampbell, Norman Shaw, Michael (Sc'b'gh & Whitby)
Hunt, John Mitchell, David (Basingstoke) Silvester, Frederick
Hutchison, Michael Clark Monro, Hector Sinclair, Sir George
Iremonger, T. L. More, Jasper Smith, Dudley (W'wick & L'mington)
Jenkin, Patrick (Woodford) Morgan-Giles, Rear-Adm. Smith, John (London & W'minster)
Johnson Smith, C. (E. Grinstead) Morrison, Charles (Devizes) Speed, Keith
Jones, Arthur (Northants, S.) Munro-Lucas-Tooth, Sir Hugh Stainton, Keith
Jopling, Michael Murton, Oscar Steel, David (Roxburgh)
Kaberry, Sir Donald Nabarro, Sir Gerald Stodart, Anthony
Kerby, Capt. Henry Neave, Alrey Stoddart-Scott, Col. Sir M.
Kershaw, Anthony Noble, Rt. Hn. Michael Summers, Sir Spencer
King, Evelyn (Dorset, S.) Nott, John Tapsell, Peter
Kirk, Peter Onslow, Cranley Taylor, Sir Charles (Eastbourne)
Kitson, Timothy Orr, Capt. L. P. S. Taylor, Edward M. (G'gow, Cathcart)
Knight, Mrs. Jill Osborn, John (Hallam) Taylor, Frank (Moss Side)
Lancaster, Col. C. G. Osborne, Sir Cyril (Louth) Temple, John M.
Thatcher, Mrs. Margaret
Lane, David Page, Graham (Crosby) Turton, Rt. Hn. R. H.
Legge-Bourke, Sir Harry Peel, John Vaughan-Morgan, Rt. Hn. Sir John
Lewis, Kenneth (Rutland) Percival, Ian Vickers, Dame Joan
Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield) Peyton, John Waddington, David
Lloyd, Ian (P'tsm'th, Langstone) Pink, A. Bonner Walker, Peter (Worcester)
Lloyd, Rt. Hn. Selwyn (Wirral) Pounder, Rafton Wall, Patrick
Longden, Gilbert Price, David (Eastleigh) Walters, Dennis
Lubbock, Eric Prior, J. M. L. Ward, Dame Irene
MacArthur, Ian Pym, Francis Wells, John (Maidstone)
Maclean, Sir Fitzroy Quennell, Miss J. M. Whitelaw, Rt. Hn. William
Macleod, Rt. Hn. Iain Ramsden, Rt. Hn. James Wiggin, A. W.
McMaster, Stanley Rawlinson, Rt. Hn. Sir Peter Williams, Donald (Dudley)
Macmillan, Maurice (Farnham) Rees-Davies, W. R. Wilson, Geoffrey (Truro)
McNair-Wilson, Michael Renton, Rt. Hn. Sir David Wood, Rt. Hn. Richard
McNair-Wilson, Patrick (New Forest) Rhys Williams, Sir Brandon Woodnutt, Mark
Maddan, Martin Ridsdale, Julian Worsley, Marcus
Maginnis, John E. Rodgers, Sir John (Sevenoaks) Wright, Esmond
Marples, Rt. Hn. Ernest Rossi, Hugh (Hornsey) Younger, Hn. George
Marten, Neil Royle, Anthony
Maude, Angus Russell, Sir Ronald TELLERS FOR THE AYES:
Mawby, Ray St. John-Stevas, Norman Mr. Bernard Weatherill and
Maxwell-Hyslop, R. J. Sandys, Rt. Hn. D. Mr. Humphrey Atkins.
Albu, Austen Chapman, Donald Fletcher, Raymond (Ilkeston)
Allaun, Frank (Salford, E.) Coe, Denis Fletcher, Ted (Darlington)
Alldritt, Walter Coleman, Donald Foley, Maurice
Anderson, Donald Corbet, Mrs. Freda Foot, Rt. Hn. Sir Dingle (Ipswich)
Archer, Peter Crawshaw, Richard Foot, Michael (Ebbw Vale)
Ashley, Jack Crosland, Rt. Hn. Anthony Ford, Ben
Ashton, Joe (Bassetlaw) Darting, Rt. Hn. George Forrester, John
Atkins, Ronald (Preston, N.) Davidson, Arthur (Accrington) Fowler, Gerry
Atkinson, Norman (Tottenham) Davies, G. Elfed (Rhondda, E.) Fraser, John (Norwood)
Bacon, Rt. Hn. Alice Davies, Dr. Ernest (Stretford) Freeson, Reginald
Bagier, Gordon A. T. Davies, Rt. Hn. Harold (Leek) Galpern, Sir Myer
Barnett, Joel Davies, Ifor (Gower) Gardner, Tony
Beaney, Alan de Freitas, Rt. Hn. Sir Geoffrey Garrett, W. E.
Bence, Cyril Dell, Edmund Gordon Walker, Rt. Hn. P. C.
Benn, Rt. Hn. Anthony Wedgwood Dempsey, James Gray, Dr. Hugh (Yarmouth)
Bidwell, Sydney Diamond, Rt Hn. John Gregory, Arnold
Binns, John Dickens, James Grey, Charles (Durham)
Bishop, E. S. Dobson, Ray Griffiths, David (Rother Valley)
Blackburn, F. Doig, Peter Griffiths, Eddie (Brightside)
Blenkinsop, Arthur Dunn, James A. Griffiths, Rt. Hn. James (Llanelly)
Booth, Albert Dunnett, Jack Griffiths, Will (Exchange)
Boston, Terence Dunwoody, Mrs. Gwyneth (Exeter) Hamilton, James (Bothwell)
Bottomley, Rt. Hn. Arthur Dunwoody, Dr. John (F'th & C'b'e) Hamilton, William (Fife, W.)
Eadie, Alex Hannan, William
Boyden, James Edelman, Maurice Harrison, Walter (wakefield)
Bradley, Tom Edwards, Robert (Bilston) Hattersley, Roy
Bray, Dr. Jeremy Edwards, William (Merioneth) Hazell, Bert
Brooks, Edwin Ellis, John Healey, Rt. Hn. Denis
Brown, Rt. Hn. George (Belper) English, Michael Heffer, Eric S.
Brown, Hugh D. (G'gow, Provan) Ennals, David Herbison, Rt. Hn. Margaret
Brown, Bob (N'c'tle-upon-Tyne, W.) Ensor, David Hilton, W. S.
Brown, R. W. (Shoreditch & F'bury) Evans, Fred (Caerphilly) Hobden, Dennis
Buchan, Norman Evans, Ioan L. (Birm'h'm, Yardley) Hooley, Frank
Buchanan, Richard (G'gow, Sp'burn) Faulds, Andrew Houghton, Rt. Hn. Douglas
Butler, Herbert (Hackney, C.) Fernyhough, E. Howarth, Robert (Bolton, E.)
Callaghan, Rt. Hn. James Finch, Harold Howell, Denis (Small Heath)
Cant, R. B. Fitch, Alan (Wigan) Howie, W.
Carmichael, Neil Fitt, Gerard (Belfast, W.) Hoy, James
Castle, Rt. Hn, Barbara Fletcher, Rt. Hn. Sir Eric (Islington, E.) Huckfield, Leslie
Hughes, Rt. Hn. Cledwyn (Anglesey) Marsh, Rt. Hn. Richard Roebuck, Roy
Hughes, Hector (Aberdeen, N.) Mason, Rt. Hn. Roy Rogers, George (Kensington, N.)
Hughes, Roy (Newport) Maxwell, Robert Rowlands, E.
Hunter, Adam Mellish, Rt. Hn. Robert Ryan, John
Hynd, John Mendelson, John Shaw, Arnold (Ilford, S.)
Janner, Sir Barnett Mikardo, Ian Sheldon, Robert
Jay, Rt. Hn. Douglas Millan, Bruce Shinwell, Rt. Hn. E.
Jeger, George (Goole) Milne, Edward (Blyth) Shore, Rt. Hn. Peter (Stepney)
Jenkins, Hugh (Putney) Molloy, William Short, Mrs. Renée (W'hampton, N. E.)
Jenkins, Rt. Hn. Roy (Stechford) Morgan, Elystan (Cardiganshire) Silkin, Rt. Hn. John (Deptford)
Johnson, Carol (Lewisham, S.) Morris, Charles R. (Openshaw) Silkin, Hn. S. C. (Dulwich)
Johnson, James (K'ston-on-Hull, W.) Morris, John (Aberavon) Silverman, Julius
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) Moyle, Roland Skeffington, Arthur
Jones, J. Idwal (Wrexham) Mulley, Rt. Hn. Frederick Slater, Joseph
Jones, T. Alec (Rhondda, West) Murray, Albert Small, William
Kelley, Richard Neal, Harold Spriggs, Leslie
Kerr, Russell (Feltham) Newens, Stan Steele, Thomas (Dunbartonshire, W.)
Lawson, George Noel-Baker, Rt. Hn. Philip Strauss, Rt. Hn. G. R.
Leadbitter, Ted Oakes, Gordon Summerskill, Hn. Dr. Shirley
Lee, Rt. Hn. Frederick (Newton) Ogden, Eric Swain, Thomas
Lee, John (Reading) Oram, Albert E. Taverne, Dick
Lestor, Miss Joan Orbach, Maurice Thomas, Rt. Hn. George
Lever, Harold (Cheetham) Orme, Stanley Thomson, Rt. Hn. George
Lever, L. M. (Ardwick) Oswald, Thomas Tinn, James
Lewis, Arthur (W. Ham, N.) Owen, Dr. David (Plymouth, S'tn) Tomney, Frank
Lewis, Ron (Carlisle) Owen, Will (Morpeth) Tuck, Raphael
Lipton, Marcus Padley, Walter Urwin, T. W.
Lomas, Kenneth Page, Derek (King's Lynn) Varley, Eric G.
Loughlin, Charles Paget, R. T. Wainwright, Edwin (Dearne Valley)
Luard, Evan Pannell, Rt. Hn. Charles Walker, Harold (Doncaster)
Lyon, Alexander W. (York) Parker, John (Dagenham) Wallace, George
Lyons, Edward (Bradford, E.) Parkin, Ben (Paddington, N.) Watkins, David (Consett)
Mabon, Dr. J. Dickson Parkyn, Brian (Bedford) Watkins, Tudor (Brecon & Radnor)
McBride, Neil Pavitt, Laurence Wellbeloved, James
McCann, John Pearson, Arthur (Pontypridd) White, Mrs. Eirene
MacColl, James Peart, Rt. Hn. Fred Whitlock, William
Macdonald, A. H. Pentland, Norman Wilkins, W. A.
McGuire, Michael Perry, Ernest G. (Battersea, S.) Willey, Rt. Hn. Frederick
McKay, Mrs. Margaret Perry, George H. (Nottingham, S.) Wiliams, Alan (Swansea, W.)
Williams, Alan Lee (Hornchurch)
Mackenzie, Gregor (Rutherglen) Prentice, Rt. Hn. R. E. Williams, Clifford (Abertillery)
Mackie, John Price, Thomas (Westhoughton) Williams, Mrs. Shirley (Hitchin)
Mackintosh, John P. Price, William (Rugby) Williams, W. T. (Warrington)
Maclennan, Robert Probert, Arthur Willis, Rt. Hn. George
McMillan, Tom (Glasgow, C.) Rankin, John Wilson, Rt. Hn. Harold (Huyton)
McNamara, J. Kevin Rees, Merlyn Wilson, William (Coventry, S.)
MacPherson, Malcolm Rhodes, Geoffrey Winnick, David
Mallalieu, E. L. (Brigg) Roberts, Albert (Normanton) Woof, Robert
Mallalieu, J. P. W. (Huddersfield, E.) Roberts, Rt. Hn. Goronwy Wyatt, Woodrow
Manuel, Archie Roberts, Gwilym (Bedfordshire, S.)
Mapp, Charles Robertson, John (Paisley) TELLERS FOR THE NOES:
Marks, Kenneth Robinson, Rt. Hn. Kenneth (St. P'c'as) Mr. Joseph Harper and
Marquand, David Rodgers, William (Stockton) Dr. M. S. Miller.

9.45 p.m.

Mr. Higgins

I beg to move Amendment No. 45, in page 74, line 25, leave out paragraph 3.

The Temporary Chairman (Mr. Bryant Godman Irvine)

It will be convenient to take at the same time Amendment No. 66, page 74, line 27, after 'textile', insert 'other than jute'.

Amendment No. 46, page 74, line 29, at end insert: 'except for linen which will continue to be exempt'. Amendment No. 68, page 74, line 29, at end insert: 'and after the word "Exempt" there shall be added the words "pram quilts, pram blankets, pram sheets, pram pillow cases, cot blankets, cot quilts, cot sheets, cot pillow cases, baby face cloths, pram and cot rubber sheets"'. Amendment No. 111, page 74, line 29, at end insert: 'except sheets, pillow cases or blankets, used by persons confined to bed by sickness, and upon the certificate of a medical practitioner, for a period in excess of two months'. Amendment No. 112, page 74, line 29, at end insert: 'except sheets, pillow cases or blankets used by hospitals, nursing homes or similar institutions'. Amendment No. 113, page 74, line 29, at end insert: 'except sheets, pillow cases or blankets used by boarding schools, youth hostels or similar institutions'. Amendment No. 114, page 74, line 29, at end insert: 'except sheets, pillow cases or blankets supplied for use in hotels and boarding houses'. Amendment No. 115, page 74, line 29, at end insert: 'except towels and soft furnishings supplied for use in hospitals, nursing homes or similar institutions'. Amendment No. 116, page 74, line 29, at end insert: 'except towels and soft furnishings supplied for use in boarding schools, youth hostels or similar institutions'. Amendment No. 117, page 74, line 29, at end insert: 'except towels and soft furnishings supplied for use in hotels and boarding houses'.

Mr. Higgins

In view of the shortage of copies of the Purchase Tax Act, 1963, it may be helpful if I spell out the significance of the Amendment. Paragraph 3 of Schedule 6 of the Bill reads: In Group 6, for so much of that Group as precedes the word 'Exempt' there shall be substituted the following:— 'Articles of textile, plastic, paper or similar material of a kind used for soft furnishings, bedding or other domestic purposes.' If one refers to the 1963 Act, it becomes apparent that the Government are proposing to bring into purchase tax a whole range of household textiles, particularly those used for bedding, such as sheets and blankets. We believe that this is a retrograde step because it effectively restores the position which existed prior to 1955–56, when the Conservative Administration took these items outside the scope of purchase tax. It is surely extraordinary, at a time when the Committee is presented with the textile report, there should apparently be no co-ordination between Government Departments on this matter and the Government propose to increase the tax borne by these items.

On the last Amendment, I had occasion to say to the Financial Secretary that I was a little uncertain about the Amendment to which his remarks referred. He pointed out that they were equally applicable to either Amendment. We are in some difficulty on this Amendment because the scope of the Schedule is far from clear. A number of us on this side of the Committee have received representations which suggest that it goes a great deal wider than was originally expected and possibly wider than the Government intend. I therefore hope that the Financial Secretary will be able to clarify a number of points which I should like to put to him.

Paragraph 3 of Schedule 6 refers to 'Articles of textile … of a kind used for … domestic purposes.' But I understand that in the purchase tax notices which have been sent to the trade there is considerable doubt about the exact meaning of these phrases. A number of items which are used for industrial purposes—in other words, industrial cloths—may fall within the scope of the Schedule. I hope that the Financial Secretary will be able to clear up the matter beyond doubt. What is the position regarding cotton filter cloth? Is this caught by the Schedule? What about laundry pressed calico or milk filter cloth? Are these to be brought within the scope of purchase tax again? What is the position concerning many industrial cloths which are used in the production of items which go into exports or commodities used on the home market?

Secondly, I should like the Financial Secretary to clarify the position concerning items which go into a further stage of production. This part of the Schedule bristles with anomalies. We have received a letter from a firm of great repute which points out that tarpaulins, which are exempt from tax, may continue not to be taxed but that the fabrics used in the tarpaulins will be charged to purchase tax if the customer using the product is not registered. Is that the intention of the Government? Do they intend to impose this tax, through this part of the Schedule, on items which will then be used to make up items which will not be taxed? If that is so, how do the Government propose to deal with this difficulty?

The second point on which there is considerable difficulty again arises from the purchase tax notices issued by the Government, but of which there has been no mention in the House, because it appears that a number of items—for example, textiles used for making garments or curtains—come within the same category as those used for bookbinding materials. We therefore need the Financial Secretary to make it clear whether textiles which are used as bookbinding materials will be caught within the provisions of the Schedule. There is great ambiguity about the whole matter.

The third point which needs to be cleared up relates to the question of stocks. If I understand the question correctly, the retailer who has held a large amount of stock of a certain textile has never since 1955 paid purchase tax on it. Many retailers hold large stocks and, on the whole, this has enabled them to charge lower prices to their customers, because of the effects of inflation, than would otherwise have been the case.

What will be the position concerning purchase tax, first, if those retailers sell the piece of textile cloth in question to a customer, who then returns it to them and asks them to make it up into an article, and, secondly, if they make up the article and sell it direct to the customer? It appears that in the case of existing stocks there will be a clear anomaly which would entail a number of customers going through the farcical process of having to buy the cloth and hand it back to the retailer for making up to avoid the tax whereas if they got it made up straight away, it would be taxed.

Would it not be a great deal more simple and sensible if the Government exempted from charge all those stocks which are already held by retailers, the vast majority of whom are not at present registered for purchase tax, whether the stock in question was sold as a raw material, as a textile, or as a finished product—say, a set of curtains? I hope that the Financial Secretary can clarify this for us.

A further matter on which we have received representation concerns the apparent discrimination between various producers of household textiles. It would appear that some producers operate on a very large scale, others operate on a moderate scale and yet a third set operate on a very small scale. The extraordinary thing with this distinction is that if there is a single large purchaser from these groups, I understand that the Inland Revenue, to maintain equilibrium between the three groups, will upgrade the wholesale price charged by the large firm when sold by a large customer compared with the alternative suppliers. As a result of the imposition of this tax, the effect will be to put the large, efficient, high-quality producer at a disadvantage compared with his smaller or less efficient competitor who is, perhaps, producing goods of lower quality.

Is that the case under the Schedule? I understand it to be so. I presume that the Treasury, like ourselves, has received representations. If so, what does the the Financial Secretary propose to do about it at this stage? It is a matter of considerable urgency because this tax is about to be levied in a few days' time.

It would be right and proper that we should have explanations from the Financial Secretary on these technical points. On the overall point, however, our con tention is that the Government are bringing into purchase tax a number of items which are clearly of an essential nature and on which purchase tax has not been imposed since we exempted them back in 1955–56.

The impact on the cost of living is likely to be considerable. For example, the price of a pair of sheets costing £3 10s. may well increase to about £4, and the price of blankets and towels is likely to rise considerably. On all these items the Government are taking discriminatory action against essentials which in turn discriminates against those with the lowest incomes. The wording of the Clause is extremely ambiguous.

The Government's proposals, we think, are wrong on the basis I have described and, unless the Financial Secretary gives a better answer than the one he gave on the previous Amendment, I hope that my right hon. and hon. Friends will support the Amendment in the Division Lobby.

Mr. Bruce-Gardyne

I rise to support my hon. Friend on the general case he has made on the main Amendment. I want to address my remarks more specifically to Amendment No. 66. I hope that it is correctly drafted, but I find the Clause more than a little difficult to follow, and this has been aggravated by the difficulty of obtaining access to the text of the original Act. The purpose of the Amendment is to make a special exemption within the general class for wall coverings of hessian and jute.

My experience bears out what my hon. Friend has said on the confusion which exists about the changes. Firms in my constituency have been entirely unable to discover what are the repercussions of the changes on the textile industry in Scotland. They sent a special representative to London to try to ascertain the exact circumstances, but even then they could obtain no clear and specific answer.

There is one point on which the experience of local firms in my area is opposite to the experience described by my hon. Friend. He referred to large suppliers dealing in bulk being apparently disadvantageously treated. The experience of some firms in my constituency is that they will not be allowed to charge purchase tax, if they have to pay it, on the retail price to the wholesaler less the discount. Their experience is precisely the opposite to the experience described by my hon. Friend. This is an example of the confusion which has arisen.

My main point is twofold in defence of what is admittedly a special and localised interest. It can be argued that there is no reason why jute and hessian wall coverings should be exempted from purchase tax when other forms of textile or paper wall coverings are not exempted. There are two reasons which I advance in support of my Amendment. First, as I understand it, these hessian wall coverings come very high in the price range of alternative wallpapers available to the customer, and as a result the incidence of the tax which is to be imposed on them under this Clause if it is not amended will be much more severe on the end price—not as a percentage, but in terms of the end price.

10.0 p.m.

I did not press that argument too far, because my main argument is that over the years successive Governments have tried to encourage the jute industry in Scotland to diversify its production towards a more sophisticated end of the product range to insulate itself against the effect of low cost competition from India and Pakistan as tariffs and other forms of protection have come down under the Government's encouragement and indeed direction. Some of the firms in Scotland have made a tremendous effort and have achieved great success in doing precisely that, but this has represented a considerable problem, particularly for some of the smaller firms in some of the burghs in my constituency.

One of the products into which they have diversified, and done so most successfully in recent years, is hessian wall cover- ings. I am told that in some of the smaller firms in my constituency hessian wall coverings represent upwards of 10 per cent. of total output, and that this proportion is rising rapidly. They feel that having been urged and begged by successive Governments to go into this sort of production, they now find themselves suddenly attacked with this imposition of purchase tax which will have a serious effect on what is becoming an increasingly important market to them.

When one bears in mind that in the burghs in which these firms are functioning anything up to 60 per cent. of the total employment in the burgh is provided by one or two jute firms, Ministers can see the seriousness of the position which could arise if this tax has a serious effect on their ability to develop what has become a most successful market.

I hope that when the Financial Secretary replies he will offer some word of help and encouragement, and perhaps even a word of release, to those firms which are urgently seeking and appealing for what is a not unreasonable narrow measure of relaxation in this respect.

Mr. Charles Mapp (Oldham, East)

We have listened to two speeches on this subject. The first contribution did consider the major principle, but rather concentrated on detail. The second was related to the jute industry. As I recall it, that industry has a measure of control which the cotton textile industry would gladly have, but does not. The jute industry is in a legislative position which I gather would never be granted to any other industry in this country. I am not complaining about that. Having tried once or twice to get that form of import and other control for cotton textiles but not having succeeded, I should be sour indeed if I were to try to rob Dundee and other places of the advantages they enjoy.

I am more than glad that the Chancellor of the Exchequer is here, because I want to look at some words which he used on Budget day and tell him why I abstained on that occasion from supporting his proposals, and why, unless I hear something better, I shall probably do the same this evening. The Chancellor said: Paradoxically, paper handkerchiefs are not taxed but linen and cotton ones are. He then put the point more generally and said: I do not think that the distinction between floor coverings, mattresses, cushions, furniture and clothing—which are taxed—and household textiles and cloth—which are not taxed—is a valid one."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1023.] My right hon. Friend prefaced this statement by agreeing with what the Opposition speaker had said about the history of the matter, namely, that in 1955 or thereabouts and in 1957 the then Government, for reasons that we all remember, took off purchase tax. In those days the industry was employing about 250,000 people. It is now employing about 100,000. In the last 15 years in my town—which is fairly typical of Lancashire—15,000 jobs have disappeared, together with half the mills. The Chancellor said that in order to tidy up an untidy position in his administrative machine he has decided that the industry will bear in a full year most of £30 million in additional taxation. He acknowledged what had been said about the history of purchase tax and its having been lifted, but he added that a good deal of the commodity was imported. We know that. The point is that both imported and home-made textiles are subject to purchase tax. That might have been a casual slip on his part. If it was a deliberate statement, however, it has no validity.

I take the view that the cotton textile industry is keeping too many of its troubles to itself. During the last seven or eight years it has undergone a major transformation such as no other industry has known. Hon. Members on both sides of the Committee have tried to ensure that the industry has some solidity, and some future. I do not want to be too controversial, but in my opinion the recent efficiency study which has been carried out has been more forthcoming than any previous study of the industry.

I know the industry reasonably well, and I was very pleased to see that it has begun to look outwards instead of inwards. It should do more in this direction. It now has a leadership, which it had patently lacked for some time. The report is now before the Government and the President of the Board of Trade is giving it his deep consideration. I hope that hon. Members on both sides of the Committee are also considering it. The industry has gone through some violent storms. Possibly it has gone through its last one, although I should not like to be too sure about that.

The industry is down on its uppers. In my town, which was a typical cotton town, during a short period of years more than 12,000 out of 20,000 left the industry. At this moment the Chancellor of the Exchequer, presumably adopting a Whitehall point of view, has decided that in order to straighten out the administrative pattern—and, at the same time, to collect most of £30 million—he will inflict upon the industry a burden of this kind, whether 40 per cent. of our textiles are imported or not, because both imported and home-produced textiles bear precisely the same Purchase Tax across the counter.

I appeal to the Chancellor to reconsider his decision. No hon. Member will object personally to paying purchase tax in respect of the textile furnishings for his or her home, but every hon. Member will know that in his constituency there are many homes where the mothers have two or three children, or perhaps more, and where the income is very limited. This tax will hurt such women. Their requirements in bed linen and personal linen are wholly different to those of the rest of us. They will bear the brunt of this tax. I can see how nice and straightforward the administrative argument might have looked in Whitehall, but I hope that some humanity will be shown.

My right hon. Friend may not have seen the dissolution of the textile industry across Lancashire and parts of Yorkshire. We have partly got over these drawbacks. I want to hear some soothing words or I cannot support the Government. It is a little late to expect my right hon. Friend to say them tonight, but perhaps he can say that he will look at this again or that this is not the Government's final policy towards the textile industry. If I abstain alone tonight, I will know that 40 or 50 Labour Members from Lancashire and Cheshire broadly agree with me. I beg my right hon. Friend to consider the feelings of this vast number who are mainly loyal to the Government. I may be a notorious cotton man, but I am always proud to state this case. I have 40,000 voters in my constituency, which may be a vested interest.

The Chancellor should think again about this unfortunate blow at an industry which has just come out of 10 or 15 years of blow upon blow. The waves are now a little smoother and with courage and Government support the future could be brighter, yet now he imposes this new blow. Whatever the decision in the Lobbies, I beg him to consider this urgently. The county, the industry and, above all, the woman with a young family deserve this consideration.

[Mr. HARRY GOURLAY in the Chair]

Mr. Bessell

The hon. Member for South Angus (Mr. Bruce-Gardyne) expressed the fears of many of us who have drafted Amendments to this part of the Bill. As he said, it has been difficult to obtain a copy of the parent Act of 1963, upon which the Schedule depends. Ten days ago, I applied to the Stationery Office for a copy, and was told that it was impossible to get one. Had it not been for the assistance of the Library, whose staff generously duplicated the essential pages for me, I and my hon. Friends could not have drafted the Amendments.

This matter cannot be emphasised enough. It is wrong that hon. Members should be inconvenienced—even more so if some Amendments are not worded correctly simply because we cannot give the relevant Act the normal study which we would wish. I support everything that was said by the hon. Member for Worthing (Mr. Higgins) in moving what I regard as an extremely important Amendment.

10.15 p.m.

Mr. Harold Lever

Before the hon. Gentleman continues, it might assist him to know that a bound copy of the Act is available in the "No" Lobby. I take it that he is likely infrequently to be in that Lobby tonight, but if between deploying arguments he wishes to refresh his memory, he will find a copy of the Act there.

Mr. Bessell

I am obliged to the hon. Gentleman, but he will agree that that only emphasises the difficulty in which we find ourselves. I notice that the hon. Member for Worcestershire, South (Sir G. Nabarro), who is seated on the bench before me, has a copy of the Act, and for all I know it is the one to which the Financial Secretary referred.

Sir G. Nabarro

It is not. I am voting "Aye". I got my copy from the "Aye" Lobby.

Mr. Bessell

I am obliged to the hon. Gentleman, not only for handing it to me but for having marked the relevant passages. I take it that he intends to refer to the Act when he speaks, which prevents me from handing his copy round. In any event, if three copies are available, one in the "Aye" Lobby, one in the "No" Lobby and one in the Library, the Financial Secretary will agree that that is not sufficient to enable 600-odd hon. Members to draft appropriate Amendments.

I will not delay the Committee by referring to all the Amendments which we are discussing, save a few which I regard as particularly important. I hope that the Financial Secretary will not attempt to deploy the sort of arguments he used when replying to the debate on the last Amendment. When he reads what he said in the OFFICIAL REPORT in a few weeks' time, if not a few years' time, he will not be proud of those comments, particularly since he is a man of considerable integrity who is respected by hon. Members on both sides, which I hope does not sound patronising.

The Financial Secretary argued that because a group of people in the community suffered from some sort of disability, they should not be exempt from paying purchase tax because, he said, they had to pay this tax to ride about in motor cars. His argument will not stand examination. There are certain groups of people who are entitled to be exempted from certain forms of taxation; for example, because they are compelled to use certain articles. The case of persons being rehabilitated was put when we discussed the last Amendment. My Amendment No. 111 suggests that people who are confined to bed on a permanent basis should be exempt from paying purchase tax on sheets, blankets, pillow cases and similar articles, simply because they suffer a hardship which does not apply to the rest of the community.

A person who is bedridden will use far more sheets, blankets, pillow cases and so on than those of us who enjoy good health and are rarely confined to bed, except for the normal purpose of sleeping. The period of two months which I mention in my Amendment may not meet the Financial Secretary's wishes. Perhaps it should be two weeks. I had to strike a balance to prevent people suffering from a temporary sickness like 'flu from being able to send out a friend or neighbour to buy new sheets, blankets and pillow cases free of purchase tax. A person confined to bed for a long period or semi-permanently as a result of an especially severe illness should be able, on production of a doctor's certificate, to obtain exemption. People like that will suffer a very much greater hardship than will others.

Turning to Amendment No. 112, it seems ridiculous that the cost of running nursing homes, and hospitals under the National Health Service should be increased. For hospitals coming under the National Health Service, it is quite obvious that the Secretary of State for Social Services will have to make additional allocations. This will be just another example of imposing a tax on the one hand and compensating for it on the other.

Mr. Eric Lubbock (Orpington)

Does not my hon. Friend think that it would be useful if the Financial Secretary were to tell the Committee what additional moneys are to be made available by the Chancellor of the Exchequer to the National Health Service, and whether these institutions will be fully compensated for the additional costs which will fall on them?

Mr. Bessell

I am very grateful to my hon. Friend—

The Deputy Chairman (Mr. Harry Gourlay)

Order. The hon. Member for Bodmin (Mr. Bessell) would be out of order if he were to reply to his hon. Friend's question.

Mr. Bessell

I accept your guidance, Mr. Gourlay, but I am sure that you will agree that a very important point—

Mr. Lubbock

On a point of order. Mr. Gourlay. I would not for one moment dispute your Ruling, but surely it would be relevant if the Chancellor were to say that these costs would be fully reimbursed, because my hon. Friend might then not be so inclined to press his Amendment as he might otherwise be, because he would be satisfied that the cost would not fall on the National Health Service. The added cost would not come, for instance, out of the sums for nurses' pay or for their meals.

The Deputy Chairman

I am seized of the point raised by the hon. Gentleman. It would be in order to make an incidental reference, but on this Amendment we cannot debate the National Health Service.

Mr. Bessell

I was not proposing to discuss the National Health Service, nor do I think my hon. Friend would wish to do so, but unless Amendment No. 112 is accepted it is a matter of fact that the National Health Service, through the hospital service, will have to bear a considerable additional burden of taxation. It is, therefore, clear that, as my hon. Friend suggested, it would be very worth while to know whether the Chancellor of the Exchequer intends to compensate the National Health Service by making a special refund to the Department for this purpose.

Amendment No. 113 seeks exemption from tax on similar purchases made on behalf of boarding schools, youth hostels and like institutions. The tax proposed will, again, considerably increase the cost of running these institutions, to the serious detriment of their users. Hon. Members opposite, and one of my hon. Friends, may not be sympathetic with the idea of the retention of boarding schools, but those of us who have children at them, and I have a son at a boarding school, know that the fees seem to rise every term which passes. The tax proposed will add to the burden of those who choose to have their children educated privately. Nor do I think that anyone would wish to see youth hostels and institutions of that character having to bear this additional burden.

I hope that the Financial Secretary will be among those who will agree with me that there is a special case to be made out for hospitals, schools and other such institutions which will pay a tax which cannot be recovered or, if it is recovered, will be recovered only by means of increasing the cost of living. Those who are confined in their homes and who require additional bed linen will suffer a real hardship and one which could be avoided by a simple exemption on the lines suggested by my Amendment which, though it may not be perfect, could be put into a form which would be acceptable to the Chancellor on Report.

I shall not refer to some of the other equally important Amendments which are being discussed with Amendment No.

45. I am certain that many hon. Members on this side will wish to speak to those Amendments. I hope that many of the Amendments will commend themselves to the Financial Secretary and that we shall this time have a less disappointing answer than that which we received in the debate on the previous Amendment

Sir G. Nabarro

I hope that the two Members for Oldham—my hon. and learned Friend the Member for Oldham, West (Mr. Bruce Campbell) and the hon. Member for Oldham, East (Mr. Mapp)—who expressed such antipathy towards this increase in purchase tax on household textiles will be seen walking through the Lobbies in unison, thus representing the staple industry of the famous borough of Oldham in Lancashire. If the hon. Member for Oldham, East runs out on it and either abstains or votes with his party, I hope that my hon. and learned Friend the Member for Oldham, West will ensure in his constituency that his counterpart in the other half of Oldham is castigated for his insincerity and hypocrisy.

If there was anything that I disliked more than enough it was the behaviour of the Chancellor on Budget day in the context of the goods we are discussing on the Amendment. Had the right hon. Gentleman been unequivocal and forthright he would have risen in his place on Budget day and said, "I propose to bring into the purchase tax schedules, for the first time for 14 years, bed linen, towels and blankets". All of us sleep between bed linen.

Mr. Lubbock

Not all of us.

Sir G. Nabarro

Does not the hon. Gentleman? He is a coarse fellow. I exclude him at once. All civilised people sleep between bed linen. We understand what bed linen is. All civilised people keep themselves warm with blankets.

Mr. Lubbock

I have an electric blanket, Gerald.

Sir G. Nabarro

The hon. Gentleman must not call me "Gerald" in a debate. I, too, have an electric blanket, but the hon. Gentleman must be careful not to get himself out of order. Electric blankets are taxed as electrical accessories, not at 13¾ per cent. Were I to talk about electric blankets, Mr. Gourlay—I hope I am not instructing you; I am merely suggesting this to you—you would rightly rule me out of order at once.

The Chancellor did not talk about bed linen, blankets and towels. In a mealy-mouthed fashion characteristic of the right hon. Gentleman he used these equivocating terms: … I do not think that the distinction between floor coverings, mattresses, cushions, furniture and clothing—which are taxed—and household textiles and cloth—which are not taxed—is a valid one. I therefore propose to bring in the latter category, as well as plastic wall-covering, knitting wool and sewing and dressmaking requisites, and paper tableware and handkerchiefs, at the lowest rate of 13 … per cent."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1023.] The right hon. Gentleman left us to deduce what was intended in the new additions to the purchase tax schedule.

10.30 p.m.

It took the trade nearly 72 hours before it realised fully what was to be brought from household textiles into this purchase tax bracket. It still does not realise entirely what is to be taxed and what is not to be taxed. Here I have the substance, were I to take unfair advantage, of another 400 Parliamentary Questions on purchase tax, so much disputation and doubt is there throughout the textile trade and the retail and wholesale trades serving the textile manufacturing industry as to what is to be taxed and what is not to be taxed. For example, I have a letter here about stockingette. We all know the importance of stockingette.

Sir Douglas Glover (Ormskirk)


Sir G. Nabarro

I am exhorted to read the letter because it is important. It says: Due to the new Purchase Tax regulations which come into effect as from the 27th May, 1969, Stockingette in its present form will be subject to such tax. However, in order to exempt this material we must exclude one needle in fifty needles, so giving a continuous ladder in the material. The number of ladders depends on the width of the fabric, i.e., a 12″ wide fabric would probably contain 8–9 ladders. The above applies only to Stockingette in rolls or cut lengths (including bags) and unbleached and undyed. For Bleached or Coloured Stockingette, the needles must be excluded as above and the fabric cut into lengths of less than 1 yard. Stockingette Dusters that are stitched at both ends will not be exempt and therefore this material will continue to be manufactured in a perfect state. Unless our customers inform us to the contrary, all stockingette despatched after the 27th May, 1969, will be made up in the form as mentioned above. Assuring you of our best attention, we are, Yours faithfully, J. C. Ley & Sons Ltd. The address is Caterbury Road Mills, Old Radford, Nottingham.

I was asked to interpret this and my reply was, "Search me!" No one knows, whether it be stockingette in rolls, stockingette in packs, stockingette part-manufactured, stockingette manufactured only or stockingette in other forms, which is to attract purchase tax at 13¾ per cent. and which is to be exempt. I quote that as one example at random.

I return to something a little more hoary. A face cloth is a household textile. Hitherto it was tax-free. There was always a certain amount of dubiety about it because whereas a face cloth that is used with soap to perform one's ablutions was said to be tax free most of the soap used with the face cloth was subject to tax at 36⅔ per cent. if perfumed, but if plain was not so subject to tax. This whole question of the performance of one's ablutions was surrounded by grave dubiety in the fiscal sense. The hon. Member for Bodmin (Mr. Bessell) will at once take the importance of the point of whether a face cloth is now free of tax.

Dame Joan Vickers (Plymouth, Devonport)

If it is a baby's face cloth it will be taxed.

Sir G. Nabarro

I am coming to babies in a minute. Is a face cloth taxed or not? Even it if it is taxed at 13¾ per cent., why is ordinary toilet soap taxed at 36⅔ per cent.? Why, in a comparable sense, is a tooth brush not taxed whereas toothpaste is taxed at 36⅔ per cent.? Are we all supposed to clean our teeth with salt and water and not buy toothpaste at a chemist's shop? The Financial Secretary need not look so grim and cross with me.

Mr. Harold Lever

I am not grim and cross but nostalgic at hearing the hon. Gentleman's act in rather different circumstances from those in which I have heard it so many times under a Conservative Government.

Sir G. Nabarro

The hon. Gentleman is being unkind. Unless I am much mistaken, I have been talking in this place about purchase tax for 19 years and have never mentioned tooth brushes before.

Mr. Lever

Oh, yes, he has.

Sir G. Nabarro

It is no good the Financial Secretary saying that I have. My memory may have failed me, but I do not believe that I have. [HON. MEMBERS: "What about dentures?"] I am not concerned with dentures. I have all my own teeth. I get through a large number of tooth brushes annually. A tooth brush is an important item in performing one's ablutions. I want to know why toothpaste is taxed at 36⅔ per cent. whereas a tooth brush is let off scot-free.

My hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers) mentioned babies. Most of us who have families are aware of the cost of having a baby. I am painfully aware myself of the cost of having a baby.

Sir D. Glover

Very painful.

Sir G. Nabarro

I have paid four times over the cost of having a baby. I want to say something about a serious matter this evening. Every year several hundred thousand families in Britain have new babies. In spite of the solicitude for babies which the Labour Party showed on the hustings—Labour candidates were breaking their hearts in 1964 and 1966 about how well they would look after babies in Oldham and Torrington and all over the country, saying how the wicked Tories had oppressed the babies and made it most expensive to have babies—here the Labour Government are putting a tax on motherhood, I call it, for the first time, deliberately inflating the pecuniary cost of producing a child.

I shall exclude baby clothes because most expectant mothers knit most of the baby clothes for their children.

Mr. Scott-Hopkins

Those clothes will be taxed now.

Sir G. Nabarro

I agree, but I shall omit them and refer to the layette—what do you call what goes into the pram?

Mr. Michael Shaw

A baby.

Sir G. Nabarro

The manufactured textiles that go into the pram and on the bed and so on. I shall tell the Committee approximately how much the wicked Treasury Ministers propose to extract from the pockets of mothers of new babies by this iniquitous purchase tax. [Interruption.] I see the hon. Member for Stockport, South (Mr. Orbach) sitting below the Bar of the House bawling at me. Would you please stop him, Mr. Gourlay, and bring him into the Committee so that I may deal with him?

The Temporary Chairman

Order. I would merely say that interruptions are to be deprecated at all times, and when they are from outside the Committee much more so.

Sir G. Nabarro

I am grateful for your protection, Mr. Gourlay. I now return to babies. Take a quilt set for the perambulator. It costs £1 17s. 6d., tax will now be 3s. 4d. For the blankets, at £1 15s. two of them, the tax now will be 3s. 2d.; rugs at £3, two of them, the tax will now be 5s. 6d.; the sheets at 30s. three of them, the tax will be 2s. 6d.; take pillow cases at a guinea, three of them, the tax will be 2s.; take a "Mattrillow" at 18s., two of them, the tax will be 1s. 8d.; take rubber sheets—

Hon. Members

Hear, hear.

Sir G. Nabarro

I do not know why the hon. Member for Buckingham (Mr. Maxwell) is roaring with laughter. He has been through the performance seven times. I have only been through it four times. He knows what rubber sheets are for. It will be 5s. 6d. for the rubber sheets, the tax on them will be 6d. The cot quilt costs 33s., tax 3s. ld.; blankets £3 7s., tax 6s. 4d. for two; sheets £5 10s. for four, the tax 10s. 4d.; pillow cases at 28s. for four, tax 2s. 8d.; rubber sheets, 11s. for one, tax 1s.

Take the miscellaneous items, baby's first blankets, 22s. for two, tax 4s.; face cloths, 6s. for four, tax 8d.; bath towels. 30s., three of them, tax 2s. 9d.; safety pins, 3s. for two packs, tax 4d.; knitting wool, 26s. two packs, tax 2s. 2d.; one pushchair quilt, 58s. 6d., tax 5s. 6d.

The total cost of all those accoutrements for the baby's arrival, leaving out the baby clothes, retail, is £30 1s. 6d. Purchase tax levied is £2 17s. 6d. repre- senting an increase of 9½ per cent. in the cost of motherhood. The Labour Government's newest tax, the tax on motherhood, is at the rate of 9½ per cent. It is no good the Financial Secretary nodding disapproval—I know that I am hurting him; I intend to hurt him. He is a wicked, uncharitable chap putting a tax on motherhood, and I shall rub it into him at the next election. I can almost hear myself on the hustings now.

Mr. Mapp

I am listening with care to an interesting and humorous speech, but some of us are wondering why there is a gap between the day of birth and the "pins and layette" stage. Why has the hon. Gentleman missed out the napkins? They are subject to the tax.

Sir G. Nabarro

I had not got them on my list. I apologise for excluding the diapers. I did not make up these figures. My source is one of the largest firms in the country engaged in the manufacture of textiles and so on of this kind. The firm is called Mothercare, and it sent me these statistics. I have no doubt they are absolutely accurate. The Financial Secretary need not worry and send off his civil servants for a copy, I intend to give him this copy. I want him to be thoroughly initiated into mothercare matters and to study all the delightful illustrations in the book.

I have said enough to convince the Chairman of my party, my right hon. Friend the Member for Altrincham and Sale (Mr. Barber), what his line should be at the next General Election, and what should be the nature of his propaganda, if he has not already perceived it.

I join my hon. Friend the Member for Worthing (Mr. Higgins), who led me forward so intelligently and who inspired this speech from me this evening. I warmly congratulate him on his speech at the outset of the debate, and I assure him and the whole of my party that I will vote with alacrity, taking with me—carrying if necessary—the hon. Member for Oldham, East and my hon. and learned Friend the Member for Oldham, West, both of whom should be our important confederates in this Amendment.

10.45 p.m.

Mr. Pounder

Together with Amendment 45, several other Amendments have been bracketed, one of which is No. 46 which seeks to exempt linen from the proposed imposition of purchase tax at the rate of 13¾ per cent. I shall be very brief, since many other hon. Members wish to speak.

The Amendment refers to linen, although, as a Member for a Northern Irish constituency, I have Northern Irish linen uppermost in my mind. I understand there is a linen factory in Dumfries, and it would be wrong, therefore, to exclude Dumfries.

There is little doubt that the imposition of purchase tax on a wide range of textiles, which for many years have been exempt, will be harmful to the entire textile industry in the United Kingdom. The hon. Member for Oldham, East (Mr. Mapp), spoke forcefully on behalf of the cotton industry and, of course, the linen industry is also part of the textile trade.

Potential customers will genuinely be tempted to purchase cheap imported cloth. I understand that the present quota system is in operation only until 1971 and that as matters stand at present thereafter the floodgates will be wide open for cheap overseas imports. The serious consequences which would flow from this do not have to be emphasised to the Committee.

It would not surprise me if the Financial Secretary reminded the Committee that until 1955 purchase tax was levied on linen and other textiles; but the reason why textiles were exempted was the worsening employment position in the industry at that time. I well remember, when I was a student accountant, in the 1950s being engaged in the audit of a large number of small and medium sized linen firms in Northern Ireland. In those days this traditional Ulster industry was passing through a critical time. Many firms had gone into liquidation and others were eking out a meagre existence, while a small number of firms who had gambled all their substance on modernisation managed to stay in business. The abolition of purchase tax in 1955 was a lifeline to the industry.

About 35,000 people are now employed in the linen industry and its ancillaries in Northern Ireland. This may not sound a large number, but it nevertheless represents 7.2 per cent. of the entire insured working population in Northern Ireland, and it will readily be appreciated that I am talking about a major industry and a major source of employment. Inevitably, the imposition of purchase tax will lead to a reduction in home market demand, with a consequential cut-back in production.

It is an accepted industrial axiom that, in order to have a competitive export trade, there must be a buoyant home market which can absorb a fair proportion of the overhead expenses. At present the Irish linen industry has an annual export market valued at £13 million, the bulk of which goes to North America, where it is a substantial dollar earner. Exports amount to 50 per cent. of the total output of the industry.

In view of the even balance between export and home sales, a cut-back in home demand will obviously set off a regrettable trend in reduced export sales. It is unrealistic to imagine that a slackening of home demand will be taken up by greater export sales. I therefore respectfully suggest to the Committee that the imposition of purchase tax at any figure, and certainly at 13¾ per cent., would undeniably have a serious adverse effect on the trading and employment position of the linen industry.

I conclude by trying to correct the impression in some people's minds as a justification for imposing purchase tax on linen that it is a luxury article. That is nonsense. The fact that it is a quality article does not mean that it is necessarily a luxury article. Since when have drying cloths become classified as luxury items? Yet they represent a substantial part of linen production.

I hope that the Chancellor will be prepared to reconsider his decision to levy purchase tax on linen goods, bearing in mind the major rôle which linen manufacture plays in an area such as Northern Ireland, where employment opportunities, although steadily improving, are limited and where, if there were a recession, it could have serious economic consequences for the area.

Mr. Michael Noble (Argyll)

I should like to keep the Committee for only two short minutes, first, to support my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) in his plea on behalf of the jute industry. I remember only too well that four or five years ago, when the jute industry was in considerable trouble due largely to competition with cheap imports from India and Pakistan, it was the policy of everybody to try to switch as much as possible of their production to higher-quality and, therefore, more remunerative goods. This was successfully done by a number of firms. I hope, therefore, that in considering this problem, the Financial Secretary will find it possible in his heart to give some sort of help to them, because they were trying to achieve in what is a traditionally difficult industry, a viable way out of a difficult problem.

I should also like the Financial Secretary to consider for a moment the problem of a quite different type of textile industry, scattered more on my side of Scotland than in the jute industry side, which is largely in the Dundee area. There has been growing up in recent years a quite considerable number of very small units of people who are making a variety of mostly very attractive textiles on hand looms. This is not, as in the old days, a croft industry, although some crofters, no doubt, take part in it, but is a craft industry and one which is of real value to the whole area. It produces some exports and certainly some very useful goods which tourists buy.

These people are finding it exceedingly difficult not only to pay the purchase tax—this, perhaps, they can often recoup—but, when producing a quite small number of goods and without the support of an efficient industry, keeping all the forms, filling them up and returning them regularly week after week. This discourages people from doing a useful piece of work not only for themselves, but for the community and for the tourist industry.

I hope that in considering the problems of purchase tax on goods of this type, the Financial Secretary may be able in some way to exempt those small industries, which are essentially craft industries and not a large industrial concern.

Mr. David Waddington (Nelson and Colne)

I hope that when he replies the Financial Secretary will not advance the same arguments as he advanced in the last debate. He can be very beguiling, but he will have to do a lot better than he did last time to beguile us when we are dealing with these important matters.

I thought that it was rather disgraceful to suggest that it really did not matter very much increasing the tax on knitting wool because the old people who knitted could be compensated by an increase in social security benefits. That did not seem to me to be a very good argument.

Mr. Harold Lever

It is not a very good argument, and it was never used by me.

Mr. Waddington

I was here throughout the debate, and it was precisely the argument advanced by the Financial Secretary. It is certainly not a valid argument when we are dealing with household textiles and furnishing fabrics. It is beyond argument that many of the people who will be affected by this tax cannot, and will not, be compensated by increased social security benefits. Take, for instance, people who are about to get married. Take the increased cost of a pair of sheets as a result of this new tax. It will be an increase to the tune of 10s. a pair.

In dealing with this group of Amendments we have to remember the history of purchase tax, as has been mentioned by my hon. Friend the Member for Belfast, South (Mr. Pounder). It was not for nothing that in 1955 these goods were exempted. They were exempted because it was acknowledged at that time that the textile industry was suffering from special difficulties. Anybody who has read the Textile Council's Report, published a few days ago, would realise that the textile industry is still facing considerable difficulties. I make no apology for speaking again on this matter, having done so on Second Reading. It is outrageous that the Government for months and months fobbed us off when we asked questions about the textile industry with the reply "Wait for the Textile Council's Report" and, having waited for it, within three weeks of publication gave the industry the biggest kick in the teeth it has had for years and years.

We have to consider the impact on young people of the new tax; the impact on elderly people who have reached the stage in life when they have to spend money on re-equipping themselves with bed linen; and to consider the serious have on the textile industry which al-effect the increased tax will undoubtedly ready has enough problems on its plate. I hope that when the Financial Secretary comes to reply he will not fob us off with the sort of arguments he advanced an hour or two ago, and that he will not reply in the spirit of the Minister of State when he replied on Second Reading and said what nonsense it was to suggest, when one is arguing in favour of spreading the tax net more widely, that no tax should be imposed on household textiles. That also is not a good argument.

I am prepared to argue in favour of widening the tax net, but what a funny time to impose 13¼ per cent. on a narrow range of necessities bought by elderly people, who certainly did not need clobbering in the way the Chancellor is now choosing to clobber them, and young people about to marry. I ask the Government to give way on this and to think again, very hard indeed.

Mr. F. A. Burden (Gillingham)

I would like to ask the Financial Secretary about a closely defined area. The Government, it would be agreed, have constantly increased the cost of living for the young marrieds since they have been in power. They have increased the cost of their homes and made it more difficult for them to make both ends meet.

I do not take the view of some of my hon. Friends that the Chancellor is devious or hard-hearted. I have always found him realistic and approachable. We all know that when a Chancellor introduces a Finance Bill he has a little something up his sleeve and that he can give way where it is considered necessary, and indeed desirable. Under this Bill a further burden is to be imposed on people by the introduction of purchase tax on cot and pram items. I put down an Amendment to deal with this, but because I suggested that it was to deal with pram and cot items, despite the fact that I asked for guidance in getting it into order, I understand that those words put it out of order. Nevertheless, it can be discussed in the context of this debate.

11.0 p.m.

The Government are now proposing to impose purchase tax at 13¾ per cent. on cot and pram items. I listened with great interest to the points made by my hon. Friend the Member for Nelson and Colne (Mr. Waddington), and I congratulate him on the fluency and cogency of his argument. He said that this rate of purchase tax would increase the cost of a pair of sheets by 10s. As profit is taken on purchase tax plus the price of the goods, the cost of articles will be increased by at least 20 per cent.

The Financial Secretary shakes his head. If he does not believe that he is living in a fool's paradise. He does not know the facts of life, and it is time that he went to the shops and found out what happens when purchase tax is imposed. The hon. Gentleman is the Financial Secretary to the Treasury. What he is saying is that if he were in business he would not charge his profit on the prime cost of the goods but on half the cost of the goods. That is nonsense, as everybody who is engaged in trade, and particularly this trade, knows full well. I see that the hon. Gentleman agrees with me.

Mr. Cyril Bence (Dunbartonshire, East)

Who, me?

Mr. Burden

Well, the hon. Gentleman was shaking his head.

Mr. Bence

When some of us used that argument to Lord Butler, as he now is, he used to say that it was nonsense.

Mr. Burden

I do not care whether Lord Butler said it was nonsense, or whether Fanny Adams said it was nonsense. I know that when merchandise is sold the cost to the buyer includes the profit on the cost of the article plus the purchase tax. It is no good the hon. Gentleman saying "No" unless he can prove it that that is not the case, because the Government have passed legislation which makes it impossible for shops to put their profit on to the total cost of the goods they buy. People will have to pay about 20 per cent. more for pram and cot covers, as well as for household linen.

Under the extended purchase tax orders, cot and pram quilts, cot sheets, pillow cases, blankets and rugs come under the all-embracing heading of Articles of textile, plastic, paper, or similar material of a kind used for soft furnishings, bedding or other domestic purposes … There is the strongest case for these proposals being reconsidered, since the following items are already specifically exempted, on a long-established basis—purely and simply because they are items used by young children: young children's clothing, babies' carrying shawls, bibs and feeders, baby bags with finished head openings and sleeves, or shaped armholes, babies' headgear, infants' napkins—my hon. Friend said that napkins were not excluded, but they are; I am glad to be able to tell him that they are—and perambulators and cots themselves. But now it is proposed to put on a tax—

Sir G. Nabarro

I defer to my hon. Friend's superior knowledge of diapers and the tax arrangements in respect of them. I accept that diapers are excluded. But diaper pins are not excluded, so we now have the further anomaly that the nappy is excluded but the pin is included.

Mr. Burden

Has my hon. Friend thought that safety pins could be extremely dangerous implements, and it may be that some better way of fastening napkins has been found, and this is intended as a deterrent?

The Temporary Chairman (Mr. Bryant Godman Irvine)

Order. I can find nothing about safety pins in the Amendment.

Mr. Burden

I was led out of order by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro), and I apologise. The Bill does not propose to introduce purchase tax on any of the items that I have listed. We must be thankful, because I presume that these are easily identifiable articles, as those required by small children. I hope that the Minister will agree that they are not easily adaptable for any other use. It is obvious that the Chancellor deliberately excluded them from tax, realising the hardship that would be created, especially upon poor families. We must therefore logically assume, that there was no intention whatsoever to include these articles, which are now threatened by purchase tax. They are all required for the welfare and comfort of small children.

I believe that these items slipped in without the knowledge of the Chancellor, and that it was an oversight, and that tonight the hon. Member will be able to give an undertaking that the tax on these items will be removed. I appreciate that the Minister is engaged in serious conversation at the moment, to see whether he cannot give way, but if he will give me his attention I should like to hammer home my argument a little further. I know the problems that face the Minister. There is often the question of definition. But there is no such problem here.

I have here a letter from the Household Textile Association which says: This Association, whose members are engaged in the production and distribution of made-up household textiles, is of the opinion that it is incongruous that certain items used by or for babies should be exempted from Purchase Tax whilst others are not. We refer, of course, to the fact that under the extended Purchase Tax orders, cot and pram quilts, sheets and pillow cases, blankets and rugs, etc., become chargeable under the all-embracing heading of 'articles of textile, plastics, paper or similar material of a kind used for soft furnishings, bedding or other domestic purposes'. They take great exception to this.

Let me add some facts about the increased cost which will now fall on the mother having a new baby. It has been estimated that a minimum equipment comprising one cot quilt, two pillow cases, two blankets, and two flannelette sheets, now costing £12 10s., will go up to £13 10s. That is the absolute minimum, but an average equipment consisting of one pram rug, one cot quilt, two pillow cases, four blankets and six flannelette sheets now costing £20 18s. 6d. will, after the increase of Purchase Tax, cost £23 15s. 4d.

I believe that the hon. Gentleman has a family, and I think he will agree with me that equipping a baby is quite an expensive operation, and there are many other items of expenditure which put great strains on young people's budget when they have a child. I do not believe it is the intention of the Government to single out new parents particularly for the imposition of additional financial hardship.

In many cases when families have their first child they suffer a very considerable cut-back in the family income.

Really I must ask hon. Gentlemen—

The Temporary Chairman

Order. Noise contributes nothing to the proceedings.

Mr. Burden

I am quite sure it is not the intention of the Government to increase the hardship on families with young children. In many instances, in order to have their first child, the wife, who has probably been contributing considerably to the family income by going out to work, has to give that up, and for the first time there is not only the cost of having the infant, and all that that brings about, but also there is a considerable cut-back in the family income. I hope the hon. Gentleman will take that into consideration when he comes to reply.

If these items are not exempted from tax they will make the financial position of many new parents utterly unbearable. There is no question of being able to avoid the outlay. These are all items which are absolutely necessary when a new child comes into the world. I must ask the Chancellor to accept this Amendment and to give way on this. Surely the cost is not substantial? Whatever the cost may be, would it not be better to lose the tax that will be derived from this rather than attract the odium that will fall on the Government from young mums and dads if they have to pay this very considerable extra cost that will be imposed?

I hope the Chancellor will not exaggerate the difficulties of exempting these particular items because of problems of precise definition. There was no difficulty when items for babies were omitted before. The textile associations are confident that exemption could be safely administered on a maximum size criterion by arrangement with the Customs and Excise. I hope that the hon. Gentleman will be able to give way on this point.

11.15 p.m.

Mr. Harold Lever

We have had an interesting debate, and a great deal of passion. Unlike some hon. Members, I always accept that hon. Members speak on these matters with great sincerity and feeling. It was never part of my case in our similar discussion earlier that we should not be sympathetic to people who are blind or disabled or bedridden. I said that it was impossible effectively to show that sympathy by exempting from purchase tax the classes of people who most excite our compassion. One cannot look to the destination of the goods but only to the category of goods when imposing purchase tax. Any attempt to do otherwise would destroy any possibility of indirect taxation at all.

Our argument this time has ranged around babies, mothers and the bedridden. I noticed—I am not questioning anyone's sincerity—that the hon. Members for Bodmin (Mrs. Bessell) and Worcestershire, South (Sir G. Nabarro) and others, who were incensed at the notion that the invalid section of the community, who presumably wear out their bed linen faster than the healthy section, seem to have ignored the tax on mattresses, which has existed since 1940 and was doubled in 1962 by the Conservative Government. This seems to have escaped their passion, although it is a not unreasonable inference that the bedridden and the sick appreciate their mattresses at least as much as the rest of us.

I do not suggest that the debate has been widespread, but all this talk of beds and mattresses and linen might produce some curtailment in my speech, in the hope that hon. Members might feel that a brief summary of their arguments might facilitate their practical experience of those desirable household textiles.

Mr. Bessell

Since I was not here in 1962, could the hon. Gentleman tell me whether his party opposed the purchase tax on mattresses? If they did, how does it come about that they are now imposing a purchase tax on blankets?

Mr. Lever

I never keep a tally of the battles between Opposition and Government on the details of purchase tax and the Finance Bill. I have heard hon. Members under one Government passionately denouncing the tax on toothpaste as undermining the nation's health, and the same hon. Members, in right hon. guise, solidly defending the right to increase that same tax a year or so later. This is one of the troublesome aspects of Finance Bill Committees which I have not been able altogether to reassure myself about.

The hon. Member for Worthing (Mr. Higgins) said that there was some doubt in the minds of the public about which articles are affected. All cloths exempt under pre-1955 regulations will be exempt here. We are going back to the pre-1955 position, when there were careful regulations, which are now being restored, which will exempt all cloths which are intended for industry and which are not household textiles as such.

He asked me about the scope of the tax on items going into further states of production, and especially into nontaxable articles. If a taxable cloth were used in a non-taxable tarpaulin for example, he wanted to know what would happen. There is a general rule, with which many hon. Members may be familiar, that where one uses a taxable article in making a non-taxable article, one can register and get one's supplies in such a form that one does not pay tax on the taxable article, since its ultimate destination is thought, for one reason or another, to be non-taxable.

I assure the hon. Member for Bodmin that in dealing with the points he raised in quoting from his Amendment I am not intending to ridicule his proposal, which, I am sure, comes from a warm heart if not from a practical administrative head. I invite him to examine the words: … except sheets, pillow cases or blankets, used by persons confined to bed by sickness, and upon the certificate of a medical practitioner, for a period in excess of two months. He is prepared to accept a period longer or shorter than two months, but he will appreciate that the whole idea of exempting bedlinen on condition that it has been certified that somebody is in bed for two or three months, or for any other specified statutory period, would be impossible to administer.

We would need not only a certificate of illness, but a certificate of occupancy of the sick bed and a certificate to the effect that only the sick person was using the items. This would be a considerable administrative burden, especially if we were to carry the idea into the realm of the other areas into which the hon. Gentleman wants to go, such as boarding schools, hospitals, nursing homes and so on. I am sure that, on reflection, the hon. Gentleman will agree that there are insuperable practical difficulties.

Mr. Bessell

Is not the Financial Secretary aware that during the war special allocation of coupons were issued for clothing and other articles of a similar nature for cases such as this? There were administrative difficulties, but they did not prove insuperable. I am sure that they could be overcome for the permanently bedridden.

Mr. Lever

I cannot see a satisfactory analogy between issuing coupons entitling people to buy rather more of certain articles and making tax free articles on which the rest of the population must pay tax.

I must disappoint hon. Members who have been able to lash themselves into a state of indignation over this matter. I understand the sincerity of their feelings on behalf of the sick, disabled and blind, but what they are discussing is not the original sin of this Government. This has been the practice of successive Governments, who have said that one cannot exempt unidentifiable articles from purchase tax in this way. We have still left exempt specialised equipment for people who are bedridden or sick, and we will no doubt continue to do that wherever possible, but we cannot exempt items in general use.

It was suggested that this would be a death blow to the textile industry. This is nonsense because the languishing condition of the cotton textile industry, to which my hon. Friend the Member for Oldham, East (Mr. Mapp) referred, has been arrived at during the last few years, when its products have been wholly exempt.

My hon. Friend must not anticipate events. Whatever the industry's present condition, it cannot be attributed to a tax that has not yet come into force. I hope that my hon. Friend will, with this assurance, feel relieved in the knowledge that this tax cannot have produced the difficulties at present being experienced by the industry and will come into the Lobby with us. Next year, if he finds that some damage has been done and if he has evidence to support that view, he might consider abstaining.

My right hon. Friend has commented on the question of this being a blunt instrument for dealing with the regions, particularly when one bears in mind the possibility of giving exemptions to products which may or may not be made in particular regions.

I have left aside the point made by the hon. Member for Worthing about the retail trade, which is treated in exactly the same way for the purpose of this tax as it is in relation to any other purchase tax change. If the hon. Gentleman wants further details, I will let him have them at a convenient time. I assure him that it applies on this score as it does in every other purchase tax change.

For the reasons which I gave before, and which I do not wish to repeat, those who are anxious to broaden the tax basis and make it less distorted in its consequences will opt for this sort of tax at a low level instead of adding to the burden on goods which are already sufficiently highly taxed—

Mr. Bruce-Gardyne

I do not know whether the Financial Secretary's reference to the regional arguments is all that he proposes to say about the special position of the jute industry, which is not a regional matter but a separately identifiable issue which has not raised the objections which the hon. Gentleman earlier mentioned.

Mr. Lever

The same argument applies to particular industries. I do not think that any case has been sufficiently made out for exemption from a very small tax—which is not 20 per cent., as the hon. Gentleman believes. His hon. Friend the Member for Worcestershire, South is, I think, more experienced and accurate on this point. He is roughly right in saying that between 9½ per cent. and 10 per cent. is the incidence of this tax on retail prices. It is no use the hon. Gentleman shaking his head. On this issue, the hon. Member for Worcestershire, South, who is an experienced man and not, I think, prone to understatement in matters of this nature, agrees with me—

Sir G. Nabarro

Is not the Financial Secretary not now admitting, for the benefit of posterity, that what I alluded to as a tax on motherhood is between 9½ per cent. and 10 per cent.? Would he make it perfectly clear—I want it on the record—that it is a tax on motherhood of between 9½ per cent. and 10 per cent.?

Mr. Lever

This is not tax on mothers, thought there are some hon. Members who might think that in some cases one would wish to put a tax on particular mothers of particular children. This is merely a tax on certain textiles which, admittedly, form part of the expenses of motherhood and, of course, it naturally adds to the cost of it. But it is a general tax on household textiles.

For these reasons, I would urge the Committee—

Mr. Burden

Will the hon. Gentleman give his arguments for not taking off the tax on prams and cots, and items for small children? Will he also tell the Committee how he arrives at the view that whereas the charges are 13¼ per cent. the retail price will rise only by 9 per cent.?

Mr. Lever

Prices will rise by between 9½ per cent. and 10 per cent. on the purchase tax as calculated on the wholesale price. That is the short answer to the hon. Gentleman.

For the reasons I have given, I hope that the Committee will now feel able to come to a decision favourable to the Chancellor of the Exchequer's proposals and reject the Amendment.

Mr. Higgins

I very much hope that the Committee will do no such thing. It is perfectly clear that in this Amendment, as in many other Amendments, we seek to do something to help the balance of payments, about which the Government seem to do nothing at all in the Budget. It is quite clear that if one imposes an ad valorem tax of this kind it will be likely to fall more on the dearer home products than on the cheaper import end of the market. I say in all seriousness that I am very disappointed with the Financial Secretary's reply, because quite apart from the merits or demerits of the tax increase as such there is grave concern in the industry on the very points to which I have already referred. The answers given by the hon. Gentleman on those points are not adequate.

I asked, first of all, what was the position in regard to industrial cloths. The hon. Gentleman said that the position was the same as it was in 1955. If that is so, it would have been the simple answer to give those firms that have been in business as long as that, but they have not been given that answer, and they are still in grave confusion about the position. It would appear that the officers under him are not giving them the assurances that they require.

11.30 p.m.

The second point I raised was with regard to the imposition of tax at one stage when the product which it was used in was not taxed. The hon. Gentleman said that it is clear that it is registration certificates. I quote just one example. A large producer of cotton textiles had, as of the 13th of this month, a list of 17 firms which had not so far provided a tax registration certificate, including firms as large as I.C.I., Courtaulds, and so on. Given the state of the post, and given the fact that the tax comes into operation on 26th and 27th May, the Financial Secretary's answer was not satisfactory. I hope that he will pursue the matter within the industry at the earliest possible moment and with the greatest possible urgency.

Again, I asked a specific question about book binding. I got absolutely no reply from the Financial Secretary. I asked a specific question with regard to the question of discrimination, the way in which the tax will fall against a large, efficient, high quality producer as against producers in the middle and at the tail end of the market. I got absolutely no semblance of reply from the hon. Gentleman. Therefore, on all these points, about which the industry itself is gravely concerned, the hon. Gentleman has failed to take this opportunity of clarifying the position.

Mr. Harold Lever

It is impossible in this Committee for me to define with legal exactitude and comprehensiveness the vast number of exemptions covered under the 1955 Regulations. I will, however, take the hon. Gentleman's point

and ensure, if it is not already being done, that all those affected are fully informed in detail—it spreads over many pages—of the definitions. I did not think that the Committee would want me to read all that at this hour. If the hon. Gentleman wants it, I shall be happy to see that any particular area is informed with special care on the points he raised.

Mr. Higgins

The hon. Gentleman could have given a clearer answer than that which he gave and he did not deal with the three points I have mentioned. This is not a satisfactory state of affairs. Now, more than a month after the Budget, and with the tax due to take effect on the 26th or 27th of this month, we are told that the Financial Secretary will chase the matter up. This is not good enough. I will not labour the point any more. I should have thought that I have made sufficient of it, and I hope that the hon. Gentleman will now do what he can in the short time available to reassure the industry on these points.

The fundamental point has been made by my hon. Friends that this is an untimely measure coming on top, as it does, of the Textile Council's Report. It is one which hits, as my hon. Friends have stressed at great length, invalids and those with young children. I do not believe that it is a measure which should be applied at this time. I hope that my right hon. and hon. Friends and those who have spoken against it from other parts of the Committee will join us in the Lobby in support of the Amendment.

Question put, That the Amendment be made:—

The Committee divided: Ayes 212, Noes 256.

Division No. 229.] AYES [11.34 p.m.
Alison, Michael (Barkston Ash) Boyle, R. Hn. Sir Edward Crouch, David
Allason, James (Hemel Hempstead) Braine, Bernard Crowder, F. P.
Amery, Rt. Hn. Julian Brewis, John Cunningham, Sir Knox
Astor, John Brinton, Sir Tatton Dalkeith, Earl of
Awdry, Daniel Bromley-Davenport, Lt.-Col. Sir Walter Dance, James
Baker, Kenneth (Acton) Brown, Sir Edward (Bath) d'Avigdor-Goldsmid, Sir Henry
Baker, W. H. K. (Banff) Bruce-Gardyne, J. Dean, Paul
Balniel, Lord Buchanan-Smith, Alick (Angus, N & M) Deedes, Rt. Hn. W. F. (Ashford)
Barber, Rt. Hn. Anthony Buck, Antony (Colchester) Digby, Simon Wingfield
Batsford, Brian Bullus, Sir Eric Dodds-Parker, Douglas
Beamish, Col. Sir Tufton Burden, F. A. Doughty, Charles
Bennett, Dr. Reginald (Gos. & Fhm) Campbell, B. (Oldham, W.) Drayson, G. B.
Berry, Hn. Anthony Campbell, Gordon (Moray & Nairn) du Cann, Rt. Hn. Edward
Bessell, Peter Channon, H. P. G. Eden, Sir John
Biffen, John Clark, Henry Elliot, Capt. Walter (Carshalton)
Biggs-Davison, John Clegg, Walter Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Birch, Rt. Hn. Nigel Cooke, Robert Emery, Peter
Blaker, Peter Cordle, John Errington, Sir Eric
Boardman, Tom (Leicester, S. W.) Corfield, F. V. Eyre, Reginald
Body, Richard Costain, A. P. Farr, John
Fisher, Nigel Lane, David Renton, Rt. Hn. Sir David
Fortescue, Tim Legge-Bourke, Sir Harry Rhys Williams, Sir Brandon
Foster, Sir John Lewis, Kenneth (Rutland) Ridley, Hn. Nicholas
Galbraith, Hn. T. G. Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield) Ridsdale, Julian
Gilmour, Ian (Norfolk, C.) Lloyd Ian (P'tsm'th, Langstone) Rodgers, Sir John (Sevenoaks)
Glover, Sir Douglas Lloyd, Rt. Hn. Selwyn (Wirral) Rossi, Hugh (Hornsey)
Glyn, Sir Richard Longden, Gilbert Russwll, Sir Ronald
Godber, Rt. Hn. J. B. Lubbock, Eric St. John-Stevas, Norman
Goodhart, Philip McAdden, Sir Stephen Scott, Nicholas
Goodhew, Victor MacArthur, Ian Scott-Hopkins, James
Gower, Raymond Maclean, Sir Fitzroy Sharples, Richard
Grant-Ferris, R. Macleod, Rt. Hn. Iain Shaw, Michael (Sc'b'gh & Whitby)
Gresham Cooke, R. Macmillan, Maurice (Farnham) Silvester, Frederick
Grieve, Percy McNair-Wilson, Michael Sinclair, Sir George
Gurden, Harold McNair-Wilson, Patrick (New Forest) Smith, Dudley (W'wick & L'mington)
Hall, John (Wycombe) Maddan, Martin Smith, John (London & W'minster)
Hall-Davis, A. G. F. Maginnis, John E. Speed, Keith
Hamilton, Lord (Fermanagh) Marples, Rt. Hn. Ernest Stainton, Keith
Hamilton, Michael (Salisbury) Marten, Neil Steel, David (Roxburgh)
Harris, Frederic (Croydon, N. W.) Maude, Angus Stoddart-Scott, Col. Sir M.
Harris, Reader (Heston) Maxwell-Hyslop, R. J. Summers, Sir Spencer
Harrison, Brian (Maldon) Maydon, Lt.-Cmdr. S. L. C Tapsell, Peter
Harrison, Col. Sir Harwood (Eye) Mills, Peter (Torrington) Taylor, Sir Charles (Eastbourne)
Harvey, Sir Arthur Vere Mills, Stratton (Belfast, N.) Taylor, Edward M. (G'gow, Cathcart)
Harvie Anderson, Miss Miscampbell, Norman Taylor, Frank (Moss Side)
Hastings, Stephen Mitchell, David (Basingstoke) Temple, John M.
Hawkins, Paul More, Jasper Thatcher, Mrs. Margaret
Hay, John Morgan-Giles, Rear-Adm. Thorpe, Rt. Hn. Jeremy
Heald, Rt. Hn. Sir Lionel Morrison, Charles (Devizes) Turton, Rt. Hn. R. H.
Heseltine, Michael Munro-Lucas-Tooth, Sir Hugh Vaughan-Morgan, Rt. Hn, Sir John
Higgins, Terence L. Murton, Oscar Vickers, Dame Joan
Hiley, Joseph Nabarro, Sir Gerald Waddington, David
Hill, J. E. B. Neave, Airey Walker, Peter (Worcester)
Holland, Philip Noble, Rt. Hn. Michael Wall, Patrick
Hooson, Emlyn Nott, John Walters, Dennis
Hordern, Peter Onslow, Cranley Ward, Dame Irene
Hunt, John Orr, Capt. L. P. S. Weatherill, Bernard
Hutchison, Michael Clark Orr-Ewing, Sir Ian Wells, John (Maidstone)
Iremonger, T. L. Osborn, John (Hallam) Whitelaw, Rt. Hn. William
Jenkin, Patrick (Woodford) Page, Graham (Crosby) Wiggin, A. W.
Johnson Smith, G. (E. Grinstead) Pardoe, John Williams, Donald (Dudley)
Jones, Arthur (Northants, S.) Peel, John Wilson, Geoffrey (Truro)
Jopling, Michael Peyton, John Winstanley, Dr. M. P.
Kaberry, Sir Donald Pink, R. Bonner Wood, Rt. Hn. Richard
Kerby, Capt. Henry Pounder, Rafton Woodnutt, Mark
Kershaw, Anthony Price, David (Eastleigh) Worsley, Marcus
King, Evelyn (Dorset, S.) Prior, J. M. L. Wright, Esmond
Kirk, Peter Pym, Francis Younger, Hn. George
Kitson, Timothy Quennell, Miss J. M.
Knight, Mrs. Jill Ramsden, Rt. Hn. James TELLERS FOR THE AYES:
Lambton, Viscount Rawlinson, Rt. Hn. Sir Peter Mr. Anthony Royle and
Lancaster, Col. C. G. Rees-Davies, W. R. Mr. Humphrey Atkins.
Albu, Austen Brown, R. W. (Shoreditch & F'bury) Edelman, Maurice
Allaun, Frank (Salford, E.) Buchan, Norman Edwards, Robert (Bilston)
Alldritt, Walter Buchanan, Richard (C'gow, Sp'burn) Edwards, William (Merioneth)
Anderson, Donald Callaghan, Rt. Hn. James Ellis, John
Archer, Peter Cant, R. B. English, Michael
Ashton, Joe (Bassetlaw) Carmichael, Neil Ennals, David
Atkins, Ronald (Preston, N.) Chapman, Donald Ensor, David
Atkinson, Norman (Tottenham) Coe, Denis Evans, Fred (Caerphilly)
Bagier, Gordon A. T. Coleman, Donald Evans, Ioan L. (Birm'h'm, Yardley)
Barnes, Michael Corbet, Mrs. Freda Faulds, Andrew
Barnett, Joel Crawshaw, Richard Fernyhough, E.
Beaney, Alan Crosland, Rt. Hn. Anthony Finch, Harold
Bence, Cyril Davldson, Arthur (Accrington) Fitt, Gerard (Belfast, W.)
Benn, Rt. Hn. Anthony Wedgwood Davies, G. Elfed (Rhondda, E.) Fletcher, Rt. Hn. Sir Eric (Islington, E.)
Bidwell Sydney Davies, Dr. Ernest (Stretford) Fletcher, Raymond (Ilkeston)
Binns, John Davies, Rt. Hn. Harold (Leek) Fletcher, Ted (Darlington)
Bishop, E. S. Davies, Ifor (Cower) Foley, Maurice
Blackburn, F. de Freitas, Rt. Hn. Sir Geoffrey Foot, Rt. Hn. Sir Dingle (Ipswich)
Blenkinsop, Arthur Dell, Edmund Foot, Michael (Ebbw Vale)
Booth, Albert Dempsey, James Ford, Ben
Boston, Terence Diamond, Rt Hn. John Forrester, John
Dickens, James Fraser, John (Norwood)
Bottomley, Rt. Hn. Arthur Dobson, Ray Freeson, Reginald
Boyden, James Doig, Peter Gardner, Tony
Bradley, Tom Dunn, Jamee A. Garrett, W. E.
Bray, Dr. Jeremy Dunnett, Jack Gordon Walker, Rt. Hn. P. C.
Brooks, Edwin Dunwoody, Mrs. Gwyneth (Exeter) Gray, Dr. Hugh (Yarmouth)
Brown, Hugh D. (G'gow, Provan) Dunwoody, Dr. John (F'th & C'b'e) Greenwood, Rt. Hn. Anthony
Brown, Bob (N'c'tle-upon-Tyne, W.) Eadie, Alex Gregory, Arnold
Grey, Charles (Durham) McBride, Neil Rees, Merlyn
Griffiths, David (Rother Valley) McCann, John Rhodes, Geoffrey
Griffiths, Eddie (Brightside) MacColl, James Roberts, Albert (Normanton)
Griffiths, Will (Exchange) Macdonald, A. H. Roberts, Rt. Hn. Goronwy
Gunter, Rt. Hn. R. J. McGuire, Michael Robertson, Jotan (Paisley)
Hamilton, James (Bothwell) McKay, Mrs. Margaret Robinson, Rt. Hn. Kenneth (St. P'c'as)
Hamilton, William (Fife, W.) Mackenzie, Gregor (Rutherglen) Rodgers, William (Stockton)
Hamling, William Mackie, John Roebuck, Roy
Hannan, William Mackintosh, John P. Rowlands, E.
Harper, Joseph Maclennan, Robert Shaw, Arnold (Ilford, S.)
Harrison, Walter (Wakefield) McNamara, J. Kevin Sheldon, Robert
Hart, Rt. Hn. Judith MacPherson, Malcolm Shore, Rt. Hn. Peter (Stepney)
Hattersley, Roy Mallalieu, E. L. (Brigg) Silkin, Rt. Hn. John (Deptford)
Hazell, Bert Mallalieu, J. P. W. (Huddersfield, E.) Silkin, Hn. S. C. (Dulwich)
Healey, Rt. Hn. Denis Manuel, Archie Silverman, Julius
Heffer, Eric S. Marks, Kenneth Skeffington, Arthur
Hilton, W. S. Marquand, David Slater, Joseph
Hobden, Dennis Marsh, Rt. Hn. Richard Small, William
Hooley, Frank Maxwell, Robert Spriggs, Leslie
Houghton, Rt. Hn. Douglas Mellish, Rt Hn. Robert Stonehouse, Rt. Hn. John
Howarth, Robert (Bolton, E.) Mendelson, John Strauss, Rt. Hn. G. R.
Howell, Denis (Small Heath) Mikardo, Ian Summerskill, Hn. Dr. Shirley
Howie, W. Millan, Bruce Swain, Thomas
Hoy, James Milne, Edward (Blyth) Taverne, Dick
Huckfield, Leslie Miller, Dr. M. S. Thomas, Rt. Hn. George
Hughes, Hector (Aberdeen, N.) Molloy, William Thomson, Rt. Hn. George
Hughes, Roy (Newport) Morgan, Elystan (Cardiganshire) Tinn, James
Hunter, Adam Morris, John (Aberavon) Tomney, Frank
Hynd, John Moyle, Roland Tuck, Raphael
Irvine, Sir Arthur (Edge Hill) Mulley, Rt. Hn. Frederick Urwrn, T. W.
Janner, Sir Barnett Murray, Albert Varley, Eric G.
Jay, Rt. Hn. Douglas Neal, Harold Wainwright, Edwin (Dearne Valley)
Jeger, Mrs. Lena (H'b'n & St. P'cras, S.) Newens, Stan Walker, Harold (Doncaster)
Jenkins, Hugh (Putney) Oakes, Gordon Wallace, George
Jenkins, Rt. Hn. Roy (Stechford) Ogden, Eric Watkins, David (Consett)
Johnson, Carol (Lewisham, S.) Oram, Albert E. Watkins, Tudor (Brecon & Radnor)
Johnson, James (K'ston-on-Hull, W.) Orbach, Maurice Wellbeloved, James
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) Orme, Stanley Wells, William (Walsall, N.)
Jones, J. Idwal (Wrexham) Oswald, Thomas Whitaker, Ben
Jones, T. Alec (Rhondda, West) Owen, Dr. David (Plymouth, S'tn) White, Mrs. Eirene
Kelley, Richard Owen, Will (Morpeth) Whitlock, William
Kerr, Russell (Feltham) Padley, Walter Wilkins, W. A.
Lawson, George Page, Derek (King's Lynn) Willey, Rt. Hn. Frederick
Leadbitter, Ted Pannell, Rt. Hn. Charles Williams, Alan (Swansea, W.)
Lee, Rt. Hn. Frederick (Newton) Park, Trevor Williams, Alan Lee (Hornchurch)
Lee, John (Reading) Parker, John (Dagenham) Williams, Clifford (Abertillery)
Lestor, Miss Joan Parkin, Ben (Paddington, N.) Williams, Mrs. Shirley (Hitchin)
Lever, Harold (Cheetham) Parkyn, Brian (Bedford) Williams, W. T. (Warrington)
Lever, L. M. (Ardwick) Pavitt, Laurence Willis, Rt. Hn. George
Lewis, Arthur (W. Ham, N.) Pearson, Arthur (Pontypridd) Wilson, Rt. Hn. Harold (Huyton)
Lewis, Ron (Carlisle) Peart, Rt. Hn. Fred Wilson, William (Coventry, S.)
Lipton, Marcus Pentland, Norman Winnick, David
Lomas, Kenneth Perry, Ernest G. (Battersea, S.) Woof, Robert
Loughlin, Charles Perry, George H. (Nottingham, S) Wyatt, Woodrow
Luard, Evan Prentice, Rt. Hn. R. E.
Lyon, Alexander W. (York) Price, Thomas (Westhoughton TELLERS FOR THE NOES:
Lyons, Edward (Bradford, E) Price, William (Rugby) Mr. Alan Fitch and
Mabon, Dr. J. Dickson Probert, Arthur Mr. Charles R. Morris.

11.45 p.m.

Mr. Bessell

I beg to move Amendment No. 47, in page 74, line 30, leave out paragraph 4.

The Temporary Chairman (Mr. Bryant Codman Irvine)

It will be convenient also to take with this Amendment, Amendment No. 67, line 40, at end insert: (d) in paragraph (1) of the exemptions after the word 'fabrics' on the last occasion on which it occurs there shall be inserted the words 'other than window display material of jute'.

Mr. Bessell

I say at once to the Financial Secretary that this is largely a probing Amendment. As the Schedule stands, we have this rather complicated piece of legislation reading: In Group 7— (a) after the words 'otherwise treated' there shall be inserted the words 'and plastic sheeting in the piece or in cut lengths, being sheeting of a kind suitable for making garments or curtains, tablecloths and similar soft furnishings'. That removes the words: Tissues and fabrics not exceeding 12 inches in width. In (4)(b) we read: For the words 'Tissues and fabrics not exceeding 12 inches in width' there shall be substituted the words 'Articles not comprised below in this Group'. I take it that, looking at page 128 of the 1963 Purchase Tax Act, this means that those items listed as being exempt, fabrics of various kinds, braids, fringes, trimmings, jute, glass fibre, asbestos fabrics, etc., are included.

This is also the effecr of (4) (c) and (d). We have a rather strange change, because instead of the adhesive gloss tape which was acceptable, provided it did not exceed three inches in width, it is now to be exempted at six inches in width. I want to know how much it is anticipated will be raised by way of the tax by including this group of items under the list of those which will now attract tax. What is this likely to mean in a full year in terms of revenue, and how valuable is it to create this additional complicated piece of taxation?

I say "complicated" because of the number of exemptions which remain and the difficulty that must be caused to retailers and others who sell these materials, in having to decide which are exempted items. There will have to be purchase tax returns and so on. If the Financial Secretary can satisfy me that there is to be a substantial increase in revenue as a result of the inclusion of these items I would not wish to press this to a Division, because I do not think that these items are in anything like the same categories as those we discussed earlier, when hardship will be caused. I am satisfied that it will be caused by virtue of the Committee rejecting the Amendments tabled by this side of the Committee.

I am only continuing to talk to enable the Financial Secretary to get the answer from the box. I believe that it is coming now—no, there is further discussion. I believe that the answer is at hand now.

Mr. Broce-Gardyne

I wish to refer briefly to Amendment No. 67, which proposes to insert in paragraph (1) of the exemptions in the principal Act of 1963, after "fabric" the words: other than window display material of jute". The point about this is that there may have been a genuine misconception in the way in which the new purchase tax arrangements are to be applied. Once again, I am not absolutely certain whether the Amendment is in the right place. I see the Financial Secretary shaking his head, so it appears that it is not. I hope that he will extend some sympathy to me, because, if one goes back to the principal Act, one finds that one is dealing with exemptions on exemptions on exemptions, and these are further complicated by the Amendments which have been introduced in Schedule 6.

The effect of the Amendment to the Schedule, as I understand it, and the Financial Secretary will correct me if I am wrong, is to include in Group 7 of the principal Act all articles not comprised among the exemptions, regardless of the fact that they are more than 12 inches in width, which previously made them exempt. Among the exemptions, clearly set out as exemption No. (1), is jute. But then, unfortunately, and this is where the complication comes in, under the same heading of exemption No. (1) there is a parenthesis which states: fabrics of the following descriptions (not being …". There follows a series of items which are exempted from the exemptions, and which presumably attract tax, the last one being: … fabrics which have been shaped or partly made-up or have been bleached, printed, embroidered or otherwise decorated". I understand from information received from firms in my constituency that according to this parenthesis window display material of jute would now be subject to tax under Schedule 6. If those firms have been misinformed, I hope that the Financial Secretary will be able to put this right.

The reason for waiving the exemption previously enjoyed by window display materials of jute is that it has been discovered that window display material which is designed to back a window display in a shop—and this is clearly not the type of end use which would attract purchase tax—can also be used as curtaining material. Because it was used and even sold as curtaining material it was felt that it should attract purchase tax. However, jute material cannot be used for curtaining because it inevitably fades in sunlight and is therefore unsuitable for this purpose. When it is sold as window display material the purchasers are warned that it should not be resold for curtaining, and it should not, therefore, attract purchase tax. The fact that it is to attract the tax—my understanding from firms in my constituency is clearly that they have been told that it does fall within the Schedule—must clearly have arisen from a misunderstanding. I hope that the Financial Secretary will be able to put this right.

Mr. Harold Lever

As far as I can have it estimated, without any pretence to accuracy, the cost of cancelling the extension of the tax to cloth would be about £7 million a year. In practice, it would be difficult to make that withdrawal alone and the consequential withdrawals which would be likely to follow would cost, together with the £7 million, a total of about £23 million a year. It works out rather expensive.

I am advised that the Amendment of the hon. Member for South Angus (Mr. Bruce-Gardyne) is meaningless as it stands. This is no reflection upon the hon. Member. He would have had to show considerable ingenuity to have drafted his purpose, in the circumstances, to give effect to what he intended. I understand his intention to be that felt, hemp and hessian fabrics used for window display should be exempt when processed. They are already exempt when used for window display purposes in unprocessed forms, and so is jute. Once it has been processed, bleached, printed, embroidered or otherwise decorated, it becomes liable to tax.

It is quite impossible to give effect even to the hon. Member's intention in the Amendment, because it would involve our determining, at the stages of manufacture when tax liability has to be determined, what was the intended use of the article. That would be quite beyond our power. Moreover, in principle, it is not the ultimate use of an article, which may have many different uses, which determines its taxability. One has inevitably to rely on broad categories. I have already dealt with the possible regional appeal, which the hon. Member disavowed on the previous occasion, concerning jute and hessian.

Mr. Bruce-Gardyne

There seems to be confusion about this. I understand from firms in my constituency that in any event, when the end use of a product is clearly commercial, purchase tax will not be payable. The only reason why purchase tax is payable in the case of window-dressing material is that it has been found that other types of textile window-dressing material can be used for curtaining, whereas jute cannot. This is the distinction that I was trying to make. I apologise if I tried to do so in the wrong place.

Mr. Lever

I was endeavouring to divine the hon. Member's intentions. I can only say that the end purpose is relevant only where that end purpose is exclusively, or nearly exclusively, the end purpose of the material itself. In those circumstances, I do not think that I can help the hon. Gentleman. If, however, he can satisfy me that the only end purpose of this material is commercial, I will certainly look at the matter again.

Mr. Bessell

If I may use a well-established Parliamentary formula with which the Financial Secretary will be familiar, on the understanding that we may want to look at this matter again on Report, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Bessell

I beg to move Amendment No. 122, in page 75, line 10, leave out "potato crisps".

The Temporary Chairman (Mr. Bryant Godman Irvine)

With this Amendment it will be convenient to take also the following Amendments: Amendment No. 123, in page 75, line 15, at end insert unless such products are packaged within a development area as designated by the Board of Trade". Amendment No. 124, in line 15, at end insert unless such products are packaged in Scotland". Amendment No. 125, in line 15, at end insert unless such products are packaged in Wales". Amendment No. 126, in line 15, at end insert unless such products are packaged in Devon and Cornwall".

Mr. Bessell

This is a rather different Amendment in the sense that we are on quite positive ground. I do not suggest that I am seeking to probe the intentions of the Chancellor of the Exchequer or to ascertain the sum which is likely to be involved as a result of this tax. My purpose in moving the Amendment is to oppose the proposal contained in the Schedule at line 11, page 75.

[MR. HARRY GOURLAY in the Chair]

12 m.

It seems to me to be a very strange decision for the Government to have taken to impose purchase tax of 22 per cent. on the items which are listed in paragraph 6. Nothing seems more absurd to me than to include potato crisps among those items. I say that because it is an item of food consumed on quite a large scale by a number of young people and others who want a quick snack. It is a wholesome item of food and is well worth selling as cheaply as possible. As the Financial Secretary well knows, there is one major company whose name is always associated with potato crisps in this country and that company has recently been taken over by an American group which has expended a considerable sum in expanding its activities and increasing the number of factories and their output. It is no secret that this has been a costly and not particularly profitable operation. Although I have not been in touch with them, nor they with me, the imposition of purchase tax will hit them badly and this is a particularly unfortunate choice of article for the imposition of tax, because, as with many other firms considering entering the British wholesale or retail trade, this must have come as a shock to the American corporation.

It might act as a deterrent to others who might come into this country with expertise, specialised knowledge, and the ability to improve the whole of our capacity and output. If a particular industry is suddenly singled out in this way, and if the Financial Secretary is unable to give an assurance, will he before Report stage look at the effect on this company whose name I have deliberately avoided mentioning, to see whether it is wise to impose a tax on the food items when the consequences at which I have just hinted might result?

Turning briefly to the other Amendments, I want to pay particular attention to Amendment No. 123. I am suggesting by that Amendment that at the end of this group there should be included the words unless such products are packaged within a development area as designated by the Board of Trade.

I can imagine that the Financial Secretary will say, in reply, "If we exempted the payment of purchase tax on items in this group, if produced within a development area, the immediate result would be that factories would move to development areas to escape purchase tax and to be able to sell the items more cheaply to the general public". Of course they would, and that is exactly my intention. I make no secret of the fact that I want to further the Government's avowed policy of giving the maximum possible assistance to areas designated as development areas.

I include in that Cornwall, and my constituency. There is nothing more desirable than that factories should be established in South-East Cornwall making crisps, since the potatoes— and similar products made from the potato, or from potato flour, or from potato starch, and savoury food products obtained by the swelling of cereals or cereal products; and salted or roasted nuts other than nuts in shell. are farmed or can be found in the area, and it would be much cheaper for manufacturers to produce these goods in development areas, particularly the West Country and Cornwall, than if they have to produce them in some big industrial area where the base product has to be taken from rural areas and prepared.

My proposal that these products should be exempted provided they are produced within development areas is in line with the Government's programme, and even though, as I said earlier in relation to potato crisps, I should not expect the Financial Secretary to accept the Amendment tonight, I hope that he will look at this matter again and see whether he can make some concession before we get to the Report stage.

Mr. Robert Cooke

The hon. Member for Bodmin (Mr. Bessell) mentioned a nationally known firm which we must not mention as being pretty well the sole producer of that vital product the potato crisp.

Mr. Bessell

The main producer.

Mr. Cooke

I should like the hon. Gentleman to understand, and I hope the Minister knows, that a certain other nationally known concern in the Bristol area has diversified into this field and I believe that its potato crisps are just as good. I hope that if consideration is given to the chips belonging to the hon. Member for Bodmin, the Bristol chips will be given the same thought and care.

Mr. Harold Lever

I think that I must leave the two hon. Members to chip each other in accordance with their constituency interests. I can only say that the question whether one should apply to crisps the tax that is already applied to confectionery and ice cream is a matter of judgment and does not lend itself to detailed expatiation.

The Chancellor's judgment is that if someone has a sweet tooth he contributes to the revenue, and if he has a savoury tooth he contributes to the revenue. This is the counterpart of ice cream for those who do not have a sweet tooth. It does not mean that my right hon. Friend is opposed to that entirely wholesome food, whether sweet or savoury, which is brought within the revenue charge.

It is not possible to give this advantage in the form that the hon. Member for Bodmin (Mr. Bessell) wants. The object of regional policy is to encourage new industry to go in there, not to ruin the industries which are outside. If we start giving this concession in the manner suggested by the hon. Gentleman, we would not bring new industry to the regions, we would demolish the taxed industry which was left to compete with the exempt industry of the region. Moreover, it would be illegal under our international obligations, because we would give the regions a tax advantage against imported goods.

For those reasons I hope that with his customary moderation the hon. Gentleman will feel inclined to reserve his position by withdrawing the Amendment.

Mr. Bessell

Right through the Financial Secretary's argument I was not prepared to waiver for a second, and I hoped that his coat tail would be pulled by the Chancellor so that he might change his mind and give a totally different answer. Alas, that did not happen.

But there is one point on which I readily admit the hon. Gentleman has floored me, and that is the position of this country in relation to G.A.T.T., and of course it is G.A.T.T. which might be affected. If the hon. Gentleman is correct in that assumption and I believe him to be, then obviously my Amendment must be withdrawn, but I am sure that both he and I will make doubly certain that he is correct before we get to Report.

Holding that one reserve in hand, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Richard Sharples (Sutton and Cheam)

I beg to move Amendment No. 48, in page 75, line 16, leave out from beginning to end of line 20.

The Deputy Chairman (Mr. Harry Gourlay)

With this Amendment we can take the following Amendments: Amendment No. 71, in page 75, line 19, leave out 'poultry or game' and insert: 'poultry, game or wild birds'. Amendment No. 127, in line 20, at end add: 'unless such foods are canned, packaged or prepared in a development area as designated by the Board of Trade'. Amendment No. 128, in line 20, at end add: 'unless such foods are canned, packaged or prepared in Scotland'. Amendment No. 129, in line 20, at end add: 'unless such foods are canned, packaged or prepared in Wales'. Amendment No. 130, in line 20, at end add: 'unless such foods are canned, packaged or prepared in Devon or Cornwall'. Amendment No. 72, in line 20, at end insert: Nothing in the foregoing shall apply to food for guide dogs for the blind, for which special tax-free supplies shall be arranged. Amendment No. 73, in line 20, at end insert: Nothing in the foregoing shall apply to food for cats or dogs owned by old age pensioners for which special tax-free supplies shall be arranged.

Mr. Sharples

The Chancellor of the Exchequer, whom I am glad to see in his place, said in his Budget speech: I also propose to bring prepared pet foods—widely advertised, no doubt appreciated, but not an essential means of feeding a pet—into tax at the same rate."—[OFFICIAL REPORT, 15th April 1969; Vol. 781, c. 1024.] The majority of hon. Members who were present in the House at that time gained the impression that those tax proposals were intended to hit out at those pet foods which are widely advertised on television, and that it was the Chancellor's intention not to go further than that.

Now that we have had an opportunity of studying the Schedule we see that this was not the only occasion on which the Chancellor did not take the House fully into his confidence—to put it politely—as to the proposals he was making in his speech. If we look at the words in the Schedule we see that they go considerably further than that. Not many members of the public outside have yet realised that what the Chancellor's proposals meant was a tax of £4 10s. on every domestically-owned cat and an increase in the tax on dogs, of every kind, of approximately £9. If my figures are incorrect I hope that the Minister will tell me what the correct figures are—because these are the best that I can obtain.

The Committee should also realise the number of households involved, and the extent of this new tax which the Chancellor has slipped quite cheerfully into his Budget speech. Nearly 9 million households will be affected. A high proportion of those are the households of retirement pensioners and those on lower income scales. Of those 9 million households—and again these are the best figures that I have been able to obtain—30 per cent. are those of retirement pensioners, who will have to bear this additional tax and 36 per cent. have incomes which fall into the lower brackets—what the pollsters classify as the D and E categories. A high proportion of those 9 million households have young children, who are also having to bear additional costs.

I should like to quote from a letter that I have received from the Royal Society for the Prevention of Cruelty to Animals. The Secretary of the Society says: At the last meeting of the Society's Council considerable concern was expressed at the proposal to introduce a tax of 22 per cent. on pet foods. It was felt that this would undoubtedly cause great hardship particularly to owners of animals living on a small fixed income and could well result in their pets being denied sufficient food particularly because their owners could not afford the additional costs involved. The Chancellor implied in his speech that the foods that he was proposing to tax were not essential for these animals. I hope he has had an opportunity of reconsidering this position, because of course it is quite impossible for any person living in one of the larger cities to be able to keep a cat or a dog as a pet without using prepared foods of one kind or another which now fall within Schedule 6 of the Finance Bill. If there are other methods which the Chancellor has in mind, perhaps the hon. Gentleman who is to reply to the debate will tell the Committee what they are.

12.15 a.m.

Of course the tax falls not only upon the animals which are classified as pets. It falls upon working dogs as well. It falls on dogs which are employed in agriculture, and the Financial Secretary will know that a very large proportion of the dogs employed in agriculture are employed on the smaller farms, the hill farms and others, which are going through a most difficult stage at the present time. I hope that the hon. Gentleman will say what is the estimated additional cost to agriculture of this proposed tax.

The tax also falls on dogs employed as security patrols, but most of all perhaps—and I think the Committee will want to give serious consideration to this—it falls upon the kind of dogs employed as guide dogs to the blind. Perhaps the constituents of the hon. Gentleman the Member for Bilston (Mr. Robert Edwards), who is laughing, might like to know that he finds this extremely funny.

If I may quote from a letter dated 19th May sent to me by the general manager of The Guide Dogs for the Blind Association, he says Unfortunately, of necessity, the guide dog is generally a large animal, either an Alsatian or Labrador or other breed of equivalent size, and consequently they are expensive to feed. Furthermore, the blind community tend to fall into the lowest income brackets. Those who are employable do not normally command high wages, and a very large proportion are unemployed and live on national assistance. He later goes on After making some allowances for the use of fresh meat in feeding their dogs, I calculate that Purchase Tax will cost a guide dog owner an additional £10 per annum on his feeding bill. I understand that representations were made by The Guide Dogs for the Blind Association to the Chancellor of the Exchequer, and that they received the usual reply.

The Chancellor's secretary, in a letter dated 8th May, said it is recognised that this tax is bound to have an effect on the cost to a blind person of keeping a guide dog, because in the nature of things he or she is likely to be buying the more convenient canned and packaged foods which fall within the scope of the tax. The letter ends Much therefore as the Chancellor sympathises with your request for relief from tax on food for guide dogs for the blind he regrets that he is unable to help. Whatever other reply may be made to this Amendment, I hope that the Chancellor of the Exchequer will give further thought to this request from The Guide Dogs for the Blind Association. I believe that in this instance, whatever else may be thought about this tax, it will result in real hardship which I do not believe the Chancellor could have considered when he introduced the tax in his Budget speech.—[Interruption.] If the hon. Gentleman wants to interrupt, perhaps he would do so from a standing position.

The R.S.P.C.A. believes, as I do, that this tax will lead to an increase in the practice of abandoning animals. There have been Press reports of animals being abandoned on motorways, and I am certain that, if the Chancellor wanted to raise additional revenue from dog owners, he should have accepted the R.S.P.C.A. proposal that the right method was to raise the dog tax and not the cost of keeping the animals.

This tax was not thought out. The public do not realise its extent, and the cost which will fall on many families. I ask the right hon. Gentleman at least to consider what I have said.

Mr. Peter Hordern (Horsham)

I support the Amendment which my hon. Friend the Member for Sutton and Cheam (Mr. Sharples) moved so eloquently. This new tax will hit the lonely, the old and the poor. It will not mean a considerable increase in revenue. The Chancellor said that purchase tax on potato crisps, salted and roasted nuts and pet foods will together bring in £22 million. What will be the extra revenue from this proposal? But it will have a great impact on the old-age pen- sioner. It is estimated that the resultant extra cost of keeping a pet will be £9 a year. The increase in the pension, about which we have heard so much, at the end of this year, will be £26, so over a third will be consumed by this tax. This will have no small effect on the annual budgeting of the old-age pensioner.

I wish that the Chancellor had given more thought to this and other matters, instead of making some rather cheap remarks about the advertising profession. He said: I also propose to bring prepared pet foods—widely advertised, no doubt appreciated, but not an essential means of feeding a pet …"—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1024.] This is arguable.

I am informed that this proposal is likely to mean that the cost of food generally will rise. Horse meat is used in the preparation of dog foods, and it may not be possible to do so to the same extent, so there will be a small but noticeable increase in the cost of living. It is difficult to know to which field the Government can stray next to raise revenue.

During their period in office the Labour Party have seen the revenue of the Exchequer increase from £7,455 million to over £15,000 million this year. Now they have put a tax on pets. Although the Chancellor did not dare increase the dog licence, he achieved virtually the same end by this imposition on dog food. What will he turn to next? I wonder if next year he will tax children's pets such as white mice and tortoises.

Mr. John Farr (Harborough)

In supporting the comments of my hon. Friends, I cannot help wondering if, in the mechanics of the Treasury, the Chancellor's intentions were understood, for the right hon. Gentleman clearly said in his Budget speech: I also propose to bring prepared pet foods—widely advertised, no doubt appreciated, but not an essential means of feeding a pet—into tax at the same rate."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1024.] Dog biscuits are an essential means of feeding a dog, but they are not widely advertised. My hon. Friends and I think we know to what the Chancellor was referring. Did not he have in mind those dog foods which are advertised on television with the frequency with which cigarettes were advertised before cigarette advertising was banned from TV? We never see dog biscuits being advertised on TV.

Mr. Albert Murray (Gravesend)

Yes, we do.

Mr. Farr

It is possible, though difficult nowadays, for people to obtain scraps of meat from the local butcher for use as dog food, but there is no substitute for the biscuit in a dog's diet, a fact which has for long been appreciated.

Mr. Murray

A brand of dog biscuit called "Crunchy Mick" is advertised widely on TV. In any event, I do not think that my right hon. Friend was referring only to TV advertising. All dog biscuits are advertised by one means or another.

Mr. Farr

That intervention shows that we are not sure what the Chancellor meant. As he is in his place, will he make the position clear? His reference in his Budget speech seemed clear when he spoke of inessential means of feeding pets. Are not dog biscuits an essential part of a dog's diet? Should people use bread crusts instead?

In addition to Amendment No. 44 we are discussing Amendments Nos. 71, 72 and 73 and I will deal briefly with each. I hope that, at this late stage, the Financial Secretary will sweeten the bitter Budget pill by making a small concession, if not to the aged then at least to the blind, by exempting guide dogs for the blind.

Amendment No. 71 seeks to exempt packaged food for wild birds in the same way as there is an exemption in the Bill for poultry and game. The cost of collecting the tax on wild bird food would be out of proportion to the yield, which would be infinitesimal. On the other hand, old people and children get a good deal of pleasure in hard weather out of sprinkling these prepared package foods on the lawn or the streets.

12.30 a.m.

Amendment No. 72 seeks to deal with a difficulty referred to by my hon. Friend the Member for Sutton and Cheam (Mr. Sharples). Guide dogs are essential to many blind people, and these people will be faced by an extra cost in feeding their animals. These dogs cannot really be called pets: they are as essential to their owners as are eyes to other people. The bill for meat and biscuits will rise substantially. I estimate that the present cost in London or any big city to be about 10s. or 15s. a week, and the tax will add 2s. to that bill.

There is no substitute for a guide dog. A blind person would be just as helpless if the right hon. Gentleman were to treble this tax—the dog must still be fed, whatever may be the cost of its food. The blind are in the hands of the Committee in that respect. The Amendment provides the Chancellor of the Exchequer with an admirable opportunity to flavour some of the rather resonant "Noes" we have had from him during the last four days of discussion with something a little more palatable.

The other Amendment relates to the slightly wider range of people who, in old age, find a cat or a dog a great companion. Their children may have married and left the family home. These old people will still be able to have the companionship of their cat or dog if they can afford the extra cost of the food. If they cannot afford it, they will have to do away with their pet or may be tempted to spend no more money on the animal's food and so provide insufficient food. Either of the last two solutions would be unsatisfactory.

I ask the Financial Secretary, who is straining at the leash—

Mr. Arthur Lewis (West Ham, North)

Instead of paying about 10s. or 15s. a week, people would find it easier and cheaper to buy continental fresh meat at about 2s. a pound. They would save money, and the pet would be just as well off on continental food.

Mr. Farr

I agree that it is still possible to get fresh meat scraps from the butcher, but that will become more and more difficult because butchers do not want to be bothered with such business. In any case, biscuits are an essential part of the diet, and there is no substitute for them.

I am very glad to see the Financial Secretary straining at the leash to make this small concession, which will cost him nothing but will mean so much to quite a number of people.

Mr. Robert Cooke

This tax will mean that very much loved family pets will now cost more to maintain on their favourite tinned food. The Chancellor has suggested, at any rate by inference, that good plain food is still exempt and that pets will be able to continue to enjoy that. If the Chancellor is right, he will get no revenue from the tax, because all expensive dog foods will go by the way. That would seem to defeat part of his argument. Then the Chancellor will probably say that the Inland Revenue has just announced that the cost of keeping watchdogs can be a charge against tax. That concession will apply only to those who pay tax against which the charge can be set. Most of those whom we seek to help by these Amendments do not have taxable income. So that is another argument against us that I have disposed of.

In any case, the whole thing is full of anomalies. The Amendments draw attention to these anomalies. Even if the Bill is left as it is, certain fish foods will escape, although all pet foods were meant to come within the thrall of the Schedule. Ant eggs are not covered. They are not prepared. They are merely collected and are often sold loose. Bird seed sold loose, in whatever amount, would seem to be outside the scope of the Schedule. I hope that what I say will not induce the Chancellor to include it at a later stage. Perhaps most of it is sold in packets. Why tax packeted bird seed? It will only drive people to buy it loose, thus destroying the trade in packeted bird seed. It will be more troublesome for purchasers to go along with their own paper bag, but it will be possible to get round this. The whole thing is a futile exercise which will cause everybody a good deal of trouble.

Then there is the point about exemption for pensioners. This is a laudable proposal. However, the Chancellor will argue that if the concession were granted it would be possible for pensioners to run an enormous boarding kennel at an unfair advantage compared with non-pensioners. I can visualise these arguments being dreamed up by the Treasury to ensure that the Minister puts up a good defence of the indefensible. In view of all the anomalies and difficulties, we must support the Amendment which would take the whole thing out.

I come, lastly, to the vexed question of guide dogs for the blind. A point which has not been made is the considerable difficulty that a blind person has in preparing for his dog a meal consisting of raw food. It is virtually impossible for a blind person to know exactly what he is preparing and to get it right. It is easy for a blind person to open a tin. The blind depend on a tin of a certain shape and size. It can be recognised easily by a blind person and opened easily. A blind person cannot feed his dog unless he does so from a tin. Tinned dog food will now cost more.

The last argument that I suspect the Chancellor will advance is that he cannot do without the revenue. Why does he not go for what has already been suggested—a low-level sales tax which would cover many things? Small purchasers would be exempt from such a tax. Those whom we want to help—the unfortunate, old-age pensioners, and the blind—would all be exempt, because they would be making small purchases.

I think I have made a case in support of the Amendment and have filled in any gaps which my hon. Friend may have left. I hope that we have persuaded the Financial Secretary, even if he is not authorised by his boss to yield to our pleas this evening, at least to say that he will reconsider the matter.

Mr. Harold Lever

I do not know whether the last invitation was for me to strain at the leash or strain at my job. I must disappoint hon. Members who have spoken. It is not from lack of sympathy, because a concession for guide dogs for the blind in particular would involve a negligible cost if it were practicable to arrange concessions in relation not to the articles but to the kind of people using them and deserving of our compassion. I have explained on innumerable Amendments that this is not a possibility and could not be attempted.

It is true that pets can for the most part be fed quite readily in other ways than on tinned foods. I cannot accept that this is no longer practicable. Indeed, the inevitability of feeding pets on tinned foods seems to bear a direct ratio to the amount of money spent on television advertising. It seems that only seven years or so ago only about half the pet foods were being sold that are sold today. One cannot claim that the habits of diet of pets have suddenly changed in that time, since they managed on half the amount of tinned food seven years ago.

Mr. Sharples

The hon. Gentleman obviously has not seen the notice put out by the Board of Trade on this. It refers not only to tinned foods but to frozen foods—indeed virtually all foods except butcher's scraps.

Mr. Lever

I was referring to the growth in the sale of prepared pet foods, which has increased at the rate of 10 per cent. per annum compound. I have done some rough arithmetical calculations and have found that approximately double the amount is being consumed compared with seven years ago.

Having been accused earlier of being unsympathetic to the blind and disabled, I hope that I shall be acquitted of having a distaste for dogs, cats and other pets or for the people who keep them and need them or derive pleasure from them. This is a matter of judgment and the Committee is always ready to make wise, speedy judgments at this sort of hour. I do not think that a documented argument is really wanted from me, so I say only one thing to the Committee—that is, keep this in proportion. The total tax to be raised on pet foods is about £10 million. I understand from the hon. Member for Sutton and Cheam (Mr. Sharples) that 9 million households derive encouragement, comfort and assistance from their pets. This tax will therefore cost £1 per year per such household. It comes to about 4½d. a week each.

But I am exaggerating the figure, because the heaviest consumers are among the commercial dog proprietors—the great Securicor fleet of massive Alsatians which guard our empty warehouses and the like. They are the great consumers. I am thus exaggerating slightly in saying that the cost will be 4½d. per pet-keeping family per week. We do not relish putting this burden on them, but I base the argument on broadening the tax base through small amounts of tax rather than on large taxes on certain goods which distort the pattern of consumption.

Mr. Sharples

I cannot pretend to be satisfied with the reply. I do not think that the hon. Gentleman has tried to answer the debate or the arguments, but in order to leave the matter open so that it can be raised again on Report, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Question proposed, That the Schedule be the Sixth Schedule to the Bill.

Mr. Iain Macleod (Enfield, West)

I do not intend to invite debate, much less a Division, on this Schedule. We have made our position clear. I merely take 30 seconds, particularly with the Chancellor present, to record the end of what I think he will agree has been a most interesting experiment. By bad luck, we lost an hour today in injury time and 45 minutes yesterday. But taking that into account, the four subjects were discussed exactly on schedule without any Closures and with some excellent debating. This experiment was entered upon in our ceaseless search for the best way of accommodating the Finance Bill to the convenience of the Committee and the House, and we should record that, on the whole, it has been something of a success.

12.45 a.m.

The Chancellor of the Exchequer (Mr. Roy Jenkins)

I am delighted to follow the right hon. Member for Enfield, West (Mr. Iain Macleod) and say that I, too, think that the four days have been usefully employed. This year we have moved a substantial distance, and I am grateful to the right hon. Gentleman for his co-operation and that of his right hon. and hon. Friends in finding a satisfactory means of dealing with the Finance Bill on the Floor of the House and in Committee upstairs. I think that they have been good debates. No doubt we have not yet achieved perfection, but we have moved a long way towards finding the best solution.

Question put and agreed to.

Schedule agreed to.

Bill(Clauses 7, 8, 36, 38, 43, 44 and Schedule 6) reported, with Amendments; to lie upon the Table.