5. Mr. R. C. Mitchellasked the Chancellor of the Exchequer what effects he estimates the reductions in purchase tax in the 1972 Budget have had on the cost of living.
§ Mr. HigginsI would refer the hon. Member to my reply to the hon. Member for Manchester, Ardwick (Mr. Kaufman) on 27th March.—[Vol. 834, c. 22.]
Mr. MitchellThe hon. Gentleman's reply, like that of his right hon. Friend in answer to the previous Question, was no reply at all. Is he aware that many of the reductions in purchase tax announced in the last Budget have not been passed on to the consumer? Has he seen the numerous Press reports indicating that articles on which purchase tax was reduced in the last Budget have increased substantially in price since the Budget?
§ Mr. HigginsI gave the hon. Member for Manchester, Ardwick (Mr. Kaufman) a specific answer on this topic on 27th March. Purchase tax reductions in the Budget were mostly reflected immediately in prices in the shops. Although there were exceptions, they were relatively few.
§ Mr. BurdenDoes my hon. Friend agree that it takes some little time for these changes to come through because, goods already in the shops having attracted purchase tax and this having been costed in the retail price, the remission of purchase tax takes place on forward buying by retailers?
§ Mr. HigginsI understand my hon. Friend's point though, as I said, most of the cuts were passed on immediately. One of the advantages of VAT will be that the problem which my hon. Friend mentioned will be ameliorated. It is true that in regard to various articles the process takes some time to work through. Some of the articles which have been mentioned in this respect were based on cost-of-living figures for last year and were then related to the arguments for this year.