§ 2. Mr. Spearingasked the Chancellor of the Exchequer if he will state the amount of revenue he expects to collect in respect of children's shoes in the first full year of operation of value added tax.
§ The Minister of State, Treasury (Mr. John Nott)My right hon. Friend, the Chancellor of the Exchequer, promised during the debate in Committee on the Finance Bill on 16th May that there is to be an inquiry about the medical aspects of children's footwear, the outcome of which may well affect its treatment under value added tax. If VAT were imposed at 10 per cent. on footwear of a kind suitable for young children's wear it is estimated that it would yield £12 million in a full year.
§ Mr. SpearingIf the tax is eventually levied on children's shoes, will the Minister of State agree that the £12 million would fall by and large on families already paying relatively little tax, and where additional children in the family would mean many additional shoes having to be bought? Will he reconsider imposing the tax on these articles?
§ Mr. NottTo zero-rate all children's footwear would be an inefficient way of giving relief to low-income families, since much of it would go to families which did not require such help.
§ Dr. StuttafordIs the Minister of State aware that the figure of £12 million is still disputed by a great many people in the shoe industry? The suggestion of an inquiry into children's foot defects and their shoes has met with widespread approval, and we now want to know when the inquiry will report. Will it report before the Report stage of the Finance Bill so that we may have another opportunity to tell the Chancellor how we feel about VAT on children's shoes?
§ Mr. NottI am glad that my hon. Friend welcomes the inquiry. My right hon. Friend the Chancellor has said that it will be completed in good time for any consequential decisions to be taken before the VAT comes into operation next April. The figure of £12 million is the best estimate we have available at present.
§ Mr. Joel BarnettThe Chancellor made clear in the debate that the inquiry would be on the basis of an open-minded consideration—presumably contrary to his previous closed-minded consideration. Will the hon. Gentleman give the House an assurance that, if the inquiry recommends that VAT should not be imposed on young children's shoes, it will not be imposed on them?
§ Mr. NottWe must wait and see what the inquiry brings out. I repeat the words which the hon. Gentleman used. My right hon. Friend has said that he will make up his mind on the basis of a completely open-minded consideration of what the inquiry reports.