HC Deb 16 July 1974 vol 877 cc367-408

As amended (in the Committee and the Standing Committee), again considered.

9.46 p.m.

Mr. Peter Rees

As the Financial Secretary said in Committee, the privilege fell to me to move the amendment which struck out the retrospective element in what was then Clause 4 and is now Clause 5.

On that occasion, the Financial Secretary resisted the amendment in temporate terms, and his case was very much that which he has made today. It is obvious that in the intervening month he has sought comfort and counsel from his Department. As a result, we have had a speech from him highly charged in content, which I suggest has been both insensitive and arrogant. In particular—this characterises his approach to this question—he made an extremely partial and selective quotation from the Treasury handout on the clause. Since it throws a flood of light on the approach of his Department and on his own approach to the clause, I hope that I shall be forgiven if I read the whole passage.

It is as follows: A Ways and Means Resolution has been introduced to authorise legislation in the forthcoming Finance Bill which will restate the intention of Section 7(8) of the Finance Act 1972, concerning the application of value added tax to 'continuing supplies' such as hirings and rentals. The effect is to correct uncertainty created by a recent decision of the London Value Added Tax Tribunal concerning television rentals … It was at that point that the Financial Secretary's quotation ceased. I intend to read on, because what follows is extremely revealing about his approach to this problem: … and to confirm that tax has been properly chargeable on hiring and rental charges from 1st April 1973 onwards irrespective of the date when the hiring or rental agreement began. According to that statement, the London Value Added Tax Tribunal has held clearly and unequivocably that no tax has been properly charged to date. In view of that, it would have been better if the Financial Secretary had cited the whole passage so that the House could judge how his administration have approached this problem.

In essence, the case which the hon. Gentleman has deployed today, although in more highly charged terms, is the same case that he deployed in Committee. He rests his case, first, on the amount involved.

Before the proceedings in Committee, I put down a Question to the Chancellor of the Exchequer asking how much tax was involved. Unfortunately, I had not received my answer by the time that this clause was debated in Committee. However, by the courtesy of the Financial Secretary, I was given the gist of the answer, which was that it was impossible to calculate how much tax was involved.

Apparently, between 17th June and 16th July—so great are the resources of the Customs and Excise—between £50 million and £100 million of tax is involved. I do not mind how much tax is involved. But if we are to test the arguments of the Financial Secretary, at least there is cause to stop and think why, if he was so uncertain on 17th June, he is so confident on 16th July.

The hon. Gentleman's second argument is that old-age argument of all administrations—but the point we are here debating is not a partisan one. It does not lie between the Liberal and Conservative Parties or the Labour and Conservative Parties; it lies, on the whole, between those who believe that in any given situation the Executive must be protected from the consequences of its own ill thought-out legislation and those who believe that at the end of the day the convenience of the taxpayer or the subject is paramount. In that I know exactly where my allegiance lies.

If it is a question of inconvenience, we have to balance the inconvenience to the Customs and Excise, who may, if this amendment is rejected and if the decision of the London Value Added Tax Tribunal is confirmed on appeal, be met with a certain number of inconvenient reclaims of tax improperly deducted and accounted to Customs and Excise. I recognise the difficulties and I know that a Department finds it particularly irksome to have to admit that on occasion it has been wrong, but it is a common experience of all great Departments of State that, on occasion, the courts will find that they have been incorrectly administering the law that we have passed in Parliament. This is an experience, particularly in the complex field of VAT, to which they must reconcile themselves sooner rather than later.

I say that that inconvenience does not balance against the inconvenience of those companies which have not charged tax to their suppliers and which, if this amendment is carried, would never be able to recover tax for periods past and gone. If it is a question of balancing the hardship and inconvenience of those two groups of people, again I know where my allegiance and support lies. It is to those who have not—as the courts have so far held, quite properly—charged and accounted for VAT on hirings and supplies derived from contracts entered into before the 1972 Finance Act. Now the Financial Secretary has almost put it that this amendment is designed to protect retailers who are involved in this mesh of provisions.

The hon. Gentleman conveniently omitted to remind the House or point out to it, as my hon. and right hon. Friends have, that there is a responsible body of opinion in the trades concerned which was enormously relieved that Clause 4 was amended in Committee. The Radio and Television Retailers Association has been mentioned. There is a representative of that association in the Gallery, and I am sure that if the rules of order permitted he would confirm everything that I am saying. That association quite spontaneously came to me and said that it was enormously gratified by the amendment carried in Standing Committe. We have not heard from the Financial Secretary about the representations it made to him, and we have not heard of any of the very substantial bodies which have been lobbying in support of the amendment.

Leaving aside questions of inconvenience—which, at the end of the day, if deep principles are involved, I suggest must count as nothing—let us look at the principles involved. The Financial Secretary is asking us to enact a piece of retrospective legislation. In our debates retrospectivity has become a kind of talisman, but the point can be overplayed. Indeed, when it came to granting relief to those who have improved their fire protection I was very glad, and admitted that the measure introduced was retrospective, because it is always right retrospectively to relieve the subject of burdens. But I believe, equally, that it is quite wrong to impose burdens retrospectively. I believe that any taxpayer, or any subject, is entitled to order his affairs on the basis of the law then prevailing and, so far, the courts of this country, in dealing with legislation between television companies and Customs and Excise, have held emphatically that those who did not charge VAT on supplies and hiring agreements deriving from before the introduction of VAT were quite proper in not having done so, and were taking a correct view of the law.

The Financial Secretary's argument really boils down to a matter of inconvenience—that, notwithstanding that they have quite properly ordered their own and their customers' affairs on a certain basis, we now wish them to re-order their affairs and to charge them tax which they will never be able to recover from their customers. I find that a particularly unattractive position for any administration to take up. The hon. Gentleman attempts to put the convenience of his own Department above the convenience of individual taxpayers. Again I find that an unattractive position for any serious-minded Minister to adopt.

Dr. Gilbert

I have never at any time suggested that the interests of the Customs and Excise came above those of individual taxpayers; I was merely saying that they were joined together, and that all would be suffering seriously from this.

Mr. Rees

I find that the most extraordinary and specious argument. If the Financial Secretary can convince the House that on this occasion the interests of Customs and Excise and those companies which have quite properly not charged VAT to their customers are identical, he is capable of sophisticated argument of a kind that quite passes over my head, and, I suspect, will pass over the heads of most of my right hon. and hon. Friends. This must be left to the House to judge.

The hon. Gentleman passed over, with considerable smoothness and speed, the fact that the amendment would have the effect of annulling a decision which litigants have so far obtained in their favour from the VAT tribunals. The precedents for this course of action are few, I am happy to say, and entirely dishonourable. The only one which I can readily recall is that of Burmah Oil Corporation, and I do not feel that that lends substantial support to the case which the Financial Secretary is seeking to deploy.

I can well remember a blush passing over the features of Lord Elwyn-Jones, who was called on in debates in the previous Parliament to justify his own position on that case. I should like to hear at considerably greater length, and with considerably more eloquence than has so far been deployed, any good point of principle which should lead Parliament to override a decision of the courts that has been quite properly obtained.

The proper and honourable course for Customs and Excise in this case, if, as it states in its Press handout, uncertainty is being created and it wishes to confirm that tax has been properly charged, is to take the matter to appeal. The improper way is to say, in this House, "We wish to override the decision of the courts." In this amendment considerable points of principle are at stake.

It may be a small amendment in a narrow compass, but involved in it is the role of the courts, the position of the Executive and the rights of the subject. I hope that I shall not be guilty of undue rhetoric if I say that, speaking for myself and—I hope—for most of my right hon. and hon. Friends, we are elected to this House to preserve the position of the courts, to make certain that the Executive does not become overweening and, arrogant, and, above all, to protect our constituents from the power of the Executive when it is improperly exercised.

The London VAT Tribunal has held that in this regard Customs and Excise has not behaved in accordance with the law. The proper and honourable course is for this House and this administration to abide by that decision. I hope that the amendment will be contemptuously rejected.

10.0 p.m.

Mr. Geoffrey Dodsworth (Hertfordshire, South-West)

In proposing this amendment the Financial Secretary made a reference to the Equipment Leasing Association in which I should declare an interest since I am a vice-chairman of the association.

It might be helpful if I were to recount briefly the conversation I had with one of the officials of that organisation late yesterday. I understood then that there had been discussions between the officers and representatives of the Treasury on this point and the view had been expressed by the association that the position which appertained before the VAT tribunal was the one being operated effectively in the industry. It was a procedure which had been arrived at after consultation at the time of the 1972 measure and was, therefore, acceptable to the industry as a whole.

When this change in the proposed legislation was made known it was felt that there was doubt and uncertainty. To see yet further doubt and uncertainty was a source of great concern to those in the narrow area affected by this Bill. That was the view of the officials of the association. They were concerned, however, that their view should not be expressed in any way on their behalf without proper consultation with the officers of their association. I understand that the matter was discussed by the management committee of the organisation this morning and their authority and permission were given to say that they felt that the changes proposed in Standing Committee were not in the best interests of that association. It is right that I should say so this evening.

It seems strange, even though that be the case, that we have had a tribunal which has brought about an effect which was not in accord with everybody's understanding of the Bill as originally presented. When the understanding arrived at was not the law, it does not seem very satisfactory that we do not follow the course of the law. If there is a proper procedure and method to establish the true intention of the original Act, then that course should be followed. In those circumstances I should be very happy to support that part of the views expressed by my hon. and learned Friend.

Mr. Pardoe

The Financial Secretary addressed some of his comments to me, particularly those about the difficulties of administration involved in setting this matter right, partly as a result of my comments made on this passage during the Committee Stage. I am deeply sorry to see that the Government have brought forward this amendment. We have debated it very fully in Committee and today. Alas, retrospective legislation is before us again. We have to consider the matter afresh tonight.

The facts of the matter are clear. Parliament and Government have made a mistake. There is no point in trying to allocate the blame for that. It is bound to happen from time to time. It has been caught out by the courts.

The question which we have to decide is simple. Do we accept the verdict of the court and the tribunal or do we use our privileged position and power to change the past? Those who are familiar with the arguments of mediaeval theologians know that a lot of argument took place whether God could change the past at that time in history. The question was never satisfactorily settled one way or the other.

I cannot vote to put this House in a position which I do not believe God occupies. We cannot change the past and we should not endeavour to do so. Therefore I stick fast to the general principle on retrospective legislation which I enunciated during the Committee Stage. I do not believe that we should set any more precedents to go alongside that of Burmah Oil. If we accept this amendment, that will provide one more argument which others can bring forward in future debates when this question again arises.

The second argument concerns the question of cost. I accept that whether the sum amounts to £50 million or £100 million it is a considerable amount of money. It is money which could well be put to very good effect elsewhere in our society and indeed in the public sector. But this is the price of the mistake made by Parliament and Government. Other people have to pay when they fall foul of the courts. I see no reason why Government and Parliament should not have to pay.

The Financial Secretary addressed his remarks on the question of administration very closely to me. I admit that there will be an enormous number of problems. I never denied that. He spelt out clearly the detail of those claims and what would be involved, with every transaction having to be recalculated. At the Committee Stage I said—I think he accepted it—that the claims will in the first instance have to be made by the traders. He said that Customs and Excise will have to check those claims. But surely Customs and Excise will not have to check every one of those claims.

It is normal practice, I know, to check a certain proportion of the claims—not 100 per cent., but 10 or 15 or 20 per cent., whatever it is. If the Financial Secretary can assure me that there is some magical reason why in this case every claim will have to be gone through, calculated and recalculated by civil servants, his argument begins to stand up. But it is not true that this would have to happen.

If these administrative difficulties are as great as the hon. Gentleman says they are—and I accept that they are great—and are insuperable, as he seems to imply, I would have thought that the industry would have concluded that it could not work them either. It has not done so. Many of us have had letters from the Radio and Television Retailers' Association welcoming the decision of the Committee and not casting any doubt on the trade's ability to go through this administrative process.

I remain totally unconvinced that the House should set aside in this way the decision of the court, and I intend to oppose again tonight the whole principle and extension of retrospective legislation

Mr. John Cope (Gloucestershire, South)

I find the amendment constitutionally highly objectionable. I want to draw attention to two consequences which would flow from it. First, no one would be able to know in future precisely what the tax law was because everyone would have to bear in mind the argument used by the Government today for the amendment—that the intention of Parliament at the time of passing the law was paramount even if the law has subsequently turned out to mean something else.

Taxpayers and their advisers should not have to look back at HANSARD in order to find out the intention of the House at the time it passed a law in case that argument were to be used to change that law in the future. When playing family croquet, it is an acceptable ploy to try to bend the rules in one's own direction in order to get an advantage, but it should not be open to Governments to say, "We wrote the rules wrongly and now want to change them retrospectively".

The second consequence is that it would scarcely be worth while for people to take the Government to court in order to decide a particular point in tax law because they would know that what had been done in this case could be done again. They would know that if the Government lost, even in a lower court, they could come to the House and say, "We did not mean this and therefore we must overrule the court and change the position", even before there was time for the taxpayer to appeal to a higher court.

The hon. Gentleman made a great deal of the delay which might be involved if the case had to work its way up through the courts on the insistence of either side. But the slowness of the courts or the uncertainty of the law, referred to in the Press release read by my hon. and learned Friend the Member for Dover and Deal (Mr. Rees), are not arguments which should weigh with us in judging this constitutional issue.

The question is, was the tax legally paid or not? If the tribunal was right, then the last Parliament itself created the administrative problems and difficulties and, possibly, the expense to which the hon. Gentleman referred. If, on the other hand, the tribunal was wrong in its decision, that is a matter not for us but for the higher court to which appeal is still open and to which, we are told, the Customs and Excise would appeal if this amendment were rejected.

These two consequences alone should persuade us of the constitutional reasons for rejecting the amendment. No one will again be able to know the tax law with certainty without referring to Parliament's intentions and no one will feel confident about going to the courts against the Government in case they lost and then changed the rules in their own favour. I shall therefore do my best to ensure that the amendment is not accepted.

Mr. Carr

The House should recognise that we are dealing with a serious case but also an important principle. This is one of the occasions when the House was to consider the expediency of the matter, in the full sense of the word, involving considerable sums, considerable work and inconvenience for the Customs and Excise as well as for industries and many organisations and private people. As the Financial Secretary said, it is difficult to unscramble this egg.

Against that inconvenience there is the great point of principle. When the House introduced value added tax we set up special value added tax tribunals to deal with questions of this kind. There is no doubt about the clarity of our intention, but taxpayers took advantage of the machinery for judging disputes. These cases came before the London Value Added Tax Appeal Tribunal, with the result we know.

The Government's proposal is offensive to me. The Financial Secretary did not make himself clear in Committee, but I got the impression that although a formal notice of appeal had been lodged there had been no determined effort to pursue it. Therefore, because the case went against them in the tribunal—the first court—without going to the appeal provided for by Parliament the Government are making a retrospective effort to upset that decision.

There are serious consequences to the lack of clarity in the Act. I suppose that Parliament must take some responsibility for that, but so must my party as the Government of the day. Nevertheless, however we look at it, we come back to the awkward principle that Parliament passed the law and set up a special tribunal as the proper remedy for grievance and uncertainty. When taxpayers use that procedure and win against the Executive, without testing the matter any further the Government propose to reverse the decision.

10.15 p.m.

I am afraid that on balance—I say "I am afraid" because I realise the serious consequences, and repeat that—when faced with this situation Parliament ought to have no option but to stand by the rule of law in this matter. I do not want to make light complaint, but I wish that the Financial Secretary had gone as fully into the matter in Committee as he has this evening. I have just been reading what he said in Committee. A number of things might then have happened which might—I do not think that they "would"—have changed my view. Whether they would have changed the view of other hon. Members I cannot say. For example, regarding the amount of money, the Financial Secretary spoke about tens of millions of pounds in Committee, and that was all that he had to say. This evening he quantified it as £50 million to begin with, but then gave a number of other consequential effects. It looked as though it might be a very much higher amount.

From my shadow position I can only say that had I felt that it was, perhaps, this much larger sum of money than he had indicated, I would have taken special measures to see some of the people involved outside this House, in the industries and among the circles involved, and investigated it personally much more closely than I have done. Second, had the Financial Secretary told the Committee that many people in the trades affected wished the matter to be left as it was, again I would have made inquiries. But I have to repeat formally to the House what I said in an intervention just before the Financial Secretary ended his speech. Whereas I have had many representations made to me against the retrospective nature of the original Clause 4—Clause 5 as it is in the amended Bill—I have not received a single representation from anyone supporting what the Financial Secretary said, namely, that many people were asking the Treasury to leave it as it is.

I have now noted that my hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth), declaring his position as Deputy Chairman of the Equipment leasing Association, confirms what the Financial Secretary says. I was expecting him to confirm it. I am sure that the Financial Secretary would tell us only what was true in this matter. He told us how he had spoken to some officials of the association and then, I gather as recently as this morning, the elected officers of the association met him about the matter.

It is several weeks since this matter was dealt with in Standing Committee. One would have thought that if the Government wanted to argue that the Standing Committee decision should be reversed because people outside the House want to reverse it, they would have gone to them and discussed it with them in time for associations such as that of which my hon. Friend is deputy chairman to consider it properly, and not just to have a meeting with the officers on the morning of the day on which we are considering it. They should have given the association a proper chance to talk to the Opposition and to back benchers. I have had not a single representation from outside the House wishing the Opposition and the House generally to do what the Government are now asking them to do. Without exception, all the weight of opinion that I have received from outside the House is begging us to support the amendment passed in Standing Committee.

Dr. Gilbert

I do not seek to interrupt the flow of the right hon. Gentleman's argument. The meeting that was held very recently was not concerned with the substance of the case. That had been the subject of representations to us previously by the association. The meeting this morning was to clear, among the officials of the association, the question whether I was at liberty to use their name.

Mr. Carr

It is clear that the view expressed by the association has not gone through all the channels of the association in great detail.

We come back to the point of principle. The only thing that could have diverted us from the point of principle was evidence that many citizens, either individual or corporate, affected by this legislation had come to Parliament and said, "On balance we would rather it was left as it was, and we accept this retrospectively." But that has not been the case. I repeat that I have not had a single representation to that effect.

I realise the great practical difficulty, but Parliament must maintain the position that in this case the rule of law must prevail.

The Chancellor of the Exchequer (Mr. Denis Healey)

I wish to address my remarks to the right hon. Member for Carshalton (Mr. Carr), who has just addressed the House with a great deal of moderation, and some caution, as well he might in the light of the information he now has. The right hon. Gentleman has asserted several times recently his belief that he may before long be holding the responsibility which I at present hold, and I ask him to reflect carefully on the implications of the course he is advising his right hon. and hon. Friends to follow.

The amendment formally establishes the position which until a few months ago the whole House believed to have existed since 1972. That position was initially established and put to the House by the then Conservative Government, who persuaded the House that it was right that VAT should apply to all hirings as from 1st April, 1973, although they accepted some concessions pressed upon them by the then Labour Opposition. The right hon. Gentleman proposes tonight to lead his Party into the Lobby against a decision taken by the Conservative Government when it was last in power. It is not the first occasion in the discussions on this Bill that he has done so.

When we were discussing the question of the trade unions' provident funds he accepted that the measure we wished to introduce sought to restore the position as he had claimed that it should be when he was in office. He also accepted during that debate that in principle he believed that retrospective legislation was justified. The right hon. Gentleman argued then, as he has argued tonight, that because of the way in which the matter has been handled, in that case by the trade unions and in this case by the Government, he is not prepared to recommend his right hon. and hon. Friends to restore a position which he himself supported when in Government—

Mr. Carr

The right hon. Gentleman must not misrepresent me in this serious and fundamental way. The case I made about the trade unions was that in exceptional circumstances Parliament is justified in passing retrospective legislation to relieve citizens of a burden imposed upon them in a way which Parliament did not intend, and from which citizens could not relieve themselves. In this case the matter is entirely the other way around. We are relieving citizens from a burden which the Government are trying to impose retrospectively. If we believe in the rule of law, then we believe in the rule of law.

No doubt we must criticise ourselves if the drafting of a law was evidently not sufficiently perfect, yet it is clear here that the Executive are asking Parliament to reverse that law without even having gone through the proper processes of appeal laid down by Parliament.

Mr. Healey

I do not want any unnecessary argument with the right hon. Gentleman. I accept the distinction that he regards as important—and there is an important distinction between retrospective legislation which is intended to relieve the citizen of a burden and retrospective legislation which has the opposite effect. But the point concerns the principle of retrospective legislation in circumstances which he then accepted, but which he would claim do not exist in the situation in which the House finds itself tonight. I fully accept that.

I come to the second point, which is that not to accept the Government's amendment tonight—and I suspect from the way in which the right hon. Gentleman spoke just now that he accepts this fact—would involve appalling administrative difficulties. I think that he accepts this evidence given by my hon. Friend the Financial Secretary and confirmed by the hon. Member for Hertfordshire, South-West (Mr. Dodsworth) in an impressive speech, that part of industry—I do not claim all of it—would find it troublesome and unwelcome to attempt to unscramble eggs which have been scrambled over the last 18 months.

I am glad that the right hon. Gentleman gave this aspect of the matter its due importance tonight, but he decided, on balance, that what he called respect for the law should override this consideration. However, I come now to a far more important point. I ask the right hon. Gentleman as pretender to my throne to consider it seriously, and I ask his hon. Friends to do the same. To refuse assent to the amendment would involve increasing the public sector borrowing requirement by up to £120 million. Opposition amendments which have been carried this afternoon would raise this sum to £200 million. New Clause 14 and Amendment No. 101 would cost £15 million and £13 million respectively. Amendment No. 120 on the investment income surcharge would cost £40 million. This is an important aspect of the matter. Later we shall be debating Amendment No. 116 on the payment of advance corporation tax, and the passing of that amendment in itself would cost £300 million and would raise the total increase in the public sector borrowing requirement by £500 million.

I and my right hon. Friends understood that when the right hon. Gentleman and the Leader of Opposition addressed themselves to the Bill they would not press any amendments which would have the effect of calling into question the Budget judgment and which would seriously unbalance the relationship between revenue and expenditure on which I based the Budget judgment four months ago. The right hon. Gentleman may be right to change his view on that. I might myself decide to change my view in the next week or so, but if I do so decide I shall tell the House frankly the magnitude of the change which I think is required and the nature of the expenditures which it is most appropriate to make in order to effect this change.

I asked the right hon. Gentleman at Question Time last Thursday whether he would like to give us his view about whether more reflation was needed. His hon. Friends were not backward in putting their views forward. I cannot claim that I counted every intervention, but my impression was that at least a dozen Conservative Members declared themselves strongly opposed to any increase in the public sector borrowing requirement at this time, yet many of them voted for such increases this afternoon.

If the right hon. Gentleman presses his oppositon to the Government's amendment tonight and continues to vote for the other amendments which stand in his name and those of his hon. Friends, he will be saying not only that he favours reflating the economy by £500 million; he will be saying—

10.30 p.m.

Mr. Carr

The right hon. Gentleman should not go on talking about £500 million. Of course, he can talk about what he likes but he cannot talk about what we are doing when we have not done it. First, as he knows quite well, the largest sum which he is talking about involves the timing of cash flow. That is a different matter. The two amendments which have been passed today do not total anything like the sum which he has mentioned unless we have been given the wrong information by the Government.

Mr. Healey

The right hon. Gentleman is shouting before he is hurt. We shall be interested to pursue this aspect of the argument later. It may be that the right hon. Gentleman does not intend to press some of the more important amendments which he has tabled, but he has pressed his amendments so far, and those which he has pressed today have cost some £15 million. We have not yet taken the amendment relating to small company taxation—

Mr. Carr

rose—

Mr. Healey

If the right hon. Gentleman wishes I shall repeat the figures. The position which he is asking his hon. Friends to take will add £120 million to the public sector borrowing requirement.

Mr. Carr

If the right hon. Gentleman now says that it will cost £120 million, why did not the Financial Secretary tell the Standing Committee that a month ago?

Mr. Pardoe

Tens of millions.

Mr. Healey

Let me give the right hon. Gentleman, who I presume is interested—[HON. MEMBERS: "Answer"] I presume that the right hon. Gentleman is interested to hear the figures. I hope that some of his hon. Friends are, too. I shall give the make-up of the £120 million. If we take services first, there will be £54 million on telephone rentals, £10 million on continuous services other than telephones, £10 million on television rentals, £10 million on the hire of motor vehicles, £5 million on the hire of computers and office equipment, £5 million on equipment leasing, £1 million on the hire of refrigerators and so on, with some 25 per cent. to be added in the period 1st April to Royal Assent. Those are important figures.

If the amendment and if other amendments are pressed to the vote, or if the Opposition's intentions are pressed to the vote, the right hon. Gentleman will not only be adding £500 million to the public sector borrowing requirement but will be ensuring that £300 million of advance corporation tax falls out of the current financial year, thus increasing the public sector borrowing requirement in the year covered by the Bill.

Mr. William Clark

rose—

Mr. Healey

Let me pass on. We shall have more time if hon. Members wish to pursue the matter. The right hon. Gentleman will not only be saying that he and his right hon. Friends believe in a reflation of £500 million, they will be saying that the additional demand should go exclusively to football pools, to persons who have paid tax according to the intentions of his own Government, to the property speculators and to small and large companies. He has a perfect right to say so if he wishes. He has every right, and so have his hon. Friends, to fight the General Election on that programme.

Mr. Carr

rose—

Mr. John Tomlinson (Meriden)

Sit down and shut up.

Mr. Carr

The right hon. Gentleman is now mentioning the property speculators and football pools. He is allowing his imagination to become even more vivid than usual.

Mr. Healey

The right hon. Gentleman has put down and carried an amendment on development gains, and that involves moneys made out of property speculation. Nobody made that clearer than did his predecessor—

Mr. William Clark

rose—

Mr. Healey

—the right hon. Member for Altrincham and Sale (Mr. Barber)—

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. If the right hon. Gentleman is not prepared to give way he must not be pressed.

Mr. Healey

If the right hon. Gentleman continues to vote along these lines, millions of his supporters in the country will see his behaviour as political opportunism and as representing a fiscal irresponsibility which would indeed make him a worthy successor to the previous Conservative Chancellor—the exponent of a type of profligacy which was rightly stigmatised only yesterday by an eminent group of Conservative economists.

I want to address myself to the hon. Member for Croydon, South (Mr. Clark) who wishes to intervene. He and his hon. Friends have expressed themselves firmly in recent weeks against any reflation in the economy and against any increase in the public sector borrowing requirements. They did so only last week at Question Time. As they did so, the right hon. Member for Carshalton sat down. He gave no opinion of his own on the question, but he has given it tonight. He believes that it would be proper at this time to increase the public sector borrowing requirement in this way. I ask the right hon. Gentleman to reflect most carefully on the points which I have put to him. If he does so, he will recognise that to press his intention to a vote in the Lobby will be to seal the doom of his party at the polls.

Mr. Clark

Before the right hon. Gentleman sits down—

Mr. Deputy Speaker

Order.

Mr. Clark

Perhaps I misunderstood the right hon. Gentleman, but I was clearly under the impression that he said he would give way to me. The Chancellor got the increased public sector borrowing requirement up to £500 million on the assumption that all the amendments which are still to be debated would be passed by the House. If the Chancellor is so keen to keep down the borrowing requirement, why did he and his party allow a Government amendment to be defeated by 25 votes? Is it Government policy to allow all Opposition amendments to be passed? The logic of the Chancellor's argument that there will be an increase of £500 million in the public sector borrowing requirement is that the Government will not resist any other amendment.

Mr. Healey

The hon. Gentleman's arithmetic is disappointing for a man who has some pretensions to a knowledge of economics. He must be aware that the overall majority of opposition parties is 33. We have said many times that if the opposition parties collectively wished to behave irresponsibly they could defeat the Government at any time they wished to do so. I assume from the way in which opposition parties have behaved in recent weeks and from the amendments which they have pressed today that they

have put down amendments with the intention of carrying them.

I have demonstrated—I believe to the satisfaction of the House—the consequence of carrying these amendments, and I ask the right hon. Member for Carshalton, who still maintains pretensions to exercise Government responsibility at a time of national economic crisis, to reflect on the profligacy to which he may condemn the country if he presses the amendment to a vote.

Question put, That the amendment be made:—

The House divided: Ayes 280, Noes 298.

Mellish, Rt. Hn. Robert Robertson, John (Paisley) Thorne, Stan (Preston, S.)
Mendelson, John Roderick, Caerwyn E. Tierney, Sydney
Millan, Bruce Rodgers, George (Chorley) Tinn, James
Miller, Dr. M. S. (E. Kilbride) Rodgers, William (Teesside, St'ckton) Tomlinson, John
Mitchell, R. C. (S'hampton. Itchen) Rooker, J. W. Tomney, Frank
Molloy, William Roper, John Torney, Tom
Moonman, Eric Rose, Paul B. Tuck, Raphael
Morris, Alfred (Wythenshawe) Ross, Rt. Hn. William (Kilmarnock) Urwin, T. W.
Morris, Charles R. (Openshaw) Rowlands, Edward Varley, Rt. Hn. Eric G.
Morris, Rt. Hn. John (Aberavon) Sandelson, Neville Wainwright, Edwin (Dearne Valley)
Moyle, Roland Sedgemore. Bryan Walden, Brian (B'm'ham, Ladywood)
Murray, Ronald King Selby, Harry Walker, Harold (Doncaster)
Newens, Stanley (Harlow) Shaw, Arnold (Redbridge, Ilford, S.) Walker, Terry (Kingswood)
Oakes, Gordon Sheldon, Robert (Ashton-under-Lyne) Watkins, David
Ogden, Eric Shore, Rt. Hn. Peter (S'pney & P'plar) Weitzman, David
O'Halloran, Michael Short, Mrs. Renée (W'hamp'n, N.E.) Wellbeloved, James
O'Malley, Brian Silkin, Rt. Hn. John (L'sham, D'ford) White, James
Orbach, Maurice Silkin, Rt. Hn. S.C.(S'hwark, Dulwich) Whitehead, Phillip
Ovenden, John Sillars, James Whitlock, William
Owen, Dr. David Silverman, Julius Willey, Rt. Hn. Frederick
Padley, Walter Skinner, Dennis Williams, Alan (Swansea, W.)
Palmer, Arthur Small, William Williams, Alan Lee (Hvrng, Hchurch)
Park, George (Coventry, N.E.) Smith, John (Lanarkshire, N.) Williams, Rt. Hn. Shirley (H'f'd & St'ge)
Parker, John (Dagenham) Snape, Peter Williams, W. T. (Warrington)
Parry, Robert Spearing, Nigel Wilson, Alexander (Hamilton)
Pavitt, Laurie Spriggs, Leslie Wilson, Rt. Hn. Harold (Huyton)
Pendry, Tom Stallard, A. W. Wilson, William (Coventry, S.E.)
Perry, Ernest G. Stewart, Rt. Hn. Michael (Fulham) Wise, Mrs. Audrey
Phipps, Dr. Colin Stoddart, David (Swindon) Woodall, Alec
Prentice, Rt. Hn. Reg. Stonehouse, Rt. Hn. John Woof, Robert
Prescott, John Stott, Roger Wrigglesworth, Ian
Price, Christopher (Lewisham, W.) Strang, Gavin Young, David (Bolton, E.)
Price, William (Rugby) Strauss, Rt. Hn. G. R.
Radice, Giles Summerskill, Rt. Hn. Shirley TELLERS FOR THE AYES:
Richardson, Miss Jo Swain, Thomas Mr. John Golding and
Roberts, Albert (Normanton) Taverne, Dick Mr. Thomas Cox.
Roberts, Gwilym (Cannock) Thomas, Jeffrey (Abertillery)
NOES
Adley, Robert Clark, William (Croydon, S.) Galbraith, Hn. T. G. D.
Aitkon, Jonathan Clarke, Kenneth (Rushcliffe) Gardiner, George (Reigate & Banstead)
Alison, Michael (Barkston Ash) Clegg, Walter Gardner, Edward (S. Fylde)
Allason, James (Hemel Hempstead) Cockcroft, John Gibson-Watt, Rt. Hn. David
Amery, Rt. Hn. Julian Cooke, Robert (Bristol, W.) Gilmour, Rt. Hn. Ian (Ch'sh' & Amsh'm)
Ancram, M. Cope, John Gilmour, Sir John (Fife, E.)
Archer, Jeffrey Cordle, John Glyn, Dr. Alan
Atkins, Rt. Hn. Humphrey (Spelthorne) Cormack, Patrick Goodhart, Philip
Awdry, Daniel Corrie, John Goodhew, Victor
Balniel, Rt. Hn. Lord Costain, A. P. Goodlad, A.
Banks, Robert Crouch, David Gorst, John
Beith, A. J. Crowder, F. P. Gow, Ian (Eastbourne)
Bell, Ronald Davies, Rt. John (Knutstord) Gower, Sir Raymond (Barry)
Bennett, Sir Frederic (Torbay) d'Avigdor-Goldsmid, Maj. -Gen. James Grant, Anthony (Harrow, C.)
Bennett, Dr. Reginald (Fareham) Dean, Paul (Somerset, N.) Gray, Hamish
Benyon, W. Deedes, Rt. Hn. W. F. Grieve, Percy
Berry, Hon. Anthony Dixon, Piers Griffiths, Eldon (Bury St. Edmunds)
Brittan, Leon Dodds-Parker, Sir Douglas Grimond, Rt. Hn. J.
Biggs-Davison, John Dodsworth, Geoffrey Grist, Ian
Blaker, Peter Douglas-Home, Rt. Hn. Sir Alec Grylls, Michael
Boardman, Tom (Leicester, S.) Drayson, Burnaby Gurden, Harold
Body, Richard du Cann, Rt. Hn. Edward Hall, Sir John
Boscawen, Hon. Robert Durant, Tony Hall-Davies, A. G. F.
Bowden, Andrew (Brighton, Kemptown) Dykes. Hugh Hamilton, Michael (Salisbury)
Boyson, Dr. Rhodes (Brent, N.) Eden, Rt. Hn. Sir John Hampson, Dr. Keith
Braine, Sir Bernard Edwards, Nicholas (Pembroke) Hannam, John
Bray, Ronald Elliott, Sir William Harrison, Col. Sir Harwood (Eye)
Brittan, John Emery, Peter Harvie Anderson, Rt. Hn. Miss
Brocklebank-Fowler, Christopher Ewing, Mrs. Winifred (Moray & Nairn) Hastings, Stephen
Brown, Sir Edward (Bath) Eyre, Reginald Havers, Sir Michael
Bruce-Gardyne, J. Fairgrieve, Russell Hayhoe, Barney
Bryan, Sir Paul Farr, John Heath, Rt. Hn. Edward
Buchanan-Smith, Alick Fell, Anthony Henderson, Douglas (Ab'rd'nsh're, E)
Buck, Antony Fenner, Mrs. Peggy Henderson, J.S.B. (Dunbartonshire, E.)
Budgen, Nick Fidler, Michael Heseltine, Michael
Bulmer, Esmond Finsberg, Geoffrey Higgins, Terence
Burden, F. A. Fisher, Sir Nigel Hill, James A.
Butler, Adam (Bosworth) Fletcher, Alexander (Edinburgh, N.) Holland, Philip
Carlisle, Mark Fletcher-Cooke, Charles Hooson, Emlyn
Carr, Rt. Hn. Robert Fookes, Miss Janet Howe, Rt. Hn. Sir Geoffrey (Surry, E)
Chalker, Mrs. Lynda Fowler, Norman (Sutton C'field) Howell, David (Guildford)
Channon, Paul Fox, Marcus Howell, Ralph (Norfolk, North)
Chataway, Rt. Hn. Christopher Fraser, Rt. Hn. Hugh (St'fford & Stone) Howells, Geraint (Cardigan)
Churchill, W. S. Freud, Clement Hunt, John
Clark, A. K. M. (Plymouth, Sutton) Fry, Peter Hurd Douglas

Question accordingly negatived.

  1. Clause 7
      2. cc391-408
    1. CHARGE OF INCOME TAX FOR 1974–75 8,779 words, 2 divisions
        2. c408
      1. HOUSE OF COMMONS (SERVICES) 51 words
        2. c408
      2. ADJOURNMENT 12 words
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