HC Deb 18 December 1975 vol 902 cc1628-9
6. Miss Fookes

asked the Chancellor of the Exchequer if he will take steps to aid manufacturers of television sets and boat builders by reducing the luxury rate of VAT from 25 per cent. to 8 per cent.

Mr. Denzil Davies

I am sure that the measures announced yesterday to relax hire-purchase and hiring restrictions will greatly assist the television and boat industries.

We shall also continue to monitor the position of these industries and all relevant information will be taken into account in our review of the effects of the 25 per cent. rate of Value Added Tax.

Miss Fookes

Where is the sense in increasing the price of home-produced sets and then worrying about the import of television tubes and setting up an elaborate system to monitor imports?

Mr. Davies

As has been repeatedly said, the recession in these industries is due mainly to the world recession. No one would deny that. It could be argued that the increase in the rate of VAT to 25 per cent. has had some effect, but we are monitoring the situation and when those results are at hand, we shall reconsider the matter.

Mr. Ward

Although I accept my hon. hon. Friend's answer in relation to luxury items on the higher rate schedule, will he accept that the items in Schedule I, to which his right hon. Friend the Chancellor referred as less essential, such as washing machines and refrigerators, are in part the essential working tools of working women? Will he undertake to give preference and an early relief to those items over the other luxuries to which he has just referred?

Mr. Davies

The 25 per cent. rate is not a tax on luxuries. It is a tax in a difficult economic situation on what most people would consider to be non or less-essential goods. We are monitoring the effects and we shall consider the matter.

Mr. Ridsdale

Does the hon. Gentleman believe that a tax of £250 on the sale of a Thames barge which costs £1,000 is necessary? These barges are used for the transportation of goods and those who work on them are self-employed and cannot afford to pay this kind of tax.

Mr. Davies

We shall take these matters into account.

Mr. Jay

Has my hon. Friend noticed that all the suggestions from the Benches opposite today would further increase the public sector borrowing requirement?

Mr. David Howell

Will the Minister first correct his right hon. Friend the Member for Battersea, North (Mr. Jay) and point out that the Opposition view has always been that VAT at 10 per cent. is better than the absurd 25 per cent. high rate and would have increased not reduced the revenue? The right hon. Gentleman should face that fact.

Secondly, will the Minister face the idiotic position into which the Government have now manoeuvered themselves? He should remember that we spent the whole of May and June in the House warning the Government that if they put the high rate VAT on boats, electronic components, caravans and other items, they would damage those industries. Is it not absurd that they now come to the House with a package to ease hire purchase and import provisions governing television sets, boats and caravans? When will this up and down, hot and cold approach to British industry cease? When will this country have a chance to have a stable environment?

Mr. Davies

Perhaps I may remind the hon. Gentleman that he and his colleagues also voted to reduce the rate on television hiring contracts, thus increasing the public sector borrowing requirement.

Mr. David Howell

Answer the question.