HC Deb 05 February 1976 vol 904 cc1398-403
10. Mr. Loyden

asked the Chancellor of the Exchequer what revenue has accrued from VAT on television repairs and maintenance during the last six months.

Mr. Robert Sheldon

I regret the information is not available.

Mr. Leyden

Does my hon. Friend agree that this rate of tax has an adverse effect upon low income groups, and especially pensioners, in the maintenance of television sets and other electrical goods? Does he agree that it has had an indirect effect upon the television tube industry? Is it not now about time the tax was reviewed so as to relieve that area?

Mr. Sheldon

I do not see the connection between the television tabe industry and VAT on television repairs and maintenance. I understand my hon. Friend's natural concern about those with limited means who have to get such repairs carried out. My hon. Friend must be aware that this situation is inherent in the application of VAT to all goods. There can be no distinction between VAT charged on goods and VAT charged on repairs and maintenance. Very often one is a substitute for the other.

Mr. Marten

Will the hon. Gentleman reconsider what he has just said, as it does not make much sense? Will he further consider the 25 per cent. VAT charged on the maintenance of electrical goods? It is a high rate and it encourages people to carry out their own repairs on electrical goods, which is often highly dangerous. I should not like to think that the hon. Gentleman was responsible for the death of anyone by electric shock.

Mr. Sheldon

I am grateful for the hon. Gentleman's concern. This is an argument that we explored in some detail in the Finance Bill debates last year. I have waited since then—it has been almost a year—for further evidence about the problems to which the hon. Gentleman has referred. I am pleased to say that I have not seen any evidence about accidents of the kind that the hon. Gentleman is asserting.

Mr. Dempsey

Will my right hon. Friend agree that a washing machine is not a luxury but an indis"ensable piece of equipment?

Mr. Speaker

Order. I appreciate the hon. Gentleman's difficulty, but the Question concerns television repairs. If the Minister wandered into the realm of washing machines, he should not have done so.

Mr. Dempsey

Will my hon. Friend agree that as a television set, for example, is a desirable part of household entertainment and education, so washing machines are of equal value in another context? Why should they be so bard hit by VAT?

Mr. Sheldon

I shall go as far as to say that both articles are desirable. In view of what you have just said, Mr. Speaker, I do not think I should say any more than that.

Mr. David Howell

Does the hon. Gentleman have an estimate of the number of people thrown out of work by the high rate of VAT that is applied to what he himself calls socially less desirable goods?

Mr. Sheldon

No. Let me take this opportunity to correct what was said in an earlier debate—namely, that 20,000 jobs were at stake. I think that there is a little confusion in that the figure of 20,000 was the result of the demana effects of the whole of the Budget of last year. If the hon. Member for St. Ives (Mr. Nott) cares to go into this matter in a little more detail, I think that he will find that my statement is correct.

16. Mr. Edwin Wainwright

asked the Chancellor of the Exchequer if, in view of the recent drop in the home market of the purchasing of home produced electric hair-dryers and toasters, he will now reduce the VAT down to 8 per cent. on such goods.

Mr. Robert Sheldon

I cannot anticipate my right hon. Friend's Budget Statement.

Mr. Wainwright

That is the usual statement, Mr. Speaker. May I impress upon my hon. Friend—

Mr. Speaker

Order. No. This is a time to receive information. Impressions can be left until later.

Mr. Wainwright

When my hon. Friend studies the effects of the Budget, will he take into account that the Hotpoint factory in my constituency is on very short time? Will my hon. Friend do something to ensure that demand increases for these necessary household goods? Or does he want the British people to dry their hair before an open fire and to toast their bread on a toasting fork as of old?

Mr. Sheldon

My hon. Friend knows that I shall be happy to take into account everything that he asks me to take into account, especially regarding his constituents. [HON. MEMBERS: "0h."] I would say the same for almost any hon. Member. My hon. Friend must remember that the 25 per cent. rate of VAT cannot be held responsible for the fall in demand for electric hair driers and toasters. I am extremely concerned about the large number of imports of these items, for they show that demand is certainly holding up, and that cannot be laid at the door of VAT.

Mr. Wyn Roberts

Is the Minister fully aware of the extent to which we are faced with foreign competition in the domestic appliance industry? Is he aware that these are low-priced imports and that the 25 per cent. VAT discrimnates against the home-produced high quality product?

Mr. Sheldon

As the hon. Gentleman knows, VAT was introduced as a broad-based tax without discrimination. It is a tax that I reluctantly inherited. It is not a tax that I should have thought was ideal for any of the hon. Gentleman's purposes. My task is to administer, however reluctantly, the rather inadequate tax that we have. However, the domestic electrical appliance industry will be very much advantaged by the removal of the hire-purchase and credit restrictions. Indeed, this action has been well received by the industry as a whole.

Mr. Michael McGuire

Will not my hon. Friend agree that although there are other factors that have led to the extenguishing of the Thorn factory in my constituency, the 25 per cent. VAT rate has crippled the industry? Will my hon. Friend further agree that the Treasury needs to think out more deeply the effects of a 25 per cent. VAT rate? Will he take on board the electrical appliance industry's plea that if it is to survive the rate must be substantially reduced?

Mr. Sheldon

I read the Adjournment debate which my hon. Friend initiated on this subject. He will recall from that debate that there were a large number of other factors involved, notably the failure of the industry to take account of the particular demands that were then in evidence. I understand the important point which he has subsequently raised. Following the monitoring exercise which I mentioned earlier and which I should be receiving within the next few days, all these matters will be available for consideration before the Budget judgment is determined.

Mr. Hannam

Does the Minister agree that, if the object of multi-rate VAT is to increase revenue and if the result is unemployment in and the breakdown of those industries affected, he is achieving the worst of both worlds?

Mr. Sheldon

I do not accept the lion. Gentleman's premise. The higher rate of VAT was a straightforward measure to increase the revenue at a very difficult time when all sources of revenue needed to be considered. It has been extremely successful in that respect and has involved a small number of civil servants. As far as other matters are concerned, we shall await the results of the monitoring exercise.

Mr. Torney

Is the Minister aware that the Thorn electronics factory in my constituency has already suffered considerable redundancies and more redundancies are feared? If my hon. Friend could see his way clear to reduce the 25 per cent. VAT rate to 8 per cent. On coloured television sets it would make a considerable difference to the employment situation in Bradford.

Mr. Sheldon

I understand the problems of the hon. Gentleman's constituency. Unemployment problems are very serious. My hon. Friend will be aware that the major problem for that industry arose with the reflation which occurred in 1972 and which produced an enormous demand for television sets, a demand which could not be met by production. Consequently there was a massive inflow of imports which established a firm footing. In my view, that is the most important and most serious problem of all.

Mr. Farr

What evidence does the Minister have that many foreign imports are being dumped here below the cost of manufacture?

Mr. Sheldon

My right hon. Friend the Secretary of State for Trade is always anxious to have details of dumping. However, the hon. Gentleman will be aware from the comments and debates on this subject that no allegations have been sufficiently well proved for my right hon. Friend to take the type of action that he would be only too happy to take were the evidence available.

12. Mr. Michael Marshall

asked the Chancellor of the Exchequer what revenue is available to the Treasury as a result of the imposition of 25 per cent. VAT on galvanised straining eye bolts.

Mr. Robert Sheldon

None. These items remain chargeable at the 8 per cent. standard rate of VAT.

Mr. Marshall

Is the hon. Gentleman aware that under pending legislation these items will be charged at 25 per cent. whether or not they are provided free of charge and whether or not they are purchased from a hardware store and handed over to the boatbuilder? I believe that Section 18(4) of the Finance (No. 2) Act 1975 is applicable. If that is so, it demonstrates that the Government have a total lack of understanding of the problems of the boat-building industry and the evils of multi-rate VAT.

Mr. Sheldon

As I have said, the items remain chargeable at the 8 per cent. standard rate of VAT. If the hon. Gentleman has any information from constituents who may have been overcharged, I shall be happy to look into the matter.

Mr. Wrigglesworth

Will my hon. Friend enlighten the House by telling us what galvanised straining eye bolts are?

Mr. Sheldon

They are items that have wide industrial use and application. They are used in the boat-building industry and elsewhere.

Mr. Adley

Is the hon. Gentleman aware that the boat-building industry is especially hard-hit by the anomalies of this tax? Will he give an assurance that when he reviews multi-rate VAT he will take account of the reduction in employment in many industries, a reduction which can be traced directly to the increase of VAT on many items to 25 per cent.?

Mr. Sheldon

The hon. Gentleman will know that, following last year's Budget, I set in train a monitoring exercise for certain aspects of VAT. The report of that exercise will be coming to me within the next few days. It will obviously be considered before the Budget is decided.