VALUE ADDED TAX

HC Deb 29 November 1976 vol 921 cc619-51

10.17 p.m.

The Financial Secretary to the Treasury (Mr. Robert Sheldon)

I beg to move, That this House takes note of Commission Documents Nos. R/1746/73 and R/2268/74 on Value Added Tax.

Mr. Neil Marten (Banbury)

On a point of order, Mr. Speaker. On Thursday of last week, during business questions, I queried the proposal to bring these documents before the House tonight without legal amendments having been put to the two basic documents. On that occasion, I asked the Leader of the House to assure the House that there had been no alterations or agreements outside the actual written documents which were to come before the House and, if there had been, would he postpone this debate. The right hon. Gentleman was kind enough to write to me in reply to my question. He said that the purpose of the Government's updated Explanatory Memorandum was to give an account of discussions on the likely basis of final agreement.

We are dealing here with legislative proposals which come from the Community, and all that we have had so far as amendments—apart from the two amendments, one of which amends the other—is the Explanatory Memorandum. To illustrate my point, paragraph 9 of the Explanatory Memorandum says that there is likely to be no obligation on the United Kingdom to require VAT returns, and so on, and the final form of the special scheme for second-hand goods has still to be settled. If these matters are unknown to the Minister—and they have not been agreed, otherwise they would be here—what is the purpose of bringing before the House legislative proposals which have not been incorporated in a proposal from the Commission?

I ask the Minister to give an assurance that, if there are further agreements or alterations, the legislative proposals will go before the Scrutiny Committee which in turn may recommend them for further debate in this House. I understand that there is to be a possible agreement about this on 16th December, and I should not like the Minister to agree to a matter which had not been before the Scrutiny Committee. Will he give that assurance?

Mr. Sheldon

The purpose of this debate is to give the House an opportunity for discussion between the two Fiscal Councils, one which met on 21st October and the one which is due to meet on 16th December, the latter one being to determine how far agreement might be achieved on the harmonisation of VAT which is due to come into operation early in 1978, if discussions are successful.

It was felt that it would be for the convenience of the House, at a time between these two Councils—that is, between the time when the first proposals were made and the time when further negotiations take place—for right hon. and hon. Gentlemen to have an opportunity to debate these matters so that their views could properly be taken into consideration during subsequent negotiations. I think that this is the proper way to arrange matters. If debate took place only before the first discussions, then clearly those carrying the burden of negotiations would not know the views of the House. If the debate followed the negotiations, it would be too late. Obviously this is not the most suitable of times for a debate, because of the heavy business of the House, but certainly those right hon. and hon. Gentlemen who take an interest in these matters will welcome it.

Mr. Marten

Do I conclude from that that the proposals will be returned to the Scrutiny Committee before any final decision? The Scrutiny Committee would then have the right to recommend the proposals for further debate because there would be amendments to be made in this House.

Mr. Sheldon

The question of debate is not a matter for me. My task is to evaluate the views of the House and to take account of them in further negotiations. I am happy to respond to requests from the Scrutiny Committee, so far as I am able to do so, and to meet particular requests that it may make to me or my fellow Ministers.

Sir John Eden (Bournemouth, West)

It is extremely important to get this matter right. If all that the Financial Secretary is seeking now is an opportunity to hear the views of this House in order to strengthen the hand of our negotiators before subsequent Council deliberations, that is all well and good. But will the Financial Secretary give an explicit undertaking that before any final decision is taken the matter will be brought back to the Scrutiny Committee so that the Committee will be able to discharge its proper function and obligation to the House? If the Scrutiny Committee recommends further debate, will that be heeded by the Government?

Mr. Douglas Jay (Battersea, North)

I want to put some questions in a different form. We have before us document R/2268/74. Is this the document upon which a decision may be taken in Brussels in December, or are we discussing one document, only to find that another will be approved in Brussels?

Mr. Sheldon

The difficulty lies in the fact that the negotiations, due to take place on 16th December, may or may not be final, depending on the way in which they go. The difference between the various points of view has been narrowed very considerably by dint of the President's work and as a direct consequence of the earlier directive which laid down the harmonisation of the VAT.

I am not sure how many times we can debate these matters within the context of the arrangements that need to be entered into by the other Community countries. I will take full note of what is said in the debate and, as far as I am able—together with my colleagues in the Government who have responsibilities for certain aspects of this—I will meet the wishes of both the Scrutiny Committee and the House. We shall do our best to assist wherever we possibly can. Clearly, this central Council meeting may come to some conclusions and I am not, at this stage, able to say in advance how those conclusions might best be further considered by the House.

Mr. Marten

It is not a question of meeting the convenience of the Scrutiny Committee. If there is an amended legislative proposal, there is an obligation upon the Government, to send it before the Scrutiny Committee before they agree to it. Can we have an assurance that the Government will honour that obligation?

Mr. Sheldon

What we are discussing is not an amended document as such. What we are discussing is the standpoint which the Government are to take in Brussels on some of these matters which I shall be debating in the House if I get the opportunity to make a start. Perhaps we can see what these issues are so that we can decide just what weight the House is prepared to attach to them.

The documents that are before the House represent the proposals by the European Commission for a common system of assessment and administration of the value added tax in the member States. The proposals are for a common structure and for a common coverage—that is, common as to those articles and services that are to be taxed and those that are not to be taxed. But it does not imply anything approaching a common rate: the diversity between the rates of tax in the various Community countries can continue as it exists now.

The background to these proposals stems from the original decision, before the United Kingdom's accession, to agree to the value added tax as the common Community turnover tax. The two directives that dealt with this were passed in 1967. They set out the basis of the VAT system which the United Kingdom delegation accepted on entry into the Community.

The directive that we are discussing now attempts to define the details and also the categories which are to be exempt. The decision that was taken in 1970 concerned the use of own resources—that is the money that is to be made available to the Community for the Community revenue. This consists of three principal forms of revenue—the customs duties, the agricultural levies, and a contribution equal to value added tax at a rate of 1 per cent. The decision to take all these was a decision that was accepted upon our joining the Community.

The decision which has been taken, as I said before, but I must re-emphasise it, does not result in the harmonisation of the rates of value added tax. Ours are rather different from many others in operation elsewhere in the Community, and there is no change to be undertaken there. The contribution that is to be made to the Community budget is the yield of a 1 per cent value added tax if it were levied. We know that we have a number of exemptions from value added tax and these will be taken into account in assessing our contribution whether or not tax is in fact levied on those items.

To arrive at a fair implementation of the own resources proposal requires an agreed basis of calculations so that, even in those cases where one of the Community countries does not charge value added tax on some category, at any rate the calculations can be common and the contributions of each of the countries can be calculated on a common basis.

At present we have an interim arrangement whereby the contribution of each country is based upon its gross national product. That is the pre-VAT own resources arrangement which we have at present. In April of this year it was agreed that a target date of January 1978 would be set for the operation of the value added tax own resources system and that this new impetus to the draft directive would require agreement at about the end of this year. This would be required so that changes in the detailed arrangements and the terms for assessing and collecting the own resources contribution could have time to be put into effect. The full harmonisation of every detail is far from being necessary. What is necessary is a common basis for the calculation of own resources. That was recognised at the Fiscal Council meeting on 21st October. The meeting which is due to be held on 16th December will settle the outstanding points to which I shall refer.

Mr. J. Enoch Powell (Down, South)

Will the hon. Gentleman draw attention to the article in the documents which sets out the arrangement which he has described for a notional VAT, as it were, to be the basis of the tax collected for the own resources of the Commission irrespective of whether VAT is being levied in the member States? Is that in the documents or somewhere else?

Mr. Sheldon

The notional amount is that which would be chargeable whether or not the actual tax is due to be levied. There are changes depending on whether the Community countries concerned charge or exempt the value added tax. We have the further complication of a substantial number of zero rates. The calculation will depend on what the 1 per cent. would have raised had it been charged.

Mr. Powell

Is it in the documents?

Mr. Sheldon

I am afraid that I cannot refer the right hon. Gentleman to the position in the documents. I am giving the general principle of the VAT own resources concept, which goes back a number of years.

Zero rating is the biggest difference between the different member countries. The United Kingdom has a considerable number of zero rates. The original Community VAT had no such zero rates, but it had a number of exemptions. The position, as the Select Committee pointed Out, has been uncertain.

On 21st October it was agreed that we would be free to retain all zero ratings in existence and to make marginal adjustments to them. But the turnover in the zero-rated goods and services will be used in the calculation for the own resources contribution in the manner which I have just described.

Mr. Marten

rose—

Mr. Nigel Spearing (Newham, South)

My hon. Friend said that there would be opportunities for marginal extension. Is he aware that the Select Committee Report, paragraph 14, said that it would be of particular concern to the United Kingdom to see whether it was permitted? The freedom to extend as well as to retain zero rates is an important matter of principle. Will he confirm that the principle of extension will not apply?

Mr. Sheldon

What I have said is what I stated to the Council on 21st October.

Mr. Marten

I am sorry to keep interrupting the hon. Gentleman, but this is an important matter. I was about to put much the same point, but in a different way. Are we surrendering our independent sovereignty to extend the zero rating if we so wish?

Mr. Giles Shaw (Pudsey)

Perhaps the Minister will answer this question at the same time. Will he, in his answer, confirm or deny that Article 28 allows us to operate a zero rate but in a temporary capacity only? Will he clear that up by stating that we shall be able to operate the zero rate as long as we wish to do so?

Mr. Sheldon

We know that the abolition of fiscal frontiers will change a number of these matters, but that is a very long way off. Everything I am saying is in these circumstances.

Regarding the extension of zero rating, my hon. Friend the Member for Newham, South (Mr. Spearing) is right, if that is what he said, that we now have the power to retain our zero rates until fiscal frontiers are abolished. In practical terms it means that we have the right to retain all our zero rates and to make marginal adjustments to them from time to time.

Mr. Jay

Surely, according to my hon. Friend's own explanatory memorandum, we are allowed to continue to zero rate only those items which were zero rated at some date in the recent past, and we are not allowed to extend it to other items. Is that correct?

Mr. Sheldon

I said that we have achieved the right to zero rate all those articles that are zero-rated at present and to extend the zero rates by marginal adjustments. I am not sure what hon. Members want extended. At present VAT is levied in a way which provides that over 30 per cent. of consumer expenditure is zero rated and a further 18 per cent. is exempt. That means that nearly half of such expenditure is either outside the scope of the tax or is zero rated. Anything more than marginal adjustments would make a nonsense of the tax. It was brought in as a broad-based, comprehensive tax. It is far from that at present and it would be less so if we made substantial moves in the direction suggested. We have the ability to retain the zero rates that we have and to make marginal adjustments either way to them. As a result of the changes we shall be able to work out a system in which details can be changed in the way in which I have described.

Much of the discussions at the Fiscal Council meeting on 21st October dealt with the scope of exemptions in a harmonised tax system. There was widespread agreement on education, health, postal, insurance and banking services. Certain residual items were considered worthy of retaining their exempt status and others of retaining their taxable status. The harmonisation has not yet been completed and will not be completed for some time. The outcome is that we shall not have to make any immediate or substantial change in our existing VAT exemptions.

I turn to the limit for exemption. The Select Committee mentioned that the turnover level originally proposed amounted to 4,000 units of account or about £1,650. That was to be the turnover limit each year for small traders. Like the Select Committee, we believe this was unacceptably low and we were opposed to such a limit becoming obligatory. I am confident that we shall come up with a realistic exemption limit.

Paragraphs 28 to 30 of the report discuss the undesirability of allowing uniformity to complicate the administration of VAT. I agree and I have argued strongly in that direction.

Secondly, the report examined the efficiency of collection and how we should proceed towards an assessment of our own efficiency. While agreeing with that in general, the differences between systems of VAT collection in varying member States are such that the interpretations of the figures have to be examined with some care. Most of the other countries have different bases of tax and they tend to have higher levels of VAT than us. That has a bearing on their apparent efficiency and is a problem to be examined when seeking to interpret the figures.

The third point that the Committee mentioned was its uncertainty about the powers and authority of the VAT committee envisaged in the Directive. The hon. Member for Banbury (Mr. Marten) sees all sorts of plots in anything that comes from the Community. He should realise that this committee will be consultative and not regulatory. The member countries were unanimous on that point. Those who have made the point, quite rightly, will see that it has achieved a very substantial measure of acceptance.

Mr. Marten

It is not qualified at all.

Mr. Sheldon

The hon. Gentleman ought to take note of the fact that some of his reservations are shared by others who, although they do not share his obsessional anxiety, see some real problems which they are trying, in as workmanlike a way as they can, to put right. All member countries saw this body as something which should be not so much regulatory as consultative, and this is how it has happened.

Mr. Marten

rose—

Mr. Sheldon

The hon. Gentleman tends to hog these debates fairly obsessively. I know his almost paranoid interest in these matters, and I understand it. When he makes a point that is of general application or interest, I listen with great care, but when it comes from other motives I am perhaps less interested.

Mr. Marten

As to the hon. Gentleman's slight slur, he may remember that about two months ago when we were debating this he was kind enough to say that my scrutiny—I shall not say "opposition"—of the Common Market and my contributions to these debates fulfilled a very useful purpose for Parliament. Will he now withdraw what he has just said?

The Chief Secretary to the Treasury (Mr. Joel Barnett)

The hon. Gentleman can be paranoic and useful.

Mr. Sheldon

The hon. Gentleman has undoubtedly done a service in drawing attention to a number of possible abuses. There are now enough hon. Members who share his interest without his excessive anxiety. The kind of role that he has exercised previously is less necessary now that we have more people who are indulging in a less over-passionate anxiety about these matters but, nevertheless, taking a natural interest to obtain the kind of changes that are most suitable for this country and most suitable for the operation of the proposals that have come before the House.

The agreement on the Sixth Directive itself will require some changes in the VAT system. In the short term we expect these to be minor and technical. Some of these changes will require legislation in the Finance Bill, and some will require orders or regulations which can be laid under the existing legislation. In the longer term there may be further changes because of the changes in more general circumstances. What I believe we should seek is to retain the ability to operate sensibly a VAT designed to meet our own situation. That is the way in which we should proceed.

10.43 p.m.

Mr. David Howell (Guildford)

The comments at the beginning of the debate and the remarks of my hon. Friend the Member for Banbury (Mr. Marten) were enough to remind us that we are dealing with proposals which are very much in liquid form. It is extremely hard to get hold of the precise amendments which are proposed to the original draft directive of 1973. In fact, the only comprehensive record that I can find that exists of those amended proposals that have now been put forward after the last meeting of the Fiscal Council of Ministers is a document that appeared in Agence Europe, which is not only written in very small type but appears to have been translated from another language by a computer. It therefore leaves one distinctly puzzled as to what has or has not been agreed. I shall come shortly to the difficulties which my hon. Friend the Member for Banbury rightly raised of deciding just what we are about this evening.

We are dealing with the whole field of VAT, because that is what is raised by the directive, and I should like to make clear our view on VAT generally before we plunge into the minutiae of this Sixth Directive. Our view is that the Government's record on VAT is disgraceful and that their handling of the tax and their constant movements and changes in the tax have made a situation that was difficult many times more so. In offering my advice to my hon. Friends, which they may not take, that we should not divide the House this evening, let me make it clear that I in no way condone the methods which the Government have used and the way in which they have addressed themselves to VAT and the policy surrounding it.

I propose to offer some of the views that we would put forward about VAT as the basis upon which we would wish this directive to be judged, because it is important to have this clear. Above all, this tax needs some stability, and that is what the Government have not given it. They knocked it down to 8 per cent. for electoral reasons when it should have stayed at 10 per cent. They then created the high rate of 25 per cent., which they had to reduce in an undignified retreat to 12½ per cent. The air is now thick with rumours that they will start shoving the rate up again, and that will create more chaos instead of stability.

There should be a single positive rate —that is zero rate plus one single positive rate—and only when the Government face that and stop trying to find reasons why there should be a variety of rates will they give the tax a chance to settle down and work, provide a chance for the whole field of compliance costs by smaller businesses to come under control, and also provide a chance for those who have to operate the tax to do so with less complexity and burden than now.

We want to move to a single positive rate. That is the background against which we argue about this Sixth Directive. We want cuts in compliance costs. We want an end to the marginal rates and also, if we can achieve it, an end to the partial exemption business, which is a nightmare of complexity. We believe that the tax should continue to be developed in a way that suits our own industrial structure in Britain and keeps down industrial costs. On the use of legal powers by the authority, we note that the record has not been perfect, but it probably could have been worse. We note, too, that since the powers were given to Customs and Excise in relation to VAT the Government have seized that precedent to propose that the Inland Revenue should have very much greater powers, and that is something that we deplore. We think that that aspect needs to be watched very carefully.

That is the background against which we want this Sixth Directive to be worked, and we want British Ministers to put our point of view robustly and in a way that protects our interests.

I think that we have here the outcome of the meeting of 21st October, the details of which were published in Agence Europe. The directive appears to have been processed by the Fiscal Council of Ministers as well as by the Economic and Social Committee of the European Economic Community, which seems to do some excellent work, and as a result there are some modifications to what was originally there. I think that one must be relieved to see that but, even so, many questions remain.

First, let us get clear the issues about the zero rate. The Minister's own docu- ment says that additional zero rating after 1st January 1976 will not be allowed. The words are slightly different. They are weazel words. The directive says that Member States would be allowed to retain those zero-ratings which were in force on 1st January 1976. The Minister has modified that this evening by talking about a marginal extension. We are left with zero rating plus marginal extensions—I would like a definition of what that means—until the time comes when fiscal powers are eliminated.

It would be interesting to have the Government's, and the Minister's, view about what that phrase means. What is the point when fiscal powers are eliminated? Is it when VAT rates are harmonised or is it merely when the basis of assessment is harmonised—that is the 1978 date allowing the 1 per cent. for own resources to be levied for uniform basis assessment. Is that the date when fiscal powers are eliminated? With that date apparently arising there is to be no more zero rating. But we understand that there are already some things which have been zero rated or exempted which the document, in a rather mystifying way, says are to be exempted or even zero rated. We need to know a good deal more clearly what this date is. If it is so far into the future that this generation of hon. Members need not bother about it, then let us have that statement. If it is to come in the not-too-distant future let us have made clear what the goal is and what that phrase means.

Equally important is the threshold for small traders. It was a little bemused to hear the Minister say that this had not yet been determined. I had understood that the original figure of £1,650 was rightly thrown out and was replaced by a proposal for a minimum level of 10,000 units of account. That was my understanding. If that is the current idea, what does that mean? Does it mean units of account at the former unit of account exchange calculation before the pound began its terrific plunge? That would work out at about £4,100 a year, which is below our own £5,000 level. Or does it mean the new rate of exchange, in which case it would be £6,000? That would be nearer what is now needed in this country.

Mr. Sheldon

In fact, £6,000 is the correct figure.

Mr. Howell

If it is at the new exchange rate, then it is £6,000. In our view that is still not enough. At the very least we should have a figure corresponding to the indexation of the original £5,000, and there are arguments for it being even higher than that. I hope the Minister will take on board at his meeting on 16th December that the £6,000, and the 10,000 units of account, is not adequate. Something higher is needed for this country whatever may be suggested for other countries.

The third matter arises from bad debts. Can the Minister explain what the position is about bad debts? Am I right that provision is made for the relief of bad debts? The Minister and the Government have resisted proposals for the relief of bad debts under VAT. We believe that it ought to be possible to find a way around this. I think that detailed attention to the administrative position could lead to a solution of this problem. I would like the Minister to indicate that he has a constructive and open mind on this matter and that at the very least he will take in mind any proposals in that direction which may help us move towards overcoming the bad debt situation.

Finally we come to the status of certain items. Here again we return to the puzzling computer-translated document. From this we learn that a number of items are to be compulsorily subject to VAT in all member States as from the entry into force of the directive. Under that list there is an item: Services provided in the struggle against pollution, collection and processing of solid urban waste. What on earth does that mean? What is to be VAT-ed in pollution control? Is that something to do with local government services?

Under the fourth list we learn that operations will have to be subject to VAT at the end of the transitional period which at present are not subject to VAT. These include—I am sorry to strike a macabre note—funeral undertakings. One cannot help wondering on what basis the inputs tax will be levied on that business. At the end of the transitional period, will funeral undertakings come in along with domestic passenger transport? Are they to be in the same category, in a category which will not be allowed to carry a zero rate?

The report after the meeting of 28th October, the last one the Minister attended, has some ambiguous words, too, on the Press and the relationship between "exonerations" as they are mysteriously called and the needs of own resources, by which I think it means that Press activities are not to be VAT-ed but own resources are to be calculated on that 1 per cent. basis as though they had been VAT-ed. That appears to be the implication of the Agence Europe report of what we think, and the Minister thinks, he decided at the meeting on 28th October.

So many questions remain wide open. We should like the Minister to take very clearly from the House tonight our doubts and concerns about some of his proposals, as we understand them, which are still in this directive. We want a robust position. We believe that the value added tax has been developed to suit our own conditions. I believe—I probably do not carry all hon. Members with me—that a good job has been done in developing the tax from the start. Although the hands of Ministers upon this business have always produced difficulties and confusions, the administrators in the Customs and Excise have not done a bad job.

It is remarkable how far we have come, but more development clearly is necessary to simplify the tax and to ease the position of small traders. The last thing we want now is more disruption, whether from the Sixth Directive or from Ministers getting their sticky fingers on it. That is the principle that we believe should guide Ministers when they go in the middle of December to work out the next stage with their EEC partners.

Mr. Marten

Before my hon. Friend sits down, may I ask a question? After his remarks—I am grateful for them, because they give me a lot of support—would he agree that the new proposals should be put into legislative form and brought back to the Scrutiny Committee before anything is finally agreed in Brussels?

Mr. Howell

I do not want to speak for the Financial Secretary, but as I understand his own paper, he makes it clear that changes which require legislative approval will have to come before the House in the proper way. That is inevitable and desirable.

10.58 p.m.

Mr. Douglas Jay (Battersea, North)

In spite of what the hon. Member for Guildford (Mr. Howell) has said, it does not seem to me to require a computer to discover that the proposal before us tonight is exceedingly unsatisfactory.

In the first place, this document is not the one on which decisions will be taken on 16th December in Brussels. That is apparent from paragraph 7 of the Minister's own Explanatory Memorandum: …at a Fiscal Council held on 21st October 1976, agreement was reached that Article 28 of the draft Sixth Directive should be amended so that Member States would be allowed to retain those zero-ratings which were in force on 1st January 1976. If this draft has been amended since October 1976, since the draft before us is dated 1974, it is clear that the draft we are considering is not the one which will come before Ministers in a fortnight's time.

The situation is profoundly unsatisfactory, and I wish that my hon. Friend the Financial Secretary would realise that we are not discussing negotiation, in which we have to give all sorts of flexibility to Ministers, but legislation. It is not good enough to tell the House that it is being asked to give its views but that, unfortunately, it cannot have the proposed context of that legislation. That is the position in which we find ourselves tonight, and it seems to carry out neither the intentions of the original report nor the spirit of the undertakings given to the Scrutiny Committee. If there is to be legislation in Brussels in December which has never been before the Scrutiny Committee, it does not seem to me that that undertaking will be carried out.

On the substance of the matter and on zero ratings, it is clear from what the Minister said that, although it will be possible for this country to continue to zero rate those items that were zero rated on 1st January 1976, we shall not be able to extend that list as we wish.

We are not tonight discussing economic policy. I thought that the Minister's remarks to the effect that the Government want to zero rate were irrelevant. We want to know what is the legal effect of allowing this legislation to go through. Apart from the use of the word marginal", it is clear that major substantial extensions of zero rating for VAT would be impossible if these decisions are taken. That is a serious new limitation on the powers of the British Government and Parliament to levy taxation. I would not regard that as a light matter to lay before the House. I was never brought up to believe that the House of Commons should have only a marginal power to influence the taxation that is levied.

It is clear that even this dispensation is only temporary, and we do not know what "temporary" means. We do not know for how long we have this power or how it would be ended, because we are left in the dark. All we know is that in future the power of a British Government to operate within the sphere of taxation will be marginal and temporary. I am far from convinced that that is a satisfactory position to lay before the House.

11.13 p.m.

Mr. J. Enoch Powell (Down, South)

I hope that, by now, the Financial Secretary realises how unsatisfactory is the form in which this Question has been proposed to the House. The order before us, and indeed the Question proposed, states that we are to consider the two specified documents, but it is clear that is not the case. Indeed, the Financial Secretary said that it was not what we were considering. He said that the House was being invited to consider the standpoint to be taken by the Government on 16th December. The difficulty is that we have nothing before us in writing—nothing apprehensible or comprehensible that tells us what standpoint the Government are to take.

It is true that the Financial Secretary in his introductory speech made certain remarks, but I am sure he would not suggest that it was satisfactory for the House to be asked to express an opinion on propositions laid before it only in the form of a ministerial speech glossing documents that do not contain the material points.

Most of us were jealous of the hon. Member for Guildford (Mr. Howell) who, no doubt because of his diligence in these matters, possessed a document called Agence Europe, which appeared to lift the veil about what had been going on at previous Fiscal Council meetings and added further details to the confusion surrounding the Government's standpoint.

The Government profess to say that the purpose of this debate is to enable them to know the views of the House or, in the words of the Lord President from his letter to the hon. Member for Banbury (Mr. Marten), so that the House may discuss the likely basis of final agreement. Yet that is the one thing that we do not have in front of us. We are in the preposterous position in which we would be if we turned up for a Second Reading and were told "The Bill is not the document in front of you. It is not the Bill that had a First Reading and was printed by order of the House. It is something different on which the Government are anxious to know the views of the House".

I agree with the hon. Member for Banbury and disagree with the hon. Member for Guildford, because the difficulty is not diminished by the fact that any changes eventually will have to be made by legislation introduced in this House. Of course that is the case. Curiously enough, this is an area in which the 1972 Act did not provide for direct powers to be exercised by the Brussels authorities over the law of this country. But when the Government eventually come to the House with legislative proposals—perhaps in the Budget or some other Bill—we know what they will say. They will tell us that the House is already committed. They will say that the Government's credit is committed. Formally we may be called upon to make the alterations in tax law; but we shall be left in no doubt by the Government that the alterations we make are those that we have to make so that they may fulfil the directive that arises out of their negotiations at Brussels.

There appears to be only one way in which in a manner tolerable to the House the Government can extricate themselves from that difficulty, and that lies in the suggestion made by the hon. Member for Banbury in an intervention on a point of order at the beginning of the debate—namely, that we should have from the Financial Secretary a clear commitment that the text to which it is proposed to agree, the nature of the "final agreement", as the Lord President calls it, shall be treated as a document which is to go to the Scrutiny Committee and if the Committee, as it no doubt will, so recommends, that it be placed before the House for debate and decision—I adopt the words in the Foster Report. I am sure that the Financial Secretary, who is a fine parliamentarian. will recognise how requisite it is that he should give that undertaking to the House. Indeed, he will be able to do so when he replies.

There are at least three matters that were left intolerably vague by the combination of all the documents, including the Scrutiny Committee's Report. that are before the House. The Financial Secretary cleared up one matter —namely, the status of the proposed VAT committee. If I understand him aright, despite the manner in which it is to arrive at its decisions, the committee is advisory only and its opinions are in no way binding, even within the framework of the Community. I note that the hon. Member for Banbury shakes his head in dissent, so perhaps even that matter was not clarified. Perhaps the Minister, for the avoidance of doubt. will confirm whether that is so.

There remain the two major points about zero rating and the minimum limit for the applicability of VAT. We have all sorts of contradiction on this matter. With due regard to what Agence Europe revealed to those who are in its secrets, the best that we know in the House is what is set out in paragraph 9 of the Explanatory Memorandum—namely that "there is likely to be no obligation on the United Kingdom to require returns from small traders in this country whose annual turnover does not exceed £5,000".

In the course of an exchange between the two Front Benches, if I understood it correctly, that figure was raised to £6,000. [Interruption.] Anyhow, in the document before us—the Explanatory Memorandum—there is the figure of £5,000. It would be the general view that it would be intolerable if, given the progress of inflation since the £5,000 was first fixed, this House was unable at any time to increase that minimum limit.

Anyone who has been on the margin, as some of us have, of the £5,000 figure,

knows how much is involved in sheer burden of accounting work to discover whether one is inside or outside the limit. To be told, as apparently we still are, that the minimum level—concession though it may be—is to be fixed as the law of the Medes and Persians and that, whatever happens to the internal purchasing power of the pound, there it will remain, is quite intolerable. So one thing on which I am sure the House will insist in the final agreement is that we shall not be bound as regards the size of the minimum figure of turnover for VAT.

Another is the matter of zero rating. On this the Scrutiny Committee was quite unable to ascertain, as the House has been unable to ascertain, what is the expected position. It appears from the right hon. Gentleman that it is only the existing zero rating, with very slight variation, which is to be allowed even during this mystical transitional period up to that mysterious terminal date of the disappearance of the fiscal frontiers.

This, too, is not good enough. It is not satisfactory that Governments and Parliaments should not be free to dispose of zero rating as circumstances may indicate. There is no reason why the circumstances obtaining on 1st January 1976 should be regarded as having even that qualified eternity which runs until the disappearance of the fiscal barriers. That is another point on which we shall insist when we see these proposals again in what is expected to be a more intelligible form.

I draw attention to some words which occur in the report of the Scrutiny Committee and which are extremely ominous. They occur in paragraph 11 where there is set out, with some dubiety, the concession which the Committee believes may be obtainable from the present text of the draft Sixth Directive. It refers to the procedure which was the subject of an exchange between the Financial Secretary and myself and says: However, the Commission is fundamentally opposed to zero-rating on the grounds that it is incompatible with the concept of a general tax on consumption. The Commission prefers that payments based on an actual tax yield should go direct to Community funds. I do not believe that the House should brush those sentences aside and say "It is all very well for the Commission to feel that way, but we are safe with the rumours that have reached us as to the improvements in the documents which will be obtained by the Government". The fact is that the logic which lies behind the Sixth Directive, and which will be pushed further as these matters go on, is a logic which does require fiscal uniformity—uniformity of method, let alone of rate—between component parts of the EEC. We would be well advised to stand upon our requirements and upon our rights at this stage.

11.15 p.m.

Mr. Nigel Spearing (Newham, South)

A little while ago, my hon. Friend the Financial Secretary to the Secretary berated the hon. Member for Banbury (Mr. Marten) for his cynicism, I think it was, or his suspicion—

Mr. Ian Mikardo (Bethnal Green and Bow)

His paranoia, which I should have thought was out of order.

Mr. Spearing

—for his paranoia—but if my hon. Friend has had brought to his attention, which I am sure he has, the points just made by the right hon. Member for Down, South (Mr. Powell) in respect of the powers of the House over the Executive, he will, I think, have ample cause for seeing that he is wrong.

In the evening paper tonight I saw a headline about Democracy finished in Britain", or some such words. I think that it was the opinion of some transatlantic commentator. But if there be any truth in that, some evidence can be seen in the exchanges we have had in the last few minutes. As I understand it, the safeguard for democracy in this country is the power of the House over the Executive, and a lot of that power has already gone.

If my hon. Friend cannot tell us the exact nature of the decisions which he is asking the House to comment upon tonight, and if we have to rely upon mere rumours and, so I understand, unofficial Press reports which are available to only a few, we are going down that road. Indeed, that is what worried some of us when the principle of direct payments to Brussels through the "own resources" formula was introduced before we entered the Common Market. That itself was anathema, and now we understand that the House cannot extend zero rating save in very marginal ways. Moreover, as has just been explained, there is a possibility that, although there will be an overall tax assessment but we do not choose, by virtue of our existing exemption, to levy it, that money must be paid from another source.

I hope that we shall be told how that money will be paid. Presumably, it will have to be paid by the Treasury in relation to the overall tax formula and the shortfall of the 1 per cent. actual VAT income. I do not imagine that it could be paid out of the Consolidated Fund, because that would have to be voted by the House, and it can hardly be moneys voted by Parliament. I assume that it must come from some other account which is dealt with retrospectively, and I hope that we shall be told how it will be done. Presumably, It will come out of the Consolidated Fund in the end, but we should know the source from which the fund comes and the extent to which the House retains control over it.

I draw attention now to paragraph 3 of the Select Committee's Report, House of Commons Paper No. 272 of the last Session. We read there: The secondary objective of the draft Directive is to eliminate some of the distortions to competition inherent in the existing diversity of VAT systems". Six months ago in this Chamber when someone drew his attention to Article 3 of the treaty and its requirement about competition, the Prime Minister referred to it as that rather fly-blown article. But that fly-blown article is buzzing around tonight. Here it is, and we have to swallow what is now put before us in order to help remove the distortion to competition.

The paragraph which I quoted refers also to the "existing diversity of VAT systems". It is true that the actual rates of VAT and the multi-rate VAT on different commodities in different countries still remain untouched, but it is clear from the philosophy of the treaty and the warning conveyed in that paragraph of the Select Committee's Report about the existing diversity of VAT systems—whether it be overall assessment or whether it be different rates on different commodities over the Market—that this will be the next stage of harmonisation.

That was all spelled out and the House was warned of it by hon. Members during the treaty debates. We were told "No, that will not come because we first have to harmonise the method of assessment". But that is what this document now before us does. We are half-way towards Brussels and towards the stage of uniform rates on uniform types of commodity. Although the Government may not wish that, they must, I think, admit that this is half way down that road. Therefore, for the House just to be asked to take note of this and for the hon. Gentleman thereby to get the views of the House—I hope he has the feelings by now—is perhaps a little mild.

Some of my hon. Friends and I may not wish simply to take note; we may wish to express our dissatisfaction not only with the way in which this has been presented but with the principle. To take note of such a motion might be regarded as acquiescence, and I am sure that my hon. Friend knows that that is not our position.

11.21 p.m.

Mr. Neil Marten (Banbury)

In speaking after the hon. Member for Newham, South (Mr. Spearing) I remind the Minister that, as far as I can make out, not one speech tonight has been in favour of these draft directives or even of the supplementary explanatory memorandum.

When he goes to Brussels, the Minister is bound to take into account the views of this House. That does not mean the views of the civil servants or the Corridors or the Smoking Room; it means the views expressed on the Floor of the House. The Minister can go back to Brussels in the knowledge that no one here so far—I do not know how many more hon. Members will be called, Mr. Deputy Speaker—has agreed with these documents. I therefore submit to him that he is successfully blocked almost from agreeing anything on the lines of the explanatory memorandum.

I did not mind the Minister's remarks about me—I see him smiling now, and I am smiling at him—but he used the words "obsession" and "paranoia". I think his reason for using them is that two months ago I needled him under his crinoline and found, under his crinoline, some rather nobbly affairs. He was not at all sure what he was about tonight. I do not know whether he had studied his brief, but he did not answer the pressing question which many of us had put—whether zero rating could be extended. He dodged it time and time and time again.

I hope that when the Minister replies he will give a firm answer to the question whether we cannot merely extend marginally but also extend zero rating. I hope he will tell us whether we have surrendered our sovereignty—I use that word specifically on this matter.

Mr. Mikardo

Has the hon. Gentleman heard the definition that an obsession is a conviction with which one happens not to agree?

Mr. Marten

I had not heard of that, but I am most grateful to the hon. Gentleman. When someone says that I have an obsession about something it is an admission that I have got my teeth in it and will not let go until I am satisfied that I have the answer.

As to zero rating and whether we have or will have the freedom to extend it, the reason that I want the freedom for this Parliament to extend it is that, if we are not allowed to do so, it will limit the manoeuvrability of the future Chancellor of the Exchequer—who I hope will be very shortly a Conservative Chancellor —in the management of the economy of this country.

On the question of exemption limits, my right hon. Friend the Member for Down, South (Mr. Powell) has mentioned the absurdity that four days ago a document printed by the Department gave the figure of £5,000 and that today the Minister spoke of £6,000. Surely we have not had that amount of inflation in the last four days. It is really quite absurd that we should be given these two figures, because we are dealing here with a legislative proposal.

I want to know whether we can put up this figure of £5,000 to take inflation into account, as it might well have galloped ahead. That £5,000 now ought probably to be about £7,000, and in two years' time—without being depressing or trying to damage sterling—it could be even higher. I want an assurance that we shall be free to put it up.

What about zero rating for exports of non-EEC countries? All we get in paragraph 8 of the memorandum, referring to exemptions for imports and exports, is the statement that a degree of flexibility is proposed to be included in the proposals as a result of recent discussions. Are we really asked to approve the proposition that the Minister should agree this sort of jargon in Brussels on behalf of this House of Commons? That is a disgraceful suggestion to write into a memorandum. I think that I was right when I said at the beginning that this debate should have been postponed until we had proper documentation on which to base our discussion.

I am very worried about this VAT Committee making its decision by a qualified majority. Presumably, when these matters arc referred from the committee, the Council of Ministers will also make its decision by a qualified majority. Once again, therefore, Parliament has lost further control if we are to have a qualified majority vote on prime matters of taxation for our country—something which has not happened for a very long time.

Parliament has to be very careful not to let its powers go to a VAT Committee which is unelected and is recommending and deciding matters on the basis of a qualified majority vote. A very large step is being taken if this goes ahead. I hope that the Minister will accept the conventions and the undertakings which have surrounded the whole of our entry into the Community and, when he gets to Brussels, be strongly guided by the views expressed in this House, on the Floor of this House, and nowhere else. On that basis, everyone appears to be against the proposals.

Several Hon. Members

rose—

Mr. Deputy Speaker (Sir Myer Galpern)

May I remind hon. Members that the debate has to finish at about 10 minutes to 12 o'clock? The Minister has a lot to answer. I hope that hon. Members will give him ample time, so that I do not have to call a halt to the debate without the Minister even having replied.

11.27 p.m.

Mr. Ian Mikardo (Bethnal Green and Bow)

You will have no complaint against me, Mr. Deputy Speaker, because I shall make two points in one sentence, in one minute, the first of them being that since my hon. Friend has said that one of the purposes of this debate is to test the attitude of the House, it may be possible that he has come to the conclusion that the enthusiasm of the House for the proposals that he is putting to us is a little less than white-hot, and the second of them being to say that if Opposition Members follow the advice of their hon. Friend the Member for Guildford (Mr. Howell) not to express their views in the Division Lobby, I hope that they will not have the brass face to go on pretending to be protectors of the small business man, because it is he who will be the worst victim of these directives.

11.28 p.m.

Sir Brandon Rhys Williams (Kensington)

It is always a tremendous pleasure to listen to my hon. Friend the Member for Banbury (Mr. Marten). We know the rose-coloured spectacles that he always wears when he is looking at Community affairs. I recall that he represents a seat that my father had the honour to represent many years before my hon. Friend was even born. But that adds greater interest for me to all that he says.

I was the only British member of the sub-committee of the Budget Committee of the European Parliament which was designated to look at questions of tax harmonisation and, when I was a member of it, we were engaged in looking at VAT. I think that I can claim the credit for having persuaded my continental colleagues that the zero rate was a real rate and not just a stunt by which perfidious Albion could get away with paying less than it should towards the Community budget in due course.

Quite apart from whether the zero rate was just an undesirable British invention, we must recollect that we are getting away with a big concession from our colleagues in the Community in being allowed to apply a zero rate for a relatively indefinite period over a very wide range of items.

I listened to the no doubt deeply-felt concern of my hon. Friend the Member for Banbury that we might be losing the power to extend this concession still more widely. But I cannot help asking myself whether he has thought out his position and whether hon. Members on the Government Benches have, either.

If the Government really want to reduce revenue from indirect taxation, are we to discern that they hope to increase income tax instead? Do they really feel that there is room for that? I recognise that, in constitutional theory, the House of Commons could be making a concession, but there is another side which has to be remembered, which is that although this country is making concessions and commitments which may bind the hands of future British Governments, eight other Governments are doing the same. Perhaps we do not sufficiently emphasise the advantages to people in this country from working and living in a Community where rules that are adopted across the board do not allow undesirable international trade practices—discriminatory taxation, dumping, and so on.

I know that many other people, including the Minister, want to contribute, but I thought it was desirable to redress the balance, because so many of the vultures who gather round in these late night debates are here again tonight. I thought that I might offer them a little bit of meat to chew over.

11.32 p.m.

Mr. Giles Shaw (Pudsey)

I rise tonight, not as a vulture but as a passing bird, to enter the debate on VAT. I want to emphasise one or two points. I did not disagree with anything that my hon. Friend the Member for Guildford (Mr. Howell) said in his opening remarks about VAT, but I think he might have gone further and pointed out that this Government elected to select certain food products for the imposition of VAT and dealt a shrewd blow to the consumer by so doing. The zero rate is not just ingenious, it is an effective rate of tax and it protects the consumer from substantial levies on many foodstuffs. It is this characteristic which causes any possible weakening in a Government's resolve to maintain zero rating to be so tremendously important. The second importance of zero rating is that it helps distributors to recover VAT totally for many commodities and foodstuffs that they require for their businesses. It is the recovery of taxation which is the advantage of being a zero-rated trader and not a tax exempt trader. We should seek assurances about continuity.

I lay great stress, as did my hon. Friend, the Member for Guildford, on the fact that VAT was designed as a simple and widespread tax. It is the complexity of the present system, as well as the rates, which has given anxiety to traders and distributors, particularly those at the margin of £5,000 per annum turnover.

In this document there is a weakening of resolve by the United Kingdom as to the importance of the zero rate for the long-term development of the consumer industry. I would like the Minister to meet representatives of the food industry—in which I declare an interest—because its particular case has not been sufficiently well taken on board by the Government in seeking to defend the maintenance of the zero rate.

I am very sorry that the Minister has been unable to tell the House that he has convinced our European partners that the zero rate should be part of their system as well as part of ours. It was our invention, and it was a good one, which benefited the consumer, food prices, and the traders who were able to use it. We have seen how important it is. I hope that when the Minister replies he will confirm that the zero rate is here to stay in a tax system which has already been sorely distorted by this Government.

11.36 p.m.

Mr. Hugh Dykes (Harrow, East)

The House has again been confronted with the problem of trying effectively to scrutinise EEC draft instruments. Until recently the Minister may have regarded this debate as going well—since successive speakers have been brief—but he should not take that to mean that the debate has indeed gone well. That brevity means, above all, that more time is needed for the Minister to give realistic answers to the many queries that have been raised in the debate.

Taking the overall importance of this subject in relation to others, one and a half hours for the consideration of a document of great complexity is absurd and unacceptable to the House. As my hon. Friend the Member for Guildford said with complete justification, in view of the tremendous importance of this document and the proximity of the meeting of the Fiscal Council on 16th December, it would be erroneous and ill-advised to divide the House, but some hon. Members may have been greatly tempted, especially as the Minister did not deal with the document properly in his opening remarks.

Although there are those on both sides of the House who may not wish for our continued membership of the EEC and who would like us to leave the Community as soon as possible, and although they may, perhaps understandably, misunderstand the nature of these draft directives—I say that in no spirit of condescension—it is nevertheless up to the Minister to treat these scrutiny exercises properly. Tonight we saw yet again his rather cavalier attitude to all this, as we have seen it in the Standing Committee on Statutory Instruments dealing with EEC matters.

However, it does not mean that when those who are opposed more fundamentally to our membership of the Community object to these draft directives as though they are Bills that that is correct. That is not correct. These are draft documents, preliminary legislative instruments which go to the Council of Ministers and other councils before going to the supreme legislative body of the Community. That is logical.

None the less, it surely imposes a duty on the Government to ensure that our scrutiny is properly done. As the Scrutiny Committee said in its Report, this is one of the most important documents to come before the House, not only this Session, but this year. On this occasion there could have been two bites at the cherry—two separate debates, one upstairs in the Standing Committee on Statutory Instruments and one on the Floor of the House.

We as a Parliament are in great difficulty. I hope that the Minister will try to come back with some realistic answers to the many queries that have been raised. I do not have time to go into them. They have been amply listed by my hon. Friend the Member for Guildford. There are serious anxieties. Although the Minister was given repeated opportunities to deal adequately with the question of zero rating and what will happen in the future, he failed to do so. We are very attached to zero rating, as my hon. Friend the Member for Pudsey (Mr. Shaw) said.

If only Britain, under this dubious Government, had greater economic growth, we could go to the Fiscal Council in mid-December and argue strongly for the virtues of zero rating. Once again we know that Her Majesty's Government have no authority at all because of the deep-seated, continuing and unremitting economic crisis which besets us.

I hope that the Minister will deal with the question of a notional VAT injected into one's own resources system and the replacement moneys. Then there is the question of the small traders' limit. It may be a rapid increase in inflation, as my hon. Friend the Member for Banbury (Mr. Marten) said. What do the Government intend to do? Many people who perhaps do not read the reports of these late night debates as assiduously as some of us will be thrown into a state of total confusion as a result of what the Minister omitted to say or said very inadequately tonight.

I remind the House, finally, that the European Parliament itself considered the original directive in the spring of 1974 and in those days the members of the Labour Party were not present in that assembly to add their voices to the very vigorous plea for the betterment of the directive which was made on that occasion by my hon. Friend the Member for Kensington (Sir B. Rhys Williams). My hon. Friend very cogently argued that zero rating on essential areas of our enonomy must be preserved and protected and that it would be inconceivable in any overall anti-inflationary programme to allow any denting of that—for example, in respect of general foodstuffs.

I repeat that I hope that the Minister will be able to give some answers tonight on at least one or two of these matters and go to the Fiscal Council with some authority—perhaps the authority of the House of Commons as a result of the help he has received from both sides tonight—and return in a mood of greater candour when he has something to report as a result of the meeting of 16th December.

11.40 p.m.

Mr. Robert Sheldon

I should like to start by apologising to the hon. Member for Banbury (Mr. Marten) for having referred to his "obsession". I chose that word because, uncharacteristically, the hon. Gentleman spoke unsmilingly and with the kind of determination which is not normally visible from where I now stand or from where I sit on the Government Front Bench. The hon. Gentleman's good humour returned during his speech. Therefore, I am happy to withdraw the word "obsession" and not to replace it with the word "vulture" or anything else.

My hon. Friend the Member for Bethnal Breen and Bow (Mr. Mikardo), in a short but important speech, pointed out the importance of the small business. I wholeheartedly agree with what he said on that subject. The small business makes an important and valuable contribution to our society. Indeed, it has been underrated for too long and will come to be appreciated more as time goes on.

I think that there is some misunderstanding about the effects of value added tax on those who are felt to be concerned here. The advantages are not at all clear to the small business man. If a small business man has a small turnover and does not register for the value added tax, anybody to whom he sells who is registered cannot buy from him and get his purchases deducted for VAT purposes. That serious limitation was not appreciated in the early days of value added tax, but people are now beginning to realise it as they come to understand the ways in which VAT works.

If a small trader registered for VAT decided to deregister, all his stock would become liable for value added tax. That would be a not inconsiderable sum for many traders who may have large stocks in relation to their annual turnover. The problems are by no means clear. There would be the difficulties of the small trader who, because of the varying nature of his business, finds himself moving into and out of value added tax.

As time passes, many people who do not wish to be involved in value added tax on a small level will realise that in a number of small-scale occupations value added tax is part of the inherent basic background to running a small business. They will begin to understand it more simply than we have been able to explain it so far and that will lead to an easier understanding of and a reconciliation between the tax and the people who operate it.

Zero rating is probably the most important matter that has been raised tonight. It was by no means clear that the Government would be able to establish their position on zero rates in the Community when they first started to discuss these matters some years ago. We have achieved something as good as most people, other than those who are firmly committed against any accord with the Community, would have regarded as possible, because we have achieved complete validation for all our zero rates for as many years ahead as most people politically are prepared to look. We have that, to a degree that goes beyond what most Chancellors may be thinking. When one looks at the large numbers of exemptions and zero rates and compares them with the original purpose of the tax—a broad-based, comprehensive, free-from-anomalies tax—one sees how far we have derogated from that. Yet we are still able to operate the tax within the Community.

I turn to the VAT Committee. The hon. Member for Banbury expressed deep concern about this. We will be negotiating and discussing this on 16th December and it is therefore difficult to come to the House with a proposition in the face of future negotiations. Although any Minister in that position knows what he is trying to obtain, he cannot be sure whether he will convince those with whom he has to negotiate. It is a problem and it limits the way in which we can present proposals in the shape of legislation. The House is coming to learn to live with

such problems, although some hon. Members seem more relucant than others to understand the situation. The VAT Committee will be consultative and not regulatory. Of that I am certain. I have discussed this with member States, and there is general agreement. But the matter has still to be finally decided.

I turn to the proposals before the House. When changes to legislation are proposed they will be in the form of a new clause or amendment to a Finance Bill or by way of orders or regulations, which can be debated. If hon. Members wish they may table their own amendments for discussion.

We have achieved a workable relationship with the Community. The hon. Member for Harrow, East (Mr. Dykes) asked about our being able to carry weight in the Community on VAT in our present economic position. The issues have nothing to do with one another. Our economic position and the rôle we play in discussions on VAT are separate matters. We are deciding a method of paying for the work of the Community, the basis of which was decided before we acceded to it.

We have done a good job in explaining the need for varying rates and we have fully explained why we believe there should be some discrimination—even if there is a price to pay for failure to achieve the kind of coverage that the purists may require as part of any viable tax in the long term. We have established our position and we have achieved a measure of success. I look forward to implementation on 16th December.

Question put—

The House divided: Ayes 86, Noes 37.

Division No. 2.]	AYES	[11.50 p.m.
Archer, Peter	Davies	Horam, John
Armstrong, Ernest	Davis, Clinton (Hackney C)	Howell, Rt Hon Denis (B'ham, Sm H)
Ashton, Joe	Deakins, Eric	Irving, Rt Hon S. (Dartford)
Bates, Alf	Dempsey, James	Jackson, Colin (Brighouse)
Bishop, E. S.	Doig, Peter	Jackson, Miss Margaret (Lincoln)
Blenkinsop, Arthur	Dormand, J.D.	John, Brynmor
Brown, Hugh D. (Provan)	Dunnett, Jack	Judd, Frank
Brown, Robert C. (Newcastle W)	Eadie, Alex	Lamborn, Harry
Buchanan, Richard	English, Michael	Lyons, Edward (Brodford W)
Campbell, Ian	Ennais, David	Mabon, Dr. J. Dickson
Cocks, Rt Hon Michael (Bristol S)	Ewing, Harry (Stirling)	McElhone, Frank
Cohen, Stanley	Freeson, Reginald	MacFarquhar, Roderick
Coleman, Donald	George, Bruce	McGuire, Michael (Ince)
Cox, Thomas (Tooting)	Gilbert, Dr John	MacKenzie, Gregor
Crawshaw, Richard	Golding, John	Mackintosh, John P.
Cryer, Bob	Hamilton, James (Bothwell)	Maclennan, Robert
Cunningham, Dr J. (Whiteh)	Harper Joseph	Magee, Bryan
Davidson, Arthur	Harrison, Walter (Wakefield)	Mahon, Simon
Mallalleu, J. P. W.	Ryman, John	White, Frank R. (Bury)
Marks, Kenneth	Sandelson, Neville	White, James (Pollok)
Millan, Rt Hon Bruce	Sheldon, Robert (Ashton-u-Lyne)	Whitlock, William
Morris, Charles R. (Openshaw)	Silkin, Rt Hon S. C. (Dulwich)	Williams, Alan Lee (Hornch'ch)
Owen, Rt Hon Dr David	Small, William	Williams, Rt Hon Shirley (Hertford)
Palmer, Arthur	Smith, John (N Lanarkshire)	Wilson(Alexander (Hamilton)
Penhaligon, David	Snape, Peter	Woof, Robert
Prentice, Rt Hon Reg	Stallard, A. W.	Wrigglesworth, Ian
Roberts, Albert (Normanton)	Stewart, Rt Hon M. (Fulham)
Rodgers, Rt Hon William (Stockton,	Stott, Roger	TELLERS FOR THE AYES:
Ross, Stephen (Isle of Wight)	Strang, Gavin	Mr. Ted Graham and
Ross, Rt Hon W. (Kilmarnock)	Walker, Terry (Kingswood)	Mr. James Tinn
NOES
Callaghan, Jim (Middleton & P)	Jay, Rt Hon Douglas	Roderick, Caserwyn
Canavan, Dennis	Kerr, Russell	Rodgers, George (Chorley)
Clark, Alan (Plymouth, Sutton)	Kinnock, Neil	Sillars, James
Cook, Robin F. (Edin C)	Loyden, Eddie	Skinner, Dennis
Crawford, Douglas	McCartney, Hugh	Spearing, Nigel
Crowther, Stan (Rotherham)	McDonald, Dr Oonagh	Thomas, Ron (Bristol NW)
Dunlop, John	Marten, Nell	Thorne, Stan (Preston South)
Dunwoody, Mrs Gwyneth	Mikardo, Ian	Welsh, Andrew
Evans, John (Newton)	Moate, Roger	Wilson, Gordon (Dundee E)
Ewing, Mrs Winifred (Moray)	Noble, Mike
Fernyhough, Rt Hon E.	Parry, Robert	TELLERS FOR THE NOES:
Flannery, Martin	Powell, Rt Hon J. Enoch	Mr. Leslie Spriggs and
Henderson, Douglas	Richardson, Miss Jo	Mr. Max Madden
Hoyle, Doug (Nelson)	Robertson, John (Palsley)

Question accordingly agreed to.

Resolved, That this House takes note of Commisison Documents Nos. R/1746/73 and R/2268/74 on Value Added Tax.