INCREASE OF VALUE ADDED TAX

HC Deb 04 July 1979 vol 969 cc1375-423

Amendment No. 20 proposed [3 July], in page 2, line 27, at end add: '(6) As from the passing of this Act subsection (1) above shall not apply to any work of repair or maintenance of a building'.—[Mr. Horam.]

Question again proposed, That the amendment be made.

3.31 p.m.

Mr. Geoffrey Johnson Smith (East Grinstead)

On a point of order, Mr. Weatherill.

The Chairman

Before I call the hon. Member—I may be anticipating his point of order—perhaps I may tell the Committee that with this amendment are grouped the following:

Amendment No. 36, in page 1, line 21, at end insert— 'Provided that after the passing of this Act these changes shall not apply to insulating materials and other products which can be shown to conserve energy.'. Amendment No. 37, in page 2, line 27, at end add— '(6) As from the passing of this Act subsection (1) above shall not apply to any repairs to buildings listed as of historic and architectural importance.'. Amendment No. 36, which stood earlier on the Notice Paper, is no longer shown on today's amendment sheet, but it will be in order in this debate to refer to value added tax on insulating materials and other energy-conserving products.

Mr. Johnson Smith

I am most obliged to you, Mr. Weatherill, for anticipating my thoughts with your usual perspicacity.

Amendment No. 36 stands in my name. Last night we heard from the Opposition spokesman on these matters, the hon. Member for Gateshead, West (Mr. Horam). We did not have the happiest of passages. The hon. Gentleman was his usual agreeable self, but the hour was very late and he addressed us at some length. We understood the reasons for that. He told us that materials purchased for the purposes of repair and maintenance, whether purchased by an individual or supplied by a contractor, attracted VAT, without any possibility of a rebate. From such as I was able to hear of the hon. Gentleman's speech, I gathered that he did not like that.

At any rate, I should like to narrow this argument to those products which are concerned with the conservation of energy—insulation materials of different kinds—which attract VAT. If the Bill passes in its present form, they will attract a higher rate of VAT.

I understand that the procedure on the Finance Bill prohibits my putting forward an amendment which would suggest to the Government that it would be to the country's advantage if insulating materials and other products which serve to conserve energy should not attract any VAT whatsoever. I cannot do that. There may be wisdom in trying to do it, in theory, but in practice it cannot be done within this Committee.

However, be that as it may, I hope that my hon. and learned Friend the Minister of State will recognise that the present state of the law is unsatisfactory and that the burden of VAT which will be carried by insulating materials comes, perhaps, at an inopportune moment bearing in mind that my right hon. Friend the Prime Minister drew the attention of the House only yesterday to the importance of having a package of energy proposals, in which conservation of energy will play a notable part.

My hon. and learned Friend will be aware that it is understood that until now materials for new construction and alterations, if supplied by the contractors, are VAT-free, and if purchased for these purposes by an individual, although attracting VAT, the tax can be rebated. This has meant, in effect, that double glazing and insulating materials are free from VAT.

However, arising in a High Court case in October 1978, which involved a company called Morrison and Dunbar, and Mecca Ltd., which I understand wanted to convert a cinema into a bingo hall, Her Majesty's Customs and Excise has put out a discussion paper. This paper proposes, I understand, that improvements and alterations to buildings should be liable to VAT. This will obviously come as a great surprise to those in the building industry and to individuals, because were this to go through it would cut right across the design and strategy of the Government's approach to energy.

That is not the end of the matter. The present state of the law is also unsatisfactory. I think that it has, possibly, been so for some time. It has certainly led to lengthy arguments owing to the difficulty in determining the borderline between what constitutes a repair and an alteration.

Be that as it may, it has led to anomalies. I cite only one, but I understand that there are plenty of others. For instance, if one wants to insulate, as many people do and many more need to do, an attic or a loft for the first time, the product will be zero rated in the end, because private individuals get the rebate. However, if for various reasons, such as the advance of technology, one wants to add to the insulation in one's loft, if it is inadequate or has, perhaps, lost some of its efficacy, that will attract VAT—presumably, and I can only guess on this matter, because it would come within the category of a repair or maintenance. As I have said, there are other examples which concern improvements to boilers and heating arrangements which would make greater use of fuel.

My hon. and learned Friend needs no lecture from me on the value of energy conservation. He will be aware of a calculation issued by the previous Government which suggested that, if £450 million were spent wisely and properly on the conservation of energy and making more efficient use of energy, it would probably save the cost of two 1,500 megawatt nuclear plants which, give or take a few hundred million pounds, would come out at about £1,000 million apiece. Therefore, the spending of £450 million could result in a saving of £2,000 million worth of expenditure on producing new energy by nuclear reactors.

I am not personally against an expanded nuclear programme. That is not the purpose of my argument. My purpose is narrow. It is to ask my hon. and learned Friend to consider two things as he comes to consider the amendment—which I cannot now press to a vote. Whatever revenue may be lost initially, when he comes to consider the effect of VAT on energy conservation, I hope that he will realise that if we ever go so far as to zero rate all of these materials the investment in energy-saving materials could yield a handsome return and balance to the Exchequer.

Secondly, I beg my hon. and learned Friend to consider the unsatisfactory nature of the law in view of the High Court judgment and the fact that, over the years, regardless of that judgment, there has been a wrangle over what constitutes a repair. I hope that he will consider both those aspects and especially the need to clarify the law. I beg to move.

The Chairman

The hon. Gentleman cannot move his amendment because, unfortunately, we have passed that part in the Bill. He may discuss it, and he has done so.

Mr. Michael Welsh (Don Valley)

I support amendment No. 20. I am concerned about modernisation of houses Over the years grants towards modernisation or revitalisation have been of assistance in increasing our stock of housing. Over the past four years the Doncaster metropolitan council has made grants of £1 million a year. The youngsters living in those old houses have been grateful for that money and have brought their houses up to a high standard.

Through the policies of this Government the youngsters will suffer. There is a planned rate of inflation of 17½ per cent., and modernisation of houses will cost more. Local authorities will make a grant of £2,500 for modernisation and a youngster will have to find a further £2,500. If he goes to the bank he will find that the MLR has gone up 2 per cent. over the past few weeks. He then needs a contractor, and that is where this amendment comes in.

The £2,500 grant from the local authority is, by and large, for repairs. The increase in VAT to 15 per cent. will mean an immediate loss of £85 to the youngster. He has to find that from his own pocket or accept £85 less work. It does not end there. The £2,500 from his own pocket is also, by and large, 50 per cent. for repairs, and he will lose a further £85.

Until a few weeks ago the total £5,000 needed for repairs was rated at 8 per cent. VAT. At the 15 per cent. rate the youngster loses £170. He has either to cut back on the modernisation or to borrow more money with the increase in MLR.

We should allow our youngsters to have good modern houses to live in. It is a top priority, and the increase in VAT does nothing to help to secure that desirable objective. Up to a few weeks ago things were not too bad for the young lad who bought an oldish house and asked for a grant to repair it. The planned 17½ per cent. inflation, the 2 per cent. Increase in MLR, and a 7 per cent. increase on his repairs, is prohibitive. The least that the Government can do is to accept amendment No. 20 and let the youngsters live in good modern houses.

3.45 p.m.

Mr. Patrick Cormack (Staffordshire, South-West)

I address my remarks to amendment No. 37, which I realise I cannot formally move. I appreciated the remarks made in the early hours of the morning by the hon. Member for Gateshead, West (Mr. Horam). We all congratulate him on his stamina and his conversion. In the past he was a doughty fighter for the heritage. One cannot blame him for thinking that Marsham Street was worthy of a temporary lapse. At least he saw from Marsham Street the heritage, even if he had to suffer an office in perhaps the most ugly building in London.

In view of what the hon. Gentleman said last night, I am slightly intrigued and absolutely delighted that the previous Chancellor and the Minister of State, who resisted such amendments so strenuously over the years, appear to have been converted. One can imagine that the right hon. Member for Llanelli (Mr. Davies), while he was at the Treasury, was repeating day after day the prayer of St. Augustine, "Lord make me good but not just yet." We are now in Government and the right hon. Gentleman is able to see the iniquities of VAT on repairs to listed buildings.

Mr. Denzil Davies (Llanelli)

We are concerned with the 15 per cent. rate of VAT. That is [...] too high for repair and maintenance of [...] house.

Mr. Cormack

I am deeply dismayed that the right hon. Gentleman's return to virtue has stopped half way. This morning the hon. Member for Gateshead, West made some telling observations, in spite of real difficulties. I should have liked to suggest that repairs to listed buildings should be exempt or zero rated, but the Budget resolution has been so skilfully and tightly drawn that that is impossible. The only thing that one can suggest is that the status quo should be preserved. I accept that a multi-rate VAT is untidy and has many disadvantages.

I plead with my hon. and learned Friend to consider the matter with great care between now and the next Budget, to listen to my points and to receive deputations from people who are experienced in these matters, with a view to its being put right at the earliest opportunity.

Last night we had an entertaining debate on the bloodstock industry. It was a cross-party debate and there were objections to the amendment from both sides of the Committee. The fundamental point of the advocates of that amendment was that here was a great British industry that stood at risk because of the imposition of a high rate of VAT and the way in which it was administered. I do not suggest that we are here talking about a discriminatory situation vis-à-vis another foreign country, but, if blood-stock is an important British industry, tourism is one of the most important and growing industries in the country.

Tourists do not come to bask in our sunshine, enjoy our cuisine, or always just to see our races. They are attracted by our culture, heritage, enormous range of fine historic buildings, old towns and attractive countryside. The magnet of tourism will be very tarnished if we allow these buildings, which many people come many thousands of miles to see, to fall into a state of disrepair. Yet there is a real danger of that happening.

Before I develop the argument about these buildings, I must point out that if my hon. and learned Friend accepted an amendment along the lines of No. 37 it would cost the Exchequer a minimal amount—between £2 million and £3 million. The hon. Member for Gateshead, West made a splendid point last night when he said that the receipts from VAT on repairs now exceeded the amount given by the Historic Churches Preservation Trust to historic churches. Therefore, justice and necessity are on the side of the amendment.

When we talk about listed buildings—I am glad that the Minister responsible is on the Front Bench today—we must realise that these buildings are statutorily listed, and those who own them or live in them have obligations placed upon them by law. They cannot add to the buildings or even repair them with ordinary materials. That is quite proper. They must abide by very stringent safeguards and regulations. Whether the building is a fine historic church, a small town house, a country cottage, a large country house or a stately home, it is an imperishable part of our heritage, and the people who live in it have certain obligations by statute.

Therefore, listed buildings could be quite easily detached from the category of other buildings and from the general tenor of the broad amendment No. 20. Here, indeed, is a specially defined case. There are strong feelings in all parts of the Committee about this matter. The necessity is real and I have illustrated the justice of the case. Now I shall demonstrate the necessity to do something quickly.

The hon. Member for Gateshead, West talked about country houses and the very real problems facing their owners who seek to maintain them. He also described the way in which the country would be impoverished, and the cultural heritage of the nation and the educational opportunities of our childen reduced if these places were no longer available for visits. We must bear in mind that 15 million separate visits were paid to country houses in Britain last year. Although tourism played an important part, the vast majority of those visits were made by British people, many of them children. These places are kept, not at public, but at private expense for the most part, and the owners have very real problems in seeking to maintain those properties.

Value added tax at 8 per cent. is bad enough, but at 15 per cent. it is crippling. Although the Budget proposals on income tax are to be welcomed, nevertheless many of these owners are not rich and they will not benefit enormously from the income tax concessions. That is even more true when one considers the vast range of smaller historic buildings, the owners of which have statutory responsibilities but generally speaking do not have the resources with which to meet repair bills. Another 7 per cent. on a repair bill is a real deterrent to doing an effective job. In fact, it is an encouragement to botching it up.

I urge my hon. and learned Friend to consider the question of trusts. I declare an interest, although not a pecuniary one, as being a trustee of the Historic Churches Preservation Trust. It was founded 26 years ago, and during that period we have disbursed about £3 million towards the repair of historic churches. Until the long battle for State aid was won in the last few years—my right hon. and learned Friend the Member for Hexham (Mr. Rippon) was the first Secretary of State for the Environment to agree on this in principle and the last Government implemented his decision—the Historic Churches Preservation Trust was the one body which gave money for the repair of historic churches.

The real problem we now face is that suddenly our income has diminished. Much of it comes from covenants. That brings me to the income tax position once again. Splendid though the tax cuts are, they mean that our covenant income will be reduced. Although one hopes that those who covenant will take account of the Budget provisions, many will not and there will certainly be a time gap. Therefore, we have a reduced income and a burden of 15 per cent. VAT. It is not just that which makes us feel that we are not entirely honouring all the wishes of our donors and helpers, but the fact that many a small parish up and down the country will be deterred from tackling necessary jobs. I am a warden of a church in my constituency. A few years ago it had to raise £10,000. If one adds £1,500 to that, it represents a very sizeable imposition for a small village. Whether one looks at this in a secular way or a religious way, or both, one must admit that these buildings are deserving of special consideration.

It must be difficult for my hon. and learned Friend when time and time again he has to answer special pleas. So many people urge him to accept special cases. But the fact remains that Governments of both parties in their wisdom have, over the years, agreed that there should be listed buildings. They have said that these provisions are right and proper and that they are necessary for the preservation of our heritage. They have placed very real and often severe obligations upon the owners. The time has come when VAT is no longer a nuisance, but a very real, and in some cases a crippling burden, which can be a considerable deterrent to an owner undertaking repairs at all.

I want an assurance from my hon. and learned Friend that he will consider this carefully and sympathetically. Over the years he has shown himself to be sympathetic about our heritage and I know that he has a great knowledge of these matters. I hope that he will be prepared to see various groups to discuss this issue—he has already told me that he will see the Historic Churches Preservation Trust and I am grateful for that. We must try to work out a solution which will not impoverish the Revenue but rather enrich the nation.

Mr. Tam Dalyell (West Lothian)

I declare an interest in that I am a council member of the Scottish National Trust and my wife is a member of the historic buildings council.

Hon. Members should understand that there are several views as to how the same end can be achieved. When hon. Members talk about bloodstock, for example, they must be aware that there is a question of priorities here. If I were to go along to many of my constituencies and tell them that the absolute priority for help was for the racehorses belonging to the Earl of Rosebery—my distinguished constituent—there would be many eyebrows raised. One must admit that last night the impression was given, by the attendance in Committee in the Finance Bill, that help to the racing industry was a considerable priority. Now we are giving the impression that help to historic buildings is an absolute priority also. All I am saying is that this must be seen in a general context.

First, what is the Treasury view of how extra VAT makes it more difficult to attract funds for the maintenance of historic buildings? Secondly—I gave the Minister notice this morning of my question—granted that it is a special problem for many historic houses that their sandstone exteriors have crumbled after 250 years and begun to deteriorate—that seems to be a critical period, as the Committee knows, because many of our most treasured buildings were built around 1800—what special help will the Government give to that range of houses? If no help is given there will be great difficulty in their restoration.

4 p.m.

I was recently guided, with other members of the historic buildings council, around the National Trust property at Killean. To make his point, the architect took a piece of sandstone from the facade of the building and crumbled it in his hands. Of course, the hon. Member for Staffordshire, South-West (Mr. Cormack) is quite right in saying that churches need restoring as well. However, the idea of restoring all these buildings over one or two decades is mind-boggling. We need to be convinced that it is better to try to cope with the problem through tinkering with VAT than by employing an overall Treasury strategy.

I hope to hear the Government come forward not with a "Yea" or "Nay" to VAT but with an overall strategy. It would be much better to channel available funds through the historic buildings council and the agencies that help churches, stately homes and many of the smaller houses—as the hon. Member for Dumfries (Mr. Monro) knows only too well from examples in his constituency. The National Trust has done an excellent job there. I believe that if the money were channelled through the agencies rather than tinkering with the effects of the fiscal system, particularly through VAT, the position would improve.

Although I have many of the same aims as the hon. Member for Staffordshire, South-West, I express considerable scepticism about fiddling with VAT to achieve those aims.

Mr. Michael Morris (Northampton, South)

I should like to address my re-marks to amendment No. 37. I shall not follow in the footsteps of my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack), because he has already made out a persuasive case.

I shall address my remarks to the anomaly that appears to exist in relation to listed buildings that are damaged by fire. There is a strong case for exemption from VAT of the reconstruction of listed buildings after damage by fire. I remind the Committee that if a listed building is dagamed by fire, and its owners, in agreement with the responsible planning authority, decide that the building is too far gutted to be restored, it can be rebuilt in absolute facsimile—as has been done on a number of occasions—and that rebuilding incurs no VAT. New constructon is zero-rated.

On the other hand, a factor that is likely to impinge on higher-graded buildings is that, if it has been decided in the national interest that the facade—or a part of it—of the building should be restored although the internal construction is completely gutted, the VAT officers have no discretion about charging VAT. That would apply even where the facade might amount to as little as 4 per cent. or 5 per cent. of the total value of the contract.

Logically, that is anomalous. However, it is even more anomalous when the law under the General Rate Act is examined. Under schedule 1(2)(c) to the General Rate Act 1967—rating of unoccupied property—no rates are payable on an empty listed building. Therefore that precedent has been set. Yet it is strange that the hands of the VAT officers are tied in relation to facades.

Two recent appeal cases of this nature were Thomas Briggs (London) Ltd. at the London tribunal in 1977, and the St. Luke's church at Great Crosby at the Manchester tribunal, reference 78/59. I believe that it is intended that the latter case should come up before the High Court on appeal. I hope that the Minister will have a close look at the anomaly.

I declare an interest by saying that I attended Bedford school, which was gutted by fire in the early hours of the morning of 3 March 1979. The restoration of that school will cost about £2 million. The inside incompletely unusable but the facade is to be kept. As the law now stands it would appear—though it is not proven entirely—that the charity will be landed with the cost of £300, 000 in VAT to keep an external facade in the interests of the community. I do not expect a reply on this matter this afternoon but I hope that the Minister will look at the problem in order to find a solution that will meet the needs of those who are affected.

Mr. Stephen Ross (Isle of Wight)

I shall make a confession and declare that I, too, was educated at Bedford school, like the hon. Member for Northampton, South (Mr. Morris). The school has never officially recognised that fact, but I should like to support his plea—although it is most unlikely that the school will come to me for assistance. However, the school finds itself in a tragic situation, particularly with the increase in VAT. Anything that can be done by the Government to assist that school and others in the same unfortunate position is badly needed.

I support amendment No. 37, upon which the hon. Member for Staffordshire, South-West (Mr. Cormack) made such eloquent and persuasive comments. My second interest is that I am a member of a buildings preservation trust. It has taken a long time to persuade my constituents that there is a great deal of architectural interest in the constituency. We have many Georgian and Victorian buildings that have been allowed to fall into a disgraceful state of neglect. However, over the past 18 months a number of local people have come together to try to put that right. At long last, our three local authorities have been persuaded to set aside funds, in each case about £30, 000. But, just as one or two minor schemes are about to be started, we find that we are faced with additional costs.

That cannot be right thinking by anybody in the country, whether by this or the previous Government. We are appealing to private industry to assist us and we believe that these trusts should not be dissuaded from taking steps to restore buildings by the actions of this Government.

My second plea is for our churches. My hon. Friend the Member for Come Valley (Mr. Wainwright) will know that I have received a letter from the vicar of Newport, whose church was rebuilt by the Prince Consort in the middle of the last century. It now suffers eternally from vandalism. Almost every week windows are broken. The very small flock managed to find the money to repair the building, but now the repairs will cost 7 per cent. more because of the VAT, and I think that we have come to the end of the line. There is no way in which we can go on persuading the same small band of people to keep on coughing up money.

When we go to East Anglia and see the fantastic churches in Suffolk and Norfolk, I wonder what their future will be. Shall we be able to preserve them? I know that we have taken certain steps.

Mr. Dalyell

The great glories of medieval English architecture at Lavenham and Long Melford are in need of preservation and restoration, but I refuse to believe that tinkering with VAT is the way to deal with the matter. Surely it must be done through the historic buildings councils and by channelling money through various other agencies.

Mr. Ross

I was merely saying that I hoped that we should have a statement of intent from the Government. I entirely agree with everything that the hon. Gentleman said in his speech.

A fortnight ago about half a dozen windows in the church in the centre of Newport to which I have referred were smashed. Money was found to repair them. But next time that happens it is unlikely that people will be able to scrounge around to obtain the money, because the bill will be that much higher. We have reached the end of the line.

It seems crazy that on the one hand we are prepared to give grants for conservation schemes through the historic buildings councils and other bodies, including some local authorities, and on the other hand the Government are taking money away. It is time the whole matter was cleared up.

Perhaps I may put forward a suggestion that was made to me at lunch time today. If we cannot give zero rating for the repair and maintenance of historic buildings and ecclesiastical buildings generally, can we not at least do so within conservation areas? That would be a step in the right direction, if the finance is not available to do it throughout the country. We should not leave the subject any longer. It is vital.

Many hon. Members visit the Isle of Wight and go sailing in Cowes. I am ashamed to say that I think that the town of Cowes is in a very rundown condition. We put a plaque on a house there to say that we were honoured that the famous headmaster of Rugby school, Thomas Arnold, was born in it, but the house has been shored up with timber because no one can repair it.

I am sure that the problems in my constituency are repeated everywhere else. There are empty houses that could be used for occupation by the many people on our waiting lists. I hope that the Government will not turn a deaf ear to what we say but will do something positive in the very near future.

Mr. Michael Latham (Melton)

It is a great pleasure to speak after the hon. Member for Isle of Wight (Mr. Ross), though it may not be such a great pleasure for him to listen to me, because he and the hon. Member for Liverpool, Walton (Mr. Heffer) will have to hear a repeated version of what I said at a function dealing with this issue attended by all three of us only three or four hours ago.

I have an interest in the matter, as a director of a building company. I am also a director of Shelter, although that is not a paid interest.

I am not in a position to support either amendment No. 37, in the name of my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack) or the Opposition Front Bench amendment, amendment No. 20, because neither achieves what I want, which is zero rating in both the areas with which they are concerned. Because of the money resolution, the amendments cannot, as my hon. Friend clearly explained, aim to achieve zero rating, but they would bring about a standstill at the 8 per cent. rate of VAT.

As hardly a word has been said today about amendment No. 20, which was moved by the hon. Member for Gateshead, West (Mr. Horam), last night, it may help the Committee if I remind hon. Members how the present position came about. New construction is and always has been zero rated. It is maintenance and rehabilitation work that is positively rated, and always has been.

Back in 1972, when the then Conservative Government produced their Green Paper on the value added tax for public consultation, I was one of the members of the staff of the National Federation of Building Trades Employers, and I had the job of drafting our comments on the Green Paper. We said that it was ridiculous to have zero rating for new construction and positive rating for maintenance, because there would be gross anomalies, moonlighting, irregularities and so on. Our advice was not accepted.

4.15 p.m.

It must also be said, in view of the Opposition amendment No. 20, that that advice kept on being given during the lifetime of the Labour Government and was continually rejected for five years. The Labour Government made no attempt to zero rate maintenance work, although the matter was frequently raised in the House of Commons and was the subject of regular representations from the industry. We are in exactly the same position as we were when the tax was introduced in April 1973, except that the rate has changed.

It is worth remembering why the then Conservative Government rejected zero rating for maintenance. I think that there were two reasons. The first was presumably cost. I believe that the latest figure for such a concession is £300 million, although how scientifically it has been calculated I should be interested to hear from my hon. and learned Friend the Minister of State. I do not know how he calculates it, because much maintenance work is done on a self-employed, non-registered basis. No doubt my hon. and learned Friend can illuminate the Committee on this matter.

The second and more coherent reason for rejecting zero rating advanced at the time by the Conservative Government, and advanced again by the Labour Government, was that if maintenance work were zero rated there would be gross anomalies over do-it-yourself. The householder who buys a pot of paint at the paintshop to redecorate his house pays VAT on the point. It is a matter of hard fact that—not simply because of VAT, but for many other reasons—the vast majority of domestic internal painting work, perhaps now 90 per cent., is do-it-yourself. Hardly anybody now calls in a painting contractor, because people cannot afford to do so. That was the case when the tax was 10 per cent. and 8 per cent., and it will continue now that it is 15 per cent.

It may be said that those reasons are not wholly persuasive and that they can be overcome. There is another reason that my hon. and learned Friend may choose to give, although it is not likely to impress many hon. Members. I refer to the question of the Common Market. It is well known that the. EEC does not like zero rates. If Ministers wanted to zero rate maintenance work, which I am sure all those who support the amendments really want, they would find themselves with a contrary pressure from the Common Market. They would be told "Instead of zero rating maintenance work you should be positively rating new construction work to bring them both into line, so that the anomalies are avoided." I am sure that no hon. Member would accept that, because it would mean a substantial increase in the price of new houses, and that would certainly be resisted by all hon. Members. The Committee should recognise that those difficulties cannot be easily overcome.

Even if VAT were to remain at 8 per cent., as amendments Nos. 37 and 20 recommend, what would that achieve? There would be a two-tier rate, which would be undesirable in principle. Secondly, would it make any practical difference?

Let us talk about the domestic householder, who is the main interest of amendment No. 20. I do not believe that VAT, although certainly serious and important, is the main determinant in preventing the householder from employing a contractor to do domestic maintenance work. On the contrary, the real problem is the price of building work generally. If it is to be done effectively by a proper contractor who is properly registered, and not by a cowboy, proper labour and material rates must be paid, and that puts the price well beyond the domestic householder.

Many domestic householders get round the problem by d-i-y, which is already positively rated for VAT purposes. Therefore, I do not believe that even if the amendments were made they would make a great deal of difference in the domestic sector, although if we had zero rating that might indeed make a difference.

I turn now to the more specialised areas of my hon. Friend's amendment. I find amendment No. 20 impossible to accept in its present form, although I could have accepted a call for zero rating. On amendment No. 37, different considerations arise. The scope is much smaller, the concession financially much less and the anomalies less obvious.

Like my hon. Friend, and the hon. Member for Walton, I have the pleasure of sitting on a number of committees of the Church of England. I must tell my hon. and learned Friend the Minister of State that the proposal for a 15 per cent. Tate on maintenance work will have grave effects on the churches and the maintenance of these important buildings. No one knows better than the hon. Member for Walton that work on historic churches is exceptionally craft-intensive. Stonemasons of the highest quality are required when repairing Salisbury Cathedral or Lincoln Cathedral. They do not come easily. They do not come cheaply. The added bill for their labour will be a serious matter. Money has to be raised almost entirely by voluntary subscription. I hope that my hon. and learned Friend recognises that this will not be an easy task.

I would like to refer to historic houses. I had the privilege, in the previous Parliament, of serving on the Environment Sub-Committee of the Expenditure Committee which produced a report on the National Land Fund—a report that I want to see this Government implement as quickly as possible. Like my hon. Friend the Member for Staffordshire, South-West, I have been pressing the Chancellor of the Duchy of Lancaster to take action and to bring forward a Bill as quickly as possible. The report made clear that historic houses are one of our major tourist attractions. It will not be sufficient for my hon. and learned Friend to say that they can put up their prices. If those houses are to be kept in an adequate state of repair, proper consideration must be given to this new burden, whether by tax deduction or by some other means. It will not be possible simply to generate extra cash. My hon. and learned Friend will have to consider this matter seriously before the Finance Bill next year.

I would like to say a brief word about insulation. If the Minister is to accede to the proposal put forward by my hon. Friend the Member for East Grinstead (Mr. Johnson Smith), I hope that he will investigate the considerable number of irregularities that have occurred. Under the insulation scheme introduced in the Homes Insulation Act by the previous Government, 200, 000 grants have been made. That is nearly £8 million of public money.

The Agrément Board and the Department of the Environment have still not produced an approved list of materials suitable for this purpose. I was with the Agrement Board only last Tuesday. It is still working through the enormous number of materials that have been submitted. It is totally unsatisfactory that a scheme of this kind should be permitted to go ahead before the approved materials are properly tested. This matter should be carefully borne in mind. My hon. and learned Friend has heard the debate. He knows the strong feelings that exist on both sides. I hope that he will take full account of them.

Mr. Eric S. Heffer (Liverpool, Walton)

The hon. Member for Melton (Mr. Latham), like myself, knows the industry well. I do not entirely agree with his arguments. It is true that we should be asking for zero rating, but that is impossible. We have to argue within the terms of the Finance Bill and the amendments that have been tabled. This means that we can argue only for the continuation of the present rate. I realise that we will have different rates, but it it is important not to go beyond 8 per cent.

I seem to spend a lot of time, as the hon. Member for Walton, combating landlords. I do not regard myself as the landlord's friend, and landlords in Walton do not regard me as their friend. The reason is simple. I spend hundreds of hours in the course of the year trying to get landlords to carry out necessary repairs. If the VAT rate goes up to 15 per cent., the difficulties encountered with landlords will increase. At the moment, when landlords finally get round to carrying out repairs and maintenance they might at least employ proper building workers, although "cowboys" are sometimes involved. If the rate is increased to 15 per cent., the number of "cowboys" carrying out repairs and maintenance for landlords will also increase. These are good reasons why Ministers should think again. Ordinary working people—who do a damned good job—living in the type of houses rented by landlords in my constituency, find great difficulty getting their houses repaired and maintained properly.

I believe that the Bill will only aggravate an already difficult situation. I agree that the work should be zero rated. I argued for this course to be adopted when I sat on the Government side of the House. I am delighted to hear hon. Members who are at least consistent on this matter. There is an across-the-board lobby on the construction industry. Some hon. Members feel strongly about the industry and believe it is important that we should speak, as far as possible, with one voice on these matters.

Thousands of ordinary people who live in rented property—some have lived in that property for 45 years—already face great problems in trying to ensure that landlords keep standards of repair and maintenance up to a decent level. They will find themselves in a very difficult situation. The problem does not apply to all landlords, but it applies to many—those who believe that owning houses means getting out the maximum and putting back the minimum in repairs and maintenance. If the rate goes up to 15 per cent., there will be an added reason for an increase in rents. This will put a further burden on to the shoulders of tenants living in that property.

Another interesting point raised by the hon. Member for Melton, with which I agree, is the attitude of the EEC. It is well known in the House of Commons that I am not an enthusiastic supporter of the European Economic Community. At one stage in my early political life, I believed that we should go into the Common Market on the grounds of sheer political idealism. When I saw what entry to the Common Market really meant, my backsliding was much more rapid than that of my own Front Bench; they came late to the scene.

There are forces within the EEC that would like to see us impose VAT on new construction. The Government's efforts in the direction of the construction industry have not been marvellous. Even Sir Maurice Laing, who has just received an award from Aims of Industry for his great struggle for freedom against nationalisation of the construction industry—that was a phoney battle anyway, since we never intended to nationalize land—[HON. MEMBERS: "Oh."] Conservative Members obviously cannot read. If they could read, they would know what we said.

The truth is that Sir Maurice Laing has made some interesting comments about the Budget's effect on the construction industry. Raising the rate will have a serious effect. I am sure that he will agree with me that it should be zero rated but that, if not, it should not bear a rate of 15 per cent. We do not agree on other issues, but I am sure that we will agree on that.

4.30 p.m.

The effect on repairs and maintenance will be marginal, although in the most important section of the industry, but there will also be a marginal effect on employment. More and more "cowboys" are likely to be involved, but good bona fide craftsmen and workers will be affected. Their unemployment is already far too high and it will get worse because of the Budget.

I apologise to the hon. Member for Staffordshire, South-West (Mr. Cormack) for not being here for the whole of his speech, but I am sure, judging from the part I heard, that I agreed with most of it, as I always have done. It is vital to maintain our historic buildings and to develop them in the best way. We have a wonderful heritage, to which many people do not give sufficient attention I often go round historic buildings as one of thousands of ordinary people, enjoying what they are seeing. It is part of our history.

Things are slightly different now, in that most of these buildings can no longer be maintained by the families because the feudal days have gone, but that does not mean that they should not be maintained. In the old days working people only worked in those buildings. Now at least more and more can see them.

Therefore, I fully support the hon. Gentleman's amendment and hope that the hon. Member will not be seduced by fair words from the Minister, who will probably say "We have the greatest sympathy with the amendment and we understand the problem, but we cannot possibly accept it." If that is the Minister's attitude. I hope that the hon. Gentleman will stand firm for a vote. I shall certainly be in the Lobby with him.

Mr. James Hill (Southampton, Test)

The hon. Member for Liverpool, Walton (Mr. Heffer) described the Budget's serious effects on the construction industry. He must have spent the last few years cocooned in the House of Commons and unaware of the effect on the industry of shortage of materials and escalating wages.

Mr. Heffer

I cannot remember whether the hon. Member has been out of the House for a period, but his hon. Friends who were in opposition in the previous Parliament will know that, day in and day out, I never stopped arguing about the effects of my own Government's policy on the construction industry. I think that I might have had a marginal effect—not very much, unfortunately—by expressing that attitude. I just wanted to get that on the record.

Mr. Hill

Whether the hon. Gentleman had a marginal effect or not, there was no effect outside this place. He may have been lobbying his Ministers constantly for the last five years, but during that time the number of bankruptcies in the building industry have risen to the point at which there is no future in apprenticing one's sons in the industry.

The industry is delighted that the Community Land Act provisions are to be discontinued. We in the industry are hoping for more building land as a result. It is no good the hon. Member describing what a gallant fight he has been making. It was ineffectual and did not show where it matters—in the industry's labour pools. However, I thank him for his efforts.

Anyone with a logical mind will agree that 15 per cent. VAT on repairs and maintenance is akin to madness. No one—whether local or national politician, building developer or householder wanting to do his own work—wants a further imposition. The hon. Member for Walton may be right about the class structure and the fact that a private landlord may do even less work with a rate of 15 per cent. than he did when it was 8 per cent. Nevertheless, the crux of the problem is not so much the VAT—I agree that repairs and maintenance should be zerorated—as the inequitable levels of rents chargeable by private landlords, which effectively bars them from doing repairs and maintenance, whatever the VAT rate.

This debate is not about simply the public or private residential sector. Repairs and maintenance in the business community will provide more work for the hon. Member's friends in the industry, but VAT at 15 per cent. logically leads one to suppose that 15 per cent. less work will be done.

I hazard a guess that VAT on repairs and maintenance throughout the EEC is not 15 per cent. In Italy, for example, the Government would be foolish to charge VAT on repairs to historic buildings and even domestic housing.

It is difficult to support any motion which bears the name of the previous Chancellor. That would be tantamount to an abdication of responsibility on our part. If the Labour Party had these views in the past, why did it not carry them out? However, the situation is grave, particularly on council repairs. Will the new rate mean a loss to the repairs and maintenance funds in our constituencies? Will money be transferred from one pocket to another? Surely we could zero rate not only repairs and maintenance but the insulation of property. However, that is a different matter.

I support what my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack) said about historic and important buildings, although for me that problem is second to the problem of domestic residential property. I hope that the Minister will look at the matter again, if not today then in a future Budget. There is a good case for zero rating all repairs and maintenance, not only to buildings of historic and architectural importance, but to ordinary residential property, whether public or privately owned.

Mr. Bob Cryer (Keighley)

Conservative Members are not taking into account the compensations in the reduction in income tax levels which the Government are continually claiming. They refer to industry, owner occupiers and owners of historic buildings, and claim that the income tax concessions will bring new enthusiasm and a new zest in life, and will transform the economy. If the economy is not transformed they will be in a terrible mess. What will happen if the new elixir of cuts of a few percentage points in income tax does not work?

Conservative Members have tabled amendments for exemption from VAT. Do they not believe in the new elixir? Did they not, during the election, put forward the case for a switch from direct to indirect taxation? Did they say then that there should be a number of exemptions? We are seeing them wriggle. Conservative Members are helping Labour Members to prove that direct taxation is fairer than indirect taxation. Increases in VAT affect all sorts of people, from those who live in grand houses—covered by amendment No. 37—to those who wish to install or improve insulation—a highly desirable aim, especially during an energy crisis. They are to be taxed because the policy of the Government is to switch from direct taxation to indirect taxation. It is a consequence of their principle and policy.

Mr. Latham

Why did the former Prime Minister, during the election campaign, say at the Labour Party press conference that if the people wanted a change from direct to indirect taxation that would have to be done?

Mr. Cryer

I do not stand at elections on the basis of personalities. The Labour Party succeeds not on the basis of personalities, but on the basis of policies. I stood on the Labour Party manifesto. Over the next five years, I shall be contributing to the new manifesto and trying to ensure that we develop procedures to ensure that the next Labour Government read their manifesto and undertake to adhere to it, word for word, when we have a Labour Government returned with a massive majority. Conservative Members may laugh, but they should go out into the country and discover how people regard their party. The Conservative Party held out the switch from direct taxation to indirect taxation as some gigantic promised land. Now we see the reality. It denied that VAT would reach 15 per cent., but it has reached that figure. It is reaping the whirlwind. The Conservative Party is becoming increasingly unpopular and, as its industrial policies put workers on the dole in hundreds of thousands, we shall see political changes. Much political education is taking place. People are realising that a Conservative Government means a Government devoted to the interests of the class they represent and against the interests of the majority who work for their livelihood and their families.

4.45 p.m.

We have laid the preamble and put to scorn the claims of Conservative Members that moving a little on VAT will remedy the grave injustices. Labour Members would prefer zero rating, but we are limited to a return to 8 per cent. because of the procedure of the Finance Bill. No one would object to reducing VAT on buildings of historic and architectural importance. We all appreciate our inheritance. Contrary to the wishes of Conservative Members, most of whom represent the owners of the grand houses, the houses are now accessible to the public.

Lord St. Oswald of Nostell Priory, for example, is not an enthusiastic Socialist, and other owners of grand houses are also zealous adherents of the Conservative Party. The increase in VAT has not helped them. We all appreciate and visit these houses and agree that it is important that they should be maintained. The VAT increase is an added burden for the owners. We should like a reduction in VAT on repairs and maintenance of historic homes.

But what about the houses which are not so grand and which are lived in by ordinary working people? Our amendment No. 20 is my priority. The Government should be concerned with widows, widowers, pensioners and owner-occupiers who are faced with property repairs. In my constituency a large proportion of the housing stock consists of older housing from the nineteenth and, at best, early twentieth centuries and much of it needs a great deal of renovation and repair. In Tory-controlled Bradford, the record of council house building is abysmal. Many Conservative-controlled authorities are eagerly selling their housing stock. Elderly owner-occupiers cannot afford the cost of repairing an aged house, but they have no alternative. Local authority dwellings are not available. They have to join a lengthy list and the only way to obtain a bungalow or a flat on the ground floor is to have a high degree of medical priority. Increasing VAT will make the repairs more expensive.

A constituent of mine needed his roof repaired. The cost was £1, 000. The increase in VAT will add another £70 to that bill and put the repair that much further out of his reach. The owner-occupier who has savings sees the prospect of their being swallowed by increases in the cost of repairs. It is nonsense for the Government to make a further imposition on the cost of repairs and maintenance.

My amendment No. 35 was deliberately designed to ease the tax burden by exempting those living alone and running a home, whether rented or owned, from the £750 of taxable income at 25 per cent. That would save them £190 per year. Single persons are often in more difficult circumstances than are married couples. Some gesture to help them should be made by the Treasury. Instead of that, the Government are imposing further burdens. It is an unfair imposition.

I made representations to the local authority and it agreed to make loans not only in general improvement areas but throughout the metropolitan district council area to meet repair costs. This is now a charge on the property. It is an indication of the seriousness of the difficulties when a local authority is prepared to make special provision throughout its area.

Now it appears that there will be a further burden. Not all local authorities are prepared to deal with the problem.

Mr. Michael Morris

There is nothing new in putting a charge on a property. That has been done by local authorities for 15 years to my knowledge, and perhaps longer.

Mr. Cryer

That may be true, but Bradford did not do it. The problems created by the cost of repairing old property was so great that after representations from me the local authority agreed to meet the situation to some degree. That is a useful contribution. Bradford did not agree to act until a couple of years ago.

The Government are now placing a further burden on those who are less able to meet the obligations. In spite of the Government's protestations about encouraging owner occupation, they are discouraging owner occupation by placing a further burden on those who are least able to bear it.

That is symptomatic of increasing the rate of VAT. It will bear most heavily on those who are least able to cope. For those reasons. I hope that we shall press amendment No. 20. I imagine that amendment No. 37 will disappear along with the courage of the hon. Member for Staffordshire, South-West (Mr. Cormack). We should try to make a dent in the intolerable burden which the Government are placing upon ordinary working men and women.

Mr. Alexander W. Lyon (York)

I rise only because of the fear of my hon. Friend the Member for Keighley (Mr. Cryer) that amendment No. 37 may disappear. I agree with his attack on the redistribution of income between direct and indirect taxation. I said that yesterday. But I was surprised at the response from the Government side. I hope that they long have the delusion that this redistribution will not be unpopular in the country and not hurt their electoral chances. The nearer we get to the next general election with them still in that state of delusion, the better our chances.

My anxiety about VAT on the repair of historic buildings relates not only to Nostell Priory. I imagine that Lord St. Oswald will make enough out of the Budget to enable him to provide for the repairs to the priory. But there is a serious problem for historic buildings and buildings of architectural merit in a place such as York when the occupier of the premises has a relatively modest income. A serious setback to the conservation of small buildings and houses which are owned by such people will occur if there is an increase of this size in VAT.

I do not believe that the Minister of State will say that he will accept the amendment. That means that there will be difficulty for schemes such as that run by the historic buildings council for town houses. It will not be possible to make up for the difference in the rate of VAT.

Such organisations will be able to reclaim VAT on grants from local authorities, but they will not be able to do that with grants from the Department of the Environment. If they are to be subject arbitrarily to the cash limits without consideration being given to this important matter, there will be a serious setback to the conservation of the historic core. I hope that the Minister will take these arguments into account when allocations from the Department of the Environment are made for this purpose.

Mr. Douglas Hogg (Grantham)

I support the preliminary remarks of the hon. Member for Keighley (Mr. Cryer). I was surprised that I agreed with him to the extent that I did. Indeed, it caused me some alarm.

A number of my hon. Friends support the amendment. It is important that they should bear in mind a basic principle—that one cannot go on reducing the base of VAT without, at the same time, substantially reducing the ability of the Government to reduce direct taxation.

We have embarked on a policy of reducing direct taxation and therefore we should not reduce the base of VAT. I hope that hon. Members will bear that in mind.

I am in favour of a substantial reduction in the burden of direct taxation. Inevitably that means that we must accept a significant increase in the burden of VAT. I see no possible reason for exempting buildings from that approach. I urge hon. Members to reject the amendment.

Mr. Cormack

My hon. Friend has not been in the Chamber. He has not listened to the arguments. He has not heard about the sums of money that are involved. He should not, therefore, make such an observation.

Mr. Hogg

I have heard the arguments before at considerable length. I am confident that my view is correct.

The Minister of State, Treasury (Mr. Peter Rees)

The hon. Member for Keighley (Mr. Cryer) said that his pre- amble would put my hon. Friends to scorn. He introduced a note of partisan fervour which had been absent from the debate. I make no complaint about that, but he could have reserved his fervour for another debate. The debate was interesting. It was characterised by many highly informed and expert views from both sides of the Committee. Before I deal with those interventions I wish to state again the general considerations which inform the Government's thinking on VAT. I appreciate that I have used some of these arguments before, but there is always an element of repetition in Committee debates. I hope that I shall carry the Opposition Front Bench with me in saying that VAT is and should be a broadly based tax and that it is not suitable for advancing particular social and political objectives.

Mr. Denzil Davies

The hon. and learned Gentleman said that yesterday. He should discard that part of his Treasury brief and try another argument today.

Mr. Rees

The right hon. Member is being unusually harsh. He is usually courteous and self-controlled. I have heard some of the arguments that have fallen from his lips before. They may have been good and they may have been bad, but he has repeated them. Since some hon. Members who contributed to the debate did not hear earlier debates on other amendments, it is right to set this debate in its context and to approach it from the broad question of principle. I was taking up the theme introduced by' the hon. Member for Keighley. We should consider the broad principles of VAT. The hon. Member did not receive universal commendation from all of my hon. Friends. Perhaps that is what motivated my hon. Friend the Member for Grantham (Mr. Hogg) to make his powerful intervention at a late stage of the debate.

VAT is a broadly based tax. We should try to maintain the base. If the base is eroded, leaving aside the loss of revenue, it follows that there will have to be higher rates on a narrower base. If the base contracts all the time then the problems of definition, as the hon. Member for West Lothian (Mr. Dalyell) perceptively said—

Mr. Davies

Will the hon. and learned Gentleman tell us what the loss of revenue would be if this amendment were accepted?

5 p.m.

Mr. Rees

I will come to that. The right hon. Gentleman is showing unaccustomed ardour. Perhaps he had more hours in bed than I did. Obviously he is entirely revived, freed from the restraints of office. I resume on the general principles before I come to the amendment.

As the hon. Member for West Lothian observed, the problems of definition that will become acute are those which were illuminated with such force and vigour by Sir Gerald Nabarro. It is better—I am sure that hon. Members on both sides of the House, on reflection, will agree—that we have a broadly based tax with the fewest possible exceptions.

We can all make special cases. Some of my hon. Friends have done so with eloquence. However, I believe that they will realise overall that it is better to preserve the broadest possible base for this tax. Those who plead for special exemptions are honour-bound to consider what alternative sources of revenue could be tapped to supplement the loss of revenue which would result if their amendments were carried. This point was touched on by the hon. Member for Keighley and he and I will have a plainly argued difference of opinion.

The hon. Member will say that there is no case at all for an increase in VAT and that we should concentrate the weight of our fiscal impost on direct taxation. I like to think that that is a point that was put fairly and squarely to the British electorate, which came down with an unequivocal answer on 3 May, and the Government are doing only what they were encouraged to do by their votes.

I turn to the specific amendments and the powerful contributions which were made in discussing them. Amendment No. 20 was moved lucidly and moderately—and I hope that he does not lose face among his colleagues if I say so—by the hon. Member for Gateshead, West (Mr. Horam). I believe that it was his debut on the Opposition Front Bench in a financial debate and I hope that the Committee will allow me to congratulate him. He has, of course, the tremendous advantage over his right hon. Friend the Member for Llanelli (Mr. Davies), in that he comes with a fresh mind and untainted by experience in this area during the past five years. My hon. Friends the Members for Melton (Mr. Latham) and Southampton, Test (Mr. Hill) reminded him of that and, if I may go back to the racing analogy used earlier in this debate, he does not carry so much lead in this field.

The hon. Member can argue with more vigour for all the special cases which he would have been disposed to resist had he been sitting where his right hon. Friend sat over the past five years. His right hon. Friend knows how many times he resisted pressure for precisely the good causes that are now being pressed on this Administration. The right hon. Gentleman murmurs "Eight per cent." I am reminded of what was said by, or about, Fouche during the French Revolution, that treason was a question of dates. To the right hon. Gentleman VAT is a question of rates.

I believe it is a matter of principle. All the arguments—I made this point yesterday and I will go on making it so long as he puts the issue to me—that the right hon. Gentleman and his hon. Friends have advanced for special cases were arguments for zero rating or exemption. It is not a question of the difference between 8 per cent. and 15 per cent. He believes, as do some of my hon. Friends, that some cases deserve exemption or zero rating. I listened closely to his arguments and I think that they led, logically, to that conclusion.

The right hon. Gentleman and my hon-Friend the Member for Melton asked for the cost of the amount of VAT collected on repairs. I may have given a figure of £300 million. The right hon. Gentleman will be under no illusion that I am not sufficiently numerate to have done the sums. The figure of £300 million given for zero rating repairs and maintenance is based on consumer expenditure estimates for 1979–1980 on repairs and maintenance work performed by contractors and purchasers of do-it-yourself materials. I will pursue the matter if the right hon. Gentleman wishes for more detail, but I think it will be better for the Committee if we pursue this rather technical argument in public.

The cost of accepting amendment No. 20 would be around £100 million. That is not negligible. According to the hon. Member for Keighley this could easily be recouped by ¼ per cent. on the basic rate of income tax. As I have said, the British electorate have given their view on that. I approach amendment No. 20, and I hope that, on reflection, the Committee will agree—I appreciate its merits, which have been canvassed by the previous Administration—in the belief that we should preserve the broad base of VAT.

There are definitional problems in that the thrust of the argument—though it may have not been put quite so exclusively as I have put it—was that it should be for essential repairs. The hon. Member for Keighley will appreciate the difficulty of defining precisely what constitutes an essential repair, though the right hon. Member for Llanelli is obviously getting worried about this argument. He did not move the amendment. If he wishes to intervene I do not discourage him, but he has a very able colleague who I thought did full justice to this amendment. The hon. Gentleman will realise that this amendment in its present form would permit a reduction in rate on inessentials, perhaps on mere interior decoration; the kind of things which the hon. Member for Keighley—who constantly uses the phrase "ordinary working people"—suggests that ordinary people might not be disposed to do. I suggest that ordinary working people do like to redecorate for aesthetic reasons. I have never quite understood the scope of that phrase.

Mr. Denzil Davies

I do not quite understand this problem of definition, because the words "repair and maintenance" are taken exactly from the present legislation. If there is a definitional problem it is a present problem and is not changed in any way by reducing VAT to 8 per cent.

Mr. Rees

Perhaps I did not put my argument sufficiently clearly. What I am saying is that the thrust of the argument of the hon. Member for Keighley was that meritorious repairs should be entitled to this reduction. Does the Committee feel that every form of interior decoration that is comprised in this amendment should be rated at 8 per cent. while other equally worthy activities should be rated at 15 per cent.'? It is for the Committee to judge, but at the end of the day I face this amendment by praying in aid the general considerations to which the right hon. Gentleman took exception but which I hope the Committee will consider good.

Mr. Latham

Will my hon. and learned Friend address his mind to the question why we still persist with the situation—which has existed since 1973—in which new construction is zero-rated but maintenance is positively rated? I urge him to reconsider that matter.

Mr. Rees

That could in some sense be regarded as anomalous. It could, equally, be cured by introducing a standard rate for both those activities, though I am not saying that this is in the Government's mind. As my hon. Friend is aware, that situation obtains in many Common Market countries. If he is so rigorously logical he will perhaps follow that particular argument through to its logical conclusion, but I do not know whether it is a conclusion that would attract him, me, or, indeed, the bulk of this Committee.

I turn to amendment No. 36, spoken to so persuasively by my hon. Friend the Member for East Grinstead (Mr. Johnson Smith). The amendment is designed to keep at 8 per cent. insulation materials and other products designed to conserve energy. There are certain problems of definition in his amendment, however concisely it may have been drawn. What exactly is meant by insulating materials? Is plaster work or panelling regarded as insulating material? Will the Committee regard that as something to be charged at a lower rate?

The conservation of energy is, of course, an objective that will command the support of the whole Committee. As for the example raised by my hon. Friend, does he believe that bicycles should be charged at the lower rate, as indeed they could be, under the form of his amendment? I appreciate that he wishes to ventilate the general principle and not the details but I hope he will permit me to observe that, as at present drawn, his amendment poses certain practical difficulties.

My hon. Friend also raised some specific difficult points on the application of the Mecca case, which I believe turned on the conversion of a cinema to a bingo hall. I believe that the Customs and Excise endeavoured to circumscribe to a degree the meaning of alterations, endeavouring to say that it was a question of part alterations and part repairs—that part should be zero rated and part should be charged at the standard rate.

That leads me to remind the Committee that alterations are zero rated and have been generously interpreted up to now. A great number of operations that achieve the objective that my hon. Friend the Member for East Grinstead has in mind, such as cavity wall insulation and double glazing, are in fact zero-rated. As my hon. Friend pointed out, the Customs and Excise authorities are a little concerned about that generosity of interpretation, but certainly no firm decision has been taken, and my hon. Friend's views, which seemed to find some favour in the Committee, will be borne in mind.

Let me reassure my hon. Friend that there is no present intention that the definition of alterations should be cut down in any way, but, as I said, even in that respect there are problems of definition and I think it right that we should seek the view of those professionally concerned.

Mr. Geoffrey Johnson Smith

May I take it, therefore, that the industry can expect any dubiety on this point to be cleared up in a matter of some months or less?

Mr. Rees

Unless my hon. Friend is contemplating another Finance Bill in a matter of months—I do not think that that would find much favour with the Committee—it could be done only by an extra-statutory concession. I am always a little reticent about extra-statutory concessions, but perhaps I have misunderstood what my hon. Friend had in mind.

Mr. Johnson Smith

I apologise for not making the matter clear. I was thinking that perhaps another circular could easily clear up any doubt that now exists in the industry.

Mr. Rees

I shall certainly look at that question again. If we feel that there are grey areas or areas of difficulty, which are causing real concern, we can see whether it is possible to define them in that way, consistent, of course, with the duty of Customs and Excise to adminster a statutory code.

Finally on this point, I remind my hon. Friend and the Committee that the Department of the Environment grant-aids insulation. I believe that one can obtain £50 for loft insulation, and 200, 000 grants have been made since September 1978.

I come now to amendment No. 37, explained so eloquently, as one would expect, by my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack). My hon. Friend has built up a considerable reputation in this subject. He modestly reminded us of his connection with the Historic Churches Preservation Trust, and I look forward to receiving some informed representations from that source. My hon. Friend was modest enough not to mention that he is the author of a considerable work on this subject, and I have no doubt that there will be a stampede to the Library, if not to the bookshops, to read that work before the subject comes up again. I need hardly remind hon. Members of "Heritage in Danger".

I am in some difficulty here. The hon. Member for Liverpool, Walton (Mr. Heffer) said that the Committee was not to be seduced by bland or fair words, but I must state in general terms that this is a concern of the present Administration, as I hope it was also, to a degree, though not so observable, of the last. But there is a new flavour about opposition now, and perhaps the hon. Member for Gateshead, West will bring a fresh mind and a yet more favourable attitude to this matter. He certainly showed that he has a considerable grasp of it. Indeed, he mentioned one house which may be known to other hon. Members. We look forward to the hon. Gentleman's contributions, and I very much hope that we shall be able to establish a bipartisan approach to this important and continuing problem.

5.15 p.m.

I am sure that hon. Members noted the support from both sides for this objective. The difficulty that I feel about the amendment is that it merely isolates a problem of VAT. Of course, I recognise the problem, but I believe—and I hope that, on reflection, my hon. Friend and the Committee will believe—that it is wrong to identify this one facet of the problem and deal with it in isolation. I suggest that it would be better—here I take up the words of the hon. Member for Gateshead. West—to evolve a broad strategy which will involve looking at more than just the question of VAT, which will involve looking at—dare I say it?—the capital transfer tax and a whole range of other taxes. Moreover, it is not just a question of taxes, not just of removing fiscal disadvantages, but of a possible need for positive advantages. I know that my right hon. Friend the Chancellor of the Duchy of Lancaster has this in mind—it overlaps his responsibilities—and we shall certainly be looking to see how far we can over the months ahead evolve such a broad strategy. I hope that, when it is produced, it will command a measure of bipartisan support.

Mr. Dalyell

It is all very well to think of messing around with the capital transfer tax, but everybody who has had experience of Finance Bills knows how difficult that is. Why should not the strategy be concentrated through the agencies, and particularly the historic buildings councils?

May I now repeat the question of which I gave the Minister's office notice, namely, what is it intended to do about the problem of those 250-year-old and 300-yearold buildings, the stone of which is suddenly crumbling? This is a problem peculiar to stone of a certain age.

Mr. Rees

There may be a difference of philosophy between the hon. Gentleman and myself on how support should be given. Perhaps there will have to be a mixture of fiscal relief and positive subvention. I suspect that at the end of the day it may be a question of balance, and perhaps the difference between us is not as fundamental as the hon. Gentleman and I might at first sight suspect.

On the more particular question—I was grateful for the notice that the hon. Gentleman gave—I should like to say that we could indeed devise a specific and positive fiscal relief for that problem in the context of this Finance Bill, but I doubt that we shall. I recognise the problem. Perhaps the Committee will permit the personal reminiscence that I was privileged to be at a college in Oxford and I could plainly see the facade of the library crumbling and blackened because it was suffering from precisely the sort of decay and corrosion to which the hon. Gentleman has drawn attention.

I do not believe that we shall be able to evolve in the context of the present Bill a specific relief in respect of that problem, although we shall bear in mind what the hon. Gentleman has to say. I am sure that, when we look at the overall strategy, there will be an important footnote to remind us to deal with it.

Dr. Jeremy Bray (Motherwell and Wishaw)

Will the Minister of State accept that this is a matter of urgency, and, in looking at it, will he examine the report by Lord Eccles, who, in the first Conservative Government after the war, accepted the principle that fiscal incentives could not deal with the problem but that grants were the only possible way of doing it?

Mr. Rees

Of course, anything that my noble Friend, with his vast experience, prepares one will read and re-read with due respect. I just would not like to commit myself to accept wholesale what he said. Nor am I entirely knocked off my perch by the hon. Gentleman's suggestion that perhaps what I am saying today is not entirely in accord with his philosophy.

As I said, I am sure that the Committee will recognise that it will take a little time to consider this matter, since it is not purely a fiscal question. I give as much as that to the hon. Gentleman. It is a subject on which we shall, I hope, be able to evolve a broad strategy, which will command bipartisan support.

Mr. Cormack

I am grateful to my hon. and learned Friend for what he said, and I entirely agree on the need to evolve a broad strategy—that is vital—but we are here concentrating our minds on VAT and there is a genuine problem. Can my hon. and learned Friend assure the Committee that he does not rule out of the broad strategy a possible zero rating of repairs to listed buildings?

Mr. Rees

If I say that I rule out nothing, I hope that my hon. Friend will not put too much weight on any specific aspect that he has in mind. He will appreciate that the solution of a particular problem may not command universal support. He will know that the EEC sixth directive obliges us not to extend zero rating. All our countries are signatories to that. I know that there are hon. Members on the Opposition Benches—the hon. Member for Walton in particular, who courteously informed me that he could not be here for the remainder of the debate—who will say that that is an argument of no weight whatever. But right hon. and hon. Members who are burdened with ministerial office or who have been so burdened—I am sure that the right hon. Member for Llanelli will agree—recognise that these international obligations are not quite so lightly brushed aside. It may therefore be a little difficult to approach the matter by the route which my hon. Friend suggests.

Nevertheless, I hope that my hon. Friend will recognise that there is a fund of good will on the Front Benches and the Back Benches on both sides of the Committee. I am sure that, given a little time, a comprehensive, comprehensible and sympathetic strategy can be worked out. Against that background, I hope that my hon. Friend will not feel it necessary to press his amendment to a Division, whatever blandishments may be offered to him by the Opposition.

Equally, I hope that my hon. Friend the Member for East Grinstead will feel that there is sufficient understanding of the problem which he has outlined and sufficient will to find some sort of solution to it that he need not press his amendment.

As for amendment No. 20, we have yet to hear the fresh voice of the hon. Member for Gateshead, West tell us whether, in his new approach to these matters, he feels that the amendment should be forced to a Division. The hon. Gentleman will be conscious of the past of his own party while in office. He will recognise that there is a certain inconsistency in the position that he has been led to take up. He will recognise, too, that there is a certain virtue in maintaining the broad base of VAT. I hope that on that basis he will feel that justice has been done to his case and that he will not feel it necessary to divide the Commitee.

Mr. John Horam (Gateshead, West)

In replying to the debate, which we began at about three o'clock this morning and which we are curtailing at a rather later hour than I expected, the Minister of State used one of the Treasury's traditional arguments and followed it with a more bizarre argument which seems to have spread along the Treasury Bench since the new team took its place.

The traditional argument is that we have a single rate of VAT and it is right that that should be broadly based. If we are all in favour of a single rate, we are all in favour of it being broadly based. That is the straightforward way to tax goods that come within the remit of the amendment.

That is a good argument, but not one that applies to a rate of 15 per cent. That is the argument that has been advanced throughout by the Opposition since the increase in VAT was announced. What is possible and sensible for a VAT rate of 10 per cent. is neither sensible nor possible when the rate is 15 per cent.

Once we move into the higher rate it is inevitable that certain problems are posed, whether they involve heritage properties or ordinary houses. Those problems are raised in an acute form. They do not occur in the same form if the VAT rate is 8 per cent. or 10 per cent. Therefore, I do not believe that the standard, traditional Treasury defence, which would have held good at a lower rate of VAT, holds good for the new higher rate. I ask Treasury Ministers to scrap that part of the brief. I hope that we shall hear no more of that argument.

The second argument that the hon. and learned Gentleman produced was most strange. He sought refuge in accusing me of introducing a new definition for repairs and maintenance. He accused me of establishing a new category of meritorious repairs. That is rather akin to his right hon. Friend the Chief Secretary seeking refuge in the remarkable idea of discretionary clothing. We have "meritorious repairs" used as a reason for the rejection of the amendment, while the discretionary clothing argument was advanced last night. I find this most bizarre. The fact that that approach has spread so fast along the Treasury Bench indicates that it is a new tactic on the part of the Treasury. In some respects it is better than the old argument, but it still will not do.

All that the Opposition are saying is that items of repair and maintenance that were taxed at 8 per cent. and will now be taxed at 15 per cent. should continue to be subject to a rate of 8 per cent. We are not changing any definitions. We wish merely to revert to the old rate. The Treasury Bench cannot deploy the arcane argument that I have described.

I turn to the substance of the debate. I shall do so briefly. I am conscious that I dwelt overlong on these matters last night. However, there were certain pressing reasons for doing so at the time. I am glad that in the end we resolved those matters to the satisfaction of everyone. We were all glad that we were able to adjourn the debate rather than continuing it earlier this morning.

First, I address my remarks to heritage properties. I mention those properties first, but not because I think that they are most important. I was interested and rather enticed by what the Minister of State said about the desirability of an overall strategy for heritage properties and what the Treasury team might do in that regard in the ensuing months or years. I hope that those are not merely bland words. I hope that they mean something significant. That is an approach that is felt necessary by both sides of the Committee, especially by my hon. Friend the Member for West Lothian (Mr. Dalyell) and the hon. Member for Staffordshire, South-West (Mr. Cormack).

That approach is also necessary in other areas such as forestry which are important to the economy in a national sense and in a local sense. Those areas need a clear economic strategy within which is included a sensible fiscal regime. They should not be treated, as they have been countless times—and heaven knows how often right hon. and hon. Members have complained about this from the Front Bench and the Back Benches—as part of a lottery. They should not have merely to accept the consequence of overall taxation changes made for other reasons. I hope that the Treasury team means what it says.

We must continue to discuss VAT. The Treasury team has expressed what may be a desirable long-term aim that we hope will lead to a positive achievement, but in the short term we face an increased rate of VAT for repairs and maintenance of heritage properties that we must oppose. It will mean problems such as lost jobs in various parts of the country. That is only one consequence.

My hon. Friend the Member for Don Valley (Mr. Welsh), who is not in the Chamber, spoke graphically about the impact of these measures on young couples who have applied for improvement grants and who are carrying out repairs and maintenance as part of that procedure. Their costs will be increased substantially because of the higher rate of VAT and the increase in the MLR and interest rates generally that they have faced and will have to face. My hon. Friend gave an example of a young couple incurring an additional burden of £100 in the course of improving their home, a desirable social objective with which we all agree. It is a great pity that that desirable social objective is to be put beyond the reach of many young people.

Many householders, especially after the severe winter of 1978–79, will be thinking about repairing and maintaining their homes. That will cost them more. As my hon. Friend the Member for Keighley (Mr. Cryer) said, that will apply especially in areas such as Keighley and Gateshead where there is a great deal of industrial revolution property in a bad state of repair and in constant need of repair and maintenance. Much of that property is occupied by pensioners and others of low means who can ill afford an extra –50 or whatever the sum may be that results from the proposed increase. The Government should have thought about that.

A number of Conservative Members and some of my hon. Friends, most notably my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), have spoken about the effect on the building industry. I cannot do better than to quote the press release issued by the National Federation of Building Employers when the increased rate of VAT was announced: There are three main areas of potential growth for private sector construction demand: private housebuilding, repair/improvement maintenance work, commercial/industrial building. All three of these areas have been steadily recovering over the past 18 months or so, but this recovery will now be severely tested by the tight squeeze on the private sector which is announced in the Budget … it must equally be recognised that the increase in minimum lending rate to 14 per cent. will … reduce the availability of funds for house purchase … increase the cost of builders' work-in-progress … decrease the incentive for capital investment in building works … the imposition of 15 per cent. VAT upon repair and maintenance work will tend to discourage householders from undertaking these works as well as encouraging the 'moonlighting' and less reputable elements in the building business, and make the administrative and commercial existence of the VAT-registered builder doubly hard. It is the small-scale builder, so well known to the Conservative Party, who will be most hard hit by these measures. I thought that it was part of the intention

of the new style of government to encourage those in that position. In fact, this Administration is hitting them hard.

The increased rate of VAT will have a special effect on heritage properties and churches. It will affect the ordinary householder by increasing his costs. It will also have an effect on the building industry and cause a loss of jobs. For all those reasons the Opposition must press the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 218, Noes 286.

Division No.41]	AYES	[5.29 p.m.
Abse, Leo	Duffy, A. E. P.	Leighton, Ronald
Adams, Allen	Dunlop, John	Lestor, Miss Joan (Eton & Slough)
Allaun, Frank	Dunwoody, Mrs Gwyneth	Lewis, Ron (Carlisle)
Alton, David	Eastham, Ken	Lofthouse, Geoffrey
Anderson, Donald	Edwards, Robert (Wolv SE)	Lyon, Alexander (York)
Archer, Rt Hon Peter	Ellis, Raymond (NE Derbyshire)	Mcartney, Hugh
Armstrong, Rt Hon Ernest	Ellis, Tom (wrexham)	McDonald, Dr Oonagh
Ashton, Joe	Ennals, Rt Hon David	McElhone, Frank
Bagier, Gordon A. T.	Evans, Ioan (Aberdare)	McGuire, Michael (Ince)
Barnett, Guy (Greenwhich)	Ewing, Harry	Mckay, Allen (Penistone)
Barnett, Rt Hon Joel (Heywood)	Fitch, Alan	McKelvey, William
Beith, A. J.	Flannery, Martin	MacKenzie, Rt Hon Gregor
Benn, Rt Hon Anthony Wedgwood	Fletcher, Ted (Darlington)	Maclennan, Robert
Bidwell, Sydney	Foot, Rt Hon Michael	McMahon, Andrew
Booth, Rt Hon Albert	Ford, Ben	McMillan, Tom (Glasgow, Central)
Boothroyd, Miss Betty	Forrester, John	McNally, Thomas
Bottomley, Rt Hon Arthur (M'brough)	Foster, Derek	McWilliam, John
Bradley, Tom	Foulkes, George	Marks, Kenneth
Bray, Dr Jeremy	Freud, Clement	Marshall, David (Gl'sgow, Shettles'n)
Brown, Hugh D. (Provan)	Garrett, John (Norwich S)	Marshall, Dr Edmund (Goole)
Buchan, Norman	Garrett, W. E. (Wallsend)	Marshall, Jim (Leicester South)
Callaghan, Rt Hon J. (Cardiff SE)	George, Bruce	Michael (Gl'gow, Springb'rn)
Callaghan, Jim (Middleton & P)	Golding, John	Maxton, John
Campbell, Ian	Gourlay, Harry	Maynard, Miss Joan
Campbell-Savours, Dale	Grant, John (Islington C)	Meacher, Michael
Canavan, Dennis	Grimond, Rt Hon J.	Mellish, Rt Hon Robert
Cant, R. B.	Hamilton, James (Bothwell)	Mikardo, Ian
Carmichael, Neil	Hamilton, W. W. (Central Fife)	Millan, Rt Hon Bruce
Cartwright, John	Hardy, Peter	Miller, Dr M. S. (East Kilbride)
Cocks, Rt Hon Michael (Bristol S)	Harrison, Rt Hon Walter	Mitchell, Austin (Grimsby)
Cohen, Stanley	Hattersley, Rt Hon Roy	Mitchell, R. C. (Soton, Itchen)
Coleman, Donald	Haynes, Frank	Morris, Rt Hon Alfred (Wythenshawe)
Concannon, Rt Hon J. D.	Healey, Rt Hon Denis	Morris, Rt Hon Charles (Openshaw)
Conlan, Bernard	Heffer, Eric S.	Morris, Rt Hon John (Aberavon)
Cook, Robin F.	Hogg, Norman (E Dunbartonshire)	Morton, George
Cowans, Harry	Home Robertson, John	Moyle, Rt Hon Roland
Cox, Tom (Wandsworth, Tooting)	Homewood, William	Newens, Stanley
Craigen, J. M. (Glasgow, Maryhill)	Hooley, Frank	Oakes, Rt Hon Gordon
Crowther, J. S.	Horam, John	O'Neill, Martin
Cryer, Bob	Howell, Rt Hon Denis (B'ham, Sm'H)	Orme, Rt Hon Stanley
Cunliffe, Lawrence	Huckfield, Les	Owen, Rt Hon Dr David
Cunningham, George	Hughes, Mark (Durham)	Palmer, Arthur
Dalyell, Tam	Hughes, Robert (Aberdeen North)	Park, George
Davidson, Arthur	Hughes, Roy (Newport)	Parker, John
Davies, Rt Hon Denzil (Llanelli)	Janner, Hon Greville	Parry, Robert
Davies, E. Hudson (Caerphilly)	Jay, Rt Hon Douglas	Penhaligon, David
Davies, Ifor (Gower)	John, Brynmor	Powell, Raymond (Ogmore)
Davis, Clinton (Hackney Central)	Johnson, James (Hull West)	Prescott, John
Davis, Terry (B'rm'ham, Stechford)	Jones, Rt Hon Alec (Rhondda)	Price, Christopher (Lewisham West)
Dean, Joseph (Leeds West)	Jones, Barry (East Flint)	Race, Reg
Dempsey, James	Jones, Dan (Burnley)	Radice, Giles
Dewar, Donald	Kaufman, Rt Hon Gerald	Richardson, Miss Jo
Dixon, Donald	Kerr, Russell	Roberts, Allan (Bootle)
Dobson, Frank	Kilfedder, James A.	Roberts, Ernest (Hackney North)
Dormand, Jack	Lambie, David	Robertson, George
Douglas, Dick	Lamborn, Harry	Rodgers, Rt Hon William
Douglas-Mann, Bruce	Lamond, James	Rooker, J. W.
Dubs, Alfred	Leadbitter, Ted	Ross, Ernest (Dundee West)
Ross, Stephen (Isle of Wight)	Stott, Roger	Whitehead, Phillip
Rowlands, Ted	Straw, Jack	Whitlock, William
Sandelson, Neville	Summerskill, Hon Dr Shirley	Wigley, Dafyd
Sever, John	Thomas, Dafydd (Merloneth)	Willey, Rt Hon Frederick
Sheldon, Rt Hon Robert (A'ton-u-L)	Thomas, Mike (Newcastle East)	Williams, Sir Thomas (Warrington)
Shore, Rt Hon Peter (Step and Poo)	Thomas, Dr Roger (Carmarthen)	Wilson, Gordon (Dundee East)
Silkin, Rt Hon John (Deptford)	Thorne, Stan (Preston South)	Wilson, Rt Hon Sir Harold (Huyton)
Silkin, Rt Hon S. C. (Dulwich)	Tilley, John	Wilson, William (Coventry SE)
Silverman, Julius	Urwin, Rt Hon Tom	Winnick, David
Skinner, Dennis	Varley, Rt Hon Eric G.	Wrigglesworth, Ian
Smith, Rt Hon J. (North Lanarkshire)	Walker, Rt Hon Harold (Doncaster)	Wright, Sheila
Snape, Peter	Watkins, David	Young, David (Bolton East)
Spriggs, Leslie	Weetch, Ken
Stallard, A. W.	Wellbeloved, James	TELLERS FOR THE AYES
Stewart, Rt Hon Donald (W Isles)	Welsh, Michael	Mr. Ted Graham and
Stoddart, David	White, Frank R. (Bury & Radcliffe)	Mr. John Evans
NOES
Adley, Robert	Dover, Denshore	Irving, Charles (Cheltenham)
Alexander, Richard	du Cann, Rt Hon Edward	Jenkin, Rt Hon Patrick
Ancram, Michael	Dunn, Robert (Dartford)	Jessel, Toby
Arnold, Tom	Durant, Tony	Johnson Smith, Geoffrey
Aspinwall, Jack	Dykes, Hugh	Johnston, Russell (Inverness)
Atkins, Robert (Preston North)	Eden, Rt Hon Sir John	Jopling, Rt Hon Michael
Atkinson, David (B'mouth, East)	Edwards, Rt Hon N. (Pembroke)	Joseph, Rt Hon Sir Keith
Baker, Kenneth (St. Marylebone)	Egger, Timothy	Kaberry, Sir Donald
Baker, Nicholas (North Dorset)	Elliott, Sir William	Kellett-Bowman, Mrs Elaine
Banks, Robert	Eyre, Reginald	Kershaw, Anthony
Beaumont-Dark, Anthony	Fairbairn, Nicholas	King, Rt Hon Tom
Bell, Ronald	Fairgrieve, Russell	Kitson, Sir Timothy
Bendall, Vivian	Faith, Mrs Sheila	Knox, David
Bennett, Sir Frederic (Torbay)	Fell, Anthony	Lamont, Norman
Benyon, W. (Buckingham)	Fenner, Mrs Peggy	Lang, Ian
Berry, Hon Anthony	Finsberg, Geoffrey	Langford-Holt, Sir John
Best, Keith	Fisher, Sir Nigel	Lawrence, Ivan
Bevan, David Gilroy	Fletcher, Alexander (Edinburgh N)	Lawson, Nigel
Biffen, Rt Hon John	Fletcher-Cooke, Charles	Lee, John
Biggs-Davison, John	Fookes, Miss Janet	Lennox-Boyd, Hon Mark
Blaker, Peter	Forman, Nigel	Lester, Jim (Beeston)
Bonsor, Sir Nicholas	Fowler, Rt Hon Norman	Lewis, Kenneth (Rutland)
Boscawen, Hon Robert	Fox, Marcus	Lloyd, Ian (Havant & Waterloo)
Bottomley, Peter (Woolwich West)	Fraser, Peter (South Angus)	Lloyd, Peter (Fareham)
Bowden, Andrew	Fry, Peter	Loveridge, John
Boyson, Dr Rhodes	Galbraith, Hon T. G. D.	Luce, Richard
Bright, Graham	Gardiner, George (Reigate)	Lyell, Nicholas
Brinton, Tim	Gardner, Edward (South Fylde)	McCandle, Robert
Britten, Leon	Garel-Jones, Tristan	Macfarlane, Neil
Brocklebank-Fowler, Christopher	Glyn, Dr Alan	MacGregor, John
Brooke, Hon Peter	Goodhart, Philip	MacKay, John (Argyll)
Brotherton, Michael	Goodlad, Alastair	Macmillan, Rt Hon M. (Farnham)
Brown, Michael (Brigg & Sc'thorpe)	Gorst, John	McNair-Wilson, Michael (Newbury)
Browne, John (Winchester)	Gow, Ian	McNair-Wilson, Patrick (New Forest)
Bruce-Gardyne, John	Gower, Sir Raymond	Madel, David
Bryan, Sir Paul	Grant, Anthony (Harrow C)	Major, John
Buck, Antony	Gray, Hamish	Marland, Paul
Budgen, Nick	Grieve, Percy	Marlow, Tony
Bulmer, Esmond	Griffiths, Eldon (Bury St Edmunds)	Marshall, Michael (Arundel)
Burden, F. A.	Griffiths, Peter (Portsmouth N)	Marten, Neil (Banbury)
Butcher, John	Grist, Ian	Mates, Michael
Butler, Hon Adam	Grylls, Michael	Mather, Carol
Cadbury, Jocelyn	Gummer, John Selwyn	Maude, Rt Hon Angus
Carlisle, John (Luton West)	Hamilton, Hon Archie (Eps'm & Ew'll)	Mawby, Ray
Carlisle, Kenneth (Lincoln)	Hamilton, Michael (Salisbury)	Mawhinney, Dr Brian
Carlisle, Rt Hon Mark (Runcorn)	Hampson, Dr Keith	Maxwell-Hyslop, Robin
Chalker, Mrs. Lynda	Hannam, John	Mellor, David
Channon, Paul	Haselhurst, Alan	Meyer, Sir Anthony
Chapman, Sydney	Havers, Rt Hon Sir Michael	Miller, Hal (Bromsgrove & Redditch)
Churchill, W. S.	Hawksley, Warren	Mills, Peter (West Devon)
Clark, Hon Alan (Plymouth, Sutton)	Hayhoe, Barney	Monro, Hector
Clark, Dr William (Croydon South)	Heddle, John	Montgomery, Fergus
Clarke, Kenneth (Rushcliffe)	Henderson, Barry	Moore, John
Clegg, Walter	Heseltine, Rt Hon Michael	Morgan, Geraint
Cockeram, Eric	Hicks, Robert	Morris, Michael (Northampton, Sth)
Colvin, Michael	Hill, James	Morrison, Hon Charles (Devizes)
Cope, John	Hogg, Hon Douglas (Grantham)	Morrison, Hon Peter (City of Chester)
Corrie, John	Holland, Philip (Carlton)	Mudd, David
Costain, A. P.	Hooson, Tom	Murphy, Christopher
Cranborne, Viscount	Hordern, Peter	Myles, David
Critchley, Julian	Howe, Rt Hon Sir Geoffrey	Neale, Gerrard
Crouch, David	Howell, Rt Hon David (Guildford)	Neubert, Michael
Dean, Paul (North Somerset)	Howell, Ralph (North Norfolk)	Newton, Tony
Dickens, Geoffrey	Howells, Geraint	Normanton, Tom
Dorrell, Stephen	Hunt, David (Wirral)	Oppenheim, Rt Hon Mrs Sally
Douglas-Hamilton, Lord James	Hunt, John (Ravensbourne)	Osborn, John

Page, John (Harrow, West)	Shaw, Michael (Scarborough)	Townsend, Cyril D. (Sexleyheath)
Page, Rt Hon R. Graham (Crosby)	Shelton, William (Streatham)	Trippler, David
Parkinson, Cecil	Shepherd, Colin (Hereford)	Trotter, Neville
Parris, Matthew	Shepherd, Richard (Aldridge-Br'hills)	van Straubenzee, W. R.
Patten, John (Oxford)	Shersby, Michael	Viggers, Peter
Pattie, Geoffrey	Silvester, Fred	Wainwright, Richard (Colne Valley)
Pawsey, James	Sims, Roger	Wakeham, John
Percival, Sir Ian	Smith, Dudley (War. and Leam'ton)	Waldegrave, Hon William
Pollock, Alexander	Speed, Keith	Walker, Rt Hon Peter (Worcester)
Porter, George	Speller, Tony	Walker-Smith, Rt Hon Sir Derek
Price, David (Eastleigh)	Spicer, Jim (West Dorset)	Wall, Patrick
Prior, Rt Hon James	Spicer, Michael (S Worcestershire)	Waller, Gary
Proctor, K. Harvey	Sproat, Iain	Walters, Dennis
Pym, Rt Hon Francis	Squire, Robin	Ward, John
Raison, Timothy	Stainton, Keith	Watson, John
Rathbone, Tim	Stanbrook, Ivor	Wells, John (Maidstone)
Rees, Peter (Dover and Deal)	Steel, Rt Hon David	Wells, Bowen (Hert'rd & Stev'nage)
Rees-Davies, W. R.	Stevens, Martin	Wheeler, John
Renton, Tim	Stewart, Ian (Hitchin)	Whitelaw, Rt Hon William
Rhodes James, Robert	Stewart, John (East Renfrewshire)	Whitney, Raymond
Rhys Williams, Sir Brandon	Stokes, John	Wickenden, Keith
Ridley, Hon Nicholas	Stradling Thomas, J.	Wilkinson, John
Ridsdale, Julian	Topsoil, Peter	Williams, Delwyn (Montgomery)
Rifkind, Malcolm	Taylor, Robert (Croydon NW)	Winterton, Nicholas
Roberts, Michael (Cardiff NW)	Tebbit, Norman	Wolfson, Mark
Roberts, Wyn (Conway)	Temple-Morris, Peter	Young, Sir George (Acton)
Rossi, Hugh	Thomas, Rt Hon Peter (Hendon S)	Younger, Rt Hon George
Rost, Peter	Thompson, Donald
Royle, Sir Anthony	Thorne, Neil (Ilford South)	TELLERS FOR THE NOES:
Sainsbury, Hon Timothy	Thornton, Malcolm	Mr. Spencer Le Marchant and
St. John-Stevas, Rt Hon Norman	Townend, John (Bridlington)	Mr. David Waddington.
Scott, Nicholas

Question accordingly negatived.

Amendment proposed, No. 21, in page 2, line 27, at end add— (6) As from the passing of this Act subsection (1) above shall not apply to the supply of laundry services.".—[Miss Richardson.]

Question put, That the amendment be made:—

The Committee divided: Ayes 212, Noes 293.

Division No. 42.]	AYES	[5.43 p.m.
Abse, Leo	Cunningham, George (Islington S)	Graham, Ted
Adams, Alien	Dalyell, Tam	Grant, John (Islington C)
Allaun, Frank	Davidson, Arthur	Hamilton, James (Bothwell)
Anderson, Donald	Davies, Rt Hon Denzil (Llanelli)	Hamilton, W. W. (Central Fife)
Archer, Rt Hon Peter	Davies, E. Hudson (Caerphilly)	Hardy, Peter
Armstrong, Rt Hon Ernest	Davies, Ifor (Gower)	Harrison, Rt Hon Walter
Ashton, Joe	Davis, Clinton (Hackney Central)	Hattersley, Rt Hon Roy
Bagier, Gordon A. T.	Davis, Terry (B'rm'ham, Stechford)	Haynes, Frank
Barnett, Guy (Greenwich)	Dean, Joseph (Leeds West)	Healey, Rt Hon Denis
Barnett, Rt Hon Joel (Heywood)	Dempsey, James	Heffer, Eric S.
Beith, A. J.	Dewar, Donald	Hogg, Norman (E Dunbartonshire)
Benn, Ft Hon Anthony Wedgwood	Dixon, Donald	Home Robertson, John
Bidwell, Sydney	Dobson, Frank	Homewood, William
Booth, Rt Hon Albert	Dormand, Jack	Hooley, Frank
Boothroyd, Miss Betty	Douglas, Dick	Horam, John
Bottomley, Rt Hon Arthur (M'brough)	Douglas-Mann, Bruce	Howell, Rt Hon Denis (B'ham, Sm'H)
Bradley, Tom	Dubs, Alfred	Huckfield, Les
Bray, Dr Jeremy	Duffy, A. E. P.	Hughes, Mark (Durham)
Brown, Hugh D. (Provan)	Dunlop, John	Hughes, Robert (Aberdeen North)
Brown, Ronald W. (Hackney S)	Dunwoody, Mrs Gwyneth	Hughes, Roy (Newport)
Buchan, Norman	Eastham, Ken	Janner, Hon Greville
Callaghan, Rt Hon J. (Cardiff SE)	Edwards, Robert (Wolv SE)	Jay, Rt Hon Douglas
Callaghan, Jim (Middleton & P)	Ellis, Raymond (NE Derbyshire)	John, Brynmor
Campbell, Ian	Ellis, Tom (Wrexham)	Johnson, James (Hull West)
Campbell-Savours, Dale	Ennals, Rt Hon David	Jones, Rt Hon Alec (Rhondda)
Canavan, Dennis	Evans, Ioan (Aberdare)	Jones, Barry (East Flint)
Cant, R. B.	Evans, John (Newton)	Jones, Dan (Burnley)
Carmichael, Neil	Ewing, Harry	Kaufman, Rt Hon Gerald
Cartwright, John	Fitch, Alan	Kerr, Russell
Cocks, Rt Hon Michael (Bristol S)	Flannery, Martin	Lambie, David
Cohen, Stanley	Fletcher, Ted (Darlington)	Lamborn, Harry
Coleman, Donald	Foot, Rt Hon Michael	Lamond, James
Concannon, Rt Hon J. D.	Ford, Ben	Leadbitter, Ted
Conlon, Bernard	Forrester, John	Leighton, Ronald
Cook, Robin F.	Foster, Derek	Lestor, Miss Joan (Eton & Slough)
Cowans, Harry	Foulkes, George	Lewis, Ron (Carlisle)
Cox, Tom (Wandsworth, Tooting)	Garrett, John (Norwich S)	Lofthouse, Geoffrey
Craigen, J. M. (Glasgow, Maryhill)	Garrett, W. E. (Wallsend)	Lyon, Alexander (York)
Crowther, J. S.	George, Bruce	McCartney, Hugh
Cryer, bulb	Golding, John	McDonald, Dr Oonagh
Cunliffe Lawrence	Gourlay, Harry	McElhone, Frank
McGuire, Michael (Ince)	Orme, Rt Hon Stanley	Stott, Roger
McKay, Allen (Penistone)	Owen, Rt Hon Dr David	Summerskill, Hon Dr Shirley
Mckelvey, William	Palmer, Arthur	Thomas, Dafydd (Merioneth)
Mackenzie, Rt Hon Gregor	Park, George	Thomas, Mike (Newcastle East)
Maclennan, Robert	Parker, John	Thomas, Dr Roger (Carmarthen)
McMahon, Andrew	Parry, Robert	Thorne, Stan (Preston South)
McMillan, Tom (Glasgow, Central	Powell, Raymond (Ogmore)	Tilley, John
McNally, Thomas	Prescott, John	Orwin, Rt Hon Tom
McWilliam, John	Price, Christopher (Lewisham West)	Varley, Rt Hon Eric G.
Marks, Kenneth	Race, Rag	Walker, Rt Hon Harold (Doncaster)
Marshall, David (Gl'sgow, Shettles'n)	Richardson, Miss Jo	Watkins, David
Marshall, Dr Edmund (Goole)	Roberts, Ernest (Hackney North	Weetch, Ken
Marshall, Jim (Leicester South)	Robertson, George	Wellbeloved, James
Martin, Michael (Gl'gow, Springb'rn)	Rodgers, Rt Hon William	Welsh, Michael
Maxton, John	Rooker, J. W.	White, Frank R. (Bury & Radcliffe)
Maynard, Miss Joan	Ross, Ernest (Dundee West)	Whitehead, Phillip
Meacher, Michael	Rowlands, Ted	Whitlock, William
Mellish, Rt Hon Robert	Sever, John	Wigley, Dafyd
Mikardo, Ian	Sheerman, Barry	Willey, Rt Hon Frederick
Millan, Rt Hon Bruce	Sheldon, Rt Hon Robert (A'ton-u-L)	Williams, Sir Thomas (Warrington)
Miller, Dr M. S. (East Kilbride)	Shore, Rt Hon Peter (Step and Pop)	Wilson, Gordon (Dundee East)
Mitchell, Austin (Grimsby)	Silkin, Rt Hon John (Deptford)	Wilson, Rt Hon Sir Harold (Huyton)
Mitchell, R. C. (Soton, Itchen)	Silkin, Rt Hon S. C. (Dulwich)	Wilson, William (Coventry SE)
Morris, Rt Hon Alfred (Wythenshawe)	Silverman, Julius	Winnick, David
Morris, Rt Hon Charles (Openshaw)	Skinner, Dennis	Wrigglesworth, Ian
Morris, Rt Hon John (Aberavon)	Smith, Rt Hon J. (North Lanarkshire)	Wright, Sheila
Morton, George	Snape, Peter	Young, David (Bolton East)
Moyle, Rt Hon Roland	Spriggs, Leslie
Newens, Stanley	Stallard, A. W.	TELLERS FOR THE AYES
Oakes, Rt Hon Gordon	Stewart, Rt Hon Donald (W Isles)	Mr. Jack Straw and
O' Neill, Martin	Stoddart, David	Mr. Allan Roberts.
NOES
Adley, Robert	Clark, Dr William (Croydon South)	Gower, Sir Raymond
Alexander, Richard	Clarke, Kenneth (Rushcliffe)	Grant, Anthony (Harrow C)
Alton, David	Clegg, Walter	Gray, Hamish
Ancram, Michael	Cockeram, Eric	Griffiths, Eldon (Bury St Edmunds)
Aspinwall, Jack	Cope, John	Griffiths, Peter (Portsmouth N)
Atkins, Robert (Preston North)	Ccrmack, Patrick	Grimond, Rt Hon J.
Atkinson, David (B'mouth, East)	Corrie, John	Grist, Ian
Baker, Kenneth (St. Marylebone)	Costain, A. P.	Grylls, Michael
Baker, Nicholas (North Dorset)	Cranborne, Viscount	Gummer, John Selwyn
Banks, Robert	Critchey, Julian	Hamilton, Hon Archie (Eps'm & Ew'll)
Beaumont-Dark, Anthony	Crouch, David	Hamilton, Michael (Salisbury)
Bell, Ronald	Dean, Paul (North Somerset)	Hampson, Dr Keith
Bendall Vivian	Dickens, Geoffrey	Haselhurst, Alan
Bennett, Sir Frederic (Torbay)	Dorrell, Stephen	Havers, Rt Hon Sir Michael
Benyon, Thomas (Abingdon)	Douglas-Hamilton, Lord James	Hawksley Warren
Benyon, W. (Buckingham)	Dover, Denshore	Hayhoe, Barney
Best, Keith	du Cann, Rt Hon Edward	Heddle, John
Bevan, David Gilroy	Dunn, Robert (Dartford)	Henderson, Barry
Biffen, Rt Hon John	Durant, Tony	Heseltine, Rt Hon Michael
Biggs-Davison, John	Dykes, Hugh	Hicks, Robert
Blaker, Peter	Eden, Rt Hon Sir John	Hill, James
Bonsor, Sir Nicholas	Edwards, Rt Hon N. (Pembroke)	Hogg, Hon Douglas (Grantham)
Boscawen, Hon Robert	Eggar, Timothy	Holland, Philip (Carlton)
Bottomley, Peter (Woolwich West)	Eggar, Sir William	Hooson, Tom
Bowden, Andrew	Eyre, Reginald	Hordern, Peter
Boyson, Dr Rhodes	Fairbairn, Nicholas	Howe, Rt Hon Sir Geoffrey
Bright, Graham	Fairgrieve, Russell	Howell, Rt Hon David (Guildford)
Brinton, Tim	Faith, Mrs Shella	Howell, Ralph (North Norfolk)
Brittan, Leon	Fell, Anthony	Howells, Geraint
Brocklebank-Fowler, Christopher	Fenner, Mrs Peggy	Hunt, David (Wirral)
Brooke, Hon Peter	Finsberg, Geoffrey	Hunt, John (Ravensbourne)
Brotherton, Michael	Fisher, Sir Nigel	Irving, Charles (Cheltanham)
Brown, Michael (Brigg & Se'thorpe)	Fletcher, Alexander (Edinburgh N)	Jenkin, Rt Hon Patrick
Browne, John (Winchester)	Fletcher-Cooke, Charles	Jessel, Toby
Bruce-Gardyne, John	Fookes, Miss Janet	Johnston, Russell (Inverness)
Bryan, Sir Paul	Forman, Nigel	Jopllng, Rt Hon Michael
Buck, Antony	Fowler, Rt Hon Norman	Joseph, Rt Hon Sir Keith
Budgen, Nick	Fox, Marcus	Kaberry, Sir Donald
Bulmer, Esmond	Fraser, Peter (South Angus)	Kellett-Bowman, Mrs Elaine
Burden, F. A.	Freud Clement	Kershaw, Anthony
Butler, Hon Adam	Fry, Peter	Kilfedder, James A.
Cadbury, Jocelyn	Galbraith, Hon T. G. D.	King, Rt Hon Tom
Carlisle, John (Luton West)	Gardiner, George (Reigate)	Kitson, Sir Timothy
Carlisle, Kenneth (Lincoln)	Gardener, Edward (South Fylde)	Knox, David
Carlisle, Rt Hon Mark (Runcorn)	Garel-Jones, Tristan	Lamont, Norman
Chalker, Mrs. Lynda	Glyn, Dr Alan	Lang, Ian
Channon, Paul	Goodhart, Philip	Langford-Holt, Sir John
Chapman, Sydney	Goodlad, Alastair	Latham, Michael
Churchill, W. S.	Gorst, John	Lawrence, Ivan
Clark, Hon Alan (Plymouth Sutton)	Gow Ian	Lawson, Nigel

Lee, John	Osborn, John	Squire, Robin
Le Merchant, Spencer	Page, John (Harrow, West)	Stainton, Keith
Lennox-Boyd, Hon Mark	Page, Rt Hon R. Graham (Crosby)	Stanbrook, Ivor
Lester, Jim (Beeston)	Parkinson, Cecil	Steel, Rt Hon David
Lewis, Kenneth (Rutland)	Parris, Matthew	Stevens, Martin
Lloyd, Ian (Havant & Waterloo)	Patten, John (Oxford)	Stewart, Ian (Hitchin)
Lloyd, Peter (Fareham)	Pattie, Geoffrey	Stewart, John (East Renfrewshire)
Loveridge, John	Pawsey, James	Stokes, John
Luce, Richard	Penhaligon, David	Stradling Thomas, J.
Lyell, Nicholas	Percival, Sir Ian	Tapsell, Peter
McCrindle, Robert	Pollock, Alexander	Taylor, Robert (Croydon NW)
Macfarlane, Neil	Porter, George	Tebbit, Norman
MacGregor, John	Price, David (Eastleigh)	Temple-Morris, Peter
MacKay, John (Argyll)	Prior, Rt Hon James	Thomas, Rt Hon Peter (Hendon S)
Macmillan, Rt Hon M. (Farnham)	Proctor, K. Harvey	Thompson, Donald
McNair-Wilson, Michael (Newbury)	Pym, Rt Hon Francis	Thorne, Neil (Ilford South)
McNair-Wilson, Patrick (New Forest)	Raison, Timothy	Thornton, Malcolm
Madel, David	Rathbone, Tim	Townend, John (Bridlington)
Major, John	Rees, Peter (Dover and Deal)	Townsend. Cyril D. (Bexleyheath)
Marland, Paul	Renton, Tim	Trippier, David
Marlow, Tony	Rhodes James, Robert	Trotter, Neville
Marshall, Michael (Arundel)	Rhys Williams, Sir Brandon	van Straubenzee, W. R.
Marten, Neil (Banbury)	Ridley, Hon Nicholas	Viggers, Peter
Mates, Michael	Ridsdale, Julian	Wainwright, Richard (Colne Valley)
Mather, Carol	Rifkind, Malcolm	Wakeham, John
Maude, Rt Hon Angus	Roberts, Michael (Cardiff NW)	Waldegrave, Hon William
Mawby, Ray	Roberts, Wyn (Conway)	Wall, Patrick
Mawhinney, Dr Brian	Ross, Stephen (Isle of Wight)	Waller, Gary
Maxwell-Hyslop, Robin	Rossi, Hugh	Walters, Dennis
Mellor, David	Rost, Peter	Ward, John
Meyer, Sir Anthony	Royle, Sir Anthony	Watson, John
Miller, Hal (Bromsgrove & Redditch)	Sainsbury, Hon Timothy	Wells, John (Maidstone)
Mills, Peter (West Devon)	St. John-Stevas, Rt Hon Norman	Wells, Bowen (Hert'rd & Stev'nage)
Monro, Hector	Scott, Nicholas	Wheeler, John
Montgomery, Fergus	Shaw, Michael (Scarborough)	Whitelaw, Rt Hon William
Moore, John	Shelton, William (Streatham)	Whitney, Raymond
Morgan, Geraint	Shepherd, Colin (Hereford)	Wickenden, Keith
Morris, Michael (Northampton, Sth)	Shepherd, Richard (Aldridge-Br'hills)	Wilkinson, John
Morrison, Hon Charles (Devizes)	Shersby, Michael	Williams, Delwyn (Montgomery)
Morrison, Hon Peter (City of Chester)	Silvester, Fred	Winterton, Nicholas
Mudd, David	Sims, Roger	Wolfson, Mark
Murphy, Christopher	Skeet, T. H. H.	Young, Sir George (Acton)
Myles, David	Smith, Dudley (War. and Leam'ton)	Younger, Rt Hon George
Neale, Gerrard	Speed, Keith
Neubert, Michael	Speller, Tony	TELLERS FOR THE NOES:
Newton, Tony	Spicer, Jim (West Dorset)	Mr. Anthony Berry and
Normanton, Tom	Spicer, Michael (S Worcestershire)	Mr. David Waddington.
Oppenheim, Rt Hon Mrs Sally	Sproat, Iain

Question accordingly negatived.

THE CHAIRMAN, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of the debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Order No. 48 (Debate on clause or schedule standing part), That the clause, as amended, stand part of the Bill.

Mr. John Gorst (Hendon, North)

On a point of order, Mr. Weatherill. There is one point of principle which, so far as I am aware, has not been aired. I wonder whether I may have an opportunity to deploy that point very briefly.

The Chairman

The hon. Member will know that the clause has been debated for 13 hours. I think that he has had adequate time to put his point.

Question agreed to.

Clause 1, as amended, ordered to stand part of the Bill