HC Deb 16 July 1990 vol 176 cc691-713

201A.—(1) Where emoluments of an employment to which this section applies fall to be charged to tax for a year of assessment for which this section applies, there may be deducted from the emoluments of the employment to be charged to tax for the year—

  1. (a) fees falling within subsection (2) below, and
  2. (b) any additional amount paid by the employee in respect of value added tax charged by reference to those fees.

(2) Fees fall within this subsection if—

  1. (a) they are paid by the employee to another person,
  2. (b) they are paid under a contract made between the employee and the other person, who agrees under the contract to act as an agent of the employee in connection with the employment,
  3. (c) at each time any of the fees are paid the other person carries on an employment agency with a view to profit and holds a current licence for the agency,
  4. (d) they are calculated as a percentage of the emoluments of the employment or as a percentage of part of those emoluments, and
  5. (e) they are defrayed out of the emoluments of the employment falling to be charged to tax for the year concerned.

(3) For the purposes of subsection (2) above—

  1. (a) "employment agency" means an employment agency within the meaning given by section 13(2) of the Employment Agencies Act 1973, and
  2. (b) a person holds a current licence for an employment agency if he holds a current licence under that Act authorising him to carry on the agency.

(4) The amount which may be deducted by virtue of this section shall not exceed 17.5 per cent. of the emoluments of the employment falling to be charged to tax for the year concerned.

(5) This section applies to employment as an actor, singer, musician, dancer or theatrical artist.

(6) This section applies for the year 1990–91 and subsequent years of assessment.".'.—[Mr. Lilley.]

Brought up, and read the First time.

4.1 pm

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Lilley)

I beg to move, That the clause be read a Second time.

Mr. Speaker

With this, it will be convenient to take the following amendments: (a), in line 10, after 'paid', add '(whether during the year or subsequently)'.

(b), in line 21, at end add— '(2A) a fee shall be regarded as satisfying the condition set out in subsection 2(a) above if it is calculated on a sliding scale such that the amount of the fee payable increases as the amount of the emoluments increases; including, without prejudice to the generality of the foregoing words, a fee calculated on the basis of a fee of £X per £Y, or part of £Y of emoluments, or a fee calculated as a specified percentage of the first fraction of the emoluments and a different percentage of successive fractions.'

(c), in line 33, after 'artist', insert 'or employment of a substantially similar nature as an entertainer'.

Mr. Lilley

In Committee, both Conservative and Opposition Members made a persuasive case that we should take a further sympathetic look at the taxation of actors. I acknowledged that in some respects actors taxed under schedule E were in a difficult and perhaps unique position. In particular, my hon. Friends the Members for Beaconsfield (Mr. Smith) and for Richmond and Barnes (Mr. Hanley) emphasised that most actors engage an agent and that the fees that they pay to their agent, at some 10 to 15 per cent. of their income, are often their most important single cost. Those fees do not qualify at present for tax relief under the rules of schedule E.

Therefore, I re-examined the matter. As I said in the debate in the House on 27 January, I hoped that the industry would take it upon itself to rearrange its contractual relationships so that the agent's fee never became part of the performer's income and the performer was not liable to tax on it. My talks with the industry, with my hon. Friends and with Opposition Members persuaded me that it would not be easy or, in the industry's view, desirable to make the necessary changes in the contract to bring about that effect.

Therefore, I announced in Committee that I proposed to introduce on Report a new relief for agents' fees paid by actors and other theatrical artists. The new relief introduced by the new clause will apply to fees paid by an actor, singer, musician, dancer or theatrical artist to agents operating commercially and licensed under the Employment Agencies Act 1973. Fees paid in respect of earnings received after 5 April 1990, and the VAT paid on them, up to a limit of 17.5 per cent. of earnings in all, will qualify for relief. That will give all members of the profession who are assessed under schedule E a significant and worthwhile measure of tax relief. There has been consultation with the industry on the precise form of the relief, so it should properly reflect the special circumstances in which agents' fees are paid by actors. I recommend it to the House.

The reason why it is possible to introduce such a major concession is that it is directed only at the particular circumstances of actors and other artists. Most types of employment agencies cannot charge fees to people who are looking for work. However, in the case of the entertainments industry, regulations made under the Employment Agencies Act 1973 permit a licensed agent to charge the artist rather than the employer. That exception shows that the fees are unique. The Revenue will consult the industry on the best way in which to implement the new relief. It may be possible eventually to set up arrangements to give the relief at source through the employer, to minimise the paperwork and to enable those qualifying for relief to receive it at the earliest opportunity.

Meanwhile, if the House approves the measure, and following Royal Assent to the Finance Bill, theatrical artists who believe that they are entitled to the new relief should claim it from their tax office.

Mr. Chris Smith (Islington, South and Finsbury)

I must begin by offering my warm congratulations to the right hon. Gentleman on his promotion to the Cabinet which, I suspect sadly for him, is delayed by two days to deal with the Finance Bill. I congratulate him especially because I always like to see my constituents doing well. As he falls into that eminent and extremely praiseworthy category, I am pleased for him. We shall miss him in our debates on future Finance Bills.

I hope that when the right hon. Gentleman gets his feet under the table at the Department of Trade and Industry, he will seek to reinvigorate its work, because that is badly needed. The right hon. Gentleman's performance at the DTI will be judged not on the degree of any adherence he may have to the Prime Minister's views on Europe but on what he does for British industry—and for the promotion of manufacturing industry and trade in particular. We wish him well in that all-important task.

As the right hon. Gentleman said, new clause 7 deals with the expenses of actors in following their profession. Earlier this year, the Inland Revenue switched its treatment of new and younger actors in the theatre from assessing their tax liabilities on schedule D to a new system under schedule E. The key problem brought about by that switch is that many of the expenses incurred by actors—especially items such as touring allowances, audition expenses and agents' fees—cannot be offset against their tax liability. Under the previous schedule D arrangements, they would have been. The crucial difference is that expenses are permissible under schedule D if they are wholly and exclusively incurred in the performance of a profession. Under schedule E, they must be wholly, exclusively and necessarily incurred. That crucial difference between the inclusion or exclusion of the word "necessarily" causes the problem.

In an attempt to make the Government see reason, and to ensure that financial penalties are not unnecessarily visited upon the acting profession, the hon. Member for Beaconsfield (Mr. Smith) and my hon. Friends proposed in Committee new clauses to improve the situation. I am sad to say that the Government rejected our proposals, as they did those of the hon. Member for Beaconsfield. However, the Government indicated that they would make one important concession, which is enshrined in new clause 7, whereby when, under particular circumstances, an actor pays an agent to operate in a general manner for him year by year, he will be able to offset his agent's fees against his tax liability. That change is welcome. However, I reiterate the point made in Committee: that is by no means enough because it does not completely tackle the problem.

Shortly after our debates in Committee, I received a letter from the British Actors Equity Association dated 11 July, which said: Although Equity, as the organisation representing actors and other artists, welcomes this concession"— the concession now before the House— the agents' fee represents only a small part of the considerable expenses which our members incur as a result of their professional activities. Therefore, although the relief is welcome, the profession believes that it is not sufficient to tackle the problem of the expenses that must be incurred in the course of an actor's work. The Government's concession is not adequate, for example, when considering touring allowances and audition expenses, which will continue to be taxable. Only agents' fees are covered and we believe that that is an insufficient concession by the Government.

We have tabled amendments (a),(b) and (c) because of other minor deficiencies in the new clause. Amendment (a) deals with the year in which the emoluments are earned. Paragraphs (a) and (e) of subsection (2) mean that fees are not deductible if they are paid after the year in which the emoluments that are being taxed were earned. We believe that that might present a problem for actors if an agent's fee was paid, for example, in the subsequent year—because of the precise wording of the clause that fee would not be deductible. The amendment seeks to put that matter right.

Amendment (b) deals with fees that are not paid on a lump sum, straight percentage or figure basis, but rather on some sort of sliding scale. It is conceivable, for example, that fees might be paid to an agent on the basis of 20 per cent. of the first £1,000 of earnings, 10 per cent. of the next £4,000 and perhaps £85 per £1,000 or part thereof thereafter. Such a sliding scale is perfectly normal in many parts of the business world and an agent might reach a similar agreement with an actor. It is not entirely clear within the terms of the new clause whether such a sliding scale of fees paid to an agent would be wholly deductible on an averaged basis, year by year, against tax. Our amendment seeks to clarify that.

Although we appreciate that the Government want to draw the net of the new clause reasonably tight so that only genuine actors and entertainers who will benefit, none the less there are a number of people who, perhaps unintentionally, the Government might exclude by their definition of such people. The most obvious example is a stand-up comic who is clearly engaged in the entertainment business. That person frequently tours for a living and frequently engages an agent to secure bookings. Under the terms of the new clause a stand-up comic would not be included—I do not, of course, want the definition of a comic to extend to hon. Members. To ensure that everyone whom we believe the Government want to assist by the new clause can be so assisted, we believe that amendment (c) should be accepted as it would ensure that the definition is broader than that set out in subsection (5) of new clause 7. Those are our detailed amendments and we hope that the Government will either reassure us on those points or accept our amendments.

I reiterate that we remain disappointed by the scope of the Government's action. It is a small step in the right direction to provide assistance for new, young actors, who are coming forward in the acting profession and providing some of the essential life blood of the theatrical work in our country, but it is far less than actors want, need or deserve. We are disappointed by what the Government have done, but we welcome the step that the new clause represents.

4.15 pm
Sir Michael Marshall (Arundel)

I am grateful for the opportunity to speak in this debate, and I do so with a sense of humility because I recognise that my hon. Friend the Member for Beaconsfield (Mr. Smith) and other hon. Friends put forward a number of the arguments in Committee. I shall now get myself slightly confused as I refer to my hon. Friend the Financial Secretary, alias my right hon. Friend the Secretary of State for Trade and Industry, who has encountered the arguments relating to the new clause. I add my voice to those who warmly congratulated my right hon. Friend the Secretary of State for Trade and Industry. Is it a record to be a Financial Secretary as well as Secretary of State for Trade and Industry? Perhaps, with our mutual love of cricket, we can at some stage, have a detailed examination of that point.

It would be churlish not to recognise the spirit with which my right hon. Friend approached this difficult problem. In putting forward his arguments today in Committee, the hon. Member for Islington, South and Finsbury (Mr. Smith) has tried to assist in a process in which the House recognises some of the special claims of the acting profession.

I also declare my interest as a parliamentary adviser to the Society of West End Theatre. In this cause, the theatrical managers are at one with British Equity, the actors' union, of which I am also a member. I declare that interest conscious of the gaze of the hon. Member for Warley, East (Mr. Faulds), who, I suspect, has a far better chance than I of picking up fees for performing. I perform on the radio; his experience covers a much wider spread.

I must declare another interest because my stepdaughter is currently appearing in a play in Guildford. I shall not advertise the play except to say that it is an excellent play called "The Dressmaker", and is on all week. As I have those interests, I am sure that the House will understand why I have watched with the closest interest and care what was proposed in Standing Committee and what appears before us in the new clause.

I am sure that my right hon. Friend will understand if I seek to point to some of the remaining practical problems and concerns. My right hon. Friend said—I think that I heard him aright—that those who sought relief in claiming agents' fees should do so as soon as they incurred those expenses. But the Inland Revenue press release of 6 July, which he kindly sent to those following such matters, states: It will not normally be possible to determine finally the amount of relief due until after the end of the tax year when the total amount of earnings assessable under schedule E for the year, and the agents' fees paid out of them, are known. But where during the year it is clear that some relief will be due, tax offices may include provisional relief in PAYE code numbers. If my reading of that is correct, what my right hon. Friend had to say earlier was not as helpful as actors may have assumed from his words. Therefore, there will be a squeeze in terms of the time that elapses between when the agents' fees are collected, normally at source, when fees come in, and the time when that relief is due.

I welcome the fact that, in an earlier paragraph of the same press release, the Inland Revenue said that it is consulting with the theatre industry about the best way to implement the new relief and, in particular, on whether it might in the longer term be possible for the tax relief to be given, at source, by employers in broadly the same way as tax relief for employee pension contributions. I hope that my right hon. Friend will take this opportunity to reassure the House that that review will continue. I strongly support relief given at source as much the best way to ease the problem.

I do not propose to rehearse the arguments that we have heard before about the broader considerations of schedules D and E, but they should be placed in a context that my right hon. Friend understands. I am sure that my right hon. Friend will appreciate that those who are paying agents' fees are, by definition, established, or are beginning to be established, in the profession. The worry for many fledgling actors and actresses is that it usually takes quite a long time to get an agent. Until they are established, they have the problem of getting an Equity card and an agent. A number of performers have no agent. Although they will be eligible for relief when they get an agent, many actors and actresses will get no relief because they are paying no agents' commission.

The category of people who will be most affected by switching from schedule D to schedule E and who will not be assisted by the new clause are typically those who are employed in the lower reaches of repertory, theatre in education and fringe theatre. That is the very seed-corn of the profession.

In view of the likely developments in the theatrical profession, it is inevitable that there will be pressure from those representing actors for wage increases to match what will be seen as a legitimate demand to offset what has been lost under the old tax relief. Anything that puts inflationary pressure on the bottom end of the fringe, start-up theatre, repertory and touring will bring into question the viability of those branches of the theatre.

Those aspects will remain, despite the new clause. I ask my right hon. Friend to stick to what was implied in the press releases about the willingness of the Treasury and the Inland Revenue to continue looking into the matter.

I shall be brief because I know that others wish to speak on this important issue. My right hon. Friend will shortly join another great Department of State where given the application and dedication that he has shown in tackling this matter, I have every confidence he will make a significant contribution. I urge him to make it one of his first tasks at the Department of Trade and Industry to set in hand a study of the impact of the British theatre on our invisible earnings and our direct earnings in foreign exchange. Such a study will not only be valuable in the wider context; it will show that anything that begins to cause increasing difficulties to the profession will undermine a profession which produces a substantial return in sheer, hard foreign exchange. Beyond that, it is part of the cultural richness of our lives.

My right hon. Friend has tried hard to meet the spirit and the letter of the law, but I hope that he will not give up his efforts to continue with what I believe he will have found to be a meaningful learning experience about the profession in the Standing Committee on the Finance Bill, and I look to him to provide an opportunity for the House to debate the matter in future, and perhaps to tackle some of the problems that I have outlined this afternoon.

Mr. Mark Fisher (Stoke-on-Trent, Central)

May I add my congratulations to the new Secretary of State for Trade and Industry on his appointment and on the concession that he has made this afternoon. He said that he was sympathetic to the case that was made on behalf of actors, but, as my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) said from the Front Bench, although the concession is welcome, it goes less than halfway towards meeting the excellent case that actors, Equity and the Theatrical Mangement Asociation have made. By including only actors' agents' fees, he has disregarded a number of expenses which are vital to actors seeking work but which the Inland Revenue almost certainly will not include in the words "and necessarily". The inadequacy of the Government's concession turns on that point.

Will the Minister say why the Government believe that the cost of letters seeking work, the cost of photographs to promote an actor in search of work, of travelling to and clothes for auditions, of board and lodging when actors are away from home acting in the regions and other areas and of advertising in Spotlight their availability to work should not be included in the schedule? Schedule D included all those expenses and had the support of both sides of the House because it was specifically designed for the circumstances of freelance workers. The circumstances of actors were peculiarly suited to that schedule, but the Government are changing it. They must ensure that the use of the words "and necessarily" cover not only agents' fees but all the other expenses which are necessarily incurred, but which at present the Inland Revenue seems determined to say are not really necessary. The Government must justify in this debate the use of those words and their interpretation by the Inland Revenue.

The Minister is aware of the circumstances behind this debate. Actors are badly paid and their work is insecure. I shall quote a letter that I received from somebody who describes himself as a young actor, although rather coyly he does not give his age. Mr. Bill Britten wrote to me saying: The current average wage for an actor of my age at a provincial theatre is about £160 gross per week. This is low for a highly skilled worker, with three years' training, who must additionally maintain a home in London as well as digs wherever the job happens to be. If you consider that the nature of the profession is such that any actor will almost inevitably suffer periods of unemployment on either side of the job, it seems less still. If you further insist that tax is paid at source and that no expenses can be claimed, it becomes virtually impossible to make ends meet. Since many jobs last only six or seven weeks it is a nonsense to maintain that they are permanent. The hon. Member for Arundel (Sir M. Marshall) dealt with the incoherent nature of employment and the different timings of payment that different forms of employment make. Mr. John Cater, a well-known actor, and his wife, Wendy Gifford, a well-known actress, wrote from the New theatre: The average fairly well-employed actor today may well do a telly, a short repertory season, another telly, and a few days on a picture in the space of six months, with unemployment in between. Television pays by the job, films by the day and invariably several weeks in arrears, theatres and labour exchanges by the week. Impossible to tax under Schedule E. Mr. Cater and his wife make a good point to which the Minister must respond.

That unfairly creates two categories of actors—those who have been secure in the profession, and those who have entered it in the past three years. Mr. Hugh Williams, who was appearing in "Hamlet" at the National theatre in March, wrote: in a Cast being paid £200 per week our Horatio (who we shall say has been in the profession for a good few years), may receive in his pay packet £200 (less NI), whereas our Ophelia, a newcomer, will receive £150. Under Schedule D Horatio may claim, amongst other things, his Agent's Commission (£20 per week), his subscription to 'Spotlight' (£2) and Equity (£3), his publicity photographs (£4). Under Schedule E Ophelia may claim nothing. Following the concession, she may claim her agent's fees. Before a line has been spoken at that evening's performance, Ophelia is some £30 per week worse off. No wonder the poor girl goes mad. That is hardly surprising given that very unfair treatment.

The Minister must respond to that. He should also say something about the whole root of the Government's cause. He knows that the Inland Revenue pressed for the change on the basis of a test case that is 18 years old—that of Fall v. Hitchen—which was untypical, as it was a long-term contract. It is on that flimsy base that the Government's case rests. As his last act in his present job, the Minister should come clean and recognise that that is not a substantial or typical case on the basis of which to make a tax change that affects the whole profession.

4.30 pm

Actors have not been well treated by the Government: the infrastructure of the theatre shows that almost every repertory theatre in the country is in deficit, and all hon. Members accept that actors are badly paid. The Minister will recall that the Department of Social Security changed the rules for claimants, and actors are now much worse off; they are now required actively to seek work other than acting work. That makes no sense, not least economically. The Minister and every hon. Member, through taxes, is subsidising the training of those actors. It is a silly system: we pay for their training and then encourage them, when they are out of work, to look for work for which they are not trained or qualified when they are able to do work for which they are trained and qualified.

Some hon. Members have spoken out on this matter, and the hon. Member for Arundel (Sir M. Marshall) has been at the forefront. Perhaps the hon. Member for Beaconsfield (Mr. Smith) would like to explain to the House why, having moved a sensible amendment in Committee, he did not back it up with his vote, and why he is now supporting a Government concession that he knows does not go anywhere near what his excellent amendment would do.

The other person who should be accounting for himself is the Minister for the Arts, whose voice has been silent on an issue that affects every actor for whom he has governmental responsibility. I wrote to the Minister, who replied: I am, of course, well aware of the high level of concern in the profession about the possible impact of these tax changes both on individual performers and the live theatre as a whole. I have been in touch with Peter Lilley about this, and understand that he has now written to Michael Marshall saying that he does not see his way to reversing the decision on Schedule E treatment. That was the end of the Minister for the Arts' interest. What a disgrace that the Minister responsible has nothing to say, and has done nothing but pass on the concern to the then Financial Secretary when he should be fighting for actors and making a case on their behalf.

Sir Michael Marshall

Within the privacy of this small group of hon. Members, the hon. Gentleman knows that, because of the way in which ministerial responsibility works in our system, he could not expect the Minister to say more than he said to him in writing. Those who have been in touch with the Minister are well aware of all the representations that he has made, and of the arguments that have gone on. He has been most helpful. I say that speaking with an interest that I have already declared. I hope that the hon. Gentleman will accept my remark in the spirit in which it was put.

Mr. Fisher

I accept the point, but the acting profession would have expected a statement on the public record from the Minister for the Arts, to the effect that he believes that actors have a good case. He is responsible for the conditions in the theatre, and the payment of performers there is vital. If the Minister for the Arts has not been able to find an opportunity to make a speech on actors' behalf, recognising their strong case, the theatre is being badly served by the Minister responsible for it.

I accept the point about the division of ministerial responsibility, but I do not accept that the Minister, with his responsibility to the theatre as a whole, could not find an opportunity to say trenchantly that actors have a good case, and that he is strongly pressing that case on the Treasury. That is the least that he could have done: the theatre has the right to be represented in that way.

Let me end on a more conciliatory note. There is a way out for the Financial Secretary tonight. It is not too late for him to issue guidelines to the Inland Revenue to interpret how it should use the words "and necessarily". If the Minister would say today that he recognises that there is a case for other expenses in addition to agents' fees, and that he will issue guidelines to the Inland Revenue to take into account the list that I gave at the beginning of my speech, he would genuinely receive credit and thanks from the profession. He would fully undo the damage that he threatened to do at the beginning of the Finance Bill, and which—to his credit—he has gone some way to repairing by allowing agents' fees. He must know that there are other genuine expenses that need to be deducted. If he would give the Inland Revenue guidelines, the acting profession would be in his debt and he would have done the decent thing.

Mr. Chris Butler (Warrington, South)

The shunting of actors from schedule D to schedule E alters arrangements that have operated satisfactorily for more than 50 years. Despite the consolation prize offered by new clause 7, I have no doubt that the move from one schedule to the other will cause extra hardship in a profession in which wages are notoriously low. My right hon. Friend the Secretary of State for Trade and Industry spoke about new clause 53 in Standing Committee and said: The suggestion that the Revenue has been winnowing out the self-employed is manifestly false. If it has been trying to do so, it has been singularly unsuccessful, as the number of self-employed has increased by no less than 60 per cent. during the Government's life and it is still rising strongly.'' —[Official Report, Standing Committee E, 3 July 1990; c. 541–2.] The move against actors is part of a general Inland Revenue campaign against the self-employed. Some of the self-employed secretaries and researchers who work in the House have been harried back into employment. One of my constituents, a self-employed typist, had her business destroyed because the Inland Revenue cast her as employed simply because she did not take her typewriter to her clients.

Any accountant will confirm that there is a general Inland Revenue campaign against the self-employed and that arrangements that are perfectly satisfactory to both sides in a contract are often altered. The reason for that campaign is that Inland Revenue inspectors earn brownie points if they can identify back tax, and the career of a tax inspector advances in direct proportion to the disincentive that is given to those who show initiative and self-reliance.

The argument that self-employment is growing and that therefore there cannot be an Inland Revenue campaign is a non sequitur. If the campaign were lifted, the number of people becoming self-employed would grow even faster. I find it strange that a Government who are supposedly wedded to the virtues of self-reliance and initiative are presiding over administrative actions which have a directly opposite effect.

Mr. Ian McCartney (Makerfield)

rose—

Mr. Tony Banks (Newham, North-West)

I add my congratulations to those that have been offered to the new Secretary of State for Trade and Industry on his sparkling political progress—and so young, too. That must encourage some of us. I remind him of the old saying, "Whom the gods would destroy they first make Secretary of State for Trade and Industry." No doubt the right hon. Gentleman is in a good mood, or even in a generous mood, and perhaps we can tempt him a little and persuade him to leave us with something by which we can warmly remember him.

Hon. Members have welcomed the concession but it simply does not go far enough. I should declare my interest. In the past I have acted as a parliamentary adviser to Equity and I get the occasional walk-on part at Prime Minister's Question Time. As I say, I welcome the concession but I think that the Minister could go much further.

The speeches by the hon. Member for Arundel (Sir M. Marshall) and for Warrington, South (Mr. Butler) plainly demonstrated that there is much sympathy for actors. As my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) said, acting is an uncertain profession. I cannot remember the precise percentage but between 70 and 80 per cent. of all actors in Equity are at any given moment unemployed or resting. Many of them have to take jobs outside the profession in order to sustain themselves while they are waiting for auditions or while they are in rehearsal or promoting themselves. Between jobs they have to do a geat deal of that while hoping that a break will come along.

Agents' fees are only one part of the expenses associated with the acting profession. I have never understood why it was felt necessary to move actors from schedule D to schedule E. I cannot believe that it was considered that actors constituted an especially attractive group of taxpayers and that they were somehow getting away with something. The change will make their lives far more difficult. When the Financial Secretary replies, I shall be interested to know the source of the original suggestion.

Unfortunately, I was not a member of the Committee that considered the Finance Bill. Perhaps someone other than the Minister, someone who probably knows far more about these matters than I, can tell me the origin of the suggestion. Was it a ministerial proposition? Was the idea put into the minds of Ministers by the Inland Revenue so as to supplement what the Inland Revenue had done itself? There must be a reason for the change.

As there is a great deal of dissatisfaction within the acting profession and outside it, we need to know how the suggestion arose. [Interruption.] My hon. Friend the Member for Makerfield (Mr. McCartney) suggests in a muttered interjection that it might have something to do with Ken Dodd and his tickling stick. Perhaps my hon. Friend the Member for Stoke-on-Trent, Central will tickle our fancy with the truth.

Mr. Fisher

The change stems from a suggestion of the Inland Revenue, which was based on the case of Fall v. Hitchen of 1972. That case concerned a non-typical long-term contract for a performer. The argument on which the change of tax liability is based is therefore feeble and insubstantial.

Mr. Banks

I am grateful to my hon. Friend. He is clearly learned in the trials and tribulations of the acting profession. He will make an excellent Minister for the Arts when we have the next Labour Government.

I am sure that it was said in Committee that actors and actresses, by definition, need to spend a great deal of money promoting themselves. That is one of the requirements of the profession. We need only to read the newspapers to learn just how much work they have to do to push themselves forward and to get their names known. As such expenses mst be recognised as incurred by actors and actresses in pursuit of their profession, they should be allowable against tax.

It is true that many people within the acting profession receive extremely low wages. Few, if any, receive a pension. We are more parsimonious and more mean-spirited with our actors than most European countries. We spend a great deal of time almost living off the reputation of our theatre, including our actors and actresses. We are always telling others how wonderful the British theatre is and about the many people who come to Britain as visitors to go to the theatre because of the excellence of our productions. Surely there should be a quid pro quo. Given the great contribution that the theatre makes to the quality of life and the economic life of this country, the unique position of actors and actresses as a work force should be recognised.

I hope that the Minister, in the salad days of his time at the Treasury, before he moves on to other and perhaps greater things for a short while at the Department of Trade and Industry, will listen sympathetically to the arguments that are being advanced. He has heard what has been said about a compromise. Perhaps he could issue guidelines to the Inland Revenue so that it can treat sympathetically all actors and actresses. If he will not do that, will he give us an undertaking when he replies that he, or his successor, will carefully monitor the impact of the changes in tax liability for those in the acting profession? If he sees that something is going wrong, and if this becomes clear to others, I hope that he will be prepared to accept representations from hon. Members on both sides of the House. There is a great deal of sympathy for the profession within the House. I hope also that the Minister, or his successor, will consider returning to the House with a provision in next year's Finance Bill that will enable our actors and actresses to receive their just deserts. There are many of us in the House who think that their rewards are thoroughly merited.

4.45 pm
Mr. Tim Smith (Beaconsfield)

I start by congratulating my right hon. Friend the Member for St. Albans (Mr. Lilley) on his appointment to the position of Secretary of State for Trade and Industry. He has done an excellent job as Financial Secretary to the Treasury. He steered the Finance Bill through its consideration in Committee with great skill. I have noted the way in which he has always sought to balance the interests of the Inland Revenue against those of the taxpayer. His approach to the new clause exemplifies that. I wish my right hon. Friend well at the DTI. I am sure that all my right hon. and hon. Friends will wish to give him their full support.

The hon. Member for Stoke-on-Trent, Central (Mr. Fisher) asked me why I withdrew a new clause in Committee. I did so because I was offered what I considered to be an important concession. Indeed, those words were used by the hon. Member for Islington, South and Finsbury (Mr. Smith). He, too, said that it was an important concession. I made it clear that I was not entirely happy about creating special protection for a new category of taxpayers.

I am inclined to agree with the traditional approach, which is that taxation under schedule D or schedule E is a matter of fact that should be determined on the basis and merits of each case. That is exactly what happened in this instance. The case of Fall v. Hitchen of 1972 led indirectly to the proposals made by the Inland Revenue to tax young actors under schedule E. The more that I considered the proposed change, the more I realised that the issue was not as clear-cut as I had initially thought. I shall explain why I think that the concession goes far enough for the time being.

First, the standard Equity contract is not like a contract for services. Instead, it contains many of the characteristics of a contract of employment or a contract of service. If Equity feels so strongly about the change which has been introduced, it should take another test case to appeal. Any young, taxpaying actor who is now to be taxed under schedule E should challenge before the commissioners the ruling of the Inland Revenue, which will take effect from 6 April.

Secondly, Equity should consider the terms of its standard contract. There is an element of Equity saying that it wants to have its cake and eat it. It wants its members to have all the protections that we associate more with employment protection and less with self-employment. I am sure that the House will be aware that actors, exceptionally among the self-employed, pay national insurance contributions under class I. That has always been an anomaly. That exceptional position demonstrates that the issue is not as clear cut as it appeared to be.

I think that my right hon. Friend the Minister has introduced an important concession. We should now wait to see what happens. For example, a test case might be brought. The other day I spoke to an accountant who has many young actors as clients. He feels strongly about the change in the basis of taxation. I told him that I hoped that he would be bringing a test case on behalf of one of his actor clients, and he said that he would do so. We should wait to see what happens when such a case is brought. It is true that the Fall v. Hitchen case involved a relatively untypical actor and a long-term contract at Sadlers Wells. The standard Equity contract has many of the characteristics that that particular contract had. That may be the reason why Equity is not prepared to take a case before the commissioners.

Only in the last resort should the House agree to a new clause which creates a special status for a special group of taxpayers. If we do that, another group will be asking for the same treatment. Journalists, for example, might come forward. The Opposition said in Committee that they wanted that to happen. If that happens, representations will not be assessed on their merits.

The Public Accounts Committee—I note that two of our members of it are present—has discussed—

Mr. Ian Gow (Eastbourne)

Why stop at two other members of the PAC?

Mr. Smith

I apologise to my hon. Friend. The members of the PAC whom I see in their places are my right hon. Friend the Minister, my hon. Friend the Member for Eastbourne (Mr. Gow) and the hon. Members for Nottingham, North (Mr. Allen) and for Islington, South and Finsbury. I am sure that they will all confirm that the Inland Revenue is always seeking, rightly, to limit abuse and to stop people fiddling by misusing the tax rules. There is as much concern about that under schedule D as under any other tax head. We should be well aware of that.

Mr. McCartney

I apologise for confusing you, Mr. Deputy Speaker, a few moments ago. Three actors wished to lobby my hon. Friend the Member for Newham, North-West (Mr. Banks) on the matter. Therefore, instead of standing up I remained in my place. I suppose that in that respect I fluffed my lines.

By the end of the week the Secretary of State for Trade and Industry will be fairly fed up with the congratulations heaped upon him by Opposition Members and, with some relief, by Conservative Members. I imagine that he is in much the same position as when he became a father for the first time: congratulations were heaped upon him but after he had been woken up during the night to change nappies and feed the baby, the gilt went off the gingerbread. The Secretary of State has been given the most accident-prone job in British politics. The only consolation that I can offer him is that if there is a general election next year he will be put out of his misery. I wish him well in his new post. I have met him about constituency matters on a number of occasions. Despite the fact that we hold different political views, he served me well.

I listened intently to the arguments advanced in Committee by the hon. Member for Beaconsfield (Mr. Smith) and others. I was surprised, therefore, when the hon. Gentleman did not vote for the amendments that he moved.

It is important to compare like with like. We ought to bear in mind the types of concession that we provide for ourselves and compare them with what we shall be taking away from members of the acting profession. As my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) pointed out earlier, under schedule D, board and lodging, applications for work, self-promotion, clothing, and travel to and from auditions were allowable expenses. Those concessions were needed if people who try to make a living in a difficult profession are to make ends meet. The public see the stars on television and at royal command performances, but the vast majority of actors and actresses are not employed; even when they are employed their salaries are very low. Both before and since I became a Member of Parliament we have made special arrangements for ourselves. We have board and lodging allowances. Hon. Members have to come here from all parts of the country. We cannot find board and lodging out of our parliamentary salary, so we have made substantial financial arrangements to cover that expense. Our allowances amount to more than what many actors and actresses receive during a year.

We are also given a clothing allowance and an allowance to cover the cost of clothes care, because of the nature of our work. We claim travelling expenses to and from our place of employment. The cost of visits by our families is also covered by the special arrangements. When, however, it comes to the acting profession, it seems that, despite the Minister's concession, we are prepared to withdraw allowances. That will lead to hardship for many people who are already on low incomes. It is hypocritical of hon. Members to provide special concessions for themselves but to withdraw them from the acting profession.

If we are serious about promoting the theatre, for both cultural and educational reasons and also to attract tourists to Britain, it is vital to provide security of employment. The taxation system must be sufficiently flexible to allow people who enter the profession to remain in it, develop their skills and use them for the benefit of us all. The Government and local authorities spend substantial sums of money on encouraging tourists to come to Britain. The arts are at the forefront of that campaign. It is nonsensical, therefore, that the acting profession should be under attack. My hon. Friends have rightly pointed out that the Government have made a concession. However, actors and actresses do not believe that they have been granted a concession when they find that they have lost £30 out of £160 a week because of changes to the taxation system. A major cut of that kind in their income makes no sense whatsoever.

A member of the education committee in my local authority is developing the role of theatre within education. If that is to be effective, a nucleus of young actors and actresses is needed who are prepared to work with the local community and develop their skills within the educational curriculum. If we are to encourage young people to enter the acting profession, we must ensure that a pool of young actors and actresses is available to do that work for a number of years and then go out into the wider profession. The new clause will make it impossible for them to do educational work. That will undermine the profession; young actors and actresses will be unwilling to develop the role of theatre within education.

When the Secretary of State for Trade and Industry gives advice to the Inland Revenue, will he consider the inclusion of a clear definition of what is meant by "necessity"? I hope that he will include board and lodgings, applications for work, self-promotion, clothing, and travel to and from auditions within the definition. It would ensure that the acting profession is in a far better position than it is now, even with the concession.

Mr. Jeremy Hanley (Richmond and Barnes)

I, too, willingly congratulate my right hon. Friend on his promotion. The acting profession is powerful and important. Who knows what position my right hon. Friend would have achieved had he given the acting profession all the concessions for which it asked? No doubt he has already been rewarded for the concessions embodied in the new clause. I thank him for the work that he did in Committee. He made an important mark there. All of us marvelled at his breadth of knowledge and at the fluent way in which he dealt with questions from both sides.

I support the new clause, but I do so with a certain amount of regret. Many hon. Members have referred to the fact that actors in the theatre are among the lowest paid in the profession. Film and television actors can be well paid, but theatre actors earn the lowest of wages. Moreover, the change will affect the newest entrants into the profession—the lowest paid in a low-paid profession.

I do not wish to repeat a speech that I made in Committee. However, as an accountant I ought to refer to the fact that I understand the Inland Revenue's desire to cut out abuse and its wish that as many people as possible should be on schedule E. However, it is unacceptable and unforgivable to make a young actor pay tax on income that he will never see—the agent's fee. The concession is important. It can mean between 10 and 15 per cent. of a young actor's regular recurring income, not just from the theatre but from other work such as voice-overs, extra parts in films or on television and other work that will be calculated under schedule D taxation. Therefore, it is a substantial concession and it would be churlish to say that I am not grateful for it.

I will accept this major concession but the wise words of the hon. Member for Newham, North-West (Mr. Banks) must be supported by Conservative Members. He said that we must look carefully at the pattern of employment following the imposition of schedule Eon this end of the stage profession. I have evidence already that certain theatrical producers are not hiring young actors but prefer slightly more experienced actors—schedule D actors rather than schedule E actors—because of the lack of bureaucracy entailed. Also, a young actor will look, rightly, for extra income to compensate for the extra burden of taxation that will be suffered in travelling expenses.

5 pm

Travelling expenses have to be sorted out. The cases mentioned in Committee such as Gurney v. Richards must be looked at again. The way in which travelling expenses are dealt with in taxation is unfair. There is no logic between the taxation treatment of a schedule D person and a schedule E person. The Revenue must grasp the issue once and for all. It has ducked the matter, hoping that case law would, bit by bit, take away some of the theoretical advantages to the taxpayer. The issue needs wide consultation within the accountancy profession and the business fraternity, such as the Confederation of British Industry, and with any person who feels strongly about it. There should be a Green Paper to discuss the issue of travelling expenses.

It is traditional in the House that a Parliamentary Private Secretary should not speak on the subject matter of his Minister's responsibilities. I do not intend to break that tradition and I do not believe that I have done so because I have been dealing with the effect of taxation on actors rather than with actors themselves. If a Minister is not seen publicly to be disagreeing with other Ministers, it is purely because that is the tradition of Government and the House. To accuse a Minister of not trying hard merely because there are no public speeches on the issue is a disgrace and an abuse of the normal procedures. Therefore, I have to defend a certain Minister because of what was said earlier by the hon. Member for Stoke-on-Trent, Central (Mr. Fisher).

Mr. D. N. Campbell-Savours (Workington)

Will the hon. Gentleman give way?

Mr. Hanley

I will not give way because I promised to be extremely brief.

Mr. Graham Allen (Nottingham, North)

Giving way is another tradition of the House.

Mr. Hanley

Will the hon. Member for Nottingham, North (Mr. Allen) hold his mouth closed? I do not intend to give way.

Mr. Campbell-Savours

On a point of order, Mr. Deputy Speaker. Is it not correct that collective responsibility applies to all Members, not only of the Cabinet but of the Government, and that a Parliamentary Private Secretary, although not additionally remunerated, is a member of the Government? Is not it improper for a Minister to use his Parliamentary Private Secretary to indicate a reservation?

Mr. Anthony Nelson (Chichester)

Further to that point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker (Mr. Harold Walker)

Order. It was not a point of order for me. The matters raised have nothing to do with me.

Mr. Hanley

A Parliamentary Private Secretary is not a member of the Government. However, he is bound by certain agreements, to which I have adhered. In showing his ignorance, the hon. Member for Workington (Mr. Campbell-Savours) has shown how long it has been since he was a member of any Government and I am sure that his memory will not be refreshed in the coming years.

The change from schedule D to schedule E is regrettable because it will have a bad effect on the ability of young actors to carry out their profession at its very root. Actors should be encouraged to carry out their work so that, having learnt their art properly, they can move on to the more remunerative parts of the profession. It would be wrong to disagree with the new clause. When the hon. Member for Newham, North-West was temporarily out of the Chamber, I said that there should be a proper study, as he suggested, into the effect of this change on the acting profession. If it appears to be damaging, I hope that my right hon. Friend and his successors will look at the matter again.

Mr. Lilley

I am grateful for the kind remarks of hon. Members. My mother-in-law is the only person who has not shared their congratulations. She is not happy that her daughter has married someone who has gone into trade. However, she will be relieved to hear the assurances of Opposition Members that it is likely to be short lived.

I am happy to be judged by the criteria laid down by the hon. Member for Islington, South and Finsbury (Mr. Smith) and will endeavour, as he hoped I would, to do my best for industry, manufacturing and all aspects of trade in this country. I hope that the attitudes I have just attributed to my mother-in-law do not survive, because trade and industry are vital to the country. One of the great industries is entertainment, with which we are dealing now.

I can, in general, give the assurance sought by the hon. Member for Islington, South and Finsbury that his amendments—which are mainly probing amendments— reveal that the new clause, as drafted, already achieves what he wishes. For example, on amendment (a) I can confirm that the words that he proposes to insert— whether during the year or subsequently"— are otiose. The clause already allows for relief in the tax year for which the income is charged to tax, whether or not the fees are paid in the same year of assessment.

Similarly, I understand the hon. Gentleman's concern as expressed by the second amendment. I am advised by the Inland Revenue that under the normal rules for construing legislation, the reference in subsection (2)(d) of the new clause to fees which are, "calculated as a percentage" is able to include fees that might be calculated on the basis of more than one percentage or by reference to a sliding scale or to a specified proportion on the lines set out in amendment (b). I have been assured that new clause 7 as drafted will enable relief to be given in the circumstances envisaged by the amendment. Therefore, I hope that the hon. Gentleman agrees that the amendment would add unnecessary complexity to the legislation and that he will not press it.

On amendment (c), I am glad to say that we have had an opportunity to consult representatives of the industry while preparing the new clause. I understand that they are content with the definition that we have adopted. By referring to "theatrical artist" we have included not only performers such as magicians, who might not fit the description of "actor", but choreographers, assistant designers and directors who are regarded as part of the acting profession and frequently take an acting role in productions. Some of those people pay agents' fees and are engaged under contracts of employment and are affected by the switch to schedule E. I can assure the House that all those categories of theatrical performer, together with stand-up comedians—whether in or out of the House— will be able to claim relief under the new clause.

Mr. Chris Smith

I am grateful to the right hon. Gentleman for his comments on amendments (a) and (b) and fully accept what he said.

On amendment (c), I understand that the term "theatrical artist" is wider than the term "actor". What would happen to a magician or stand-up comic who was engaged not at a theatre but on the club circuit as an entertainer? Because that person is not employed at any time in a theatre, would not the term "theatrical artist" be inappropriate and would not he fall outside the terms of the new clause?

Mr. Lilley

As I understand it, such a person would be included in the new clause. "Theatrical" has a wider use than activities in the theatre. Many hon. Members are theatrical from time to time, and the definition is quite wide. I am assured that there is no difficulty in this respect. Those in the industry with whom we have discussed the matter are content with our definition. If we discover that it does not work properly, my successor will consider it in that light.

My hon. Friend the Member for Arundel (Sir M. Marshall) mentioned the timing of tax relief. I assure him that we shall, as promised in the press release, continue our discussions to find out whether it is possible to give relief on the same basis as relief for pension contributions. I recognise that the profession would welcome that.

It would be sensible if I were to return to the fundamental issues that have been raised in the debate. I have discovered that the hon. Member for Newham, North-West (Mr. Banks) is 137 days older than me—

Mr. Tony Banks

If you don't mind!

Mr. Lilley

We are both well preserved, despite our great age. The hon. Gentleman asked why the status of actors was changed. There are two reasons. First, a decision in law was made. Secondly, the interpretation of the law that was more generally available to the Inland Revenue required the Revenue to make that change. The decision was not made by whim or fancy of Ministers or the Revenue. It was made in response to an interpretation of the law laid down by the House.

The hon. Member for Stoke-on-Trent, Central (Mr. Fisher) argued that the case that triggered the decision was old and atypical. The matter is up to Equity. One reason for the long delay in implementing the change was that we were waiting to see whether Equity would challenge the decision and appeal. It did not do so.

Mr. Fisher

Eighteen years have passed.

Mr. Lilley

If the hon. Gentlemen cares to look at the chronology of events that I related in Committee—I shall not bore the House by repeating it—he will see that the cases were spread out and he will note that Equity had several opportunities to appeal but did not. I believe that Equity is now considering an appeal. I have already given an assurance that the Revenue will co-operate with Equity in developing test cases which will provide appropriate coverage. I admit that I am not wedded to a particular legal ruling reached by courts in the past. If they reach one that is more satisfactory to the House, so be it; but let us go through the correct legal procedures.

My hon. Friend the Member for Warrington, South (Mr. Butler) suggested that there was a Revenue campaign to winnow out the self-employed. I assure him that there is no such campaign. The Revenue is under an obligation to implement the laws passed by the House, according to advice by its legal advisers or according to how the courts interpret the law and require it to act. In this respect, the Revenue has a certain amount of discretion in terms of the transitional arrangements which it may in certain circumstances, under its care and management powers, deploy in introducing a changed legal interpretation.

5.15 pm

As the hon. Member for Stoke-on-Trent, Central pointed out, the changes have taken a long time. The Inland Revenue has not been precipitate in implementing this decision. I should have thought that, in its generous concession to established artists, it has used its discretion to the full. In effect, it has said that, although the law says that all actors on such a contract are employed—not self-employed—those who, over the past three or more years, have been treated as self-employed may retain that status not just for one or two years but for the rest of their working lives.

The generosity of this concession to established members of the artistic and acting professions has created the disparity between them and newcomers about which hon. Members have been rightly concerned, and we have tried to allay those fears a little with the new clause. We have a problem because of the Revenue's generosity, not its meanness, and because a protracted period has passed, not because the Revenue has acted precipitately. I hope that hon. Members will not blame the Revenue for the consequences of laws that we in our wisdom, or lack of it, choose to pass. If we do not like the consequences of those laws, it is up to us to change them, and not to rely on civil servants to use a discretion which, rightly, they have not been given.

The hon. Member for Islington, South and Finsbury said that the key to achieving more generous treatment of new actors lies in the "necessarily" condition on the treatment of expenses. I understand that the issue concerns not just the "necessarily" condition but, as I said in Committee, the phrase in the performance of those duties which rules out many expenses which are allowable against income under schedule E. Auditions, which were mentioned by the hon. Member for Makerfield (Mr. McCartney), and several other items which were mentioned by the hon. Member for Stoke-upon-Trent, Central are not expenses incurred in the performance of those duties as the law has established the meaning of those words. So long as we leave that test in the legislation, we will not be able to render those costs deductible.

Mr. Fisher

rose—

Mr. Lilley

I suspect that the hon. Gentleman is going to say that we should replace that phrase with wording that would allow those costs to be deductible. I have been persuaded that that would not be appropriate because it would be impossible to ring-fence it to actors. It would be difficult to do so initially in law, but I am certain that, if it could be done just in the first drafting of the law, countless other professions that incur similar expenses and want similar treatment would, before long, be knocking at our door, and we would find it difficult to resist them. In a new clause tabled in Committee, the Opposition began that process of erosion by joining journalism to the entertainment profession so that journalists could receive the benefits of such an extension.

Mr. Fisher

Will the right hon. Gentleman explain why agents' fees are incurred in the performance of those duties rather than "in the pursuit of work"? I think that he would agree that the other expenses which my hon. Friends and I itemised are definitely expenses incurred "in the pursuit of work" because unavoidable expenses are incurred. As I understand it, the right hon. Gentleman is making a distinction between "in the pursuit of work" and in the performance of those duties". I am not sure that he can justify that in terms of his concession on agents' fees. Will he be a little more sympathetic and look at the possibility of issuing guidelines to the Inland Revenue? If he said that those guidelines should take into account the other expenses in pursuit of work which are unavoidably incurred, he would satisfy all hon. Members.

Mr. Lilley

I was not arguing that agents' fees meet the present terms and conditions under schedule E. On the contrary, they do not. We introduced the new clause to override the normal expenses rule in the case of agents' fees. We are doing that because it is capable of being ring-fenced. All other professions, apart from entertainment, are forbidden by employment law to charge an employee for the fees of an agent in obtaining employment —they have to charge the employer. Therefore, there are no other people in a similar position waiting to knock at my door, my successor's door or even the door of the hon. Member for Stoke-on-Trent, Central. I assure the hon. Gentleman that, if we did as he suggested, we would open a Pandora's box of demands to widen relief on all expenses. We would find it costly, not especially in the case of actors, as we are not arguing about the cost of relief to actors, but, once one has started on that slippery slope, one would have to extend the provision further and further before very long, as the new clause introduced by the Opposition in Committee illustrated.

Mr. Tony Banks

That is an argument that one often hears when a case is being put forward. People say, "If we do it for this group, we will have to do it for every other group." That does not necessarily follow. Given that the Inland Revenue is allowed to exercise discretion when considering individual cases or groups of workers, why should it not consider the cases of other groups of workers who might come forward? If they have a good enough case the relief could be extended to them as well. If one concedes that a case is good when it is made well by one group of workers, it does not follow that a Pandora's box is opening up or that we are on a slippery slope.

Mr. Lilley

The hon. Gentleman underestimates the political pressures that erupt when one creates a precedent. As I have already mentioned, before we have even given a concession to actors, journalists are being linked with them and piggy-backed on to the concession. It would be damaging to determine people's tax status, not by the terms and conditions of their engagement, but by the profession to which they belong. If we try to decide profession by profession whether people are self-employed or employed, we shall rapidly find that we are determining people's tax status by the political lobbying power of their profession, rather than for objective reasons. That would be a dangerous step to take.

Mr. Chris Smith

In general terms, the principle that the Financial Secretary has just adumbrated is entirely correct. However, taxation law and taxation administration single out a number of professions—North sea divers are an obvious case; postmasters and certain peripatetic doctors are others—whose nature makes them a special case. To a certain extent, the new clause renders actors a special case. So the Minister cannot argue against the existence of special cases. Obviously, we have to be careful about who is judged to be a special case, but it is appropriate to regard some professions as a special case.

Mr. Lilley

That intervention perfectly illustrates the point that I was trying to make. Only one profession is treated analogously with what some hon. Members are now seeking—definition by law as schedule D—and that is deep divers. That resulted from an anomalous change made in 1978 by the last Labour Government for somewhat obscure reasons, which seemed to have something to do with the strategic importance of the developing North sea oil industry at that time and with the considerable sympathy that the profession evoked because of the high mortality rate suffered by divers. It did not have anything to do with the cost of getting to the place of work, which was one of the issues that we discussed in Committee—even though North sea divers face considerable costs in getting to the sea bed. However, as that is now being used as an argument for actors, and as the actors' profession numbers about 40,000, once it is defined in law that they are entitled to schedule D treatment whether the nature of their engagement is self-employed or not, it will be a much greater precedent for others to demand similar treatment.

In Committee, I listed the different groups and professions that had approached me and the Treasury relatively recently to demand some sort of concessionary treatment on schedule D. It was a long list. They are already asking for such treatment and having to be fended off. Once 40,000 actors were allowed schedule D treatment by law, year by year we would have to add to the list and before long we would find that anyone who wanted to be on schedule D and could get powerful support in the House would do so. That would erode the tax base considerably and tax rates would have to go up to compensate and we should all be back where we started. That is not a path that I can advise the House to take, any more than I advised the Committee to take it.

The Committee largely accepted that we should try to seek a concession which could be extraneously ring-fenced and which would benefit actors, as it affects a considerable proportion of their income. There was agreement that agents' fees are the largest single item that most actors have to pay as a cost, and that they would welcome some tax relief on such fees. Although the clause does not achieve the perfect state that many hon. Members would like, it was right to go that far and no further. Therefore, I commend the clause to the House.

The hon. Member for Stoke-on-Trent, Central mentioned the stance of my right hon. Friend the Minister for the Arts. My hon. Friend the Member for Richmond and Barnes (Mr. Hanley) rightly illustrated that taxation and the arts are essentially different responsibilities. He is participating in this debate and made a notable contribution in Committee because of his knowledge and expertise in the arts, happily reinforced by family involvement in the arts and a professional knowledge of taxation.

Mr. Fisher

A beautiful baby.

Mr. Lilley

So he told us. I can assure the hon. Gentleman that my right hon. Friend, in discussion with the Government, as everyone would expect, made the position of artists and the views of entertainers and others involved in the profession known to me. He explained their circumstances to me and therefore fulfilled his responsibilities to the arts, in the excellent way in which he always fulfils them, while ultimately leaving the decision about taxation to me and to Treasury Ministers, once we were fully informed of the needs and circumstances of those in the entertainment profession. It is utterly wrong to criticise my right hon. Friend in the way that the hon. Member for Stoke-on-Trent, Central did.

I commend the new clause to the House and I hope that the amendments will be deemed unnecessary by the Opposition.

Mr. Chris Smith

rose—

Mr. Deputy Speaker

Does the hon. Gentleman have the leave of the House to speak again?

Hon. Members

Yes.

Mr. Smith

I simply wish to pick up the last point that the right hon. Gentleman made. We entirely accept the assurances that he has given us on amendments (a) and (b), but we remain a little concerned about amendment (c)—the definition of theatrical artists. However, we accept he Government's assurances that they have acted in good faith. We will wish to study carefully the way in which the Inland Revenue interprets the clause.

Mr. Fisher

May I take the opportunity to respond to the Minister and to the hon. Member for Richmond and Barnes (Mr. Hanley)? I entirely accept that the Minister for the Arts made positive and full representations to the Financial Secretary—as he then was—as the House would expect. I also accept the point made by the hon. Member for Richmond and Barnes that no hon. Member would expect the Minister to speak against Government policy—that would be one Minister speaking against another. I was trying to make a wider point. While not contradicting the point that the Secretary of State was making about tax, I believe that the Minister for the Arts could have made a positive statement at some stage about the poor treatment of actors and the substantial case for their protection. That would not have gone against the Treasury's position, or breached ministerial guidelines. I accept the points that the Secretary of State made about representations, although I believe that the Minister for the Arts could have found some time to make a general statement in support of the acting profession.

Mr. Smith

My hon. Friend has made an extremely apt and helpful intervention.

I shall not seek, on behalf of the Opposition, to press our amendments to the vote. We wish new clause 7 all speed on to the statute book. However, we remain a little sad that the Government did not take the opportunity to go further, and to give a better deal to members of the acting profession.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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