§ 3.2 p.m.
§ THE MARQUESS OF ABERDEEN AND TEMAIR rose to call attention to the state of the hand-woven tweed section of the woollen industry in the Highlands and Islands of Scotland, to ask whether His Majesty's Government will reconsider favourably their decision not to reduce the purchase tax of 66⅔ per cent. as suggested in another place on Wednesday, January 19, and to move for Papers. The noble Marquess said: My Lords, the actual event which made me put down this Motion on the Order Paper was the very unsatisfactory debate in another place on an adjournment Motion in connection with the position of the hand-woven tweed industry in Scotland. In another place they have an awkward procedure for debates on the adjournment which gives little time as a rule to discussion. This question was left in so unsatisfactory a state that I thought it only right, as one interested in Scottish welfare and industry, to bring the matter forward in your Lordships' House, where opportunity for debate is much fairer.
§ The main fault I have to find is with the very unsympathetic reception which the Financial Secretary to the Treasury (Mr. Glenvil Hall) gave to the honourable member for Orkney and Shetland (Sir Basil Neven-Spence) in replying to his statement. There are, as the Financial Secretary to the Treasury said, 697 thirty-seven persons employed in the hand-woven tweed industry in the Orkneys and 114 in the Shetlands. He also stated that the Board of Trade representatives had been sent in November last to investigate the state of the industry in the Highlands and Islands. This was seven months after the increase of purchase tax from 50 per cent. to 66⅔ per cent. I cannot help wondering how much of the profit tax receipts was left after the expenses of the Board of Trade had been met. The investigation ought to have been made before the increased tax was levied, to ascertain if the industry could stand it. Surely the essential thing would have been to allow the trade to prosper, thereby increasing the receipts from income tax.
§ The Financial Secretary to the Treasury seems to think that there are so few employed in this trade that they are not worth bothering about. Perhaps the numbers given of those employed in November in the Orkneys and Shetlands are correct, but the imposition of purchase tax had gone a long way to reduce the numbers employed, including ex-Service men who had taken up the industry after demobilisation and are now out of employment. As a matter of fact, the Financial Secretary's figures were wrong, for in the Hebrides there are up to 2,000 looms, and an appreciable number of men and women were employed in or near their homes and, but for this ancient industry, they might have had to seek their livelihood in the towns of Scotland or even in the Dominions. Before the war this industry was developing rapidly. During the war it survived, to look forward to even greater development. Mr. Hall said that the present decline of the industry is due to a change of fashion. I submit that Scotland's lovely tweeds will never go out of fashion. If the weavers had been given encouragement instead of crippling blows, if they had been given opportunities of experimenting with their materials, or even if they had been left alone to work out their own salvation, I am quite sure they would have pulled through, for Scottish folk are made like that. If prices were at all reasonable—and they could be if this purchase tax were remitted—even now I could guarantee that the sale of tweeds would immediately rise. To prove that, 698 I will quote from correspondence from firms concerned.
§ In June, 1948, a firm in Scotland, who had orders from one Edinburgh and nine London firms for 242 pieces, had them cancelled and no further orders placed by these firms owing to the high prices. The value of the pieces at contract price amounted to £6,800. If one adds to that sum 66⅔ per cent. purchase tax, the total cost to the cloth merchant was £11,332, or approximately 18s. 9d. per yard. Add the cloth merchant's profit to the retailer's and no doubt the cost of the cloth to the wearer would be 35s. per yard, or possibly more.
I have another letter, dated July, 1948, which says:
The imposition of 66⅔ per cent. purchase tax on hand-woven material is a gross injustice. On a 28 inch yard, 20 shots to the inch, we pay our weavers approximately 2s. the yard, which means that the weaver's wage alone carries Is. 4d. tax. On the same texture of material, the powerloom weaver is paid 6d. for 56 inch wide, and the tax on her wage works out at 4d. On the same area of cloth, the comparison is 1s. 4d. against 2d. Our firm, which has never had a man unemployed or on short time for over forty years, has now had to dispense with several hand-loom weavers in Galashiels while about one-third of our Shetland weavers are on short time.
I would also like to quote an extract from a letter which I received this month. It says:
An immediate relaxation of the purchase tax on tweed is necessary to avoid the extinction of a noble industry. It is most necessary that home industries be given every possible encouragement; otherwise such schemes as electrification and afforestation cannot achieve their objects. Depopulation and conditions detrimental to the Highlands and Islands may result. … Simply to reduce the tax would not achieve the desired result; it is essential that the tax be completely removed. In addition, it is most necessary that the removal of the tax should apply to all tweeds, and not only to that which qualifies for the Orb mark. There appears to be no question of the marketing procedure being at fault, just simply that the purchase tax is crippling the industry.
In another letter it is stated:
There can be no doubt that there is only a very small demand for hand-woven tweeds for the following reasons: (a) there is a feeling in the trade that there may be a reduction in purchase tax at the time of the Budget; (b) that, if there is no reduction at the April Budget then there will be no demand for general goods as opposed to utility. … The argument has often been raised in regard to purchase tax generally that by keeping on the purchase tax the Treasury will lose,
because of reduced unemployment, by a consequent fall in the amount of income tax collected. There is the further argument, however, that as far as the Isles are concerned, the weavers will definitely be unemployed. While Mr. MacMillan stated that as these are self-employed persons, they will not be entitled to draw unemployment benefit, there is, I would imagine, little doubt that they will be compelled to claim some form of public assistance. In the Hebrides, in addition to the number of weavers already stated, there are approximately 600 workers in the spinning mills, and these men and women would also either have to go on short time, or a number become unemployed.
Since the debate in another place on January 19, there has been a large correspondence in the Scottish Press, and also editorial leaders, which show how strong is the resentment felt in Scotland at this totally wrong use of purchase tax, which at its inception was imposed only as a war measure, and which cannot be justified as applied to the clothing industry at the present time. I should like to quote an extract from one of the Scottish Press which probably none of your Lordships ever sees. It is from the Shetland News, whose motto is:
Great is the Truth, and it will prevail.
The paper says:
That the industry only employs 114 people in Shetland and 37 in Orkney, and that purchase tax is applied to the finished article when it is impossible to distinguish the hand-woven variety, were Mr. Hall's pleas for retaining the oppressive tax. That arrangement could be made, as in other trades, to apply the tax at an earlier stage, and that industry is one to foster and build up were obvious points ignored or forgotten by Mr. Hall … If the Government have better arguments, let them produce them. Their present ones are excuses, not arguments.
§ It is essential that any change which the Government may intend to make as a result of further consideration of the serious position in the hand-woven trade industry should be intimated at a very early date; otherwise the remedy will come too late to save a desperate situation. The Government have been urging on the nation the great importance of increased home production. Let them prove that they mean what they say by enabling this industry, by the removal of purchase tax, to flourish in all its branches. With those few comments, I beg to move for Papers.
§ 3.20 p.m.
THE MINISTER OF CIVIL AVIATION (LORD PAKENHAM)
My Lords, the Government fully appreciate the 700 disinterested motives which animate the mover of this Motion. I only wish that it were possible to-day to give some practical expression of our sympathy for the noble Marquess and those for whom he speaks. I would hasten to clear my right honourable friend the Financial Secretary to the Treasury from any charge of lack of sympathy. I think it is generally conceded in this House that we are a sympathetic Government, and I do not think anyone is usually regarded as more sympathetic than my right honourable friend.
If I am in order in referring to proceedings in another place, I would, for the benefit of the House, recall the way in which the discussion there ended up—in circumstances which, as the noble Marquess has said, could never arise in your Lordships' House. Mr. Hall was proceeding to state his case, clearly and well, and the closing time was approaching when he began a sentence with the words, "Another reason." He was then interrupted by Lieutenant-Colonel Elliot, who began a sentence, "The right honourable gentleman knows," whereupon there were cries of "Order," so Mr. Elliot was also cut short. The Deputy Speaker then made one or two observations, and apparently obtained reasonable hearing. When he finished, Lieutenant-Colonel Elliot rose again and spoke for a period which is covered by about ten lines of Hansard. When he had finished, Mr. Hall again rose and said, "That was not …", whereupon the Question was put, and the proceedings at once came to an end. Therefore, I do not think Mr. Hall had a fair chance in the closing stages of giving full vent to his sympathy.
I certainly take this opportunity—sure that such rough treatment is not likely to be accorded to a Government speaker here, and knowing that the night is still young—of emphasising yet once more the very great sympathy which we feel for these people, and also for the noble Marquess.
I thought matters of that kind were finally disposed of! However, I must inform the noble Marquess that there is, unfortunately, no way of giving practical expression to this 701 sympathy. A change of the kind advocated by the noble Marquess could be brought about only as a result of the Budget, and it would be quite improper for me to anticipate anything which may be introduced on that occasion. I hasten to say that I have no grounds whatever for raising any hopes in this connection, and I hope that no words of mine this afternoon will send people away with a faintly optimistic feeling about this matter, or indeed in any other connection, because obviously that would be misleading and improper.
I fully agree with the noble Marquess when he said that there has been some decline in this industry. We must not, it is true, overestimate the physical magnitude of the industry in question. For example, at the current rate the purchase tax paid on the products of the industry is in the region of £1,000,000 to £1,500,000 a year, whereas the non-utility textile products as a whole yield sonic £80,000,000 a year. I thought the noble Marquess was perhaps a little less generous than usual in suggesting that probably the whole of that sum was spent on the visit of the Board of Trade investigator. One has heard of expense accounts, but hardly on that scale.
The noble Marquess will forgive me if I misrepresented hint—it was not intentional. I understood him to say that it was doubtful whether there was any substantial gain to the Exchequer. To go back to the magnitude of the industry, I can only repeat the figures given by the Financial Secretary, which are that about 37 are employed in the Orkneys and about 114 in the Shetlands. I am not equipped with earlier figures, but if the noble Marquess wishes, I will send them to him. Nevertheless, we in this House, and in the Government, are all at one in recognising that this industry, though small, is very important to the local people whose lives are wrapped up with it. Do not let us attempt to say that because it is small, therefore it should not be carefully considered. No one, I venture to say, is more alive to this fact than the Secretary of State for Scotland, who is so keenly interested in promoting industry there; and the same holds true 702 of his representative in this House, my noble friend Lord Morrison.
However, let us come to the particular remedy suggested by the noble Marquess. He demands that we should remove or lower the purchase tax of 66⅔ per cent. on which is heaped the responsibility—or at any rate, in his view, the main responsibility—for the decline in the industry. Is it fait to put the main responsibility on the purchase tax for any decline which has occurred? The Board of Trade sent a special representative to investigate the effect of the purchase tax on employment and production of Harris tweeds in September, 1948, and of Orkney and Shetland tweeds in November, 1948. The House will want to know what was the result of this special investigation. The investigation demonstrated, it is fair to say, that the increase in the rate of purchase tax on non-utility cloth (of course it applies not specially to this industry but also to other producers) was only one of a number of factors affecting handloom weavers. Moreover—so far as they could judge, it was probably not the most important factor. For example, to mention other factors, there has been, here and abroad, a change in fashion which has affected both home and export demands. At the present time, there is relatively much greater demand for worsted than woollen goods, and I am told that the "New Look" has helped this development. It appears that under the "New Look" the ladies do not fancy themselves so much in woollen goods as in worsted goods. These mysteries are far beyond my understanding, but that appears to be the case.
One vital reason for the decline in sales is the fact that people are now looking to worsted rather than to tweeds. In relation to this decline, it is interesting to learn from the investigators that those who have been longest established in the industry have suffered least. I hope the noble Marquess confirms that from his first-hand knowledge. The investigators also found that the hardest hit are those who went into the industry during the post-war boom. I am not trying to use that fact, I would add, to whittle down the importance of doing justice all round. Let us, therefore, come down to "brass tacks." What loss of revenue would the Government suffer if they adopted the proposal of the noble Marquess? The 703 vital point to grasp is that it is impossible with any certainty to distinguish hand-woven tweeds from machine-woven tweeds.
I am glad the noble Marquess accepts that, because a great deal hangs upon it. I myself am wearing a suit which would pass for either hand-woven or machine-woven tweed.
I should be surprised if there were anyone able to say which it was, and even whether it came from Scotland or Ireland. The point is that no one can tell, and that is a cardinal fact in this discussion. It is impossible, therefore, to assist the hand-loom weavers by providing a special rate of tax for their cloth. Unlike hand-knitted goods, hand-woven cloth is not clearly distinguishable with reasonable certainty from the power mill product. Consequently, a preferential rate could not be operated by the wholesalers and tailors through whom the tax is largely collected. And to provide for identification by other means than physical characteristics, such as by some sort of certificate from the weavers, would afford such possibilities of abuse that it could not be seriously contemplated.
However, if you accept that and then say, "Let us try to apply this concession more widely," the question arises, where you are going to stop? Suppose you exclude from the tax all tweeds, whether hand-woven or machine-woven, then the remaining non-utility textile groups would be up in arms, and indeed it would be hard to resist their claim for a similar concession. In order, therefore, to assist the people whose cause is being pleaded by the noble Marquess and who are complaining of a purchase tax that brings in £1,000,000 to £1,500,000 a year, you would finish up by mulcting the Exchequer in a sum of the order of £80,000,000 a year.
The noble Viscount is a master of relevance, but to-day I do not follow him as easily as usual. I do indeed appreciate the deep feeling behind this Motion. The last thing I want to do is to niggle or quibble or to try to lead the noble Marquess up some dialectical garden path. The Government have given considerable time and energy to seeing whether these people can be helped without serious loss to the Exchequer. If a solution along the lines suggested by the noble Marquess has not been found possible, that does not mean that the Government as a whole, and particularly those Ministers directly concerned with Scotland, will not do everything in their power to assist the worthy citizens whose cause the noble Marquess has championed to-day with so much public spirit and in a fashion that I am sure has been most acceptable to all.
THE MARQUESS OF ABERDEEN AND TEMAIR
Has the noble Lord nothing to say as to why the purchase tax was increased from 50 per cent. to 66⅔ per cent.?
That would carry us into a very wide field of discussion; but the tax was not confined to this relatively small industry. It was a far-reaching fiscal measure, and I should not imagine that this afternoon was the occasion to go into the whole question of purchase tax. Perhaps if the noble Marquess desires a discussion on the whole issue he will find some other occasion which he may feel more appropriate.
§ 3.35 p.m.
§ THE EARL OF SELKIRK
My Lords, I feel I must support what the noble Marquess, Lord Aberdeen, has said on the reception which was given to the Financial Secretary's statement about a month ago. If I may, I will read to your Lordships what was said by Mr. Malcolm MacMillan in a letter to The Scotsman. Mr. MacMillan is, of course, a supporter of the Government. This is what he said:It was about the most incompetent and ill-informed absurdity ever foisted by an unshiftable, unassailable bureaucrat on a benevolent but bemused Financial Secretary.I think it was a pity he used the word "bureaucrat." He ought, of course, to 705 have said "politician." I know there has been a great deal of indignation as the result of this tax. It is all very well for the noble Lord to refer to the difficulties of Orkney and Shetland; that is not the whole of the matter. There are some 2,000 or 3,000 people connected with this industry, and the Government must accept responsibility for the results of the action they have taken. The result may be that large numbers of people will be unable to continue living in parts of the country in which they are living now—and at the same time Sir Stafford Cripps is crying out for people to go back to the textile industry. It is all very illogical. This matter should be pursued further, and I hope the Government will do so.
§ 3.37 p.m.
§ LORD POLWARTH
My Lords, my noble kinsman, Lord Aberdeen, has already given a full statement of the position, and it has already been fully threshed out in another place. But I must confess that I am extremely disappointed with the result. We have achieved very little here this afternoon in fact, I should say the only thing we have achieved is that the noble Lord, the Minister of Civil Aviation, has given a little advertisement for the product which we have been discussing. He has, however, been so modest that he has not vouchsafed to us whether, in fact, it is a Scottish or an Irish tweed that he is wearing. I would certainly not consider pressing him on the point, much less asking him whether it was purchased before or after the imposition of purchase tax.
I was surprised at the noble Lord's statement that fashions have changed. I seem to remember the last occasion when certain of the noble Lord's colleagues made a categorical statement about fashion; I seem to remember one of them making some very deprecatory remarks about the proposed invasion by the "New Look" last summer. Well, my Lords, if those prophecies were anything to go by, I am afraid I cannot place much reliance on the noble Lord's statement about the fashion having changed in connection with tweed. Noble Lords who have spoken emphasised the seriousness of the situation for those employed in the trade. I saw it reported that only two days ago a meeting of the workers in the industry in the Island of 706 Lewis agreed to postpone their demand for increased wages which had been previously submitted. They did this on account of the serious position in the industry. That is surely another indication of how grave the situation is. It is not often that proposals for wage increases are postponed or withdrawn.
Finally, I cannot help feeling that the whole reason for the Government maintaining their present line is that of administrative inconvenience. As the noble Earl, Lord Selkirk, said, the answer is that the Government must take responsibility for the consequences of their actions. Surely, this is just another example of the inequities which are bound to arise from the universal application of a tax which was imposed originally not as a source of revenue but as a means of stopping people from spending. That was the original, purpose of the purchase tax: to stop people spending money on undesirable commodities and restrict expenditure in general. All I can suggest is that if the noble Lord's colleagues are unable to find a solution by which these hand-made tweeds car, be relieved of purchase tax, the most sensible thing to do would be to remove this tax, which was never intended to be a source of revenue, from the entire range of clothing.
§ LORD GLENTANAR
My Lords, may I add a word in support of the Motion of the noble Marquess? We have heard for many years lip service to the need for re-establishing and maintaining rural crafts. Here is a particular case in point, where one of our oldest hand-crafts is probably being "done in" altogether. I know the technical and administrative difficulties which there must be in telling one tweed from another, but I should like to throw out this suggestion. I do not know whether it would be possible or not, but I cannot see why it should not be possible. The noble Lord who has spoken on behalf of the Government has mentioned the difficulties, but I am sure he is aware—I think I am right in saying this—that the rope used by His Majesty's Navy has a special thread incorporated in it which makes it easily distinguishable from other rope. I suggest that a way of distinguishing all hand-loom materials would be to allow under licence the issue of a special thread which might be incorporated in the material when it is woven.
§ VISCOUNT SWINTON
My Lords, as a mere Yorkshireman from where I believe the worsted emanates, I hesitate to intervene in this debate, but I should like to make another constructive suggestion. I appreciate the taxation difficulties in granting particular rebates, though generally "where there's a will there's a way." There is another way of popularising these things. The Government are trying to popularise the Highlands and Islands and attract tourists there. At the present time—I am not sure that the other place has not a Supplementary Estimate for it—the Treasury are spending millions of pounds on publicity and advertising for the Government. Without adding one penny to the cost of the taxes in the Estimates—which, heaven knows, are heavy enough as it is!—surely it should be possible for the Government to divert a little of the money which they spend on advertising themselves to advertising something which is both more useful and more ornamental.
My Lords, I wish to emphasise a point which has been little mentioned in this debate. The noble Lord who replied based practically the whole of his argument upon the monetary position and the amount of taxes that would be lost if this purchase tax were taken off. There is one issue in Scotland which is a serious and difficult problem and which Secretaries of State, present and future, will have to attempt to solve—namely, the depopulation of the Highlands and Islands. It is happening all the time. The noble Lord says that the effect of the purchase tax upon these hand-woven goods will be only small; but actually it will have an effect upon the depopulation of the Highlands. "Mony a mickle mak's a muckle," as we know only too well. The Government, and the Secretary of State for Scotland who insists on maintaining a tax which obviously has had an effect upon the trade, ought to take this matter into serious consideration. That is the position in the Highlands and Islands.
In my part of Scotland, the Border, there are only 110,000 people left, as against about 1,250,000 on the eastern side. What is the reason for it? It is depopulation because of the difficulties of getting employment. I suggest that this problem ought to be considered entirely apart from the question of pounds, shillings and pence. According to the noble 708 Lord, the whole amount involved is £1,500,000. What is £1,500,000 to-day in the present £3,000,000,000 Budget? What is £1,500,000 when we find a Supplementary Budget of £239,000,000—the greater part of which will be spent by the Minister of Health? It is too nonsensical! It is too stupid! This is a case where the whole problem and not only the tax position ought to be considered. I urge upon the noble Lord that the Secretary of State for Scotland should take that issue into consideration and that the Government should back him if he does so.
§ 3.48 p.m.
My Lords, I rise to make one point. The problem of the Highlands and Islands is one which has been the greatest concern of successive Secretaries of State. Even now, the proposition is being considered that the Highland areas should be brought into the development areas under the present Act. If that is done and money is spent on drawing new industries into those areas, surely it is desirable that the existing old industries in those areas should be maintained. They are indigenous to the areas; their work is natural to the people, but they are up against great difficulty. I would strongly urge the noble Lord not to adopt a non possumus attitude about the question of discrimination. I think the suggestion thrown out as to some means of distinguishing these goods is one worthy of consideration. I strongly urge that it should be re-examined; otherwise we may have the situation of fresh statutory powers being taken to help these areas and fresh money being spent while the old industry natural to the areas is allowed to die.
My Lords, may I crave the permission of the House to speak again on this subject? I should be wanting in respect to the noble Marquess, to those who have taken part in the debate and to the House generally if I did not undertake to lay most carefully before my right honourable friend all that has been said, and to represent to him the strength of the feeling expressed to-day. More than that I cannot say at the moment. It would be wrong to say more, particularly where we are concerned with taxes. I think I should be doing a great disservice, for which I might rightly be 709 castigated, if I sent out a too hopeful message to Scotland this afternoon. I would rather see in the headlines to-morrow: "Minister's unhelpful attitude" than the alternative headline, "Better News for Scotland." Really, it would be most improper for me to do any such thing. I can only make sure that everything that has been expressed, not only the argument but the feeling, is carefully placed before my right honourable friend. With your Lordships' permission, I will leave it there.
§ 3.50 p.m.
THE MARQUESS OF ABERDEEN AND TEMAIR
My Lords, I am most grateful to the noble Lords who have spoken in support of the Motion I have brought forward this afternoon. I can only say that I am disappointed that the noble Lord who responded for the Government did not take the opportunity of using the privilege of this House of putting forward other sides of the question besides finance. In another place they say that we in this House have nothing to do with finance; but it would be just as well if the Members there did consider other matters than finance in connection with subjects of this kind. After all, as my noble friend Lord Elibank asked, what is £1,500,000 to-day? Our contention is put forward especially strongly to-day when we realise that only last night in another place they brought forward Supplementary Estimates for millions and millions. What for?—on account of had estimating, bad administration, and a great deal of useless legislation which has not brought prosperity to the country.
The whole point that I have in mind is that the Government have urged production. They have said, or rather they make believe, that they are taking action by encouraging hydro-electric projects and afforestation in the Highlands and Islands of Scotland. But what is the use of increasing power and woodlands if you are going to drive people away from that area through lack of employment caused by unreasonable taxation. One point the noble Lord did not reply to was the fact, that if purchase tax were taken off, the chances are that the Exchequer would receive much more in income tax, and surely that would have been an offset to 710 the £1,500,000 about which he has been speaking.
My Lords, I am afraid there are a number of points to which I did not reply, but some of them were matters to which I thought it better not to reply—for instance, the assertion, which seemed to be brought into the debate against all the rules of relevance, that it did not matter to-day whether £1,000,000 or £1,500,000, or sums of that kind, were spent. I cannot believe that it is seriously claimed by noble Lords opposite that it really does not matter to-day whether, rightly or wrongly, £1,500,000 is spent. I should be very much surprised if that charge were taken up by the Opposition Front Bench speakers; indeed, I should be amazed if any such doctrine were pronounced by noble Lords on the opposite Front Bench. We are being told all the time that we ought to be more careful about spending money, and we have an ideology about squandering money preached to us from the Opposition Benches.
THE MARQUESS OF ABERDEEN AND TEMAIR
The noble Lord does not understand that that £1,500,000 has been extracted from people who cannot afford it, whereas prosperous industries can. Therefore, I must say that I am extremely disappointed with the reception he gave to my argument and to those put forward by my supporters this afternoon. But there we have had this one satisfaction: that in this House we have been able to ventilate all sides of the question. I hope that not only the noble Lord who replied to my Motion but also the noble Lord who sits beside him and who represents Scottish affairs in this House in the majority of cases, will make representations to their colleague, the Secretary of State for Scotland, and that this matter will receive the most earnest consideration of His Majesty's Government. My Lords, I thank you for the reception you have given to my Motion, and I now beg leave to withdraw it.
§ Motion for Papers, by leave, withdrawn.
§ House adjourned during pleasure and resumed by the Lord Chancellor.