§ LORD MORRISON OF LAMBETHMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ [The Question was as follows:
§ To ask Her Majesty's Government what it is estimated the yield will be during the financial year 1961–1962 from the proposed surcharge on employers (payroll tax) if imposed at the maximum rate of 4s. per employee per week, as regards (a) the public corporations; (b) Government Services; and (c) the local authorities; respectively.]
§ THE EARL OF DUNDEEMy Lords, it would be misleading to give without qualification a figure for the yield in 1961–62, since the surcharge can at most be imposed for only three-quarters of that year, and of course may not be imposed at all during the year. On the hypothesis suggested by the noble Lord I think the best answer which I can give your Lordships' House is that the monthly rate of payments on behalf of Government servants (Civil Service, Armed Forces and National Health Service) would be about £1¾million; on behalf of local authorities (teachers, police, fire services and local authority employees) about £1½million; and on behalf of public corporations—that is the nationalised industries—rather over £1½million.
§ LORD MORRISON OF LAMBETHMy Lords, does the noble Earl appreciate that these are very heavy figures? I understand that in the case of the London County Council alone the amount involved in a full year would be in the region of £750,000. Whilst I do not object to some taxation by order, subject to Parliamentary approval, this 1357 is a very heavy burden, particularly on some of the public corporations that are losing money; and in the case of the railways, of course, their job is to get the staff, not to squeeze it out. Are those considerations in the mind of the Government?
§ THE EARL OF DUNDEECertainly, my Lords. I gather from the noble Lord's supplementary that he is not wholeheartedly in favour of this potential new tax. He says that the burden is so heavy; but he will, of course, appreciate that the tax may not be imposed at all. I think the point is that if we are expected to use fiscal methods of controlling the economy it is a good thing that there should be power to use them, either upwards or downwards, at any time of the year, and not only in the month of April.
§ LORD SHACKLETONMy Lords, while I accept that this tax might have some possible value as a long-term tax, are the Government aware that it must be completely misconceived as an anti-inflationary tax and that it is not possible for firms to alter overnight their employment? And is the noble Earl aware that it is precisely the directional effects of an unplanned kind to which the Radcliffe Committee objected so much in the type of instruments that the Government are apt to use on these occasions?
§ THE EARL OF DUNDEEMy Lords, I am aware that there are objections—sometimes strong objections—to every tax which is ever imposed; and there is also usually something to be said on the other side as well. I do not think we can debate the merits and demerits of this proposal, especially as it is only a potential tax, at Question Time.
§ LORD LATHAMWould the noble Earl say whether the figures he has given are gross or net?
§ THE EARL OF DUNDEENo, my Lords: they are the amount of the levy.
§ LORI) LATHAMIn some cases, of course, it would therefore be possible to charge them as against the sums otherwise due for taxation?
§ THE EARL OF DUNDEEMy Lords, I think that is another question, but I will certainly look into it.
§ LORD WILLIAMS OF BARNBURGHMy Lords, may I ask the noble Earl whether we can take it from his figures, which think he said were monthly, that this would mean that ordinary ratepayers would be called upon to pay £18 million a year? Was that the intention of the Government—to penalise ratepayers, as distinct from workers in general industry?
§ THE EARL OF DUNDEEMy Lords, these figures which the noble Lord asked for were not only for local authority employees, but also for civil servants, the Armed Forces, National Health Service and public corporations. I do not want to take up time now by breaking down the figures between them. With regard to the point about rates, I think the sums involved would be treated for grant purposes like any other unforeseen variation in costs.
§ LORD WILLIAMS OF BARNBURGHBut did the noble Earl not say that the estimate was £1½ million a month for local authorities, and would that not be £18 million a year to be paid exclusively by the ratepayers?
§ THE EARL OF DUNDEENot necessarily exclusively by the ratepayers. That would depend on its effect, if any, on the grant. But of course, the noble Lord is assuming that, if it were imposed, it would be it-noosed for twelve months in the year. On that assumption, it is correct to say that it would mean £18 million in a whole year.
§ LORD LATHAMMy Lords, is it intended in regard to local authorities that the grant will be increased by precisely the same amount as the payroll taxes?
§ THE EARL OF DUNDEENo. The surcharge will add to the costs borne by the local authorities and will be treated for grant purposes like any other unforeseen variation in costs. Whether or not the level of grant would be adjusted would depend on whether, in the Minister's judgment, the total rise in these costs would impose a burden of such magnitude that it should not be left to fall entirely on the local authorities.
§ LORD LATHAMThat means, then, that there will be a very heavy burden, not yet ascertainable, cast upon local authorities?
§ THE EARL of DUNDEEThat depends upon what is meant by "very heavy", and also on whether the tax is imposed.
LORD HAWKEMy Lords, I hope that my noble friend will not think that, because all the supplementaries have come from the other side of the House, we on this side of the House heartily approve of this particular form of tax.