HL Deb 20 May 1969 vol 302 cc301-3

2.40 p.m.

LORD JACQUES

My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government whether it is their policy to subject reputable firms in the construction industry to unfair competition from firms using self-employed labour to avoid selective employment tax; and whether they are aware that this is increasing the amount of shoddy house building.]

BARONESS LLEWELYN-DAVIES OF HASTOE

My Lords, Her Majesty's Government are aware of the problems created by self-employed labour in the construction industry and set up a Committee of Inquiry under Professor Phelps Brown on this and related subjects. The Committee's Report [Cmnd. 3714] was published in July, 1968. The Government immediately sought the opinion of both sides of the industry, and the Committee's recommendations are being urgently considered in the light of these consultations.

LORD JACQUES

My Lords, I thank the noble Baroness for that reply. May I ask whether she is aware that in the meantime it is the firms that employ trade union labour and the trade unionists whom they employ that are suffering?—because the device of self-employment is rampant where there is bad or no trade union organisation.

BARONESS LLEWELYN-DAVIES OF HASTOE

My Lords, as I said, the Government are aware of the problems created by self-employed labour. I should like to point out, in the context of my noble friend's Question, that the increase in self-employed labour began long before the introduction of S.E.T.

LORD RHODES

My Lords, is the Minister not aware that this tax avoidance by these people is holding the Inland Revenue to ridicule? Is it not about time that action was taken? Is not the Minister aware also that new taxes need not be thought out if only the Government would collect the ones to which they were entitled?

BARONESS LLEWELYN-DAVIES OF HASTOE

My Lords, I have noted the remarks of my noble friend. As always, he is extremely interesting and to the point—but not, perhaps, to this particular Question. We are aware of the difficulties but we cannot deal with the whole question of the collection of inland revenue.

LORD ERROLL OF HALE

My Lords, is not a very important aspect of the matter that in the building industry self-employed people are not subject to P.A.Y.E. and therefore do not pay income tax because they move about? While it was a problem before the introduction of S.E.T., it is enormously aggravated now by the imposition of S.E.T. on building workers who are not self-employed.

BARONESS LLEWELYN-DAVIES OF HASTOE

My Lords, we are aware of the various difficulties. As I have said, my right honourable friend is taking the whole problem extremely seriously—but that is not to say that I accept all the assumptions of the noble Lord.

LORD CONESFORD

My Lords, can the noble Baroness assure us that the Government do not think it improper that a man should be his own master; that they do not think it ought to be compulsory that he should have an employer?

BARONESS LLEWELYN-DAVIES OF HASTOE

My Lords, the noble Lord is a very good example of self-employed labour.

LORD DRUMALBYN

My Lords, would it not be much easier to get rid of self-employment tax—I should say selective employment tax—altogether?

BARONESS LLEWELYN-DAVIES OF HASTOE

My Lords, if we did abolish S.E.T. it would not solve the problem of self-employed labour in the building industry.

LORD JACQUES

My Lords, is the noble Baroness aware that the Phelps Brown Committee confirmed that there had been an increase in the device of self-employment following the introduction of S.E.T.; that it expressed its fears of the consequences of an increase of 50 per cent. in the amount of tax? Now that we have a further 28 per cent. increase compounded, surely it is time for action.

BARONESS LLEWELYN-DAVIES OF HASTOE

My Lords, it is quite true that the Phelps Brown Committee confirmed that there had been an increase in self-employed labour; but, as I said, it had begun long before that. The Government are taking the whole situation seriously and that is why they have set up an inter-departmental working party to consider the very problems that my noble friend has raised.