Orders of the Day — Finance Bill

– in the House of Commons at 12:00 am on 16th November 1955.

Alert me about debates like this

Question again proposed, That the words proposed to be left out stand part of the Clause.

Photo of Mr Alan McKibbin Mr Alan McKibbin , Belfast East

The men about whom I was speaking do not qualify for the cars which are rightly supplied free by the Government to limbless ex-Service men who are disabled in the highest degree. I am not asking for charity for these men. I am merely asking for this concession because they have had the courage and integrity to overcome their disability and also have the ability to continue in work, which enables them to earn enough to purchase a car at a reasonable price. If the concession is not granted, many of them may have to give up the employment which enables them to keep their families and themselves and will have to apply for National Assistance, which will cost the country much more than the loss in Purchase Tax if the concession is granted.

The average age of 1914–18 limbless ex-Service men is now 64. As these men get older, it becomes much more difficult for them to stand about in queues and go to their work. One man told me that he is so exhausted after travelling to and from work every day and standing in queues that he has to go to bed over the week-end in order to be able to go to his employment on Monday.

I suggest to the Chancellor that Purchase Tax at 60 per cent. might make all the difference between a man purchasing a new car, which would run comparatively free from trouble for two or three years, and his being landed with a secondhand car. Anyone with experience of cheap second-hand cars will know that they have to have the engines rebored, new tyres and new batteries, and will appreciate how very expensive a "cheap" second-hand car can be.

The concession would cost the Government little or nothing. The men would get no grant for petrol, and would have to pay the full price, and the duty on the petrol could be offset against the loss in Purchase Tax resulting from the concession. I earnestly appeal to the Chancellor to grant this reasonable concession, for the cost would be infinitesimal, whereas it would be a matter of great importance to the individuals. We ought to have in mind the fact that these men were wounded in our service, and, with advancing years, are suffering from increased fatigue and loss of activity.

Photo of Mr Thomas Price Mr Thomas Price , Westhoughton

I should like to bring the Economic Secretary back to an extremely important matter which he very gracefully, if that is the right word to use, avoided when he last spoke.

My hon. Friend the Member for Stechford (Mr. Roy Jenkins) earlier referred briefly to the relationship between the Purchase Tax, which it is now proposed to increase to 60 per cent., on motor cars and the initial and depreciation allowances under present fiscal arrangements. The Economic Secretary did not pay the attention to the problem which the Amendment demanded.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

Might I raise a point of order, Sir Rhys? We are somewhat perplexed on this side of the Committee. If we are to go into questions of the investment and initial allowances and other matters which have been mentioned, which are not included in the Amendment, I do not know how we shall keep wthin the rules of order or the terms of the Amendment. If I am expected to answer the hon. Member—I was proposing to attempt to join in the debate later if I caught your eye—I should be rather foxed if I did not know whether I was permitted to speak on those points or not.

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

I have great sympathy with the right hon. Gentleman. I tried earlier on to curb the extent of the debates, but it is very difficult in some cases to keep strictly within the scope of Amendments. I do not think that hon. Members should range over the whole subject of Purchase Tax on every Amendment.

Mr. H. Wilson:

Further to that point of order, Sir Rhys. We all understand that we are debating the question of the increase in Purchase Tax from 50 per cent. to 60 per cent. on a very wide range of goods, even if so far the debate has been rather narrowly confined in the main to motor cars. One hopes that in the next hour or two the debate may widen to embrace some of the other items which are covered by the Purchase Tax proposals. I presume that we shall be in order in doing that. Surely my hon. Friend is in order to asking questions about initial allowances, at any rate as long as he does not go too wide or take too long in doing so, in that it is very difficult for the Committee to make up its mind whether an increase in Purchase Tax from 50 per cent. to 60 per cent. is the right to increase exports of motor cars or whether there might not be some other perhaps simpler method which would obviate the necessity for the increase in Purchase Tax, which some of my hon. Friends have suggested may do damage to industry.

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

It is difficult to draw a line as to how far one should range, but the range on nearly all the Amendments has really been too wide.

Photo of Mr Thomas Price Mr Thomas Price , Westhoughton

I am grateful to the Chancellor for his intervention, and to you, Sir Rhys. I think, it is proper that hon. Members on both sides of the Committee should have a clear picture of how far they can go within the rules of order on these Amendments. I have not yet reached the point of indicating the reasons why I am supporting the Amendment and am introducing the question of allowances on the lines first mentioned by my hon. Friend the Member for Stechford.

I submit that the Chancellor's case for increased Purchase Tax in his Budget and in the Finance Bill rests entirely on his assumption that the increases will be an important step towards arresting inflation. My remarks were uttered from the point of view that I do not believe that an increase of £15 million in motor car taxation will have any effect whatever in arresting inflation and deflecting motor cars into the export trade.

What are the facts? I pay due respect to the Chancellor for what he said in his Budget speech about the pace of inflation and the concern which he, with his great responsibility, is bound to feel about it.

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

I have no doubt that inflation is involved here, but I hope we shall not have the general argument on inflation on every one of the Amendments.

Photo of Mr James Ede Mr James Ede , South Shields

But they all tend to inflation.

Photo of Mr Thomas Price Mr Thomas Price , Westhoughton

I will try to keep within the rules of order on this point, Sir Rhys, but I think I am legitimately entitled to remind the Chancellor that, if the Committee and the House are not satisfied that his proposals will have the effect which he claims, then we are entitled to debate not only the figures and mathematics of the situation but the basic ideas upon which his case rests.

On 22nd October, Economist said that during 1955 the motor output had been booming more than the boom itself. It said it had boomed to such an extent that during the last year more than a million vehicles of various descriptions had been turned out from British factories. I would not be so churlish as to deny that great enterprise has been shown by motor manufacturers not only in servicing the home market, which has been rather over-serviced, but in developing the export trade.

I refuse to accent the case presented by the Chancellor and the Economic Secretary that the tax will have no material effect upon the output of motor cars available for export. Out of the rather more than one million motor cars produced in 1954, 917,000 were produced by the "Big Four" companies and the marginal firms' output brought the total to more than a million. I am prepared to assume from figures published in the Trade and Navigation Returns and the Abstract of Statistics that during the past twelve months about 700,000 vehicles have come on to the home market. That is confirmed by the fact that 728,000 new registrations were entered in the Board of Trade in the last twelve months.

If one takes 560,000 vehicles out of the 700,000 as a very reasonable estimate of what might be chargeable in business accounts in the estimation of Income Tax liabilities and Profits Tax liabilities to the Treasury, one reaches the conclusion that if the average price of a vehicle is about £500—that figure can be checked with official statistics—approximately £280 million worth of motor cars were sold in the home market last year to business firms who were entitled to set off their cost as business expenses against liability to tax.

One of my hon. Friends said that 40 per cent. initial allowance would be chargeable to the Government as against the Purchase Tax on these vehicles which the Government would receive. I would not go so far as to say that. The Chancellor will probably agree that in the first year the initial allowance on the vehicle will be 20 per cent., which, with 10 per cent. depreciation, makes 30 per cent. in all. However, many hon. Members who have experience of this business will know that when a motor car is kept for fourteen or fifteen months, going into the second taxation year, there is another 10 per cent. depreciation, making 40 per cent. in all.

With what I estimate to be the British output of cars sold to British firms last year, one reaches the situation that 30 per cent. of the total value of the cars would be £84 million in a year and if one takes 40 per cent., it would be £112 million as against the extra £15 million taxation which the Chancellor estimates he will get. This is a very serious state of affairs and has become endemic in British industry today, because in the fiscal system which we are operating in British industry when even a minor executive is engaged he has to be offered a motor car.

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

To discuss the fiscal system is beyond the scope of the Amendment.

Photo of Mr Thomas Price Mr Thomas Price , Westhoughton

I will go back to mathematics if I cannot discuss principles, Sir Rhys. I am bound to bow to your Ruling, so I will go back to figures, although I had not wanted to bore the Committee with statistics.

This is a valid line of country which has not been properly explored and it is most important that the Committee should consider it. We are dealing with more than £100 million of public finance and if we are not careful in the Committee to have proper and prudent regard for public finance, on which the Chancellor himself claims to be a purist, and are to confine our debates to merely high falutin' abstractions, we shall not do the job which our constituents sent us here to do.

6.15 p.m.

Purchase Tax has been increased in this range of goods to 60 per cent. and in the trade there is great consternation and objection, but I am not attacking the tax from that angle. The tax will have no effect whatever in arresting manufacture of motor cars for the home market. It is a massive deception of the people to fiddle about and put a tax on pots and pans, brushes and brooms and all the little things that will annoy every housewife in the country and, at the same time, allow this racket to continue and to deceive people that they will get something from taxation.

This is a cumulative process. The initial allowance of 30 or 40 per cent. does not stop at one infliction. It is perpetuated year by year by a very large number of companies. The practice in the trade is that when new vehicles are ordered there is generally an arrangement with a distributing agency that after twelve or fifteen months the cars will go into and form the basis of the second-hand market. In the next year, the same initial allowances are granted all over again. This is a very serious matter that warrants closer examination, and before we on this side of the Committee are satisfied we will strongly resist the Clause to which we have put the Amendment.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

I am sure that the hon. Member for Westhoughton (Mr. J. T. Price) would not want to leave a wrong impression with the Committee. If a car is sold at the end of fifteen months, the price paid for the car is ploughed back—

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

I do not think that that question is in order.

Mr. H. Wilson:

It may be convenient if I intervene at this stage, because so far no one has spoken from the Opposition Front Bench and the Chancellor will probably agree that, although no one would say we are at the beginning of the end in this debate, we are, to coin a phrase, at the end of the beginning. It has been a somewhat discontinuous debate for reasons of which the Committee will be aware. Some very important points have been raised and on a number we have had an answer from the Economic Secretary.

The main characteristic of the debate—indeed, the main characteristic of the tax range which we are now debating—is that this afternoon we have been away from the essentials, the necessities that we debated for a rather short time last night. We have been in the range of what some hon. Members have called luxuries and others have called conventional necessities. I rather like the phrase used by the hon. Member for Basingstoke (Mr. Freeth), who spoke an hour ago, although we have not seen much of him since, when he referred to "comforts." A number of the things which we are discussing may be regarded as comforts and I hope that when the Chancellor replies he will pay very careful attention to what was said by his hon. Friend the Member for Belfast, East (Mr. McKibbin), who put—quite apart from the interruptions—. some rather important points.

My hon. Friend the Member for Stechford (Mr. Roy Jenkins) began the debate with what I am sure all hon. Members will agree was a very fine speech. If I have any criticism of him—and I am sure my hon. Friend will take this in the spirit in which it is meant—it is that I thought he was rather narrow in his attack on the situation. My hon. Friend referred mainly to cars, as have a number of my hon. Friends, but I am sure that he would have liked to have taken a much wider view of the subject, and given equal attention to a number of other very essential items covered by this range of Purchase Tax. I think that my hon. Friend showed great forbearance and consideration to the Chancellor in confining his remarks to so narrow an aspect of the problem.

My hon. Friend made one comment which I think must have been in the minds of, at any rate, all hon. Members on this side of the Committee, when he said that we must balance every increase in Purchase Tax which we are now debating with the remissions of Income Tax given by the Chancellor last April. I am bound to say that that does affect the attitude of hon. Members on this side of the Committee when they consider whether these increases in Purchase Tax are necessary.

A great deal of the time we have so far spent on this Amendment—there is plenty of time to remedy this lack of balance—has been devoted to debating the Purchase Tax on cars and the wider problems of the motor car industry. I do not wish to go very deeply into the problems of the motor car industry. That has been done so very well by a number of my hon. Friends, including the hon. Member for Northfield (Mr. Chapman) the hon. Member for Edmonton (Mr. Albu), and, in a remarkable speech, my hon. Friend the Member for Westhoughton (Mr. J. T. Price), in addition to my hon. Friend for Stechford.

A point was made by the hon. Member for Basingstoke which, I think, calls for a reply. He said that we on this side of the Committee supported the increase in the tax on cars which was included in the Budget introduced by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) in 1951. The hon. Gentleman said that even though we must have realised that the cuts in the Australian import of cars were at that time imminent, yet we nevertheless supported the increase in the tax. The hon. Gentleman was very wide of the mark. He was not a Member of this House at that time, and I have not checked the details of this or the exact timing; but it was my impression that the import cuts took place in March, 1952, or thereabouts, almost twelve months after the Budget introduced by my right hon. Friend on 10th April, 1951. Therefore, the two situations are not in any sense parallel.

Today, the Committee is considering this proposal to increase Purchase Tax on cars from 50 per cent. to 60 per cent. at the very moment when there has been an announcement about a restriction on imports not only into Australia, but New Zealand as well. From what was said by the Economic Secretary in his, if I may say so, very helpful speech—helpful to this side of the Committee—I think it clear that one of the things that the Government had in mind in proposing this increase in Purchase Tax was the hope that it would drive more into exports, in general, increase exports. We may take it, since so much of the right hon. Gentleman's speech was related to cars, that he was referring to the effect on the export of cars as well as other goods. I presume we are right in assuming that from what he said.

The right hon. Gentleman gave some figures, some estimates of the yield from cars, which we might expect on the basis of Customs and Excise estimates as a result of the increase in tax from 50 per cent. to 60 per cent. It would be helpful if the Chancellor would give the Committee an indication of the basis on which those estimates were made. My hon. Friend the Member for Jarrow (Mr. Fernyhough) tried to get that information from the Economic Secretary, who did not have it readily to hand at the time. But if the Treasury experts made estimates of the yield from the increase in the rate of tax, they must, in the course of doing so, have made some assumptions about the proportions in which the motor car output is to be divided between the home and the export trade in the year that lies ahead—indeed, in the eighteen months that lie ahead.

I hope that the Chancellor will tell us what was estimated. Was it estimated that one result would be a further diversion to exports, or was it assumed that the increase in the Purchase Tax would not be sufficient to counteract the effect of further factors which are reducing our export trade in cars at the present time? We should like to know how much diversion to exports was assumed and how much would be due to the increase in Purchase Tax.

The Economic Secretary referred to the Chairman's statement made by Sir Leonard Lord at the annual meeting of the British Motor Corporation. The right hon. Gentleman said—I think he was quoting Sir Leonard—that the intention was to produce 2,000 more cars per week next year than had been produced this year. I think it important to know—perhaps the Chancellor or the Economic Secretary can tell us—what will happen to the 2,000 additional cars. Is it intended that there shall be an increase in exports, or will they all come on to the home market? If they come on to the home market, it would certainly improve the revenue position for the Chancellor, but it would also add to the congestion on our roads, and perhaps endanger our economic situation in other ways.

I suggest that it is important that the Chancellor give us some views about this proportion between home market and export market. At present, the motor car industry is a very heavy exporter and is earning some valuable foreign exchange, though not as many dollars as it was formally earning. At the same time, it is a very heavy consumer of dollar raw material. A couple of weeks ago we had figures given by the President of the Board of Trade in answer to a Question from my hon. Friend the Member for Rugby (Mr. J. Johnson). If I remember the figures correctly—the Chancellor will put me right if I do not—the President said on that occasion that we were spending about 59 million dollars a year on imported sheet steel. A great proportion of that must be consumed by the motor car industry, though the President did not have the remotest idea of how much. If that be the position, it is relevant to this Amendment to know what proportion of the cars to be produced out of this quantity of sheet steel—or perhaps out of an increased import of sheet steel, we do not know—will be diverted to export as a result of the proposal at present before the Committee, namely, an increase in the Purchase Tax on cars from 50 per cent. to 60 per cent.

We on this side of the Committee are very doubtful whether this proposed increase in the Purchase Tax will do the trick. I am sure that I should be ruled out of order were I to indicate to the Chancellor all the measures open to him by which he might ensure that increase in exports which hon. Members on both sides of the Committee desire to see. I have indicated one or two in the past, particularly in relating the sheet steel allocation to this question, but I do not propose to pursue this matter any further because, as I say, I am sure that I should be out of order were I to do so.

We on this side of the Committee who are not pursuing that kind of argument, are, I am bound to say, interpreting the Amendment extremely narrowly. We are conducting this debate within very narrow limits, Major Anstruther-Gray, as I tried to suggest to your predecessor in the Chair a few moments ago. Before they decide whether it is right to increase the Purchase Tax from 50 per cent. to 60 per cent. it is important that hon. Members should know whether any other measure might be more effective and achieve the same end more simply. I believe that if the Government sent for the motor car manufacturers and said that their continued use of sheet steel depended on still further efforts in the export market, it might do the trick much more successfully than this proposed increase in Purchase Tax.

6.30 p.m.

Of course, it may be that the main purpose of this increase in Purchase Tax is not so much to provide a simple incentive to increase exports as a means of dealing with the inflationary situation. Again, my hon. Friends have had some difficulty in knowing how far they were in or out of order on the question of inflation. As I understand, it will be out of order to discuss the inflationary situation in general and the reasons for it, though that would form a very interesting debate, but it will be in order to discuss how far this Amendment might relieve the inflationary situation. Of course, it is certainly in order, I would suggest with respect, for us to discuss how far the Government's proposals are adding to the inflationary situation by pushing up prices. A number of my hon. Friends have dealt with that point.

Before I leave the subject of cars, I wish to refer to the question of commercial vehicles, because most of my hon. Friends have referred to private cars rather than to commercial vehicles. The Economist last week gave some figures of the increased production of commercial vehicles. I think it said that about 112,000 vehicles were sold on the home market in the first nine months of this year. If we look particularly at the small delivery vans weighing under 15 cwt., those dreadful little vehicles which contribute far more than anything else to the congestion in our big cities, and which are generally responsible for most of the bad driving, and, particularly, most of the bad parking—[HON. MEMBERS: "Oh."] I think that is the experience of most hon. Members in this Committee.

Mr. Wilson:

The hon. Gentleman, who has experience of running a business in Liverpool, requires a rather more slower-moving vehicle than the kind I have in mind, but I think it would be rather difficult for him to suggest that it is impossible to run a business without having one or more, or a considerable number, of the less than 15 cwt. commercial vehicles. In fact, if the figures given by the Economist are correct, there was an increase of 61 per cent. in the number of these vehicles delivered to the home market in the first nine months of this year compared with the same period last year. The hon. Gentleman has a constituency very near mine, and he made some extraordinary claims in the speeches which he made during the last Election, but even he does not suggest that industry is increasing at that rate.

Photo of Mr Kenneth Thompson Mr Kenneth Thompson , Liverpool, Walton

I would not have it thought for one moment that the speeches which I made during the General Election were other than those stimulated by the competition in the neighbourhood. The fact is that the growth in the use of these small commercial vehicles arises entirely from their attractiveness to business and commerce. They serve a vital and useful purpose in businesses of all kinds.

Mr. Wilson:

I can quite understand the hon. Gentleman being under competitive pressure in the Merseyside area, especially when one considers the claims of his competitors in the Birmingham district.

It is recognised that these vehicles may be very convenient to a number of industries, but the Chancellor has been telling us for a long time now—I think he first made this point with some force on 26th July—that industries must review their investment programmes and must not spend their resources on everything handy, convenient and nice to have, but only on those things which are essential. That, surely, is the Chancellor's policy, and I would have hoped that the hon. Member for Walton (Mr. K. Thompson) would support him in that.

At a time when the Chancellor is making very severe cuts in investment elsewhere, it is essential that private industry equally, especially the less essential sectors of it—and there are many such sectors—should be extremely restrained in its call on the resources of the nation, especially those resources which involve imported sheet steel from the dollar area. That is why, although my right hon. and hon. Friends and I have many reservations about this part of the Bill, I personally do not regret an increase from 50 to 60 per cent. in Purchase Tax so far as the smaller commercial vehicles are concerned. I hope that the Chancellor will consider at some time, especially when he contemplates the road programmes necessary, the congestion in London, and all the rest of it, putting an even higher tax on these small commercial vehicles.

Turning from cars—and I have complained that perhaps we have spent too high a proportion of the debate on cars—

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

On a point of order. Could we have a little more quietness on the benches opposite? I am very interested in what the right hon. Gentleman is saying, and I should like to be able to hear what he is saying.

Mr. Wilson:

I am grateful to the hon. Gentleman, who represents another neighbouring constituency to mine. Perhaps I might say that, so far as my hon. Friends are concerned, they all know what I am saying. Perhaps that explains why they are not listening as attentively as the hon. Gentleman.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

I hope that by his gesture a moment ago my right hon. Friend was including the most responsible, well-behaved and quietest section of his hon. Friends.

Mr. Wilson:

My hon. Friend will know that it is a little difficult to indicate by a gesture of that kind an area which does not include him.

Before I was interrupted, I was attempting to take the debate away from the subject of cars and commercial vehicles to other items included in this list, because cars, I think, represent only about 1 per cent. of the items covered. Radio and television sets have been mentioned by a number of hon. Members, and reference has been made to the 1951 Budget. In his speech, the hon. Member for Basingstoke seemed to think that there was something inconsistent about hon. Members on this side of the Committee increasing the tax on radio and television equipment in 1951 and yet being opposed to this increase today.

I suggest that there is certainly nothing inconsistent about that at all, because in the 1951 Budget, which was certainly a very tough Budget, my right hon. Friend made it perfectly clear that his reason for increasing Purchase Tax on these items was the fact that the home consumption of them was competing with the demands of the arms programme, particularly in the electronics industry, but also in respect to aircraft, tanks and other parts of the defence programme. I would remind the Committee, however, that, in that very same Budget, my right hon. Friend also removed Purchase Tax from a wide range of essential goods which the Chancellor of the Exchequer has put back into tax in this supplementary Budget.

There is one other item on which very little has been said, and I am sure that the Chancellor, and particularly the Economic Secretary, would not like it to be omitted from this debate. It is the item of gold and silverware. The Economic Secretary was very eloquent in 1951. when he asked the Chancellor to reduce the tax on gold and silverware. In due course, the Chancellor took steps in that direction, which he has continued to take this time. I should be out of order in going from one list to another, but there are a number of items now in the 50 per cent. range which go up to 60 per cent., and some of them are of considerable interest.

I am sure that the Economic Secretary will be concerned at the fact that the gold wedding ring which was selling at 5 guineas, of which Purchase Tax represented £1 4s., will now bear a tax of £1 9s. That means that it will now he selling at £5 10s., or, as usually happens when the retailers get a chance of putting up prices, at more than £5 10s.—probably at £5 12s. 6d. We have an increase there of 5s. or 7s. 6d. in the cost of a plain gold wedding ring which at present is selling at 5 guineas.

Here we have a situation in which the Government are not only making life almost impossible for the young married couple in respect of the mortgage payments if they buy a house, which the Government have suggested they should do, not only making it very costly in terms of equipping that house with furniture, bedding and all the rest, and not only making it much harder for them to live because of the cost of food, but even increasing the tax on the wedding ring itself.

We have heard a lot about incentives, and I am not at all sure which particular incentive the Chancellor had in mind in increasing the tax on wedding rings. A wedding ring, surely, is an essential, at any rate to the newly married couple. Yet, at the very moment of time when the Chancellor is increasing the tax on gold wedding rings, he is reducing the tax on more and more luxury items of gold and silver.

For some reason which we have been unable to understand, the Purchase Tax has come off gold and silver petrol lighters. The price of a gold lighter has come down from £25 to £20, while some of the more expensive items, such as silver teaspoons, have been reduced from 5 guineas to £4 12s. 6d. A silver teaset which costs £120 at present will come down to £108, and, of course, gold plate comes down even more. At last, we are beginning to understand why Sir Bernard Docker, despite all those blood chilling warnings to the effect that he thought he would have to go to live abroad, has now decided that he will not leave this country, because these expensive items are to be cheaper.

Finally, let me come to the question referred to by the Economic Secretary to the Treasury. He said that the proposal we are debating on this Amendment will help exports, particularly because of the present strain on the metal goods industry. He gave the Committee some interesting figures about what he called the excess demand for labour. This is always a phrase that rather frightens us when we hear a Minister talking about the excess demand for labour. He said it was greatest in areas in which the metal goods industries are now most strongly concentrated—and I think we would agree about that—but he quoted with approval some words which were used by my right hon. Friend the Member for Leeds, South on 10th April, 1951. I am paraphrasing his words, although the hon. Gentleman think quoted them exactly. My right hon. Friend said that we must concentrate the tax on those goods which might be diverted to export.

The hon. Gentleman approved of this policy, as stated by my right hon. Friend, and gave us to understand that that is the policy of the Government today in increasing the Purchase Tax, because they want to divert to the export trade those items which are capable of being exported, where it is thought that there is too much being consumed in this country at the present time. That was the main reason, or one of the main reasons, for this increase in the tax. I would only say that all this is very interesting, and I think we can follow very easily the reasoning of the hon. Gentleman in putting that argument forward.

I must remind the hon. Gentleman and the Chancellor, however, that it is at complete variance with what we were told by the President of the Board of Trade on 10th June this year. I should like to remind the Committee once again of the words which the President of the Board of Trade used on that occasion, in reply to what I thought was a helpful and constructive speech of my own on that Friday morning. He then said this: What about consumption? Do not let us be too afraid of our people consuming things Sometimes, to hear the right hon. Gentleman, one would think it was terribly shocking for our people to be consuming things which ought to be all going into the export market. Nobody is keener about exports than a President of the Board of Trade.".—[OFFICIAL REPORT, 10th June, 1955; Vol. 542, c. 162.] Well, not this one. It is because of this difference, because of this completely schizophrenic view about exports which characterises the whole Government, that we are in this difficulty today. The President has not taken any of the measures which we advocated as being necessary for increasing exports, and, because he will not increase exports, the Chancellor of the Exchequer has to come along and try to do it by means of the fiscal weapon.

So far in this debate, over the narrow field to which the discussion has been restricted for the last hour or so, we have had no convincing argument to suggest to us that we should agree with the Government in their proposal to increase this range of Purchase Tax from 50 to 60 per cent.

6.45 p.m.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

It would perhaps be reasonable if, after three and a quarter hours of discussion, we should now come to a decision on this Amendment, because we have the next range of Purchase Tax to consider. After that, we then have the general debate on the Clause, and we then have, as is known, eight or nine debates on the rest of the Amendments on the Order Paper, which will, I think, make our deliberations somewhat protracted. Therefore, I think that it will probably be for the convenience of the Committee to come to a decision on this matter, upon which the difference of opinion between us is now sufficiently clear to enable the point to be decided in the Division Lobbies.

The first point that I wish to deal with is that concerning commercial vehicles, which was raised by the right hon. Gentleman the Member for Huyton (Mr. H. Wilson). I had understood that commercial vehicle chassis stood at 25 per cent., now raised to 30 per cent. in this Budget, and not at 50 per cent. now raised to 60 per cent., but if I am at fault—and I have only just been informed on this—we can discuss it later. It would be out of order to try to do it on this Amendment.

On the question which the right hon. Gentleman raised about the revenue from cars, my hon. Friend the Economic Secretary to the Treasury correctly gave the revenue figures, which amount to approximately £15 million on motor cars, leaving aside all the other items in the list. All the items in the list total about £30 million—items which we are considering on this Amendment—and motor cars come to about £15 million out of that £30 million. I am informed that this estimate is based on the current level of receipts in a year. If, during the coming year, as we hope, exports take an increasing proportion of output, we shall not get this revenue, for the reason that there is no Purchase Tax on exports, but to that extent we shall have an improvement from the economic point of view. Quite frankly, I would rather have exports than revenue at the present time, and that is as good an answer as I can give the right hon. Gentleman on that point because I cannot go into the methods of calculating the revenue figures.

This particular Amendment deals with a list of items which was read out in his able speech by the hon. Member for Stechford (Mr. Roy Jenkins), and it covers such things as motor cars, radio and television sets, electric and gas fires, certain jewellery, including costume and imitation jewellery, trunks and bags, fancy goods, smokers' requisites and mirrors. It would be a pity if, in our discussion, we became attached to one particular trade or item, such as the motor trade or anything else.

The Government have particularly used, and used on purpose, the weapon of the Purchase Tax for very much the same reason as it was used by the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) when he spoke on 10th April, 1951. These motives were referred to by the right hon. Gentleman the Member for Huyton, and the motives remain in general very much the same in the particular economic difficulties which we are facing at the present time. One difference between the right hon. Gentleman and myself is that I am not quite so keen on the revenue aspect as he was when he imposed the Purchase Tax at that time on motor cars, whereas with television sets and a range of other domestic appliances, the range, I fully acknowledge, was not the same.

Perhaps the right hon. Gentleman will have plenty of opportunity later to indicate whether he differs from me in the choice of articles, but, in these articles, which broadly correspond with those which we are debating today, I think that the motives, which, I trust, in each case were in the country's interests, were the same, except that I am less keen on getting revenue, and if there were to be an increase in exports and we got less revenue, I should be less dissatisfied than he was, owing to the difference in the budgetary situation. At present, the budgetary situation is what is called satisfactory; that is, purely from a budgetary point of view, we have an adequate surplus. What is wrong is our balance with overseas countries. The answer now is to increase our exports in these ranges, and to relieve the presssure upon the metal-using industries.

The most telling argument that I can use in the very few minutes for which I shall detain the Committee is to use exactly the same words as the right hon. Member for Leeds, South used on 10th April, 1951, when he said: …in choosing the articles we must turn to those whose production for the home market we want to discourage because their production and sale at home is likely to conflict most seriously with the needs of export and defence. Increased taxation for this range of articles is clearly indicated, for so long as these other claims continue."—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 859.] Leaving aside all the other articles which I have mentioned, I notice that the proportion of exports in the motor trade in 1952 was 69 per cent., and that in the first half of this year it was 45 per cent. There is, therefore, a distinct need for improvement in our exports of motor cars, and exactly the same reason as that given by the right hon. Gentleman in his speech on 10th April, 1951, prevails in this instance in regard to the metal-using industries, especially the motor car industry. I have given statistics to indicate that I am basing my policy upon ascertainable facts and ascertainable needs.

As for the needs of defence, it so happens that, as Sir Stafford Cripps used to say, the nexus of our economic problem is in the metal-using sector, because it is precisely within that sector that one has the terrible pull of defence; the needs of the housewife for all these new appliances — [Interruption.] — some of which will bear increased taxation this year, and, at the same time—

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

On a point of order. An hon. Member was heard to say of the Chancellor that he was putting forward pure "Butskellism." I know that a number of offensive words are out of order, and that some do not change with the times. Would you say, Major Anstruther-Gray, whether the charge of "Butskellism" which was made against the Chancellor is a proper one, and within the rules of order?

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

I heard no such word. That being so, I take no cognisance of it.

Mr. Percy Dailies:

Surely it is up to the hon. Member concerned to say whether or not he said "Butskellism."

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

Whether or not my hon. Friend the Member for Dorset, South (Viscount Hinchingbrooke) said "Butskellism," I thought that that attractive and agreeable figure had been killed in recent controversy, and that his place had been taken by "Mr. Gaitvan"—a different figure, whose controversies I shall leave to right hon. Gentlemen opposite, who will have opportunities for talking to and debating with my hon. Friend.

I would only point out to him that if he imagines that a policy of freeing the economy, as we have so successfully indulged in over the last four years—by opening up markets, freeing payments, widening our trade, cheapening our provisions, giving a choice to the housewife, and, generally, following a policy of liberation in order to relieve the economy—is the same as that practised by the right hon. Member for Leeds, South, he is making a great mistake.

He is also making a mistake if he thinks that I, or anybody occupying my position, would be lacking in the courage necessary to take unpopular actions such as raising the tax upon a certain section of the metal-using industry—which is what this proposal does—because it is in short supply; we want to limit home demand, and conquer inflation. That is why we are doing this. We are not going back to the physical controls used by the right hon. Gentleman opposite, or to many of the other methods used by him. It is not a question of rudery or of wishing to impugn the motives of the right hon. Gentleman in using these methods. I am merely stating that we are not going back to those methods. Therefore, when methods exist which we believe will be effective in limiting home demand, we intend to use them. One of the methods which I believe will be most effective in this respect is the use of Purchase Tax, whose effect is immediate.

I conclude upon that note of immediacy. I should be out of order if I followed the speeches made by the hon. Member for Stechford—upon the subject of investment and initial allowances—the hon. Member for Westhoughton (Mr. J. T. Price) or the right hon. Member for Huyton. I would merely say that the difference between withdrawing the initial allowance from the motor car industry and the use of Purchase Tax is that Purchase Tax operates at once.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

On a point of order. I understood the Chancellor to say that he could not reply to certain points made by my right hon. and hon. Friends because he would be out of order. In view of the fact that they made those points during the debate, and were permitted by the Chair to do so, surely they were in order. If the Chancellor desired to answer them surely he would also be in order.

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

My information is that the Chair attempted to restrict the debate and to prevent it going outwith the proper limits. If the Chancellor can continue to keep within the limits, that is what he should do.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

I am in a stronger position than the hon. Member, because I have been here throughout the debate. I have had no diversions outside the Chamber. I have watched the changing of Chairmen. Each Chairman has given an opportunity for a wider debate in this matter, up to a certain point, but the only attitude I am taking is to say to the hon. Member for Stechford, the right hon. Member for Huyton, the hon. Member for Westhoughton and others, that the only action which operates as from the day of its introduction is Purchase Tax. If I had withdrawn the initial allowance, that would not have had the same effect as I believe these measures will have.

I therefore draw these measures to the attention of the Committee. I believe that they are in accordance with precedent and, according to the best economic advice available, the best measures, under the circumstances, to deal with the danger of inflation. I hope that we shall now be able to reach a decision upon this matter, because we have a very heavy programme before us and if we cannot make progress I believe that the Committee will be unduly detained.

Photo of Mr George Pargiter Mr George Pargiter , Southall

I do not think that the matter can be allowed to rest where the Chancellor proposes to leave it. He has adduced no evidence that Purchase Tax, in the past, has effectively restricted consumption. Certainly, in the case of certain classes of goods it has not done so. The best evidence available from manufacturers at present is that the effect will be that some people who previously purchased goods of this kind for cash will now do so by hire-purchase instead, because of the little extra they will have to pay. In many respects the long-term effect will be worse than if they had purchased for cash. The Chancellor's arguments are not well founded in their application to this range of goods.

It cannot be shown that there is any analogy between the present circumstances and those which existed in 1951, especially in relation to the metal-using industries. In 1951, there was an expanding market abroad in various countries for motor cars, vehicles and other durable consumer goods. It cannot be argued that the position is the same today. We are now meeting with increased competition from other countries, and are not able to make the same progress in foreign markets as we were in 1951, when other countries were a long way behind us.

The argument to which the Chancellor should address himself is that the general effect of these proposals, among his others, will be to increase costs at home, and if costs increase we shall be in a still worse position in trying to compete with other countries in the various markets in which the Chancellor thinks that we shall be able to expand.

7.0 p.m.

We shall not get the expansion of those markets. We shall pay something more for the goods, but the goods will still be sold on the home market. So long as there is no distinction as to where metal is going and the types of firms to which it is going, it will go to those who can pay most for it, and into the market which is most readily available. That is a fact, and there is no question about it, whether the Chancellor likes physical controls or not. The time when the export market worked well, and when there was the greatest volume of goods going into the export market in relation to production, was when there were physical controls such as those on steel and other raw materials. The Chancellor may not like it, but the facts are there. It cannot be said that steel control broke down at any time and failed to do its job.

The Chancellor will really have to look at this question of the inflationary effect. Quite apart from purchases made by housewives, let us look at those made by local authorities, who do not buy things for nothing and have been pruning their budgets for long enough now, because of rising costs. The Chancellor's proposals will mean to my own county council an additional cost of £68,000 in a full year. The money must come from somewhere; it will come out of the rates. It will have an inflationary effect because people will want more money to pay more rates. The process of inflation will grow as a result of the Chancellor's proposals.

It seems that very little research has been done by the Treasury or by the Chancellor himself into the effect of these proposals on the relationship between goods and markets. The effect of Purchase Tax on the whole range of goods available on the home market has not ultimately, over a period of years, been to reduce consumption. Its effect has been what we have already said it would be. If prices go up, there will be a demand for more money to buy the goods. The

increase in Purchase Tax will not work in the way the Chancellor thinks it will.

If the Chancellor chooses to see that firms which are prepared to do their utmost to export are placed in a favourable position for their raw materials against those who rely on the home market, he will be doing a more useful job of work than in the proposals he is putting before us.

Question put, That the words proposed to be left out stand part of the Clause:—

The Committee divided: Ayes 280, Noes 237.

Division No. 45.]AYES[7.4 p.m.
Agnew, Cmdr. P. G.Davidson, ViscountessHorobin, Sir Ian
Aitken, W. T.D'Avigdor-Goldsmid, Sir HenryHorsbrugh, Rt. Hon. Dame Florence
Allan, R. A. (Paddington, S.)Deedes, W. F.Howard, Hon. Greville (St. Ives)
Alport, C. J. M.Dodds-Parker, A. D.Howard, John (Test)
Arbuthnot, JohnDonaldson, Cmdr. C. E. McA.Hudson, Sir Austin (Lewisham, N.)
Armstrong, C. W.Doughty, C. J. A.Hudson, W. R. A. (Hull, N.)
Ashton, H.Drayson, G. B.Hughes, Hallett, Vice-Admiral J.
Astor, Hon. J. J.Dugdale, Rt. Hn. Sir T. (Richmond)Hughes-Young, M. H. C.
Atkins, H. E.Duncan, Capt. J. A. L.Hulbert, Sir Norman
Baldock, Lt.-Cmdr. J. M.Duthie, W. S.Hurd, A. R.
Baldwin, A. E.Eden, Rt. Hn. SirA.(Warwick&L'm'tn)Hutchison, Sir Ian Clark (E'b'gh, W.)
Balniel, LordEden, J. B. (Bournemouth, West)Hutchison, James (Scotstoun)
Banks, Col. C.Elliot, Rt. Hon. W. E.Hyde, Montgomery
Barlow, Sir JohnEmmet, Hon. Mrs. EvelynHylton-Foster, Sir H. B. H.
Barter, JohnErrington, Sir EricIremonger, T. L.
Baxter, Sir BeverleyErroll, F. J.Irvine, Bryant Godman (Rye)
Beamish, Maj. TuftonFarey-Jones, F. W.Jenkins, Robert (Dulwich)
Beattie, C.Fell, A.Jennings, J. C. (Burton)
Bell, Ronald (Bucks, S.)Finlay, GraemeJennings, Sir Roland (Hallam)
Bennett, Dr. ReginaldFisher, NigelJohnson, Dr. Donald (Carlisle)
Bevins, J. R. (Toxteth)Fleetwood-Hesketh, R. F.Johnson, Eric (Blackley)
Bidgood, J. C.Fletcher-Cooke, C.Kaberry, D.
Biggs-Davison, J. A.Fort, R.Keegan, D.
Birch, Rt. Hon. NigelFraser, Hon. Hugh (Stone)Kerby, Capt. H. B.
Bishop, F. P.Freeth, D. K.Kerr, H. W.
Body, R. F.Galbraith, Hon. T. G. D.Kershaw, J. A.
Boothby, Sir RobertGammans, L. D.Kirk, P. M.
Bossom, Sir A. C.Garner-Evans, E. H.Lagden, G. W.
Boyle, Sir EdwardGlover, D.Lambert, Hon. G.
Braine, B. R.Godber, J. B.Lancaster, Col. C. G.
Bromley-Davenport, Lt.-Col. W. H.Gomme-Duncan, Col. A.Langford-Holt, J. A.
Brooke, Rt. Hon. HenryGower, H. R.Leather, E. H. C.
Brooman-White, R. C.Graham, Sir FergusLeavey, J. A.
Browne, J. Nixon (Craigton)Grant, W. (Woodside)Leburn, W. G.
Bryan, P.Grant-Ferris, Wg Cdr. R. (Nantwich)Legh, Hon. Peter (petersfield)
Buchan-Hepburn, Rt. Hon. P. G. T.Green, A.Lennox-Boyd, Rt. Hon. A. T.
Bullus, Wing-Commander E. E.Grimston, Hon. John (St. Albans)Lindsay, Hon. James (Devon, N.)
Burden, F. F. A.Grimston, Sir Robert (Westbury)Lindsay, Martin (Solihull)
Butcher, Sir HerbertGurden, HaroldLloyd, Maj. Sir Guy (Renfrew, E.)
Butler, Rt. Hn. R. A.(Saffron Walden)Harris, Frederic (Croydon, N.W.)Lloyd-George, Maj. Rt. Hon. G.
Campbell, Sir DavidHarris, Reader (Heston)Longden, Gilbert
Carr, RobertHarrison, A. B. C. (Maldon)Low, Rt. Hon. A. R. W.
Cary, Sir RobertHarrison, Col. J. H. (Eye)Lucas, Sir Jocelyn (Portsmouth, S.)
Channon, H.Harvey, Air Cdre. A. V. (Macclesfd)Lucas, P. B. (Brentford & Chiswick)
Chichester-Clark, R.Harvey, John (Walthamstow, E.)Lucas-Tooth, Sir Hugh
Clarke, Brig. Terence (Portsmth, W.)Harvie-Watt, Sir GeorgeMcAdden, S. J.
Cole, NormanHay, JohnMackeson, Brig. Sir Harry
Conant, Maj. Sir RogerHead, Rt. Hon. A. H.McKibbin, A. J.
Cooper-Key, E. M.Heald, Rt. Hon. Sir LionelMackie, J. H. (Galloway)
Cordeaux, Lt.-Col. J. K.Heath, EdwardMaclay, Rt. Hon. John
Corfield, Capt. F. V.Henderson, John (Cathcart)McLean, Neil (Inverness)
Craddock, Beresford (Spelthorne)Hicks-Beach, Maj. W. W.Macleod, Rt. Hn. Iain (Enfield, W.)
Crookshank, Capt. Rt. Hn. H. F. C.Hill, Rt. Hon. Charles (Luton)MacLeod, John (Ross & Cromarty)
Crosthwaite-Eyre, Col. O. E.Hill, Mrs. E. (Wythenshawe)Macmillan, Maurice (Halifax)
Crouch, R. F.Hill, John (S. Norfolk)Macpherson, Niall (Dumfries)
Crowder, Sir John (Finchley)Hirst, GeoffreyMaddan, Martin
Crowder, Petre (Ruislip—Northwood)Holland-Martin, C. J.Maitland, Hon. Patrick (Lanark)
Cunningham, KnoxHope, Lord JohnMarkham, Major Sir Frank
Currie, G. B. H.Hopkinson, Rt. Hon. HenryMarlowe, A. A. H.
Dance, J. C. G.Hornsby-Smith, Miss M. P.Marshall, Douglas
Mathew, R.Profumo, J. D.Summers, G. S. (Aylesbury)
Maude, AngusRaikes, Sir VictorSumner, W. D. M. (Orpington)
Maudling, Rt. Hon. R.Ramsden, J. E.Taylor, Sir Charles (Eastbourne)
Mawby, R. L.Rawlinson, P. A. G.Taylor, William (Bradford, N.)
Maydon, Ut.-Comdr. S. L. C.Redmayne, M.Teeling, W.
Medlicott, Sir FrankRees-Davies, W. R.Thomas, Leslie (Canterbury)
Milligan, Rt. Hon. W. R.Remnant, Hon. P.Thomas, P. J. M. (Conway)
Molson, A. H. E.Renton, D. L. M.Thompson, Kenneth (Walton)
Monckton, Rt. Hon. Sir WalterRidsdale, J. E.Thompson, Lt.-Cdr. R. (Croydon, S.)
Morrison, John (Salisbury)Rippon, A. G. F.Thornton-Kemsley, C. N.
Mott-Radclyffe, C. E.Roberts, Peter (Heeley)Tilney, John (Wavertree)
Nabarro, G. D. N.Robertson, Sir DavidTouche, Sir Gordon
Nairn, D. L. S.Rodgers, John (Sevenoaks)Turton, Rt. Hon. R. H.
Neave, AireyRoper, Sir HaroldTweedsmuir, Lady
Nicholls, HarmarRopner, Col. Sir LeonardVaughan-Morgan, J. K.
Nicholson, Godfrey (Farnham)Russell, R. S.Vickers, Miss J. H.
Nicolson, N. (B'n'm'th, E. & Chr'ch)Schofield, Lt.-Col. W.Vosper, D. F.
Nield, Basil (Chester)Scott-Miller, Cmdr. R.Wakefield, Edward (Derbyshire, W.)
Noble, Comdr. A. H. P.Sharpies, Maj. R. C.Walker-Smith, D. C.
Nugent, G. R. H.Shepherd, WilliamWall, Major Patrick
O'Neill, Hn. Phelim (Co. Antrim, N.)Simon, J. E. S. (Middlesbrough, W.)Ward, Dame Irene (Tynemouth)
Orr, Capt. L. P. S.Smithers, Peter (Winchester)Watkinson, H. A.
Orr-Ewing, Charles Ian (Hendon, N.)Smyth, Brig. J. G. (Norwood)Webbe, Sir H.
Orr-Ewing, Sir Ian (Weston-S-Mare)Soames, Capt. C.Whitelaw, W.S.I.(Penrith & Border)
Page, R. G.Spearman, A. C. M.Williams, Gerald (Tonbridge)
Pannell, N. A. (Kirkdale)Speir, R. M.Williams, Paul (Sunderland, S.)
Partridge, E.Spence, H. R. (Aberdeen, W.)Williams, R. Dudley (Exeter)
Peake, Rt. Hon. O.Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)Wills, G. (Bridgwater)
Pitt, Miss E. M.Stevens, GeoffreyWilson, Geoffrey (Truro)
Pott, H. P.Steward, Harold (Stockport, S.)Wood, Hon. R.
Powell, J. EnochStewart, Henderson (Fife, E.)Woollam, John Victor
Price, David (Eastleigh)Stoddart-Scott, Col. M.Yates, William (The Wrekin)
Price, Henry (Lewisham, W.)Storey, S.
Prior-Palmer, Brig. O. L.Studholme, H. G.TELLERS FOR THE AYES:
Mr. Oakshott and Mr. Barber
Ainsley, J. W.Cronin, J. D.Houghton, Douglas
Albu, A. H.Crossman, R. H. S.Howell, Denis (All Saints)
Allaun, F. (Salford, E.)Cullen, Mrs. A.Hoy, J. H.
Allen, Arthur (Bosworth)Daines, P.Hubbard, T. F.
Allen, Scholefield (Crewe)Davies, Ernest (Enfield, E.)Hughes, Emrys (S. Ayrshire)
Anderson, FrankDavies, Harold (Leek)Hughes, Hector (Aberdeen, N.)
Attlee, Rt. Hon. C. R.Davies, Stephen (Merthyr)Hunter, A. E.
Awbery, S. S.Deer, G.Hynd, H. (Accrington)
Bacon, Miss AliceDelargy, H. J.Hynd, J. B. (Attercliffe)
Balfour, A.Dodds, N. N.Irvine, A. J. (Edge Hill)
Bartley, P.Donnelly, D. L.Irving, S. (Dartford)
Bellenger, Rt. Hon. F. J.Dugdale, Rt. Hn. John (W. Brmwch)Isaacs, Rt. Hon. G. A.
Bence, C. R. (Dunbartonshire, E.)Dye, S.Janner, B.
Benn, Hn. Wedgwood (Bristol, S.E.)Edwards, Rt. Hon. Ness (Caerphilly)Jeger, George (Goole)
Benson, G.Edwards, Robert (Bilston)Jeger, Mrs. Lena(Holbn&St.Pncs,S.)
Beswick, F.Edwards, W. J. (Stepney)Jenkins, Roy (Stechford)
Bevan, Rt. Hon. A. (Ebbw Vale)Evans, Albert (Islington, S.W.)Johnson, James (Rugby)
Blackburn, F.Evans, Edward (Lowestoft)Johnston, Douglas (Paisley)
Blenkinsop, A.Evans, Stanley (Wednesbury)Jones, Rt. Hon. A. Creech (Wakefield)
Blyton, W. R.Fernyhough, E.Jones, David (The Hartlepools)
Boardman, H.Fienburgh, W.Jones, Elwyn (W. Ham, S.)
Bottomley, Rt. Hon. A. G.Fletcher, EricJones, Jack (Rotherham)
Bowden, H. W. (Leicester, S.W.)Forman, J, C.Jones, J. Idwal (Wrexham)
Bowles, F. G.Fraser, Thomas (Hamilton)Jones, T. W. (Merioneth)
Boyd, T. C.Freeman, PeterKenyon, C.
Braddock, Mrs. ElizabethGaitskell, Rt. Hon. H. T. N.Key, Rt. Hon. C. W.
Brockway, A. F.Gibson, C. W.King, Dr. H. M.
Broughton, Dr. A. D. D.Gooch, E. G.Lawson, G. M.
Brown, Rt, Hon. George (Belper)Gordon Walker, Rt. Hon. P. C.Ledger, R. J.
Brown, Thomas (Ince)Greenwood, AnthonyLee, Frederick (Newton)
Burke, W. A.Grenfell, Rt. Hon. D. R.Lee, Miss Jennie (Cannock)
Burton, Miss F. E.Grey, C. F.Lever, Harold (Cheetham)
Butler, Herbert (Hackney, C.)Griffiths, David (Rother Valley)Lever, Leslie (Ardwick)
Butler, Mrs. Joyce (Wood Green)Griffiths, Rt. Hon. James (Llanelly)Lewis, Arthur
Callaghan, L. J.Griffiths, William (Exchange)Lindgren, G. S.
Carmichael, J.Hale, LeslieLipton, Lt.-Col. M.
Champion, A. J.Hall. Rt. Hn. Glenvil (Colne Valley)Logan, D. G.
Chapman, W. D.Hannan, W.MacColl, J. E.
Chetwynd, G. R.Harrison, J. (Nottingham, N.)McGhee, H. G.
Clunie, J.Hastings, S.McGovern, J.
Coldrick, W.Hayman, F. H.McInnes, J.
Collick, P. H. (Birkenhead)Healey, DenisMcKay, John (Wallsend)
Collins, V. J. (Shoreditch & Finsbury)Herbison, Miss M.McLeavy, Frank
Corbet, Mrs. FredaHobson, C. R.MacMillan, M. K. (Western Islet)
Cove, W. G.Holman, P.Mahon, S.
Craddock, George (Bradford, S.)Holt, A. F.Mallalieu, E. L. (Brigg)
Mallalieu, J. P. W. (Huddersfd, E.)Probert, A. R.Thomas, George (Cardiff)
Mann, Mrs. JeanProctor, W. T.Thomson, George (Dundee, E.)
Marquand, Rt. Hon. H. A.Pryde, D. J.Thornton, E.
Mason, RoyPursey, Cmdr. H.Timmons, J.
Mellish, R. J.Rankin, JohnTomney, F.
Mikardo, IanReeves, J.Turner-Samuels, M.
Mitchison, G. R.Reid, WilliamViant, S. P.
Monslow, W.Rhodes, H.Wade, D. W.
Moody, A. S.Roberts, Albert (Normanton)Warbey, W. N.
Morrison, Rt.Hn. Herbert(Lewis'm,S.)Robinson, Kenneth (St. Pancras, N.)Watkins, T. E.
Mort, D. L.Rogers, George (Kensington, N.)Weitzman, D.
Moss, R.Ross, WilliamWells, Percy (Faversham)
Moyle, A.Royle, C.West, D. G.
Mulley, F. W.Shinwell, Rt. Hon. E.Wheeldon, W. E.
Noel-Baker, Francis (Swindon)Short, E. W.White, Mrs. Irene (E. Flint)
Oliver, G. H.Silverman, Julius (Aston)White, Henry (Derbyshire, N.E.)
Oram, A. E.Silverman, Sydney (Nelson)Wigg, George
Orbach, M.Simmons, C. J. (Brierley Hill)Wilcock, Group Capt. C. A. B.
Oswald, T.Skeffington, A. M.Wilkins, W. A.
Owen W. J.Slater Mrs. H. (Stoke, N.)Willey, Frederick
Padley, W. E.Slater, J. (Sedgefield)Williams, Ronald (Wigan)
Paget, R. T.Smith, Ellis (Stoke, S.)Williams, Rt. Hon. T. (Don Valley)
Paling, Will T. (Dewsbury)Sorensen, R. W.Williams, W. R. (Openshaw)
Palmer, A. M. F.Sparks, J. A.Williams, W. T. (Barons Court)
Pannell, Charles (Leeds, W.)Steele, T.Willis, E. G. (Edinburgh, E.)
Pargiter, G. A.Stones, W. (Consett)Wilson, Rt. Hon. Harold (Huyton)
Parker, J.Strachey, Rt. Hon. J.Winterbottom, Richard
Parkin, B. T.Strauss,Rt. Hon. George (Vauxhall)Woodburn, Rt. Hon. A.
Paton, J.Stross, Dr.Barnett (Stoke-on-Trent,C.)Yates, V. (Ladywood)
Pearson, A.Summerskill, Rt. Hon. E.Younger, Rt. Hon. K.
Peart, T. F.Swingler, S. T.Zilliacus, K.
Plummer, Sir LeslieSylvester, G. O.
Popplewell, E.Taylor, Bernard (Mansfield)TELLERS FOR THE NOES:
Price, Philips (Gloucestershire, W.)Taylor, John (West Lothian)Mr. J. T. Price and Mr. Holmes.

7.15 p.m.

Photo of Mrs Eirene White Mrs Eirene White , Flintshire East

I beg to move, in page 2, to leave out lines 3 and 4.

This Amendment proposes that those articles at present carrying Purchase Tax at the rate of 75 per cent. should not, as is sought, be charged at a rate of 90 per cent. When one has a group of articles in the very highest range of Purchase Tax—and all hon. Members will agree, I think, that a 90 per cent. tax is a very heavy tax indeed—one would at least have expected that the articles affected would be those of extreme luxury, of vast expense, which would vitally affect our export trade, our balance of payments, the inflationary situation and all the other aspects of our economy.

When I looked at the articles included in the group, I was astonished to find that, far from being articles of major expenditure and great luxury, they are a very small group of curiously-assorted things. I can only conclude that, not content with an attack on the home which he has been conducting with some ferocity in the earlier parts of the Bill, the Chancellor has now turned his attack to beauty. [HON. MEMBERS: "Shame."] Most of the articles with which we are here concerned are aids to beauty, and it seems to me, to say the least, that it is ungallant of the Chancellor to put the highest possible rate of tax on those things which affect the morale of so many of our women and. I hope, add to the pleasure of so many of the men.

Included in this group, which covers hairdressing equipment, various toilet articles and other things, are some very odd items indeed. Further to his attack on aids to beauty, the Chancellor also adds a very high tax on articles required for manicure and chiropody and also, I am happy to say—just to keep the balance even between the sexes—certain articles required for shaving. It would therefore seem that the end-result of "Britain Strong and Free" is a 90 per cent. tax on corn eradicators, shaving bowls and denture boxes. Perhaps we shall be told why it is necessary to put this penal tax on these things.

The Chancellor has told us that he is not particularly concerned about the revenue aspect of Purchase Tax but that his concern is with the great metal-using industries, with our exports, our balance of payments and the inflationary position. That being so, why this attack on "home-perms"? I do not suppose that the right hon. Gentleman—I am sorry that he is not here to tell us—knows which twin had the "Toni." He quite clearly does not care. One may go to the hairdresser and have to pay for the increased rates of tax on the equipment used there, but it so happens that, on the whole, those articles are taxed at a somewhat lower rate, while the working woman using the home permanent waving set has to pay the highest tax of all at 90 per cent. I should be very much interested in an explanation as to just why it is that the woman who tries to economise—as, indeed, she will have to as a result of the other provisions of the Budget—by doing her own permanent waving at home is singled out for this damaging tax.

I cannot really believe that this will affect our balance of payments. It certainly does not affect the metal-using industries because, with home permanent waving, metal equipment is not used. We want to know why, in this particular group, this item is singled out. There are various items, such as curling papers—they are somewhat old-fashioned things—but this most modern method of dealing with the hair is penalised in this fashion. It is a very great pity because, evidently, the Chancellor in considering the matter—and I am sure that he has given the deepest possible attention to it—cannot have had much sympathy with men who, throughout the ages, have referred to a woman's hair as her crowning glory. Even St. Paul, that rather austere man, referred to the glory of a woman's hair, although, as one might have expected from him, he preferred it long.

Why does the Chancellor impose this largest possible increase upon something which is not very important economically? I can hardly believe that it is of major importance to our national economy, but it makes a difference to the happiness and comfort of many women in this country and, I hope, adds some pleasure to life for men.

These hairdressing requisites, which are dealt with in Group 3 in the Schedule of Purchase Tax increases, are only the first of the groups and I will pass to another which is included in the 90 per cent, tax range—various toilet requisites. I am sorry to say that there seems to be a sadistic streak in the Chancellor. Otherwise why should he consider it necessary to impose a 90 per cent, tax upon corn rasps and eradicators and corn knives, other than those with metal handles. If they have metal handles they are taxed at a lower rate, so this can be nothing to do with saving metal. Perhaps we might have an explanation.

It seems to me a very peculiar tax when one has a 90 per cent. tax on articles required for chiropody, which is never a pleasure and not something in which we indulge; to some people, unfortunately, it is a necessity. Anything which even slightly adds to the cost of these painful processes is to be deprecated, and I should be glad to know on what possible principle these articles are included in the group to bear this high rate of tax.

Manicures are not perhaps quite as important to health as chiropody, but they are important for decent and civilised living. For some obscure reason the Chancellor imposes this very heavy tax upon nail clippers if they do not exceed 3½ inches in length. If they are longer than that they carry a lower rate of tax, which is also very peculiar. Even such very ordinary requisites to any civilised person as nail files and emery boards carry this fantastic rate of tax. Surely they have nothing to do with our balance of payments. Surely that argument cannot be used.

Some more elaborate articles are included, for instance chin straps for correcting double chins. On these, too, there is a penal rate of taxation. I greatly admire any of my feminine companions who have sufficient patience to use one of these corrective articles, and if they are prepared to go through what must be a very tedious process I cannot see why they should also have to pay a 90 per cent. tax. Again, I should be glad to know the economic reason which makes it necessary to apply a 90 per cent. rate of tax to these articles.

Speaking of the same group, I have a certain feminine satisfaction when I observe that shaving mugs, strop oils, powders and other shaving requisites are also charged at the same rate, but this is a much shorter list than the very long list which applies to so many of the feminine requisites in this group.

The next group which is charged at this rate comprises various toilet preparations, including lipstick, face powder and rouge. Speaking of chiropody, I said that there might be a sadistic streak in the Chancellor. It seems that there might also be a Puritanical streak; for all I know he may feel that women should be discouraged from trying to improve upon Nature. Whereas few women are born beautiful and need only perhaps to emphasise the features with which they have been endowed, the great majority of us, I am afraid, when we look into our mirrors feel that Nature could have made a very much better job of it and therefore, with more or less skill, we endeavour to make up for Nature's deficiency.

Although this reference to cosmetics may seem a very trivial matter, they are regarded by psychologists as of very great importance—so much so that even the women convicts in Holloway Gaol, as part of their corrective treatment, are now permitted the use of cosmetics. [HON. MEMBERS "Tax-free?"] I do not know. In any case, what I suggest is that these articles are of value and importance to the great majority of the women of this country, and I cannot see why we should have to pay this excessive tax of 90 per cent. upon them. I cannot believe that they make all that much difference to the fundamentals of our economic situation. If they do, I shall be happy to hear the reasons, but I find it very difficult to see why, as they already bear a heavy enough tax of 75 per cent., we should have to pay this rather undignified tax of 90 per cent.

These are the major articles which we are discussing on the Amendment. I have not been obliged to mention any of the group previously discussed—motor cars, television and radio sets and so on; at least there is an arguable case for a tax on those articles, although we do not think the arguments are very strong. Why this other group should have to bear the highest rate of tax, bearing hardly on the women of the country, who are already being penalised in their home lives, I do not know. Now the women are being taxed in their personal lives. The title of "Austerity Chancellor" was carried for many years by my friend the late Sir Stafford Cripps, but I think the present Chancellor deserves it more.

There is one other group of articles which is also to carry this tax of 90 per cent. If any hon. Members have not had sufficient time to study the schedule of Purchase Tax, I am sure they will never guess the other articles which have been selected by the Chancellor and his Department to carry this extremely high rate of tax. I am about to inform those hon. Members who have not been able to inform themselves. I was astonished, first, that the groups which I have already mentioned should be singled out, but my surprise was increased when I found that of all the purchases one can make, the only other articles on which one has to pay this extremely heavy rate of tax—now increased even further—are those included in Group 34, among which are coloured greetings cards.

Photo of Mrs Eirene White Mrs Eirene White , Flintshire East

I was interested to see the explanatory note which follows the lists because there are many articles of stationery which carry a lower rate of tax. The articles which carry the 90 per cent. tax are: … in general, cards, or similar articles which bear words conveying greetings, thanks, sympathy, wishes, congratulations or similar sentiments. They have also to be coloured.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

I wonder whether my hon. Friend's researches have gone so far as to enable her to inform the Committee whether a coloured card containing a housewife's opinion of the Chancellor would come within the Schedule.

7.30 p.m.

Photo of Mrs Eirene White Mrs Eirene White , Flintshire East

I think that it very well might. I am very glad of my hon. Friend's correction, because in reading the list I made one slight error. It was "greetings," "thanks"—that is unlikely in a message to the Chancellor—"sympathy"—and I can hardly think that would be included in a message to the Chancellor, but it might—and "wishes." I think that a message carrying bad wishes to the Chancellor, possibly with a touch of sympathy, if it were coloured, would bear the 90 per cent. rate of tax.

Then there are Christmas cards, birthday cards, anniversary cards, and cards for special occasions or festivals. Valentines are not mentioned, but I am sure that they would be included. There are also Easter and Christmas service cards giving information regarding church services, and also words of greetings, birth announcement cards, wedding invitation cards, memorial cards, motto or text cards and mass cards. All these cards bearing this information have, for some astonishing reason, been singled out by the Treasury for this very high rate of tax. Surely this is a ludicrous situation.

I am not pretending that this is gross hardship upon the nation. After all, one must keep these things in proportion. But surely it is ridiculous. That is really the burden of my argument. It is ridiculous that this group of articles should carry this extraordinarily high rate of tax. At a time when we have this special autumn Budget—

Photo of Mr Thomas Brown Mr Thomas Brown , Ince

Christmas Budget.

Photo of Mrs Eirene White Mrs Eirene White , Flintshire East

Yes, indeed, a Christmas Budget. It is all part of the Christmas spirit. Surely this was an opportunity to deal with something which has perhaps been overlooked on previous occasions. As a gesture, the Chancellor might have come along and said, "As this is Christmas time, I will take the tax off coloured Christmas cards." But so lacking is he in the Christian spirit or good public relations, I am not sure which, that this quite obvious manoeuvre did not even occur to him. So we are left with this ridiculous and foolish situation in which the very highest rate of tax which the public has to pay is on the articles which I have enumerated.

There are various trade hardships concerned with this into which I do not feel competent to enter, but I know that some of my hon. Friends have obtained information, or have connection with the trade, and they will be able to present the various arguments My principal argument is on the stupidity of having the very highest rate of 90 per cent. imposed on these articles. I do not believe it can be defended by any Minister, however able or well-informed, and I hope that the Committee, whatever it may have done when discussing some other articles, will, in considering this group, decide to support our Amendment.

Photo of Viscount  Hinchingbrooke Viscount Hinchingbrooke , South Dorset

This is not a post-prandial debate. It has come on at an early hour, and I wondered why the Labour Party was in such a state of gay abandon. The hon. Lady the Member for Flint, East (Mrs. White) delighted us with a speech which was full of wit and humour, with an interesting association of chiropody and St. Paul's views. She brought in a great many light and gay arguments to amuse us. Her speech was not unlike the speech delivered earlier this afternoon by the hon. Member for Stechford (Mr. Roy Jenkins). He spoke a little about motor cars. There was no real concern or anxiety. It was a light occasion, and he made an able, amusing speech lasting 40 minutes. Yesterday evening, the hon. Member for Rossendale (Mr. Anthony Greenwood) initiated a debate on another of these three Amendments on increases in the Purchase Tax. That also was quite light, gay and amusing, and I wondered what the reasons for it were.

I think that there are perhaps two reasons. The first is that the Labour Party has to discharge its formal duty in opposition. It has to put down a few Amendments to a Finance Bill, or whatever it may be. It is the duty of the Opposition to oppose, and the Labour Party must discharge its duty if it is to go down well with the country and its supporters. This is obviously one of the reasons why we have had this series of trite and comparatively innocuous Amendments so far to the Purchase Tax.

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

Is it in order, Sir Charles, to impute motives?

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

I did not hear any motives being imputed.

Photo of Viscount  Hinchingbrooke Viscount Hinchingbrooke , South Dorset

One of the answers is that the Labour Party likes the Purchase Tax. [HON. MEMBERS: "Rubbish."] It has always liked the Purchase Tax. It has put it up in the past whenever it could. It is part and parcel of its political doctrine. Conference after conference of the Labour Party, for fifty or sixty years back, has passed resolutions in favour of indirect taxation. Hon. Members opposite prefer indirect taxation, selective taxation which impinges on different sections of the community, whenever possible, and they are opposed traditionally and doctrinally to direct taxation.

Therefore, when it comes to a position in which a Conservative Chancellor is increasing the Purchase Tax, it goes against the grain for the Labour Party to produce any Amendments to reduce it. [HON. MEMBERS: "Rubbish."] It is fundamentally against the party's doctrine. That is one of the reasons why we have had speeches of comparative inconsequence, without any sense of urgency, without reflecting the real grief and hardship in the community, put in a light, gay, bantering way before hon. Members opposite depart for the Dining Room.

The second reason why the Labour Party has failed to reflect the anxiety, if there is any anxiety in the country, is because it is convinced, as I am myself convinced, that the increase in the Purchase Tax will have no effect whatever on the people. [HON. MEMBERS: "Rubbish."] They will pay the tax and go on buying the goods. The hon. Lady the Member for Flint, East, speaking about the difficulties of the trade, put them in such a light and inconsequential way as to lead me to suppose that she knew very well, or had information—or had failed to obtain information—from the firms concerned that this really was of no political consequence.

We all know—and this is the main burden of the attack on the Purchase Tax which comes from this side of the Committee as well as the other side—that this is no inflationary weapon at all. After the first initial shock, and laying off buying for a matter of weeks, people will begin to return to the shops and make the purchases which they have always made, because in a community which is based upon democracy and freedom, where no physical controls exist, people will definitely buy the goods which they want to maintain the standard of living they want; and when they have run into financial difficulties, they will go back to their employers, or to their trade unions, and insist upon having given to them the financial resources which will enable them to acquire the standard of living which they want.

Photo of Viscount  Hinchingbrooke Viscount Hinchingbrooke , South Dorset

I have really come to the end.

Photo of Mrs Harriet Slater Mrs Harriet Slater , Stoke-on-Trent North

What does the noble Lord think the landlords intend to do when they ask his own Tory Government to remove rent control and when one considers the contents of the Housing Subsidies Bill which we are to discuss tomorrow? Are these things designed to meet the financial difficulties of the Tories or not?

Photo of Viscount  Hinchingbrooke Viscount Hinchingbrooke , South Dorset

It would not be in order for me to answer the hon. Lady's question now.

This is a pernicious tax which ought never to have been introduced and even now ought to be withdrawn. If I have an opportunity later, when we come to the Question, "That the Clause stand part of the Bill," to develop the full argument against the tax, I hope to do so.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

I was disappointed with the speech of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke). I thought that he was going to make a serious contribution to our deliberations but, instead, he brought all the prejudice of the Tory on questions of this kind. The noble Lord ignored almost all the arguments of my hon. Friend the Member for Flint, East (Mrs. White) in dealing with the items which are being taxed.

I recall Lord Woolton making a speech in which he said he wished that the day would come when a young man could once again take his young lady to the pictures, buy her a box of chocolates and have a happy evening. I give that as an illustration, and only as an illustration, because now we have reached the stage in which apparently a young man's young lady is not to be allowed a "home perm" and the ordinary additions to her beauty without paying excessive taxation. I do not suppose for a moment that there will be a duchess in Britain who will be upset by the tax on "home perms." We realise that the people who will be affected by this increase in tax belong to one section of society—the working class. They are the people who indulge in these cheaper "perms." We are telling those people who have already had their resources strained by other increases due to the Budget—

Photo of Mr George Thomas Mr George Thomas , Cardiff West

I will give way in a moment to the hon. Member who is struggling with himself.

These, as I was saying, are the people against whom a further blow is now being struck.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

It is kind of the hon. Member to give way. I was rising to tell him that a bachelor should not enter into these arguments. "Home perms" are used in many more homes than the hon. Member believes.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

When I look at the hon. Member, I am surprised that he should mention a "perm" at all.

There are other items which enter into the life of our people which mean a great deal to them. There is the posting of a congratulatory card when a baby is born. What does the Chancellor mean by putting an increased tax on such cards to solve his export-import problem?

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

He cannot put the tax on the babies.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

The right hon. Gentleman puts the tax on babies indirectly.

An increased tax is put on Christmas greeting cards. We have a dollar problem, of course, but this is a fantastic thing for the Government to do. The Financial Secretary to the Treasury is not an unreasonable man when he is given the chance. I am afraid that he is not given much opportunity to express that warm human nature which he enjoys, but I hope that tonight he will say that the Government can make a concession in relation to the Amendment. The Government's proposals are indefensible, they are mean, they are spiteful and they are hitting at that section of our community which most needs the protection of the Committee. I ask the Government to think again.

7.45 p.m.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

I did not intend to enter into the debate until the question of "perms" was raised. The hon. Lady the Member for Flint, East (Mrs. White) opened the discussion in a most charming manner. If I may not be misunderstood, I should like to say that obviously she is so far not suffering from the tax because her make-up looks so very nice.

I hope that the Chancellor will give a second thought to the argument which is being put forward on the Amendment. I do not think that attacks on cosmetics will reduce the consumption of cosmetics. While there are men in the world women like to look attractive. Therefore, cosmetics are the last things on which a woman will cut down. A tax on cosmetics means a real hardship to women.

Women are already paying a tax of 75 per cent. and have done so uncomplainingly for several years. I do not think that anyone who looks round the country could suggest that during those years the consumption of cosmetics has gone down. If the Chancellor's policy is to reduce expenditure, it seems to me that in the process he wants us to spend a little extra time at home. Husbands are more likely to sit at home if their wives, sitting on the other side of the fireplace, are attractive than if their wives are a little bedraggled and without makeup on their faces. If one wants to reduce the consumption of luxury goods one is more likely to get people to stop at home if they are happy.

The Chancellor has increased Purchase Tax in order to damp down purchasing power and has thus automatically affected the womenfolk. By increasing the tax on these things which are so dear to a woman's heart and the things that make her more attractive, the Chancellor is losing the good will which many women would bear towards his general proposals if he would only consider them from a human point of view. I hope that my right hon. Friend will give second thoughts to this matter.

Photo of Mr Charles Royle Mr Charles Royle , Salford West

We receive support from all kinds of unexpected quarters. I am sure that my hon. and right hon. Friends are very much obliged to the hon. Member for Ormskirk (Mr. Glover) for his unexpected support. We sincerely hope that when we divide the Committee on the Amendment he and the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) will be with us in the Lobby. We have never had any doubt about the courage of the noble Lord, and we recognise with gratitude his gesture in coming into the Lobby with us on the Budget proposals on this subject. We look forward to his presence in our Lobby tonight on this very important point. I am sure that the hon. Member for Ormskirk will be with him on that occasion.

I bow to the superior knowledge of the hon. Member for Ormskirk and my hon. Friend the Member for Cardiff, West (Mr. G. Thomas) about cosmetics and "home perms," particularly my hon. Friend, for, as one of the bachelors in the House of Commons, he knows much more about these things than a mere married man like myself could possibly know, and he speaks with a great deal of authority. Not knowing a great deal about cosmetics, I want to concentrate upon greetings cards. On Second Reading the Financial Secretary said that the only articles left in this higher range of Purchase Tax were cosmetics and greetings cards. The right hon. Gentleman must have been very narrow in his outlook, because my hon. Friend the Member for Flint, East (Mrs. White) gave a much longer list.

The House is justified in accusing the Chancellor of meanness about greetings cards. Cards printed in up to two colours attract 30 per cent. tax, but if the printing is in more than two colours they have 90 per cent. tax on them. Will the Finance Secretary point out how it is that cards with three-colour printing should attract three times as much as cards printed in two colours? Why cannot all greetings cards at least be put in the lower range of tax? I am told by people in the industry that greetings cards going away from the manufacturer's premises at £5 per gross cost £11 11s. 11d. per gross by the time they reach the public, tax and the retailer's profit being included. That is a ridiculous figure.

The imposition of the higher tax discourages first-class work. An immediate cost is imposed upon the manufacturers. They have already produced and sent out their lists, catalogues and sample books for the 1956 Christmas, and these are having to be withdrawn. The lists, catalogues and sample books will have to be reprinted and sent out again to retailers and wholesalers. I am told authoritatively by the representative of a firm with 800 employees in my part of the country that the cost of revision will amount to at least £1,000, an expenditure with no return at all.

This is a crazy way to go about the policy of checking spending. This is one of the trades which pays an automatic cost-of-living bonus.

Photo of Mr Charles Royle Mr Charles Royle , Salford West

My hon. Friend says that it is ending today, but the Budget proposals came into operation before today. The benefit to such employees represented 1s. for men and 9d. for women for every point rise in the cost of living. Millions of workers in this industry and other industries are affected.

Once more the crazy vicious circle operates. In this industry, as in many other industries, printing prices rise, the cost-of-living index goes up, then wages go up, and as a result of that printing costs rise again, the cost-of-living index goes up, and there are more wage demands. That is what the Chancellor is encouraging at present. Is that the object of the Budget? If so, it is in complete contradiction of all the speeches that we have heard from the Government benches since the Budget was introduced.

There is another instance of the meanness of the Government in respect of greetings cards. The minimum cost of a telegram is now 3s., and telephones are difficult to obtain. The only way hundreds of thousands of our people can send messages to friends in times of joy is by means of a greetings card. Our very pleasant custom of sending greetings to our friends on important occasions in their family life is being taxed by a Tory Chancellor to the extent of 90 per cent.

I am sure the Financial Secretary will "come clean" about this. Whatever else the Government may have resisted during our debates, surely he will say that there are so few articles left in this range of Purchase Tax that it might as well be wiped out and the articles placed in a lower range.

Photo of Mr John Jones Mr John Jones , Rotherham

As one who has nothing to "perm" and to whose skin the finest cosmetics would make no difference, I support the plea which has been made by my hon. Friends. It is right and proper that back benchers representing heavy industries should do so.

I commend the hon. Member for Ormskirk (Mr. Glover) on his contribution to the debate. I was not surprised. He happens to be a manufacturer of beautiful gowns, and he does his best to ensure that the ladies, so far as he is able to supply them, look their very best. It would be ridiculous for him to be producing beautiful gowns and, at the same time, supporting the Chancellor in doing away with lipstick and rouge. I hope to see him with us in the Lobby. We shall see.

A psychological factor is involved in this question. The Chancellor tells us that we must import less steel from America and produce more steel in this country, and that the way to achieve that is to get Bill Bloggs, the steel maker, to go home and tell his wife that she has to pay 6d. more for the bucket which he has helped to make, and then he, with his whiskers unshaved, will see her not looking at her best. The Chancellor says that that is the way to get a happier Britain. He wants to get that idea out of his head.

8.0 p.m.

I happen to be the very proud father of six very fine children. I have two very beautiful daughters and those hon. Members who have seen them will agree with that. I know that nothing gave me greater joy than to go home and see my wife and my two daughters looking their best. It helped my attitude towards my job. It gave me a feeling of having something worth living for and I went back to work happier among people of the same mind, and we were able to increase production a little.

I say that very seriously. If the Chancellor, with all the other evils he has committed, is to de-pretty the womanhood of our nation he ought to be damned well ashamed of himself. [HON. MEMBERS: "Oh."] It is quite Parliamentary. It is in the Bible. The Government are both damned and doomed as far as I am concerned. Where I live there are two very fine works belonging to the C.W.S. They are margarine and soap works and I confess that when I am on my allotment I watch the girls coming away from work. They sometimes call to see whether there are any spare roses. I know that the attitude of those girls is conditioned by how well they look in the eyes of their fellow women and how well they feel they look when they go to work.

Foremen and management like to see people looking at their best. When I was a Member for Bolton I used to look at some of the youngsters in the mills and I saw that the happiest were conditioned by the way they looked. That all helps to bring about what the Chancellor is seeking. I conclude with the very old story of the parson who, at Christmas time, got a bottle of cherry brandy. He said that, like the Christmas cards, it was not so much the price as the spirit in which the cherries were sent that mattered. That spirit is being broken by the difficulty in paying for these cards.

This may appear to be humorous, but it is serious. The aggregate effect of this pinpricking is unnecessary. I cannot understand why the Government are telling women that to go to a dance, to a works canteen, to appear amongst their fellow women, or to go out with their boy friend looking a little less than their best, is the right road to economic recovery. I support my hon. Friend who has my name, the Member for The Hartlepools (Mr. D. Jones), in hoping for a remission of this tax which is so unnecessary and which is doing so much harm.

Photo of Mrs Lena Jeger Mrs Lena Jeger , Holborn and St Pancras South

I rise to support the Amendment. Nothing we have heard from the Government can justify the penal tax of 90 per cent. As long as there is Purchase Tax, none of us on this side would claim special consideration for cosmetics and this class of goods, but we are asking that the tax should stay at 75 per cent. I should have thought that that would have been enough to satisfy the tax collectors. I am very puzzled about the source of the feminine advice on which the Treasury acts in these matters. [An HON. MEMBER: "Lady Docker."] I cannot think to whom they are looking for advice and I should like to give the Financial Secretary a little information.

The life of every normal woman is a constant fight between the Dorcas and Jezebel influences and in this constant fight we are not at all helped by the Treasury Bench. The good housewife wants to go and buy a pot scourer to keep her saucepan cleaner. I should be out of order if I pursued that. However, she is receiving nothing but discouragement in her good housewifely intentions and one might therefore be led to the conclusion that hon. Gentlemen opposite are more interested in women pursuing more light-hearted purchases. But no, the girl who wants to go and buy herself a lipstick or "home perm" meets with the same disapproval from the Treasury Bench, and the women of this country have to ask themselves, "What do right hon. Gentlemen opposite want of us?"

This is not solely a feminine problem. It is not only women who spend money on these articles. The articles within this range form the most acceptable presents. I am referring especially to perfume. For myself, I never use it unless it has been given to me. It is a sad woman who buys her own perfume, and I hope that hon. Gentlemen opposite will pay attention to the impact which they will feel in their personal economies from this increase in tax.

It may be that it is very impudent of working-class girls to want to look nice. I often think that that must be at the back of these arguments, because women who are living on a fair margin of personal expenditure are not very much worried when lipstick goes up by 1s. and face powder by 1s. 9d. But it is important to the young working girl. Any woman worthy of the name has gone without lunch more than once in order to effect these very necessary purchases. Working-class girls with comparatively small incomes will be the worst hit by these increases in price.

I profoundly agree with the hon. Member for Ormskirk (Mr. Glover), who said that the tax would not discourage consumption, because women would go on buying these essential things. Of course they will, but they will be buying them only at the price of keeping down on something else and that will probably be detrimental to health and certainly not to be encouraged. The Customs and Excise definition of the goods in this class runs as follows: 'Toilet preparations' includes articles of a kind used generally for personal hygiene or cleansing. … Why should the Treasury want to discourage what seems to be a very proper pursuit of civilised living? I cannot see what public service is being served by the discouragement of personal hygiene and cleansing.

The case that has not been made out, least of all for the women, who are very logical about these matters, is that there is any connection between this sort of penal taxation and the difficulties in which the country finds itself. How can it be maintained that by making lavender water more expensive at home, automatically the volume of lavender water which we do not buy is exported? In logic, there is no connection between the two things. Our difficulties in the export market with perfume have to do with the much more fundamental problems of the traditional predominant place of France in this great industry, and have very little to do with the amount of money which the average housewife squeezes out for this kind of expenditure.

I do not think that any hon. Gentlemen opposite, when they are thinking of engaging a secretary, would be particularly attracted to a girl who came to them with unkempt hair, unmanicured nails and a neglected skin. When I look at some of their secretaries, I think that their standards are very high. What with the demands of employers with quite natural reasons and the impact of advertising, on which so much money this country has spent, it is ludicrous to suggest that there will be any serious decrease in consumption or expenditure on these goods. We must be told the reason for selecting these articles and putting them into this absurdly high tax group.

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

May I remind my hon. Friend of the Government's argument, which she seems to have overlooked, that if a girl pays more for lavender water she will buy fewer motor cars?

Photo of Mrs Lena Jeger Mrs Lena Jeger , Holborn and St Pancras South

I thank my hon. Friend for his reminder. Another illogicality is that men and women who take care of their hair will have to pay 90 per cent. Purchase Tax on the commodities which they need to help them do this, whereas, even under the new rates of tax, we can buy false beards and moustaches at a Purchase Tax of only 30 per cent. There are certain circumstances in which false beards used for theatrical purposes only can be bought tax-free. There is an unfortunate illogicality there.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

Would the hon. Lady, for the comfort of the hon. Member for Rotherham (Mr. Jack Jones) and myself, tell me whether wigs are included?

Photo of Mrs Lena Jeger Mrs Lena Jeger , Holborn and St Pancras South

Wigs were relieved from tax by my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) when he was Chancellor of the Exchequer.

There is to be this tax of 90 per cent. on implements used for manicure and chiropody. The wording of the Schedule is "knives and instruments." On the other hand, if one examines the other Schedules in the notice issued by the Commissioners of Excise, one finds that most knives are charged at the rate of only 30 per cent. even under the increased charges. Specialised knives such as grapefruit knives, cucumber knives, whatever they are, and oyster knives are to be charged at the rate of only 30 per cent., but chiropody knives are to be charged at the rate of 90 per cent. Where is the logic in that situation? I should like the Financial Secretary to tell us why the oyster knife should carry only 30 per cent. tax and the chiropody knife should be charged at 90 per cent. Oysters might sometimes be in greater need of the knife than the feet of the right hon. Gentleman, but I wish that we could have an explanation.

I refer now to some of the toilet preparations. There is a very narrow line between the cosmetic and the medicinal. I wish the opportunity had been taken to clear up some of the anomalies. The Chancellor intends to charge us 90 per cent. if we get sunburn and want some camomile lotion with which to relieve it, but if we use some other lotion, an un-perfumed preparation, which does not have the smell of camomile, we shall have to pay only 30 per cent. tax.

In fact, the whole Schedule is full of anomalies, contradictions and unfairness. The best thing to do is for the Government Front Bench to accept the Amendment, and then the whole situation will be cleared up.

8.15 p.m.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

I knew that this was a bad Budget and that the Chancellor was treading on extremely dangerous ground, but until my hon. Friend the Member for Holborn and St. Pancras, South (Mrs. L. Jeger) concluded her speech I had not appreciated that he had ventured even further into dangerous pastures and that he has cast himself between the two restlessly warring personalities which, I am reliably assured, exist in every female. I can only hope that this added difficulty will bring to an end the evils which he is inflicting upon the country.

We have had little argument to support the whole idea of Purchase Tax being increased, whether in the range we are now discussing or generally. The Chancellor said yesterday, he admitted it quite freely, that all the economists were in favour of this tax; but there are other grounds for opposing it apart from that. The Chancellor, by that argument, puts me in mind of a famous judge who, towards the end of the last century, was nearly as often wrong in his decisions as the economists have been in their financial and economic judgments. If I may adapt what the Court of Appeal said of him to the economists who have advised this evil tax, I would say that to have the economists of this country on one's side is like setting out to sea on a Friday—not necessarily fatal, but most unfortunate. It is a poor argument for the inflictions of the Chancellor that he has the economists on his side.

The difficulty about economists is that they can never do anything in a simple straightforward manner. They are always indirect, over-subtle and tortuous in their reasoning. This tax is supposed to help the general situation of the country. The argument is as ludicrous as the intervention of my hon. Friend the Member for Stalybridge and Hyde Mr. Blackburn) led us to suppose. When we have too much bridge building under the Tory Government, advised by the economists, we do not stop bridge building. That would be too obvious. Instead, we put a tax on frying pans.

If too much steel is being used in building unnecessary office blocks, then the economist who is advising will tell us that the way to remedy that pressure is to make it rather more expensive to sit one's child upon a chamber pot with floral decorations. If there is excessive demand for machine tools, why, Sir Charles, you must remove your corns only at penal expense to your personal exchequer. It is an odd situation.

Having lost, as I have, the ability to address the Committee while standing on my head, I find some difficulty in arguing with economists on their own ground. Only an economist could urge that the way to reduce the cost of living was to put it up. It is freely agreed that this tax will have that effect. They do say, of course, that it will only put it up in order to bring it down—a sort of fiscal aspirin treatment for the nation. More Purchase Tax, send up the cost of living and hope that somehow, some time, it will come down again.

The Chancellor also said something which I find alarming and very discouraging. He said that the economists had urged him to pick up this weapon—not to impose a tax. Notice that, under the new enlightened economic theory, Chancellors of the Exchequer do not think in terms of duties, imposts and taxes; they think in terms of weapons. This is the final result of that enlightened economic doctrine which has enslaved the nation. Chancellors now think and speak in terms of criminal assault rather than in the language of the tax gatherer. They are always picking up weapons to deal with the unfortunately recalcitrant public who are struggling through a life of taxation and toil to make both ends meet. It is a very odd expression for the Chancellor to use, though it is extraordinarily apt to the particular tax that he has increased.

There is one final matter with which I should like to deal on the Amendment. Here is a chance for ordinary hon. Members on both sides of the Committee—I am sure that I shall command an adequate response from this side, and I am not altogether without hope that we shall have support from hon. Members opposite—who have not been misled by all this over-theoretical, economic poppycock, to assert themselves.

Some of them have. I am glad to note that the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) made a courageous stand against this iniquitous tax. He may well serve as an example to the more timid or more ambitious of his colleagues who are not prepared to give effect to their very deep feelings about this tax in the Division Lobby. That is the only way in which their expressions will take effect upon a Treasury Department as obdurate and insensitive to ordinary human feeling as the Chancellor and his advisers have shown themselves to be.

Hardly a single back-bench Member has supported the Government on any one of these Amendments. Everyone knows that this is a bad tax. All hon. Members who have not studied economic theory and, like myself, may even be in arrears with their reading of the Economic Survey from time to time—all the normal hon. Members, who know that "the king has no trousers on"—have refused to speak in favour of the tax, and those with courage have condemned it vigorously.

How is it that time and again most important Measures are carried through this House of Commons when it is plain that 90 per cent. of the hon. Members regard them as an affront to common sense and a menace to the finances and economic welfare of the nation? Surely there must be some courage shown in this matter; and this is a chance, which may not readily recur, for hon. Members opposite to distinguish themselves and make it thoroughly unpleasant for the Chancellor and his obedient minions to impose this sort of tax.

Here is an occasion for courage, despite any sacrifice they may make of their political ambitions, in connection with this Amendment—and no more than that, because I do not expect too much of them. Here is an occasion when such a sacrifice will be well rewarded, for they will derive solace and encouragement when they return home from the Division Lobbies. Their families, their friends, their wives, all the women in their constituencies, will want to know what they did about this Amendment, for, as has been rightly pointed out, this tax aims a blow at all the things that make life worth living.

It was proper and necessary that the Chancellor should overtax greeting cards—though, having removed all the grounds that are likely to lead to joy or greeting, it was a work of supererogation on his part to increase the tax on the actual greetings cards. I do not wish to say more than that it will be a deep disappointment to me if hon. Gentlemen opposite miss this unique chance to assert themselves on a relatively minor point so far as the Revenue is concerned but a major point so far as our outlook is concerned. They have a great opportunity, by supporting this Amendment, to show to the world, to their friends and to their constituents that they have some principles and that they are prepared to stand up for them, even in the Division Lobby.

Photo of Mr William Wilkins Mr William Wilkins , Bristol South

I think it well that at this point someone should say something on behalf of the printing industry. I think I am the only representative of this industry in the Committee from the point of view of practical knowledge, that is, working knowledge in the industry itself; although I did note that my hon. Friend the Member for Salford, West (Mr. Royle) had a superb knowledge of the printing industry although he is a butcher. I presume that is because his constituency happens to be the home of the largest branch of the printing industry in this country, and I imagine that he has been well primed by some of my friends who live in that area.

I wish to be serious about what is really a serious matter. I wish to try to divert the attention of hon. Members for a moment from thoughts that may be lingering in their minds about the effect of this tax on cosmetics, although we all enjoyed the contributions from the ladies on the subject. The manufacture of those cosmetics would not have met with the success that they have had it not been for the superb ability of the printing industry to sell the commodities for the manufacturers by first-class printing.

This proposal is disastrous for the printing industry. For some years now, particularly for the last two or three years, we have been subjected, as an industry, to the most intense competition in the highest class of printing that we have ever experienced. I would remind hon. Members of the fact that bulbs are sent to this country from Holland and, in order to sell those bulbs, catalogues are produced showing how beautiful the flowers will appear when they are grown. The catalogue is a highly multi-coloured production.

I wish to discuss the effect of this tax on three-coloured printing. We have been unable successfully to compete with this new industry in Holland because, instead of the bulb growers sending their bulbs to this country and having their catalogues printed here, the catalogues have been produced and sent with the bulbs at prices which, I am advised, it is absolutely impossible for our people to compete with.

There are many technical considerations which arise on this proposal. I suggest that I could put the Financial Secretary in very grave difficulty if I asked him to decide on what might be a three-colour printing job which would be subject to this proposed 90 per cent. tax. The Tories should be well aware of this difficulty, because it is the habit of the Conservative Party to print their literature in what appears to be three colours but very often is only two colours. Red, white and blue may easily be produced by the use of only two colours provided that the appropriate kind of type is used which shows the printed article as a white print. How would the right hon. Gentleman give a definition in such a case? I believe that it will be impossible to apply this proposal without a lot of argument between the Master Printers' Federation and the Treasury. I hope that in our discussions we shall hear something from hon. Members opposite about the opinion of the Master Printers' Federation on this subject.

8.30 p.m.

I am pleading for the reconsideration of this proposal, because I believe that it will lead to the debasement of the craft in the printing industry. No one in this Committee would, I think, deny that printing, and particularly the production of printing—I am thinking now of the creative part of the job, the building of the job in the first instance—is a very highly skilled craft. The result of this proposal will be to drive prospective customers into ordering only cheap or even shoddy printing.

The menace is already with us. Printing has already become so expensive that hundreds of business firms are now resorting to the use of duplicating machinery. The printing industry is very gravely concerned about that. It views it with alarm, because it is not always easy, once a machine has been installed, to interest firms in other types of printing. For instance, the huge pools firms have their own duplicating machinery.

Is it not rather strange that the Chancellor should decide to increase the tax from 75 to 90 per cent. on the best class of work produced when, in the same Schedule, he is entirely exempting from tax, pool, lottery and sweepstake tickets unless they are provided with counterfoils for completion in manuscript? What utter nonsense all this is. The Treasury Bench has no understanding at all of the difficulties in which it is placing British industry, and, therefore, I plead with the Chancellor to look again at this proposal.

Who, in the ultimate, is going to pay this increased tax? I will quote to the Committee from a speech made during the debate on the Finance Bill on 20th June, 1950, by a well-known printer who happened to be, and still is, a Member of this House. Indeed, I am very pleased to see the hon. Gentleman on the benches opposite at this moment, and perhaps he will tell me if he still agrees with the opinion which he expressed on that occasion. I am referring to the hon. Member for Bath (Mr. Pitman). His firm bears a very highly respected name in the printing industry. In that debate, the hon. Gentleman said: When the hon. Gentleman mentions stationery, does he not realise that the tax on stationery is passed on to all these articles which he claims are exempt? Business stationery is 95 per cent. of stationery and bears virtually all the Purchase Tax in that field, and that tax is recovered in these Utility blankets, in food, and in all cost of living items of the people. The whole of that big sum of tax on stationery is actually borne by others than the payers, including the working people in their homes. That is the argument which we have been trying to advance throughout this debate on the Government's financial proposals. It is a matter for regret that, so far, we have had no contribution to the debate from the Leader of the House, because that right hon. Gentleman had a very happy time when Purchase Tax was under discussion during the debate on the Finance Bill of 1950. The right hon. Gentleman called in aid—that was the term he used—the observations of the chairman of Woolworths. He suggested that the advice of such an eminent person would be worthy of the consideration of the House. Of Woolworths, the right hon. Gentleman said: Whatever else may be said about that great organisation, it does not really cater in the most luxurious class of goods or for the wealthier section of the community. I presume we are all agreed about that. The chairman said:'I think it appropriate to repeat the contention I uttered last year—the terrific burden the consumer public bears in the matter of Purchase Tax, increasing as it does the cost, not only of essential goods, but also of semi-essential goods'."—[OFFICIAL REPORT, 20th June, 1950; Vol. 476, c. 1230 and 1233.] We say that these increases in Purchase Tax will bear hardly upon the consuming public of this country. They will also do something more. In certain cases, and particularly in the case of the printing industry, the increase in Purchase Tax will be a disastrous thing. I wondered, as I sat here most of the time during the last two days, whether there is any hope at all that the Chancellor will give way on any single one of his proposals. If it is not too late, may I suggest that he might give the most serious reconsideration to this proposal to jump a tax, which is already extremely heavy at 75 per cent., up to 90 per cent., and in so doing tax all the better things which we in the printing industry are able to provide, not least of which are the Christmas cards now on sale in the shops.

I went into a shop in Kingsway only yesterday morning. It was obvious that the proprietors had already stuck another Purchase Tax list over the one already printed in the book, and the new ones were simply appalling. It is only when we see these things in black and white and when we come to purchase the goods that we realise exactly what the Government are doing in this connection.

When I think of all the drivel which we heard from the Front Bench below me, during those years from 1946 to 1950, when the present Government were in Opposition, and when I recall the speech of the present Lord Clitheroe, then Sir Ralph Assheton, ridiculing our proposals for this very thing in the case of Christmas cards—unfortunately, I have been unable to find a copy of HANSARD for that day, but I recall it well—I think that hon. and right hon. Gentlemen opposite have an awful nerve to come here with a proposal like this. How they hope to defend their position in the country on this issue I just do not know.

May I beg the Financial Secretary—[Laughter.]—I know it sounds pretty hopeless, but while there is life there is hope, and we do not despair of making some sort of impression on the Chancellor, although I must admit that it looks as if he is almost beyond hope. Nevertheless, I do appeal to the Financial Secretary to bring to the notice of the Chancellor the serious and very sincere observations which I have tried to make, and to ask him if he cannot do something to try to prevent this industry being severely penalised by his present proposal.

Photo of Mr Henry Brooke Mr Henry Brooke , Hampstead

I purposely waited before rising until the hon. Member for Bristol, South (Mr. Wilkins) had spoken, because I felt convinced that he had a serious and sincere contribution to make to a debate which previously had been of a lighthearted character, although I entirely agree that every hon. Member who took part in it was seriously urging a case.

In reply to the hon. Member for Bristol, South, I feel bound to say—indeed, he almost invited me to do so—that this distinction, which at first sight looks a curious one, between the greeting cards printed in three or more colours, taxed at the highest rate, and other greeting cards of a less elaborate character, taxed at the former 25 per cent. rate, was worked out during the period of the Labour Government and has been in force ever since. I agree at once that to the uninitiated it looks a very strange distinction. I understand, however, that it was the result of long consultations between the Customs and the trade, and that it was decided in the end that this was a reasonable line of demarcation. I would assure the hon. Gentleman that no change whatever in that respect has been made by this Government, and indeed the proposed rate of tax which he is now so sincerely criticising is 10 per cent. lower than the tax imposed in the time of the Government which he supported.

Photo of Mr William Wilkins Mr William Wilkins , Bristol South

Of course, the right hon. Gentleman is talking about five years later, and one would now expect that there would have been some improvement.

Photo of Mr Henry Brooke Mr Henry Brooke , Hampstead

The Amendment was moved in a charming speech by the hon. Lady for Flint, East (Mrs. White), and I should like to congratulate the Opposition on selecting her for this important duty. The hon. Lady alleged that my right hon. Friend was making an attack on beauty. I hope she will accept my assurance that I am seeking to pay her a compliment when I say that she should, perhaps, have declared an interest. We all enjoyed her speech. The Amendment could not have got off to a better start than she gave it.

Photo of Mr David Jones Mr David Jones , Hartlepools, The

Does the right hon. Gentleman agree that the tax upon soft soap is much less than that upon cosmetics?

Photo of Mr Henry Brooke Mr Henry Brooke , Hampstead

I had better keep in order and not go back to previous Amendments.

At this stage I should like to describe the somewhat miscellaneous list of articles that enters into this top Purchase Tax group. It consists of picture postcards; greeting cards in not less than three colours; and pictorial calendars; equipment for dyeing, bleaching or otherwise beautifying the hair; the more specialised and less essential toilet requisites and preparations; equipment for chiropody, and a variety of other such articles. I agree that 90 per cent. is a high and punishing rate of tax, and in our calculations we have allowed for the probability that this increase of 15 per cent. may have a considerably restricting effect upon sales.

At an earlier stage in our debates I was asked what increased revenue was expected from this highest taxed group, and I said that it was expected to be only £2 million. The present revenue from this group is £19 million. It is proposed that the tax should rise by one-fifth, but we do not expect to get anything like a one-fifth increase upon the £19 million.

As the hon. Lady has said, at first sight this list comprises a rather strange and miscellaneous collection of articles. I know that she will grant me that it appears like this because it was left in a form very like this by the Government which she supported. It is quite true that at that time jewellery and furs were also included. Jewellery was taken out of it by common consent about two years ago; furs were taken out of it, also by common consent, one year ago, and yesterday the Opposition moved an Amendment against further increasing the tax upon furs, from which I take it that they are in no way criticising their absence from this list.

The fact is that it has been left with a rather curious scattering of articles, ranging from cosmetics to greeting cards.

Photo of Mrs Eirene White Mrs Eirene White , Flintshire East

Does not the Financial Secretary agree that this is a most admirable opportunity to complete the process? Having removed jewellery and furs, all that remains for him is to remove the very articles that we are now discussing.

Photo of Mr Henry Brooke Mr Henry Brooke , Hampstead

I quite appreciate that the hon. Lady is criticising me for not seizing this opportunity to correct what she is denouncing as a mistake of the Labour Government, but it would be an inopportune moment to reduce the tax upon these articles when it is necessary to increase the tax over the whole of the rest of the range. If we were to omit articles from this category I am quite sure that nobody would be quicker to criticise us than some hon. Members opposite.

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

The Financial Secretary has repeated two or three times the assertion that it was the Labour Government that drew up this list. Is he insisting upon that? Is not he aware that it was not the Labour Government who introduced Purchase Tax?

8.45 p.m.

Photo of Mr Henry Brooke Mr Henry Brooke , Hampstead

The Coalition Government introduced the Purchase Tax during the war. I am speaking of the way in which Purchase Tax was handed over to us when the Labour Government fell and we came into power.

The hon. Member for Cardiff, West (Mr. G. Thomas) sought to win my heart by kindly references, which I greatly appreciated, to my warm human nature. He touched me when he levelled the charge that this particular tax was discriminatory against the working class. I quickly picked up my Purchase Tax Schedules to refresh my memory. The first item that caught my eye was: Packs containing henna or other preparations for tinting the hair. I had never thought that the tinting of the hair was a mark that distinguished the working class from any other class in this country.

Photo of Mrs Eirene White Mrs Eirene White , Flintshire East

Surely the hon. Gentleman knows the difficulty that women over the age of 45 have in obtaining employment and that they need something to conceal their age. One of the aids on which they rely is tinting to conceal greying hair.

Photo of Mr Henry Brooke Mr Henry Brooke , Hampstead

I congratulate the hon. Lady on the originality of her argument. Perhaps for reasons of feminine modesty she excluded face patters from her list of the odder items included in this category. I presume that they are mechanical and not human agents. I would like to assure her that throughout the Schedule that defines this tax there is no distinction between the sexes, and that articles such as hair-waving apparatus are taxable whether they apply to men or to women. She agreed that the shaving requisites of men were included.

We heard earlier in our debates that these increased taxes are specially attacked by the Opposition on the ground that they are forcing up the cost of living. I have been examining the cost-of-living schedules. I found it extremely hard to discover a single item in this highest category which affects the cost of living. [HON. MEMBERS: "Oh."]

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

The cost-of-living index.

Photo of Mr Henry Brooke Mr Henry Brooke , Hampstead

I meant to say "which affects the official cost of living." I want the help of the Committee in understanding why the Opposition are alleging at this moment that these articles are necessities of life while, in virtually the same breath, they assert that the policy of the Labour Government was to place the highest rate of Purchase Tax upon luxuries. It is from that dilemma that I invite hon. Members opposite to escape.

The truth is that this category of goods consists almost entirely of luxury articles. I am sorry that the hon. Member for Holborn and St. Pancras, South (Mrs. L. Jeger) has left the Committee. She threw out a suggestion that we ought to hesitate before taxing Jezebels. She said this group was suffering absurdly high taxation. She did not mention to the Committee that even the tax we are now proposing would be 10 per cent. lower than that which was existent on these very articles when the Labour Government fell.

We have heard it said that the tax will be cruel to the daughters and wives of some hon. Members, and to many other ladies. In fact, a number of these cosmetics that are taxed are of a character that are more highly valued by the purchaser the higher the price that is charged for them. [HON. MEMBERS: "How does the right hon. Gentleman know?"] I am asked how I know—I, too, have lady friends. [HON. MEMBERS: "Oh."] Perhaps if I end by saying "Not too many," it will be considered a fault on the right side.

I must put it quite seriously to the Committee that it would be entirely out of keeping with what we are otherwise doing in this Committee if we exempted this highest group in the Purchase Tax Schedules from the additional tax which my right hon. Friend thinks right to put upon the lower groups. I must say that it surprises me to hear representatives of the Labour Party in the House of Commons attacking the Government on the ground that the Government are causing hardship by putting a higher rate of tax on such articles as perfumed bath salts and eyelash curlers.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

I rise at this stage not with any intention of bringing this debate to a close, but because I want immediately to say how unconvincing we find the answer given by the right hon. Gentleman. I hope that many of my hon. Friends will follow me in replying to the points he made.

This has been a most useful, constructive, and, at times, entertaining debate, but it is a little surprising to find that, in what the Chancellor says is a serious economic situation for the country, one of his contributions to finding a cure for the country's ills is to insist on our debating not only the face patters to which the Financial Secretary referred, but also—according to the document issued by Her Majesty's Commissioners of Customs and Excise—blackhead removers and chinstraps for correcting double chins.

I would remind the Committee that, according to the same list, there will be chargeable at a rate of 90 per cent. … hair curlers … papers put up as 'end papers' or with any other indication of suitability for use in hair waving, curling, etc. … powder puffs, make-up pads … nail files … tooth brush bags, sponge … bags … soap cases … shaving mugs … denture bowls … Does the Financial Secretary really think that a denture bowl is a luxury? Of course it is not. Then there are such items as anti-midge lavender, personal deodorizers—so we can go on. From this heterogeneous collection of goods the Financial Secretary hopes to collect £2 million in taxation at what must be very nearly the same cost to the public Exchequer in paying the large number of officials who will collect it.

I enjoyed, as we always enjoy, the speech of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), but he was, I think, less correct in his facts than is normally the case. He was quite wrong about the traditional attitude of the Labour Party towards indirect taxation. In fact, we have always argued strongly in favour of direct taxation as being more in accordance with the principles of social justice than is indirect taxation. He was equally wrong in referring to the additions to the Schedules which were made in the régime of my right hon. Friend the Member for Leeds, South (Mr. Gaitskell). Although I do not propose to do so at present, I could read out a list of the goods which were removed from the Schedules in 1949 and 1951. It is significant that many of the goods which were freed from tax at that time are within the category of goods which are now being brought once again within the scope of Purchase Tax.

Of course, we continue to believe, as we have always believed, in a tax on luxuries, and undoubtedly many of the goods comprised in this scheme come within those categories, but we say that at regular intervals the Committee should consider the list of goods classified as luxuries for taxation purposes and should make such amendments as seem desirable in the light of the circumstances at any moment. It is surely a little unconvincing for the right hon. Gentleman to argue from a position which existed ten or five years ago. Is the most that he can say, after four years of Conservative Government and ten years from the end of the war, that the economic position of the country is no better than it was eight or nine years ago? We know that that is the case, but it is a little surprising to find the Financial Secretary admitting it from the Government Bench.

We believe that the Government are not being as flexible in this matter as they ought to be and we feel that we are obliged to contrast what some of my hon. Friends called the Scrooge-like attitude of the Treasury with the quite remarkable generosity which it showed in the Budget in April. We have to take the concessions bestowed on that occasion on the Surtax payers and the big corporations and contrast them with the niggardliness, the meanness and the pusillanimity of the tax proposals which the Chancellor has brought before the Committee tonight.

What a bunch of wet blankets the Government are. As a number of my hon. Friends have said, on the eve of Christmas we find them increasing the tax on the highest grade of Christmas card. We have been told earlier how the Government's policy in this difficult economic situation is to put up the price of the house which the young couple have to buy. My right hon. Friend the Member for Huyton (Mr. H. Wilson) told us a couple of hours ago that the Government are also putting up the price of the wedding ring which they need to get married. Now we find that the Chancellor is putting a tax upon the invitation which they send out to the guests they hope will be present at their wedding. When, after due season and in the ordinary course of events, there is an addition to the family, a further tax is levied by the Chancellor upon the announcement which is made by the proud parents. I think it is a mean and paltry attitude to adopt.

I have referred to some of the goods included in this category for Purchase Tax. The hon. Member for Ormskirk (Mr. Glover) showed an interest in the subject. I am sorry that he has left the Committee, because he would have learned something to his advantage. He asked about the provision of wigs and whether they were tax free. I am happy to inform him that not only are wigs tax-free but also eyelashes, eyebrows, curls, ringlets, plaits and switches.

Photo of Mr David Jones Mr David Jones , Hartlepools, The

If my hon. Friend goes a little further he will find that eyewash is taxed at the rate of 25 per cent., which is probably why the Financial Secretary is using it.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

It may also interest hon. Members to know that although denture bowls and shaving mugs are regarded as luxuries, artificial fingernails are apparently regarded as necessities because they come within the category of goods not subject to taxation.

My hon. Friend the Member for Bristol, South (Mr. Wilkins) made a most impressive and constructive speech upon the effect of these proposals on the printing industry. My hon. Friend the Member for Salford, West (Mr. Royle) had previously tried to explain to the Financial Secretary the difficulty in which we find ourselves. In case my hon. Friend did not make himself clear—and we have certainly had no reply from the Financial Secretary—I should like to make the position crystal clear in the pellucid language of Her Majesty's Customs and Excise by reading its views on the subject, because afterwards the position will be perfectly clear to all hon. Members: Greeting cards which, apart from (a) ribbons, cords or tassels tied to the card, (b) black lettering and (c) the basic colour of the paper after its manufacture, display or bear one or two colours are chargeable with tax at 25 per cent. while those displaying or bearing, apart from (a), (b) and (c), three or more colours are liable at 75 per cent. These rates will apply whether the articles are produced in quantity for general sale or not. The paper or paper board on which designs or lettering etc. are printed can be of any colour or colours this is called setting the people free— provided that those colours are not applied by printing or similar process after the manufacture of the paper or paper board itself. The colour or colours of ribbons cords or tassels tied to the card can be ignored for the purpose of deciding whether the cards to which they are tied are within Group 34 (c) or (d). I think the Committee will now appreciate the position much more clearly and much more realistically than it did.

9.0 p.m.

The point put by my hon. Friend the Member for Bristol, South is a most serious and pertinent one, and I do not think that it had the answer which it merited from the Financial Secretary. I have in my constituency a firm engaged in the manufacture of some of the finest multi-coloured printing machines in the country. It is an old-fashioned family firm, still run in the old tradition, where the hundred or so workpeople in the firm all feel that they are members of a team doing a job of craftsmanship and producing something worth while and important in the life of the nation. These are the kind of people whose livelihood will be imperilled by this kind of foolish restriction which the Government are placing upon craftsmanship. I do not think that we can allow the Financial Secretary to get away with it without giving a more satisfactory reply to my hon. Friend.

Over and over again we have had occasion to criticise the timing of the Chancellor's proposals about Purchase Tax. Here, surely, is a classic example of disastrous timing on the part of the Treasury. The two main articles of goods included in the Schedule are two of the things for which the sale is biggest in the weeks approaching Christmas, and one would have thought that even the Treasury would have realised that the peak sale for Christmas cards is in the weeks preceding Christmas.

That is also true of cosmetics. We all know the tendency that our friends and relations have at Christmas time to give us things like bath salts and talcum powder which are no doubt intended to ensure that the spirit of sweetness, if not of light, may pervade the festive season. The firms producing these goods are placed in a most embarrassing position by this sudden impetuous decision on the part of the Treasury. They have their Christmas packaging complete and price lists issued, and now they have to start once again on the procedure of getting out new price lists, cataloguing, and all the rest of it. It is surely unimaginative for the Treasury, for the sake of the paltry return that there will be, to impose such chaos on one of our comparatively smaller industries in this country.

I am not happy about the answer which the Financial Secretary has given. I have listened to the arguments which he has put forward and I have weighed them against the rest of the Budget and against the dereliction of duty of the Chancellor and the Financial Secretary in the Budget of April, and if my hon. Friends, when they have finished this debate and made all the speeches which they feel it desirable to make, feel it necessary to divide the Committee, I for one shall warmly support their decision.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

I do not think that the Committee has had the privilege of listening to a speech from the Treasury Bench similar to the one which we heard a few moments ago from the Financial Secretary to the Treasury since "Hellfire" Dashwood ceased to be Chancellor in 1762. [Laughter.] I do not find that humorous. I was trying to refer to the argument put forward by the Financial Secretary. "Hellfire" Dashwood introduced a 40 per cent. tax on cider, and when asked to explain it he asked the House to "Take it rough as it comes." That was the only argument that he put forward in defence of the tax. He was never able to explain his tax, and he was removed from the Chancellorship and appointed Keeper of the Wardrobe. It may well be that the talents of the Financial Secretary might also find some other employment.

The Financial Secretary was a little ungenerous to me yesterday and for that reason I am most reluctant to intervene at all. He told the Committee that I had spoken for about half an hour, on a subject of importance to my constituents. It was the first time that I had opened my mouth in this Chamber for about five months and I thought that that reticence might have been appreciated.

I spoke, according to the OFFICIAL REPORT, for twelve minutes but I suppose that an extra 150 per cent. is of no great consequence to the Financial Secretary. The right hon. Gentleman's attitude apparently seemed to be that it was a gross intrusion of Oldham and, still worse, of Wigan to enter into discussions which were the concern of the City of London. But if the Financial Secretary had taken time off a fortnight ago to take a tour of the back streets round Threadneedle Street he would have found a lot of stockbrokers' sons wheeling in prams guys which bore a remarkable resemblance to him. The City is not pleased with this Measure, and I do not know who is.

This argument—and I call it an argument as a matter of courtesy—is one which I hope will not be used again. The Financial Secretary said that some of these taxes were imposed by Labour ten years ago. We have had two Elections since, two fought on "Tory Freedom Works," two fought on "Set the People Free," two in support of propaganda that hon. Members opposite, the Lobby fodder who will vote almost to a man, with the exception of the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke)—

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

I hope that the hon. Member will address himself to the Amendment as soon as may be.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

Could I ask for your guidance, Major Anstruther-Gray, in this matter? It is important. If it is in order for the Financial Secretary to say that one of the reasons for these taxes is that the Labour Government imposed them ten years ago and the Labour Government defended them, is it not in order for me to reply?

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

As long as the hon. Member makes clear that he is dealing with the Amendment. Hitherto, there has been no mention of it.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

I am much obliged and I will keep myself strictly to Christmas cards for the moment, or perhaps, if I may change my mind, try to deal with one small technical point on which I should be grateful for the assistance of the Financial Secretary. [HON. MEMBERS: "He has gone."] I hope I may say that I do not regard the exchange as one from which I shall suffer. I welcome the fact that the Economic Secretary is here. I know that he will deal with the matter seriously. It is not a matter for persiflage. It is one which places a new burden upon people. The Chancellor of the Exchequer, in answer to the question, "What did you do in the great economic crisis, daddy? "replies," I slapped 15 per cent. on Christmas cards."

I have in my hand a letter from my constituents, manufacturers of a wide range of brushes and constituents of very great reputability. It seems to me clear that the majority of these items will fall to be discussed on an Amendment to leave out paragraph (j) of a section of the Schedule but this firm says most sincerely that it is in the greatest possible difficulty in knowing what brushes are taxed and how and when and, of course, why. Naturally, we cannot hope to have an explanation of that last matter.

The letter states: The Customs and Excise have informed the British Brush Manufacturers Association that the brushware becoming chargeable for the first time is 'of a kind used for domestic purposes.' Purchase Tax Notice No. 78 states 'the question whether an article falls within a tax group is determined by reference to the character of the article itself, and not by reference to the particular purpose for which it is bought'. As I understand—I have tried to follow this through—we now have three or four, or possibly five, main categories of brushes. We have brushes used for toilet purposes, which are dealt with in Groups 30 and 31, some of which come within the Clause and some do not. We have brushes used for household purposes, which I understand will fall within the new paragraph (j) which is being amended by the Bill. Some people think the tax will be 5 per cent. and some think it will be 30 per cent. Then we have industrial brushes.

The difficulty of the definition arises in this way. In the first instance—I hope the Economic Secretary is trying to follow me, because I should like to have my mind clear on this before we move on—I understand that a toilet brush is a brush which is normally used on a human being—roughly speaking. [Laughter.] I wish my hon. Friends would not regard my most serious observations as matters for laughter. I am trying to deal with a matter of complexity. I do not know how manufacturers will deal with it.

Photo of Sir Eric Fletcher Sir Eric Fletcher , Islington East

I hope my hon. Friend is not overlooking the special rate for animal toilet brushes.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

I was coming to that. There is a difference between animals domestic and ferae naturae. I understand that the definition of animals ferae naturae includes some domestic animals. For this purpose a horse has an industrial brush, a dog has a household brush and a man has a toilet brush. That is as I understand it. If the brush has some processed metal on the back, it comes under the goldsmiths and silversmiths or some other section and attracts some higher rate of duty. [HON. MEMBERS: "A lower rate."] I believe it is a higher rate. The fact that I and my hon. Friends differ about this is an indication of the difficulties which manufacturers will have. Perhaps some of my hon. Friends have in mind the human toilet, the dog toilet or the horse toilet.

Brooms come in a different class from brushes. As I understand, the household brush would normally, in ordinary comprehension, include a broom, but "broom" has a separate definition. A whole variety of brushes is shown in the Schedules as separate articles. On the other hand, if the brush is packed in an ordinary toilet case, it goes to a higher rate still.

There is very genuine difficulty for anyone who reads paragraph (a) of Group 30, because it refers to Articles designed for use in one or more of the following processes, that is to say waving, curling, setting, dyeing, tinting, bleaching, or in any way dressing or treating the hair. … One would have thought that that included brushes, but one would have been wrong. This is followed by a note referring one to Group 31, and there one comes to brushes and combs and finds that they are dealt with separately. I am trying to make this clear as I understand it, and I am sure that the Economic Secretary will try to help.

Group 30 (b) refers to: Assemblies of two or more such articles as are comprised in the foregoing paragraph, or of one or more such articles together with any other article not so comprised. Therefore, if one sells two things together, such as a brush and a pair of scissors, they come under paragraph (a). The brush and comb come within Group 31 because combs are included with brushes as human toilet apparatus. If, on the other hand, one sells not merely the apparatus of dyeing but a brush to tint it up, this being sold in a little collection, it comes under the 75 per cent. tax in Group 30.

9.15 p.m.

It may be that I am wrong. I am prone to err and I should be grateful to the Economic Secretary for such enlightenment as he can give me on this problem, which is very serious. The gravity of the matter may perhaps come more for discussion when we debate paragraph (j) and the question of when a broom ceases to be a broom and when a house broom becomes an industrial broom and how far into the backyard one must go before it becomes industrial. It is clear that if it gets to the stable and stays there, it is industrial and if it stays in the house, it is domestic. I am not sure where the line of demarcation in the backyard is.

Photo of Mr Victor Collins Mr Victor Collins , Shoreditch and Finsbury

It has been decided that if it is a stiff broom and is 12 inches wide or more, it is industrial and if it is less than 12 inches, it is domestic, unless it has a hump, when it can be smaller than 12 inches, and still be industrial. My hon. Friend may like to have that clarification of the position.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

I am grateful to my hon. Friend for that addition to my stock of information, but whether it was a clarification is open to some dubiety.

A broom seems to be hermaphrodite, partly domestic and partly industrial and, presumably, one will have to go to the Customs and Excise and submit samples and a list of one's customers who usually buy it, and if the majority buy it for domestic purposes then it will be a domestic brush.

Photo of Mr David Renton Mr David Renton , Huntingdonshire

Hermaphrodite is not partly one and partly the other. It is wholly both.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

That is a somewhat new definition. As I understood, it was a combination of Hermes and Aphrodite in one being and it is, of course, extremely difficult for one being to be wholly Hermes and wholly Aphrodite.

Photo of Sir Barnett Stross Sir Barnett Stross , Stoke-on-Trent Central

I ask my hon. Friend the Member for Oldham, West (Mr. Hale) to remember in this definition of hermaphrodite the old Saxon term "Will-Jill," meaning that it is neither one nor the other.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

I will not attempt to deal with that point, because I may be getting to the bounds of order. I remember an authority in Punch who once advocated an amalgamation of Her Majesty's Forces as a sort of giddy hermaphrodite, soldier and sailor, too. Every time I make a humble submission without authority, the high scientific authority of the Committee is always ready to say that I am right. This gives me a confidence which I would otherwise lack.

May I just have one word about Christmas cards? I do not want to detain the Committee. The argument which the Financial Secretary put forward was perhaps the most astonishing of all the suggestions which he has made. He said that people value things by their price and that if we put 100 per cent. tax on things, they will cost more and that people will think more of them. He thinks that greetings going from one member of a family to another to call attention to the greatest of our religious festivals will be appreciated more because the Chancellor is taking a higher rake-off.

There has been a very notable and important change in the use of Christmas cards in the last few years. Organisations which have the great respect of everyone in the Committee, organisations like the United Nations International Children's Emergency Fund; organisations like the Movement for Colonial Freedom, in which I have some interest to declare—[HON. MEMBERS: "Spastics."] Yes, and, I believe, the Cancer Research Association, and so on, have used this admirable method of saying, "Here is a way by which we can convey at this time of the year, when people might well feel charitable and remember human kindliness, a reference to those activities which we are carrying out on behalf of humanity. By spending your money with us, you can substantially contribute to the work which we are doing."

That is an admirable thing. I do not know what the rate of Purchase Tax is, but I understand that they have to use a limited number of colours and a small design in order to try to escape the maximum tax. I believe that if they reproduce a picture more than a hundred years old as well, that reduces the tax. Whether a picture over a hundred years old would be appropriate to the United Nations Children's Emergency Fund is a matter of some technical consideration.

What does the Financial Secretary say in reply to all this? What he says is, in fact, what Scrooge said, "Out upon you and your merry Christmas. Christmas is all humbug. Ten years ago my partner Jacob Marley died, leaving me his sole and residuary legatee, sole heir and sole mourner." That is the answer that we get.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

Not as attractively expressed.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

The argument was put differently yesterday. Then the argument was that if we put up the price of Christmas cards people will pause before they buy them; they will consider the economic implications of the tax but if they do decide to buy they will gradually get used to the higher price. Presumably, by next Christmas they will think that it is the normal rate for Christmas cards, unless another Budget has put up the price again.

That was the argument yesterday, but it is not the argument today. Today, it is that people actually benefit by paying more; they get a higher value. The way in which they get the higher value is that instead of buying a 6d. card and sending it to their brother, they buy a 3d. card with 3d. tax and send it and they get the same sense of value, because it costs as much. That is the argument put forward today in defence of this increase as an economic proposition. It is really astonishing in view of what we are told is a major crisis.

My hon. Friend the Member for Cheetham (Mr. H. Lever) quoted the story of Mr. Justice Kekewich. There is the famous story of the man who had fifteen defences, including two alibis.

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

Order. I hope that the hon. Member will not proceed to relate that story unless it is definitely connected with the Amendment.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

It is a short point. It is exactly what the Financial Secretary said, "I have two or three explanations; they all conflict; they cannot all be true because they are completely conflicting." Today's explanation is now reinforced by the suggestion, "Anyhow, people pay the tax and they are reasonable, so I should not worry." The point I was making on the story is that of the counsel who said to the jury, "You can take any explanation you like. I do not mind which it is as long as you believe one of them." He was putting a point which, on the whole, it is not proper for counsel to put; and when the Financial Secretary to the Treasury put the point that it is no responsibility of his because somebody did it before he came into office—"It is no interest of mine because it happened years ago; I am not responsible for Christmas cards; that is contained in the Budget of 1946, 1947 or 1948"—he is putting an argument which no responsible Minister ever ought to advance.

We are really getting a little tired of it. The other argument is that it has been said, "Everybody knew that there were economic difficulties even if we lied about it in April. We lied about it in April for the best of reasons, because we wanted to win the Election." My Conservative opponent did not know that there was an economic crisis, because he was promising great expansion, new schools, and so on. When I read his Election address I felt my own modest contribution of suggested reforms, weakened, perhaps, by my personal predilection for never being quite sure that any party I do not lead myself will implement my suggestions paled into insignificance.

Now, having dealt with the two minor points, I come to what is the major point. The articles which mainly fall within the scope of the present Amendment are the articles classed as toilet requisites and cosmetics. Here I wish to say seriously that it is easy to be facetious about cosmetics. It may be that they are not in great use in the House of Commons. But the toilet compact today is as much the equipment of the average factory girl as her dress, or her brush and comb, or anything else. It is part of the ordinary amenities of her life. It has come and it has come to stay.

When the Russians had to face this problem in 1918 they had to put a ban on cosmetics altogether, because they wished to concentrate on other forms of production, and they used that mechanics to try to divert production to another source. No one is suggesting that today. Today, the little toilet compact that a girl carries about with her, and which attracts 75 per cent. tax, is just as much a part of her equipment as is the razor to the average man. It is just as necessary to her and she would be lost without it. Therefore, this is quite an unnecessarily vicious tax which benefits no one. And here again the Financial Secretary has shown an economic ambivalence, on the one hand estimating what we shall get from this tax and, on the other, how it will reduce the purchases of these things.

Who will benefit by that? Will labour be driven from the cosmetic factories into the production of motor cars—or armaments? No, of course not. It will merely cause pockets of unemployment and difficulty and I imagine that people will go on buying cosmetics in spite of the 50 per cent. tax and economise on something else—probably food. But I have little doubt that they will go on buying them.

Group 32 is even more difficult because under the heading of "cosmetics" the thing has been set out by the Commissioners of Customs and Excise for the guidance of the trade including cosmetics and preparations of a comparable character. Really, these are genuine trade difficulties. What is a "cosmetic" and what is not. What is a "preparation of comparable character"? What is a disinfectant and when does it not disinfect, and so on? It includes: Face cream, cleansing creams, massage creams, including slimming or flesh forming creams, and all other toilet pastes and creams. The unfortunate thing is that we are inclined to laugh about these things, but some of them are medicinal preparations used in industry. What about the man with dermatitis? What about the man in the cotton spinning industry who wishes to avoid spinners' cancer? These things are used and they are costly. It goes on: Astringent lotions; 'after shaving' lotions, blocks (excluding blocks made substantially of alum … dusting powders, tinted or perfumed, except as specified under paragraph 2 above; face powder in all circumstances; talcum powder, except when it is of an alleviating character and untinted and unperfumed. e.g., foot powder (chargeable under Group 32 (b) (ii))); all dusting etc. powders (other than untinted and unperfumed alleviants chargeable under Group 32 (b) (ii) … Baby talcum powder, as I understand it—

Photo of Mr Fred Blackburn Mr Fred Blackburn , Stalybridge and Hyde

Would my hon. Friend explain what "alleviating talcum powder" is?

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

No, I am blowed if I will.

I noticed that an exception is baby talcum powder. I think I am right, but perhaps the experts in this matter will tell me: All dusting etc. powders … whether or not tinted or perfumed, including French chalk, fullers earth, rice starch, talc, papier poudre, kaolin and powdered soapstone, which are specially prepared for toilet use or are put up for sale with any implication by label, literature or otherwise that they are intended for toilet purposes. 9.30 p.m.

If I remember rightly, kaolin is used as a plaster. If I poultice a boil with kaolin, is that regarded as a toilet preparation, or is it not? Does anybody know? Do the manufacturers know? How is anybody to say whether it is a toilet preparation, a thing of comparable character or a thing of incomparable character. Then we come to: Lipstick, lip salve, rouge, grease-paint … Every amateur operatic and dramatic society in Oldham and elsewhere has been taxed by this proposal. It goes on: Eye lotion masks; mud packs and other toilet 'packs'; and the like; preparations made op for sale primarily as nicotine stain removers. One would have thought that the removal of such stains was not a criminal process which should be regarded as a subject for punitive taxation. It continues: … nail polishes enamels, pencils, etc., Cuticle removers, and other preparations for use in manicure or chiropody (but see Notice No. 78B as to corn cures, salves and paints). If there is one service which ought to be extended in this country, and which is wholly inadequate at the present time, it is the chiropody service. One of my hon. Friends has been talking today about old-age pensioners. Here is a service which they specially need, a service which we talked of introducing under the National Health Service. Indeed, it is a service which we have ostensibly introduced, but which is not being implemented at the moment on anything like the scale that it should. Many aged people find difficulty in walking, and a simple operation would help them a great deal. But the necessities to this end are taxed at 90 per cent.

I have no doubt that the Economic Secretary, for whom I have a great admiration, will say that if it is a corn cure, it comes out. [HON. MEMBERS: "What the corn?"] I do not know. I must again rely on my medical friend to find out what exactly is a corn. As I understand it, the sort of thing one gets on the foot is very rarely a corn. I do not know whether chilblains, growths—

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

Well, there we are.

Three hundred years ago, Oliver Cromwell might have had his disfiguring warts removed, but it would have been at a heavy cost to the National Health Service. That Service would still have had to pay 90 per cent. tax on the implement for removing the warts. Then we come to: Perfumes (including solidified perfumes); anti-midge lavender; pomades and scents of all kinds; scented sachets; perfumed smelling salts; perfumed spraying fluids (except approved disinfectants—in respect of which no toilet claims of any kind are made This is really nonsense. I do not believe that there is an hon. Member on either side of the Committee who thinks that anyone in the Treasury has gone through this list carefully and tried to find out what these things mean. In some working conditions, disinfectant is an absolute necessity in order to make it possible for the workers to work. It is fantastic to visualise slaughterhouses without disinfectant.

This is the interesting thing. Under this Schedule, if a manufacturer is honest enough to say that this disinfectant serves no useful purpose, it attracts the lower tax. If he puts on the bottle a label with a statutory declaration to say that the preparation disinfects but does nothing else, he would still be absolved from this increase, but if he says, "This is good disinfectant; it does you good," then, as I understand, it attracts 90 per cent. tax, because it then becomes something that has made a claim other than a claim for disinfectant.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

My hon. Friend asks what is a toilet claim; I really do not know, and I would hate to hazard a guess. It is absolutely confusing. There can be claims for toilets which have nothing to do with the toilets we are discussing. And then we come to this: floral absolutes, floral concretes and concentrated perfumery essences, either simple or mixed (whether supplied as such or as collections of ingredients in related quantities). Floral absolutes I take to be the direct extract from the flower, but if it is digitalis, then it is poison and probably comes under another section. It goes on: —and concentrated perfumery essences, either simple or mixed (whether supplied as such or as collections of ingredients in related quantities). What that means I do not know. Does it mean that if they are in a collection of other things that portion bears the tax or that the whole collection bears the tax? If not, what does it mean? To quote again: —when put up for toilet use or when supplied in conjunction with a vehicle or diluent suitable for the production of finished perfumes. (These absolutes, concretes and essences, if free from vehicle or diluent such as ethyl alcohol and when not put up for toilet use, are not chargeable. Food flavourings also are not chargeable under this Group.) The next paragraph talks about Perfumed bath salts, cubes, essences and the like (whether medicated or not), … coloured or containing pine oil, pine compounds, etc., whether or not sold as bath salts; toilet oat-meals, depilatories, perfumed deodorants and personal deodorisers. This is the final observation which I should like to make.

Photo of Mrs Harriet Slater Mrs Harriet Slater , Stoke-on-Trent North

Before my hon. Friend sits down, would he say where the poor consumer comes into this? Would he explain how the consumer is to know what the price of the article is, and why the matter is left so wide that the consumer will have even more burdens added because of complications being added to complications?

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

Of course, let us be fair to the trader about this. If the trader does not know, he would be wise to add the tax on the price of the article. If he is wrong, he can claim a refund, and if he is right he will not have lost anything. People are saying that they do not know, and the trade papers are publishing long articles in which they say they do not know.

The last paragraph really was the most frightening of all, because, when the Financial Secretary returns like a giant refreshed with new arguments, he will say that this is being done in the interests of a Spartan country. He will say that we are going to aid the health of the people by discouraging the use of these things. He will say, "You will take your deodorants and disinfectants in an unpleasant form. It will certainly form your character on the stern lines of your Victorian forebears. The Chancellor had in mind, in imposing this tax on perfumes, a new and more Spartan race arising as a result of this Budget capable of bearing burdens of the magnitude of those imposed upon it by a Tory Government."

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

As my hon. Friend the Member for Oldham, West (Mr. Hale) said in the course of his very interesting and amusing speech, this is a subject which lends itself to a little frivolity. Since we are faced with a rather long sitting, perhaps it is just as well that we should be able to deal with it in a lighthearted way, but I hope that the Committee will not assume from the lighthearted arguments which have been adduced by my hon. Friends that there is not a serious effort behind them to make the tax more just than is now proposed.

I want to complain about the inadequate reply we have had from the Financial Secretary. My hon. Friend the Member for Bristol, South (Mr. Wilkins), who is an expert in the point of view he was putting to the Committee, gave us some very serious reasons why the printing trade should not be faced with this extra imposition, but his arguments were completely ignored by the Financial Secretary. We should have a certain amount of sympathy with the right hon. Gentleman, however. He is not the Chancellor and is obviously here tonight under strict instructions. He is limited in what he can say, and in the concessions that he is allowed to make. Nevertheless, the arguments put forward by my hon. Friend deserved some reply from him, and, if he was not armed with an adequate reply, he had ample opportunity to get a brief from the Treasury representatives for that purpose.

We also sympathise, to some extent, with the Economic Secretary, who is to reply upon this occasion, because of the very difficult task he has in harmonising conflicting arguments. We have heard hon. Members opposite saying that the result of this tax will be a reduction in our financial difficulties, and we have heard the hon. Member for Dorset, South (Viscount Hinchingbrooke) say this afternoon that the tax is not inflationary. I understood from the speech he made during the Second Reading debate that he thought it was inflationary, and that that was why he voted against the Government. Apparently, he has changed his opinion in the meantime. When hon. Members opposite try to tell us at one and the same time that Purchase Tax is not inflationary and also that it is inflationary, I can understand the dilemma in which the Minister finds himself.

There was also a very inadequate reply from the Financial Secretary in the case of toilet articles. He confined himself to stating repeatedly that it was the Labour Government which were responsible for those articles being included in the Schedule. The Labour Government did not introduce Purchase Tax and did not draw up these Schedules. They made certain alterations in those groups, and if the argument from the Treasury Bench is to be that it is impossible to alter the list of articles in the various groups, it is contradicting itself, because it has already made an alteration in the groups by bringing household articles within the tax range. That is a definite alteration in the list of articles, and if that alteration can be made I suggest that it would be equally easy to remove from this highest group some of the articles about which my hon. Friends have been complaining.

It is rather strange that no voice has been raised from the benches opposite in defence of the proposal we are attacking, except the official voice of the Front Bench. I should like to hear some hon. Members opposite explain why they are supporting the Chancellor in the action which he is taking. When my hon. Friend the Member for Rossendale (Mr. Anthony Greenwood) said that the Financial Secretary's reply was unconvincing, he was guilty of a gross understatement.

9.45 p.m.

The Amendment is part of our attack on the Budget, which we believe will put up the cost of living in flat contradiction to the speeches that were made by Government supporters at the General Election. They said that above everything else they stood for a reduction in the cost of living. They would bring down prices—

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

Yes. My hon. Friend reminds me that Government supporters said the same thing in 1951. They said that they would reduce taxation. They are doing the very opposite. We complain about that, and we intend to insist, as far as we possibly can by our votes, upon this small adjustment being made.

Photo of Mr Percy Holman Mr Percy Holman , Bethnal Green

I am sorry that I was not present during the whole speech of the Financial Secretary to hear what he said about greeting cards, showcards and calendars. I heard him say that the tax had been carefully worked out with the trade, but that was many years ago. As one who is closely associated with the Joint Committee of the Stationery and Allied Trades, I can tell him that for years the trade has been getting more and more dissatisfied with the present arrangements.

The Budget is presumed to be part of a policy to damp down consumer demand, yet we can have tax-free as much beautiful printing as we like for advertising and to help to sell goods, while there is a 90 per cent. duty on beautiful printing, which means multiple-colour work, for human, decent reasons and not for profit making or selfish purposes, such as for Christmas, birthday greeting cards and things for the more humanitarian side of life.

On this side of the Committee we realise that beautiful printing ranks very close to any other art. Many countries are surpassing us in this respect. The export trade for greeting cards is limited, unfortunately, by quotas in the case of Australia, and it may be adversely affected financially for other parts, but the trade can extend within the English-speaking world. The cost of production for the home market regulates to a large extent the volume of the export trade in multi-coloured work of this character. It is work of the best quality, which it is not likely to be economical to produce for smallish communities where there is only a limited demand for it. That is where our opportunity lies for developing further the export trade in multi-coloured printing.

I appeal to the Treasury Bench to reduce the tax, if not now, then next April, on an essentially artistic side of printing. I remind them that they are going back on every promise they made, including promises to the trade. I am sorry that the Minister of Pensions and National Insurance is not here. [HON. MEMBERS: "Where is he?"] When the Tories were in Opposition in 1951, he said: The Opposition have gone further than that"— He referred to the statement from the then Government benches that we believed in the steady, gradual reduction of Purchase Taxand have said that had we been in office during the last six years Purchase Tax would long ago have disappeared."—[OFFICIAL REPORT, 19th June, 1951; Vol. 489, c. 362.] We have had five years of Tory Government. They now tell us that the financial position is at least nine-tenths as bad as it was in 1951.

Photo of Mr George Brown Mr George Brown , Belper

Nine-tenths worse.

Photo of Mr Percy Holman Mr Percy Holman , Bethnal Green

The tax is to be 90 per cent. now, as against 100 per cent. then. The Government are now legislating for the largest income from Purchase Tax in our history—£400 million. They are going back to the penal levels of taxation which, in the case of Rolls Royce motor cars and furs, for different reasons, we were compelled to reduce from 100 per cent. to 50 per cent. because the lack of the home market—in the case of the cars—was killing the export trade.

In normal conditions, we cannot continue indefinitely to tax commodities at the rate of 90 per cent. To me, that is a sign that the crisis is far worse than the Government are willing to admit. They say that they do not need the revenue. In that same speech in 1951 we were told by the right hon. Gentleman that it looked as though the tax was becoming permanent and that once it was looked at in that light people paid the extra price as the normal thing. The tax is inflationary; the income derived from it is small. I say to the Government, "Bring down Purchase Tax in the next Budget, because otherwise you are damaging the best part of the highest craftsmanship of British work today. You are increasing the tendency to produce inferior goods, and not helping the more artistic side of the trade. You are making the trade produce fairly shoddy goods instead of the best." I plead with the Chancellor to take all printed matter, as such, out of the highest range of tax and to bring it down to the lowest.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

I should like to appeal to the Committee to come to a decision on this Amendment because there are others to be dealt with before we come even to Clause stand part. Hon. Members agreed that on Clause stand part there are general considerations to raise; and if anyone should be disappointed because he cannot express views on Purchase Tax there is the whole of the First Schedule, in which there is almost indefinite opportunity for the human mind and imagination to exercise its skill and for hon. Members who feel conscientiously to express views on behalf of constituents. In the interests of our sitting, therefore, I would ask hon. Members to come to a decision on this Amendment, which relates only to the highest part of the tax.

I have paid due attention to the points raised with great sincerity by the hon. Member for Bethnal Green (Mr. Holman). I cannot give any promise, but I do understand some of his anxieties. With this assurance, I hope that we may come to a decision on the Amendment and then proceed to the latter part of the Bill in which there is endless opportunity for further debate.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

The difficulty is that the Financial Secretary rose at the Box and virtually demanded the right to speak when at least six of my hon. Friends, who had genuine constituency points to raise, had not been called. We rose afterwards and put those points. No answer has been given. I raised a point about brushes, for I am concerned, as I know are some of my hon. Friends, about the fact that these provisions will affect a very substantial industry. I know that the Chancellor is having discussions with the brush industry.

I have no desire to be obstructive, but we put a whole series of questions, and now the Chancellor rises to say, "We have had enough. We will not answer the questions. Let us finish the debate and get on with something else." Surely an answer to the main points would be eminently proper at this stage. I asked for some information. If it is promised at a later stage I shall be grateful. There is a genuine dilemma about the effect of these provisions on brushes. No one knows where the line of demarcation is.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

It so happened that I was absent from the Committee during the speech of the hon. Member for Oldham, West (Mr. Hale), although I have not been absent very much during the last two days. The point about brushes was brought to my attention, just as was the point about slippers, about which I should like to say something later tonight. All these points are genuine, but anything like the point about slippers, which is an anomaly which can be dealt with, will be looked at.

I have already been told, outside the Chamber and by my hon. Friends inside the Chamber, about the hon. Member's speech. All I can do is undertake that I will look into this curious position, which is one of the many curious positions in which any Chancellor of the Exchequer is landed in trying to defend Purchase Tax in its present form. I can assure the hon. Member that that is a very difficult task. If he will accept that, I will undertake to look into the point which he raised.

Photo of Mr Benjamin Parkin Mr Benjamin Parkin , Paddington North

I should gladly have done nothing to obstruct the conclusion of this part of the debate if the Chancellor had done what for a moment I hoped he was about to do—repair the very serious damage done by the weak speech of the Financial Secretary. Because of the attitude of the Government Front Bench it has been necessary for hon. Members to make again the points which were obviously wasted on the Financial Secretary. The way in which the serious and considered speeches of my hon. Friends, especially that of my hon. Friend the Member for Bristol, South (Mr. Wilkins), were virtually ignored by the Financial Secretary amounted to an insult. Hon. Members have the right to a serious reply.

I have been here throughout the whole of these debates and, like my hon. Friends, have noticed a very interesting pattern of opinion building up on the other side of the Committee. The Chancellor himself just used a very interesting phrase, in which he said he found it very difficult to defend the present structure of Purchase Tax. Again and again criticisms from this side of the Committee of anomalies are greeted with flippancy or ribaldry and receive no answer at all, but the right hon. Gentleman and his colleagues—all three of them—have been at the Treasury for a considerable time and they ought to have been able to find out the significance of these differences in Purchase Tax at the time they were introduced.

They still seem quite unable to realise that Purchase Tax, if it is to be used intelligently, must be flexible and adaptable to the needs of the moment. It is one thing to say, at the end of a war, that we must impose some restrictions on certain industries in order that others may recover, and quite another thing to continue for ten years those restrictions to such an extent that the training and re-equipment needed for the best quality of work in the industry are held back.

The Government owe us a serious and considered reply to the points made on behalf of the printing trade. Points have been made about other industries, too, and it has been emphasised that if we penalise the best work we are harming the training of apprentices and lowering the standards of the country. My hon. Friends have spoken of the important work done by the great printing firms. A short time ago, at a social function connected with my old university, I was sitting next to no less a person than the university printer. He is a very important person, in charge of a very important press, but he started as an apprentice in a small firm. Indeed, these big firms can exist only because they can recruit their personnel and their skill from a wide area. All the time these restrictions are enforced on that industry it means that certain firms, certain apprentices and certain workers are being deprived of the opportunity of developing the best skills in their trade. That is why I hope that the Chancellor will not treat these anomalies with flippancy.

I too can take this booklet and read out silly nonsense. There is a bit about the reproduction of pictures more than 100 years old, and a piece of solemn advice by the Commissioners to the trader to authenticate that the picture is in fact more than 100 years old before charging it at the lower rate. There is a further paragraph and a warning that a trader must not imagine that he can sell at the lower rate a reproduction of a piece of sculpture. If it is of three dimensions the tax is at a different rate.

The Chancellor knows about these things better than we do. He has had years in which to study them. Why has he not tidied them up before? Why has he not inquired what their significance was when these distinctions were made—unless he is trying to build up in the minds of his supporters on that side of the House the idea that sooner or later, when we have had Purchase Tax put up steadily in Budget after Budget, we shall have reached a stage when he can say that a general sales tax can now be imposed with the consent of the whole country, because the country will be ready for it.

Many hints have been given to that effect. Questions have been asked. The Chancellor would certainly cut short the discussions if he intervened now and told us what is his long-term view on the sales tax, and whether he now agrees with the view put forward by his party, as quoted by my hon. Friend, four or five years ago, when it held the view that the counter-inflationary effect of the Purchase Tax was lost once the public had got used to it.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

I can help the hon. Gentleman and the Committee immediately by saying that the only opportunity to make a general statement of that sort is when we debate the Question, That the Clause stand part of the Bill. I should be out of order in doing it on this Amendment. I will, of course, pay attention to what the hon. Gentleman has said, particularly as he once came from Gloucestershire, a county with which I have many affinities, and I will attempt to be sympathetic to some of his ideas.

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

Can the Chancellor elaborate the remark which he made a moment ago when he appealed to the Committee to get on in view of the assurance he had given on the question of printing? I did not understand that he had given any assurance beyond a general remark to the effect that he understood the point which my hon. Friend the Member for Bristol, South (Mr. Wilkins) and others had made. That did not seem to me to constitute an assurance. Perhaps I misunderstood him. If he can define what he meant it would help this side of the Committee.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

The hon. Member's interpretation is perfectly correct. I did not give an assurance that I would give a concession on this occasion in this debate. I simply said that I understood the extreme discomfort of the trade, to which the hon. Member referred, which has always been a source of considerable anxiety to me, particularly owing to the difficulty in which stationery lies as between the 30 per cent. and the 90 per cent. and all this question of colouring and everything else of which I am fully aware. I only gave an assurance that I would

like to study what he said with a view perhaps on a future occasion of being able to do something about it. I can absolutely give no assurance to the Committee, and I would be quite dishonourable if I said that we proposed to do anything tonight.

Question put, That the words proposed to be left out stand part of the Clause:—

The Committee divided: Ayes 270, Noes 228.

Division No. 46.]AYES[10.5 p.m.
Agnew, Cmdr. P. G.Donaldson, Cmdr. C. E. McA.Hutchison, James (Scotstoun)
Aitken, W. T.Doughty, C. J. A.Hyde, Montgomery
Allan, R. A. (Paddington, S.)Drayson, G. B.Hylton-Foster, Sir H. B. H.
Alport, C. J. M.Dugdale, Rt. Hn. Sir T. (Richmond)Iremonger, T. L.
Amery, Julian (Preston, N.)Duncan, Capt. J. A. L.Irvine, Bryant Godman (Rye)
Arbuthnot, JohnDuthle, W. S.Jenkins, Robert (Dulwich)
Armstrong, C. W.Eden, Rt. Hn. Sir A. (Warwick & L'm'tn)Jennings, J. C. (Burton)
Ashton, H.Eden, J. B. (Bournemouth, West)Jennings, Sir Roland (Hallam)
Atkins, H. E.Emmet, Hon. Mrs. EvelynJohnson, Dr. Donald (Carlisle)
Baldock, Lt.Cmdr. J. M.Errington, Sir EricJohnson, Eric (Blackley)
Baldwin, A. E.Erroll, F. J.Kaberry, D.
Balniel, LordFarey-Jones, F. W.Keegan, D.
Banks, Col. C.Fell, A.Kerby, Capt. H. B.
Barber, AnthonyFinlay, GraemeKerr, H. W.
Barlow, Sir JohnFisher, NigelKershaw, J. A.
Barter, JohnFleetwood-Hesketh, R. F.Kirk, P. M.
Baxter, Sir BeverleyFletcher-Cooke, C.Lagden, G. W.
Beattie, C.Fort, R.Lambert, Hon. G.
Bell, Ronald (Bucks, S.)Foster, JohnLancaster, Col. C. G.
Bennett, Dr. ReginaldFraser, Hon. Hugh (Stone)Langford-Holt, J. A.
Bevins, J. R. (Toxteth)Freeth, D. K.Leather, E. H. C.
Bidgood, J. C.Galbraith, Hon. T. G. D.Leavey, J. A.
Biggs-Davison, J. A.Gammans, L. D.Leburn, W. G.
Birch, Rt. Hon. NigelGarner-Evans, E. H.Legh, Hon. Peter (Petersfield)
Bishop, F. P.George, J. C. (Pollok)Lindsay, Hon. James (Devon, N.)
Body, R. F.Glover, D.Lindsay, Martin (Solihull)
Bossom, Sir A. C.Gower, H. R.Linstead, Sir H. N.
Boyle, Sir EdwardGraham, Sir FergusLloyd, Maj. Sir Guy (Renfrew, E.)
Braine, B. R.Grant, W. (Woodside)Lloyd-George, Maj. Rt. Hon. G.
Bromley-Davenport, Lt.-Col. W. H.Grant-Ferris, Wg. Cdr. R.(Nantwich)Lucas, P. B. (Brentford & Chiswick)
Brooke, Rt. Hon. HenryGreen, A.Lucas-Tooth, Sir Hugh
Brooman-White, R. C.Grimston, Hon. John (St. Albans)Mackeson, Brig. Sir Harry
Browne, J. Nixon (Craigton)Grimston, Sir Robert (Westbury)McKibbin, A. J.
Bryan, P.Gurden, HaroldMackie, J. H. (Galloway)
Buchan-Hepburn, Rt. Hon. P. G. T.Harris, Frederic (Croydon, N. W.)Maclay, Rt. Hon. John
Bullus, Wing Commander E. E.Harrison, A. B. C. (Maldon)McLean, Neil (Inverness)
Burden, F. F. A.Harvey, Air Cdre. A. V. (Macclesfd)Macleod, Rt. Hn. Iain (Enfield, W.)
Butcher, Sir HerbertHarvey, John (Walthamstow, E.)Macmillan, Maurice (Halifax)
Butler, Rt. Hn. R. A. (Saffron Walden)Hay, JohnMacpherson, Niall (Dumfries)
Campbell, Sir DavidHead, Rt. Hon. A. H.Maddan, Martin
Carr, RobertHeald, Rt. Hon. Sir LionelMaitland, Cdr. J. F. W. (Horncastle)
Cary, Sir RobertHeath, EdwardMaitland, Hon. Patrick (Lanark)
Channon, H.Henderson, John (Cathcart)Markham, Major Sir Frank
Chichester-Clark, R.
Clarke, Brig. Terence (Portsmth, W.)Hicks-Beach, Maj. W. W.Marlowe, A. A. H.
Cole, NormanHill, Rt. Hon, Charles (Luton)Marples, A. E.
Conant, Maj. Sir RogerHill, Mrs. E. (Wythenshawe)Marshall, Douglas
Cooper, Sqn. Ldr. AlbertHill, John (S. Norfolk)Mathew, R.
Cordeaux, Lt.-Col. J. K.Hirst, GeoffreyMaude, Angus
Corfleld, Capt. F. V.Holland-Martin, C. J.Maudling, Rt. Hon. R.
Craddock, Beresford (Spelthorne)Hope, Lord JohnMawby, R. L.
Crookshank, Capt. Rt. Hn. H. F. C.Hopkinson, Rt. Hon. HenryMaydon, Lt.-Comdr. S. L. C.
Crosthwaite-Eyre, Col. O. E.Hornsby-Smith, Miss M. P.Medlicott, Sir Frank
Crouch, R. F.Horobin, Sir IanMilligan, Rt. Hon. W. R.
Crowder, Sir John (Finchley)Howard, Gerald (Cambridgeshire)Moison, A. H. E.
Crowder, Petre (Rulslip—Northwood)Howard, Hon. Greville (St. Ives)Morrison, John (Salisbury)
Cunningham, KnoxHoward, John (Test)Mott-Radclyffe, C. E.
Currie, G. B. H.Hudson, Sir Austin (Lewisham, N.)Nabarro, G. D. N.
Dance, J. C. G.Hudson, W. R. A. (Hull, N.)Nairn, D. L. S.
Davidson, viscountessHughes Hallett, Vice-Admiral J.Neave, Airey
D'Avigdor-Goldsmid, Sir HenryHulbert, Sir NormanNicholls, Harmar
Deedes, W. F.Hurd, A. R.Nicholson, Godfrey (Farnham)
Dodds-Parker, A. D.Hutchison, Sir Ian Clark (E'b'gh, W.)Nicolson, N. (B'n'm'th, E. & Chr'ch)
Nield, Basil (Chester)Robertson, Sir DavidThompson, Kenneth (Walton)
Noble, Comdr. A. H. P.Rodgers John (Sevenoaks)Thompson, Lt.-Cdr. R. (Croydon, S.)
Nugent, G. R. H.Roper, Sir HaroldThornton-Kemsley, C. N.
Oakshott, H. D.Ropner, Col. Sir LeonardTilney, John (Wavertree)
O'Neill, Hn. Phelim (Co. Antrim, N.)Russell, R. S.Touche, Sir Gordon
Orr, Capt. L. P. S.Schofield, Lt.-Col. W.Turton, Rt. Hon. R. H.
Orr-Ewing, Charles Ian (Hendon, N.)Scott-Miller, Cmdr. R.Vaughan-Morgan, J. K.
Page, R. G.Shepherd, WilliamVickers, Miss J. H.
Pannell, N. A. (Kirkdale)Simon, J. E. S. (Middlesbrough, W.)Vosper, D. F.
Partridge, E.Smithers, Peter (Winchester)Wakefield, Edward (Derbyshire, W.)
Peake, Rt. Hon, O.Soames, Capt. C.Walker-Smith, D. C.
Pickthorn, K. W. M.Spearman, A. C. M.Wall, Major Patrick
Pitman, I. J.Speir, R. M.Ward, Dame Irene (Tynemouth)
Pitt, Miss E. M.Spence, H. R. (Aberdeen, W.)Waterhouse, Capt. Rt. Hon. C.
Pott, H. P.Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)Watkinson, H. A.
Powell, J. EnochStevens, GeoffreyWebbe, Sir H.
Price, David (Eastleigh)Steward, Harold (Stockport, S.)Whitelaw, W. S. I.(Penrith & Border)
Prior-Palmer, Brig. O. L.Steward, Sir William (Woolwich, W.)Williams, Gerald (Tonbridge)
Profumo, J. D.Stewart, Henderson (Fife, E.)Williams, Paul (Sunderland, S.)
Raikes, Sir VictorStoddart-Scott, Col. M.Williams, R. Dudley (Exeter)
Ramsden, J. E.Storey, S.Wills, G. (Bridgwater)
Rawlinson, P. A. G.Stuart, Rt. Hon. James (Moray)Wilson, Geoffrey (Truro)
Redmayne, M.Studholme, H. G.Wood, Hon. R.
Rees-Davies, W. R.Summers, G. S. (Aylesbury)Woollam, John Victor
Remnant, Hon. P.Sumner, W. D. M. (Orpington)Yates, William (The Wrekin)
Renton, D. L. M.Taylor, Sir Charles (Eastbourne)
Ridsdale, J. E.Taylor, William (Bradford, N.)TELLERS FOR THE AYES:
Rippon, A. G. F.Thomas, Leslie (Canterbury)Colonel J. R. Harrison and
Roberta, Peter (Heeley)Thomas, P. J. M. (Conway)Mr. Godber.
Ainsley, J. W.Dodds, N. N.Janner, B.
Albu, A. H.Donnelly, D. L.Jeger, George (Goole)
Allaun, Frank (Salford, E.)Dugdale, Rt. Hn. John (W. Brmwch)Jeger, Mrs. Lena (Holbn & St. Pnos, S.)
Allen, Arthur (Bosworth)Dye, S.Jenkins, Roy (Stechford)
Allen, Scholefield (Crewe)Ede, Rt. Hon. J. C.Johnston, Douglas (Paisley)
Awbery, S. S.Edelman, M.Jones, Rt. Hon. A. Creech (Wakefield)
Bacon, Miss AliceEdwards, Rt. Hon. Ness (Caerphilly)Jones, David (The Hartlepools)
Balfour, A.Edwards, Robert (Bilston)Jones, Elwyn (W. Ham, S.)
Bellenger, Rt. Hon. F. J.Edwards, W. J. (Stepney)Jones, Jack (Rotherham)
Bence, C. R. (Dunbartonshire, E.)Evans, Albert (Islington, S. W.)Jones, J. Idwal (Wrexham)
Benn, Hn. Wedgwood (Bristol, S. E.)Evans, Edward (Lowestoft)Jones, T. W. (Merioneth)
Benson, G.Evans, Stanley (Wednesbury)Kenyon, C.
Beswick, F.Fernyhough, E.Key, Rt. Hon. C. W.
Bevan, Rt. Hon. A. (Ebbw Vale)Flenburgh, W.King, Dr. H. M.
Blackburn, F.Fletcher, EricLawson, G. M.
Blenkinsop, A.Forman, J. C.Lee, Frederick (Newton)
Blyton, W. R.Fraser, Thomas (Hamilton)Lee, Miss Jennie (Cannock)
Boardman, H.Gaitskell, Rt. Hon. H. T. N.Lever, Harold (Cheetham)
Bottomley, Rt. Hon. A. G.Gibson, C. W.Lever, Leselie (Ardwick)
Bowden, H. W. (Leicester, S. W.)Gooch, E. G.Lewis, Arthur
Bowles, F. G.Gordon Walker, Rt. Hon. P. C.Lindgren, G. S.
Boyd, T. C.Greenwood, AnthonyLipton, Lt.-Col. M.
Braddock, Mrs. Elizabeth
Brockway, A. F.Grey, C. F.Logan, D. G.
Broughton, Dr. A. D. D.Griffiths, David (Rother Valley)MacColl, J. E.
Brown, Rt. Hon. George (Belper)Griffiths, Rt. Hon. James (Llanelly)McGhee, H. G.
Brown, Thomas (Ince)Griffiths, William (Exchange)McGovern, J.
Burke, W. A.Hale, LeslieMcKay, John (Wallsend)
Burton, Miss F. E.Hamilton, W. W.McLeavy, Frank
Butler, Herbert (Hackney, C.)Hannan, W.MacMillan, M. K. (Western Isles)
Butler, Mrs. Joyce (Wood Green)Harrison, J. (Nottingham, N.)Mahon, S.
Callaghan, L. J.Hastings, S.Mallalieu, E. L. (Brigg)
Carmichael, J.Hayman, F. H.Mallalieu, J. P. W. (Huddersfd, E.)
Champion, A. J.Healey, DenisMarquand, Rt. Hon. H. A.
Chapman, W. D.Henderson, Rt. Hn. A. (Rwly Regis)Mason, Roy
Chetwynd, G. R.Herbison, Miss M.Mellish, R. J.
Clunie, J.Hobson, C. R.Mikardo, Ian
Coldrick, W.Holman, P.Mitchison, G. R.
Collick, P. H. (Birkenhead)Holmes, HoraceMonslow, W.
Collins, V. J. (Shoreditch & Finsbury)Holt, A. F.Moody, A. S.
Corbet, Mrs. FredaHoughton, DouglasMorrison, Rt. Hn. Herbert (Lewis'm, S.)
Cove, W. G.Howell, Denis (All Saints)Mort, D. L.
Craddock, George (Bradford, S.)Hoy, J. H.Moss, R.
Cronin, J. D.Hubbard, T. F.Moyle, A.
Crossman, R. H. S.Hughes, Emrys (S. Ayrshire)Mulley, F. W.
Cullen, Mrs. A.Hughes, Hector (Aberdeen, N.)Noel-Baker, Francis (Swindon)
Dalton, Rt. Hon. H.Hunter, A. E.Oram, A. E.
Davies, Ernest (Enfield, E.)Hynd, H. (Accrington)Orbach, M.
Davies, Harold (Leek)Hynd, J. B. (Attercliffe)Oswald, T.
Davies, Stephen (Merthyr)Irvine, A. J. (Edge Hill)Owen, W. J.
Deer, G.Irving, S. (Dartford)Padley, W. E.
Delargy, H. J.Isaacs, Rt. Hon. G. A.Paling, Will T. (Dewsbury)
Palmer, A. M. F.Silverman, Sydney (Nelson)Warbey, W. N.
Pannell, Charles (Leeds, W.)Simmons, C. J. (Brierley Hill)Watkins, T. E.
Pargiter, G. A.Skeffington, A. M.Weitzman, D.
Parker, J.Slater, Mrs. H. (Stoke, N.)Wells, Percy (Faversham)
Parkin, B. T.Slater, J. (Sedgefield)Wells, William (Walsall, N.)
Paton, J.Smith, Ellis (Stoke, S.)West, D. G.
Peart, T. F.Snow, J. W.Wheeldon, W. E.
Plummer, Sir LeslieSorensen, R. W.White, Mrs. Eirene (E. Flint)
Popplewell, E.Sparks, J. A.White, Henry (Derbyshire, N. E.)
Price, J. T. (Westhoughton)Steele, T.Wilcock, Group Capt. C. A. B.
Price, Philips (Gloucestershire, W.)strachey, Rt. Hon. J.Wilkins, W. A.
Probert, A. R.Strauss, Rt. Hon. George (Vauxhall)Willey, Frederick
Proctor, W. T.Stross, Dr. Barnett (Stoke-on-Trent, C.)Williams, Ronald (Wigan)
Pryde, D. J.Summerskill, Rt. Hon. E.Williams, Rt. Hon. T. (Don Valley)
Pursey, Cmdr. H.Swingler, S. T.Williams, W. R. (Openshaw)
Rankin, JohnSylvester, G. O.Williams, W. T. (Barons Court)
Reeves, J.Taylor, Bernard (Mansfield)Willis, E. G. (Edinburgh, E.)
Reid, WilliamTaylor, John (West Lothian)Wilson, Rt. Hon. Harold (Huyton)
Rhodes, H.Thomas, George (Cardiff)Winterbottom, Richard
Roberts, Albert (Normanton)Thomson, George (Dundee, E.)Woodburn, Rt. Hon. A.
Robinson, Kenneth (St. Pancras, N.)Thornton, E.Yates, V. (Ladywood)
Rogers, George (Kensington, N.)Tomney, F.Younger, Rt. Hon. K.
Ross, WilliamTurner-Samueis, M.
Royle, C.Usborne, H. C.TELLERS FOR THE NOES:
Short, E. W.Viant, S. P.Mr. Pearson and
Silverman, Julius (Aston)Wade, D. W.Mr. James Johnson.

10.15 p.m.

Photo of Mr Malcolm Macpherson Mr Malcolm Macpherson , Stirling and Falkirk Burghs

It may be for the convenience of the Committee if the next Amendment, in page 2, line 7, to leave out certain words were taken together with the next but one, that is, in page 2, line 12. The Amendment coming in between, that is, in page 2 to leave out lines 12 and 13 and insert certain words, is not selected. If the two Amendments which I have just mentioned were discussed together, it would remain possible, if it were so desired, for a Division to be taken on each.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

I had supposed, Mr. MacPherson, that the Chairman would select the intervening Amendment as it is the official Amendment and we had supposed that all three would be taken together. It is rather unfortunate, if I may say so, that the middle one is not selected, because that raises a very important point, namely, that the change in the rate of tax can be made only if it is a reduction in tax and not if it is an increase. Can we not discuss all three Amendments together?

Photo of Mr Malcolm Macpherson Mr Malcolm Macpherson , Stirling and Falkirk Burghs

The matter has been considered, as I think the right hon. Member will understand, and these decisions are not lightly reached. It has been decided that the second of these three Amendments is not selected. I am not sure to what extent the substance of the Amendment can be discussed during discussion of the other two which are both being called.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

Since the middle one seems to be part of the point covered by the first Amendment, perhaps we can cover it by that. I do not know what my hon. Friend the Member for Islington, East (Mr. E. Fletcher) feels, but if he would be good enough to cover the second Amendment, we might proceed.

Photo of Mr Malcolm Macpherson Mr Malcolm Macpherson , Stirling and Falkirk Burghs

In effect, the Committee will have a discussion on the three Amendments together. Before calling the first Amendment, I should point out that I will call it in a form slightly different from that which appears on the Paper.

Photo of Sir Eric Fletcher Sir Eric Fletcher , Islington East

On the procedural point, I am sure, Mr. MacPherson, that the Committee appreciates the difficulty in which you are placed, but as there may have been some misunderstanding, might I suggest that we should discuss the substance of the three together? After that discussion and perhaps after the Chairman has returned, we might then consider whether, at the end of the debate, it might be desirable to divide on the middle Amendment as well as on the other two.

The whole Committee will agree that it will be most convenient if all three Amendments are discussed together, because they all relate to the same point. They deal with a point rather different from that which has been considered by the Committee during today and yesterday. In these Amendments we are not dealing with the details of the Purchase Tax, nor particular rates.

Photo of Mr Malcolm Macpherson Mr Malcolm Macpherson , Stirling and Falkirk Burghs

I should make it clear that the question of what can be done about the middle Amendment can always be raised when we have gone further in the discussion, but the situation now is that the Chairman has decided that the middle Amendment is not selected; and I have no authority to change that decision. I am calling the first Amendment and I suggest to the Committee that it might like to discuss with it the next Amendment but one.

Photo of Sir Eric Fletcher Sir Eric Fletcher , Islington East

The Amendments in my name are in page 2, line 7, to leave out from "Act" to end of line 13, with which we shall discuss the Amendment, in page 2, line 12, after "the" to insert "next". We will leave until later any points of order which we may wish to raise with regard to the second Amendment, that is, in page 2, to leave out lines 12 and 13 and to insert: lower rate than the operative rate whether or not such lower rate is for the time being chargeable in respect of goods of any class". The Amendment deals with a quite different matter from that which has occupied the attention of the Committee earlier this afternoon and yesterday. Here we are dealing with a matter which I venture to think the Committee will feel is of constitutional importance. I am not sure that the Committee have realised as yet what the Government are trying to do by the introduction of these words at the end of the subsection. They are trying to insinuate into the Clause a power in future to change the rates of Purchase Tax by Statutory Instrument to a far wider degree than has hitherto been permitted.

It is all very well for the Chancellor to shake his head, but we have suffered a great deal from his two Budgets this year. Parliament has been deprived of its usual opportunity to put down a series of Amendments on our financial structure. We have been deprived on two occasions of the opportunity to put down any new Clauses, and now the Chancellor is going a stage further and trying to eliminate, or to reduce, Parliamentary discussion about the changes he wants to make in future in the rates of Purchase Tax. That is very serious.

The Committee will be conscious of the widespread interest, shown not only in the Committee but in the country, in any change in the rate of Purchase Tax. If the subsection is carried in its present form the Chancellor will be able in future, by a mere Statutory Instrument, without coming to Parliament and asking for a new Finance Bill, to make drastic alterations in the rate of any category of goods to which Purchase Tax applies.

I remind the Committee how matters stand at present. It has been the case that under Section 21 of the Finance Act, 1948, the Treasury has power to change the rates of Purchase Tax in a very restricted manner. It is able to change any article from one existing rate of tax to another, but there is no power at present which entitles the Treasury, without coming to Parliament, to place an intermediate rate of Purchase Tax on any article. That was a very sensible provision which has hitherto obtained.

The Chancellor is now suggesting that he should be given power to take any commodity from all this wide range of goods, to which we have now got not merely three rates but at least six different rates of tax. Some goods are taxed at 5 per cent. and others at 10 per cent., 30 per cent., 50 per cent., 60 per cent., and 90 per cent. As the Financial Secretary said when moving the Second Reading of the Finance Bill, the object of this additional provision for which the Government are seeking authority is to enable them in future by Statutory Instrument to change an existing rate of tax, either up or down, to any intermediate rate.

In other words, in future the Chancellor can change the rate of tax on textiles, motor cars, household goods, furniture or anything else. He can take an article taxed at 5 per cent., and say that in future the rate should be 7½ per cent., 10 per cent., 12½ per cent., 15 per cent. or anything right up to 90 per cent. There can be no possible justification for that. These rates of Purchase Tax are matters of close and immediate concern to all sections of the community. It cannot be right to give the Treasury power to change the rates of tax without coming to Parliament in the ordinary way and producing a Finance Bill so that the question can be properly considered in all its aspects.

When I read the Clause—I was about to say that it was a piece of impertinence—it certainly seemed to me an audacious attitude on the part of the Chancellor. We know that he does not particularly welcome these protracted discussions on the details of the Finance Bill, but there is no excuse whatever for stifling the full opportunity for Parliamentary criticism in this way. To give the Treasury what they are seeking in this Clause is very nearly as serious as giving the Chancellor the power to raise the Income Tax by Statutory Instrument, which is something no Chancellor has yet dared to suggest.

Photo of Sir Eric Fletcher Sir Eric Fletcher , Islington East

I know, but I mention the analogy only to show the seriousness of the matter.

Hitherto, no Chancellor would dare to try to slip into a Finance Bill some power giving him, by Statutory Instrument, the right to change the level of Income Tax, or Surtax, or Profits Tax, or to change the allowances. It would be contrary to all our constitutional traditions even to think of such an innovation. In my submission, it is no less serious to ask this Committee to surrender its fundamental right of control over these important matters of legislative action, and to give the Chancellor complete freedom, subject, of course, to affirmative Order. As the Committee knows, the opportunities for debating an affirmative Order are much more restricted than if the Chancellor introduces a Finance Bill. That is what the Chancellor is asking—

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

If the hon. Member will give my right hon. Friend an opportunity to explain, he will see that the thing is not quite so sinister as he thinks. But he must, of course, develop his own case first.

Photo of Sir Eric Fletcher Sir Eric Fletcher , Islington East

I think it a pity that neither the Chancellor nor the Financial Secretary, at any previous stage in our discussion, has indicated what was the real purpose of the suggestion. If there is an onus on anyone to prove the necessity for this innovation, it surely falls upon the Treasury Bench.

So far, the only observation we have had is what the Financial Secretary said in his Second Reading speech. He said that Clause 1 removes what I think is an obvious anomaly in the existing law. … These words are very ominous, because one thing we have learnt as a result of our discussions yesterday and today is that this matter introduces far more anomalies than it removes.

On the one hand, we have the Treasury resisting a whole series of Amendments proposed from this side of the Committee on the ground that they would introduce anomalies. But when it suits the Financial Secretary, he says that something would remove an anomaly. I suppose it could be argued that it would simplify matters and remove an anomaly if the Chancellor had the power to raise the rate of Income Tax by Statutory Instrument or to change the child allowance or some other allowance.

What is the suggested anomaly? I wish to quote what was said by the Financial Secretary. He said he thought that it was an obvious anomaly in the existing law, in that at present goods may have tax imposed on them at any existing rate, including the highest rate of all, by an affirmative Order but not at any new rate."—[OFFICIAL REPORT, 8th November, 1955; Vol. 545, c. 1673] Why is that an anomaly?

In the debates this year, as in previous years, we are acceding, willingly or unwillingly, to suggestions from the Government that the rates of Purchase Tax should be fixed in some respects, and that in other respects they should be changed, and there is a good deal of argument about what the rates of Purchase Tax should be. Once the rates are fixed Parliament has hitherto laid down that they are the rates of Purchase Tax which should operate, and that is a very sensible provision, because then manufacturers, merchants, wholesalers, traders and the public know where they stand; the public know at a certain time that that is the Purchase Tax they can look forward to paying on particular goods if they want to continue buying them.

10.30 p.m.

I suppose the Chancellor will tell us that it might be convenient for him to have power to do this so that he can make these changes on some occasions other than when he introduces a Budget. I am familiar with the argument that there have been occasions in the past when the Chancellor has been urged not to wait for the Budget before announcing changes in Purchase Tax, and I do not want to overlook it. But that is not an argument which the Chancellor can use. When he has been urged to mitigate the uncertainty that falls upon traders by not knowing until the Budget what, if any, changes are to be made in Purchase Tax, the argument is only on the ground of removing uncertainty; but on this occasion the Chancellor himself has introduced the maximum uncertainty to traders, he has introduced a whole range of changes in Purchase Tax at a time of the year which necessarily leads to the maximum confusion—just before Christmas. There would be less objection to it by shopkeepers and the public if it were done after Christmas, but to do it immediately before Christmas introduces the maximum confusion, the maximum dislocation and the maximum uncertainty.

Photo of Mr William Rees-Davies Mr William Rees-Davies , Isle of Thanet

I wonder whether I might interpose one question in this very interesting speech—which I am following, as I am sure we all are, very carefully—on a point of principle. The hon. Member said that the Committee would "surrender control" in the event of this Clause remaining as it stands. I wonder whether we could be told exactly what is meant by "surrender control". Would the method of Prayer be that used to oppose the Statutory Instrument which would then be laid, or what would be the method?

Photo of Sir Eric Fletcher Sir Eric Fletcher , Islington East

I will give that information if it will not bore the Committee. I thought most hon. Members were familiar with the matter. If the Treasury has power to change the rates of Purchase Tax by Statutory Instrument it is able to make an omnibus Order, and all hon. Members can do is to put down a Prayer that the whole Order shall be annulled. I thought the hon. Gentleman knew, as most hon. Members on this side know, that there is no opportunity for the Opposition—or for Government supporters for that matter—to analyse it in detail or put down Amendments to an Order.

The really insidious nature of this proposal, which the Financial Secretary has tried to slip into this Bill unnoticed, thinking that we shall all be so concerned with these objectionable increases in Purchase Tax that we shall let it go by—which we are not going to do—the offence which the Government are seeking to commit, is to give the Government power in future to change the Purchase Tax on perhaps half-a-dozen goods, perhaps on a whole range of goods, from an existing rate to a quite different rate, up or down, even up to 85 per cent. or 90 per cent., or any other figure they may choose, and to do it in such a way that all the House could do would be to have a relatively short debate, which generally comes on late at night, when the argument is confined by the rules of order, and when no amendment can be proposed.

There may be some elements in such an Order that the House would wish to support and there may be other elements that the House would wish to oppose. There is no machinery whatever under such a procedure for dissecting the objectionable from the unobjectionable and the Committee is faced with the choice of either having to accept it in toto or to reject it. That is the situation, which I think is not only intolerable, but which I think is a piece of audacious effrontery that this Committee should be asked to accept.

That is why I say that in reality the Chancellor is asking the House of Commons to surrender one of its cherished measures of control over financial legislation. We can see why the Chancellor is doing it. He realises that the country takes a great interest in these rates of Purchase Tax. That is why we are having these debates. That is why if, as at present, the Chancellor wants to change the rates he has to introduce a Finance Bill. Instead of having to put down a Prayer we can put down Amendments to oppose items which we do not like or probing Amendments to see what is the real object of the Government. We have the opportunity of dissecting the whole thing and attacking it item by item. Hon. Members from different parts of the country with different interests according to their constituencies, and according to the different industries in the constituencies they represent and the particular parts of the country they represent, are able to give expression to the views of their constituents.

Let no one doubt that although the debates we are having this week and no doubt next week—and although the Chancellor may find them a little tedious; perhaps one can forgive him if sometimes he appears to look a little tired—

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

Perhaps the hon. Member would permit me to say that I have very much enjoyed the debates and that had it not been for the Government's undertaking to give the House every opportunity of debate, we might have got these changes through by Order in Council on this occasion. But we thought it fairer to the House to have an autumn Budget. That is precisely why the hon. Member is having the opportunity of making his speech tonight, which I think he should. If he will give the Financial Secretary an opportunity to reply, the hon. Member may receive an explanation which I think will satisfy him.

Photo of Sir Eric Fletcher Sir Eric Fletcher , Islington East

In some respects I welcome that interruption. I welcome the sentiments the Chancellor has expressed. We are very glad to have his acknowledgment of the rights of Parliament to discuss this matter. We are glad to have his assertion—I do not think it is justified, but I am glad to hear that he thinks he is entitled to claim some credit for having done this by legislation and not by Order. But surely he is wrong in thinking that he could have made these changes in Purchase Tax by Order in Council.

Under the powers Parliament entrusted to the Treasury in 1948 all the Chancellor could have done would be to change some articles from one category to another. What he wanted to do with this Budget was to raise the existing rates of tax and he introduced some new rates. We have never had a 5 per cent. rate before; we have never had a 10 per cent. rate before. He had no power to do that by Statutory Instrument. The Government could not have abolished the D Scheme by Statutory Instrument. I hate to say so, but I feel that the Chancellor's observation was a little disingenuous. I admire his sentiments—

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

To do the hon. Member justice, his argument is quite correct. Had we wished an operation on Purchase Tax to deal with inflation we could have done it by Order in Council, but it would not have been the same operation as this, for some of the very good reasons to which the hon. Member has referred, in connection with the D Scheme and other matters. We have not powers to do that by Order in Council, but we could have put through another operation by Order in Council which would not have required legislation.

Photo of Sir Eric Fletcher Sir Eric Fletcher , Islington East

The further we go, the more the Chancellor and I seem to agree. The Chancellor is now saying that he could have done by Order something which he did not want to do, but he could not have done by Order what he wanted to do. I cannot see how it is relevant to the argument for the Chancellor to say that, by making an Order, he could have done something totally different which he did not want to do.

Parliament has been very careful to circumscribe what the Treasury can do by Order. I hope the House will always be very vigilant against attempts by the Treasury to slip into Bills additional powers to enable it to act by Order. We should be very vigilant in ensuring that existing rights are not exceeded or abused. The provision for which the Chancellor is seeking power in the Clause is an obvious abuse and something for which no other Chancellor would have dared to ask.

As to our first Amendment, Parliament having decided, in 1948, that the Treasury should have some limited rights to change the rates by Statutory Instrument, we are content that those rights should be reserved. I am not at the moment concerned with arguing whether that was a good or a bad thing, although personally I am not very happy about it. We are not seeking, in our Amendment, to take away any existing rights.

Parliament considered the matter in 1948. In those days there was nothing like the vigilant Opposition that there is today, and that may be why the Section was passed in that form. However, there can be no excuse for extending it and for letting the Chancellor have power in six weeks' or six months' time to increase Purchase Tax on, say, furniture from 5 per cent. to 9 per cent., 19 per cent. or any other figure. It is beyond all reason to give the Treasury such power. What would be the result? We should have no opportunity to discuss or ventilate it and no opportunity to let the Government know what the people thought about the incidence of Purchase Tax.

I hope that the first of these Amendments will be accepted. In case it is not, it was suggested from the Chair that it would be appropriate to discuss with it the next Amendment but one, leaving aside for the moment the second Amendment, with which we may want to deal separately.

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

I understand the position to be that the three Amendments are being discussed together, but the first and third can be selected for a Division if required.

Photo of Sir Eric Fletcher Sir Eric Fletcher , Islington East

Thank you very much, Sir Rhys. That clarifies the position completely.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

A point of great delicacy arises here, Sir Rhys. Not only did your predecessor say that there was some doubt about the selection of the second Amendment, but it is already covered by an existing statute. So it is not a very controversial matter. I suggest that we just carry on with the discussion. As we have now heard the hon. Member's argument in full, perhaps we may now proceed.

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

I must point out that the Amendment has not yet been moved.

10.45 p.m.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

What you have just said, Sir Rhys, is fully in accordance with our expectations about this matter.

Photo of Sir Eric Fletcher Sir Eric Fletcher , Islington East

Perhaps I may continue, Sir Rhys, although the Chancellor is apparently anxious that my arguments should come to the point where I move the Amendment. It is happy suggestion of yours that we should consider the three Amendments together. I will mention the second and third briefly because I still hope, in view of the Chancellor's sympathetic reception of the arguments addressed to the Committee on the first Amendment, that it will not be really necessary to deal with the other two.

The second Amendment is less objectionable than the Clause, but not so suitable as the first Amendment. It would give the Chancellor power to lower but not to raise the rate of Purchase Tax. Why the Chancellor thought this was covered by the existing law I fail to understand. At the moment all he can do is change one rate for another. He can reduce the rate from 60 per cent. to 30 per cent., from 60 to 40 per cent. or from 10 to 7· per cent. The second Amendment would give him power by statutory Instrument to reduce the rate to some lower rate, but not to raise it without coming to Parliament.

The third Amendment is the absolute minimum for which we are entitled to ask. It would give the Treasury power, by Statutory Instrument, to increase the rate of Purchase Tax to the next higher existing rate. A rate of 5 per cent. on furniture or textiles could be increased to 10 per cent., but not to 90 per cent. or 85 per cent. Under the Clause, the Chancellor is asking us to increase the rate from 5 per cent. to 85 per cent. Surely the Chancellor could not possibly ask for more than the third Amendment proposes, that he should be able to, raise the rate to either the next higher rate or to some intervening rate between the existing and the next higher. For example, he could move something taxed at 30 per cent. to 50 per cent. but not to 90 per cent., which is what he is now asking us to do.

If it becomes necessary to do so, I have no doubt that some of my hon. and right hon. Friends will be elaborating the arguments that apply to the second and third Amendments, but I conclude by saying, as I did at the beginning, that this seems to me to be a matter of some constitutional importance, involving the rights of the House over the Executive in relation to a matter which is of very great human interest and affects all sections of the community. The Chancellor having expressed those sentiments, and wishing to observe Parliamentary propriety, I hope that he will accept the Amendment. I therefore beg to move, in page 2, line 7, to leave out from "Act" to the end of line 13.

Photo of Mr Henry Brooke Mr Henry Brooke , Hampstead

I rise at once to give the Committee an objective explanation of this subsection, which the hon. Member for Islington, East (Mr. E. Fletcher), in his long speech, failed to do. He was certainly less than fair to the Government and to me in insinuating that this provision had been slipped into the Bill without any explanation. I explained this subsection fully during the Second Reading debate, but he chose to quote to the Committee only one or two sentences out of what I then said about it.

The position is that the second of the Amendments, so far as I can ascertain, proposes to re-enact what is already enacted in Section 11 of the Finance Act, 1953. By that Act there is already power to move any article or duty down to a new rate, by order. I shall, therefore, leave the second Amendment out of consideration and confine myself to the first and third. Under Secton 21 of the Finance Act, 1948, which was passed in the time of the Government which the hon. Member for Islington, East supported, authority was given by order to exempt any goods from tax to impose tax upon any goods at one of the rates which already existed, or to move goods from one existing rate upwards or downwards to another.

Photo of Mr Gilbert Mitchison Mr Gilbert Mitchison , Kettering

I am looking at the second Amendment, which provides for goods being moved into a lower rate, whether or not such lower rate is for the time being chargeable in respect of goods of any class. That is to say, goods can be moved from their present rate to a lower rate which is not mentioned in existing legislation and which does not apply to goods of any class. Surely that is beyond the provisions of the 1948 Act.

Photo of Mr Henry Brooke Mr Henry Brooke , Hampstead

When I have finished what I am going to say about the first Amendment it may be necessary to revert to the second, but I should like to continue my speech upon the first, which is the one which the hon. Member moved.

Under the Act which was passed through the House on the suggestion of a Labour Chancellor of the Exchequer, it is possible to take any article which is not taxed at all and impose a tax upon it at any rate—however high—which already applies to any other article. In other words, when this Bill is passed it will be possible, under the powers of the 1948 Act, to take goods which were exempt and impose upon them by affirmative order the highest rate of 90 per cent. I understand that that is the policy which hon. Members opposite approve, but that they strenuously disapprove the suggestion contained in the subsection that goods which are now exempt—although they can be raised to bear 90 per cent. tax by order—must not be raised to bear 2½ per cent. tax, because there are no goods at 2½ per cent. tax at the present time.

It seems absurd that Parliament should enable the largest possible rise of tax to be imposed by Order, subject to affirmative Resolution, and yet should deny the possibility of making a small upward adjustment of tax unless the House goes through the whole procedure of legislation. That is an absurd position, and the provisions were introduced into the subsection to remedy that absurdity. I understand that hon. Members opposite feel that this absurdity should be retained. I want to make it perfectly clear that it is not essential for our autumn Budget that this change should be introduced and, therefore, as hon. Members opposite appear to feel strongly about it, I have my right hon. Friend's authority to accept the Amendment.

Amendment agreed to.

Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

In the course of our discussions in Committee we have stated our general objections to the Purchase Tax, and we have spoken of the way in which it produces distortion of our industrial production, of the way in which it makes planning difficult, of the way in which it imposes an unfair burden on the traders and of the way in which it penalises those sections of the community which are already the hardest hit. Now we are opposing the Question, "That the Clause stand part of the Bill," in order to protest against the extension of the range of goods covered by the Purchase Tax, to protest against the increase in the tax and to protest against what appears to be the Government's intention to make this a permanent tax and even to develop it into a general sales tax.

It had always been generally expected that in the years after the war the tax would be gradually reduced, and it is surprising to find the Chancellor presiding over the present operation because his right hon. Friends have from time to time spoken about distorting the national pattern of a free economy. Indeed, they have used that as an argument against the existence of food subsidies. According to the Tories, it is wrong to have subsidies which make the price of food artificially low but right to have a Purchase Tax which makes the price of the plates off which the food is eaten artificially high. That is a reasoning which my hon. Friends cannot accept.

The Committee will not be surprised if I first address my remarks to the position of the Lancashire cotton industry. Since the right hon. Gentleman took over the reins of the Treasury in 1951, we have discussed Lancashire in the Committee on many occasions. We on this side of the Committee have tried to get a reduction in Purchase Tax on textile goods, we have tried to get alternative industry into the textile areas and we have tried to get some protection for the industry against what we believe to be unfair competition from countries overseas. I hope we shall soon have another opportunity of stating in the House the case for the Lancashire cotton industry, because already this year 50 mills have closed down. As the hon. Member for Darwen (Mr. Fletcher-Cooke) will no doubt confirm, most of the mills have less than four-fifths of their machinery working at present, nearly 30,000 operatives in the industry are on short-time and in the first nine months of this year no fewer than 28,000 insured workers left the industry.

11.0 p.m.

The result is that the average age of the workers in the industry is increasing and the recruitment of school-leavers is steadily falling. This is due partly to a fall in home demand and partly to a drop in exports. We are now going through a time of intensifying foreign competition, in which we are having to face competition from cloth and yarns produced by cheap labour out of subsidised cotton. The precariousness of the position is made even worse by uncertainty about the policy of the Americans regarding raw cotton prices—an uncertainty exacerbated by the Government's ill-advised and doctrinaire reopening of the Liverpool Cotton Exchange. Now, at what is for the industry a moment of the gravest difficulty, the Government have delivered two new blows to the industry. The first, of course, is the credit squeeze, which is making things more difficult for the industry in two ways.

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

I think that that is getting a little wide of the Question before the Committee.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

With great respect, Sir Rhys, and as I hope I may explain to your satisfaction in a moment, because in this Clause we are putting up the tax on the products of the industry, the argument I am adducing is that we are making it more difficult for wholesalers and retailers to hold the stocks at inflated prices when the credit facilities offered by the banks are being reduced and withheld. I think that that is not perhaps unfair, and it is also the case that the credit squeeze is making it much more difficult for the mill owners to re-equip their mills.

However, I will pass to the second blow which is directly connected with the Clause, and that is the attack on the home market by the extension of the Purchase Tax to a new range of goods. The Government's intention, apparently, is to reduce home consumption and so to encourage exports. But even if home consumption is reduced, how will that help Lancashire to compete in East and West Africa with Japanese and Indian-produced goods? It will not make any contribution at all. It is particularly unfortunate that the Government should be delivering these blows at the industry just at the time when the trade unions have accepted the principle of three-shift working, so giving a further valuable impetus to re-equipment in the industry.

At this time of intensifying foreign competition one should not overlook the fact, which I tried to put to the Committee last night, that the Purchase Tax exaggerates differences in prices. Five per cent. of a large amount is more than 5 per cent. of a smaller amount, and if cheaper cloth is coming into this country and competing with more expensive home-produced cloths, the Purchase Tax makes the differences in price even greater than they normally would be.

Because we are opposing this Clause we would not wish it to be assumed that we are, therefore, against the abolition of the D Scheme so far as clothing is concerned. In April and May, 1952, we on this side of the Committee advised the Government over and over again against the adoption of the D Scheme. We said that it would impose a heavy burden on retailers, that it would discourage the production of quality goods, that it would have a harmful effect on our export trade, and would distort the pattern of the woollen and cotton textile industry. We were told that the purpose of the scheme was to encourage exports. We are now told by right hon. Gentlemen opposite that they are abolishing the scheme to encourage the export trade. The Financial Secretary, on the Second Reading, had this to say: The D Scheme is to go entirely and I have not seen anyone closely acquainted with it who has shed a single tear on that account. The right hon. Gentleman went on: What really moved my right hon. Friend to his decision—and it was a bold decision—to abolish the D Scheme completely was the handicap it placed on export trade. We must live so largely by exporting high quality goods, the best goods that we can produce, and yet the D Scheme contained a tax incentive to make less high quality goods below the D level for sale in the home market."—[OFFICIAL REPORT, 8th November, 1955; Vol. 545, c. 1675.] What a mockery it is, after we have been saying that to the Chancellor and to hon. Members opposite in this Committee for four years, that it has only at last been realised by them that there was truth in the criticism that we made four years ago and now, having introduced the scheme to help the export trade, they are presiding over its demise to help the export trade.

It is absurd that, when industry has been clamouring for a lifebelt to be thrown to it for so long, the Government throw it only after holding the victim under water for three-and-a-half years. On 28th April, during a discussion late one night in reply to speeches by my hon. Friend the Member for Blackburn (Mrs. Castle), my hon. Friend the Member for Oldham, West (Mr. Hale), Mr. Shackleton, who then represented a Preston constituency, and others, the Chancellor said that he could not accept our proposal that a tax on a very limited range of textile goods should be abolished instead of being merely halved.

I ask the Committee to realise that that was on 28th April. Less than a week later, on 3rd May, the Prime Minister announced at the Dispatch Box that exactly what the Chancellor had told us could not be done was being done by the Government. We had this unashamed piece of electioneering on the eve of the Election—the Prime Minister telling the House that there could be done what the Chancellor had told us, with great sincerity and great firmness, a few nights before was quite out of the question.

I hope that on this occasion the Chancellor will prove himself as flexible as he did on that occasion. We make no complaint that the D Scheme is to be abolished. Our complaint is that it has taken the Chancellor four years to realise the truth of our arguments. What a pity that the Chancellor should be accompanying the abolition of the D Scheme with a 5 per cent. or 10 per cent. tax on things which previously did not carry tax at all. Now all garments, including the ones which were in the Utility range, or later came into the D Scheme, will pay tax.

On 5th November, the periodical Men's Wear said, The Chancellor, in effect, has clamped a sales tax on textiles and clothing, and although at first sight this might not appear to constitute a very serious menace, the danger is that the industry may now be saddled permanently with a tax that it should not be called upon to bear, especially in respect of those grades of merchandise which previously were granted relief. The Drapers' Record on the same date said: Henceforth the trade will once again have to contend with pettifogging fractions of pence tax on small items, with no apparent advantage to the Chancellor's coffers or to the nation, Many manufacturers, wholesalers and retailers today plan their production and sales to satisfy the public's price requirements. Abolition of the D Scheme might mean in some cases that quality will be debased if existing price levels are to be maintained. Because Purchase Tax has remained on a fairly even keel since the commencement of the D Scheme in March. 1952, manufacturers and distributors have been able to plan ahead. Last week's announcement, at the height of the season, therefore, threw the industry into a state of chaos and worsened the delivery situation. More disquieting is the effect for the future that the changes will have on the trade. By placing Purchase Tax once more in the cockpit of politics, the Chancellor has created nervousness and tension throughout the industry, which will heighten on the approach of each Budget. Those are the views of two leading journals in the textile industry, periodicals which never commit themselves to a political point of view, but both of them are most critical of the Chancellor over his policy.

My hon. Friend the Member for Bermondsey (Mr. Mellish) tabled a Question the other day asking the Chancellor the proportion of the total volume of sales of clothing, footwear and furniture wholly exempted from Purchase Tax by the operation of the D Scheme at the time of its abolition. The Financial Secretary replied: It is estimated that about five-sixths of the footwear (other than young children's footwear), and about three-quarters of the furniture sold before the Budget was free of tax by reason of the D Scheme. In the case of clothing, the proportion varied widely from one article to another …"—[OFFICIAL REPORT, 15th November, 1955, Vol. 546, c. 22.) Then the Financial Secretary told my hon. Friend that previously less than a quarter of the three-piece suits were free of tax; between a quarter and a half of the two-piece suits were free of tax and between half and three-quarters of jackets, waistcoats, cardigans and pullovers, overcoats, woollens, shirts and non-woollen vests and pants and more than three-quarters of trousers, overalls, woollen socks, and pyjamas were free of tax. All these garments will come within the tax range as a result of the change which the Chancellor has made.

Where is the evidence of an excessive demand for clothing over the last few years? I was looking the other day at a copy of The Statist for 24th September and in an article on the Government's national income and expenditure figures it pointed out that outlay in real terms on clothing in every year since the post-rationing spurt of 1950 has been below the level of 1938. It does not appear from the Government's own figures that there has been any excessive pressure on the textile industry or an excessive home demand. It is not suggested, either, by the condition of Lancashire today, evidence of which I gave to the Committee a few minutes ago.

How will it help exports to knock the bottom out of the home market, so that there is additional uncertainty in the industry, so that there is a further loss of craftsmen and a greater difficulty in recruiting? I read in the Manchester Guardian of 5th November a speech by Mr. Leslie Gamage, the president of the Institute of Export. He said: Much as I admire Mr. Butler, I must emphasise again and again that without an adequate home market we cannot export effectively or competitively. To adventure into overseas markets, with no home market behind us, is going into a fight with one hand tied behind our back. Every hon. Member with experience of the trade, like the hon. Member for Oxford (Mr. Turner) and others, will know that what Mr. Gamage said is 100 per cent. right. Of course we cannot expect to have a healthy export market when we are knocking the bottom out of the home market in this way.

There is an extraordinary lack of consistency in the Chancellor's choice of industries to help. In my view, it is difficult to find any principle of selection whatever. There are some industries which the Chancellor is helping in this Budget because he believes that it will provide him with a market basis for exports, and the idea is to encourage craft or quality goods. He is singling out for help of this kind the poorer kinds of clothing—but not furs—and glassware and silverware. Why only those? Why not furs as well? What about craft production of pottery? I hope hon. Members read in The Times yesterday a most interesting letter from a craftsman in the pottery industry about the difficulties that men of his kind are facing under the Chancellor's new proposals. Why does not the Chancellor apply it to cutlery or leather goods and to many other ranges of articles where in fact the rate has been increased?

11.15 p.m.

I should like to remind the Chancellor that in 1952 he made the Purchase Tax No. 4 Order which operated from 22nd September and reduced from 100 per cent. to 66⅔ per cent. the tax on both cut glassware and leather goods. He advocated both these changes on the ground that they would help to provide a home market as a basis for expanding exports. Now the Chancellor is in the position when he reduces the tax on glassware and increases it on leatherware. There does not seem to be very much consistency of policy on the part of the right hon. Gentleman.

If I may turn from cotton to wool, I would say that the Chancellor's proposals are not altogether an unmixed blessing for the wool industry. The Textile Mercury, in its current number, makes this criticism of the Chancellor's proposals: Woollen piece goods departments in the London stores have little to thank him for in the matter of his latest tax measures. The abolition of the D scheme and the introduction of a straight tax on woollens may be of advantage to the higher-priced quality goods, but penalises those goods in the popular price bracket, which previously came under the D level and carried no tax. Several shillings a yard are added to cloths which previously sold well at just under £1 per yard, and this rise is sufficient in the eyes of some buyers to occasion sales resistance among consumers. It expresses the fear that all woollen cloths may well be driven off the market in the department stores of the West End.

What I have said about the cotton industry applies to quite a considerable extent to the pottery industry, also. This is an industry which depends to a large extent upon craftsmen. Only 1 per cent. of the pottery industry's raw materials have to be imported, and a great proportion of its output goes overseas. I do not think anyone can deny that no industry in this country has done more to expand its exports than has this industry.

Now, when the pottery industry, like the cotton industry, is subject to increasing foreign competition, when it is facing competition particularly from Germany and Italy and to a lesser extent from Japan, the Chancellor chooses to impose a new tax on the industry and to reimpose tax on some sections of the industry's products which, for a considerable time, have been free from tax. That is not the way to encourage an industry which has played more than a fair part in developing the export trade of Great Britain.

I know it is difficult to base an argument on individual industries. But if we are to regard Purchase Tax as a planning instrument, as the Chancellor appears to regard it, surely there is a case for special treatment for industries subject to very keen foreign competition.

I was impressed the other day by a speech by the hon. Member for Yeovil (Mr. Peyton), in which he described the growing imports of gloves into the United Kingdom. He said that in the first nine months of 1953, 282,000 dozen pairs were imported, in the first nine months of 1954, 733,000 dozen pairs and in the first nine months of this year, 1,383,000 dozen pairs. That means that the number has increased five times in just about two years. It is understandable that the hon. Member for Yeovil and other hon. Members representing glove-producing constituencies should be anxious about the situation.

Purchase Tax, as I have said, always increases the disadvantage which home-produced goods are at when faced with competition from cheap goods from overseas. There is one absurdity, before I leave this industry, which has been commented upon in the Press. That is the one relating to babies' gloves, which are said to be exempt from Purchase Tax. The ruling of the Customs and Excise is interesting as showing the difficulties into which we get with taxes of this kind. It says: Any gloves having separate fingers are not exempt and are chargeable at 5 per cent. When the whole of the hand is enclosed in a 'bag' it is not a glove and is not subject to tax. Gloves with four fingers enclosed and a thumb are exempt, provided the inside thumb measurement does not exceed 1¼ inches. That is the kind of absurdity into which we get when we bring goods of that kind within the scope of Purchase Tax.

We can give many examples of anomalies which are created by this Clause, but I want to confine myself to mentioning two and I hope that the Committee will forgive me if one has a particular constituency interest of mine. My hon. Friend the Member for Flint. East (Mrs. White), in an admirable speech yesterday, stressed the difficulties that have been imposed upon the slipper manufacturing industry by the absurd distinction between lamb's wool and rabbit fur. The Chancellor undertook to look into the position which my hon. Friend revealed and I should like to emphasise to the Chancellor that the longer the uncertainty in the industry continues the greater difficulties the slipper manufacturers in my constituency will have to face. We would all be grateful if, tonight, the Chancellor were able to tell us whether he has come to a conclusion in this matter.

Another anomaly to which I should like to draw his attention also relates to shoes. I want to read to the Committee a letter which was written to The Times by Mr. E. 0. Scammell, footwear buyer to Thomas Donne, Ltd., of Corporation Street, Birmingham. It is widely believed that children's shoes are exempt from Purchase Tax. Mr. Scammell, however, said: Previous Chancellors, alive to the importance of keeping children's clothing and footwear tax free, have done this through the medium of the utility scheme and latterly the 'D' scheme. In his new Budget, however, Mr. Butler has either overlooked this or is prepared to do nothing. To the unthinking, the exemption of girls' shoes to size 3 and boys' to 5½ might make it appear that children's shoes are tax free, but when one realizes that the average girl of II would be wearing over size 3 and the average boy of 12 over size 5½., in footwear, and that many much younger than this would be wearing larger sizes, the contention that children's footwear is tax free is palpably dishonest. Those are only two anomalies which I should like to bring to the Chancellor's attention tonight.

I shall conclude by saying that before the Budget the Chancellor of the Exchequer received a good deal of advice from many organisations. One of them was the National Union of Manufacturers. On 22nd October, the Manchester Guardian told us what advice the National Union of Manufacturers had submitted to the right hon. Gentleman. It reads: … the National Union urges the Chancellor not to attempt to correct the tendency to overspending at home by additional taxation, whether directly or by an increase in purchase tax. Additional taxation is in itself one of the main causes of the country's recurring financial crises. To add to it would be a retrograde step likely very quickly to provoke another round of wage demands. It is the last sentence which I should like to commend to the Chancellor, because if he had accepted that advice and refrained from increasing Purchase Tax on this occasion, he might have been spared some of the pressure to which he is now subject.

Immediately after the Budget, many of the great unions pronounced and gave the country their views upon it. The National Union of Mineworkers issued a statement which read: Mr. Butler's proposals are an indication of the usual Tory technique and affect substantially the position of the poorer sections of the community.

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

I am not sure that this bears upon the Question, "That the Clause stand part of the Bill."

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

With respect, the unions are basing the wage claims they are submitting upon the higher cost of living, part of which they attribute to the increased Purchase Tax included in the Clause under discussion. I do not want to weary the Committee too much, but if I may continue with that quotation, it reads: Thousands of families, because of insufficient means to provide all the domestic requirements of the kitchen and the table, and whose supply now falls short of what is required, are going to be in a worse position. This is an attempt to lower the living standards of the people. The unions in the engineering industry take much the same view. The National Union of Tailors and Garment Workers, in a colourful phrase, said that the Budget was unsurpassed as a piece of class legis- lation. Less progressive opinion on much the same lines was expressed by Time and Tide, which said, Deliberately to put up the cost of living and then to call for wage restraint shows, on the face of it, an outstanding naievity. The Observer, on the Sunday after the Budget, referring to the Purchase Tax Clause, said, The justification for the increase is somewhat difficult to see, at any rate over a very wide range of the things affected. On many of the articles the irritation caused, and the retaliation by the unions, will be more than likely to outweigh the economic interest. That is the view which we take on this side of the Committee. We believe that this Clause embodies an unfair and unnecessary proposal. We believe that it is inadequately thought out. We think it is irrelevant to the economic needs of the country, and that it is a proposal which could have the gravest consequences not only for individual industries, but for the whole economy of the country. That is why we are opposing the Clause.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

The hon. Member for Rossendale (Mr. Anthony Greenwood) was very stingy in his praise of the Chancellor for abolishing the D Scheme, which had been attacked from both sides of the House for many years. It is rather ungenerous, now that it has gone, to give the Chancellor such faint praise. The abolition of this scheme was by far the best part of this Budget. It is time the Chancellor was given some praise for removing it. I regret the absence from these benches tonight of Lord Clitheroe, formerly Mr. Ralph Assheton, because he led the attack of the Conservative hon. Members from Lancashire on the D Scheme for many years.

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

If an hon. Member does not give way, another hon. Member must resume his seat.

Hon. Members:

Give way.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

I hope that the hon. Member for Darwen (Mr. Fletcher-Cooke) will realise that if he refuses the normal courtesies hon. Members on this side may find themselves reciprocating.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

On a point of order. When an hon. Member gets up and an hon. Member who is speaking refuses to give way, is it not out of order for the hon. Member who wanted to interrupt to remain standing? Supposing another hon. Member gets up to interrupt, and the hon. Member speaking refuses to show the ordinary courtesies of debate, is that in order, Sir Rhys?

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

There is no point of order there.

11.30 p.m.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

I am not usually reluctant to give way, but I had begun a short speech, after listening to a series of long speeches from hon. Members opposite which were not interrupted, and in those circumstances, since it is reciprocation that hon. Members opposite are anxious to have, I should have thought—[Interruption.]

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

Order. I cannot hear what the hon. Gentleman is saying.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

I usually give way as frequently as I can. The reason I have not given way tonight is, as I indicated, because I wished to speak for only three minutes, but my speech has now already lasted for five minutes because of interruptions from hon. Members opposite—

Hon. Members:

Speak up.

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

I cannot hear either.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

As I was saying, I do not think hon. Members opposite are really doing justice to their case, and I was trying to answer the hon. Member for Rossendale [Interruption]—

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

On a point of order. Is it not out of order for the hon. Gentleman to speak so quietly that hon. Members on this side of the Committee cannot hear a word he is saying?

Photo of Sir Rhys Morris Sir Rhys Morris , Carmarthen

I agree. I think it is equally out of order for hon. Members to make so much noise that we cannot hear him.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

I was attempting to say it was a pity that Mr. Ralph Assheton, as he then was—

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

In view of what the hon. Gentleman has just said, may I ask him whether, at the recent Election, he explained to the electors of Darwen that if and when he was returned to Parliament he would support an increase in Purchase Tax?

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

The hon. Gentleman is quite mistaken. At the time of the last budget I said unless the D Scheme was abolished—[An HON. MEMBER: "Which party was the hon. Gentleman in then?"] I was asked whether I supported an increase in Purchase Tax at the time of the General Election, and the answer is that I told the electors that I would urge, as I have always urged, for the abolition of the D Scheme. That scheme has been abolished, and I think hon. Members opposite, who agreed with me in this and who were urging its abolition, are showing a poor spirit in not congratulating the Chancellor on at least this part of the Budget, whatever else they may feel about other parts of it.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

I am grateful to the hon. Member for giving way. I am sure he will agree that the difference between him and ourselves over the last four years has been that we have consistently voted against the D Scheme while he has done nothing but speak against it.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

We have certainly been speaking against it and I am glad of that corroboration from the other side of the Committee. As the hon. Member says that all along he has been opposing the D Scheme, it is only fair to Remind him that the complaint made from his benches when his attack began was not to favour of a flat rate but that the Utility Scheme was much better. But the Utility Scheme was something which penalised quality far more than the D Scheme. That is what hon. Members opposite were advocating and the repeal of it they were much regretting.

It is now no good to say, "We were always against this tax on quality," because, in fact, the Utility Scheme taxed quality much higher."—[AN HON. MEMBER: "Nonsense"] I think that that is so and any fair-minded person who reads those debates—which I well remember because they were the first which I listened to when I came to the House—will see that it was the Utility Scheme, on the usual grounds of social justice, which I quite understand, which conflicted with our export requirements.

I agree with the hon. Member for Rossendale when he says that the abolition of the D Scheme will not help the great problem which faces Lancashire industry at the moment, the problem of the importation of cheap cloth. I should like to follow him on that, but your predecessor in the Chair, Sir Charles, ruled that out of order. But abolition of the D Scheme with its frightful consequences of manufacturers, for psychological reasons, trying to get below the D line at all costs and trying to debase their cloth—must surely have an effect now on our ability to compete with the higher quality European cloths, not only in Europe but in this country as well. That is a direct help to our industry in the finer cloths and for that reason I think we should all show our appreciation of what has been done even if, like the hon. Member for Rossendale, we would like to have seen it done somewhat earlier.

Photo of Mr Gilbert Mitchison Mr Gilbert Mitchison , Kettering

I should like for a moment to put my foot in it by referring to boots and shoes. I can satisfy the hon. Member for Darwen (Mr. Fletcher-Cooke) by congratulating the Chancellor on the removal of the D Scheme. I would add that it ought to be have been removed long ago and, so far as boots and shoes are concerned, it ought never to have been introduced.

In a recent Answer to a Question the Financial Secretary to the Treasury made it clear that the effect on the boot and shoe trade had been to tax only one-sixth of the total production. Of course it did not tax the ordinary boot or shoe that is worn by the ordinary man; it taxed only the higher ranges in the trade. I regret very much, not that the D Scheme has been abolished, but that a tax has now been put on boots and shoes.

Surely of all the articles in the country they are about the most inelastic in demand. They are things which are bought in quantities varying a little from time to time it is true, but, on the whole, fairly steadily. The effect of putting a tax on them as far as any direct result on the export trade is concerned I believe to be very small indeed. I simply cannot see the sense of expecting any large increase in export trade by making ordinary boots and shoes dearer for people in this country.

This seems to me to be exactly the kind of case that in a quite different connection the Financial Secretary mentioned a short time ago. People will have to pay more for them, they will still have to have them even more than the Christmas cards to which he was referring, and they will buy them. Therefore, the effect of putting a tax on a commodity of this sort seems to be not to reduce inflation but to create it. It is simply putting people to a larger expenditure which they are bound to meet.

There is, of course, a way out of it. If one has to pay more for one's boots and shoes and one has to have them, one will inevitably ask for more pay in order to do so. If, at the moment, the Chancellor taxes standard commodities of this kind, it seems to me that he is expecting and encouraging wage demands.

I agree that the amount is not very large, but it is large enough to make a considerable difference to a trade which is not desperately strongly organised from the manufacturing point of view. We have already had adverse comments on the Chancellor's decision from trade organs. It should be borne in mind that they are commenting on the whole decision, the abolition of the D Scheme coupled with the introduction of the tax on boots and shoes. In its issue of 3rd November, the Shoe and Leather News said: Does Mr. Butler really think the best way to put out a fire is to add fuel to it? Its effect on our industry is thoroughly disruptive. A small proportion of high priced footwear will pay less tax. But there will be many millions of pairs of lower priced productions that will bear a tax which in the opinion of many is a monstrous imposition. Inevitably, because tax liability was immediate, there has been a general holdup in deliveries; and where there are no deliveries there is no inflow of money to meet expenses. Nor is there a good prospect, thanks to Mr. Butler's credit squeeze, of getting required help from bankers. Manufacturers, in other words, have been plunged into a complicated dilemma. The paper put it in its own way and in its own language, but that is only one of many trade papers—certainly not Labour in politics; usually, as in this case, completely non-political—which have found the Budget thoroughly unsatisfactory because, first of all, introduced as it is at this moment, it is causing the maximum disruption to trade, and, secondly, the effect on the trade is to put an additional tax on the ordinary man, in this instance on the ordinary footwear that he wears.

It is pointed out, too, that the increase in price will not be strictly confined to the increase in tax. If we add to the ordinary prices of boots and shoes an artificial percentage of this kind, we reach some odd figures which will, in fact, be evened out upwards, so the increase will be slightly more than the actual increase in tax.

11.45 p.m.

I fail to see the point of this kind of increase. The Chancellor tells us that we are in a dire crisis in our financial relations with the world and he attempts to save us by taxing toy swords and Christmas cards. I suppose he will kill the dragon of inflation with a toy sword taxed at an increased rate and will put the poor beast into one of the articles so happily described as a "pedal-operated hygienic dustbin", which, too, is taxed.

This kind of tax is highly uncertain in its effect, and in the case I have in mind seems more likely to be inflationary than the deflationary step it ought to be. Taking this one essential commodity upon which a considerable area of the East Midlands depends, I say that it will do the maximum harm to the trade, will put up prices of boots and shoes to ordinary people and will inflict a measure of hardship—not on a large scale, of course, but still hardship—that is unnecessary and out of proportion to any good it might be expected to do.

Photo of Mr Charles Waterhouse Mr Charles Waterhouse , Leicester South East

It is extremely interesting to hear hon. Members on the opposite side take strong views about the boot and shoe industry and stand up for the manufacturers. That is the sort of mood that we do not expect from them, and we look forward to hearing it again in the future.

Photo of Mr Gilbert Mitchison Mr Gilbert Mitchison , Kettering

The right hon. and gallant Member need not be so surprised. I made an exactly similar objection on the introduction of the D Scheme.

Hon. Members:


Photo of Mr Charles Waterhouse Mr Charles Waterhouse , Leicester South East

I shall not withdraw. I do not want to withdraw my refreshment from the fact that hon. Members on the Opposition side should take that particular viewpoint. I agree with what the hon. and learned Member said about the D Scheme for the boot and shoe trade. It was a real imposition. The trade paid a relatively small tax of about £500,000 under the older scheme but about £4 million or £5 million under the D Scheme. It was an unfair and very heavy tax on the better end of the trade, making it harder for the trade to compete in foreign markets. The trade said, "Remove the D Scheme and we shall be able to develop the market in England up to a point comparable with what we can export. Therefore, we shall be able to improve our power in export markets."

This matter affects my constituents far more than the constituents of the hon. and learned Member. Nobody likes to have a tax of 5 per cent., or 1s. in the £, on trade. The bulk of the Leicester trade is in the cheaper shoes. Therefore, Leicester regrets this tax. On the other hand, I am satisfied that it is in the long-term interest of the boot and shoe trade that we should have done away with the D Scheme and have a flat tax. Any tax must affect sales and is bound to put up prices to some extent, but it is a great deal worse to have a differential tax, one range of goods carrying a higher tax and another range a lower tax. My right hon. Friend has changed his mind: I wish that we had not had the D Scheme, and I am glad that he has gone over to the 5 per cent., and has done away with the D Scheme. I hope the time will come when he will be able to do away with the tax altogether.

Photo of Miss Alice Bacon Miss Alice Bacon , Leeds South East

I can well understand the hon. Member for Darwen (Mr. Fletcher-Cooke) having difficulty in explaining to the Committee his attitude to the D Scheme and the Utility Scheme which preceded it, because I understand that he has had to change his attitude in the last few years according to which party he happened to be standing for at the Election.

We have now spent two days discussing this Clause. I only wish that the people who went to the polls a few months ago could have been in the Chamber during the last two days and seen how the party opposite has kept its promises to reduce the cost of living. It has been said on several occasions—it was said several times yesterday evening—that the Chancellor has made these changes in Purchase Tax in order to curb inflation. If that is his objective, surely it is a very curious way of achieving it so to arrange the Purchase Tax scheme that he decreases the cost of expensive articles and increases the cost of the cheaper ones. I will give just one example of the way in which this tax has been arranged. A £27 coat is reduced in price by £2, and a £9 coat is increased in price by 10s.

It was also argued yesterday that because of the increases in Purchase Tax people would have less money available for other things, but apparently this applies only to those who are earning low wages. Last night we heard a very curious speech from the hon. and gallant Member for Worthing (Brigadier Prior-Palmer), although I agreed with a great deal of what he said. He talked about the difficulty experienced by the man earning £8 a week, having to keep himself, his wife and, perhaps, two or three children. He also referred to the difficulties of those people living on small fixed incomes, and asked us how we would like to try living on £100 a year. I would remind hon. and right hon. Gentlemen opposite that quite a few million of our people are living on £100 a year—our old-age pensioners. We are wondering whether anything will be done in the very near future to help them with the increases they will have to pay under the Budget proposals.

I want to say something about the abolition of the D Scheme. I am very sorry that this is the only opportunity which we shall have to talk about it. It appears that the Amendments upon the particular items in the Schedules will not be in order, and will not be called. That means that we shall not have an opportunity of voting specifically upon the scheme, and can refer to it only generally in this debate on the Question, "That the Clause stand part of the Bill." It is quite true that when the D Scheme was introduced hon. Members on this side of the Committee opposed it, and hon. Members opposite are saying that that is inconsistent with our attitude today. Not at all; it is not the abolition of the D Scheme that we oppose, but what has been put in its place.

The worst feature of what is proposed is that clothes and boots and shoes which were never before taxed—either in wartime or in the dark days immediately after the war—are today to be taxed, and taxed in such a way that there are decreases in the prices of the expensive articles and increases in the prices of the inexpensive ones.

My hon. and learned Friend the Member for Kettering (Mr. Mitchison) spoke about shoes. I want to give a concrete example in that connection. A pair of women's shoes which today costs £2 10s. will, as a result of these changes, cost £2 12s.—an increase of 2s. Under the changes, a pair of shoes now costing £6 will be reduced in price to £5 15s.—2s. extra on the cheaper pair and 5s. less on the dearer pair.

I represent a constituency which is the centre of the clothing trade. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) and I have in our constituencies some of the great multiple firms which produce hundreds, thousands, even millions of the cheaper men's suits. Let us see what will happen. A man who buys a suit now costing £23 will in future get a reduction of 30s. If he is in the Surtax class and buys a suit costing, at present, £40, he will get a reduction of £3 10s. A man who buys an overcoat costing £5 will pay 3s. 9d. extra.

A man's shirt costing £1 will be increased in price by 8d. A shirt costing £2 will be decreased in price by 1s. 2d. Many other similar examples have been given to me by the trade. A woollen vest now costing 8s. 6d. will be increased to 8s. 11d., but a vest costing 35s. 6d. will be decreased by 3s. to 32s. 6d. I could give many other examples. Coming from Yorkshire, as I do, I am concerned, as is my hon. Friend the Member for Rossendale (Mr. Anthony Greenwood), that we are to have a tax on wool cloth.

I feel very strongly, too, about the increase in the tax on electrical equipment. Those who live in a working-class area, as I do, realise that for the first time the working-class housewife is having some of the drudgery taken out of her daily work by means of such equipment as electric washing machines. It is a great blow to the woman in the home that these are to bear an increased tax. There is to be an increased tax of 1d. on electric light bulbs. Think of the administration we are to have in order to collect these pennies here and twopences there.

I tried to speak earlier in the discussion on the increased tax on such things as cycles and stationery and I should like to comment now on the increased price of cycles. I do not know anything about the trade and I am not pleading a particular trade interest. Cycles are used chiefly by two kinds of people—by men and women going to work and by children going to school. Do not let us forget that some time ago this Government reduced the amount of free travel for children going to school by increasing the distances involved, and this has meant that many parents have had to buy cycles for their children. This was necessary because, as a result of the Government's action, the free buses were no longer available.

The Bill also increases the tax on stationery, but nothing has been said about the effect of this on the cost to local education committees. I know that the Chancellor has a genuine interest in education, but the increased Purchase Tax will bear heavily on local education committees. I wonder whether the right hon. Gentleman retains his interest in education so much as to read the official journal of the Association of Education Committees, Education. On 11th November that publication made this comment: The Budget is going to hit the School Meals Service together with the hotel industry (whose sensitivities have already been reflected in the correspondence columns of The Times). Silver and cut glass are not likely to bulk large in the annual purchases of any Authority, but the range of goods on which the increase of one-fifth will have to be paid includes many articles which are already on many requisition lists. As for the imposition of 30 per cent. duty on pots and pans and kitchenware hitherto exempt—the impact is bound to be severe.The list of goods affected is formidable. It runs from cups and saucers, by way of frying pans, to wringers and mangles and all manner of more or less likely pieces of equipment. It is not easy to work out just how the increase will affect canteens … As far as Education Authorities are concerned this is just one more example of the absurdity of making education pay purchase tax at all. And when it comes to tax on stationery and work books it is extreme folly. Those are the words of the official journal of the Association of Education Committees, and I hope that the right hon. Gentleman will have this in mind, because we know perfectly well that other measures which the Government are taking will hit local authorities very severely, and these Purchase Tax changes will also hit them.

I do not want to spend any more time going through any more of the items, though there are many more we can go through. But when one thinks, for instance, that toilet soap, toothpaste, brushes, combs and all these things will have extra coppers put on their price, one knows what it will mean. I know hon. Gentlemen opposite will say these are only pence—but pence make up shillings, and shillings make up pounds, and together with the other increases in the cost of living which this Government have im- posed, we know that it will be an extremely heavy burden which will fall very hard on every working-class house.

12 midnight.

Photo of Mr Henry Turner Mr Henry Turner , Oxford

I will not seek to detain the Committee for more than about ten minutes, unless the hon. Member for West Ham, North (Mr. Lewis) is expecting any more deputations. I speak in a very critical vein of Clause 1. I do so with very great regret and in the presence of my right hon. Friend the Chancellor of the Exchequer, to whom I think the whole country has been so grateful in the last few years for his economic policy. I also speak with regret because of the very yeoman work also done in this debate by the Economic Secretary to the Treasury, a true Oxford man who has gone to the rescue of a Cambridge Chancellor.

As one who is actively engaged in industry, I must support the view that there must be full production if Great Britain is to hope to compete successfully in the export markets. Unless there is a full and satisfied home market no manufacturer can possibly hope to tender in the export markets, least of all in the hard currency markets. He has to find the maximum quantities of raw materials; he has the constant capital cost of tooling up; he has to have the available labour force for his production—in other words he has to have his overheads fully covered and be able to produce on a scale that covers his overheads. Then and only then can he make bids for overseas contracts.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

I am trying to discover whether the hon. Member is advocating that there should be more consumption in the home market or less.

Photo of Mr Henry Turner Mr Henry Turner , Oxford

Happily, I can put the hon. Member at his ease. I am one of those who, unfortunately, has felt unable so far during the course of the Finance Bill to support the Government. I wish only that I did not have to say that. When I am trying to meet the point about the need to have a strong, healthy home market, I am trying to see the Clause against the background, which my right hon. Friend painted in his Budget statement, of the need to support the £ sterling. Every hon. Member in the Committee must agree with the need to add to our gold and dollar reserves and to improve our balance of payments position.

I cannot see how, under the Clause, the imposition of additional Purchase Tax will achieve any of these objects. The only argument that I have heard so far—put with great skill by my hon. Friend the Economic Secretary to the Treasury—is the quite ordinary argument that we must cut down home consumption. I suggest that it would be a dangerous thing to do as a matter of policy, quite apart from taxation.

We are in very great danger of being out-priced, and sometimes tenders are quite fractional between being accepted or rejected. I do not think that any hon. Member is unaware of how important and vital the effect of any and every wage demand is on export tenders. The attitude of the T.U.C. has been and is increasingly very responsible in this matter. It has preached wage restraint to an increasing extent. I cannot see, therefore, that it will help the T.U.C., or anyone else for that matter, let alone manufacturers, to practise wage restraint, with the cost-of-living index as high as it is at the moment, to have additions to the index.

A great deal has been said about 4d. per head per week as the net overall result of these increases in Purchase Tax. I just do not understand that. If it is true, it is no way to deal with inflation. If it is not true, we would like to know exactly what the increase will do and how far these figures will be computed in a cost-of-living index. I hold the view that if we are to reduce the cost of living and thus help to have more tenders accepted in the export market we must reduce and eventually abolish all artificial taxation, of which Purchase Tax seems to me to be the most artificial of all.

Earlier in the debate we gave considerable thought to the motor car industry. I believe I understood my right hon. Friend aright when he referred to the retaining of the initial allowances for companies which buy cars. It has been stated that the British Motor Corporation, for instance, is making plans to increase its weekly output from 10,000 to 12,000, even though it is said that the export sales of motor cars generally have fallen to 47 per cent. from a much higher figure.

I would, however, ask my right hon. Friend to bear in mind that this fall in sales—which certainly will not be helped by an increase in the Purchase Tax—is due to several things. Undoubtedly, one of them is very stiff German competition, and subsidised competition at that. Another is that these big British motor companies, including the British Motor Corporation are, and I think quite rightly, building factories overseas, and these figures do not reflect in home sales.

When the right hon. Gentleman referred to imports of steel—rather lightly —I fully appreciated his point. Surely what the Prime Minister said yesterday about the cost of importing coal was very much more important. The £80 million we spent on importing coal is precisely what the motor car industry earned last year in exports overseas. I think that he is giving to the wrong people.

My other example, before I come to my questions, relates to television sets. I simply do not understand Government policy. We spend day and night introducing legislation and we produce an I.T.A. I am much more impressed with it than I expected to be. But new television sets have to bear a proportion of this increase in the Purchase Tax. What are we supposed to do? People, at any rate those in London, either have to adapt their existing sets, which costs between £15 and £20 a time, or buy new sets—and why should they not do so? I cannot see the object of getting people to work overtime if they cannot buy. "Earn overtime and enjoy spare time" seems to be the thing.

I have three questions to ask the Chancellor: first, does he really think for one moment that anyone will stop buying anything because of Purchase Tax increases? I would say—not to the Chancellor—but to some of his advisers, let them leave Whitehall and cross to Vauxhall and learn the facts of life. Secondly, do my right hon. Friend's advisers really want to balance the under-the-line account? Do they really want this £80 million? My right hon. Friend said earlier that this was not what he wanted, and it seems to me that if he gets it he will not have achieved the object of Clause I. Lastly, has my right hon. Friend forgotten the value of incentives which he and many of us have been preaching for so long? I am not so much referring to profit sharing—it does not relate to this Clause—but I believe that an increase in the Purchase Tax is anything but an incentive.

I hope that by the time next spring comes along we shall have more "carrot" and less "stick;" that at any rate my right hon. Friend will allow industry to do what any citizen can do, and that is to have an incentive in direct taxation remission by reclaim forms for export orders won. I hope that he will give sympathetic consideration to what I have said.

12.15 a.m.

Photo of Mrs Bessie Braddock Mrs Bessie Braddock , Liverpool Exchange

I am in a difficulty, because I have been unable to bring along any quotations. I have been given a lot of quotations which refer to the Chancellor, but they are couched in unparliamentary language and I cannot repeat them here. Last night I told the right hon. Gentleman something privately which I dare not repeat in this Chamber—[HON. MEMBERS: "Say it."] I dare not, but perhaps the Chancellor might like to whisper it in the ears of his hon. Friends. However, what I want to deal with—the right hon. Gentleman is telling the Economic Secretary what I said—

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

On a point of order. The hon. Lady said she has a quotation that she cannot use because it may be unparliamentary. With respect, Sir Charles, how do you know whether, it is unparliamentary or not until she has made it?

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

I cannot tell until I hear it, but I have no doubt that it is.

Photo of Mrs Bessie Braddock Mrs Bessie Braddock , Liverpool Exchange

I know it is unparliamentary. That is the trouble. I do not want to be thrown out of the Committee until I have made by speech. May I suggest to you, Sir Charles, that when I get to the end of my speech, if I feel I have had enough, I may then tell the Committee what I said?

I want to deal specifically with one or two items that have not been dealt with in reference to this Clause. I support my right hon. and hon. Friends in their very strong opposition to it. I hope, even at this late hour and in spite of the fact that the Chancellor has said that he is not going to make any alterations, that perhaps some of the things I say to him in ordinary working-class language may persuade him that he has been a little severe in what he has done.

I represent a constituency which had a lot of unemployment during the years between the wars and where there was abject poverty. The attitude being adopted by this Government is responsible for bringing that state of affairs back again to my constituency. I can tell what is happening, because I am there every week. They come along to me, and I can tell by the type of case they bring. Let me quote just one case which came to me on Saturday morning—an old lady of nearly 70, who had to work in industry as long as she could, was now managing on her own on the £2 pension, plus supplementation. She has a little place of her own; her rent is 7s. 11d. a week, and she has to buy everything she needs out of the money she receives.

The National Assistance Board is not to any large extent at present giving additional clothing grants to old people. It is saying, in general, "Out of the money you are receiving you ought to put 1s. a week into a clothing club, so that you can obtain the clothes you want." She came to me and said, "I have broken my teacup—I have not got a saucer—and I went to Lewis's shop—a shop in the area which is very well known—and was told that the teacup I wished to buy, because of the additional tax put on to it, instead of costing 8½d. as the last one did, will cost 11d." That is 2½d. on an ordinary cup for an ordinary person who has a limited amount of money.

Is that the sort of expenditure that the Chancellor wants to restrict? Does he want the people to go back to using the jam pots which they used in the years when they had no money to buy cups and saucers? I believe that that is what he does want, and what his party wants. It is the kind of thing that they have been doing in the last four years. [HON. MEMBERS: "Oh"]. Of course, you think it is rubbish; you think it is nonsense, because you do not understand. What have you done?

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

If the hon. Lady addressed her remarks to me, there would probably be less noise.

Photo of Mrs Bessie Braddock Mrs Bessie Braddock , Liverpool Exchange

I am sorry, Sir Charles. I probably blame you for too much.

Hon. Members opposite do not understand. They do not realise what has happened. They do not realise that by their attitude and policy of "setting the people free" the Government have set free those people who have done nothing all their lives but batten upon the ordinary working class. Because the Chancellor's policies set them free, we now have to face a situation which the Government created, because private enterprise exists only for the purpose of making as much profit as possible.

Controls were taken off as part of the policy of setting people free and people who should have been manufacturing goods for export were switched to production of those things which could make the most profit in the home market. That is a simple economic fact. The Chancellor knew what he would have to do at the beginning of this year and he was completely dishonest. What some people are saying about him is, "Deceitful and dishonest, because he wanted power to get the people whom he represents to go on exploiting the working class and making as much profit as possible." It is time that that was said in straightforward English in this House of Commons.

Besides making my old constituent perhaps use a jam jar instead of a cup—[Laughter.]—hon. Members should not think that funny; it is actual fact—the Chancellor's policies have been such that people have been finding the cost of things they need increasing week after week. They cannot buy bacon, it is too expensive; they have forgotten what butter is like, because of its price; children are not eating butter these days, except that which they get at school meals, which have also been increased in price.

It is no good beating about the bush. That is what is happening. Let the Chancellor remember that we are not dealing with the sort of people with whom we were dealing in the years between the wars. The young people will not put up with the sort of thing his Government is trying to put upon them. By this increase in Purchase Tax, the Chancellor is making it very difficult indeed for the Trades Union Congress to be able to put into operation what it wants to do. What he is actually doing is giving those in this country who control the Communist Party an opportunity of getting control of the situation, an opportunity which they would not have had had the present Government not been in power. That should be quite openly stated on the Floor of the House of Commons.

Let me tell the Chancellor of something else which he has done. Every hospital management committee has had to face increases in the prices of the goods they purchase. Their estimates for crockery and brushes and the other things they require have already been securely tied down by the squeeze of the last couple of years. The only things they have ordered are absolute necessities. The hospital management committee of which I am a member is one of the smallest in the country—I am referring to the area which it administers—and the additional cost for actual requirements is £2,500. That is for one management committee. The Treasury has already agreed that any increases will be met by the Treasury.

I ask the Chancellor to say how much it is estimated that this will cost. He may say that he has not been able to get the information. I asked for the information in a supplementary question a little while ago, so there has been plenty of time to obtain it. How much additional expenditure is it estimated will be required to meet the Purchase Tax through the hospital service alone? It is £2,500 for the management committee of which I am a member. For the Liverpool board of governors, the increase on an estimate of £5,000 for crockery, etc., is estimated to be £1,300. How much will the Treasury take out of the Treasury to pay the Treasury?

Was that amount of increase considered when the Chancellor stated the amount he expected to obtain from Purchase Tax? There is another thing. Every hospital matron is given an amount with which to purchase things for Christmas, for the hospital and the patients. Every one of them, on ordering the things she required, has found that she had insufficient money to meet the additional cost. Wholesalers had orders about sixteen weeks ago from the retail shops at which parents had ordered something for the children at Christmas. Those parents cannot pay down the whole of the purchase money at once. They go to the showrooms of the shops and choose what they want from samples. The retailers do not buy them then, but indicate to the wholesalers that they want the things a week or two before Christmas. Weekly payments for these toys are made by the parents. The price of every child's toy has been increased. Some have gone up 1s., some 2s.

When the retailers send to the wholesalers for the things ordered it will be after the date when the tax comes into operation. Every mother or father will have an additional few shillings to pay on top of the weekly payments for the Christmas toys. Is not the Chancellor ashamed of himself? The cost of every Christmas decoration has risen. Did the Chancellor do it deliberately? Did he think about it? He said he had given plenty of thought to the matter when he put the tax on certain goods. I heard a lot of talk from right hon. and hon. Gentlemen on that side of the Committee, when we were in control, about difficult Christmases; but the Chancellor has made this one more difficult. He has made fewer things available, because of the cost, and he has said that that is what he wants to do.

What is to be the effect on export production, and upon exports and imports, of making people do less for their children and themselves for Christmas? I do not suppose that the Chancellor thought about it. The Chancellor's proposals also mean that many more retail and wholesale establishments will have to be registered for the collection of Purchase Tax. They mean that there will have to be many more clerical workers, and much more work will have to be done in wholesale and retail establishments assessing the additional tax over Christmas.

I suggest that the Chancellor should withdraw this Clause and have a look at the arrangements for the collection of the tax. He is being diddled out of thousands of pounds by his friends. Purchase Tax collection was a hasty sort of thing during the war; it was improvised administration. It has never been overhauled, and if the tax is to be collected properly it needs a similar sort of system to that of the brewers over the amount of beer they sell—somebody sitting there watching it.

12.30 a.m.

Let me tell the Chancellor what is happening about Purchase Tax. It is quite easy for the wholesaler to order from the manufacturer so many things on which Purchase Tax has to be charged; he gets so many of them, but the Purchase Tax is charged on the invoice, and in thousands of cases—some of which I could quote, but I am not what is known in Liverpool as a "copper's nark"—goods obtained through the manufacturers are never invoiced to the wholesaler at all; they are sold at the price of the Purchase Tax on them. The only way the Purchase Tax is collected is through the invoices submitted by the manufacturer to the wholesaler. Why does not the Chancellor have a look at that to see whether there is something wrong and the tax collection is short?

I could quote case after case, but let me give just one more. The Chancellor says, "People do not need to buy a pan every week." Do not they? Has he forgotten, or does he not know, that there are thousands of people still cooking on ordinary coal fires with ordinary pans that burn out very quickly? People are still cooking on ordinary bedroom gas rings or coal fires, and a pan used for all sorts of purposes on an ordinary coal fire wears out very quickly. Sometimes it is forgotten and it wears out very quickly; it is useless a couple of days after its purchase.

The Purchase Tax that the Chancellor has put on these items is positively disgusting and almost obscene, and the attitude he has adopted towards it proves to me that he knows nothing at all about the conditions under which ordinary people have to live. If he did he would not have done what he has done. If he was so sure of his ground, why, when he was invited to go to the old-age pensioners' demonstration on 9th November, did he not go and listen to them? He dared not listen to them. He dare not come into my constituency and talk to them there either.

Photo of Mrs Bessie Braddock Mrs Bessie Braddock , Liverpool Exchange

I am talking about my own constituency. My hon. Friend can talk about his if he likes.

Last Saturday morning, two groups of people came to see me. The first was a few dockers who wanted to know why none of us from Liverpool had said anything in the House about the proposed increased Purchase Tax. I cannot repeat the expression they used in telling me to tell the Chancellor about it, but anybody who knows the language of Liverpool dockers will have some idea what it was they said.

The second group who came to see me was a group of old people from my constituency. Many of them live in one room. They, also, had some very caustic comments to make in ordinary Liverpool working-class women's language-which very often is much more expressive than the men's language-and they asked me to convey it to the Chancellor. If he wants to know what it was and meets me outside the Chamber afterwards I will tell him.

Photo of Mrs Bessie Braddock Mrs Bessie Braddock , Liverpool Exchange

There are a lot of things my hon. Friend wants to know.

In conclusion, let me quote the proposed increases on things ordinary working-class women use. I am one of those peculiar people who does not believe the working-class understand percentages at all. We have to tell them about these things in pounds, shillings and pence—usually in shillings and pence because they do not know much about pounds. I will take the items which have not had tax on them before. A set of good aluminium pans cost 22s. 11d. before the tax and will cost 27s. 6d. with the tax. An aluminium teapot before the tax cost 5s. 11d. and will now cost 6s. 9d. A cake tin cost 2s. 6½d. and will now cost 2s. 11½d. I have mentioned the earthenware cup, which I think is the wickedest increase of all. An earthenware teapot cost 17s. 11d. before the tax and will now cost 21s. 6d. A zinc bucket cost 5s. 11d. and will now cost 7s. 3d. A sweeping brush cost 1s. 9d. and will cost 2s. 0½d. with the tax.

I have a very vivid recollection of a General Election in which I was taking part and in which Viscount Kilmuir had quite a lot to say. He called together a lot of Conservative women and issued them with buckets and mops for the purpose of clearing up the mess which he said the Labour Government had made. What is the Chancellor doing—preventing women clearing up the mess he has made by charging an extra 6d. on a sweeping brush?

Scrubbing brushes cost 1s. 4½d. before the tax and now are to cost 1s. 8d. A Pyrex casserole—I do not know whether the Chancellor knows what that is; it is something you cook meat in and that sort of thing—now costs 7s. 6d. and will cost 9s.—1s. 6d. additional because of the tax. A pudding basin—it is getting near Christmas and perhaps the Chancellor wants to stop people having them cost 2s. 9d. and will cost 3s. 3d. with the tax. An ironing board-but perhaps I had better leave that because I am dealing with things which my people buy and they have not the room for ironing boards. Frequently they have not room for ironing. Children's tea sets cost 12s. before the tax and with the tax will cost 14s. 5d. Children like tea sets. Perhaps the Chancellor did not know that, or may have forgotten, or not looked into this. Dolls of a decent size are expensive. A doll now costs 25s. 11d. and, with the tax, will cost 26s. 8d. A child's toy car cost 10s. 11d. and will cost 11s. 3d. with the tax.

I hope the Chancellor feels satisfied. If I were him I would feel thoroughly ashamed of the sort of thing he has done to ordinary people. The sooner they have the responsibility of getting him and his crowd out of it, the sooner we shall be satisfied.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

The Committee has been regaled by a speech from the hon. Lady the Member for Liverpool, Exchange (Mrs. Braddock) which I think was one of her more unfortunate. I have had the pleasure of listening to some very constructive speeches from the hon. Lady, on local government and other matters, from which I have learned a lot and which I valued. I do not think that many of us have appreciated the type of speech she has made tonight.

Photo of Mrs Bessie Braddock Mrs Bessie Braddock , Liverpool Exchange

I did not expect the hon. Member to do so, and should be very upset if he did.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

I do not happen to find myself on this occasion very much in line with the Chancellor about Purchase Tax. [HON. MEMBERS: "Which way will the hon. Member vote?"] I am to some extent running parallel with my hon. Friend the Member for Oxford (Mr. Turner), but not entirely so. I have taken an interest in financial affairs ever since I have been in the House, and have always had a very high regard for the Chancellor. If, on one occasion, he does something which I do not think is the best thing or the right thing, that does not mean that I have to vote against or not support a Government which I think is doing a good job and a Chancellor who, I think, is doing a good job.

In spite of my feelings on the matter, I am appalled at the disgraceful allegations which the hon. Member for Liverpool, Exchange has made against him. I hope that he will deal with them firmly, if he thinks it is worth while dealing with remarks of that sort. I think they are quite despicable.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

On a point of order. Even if one makes the fullest possible allowance for the freedom of controversy, especially at this time of the morning and on such a subject, are words such as "disgraceful" and "despicable," used by one hon. Member of the speech of another, Parliamentary expressions? If so, would I be in order in telling the hon. Member what I think of his speech?

Photo of Mr Malcolm Macpherson Mr Malcolm Macpherson , Stirling and Falkirk Burghs

There will be no objection to the hon. Member for Nelson and Colne telling the hon. Member for Shipley (Mr. Hirst) what he thinks of his speech. There are certain words which are not Parliamentary when applied to individual hon. Members, but which may still be applied to speeches.

Photo of Mrs Bessie Braddock Mrs Bessie Braddock , Liverpool Exchange

On a point of order. Would you, Mr. MacPherson, on my behalf, mind telling the hon. Member for Shipley (Mr. Hirst) that I have not the slightest objection to whatever he says about me? Hon. Members can say whatever they like. The more they say, the better it will suit me.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

On a point of order. It was said from the Chair yesterday that the Chair would try, as far as possible, to call one speaker from each side of the Committee. Shall we have the opportunity, in the course of the debate, of hearing anyone who supports the Budget?

Photo of Mr Malcolm Macpherson Mr Malcolm Macpherson , Stirling and Falkirk Burghs

That is not a point of order, either.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

Perhaps we may now get on with the discussion, which, in case any hon. Member has forgotten, is on the Question, "That the Clause stand part of the Bill." I have already indicated that I am supporting the Government and also my right hon. Friend, even if I choose to criticise him on one point. My point does not cover the whole field which has been discussed at great length, almost at too great a length—

Photo of Mr James Ede Mr James Ede , South Shields

Then why is the hon. Gentleman carrying on the discussion?

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

It will take a long time if I am continually interrupted like this. I want to deal with a specific point which interests me very much and to which I drew attention in an intervention on Second Reading. It is a point which I hope my right hon. Friend will answer, because he then indicated to me that he might at a later stage.

It is the discrimination against wool cloth under the present tax vis-à-vis non-wool cloth. A certain amount has been said about the D Scheme. I have already said that I welcome the end of the D Scheme. However, we ought to get a little proportion into the matter so far as certain industries are concerned. The wool textile industry in Bradford, and in my constituency of Shipley and all round there, welcomed the D Scheme in comparison with the scheme that was in force before. It appreciated its value then and now wanted it to go. Like the constituents of the hon. Member for Rossendale (Mr. Anthony Greenwood), they did not want the 5 per cent. Purchase Tax on wool cloth put into its place.

12.45 a.m.

There cannot be a good case for this discrimination against wool cloth. I have never heard a good argument for it. It existed under the D Scheme and it is to be continued now. It is inexplicable and unfortunate. I have never heard an argument for it that holds water after all the delegations to the Treasury and to the Board of Trade. One argument, administrative convenience, I never tolerate at any time. That is no excuse for upsetting a whole industry. Another reason, that it suits the Customs and Excise, does not carry any weight. As to the argument that there is considerable scope for evasion in the industry, I tell my right hon. Friend that I shall need to have good evidence if that is to carry any weight.

I know approximately the extent to which wool cloth goes to people who are not registered for Purchase Tax and could alone be within the bracket of evasion, but I am not giving the figure. I want to know how much my right hon. Friend knows. The extent is so small that it cannot be accepted in the trade as an excuse for discrimination.

I cannot accept any of these conceivable excuses. If there is some excuse that I do not know and have not learnt from the trade, some extra reason why it is necessary to have discrimination, I would like to know it, and I will then go back and discuss the matter further with the trade. I am deeply sincere about this point, because it upsets the trade very considerably. Traders have sent letters and telegrams to the Chancellor of the Exchequer and to the Prime Minister and I have done the same, but still the same situation goes on.

I am not prepared to believe that the amount of taxation involved in the bracket to which I am referring—I believe the amount is less than £1 million—will cut down inflation or will mop up purchasing power. I have put these points quite straight. I am always straight to the point on anything about which I feel keenly. This is a limited but important point of great interest to my constituency and to the wool textile industry. Psychologically, it is perhaps more important than it is financially. I press it, but it is not sufficient in itself to out-weight the many admirable advantages and services that my right hon. Friend has given to this country as Chancellor of the Exchequer.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Cleveland

The hon. Member for Shipley (Mr. Hirst) praised himself by saying that he was always straight. Samuel Butler said that the advantage of praising oneself was that one could always put it on thick and in exactly the right places.

The hon. Gentleman objected to the plain speaking of my hon. Friend the Member for Liverpool, Exchange (Mrs. Braddock). The ordinary elector would much prefer the honesty of my hon. Friend to the kind of performance that we are having tonight from hon. Members opposite. [An HON. MEMBER: "Double-talk."] Yes, double-talk. The hon. Member for Shipley and the hon. Member for Oxford (Mr. Turner) were very brave in words, but when they have an opportunity of translating that bravery into action later they will be found complacently walking behind the Chancellor of the Exchequer

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

I do not mind criticism, but I am not going to be accused of double-talk. There is no double-talk going on at all.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Cleveland

I have expressed my opinion to the Committee. I contrasted the words of the hon. Member with what I think will be his behaviour in the Lobby later on. If, by any chance, I am wrong in my judgment—if I am doing him an injustice—he can prove me wrong by voting according to his words.

I have not burdened the Committee up till now with my observations upon the Clause, and if I now speak—with the night still young—I cannot believe that it will do very much harm. We have had discussions upon what we might describe as the technicalities of the Clause. We have had fur boots, dustbins, shirts, toy swords, and Christmas cards, all in a bewildering variety, marching in front of us. I do not propose to go into the technicalities of the Clause myself, because I feel that my hon. Friends will have plenty of further scope for that if they follow me in the debate.

I want to discuss the general intentions of the Clause. It seems to me that it is no abstract essay in revenue-raising; its plain intention is to increase the cost of living, to put up prices. If it had any other intention it would surely contradict the policy of the Chancellor. He said himself that he was anxious to damp down and restrain purchasing power, and he proposes to do it by putting up prices and increasing the cost of living.

I suggest that that is a very extraordinary exercise, coming from a party which climbed to power upon precisely the opposite claim. I can remember quite well the Elections of 1950 and 1951. I was not successful in being returned to the House on those occasions. I remember that the hon. Member who now sits for Wimbledon (Mr. Black)—he is not in his place at the moment—was very anxious to win that seat, which I held previously. I would not bring him into the debate without giving him prior notice that I intended to do so but he was only typical of many Conservative candidates in the Elections of 1950 and 1951, especially in surburban London.

A Conservative candidate not only must be able to speak passably well, I assume, but must be able to act well, and do demonstrations upon public platforms. The hon. Member to whom I am referring took an umbrella on to the platform to illustrate the incidence of Purchase Tax. The umbrella was a very appropriate weapon for the Conservative Party representative to use.

The general inference which I am sure was taken by the housewives of Wimbledon, Merton and Morden and Croydon—if that sort of thing went on at Croydon—was that the Conservative Party was against Purchase Tax and would gradually abolish it if returned to power. We can see the practical outcome, however, from the Clause now under discussion.

We have had some excellent deputations today from the women of the Cooperative movement and some of us have spent some time talking to these good ladies, although we also told them that they would be using their time more usefully if they spoke to hon. Members opposite.

I feel that it is a pity that these excellent women from the Co-operative movement were not joined by the disillusioned women from the London Women's Conservative Party. I am not referring to the women of the Housewives' League, who, I understand, have been underground for some time, but to the official London Women's Conservative movement, which held a conference recently which the Economic Secretary attended. It seems to me that these Conservative ladies now look upon their former heroes of the Government Front Bench with "all passion spent."

It is four years since the Conservatives came into power, and I noticed from the report of the conference in the Manchester Guardian, which is a reputable, still more or less Liberal newspaper, that four of the resolutions on the agenda dealt with the rising cost of living. I tried to check this report with The Times, but there was very little in that newspaper about the conference. Those resolutions dealt with the rising cost of living—four years after the Conservative Party returned to power and the effect of this Clause is to raise the cost of living higher still. It is an extraordinary policy, as I say, for a party which climbed to power through advocating precisely the opposite policy. One of the ladies told the conference that she no longer enjoyed meeting the electors. I would say to her that is nothing. It is no longer a pleasure for us in the Committee to listen to the Government Front Bench.

Two arguments seem to have been used in defence of the Government's action. One was used by the Economic Secretary in a recent speech which was supposed to be a tremendous come-back for the Government. He said that these changes in Purchase Tax rates would not put up the cost of living by more than a point or so. The second argument was put forward last night by the Financial Secretary, who said that people will soon get used to higher prices. We must try to take these arguments, if we can, in intellectual conjunction. If we examine the first argument—I will not use the words of a celebrated servant girl—it is in effect, "My sin is small and hence it is hardly wicked." It hints that there will be no justification for wage or salary increases on the part of the trade unions because the actual alteration in the cost of living index is not likely to be more than one point.

1.0 a.m.

Does any hon. Member in the Committee believe that it will work out that way in practice? What happens, as we know, is that in any ordinary family the housewife goes out to buy a set of saucepans, for example. I understand that a set of suacepans which would have previously cost say £1 14s. 0d. is now likely to cost more than £2. When the housewife goes out and finds this increase in such an essential article of household use, which she needs and must buy, she comes back and, naturally, complains to her husband and the family generally about the price of things. She has had a practical demonstration, and her husband, in due course, will take that example into his trade union branch meeting, and in the long run it will have an effect on the policy of his union.

In those circumstances, with that kind of mental, emotional and psychological background, it is no good talking in abstract terms, as do right hon. and hon. Gentlemen, saying that it is only one point on the cost-of-living-index, because people think not in abstractions but in concrete and real terms. Is that what the Financial Secretary meant when he said that at the end these changes would make little difference, because people would get used to them? He was right if he meant that, in the end, incomes would be adjusted by fresh applications for wage and salary increases. Up till now I have heard no convincing reason—certainly not by any back-bencher on the other side of the Committee—against that conclusion from the arguments used.

It may not be that everyone on my side of the Committee agrees with me on this, and perhaps all my hon. and right hon. Friends on the Front Bench do not, but I am one of those who believe that the Purchase Tax is thoroughly bad in principle. I believe that taxation should be broadly based according to the ability of the taxpayer to pay, and not according to the movement of consumer needs. The Economic Secretary to the Treasury, when he addressed the Committee earlier in the debate, said that the Purchase Tax was a blunt instrument. I would like to see the House of Commons and the country generally recognise Purchase Tax not just as a blunt instrument but as an instrument that should be discarded altogether. I had hoped that ten years after the war we should now have been at the point when Purchase Tax was on the way out. Instead of that, quite deliberately, as an instrument of policy on the part of the Government, not only is the Purchase Tax not moving out but the present Chancellor has earned a distinction, if one may call it that, for having riveted this bad tax more thoroughly about our necks.

Photo of Sir Alexander Spearman Sir Alexander Spearman , Scarborough and Whitby

Many hours ago I had given up the idea of detaining the Committee and at this hour I rise only to meet the challenge of the hon. Member for Oldham, West (Mr. Hale), who is not now in the Chamber, to say that I am one among many of my hon. Friends who support the whole of the Budget. It is, of course, easy and popular to attack increases in taxation but not entirely consistent for those of us who are intent on maintaining the Welfare State to the full, who know that for safety our finances must be strong, and who want to check inflation.

It seems to me that the two main attacks on the Budget are that the Purchase Tax increases are inflationary, and that they are unfair in the burden that they lay. I should like to make some attempt to answer those two points. I do not think that the right hon. Member for Leeds, South (Mr. Gaitskell) would disagree with my saying that putting up prices by taxation could not be anything but deflationary in itself. Obviously, it there is less money to buy things there must be less inflation. I think that it would be argued by hon. Members on both sides of the Committee that it could only be inflationary in so far as it caused wage demands.

We all want wage increases, in so far as they are consistent with increased production. It is argued that these increases in the cost of living caused by Purchase Tax might bring about wage claims. I suggest that far too much responsibility is placed on wage claims. We all claim more money if we think that we can get it. Members of Parliament do that. It is human nature. The claims are not the cause; it is the ability to pay. The cause of excessive increases in wages is largely the ability of industrialists to pay more than trade union rates, very often to keep men they do not really want, because they know that they can stick the cost on prices. They know that demand has been so high lately, indeed ever since the war, that it has been too easy for industrialists in many cases to make profits and to stick increased costs on to the price and raise the price.

This is all because we have been in a boom. Indeed, in every year but one since the end of the war there have been bigger rises in money incomes and the money we have to spend than there has been in the national income. The only year in which that did not occur was 1953–54. During that year there was a balance and no material rise in the cost of living, because wages did not go up any more than production. Therefore, I believe that it is absolutely imperative to get that balance between resources and demand, and I think that a great deal of the brunt of reducing that excess demand must fall on investments, although I hope only temporarily. But I feel strongly that the consumer must bear some share of it, for three reasons.

First, inflation is something which we attack from every side. Secondly, I believe it to be of great importance that everyone at home, and particularly abroad, should realise that the Chancellor is absolutely determined to maintain the value of the £, whatever the cost and however unpopular it may make him. Chancellors, whether Conservative or Socialist, do not do unpopular things because they like to. They do them most reluctantly and many politicians avoid doing the unpopular things which they ought to do.

Thirdly, I think it a very logical thing that at this time we have a situation which is the exact opposite of what it was before the war, when there was a glut of goods and not enough purchasing power, and that taxation should be used to curb spending; that is to say, indirect taxation, like the Purchase Tax, rather than direct taxation which checks production and saving.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Cleveland

The hon. Member is not suggesting, is he, that there is any scarcity of consumer goods at present?

Photo of Sir Alexander Spearman Sir Alexander Spearman , Scarborough and Whitby

I should say that the money incomes are increasing all the time much more than the actual goods. I think that the scarcity of goods is so great that they are being diverted to the home market when they ought to be exported.

Photo of Mr Donald Chapman Mr Donald Chapman , Birmingham, Northfield

Has not the hon. Gentleman seen the recent figures which try to summarise the position between 1948 and 1954? He will find that, roughly, the purchasing power of wages is up by about 10½ per cent. and production is up 20 per cent. How can he think that goods are short when the men in the shops have been producing much more than they have taken in wage demands over the last few years?

Photo of Sir Alexander Spearman Sir Alexander Spearman , Scarborough and Whitby

If the hon. Gentleman will look at the Digest of Statistics, he will see that for every single year, except the one I mentioned, 1953–54, there has been a greater increase in money incomes than in the national income. I do not wish to pursue the question any further. I have given my opinion and the paper from which I quoted.

I was saying before that interruption that I believe that Purchase Tax, unhappy a thing as it may be, is a very necessary evil at the present time, and were he present in the Chamber, I should expect to gain the support of the right hon. Member for Bishop Auckland (Mr. Dalton), who said in one of his Budget speeches: Now I come to the Purchase Tax. I must confess that I do not regard this as a temporary tax or as a wartime aberration of one of my Conservative predecessors to be hastily swept away. On the contrary, my view is that Purchase Tax has got to stay.… This tax … not only raises revenue but also absorbs or 'mops up,' as they say in the Treasury, purchasing power, and so helps to prevent inflation."—[OFFICIAL REPORT, 9th April, 1946; Vol. 421, c. 1822.] That is as true today as it was nine years ago.

It has been said that this is an unfair tax, and I wish to try to deal with that point. We must keep a sense of proportion in these things which I do not think was apparent in some of the speeches by hon. Members opposite, but was present in others. From 1951 to 1954 consumption in this country has gone up from £8,500 million to £9,400 million, which is double what it went up in the last three years of the Socialist Government. It we take the estimate for this year, I think it is up by £1,000 million in the last five years.

1.15 a.m.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Would the hon. Gentleman mind indicating how much that is in terms of real value, because the £ has depreciated?

Photo of Sir Alexander Spearman Sir Alexander Spearman , Scarborough and Whitby

I am taking 1948 prices. At 1948 prices, consumption in this country, in 1948, was £8,500 million. In 1951 it was £8,820 million. In the first three years of the Conservative Government it was up £600 million. Now it is up £1,000 million.

I am trying to show that, in the vast majority of cases, consumers are far better off than they were, and, it so happens, far better off than under the Socialist Government. I am just stating that if consumption is up then spending is up by £1,000 million in the last four years, and that, therefore, £75 million of Purchase Tax is not really such a great calamity. It is only a fraction of 1 per cent. of total consumption. The whole of this £75 million which it is estimated that Purchase Tax will bring in is equal to about as much as the increase in the cost of living which we have had, on average, every six weeks since the end of the war, during the time of both Governments.

I realise that these increases in the cost of living do not matter so seriously to those who have got capital, because they can spend it—although it goes eventually—or to wage earners who are getting more wages. What we are all agreed upon is that it is a tremendous hardship to those people with fixed incomes, and that is why I say—

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

I cannot follow this at all. I do not know whether the hon. Gentleman is saying that these proposals will or will not mop up surplus purchasing power. I do not know what he suggests is the effect of a budgetary scheme which raises prices in such a way that, as he says, the workers will get higher wages to meet them. If that is the effect which the Budget is going to produce, why is the hon. Gentleman in favour of it?

Photo of Sir Alexander Spearman Sir Alexander Spearman , Scarborough and Whitby

I do not think that higher taxation will mean wage rises. [HON. MEMBERS: "Oh."] I have been asked a question and I think I might be allowed to answer it. I maintain that wage rises are given because industrialists can afford to pay them because they can stick the extra on their prices. The urgent need is to get general demand down so that industrialists cannot raise prices so easily. I want to make it much more difficult than at present for them to make their profits, and I therefore say that if we get down demand we shall check excessive wage rises. I believe that one of the ways of cutting down demand is to increase taxation and, as the right hon. Member for Bishop Auckland said, mop up purchasing power.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

I was trying to relate that part of the hon. Member's argument, which I heard and understood, to the latter part, which seemed to be inconsistent with it. He was saying, when I interrupted him the first time, that these increases in prices did not matter to the man with capital, because he could spend his capital while it lasted, and did not matter to the wage earner because he could get wage increases to cover them. I am asking the hon. Member what effective purpose will be served by raising prices in such a way that wage earners are not affected by them.

Photo of Sir Alexander Spearman Sir Alexander Spearman , Scarborough and Whitby

It is absolutely imperative to check the rise in the cost of living. A rise in the cost of living may be compensated for by increased pensions and wage demands, but when one is in the sort of danger with which we are now faced, when it is not possible to compensate for the increased cost of living, without, possibly, causing an acute crisis in our balance of payments, it is imperative to check the rise in the cost of living. If it can be checked by a slight decline in demand, by Purchase Tax producing £75 million, then that is a very small price for those with small fixed incomes to pay—4d. a week—if, by that means, we prevent a really serious rise in the cost of living.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

The Chancellor must indeed be very refreshed by the noble effort which has just been made by the hon. Member for Scarborough and Whitby (Mr. Spearman). If we could persuade hon. Members on the Government back benches to say exactly what they think about Purchase Tax, almost every one of them would imitate those who have so far taken part in this debate and would be supporting the Opposition in denouncing the Purchase Tax. My hon. Friend the Member for Cleveland (Mr. Palmer) wittily dragged in a reference to Milton's "Samson Agonistes." It was most appropriate to bring in a reference to "Samson Agonistes" tonight, because the Chancellor is obviously "blind, among enemies" on both sides of the Committee.

Indeed, it is worthy of a headline for newspapers tomorrow that one hon. Member opposite should have so eloquently supported the Chancellor's proposals. In spite of everything which the hon. Member for Scarborough and Whitby said to justify Purchase Tax, hon. Members opposite have been consistently opposing Purchase Tax for year after year. As the Chancellor has always been one move ahead of his party, one can understand the unwillingness and slowness of the benches behind him to move as rapidly as he does. Both sides of the Committee have consistently renounced Purchase Tax for four years as something evil and something that ought to go. We have regarded it as a necessary evil to be maintained in difficult times, but anyone who has taken part in debates on Purchase Tax during the last four years has expressed the view that if the tax has had to be maintained it is something which ought to be got rid of at the earliest moment.

Those who, like myself, have argued about this tax have been tackling the problem of how it was to be got rid of without imposing injustice upon retailers. One of the alarming features of this reactionary Clause is that not only does it again impose a kind of tax which my hon. Friend the Member for Cleveland thought he was a heretic in denouncing, but which most hon. Members denounce; but that it means that at some time in the future we will again be faced with the problem of dealing with the injustice inflicted upon retailers left with taxed goods when the time comes to remove the tax.

I say that the Clause is reactionary because Purchase Tax is a flat-rate tax. The same Purchase Tax is paid by the rich and the poor. Indeed, if that is not true about the taxes imposed in this Clause it is only not true because in some cases the people who will pay less will be the rich. This Clause gives concessions to rich people on clothing, for example.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

Will my hon. Friend add that the people who will find their taxes reduced are those who had the £150 million which the Chancellor gave away in April?

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

That is further support of what I was saying.

In 1951, when we were discussing certain increases which the Labour Chancellor made in Purchase Tax, the then Mr Oliver Lyttelton said: …we must satisfy ourselves about one or two matters before we can accept it … The first qualification is whether the things which are subject to Purchase Tax are really things that people can do without. Or does the list still contain a number of articles which any sensible man or woman would regard as necessities?"—[OFFICIAL REPORT, 8th May, 1951; Vol. 487, c. 783.] He was arguing then, as I think everyone has been during the last four years, that if Purchase Tax were ever to be reimposed it ought to be imposed only upon luxury goods. No one who has heard any part of the long debate on this Clause can deny that the bulk of the new Purchase Tax is imposed upon things which people cannot do without. The Minister who spoke in the debate yesterday said that the Purchase Tax which was being imposed on the miscellaneous list of household articles would not prevent people buying them, because they must have them. I believe that this Clause is only the first part of an attack on the workers' standard of living, and that it must be considered in connection with the second part, which we will be debating on Thursday, namely, the attack on council house rents. It must also be considered in connection with something which will take place when the climate has been prepared. That is an attack on private rents—the end of controlled rents.

This attack tonight, Clause 1, which the Chancellor seeks to impose upon the people, is one of three attacks on the standard of living not of all the people of England, but of the ordinary people. But it will not succeed as far as most workers are concerned. All the benefits which the Chancellor seeks from this Purchase Tax will be nullified because the trade unions are strong enough to offset any rise in the cost of living by increased wage demands. While those wage demands will add to the cost of living in addition to the increase made by this Clause, the people who will suffer from this Clause, and by its resultant effects of wage increases which will be demanded and secured by the workers of this country, will be the people about whom the hon. and gallant Member for Worthing (Brigadier Prior-Palmer) spoke last night—the people on low incomes, the people with fixed incomes and the pensioners.

I speak with the memory fresh in my mind of an interview some of us had in a Committee Room upstairs yesterday with representatives of the National Association of Old-Age Pensions Associations, with whom some of us went this morning to plead with the Chairman of the National Assistance Board for some immediate relief for the million poorest people in the country. It is those million poorest people who cannot offset the effect of the new Purchase Tax on their weekly budget who will suffer most from this Clause, and I therefore welcome the opportunity of declaring my reasons for voting against it.

1.30 a.m.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

We have had a very considerable debate, and I think it may be convenient if I intervene at this stage. I would remind the Committee that, although the night may be young, there is still a great deal of work to do and that the sooner we can come to a decision on this Clause the better it will be for our business. [HON. MEMBERS: "No."] I have always taken the Committee into my confidence about the course of business. There is a great deal of business to be done, and if I do not warn hon. Members it simply means the Committee will have to sit all the longer. It is for the Committee to choose.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

The right hon. Gentleman will recall, however, that last night, at the end of our proceedings, he did himself draw attention to the fact that it would be possible for all those who had been unable to speak last night to speak on the Question, "That the Clause stand part of the Bill." I am sure he will bear that in mind and realise that, naturally, the discussion must be a rather lengthy one.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

Certainly. It has been lengthy already. We have had the benefit of at least one speech from the hon. Lady the Member for Liverpool, Exchange (Mrs. Braddock) which lost nothing in the telling, to which we had all been eagerly looking forward and were not at all disappointed to hear, so we have had some reward for our early bed last night and for our late bed this evening.

I thought that perhaps the most interesting point from which to start the observations I want to make about this Clause would be in response to my hon. Friend the Member for Scarborough and Whitby (Mr. Spearman), who pointed out that it was only in 1953–54 that in his opinion, as a very competent economist, if I may say so—a fact which I think the Committee acknowledges—there was a balance between our resources and the money available.

That was an achievement, under the late Government, of which we were justly proud. It was towards the end of 1954 and the beginning of 1955 that symptoms began to be drawn to my attention of the start of inflation. I first had a hint of it when I discussed this matter with the Commonwealth representatives in that autumn in Washington, and at that time we thought we were going to get on top of the inflationary tendency. In fact, it appeared by February that the inflationary tendency in this country was starting. Therefore, action was taken in February, at the earliest possible date, to start dealing with inflation in one way, namely, by the Bank Rate, by the "credit squeeze" and by restriction of hire purchase.

On the analogy of other countries which I had studied—in America, and I have tried to study these things in other countries, some of whom run their economic affairs with great skill, and it is wise to study their example—I had hoped that by these methods it would be possible to control the inflationary urge. What we had not estimated correctly is—as I said in my reply to the right hon. Member the other day—the extraordinary urge of expansion which had been created by freeing the economy under the late Government and under the present Government. That urge for expansion manifested itself in increased factory building, the figures for which are 60 per cent. in the last year above the year before, which shows the immense increase in investment in one sphere alone to which right hon. and hon. Members opposite attach great importance. It also manifested itself in what we forecast this summer as a likely increase in demand and personal consumption at home. It was to some extent balanced by an increase in personal savings, which has been a very welcome feature of our economy.

However, it became clear by this autumn that measures were necessary to deal with this situation, that is, the urge to expansion and an inflationary tendency—which is not confined to this country but which I have discussed with the Finance Ministers of Holland, Germany, the United States, and at least two of our Commonwealth countries. This inflationary tendency happens to be being dealt with by a variety of countries in not dissimilar ways from our own. What we want to keep, as my hon. Friend the Member for Scarborough and Whitby said, is the right balance between the resources and money available. If so you do not get rising prices, you get the benefit of prosperity and of full employment in this country.

Even in the middle of the night I am not going to be rude to the hon. Lady the Member for Liverpool, Exchange—

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

I am sure the hon. Lady does not mind, but I do not want to follow the argument she used. Although she said some very hard things about me, I hope she will see me when we finish the debate, so that I might hear those remarks she did not make and be fully apprised of her vocabulary. Despite her remarks, including "obscene" and other words, which evidently are now Parliamentary, I do understand many of the difficulties which arise in her constituency.

The hon. Lady said one especially hard thing—that I would not meet the old-age pensioners. The reason is the same as that for which my predecessors did not meet them. It is always the habit of the Chancellor of the Exchequer, when invited to that function, to refer the invitation to the Minister of Pensions and National Insurance and for him to be the representative who meets them. It may sound bureaucratic, but that is what is done.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

My right hon. Friend went last year; I do not know whether he went this year. That has been the practice in previous Governments and of myself. I am perfectly ready to meet old-age pensioners, or constituents of the hon. Lady, or anyone in the country and to explain—as I am doing now—why we had to take action to deal with inflation. I refer particularly to what the hon. Lady said because we have conferred certain very marked benefits on the working people. Gone are the cries of "Unemployment under the Tories". It is, in fact, under the Tories that we have record employment in the history of our country. Not only have we had this record employment, but one of the problems facing us now is that no less than ½ million vacancies are unfilled in our industries—particularly in the metal-using industries, which will be partly affected by the Purchase Tax. That is a problem which gives any economist who considers this matter seriously an impression of impending inflation.

It is our desire to maintain in a free society a system of full employment. I sometimes think that if there is a criticism of this Government it is not of the policies we have adopted, or the motives which have driven us to adopt those policies; it is that we have not explained sufficiently to the people that if we are to carry an immense defence programme, the social services programme, with its improvements, which we intend to maintain, and a system of full employment, we have to have moderation in spending and to get the right relationship between the manpower available and the resources available and the money to meet it.

It is because we want to achieve that position and maintain the undoubted benefits which we have brought to the working people—[HON. MEMBERS: "The Government have?"] Certainly. We have brought them full employment, we have brought them record production, and we have opened the markets and brought them supplies from overseas. It is largely due to our policies of freeing the economy that so much improvement has come about.

But what has resulted from our policies, as I have freely and openly acknowledged, has been this surge of expansion, in a form which amounts in some sectors to over-investment and in this sector to over-consumption, and an increase in home demand that we now insist on taking steps to quell. It would be out of order for me to discuss some of the steps we have taken. I cannot discuss, for example, our investment control plans. But what is in order is discussion of the attempt to control home demand.

It would have been absolutely wrong not to use Purchase Tax as an instrument to deal with home demand at the present time. I defy the right hon. Member for Leeds, South (Mr. Gaitskell) to deny the words which he used in his Budget of 10th April, 1951 when he said that one of the objects of Purchase Tax was: … the withdrawing of spending power to check inflationary tendencies.…—[OFFICIAL REPORT, 10th April, 1951, Vol. 486, c. 858.] That is precisely the reason we have used it as one of our weapons. Although it may seem very contentious, and although I acknowledge that the spirit of the debate has been excellent, that is one of the weapons that I have got to use, and I think it is a weapon which is going to help us out of our difficulties.

The hon. Member for Rossendale (Mr. Anthony Greenwood) wanted to know whether this would be a permanent tax, whether we were turning it into a sales tax. The hon. Member for Itchen (Dr. King) asked whether we ought not to rely solely on the taxation of luxuries.

Taking the question of luxuries first, the right hon. Member for Leeds, South, speaking in the Budget debate, said the policy should be to limit Purchase Tax as far as and as fast as possible to luxury goods only. However, it is only fair to point out to him that in the hands of his Government the Purchase Tax Schedule was far from being confined to luxury goods. It included such things as linoleum, stationery, electric light bulbs, sewing machines, toothpaste, bicycles, and goods vehicle chassis, none of which can be said to be a luxury. He knows that, however much any Government might want to restrict the tax to luxury goods, it is impossible to do so and obtain the result from the tax which he described in his own words on the 1951 Budget, which I have quoted.

What we have done—the right hon. Gentleman must himself face up to the problem—is to try to share the burden of Purchase Tax as a whole. [HON. MEMBERS: "Oh."] This, as a matter of fact, appears a more unpopular course than trying to confine it to certain goods, but it is just as effective a course in dealing with the problem of inflation.

The hon. Member for Rossendale asked whether we were moving to a sales tax. I would reply that at present no decision has been taken. I certainly cannot say anything at the Dispatch Box in answer to his question whether we had ready-made schemes for a sales tax in our pocket, because we have not got one. We have plenty of work on hand; there is plenty for the present Government and a future Government to consider.

What we have done, however, is to abolish the D Scheme. That has been widely welcomed. It has been welcomed by the hon. Member who is the famous and most successful draftsman of the party opposite and by many other hon. Members, even by the hon. Lady the Member for Blackburn (Mrs. Castle). It has been welcomed on this side of the Committee by my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke). It was welcomed by the hon. Member for Farnworth (Mr. Thornton). It was welcomed, and the defects of the scheme as regards gloves were previously clearly pointed out, by my hon. Friend the Member for Yeovil (Mr. Peyton). The anomalies of the scheme were brought out by my hon. Friend the Member for Lewisham, West (Mr. H. A. Price). I have also heard from the Federation of Master Cotton Spinners, from the Cotton Board, and from Lancashire generally that the abolition of the scheme is welcomed.

1.45 a.m.

That is an improvement. To say, in the words of the hon. Member for Rossendale, that a tax of 5 per cent., which is normal now on these textile goods and on the boots and shoes to which the hon. and learned Member referred, is knocking the bottom out of the home market, is a gross exaggeration of the English language. It is doing nothing of the sort. The hon. Gentleman challenged me, and it is my business to answer him. Why did I say that the introduction of the D Scheme would help exports? The answer is that when we first assumed power we had the Utility Scheme, in which there was the so-called "black spot" in which no manufacturer was planning his designs, and which almost inevitably spoilt and hurt our export trade. As a result of the findings of an expert committee, we adopted the D Scheme, which was an improvement on the Utility Scheme, but had great defects in regard to the export trade which became quite clear to me.

More than one member of the Douglas Committee confessed to me that the D Scheme had to go. It goes, under this Clause. It is very good that it does. The 5 per cent. that we are imposing is not a great burden upon our economy or upon spenders. The words of the hon. Member for Rossendale that it is knocking the bottom out of the home market are an exaggeration.

I was asked questions about wool, not only by—

Photo of Mr Hervey Rhodes Mr Hervey Rhodes , Ashton-under-Lyne

Is it not very significant that, despite the criticisms of the Utility Scheme and of the way in which the marketing was done in those days, the performance of all the consumer-goods industries in exporting overseas was higher then than it is now?

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

That is a generalisation which it would be very hard to maintain. There has been a great variety of change in the overseas markets and a great increase in competition from certain countries, as the hon. Member knows. I would like to look into the matter scientifically with him. I have heard from manufacturers, and I am certain that the abolition of the D Scheme, enabling them to plan for quality goods, will give us a greater chance in the exports markets, especially in textiles. From my information, I am certain that that is so.

My hon. Friend the Member for Shipley (Mr. Hirst) and the hon. Member for Rossendale asked about wool. As my hon. Friend knows, there are certain concessions in the wool field. The opportunity has been taken to exempt from the tax blankets and other woollen household textiles as a class. That is one advance that we have made. I was asked why wool cloth should remain at 10 per cent. and wool suits and other made-up goods should be at 5 per cent. We went into that matter carefully; it is not just because of administrative difficulty. I would like to pay my respects to the deputations from Yorkshire on this subject. They put their case very well, and I think they understood some of our difficulties.

The problem in the wool trade in administering Purchase Tax is how to control it in the case of the small tailors who make up the cloth. It is impossible administratively to operate the Purchase Tax unless we preserve the ratio which was started by the Socialist Government of 2 to 1 as between the cloth and the made-up garment.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

I thank my right hon. Friend very much for his reply. My objection was not against the 2 to 1 but against the discrimination applying to wool as against non-wool cloth. I am well-informed that the actual percentage of tailors and people who use this material is less than 3 per cent. of the turnover of wool cloth.