Clause 6. — (Reduction of Purchase Tax on Certain Household Goods.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 28th May 1957.

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Photo of Mr Harold Wilson Mr Harold Wilson , Huyton 12:00 am, 28th May 1957

The right hon. Gentleman has just said that he was faced with the choice between reduction of taxation and simplification, and preferred to reduce rather than to simplify. That was not the only choice he was facing because he could have both reduced and simplified at the same time. If he had reduced this range of articles to 10 per cent., as we suggested in our Amendment this afternoon, quite apart from the desirability of making them all tax-free, that would have been something of a simplification. It would in any case, have avoided the creation of this new tax rate which, as my hon. Friend the Member for Battersea, North (Mr. Jay) and other hon. Members have said, now involves no fewer than seven different Purchase Tax rates.

Another thing that struck us was the Chancellor's reference to the Utility scheme. The right hon. Gentleman said that he remembered it; he ought to, because he killed it. He was responsible for ending the Utility clothing scheme. He said this afternoon that if the textile trade had the choice today it would not want to go back to that scheme. It is not only the textile trade we have to think about; we have to think about the consumers. Most consumers would prefer the Utility system of taxation, whereby Utility goods were tax-free over practically the whole field, and they would certainly be very much happier if they had the quality guarantee that we gave to them under the old Utility scheme.

I know that the right hon. Gentleman held out high hopes in 1952 that the textile trade would itself introduce a system of quality guarantees as good as those we had under the Utility scheme. The right hon. Gentleman struggled on month after month, year after year—1952, 1953, 1954, 1955—and we did not get any of those guarantees. If I were to pursue this point I should be in danger of getting out of order, so I will deal with the Clause, which has now been debated for quite a considerable time.

The Clause is another chapter in the history of the many changes of Purchase Tax on this range of goods. My right hon. Friend the Member for Bishop Auckland (Mr. Dalton), when he was Chancellor, removed many of these goods from taxation altogether. My right hon. Friend the present Leader of the Opposition, even in the 1951 Budget—a very tough Budget which was associated with the beginning of the rearmament programme—even in that tough Budget, when Income Tax went up, removed many items of household essentials now covered in this Clause from the coverage of Purchase Tax. They were brought back into its scope in the autumn Budget of 1955, to which reference has been made.

That was a Budget which followed an Election Budget earlier in the year, which gave away £150 million of taxation. It was only after the Election that the present Lord Privy Seal, who had denied that there was an economic crisis, found that it was so serious that he had to introduce another Budget to get the £150 million back. He did not take it from those to whom he had given it in the Election Budget, but took it from different taxpayers, mainly by pots and pans taxation.

I know that it would be out of order for me to attempt to discuss that Budget in any detail, or even the blow which we can now see to have been probably a fatal blow to the hopes of the Lord Privy Seal in introducing that Budget. I think that most of the difficulties can be traced back to the blunder which he made in introducing that autumn Budget. Much more skilful was his successor, who introduced another autumn budget, although he did not call it a budget when for all practical purposes it was a budget. However, I should be equally out of order in discussing that.

I think I should be in order to discuss that part of this year's Budget enshrined in Clause 6, which we are now debating. We are very sorry that the Lord Privy Seal has not been here for this debate. I think that he has a very serious grievance against the Chancellor because the Chancellor has really rubbed the salt in with this Clause. He scrapped—or at any rate half scrapped—the policy of the Lord Privy Seal which, as the Committee will remember, we debated day after day, night after night and right through the night—