New Clause.; — (Reduction of Purchase Tax from Five or Ten per Cent. to One per Cent.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 3rd July 1957.

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Photo of Mr Emanuel Shinwell Mr Emanuel Shinwell , Easington 12:00 am, 3rd July 1957

I am grateful to you, Sir Gordon. That is precisely the point I am coming to. It was necessary for me to lead up to it.

Before I come to that point—if I have your good will—I would observe that even on this side of the Committee occasionally—I regret having to say it and there is nothing I deplore more than having to say it—when we demand that there should be reduction in the cost of living we do not present any constructive proposals except to say, "Reduce Purchase Tax," or "Curtail expenditure." Then, of course, we sometimes say, "Increase expenditure." So what does it matter? There is a great deal of confusion, uncertainty and lack of knowledge about it. I do not pretend to be able to postulate any kind of solution.

I come to the point of the new Clause. Here is an opportunity of reducing the cost of living by reducing the Purchase Tax. On the assumption—it may not be a very well-founded assumption, but it is worth trying—that manufacturers, wholesalers and retailers of consumer goods will "play ball" and will not take advantage of the reduction in Purchase Tax to boost or to maintain prices, this is obviously one means of reducing the cost of living. A simple illustration is that if, instead of having to pay £20 for some household requirement I want, I pay only £15 or £16, there is an improvement in the cost of living for myself. That applies all round.

How can the Government say that this is not one means of reducing the cost of living? Of course it is. If they reject it I am bound to say with the utmost good will that they are bereft of any constructive solution. A Government should not be placed in that embarrassing position. We want to reach out to achieve a constructive solution of this very vital problem.

Now is the time, even if it means depriving the Treasury of £150 million. £100 million, or even of £50 million, to take this action. It is far better for it to be deprived of that money than for us to miss an opportunity of reducing the cost of living. That is why I support the proposed Clause.