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 Charles Gibson Mr Charles Gibson , Wandsworth Clapham 12:00 am, 3rd July 1957

I should like to support the proposals put forward by my right hon. Friend the Member for Battersea, North (Mr. Jay), not because, like my right hon. Friend the Member for Easington (Mr. Shinwell), I feel any particular sense of good will towards the Government, but because I want to put it to the Government that this tax is oppressive, unfair and unreasonable towards the people it hits hardest.

My right hon. Friend went over the list of articles, and this illustrated that the tax affects most those people who can least afford to pay it. Anyone who has been round the shops trying to buy household goods knows how difficult is the situation for ordinary working people all over the country when a tax of this kind is retained. In fact, it was reimposed by the Government after it had earlier been removed. It is surely a sound principle of taxation that a tax which is oppressive, unreasonable and unfair towards the people on whom it falls should be removed as soon as possible.

I understand that the Minister said that this concession would cost £150 million. Suppose it does. If, to leave that spending power in the hands of the millions of people, will tend to relieve the pressure for more wages in the next twelve months, it will be well worth while. We are now passing through a period of wage demands and wage increases. They have not reached their end. All trade unionists who use their brains at all are very perturbed about what the position is likely to be in twelve or eighteen months' time when the new Rent Act begins to be fully effective and we have the new increases in prices with which we are threatened for coal, gas, electricity, and other things.

It is inevitable that the organised workers will demand an improvement in their wage scales because they feel, I think quite rightly, that they are entitled to maintain their present standards of living which, according to Government reports on earnings and the standard of living, cannot be said to be too high in these days and which I do not think are at all high.

Even a skilled carpenter in London, where the highest wages in the building industry are paid, still gets less than 10 guineas a week. Unless he does a lot of overtime, or works for a contractor who will faithfully and properly carry out the bonus agreement scheme in the industry—which, I am sorry to say, most of them do not—he never gets more than 10 guineas. At the end of the year, after allowance has been made for lost time for inevitable bad weather, his average earnings are found to have been a great deal less than 10 guineas a week, yet he is one of the highest paid skilled craftsmen in the country.

Many people whose work is not regarded as skilled, such as shop assistants —although I think that in many ways they are skilled—receive £2 a week less than the skilled carpenter. Even an engineer does not get a guaranteed wage of 10 guineas a week. That kind of person, faced with the prospect in the next twelve months of rising prices and very stiff increases in rent—in some cases already attempts are being made to operate the rent increases—will inevitably demand increases in wages, unless the Government use their powers to hold the cost of living. They can do so if they wish, as that has been done in the past. To reduce or abolish Purchase Tax on household articles which were mentioned at the beginning of this debate would make a considerable contribution towards creating that atmosphere which in the next twelve months may save this country from a great deal of industrial trouble.

I hope that the Economic Secretary will consider that point if he is to say anything more in this debate. It is of first-class importance and is a subject of conversation all over the country by those concerned. If we are to continue Purchase Tax on the wide range of household goods which it at present covers and, in addition, are to have the increases to which I have referred, it is inevitable that there will be demands from trade unions all over the country for increases in wages. Those demands will not be to improve the standard of living, but to maintain it. It would be much better for the wage-earners if the standards of living could be held by holding prices than by allowing the continual spiral of wage and price increases to go on.

I urge the Government very strongly to have second thoughts about this matter, to accept these proposals and make what would be a most striking contribution towards creating the right atmosphere in the economic life of our country.