Amendment of the Law

Part of the debate – in the House of Commons at 12:00 am on 3rd May 1966.

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Photo of Mr William Rees-Davies Mr William Rees-Davies , Isle of Thanet 12:00 am, 3rd May 1966

I take this early opportunity to direct attention to one or two matters within the broad horizon which the Chancellor pictured today, and I do so with some humility because this is an early stage to speak without having had several days to mull over the Chancellor's proposals. I ask the House to consider the effect of the proposed poll tax on certain industries and services, and I am glad to have the Chancellor's attention on the Front Bench now because I want him to give careful thought to these matters.

The tourist trade is rapidly becoming one of our most successful exporters. It is the greatest invisible export earner that we now have. The hotel expansion which has recently taken place in this country is a prerequisite of successful tourism. I hope that I may have the right hon. Gentleman's attention on this point. I realise that there are, probably, many attractions for him after his very able effort this afternoon in presenting his Budget with great clarity, on which I, too, congratulate him, but I wish to direct his attention specifically to certain problems.

In excluding the hotel and tourist trade entirely from any possibility of refund—it is quite clear that this is his intention—did the Chancellor fully appreciate that no less than 25 per cent. of the whole of the gross costs of hotels and catering businesses are borne upon their wages? The Selective Employment Tax, so far as it affects the tourist trade and, more particularly, hotels and guest houses, will be a direct tax upon 25 per cent. of their gross costs. In effect, by imposing a tax of this kind, the Chancellor will put a direct tax upon the hotel and catering trade in itself.

It may be that there is a case for doing this. It may be said that there ought to be, as there is in France, some sort of luxury tax upon the special hotels. This has existed in other countries. But it is totally unrealistic to argue that, by application of a poll tax of this kind, one is not putting a direct impost upon the whole hotel and boarding house trade which, next year, must immediately entail a substantial rise in the cost of holidays for everyone in this country.

I am raising this matter now because I take it that the First Secretary of State will be deploying the more detailed arguments which arise on the effect of this tax in its various aspects, and I want the right hon. Gentleman to be good enough to pay attention tomorrow to the serious effects which it will have on the hotel industry.

First, there is the whole question of the development of hotels in this country. At present, the hotels of London are full and we need more hotels. The demand is such that the British Travel Association—I speak as one who, for some years, has been an officer of an all-party committee in this House which deals with tourism—is concerned with the expansion of hotel provision. We need more provincial hotels. We need good hotels in the Midlands, in Birmingham, in Manchester. We need to modernise our hotels throughout our tourist centres and resorts. Not only has the Chancellor turned a stony heart to investment allowances—investment grants are "out" for the catering industry—but just when we want to expand tourism, he has imposed a substantial tax on 25 per cent. of their gross profits—the wages element in the average hotel.

It is no good saying that this will not affect the cost of living. Consider the effect on all the camps and tourist places to which people go for their holidays. Consider the situation for those who operate camps, such as Butlins, Warners or Pontins. In a camp of 8,000 people, they require 1,500 employees to provide the service. That is a ratio of nearly 20 per cent. serving those who are on holiday. This means a very substantial tax of 25s. a week on, say, 1,000 men and 12s. 6d. a week on, say, 500 women. These are large figures. It will not be long before the trade unions say, "It is no good giving us two or three weeks holiday without taking into consideration the increased costs which we shall have to pay".

The tax is allegedly selective. We must see how it will be applied. Is it to apply to hairdressers? What about agriculture? It may be that on very large farms it will be an encouragement for the introduction of still further modernisation, but there are many farmers each employing 8 to 10 people, and they may well find this tax crippling. That is certainly the situation in horticulture. While I am attracted to the idea of covering a wider field than Purchase Tax, we shall need to give careful consideration to the application of this tax in our debates over the next few days.

The other subject with which I wish to deal this afternoon is a subject on which I claim to have a certain expertise—the tax proposed on betting and gaming. Two years ago I put certain proposals to the Treasury which I believe found favour in the eyes of many of those who wanted to introduce a betting tax. These were proposals on how we could achieve a fair and proper tax on betting and gaming. The proposals contained in the Budget and on page 7 in Table I, Customs and Excise, of the summary, set out a system of taxation which will inevitably fail, is completely inept and has no chance whatever of meeting the purpose for which it was designed. A tax of 2½ per cent. upon the stake money of every punter in this country will have a first effect of leading to substantial evasion, a great deal of crime and growing illegal betting. The purpose for which the tax is introduced on betting will be set aside. Furthermore, the tax system is impracticable because the bookmakers who are not honest—and some of them are not—will not only evade the tax but will put the punter's money to their own benefit. The great majority of bookmakers, who are perfectly honest, will pay the tax. Thus, those who are dishonest will reap the benefit of their dishonesty.

The tax will fail, too, because it does not understand the technique of betting. It does not recognise that the ordinary punter does not have a single bet on one race or bet once or twice in one day. The average punter probably has 12 ls.doubles, trebles, accumulators and Yankees, and the tax provides that someone must calculate 2½ per cent. on each of those shillings. One's imagination baulks at a situation which is so ridiculous and which envisages that we can tax betting by taxing it on turnover.

It does not require much wisdom to make proposals which would achieve for the Chancellor what he wants to achieve. First, it is agreed among the betting fraternity that they are willing to accept a betting office licence of a considerable sum in respect of every betting office. One well-known sporting newspaper said that £30 a week or £1,500 a year could be carried by a betting office as a tax. That would cover the cash betting operator.

I raise this matter today because there is still time to consider these proposals again. I have reason to think that my proposals attracted the Treasury and, when they were made, attracted some of my hon. Friends. I raise the matter today because if they attract the Chancellor the necessary changes could be made. What should he done? First, there should be a betting office licence and, secondly, there should be a tax upon the telephones in the S.P. betting offices. A bookmaker cannot operate without telephones, and by the number of telephones we know the volume of his business. If we wish to tax betting, do so on the telephones and through a betting office licence, but let us give up this absurd notion that we can tax on 2½ per cent. of turnover. Anyone with considerable knowledge of racing knows that we cannot do this without getting into a great many more troubles, and perhaps the most serious of these troubles would be those of enforcement for our police force. In view of the amount of crime in the country the last thing we want to do is to impose still further burdens of enforcement and surveillance upon the police, who will not want this duty and will find it unacceptable.

I am delighted to see the right hon. Member for Dudley (Mr. Wigg) here. When I read about the turnover tax I wondered whether at some stage he would assure us that it was not intended that the tax should break down so that in future it might be argued that the totalisator should take over altogether, getting rid of bookmakers entirely. If the tax broke down the Government might then seek to set up a complete dictatorship of the totalisator. For some time I have believed that there was a feeling in certain quarters of the House that they would like to see an end of the days of the colourful race course, with the bookmakers, and would like to turn to the dreary way in which they operate in France or America, without the benefit of the traditions of racing in this country.

I turn to the question of gaming. About the right amount has been set for amusement machines. I suppose that it is all right to have a licence for gaming houses which can be fixed at different levels. But the amounts set out are not very suitable. We have a considerable increase in tourism and money is attracted into this country, brought here by those who can enjoy all the pleasures in the "with it" London of today and throughout the provinces. We want to ensure that these premises are made attractive, and it is not a very good method of taxation to apply a low tax to small premises and a very high tax to attractive premises. That does not achieve the purpose which we have in mind.

Would it not be more effectively achieved if it were decided to have proper control of gaming clubs? Might not this achieve the purpose which we are discussing today of bringing revenue to the Treasury, in the first place, and, more important, meeting the social and moral purpose which we have in mind in improving our gaming legislation? When the Betting and Gaming Act was introduced in 1960 it was recognised that amending legislation would be required at an appropriate time. My right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) said two years ago that there had not been a long enough period for consideration of such amendments and that the time was not ripe for them. We know that the Home Secretary and the Home Office now think it time to review this legislation.

If we review the legislation for gaming, we can assure effective licensing of gaming clubs. Having secured that, we can control the supervision and surveillance of those clubs with an inspectorate, thus ensuring a code of good and reasonable gaming so that there is none of the social evils and none of the trouble which has arisen. This proposal is attractive to some of my hon. Friends. Having done that by an inspectorate, we can control the nature of the games played, the type of games played and the stakes, without difficulty, and we can get an effective siphoning off of the taxation which we want. That will be easy to do. In order not to put a further burden upon the police force, this can be done by setting up a gaming commission similar to the Jockey Club, and, I hope, rather better managed. If we have a first-class gaming commission, we can ensure that we get the revenue which the Government require, on the one hand, and surveillance and licensing control, on the other hand.

I spoke, first, about the poll tax and the grave effect which it will inevitably have, unless there is some amelioration, on both those who take holidays and those who serve the holidaymaker. Secondly, I spoke about the changes necessary to bring into effect taxes in respect of betting and gaming—taxes which I believe it to be absolutely right to impose. I have raised them so that the Government may consider what I have said, and I have done so in a wholly constructive sense. If the Government are determined to go on with a poll tax which covers hotels, restaurants and catering as well as agriculture, I hope that they will examine the situation carefully to see whether compensation can be provided by investment allowances or in other ways to meet the grave disadvantages which they are placing on certain sections of the community.

If the Government are to tax betting, gaming and bookmaking, I sincerely trust that they will try to do it efficiently so that we are not left with more crime and more contempt for the law but respect for the law because we introduce a system which will be respected by all and sundry and which is workable. In that event those who have knowledge and experience of the subject may assist the Government in achieving the purpose which we should all like to see achieved.