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 Laurie Pavitt Mr Laurie Pavitt , Willesden West 12:00 am, 3rd May 1966

I welcome the correction of my hon. Friend, who has had a good deal of experience in these matters. If what he says is correct, it is most welcome. This is the sort of point which we shall examine in great detail in the next two or three days, but I understand that women employees are also charged for at a reduced rate. Whether it has such a swingeing effect or is less than would appear at first sight, it will still be a heavy burden which has to be borne.

I bear in mind that the Co-operative organisation is non-profit-making. Any surplus that it makes goes back in the form of dividends in proportion to the size of people's purchases. The existing dividend in a co-operative society may well be something like 4d. in the £ on sales. I estimate that this new kind of tax might well eliminate the dividend in some societies. I shall need to do more homework about this, because it is difficult to give accurate facts if one speaks immediately after a Budget Statement has been made.

At the same time as the distributive trades meet this kind of problem, my right hon. Friend is also making a change in the way in which investment incentives are given by the Government, and this will affect distributive costs and not production. Here, therefore, is a second way in which I estimate that the Co-operative movement loses something like £1¼ million or £1½ million because of the rearrangement of the way in which incentives are being given.

Inevitably, an increase in the cost of distribution has the same result as increasing the cost of production. When the final article is sold, the increase is passed on to the housewife. This aspect must be given a good deal of thought if we are to ask the community, as we must, to accept a prices and incomes policy. We must accept that prices have to be kept down to keep wages within the rising level of productivity.

Last year, 80 per cent. of the total sales of the Co-operative movement, representing a figure of £1,068 million, were accounted for mainly by grocery, butchery and greengrocery. The other points of consumption accounted for only the remaining 20 per cent. Over this whole sector, therefore, there will be a tremendous rise in cost.

It will be difficult to persuade members of trade unions to co-operate with the prices and incomes policy when their wives tell them that they cannot make both ends meet. Their husbands will then say, "We have agreed through the T.U.C. to restrict our demands for wages within the productivity level." The housewife will reply that the price of bread, butter, sugar, milk, tea and other items is now higher and that without more income for her purse, she cannot manage. We must, therefore, be careful to maintain a proper balance in fulfilling my right hon. Friend's desire to give incentives to increase exports and to redeploy manpower so that any spare manpower goes not into services, but into production.

Most grocery stores are understaffed. There has been a big movement away from personal salesmen to self-service in shops because of the shortage of staffs in retail distribution. There is not a surplus that will keep flowing from behind the counters of shops into the factories to produce more goods. The surplus simply does not exist. I hope, therefore, that in the course of the debate, we shall get a little more intormatian about the kind of Government help that we can expect if the retail distributive trades are to absorb the new tax, as we hope that they will, without passing it on to the consumer. Will the Government look again, for example, at the investment incentive scheme? What other action can they take so that the consumer will not be, as usual, on a sticky wicket?

During the whole of my time in the House of Commons, I have seen that in any question of fiscal or economic policy the Government are subject to pressures. There has only to be an agricultural Price Review and every hon. Member knows that his wastepaper basket will be full next morning with the stuff which we receive from the National Farmers' Union. Whenever anything happens about drugs, every manufacturer of medicines sends us his literature. If something happens affecting workers, the trade unions make sure that their voice is heard both in the House of Commons and elsewhere. There is great difficulty, however, in getting organised pressure for the housewife and the general consumer. I hope that during the next five years, in implementing the Government's plan, we shall see a little more strength of action in this direction.

My last point is to ask my hon. Friend the Minister of State for clarification of the way in which services provided through the National Health Service will be affected by the new tax. My right hon. Friend the Chancellor of the Exchequer has made it clear that in the case of nationalised industries and other sectors such as the Civil Service, it will be a matter of taking it from one pocket and putting it into another. I would be interested to know how all this will affect a very large body of people who are employed by, for example, the regional hospital boards, in all grades—not simply nurses, medical staff or professions supplementary to medicine such as physiotherapists and radiographers, but hosts of people like porters, who wheel the trolleys, stokers and all the others who help to make a hospital efficient. Will all these people come within the purview of the new tax, or will there he an arrangement by the Ministry of Health so that the Health Service is regarded as a nationalised industry: or is it regarded in the same way as the kind of exemptions which my right hon. Friend announced for local authorities?

Naturally, we shall have more time to consider and study my right hon. Friend's proposals in detail. I hope, however, that he will take seriously the whole question of the way in which retail distribution will be affected and in which the new tax results in a policy which makes the housewife's task even more difficult than in the past. This might even jeopardise the whole of his gigantic plan to get organisation and some kind of sense into our prices and incomes and productivity policy. If my right hon. Friend omits to tackle this question, it does not matter how successful he is with Mr. Woodcock and the T.U.C.; if he fails with prices, his whole policy will be in jeopardy.