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 Richard Winterbottom Mr Richard Winterbottom , Sheffield, Brightside 12:00 am, 3rd May 1966

Let me finish my argument. The hon. Member should not try to argue my case for me. I will do it in my own little tin-pot way. It may be inadequate, but at any rate it is done sincerely, and if I did it in the way in which the hon. Member wants me to do it, it might not appear to be quite so sincere.

I have watched this revolution almost the whole of my life. Distribution is one of the greatest service industries in the country. If distribution is out of line with production, the whole of the economy suffers. This adventurous move by the Chancellor has forced the distributive trades to a consideration of the fundamentally revolutionary nature and implications of these proposals.

On the face of it, it appears that this Selective Employment Tax will increase prices. At first glance, it seems bound to do so. Co-operative societies have been mentioned, and I should like to give some facts about one. With 1,000 employees, in a period of 12 months it will have to pay between £20,000 and £25,000. Its dividends are 7d. in the £. Its shops are mainly grocery shops on a 16 per cent. margin, and this means that about £40 a week will have to go on overheads and the tax will mean an increase of about 4½ per cent. in those overheads. On the face of it, that will reduce the dividend from 7d. to 4d., a crippling blow.

But let us consider the other side of the coin, the necessity for reorganisation of distribution by that society. The immediate problem can be overcome by wise buying. Some of the multiple grocery establishments with a wages bill of 14 per cent. of turnover and a 16 per cent. margin of gross profit still find themselves able to pay dividends to shareholders, all because of wise buying. Over these many years, while prices have been on the increase, it has been comparatively easy to meet the difference in gross profit by wise buying. If the Government are successful in stabilising price levels, that avenue will be closed and another will have to be found.

The subject of prices in relation to this new tax therefore assumes the highest importance and if the Prices and Incomes Board is to be successful it will have to examine prices much more intensely than it is now studying the specific issues referred to it. It will have to examine the margins of all commodities and to fix the margins in all commodities. It will have to recommend to the Government that certain things should take place to reduce price levels, because some price levels can be reduced—and I refer now to agriculture.

The subsidy paid for fat cattle is very high in relation to the retail price of meat. The difference between the auction price of meat and the price of meat on the butcher's block is comparable with the return of 1s. 6d. for a dozen cabbages to the farmer and the Is. a cabbage which has to be paid in the shops. The reason for the discrepancy in the two prices of meat is the same as that for the cabbage. There are those who toil not, neither do they spin, and yet who make a profit so that it can be said of them, Solomon in all his glory was not arrayed like one of these. The Prices and Incomes Board will have to examine very closely the whole range of commodities which appear in the food shops.