The Amendment I have moved concerns a drafting point only. It deals with an omission in the Bill as drafted, in that it extends the definition of forestry in Clause 10(1) to include certain forestry operations which may be undertaken in the forest or at the roadside. It refers to the preparation of forest produce which would include such operations as peeling, crosscutting round timber to specification, cording, piling, stacking, cleaving, pointing, and the preparation of minor produce such as bean poles and faggots.
In addition to adding the preparation of produce, the Amendment makes it clear that the exception for operations carried out by sawmilling establishments applies to thinning, felling, and bringing to the roadside of timber and the preparation of forest produce in the forest and at the roadside. In the original definition——
I beg to move Amendment No. 337, in page 13, line 9, to leave out paragraph (a) and to insert:
(a) activities carried on for office purposes within the meaning of section 1(2) of the Offices. Shops and Railway Premises Act 1963, but excluding
The effect of the Amendment is merely to add to what already appears in paragraph (a) under the definition of non-qualifying activities the words that appear in sub-paragraph (iii) of the Amendment. It is concerned, therefore, to rectify an anomaly that appears to arise in the case of shipping companies.
When one looks at the activities listed under Clause 2(3,a) one finds they include any heading in Order XIX of the Standard Industrial Classification other than heading 709, and, therefore, include activities under heading 704 which is entitled "Sea Transport," and is subdivided into three subheads, the first of which reads:
The shore establishments of companies (including railways) operating sea-going ships for conveyance of either passengers or cargo.
But it excludes fishing vessels as classified under heading 003.
Sub-head 2 merely reads:
Shipping company (sea-going personnel).
Subhead 3 is concerned with pilotage only, which does not concern this argument.
It is clear from Clause 2(2) that a shipping company fulfils all the requirements of paragraph (a) of that subsection, but because the bulk of shore-based
personnel will be employed in almost every case only for the non-qualifying activities associated with office administration, they do not appear to fulfil the 50 per cent. rule of paragraph (b) unless the employment of the sea-going personnel is to be regarded as, in the words of subsection (2),
… in, or carried out from …
those office establishments. Since the sea-going personnel are expressly included in Subhead 2 of Heading 704, one would expect that it was intended that they were to be included. I say "one would expect", although I must add that I lost a lot of my faith in either logic or common sense governing the Bill.
However that may be, and whether or not this is an inadvertent slip, or whether I have misunderstood the Bill, the Bill appears to contain an inherent contradiction in that, when we refer back to Clause 44 of the Finance Bill—which is, so to speak, the parent legislation of this Selective Employment Payments Bill—we find that the sea-going personnel are excluded from the payment of S.E.T. because of subsection (2) of that Clause and, secondly, that to determine whether a person is employed for the purpose of the Selective Employment Tax under the Finance Bill one is obliged, by subsection (9) of Clause 44, to resort to the definition of "employed persons" appearing in the National Insurance Act, 1965.
That Act defines "employed persons" as those
… gainfully occupied in employment in Great Britain, being employment under a contract of service …
It is clear that, by the very nature of the employment of deep-sea personnel, they are not employed in Great Britain, and it would, therefore, seem to follow that they are not employed persons for the purposes of either the National Insurance Acts or the Finance Bill provisions relating to S.E.T. If they are not employed for the purposes of the Finance Bill, it is very difficult to see how they can be employed for the purposes of this Bill, which rests upon Clause 44 of the Finance Bill.
If they are not employed, not only will S.E.T. not be payable in respect of these deep-sea sailors because of the special provisions of the National Insurance Act, but it would seem to follow that they cannot be taken into account for the purely head counting operation which is necessary to determine whether an undertaking fulfils the 50 per cent. rule of Clause 2(2,b). In that event, despite the specific inclusion of the minimum list Heading 704, the shipping companies will be excluded from Clause 2 because if their sea-going staff are excluded their employees will be overwhelmingly engaged in the non-qualifying office activities associated with the administration.
In this respect, the result will be a discrimination against the genuine private shipping company lines compared with the shipping services of British Railways or the nationalised airlines, which to a large extent compete directly with the shipping companies and not only qualify in respect of their engineering activities for a refund but for a premium. It would, of course, be a discrimination against an industry which in both earning and saving foreign exchange is important in relation to our balance of payments. I hope that this apparent contradiction will either be explained or put right, because I believe that it is rather more than an apparent contradiction.
Two other matters should be mentioned. Although, in most cases, I think the great majority of cases, the seagoing personnel will far exceed the shore-based personnel of a shipping company, there may be a few cases in which that is not so and even when the sea-going personnel are included there would be less than 50 per cent. of the total employees employed in, so to speak, productive activities. For this reason, the Amendment contains the qualification that the office personnel shall be included only where they are, in fact, a minority compared with the sea-going personnel.
It will be remembered that in Section 85 of last year's Finance Act special provisions were introduced in favour of companies managing and operating ships whether or not those companies actually own the ships they operate. There were provisions among other things for what have become known as management companies. It would be logical to expect the same principle to apply under this Bill. Hence the reference in the Amendment to operating of ships as well as management of ships and also to associated companies. In many cases management companies are not necessarily owners of the ships or their subsidiaries.
I refer back to the White Paper on the Selective Employment Tax and to page 16, paragraph 5, which makes quite clear that it was the intention that the shipping companies should be included in this neutral zone, that is, in receipt of refund. The first sentence of that paragraph says:
It is not intended that the tax should fall effectively upon transport, that is on establishments within order XIX of the Classification, with the exception of heading 709—Miscellaneous services and storage …
At the foot of the page there is a reference to shipping, airlines and inland waterways which, with ports and airports, will generally have the tax refunded, although there are exceptions such as shops and restaurants which have no bearing on the present argument.
I refer, also, to the Government Amendment No. 242, which we welcome so far as it goes. I am sure that the Minister appreciates that it does not cover this question, although it is welcome because it brings into this category such companies as oil companies which use and operate their own sea transport for the importation of their own goods.
May I immediately point out to the hon. Member for Gloucestershire, South (Mr. Corfield) that there is a misunderstanding which I thought we had carefully explained to the Chamber of Shipping of the United Kingdom, which naturally was worried by the same arguments which the hon. Member has adduced. It formed the impression that mariners on foreign going agreements would not be employed persons for the purposes of Clause 2 and in consequence office workers would in many cases outnumber those mariners and could be counted as employed on a shore base. However, the only large class of mariners who will not be employed persons for the purposes of this Bill are persons not domiciled or having a place of residence in the United Kingdom, for example, lascars, seamen engaged in Asia.
Generally speaking, British seafarers will count. In almost all cases, British seafarers employed from an establishment will outnumber the office staff at that establishment and, consequently the refunds will be payable. This information has been conveyed to the Chamber of Shipping, and I hope that the hon. Gentleman will accept it without my going into too much detail about the derivation of that authority.
The second point is that a substantial number of seafarers are employed by ship-owning companies which have very few shore staff, the management of the ships being undertaken by specialist management companies which have substantial office staffs but few or no seafarers. This group of amendments, by aggregating companies owning or operating seagoing ships, would make such office workers qualify for the refund so long as the seafarers employed by the ship-owning companies outnumbered the office workers employed by both the owning and managing companies. By aggregating the employees of different employers, the Amendment conflicts with the principle used throughout the Bill that each employer is considered separately and then each establishment of that employer is so dealt with.
In view of what I have said, I hope that the hon. Gentleman will now not press his Amendment.
With this Amendment, we are taking a number of others, including Amendment No. 324, in particular.
I do not believe that the Government have begun to appreciate the way in which the Bill will operate even in respect of manufacturing enterprises. Amendment No. 324 deals, among other things, with activities by way of erection of plant and machinery within an establishment. I do not know whether the Government have appreciated that the effect of this tax is going to put up the capital cost of erecting new plant and machinery which will be nowhere near offset by the premiums returned to the firm which operates that plant and machinery.
If I may give the Committee one or two figures on this, they are very revealing. I might say that the figures are based on an accurate calculation of how this will work out in practice. To take a large chemical plant which is to be erected at a cost of £4 million, it has been calculated that because the contractor putting up that plant comes into the building industry and does not get the premium or refunds, the additional capital cost that will be incurred will be about £40,000. That covers the contractor's own staff, his fees, and also any costs incurred by the chemical manufacturer himself in design procurement, because they will not qualify either. If one takes an opportunity rate of roughly 10 per cent., one gets an extra cost applicable to the capital of £4,000 a year.
Assuming that the plant could operate with about 40 men who qualify for both the refund and the premium, the premium would come to £16 each, or a total of about £640 per annum. In other words, one has a capital intensive activity—a new plant of this sort obviously will increase enormously the productivity of the firm and the whole nation—and the effect of the Selective Employment Tax, as at present drawn up in the Bill, is to impose on that firm an extra annual cost of about £4,000, only to be offset with a benefit of about £640.
I would ask the right hon. Gentleman to address his mind to this, because that will happen to firms which erect large-scale capital plant up and down the country. The whole thing has been presented to the Committee, to the House and to the whole country as if it is going to confer benefits to manufacturing industry. However, unless Amendment No. 324 is accepted, it will make such firms infinitely worse off.
The truth is, as was pointed out in the Chemical Trade Journal, that this is taxation gone made. How many times must the Minister of Labour, as he enjoyed his rest and recuperation in the Stilly Isles, have been wishing that his right hon. Friend the Chancellor of the Exchequer had not listened to the Hungarian rhapsody and had resisted the temptation to go in for the sort of gimmicky stunt of a tax of this sort which will add complication to complication and, in the case of the instance that I have quoted, will add substantially to industrial costs.
I should like to refer the Committee briefly to the question of the shipping industry. I think the Minister of Labour is leaving the Committee under a false impression as to the degree of satisfaction which the shipping industry feels about the concessions that he has made. I am sure the shipping industry welcomes the fact that he has made it possible for the shore establishments to be counted as part of the shipping industry. What a ludicrous situation it would have been—it would have been ludicrousness upon ludicrousness, if I may so express it—if the shipping firms of this country were not to have their essential shore-based departments counted as part of the industry.
I should like to refer to the question of Asian crews. This cannot be discounted as lightly as the right hon. Gentleman apparently wishes it to be. There are in the United Kingdom shipping industry 115,000 seafarers domiciled in the United Kingdom. There are 40,000 not domiciled in the United Kingdom. Of those, about 30,000 are recruited abroad. Those 40,000 represent a very substantial segment of the sea-going staff of this most important industry in this country. It would be anomalous to the highest degree to exclude these companies when their ratios have been calculated for the benefit of the very provisions which the right hon. Gentleman has introduced for the other companies of which he has spoken. This would introduce a rather strange form of discrimination against which I would have thought hon. Members opposite particularly would set their faces.
I should like to confirm a point which I made, that the shipping industry is not satisfied with this situation. In his Press release two days ago, the President of the Chamber of Shipping said:
We have made urgent and repeated representations to the Board of Trade and the Ministry of Labour but, apart from two amendments to rectify obvious anomalies, we look like being bogged down in this morass of uncertainty, unless there is a change of heart on the part of the Government when the Committeee stage of the Bill is resumed and concluded in the House of Commons on Monday.
This is clear evidence that the industry is far from satisfied. It has made representations but the answer that it has received is far from satisfactory.
I would not expect the Government to change their mind, because we all know that they have not got a mind, but if the right hon. Gentleman will show that he has still got a heart of gold, perhaps he will change his heart.
I cannot say that I am entirely satisfied with the right hon. Gentleman's reply, unless it is based on the supposition that "in Great Britain" includes "on a British registered ship". Then, of course, we include the overseas seamen to whom my hon. Friend has referred.
The point which the hon. Gentleman may have overlooked in my right hon. Friend's reply is that these people will be treated as being employed from the shore-based establishments.
I beg to move Amendment No. 113, in page 13, line 15, after "goods", to insert:
otherwise than within or between premises occupied".
I do not think that the Amendment needs much advocacy. It seems clear that this is something that ought to be excluded. I very much hope that the right hon. Gentleman will be as forthcoming as he was on a former Amendment.
|Division No. 153.]||AYES||[8.45 p.m.|
|Alison, Michael (Barkston Ash)||Harvey, Sir Arthur Vere||Osborn, John (Hallam)|
|Allason, James (Hemel Hempstead)||Hawkins, Paul||Page, John (Harrow, W.)|
|Astor, John||Heald, Rt. Hn. Sir Lionel||Pardoe, John|
|Balniel, Lord||Heseltine, Michael||Peel, John|
|Batsford, Brian||Hill, J. E. B.||Percival, Ian|
|Bessell, Peter||Hobson, Rt. Hn. Sir John||Pike, Miss Mervyn|
|Blaker, Peter||Hogg, Rt. Hn. Quintin||Pounder, Rafton|
|Boyd-Carpenter, Rt. Hn. John||Holland, Philip||Price, David (Eastleigh)|
|Boyle, Rt. Hn. Sir Edward||Hooson, Emlyn||Prior, J. M. L.|
|Brinton, Sir Tatton||Hornby, Richard||Pym, Francis|
|Bromley-Davenport, Lt. Col. Sir Walter||Howell, David (Guildford)||Quennell, Miss J. M.|
|Bruce-Gardyne, J.||Hutchison, Michael Clark||Ramsden, Rt. Hn. James|
|Buchanan Smith, Alick (Angus, N&M)||Irvine, Bryant Godman (Rye)||Rawlinson, Rt. Hn. Sir Peter|
|Buck, Antony (Colchester)||Jenkin, Patrick (Woodford)||Rees-Davies, W. R.|
|Bullus, Sir Eric||Jennings, J. C. (Burton)||Ridley, Hn. Nicholas|
|Carlisle, Mark||Kimball, Marcus||Ridsdale, Julian|
|Carr, Rt. Hn. Robert||Kirk, Peter||Rossi, Hugh (Hornsey)|
|Cary, Sir Robert||Kitson, Timothy||Royle, Anthony|
|Chichester-Clark, R.||Knight, Mrs. Jill||Scott, Nicholas|
|Cooper-Key, Sir Neill||Lambton, Viscount||Sharples, Richard|
|Corfield, F. V.||Langford-Holt, Sir John||Sinclair, Sir George|
|Craddock, Sir Beresford (Spelthorne)||Legge-Bourke, Sir Harry||Steel, David (Roxburgh)|
|Crowder, F. P.||Lloyd, Ian (P'tsm'th, Langstone)||Taylor, Sir Charles (Eastbourne)|
|Cunningham, Sir Knox||Longden, Gilbert||Temple, John M.|
|Dance, James||Lubbock, Eric||Thatcher, Mrs. Margaret|
|Davidson, James (Aberdeenshire, W.)||McAdden, Sir Stephen||Thorpe, Jeremy|
|d'Avigdor-Goldsmid, Sir Henry||MacArthur, Ian||Tilney, John|
|Dean, Paul (Somerset, N.)||Mackenzie, Alasdair (Ross&Crom'ty)||Turton, Rt. Hn. R. H.|
|Deedes, Rt. Hn. W. F. (Ashford)||Maclean, Sir Fitzroy||van Straubenzee, W. R.|
|Dodds-Parker, Douglas||Macleod, Rt. Hn. Iain||Vickers, Dame Joan|
|Doughty, Charles||McMaster, Stanley||Wainwright, Richard (Colne Valley)|
|Eden, Sir John||Macmillan, Maurice (Farnham)||Walker-Smith, Rt. Hn. Sir Derek|
|Elliot, Capt. Walter (Carshalton)||Maddan, Martin||Ward, Dame Irene|
|Elliott, R. W.(N'tie-upon-Tyne. N,)||Marten, Neil||Weatherill, Bernard|
|Eyre, Reginald||Mathew, Robert||Webster, David|
|Fletcher-Cooke, Charles||Maude, Angus||Wells, John (Maidstone)|
|Gilmour, Sir John (Fife, E.)||Maxwell-Hyslop, R. J.||Whitelaw, William|
|Glover, Sir Douglas||Maydon, Lt.-Cmdr. S. L. C.||Wills, Sir Gerald (Bridgwater)|
|Goodhew, Victor||Mills, Peter (Torrington)||Wilson, Geoffrey (Truro)|
|Gower, Raymond||More, Jasper||Winstanley, Dr. M. P.|
|Gresham Cooke, R.||Mott-Radclyffe, Sir Charles||Wolrige-Gordon, Patrick|
|Griffiths, Eldon (Bury St. Edmunds)||Munro-Lucas-Tooth, Sir Hugh||Worsley, Marcus|
|Grimond, Rt. Hn. J.||Nabarro, Sir Gerald||Wylie, N. R.|
|Gurden, Harold||Neave, Airey||Younger, Hn. George|
|Hall, John (Wycombe)||Noble, Rt. Hn. Michael|
|Harris, Frederic (Croydon, N. W.)||Nott, John||TELLERS FOR THE AYES:|
|Harris, Reader (Heston)||Onslow, Cranley||Mr. David Mitchell and|
|Harrison, Brian (Maldon)||Orr, Capt. L. P. S.||Mr. Anthony Grant.|
|Albu, Austen||Gourlay, Harry||Ogden, Eric|
|Alldritt, Walter||Gray, Dr. Hugh (Yarmouth)||O'Malley, Brian|
|Allen, Scholefield||Gregory Arnold||Oram, Albert E.|
|Atkins, Ronald (Preston, N.)||Griffiths, David (Rother Valley)||Orme, Stanley|
|Bacon, Rt. Hn. Alice||Griffiths, Rt. Hn. James (Llanelly)||Oswald, Thomas|
|Beaney, Alan||Griffiths, Will (Exchange)||Palmer, Arthur|
|Bennett, James (G'gow, Bridgeton)||Gunter, Rt. Hn. R. J.||Pannell, Rt. Hn. Charles|
|Bidwell, Sydney||Hamilton, James (Bothwell)||Park, Trevor|
|Bishop, E. S.||Hamilton, William (Fife, W.)||Parker, John (Dagenham)|
|Blackburn, F.||Hamling, William||Parkyn, Brian (Bedford)|
|Blenkinsop, Arthur||Harper, Joseph||Pearson, Arthur (Pontypridd)|
|Boardman, H.||Harrison, Walter (Wakefield)||Peart, Rt. Hn. Fred|
|Booth, Albert||Haseldine, Norman||Pentland, Norman|
|Boston, Terence||Hazell, Bert||Perry, Ernest G. (Battersea, S.)|
|Bowden, Rt. Hn. Herbert||Henig, Stanley||Price, Christopher (Perry Barr)|
|Boyden, James||Herbison, Rt. Hn. Margaret||Price, Thomas (Westhoughton)|
|Braddock, Mrs. E. M.||Hooley, Frank||Price, William (Rugby)|
|Bray, Dr. Jeremy||Horner, John||Pursey, Cmdr. Harry|
|Brown, Rt. Hn. George (Belper)||Houghton, Rt. Hn. Douglas||Redhead, Edward|
|Buchan, Norman||Howarth, Harry (Wellingborough)||Rees, Merlyn|
|Butler, Herbert (Hackney, C.)||Howarth, Robert (Bolton, E.)||Richard, Ivor|
|Callaghan, Rt. Hn. James||Howell, Denis (Small Heath)||Roberts, Gwilym (Bedfordshire, S.)|
|Carmichael, Neil||Howie, W.||Roebuck, Roy|
|Chapman, Donald||Hoy, James||Rose, Paul|
|Coe, Denis||Hughes, Entry (Ayrshire, S.)||Ross, Rt. Hn. William|
|Concannon, J. D.||Hughes, Hector (Aberdeen, N.)||Ryan, John|
|Corbet, Mrs. Freda||Hughes, Roy (Newport)||Sheldon, Robert|
|Craddock, George (Bradford, S.)||Hunter, Adam||Short, Mrs. Renée (W'hampton. N. E.)|
|Cullen, Mrs. Alice||Hynd, John||Silkin, Rt. Hn. John (Deptford)|
|Dalyell, Tam||Irvine, A. J. (Edge Hill)||Silkin, S. C. (Dulwich)|
|Darling, Rt. Hn. George||Jackson, Colin (B'h'se & Spenb'gh)||Silverman, Julius (Aston)|
|Davies, Dr. Ernest (Stretford)||Jackson, Peter M. (High Peak)||Silverman, Sydney (Nelson)|
|Davies, Harold (Leek)||Jeger, George (Goole)||Slater, Joseph|
|Davies, Robert (Cambridge)||Jenkins, Hugh (Putney)||Small, William|
|de Freitas, Sir Geoffrey||Johnson, Carol (Lewisham, S.)||Spriggs, Leslie|
|Delargy, Hugh||Jones, Dan (Burnley)||Steele, Thomas (Dunbartonshire, W.)|
|Dell, Edmund||Jones, J. Idwal (Wrexham)||Symonds, J. B.|
|Diamond, Rt. Hn. John||Judd, Frank||Thomas, George (Cardiff, W.)|
|Dickens, James||Kelley, Richard||Tinn, James|
|Dobson, Ray||Kenyon, Clifford||Tomney, Frank|
|Doig, Peter||Kerr, Russell (Feltham)||Tuck, Raphael|
|Donnelly, Desmond||Lawson, George||Urwin, T. W.|
|Dunn, James A.||Ledger, Ron||Varley, Eric G.|
|Dunnett, Jack||Lestor, Miss Joan||Wainwright, Edwin (Dearne Valley)|
|Dunwoody, Mrs. Gwyneth (Exeter)||Lewis, Ron (Carlisle)||Walker, Harold (Doncaster)|
|Eadie, Alex||Luard, Evan||Wallace, George|
|Ellis, John||McBride, Neil||Watkins, David (Consett)|
|Ennals David||McCann, John||Weitzman, David|
|Evans, Albert (Islington, S. W.)||MacDermot, Niall||Wellbeloved, James|
|Evans, loan L. (Birm'h'm, Yardley)||McGuire, Michael||Wells, William (Walsall, N.)|
|Mackintosh, John P.||Whitaker, Ben|
|Fernyhough, E.||Maclennan, Robert||Whitlock, William|
|Finch, Harold||McMillan, Tom (Glasgow, C.)||Williams, Alan (Swansea, W.)|
|Fitch, Alan (Wigan)||MacPherson, Malcolm||Willams, Alan Lee (Hornchurch)|
|Fletcher, Raymond (Ilkeston)||Mahon, Peter (Preston. S.)||Williams, Mrs. Shirley (Hitchin)|
|Fletcher, Ted (Darlington)||Manuel, Archie||Williams, W. T. (Warrington)|
|Floud, Bernard||Mapp, Charles||Willis, George (Edinburgh, E.)|
|Foley, Maurice||Mason, Roy||Wilson, William (Coventry, S.)|
|Foot, Michael (Ebbw Vale)||Mayhew, Christopher||Winterbottom, R. E.|
|Ford, Ben||Mendelson, J. J.||Woodbum, Rt. Hn. A.|
|Forrester, John||Miller, Dr. M. S.||Woof, Robert|
|Fowler, Gerry||Mitchell, R. C. (S'th'pton, Test)||Wyatt, Woodrow|
|Fraser, John (Norwood)||Molloy, William||Yates, Victor|
|Fraser, Rt. Hn. Tom (Hamilton)||Morris, Charles R. (Openshaw)|
|Galpern, Sir Myer||Murray, Albert||TELLERS FOR THE NOES:|
|Gardner, A. J.||Newens, Stan||Mr. Charles Grey and|
|Ginsburg, David||Noel-Baker, Francis (Swindon)||Mr. R. W. Brown.|
|Gordon Walker, Rt. Hn. P. C.||Norwood, Christopher|
It being after eight minutes to Nine o'clock (the House having resolved itself into the Committee at eight minutes to Four o'clock), The CHAIRMAN proceeded, pursuant to Order [18th July], to put forthwith the Questions necessary for the disposal of the business to be concludedat that hour, including the Questions on Amendments, moved by a member of the Government, of which notice had been given:
In page 14, line 17, after "(5)", insert:
Where any minimum list heading in the Standard Industrial Classification contains express provision that a specified activity is excluded from or included in that heading if it is carried on at premises attached to premises of a specified class, and but for that express provision that activity would have fallen under that or, as the case may be, some other minimum list heading, that express provision shall be deemed to be omitted; but, save as provided by the foregoing provisions of this subsection,".
In page 14, line 20, at end add:
(6) For the purposes of this Act—