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I beg to move, That the Bill be now read the Third time.
I do not propose to take any time in going over once again the arguments that have been deployed on the merits of the Bill. My hon. and learned Friend the Financial Secretary will reply to the debate, and will then no doubt take up any points that have been made, but I think that it will be for the convenience of the House if I say something about the way in which the Bill will operate in practice, and, in particular, about the arrangements we propose to adopt for the registration of establishments and the payment of premiums and refunds.
When moving the Second Reading, I said that we would endeavour to keep the registration procedure as simple as possible, and that we would let employers know in good time what they would have to do. We have drawn up our plans in consultation with the Confederation of British Industry and the Association of British Chambers of Commerce, and I am most grateful to them for the help they have given.
Employers who consider that they are entitled to premium or refund will be invited through the Press and by other publicity early in September to ask at the Ministry of Labour's local offices for the necessary forms on which to apply for the registration of their establishments. Local offices will then send them a copy of the "Guide to Employers", which will, I hope, be of help to them in completing the application forms. Employers will be asked to return the completed forms to their local offices between the beginning of October and the end of December.
The local office will tell the employer as soon as his establishment has been registered, and will, at the same time, send him a claim form covering the period from 5th September to 1st January. In some instances, the local office may need to ask an employer for additional information, or for clarification of information already given.
If the Ministry should reject an application for registration, the employer will be informed, and he will be given the reason. He will then have a right to appeal to an industrial tribunal. Draft regulations governing the procedure to be followed in relation to appeals have been considered by the Council on Tribunals. Full information on how to appeal will be made known to employers in due course.
The first claim period will cover 17 weeks, and after that the normal claim period will be 13 weeks. Employers whose establishments have been registered may send in their claims as soon as the first claim period is ended. This means that completed forms will reach local offices of the Ministry of Labour from the beginning of January onwards. Repayments will be made during the first quarter of 1967—the first of them, of course, within a few days.
Yes. The first 17 weeks will date from 5th September, and after that the period will be 13 weeks.
Employers will be told that payment has been made by credit transfer to their banks, and they will, at the same time, be sent claim forms for the next period. It is our intention to transfer the work of dealing with claims and repayments as soon as practicable to a computer. We also intend, once the initial phase is passed, to stagger the claim periods—this relates to the point raised by the hon. Member for Ormskirk (Sir D. Glover)—so that each month roughly one-third of all the establishments entitled to premiums or refunds will be able to claim payments in respect of the previous quarter.
This will enable employers, on average, to get the money to which they are entitled more quickly and will also enable the Ministry to spread the work over a quarter in a more organised and efficient way. To ensure that no employer is worse off as a result of the introduction of staggering, we shall introduce the change-over in May and June, 1967, by advancing payments to some of the employers in the field.
As I understand, there will be a 13-week delay in repayment and this will apply to charities. For example, the Y.M.C.A. will have to pay £125,000 in a year, which means that in any one period it will have over £25,000 out on interest-free loan to the Government. Is this so?
We start on 5th September to 1st January. Then many of the claim forms will be in and we shall start paying as quickly as possible. That 13 weeks, or the 17 weeks in the first case, will be the contributing period.
It was the hon. Member for Ormskirk who misled me before.
The arrangements for dealing with charities have been discussed between the various Departments concerned and representatives of the National Council for Social Services, and the Church Commissioners. Charities, whether registered under the Charities Act, or not, will be asked to obtain a certificate from the Charity Commissioners, the Department of Education and Science, or the Secretary of State for Scotland, as appropriate, which they should send to the nearest local office of the Ministry between October and December.
The local office will then tell each charity that it has been recorded as a charity for the purpose of the Act, and it will at the same time send it a claim form. The arrangements for claims and repayments will be the same as those for other employers, but, as my right hon. Friend the Chief Secretary has said, we shall keep these arrangements under review.
In Committee, hon. Members expressed a very proper concern about the records which employers might be required to keep. I explained at that time that Ministers intended to be reasonable in their requirements. There was some doubt about the reasonableness of Ministers of all colours. Therefore, we have looked again at this matter and the Amendments which have been incorporated in the Bill today have turned these good intentions into statutory obligations.
The hon. and learned Member for Southport (Mr. Percival) will be gratified to know that I do not require employers to keep records in any particular form. Employers who claim repayments of the tax will have to ensure that adequate records exist to enable an authorised officer of the Ministry to satisfy himself as to the amount of tax paid and the number of men, women, boys and girls in respect of whom the tax has been paid. So long as this information is readily available, the employer may suit his own convenience as to the way in which it is recorded. This will all be set down in the "Guide to Employers", to which I have already referred.
Repayments under Clause 6 of the Bill to employers of domestic or nursing assistants in private households will normally be made three months in arrears Initial claims will be invited during the period from the beginning of October to the end of the year. This means that employers who qualify under Clause 6 will get their first refunds at different times and for different periods. Second and subsequent repayments to each employer will be made at three-monthly intervals. As my right hon. Friend the Chief Secretary mentioned earlier this evening, my right hon. Friend the Minister of Pensions and National Insurance will be announcing in due course special arrangements which we propose to make for refunds at monthly intervals to employers for whom the longer period would cause hardship.
It may be helpful if I say a few words about the "non-qualifying activities" provisions of the Bill and how they will operate. As the House knows, the purpose of these provisions is to ensure that establishments which are mainly concerned in office work or in sales do not qualify for the premium or for refunds; and that establishments in which a substantial number of the employees are engaged in the transport of the employer's own goods qualify for refunds rather than for premiums.
Among the non-qualifying activities are activities carried on for office purposes within the meaning of Section 1(2) of the Offices, Shops and Railway Premises Act, other than certain named exceptions. Some people seem to have interpreted the term
activities carried on for office purposes
as including the work of such people as works managers, planning engineers, design staff and computer programmers. This interpretation is based on the assumption that a man who works in an office must, therefore, be employed for office purposes within the meaning of the Offices, Shops and Railway Premises Act.
This is not so. The engineer who is doing calculations is not engaged in clerical work merely because he is writing. The fact that he works in an office is not sufficient in itself to make him employed for office purposes. Therefore, the term, "for office purposes" carries a much narrower meaning than many people may have realised. Fears which may have been expressed that such important contributors to the manufacturing process as design staff will be counted as engaged in non-qualifying activities are groundless.
This is a very important point. Many people are very anxious about it. Anyone engaged in writing is, of course, within the definition, but how does the right hon. Gentleman distinguish among those who are in the definition between those who are writing and those who are not? What is the definition which divides the sheep from' the goats?
All I can say is that the legal advisers tell me that it can be distinguished in this manner and that the Offices, Shops and Railway Premises Act distinguishes it in this way.
Under Amendment No. 96 even the editor of The Times qualifies. I want to make clear that the term "non-qualifying activities" includes only the activities specified as such in the Bill itself. An activity is not non-qualifying merely because it does not attract a refund. The number of persons employed in connection with non-refund activities has a material bearing on whether an establishment satisfies the first of the two conditions set out in subsections (2,b) of Clauses 1 and 2. It does not in itself have any bearing on whether the establishment satisfied the second.
Because they have put too wide an interpretation on the term "for office purposes", and have concluded that a non-refund activity must also be non-qualifying, some people have concluded that the effect of the "non-qualifying activities" provisions will be to exclude a larger number of establishments from entitlement to premiums and refunds than will be the case.
No new tax is popular, and I do not know that any old taxes are popular, but my right hon. and hon. Friends have given assurances and I repeat, that we shall keep the working of the tax under review during the first year of its operation, with the aim of making modifications if they prove necessary or desirable. We shall take into account any representations that may be made by interested industrial organisations and we shall consult closely with the Confederation of British Industry.
I have seldom heard a major Government Measure moved with less enthusiasm, nor supported by fewer hon. Members opposite. This is one of the Government's major Measures of this Session, but the benches opposite are almost empty. While we had a faint cheer when the Minister rose, I have no doubt that it was the universal sympathy that people felt for him and not enthusiasm for the Bill that prompted those noises from behind him.
Now that we come to the Bill on Third Reading, we hear nothing from the Minister about its impact, its effect, or how it will operate. He regards the whole thing as an administrative exercise for his Department. That is how the Bill has been presented and run through, because the unfortunate Minister of Labour has been appointed the agent of the Chancellor of the Exchequer and has had this horrible job dumped on his plate and wants to get through it as efficiently as possible.
Apart from the administrative problems for the Minister of Labour, the Bill will have an effect on employers and workpeople throughout the country. It is likely to have a very unusual and perhaps a severe effect upon employers and the expansion and growth of our industries.
Like the Prices and Incomes Bill now being discussed in Standing Committee B, this is legislation that was never mentioned a short four months ago when the Labour Party was seeking the votes of the electorate. There was not one mention of either of these Measures in the course of the General Election. This is simply a device thought up by the Chancellor to conceal from the people that after such fair promises in March the Government were at once embarking on strong measures of deflation and imposing additional taxation to the tune of £315 million.
When the tax was first proposed, and at Second Reading on 23rd June, there was no talk of redeployment of labour, the new euphemism for promoting unemployment, or of the tight and bitter freeze that the Government are now imposing. Now, on Third Reading, we are discussing this Measure against that background, and we must consider the Bill's impact against the background of the Government's total freeze on prices and wages. These two Measures are the hammer and the anvil between which our growth, investment, expansion and prospects are to be battered and reshaped in the coming months. Who dare forecast what the forge and the smith will in the end produce when the heat at last is off?
Prices will be frozen. Presumably, though we have not been told by any Minister so far, no relaxation will be allowed to any industry or trade to take account of the impact of this tax upon its costs. We do not know for certain. We should like to know, and perhaps whoever is to wind up will tell us. But let us assume—I think this must be so—that the Government mean to peg not only wages but prices and that, this being so, they could not allow one piece of relaxation to anyone paying the tax to take account of the impact of it upon his costs.
Thus, during the period from September to January next, when the freeze is at its tightest and when no relaxations are to be allowed, every employer in this country, industrial, agricultural, charitable or private, will be paying the tax, and not one, save for a few excepted cases, will get a penny back. The Government will receive £100 million a month from the employers in this country and by January they will have collected £500 million.
Employers will have no chance whatever of meeting the cost of the tax by raising their prices. They will have no chance of borrowing money from the banks. As redeployment bites, intense pressure will, naturally, be exerted upon them by the trade unions not to get rid of labour. Those industries which are to have a premium in the end will have pressure upon them to keep their labour force but, nevertheless, if they were to get rid of some of their labour force as a result of the impact of the Bill, they would have the problem of redundancy payments falling upon them.
Everyone can see the inevitable result between now and next January. No prospects for growth. No prospects for modernisation. No prospects for investment. No prospects for expansion. Here is the recipe for recession with a vengeance.
Then we come to February. Suddenly, and selectively, the Government will pour out money which they have been collecting during the previous period. As the thaw begins, all will be changed. In the mushy period at the beginning of the thaw, the angels of industry will receive not only the money they have paid out but a little prize of 7s. 6d. a head. Agriculture, fishing, forestry and quarrying and others will get money back to put them in funds for the next period while they are paying the tax. Their liability will continue, of course. They will get money back from the Government and they will be paying tax out to the Government, and so the money will shuttle back and forth between the two.
But the goats, poor things, those excluded from any form of benefit or refund under the Bill, will be left to continue to carry the burden at a time when, no doubt, prices will still be tight and they will still have little opportunity to recoup the burden falling upon them. It will be a great burden falling chancily and indiscriminately upon different people. In the pottery trade, in which the labour charge forms a large proportion of the costs of manufacture, it will be an infinitely heavier burden while this process is going on than it will be in an industry which is highly mechanised and in which the labour cost is small as a proportion of total product cost.
The indiscriminate effect will be seen in the severe impact of the tax upon laundries. Laundries will suffer particularly by the impact of the tax because almost all the costs of a laundry are labour costs. The bite of the tax on laundries is infinitely different from its bite on many other service trades which, perhaps, provide a valuable and expensive service at quite small labour cost.
The Government originally introduced this Measure on the basis that it would lead to a redistribution of labour between service and manufacturing industries. This is what the White Paper said and what the Chancellor said in his Budget speech. On the Second Reading of the Finance Bill, however, the Chancellor said that it would have no very large effect in that direction. On Monday this week the Financial Secretary told us that its only impact would be on recruiting into industries. Then we had him on an Amendment this afternoon speaking on what his right hon. Friend had said about many people looking carefully at the way they employed their labour and cutting down. What is the Government intending to do? Is it part of their measures for redeployment, creating unemployment in certain sectors and getting people to shift their jobs, or not? We really ought to know exactly what impact the Government think this Measure combined with other Measures is to have on the employment prospects for the workpeople of this country.
The really ridiculous feature of the Bill, apart from the discrimination it has according to whether or not people are labour intensive in particular different industries, is that the whole basis of discrimination in this Bill and the way it operates is itself without any real relevance at all to the importance of the economic function. It selects people according to whether they are on one side of a line or another. Angels, sheep and goats are put into separate categories, not according to any economic principles, but wholly on the foundation of statistical calculations which may be perfectly all right for putting people into different labour pigeonholes in a statistical exercise; but when we come down to applying this to individual workpeople and individual businesses it has the most extraordinarily discriminatory effect and produces absurdities and anomalies, such as dividing those who get their money back from those who really bear the burden of the tax.
This Bill bears upon its face the method by which it has been forced through this House into legislation. It bears these undiscriminating distinctions because we have hardly had a chance, by reason of the severity of the guillotine imposed by the Government, properly to discuss the issues which the Bill involves. The Government have been moving Amendments up to the last minute. We had this—I will not say pantomime—this procedural performance which the Minister had to go through of putting through a whole series of Amendments not one of which was explained; and throughout the Committee stage almost every Government Amendment has gone through without the slightest explanation. While we are grateful for some of the things which have been done, it really is not the way to shape legislation of this importance that affects every business and employee in the country.
Two concessions have been put on the Order Paper which were passed formally a few minutes ago, the only two as far as I know which the Government have made in the system of classifying those who are to get refunds and those who are not. The two which were made concerned the newspaper industry and the film industry. No doubt they have very good cases for their particular problems to be so dealt with, but would it be unreasonable to suggest that they now find themselves in the Bill because they are the two industries which are concerned with communications and that all the other people who are much more important to our economy—the construction industry, the oil industry, laundries and a host of others—had just as good and perhaps an even better case if we had been able to discuss them?
Why are the Government putting only those two into the Bill without discussing anyone else? When we look at the Amendment affecting films, while it may seem really attractive we find it has really done absolutely nothing in the sense that the film makers get nothing, the studios get nothing. It is really bogus to suggest that it gives any real help, because it merely allows the actual process of turning the film which has been exposed into a condition in which it can be exhibited. That tiny area only is getting a relaxation of tax. My information is—I do not know whether it is true—that the Amendment proposing this minor and bogus concession to the film industry was tabled before the Board of Trade, which is responsible for the industry, had ever seen it. I do not know whether that is true, but if it is it shows the sort of way in which the Government are legislating at this stage.
The idea behind the Bill, which came out clearly in the Minister's speech, is that what suits administrators and what solves the administrative problem and what is most convenient for the Ministry of Labour must be done, regardless of the impact on trade, or industry, or employer, or employee. We got one small concession by our debate the other evening, and we are very grateful that the Minister has decided that he really does not need to direct that everybody should keep records and how he should keep them. If we had been able to discuss the Bill a little more, it might have been made slightly more convenient for industry and for the citizen instead of for the Government.
But the administrative approach to the Bill has also led to what I regard as a serious defect in a Measure for seeing that the bite of taxation falls fairly between citizen and citizen. Throughout the Bill one finds that many important decisions are left solely to the discretion of individual Ministers and they are allowed in their sole discretion to grant or withhold serious and substantial tax advantages and disadvantages. It surely must be wrong that the impact of taxation on many citizens and many businesses should depend solely upon the discretion of Ministers and the way in which they exercise it.
Let me give some examples. Clause 1(2) provides that certificates may be given by the Minister of Technology or the Minister of Labour who can declare that establishments are entitled to refund who might not otherwise have been within the Bill, or they can withhold the certificates in exactly similar circumstances when they have given them to other persons within that category. In Clause 2(2) the same power to grant or withhold qualifications for the payment of refunds is given to the Minister of Agriculture and the Secretary of State for Scotland who are able to grant a certificate which may make an immense difference to the amount of money received by a business in the course of the following year.
In Clause 3 an absolute discretion is given to Ministers to make any refunds they like, with or without premiums, to the nationalised industries as they may decide. In Clause 4 they are given absolute discretion to make any payment, including a premium of any amount, and with discretionary preference for any local authorities or other bodies within Clause 4 and they can pay to some and withhold from others exactly as they please.
The Government may say that Ministers will be very fair and reasonable and extremely good administrators, but it has to be realised that in this Bill, which lays down the bite of taxation between one citizen and another, we are simply putting it on the basis not of what Parliament decides, but of what individual Ministers may decide and which may be vital to the interests of individual citizens.
Most surprisingly of all, in Clause 7(5) Ministers are given a complete discretion as to the time and manner and conditions upon which they will make repayments. We debated this matter the other day when we had complete obstinacy from the Government and no relaxation at all. Parliament may say that people should be entitled to have their money back if they fulfil certain conditions, but for the Government to take powers to pay it if and when they like and to pay it in any manner they like and to pay it subject to such conditions as they may impose seems to be an extraordinary way in which to legislate for the bite of taxation.
Finally, in Clause 10, most important of all, perhaps, complete discretion is given to Ministers to marry or divorce establishments. We all know that the way in which one puts together different units or separates them may make the difference between whether one gets a refund or the premiums or nothing at all. Yet a Minister, on his say-so, can put the establishments together so that the whole gets a refund and a manufacturer or a businessman in exactly the same circumstances can be refused, in the discretion of the Minister, that same advantage.
All of these powers are given to Ministers, without direction as to the principles upon which the powers should be exercised. They are to be used without Parliamentary control, without being subject to the courts, without publicity and, most important of all, without one citizen knowing how another citizen has been treated. Parliament will have to be very acute in future in supervising the way in which Ministers exercise these powers of giving or withholding money to individuals.
The other major criticism that I desire to make of the Bill is of the whole concept of establishments. It is a concept which is very convenient for the Minister. We have been told by the Minister of Labour how they are going to draw up the register. One gets one's name on the register and receives payment back again. When one has taken the piece of land then one counts the nobs and sees what the nobs are doing and so sees if the unit is entitled to claim back. To this extent it may be very convenient for the Minister, but it is utterly ridiculous as a way of taxing employment. It bears no relation at all to the way in which businesses are organised, and it is absurd that a citizen should qualify or fail to qualify according to the number of establishments into which he has divided his activities. This seems to us to be utterly and completely absurd and nonsensical.
It all arises from the fact that the Minister of Labour, very correctly, wants to run an efficient show and have things as simple as possible. It wholly ignores the way in which people really run their businesses. As to the discretionary powers of the Minister to marry or divorce establishments, the whole turns on the Government making a premium or a refund or nothing payable. They will take a little piece of land, look at the people working on it, and count up what they are doing. One of the things that disqualifies is when people are engaged in office purposes. That includes the purposes of administration, clerical work, handling money and telephone and telegraphic operating. And clerical work by definition includes writing, book-keeping, sorting papers, filing, typing, duplicating, machine accounting and drawing. Are draftsmen included within drawing or is it a different sort of drawing which the Minister has been advised by some unknown legal pundit is without the Act?
There are large sections of industry, particularly people working in offices, who are left largely undefined by the adoption of this provision. It is all very well the Minister saying that it is going to be much better than was thought. Everyone ought to know. As was pointed out to him, it does not matter what the Minister now says. It is what the industrial tribunals decide when they come to consider individual cases throughout the country. There is a very wide margin in this definition which may make the whole difference between enabling establishments to get a refund plus the premium on the one hand or to receive nothing at all on the other.
Let me give an example of this absurd method of endeavouring to discover how this tax will bite. There is a company in the forefront of the electronic research and development industry which exports 50 per cent. of its output It is a large organisation employing 5,700 employees, the majority of whom, counted as a whole and treated as in a single business are not in non-qualifying employment. If that business was taken as a whole it would be entitled to refund and premium for all of its 5,700 workers. It so happens that it is organised into 24 separate establishments spread round the country. One of them is its headquarters at which most of its clerical, many of its transport, and all of its sales and administrative staff are engaged. That unit will plainly, if treated separately, be disqualified. It will lose a refund of £330,00 a year by its treatment as a separate unit. Of its other establishments, 16 qualify and 8 do not.
If one treated the business as a whole—we tabled Amendments to try to secure this, but none of them was adopted and nor have the Government taken steps to try to help—the net annual gain from the refund would be £200,000. If its establishments were split up, the net result would be that it would pay £215,000. The difference is £400,000 a year for this business.
All this depends on the say-so of a Minister about what he will marry and what he will divorce. The Government have made no attempt in the Bill to ensure that people who run businesses in a sensible way as single units are treated as one unit. In the motor industry there are manufacturing sections, spares sections, delivery sections and administrative sections. The motor industry cannot understand how the tax can be administered when it has units spread all over places like Birmingham and Coventry which will all be split into penny packets.
It is all very well the Minister saying, "You just keep the records". If he does not marry the establishments, every business must keep a record of tranfers between internal establishments such as it has never kept before. If an organisation has 24 separate establishments, some of which qualify and some of which do not, and it moves its transport or clerical staff from one department to another, it will have to split the records into different establishments. This is one of the ways in which the Bill is being administered.
These are the outstanding features of the Bill and the impact which it will have. This is an ill-conceived, misjudged, misshapen abortion of a Bill, and we should terminate the pregnancy as soon as possible by the sharp and neat surgical operation of destroying it on Third Reading.
It used to be said that no subject could be raised in the House on which somebody could not speak as an expert, however obscure it might be. This rule, if rule it be, has certainly held good throughout this debate. A number of my right hon. and hon. Friends, and a number of hon. Members opposite, have raised points on which they have expert knowledge. Attention has been drawn to a number of obvious anomalies and unfairnesses in the Bill. Some of them, such as that concerning charities, have been put right. The anomaly about farmers has been put half right.
There is a smaller anomaly which has been put right to which I should like to draw attention because of my specialised knowledge of it. I should declare an interest. Before I became a Member, I was a bespoke tailor. When I looked at the Standard Industrial Classification, I was staggered to see a note specifically excluding bespoke tailors and dressmakers with workrooms attached to the retail shops from Order 12, a manufacturing section, to Order 20, the distributive section.
I immediately tabled an Amendment to the Bill. Subsequently, I went to see the Parliamentary Secretary to the Ministry of Labour and the Financial Secretary to the Treasury to point out that this was a real and genuine anomaly which. in equity, should be put right. The genuine bespoke tailor, dressmaker or couture house is, in every sense, as much a manufacturer as an engineer. The only difference is that a different kind of material is used—wool, silk or something of that kind, instead of metal. Furthermore, it is just the kind of manufacture which our economy needs to encourage.
In this trade or industry, the raw materials form a very small part of the cost of the end product. The major cost goes into design, skill and "know-how." For a country which has to import a major part of its raw materials, it would have been quite criminal to penalise an industry which, in that respect, is so important to us in terms of visible and invisible exports.
However, perhaps the strongest point of all is that this industry is responsible for the collection of Purchase Tax. It so happens that the Purchase Tax certificate issued by the Customs and Excise to my own firm specifically calls us a manufacturer. I have another certificate which was issued to a firm in Birmingham only eight days before the publication of the Bill and it says:
I hereby certify that Alderman and Pitt Limited … carrying on business as a manufacturer, has been registered in connection with Purchase Tax.
That is dated 23rd June, as I say, only eight days after the publication of the Bill. I suppose that that shows more than anything what little thought has gone into the Bill. On the one hand, one Government Department calls an industry a manufacturer; on the other, another Government department calls it a retailer. That is not the only anomaly in the Bill, but it illustrates what a mess the Government are in and what a nonsense the Bill is.
I am glad to say that my Amendment has been capped, if that is the right word, by Government Amendment No. 246. It is a very involved Amenment, and I confess that it took some days for me to realise that it nullified my own.
I am encouraged to learn that the Chancellor of the Exchequer himself wrote to the President of the National Federation of Merchant Tailors and to the Chairman of the Incorporated Society of London Fashion Designers saying that in future they would be classified as manufacturers. Although I disagree strongly with the selective element in the Bill, I am content with that and I thank the right hon. Gentleman. Had he not done so, there is no doubt that a very large number of famous houses and businesses in the trade would have gone into liquidation.
Although it is a small industry in terms of the people which it employs, it is very important in terms of the country's economy. A large number of people still come to England, and London in particular, to buy their clothes. London has always enjoyed a unique reputation in that respect as the centre of style and fashion. It would have been extremely short-sighted, even of this Government, to have legislated this small and important industry virtually out of existence.
I am grateful for what the Minister has done to correct this one small anomaly, but I still feel that the whole Bill is an anomaly. I am not against the payroll tax as such, but I am absolutely against what I believe are the selective elements in the Bill. The only thing that will save our country is more productive and more efficient industry. I firmly believe that the only way in which we will achieve this is by competition, and fair competition at that, but the Bill legislates for unfair competition.
If the tax is to be permanent, as the Chancellor said when he introduced it, but if modifications are to be made, as the Minister has just said, I hope that the modifications next year will include the abolition of all premiums, and a refund to charities, to old-age pensioners, to the handicapped, and to part timers, and for the rest that it will remain as a payroll tax. Then, and only then, will I be able to concede that this tax has any merit, and then, and only then, will I feel able to vote for it.
Like the hon. Member for Croydon, North-East (Mr. Weatherill) I should like to thank the Government for a concession which they have made. I am glad that the debate has got off to such a good start, and I shall continue it that way.
The concession to which I am referring is that which the Minister mentioned in connection with Clause 10 about the access to offices and other parts of an establishment. The original Clause did not propose to provide for this. In fact, it laid down specifically that where there was no direct access from one part of the establishment to another they would be treated as separate establishments. I am therefore grateful to the Minister for having accepted the representations made to him in this respect, and for having made the alteration.
But I am still a little worried about the Clause as it stands and about the criteria which are likely to be accepted by the Minister in deciding whether or not he will recognise divided premises of this kind, and I hope that before the debate ends the Minister will give us some idea of what kind of criteria will be adopted.
The right hon. Gentleman said that it was asking a little much to say that we are not going to give any criterion to the House, we will just leave it to whoever happens to be the Minister at the time, and whoever happens to be acting on account of the Minister. I hope that we can have some reassurance on the matter.
The only other matter that I wish to raise is on this question of design. My right hon. Friend the Minister of Labour has assured us that on the best legal advice which he can obtain, people engaged on design work, it is directly connected with scientific research, which is referred to in Clause 1, will be included for the purpose of the premium. The Clause refers to people who are
employed wholly or mainly in connection with such activities …
that is scientific research. If he is relying on the wording of the Bill, I do not see on what he bases his legal interpretation, because if the wording is taken at its face value, people who are working in offices and are so employed wholly or mainly in connection with scientific research would include the clerks as well.
I do not see where the Minister makes a distinction, nor on what legal principle he bases it, and I am still worried, because we have had this sort of thing so often in the drafting of Acts of Parliament. We get an assurance from the Government spokesman about what is intended by the Government, but we find, in the event, that it is not upheld by the courts. I hope that we shall have information about Clause 10, the criteria which the Minister is likely to adopt in deciding whether a separate establishment is to be treated as one or two, and about the legal interpretation of the reference to designers and drawers we will have some further reassurance.
When the Bill was first foreshadowed by the Chancellor of the Exchequer, I was bold enough to say that I believed it to be as ill-conceived, stupid and useless a piece of taxation as had ever been introduced into the House. At the time, I was castigated by the Government Front Bench and criticised in various newspapers which had not previously considered the matter. It was some time before people appreciated what was involved. We now know that we have passed a large number of provisions with no discussion, about which the country knows nothing but will learn something in the coming months, and there is very little more we can say. However, we can still say, within the rules of order, that those criticisms which I made at the beginning are just as valid today.
One example already mentioned is films. At the beginning, when we examined the Bill—it had been constructed with great care so as to obscure all the points which really mattered—we had to look at this curious document, the classification. Under that, film studios, which produce a method of communication or, in a lawyer's term, something from which people derive information, possibly improvement and certainly amusement, were services. They would pay and get nothing back. Still less would they get a premium.
On the other hand, publishers of newspapers were in another category. They were not only to get their money back, but to get a premium of 7s. 6d. a week for every man employed in this so-called industry which everybody knows is already overmanned. A splendid demonstration of the logical policy of the Government. Everyone agreed that this was not a good idea. A complication arose because the newspapers thought that this was unfair because only those engaged in manual labour or looking after the machines would qualify. The office people, editors, and so on, would not.
We may not realise it, but we have today passed an Amendment, No. 96, resulting from new Clause No. 5, which was not dealt with. That new Clause provided that all the office staff of newspapers should be included in manufacturing. The Government accepted that in their usual clever way, so that nobody understood what was going on. The Amendment was so worded that it was almost impossible to understand. It meant that the editor of The Times was a manufacturer. What does he manufacture? Some people might wrongly think that he does manufacture things. I should not have thought that he would be proud of this, but he will have to be proud of it tomorrow.
Returning to the subject of films, we—I say "we" because a large number of my constituents work at Shepperton Studios—found ourselves in the position of having to pay £25,000 to £30,000 in S.E.T. These film people are already working on very narrow profit margins. I was appointed, with Lady Wootton, to the Board of British Lion, an organisation designed to maintain the independence of British films. A report was made to us stating that if S.E.T. went through in its present form, Shepperton Studios might have to close down. I should mention that some fine films are made there.
We went to the Board of Trade—and I am purposely being definite in my remarks—and received a very good welcome. These film people were told that they would get consideration. An Amendment was to be tabled. However, tonight we passed a Government Amendment and everyone concerned thought that it would be of real assistance to the film industry. I have only just been able to discover that that will not be the position, because the Amendment gives exemption only in respect of what is done after a film has been completed, at the very last stages.
Is it a fact that that Government Amendment was tabled without consultation with the Board of Trade? I believe that there was no such consultation, because the people concerned went to the Board of Trade and came away with the feeling, as one would expect after meeting the President of the Board of Trade—and, while I do not agree with the right hon. Gentleman politically, I and most hon. Members consider him to be a man who is concerned with what he believes to be the proper performance of his duties and the best interests of trade in this country—that they would get exemption.
As a result of this wonderful guillotine procedure, we have not been able to discuss this matter.[Interruption.] I gather that at any moment an hon. Gentleman opposite is likely to rise on a point of order and ask, "Is the right hon. and learned Gentleman entitled to go into this matter"? I believe that I am entitled to do so, and in much more detail if I so wish. I discussed the issue tonight, having had considerable difficulty getting in touch with those concerned on the telephone, and I am satisfied that the Amendment proposed by the Government and passed by the House is not adequate and might, as one of my hon. Friends mentioned, even be described as bogus.
The Government Amendment which we passed, and which is supposed to deal with this matter, is Amendment No. 5, standing in the name of the right hon. Gentleman the Minister of Labour, and inserts at the end of subsection (2,a):
(ii) activities by way of the manufacture from exposed film of cinematograph films for public exhibition; or.
On the surface, one might think that that covered the exposure of the film and production of the actual cinematographic film, but I find from my inquiries at the Board of Trade today—the Board of Trade, which, I think I might say, answered us in a not altogether unsympathetic way—that it took the view that this Amendment gives virtually no relief at all—as anyone will understand who realises that the whole work of the film studio is done before that stage, which is merely laboratory work.
This is the kind of thing that has been done under the Bill. It may be that we shall be told, and I hope that we will, that this is just a mistake in drafting. That would be a complete vindication of the honesty of all those concerned, and it might be a very nice thing for us to hear. But it is rather difficult to believe that it could be so. This is the sort of thing that is going on every day in this House—the new gimmicks—and it is the kind of thing against which we should protest. I therefore hope that all my hon. and right hon. Friends will direct their attention to this case as an example.
During its passage through the House the Bill has had a few patches of its face washed a little, but it remains a horrid and grotesque thing. To me, the most appealing evidence of this is the way in which the representatives of those who stand to gain premiums from this Measure have joined solidly in condemning it with those who are to be its victims.
For instance, I represent a constituency engaged quite pre-eminently in alleged "manufacturing activities"—to use the Government's term—and conspicuously lacking in what the Government describe as service industries. It consists of small manufacturing communities which, naturally, rely on the large West Riding towns on their borders for the various services. Yet from my constituency I have had not a single commendation of the tax, but a large postbag—as I believe most hon. Members on both sides have had—condemning it.
Those of us who live in the larger commercial cities and are accustomed to reading of strife between the retailers' organisations—very often the chambers of trade—and the larger industrialist organisations; they are very often at war one with another—have noticed how those organisations, with their different interests and viewpoints, have been united in condemning this tax.
That is due primarily to the entirely "phoney" basis of the tax in trying to discriminate between alleged service industries and alleged manufacturing industries. That seemed a shaky concept when it was first unveiled before us, and it has fallen down ignominiously in debate. In the view of the Liberal Party, it cannot be put right by any process of amendment by Order, or by the fulfilment, if they are ever fulfilled, of any promises to refine the tax which the Government have made during the course of debate.
This Bill will hit particularly hard that valuable class in a modern industrial society, the specialists—particularly those who render specialist services, and those who rely on them. I imagine that every hon. Member representing an industrial or partly industrial constituency is familiar with the dynamic character who is avowedly a specialist, and who tells the world that he is trained and successful in producing a particular line of products and has neither the training nor the resources to be a great organiser.
He does not want to gather under his own factory roof a maintenance squad or a canteen staff under his own orders and employment. He does not want to organise his own research team. He wants to use either the research pool in his industry or a particular research firm. He does not want to do his own advertising, or even his own factory cleaning. In the past he has chosen, very wisely in some cases, to rely on service organisations. He will be heavily penalised vis-à-vis the large, well-established, comprehensive firm which has been able to employ these people under its own roof and which will get a premium in respect of them.
The Bill entirely funks the admittedly difficult problem of the self-employed and remains a backward-looking charter for the village blacksmith and those who become self-employed. This is entirely contrary to the sort of trend which we ought to be encouraging in our present trading position in the world. I do not want to dwell on this because it has been eloquently thrashed out in debate tonight, but the principle of deciding the character of an establishment by the mere counting of heads is extremely offensive to the Liberal Party. Perhaps the House will appreciate that this is even more offensive to us than to members of other parties. By whatever way we look at it this seems an extraordinarily crude way of determining the character of any trading establishment.
I wish to mention a point which, perhaps naturally, has not been deployed by hon. Members from either side of the House so far. That is the considerable evidence there is that as the shadow of buying a weekly stamp, costing in many cases £2 16s. 10d., begins to fall across people's ledgers and cash books, there is evidence that public opinion is making itself felt against this Bill and against the Government who have brought it in. This is revealed in the National Opinion Poll figures which many hon. Members will have read in today's Daily Mail which show that combined opposition to the Government is now in a decisive majority.
The greater part of the public opinion which has ebbed away from the Government has flowed towards us on this bench who claim that during these debates we have put before the House clear and decisive alternatives to the Government's proposals, against which we intend to vote tonight.
We are now coming to the last stage of the long-fought debates on the deplorably ill-thought-out, hastily put together and very badly conceived Measure.
Throughout all the debates, on Second Reading, in Committee and, above all, on Third Reading, as was indicated by the speech of the Minister of Labour, the Government have totally under-estimated the enormous administrative difficulties and problems which will arise when the Act comes into force in September. It was made perfectly clear from the speech of the Minister of Labour, when he was explaining to the House the kind of instructions and advice that was going out to employers, manufacturers and others, that he had no idea of the complications, muddle and uncertainties which will arise.
The Government, in this ill-thought-out Measure have broken almost all the administrative rules of collecting a tax. The golden rule if a new tax is to be imposed is the simple but none the less effective rule that whatever Department collects the money must also be the Department which pays the money back, where any repayment is applicable. But this golden rule has been broken in the Bill, because one Department will collect the sum of 25s. or 12s. 6d. a week per employee from September onwards, but a multiplicity of three, four or five Departments will be assessing the repayment, and a number of Ministerial decisions will be involved.
I do not believe that there is any proper machinery in Whitehall for getting round this problem. The bodies are not yet available, and will not be available by September, for collating the information and transferring it from one Department to another.
The right hon. Gentleman talked about the first period of 17 weeks and the second period of 13 weeks of delay in repayment. Let us take the case of a firm with a payroll of 1,000 in September in which, according to whether it is in category I or category II, there is a shake-out or the reverse. The number of employees might drop by December in the first case to 950 and in the second case it might increase to 1,050. Who will check the difference between 50 plus or minus on the September figures, and how will it be done?
At least, a firm employing 1,000 people has accountants and others to deal with that kind of thing. But what about the farmer, who does not have a firm of accountants behind him, who fills in his own milk returns and all the other forms? Let us suppose that he normally employs five or six men and takes on a couple of extra men for harvest. If the corn harvest is late, as it can easily be if the weather is bad, the two extra men, the casuals, may stay on to help him with the sugar beet harvest. He starts off with five or six men in September, plus two extra men, and the two extra wili stay on until, say, December. If one of his regulars falls ill or has an accident, one of the casuals may stay on for another couple of months to help him out.
When one multiplies that sort of problem hundreds of times all over the country, who will check all this? How will the farmer cope with the forms, and who will check whether they have been filled in accurately or inaccurately? I do not mean that they would be filled in inaccurately on purpose, but simply by mistake.
I do not believe that the right hon. Gentleman and his colleagues have any conception of the tangle of administrative nonsense and uncertainty that will happen over all this. They are doing the ostrich act. They have not the faintest idea of the muddle there will be at the paying end for the employer, big or small, or the remotest idea of the muddle at the receiving end in Whitehall with the multiplicity of Departments, the one taking the money in and four or five others paying it back.
The right hon. Gentleman said that it would not be very long before the repayment was made. But the plain and rather unpleasant fact is that whether the repayment is in the first period of 17 weeks or the second of 13 weeks, and whatever Department is concerned, the employer, big or small, is giving the Government something that they cannot get anywhere else—an interest-free loan. While he is in process of giving the Government this involuntary interest-free loan, he is being pressed by the bank, because of the credit squeeze, to do something about his overdraft. He is caught between two draughts which are quite outside his control.
The artificial and arbitrary dividing line between manufacturing firms and distributive or service firms is absolute nonsense. So long as there is a premium for category 1, there will be every encouragement for those firms to hang on to labour which might otherwise be surplus. So long as there is discrimination against the service industries, although there may be a shake-out, costs are bound to rise. Almost all the service industries perform services for the public which directly or indirectly affect the actual cost of living and the cost of living index, and to this extent the success of the Prices and Incomes Bill will be made more difficult to achieve.
Never have I seen a Bill worse designed, worse drafted, more obscure in its scope or less likely to have the desired effect.
I endorse and adopt all the reasons, general and detailed, so cogently advanced by my right hon. and learned Friend the Member for Warwick and Leamington (Sir J. Hobson) for the total rejection of the Bill. It is a monster. It has got out of hand. It is bulging with absurdities. It is crammed full of unfairness. It is riddled with disincentives.
Nowhere will the effect of the tax be more widely or unfairly felt than in constituencies like mine. Nowhere will the infinite number of anomalies hit harder than in Southport and towns like it. Nowhere will the wholly unfair discrimination be more damaging than in Southport and towns like it.
Both the tax and the Bill providing for the machinery of repayment are thoroughly bad. I have no doubt how my constituents would vote on the Third Reading if they had the chance, and I have no doubt how they will show their opinion of it when they have the opportunity to do so at a General Election.
Passing from the generalities to a small point of detail, on which I should like the assistance of Ministers, I recall that the Minister of Labour said this evening that it was not his intention to require employers to keep records in any particular form. I think that I have that right. I do not know whether either of the Ministers would care to say whether he agrees, but that is how I took the right hon. Gentleman's words down. He said that he was, therefore, giving up the power to require employers to keep records in a particular form and this was why Clause 7(4) was to be deleted.
If the right hon. Gentleman says that that was his intention in moving to delete Clause 7(4), I entirely accept it as genuine. He was kind enough to indicate that he had formed that intention as a result of arguments advanced by my hon. and right hon. Friends and myself on this question of records, and that he had heeded our arguments and accepted our criticisms, and that his object was to seek to meet them.
While I fully accept the genuineness of his intentions, it ought to be made clear that what he has done does not succeed in giving effect to them. What he has done is to substitute for Clause 7(4) a new wording of Clause 7(1,b) which says, in effect, that the Minister may decline to make repayments unless the employer produces such records of the payment of Selective Employment Tax in respect of persons engaged in employment, etc., as the Ministers concerned may reasonably require.
Although this may have been quite unintentional on the part of the Minister, and I make my observations on that assumption, the result is exactly what we had before. The position now is simply that instead of the Minister doing something positive and saying that one must keep such and such records, what happens is that he can decline to pay unless such records as he requires to be kept are kept. It is the same thing, done in a different way.
Accepting entirely what the Minister said in moving the Third Reading, that it was not his desire to have powers to require employers to keep records in a particular form, the point I am making is that the Minister's Amendments, which he has had to prepare very quickly, have not secured the result that he intended and have not secured the result that he informed the House this evening on Third Reading he intended to secure.
Unless I am wrong in my interpretation, I hope that the Minister will take the opportunity, in another place, of implementing the intentions which he has expressed this evening, because he has not so far met the points made by my hon. and right hon. Friends and myself.
During my short time in this House I have got used to a feeling of indignation when I hear speeches from the benches opposite, but it is true to say that I have seldom felt so indignant as I felt during the speech of the right hon. Gentleman the Minister of Labour, moving the Third Reading. That may seem surprising, because it was a very moderate and reasonable speech, on the face of it. What made me indignant was that it was 16 minutes, and I timed it, of solid, bureaucratic officialese. When I come to judge bureaucratic officialese I know what I am talking about, because for 10 years I was writing it. This was one of the finest examples that I have ever heard.
By these remarks I am not criticising the very assiduous and capable officials who wrote the speech. I am criticising the Government who have adopted the policies which make that sort of speech necessary. That speech was 16 minutes of exposition of the administrative problems created by the Bill. The speech should have been totally unnecessary. The Government had adopted a system which, by its selective nature, has made that sort of speech necessary and created these problems. The many explanatory pamphlets which will be put out by the various Ministries in the coming months in an effort to clear up the anomalies and all of this bureaucratic activity has been made necessary by these policies.
When one reads the Minister's speech in HANSARD tomorrow, if any of us feel able to bring ourselves to read it, it will be seen to be the most extraordinary collection of administrative phrases. I took some of them down. He said, "My right hon. Friend the President of the Board of Trade will be announcing how certain problems will be dealt with. Forms will be sent out on certain dates. Records must be kept. Repayment will take place in certain cases after 17 weeks. It is hoped that the first repayments will take place after 13 weeks." Then we had the extraordinary passage about what are "office purposes". He said, "Among the non-qualifying activities are activities carried on for office purposes," and went on, "Some people seem to have interpreted this as meaning something rather wide."
"No," he said, "This is not true; the term 'offices' has a much narrower meaning than many people have realised." Those were his words. In my 43 years, I had formed the impression that I knew what an office was, but, apparently, I do not, nor does any other hon. Member on this side or the 50 million people in the country. When the Minister reached this passage, the lawyers were on the edges of their seats. My right hon. and learned Friend the Member for Warwick and Leamington (Sir J. Hobson) interjected what was, I am sure, a valid argument, and the hon. Member for Sheffield, Attercliffe (Mr. John Hynd) thought that it was something different: all the lawyers wanted to raise points with the Minister.
That is what is happening in this House, with people who are not now considering, although they will later have to consider, no doubt, how they will pay the tax and get the repayment and adjust their businesses in such a way as not to bear a bigger burden than necessary. But what will happen when the Bill gets to the country, if this is what happens in the House, when 50 million people will be directly concerned with the question of how to avoid paying perhaps 25s. a week if they employ one person, or thousands of pounds a week?
If we cannot interpret the Bill after days of careful study, what will happen to Mr. Jones or Mr. Smith, whose businesses it directly affects—[AN HON. MEMBER: "Or Mr. Brown."]—when they are faced with this problem? This little encounter about the meaning of an office is a very good example in miniature of the legal disputes, and, I am sorry to say, the fiddling and scrimshanking which will result all over the country from this inept and ill-thought-out Bill.
The right hon. Gentleman spoke about the companies and firms which will be fortunate enough to claim the repayment. What about the individuals? I have had a letter from an elderly gentleman in my constituency, aged 75, whose wife is over 70. Both are invalids and the wife is paralysed with arthritis. They employ a domestic servant-cum-nurse to help them. He is an intelligent man, and he is worried. I have had considerable correspondence with him. I wrote to tell him that, under a concession granted by the Government in response to pressure from this side, he would be entitled to a repayment.
This is all right as far as it goes, but this elderly gentleman, who is 75 and has a wife who is paralysed at the age of 70, will have to keep records and make sure that he makes the repayment claim. This will be happening all over the country.
The main criticism of the Bill and the Minister's speech is that it is all totally unnecessary. If it is necessary for the Government, as a result of their inept policies of the last two years, to raise £250 million of revenue, they could have done it with a flat-rate payroll tax of 4s. in the £ across the board, and all these debates and problems and the fiddling and scrimshanking which will occur would have been unnecessary.
Do right hon. Gentlemen opposite remember the words of the Labour Party manifesto, in 1964? They said:
We are ready, poised to swing our plans into instant operation.
Is this one of those plans? I acquit them of the charge. I do not think it could have been, because not even hon. and right hon. Gentlemen opposite could have prepared a plan of this ineptitude—if they had given it prior consideration. What a way to run a country !
There is an hon. Gentleman who has just come into the Chamber; he has not sat through the debates, and before he interrupts he might learn what the Bill is about.
The point I am making is that we had two speeches from the Government side of the House, a Ministerial speech, and a carping, niggling contribution by the hon. Gentleman the Member for Sheffield, Atter-cliffe (Mr. John Hynd). There is no enthusiasm in the Labour Party for this Bill. None whatever. I hear nobody opposite dissenting from that.
Sit down. We have till 12.7 a.m. under the guillotine arrangements to complete the discussion on Third Reading, and if hon. Gentlemen opposite wish to make a constructive contribution and support the Treasury Bench they will subtract from the amount of time available to hon. Members on this side of the House.
Apart from that made by the hon. Gentleman the Member for Attercliffe, not one contribution has been made from that side, and, therefore, the fact is patently clear; there is no enthusiasm whatever for this Measure among Members of the Labour Party.
The Bill extracts £315 million of additional taxation in the current year. In addition, it forces and foists upon an unsuspecting community an interest-free loan at the rate of about £100 million a month. I believe the Bill not to be deflationary, but to be inflationary. I believe the provisions of the Bill to be thoroughly inequitable. I believe the Bill to be highly immoral, because of its provisions by which hardship will be incurred.
We have had four speeches from this side of the House drawing attention to the incongruities and anomalies in the Bill. My hon. Friend the Member for Croydon, North-East (Mr. Weatherill) related how he wrung a concession from the Treasury on behalf of the bespoke tailor manufacturing firms which were to be classified originally as non-manufacturers and then reclassified by the Treasury later as manufacturers. Well, all charity begins at home and in this House Members of Parliament have, for purposes of the Selective Employment Tax, to be classified as self-employed persons.
That means that they will not pay the tax. It is significant that the Treasury did not put Members of Parliament into the Bill as expected or excluded people. The reason they did not do so was the fact that they would have been held up to opprobium by the general public for excepting Members of Parliament from rules and provisions applicable to other people. But whereas Members of Parliament are classified for purposes of the Selective Employment Tax as self-employed people, Members of Parliament are not taxed for their Income Tax as self-employed people. Oh, no; they are taxed under Schedule E as employed people.
In a moment.
Here is just one more anomaly, that the Treasury will not explain to the House, or to me, why a Member of Parliament is classified as a self-employed person for the Selective Employment Tax, but is classified as an employed person under Schedule E, or as an office of employment, for Income Tax purposes.
That is a further anomaly. My hon. Friend might go away and look up the facts, and he will find that his Income Tax assessment is under Schedule E as a Member of Parliament, as a self-employed person. What my hon. Friend is doing is reinforcing my case by creating a third anomaly within this context.
The only answer that the Treasury will give on this matter is that the Selective Employment Tax is nothing to do with Income Tax and that it is perfectly reasonable to classify a Member of Parliament as self-employed for purposes of Selective Employment Tax, but as an employed person for purposes of Income Tax assessment. Further than that, the Treasury will not go.
Bias, bigotry and discrimination run through every provision of this Bill—[Interruption.] I recommend the hon. Member for Derbyshire, North-East (Mr. Swain) to go away and learn how to pay his local rates before he interrupts me.
If the hon. Gentleman, the ex-Member for Kidderminster, whom I have always termed the expert carpetbagger, sees fit to insult me in the Chamber, and is prepared to repeat that outside in the Lobby, I will knock his "'tache" and his nose straight through the back of his blasted head.
Mr. Deputy Speaker:
I was not aware that I had been addressed on any point of order. I understood that the hon. Member for Worcestershire, South (Sir G. Nabarro) made a personal reference to the hon. Member for Derbyshire, North-East (Mr. Swain), to which the hon. Member replied. I think that it would now be convenient if the hon. Member would resume his speech.
I was saying that bias, the bigotry and discrimination run through every provision of the Bill. I give only one or two examples in support of what I have said as my reasons and the reasons, I believe, of the majority of my hon. Friends for voting unanimously against this Measure tonight. The worst was the example referred to earlier this evening—the bias in favour of nationalised corporations and against private enterprise. We read in Schedule 1:
Bodies to which section 3 applies … An Area Electricity Board".
I repeat to the Financial Secretary the questions which were put to him earlier. I do so in the hope that we will have some evidence tonight in support of his allegation that nationalised corporations are to be treated on exactly the same terms—notably, an area electricity board—as a private enterprise contractor.
The Midland Electricity Board, for example, carries out considerable contracting services. Considerable numbers of men are employed on those contracting services. That board will be relieved of S.E.T. on those men. But if the identical tasks, purposes and contracts are carried out by a private enterprise firm, S.E.T. will be charged. This is a shocking discrimination against the private enterprise firm and perhaps the Financial Secretary—who intervened earlier and said that there was no such discrimination; that both bodies, private contractors and nationalised industry contractors would have parity of treatment—will explain how he arrives at that extraordinary conclusion, despite the terms of the Bill.
I must comment on non-qualifying activities and the flatulent explanations given by the Minister of Labour. The right hon. Gentleman has disappeared from the Chamber and will not have an opportunity to explain in greater detailin view of the extraordinary difficulties whilch will add to the bewilderment of industry—how quite large numbers of men are to be classified under the Bill.
What is a cost and works accountant in a manufacturing establishment? Is S.E.T. to be paid for him? What is a time and motion study engineer, in the context of this Measure, employed full-time in a manufacturing establishment? Is S.E.T. to be paid for him? I am not concerned with research establishments alone when I talk about draughtsmen. Every engineering firm of any size employs a staff of draughtsmen. Whether such firms are manufacturers or engaged in scientific and research activities, draughtsmen are almost ubiquitous in industry. They are employed by manufacturing and non-manufacturing firms alike. Is a draughtsman in a manufacturing establishment to be the subject of S.E.T.? Is a works manager to be the subject of S.E.T.?
I could go through 100 classifications of men and women employed throughout industry, in merchanting firms and in a wide range of commercial undertakings, excluding nationalised undertakings, where dubiety exists. Bewilderment has already occurred throughout industry about the position of these men and women in relation to S.E.T.
I suppose that if this tax is continued for any length of time case law will be built up. There will be innumerable appeals to the courts, for there is no tribunal and no powers under the Measure for the Minister to have cases of genuine dubiety referred to an arbitration tribunal. Neither is there any provision in the Bill for Statutory Instruments to set right the obvious difficulties which will arise from the looseness of the classifications.
My party has not yet declared its future intentions towards to the Bill. For myself, I shall urge it to issue, I hope well before the next General Election—[An HON. MEMBER: "It will not be long now."]—no, it will not be long now—an unequivocal statement that the Tory Party will repeal this Measure at the earliest possible moment. It will be of great electoral value if it does.
The Minister of Labour said that most of the arguments for and against the Bill had been discussed and that he would not deal with them, but it is only fair to point out that, in Committee, the only time that we were permitted to discuss the effect of the tax on Scotland was during a brief period of debate on the charities. In these circumstances, I want to discuss the effect on Scotland, for the Bill discriminates blatantly against Scotland.
It does so, first, by its impact on tourism, one of our main growth industries. It will hit it extremely hard. Secondly, it also hits the Highlands extremely hard. About 80 per cent. of the working population in the Highlands is in the industries which are to get no refunds or premiums. To that extent, it is working against all the regional policies the last Government introduced. And it affects not only the Highlands, but the Borders and many other development areas.
Thirdly, the Bill affects transport, which is vital to the outlying areas of Scotland and elsewhere. Transport is a vital cost in such areas and when we add to the effect of the tax the effect of the increases in the petrol tax and the cost of vehicle licence duties, there is clear discrimination against Scotland. More important, the Bill discriminates against wages in Scotland and other development areas because, in general, they are lower than elsewhere. A tax of 25s. for men and 12s. 6d. for women will have a savage effect.
But the Bill will also affect even some of the major industries which are to get a refund or premium, such as shipbuilding, which, in the West of Scotland, directly or indirectly provides a living for 100,000 people. It may surprise the Government to know that the Scottish banks are now only £10 million below the limit of overdrafts. The Selective Employment Tax will cost about £2½ million a week. After four weeks, if the money comes from overdrafts, there will be no more finance to come from the banks. We have seen that in the North-East one of the shipbuilding yards is in very severe difficulties. What is to happen to other yards which are in a poor financial state when, for 17 weeks, they have to provide a loan of this sort to the Government?
We cannot impress too much the position, not only of John Brown's, but of every yard. This tax could well be the straw which breaks the camel's back. It is a very serious situation. Irrespective of the percentages which the Government may provide, there is no question that for outlying areas the Bill will be very serious. The Government have said that they can change the Bill by Order, that under Clause 9 they have certain powers to refine the Bill in special ways, but, having read that Clause carefully, I can see no way, except by a very very unusual exercise of powers, that the Government could bring in an Order to exempt the regions. They could exempt trades and parts of an industry, but I cannot see how relief could be given to an area.
One of our most vital industries in Scotland is building. The Government were brought to power on the basis of an election manifesto which promised that housing would be treated as a military operation. Now we see the shambles in which the construction figures have gone down, houses started in the second quarter, approved in the second quarter and completed in the second quarter were all down compared with the same quarter of last year, after a quite disastrous first quarter. It is clear that to put a further cost on to the industry and disincentive will be very serious. Hon. Members opposite who think that this is not important should come to Glasgow to see the housing position there and how vital it is that we should push ahead and build more houses. The Bill has made the position of the building industry much more serious.
For these and many other reasons advanced by my hon. Friends I trust that we shall reject the Bill and soon see an end of this tax.
Ministers are not able to travel about the country at present, because they are chained to their desks with a mass of ill-digested legislation, but if they were able to do so and to listen to what people are saying they would know that at the moment Parliament is in ill repute. I said it last night, but there is a bigger audience tonight—people are going about the country with stickers on their cars saying, "Guy Fawkes come back; all is forgiven".
The reason is that people think that Parliament has no influence on events and that we are being bull-dozed and have no influence on the Government over this Bill or financial measures which the Government are taking. The principle behind this Bill is entirely wrong. Anyone in trade or industry knows that the weakest part at present is in the sales and service side of an organisation. Anyone with a piece of machinery in his home knows that it is the sales and service side which wants assistance, not die manufacturing side.
There are all sorts of services which have not been discussed tonight under the Guillotine. I was particularly concerned with Clause 10 and new Clause 8, which were not discussed. Here I declare an interest as a director of Rootes Motors. The motor industry has expanded in the last few years and thrown out new despatch departments in Coventry and research departments elsewhere, but these outlying parts will not qualify for premium whereas the old factories will. That sort of problem could have been discussed in this House if we had been given a chance to do so.
If Mr. Speaker were tomorrow to give a certificate to the Bill as a Money Bill the other place would not have a chance of putting forward Amendments and discussing these important points. I went to a firm in a congested area in North London the other day which has gradually expanded by buying up old properties so that it has its sales side in one property, manufacturing in another and distribution in another. It finds that although it is manufacturing it will pay far more on the sales and distribution than it receives on the manufacturing side because it is scattered in various premises a mile or so apart. That kind of anomaly has not been discussed and that is why the public are saying that Parliament is in disrepute and that we have no effect on events. The Executive is far too strong and is bulldozing the country. That is why the people will throw the Government out at the next General Election.
The Bill makes perfectly clear that the Selective Employment Tax is not a payroll tax. Although it has been called that as an abbreviation, it is a misnomer, because three-quarters of the money is to be paid out again; and to manufacturing industry it is not a tax at all. After a forced loan it is to be paid a bonus.
In reply to Questions which I put to Treasury Ministers, I was told that nearly 80 per cent. of the tax collected is to be paid out again in England and Scotland. But no convincing case has been put today to justify the complicated and expensive administration which this entails, or the many anomalies to which many of my hon. Friends have referred this evening. There is no case either for these forced loans, at a time of high interest rates and a credit squeeze, from those who will not ultimately pay the tax at all.
Nearly 80 per cent. is to be paid back, but that is not the percentage in certain regions. Here I come to the regional considerations to which my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) referred. From figures which the Treasury gave in May, it was clear that the Highlands, the only rural area for which it gave an estimate, would receive very much less in repayment because of the preponderance of service industries and the small proportion of manufacturing.
Perhaps the Treasury was rash to give those figures in May, soon after the tax was announced, but it stated at that time that for England as a whole the proportion of money to be returned in refunds and premiums will be 68 per cent. and for the seven crofting counties in the Highlands 18 per cent.
Since then I have put down further Questions, after the concessions for charities, the extractive industries and others on the way in which the refunds would be paid. The Treasury has refused to give any estimates of the same kind, but that earlier estimate was enough to show the enormous difference between a large rural area and England or Scotland as a whole. The percentages which have been given, nearly 80 per cent. now, indicate that the Highlands would probably now be about 26 per cent., at any rate less than 30 per cent., and therefore considerably different from the country as a whole.
Other rural areas for which no estimates have been given must be in a similar position; for example, the North-East and the South-West of Scotland and no doubt comparable large rural areas in England and Wales. I emphasise that the geography of Scotland is such that this question is more serious for those areas in Scotland than perhaps anywhere else. When young people are leaving school in such areas, will they get the jobs they were expecting in hotels, garages, shops or offices? The managers cannot be blamed if they reduce staff and the vacancies disappear.
That is evidently one of the Chancellor's objects, but as there is little manufacturing industry in such areas—and the employment provided by manufacturing industry in the Highlands is only 10 per cent., according to the Government's own figures issued in January—will not these young people have to leave these areas? In the case of Scotland they will undoubtedly go south to England, or else go abroad, and this will accelerate the flow away from Scotland which in other contexts the Government have been contending that they are trying to stop. No wonder the letters S.E.P. have come to mean in Scotland the Scottish Emigration Plan !
I recognise that in the industrial belt in Scotland the problem will not be the same. My hon. Friends have brought to light many of the anomalies which arise there, but it is the large rural areas that make up so much of Scotland which will suffer, and those whose jobs will disappear, or for whom there will be no jobs, may well have to leave Scotland altogether.
The Guillotine has resulted in our having no chance in Committee to discuss the main points affecting such areas in Scotland, the areas which will bear the heaviest impact of the tax because so little is to be repaid to them under the Bill. In a tantalising way, Ministers have spoken of refining the tax after it has been in operation for some time, and there has been a hint that in such refinement in the future regional considerations could be taken into account. But why not do this now? The regions which will be hit the hardest under the Bill are largely those which the Government are supposed to be aiming to assist with development. Instead of reducing jobs, the Government are supposed to be increasing employment in those areas.
Nothing was said during the General Election campaign in March that most of the jobs in the north of Scotland, for example, would be subjected to this tax, while a large proportion of jobs elsewhere would not only not be taxed, but would be rewarded with payment of a premium. This is a classic example of the Government's habit of saying one thing and doing another.
I shall develop the point so ably put by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro). The only reason why the nationalised industries are to be exempted from the Selective Employment Tax is that that is the only way by which they can be helped to compete against private enterprise.
There are three golden rules which are never broken by these moronic nationalised industries.[Laughter.] Let the animal noises cease both above and below the Gangway opposite. They increase costs, they give worse service, or they inflict gigantic losses on the public—and usually it is all three together.
I say again, at dictation speed to get it right into the cranium of the Minister, that the real object of the tax is to help the nationalised industries to defeat private enterprise and to try, if possible, to put it out of business. If that is not the reason, what is it?
I am glad that the Parliamentary Secretary to the Ministry of Technology is in his place, because the point I am about to raise is relevant to his activites. The tax we are considering is seen as wholly ludicrous in the context of the developing technological industries. The whole trend in these industries is away from having men actually at the plant making things and towards reducing the number of people directly engaged in manufacture.
Correspondingly, the trend must be weighted towards the employment of those who are coming to be known as technico-administrative people. The number of firms having to employ a greater proportion of people in offices is increasing in the technical industries, in computer manufacturing, in the chemical industries and in other advanced manufacturing. It is a very strong trend.
If a firm has more than 23 per cent. of people who do not qualify as manufacturing, it will be worse off under the Bill. In the chemical industry, more than 23 per cent. of the staff are administrative and technico-administrative, and, therefore, if that industry were considered as a lump, it would not qualify for refund or premium.
The tax must, therefore, have an influence diametrically in the wrong direction. It must encourage firms to continue to employ people on machines when they ought to be putting in automation. It will inhibit the employment of planning staff and those engaged on similar exercises in offices, but without these people firms cannot expect to invest, develop and expand. For this reason, if for no other, the Bill is thoroughly bad and I shall vote against it.
Normally, when we come to the Third Reading of a Bill, we feel that it is the completion of a task. We may either like or detest the Measure in question, but at least something has been achieved. Something has been attempted, something done, and, I dare say, we have earned a night's repose. But in this case all that the House of Commons has done is a journey round the mulberry bush.
The whole of the Bill has now been made out of date, particularly by the Prime Minister's statement on 20th July. The Bill was conceived in folly. It was thought right to take a certain sum of money, about £240 million in a full year, out of the pockets of the people, and an orthodox package to achieve this was prepared. Then right hon. Gentlemen opposite turned up their eyes in horror at the thought of doing something which might look similar to 1961, and so, out of the pigeon-holes, came the elemental folly of the Selective Employment Payments Bill.
The Bill goes back to a primitive folly of the Labour Party, the idea that there is something good sacred and magical about manufacturing and something utterly wrong about services. This absurdity is really the parent of all the anomalies to which so many of my hon. and right hon. Friends have drawn attention. That was how the Bill was conceived and when the day came that it should be delivered the Government looked around and found that the maternity wards were full. The Bill ought to have been run by the Treasury, it ought to have been dealt with, in all of its details, by the fiscal Departments. It is an intolerable constitutional affront that it should have been run by the Minister of Labour.
I do not know where the Minister of Labour is. If he is ill I would accept that at once, but we have been told all the time that this is a Ministry of Labour Bill. The Minister's name is the first on the Bill, all the Amendments are tabled in his name and it is his accounting officer who is to be responsible.
It is the final insult to the House that the right hon. Gentleman cannot come here tonight for the final stages of the Bill. Even at this late stage, if the guillotine Motion allowed it, and I realise that it does not, I would move the Adjournment of the House, against the affront being offered to the House by the Government. The Minister——
It is not the business of the Ministry of Labour to deal with these matters. The Minister of Labour is very well liked in this House, on both sides. He is very highly respected and the answers given by the Parliamentary Secretary were received with great sympathy and understanding on this side of the House, although we did not agree with them. But the Parliamentary Secretary should never have been asked to give those answers. It is intolerable that a Parliamentary Secretary to the Ministry of Labour should be put up at that Box to plead the case against special treatment for the disabled.
It has been said before, and I say it again, for the last time, that this Bill is deeply offensive to everything that the Ministry of Labour has ever stood for, and I hope, will stand for in future. We know the origin of this miserable child. We remember that happy little episode at the beginning of Budget day, with the Chancellor on television afterwards, and the vision offered to us of a ladies' hairdressing assistant tripping off to a blast furnace in Sheffield and all the rest, which would somehow put the economy right.
That is how all of this nonsense started. From the very beginning this concept was attacked. I have said outside the House, and I would like to say it here, that one of the most brilliant pieces of improvised opposition—because it had to be improvised; we had only a few seconds' notice—was the immediate response of my right hon. Friend the Leader of the Opposition, in the 10-minute reply that he made to the Budget speech. Right from the beginning, without notice, he pinpointed the mistakes that, one by one, over the months the Treasury Ministers have been forced to admit.
Within a short time my right hon. and hon. Friends were saying that the method of repayment for agriculture was nonsense. I remember my hon. Friend the Member for Macclesfield (Sir A. V. Harvey) saying that. Yet this had gone through the Cabinet, when the Minister of Agriculture and the Secretary of State for Scotland and the Secretary of State for Wales were silent.
Every single concession, without exception, the concession to agriculture, charities, china clay and many others, was pressed by the Opposition, resisted by the Treasury Bench and finally conceded by it in response to the overwhelming case that we have been able to make.
Now we come to the last stages, and only the Treasury team are left to us. We are faced by a Treasury team that has been utterly discredited over these last few months. They have been wrong, both from and before the Budget and both on and before——[HON. MEMBERS:"Hear, hear."] I am very glad to see that the right hon. Gentleman the Minister of Labour has entered the Chamber. He will be able to read in HANSARD what I have said. I was just expressing sympathy with him, that he has had to handle such a Bill, sharing his shame that a Minister of Labour should be associated with such a Measure and saying that I appreciated the efforts, even in a bad cause, by his Parliamentary Secretary.
I would draw the attention of the House to what has been achieved under this wretched Guillotine. On Clause 1, in Committee, there were selected by the Chair 61 Amendments, including the main debates, the Clauses and the Amendments selected with them. Of those, 12 were discussed or 20 per cent. On Clause 2, 89 were selected and 11 discussed: that is, only 9 per cent., and I am leaving aside the 14 Government Amendments, 12 at least of real importance, which went through on the nod without a word of explanation from the Government.
Not a word was heard on Clause 4, about local authorities, in Committee or on Report. The same with Clause 6, relating to the special households. The same with Clause 8, relating to enforcement. Not a word either in Committee or on Report. On Report, not a syllable has been spoken about the Bill, because it was impossible, in view of the five hours allocated to us, even to complete the discussion on new Clauses.
During those five hours we discussed five new Clauses and five other Amendments. That is 10. Half an hour each—and, counting the time for Divisions, no one can conceivably say that all that time should not have been given. That meant that we did not even complete the discussion of the new Clauses, and all the questions which my right hon. and hon. Friends tried to raise in this all too brief Third Reading debate went entirely unconsidered.
We do not regard this as the end. We will ensure that every single Labour Member who voted for the allocation of time Motion is brought to account in his own constituency for that vote. We will make sure that they know about their votes against special treatment for the disabled, for the elderly, and for the part-time workers.
I would give a special message to the Co-operative Members. We knew well how brave they would be and we turned out to be right. Many of them voted for the allocation of time Motion, knowing very well that it would close out—and they wanted to close out—discussions of the retail and part-time workers and all the other aspects which we were told they held so dear. We knew they would run away; they did run away, and they will answer for it, each one of them, in their constituencies.
They will, of course, get this shabby Bill. Look at them ![HON. MEMBERS: "Where are they?"] Those who are here. By the use of the Guillotine and the use of the Closure, by the abuse of Parliamentary procedures in the same way as we have seen on the Prices and Incomes Bill, somehow they hope that they will reach the Recess. That is what they want.
I say this in the presence of my right hon. Friend the Member for Kinross and West Perthshire (Sir A. Douglas-Home)—in my day, I have done almost as much shooting as he has—no grouse moor owner has longed for 12th August as much as this Government do. They have been mute of malice almost throughout. Almost at all times those benches have been empty while ours have been crowded. On the Third Reading, one speaker from the back benches opposite, and one speaker only, and he critical of the Bill, spoke in the time which was available.
I hope that the Financial Secretary has not got a brief prepared as the Chancellor of the Exchequer did at the end of the Third Reading debate on the Finance Bill, when he explained at great length what things we would be voting against if we voted against the Third Reading of that Bill. This is an ordinary Parliamentary procedure: it does not mean that one is against every comma of the Bill. The Government of today know perfectly well that, as the Opposition, on three occasions they voted against the Third Readings of Finance Bills.
So, then, we have got this Bill, as a monument to the follies which have been revealed from the very first speech by my right hon. Friend the Leader of the Opposition to those on Third Reading, and the devastating speech of my right hon. and learned Friend the Member for Warwick and Leamington (Sir J. Hob-son). What we are left with is the melancholy satisfaction of being right, and that is little comfort, because it is the people who will suffer from the follies of Treasury Ministers. Any success which they achieve will be because of the deflation and because of the unemployment which they have now been driven into planning for the people.
The Budget judgment was wrong, and it is admitted to be wrong. The Budget speech founded on it was wrong, and is admitted to be wrong. The Budget legislation, the Finance Bill and this Bill which comprise the Selective Employment Tax, those, too, were wrong, and are increasingly being admitted to be wrong. Therefore, it is with very great pleasure that we shall record our vote tonight against the Third Reading of this Bill. We shall carry our fight forward against the Bill from this House to the country till we win.
I think that hon. Members who have experience of debates under the Guillotine know they can fall into one of two classes. Either the Opposition choose—because the choice lies with them—to use the timetable for a series of short, sharp and very relevant and debates pertinent to the contents of the Bill, or they may choose instead to use the time by having general, wide-ranging debates and then complain that the debate has been strangled as the result of Government measures.
The choice lies with the Opposition and, of course, it is perfectly clear where, on this Bill, their choice has lain. I must say, sitting here, as I have done, hour after hour, I have often wondered whether I was not suffering from the neurological disease called deja vu where one feels that one has been through it all before, because we have had to listen to the same arguments being brought up again and again.
The criticism that there has not been ample opportunity to debate the Selective Employment Tax is really too silly for words.[HON. MEMBERS: "Oh."] Let me remind hon. Members. We began with the Budget debates themselves, where a very large part of hon. Members' speeches were devoted to the Selective Employment Tax. We then had the Finance Bill, and I think I can say that the whole Second Reading debate was devoted to the tax—virtually the whole of it. We then had the Committee stage of the Finance Bill and on that we spent 33 hours and 10 minutes discussing what was then Clause 42. We had the Report stage, when hon. Members spent another 2 hours 30 minutes—altogether a total of 35½ hours of debate on the tax during the debates on the Finance Bill.
We then had the Second Reading of this Bill, and we then had the Committee stage under the Guillotine with three days with 1½ extra hours each day—24 hours. The right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod) reminded the House again of three particular issues on this tax which, of course, have been a constant and repeated refrain throughout the debates—the particular position of part timers, the disabled and the elderly. I would remind the House that in Committee and on Report of the Finance Bill, we had six hours of debate devoted exclusively to part timers, whose various circumstances were also a constant refrain of other speeches on other Amendments. When we come to the 24 hours of time-tabled debate on the Bill, we see that 3½ hours of those were spent discussing Amendments on part timers. We discussed the disabled for 1½ hours on the Finance Bill and four hours on this Bill, and the elderly 1½ hours on the Finance Bill and three hours on this Bill.
Well, it is entirely a matter for the Opposition to choose how they want to use their time, but once they have chosen to use it that way it hardly lies in their mouth to complain that there are other matters which have not been debated, many of which I have been asked to reply to—they having been raised for the first time in this debate. The truth is that the Opposition do not want to discuss the Bill. They do not want to improve the Bill. They want to strangle it[HON. MEMBERS: "Hear, hear."] "Hear, hear," they say: I thought they would say that. If that is the position, they must not complain that we have strangled debate if they do not want to debate the Bill.
The right hon. and learned Member for Warwick and Leamington (Sir J. Hobson), in the unusually knockabout speech which he made this evening, appeared to be unaware even of the changes which had been effected in the Bill. He alleged that the only alterations which we had made to the Bill—that is to say, to the categories which qualify for the premium or the refund—were in respect of film laboratories and newspapers. Of course, the lie was immediately given to that by one of his hon. Friends, who thanked us for one of the other Amendments which we had made and which affected bespoke tailoring.
There have been many other categories—gas, opencast mining, electricity, water supply, and transport establishments serving refund-earning establishments, and a number of other anomalies which were thrown up from the Standard Industrial Classifications, such as bakehouses attached to shops, all of which were covered by Government Amendments to the Bill. Indeed, so little interest did the Opposition Front Bench appear to have that they put down again on Report an Amendment to achieve something which had already been achieved by one of the Government Amendments that we passed in Committee, dealing with bakehouses.
I was asked by the right hon. Gentleman to deal with and to comment upon the question of establishments, to say why we had chosen establishments rather than total businesses or trading organisations as being the unit on which we based the repayment or the refund. There are a number of reasons for it. One is the severely practical one, which is that virtually all establishments are already classified in the Ministry of Labour records for other purposes. This, of course, saves an enormous amount of administrative work—something which hon. Members opposite have sneered about all through the debates until today, when they decided to spend 2¾ hours of the time available to have a debate on how we must cut down the Civil Service and not allow it to expand at the rate at which it is expanding—something which could not have been achieved if we had accepted half the Amendments which hon. Members opposite have asked us to accept.
The fact is that the establishments test is the right approach. It is the right unit to use for what is a selective system of tax and rebates according to the nature of the activity which is being carried on. Very many business organisations have establishments in different classifications, in different categories. Apart from the administrative difficulties of trying to determine the position of businesses, many of which will have establishments spread all over the country, they will not themselves in the end produce units which will fit into the system of industrial classification. The approach which has been so much criticised is the approach which hon. Members opposite adopted when they were in government and had to decide a system of classification of industry for purposes of the levy under the Industrial Training Act. They adopted the same test of establishments.
The right hon. Gentleman cited the case of an important electronic company. He did not give its name, but, if he wishes, I would be delighted to go into the particulars of it. Where we have had particular cases of large companies of the sort that he described, we have found that, in practice, the company which has complained has been suffering from a number of misunderstandings about the effect of the Bill, and, as was made clear in an earlier debate, the effect of the Bill is much more beneficial to them than they have usually imagined.
While taking the establishment as being the unit, we have introduced a considerable measure of flexibility. From the start there was in the Bill power for my right hon. Friend and the other Ministers concerned to make an Order dividing an establishment so as to separate the manufacturing part from the rest in certain circumstances. My right hon. Friend made clear on Second Reading what the criteria would be. Broadly speaking, there must be two sets of activities of a different kind, generally under different minimum list headings, and they must be physically distinguishable and separately organised.
Under the Amendments which have been accepted, there now is a new power to unite different establishments on the application only of the employer in order to treat as one what otherwise are two establishments. This is to obviate the sort of difficulties where a factory was expanding to, say, the other side of a road.
My hon. Friend the Member for Sheffield, Atterclifle (Mr. John Hynd) asked what would be the criteria upon which this power to unite establishments would be used. Broadly speaking, it is the intention to use this power where two establishments are contributing to a single activity under the same minimum list heading and where the two establishments are in close proximity. It has not been thought right to try to lay down—as one Opposition Amendment did—a definite distance. One Amendment suggested one mile. We do not want to put anything so rigid into the provision and, as I say, the intention is that they should be close to each other in geographical proximity.
I was questioned about the definition of "office purposes", on which my right hon. Friend commented in his opening speech and it was said that it was not for the Minister, but for the courts, to decide the meaning of this term. That is true, but in this, as in many other Measures, it is the practice, where there is doubt as to the possible meaning of a word, for the Government to inform the House of the best legal advice available to them about the true construction. Until the matter has been tested, or upset, in the courts, naturally that is the construction which the Minister who will administer the Measure will apply.
In this case, since the definition and interpretation which he gave will clearly, and in every case, be in favour of the employer, it is exceedingly unlikely that any employer will appeal in the courts against that construction. Thus, one may take it that, in practice, the interpretation which my right hon. Friend gave is the one which will operate and which will continue to operate.
The hon. and learned Member for Southport (Mr. Percival) commented on what my right hon. Friend said about the keeping of records under Clause 7. My right hon. Friend was not dealing with the Amendment to which the hon. and learned Gentleman was referring. He was not saying that he was giving up the power to require records to be kept. He said that he did not intend to require them to be kept in a particular form. The matter which was argued in Committee by a number of hon. Members—the request to my right hon. Friend to alter the terms of his legal power in this respect—was followed up and carried out precisely in the Government Amendment.
The hon. Member for Windsor (Sir C. Mott-Radclyffe) raised a number of questions about the application of the Bill, in particular for farmers. As my right hon. Friend said, we are not going to make difficulties for people about the forms of the records to be kept. They will merely be told the information on which it is required that records should be kept. The hon. Gentleman instanced the case of a farmer with a varying number of employees from week to week or month to month. This will not present difficulties. The payments will be in repect of the tax which has been paid via the Class I National Insurance contributions. It makes no difference whether the numbers employed are constant or vary. The hon. Member asked how the matter will be checked. The employers will have to keep records of the tax paid and these will be open to inspection.
The hon. Member for Worcestershire, South (Sir G. Nabarro) and others raised the allegation—made a number of times—of unfair competition between the nationalised industries and those parts of the private sector in competition with them. As my right hon. Friend the Chief Secretary made clear in Committee, it is our intention that this tax shall operate fairly and that there shall not be unfair advantage for those parts of the public sector competing with the private sector. But nor must they suffer an unfair disadvantage. The Government accept this general principle. This is reflected, for example, in the decision on the direct labour used by local authorities in new construction work.
Where Government establishments are engaged in manufacturing, they have been instructed to calculate their prices is if they received the premium. The Royal Ordnance factories are an example of this. On the other hand, where a service is provided and a charge is made, the tax is to be taken into account as a relevant staff cost. Government Departments will, of course, pay the tax and the cost will be shown in the next Estimates.
I am grateful to the hon. and learned Gentleman for giving way. He has twice said that he proposes—I use my own words—to ensure parity, to ensure truly competitive terms between a nationalised undertaking and the equivalent private enterprise undertaking. How does he propose to do this? I press him on it because the Bill contains no method by which it can be done. How is it proposed to give effect to the promise he has given?
I was coming to that point. I was wondering whether to give way now to the hon. Gentleman for that reason.
Clearly, there is a great variety of different cases in relation to the nationalised industries and some of them have been referred to in our debates. I invite hon. Members, on behalf of my right hon. Friend, to submit to us any cases where they consider that unfair competition is operating as a result of the tax. On the basis of the matters raised, we propose to enter into discussions with the nationalised industries and consider with them in what way we can operate the tax and their pricing system fairly so as not to have unfair competition of the kind referred to.
The fact remains that, under the Bill, the electrical contracting industry, for example, will pay 25s. per head for every man employed in competition with nationalised industries which will pay nothing. The hon. and learned Gentleman is wrong in saying that the Chief Secretary deployed a clear answer. He never did throughout the whole proceedings on the Bill.
I am sorry, but I have already given way twice on this specific point. I have only three minutes left.
Again tonight we have heard from the right hon. Member for Enfield, West (Mr. Iain Macleod) what is becoming the old chestnut that the tax has in some way become out of date as a result of the recently announced measures. This is complete nonsense. All the objectives of the tax stated by my hon. Friend the Chancellor of the Exchequer at the outset are still as relevant and even more relevant than they were then. I remind the House of what they are.
The first and primary objective is to raise revenue and that continues to play an important part in the disinflationary measures the Government have adopted. The second objective is to broaden the tax base, a principle which was welcomed very widely at the time not only in this House, but throughout the country. For all the criticisms which hon. Members have made of this tax, it is this above all which will ensure that it is of a lasting nature.
Thirdly, it is to make a start towards redressing the balance between the services
and the manufacturing sector in tax liability, to encourage greater economy of labour and higher productivity in the service industries. This again was sneered at throughout the debates. But we had this evening most telling evidence in an excellent speech by the right hon. Member for Enfield, West of the way in which industries in headquarters and organisation of business are as a result of the tax reviewing their whole manpower situation and scrutinising it in the most careful way, which is precisely the effect we predicted.
With two minutes——[HON. MEMBERS: "Answer".] Listen to the answer. Stop baying and listen to the argument. I had two minutes in which to answer the precise question of the right hon. Member——
|Division No. 160.]||AYES||[12.07 a.m.|
|Abse, Leo||Alldritt, Walter||Archer, Peter|
|Albu, Austen||Allen, Scholefield||Armstrong, Ernest|
|Allaun, Frank (Salford, E.)||Anderson, Donald||Ashley, Jack|
|Atkins, Ronald (Preston, N.)||Ford, Ben||Mallalieu, J. P. W. (Huddersfield, E.)|
|Atkinson, Norman (Tottenham)||Forrester, John||Mapp, Charles|
|Bacon, Fit. Hn. Alice||Fowler, Gerry||Marquand, David|
|Bagier, Gordon A. T.||Fraser, John (Norwood)||Marsh, Rt. Hn. Richard|
|Barnes, Michael||Fraser, Rt. Hn. Tom (Hamilton)||Mason, Roy|
|Barnett, Joel||Freeson, Reginald||Mayhew, Christopher|
|Beaney, Alan||Galpern, Sir Myer||Mellish, Robert|
|Bellenger, Rt. Hn. F. J.||Gardner, A. J.||Mendelson, J. J.|
|Bence, Cyril||Garrett, W. E.||Millan, Bruce|
|Benn, Rt. Hn. Anthony Wedgwood||Garrow, Alex||Miller, Dr. M. S.|
|Bennett, James (G'gow, Bridgeton)||Ginsburg, David||Mitchell, R. C. (S'th'pton, rest)|
|Bidwell, Sydney||Gordon Walker, Rt. Hn. P. C.||Molloy, William|
|Binns, John||Gourlay, Harry||Morgan, Elystan (Cardiganshire)|
|Bishop, E. S.||Gray, Dr. Hugh (Yarmouth)||Morris, Charles R. (Openshaw)|
|Blackburn, F.||Greenwood, Rt. Hn. Anthony||Moyle, Roland|
|Blenkinsop, Arthur||Gregory, Arnold||Mulley, Rt. Hn. Frederick|
|Boardman, H.||Griffiths, David (Rother Valley)||Murray, Albert|
|Booth, Albert||Griffiths, Rt. Hn. James (Llanelly)||Neal, Harold|
|Boston, Terence||Gunter, Rt. Hn. R. J.||Newens, Stan|
|Bottomley, Rt. Hn. Arthur||Hamilton, James (Bothwell)||Norwood, Christopher|
|Bowden, Rt. Hn. Herbert||Hamilton, William (Fife, W.)||Oakes, Gordon|
|Boyden, James||Hamling, William||Ogden, Eric|
|Braddock, Mrs. E. M.||Hannan, William||O'Malley, Brian|
|Bradley, Tom||Harper, Joseph||Oram, Albert E.|
|Bray, Dr. Jeremy||Harrison, Walter (Wakefield)||Orbach, Maurice|
|Brooks, Edwin||Haseldine, Norman||Orme, Stanley|
|Broughton, Dr. A. D. D.||Hattersley, Roy||Oswald, Thomas|
|Brown, Rt. Hn. George (Belper)||Hazell, Bert||Owen, Will (Morpeth)|
|Brown, Hugh D. (G'gow, Provan)||Healey, Rt. Hn. Denis||Page, Derek (King's Lynn)|
|Brown, Bob (N'c'tle-upon-Tyne, W)||Henig, Stanley||Paget, R, T.|
|Brown, R. W. (Shoreditch & F'bury)||Herbison, Rt. Hn. Margaret||Park, Trevor|
|Buchan, Norman||Hooley, Frank||Parker, John (Dagenham)|
|Butler, Mrs. Joyce (Wood Green)||Horner, John||Parkyn, Brian (Bedford)|
|Callaghan, Rt. Hn. James||Houghton, Rt. Hn. Douglas||Pearson, Arthur (Pontypridd)|
|Cant, R. B.||Howarth, Harry (Wellingborough)||Peart, Rt. Hn. Fred|
|Carmichael, Neil||Howarth, Robert (Bolton, E.)||Pentland, Norman|
|Castle, Rt. Hn. Barbara||Howie, W.||Perry, Ernest G. (Battersea, S.)|
|Coe, Denis||Hughes, Emrys (Ayrshire, S.)||Perry, George H. (Nottingham, S.)|
|Coleman, Donald||Hughes, Hector (Aberdeen, N.)||Prentice, Rt. Hn. R. E.|
|Concannon, J. D.||Hughes, Roy (Newport)||Price, Christopher (Perry Barr)|
|Conlan, Bernard||Hunter, Adam||Price, Thomas (Westhoughton)|
|Corbet, Mrs. Freda||Hynd, John||Price, William (Rugby)|
|Cousins, Rt. Hn. Frank||Jackson, Peter M. (High Peak)||Probert, Arthur|
|Craddock, George (Bradford, S.)||Janner, Sir Barnett||Pursey, Cmdr. Harry|
|Crawshaw, Richard||Jay, Rt. Hn. Douglas||Rankin, John|
|Cronin, John||Jeger, George (Goole)||Redhead, Edward|
|Crosland, Rt. Hn. Anthony||Jeger, Mrs. Lena (H'b'n&St. P'cras, S.)||Rees, Merlyn|
|Cullen, Mrs. Alice||Jenkins, Hugh (Putney)||Rhodes, Geoffrey|
|Darling, Rt. Hn. George||Jenkins, Rt. Hn. Roy (Stechford)||Richard, Ivor|
|Davidson, Arthur (Accrington)||Johnson, Carol (Lewisham, S.)||Roberts, Albert (Normanton)|
|Davies, Dr. Emest (Stretford)||Johnson, James (K'ston-on-Hull, W.)||Roberts, Goronwy (Caernarvon)|
|Davies, G. Elfed (Rhondda, E.)||Jones, Dan (Burnley)||Roberts, Gwilym (Bedfordshire, S.)|
|Davies, Ednyfed Hudson (Conway)||Jones, Rt. Hn. SirElwyn (W. Ham, S.)||Robinson, Rt. Hn. Kenneth (St. P'c'as)|
|Davies, Harold (Leek)||Jones, J. Idwal (Wrexham)||Rodgers, William (Stockton)|
|Davies, Ifor (Gower)||Judd, Frank||Roebuck, Roy|
|Davies, Robert (Cambridge)||Kelley, Richard||Rose, Paul|
|de Freitas, Sir Geoffrey||Kenyon, Clifford||Ross, Rt. Hn. William|
|Delargy, Hugh||Kerr, Russell (Feltham)||Rowland, Christopher (Meriden)|
|Dell, Edmund||Leadbitter, Ted||Rowlands, E. (Cardiff, N.)|
|Dewar, Donald||Ledger, Ron||Ryan, John|
|Diamond, Rt. Hn. John||Lee, Rt. Hn. Jennie (Cannock)||Sheldon, Robert|
|Dickens, James||Lee, John (Reading)||Shore, Peter (Stepney)|
|Dobson, Ray||Lestor, Miss Joan||Short, Rt. Hn. Edward (N'c'tle-u-Tyne)|
|Doig, Peter||Lever, L. M. (Ardwick)||Short, Mrs. Renée (W'hampton, N. E.)|
|Donnelly, Desmond||Lewis, Ron (Carlisle)||Silkin, John (Deptford)|
|Driberg, Tom||Lomas, Kenneth||Silkin, S. C. (Dulwich)|
|Dunn, James A.||Loughlin, Charles||Silverman, Julius (Aston)|
|Dunnett, Jack||Luard, Evan||Skeffington, Arthur|
|Dunwoody, Mrs. Gwyneth (Exeter)||Lyon, Alexander W. (York)||Slater, Joseph|
|Eadie, Alex||Lyons, Edward (Bradford, E.)||Small, William|
|Edwards, William (Merioneth)||Mabon, Dr. J. Dickson||Snow, Julian|
|Ellis, John||McBride, Neil||Stewart, Rt. Hn. Michael|
|English, Michael||MacColl, James||Stonehouse, John|
|Ennals, David||MacDermot, Niall||Summerskill, Hn. Dr. Shirley|
|Ensor, David||Macdonald, A. H.||Swain, Thomas|
|Evans, Albert (Islington, S. W.)||McGuire, Michael||Swingler, Stephen|
|Evans, loan L. (Birm'h'm, Yardley)||McKay, Mrs. Margaret||Taverne, Dick|
|Faulds, Andrew||Mackenzie, Gregor (Rutherglen)||Thomas, lorwerth (Rhondda, W.)|
|Fernyhough, E.||Mackie, John||Thornton, Ernest|
|Finch, Harold||Mackintosh, John P.||Tinn, James|
|Fitch, Alan (Wigan)||Maclennan, Robert||Tomney, Frank|
|Fletcher, Raymond (Ilkeston)||McMillan, Tom (Glasgow, C.)||Tuck, Raphael|
|Floud, Bernard||McNamara, J. Kevin||Urwin, T. W.|
|Foley, Maurice||MacPherson, Malcolm||Varley, Eric G.|
|Foot, Michael (Ebbw Vale)||Mahon. Peter (Preston, S.)||Wainwright, Edwin (Dearne Valley)|
|Walker, Harold (Doncaster)||Willey, Rt. Hn. Frederick||Wilson, William (Coventry, S.)|
|Wallace, George||Williams, Alan (Swansea, W.)||Winnick, David|
|Watkins, David (Consett)||Williams, Alan Lee (Hornchurch)||Winterbottom, R. E.|
|Weitzman, David||Williams, Clifford (Abertillery)||Woof, Robert|
|Wellbeloved, James||Williams, Mrs. Shirley (Hitchin)||Wyatt, Woodrow|
|Whitaker, Ben||Williams, W. T. (Warrington)||Yates, Victor|
|White, Mrs. Eirene||Willis, George (Edinburgh, E.)|
|Whitlock, William||Wilson, Rt. Hn. Harold (Huyton)||TELLERS FOR THE AYES:|
|Wigg, Bt. Hn. George||Mr. Lawson and Mr. Grey.|
|Alison, Michael (Barkston Ash)||Gower, Raymond||Morrison, Charles (Devizes)|
|Allason, James (Hemel Hempstead)||Grant, Anthony||Mott-Radclyffe, Sir Charles|
|Astor, John||Gresham Cooke, R.||Munro-Lucas-Tooth, Sir Hugh|
|Awdry, Daniel||Griffiths, Eldon (Bury St. Edmunds)||Murton, Oscar|
|Baker, W. H. K.||Grimond, Rt. Hn. J.||Nabarro, Sir Gerald|
|Balniel, Lord||Gurden, Harold||Neave, Airey|
|Batsford, Brian||Hall, John (Wycombe)||Noble, Rt. Hn. Michael|
|Beamish, Col. Sir Tufton||Hall-Davis, A. G. F.||Nott, John|
|Bennett, Sir Frederic (Torquay)||Hamilton, Michael (Salisbury)||Onslow, Cranley|
|Berry, Hn. Anthony||Harris, Reader (Heston)||Orr, Capt. L. P. S.|
|Bessell, Peter||Harrison, Brian (Maldon)||Orr-Ewing, Sir Ian|
|Biffen, John||Harrison, Col. Sir Harwood (Eye)||Osborn, John (Hallam)|
|Birch, Rt. Hn. Nigel||Harvey, Sir Arthur Vere||Page, John (Harrow, W.)|
|Black, Sir Cyril||Harvie Anderson, Miss||Pearson, Sir Frank (Clitheroe)|
|Blaker, Peter||Hastings, Stephen||Peel, John|
|Body, Richard||Hawkins, Paul||Percival, Ian|
|Bossom, Sir Clive||Hay, John||Pike, Miss Mervyn|
|Boyd-Carpenter, Rt. Hn. John||Heald, Rt. Hn. Sir Lionel||Pink, R. Bonner|
|Boyle, Rt. Hn. Sir Edward||Heath, Rt. Hn. Edward||Pounder, Rafton|
|Braine, Bernard||Heseltine, Michael||Powell, Rt. Hn. J. Enoch|
|Brewis, John||Higgins, Terence L.||Price, David (Eastleigh)|
|Brinton, Sir Tatton||Hiley, Joseph||Prior, J. M. L.|
|Bromley-Davenport, Lt. Col. Sir Walter||Hill, J. E. B.||Quennell, Miss J. M.|
|Brown, Sir Edward (Bath)||Hobson, Rt. Hn. Sir John||Ramsden, Rt. Hn. James|
|Bruce-Gardyne, J.||Hogg, Rt. Hn. Quintin||Rawlinson, Rt. Hon. Sir Peter|
|Bryan, Paul||Holland, Philip||Rees-Davies, W. R.|
|Buchanan-Smith, Alick (Angus, N&M)||Hordern, Peter||Renton, Rt. Hn. Sir David|
|Buck, Antony (Colchester)||Hornby, Richard||Ridley, Hn. Nicholas|
|Bullus, Sir Eric||Howell, David (Guildford)||Ridsdale, Julian|
|Campbell, Gordon||Hunt, John||Rippon, Rt. Hn. Geoffrey|
|Carlisle, Mark||Hutchison, Michael Clark||Rodgers, Sir John (Sevenoaks)|
|Carr, Rt. Hn. Robert||Irvine, Bryant Godman (Rye)||Rossi, Hugh (Hornsey)|
|Cary, Sir Robert||Jenkin, Patrick (Woodford)||Royle, Anthony|
|Chichester-Clark, R.||Jones, Arthur (Northants, S.)||Russell, Sir Ronald|
|Clark, Henry||Jopling, Michael||St. John-stevas, Norman|
|Clegg, Walter||Joseph, Rt. Hn. Sir Keith||Sandys, Rt. Hn. D.|
|Cooper-Key, Sir Neill||Kaberry, Sir Donald||Scott, Nicholas|
|Cordle, John||Kerby, Capt. Henry||Sharples, Richard|
|Corfield, F. V.||Kershaw, Anthony||Shaw, Michael (Sc'b'gh & Whitby)|
|Costain, A. P.||Kimball, Marcus||Sinclair, Sir George|
|Craddock, Sir Beresford (Speltho'rne)||King, Evelyn (Dorset, S.)||Stainton, Keith|
|Crouch, David||Kirk, Peter||Stodart, Anthony|
|Cunningham, Sir Knox||Knight, Mrs. Jill||Stoddart-Scott, Col. Sir M. (Ripon)|
|Currie, G. B. H.||Lambton, Viscount||Summers, Sir Spencer|
|Dance, James||Lancaster, Col. C. G.||Talbot, John E.|
|Davidson, James (Aberdecnshire, W.)||Langford-Holt, Sir John||Tapsell, Peter|
|d'Avigdor-Goldsmid, Sir Henry||Legge-Bourke, Sir Harry||Taylor, Sir Charles (Eastbourne)|
|Dean, Paul (Somerset, N.)||Lewis, Kenneth (Rutland)||Taylor, Edward M. (G'gow, Cathcart)|
|Deedes, Rt. Hn. w. F. (Ashford)||Lloyd, Ian (P'tsm'th, Langstone)||Taylor, Frank (Moss Side)|
|Dodds-Parker, Douglas||Lloyd, Rt. Hn. Selwyn (Wirral)||Teeling, Sir William|
|Doughty, Charles||Longden, Gilbert||Temple, John M.|
|Douglas-Home, Rt. Hn. Sir Alec||Loveys, W. H.||Thatcher, Mrs. Margaret|
|Drayson, G. B.||Lubbock, Eric||Thorpe, Jeremy|
|du Cann, Rt. Hn. Edward||MacArthur, Ian||Tilney, John|
|Eden, Sir John||Macleod, Rt. Hn. lain||Turton, Rt. Hn. R. H.|
|Elliot, Capt. Walter (Carshalton)||McMaster, Stanley||van Straubenzee, W. R.|
|Eyre, Reginald||Macmillan, Maurice (Farnham)||Vaughan-Morgan, Rt. Hn. Sir John|
|Farr, John||Maddan, Martin||Vickers, Dame Joan|
|Fisher, Nigel||Maginnis, John E.||Wainwright, Richard (Colne Valley)|
|Fletcher-Cooke, Charles||Marten, Neil||Walker, Peter (Worcester)|
|Fortescue, Tim||Maude, Angus||Wall, Patrick|
|Foster, Sir John||Maudlins, Rt. Hn. Reginald||Ward, Dame Irene|
|Fraser, Rt. Hn. Hugh (St'fford & Stone)||Mawby, Ray||Weatherill, Bernard|
|Galbraith, Hn. T. G.||Maxwell-Hyslop, R. J.||Webster, David|
|Gibson-Watt, David||Maydon, Lt.-Cmdr. S. L. C,||Wells, John (Maidstone)|
|Giles, Rear-Adm. Morgan||Mills, Peter (Torrington)||Whitelaw, William|
|Gilmour, Sir John (Fife, E.)||Miscampbell, Norman||Wills, Sir Gerald (Bridgwater)|
|Glover, Sir Douglas||Mitchell, David (Basingstoke)||Wilson, Geoffrey (Truro)|
|Godber, Rt. Hn. J. B.||Monro, Hector||Wolrige-Gordon, Patrick|
|Goodhart, Philip||More, Jasper||Wood, Rt. Hn. Richard|
|Goodhew, Victor||Morgan, W. G. (Denbigh)||Woodnutt, Mark|
|Wylie, N. R.|
|Younger, Hn. George|
|TELLERS FOR THE NOES:|
|Mr. Pym and Mr. R. W. Elliott.|