§ Where the Commissioners of Customs and Excise are satisfied by an auditor's certificate, or in such other manner as they may direct, that articles chargeable to purchase tax have been purchased solely for use in a hotel or catering establishment, they may, subject to such conditions as they may impose for the protection of the revenue, remit purchase tax chargeable in respect of such articles.—[Sir C. Taylor.]
§ Brought up, and read the First time.
§ Sir Charles Taylor (Eastbourne)
I beg to move, That the Clause be read a Second time.
During the debate on the Clause concerning building societies there was much declaring of interests; in fact, the Financial Secretary himself declared an interest. I suppose that I should, therefore, also begin by saying that I have two interests in the Clause: first, that the main business of my constituency is the hotel trade; and, secondly, I have the honour to be the chairman of a hotel in London.
I want to talk about one of the industries which are vital to our export trade. The tourist trade is the No. 1 export industry for this country, not only because of the people who stay in the hotels but because of all the ancillary connections—the spending of money in shops and restaurants and the travelling 1050 by the people who come here. I have no hesitation in claiming that the tourist trade is probably our biggest dollar earner.
The British Travel and Hotels Association—which is largely supported by the Government—and the Board of Trade have repeatedly said that they want to see more hotel accommodation in London and in some of the great tourist centres throughout Britain, although I should make it quite clear that if there is any shortage of accommodation at the moment it is a seasonal one, and not an all-the-year-round one, and I would suggest that the same thing applies to every city in the world which caters for tourist traffic.
Many people would like to build new hotels in London, or in some of our great cities, if they could do so profitably. It has been proved time and time again, however, that it just is not possible to build a new hotel, with present-day site values and building costs, and run it at a profit. Therefore, for the time being, at any rate, we shall have to rely, in the main, upon extensions and improvements to existing hotels, so that extra and improved accommodation is made available for all the visitors whom we hope to attract.
The Americans take the view that within a very short time we shall have vast numbers of jet aircraft flying visitors from Canada and the United States to this country at very cheap rates. In that case, if we are not able, because of the cost, to provide hotel accommodation in our great tourist centres we shall miss a great deal of trade. They will go to Europe, to the hotels that have been built with the help of Marshall Aid. They will go to other places where building costs are not so high.
§ The Deputy-Chairman (Sir Gordon Touche)
I am sorry to interrupt the hon. Member, but this new Clause applies to Purchase Tax.
§ Sir C. Taylor
I had to give that background. Sir Gordon, and I make no apology for keeping the Committee at this time of night. I did not myself fix the time of debate. This is a very important subject. I wanted to give the background of the case for the relief of Purchase Tax on the tools of our trade. We hon. Members who represent tourist and holiday resorts and such places protest against a first line export industry being 1051 taxed on the tools of its trade because no other industry in the country is so taxed.
§ Mr. W. R. Rees-Davies (Isle of Thanet)
I think that I ought perhaps to correct my hon. Friend on that point. His case is in direct line, is it not, with the case of the chassis of commercial vehicles? Users of lorries are being taxed on the tools of their trade, and these are the only two examples where the tools of trade are taxable.
§ Sir C. Taylor
I thank my hon. Friend very much for his intervention. I should have been aware of that. Nevertheless, as I explained earlier, this is the No. 1 export dollar earner of the country and it is—
Mr. H. Wilson
If the hon. Gentleman will permit me, his claim to a monopoly in this respect has already been turned into a duopoly by his hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies), and if I may mention another example it is the anomalous, and I should have thought indefensible, tax on export forms and other documents used by export merchants. No doubt hon. Gentlemen could think of others, but would the hon. Gentleman not take up the time of the Committee by inviting us to find other examples of a monopoly?
§ Sir C. Taylor
I did not ask the right hon. Gentleman to give another example. I thought, in good faith, that the industry for which I am pleading was the only industry which had to pay tax upon the tools of its trade, but that does not really alter the argument that I want to put forward tonight. I say it is wrong that the majority of industries should be exempt from Purchase Tax on the tools of their trade while certain other industries should be affected in this way.
We may hear from the Treasury, which has, at any rate, once tonight been put in its place by the Committee regarding building societies—I hope the same will happen again over this matter—that there are administrative difficulties about running such a scheme as I am suggesting. There may be wangles. People will somehow find loopholes in laws and might do so to get linen, glass, or china the tourist industry and gave it some of for their own use without paying Purchase Tax. That might be so. There are wangles in every sort of tax law if one 1052 cares to look for them, but that does not detract from the serious and legitimate argument that I am putting forward that it is wrong to charge an industry with tax on these things.
I now want to deal for a few moments with the tax on hotel improvements. All expenditure on the building and equipment of hotels and restaurants which is not for specific replacements of existing assets is treated as a capital item. Therefore, with very few exceptions all modernisation of hotel and restaurant premises must be met out of taxed profits. In addition, I should point out that the Tucker Committee recommended that capital allowances should be granted for commercial buildings and, I ask, why should not the same thing apply to hotels?
I consider that we have a first-class case for asking that all the linen, glass, china and other equipment of the hotel keeper should be free from tax. The tourist resorts are particularly affected. They have to compete with European tourist resorts, and with places that may have casinos. They may have to compete with countries where the licensing laws are a little less stringent than in this country. Our resorts have to compete perhaps against better climates. Surely it is desirable that we should try to persuade not only visitors from abroad to spend their holidays in this country, but also our own people, thereby saving foreign currency.
For many years the Government have spent a lot of money on propaganda through the British Travel and Holidays Association to bring people to this country and to increase our earnings of dollars and other foreign currency. They have paid lip-service to the needs and importance of the tourist industry. They have asked that hotels, particularly those in London, should accommodate V.I.P.s. At present, the majority of the Commonwealth Prime Ministers visiting this country are accommodated in London. But, despite all this, there has been little practical support for this great industry and I think it time that the Government paid more than lip-service to the concessions which are given to other industries.
§ Mr. John Eden (Bournemouth, West)
I wish to support the Motion and, as a representative of the principal holiday 1053 resort in this country—[HON. MEMBERS: "Oh."]—I am anxious to speak on behalf of the hotel industry. It is necessary to emphasise that it is an industry and not a collection of individuals, and that it is of extreme importance to the country. The Treasury has already done extremely well out of this industry. It gets a lot from the influx of visitors and, obviously, they would not come here unless there was adequate hotel accommodation. I contend that the Treasury should try to make the position easier for this industry to modernise its plant and equipment and provide greater attractions for the potential customers who come to Britain.
I think that it is the responsibility of my right hon. Friend to see that things are made easier for this important industry. It has to try to modernise the furnishings and equipment that it has available. It has to buy such new equipment as carpets. cutlery, glass, furniture, television sets, and all the other amenities and appurtenances which are so much required—indeed, expected—by all tourists today.
To believe that we can continue to maintain a high rate of tourist traffic into this country, particularly from the United States of America and other dollar areas, without being able to improve upon our standards of accommodation is a complete myth. I would, therefore, urge upon my right hon. Friend that he give very serious consideration to this new Clause, and to an industry which is already extremely hard-pressed, and which now has many out-of-date hotels that cannot possibly compete with those new hotels appearing in other European capitals such as Rome, Paris, and even Berlin.
It is high time that we did our very best to modernise what we have available. After all, this is a most important shop window for the customers who come from overseas, and this Purchase Tax concession would be a very great help to achieving that end. I hope that my right hon. Friend will do something about it.
§ Mr. G. R. Howard (St. Ives)
I support the new Clause because the hotels in my part of the country have various things to contend with. There is, first, their distance from the larger centres of population, and the cost of railway travel which will, no doubt—
§ Mr. Howard
I am coming to that. The distances that people have to travel to those places makes that expense of a holiday a very material factor, and anything that we can do to help the hotel industry to bring down prices by concessions like this will be extremely useful.
§ Mr. Birch
My hon. Friend the Member for Eastbourne (Sir C. Taylor) said that he had an interest to declare because he represents a seaside resort, so perhaps I might say that I have an interest, also—I represent two seaside resorts.
The debate has ranged fairly wide. I myself received a delegation before Budget day from the Hotels and Boarding Houses Association, which put their difficulties and troubles to me. Listening to them then it struck me that Purchase Tax was quite a small part of the things they had in mind.
It is very right that my hon. Friends should raise this, and say that the hotel industry is of great importance and a very great dollar earner, but I think that there are considerable objections to the proposal contained in the new Clause. Administrative difficulty has been mentioned. There is administrative difficulty, but what is, I think, rather more important is the question of principle. Once we start saying that we will exempt taxable articles according to the status of the person who buys the articles we are getting into rather deep water. That point was made by the present Home Secretary to the Hotels and Boarding Houses Association as long ago as 1954. I think that the principle is one that we should stick to.
We had the tools-of-the-trade argument again. Everyone thought of a few more tools of the trade. It is not only a matter of haulage vehicles. Stationery is another obvious example—and there are also car-hire firms. It is not at all an unknown thing for tools of the trade to be used. On the administrative side, I think that perhaps the main difficulty might lie in drawing the line exactly between what was and what was not an hotel or a boarding house. For instance, would a suburban villa whose occupants took in a lodger be a boarding house, or not? It would not be a simple thing to define or to administer.
1055 It is wrong to speak as if nothing had been done about Purchase Tax. In 1955, what are described as soft furnishings were exempted, and these included sheets, which my hon. Friend mentioned as one of the articles which he would like to have exempted. They were exempted as long ago as 1955. My hon. Friend will have noticed the reductions in Purchase Tax in this Budget on pots, pans and carpets. All the reductions in Purchase Tax are of direct benefit to the hotel industry. We have, therefore, done something for the industry both in 1955 and this year.
Mr. H. Wilson
The right hon. Gentleman is misleading the Committee. If he mentions 1955, he must admit that it was this Government which, in 1955, imposed the tax on pots and pans, which they have only halved in this Budget.
§ Mr. Birch
I said that soft furnishings were exempted in 1955. Whereas the tax on pots and pans may have risen then, in this Budget it has been reduced. Something has been done.
I do not think that my right hon. Friend can see his way to doing more in this Budget. What may happen in future years we do not know; it depends on how we get on and on the state of our finances. I agree that this is an important industry, but I do not think that anything we did under this proposal would be right as a taxation principle and I think that the assistance which it would give to the hotel industry would be very marginal.
While the last thing I want to do is to encourage any hon. Members opposite to take us on a yet further tour around the Tory holiday resorts of the country, I must say that I was very disappointed that in his brief speech the hon. Member for St. Ives (Mr. G. R. Howard) confined himself to the mainland side of his constituency. I share with him and certain others a great delight in the other part of his constituency, across the water. He did not refer to that.
While not wanting to encourage any other hon. Member to enter into the debate, I must confess that I was very disappointed at the Economic Secretary's speech. This must surely be a precedent in discussing the new Clauses in this year's Finance Bill, because he did 1056 not even say that the Chancellor would consider it between now and next year. It is the only new Clause which has not been greeted in that fashion.
§ Dame Irene Ward (Tynemouth)
Why should the right hon. Gentleman want to discourage other hon. Members from speaking? As a Privy Councillor, he has the right to speak, so why should we not speak in the debate if we wish to do so?
As far as I am aware, every hon. Member of the Committee has a right to speak, Privy Councillor or not. No impediment has been placed on any hon. Member during the Committee stage. I was only pointing out that, having done what we can to facilitate the passage of the Bill, during the debate on the new Clauses only two have been moved from the Labour benches and 10 from the Conservative and Liberal benches, so that I do not think it can be claimed that we have hogged the time of the Committee.
§ Sir C. Taylor
This is an all-party new Clause, supported by some of the right hon. Gentleman's hon. Friends.
I have no doubt about that. I was merely saying that at this late hour I should like to hear a little more from the Economic Secretary rather than a further repetition of the argument put at great length and with considerable ability by the hon. Member for Eastbourne (Sir C. Taylor). There are reasons why I want to press this matter with the Economic Secretary. Will the Chancellor consider this matter between now and next year, or is he singling out in an invidious fashion this new Clause as one on which he cannot make that promise?
When the Economic Secretary refers to what the Government have done for the hotel industry in terms of Purchase Tax reliefs from 1955 to 1957, he must take the whole record of 1955, 1956 and 1957 together, when he will find that the hotel industry has suffered more than it has gained in respect of Purchase Tax. I agree with him that there were reductions in the tax on soft furnishings and sheets in the Election Budget of 1955. That was done after very considerable pressure from this side of the Committee, supported by one or two hon. Members opposite, and after the Chancellor had said that it would be monstrous to remove 1057 Purchase Tax from these items. He said that in the course of the Budget debates of April, 1955, but under strong pressure, and fearing to lose one or two Lancashire seats, he gave way, and did the one thing he had said would be dishonest to do three days earlier.
But if one adds all the additions to Purchase Tax introduced for the hotel industry in October, 1955, and then subtracts the partial remissions made in this Bill, taking into account the soft furnishings, the net result is that the industry is paying much more in Purchase Tax today than it was before 1955. So the right hon. Gentleman was really misleading his hon. Friends in trying to persuade them that the Government had done something for the hotel industry in the past three years.
The other point where the right hon. Gentleman was rather perfunctory was that he did not even attempt to deal with the administrative problems involved. I agree with his own view that this is a very difficult thing to do administratively—to remit Purchase Tax in terms of the user—but he might have given the Committee an indication of the experience of the Board of Customs and Excise in operating a scheme that was designed to deal with the point made by the right hon. Gentleman—a very complicated scheme.
This was the scheme introduced by Sir Stafford Cripps, under which, as a result of the representations made to him by the British Tourist and Holidays Board, and by the hotels and restaurants trade, it was provided that there should be a total remission of Purchase Tax on the tools of trade of the hotel industry, in respect of well-thought-out schemes of re-equipment, proportionate to the number of dollar visitors entertained by these hotels.
That was dropped in the lifetime of the present Government. But the right hon. Gentleman could hardly feel he was doing justice to this subject without saying something of the administrative experience of that scheme. Just to talk about the administrative difficulties, without drawing on that experience was not, even at this time of night, treating the Committee, or this Clause, with the courtesy that was required.
§ Sir C. Taylor
I am very disappointed at the reply I have had from the 1058 Economic Secretary to the Treasury. I feel that this is not a new point, and as the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) said, there was some sort of scheme several years ago, for a specific period of years, and I gather that it worked extremely well. I should have liked to hear something about the administrative difficulties, of which we have not heard anything. But I do not want to press the case further this year, and on the assurance that the matter will receive consideration before next year's Budget, I beg to ask leave to withdraw the Motion.
§ Motion and Clause, by leave, withdrawn.
§ Motion made, and Question proposed, That the Chairman do report Progress, and ask leave to sit again.—[Mr. Birch.]
Mr. H. Wilson
While not dissenting from the Motion, which is the best speech that the right hon. Gentleman has made all day, I think that something should be said about the timetable for the rest of the Bill. I hope that the Patronage Secretary, who is very much involved, will take into account what I have to say at this point. As he and the Economic Secretary know, we on this side of the Committee have done our best to facilitate the passage of this Bill, particularly to work to a timetable announced by the Lord Privy Seal last Thursday, when it was said that it was hoped to end the Committee stage at the time when you, Sir Gordon, as Acting Chairman of Ways and Means, intervene at 7 p.m. tomorrow, for the purpose of discussing an important Private Bill.
We had every hope that we should have been through the Committee stage by that time, but a large number of new Clauses have been tabled by hon. Members in all parts of the Chamber, and, despite our hope to have made more progress, I think that we have had, last night and today, debates on only 12 of the new Clauses to be selected by the Chair, and I understand that another 10 are likely to be selected—although that is entirely within your control, Sir Gordon. I do not see, however, that with the best will in the world, and with the best possible co-operation, at any rate on this side of the Committee, the only side which seems to be co-operating with the Government in the timetable—
I shall have a word to say about that in a moment.
I do not see how, with the best will in the world, we can finish by seven o'clock tomorrow night if the other new Clauses are to be debated adequately.
I would be the last person to want to go back on any understanding, however informal, about the timing of the proceeding of the Committee on an important Bill like this, but I am sure that the Patronage Secretary will be the first to agree that it has not been this side of the Committee which has delayed the Committee.
I take the point made by the hon. Lady the Member for Tynemouth (Dame Irene Ward) earlier, that it is the right of all hon. Members in Committee, especially on the Finance Bill, to criticise the legislation and to seek to amend it, and to seek to control the Executive, but the Patronage Secretary will agree that it is extremely difficult for us to ask hon. Members on this side to restrain themselves, to withdraw new Clauses put down, to speak with brevity—
They are not here at this moment because some of us have become extremely "browned off" by listening to so many Tory arguments for so many Tory new Clauses that certain Labour ones have not been reached. They have not been reached partly because of the large number of Conservative new Clauses moved, and partly because of the ineptitude of the Government
I had thought that the Conservative back benchers—I am not, of course, now referring to the Independent Conservatives—were so thrilled with the Government and with this Bill that they thought it incapable of further amendment, but for all parts of the Bill, certainly for Part IV, there have been more Conservative Amendments than Labour Amendments, which suggests that the Conservatives are not exactly happy with the Bill after all.
1060 We could have got on faster had we reached earlier the new Clauses affecting the Purchase Tax. Now we shall take them tomorrow. I think that we could have considered them today had there not been so long a debate on building societies. Had the Financial Secretary, when he spoke, spoken in the same terms as the Chancellor was driven into using we could have ended that debate a great deal earlier. Then we should have made much more progress.
I ask the Patronage Secretary to agree that whatever we do tomorrow, even if he is more successful than he has been in controlling his own back benchers, there is now little hope of finishing the Committee stage by seven o'clock. We on this side shall do our best. We certainly cannot be accused of having filibustered or delayed the proceedings on the Bill since we entered into Committee on it. I hope that it will be agreed that, after the debate on that important Private Bill tomorrow, on which a number of hon. Members, I know, what to make speeches, it may be necessary to return to the Committee on the Finance Bill. We would hope to make progress with the more interesting, important and controversial new Clauses so that we shall not need to detain more hon. Members than those who feel a close interest in the Finance Bill as a whole.
But, any rate, I hope that the Patronage Secretary will agree that there will have been no breach of faith, and that no accusations can be made of that against us on this side of the Committee, if we do fail to get through the Committee stage by seven o'clock. We shall have, I think, to return to it after ten o'clock. I should not like to make any forecast about the hour at which we shall then rise.
§ Mr. Birch
I am much obliged to the right hon. Gentleman. I agree there has been no breach of faith, even if we do not finish by seven o'clock tomorrow night, but I do not think that it is at all impossible that we shall do so. If we do not, it will still be necessary to finish the Committee consideration of the Bill tomorrow night, as he says.
§ Question put and agreed to.
§ Committee report Progress; to sit again this day.