§ 4.23 p.m.
§ Mr. Maurice Macmillan (Farnham)
I beg to move Amendment No. 31, in page 28, line 14, after "person", to insert:'was a registered disabled person under the Disabled Persons (Employment) Act 1944 or was sixty-five years of age or over in the case of a man, or sixty years or over in the case of a woman, or was a person who'.I suppose that we should be grateful for the small mercies in this Clause, which goes some way to meet the objections which we raised in the debate on the Selective Employment Tax last year, but it does not go nearly far enough. In one of yesterday's debates, the Financial Secretary said:My right hon. Friend is unable, within the overall Budget judgment which he has formed this year, to assist all the people whom he would like to assist, and he has picked out what he considers to be the most deserving …"—[OFFICIAL REPORT, 7th June, 1967; Vol. 747, c. 1136.]I shall seek to argue that, in confining the partial repayment of tax to part-time workers and excluding the disabled and older people, the Chancellor is failing to live up to the criterion which be has set himself.
In his Budget speech on this subject, he said, in col. 1008 that this question of part-time workers was a subject on which he had had the most representations and that the representations showed a strong case for modifying the tax in this respect. We told him that in the debate on the tax and provided equally strong evidence that this was so, but he took no notice of it then.
The amount of the refund is dealt with in a later Amendment and I wish to deal only with the principle of who receives the refund. The Chancellor said in his Budget speech that he recognised that many elderly people could make a useful contribution, but did not wish or were 1315 not able to work full-time. I recognise that the Clause will help some elderly and disabled people who are part-time workers, but this is not an argument extending it to those elderly people of retirement age and those disabled who are seeking, in some cases successfully, to work full-time.
One could argue in a reverse direction—that the greater the proportion of elderly and disabled already helped by the Amendment, the less reason, on grounds of cost, for not extending it to those who are not helped at all.
Taking, first of all, the disabled, the evidence is that, when they work part-time, employers are very reluctant to pay the full tax for people on whom they feel that they are not getting a fair return. This is dealt with in the Clause, which undoubtedly includes some disabled people. There is also evidence that fully trained and experienced people are not being discharged because of the Selective Employment Tax. This is exactly what one would expect, because the work of these people, even though they are disabled, is at least up to, and in some cases higher than, the standard of that of able bodied people.
However, there is also evidence, in the case of the semi-skilled and unskilled, of some discrimination. I am referring to those who might otherwise work full time. Therefore, the problem affects not so much the trained and the skilful and those whose special abilities enable them to discharge their job with equal effect, even though disabled, but much more the unskilled and those who are perhaps kept on by employers for social as well as purely economic reasons.
I know that the Disabled Persons Employment Act gives partial protection, but there are firms which seek to carry more than the 3 per cent. which the Act requires. The Act does not, of course, apply to the smaller firms, some of which can, and indeed do, employ disabled people.
I should like to quote a letter to The Times on 2nd November last, written jointly by Mr. Pirrie, the Psychiatric Registrar of the Psychiatric Unit of Brighton General Hospital, and Mr. Jacobson, the consultant psychiatrist at the same hospital: 1316For several years one of our local mental hospitals has provided a group of patients to work in a factory at Crawley; as each improved and left he was replaced by another living in the hospital. Today, all this has ended. We fear that this is symptomatic only of what is happening all over the country. The casualties of S.E.T. are just those patients whom social workers have been trying to help to return to life in the community. Discharge from hospitals will be delayed and there will be increased demand for institutional care with its resulting deterioration, exactly what for years we have been trying to avoid. The effect of all this on medical and social services can be very great.These are not political but professional arguments and the Chief Secretary should give considerable weight to this kind of opinion when considering whether to extend the relief in the Clause to include the disabled.
§ 4.30 p.m.
§ In Mental Health Week it should be emphasised that the disabled—not only those who are physically disabled but those who may be, or may have been, mentally sick or handicapped—should be given priority. I am glad to see the Chief Secretary wearing a badge which acknowledges this in principle, however much he may have to deny it in practice, when replying to these arguments.
§ The details of many cases have been sent to me and they show that S.E.T. has prevented the continuing rehabilitation of many people through work, the results being disastrous to themselves and their families. It is difficult to discover the extent of the problem because significant figures are difficult to obtain. The Parliamentary Secretary to the Ministry of Labour, the present Minister of State for Education and Science, said last July that there were 300,000 disabled persons employed in jobs qualifying for premium, 100,000 employed in work which obtained the refund of S.E.T. and 200,000 on whom tax had to be paid in full.
§ What has happened during the past year? In which way have those figures altered? What change will the provisions of this Measure make, if they are unamended, and how many of these people will be left out? There were 200,000 last year in respect of whom there was no refund. How many are there now and how many will there be after this Measure, as it stands, is passed? What will be the effect of that and what would 1317 be the effect of accepting the Amendment?
§ The other main argument when we sought last year to relieve employers from paying S.E.T. for disabled workers was that it was administratively too complicated. I dare say that virtually anything to do with S.E.T. is administratively difficult, since the whole concept of the tax is so ludicrous and absurd that the anomalies it creates must result in difficulties being experienced when trying to deal with it. However, when the right hon. Lady the Minister of Social Security was Parliamentary Secretary, she said that if something had to be done, it would be done. I trust that this will be done and that the Amendment will be accepted.
§ We gather from a reply to a Parliamentary Question that unemployment among the registered disabled went up between April, 1966, and April, 1967, from 38,337 to 50,450, an increase of about 30 per cent. I hope that the Chief Secretary will not say today that that is not as big a percentage rise as the rise affecting those who are not disabled. That would be no argument at all, particularly since the Financial Secretary sought to set up the Chancellor as a sort of Victorian parish relief officer distinguishing between the deserving and the undeserving. No matter what the rise in unemployment among the able-bodied may have been, that is no excuse for saying that the rise in unemployment among the disabled should not be treated with the sympathy and practical help which the Amendment would provide.
§ It has been argued that if disabled persons were given this relief employers would cause people to be put on the disabled persons register. even though they did not really qualify to be so registered. That is a contemptible argument. It is saying that if the conditions on which people who are placed on the register must be satisfied, some people who are not genuinely entitled to be placed on it will be on it. The problem should not be tackled at the expense of the disabled, but by ensuring that the administration of the law is more effective.
§ Much the same arguments apply to old people. A strong economic argument was set out in, among other places, 1318 an article by Mr. Peter Jay in The Times on 31st May. I do not wish to deploy the economic argument, because the case my hon. Friends and I are putting rests strongly enough on the social priorities involved and on the Chancellor's definition of what should be those priorities.
§ Last year, the Government's refusal to allow the repayment of S.E.T. in respect of employees over retirement age was based on the alleged fact that such a relief would have ill-effects. Much the same argument was adduced in respect of part-time workers. All our efforts on behalf of part-time employees and old people were unsuccessful, but now the Government are forced to admit that we were right in our assessment of the effects of S.E.T. on part-time workers. I suggest that we are right now in assessing the effect that it is having on the employment of old people.
No figures were given last year about the way in which pensionable employees are divided as between those employed in service and manufacturing industries. Nor was a division made between those working in jobs attracting the premium, those employed in jobs achieving the refund and those in respect of whom S.E.T. had to be paid in full. I hope that the Government have accurate figures of the position and will say what the effect of the Bill will be on these people. The Ministry of Labour Gazette for July, 1965 appears to contain the latest report. It stated that an inquiry had been set up by what was then the Ministry of Pensions and National Insurance. It added that that inquiry had indicated that
… pensioners were employed for the most part in occupations other than productive processes.
§ If that is still the position our case for people of pensionable age is even stronger because many of them are employed full-time. If they are mostly employed in non-productive processes, they will escape entirely any benefits of the Clause, unless it is amended. We need to know the proportion of those attracting the premuim, getting the repayment and those who will be unaffected by the Bill as it stands. There is no Act to protect the employee of pensionable age in the same way as there is to protect the disabled. Retired people are often kept 1319 in employment for personal and social reasons, in addition to economic reasons.
§ Apart from the economic argument, to which I will not refer, there are strong arguments on the grounds of social justice and priority. Are the Government serious in saying that they mean to encourage people of pensionable age to stay at work full-time as well as part-time?
§ We on this side have always accepted that there is everything to be said not for forcing work on those who do not wish to work after retirement age but to give every encouragement to the employment, part-time or full-time, of the older men and women. The Government have paid lip-service to this idea, and if they really mean what they say they can hardly avoid accepting this Amendment in so far as it affects men and women of pensionable age.
§ All the Government's words about social priorities will be made meaningless if the Government refuse to accept this Amendment, but their whole argument tends to indicate that they do not really mean what they say. They talk about the need for more information about and research into these problems but the matter is continually being put back in time and we are told that it will be dealt with in due course. I cannot believe that the Amendment would cost very much—certainly not enough to exclude from the benefit extended to part-time workers generally those elderly or disabled people who seek to work full time.
§ Unamended, the Clause does some grudging good, but we need to extend its scope beyond part-time work. As I have said, the argument that that is not necessary is not valid, while the argument that it is administratively too difficult is simply contemptible. There is no half-pay retirement yet. There is no growth in the economy. The pension has been cut by price rises so the need to work is greater, but a stagnant economy reduces the opportunities for the old people as for the disabled. The cutting down in the firms which is still necessary must inevitably penalise the old and the less fit.
I end by quoting from a letter written to The Times by Professor Titmuss on 11th May, 1966, when he stated:
I find it odd that at a time when a number of countries are becoming more conscious of the social aspects of budgetary and economic instruments Britain would seem to be moving in a reverse direction.
§ I find it odd. I hope that the Chief Secretary and the Chancellor of the Exchequer will find it odd. And the country, if this Amendment is not accepted, will find it not odd but disgraceful.
§ Dr. M. P. Winstanley (Cheadle)
I want to limit my remarks to the disabled referred to in the Amendment. Amendment No. 35 standing in the names of my right hon. Friend and some of my hon. Friends, refers also to the disabled, while our Amendment No. 33 refers to the older people, about whom I know that my hon. Friend the Member for Cornwall, North (Mr. Pardoe) will seek an opportunity to speak. I spoke on a number of occasions when this question of the disabled was debated a year ago, so I shall restrict myself to matters that have emerged or have become clarified since then.
I want to refer, as did the hon. Member for Farnham (Mr. Maurice Macmillan), to the exchanges that took place at Question Time on 17th April, when I put questions to the Minister of Labour, and on 5th June, when the hon. Member for Essex, South-East (Mr. Braine) and some of his hon. Friends put questions on this subject. In particular, I want to refer to an Answer given on 5th June by the Joint Parliamentary Secretary to the Ministry of Labour in which he gave figures, and pointed out, rightly, that globally the increase in unemployment amongst the registered disabled was not as high as among the population as a whole.
He added:In other words, the disabled have not fared any worse than the general bodies of workers."—[OFFICIAL REPORT, 5th June, 1967; Vol. 747, c. 623.]It is important to emphasise that the whole purpose of the Disabled Person's (Employment) Act, 1944, was to ensure, not that registered disabled persons fared no worse than other people, but that they fared very much better. If one introduces a new measure which is capable of upsetting the balance, it is logical, reasonable and necessary to take corresponding and complementary steps to restore that 1321 balance. That is what the Amendment seeks to do.
§ 4.45 p.m.
§ From those exchanges, it will not have escaped the notice of the Government spokesman that, whilst the figure is small, there has been a substantial increase between 17th April and 5th June. I will also say, as has become clear, that this is not so much a quantitative as a qualitative problem. The possibility of employment amongst the registered disabled varies a good deal according to the section of the disabled of whom one is thinking. I have had a good deal of experience with the registered disabled—putting them on the register, acting on behalf of the Ministry of Labour to decide who should go on to the register, from time to time in industry seeing that employees were put on the register and, as a general practitioner, channelling patients in the right direction.
§ There are great differences in the capabilities of these people. There are registered disabled who are fully capable of competing for and retaining employment in competition with the healthiest and the fittest of us. They are disabled, but they have compensated for their disability. They have learned other skills or developed their capacities in one way or another. The blind probably provide a case in point. There are certain types of employment that are not as open to them as to sighted people, but many blind people have no difficulty in obtaining and retaining employment.
§ Nevertheless, a substantial number of these disabled people cannot compete, and their employment is almost a form of social service on the part of their employers. Many employers do an excellent job in giving regular occupation to someone who cannot give very much in return. The Civil Service does this, although it is disturbing to note that the numbers there are slightly lower. There are not so many disabled persons employed in Whitehall now, but the Government have always set an example, as have many sections of industry.
§ As I say, many of these disabled people hold their employment as a social service because it is understood by trade unions, employers and the Government that it is therapeutically important to keep 1322 them occupied, and to give them a sense of making a contribution. Nothing can be so disorganising to people's morale than to feel that they are not making a contribution, are not really part of society—do not belong. Nothing can do more to restore the sense of belonging than to give them the feeling that they are making their contribution, even though it may be small in comparison with that of a fitter neighbour.
§ It is amongst those people that this growth in unemployment has taken place. I remember the hon. Member for Sheffield, Brightside (Mr. Winterbottom) saying that he knew from his own personal experience that in the catering industry there were places where disabled persons, sometimes mentally retarded, were given employment. They were sometimes paid very low rates of wages, but they were provided with employment which the hon. Member felt would be very difficult for them to retain once the added burden of the Selective Employment Tax came into existence.
§ The percentage in relation to a small wage is very much larger than that in relation to a big wage. It is on account of these people that I am making a special plea. Their plight is referred to by the British Council for Rehabilitation. The Council confirms that there is no evidence that overall the registered disabled are suffering more unemployment than other people, but it goes on to say that there is evidence that Selective Employment Tax has caused discrimination against semi-skilled and unskilled workers who are disabled. Discrimination has also been caused against people with certain types of disability.
§ I have said much before about the proportion of the population represented on the Disabled Persons' Register and to what extent this is reliable. People are unclear about how to get on to the register. There is no routine by which the whole industrial field is periodically combed to find disabled persons who can be put on the register. Many do not come on to the register until they lose their employment or are in danger of losing it. It is often difficult to persuade people to go on to the register when they are in regular employment. They ask what benefit it would be to them as they have a job and are all right.1323
§ When they lose a job and find difficulty in obtaining another, they are possibly advised by a resettlement officer that they should be on the register. Then the difficulty arises about people being put on the register who were not previously on it although they were in the same employment. The actual size of the registered persons list is not a clear indication of the potential number of registered disabled persons. That number could change very much in a situation where there was sudden unemployment and people sought to be put on to the register.
§ I mention this because the figures are often misleading. When it is said that there are 600,000, or whatever the number may be, on the register and the percentage of unemployed is only so many, that does not necessarily give a true presentation of the case. If pressures arise and people come out of employment, we might find that the potential register is much larger. That would immediately affect percentages and show that the comparisons made with the total population are not strictly correct.
§ I have made an appeal to the Chief Secretary, and later to the Minister of Labour, on this question. I was assured, and fully accepted the assurance, that the Government intended to watch the situation extremely carefully. They agreed that if the sort of thing I predicted should come to pass they would take necessary action. The evidence suggests that it is coming to pass and that the Government should take that action. I ask the Government not to be misled by the global figures. This is a small percentage of the people with whom we are concerned, but at the moment they are in real difficulties. Their difficulties could get much greater. The Government have an opportunity here of seeing that they are substantially reduced. I hope that they will accept the Amendment.
§ Mr. Harold Finch (Bedwellty)
I hope that we shall get some concession from the Treasury Bench this afternoon on this very urgent and important problem. It is a serious problem. I said in the debate on the Finance Bill 12 months ago that if employers in the service industries were called upon to pay this tax in respect of 1324 disabled persons they would be discouraged from employing disabled persons. We have to be realistic. An employer hesitates and may not give employment in these circumstances because he recognises that if he is employing a seriously disabled person that person is not in a position to do a full day's work.
Anything which discourages employment of disabled persons in whatever industry has a serious effect on those persons. As the hon. Member for Cheadle (Dr. Winstanley) said, on the last occasion the Treasury Bench promised to keep the problem under serious review and that if the position deteriorated the Chancellor would see what could be done to remedy it. We have heard nothing more and 12 months have elapsed since then.
The hon. Member for Farnham (Mr. Maurice Macmillan) referred to an increase of 30 per cent. I cannot confirm that, but I know that in the mining areas in Wales the number of unemployed disabled persons has gone up by about 800. Many of those men have given a lifetime to the mining industry. Many of them are suffering from pneumoconiosis. At 35 or 40 years of age they have had to leave there and to try to find another job. When month after month a man has no work to go to and he is fit only for a very light job, because he sees no hope of getting one he becomes demoralised and depressed. I have often had the experience of meeting such a man who has at last found a job and he has said, "This has meant everything to me." It gives him a great sense of happiness and comfort.
In South Wales there are hundreds of these men. It is true that men can get jobs in manufacturing industry, but if disabled, and unable to find work in the service industries it will be very difficult for them. If the situation continues there might be 1,600 unemployed disabled persons next year. When a pit is closed able men can go to other pits or to other industries, but a disabled man is fit for only the lightest kind of employment and his chances are restricted. These men require special attention. In these circumstances, I hope we shall be given some assurance from the Treasury Bench. Some of these disabled men cannot travel so easily as able men may travel.
§ 5.0 p.m.
§ Efforts are made in towns and villages to find them jobs in shops and warehouses. The position would have been much worse had not many employers in South Wales gone out of their way to find a job for a man irrespective of the S.E.T. Ex-Service organisations, the National Union of Mineworkers and other trade unions, and organisations for the care of the mentally handicapped, with which I am glad to be associated, do all they can to find such men jobs. Now, as a result of the incidence of the S.E.T., employers in service industries are taxed in respect of their employment of disabled men.
§ I am one of those who support the Government in 99 cases out of 100. I believe in the prices and incomes policy. However, it is not social justice if, as a result of one facet of the Government's policy, it is made more difficult for a crippled man or a disabled woman to obtain employment. The Government are here retaining a provision which will make the employment of disabled persons more difficult.
§ What are the Government saving by this method of dealing with the disabled? Many of these men are in receipt of unemployment benefit. In South Wales the Exchequer is paying out unemployment benefit in respect of thousands of men. I do not know whether the Treasury Bench is fully conversant with the operation of disablement benefit. Under the Industrial Injuries Act, men seriously disabled by injury are entitled to a hardship allowance, which is based on the difference between their pre-accident wages and what they are able to earn on light work. Many of these men, particularly in the mining industry, have taken light jobs and have earned, say, £12 a week. Their pre-accident wages might have been £15. Their hardship allowance is based on the difference between £12 and £15 a week. When pits are closed, these men become unemployed and they seek work elsewhere. If they are in receipt of the hardship allowance, they are assumed to be able to earn what they were receiving when they were in work. Although they are out of work, they are assumed to earn money. This places an extra hardship on them under the Industrial Injuries Act. Problems such as these bedevil many disabled men in the South Wales coalfield.1326
§ I hope that we shall have a more definite undertaking from the Treasury Bench that the Government are prepared to make at least some concession. It is not sufficient to say that the figures which have been quoted are not correct. To the individuals concerned, it is a matter of their whole future. Men who have not been able to work for many years will be in a serious position if this provision continues in force. I hope to hear something much more optimistic from the Treasury Bench today.
§ Mr. Charles Fletcher-Cooke (Darwen)
We have heard three very eloquent speeches on behalf of the disabled. I could add nothing of value to those speeches, though I entirely support them. I want to talk more about the older workers and try to justify the Amendments on purely economic grounds and not merely on the social grounds which are necessary to justify them in relation to the disabled.
Since the Government have taken their decision about the regional employment premium, a whole new area of principle has been opened up in this tax. Geographically outlying areas of employment are to be specially weighted, whether these areas are in the Celtic fringe, on Merseyside, or down in Cornwall. If it is said that such areas are to be specially weighted in favour of the employment of persons who, because they are geographically removed from the centre, should have this advantage on economic grounds, the Government have gone a long way—I suggest all the way—to applying the same principle to those who are not on the geographical fringe but who are upon the age fringe.
Just as those who are on the geographical fringe are the first to suffer in case of recession or slump, because, human nature and the facts of economics being what they are, whenever there is a recession it is the outlying plants that close down, so it is undoubtedly the older people who are the first to go, and most certainly they are the last to be reengaged, when the recession is over or when there are jobs to be had.
Anybody who has had any experience of the employment of older people knows how very difficult it is for such people to get jobs, even though an older person is perfectly able to do the work. This 1327 is where I distinguish older people from the disabled and why I think that, on purely economic grounds, the case is even stronger. Often older people are debarred because they do not fit in with some pension scheme. They, therefore, go to the end of the queue. They are taken on only as a last resort, because the firm's pension scheme cannot accommodate them.
If we are to get the greatest effort out of our people and get work out of people who would otherwise be idle, it is necessary to give a special benefit to the old, just as a special benefit is to be given to the geographically remote. The two cases are very similar. I ask the Treasury Bench to think again in purely economic terms on that basis. If the tax is to be selective, if it is to have an economic purpose, one purpose must be to ensure that older people are brought into employment if they have left it, or at least kept on if they are still in employment.
Therefore, some incentive must be given to the employer to employ older people, because older people will have great difficulty in getting jobs elsewhere. This does not apply to younger people, who can travel more easily, who can fit into pension schemes, and who are generally infinitely more adaptable. It is for my present purpose irrelevant whether the premium is a complete one—a return of the tax—or whether it is one-half, as I think is suggested in the Clause as drafted. That there should be an inducement to employers to employ older people in times of recession is absolutely essential; otherwise older people will be thrown out of work, they will be the first to go, and they will never get back.
§ Mr. Hugh Jenkins (Putney)
The purpose of these Amendments, the effect, is to exclude from the application of the tax certain categories of persons. I want to follow the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) in his plea for consideration for older persons. I am particularly concerned with older persons in the theatrical profession. Indeed, I am concerned with all persons in the theatrical profession, but, as the Amendment I have tabled to this effect is out of order, I am forbidden to refer to all persons in the theatrical profession and must refer only to older persons in 1328 the theatrical profession. I hope that my hon. Friend the Joint Parliamentary Secretary to the Ministry of Labour will understand that, when I refer to older persons in the theatrical profession, I am really referring to all persons in the theatrical profession.
I understand that it is in order to refer to categories of persons covered by these Amendments but not to categories of persons by occupation. In other words, one may refer to disabled people or to older people but not to an occupational group.
§ The Chairman
The hon. Gentleman will appreciate that on these Amendments we can refer only to the person covered by the Amendments
§ Mr. Jenkins
Yes, Sir Eric, and I shal1 refer to a certain category of persons sc covered, to wit, persons over 50 years of age engaged in the theatrical profession, a small group within the general group of persons over 50. But, as I said, I hope that my hon. Friend the Parliamentary Secretary to the Ministry of Labour, knowing what I have in mind, will treat the matter in as wide a sense as you will permit.
For persons over 50 employed in the theatrical profession the effect of the application of the tax has been and is particularly severe. Moreover, it is not of a character which, I think, was intended when the tax was framed. The consequences have been peculiarly sharp for older people in the theatrical world. Whenever it is desired to reduce employment, the tendency is to reduce it among people at the top, the older people. There have been reductions in the numbers of people in theatrical employment. Hon. Members who have been accustomed to watch plays in the Provinces may have noticed that there seems to have been a marked fall in the age of people engaged. This has come about because, in the theatrical world, people's salaries rise over a period, as they grow older. The tendency has been, therefore, when reduction of employment has been under consideration, to reduce it at the top level among actors of fairly mature years who are being paid more money. By reducing employment at that level, not only is the tax saved but more wages are saved as well. There has, on that account, been a reduction in theatrical employment among older people.
1329 The Government have seen the point as regards non-profit distributing theatrical employment. By removing the application of the tax to charitable trusts, they have, not by accident, I believe, but by intent, relieved all non-profit-distributing theatrical companies from the application of the Selective Employment Tax. This is an excellent step which I warmly support. Nevertheless, the consequences has been somewhat peculiar. There can be two companies, one, a profit-seeking company, employing a person over 50 years of age in respect of whom the Selective Employment Tax is payable, and the other, a non-profit-distributing company, employing an exactly similar person in exactly the same play, in respect of whom the tax is not payable.
This is something of an absurdity. Far be it from me, in the context of the employment of older people, to become the spokesman of profit-distributing theatrical companies, but, for better or worse, we have, so to speak, a mixed economy in the theatre and we are likely to have it for many years. The commercial theatre is still the largest in the country—but for the older people about whom we are concerned under the Amendment a peculiar state of affairs is created by the distinction between the two categories.
I have been careful, Sir Eric, to keep my remarks within the bounds of order. I hope that, when he replies, my hon. Friend will say that the Government are prepared to accept the Amendment and, more than that, that it is the intention of his Department to exclude altogether, before very long, the employment of all persons in theatrical work from the application of the Selective Employment Tax.
§ The Chairman
I must point out that the Minister would not be able to say that on these Amendments.
§ 5.15 p.m.
§ Mr. Bernard Braine (Essex, South-East)
I support the Amendment, moved with such force and clarity by my hon. Friend the Member for Farnham (Mr. Maurice Macmillan). I support it because it makes economic sense and, more important, because it makes good social sense. The Amendment is designed to remedy an injustice to a section of our community more deserving than most of our compassion and practical support.
1330 Like the hon. Member for Cheadle (Dr. Winstanley), who speaks in this context with considerable authority, having had great experience on industrial panels, and like the hon. Member for Bedwellty (Mr. Finch), whose knowledge of industrial injuries and workmen's compensation schemes is unrivalled, I warned the Government last year that the Selective Employment Tax would have a disproportionately adverse effect upon the disabled, upon the elderly and upon the part-time worker.
For the disabled, we can say emphatically that the tax has had that disproportionately adverse effect. On Monday last, in answer to a Question, the Minister of Labour told me that unemployment among those disabled persons considered suitable for work in normal conditions had increased from 38,000 in April, 1966, to 50,000 in April this year, an increase of about 30 per cent.
I have done my arithmetic and have looked up the figures. I hope that the Parliamentary Secretary to the Ministry of Labour will not say that that increase is less than the increase in unemployment generally over the same period. The figures given to me by the Minister on Monday ignore two facts. First, unemployment among disabled workers is in any event about four times that in the labour force as a whole. Thus, the disabled start off at a tremendous disadvantage. Second, as the hon. Member for Cheadle said, many disabled persons refuse to register. They refuse quite deliberately in order to conceal their disablement. In some ways, this is wholly laudable. It is part of the business of trying to fit oneself into the community and to lead as normal a life as one's disability will permit. Many disabled people feel—they have told me this, and I am sure that other hon. Members have heard the same—that, if they register as disabled, this might prejudice their chance of holding a job or of getting another one.
Therefore, when talking about the disabled, we are talking not only about those who are registered as disabled—who labour under considerable disadvantage anyway—but about a large number of workers—I cannot put a figure to it—who are also disabled and who ought to be registered as such but who are not so registered. Because of their disability, their pace may be slower and their periods 1331 of absence because of sickness may be greater. Such people may well be the first to be dismissed as a result of a tax which was deliberately designed—many terms of art have been used, but this is what it amounts to—to create unemployment in the service industries. That was the purpose of the tax.
Hitherto successive Governments of all political complexions have accepted an obligation to protect the disabled, even to give them a conscious preference where this is possible. I should be the first to pay tribute to the rehabilitation services of the Ministry of Labour under successive Ministers. They have had a magnificent record in training and placing disabled persons in employment. The real task, as any disabled resettlement officer knows, and as most constituency hon. Members know, is not the placing of a disabled man—that is difficult enough—but having placed him to keep him in employment. That has never been easy.
Ever since I was Parliamentary Secretary to the Ministry of Health I have had a particular interest in the problems of the disabled. I am in close touch with my county welfare officer, who I like to think is one of the best in the country, and with the local D.R.O.s. I have found that they experience acute difficulty in placing, for example, deaf school leavers, those whose mobility for one reason or another is restricted, those who suffer from epilepsy and other crippling diseases. A young girl came to see me the other day. She suffers only from mild epilepsy, but she has been desperately trying to find a job and cannot. One encounters numerous cases of this kind.
By the very nature of their disability, the disabled have a much reduced chance of finding work. They encounter difficulties at every turn. They cannot travel very far; they are limited in the kind of work they can do. They get no tax relief by way of compensation for their condition.
I want to make a special plea on their behalf. It is sometimes forgotten that, in addition to the difficulties I have mentioned, the physically disabled often suffer pain and discomfort. The vast majority of them are socially and psychologically at a disadvantage com- 1332 pared with fit workers. Moreover, they almost invariably have worse sick absence records than fit workers.
The Government must therefore have been aware last year when they introduced this iniquitous tax that a disincentive to employment, which the Selective Employment Tax was deliberately intended to be, would encourage employers to get rid of disabled workers where they could. Look at the way in which the provisions of the Disabled Persons Employment Acts are being observed today under this enlightened Administration.
I asked a Question on 5th May which revealed that last year 48.8 per cent. of firms in England to which the provisions of the Acts apply were failing to meet their obligation to employ 3 per cent. registered disabled workers. The proportion in Wales was lower, at 32.9 per cent. It is interesting to compare that with the position 10 years ago. The comparable figures in 1956 were 26.8 and 19.2 respectively. In other words, under this Administration the number of firms meeting their quota obligations under disablement Acts is declining. The proportion is declining and the trend has worsened. What are the Government doing about that?
§ The Chairman
Order. I do not think that on this Amendment the hon. Member can further pursue the question of the administration of the 1944 Act.
§ Mr. Braine
I fully accept that, Sir Eric. May I put it another way? It is the business of the Government to observe and study the trends. Knowing the trend, why did they turn a deaf ear to representations on this point from the British Legion, which has a special responsibility for the war disabled? Why did they turn a deaf ear last year to requests to exempt employers of disabled workers from S.E.T.? I hope that I am permitted to ask the Parliamentary Secretary whether he can confirm that the trend has been worsening. We are entitled to ask him to give us an answer.
My hon. Friend quoted a letter which appeared in The Times from a psychiatric registrar at a hospital. That letter revealed a state of affairs which I know from my knowledge and experience is pretty common all over the country. Has 1333 the Minister of Health made any representation about the increasing difficulties of placing those who have gone through a period of mental illness in the hospitals and seek to be rehabilitated? What advice has been given to the Minister of Labour by his National Advisory Committee for the Disabled? Has it been consulted? What view has it expressed? We should have an answer to those questions.
I hope that there will not be an attempt to justify the tax on the disabled on economic grounds. There is no doubt what both sides of the Committee feel about the social consequences. It is a tax which operates most harshly against the weakest, the disabled, the elderly, the women who work part-time to keep together a family where the father may have died or be sick or completely disabled.
What has happened to the Socialist conscience in all this? Hon. Members opposite, who I know feel deeply about these things, should be utterly ashamed of the Government's performance. My hon. Friend quoted a letter from Professor Titmuss, who I suppose is one of the principal keepers of the Socialist conscience these days. He is certainly one of the very few Socialists looking objectively at our social provisions. In another part of the same letter, he wrote:Do we or do we not wish to encourage the employment, part-time or full time, of older men and women and the rehabilitation of the disabled and the handicapped? Unless amendments are made to exclude these groups (administratively this would not present great difficulties) the social and psychological effects—as well as the purely financial—could be serious and far-reaching.That is a pretty clear lead to the Government, and I hope that we shall hear from the Parliamentary Secretary that the Government have relented on this and are prepared to accept the Amendment.
The Parliamentary Secretary said last year that should there be any evidence of ill effect on the disabled in the operation of the tax the Government would act. I invite the Committee to say that the evidence is there. I therefore hope that the Government will act by accepting the Amendment.
§ Mr. Leslie Hale (Oldham, West)
I do not want to introduce a note of controversy into what has been a very good debate. Having listened to the sincere and eloquent appeals from the other 1334 side, speeches which I envy, I am glad that I still represent, even for a comparatively short time, a Lancashire constituency, because some of the problems that were emphasised by the speeches so far do not apply in the North.
I find a considerable disposition on the part of the good employers in Oldham to find employment for disabled men. When I get a disabled man coming to see me I sometimes suspect that there must be something else behind the fact that he has not been able to resume his employment with some of these firms which have an admirable record. My own experience is that private enterprise in Oldham has a rather better record in this respect than some branches of our nationalised industries.
§ 5.30 p.m.
§ Although I started life rather cynical about the Co-operative movement, when I got to Oldham I found there a society which does great service to the town and which I extol without any jeers at a Chamber of Commerce or Chamber of Trade dinner. The Co-operative Society in Oldham is indeed political. We had a Socialist Co-operative Society and a Conservative Co-operative Society, but the Conservative Co-operative Society went bankrupt and the Socialists took it over and paid all its debts to preserve the reputation of the movement. The Society was unwise enough to support me at the last General Election and found within six weeks that it had to pay £40,000 a year in tax as a result of that support. I apologise to it.
§ In this discussion, we all face difficulties, including the Chancellor of the Exchequer. We recognise the constitutional difficulties of a Chancellor introducing a new concept in taxation. He cannot make all the necessary inquiries because it would be impossible to do that with the necessary secrecy which attaches to the Budget. He has to make concessions from time to time. I am genuinely grateful for the concession in this Clause, although my tributes to the Treasury are never free from some reservations. The Amendments raise many problems, and I am grateful to those who have put them down. Some of them may be a little constitutional. When a Chancellor says that the Treasury is constantly examining these problems and exploring every avenue, it is examining problems 1335 of its own child and I am not sure that the introduction of a few step-parents might not provide a fuller and more critical examination.
§ When we get up to speak, Sir Eric, even under so kindly a Chairman, I can understand that a speech devoted to King Lear or the centenarian in Conan Doyle's play about the veteran of Waterloo might sometimes verge on the bounds of order, but all of us are passionately anxious not to stray across any sort of canal.
§ The Chairman
The hon. Gentleman would no doubt be able to relate any such references to the Amendment.
§ Mr. Hale
I was relating my speech to the debate, Sir Eric, but I will now immediately relate it to the Amendment. The Clause meets one of the difficulties of the Oldham Co-operative Society to a considerable extent. In retail organisation, part-time workers are employed because more people shop on Friday and Saturday, and naturally a benevolent society tries to find work for the older employees for those two days of the week. This Clause will at least help considerably in that connection.
But there are different problems for the disabled persons. These problems vary according to the kind of disability. I was proud many years ago when we got in Oldham one of the first Remploy centres. The excellent record of the Ministry of Labour was somewhat marred when conditions were laid down about profit making or on the ratio of profits to expense. This has meant that Remploy has ceased to employ seriously disabled people because they could not pay their way. The Remploy building in Oldham is very large and is now almost entirely engaged on a routine job—useful work but in a sense a minor form of mass production. The result is that even if one would like to take on a man who may be paravertic one may be unable to do so because he cannot produce the necessary revenue through his employment. One must, after all, make sure that the Treasury does not lose too much on Remploy.
I am not criticising my right hon. Friend the Minister of Labour, from whom I have had most helpful correspondence on this and other subjects. I do not think that he has yet had time 1336 to deal with some of the complex and difficult problems involved. Where I have found difficulty with the disabled or diseased is that they have not in many cases had the sort of relationship with an employer of a man who has had some years at his job. Nevertheless, such people need very much some method of occupying their time.
In Oldham, we introduced a special and pioneering scheme for the employment of the mentally disabled, which is a form of trying to clear from our mental hospitals people who have been there far too long. Indeed, some have been there so long that no one knows why they went there in the first place. We found that many forms of mental disability produce a concentration leading to higher productivity than in the case of ordinary workmen, whose concentration may be disturbed by the passing of a mini-skirt or by a desire to know what is happening at Epsom. Many mentally disabled are able to give high concentration to their job.
Some years ago I had a letter from a man who raised the problem of haemophilia. When he saw me he said, "I know that you will do your best and I know that you will fail and that the time will come when you will say that we are damned nuisances. Everybody does." There is an excellent Haemophilia Society making propaganda and trying to help. It services research and so on. But there are only limited forms of employment for a haemophilic.
Remploy will not employ an epileptic, although it has one as a rather special case. To my knowledge, it has refused to employ people because they were haemophilic. It is plain that there are dangers, but they do not take place two days a week. They are not made by any specific periodical remission. Nor is the chance of employing them really affected by a specific periodical remission. Haemophilics were employed from time to time, but their record of attendance was such that they could not continue to be employed by the employers concerned who had behaved so generously.
Unless we give specialised employment under specialised conditions to these young men, they will drift, doing nothing for year after year. I agree with almost every word that the hon. Member for Farnham (Mr. Maurice Macmillan) 1337 said. The fact that he has a south of England constituency was rather due to a an accident of his own. The sole representative of a constituency such as his in Oldham is a memorial to the first Member for Oldham, but the right hon. Gentleman's early political experience was in the North, although rather on the wrong side of the county boundary.
The Chancellor must face the fact that we have not sufficient information. The figures are not available, and while I would be the last person wantonly to accuse anyone of intentional deceit of any kind, there is a feeling, as one looks through all the classifications of industry, that no effort has been made to provide this House with information upon which useful and comparable figures could be evaluated.
I agree that figures about disablement can be very misleading. If a man has been out of work for some time, he gets a feeling that his registered disablement may be preventing him from being employed. Certainly one does have such cases. Possibly there may be other reasons as well. I do not know. But some people have certainly found difficulty in securing employment year after year. There are things like multiple sclerosis, Parkinson's Disease and disseminated sclerosis, the last two being notable for spontaneous remission. A man with disseminated sclerosis can have a spontaneous remission for a short or a long period. After suffering terribly and being even incapacitated from work he may find himself in a period. However, with such a record it is not easy.
If there is one objective which still remains clear and could even unite this party, which has its difficulties, it is thai the whole concept of Socialism, the whole concept of the Labour Movement, is towards giving help to those in the greatest need. It goes even further if one wishes to be controversial—that we should take a little more from those who have the greatest ability to give, or we should at least try. I understand the constitutional difficulty. No Minister likes to have a discretion about anything. I have had hundreds of letters from the Ministry of Pensions saying, "We could not interfere if we wanted to. Parliament has deprived us of the opportunity and we have no power to do anything".
1338 Without derogating from the desirability of accepting these Amendments in toto, there is a case for the Chancellor to say that he investigating this matter not merely inside the Treasury but outside, and that he is considering the effect of this tax upon the employment of people who suffer and who are called upon to suffer for many years grave disabilities and who need help, but who are not helped by the existence of this tax. If this distressing problem were approached even outside the boundaries of these Amendments from which I cannot for the moment pass, then this debate will have served an additional useful purpose. No one in an industrial constituency, in a conurbation, can have any doubt of the multiplicity of the problems remaining unsolved and which have certainly been aggravated by the introduction of this tax.
§ Mr. John Pardoe (Cornwall, North)
I accept and support entirely the arguments for the other Amendments, but Amendment No. 33 directs attention to a rather special problem and I shall confine my remarks to that.
I welcome the Clause, because it goes some way towards giving relief to part-time workers. I welcome it for a personal reason, because almost this time last year I moved an Amendment which sought to do this.
My Amendment is directed towards the problem of those who are nearing retirement, not just those who have already retired or passed retirement age. Unfortunately, we know little about this group. What we do know leads me to conclude that those concerned are finding it difficult to get new jobs when they lose jobs. This conclusion is not merely mine hatched up for this occasion; it is the conclusion of the hon. Gentleman's colleague at the Ministry of Labour in answer to an Adjournment debate, when he said:Our statistics show that people over 45 … when they do lose their jobs … have much more difficulty in finding another, and tend, on average, to remain unemployed for a longer period than younger people.That is the admission of the present Government and might count for something on the Treasury Bench.
These people have been rather hard hit by the squeeze and by Selective Employment Tax.…There is no doubt from the 1339 Ministry of Labour figures on unemployment that the unemployment percentage increases with increasing age in the group I am talking about.
§ 5.45 p.m.
These figures, too, have their limits. They cover only those who sign on. We are all aware that this is a limitation which is true of all statistics of this sort. There is no doubt that they show a continuing problem among people in this age group who find more and more difficulty in obtaining work if they become unemployed. The hon. Member for Oldham, West (Mr. Hale) said that many employers seek to employ disabled people. However, that is not so true of those in this age group who become unemployed. Indeed, the Parliamentary Secretary in the debate on 26th January said:
there is still, undoubtedly, a good deal of resistance among employers."—[OFFICIAL REPORT, 26th January, 1967; Vol. 740, c. 1926–7.]
§ The statistics prove the general experience of most hon. Members. In Cornwall we have a high proportion of old people. This is also true of this age group of people nearing retirement and we are finding considerable difficulty about reemploying them. We find that they stay unemployed for longer periods.
§ I have not said a great deal about this Amendment. In some respects it is but a part of the overall problem raised by this series of Amendments, and even if the Amendments were passed, this would still be a bad tax. It has been made a great deal better by the Clause, but it would be made better still by the acceptance of all three Amendments.
§ I give the Minister one or two warnings if I may be so bold, about the arguments which he must not use when answering my proposal. He must not say that it is impractical, because the Financial Secretary spent a great deal of time in the debate last year telling us why the principle enshrined in the Clause was totally impractical. Therefore, we do not want to listen to that argument.
§ He cannot say that there is no problem for this age group, because, as I have already pointed out, the Joint Parliamentary Secretary to the Ministry of Labour has said that there is a very considerable problem. All he can do to save the face of the Government is to indicate 1340 that while he cannot accept these Amendments this year, he will, with the precedent of last year's debate behind him, accept them in 12 months' time.
§ Mr. John Peyton (Yeovil)
Not the least of the very many endearing qualities of the hon. Member for Oldham, West (Mr. Hale) is the long enduring nature of his gratitude. I have heard him before discharging the debt which he owes to the Oldham Cooperative Society for the help which he has had from it in the past, and he has done so today with his usual eloquence. I notice that one of many points about him only in passing.
He said how much the philosophy of helping the needy had played in the life and structure of the party which he represents. It would be a very foolish politician—even I would not go so far—who would deny any merit to the Labour Party. One of the features with which I would always credit it is a desire, whether it always achieves it or not, to do justice to those who are in need. It is for that reason that I find the debate astonishing.
If I may say so without offence, I do not find the presence of the Parliamentary Secretary to the Ministry of Labour a particularly encouraging omen, not because I have any disrespect for him, or anything but regard for him, but because he is not one of those people who are put up to make popular speeches. He is one of those "No men" and is enduring a very painful experience, but doing so with great good humour and almost making friends in the process.
§ The Temporary Chairman (Mr. Thomas Steele)
I hope that the hon. Gentleman will now address himself to the Amendment.
§ Mr. Peyton
I was merely trying to harden myself against the blow which I know we are to receive on our heads when the Parliamentary Secretary turns down the case. However, I will comply with your request, Mr. Steele.
One of the purposes which should be kept before us at all times and by all Governments is keeping people within the area of possible employment. Failure to do so is a thoroughly unsocial and dangerous policy. I am amazed that the Government should be led into the denial of this principle, as they will be if they turn down these Amendments.
1341 I am sorry that the hon. Member for Bedwellty (Mr. Finch) is no longer with us, but I cannot conceive that the Parliamentary Secretary can have remained unmoved by the hon. Gentleman's plea this afternoon. The hon. Gentleman has all the eloquence of the country from which he comes. He has long membership of his party. I should have thought that his eloquent plea this afternoon would bring the Government to respond. He was even able to make the proud boast and have all the honour that he was a voluntary supporter of the Government's prices and incomes policy, and if that does not entitle him to some respect from the Government Front Bench, I do not know what does. Certainly he deserves a great deal of gratitude.
Labour Party spokesmen, perfectly properly, habitually remind employers and industry generally of their duties towards disabled people. In those circumstances, it is astonishing that the Gov-erment should not be willing to play their own part and that they should have thrust this obstacle into the field. It must be constantly a battle to see that this rather artificial influence which we are able to throw in the scales to help the disabled is not overrun, but the Government are not just not defending their position, but flagrantly acting against their interests.
I was very impressed by the speech of my hon. Friend the Member for Farnham (Mr. Maurice Macmillan). It was an exceedingly eloquent but restrained appeal to the Government. In a rather hard way, we have all learned that these appeals do not always receive the replies and responses which they deserve, but the extraordinary thing about my hon. Friend's speech was that at no time did he even seek to inject the slightest element of a party attitude and perhaps that, if no other reason, should cause the Government to pay even closer attention to the arguments which he delivered with singular force and eloquence.
I do not want to end on too rough a note, but I want to say quite clearly that I hope that the Government will say tonight whether they care more for the interests of fairness and justice to disabled people or for the integrity of a tax which has never been anything better than a stupid anomaly.
§ The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley)
I will not deal immediately with the false antithesis posed by the hon. Member for Yeovil (Mr. Peyton), but I should like to make one complaint against him. If on some future occasion he wishes to say something complimentary about me, I hope that he will contrive to remain in order until that passage in his speech is completed.
§ Mr. Hattersley
Neither he nor the hon. Member for Farnham (Mr. Maurice Macmillan) suggested to the Committee the principles which underline both the primary Amendment and the two being discussed with it, and it is not possible to discuss with any great accuracy or clarity the propositions which have been put to us unless we understand exactly what those principles are.
The principles embodied in all three Amendments are concerned with providing a special employment subsidy for either the elderly or the disabled in a part, but only a part, of British industry. They are the principles of providing a special employment subsidy for the elderly or the disabled in the service industries and in construction, but not in manufacturing. Considered in those terms, the basic principle must stem from one of three conclusions.
First, there is the conclusion that the Selective Employment Tax has worked and is moving people out of the service industries into manufacture and that there is therefore a net disadvantage for the disabled or elderly people working in the service industries as compared with similar categories in manufacture. The second possible line of argument is that the service industries are particularly appropriate for the employment of the elderly or disabled and that therefore this specially exclusively elderly and disabled employment subsidy should be applied in those, but not in other industries. The third is that anything which is likely to increase the job prospects of the elderly or disabled in any part of the economy, in any sector, no matter how partial, or how arbitrary, or how inconsistent, is something which the Committee should feel itself obliged to support.
1343 I want to examine the contentions which have been made this afternoon in the light of those three possible conclusions and I want to do so by discussing the Amendments in two parts, dealing first with the disabled and then with the problems of the elderly. I must first outline the actual unemployment position of the registered disabled and I emphasise that it is the registered disabled about whom we are talking. The hon. Member for Essex, South-East (Mr. Braine) was at some pains to point out that there may be, and almost certainly are, substantial numbers of people who are entitled to register as disabled, but who choose not to make that registration. That fact has some relevance, although I cannot pursue the matter, to his later criticism that the proportion of firms fulfilling their obligations in this respect has gone down over the last ten years. That may be because they have chosen to employ disabled as opposed to registered disabled. I must make it clear that the figures which I am about to give are concerned with the registered disabled, the only people for whom these Amendments can be appropriate, the only people for whom statistics of this sort are available.
In August, 1966, when Selective Employment Tax began, in the service industries and in construction there were 12,921 unemployed registered disabled persons. By April of this year, the last date for which we have figures available, the number was 18,235, a net increase of 5,314 or 41 per cent. In the premium or neutral sectors of the economy, manufacturing or those parts of the economy which, although not receiving the premium, at least get the full tax refunded, there was an increase from 17,447 unemployed in August, 1966, to 24,036 in April of this year, an increase of 6,500, or about 38 per cent.
§ 6.0 p.m.
§ The hon. Gentleman the Member for Farnham anticipated that this net figure of increase in unemployment among the disabled would be given by the Government and would be compared with the total figure. I have to tell the Committee the basic fact that an increase of unemployment among the registered disabled of 41 per cent. during the period under review is appreciably less than half of 1344 the increase among the total insured population. The total increase in unemployment between August last year and April of this year was 117 per cent.
§ By any standards, that means that the registered disabled have suffered much less from the squeeze and the measures of 20th July, Selective Employment Tax and any other economic measure that the Committee cares to consider than the employed population as a whole. This is an altogether desirable and proper thing, and it is part of Government policy.
§ These figures mean something else, too. They mean that the increase in unemployment in those areas of the economy which are paying Selective Employment Tax, but getting no refund and no rebate, is hardly higher than the increase in those sectors of the economy which are paying Selective Employment Tax and receiving the premium. Therefore, nothing in the figures that I have read out is in any way a justification for those hon. Gentlemen who this afternoon have chosen to say that the Selective Employment Tax has promoted unemployment among the registered disabled.
§ The hon. Gentleman the Member for Farnham told the House of a letter in The Times in which two members of the medical profession had given examples of how mentally handicapped persons recently in their care had lost jobs as a result of Selective Employment Tax. The inquiries made by the Government about that case, and that category, suggests that the people referred to in that letter were employed in the premium category. They were receiving, or their employers were receiving, as a result of that employment, subsidy in the form of the Selective Employment premium.
§ Mr. Finch
I appreciate all that my hon. Friend has said, but the fact still remains that the number of disabled persons has increased in the service industries. These increases are going on all the time. The question arises: what has happened to these men who need to be re-employed? Many of the unemployed will be re-employed if a Labour Government is in long enough, because we shall have full employment. But for the disabled it will be very difficult, with this tax, to get employment.
§ Mr. Hattersley
I concede the central statistical truth of this point—I do not 1345 only concede it, I advanced it, by reading out the net figures and saying quite frankly and openly, because it is the Government's duty to lay the position rationally and statistically before the Committee, that there has been this increase. What I can demonstrate, and what the figures prove, is that the increase in unemployment in the service industries cannot legitimately be attributable to the incidence of the Selective Employment Tax.
§ Mr. Hattersley
The hon. Gentleman the Member for Farnham says that it can be, but the only example that he has managed to produce to prove that contention was totally irrelevant, totally inaccurate and, quite simply, wrong. The reason why unemployment among the disabled has risen by less than 50 per cent. of the rate that it has risen in the insured population as a whole is because of some special reasons—special reasons which the Committee would do well to bear in mind when it considers giving a subsidy to the disabled in any part of the economy.
In part it has risen at a smaller rate, because the very severely disabled receive special attention in the form of special workshops, Remploy, and in the form of occupations, which have been specially designated for their use and in which employment is almost limited to them.
The second reason why it has risen at a much slower rate is because very many registered disabled persons are able, if they are given the right training and found the right job, to hold down a job on their own terms, and on their own merits, and to occupy that position as a normal member of the working population. That is why I very much regret some of the more extravagant descriptions of the plight of the very badly disabled persons.
Clearly, these people do exist, but a more typically registered disabled person is someone who, given the right training and the right job, can carry on with that job and justify his proper wage rate on his own merits. Because of that I hope that the Committee will be very careful before committing itself to the concept of under-pinning employment of the disabled in part of the economy—I emphasise part of the economy—by way of providing a special employment subsidy.
§ Mr. Finch
My hon. Friend talks of training. This is very limited. There are thousands of unemployed disabled persons. Where are they all to be trained? We have two or three training centres in South Wales. I quite agree that a disabled person, given proper training and found a job, is able to carry on with that job, but thousands of men cannot be expected to travel miles to a training centre when they are crippled, when their backs are half broken. This is an exaggeration on the part of my hon. Friend.
§ Mr. Hattersley
The rules of order prevent me from going in any great detail into the Government's very substantial programme for increasing the training schedules for disabled workers, and for that matter for the working population as a whole. I hope that my hon. Friend will put his mind to the point which flows naturally from this. As a supporter of two Amendments which are concerned with disabled men, he is saying to the service industries that in order to make the employment of disabled persons a viable proposition, the Government understand and accept the necessity to subsidise them. He is not saying that to the manufacturing sector of the economy, but I ask him and other hon. Ladies and hon. Gentlemen who support, or feel inclined to support the Amendments, what will be, first of all, the attitude of the men. Their morale in many cases may be undermined by the suggestion that their employment is possible only if someone meets part of their wage bill and subsidise their existence. Secondly, what will the attitude be of management in the manufacturing sector who hear the Government say that they will subsidise disabled persons in the service industries? The implication of that is that they cannot be employed as viable units in their own right, yet the Government do not provide a subsidy in the manufacturing sector.
Some are entitled to conclude that it means that many registered disabled persons should not, or could not, or might not, be employed on their own merits. If they conclude that, in the absence of the provision of a subsidy to make their employment worth while, we are taking a very dangerous step, which is not in the interests of the registered disabled. What is basically and primarily in their 1347 interests is finding them the sort of training, and putting them to the sort of job, which enables them to work on their own merits, and earn wages according to their abilities.
I refer the Committee to the guide that my Ministry produced to the 1944 and 1958 Acts, which puts the matter exactly in perspective. It says:Experience has shown that the great majority of the disabled can take their place with others in ordinary work if their occupations are carefully chosen.That should be our rule, and that should be our duty and our policy. In many ways, it is.
The quota system is intended to bring that about. The fact that disabled persons, doing a good job cannot be dismissed without reasonable cause is designed to bring that about; the fact that some jobs which, by any standards, the disabled can do just as well as anyone else are specially designated for them, is designed to bring that about. As the hon. Gentleman the Member for Essex, South-East was generous enough to say, the work of my Ministry's disablement resettlement officers is very largely concentrated on doing this—getting the men into a job which enables them to go on working, not as a disabled person, but as ordinary members of society, doing the job in the ordinary and typical way. To imply that that is not possible without a special wages subsidy is a very dangerous path for this Committee to embark on.
That was the view of the Tomlinson Committee in 1944 and of the Piercy Committee in 1956. The hon. Member for Essex, South-East asked whether the views which I express now are the views of the National Advisory Committee on the Employment of the Disabled. That Committee's view, before and after Selective Employment Tax, is that the interests of the registered disabled man are best served by integrating him into society rather than by subsidising him in order that that integration comes about in an artificial way. Those arguments are more important than the administrative arguments and the cost of £9 million in a full year. My Ministry rejects the conception of an employment subsidy for reasons which we believe primarily are to do with the welfare and long-term interests ot the registered disabled man.
1348 If the figures were to show that S.E.T. or anything else had brought about such a deterioration, that there was a need for a radical review and to chance all the disadvantages and dangers which I have outlined in terms of a disablement employment subsidy, that might be the occasion to look again at the entire principle. But the employment position for the registered disabled, which has improved over the last two months, does not, in our view, justify taking the risks involved in allowing a special employment subsidy to be associated with disabled people in part of the economy.
§ Mr. R. C. Mitchell (Southampton, Test)
My hon. Friend has compared the 41 per cent. increase in unemployment among the registered disabled in the service industries with 117 per cent., which I understand relates to the total insured population in all industries. What is the equivalent figure for the total insured people in the service industries?
§ Mr. Hattersley
It is rather more than the figure in the manufacturing industries. I gave an Answer in the House on this matter on Monday afternoon. I think that the ratio is about 5½ to 4½. The split for the registered disabled is 41 per cent. to 38 per cent. and, within rough tolerances, that figure holds good for the total employed population.
May I turn to the problems of the elderly as embodied in the principal Amendment and the supporting Amendment? We were asked if we would put into perspective the numbers of elderly people whose position might be improved by acceptance of the two Amendments. There are 850,000 men and women over minimum retirement age who work for more than eight hours a week. Of those, 425,000 are in premium or neutral industries and 100,000 workers work part-time and therefore will obtain benefit from the Clause as it stands. Under Amendment No. 31, 325,000 elderly people would receive an employment subsidy. Clearly the figures in respect of Amendment No. 33 are substantially greater.
There are 4 million men and 1¾ to 2 million women over 50 years of age who work, and accordingly pay the Class I contributions of the Ministry of Social Security. Two million are in 1349 non-refund categories and 70,000 in part-time work. Therefore, Amendment No. 33 would affect only 1,300,000 people. If Amendment No. 31 were accepted, the cost would be £14 million in a full year, and if Amendment No. 33 were accepted it would be £84 million in a full year out of the total net revenue of £195 million—almost half the total revenue of the tax. That is on the assumption which I understand is supported by the mover of the Amendment that the Clause would be further amended so that the refund would be not 50 but 100 per cent.
Despite the substantial arguments against the Amendments in terms of cost to the Exchequer and in terms of the administrative difficulty, the main reason why I urge the Committee to reject them is neither administrative nor financial. It is, again, the undesirability of picking out a section of the working population for a special wages subsidy.
§ 6.15 p.m.
§ Mr. Pardoe
Is the hon. Gentleman denying that this is a selective employment tax? We on this side have been attacking the tax because it is selective.
§ Mr. Hattersley
Of course I am not. In the halcyon days when I made speeches from three benches back, I made a speech on the Second Reading of the Finance Bill and said that the beauty of the tax was that it was selective. But the Government have chosen, rightly, to make it selective in different terms. With the Committee's permission, they hope to make it selective in regional terms and between one form of industry and another. But they have never chosen to make it selective between one man and another working side by side at the same bench or in the same office. That seems to be a very dangerous thing to do. To make it selective between two men in the same office, with the age of 50 being the dividing line, would be not only a dangerous thing, but a fatuous thing to do.
I do not subscribe to the view that people are too old to work at 50, and I hope that I shall not subscribe to that view in 17 years' time when I attain that age. It seems to me that there is an implied impertinence in suggesting that the employment of a man of that age should be or might be dependent on the provision of an employment subsidy. I do 1350 not believe that it is in the interests of elderly workers to say to employers, "We are demonstrating in the service industries that an employer can be expected to take on a man of 51 only if he receives a subsidy", but say to employers in manufacturing industry, "We want you to take on men of 51, but we will not give you a subsidy for their employment". This is a most dangerous argument.
The Government are strongly in favour of the continued employment of the older workers. That is in the national interest and their personal interest. But what is suggested in the Amendments is not the way to do it. One way in which we hope to do it is through the relaxation in the earnings rule which became operative three days ago. There are other ways which should and must and will be put into operation in encouraging elderly workers to remain in employment. The regional employment premium will affect the elderly worker.
One of the problems of the development areas is that a disproportionate share of our elderly people live in them. Therefore, if we are to attract larger amounts of work to the development areas, we must attract a larger amount of work for the elderly. But that is different from providing an almost individual employment subsidy for men or women because they reach the age of 50, according to one Amendment, or 60 or 65, according to another.
I turn to something which is common to all three Amendments. Throughout the year we have continued to examine, as we promised we would, the employment prospects of the elderly and the registered disabled in terms of the Selective Employment Tax. Throughout the year we have received reports from our regional controllers and regional offices about how the employment prospects of those categories of people have been hindered or helped by the existence of that tax. We have not heard a word today, nor I suppose will we throughout the Committee stage, about those many elderly and registered disabled people who, according to the logic which we have heard from the benches opposite, have had their employment chances enhanced in the manufacturing sector.
Our regional reports have shown that the Selective Employment Tax has not affected the employment chances of the 1351 disabled or the elderly who want to work and are prepared to work full time. But I gladly concede that it has affected the employment chances of both those categories of persons who wanted to work and who were able to work part time. That is one reason for the Clause. We accept that it will be of assistance to the registered disabled and the elderly who want to work for part of the working week. This is one of its fundamental justifications.
I accept that entirely. It was urged on us last year by the Opposition, and equally urged on us by the Daily Telegraph on Wednesday. We concede that the advantages to the disabled and elderly are substantial in terms of getting a concession for part-time workers. But a special concession which is limited to those in the service industries, provided not for those in manufacturing industry but only for those in part of the national economy and related to their disability and their age, is not in the interests of the economy or in the interests of the categories whom, I freely acknowledge, the movers of the Amendment have this afternoon sought to help.
§ Mr. Hugh Jenkins
Throughout his remarks, my hon. Friend has been referring to the application of an employment subsidy. Should he not have been referring to the removal of an employment disincentive?
§ Mr. Hattersley
I regret that I have not taken my hon. Friend with me. The Government's case this afternoon is concerned entirely with the treatment of two men in the same establishment, offering a subsidy to one of them if he is disabled or elderly but no subsidy to the other if he is not. I cannot reiterate too strongly that it is the Government's strong belief that this is not in the interests of the disabled themselves. That is essentially why we ask the Committee to reject the Amendments.
§ Mr. F. A. Burden (Gillingham)
My hon. Friend the Member for Yeovil (Mr. Peyton) stated that he saw something ominous in the appearance at the Dispatch Box of the Joint Parliamentary Secretary to the Ministry of Labour. He assumed, quite rightly, that if the hon. Gentleman was called upon to answer 1352 the debate, we should get one of his usual "Noes".
The hon. Gentleman has admitted that there has been a rise, and a quite considerable one, of 41 per cent. in unemployment among people who are totally disabled, but he said not one word of encouragement about it. All that he tried to do was to justify the rise and say that there had been higher increases in unemployment throughout the economy as a whole. That was not what we were told would happen when the Government took office.
I should like to know from the Parliamentary Secretary and his colleagues on the Treasury Bench, and even from the back-bench Members of his own party who have spoken in the debate, what their attitude would have been had the words spoken this afternoon by the hon. Gentleman come from a Conservative or even a Liberal Minister. The hon. Gentleman would have been highly critical. He would have been on the back benches fulfilling the rôle that he regretted having lost when he moved to the Front Bench. He would have been "going to town" on the Government of the day for the action they had taken.
The hon. Gentleman also made one or two extraordinary assumptions on which he was taken up by his hon. Friend the Member for Bedwellty (Mr. Finch). He said that when fully trained, the incapacitated worker could earn on a par with workers who were not incapacitated. The area in which incapacitated workers can be trained, however, is highly restricted. As the hon. Member for Oldham, West (Mr. Hale) so eloquently put it, people suffering from many diseases have no facilities for such training. Certainly, Remploy or any other institution which the Government may have for training or retraining does not serve those people.
The Parliamentary Secretary then said that having trained those people for whom training is not available, or for whom, in many cases, the distances are too great to go for training, the need was to find them jobs. A few words earlier he had stated that what has really happened as a result of their policy is that the Government are not finding jobs for more people in this category. Indeed, the number of those who are unemployed is increasing. The hon. Gentleman was not, therefore, by his 1353 remarks holding out very much hope for those people.
This is a social problem, and a very serious one. It would have become the hon. Gentleman much better if, instead of trying to justify the rise in the number of unemployed in this category, he had offered sympathy. Throughout the whole of his speech, there was not one word of sympathy for those people. There was not one word of hope for them. What these people need is hope and help. Certainly, there was no indication whatever from the hon. Gentleman's speech that they would receive either of these from the Government.
I was very pleased to see how the hon. Member for Cornwall, North (Mr. Pardoe), from the Liberal benches, took up the Parliamentary Secretary when he seemed to imply that the Selective Employment Tax was not selective. What the Parliamentary Secretary meant was that it was selective in the way that the Government want to manoeuvre it for their convenience at the time. Indeed, as was pointed out earlier, the Economic Secretary said last year that what is now contained in Clause 24 was impossible and could never be done. One year later, it is not only possible, but is achieved. Where is the consistency of the party opposite? There inconsistency can be expected in this matter as in so many other things.
The terms of the Amendment are precise. After "person", it would insertwas a registered disabled person under the Disabled Persons (Employment) Act 1944".There is no great administrative difficulty in determining the people who are classified in that way because they are all medically classified. The Ministry knows the people who come within that classification. There is, therefore, no great difficulty there. I refer the Parliamentary Secretary particularly to the remarks of his hon. Friend the Member for Oldham, West, who illustrated some of the terrible difficulties, illnesses and diseases from which these people suffer. Quite apart from anything else, many of these people, because of their infirmities, with which some of them were born—I think of spastics and the like—are doomed to lead a very lonely and, in many instances, isolated life. They are, above all, people who in many cases suffer constant pain and depression.
1354 No matter what the problems, if the declarations about social conscience which are so often paraded by the party opposite mean anything at all they should help these people. It is clear that when people are in constant pain or are disabled or suffering loneliness because of their infirmities, the one thing above all which could help take away from them the terrible restrictions imposed upon them by their infirmities would be the ability to do a job which would keep them occupied and, at the same time, make them realise that they can live a useful life and be in contact with their fellow men, which otherwise would be denied to them.
§ 6.30 p.m.
§ The attitude of the Government is disgraceful. Just as it was possible to do this year that which they said was impossible last year, it is possible for them to offer some hope that legislation can be introduced to deal with these circumstances, if not today, in the very near future.
§ The same arguments apply to women over 60 and men over 65. We know of the desire of many men over 65 who have retired or women over 60 to return to employment because of loneliness. Such women may have been widowed or, in the case of men, their wives have died, and they want to get away from the awful boredom which in many cases brings them to a premature grave in circumstances of terrible loneliness.
§ I hope that, in replying to this debate, my hon. Friend the Member for Farnham (Mr. Maurice Macmillan) will castigate the Government on this matter. They should be castigated. I shall have the utmost pleasure in supporting my hon. Friends, and I hope that we shall carry with us some hon. Gentlemen opposite who feel equally strongly.
§ Dr. Winstanley
We are all aware of the Parliamentary Secretary's enthusiasim for the general provisions of the Selective Employment tax, and we recall the speech he made from the back benches during the Second Reading debate a year ago. Indeed, we could hardly forget it, since it was the only speech in support of the Measure from the back benches opposite.
I wish to correct him on one or two points which he made and which could 1355 be seriously damaging to the interests of the disabled. I agree that none of these Amendments may be the right way to deal with the situation. It is a situation which should never have arisen.
We have had a valuable discussion drawing attention to some special problems for the disabled, but its value will disappear if we do not correct some of the impressions left with us by the hon. Gentleman. He based the Government's case on their objection to some kind of open financial discrimination as between one worker and another. However, he ought to come down to earth and remember that there is already open discrimination, although in another way, and necessarily so.
When one asks an employer to accept a registered disabled person, in many cases he has to introduce special facilities for that employee which are manifest for all to see. It may be that he cannot climb. It may be that he has to sit down at his work, whereas everyone else on the bench is standing up. It may be that he has an ulcer and has to take a glass of milk every hour or two. It may be that he cannot work shifts, whereas his colleagues can. However, he does not feel that he is being discriminated against. Let us put an end to the idea that there is something disagreeable or disgraceful in doing something special for one class of people which we do not do for others. The Government should not base their argument on that sort of attitude.
The hon. Gentleman referred to the difference between service and manufacturing industries. If he inquires, he will find that, on the whole, the registered disabled persons employed in manufacturing are those less substantially disabled than those employed in service industries. Generally speaking, that will be found to be true in factories and manufacturing industries. Certainly it is true in my area. I ask the Parliamentary Secretary to look into the position and, if he finds what I say to be true, I ask him to make the necessary deductions.
He is right when he says that the total figures may be misleading and that the global figures of disabled have been under-assessed. There are many people who do not like to be registered. However, at the opposite end, there are others 1356 who are not registered and who are crucial to the argument. The criteria adopted for putting a person on the Register of Disabled Persons are that, first, they have to be capable of some form of regular remunerative employment and, second, they have to be substantially handicapped in obtaining or keeping employment in competition with people who are not disabled—
§ The Temporary Chairman
Order. We are not discussing who should or who should not be on the Register of Disabled Persons. We are discussing whether those who are should be entitled to the benefit of this Amendment.
§ Dr. Winstanley
With respect, Mr. Steele, one of the reasons advanced by the Parliamentary Secretary for not accepting the Amendment was that he could not say effectively which people should be covered by the Clause. I am endeavouring to explain to him that there are others in addition to those whom he mentioned. Many people who are out of employment—
§ The Temporary Chairman
Order. We are not discussing who should or should not be on the register. We are discussing whether, according to the Amendment, those on the register should be entitled to the benefit of the Amendment.
§ Dr. Winstanley
I am grateful to you for that Ruling, Mr. Steele. As you have rightly reminded us, we are discussing whether persons on the register should be in receipt of this special provision. Arguments have been advanced by the Parliamentary Secretary to say that they should not. In countering those arguments, I say that the problem is larger than he thinks. When a person is off work, his doctor has to decide whether he receives a certificate—
§ The Temporary Chairman
Order. The hon. Gentleman is now trying to pursue the same argument by a different method.
§ Dr. Winstanley
Mr. Steele, since apparently, it is out of order to answer a statement made by the Parliamentary Secretary earlier in the discussion, I will not pursue it. I say merely that I hope that his statement will not be recollected, because it would be misleading in further 1357 discussions which we may have on the subject.
§ Mr. Hale
I hope that my hon. Friend will forgive me if, briefly, I point out to him that one of the real defects of democracy is that one has to proceed at the speed of the slowest ship in the convoy. It is a defect when we see dictarorships everywhere, because we deal with matters in a democratic way. If the people of Oldham, in their infinite wisdom, elect a half-baked sentimentalist to represent them instead of a bearded economist, and go on returning him with an increasing majority for 20 years so that a seat which at one time was scheduled unsafe and needing special financial support was until recently scheduled safe, he must do his best to explain his case. I may say that he did it very well, and I congratulate him on an able speech in defence of an argument which, basically, is untenable. But he must do his best to explain. But for the fact that it is already 6.30 and I do not eat lunch, I might have pursued the argument further. I will not accompany the hon. Gentleman into the Lobby, because my mind is exercised enough about next Tuesday, without dropping any blots on the copybook today.
Basically, the argument was with the hon. Gentleman on the impracticability of making piecemeal Amendments to a singularly bad tax. The remedy is to repeal it, which I have favoured since the Budget. Five hundred brilliant economists said that it was a brilliant conception; I said it was barmy, and gradually the argument is passing in my direction.
§ Mr. Maurice Macmillan
I must apologise to the Parliamentary Secretary for having assumed in my opening speech that the Chief Secretary would reply, though I do not know that I would have been more optimistic if I had been right.
The hon. Gentleman should apologise, I think, for the thinness of his argument, although we all admire his skill in deploying it. The hon. Member for Oldham, West (Mr. Hale) had the real answer. Little tinkering can be done with a ludicrous tax which would not be administratively complicated and still leave it ludicrous. I thank the hon. Gentleman for his kind words, which I 1358 heartily reciprocate, in a non-party-political sense.
If the Parliamentary Secretary really believes that it will damage or annoy or upset the disabled or the people of retirement age who are seeking to remain in work to relieve their employers of a tax which most employers regard as iniquitous anyway, he will believe anything. He did not deal with most of the arguments. Some of my intended remarks were made by the hon. Member for Cheadle (Dr. Winstanley).
It is obvious from his second speech as much as from his first that the Parliamentary Secretary, in quoting the global and comparative figures in percentages, was entirely ignoring a fact which is obvious to us, that, although this is not so much a question of quantity, it is very much one of quality. It is just these people who are in the weakest position who need the extra protection of the Amendment. I was grateful for the support of the hon. Member for Bedwellty (Mr. Finch.) That such a known expert should support our argument shows that we are right and that such a keen Government supporter should do so shows that it has no party political bias.
The Parliamentary Secretary's arguments on selectivity made nonsense not only of his speech but of most of the Government's policy. The idea that a tax could not be selective as between one person and another and that it is wrong to treat people working side by side differently is quite contrary to the practice not only of this Government but of successive Governments. It denies that there should be any special treatment for the disabled or people of pensionable age; it denies the principle of special Income Tax allowances for people of pensionable age, whether working or not; it denies that one should discriminate in the tax system at all between those who are disabled and those who are not; and it would make absolute nonsense of any ideas of the Minister of Social Security about bringing forward proposals for a disablement income.
We ask that discrimination should be removed. The Parliamentary Secretary said that the principle of the Amendment was a subsidy for service industries. This use of words, in itself, is as selective as Humpty Dumpty ever was. We are 1359 not suggesting that there should be a subsidy, but that a liability should be removed from full-time as well as from part-time workers. The principle is of not penalising those people of retirement age and the disabled, whether or not they are part-time workers, or of extending the protection given by successive Governments to full-time workers.
The Parliamentary Secretary showed some haste at the end of his speech which acknowledged that the hon. Member for Cornwall, North (Mr. Pardoe) might be in pocket and that we have some hope of getting this Measure next year, if not this year. But we do not base our argument only on the hope of getting a concession but on the help for the disabled which every Government up to now have carried out.
The argument is not only that the Selective Employment Tax has decreased these
§ people's chances of getting work, but that it does not increase the chances, in the way that all legislation and administration has up to now, in favour of the disabled. This tax is not the only or the main factor in the disabled and the old not being able to get work. One of the major factors might be the lack of work, training, training schemes and facilities, and job opportunities—in fact, the general lack of expansion in our economy.
§ It is in this context that we are asking for special help for these people, but we appear to have asked in vain, so I must ask the Committee to vote for the Amendment and hope that we can, if not demonstrate our success, at least give some prospect of history repeating itself and of having it next year.
§ Question put, That those words be there inserted:—
§ The Committee divided: Ayes 119, Noes 159.1361
|Division No. 354.]||AYES||6.49 p.m.|
|Alison, Michael (Barkston Ash)||Hamilton, Marquess of (Fermanagh)||Osborne, Sir Cyril (Louth)|
|Allason, James (Hemel Hempstead)||Harris, Frederic (Croydon, N.w.)||Page, Graham (Crosby)|
|Bessell, Peter||Harris, Reader (Heston)||Page, John (Harrow, W.)|
|Blaker, Peter||Harrison, Brian (Maldon)||Pardoe, John|
|Body, Richard||Harrison, Col. Sir Harwood (Eye)||Powell, Rt. Hn. J. Enoch|
|Boyd-Carpenter, Rt. Hn. John||Harvey, Sir Arthur Vere||Price, David (Eastleigh)|
|Boyle, Rt. Hn. Sir Edward||Harvie Anderson, Miss||Prior, J. M. L.|
|Braine, Bernard||Hastings, Stephen||Pym, Francis|
|Brewis, John||Higgins, Terence L.||Ramsden, Rt. Hn. James|
|Brinton, Sir Tatton||Hiley, Joseph||Rossi, Hugh (Hornsey)|
|Bromley-Davenport, Lt.-Col. Sir Walter||Hirst, Geoffrey||Royle, Anthony|
|Bryan, Paul||Hogg, Rt. Hn. Quintin||Russell, Sir Ronald|
|Buchanan-Smith, Alick (Angus, N & M)||Holland, Philip||Scott, Nicholas|
|Bullue, Sir Eric||Hordern, Peter||Shaw, Michael (Sc'b'gh & Whitby)|
|Burden, F. A.||Hornby, Richard||Sinclair, Sir George|
|Campbell, Gordon||Hunt, John||Stodart, Anthony|
|Clark, Henry||Iremonger, T. L.||Summers, Sir Spencer|
|Corfield, F. V.||Irvine, Bryant Godman (Rye)||Tapsell, Peter|
|Costain, A. P.||Jenkin, Patrick (Woodford)||Taylor, Sir Charles (Eastbourne)|
|Craddock, Sir Beresford (Spelthorne)||Jennings, J. C. (Burton)||Taylor, Edward M. (C'gow, Cathcart)|
|Crouch, David||Johnston, Russell (Inverness)||Temple, John M.|
|Crowder, F. P.||Kimball, Marcus||Thatcher, Mrs. Margaret|
|Cunningham, Sir Knox||King, Evelyn (Dorset, S.)||Thorpe, Rt. Hn. Jeremy|
|Davidson, James (Aberdeenshire, W.)||Kirk, Peter||Tilney, John|
|d'Avigdor-Goldsmid, Sir Henry||Kitson, Timothy||Turton, Rt. Hn. R. H.|
|Dean, Paul (Somerset, N.)||Knight, Mrs. Jill||Walker, Peter (Worcester)|
|Doughty, Charles||Langford-Holt, Sir John||Walker-Smith, Rt. Hn. Sir Derek|
|Drayton, G. B.||Lloyd, Ian (P'tsm'th, Langstone)||Walters, Dennis|
|Eden, Sir John||McAdden, Sir Stephen||Ward, Dame Irene|
|Errington, Sir Eric||Macleod, Rt. Hn. Iain||Webster, David|
|Eyre, Reginald||Macmillan, Maurice (Farnham)||Whitelaw, Rt. Hn. William|
|Fisher, Nigel||Maydon, Lt.-Cmdr. S. L. C.||Wilson, Geoffrey (Truro)|
|Fletcher-Cooke, Charles||Miscampbell, Norman||Winstanley, Dr. M. P.|
|Fortescue, Tim||Mitchell, David (Basingstoke)||Worsley, Marcus|
|Glover, Sir Douglas||More, Jasper||Wright, Esmond|
|Glyn, Sir Richard||Morrison, Charles (Devizes)||Wylie, N. R.|
|Gresham Cooke, R.||Mott-Radclyffe, Sir Charles||Younger, Hn. George|
|Griffiths, Eldon (Bury St. Edmunds)||Noble, Rt. Hn. Michael|
|Grimond, Rt. Hn. J.||Nott, John||TELLERS FOR THE AYES:|
|Gurden, Harold||Onslow, Cranley||Mr. Anthony Grant and|
|Hall, John (Wycombe)||Osborn, John (Hallam)||Mr. Hector Munro.|
|Anderson, Donald||Barnett, Joel||Blackburn, F.|
|Archer, Peter||Beaney, Alan||Blenkinsop, Arthur|
|Bacon, Rt. Hn. Alice||Bidwell, Sydney||Booth, Albert|
|Boston, Terence||Hobden, Dennis (Brighton, K'town)||Norwood, Christopher|
|Bottomley, Rt. Hn. Arthur||Hooley, Frank||Ogden, Eric|
|Bradley, Tom||Houghton, Rt. Hn. Douglas||O'Malley, Brian|
|Broughton, Dr. A. D. D.||Howarth, Harry (Wellingborough)||Oram, Albert E.|
|Butler, Herbert (Hackney, C.)||Howell, Denis (Small Heath)||Orbach, Maurice|
|Carter-Jones, Lewis||Huckfield, L.||Orme, Stanley|
|Castle, Rt. Hn. Barbara||Hughes, Emrys (Ayrshire, S.)||Padley, Walter|
|Chapman, Donald||Hughes, Hector (Aberdeen, N.)||Page, Derek (King's Lynn)|
|Coleman, Donald||Hughes, Roy (Newport)||Parker, John (Dagenham)|
|Concannon, J. D.||Hunter, Adam||Pavitt, Laurence|
|Crawshaw, Richard||Jackson, Colin (B'h'se & Spenb'gh)||Pentland, Norman|
|Crosland, Rt. Hn. Anthony||Jackson, Peter M. (High Peak)||Perry, George H. (Nottingham, s.)|
|Crossman, Rt. Hn. Richard||Janner, Sir Barnett||Prentice, Rt. Hn. R. E.|
|Darling, Rt. Hn. George||Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)||Price, Christopher (Perry Barr)|
|Davies, Ifor (Gower)||Jenkins, Rt. Hn, Roy (Stechford)||Price, William (Rugby)|
|Dewar, Donald||Johnson, Carol (Lewisham, S.)||Rankin, John|
|Diamond, Rt. Hn. John||Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)||Richard, Ivor|
|Dickens, James||Jones, T. Alec (Rhondda, West)||Roberts, Gwilym (Bedfordshire, S.)|
|Doig, Peter||Judd, Frank||Robinson, W. O. J. (Walth'stow, E.)|
|Donnelly, Desmond||Kelley, Richard||Roebuck, Roy|
|Dunwoody, Mrs. Gwyneth (Exeter)||Kerr, Dr. David (W'worth, Central)||Rose, Paul|
|Dunwoody, Dr. John (F'th & C'b'e)||Kerr, Russell (Feltham)||Rowlands, E. (Cardiff, N.)|
|Eadie, Alex||Lawson, George||Shaw, Arnold (Ilford, S.)|
|Ellis, John||Leadbitter, Ted||Shinwell, Rt. Hn. E.|
|Ensor, David||Ledger, Ron||Shore, Peter (Stepney)|
|Evans, Albert (Islington, S.W.)||Lee, John (Reading)||Silkin, Rt. Hn. John (Deptford)|
|Evans, loan L. (Birm'h'm, Yardley)||Lestor, Miss Joan||Slater, Joseph|
|Faulds, Andrew||Lever, Harold (Cheetham)||Small, William|
|Fernyhough, E.||Lewis, Arthur (W. Ham, N.)||Snow, Julian|
|Fitch, Alan (Wigan)||Luard, Evan||Strauss, Rt. Hn. G. R.|
|Fletcher, Raymond (Ilkeston)||Lyon, Alexander W. (York)||Swingter, Stephen|
|Fletcher, Ted (Darlington)||Lyons, Edward (Bradford, E.)||Symonds, J. B.|
|Foot, Michael (Ebbw Vale)||McBride, Neil||Tinn, James|
|Ford, Ben||MacColl, James||Varley, Eric G.|
|Fraser, John (Norwood)||MacDermot Niall||Wainwright, Edwin (Dearne Valley)|
|Freeson, Reginald||Macdonald, A. H.||Walden, Brian (All Saints)|
|Gardner, Tony||McKay, Mrs. Margaret||Walker, Harold (Doncaster)|
|Gourlay, Harry||Mackenzie, Gregor (Rutherglen)||Wallace, George|
|Gray, Dr. Hugh (Yarmouth)||Mackie, John||Weitzman, David|
|Grey, Charles (Durham)||McNamara, J. Kevin||Wellbeloved, James|
|Griffiths, David (Rother Valley)||MacPherson, Malcolm||Wells, William (walsall, N.)|
|Griffiths, Rt. Hn. James (Llanelly)||Marsh, Rt. Hn. Richard||Whitaker, Ben|
|Hate, Leslie (Oldham, w.)||Mendeleon, J. J.||Whitlock William|
|Hamilton, William (Fife, W.)||Millan, Bruce||Williams, Alan Lee (Hornchurch)|
|Harper, Joseph||Miller, Dr. M. S.||Williams, W. T. (Warrington)|
|Harrison, Walter (Wakefield)||Mitchell, R. C. (S'th'pton, Test)||Winnlck, David|
|Hattersley, Roy||Moorman, Eric||Wyatt, Woodrow|
|Hazell, Bert||Morgan, Elystan (Cardiganshire)||TELLERS FOR THE NOES:|
|Heffer, Eric S.||Morris, Alfred (Wythenshawe)||Mr. Charles R. Morris and|
|Henig, Stanley||Noel-Baker, Francis (Swindon)||Mr. William Howie.|
|Hilton, W. S.||Noel-Baker, Rt. Hn. Philip (Derby, S.)|
§ Mr. Patrick Jenkin (Wanstead and Woodford)
I beg to move Amendment No. 32, in line 31, to leave out 'half'.
Last year the announcement of the Selective Employment Tax aroused what I can only describe as a deafening chorus of protests, two of which rang through the clamour with particular penetration. The first was charities and the second was the plight of part-time workers.
After some attempted defence by the Chief Secretary in respect of charities, the Government bowed to the storm and agreed that charities should come into the refund category. However, they refused steadfastly and utterly to move in any direction to meet the demand for a concession for part-time employees. The Government argued that there was no practical way by which such a concession could be given. The Financial Secretary said: 1362I must tell the Committee that we are able to find no practical way whatever of devising a refund system on the basis of part timers.We were then debating the Selective Employment Payments Bill in Committee. He went on to explain briefly why he was making that statement. One of the reasons, he said, was because there was no way of policing any system of refunds. He said:We would be in the position of paying out enormous sums of public money entirely on trust, without any practical means of verification.Later he said:… it will require a fairly considerable alteration to the National Insurance system so that we can devise a mechanism by which we could make a separate category of part-time workers."—[OFFICIAL REPORT, 20th July, 1966; Vol. 732, cc. 807–8.]The Government argued that the case was a bad one and that the remedies were 1363 impossible. That was last year. Now we are assaulted by what is coming to be recognised as a familiar noise from the Treasury Bench—what I can only describe as the subdued rumble of Her Majesty's Ministers munching their words. For example, the Chancellor of the Exchequer said in his Budget statement:I have, therefore, decided to relieve employers of part-time labour, employed in establishments not at present entitled to premia or refund, by refunding one-half of the tax payable in respect of adult employees who normally work less than 21 hours a week. This will help retail distribution as well as the tourist and hotel trades. The Ministry of Social Security will operate the refund scheme."—[OFFICIAL REPORT, 11th April, 1967; Vol. 744, c. 1008.]It now appears that there is a case after all. The Opposition were right. A refund system can be operated without all the hideous difficulties the Financial Secretary persuaded the Committee last year were so insuperable. Furthermore, it will not require a fairly considerable alteration in the National Insurance system—in fact, it will not require an alteration of the system at all. The Government cannot in future expect the Committee or the country to accept these protestations of impossibility when one can see such stark, absolutely unqualified statements as were made last year so swiftly shown to be nonsense.
§ 7.0 p.m.
§ I do not want to suggest that we are in any way ungrateful for the fact that the Government have found a way round—because some modicum of improvement this Clause certainly is, and we welcome it as such—but it is right that we should examine the evidence as to why the Government have felt it necessary to make this change, and to see whether or not one should draw from it the conclusion that the change has gone far enough, or that what is needed is not to refund merely half of the tax in respect of part-timers but to refund it in toto.
§ There can be little doubt that the piece of evidence that has weighed more heavily with the Government than any other was the pungent and powerful report of the economic development committee for the distributive trades. It is a plain fact, and I do not suppose for one moment that the Chief Secretary will seek to deny 1364 it, that the report has confirmed, fairly and starkly, every forecast which we from these benches made—and, I give credit where credit is due, though they are not in their place, the Liberal Members who joined us—about the effect that the Selective Employment Tax would have on part-time employment in the service industries.
It is worth examining this report, because it is by far the most convincing and comprehensive document we have on the impact of this tax on this kind of trade. Paragraph I states:
In May. 1966, the Economic Development Committee"—
this is very soon after the tax was announced:
for the Distributive Trades set up a working party to suggest ways and means of overcoming the administrative problems that would be involved in exempting"—
and I emphasise the word "exempting":
insured part-time workers from the selective employment tax, and to examine the administrative implications of exempting those performing the wholesale function from the tax.
I shall come to the problem of the wholesalers in a moment.
This was a very wide-ranging survey. The E.D.C. consulted over 40 organisations in the distributive trades, covering nearly one-third of a million workers. It described its survey as being
… as comprehensive a cross-section of the distributive trades as a whole as could be obtained in the time available.
The report is, therefore, a responsible report. It is authoritative and impartial. The E.D.C. examined, in terms of employment policies, what the firms in the industries concerned were actually having to do to react to the Selective Employment Tax, and I propose to read out, very briefly, the five principal measures that a substantial number of employers were found to have taken.
By way of introduction to this aspect, the report states:
Over half of the organisations concerned reported that some changes have had to be made in employment policies, conditions and hours of work, or methods of operation. In over 90 per cent. of these instances the changes were brought wholly or partly by the introduction of the SET.
What were these changes? Before enumerating them, I emphasise that each and every one of them was forecast from
these benches—and even from this Dispatch Box—last year. They were:
… i. to reduce the actual number of part-time employees;
ii. to try to get part-time employees to work either fewer than eight hours a week than they had previously done in order to reduce the number of part-timers employed;
iii. to cease to employ the older part-time workers"—
and I am sorry that the Joint Parliamentary Secretary to the Ministry of Labour is no longer in his place to be reminded of that one:
iv. to increase the number of full-time employees to replace the part-time employees …
v. to try to cover the work done by former part-time employees, by requiring existing full-time staff to work longer hours.
Those were the five main reactions which employers in this industry found themselves having to take in order to cope with the problems thrown up by the Selective Employment Tax.
It is as well to remind the Committee of what the Financial Secretary told us last year when the Selective Payments Bill was in Committee. He referred to the Opposition's arguments, and said that they were based on the assumption
… that because employers have to pay this tax they will start to dismiss their part-timers. They will not"—
said the Financial Secretary:
because they will need the employment of these people just as they need it now."— [OFFICIAL REPORT, 20th July, 1966; Vol. 732. c. 805.]
The report of the E.D.C. for the distributive trades referred to a reduction in the actual number of part-time employees. Condemned utterly by events the Government's words are there seen to be.
Perhaps I might compare that statement also with the summary of the report. It is a brief paragraph that I should like to read in full, because it emphasises what a severe impact the tax has had on part-time employees in the service trades. Under the heading "Recommendations", paragraph 14 states:
The working party's inquiries have confirmed that so far as the distributive tiades are concerned, the selective employment tax falls disproportionately heavily on the employment of part-time workers, and that the effect of this is causing employers to get rid of part-time workers and to employ or seek to employ full-time workers to take their place. The EDC does not think this
is intended by those who devised the tax and the effect it is causing is contrary to the employment pattern which the Government.management and trades unions represented on the EDC wish to promote in the long-term interest of the industry and the economy as a whole.
What a sad memorial for the Selective Employment Tax so soon after its introduction. The simple fact is that the Government were proved wrong—completely, utterly and disastrously wrong. The tax has been responsible for a considerable dislocation of trade and for hardship to individuals—for the part-timers who have found themselves, as a result of the tax, on the dole and looking for work.
§ These facts should have become apparent to the Government last year—they were warned. But they should have become apparent even earlier than they did. It was interesting to hear the Joint Parliamentary Secretary to the Ministry of Labour in the debate we have just had saying that the tax had had no effect on the disabled. I have no doubt that in the absence of such a report as this on the distributive trades one would have had exactly the same argument used against this Amendment. The fact is that the Government just do not know the effect of the tax on the various industries it affects.
On 13th February last, in a Question for Written Answer, my hon. Friend the Member for Wycombe (Mr. John Hall) asked the Minister of Labour
… what evidence he now has that the imposition of Selective Employment Tax is having the effect of shaking out labour from service into manufacturing industries.
The Joint Parliamentary Secretary to the Ministry of Labour replied:
It is not possible, so soon after the inception of the tax. to make a precise distinction between the effects of S.E.T. and the results of other items of Government economic policy."—[OFFICIAL REPORT, 13th February. 1967; Vol. 741, c. 11.]
Perhaps in February that was not unreasonable. The refund had only just begun in manufacturing industry. The tax had been paid only for a few months. But those words of the Parliamentary Secretary were echoed like a refrain through Answer after Answer in succeeding months until only last month the hon. Member for West Ham, North (Mr. Arthur Lewis) asked exactly the same
Question. He asked the Ministry of Labour:
whether he is satisfied that the objectives of the Selective Employment Tax on moving workers from service industries into production industries have proved successful; and what are the numbers of works who have changed their employment from service to productive industry as a result of the operation of the tax.
The Parliamentary Secretary, months after the Answer to which I referred earlier, replied:
I have nothing to add to my reply to the hon. Member for Wycombe (Mr. John Hall) on Monday, 13th February."—[OFFICIAL REPORT, 9th May, 1967; Vol. 746, c. 204–5.]
Yet here was a tax which, in the words of the Government's White Paper, a considered statement of the objective of the tax:
will have a beneficial longer-term effect by encouraging economy in the use of labour in services and thereby making more labour available for the expansion of manufacturing industry.
The Government first denied that it would have an effect on employment in service industries. Then they said they could not say whether it would have an effect or not. Now they grudgingly admit that it seems to be having an effect. This is a sorry tale of muddle and mismanagement. Clause 19 goes part of the way to remedying the evils experienced in the last few months but it does not go nearly far enough. This is the unfortunate trend, this dismissal of part-time employees and their replacement by full-time employees, many of whom have come from the manufacturing industries. They have been shaken out of manufacturing industry as a result of the July measures of last year. If these part-timers are to be restored to employment their employers must be wholly exempt in respect of them.
We stand firmly by what the Economist wrote on 25th March:
The effect of S.E.T. so far has been to make it unprofitable to employ large numbers of part-time people and to leave employers to fight all the harder over the limited pool of full-time ones. As a matter of urgency the Chancellor should exempt from the S.E.T. system altogether anybody who works less than 21 hours a week, anybody who is over the age of 65, plus the blind, the handicapped and the disabled.
The Government have shown what they are prepared to do for the disabled— simply nothing. I hope that they will
take a more sympathetic view of the problem of part-timers where—the evidence cannot be controverted—Selective Employment Tax is having a damaging effect on employment prospects.
§ I will illustrate and reinforce the case in relation to two particular industries which, on statistics, employ a higher than average number of part-time employees. It so happens that I referred to both these industries in the debate on part-time employees last year when I was speaking from a back bench. I make no excuse for returning to them now because the case for examination of this problem is stronger now than it was then.
§ The two industries are warehousing as it affects the independent wholesaler, and laundries and dry cleaners. Warehouses are now suffering, as they were not suffering last year, from an added disability as a result of Selective Employment Tax. Originally when the tax was introduced the Ministry of Labour indicated that warehouses of all sorts, whether belonging to manufacturers or independent wholesalers, were to be treated as service establishments. All were to be regarded as paying the tax and eligible neither for refund nor premium.
§ 7.15 p.m.
§ This was notified to the industry by a letter sent by the Parliamentary Secretary to the Ministry of Labour in July, 1966. On 7th November the Ministry of Labour, as apparently it has power to do, by a simple act of ministerial dictat—simply by issuing a directive to its officers throughout' the country—directed that warehouses which were part of manufacturing establishments should be treated as manufacturing establishments however many miles they may be from the manufacturing premises. They were to be regarded as eligible for refund and premium, thus leaving the independent wholesaler out in the cold with no premium or refund. This reinforces the case, this unfair discrimination and competition, for granting complete exemption from employment tax for part-time employees.
This situation gave rise to strong and well justified protests on the part of the wholesaling trade. One of them was quoted in an article in the Sunday Times of 11th December. Frank Walters, chairman of Doncaster's Yorkshire Factoring,
the third largest motor factor in the country, was reported as saying:
Quite honestly, one can see neither justice nor any reason of national policy, except perhaps administrative convenience, for this decision.
His S.E.T. bill is £30,000. If his firm were part of a manufacturing complex he would receive £5,000 to £8,000.
I raised this matter at Question Time on 12th December. I asked why this had been done and what protests the Ministry had received. The then Parliamentary Secretary, now Minister of State, Department of Education and Science, explaining from whom there had been protests, said:
the separate storage establishments of a manufacturing firm are classified to the same heading of the Standard Industrial Classification as its manufacturing establishments and will therefore, provided they satisfy the conditions relating to non-qualifying activities, qualify for refund of Tax plus premium.
Why did the Minister change his view … is not this taxation by Ministerial dictat, and is it not grossly unfail ….
The hon. Lady replied, somewhat surprisingly:
The hon. Gentleman may not be aware that there was no public statement to industry on the original view, and that it was not the case that the Ministry made it clear that it wished to consider in detail this problem, which is a technical one."—[OFFICIAL REPORT, 12th December, 1966; Vol. 737, c. 23.]
That was slightly less than frank because, in a letter to retail organisations, the Minister said that he had indicated to the C.B.I, that manufacturers' warehouses would be under the same heading and he had transferred them from one heading in the Standard Industrial Classification to another.
§ My hon. Friend the Member for Worthing (Mr. Higgins) pressed the matter on 20th February and got no change out of the Government. Manufacturing wholesalers who employ a larger number of employees are able to compete unfairly with independent wholesalers. This is unfair competition of the worst kind. One can understand how readily and rightly this has given rise to righteous indignation. Some of those to whom I have talked about this matter have been reduced to an almost 1370 impotent fury, because there is nothing whatever that they can do about it.
§ I hope that this will be put right, perhaps by a return to the previous practice, or possibly by enabling wholesalers' storage establishments to qualify for the refund of premium. If that cannot be done, at least the Government can go part of the way and accept the Amendment, which would have the effect of exempting these wholesalers' part-time employees from the Selective Employment Tax.
§ The second Report is that relating to laundries and dry cleaners, which employ an even higher proportion of part-timers. This industry has had a very raw deal. It is increasingly facing competition from the housewife with her own washing machine. It is facing competition from laundromats and launderettes. It has lost the investment allowances, to which it was entitled. It has failed to qualify for the new investment grants. Now it has suffered the Selective Employment Tax. As a crowning blow, it was referred to the "Jones" Board for, in the face of all this, putting up its prices.
§ The laundry industry has been hit very hard by the Selective Employment Tax. Many hon. Members have been approached by laundries and dry cleaners operating in their constituencies complaining of the conditions in which they now have to operate—rising costs, a static or falling turnover, and a slashed profit margin. In all these things the Selective Employment Tax, particularly the Selective Employment Tax on the part-timer, has played a major part. This was adverted to by the "Jones" Report, by which I mean Report No. 20 from the National Board for Prices and Incomes.
§ The Deputy Chairman (Mr. Sydney Irving)
I think that the hon. Gentleman is out of order in referring to laundries on this Amendment. He is referring to an Amendment which has not been selected.
The quotation which I am about to make to the Committee will show the relevance of this case to the Amendment which we are discussing. On page 17 of Report No. 20 from the National Board for Prices and Incomes, relating 1371 to Laundry and Dry Cleaning Charges, there is this passage:Clearly, the ability of different establishments to use labour more economically will differ; the increase in gross costs resulting from the tax will also differ for different establishments, the increase being greatest for establishments employing a high proportion of part-time workers.The Report had earlier indicated that launderers and dry cleaners employ a high proportion of part-timers. The least that the Government can do to relieve these hard pressed industries is to exempt part-timers altogether from the effects of the Selective Employment Tax.
It would be possible to indicate the impact of S.E.T. on part-time employment in many other trades—particularly the tourist trade—but I will not weary the Committee further. I shall be very happy to leave my hon. Friends who represent constituencies where the tourist industry is a major one to deal with the effects of the tax on the tourist industry.
I have already quoted the Parliamentary Secretary to the Ministry of Labour as saying that the Government are unable to disentangle the effect of the Selective Employment Tax from all the other measures which the Government have taken. Yet there are thousands upon thousands of businesses throughout the country which could tell the hon. Gentleman only too clearly, just as clearly as the Economic Development Committee for the Distributive Trades has told him, that the tax is having a damaging effect on their businesses.
This tax has been condemned with a unanimity and a virulence of language which must have shocked even this impervious Government. The whole range of the Press has challenged the logic of the tax and has derided its ludricous anomalies. The comments of practical men in commerce have been no less pungent.
In an article on the effect of the Selective Employment Tax on the distributive and other trades, an eminent journalist, Anthony Harris, in the Financial Times on 25th January gave a couple of quotations from people in the distributive trade. The general manager of a supermarket chain is reported as saying this:We decided to take S.E.T. into our wages budget. It meant dropping some staff: that means longer queues at the check-outs and 1372 empty gaps on our shelves which take longer to fill.The personnel manager of a department store—I hope that the Chief Secretary will listen to this—is quoted to this effect:We persuaded a lot of our part-timers to go one week on, one week off instead of three days a week. That halves our S.E.T., and the odd weeks they sign on as temporarily unemployed.That is the sort of miserable nonsense to which the Government have driven perfectly respectable trades. For this the Government should be heartily ashamed of themselves. I have already quoted the Report of the Economic Development Committee for the Distributive Trades. That is a documentary critique of the whole tax. It strikes at the whole economic theory.
We have already indicated from these Benches and from this Dispatch Box that the Conservative Government will repeal this tax when we get back. It is a silly, damaging impost.
§ The Deputy Chairman
The hon. Gentleman is going much too wide of the Amendment. He is now on a general debate about the tax, which is not in order on the Amendment.
§ Mr. Jenkin
My last words were going to be these: but, if the Government are not prepared to repeal it, at least they can improve some of its most damaging anomalies, of which its incidence on the part-time employee is one. We believe firmly that the part-time employee should be wholly exempt from this tax. That is what the Amendment would achieve. I commend it to the Committee.
§ Mr. Norman Miscampbell (Blackpool, North)
I accept with alacrity the invitation of my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) to deal with the problems of the tourist industry, because the tourist industry is a major constituent industry in Blackpool. Blackpool is almost entirely a service town.
One can hardly think of an industry which is not in some way affected by this tax. When considering the incidence of the tax upon part-timers, it should be realised that Blackpool suffers unemployment in the winter at the rate of 8 per cent. and there is no alternative employment within 20 miles. The declared 1373 object of the tax, which was to shake people out from the service industries, would appear to be nullified.
The question of part-timers in the tourist industry was argued with force a year ago. It is pleasant to know, from what the Government are saying today, that we were at least half right. We assert that the incidence of this tax on part-timers in the tourist industry should be removed.
I want to deal, not with large hotels, although they, too, employ part-timers, but with the traditional, and now rapidly improving, small hotels and boarding houses which provide, for literally millions of working people in Lancashire and the north of England, happy holidays, not only in my constituency, but in other Lancashire resorts and in resorts elsewhere. These holiday makers come to typical boarding houses which are often run by the family, helped by part-timers, who are, and who have to be, brought in, often in quite large numbers, to keep the hotel or boarding house going through the busy season.
Nowadays the decision facing holiday makers is not whether to go to Blackpool, or to Lytham St. Annes, or to Skegness, or to Butlins.
Yes, or to Weston-super-Mare. Nowadays the real challenge to our resorts and the deciding factor as to whether we keep them going to provide the holidays which they have traditionally provided is the Costa Brava. If the cost of the employment of part-timers in the tourist industry rises, the cost to the country in foreign currency may well be high. Small boarding houses employing three or four part-timers, some of whom come in in the morning and some of whom come in in the evening, face a very great increase in their costs, because of this tax and for other reasons. This tax is increasing the cost of holidays in our traditional resorts, so that many people will choose to take a package holiday abroad at prices which are now very comparable to what must be charged at home. If employers of part-timers in the catering industry, in parks, in entertainment, and in small hotels, could be relieved of all payments of S.E.T., this would go some way to- 1374 wards alleviating the steadily increasing costs we have to meet in providing holidays at home.
I turn from an industry to something which must be entirely a service but which towns such as Blackpool unfortunately must provide in large numbers. Seaside resorts are not merely places where people enjoy their holidays. They are places to which people retire. Retired people live in their bungalows, small houses, or flats, where they set up their last home. But the time comes when they must go into nursing homes and be looked after, because their families are either not able to look after them or not near enough to do so.
§ 7.30 p.m.
§ The typical small nursing home in Blackpool—I imagine that it is the same in many other retirement areas—is run by one or two full-timers, perhaps one full-time nurse and one or two other people working full time. But the hard grinding work of looking after the elderly people in these cheap nursing homes all over the town—they are cheap, and they are very good—is done largely by part-timers.
§ These part-timers will, for example, come in and make breakfast in the morning, perhaps help to get the patients up and make the beds, and so on. Then they go away to their families for a time, having lunch at home, and then they will come in again in the evening. Various arrangements are possible, but that is a typical example. The essential point is that, without the help of these part-timers, it would simply not be possible to run these homes. The people are old and they are not really geriatric cases, but they are coming to the end of their days and they need special assistance and care. These homes must be provided because it is not possible to provide the same succour and help within their own families.
§ Yet these nursing homes, providing a last refuge for elderly people, for 13 or 14 guineas a week, which is really cheap nowadays, are being taxed, at the full rate so far and, as now proposed in the Bill, at half rate for part-time workers. This is a matter of sheer humanity. Unquestionably, this is one of the points on which the Government should change their mind and say that workers who 1375 come in to help in these circumstances should not be subject to the tax. Plainly, they are not likely to move into manufacturing. They are not suited to it. In any case, they are doing a job which is needed by the community, a service to the community, a service which our present social structure and pattern of family life cannot, in large measure, supply. On humanitarian grounds alone, apart from economic grounds—though the case is made on both—the Government should change their mind.
§ The need is great in areas such as mine where service industries predominate. The Government must change their mind on the question of part-time workers, and, may I add, Mr. Irving, although it is out of order, they should change their mind on the whole tax as well.
§ Mr. A. P. Costain (Folkestone and Hythe)
Like my hon. Friend the Member for Blackpool, North (Mr. Miscamp-bell), I represent a seaside constituency. The Chief Secretary will have observed that all hon. Members on this side who are anxious to speak represent seaside constituencies, because this is a special problem for the seaside constituency. My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin), in moving the Amendment, spoke of the excuses which the Government gave last year for not agreeing to some refund. He completely shot away any argument which they could put forward now for their present half-hearted proposal to get them out of trouble.
The problem has been dealt with thoroughly on the industrial side, and I shall direct attention to the personal side of it, the need for people to find employment. Just as there are elderly retired people who need help, there are elderly people living in areas such as mine who want work. They need to supplement their retirement pensions because of the added burdens which have come upon their personal and family budgets. Very often, these people have been employed on a marginal basis. Hotels and shops which wanted to maintain employment have kept them on, and, as they have grown older, these people have been kept on past the time at which they might have been dismissed because of their 1376 lower efficiency. But now, in many cases, the Selective Employment Tax has been the last straw.
The Government propose to give half the tax back. What an extraordinary thing to do. If they really want to encourage the elderly and part-timers to work they should go the whole way. Are they frightened that the level of unemployment may rise so much that they ought not to encourage part-time work? Is that at the back of their minds, while, at the same time, they want to take credit for giving a concession?
This half-hearted concession is not enough. It will not do enough to help our tourist trade from the point of view of, for example, service in our shops. I speak here as vice-chairman of the all-party Tourist Resorts Committee. I wish that we were able to develop this side of the question more fully, Mr. Irving, but you have been severe on the question of order and I shall not take it further. I just emphasise the need to give better service in our residential and retirement areas and better service to visitors. If we are to stop the exodus of people overseas, we must give better service in our hotels, boarding houses and shops.
§ The Chief Secretary to the Treasury (Mr. John Diamond)
§ Mr. Costain
I see the right hon. Gentleman nodding his head. Am I being too optimistic in thinking that he accepts that that should be done and that the Amendment is the way to do it? I shall sit down at once if that is so.
§ Mr. Diamond
I willingly assented to the hon. Gentleman's proposition that hotels must give better service.
§ Mr. Costain
This is the way to do it. The Government can help them to give better service by making it easier for them to employ people on a part-time basis.
§ Dame Irene Ward (Tynemouth)
I have listened with great interest to the admirable speech of my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) in moving the Amendment and to the speeches made in support of it. I always enjoy hearing the Treasury Bench torn to shreds. My hon. Friend the Member for Wanstead and Woodford was very courteous in his choice of language. I should not have been nearly as polite as he was.
1377 Mine is a constituency with several interests, and I have a seaside resort interest, too, in Whitley Bay. Not only is Whitley Bay a very well known tourist resort but it is attracting more and more conferences, a great many of them being trade union conferences and the like. People want to come there for their conferences, quite apart from holidays, because they like and admire our part of the world. In addition, there is in Whitley Bay, as there is in the constituency of my hon. Friend the Member for Blackpool, North (Mr. Miscampbell), an above average number of retired people. The Selective Employment Tax has been particularly hard on them and on part-timers.
Although I wish to be restrained in my language, and I know that we do not as a rule, and quite rightly, say anything in the House about the advisers to the Government, I cannot help pointing out that all our protests and warnings about the effect of the Selective Employment Tax on part-time workers have been reinforced by events and proved correct. This makes me wonder what has happened to the advisers at the Treasury. This is an important question for the economy as a whole. I have been in the House a long time, and I realise that most of the briefs from which Ministers speak are not their own, because they really do not know anything about the subject on which they are speaking.
§ The Deputy Chairman
Unless the hon. Lady is suggesting that the advisers should be part-timers, she is out of order in pursuing that matter.
§ Dame Irene Ward
Perhaps I may take that up, Mr. Irving, and observe that one of the chief Treasury advisers was a part-timer. I need not mention him by name, but that was the fact. I have only just heard that another one, an adviser to the Prime Minister, who probably has advised him when this matter has come up for discussion in the Cabinet, has just retired from being a full-timer to a part-timer. I do not think that I can be more in order in referring to the part-timer.
§ The Deputy Chairman
I am afraid that the hon. Lady is out of order, because the Government do not pay S.E.T. for their employees.
§ Mr. Webster
My hon. Friend has shown the great anomaly between special advisers who are part-time workers for Prime Ministers and those who try to help us in our constituencies to make life a little more pleasant rather than a little more unpleasant.
§ Dame Irene Ward
I am grateful for my hon. Friend's intervention. Perhaps it would be a good idea if the Treasury were to employ part-timers who knew something about the tourist trade and the retail trades, all of which were covered in the important report to which my hon. Friend the Member for Wan-stead and Woodford referred. What emerges from all this is that the full-timers are not competent to advise on part-time employment.
This raises another matter of great interest. It would be very much better if part-time people drawn from the ranks of those who know something about the tourist industry and about the retail trade—
§ The Deputy Chairman
I am sorry to interrupt the hon. Lady, but the Amendment refers to those part-timers for whom S.E.T. is paid, and I am afraid that she cannot discuss the matter which she is now raising.
§ Dame Irene Ward
I may have to sit down now, but perhaps I may be able to raise the matter on the Question, That the Clause stand part. Surely I must be in order in questioning the Treasury brief and the advice that has been tendered?
§ The Deputy Chairman
Let me help the hon. Lady. I do not want to restrict what she wants to say. As long as she makes a passing reference to this matter I think that it would be in order, but it must be only a passing reference.
§ Dame Irene Ward
It will be only a passing reference, but I do not see how the Treasury Bench can make against our Amendment a case which has been prepared by full-time people. The Minister's speech cannot be in order, if he is going to oppose our proposal, because he must be speaking from a brief which has not been prepared by anybody for whom the Government pays S.E.T.
One can argue things up and down dale from beginning to end. The Government have moved a step forward in 1379 helping part-time workers, and I hope that they will go a long way further by accepting the Amendment. The right hon. Gentleman and hon. Gentleman concerned have shaken my faith. Whether there are part-time workers or full-time workers in the Treasury, I could not care less, but the advice tendered to Her Majesty's Government by the Treasury has been very bad.
I want to raise one other point about part-time workers and S.E.T. It concerns the railways. I suppose that the main part of the British Railways does not pay S.E.T. but the railways must pay S.E.T. at the hotels. I have a great admiration for British Railways hotels. I very much enjoy going to the Great Northern Hotel or the Royal Station Hotel in Newcastle, where we are very well served, sometimes by full-time and sometimes by part-time staff. They are very nice, they give a friendly welcome to tourists, and they do all sorts of things to help in the interests of the economy. When one receives one's bill one also gets a little thing which says that S.E.T. is being added on. I presume that that is in order. Nobody complains, because one gets very good service from the hotels and from the part-time workers.
§ Mr. Burden
I am grateful to my hon. Friend for raising this point. I can assure her that a great many people do complain. I had a letter from a constituent complaining that 2s. 6d. had been added on the bill at a railway hotel for S.E.T. I sent the complaint to the Minister of Transport, who said that British Railways were in order in charging that. But there is a great difference when it comes to private industry putting it on anything.
§ 7.45 p.m.
§ Dame Irene Ward
I am grateful to my hon. Friend for putting my case for me. That was exactly what I was going to say. British Railways hotels can add S.E.T. and one presumes that they do it within the law, though one never knows whether the S.E.T. on the bill refers to part-time or full-time workers. As I have said, the railways hotels give a very good service.
I want to impress on the Treasury Bench—if the people on it do not mind taking from me what I am trying to say, 1380 even though I think nothing of their brains—that if retail traders, small independent nursing homes, small hotels and boarding houses, who must employ many part-time workers, started adding to their account a special charge for S.E.T. what an outburst of criticism there would be, and rightly so! Does anybody imagine that those people sitting on the Treasury Bench would back up those who are trying to do a good service to the tourist industry and to the old people who must go to the nursing homes, and the retailers doing their best to serve in those areas and to do a good job for the consumer? The Treasury Bench would not be interested. But the people on it are only too delighted if a nationalised service finds a way out, as the British Railways hotels have done.
§ The Deputy Chairman
The hon. Lady is far away from the Amendment. She is now discussing the question of whether a publicly-owned undertaking can put S.E.T. on the bill, as against what happens in other undertakings. But the Amendment is concerned with the payment of the rebate on S.E.T. for part-timers. I am afraid that she must return to the Amendment.
§ Dame Irene Ward
You are being extremely nice, Mr. Irving, but I find it as frustrating as anybody else that in this great House of Commons I cannot speak my mind today. There has been great difficulty over a year, after advice was tendered from this side of the Committee about the problem of part-time workers and the application of S.E.T. to them, all of which was rejected by the Government.
With great respect, I think that probably on these matters my sex gets a great deal more complaints than the people sitting on the Treasury Bench. There comes a time when one is nearly bursting with annoyance, and almost finds it impossible to say how stupid one thinks the Treasury Bench is. I shall be very glad to know who advised the Treasury Minister on this idiotic proposal, from which they must now retreat. They cannot retreat the whole way because they are rather like the Chinese; they must still save face. I regard this move as a sort of halfway-house concession. It is working on the Chinese philosophy, but the British do not work on the Chinese philosophy.
1381 We want our Amendment accepted, and we think that that would be the only fair way of dealing with the matter. Those who have been subject to S.E.T. for one year as part-time workers deserve better treatment from this ridiculous Treasury influence on matters about which it knows nothing.
§ Mr. Webster
My hon. Friend the Member for Tynemouth (Dame Irene Ward) made a modest and moderate speech on a subject about which she feels deeply. There is nothing part-time about her. She argues her case with great conviction. She spoke with feeling and humanity, in reference not only to this Amendment but the last one, about the elderly and the infirm. This Amendment certainly deals with something which has a great deal of humanity involved in it. This is one of the reasons that, although my hon. Friend remained calm throughout her speech, her calmness was possibly a little less than usual.
My hon. Friend spoke with vigour and compassion about a subject on which she feels very strongly. Selective Employment Tax is riddled with anomalies. I, too, have many hotels in my constituency, and it is notable that in this debate many seaside Members have spoken.
§ Mr. Webster
They have represented Whitley Bay, Folkestone, Blackpool and other resorts, and it is nice for a major resort like Weston-super-Mare to take part as well. It may be that we shall also be hearing about the problem as it afflicts Arbroath in Scotland.
My hon. Friend the Member for Tynemouth talked about railway hotels. One of the anomalies is that a privately owned hotel near Victoria Station has had to reduce service because of the S.E.T. It is impossible now to get room service unless one is an invalid. This is because of the tax and the difficulty of getting part-time people to come in and assist. Listening to her and to my hon. Friend the Member for Blackpool, North (Mr. Miscampbell), it struck me—but not in the case of Folkestone—that so many resorts, like Weston-super-Mare, are areas of seasonal unemployment.
§ Mr. Costain
I assure my hon. Friend that Folkestone has as much seasonal unemployment as Weston-super-Mare.
§ Mr. Webster
I am grateful to my hon. Friend for putting me right. I thought that the prosperity in that part of the country was a little more constant than in the West Country and in the North. Many holiday resorts are areas of seasonal unemployment.
This year already in the West Country we have had the great anxiety of the oil pollution from the "Torrey Canyon" and the Prime Minister's last attempt to be very resolute on this matter. Our difficulties have been acute. Bookings have fallen off considerably. People there were hoping for some relief after a hard and long winter with the highest level of unemployment for many years. Half a loaf has been given to us. It is not enough. My hon. Friend the Member for Tynemouth was right in pointing out the effect upon the service industries which, in these regional areas, are much dependent on part-time workers.
The hotel trade is served by other service industries, including the laundries. I see my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) with washing in his hand ready to give his view. The laundry trade employs a large number of part-time workers. It is afflicted by S.E.T. and the removal of investment allowances. When the laundries tried to put up their prices they were, as usual, referred to what our friends from Wales call "Jones the Price". The case went to the Prices and Incomes Board and the laundries were publicly lambasted by "Jones the Price".
§ Mr. Webster
I am grateful to my hon. Friend. The net result is that, following the activity of "Jones the Income" or "Jones the Price", the increase in prices was stopped—and this was in addition to the afflictions caused by direct Government action.
The hotel trade—which is the main trade in all our resorts—is served also by transport and other service industries, and large sections of these are manned by part-time workers. This is particularly so because it is to a pleasant resort with the 1383 salubrious air of, say, Whitley Bay, which is not always so fresh when the sea fret comes in, that people go to retire. Retired people, as a result of the Government's actions, resulting in the rise in the cost of living, including an increase of 10 per cent, in electricity charges and other things of that nature which are not referred to the Prices and Incomes Board, instead of having a pleasant retirement as they expected are having to go out to work on a part-time basis.
We attacked the Government last year for what they were doing to these people. This year the Government have been a little generous, but they should be very much more so with these areas, where there will be hardship this winter. That hardship will be caused by direct Government action. That is what we want to drive home. Last year, there was heavy unemployment in all these areas, and it was an exceptionally mild winter. I do not think that even our great Prime Minister can guarantee two mild winters, despite his Winter Emergency Committee, which was lucky to get away with a mild winter.
I am sure that the coming winter will not be so mild, and I assure the Chief Secretary that there will be hardship in the regions that we have been talking about. In the West Country, we have been very hard hit by what has happened. I did not quite catch what the right hon. Gentleman said about the hotel trade. He made some remarks about improving its standards. Those remarks were also made by the Chancellor at the Boat Show last year, and some of us who represent these people, knowing that the hotel trade is the first to admit that it is not perfect, resent heartily such criticism of it from people who have put the greatest burdens on it by increasing imposts of taxes which it is not allowed to pass on.
I remind the Chancellor that through the hotel trade we earn a great deal to help us with our balance of payments. Not only does it bring in business from abroad to "swinging London", despite the joylessness of the Chief Secretary, but when foreigners have been in the capital they often move on to the West Country, Blackpool, Folkestone or Whitley Bay or elsewhere, and enjoy the hotels there But if life is made difficult for 1384 hoteliers and they have to increase prices because of the S.E.T., then visitors will not come so readily.
Thus our balance of payments is affected adversely. It is also affected adversely if our own people find that they do not want to go to a domestic resort. We know that people have the attraction of going to the Costa Brava and elsewhere abroad and, let us face it, our climate is not the sunniest. We must do all we can to help the hotel trade to be efficient and serve the customer. But every time we do it we get another imposition from the Government and those of us in these areas are finding life very hard.
I want to come to a point which has not been developed to any great extent so far. My hon. Friend the Member for Tynemouth referred to some aspects of transport and to British Railways hotels. I want to refer to the bus operator who, although he is in a neutral band, has had life made hard for him. A large number of bus conductors operate on a part-time basis. The bus operators lost their investment allowances. During the proceedings of last year's Finance Act, we attempted to restore certain concessions and managed to achieve something and we thank the Government for that. Although the bus operators are in the neutral band, they still have to pay the revenue into the Treasury but they do not get back their money for months and this adversely affects the cash flow of the industry. If they were given a complete concession, it would be helpful.
Concessions in fuel duty have been given by the Government, after pressure —and I pay tribute to them for having bowed to that pressure—but there is still the problem of cash flow, because there is no rebate for several months. This is a service industry which has been adversely affected. The laundry, hotel and retail industries, like the bus industry, would be helped if this concession were made in full. A massive number of industries have a service aspect. We have dealt with that at great length, and I do not want to detain the Committee excessively about the service industries, but it must be remembered that in a sophisticated society it is the service industries which develop fastest, and the Government are still penalising them acutely.
1385 There are part-timers working in offices in the City of London, retired people who now find, because of the Government's actions, that their rates and cost of living have gone up and they have to seek part-time employment. It is very difficult for them to get employment. A professional or business man who, at the age of 50, because of some redeployment, loses his job, finds it very difficult to get that job back again, or an equivalent job. If a man at the age of 50, earning about £1,500 or £2,000 a year is on the labour market, he has great difficulty getting a job of an equivalent nature.
I have written to the Parliamentary Secretary to the Ministry of Labour about a professional man with excellent qualifications who has tried very hard, but it is difficult for him to find part-time employment in the West Country. Does he have to come to London to get a job? That would cost him much more than any benefit he might get from a part-time job. The regions are adversely affected.
We all know that the use of part-time conductors in public transport is prevalent, and it should be encouraged. The withdrawal of investment allowances, followed by the Selective Employment Tax, although in the neutral phase, is having an effect on cash flow. Even though there is repayment of fuel imposts after a time, the industry is very hard hit. This is at a time when the Minister of Transport is constantly saying that the motor car is an evil thing and that everyone should go by public transport. It shows what effect she has on the Cabinet about any subject but the doctrinaire policies which she loves. She waxes hot at anything like that and seems to get her way, but when it comes to an administrative matter to benefit transport itself, she is an utter failure, and her failure to induce the Government in this respect is another indictment of her failure. I hope that the argument so cogently put by my hon. Friend the Member for Blackpool, North (Mr. Miscamp-bell) and my hon. Friend from the miners' seaside resort will convince the Government to give way on this point and see some sense for the first time in this Finance Bill.
§ Mr. Burden
When this tax was imposed, we were told that it would transfer people from the servicing side of the economy to the manufacturing side. This 1386 has not happened. There has been such a big rise in unemployment that that first intention has failed. It may well be that because of that the Government have started to re-think some part of this tax, and this Clause is an indication that they have done so.
I am reminded that it was the right hon. Gentleman last year who stated, when a request was made for some reduction in the tax on part-timers, that it was utterly impossible. We now find one year later that it was not only possible, but that it is the same right hon. Gentleman who is in charge of the Clause today.
The effect of this tax on part-timers in the service industries has meant that many of them are being denied the extra money which they could well use and which they find increasingly necessary as a result of the constant rise in prices.
In the wholesale textile trade, in which I am interested, we are endeavouring, because of the economic circumstances imposed by the Government, to bring about economies. In many instances, it is preferable, because of the increase in general unemployment to employ people full time instead of part time. This emphasises the Government's failure to transfer fully employed people in the wholesale textile trade into manufacturing and increase the number of part-timers in that trade. If I may have a little attention—
§ Mr. Diamond
I apologise. My attention strayed for a moment. I have listened to every speech with the greatest care and attention. I have heard the arguments time and time again, but I am only too glad to listen to them for the twentieth time.
§ Mr. Burden
The hon. Gentleman is very courteous. I am reminded that the other night he boiled when he listened to some of my arguments, although he did not betray it very much. This is a case where I hope he will merely simmer and not boil.
I recall to the right hon. Gentleman the remarks of his hon. Friend the Member for Oldham, West (Mr. Hale) on another Amendment. He pointed out how the Co-op—and this applies to other retailers —found that there was a great increase in trade on Fridays and Saturdays and, in order to cope with the extra trade and 1387 give the public the service it had a right to demand, it was necessary to endeavour to recruit part-time labour. What happens? As soon as part-time labour becomes too costly, there is an effort to cut down and service is reduced. Because of reduction in service, many retail profits and wholesale profits are going down and the Government are losing more because of the lack of profitability of these businesses than they would if they abolished this tax entirely for part-time workers.
My hon. Friends have mentioned the classic case of part-time employment in the catering industry. I think that the right hon. Gentleman will agree that catering generally employs a large number of part-time workers to whom it is an extremely beneficial industry. The Government say that it is in the interests of the country and the economy that people should spend their holidays in this country. Although we have unfortunate weather, provided that they can get good service in hotels, people will do that—provided that the price of the hotel does not seem to be exorbitant. But hotels have had to cut down on even their part-time workers, because of the high cost involved, and in some cases they have had to cut down on the number of employees and impose higher charges on their guests.
The hotel industry is a large earner of foreign exchange. Many people visit this country from hard currency areas such as America. They do so despite the inclement weather which may face them. They do so because our hotels are comfortable and have been well staffed. But they can be well staffed only by the employment of part-time workers. Hotels could afford to employ part-time workers when they did not have to pay the Selective Employment Tax, but the services of many hotels and restaurants have had to be reduced and along with declining services there have often had to be increases in prices. If the services provided by our hotels to visitors from overseas are inferior, because of taxation, to the services provided by our competitors in Europe and if in addition our hotel prices are considerably increased, foreign visitors will be reluctant to continue to come here and to advise others to do so.
1388 The Government have largely admitted this case by halving the tax. If there is not substance in the argument, why has the tax been reduced? Why should it not also apply to the disabled as well as the ordinary part-time worker? The Government have admitted the case, and what an admission it is. How difficult it must have been for them to swallow their words of last year. How difficult they must have found it to do something this year which last year they said was completely and absolutely impossible. We may be reaching a time when the Government say that the difficult is something which they do today while the impossible is something which takes just a little longer. This has taken a year and, while the Chief Secretary may say today that it is impossible to refund the tax entirely in respect of part-time workers, we can hope that in a little less than a year the Government will have appreciated the necessity for removing the whole of this tax.
§ 8.15 p.m.
§ It is curious how the Government so often profess always to help the poor— it is the philosophy of the Labour Party that the poorer people in the community are those whom we should protect—and yet those who are employed part time in most industries are the most needy in the community. They are the old or the incapacitated, those who because of infirmity, or for some other reason, cannot obtain full-time work, or do a full day's work, or a full week's work. They, above all, are the people who need help in order to live a useful and comparatively full life.
§ I do not know whether a glimmer of understanding is reaching the Government, but they are now reconsidering the position which they maintained when they introduced Selective Employment Tax and they are making it possible for half the sum to be refunded. It is but a glimmer, but I hope that it will turn into something much brighter and that the right hon. Gentleman will say that the Government are prepared to accept the Amendment.
§ Mr. R. Gresham Cooke (Twickenham)
I entirely agree with the excellent speeches of my hon. Friends who represent seaside areas or areas near the seaside which have special problems, but 1389 this problem affects every residential area, one of which I have the pleasure of representing. In residential areas there were women employed part time in shops and laundries and offices who have now gone out of employment and who are of no use to the economy whatever. The whole philosophy behind the Selective Employment Tax a year ago was that the women of Twickenham, for instance, should rush madly out of the shops and offices to work in the foundries of Chiswick or in the motor works of Dagen-ham to produce exports.
§ In fact, the production of the foundries of Chiswick is seriously down and the motor works at Dagenham has been laying men off, so that even if those women wanted to take the long trip to Dagenham, they would not have been able to find jobs there. In fact, they are staying at home and doing nothing and it would be much better if they could be re-employed by the laundries and shops and offices which would like to take on part-time workers and which would do so if they did not have to pay Selective Employment Tax.
§ I emphasise that this is a national problem affecting every constituency and not just those of the West Country or seaside resorts. The Government should take this matter seriously. I prophesy that otherwise production will go down, that more little shops will go out of business, as they are now, particularly radio and television shops, and that this autumn there will be a serious increase in unemployment, particularly among part-time workers, and that the Government will be shocked by the rise in the unemployment figures.
§ Mr. John Tilney (Liverpool, Waver-tree)
I support what my hon. Friend the Member for Twickenham (Mr. Gres-ham Cooke) and my hon. Friend the Member for Gillingham (Mr. Burden) have said, and I particularly want to suggest to the Chief Secretary that he may not have thought about the part-time staff of the voluntary non-profit-making organisations, of which there are a considerable number.
§ Mr. Diamond
I very much hope that I shall have the privilege of listening to the hon. Gentleman's speech when we reach that Amendment.
§ Mr. Tilney
Unfortunately I understand that that Amendment has not been called. I am therefore suggesting that the part-time staff of these voluntary, non-profit-making organisations should be considered by him and the Treasury very carefully indeed, because they are helping the social services of the country in a major way.
Many of the organisations cannot afford a full-time paid staff. I know that the Financial Secretary, not so very long ago, was good enough to receive a deputation from the Women's Consultative Council. It was pointed out then that many of the organisations that make up that Council supplement the work of statutory educational and social services. It is representative of a very large body. No less than 19 members of that body supported the deputation which brought the Memorandum to the Financial Secretary.
These were bodies varying from the Co-operative Women's Guild, the Federation of Soroptomists Clubs, the National Union of Townswomen's Guilds and even the National Labour Women's Advisory Committee. I accept that neither the National Labour Women's Advisory Committee or for that matter, the Women's Advisory Committees of the National Union of Conservative and Unionist Associations would qualify for relief, and I also accept that some of the supporting bodies, like the National Federation of Women's Institutes and Townswomen's Guilds are registered as charities.
But there are others, and I hope that the Chief Secretary will bear these in mind. There is, for example, the Federation of University Women, the League of Jewish Women, the National Board of Catholic Women or even, and I believe that it is the senior organisation, the National Council of Women, all of whom are badly hit by this tax.
It is not only women's organisations which are affected. I have here a letter from the Overseas Service Pensioners' Association. It employs a certain number of part-time workers and it pays £350 per annum to help the work of the council and the executive of the Association. The only revenue that it can rely on comes from subscriptions and gifts from old servants of the Crown, who are frequently 1391 very badly off. These organisations help the State in a very major way.
They save the expense of paying additional professional social workers; they often pioneer projects in community care; they do much in hospitals; they run canteens; look after mental patients and visit homes for aged people. It is hardly a good advertisement to say that a large percentage, or a certain percentage, of the subscriptions to these bodies, given for charitable reasons, is syphoned off by the Treasury.
They do many useful jobs of work and I will not weary the Committee by going into them all. They help the State to save money—
§ The Deputy Chairman
Order. The hon. Gentleman is now making a plea for exemption in general for these bodies. I am afraid that he is getting a little far from the Amendment, which is concerned with part-timers, and I hope that he will relate his remarks to those part-timers.
§ Mr. Tilney
I understand, but nearly all of these bodies are jolly poor. They employ a considerable number of part-time workers, and that is why I am making a special plea for those part-time workers who help to pioneer projects which enrich the community and who are now penalised by the Treasury. I very much hope that when the Chief Secretary replies to the debate he will tell us that he has considered the point of view that I have put forward, that of the valuable service to the community by these organisations.
§ Mr. Diamond
Let me say straight away that I listened with great interest, and full understanding of the procedural difficulties, to the hon. Gentleman the Member for Liverpool, Wavertree (Mr. Tilney). I will bear in mind what has been said by him and all other hon. Members, whether related to this Amendment or not. I would particularly bear in mind what was said by the hon. Gentleman the Member for Wanstead and Woodford (Mr. Patrick Jenkin), who spoke of the indignation among his constituents about a particular incident and mentioned that no proper channel of communication was available. I do not know if this is a matter affecting my Department, or one of my colleagues, but I will gladly look into it and see if 1392 it can be alleviated. I will write to the hon. Gentleman.
Perhaps it will not be considered that I am being either discourteous to the Committee or that my remarks are out of order if I refer to the Amendment in page 28, line 31, to leave out "half". That is the Amendment put forward by the official Opposition to reduce the remaining Selective Employment Tax on part-time workers, which the Government proposed to reduce by half. The Opposition propose that the half should be extinguished, and that there should be no tax at all.
I should start by giving the background to this. The tax was introduced last year and my right hon. Friend the Chancellor promised that he would keep very carefully under review certain sensitive points, of which this was obviously one. That matter has been kept under careful review. There has been a report, to which hon. Gentlemen have referred, but economic circumstances have been such that it is quite impossible for me to say that the reason why the Government are coming forward with this Clause, I refer to the Clause and not the Amendment, is because they are satisfied that there is any major economic damage resulting from the imposition of the tax at a disproportionate rate on part-time workers.
Because of the economic situation, although the matter has been kept under review, it has been impossible to distinguish between the economic forces and to say that what has happened has been due to the Selective Employment Tax at a disproportionate rate. Nevertheless, we recognise the fact that it is a disproportionate rate. We have always recognised this and we recognise that there is a theoretical economic argument in favour of removing the disproportion. As the hon. Gentleman properly said, we have some evidence, namely, the report of the Distributive Trades Economic Development Committee. The distributive trades felt that the tax had an ill-effect on the employment of part-time workers.
We have never been inflexibly disposed against reducing the disproportion. We have said that we should be glad to keep it under review and have recognised the simple force of the arithmetic. But we were not able last year to conceive of 1393 any administrative method whereby, if we thought it could be reduced by half, we could satisfactorily do so. We made our views clear.
§ 8.30 p.m.
§ As the hon. Gentleman said, a Labour Government takes a little longer to do the impossible, and therefore we are doing it this year. The hon. Member for Wan-stead and Woodford took great pleasure in laying stress on this. I am grateful that he draws attention to the Government's willingness at all times to keep matters under review and to give full consideration, even possibly premature consideration, to possible economic causes before they get too far advanced and to try again and yet again to find suitable machinery for dealing with them. We think that we have found suitable machinery.
§ Our experience of the refund machinery has been very good. In view of some of the comments which it was thought proper to make in the Committee, I should like to congratulate publicly those civil servants in all departments who, tackling something entirely new, have been able to find an efficient, taxpayer-protecting method of refunding the tax in appropriate cases smoothly and satisfactorily. Because of that experience, we can properly move on and provide machinery for the refund of the disproportion—to take the "dis" out of "disproportion".
§ The Amendment deals with the removal of the remaining half. I have listened very carefully, as I always do, to every speech. I have heard a good deal of emotional outburst, but I have not heard one argument in favour of a remission of 100 per cent. as opposed to 50 per cent. Let me say why I think that 50 and not 100 per cent. remission is right. May I put the matter in perspective, because some speeches might have led us to believe that we are dealing with an enormous sector of the economy and that the effect of the tax has been terrible to a degree.
§ We are dealing with part-time employees in the service industries—about 2 per cent. of the labour force—90 per cent. of whom are women. For the sake of simplicity, I hope that the Committee will allow me to assume that the percentage of part-time women workers is 100, realising that a slight adjustment has to be made 1394 as the figure is in fact only 90 per cent. The tax payable is 12s. 6d. The argument is about 6s. 3d. per week. The average number of hours worked by those working between eight and 21 hours is approximately 17. Therefore, the cost per hour of the Amendment would be approximately 5d. It is this 5d. an hour which hon. Members who have alleged that this impost is destroying the hotel industry and I do not know how many other industries have been inveighing against. Fivepence an hour mounts up to 6s. 3d. a week, and it mounts up if an employer has many employees. I recognise that. But we have to keep a sense of proportion, and it is only right that, as no figures have been given, I should put the matter in its proper perspective.
§ The question therefore is: is it right to relieve 12s. 6d., or is it right to relieve, as the Government propose, 6s. 3d.? The argument which the Government have always accepted has been that it is a disproportion to charge a full rate on a part-time worker and that unless we are to have a particular subsidy or pick out a certain group for special help, the sensible thing, therefore, is to have a half rate for a part-time worker. I say "half" because that is broadly right. Indeed, the report of the Distributive Trades E.D.C., to which the hon. Member referred and on which he based his case although, I regret to say, he did not refer to its recommendation, recommended that the disproportionate effect of the tax on the use of part-time labour should be corrected either by reducing the tax to one-third or one-half for insured persons working between eight and 21 hours— that is, the category which we are considering—or by exempting from its incidence the part-timers employed for less than 16 hours a week.
§ We have chosen to accept the recommendation of the E.D.C. concerning the eight and 21 hours—as hon. Members know, there are very good reasons for going up to 21 hours and for the eight hours—and to relieve tax by one-half, which is broadly in line with the part-time worked, because these people are women and women do not normally work a full week even if they are employed full time. Broadly, therefore, in simple terms, it is in line with the hours worked and it would. therefore, be a proportionate tax.1395
§ I go further at once. It would, therefore, be precisely in line with Tory thinking and Tory proposals. The Tory proposals are that they do not like a Selective Employment Tax, and they have said so many times. They dislike the selectivity. On every Amendment, they ask for increased selectivity in a particular case. We will, however, forgive that inconsistency.
§ The Tories have said that they do not like a Selective Employment Tax and that they much prefer a payroll tax.
§ Mr. Diamond
The hon. Member, who moved the Amendment, says, "Hear, hear", agreeing that the Conservative proposal is for a payroll tax, which would mean a part-time tax on a part-time worker.
§ Mr. Burden
On a point of order. Are we not discussing the Amendment, Mr. Grant-Ferris? We are not discussing the hypothetical position of the Conservative Party regarding a payroll tax.
§ Mr. Diamond
The point which I am making is the inconsistency of the hon. Member for Wanstead and Woodford, who moved the proposal, which, I feel sure, will get the support of all his right hon. and hon. Friends in the Division Lobby. The proposal is not that it should be, as we suggest, proportionate—that is, exactly the same as a payroll tax in broad terms—but that it should be disproportionate and not as a payroll tax and that, therefore, if it were a payroll tax, special relief would be given for these part-time employees.
§ Mr. Patrick Jenkin
The right hon. Gentleman recognises, I am sure, that a common form of payroll tax is a tax based as a percentage of the payroll—that is, the remuneration. That would mean that it would be directly proportional all the way through, including the reduced rate for the part-time workers. The other form, a completely flat-rate payroll tax per head with no selectivity, is what I should like to see, to remove the selection. It is the selectivity against the service trade 1396 which is the source of the difficulty in this case and is the real evil of the tax.
§ Mr. Diamond
The hon. Gentleman cannot wriggle out of it in that way. He has not thought sufficiently carefully, as he normally does, about what he is saying. I am not talking about a poll tax. The Tories do not propose a poll tax— that is, a tax of so much per head irrespective of the wages. The Tories are proposing through their leader a payroll tax, and a payroll tax is one in which tax is paid proportionate to the wages. The nearest parallel is that with the Selective Employment Tax is a half-rate tax for half-time employees, as provided in the Bill, against which the Tories propose to vote as soon as I sit down—at least, I hope that it will be as soon as I sit down, because we have had a very long debate.
Therefore, I simply make the point that the natural justice in this case is that there should be a half-rate tax on part-time employees. It was not done earlier because we could not see a way of doing it. We have found a way, and we hope that the Committee will accept it. We think that what we are proposing is good sense and ties up with Tory policy. It is supported by the only authoritative report available, which is that of the Distributive Trades E.D.C. In those circumstances, we cannot recommend the Committee to accept this Amendment.
§ Mr. Costain
Before the right hon. Gentleman sits down, may I ask him if he did not hear the argument put forward that this Amendment would help the elderly, and is it not right that we should give special concessions to the elderly? That is what we are after.
§ Mr. Higgins
I shall not detain the Committee for very long, but the right on. Gentleman cannot expect to put up that sort of argument and hope that we shall move immediately to a Division. It is right that the points which he made should be answered.
It is clear that the tightness of the Government's Money Resolution which governs Amendments to the Selective Employment Tax has been designed to make it difficult to table Amendments. Given the strength of feeling which exists 1397 in the country about the tax, that is not surprising. Nor is it surprising that, from time to time, my hon. Friends have found it difficult to keep in order. This is a matter which raises great passion, but I shall seek to keep well within the rules of order when dealing with this Amendment covering part-time workers.
I do not think that the Chief Secretary's reply was at all satisfactory. It was almost as unsatisfactory as the presence of the Parliamentary Secretary to the Ministry of Social Security throughout this debate has been welcome. I am sure that his Department is rightly concerned about the effects which the inadequate Clause that we seek to amend is having on part-time workers, many of whom are in an elderly age bracket.
The Government's Clause merely makes the tax on part-time workers equal to that on workers as a whole. We pointed out clearly last year, that, effectively, there was a double tax on part-time workers under the arrangements which we were considering and, therefore, that there was a case for at least bringing them into line with other workers by halving their rate. We are glad that the right hon. Gentleman has recognised the strength of that argument —[A RIGHT HON. MEMBER: "It was conceded."] It was conceded, but the right hon. Gentleman sought to wriggle out of it by saying that it was not possible administratively. We find now that it is possible.
If it is possible to reduce the figure to half, it is possible to eliminate it completely. We suggest that there is a good case for doing so, and I wish briefly to deploy the arguments in favour of that course.
My hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) made a number of points about voluntary and non-profit-making institutions, and certainly they need to be taken into account. However, the bulk of the argument has turned on part-time workers in the distributive trades and in hotels. A reduction of the kind which we suggest will do something to stimulate the employment of part-time workers. The right hon. Gentleman tried to bring in a complicated argument about what Conservative policy was on this matter, but he must understand that we are against the 1398 tax absolutely and have a complete alternative proposal. That does not mean that the discrimination which he is now employing in this tax could not be made rather less bad by Amendments of this kind. If we are considering the case from scratch, that is a different matter. The right hon. Gentleman knows that his case is based on well-known logical fallacy, and he cannot come before the Committee with that kind of argument.
§ 8.45 p.m.
§ My hon. Friend pointed out that due to an arbitrary Ministry of Labour decision, there is gross discrimination between warehouses which are integrated with a concern and those which are independent. Both depend considerably on part-time workers, but integrated warehouses receive the premium whereas independent warehouses pay the tax. In fact, the economic argument is very much in favour of the independent warehouses, because they are not related, by and large, to a fairly small-scale single undertaking but to a larger group and thus have the efficiencies of economy of scale.
§ On hotels, I will not give "commercials" for my constituency as others have done, but I reinforce their argument that this industry is a big dollar and export earner. Therefore, anything which raises hotel costs affects the balance of payments adversely, particularly given that the import content of the industry, apart from certain labour requirements, is low.
§ The hon. Gentleman said that we were arguing about only 5d. an hour, but it is nevertheless important to people in small boarding houses and hotels. Anyway, if it is so small, why is it so difficult to accept the Amendment? A silly feature of the S.E.T. is that we are not simply exempting people but collecting the money and then refunding it and all this, on his own argument, for 5d. an hour on part-time workers.
The point is summed up in a letter which appeared in the Sunday Times on 6th November:
Just how ludicrous the situation has grown can be judged by the attitude of British Rail hotel executives, faced with a £300,000 bill for SET. 'If we lose men,' says a spokesman, ' our standards fall, customers vanish and profits take another dive. And, anyway, a large proportion of them are foreign. If they leave, they have to return to the Ministry of Labour who could send them all back to Italy.
How's that going to help the factories in the Midlands?'.
But many of those working in hotels are citizens of this country and often they are part-time workers.
We therefore believe that there is a strong case for the Amendment which would help the tourist trade and improve the balance of payments. My hon. Friend1400
§ said that there was no reason why the Government should not now accept the Amendment from a technical point of view, and I therefore hope that my hon. Friends will join me in the Division Lobby in support of it.
§ Question put, That "half" stand part of the Clause:—
§ The Committee divided: Ayes 158, Noes 105.1401
|Division No. 355.]||AYES||[8.49 p.m.|
|Anderson, Donald||Hale, Leslie (Oldham, w.)||Mitchell, R. C. (S'th'pton. Test)|
|Archer, Peter||Hamilton, William (Fife, w.)||Moonman, Eric|
|Bacon, Rt. Hn. Alice||Hamling, William||Morgan, Elystan (Cardiganshire)|
|Bagier, Gordon A. T.||Harper, Joseph||Morris, Alfred (Wythenshawe)|
|Barnett, Joel||Harrison, Walter (Wakefield)||Morris, Charles R. (Openshaw)|
|Beaney, Alan||Hattersley, Roy||Morris, John (Aberavon)|
|Bennett, James (G'gow, Bridgeton)||Hazell, Bert||Moyle, Roland|
|Bidwell, Sydney||Heffer, Eric S.||Noel-Baker, Francis (Swindon)|
|Blackburn, F.||Hilton, W. S.||Norwood, Christopher|
|Blenkinsop, Arthur||Hobden, Dennis (Brighton, K'town)||Ogden, Eric|
|Booth, Albert||Hooley, Frank||O'Malley, Brian|
|Boston, Terence||Horner, John||Oram, Albert E.|
|Bottomley, Rt. Hn. Arthur||Houghton, Rt. Hn. Douglas||Orbach, Maurice|
|Bradley, Tom||Howarth, Harry (Wellingborough)||Orme, Stanley|
|Bray, Dr. Jeremy||Howell, Denis (Small Heath)||Padley, Walter|
|Broughton, Dr. A. D. D.||Howie, W.||Page, Derek (King's Lynn)|
|Butler, Herbert (Hackney, C.)||Huckfield, L.||Parker, John (Dagenham)|
|Callaghan, Rt. Hn. James||Hughes, Emrys (Ayrshire, S.)||Pavitt, Laurence|
|Carter-Jones, Lewis||Hughes, Hector (Aberdeen, N.)||Pentland, Norman|
|Castle, Rt. Hn. Barbara||Hughes, Roy (Newport)||Perry, George H. (Nottingham, S.)|
|Chapman, Donald||Hunter, Adam||Prentice, Rt. Hn. R. E.|
|Coleman, Donald||Jackson, Colin (B'h'se & Spenb'gh)||Price, Christopher (Perry Barr)|
|Concannon, J. D.||Jackson, Peter M. (High Peak)||Price, William (Rugby)|
|Crawshaw, Richard||Janner, Sir Barnett||Reynolds, G. W.|
|Crosland, Rt. Hn. Anthony||Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)||Richard, Ivor|
|Crossman, Rt. Hn. Richard||Jenkins, Hugh (Putney)||Roberts, Gwilym (Bedfordshire, S.)|
|Darling Rt. Hn. George||Johnson, Carol (Lewisham, S.)||Robinson, W. O. J. (Walth'stow, E.)|
|Davies, Ifor (Gower)||Jones, T. Alec (Rhondda, West)||Roebuck, Roy|
|Dewar, Donald||Kerr, Dr. David (W'worth, Central)||Rose, Paul|
|Diamond, Rt. Hn. John||Kerr, Russell (Feltham)||Rowlands, E. (Cardiff, N.)|
|Dickens, James||Lawson, George||Ryan, John|
|Doig, Peter||Leadbitter, Ted||Shaw, Arnold (Ilford, S.)|
|Donnelly, Desmond||Ledger, Ron||Sheldon, Robert|
|Dunwoody, Mrs. Gwyneth (Exeter)||Lee, John (Reading)||Silkin, Rt. Hn. John (Deptford)|
|Dunwoody, Dr. John (F'th & C'b'e)||Luard, Evan||Slater, Joseph|
|Eadie, Alex||Lyon, Alexander W. (York)||Small, William|
|Ellis, John||Lyons, Edward (Bradford, E.)||Snow, Julian|
|Ensor, David||McBride, Neil||Symonds, J. B.|
|Evans, Albert (Islington, S. W.)||MacColl, James||Thomson, Rt. Hn. George|
|Evans, loan L. (Birm'h'm, Yardley)||MacDermot, Niall||Tinn, James|
|Faulds, Andrew||Macdonald, A. H.||Wainwright, Edwin (Dearne Valley)|
|Ferryhough, E.||McKay, Mrs. Margaret||Walden, Brian (All Saints)|
|Fletcher, Raymond (Ilkeston)||Mackenzie, Gregor (Rutherglen)||Walker, Harold (Doncaster)|
|Fletcher, Ted (Darlington)||Mackie, John||Wallace, George|
|Foot, Sir Dingle (Ipswich)||Mackintosh, John P.||Wellbeloved, James|
|Foot, Michael (Ebbw Vale)||McMillan, Tom (Glasgow, C.)||Wells, William (Walsall, N.)|
|Ford, Ben||McNamara, J. Kevin||Whitaker, Ben|
|Fraser, John (Norwood)||MacPherson, Malcolm||Whitlock, William|
|Gardner, Tony||Marsh, Rt. Hn. Richard||Williams, Alan Lee (Hornkurch)|
|Gray, Dr. Hugh (Yarmouth)||Maxwell, Robert||Winnick, David|
|Gregory, Arnold||Mellish, Robert|
|Grey, Charles (Durham)||Mendelson, J. J.||TELLERS FOR THE AYES:|
|Griffiths, David (Rother Valley)||Millan, Bruce||Mr. Alan Fitch and|
|Griffiths, Rt. Hn. James (Llanelly)||Miller, Dr. M. S.||Mr. Harry Gourlay.|
|Alison, Michael (Barkston Ash)||Brewis, John||Craddock, Sir Beresford (Spelthorne)|
|Allason, James (Hemel Hempstead)||Brinton, Sir Tatton||Crouch, David|
|Bessell, Peter||Bryan, Paul||Cunningham, Sir Knox|
|Blaker, Peter||Buchanan-Smith, Alick (Angus, N & M)||Davidson, James(Aberdeenshire, W.)|
|Body, Richard||Bullus, Sir Eric||d'Avigdor-Goldsmid, Sir Henry|
|Boyd-Carpenter, Rt. Hn. John||Burden, F. A.||Dean, Paul (Somerset, N.)|
|Boyle, Rt. Hn. Sir Edward||Corfield, F. V.||Deedes, Rt. Hn. W. F. (Ashford)|
|Braine, Bernard||Costain, A. P.||Drayson, G. B.|
|Eden, Sir John||Jennings, J. C. (Burton)||Royle, Anthony|
|Elliott, R. W. (N'c'tle-upon-Tyne, N.)||Kimball, Marcus||Russell, Sir Ronald|
|Errington, Sir Eric||King, Evelyn (Dorset, S.)||Scott, Nicholas|
|Fletcher-Cooke, Charles||Kirk, Peter||Shaw, Michael (Sc'b'gh & Whitby)|
|Fortescue, Tim||Knight, Mrs. Jill||Sinclair, Sir George|
|Foster, Sir John||Langford-Holt, Sir John||Smith, John|
|Clover, Sir Douglas||Lloyd, Ian (P'tsm'th, Langstone)||Stodart, Anthony|
|Grant, Anthony||McAdden, Sir Stephen||Summers, Sir Spencer|
|Gresham Cooke, R.||Macleod, Rt. Hn. Iain||Tapsell, Peter|
|Griffiths, Eldon (Bury St. Edmunds)||Macmillan, Maurice (Farnham)||Taylor, Sir Charles (Eastbourne)|
|Grimond, Rt. Hn. J.||Maydon, Lt.-Cmdr. S. L. C.||Taylor, Edward M. (G'gow, Cathcart)|
|Gurden, Harold||Mitchell, David (Basingstoke)||Taylor, Frank (Moss Side)|
|Hall, John (Wycombe)||Monro, Hector||Temple, John M.|
|Harris, Frederic (Croydon, N. W.)||More, Jasper||Thatcher, Mrs. Margaret|
|Harris, Reader (Heston)||Morrison, Charles (Devizes)||Tilney, John|
|Harrison, Brian (Maldon)||Mott-Radclyffe, Sir Charles||Turton, Rt. Hn. R. H.|
|Harrison, Col. Sir Harwood (Eye)||Noble, Rt. Hn. Michael||Walker, Peter (Worcester)|
|Hastings, Stephen||Nott, John||Ward, Dame Irene|
|Heald, Rt. Hn. Sir Lionel||Osborne, Sir Cyril (Louth)||Webster, David|
|Higgins, Terence L.||Page, Graham (Crosby)||Whitelaw, Rt. Hn. William|
|Hiley, Joseph||Page, John (Harrow, W.)||Wilson, Geoffrey (Truro)|
|Hogg, Rt. Hn. Quintin||Pardoe, John||Worsley, Marcus|
|Holland, Philip||Powell, Rt. Hn. J. Enoch||Wright, Esmond|
|Hordern, Peter||Price, David (Eastleigh)||Wylie, N. R.|
|Hunt, John||Prior, J. M. L.||younger, Hn. George|
|Iremonger, T. L.||Pym, Francis|
|Irvine, Bryant Godman (Rye)||Ramsden, Rt. Hn. James||TELLERS FOR THE NOES:|
|Jenkin, Patrick (Woodford)||Rossi, Hugh (Hornsey)||Mr. Reginald Eyre and|
|Mr. Timothy Kitson.|
§ Mr. R. H. Turton (Thirsk and Malton)
I beg to move Amendment No. 200, in page 29, line 7, at the end to insert:(2) Notwithstanding the provisions of subsection (1) above, in respect of persons employed by a fee-paying school the Minister shall make a payment equal to the tax paid in respect of persons who do not pay surtax.This Amendment raises the whole question of the incidence of the Selective Employment Tax on education. The operation of the Guillotine last year prevented a debate on this subject, so I will, if I may, sketch in the background of the present position. At present, the Selective Employment Tax is refunded in respect of staff employed by schools managed by local education authorities and the staff of all schools that are charitable trusts, but it is not refunded in respect of staff at schools coming into neither of those categories. That raises two questions, the first being: is education a social service? If it is, it is clearly quite reactionary and uncivilised to tax it. Secondly, is it right to levy a tax on the staff of some schools without refund, but to refund it in respect of staff of other schools?
The discrimination over the refund of tax in education is quite haphazard and unfair. In order to comply with the strict terms of the Financial Resolution I have had to draft my Amendment so as to limit its scope to staff earning below the Surtax limit, but I can assure the Committee that few if any of the staff, 1402 of the independent schools belonging to the Association of which I am president are fortunate enough to be excluded from the provision by being within the Surtax limit.
During the nine months of the operation of the tax the arbitrary nature of its provisions has been exposed. The figures I give are accurate, I believe, but I know that the Financial Secretary will correct me if they are not. In respect of about half the independent schools that are recognised as efficient the tax has been refunded, whilst in respect of the other half it has not been refunded. In a number of schools registered but not recognised as efficient, the tax has been refunded, but in the other cases it has not. This is an anomalous position. If there is any merit in the Ministry's system of classification of schools as registered and recognised as efficient, this shows that the arbitrary discrimination under Selective Employment Tax is both unsound and bad for education.
§ 9.0 p.m.
§ In the last few months since Selective Employment Tax has been in operation it has been the cause of the closure of a number of schools. If it continues more schools will have to close. Unfortunately, the incidence of the tax is hardest on the better schools. Schools which give a wider range of teaching facilities have to bear a far heavier burden of tax than schools which have not such a wide range of facilities. A school which has classes 1403 in different foreign languages and staff employed for that purpose has a burden of tax which is a great deal higher.
§ It is also particularly harsh on independent schools which are boarding schools and have the necessity to employ a great many more staff than day schools. It has been the experience that fees for independent schools which are boarding schools have had to go up far higher proportionately than fees for independent day schools. That is especially unfortunate at present when there is a great shortage of boarding school accommodation. I think I am right in saying that only two local education authorities provide boarding school facilities. The tax is having a damaging effect on boarding school facilities.
§ This is a very grievous drawback. In many cases children, either because of home background or parental occupation, have to receive boarding school education. I am glad to see the Under-Secretary of State for Education and Science present. Local education authorities do not provide boarding education for children and they have to go to schools in the independent sector. Those schools are now closing because of the operation of the tax.
§ There is also the problem of children from Commonwealth countries or whose British parents are serving abroad. There is a great need for boarding schools for their education. The axe of Selective Employment Tax is falling harshly and unequally in this sector. Schools which can get themselves within the terms of a charitable trust get the refund, but those which for reasons of history, or endowment, or the nature of the tenancy of the school are not able to become charitable trusts, are so penalised that in many cases they have to close.
§ For these reasons, I move this Amendment which is designed to remedy a muddle created by the Selective Employment Payments Act. If it cares for the future of the country, this Committee must stand by the principle of no tax on education. That is an essential principle from the social aspect. The tax at its present level is penalising certain children, certain parents and certain schools on the purely arbitrary ground of whether a school can or cannot bring 1404 itself under the Charities Act. This Amendment would remedy that in a suitable way.
§ Mr. A. H. Macdonald (Chislehurst)
I have listened to the debates on most of the Amendments so far. Most of the Amendments have had the common objective of seeking to reduce the burden of taxation on a particular sector of the economy or of the people. To redress the balance, I have today tabled a new Clause which seeks to increase taxation on a certain sector.
§ Mr. Macdonald
Many of the Amendments have been moved with great cogency. So great was the cogency with which an Amendment was moved last night that I was glad that it was not pressed to a Division, otherwise I might have been somewhat embarrassed. The Amendments have been put forward on behalf of various sectors of the economy, many of them very deserving. It must have been difficult for the Treasury Bench to determine a proper sense of priorities.
All the Amendments have been moved persuasively until now. I listened with astonishment to the suggestion that this sector of the economy should be singled out for favourable treatment. The right hon. Member for Thirsk and Malton (Mr. Turton) asked whether a school is not a social service. The schools he had in mind are not social services. They are business enterprises and should be taxed accordingly. I cannot think that at this time this sector of the economy should be singled out for favourable treatment.
Not long ago a very unfortunate case arose affecting a private fee-paying school. The case was reported in the Press. I shall not dwell upon the details. I am far from suggesting that every fee-paying school is of the same character. However, there is the fact and I do not see why these schools should be singled out for favourable treatment.
Last Saturday I had a conversation with a man in my constituency who teaches at a grammar school which is likely to be affected by secondary reorganisation plans. I will not go into the merits of that policy. The teacher spoke to me because he was aggrieved because criticisms had been made that 1405 he was defending some sort of privilege. The point he made very strongly was that he and his colleagues at the school taught there precisely because they did not want to maintain privilege: and, though all of them could easily have obtained positions at fee-paying schools, they deliberately did not do so because they wanted to maintain the standard of education provided by public authorities. That is a standpoint with which I have a great deal of sympathy. I went to a fee-paying school. I know very well the spirit of class distinction which is fostered at these places. I do not say deliberately fostered, but fostered it certainly is, and I regard it as thoroughly undesirable.
When the right hon. Gentleman said that some of these schools were being forced to close down, particularly those with large numbers! of employees, it occurred to me that it is just those schools which are undesirable. While we have a State system under which we have to accept classes of 30, 40 or even more, it is a monstrously uneconomic use of teachers to perpetuate the existence of private schools where there are relatively small numbers in classes.
For those reasons, I cannot think that this Amendment, of all the Amendments put before us, is the one which we should support.
§ Mr. Evelyn King (Dorset, South)
It is tempting to follow the hon. Member for Chislehurst (Mr. Macdonald) and to indulge in a debate about the merits of private education or otherwise, but, save for a few comments, I shall avoid that temptation. I hope that the hon. Gentleman will allow me to correct him at least on one point. He is under the impression that financial advantage derives to the proprietor and is lost to the State when a pupil is privately educated. Precisely the opposite is true. A boy or girl educated at State schools for 10 years, which is about the average, costs the State over £1,000. For every child who goes to a private school, the State is saved that £1,000. Therefore, purely from the narrow financial standpoint, the education of any boy or girl at a private school is a bargain for the State, and any concession made under this Amendment would only slightly affect that immensely advantageous bargain which 1406 the State has. Let us nail that financial argument right away. It is wholly false.
Again, on the education side, I remind the hon. Gentleman—I know that there are many who take his view—that it is one of the principles of the United Nations, to which this House and the country assented, that parents shall have the right to choose the education for their children. The hon. Gentleman may think-that many parents are wrong, and I assume, if he likes, that they are wrong. But, whether they be right or wrong, they have the right to make that choice. If hon. Members opposite propose to make private education either illegal or disadvantageous, they should remember the principles of the Charter of the United Nations to which they so freely subscribe.
The hon. Gentleman spoke as though all parents had a choice in the matter. They do not. There are many parents, far more than he realises, who live overseas, who serve in Commonwealth territories, in Europe or elsewhere, who are divorced, or who live in small flats in London, who have no choice but to send their children to a boarding school. The State does not provide even enough boarding school accommodation to meet the essential needs. I therefore hope that the hon. Gentleman will take it from me that this is an essential point. Indeed, to a large extent the educational system would break down and parents would not have the choice which the hon. Gentleman sought to deny by so unwise a speech.
§ 9.15 p.m.
§ That is sufficient on the educational side, on which I had not intended to dwell for so long. The effect of the Amendment is to encourage those who control private schools of all kinds to have as large a staff as practicable and as small a class as possible. I have thought that both sides of the Committee would think that that was desirable, and if it is thought desirable, the Amendment has substantial merit.
§ My final point concerns the inequity of the present arrangement. Even if one accepts everything the hon. Gentleman said, the present tax arrangement is wholly inequitable because it does not do what he thinks. It discriminates on no basis of common sense between one school and 1407 another. If he takes the preparatory school section, to which the Amendment principally refers, he will find that about half our schools are charities or companies limited by guarantee which are registered as charities. They have the full benefit of the rebate. The other half do not happen to have that particular company formation and are therefore robbed of the benefit. No one suggests that the educational merits of one are superior to the other. It is simply a matter of luck.
§ Therefore, first upon educational grounds, secondly upon financial grounds, and thirdly upon grounds of pure necessity, these schools should be encouraged. The law as it stands is inequitable, unjust and unwise.
§ The Financial Secretary to the Treasury (Mr. Niall MacDermot)
I shall not be drawn into the educational argument which the hon. Member for Dorset, South (Mr. Evelyn King) has been deploying. But in his so-called financial argument of the alleged £1,000 saving in respect of each child I do not know what allowance he has made for the considerable tax allowances which are involved in different ways.
The hon. Gentleman says that there is the right to choose, and it is very important to have that right. It is a much greater right among those who can afford to send their children to fee-paying schools than among those who cannot. For the great mass of people in this country, I am afraid, the right, although it exists in law, is very narrow if it exists at all.
Let us return to the Amendment which the right hon. Member for Thirsk and Malton (Mr. Turton) moved with a clarity, brevity and relevance which are a model to us all, and a reminder of how the Finance Bill Committee debates should be conducted. He put two questions at the outset of his argument. I shall come direct to them, because they go right to the heart of the matter. First, he asked if education is a social service, and, if so, if it is not reactionary to tax it. Secondly, he asked, if it is right to grant a refund for some schools why is it not right to grant it for others.
It is on what he considers to be the proper answers to those questions that he argues for the Amendment. My answer 1408 is the contrary to his. I agree that education in general is a social service, and that most education in this country is provided as a social service and paid for from public funds. But a part of education is operated on a commercial basis and is already subject to taxation in various forms. There is no general principle for exempting it from tax.
I do not consider it reactionary to tax commercially run education. One can think of many highly successful commercial enterprises, not particularly in the range of fee-paying schools the right hon. Gentleman had in mind, but which are nevertheless fee-paying schools—for example, commercial and secretarial colleges which are run as highly efficient and profitable commercial organisations. I do not see why they should not be taxed.
The right hon. Gentleman's second question was that, if it is right to grant a refund for some schools, is it not right for others? A refund is granted for some schools because they are charities. So far as the vast bulk of schools—the maintained schools—is concerned, in effect there is reimbursement from public moneys because there is no other source from which it could be obtained. The schools he has in mind are the private independent schools which have the good fortune to be charities or have been able to bring themselves, or were founded in such a way as to be, within the law of charities. They have benefited from this exemption.
The Committeee will remember that last year some of my hon. Friends moved an Amendment to deprive these schools of the advantage they receive as charities and that I pointed out that we were not able to make this distinction because it would be wrong to try to put upon the Chancellor the task of picking and choosing among charities which were deserving of refund and which were not.
§ Mr. Pardoe
It was not any of the hon. and learned Gentleman's Friends who moved that Amendment to exempt public schools from being regarded as charities. It was I.
§ Mr. MacDermot
I apologise to the hon. Gentleman. I recall that it was indeed he. But the theme he started was quickly picked up by a number of my hon. Friends and we had a short but lively debate which I remember well as 1409 one of the less tedious parts of our proceedings last year. It was almost the only debate from my point of view which was not tedious. We suffered long, I assure the Committee, last year on the Treasury Bench.
The exempted schools are not picked out because they are worthy of a refund but because they are charities, and charities as a class have been accepted, and were accepted by the Chancellor last year, as being entitled to a refund. If we were at once to accept the principle that any body or class of organisation, of which some were charities and others were not, should be entitled to the same exemption, we should be extending the charity exemption far beyond what it is, and it is fairly wide already.
Again, this would be putting upon the Chancellor the impossible task of trying to pick and choose those which were worthy bodies and should be entitled to exemption and those which should not. All this comes back to the basic heresy which comes up so often—the assumption that when the Chancellor chooses to impose a tax on some body or activity, he is making a moral judgment in some way against it. That is not so.
This tax is levied upon these independent schools because they are operating as commercial organisations providing a service and therefore fall within the general services to which the tax applies. They do not fall within an accepted category for exemption. From the arguments which have been deployed, we do not see that any sufficient case has been made out for saying that a special exemption should be made in their case.
§ Mr. Costain
The hon. Member for Chislehurst (Mr. Macdonald) made a typically Socialist speech about privilege in education. We never expect to make much impression on the Treasury Bench during Finance Bills. We have found on previous Amendments that arguments which we have put forward one year generally bear fruit the next. What surprises me is that my right hon. Friend, the Father of the House, should have thought that an Amendment, even so well moved, would have any effect, because
§ of the prejudice of the Socialists against private education.
§ I accept what the Financial Secretary says about this being a social service. It is more than a social service; it is a manufacturing process. In the process of education we are producing some of our finest assets. If a bonus can be given for manufacturing a computer, why cannot a bonus be given for manufacturing a human computer which will be a greater asset? It is wrong for the hon. Member for Chislehurst to say that we are giving a special privilege. We are trying to arrange for this form of education to get a fair share of the bounty.
§ This is a matter of exports. In Folkestone there are boarding schools which exist because they are educating the children of British people abroad. The hon. Member made the point that there are a number of children whose parents are abroad and children of foreign parents at these schools. I should like the Treasury to find out what revenue is being earned from educating overseas children in private schools in this country. If these schools are put out of business, we shall lose this income of foreign currency. However, it is no good arguing this case long in view of the prejudice of the Government Front Bench.
§ Mr. Turton
I have always admired the debating facility of the hon. and learned Gentleman the Financial Secretary, but I am surprised that he should have used that argument. We are not talking about taxation on profits. Most of these schools are non-profit-making. Selective Employment Tax is devoted to attempting to shift labour from the service industries into manufacturing. Education is the manufacture of character. For that reason, education should be exempted from the tax. That is the main purpose of this Amendment and I hope that my right hon. and hon. Friends will follow me into the Lobby.
§ Question put, That those words be there Inserted:—
§ The Committee divided: Ayes 104, Noes 165.1413
|Division No. 356.]||AYES||[9.28 p.m.|
|Alison, Michael (Barkston Ash)||Boyd-Carpenter, Rt. Hn. John||Brinton, Sir Tatton|
|Allason, James (Hemel Hempstead)||Boyle, Rt. Hn. Sir Edward||Bromley-Davenport, Lt.-Col. Sir Walter|
|Blaker, Peter||Braine, Bernard||Bryan, Paul|
|Body, Richard||Brewis, John||Buchanan-Smith, Alick (Angus, N & M)|
|Bullus, Sir Erie||Higgins, Terence L.||Prior, J. M. L.|
|Burden, F. A.||Hiley, Joseph||Pym, Francis|
|Clark, Henry||Hogg, Rt. Hn. Quintin||Ramsden, Rt. Hn. James|
|Corfield, F. V.||Holland, Philip||Rossi, Hugh (Hornsey)|
|Costain, A. P.||Hordern, Peter||Royle, Anthony|
|Cradciock, Sir Beresford (Spelthorne)||Hunt, John||Russell, Sir Ronald|
|Crouch, David||Iremonger, T. L.||Scott, Nicholas|
|Crowder, F. P.||Irvine, Bryant Godman (Rye)||Shaw, Michael (Sc'b'gh & Whitby)|
|Cunningham, Sir Knox||Jenkin, Patrick (Woodford)||Sinclair, Sir George|
|d'Avigdor-Goldsmid, Sir Henry||Jennings, J. C. (Burton)||Smith, John|
|Dean, Paul (Somerset, N.)||Kimball, Marcus||Stodart, Anthony|
|Deedes, Rt. Hn. W. F. (Ashford)||King, Evelyn (Dorset, S.)||Summers, Sir Spencer|
|Dray son, G. B.||Kirk, Peter||Tapsell, Peter|
|Eden, Sir John||Kitson, Timothy||Taylor, Sir Charles (Eastbourne)|
|Elliott, R. W. (N'c'tle-upon-Tyne, N.)||Knight, Mrs. Jill||Taylor, Edward M. (G'gow, Cathcart)|
|Errington, Sir Eric||Langford-Hoit, Sir John||Taylor, Frank (Moss Side)|
|Fletcher-Cooke, Charles||Lloyd, Ian (P'tsm'th, Langstone)||Temple, John M.|
|Fortescue, Tim||McAdden, Sir Stephen||Thatcher, Mrs. Margaret|
|Foster, Sir John||Macleod, Rt. Hn. Iain||Tilney, John|
|Glover, Sir Douglas||Macmillan, Maurice (Farnham)||Turton, Rt. Hn. R. H.|
|Glyn, Sir Richard||Maydon, Lt.-Cmdr. S. L. C.||Walker, Peter (Worcester)|
|Grant, Anthony||Monro, Hector||Ward, Dame Irene|
|Gresham Cooke, R.||More, Jasper||Whitelaw, Rt. Hn. William|
|Griffiths, Eldon (Bury St. Edmunds)||Morrison, Charles (Devizes)||Wilson, Geoffrey (Truro)|
|Gurden, Harold||Mott-Radclyffe, Sir Charles||Worsley, Marcus|
|Hall, John (Wycombe)||Noble, Rt. Hn. Michael||Wright, Esmond|
|Hamilton, Marquess of (Fermanagh)||Nott, John||Wylie, N. R.|
|Harris, Frederic (Croydon, N. W.)||Osborne, Sir Cyril (Louth)||Younger, Hn. George|
|Harris, Reader (Heston)||Page, Graham (Crosby)|
|Harrison, Brian (Maldon)||Page, John (Harrow, W.)||TELLERS FOR THE AYES|
|Hastings, Stephen||Powell, Rt. Hn. J. Enoch||Mr. Reginald Eyre and|
|Heald, Rt. Hn. Sir Lionel||Price, David (Eastleigh)||Mr. David Mitchell.|
|Anderson, Donald||Foot, Sir Dingle (Ipswich)||MacColl, James|
|Archer, Peter||Foot, Michael (Ebbw Vale)||MacDermot, Niall|
|Bacon, Rt. Hn. Allce||Fraser, John (Norwood)||Macdonald, A. H.|
|Bagier, Gordon A. T.||Freeson, Reginald||McKay, Mrs. Margaret|
|Barnett, Joel||Gardner, Tony||Mackenzie, Gregor (Rutherglen)|
|Beaney, Alan||Gray, Dr. Hugh (Yarmouth)||Mackie, John|
|Bennett, James (G'gow, Bridgeton)||Gregory, Arnold||Mackintosh, John P.|
|Bessell, Peter||Grey, Charles (Durham)||McMillan, Tom (Glasgow, C.)|
|Bidwell, Sydney||Griffiths, David (Rother Valley)||McNamara, J. Kevin|
|Blackburn, F.||Griffiths, Rt. Hn. James (Llanelly)||MacPherson, Malcolm|
|Blenkinsop, Arthur||Grimond, Rt. Hn. J.||Marsh, Rt. Hn. Richard|
|Booth, Albert||Hale, Leslie (Oldham, W.)||Maxwell, Robert|
|Boston, Terence||Hamling, William||Mellish, Robert|
|Bottomley, Rt. Hn. Arthur||Harper, Joseph||Mendelson, J. J|
|Bradley, Tom||Harrison, Walter (Wakefield)||Millan, Bruce|
|Bray, Dr. Jeremy||Hattersley, Roy||Miller, Dr. M. S.|
|Broughton, Dr. A. D. D.||Hazell, Bert||Mitchell, R. C. (S'th'pton, Test)|
|Brown, Bob (N'c'tle-upon-Tyne, W.)||Heffer, Eric S.||Moonman, Eric|
|Butler, Herbert (Hackney, C)||Hilton, W. S.||Morgan, Elystan (Cardiganshire)|
|Callaghan, Rt. Hn. James||Hobden, Dennis (Brighton, K'town)||Morris, Alfred (Wythenshawe)|
|Carter-Jones, Lewis||Hooley, Frank||Morris, Charles R. (Openshaw)|
|Castle, Rt. Hn. Barbara||Horner, John||Morris, John (Aberavon)|
|Chapman, Donald||Houghton, Rt. Hn. Douglas||Moyle, Roland|
|Coleman, Donald||Howarth, Harry (Wellingborough)||Noel-Baker, Francis (Swindon)|
|Concannon, J. D.||Howell, Denis (Small Heath)||Norwood, Christopher|
|Crawshaw, Richard||Howie, W.||Ogden, Eric|
|Crosland, Rt. Hn. Anthony||Huckfield, L.||O'Malley, Brian|
|Crossman, Rt. Hn. Richard||Hughes, Emrys (Ayrshire, S.)||Oram, Albert E.|
|Darling, Rt. Hn. George||Hughes, Hector (Aberdeen, N.)||Orbach, Maurice|
|Davidson, James(Aberdeenshire, W.)||Hughes, Roy (Newport)||Orme, Stanley|
|Davies, Harold (Leek)||Hunter, Adam||Owen, Will (Morpeth)|
|Davies, Ifor (Cower)||Jackson, Colin (B'h'se & Spenb'gh)||Padley, Walter|
|Dewar, Donald||Jackson, Peter M. (High Peak)||Page, Derek (King's Lynn)|
|Diamond, Rt. Hn. John||Janner, Sir Barnett||Pardoe, John|
|Dickens, James||Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)||Parker, John (Dagenham)|
|Doig, Peter||Jenkins, Hugh (Putney)||Pavitt, Laurence|
|Donnelly, Desmond||Johnson, Carol (Lewisham, S.)||Pentland, Norman|
|Dunwoody, Mrs. Gwyneth (Exeter)||Jones, T. Alec (Rhondda, West)||Perry, George H. (Nottingham, S.)|
|Dunwoody, Dr. John (F'th & C'b'e)||Kerr, Dr. David (W'worth, Central)||Prentice, Rt. Hn. R. E.|
|Eadie, Alex||Kerr, Russell (Feltham)||Price, Christopher (Perry Barr)|
|Ellis, John||Lawson, George||Price, William (Rugby)|
|Ennals, David||Leadbitter, Ted||Reynolds, G. W.|
|Ensor, David||Ledger, Ron||Roberts, Gwilym (Bedfordshire, S.)|
|Evans, Albert (Islington, S. W.)||Lee, John (Reading)||Robinson, W. O. J. (Walth'stow, E.)|
|Evans, loan L. (Birm'h'm, yardley)||Luard, Evan||Roebuck, Roy|
|Faulds, Andrew||Lubbock, Eric||Rose, Paul|
|Fernyhough, E.||Lyon, Alexander W. (York)||Rowlands, E. (Cardiff, N.)|
|Fletcher, Raymond (Ilkeston)||Lyons, Edward (Bradford, E.)||Ryan, John|
|Fletcher, Ted (Darlington)||McBride, Neil||Shaw, Arnold (llford, S.)|
|Sheldon, Robert||Tinn, James||Whitlock, William|
|Short, Rt. Hn. Edward (N'c'tle-u-Tyne)||Wainwright, Edwin (Dearne Valley)||Williams, Alan Lee (Hornchurch)|
|Silkin, Rt. Hn. John (Deptford)||Walden, Brian (All Saints)||Winnick, David|
|Slater, Joseph||Walker, Harold (Doncaster)|
|Small, William||Wallace, George||TELLERS FOR THE NOES:|
|Snow, Julian||Wellbeloved, James||Mr. Alan Fitch and|
|Symonds, J. B.||Wells, William (Walsall, N.)||Mr. Harry Gourlay.|
|Thomson, Rt. Hn. George||Whitaker, Ben|
Mr. Paul Somerset (Dean, North)
I beg to move Amendment No. 201, in page 29, line 7, at the end to insert:(2) Where an employer of persons in a nursing, convalescent or old people's home, or in a private hospital or medical insurance scheme, has paid selective employment tax in respect of any such person for any contribution week beginning on or after 4th September, 1967, the Minister shall repay to that employer all the tax so paid in respect of employees who do not pay surtax.The object of this Amendment is to grant a refund of S.E.T. to employees of nursing homes, convalescent homes, old people's homes, private hospitals or medical insurance schemes, in the case of employees who do not pay Surtax. As the Committee will know, the State hospitals and the local authority health services do not bear the burden of the Selective Employment Tax. Nor do private institutions where they are charities.
This Amendment is concerned with those private institutions which are not charities, and which therefore bear the brunt of this tax. I do not propose to argue again the merits and demerits of the Selective Employment Tax as such. I propose to test this Amendment by the criteria which the Government have used for the Selective Employment Tax, both this year and last year, and the arguments employed to justify it.
On this basis the Government should have no difficulty in accepting this Amendment. There will be agreement on all sides of the Committee, including the Treasury Bench, that no one wishes to put additional burdens on the care of the sick, the old, the disabled, the mentally handicapped, the incurable and the dying, yet this, in practice, is what this tax does in the case of those homes which are not exempt under present arrangements. Equally I am sure that the Government will readily recognise that one of the main arguments that they have used in support of the Selective Employment Tax, namely the desire to shift people from service industry to manufacturing industry, cannot possibly apply in cases of this kind. The notion that the Government would wish to see skilled 1414 medical staff going to work in jobs on the factory floor is clearly ridiculous. Therefore, that argument cannot apply in this case, and I do not suppose for a second that the Government intend to deploy it. Equally, it cannot be said that the organisations referred to in the Amendment are hoarding labour. Indeed, in most cases they are desperately short of labour to keep these institutions going. Therefore, none of the main arguments which the Government have used in respect of S.E.T. apply in this case.
What about the practical arguments? Last year we were told by the Government that, whatever the merits of particular cases, it was not possible, at any rate at that time, to distinguish categories other than categories recognised within the National Insurance arrangements. But they added that if they were given time it might well be possible to find a way round this for particular groups deserving of refunds under the S.E.T. This year they have found a way round it in the case of the part-timers. In my view, there are no practical difficulties in finding a way round it for these homes. They are all registered with local authorities. They are subject to inspection and, therefore, are known to the public authorities. So if the Government wish to do this, I do not believe that there is any practical difficulty in doing it, nor is there any conflict between the basic aims which the Government have set themselves in the S.E.T.
I turn briefly to some of the practical effects of S.E.T. on these institutions. First, there are the anomalies, very similar to those mentioned by my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) when he was talking about the independent schools. Some of these homes are charities and therefore are exempt from the S.E.T. Some are not, although they are fulfilling very similar functions to those which are exempt. Here we have an arbitrary and unfair incidence of the tax, with some getting a refund and others not. In the case of those which are not getting a refund, it is largely because their rules; 1415 or functions are drawn in such a way that they cannot bring themselves within the regulations laid down by the Charity Commission. Either they are run for a particular group of people or they are based on the mutual benefit of the contributors. In some cases they are trade unions. In other cases they are run for profit. Few of those which are run for profit make a profit. My hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn) has given me two examples of old people's homes near Sheffield which, in theory, are run for profit but which find themselves in very serious difficulties and may not be able to continue in existence owing to the incidence of S.E.T.
I come now to one or two examples of the types of institution involved. First, I mention the Association of Independent Hospitals. It has as members most of the non-profit-making private nursing homes, old people's homes and the like. Many of them are charities, but some are not. They are doing an immensely good job, in partnership with the National Health Service, in caring for the sick, the aged and the like. They offer a service to the community in some 11,000 beds and also out-patient facilities, which helps to relieve the very great pressure on the National Health Service.
§ 9.45 p.m.
§ The type of work which they are able to do is wide ranging. It includes general hospital, orthopaedic hospitals, maternity hospitals, mental hospitals, homes for the incurable, homes for disabled ex-Service men, cancer and chest foundations, epileptic homes, religious homes, convalescent homes and homes for the aged and the chronic sick. This gives an idea of the wide range of the activities of these homes. Many of them have contractual arrangements with the National Health Service or with the local authorities whereby patients from the National Health Service or the local authorities are able to be treated in these homes.
§ Those are merely a few details of the range of operations of the Association of Independent Hospitals. Which of them pays the Selective Employment Tax? I propose to quote only two examples. My ihon. Friends have a number of others which they will, no doubt, wish to give. 1416 The first and, perhaps, the most striking example of all is the Manor House Hospital, which is often referred to as the Trade Union Hospital, an institution of great value and great repute in the medical world, which will be familiar to hon. Members on both sides.
§ The Manor House Hospital and its associated women's hospital have over 500,000 members throughout the country who subscribe voluntarily a weekly sum of 6d. or an annual subscription of £2 12s. 6d. Membership of the society is open to all. No charge is made for either in-patient or out-patient treatment, and the hospitals provide a comprehensive general hospital service with a complete range of ancillary departments. It is an excellent independent hospital doing a first-class job, yet under the Selective Employment Tax it has to pay £13,500 a year. Nobody, on either side, can suggest that an impost of that description is one which we can fairly ask a hospital like the Manor House to bear.
§ Another example is that of the Printers' Medical Aid and Sanatoria Association, an association of 50,000 members who contribute 1s. 6d. a quarter. Membership is limited to those engaged in the printing and allied trades. It owns and operates a convalescent home which has 40 beds for men and 45 for women. They are mainly used for post-operative cases coming direct from hospitals. The Association also receives patients from the National Health Service at charges substantially below cost. In other words, it is in some degree subsidising the National Health Service.
§ The burden to that association under the Selective Employment Tax is £1,400 a year. Here again is another institution which by no stretch of the imagination could be suggested to be rich or to be in a position to afford a burden of that description. Those are merely a few examples from the membership of the Association of Independent Hospitals.
§ What about the British Hospitals Contributory Schemes Association? Here is the classic example of the tradition of self-help and thrift existing from the early days of the last century among weekly wage earners. That is what these organisations are about. They provide mainly cash benefits for their members while they are in hospital. The contributions are seldom more than 6d. a week. There are over 4 1417 million contributors, and they cover, with dependants, about one-quarter of the population of England and Wales. They run convalescent homes for their members and, in addition, since 1948 these associations have provided over £1 million for medical research and medical charities. That is a striking figure. It is a very substantial contribution from associations which are based on and run by weekly wage earners. Not only are they helping their members, but adding to the resources of the hard-pressed National Health Service.
§ As a result of the Selective Employment Tax, these organisations of weekly wage earners find themselves bearing a burden of something like £40,000 a year, which is a very big burden for people in this category. To give just one example, the Birmingham Hospital Saturday Fund has 447,000 voluntary weekly contributors. It owns and operates six convalescent homes for men and women and provides convalescence for children. In addition, it pays cash benefits to those having hospital in-treatment, and it also provides nursing home treatment, maternity facilities, home helps, spectacles, dentures and specialists' fees. The burden of a Selective Employment Tax on that fund is £6,000 a year.
§ I hope that I have given enough examples to the Committee of organisations of modest means supported by people who are sacrificing sums out of their weekly earnings, in many cases in order that these institutions shall exist, and the very big impost upon them of the Selective Employment Tax.
§ I come now to the provident associations. They are non-profit-making, limited by guarantee, but are not charities, and cannot be charities within the terms of the charity legislation. They provide insurance for hospital and general practitioner treatment. Here again, they bring not only additional financial resources into health, but provide additional beds and facilities. The largest of them is the British United Provident Association, which is paying £28,000 a year in Selective Employment Tax. The Private Patients' Plan is paying £5,000 a year. The Western Provident Association is paying nearly £2,000 a year.
§ I hope that I have given enough facts and figures to the Committee to convey very strongly not only that the Govern- 1418 ment can accept this Amendment without damaging their concept of the Selective Employment Tax, because it does not affect the principle, but that there are no insuperable practical difficulties to accepting it.
§ We are dealing here with organisations most of which are of modest means and are doing splendid work for the healing and care of the sick. They are doing it in partnership with the State services. Surely the Government with a sense of social justice and social priorities cannot any longer continue an impost of this kind on organisations such as those which I have described.
§ Mr. J. J. Mendelson (Penistone)
In moving his Amendment, the hon. Member for Somerset, North (Mr. Dean) has opened up a range of important problems which affect all parts of the country. I hope that he will bear with me if I begin by saying, not by way of criticism of his draftsmanship, that it does not necessarily help in trying to press a change upon the Government to make the circle too wide.
I say this with humility, because, having tried to draft an Amendment on this subject, I know how impossibly difficult it is to remain in order and hope to have it called. But I suggest that, if Amendments are too widely drawn, that does not absolve the Government from their duty and responsibility, with the services of expert draftsmen, to find some way of refining the Bill, and exempting these organisations which, on good social and moral grounds, ought to be exempted.
The hon. Gentleman said that the Chancellor mentioned a "shake-out" or transfer of personnel from service industries to others, but we should be fair to my right hon. Friend, particularly in his absence. When he introduced his tax, he said quite frankly that he had to find additional revenue and, dismissing the traditional methods of a penny on cigarettes or beer, he thought that he should try to find some new method. He did not start by saying that the purpose of the tax was a transfer or shake out, and it would be unfair to say that. He had to raise revenue, as any Chancellor would, as the Shadow Chancellor understood—he did not disagree at the time.
To ensure that he would not be misunderstood, my right hon. Friend added 1419 that, although not in the first year, there might in later years be an additional effect of a transfer and he gave facts and figures to show why this was desirable— because, he said, of a developing disproportion in the number employed in service as against manufacturing industries, as well as to strengthen our export drive. He did not promise it in the first or second year.
But, having established the Government's chief motive for the raising of additional revenue—to finance the Health Service and other things, which, I thought then and do now, was honourable—the Government then, through the Chancellor, gave a definite promise, that, in the first year, although the instrument might not be as refined as it should, it might be possible to refine it as it went along.
I support the case of medical homes for old people, which is particularly urgent. In so far as I have an interest, I state it immediately. In Ecclesfield, in my constituency, there is such a medical home with 22 old people who are well looked after by the matron, who has been doing this for 17 years at great self sacrifice, and her staff. Technically, this home and many others are fee-earning institutions because the patients, who almost invariably need a great deal of medical attention, pay a fee. In many cases the fees are paid by relatives, some of whom reside outside this country. Often they assume this lifelong responsibility to look after the patient.
§ 10.0 p.m.
§ I appreciate the difficulties involved in creating categories for this purpose. I understand that the Government are as concerned as anyone to do something for the sort of people I am mentioning. I also appreciate that it does not help to make a sweeping case about moral responsibilities on the part of the Government in this matter, because hon. Members who have held Government office know that when we were in Opposition we made similar requests and were told the hard facts of life. These facts often seem more important when one is in Government than when one is in Opposition.
§ It could be argued that a wide-ranging Amendment which covered an enormous category—for example, nursing homes as 1420 a whole—should be resisted. Some nursing homes, such as the London Clinic, are making money hand over fist and, with charges like £35 a week, only the very wealthy are normally able to obtain a private room.
§ Mr. Mendelson
The hon. Gentleman is making my case for me. It is a charity under a definition to which I intend to refer. One must be well off to get a private room in the London Clinic. The paradox is that, under this type of general category, some institutions—including many which require large sums of money before one can be admitted—are classed as charities while others are not. Some very able lawyers in the past have drawn up the papers applying to certain institutions, which are classified as charities.
One must consider the other institutions, like the medical home for old people in my constituency, which do not come within that category. Representations about this have been made to the Government, who have replied, "We have not been able to find a way to incorporate such institutions". That is not good enough. When faced with such a situation, in which some institutions come within the definition of a charity while others do not, we must take steps to remedy this paradox.
The incomes of some homes for old people are so small that hardly any profit is made. Although people pay fees, the profit margin sometimes barely covers the upkeep of the home, and in some years there is a deficit. I know of homes in which some patients are unable, after a time, to pay their fees. Often a way is found, unofficially and informally, to go on keeping them in these old people's homes, and usually nobody knows anything about this informal arrangement. The people responsible for running the homes "make do", and use some of their small margin of profit to provide for some of the patients who are unable doing an important job in the right way, to pay and who have no one to pay for them. That is an excellent example of and my right hon. Friend has the responsibility of searching for ways and 1421 means of relieving these people of their difficulty.
I know that we shall be given the familiar argument that we are between two difficulties: the difficulty of defining a group—one cannot legislate for one home and one constituency, however fond one might be of the Member concerned, and, in any case, it would be introducing an undesirable political principle, and one might not be so fond of that Member, anyway—and the difficulty of the danger of opening the floodgates so wide—the term that is so often used in these cases, although I think that it is most inappropriate—that all sorts of organisations might be swept in.
I therefore come to the root of the problem. The Government having given a definite promise to the House that this tax is an instrument that must be refined in future years, and having started on the road towards refinement in a very important respect, are now called upon to say what steps they are taking to make it possible to create an additional category in which these medical homes for old people would be included. The onus is not on the hon. Member for Somerset, North or his supporters, nor is it on my hon. Friends. Objectively, it may be extremely difficult to find a solution, but the onus is on the Government.
A category of socially useful institutions causes a great deal of difficulty. We know that there is a serious shortage of these medical homes for old people. It is one of the normal duties of a Member to visit any home in his constituency run by the local authority for old people, and those of us who do this are always 1422 told, "We have a number of people here whom we would rather see elsewhere. This is not the best atmosphere for them." We know that the hospitals sometimes insist that some of the homes run by local authorities accept too high a proportion of people who are unwell when homes run by local authorities for old people are meant for healthy old people.
It is very difficult for local authorities because often they do not have the staff —and it is not so good for the other people living in the homes—to take over these cases from the hospitals. We have a number of institutions which provide full medical attention and are run on a very small income, as is the case in Ecclesfield in my constituency. The old people there have 24-hour-a-day attention, so that the need for part-timers is not so great, because in order to provide constant attention there must be three shifts a day. Some part-timers are employed, but we must not think that by solving the part-time problem we are solving the whole problem.
Therefore, where such homes for old people are doing, socially, the most useful type of work and making a direct contribution which helps the existing local authority homes, and where, at the same time, the amount of money needed to exempt them from payment of the tax will not be very large, is it not time for my right hon. Friend to give a pledge to us that the Government accept my general case, and will find ways and means at least at a later stage of the Finance Bill to give some relief by ex-ampting these homes from this tax, which imposes a serious and, in some cases, an intolerable burden?
§ Mr. Braine
I support this Amendment, which was moved so ably by my hon. Friend the Member for Somerset, North (Mr. Dean). He advanced an argument which should have moved the stoniest heart on the Treasury Bench. Despite the fact that we have had no concessions up to now, I live in hope.
Earlier today, after hon. Members in all quarters of the House had pleaded with the Treasury Bench to relieve the disabled and the elderly—two of the most vulnerable groups in the community— of the burden of S.E.T., the Parliamentary Secretary to the Ministry of Labour advanced a most extraordinary argument. I could hardly believe my ears. He said that to exempt these groups from S.E.T. would be to give them a subsidy. That, he said, without any trace of feeling of the enormity of what he was saying, would not be good for them. I hope that that cold-blooded argument, that unfeeling argument, will not be used against this Amendment. Knowing the right hon. Gentleman, I do not think it will.
Here we are concerned with social service organisations which manifestly supplement our hard-pressed National Health Service, organisations which are often run without a profit. They bring additional resources of personnel and beds and care to the vital task of battling against ill-health. Nevertheless, because of a technicality on which the hon. Member for Penistone (Mr. Mendelson) fairly touched, they do not qualify as charities. In this Amendment we are seeking to relieve such organisations which provide a service for the sick, for the handicapped, for incurables and in some cases the dying.
Under the existing law, the Charities Act, 1960, such an organisation or institution can qualify as a charity only if it meets three requirements. First, it must benefit the community, or some section of it. Secondly, it must contain an element of altruism; it must not be intended exclusively for its own members. Thirdly, it must not be run for profit. That is the law of the land and I have no quarrel with it, but, as the hon. Member for Penistone said, speaking from knowledge of organisations in his constituency, many such organisations are clearly run for charitable purposes, 1424 and provide a socially useful and often indispensable service. Because of this they were accorded and retain charitable status under the Income Tax law and receive a relief of tax on the interest from their general income, but they do not qualify as charities under the 1960 Act.
These include a whole range of private nursing homes, private hospitals, convalescent homes, homes for incurables and privately-run physiotherapy services. My hon. Friend referred to Manor House Hospital at Golders Green run by the Industrial Orthopaedic Hospital Society. There is also the Civil Service Sanatorium Society which administers Benenden Hospital in Kent, the Birmingham Hospital Saturday Fund, which runs some of the finest convalescent homes in the country and has over half a million contributors. There is also the Hospital Saturday Fund and there is the London Area Mobile National Physiotherapy Service, a national service which expanded from London.
§ 10.15 p.m.
All these, and many others like them, provide an indispensable supplement to the National Health Service. One might have expected the Minister of Health to have gone into battle for them. Yet, when the Chairman of the Association of Independent Hospitals wrote to him last October, he elicited the following reply from the Minister. The hon. Member for Penistone tried to help the Government by stating what he thought was the real purpose of S.E.T. The Minister of Health was quite candid about it. In his letter dated 25th November to Mr. Mark Baring, he said:
… in addition to raising revenue and broadening the tax base, one of the main objectives of the tax is to improve the structure of the tax system by redressing the balance between services, which have hitherto been lightly taxed, and manufacturing which has for a long time been subject to Excise duties and the Purchase Tax. There was certainly no question of penalising the many worthwhile service activities, but simply of correcting an existing bias in the tax system.
This was not the Chief Secretary speaking. This was not the Chancellor. This was the Minister of Health, who is responsible for the continuing and incessant battle against ill-health, arguing the Chief
Secretary's case for him. The letter continues:
In order to achieve this aim it was necessary that privately financed services as a whole should pay the tax without refund, and that reimbursement and other forms of compensation to them should only be allowed in the most exceptional circumstances.
There was no recognition of the vital rôle these institutions play in helping the National Health Service. There was no recognition of their social value. There was no recognition of their humanitarian nature.
§ Yet in view of the difficulties confronting the National Health Service and the relief which these organisations provide, there was surely a very strong case for the Minister of Health having argued on these lines, for him to tell his colleagues, "For heaven's sake, this is a field where exceptional treatment should be given".
I want to be fair to the right hon. Gentleman. He ended his letter in this way:
But the Chancellor has by no means ruled out the possibility of adjustments later.
The Chief Secretary has the opportunity tonight to make an adjustment. I hope he will shortly say that this is the first concession that the Chancellor feels able to make. If it was not meant sincerely, the Minister of Health was fobbing off the Chairman of the Association of Independent Hospitals with the phrase:
the Chancellor has by no means ruled out the possibility of adjustments later.
How much later? The Chief Secretary has an opportunity to tell us tonight.
§ I want to quote just one example to show how anomalous and unjustified is the Government's attitude. The L.A.M.P.S. National Physiotherapy Service is a non-profit-making organisation based on London. It is one of a number of similar organisations which provide physiotherapy to patients in their own homes, usually under the direction of a hospital consultant. Such arrangements have the advantage, as my hon. Friend the Member for Tynemouth (Dame Irene Ward) well knows, because she is conducting a battle on this subject in Newcastle, of supplementing the hospital service. They have the advantage of providing rehabilitation treatment after a patient has left hospital. Above all, they have the advantage of making use of married women physiotherapists, who 1426 cannot, by the nature of their family ties, work in the hospital service. There is an acute shortage of physiotherapists. This is a very useful way of employing married women to supplement the hospital service.
§ Clearly this is an organisation—there are many others which relieves the burden on National Health Service facilities. But, because this non-profit-making body is principally supported by a contributory scheme, taking the Charity Commissioners' definition literally, it lacks the necessary element of altruism to be regarded in law, under the Charities Act 1960, as a charity, although, incidentally, it gives charitable services to non-contributors. On the other hand, it has charitable status for the purpose, moreover, of the Income Tax Acts. Since the Charities Act, 1960, applies only to England and Wales and not to Scotland, there is the extraordinary anomaly that this organisation is subject to Selective Employment Tax because its headquarters is in London, though, presumably, if it were in Glasgow or Edinburgh, it would be eligible for reimbursement of Selective Employment Tax.
§ Where is the equity, the principle, the justice or sense in that? I can scarcely wait to hear the right hon. Gentleman defend such a situation. It would seem to me to be only just and equitable that, in the Selective Payments Act, the expression "charity" had the same meaning and application in England and Wales as it has in Scotland. We can do nothing about that tonight, and I should be out of order if I pursued the matter, but this Amendment would right the anomaly. It would do justice to similar organisations. It would proclaim the widely held view in the House of Commons—we know that this is so, although there are not many hon. Members opposite present to support the hon. Member for Penistone in his argument—that it is high time we got our social priorities right.
§ I trust that the Chief Secretary will be more forthcoming in his reply than he and his colleagues have been up to now. Here is a point at which he can be not only generous but just. I invite him to accept the Amendment.
§ Mr. Bryant Godman Irvine (Rye)
I support the Amendment. The case has been forcefully put by previous speakers, 1427 and I shall add only one or two points. My recollection of our discussions on the Selective Employment Tax last year is that much more emphasis was put upon the transfer of people from services to manufacturing than the hon. Member for Penistone (Mr. Mendelson) suggested. As regards my own constituency, I can remember making the point to the Chief Secretary that there was no industry there to which people could be transferred, and that, if my constituents were not to be employed in nursing homes or whatever it might be, they would have to move a long way before they could find any employment at all. There is no prospect in my constituency of the tax having at least one of the effects claimed for it when we discussed it last year.
I have in my constituency several institutions of the kind covered by the Amendment, nursing homes, convalescent homes and old people's homes. But here is the anomaly. I can walk down a road in my constituency and come across a series of these institutions. One on one side of the road is paying Selective Employment Tax while one on the other is not. What principle is there behind that, when there is no industry to which workers could go in any event?
I could give several examples of the way it works, but here is just one. It has been put to me by one of my constituents, and the institution is one of those referred to by my hon. Friend the Member for Essex, South-East (Mr. Braine), the Civil Service Sanatorium Society, a society which provides 181 beds and also a children's centre. The society is providing a most valuable service, assisting the National Health Service to deal with some of its problems, and it provides that service for people who make a subscription to it. Yet that society is paying £12,000 a year in tax. That is the point I wish to put forcibly to the Chief Secretary.
I cannot see how such an impost can be justified in a case of that sort. There are other examples in my constituency which I could direct to the attention of the Chief Secretary, but I shall leave it at that and commend the Amendment to the Committee.
§ Mr. John Page (Harrow, West)
The case put forward by my hon. Friend the Member for Somerset, North (Mr. Dean), 1428 that special consideration must be given for the social services is so devastating that I think that that is why there are only three back-benchers opposite. Hon. Members opposite would be too ashamed to vote against the Amendment had they heard the rest of the debate.
I feel passionately about the Amendment because this is Mental Health Year, and in the past weeks and months attention has been drawn to the problems of mental health. Like other hon. Members I have been seeing conditions at first hand.
This is a tax on geriatric beds for mentally handicapped people. Anybody who read the article in the Sunday Times last Sunday and who has a member of his family in a State mental hospital must be worried. Those articles are not a general example of conditions in mental hospitals in this country, but conditions are desperate in them. There is a desperate shortage of beds and dedicated male and female nurses to look after these patients, who cannot help themselves.
I see that at last we have somebody here at the Bar of the House from the Ministry of Health. One would think that a Government would say, "Thank God" that there are private individuals who will dedicate their lives to trying to help. The homes run by many couples in partnership are called profit-making but, how many people setting out to make a big profit for themselves would start by opening a small home with geriatric beds? I know that the hon. Member for Penistone (Mr. Mendelson) agrees on this.
This is a social service, and these people are finding the new burden of Selective Employment Tax, ruthlessly, unnecessarily and callously imposed upon them by a bureaucratic Treasury, almost more than they can bear. It comes at a time when their souls and bodies are exhausted by the efforts they are having to make to look after their patients, and they feel that perhaps they had better give up altogether.
I beg the Chief Secretary to say that he will think again on this. We must ask him to do that, because with just a small change in the law people who are dedicating their lives to the service of the community in the most difficult circumstances would feel that there is some recognition from the general public, who really like to forget what they are doing.
§ Mr. Charles Doughty (Surrey, East)
So strongly do I feel about the Amendment that I added my name to it last night. I cannot say why it does not appear on the Order Paper today.
The Amendment has nothing to do with the general principle of Selective Employment Tax. Rightly or wrongly, S.E.T. was intended to take people away from industries that were not productive and place them in productive industries. I should not be in order in discussing now whether that has worked. One thing that the tax has hit hard—and wrongly —is the private nursing homes, hospitals and old people's homes.
§ 10.30 p.m.
§ I know very well, because a number of my constituents have written to me about these matters, that the National Health Service, as is extremely well known, is under-bedded, over-worked, and unable to find places for people who ought to be admitted. We all know, Members on both sides know who have written to Ministers and Parliamentary Secretaries to the Ministry of Health trying to get for our constituents admission to hospitals for necessary treatment which is not of an emergency character, that if these nursing homes, hospitals, old people's homes were closed down for any reason the National Health Service could not take them on.
§ Most people nowadays are living, I am glad to say, very much longer; there are enormous advances in medical science and medical knowledge and medical research which very often is done in this type of hospital. In my constituency is a most important hospital which makes important researches into cancer. They have the very greatest difficulty in carrying on because their expenses, apart from this tax, are tremendously high, and the tax has been almost, and in many cases actually has been, the straw which has broken the camel's back.
§ I do not believe it is the intention of the Government or the Chief Secretary that this type of institution should go out of business, that its patients and inhabitants should be thrown upon the National Health Service, which could not, in any case, receive them. The principle of Selective Employment Tax, be it a good principle or be it a bad one, would not in any way be breached if this Amendment were allowed, but a large 1430 number of excellent, very desirable, very well-run and very useful institutions might—I say only might, because in any case they have great difficulties—possibly carry on for a number of years more to look after the elderly, the sick, the convalescent. If the Chief Secretary says tonight he cannot accept the Amendment it must mean that the Government cannot have that interest in the sick, the convalescent and the elderly which any Government ought to have.
§ Mr. Diamond
We have had a long debate, and I have heard many requests from hon. Members opposite who said they could scarcely wait till I got up to reply to the debate. If I do so now I hope it will be thought convenient to the Committee. I hope I do not make a mistake, but may I say to the hon. Gentleman the Member for Somerset, North (Mr. Dean), who introduced the debate, that if this was his first appearance at that Box it was not obviously so; it was, I thought, too polished a performance to be the first. We are delighted to see him there in any event.
The hon. Gentleman made a polished speech, but the Amendment itself is far from being polished and therefore, although I am not going to rely on drafting deficiencies, because nobody would wish to do that, I have first, in order to remove those parts which are removable before dealing with the essence which has been brought out in all the speeches, to refer to the end and the reference to Surtax and the tax paid in respect of employees. I could not follow that reference for the life of me. I do not see how the employees come into it, as this is a tax on employers and there is no means of knowing which employees pay Surtax. In saying this I assume that that is not the essence and the heart of the Amendment.
§ Mr. Diamond
I am sorry. It is so long since I was doing that very same thing myself that I had forgotten one has to put in a lot of nonsense to be able to make a speech. I am glad that that is common ground.
What the Amendment does not refer to is profit making. The hon. Gentleman 1431 does not say in the Amendment whether profit-making bodies are excluded or not. There is, of course, in most people's minds a very marked difference between a profit-making body and a non-profit-making body in this field. Therefore, I will assume that if there are people— I am sure that they include hon. Members on both sides—who would not wish this advantage to go to profit-making bodies, we are talking of non-profit-making bodies.
I hope that no one would seriously suggest that any hon. Member on either side or any member of any Government is not anxious to help those who are ailing or sick and need help and those who cater for them. Many hon. Members, like I myself, must have had the privilege to serve in a voluntary capacity in such work, and I am grateful for the interest that it gave me.
We have to consider the matter in relation to the Selective Employment Tax. My hon. Friend the Member for Penistone (Mr. Mendelson) made by far the most constructive speech in the debate and began by pointing out that the Tax was clearly stated by the Chancellor and by me on many occasions to be a method of raising revenue. If anyone does not like the tax—and I gather that there are one or two people who do not —then of course they have to say which other method of raising revenue they would have preferred. Suppose that we had gone on the ordinary method of raising revenue through Purchase Tax and other taxes. One must then consider what effect this would have had on those we are considering. The effect would have been substantial and in many cases, I dare say, heavier. It would have depended on how the money was raised. If the same figure of £180 million to £200 million had been raised in the form of Purchase Tax, one can imagine that nursing homes, for example, in paying for their linen and other things, for which they would get no relief, would have been worse off. But one does not know. All I am saying is that this is an alternative method of raising revenue and that it is unrealistic to say that we could have done both without S.E.T. and without other alternative revenue and therefore that these bodies would not have been called upon to pay some form 1432 of tax. The point I am asking the Committee to bear in mind is that it must, in considering alternative ways of raising revenue, consider how these would have affected the bodies in question.
The second question is what is the effect of the tax on these bodies. Some interesting figures were given by the hon. Member.
I listened carefully and worked them out as he gave them. He talked first about the printers' organisation in which the printers collect together and pay for their own hospital treatment by contributing 1s. 6d. a quarter. He said that there are 50,000 of them and that they pay £1,400 in S.E.T. That means that each has to pay an extra half penny a month.
Then the hon. Gentleman referred to the Birmingham Saturday Fund, with under 500,000 members. One of his hon. Friends said that it was over that figure. I will take it as being 500,000. The hon. Gentleman stated the amount of S.E.T. it pays. It means that each member is called upon to pay an additional farthing a month to cover the cost.
I am bound to say that these figures are probably right because the Chancellor was approached by the Chairman of the Hospital Savings Association on the same point and in his reply pointed out that the association's liability to S.E.T. was equivalent to something less than one farthing a month from each contributor. This is the level which we are discussing, something about ¼d., or perhaps ½d., a month additional payment by the contributors who group together to pay for their own services in this way.
§ Mr. Braine
Is the right hon. Gentleman aware that, in addition to providing services for its contributors, the organisation to which he is referring provides extensive services for non-contributors? Does not that somewhat vitiate his argument?
§ Mr. Diamond
I am delighted to hear that. To the extent that it provides services for non-contributors and carries on non-profit-making activities, it would be most likely to qualify to be a charity. We can deal immediately with that, because last year both sides of the Committee took the view that for charities it would be right to go beyond what one 1433 would normally do for a charity and to exclude from its responsibilities that of paying S.E.T.
§ Mr. Diamond
Of course it has happened. All that a charity has to do is to apply to get its refund and it gets its tax refunded. If a charity had been called upon to pay Purchase Tax, if that had been an alternative form of raising the revenue, then the charity would have been called upon to pay that additional tax and there would have been no refund. We all accepted that charities, which are most carefully defined in our law and which were most recently defined in 1960 by the Government of which the hon. Member for Essex, South-East (Mr. Braine) was a member, have to be protected and that they are quite separate organisations which have certain responsibilities. We all tried very hard to find some category which could be relied upon to be acceptable to both sides of the Committee and to the community as a whole, and we decided that it would be charities. We have, therefore, eliminated charities from paying S.E.T., although we would not have eliminated them from alternative sources of raising the revenue. The net effect is that as a result of S.E.T. charities are better off than they would have been if we had raised the revenue in a different form.
My hon. Friend the Member for Penistone posed a difficult question. He accepts most of the argument which I have been putting hitherto, but he says that there are certain bodies—I imagine that he would say that they were exclusively non-profit-making bodies, because I do not imagine that he would wish profit-making bodies to be excluded from the normal burdens of taxation which we all have to bear—which carry on certain functions and which ought to be entitled to be relieved from this tax, although not from alternative forms of tax.
I shall be frank: the Government have thought very hard and the only category which we can find which we believe would be acceptable and of which one could possibly draw a sustainable definition is a charity. It is perfectly simple for a body which is carrying on a function of this kind and which is non-profit-making and which allows a large section of the 1434 public, not only its own members, to obtain these services, which may be expensive services—I do not know what the fees at Eton are at the moment, but they are very expensive, and yet Eton is nevertheless a charity and, therefore, gets its S.E.T. repaid, like every other charity—to apply to be registered as a charity if it is a body in England or Wales, or to go through the appropriate machinery and apply to my right hon. Friend the Secretary of State for Scotland if it is in Scotland to be treated as a charity for these purposes and therefore to get a refund.
§ Mr. Reginald Eyre (Birmingham, Hall Green)
The Birmingham Hospital Saturday Fund is registered as a company not for profit and is exempted by the Board of Trade from the obligation to carry "Limited" after its name, as a consequence of its activities which are entirely within the range of those which are entitled to be registered as charities. It is the mere absence of any application to become registered as a charity which has resulted in this difficulty. Would the right hon. Gentleman accept that an organisation of that kind, carrying on work which is entirely within the definition of charity, but which need not come within his strict legal definition, should be exempt from the obligation to pay this tax?
§ Mr. Diamond
The hon. Member must make up his mind what case he puts to me, because he is putting two. The first is that this fund is capable of being registered as a charity if it applies, to which the answer is that it should apply. The second case he puts is that this Hospital Saturday Fund is not capable of being accepted as a charity because it does not comply with the statutory rules. It must make up its mind whether it wants to work as a charity, in which case its rules must be altered, or as a mutual organisation and its members will have to pay an additional ¼ a month to cope with this tax.
§ Mr. Eyre
Will the Chief Secretary accept that the Birmingham Hospital Saturday Fund is entitled to become a charity and is in correspondence with the Charity Commissioners. Will he not also accept, as a principle, that certain organisations which are entitled to become charities should be morally entitled to be exempted?
§ Mr. Diamond
The hon. Member now makes a third proposition, that although the organisation to which he refers is about to become and is capable of becoming a charity, I should accept that certain organisations not registered should be exempted not on legal but on moral grounds. That is a difficult question. The older I get, the less I like to pass views on morals. If an organisation passes the rules this House agreed to, it could become registered as a charity and become entitled to refund of Selective Employment Tax paid.
My hon. Friend said that the Government had a responsibility, and I accept it, to see that organisations should be free of tax if they satisfied the public conscience. My right hon. Friend and I have sought for a definition and the only one we can think of which would be satisfactory to both sides of the House and the community would be that of a charity. We have no recommendation to extend this beyond charities.
If one extends beyond charities, one gets into frightful difficulties. My hon. Friend the Member for Penistone has already mentioned nursing homes. I have had experience of this on the General Nursing Council. There are nursing homes and nursing homes.
In all the circumstances, I do not think this is an Amendment I could recommend to the Committee.
§ Mr. T. L. Iremonger (Ilford, North)
What a pettifogging, nasty, mean little speech! I think the Committee is anxious to proceed with this business with
§ dispatch. I merely want to add one point which will take little time. My hon. Friend the Member for Somerset, North (Mr. Dean) would have said this, had it not been that I particularly wanted to, because I have here a letter from a constituent who writes as the Treasurer of the Civil Service Sanitarium Society. I want to put this on record, in supplementation of what my hon. Friend said. I am sorry to say that this organisation must still be left at this stage with this intolerable burden.
The Treasurer of the Sanatorium Society says:
This tax costs our Society in excess of £12,000 a year. The sum is large enough to interfere with the Society's policy of extending its health benefits on behalf of 800,000 persons covered by contributions of members. In treating patients, mainly for respiratory conditions in the 181 beds in the hospital, we not only relieve the National Health Service of a vast expense, but contribute to the economy of the country by bringing about a great improvement in the health of the many hundreds of workers each year.
§ I am sure that the Committee will not resent the few moments that it has taken me to add that.
§ The Chief Secretary said that as he gets older he gets something or other. What the whole Committee would like me to say, and it is a great temptation for me to expand on this at great length, is that the older he gets the less fit he is to sit on that Bench.
§ Question put, That those words be there inserted:—
§ The Committee divided: Ayes 89, Noes 138.1437
|Division No. 357.]||AYES||[10.51 p.m.|
|Alison, Michael (Barkston Ash)||Eden, Sir John||Kirk, Peter|
|Allason, James (Hemel Hempstead)||Elliott, R. W. (N'c'tle-upon-Tyne, N.)||Kitson, Timothy|
|Blaker, Peter||Errington, Sir Eric||Knight, Mrs. Jill|
|Body, Richard||Fletcher-Cooke, Charles||Langford-Holt, Sir John|
|Boyd-Carpenter, Rt. Hn. John||Fortescue, Tim||Lloyd, Ian (P'tsm'th, Langstone)|
|Boyle, Rt. Hn. Sir Edward||Glover, Sir Douglas||Macleod, Rt. Hn. Iain|
|Braine, Bernard||Glyn, Sir Richard||Macmillan, Maurice (Farnham)|
|Brewis, John||Gresham Cooke, R.||Maydon, Lt.-Cmdr. S. L. C.|
|Brinton, Sir Tatton||Griffiths, Eldon (Bury St. Edmunds)||Mitchell, David (Basingstoke)|
|Bromley-Davenport, Lt.-Col. Sir Walter||Gurden, Harold||Monro, Hector|
|Bryan, Paul||Hall, John (Wycombe)||More, Jasper|
|Burden, P. A.||Hamilton, Marquess of (Fermanagh)||Morrison, Charles (Devizes)|
|Clark, Henry||Harris, Reader (Heston)||Noble, Rt. Hn. Michael|
|Corfleld, F. V.||Hastings, Stephen||Nott, John|
|Costain, A. P.||Higgins, Terence L.||Page, Graham (Crosby)|
|Cawley, Aidan||Hiley, Joseph||Page, John (Harrow, W.)|
|Crouch, David||Holland, Philip||Powell, Rt. Hn. J. Enoch|
|Crowder, F. P.||Hordern, Peter||Price, David (Eastleigh)|
|Cunningham, Sir Knox||Hunt, John||Prior, J. M. L.|
|d'Avigdor-Goldsmid, Sir Henry||Iremonger, T. L.||Pym, Francis|
|Dean, Paul (Somerset, N.)||Irvine, Bryant Godman (Rye)||Ramsden, Rt. Hn. James|
|Deedes, Rt. Hn. W. F. (Ashford)||Jcnkin, Patrick (Woodford)||Rossi, Hugh (Hornsey)|
|Doughty, Charles||Kimball, Marcus||Royle, Anthony|
|Drayson, G. B.||King, Evelyn (Dorset, S.)||Russell, Sir Ronald|
|Scott, Nicholas||Temple, John M.||Wilson, Geoffrey (Truro)|
|Shaw, Michael (Sc'b'gh & Whitby)||Thatcher, Mrs. Margaret||Worsley, Marcus|
|Sinclair, Sir George||Turton, Rt. Hn. R. H.||Wylie, N. R.|
|Smith, John||Walker, Peter (Worcester)|
|Summers, Sir Spencer||Ward, Dame Irene||TELLERS FOR THE AYES:|
|Taylor, Sir Charles (Eastbourne)||Webster, David||Mr. Anthony Grant and|
|Taylor, Frank (Moss Side)||Whitelaw, Rt. Hn. William||Mr. Reginald Eyre.|
|Anderson, Donald||Hattersley, Roy||Morris, Alfred (Wythenshawe)|
|Archer, Peter||Heffer, Eric S.||Morris, Charles R. (Openshaw)|
|Atkinson, Norman (Tottenham)||Hilton, W. S.||Morris, John (Aberavon)|
|Bagier, Gordon A. T.||Hobden, Dennis (Brighton, K'town)||Noel-Baker, Francis (Swindon)|
|Barnett, Joel||Hooley, Frank||Norwood, Christopher|
|Bidwell, Sydney||Horner, John||Ogden, Eric|
|Blackburn, F.||Houghton, Rt. Hn. Douglas||O'Malley, Brian|
|Blenkinsop, Arthur||Howarth, Harry (Wellingborough)||Oram, Albert E.|
|Booth, Albert||Howell, Denis (Small Heath)||Orbach, Maurice|
|Boston, Terence||Howie, W.||Orme, Staniey|
|Bottomley, Rt. Hn. Arthur||Huckfield, L.||Owen, Will (Morpeth)|
|Bradley, Tom||Hughes, Roy (Newport)||Padley, Walter|
|Bray, Dr. Jeremy||Hunter, Adam||Page, Derek (King's Lynn)|
|Broughton, Dr. A. D. D.||Jackson, Colin (B'h'se & Spenb'gh)||Pardoe, John|
|Callaghan, Rt. Hn. James||Jackson, Peter M. (High Peak)||Pavitt, Laurence|
|Carter-Jones, Lewis||Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)||Pentland, Norman|
|Coleman, Donald||Jenkins, Hugh (Putney)||Perry, George H. (Nottingham, S.)|
|Concannon, J. D.||Johnson, Carol (Lewisham, S.)||Prentice, Rt. Hn. R. E.|
|Crawshaw, Richard||Jones, T. Alec (Rhondda, West)||Price, Christopher (Perry Barr)|
|Crosland, Rt. Hn. Anthony||Kerr, Dr. David (W'worth, Central)||Price, William (Rugby)|
|Crossman, Rt. Hn. Richard||Kerr, Russell (Feltham)||Reynolds, G. W.|
|Davies, Harold (Leek)||Leadbitter, Ted||Richard, Ivor|
|Davies, Ifor (Gower)||Lee, John (Reading)||Roberts, Gwilym (Bedfordshire, S.)|
|Dewar, Donald||Lector, Miss Joan||Robinson, W. O. J. (Walth'stow, E.)|
|Diamond, Rt. Hn. John||Lever, Harold (Cheetham)||Roebuck, Roy|
|Dickens, James||Luard, Evan||Rowlands, E. (Cardiff, N.)|
|Dunwoody, Mrs. Gwyneth (Exeter)||Lubbock, Eric||Ryan, John|
|Dunwoody, Dr. John (F'th & C'b'e)||Lyon, Alexander W. (York)||Shaw, Arnold (Ilford, S.)|
|Ellis, John||Lyons, Edward (Bradford, E.)||Sheldon, Robert|
|Ennals, David||McBride, Neil||Silkin, Rt. Hn. John (Deptford)|
|Ensor, David||MacColl, James||Snow, Julian|
|Faulds, Andrew||MacDermot, Niall||Thomson, Rt. Hn. George|
|Fernyhough, E.||Macdonald, A. H.||Tinn, James|
|Fitch, Alan (Wlgan)||McKay, Mrs. Margaret||Wainwright, Edwin (Dearne Valley)|
|Fletcher, Raymond (Ilkeston)||Mackenzie, Gregor (Rutherglen)||Walden, Brian (All Saints)|
|Fletcher, Ted (Darlington)||Mackle, John||Walker, Harold (Doncaster)|
|Foot, Michael (Ebbw Vale)||Mackintosh, John P.||Wallace, George|
|Fraser, John (Norwood)||McNamara, J. Kevin||Weitzman, David|
|Freeson, Reginald||Marsh, Rt. Hn. Richard||Wellbeloved, James|
|Gardner, Tony||Mellish, Robert||Wells, William (Walsall, N.)|
|Gourlay, Harry||Mendelson, J. J.||Whitaker, Ben|
|Gray, Dr. Hugh (Yarmouth)||Millan, Bruce||Whitlock, William|
|Gregory, Arnold||Miller, Dr. M. S.||Williams, Alan Lee (Hornchurch)|
|Griffiths, David (Rother Valley)||Mitchell, R. C. (S'th'pton. Test)||Winnick, David|
|Hamling, William||Molloy, William||TELLERS FOR THE NOES:|
|Harper, Joseph||Moorman, Eric||Mr. Charles Grey and|
|Harrison, Walter (Wakefield)||Morgan, Elystan (Cardiganshire)||Mr. Ioan L. Evans|
§ Mr. Eric Lubbock (Orpington)
I beg to move Amendment 34, in page 29, line 10, to leave out "thirteen" and to insert "six".
I do not wish to detain the Committee for long at this time of the evening, but I wish to remind the Committee that last year I moved an Amendment which would have provided that any person employed out of the United Kingdom for a single contribution week should be exempted from the Selective Employment Tax. The Financial Secretary to the Treasury, who replied on that occasion, said that if the Government had had a completely free hand in the matter, they would not have extended the tax to those employees whom I was seeking to exempt 1438 and that it was not their purpose to impose a tax on employees who were employed abroad. Indeed, the only excuse given by the hon. and learned Gentleman for imposing such a tax on persons employed outside the United Kingdom was that he had not had the opportunity to investigate whether it was possible to exempt them under the machinery provided for the introduction of the Selective Employment Tax.
I must say that this is one of the most ludicrous examples of how wrong it was to introduce the Selective Employment Tax without having given adequate consideration to the classes of persons who might be exempted if that exemption was in the national interest; and I can think 1439 of none more entitled to have been exempted than those covered by this Amendment. They make a very considerable contribution to the foreign exchange earnings of this country abroad, and when I raised this matter last year, I referred to those in the civil engineering and construction industries, in oil and in the airlines, and those engaged in any firm undertaking concentrated selling abroad.
I am not completely wedded to the period of six weeks mentioned in the Amendment, but I must ask why has the Chancellor accepted a period as long as 13. In the operations to which I referred last year, it was agreed that it would be a good thing to have a shorter period because some of them could be undertaken in a far shorter period than 13 weeks. Why so long a period? I do not want to detain the Committee at this hour, and I shall be satisfied if he will tell me that he will consider this on its merits.
Six weeks is far more suitable. It would extend the concession to a great many people whose work is of great value to our economy and, unless we can be told of some insuperable difficulty, I cannot understand what can be the Government's objection. I also cannot see why this should pose any difficulties administratively if we substituted six for 13 weeks and, with this very brief explanation, I hope that the Minister will be able further to save the time of the Committee by saying that he will accept my Amendment.
§ The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Norman Pentland)
As the hon. Member for Orpington (Mr. Lubbock) has explained, the object of this Amendment is to reduce from 13 weeks to six the length of the qualifying period after completion of which Selective Employment Tax will be refunded in full for each week of a continuous period of employment abroad, so long as the National Insurance contributions are payable by the employer. Liability for such contributions is usually for the first year of employment abroad. Before discussing the substance of this Amendment I should, without in any way seeking to labour the point, say that it would not, in fact, achieve its object unless 1440 "fourteenth" in line 15, on page 29 of the Bill was amended to read "seventh".
Apart from this technical defect, the cost of the Amendment might, we believe, be something of the order of £150,000 a year;but it is not on the cost that I wish to base my case. Before the Selective Employment Tax was introduced last year, we made it quite clear that it was not our purpose to impose a tax on employees employed abroad and that the tax extended to them merely as an incidental consequence of the link with National Insurance contributions.
This year, we propose to relieve the employers of those employed abroad by making provision for refunds, but the refunds are designedly limited to those employees who are genuinely employed abroad. That is the real point at issue. No case has been made for extending them to people who are really home-based but who go abroad for short periods as part of their duties. There is no reason to treat them differently from those employees in the service industries who never go abroad.
We are seeking to distinguish the employees who will attract refund by use of a 13 weeks qualifying period of employment abroad, and by adding safeguarding provisions to ensure that the continuity of employment, for purposes of the refund, will not be treated as broken even though an employee returns for short spells on business or is sick or on leave either here or abroad. These safeguards should make it unnecessary for an employee based abroad to have to serve the qualifying period twice merely because of some brief or incidental return to the United Kingdom. The Clause thus distinguishes overseas-based employees by reference to a qualifying period of appreciable length and also ensures that it would not have to be served twice in what is effectively the same period of overseas service.
The Amendment accepts the principle of a qualifying period, but would reduce the length of the period to six weeks. After careful consideration, we believe that this would be too short a period to distinguish those employees who are in a real sense "employed abroad" from others who go abroad only now and again, particularly if linked with the present safeguarding provisions which enable the qualifying period abroad to be 1441 treated as continuous despite short returns to this country. Withdrawal of those safeguarding provisions would mean that some refunds for genuinely overseas based employees would cover shorter periods than if the length of the qualifying period remained at 13 weeks.
Despite the hon. Gentleman's persuasive arguments, therefore, we are satisfied that the present provisions are better adapted to their purpose and better balanced than could be secured with a six-week qualifying period. I hope that he will accept that explanation; otherwise, I must ask the Committee to reject the Amendment.
§ Amendment negatived.
§ Mr. Patrick Jenkin
I beg to move Amendment No. 125, in page 29, line 15, to leave out from 'which' to 'began' in line 16.
The Parliamentary Secretary has explained the rationale of the qualifying period for this relief, and we accept that. There was force in the argument of the hon. Member for Orpington (Mr. Lubbock) that it should be shorter, but the Government are not prepared to accept that. Granted that there should be a qualifying period, why, once the qualifying period is completed, should not the entitlement to refund be dated back to the point at which the employee first went abroad?
The Clause as drafted means that although an employee has done his 13 weeks abroad, it is only for the 14th week onwards that the employer will be entitled to the refund. He is entitled to nothing for the first 13 weeks even though for the whole of that period the employee may have been fully and entirely based abroad, squarely within the intention of the relief which is given. Why, once he has established his residence abroad, cannot the refund be backdated to the time when he went abroad?
The Chief Secretary said at the outset of his speech on the last Amendment that the Government had made it clear from the beginning that it was not their intention to impose a tax in respect of employees based abroad but that this was brought in merely by a sidewind. In subsection (2) of the Clause they are going part of the way to effect their intention and to avoid the sidewind, but by some nasty gust that has caught them 1442 in the small of the back they have left these first 13 weeks in. Why should the employer suffer the tax and get no refund when the employee will have been based abroad for the whole of the period in question? My Amendment would leave out this tiresome side gust and would entitle the employer to refund from the beginning once the qualifying period had been achieved.
§ Mr. MacDermot
The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) finds it impossible to see what the reasons could be for this provision. May I try to explain the reasons to him?
There is no immense question of principle at stake here, and obviously the matter could have been dealt with in one of two ways—either in the way suggested in the Amendment, or in the way which we have adopted and to say that the employer will be entitled to the refund in respect of the employee from the time when he becomes a qualifying employee qualifying for refund, having done his 13 weeks' service.
I can see the argument which the hon. Gentleman has advanced, namely that once the employee has done his 13 weeks and has established his status, the employer should be entitled to refund for the whole period. The difficulty which would arise on doing that would be this. What people consider most unfair is when they compare their own situation with that of someone in a situation very proximate to their own and find a different treatment. That is the injustice—in inverted commas—which hurts. If one were to do what the hon. Gentleman suggests, the effect would be that an employer who had an employee who worked only 13 weeks abroad would get no refund. The employer who had an employee who worked anything over 13 weeks—say, 14 weeks— would then become entitled to a payment of £17 10s.
It is the employer who gets no refund at all when there is such a marginal difference who would feel this was unjust. This would lead to demands that one should avoid that sharp cut-off by some kind of tapering provision, or some kind of partial refund for employees who work less than 13 weeks abroad. One could not accede to those demands without undermining the concept of the 13 week qualifying period.
1443 In effect, what happens in our proposal is that the tapering operates the other way by enabling the refund to be made for each week after the 13 qualifying weeks. There are not a great number of people involved here, and the amount of money is not very great. It is impossible to estimate with certainty, but the best estimate we are given is that something of the order of £250,000 would be involved. It is impossible to be dogmatic in advance of experience, but it seems to us reasonable to assume, on the basis of previous experience, that an absolute, rather than a repayable, qualifying period will provide the most satisfactory borderline to draw. It is purely an attempt to draw the borderline which would not give a sense of injustice which led to this provision.
§ 11.15 p.m.
§ Sir Douglas Glover (Ormskirk)
The Financial Secretary's reply was the most extraordinary thing I have heard since the start of our consideration of the Finance Bill. His argument boiled down to saying that, because not many people were involved and because they could not make much of a row, nothing need be done.
The hon. and learned Gentleman should realise that these people are entitled to complain when they are not given this advantage. He must live in a strange world. Most of my friends are delighted if somebody they know is given a taxation concession. They do not complain about it, but ask their hon. Member to see if he can get them the same advantage for the following year. I do not object, mainly because I object to taxation, anyway.
The Financial Secretary did not argue the real case adduced by my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin). If a man is abroad for 13 weeks and one day he qualifies. If this means, in the thinking of the Government, that after such a time he is employed abroad, should he not be exempt from S.E.T. for the whole of the 13 weeks he is abroad? The hon. and learned Gentleman's argument was more ineffective and unconvincing than any I have heard adduced in previous Finance Bill debates.
It appears that the Financial Secretary considers that one can deal with this matter in one of two ways; either by 1444 way of justice or by way of injustice— and he has decided to proceed by way of injustice. It seems that he believes that the number of people involved is so few that they need not be taken into account because their vote against the Labour Party will not be significant.
People who are abroad for 13 weeks will probably be abroad for much longer. The date they went abroad should be operative time from which their firms should be exempt from S.E.T. After all, if a man becomes domiciled abroad for tax purposes, the date on which he went abroad is, if he has been away long enough, the operative date. Why should not that apply in this case?
§ Amendment negatived.
§ Mr. MacDermot
I beg to move Amendment No. 120, in page 30, line 3, to leave out from 'week' to end of line 7.
This Amendment should appeal to the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin), because he told us yesterday that he has a dislike of prolixity and went on to explain that he was referring to the written word. Here is a case where we have found that we were originally unnecessarily prolix because we had included a provision which could be deleted without altering the provisions relating to the refund of S.E.T. for these employees serving overseas. We find that the provisions of paragraph (a) alone are sufficient to ensure that the qualifying period does not have to start afresh after any temporary return the employee may make to the country, so we can delete paragraph (b).
§ Amendment agreed to.
§ Question proposed, That the Clause, as amended, stand part of the Bill.
§ The Deputy Chairman
Under Standing Order No. 47, in my opinion the principle of the Clause and any matters arising therein have been adequately discussed in the course of debate on the Amendments proposed thereto, and I therefore propose to put the Question, That the Clause, as amended, stand part of the Bill.
§ Mr. Jenkin
On a point of order, Mr. Irving. I have only one very small comment to make. This is the only Clause on this tax. We have covered only one or two aspects which, in a sense, are not in the Clause, and we have not had very much on what is in it.
§ Question put and agreed to.
§ Clause, as amended, ordered to stand part of the Bill.