Speeches, Interviews & Other Statements

Complete list of 8,000+ Thatcher statements & texts of many of them

1966 May 17 Tu
Margaret Thatcher

HC PQ [National Finance]

Document type: Speeches, interviews, etc.
Document kind: House of Commons PQs
Venue: House of Commons
Source: Hansard HC [728/1093-1116]
Journalist: -
Editorial comments: 1430-1515. MT spoke at c1098.
Importance ranking: Minor
Word count: 8698
Themes: Industry, Taxation
[column 1093]

NATIONAL FINANCE

Income Tax Returns (Capital Gains)

1. Sir C. Osborne

asked the Chancellor of the Exchequer if he is aware that the requirements of the Income Tax returns concerning capital gains are causing difficulty to the accountancy profession, with the result that there will be delay in the payment of taxes; in view of these difficulties, if he will revise these requirements; and if he will make a statement.

The Chief Secretary to the Treasury (Mr. John Diamond)

I am aware of the additional work falling on the accountancy profession, but I cannot undertake to modify the requirements.

Sir C. Osborne

Would the right hon. Gentleman consult the Institute of [column 1094]Chartered Accountants to see whether the same aims cannot be achieved by simpler methods? Is he not aware that the present requirements are nearly driving members crazy in that profession?

Mr. Diamond

I am not aware of what the hon. Member says in the last part of the question. I do not think that members of the profession are ever likely to be driven crazy. But I am aware of certain anxiety, and my right hon. Friend has told the President of the Institute that we shall be prepared to discuss this matter with him.

Mr. Barnett

Is my right hon. Friend aware that, as a member of the accountancy profession, I am not quite as crazy or as miserable as the hon. Member for Louth (Sir C. Osborne)? But is my right hon. Friend aware that he could gain a great deal of good will by looking at the matter again and that he could assist both the accountancy profession and taxpayers by seeing whether he could do something to help in simplifying these tax forms?

Mr. Diamond

I have already indicated that we are only too glad to discuss this matter with leaders of the profession.

Mr. Stratton Mills

Has the right hon. Gentleman noted the dozen resolutions which have been tabled at the Inland Revenue Staff Conference this month? Has he also noticed that 179 senior grade tax officers resigned during the last year?

Mr. Diamond

My right hon. Friend the Chancellor reminds me that it is exactly 30 years since he moved an identical kind of resolution himself.

Travellers (Duty-free Spirits)

2. Mr. Brewis

asked the Chancellor of the Exchequer why the duty-free concession for travellers entering the United Kingdom has been increased from half a bottle to a whole bottle of spirits.

Mr. Diamond

To conform to international commitments affecting overseas visitors and to facilitate the passage through Customs of ever-increasing numbers of travellers.

Mr. Brewis

Could the right hon. Gentleman say how much this represents in terms of Scotch whisky being reimported into this country? Would it [column 1095]not be better to reduce the duty for people who take their holidays at home?

Mr. Diamond

No, Sir. It is better to conform, in the manner which I have already indicated, to the convenience of travellers coming either from Europe or from outside Europe.

Agricultural Machinery (Allowances)

4. Mr Ridley

asked the Chancellor of the Exchequer how much more Income Tax will now be paid by a married farmer, with two children, who buys a tractor worth £1,000, as a result of his change in the allowances for agricultural machinery.

Mr. Diamond

This depends on the amount of his income.

Mr. Ridley

Is not the right hon. Gentleman aware that I mentioned in the Question a constituent of mine with this income who has to pay £39 more a year? How does he think that the ordinary industrial worker would react if he were asked to pay £39 more a year in Income Tax from the average wage?

Mr. Diamond

I am anxious to serve the House, but I am Chief Secretary and not a juggler. There is no reference in the Question to income. The Question refers to buying a tractor worth £1,000.

Civil Servants

5. Mr. Iremonger

asked the Chancellor of the Exchequer what change in the number of civil servants he estimates will have occurred by this time next year.

Mr. Diamond

The 1966–67 Estimates provide for an addition of about 13,000 but do not include the staff necessary for new legislation such as the investment incentives scheme and the non-contributory benefits scheme.

Mr. Iremonger

Is the right hon. Gentleman aware that this is following the classical Socialist pattern of high taxation, swollen bureaucracy and economic failure? It is only President Johnson who is saving him from devaluation.

Mr. Diamond

If I may reply to the more serious parts of the allegations, I am aware that I have a responsibility to the House for public expenditure, and I am aware of the need to keep down to the barest minimum the increase in [column 1096]the number of civil servants. For that reason, I am glad to tell the House that during the three years 1964–67 the increase in the number of civil servants due to a classical Socialist Administration will be less than the number engaged in the final three years of the Conservative Administration?

Mrs. Thatcher

Will the Chief Secretary give comparable figures from 1951 to 1954?

Mr. Diamond

The figures have already been given by my hon. Friend and were published in Hansard.

Hon. Members

What were they?

Sir D. Renton

What will be the cost of these extra 13,000 civil servants?

Mr. Diamond

The rough cost is always £1,000 a head.

Post-War Credits

6. Mr. Iremonger

asked the Chancellor of the Exchequer what is the total amount of post-war credits outstanding now; and what considerations govern his decision as to whether or not to repay them at any given time.

The Chancellor of the Exchequer (Mr. James Callaghan)

About £217 million, plus £38 million in respect of accrued interest. Changes in the conditions of repayment are made in the light of the general economic situation.

Mr. Iremonger

Will the right hon. Gentleman recognise that he always has a choice to make when he is able to increase purchasing power, particularly in regard to those to whom he should give money, and will he now consider giving a really higher priority to those people who have been promised it by successive Governments?

Mr. Callaghan

Yes, Sir, but, without reverting to the last Question, it is very difficult both to reduce taxation and increase expenditure, as I spent some time explaining to right hon. Gentlemen opposite during the General Election.

Mr. Bessell

Would the right hon. Gentleman say whether he will consider special cases; people who are suffering particular hardship and to whom repayment would give special benefit?

[column 1097]

Mr. Callaghan

Yes, Sir, There is a wide variety of cases which can be met where hardship arises. They are well understood, and I will gladly see to it that the hon. Gentleman gets a copy of the circular explaining them, which is available to everybody.

Foreign Currency Securities (Sales)

7. Mr. Patrick Jenkin

asked the Chancellor of the Exchequer whether he will introduce legislation, with a provision requiring annual renewal, to give effect to the arrangements at present in force under the Exchange Control Act 1947, providing that 25 per cent. of the proceeds of sales of foreign currency securities must be exchanged for sterling at the official exchange rate.

Mr. Callaghan

No, Sir. No such legislation is required.

Mr. Jenkin

Does the right hon. Gentleman not recognise that, with the premium now standing at over 25 per cent., the tax is about 5 per cent. on every change of a portfolio investment? Does he not think that a tax of this sort should be levied under an Act of Parliament, passed on that behalf, and not under some Regulations under an Act framed for an entirely different purpose?

Mr. Callaghan

No, Sir. This is not a tax. It is a concession under which, at the present time, investors are able to use this market to secure 75 per cent. of the proceeds without surrendering them to the reserves at the normal rate. And that cannot, in any sense, be regarded as a tax.

Directors (Expenses and Fees)

8. Mr. St. John-Stevas

asked the Chancellor of the Exchequer whether he will take steps to remove present restrictions on the expenses and fees of directors of family companies which may be claimed before the levy of Corporation Tax.

Mr. Diamond

No, Sir.

Mr. St. John-Stevas

Are not the present limits of £13,000 a year, 15 per cent. of the profits that may be charged before tax, grossly discriminatory against the medium and larger sized family companies which are making such a great [column 1098]contribution to our industrial welfare? Will he not revise these limits upwards?

Mr. Diamond

No, Sir. I do not recognise any such discrimination. This broadly follows the pattern of previous taxation under Profits Tax. The limits were fully debated during the last Finance Act, and I do not see any reason to suggest their increase.

Mr. Barnett

Is my right hon. Friend aware that the Opposition are grossly exaggerating, mischievously exaggerating, the effect of Corporation Tax on close public companies of this type?

Mr. Diamond

I am certainly aware of that. I am sorry to have to observe that it is extremely difficult to try to get over—and I shall be greatly helped if hon. Members would assist me to get this over—that there are no penal provisions whatever in the Corporation Tax for close companies. The situation is ameliorated, not worsened, as compared with Profits Tax.

Mrs. Thatcher

Will the right hon. Gentleman confirm that he has received a large number of representations from both professional and industrial bodies showing that this tax is inequitable in its incidence, and will he say why he refuses to allow this group of people remuneration allowable for Corporation Tax at a level commensurate with the services which they render?

Mr. Diamond

I have said that the level is better, is higher, than the level that was thought appropriate when the hon. Lady's Government were in office.

Capital Gains and Corporation

Tax (Booklets)

9. Mr. Stratton Mills

asked the Chancellor of the Exchequer why the official explanatory booklets about the Capital Gains Tax and Corporation Tax were not available to the public until 23rd February; and if he will make a statement.

Mr. Diamond

Because of other work arising from last year's Finance Act.

Mr. Stratton Mills

Is the Chief Secretary aware that he has recognised once again the heavy burden which is placed on the Inland Revenue, and will he say specifically why it took six months longer to prepare this booklet than the one prepared by chartered accountants, which [column 1099]came out in August 1965, and the one prepared by certified accountants, which came out in September 1965?

Mr. Diamond

To answer the second part of that question first, outside bodies do not have the Revenue's obligation to give an authoritative interpretation of the law or a statement of the practice which will be followed. To answer the first part, my anxiety—as I have already described to the House and which I think is shared by hon. Members—is not to increase the number of civil servants so as to produce the document unnecessarily early. The only further comment I would make is that this booklet was prepared at a much shorter interval than the comparable booklet prepared by the Tories on a much shorter short-term gains tax.

Mr. Jenkin

Why did it take the Inland Revenue from July or August until February to find out what the 1965 Finance Act meant?

Mr. Diamond

It took the Inland Revenue a longer period to describe what a shorter tax meant.

Dollar Premium

10. Mr. Dodds-Parker

asked the Chancellor of the Exchequer whether he is aware that the dollar premium has now stood for some considerable period at over 20 per cent.; and, in view of the fact that this reflects adversely on the standing of sterling and puts British companies at a disadvantage against their foreign competitors in connection with investments overseas, what steps he intends to take to achieve a reduction in the level of this premium.

Mr. Callaghan

The measures in my Budget speech will have the effect of relieving pressure on the investment currency market. This small market has no bearing on the standing of sterling.

Mr. Dodds-Parker

Will the right hon. Gentleman look at this again and seek some disinterested advice—there is plenty of it about; and I do not mean Mr. Kaldor? Does he realise that the Prime Minister at the Economic Club in New York gave great praise to and claimed considerable credit for this type of investment, yet this action by the Chancellor is seriously undermining the status of these investments?

[column 1100]

Mr. Callaghan

I do not lack advice. I get it from all quarters, and I read it all and use it whenever it seems to be valuable. I am sure that the present policy is the right one; and it is producing more than £70 million a year, which goes into the reserves.

Mr. O'Malley

Is it not likely that the rise in the dollar premium last week arose as a result of the sharp falls on Wall Street and that once the present authorisations have been exercised, the result of the Budget proposals will probably be a fall in the premium?

Mr. Callaghan

That may be so. People tend to feel that they are “locked in” a holding when the price of securities falls.

Mr. Peyton

Is the right hon. Gentleman really saying that the dollar premium does not reflect the views of people in this country on the strength of their currency?

Mr. Callaghan

That is exactly what I am saying.

Capital Gains Tax

11. Mr. Robert Cooke

asked the Chancellor of the Exchequer what has been the yield from the Capital Gains Tax on tangible movable property since its introduction.

Mr. Diamond

This information is not available, but the yield would be very small so far.

Mr. Cooke

Would the right hon. Gentleman give an estimate of the yield in the first available year and tell the House how many persons are being employed to receive information from all these people who might have transactions which might be involved in this tax?

Mr. Diamond

No, Sir, because the returns issued last month have not yet come in and it is impossible, therefore, to make any kind of estimate.

15. Mr. Stratton Mills

asked the Chancellor of the Exchequer if individuals have to calculate their capital gains for submission to the Revenue or if this will be done for them where they provide the relevant information.

Mr. Diamond

Individuals have to calculate their capital gains or losses and enter them in their Income Tax returns.

[column 1101]

Mr. Stratton Mills

Will the right hon. Gentleman look at this again to see that individuals have all the information required as to profits and losses during the year, as the Inland Revenue can do the calculations which are extremely difficult where the question of rights issues arises?

Mr. Diamond

The Inland Revenue will be only to glad to be of help and assistance. The booklet which is being issued is specifically for the purpose of giving assistance. If the profits and losses are calculated, there remains little to do.

Internal Air Services (Fuel Tax)

12. Mr. Robert Cooke

asked the Chancellor of the Exchequer whether he will remit the fuel tax on petrol used for internal air services to bring it to the same level as that levied on jet turbine fuels.

Mr. Diamond

No, Sir.

Mr. Cooke

Is the Chief Secretary aware that many of the smaller internal airlines face going out of business because of the disadvantages with which they find themselves faced compared with the larger companies which pay a different type of tax, and will he look at the whole matter again?

Mr. Diamond

Under my right hon. Friend's proposal the tax in question is refunded to internal airlines.

Later——

Mr. Diamond

On a point of order, Mr. Speaker. May I have your permission to correct a statement I made when answering Question No. 12? I apologise to the hon. Member for Bristol, West (Mr. Robert Cooke), but as we do not read out the Question we are sometimes not absolutely sure what the words in a Question actually are. The Question refers to fuel tax and I replied to a point in connection with employment tax.

Mr. Cooke

Perhaps I may reinforce my request to the right hon. Gentleman to look at this matter again because these people are in dire straits.

Mr. Diamond

It was with the intention of giving the hon. Member that opportunity—I hope he accepts my apology—that I sought your leave, Mr. Speaker, to correct my answer immediately. I am afraid, however, that my right hon. Friend is not prepared to look at the question again this year.

[column 1102]

Government Contracts (Racial Discrimination Clause)

13. Mr. Winnick

asked the Chancellor of the Exchequer whether, in all contracts with Government Departments, he will introduce a clause barring any form of discrimination on grounds of a person's colour and race.

Mr. Callaghan

The Government are strongly opposed to racial discrimination in employment and although there are difficulties in making such a clause effective, I propose to give further consideration to this matter.

Mr. Winnick

I appreciate my right hon. Friend's reply and I am pleased to know that this matter is being looked into. Would he not agree that such a clause would give a clear lead by the Government against any form of discrimination in employment, and is my right hon. Friend aware that such a clause works in other countries, notably in the United States?

Mr. Callaghan

That is one of the factors that has influenced me: that they apparently make it work in the United States. We must draw a distinction, however, between something that is purely declaratory and something which would be effective, and that is the further point I want to consider.

Savings (State Unit Trust)

14. Mr. Cant

asked the Chancellor of the Exchequer whether he is aware of the fall in personal savings as a proportion of national income; and whether, in this context, he will make a statement regarding the formation of a State unit trust.

Mr. Callaghan

The latest figures show that the ratio of personal savings to disposable income has remained at about 8 per cent. during the past three years.

I have no further statement to make at present about a State unit trust.

Mr. Cant

Would the Chancellor say whether, in his Budget strategies, he is not dealing a death blow to savings in the public sector? Is he aware that I am concerned because he is quite obviously financing so much of his below-the-line capital expenditure by forced savings through taxation?

[column 1103]

Mr. Callaghan

It is quite true, of course, that we have got a very large Budget surplus this year, but that should be a matter for opprobation and not denigration.

Sir Knox Cunningham

Would the right hon. Gentleman say if such a State unit trust would simply mean that it invests in Government securities and, if not, how would that help savings in the public and State interest?

Mr. Callaghan

As I said in my original Answer, I have no further statement to make at the moment.

Sir G. Nabarro

How does the right hon. Gentleman conceive the idea that unnecessarily onerous taxation and an unnecessarily large Budget surplus is a matter of approbation to the nation, though it may be a matter of approbation to him personally?

Mr. Callaghan

The hon. Gentleman is putting words which I did not use into my mouth.

Sir G. Nabarro

The right hon. Gentleman said “approbation” .

Mr. Callaghan

I said that it was a matter of approbation to have a large Budget surplus out of which to finance necessary borrowings by local authorities and nationalised industries. I do not see how that can be denied.

International Liquidity (Discussions)

16. Mr. Bruce-Gardyne

asked the Chancellor of the Exchequer when he now expects to receive the reports of the Ministers' Deputies who have been studying the question of reform of the international liquidity system; and if he will make a statement on the progress of this work to date.

Mr. Callaghan

The Deputies' Report is likely to be ready in June or July.

Mr. Bruce-Gardyne

In view of the recent public controversy between the Managing Director of the International Monetary Fund and the Chairman of the Group of Ten, could the Chancellor tell us whether the Government will bear in mind in framing their attitude on the proposals for monetary reform that they must command the support of the [column 1104]majority of the Group of Ten if those proposals are to be accepted?

Mr. Callaghan

That is only partly true, I think. They must certainly command the support of the Group of Ten; but they must also command the support of member countries of the I.M.F. who were not included in these preliminary discussions.

Nationalised Industries

(Capital Requirements)

17. Mr. Peyton

asked the Chancellor of the Exchequer why he decided that the capital requirements for 1966–67 of electricity and gas industries, the Post Office, British European Airways, London Transport, and British Transport Docks should be met by an increased proportion of Exchequer borrowing rather than from internal resources.

Mr. Diamond

Because the proportionate burden of capital expenditure must be expected to vary from year to year.

Mr. Peyton

Would not the right hon. Gentleman agree that the demands of the nationalised industries upon our resources are immense and that if they are not to grow unreasonable they must be subject to some form of discipline? This constant weakening of pressures by the Government on these industries to provide for their own needs out of their resources is wholly wrong and grossly unfair to other sectors of the economy.

Mr. Diamond

Of course, these demands must be subject to the most careful scrutiny. Indeed, that is what is happening at present.

18. Mr. Peyton

asked the Chancellor of the Exchequer why there has been a downward adjustment by £96 million of the capital requirements of the nationalised industries, referred to in paragraph 6 of Command Paper No. 2974, in view of the fact that the programmes of those industries have already been vetted and approved.

Mr. Diamond

The individual programmes are not altered but experience shows that there is always some shortfall in the aggregate of the approved programmes due to unforeseen difficulties and delays.

[column 1105]

Mr. Peyton

Does it not seem very odd, even to the right hon. Gentleman, that when some very careful sums have been done by the industries, by the Ministry of Power, the Ministry of Transport and his own Department and they having all agreed on these sums, they should now say they should not spend them? Does not the right hon. Gentleman think that the budgeting should be more careful?

Mr. Diamond

It is in order to be more careful in budgeting that we are putting down the best estimate we can. It does not relate to individual programmes but to the fact that experience of previous years shows that, however careful one is on an individual programme, due to unforeseen delays the total aggregate expenditure is not met. In the previous year it was £124 million.

Mr. Speaker

Mr. Hooley.

Mr. Peyton

rose——

Mr. Speaker

Order. I did not call the hon. Member for Yeovil (Mr. Peyton).

Industrial Safety Wear (Tax)

19. Mr. Hooley

asked the Chancellor of the Exchequer what is the yield of Purchase Tax on safety wear supplied to industrial users; what classes of safety wear are exempt from tax; and whether he will abolish the tax on this class of goods.

Mr. Diamond

The detailed information on the yield is not available. Protective boots designed for use by miners or quarrymen, or moulders, and protective helmets are exempt from tax. It would not be practicable to exempt industrial safety wear generally.

Mr. Hooley

Is my right hon. Friend aware that the number of accidents per 1,000 employees in the steel industry is running at 60, compared with 28 per 1,000 in manufacturing industry generally? Would he not think that an exemption from Purchase Tax would assist in reducing this accident rate?

Mr. Diamond

I shall certainly look at that. I do not think my hon. Friend identified the kind of protective clothing he has in mind, but I shall look at the point he has made.

[column 1106]

Decimal Currency System

20. Mr. J. H. Osborn

asked the Chancellor of the Exchequer what representations he has had from trade, commercial and industrial associations about the system of decimal currency to be adopted in this country; and whether he will reconsider the decision to adopt the £/cent in view of the complexities resulting from the circulation of a half cent piece.

Mr. Callaghan

I have received only two or three representations indicating a preference for a 10s. unit. The Government gave the fullest consideration to the arguments for the selection of different major units put forward to the Halsbury Committee and decided to retain the £.

Mr. Osborn

Would not the Chancellor agree that this decision means we shall have this awkward half cent piece, which will not fit in with the decimal currency system? Is it now too late to reconsider the decision? Is this the last word?

Mr. Callaghan

I think there was pretty general acceptance of the decision. I think the country was anxious that there should be a decision; and it would be unwelcome to a great many people if argument continued about the matter now because industry wants to get on and to plan ahead. I recognise that the half cent is a transitional deformity in the currency system, but we are devising a system which we hope will last for the next thousand years as the present system has lasted for a thousand years.

Mr. Lubbock

Does the Chancellor recognise that if he had chosen a 5s. cent all coins from 3d. upwards could have been retained and that this would have saved at least £40 million which could have been lopped off the conversion?

Mr. Callaghan

We looked at that. I cannot remember the reasons why we rejected it, although I am sure that they were jolly good ones.

Mr. Sheldon

Would not my right hon. Friend agree that the divergence of opinion between the single unit cent and retaining the £ as it is is largely a divergence between the interests of the [column 1107]City and of industry? Would he not think of putting the situation of industry first in priorities and offering some encouragement that we might get this change introduced before 1971?

Mr. Callaghan

I am glad that my hon. Friend has asked that question because it enables me to say that the decision was not reached in the face of divergence of interest between the City and industry. Indeed, some of the organisations representing industry said that they were content to leave the decision with the Government because the argument was evenly balanced. We could have an academic discussion for a long time to come, but if, as my hon. Friend wants, the system is to be introduced as early as possible, I ask the House—the decision having been taken—that we should get on with it now.

Pirate Radio and Television Stations

(Advertisement Costs)

21. Mr. Hugh Jenkins

asked the Chancellor of the Exchequer if he will disallow for taxation relief purposes the cost of advertising on pirate radio or television stations.

Mr. Callaghan

No, Sir.

Mr. Jenkins

Does my right hon. Friend recognise that what he is doing is subsidising the theft of performance on the one hand and proposing to tax legitimate performance on the other hand? Will he reconsider and reverse these two things?

Mr. Callaghan

I do not think I should want at this stage to recommend to the House that we should decide whether advertising should be allowed for taxation purposes by reference to the merit of the particular medium through which the advertisement is made.

Sir A. V. Harvey

Is not the Chancellor embarrassed by the situation when 18 months ago the Postmaster-General said that he would shut down these stations and the Dutch have been able to do so? Are the Government afraid to do so because the stations are too popular?

Mr. Callaghan

I do not think this is my responsibility; but I can tell the hon. Member that I live in an almost permanent state of embarrassment. [column 1108]

Later——

Mr. Jenkins

On a point of order. In view of the entirely unsatisfactory nature of the reply of my right hon. Friend the Chancellor of the Exchequer to Question No. 21 on pirate radio and television stations, in accordance with your Ruling, Mr. Speaker, that these questions should be raised at the end of Question Time, I give notice that I shall raise the matter on the Adjournment at the earliest possible moment.

Mr. Speaker

The hon. Gentleman misunderstood my Ruling. If an hon. Member does not like the answer to a Question, he must give notice before we move to the next Question that he intends to raise the matter on the Adjournment. What I was suggesting was that tricky points of order during Question Time might be raised at the end of Questions.

Tax Evasion

22. Mr. Ashley

asked the Chancellor of the Exchequer what proportion of those found to be evading taxes in the last financial year were prosecuted.

Mr. Diamond

In 1964–65 there were 94 prosecutions for false accounts, false returns and false claims to allowances. In the same year 12,405 cases of under-assessment were settled by the payment of tax and penalties. The criteria are different and percentages or proportions would be misleading.

Mr. Ashley

In view of that Answer and as this year a man was sent to prison for seven months because he defrauded to the extent of £175, whilst others who have defrauded to the extent of thousands of £s have gone scot-free, would the Chief Secretary agree that the system of selecting cases for prosecution is grossly unfair and needs revision?

Mr. Diamond

No, I could not accept that for one moment. If my hon. Friend would care to send to me details of the one case he has in mind, I would be glad to be of what help I properly can.

23. Mr. Ashley

asked the Chancellor of the Exchequer what proportion of those found guilty of evading taxes in the last financial year were concerned with land deals.

Mr. Diamond

I regret that this information is not available.

[column 1109]

Schedule E (Rents)

26. Mr. David Mitchell

asked the Chancellor of the Exchequer whether, in assessing the taxpayer's liability to pay Schedule E tax under Section 47 of the Finance Act 1963, the notional income on which tax is levied will be limited to the difference between the rent paid and the rent which would be applicable when fixed by a local rent officer for a regulated tenancy under the terms of the Rent Act, 1965.

Mr. Diamond

No, Sir. This is not the measure of liability prescribed by Section 47.

Mr. Mitchell

I cannot see any logic in the position that the Chancellor of the Exchequer is taking up. If one is levying a tax on the difference between——

Hon. Members

Question.

Mr. Mitchell

If one is levying a tax on the difference between an assumed rent and the rent actually paid, there must be some fair and external way of arriving at the figure of the fair rent.

Mr. Speaker

Questions must be put in the form of questions.

Selective Employment Tax

27. Mr. Wolrige-Gordon

asked the Chancellor of the Exchequer what will be the position of the fishing industry in relation to the Selective Employment Tax.

Mr. Diamond

As in the case of shipping, employers in the fishing industry who pay the tax will receive a refund.

Mr. Wolrige-Gordon

Is the Chief Secretary aware that almost the least planned for victim of this hasty, ill-considered and unplanned tax has been the fishing industry, which has been caused considerable and understandable confusion as a result of the introduction of this tax? Is the right hon. Gentleman aware that, just like agriculture, fishing needs to be classed as a basic productive and manufacturing industry?

Mr. Diamond

No, I am not aware of either of those statements and do not accept either of them. I am aware of a good deal of noise.

Mr. Hector Hughes

Does the Minister realise that in the national interest [column 1110]and in the interests of catchers and consumers the fishing industry deserves and requires a rebate, not a penalty? Would he take steps to see that that is put into effect?

Mr. Diamond

I have already said—I repeat it—that employers in the fishing industry who pay the tax will receive a refund.

Mr. Macleod

Does not the right hon. Gentleman realise that although the Government's retreat from an indefensible position in relation to agriculture is welcome, agriculture, fishing and forestry should be classed as manufacturing industries and that we shall press for that?

Mr. Diamond

It is for the right hon. Gentleman to decide on what course he will adopt. If the intends to press for that, there will be another opportunity for us to debate these issues.

28. Mr. Wolrige-Gordon

asked the Chancellor of the Exchequer if he will assist by fiscal means those development areas most seriously affected by the Selective Employment Tax.

Mr. Callaghan

The Government's measures to strengthen the development areas have had a substantial effect in increasing employment and there is no present need for the step proposed.

Mr. Wolrige-Gordon

Is the Chancellor aware that the introduction of the Selective Employment Tax has hit any regional development policy more seriously than anything else could have done and that, unless some alternative of the kind I suggest in my Question is put forward, the depopulation from my part of the country and from many other parts of the country will be increasingly intensified?

Mr. Callaghan

That extravagant language might be justified if it were not the case that under the Industrial Development Bill 40 per cent. investment grants will be payable; building grants, loans and the provision of factories will be continued for investment; there will be additional incentives for certain new projects; there has been a tighter control over I.D.C.s in the more congested areas; there is preferential access to the Public Works Loan Board for local authorities [column 1111]in certain regions; development districts have been exempted from the deferment of capital projects; banks have been requested to give special regard to regional development policies; and the loans and building grants, as my right hon. Friend said yesterday, will continue to be available for new hotels and other employment-creating institutions in the tourist industry.

Mr. Younger

Is not the Chancellor aware that all that wonderful catalogue does not alter the fact that the Selective Employment Tax will tax people out of jobs, particularly in the Highlands? Will he not take this matter more seriously and discuss it with his right hon. Friend the Secretary of State for Scotland with a view to doing something concrete and giving jobs back to those who will be thrown out of work?

Mr. Callaghan

The hon. Gentleman, like the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon), is forecasting something which has not yet happened. The tax is not yet in operation. They are merely making prophecies. I am asked in the Question to give additional assistance over and above the very wide range of measures that I have catalogued this afternoon which are an earnest of the Government's desire to ensure that there is full employment in these regions.

Mr. Woodburn

Is my right hon. Friend aware that the same dismal prophecies were made about the Tory tax on hotel occupants which was proposed and then withdrawn?

Mr. Callaghan

I think that is true. At that time, unlike now, there was considerable unemployment in Scotland. I am glad to say that now there is a record number of vacancies in proportion to the number of unemployed in Scotland and the position is better than it has been for as far back as I can remember.

Mr. Baker

Does not the Chancellor realise two things; first, that the rate of male unemployment in North-East Scotland is double that for the rest of Scotland and, secondly, that service industries, which employ a great number of people in the areas concerned in this Question, do not qualify for the grant?

Mr. Callaghan

The hon. Gentleman obviously does not listen to my answers. [column 1112]The Question asks if I will give additional fiscal assistance. I have already given the House this afternoon a long list of the help that is available to these areas. Perhaps when the hon. Gentleman is making speeches in the country he will pay equal, if not greater, regard to that list.

31. Mr. Loveys

asked the Chancellor of the Exchequer to what extent, under the terms of paragraph 17 of Command Paper No. 2986, agriculture, horticulture and forestry will be adversely affected by the proposed Selective Employment Tax.

Mr. Diamond

On the first part of the Question I would refer the hon. Member to the reply given by my right hon. Friend the Minister of Agriculture on 13th May. On Forestry, I cannot add to what was said in the White Paper.

Mr. Loveys

I welcome the change in the system of repayment announced since the White Paper was published, but how is account to be taken of the cost to these industries of outside purchases which will be affected by the tax and which in the case of agriculture alone amount to approximately £1,000 million a year?

Mr. Diamond

I am not quite clear that I follow the hon. Gentleman's supplementary question. He understands, I am sure, that the tax is payable by everybody who pays an insurance stamp—that is the criterion—and my right hon. Friend has indicated where the repayment will take place as to the agricultural industry.

Mr. Grimond

We welcome the change in the Government's attitude, but would it not be much simpler, as farmers are readily identifiable, to relieve them of this tax altogether?

Mr. Diamond

Self-employed farmers are relieved of this tax altogether, and the essential principle in collecting the tax at the minimum cost is the one I have just indicated.

Mr. Wingfield Digby

With regard to forestry, is the right hon. Gentleman aware that paragraph 17 is very ambiguous in that it does not make clear what will be given back? Will the two fixed scales of grant remain, or will there be one scale in future?

Mr. Diamond

The hon. Gentleman is right in saying that the paragraph does [column 1113]not precisely describe the amount in every single case, but discussions will take place which will lend further clarification.

Mr. Gibson-Watt

In view of the importance of forestry to the Welsh rural economy, will the right hon. Gentleman come clean and tell the House whether these industries, agriculture, forestry, fishery and horticulture, will be treated in exactly the same way?

Mr. Diamond

I do not take offence at what the hon. Gentleman said about coming clean. I know that he did not mean what he said. His hon. Friend the Member for Finchley (Mrs. Thatcher) who is sitting on the Opposition Front Bench, is always very helpful on this kind of logic. The Question refers to forestry, and my right hon. Friend has already indicated the effect on agriculture.

33. Mr. Lubbock

asked the Chancellor of the Exchequer if he will exempt institutions of higher education which are negotiating for accession to universities from the Selective Employment Tax.

Mr. Diamond

No one for whom flat rate employers' National Insurance contributions are paid is exempt. Educational institutions in receipt of public funds will be variously compensated to the extent set out in the White Paper, paragraph 22.

Mr. Lubbock

Is the right hon. Gentleman aware that the particular institutions which I mention will have to dismiss lecturers as the only means possible of finding the money with which to pay the tax? Is this not extremely unfortunate just at a moment when they are negotiating for accession to university status?

Mr. Diamond

No, Sir; I am not aware that that is the only method they have for meeting the tax.

Mr. Iain Macleod

Could the right hon. Gentleman clear up a point which arises out of the White Paper? It lays down that universities will have recompense in one way or another through the University Grants Committee, but for modern universities the university is the unit whereas for many other universities the college is the unit. Will the college have the same treatment as the university?

Mr. Diamond

With great respect to the right hon. Gentleman, I do not [column 1114]think that that is a question, as he himself pointed out, which arises on this Question, being directed to the White Paper.

Mr. Macleod

But the Question is directed to institutions of higher education. Is the Chief Secretary telling the House that, as so often, he has not even thought of this point in relation to the colleges, apart from the universities?

Mr. Diamond

That has been adequately set out in paragraph 22 of the White Paper.

Government Departments (Press Advertisements)

30. Mr. Moonman

asked the Chancellor of the Exchequer if he will indicate the actual amounts spent by Government departments on advertising in the national daily and Sunday newspapers.

Mr. Diamond

The amounts paid by Government Departments (excluding the Post Office) for display advertising space in the national daily and Sunday newspapers in 1965–66 were £1,218,241 and £1,110,502, respectively. It is not possible without disproportionate expense to identify amounts paid in respect of semi-display and classified advertising in particular kinds of newspapers. In addition, the Post Office paid £142,318 for all forms of advertising in the national dailies and £47,844 in the national Sunday newspapers.

Mr. Moonman

Would not my right hon. Friend agree that the figures reveal a very small allocation to the newspapers associated with the working-class movement and that this is causing a great deal of concern, not only in the printing industry, but also in the nation as a whole from the point of view of the sort of society we would like to have?

Mr. Diamond

I am aware of my hon. Friend's anxieties, but I think that the full answer to this Question was given by my hon. and learned Friend the Financial Secretary to my hon. Friend the Member for Salford, East (Mr. Frank Allaun) on 26th April.

Non-industrial Civil Servants

32. Sir D. Renton

asked the Chancellor of the Exchequer why Her Majesty's Government have increased the number of [column 1115]non-industrial civil servants by nearly 11,000 since 15th October, 1964, at a cost of about £11 millions at a time when manpower is scarce and there is a need to save public money; whether it is the Government's policy to increase or reduce the present strength of the Civil Service; and what attempts are being made to save manpower and expense and improve efficiency by the use of computers and other modern techniques in Government departments.

Mr. Diamond

All Government Departments are enjoined to make full use of modern techniques such as computer installations to economise in the use of manpower. The increase in recruitment is to provide the necessary means for carrying out the Government's new policies, and for manning existing essential services.

Sir D. Renton

When there is both a general shortage of administrative manpower and heat in the economy, why do the Government deliberately set such a bad example to other employers as to increase by 25,000 in two years—for that is what it will have been—the total number of non-industrial civil servants employed by them?

Mr. Diamond

I have already indicated the care which the Government take in examining every single request for additional civil servants and the need to give effect to Government policies which are the wish of the people of this country—[Hon. Members: “Oh.” ]—upon which an election has been fought and in regard to which we are carrying out our election promises. In the comparable period under the Government of which the right hon. and learned Gentleman was such a distinguished member, the increase was higher.

Bank Notes (Design)

34. Mr. Hector Hughes

asked the Chancellor of the Exchequer, in view of the similarity in format between £1 notes, £5 notes and £10 notes, if he will direct the Bank of England to differentiate them respectively in size and colour.

Mr. Callaghan

Current Bank of England £1, £5 and £10 notes are already differentiated in both size and colour.

[column 1116]

Mr. Hughes

Does the Chancellor realise that even in these affluent days one does not want to make the mistake of giving away a “fiver” or a “tenner” for a “one-er” , which is very easily done, having regard to their similarity, and will he, therefore, change the form of these notes in order to prevent such unfortunate error?

Mr. Callaghan

I never expected to live to hear a Scottish Member say that it was easy to give away a £5 note instead of a £1 note.

War Loan

35. Mr. Weatherill

asked the Chancellor of the Exchequer if he will state the estimated cost of allowing holders of 3½ per cent. War Loan the option of converting such stock to Premium Bonds.

Mr. Diamond

If holders of War Loan were allowed to convert at par into Premium Bonds, the effect would be the same as if they were given the option of redeeming their holdings at par. The cost of such a redemption would be £1,909 million.

Mr. Weatherill

But will not the right hon. Gentleman agree that many people who purchased 3½ per cent. War Loan were small investors who believed that they were being patriotic and that they could not put their money into a safer investment than Britain? Does not the present price of 51 per cent. amount almost to a national scandal, and ought not an opportunity to be given now to those who have held this stock for 20 years or more to go into Premium Bonds and save at least some part of their shrinking capital?

Mr. Diamond

The hon. Gentleman will be aware that this matter has been discussed many times by Governments of all parties but, because of the difficulties in dealing with the matter and selecting worthy cases, it has not been found possible to make the kind of advance he suggests.