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Third Schedule—(Purchase Tax—Intermediate Rate)

Volume 440: debated on Wednesday 16 July 1947

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I beg to move, in page 61, line 28, at the beginning, to insert:

"Glass mirrors (whether framed or not), not being optically worked or specially designed for use with machinery, tools or instruments, and mirrors (whether framed or not) being toilet requisites and not being articles supplied as part of a toilet set."
We inserted in Clause 6 a reference to mirrors, and I informed the House then that we would have to make a consequential Amendment when we came to this Schedule which deals with the Intermediate Purchase Tax rate of 66⅔ per cent. My right hon. Friend undertook, at an earlier stage, to reduce the Purchase Tax on certain classes of mirrors in common use from 100 per cent. to 66⅔ per cent.

Amendment agreed to.

I beg to move, in page 61, line 30, to leave out from "mains," to the end of line 36, and to insert:

"of the following descriptions:—
Space heating appliances and apparatus, including appliances and apparatus of a kind used for boiling or cooking and also for space heating.
Instantaneous water heaters.
Immersion water heaters.
Storage water heaters.
Circulator water heaters for tank storage.
Water boilers for tank storage or central heating."
This Amendment implements an undertaking given by the Chancellor with regard to certain electrical and gas appliances which operate from the mains. The cost to the Revenue will be £12 million.

The Chancellor said that he would listen to further arguments and give further consideration to the question of water heaters. He will remember that in the short discussion we had on the last stage, I referred to instantaneous gas water heaters, and that he poured scorn on me because he did not think that any water heater was instantaneous. I was, of course, referring to that type of gas water heater which only uses gas when the water tap is turned on, except for the small amount of gas that is consumed by the pilot light I wish to put a few arguments to the Chancellor, so that he may perhaps fulfil part of his undertaking, if he has not been listening to the same sort of arguments in the interim. I want him to believe that those arguments are based on two points of view particularly. First, I am desirous of achieving as much fuel economy as possible; and, second—and just as important—I want this tax to be fair to all income groups. If the Chancellor took the Purchase Tax off the gas instantaneous water heater of the type I have mentioned to him, he would be being more fair to all income groups than he is by imposing a 66⅔ per cent. Purchase Tax. As a result of the Purchase Tax, orders for this type of heater, so I am instructed, have declined by about 75 per cent, since Budget Day. There can be no doubt that to put a Purchase Tax on such articles as these has had a definite effect.

This type of heater, with which many hon. Members will be familiar—though perhaps the Chancellor will not be familiar with it—is, I am told, installed in common form in practically every local authority house. [HON. MEMBERS: "No."] Hon. Members dissent. Obviously there will be cases in which that is not so, but in general I think it is commonly found in local authority houses. [HON. MEMBERS: "No."] Well, I have seen a great many local authority houses which have them, and I am told that that is so. Therefore, this is of some importance in housing at this time. I imagine we are all agreed that whatever may or may not be a luxury, hot water is not one. And even right hon. Gentlemen opposite know the use of hot water.

There are, approximately, one million of this type of instantaneous water heaters in general use today. By using this type of water heater, it is estimated—and I believe the figures have been given to the Chancellor, so he can correct me if I am wrong—that in a family unit of four, in order to heat 150 gallons of water per week there is a saving of 45 lbs. of coal per week over the amount of coal which would be required to heat that amount of water per week for that sized family. The saving over a five months' period—which is that covered by the fuel economy period—amounts to a total of 440,000 tons of coal. [Laughter.] I am sure those figures are known to the hon. Member for Nelson and Colne (Mr. S. Silverman) who is finding them a matter of some merriment. At any rate, the figures prove that this would result in some fuel economy.

If the right hon. Gentleman does not take the Purchase Tax off this type of heater he will, of course, agree with me that it will not be bought by those in the lowest income groups, who will then be forced to heat their water in some other way. If they use coal, they will be using much more coal than would otherwise be used, over the whole country, if they had gas heaters. If they do not use coal but boil up the water on their gas cookers, they will still be using a great deal more gas than they would be using with this type of heater. For those two reasons—from the point of view of fuel economy, and in order that we may be fair to the lowest income groups—I beseech the Chancellor to reconsider this matter. If he does not agree with all the arguments I have put and those which will be put by others, I would ask him to go into this very carefully with those people who do know the true figures so that he may give a just decision.

I think the Chancellor of the Exchequer as a Member of the Cabinet will admit that the electricity supply industry of the country, whether run by companies or municipalities, is doing its best to co-operate with the Government in securing the greatest possible fuel economy at the present time. When we are short of coal and of generating plant, I am going to ask the right hon. Gentleman to reconsider the question of immersion water heaters. When we were discussing this matter before, he said it was not the economical unit that it was claimed to be, but I hope to convince him even at this late stage, that it really is, and that the industry itself is most anxious that the Chancellor of the Exchequer should meet it on this point, because there are certain fundamental reasons with which I think he will agree if he wants to assist in securing the maximum coal economy.

The use of this type of heater for warming water is about the most economical method at present available to the householder. I claim that the immersion heater when properly fitted into a tank with thermostat control and with the tank properly insulated, provides as near 100 per cent. efficiency as any piece of apparatus can do. The warm bath of normal temperature can be secured by a consumption of two or three units, at the average cost of somewhere between two-pence pence or 2½d., based on the price of current at the present time. If the bath water is to be obtained by burning coal, between 12 and 15 lbs. of coal would have to be used for the same purpose. To provide those two or three units needed to raise the water to the necessary temperature, would require only two or three pounds of coal in the generating station as against 12 to 15 in the ordinary range. The coal used in the power station is of no use for any other purpose. It is practically waste coal, and it could not be used for carbonising gas or raising the steam in any big works. It can only be used in boilers specially designed for burning this type of coal. There we have a definite economy.

I want to put another reason for this on behalf of the housewife. The Government, because they are compelled to do so, are imploring women to leave their domestic duties and go into the factories to work. Women will be encouraged to do that if the moment they get home, they have available a hot water supply which will enable them to fill their kettles, boil the water in a minute or two on the gas ring and provide tea for the family. The housewife will have a tremendous advantage if she is allowed to have one of these immersion heaters installed in the water system. I think I have made out a really convincing case, one in which I honestly believe and which will persuade the Chancellor to meet us on this point. The House will agree that this is a matter that I can at least claim to know something about, through being associated with the industry in question.

10.30 p.m.

I heard an hon. Lady opposite say during the Committee stage that this type of apparatus was rather costly to use. That was because she thought that the charge for the units of electricity consumed amounted to a high figure, but I would ask anyone who makes that comparison to compare the cost with that of a ton of coal and with wood as fuel—if they could get it. Wood logs are running at £6 per ton. Electricity will have to go to a very much higher price than it is today, if it is going to compare unfavourably with the price of coal and the present cost of wood logs. Therefore, from the point of view of economy, and the point of view of coal economy, there is nothing which will secure hot water more cheaply than this method.

Before the Chancellor of the Exchequer gives a comprehensive reply, with his usual sympathy and understanding, I want to put before him a situation which possibly will not be in his mind. I am thinking in particular of a type of fireplace which is an assembly of articles used in the construction of working class homes and which includes not only the fireplace, but an electric fire, fire screen and guard. The total value of this article is in the neighbourhood of £18 and with the imposition of the 66⅔ per cent. Purchase Tax the price would shoot up to £30. This article is used not only in the design but in the construction of housing and is sold to builders' merchants and contractors. It would be impossible, at the price of £30, for it to be readily accepted in the construction of houses.

I do not know the proportion of deaths to children arising from fires. It is 30 to 40 years ago since fireguards were compulsorily introduced, but because of their unsightly appearance they are not generally used in the home today. This appliance would save the housewife a considerable amount of money. The electric panel might cost 30s. or £2 and that is taxable, while the other parts are not taxable. As the majority of the articles comprising this fireplace are nontaxable it seems rather unfortunate that the taxation should be imposed on the whole rather than on that part which is taxable. I would like the Chancellor to consider this point with a view to defining this matter clearly and unambiguously, particularly where this article is important to the housewife and the building of houses.

We had a fairly comprehensive discussion on the Committee stage and several hon. Members opposite, notably the hon. and gallant Member for Lichfield (Major Poole), expressed themselves very forcibly on the subject of immersion heaters. I know the hon. Member for West Ealing (Mr. J. Hudson) is against this. It looks as if he is about to speak. He told us that his own was very expensive. I told him then he ought to see whether he could not include it in something which would do better in the way of thermal efficiency.

My own was not an immersion heater but a gas heater, and the interruption of the noble Lord had no reference to the heater to which I referred.

Immersion water heaters cover both types. We ought to get something from the Chancellor on this to justify the inclusion in this Schedule of immersion water heaters, after the Debate we had in Committee. He should tell us exactly what he complains about. Is it a question of coal? If so, the hon. Member for Stockport (Sir A. Gridley) has disposed of that. He has given examples showing that the cost of electric immersion heaters is far less that the relevant cost in the use of household coal. Is the right hon. Gentleman frightened of an electrical breakdown next winter? If that is the case, can he say that the addition of this tax to immersion water heaters will result in a diminution in the sales of electrical apparatus such as will relieve electricity stations of a high proportion of their electrical output? Of course he cannot say anything of the kind. If fewer immersion heaters are sold between now and next Christmas, is it going to make a difference of a half a ton of coal—

I understand we are to discuss coal on Thursday. I think the noble Lord might confine himself to electricity.

I was hoping to confine myself to electricity, which I think will be out of Order on Thursday.

I am much obliged for your Ruling, Sir. I was trying to point out to the Chancellor that this was purely an electrical question, and I think he ought to try to justify to the House, considering the elaborate Debate we had in Committee, when many Members of all parties expressed themselves against inclusion, the attitude he takes today. I do not believe that he can show that the sale—he has tried to stop the sale by adding Purchase Tax to them—of water heaters would result in a great expenditure of electrical energy or a great expenditure of coal. I think that the House, having regard to the interest in this matter of all Members in the Committee stage, is entitled to a fairly elaborate explanation.

I am not going to be very elaborate at this time of night. I will try to give a reasonable and concise answer. The original proposal I made in the Budget Resolution was for a 66⅔ per cent. Purchase Tax on a very wide range of gas and electrical appliances. The matter was thereafter reconsidered, and by general agreement, I abbreviated that list and we have reverted to the pre-Budget status, which in some cases means freedom from tax altogether and in other cases a tax of 33⅓ per cent. In terms of taxation there are a large number of items indicated in the Schedule. On the other hand, there remains a residue of appliances—which do not, directly or indirectly, use a lot of fuel—which we have left unchanged. But I must ask the Committee to agree that, in the first case, space heaters and, in the second case, water heaters should remain in the Schedule. The reason why we have selected them is not that we do not value hot water at the right time.

Having thought about this a good deal, I agree in principle, with the hon. Member for Stockport (Sir A. Gridley) in what he said, namely, that wisely used by the careful and economical housewife and householder, these water heaters can be economical; but because human nature is what it is, over a great range of instances they are capable of great waste. These would be difficult to bring into line; and I think it will be evident that we will have to effect a fuel economy publicity campaign. It is right in the national interests to do so for the months ahead, particularly when the winter comes around, and we will have to ask people to be very careful in the use of electric current, apart from solid fuel. We have given great attention to it. We think that water heaters ought to stand with space heaters, subject to the higher Purchase Tax. This will be an important indication when we come to our fuel ecoonmy campaign, that these are dangerous instruments in the hands of thoughtless and wasteful citizens. It is against those citizens that the public must be protected. I have listened to what the hon. Member for North Blackpool (Brigadier Low) and the hon. Member for Stockport had to say. We do not deny that some careful users may find an economical means of heating water by these heaters, but a large number of them on the market at the lower price would introduce into many homes what would be, in present circumstances, essentially wasteful implements. In view of the fuel shortage of which we are all deeply conscious, I must ask the Committee not to accept the proposal.

I would put this to the Chancellor: while the argument which he uses may be valid in the case of certain electrical appliances, would he explain how a careless person can use more fuel with a gas instantaneous water heater unless he has all his taps full on?

I think that the Chancellor of the Exchequer is mistaken in the view that the water heater leads to carelessness. I am pretty certain that the gas ring or gas stove on which people will now heat water as they require it, is, in practice, quite as wasteful as and probably more wasteful than the water heater. I am sure that the Chancellor of the Ex- chequer has not given adequate consideration to it. I feel he was misled partly by an hon. Gentleman on my own side of the House who quite mistakenly attacked me for my evidence regarding the matter, and I think that he really did not understand what we were discussing. The point I wish to make for the Chancellor of the Exchequer's consideration is this: that if you heat a gallon of water on an ordinary gas ring you require, in order to get it up to boiling point—and you can do it in four minutes on an average gas ring—2,700 thermal units. But if you use an ordinary instantaneous gas water heater you use only 2,000. Therefore the Chancellor and the Government are all wrong, and there is no saving of coal or gas by the change that they are now offering to us.

I have a still more serious objection to raise which I referred to last time this matter was discussed. You will be raising the rent of the new houses, by raising the rent of the water heaters that will be placed in them. About £2 10s. is the usual amount charged each year as rent for the water heater to be put into the modern house. That amount will be raised if the water heaters are still placed in the new house, and the total rent will be raised. The result would be that while the Government, on one hand, are doing their best to reduce the rents of the new houses by a subsidy, at great expense to the Chancellor of the Exchequer, on the other, they are whittling away that benefit by the proposal that is now made. While it is too late now—[HON. MEMBERS: "No."]. At any rate, it is my view after the consideration that has been given to this, that it is too late. I hope that during the year the Government will consider the matter again, because I am sure that, both from the point of view of fairness to working people, and from the point of view of fuel economy, it would have been better if the Chancellor of the Exchequer could have added this to the many other concessions—and I agree he has made many other concessions. I am thankful for them, but I believe my right hon. Friend has made a mistake with reference to the gas water heater.

Having listened to this Debate, it still seems to me that the Chancellor of the Exchequer is out of date in the information on which he is acting. Does he quite realise that to-day, when an electricity supply company puts in a water heater, it takes the greatest pains to ensure that it is so put in, and so protected, that the loss of heat is reduced to the barest minimum? I know that happened in the past and that it is the case today. I happen to know, because I had one installed only a fortnight ago, and it is packed round with cork. I want the Chancellor of the Exchequer to look at this from the point of view of food production. Does he realise that electricity supply companies are now serving a great many dairy farmers? The progressive, dairy farmer is, more and more, using immersion heaters for getting real heat. He must have them for sterilising his dairy equipment. Where that equipment is put in properly—and it is done by the electricity supply companies so that there is the least possible waste of heat—I suggest to the Chancellor of the Exchequer that this is a progressive move because, the Ministry of Agriculture and the Ministry of Food want to get more milk, and the milk provided must be clean. The Chancellor of the Exchequer could help farmers but they will be scared off by the extra cost if this proposal goes through.

Amendment agreed to.

Schedule, as amended, agreed to.