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Selective Employment Tax

Volume 728: debated on Thursday 12 May 1966

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asked the First Secretary of State and Secretary of State for Economic Affairs if he will undertake a survey in conjunction with the National Economic Development Council to examine the effect of the Selective Employment Tax on areas of high unemployment.

The Government remain concerned about the economic position of all the less prosperous areas of the country. No special survey is required.

Is the Under-Secretary of State not aware that the Selective Employment Tax is directly contrary to the Government's policy of promoting employment in these areas of high unemployment? Would the hon. Gentleman give the House some assessment of the damage which the tax will do in those areas?

The hon. Gentleman's assumption is false and, therefore, his conclusion is wrong. The important thing is that we have to keep an eye on all areas, and we are doing a great deal to change the structural balance of the country. As my right hon. Friend the Chancellor of the Exchequer has said, the new tax is a very flexible one and, over a period, may be used for a variety of useful purposes.

Would the hon. Gentleman reconsider the rather unsatisfactory answer he has just given? Would he not agree that in many areas of relatively high unemployment there is, for structural historical reasons, an imbalance between the service and manufacturing industries, and, therefore, in some areas the proposals may and probably will adversely affect those areas? Should he not make a special inquiry there?

May I make it clear that we are very concerned about what the incidence of the tax may be and to relate it to the needs of various parts of the country. In answer to the original Question, I said simply that no special survey seemed to be required.

As Northern Ireland has its own system of National Insurance, is there any administrative difficulty in excluding it from the tax altogether?

Does the hon. Gentleman realise that certain under-developed areas, including the South-West, are largely dependent on the tourist industry and that this tax will have a very serious adverse effect upon them?

We fully appreciate that it will have certain effects within the country, and we shall watch what happens in the South-West as well as in other development areas.

Is the hon. Gentleman aware that in the north-east of England, where there is still a long-term employment problem, business people are writing in great dismay about the effects of the tax to those of us on this side of the House who represent constituencies in that area? Is he aware that they will view the answer he has given today with great dismay?

As the representative of a constituency in the same part of the country, all I can say is that in my experience business men in the North-East are a great deal happier today that in any period over the last ten years.

In view of the very unsatisfactory nature of those answers, I give notice that I shall raise the matter at the earliest possible moment on the Adjournment.