HC Deb 12 December 1911 vol 32 cc2277-82

(1) As from the first day of January, nineteen hundred and twelve, the Excise Duty payable under Sub-section (2) of Section eighty-four of The Finance Act, 1910, on motor spirit made in Great Britain or Ireland shall be reduced to three halfpence per gallon.

(2) This Section shall be construed with Section eighty-four of The Finance Act, 1910.

The object of this Clause is to make an alteration in the duties upon motor spirit made in Great Britain and Ireland. The intention of the Clause is quite obvious, and in recommending it to the Chancellor of the Exchequer there are one or two observations I desire to make with reference to the industry in order to secure his support. First of all, I do not in any way object to the general principle of the tax upon motor spirit because I recognise that it is a tax which produces a very considerable sum, and an increasing sum. The first year it was put on it produced a sum of £320,000, and that has now gone up, according to the last estimates, to a sum of £440,000. As I say, I do not object to the principle of the tax, but in view of the enormous development which has already taken place since the tax was first introduced in this particular industry, and in view of the still greater development which we have every reason to anticipate will take place ill the next few years, I think even now it is desirable to reconsider this question, and see whether this tax could not be put on in a more equitable way, and in such a manner as to involve the least possible hardship upon the consumers of petrol. I may relieve the anxiety of the right hon. Gentleman at once on this question by saying that so far as petrol is concerned, it is obviously a tax which is entirely paid by the consumer of the article.

This industry of petrol production is growing very rapidly. So far as the production of crude petroleum is concerned, upon which the industry depends, there are no definite figures since 1908, and in that year 63 per cent. of the total came from the United States. Unfortunately only 2 per cent. came from any part of the British Empire—from Burmah, Assam, and the Dominion of Canada. As far as the output of petrol in European countries is concerned, 60 per cent. is controlled by the great combine of the Royal Dutch and Shell Company. On the other hand, the Standard Oil Company, which is not a great factor in the European petrol market, to a very large extent controls the illuminating oil throughout Europe generally. The industry of Great Britain, so far as petrol is concerned, is practically controlled by the Royal Dutch combine.

When the right hon. Gentleman introduced the tax on motor spirit he was exceedingly fortunate, because very shortly afterwards the price of petrol was lowered owing to a war of prices being entered into by the Royal Dutch combine and the Standard Oil Company, by way of retaliation by the former firm because the Standard Oil Company had cut prices in kerosene in the Eastern market. Therefore the tax was not felt, owing to the competition between these two great organisations. The situation is now somewhat changed. A reconciliation has practically been effected between these rival organisations, and there has been a tendency for prices to go up in consequence, which tendency will probably continue. Our experience with regard to petrol spirit surely shows that the idea that because this country is a free trade country therefore we are relieved from the undesirable operations of trusts and combines cannot be in the least degree substantiated. I do not suggest that the combine is likely to raise prices to a prohibitive figure. There is an enormous supply of this article from which motor spirit can be obtained. In addition, the motor spirit represents extra profit on the original undertaking, because it is a product for which until a few years ago there was small demand, the greater portion of it being thrown away or burnt.

The object of the new Clause is, while leaving the customs tax on the ready refined petrol spirit coming into this country exactly as it is at present, to reduce by 50 per cent. the Excise Duty upon the petrol spirit refined in Great Britain and Ireland. I hope the right hon. Gentleman will not say that any suggestion of this kind is inconsistent with the policy of free trade. So far as this question is concerned, I hope he will have the courage to rise above what I may describe as a foolish consistency. His object should surely be to do his best for British industries, to frame his taxes where they are necessary in such a way that they shall stimulate employment and bring more capital and more work to this country. I would urge upon him, if possible, to accept this view, and to follow his own excellent example in the Patents Act, 1907. The operation of this new Clause would have exactly the same effect on the petrol industry as the Patents Act has had upon the various industries concerned. What was the result of the Patents Act? I am not aware that the right hon. Gentleman has been seriously attacked by his own followers because the Patents Act represented any lapse from the principles of Free Trade, and in operation that Act has been in every way satisfactory to the industrial classes of the country. Since the introduction of that Act, I understand, about sixty foreign firms found it expedient to come into this country, and to set up their factories in Great Britain.

On the other hand, thirty-five British firms are now, under the operation of the Act, manufacturing on royalty terms for foreign firms who do not think it worth while to establish their individual factories in this country. I am told—I give it subject to correction—that the result of the operation of the Act of 1907 has been to give additional employment to no less than ten thousand persons in this country; that it has induced a million additional capital to be spent on plant, etc., whilst new industries have been introduced. If this process of refining motor spirit had been a patent process it would automatically have come under the operation of that Act. I do suggest that because it does not happen to be a patent process that we should not lose all the benefits which we should gain under the Patents Act. I believe if this new Clause were accepted the result would be that we should build up a new great refining industry in this country; that it would encourage employment and the investment of capital. If in the future the right hon. Gentleman is charged with inconsistency to free trade principles he would, I say, be perfectly justified in laughing at his accusers. I believe we are quite justified in saying that the result of a policy of this character in regard to this particular industry would have the same results as the Patents Act. It would lead to the investment of capital here. Those great organisations, the Standard Oil Company, the Shell Company, and the Royal Dutch Company, would be practically obliged to start their refineries here. Thus employment would be given to a very large number of people, and those the very people whom we desire to benefit—the unskilled labourer. I am told that in the production of this motor spirit a very large quantity of unskilled labour is required. Another advantage that we should gain from the adoption of this policy would be an increase of shipping rates, because when the crude oil was carried here, obviously the freight would be heavier than that in respect to the refined spirit merely.

There is another advantage which I would urge upon the right hon. Gentleman, and that is that it would be an encouragement to the storage of crude oil here in Great Britain. I do not want to overstate the case, but certainly some portion of our naval supremacy, and some portion of that undisputed position which our merchant shipping occupies amongst the mercantile marines of the world must be due to the monopoly we possess in steam coal. It is obvious that changes are taking place. The steam engine is admittedly a wasteful source of power, and some experts have come to the conclusion that the internal combustion engine is very likely to a large extent to take the place of the steam engine, especially for marine purposes. If that is so we shall have to look to our position in the future. We shall not occupy the same situation as we do at the present time with our monopoly of steam coal, and as I pointed out earlier, unfortunately, so far as oil is concerned the British Empire only produces about two per cent. out of the world's supplies. In these circumstances surely it should be our policy to give every encouragement to the storage of crude oil: it is a process which will have to be gradually brought about for the use of our Mercantile Marine, and what is still more important for the use of our Navy in time of war. I urge upon the right hon Gentleman in view of these developments whether he could not reconsider the whole question as to altering the incidence of this tax and whether he could not rearrange the taxes in some way in the manner I have indicated in this Clause. Even if there was a slight loss of revenue, I believe we should be more than compensated by the other results of the change of policy which I have indicated. We should be encouraging the storage of crude oil in this country which, I believe, will be a necessity of the future; we should be able to build up a new industry, and to give encouragement to capital, and what is perhaps more important, we should be able to give increased employment to labour.


I beg to second the Motion. It is perfectly obvious that the motor industry will be the great industry of the future. We ought to try to keep the industry in this country. We ought to build the car, and make the tyre, and prepare the motor spirit, and manufacture from the crude oil. I was greatly struck by the arguments of my hon. Friend when he spoke of the demand of the Navy, and the Mercantile Marine as well, for petrol. We ought to try and have the crude oil brought over here and refined in this country, and by doing so we should possibly be able to combat the machinations of the trusts, such as the Standard Oil Company, the Shell Oil Company, and others. There are many places in this country where we could set up manufactures for crude oil, and where we could get crude oil turned into petrol for use in our ships.


The hon. Member who moved this Clause made a very interesting speech, but I feel sure he will not expect me, when dealing with the Finance Bill, to follow him into all the arguments he used and which he stated with so much ability and skill. To put the matter shortly, the hon. Member's object is to secure protection for this industry. That may be a very laudable object, but the hon. Member must have articipated that the reply would be that it would be contrary to the Free Trade principles of the Government to indulge in any such Protectionist views at the expense of the taxpayers. The hon. Member dealt with a variety of subjects. He told us that the effect of his proposal would be to stimulate industry and create employment. In regard to all these subjects I must exercise considerable restraint upon myself and decline to follow the hon. Member, pleading not only the lateness of the hour but also the lateness of the Session and the impossibility of bringing the Debate on the Finance Bill to a conclusion within a reasonable time if I attempted to follow him. The hon. Member quoted as an illustration the Patents Act. I am grateful to him for the tribute he paid to the Chancellor of the Exchequer for the introduction of that Act and to the useful results to which he has borne testimony. This, however, is the old point as to whether that was a Protectionist Act or not, and every hon. Member of this House is quite familiar with the arguments. I trust, therefore, that the hon. Member will not think me disrespectful if I leave his arguments on this question where they are, and say that we must stand firm to the principles upon which we have commanded a majority of votes in this country, and we cannot go back upon the views which have been so endorsed.


I wish to point out this interesting feature. My hon. Friend who made this proposition made no reference whatever to any of his views on Protection. He put his case with regard to this particular motor industry quite fairly and impartially, and yet the right hon. Gentleman has made no attempt to answer it on the merits. The case for the Government is very weak indeed when they have to take refuge in the general principles which are held to be sacrosanct by hon. Gentlemen opposite.

Proposed new Clause negatived.


I beg to move that the following new Clause be read a second time:—