HC Deb 02 August 1912 vol 41 cc2568-78

  1. (1) As from the day of the passing of this Act the Excise Duty payable under Sub-section (2) of Section eighty-four of the Finance (1909–10) Act, 1910, on motor spirit manufactured in Great Britain or Ireland shall be reduced to three halfpence per gallon.
  2. (2) This Section shall be construed with Section eighty-four of the Finance (1909–10) Act, 1910."


I beg to move "That the proposed Clause be read a second time."

This is of greater importance than any of the new Clauses I have put forward. It deals with a large question and with a national question of the utmost urgency, and I believe it will meet with a very sympathetic reception from the Chancellor of the Exchequer from his well-known record in these matters. It is really a question of the first moment from the Cabinet point of view. I do not want it to be understood for a moment that it is a proposal to reduce the Petrol Tax as such. I agree with almost all that the Noble Lord (Lord Robert Cecil) said on the question of the specific tax, but that is not my argument at all. If it were within the rules of order I should be perfectly willing to propose that the Petrol Duty on imported spirit should be increased to 4d. and again diminished on that distilled in the United Kingdom to 2d., so that the net result would be nothing to the Exchequer either way. I only mention that to indicate that I am not moving this with any desire to reduce the tax, but I have the strongest and most urgent reasons for pressing upon the Chancellor of the Exchequer that it is essential that there should be a large remission of the tax in the present circumstances on motor spirits distilled within the United Kingdom. May I ask the Committee to consider what is our present position in the world in respect to the question of distilled motor spirit? About 60 per cent, of the supply of Europe is under the control of the Royal Dutch Shell Combine. In the matter of petroleum and of the products of crude oil we have not, being a Free Trade country, escaped, or made any effort to escape, from the entire control of these products being in the hands of the two strongest combines that exist in the world, in any trade. The Chancellor of the Exchequer imposed this duty of threepence per gallon at the time when it represented a duty of, roughly speaking, 25 per cent, on the value. That was apparently his intention. He was extraordinarily fortunate, because the imposition of the duty almost synchronised with the war which was going on between the Standard Oil Company and the Royal Dutch Company, which reduced the price of oil by an amount equal to the whole of the tax put upon it. Therefore everybody bore the tax with the utmost complacency, because they believed that in some mysterious way it did not make any material difference, the price remaining at about the same figure as it was before. As a matter of fact, this is one of those duties which are carefully calculated to fall entirely upon the consumer. I do not think anybody will object to that statement. The hon. Member opposite seemed to think that that was an excellent thing. He and his Friends will say, "We pay it all ourselves, and we never give anybody else a chance of paying any part of it." That is, in their opinion, the true and virtuous view to take in regard to taxation. But with regard to the question of what is the rate of duty upon motor spirit. It was calculated at something approaching 25 per cent., but if we were anything near the competitive selling price of motor spirit, then the tax of threepence per gallon would be at least 50 per cent. I say so because what is called naptha-benzoline, which is used for exactly the same purposes in the United States, usually costs ten or twelve cents a gallon. That is one of the things which in this country, under our present system of taxation, we do not get cheaper, and for which we pay more than double the price paid in the United States.

I do not wish to frighten the Committee with the idea that the great corporations, in view of the entire control which they hold over this commodity, are the least likely to raise the price of motor spirits to a prohibitive level. After the cost of distillation, it is all extra profit. It represents a material which was entirely waste, or was used with the rest of the crude burning oil even as lately as twelve or fifteen years ago. What would be the effect of the alteration in the duty which I advocate? There are no doubt many people, several of whom I have consulted myself, who think that if there was this differentiation between home spirit and motor spirit imported, the great companies or combines, who now control the supply, would be obliged, in order to reap the profit which would be theirs by doing so, to establish great oil refineries at the ports in this country. I ask the Chancellor of the Exchequer to consider this. Supposing the process by which this commodity is produced was a patented process, under the right hon. Gentleman's own Act and by another means, namely, the arbitrary compulsion of his Patents Act, the result would be achieved of compelling people to manufacture what is in this particular case a distilled product within this country. But it is not a patented process. It is a process free to the world.

I want to put before the Committee one or two reasons why it is of such urgent importance that we should have this industry in this country at the present time, or as soon as possible. The first is this: We have a great lack of employment in our ports of simple occupations that practically any able-bodied man can do. There is no doubt about that on either side of the House. The work in an oil refinery is done by practically the same kind of labour as would be engaged in general dock work. That is one of the minor reasons why we should have this industry. Then hon. Members who are interested in the question—and I believe we all are—of finding sufficient employment, whether for free labour or union labour—and who know the want of employment at our ports, should bear in mind that the introduction of a great oil refining industry in this country is a thing that would go hand in hand with all our other dock employment, and would go a long way to solve the whole question of lack of employment. The main reason why we should have this industry is undoubtedly—there is no question about it— that there is a strong proability that we shall be forced, whether we like it or not, as regards our naval engines to follow the course which apparently is going to be the future development, and, either for internal combustion or the ordinary combustion of the old kind of crude oil, to use oil in one form or another in our Navy. What have other countries done in this matter? Nearly every one has taken some steps. Even Germany, though a small producer of crude oil, produces within its own territory 1,000,000 tons of crude oil annually. We cannot ask the Chancellor of the Exchequer to wave his magic wand in this matter, as he has so often done with respect to others, and to say that we are going to find oil wells in this country for producing our own supplies, but we can ask him to do what Japan has done. That country, with no home production of its own, realises that this is a serious question from the point of view of national defence. They have got a very large duty upon all forms of manufactured oil; they have got practically no duty upon crude oil. The consequence is that they have got very large refineries of oil, foreign oil in every case, which they get into their country in order not only to have the business there, but to make sure that there is always oil in the ordinary course of things in large quantities in storage in the country. I ask the Chancellor of the Exchequer just to consider a few sentences from the speech of the First Lord of the Admiralty on the 18th of March last, which was one of the most important points in a most important pronouncement on our naval policy:— The adoption and supply of oil as a motive power raises anxious and perplexing problems. In fact, I think they are among the most difficult with which the Admiralty has ever been confronted. Oil as a fuel offers enormous advantages to ships of all kinds, and particularly to the smallest kind. In speed, convenience, cleanliness, economy, and in the reduction of personnel, oil is incontestably superior to coal, and if internal combustion engines of sufficient power to drive warships could be perfected, as may be hoped for within a very reasonable time, all these advantages of oil will be multiplied, and some of them will be multiplied three or four times over. But, on the other hand, can we make sure of obtaining full supplies of oil at reasonable prices in time of peace and without restriction or interference in time of war? Can we accumulate and store a sufficient reserve of oil to meet our ever-growing requirements, and can we make that reserve properly protected against attack, either by aeroplanes or sabotage? All these matters are receiving continuous attention."—[OFFICIAL REPORT, l8th March, 1912, col. 1560, Vol. XXXV. Since then a Royal Commission has been appointed to inquire into this very question. The terms of reference are— to report on the means of supply and storage of liquid fuel in peace and war and its application to warship engines, whether indirect or by equipment for internal combustion. The Chancellor of the Exchequer would be doing an enormous national service, quite apart from the employment of labour and from the establishment of a new industry in this country. He would be assisting in the most material manner the investigations of the Royal Commission by this simple differentiation between the duty which he has already got upon refined motor spirit, manufactured in this country, and that which is imported from abroad. He would automatically make sure that in the ordinary course of things we should at our ports have an immense storage of oil going through the refineries from one end to the other, without incurring the expense and the risk of special storage places for oil for the purposes of the Navy alone. Once you introduce the industry of oil refinery in this country at our ports you have got a great supply to go upon, which would be almost as effective as to introduce, if that were possible, the production of oil itself. I say that it is in our hands, and it is no use having a Royal Commission to investigate how best to attain a thing if we do not avail of the obvious means, by a simple fiscal proposal such as this, of making sure of the desired result, without paying anything, but, on the contrary, gaining enormously, as I will show in the revenue, in spite of the diminution at the time. And not only that, but you will also have automatically, without any direct interference in the matter, a constant supply of crude oil, refined petroleum, and motor spirit in this country. But is there any question of any loss of revenue? I ask the Chancellor of the Exchequer does he suppose for a moment that he lost revenue by passing the Patents Act? Did he not rather enlarge the area from which he collected revenue in this country?

Is it possible to erect a single factory of any sort, whether an oil refinery or anything else, without having additional profits to pay Income Tax, and additional employment for the working classes, who will be making their contributions in their tobacco and their beer? Of course, it is perfectly obvious, though he might lose a little of the l½d. per gallon at first, the introduction of these industries will compensate for that, and I ask him to make his own independent investigations from people who know the oil trade thoroughly, and he will find that what I say is con- firmed, that the simple alteration of his tax in the method which I suggest will introduce into this country a great industry and pay back to him probably five or tenfold any money which he could possibly lose on the 1½d. per gallon that he will not collect on the petrol refined in this country. Therefore from the point of view of employment and trade in this country, and still more from the urgent necessity which we have of finding some means of getting a constant supply of crude oil, to provide for possible developments of our Navy which is absolutely essential, he should take the immediate steps which is available to his hand, for which he has made a precedent himself by passing this Patents Act, and take such steps as are necessary to ensure the introduction of this industry, and the erection of great oil refineries by foreign capital coming into this country, for the employment of our people and for the use of our Navy, instead of the reverse of the proposition that is at present going on.


I am afraid that I cannot enter into the very wide considerations which the hon. Gentleman has opened upon this Amendment. To follow all the questions which he has raised, I should have to discuss the question of oil in the Navy, which in itself is a matter considered sufficiently important to be the subject of a Royal Commission that will

probably take a considerable time before making its report. We have also to consider the question of the very thorny tangle of the Tariff Reform and Free Trade controversy, and I do not think that the Motion now made could really dispose of either of those questions. It is necessary to get this revenue, not for the benefit of the Treasury, but for the benefit of the local authorities, for the improvement of the roads of the country, and there is no doubt that one effect of this would be to diminish the sum available for the purpose of improving the roads of the country, and I really doubt very much whether the local authorities would thank the hon. Gentleman if he succeeded in incorporating his Motion in the four corners of the Finance Bill. The more successful he is the less would be the revenue for the purpose of the roads, and though he said we would get some other indirect advantages which would more than compensate, those advantages do not include the advantage of improving the roads. I think it is far safer for us to take the actual revenue which we have got and not to embark on the question of the very speculative industries which the hon. Gentleman wants to establish.

Question put, "That the proposed Clause be now read a second time."

The Committee divided: Ayes, 149; Noes, 217.


On a point of Order, Mr. Deputy-Chairman. My hon. and learned Friend (Mr. Horner) has been unfortunately obliged to go to Ireland, and he has asked me to move for him the Amendment which stands in his name on the Paper. I wish to know whether I shall be in order in doing so.

The DEPUTY - CHAIRMAN (Mr. Maclean)

It is not competent for the hon. Member to move a new Clause standing in the name of another hon. Member.


Is it not competent for one Member to take up the Amendment of another in Committee?


That would be a new procedure in the case of new Clauses, and would enable an hon. Member to unfairly take precedence of other hon. Members.


May I ask whether that rule is one which applies to Committee? Is it not a rule that applies to the Report stage, and in the case of Committee whether it is an Amendment or a new Clause, has it not always been the practice that one hon. Member can move an Amendment or a Clause for another Member?


The practice is that an hon. Member cannot move a new Clause of another hon. Member, because that would enable him to cut in, and take precedence of other hon. Members.


Does not that only apply when a Closure Resolution is in force, and that when there is no Closure Resolution it does not matter? I can understand when there is a Closure Resolution that the moving by one Member of the Amendment of another would give him precedence.


May I point out that last year there was a Clause down in my name, and an hon. Friend of mine was not given the chance to move it in my absence?


May I ask, Sir, under what Standing Order your ruling was given?


It was not under a Standing Order, but in accordance with the practice of the House.