HC Deb 19 June 1933 vol 279 cc560-614
Mr. SPEAKER

I am aware that great interest is taken in the question of the taxation of hydrocarbon oils and, therefore, it may be convenient to allow a general discussion on the Amendment standing in the name of the hon. Member for Blaydon (Mr. Martin).

7.24 p.m.

Mr. MARTIN

I beg to move in page 5, line 22, at the end, to insert the words: Provided however the tax actually levied on such oils shall in no case exceed ten per cent. ad valorem. I move this Amendment with some misgivings because I represent a constituency which is largely devoted to the mining of coal. Ever since the Chancellor of the Exchequer proposed this tax I have had some doubts as to how far the coal industry would benefit. I admit that at first sight I welcomed it as being a measure which would probably mean employment for a greater number of miners, hut on further reflection I began to have doubts whether many more miners would be employed, and, therefore, I decided to examine the subject very carefully and thoroughly. Perhaps it would be the best course to pursue if I give the House the process of my reasoning in coming to the conclusion that it would be wise to put down an Amendment to reduce the tax. To do that I propose to take the reasons which the Chancellor of the Exchequer has given for imposing the tax. There were two main reasons; one, that it is purely a question of revenue, and the other that it is a help to the coal industry. On the question of revenue, the Chancellor of the Exchequer made two main statements; one was that he wished to protect the petrol duty and the other that he wished to have an increase of income for the Budget. In considering the statement which deals with the petrol duty I immediately asked myself how far it could be evaded by those who wished to do so.

I asked myself whether it would be possible in the ordinary way to get behind this tax and thereby defeat the aims and objects of the Chancellor of the Exchequer. I made inquiries, and I found that there is one way which has already achieved some prominence. Perhaps the Treasury officials and the Chancellor of the Exchequer have not sufficient technical knowledge to know of such a thing as a bi-fuel carburettor. I have discovered, I admit for the first time, that there is such a thing as a bi-fuel carburettor, and the point is that as regards this tax it Can be used on many vehicles which at present use petrol. This bi-fuel carburettor can be installed on many road engines using petrol, and then, when the engine is warm after starting on petrol, they can turn to the second carburettor and use light fuel oil. The point I wish to put is this, that if the Chancellor of the Exchequer increases the duty on kerosene by one penny per gallon how is he going to prevent people using engines starting on petrol, thereby giving the Chancellor of the Exchequer his tax, and immediately afterwards, when the engine is warm, turning over to kerosene? It would be an enormous advantage to the consumer because the tax on kerosene would be only a penny per gallon. That is a point which, I think, has not been considered by the Treasury. The second part of that particular portion of Clause 6 was really designed to some extent to suppress the Diesel engine for road use. But surely a penny a gallon on the oil which the Diesel engine uses is not nearly sufficient to achieve the object. The margin in hand would be about 6d., and there would be need for a much greater tax if the Chancellor of the Exchequer were to achieve his object on that particular point.

Now I come to the second part of the Chancellor's contention, namely, that he wished to aid the coal industry. Of course, the two things are connected, because if the right hon. Gentleman can persuade the users of engines on the road to return to the derivatives of coal ho will obviously help the coal industry. But does the Chancellor of the Exchequer really expect to get his revenue, or does he not? If he expects to get his revenue from the consumers of oil, obviously he cannot help coal, for in that event people using oil will continue to do so and will not turn to coal or its derivatives. One must assume that the Chancellor does not expect to get his revenue, or perhaps only a small part of it, and that nearly everyone now using oil will turn over to coal or its derivatives. I cannot reconcile the two. There may be some stage half-way that the Chancellor has chosen. Perhaps he is expecting to gain on the swings what he loses on the roundabouts.

The second point with which I wish to deal, and perhaps the most important, is how far the consumers of oil can turn over to coal. I confess that it has given me great pleasure to find, as a result of all the controversy about this tax, that the scientists who are occupying themselves with the use of coal and its derivative have discovered or invented new methods whereby coal derivatives can be presented to the consumer in a much more attractive form than formerly. I find that there are new devices, thermostatic control and so on, which make coal derivatives as effective as liquid fuel in many cases. Many people turned to liquid fuel in the past because they could control the heat much better than with solid fuel. Now it has been proved that there are excellent methods and very good apparatus for controlling the heat of the solid fuel and the derivatives of coal. Here I would mention a rather important consideration. The body which has been set up to help the coal industry to sell its products has issued various memoranda and pamphlets proving that coal can in all cases compete successfully with oil. If that contention is true it seems to me rather to support the argument that there is no necessity for this tax, for it is obvious that coal, being much cheaper, if it were equally effective would be used by the consumer rather than oil.

I am loath to have to put that to the House, because I represent a constituency which very largely produces coal. But I am not willing to accept the statement of those who have drafted these memoranda. I am anxious that the case for coal should not be misrepresented. If the coal salesmen were as good as oil salesmen have been in the past, I have no doubt that a great many consumers of oil would definitely turn to coal or its derivatives in the next few weeks, if they have not already done so. During the Committee stage of the Bill I emphasised the view that if the coal salesman needs this particular form of tax in order to sell his products, it is a very poor argument for his products, because obviously the consumer cannot find it so efficient or so effective as the liquid fuel at the comparative prices. Therefore, I intend to turn rather to other arguments which will perhaps not antagonise those who may possibly use solid fuel or the derivatives of coal.

On examining the problem as to how far coal derivatives were suitable to replace oil I found myself in a very difficult field. I found that in many cases oil is complementary to coal. For instance, in the metal trades 275,000 tons of oil and 9,000,000 tons of coal are used. The two forms of fuel are complementary. These trades are highly competitive. They have found in these hard times that anything which tends to damage them will cause the loss of their markets, particularly abroad, and therefore any tax which puts 40 per cent. on the cost of their raw material, the oil, and adds very largely to their total costs, is obviously to some extent damaging our export trade, and certainly our home trade. In that particular trade the export section has been well established, and it would be in very grave danger of being lost entirely if this tax were put on to the extent that the Chancellor of the Exchequer proposes.

There has been a great deal of discussion as to how far the users of oil can change over to coal or its derivatives. There is one outstanding point, and that is that in most oases they could change over to gas, which, of course, is a derivative of coal, but that in nearly all cases it would be very difficult indeed, as well as costly, for them to change over to solid fuel. In many cases it would be quite impossible. I do not propose to discuss in detail the pros and cons, and how many cases there are, but one thing that must be considered is, how far can gas displace oil? Oil has one great advantage over gas—it is much cheaper. Here I may be allowed to suggest to the Chancellor of the Exchequer that it might have been a far more proper course for him to have taken, before he brought in this tax, to have ensured that attention was turned to the anomaly of the legislation governing gas. If gas companies had been able to sell their product more cheaply to large consumers there is no doubt whatever that many of the consumers of oil would have turned over to gas, because there is not very much difference in the efficiency of the two fuels. As gas companies are prohibited from doing so, a preliminary step to the introduction of this oil tax would have been the removal of the restrictions against the gas companies.

If gas is too expensive, what is the alternative? Consumers must continue to use oil, or they must reorganise all their plant. They must, at very great cost in many cases, take out their plant, perhaps reorganise their works, perhaps demolish buildings and build new ones for the use of solid fuel. I do not think that the Chancellor of the Exchequer when weighing up the pros and cons has given sufficient consideration to that point. I find that in his speech during the Committee stage of this Bill, he said that, even if the worst came to the worst— Even then I say you must remember that you have to set against that the increased employment which you expect to create in the industries of coal, gas, and electricity, and on the railway systems of the country, by the imposition of the tax."—[OFFICIAL REPORT, 24th May, 1933; col. 1201, Vol. 278.] I quite agree, but it seems to me that the Chancellor of the Exchequer has not by any means done justice to that point; he has not really put before the House detailed considerations which show how far he is going to increase employment in the coal industry. I would very much have liked to have heard him give us a rough estimate of how many men he thinks this tax will result in employing in the coal industry. I have tried to make some estimate, and the more I go into the matter the more I find that there will be loss in employment in other trades, or that the impossibility of turning over will in fact lead to the result that men will be thrown out of employment. I admit that the consumption of oil is such that one is rather tempted to suppose that if all the tons of oil were produced by miners there would be a great deal of employment, and that the oil brought into this country is definitely displacing coal.

We have been told that oil has displaced miners enormously in the last 10 years. The coal industry itself, the gas and electricity industries, have been responsible for far more unemployment in the mining industry than the introduction of oil. If you examine the facts you find that the production of coal per man per shift per annum has increased enormously in the last few years. You find that improved methods of winning the coal, coal-cutters and so on, have meant that fewer miners have been employed as the technique has improved. But would one say that coal-cutters ought therefore to be highly taxed? That seems to follow somewhat logically on the argument of the Chancellor of the Exchequer. Gas and electricity are means whereby miners have been put out of employment. The more improvements are made in the electricity industry, the less coal is consumed. Similarly with gas. The displacement of miners by the use of oil is a very small thing compared with the displacement caused by economy in electricity and gas consumption.

Let me give one or two very good examples of what I mean when I speak of the impossibility of certain trades turning over from oil to solid fuel or its derivatives. I take the example of the enamel trade and I apologise for mentioning it again, because I referred to it in the Debate on the German Agreement when I discovered that the German Agreement reduced by 5 per cent. the benefit which had been given to that trade by the tariff. That was after the Chancellor of the Exchequer had announced his Oil Duty. Oil is a very large part of the raw material of the enamel trade. This trade has been making great strides in the last few years and has gained a good export market. It has given employment to miners because I find that the weight of coal employed in the black metal used in the enamel trade, is about twice the weight of oil used in the process of enamelling. If you are going to put a 40 per cent. tax on the oil, it means that that trade cannot continue to get the sales which it was getting before. Its output must lessen, in which case those miners will not be employed in producing that coal. Either the enamel trade will have to pay the tax, because they cannot use anything else, or it will have to go out of existence. I do not like to overstate a case and a phrase like that sounds like overstatement but if they cannot keep up their export trade then they must either lower wages or quietly go to the wall. If there were any other alternative I should welcome it.

It seems to me that the gas industry has largely inspired this tax. They have put it to the Treasury that they are the people who can supply, better than any others, a form of fuel which can take the place of oil. If that be so, why cannot the gas industry begin by reducing their prices to heavy consumers and thereby attract those consumers to their proposition? If the gas salesmen and the coal salesmen were as good as the oil salesmen there would be far more gas and coal installations in the country. It has been said that there is a fashion for oil, but I do not think that contention can be seriously supported. Certain people say that hotels and other large concerns in London, such as hospitals and so forth, like to burn oil because it is modern, because it is the thing to do, but I cannot conceive that any business organisation would use a form of fuel which is dearer than solid fuel if there were no advantages to compensate for the extra cost. I do not wish to argue the case for the hospitals which has already been very efficiently put, but I would remind the Financial Secretary that he will have to talk very seriously to the Minister of Transport if he forces big hotels and other institutions to turn to solid fuels from oil. There will be a very difficult traffic problem involved in carrying solid fuel in the amounts required to the centres in the Metropolis where these buildings are situated.

I have been very interested in two passages in the speech of the Chancellor of the Exchequer on this subject. These passages seemed somewhat enigmatic and the right hon. Gentleman seems to have fallen into an error. When no one else challenged him at the time, I mistrusted my own technical knowledge, and did not do so. The first passage to which I refer is as follows: Do not let us forget that in the first place the difficulties that have been suggested are based on the assumption that the whole of the cost is going to be added to the present cost of fuel. I do not know what was in the right hon. Gentleman's mind when he made that statement. He went on to say: I take the general suggestion that we should make a difference between the heavier and the lighter oils and that we should exempt the heavier oils from the operation of the duty. Some one else might possibly suggest that if you did not exempt the heavy oils, at any rate you might give them a rather lower level of duty than the others. But that is going to leave the Diesel oil outside the duty. That is going to leave the competitor of petrol outside the duty. Of course, that is not the case. The very opposite is the case. Then the right hon. Gentleman went on to say on the subject of differentiation: I have gone into this question of differentiation with some care to see whether that was an advisable and desirable method of varying the tax.…but the conclusion that I have come to after looking into the thing all round is that I have been unable to see any way of differentiation and of having different levels of taxation which would really meet the views of those who object to the tax."— [OFFICIAL REPORT, 24th May, 1933; cols. 1201 and 1202, Vol. 278.] What is behind that statement and the statement that the right hon. Gentleman did not think that the whole of the tax would be passed on? Is it possible that he considered that the oil companies themselves would make a differentiation by merely changing the price? It is most important to know whether that consideration was in his mind and I am willing to give way to the Financial Secretary if he will now answer this question, which is vital to my Amendment: Did the Chancellor consider that the oil companies themselves could or would differentiate between different forms of oil by changing their prices so that for example, lubricating oil would be taxed at 2d. or 3d. or some similar figure and the heavy residual oils would be exempt? Apparently, the Financial Secretary is not able to answer that question now but it is a very important point and I beg him to give it consideration. It seems to me that if the right hon. Gentleman realised that that was not only possible but probable, all the talk about helping the coal industry was futile. If the oil companies could make the differentiation themselves then the object of the tax would be annulled and as one keenly interested in the prosperity of the coal trade, I should like to know whether the Chancellor had that consideration in mind and what his answer would be if the oil companies adopted that course and defeated the object of the tax.

This tax strikes me as an unfortunate example of lack of co-ordination between Government departments and between objects of taxation. If the Chancellor had gone into every avenue and had mapped out a coordinated plan—and I confess that as a new Member I assumed that he had done so before imposing the tax—and if he had reached the logical conclusion on this matter, he would not have proposed the tax in its present form. If the right hon. Gentleman wants his revenue or part of his revenue from this duty he ought to accept my Amendment. I believe it is a proposal which the oil companies will seek to meet by changing the prices of oil and transferring the burden from one to another. I believe that under my proposal they would not nullify the tax because it would only be 10 per cent. on the heavy residual fuel oils. If however the right hon. Gentleman rejects the Amendment and leaves the duty as it is, then quite probably his proposal will be nullified by the oil sellers themselves and the duty brought forward to help the coal industry will completely fail. I urge the Financial Secretary to tell us how he proposes to meet the objections which have been raised to this duty and how he proposes to co-ordinate the objects of this taxation with the welfare of the industries concerned.

7.55 p.m.

Mr. MALLALIEU

I beg to second the Amendment.

Before urging some reasons why the House should accept the Amendment, may I say how refreshing it is to hear an hon. Member honestly speaking against the apparent interests of his constituency when he can see that in the long run the course which he is advocating is the right one for the nation and therefore for his constituency? I have not the knowledge of the coal industry which the hon. Member for Blaydon (Mr. Martin) has, but I would like to put to the Financial Secretary certain facts relating to one industry, because that industry is typical and because the facts which apply to it, apply to many others affected by this duty. I refer to the nut and bolt industry which, by the way, has recently had a tax of 33⅛ per cent. placed on its raw material. I believe that the full facts as to the condition of that industry cannot have been properly represented to the Treasury, otherwise I cannot believe that the Treasury would have allowed this proposal to go forward in its present form. This industry formerly did a considerable export trade but during the last few years no fewer than 20 firms of manufacturers of nuts and bolts have had to close down owing to competition. Curiously enough one was holding its sale at the very time when the Chancellor of the Exchequer was refusing, during the Committee stage of the Finance Bill, to make any concession.

Very few of the companies engaged in this industry are making their depreciation. One firm in Yorkshire I know has entered into contracts, as far ahead as February, 1934—with fixed prices of course. The tax alone will cost that company £1,000 in that period, and it cannot be passed on because the prices are fixed. They will use 1,000 tons of the oil which is to be taxed, and if the tax remains in its present form, it will cost that company no less than £1,000. Those contracts were entered into, as are so many contracts nowadays, not with a view to making a profit—the cost was the bare cost—but merely to keep the works going, in the hope that better times would return. Now this £1,000 additional burden is to be placed upon this company, and it is typical of what is happening in this industry and, I have no doubt, in many other industries too.

I know of another firm, in the Black Country this time, which employs 1,000 workpeople on the making of bolts and nuts. Seven hundred of them are not directly employed in using oil, but 300 are. No fewer than 300 workpeople are employed in connection with the oil-burning furnaces, and the other 700 are dependent indirectly on this oil, because they too are dependent for their employment on the keeping up of the output from these very furnaces; and with that company the tax amounts to £3,500 a year, even in these depressed times, when there is so little output and in consequence when so little oil is being used. I know of another case, of a rivet works where this tax will account for no less than 6 per cent. of the price of the finished article, which must be a tremendous additional burden when considering foreign competition.

I agree entirely with the remarks of the last speaker, the hon. Member for Blaydon, that it is not possible in most cases to turn back to coal when once one has gone to oil. After all, one has not spent one's money and taken the trouble to go over to oil just for the fun of the thing. It has only been done because of dire economic necessity, and I have been amazed at the glibness with which certain hon. and even right hon. Members of this House have implied that, just overnight, so to speak, a firm can turn back to coal when once it has gone to oil. The particular firm from which I was giving an example just now estimate that they would get only 40 per cent. of the output of these nuts and bolts if they were obliged to turn back to coal, and that can be expressed by saying that they would have to have 60 per cent. more plant; and the wages would have to be raised on piecework no less than 60 per cent. also, if a man were to be capable of earning in a given period what he can now earn. In those circumstances, turning back to coal is a sheer impossibility, quite apart from the technical reasons, such as the control of temperature, which are absolutely paramount.

I would like to point out the processes through which these nuts and bolts go just to show what great damage to the coal industry this tax would inflict. In the first place, we have a certain amount of coal and a certain amount of ore taken out of the pits and mines. This coal and ore have to travel, of course, upon railways, which use coal, and they both go to the steelworks, where pig iron is manufactured; and that pig iron cannot be manufactured except in furnaces that use a tremendous quantity of coal. All the time so far coal has been used, and no oil at all. The pig iron is converted into steel, and the steel goes through another process and goes into billets, with still no oil at all. It is only when the billets are sent up to the rolling mills to be made into bars that oil is used at all. All the way along so far coal has been used. In the highly exacting finishing process, however, of turning into nuts and bolts oil is used; and after that there is a certain amount of screwing and tapping to be done, where electricity, which comes from coal too, is used. If you dislocate that process at any one point, you will throw the whole out of gear, and at each of these stages at which coal or a derivative of coal is used, you will hit the coal industry or one of its derivatives.

It is not so much that direct unemployment will be caused by this tax to the nut and bolt industry, but it is all the way along to the coal industry; yet one of the main reasons for this tax seems to have been to benefit the coal industry. The Chancellor of the Exchequer, very rightly, said that the tax was an exceedingly important consideration when dealing with unemployment, and he suggested that, if this tax were enforced, work might be given to something like 12,000 miners. He was not a bit sure of it, and he did not promise it; but obviously that was his suggestion. The position in 1932 was this, that approximately 2,900,000 tons of fuel oil were used, but of that amount, 1,460,000 tons were used in ways which would render it untaxable, according to the present scheme, in the Navy, in fishing boats, and in foreign-going ships. But the Chancellor has himself added 200,000 tons to that, which leaves approximately 1,260,000 tons of taxable oil. I do not, however, think that anyone would suggest that the 150,000 tons of fuel oil which are used annually for agricultural purposes could possibly be turned over to coal, and I do not think anyone would suggest that the 200,000 tons of fuel oil used by gas undertakings themselves for the purpose of enriching their gas could be turned over to coal either, so that leaves you with 900,000 tons only of taxable oil, and of this, 375,000 tons are consumed by the metallurgical and glass industries.

I am not an expert on either of those two trades, but, so far as I can see from the outside, it is incontrovertible that the processes used in them are such that it would be highly uneconomic, and therefore utterly bad for the nation, to attempt to force either of those two industries back to coal. Indeed, the mere use of the expression "Back to coal" is quite wrong in many of the metallurgical trades, because coal was never used in many of the newer processes, and never could be. I believe it is not an overstatement to say that some 90 per cent. of the fuel oil that is used in the metallurgical and glass trades is not fuel which could be replaced in any way by coal; so that you are left with 560,000 tons of fuel oil, which is used in the hotels, churches, hospitals, and offices for heating purposes, and most of it, I believe, in London, where, as the Eon. Member for Blaydon has pointed out, traffic and storage conditions are such that it would be almost impossible to turn back to coal, even if it were possible economically. Possibly you might get about half at the very outside; but if you did, the net gain to the miners would be something like 1,200, on the same basis that the Chancellor took when he estimated or suggested his 12,000; so that, although you might conceivably get that small addition to the miners direct, how very many more would you get put on the dole otherwise, in the indirect way that I have tried to point out?

I should like to suggest to the House this thought about the proposals of the Government in general with regard to coal and fuel. We have had to discuss here various trade agreements recently, in which hon. Member after hon. Member has risen to say that his industry has been sacrificed to coal. The same thing is happening here now. Industry is being sacrificed to coal, just as though industry existed in order to give men the pretext of spending miserable hours every day underground delving for this stuff. Surely coal is only delved for in this miserable manner in order to be a help to industry; but now the Government are turning the thing all topsy turvy, and industry is being penalised in order to serve coal, which should serve industry. The real reason for unemployment in the coal industry since the War has been the extraordinary increase in the efficiency of the manner of getting coal and of the manner of using it. Those two things have accounted for a great quantity of unemployment in the coal mining industry; but there have come into existence, largely owing to oil, many new industries, and much new employment has been created, which has kept in check to a certain extent the rise in the figures of unemployment.

Surely the way to check unemployment is to encourage these new industries, and if it is necessary to turn one's back upon coal, though it may not be, surely the way to encourage people to employ more men now is to give them the cheapest fuel that they can get. Oil has stepped into the breach so far as employment is concerned, and has brought new industries into existence. My submission to the House is that the way to increase employment and efficiency in this country is to encourage that oil, at the same time as encouraging coal to be more efficient still and thereby perhaps to rehabilitate itself.

8.15 p.m.

Miss HORSBRUGH

I should like once more to put the case for the jute industry which I have often urged in this House. My hon. and gallant Friend the Member for Montrose (Lieut.-Colonel Kerr) and I are very anxious to learn from the Financial Secretary to-day what decision has been come to by the Government on the subject of this oil which is used for batching in the jute industry. That oil is entirely different from any other fuel oil and cannot in any way be dragged down into the controversy of coal versus oil or even into the controversy inspired by gas. Gil for batching is absolutely necessay in the jute industry and is a raw material of the trade. Wherever possible other oils, such as white oil and emulsions, have been used, but a certain amount of mineral oil is a necessity. This tax will be a serious difficulty to be overcome by a trade in winch employment during the last year reached up to 50 per cent. and is only now beginning to recover to a smaller figure. I have had one or two rays of hope from the Chancellor of the Exchequer. On Second Reading he suggested that the matter should be discussed on the Committee stage, and on the Committee stage he said that individual hard cases could be discussed on the Report stage. I hope that that flicker of hope will not be extinguished by the Financial Secretary to-night. This particular case is entirely different from the other cases in which fuel oil is used, and I would plead with the Financial Secretary to consider some form of rebate for the oil used in batching.

A tax on the oil used in the jute industry will be an extra tax upon it that cannot benefit any other industry in the country, but will make it harder for the jute trade to recover and to take advantage of what the Government have already done by the trade agreements to help it to employ the thousands of men and women who are now walking the streets of Dundee unemployed. I hope that this case will be considered on its merits. The proposal means putting a tax of £8,000 on to an industry that has to compete in the open market and cannot have the same form of protection as other industries. Its chief competitor is India, and enormous quantities of jute goods are still coming from that country where labour conditions and rates of pay are entirely different from those in the industry in Dundee. If the Government give this rebate to help the jute industry, it will not open the door to other rebates, for the fuel oil used in this industry is separate from that used in other industries. I do not mean that I do not hope that some consideration will be given to the whole subject of fuel oil, for this is a tax that will not help industry but in a good many cases will hinder it. I cannot see, however, how the taxation of fuel oil used for batching will help any other industry. It will, on the contrary, make it difficult for a struggling industry to recover its position in the world and to get the chance which this Government ought to give it.

8.18 p.m.

Mr. BANFIELD

I want to add my voice to those which are supporting this Amendment. I represent a constituency which is primarily engaged in the nut and bolt industry, and to a growing extent in the brass industry. I have received letters from or given interviews to nearly every employer in my constituency. I have consulted with the men, and I have gone into the business with them. I am confident that the effect of this tax will be to do tremendous damage to the nut and bolt industry. I am satisfied that for every miner which these proposals may put into work, two other persons will be displaced. Perhaps too much may be made of the point that this is a kind of battle between coal and oil. That is not the position at all. As a matter of fact, in the nut and bolt industry and in the brass industry coal is used to a very great extent.

I would like to draw the Financial Secretary's attention to a typical case which was sent to me by one of the big manufacturers in my constituency. They say that the consumption of fuel in their works during the past 12 months was as follows. They bought 12,000 tons of coal of the value of £3,100. They used just over 1,000,000 cubic feet of Mond gas of the value of £l,970, and 980 tons of fuel oil of the value of £2,915. This firm would have to pay in tax, if the proposals of the Chancellor are carried, a sum of £980 a year. That will mean an increase of 11.3 per cent. on their total fuel cost. This will naturally put them out of the market so far as their products are in competition with foreign made articles. Foreign competition has become keener and keener during the last 18 months, in spite of all the tariffs and quotas, and this £980 placed upon this struggling industry and upon employers who have done their best to keep their works open and to give as much employment as they can during this difficult time, will, they say—and the figures seem to prove it—lead to the ultimate closing down of their works, the unemployment of their people, and above all the loss of thousands of tons of coal which is now used in the works.

One of the arguments of the Chancellor of the Exchequer was that this tax would help the coal industry, but I suggest that, if the result is that an industry like the nut and bolt industry is obliged to curtail its production, and if works are closed down, the only possible result can be that, instead of there being more employment in the coal-mining industry, there must be considerably less. In moving this tax, the Chancellor of the Exchequer said that he had to consider the injury which might be done to other industries. I want to point out to him that since the post-war days we have had a considerable number of new industries, particularly the aluminium industry. That industry is growing steadily; it is a new thing which has been introduced since the War, and for technical reasons it is impossible for it to use coal. It is obliged to use fuel oil. This industry is getting on its feet, and it has been able to compete not only in the home market but in the foreign market, and tremendous injury will be done to it if this tax is imposed.

In the course of my investigations into this matter, I have found that the nut and bolt people in my constituency have entered into contracts extending in some cases over the next six or nine months. They entered into them without having any idea that this tax was likely to be imposed on them. They quoted certain prices, keen prices, and as they are tied down by their contracts, the result of imposing this tax will be that for the next six or nine months, instead or getting any profit, they will be in the position of losing money every week that they are engaged on those contracts. That is a. very serious matter for them and for the men whom they employ. This is an industry which has been very hardly hit indeed since post-war days. Even to-day only 33⅓ to 40 per cent. of the people normally engaged in it are employed. It is an industry which wants encouragement and help, but, instead, it is suddenly faced with this tax, which in the vast majority of cases will make all the difference between whether works can continue to struggle along or will have to "give up the ghost," as it were.

It is an industry in which oil has been used for many years; oil has always been part and parcel of the process, and those who say that this industry can go back to coal and will find that coal is cheaper do not understand the technicalities of the case. It is impossible to go back to coal if the industry is to flourish at all, even if it is to continue in existence; it must use oil fuel alongside coal. If we could get the output of the industry increased by 20 or 30 per cent. considerably more coal would be used. The mining industry has everything to gain and nothing to lose by encouraging the nut and bolt industry to increase its output from 60 per cent. of its capacity to 90 or 100 per cent., because then far more coal would be used —with, of course, a little more oil fuel. To attempt to play-off oil fuel against coal and to say that there is some antagonism between the two is altogether a wrong way of approaching the matter. Fuel oil and coal can be used side by side, and if we can make industries like the nut and bolt industry prosper more coal will be used and more employment will be found for miners.

This Amendment strikes me as a happy attempt at a compromise. It says to the Chancellor: "If you feel that you must have some tax, this will provide a Way out." The tax will be quite bad enough even if it is only 10 per cent., but I am satisfied that the Amendment is an honest attempt on the part of everybody concerned to arrive at a compromise, because I am certain that, unwittingly, a very serious and grievous blow is being dealt to one of the old-established industries of the Black Country which has furnished stable employment for men for many years, and which is carrying on to-day in spite of all difficulties. Employers and men alike are endeavouring to keep up the output, and to increase it, and the Government ought seriously to consider the plea which the industry is making. Within an area of not more than 10 or 12 miles' radius this tax will take no less than between £50,000 and £60,000 a year out of the pockets of employers, and that will make just the difference between their being able to carry on and being compelled more or less to close down.

When introducing this tax the Chancellor said he was prepared to consider the special case of industries which might be hit, and knowing that the Chancellor has local knowledge of this area and of what is going on there I am surprised that he should not have recognised that if there was one industry which was entitled to some consideration it was the nut and bolt industry of the Black Country. I hope, however, that the Financial Secretary will see his way tonight to accept the Amendment. Here is a surprising thing which I think is worth mentioning. The employers who have been urging me very strongly to put the case which I have presented to-night are good and loyal supporters of the Conservative Government. They did their best to prevent me coming to this House at all. I have suggested to them that it is very hard indeed that they should be hit so badly by those whom they have always supported and have always looked upon as their friends. I suppose there is no gratitude in politics, otherwise the Chancellor might have thought about his loyal supporters among the employers in the Black Country. But so far as I am concerned it is not a matter of the political opinions of the people I represent. I represent the constituency as a whole, employers and workmen alike. People of all political opinions in the constituency, including the tradesmen who depend for their living upon the prosperity of the nut and bolt industry, are united in asking, in praying, almost, that consideration should be given to this tax on fuel oil so far as it affects the Black Country. I hope the appeal I have made may meet with some response. If not, then I am sadly afraid that, possibly without knowing it, and possibly feeling that the position is not so serious as has been represented, the Chancellor will have dealt a very heavy blow to an area which is struggling under very great difficulties to keep its works going and its people employed.

8.33 p.m.

Mr. MOLSON

The hon. Member for Wednesbury (Mr. Banfield) has been "chipping" the Conservative party because it is not entirely united on this matter. May I suggest to him that he should look over previous Division Lists, when he will find that a large number of Members of his own party, who are convinced that this tax is in the best interest of the mining areas, having a due regard to the safety of their own seats, abstained from voting against the Government on at least one occasion? I have no complaint against an hon. Member like the hon. Member for Colne Valley (Mr. Mallalieu), who is opposed to a tax of this kind, who stands firmly for Free Trade, who stands for laissez faire. I can understand that those who still abide by that doctrine would say that no attempt should be made to come to the assistance of any particular industry which is depressed, and that no attempt should be made to encourage the industries of this country to consume British-produced rather than foreign-produced fuel. Those of us, whether Conservatives or Socialists, who are inclined to believe that in these days some sort of foresight and some kind of planning are necessary, find it less surprising that they should vote against it than that a number of hon. Members of my own party who sit for safe seats in the South of England, where there are no coal mines, and who for a long time have been carrying on a propaganda in favour of high duties for all other industries, should now oppose this tax which has been introduced, belatedly, by the National Government in order to come to the assistance of, perhaps, the most depressed of all the industries in this country.

I think the argument against those of us who desire to encourage the use of coal has not been put with entire fairness by our opponents. They have constantly said that it is our purpose to penalise the use of a newer, more up-to-date and more efficient fuel, and to drive industry back to the use of solid fuel. That is not our purpose. We are perfectly willing to admit that, during the last 10 or 15 years, the coal industry may have been far behind the oil industry in the development of its selling organisation and in the technique of producing more scientific and up-to-date methods of consuming coal. During the last few years the coal industry has been making great strides in the production of oil and pulverised coal, and it is in that direction, as was said by the right hon. Gentleman the Member for Hillhead (Sir R. Horne), that we, who are concerned for the prosperity of coal fuels, are looking for the revival that we believe is to come.

Already there is a turn in the tide. A short time ago oil was fashionable. A number of large hotels in London at that time installed oil-burning plant, for the purpose of. central heating, but you find that the latest hotels in London have returned to coal or to derivatives of coal. There are actual cases of a replacement of an oil-burning plant by coal, because coal, with mechanical stokers, has been found to be so much cheaper. As a purely business proposition, managers of hotels, local authorities, and schools have preferred to return to coal, believing it to be the more economical and efficient method of heating. We, who welcome these taxes and who ask the Chancellor of the Exchequer to show his usual courage and to stand firm for the principles in which he believes take the view that this duty will have a most helpful and salutary effect in giving just that encouragement to the more scientific use of coal which is needed at the present time and in order to encourage reversion to coal.

It is upon not only reversion to coal that we rely. There is still a tendency for coal to be replaced by oil, not, as I maintain, because in most cases oil is actually a more efficient fuel, but because it must be admitted that, for many purposes, it is more convenient. It requires more organisation and more thought to use coal than to use oil. I would draw the attention of the House to a most interesting scientific experiment which is being made, and which is a matter of grave concern to those of us who sit for coalmining constituencies. At least two railway companies are carrying out experiments with Diesel engines to replace steam locomotives. All my prejudices are against any attempt to interfere with the ordinary progress of industry, but I ask hon. Members from the purely practical point of view and to whatever party they may belong, whether, when nearly 300,000 miners are unemployed and probably permanently unemployed, this House could allow the railways of the country to change to Diesel engines and to cease consuming coal? No theoretical arguments about efficiency ought to weigh in a matter of that kind. It would be such a grave economic and social problem that I believe that some special encouragement would have to be given to the railways to continue to burn coal.

Most of the speeches to which we have listened to-day have drawn attention to hard cases. There must inevitably be hard cases when you introduce a new tax. I believe, although I was not in this House, that disaster was foretold for all industries when the Petrol Duty was introduced. Those prophecies have not been fulfilled. If there are hard cases, it is because this taxation has come too late. Had it been introduced, as it might have been, years ago, far less dislocation would have been caused by it. There may be cases where hardship is caused, like the use of mineral oil for batching in the jute industry, about which the hon. Lady the Member for Dundee (Miss Horsbrugh) so frequently speaks. There is the case of the glass industry. There is the case which I myself put before the Chancellor of the Exchequer, of one of the metallurgical industries, where, I am told, it is only possible to melt the scrap brass and to refine it simultaneously by the use of oil. Gas could be used, but it would be three times as expensive. One of the few matters in which I agree with the hon. Member for Blaydon (Mr. Martin) is in asking the Chancellor to give further consideration to the possibility of modifying the legislation which now governs the gas companies of the country.

I recognise that there may be insuperable administrative difficulties in giving some rebate, in the case of those particular industries and processes where oil is the only suitable fuel. I trust that the Chancellor of the Exchequer has given sympathetic consideration to that matter, because obviously it would give general satisfaction, in those cases where oil is the only efficient and suitable fuel, if those industries could be spared the extra burden which, inevitably, this duty must impose. Upon general principles, I want to congratulate the Chancellor upon having, as soon as the National Government came into office, done for the mining industry what ought to have been done long ago, and I hope that he will not be weakened in the attitude that he has so far taken up.

8.43 p.m.

Colonel WEDGWOOD

The hon. Member for Doncaster (Mr. Molson) is somewhat illogical. In the first place, he urged that the duty should be imposed, and complained that it had not been imposed before and then he urged that some particular industry should be exempt, and that the grounds of exemption should be that gas could not be substituted for oil in that industry. I ask him to extend from the particular to the general, and to help us this afternoon in exempting all those industries where it is impossible to substitute for fuel oil the older fashion of coal.

Mr. MOLSON

That is what I said.

Colonel WEDGWOOD

The hon. Member urged the Government to encourage one industry, not realising that the Government, by that very action, would be discouraging the general advance of industry.

Mr. MOLSON

The right hon. and gallant Gentleman misrepresents me. I realise that his position is perfectly logical He is a Free Trader all through. At the present time, the coal-mining industry is almost the only one which has not derived a direct benefit from tariffs. I said that I would welcome it if the Chancellor of the Exchequer could give a rebate in cases where coal or derivatives of coal would not be an efficient substitute for oil. If that applies to the pottery industry, or to any other particular industry, I should claim that exemption to be made in those cases. I gravely doubt, however, whether there are many industries where derivatives of coal would not be equally efficient.

Colonel WEDGWOOD

The argument is that, because the coal-mining industry is not making progress, it (might at least be saved from some of the charges upon it—

Mr. MARTIN

It is getting benefit from the trade agreements.

Colonel WEDGWOOD

We might save the coal industry from some of the drawbacks from which it suffers without penalising other industries in favour of coal. I would point out to the hon. Member that experiment is now being carried on, and is being encouraged by the Government, on the more economical use of coal—on economy in fuel consumption; and that is inevitably resulting in a pound of coal going farther than it did before. There is the use of gas, and the use of electricity. Would the hon. Member bar the railways from the use of electricity? All these things are derivatives from coal, and yet they represent a more economical use of the power derived from coal; they all reduce the need for the consumption of coal. Therefore, every stage forward in the Government's own research tends to reduce the production of coal, while increasing the number of heat units that can be produced from it.

The general objections to this tax—I am not talking about any particular industry—are two-fold. In the first place it is stupid, and in the second place it is unjust. Let me take first the stupidity of it. This is, as is evidenced by the hon. Member for Doncaster and by all the speeches we have had on the question from the Chancellor of the Exchequer, a desperate effort to save the coal industry, apparently regardless of the fact that the coal industry of this country depends for its prosperity upon the prosperity of all the other industries of the country. It is useless to expect coal to recover unless the industries which use coal recover, and those industries which use any form of fuel are potential customers for the coal industry. Worse than that, it is an attempt to stop the most economical use of coal. I noticed to-day that the ex-Kaiser of Germany has been giving an interview to an English journalist on what he would do to save the world. That is a subject upon which we have all been interviewed during the last five years, and there is no reason why the ex-Kaiser should not give his views too. I recommend his view to the Chancellor of the Exchequer. His view is that all the suffering in the world is due to this wretched machinery—that there is too much machinery, that people keep on inventing new labour-saving dodges so that there is nothing left for the worker to do, and presently the whole world will move automatically.

Mr. CAPORN

That is the Labour party's view.

Colonel WEDGWOOD

That point of view is a perfectly understandable one. That was why the Luddite rioters broke up machinery 100 years ago; that is why the Chancellor of the Exchequer would do anything to save the coal mining industry. Apparently people working underground are better than people working above ground. But I would call the attention of the House to the fact that the ex-Kaiser is wise enough to say that it should come about by international agreement—that any attempt to stop the use of machinery and substitute manual labour should at any rate be international. If it were felt by the bulk of opinion that it was desirable to stop the use of machinery and go back to using spades and so on, obviously the only sensible way of doing it would be by international agreement, and not by coming upon English industries alone and saying to them, "We will stop you from using machinery, we will stop you from using the latest and best methods of producing goods or heat, and will let the other nations of the world go on doing it." If that were done, it certainly would not increase the opportunities for the employment of English labour; but that is what is being done here.

Really, every hon. Member, in whatever quarter of the House he sits, knows what would be the result of any step to make production more expensive, to prevent the use of machinery, to tax machinery. We used to tax it, but we gave it up, because we said that a tax on machinery was a tax on progress, that it put our nation behind others in the struggle for competitive markets. What is this but another tax on machinery? It is in the interests of coal, or may be in the interests of coal, or is alleged to be in the interests of coal, but it is none the less a tax on machinery, and, therefore, it puts us at a disadvantage in the neutral markets of the world, and makes the recovery of British industry more difficult. The hon. Member for Doncaster protests about the Diesel engine, and says, if it were to come into use on the railways, where would the coalminer be? But the fact that this oil was not taxed has made the Diesel engine trade in this country. We have replaced Germany as the chief producers of Diesel engines in the world because this oil was taxed in Germany and it was free here. The hon. Member has not realised that the development of a new industry in this country by using the latest methods has helped production, not only in the case of the Diesel engine, but in countless other industries as well. The Diesel engine would not come unless it was wanted. The manufacturers themselves are the best judges of what is economical in production. This is putting back the clock.

And yet I think the stupidity of this tax is not so clamant as its injustice. Its injustice is patent to everyone. The tragedy is that the Chancellor of the Exchequer has not the vaguest idea that it is his business to levy taxes justly. He sees only the change that he wants to make; he does not realise that it is the duty of the tax collector to be universal in his incidence, and to call on all citizens alike. When 2d. is put on or taken off beer, it is not the brewers who suffer or gain, it is the consumer. When Income Tax is put on, it falls upon all alike according to their income. Super-tax, Death Duties, a tax on sugar, a tax on tea—all these are taxes which fall upon everybody, and there is no particular injustice. Nobody can treat the tax as a punishment; he treats the payment of the tax as a necessary evil, affecting A and B just as much as it affects him. I do not know of any other tax which can be regarded, as this one can, as a punishment for having done something wrong.

Mr. HALES

Something right.

Colonel WEDGWOOD

The punishment must be for something which the Chancellor of the Exchequer believes to be wrong. Why should isolated manufacturers here and there be forced to pay £1,000 a year when other people do not? That is the injustice of the tax. If this were an extra half-farthing in the £ on the Income Tax—which is about what it amounts to—it would fall on everybody alike.

In every little town in the country there is someone who is being penalised because he has changed over to oil. Many of these people have entered into contracts a year ahead. They base their cut prices on the cost of production, taking it as what it was three months ago. Suddenly you turn a profit into a loss by imposing a fine on them. If it affected the whole of the machinery in the country, there would be something to be said for it on the ground of justice, but you cannot justify selecting isolated trades and putting a 40 per cent. tax on their raw material, in some cases adding 6 per cent. to the cost of production, on grounds of justice. You might justify it on grounds of necessity if you had to get the money at all costs and had exhausted every other avenue. If you found this £2,000,000 by an increase of Income Tax falling on those who made profits and not, as this tax does, falling on manufacturers who are making losses, it would be something in the nature of justice, but this system is unjust. I have a letter here from some asphalt manufacturers who say: The very existence of our bitumen factory depends on your success. Heavy oil is the only known flux for bitumen and the tax gives our big American competitors roughly a halfpenny a gallon, on which they bring in their compounds as bitumen compounds and, therefore, escape tax, which is roughly 50 per cent. of the total.

Mr. CLARRY

The bitumen that comes in is subject to a 10 per cent. tax.

Colonel WEDGWOOD

Yes, and this gives them 50 per cent.

Mr. CLARRY

In both cases they are foreign materials which can be replaced in this country by a British material.

Colonel WEDGWOOD

Quite so, and that is why I ask for this Amendment to limit the tax to 10 per cent. That would leave our manufacturers competing on equal terms with their American rivals.

Mr. CLARRY

There is no need for either the bitumen coming in in a finished state or the bitumen being produced in this country. There is a British commodity which will answer both purposes.

Colonel WEDGWOOD

In that case, your complaint should be against the Chancellor of the Exchequer for not having put a higher tax on. There is at present a 10 per cent. tax on all bitumen and 40 per cent. on the raw material, which is half the cost of the bitumen produced in this country. That is so manifestly and obviously unjust that I cannot imagine anyone supporting the tax on the ground of justice. One of the first canons of taxation is that the citizen should feel that he is being justly taxed. This means a tax of 2 per cent. on the cost of production of glass. [HON. MEMBERS: "More."] I am taking a very moderate estimate. That is cheap glass turned out in this country in recent years against hot competition from abroad. It is not sold on this market but sold abroad. Are you really going to put those people out of business so far as their export trade is concerned? The nut and bolt people, the glass people, and the asphalt people are bad enough, but some of these metallurgical trades are worse hit than anyone else. They have gone in for the enamelling business, and they have cut out the Continent. They have got the foreign market by cutting prices and wages. A British industry once more finds its place in foreign markets, and you are putting a 40 per cent. tax on their raw material. That is an injustice. You are doing it with the best intentions.

Every one of these people is being penalised by this tax, which amounts to far more than 5s. in the £ Income Tax. Directly you do that, you arouse in the whole community impotent but none the less violent indignation against the Chancellor of the Exchequer who imposes the tax. He cannot want money as badly as that. He knows that there are better, ways of protecting the coal industry than by trying the Canute dodge of keeping back the tide of progress. He has made it far more unjust than it was before by omitting the most powerful industry using fuel oil. He previously took out the fishing industry and the overseas shipping industry because they had to meet strong competition. He has taken it off the coastwise shipping trade, nominally because they were subject to foreign competition. They are far less subject to foreign competition than the glass, nut and bolt and bitumen trades. These people who are competing in neutral markets know what foreign competition means. What competition have steamers running from Liverpool to Llandudno, and running round the islands of Scotland, to face? He has taken the tax off them, because they are powerful and have organised their opposition better. These metal and glass people are all small men, and they are made to suffer injustice. From the point of view of injustice, from the point of view of this stupid effort to reverse progress, to stop economical production, to get back to spades and ploughs, to stop machinery—for both these reasons I hope that in the interests of next year's Budget, when this matter must be reconsidered, hon. Members will go into the Lobby in support of an Amendment which leaves the tax there, but, at any rate, limits it to 10 per cent. instead of inflicting a 40 per cent. tax on the raw material of a lot of struggling industries.

9.5 p.m.

Sir ADRIAN BAILLIE

I believe that I am only the second Member this afternoon to rise in support of this tax and to resist the Amendment which is presently being discussed. The various Amendments on the Order Paper, and the speeches to which we have listened with great interest and considerable sympathy this afternoon, have all consisted of claims for the remission or modification of the tax. I am sure that the Chancellor of the Exchequer has carefully examined these claims and has given them due con- sideration. I cannot help feeling that there can be no person in a better position than the Chancellor of the Exchequer and his Departmental officials, at the end of the day, to weigh in the balance all the claims of the various interests concerned. Allusion was made to the hardship which would result in certain trades, particularly to the nut and bolt industry. Admitting that the nut and bolt industry requires in its finishing processes the use of oil, I have it on fairly good authority that a firm in the business of low temperature coal carbonisation have represented to the industry in Birmingham that they are able to supply creosote oil from coal at a lower price than the imported oil presently used. Reference was made by the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) to the glass industry. I will not endeavour to pose as an authority upon that industry, but it is claimed that a survey will show that a combination of producer gas and town gas is rather more largely used than oil, and is considered by the firms who use the combination as being equally efficient.

A great many of us received recently a memorandum from the National Union of Manufacturers. I read it with interest, and most of the speeches this afternoon bore a certain resemblance to it. The first point made in the memorandum—and it has been made and repeated in the speeches this afternoon—is that the displacement of employment in the coalmining industry is due more to the increased efficiency in the industry and the increased efficiency in the utilisation of coal than to the influx of imported foreign oil. The number given as having been displaced as a result of increased efficiency since 1922 is 200,000. I maintain that the statement is entirely misleading and erroneous. It is clear that in those years the displacement of at least 50 per cent. of those miners was due to our loss of export trade. As far as such statements are meant to convey that the diminution of the coal output or the displacement of miners from their jobs has nothing to do with the influx of oil and the extension of oil-using machinery in this country, they are palpably misleading, because it is also claimed by those who support the Amendment that, as a result of the extensive and expanding use of fuel-oil-using appliances in this country new employment has been given and new industries have been created. New employment has no doubt been given to men not previously employed in those industries, but I suggest that that was nothing more than a diversion of employment from the coal mining industry, and, therefore, from the railways and from the the industries previously engaged in the manufacturing of coal-using appliances and so on.

Colonel WEDGWOOD

Did the hon. Member say "diversion?"

Sir A. BAILLIE

Yes and I am delighted at that intervention, because it is since this measure is supposed to be a diversion and a rediversion back to the utilisation of coal that I am pleased to support my right hon. Friend the Chancellor of the Exchequer. I suggest to the right hon. and gallant Gentleman that in the diversion, on balance, the further use of oil-using appliances has created more unemployment than it has created employment. It has been stated—and it certainly was stated in the memorandum—that the estimate of the Chancellor of the Exchequer that the 2,000,000 tons of foreign oil presently consumed in this country can be replaced by the coal equivalent of 3,000,000 tons and therefore provide employment for an extra 12,000 miners, was an erroneous estimate. It has been urged that in a very large number of cases it would be impossible to revert from oil to solid fuel. I have noticed in particular this afternoon the constant references to solid fuel, but I am quite sure that the belief of the Chancellor of the Exchequer that in the course of time the foreign fuel oil required in this country will be replaced by derivatives from British resources, was not based on the assumption that solid fuel would replace oil, but, on the contrary, that this replacement would be from the derivatives of coal, pulverised fuel, coloidal fuel, creosote oil, compressed gas and so on, and that ultimately it will be found commercially attractive to produce fuel oil from our great coal resources by one or other of the methods of carbonisation.

It was suggested by an hon. Member who spoke from the opposite benches that in and around London it would be impossible for hotels, hospitals, churches and so on to return to the use of solid fuel because of the transport problem it would create. I cannot believe that such an argument would have much weight with the Chancellor of the Exchequer. All the arguments to which we have listened this afternoon are in point of fact the very arguments which the cunning salesman of the brilliant oil barons in the past have used to persuade people to buy oil-using plant and appliances. I agree with the hon. Gentleman who brought that question forward that if the coal industry and the coal barons would use the same brilliance and cunning in their salesmanship they could use precisely similar arguments to induce industries in this country either to revert to, or at least take up, coal-using appliances and discard the use of oil-using appliances at this time. At this moment the various processes for the better utilisation of coal or the derivatives of coal are only awaiting an impetus, and they are only awaiting the impetus which this proposition will give them for these coal-using appliances to be widely used. I will mention only three to exemplify my point. It is only a matter of time before compressed gas can be widely used for heavy goods vehicles, and it is only a matter of time before producer gas can be used for light goods vehicles. It is only a matter of time before pulverised coal can be used for power-producing plant.

Colonel WEDGWOOD

What about the price?

Sir A. BAILLIE

The price will naturally depend upon the demand. The ultimate effect of the tax, and I am sure that that is the desire, is to foster and encourage the nascent industry in the production of oil from coal. Our coal markets abroad have gradually dwindled and have been taken away from us by tariffs, quotas and the like, and our home market is continually being eaten away by the extensive and expanding use and import of fuel oil. Coal is really our only great national resource, and those who realise that and wish to maintain the coal-mining industry and those employed in it cannot better encourage the industry than by resisting the Amendment and supporting the Chancellor of the Exchequer.

9.17 p.m.

Mr. MANDER

My hon. friend said that it was possible to substitute British fuel for the fuel imported from abroad. That statement is entirely disputed by the people who have to use the fuel. The manufacturers who use the fuel do not admit that it is available in assured quantities and of the right quality. Until that situation arises the manufacturers will in the meantime have to pay a very much higher price for the fuel under this tax.

Sir A. BAILLIE

I can quote prices which are competitive. Naturally, the supply is limited to-day but the burden of my argument is that these fuel oils can to a large extent be replaced by derivatives from coal, such as gas.

Mr. MANDER

That may well be so, but for the time being the unfortunate British manufacturer, who is struggling, will have to add a very large amount to his annual charges as the result of this tax. I suppose that it is too much to hope that the Chancellor of the Exchequer will make a departure from the decision already announced, but I am sure that if he had realised before he imposed the tax the hardship that was going to be involved he would not have brought forward this proposal. I hope that even now the Government will have the courage to realise that they have made a mistake and that they will withdraw the tax. If it had been intended to introduce it there should have been due notice to the manufacturers concerned. If they had been told that in a certain time, a year or so hence, a tax might be expected they could have put their house in order, or if the tax had been imposed at a lower rate at the beginning they would have had a fuller opportunity of meeting the new conditions. It is the suddenness of the tax that has filled them with great misgiving and with feelings of indignation which ill befit supporters of the National Government, as most of these manufacturers are.

The Chancellor of the Exchequer seems to me to have used two entirely inconsistent arguments in connection with different parts of his Budget. When he was defending the concession in regard to the Beer Duty he said: "I am not concerned with the effect of it. I am not concerned with its social effects or its effects on employment but I am simply thinking of revenue and nothing else." He uses an entirely inconsistent argument in defending the Fuel Tax. He says: "I am thinking of the indirect result of this. I am doing it partly to get revenue and partly to assist coal." I should like him to give the House some indication of the way he can reconcile the use of two entirely inconsistent arguments in the course of the same Budget. I am not going to go over the whole ground that has been dealt with in the Debate to-day, but on this occasion, as on every previous occasion when the matter has come before the House, I want to say something in defence of the manufacturers of the Black Country. The industries most hardly hit by the tax are chiefly to be found in the Midlands and the Black Country—the glass industry, the bolt and nut industry, the drop stamping industry, the aluminium casting industry, non-ferrous metals and tubes.

To show how keen the competition is at the present time and how intensified the struggle is in the export trade, I would point out that recently a very large order for enamel goods was lost by British industry in the West African market by one-eighth of a penny per dozen. That fact makes it quite clear that by the imposition of this tax we shall undoubtedly lose a good many orders in our export trade and that further unemployment will be created to offset any employment that may come in the coal industry. The Chancellor of the Exchequer has exempted the coastwise shipping because it is an industry very hard hit. So are all the industries to which I have referred. They are having a terrible time in connection with foreign competition. If the Chancellor of the Exchequer has made a concession in regard to one industry I do not see why these other industries should not be justly treated in the same way. It has been pointed out that the nut and bolt industry will have to pay between £25,000 and £40,000 a year extra as a result of this tax. It can well be imagined how they regard a proposal of this kind. On behalf of the industries of the Black Country I protest very strongly against a wholly gratuitous imposition of this kind which is going to handicap some of the most progressive industries and manufacturers in. the country and make their struggles unnecessarily very much harder than it has been up to the present time

9.24 p.m.

Mr. T. WILLIAMS

Perhaps I may be forgiven for intervening in the Debate, because the hon. Member for Doncaster (Mr. Molson) claims to represent the mining industry and has seen fit to congratulate the Chancellor of the Exchequer on two or three occasions upon the magnificent benefit that he is about to confer on the mining industry. It so happens that I have at least twice or three times as many miners in my division as the hon. Member for Doncaster has in his division. I have not noticed any great bursting enthusiasm on the part of the coalowners for my support of this taxation, neither do I recall a single instance where a miner, a miners' lodge or any miner representatives have made a request for this special piece of taxation. On the other hand, I have probably one of the largest glass works in the country in my division. It employs up to 5,000 people. I have observed no activity on the part of the company in inviting me to oppose this taxation, and the Chancellor may draw a little comfort from that fact. I have also in my division one of the two big low temperature carbonisation plants, and no approach has been made to me as apparently they are unconcerned whether the tax is imposed or not. I can, therefore, claim to be in a strictly impartial position. I can support the duty and secure the encomiums of the mine workers, if I can make them believe this will help them. I can oppose the duty and secure the encomiums of the glass firms, if they can be made to believe that it will help them. I can also secure the encomiums of the low temperature carbonisation firms, if they can be made to believe that a duty on oil will be helpful to them.

I deprecate the suggestion that has been made that the imposition of this duty upon heavy oil is going to be a magnificent help to the mining industry of this country. The mine workers should not be misled into the belief that something is going to happen which will provide work for many thousands of them. The Chancellor himself, in the most optimistic estimate he could possibly have given, assuming the whole of this oil was no longer used after the imposition of the duty, and that solid fuel was used instead, estimated that 12,000 mine workers would be affected. Since then the right hon. Gentleman has withdrawn the duty on nearly 50 per cent. of the oil. Out of the 2,000,000 tons of oil which we used last year, and which is equivalent to 3,000,000 tons of coal, he has made concessions affecting approximately 750,000 tons of oil. His original estimate, therefore, of 12,000 mine workers has now been materially reduced, on that basis, to 7,500. Since then a very careful analysis has been made and the manufacturers' organisation, which circulated Amendments on Friday last, has by a very careful examination whittled down the possible employment of mine workers to 1,200. I submit that the only question before the House is whether it is worth while to impose a duty on a large number of new and growing industries when the net result to the mining industry is so small. After all, finding work for 1,200 miners out of 360,000 who are unemployed affects only one-third of 1 per cent. It would, of course, be worth while employing 1,200 men as long as they are not employed by putting 3,000 others out of employment.

This is a very doubtful step which the Chancellor is taking. I commend him, however, for having expressed what he believed to be a real and practical solution for the mining industry. I wish I could see the same possibility that he saw when he decided upon the imposition of this duty. Even the mine owners are not too optimistic about its result. I could have understood the mine owners taking very definite steps in 1919 when the Peace Treaty was being negotiated, but they never said a word. When the Irish trouble was developing, with the result that we are losing a market of 1,000,000 tons, not a word came from the coal owners. We must also remember that, by superior efficiency on the part of the producers of gas and electricity, their consumption has been reduced between 1922 and 1931 to such an extent that 50,000 or 60,000 miners have been displaced as a result. In the same period the miner's output has increased from 217 tons to 353 tons per annum, an increase of 16.2 per cent., which has meant the displacement of 142,000 workers. If we are striving for efficiency in the mining industry and in the production of electricity and gas, it is hardly fair to condemn efficiency in some other industry. Moreover the Coal Utilisation Council is constantly advertising how the utilisation of coal can be carried out on a scientific basis. Yet using less coal instead of more means fewer workers employed.

The duty may have reactions in certain directions where coal is now being used. For instance, the use of coal in making steel for machinery may be less, and these reactions may be more than the direct effect upon employment. If the Chancellor wanted to encourage the use of coal instead of oil, it would perhaps have been best to have adopted the suggestion of the hon. Member for East Wolverhampton (Mr. Mander), namely, to relieve from duty those who have already changed from solid fuel to liquid fuel, and to impose a duty on any who make the change in future. That would have been a warning, and would not have been a burden on those persons who, being in charge of industries, felt that they should use the fuel which was cheapest for them. In the circumstances, the mining community, who have been led to believe that this duty will create vast opportunities for employment, will suffer disillusionment very rapidly, for little or no increased employment for miners will result from the duty. It is because of that fact that, from my very impartial position, I merely express doubt as to the wisdom of the Chancellor's action.

9.35 p.m.

Mr. OWEN EVANS

I desire to support the Amendment because I feel that it is better to have half a loaf than no bread at all. I, and many other Members of the House who are concerned in this matter from an industrial point of view, knowing the use to which oil has been put in recent years consider the tax unsound and thoroughly bad from the point of view of the industrial development of this country, and in view of the many speeches which have been made from all sides against it I cannot understand why the Chancellor of the Exchequer has remained so stubborn. It is unfortunate that the tax has been represented as having been put on for the purpose of helping some other industry, and I deprecate the contest which has been going on inside and outside the House between the industrial interests of the producers of fuel, other than fuel oil. The Chancellor of the Exchequer on a previous occasion specifically referred to the representations made to him on behalf of the coal industry and other industries, such as electricity and gas. I do not want to speak from the point of view of a producer of fuel and I deprecate the House being asked to consider the question from that point of view.

I am not concerned with oil interests at all. With the knowledge and experience I have had of the use of fuel in industry for industrial operations I am concerned that nothing should be done by the Government which will in any small degree retard the progress industry is making by using any fuel which is suitable for any particular industry. I want to impress this on the House. We do not want to contest the right of coal to its place in industry. Many of us are concerned with large industrial operations in which we use a far greater quantity of coal than any other fuel. I am myself concerned with one industry which uses a larger quantity of anthracite coal than any other single industry in the whole world. But we do not want to be told, after serious and careful consideration and investigation we have found that no other fuel but oil will do the work as efficiently and as economically, that we are to be penalised for using that particular fuel in order that we should turn back to coal. If the tax is intended for the purpose of helping the coal industry, if it is intended for the purpose of inducing, or compelling, people to go back to the use of coal, then the Chancellor of the Exchequer is embarking upon a hopeless task. Any person of experience will know that there are certain operations which cannot be carried out so efficiently and so well with any other fuel but fuel oil, except, of course, electricity or gas; but if we have to use electricity or gas it means that the cost of fuel will be increased two or three times.

I ask the Chancellor of the Exchequer to give ear to the appeals made from all sides of the House. If he will go to his own area, the great city of Birmingham, where I have the honour to be associated with one of the best and well known industries, he will find there, and I will show him, processes which are able to compete with foreign competitors without the aid of Tariffs and if he will investigate for himself he will realise that their operations are dependent solely upon the use of oil fuel, and that no other fuel can compete with it to-day. If the tax is kept on, or if even a small tax is put on, he is placing a considerable burden on British industry, a needless burden, without anything in return for it. The future of coal is unknown. We have heard some prophesies by distinguished Members of the House in regard to coal, but the right hon. Member for Hillhead (Sir R. Home) does not know what is the future of coal. Careful investigations are being made and we all hope there will be derived as one of the derivatives of coal some form of oil fuel which will be available and economical, but let me tell the coal industry that it is better for that development that those who are now accustomed to the use of oil fuel should have their furnaces and equipment ready for that day. It is a great disadvantage to coal itself if we are to be deprived of the opportunity of getting experience in the technique of oil fuel. All the arguments have been put and I do not think that anything more can be usefully said, but I want to impress upon the House this fact, that whatever the Coal Utilisation Society may say, I have read many of their pamphlets, it is untrue to say, it is an exaggerated claim to make, that coal in any form to-day and for years to come can take the place of oil fuel in many industries which are successful and prosperous, and which are competing with foreign producers. I ask that even at this late stage the Chancellor of the Exchequer will reconsider the matter and ask himself whether he is not dealing a hard blow to British industries by the unnecessary imposition of this tax.

9.45 p.m.

Mr. CHAMBERLAIN

The hon. Member who has just spoken expressed the view that all the arguments had now been employed and that nothing more could usefully be said in the Debate on this subject. The representative of the Government must, however, make some reply, and I therefore take this opportunity of intervening. I have listened to most of the speeches this evening on this subject, and it does not appear to me that the general character of the arguments has in any way developed since we discussed the same matter at an earlier stage of our proceedings. Once again we have had very different views expressed by different exponents, and we have been able to realise how very much our views on a subject of this kind are affected by the nature of the interests of our respective constituents. There is no doubt that this is one of those cases in which there is a great deal that may fairly be said on both sides of the question. The particular Amendment which we are discussing would provide that a duty of 10 per cent. ad valorem be substituted for the specific duty which is in the Bill. As a matter of fact, the administrative difficulties in the way of an ad valorem duty upon imported oil are so great as to make it impracticable.

Really the Debate has not turned upon the difference between the specific and the ad valorem duty; it has rather ranged over the whole question whether a duty is to be justified at all or not. I submit that in a matter in which a great many different industries are affected in different ways it is really impossible to take a final decision upon individual cases, and that the House must try to weigh up the general considerations, and see on which side the evidence brings them to place the most weight. In considering this matter we have to think first of all what is the purpose of the duty, and afterwards what may be the results. In an earlier speech on the same subject I pointed out that there were three purposes in view. First, there was the actual revenue which the duty might be expected to provide, amounting to some £2,000,000 in the present year. Secondly, I indicated that I was concerned to protect the duty which is now being derived from a competitor of heavy oils, namely, the Petrol Duty. Thirdly, I said I desired to consider very particularly the interests of the coal industry and the industries which were closely allied with it, including, of course, the gas industry and the electricity supply industry.

The hon. Member for East Wolverhampton (Mr. Mander) confessed to finding serious inconsistency in my behaviour, because he said I used entirely different arguments when dealing with this duty from those which I used when dealing with the Beer Duty. Let me tell him that they are two entirely different things.

Mr. MANDER

They are in the same Budget.

Mr. CHAMBERLAIN

In the same Budget, but apparently the hon. Member's idea is that in the same Budget you must always use the same arguments, whatever the duties may be. I could accuse the hon. Member of some inconsistency in his new-found enthusiasm for the industries of the Midlands. He protests to-day against the Oil Duty, but he did not support the imposition of duties on imported articles which compete with those industries. But I am not troubling myself about any accusations of inconsistency, because I say quite frankly that in the case of the Beer Duty the revenue consideration was obviously the paramount one. In that case we were dealing with a revenue of £60,000,000 to £70,000,000, and here we are dealing with a revenue of £2,000,000. The revenue cannot have the same importance in our consideration of the subject as when it constitutes a large proportion of the national income.

Then we are told that the imposition of this duty is going to ruin a large number of industries, and that whatever benefits it may confer on the coal industry will be more than counteracted by the imposition placed upon the industries which now use oil fuel in one form or another. Of course if you get a new duty put on suddenly, and it must be put on suddenly—I cannot help thinking that it may have occurred to one or two people that there was a possibility of something of the kind happening—naturally those who are using the article which has hitherto been free and is now to be subject to a duty, will put forward every argument that they can think of against it, in the hope that they may get it removed. They do not set themselves to think, at this stage of the proceedings, "How can I evade, avoid the disagreeable results which may ensue from the placing of this duty upon the article which I am going to use?" They merely think, "What argument can I bring forward, how can I present my case to the House of Commons in such a way that it will seem the very height of injustice to proceed with this duty, the very height of stupidity indeed?" and they make the very worst case that they can put forward.

There was the hon. Member for Don Valley (Mr. T. Williams). Figures never trouble him; he never troubles about their accuracy. He brings out figures with an air of confidence and assurance which does him credit. He did not trouble to look up the figures that he used a little while ago, and the whole of the preceding Debate on this subject had gone out of his head. He said I had omitted the duty on half the amount of oil that I estimated would be consumed. He said I had put the oil consumption at 3,000,000 tons. He afterwards said that the amount I omitted was 750,000 tons. 750,000 tons is not 50 per cent. of 3,000,000 tons. Then he said the figure was 2,000,000 tons. 750,000 tons is not even 50 per cent. of 2,000,000 tons. In order to make the best of his case he multiplied the amount of oil to which I had given a concession by no less than 7½ times. That is one inaccuracy.

Then take the speech of the right hon. Member for Newcastle-under-Lyme (Colonel Wedgwood). He gave us a very vehement, I might almost say a violent account of his feelings, and the feelings of indignation under which industries laboured—industries which, he said, were being handicapped, and in some cases would be ruined by the new duty. Among others I remembered there was the case of bitumen compounds. He said that people who liquefied bitumen with oil in this country would have to pay 40 per cent. on their raw material, and that they could not possibly stand up to the competition of the foreigner, whose bituminous compound came into this country free of tax. The right hon. Gentleman has not taken the trouble to investigate the facts. Bitumen compounds do not escape taxation when imported. If he means the bitumen which is liquefied by the use of oil it pays duty as a composite article. In other words it pays the Oil Duty on the oil content, and if that duty is not equivalent to 10 per cent. on the compound it pays in addition the extra amount to bring it up to 10 per cent. So that as a matter of fact those who are making bitumen in this country are not in any way injured and are not put in a position in which they are handicapped by the imposition of the new duty. Let us try, therefore, to see the case as it really is, and not as those would desire us to see it who are going to make every possible effort to avoid the duty, if it can be avoided. We must not, therefore, assume that these terrible things will occur which we are told are going to take place.

I take another case. My hon. Friend the junior Member for Dundee (Miss Horsbrugh) has on various occasions called attention to the use of oils in the process of batching in the manufacture of jute. She always puts her case so well that naturally the sympathies of the House are inclined to be with her in the arguments which she puts forward. But we must not exaggerate the danger of the ruin of the jute industry in this case, because I am informed that even on the assumption that the whole cost of the duty is to be added to the cost of this batching oil, it is only going to mean something like £6,000 a year and, as the output of jute is of the value of some £9,000,000 a year, I cannot think that this is going to ruin the jute industry in any short period of time. In the case of these industries I think one may take it fairly that a good many of them have not investigated, with any particularity, the possibilities of replacing oil fuel by fuel derived from coal in one form or another. Perhaps they have not had reason to do so. They have at some time in the past, when oil was free from duty, installed plant for using oil fuel. Naturally, they do not want now to be asked to replace or to modify that plant in favour of some other fuel. But it may be that when they are induced by the imposition of this duty to look into the matter again they will find that there are possibilities which had not occurred to them before.

I may tell the House that even since the duty has been imposed it has been found in a number of cases that manufacturers who were thinking of installing oil furnaces have put in gas furnaces or furnaces which use coke, and that the production of the derivatives of coal has been already given considerable encouragement. For instance I have a letter from the manager of a very large municipal gas concern in the country, who says: This department has recently installed gas heating furnaces in several industrial premises in this area, where, but for the tax, oil would have been adopted. He goes on to say: The annual consumption represented by these installations would amount to no less than 40,000,000 cubic feet a year. There are a number of other cases, it is stated, where manufacturers are considering the replacement of oil furnaces by gas, and if the inquiries which have been received result in orders, as is confidently expected, it is anticipated that in this area there will be an increased user of gas of approximately 150,000,000 cubic feet per annum, and an increased consumption of coal to the extent of 10,000 tons per annum.

Mr. MARTIN

Has that company a statutory restriction on the price at which it sells gas to those consumers? Is it not the case that it cannot reduce the price whether it likes to do so or not?

Mr. CHAMBERLAIN

It is not a company. I said it was a municipal enterprise, but I do not think that matter has any relevance. The point which I am endeavouring to illustrate to the House is that the imposition of the duty upon oil has already drawn the attention of manufacturers in this area to the possibility of using an alternative, which alternative is a derivative of coal, and that even in the short space of time which has elapsed since the duty was introduced, there have already been received orders or inquiries which it is anticipated in this one area will result in an additional consumption of coal amounting to 10,000 tons a year. I submit to the House that that is a very important illustration of the argument which I was endeavouring to put to them, namely, that it is only when a brake of this kind is put upon the consumption of oil that many manufacturers look into the possibility of using something else.

Mr. ALEXANDER RAMSAY

My right hon. Friend has been telling the House that by this duty he has forced consumers from one kind of fuel to another, but he does not say a word about the respective costs of these fuels to the consumers.

Mr. CHAMBERLAIN

No, I do not say a word about the respective costs because I do not know.

Mr. RAMSAY

Surely that is the important point.

Mr. CHAMBERLAIN

All I am saying is that that has been the actual result. I can give a further case. My informant states that not only have these orders and inquiries been received but that, in addition, coke and tar oils are also feeling the beneficial effect of the tax, and in this area alone, as a direct result of the Budget proposals, 5,000,000 gallons of creosote oil have been sold to manufacturers in substitution for imported fuel oil. That is another derivative of coal which is being brought into use by the fact that this brake, as I have called it, has been put on the use of fuel oil. We have been addressed by various Members of the House on the subject of the encouragement of efficient processes and the efficient development of our industries. We are told that this tax is penalising progress. I submit that it does exactly the opposite. I submit that it is going to encourage progress in the use of the greatest of our British resources and that it is to the interest of the country as a whole that we should encourage the progress of science and the development of applied science in the use of our British resources as against imported resources which are not in our own hands; which, if we become too reliant upon them, we may find put up in price against us in the future, and which, on every account must I think yield to the claim upon our attention and our sympathy of what we can produce and what will give employment to our own people at home. Having heard the arguments repeated to-day which were addressed to me on this subject before, on both sides of the case, I cannot feel that there is any reason to suppose either that this tax

is unjust or unfair, or that it is a penalising tax. Undoubtedly there may be hardships in particular cases, but I believe those hardships will be only temporary and in the long run I cannot doubt that the imposition of this tax will be beneficial to British industry and British interests as a whole.

Mr. MARTIN

As I do not think the Chancellor of the Exchequer was in his place when I introduced the Amendment, perhaps he is not aware of one or two vital questions which I put to the Financial Secretary.

Mr. SPEAKER

The hon. Member can only speak again by leave of the House.

Mr. MARTIN

I wish merely to ask the right hon. Gentleman a question.

HON. MEMBERS

Divide.

Mr. SPEAKER

The hon. Member does not appear to have the leave of the House.

Question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 58; Noes, 228.

Division No. 227.] AYES. [10.5 p.m.
Adams, D. M. (Poplar, South) Groves, Thomas E. Mason, David M. (Edinburgh, E.)
Banfield, John William Hamilton, Sir R.W.(Orkney & Z'tl'nd) Milner, Major James
Batey, Joseph Harris, Sir Percy O'Neill, Rt. Hon. Sir Hugh
Bevan, Aneurin (Ebbw Vale) Henderson, Sir Vivian L. (Chelmsford) Owen, Major Goronwy
Buchanan, George. Holdsworth, Herbert Parkinson, John Allen
Cripps, Sir Stafford Janner, Barnett Ramsay, Alexander (W. Bromwich)
Daggar, George John, William Rathbone, Eleanor
Davies, Rhys John (Westhoughton) Johnstone, Harcourt (S. Shields) Rea, Walter Russell
Edwards, Charles Jones, Henry Haydn (Merioneth) Salter, Dr. Alfred
Evans, David Owen (Cardigan) Jones, Morgan (Caerphilly) Samuel, Rt. Hon. Sir H. (Darwen)
Evans, Capt. Ernest (Welsh Univ.) Lackle, J. A. Spencer, Captain Richard A.
Evans, R. T. (Carmarthen) Liddall, Walter S. Strickland, Captain W. F.
Foot, Dingle (Dundee) Llewellyn-Jones, Frederick Sugden, Sir Wilfrid Hart
Foot, Isaac (Cornwall, Bodmin) Logan, David Gilbert Tinker, John Joseph
Ganzonl, Sir John Lovat-Fraser, James Alexander Wedgwood, Rt. Hon. Joslah
George, Major G. Lloyd (Pembroke) Macdonald, Gordon (Ince) White, Henry Graham
George, Megan A. Lloyd (Anglesea) McEntee, Valentine L. Williams. Thomas (York, Don Valley)
Greenwood, Rt. Hon. Arthur Maclean, Nell (Glasgow, Govan) Wood, Sir Murdoch McKenzie (Banff)
Grenfell, David Rets (Glamorgan) Mallalieu, Edward Lancelot
Griffith, F. Kingsley (Middlesbro'.W) Mander, Geoffrey le M. TELLERS FOR THE AYES—
Mr. Martin and Mr. Alan Todd.
NOES.
Acland-Troyte. Lieut.-Colonel Beaumont, Hon. R.E.B. (Portsm'th, C.) Buchan, John
Adams, Samuel Vyvyan T. (Leeds, W.) Benn, Sir Arthur Shirley Buchan-Hepburn, P. G. T.
Agnew, Lieut.-Com. P. G. Bevan, Stuart James (Holborn) Burghley, Lord
Altchlson, Rt. Hon. Craigie M. Bird, Ernest Roy (Yorks., Skipton) Burgin, Dr. Edward Lesile
Allen, Sir J. Sandeman (Liverp'l, W.) Blindell, James Butler, Richard Austen
Aske, Sir Robert William Boothby, Robert John Graham Butt, Sir Alfred
Bailey, Eric Alfred George Boulton, W. W. Campbell, Sir Edward Taswell (Brmly)
Baillie, Sir Adrian W. M. Bowyer, Capt. Sir George E. W. Campbell, Vice-Admira: G. (Burnley)
Baldwin, Rt. Hon. Stanley. Braithwaite, J. G. (Hillsborough) Caporn, Arthur Cecil
Banks, Sir Reginald Mitchell Broadbent, Colonel John Carver, Major William H.
Barclay-Harvey, C. M. Brocklebank, C. E. R. Castlereagh, Viscount
Barrie, Sir Charles Coupar Brown, Col. D. C. (N'th'l'd., Hexham) Cayzer, Sir Charles (Chester, City)
Beauchamp, Sir Brograve Campbell Brown, Ernest (Leith) Cayzer, Maj. Sir H. R. (Prtsmth., S.)
Beaumont, M. W. (Bucks., Aylesbury) Brown,Brig.-Gen.H. C.(Berks., Newb'y) Cazalet, Thelma (Islington, E.)
Chamberlain, Rt. Hon. N. (Edgbaston) Howard, Tom Forrest Rhys, Hon. Charles Arthur U.
Clarry, Reginald George Howitt, Dr. Alfred B. Ropner, Colonel L.
Clayton, Sir Christopher Hudson, Robert Spear (Southport) Rosbotham, Sir Samuel
Cobb, Sir Cyril Hume, Sir George Hopwood Ross Taylor, Walter (Woodbridge)
Cochrane, Commander Hon. A. D. Jackson, Sir Henry (Wandsworth, C.) Ruggles-Brise, Colonel E. A.
Colman, N. C. D. James, Wing-Com. A. W. H. Runge, Norah Cecil
Colville, Lieut.-Colonel J. Jamleson, Douglas Russell, Alexander West (Tynemouth)
Conant, R. J. E. Jesson, Major Thomas E. Russell,Hamer Field (Sheffield, B'tside)
Cooke, Douglas Joel, Dudley J, Barnato Russell, R. J. (Eddisbury)
Copeland, Ida Jones, Sir G. W. H. (Stoke New'gton) Rutherford, Sir John Hugo (Liverp'l)
Courtauld, Major John Sewell Jones, Lewis (Swansea, West) Sandeman, Sir A. N. Stewart
Courthope, Colonel Sir George L. Ker, J. Campbell Sanderson, Sir Frank Barnard
Cranborne, Viscount Kerr, Lieut.-Col. Charles (Montrose) Sassoon, Rt. Hon. Sir Philip A. G. D.
Craven-Ellis, William Kerr, Hamilton W. Selley, Harry R.
Croft, Brigadier-General Sir H. Kimball, Lawrence Shaw, Helen B. (Lanark, Bothwell)
Crookshank, Capt. H. C. (Gainsb'ro) Lamb. Sir Joseph Quinton Shaw, Captain William T. (Forfar)
Crose, R. H. Latham, Sir Herbert Paul Shute, Colonel J. J.
Davison, Sir William Henry Law, Sir Alfred Simmonds, Oliver Edwin
Dawson, Sir Philip Lelghton, Major B. E. P. Smith, Bracewell (Dulwich)
Denman, Hon. R. D. Lennox-Boyd, A. T. Smith, Sir Jonah W. (Barrow-in-F.)
Dixon, Rt. Hon. Herbert Levy, Thomas Smith, R. W. (Ab'rd'n & Kinc'dine, C.)
Donner, P. W, Lindsay, Noel Ker Smith-Carington, Neville W.
Drewe, Cedric Lleweilln, Major John J. Somerville, Annesley A. (Windsor)
Duckworth, George' A. V. Mabane, William Somerville, D. G. (Willesden, East)
Duggan, Hubert John MacAndrew. Lt.-Col C. G. (Partick) Soper, Richard
Duncan, James A. L. (Kensington, N.) MacAndrew, Capt. J. O. (Ayr) Sotheron-Estcourt, Captain T. E.
Edmondson, Major A. J. McCorquodale, M. S. Southby, Commander Archibald R. J.
Elmley, Viscount MacDonald, Malcolm (Bassetlaw) Spens, William Patrick
Emmott, Charles E. G. C. Macdonald, Sir Murdoch (Inverness) Stanley, Lord (Lancaster, Fyldo)
Emrys Evans, P. V. McEwen, Captain J. H. F. Stanley Hon. O. F. G. (Westmorland)
Entwistle, Cyril Fullard McKle, John Hamilton Stones, James
Erskine, Lord (Weston-super-Mare) Makins, Brigadier-General Ernest Strauss, Edward A.
Erskine-Bolst, Capt. C. C. (Blk'pool) Manningham-Buller, Lt.-Col. Sir M. Sueter, Rear-Admiral Murray F.
Essenhigh, Reginald Clare Margesson, Capt. Rt. Hon. H. D. R. Sutcliffe, Harold
Fleming, Edward Lascelles Marsden, Commander Arthur Tate, Mavis Constance
Ford, Sir Patrick J. Mason, Col. Glyn K. (Croydon, N.) Thomson, Sir Frederick Charles
Fraser, Captain Ian Mayhew, Lieut.-Colonel John Thorp, Linton Theodore
Gault, Lieut.-Col. A. Hamilton Merriman, Sir F. Boyd Tryon, Rt. Hon. George Clement
Gillett, Sir George Masterman Morton, A. Hugh Elsdale Turton, Robert Hugh
Gluckstein, Louis Halle Morris-Jones, Dr. J. H. (Denbigh) Vaughan-Morgan, Sir Kenyon
Goff, Sir Park Muirhead, Major A. J, Wallace, Captain D. E. (Homsey)
Goodman, Colonel Albert W. Munro, Patrick Wallace, John (Dunfermline)
Gower, Sir Robert Murray-Phillpson, Hylton Ralph Ward, Lt.-Col. Sir A. L. (Hull)
Grattan-Doyle, Sir Nicholas Nation, Brigadier-General J. J. H. Ward, Irene Mary Bewick (Wallsend)
Greene, William P. C. Nicholson, Godfrey (Morpeth) Ward, Sarah Adelaide (Cannock)
Gretton, Colonel Rt. Hon. John Normand, Wilfrid Guild Warrender, Sir Victor A. G.
Grimston, R. V. Nunn, William Watt, Captain George Steven H.
Gunston, Captain D. W. O'Donovan, Dr. William James Wedderburn, Henry James Scrymgeour.
Hacking, Rt. Hon. Douglas H. Patrick, Colin M. Wells, Sydney Richard
Hales, Harold K. Peaks, Captain Osbert Weymouth, Viscount
Hall, Capt. W. D'Aray (Brecon) Pearson, William G. Whyte, Jardine Bell
Hannon, Patrick Joseph Henry Peat, Charles U. Williams, Charles (Devon, Torquay)
Hartland, George A. Penny, Sir George Williams, Herbert G. (Croydon, S.)
Harvey, George (Lambeth,Kenningt'n) Petherick, M Wills, Wilfrid D.
Haslam, Henry (Horncastle) Peto, Sir Basll E. (Devon, Barnstaple) Wilson, Clyde T. (West Toxteth)
Haslam, Sir John (Bolton) Pickford, Hon. Mary Ada Windsor-Clive, Lieut.-Colonel George
Headlam, Lieut.-Col. Cuthbert M. Pike, Cecil F. Womersley, Walter James
Hellgers, Captain F. F. A. Powell, Lieut.-Col. Evelyn G. H. Worthington, Dr. John V.
Herbert, Capt. S. (Abbey Division) Pownall, Sir Assheton Wragg, Herbert
Hills, Major Rt. Hon. John Waller Raikes, Henry V. A. M. Young, Rt. Hon. Sir Hilton (S'v'noaks)
Hore-Belisha, Leslie Ramsay, T. B. W. (Western Isles)
Hornby, Frank Remer, John R. TELLERS FOR THE NOES.—
Horsbrugh, Florence Rentoul, Sir Gervals S. Captain Austin Hudson and Major
George Davies.

Resolution agreed to.

10.14 p.m.

Captain FRASER

I beg to move, in page 5, line 22, at the end, to insert the words: Provided that where any oil other than light oil is used as a fuel in any voluntary hospital for the sick poor equipped prior to the twenty-fifth day of April, nineteen hundred and thirty-three, with apparatus especially designed for the use of such oil, the rate of rebate shall continue to be eight pence per gallon. The object of this Amendment is to secure a rebate on the Oil Duty so far as it applies to voluntary hospitals for the sick poor. It only asks that the rebate should be given in the case of voluntary hospitals, because it is only in their case that there is a very real difficulty in raising the money to pay the tax. I cannot believe that this Amendment can lead the Chancellor of the Exchequer into any difficulties from the point of view of precedent, because, as far as I can see, there are no other organisations which can make a similar claim, based upon the sentimental aspect of the case and upon the impracticability of securing the money to pay for the tax from any source whatever. It is plainly true that if this tax goes on, a certain small number of voluntary hospitals would have to reduce the services which they render to their patrons, because everybody knows that there is less money available for voluntary hospitals than is required by the calls that are made upon them. In London there is a small number of hospitals using oil, and, were they to be compelled to pay the tax, it would cost them about £12,000 a year. In the provinces the figure would be about £8,000, so that the total cost of this concession would be about £20,000 a year. That is very little indeed to the Chancellor of the Exchequer, but it means much to these hospitals.

Only about 55 hospitals have installed and are using this plant, and my plea is that the Chancellor should exempt them from the operation of this tax. He may say that it is difficult to exempt them without exempting all hospitals, but he is not asked to exempt all hospitals. I am speaking for the hospitals with the assent of all the hospitals and only on behalf of those that are using this oil-burning machinery. It is a hardship to them to have to change back, and they have no means of augmenting their income to pay this tax. They are not sheltered by a tariff and cannot very well make a larger appeal to the kindly public to increase their subscriptions knowing that the money is going to the Chancellor of the Exchequer, because, greatly though they respect him, they are not likely to make voluntary contributions in that way. There is no source from which hospitals can get the revenue.

There is another aspect of the case which I will mention but will not stress, namely, that where hospitals have this apparatus they have found it beneficial to their patients because there is less noise and because it has made available for useful hospital purposes other parts of the building hitherto used for storage. I will not stress that, because I know that every argument that can be raised about using oil in hotels and blocks of flats can be used in favour of hospitals. Where they stand alone is that they cannot replace the revenue in any way; they are in a class by themselves, and a concession made to them need not spread into any awkward precedent with which the Chancellor might have to deal.

I have reason to believe that the concession can be worked and that it is administratively possible to operate it. There have been occasions upon which matters rather like this have been dealt with sympathetically. For example, the Lifeboat Institution secured a rebate for lifeboats in the matter of the Petrol Duty. This is, I think, an analogous kind of case. Then, again, alcohol when used for medicinal purposes is tax free. One would not have quoted that if one had not heard the Debate an hour or so ago in the House. Voluntary agencies and philanthropic bodies have also been recognised by the Legislature for special consideration, and because of the fact that they trade without profit they do not pay Income Tax. There are plenty of precedents for this concession; it can be worked, and I ask the Chancellor to take the view that the need of the hospitals is greater than his.

10.19 p.m.

Dr. O'DONOVAN

I beg to second the Amendment.

I address the House without any great air of confidence, but perhaps my words may fall on the mind and heart of the Chancellor of the Exchequer and that he will be encouraged by his easy defeats of the various efforts to entice him to make concessions to grant a concession which most of us support. What has just been said in support of this Amendment must appeal, I think, to most Members of this House. I would only say that the Chancellor of the Exchequer is at present a very great friend to hospitals, inasmuch as he allows thousands of gallons of spirit which, if it were called rectified spirit would put us all out of action, to go to hospitals under the simple title of surgical spirit without any contribution to the Exchequer whatever. In other words, there is a precedent for special consideration for hospitals.

I do not wish to say anything on the question of cost. Hospital managers will appeal to the public for more money for every new development in medical science and in surgical art, but I would like the Chancellor to exercise a little directive force in the development of hospital life. We can heat our hospitals with coal, but we who work in hospitals feel that better work can be done for us by the administrative side if they are not compelled to give so much time to the very many administrative problems which are brought into being by the use of coal in the matter of storage, insurance, and manpower. If by encouraging hospitals to use oil fuel such administrative aid can be given to doctors and the sick it will be an advance in hospital practice. I am quite certain that the Chancellor has consulted with his advisers and the advisers of the Ministry of Health, and I await with some interest, and with some real hope, that this matter has not only had his consideration, but, as far as may be, his favourable consideration.

10.23 p.m.

Major HILLS

I agree with the last speaker that this is not entirely a matter of cost. It has been stated that it would cost one London voluntary hospital £2,400 a year. A newly-built hospital in my own constituency equipped with the latest plant would find £400 a year added to its expenses—a heavy charge for a country hospital. The real argument against this tax, however, is that oil is a much better fuel for use in a hospital. It is more convenient to transport, and it is easier to store; and, since hospitals are chiefly in busy centres, storage space is an important item. The service of the oil is easier than in the case of coal; no stoking is required, no ashes have to be removed, and there is no dirt or noise, with all their evil effects on patients. Space is saved and there is cleanliness, convenience and benefit to health. It would be a set back to the modern equipment of hospitals if this tax were imposed. It is recognised by the medical profession that by far the best fuel to use is oil fuel, and I do not think the Chancellor would like to force hospitals back to coal.

10.25 p.m.

Sir WILLIAM DAVISON

I desire to associate myself with the appeal made to the Chancellor to exempt voluntary hospitals from this tax. In these days of financial stringency hospitals are finding it more and more difficult to carry on. Suddenly, as a bolt from the blue, comes this heavy additional maintenance expenditure upon them. May I point out that, in the Amendment on the Paper, we ask only for this concession to be made to voluntary hospitals for the sick poor who were equipped prior to 26th April, 1933, that is to say hospitals which equipped themselves in this way before there was any idea that such a duty would be imposed. Any hospital which may, in future, be inclined to instal plant for burning oil will do it with their eyes open. and will have to make provision for the additional expenditure.

There are some 19 hospitals in London which are using fuel oil. As the hon. Member who proposed the Amendment said this tax will involve the hospitals in an additional cost of about £12,000 a year in London and about £8,000 or £9,000 in the country. The Cancer Hospital, in my constituency, would incur an additional charge of £900, and St. George's Hospital would have to meet an additional cost of £2,000. Sir Arthur Stanley stated in the "Times" this morning that it would cost St. Thomas's Hospital £2,400 a year, or a 50 per cent. addition to their present bill for oil fuel, which is £4,800 a year. As the right hon. and gallant Member for Ripon (Major Hills) has pointed out, oil is much more suitable than coal for use in a hospital. Take, as an example, St. Thomas's Hospital. It will mean, if they have coal, bringing in some 12 tons of coal a day, and carrying it through the hospital to a central bin where it can be stored, quite apart from an extra amount which must be stored for emergencies Then they have to remove the ashes from the boilers, creating dust and dirt in the hospital. Compare this with their present system. Oil is pumped from a lighter on the Thames, and taken to a reservoir where it can be stored, using very little room and causing no dust or dirt. This concession would cost the revenue very little, and it is desirable in the national interests that no additional burden should be thrown upon hospitals which they will find it difficult to bear.

10.28 p.m.

Major LLEWELLIN

in reply to the last Amendment, the Chancellor of the Exchequer said that the Oil Duty showed that people were very much alive to the interests of their respective constituencies. The incidence of the duty has been brought to my notice by a hospital in my constituency, the Cancer Hospital, which will have to pay an extra amount of £500 a year if this duty is levied upon oil, whether used in the institution or not. £500 may be a very small sum, and indeed is small to the Chancellor of the Ex- chequer, but it is a large sum to a voluntary hospital, and it means that they can take in fewer cancer cases. They have not the capital available with which to alter the machinery which is already installed in that hospital.

I notice the Chancellor said that there were three reasons which actuated him in upholding this duty. In the first place, the actual revenue is £2,000,000; secondly, he desires to protect the duty on petrol; and, thirdly, he desires to help the interests of the coal industry and of the industries allied to it. This small sum of £20,000 a year cannot do very much to impair his revenue, to impair the duty on petrol—in fact, nothing at all on that head—or to affect the interests of the coal industry, because it is obvious that the hospitals in which this plant has been installed cannot afford to alter their plant, and will merely have to go on using oil. Therefore, the only consideration is the £20,000 of revenue.

I, probably in company with a large number of Members of the House, am a supporter of the voluntary system of hospitals in this country, and I do not wish to see anything done that will make it more difficult for these hospitals to carry out the task entrusted to them. Therefore, I very much hope that the Chancellor of the Exchequer will see his way to accept this small Amendment. It does not apply, of course, to any hospital that has not already installed oil fuel-burning plant. As my hon. Friend the Member for South Kensington (Sir W. Davison) has said, those who do it after this will do it with their eyes open, but a large number have already done it, for the purpose, perhaps, of having a cleaner fuel, or, at any rate, reducing their fuel costs in order that they may be able to take in more patients. I think that my right hon. Friend can trust the managers of these voluntary hospitals to see that this privilege, if it be granted, will be in no way abused by them; they are people whom he can trust not to make any attempt to get a rebate to which they are not entitled. I beg him to make this small concession to these bodies which, to the knowledge of us all, are doing such valuable work in our midst.

10.33 p.m.

Mr. CHAMBERLAIN

Everyone who has at any time represented the Treasury knows how difficult it is to resist these insidious and rather dangerous arguments which are brought forward in support of a concession which is asked for on the ground that it is only a little one. The very precedents which have been adduced to-day show how dangerous it is to begin whittling away the foundations upon which one rests, and how one concession is immediately made the precedent in asking for another. Although my hon. and gallant Friend who moved this Amendment said that there was no danger of this being extended to any other body, that there could not be any other bodies in the position of these hospitals, I have already thought of asylums, sanitoria and convalescent homes, and I am sure that, if I had more time, I could think of many other institutions supported by voluntary contributions which might make an equally sound claim. But when, in addition to the argument that this is only a little concession, we are brought into contact with the idea of voluntary hospitals and the relief of the sick poor, then, indeed, the sympathies of everybody are naturally aroused, and it is perhaps easy for us all to be led away towards the course to which our inclinatiions would naturally turn us. If it were actually true that all these hospitals which are dependent upon voluntary contributions would, as my hon. Friends who have spoken on this Amendment have suggested, be obliged to find an additional £400, or £500, or £1,000, or £2,000 a year extra, then, indeed, it would be very difficult to maintain my position. But I think I have a very good reply to my hon. Friends. After all, although they have adduced the convenience of oil as a strong reason why the hospitals which have installed it should continue to use it, the fact that there are only 55 hospitals in the country which are concerned and which have actually installed oil shows that that is not a very powerful consideration.

The real consideration is the comparative cost of the two kinds of apparatus. I am glad to say that I can offer my hon. Friends a very different view of this position. Not only will this concession not necessarily cost the hospitals a large sum per annum, but, if they follow the example of some very progressive and efficient hospitals which have made the most of the time that has elapsed since the Budget proposals were introduced, they can actually save money. Here is a case of a hospital in London where conversion from oil to coke has actually taken place since the Oil Duty was first proposed. The total cost of conversion was £80, and the estimated annual saving due to the use of coke is £2,000, so that in two weeks the hospital will have paid off the extra cost of conversion and will be in receipt of an additional source of income which was never thought of before. Here is another case of a much larger hospital. The cost of conversion is no less than £680, but they are going to save £1,670. The relative improvement is not so great as in the first case, but the capital expenditure will be paid off in five months, and the hospital will have a new source of income which it had not before. Conditions vary in different cases, and a great deal depends upon such technical questions as whether a natural draught is sufficient or whether there will have to be a forced draught. With a natural draught the cost of conversion works out at £50 and thermostatic control, which is a desirable thing to have, can be supplied at a cost of £20.

Mr. D. G. SOMERVILLE

Was that a saving made after the increased cost of the oil was paid or not?

Mr. CHAMBERLAIN

I take it that it was. That is just the point. You can, by making this conversion, not only not spend more money than you were spending before, but you can actually save money. The company which gives me this information and which is responsible for the conversion in these cases will, no doubt, be ready to give information to my hon. and gallant Friend and to any other hon. Member who is interested in a particular hospital, and I hope, therefore, that, instead of shedding rears over the new Oil Duty, they will have found a new hope.

10.39 p.m.

Mr. M. BEAUMONT

I cannot but regret the nature of the reply that the Chancellor has thought fit to give to the Amendment. I speak as one of the managers of a hospital. Notwithstanding what my right hon. Friend has said, it is a very grave matter to a certain number of hospitals. I do not think that the managers who have to face the extra expenditure will share the view of the Chancellor of the Exchequer that it is a matter out of which we can make money. On the contrary, those who have to face the position have found that it is a matter which will inflict considerable cost. Many of us regret that there was not a reduction of taxation in the Finance Bill, and that the reason was that the Government refused to curtail the social services. It becomes doubly grave when we find that in practice, though I admit that it is a small sum, £20,000 of the money which helps to maintain, as we believe, expensive and excessive social services, is to come from a direct tax upon the social service which we regard as every bit as valuable and important as those which the Government desire to maintain. I do not know what course the Amendment will take, but I cannot fail to express the very great regret which I am sure many hon. Members feel, notwithstanding the implications of the Patronage Secretary, that the Chancellor of the Exchequer has found it necessary not only to reject it, but to reject it in the particular manner in which he did.

Captain FRASER

I propose, by leave of the House, to withdraw the Amendment, because it is not the wish of the voluntary hospitals to set themselves against any Government by making any demonstration such as a Division would obviously imply. The cases which the Chancellor of the Exchequer gave to the House were in the minds of Sir Arthur Stanley and those who advised me as to the manner and terms in. which it was desirable that I should move the Amendment. They have full knowledge of the fact that certain hospitals have been able to make appliances, but others cannot do so. I hope that the Chancellor of the Exchequer, between now and the time the Bill comes from another place, will see if he cannot reconsider it. I, therefore, beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.