§ I have a concession to announce which I can provide without trespassing for any practical purpose upon my Budget surplus. It has always been the policy of His Majesty's Government to try and provide conditions under which industry can expand and give rise to further employment, wherever that is possible. Among the industries that have shown a capacity for expansion there is none more conspicuous than the motor car industry. The increase in production in recent years has really been phenomenal, but it has been represented to me that the export trade in private cars is not quite maintaining its earlier resiliency. In particular, our manufacturers are finding some difficulty in meeting the overseas competition of foreign cars whose horsepower in relation to their size and weight is greater than our own. I do not want to suggest that our low-powered cars are unsuitable for export or that their export shall not be increased in every possible way, but I am informed that the trade has been to some extent hampered by the heavy horse-power tax which is levied in the United Kingdom, and that if any reduction could be made in the rate of that tax it would be likely to lead to an expansion in production in all kinds of private ears in this country, which in turn would react favourably upon the export trade. I have been impressed by the weight of that argument, and I am anxious to do something to meet it.
§ I am, therefore, proposing that, as from the 1st January next, the present tax of £l per horse-power shall be reduced by 25 per cent. to 15s. There will be a corresponding reduction in the duty upon motor cycles. The details of the proposal will be found in the White Paper. The cost I estimate to be £2,200,000 this year and £4,000,000 in a full year. That cost under the existing law would fall to be borne as to two-thirds by the Road Fund and one-third by the Exchequer, but in the present circumstances and with the many claims which are being made upon my surplus, I did not feel that I can undertake this year to provide any considerable sum for this purpose. I, therefore, consulted with my hon. Friend the Minister of Transport, and we have agreed upon the following arrangement: The Exchequer's share of the produce of the Motor Vehicle Duties in present cir- 921 cumstances is to be subject to a minimum of £5,000,000, rather less than the sum that I should expect to get if no alteration had been made at all. By that arrangement, therefore, the cost of the concession that I have described will fall mainly upon the Road Fund. There is another concession, a small one, affecting all classes of cars, which I have to announce, and that is that I propose to abolish the fee of 10s., or 5s., as the case may be, which is now charged upon the surrender of licences, which has been so charged since 1924, and which I am told has given rise to a considerable amount of irritation. This change will come into force upon the passing of the Finance Bill.