NEW CLAUSE.—(Relief from duty on heavy hydrocarbon oils to be extended to vessels on canals and inland waterways.) (Hansard, 1 July 1935)

§ Mr. T. SMITH
I beg to move, "That the Clause be read a Second time."
The Finance Act of 1933 excluded from the duty on heavy hydrocarbon oils certain vessels engaged in the coastwise trade and certain vessels travelling through the Manchester ship canal. That concession was given to these vessels, because they are engaged in a trade which is subject to foreign competition, and I think that when it was given it was worth about £100,000 a year to the particular companies concerned. We on this side of the House do not oppose such a concession; we think it is necessary. But when this relief from the duty was given it was made perfectly clear that it did not extend to canals and other forms of inland water transport. Last year we had a discussion on this question. I am pleased that the Chancellor of the Exchequer is present to-day, because when I moved a similar proposal 12 months ago it was supported by hon. Members in all parts of the House. There was evidently a desire to accept the new Clause. The Chancellor of the Exchequer was not present and the then Financial Secretary to the Treasury was in something of a dilemma.
Canal transport is one of the oldest and cheapest forms of transport in the country and for a long period has been suffering from severe competition, first from the railways and secondly from the development of road transport. That competition has hit many canal carriers, who, however, have been trying to meet it as best they can. They recognise that they must improve the speed of their barges and have taken away from the canal banks the old horse which we used to see and have put in motor power. The motor power which they find best is a type of engine which uses heavy hydrocarbon oil and, therefore, they are a little concerned with regard to the cost and the way in which it is limiting their activities. The new Clause would only cost about £5,000 a year. I am not arguing it, however, merely on the small cost it would entail, but mainly because of the encouragement it would give to canal carriers still further to improve their barges and inland water transport. 1555 At the present time there is a tremendous amount of merchandise going by road which used to be carried by canal boats. In my view, there is still scope for stimulating activity in our canal systems.
The Chancellor of the Exchequer knows as much about inland Water transport as anybody. He was the chairman of the departmental committee which dealt with this kind of transport and made a number of excellent suggestions. He is not ignorant of the difficulties in the way of canal transport, and I hope he will see his way to accept the new Clause. If he cannot, perhaps he will tell us what reply he gave to the letter sent to him by the National Association of Canal Carriers. Last year I quoted a letter sent by them to the right hon. Gentleman, but we failed to elicit from the Financial Secretary what had transpired or the reply that had been made. This year the National Association sent a letter to the Chancellor of the Exchequer on the 25th March in which they made out a most excellent case. They pointed out their difficulties and what they were trying to do; how they were organised and speaking as a national association. They pointed out also that they had an understanding with the railway companies and that they would be able to make still further progress. They asked whether they could submit their views to the Chancellor of the Exchequer for consideration. If the right hon. Gentleman cannot accept the new Clause, I hope he will tell us the objections against it. Last year we were told that those engaged in coastwise traffic were in competition with foreign-owned boats and that canal transport was not in competition with foreign-owned boats, but, in fact, was competing against the other two forms of transport in this country, namely, the roads and the railways. Still, I think some differentiation can be made in the case of the canals; they are in an exceptional position, and if the new Clause were accepted it would encourage them to make still further improvements in their particular form of transport.

§ Mr. TINKER
I beg to second the Motion.

§ Mr. HANNON
I cannot allow the new Clause to be dealt with by the Chancellor of the Exchequer without saying 1556 a word in its support. I recognise the difficulty of the Treasury in making arrangements for a readjustment of the duty, but nobody knows better than the Chancellor of the Exchequer the difficulties with which canal transport in this country is confronted, and he realises the extent to which the State itself is now interested in canal transport. There is a very great scheme of improvement now in progress on the Grand Union Canal to which the State has given a substantial financial guarantee. I have the privilege of travelling over the canal each year in a tour of inspection of the works which are being carried out, and during the last five or six years there has been a complete transformation in the developments which have taken place. I hope that my right hon. Friend, therefore, in the interests of the State itself and industry generally, will consider whether he cannot do something to promote the improvement of canal transport, perhaps in more generous measure than has been the case up to the present. The carrying capacity of the Grand Union Canal will be increased by more than 50 per cent. in the course of the next year or two, and it is a great pity that such a concession as is contemplated by the new Clause is not available for the benefit of this rapid development. While it is not a matter for the Treasury itself, I think there should be some arrangement to provide for a distribution of the traffic of the country between the three systems which are now in operation. Of course it would help considerably if some concession on this line were accepted by the Chancellor. I know my right hon. Friend's difficulties and his sympathies in this matter, and I feel that the House must leave it to him to take such action as he sees fit.

§ The FINANCIAL SECRETARY to the TREASURY (Mr. Duff Cooper)
I think the hon. Member who moved the Second Reading of this new Clause stated the position correctly with regard to the reasons why a similar proposal brought forward two years ago was rejected. He said that the reason was that canal carriers were not subject to foreign competition in the same way as coastwise trading vessels were. Upon reflection, I think he will probably agree that, important as was the reason for the refusal then, it is if anything rather stronger 1557 now. These vessels make use of heavy oil. As the House is aware, the duty on heavy oil for road transport this year has been increased from a penny to 8d. In so far as road vehicles are the principal competitors with the inland trading vessels, a great advantage has been given to those vessels this year by the additional duty that has been imposed upon one of their principal competitors.
The hon. Member who seconded the new Clause, seconded an Amendment some days ago on the Estate Duties and then, after hearing my argument said that so far from the duty in question being reduced it ought to be increased in order to teach hon. Members not to introduce Amendments of this character. A similar plea might be put forward here. I am not at all sure that such a fear was entirely absent from the canal interests. When they learned that the duty was being put up on road transport were they not afraid that it might be put up on water transport also? In fact, their fears have not been realised. They are really beneficiaries under this Finance Bill in so far as any duty has been laid upon one of their principal competitors.
Nor can it be contended that this traffic is under any undue weight of taxation at the present time. The National Association of Canal Carriers a year ago estimated the expense of the heavy Oil Duty on their whole membership at £5,000 a year, and they admitted that it was not a crushing burden. So short a time ago as last March the Chairman of the Grand Union Canal Company stated that the tonnage carried by their canals in 1934 increased by 52,000 tons over 1933, and he added: With regard to the future I cannot feel anything but very optimistic. We have really been deluged with inquiries from all directions, but owing to a shortage of canal boats for long-distance traffic we have had to turn down trade. It was stated that the company had placed orders for nearly 100 new boats, and proposed to order immediately another 50. No one can contend that this branch of industry is suffering from high duties. My hon. Friend the Member for Moseley (Mr. Hannon) argued that when industries begin to prosper it is a good time to give them a pat on the back and to help them forward; but if the Treasury are to be asked to support all those industries which are not doing well, and at the same time to support all the other 1558 industries that are doing well in order to encourage them to do better, there would be no end to the expenditure that the country would incur.