HC Deb 27 June 1939 vol 349 cc247-357

4.10 p.m.

Sir Percy Harris

I beg to move, in page 8, line 9, after "forty," to insert: except in respect of vehicles which are not less than two years old. I would like to be quite clear that if the Chancellor of the Exchequer intends to yield to pressure from hon. Members behind him and not to press on with the increased duty, my Amendment would, of course, be superfluous, and it would not be necessary to press it to a Division or to put up a case for it. But I am assured that in this particular case the right hon. Gentleman, at any rate for the moment, is to stand firm, so I am going to endeavour by my Amendment to mitigate some of the undoubted hardships that this new rate of taxation, this penal taxation on high-powered motor cars, will entail. I have felt for many years that the whole principle of a horse-power tax is wrong, and I have spoken against it. It is a thoroughly vicious principle. It has put our motor car industry at a disadvantage with foreign producers. It has made the industry concentrate on the small car, the low-powered car, which I believe is technically, mechanically, and from an engineering point of view, not the most economic kind of car to produce, at any rate for the Dominions, places like Australia and South Africa. However in practice, of course, this increased tax will be a discouragement both for producers to produce high-powered cars and for users to buy them.

There is another side to this problem. It may be argued by the Chancellor of the Exchequer with reason that an Amendment in this form will not only be some assistance to the dealer in second-hand cars who already is seriously threatened with depression in his trade, but that it will be of assistance to owners of second-hand cars in the third year of possession, who will get the advantage of being allowed to pay only the original rate of duty. I do not object to that criticism if it is to be made. I want the Chancellor to make clear what is the definite purpose of this increased tax. Is it mainly aimed at producing revenue; is it for the purpose of filling up his depleted coffers and making good the shortage of revenue? From that point of view I am not sure that he is on the right lines. If these penal taxes are imposed, there will be, and there already is, discouragement of the use of motor cars.

But I am credibly informed that there is a second purpose. The engineering industry has great demands made on it for rearmament purposes, for aeroplane engines or machinery to produce armaments, and particularly for highly skilled engineers, just the kind of engineers who are employed in producing high-powered cars. If that is the Chancellor's purpose, then, of course, he will make it clear, and I suggest that my particular Amendment would be a practical way of achieving the purpose. If the indirect purpose of the Government is to divert technical skill from the manufacture of motor cars to the production of aeroplanes and munitions, then of course it would be a good plan to encourage people not to buy new cars but to retain their old cars.

I am informed on good authority that, from the business point of view, this new rate of tax will be a terrible blow to the dealer in second-hand cars. It may be said that that is an industry not to be encouraged, but it does achieve a purpose. There are many people, in particular business people of comparatively small means, especially doctors and professional men, who require for their work high-powered cars. They cannot afford to buy such cars when they are new, and there is a considerable and very useful trade in the sale of high-powered second-hand cars to meet this demand. I suggest that this high taxation will prohibit the professional man of small means from buying these second-hand high-powered cars. I have moved the Amendment on the supposition that the right hon. Gentleman is going to adhere to this new rate of taxation, and the Amendment will, therefore, bring some relief to people who will otherwise be hard hit, and also be some help to the dealers in second-hand cars.

4.16 p.m.

Mr. Pethick-Lawrence

I understand that my Amendment, in view of its similarity to the Amendment which has been moved by the hon. Member for South-West Bethnal Green (Sir P. Harris), is not to be called and, therefore, I propose to support this Amendment. In passing, may I say that, so far as the actual terms of the Amendment are concerned, I prefer my own, and that it would be better to take the date of registration rather than the years old. However, that is a detail, and I have no doubt that if the Chancellor of the Exchequer is prepared to accept the principle of either of these Amendments he will choose his own words and, therefore, the precise words of either Amendment are of comparatively small importance.

There are two main grounds which, in my view, support the Amendment. The first is that the proposal of the Chancellor of the Exchequer penalises the humble man, and penalises him to a much greater extent than, I think, the Chancellor of the Exchequer realises. A great many people of quite small means buy small second-hand cars, which they are able to pick up for a small amount of money. These low-powered second-hand cars use very little petrol per mile, and, as a result, the running of these cars is a very cheap business and, incidentally, they bring in a substantial sum of money in the aggregate to the Chancellor of the Exchequer. What is the right hon. Gentleman doing? He is putting a tax on an 8-horse power car of £4 a year, and it is perfectly clear that the imposition will make all the difference in certain cases whether these small people will be able in the future to drive a car or have to give it up. Even if it does not go to the extent of making a man put his car away or sell it, it will have the effect of making him take out a licence for part of the year instead of for the whole year. The hon. Member spoke of the high-powered cars. I am applying the argument to the small-powered cars, and this amount may be a very considerable figure to the people who are concerned with the use of these little second-hand cars. That is the first point— that the Amendment, if accepted in principle, would enable these small car users still to have a car, provided that they use a car which is more than two years old or— as I propose— of three years' register.

There is another aspect of the Amendment which, I think, is equally important, although different in kind, and that is the effect which this duty will not only have in the future, but has already had in the value of used cars. The trade itself reckons that the Chancellor's proposal overnight has deprived it of something like £3,000,000, by the loss in the value of the used cars in their possession. But large as that sum is it is probably exceeded by the loss to all owners of used cars, who in the aggregate probably have far more cars than actually the trade itself. In fact, as I pointed out on a previous occasion, the effect of the Chancellor's announcement was to bring about immediately a direct loss to the agents and to persons in the possession of used cars greater than the whole yield which the Chancellor of the Exchequer supposes he will get from this tax in the course of the first year, and that before the Chancellor has drawn in a single penny of the proceeds.

In my view it is very doubtful whether the Chancellor of the Exchequer will get anything like the amount he expects. If the right hon. Gentleman persists in refusing to accept an Amendment the effect will be that large numbers of these used cars will be put out of operation altogether; and that will mean that he will get no duty at all from them, he will lose the duty on the petrol which these cars would have used, and, in addition to that, there will be this loss by the trade of £3,000,000— I am taking the figure which has been given to me— which will be reflected in loss of Income Tax. Therefore, the result of all these factors may very likely prove that the Chancellor of the Exchequer's hypothetical gain from the tax in its present form will not be realised. If he is prepared to make this concession I think he will find that he can make it with very little loss or even without any loss to the revenue.

I know that the Chancellor of the Exchequer usually answers these things by saying that it will unbalance the Budget, but I must remind him of what we decided yesterday, and that the A.P.D. must be regarded as a sort of windfall which was quite unexpected when the Budget was introduced. I do not know in which year he expects to harvest the products of that windfall, or how much he expects to get, he has been coy in telling us, but unless he can say he is not going to get anything at all, he cannot plead the usual claim that our Amendment is going to unbalance the Budget. Therefore, I hope he may see his way either to accept the Amendment of the hon. Member or the Amendment in the form I have put down, or in the form which I believe some of his own supporters have suggested, and that he will make some concession with regard to this matter. I assure him that it has already aroused considerable feeling and has already brought great hardship on a, trade which, quite properly, should be called upon to shoulder a reasonable share of the burden, but which, if the tax is imposed in its present form, will have to bear a disproportionate share of the burden, a share which I think would be quite unreasonable. For these reasons I hope that the Chancellor of the Exchequer will be wise in time, will be reasonable and fair, and make some concession on this matter.

4.27 p.m.

Mr. Poole

I support the Amendment. I suppose that we all feel most strongly on those items of taxation which affect us personally, but anyone who gives an impartial study to the figures which the Chancellor of the Exchequer gave us when introducing the Budget will be forced to the conclusion that again the Chancellor of the Exchequer has thought, as many of his predecessors have, that the motor car industry is fair game for the greatest measure of taxation. Out of the additional taxation which he proposes to raise, 25 per cent of it is foisted upon the motor car industry, and in a full year out of the additional taxation he will receive from the major sources of revenue, that is £29,000,000, £11,500,000 is to come out of the motor car industry, approximately 35 per cent. Figures such as these show that the motor car industry has been considered by the Chancellor of the Exchequer as something as a class apart, something which can stand any measure of taxation he cares to foist upon it. I think that the Chancellor of the Exchequer will find at the end of the financial year that the revenue he has received from the additional taxation will be of such an amount that he will be greatly disappointed.

Coming from a working-class home I remember the way in which I used to assess the wealth of people. I thought that anyone who had a bathroom must of necessity be quite rich. Later, I thought that anyone who had a motor car must be fabulously rich. To-day, when I have both, I know that the mere possession of a bath and a motor car are not necessarily synonymous with wealth. The owners of motor cars are not necessarily drawn from one section of the community. All classes of the people have motor cars to-day of various sizes, various horse power, and very varied as to the date of origin, and it is for the people who cannot afford to buy a new car that I want to speak this afternoon. Motoring is a particularly expensive business. It is not merely a question of a horse-power tax. It is not even so much the 9d. a gallon which you extract out of each gallon that is consumed. The older cars are the most expensive cars to run. They are the cars which, due to wear and tear, are consuming more petrol per mile than new cars, and, therefore, through the petrol tax they are creating additional revenue which the owner of the new car does not pay. Motorists are called upon to pay not only these things, but to pay for the roads, which apparently they have very little right to use except for a limited period, because if they stay too long the police mulct them out of hundreds of thousands of pounds every year in fines. They are apparently fair objects for taxation by the Chancellor and for providing a large revenue to the local authorities by way of fines.

I want to speak particularly for those workers who of necessity are possessors of motor cars in order that they may proceed to their work. Any hon. Member of this House who will go to any of the factories adjacent to Birmingham and the Midlands and see there the enormous number of motor cars stored each day by men who have come long distances to take their place and play their part in the expansion of the armament industry, will realise just how much effect this increase of taxation will have on the workers in industry. It will mean that many men will be placed in a very difficult position. With transport costs through the ordinary transport services abnorally high, many of them have purchased cars of doubtful age and doubtful quality, but cars which have enabled them to get to and from their work with a minimum of payment, and those people will now be placed in an impossible position. The realisation will come that it is not economic to pay £1 5s. horse-power tax for a car that is seven or eight years old, and that the household budget will not balance.

I appeal to the Chancellor, therefore, to give further consideration to this matter. I am satisfied that if he accepts in some way the Amendment which has been moved, he will not lose a penny of revenue in the process, and I am also satisfied that if he insists on imposing a horse-power tax of £1 5s. on all cars, of whatever age, he will have cars laid up, as the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) has said, for six months in the year, and in that way he will lose revenue. This increased tax will prevent thousands of city workers, their wives, and children getting out to the country at the week-ends, and there is great need to-day, in the intensification of the industrial life of the country, that the workers should be able to get away from the surroundings of the city into the quiet of the country. It is possible to do that to-day because men have been enabled to run small motor cars, but I fear that the Chancellor is killing any hope of a continuance of that kind of thing.

4.34 p.m.

The Chancellor of the Exchequer (Sir John Simon)

I think it would be well that I should speak now, because I presume, Sir Dennis, that your wish is that we should deal with this Amendment as a concrete issue and not, on the discussion of this Amendment, have the more general Debate which, no doubt, will arise on the Amendment of my hon. and gallant Friend. I will endeavour to deal with it in that way. As the Committee has already noted— and it is very natural that it should be so— some of the argument which is addressed to this Amendment applies also to the main Amendment. At any rate, I should at once like the Committee to be under no misapprehension as to the position that I must take up. I must ask the Committee — and I trust they will agree, after discussion— to preserve this Clause. I am not able in this matter, which I should be very glad to do if it were not that I should be losing a very large sum of money, to accept suggestions for modifications, but as regards this particular modification, I think the Committee would like to know at once what is really involved. This is a very good example of how confidently proposals may be made to reduce a level of taxation, for a change or what looks like quite a reasonable adjustment, which would strike at the root of the tax.

The hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris) proposes that there should not be this increased rate of horse-power tax on vehicles which are more than two years old. If we look at the cars that are running about the roads, what is there to be known about their ages? Roughly speaking, there are at present about 2,000,000 private motor cars under licence running about the country. That was about the figure in September, 1938, and it is probably a little more now. How many of those 2,000,000 cars would fall on one side of the line and how many on the other? If we take the cars registered for the first time in 1937 and those registered for the first time in 1938, we get a figure to compare with the total. I may say that I agree with the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) when he said that if we were going to divide in this way, it would be better to do it by registration than by age, and indeed there would be another question arising, which would be how much tax should be paid for the present year, but that would be a matter for adjustment. Out of the 2,000,000 cars running about our roads— private motor cars belonging to private people— only 600,000 are cars which would pay the higher duty. The cars registered in 1937, added to those registered in 1938, come to 600,000, and the effect of this harmless little Amendment, therefore, would be that 1,400,000 cars would still be taxed at the rate of 15s. per horse-power. That would manifestly, from the revenue point of view, be a very serious change indeed.

All estimates as to the result are, of course, estimates as to the future. The hon. Member for Lichfield (Mr. Poole), who has just spoken, is very confident that the estimate given to me is wrong, and very confident that his own estimate is right. I am afraid I think that my expert advisers in the Ministry of Transport and the Treasury, who have the business of making these estimates, have a better opportunity of being right than somebody who, however thoroughly persuaded in opposing my proposals, is convinced that they are not going to produce the revenue. I am advised that if I were to give way to the hon. Baronet and accept his Amendment, the result would be, in a full year, that I should lose £8,000,000, and that in the current financial year— we have already got some way through it, and this new provision does not begin to operate till January— I should be expected to lose £4,000,000. Well, I cannot do it and nobody holding my position could come forward lightly and make such a concession. I cannot do it, and it is, therefore, necessary to ask the Committee to support the original Clause without making any change.

Now I would like to point out what is really the budgetary background. The hon. Member for Lichfield said something about it and expressed the view— and many other people have done so— that the tax as proposed works very hardly on those, or some of those, who have to pay it. Most taxes do, and I would ask the Committee to remember the situation which I disclosed to them in the Budget. We had very heavy expenses to meet, and it was necessary to share those expenses between loan and revenue. Even so, it was necessary to raise a sum by increased taxation— not, it is true, in proportion to the borrowing. Indeed, I was criticised and rebuked because I was not raising more. The central feature of my proposals for raising revenue was that I had to get a contribution taken from different sorts and kinds of people who, as far as I could see, would be representative, without increasing the Income Tax. Let it be observed that 3d. in the £on the Income Tax would do what this tax will do. It would certainly produce this £11,500,000, but I hope I still carry the Committee with me, as I am sure I did on Budget Day. When I said that I believed it was in the real interest of the country not to increase the Income Tax this year, I was supported by many hon. Members who no doubt felt most deeply about this duty.

What I did, therefore, was this— and I am criticised naturally from many quarters for doing it— I proposed to get a portion of the money by imposing indirect taxes, by increasing the tax on sugar and by increasing the tax on tobacco. I have always made it plain to the House as a whole that it is in the nature of indirect taxation of that sort that it falls with a special measure of severity on those with small incomes. It must be so. At the other end of the scale, I proposed to impose an increase on the Surtax and an increase on the Death Duties, although those taxes are already very high. It would be very foolish to deny it. But what was I to do about the middle lot of people, who neither, on the one hand, would feel so severely the indirect taxes, nor, as a general rule, would have to bear the taxes imposed at the higher end of the scale? It would be intolerable that we should have a Finance Bill this year which did not get a contribution from that great portion of the population, and I did quite deliberately invite Parliament— and I invite this Committee— to say that rather than have an increase in the Income Tax this year, which would have made the fourth year running, we should adopt this alternative of an increase in another direct tax, and that direct tax is the motor duty. It is a direct tax, which cannot be passed on to anybody else. My proposal was deliberately designed not to bring in commercial vehicles and not to bring in the consumption of petrol or oil used in industry so largely. It was essential to do what we could in these difficult times to encourage industry in every way possible.

We cannot devise any tax which will not have, unfortunately, a very severe impression on some people, and, weighing the different arguments between Income Tax and the motor tax, I came to the conclusion— and I invite the Committee to come to the conclusion— that we must on the whole avoid an increase in Income Tax and that I must find my money by a direct tax spread over a very large number of people, very largely over the middle section of the population, and that is what this does. I submit to the Committee that, unpleasant as it may be, as all taxes are, we must really look at the budgetary background as a whole. The House of Commons, I am sure, on reflection, would never wish to levy these. additional burdens on people who feel it so much when they are poor, and put extra burdens on those who are very rich, and not make a call for a corresponding contribution from the great body of ordinary people in the middle section. It is true that not everybody of this sort has a motor car. You cannot make taxes quite scientific— you cannot tax teetotallers by taxing beer; you cannot tax non-smokers by taxing tobacco— but the tax on the private motor car, under modem conditions, is a tax which calls for contributions from a very wide range of persons. I would, however, sooner call for that contribution from the private users of motor cars than at the present time increase the Income Tax or some other tax of that sort.

The hon. Gentleman is right in saying that cars are becoming more and more numerous, and I am very glad that it is so. I think that on this matter there has been a good deal of confusion and a considerable amount of exaggeration. I have had letters which would make it almost appear that the writers were under the impression that the horsepower tax was the main or the controlling factor which determined whether a man would or would not have a motor car. That is not true at all. If anyone will take a pencil and paper and, from his experience, write down how much he spends on petrol, on tyres, on oil, on driver's licence, the provision of a garage, and also a reasonable amount for depreciation, he will find that if he adds these items together the horse-power tax is not really the controlling factor which determines whether or not he will run a motor car. [Interruption.] I am speaking after a good deal of study of the subject and with the assistance of the experts of the Ministry of Transport, and I think the facts that I have stated will be confirmed by reasonable people who think the matter out.

The hon. Member opposite spoke about the eight horse-power car. I regret very much that anybody who is driving an eight horse-power car should have to pay £4 a year more in tax than he did before; but, as a matter of fact, £4 a year is about the same cost as a gallon of petrol a week. Anybody who makes an estimate of the expenses which they have to meet by running a car for 12 months will be driven inevitably to the conclusion that this additional tax, which, I admit, is a painful addition for some people, represents a very small percentage of the cost. The hon. Member asked me whether it was not a fact that some time ago the Prime Minister reduced the tax from 20s. to 15s. He did, and that was done in the hope that it would materially encourage the export of high-powered cars, but anybody who looks at the figures will see that that has been a disappointing expectation. [Interruption.] Yes; the figures show it. The thing that makes for increased production of cars, whether high horse-powered or low horse-powered, is not variations in horse-power duty; the thing that really affects it is the general state of the prosperity of the country. When the country shows a tendency to become more prosperous, there is a very considerable additional purchase of motor cars, including high-powered cars, but when we come to a period when there is, unfortunately, a tendency towards depression, the purchase of cars very rapidly decreases.

Mr. Cove

Has not the right hon. Gentleman left out a very great psychological factor in his calculations? While it may be true that the horse-power is relatively a minor factor in all these costs, when a man spends money on petrol and oil be gets mileage for it; he goes into the country and gets pleasure, and, therefore, he gets some result; but a tax is a very different matter. He feels that he does not get the benefit in that case.

Sir J. Simon

Many taxes come in that category. I was going on to say that the Committee will appreciate from what I have said that I cannot accept this Amendment, but I understand that you take the view, Sir Dennis, that the full discussion should be on the next Amendment, which stands in the name of my hon. and gallant Friend the Member for Birkenhead, West (Colonel Sandeman Allen).That being so, I will not say more now. I think I have shown the reason why we cannot accept this Amendment. I cannot accept it because it goes to the root of my proposal. It would relieve by far the larger proportion of the cars concerned. The number of cars of one year or two years old is comparatively small. If the Amendment were adopted, I should lose a very large part of my revenue. That I cannot afford to do. Therefore, I must ask the Committee to realise that it is necessary to maintain the Clause in its present form. We will of course discuss the Amendment of my hon. and gallant Friend, and the general question which will then arise.

4.50 p.m.

Sir Archibald Sinclair

At the end of his speech the Chancellor of the Exchequer came back to the point of departure at which he told us that he was only going to discuss the particular Amendment before the Committee. In the meantime he has ranged over the whole policy of the motor duty and discussed alternatives, such as a duty on sugar, tea, tobacco, increased Income Tax, Death Duties, and so forth. I am only sorry that he did not mention one possible alternative, which I should have thought he would have regarded as a possibility, and that is the taxation of land values. At the end of his somewhat extensive tour he has come back to his point of departure and addressed himself to the Amendment before the Committee. I do not propose to follow him on that more extensive tour. I would rather ask him to take into consideration the merits of this Amendment. He has told us that the Amendment would cost him this year £4,000,000. I should like to ask him whether in making that calculation of £4,000,000 he has taken into account the number of people who will undoubtedly lay up their cars rather than pay this additional tax. Has he taken that factor into account? Will he tell us how many people he has allowed for in regard to the laying up of their cars?

Sir J. Simon

My right hon. Friend will appreciate that when the Government gets the advice of the Departments, all the relevant elements have to be estimated and tabulated, and the result which I have given to the Committee is the exact result at which we have arrived.

Sir A. Sinclair

Can my right hon. Friend say how many cars he is calculating will be laid up? Will he tell us that factor in his calculations? It would be very interesting to the Committee to know how many cars he expects to be laid up. Has he calculated, as was mentioned from the Front Opposition Bench, the amount of petrol and oil that will not pay duty on account of the cars being laid up? I doubt very much whether the acceptance of this Amendment would cost the Chancellor of the Exchequer as much as he says. He said that the horse-power tax was not a big factor in the calculation of a man who was trying to decide whether or not he should buy a car. I think that is true. If the man was considering whether he would buy a car he would have to consider the cost of running it, the cost of petrol, insurance, and so forth, and I do not suppose the horse-power tax would enter very largely into the calculation. [Interruption.] To a certain extent it would, but not very largely. I would ask the Committee to consider what is far more relevant. The man having got the car, is considering whether he can continue to run it. He has worked out his calculations and is only just able, say, to run a small eight horse-power car. He has to pay £4 a year more in tax on that car, and that may well be the deciding factor which will make it no longer possible for him to continue to run the car.

It is the effect upon people of very-small incomes, who are just able to manage to run their cars, that we have-in mind in asking that the Chancellor of the Exchequer should accept the Amendment. Many of these people have bought second-hand cars, cheap, and are-just able to keep them running now. If the Chancellor of the Exchequer would give us this Amendment, or something like it— we do not press the two years; perhaps he would indicate that three years would meet his view— we believe that it would not cost him anything like the sum of money that he has mentioned to the Committee. We believe that a very large number of people, poor people, owning these second-hand cars would, if he accepted our Amendment, be able to keep on running their cars and would be able to pay their horse-power tax, which they will not be able to do if the Chancellor's proposals are adopted, and would continue to use their petrol and oil and pay their duty on it. I would ask my right hon. Friend whether he will not consider that this proposal offers a compromise which would meet the views of hon. Members in all parts of the Committee, and which would be the best way of giving him the greatest possible amount of revenue from motor taxation, without causing hardship to motor car users.

The Chairman

I am in somewhat of a difficulty. It was obviously impossible to continue the Debate on this Amend- ment without some indication on the part of the Chancellor of the Exchequer as to his intentions on the Clause generally, but I thought the question might be more generally dealt with on the next Amendment on the Order Paper. Therefore, I would ask the Committee to bear that fact in mind and try to dispose of this first Amendment as soon as they reasonably can, and get on to the next Amendment. I only want to put it to the Committee that if there is further debate on this Amendment I shall be obliged, notwithstanding the Chancellor of the Exchequer's references, to confine very strictly any further debate to this particular Amendment.

Sir Arthur Salter

I understand that if hon. Members desire to express an opinion upon the general merits of this horse-power tax, they will reserve their observations for the later Amendment, but suppose an hon. Member desires to advocate that there should be some distinction between new cars and old cars, without necessarily being in favour of this particular distinction, would he do well to speak on this Amendment or reserve his remarks for the discussion on the later Amendment?

The Chairman

I do not think he will have a later chance.

4.58 p.m.

Sir Patrick Hannon

I intervene for only one or two moments. I am fully conscious of the significance of the statement you have just made, Sir Dennis. I should like to support the views expressed by the right hon. Member for Caithness and Sutherland (Sir A. Sinclair). I do not propose to vote on this Amendment because, as many hon. Members know, I am interested in the effect of the Amendment, indirectly, but I should like to say to my right hon. Friend the Chancellor of the Exchequer, that this tax in relation to old cars will cause considerable disorganisation in the distributive trade of the motor agents throughout the country. It will have a very serious effect on the selling capacity of motor agents, where a large number of transactions take place in the exchange of old cars for new. While we all realise the efforts that my right hon. Friend is making in order to get the finance to meet the exigencies of the moment and to meet the immense obligations which are pressing on his shoulders in these days of difficulty and the great defensive commitments of the country, nevertheless I suggest that this tax is inflicting a very grave disability and inconvenience upon a number of hard-working people in the retail motor trade. I am sure the right hon. Gentleman did not come to his conclusion without having very solid reasons, but I hope he will bear in mind that there are literally thousands of people engaged in the distributive trade who will be seriously affected by the tax.

5.1 p.m.

Sir A. Salter

I do not support the Amendment in the form in which it has now been proposed. I think the Chancellor of the Exchequer has made a convincing case that to accept it in its present form would be so far to destroy his main tax as to make it scarcely possible to go on with it. Nevertheless, I should like to ask him to consider whether some expression should pot be given to the principle of making a distinction between taxes on new and old cars, by which I mean cars a good deal older than two years. I should like to give a reason which 'has not so far been mentioned, and which is economic rather than financial. When this new tax was introduced I thought it would have what I considered a positive advantage of an important kind, which two or three years ago I should have regarded as a disadvantage, namely, that it would help to secure the inevitable reduction in the manufacture and supply of new cars. If there is no distinction at all between the horse-power tax on new cars and even the oldest cars I think it will rather tend to diminish that effect.

To put the same point from another point of view, not only is it desirable to discourage the extensive purchase of new cars at present but the demands of the Minister of Supply will certainly mean a positive interference with the manufacture of new cars, because the automobile industry will be required to make other things. The effect of that will, I think, be to diminish the supply below the demand, with consequences that the right hon. Gentleman is aware of. In these circumstances it seems to me highly desirable that cars which are perfectly good running machines should not be scrapped for a purely fiscal reason. It seems to me above all desirable that you should not see more cars scrapped, or cars scrapped at an earlier date, just at the time when it is particularly desirable in the national interest, on the one hand to use our manufacturing resources for other purposes, and on the other, in view of the necessary reduction of new manufacturing, to utilise existing machines as far as possible. I should like, therefore, to ask the Chancellor whether he would not consider some way of making a distinction between new and quite old cars, which under his present proposal will certainly be scrapped, when they could quite properly go on being used, and thus tend to make up the deficiency which must be caused by the demands of the Minister of Supply on automobile manufacturers.

5.5 p.m.

Captain Plugge

I think the Chancellor of the Exchequer has made a very good case in the fact that he desires the money, and I will confine my observations to another point of view. This is not like a tax on buildings. It is allied to loss of life, and we should look at it from the standpoint of its effect on deaths on the road. The Amendment supports the sale of second-hand cars, and I feel that anything which would discourage the use of old cars would contribute to lessening the loss of life on the road. But there is another point. It is a fictitious tax. It is a tax that is applied to horse power, but really the figure indicated is not horse power at all. I heard an hon. Member say that it encouraged the construction of small-powered cars. I submit that it fosters the construction of inefficient cars. The power of a petrol engine can be defined by three dimensions, the power of the cylinder, the stroke of the piston and the number of revolutions per minute. This will give the power of the engine, whereas the taxable, rateable horse power is based on one dimension only, the power of the piston. It is for this reason that I think a tax on horse power is bad and should be substituted by one on petrol.

The Chairman

I must stop the hon. Member from going into that. For the reasons I have already given I am afraid I must rule very strictly in regard to this discussion.

Sir P. Hannon

On a point of Order. As this Clause also covers motor cycles would you, Sir Dennis, permit some observations to be made on motor cycles on this or on subsequent Amendments?

The Chairman

I should prefer to wait until I hear them.

Captain Plugge

Leaving the point about petrol, I should like to point out that the way to save life on the road is to encourage as few vehicles to use the road, and to use them as little as possible. With an increased horse power tax an owner will have to pay a larger lump sum and he will be inclined to use his car on small errands when the necessity does not arise. I am in favour of anything that would foster the disuse of old cars.

5.10 p.m.

Mr. Mander

I should like to say a few words in support of the Amendment on behalf of my constituency, which has made strong representations to me on the subject. Wolverhampton is an important motoring centre and a great many motor accessories are manufactured there. One of the most important points against this tax is that the Chancellor of the Exchequer is not going to get his revenue, because there has been a very marked decrease in sales even up to the present. Customers are, obviously, going to do one of two things. They are either going to keep their old cars or they are going to buy cheaper ones. The outlook for a 15 horse power car is almost hopeless. The owner of the 8–10 horse power car will probably lay it up for most of the winter, or at any rate for one quarter, in order to save the duty and the petrol tax will lose, too. Secondhand cars of over 20 horse power have become practically valueless— that is a very strong argument for the Amendment— and these 20 horse power cars are largely used by tradesmen for the purpose of their business, and there is going to be a very serious interference with 'the allowance prices which can be and are being made at present in the £400 and £500 class. It is quite wrong to think that these are luxury cars used for joy-riding. They are for business purposes. They are used by travellers and tradesmen in getting about doing their ordinary day's work. Anything that prevents them from having the use of their cars, as will be the case certainly in the winter months, will have a serious effect on the industry. It is not unfair to assume that the effect of this duty on the retail motor trade has been to write off something like £2,000,000 or £3,000,000. I would very strongly appeal to the Chancellor in the interests of the revenue itself, of the motor industry and of industry in general, to consider accepting the Amendment.

5.13 p.m.

Captain Strickland

It is, as you say, Sir Dennis, most difficult to confine this Debate entirely to the actual Amendment before the Committee, and yet in one way it is quite simple to do it by recognising the exact limits to which the Amendment goes, because it must be obvious that, if the Chancellor of the Exchequer persists in carrying his tax at 25s. on horse power, then, of necessity additional weight must be given to the first Amendment, that the full weight of taxation should not apply equally on all types of cars and cycles. I was very glad my hon. Friend brought in the matter of motor cycles, because this point will undoubtedly be covered by the Amendment. Here we come against a class of people, many of them of a very humble character who are using the roads. On account of the spread of the towns into the country and the longer distances they have to go to work, they have to devote a considerable part of their weekly earnings to the acquisition of some means of getting to and from their work, and the motor cycle presents itself to them literally as a godsend. Though it may seem to many a small thing to raise the tax, it is a very serious thing for motor cyclists who have to pay additional money for their cycles out of the small sums that they may be earning. If the Chancellor would meet us reasonably on this point that we are urging against this additional burden being placed on the owners of motor cycles and motor cars, I think that, particularly in the case of motor cyclists it would lead to the creation of an asset which would be valuable in the event of a large crisis, in which so much would depend upon the ability of our young people to control and manage motor cycles.

The Chancellor said that he did not think the horse-power tax was the deciding factor when a man was going to buy a car. I am afraid that I disagree with that statement. The motor cyclist or motorist who goes out for a run pays a few shillings for petrol; the next week he pays a few more shillings for his next run, and so on; he can pay insurance by weekly contributions; he can pay everything connected with the expenses of run- ing a car by weekly contributions; but all classes of motorists— from the humble people who can just afford a motor car right through the scale— are to be called upon, in the very worst month of the year from the point of view of the expenses of the ordinary citizen, to pay something which, according to their capacity as motor car purchasers or motor cycle purchasers, is a big sum to them. It is all very well to say that £4 paid in January represents only so much per week. The point is that on the day in January when the car has to be licensed, the person has to pay £4 out of his week's earnings. That is the psychological effect which we fear with regard to this taxation.

We have it in our power to-day to decide whether we will give some encouragement to the person whose case I have tried to plead before the Committee, by encouraging him, as a result of reduced taxation, to take the second-hand cars and motor cycles that are in the market. This would have a wide effect. Every second-hand car or motor cycle in the market is disposed of by some person, and if we encouraged people to buy second-hand cars and motor cycles, it would clear the way, and people would no longer have to hang on to cars and motor cycles because they could not sell them owing to the high taxation. These people would dispose of second-hand cars and motor cycles and come into the market to buy new ones. There was once a highwayman who met a middle-class citizen on a heath. The highwayman went through the man's pockets and took his watch and rings, and emptied his pockets of all the money they contained; and when the highwayman had done this, the man said, "I am 10 miles from home; can you spare me just enough to pay my fare home?" The highwayman replied, "No, I cannot do that because it would upset my budget; I have a wife and family to care for, and unless I take all you have, I shall be doing less than my duty to my wife and family."

With regard to this tax, the point we have to decide is whether it is fair to place such a heavy burden of taxation on the motorist. I agree that the money has to be found, but why place the burden on these people? It comes back on the trader, and the motor trade is called upon to bear the greatest burden in proportion of all the new taxation placed on the community. The motor trade is picked out for this particular form of taxation because the Chancellor says that he can find no other source of revenue. He mentioned the taxation on tobacco, beer, and so on. But do not the motorists pay these taxes? Do they not bear a proportion of them? Why should this particular trade be called upon, not only in this Budget, but time and again, as it has been, in one form and another, to bear this penal legislation and this penal financial imposition? I hope the Chancellor will think twice before he turns down this Amendment.

One of my hon. Friends has mentioned old cars. I am not speaking of cars that are 10 or 12 years old and a danger to the community, but of the type of car that comes into the market because the motorist wants to keep up to date, and therefore, buys a new car every year. At the end of 12 months, the car is to all intents and purposes a good and safe car to have on the road. After three, four or five years, if it is kept in a proper condition, it is still in good running order and capable of going on the road. If the market for such cars is blocked, the expansion of the motor trade is blocked, and if that is blocked, then it affects one of the great sources of revenue, as a result of a reduction in the revenue from Income Tax and, as a result of a decrease in the number of high-powered cars, a reduction in the revenue from petrol tax. This is not something that can be lightly passed over by any Chancellor with the remark, "This is an easy way of getting the money; and, therefore, whether it is just or not, I am going to hit this particular trade, because it is the easiest method of collecting revenue." I plead particularly for the motorcyclists. Representing the constituency which I do, I beg the Chancellor to give way on this point, and to make some concession, particularly if he intends to retain the 25s. horse-power tax. I agree that we ought to have some guidance from the Chancellor, before we are called upon to vote on this Amendment, as to whether he intends to refuse to make any concession on what we believe to be an unjust tax. I hope the Committee will support us in our endeavour to secure this reduction in respect of old cars.

5.23 p.m.

Mr. Burke

The right hon. Gentleman the Chancellor of the Exchequer said that he was certain that the people who had advised him were right in suggesting that the motor industry would not be seriously affected by this very great increase in taxation. I think that every hon. Member must have had numerous communications from people in the motor trade in his constituency, all of them disagreeing entirely with that statement, and I think the Chancellor must also remember that when the increase in tax was announced, there was a very great slump in the price of motor shares. Hon. Members on this side are not concerned about motor shares — [Interruption.] We are not concerned about the losses of people who are sufficiently wealthy to own motor shares, but we are concerned about a very large number of people who own cars and who have to face this great increase in taxation. The Chancellor said that when people are going to buy a new car, they are concerned about the amount of taxation on petrol, but not about the amount of initial taxation which they will have to pay. If that be so— and I am not certain that it is— it is right for the people who have not yet bought cars to have in mind what the Chancellor proposes. But this Amendment deals with the people who have already made commitments on the assumption that the tax would be 15s. They now have to face a very sudden and unexpected increase, in addition to the enormous amount which they have to pay already by way of petrol tax, insurance, and so on.

I should like to stress the question of employment. I believe there are about 20,000 garages and service stations in this country, employing about 150,000 per-sons. I am informed, as other hon. Members have been informed, that already orders for new cars and old cars have been cancelled, and that means, of course, that the amount of trade and employment for people in garages and service stations will be very considerably cut down. At the present time, the motor industry is a growing industry, and one on which we may have to rely to a very great extent in time of emergency. I think the Chancellor ought to consider the point made by one hon. Member opposite that, if the market for second-hand cars is blocked, it will have an effect upon the market for new cars. The burden will be placed not merely on the persons who have to pay the tax, but will be passed on to garage proprietors and employés. On the basis of the information given to me, which I think is similar to that given to other hon. Members, I suggest that motor salesmen have been faced with the cancellation of orders for new and old cars, and are complaining bitterly that this particular section of the community, which already carries a large proportion of taxation, has been called upon, quite unexpectedly, to face this huge increase. I suggest that the Chancellor ought either to reduce the incidence of taxation as far as this Amendment is concerned, or to make a reduction in the taxation as a whole.

5.28 p.m.

Mr. Lipson

I can conceive of one justification for the Committee rejecting the Amendment, but, unfortunately the Chancellor did not give that reason. It is that he would have given to the Committee an indication that he is going to give some relief in some other way to the motor industry. There is a very strong feeling throughout the country that the Chancellor, in his Budget, has imposed penal taxation on the motor industry.

The Chairman

I must enforce my Ruling and keep the discussion very strictly to the Amendment before the Committee.

Mr. Lipson

The users of second-hand cars are not behind other sections of the community in their willingness to pay their fair share of taxation, particularly in view of the nation's needs at the present time; but they object, and I think they object rightly, when they find themselves called upon to bear a share of taxation which is unreasonable. They have reason to hold that view because, at the present time, the motorists are contributing something like one-tenth of the Budget. Therefore, it is difficult to find out why the Chancellor of the Exchequer should have selected the motoring community in particular.

The Chairman

The hon. Member is now arguing on the tax as a whole. I must confine him to the Amendment. Perhaps the hon. Member would read the terms of the Amendment.

Sir Irving Albery

On a point of Order. May I respectfully submit that it is very difficult to differentiate between arguing for the reduction of a tax and the aboli- tion of a tax. The arguments in each case are largely the same. Would it not meet the convenience of the Committee even now to take a general discussion on both these Amendments and have separate decisions upon them afterwards?

The Chairman

I am afraid it is too late to do that now. I must try to restrain the discussion to the terms of the Amendment which is before the Committee. I admit that it is difficult, but I have to do my best and hon. Members who wish to discuss the tax as a whole, must have patience and wait until the other Amendment has been reached.

Mr. Benjamin Smith

Would it not be well, in view of your Ruling, Sir Dennis, if the Chancellor of the Exchequer gave some hint to the House, whether he intends to stand for the Bill as it is or whether he contemplates meeting the views which have been expressed, when we come to the next Amendment?

Sir J. Simon

I did indicate that I intended, when we came to the main Amendment, to ask the Committee to support the Bill as it stands.

Mr. Lipson

I would only add that in this country the second-hand car is the people's car. The man who does not want to pay more than £50 for a car uses a second-hand car and the amount of tax which he will be called upon to pay under the proposal in the Bill, is out of all proportion to the cost of the car. I submit that it is an unreasonable tax in that case and that it presses with particular severity on the poor man. I think that the Chancellor of the Exchequer in refusing any concession in this matter of second-hand cars, is treating that section of the community very hardly. If, on the other hand, the right hon. Gentleman were prepared to make a concession on the larger issue, then the users of second-hand cars would be covered by it, but failing any undertaking that any relief will be given on the tax, for all users of cars, those of us who believe that the Chancellor's proposals will press unfairly on the motoring industry can only show our disapproval of those proposals by voting for the Amendment.

5.34 p.m.

Mr. Crossley

I wish to make only one point on this Amendment because I think it would be out of order on the next Amendment. I assume that part of the underlying purpose of this tax is to release men from the manufacture of motor cars in order that they may be able to make much more urgently needed munitions of war. If that be so, there is some case for drawing a distinction between old cars and new. I feel strongly on this question, perhaps because I myself have a car which is six years old and which I hope will last for another six years, but, apart from that consideration, I cannot help feeling that the man who makes his old car do, instead of buying a new one, performs a public service at the present time. By refraining from buying a new car at the works he helps to release men who are urgently needed to make other things, and for that reason alone I wish the Chancellor of the Exchequer could reconsider the possibility of differentiating to some extent between the new car and the old car— that is the car that has been on the road for a considerable time.

Mr. Quibell

The very old cars ought to be put off the road altogether.

Mr. Crossley

There may be some to which that remark would apply, but I am only saying that there is a distinction to be drawn between the car which has been on the road for a considerable time and the new car, when those who are engaged in the manufacture of new cars would probably be better employed in the manufacture of munitions.

5.36 p.m.

Mr. Petherick

I have my name to a subsequent Amendment on the Paper, but after the clear declaration of the Chancellor of the Exchequer that he is unable to make any concession on the general issue I feel disposed to speak on this Amendment. On further consideration, I am not at all sure that, if it were possible to make a concession in the direction asked for by this Amendment, it would not be even more advisable to do so, than to make a concession on the later Amendment. The case for the second-hand car has been exhaustively discussed. I agree with my right hon. Friend that it is possible to exaggerate such a case. I do not suggest that any exaggerated language has been used in this discussion, but it is easy to over-state the case by claiming that because a man has to pay another £4 or £5 a year he is therefore going to lay up his car, or give it up altogether. As my right hon. Friend said, the horse-power tax is not the only factor. There is also the petrol tax which may be a comparatively minor matter but is, at the same time, of considerable importance.

This however affects particularly owners of and dealers in second-hand cars, for whom I would put in a plea. There are farmers all over the country who use second-hand cars and who will lose, not only because of the higher tax but also because of the reduced value of the cars. Most people when they buy a second-hand car have in mind what they could get for it if they sold it and they write off the difference in price which arises over the period in which they are using the car. The Chancellor of the Exchequer says he is unwilling to make any concessions. This Amendment would exclude cars of two years and over. The Chancellor said, I think, that it would cost £4,000,000.

Sir J. Simon

I said £8,000,000 in a full year.

Mr. Petherick

It would cost £4,000,000 this year, and £8,000,000 in a full year. I realise that it would be difficult for my right hon. Friend to dispense with that considerable sum, but would it not be possible for him to make some concession for cars of, say, three years or four years and upwards? It would be interesting to know how much the exemption of cars of three years or four years and upwards would cost the Exchequer. On the question of making any concession at all, in connection with this tax, it has been pointed out that the Chancellor has already made two concessions in the course of the Budget discussions. His action has been represented alternatively as a concession to pressure and force and as a concession to common sense. Personally, I look upon it as a concession due to fuller knowledge.

When a Chancellor is making up his Budget he must, in regard to any item which he contemplates taxing, make very guarded and tentative inquiries, otherwise the cat will be out of the bag. If he were to make exhaustive inquiries about particular items he would soon have the whole of England strewn with escaped budgetary cats. People would obviously make their dispositions and perhaps destroy the whole plan of a new tax in its first year. Therefore, the Chancellor is only in a position to make very careful and discreet inquiries. When the Budget is opened and the new tax is announced, he gets representations from all quarters made in perfectly good faith by those affected and very often it is only then that he is able to go into the figures and find out whether concessions are advisable or not. I suggest that that is what happened in the case of the two concessions which have already been made, and I hope my right hon. Friend will not be deterred from making a further concession, in the case of older second-hand cars, just because he fears that if he does so he may be regarded not as an iron Chancellor but as an india-rubber Chancellor. I hope he will regard the proposal in this Amendment on its merits, and do in this case what he has so wisely done in the earlier cases in which concessions have been made.

5.42 p.m.

Mr. Vernon Bartlett

I support the Amendment or at any rate the modification of the Amendment which is now generally suggested in the Committee. I sometimes see the Chancellor of the Exchequer driving about in a very impressive car which has as its mascot a squirrel, though I am sure that no nuts ever fall off that so-well-cared-for vehicle. Possibly as a result of driving around in that car, the right hon. Gentleman under-estimates the effect of this tax on the dealer in second-hand cars. I have driven cars for a quarter of a century and have never yet had a new car and I have never been let down by a dealer in this country. When I lived in Rome I had a car, the misfortunes of which have become legendary and will be passed on from father to son as long as the Eternal City stands, but I have never been let down by a dealer in England. Yet dealers of this sort are the people who are now faced with ruin as a result of this rather savage tax. They will, of course, be partially compensated by the increased demand for small cars. Nevertheless they will lose a large portion of their capital as a result of this tax and I suggest that the terrific run on small second-hand cars which has taken place since this duty was first spoken of, is an indication that it is not going to produce anything like the revenue expected of it. I am told there are some 15,000 retail motor firms in this country and that they earn an average profit of only about 2 per cent. Obviously it will be impossible for men in that position —

Captain Sir William Brass

On a point of Order. May I ask, Sir Dennis, whether we have now decided to have a general discussion.

The Chairman

No, certainly not.

Mr. Bartlett

I do not think I was going beyond the terms of the ruling already given. I was speaking of second-hand cars. It will be very difficult for dealers in second-hand cars to sell a car of 14-horse power or over. When they take into account tax and insurance, this is going to add some £30 to the price. The people who will be thrown on to the unemployment market as a result of this tax, will, in many cases, be highly-skilled mechanics who are of great and increasing importance to the country during these months of crisis. When I think of the cars that have been sold to me built out of bits and pieces and yet able to go satisfactorily, I am filled with respect for those men. They are valuable members of the community and although it is true that they will be absorbed in the new war economy that we have to develop, I am afraid that in the meantime this duty may throw a lot of them unnecessarily on to the unemployment market. If I were not afraid of being out of order I would suggest that if the Chancellor needs the money he might consider taxing private cars with trailers, or taxing that atrocity —

The Chairman

The hon. Member is now out of order.

5.45 P.m.

Mr. Holdsworth

One point which was touched upon by the hon. Member for Burnley (Mr. Burke) has not, I think, been sufficiently emphasised, and that is the effect this tax will have upon the production of new cars. It is absolutely essential to the production of new cars that there should be an open market for second-hand cars. The figures given by the Chancellor show that of the total number of cars on the roads more than two-thirds are second-hand cars above two years old. I understand from figures given to me that the average life of a car is eight years, and that it passes through three or four hands. I appreciate that the Chancellor has got to have his money, and I think it would be rather churlish to turn round on him now and say that this is a bad Budget because we all felt very grateful on Budget Day on finding we had not been hit harder. May I also say, in passing, that I cannot understand criticism of the Chancellor because he has given way on two particular items in his Budget. We always claim that we live in a democratic country, and it seems to me to be totally wrong to levy criticism at the Chancellor when he has had the good grace and the democratic sentiment to pay attention to the views of Members of the House of Commons. Therefore, I hope the House of Commons will not be ready to criticise him if he should give way on a third item.

I cannot help thinking that perhaps there is a purpose behind the increase in taxation, of which nothing has so far been said, the purpose of putting some new cars out of production. I wish the Chancellor would say that. If that is not the purpose, at any rate, this increased taxation will have a serious effect upon the production of new cars by spoiling the market for the sale of second-hand cars. A tax of 25s. per horse power on a car which is two to three years old will have a very detrimental effect upon the sale of second-hand cars. From that point of view I beg the Chancellor to reconsider his attitude. If he objects to making the concession in the case of cars over two years old, perhaps by some later Amendment the period might be extended to three or four years. The development of the motor car industry has been remarkable, and it gives a tremendous amount of employment, and although I should not be prepared to oppose the Chancellor in the Division Lobby, because he has got to find the money, I beg of him to reconsider whether he cannot by a later Amendment put a lighter tax upon older cars in order that the industry may be assisted to continue to grow.

Sir A. Sinclair

My hon. Friends and I are willing to accept any modification of this Amendment which will concede the principle that there should be a difference in favour of the second-hand car.

Mr. Holdsworth

I am not criticising this Amendment, because I understood perfectly well what the right hon. Gentleman said, and that is why I am saying that if we cannot get an Amendment relating to two-year old cars accepted we might get a concession for older cars. My last point is that if it is the purpose of the Chancellor to stop the production of new cars then a smaller tax on the old cars would perhaps encourage men who thought of buying new cars to stick to their old ones, and so from both points of view the Chancellor might be helped. It requires great courage to give way to pressure of the kind he has given way to in the past, and I beg the Chancellor not to be deterred from doing so because people call it an exhibition of weakness. To my mind there is real strength in paying serious attention to what Members of the Committee have been saying.

5.52 p.m.

Wing-Commander Wright

I want to add my support to the plea of the hon. Member for South Bradford (Mr. Holds-worth) and of the hon. Member for Oxford University (Sir J. Salter), because I am sure the whole Committee must agree that it would be a great pity if at this time there were any increased tendency to scrap old cars before it became absolutely necessary to do so. If the Chancellor would look around a large provincial city like Birmingham at week-ends he would probably be astonished at the amount of really good work those old cars are doing. They are getting poor people and their families out into the country. When he says that the £4 addition to the tax represents only the cost of one gallon of petrol per week I wonder whether he realise how few of those motorists do use one gallon of petrol a week, and to be suddenly asked to pay for their whole year's petrol supply at one blow, and at a time of year when they are particularly short of money, is a very serious matter to them. From that point of view this is a very unfair tax in its incidence upon very poor men.

One hon. Member suggested that the tax might have been raised with the object of curtailing the production of new cars, and thereby releasing skilled workmen for munitions work. That is a mistaken theory. If we penalise the motor car trade so that they are not able to sell their cars and have to "sack" their workmen, will they "sack" the skilled workmen such as are required for the production of munitions Of course, they will not. They will get rid of those who are not so skilful, and one of the troubles at the present time in the production of munitions is that there are so many men who call themselves skilled but who are not up to the standard required, though they may be quite satisfactory for the production of motor cars. Therefore, I hope that we shall hear no more of that argument, because I am certain it is absolutely fallacious. I hope that the Chancellor will see his way to make some concession on this Amendment. Like other speakers I think two years is far too short a period, but it could easily be extended to four years and thus achieve the object which we are seeking. I hope that he will give the concession, because there are many of us who want to support him but at the same time feel so strongly about this matter, and whose constituents feel so strongly, that if we cannot meet them in some slight way we shall regretfully be forced to go into the Division Lobby against him.

5.55 P.m.

Lieut.-Colonel H. Guest

I trust that I shall be in order in mentioning a point which was referred to by the hon. Member for South Bradford (Mr. Holdsworth), because I should like to reinforce it. I have an Amendment later on the Paper with reference to workmen's cars, but I do not know whether it can arise if this Amendment is decided upon. An enormous number of men go to their work in small cars. They are old cars, very old cars, and I should like to feel that some remission from taxation from the highest rate was granted on behalf of men who go to work in their cars. I think hon. Members opposite will bear me out when I say that in South Wales a good many miners go to work in cars. They group together, perhaps two or three of them, to get a car of their own with which to go to work, and if a remission of the increase from 10s. to 5s. were made in the case of a man who is a workman and uses his car to take him to work such a concession would be very welcome.

5.57 p.m.

Sir Nairn Stewart Sandeman

I came into the Chamber with a rather open mind, a little prejudiced in favour of relief for the second-hand car, but after listening to a great deal of the Debate all the arguments I have heard make me hope that the Chancellor will not change his mind. If we are to be so busy making munitions there will not be the same number of new cars turned out, because workpeople will be wanted for other work, and that means that there will still be a demand for the second-hand car; and it will be a very good demand, because the small car will be wanted by the man who cannot afford a big one and the man who would like a new Rolls-Royce will have to be content with buying a second-hand one. That is what will actually happen. During the last War the trouble was not to get a car but to get the petrol with which to run it. We hear it said that this is going to be a very heavy tax, but we should remember that in these times the wage-earning class will be getting very much bigger wages. They had them in the last War.

Mr. Benjamin Smith

And there were higher prices.

Sir N. Stewart Sandeman

Yes, but there were bigger wages. If it comes to that, I remember that better-class people could not afford to buy what poorer wage earners could perfectly well afford— —

The Chairman

We cannot go into a discussion on wages.

Sir N. Stewart Sandeman

I hope that no hon. Members on this, side of the Committee will be carried away by the pleas that have been put forward for a remission of the taxation, because we do need the money very badly, and everybody in the country ought to be ready to pay something extra.

5.59 p.m.

Sir Henry Fildes

I should like to support the plea to the Chancellor to make a concession on this matter. On the roads on Sundays we see large numbers of small second-hand cars occupied by men taking their wives and families into the country, and it is a mistaken idea for the Chancellor to suppose that the addition of £4 a year to the taxation on those cars means little to their owners. If we could say that cars up to 10-horse-power should suffer no increase of taxation it would be a great advantage. The Chancellor has said that he does not know of any other source from which the money could be got. Let him put a tax of 3d. on every golf ball.

Sir J. Simon

What reduction would my hon. Friend suggest for second-hand golf balls?

Sir H. Fildes

The repainting department would have to engage additional men. The right hon. Gentleman has on two previous occasions shown respect for the opinions expressed in this Committee. I admire him for his courage, and I am glad to see a strengthening of the position of the House of Commons as a debating chamber. My right hon. Friend should not become obsessed, because his experts, the permanent officials, come along with a suggestion, into thinking that they have said something which is sacrosanct. The opinions of Members of this House are just as entitled to respect as are the suggestions of highly-paid officials in Whitehall. There is intense feeling in the country on this matter.

The Chairman

rose—

Sir A. Sinclair

Surely the Chancellor of the Exchequer will make some reply to the repeated pleas that have been made by his own supporters that he should respect the opinion of Parliament and the speeches which his own supporters have made?

6.3 p.m.

Vice-Admiral Taylor

I hope that the Chancellor of the Exchequer will see his way to make some concession in respect of second-hand cars. Many people buy second-hand cars at very low cost, because it is important for them to have a car both for business and pleasure. There is a tremendous sale of cars at an extremely low price, round about £12. Many of these are high-powered cars which very quickly lose their value. The man who can afford to buy a low-priced second-hand car of 20 horse-power will not be able to afford the extra taxation, because he would thus be paying more in taxation than the car was worth. The tax will, therefore, press very hard upon the poor man and upon the people who are selling only second-hand cars. It is well known that the practice now is for people to have a car for one or two years and then to get a new car by part exchange of the old one. The loss to the second-hand trade will be immense. One realises that the Chancellor must find the money, but there are other means. There are cosmetics, for instance.

The Chairman

I am afraid that we must cut out alternatives.

Vice-Admiral Taylor

I will cut out the cosmetics. I appeal to my right hon. Friend to see whether he can make some reduction in this taxation in respect of cars which have been in use for a certain number of years.

6.8 p.m.

Sir J. Simon

In response to the request of the right hon. Gentleman I gladly add a word. I hope that it will be possible to take the Division afterwards, because there are many important questions still to discuss. I assure the Committee that I have listened with attention and sympathy to what a number of Members have urged. I hope that on their side they will continue to remember that if I made this concession I should lose £8,000,000 of revenue, and that cannot be done. I appreciate the references that have been made to my actions upon an earlier occasion, but I should be disregarding my duty if I said "Let it go, because I know that a large number of people would feel much relieved." The circumstances with which we are now faced financially are not easier than they were on Budget day and I should be acting most wrongly if I did on this occasion what I am asked to do.

I quite understand the suggestion that is made for some variation of the tax, but I do not think that the distinction between old and new cars would turn out in all cases to be practicable. There is a difficulty in the suggestion that the sort of car which has attained what you might call quite a respectable age would gain by a variation of this tax. The more expensive and the very best kind of car — the Rolls Royce car, for all I know—when it is a number of years old is still regarded as a first-class car. You would be making a provision by which cars of this kind would get an advantage as compared with others. I doubt very much, in spite of the very strong appeal, whether there is very much in the distinction. I shall not now go into the larger question, but we will look into the matter again. I assure the Committee that I have attended and will attend very carefully to what they say. I do not come down here to clamp taxes upon people without consideration, but I should not be acting honestly if I said I could see my way to make the proposed distinction.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 145; Noes, 224.

Division No. 195.] AYES. [6.10 p.m.
Adams, D. (Consett) Hardie, Agnes Pritt, D N.
Adams, D. M. (Poplar, S.) Harvey, T. E. (Eng. Univ's.) Quibell, D. J. K.
Adamson, Jennie L. (Dartford) Hayday, A. Richards, R. (Wrexham)
Adamson, W. M. Henderson, A. (Kingswinford) Rickards, G. W. (Skipton)
Ammon, C. G. Henderson, J, (Ardwick) Ridley, G.
Anderson, F. (Whitehaven) Henderson, T. (Tradeston) Riley, B.
Banfield, J. W. Hills, A. (Pontefract) Ritson, J.
Barnes, A. J. Isaacs, G. A. Roberts, W. (Cumberland, N.)
Barr, J. dagger, J. Robinson, W. A. (St. Holens)
Bartlett, C. V. O. Jenkins, A. (Pontypool) Rothschild, J. A. de
Batey, J, Jenkins, Sir W. (Neath) Salter, Sir J. Arthur (Oxford U.)
Bellenger, F. J. John, W. Sanders, W. S.
Benn, Rt. Hon. W. W. Johnston, Rt. Hon. T. Sexton, T. M.
Benson, G. Jones, Sir H. Haydn (Merioneth) Silkin, L.
Broad, F. A. Kennedy, Rt. Hon. T. Silver man, S. S.
Bromfield, W. Kirby, B. V. Simpson, F. B.
Brown, C. (Mansfield) Kirkwood, D. Sinclair, Rt. Hon. Sir A. (C'thn's)
Buchanan, G. Lawson, J. J. Smith, Ben (Rotherhithe)
Burke, W. A. Leach, W. Smith, E. (Stoke)
Cape, T. Lee, F. Smith, Rt. Hon. H. B. Lees- (K'ly)
Charleton, H. C. Leonard, W. Smith, T. (Normanton)
Cluse, W. S. Leslie, J. R. Sorensen, R. W.
Cocks, F. S. Lipson, D. L. Stephen, C.
Collindridge, F. Logan, D. G. Stewart, W. J. (H'ght'n-le-Sp'ng)
Cove, W. G. Lunn, W. Strauss, G. R. (Lambeth, N.)
Cripps, Hon. Sir Stafford Macdonald, G. (Ince) Strickland, Captain W. F.
Daggar, G. McEntee, V. La T. Summerskill, Dr. Edith
Dalton, H. McGhee, H. G. Taylor, R. J. (Morpath)
Davidson, J. J. (Maryhill) McGovern, J. Thorne, W.
Davies, R. J. (Westhoughton) Maclean, N. Tinker, J. J.
Dobbie, W. Mainwaring, W. H. Tomlinson, G.
Dunn, E. (Rother Valley) Mander, G. le M. Viant, S. P.
Ede, J. C. Marshall, F. Watkins, F. C.
Edwards, A. (Middlesbrough E.) Mathers, G. Watson, W. McL.
Edwards, Sir C. (Bedwellty) Maxton, J. Wayland, Sir W. A.
Evans, D. O. (Cardigan) Montague, F. Wedgwood, Rt. Hon. J. C.
Evans, E. (Univ. of Wales) Morrison, R. C. (Tottenham, N.) Welsh, J. C
Foot, D.M. Muff, G. Westwood, J.
Gallacher, W. Naylor, T. E. Whiteley, W. (Blaydon)
Gardner, B. W. Noel-Baker, P. J. Wilkinson, Ellen
Garro Jones, G. M. Oliver, G. H. Wilmot, John
George, Major G. Lloyd (Pembroies) Owen, Major G. Wilson, C. H. (Attercliffe)
Graham, D. M. (Hamilton) Paling, W. Windsor, W. (Hull, C.)
Green, W. H. (Deptford) Parker, J. Woods, G. S. (Finsbury)
Grenfell, D. R. Parkinson, J. A. Wright, Wing-Commander J. A. C.
Griffiths, J. (Llanelly) Pearson, A.
Groves, T, E. Perkins, W. R. D. TELLERS FOR THE AYES.—
Guest, Dr. L. H. (Islington, N.) Pethick-Lawrance, Rt. Hon. F. W. Sir Hugh Seely and Sir Percy Harris
Hall, G. H. (Aberdare) Poole, C. C.
Hall, J. H. (Whitechapel) Price, M. P.
NOES.
Acland-Troyte, Lt.-Col. G. J. Brown, Brig.-Gen. H. C. (Newbury) Courthope, Col. Rt. Hon. Sir G. L.
Albery, Sir Irving Browne, A. C. (Belfast, W.) Cox, H. B, Trevor
Allen, Col. J. Sandeman (B'knhead) Bull, B. B. Crooke, Sir J. Smedley
Amery, Rt. Hon. L. C. M. S. Bullock, Capt. M. Crookshank, Capt. Rt. Hon. H. F. C.
Anstruther-Gray, W. J. Butcher, H. W. Cross, R. H.
Aske, Sir R. W. Carver, Major W. H. Crossley, A. C.
Assheton, R. Cary, R. A. Cruddas, Col. B.
Baillie, Sir A. W. M. Cayzer, Sir C. W. (City of Chester) Davidson, Viscountess
Balfour, Capt. H. H. (Isle of Thanet) Cazalet, Thelma (Islington, E.) De la Bère, R,
Balniel, Lord Cazalet, Capt, V. A. (Chippenham) Denman, Hon. R. D.
Beaumont, Hon. R. E. B. (Porlsm'n) Channon, H. Despencer-Robertson, Major J. A. F.
Bennett, Sir E. N. Chapman, A. (Rutherglen) Doland, G. F.
Bernays, R. H. Chapman, Sir S. (Edinburgh, S.) Drewe, C.
Blair, Sir R. Chorlton, A. E. L. Dugdale, Captain T. L.
Boulton, W. W. Clarke, Colonel R. S. (E. Grinstead) Duggan, H. J,
Bower, Comdr. R. T. Cobb, Captain E. C. (Preston) Duncan, J. A. L.
Boyce, H. Leslie Colfox, Major Sir W. P. Dunglass, Lord
Brass, Sir W. Colville, Rt. Hon. John Eckersley, P. T.
Briscoe, Capt. R. G. Conant, Captain R. J. E. Eden, Rt. Hon. A.
Broadbridge, Sir G. T. Cook, Sir T. R. A. M. (Norfolk, N.) Edge, Sir W.
Brooke, H. (Lewisham. W) Cooks, J. D. (Hammersmith, S.) Edmondson, Major Sir J.
Brown. Rt. Hon. E. (Leith) Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs) Elliot, Rt. Hon. W. E.
Emrys-Evans, P. V. Lewis, O. Sandeman, Sir N. S.
Entwistle, Sir C. F. Liddall, W. S. Sanderson, Sir F. B.
Evans, Colonel A. (Cardiff, S.) Little, J. Sandys, E. D.
Everard, Sir William Lindsay Lloyd, G. W. Schuster, Sir G. E.
Fox, Sir G. W. G. Locker-Lampson, Comdr. O.S. Selley, H. R.
Furness, S. N. Loftus, P. C. Shaw, Captain W. T. (Forfar)
Fyfe, D. P. M. Mabane, W. (Huddersfield) Shepperson, Sir E. W.
Gledhill, G. MacAndrew, Colonel Sir C. G. Simmonds, O. E.
Gluckstein, L. H. Macmillan, H. (Stockton-on-Tees) Simon, Rt. Hon. Sir J. A.
Glyn, Major Sir R. G. C. Magnay, T. Sinclair, Col. T. (Queen's U. B'lf'st)
Goldie, N. B. Makins, Brigadier-General Sir Ernest Smiles, Lieut.-Colonel Sir W. D.
Gower, Sir R. V. Manningham-Buller, Sir M. Smith, Bracewell (Dulwich)
Graham, Captain A. C. (Wirral) Margesson, Capt. Rt. Hon. H. D. R. Smith, Sir R. W. (Aberdeen)
Granville, E. L. Markham, S. F. Smithers, Sir W.
Grattan-Doyle, Sir N. Mason, Lt.-Col. Hon. G. K. M. Snadden, W. McN.
Gridley, Sir A. B. Maxwell, Hon. S. A. Somerset, T.
Grimston, R. V. Medlicott, F. Somarvell, Rt. Hon. Sir Donald
Guest, Lieut.-Colonel H. (Drake) Mellor, Sir. J. S. P. (Tamworth) Somerville, Sir A. A. (Windsor)
Gunston, Capt. D. W. Mills, Sir F. (Leyton, E.) Southby, Commander Sir A. R. J.
Hammersley, S. S. Mills, Major J. D. (New Forest) Spens. W. P.
Hannah, I. C. Mitchell, Sir W. Lane (Streatham) Stanley, Rt. Hon. Oliver (W'm'l'd)
Harbord, Sir A. Mitcheson, Sir G. G. Storey, S.
Haslam, Henry (Horncastle) Moreing, A. C. Stuart, Lord C. Crichton- (N'thw'h)
Heilgers, Captain F. F. A. Morgan, R. H. (Worcester, Stourbridge) Stuart, Rt. Hon. J. (Moray and Nairn)
Hely-Hutchinson, M. R. Morris, O. T. (Cardiff, E.) Sueter, Rear-Admiral Sir M. F.
Heneage, Lieut.-Colonel A. P. Morrison, G. A. (Scottish Univ's.) Tasker, Sir R. I,
Hepburn, P. G. T. Buchan Morrison, Rt. Hon. W. S. (Cirencester) Tate, Mavis C.
Hepworth, J. Munro, p. Taylor, Vice-Adm. E. A. (Padd., S.)
Herbert, Lt.-Col. J. A. (Monmouth) Neven-Spence, Major B. H. H. Thornton-Kemsley, C. N.
Higgs, W. F. Nicolson, Hon. H. G. Touche, G. C.
Hoare, Rt. Hon. Sir S. O'Connor, Sir Terence J. Train, Sir J.
Holdsworth, H. O'Neill, Rt. Hon. Sir Hugh Tree, A. R. L. F.
Holmes, J. S. Palmer, G. E. H. Tryon, Major Rt. Hon. G. C.
Hopkinson, A. Peake, O. Tufnell, Lieut.-Commander R. L.
Horsbrugh, Florence Pickthorn, K. W. M. Turton, R. H.
Howitt, Dr. A. B. Pilkington, R. Wallace, Capt. Rt. Hon. Euan
Hudson, Capt. A. U. M. (Hack., N.) Radford, E. A. Ward, Lieut.-Col. Sir A. L. (Hull)
Hume, Sir G. H. Ramsay, Captain A. H. M, Ward, Irene M. B. (Wallsend)
Hunter, T. Ramsbotham, Rt. Hon. H. Wardlaw-Milne, Sir J. S.
Hutchinson, G. C. Rathbone, J. R. (Bodmin) Warrender, Sir V.
Jarvis, Sir J. J. Reed, A. C. (Exeter) Waterhouse. Captain C.
Jennings, R. Reed, Sir H. S. (Aylesbury) Wells, Sir Sydney
Joel, D. J. B. Reid, J. S. C. (Hillhead) Wickham, Lt.-Col. E- T. R.
Jones, L. (Swansea W.) Reid, W. Allan (Derby) Williams, Sir H. G. (Croydon, S.)
Kerr, Colonel C.I. (Montrose) Remer, J. R. Windsor-Clive, Lieut.-Colonel G.
Keyes, Admiral of the Fleet Sir R. Rosbotham, Sir T. Wintorton, Rt. Hon. Earl
Kimball, L. Ross Taylor, W. (Woodbridge) Wise, A. R.
Knox, Major-General Sir A. W. F. Rowlands, G. Womersley, Sir W. J.
Lamb, Sir J. O. Royds, Admiral Sir P. M. R. York, C.
Lambert, Rt. Hon. G. Ruggles-Brise, Colonel Sir E. A. Young, A. S. L. (Partick)
Law, R. K. (Hull, S.W.) Russell, Sir Alexander
Leech, Sir J. W. Russell, S. H. M. (Darwen) TELLERS FOR THE NOES.—
Lees-Jones, J. Salmon, Sir l. Lieut.-Colonel Harvie Watt and Captain McEwen
Leighton, Major B. E. P. Salt, E. W.

6.18 p.m.

Colonel Sandeman Allen

I beg to move, in page 8, line 11, to leave out from "if," to the end of the Clause, and to add: paragraphs 1 and 6 of the Third Schedule to the Finance Act, 1934, had not been substituted for paragraphs 1 and 6 of the Second Schedule to the Finance Act, 1920, and Subsection (1) of Section eighteen of the Finance Act, 1934, shall be read and have effect accordingly. The wording of this Amendment may sound complicated, but, when boiled down, it proposes that the addition to the tax should be only 5s. per horse-power instead of 10s., or, in other words, that the tax should be 20s. per unit of horsepower instead of 25s. Many of my arguments were used on the last Amendment, but crashing of gears and unsafeness of steering brought about many collisions with the Chair. Nevertheless, a great many arguments still remain to be used on the present very important Amend ment.

There are three points of view in connection with this tax— that of the Chancellor of the Exchequer, that of the trader, and that of the taxpayer. The Chancellor says he must have the money. The trader says, "Yes, but why single me out for damage?" And the taxpayer says, "I am prepared to pay my whack, but I think that this is a bit thick, and that there should be a slightly better arrangement." I think that many of those hon. Members— over 100— who support this Amendment are almost convinced that the Chancellor will not get his money from a tax of 25s. per horse power. This tax has been put on, as my right hon. Friend said, instead of an increase in Income Tax, but it is not a very fair way of doing it, because it only taxes those Income Tax payers who happen to own cars. Why should the Income Tax payer who does not own a car escape the increase of taxation?

The tax affects three types of people, and it affects them very severely in some cases. It affects the manufacturer, the distributor, and the user. It may quite easily, and in my opinion and that of many others, as well as of the trade, it will, have the effect of causing the user to drive a machine of lower horse-power. It will therefore restrict the sales of machines of higher horse-power, both new and second-hand. In May of this year— last month— there was, in the case of cars of 17 horse-power and over, an average drop in sales in this country of 46.1 per cent. That is mainly the result of the Budget. It cannot all be due to trade depression and rumours of unrest abroad; it is in the main, as I think the Chancellor must in fairness admit, the result of the Budget. That means that a certain section of manufacturers of motor cars in this country are going to be penalised. Those who make only cars of high horse-power are going to find themselves in a very difficult position. As has already been mentioned, the motor industry trains highly skilled mechanics, and this seems to be the wrong moment to drive away highly skilled mechanics working on expensive cars. The high horse-power car is the expensive car, tailing for a greater degree of skill than the ordinary mass-production car. The country will be deprived of the opportunity of training these highly skilled mechanics, who are going to be so valuable to us.

No doubt one of the answers that will be given to us by the Chancellor is that the tax will also have the effect of restricting the importation of American cars, but I suggest that that is a very poor argument. The number of American cars imported last year was 4.3 per cent., and we are penalising 95.7 per cent. for that. Undoubtedly there will be a decrease in the output of high horse-power cars, and that will discourage research into improvements in the internal combustion engine and the running of motor cars. It will also increase overhead costs, and therefore will increase prices and decrease competitive export power. Home taxation has a dominating effect upon exports. My right hon. Friend mentioned this in the discussion on the last Amendment. He said they were disappointed at the result of the reduction from 20s. to 15s, because it did not produce such a substantial effect on our exports as was hoped. I would remind the Committee that in 1934 our exports of motor cars were 17.2 per cent. of the total world exports. By 1939, that figure had gone up to 19½per cent., which, although it represented but a very small increase as compared with world exports, was an increase of 13.4 per cent. on our exports of motor cars, and I do not regard that as a trifling increase at all.

I have given the case for the manufacturer. The case for the distributors was put very forcibly on the last Amendment, and I do not propose to reiterate the arguments which were then used, but I would like to say that very real hardship has been inflicted on this section of the community. I think it has already been shown that, as regards new cars of high horse power, there has been a tremendous drop, and the same applies to secondhand cars of that type. The whole market has been vastly disturbed. I have the figures of one firm, which show that in the three months ended on 31st May, 1937, their sales were £43,000; that during the three months ending 31st May, 1938, their sales were £38,500, and in the corresponding period this year, £24,900. It cannot be said that the whole of that enormous drop has been due to a drop in general trade; it must have been largely affected by this tax.

I hope the Chancellor realises, also, that he is going to lose a lot on the petrol tax. If he does, and he certainly will, the distributors also will lose their commission. They are hit in every possible direction. They will be insuring smaller cars for those who change over to them, and, therefore, will get a smaller commission on the insurance. Their petrol sales and commission will be less, and, in addition, they will be badly hit by a capital levy, which benefits nobody, on their secondhand stock. The case of the distributors is particularly hard.

As far as the owners are concerned, they fall into two categories— those who own high-power cars and those who own low-power cars. The figures for 1938 show that cars up to 12 horse-power were owned by 1,424,044 persons, that cars over 12 horse-power were owned by 520,350 persons, and that, of cars of 10 horse-power and under, there were over 1,000,000 owners in this country. That is a very large number. The 8 horse-power car is a very popular car. As has already been said, it is the small man's car, and to a great many people it is a necessity. There is no reason why a man with an income of £500 should not have an 8 horse-power car; in fact, people with lower incomes than that run them. Take the case of a married man who has two children, and who earns £500 a year and owns an 8 horse-power car. He pays £8 6s. 8d. in Income Tax. On his car, when the tax was 15s. per horse-power, he paid £6 in tax. He is now called upon to pay £10, and that tax has to be paid in one lump sum on 1st January. The Chancellor of the Exchequer may say that he can take out a quarterly licence, and that is so, but, if he pays in quarterly instalments, he will have to pay 10 per cent. more, while the Chancellor can get the money in the City at 2 per cent. for one year. That additional £4 is equal, in the case of the married man with two children, to an addition of 50 per cent. to his Income Tax, and I think that that is rather a stern addition for Income Tax payers in the lower category.

In many cases cars will be laid up. I do not want to discuss the question of monthly licences now, because it would be out of order, but I think that monthly licences would ease the burden, and there is a later Amendment which I hope will be discussed, and on which I shall be able to make a bigger case. We must all realise the necessity for raising money, but we feel very strongly that the Chancellor of the Exchequer will not get his money from a tax of 25s. Naturally, he will not get in as much from a tax of 20s., but proportionately he will not lose so much, and will not destroy the second-hand market and do the damage to the trade that will be done by a tax of 25s. We are all willing to pay our fair share for the defence of our country in these troublesome times. We say, let it be a fair share. We can manage the 5s. rise in taxation, and will willingly make efforts not to let the Chancellor lose money on a 5s. rise. A rise of 10s. is a serious matter to all sections. I trust I have shown why the increase should not be more than 5s.

6.31 p.m.

Major Lloyd George

I am sure the Committee sympathise with the statement of the Chancellor that he has to find the money, and we all appreciate the difficulty that he has in doing so. But there is another principle that must be considered, and that is whether he is finding it fairly. In making his Budget statement he said that, on the whole, the motorcar users were practically the same people as the Income Tax payers. I do not think that that is so, because, as the hon. and gallant Member for West Birkenhead (Colonel Sandeman Allen) pointed out, at least 50 per cent. of this taxation would be borne by the small car owners. I believe that about 75 per cent. of the cars in this country are under or up to 12 horse power. The hon. and gallant Member pointed out that in some cases motor car owners would be paying considerably more in motor car duties than in Income Tax. The motor car owner is entitled to ask whether he has been fairly treated, not only now but in the past.

The right hon. Gentleman, in the Budget statement, said that for five years the motoring community have enjoyed lower taxation. I do not know whether he is entitled to say that, but they have certainly not enjoyed the things that they should have got out of that taxation. Motor car taxation was originally introduced to provide roads adequate for the motor car traffic, and my recollection is that at the time it was introduced the Opposition of the day supported it only on condition that the whole of the revenue from that taxation was devoted to roads-. But for many years there have been heavy raids made on the Road Fund. Would anybody in the House of Commons, or outside it, suggest that the roads of Great Britain are now adequate for the traffic that they have to carry? The Report of the Select Committee in another place said quite definitely that they are inadequate and out of date, that the system does not meet traffic needs and that in many cases roads made for horse traffic are still being used for motor traffic. The report says that only 280 miles of new roads have been constructed in the last seven years— and this despite the fact that this is the most densely trafficked country in the world at present.

Now we come to the question of whether motorists are entitled to say that the money should be devoted to the purposes for which it was promised. Last month 550 were killed on the roads of Great Britain and 20,000 injured. Since the first raid on this fund something like 84,000 have been killed and 2,500,000 injured. It is absurd to suggest, as I believe the representatives of the Ministry of Transport do, that only about 1.5 percent. of those accidents are due to road conditions. It is a very interesting commentary on that to note what has happened in Germany, where they have expended large sums on roads. The number of cars there has increased by 32 per cent. and the number of people killed on the roads has fallen by 13 per cent. The state of the roads of this country must have a great influence on the casualties that occur here. The duties on cars this year are to bring in £43,500,000, and the grant out of that for road purposes is to be £23,000,000.

One of the right hon. Gentleman's predecessors had the phrase applied to a Budget of his: "Ninepence for fourpence. "The motorists of this country are entitled to say now that they are getting fourpence for ninepence. That is approximately what they are getting. They have legitimate ground for complaint, not only at the increased taxation but at the allocation of the existing money, because the money was raised originally for this purpose, and no one will suggest that the roads system of this country is adequate to-day. Since the first raid, £105,000,000 has been taken out of this fund. That is not the only tax to which motorists have had to contribute. They will pay 90 per cent. of the Oil Duty, which is estimated this year to bring in £60,000,000. Altogether, the road users are contributing this year about £100,000,000 of the taxation which is raised. No one can deny that they arc contributing their fair share, for every one of these people is open to exactly the same taxation as everybody else, in addition to having to contribute that £100,000,000.

It has been asked whether the Chancellor is sure to get his increase. I am not all certain that he will. In the first instance, there are bound to be a number of larger cars laid up, and the sale will decrease considerably. Smaller cars will increase. That will mean that revenue from the duties will be down; and the revenue from the petrol tax will be down, because, with the smaller cars, there will be increased mileage per gallon. This industry supplies an enormous amount of employment. This increased taxation is bound to have an effect on that employment. Reference has been made to the export trade. The remission of duty which was enjoyed— as the Chancellor says— by motorists for five years was announced specifically for the purpose of encouraging the export trade. There really has been quite a considerable improvement in the export trade in cars. Particularly has it enabled us to enter for the first time the market for larger cars, which is a vitally important market for this country, because there is limited scope for the sale of smaller-powered cars abroad, and this is the first time we have ever entered into the field of the larger cars? This is one of the more hopeful sides of our export trade— and I should hardly have thought that our export trade was in such a condition that it was a good thing to discourage some industry which was making a mark. I come back to the Chancellor's argument that he must have the money. I suggest one way in which he could get this money and much more. Let us look at the armaments industry. The last War showed that, as the War progressed—

The Deputy-Chairman (Colonel Clifton Brown)

The hon. and gallant Member cannot discuss an alternative of that kind.

Major Lloyd George

There is no question that the money could be found. I hope the Chancellor will consider this Amendment not only on the ground of justice to this large section of the community, but also because we do not want to discourage a trade which is showing very hopeful signs at the present time.

6.42 p.m.

Sir W. Brass

I want to support this Amendment, to which my name is attached. I have great sympathy for the Chancellor in the very difficult position in which he is placed. He obviously must have this money. I want to congratulate him upon what he has already done during the Budget Debates. Because he has been convinced by the arguments which he has heard in the Committee, he has been willing to give up the films tax and the Patent Medicine Duty. I think there is something behind the fact that the Chancellor puts forward suggestions and, after they have been discussed by the Committee, he gives way because he feels that the Committee has proved a case. This goes back to the time when there was a Budget leakage. After the leakage, the Chancellor had to be very careful not to discuss anything with the trades concerned. I am convinced that, if he had consulted the trade on this matter, he would not have raised the tax to the extent that he has done. I think he has got the wrong psychology about this tax. He illustrated it in the speech he made just now. The Financial Secretary also illustrated it when he spoke on the Second Reading of the Bill. My right hon. and gallant Friend then said: I find it very hard to accept the argument that an extra impost of is. 6d. to 2s. per week for the smaller cars, 4s. for the medium cars and 6s. for the very largest cars, will stop many people, not this year at all but next January, from using the motor cars which they do now." —[OFFICIAL REPORT, 25th May, 1939; col. 2666, Vol. 347.] I think that my right hon. and gallant Friend and the Chancellor have missed the whole point. I ask the Chancellor to consider the position that a man finds himself in on 1st January. He has to pay his Chrismas bills, then his rent and his taxes, probably some fuel bills, and his insurance. Then, let us assume that he has a 24 horse-power car. Last year the amount of taxation he had to pay on 1st January for that car was £18. It will now be £30. Instead of having to pay £18 and all these other payments on the 1st January, he has to pay £30. If he follows what the Financial Secretary to the Treasury has said, he will work it out carefully and say that it is only 4s. 7½d. per week, but he does not look at it from that point of view. He says, "I have to pay £30." He comes to the conclusion that he must economise in some way or other. If he happens to have two cars, he will consider laying up one of them, or if he has one of the larger cars he will try and sell it and obtain a smaller car in order to reduce his expenses as far as taxes and petrol are concerned. That is the sort of thing that will really happen. I do not believe that the ordinary car user does what the Chancellor of the Exchequer said just now, that you have only to look at your car budget and work out the garage cost, insurance, petrol, oil and depreciation together with the tax cost. That is not the way that people do it.

I am convinced that the result of this 25s. tax will be to block the second-hand market, and that will be a very serious matter. All the fairly high horse-powered cars are not bought as new cars. They are very often second-hand cars of considerable age and are bought by men of moderate means. The demand for cars round about 15 horse-power and over will simply be blocked altogether, and dealers will not be able to sell them at all. The Chancellor of the Exchequer said that we must encourage industry in every way possibe. Is this going to encourage industry in every way possible? I think that it will have the reverse effect. These dealers will not be able to sell their second-hand cars, and the Chancellor fo the Exchequer must know that a large proportion of the cars in this country are sold through the agency of a new car being sold in exchange for the old one.

I am told by the trade that something like 2½second-hand cars have to change hands before a new car is sold. This tax will block the second-hand market, and if you block the second-hand market you will also block the first-hand market. If the Chancellor of the Exchequer wants to encourage people to buy cars and to encourage industry he is by this tax doing exactly the opposite. If he wanted to take people away from the motor trade and put them on munitions, then he would be doing the right thing in putting on this tax, but he does not want to do that. It will eventually restrict employment in the motor trade, whereas it is essential to keep the motor trade going in this country as much as we can.

The export trade is even more important than the internal trade. When the horse-power tax was reduced from £1 to 15s., it gave a tremendous fillip to the motor car trade in respect of the production of larger cars which were manufactured in greater numbers and exported to the Empire markets. The effect of that was to encourage our manufacturers to make bigger cars, and by means of mass production they were able to produce them and compete with the American cars which were going into our Dominions. In 1934 the export of cars from this country to Empire markets totalled 34,346, and during that same period the United States exported to Empire markets 60,037. In 1938, owing to the fact that we had encouraged the production of larger horse-powered cars in this country, which are the sort of cars required in the Dominions— and I know that that is the fact from having travelled in the Dominions— we exported to these Empire markets not 34,000, but 56,831, a very considerable increase. On the other hand, the United States exported only 4,000 more than they did in 1934. Their figures had gone up from 60,000 to 64,000, while our figure went from 34,000 to nearly 57,000. That is the position at the present time. Now that the efficiency of the internal combustion engine has been increased, the smaller engined car has so increased, that I do not believe that a 20s. tax would affect the export market, but I am convinced that, if the Chancellor puts on the 25s., he will kill the organisation which has been built up in competition with the American cars in the Dominions. This is a most important point, and one which I hope the Chancellor will consider carefully.

I would re-emphasise the two important points— first, the question of the blocking of the second-hand market and secondly, an even more important point, the question of the export to Empire markets. If the Chancellor of the Exchequer increases the tax to 25s. the Americans will get back again into the Empire markets. The manufacturers in this country will have to compete with one another in producing a smaller horse-powered car in order to reduce the expense of the tax. They will be bound to do something like that, and the Americans will come along again and capture our Empire markets. I ask the Chancellor of the Exchequer seriously to consider that matter. There is an easier way of getting the money he requires. He could put a halfpenny on petrol, which would give him £3,000,000.

The Deputy-Chairman

The question of alternative methods has already been ruled out of order several times.

Sir W. Brass

Then I will speak to the Chancellor of the Exchequer later on and tell him another way in which he can raise £3,600,000 very easily. I ask the Chancellor of the Exchequer to look at this tax from the proper psychological point of view. He must not look at it from the point of view of whether it is 2s. or 4s. a week, but he must realise that people have to pay the tax. It might be done a little better if we had monthly licences, and I would ask him to consider such a proposal. In that way he would be able to distribute the tax more evenly over the year. After he has considered all this most carefully, I hope that he will at least decide to bring down the tax to 20s.

6.57 p.m.

Mr. Benjamin Smith

If the hundred Members opposite who had their names appended to the Amendment before the Committee to-day really mean what they say, there is no doubt that the Chancellor of the Exchequer will give way, or he will suffer defeat, one of the other. It is making cheap capital for hon. Members to go to constituencies and say: "After all, my name was put down to an Amendment asking the Chancellor of the Exchequer to reduce this tax." Their constituents will quickly discover what force there was behind those 100 signatures. I can imagine the Chancellor of the Exchequer going to Spen Valley and holding forth, with tears in his eyes, and telling his constituents that they are going to tax the currants in their buns. Perhaps he will remember that phrase to-day, when, having swallowed the whole of the philosophy and policy of the Government which he now serves, he does not mind bringing a punitive tax to bear on a large section of the people who can ill afford to pay it.

I want to take a fair, average figure and deal with the tax not from the point of view of so many shillings a week, but from the point of view of how much it will cost the ordinary person to run a 14 horse-power car in fairly general use owing to the imposition of these duties, plus the statutory requirement that everybody must have his car insured. The ten guineas tax on the 14 horse-power car will now be increased to £17 10s. If that car averages 10 gallons of petrol a week, which is 500 gallons a year, it will add another £16 10s., if you include a small amount for lubricating oil. If the man is a fair motorist and believes in comprehensively insuring his car the cost will be 19s. a week before he turns a wheel. If that is not punitive taxation upon one section of the community, I would like to know what is. I want the Chancellor of the Exchequer to be thoroughly seized of that fact, and if we eliminate the compulsory comprehensive insurance that motorist will have to pay 15s. a week, without taking into account any garage costs or any insurance, before he turns a wheel.

Colonel Sandeman Allen

Plus the rates on his garage.

Mr. Smith

I am not including the cost of the garage, but talking exclusively of the car. What is going to be the effect of this increased tax? The poorer people who to-day are running cars of the type I have mentioned will have to get rid of them. There is no question about that. The effect of suddenly throwing these cars on the market will be that they will have to be sold at an absolutely knock-out price. Nobody wants to buy them, and the dealers will not look at them. In many cases these cars are a necessity to their owners. They may have gone to live in the country, or they may be people who are badly served by trains, like the market people or the newspaper people, who go home late at night. Such persons will be forced to think of getting smaller cars. The moment they do that the increased demand will put up the price. So they lose in having to get rid of their old cars and, if they buy smaller ones, they have to pay a higher price owing to the demand. This class of motor users, if we include their families, represents 7,000,000 or 8,000,000 people, and let the Chancellor remember that at least two in every family will have a vote, and next time they will probably understand how to use it than they did on the last occasion.

Some hon. Member has pointed out that the Chancellor has already made two concessions. Why did he make them? Simply because he had to meet efficient organisation by the people in the film trade and the producers of patent medicines who were able to bring sufficient pressure on hon. Members to persuade them that they really meant what they said. [Hon. Members: "No."] Do you mean to tell me that the Chancellor would take any notice of people who just spoke for the unorganised opinion in the country? Obviously not. He gives way under pressure in this House, backed by the people outside.

Mr. Petherick

Is the hon. Member aware that far more pressure has been brought to bear over this tax than in the case of the other taxes he has mentioned?

Mr. Smith

I would rather wait and see when hon. Members vote what sort of pressure has been brought to bear. The fact remains that this section of the community is not sufficiently vocal, owing to lack of organisation. [An HON. MEMBER: "No."] It is true. I am speaking for the man who runs his car, not the man who sells it, and I say the Chancellor thinks he can make a stand irrespective of the equity of the tax.

I come to the export market. I travel a good deal abroad in the Recess. Go to any of the Balkan countries and see how many British cars are there, compared with German and American high-powered cars. If you talk to the people they will tell you how much they would prefer British cars, but we do not produce cars for their market and, if we did, they say the price is not competitive. What will be the effect of this tax if, as every speaker has suggested, it drives the heavy and high-powered British car out of existence, and increases the production of the low-powered car? Then obviously our export trade will got at once, because the small car is not the type that is used in our Dominions and Colonies, or on the Continent of Europe. Whatever the Chancellor thinks he will get out of this tax, he will have a rude awakening when the end of the year comes and he has to balance against the revenue he obtains one loss on the export trade, and two losses in the yield of the tax on petrol and the tax on high-powered cars. I have had 40 years' driving experience. I cannot go into the question of the precedent of 1913, but the Chancellor will remember that doctors and commercial travellers had some concession made to them. Now that is wiped out, because those who received that concession will have to pay higher taxation.

Colonel Sandeman Allen

Surely it is allowed for in Income Tax in the case of the doctors.

Mr. Smith

Surely it is not. The doctor can only get the benefit of it for his professional work, and the moment he uses his car for other purposes there is no allowance made. The Chancellor might have raised the money by putting another id. a gallon on petrol, but no doubt he was afraid of organised opposition from the traders— the users of commercial vehicles and omnibus owners. But it would have been much easier for the poor man to pay an extra id. a gallon than to pay this punitive tax. I know that many hon. Members on this side will vote against this tax, and if I could revive the waning courage of the 100 Members who put their names down as being in favour of the Amendment on the Order Paper, I venture to say that the Chancellor would give way, or he would suffer defeat in the Lobby.

7.8 p.m.

Captain Sir Derrick Gunston

I must say I was surprised to hear the hon. Member opposite say that the opposition to this tax was not vocal. I think I have never come across anything more vocal, but however strongly he may feel about it, the Chancellor is in a difficult position, because he has to find the money in a time of grave emergency. I am sure no motorist wants to escape paying his fair share. It has been said that as you pay taxation for your car you ought to be able to say how the money should be spent. I have never subscribed to that argument. I do not believe that the motorist has any right to say how the money should be spent, any more than the taxpayer who is in the Services has a right to say how the money should be spent on the Services. My objection to the increase in this tax is really that it has reacted very badly on the industry in the past, and, if you increase it, the evil will be worse than it was before. I do not agree with those who doubt whether the Chancellor will get his money. My experience is that the Treasury are pretty good at allowing for all the disadvantages of a tax, and I would not like to say that the Chancellor will be wrong in that. But I wonder whether his officials have always thought out the implications of taxes. He may remember the famous tax on kerosene introduced by the right hon. Gentleman the Member for Epping (Mr. Churchill). It was thought that there would be no difficulty about that tax, and that it would only hit those who used kerosene for lighting. It was forgotten that an enormous number of people use kerosene for cooking, and there was such an outcry that in two days the tax was withdrawn. I cannot help thinking that the Chancellor, similarly, did not realise the implications of this tax.

My objection to the horse power tax is that it prevents the development of the most efficient internal combustion engine. Much has been said this afternoon about its effect on our export trade. Why is it that the American medium car and high-powered car is found in the Dominions and on the Continent and all over the world, instead of the English car? For two reasons. The first is that the American manufacturers have a larger home market, and they can build on a larger scale and export more. But the real reason is that the American designer can design his engine for the most efficient carrying of goods or people. The British car designer cannot do that. He has to overcome two artificial obstacles created by the Government. He has to overcome the difficulty of the high price of petrol, and therefore he has to have an engine which consumes as little petrol as possible; he has also to get over the difficulty of the horse-power tax. It is for that reason that the British manufacturer is at an enormous disadvantage. We know our engineers are as able and as efficient as the American engineers. I am sure that if they were given a chance they would develop a medium-powered car at a cheap price which would be most efficient.

Why do people in the Dominions want the American car? Because it has more power. We would all have cars with more power if we could afford it. We only have these small quick-"revving" engines because they are cheap. As the result of this tax our manufacturers have had to design the wonderful quick-"revving" small engine, which in a way has captured the English market. But it is an entirely artificial product, and if they had been able to turn their brains to designing a medium-powered engine I am convinced that we should have had a much greater proportion of the export trade than we have to-day. Reference has been made of the effect of a reduction in the tax a few years ago. Almost immediately our designers were making more powerful engines, and exporting more powerful cars, and competing effectively in the markets of the world. Now that advantage is going to be taken away, and I cannot help thinking that the Chancellor and his officials might have thought out the effect on our export trade. I wonder whether he realised that he was hitting one of the most valuable potential export markets in the world.

We are told that one of the reasons for putting this tax on horse-power is that the smaller Income Tax payer is not hit by the taxation in this Budget. That may be true, but I cannot help thinking that it would have been a little more honest with the House and the nation if the Income Tax payer had been asked for a direct contribution, instead of putting a tax on an industry which will prevent its development. I beg the Chancellor at any rate to review the whole of the taxation on the motor industry. Will he consider the setting up of a committee in the Treasury to go into the whole matter during the coming year? Will he get expert advice as to the effect of it on our export trade? If he does, I think he will discover that the horse-power tax and the petrol tax have, in their opinion, an adverse effect on our export trade, and in that case I hope he will think out other ways of taxation. I am not asking him to let the motorist off; I am asking that he will not penalise our export market, but think out some other means of taxation.

7.16 p.m.

Captain Strickland

We seem to have moved away from the psychological side of the Debate into the more practical side which faces any Chancellor of the Exchequer who has to meet the enormous expenditure with which the country is faced to-day. We do expect a Chancellor of the Exchequer to bring to the Committee such schemes as will commend themselves to the intelligence and good sense of hon. Members, and schemes which will be likely to cover the expenditure which will take place during the next 12 months. Allusion has been made to the Budget of 1934, and I think it is important that the Committee should realise exactly what was the view of the Chancellor of the Exchequer of that time. This is what he said. I hope it will not bore the House if I read it: 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, where 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 overseas competition of foreign cars whose horse-power in relation to their size and weight is greater than our own. 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 cars in this country, which in turn would react favourably upon the export trade. It was, therefore, not entirely the interests of the export trade but also home production which was under the consideration of the Chancellor of the Exchequer at that time. He concluded by saying: I have been impressed by the weight of that argument, and I am anxious to do something to meet it." —[OFFICIAL REPORT, 17th April, 1934; col. 920, Vol. 288.] I think the Committee has a right to ask the Chancellor of the Exchequer to state a case showing in what way the foresight of the then Chancellor of the Exchequer was at fault. Has expansion decreased as a result of the reduction of the horse-power tax from £1 to 15s. Has the export trade suffered; and, finally, has the Exchequer itself suffered by this reduction in the tax? If the Chancellor of the Exchequer can prove any one of the points there may be something to be said for raising the horsepower tax from 15s. to £1, but it will still require some argument to show the wisdom of raising the tax to 25s. The Chancellor of the Exchequer in 1934 estimated that he was going to lose in the first year £2,200,000 and £4,000,000 in a full year. Those who care to turn up the records will see that that estimate of the Chancellor of the Exchequer was wonderfully accurate. His loss in revenue was £2,400,000 in the first year, but since that time there has been a rapid expansion of the receipts into the Treasury from the 15s. tax as compared with the 20s. tax, and if you add to that the natural expansion of the motor trade following the reduction to 15s. and take the petrol tax on the whole motor vehicles, it will be found that in 1938 there was no less a sum than £16,000,000 more out of the whole petrol tax than in 1934 when that Budget was introduced.

The Chancellor of the Exchequer says that he cannot possibly reduce the tax from 25s. to 20s. because he estimates, in a way that is not clear to me at the moment, that there would be a terrific loss. In that case I want to know where was the error of the Chancellor of the Exchequer in 1934 when he reduced the tax from 20s. to 15s., and why it is necessary now to raise the tax to 25s. instead of 20s.? If you take the export trade, it is sufficient to show that the United Kingdom share of the world markets increased by 13.4 per cent. from 1934 to 1938 and that during the same period the export trade of the United States and Canada decreased by 15.9 per cent. We have been practically taking the markets of the United States and Canada. The Chancellor of the Exchequer must show clearly that this tax of 25s. is going to help the export trade, or that the prognostications of the Chancellor of the Exchequer in 1934 have failed. In the home market the same thing is happening. The home trade in 17 horse-power cars and over increased from 9 per cent. in 1935 to 12.7 per cent. in 1937, so that the receipts from the home market and the export market into the Exchequer shows that the Chancellor of the Exchequer in 1934 was fully justified in reducing the horse-power tax from £1 to 15s.

What we contend is this. This tax is going to hit the motor industry. It will hit a very large number of people who are motor cyclists as well as the motor car owners. We keep on talking about motor cars, but there is a very large number of young people, sometimes poor people, who will be hit on the motor cycle side. We maintain, and I think we are justified in maintaining, that an increase in a single tax of 66 per cent. in one year without any justification is a grossly unfair imposition on one particular trade, which may have very harsh reflections on the people connected with it. I do not know why I need to plead a special case, but I have in my constituency a well-established firm, more than one firm, whose whole trade is bound up in the high-powered car. What are they going to do if the high-powered car market slumps? They must suffer, and their shareholders must suffer, and their workpeople must suffer; Coventry must suffer. There will be a heavy day of retribution for the Government if this tax of 25s. puts men out of work and smashes one of our greatest industries in the way of employment. There is tremendous resentment among manufacturers of cars, among traders connected with cars and among those who have to sell cars as agents, and also among those who use cars.

The hon. Member opposite has mentioned the fact that 100 hon. Members have signed the Amendment. It is, in fact, 140, and all are Government supporters. There is, resentment in this Committee on the Government side, which is too powerful to be ignored. I say, frankly, that I shall support the Amendment in the Lobby, but by no manner of means will that be disloyalty to the Government. Some of my hon. Friends view the matter in a much graver sense in the present international crisis, but I do not want the Chancellor of the Exchequer to put too little value on the loyalty of those hon. Members who have signed the Amendment. They have taken this opportunity of bringing to his notice their own feelings that this tax is not fair or justifiable. It is bad for the motor car industry and bad for the trader. It is bad for the second-hand car market. It is the second-hand car which sells the new car. If a man has a car and cannot sell it, he cannot buy another, and that goes on right down the scale, and if the sale of the bottom car is stopped you stop the sale of cars right through the column of production up to the new car. That is a point of great moment. We have refused to reduce the tax on the second-hand car and that rather strengthens our argument that the horse power tax should not go over 20s. There will be a tremendous loss of trade as a result of this tax which must have its repercussions in the petrol trade and also in the Income Tax.

I want to ask the Chancellor of the Exchequer a question which, I hope, he will be able to answer. I want to know whether the right hon. Gentleman took any opportunity of consulting with the trade itself as to the possible effects of this tax. We are not dealing with a lot of rogues when we are dealing with the motor industry. They are people of honour, who could have been approached and could have advised the Chancellor of the Exchequer quite as well as his permanent staff. They know more about the world market and high-powered car than any civil servants can possibly know. One other thing. There is a great motoring public outside. I do not know whether it is realised how many people in this country use cars, ride in cars and on motor cycles. You are inflicting an undue burden on these people which will not be forgotten. The Chancellor of the Exchequer will say that he must balance his Budget. We have tried to point out to him that the whole weight of this new tax is coming in the one month when men can least afford it. What is going to happen next January if, instead of receiving a year's tax on motor cars which are licensed, the great bulk of the motoring public take out licences for one quarter only? What is going to happen to his Budget? There is no question that in making his estimate he has estimated that the amount will come in the month of January, and if as a result of this heavy taxation they take out a tax for only one quarter instead of for a year, there will be a deficit on that item alone of something like £10,500,000.

We have tried to put our case, and we cannot do more. It must lie in the judgment of the Committee whether they support the Amendment or not. The responsibility will rest on the Chancellor himself as to the results that will accrue from the introduction of this very heavy punitive tax, and I would ask him, even at this eleventh hour, not to give way to pressure, not to give way to any threats that we are going into the Lobby to defeat the Government— I have made my own position quite clear, particularly in view of my own constituency— but because he should put this tax at 20s. If there is a deficit, it could be made up in the following year, but I believe, honestly, that if the tax were 20s. instead of 25s., there would be little or no loss to the revenue resulting from that concession, whereas if my right hon. Friend persists in maintaining this very high level of taxation, with the shock that will inevitably come to people next January when they have to put up this money, I am afraid he will find, at the end of the time, that he has backed the wrong horse.

7.31 p.m.

Mr. Bellenger

I am not speaking for either the owners or manufacturers of, or the traders in, high powered cars. I speak because I have had representations from certain people in my own constituency, and I am bound to pay attention to then-views. I approach the matter from a different angle from that of some hon. Members who have spoken in this Debate. I realise, as the whole Committee should realise, that the Chancellor of the Ex-chequer has got to find the money, and therefore it is obvious that he must suggest taxation, and the question which occurs to me, not having a personal interest in the matter, is this: Is the Chancellor, by imposing this very steep in-crease in the horse-power tax, doing the fair thing, apart from raising revenue? Hon. Members have advanced all sorts of arguments to show that he will not get the money from this tax which he anticipates. It would be easy for the Chancellor to tell us on what he bases his estimate, and if he can prove to our satisfaction that, on his expert advice, in all probability he will be able to get the revenue that he estimates receiving, I think that will destroy the arguments of hon. Members who have said that he will not get his requirements. We have heard various arguments to show that Chancellors of the Exchequer are entirely wrong in their estimates, but they have their expert advisers.

I base my remarks on this principle: Is this increased taxation fair? If taxation is to be imposed— many of us would desire that no taxation whatever should be levied— the question arises, Is it fair in its incidence? We have advanced arguments in this House on other taxes, such as the Sugar Duty and those that affect the really poor people, and, therefore, we have to clear our minds at the outset of any hypocrisy that this tax will fall on the poorest section of the community. As far as the larger car owners are concerned, it will not. Therefore, anything that I have to say is not based on the injustice of the tax to the better-off people who are running large cars. Mention has been made of the 14 horse-power car owner. I am one of them, and I can say that the extra taxation which will be imposed on me as the owner of such a car I can well afford to pay, because I use that car mainly for pleasure and not for business, but I recognise that owners who use their cars mainly for business must be considered from a different angle. Is it fair to that particular class of car owner?

The other aspect that occurs to me, and which has been put before me by con- stituents of mine, is that of the traders in motor cars. Hon. Members know that we on this side hold somewhat different views of industry and the way in which it should be conducted from those held by Members opposite, but we in this country are conducting an economic system which presumably allows free play to all sorts of trading interests. Therefore, if the Chancellor, by imposing taxation, is going seriously to prejudice the livelihood of those engaged in any particular industry, he ought to consider the question more than once. If a tax cuts the livelihood away from those engaged in industry to any large extent, then that tax becomes a very penal one, and I think that taxation of that sort is very unfair.

As to the attitude of the supporters of the Government who put their names to an Amendment on this Clause, if they are firmly convinced that a gross injustice is being done to the owners of high powered cars, or of any cars, or to those who trade in this industry, either in production or in distribution, then I hope they will have the courage and the sincerity to support their own views. We saw the effect of arguments and of threats of going into the lobby against the Government on two previous occasions last week, when different taxation was under review, and if we are to believe in the sincerity of hon. Members opposite in the pleading of their case, we invite them to-night to show their sincerity, and, if they are not convinced by the arguments that the Chancellor will put forward, then they should go into the division lobby against him.

I have spoken in support of the Amendment, and I shall be prepared to support it in the division lobby if it is forced to a division, not because I want to support hon. Members opposite, but because I believe that the increase in the taxation proposed is too steep. Car owners, like everybody else, must bear their fair proportion of taxation, and as a car owner myself I have no objection to paying my fair due, but I think the Chancellor, in increasing this taxation by 66⅔ per cent., has overshot the mark. Therefore, I invite him, as other hon. Members have done, to reduce the tax to a lower level. If I were permitted to do so, I could make suggestions to him as to how he could make up this loss in revenue, but the right hon. Gentleman himself will know very well how to do that. He made up £750,000 revenue when he, in a light-hearted manner, adhered to the tax on medicine stamps after making a very strong case for its repeal; but it is not for us to suggest how he should find the money. All that we have to do is to put our views before him when we think that he is imposing too heavy a burden on one section of the community. They are not the poorest section by any means, but because I do not believe in injustice being done to any section of taxpayers, I support the Amendment.

7.40 p.m.

Mr. Henderson Stewart

The Committee has examined this question from every angle, and I must say that one is impressed by the unanimity of the demand for this change. It is significant that not one speaker in the last three hours, except, of course, my right hon. Friend the Chancellor of the Exchequer himself, has been prepared to stand up and support the maintenance of this Clause. I submit to my right hon. Friend that here is another case where, as a proved and grand democrat, he ought to submit to the will of Parliament, and that will could not be more forcibly expressed than it has been to-day. I have heard, in the course of the six or seven Budgets to which I have listened, many canons of wise taxation expressed in this House, such as that a tax should be fair and sound, but there is another canon. A tax should appear to the people to be fair, and it is abundantly clear that this tax is not regarded as fair by any section of the industry concerned. I would like to have developed that argument, but it has been very well covered already.

I would respectfully challenge my right hon. Friend's fundamental view on this matter. He said on the introduction of his Budget and, I think, on another occasion also that the rate of horse-power tax does not decide the extent to which British motor cars are sold. That is his fundamental view, and, taking that view, he naturally proposes the steepest rise of this duty that we have ever known. That seems to me a profoundly mistaken view of the situation, and I cannot understand how my right hon. Friend has arrived at it, having considered, as he must have done, the course of events during the last four or five years. It has been pointed out already to-day how in the 1934 Budget a reduction was made in the horse-power tax, and my right hon. Friend must know the immediate and startling result of that reduction in the sale and use of motor cars, and, particularly of heavy horse powered motor cars, in this country. I will say nothing about the export trade, because that argument has been repeated many times, but in the home trade, from 1929 to 1933, there was a steady and increasing reduction in the number of cars of from 17 to 34 horse-power on the roads, and from 1934 when the change was made there was a steady increase in the numbers of those same cars. In 1934 the increase was 2,000, in the next year 18,000, in the next year 16,000, and in the next year again 14,000; and if you look at the figures of the sales of new cars, the same facts are revealed. That seems to me to prove that the level of horse-power tax has an immediate and powerful effect on the use of motor cars in this country, and that is quite apart from the most important factor of the export trade. Therefore, we are driven to the conclusion that my right hon. Friend, if I may say so with great respect, bases his proposal on a mistaken assumption.

The tax has not only to be fair and to appear to be fair, but it has to be sound. Who is to be the judge of that? Up till now it has been the custom of this House, and certainly of Chancellors of the Exchequer, to accept the advice of experts. Upon this matter I challenge the statement that the experts are right and that we are wrong. I challenge my right hon. Friend's statement this afternoon, for it was he who said, not many hours ago, that the experts had a better opportunity than hon. Members present of being right in this matter. Why? I do not accept that view for a moment. I have the best authority for not accepting it. I have the authority of my right hon. Friend himself, one day last week, when he was dealing with the question of films. What did he say on 22nd June? He said that he had been advised by his experts but he was found to be wrong. He said so with the greatest frankness, for which we all admire him. He said: I am quite satisfied in my own mind, after closely examining the matter, that my proposal was wrong. He went further and told us how it came about that he was wrong. He said: It is never easy to anticipate the difficulties that will arise in applying a new Excise Duty … we certainly did not realise some of the complications involved. He went on further, and said: I did not appreciate— I think my advisers would be willing that I should say that they too did not sufficiently appreciate— that this very great difficulty would arise." — [OFFICIAL REPORT, 22nd June, 1939; cols. 2541–43, Vol. 348.] Later on he was even more explicit, for he said: In considering any modification of a duty you are very much more circumscribed in your technical inquiries than many people realise. It is a very difficult thing, especially in a duty of this sort, to disclose your ideas to a large number of people who, quite honourably, but naturally, in the interest of their trade, will be very much interested and are not always able to give you at that stage exactly the same assistance that they can give afterwards. That is exactly the position of this proposal. My right hon. Friend said that he had not had an opportunity to consult the trade, or to consult us, as representing the users of cars. He went on: Therefore, to a large extent you have to rely on what can be ascertained in advance without the full assistance of the trade. I say this because the experts who advise the Chancellor of the Exchequer really ought not to be regarded as under any sort of reproach because they cannot at the time get all the detailed information as to how a duty like this will work out. No one could have done so. It is only after a duty is proposed that the people themselves begin to work out how the different combinations and permutations may develop. I say that not in the least to excuse myself, but because I think it is a mistake to suppose that a Government Department does not do it on a very large scale." — [OFFICIAL REPORT, 22nd June, 1939; cols. 2556-57. Vol. 348.] I submit that my right hon. Friend there expressed with admirable frankness and complete accuracy the situation as between the Chancellor of the Exchequer, his advisers and the public. In the introduction of a new, difficult and complicated tax like this, the fact is that he had not at his disposal the advice which is now available as to the results of this new proposal. Now that we have examined it— I and others have met members of the trade many times— it is quite plain to all of us, and it has been proved beyond any doubt this afternoon, that far from this tax producing what the Chancellor of the Exchequer thinks it will produce, it will have the reverse effect. There is psychology to be taken into account in framing a Budget, as in every other action in life. There is psychology in this tax. This two-thirds rise in the tax affects not so much the owners of Rolls-Royces but the tens of thousands of little men, and the psychological reaction is that it is an unfair and a wicked impost, and the result will be that they will lay up their cars whenever they get a chance. For what it is worth, I shall certainly lay up my car in the quarter from January to March, and there will be thousands, may be tens of thousands like me, who will do the same, and the result upon the Exchequer will be very unhappy.

One argument which the Chancellor of the Exchequer adduced is that his experts tell him that he will lose money by this Amendment. We say that he will lose money if he does not reduce the tax. A pound is a good round figure and one which the motorists are prepared to accept as their contribution. That is their psychology. My right hon. Friend's second argument has been that he cannot afford it—that there is no other source. He said so this afternoon. It would be out of order for me to suggest an alternative source, but perhaps I may be allowed to quote three lines from the Chancellor's speech on 22nd June. He was asked a question by the hon. Member for Burslem (Mr. MacLaren): The great thing that worries most of us is this. You are going to lose much by the remission of the tax. Could the right hon. Gentleman give us any idea how he is going to make it up? That was a very pertinent question and my right hon. Friend had no hesitation in giving his reply, He said: Not, as far as I am concerned, by continuing to impose a completely obsolete tax on medicines. If and so far as is necessary I think we may get a contribution from a tax, which will be discussed in a few days called the Armament Profits Duty." — [Official Report, 22nd June, 1939; col. 2557, Vol. 348.] I accept that assurance of my right hon. Friend, and I feel sure that if he will return to his advice to the Committee a few days ago, this problem will be solved to-night to the satisfaction of the Committee.

7.52 p.m.

Sir J. Simon

I have greatly enjoyed the speech of my hon. Friend the Member for East Fife (Mr. Henderson Stewart), but I should like to deal with one of the principal points he made. He has, I think, been led into a fallacy. He quoted what I had observed as to the advice of the experts of the Government in relation to the proposed film duty, and he read the words "a new excise duty." That is exactly the point. If you attempt to devise a new duty, which has never been applied before, then the difficulty of forming an accurate judgment as to how it will work is very considerable. My hon. Friend will appreciate at once that what I am dealing with here is not a new duty but the variation of a duty, the operation of which has been watched with the greatest closeness by the Ministry of Transport and by my own advisers, and in reference to which we have minute figures of all sorts and kinds. It is exactly the sort of duty in regard to which you can at least expect that those who have made it their business, their official task, to follow how it works out, are likely to be able to give a correct estimate.

Mr. Henderson Stewart

I am sure my right hon. Friend will not wish to misquote me. The passage that I quoted from his speech contained these words: In considering any modification of a duty. His whole thesis was based upon the modification of an existing duty. In the present case it is a modification of an existing duty.

Sir J. Simon

My hon. Friend is incorrect. I was there dealing with a films duty, a novel duty, and one very difficult to work out. I will not, however, discuss that any further. What I am saying is that here I am considering a duty that has been in operation for a long time. It was reduced in 1934 by my predecessor. At that time estimates had to be made, and I can assure the Committee that every year and at various times of the year it is the business of the Departments concerned to make these estimates. While, of course, it is a matter of estimate and, in a sense, of prophecy, and while I am not going to pledge myself in language quite so decisive as that expressed by hon. Members on the other side of the Committee, I am entitled to say that I shall be greatly surprised if those who have worked this out for the Government are found to be so wildly wide of the mark as hon. Members suggest.

My hon. and gallant Friend the Member for Birkenhead, West (Colonel Sandeman Allen), who made so reasonable a presentation of his case, said that he quite recognised that if we made the tax 20s. instead of 25s., I should not get as much duty. That is a reasonable view. How much I should get is a matter for conjecture, but I should like to tell the Committee this, that when I found that a challenge was being made as to the estimate which I had presented to the House, I took particular trouble to have the matter re-examined by the Ministry of Transport officials and by my own officials. I called their specific attention to the point on which this challenge was made, and it was only after having the matter reviewed and recalculated that they came to me again and told me that they were still quite satisfied that the estimate which they had put me in a position to place before the House would be found to be accurate.

I have listened throughout the Debate to the comments that have been made, but I do not think there has been a single comment on the point as to the produce of the tax which was not really one that was in the minds of my experts, and was included in their calculations. As for the rest, we must wait for the future. It may turn out that at some future date hon. Members will have the best of it, but for the present we must as sensible people proceed on the basis that the estimate will probably turn out to be right. One of my hon. Friends in his speech said that on reflection as to what a particular tax was likely to produce if it was modified in a particular way, his experience was that those who advised the Government, whatever the Government may be, are often very near the mark. I admit that you may go wrong when it is a question of an entirely new duty, but here we are dealing with something which is capable of fairly accurate calculation. It is not likely that the difference between 20s. and 25s. would really mean that I should get more revenue from the 20s. duty or anything near as much. Therefore, I must ask the Committee to proceed on the basis that the usual care has been taken with these estimates, and I hope the Committee will give those estimates the full value which they merit.

The hon. Member for Rotherhithe (Mr. Benjamin Smith) put this point to me. He asked why it was that in 1934 there was a reduction in the duty from 20s. to 15s. and that now I was proposing not merely to bring the duty back to 20s. but that I was putting an additional tax on the top of that. He suggested that that was an additional argument against what I was proposing now. I regret it very much, and I am not now discussing the cause or the blame, but the fact is that we are facing in our finances this year a problem which is very much more difficult than the problem which existed in 1934. I said in my Budget speech: The users of private cars, who very largely correspond to the Income Tax paying classes, have for five years enjoyed the benefit of this reduced scale of taxation. Therefore, I feel bound to ask them, in these stern times, to submit to a substantially increased scale. Just as the reduction of Income Tax from 5s. to 4s. 6d. in 1934 has already been reversed by an increase of the tax to 5s. 6d., I propose that the duty on private cars should be fixed at 25s. per horse-power." — [OFFICIAL REPORT, 25th April, 1939; col. 994, Vol. 346.] The truth is that if we regard this tax as a substitute for increased Income Tax, then I say that in proposing this increase in horse-power duty I am acting in line with that which Parliament has already decided to do.

Now I come to the question of the burden and the grievance which have been expressed in various parts of the Committee on behalf of several classes of persons who will be affected by this proposed taxation. As my hon. and gallant Friend said in his opening speech, we have to consider the user, the distributor and the manufacturer, and I have tried to consider all three. As regards the user, while unquestionably one may have border-line cases about which one may feel sympathetic, I think there has been a great deal of exaggeration. I find it quite impossible to suppose seriously that a man who can afford to pay £500 or £1,000 in buying a 24 horse-power car is going to shrink back in horror on discovering that he has to pay another £12 a year. It does not seem to me to be sensible, in the case of the high-powered car, to say that this tax is going to inflict such serious damage as has been suggested. It has rather shaken my feeling as to the weight to be placed on the other arguments advanced against my proposal. I agree, of course, that there are the cases of the "marginal motorist" with which one must sympathise, but I simply cannot find it in my own intelligence to believe that, when the scurry and flurry of this thing has blown over, it is really going to have that sort of result on purchasers of large cars. What the hon. Member for Bassetlaw (Mr. Bellenger) said, speaking of his own experience, which I thought was very fair, was that, while we must consider whether this is just the truth about it, it is a thing, generally speaking, which can be borne by the motorist. [Interruption.] I have no doubt the hon. Member has made the sort of calculation which I suppose everyone has made as to the effect on motorists' costs of this increase in tax, and in my view it would be rather ridiculous to suggest that with the higher-powered cars there is going to be permanently this sort of slump in the home market. You must also take the initial cost, fuel consumption, insurance, tyres, garage, driving licence, depreciation. Anyone who takes those elements must, of course, reach the conclusion that the horse-power tax represents a comparatively small proportion. This is an additional burden, but still it is in fact, as compared with these other running expenses, a comparatively small percentage which certainly is not going to revolutionise the whole future of the use of motors.

The class of person who, I think, is much more likely to have some real ground for complaint is the dealer with a stock of second-hand cars. I wish very much that there was a way of avoiding it for his sake. It is not a permanent grievance but a difficulty in respect of his present stock and, if it be true, as has been insisted in some quarters, that the result is that there is going to be, at any rate for the time being, a reduction in the price which a second-hand car will fetch, that is going to result in a certain drop, which no doubt affects the stock at the time though it does not affect the course of the business later on. We really cannot have all the evils poured upon this tax from every point of view at the same time. If it be the case that the result will be that the second-hand car is going to be valued at a lower figure, with £20 knocked off its price, the result is that the second-hand car is going to be cheaper to buy, and many people are going to find, if that is so, that they are going to buy their car at a distinctly cheaper price, which will counteract, and may indeed over-top, the amount that they will have to pay for several years to come in increased motor duty. I have myself received communications which made that very point and, so far as regards the man who wants to get a second-hand car, the fact that these have lost some of their value is a favourable circumstance to him and one which is not as a matter of fact pressing hardly upon the man of very moderate means.

Then I come to the effect of the duty on cars which either come from or are going abroad. A point which ought in fairness to be made is that just as it may be said this tax is going to have an effect on the purchase of the high-powered cars, so just in the same way is it going to operate to keep out of this country high-powered American cars. They have already to pay their 33⅓ per cent., and if it be true that there are persons who are thinking of acquiring these high-powered cars who are going to be stopped from doing it because of this tax, it is certainly going to have the effect of tending to throw the purchaser on to the British manufacturer rather than to import an American car.

Then the point is made as to exports. I do not wish to quarrel about figures, though one or two of them are not quite in accordance with those which I have before me. But there is no doubt that the idea was that by reducing the horsepower tax from 20s. to 15s. we might hope to give a fillip to our export of cars and their sale abroad. Anyone who has looked at this thing abroad knows how important it is. I have always thought it a lamentable thing, when one has been in a Dominion or a foreign country, how very seldom one sees a British car. Certainly the last thing any of us would willingly see would be the discouragement of our production for the export market in ways that can be avoided. I shall have a word to say in a moment more particularly in reference to the remarks of my hon. and gallant Friend the Member for Thornbury (Sir D. Gunston), who made some interesting observations on the effect of the formula of horse power in acting as an obstacle to encouraging the export of British cars.

For the rest, I must say no one can look at the figures since 1934 without being impressed by the fact that the reduction in the horse power duty, though it might have helped— I think it did help— the export trade, has not succeeded in bringing anything like the encouragement to export that we hoped for. Broadly speaking, what the figures show is that, for whatever reason, the trade in British-made cars is such that not exclusively but by far the larger proportion of trade is in the production of cars of comparatively low horse power. That is to say, the new cars, up to 20 horse power, produced each year are always over 90 per cent. of the total over a series of years. That has been the percentage of the low-powered cars produced in this country for many years. The cars over 20 horse power are the small percentage that remain and, while it is correct that there was an indication of improvement in 1934, the changes in the percentage are not very striking. What is very striking is that the moment you come to a year which is a year of setbacks rather than of prosperity, you find the manufacture and the sales dropping not only in respect of the home markets but in respect of the export market too.

Mr. Kirkwood

The right hon. Gentleman has made a comparison between the high and the low-powered car and says that the lower-powered cars produced here are 90 per cent. of the whole. How does that compare with other countries? They are just about the same. They do not produce proportionately more high-powered cars in America than we do.

Sir J. Simon

My impression is rather different. I think if you were to go there you would find that the percentage of high-powered cars is very considerably larger. [Interruption.] They have a different type of engine. The hon. Member will see that one reason why this is so important for the export trade and for our workpeople is the Empire demand for cars. Their roads may not be as flat and well made as they are in large parts of this island, but they provide what is necessary for the high-powered car, which gets over the ground in spite of obstruction. It is a problem which we have not yet satisfactorily solved.

Mr. Benjamin Smith

Is not the real point that producers here are making a type of car to meet this market, the type known as the small bore and the long stroke and with only very often an 8 to 10-inch clearance of the road, whereas the Americans and the Germans cater for the export market with what is known as a square engine, with a high chassis, which meets a difficulty that this country has never tried to overcome?

Sir J. Simon

The hon. Member has put the thing with more knowledge and technicality than I can, but it is a subject which I have done my best to consider. At present we have a horse-power tax which is based on a formula. The formula is based on the area of the bore and the number of the cylinders, but it does not take any account at all of the length of the stroke or of the speed of revolution, and I think some other factors such as pressure. One result of that, I am told by some who are interested in this, is that there is a tendency for the British designer to make the engine not in the best shape to produce results but in a shape which will adapt itself to the horse-power tax.

Although of course these things are technical and are primarily for the manufacturer and the designer, I am very willing to believe that the result of that may be to produce an engine which I daresay is convenient from the horsepower tax point of view but not from the point of view of the demand of the export market. The result is that we have developed here small, high-speed engines not particularly suited for export. They have proved suitable in a country like this, which has a well developed road system and where the distances to be covered per journey are not very great, but it does not follow in the least that they are right if you want to sell your products to other countries. I am very conscious of this, and so is the Minister of Transport.

Of course no Government Department would take upon itself to review this formula. It is essentially a thing that has to be done by the trade and by the designers, but if a revision should be required, and that revision is offered by the manufacturers themselves to suit their purposes, then I think it would be my duty to facilitate that in every way I could, provided, of course, that the new formula or the new design would produce the revenue which it is intended to produce, by substituting a new formula for an old one. I know this is a point of great importance to the export trade, and the Minister of Transport and I would be glad if designers and manufacturers thought well to consider this, and, provided always that it does not have the effect of cutting down revenue, it may well be that there is some other way which they can devise that would bring in all these other factors and would, I hope, do a very great deal to encourage the export trade, which I do not believe can be done as long as we have our slightly distorted form of design.

I told the Committee earlier in the Debate that, much as I regret it, I really cannot give way on this matter. I do not feel that I should be doing my duty if I did so. I hope and believe that when the flurry of this business has to some extent died down, we shall find that the concrete effects of this change are not anything like as great as has been prophesied. It is noteworthy that although in the month of April the production of cars went down, in the month of May, after I made my announcement on 26th April, the production of cars rose. [Interruption.] I am not disposed, in that event, to think that the results of a month had very much to do with it. In time we shall see what the results really are. In the meantime, I must say to my hon. and gallant Friend and those who support him that, much as I regret it, and carefully as I have considered, and will consider, what they have said, I cannot agree to a modification of this proposal. It really is essential that we should produce the sum— £11,500,000 in a full year— which it is here intended to produce if we are not to have any rise in the Income Tax this year. It is true that we have selected the motor car users and this great trade. I do not think that is unjust, for the distribution of motor cars in this country among the Income Tax-paying classes is very wide indeed. There are over 2,000,000 of them running on the roads now. Therefore, I hope the Committee will realise that I have done my best to consider these arguments, and I hope they will think that I have treated them fairly. I do not wish to exaggerate, but I think that when the disturbance and discussion have somewhat abated, it will not be found that these proposals produce so destructive an effect as some of my hon. Friends fear. In any case, I must have this money if I am to carry through this Budget as I conceive it ought to be carried through.

8.19 p.m.

Mr. Harold Macmillan

I wish to refer to a point which is, I think, of some substance. My right hon. Friend the Chancellor of the Exchequer and the Committee have covered the field very widely in the Debate, and I will not detain the Committee for more than a few minutes. Certainly, I feel that what the Chancellor has said regarding possible alterations to the formula may help in developing the export trade, but on the broad issue as to the fairness or unfairness of this tax, it has not been seriously argued from any part of the Committee that the tax falls upon the poorest section of the community. It is clear that it falls mainly upon the Income Tax-paying classes, and I wish to congratulate the Chancellor on having stuck to his guns with regard to this tax, for the following reasons. We have to face the fact that we are meeting to-day in very serious times. We are either within a few weeks of a great war, or we shall have to face perhaps one year, or perhaps two years, of most tremendous pressure in every form upon our country. The Chancellor tells us that he needs this tax for the revenue which he must raise. I think the Committee should accept that view.

I sympathise immensely with my hon. and gallant Friend the Member for Coventry (Captain Strickland). But let him not fear. The men whom he represents, the technical skill of his constituency, the materials at their command, and even the machinery, will all be required for other purposes in this immense effort of rearmament and of preparing every resource of this country to face great needs. I support the Chancellor, as I hope the Committee will, in his decision. For months and years, some of my hon. Friends and I have pleaded with the Government to go forward with greater effort in the recreation of the power and strength of this country and to follow a more powerful policy in defence of right and justice abroad, and when the Chancellor asks us for the means, and tells us that he requires the money, I for one would not like to take the responsibility of voting against him.

Captain Strickland

Is my hon. Friend speaking with authority when he says that the Chancellor's purpose is to get these men away from the motor industry and into armaments production?

Mr. Macmillan

I do not speak with authority, but anyone who studies the present conditions of the engineering trade and takes a serious view of the probable requirements for armaments, even if there is no war, must face the fact that even if this tax does tend to restrict the motor industry, it will not do harm to the vital interests of the nation as a whole.

8.23 p.m.

Colonel Sandeman Allen

I think that the whole of the motoring community, manufacturers and agents, will very much welcome the suggestion made by the Chancellor that there should be an alteration of the basis of the horse-power. In view of that statement and in view of the general situation, I think the taxpayers will say that they are prepared to lump it this year.

Therefore, I beg to ask leave to withdraw the Amendment.

Hon. Members

No.

8.24 p.m.

Mr. Lipson

My hon. Friend the Member for Stockton (Mr. Harold Macmillan) said that the Chancellor needs this money and has shown us how he can obtain it, and, therefore, we must accept his decision. I submit that hon. Members are not mere rubber stamps for signing decrees issued by the Chancellor of the Exchequer. We do not quarrel with the Chancellor in his desire to provide this country with the money that it requires, but we are perfectly free to use our own judgment as to whether the particular method he has chosen is best for the country and fair to the particular industry concerned. I want to try to answer some of the points that have been raised by the Chancellor. [Hon. Members: "Divide."] If it is the desire of those who call "Divide" to hasten a Division, they will secure that end much more quickly if they will listen to me quietly, for I am determined to go on. The Chancellor of the Exchequer has not found one supporter for his proposal except the hon. Member who spoke last.

Mr. Harold Macmillan

The hon. And gallant Member for West Birkenhead (Colonel Sandeman Allen) sought to withdraw his Amendment.

Mr. Lipson

I think the fact which I have just mentioned is a reason why the Chancellor should have paid rather more attention to the criticisms made of this proposal. He began by drawing a distinction between his attitude on the Films Duty and his attitude on the proposed increase in the horse-power tax. He said he was justified in changing his mind on the Films Duty because it was a new duty, whereas this proposal was a variation of an old duty. I think the Chancellor exaggerated the difference between those two taxes. When you extend an old tax beyond what is reasonable, you enter a world where the conditions are different and, therefore, the distinction between these two is not so great as it seems.

The right hon. Gentleman then sheltered himself behind his experts. He said they had had opportunities of studying the operation of this tax in the past and were able to estimate its probable future yield. The opinion of the right hon. Gentleman's experts is however in flat contradiction of the opinions of those who have been engaged in the motor industry all their lives. Why should this Committee attach more importance to the experts whom the Chancellor of the Exchequer consults, who regard the matter solely from the point of view of the yield of the tax, than to those who, rightly, regard the question not only from the point of view of the yield of taxation, but also from the point of view of the effect on the industry as a whole? In the opinion of those engaged in the motor industry, this steep increase in the horse-power tax will have a serious effect on the industry, and it has a right to consideration from the Committee, because, during the years of slump, it was the motor industry which grew and provided work for our people and revenue for the Chancellor of the Exchequer.

Mr. Bracken

The hon. Member will bear in mind that the motor industry is one of the most highly-protected industries in the country and it has its obligations as well as its advantages.

Mr. Lipson

That is true, but it does not weaken my point that the motor industry has been very useful to this country in providing work and revenue. It is, therefore, entitled to consideration when those engaged in it point out that the taxation which is being imposed upon it is of a crushing kind. Those in the industry have no desire to shirk their fair share of the burden of taxation. They are willing, in view of the national emergency, to accept an increase in the horse-power tax. They are prepared to go back to the pre-1934 period and accept a 20s. horse-power tax, but they say it is not fair or just, to impose a tax of 25s. The Chancellor says he is sure he will get the money, but the man who killed the goose that laid the golden eggs was also sure that he would get his money. If the result of this taxation is to injure the motor industry then the Chancellor of the Exchequer may get his money for the first year, but he will have inflicted a serious blow on a vital industry. I express my regret that in spite of the representations made to him from all quarters the right hon. Gentleman has not seem fit to make some concession to those who have demanded in the interests both of the industry and the country as a whole, a reduction from 25s. to 20s. in the proposed tax.

Several hon. Members

rose—

Hon. Members

Divide.

The Temporary Chairman (Lieut.-Colonel Sir A. Lambert Ward)

I think the Committee is prepared to come to a decision.

Hon. Members

No.

8.30 p.m.

Lord Apsley

There is one point which ought to be brought forward. Both the hon. Member for Cheltenham (Mr. Lipson) and the hon. and gallant Member for West Birkenhead (Colonel Sandeman Allen) took it for granted that the whole motor industry were in favour of this Amendment and against the Clause. I doubt very much whether that is the case. I think Lord Nuffield and Lord Austin have both, by now, made ample arrangements to produce large quantities of small-power cars, which will be put on the market, as the hon. Member for Rotherhithe (Mr. Benjamin Smith)suggested, at an increased price. Therefore, I doubt whether they would be in favour of this Amendment. Furthermore, they are actively engaged, Lord Nuffield in mechanising the Army and Lord Austin and the Rolls-Royce Company in producing aircraft engines, and indeed to the latter firm it is of very little account whether it produces any civil motor cars at all. All these firms are fully engaged in other business. As time goes on, those independent factories who are making only high-power cars— and it is they who will suffer— will go out of business and the business will be started again on another basis.

The hon. Member for Stockton-on-Tees (Mr. Harold Macmillan) told us that we ought to accept this proposal because a crisis was imminent. Let me assure him that if war is imminent it is of little account whether this Amendment is passed or not. The Chancellor in that case will not get his revenue from a horsepower tax, because there will be no civilian cars of high horse-power and few of low horse-power in circulation. I think hon. Members would be quieter in their minds if they could be assured that the reconsideration of the formula of the horse-power tax to which the Chancellor of the Exchequer referred, would be expedited as much as possible. This is a most important matter, not only for industrial but also for defence reasons.

Sir J. Simon

It must be clear, of course, that the proposals on this subject must come from the manufacturers and designers. The Government could not possibly undertake that sort of duty. What I said was that we shall be willing to receive such proposals, if they are made, and I shall do anything I can to facilitate their consideration.

Lord Apsley

If for defence reasons alone I hope there will be no great delay. We have known of representations made by various industries to Government Departments which were delayed for years, but this is a question which must be dealt with speedily. We have not in this country either a chassis or an engine capable of being fitted to an armoured car which could go across country at a high speed. In India they have solved that problem by fitting armoured-car bodies to American chassis. In this country we have not adopted that practice for reasons of pride, because those concerned are afraid that hon. Members opposite would then criticise the War Office for having adopted an American chassis. We have only Lord Nuffield to rely upon in connection with the provision of these cross-country armoured fire vehicles. Therefore if for defence alone, I hope this matter will be expedited as much as possible. I confess that I would prefer in the meantime to see this Amendment passed. The money might be made up in some way, as for instance, by having a £1 per horse-power tax up to 30 horse-power and then a tax by weight and horse-power combined.

8.35 p.m.

Mr. Little

I hope the Committee will excuse me for intervening, but no one has spoken for Northern Ireland, and I think I have a right to say a word, because in what we are doing here we are "blazing the trail" for Northern Ireland. I hope that my right hon. Friend the Chancellor will find a place of repentance, even at the eleventh hour. It was a little girl who brought the news that Peter was freed from prison, and perhaps little Ulster may prevail with the right hon. Gentleman this evening. In Northern Ireland both motor car users and dealers are at one about the iniquity of this tax. We in Northern Ireland are prepared to do our share and are going to do it. We are prepared to pay 20s. per horse-power, but we regard 25s. as a penal tax. I do not know how the farmers here regard it, but we have a number of farmers who require high-powered cars to draw trailers, and I do not think those farmers can bear further taxation at the moment. In addition we are threatened with higher insurance. I was paying my insurance yesterday. My present car has been driven free of all accidents, there has been no claim, but I was told that the moment a claim was made the insurance would be increased by about one-third. We are between the upper and the nether

millstones. We are to have the tax increased incredibly and the insurance is to be raised. We are, so to speak, going to be crushed to death between the Government and insurance companies.

I say that we here are "blazing the trail" for Northern Ireland because motor car users and motor car dealers waited upon the Minister of Finance for Northern Ireland and presented their case so well that, I understand, he told them that if this House fixed the tax at 20s. per horse-power he was quite willing to fall in with it. Therefore, we here are "blazing the trail" for Northern Ireland, and so I hope that my right hon. Friend the Chancellor will think of us in Ulster, knowing that he has only to speak the word and that Ulster motorists will be treated in the same way as motorists here, and have a 20s. per horse-power tax. I do not know whether the Chancellor is going to make anything out of this tax. There is a saying about losing on the swings and gaining on the roundabouts, but I think he is going to lose on both, because he will lose on the cars and on the petrol, as a great number of high-powered cars will be laid up and a great many will be put on the scrapheap. I am wondering whether what he is doing is worth while and I make a strong last appeal to my right hon. Friend to think not only of Britain but of Ulster.

Question put, "That the words proposed to be left out, to the word 'paragraphs' in line 12, stand part of the Clause."

The Committee divided: Ayes, 192; Noes, 139.

Division No. 196.] AYES. [8.40 p.m.
Acland-Troyte, Lt.-Col. G. J. Bull, B. B. Despencer-Robertson, Major J. A. F.
Albery, Sir Irving Burgin, Rt. Hon. E. L. Drewe, C.
Allen, Col. J. Sandeman (B'knhead) Butcher, H. W. Dugdale, Captain T. L.
Aske, Sir R. W. Campbell, Sir E. T. Dunglass, Lord
Baldwin-Webb, Col. J. Carver, Major W. H. Eckersley, P. T.
Balfour, G. (Hampstead) Gary, R. A. Eden, Rt. Hon. A.
Balfour, Capt. H. H. (Isle of Thanet) Cazalet, Thelma (Islington, E.) Edge, Sir W.
Balniel, Lord Cazalet, Capt. V. A. (Chippenham) Emery, J. F.
Barrie, Sir C. C. Channon, H. Emmott, C. E. G. C.
Baxter, A. Beverley Chapman, A. (Rutherglen) Erskine-Hill, A. G.
Beauchamp, Sir B. C. Clarke, Colonel R. S, (E. Grinstead) Evans, Colonel A. (Cardiff, S.)
Beaumont, Hun, R. E. B. (Portsm'h) Cobb, Captain E. C. (Preston) Everard, Sir William Lindsay
Beit, Sir A. L. Colfox, Major Sir W. P. Fremantle, Sir F. E.
Bensett, Sir E. N. Colville, Rt. Hon. John Furness, S. N.
Blair, Sir R. Conant, Captain R. J. E. Fyfe, D. P. M.
Boulton, W. W. Cook, Sir T. R. A. M. (Norfolk, N.) Gledhill, G.
Bower, Comdr. R. T. Cooke, J. D. (Hammersmith, S.) Gluckstein, L. H.
Boyce, H. Leslie Courthope, Col. Rt. Hon. Sir G. L. Glyn, Major Sir R. G. C.
Bracken, B. Crooke, Sir J. Smedley Gower, Sir R. V.
Braithwaite, J. Gurney (Holderness) Crookshank, Capt. Rt. Hon. H. F. C. Gretton, Col. Rt. Hon. J.
Briscoe, Capt. R. G. Cross, R. H. Gridley, Sir A. B.
Brooklebank, Sir Edmund Crossley, A. C. Grigg, Sir E. W. M.
Brooke, H. (Lewisham, W.) Cruddas, Col. B. Grimston, R. V.
Brown, Rt. Han. E. (Leith) De Chair, S. S. Guest, Lieut.-Colonel H. (Drake)
Browne, A. C. (Belfast, W.) Denman, Hen. R. D. Guest, Maj. Hon. O. (C'mb'rw'll, N.W.)
Hacking, Rt. Hon. Sir D. H. Maxwell, Hon. S. A. Simmonds, O. E.
Hammersley, S. S. Mills, Major J. D. (New Forest) Simon, Rt. Hon. Sir J. A.
Harbord, Sir A. Moore, Lieut.-Col. Sir T. C. R. Smiles, Lieut.-Colonel Sir W. D.
Haslam, Henry (Horncastle) Moreing, A. C. Smith, Bracewell (Dulwich)
Haslam, Sir J. (Balton) Morgan, R. H. (Worcester, Stourbridge) Smithers, Sir W.
Hely-Hutchinson, M. R. Morrison, G. A. (Scottish Univ's.) Snadden, W. McN.
Hepburn, P. G. T. Buchan- Morrison, Rt. Hon. W. S. (Cirencester) Somerset, T.
Hepworth, J. Munro, P. Somervell, Rt. Hon. Sir Donald
Herbert, Lt.-Col. J. A. (Monmouth) Nall, Sir J. Somerville, Sir A. A. (Windsor)
Higgs, W. F. Neven-Spence, Major B. H. H. Southby, Commander Sir A. R. J.
Hoare, Rt. Hen. Sir S. O'Connor, Sir Terence J. Spens. W. P.
Hogg, Hon. Q. McG. O'Neill, Rt. Hon. Sir Hugh Stanley, Rt. Hon. Oliver (W'm'I'd)
Holdsworth. H Pickthorn, K. W. M. Storey, S.
Hopkinson, A. Procter, Major H. A. Stuart, Rt. Hon, J. (Moray and Nairn)
Horsbrugh, Florence Radford, E. A. Sueter, Rear-Admiral Sir M. F.
Howitt, Dr. A. B. Raikes, H. V. A. M. Sutcliffe, H.
Hudson, Capt. A. U. M. (Hack., N.) Ramsbotham, Rt. Hon. H. Tate, Mavis G.
Hume, Sir G. H. Reed, A. C. (Exeter) Taylor, Vice-Adm. E. A. (Padd., S.)
Hunter, T. Reed, Sir H. S. (Aylesbury) Thornton-Kemsley, C. N.
Hutchinson, G. C. Raid, J. S. C. (Hillhead) Tree, A. R. L. F.
Jarvis, Sir J. J. Reid, W. Allan (Derby) Tufnell, Lieut.-Commander R. L.
Jennings, R. Remer, J. R. Turton, R. H.
Jones, Sir G. W. H. (S'k N'w'gt'n) Rickards, G. W. (Skipton) Walker-Smith, Sir J.
Jones, L. (Swansea W.) Ropner, Colonel L. Wallace, Capt. Rt. Hon. Euan
Kimball, L. Rosbotham, Sir T. Ward, Irene M. B. (Wallsend)
Law, R. K. (Hull, S.W.) Ross Taylor, W. (Woodbridge) Wardlaw-Milne, Sir J. S.
Leech, Sir J. W. Rowlands, G. Warrender, Sir V.
Lees-Jones, J. Royds, Admiral Sir P. M. R. Waterhouse, Captain C.
Lewis, O. Ruggles-Brise, Colonel Sir E. A. Watt, Lt.-Col. G. S. Harvie
Little, Sir E. Graham- Russell, Sir Alexander Webbe, Sir W. Harold
Llewellin, Colonel J. J Russell, S. H. M. (Darwen) Wells, Sir Sydney
Locker-Lampson, Comdr. O. S. Salmon, Sir I. Wickham, Lt.-Col. E. T. R.
Loftus, P. C. Salt, E. W. Windsor-Clive, Lieut-Colonel G.
Mabane, W. (Huddarsfield) Samuel, M. R. A. Winterton, Rt. Hon. Earl
MacAndrew, Colonel Sir C. G. Sandaman, Sir N. S. Womersley, Sir W. J.
McCorquodale, M. S. Schuster, Sir G. E. Wragg, H.
Macmillan, H. (Stockton-on-Tees) Scott, Lord William Young, A. S. L. (Partick)
Makins, Brigadier-General Sir Ernest Selley, H. R.
Manningham-Buller, Sir M. Shaw, Captain W. T. (Forfar) TELLERS FOR THE AYES. —
Margesson, Capt. Rt. Hon. H. D. R. Shepperson, Sir E. W. Major Sir James Edmondson and Captain McEwen.
NOES.
Adams, D. (Consett) Griffiths, J. (Llanelly) Montague, F.
Adams, D. M. (Poplar, S.) Groves, T. E. Morgan, J. (York, W.R., Doncaster)
Adamson, Jennie L. (Dartford) Guest, Dr. L. H. (Islington, N.) Morrison, Rt. Hon. H. (Hackney, S.)
Alexander, Rt. Hon, A. V. (H'lsbr.) Hall, G. H. (Aberdare) Morrison, R. C. (Tottenham, N.)
Ammon, C. G. Hall, J. H. (Whitechapel) Nathan, Colonel H. L.
Apsley, Lord Hardie, Agnes Naylor, T. E.
Banfield, J. W. Harris, Sir P. A. Noel-Baker, P. J.
Barnes, A. J. Harvey, T. E. (Eng. Univ's.) Oliver, G. H.
Barr, J. Hayday, A. Owen, Major G.
Batey, J. Henderson, A. (Kingswinford) Paling, W.
Bellenger F. J. Henderson, J. (Ardwick) Parkinson, J. A.
Benn, Rt. Han. W. W. Henderson, T. (Tradaston) Pearson, A.
Benson, G. Hills, A. (Pontefract) Pethick-Lawrence, Rt. Hon. F. W.
Bevan, A. Isaacs, G. A. Poole, C. C.
Broad, F. A. Jagger, J. Price, M. P.
Bromfield, W. Jenkins, A. (Pontypool) Pritt, D. N.
Buchanan, G. Jenkins, Sir W. (Neath) Quibell, D. J. K.
Burke, W. A. John, W. Richards, R. (Wrexham)
Cape, T. Johnston, Rt. Hon. T. Ridley, G.
Chater, D. Jones, Sir H. Haydn (Merioneth) Riley, B.
Cluse, W. S. Kennedy, Rt. Hon. T. Ritson, J.
Cocks, F. S. Kirby, B. V. Seely, Sir H. M.
Collindridge, F. Kirkwood, D. Sexton. T. M.
Cove, W. G. Lawson, J. J. Silkin, L.
Daggar, G. Leach, W. Silverman, S. S.
Dalton, H. Lee, F. Simpson, F. B.
Davies, R. J. (Westhoughton) Leonard, W. Sinclair, Rt. Hon. Sir A. (C'thn's)
Day, H. Leslie, J. R. Sloan, A.
Dobbie, W. Lipson, D. L. Smith, Ben (Rotherhlthe)
Dunn, E. (Rother Valley) Logan, D, G. Smith, E. (Stoke)
Ede, J. C. Lunn, W. Smith, Rt. Hon. H. B. Lees- (K'ly)
Edwards, Sir C. (Bedwellty) Macdonald, G. (Ince) Smith, T. (Normanton)
Evans, D. O. (Cardigan) McGhee, H. G. Sorensen, R. W.
Evans, E. (Univ. of Wales) Maclean, N. Stephen, C.
Gardner, B. W. Mainwaring, W. H. Stewart, W. J. (H'ght'n-le-Sp'ng)
Garro Jones, G. M. Mander, G. le M. Strickland, Captain W. F.
George, Major G. Lloyd (Pembroke) Markham, S. F. Summerskill, Dr. Edith
George, Megan Lloyd (Anglesey) Marshall, F. Taylor, R. J. (Morpeth)
Graham, D. M. (Hamilton) Mathers, G. Thorne, W.
Green, W. H. (Deptford) Maxton, J. Tinker, J. J.
Grenfell, D. R. Messer, F. Tomlinson, G.
Griffith, F. Kingsley (M'ddl'sbro, W.) Milner, Major J. Viant, S. P.
Walkden, A. G. Westwood, J. Woods, G. S. (Finsbury)
Watkins, F. C. Whiteley, W. (Blaydon) Wright, Wing-Commander J. A. C.
Watson, W. McL. Wilkinson, Ellen Young, Sir R. (Newton)
Wayland, Sir W. A. Wilson, C. H. (Attercliffe) TELLERS FOR THE NOES. —
Walsh, J. C. Windsor, W. (Hull, C.) Mr. Adamson and Mr. Anderson,

8.47 p.m.

Mr. Jagger

I beg to move, in page 8, line 12, to leave out "paragraphs set out in Parts I and II of," and to insert "paragraph set out in." This Amendment and that which follows have for their object the retaining of the taxation on motor cycles at the present level instead of the advanced rate proposed by the Chancellor of the Exchequer. In spite of the treatment meted out by the Chancellor to the last two Amendments I am not without hope that in this matter he will react to my pleadings in a way different from that in which he reacted to the pleadings that have been made to him up to now. I have to make a time-honoured proposal but I can say that like the servant's baby the baby for which I am asking his support is a very small one.

The Chancellor has made it very clear that his objections to the two previous Amendments are that he requires £11,000,000 and does not see how he can get it in any other way, and that by means of the increased taxation upon motor vehicles he is taxing people within the Income Tax limits who can well afford to pay this increase in place of a problematical increase in the Income Tax. However true that may be of the Rolls-Royce or even of the Morris, it is not true of the owner of the motor cycle. He is a man who has to calculate carefully to the very last penny whether he can afford to do his daily journey from the suburbs to his work by a contract ticket on the railway, or whether he can do it on a motor bicycle instead. It is significant that to an overwhelming degree, entirely unknown in the case of four-wheeled vehicles, the incidence of the season makes the whole difference in the number of these vehicles that are upon the roads. There were 77,488 annual licences last year and 77,865 part-year licences; but there were 1,069,249 quarterly licences. If one takes the quarters one finds that in the first quarter the number of licences was 298,698, in the second quarter 430,973, in the third and maximum quarter 436,232 and in the fourth quarter the figure went back to 370,240.

It is evident from those figures that the vehicles to which I am referring are not owned by people to whom 4s., 5s. or 6s. a week is of no importance, like those of whom the Chancellor so airily spoke, but by people who have carefully worked out the cost of their vehicle in depreciation, petrol and oil. This is a very different consideration indeed. Take the case of a young lad in his apprenticeship— because such is usually the type that rides upon motor bicycles— going to and from his work. Imagine him suddenly faced, if he uses the lightest motor cycle on the road, with a 46 per cent. increase in taxation; if he uses the next lightest or the third or the fourth, with an immediate increase of 66 per cent. in the taxation on his machine. It is only in the case of mechanically-propelled tricycles that the increase is as low as 25 per cent.

If the Chancellor could claim, as he did with regard to the two previous Amendments, that a great financial reward would be coming to the Government to meet the emergency with which they are faced, I should expect the same kind of reply to this Amendment as was given to the two previous Amendments, but here the Chancellor himself estimates the yield at only some £500,000. If the estimate of the decrease in user which has been made in the case of motor cars applies in the case of motor cycles the Chancellor's estimate will be woefully out and he will find himself at the end of his first full year with very much less than the £500,000 for which he has budgeted.

The inconvenience to these young working lads is so great and the increment to the Treasury is so insignificant that I think the Chancellor might, in order to avoid doing the hat trick— I know he does not like doing the hat trick but he has run away twice and he would not run away a third time— make an effort to be consistent. He has twice refused a concession. Here is the third time; let me urge on him to give us this small concession for which we are appealing. On 1st January this year the insurance companies virtually doubled the insurance premiums on motor cycles. That has been a very big blow to the motor cyclist. A 66 per cent; increase in the taxation would therefore be a particularly grave hardship to an exceedingly poor class of people, in no sense the class with which we were dealing on the subject of holders of motor car licences. For all these reasons and many others which could be urged if time permitted, I would appeal that on this matter, so small and insignificant, and yet so pregnant with advantage to the youth of the country, the Chancellor of the Exchequer will give way.

8.55 p.m.

Mr. R. C. Morrison

My hon. Friend has put the case so well that I do not propose to detain the Committee for more than a few moments on an additional point. My hon. Friend commenced by saying that he had great expectations that the concession asked for would be given, but I must say that, as regards the last decision of the Committee, I never at any time during the Debate had any expectation of a concession, because it has been a feature of the motor industry ever since I have been a Member of the House that they are always ready to bark but are never ready to bite. Any Government can wipe its boots on them, and will always find, when the elections come round, that the Conservatives will still come out with their motor cars to help the party. Therefore, I knew that, when we heard on the last Amendment accounts of large meetings upstairs, and of 100 Members putting down an Amendment to reduce the tax, that, while there would be a claim that the tax should be reduced, if the Labour party decided that that claim should be pressed in the Division Lobby, the 100 Members would vote for the Government. I was not, therefore, surprised at the decision on that Amendment. There have been no great indignation meetings in connection with the present Amendment, and no one has been throwing their weight about as to what will be done.

The only additional point I wish to urge is one that I think ought to appeal to the Government if nothing else does. This is a tax upon the young, because something like 90 per cent. of the people who ride motor cycles in this country are young people. It is a tax upon the people who are being called up to serve in the Army. Thousands of them will be in difficulties because, when they were getting along all right in the world, the Government decided to introduce conscription, which will reduce their earnings to is. 6d. a day, and it will be very difficult indeed for them to have a motor bicycle. Now, on the top of that the Government come along and increase the tax. The attitude of the Chancellor of the Exchequer seems to be that, instead of spreading taxation evenly, he takes bites here and there. This is a savage, vindictive tax that has been placed upon a body of young people who are being called upon to make a very great sacrifice for the country, and who, in view of the large number of enthusiastic motor cyclists who will be affected by the Military Training Act which was recently passed, might at any rate be left alone during this period. I hope, therefore, that the Financial Secretary, in his reply, will keep in mind the question whether some concession might not be made on this point, in view of the large number of young people who will be affected by the tax.

9.0 p.m.

Mr. T. Smith

As one whose name is attached to this Amendment, I would appeal to the Financial Secretary to accept it, particularly as regards the lighter type of motor cycles. My hon. Friends have said, perfectly truly, that most of those who have motor cycles, particularly of the lighter type, are young men. Some of them have purchased their cycles in order to get to their work from a distance, and others in order to enjoy their leisure. When this matter was discussed on the Budget Resolutions, the Chancellor defended the tax by saying that, after all, in the case of the lighter cycles, it was only an increase from 12s. to 17s. 6d., that is to say, only 5s. 6d. a year, or 1½d. a week, implying that it could easily be borne. We have to remember, however, that in the case of many young men it requires a great effort to get hold of a motor cycle at all. If it is bought direct, well and good, but many whom I know have to get it on the instalment plan, and this 5s. 6d. represents an addition to what they have to pay in other ways. We have heard from the Mover of the Amendment that the insurance companies have increased their premiums, and these young men have to pay indirect taxation in other ways. I would appeal to the Financial Secretary, if he cannot accept the Amendment in its entirety, at least to make the concession asked for as regards the lighter motor cycles.

9.2 p.m.

Mr. Poole

There is a considerable volume of opinion in the country that the job of the Chancellor of the Exchequer is to present to the House a balanced Budget. While I might have been foolish enough to believe that at some time in the past, I realise that that apparently is not the purpose of the present Chancellor of the Exchequer. We have now, however, got back to talking of balanced Budgets, because the Chancellor has been basing his resistance to Amendments on the question whether he could or could not afford to grant the concessions asked for, and I gather that his approach to the present Amendment will be on much the same lines, namely, that he cannot afford to grant a concession of £500,000 to the motor cyclists. I want to assure him that it is a much more vital thing to the motor cyclists of this country that they should be relieved of £500,000 of taxation than that the Chancellor should be assured of £500,000 of revenue. I am reminded that he found no difficulty in giving £250,000 to the living theatre industry, and that he has only recently given back to the film industry £1,000,000 which he proposed to raise in taxation from that industry. On the question which is the most deserving industry, I wonder whether the film industry can claim any predominance over the enormous number of young motor cyclists in this country.

I think we may venture to suggest to the Chancellor that he can afford to make this concession of £500,000, because, although in his wisdom or otherwise he had already decided to give back to the manufacturers of patent medicines £750,000 of taxation, the House saved him from his own folly in that direction, so he is £750,000 better off than he really deserves to be. Therefore, it seems perfectly reasonable to ask that £500,000 of the £750,000 which we have saved for him on the Medicine Stamp Duties should be used to relieve the motor cyclists of the country from this taxation. It is going to be a serious burden. As has already been suggested, these motor cyclists are not in the same category as ordinary motorists. They run motor cycles, not because they have a great deal of this world's goods, but mainly for business purposes, and in some cases for pleasure. In the case of the great majority, the margin which remains to them after having paid their expenses does not enable them to take upon their shoulders this burden of £500,000. I urge the Chancellor to consider whether, in view of the fact that he has been saved that £750,000, he will not concede this sum, which is very small in comparison to the total Budget.

9.6 p.m.

The Financial Secretary to the Treasury (Captain Crookshank)

It is always the plea in these cases that what hon. Gentlemen would like to have done is only a very small thing, but I would not agree that, even when we get into the realm of very large figures, £500,000 is not worth bothering about in these hard times. Once again I have, on behalf of my right hon. Friend, to resist the Amendment. I should like to make one or two remarks in amplification of that bald statement. The hon. Member for Lichfield (Mr. Poole) said that this tax would be a serious burden upon those who run motor bicycles. Every tax is a burden; but, unfortunately, circumstances demand that not only taxes but increased taxes should be paid by all classes. It has always been the case that taxes on motor cycles are equated with those on motor cars. When the motor car duties went down in 1934, so did the motor cycle duties; now that the motor car duties are going up, the motor cycle-duties also are going up.

When hon. Members make their plea on behalf of the very young who use the lightest motor cycles, it is worth pointing out that for the lightest kinds of motor cycle the increase is not at the same rate as it is for the heavier kinds and for motor cars. In the case of the latter, the increase is 66⅔ per cent., but the increase for the lightest type of motor cycle is only 45 per cent. To that extent, some less stringent tax has been placed on the lighter kinds of motor cycles. The duty goes up from 12s. to 17s. 6d. I am prepared to accept the argument that that may be a burden on some of those who have these motor cycles. But quarterly licences are available for motor cycles, and figures show that a very large proportion of motor cyclists do actually pay their taxes on a quarterly basis. The last figures showed that out of a total of 290,000, 213,000 were on a quarterly basis.

Mr. R. C. Morrison

Surely that shows how hard up these people are?

Captain Crookshank

I was trying to point out that, even if the increase from 12s. to 17s. 6d. is a very large burden, there is the compensation of being able to take out the licence on a quarterly basis. As I pointed out in the Debate on the Resolution, this extra burden in respect of the lightest type of motor car works out at 1¼d, a week. While it may be that those who calculate their budget do not consider it from the point of view of their weekly payment, but only from the point of view of the lump sum they

pay quarterly or annually, a burden of this nature is not such as would make many, if any, of these young men give up motor bicycles. So we come back to the general consideration that, in the circumstances of the time, we cannot afford a remission of £500,000 in this case.

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee divided: Ayes, 204; Noes, 135.

Division No. 197.] AYES. [9.12 p.m.
Acland-Troyte, Ll.-Col. G. J. Fildes, Sir H. Morrison, G. A. (Soottish Univ's.)
Albery, Sir Irving Fleming, E. L. Morrison, Rt. Hon. W. S. (Cirencester)
Allan, Col. J. Sandeman (B'knhead) Fremantle, Sir F. E. Munro, P.
Aske, Sir R. W. Furness, S. N. Nall, Sir J.
Baldwin-Webb, Col. J. Fyfe, D. P. M. Neven-Spence, Major B, H. H.
Balfour, G. (Hampstead) Gledhill, G. O'Connor, Sir Terence J.
Balfour, Capt. H. H. (Isle of Thanet) Gluckstein, L. H. O'Neill, Rt. Hon. Sir Hugh
Baxter, A. Beverley Glyn, Major Sir R. G. C. Perkins, W. R. D.
Beauchamp, Sir B. C. Goldie, N. B. Petherick, M.
Beaumont, Hon. R. E. B. (Portsm'h) Gower, Sir R. V. Pickthorn, K. W. M.
Beechman, N. A. Gridley, Sir A. B. Ponsonby, Col. C. E.
Beit, Sir A. L. Grigg, Sir E. W. M. Procter, Major H. A.
Bennett, Sir E. N. Grimston, R. V. Radford, E. A.
Blair, Sir R. Guest, Lieut.-Colonel H. (Drake) Raikes H. V. A. M.
Boulton, W. W. Guest, Maj. Hon. O. (C'mb'rw'll, N.W.) Ramsbotham, Rt. Hon, H.
Bower, Comdr. R. T. Hacking, Rt. Hon. Sir D. H. Rathbone, J. R. (Bodmin)
Boyce, H. Leslie Hammersley, S. S. Rayner, Major R. H.
Bracken, B. Hannah, I. C. Reed, A. C. (Exeter)
Braithwaite, J. Gurney (Holderness) Harbord, Sir A. Reed, Sir H. S. (Aylesbury)
Briscoe, Capt. R. G. Haslam, Henry (Horncastle) Reid, l. S. C. (Hillhead)
Brocklebank, Sir Edmund Haslam. Sir J. (Botton) Reid, W. Allan (Derby)
Brooke, H. (Lewisham, W.) Hely-Hutchinson, M. R. Rickards, G. W. (Skipton)
Brown, Rt. Hon. E. (Leith) Hepworth, J. Ropner, Colonel L.
Browne, A. C. (Belfast, W.) Higgs, W. F. Rosbotham, Sir T.
Bull, B. B. Hogg, Hon. Q. McG. Ross Taylor, W. (Woodbridge)
Burgin, Rt. Hon. E. L. Holdsworth, H. Rowlands, G.
Butcher, H. W. Hopkinson, A. Royds, Admiral Sir P. M. R.
Campbell, Sir E. T. Horsbrugh, Florence Ruggies-Brise, Colonel Sir E. A.
Carver, Major W. H. Howitt, Dr. A. B. Russell, Sir Alexander
Cary, R. A. Hudson, Capt. A. U. M. (Hack., N.) Salmon, Sir l.
Cazalet, Thelma (Islington, E.) Hume, Sir G. H. Salt, E. W.
Cazalet, Capt. V. A. (Chippenham) Hunter, T. Samuel, M. R. A.
Channon, H. Hulohinson, G. C. Selley, H. R.
Chapman, A. (Rutherglen) Jarvis, Sir J. J. Shaw, Captain W. T. (Forfar)
Clarke, Colonel R. S. (E. Grinstead) Jennings, R. Shepperson, Sir E. W.
Cobb, Captain E. C. (Preston) Joel, D. J. B. Simmonds, O. E.
Colfox, Major Sir W. P. Jones, Sir G. W. H. (S'k N'w'gt'n) Simon, Rt. Hon. Sir J. A
Colman, N. C. D. Jones, L. (Swansea W.) Sinclair, Col. T. (Queen's U. B'lf'st)
Conant, Captain R. J. E. Kimball, L. Smith, Bracewell (Dulwich)
Cook, Sir T. R. A. HI. (Norfolk, N.) Lamb, Sir J. O. Smith, Sir R, W. (Aberdeen)
Cooke, J. D. (Hammersmith, S.) Leech, Sir J. W. Snadden, W. McN.
Courthope, Col. Rt, Hon. Sir G. L. Lees-Jones, J. Somerset, T.
Cox, H. B. Trevor Leighton, Major B. E. P. Somervell, Rt. Hon. Sir Donald
Craven-Ellis, W. Lewis, O. Somerville, Sir A. A. (Windsor)
Crooke, Sir J. Smedley Liddall, W. S. Southby, Commander Sir A. R. J.
Crookshank, Capt. Rt. Hon. H. F. C. Lipson, D. L. Spens, W. P.
Cross, R. H. Little, Sir E. Graham- Stanley, Rt. Hon. Oliver (W'm'l'd)
Crossley, A. C. Little, J. Stewart, J. Henderson (Fife, E.)
Crowder, J. F. E. Llewellin, Colonel J. J. Strauss, H. G. (Norwich)
Cruddas, Col. B. Locker-Lampson, Comdr. O. S, Strickland, Captain W. F.
De Chair, S. S. Loftus, P. C. Stuart, Rt. Hon. J. (Moray and Nairn)
Denman, Hon. R. D. Mabane, W. (Huddersfield) Sueter, Rear-Admiral Sir M. F.
Despencer-Robertson, Major J. A. F. MacAndrew, Colonel Sir C. G. Sutcliffe, H.
Drewe, C. McCorquodale, M. S. Tasker, Sir R. I.
Dugdale, Captain T. L. McEwen, Capt. J. H. F. Tate, Mavis C.
Dunglass, Lord Makins, Brigadier-General Sir Ernest Taylor, Vice-Adm. E. A. (Padd., S.)
Eckersley, P. T. Manningham-Buller, Sir M. Thornton-Kemsley, C. N.
Edge, Sir W. Margesson, Capt. Rt. Hon. H. D. R. Touche, G. C.
Emery, J. F. Markham, S. F. Tufnell, Lieut.-Commander R. L.
Emmott, C. E. G. C. Maxwell, Hon. S. A. Turton, R. H.
Emrys-Evans, P. V. Mills, Major J. D. (New Forest) Walker-Smith, Sir J.
Erskine-Hill, A. G. Moore, Lieut.-Col. Sir T. C. R. Wallace, Capt. Rt. Hon. Euan
Evans, Colonel A. (Cardiff, S.) Moreing, A. C. Ward, Irene M. B. (Wallsend)
Everard, Sir William Lindsay Morgan, R. H. (Worcester, Stourbridge) Wardlaw-Milne, Sir J. S.
Warrender, Sir V. Wells, Sir Sydney Wragg, H.
Waterhouse, Captain C. Wickham, Lt.-Col. E. T. R. Wright, Wing-commander J. A. C.
Watt, Lt.-Col. G. S. Harvie Williams, Sir H. G. (Croydon, S.)
Wayland, Sir W. A Winterton, Rt. Hon. Earl TELLERS FOR THE AYES.—
Webbe, Sir W. Harold Womersley, Sir W. J. Major Sir James Edmondson and Lieut.-Colonel Herbert.
NOES.
Adams, D. (Gensett) Hall, J. H. (Whitechapel) Parkinson, J. A
Adams, D. M. (Poplar, S.) Hardie, Agnes Pearson, A.
Adamson, Jennie L. (Dartford) Harris, Sir P. A. Pathick-Lawrence, Rt. Hon. F. W.
Alexander, Rt. Hon. A. V. (H'lsbr.) Harvey, T. E. (Eng. Univ's.) Pools, C. C.
Ammon, C. G. Hayday, A. Price, M. P.
Banfield, J. W. Henderson, A. (Kingswinford) Pritt, D. N.
Barnes, A. J. Henderson, J. (Ardwick) Quibell, D. J. K.
Barr, J. Henderson, T. (Tradeston) Richards, R. (Wrexham)
Batey, J. Hills, A. (Pontefract) Ridley, G.
Bellenger, F. J. Isaacs, G. A. Riley, B.
Benn, Rt. Hon. W. W. Jagger, J. Ritson, J.
Benson, G. Jenkins, A. (Pontypool) Robinson, W. A. (St. Helens)
Bevan, A. Jenkins, Sir W. (Neath) Seely, Sir H. M.
Bread, F. A. John, W. Sexton, T. M.
Bromfield, W. Johnston, Rt. Hon. T. Silverman, S. S.
Brown, C. (Mansfield) Jones, Sir H. Haydn (Merioneth) Simpson, F. B.
Buchanan, G. Kennedy, Rt. Hon. T. Sinclair, Rt. Hon. Sir A. (G'thn's)
Burke, W. A. Kirby, B. V. Sloan, A.
Cape, T. Kirkwood, D. Smith, E. (Stoke)
Chater, D. Lathan, G. Smith, Rt. Hon. H. B. Lees- (K'ly)
Cluse, W. S. Lawson, J. J. Smith, T. (Normanton)
Cocks, F. S. Leach, W. Sorensen, R. W.
Collindridge, F. Lee, F. Stephen, C.
Cove, W. G. Leonard, W. Stewart, W. J. (H'ght'n-le-Sp'ng)
Daggar, G. Leslie, J. R. Strauss, G. R. (Lambeth, N.)
Dalton, H. Logan, D. G. Summerskill, Dr. Edith
Davies, R. J. (Westhoughton) Lunn, W. Taylor, R. J. (Morpeth)
Day, H. Macdonald, G. (Ince) Tinker, J. J.
Dobbie, W. McGhee, H. G. Tomlinson, G.
Dunn, E. (Rother Valley) Maclean, N. Viant, S. P.
Ede, J. C. Mainwaring, W. H. Walkden, A. G.
Edwards, A. (Middlesbrough E.) Mander, G. le M. Watkins, F. C.
Edwards, Sir C. (Bedwellty) Marshall, F. Watson, W. McL.
Evans, D. O. (Cardigas) Mathers, G. Welsh, J. C.
Evans, E. (Univ. of Wales) Maxton, J. Westwood, J.
Foot, D. M. Messer, F. White, H. Graham
Gardner, B. W. Milner, Major J. Whiteley, W. (Blaydon)
Garro Jones, G. M. Montague, F. Wilkinson, Ellen
George, Major G. Lloyd (Pembroke) Morrison, Rt. Hon. H. (Hackney, S.) Wilmot, John
George, Megan Lloyd (Anglesey) Morrison, R. C. (Tottenham, N.) Wilson, C. H. (Attereliffe)
Graham, D. M. (Hamilton) Nathan, Colonel H. L. Windsor, W. (Hull, C.)
Green, W. H. (Deptford) Naylor, T. E. Woods, G. S. (Finsbury)
Griffith, F. Kingsley (M'ddl'sbro, W.) Noel-Baker, P. J. Young, Sir R. (Newton)
Griffiths, J. (Llanelly) Oliver, G. H.
Groves, T. E. Owen, Major G. TELLERS FOR THE NOES—
Hall, G. H. (Aberdare) Paling, W. Mr. Adamson and Mr. Charleton.

9.20 p.m.

Mrs. Tate

I beg to move, in page 8, line 14, at the end, to add: Provided that the duties of excise as specified in Parts I and II of the Third Schedule to the Finance Act, 1934, shall continue to apply in the case of mechanically-propelled vehicles owned and/or used by maternity or district nurses for the purposes of their work. The Chancellor of the Exchequer has had to sit in Committee the whole of the afternoon and hear hon. Members asking for some concession, but the Amendment which I now move does not ask for a concession of the Chancellor of the Exchequer. On the contrary, it confers a great opportunity upon him. I merely wish to allow him the privilege of exempting district nurses and midwives from the increase of the horse-power tax when they are using a car solely for the purposes of their work. It is generally acknowledged that the nursing profession is one which, in the past, has not had the generosity of treatment from the public which it had the right to expect, nor has it been a profession which has been remunerated in any way in accordance with the work it has performed or the value of its services to the community. The hospital nurse has a very short working life. She is always paid at a very small rate. The Financial Secretary to the Treasury may tell me that her case is comparable to that of a doctor who also uses a car for the purposes of his work, but the case is in no way comparable. The pay of a doctor is far more in proportion to his services than the pay of a nurse or midwife ever is. A doctor may come and perform an operation, very often to a part of the body from which you do not happen to be suffering. He then gets a fee of perhaps 50 guineas or 100 guineas. It is an exceedingly difficult thing for a nurse to make £100 profit up to the end of a long year of ceaseless work. She is very often the person who has really saved the life of the patient.

I very much deplore the fact that the Chancellor of the Exchequer himself is not in his place and that I am left to the inexperienced hands of the Financial Secretary to the Treasury. He has not yet learned that the right way to treat women is sometimes to give them something. It is no good his laughing in that hearty and scornful manner. He has obviously done nothing up to to-day but run away. I am hoping that he is now going to do a little something to redeem his record in regard to women by granting this very small concession. I beg of the Financial Secretary to remember the extreme difficulty of a nurse's life. I know I shall be told that she can put the expenses of her car to a reduction of Income Tax. There are a great many nurses who do not even have the opportunity of paying Income Tax, and there is not a nurse in the country that is ever paid at a rate which bears any relation to the services she renders. I know that it has, unfortunately, been the policy of the Government to have unequal pay as between men and women. I deplore that policy, but here is a small opportunity for the Government to show that they are not entirely without a sense of justice or right. I do not wish to keep the Committee, as I realise that we have a great deal of work before us, and my case is so strong that it should not need pleading. I, therefore, leave it in the unsympathetic hands of the Financial Secretary.

9.25 p.m.

Captain Crookshank

The hon. Lady says that she is expecting nothing from me, and I am afraid she is right. It is true that I have not held this office very long, but I am not inexperienced when it is a question of the great services which the nursing profession renders to our fellow-citizens. It has been my unfortunate lot to have known a great number of occasions on which their services were necessary, and I yield to no one in my feeling of respect for the work which these nurses do. But that, of course, has nothing to do with this Amendment. The hon. Lady said this Amendment conferred on the Chancellor a great opportunity, in the privilege of exempting these nurses from the tax. On his behalf I must say it is a privilege which he is unable to accept. The hon. Lady has rather shifted her ground to-day — perhaps it is not unusual with Lady Members to do so. On the Budget Resolution she asked for some concession to be made to district nurses, not on the grounds that it is very rare for a district nurse to make £100 a year, but on the grounds that in country districts it is very difficult to increase the funds raised towards the payment of district nurses. That is quite another matter.

Mrs. Tate

I know what a good memory the right hon. Gentleman has, and I am sure he did not wish me to indulge in repetition.

Captain Crookshank

Then I was not so inexperienced after all. As I understood the case, it was that the funds out of which these nurses are paid are locally raised, and the extra burden which the increased horse-power tax places on the motor cars which they use is. one which it would be very difficult to raise in country districts. Well, I am not so sure that the burden is really of that nature. But to-day the hon. Lady said it was difficult for a nurse to make an income that was at all comparable with that made by a distinguished surgeon. Of course that is quite true, but may I remind her of what her Amendment does? She wants to exempt the vehicles used by nurses from the increased horse-power tax. That means that there will be a general increase of the horse-power tax on motor cars, but that the nurse's car alone is to remain at the old rate; there will be just one kind of motor car which will be exempted from the increase. What is that motor car? It is either the motor car owned by the maternity or district nurse, or the motor car which is used by her, that is to say, a motor car which belongs to someone else. But because it is used by the district nurse the hon. Lady says that for that reason it should be exempt. That is a principle of taxation which, however desirable it may or may not be to make some concession to nurses, it is not possible for me to ask the Committee to accept, or one which can be fairly administered in practice. The Amendment applies to a car which is either owned or used by nurses "for the purposes of their work." I am sure the Committee will realise that a phrase like that is one which it will be almost impossible to work from the taxation point of view.

Finally, the hon. Lady rightly said that a concession of this kind would inevitably give rise to a considerable number of demands for concessions to persons employed in the same sphere of public services. Doctors might claim to be engaged in humanitarian work, veterinary surgeons might claim that their work was equally important, and then there is the case of the commercial traveller which is dealt with in a later Amendment. These instances all show that once you start making exemptions it is very difficult to stop. My right hon. Friend feels that the increase in the horse-power tax is one which ought to be universally applied, and, while we all recognise the value of the work of the maternity and district nurses, that is not a sufficient reason for making an exemption on the lines of this Amendment, particularly in view of the difficulties of working it.

Amendment negatived.

9.33 p.m.

Sir J. Smedley Crooke

I beg to move, in page 8, line 14, at the end, to add: Provided that no increase of duty shall be payable by ex-service officers or men who are in receipt of wounds or disability pension for the loss of one or both legs as a result of service in the Great War. Few words will be required to recommend this Amendment to the Committee and to the Financial Secretary, who is himself an ex-service man. We are asking in this Amendment that the ex-Service man who lost a leg in the War should not be called upon to pay an increase in the horse-power tax of the car which he uses as the means of getting about. If a man has two legs it is another matter altogether. But the ex-Service man who has lost a limb needs a motor car to get about, and it is very hard for him to have to pay an increase in the tax. This concession would make very little difference to the revenue. There cannot be a great number of these men, and on their behalf I appeal to the right hon. and gallant Gentleman to accept the Amendment.

9.34 p.m.

Captain Crookshank

Great as was the sympathy felt by the Committee with the case of the district and maternity nurses, of course the case of the ex-Service man who has lost a leg or both legs in the service of his country is one which strikes a very sympathetic chord in everybody's breast. We are on common ground there. But what the hon. Gentleman asks is to make an inroad into this tax on their behalf, that is to say, that every motor car in the country should be subject to the increased horse-power tax except the motor car owned by an ex-Service officer or man who is in receipt of a pension because of the loss of one or both legs.

That is a proposal which it is almost impossible to apply, and for this reason. I cannot see that there is any logic in the argument of the hon. Member. He says that because a man has lost one leg or both legs it is hard for him to get about without his motor car. There are many people who have both legs who have to use a motor car in their vocations. The hon. Lady's Amendment was directed to that argument. But if you wish to make concessions to persons, men or women, who have been disabled in the service of their country it is not right to do that by remitting a certain portion of a duty which is payable on their motor car. The proper way surely is to recognise the fact of their disability and pay them a pension for that purpose. That is what the State has done. If the hon. Member thinks the pension is not large enough, that is another story, but disablement, surely, must be recognised in a positive manner, by the way of a pension or grant and not in a negative manner by letting these men off a duty which is laid upon the general bulk of motor car owners, and which has no relevance to the fact that a man may have one leg or both, or no legs at all. We all feel with those who have suffered these terrible disabilities in the War and have to bear the burden for the rest of their lives. While we have great sympathy with them, it is not a sufficient reason for excusing them the increase in the horsepower tax which the Finance Bill lays upon the general community.

9.37 p.m.

Mr. A. V. Alexander

The Financial Secretary has not argued that the fixed pension payable for these disabilities should be varied upwards because of an increase in taxation. In the case of these limbless men there is a widespread use, not of the motor car but of the automatically propelled chair— by internal combustion engines— and it seems exceedingly hard that these men should have to pay this increased tax. There is certainly no question of making any adjustment upwards on the fixed sum which is considered in many quarters to be inadequate which has been awarded as a pension. I quite see that it would be difficult to remit the increased duty on motor cars used by these men, but will the Financial Secretary consider putting in special words to deal with the invalid carriages which are automatically propelled and which are used by these men?

Captain Crookshank

Actually that type of invalid carriage is not taxed at all; it is exempt under existing law.

Amendment negatived.

9.39 p.m.

Mr. Hutchinson

I beg to move, in page 8, line 14, at the end, to add: Provided that the duties of excise as specified in Part II of the Third Schedule to the Finance Act, 1934, shall continue to apply in the case of mechanically propelled vehicles owned and used by commercial travellers for the purpose of their business. My friends and I have put down this Amendment for the purpose of drawing the attention of my right hon. Friend to the position of the commercial traveller under the proposed increase in the horse power tax. It is quite obvious that the commercial traveller is in a different position from the ordinary pleasure car user. He uses his car for the purpose of his business. In many cases he must necessarily use a larger car, for he has samples to carry and bulky packages to carry with him, and so forth. In many cases the commercial traveller will undoubtedly be precluded from turning over to a lower horse power car as many other users of high horse powered cars will probably do. All these considerations are very obvious and I do not intend to dwell upon them, because my right hon. Friend must be well acquainted with them. In the Debate on the Budget Resolutions it was said in answer to a criticism of this sort that the commercial traveller will enjoy some relief because he will be able to deduct the additional horse power tax as an expense when he comes to make his Income Tax return. He will certainly obtain some relief in that way, although even if full allowance is made for the Income Tax relief which he will receive by the deduction, he will still, of course, be in the position of having to pay a substantially increased tax in relation to his travelling expenses.

But it is not every commercial traveller who is going to enjoy relief in that way, because there are a certain number of commercial travellers— I am told it is not an uncommon arrangement— who receive a fixed allowance for their expenses. The commercial traveller who receives a fixed allowance in respect of his expenses is not going to enjoy any relief in respect of Income Tax unless he can persuade his employer to pay the increased tax for him. Let me give an example of the sort of case I have in mind, to which I desire to draw the attention of my right hon. Friend. Take the case of a commercial traveller who receives a salary of £6 to £8 a week and an allowance of £1 per day in respect of his travelling expenses, his hotel expenses and such incidental expenses as he may incur. The commercial traveller in that position of course makes no claim for deductions against his salary; the expenses are claimed by his employer, and the result of this tax is going to be that the commercial traveller who is remunerated in that way, by a fixed allowance in respect of his travelling expenses, will have to bear the whole of this increased taxation himself. If he is using a large car of 20 horse power he will have to pay about £10 a year in additional expenses, and for a man of the range of salary to which I have referred expenses of that sort are not a trivial matter.

When the Financial Secretary was dealing with the Amendment moved by the hon. Member for Frome (Mrs. Tate) he said something about my Amendment. I am bound to say that I am not very much impressed by the difficulty of differentiating between different classes of motor users. My Amendment differs from that of the hon. Member for Frome inasmuch as I am asking that the cars which shall pay horse-power tax at the lower rate shall be cars which are owned and used by commercial travellers for the purposes of their business. I quite recognise that that may restrict the use of the car to business purposes, but I must say that I do not see any very substantial practical difficulty in the way of differentiat- ing between persons who are really commercial users of cars and other classes of users. It may be that some distinguishing mark may be desirable, and if my right hon. and gallant Friend says that, we must accept it, but so far as the principle on which he was proceeding in dealing with that Amendment is concerned, it does not seem to be of importance on this Amendment. I got some encouragement from what the Chancellor said when dealing with another Amendment earlier this afternoon, when he told the Committee that he recognised that there were cases where a certain amount of hardship would undoubtedly arise. This case of the commercial traveller seems to me to be precisely that class of case. Here is a man who is using his car for the purpose of his business. He is bound to have a car of some considerable size, and he would not necessarily enjoy that measure of relief which was suggested during the Debate on the Budget Resolutions.

I hope my right hon. and gallant Friend will be able to hold out to us some hope that the position of the commercial traveller will receive consideration. Let me put the case to him in this way: This tax was never intended to fall upon persons whose cars are their means of livelihood. The Chancellor of the Exchequer said more than once earlier to-day that the class of person who used high-powered cars corresponded roughly to the Income Tax paying class. This is precisely the case where that analogy does not hold good. Here you have the case of a man whose remuneration is of a modest order but who, by reason of the nature of his business, is bound to keep a car of a high power. It seems to me —and I hope my right hon. and gallant Friend will be able to see it in the same light— that this is precisely the class of special user who ought to be safeguarded against the additional expense which will be involved by this increase of the horsepower tax. The real justification for this tax is that a high-powered car is in the nature of a luxury. If a person can afford to use a high-powered car, he can afford to make some additional contribution to taxation, but in the case that I am putting that state of affairs does not hold good at all. If the justification for the tax is that it is really a tax upon a luxury article, then it seems to me that it follows necessarily that some provision should be made for those who do not use their cars for luxury purposes.

9.50 p.m.

Sir Herbert Williams

I desire to support my hon. and learned Friend in this Amendment, to which my name also is attached. I am told, though I am not in a position to verify the statement, that there are about 1,000 persons in my constituency falling within the class described in this Amendment as commercial travellers. I am not certain—and I say this quite frankly— whether those words are words that are strictly known to the law and whether, if the Financial Secretary is sympathetic to the Amendment, it might not call for some redrafting in order to define with greater precision what we clearly intend, but the burden represented by this tax will be a very heavy burden to a large number of people whose income is by no means large. It is very difficult to make a strict comparison, but I have no hesitation in saying that the effect of the increase in this tax from 15s. to 25s. is equivalent in the case of a number of these people to an increase in the standard rate of Income Tax of 1s. That may rather startle hon. Members. Of course, these people are not in the class to whom 1s. increase in the rate of tax means 1s. in every £they earn, because of the effect of all the abatements and so on, but it is true that, in the case of quite a substantial number of these persons who live in large numbers in my hon. and learned Friend's constituency and in mine, and also in a great number of London suburban constituencies, this burden will be a very serious one indeed.

Hon. Members in this House, some rich and some not so rich, may regard as not very important an increased expenditure of £10 a year, but I am satisfied that in the case of a very large number of my constituents who live in pleasant houses, who have to dress well and to give every outward and visible appearance of a fairly rich existence, who are in fact people who have quite a substantial struggle, these payments in substantial lumps will represent a very serious problem. What we have to realise is that it is so much easier if you can dribble it out as you go along, but when on 1st January a man who maybe has a 21 horse-power car, because he takes a good deal of stuff round with him— because, if he has to travel very long distances in a light car, it means an enormous nervous strain upon him, and that is one of the reasons why he has a large car— is suddenly Called upon to find £26 5s. instead of £15 15s., it is a burden which will cause him quite a substantial anxiety. It is the substantial lump-sum payments which are the cause of much perturbation to great masses of what are commonly described as the middle class. This £25 5s. has to be saved up and to be ready on the day, because the man cannot afford to do without his car, and that day comes, unfortunately, only a week after Christmas, when in all nice houses there has been certain pleasant expenditure which nevertheless has the effect of depleting the resources at one's command. I hope, even if my right hon. and gallant Friend cannot accept the Amendment in its present form that he will try to re-examine this problem to see in what way there can be some easement in respect of a very big section of the community. To a large extent it is the success of their activities which produces employment for great masses of the community. I strongly urge on my right hon. and gallant Friend that he should give the most serious and careful consideration to the spirit of the Amendment, even if he may not be too friendly to its precise wording.

9.54 p.m.

Mr. Montague

It is rather a pity that so much comment has been made about the Chancellor's running away, in connection with the Finance Bill, in respect of the two points on which he gave way during the past week, because it seems to have stiffened his back, and there seems to be very little likelihood of his giving way upon any of the points that are being brought forward now, including this one. I agree with the hon. Member for South Croydon (Sir H. Williams) as to the Chancellor of the Exchequer being asked to consider the spirit of the Amendment and to see between now and the Report stage whether it might not be possible to reduce the amount of taxation to the commercial traveller who owns a car and uses it in his business. The commercial travellers, through their two organisations, are themselves agreed on the point. They are quite willing to accept the compromise— I suppose they have to accept what they can get, anyhow— of the reduction to £1 from £1 5s. The hon. and learned Member for 11 ford (Mr. Hutchinson) spoke about commer- cial travellers earning £8 to £10 a week. I can assure him that the majority of commercial travellers do not earn from £8 to £10 a week.

Mr. Hutchinson

I said from £6 to £8.

Mr. Montague

Even £6 to £8 is rather a high level of salary to apply to the average commercial traveller. There are scores of thousands of commercial travellers who get a fixed sum for expenses, and it is not always a very extravagant sum, and out of that they have to provide their own car and run it. There are many commercial travellers who advertise for jobs and answer advertisements, and they put forward the fact that they possess a car. They get nothing more than commission upon the business they obtain and do not get any allowance from their employers in respect of their car. That means that the commercial traveller who has to pay this increased tax is really suffering a reduction of salary, for it comes down to that. If the car is between 10 and 20 horse-power, the increased tax represents something in the nature of the cost of a. week's holiday. That will be a burden upon a very large number of commercial travellers, who are sufferers from very keen competition. The commercial traveller who is on the highest rung of the profession and who has rounds which are worth money in themselves, are a dwindling feature in the profession. The competition is much keener than ever it was, and certainly the salaries and commission that are obtained are very often, if not upon the edge of actual poverty, at any rate upon the edge of a very low standard of life, considering the position that the commercial traveller has to keep up in the commercial world.

The point put by the Financial Secretary, that it is impossible in all these cases to differentiate, is one that can hardly be supported in respect of commercial travellers. There are exceptions in all cases of taxation, but in this case the claim is based upon the fact that the commercial traveller uses his car for the purposes of his business. It is a clear-cut case, with no difficulty about it. The average commercial traveller spends his time in his motor car every day of the week until Friday night, and then probably has to travel some hundreds of miles to his home from where he may be on his round, in order to have a week-end for himself, and no one, surely, can imagine that he is going to use that car as a means of pleasure. That is not usually done, I can assure the Committee and the Chancellor of the Exchequer. The commercial traveller's car is a business car, and there can be no real difficulty about differentiation.

The cost of this concession would be very little. When the Chancellor of the Exchequer was dealing with the allowance in respect of another question of taxation, where he gave way, he stated that the new tax in respect of the profits on armaments would be adequate to make up the difference. We do not know how much that tax is going to bring in, but certainly it will bring in considerably more than the amount he would lose on this remission in favour of commercial travellers. I doubt whether the remission would amount to more than one-eighth of a million pounds in the course of a year. That is a very wild guess, but I know, roughly, the number of commercial travellers and I can guess at the number of motor cars possessed by the technical commercial travellers. The amount involved would be very small, compared with the total budgetary position, and would make no practical difference to the revenue of the Chancellor of the Exchequer. This is a case which is different from most of the others which have been put forward, and one which might easily be granted by the Chancellor of the Exchequer from the point of view of justice to the commercial traveller and the efficacy of the tax.

10.2 p.m.

Mr. Graham White

I do not know who it is that has suggested that the Chancellor of the Exchequer is running away from his Finance Bill. I am perfectly certain that the Chancellor will in the course of this Finance Bill continue to exercise his judgment and take such action as he thinks fit, independently, after hearing the views of the Committee. I have no doubt that he will apply that process to this Amendment, as to others. The hon. and learned Member who moved the Amendment, and those who have followed him, have stated the case for the Amendment completely, and it excuses anyone who follows, and who cannot give a silent vote, from saying more than a very few words. Reference has been made to what the Chancellor of the Exchequer said on a previous Amendment, and it has been said that this may be a marginal case. However that may be, there is one sense in which commercial travellers are marginal cases. The margin they are concerned with is whether they will be able to continue on the road at all, in view of this tax. Although the tax to some of us may seem a comparatively small affair, it is a serious matter to many commercial travellers, and it may be the deciding factor as to whether or not they will be able to continue in their business.

So far as the incidence of this tax on the commercial traveller is concerned, it is in the nature of a tax upon a work-man's tools and trade, and it is particularly aggravated in this case because the commercial traveller has to use that particular tool continually. He may have to use it for days together, going about the country, when he may reap no benefit or reward. This is a case that calls for consideration, and I hope that it will receive favourable consideration from the Chancellor of the Exchequer. It has to be admitted— the hon. Member for South Croydon (Sir H. Williams) referred to it — that there may be some difficulty in differentiating as to the user of the car, but there is in this country a very powerful body representing the commercial travellers, the United Kingdom Commercial Travellers' Association, which is an amalgamation of two associations, and if they were consulted on this matter I do not think that, with the resources available to them, they would fail to find some satisfactory definition which would enable this difficulty, in so far as it is a difficulty, to be overcome. I hope that the Chancellor of the Exchequer may see his way to accept the Amendment."

10.5 p.m.

Captain Crookshank

When the hon. Lady was speaking and I had to reply, I said at once that her claim would, no doubt, very soon be followed by others of a similar nature. It was barely 10 minutes before that event occurred and we have had the claim of the commercial traveller put forward for a differential rate of horse-power tax on his car. My hon. and learned Friend who moved the Amendment said he hoped this would receive consideration. I can give him the assurance that this is the case. My right hon. Friend has looked carefully into the claim which has been brought to his notice on behalf of the commercial traveller. It is true that the Amendment differs in one sense from what the hon. Lady proposed in that this deals with mechanically-propelled vehicles owned and used by commercial travellers. Therefore, you have the two tests, the test of the ownership of the car and the test of the user. It is true that commercial travellers are not the only people who both own and use their cars for business purposes. I am not trying to be over-critical of the wording of the definition, but the general sense of it is that the car shall be owned by the commercial traveller and used by him for the purpose of his business, in which case it is to pay a lower tax. It does not require many minutes' consideration to realise that a distinction of that kind is really not a practicable one. After all, it would mean in strictness that a commercial traveller would never be allowed in any circumstances at all to use his car for any other purpose than his business. The hon. Gentleman opposite said that if he had to travel some 100 miles on Friday he would not be likely to use it at the week-end, but for all that he might want to use it on Saturday or Sunday for some private purpose.

Mr. Montague

That would be terrible, would it not?

Captain Crookshank

It might not be very terrible but it would take the car outside this class; because seeing his mother-in-law on Saturday, or going to church on Sunday, or having a holiday trip during the Bank Holiday week-end, could not be called using the car for the purpose of his business.

Sir H. Williams

In order to get over that difficulty would my right hon. Friend compromise on 17s. 6d.?

Captain Crookshank

We are not at an auction sale now.

Sir H. Williams

Will my right hon. Friend answer my question? It was perfectly serious, as I will explain if he will allow me.

Captain Crookshank

My hon. Friend has already spoken once. As a method of taxation this Amendment would be impracticable. You would never know, in fact, whether the car was being used in this way or not on Sundays or in holiday periods.

Mr. Montague

The differentiation actually takes places in respect of the commercial traveller's car. He receives a rebate upon the actual taxation itself on the ground that he uses his car in his business. If it can be done in the actual tax, why not in the incidence of the tax?

Captain Crookshank

That is true, but that is a relief of Income Tax and the amount can be adjudged according to how much the car is used for business purposes and how much for other purposes. We are now considering the question of a flat rate of horse-power tax. The same considerations do not equally apply and it would not be practicable to work this tax along the lines that the Amendment suggests. The hon. Gentleman said it is difficult to estimate how much this concession would cost. I agree. If he says it may be an eighth of £1,000,000, I am not prepared to dispute that, but it would obviously cost something. It might cost more than that, because the car might be used by firms who themselves supply cars to travellers for business purposes adopting the very obvious device of registering them in the name of the traveller and thereby getting the benefit of this concession, so that it might be a larger sum than the hon. Gentleman envisages. Everyone, as is obvious during the course of this long Debate, recognises that there are inherent difficulties, but when my hon. Friend the Member for South Croydon (Sir H. Williams) says the difficulty about this is that there would be a payment soon after Christmas, when so many people may have exhausted their resources on the festivites that he described, that is inherent in the whole tax. It does not apply particularly to commercial travellers. So far as it is a difficulty, it extends over a far wider field. The matter has been very carefully considered and my right hon. Friend has not seen that it is possible to accept the proposal. For that reason I ask the Committee to let us get on to the next Amendment.

10.13 P.m.

Sir H. Williams

The Financial Secretary was not willing to answer my question so I feel impelled to make a few more observations. It is always a good thing for a Minister to answer questions when put to him; it saves a lot of time. The question that I put was this: If the user of a car indulges in a certain amount of week-end or holiday use, that was regarded by the Financial Secretary as a firm argument against the proposal. Really that is rather a superficial thing to say and indicates a want of careful examination of it. I threw out the suggestion of a compromise at 17s. 6d. I got the reply that we were not at an auction sale. Because I put it forward in one word that is no reason for dismissing it rather with a sneer. Our proposal was that, if it is used entirely for commercial purposes, it may remain on the existing basis of 15s. The point was raised that you cannot expect a human being to have a car in his garage over the week-end and never take the family out. It is easy to provide for that. If you want to have this occasional use for pleasure purposes, there is no reason why an intermediate rate should not be selected. Therefore, I selected 17s. 6d. not as the basis of an auction but as the basis of a not unreasonable valuation. I hope that in future, when a suggestion is made which is intended to be helpful, it will receive rather more careful consideration from the Minister, because if Ministers want to get the business through quickly, it is better for them to be conciliatory.

10.16 p.m.

Captain Crookshank

In reply to my hon. Friend the Member for South Croy-don (Sir H. Williams), of course I

assumed that, as his name was attached to the Amendment, it was the Amendment which he supported; but he has now put forward an entirely different suggestion. Surely it would have been better if that had been put on the Paper, so that I might have had more time to consider it, instead of being advanced for the first time in the middle of my speech, when I was answering the arguments that had already been made.

10.17 P.m.

Sir P. Harris

This Amendment represents the inevitable reaction to the kind of additional taxation that is imposed under this Clause. It is significant that the few hon. Gentlemen opposite who are taking up particular cases voted for the retention of the tax on its original scale. I recognise that at a time such as this, when there is a general trade depression, when orders are difficult to get, when business is largely contracted, and when ordinary trade is limited because of the concentration of industry on national production, this particular section of the community is going through, and is likely to continue to go through, exceptional hardships. Therefore, I hope the hon. Member who moved the Amendment will press it to a Division in order to show these hard-pressed people that they have some champions in this Committee.

Question put, "That those words be there added."

The Committee divided: Ayes, 137; Noes, 216.

Division No. 198.] AYES. [10.19 p.m.
Adams, D. (Consett) Daggar, G. Hayday, A.
Adams, D. M. (Poplar, S.) Dalton, H. Henderson, A. (Kingswinford)
Adamson, Jennie L. (Dartford) Davidson, J. J. (Maryhill) Henderson, J. (Ardwick)
Adamson, W. M. Davies, R. J. (Westhoughton) Henderson, T. (Tradeslon)
Alexander, Rt. Hon. A. V. (H'lsbr.) Dobbie, W. Hills, A. (Pontefract)
Ammon, C. G. Dunn, E. (Rother Valley) Isaacs, G. A.
Anderson, F. (Whitehaven) Ede, J. C. Jagger, J.
Banfield, J. W. Edwards, A. (Middlesbrough E.) Jenkins, A. (Pontypool)
Barnes, A. J. Edwards, Sir C. (Bedweltty) Jenkins, Sir W. (Neath)
Barr, J. Evans, D. O. (Cardigan) John, W.
Batey, J. Foot, D. M. Johnston, Rt. Hon. T.
Bellenger, F. J. Gallacher, W. Jones, Sir H. Haydn (Merioneth)
Benn, Rt. Hon. W. W. Gardner, B. W. Kennedy, Rt. Hon. T.
Benson, G. Garro Jones, G. M. Kirby, B. V.
Bevan, A. George, Major G. Lloyd (Pembroke) Kirkwood, D.
Broad, F. A. George, Megan Lloyd (Anglesey) Lathan, G.
Bromfield, W. Graham, D. M. (Hamilton) Lawson, J. J.
Brown, C. (Mansfield) Green, W. H. (Deptford) Lee, F.
Buchanan, G. Greenwood, Rt. Hon. A. Leslie, J. R.
Burke, W. A. Griffith, F. Kingsley (M'ddl'sbro, W.) Logan, D. G.
Cape, T. Griffiths, J. (Llanelly) Lunn, W.
Charleton, H. C. Groves, T. E. Macdonald, G. (Ince)
Chater, D. Hall. G. H. (Aberdare) McEntee, V. La T.
Cluse, W. S. Hall, J. H. (Whitechapel) McGhee, H. G.
Cooks, F. S. Hardie, Agnes Maclean, N.
Collindridge, F. Harris, Sir P. A. Mainwaring, W. H.
Cove, W. G. Harvey, T. E. (Eng. Univ's.) Marshall, F.
Maxton, J. Richards, R. (Wrexham) Taylor, R. J. (Morpeth)
Messer, F. Ridley, G. Tinker, J. J.
Milner, Major J. Riley, B. Tomlinson, G.
Montague, F. Ritson, J. Viant, S. P.
Morrison, Rt. Hon. H. (Hackney, S,) Robinson, W. A. (St. Helen) Walkden, A. G.
Morrison, R. C. (Tottenham, N.) Rothschild, J. A. de Watkins, F. C.
Nathan, Colonel H. L. Salter, Dr. A. (Bermondsey) Watson, W. McL.
Naylor, T. E. Sealy, Sir H. M. Welsh, J. C.
Noel-Baker, P. J. Sexton, T. M. Westwood, J.
Oliver, G. H. Silkin, L. White, H. Graham
Owen, Major G. Simpson, F. B. Wilkinson, Ellen
Paling, W. Sinclair, Rt. Hon. Sir A. (C'thn's) Wilmot, John
Parkinson, J. A. Sloan, A. Wilson, C. H. (Attereliffe)
Pearson, A. Smith, E. (Stoke) Windsor, W. (Hull, C.)
Pethick-Lawrence, Rt. Hon. F. W. Smith, Rt. Hon. H. B. Lees- (K'ly) Woods, G. S. (Finsbury)
Poole, C. C. Smith, T. (Normanton) Young, Sir R. (Newton)
Price, M. P. Sorensen, R. W.
Pritt, D. N. Stephen, C. TELLERS FOR THE AYES. —
Quibell, D. J. K. Stewart, W. J. (H'ght'n-le-Sp'ng) Mr. Whiteley and Mr. Mathers.
Rathbone, Eleanor (English Univ's.) Summerskill, Dr. Edith
NOES.
Acland-Troyte, Lt.-Col. G. J. Entwistle, Sir C. F. Macdonald, Capt. P. (Isle of Wight)
Albery, Sir Irving Erskine-Hill, A. G. McEwen, Capt. J. H. F.
Allen, Col. J. Sandeman (B'knhead) Evans, Colonel A. (Cardiff, S.) McKie, J. H.
Aske, Sir R. W. Fildes, Sir H. Makins, Brigadier-General Sir Ernest
Assheton, R. Fleming, E. L. Manningham-Buller, Sir M.
Baldwin-Webb, Col. J. Fremantle, Sir F. E. Margesson, Capt. Rt. Hon. H. D. R.
Balfour, G. (Hampstead) Furness, S. N. Markham, S. F.
Balfour, Capt. H. H.(Isle of Thanet) Fyfe, D. P. M. Medlicott, F.
Baxter, A. Beverley Gledhill, G. Mills, Major J. D. (New Forest)
Beaumont, Hon. R. E. B. (Portsm'h) Gluckstein, L. H. Moore, Lieut.-Col. Sir T. C. R.
Beechman, N. A. Glyn, Major Sir R. G. C. Moreing, A. C.
Beit, Sir A. L. Goldie, N. B. Morgan, R. H. (Worcester, Stourbridge)
Bennett, Sir E. N. Gower, Sir R. V. Morris, J. P. (Salford, N.)
Boulton, W. W. Graham, Captain A. C. (Wirral) Morrison, G. A. (Soottish Univ's.)
Bower, Comdr. R. T. Gridley, Sir A. B. Morrison, Rt. Hon. W. S. (Cirencester)
Boyce, H. Leslie Grigg, Sir E. W. M. Munro, P.
Bracken, B. Guest, Lieut.-Colonel H. (Drake) Nall, Sir J.
Brisooe, Capt. R. G. Guest, Maj. Hon. O. (C'mb'rw'll, N.W.) Neven-Spence, Major B. H. H.
Brocklebank, Sir Edmund Gunston, Capt. Sir D. W. Nicholson, G. (Farnham)
Brooke, H. (Lewisham, W.) Hacking, Rt. Hon. Sir D. H. O'Connor, Sir Terence J.
Brown, Rt. Hon. E. (Leith) Hammersley, S, S. O'Neill, Rt. Hon. Sir Hugh
Brown, Brig-Gen. H. C. (Newbury) Hannah, I. C. Perkins, W. R. D.
Browns, A. C. (Belfast, W.) Harbord, Sir A. Petherick, M.
Bull, B. B. Haslam, Henry (Horncastle) Pickthorn, K. W. M.
Burgin, Rt. Hon. E. L. Haslam, Sir J. (Bolton) Pownall, Lt.-Col. Sir Assheton
Butcher, H. W. Heilgers, Captain F. F. A. Procter, Major H. A.
Campbell, Sir E. T. Hely-Hutchinson, M. R. Radford, E. A.
Carver, Major W. H. Heneage, Lieut. Colonel A. P. Ramsbotham, Rt. Hon. H.
Cary, R. A. Hepburn, p. G. T. Buchan- Rankin, Sir R.
Castlereagh, Viscount Hepworth, J. Rathbone, J. R. (Bodmin)
Cazalet, Capt. V. A. (Chippenham) Herbert, Lt.-Col. J. A. (Monmouth) Rayner, Major R. H.
Channon, H. Higgs, W. F. Reed, A. C. (Exeter)
Chapman, A. (Rutherglen) Hogg, Hon. Q. McG. Reed, Sir H. S. (Aylesbury)
Clarke, Colonel R. S. (E. Grinstead) Holdsworth, H. Reid, J. S. C. (Hillhead)
Cobb, Captain E. C. (Preston) Hopkinson, A. Reid, W. Allan (Derby)
Colfox, Major Sir W. P. Horsbrugh, Florence Remer, J. R.
Colman, N. C. D. Howitt, Dr. A. B. Rickards, G. W. (Skipton)
Conant, Captain R. J. E. Hudson, Capt. A. U. M. (Hack., N.) Ropner, Colonel L.
Cook, Sir T. R. A. M. (Norfolk, N.) Hunloke, H. P. Ross Taylor, W. (Woodbridge)
Cooke, J. D. (Hammersmith, S.) Hunter, T, Rowlands, G.
Courthope, Col. Rt. Hon. Sir G. L. Jarvis, Sir J. J. Royds, Admiral Sir P. M. R.
Cox, H. B. Trevor Jennings, R. Ruggles-Brise, Colonel Sir E. A.
Craven-Ellis, W. Joel, D. J. B. Russell, Sir Alexander
Crooke, Sir J. Smedley Jones, Sir G. W. H- (S'k N'w'gl'n) Salmon, Sir I.
Crookshank, Capt. Rt. Hon. H. F. C. Jones, L. (Swansea W.) Salt, E. W.
Cross, R. H. Keeling, E. H. Samuel, M. R. A.
Crossley, A. C. Karr, Colonel C. l. (Montrose) Sandeman, Sir N. S.
Crowder, J. F. E. Kimball, L. Selley, H. R.
Cruddas, Col. B. Knox, Major-General Sir A. W. F. Shaw, Captain W. T. (Forfar)
De Chair, S. S. Lamb, Sir J. Q. Shepperson, Sir E. W.
Denman, Hon. R. D. Leech, Sir J. W. Simmonds, O. E.
Donner, P. W. Lees-Jones, J. Simon, Rt. Hon. Sir J. A.
Drewe, C. Leighton, Major B. E. P. Sinclair, Col. T. (Queen's U. B'lf'st)
Dugdale, Captain T. L. Liddall, W. S. Smith, Bracewell (Dulwich)
Dunglass, Lord Lipson, D. L. Smith, Sir R. W. (Aberdeen)
Eckersley, P. T. Little, Sir E. Graham- Snadden, W. McN.
Edge, Sir W. Little, J. Somerset, T.
Edmondson, Major Sir J. Llewellin, Colonel J. J. Somervell, Rt. Hon. Sir Donald
Elliot, Rt. Hon. W. E. Loftus, P. C. Somerville, Sir A. A. (Windsor)
Emery, J. F. Mabane, W. (Huddersfield) Southby, Commander Sir A. R. J.
Emmott, C. E. G. C. MacAndrew, Colonel Sir C. G. Spens, W. P.
Emrys, Evans, P. V. McCorquodale, M. S. Stanley, Rt. Hon. Oliver (W'm'l'd)
Stewart, J. Henderson (Fife, E.) Tufnell, Lieut.-Commander R. L. Willoughby de Eresby, Lord
Storey, S. Turton, R. H. Windsor Clive, Lieut.-Colonel G.
Strauss, H. C. (Norwich) Walker-Smith, Sir J. Winterton, Rt. Hon. Earl
Strickland, Captain W. F. Wallace, Capt. Rt. Hon. Euan Wise, A. R.
Stuart, Rt. Hon. J. (Moray and Nairn) Ward, Lieut.-Col. Sir A. L. (Hull) Womersley, Sir W. J.
Sueter, Rear-Admiral Sir M. F. Ward, Irene M. B. (Wallsend) Wright, Wing-Commander J. A. C.
Sutcliffe, H. Warrender, Sir V. York, C.
Tasker, Sir R. I. Watt, Lt.-Col. G. S. Harvie Young, A. S. L. (Partick)
Tate, Mavis C. Webbe, Sir W. Harold
Thornton-Kemsley, C. N. Wells, Sir Sydney TELLERS FOR THE NOES —
Touche, G. C. Wickham, Lt.-Col. E. T. R. Captain Waterhouse and Mr. Grimston.

Motion made, and Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 211; Noes, 132.

Division No. 199.] AYES. [10.27 p.m.
Acland-Troyte, Lt.-Col. O. J. Gledhill, G. Morgan, R. H. (Worcester, Stourbridge)
Albery, Sir Irving Gluckstein, L. H. Morrison, G. A. (Scottish Univ's.)
Allen, Col. J. Sandeman (B'knhead) Glyn, Major Sir R. G. C. Morrison, Rt. Hon. W. S. (Cirencester)
Aske, Sir R. W. Goldie, N. B. Nail, Sir J.
Assheton, R. Gower, Sir R. V. Neven-Spence, Major B. H. H.
Baldwin-Webb, Col. J. Graham, Captain A. C. (Wirral) Nicholson, G. (Farnham)
Balfour, G. (Hampstead) Gretton, Col. Rt. Hon. J. O'Connor, Sir Terence J.
Balfour, Capt. H. H. (Isle of Thanet) Gridley, Sir A. B. O'Neill, Rt. Hon. Sir Hugh
Baxter, A. Beverley Grigg, Sir E. W. M. Perkins, W. R. D.
Beaumont, Hon. R. E. B. (Portsm'h) Grimston, R. V. Petherick, M.
Beechman, N. A. Guest, Lieut.-Colonel H. (Drake) Pickthorn, K. W. M.
Beit, Sir A. L. Guest, Mai. Hon. O. (C'mb'rw'll, N.W.) Pilkington, R.
Bennett, Sir E. N. Gunston, Capt. Sir D. W. Pownall, Lt.-Col. Sir Assheton
Bossom, A. C. Hacking, Rt. Hon. Sir D. H. Procter, Major H. A.
Boulton, W. W. Hammersley, S. S. Radford, E. A.
Bower, Comdr. R. T. Hannah, I. C. Raikes, H. V. A. M.
Boyce, H. Leslie Harbord, Sir A. Ramsbotham, Rt. Hon. H.
Bracken, B. Haslam, Henry (Horncastle) Rankin, Sir R.
Braithwaite, J. Gurney (Holderness) Haslam, Sir J. (Bolton) Rathbone, J. R. (Bodmin)
Briscoe, Capt. R. G. Heilgers, Captain F. F. A. Rayner, Major R. H.
Brocklebank, Sir Edmund Hely-Hutchinson, M. R. Reed, A. C. (Exeter)
Brooke, H. (Lewisham, W.) Heneage, Lieut.-Colonel A. P. Reed, Sir H. S. (Aylesbury)
Brown, Brig.-Gen. H. C. (Newbury) Hepburn, P. G. T. Buchan- Reid, J. S. C. (Hillhead)
Browne, A. C. (Belfast, W.) Hepworth, J. Reid, W. Allan (Derby)
Bull, B. B. Herbert, Lt.-Col. J. A. (Monmouth) Reiner, J. R.
Burgin, Rt. Hon. E. L. Higgs, W. F. Rickards, G. W. (Skipton)
Butcher, H. W. Hogg, Hon. Q. McG. Ropner, Colonel L.
Campbell, Sir E. T. Holdsworth, H. Ross Taylor, W. (Woodbridge)
Carver, Major W. H. Hopkinson, A. Rowlands, G.
Cary, R. A. Horsbrugh, Florence Royds, Admiral Sir P. M. R.
Castlereagh, Viscount Howitt, Dr. A. B. Ruggles-Brise, Colonel Sir E. A.
Cazalet, Capt. V. A. (Chippenham) Hudson, Capt. A. U. M. (Hack., N.) Russell, Sir Alexander
Channon, H. Hunloke, H. P. Salmon, Sir I.
Chapman, A. (Rutherglen) Hunter, T. Salt, E. W.
Clarke, Colonel R. S. (E. Grinstead) Hutchinson, G. C. Samuel, M. R. A.
Cobb, Captain E. C. (Preston) Jarvis, Sir J. J. Sandeman, Sir N. S.
Colfox, Major Sir W. P. Jennings, R. Selley, H. R.
Conant, Captain R. J. E. Joel, D. J. B. Shepperson, Sir E. W.
Cook, Sir T. R. A. M. (Norfolk, N.) Jones, Sir G. W. H. (S'k N'w'gt'n) Simmonds, O E.
Cooke, J. D. (Hammersmith, S.) Jones, L. (Swansea W.) Simon, Rt. Hon. Sir J. A.
Courthope, Col. Rt. Hon. Sir G. L. Kerr, Colonel C. I. (Montrose) Sinclair, Col. T. (Queen's U. B'lf'st)
Cox, H. B. Trevor Kimball, L. Smith, Bracewell (Dulwich)
Crooke, Sir J. Smedley Knox, Major-General Sir A. W. F. Smith, Sir R. W. (Aberdeen)
Crookshank, Capt. Rt. Hon. H. F. C. Lamb, Sir J. Q. Snadden, W. McN.
Cross, R. H. Leech, Sir J. W. Somerset, T.
Crossley, A. C. Lees-Jones, J. Somervell, Rt. Hon. Sir Donald
Crowder, J. F. E. Leighton, Major B. E. P. Southby, Commander Sir A. R. J.
Cruddas, Col. B. Liddall, W. S. Spens. W. P.
De Chair, S. S. Little, Sir E. Graham. Stanley, Rt. Hon. Oliver (W'm'l'd)
Denman, Hon. R. D. Little, J. Storey, S.
Donner, P. W. Llewellin, Colonel J. J. Strauss, H. G. (Norwich)
Drewe, C. Loftus, P. C. Stuart, Rt. Hon. J. (Moray and Nairn)
Dugdale, Captain T. L. Mabane, W. (Huddersfield) Sueter, Roar-Admiral Sir M. F.
Edge, Sir W. MacAndrew, Colonel Sir C. G. Sutcliffe, H.
Edmondson, Major Sir J. McCorquodale, M. S. Tasker, Sir R. I.
Elliot, Rt. Hon. W. E. Macdonald, Capt. P. (Isle of Wight) Tate, Mavis C.
Emery, J. F. McEwen, Capt. J. H. F. Thornton-Kemsley, C. N.
Emmott, C. E. G. C. McKie, J. H. Touche, G. C.
Emrys-Evans, P. V. Makins, Brigadier-General Sir Ernest Tufnell, Lieut.-Commander R. L.
Entwistle, Sir C. F. Manningham-Buller, Sir M. Turton, R. H.
Erskine-Hill, A. G. Margesson, Capt. Rt. Hon. H. D. R. Walker-Smith, Sir J.
Evans, Colonel A. (Cardiff, S.) Markham, S. F. Wallace, Capt. Rt. Hon. Euan
Fleming, E. L. Medlicott, F. Ward, Lieut.-Col. Sir A. L. (Hull)
Fremantle, Sir F. E. Mills, Major J. D. (New Forest) Ward, Irene M. B. (Wallsend)
Furness, S. N. Moore, Lieut.-Colonel Sir T. C. R. Warrender, Sir V.
Fyfe. D. P. M. Moreing, A. C. Watt, Lt.-Col. G. S. Harvie
Webbe, Sir W. Harold Winterton, Rt. Hon. Earl Young, A. S. L. (Partick)
Wells, Sir Sydney Wise, A. R.
Wickham, Lt.-Col. E. T. R. Womersley, Sir W. J. TELLERS FOR THE AYES.—
Williams, Sir H. G. (Croydon, S.) Wragg, H. Captain Waterhouse and Mr. Munro.
Willoughby de Eresby, Lord Wright, Wing-Commander J. A. C.
Windsor-Clive, Lieut.-Colonel G. York, C.
NOES.
Adams, D. (Consett) Griffiths, J. (Llanelly) Paling, W.
Adams, D. M. (Poplar, S.) Groves, T. E. Parkinson, J. A.
Adamson, Jennie L. (Dartford) Halt, G. H. (Aberdare) Pearson, A.
Adamson, W. M. Hall, J. H. (Whitechapel) Pethick-Lawrence, Rt. Hon. F. W.
Alexander, Rt. Hon. A. V. (H'lsbr.) Hardie, Agnes Poole, C. C.
Anderson, F. (Whitehaven) Harris, Sir P. A. Price, M. P.
Banfield, J. W. Harvey, T. E. (Eng. Univ's.) Pritt, D. N.
Barnes, A. J. Hayday, A. Quibell, D. J. K
Barr, J. Henderson, A. (Kingwinford) Richards, R (Wrexham)
Batey, J. Henderson, J. (Ardwick) Ridley, G.
Bellenger, F. J. Henderson, T. (Tradeston) Riley, B.
Benn, Rt. Hon. W. W. Hills, A. (Pontefract) Ritson, J.
Benson G. Isaacs, G. A. Robinson, W. A. (St. Helens)
Bevan, A. Jagger, J. Rothschild, J. A. de
Broad, F. A. Jenkins, A. (Pontypool) Seely, Sir H. M.
Bromfield, W. Jenkins, Sir W. (Neath) Sexton, T. M.
Brown, C. (Mansfield) John, W. Simpson, F. B.
Buchanan, G. Johnston, Rt. Hon. T, Sinclair, Rt. Hon. Sir A. (C'thn's)
Burke, W. A. Jones, Sir H. Haydn (Merioneth) Sloan, A.
Cape, T. Kennedy, Rt. Hon. T. Smith, E. (Stoke)
Charleton, H. C. Kirby, B. V. Smith, Rt. Hon. H. B. Lees- (K'ly)
Chater, D. Kirkwood, D. Smith, T. (Normanton)
Cluse, W. S. Lathan, G. Sorensen, R. W.
Cocks, F. S. Lawson, J. J. Stephen, C.
Collindridge, F. Lee, F. Stewart, W. J. (H'ght'n-le-Sp'ng)
Cove, W. G. Leslie, J. R. Summerskill, Dr. Edith
Daggar, G. Logan, D. G. Taylor, R. J. (Morpeth)
Dalton, H. Lunn, W. Tinker, J. J.
Davidson, J. J. (Maryhill) Macdonald, G. (Ince) Tomlinson, G.
Davies, R. J. (Westhoughton) McEntee, V. La T. Viant, S. P.
Dobbie, W. McGhee, H. G. Walkden, A. G.
Dunn, E. (Rother Valley) Maclean, N, Watkins, F. C.
Ede, J. C. Mainwaring, W. H. Watson, W. McL.
Edwards, A. (Middlesbrough E.) Marshall, F. Welsh, J. C.
Edwards, Sir C. (Bedwellty) Maxton, J. Westwood, J.
Evans, D. O. (Cardigan) Messer, F. White, H. Graham
Foot, D. M. Milner, Major J. Wilkinson, Ellen
Gallacher, W. Montague, F. Wilmot, John
Gardner, B. W. Morrison, Rt. Hon. H. (Hackney, S.) Wilton, C. H. (Attereliffe)
George, Major G. Lloyd (Pembroke Morrison, R. C. (Tottenham, N.) Windsor, W. (Hull, C.)
George, Megan Lloyd (Anglesey) Nathan, Colonel H. L. Woods, G. S. (Finsbury)
Graham, D. M. (Hamilton) Naylor, T. E. Young, Sir R. (Newton)
Green, W. H. (Deptford) Noel-Baker, P. J.
Greenwood, Rt. Hon. A. Oliver, G. H. TELLERS FOR THE NOES.
Griffith, F. Kingsley (M'ddl'sbro, W Owen, Major G. Mr. Whiteley and Mr. Mathers.

Clauses 11 and 12 ordered to stand part of the Bill.