HC Deb 28 June 1944 vol 401 cc735-8

Section twenty-one of the Finance Act, 1943, shall have effect and be deemed always to have had effect as if the word "coal" were inserted after the second word "to" in the fifth line thereof.—[Mr. Keeling.]

Brought up, and read the First time.

Mr. Keeling (Twickenham)

I beg to move, "That the Clause be read a Second time."

This new Clause refers to the Excess Profit Tax. To explain it, it is necessary to go back, not only to the 1943 Act, but to the Finance Act of 1941. Section 31 of that Act gives certain relief from Excess Profit Tax to companies or firms producing metals or oil where the Treasury certify that the prosecution of the war requires an abnormal production of those things, and therefore an accelerated wasting of assets, and a shortening of the life of the concern. At that time the Chancellor resisted any extension of the relief to other minerals or to clay, stone, chalk or gravel. He said that he had endeavoured to meet only exceptional cases, in which the Government were asking for exceptional efforts. Surely that applies now to coal. If there is a mineral in the production of which exceptional efforts are required, it is coal. In 1943, the Chancellor of the Exchequer gave way as regards other substances. He agreed to the extension of this benefit of the 1941 Act to certain minerals, namely, asbestos and mica, and to sand, chalk, gravel and limestone. If the concession can be given to these substances, why cannot it be given to coal?

Although the output of coal generally, as we all know, is far below the pre-war level, there are certain collieries, especially in Leicestershire and South Derbyshire, which are producing very largely in excess of their pre-war output. Incidentally, I may mention that they are the only districts which have consistently earned the output bonus. In Leicestershire, in 1943, the production was 173 per cent. of the 1938 production, and in South Derbyshire it was 151 per cent. In some cases the life of these collieries is short, and the burden of full Excess Profits Tax, when the assets are being thus rapidly wasted, is serious, although the concession for which I am asking would not be a very serious matter from the Exchequer point of view. It would be only fair to extend to coal the concession which is given to metals, oil, asbestos, mica, chalk, sand, gravel and stone.

When the question was raised on the Finance Bill last year, the Chancellor of the Exchequer asked whether it had been discussed with the mineworkers. Thereupon discussions took place. At first the Mineworkers Federation agreed to the concession, on the condition that the relief should be used for the improvement of the mines, not for the payment of divi- dends. To that condition the colliery owners agreed; but subsequently the Mineworkers Federation withdrew their consent, and the Chancellor of the Exchequer intimated that if this was going to be a matter of political controversy he could not agree to it. I ask my right hon. Friend to deal with it on merits. I have already shown that the merits are considerable. Moreover, the mineworkers will benefit if this concession is given. It is not in their interests, but far otherwise, that the owners should be impoverished through paying away their resources in Excess Profits Tax, to the detriment of their capacity to improve the collieries. In view of the national importance of coal, I submit that the concession already given to other milling and quarrying industries ought to be extended to coalmining.

Mr. Hammersley

I beg to second the Motion.

I think that my hon. Friend has put the case very clearly. He has intimated to the House that certain wasting assets—in the first case, oil and metals, and, later on, sand, gravel, limestone, igneous rocks, chalk, asbestos, and mica—if they are used at an accelerated rate for the purposes of the war, receive special treatment. He has suggested that there is no reason why coal, which comes into that general category, should be singled out. He has intimated that the reason why it has received special treatment, is that there is no agreement between the Mineworkers Federation and the coalowners. If that is the case, it seems to me that we ought to decide this matter not on points which are affected by agreement between these trade associations, but purely on their merits.

The Chancellor of the Exchequer (Sir John Anderson)

I confess that I had been hoping to hear a little more of the cons, as well as the pros, in connection with this Clause. I am sure the House would wish me to offer the best judgment that I can on this matter. I have looked into it. The effect of the Clause, if it were accepted by the House, would be limited to the case in which there were increased output and excess profits, and where the mine could be shown to have a short life. In another connection, coal-mining has already been admitted to certain benefits, conceded in the case of wasting assets. I refer to the allowance on capital, which can be increased where the capital investment has a short life. The benefit of that increased allowance, which, I think, is of the order of 1½ per cent., has been extended to coal. When the provision which it is now sought to extend was strictly limited to certain metals and to oil, the case for excluding a whole range of other wasting assets was, I think, definitely stronger than it is now, when the concession, as the result of an Amendment passed last year, has been extended to almost everything that is won out of the earth. I will not repeat the catalogue, that we have already had twice, of the various minerals and substances that are extracted from the earth, and are treated, for the purpose of Excess Profits Tax, as wasting assets. If the matter is to be viewed strictly on merit, I cannot myself see, apart from the history of this particular Amendment and the suggestion that there might be controversy, any substantial ground for treating coal as the one exception to a general practice which the House has approved. Therefore, unless it were clear that this was going to arouse further controversy in an area from which we all are anxious to banish controversy, I would say, on behalf of the Government, that I should be prepared to accept this Clause.

Mr. E. J. Williams (Ogmore)

I would like to put a question—perhaps I ought to put it to the mover of the new Clause rather than to the Chancellor. The question is, whether the coalowners will observe the offer they made last year, and see that any concession they may get in this connection will be directed to the benefit of the industry?

Sir J. Anderson

I am afraid that I cannot answer that question.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.