HC Deb 27 November 1945 vol 416 cc1123-59

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

Mr. Alfred Edwards (Middlesbrough, East)

When we were discussing the matter on the Second Reading, the Chancellor promised that he would keep an open mind. He and previous Chancellors have said that. I would remind him of that fact however and ask him whether he would not consider the Amendment which I have put down to leave out this Clause. During the previous Debate I also tried to convince the right hon. Gentleman that we could get almost unanimous support for a fuel tax instead of this cubic capacity tax. These are the right hon. Gentleman's words on that occasion: I will not commit myself on the matter tonight. I would only say that it will be a miracle if my hon. Friend has got all the manufacturers to say the same thing. I never could get them to do that. All I can say is that if my hon. Friend puts down an Amendment, I will give it careful onsideration."—[OFFICIAL REPORT 19th NOVEMBER, 1945, Vol. 416 c. 154.] The only Amendment I could put down was one to leave out the Clause. That has not been called, so I have to speak on this Motion. I want to put it to the Chancellor now, that he is doing much more in this particular Clause, if it goes through, than he meant. He is hamstringing the motor industry for practically all time. He thinks that we shall not perform this miracle. I believe he is wrong. Those of us who have had opportunity of discussing this matter with the trade and all the interested parties, have, I think, convinced them that they, by their neglect, are doing a very serious thing. I am told by some of the leading manufacturers that the only reason why America ever got ahead of us in the motor industry was that we were tied up with this foolish tax legislation, whereas they were not. There never has been anything to be said in its favour, and I cannot understand how anybody ever brought themselves to pass it. It must be wrong to compel engineers to design engines on fiscal considerations that are not engineering principles. That can never be right. Yet this great industry of ours has been tied up all these years. Now there is to be a change. I sympathise with the Chancellor, for if the trade had treated me as it has treated him by leaving it till the eleventh hour, I should have been very annoyed. But he must remember that there is a lot to be said for those people who do come at the eleventh hour. This Committee must not turn down a thing that is good in itself, and which is going to help a great industry, just because the trade itself has not been of one mind up to the eleventh hour.

5.30 p.m.

The vast majority will accept the fuel tax in place of this cubic capacity tax if the Chancellor of the Exchequer says that he will accept it. I know that he has had correspondence on this and representations. It has been said that the cubic capacity tax is a great advance on the old R.A.C. rating. Of course it is—a very great advance. But no one has ever said that it is a better tax than the fuel tax, and people who have said that they like this cubic capacity tax because it will enable them to get on with a very powerful export drive, have said it, because they were under the impression that the Chancellor of the Exchequer had said, for all time, that he would not accept a fuel tax. That is the only reason. I can say that there is nobody in this country, no interest—and we have interviewed them all—that is against a fuel tax. Most of them are against the cubic capacity tax if the Chancellor of the Exchequer will say that he is still open to consider the fuel tax.

The proposal made by the last Chancellor of the Exchequer was that if the trade could show him that he could get the same revenue, by some other means, he did not care how they got it. Why should he? He is not an engineer. "It is our business," he said, "to get a certain amount of revenue; consider it among yourselves; and I will accept it, if it produces the same amount of revenue." The time has come when nobody in this industry is against the fuel tax. I do not think that there is anybody who has spoken against it. I want to read one or two things that have been said in favour of the fuel tax. The Society of Motor Manufacturers and Traders informed the Chancellor of the Exchequer in a letter dated 18th September that the manufacturers are not greatly concerned whether the cubic capacity basis or the fuel basis is adopted. That is true. I have a letter from the same organisation saying that they will support a fuel tax. In conversations which took place last week with the manufacturers, we were informed that if there was unanimity among the users—and I speak for the R.A.C. and the Combined Board at this time and it is their statement that I am putting forward—of all types of motor vehicle in favour of the tax being on petrol, the manufacturers would be prepared to support it.

The traders—the Motor Agents Association—in a letter to the Chancellor of the Exchequer dated 31st September said: The Association strongly advocate the adoption of a fuel tax. Users of private cars and motor cycles, the Standing joint Committee, the Royal Automobile Club, the Automobile Association and the Royal Scottish Automobile Club, speaking jointly, have advocated the substitution of an annual registration of £5 on all vehicles, with the addition of 3d. on the present duty of 9d. per gallon on petrol. I am quite sure that the Chancellor of the Exchequer had not realised there was an annual registration of £5 proposed and he thought that he was going to fall short of the amount required to be provided. Anything that I say to him today fails, if we do not provide the same revenue. A £5 registration tax—£1 for motor cycles—and a 3d. increase on the petrol tax will give him almost the amount of money he requires. The goods vehicle representatives were a body of people who spoke against it at one time. The National Road Transport Federation, representing all classes of goods vehicles, have now recommended to constituent bodies the adoption of the fuel tax. No final decision has been taken by the Federation and not all of the constituent bodies have yet made their decisions, and will not do so until the 4th December next. The Public Transport Association has referred to its members the question of a fuel tax. A decision will be taken by this body on13th December next. The Scottish Motor Transport Company have indicated that they are prepared to accept these proposals. I have talked to them upstairs. The Municipal Transport Association has agreed to send representatives to the Standing Joint Committee and the R.A.C. and R.A.S.C. are all meeting on the 6th December next to discuss this matter. The three bodies representing the goods and passenger carrying interests have indicated to me that they would welcome the postponement of a decision on this important matter, so that these discussions may be carried through, and any doubtful points cleared up.

I think I have shown, therefore, that there are various strong bodies of opinion among the users and manufacturers who have thought again on this matter. Those who were opposed to it on one occasion have now thought over it again, and wish to appeal to the Chancellor of the Exchequer to adopt this fuel tax in the place of the tax he has in this Bill. I am only asking the Chancellor of the Exchequer not to make up his mind against it, now that these people have same measure of unanimity. It will be a dangerous thing if he does. It is determining the character of our motor industry and putting us firmly behind our leading competitors. All I am asking him to do is not to make this his last word. This matter is of great importance to this industry. If the right hon. Gentleman deleted this Clause he would have before his next Budget the benefit of the old revenue and he would lose nothing, and if he comes forward on the appointed day with this new form of legislation he will get all the revenue he requires. I appeal to the Chancellor of the Exchequer to give us some encouragement; to say that he will agree to delete this Clause, and give us a month or two to think it over with him, and see whether we cannot give him the measure of unanimity for which he has asked. Please do not think that miracles cannot happen. I believe that, on this occasion, a miracle will happen.

Sir G. Fox

I rise to support the Chancellor of the Exchequer and to express the hope that he will retain this Clause. My Division has the Nuffield organisation composed of Morris, Wolseley, M.G. and Riley. Before the war 25 per cent. of all cars built in this country were built by this organisation. They built 100,000 out of 400,000 cars. They, with others, have been pressing for the review of the R.A.C. formula. They wanted it changed for greater technical freedom, and they advocated that the taxation should be in small steps of 100 c.c. Other manufacturers have advocated that it should be in wider steps—200 C.C. or 400 C.C. It is very interesting to note that the manufacturers who have advocated the wider steps are such as Vauxhall, which was bought up by General Motors of America, and Ford's, which came to build a factory at Dagenham in Essex. They found that the graduated h.p. rating forced them to come to this country to build the cars in which they specialised. The small steps of h.p. taxation before the war enabled the motor car industry in this country to thrive.

Now, with greater technical development, the manufacturers who benefited under the h.p. tax require a change and they want it to be done in gradual steps of taxation, namely, 100 c.c. If it was done otherwise, it would be difficult to determine, without hardship on some manufacturers, whose products and machine tools set-up fall nearer the bottom of a wide taxation gap. Equally, once the arbitrary wide steps were adopted, it would lead to constant change, and there would be constant approaches to the Treasury for these to be changed. Forward notice for such change would have to be given, as engine design and fuel improvements warrant a reduction in size. The Chancellor of the Exchequer would find it very embarrassing. The question of wide steps is also bound up with the date of introduction of the cubic capacity tax. If the wide steps—200 to 400 c.c. — were adopted, it means that the manufacturers would want the date of introduction for three or four years ahead because several of their existing models would want completely redesigning. If the steps could be of a 100c.c. there would be a period for making the necessary adjustment—

Major Cecil Poole (Lichfield)

Will the hon. Member inform the House whose information this is?

Sir G. Fox

I am speaking on behalf of the Nuffield organisation and other organisations.

Mr. A. Edwards

Is the hon. Gentleman telling the House on behalf of the Nuffield organisation that he is against the fuel tax?

Sir G. Fox

No, I will come to the question of the fuel tax. I have been in this House for a number of years, and I have heard many Members advocating how fair the fuel tax is and why it should be substituted for the h.p. tax; and the Chancellor of the Exchequer has listened to these arguments put up by the A.A. and the R.A.C., and he thought them so excellent that he also increased the petrol tax without any corresponding reduction in the h.p. tax. I can assure the hon. Member for East Middlesbrough (Mr. A. Edwards) that the Chancellor of the Exchequer never takes a plunge in the dark. He generally makes sure that he is well balanced and on the right side. If, as suggested, you should have a registration tax of £5 or £6 up to 1,300 c.c. and then a petrol tax—and the Chancellor of the Exchequer will be quite sure that he is not going to lose—it may well be that the artisan class who have the eight h.p. or ten h.p. cars today will find that they will have to pay more tax than they would under the £I per 100 c.c. arrangement.

It is easy and popular to say "Put a tax on petrol." I would like that myself, but it is a dangerous thing to put up too good an argument in favour of a tax. It often happens that it may be increased by the Chancellor and then there is no answer to it. There are other suggestions. It is said that having a graduation of 100 c.c. will mean great multiplicity in designs. I am sure that is far from the case. The great difficulty in production is labour and the general conditions in factories, and the tendency of all manufacturers is to reduce the different number of models to the minimum. I wonder why those who are in favour of the wider steps advocate the 14 h.p. car, which is what 1,500 c.c. roughly means. If we think that by producing a 14 h.p. car in this country we are going to expand our exports greatly, all I can say is that in Melbourne the pre-war price of a 14 h.p. Morris was equal to that of an American eight-cylinder 32 h.p. Buick. The Morris 140-h.p. had so reduced overhead costs that they were not included, and there was virtual elimination of profit margins. A great number of the cars exported from this country are the small 8-h.p. cars. In the Morris range, in 1937–38, the 8-h.p. cars represented 71 per cent. of all Morris exports. I hope that I have satisfied the Chancellor that there is a great desire in a large section of the motor industry to know where they are, that they are satisfied with this agreement per 100 c.c., and that they would like the tax per 100 c.c. to be reduced.

5.45 p.m.

Mr. John Lewis (Bolton)

I would stress the point that the hon. and gallant Member for Henley (Sir G. Fox) did not speak against the fuel tax. I venture on this speech with a certain amount of trepidation, because I know that the Chancellor has had more trouble over this question of motor taxation than over any other Clause in the Bill. He has had representations made to him even at dinner-time, and perhaps at breakfast-time, and I hope he will forgive us, if we drew his attention once again to this most important matter, in view of the fact that upon his decision now depends what form our motor car industry is to take for Many years to come. I agree that it is not his sole responsibility; indeed, this matter should have been settled by his predecessors. I have the greatest sympathy for him in this matter, but I hope he will give the most careful, unbiased consideration to the arguments put forward on this matter from both sides of the Committee, because I do not believe that this is a party matter. Hon. Gentlemen opposite often claim that matters are not party matters which are party matters, but this is one of the cases in which we must agree that the subject is purely technical. In these circumstances, I hope that my right hon. Friend will thrust out of his consciousness any ideas that he might have had before he came here this afternoon, and consider this matter in a new light.

We all agree about the export trade. We know full well that not only in respect of motor cars, but in respect of all goods we produce in this country, it is vitally necessary, in the interests of our national economy, that we should export to the utmost. There is a lot of nonsense talked about a sellers' market. We have no sellers' market unless we are prepared to produce those types of goods which will be readily acceptable in the buyers' market. So far as the motor car industry is concerned, we are not producing the type of vehicle which will find a ready market abroad in competition with those vehicles supplied by American concerns. The only way in which we can find that sellers' market is to produce high-power cars to challenge American superiority in this field, cars which are suitable for conditions of travel which exist all over the world, and not for those particular conditions which exist in this country.

So far as the revenue is concerned, I think that my hon. Friend the Member for East Middlesbrough (Mr. A. Edwards) has made it quite clear that it is merely a question of reducing the amount taken in respect of the licensing or taxation part of the revenue, and increasing the amount of the fuel tax. We find that in 1938 the Chancellor received £36 million from the annual licence duties on vehicles of all kinds. In respect of fuel Custom duties he received £54 million. We, are asking him to adjust those figures so that he obtains the same revenue of £90 million, but in such a way as to give an opportunity to motor manufacturers to standardise, which is of importance if we are to settle what kind of vehicles are to be made for the export market. There has been a lot of divergence of opinion among motor car manufacturers and other interested bodies as to the nature of this taxation. The Chancellor claims to have been guided to a large extent by the predominance of a particular point of view on this matter, but I would remind him that he has not always allowed himself to be guided by information he receives from outside interests. I cannot remember that before he raised the Surtax he called in a body of Surtax payers and consulted them on what he should do. In this matter I believe it is the duty of the Government, if people cannot make up their minds, to make up their minds for them, an idea which probably will be unpopular on the other side of the Committee.

The Chancellor has said that behind all his plans for taxation, was full employment for all industries, including the motor car industry, and he stated quite specifically that he would consider a tax change in the event of any particular tax arrangement impeding full employment. On 19th November when this matter was debated in the House during the Debate on the Finance Bill, the Chancellor said he wanted the export of motor cars to be raised to above 50 per cent. of production. In those circumstances he must obviously have had in his mind that if the export output is to be raised to 50 per cent. the remaining per cent. of the vehicles will be absorbed in the home market. We must welcome his promise that, in the event of full employment being affected by the inability of the home market to absorb that 50 per cent., he will consider the reduction of the Purchase Tax to enable that quantity to be absorbed. We know that he cannot reduce the "Purchase Tax now; he has his bills to meet.

The question we have to decide is how to produce a car suitable for the export trade, at the same time supplying the domestic market to ensure that we have full employment in the motor car industry. I believe the Chancellor will agree that full employment is vital from the point of view that we cannot produce economically for export purposes unless we have full employment and, equally because of the multiplied effect of that on the national economy. The only way we can have full employment is to ensure standardisation of type and to build vehicles suitable for the world market. Only in that way can we eliminate the multiplicity of car sizes which make our production costs unduly high and uncompetitive. The change from a h.p. to c.c. tax really leaves the main part of the problem untouched. If we are to get these foreign markets we must build a larger car, because a larger car is a better car. I could not agree with the suggestions by the hon. and gallant Member for Hornsey (Captain Gammans) on the previous occasion when this matter was debated in the House that we have subordinated sound engineering to an arbitrary factor like taxation. We are producing a sound engineering job in the motor car industry today, but by virtue of the fact that there are these restrictive influences on the size and capacity of these vehicles it might well be compared to producing a three-valve wireless set, which is a splendid set, but which has not the efficiency in all respects of an eight-valve super-het, because the questions of space and volume do not have to be taken into account in designing the larger wireless set. It is precisely the same in the matter of vehicle construction.

A few weeks ago, when I was in New York, I saw in Broadway a small British made car—I will not mention any names —shining like an advertisement for a tin of boot polish. Around it were standing a large crowd of Americans. I crossed to listen to their comments. I will not repeat them, because they were not too complimentary. They did not believe it was possible for anybody to travel "in that little thing," as they put it. Indeed, if we are to consider this question of export service we must get down to some standard, and if we are to do that we must remove the restrictive influences of the present form of taxation.

Take certain industries which are interrelated to the motor car industry. I refer in particular to the tyre industry in this country. We cannot have motor cars without tyres, and it is conversely true that tyres are no use without motor cars. Before the war we were exporting approximately 33 per cent. of our output of tyres. In America today one size of tyre is suitable for approximately 75 per cent. of the vehicles produced, whereas in this country is requires 100 different sizes to satisfy the need of all sizes and makes of cars. Assume for the moment that we sell our cars abroad. Under our present system involving multiplicity of design when a now tyre is wanted it is very likely that the size required will riot be available, whereas in regard to American vehicles purchasers know that every tyre store has that size in stock, because they arc more or less standard. It is of vital importance to take this tyre industry into account, because if we standardise on tyres we can produce them much more economically than at present. It costs much less to produce a large quantity of one size than to change the moulds to produce smaller quantities of various sizes.

More or less every point mentioned in the Debate has been with the object of inducing the Chancellor to change his mind. I have very little hope that anything I can say will make him do that now. To be fair to him I will say that even though he were to remove the restrictive influence of the present system of taxation that would not be enough, for the simple reason that there is no guarantee that when he has done that the British motor car manufacturer will produce that type of vehicle which we claim is necessary for the export market.

I would like to see a working party set up for the motor car industry in the same way that the President of the Board of Trade found it necessary to set up working parties for other industries, including the cotton industry. He told the cotton industry that we require continuous runs to reduce the cost of production, and this is vitally true in the case of the motor industry as well. Whereas the Chancellor might have had difficulty in getting the motor car manufacturers to make up their mind as to what they do want, if there was a working party the motor industry would soon make up their mind, as to what they did not want. It would result in efficiency, and we should get cars suitable both for the export market and domestic purposes. My right hon. Friend has said that he listens to these matters with a half-open ear. He has said on other occasions that his mind is wide open. The Financial Secretary has said that his mind is only half open. I appreciate that this is a very difficult prob- lem, and I would stress again that if the motor car manufacturers cannot make up their mind then let the Chancellor make up their minds for them. What we are concerned with is our national economy and the future of the motor car industry. I submit to him that we must not allow the viewpoint of individual manufacturers to interfere with sound and sane judgment on this issue, because transport motor cars, and the export trade, are all matters of vital importance at the present time.

6.0 p.m.

Sir Peter Bennett (Birmingham, Edgbaston)

I rise because of some of the remarks made by the hon. Member for Bolton (Mr. J. Lewis). I do not understand his suggestion that there is a sort of conspiracy on the part of British manufacturers to make something which they ought not to make and which is antisocial. The reason that the British motor manufacturers make small motor cars is because the public ask for them in very large numbers. Something like 90 per cent. of the output of British motor cars are from 12 horse power downwards, and that is because the British motoring public want small cars, which are inexpensive. The reason they do not want large motor cars is because it is part of Government policy to tax motor cars very heavily. The consequences are that motoring is expensive. A large number of people in this country want inexpensive motoring, and as long as we have high taxation we shall have a demand for inexpensive cars which will be small cars. That is a reason, which the hon. Member for Bolton may note, why a large number of cars in this country are small cars.

Mr. John Lewis

My remarks were about the large number of cars made for export purposes.

Sir P. Bennett

I was coming to that. Any export business is based, in the main, onthe home market and the British motor industry, like other industries, has its export trade based on the home market. In the past, it was something like 15 to 20 per cent. The overheads were charged in such a way that the cars were sold overseas at a less rate of overhead than those at home. The Americans make 4,000,000 cars to our 400,000 and their home car is suitable for the overseas market. The result is that they are able to send overseas a different type of car because their home trade is in that car. They make them in very large quantities; their surplus is equal to our production and it is impossible for us to manufacture a small quantity of cars of a different type from those intended for export. There is no mystery about it; the motor car manufacturer is not doing this out of "cussedness." If it was a business proposition he would take it up willingly. We all know markets where the goods are suitable for overseas. The reason the motor car manufacturer does not make a few small cars and send them overseas to compete with American production, is because it has been an uneconomic procedure in the past.

Turning to the petrol tax, the position of the motor car manufacturer is simple. He is like the Chancellor and has never been able to get all his customers to agree. There has always been this difference of opinion on whether petrol should be taxed, or whether the taxation should be by registration. There has always been the dffierence, because there are those who use the cars for limited purposes and say, "Let us have it on the petrol only," and those who say, "We do not want it -on the petrol, because when we do a big mileage we shall be penalised." They have never told the manufacturers that they were in agreement, and because of that difference, the motor car manufacturer went to the Chancellor and said, "We do not want this R.A.C. tax; we want it on cubic capacity, and in small steps." We are now told that there is agreement. The motor car manufacturers have said that if there is agreement between their customers it is not for them to stand in the way, but so long as there is not agreement they say, "We do not like the R.A.C. rating, and we want it on cubic capacity. If there is agreement and the agreement is reported to the Chancellor and we hear about it we shall, of course, fall in with that agreement." It is for the other interests to say that they will come in.

Mr. Walker (Rossendale)

I support this Amendment because I am thoroughly convinced that the present system prevents the natural development and progress of the motor industry and also prohibits large numbers of people from owning their own cars. I look upon the motor car industry as providing not for one section of the community, but for all sections, a real pleasure in life, a pleasure in which I think everyone ought to have the opportunity to indulge.

I am going to follow a different line of argument altogether from that which has been put forward so far on the Amendment. I urge upon the Chancellor that working men should have just as much opportunity and the same facilities for running cars as anybody else. During some wage negotiations in the newspaper industry many years ago the late Lord Northcliffe was taken to task by one of his fellow employers because he paid such high wages to his linotype operators that some of them were even able to come to work in their own motor cars—using that, of course, as an argument that high wages should not be paid because it gave the men the opportunity of purchasing cars for their own use. But the late Lord Northcliffe said, "I am very glad to hear that my workers can afford motor cars." So I think everybody in every section of the Committee today will uphold the view that if we can raise—and we hope to raise in the future—the wages of the workers, they ought to have the opportunity given them for as much cheap motoring pleasure as they can possibly obtain. I bought my first motor car in 1923. How I did it I do not know. A good many people questioned how I happened to get hold of a motor car—in fact some very hard-hearted people even went so far as to say that probably I had stolen it. But I can assure the House I paid good English cash for it. It cost £250 and, after I had used it seven years, I had to sell it for £10 and if I had tonight all the money which I have spent in motor cars and motoring, I could regard myself as a bloated capitalist.

Motoring is a real pleasure, not only to the wealthy classes but to the working classes. As soon as the basic petrol allowance was removed, I noticed particularly how people flocked to take motor rides in what was described by an hon. Member opposite as "the luxurious motor charabanc." I think that is an indication that the workers of this country love motoring and are prepared to make a good many sacrifices in order to have that pleasure. In Autumn and in Summer at weekends one could see, especially in prewar days, not hundreds but thousands of people coming from Lancashire, York- shire and the Midlands to enjoy a Sunday out in the beautiful Lake District. There they would squat every few miles on the road having al fresco meals and enjoying the beauties of their surroundings. I urge on the Chancellor that he should give some consideration to the worker who wants to run a motor car. Sometimes as I sit behind him here and he is standing at the Despatch Box, I feel I am looking at six feet of solid democracy. He believes, like everyone of us on this side of the House, in equality of rights. The working man does not want to be fobbed off, in his desire for motoring, with the second-hand cast-off of his wealthy contemporary. He wants to have a decent car underneath him, a car in which he can sit with comfort. I try to imagine the right hon. Gentleman trying to shove himself into a baby Austin and I think of the kind of danger he would be on the roads. The first policeman who saw him coming would be justified in stopping him and charging him with driving to the danger of the public, and if I were on the Bench, I would fine him £10 for taking the risk.

The paint I want to put forward, and I hope the Chancellor will take particular notice—he and I are old friends—is that the working man who owns a car is only able to run it at the weekends. He is not on the road every hour of the day, arid every clay of the week. He is confined to a certain circumscribed time. Yet, when it comes to paying the tax, he has to pay exactly the same as the man who is on the road every hour of the day, every day of the week and every week of the year. The tax in that respect is a most undemocratic tax. I know the Chancellor wants to be sure of his revenue. Surely the best way to ensure that lie gets, not only the present revenue, but increased revenue, is to alter the incidence of tax on the motor car. I want him to take hold of this idea we are putting forward today and develop the motor industry, so that revenue will not be coming in as it is today from a certain circle of people, but from a wider area altogether because of the conditions inviting far more 'people to indulge in this luxurious pleasure of motoring. If he will do that, then the development will provide him not only with his present revenue, but with a greater revenue.

There are two great sources of revenue that the Chancellor looks to with a good deal of expectation—the revenue he derives from drink and the revenue he derives from tobacco. They are splendid sources of revenue. If he treated the drink and tobacco in the same way as he treats the motoring public, and said to the drinker and tobacco smoker, "You must pay a substantial registration fee before you drink your first glass of beer, or smoke your first pipe of tobacco," what would become of a great portion of his revenue? When I bought my first motor car, I found that before I dare take it on the road and turn the wheels round, I had to pay about £20 down for taxation and insurance. This kind of taxation is the biggest prohibition that can stand in the way of ordinary people using' motor cars. For the sake of the motor car industry, and for the sake of allowing numbers of worthy people to enjoy some of the pleasures of life, I urge upon the right hon. Gentleman to consider this matter from the point of view I have indicated. To a vast number of people, motoring is not a business and not a commercial concern. It is a pleasure, something that gets them out into the country, fills their lungs with fresh air and makes them feel that life is worth living. Do not make it hard for them. Make it as easy as you can, and I assure the right hon. Gentleman that the revenue will be all right in the end.

6.15 p.m.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

I was rather astonished by the observation of the hon. Gentleman who has just sat down, for I never thought that a motor car filled my lungs with good fresh air. It fills my lungs with petrol fumes. I certainly hope the Chancellor of the Exchequer will pay no attention to the veiled suggestions that he should impose a registration tax upon smokers and drinkers, before they have their first drink or smoke of the day, because that would create a more alarming situation than ever. I suggest to the Committee that we should come back to a consideration of the real issue before us this evening, which is: Are we going to manufacture motor cars in the immediate future primarily for export or not? As I read it, the President of the Board of Trade attaches great importance to the motor car industry from the export point of view. That, I think, was behind the savage clash which took place at what must have been a very unpleasant meeting between him and the motor car manufacturers the other day, when they ended up by abusing each other flat out. My sympathies on that occasion, I must say, were on the side of the motor car manufacturers and not on the side of the President of the Board of Trade. He seemed to me to be complaining quite unreasonably, because, as hon. Members on both sides of the Committee have pointed out in this rather interesting Debate, the present state of our motor car industry is the result of the taxation imposed on that industry, not only for the last five years, but for the last 25 years.

I have always taken the view that that taxation was absolutely wrong and should have been changed many years ago. It produced a wholly artificial type of motor car designed, as one hon. Member opposite said, to keep down expenses at all and any cost, and to reduce the consumption of petrol to the absolute minimum. But it was an artificial type of car. From the point of view of utility, it was not the most efficient. It may have put £10,000,000 into the pockets of Lord Nuffield, but it did not put 10,000,000 cars into the export market before the war, because the export market had no use for them and will have no use for them in the future. We may as well make up our minds to it. If hon. Members have seen the new models of the Rover and the Humber that have just come out, they will agree that if the President of the Board of Trade thinks he is going to put them on the markets of the world, except in a period of artificial scarcity, he is doomed to bitter disillusionment. The fact of the matter is that the taxation which is now proposed, even in these proposals by the Chancellor of the Exchequer, is knocking out the motor car industry of this country. I would beg my right hon. Friend to read an extremely interesting article in the Socialist newspaper called "The New Statesman and Nation" this week, from which I will give two very short quotations. It says: The State does not say, Gentlemen, in this export campaign Austins will be the parent firm for the 16 horse power national model, Standard for the 12, Morris for the 10, Vauxhall for the 8. The rest of the firms will become daughters to these parents. In 1945 total production will reach 100,000 units, in 1946, 500,000 units. Everything will be purchased by the State, which will market the product through a single public corporation. No, on the contrary, the Government says, 'Gentlemen, the war is over, and since we are not nationalising the motor industry, State control is over as far as you are concerned. Go back to private enterprise and conquer the foreign market. To assist you in this we shall modify the horse power tax for your requirements, but the new tax must raise as much money as the old. In addition to this, we shall maintain the Purchase Tax in order to kill deliberately the home market for the time being.' That is the Government's contribution. The rest is up to you. That, according to our leading, most enlightened and most intellectual Socialist journal, is what the Chancellor is doing to the motor car industry, and I think it is true. I would say to the right hon. Gentleman—and I am sure we shall all have occasion to say it very often in the months and years that lie ahead—that a combination of private enterprise and punitive taxation will never work. If you are going to hand over 80 per cent. of the export trade of the country to private enterprise, you must create the conditions in which private enterprise can function, and that is where the right hon. Gentleman and this Government will ultimately fall down, to the great detriment not only of the right hon. Gentleman's own party, but of the whole country as well.

We have no car suitable for export at the present time. What we want, of course, is a medium power tough car, capable of pretty high speed and standing up to very rough use. That is the kind of car which will find a place in the export markets of the world. The little tiddler that runs about the road and goes 25 miles to the gallon, has not a hope. If the Chancellor of the Exchequer continues with his present rate of taxation, we shall have to rely upon something else than the motor car industry if we are to recapture our export trade. We are up against a car the price of which will be fixed by a colossal and virtually untaxed home market—the market of the United States of America. Think of the advantage which that gives to the motor car manufacturers in the United States. Go to Detroit, as I have been, and see the production and the background of it; their export is only six per cent.

In conclusion, I do not believe that in the motor car industry or in any other industry, you can build up a really big export trade except upon the basis of your own home market. I do not think it is ever possible unless we can manufacture a car—I should say at least 50 per cent. of the total production—which will find a real demand in this country from people of moderate means. Until we can manufacture that car, we shall never capture on any scale that is desirable or necessary the export markets which we want, so far as this industry is concerned. Therefore, in my submission, the Chancellor of the Exchequer is entirely wrong in imposing taxation which, in the words of the "New Statesman," kills the home market. That is what he is doing, and so long as he continues to do it we shall never recapture the export trade.

Mr. Perrins (Birmingham, Yardley)

I rise to support the hon. Gentleman who has suggested that the Chancellor should review motor car taxation. I certainly believe that the present form of taxation controls the design of private cars and industrial vehicles. I wonder if the Chancellor has ever been to see the industrial vehicles weighed for taxation purposes. If so, he will know that people empty their radiators and petrol tanks, take off the spare tyres and even the tail boards in order to keep their vehicle down below a certain weight for taxation purposes. I listened with very great respect to the view put forward by the hon. Member for Edgbaston (Sir P. Bennett), who said that the motor car industry produced a motor car in accordance with public demand. I know he is an authority on this subject, and I always listen to his views with respect. If I go to a showroom to buy a motor car, I do not buy the car that I need but that which I can afford. At the moment I run a 12 horsepower dependable car, made in my own city, but in January I am faced with possibly a £15 insurance and a £15 taxation, and if I am buying a car I am faced with the purchase price of the car, plus £30. So I hesitated, and said, "Oh, dear no," and I got an Austin 7. I know the limits and uses of the seven horsepower car, but nobody can convince me that an Austin 7 represents a family car, especially for a man of my stature. Under the present system we know that it represents the cheapest car we can afford.

Now let us look at it the other way. Let us suppose, for the purpose of argument, that we shall have a flat car tax of £5. My initial expenditure at the beginning of the year would be substantially reduced, and when I wanted to go to the seaside it would only be a question of 2s. or 4s. there and back, and for the convenience that I get in running a larger car I think it is worth while. I hope the Chancellor will pay due heed to my hon. Friend who said that many users of the roads, including the large industrial users, now agree that this would be the best form of taxation. I think that is important. All road users are agreed that this is the best form of taxation. I think that if we had a petrol tax we should find that the motor car designer would be able to design a car in the light of that figure; many of these very small models would disappear, and they would produce a car which would give better service in the home market. When we talk about export, we should only export that which is surplus to what we produce in the home market. I cannot agree with the argument that the wide multiplicity of designs in this country is necessary.

6.30 p.m.

When we were fighting the war and building planes we did not allow people to say "We will have this model here and this model there, and this little one here and this little one there." We limited the number and so did a fine job of work. I want the Chancellor to use his imagination daringly. I do not think we ought to allow a halt between two opinions in the motor industry to influence us at present or to hold up the motor industry itself. I want to support the appeal of the hon. Gentleman the Member for East Middlesbrough (Mr. A. Edwards) to the Chancellor to hold his hand. At least let us inquire into this matter and, having inquired, let us determine policy, because I feel that now we have a change in rating we are going to design cars for the next 25 years, and if we miss an opportunity now I am afraid it is one that will not occur for another 25 years. Therefore I feel that this plea, which is for reasonableness, is one to which the Chancellor should pay due heed. We ought to have a clear study of the problem sufficient to make up our minds in April, and it is for that reason that I hope the Chancellor will accept the point made by the hon. Member for Middlesbrough.

Lieut. - Commander Joynson - Hicks (Chichester)

The Committe have addressed to the Chancellor an appeal for the revision of this tax, on practically every conceivable ground. They have appealed to him from the point of view of export, of the industry as a whole, of pleasure users and of industrial users, and the Chancellor may perhaps feel he has come to the point where there can be no other basis on which an appeal can be addressed to him. I have however another point to put to him, otherwise I would not now be taking part in the Debate. There is one very important argument which has not been addressed to the Chancellor. That is the argument from the point of view of agriculture. I put it to him that it will be of the greatest assistance to agriculture, if he will take into consideration the pleas for the revision of the tax. I think he will agree, that from the Government's point of view, the wellbeing and success of agriculture, and food production in general, are of the utmost importance to the country as a whole. It will assist farmers very greatly indeed if they can feel that they can utilise a high-powered car instead of a low-powered car in the course of their business.

I doubt very much if many industrial Members of the Committee realise the multiplicity of uses to which farmers put their cars. It is not only for pleasure purposes; it is not only for taking the farmer himself and his men and very often the products of his farm to market; it is not only for general transport convenience, but also for many and varied forms of work on the farms as well that cars are used. It is of tremendous importance to him to have a big and powerful car, which he can turn into use on the farm. Therefore I do ask the Chancellor very briefly to take this also into account among the other considerations which have been addressed to him from all parts of the Committee. I ask him to appreciate that if he can assist farmers by putting them on the same basis, so that they can get a high powered car instead of being forced through taxation, to the necessity of getting a low-powered one, it will be very convenient to them, also very beneficial to the industry and to the food production which is so vital at the present time.

Mr. Crossman (Coventry, East)

I would like to add one word to the almost unanimous appeal to the Chancellor at least to defer his decision on this matter for four months. It is only a question of deferring for four months.

I think that many Members on both sides of the Committee have come to the same conclusion, that during these four months there may be formed a consolidated view between the Government and the industry, between employers arid employees, which will enable that industry to play its part in the export market in the immediate future, as we know is needed, and later to provide the home market with decent cars for both rich and poor.

I would like to stress one or two other points which I feel he should consider in making up his mind this evening. I do not think that it is quite fair to say that we have changed our mind about cubic capacity. The discussions on this point took place before the Government's export plans were known. They took place in an atmosphere in which the manufacturers were chiefly concerned with the home market. And when the relative needs of the two kinds of taxation were discussed it had a certain effect on some of the manufacturers, that in a sense the c.c. tax was a tariff tax and had the merit that it could be used for keeping out American cars. To an industry that is concerned with the home market as number one thing and with an export market only as something which you subsidise, for national prestige, but in which you do not hope to make your money, the cubic capacity tax is something to which serious consideration must be given. In my view the statement which the Government made recently on motor exports has completely changed the fiscal situation, because of the high priority that the Government gave to the export of cars. If it is really true that motor exports are priority No. I then surely it is absolutely obvious that any tax which is in effect a tax on horse power—whether it is horse power or c.c. —militates against the export of cars from this country. It is equally clear that, if we are to export, the majority of cars built in this country must be either medium or high-power cars; and any form of taxation which forces the making of small cars as against the medium and high-power cars and which forces the ordinary person to buy a small car when he really wants a medium one, equally militates against our exports. We cannot hope to compete with the V.8 which is being sold for £220, unless the form of taxation—whether horse-power or c.c.— gives the manufacturer a chance of making a car which will compete with it instead of being compelled to make a small horse-power car. It is that consideration first and foremost which I would like to put before the Chancellor in asking him to postpone making up his mind.

There is a second one of equal importance. The hon. Member for Rossendale (Mr. Walker) was perfectly right when in his speech he put up the argument that if a man is forced to buy a pipe, of highly unhygienic design owing to fiscal pressure, and is then made to pay registration for the use of the pipe and thirdly to insure himself against the risk of smoking the pipe, and the total that he would be paying every 1st January would be between £7 and £8 a year, then the Chancellor would not get as much money from the smoker as he is getting today. If you discourage people from taking up a vicious or a healthy habit, you will not get as much money out of the habit. The habit of motoring has been discouraged in this country from the point of view of the ordinary person because of the enormous initial outlay in which he was involved in buying his car and paying the tax and so on. It is humbly suggested that if you do away with every form of tax on the car itself except £5 a car for all models then the ordinary man in the street will be inclined to buy a medium or high-powered car and this would be the sort of car which we would need to export.

Why is this relief of taxation being asked for at the present moment? The Government have stated that there are not going to be any cars for the home market for the next one to two years. But the Chancellor must look beyond those two years—as the industry must—in his planning, to see what production will look like and to plan for the home market on which the industry is to recoup its losses for those two years. It must have a chance of building the same type of car, the medium car, which it is trying to sell abroad. In my humble belief it is only a fuel tax, as against either the c.c. or the horse-power tax that will accomplish that. It is as the hon. Member for Rossendale said, the only democratic tax, and it is the only economic tax which will enable the Government to carry out their export policy.

The question of steps has been put up for the Chancellor to decide. My only opinion is this. I think that any method that is used in determining the number of models fiscally is a thoroughly bad method. Have we not yet learned our lesson that the fiscal influence on car designs has been one of the worst tragedies of this country. To those who would argue that the Government in this way have a right to influence the manufacturers of cars in the production of models, I would say that there are many and very much better ways for the Government to tell the manufacturers what to do. There are other ways of going to the industry. We went direct to the industry during the war; and we only had a few models. It is possible that this example can be copied now. I was rather gratified to observe the hon. Member for East Aberdeen (Mr. Boothby) has been completing his education by reading "The New Statesman and Nation" although it made it difficult for me to make my speech afterwards. If I could add to his admirable quotations from that paper, in point of fact it was argued there that the best way of approaching this problem of getting the models down to a reasonable number so that the manufacturer would be enabled to compete with the American market was direct Government control of design. It is for all these reasons that the Government should go again to the industry and say that it wishes them to revive the conditions under which they worked during the war. Then we had a few models, and, indeed, we rationalised the industry, although I suppose that that is not a subject for debate this afternoon but is a subject rather for a working party.

What I wish to do is to appeal to the Chancellor to consider in the next four months—and it is something which we must make up our minds about—the vital need there is for some form of consultation between the Government and the industry not merely in dealing with this fiscal subject but on the whole question of how best to produce motor cars both for export and in the long run for the British public. It is a very bad thing for the Government and the industry to jibe at each other as has been done recently. Our industry is one of the most important in this country, employing more skilled men and with more potential good for the country than almost any other industry in terms of dollars, and it is those terms which are the most important at the present time. It is vital in the immediate future to produce a practical plan under which the industry can work, not only to enable the Chancellor to make money but to make money in a much better way, by creating prosperity and selling power in the industry. For these three reasons I beg the Chancellor to accept the views that have been expressed in favour of the Clause being dropped for reconsideration.

6.45 p.m.

Colonel Oliver Stanley

I am sure the Committee are grateful to the hon. Member for East Middlesbrough (Mr. A. Edwards) for having started a Debate which has proved to be of the greatest interest. I do not propose to follow him in some of his observations, chiefly those concerned with the personal habits of the Chancellor, although I must say to the hon. Member for Rossendale (Mr. Walker) who said that, seen from the back, the Chancellor looks like six feet of solid democracy, that if he will come round to our side, he will see a quite different aspect. I think this Debate fails into two parts. One is the actual proposal put forward by the hon. Member for East Middlesbrough, that assuming the same amount of taxation to be raised under any new system as under this one, he pleads for agreement in finding a better way of raising it. The other and wider point, which has entered into most speeches and is one that I feel to be fundamental, is whether, if we are going to raise this amount of taxation, by whatever means, from the industry, it will be possible ever to turn it into an industrial exporting industry instead of the luxury trade which it has been up to now. Certainly, the motor car industry suffers very much from the history of its development. The motor car started as a luxury, it started as something which was beyond the reach of all except the well-to-do, and as such it incurred, quite properly, that taxation which is imposed upon luxuries of that sort. Having started that way, and having provided successive Chancellors of the Exchequer with increasing benefits, it became more and more difficult for them to see that the whole position had changed and that what had started as a luxury had rapidly become a necessity, and, but for the handicaps imposed upon it, might well have become the commonplace.

I believe that within the next year, if there really is to be any substance in the idea that the motor industry is to contribute to any large degree to our export trade, the Government must make up their mind that there must be a drastic reduction, and they must risk—although I believe it might only be for a temporary period—a considerable loss of revenue. That may be impossible; if so, let us be frank about it and say that we cannot afford it, that we will go on treating it as a luxury, and drop all this talk about the motor car industry contributing substantially to our export trade. It is quite clear that, unless we can devise means by which a car suitable for export is also suitable for the home market, there will be no possibility of a substantial export trade. Of course, in the next year or two, when there are great shortages and when people are prepared to buy anything, it may be possible to get people abroad to buy something they do not really want, but that will be a temporary phase. That sort of shortage will disappear, and we shall be faced before very long with the same problem.

I have had certain opportunities during the last year or two of visiting the Colonies, and I have seen the kind of road on which they have to operate, and the sort of cars they need. It is obvious to any one who goes there, as it is obvious to any one who talks to them, that the kind of car which is sold in bulk in this country, the kind of car you see when you go to the Lake District, is wholly unacceptable to them and wholly unadapted to their purposes. To them the higher horse powered, the more powerful and larger car, is a necessity. It may not be a necessity to people here, but we cannot deny that it would be an advantage and that if there were not economic handicaps in the way, the ordinary man would prefer to have a car of rather higher horse power and of rather larger size. It is not only those of the physical stature of the Foreign Secretary who sympathise with those owners of small cars who find themselves in the same position as the unfortunate sardine in a sardine box when the Government cannot provide the tin opener. I am sure this is the fundamental matter which the Government must con- sider in the next month or two. If we want an export trade, we must have not only a change but a substantial reduction in motor taxation.

I pass now to the other branch of this discussion, on which I am not so sure. Assuming that there is to be no reduction in taxation, is there any advantage from the point of view of the export trade in having a new form of taxation dependent, apart from the fixed registration fee, upon a tax on petrol? That was put forward very convincingly by the hon. Member for East Middlesbrough. He was backed up by the hon. Member for Bolton (Mr. j Lewis), who comes from a constituency for which I have great affection, because one of my ancesters was beheaded there.

Mr. J. Lewis

Outside the Swan hotel.

Colonel Stanley

It is a town that makes mistakes from time to time. In the past I have, of course, argued and heard the case for the fuel tax as opposed to the registration tax. The difficulty I have always seen up to now is that if there is to be, as there is now, taxation based upon the penalisation of a luxury then the tax on fuel does not appear to be the fairest way of doing it, because the man who uses his car as a luxury, who takes it for a weekend drive round the Lake District, uses it less and therefore pays more than the man for whom it is a necessity, the doctor, the commercial traveller, and the user of a commercial vehicle. I have always regarded that as the difficulty in accepting this as a substitute. I could not quite make out from the hon. Member for East Middlesbrough whether that kind of person, the commercial users, who in the past have been very keenly opposed to this tax, are now included among those to whom he referred as now being in agreement.

Mr. A. Edwards

All the haulage people are now in agreement for the simple reason that they would be able to save an enormous amount on the registration tax and would be able to carry more spare vehicles to work on the roads in an emergency.

Colonel Stanley

That certainly is a new point. All I can say is that, if the assumption is that the yield from the tax is not to change, there cannot be saving for everybody. The hon. Gentleman said the hauliers are going to save a great deal. The man who has his car out only for week-ends will save a great deal; but if those classes are going to save a great deal, someone will have to pay more in order to maintain the total. But it is a very significant feature if in fact there is this measure of agreement. Hon. Gentlemen who have spoken from this side have not differed from that view. They have been speaking entirely from the point of view of what is the best alternative if the fuel tax, as such, is impossible. I do suggest that if agreement has been, or might soon be, reached, it might be a profound mistake to introduce at this period a new form of taxation which must inevitably affect design immediately. That might make it almost impossible for the right hon. Gentleman, after a further period for reflection and after being reassured as to the agreement, to see his way later on not only to change the method but to reduce the total. We might, if we took these steps now, cause manufacturers in the interval to do things which would make a later relief almost useless.

I do not know what view the right hon. Gentleman the Chancellor of the Exchequer takes. It seems to me that a very good case has been put up for at any rate further consideration of this matter, and under those circumstances it seems to me that the best thing might be to leave taxation as it is for a period which, after all, can only be at the most another three or four months till the next main Budget, and consider between now and then whether it would not be better to cut out the step which is being taken now—a step which everybody agrees is some advance on the previous position, but which falls short, as everybody also agrees, of what we really desire—in the hope that next April the Chancellor may be able to take some more far-reaching steps which might enable the motor industry in this country to make an effective contribution to the export trade.

Mr. Dalton

We have had a very interesting Debate, and the alternatives before us are relatively clear and not very numerous. I hope the Committee will not press me to continue longer in a state of indecison. Indecision as such is not a virtue. We have had much of it. The arguments have been deployed not once but many times, with minor variations, but they have not changed their essential character, and I hope the Committee will now agree with me that it is time we took a decision.

I will try to state the case in as clear and compact a way as I can. The first question was: Do I or do I not want to maintain the yield of revenue from the motor industry? The right hon. Member for West Bristol (Colonel Stanley) suggested that we were maintaining the view which has hitherto been maintained, and which was strictly enforced by my predecessor with the full support of the Coalition Government, that this revenue is not a total which we can agree now to diminish. That is my view, as I said in my Budget statement, and I have not varied from it; nor have the Cabinet varied from it. My view is that we cannot afford to give away revenue for the present. None of these statements about not giving away revenue is final. They must, of course, be constantly related to the general budgetary position as we go from year to year and sometimes even from month to month; but as far as I can see into the near future, it does not seem to me that I should be justified in giving up the revenue in the aggregate which I obtain from the motor industry. There are many other claimants—groups of direct or indirect taxpayers—who, I think, should stand in front of the motor industry, and those who use motor cars, for some time to come. I should be disappointed if over the next five years one had to maintain so rigid a view for as long as that. Nevertheless, it is just as well to be frank regarding the next few years. The motor industry always want to be told where they stand. That is their catch phrase, and there is sense in it. Where they stand at the moment, in my considered view, is that they have got to go on giving the Exchequer as much revenue in the aggregate as now. If that is generally agreed, it is at any rate one point on which we can go forward—[Interruption]—and if it is not agreed, then it is decided in the habitual way in which we do decide things. That is the view I ask the Committee to accept when the time comes to reach a decision. I do not think we ought to be so defeatist as the right hon. Member for West Bristol seemed to be and to say that if the motor industry has to go on paying in the aggregate as much as now, there is no hope tor motor car exports. I think that is very much a matter of dispute, and I do not think it does justice to the spirit of enterprise which permeates a considerable part of the industry. [HON. MEMBERS: "Private enterprise"] I did not say there was no private enterprise anywhere.

Mr. Jennings (Sheffield, Hallam)

The right hon. Gentleman seems to expect a great deal from private enterprise in spite of the hindrances to it, and to expect private enterprise to recover from the very difficult position in which he is placing it.

7.0 p.m.

Mr. Dalton

I do not put them in a difficult position at all. They were in the same position long before I was Chancellor of the Exchequer and long before the war. This trouble about motor taxation has been dragging on for nearly a generation, and the present Government certainly cannot be blamed for the immediate situation in which they find themselves. I am saying that I do not accept the defeatist view that with this revenue to be drawn from this great industry there is no hope for the export trade, nor do most of the manufacturers. Therefore, while agreeing that we must maintain the industry, I do not accept the suggestion that the industry cannot do more than 50 per cent. export business, or that with that total the industry cannot be in a quite substantial position.

Now we come to the alternative ways of raising this revenue. The alternatives are fairly few and they are well defined. First of all there is the present tax. Some people who want me to give an example of indecision say that although everybody adimits that the present tax is all wrong and that the c.c. tax would be better, yet until we can reach agreement on a plan to replace the cylinder bore calculation we should go on thinking and talking and trying to arrive at some Utopia of unanimity. I do not think that is sense. Everybody, including my predecessor in the Coalition Government, with the full support of myself and those responsible, decided to get rid of the cylinder bore and substitute the c.c. Therefore I ask the Committee to rule out the cylinder bore and not to ask us to stay stuck in that admittedly difficult situation.

What are the other alternatives? There is the c.c. tax and various variants of the petrol tax. Really there are four alternatives: the c.c. tax with the short steps, the c.c. tax with the wider steps, the fixed registration fee plus more on petrol, and the whole taxation on petrol without even a registration tax. Those are the four and nobody else has suggested anything additional. What I said in my Budget statement was that my mind was open as between c.c. with wide steps and c.c. with narrow steps. I did not say it was open as regards petrol. Indeed, I adduced certain arguments against the petrol tax, but I did say that as between the variants my mind was open. The case for the wide steps has, if I may put it so, gone by default in the Debate. Nobody has made it. Several people have put the case for the narrow steps. I think the arguments within the field of c.c. tax are fairly evenly balanced, and that is why I said I should like to listen to what had to be said today. Several hon. Members have put the case for the narrow steps and no one has put the case for the wide steps, and therefore I dismiss the wide steps. if it is to be c.c. it is on the narrow steps of too c.c.

Mr. A. Edwards

I put it to the Chancellor of the Exchequer that on Second Reading he said that he and the previous Chancellor would accept a scheme which gave the same results, even if arrived at in a different way. The right hon. Gentleman said then that if I put down an Amendment he certainly would consider it, and, in fact, he went on to ask whether such a miracle could be performed as to get all the manufacturers of one mind, but I was allowed to understand that he was considering the position.

Mr. Dalton

I am considering it, and I have given my reasons about it. What I was referring to was my main Budget speech, in which I adduced arguments against the petrol tax and, when I said that my mind was being held open, it was in relation to variants of the cubic capacity tax. The argument I would adduce is the following. There are two variants of it. One variant, which was put forward this afternoon, was to have, say, a £5 registration fee on all cars, large or small, and in addition to that to have an extra tax on the fuel. If we were to do that it would need an additional 4d., not 3d., on the fuel, and on top of the present 9d. that would make the tax on the fuel IS. Id. That, in addition to the £5 registration fee, would be required to give me my revenue. [Interruption.] We have worked it out and our arithmetic is faultless.

Mr. J. Lewis

Is the right hon. Gentleman referring to the revenue of £86,000,000 or £90,000,000?

Mr. Dalton

It is on the basis of the present revenue. I asked my advisers to tell me what would be required today to get the revenue, and what they told me was that the£5 registration fee, plus an additional 4d. on the petrol would give me the same revenue. There is the present duty of 9d., and 9d. and 4d. make Is. id., and that would be heavy.

Colonel Stanley

That is on the present consumption.

Mr. Dalton

Even if it is on the present consumption you could not expect to get it down. We are talking of the near future, and people are not going to get all the petrol they want, whatever we do in this matter of taxation, because petrol costs dollars, and we shall have to keep a pretty tight hand on petrol imports for some time to come. But this is really a deviation, and I do riot wish to pursue it, because it interferes with the argument. As I have said, a £5 registration fee plus an additional 4d. a gallon on petrol would give me the same revenue as now. My hon. Friend the Member for Rossendale (Mr. Walker) made an appealing speech and said a number of agreeable things, for which I thank him, but it really would be very difficult to do what he asks. Let us take the cases of some of the people who would be affected by such a plan. It is admitted that these petrol duties are not charged solely on petrol used in motor cars. There are the light hydro carbon oils, used, for example, in dry cleaning, paint manufacture and for various other industrial purposes. Is the hon. Member shaking his head? Unless he is going to propose a rebate—

Mr. J. Lewis


Mr. Dalton

If we were to increase the taxation on petrol, and that on oils, that would have an effect on a large number of other industries, and then we would get claims for rebates. All sorts of people would be claiming. There is the doctor who needs his car and uses it a great deal, not merely for pleasure but in the course of his profession. There are the commercial travellers and the heavy com- mercial users of petrol. All these will want rebates, and one of the most essential reasons in my view for rejecting this proposal is that, as I have said before, it is going to benefit the black market at the expanse of the Exchequer. We shall be giving bits of paper to doctors or commercial travellers entitling them to get their petrol cheaper, and these will be traded, and unless we turn the whole of the demobilised Army into policemen and turn them on to a degree of inquisition which would be intolerable and ineffective we should not be able to control this black market, which would undoubtedly be generated by a far-reaching system of rebates accompanying a high petrol duty. That is the reason I gave in my Budget speech, and it is one of the most fundamental reasons for rejecting this particular proposal.

There are other people who would be adversely affected. How right the right hon. Gentleman was in pointing out that if there is a total sum to be raised from the industry, and it is going to be raised in this way—and so many people are delightedly assuring my right hon. Friend that we are going to be better off and pay less, and, therefore, in favour of it—many people are going to pay more, and will not like it. I will give a few examples which have not been mentioned. Take ambulances, for instance; they use petrol for carrying sick and injured people. They will have to pay more for their petrol unless they are given a rebate, and if rebates are handed out we shall have to put up the price of petrol to the non-rebated people, since the total revenue has to be the same.

Mr. A. Edwards

The right hon. Gentleman is putting simple arithmetic before us, but what he is not doing is to relate these comparatively minor difficulties to the colossal impulse such a change would have on the motor industry. Now is the time for the industry to design engines in the interests of our export and home trades.

Mr. Dalton

Perhaps my hon. Friend will let me try to explain. I am endeavouring to give some examples. Rules of arithmetic still operate, even in a complicated situation, and my point is very simple. Either you are going to overcharge a large number of people for their petrol who will resent being over-charged, such, for example, as those who drive ambulances, doctors and commercial travellers, and so on, or you are going to allow them rebates. If you grant rebates two things happen; in the first place, you encourage black marketeering which you cannot check, and secondly, since you are rebating some, the standard rate of tax on others must be higher. It will not stop at is. Id.; it will go up considerably above that, and will hit all the non-rebated public.

Lieut. - Commander Joynson - Hicks

Before the right hon. Gentleman leaves that point, may I ask if he does not agree that, so far as the business user is concerned, the figure of the additional 4d. per gallon is illusory because, so long as Income Tax is kept at 10s. in the £, the business user will be entitled to charge as expenses the running of a vehicle against Income Tax and, therefore, his petrol will only cost an additional 2d. a gallon?

7.15 p.m.

Mr. Dalton

I think I would rather not go into that now. The hon. and gallant Gentleman must have been away from our Debates because Income Tax is not going to be 10s. in the £. I am anxious to deal with the point as fairly as I can. I am endeavouring to adduce to the Committee arguments why such a system would fall inequitably on different parts of the country, and would land us into the double disadvantage of the black market, on the one hand, and a still higher cost of petrol for honest, unrebated people, on the other. That is what I call the modern petrol tax proposal, namely, a £5 registration fee and the rest of the revenue being placed on the cost of the petrol. Of course, many people want to go further than that. They say, "Put the whole cost on the petrol." If you do that the argument that I have been adducing applies in even more emphatic form, as I need not assure the Committee.

Much has been said about the unanimity of manufacturers and the trade generally. I am not quite sure whether my hon. "Friend 'the Member for East Middlesbrough (Mr. A. Edwards) said this afternoon that manufacturers were now unanimous. I would like to be clear on that.

Mr. A. Edwards

I was very careful to read what I said on that. There was cor- respondence between the trade and the Chancellor of the Exchequer and other statements have been made recently. The Nuffield organisation, the Rootes organisation, arid the Vauxhall Company have all said to me, personally, that if the Chancellor would accept fuel tax they would certainly support him.

Mr. Dalton

I have naturally been going into the matter very fully, and, if I may, I would just read a few sentences from a letter which indicates that there is not only not unanimity, but that we are as far from unanimity as ever. Therefore, this plea for further indecision and delay is not well based. The letters says: At this late stage it is wholly undesirable for the petrol versus the cubic capacity argument to be revived. Two Chancellors have said that they accept the c.c. tax. All that remains to be done now is to determine the steps, which I hope commonsense will dictate as being of 100 c.c. I have said that I accept that in view of the absence of any other suggestion. The Society of Motor Manufacturers and Traders, Ltd., as representing the motor manufacturing industry, has plainly come down on the side of the c.c. tax. Admittedly, there are one or two manufacturers who would prefer the petrol tax—as would users, agents and others who have no interest in export. But the majority of British manufacturers want the cubic capacity basis, and do not see why it is necessary to keep on harping about lack of unanimity in the Trade. The country, as a whole, is never unanimous about the kind of Government it wants, but, nonetheless, we get one that generally seems to work. The old objections to the petrol tax remain—namely, with the present weight of revenue required. Revenue collected in the form of the petrol tax would cause us manufacturers to make fuel economy our fetish, which would result in cars with small engines, of low performance, highly stressed, of high compression and with constricted valve throats in order to achieve high mileage per gallon. So, for heaven's sake, let us get on with finalising the c.c. basis in steps of 100 c.c., and then we shall know where we stand. That is a very powerful letter, and the man who wrote it is not going to change his mind.

Mr. A. Edwards

That is a letter from Sir Miles Thomas. He used similar language to me because he said: "Do not let us start this controversy all over again." In the same interview he said, "If the Chancellor makes up his mind, that is acceptable to us." He has not said anything contrary in his letter. Obviously, they must know the form of taxation because they must design their cars accordingly. If the Chancellor could make up his mind, I am certain there would be unanimity.

Mr. Dalton

This is a very good letter. As a matter of fact it is a copy of a letter written to my hon. Friend from Sir Miles Thomas and in view of my hon. Friend receiving this letter—

Mr. A. Edwards

Sir Miles Thomas has not contradicted me.

Mr. Dalton

Indeed, he has. It would be wrong to weary the Committee with reading the letter again. I read it very deliberately.

Mr. Edwards

There is not one word in that letter against the fuel tax. Sir Miles Thomas simply said "Do not let us start a controversy again," and that is all.

Mr. Dalton

This is a copy of a letter written on 22nd November—quite recently —to my hon. Friend who has been endeavouring to bring about unanimity, which would have been a miracle if he had done it. He has failed. This letter makes it clear that he has failed. I am not going to read it again. It will be on the official record and hon. Gentlemen interested will no doubt see it. I regard it as a very clear and cogent letter, whether we agree with it or not. I only make one comment on it. It is very illogical to talk as if fuel taxation has no influence on the design of the car. Any taxation has an influence on the design of the car in some way or other. The idea that you can detach the influence of the fuel tax from design is complete nonsense, and in the last paragraph which I read, Sir Miles Thomas gave an example of how an additional tax on fuel would influence the design of cars which, he submitted, would be very undesirable. He may be wrong or right. But that is the serious position which has to be considered. He has made up his mind, and the fact that he has made it up in this way is a sign that you cannot get unanimity. Therefore, I ask the Committtee to support the Government in the proposal which we have in this Clause.

All the other arguments have been fully considered. No other arguments will be produced in four months, and it is desirable that we should arrive at some decision now. I cannot give any promise now to take less revenue from the motor industry, but I shall be very glad, as the years go on, and if I hold the office I now hold, to see whether, in the changing situation, there cannot be some alleviation of the total pressure on the industry. I am not going to commit the Government by promising this now, but it is something that I would like to do if circumstances are favourable in the next three or four years.

Colonel Ropner (Barkston Ash)

Can the right hon. Gentleman say whether Sir Miles Thomas was writing as an individual or writing on behalf of motor manufacturers?

Mr. Dalton

He wrote from the Nuffield Organisation and signed it "Miles Thomas."

Mr. J. Lewis

Can the Chancellor of the Exchequer say whether he would not agree that in reference to the point in this letter from Sir Miles Thomas, in which he explained that, in the event of there being fuel taxation, it might cause manufacturers to reduce the size of the engine in the interest of fuel consumption, that in view of the fact that fuel abroad is often much cheaper, he was only thinking of the home market and not the export trade?

Mr. Dalton

I cannot agree, but that is what he said.

Clause ordered to stand part of the Bill.