CLAUSE 8—(Commencement of two preceding sections, and saving.)

HC Deb 09 July 1947 vol 439 cc2217-63

Mr. Dalton

I beg to move, in page 7, line 14, after "operation," to insert: (a)except in so far as they relate to road vehicles. This is the point at which we can most conveniently deal with this subject. The proposal which I have now to submit to the Committee is that which I indicated when I made my previous statement on the matter of motor taxation generally. Although we are properly treating the two things separately, this proposal for the double Purchase Tax on the more expensive cars is part of the single scheme. It was not proposed on its own isolated merit but as a balancing factor in the general scheme of motorcar taxation, connected with the reduction of tax to £10 for new cars. I am not dealing with that question at the moment but merely reminding the Committee that this is part of a balanced scheme.

As I indicated on a previous occasion, the reduction of the annual licence fee to £10 carries exceptional advantages for the more expensive cars. Therefore, it seemed to the Government that the equitable way to deal with this matter—and also from the Treasury point of view the way in which to balance our accounts substantially for the present year—was by compensating for the loss of revenue on the reduction of the annual licence fee on new cars. We do not propose, as some have suggested in the past, to do this by an increase on the fuel tax. The method we propose provides that all cars which ex-tax are worth £1,000 or more should be subject to Purchase Tax at 66f per cent. instead of 33⅓ per cent. This may quite properly be regarded as requiring the person who purchases one of these more expensive cars which are now becoming liable to the higher rate of duty to pay a larger lump sum down by way of Purchase Tax in return for the prospective reduction year by year in the future of his annual licence fee.

I was reading something in the "Sunday Times" of 29th June, by their motoring correspondent. That is not a paper which gives unquestioning support to His Majesty's Government on all subjects, and therefore I attach the more importance to this expert- opinion. The motoring correspondent writes a note which is broadly favourable to the proposals I am making, and in it he deals with some of the objections which have been made. He says: The effect, it is complained, will be to reduce to a dangerous degree the saleability of such cars on the home market. That is the whole issue with regard to Purchase Tax. We are most anxious to sustain the export drive, particularly in regard to these cars, which would raise, by reason of their price, a large foreign exchange. [Interruption.]

Mr. Royle (Salford, West)

On a point of Order, Major Milner. Is it out of Order for me to leave a case on the bench for the convenience of another hon. Member who wishes to make reference to certain notes for the Debate? I have brought his bag into the Chamber.

Hon. Members

Take it away.

Captain Crookshank (Gainsborough)

We do not know what is inside it.

Mr. Dalton

I gather, Major Milner, that it is not so eminently out of Order that you desire to intervene in the matter.

Mr. Stanley

As the matter has been called, to the attention of the Chair and no action has been taken, may I ask is it now to be held, Major Milner, that people may bring into the House despatch cases or even suitcases, and place them on the bench? It would be for our convenience to know that that is now the new Rule.

The Chairman

Frankly, I was not aware what the hon. Member for West Salford (Mr. Royle) had brought into the Chamber. It is perfectly in Order for Ministers to bring in despatch boxes, but it is quite out of Order to bring in receptacles of a different character.

Hon. Members

Take it away.

Mr. Royle

I beg your pardon, Major Milner, I will take it away. One gets into trouble for somebody else's fault.

Mr. James Hudson (Ealing, West)

On a point of Order, Major Milner, now that the case has been removed. Is there any difference in size or appearance between the article removed and the boxes usually brought into the Chamber by Ministers? Why should a special advantage be afforded, even to Ministers, in matters of this kind?

The Chairman

Of course, it is an ancient practice, and one which is peculiar to Ministers, who have the privilege of bringing despatch boxes into the Chamber. It is quite out of Order to bring in receptacles of a different nature or kind, on which it would be difficult to draw a line.

Mr. Dalton

I call you to witness, Major Milner, that I have brought in no box— red, black or brown. I have merely a small sheaf of aides-memoire.

What I was seeking to argue, when we had this interlude, was that in the adjustment of this, the expert motoring correspondent of the "Sunday Times" thought that the danger to the home market of the more expensive cars had been somewhat exaggerated by those who have criticised this proposal. He concludes the discussion of the matter by saying: There is evidence"— I am only quoting one sentence, but the whole paragraph is interesting— that buyers of luxury cars are not, in fact. cancelling their orders. He goes on to say that the agents point out that the savings of more than £50 a year by the flat rate tax offsets the increase of even £1,000 of capital outlay, much of which is recouped when the car is sold secondhand. That is evidence that this is helping the industry. I merely quote this as a dispassionate person's view, who will not be suspected of being on my side.

Mr. Scollan (Renfrew, Western)

Is the Chancellor aware that some of these agents have now reduced the price by £1 to keep within the lower tax?

Mr. Dalton

Yes, that is quite true. Certain cars are now for sale at £999 ex-tax. That is all right by me. They fall outside the field of the double Purchase Tax. That is all right. Wherever you draw a line, there will be somebody rather near it who can move across it; we find that in all these tax arrangements. I am merely making the point made by the motoring correspondent, I have quoted, as evidence that the increased Purchase Tax which I am proposing must be set against the annual reduction in the licence fee. In the case of the more expensive cars which, but for these tax proposals, would be paying a higher licence fee of £70, £80 or more a year, if this is worked out, it is bound to result, on the whole, in a balance of advantage to the purchaser of these cars in the home market. He pays so much less each year and, because of that, it is worth while from his point of view to pay a somewhat larger purchase price such as is here involved.

3.45 p.m.

That is the broad argument. It is open to debate where we draw the line, but I would not be prepared to recommend to the Committee the annual licence fee on new cars of £10,however high-powered unless we balanced it, in regard to the more expensive and luxurious cars, by an addition to the Purchase Tax. If we say there shall be an addition to the Purchase Tax, we are limited to considering what the addition shall be. We cannot just make the Purchase Tax any percentage we like; it has to be a certain percentage of 100 per cent—of 33⅓ per cent., which is now levied on all cars for the home market, or of 66⅔ per cent., a step which I have this year introduced into the Finance Bill, and the Committee have approved, and to which already some of the previous 100 per cent. liabilities have been reduced. Therefore, if we are to raise the Purchase Tax as it now stands from 33⅓ per cent., we can raise it only either to 66⅔ per cent. or to 100 per cent. I have not proposed to raise it to 100 per cent.; that, in my view, would be too much. Therefore, our idea is to raise it to 66⅔ per cent., if we are to raise it at all, and that is the proposal I am now defending.

I made this proposal to the House on 17th June, and it is proposed that the change should be made operative as from the day following that statement, in order to prevent forestalling, as from 18th June. The proposal is that the increased rate of tax would apply to all cars within the field here defined, when these are despatched by the manufacturer on or after 18th June. The increased tax will also apply to imported cars. There are not many of them but, in so far as they are coming in, they would also have to pay this tax in so far as tax is chargeable at import, as in most cases it is, provided they are entered with the Customs or through some agent for delivery to a person in this country on or after 18th June.

If my principle of action is accepted, the Committee may debate where the line should be drawn. I have proposed to draw it at £1,000 ex-tax. The provision here of £1,280 cum-tax is the same thing and it is the more convenient, I am advised, so to define it. If it is taken at £1,000 ex-tax, one excludes all except a relatively small number of types of cars. I will not at this stage enumerate these, or discuss their special characteristics, or the market for them. I have, of course, had representations made from various hon. Members, and various private interests have quite properly made representations to me. I have considered them with great care, and it may well be that some of these points will be raised in Debate. It would be more convenient that I should not anticipate those, but should rather deal or ask my hon. Friend to deal, later on with any points that may be raised by hon. Members in the discussion.

Having looked at the thing to the best of my ability, it seems to me that the £1,000 ex-tax is the right dividing line. Everything is experimental in our finances, not least in the field of the Purchase Tax. It always has been so. I am inclined to think—though naturally, we will listen to the Debate as it proceeds —in spite of the representations I have received, that this is the right line at which to distinguish the more luxurious from the less luxurious cars. On those falling below this level, the present Purchase Tax is retained at 33⅓ for the home market and those cars all obtain the advantage of £10 a year annual licence fee. Those which come above this line of £1,000 or more, appear to me to get a pretty good bargain, balanced annually with this lump sum payment, under the proposal I make. Although I may say another word later after the Debate has developed, at this stage I merely move the Amendment.

The Chairman

I must make it clear that if we are to have a general Debate on these Amendments, the Debate ought not to be repeated on the Third Schedule. I am rather in the hands of the Committee, and if they wish to have a general Debate now I am perfectly agreeable on that undertaking.

Mr. Osbert Peake (Leeds, North)

That would be quite agreeable, provided that it is understood that we can discuss the Amendment in the name of my right hon. Friend the Member for West Bristol (Mr. Stanley) to leave out certain words from the Amendment in the name of the Chancellor to Schedule 3, page 61, line 37.

The Chairman

I am much obliged to the right hon. Gentleman.

Mr. Peake

I listened with interest to the explanation of this new proposal given by the Chancellor and I would like to deal straight away with the points he has made. He bases his case for the doubling of the Purchase Tax on cars of which the price is more than £1,000 almost entirely on the ground that it will provide what he calls a balancing factor to offset a relief which the purchaser of a high-powered car will obtain by a reduction of the horse-power tax to the fixed figure of £10. He goes on to say that anybody having a high-powered car, and paying this extra Purchase Tax, will get a good bargain, because the amount of money he would save over a period of years on the horse-power tax will equal and even, he claims, exceed the additional Purchase Tax paid. I shall be very interested to see how the Chancellor makes out his last proposition. Even if we assume the life of the car, being a good quality car, to be a long one, and put it at 10 years, I should think a simple mathematical calculation would show that a saving of £30 on a 30-horse-power car over 10 years amounting to £300 was nothing like equal to doubling the Purchase Tax on present prices of cars of that type. Many cars of that class cost £2,000, and a Purchase Tax of 66f would amount to £1,300 or £1,400, and the additional Purchase Tax imposed will be £600 or £700. I do not think we can justify this additional tax on the ground that it is to be a balancing factor.

A £1,000 car today is only the same vehicle as cost £400 before the war, and there are many cars of quite small horsepower. 10 or 12-horse-power cars, which are priced today at £1,000 or more. Those cars will be hit by this doubling of the Purchase Tax. On the other hand, there will be cars in the future—and this is the whole object surely of fixing the Horse-Power Tax at £10—of a high horse-power which are cheap vehicles to buy. The whole object of the new arrangement is to enable cars of 20 or 25 horse-power to be built here, mass produced, suitable for sale overseas in the Dominions and Colonies. Therefore, there is no true relationship between horse-power on the one hand, and price on the other. It is intended that in the future there will be very much less relationship between those two factors than at present. A car of 25 or 30 horse-power will be selling very cheap, and some small high quality cars will be selling at £1,000 or more. If the Chancellor wanted to balance this factor of the advantage gained by a reduction in the horse-power tax by an increase in the Purchase Tax, I believe he should have related his rates of Purchase Tax to the horse-power of the car. The Purchase Tax in the home market should be fixed to a relationship with the horse-power of the car, and in that way the Chancellor would get back from the purchaser of a high-powered car an amount which would precisely balance the advantage he gained by the reduction of the Horse-Power Tax.

Mr. Benson (Chesterfield)

If that were adopted, it would defeat the whole purpose of the flat rate tax.

Mr. Peake

Surely, the Chancellor's proposal has exactly that effect, as I think I will be able to show the hon. Member for Chesterfield (Mr. Benson) in the course of a few moments.

The Chancellor goes on to say that if he is to go on to increase the Purchase Tax he has to fix the rate at one of the rates provided, and that he has only the 33⅓ compartment, the 66§, and the 100 per cent. compartment, and that he has no alternative but to step up the rate to 66|. That he should feel himself bound by the three or four compartments of Purchase Tax existing at present seems quite ridiculous, especially when we look at what he is going to do in regard to Customs Duties for imported films. He has made some revolutionary proposals in this Finance Bill, and if he wished to fix graded rates of Purchase Tax, there would be nothing whatever to stop him doing so. I am quite sure that on his first point, that this is a balancing charge to recoup an advantage the purchaser of a car might otherwise obtain, his case is not made out.

Mr. Dalton

I did not suggest that it would be balanced car by car, but, in the end, in terms of revenue.

Mr. Peake

In the aggregate revenue which the Chancellor expects to get, there is some relation. Actually the right hon. Gentleman is forfeiting £1 million of revenue by reducing the horse-power tax in the coming year, but he anticipates to get £1,500,000, or 50 per cent. more than he is giving away, by this additional Purchase Tax. So the balance, even on the global figures, is a very rough and ready one, and by no means to his disadvantage. This is the first case in which a single type of article has been subjected to differential rates of tax, and it seems to us on this side of the Committee to be quite unnecessary, because, so long as we tax by means of percentage, the more expensive article automatically pays a larger sum in duty than does the cheaper. In point of fact, under this proposal a £600 car will continue to pay £200 in duty, whereas the £1,200 car will pay, not double, but four times that amount of tax. We on this side of the Committee have, of course, a fundamentally different attitude towards the Purchase Tax to that which is held by the Chancellor. We think that it is a bad tax and that the Chancellor's declaration last year that it was to continue as a permanent part of the revenue was an inflationary pronouncement.

4.0 p.m.

Mr. Scollan

Bow could it be inflationary?

Mr. Peake

Because it induced everybody to go and purchase now; if the tax is never to be taken off, people say that they might as well buy now, instead of keeping their money in the bank. We also think that by setting a precedent of this character in increasing the Purchase Tax the Chancellor will make people much more inclined than they would have been to purchase articles which otherwise they would not buy at the present time.

In this case, this increased tax is being imposed at a particularly unfortunate time. Two years ago there might have been something to be said for this changeover before the motor manufacturers had laid down their postwar designs. Two years have elapsed, and the result is bound to be great dislocation in the shops and the factories of motor car manufacturers. The right hon. Gentleman read a quotation from the "Sunday Times" of a fortnight ago in which their motor correspondent said he had not heard of any cancellation of orders. My information, which is a great deal more recent than that of the "Sunday Times" correspondent, is that the cancellation of orders is going on, and is widespread. In fact, this morning, in order to confirm what is happening, I rang up one of our leading firms of motorcar manufacturers, which makes not only small 10 h.p. cars but also high-power luxury vehicles. The answer I got as regards the 10 h.p. car, was, that I would have to wait three years for delivery. As regard the expensive model I could have one in two or three months time because orders were being cancelled. That, I am sure, is the case. I cannot understand the Chancellor standing up and contending that doubling the Purchase Tax on these vehicles has not involved any cancellation of orders.

When this matter was discussed previously, the Chancellor said that it would be much better if these expensive cars were exported. He expressed the hope on that occasion, which he has not followed up today, that these cars would go into the export market. But surely he cannot have overlooked the fact that motor cars, whenever they cross frontiers, are subject to Customs duties. Our motor cars which go overseas have to bear Customs duties in all countries, I think, and are subject to embargoes in some. In the Argentine there is an embargo at the moment on the import of British motor cars. The only country I know to which these more expensive cars are likely to go is the United States of America. There are not the people in the Continent of Europe today who can afford to buy these high-grade British engineering models, and if the Chancellor thinks that the demand for the high-grade British motor car is likely to be increased in the U.S.A. by crippling the home market here at the present time, I am sure that he is totally mistaken.

There are two points which, I think. are of much more importance than the raising of £1½ million of revenue in this way. I wonder if the right hon. Gentleman consulted the Minister of Supply upon the question of our war potential before he brought forward this proposal. We won the Battle of Britain in 1940 through the courage and skill of our pilots and the wonderful quality of our aeroplane engines. We should never have won the Battle of Britain in that year had we not had the finest aeroplane engines in the world, and it seems to me to be of vital importance that we should not strike a blow at those firms which produce these high-grade products. In the second place, it is these high-grade products which are responsible for the high reputation of British engineering overseas. In every country in the world, even where people have never seen a Rolls Royce, they have all heard of one. It is, in fact, in the high-grade products, as we know, that our export trade in the future, If we are to do an export trade, must be done. We cannot compete with the foreigner in the cheaper lines. If we are to survive in this country we have to produce the highest quality, which will always command a market throughout the world.

Mr. Grossman (Coventry, East)

Is the right hon. Gentleman really asserting that no British car of under £1,000 without Purchase Tax can be a high-grade quality product?

Mr. Peake

I do not know what the hon. Member means.

Mr. Crossman

Shall I repeat it?

Mr. Peake

No. The class of car over £1,000, are the products for which this country has been famous in the past.

Mr. Crossman

And under £1,000.

Mr. Peake

Some of the smaller cars are quite good, indeed are very good, but they are, as everybody knows, mass-produced cars, and they are not given the hand finish which the high-grade vehicles, about which I am speaking, get.

This proposal is, in our view, a blow to the British motor industry. I can well understand that it may give some joy to the heart of the equalitarian levelling-down Socialist, that it may give some pleasure to the man who is filled with envy, malice and uncharitableness every time he see a high quality car go down the road. But in our view, it is not worth while, in order to satisfy those base passions, to deal a heavy blow, I would even say a fatal blow, at the highest quality engineering products which this country produces.

Mr. Crossman

I desire to make one or two points in reply to the right hon. Member for North Leeds (Mr. Peake). It is important that we should get in pers- pective exactly what cars are affected and what cars are classed at over £1,000 without Purchase Tax. There are eight firms, I agree with the right hon. Gentleman, which are very seriously affected by this proposal, including one or two famous ones which he has mentioned. But it is quite grotesque to suggest that all the quality cars are affected. There are cars costing £850, £900 and £950 which are recognised as quality cars, recognised as semi-hand finished, though I know that the right hon. Gentleman on the other side of the Committee would not recognise as having hand finish any car costing under £1,000. They are, however, recognised outside this country as quality cars.

Mr. Peake

I think the hon. Member is thinking in terms of prewar prices, because a £900 car today would have cost only about £300 or £350 before the war.

Mr. Crossman

It would have cost £450 before the war. The cars to which I am referring—

Viscount Hinchingbrooke (Dorset Southern)

Tell us what they are?

Mr. Crossman

I cannot give a list of the firms here.

Viscount Hinchingbrooke

Can the hon. Member not identify the cars?

Mr. Crossman

If hon. Gentlemen will tell me what car at £950 before Purchase Tax is a non-quality car, not worth selling abroad, they will be addressing themselves more to the point. I should be interested to know which motor car at that price they regard as a non-quality car.

Let us look at the facts of the situation. There are these eight firms working exclusively on high quality models and there are three other firms which also have models of the same type. When we are concerned with the export trade, let us remember that 75 per cent. of the total cars produced in this country and exported, are cars below the £1,000 mark. I am giving the very limit. I doubt whether 25 per cent. of the cars exported are over the £1,000 mark. Indeed, I heard only the other day in my constituency that one firm of the eight we are discussing, had succeeded in getting under 20 orders for the export of its top model before this tax was introduced. From where are we really getting our sales in the export market? It is not, of course, in terms of bulk for these expensive cars. Our exports will succeed or fail on the medium horse-power car and to some extent, on the baby car.

I am not saying that quality does not matter. I am only saying that, in terms of bulk, our exports, if we are to make any money out of them, must be of the medium and low horse-power cars. We will have a useful adjunct in the sale of very expensive cars abroad. I would remind the right hon. Gentleman the Member for North Leeds (Mr. Peake) that quite apart from America there are, of course, Eastern European governments which are delighted to buy Rolls Royces. The only exports' we have made to Rumania are 11 Rolls Royces for the 11 Commissars of Rumania. I am delighted to feel that British workmanship is appreciated even by the Soviet commissars. On the other hand, I think that what I have to say justifies the decision to keep the tax at the £1,000 level. Over the £1,000 level we have only eight firms making these cars, and three other firms have a single expensive model. The three other firms will not be profoundly affected by the fact that their super-model will have a reduced sale in this country.

What concerns me is the size of the tax. I agree with the objection that 66⅔ per cent. is a crippling tax for these firms. I agree that quality does matter so long as we do not argue for it as providing the bulk of our exports. Quality matters to the industry. It has always been true that the quality car has led the way in development and design. I think we ought to consider, therefore, the preservation of the high quality car because it is vital to the development of the mass produced car as well. The correct way of putting this problem is to say, "Does a 66⅔ per cent. tax cripple the industry as a whole by threatening a close-down of the eight quality firms and thereby of the technical developments which are likely to come, in the first place, in an expensive car?" I am inclined to think that if this Purchase Tax were a permanancy it would have that effect. I am not so concerned about the cancellation of orders. I am much more concerned about rumours I have heard of skilled engineers beginning to say, "It is not worth working for so and so. There is no future in this type of car. I will go into something else." That upsets anybody interested in the industry as a whole. If there is felt to be no future in the high quality car, then I think that the industry as a whole will lose.

The Chancellor says that there are only these grades of Purchase Tax. He can only make it 66⅔ per cent. or 33⅓ per cent. I feel that if a thing is important enough, if the Chancellor feels that 50 per cent. is correct and not 66⅔ per cent., he might well bring forward a special order, which I think would be necessary, to get this tax. It may be said that it is only a question of a few hundred pounds, but every hundred the right way would help. If he cannot do that, I think that the least he could do would be to tell the industry that this is not to be regarded as a permanency and that after this year some reduction will be made. I do not think that in the course of this year the sound firms are likely to go bankrupt. They should be able to carry on with exports. We have at least a few months more of the sellers' market. According to hon. Gentlemen opposite there is no question that we should be unable to export quality cars. During the nine or 10 months left there is no reason why the export drive should not be increased, if the firms are given an assurance that the home market has not been taken away in perpetuity. What they fear is that once the Purchase Tax is clapped on, it will stay there for ever because it is tempting to put taxes on and never take them off.

I do not think that the Chancellor's argument about tax reduction is really sound. If we are to choose between a high horse-power car with the penal Purchase Tax, and another under the £1,000 level, one will choose a cheap car rather than an expensive one. The sensible buyer will say "I will not buy a Rolls Royce now. I will buy another car for under £1,000." Many people will change their orders to cars below the £1,000. I think that we will have to face cancellation of orders in the home market. I do not think that they matter this year; the firms can carry on; but it will matter unless solid assurances can be given that this is not in perpetuity. Of coure, I would prefer to have a reduction to 50 per cent.

4.15 p.m.

Mr. Michael Astor (Surrey, Eastern)

I find myself in agreement with the last part of the speech of the hon. Member for East Coventry (Mr. Crossman), Perhaps I can add a little to it in the form of a question to the Chancellor. If we assume for the sake of argument that this tax is sound from a revenue point of view, though I do not say that it is, I think the Chancellor will agree that if it cripples the industry, or sections of it, it thereby defeats its own end. I agree entirely with my right hon. Friend the Member for North Leeds (Mr. Peake) when he says that the home market for expensive cars will disappear when this tax becomes Jaw. Very few people will be able to purchase these excessively expensive cars. The hon. Member for East Coventry indicated that firms dealing exclusively in very expensive cars could carry on for one year with this tax in operation. That may be true. but there are certain qualifications. In the case of a firm like Rolls Royce, they also make aeroplane engines. They are not geared to make cheap cars, but they have another industry closely co-related to the motor production industry and, therefore, I imagine they could convert reasonably easily in order to increase production of aeroplane engines or cars. On the other hand, there are certain firms which are not geared to make cheap cars and which do not make things like aeroplane engines. I wonder very much whether they can carry on for the next 12 months. I dare say that they could carry on but, from a manpower point of view, they would be crippled or dealt a very serious blow.

My question is this. If the Government cannot guarantee very substantial markets abroad to these firms who have all their eggs in one basket, and I do not think they can. are they prepared to run this risk of crippling a certain section of the industry? I do not think that it is entirely the producers of expensive cars, who are of vast importance to the country, who will be crippled, but a certain section of this industry who have only one string to their bow. I hope that the Chancellor will give an answer to my question and to the second part of the speech of the hon. Member for East Coventry.

Mr. Scholefield Allen (Crewe)

On behalf of those of my constituents who are vitually interested in this matter, I appeal to the Chancellor to pay heed to the argument of the hon. Member for East Coventry (Mr. Crossman). No doubt the Committee is aware that the production of Rolls Royce motor cars is now concentrated near Crewe. Prior to the war the production took place in Derby. A large Ministry of Supply factory taken over by Messrs. Rolls Royce now employs many thousands of skilled workers. I have had representations from the skilled workers in Crewe. I have passed those representations to the Chancellor. These workers are very concerned about the very heavy tax of 66⅔ per cent. They form a pool of engineers whose skill, once lost, once dissipated, will be very difficult to gather together again. There are not many engineers producing that particular high quality engine for which Rolls Royce and Bentley cars are famous throughout the world. We want to keep the quality that we possess in this matter, which is not a political question at all.

I do not think there is any Englishman, Scotsman, Welshman, or indeed, Irishman, who is not proud of these Rolls Royce and Bentley engines, and we all owe that firm a great debt of gratitude for its intensive research and for the amount of profits which it has set aside for research. That constitutes a great debt which this country owes to that firm, because, in setting aside profits, a firm like Rolls Royce was able to conduct further experiments in the engines to which perhaps we all owe the victory in the Battle of Britain. We do not want to lose these highly skilled engineers, a large number of whom are in my constituency. Branch after branch of the A.E.U. in Crewe has passed resolutions appealing to the Chancellor, and to me to make my voice heard with the Chancellor, because they fear that this tax will be a crippling tax. I dare say that a firm like Rolls Royce could stand on its feet for 12 months in spite of the tax, but if the tax is to be continued at 66⅔ per cent., I say that the age of the Rolls Royce and the Bentley has gone for ever.

I think the Chancellor has probably examined the prices of post-war cars. What do we find? We find a large range of cars up to £1,000, a few between £1,000 and £2,000, and then a very large gap, which goes from £2,000 to about £3,500 or £3,700, which is the Rolls-Royce and Bentley category. That is roughly the position, with the exception of one Daimler, which comes just over £2,000. The effect of this tax will be felt in the weight with which it falls. The right hon. Gentleman the Member for North Leeds (Mr. Peake) said that he had information about the cancellation of orders. I have information which is right up-to-date. Very many cancellations have come into the Rolls Royce works. I do not want to mention the number, because I do not want to disrupt Rolls Royce, but a large number of cancellations have been received by the firm, and a large number of other people are also threatening to cancel. The question may be asked, "What about the export market?" There always is, and I hope there always will be, a large export market for the Rolls Royce car, but the fact is that, on the figures I have presented to the Chancellor—and I assure him that they are correct and reliable—we get 10 home orders for one export order for Rolls Royce cars. I have given the Chancellor some figures, and I do not want to give the Committee a complete statement, because I think the Chancellor has perused a complete statement which I have given him, setting out this case.

I have one suggestion to make to the Chancellor on behalf of these highly skilled engineers. If he cannot, by some special order, reduce the taxation to 50 or 45 per cent., will he consider the possibility of putting a tax of 33⅓ per cent. on the chassis, that is, upon the highly skilled engineering part of the job, and putting a tax of 66⅔ per cent. upon the body. The Chancellor is well aware that these bodies for Rolls Royce and Bentley cars are special constructional jobs which greatly increase the price.

Mr. Scollan

Will my hon. and learned Friend explain this point to me? Is it to the benefit of the country to expend all this first-class skilled labour on nine cars out of 10 for home consumption?

Mr. Scholefield Allen

That has nothing to do with it. Politics, or exports and imports, have nothing to do with it. This has to do with preserving this very highly skilled body of workers in my own constituency, who are very worried lest this tax be continued indefinitely, and lest it should be a penal tax. We have no assurance that it will be reduced in the very near future, and this is causing a great deal of concern to these very highly skilled engineers. They have seen customers drifting to the lower-priced cars, and there is a real fear that we shall lose the potential and the great skill of these men.

In the past, this country has depended upon the skill of its engineers, and I hope that in future, we are still going to depend on their skill. This has nothing to do with politics, and I repudiate the suggestion that has been made from the other side of the Committee. My real concern is for the future of a British job which has been exported throughout the world, which has brought great credit to this nation, and which, I believe, contributed in no little way to our victory in the war. May I add one other fact? It has been suggested that perhaps the Rolls Royce firm could turn over to aeroplane engines, but, since acquiring their new factory, Rolls Royce have spent no less than £850,000 in tooling.

Sir Peter Bennett (Birmingham, Edgbaston)

I would like to refer to some of the speeches that have already been delivered, and, first of all, to some remarks of the Chancellor. The right hon. Gentleman suggested that there was a sort of over-all benefit to be obtained. We know that the proposals put forward by the motor car manufacturers, which have been adopted to a certain extent by the Chancellor, do benefit a large part of the industry, but the Chancellor, while giving with one hand, has taken away with the other, and he has not taken away from the people to whom he has given. The quality motor cars, by and large, do not benefit. It is the quantity people who benefit, and it is quite impossible to switch over suddenly from the one to the other. Some of the manufacturers who are making a few larger cars and a large number of small ones will, no doubt, be able to adapt themselves, but the makers of the class of car referred to by the hon. and learned Member for Crewe (Mr. Scholefield Allen), and others mentioned by the hon. Member for East Coventry (Mr. Crossman), are not in that position. In regard to loss of revenue, the Chancellor said that it was a good proposition for people to pay capital down and get it back over a period of years. The right hon. Gentleman the Member for North Leeds (Mr. Peake) has shown that it will take 20 years to get it back in many cases.

The suggestion has been quoted from the "Sunday Times" that there is always a second-hand value to think about. Let me remind hon. Members that the second-hand value may be a terrible gamble, and that few people will put down a great deal of money in the hope that, when they want to realise, they will get most of it back again. Cancellation of orders has been referred to. It is very early to talk about cancelling orders, because the people who want special bodies on cars are used to being told that they will not get them for two years. Consequently, a man who has had a car on order for 12 months does not jump in at the first opportunity and say, "I will cancel it." He thinks about it, and waits. He says, "I have plenty of time; I will leave it, and, in the meantime, I will see what I can get." But I can assure the Chancellor that, as time goes on, such people will consider cancelling their orders. In some cases, the makers will not accept cancellations because they have already ordered the bodies for the cars.

4.30 p.m.

Whether people are makers or owners, they are all up against this new proposition. They do not agree with the suggestion of the motoring correspondent of the "Sunday Times," which has been referred to, that it will not be bad. People who are going to buy the cars think it is very bad. The hon. Member for East Coventry, of course, was right, but he was not referring to the same thing as the right hon. Member for North Leeds. When he refers to £900 cars, he is talking about high-grade cars. I drive one myself, and like it. When a buyer looks at the price of that type of car, and compares it with the price of the high quality car about which we are talking, and which costs anything from £4,000 to £5,000, he will not be such an ass as to pay that sum for something which is not considerably different from the £900 car. One cannot fool all the public all the time. The £900 car—I am speaking of present-day values with Purchase Tax added—is really semi-mass produced, whereas the high quality car is hand-finished, thoroughly tested out, and carries a special body.

It is the same with other things. Today many of us are content to get utility furniture, but we understand that if we want special hand-made goods we have to pay considerably more for them. It has been the boast of this country that we produce something which is really high-class, and there are always people who are prepared to pay for such a product. The hon. and learned Member for Crewe suggested that the high grade motor manufacturer did not mind going on under these conditions for a few months. I would point out that the motor manufacturer is a little suspicious when he is told that it is only for a little while. May I remind the Committee—and most hon. Members motor in some form or another —that we are still paying 4d. a gallon on petrol for the privilege of derating. The cost of derating was put on the motor car in the form of a special tax of 4d. a gallon on petrol, and we are still paying it. Every time we take a ride, we are paying that 4d. a gallon. Therefore, one can understand the motor industry being a little suspicious on being told that this extra tax is only being placed on it for the time being, and that one day a benevolent Chancellor of the Exchequer will take it off again. I have never met such a Chancellor of the Exchequer.

The hon. Member for East Surrey (Mr. Astor) suggested that people can swap over. They cannot. If a works is laid out to manufacture motor cars, it has to be completely stripped before it can produce aero-engines. The hon. and learned Member for Crewe pointed out that the Rolls Royce Company had taken their works from Derby to Crewe in order to make nothing but cars. These quality makers—and there is quite a number of them besides Rolls Royce, such as Daimler, Lagonda, the New Bristol, and a number of others—feel that they get no benefit whatever from the Chancellor's new proposition, and, indeed, that they suffer a good deal of harm, because it produces uncertainty. Every businessman knows that the one thing which must be guarded against is uncertainty. To suggest that only 10 per cent. of high quality cars are for export is to misunderstand the position. Such firms are exporting nearly 50 per cent. of their cars, and have undertaken to increase that percentage to 60 per cent.

At the present moment their order books contain only 10 per cent. for export because the export buyer does not wait for 18 months, as we have to do in this country. He asks the agents when he can have a car, and unless they can promise delivery in from three to four months. he does not order it. The reason they can quote delivery is that Rolls Royce and other quality car manufacturers all put through 18 months' supplies in order to get going. The result is that they are putting through 10 times the quantity which appears on their export order books. But as time goes on, nine-tenths of the bulk supply are taken for export. That is the insurance which a manufacturer has to have. It is very difficult to get people who are not manufacturers to understand the importance of that insurance. That is why there has to be a home market.

It sometimes happens that there is a close-down of the foreign market until certain alterations in design are made. Meanwhile, those cars which would have gone for export are sold in the home market. The revenue comes in, the alterations are made, and export begins again as soon as they are ready. A firm cannot run a purely export business; it must produce the quantities. That is why these manufacturers are so concerned. As has been said, in the Rolls Royce car we have today something which is acknowledged to be the best in the world. For 30 years a particular car manufacturer has advertised the best car in the world, and nobody has contradicted him. It is admitted. I was on the committee appointed by the President of the Board of Trade—

Mr. Scollan

Would the hon. Gentleman please clear up the point raised by my hon. and learned Friend the Member for Crewe (Mr. Scholefield Allen), who made it quite clear that his information was that only 10 per cent. of the production of the high quality firms was being exported? The hon. Gentleman is now claiming that 10 per cent. of the orders on the books in no way represents the true figure.

Mr. Scholefield Allen

On a point of Order. I would like to point out that that was not what I said. I said that of the orders on the books, only one in 10 was for export. Orders on the books have nothing to do with the percentage which is, in fact, exported.

Mr. Scollan

If my hon. and learned Friend will look at his speech in the OFFICIAL REPORT tomorrow, he will find that he said one in 10

Mr. Scholefield Allen

On the books.

Mr. Scollan

Not on the books. The hon. Member for Edgbaston (Sir P. Bennett) has now told us that not one in 10, but actually the whole production is going abroad Someone must be wrong.

Sir P. Bennett

The hon. Gentleman has got us both wrong. I was confirming what was said by the hon. and learned Member for Crewe that 10 per cent. of the orders on the books at any one time are for export. Actually, the quantity going overseas is in the neighbourhood of 50 per cent., and it is going up to 60 per cent. There is no question about that. In fact, I know that the Minister of Supply will confirm it. Of the Rolls Royce output, 50 per cent. is being exported at the present time, and the firm have undertaken to increase their exports to 60 per cent.

The point I was going to make was that here we have the No. 1 exhibit in the world. On several occasions I was on committees appointed by the President of the Board of Trade to organise overseas exhibitions. In every case the British prestige pavilion asked to have a chassis of that particular make, and, later on, an engine, because it was the one thing that is talked about all over the world as the highest example of engineering finish. I do not want to see that endangered. It is of immense prestige value. Why did the Government go to the expense of having these prestige pavilions in exhibitions in different parts of the world? The reason was that they were regarded as an advertisement for the rest of the products of this country, and that is what is happening today with these high-class vehicles. There is in that industry a reservoir of skilled labour which is found nowhere else. Twice in my lifetime we have seen that switch-over to the production of aeroplane engines, and twice we have thanked God that we had a high-class engineering industry to switch over. We do not want anything to hinder that industry. Let no one run away with the idea that it is a small matter merely because the numbers are small. Re- member that the price, at £4,000 to £5,000, is equivalent to the price of 10, 20 or 30 of the cheaper cars. I know that the tooling equipment charges of the three or four factories which are making these high-class cars have run into several million pounds. It means that the labour must be highly skilled, and it is very valuable.

Can one imagine the Swiss throwing away their high-class watch' trade by imposing a penal tax on the watches which they sell at home, when the export market is temporarily held up? I am alarmed at the suggestion that we are going to endanger the position of our high-class motor industry. Those manufacturers say, "Leave us as we were; we do not want the £10 tax; we would rather go on as we were, paying the high registration duty and the 33⅓ per cent." That is one alternative. The other is that which was mentioned by the hon. and learned Member for Crewe. If the Chancellor must retain the magic figure of 66⅔, why cannot he apply it to the special bodies and let us have the engineering at the basic price? It is the engineering with which we are concerned. I should hate to hurt the coach builders, because they are craftsmen of the highest order, but I am anxious that, above everything else, we should maintain our standard of engineering and that we should not throw away the finest engineering trade in the world. I hope the Chancellor's mind is not closed. He will not get much out of this tax. It is a gesture, and a gesture which will harm a great deal more than it will help.

Mr. Viant (Willesden, West)

I intervene in this Debate because I have in my constituency a firm which is engaged in the production of this type of car to which reference has been made. Representations have been made to me by the engineers who are a highly skilled class of men. From the practical point of view when a firm has gathered these skilled men together and has formed a pool of expert engineers, it is exceedingly difficult for that firm if it has to allow those men to go elsewhere. Since the war these firms have had a considerable amount of difficulty in gathering together the men who were in their employ in prewar days, and they have made it clear to me that if this 66⅔ Purchase Tax remains, it will be impossible for them to carry on their business. I understood the Purchase Tax was introduced to deter people from making purchases This tax of 66f per cent. will, undoubtedly, achieve that purpose. We ought to make up our minds whether we, as a nation, desire this type of car to be produced or not, and whether it will be for the benefit of the nation if we permit this highly skilled work to be performed. If we make up our, minds that we no longer need that kind of work, let us continue with this deterrent tax.

4.45 p.m.

On the other hand, I am informed that we cannot afford to allow this type of work to pass out. Speaking as a craftsman myself, I deplore the mass production method. I know it has come to stay, but I would like to see retained facilities whereby we shall be able to encourage and train the highly skilled craftsmen. It has an effect not only upon the industry of the country, but upon the character and personality of the individual. We cannot afford to throw these things lightly aside. Therefore, I appeal to the Chancellor to reconsider this tax. It is too high. His arithmetic this afternoon has been proved to be erroneous, in so far as even the period of 10 years to which he referred does not permit the purchaser to make good on the reduced horse-power tax. The capital outlay for a large car of this kind, with such a large tax, will mean that 20 years will have to elapse before a purchaser can recoup himself from the lower engine tax. I hope the Chancellor will give heed to the appeals which have been made. I feel that I would have been lacking in my duty to my constituents if I had not made this appeal to him.

Sir Arthur Salter (Oxford University)

I wish very briefly to make two points which have a certain connection with each other. First of all, I am disturbed about the probable grouping of the price levels around the £999 figure. There may as already suggested in this Debate be reductions from £1,000 or a little over to £999,I do not see any harm in that, but I am disturbed at the possibility that the prices of cars in the £850–£950 class will climb nearer to £999, because the seller will be able to sell to the client the advantage of a reduction on his flat rate licence compared with what he has been paying on his previous car, and, at the same time, will be able to assure the client that he will not have to pay the increased Purchase Tax. My other point is this. The Chancellor's counterpart to his increased Purchase Tax, and his reduction in the flat rate on new cars, is a continuation of the full rate of the licence paid on existing cars. That may, be perfectly fair in regard to, say, a licence fee of something like £30 on a moderate powered car, when it is a new car with the value, the utility and the reselling value of a new car.

But there comes a time when a car of that kind begins to approach the end of its utility and has greatly lost its value for resale. I have seen in the past, even before the war, cases in which cars with several years of good driving still in them could not be used because the original owners did not want to use them, and when they tried to sell the cars the annual licence fee was so big in proportion to the value of the cars at that moment, that they could not get rid of the cars and they were scrapped. I suggest that it is in the public interest, and will continue to be for some time, that existing cars should live out their natural life of reasonable usefulness, without being prematurely aged by a tax consideration. I wonder, therefore, particularly as the Chancellor of the Exchequer, as my right hon. Friend remarked before, has a considerable balance in hand in his revenue proposals on this question, whether he could not use a little of the excess to lower the rate of licence fee on existing cars as they pass beyond a certain age. The 10-year-old car paying a very high licence fee is, in my view, paying much too highly in relation to its value or selling price on the second-hand market. I do suggest that there is a very real case for some relief there, particularly when the discrepancy is being brought into such prominence by the flat rate licence fee for all new cars.

Mr. Christopher Shawcross (Widnes)

It seems to me that the hon. Gentleman the Member for West Willesden (Mr. Viant) put his finger on the crux of the problem that we are discussing when he said that this Committee must decide whether we want this type of car to be produced or not. I take it as obvious from all the speeches that have so far been made, that we want to continue—in fact, We want to encourage—the production of quality cars, because we see that, in the long run, they are the most likely to be a permanent factor in our export trade. It seems to me that this tax is a discriminating tax; and that, therefore, although it will not have the same influence as the repealed horse-power tax, it is open to precisely the same objection: it is discriminating between one type of car and another, or between one class of car and another.

I do not wish to discuss the merits, because I do not think this is a fit place to discuss the merits of individual makes of cars. But the fact is that, whatever else the motor industry in this country may or may not have done, it produced in the Rolls Royce car a product which is the best car in the world—a product which, in the opinion of all quarters and in all countries significantly, is acknowledged to be of superlative quality, something of unequalled quality in engineering. Its name is a phrase which has passed into the language—not only English, but others —and which is metaphorically used to describe the best in manufactured goods and other things of all types. Therefore, it is clear that we want to encourage, and not to discourage. For the reason I have mentioned, that in the long run—and, it may be, in the short run—it is these quality cars which are likely to be most useful to us in the export trade, I suggest that this increase should be reconsidered. Even if the Chancellor of the Exchequer cannot go so far as to say that he will reconsider it to the extent of not having the extra tax at all, of not having any discrimination at all, I should like to support those who have said it should be at a less steep rate of increase. such as 40 per cent. to 50 per cent.

Mr. Orr-Ewing (Weston-super-Mare)

I was alarmed when this Debate started, to hear the Chancellor of the Exchequer use an expression that I do not think can be fairly attached to this particular class of cars from the engineering angle—that they are "luxury" cars. We are not at the present moment talking about luxury cars at all, and I think that every subsequent speech to that of the right hon. Gentleman has made that quite clear. We are, in fact, talking about a very high-grade engineering product, and it would not matter if it were something other than a motor car. We are talking about a high-grade British engineering product. I should like to bring to the notice of the Committee the effect that the proposals of the Chancellor of the Exchequer will have on a class of firm I am going to mention, that is to say, on those firms that really depend on the production of one class of motor car alone, and not on a variety of models.

I know one firm, which the Chancellor of the Exchequer knows of very well, which made for itself a great reputation in producting aero-engines and aircraft and all sorts of things like that, who were definitely encouraged by the Minister of Supply to keep their extremely highly skilled workers together; and in order to do that they were encouraged to produce a particular model of motor car. It is the only model they produce. Now the Chancellor of the Exchequer comes along and says, "I know nothing about this; I am going to hit your new product sideways." That firm had previously not produced motor cars, though they had produced aeroengines; and they spent a considerable sum of money in preparation for the production of this car, and so tooled up the job as to enable them eventually to reduce the price of it, it may not be below £1,000, but to reduce the price to the home market and to the export market. The effect of this proposed additional tax, in a case of that sort, is really catastrophic. A firm having no prewar reputation in the motor car market is in a far more difficult position than one that has a prewar reputation in the export market and in the home market, and I think there is no possible doubt that those people will suffer dire consequences. Moreover, those highly-skilled men engaged in the production of this motor car will be dispersed, and that against the wishes of another Department of the Government which has urged that they should be maintained together.

I really wonder whether the Chancellor of the Exchequer took into full consultation his colleague in the Ministry of Supply before the proposal was put before Parliament. It seems to me to be a most extraordinary thing. All of us engaged in industry have had conversations with Ministries as to what we could or could not do under certain circumstances. This firm said that they would do certain things to maintain production and to maintain it at a certain rate. Then the Chancellor of the Exchequer comes along and knocks that firm sideways, and makes it impossible for them to maintain their arrangements with another Ministry. That is not sound practice. It is not common sense.

I cannot help feeling that those who have struck a would-be optimistic note as regards the possibility of maintaining these cars in production have not really understood the manufacturing problem at all. It has been proved over and over again, that it is quite impossible to produce for the export market only. The reasons have already been given to the Committee. But let us take the picture as' it will exist if this proposed tax goes through. Not even the Chancellor of the Exchequer would deny that sales of cars for export of these classes are likely to fall. Quite obviously they are likely to fall. They will fall even more rapidly if the cost of the cars in the export market rises. A number of cancellations will be made. One cannot possibly plan production of motor cars at one rate, and then if the rate of production is cut down by one third or one half as a result of the tax, maintain the cost of production at the previous level. It is not common sense, and it is not practical, if the whole production rate of these motor cars is lowered. Therefore, the price is bound to go up on the export market. I cannot really think that that is going to help our export trade.

We have heard a good deal about the export trade; over the next few weeks we are going to hear a great deal more. I think by this tax the Chancellor of the Exchequer is damaging the prospects of the export trade and the prospect of these motor cars overseas. I would ask him, for this reason alone, to look at this matter again. I do not believe modification of the increased tax is going to be of any value in the matter. I believe it is a question of taking it off, or putting it back to 33⅓ per cent. I think that is the only way to deal with the problem. I shall vote against the 66f per cent. proposal. I ask the Chancellor to look at this again very carefully indeed. He will do far more than discourage the use of luxury motor cars on the roads of this country. That has nothing to do with the problem, as I think he would admit to the Committee. It may be that some hon. Members would like to see luxury motor cars taken off the roads. Well, I hope it is not in that sort of spirit that this matter is being approached. This is a discriminatory tax against an extremely important national asset, the most highly skilled and valuable branch of engineering in this country, and, as such, is an attack on the craftsman.

5.0 p.m.

I was delighted to hear what was said about craftsmen by the hon. Member for West Willesden (Mr. Viant), who spoke as a craftsman. The Chancellor's colleague, the Minister of Labour, said something the other day which gave great encouragement to some of us in industry. He then seemed to take an interest in craftsmen, and it was very helpful to hear those words from a Minister of Labour. Cannot the Chancellor speak to him about whether it is worth while doing something which will damage craftsmanship? There is no possibility whatsoever of our being able to compete with the American producers, to any great degree, in mass-produced motor cars in overseas markets. But we can, and shall always be able to, compete in the high-quality product, which is the best advertisement in the world for British engineering. I hope the Chancellor will say that he will change his mind before he does too much damage.

Mr. Douglas Jay (Battersea, North)

I hope the Chancellor will stick to this tax. There has been only one substantial argument advanced against it today, and that came from the right hon. Member for North Leeds (Mr. Peake), who pointed out that the Rolls Royce company and organisation is a national asset from the war potential point of view. I fully agree with that. I think that if we had not had the Rolls Royce Spitfire engine in 1940 we might well have lost the war. If I thought this tax would damage the Rolls Royce organisation and their production of aircraft engines, I should be against it, but I do not believe it will. I do not believe any real evidence has been advanced to support that contention this afternoon. I say that for three reasons. In the first place, surely the Rolls Royce aero engine manufacturing and research capacity in future will be much greater than it was before the war. The firm are now engaged much more in the production of aircraft engines as against motor engines than before the war. Secondly, we shall have a very large export trade in high quality motor cars. Thirdly, there will surely still remain some market in this country amongst those persons who are still able to pay these very high prices? I suggest that, so far as we can tell at present, those three possibilities together will preserve what is admittedly a very great national asset.

It may turn out that nobody, or at any rate, very few people, will be able to pay these prices in the home market. But we can discover that only from experience; and, therefore, the Chancellor would be well advised to keep this tax on for a year or two. Of course, if experience shows that serious damage is being done to the home market, there would be a case for reducing the tax; but we do not know that in advance. Obviously, this is not, as some hon. Members seemed to suggest, a malicious or spiteful tax. It is one designed to raise revenue, and if it did not raise revenue, the Chancellor would take it off. I think that in this controversy, however, we are all losing sight of what is, after all, the background of the whole matter. Surely, the original, much abused, horse-power tax was imposed 20 or 25 years ago as a form of luxury tax. [HON. MEMBERS: "NO."] Well, it was imposed as a tax which would fall more heavily on the more high powered car than on the less high powered car.

Speaking as a former small car-owner— that is to say, somebody who could afford a small secondhand car before the war, but who cannot afford any now—I have been watching the Chancellor's proceedings in the last few months with some suspicion. What have we done? We have accepted the argument of the motor industry, that if the cubic capacity tax is abolished and a £10 flat rate tax substituted, they will be enabled to produce a new sort of car, which can be exported on a very large scale. That is a strong argument, but I have never been convinced myself that, as a result of doing that and nothing else. we shall increase enormously our motor car exports. Even though the Chancellor was right to accept that it is not a certainty. It is a gamble, and in order to make that gamble, in order to obtain that hypothetical advantage, we have been asked to shift the taxation from the more wealthy motorists on to the shoulders of the poorer motorist. It is quite clear that the motorist with the larger car would be better off as a result of this change if the Chancellor did not raise the Purchase Tax.

The dilemma has always been that either we increase the petrol tax—and I think we all agree that would do very serious damage to industry and trade as a whole—or else, in effect, we make a quite material shift of taxation from the shoulders of the wealthier motorist. As I see the position, the Chancellor has very ingeniously escaped that dilemma by adding this Purchase Tax on to the more expensive car. It is an ingenious solution, and I do not think the arguments advanced against it this afternoon have any force. Unless and until it is shown by experience—and it is my opinion for what it is worth that it will not be so shown—that organisations such as Rolls Royce will be seriously damaged, I hope that for the time being the Chancellor will stick to the tax.

Mr. Digby (Dorset, Western)

I think I was a little unfortunate that the hon. Member for North Battersea (Mr. Jay) spoke—I may not have heard him aright —as though in the present flat rate proposal we were shifting the burden from the richer to the poorer motorist. The practical effect will be that he is far worse off than before, so I do not see how that question arises.

Mr. Jay

Since the hon. Member challenges my argument, surely it is clear that somebody who runs a 20 or 25 horsepower car will be better off than before?

Mr. Digby

Yes, but the hon. Member has not shown how the person running the eight horse-power car will be materially worse off. It is unfortunate that in the discussion this afternoon so much attention has been paid to one particular make out of the 11 affected, namely, the Rolls Royce. It was unfortunate that the Chancellor, in his opening remarks, spoke as though he was thinking only of Rolls Royce and not of other makes of car. I was rather surprised at the arguments he put forward to justify this double Purchase Tax. He argued that those who bought these expensive cars would, in spending less on the annual tax, get back almost as much as they would lose on the increased Purchase Tax. I have not had time to work out many examples, but while he spoke I did work out one simple example. Take the case of a very high-performance 16 horse-power car, the ordinary taxation on which would be £20 a year. With that car it would take 10 years to save £100. The extra Purchase Tax on that car is £417, so it would take over 40 years to work off that amount. I am very glad that the Chancellor has this splendid confidence in the lasting capacity of British motor cars.

When we come to the other end of the scale, taking the Rolls Royce, the figure works out a little bit better, but I implore the Chancellor of the Exchequer not to fix his attention on the Rolls Royce, because there are 10 other makes of cars involved, among which are four of a completely new design, which in every way are excellent, and which are on the lines we should like to see the British motor industry develop. It would be a very unfortunate thing if the Chancellor of the Exchequer were to prevent these models from coming into full production. It has been pointed out already that we cannot ignore the effect on the home market, and that was the very reason why the flat rate was advocated. It has been universally admited that the home market does affect design, and what we want to see is design improved. There is a tendency for the design of the cheaper cars to improve, and to follow the design of the better makes.

There is another aspect of this matter which should not be lost sight of, and that is the improvement in prestige of the British motor industry abroad. The prestige of one particular make has already been stressed, but there is the prestige of other makes to be considered. In the long run, when the sellers' market ends, whether or not we can sell our cars abroad will depend on the prestige of British cars in general. There is no doubt that we need to send abroad, especially to Europe where such things are appreciated cars of smart appearance. Of the 12 models which are affected several are of a kind which will undoubtedly appeal to Continental taste. I have four particularly in mind.

Then there is the question of performance. There is no doubt that people on the Continent appreciate good performance, and that can be seen by the attention which was given to models of good performance at the Geneva motor show. The French, for example, have produced an excellent model with an extraordinarily high performance, and Italy has brought out at least three excellent new models. If we are seriously to compete in this market, we must be able to match their performance, and I doubt whether the cheaper cars will be able to match that performance, if the way is not piloted for them by these more specialised firms. I wonder whether the Chancellor, who is a busy man, has had time to look at the results of the Grand Prix races abroad. If he has had the time, he will no doubt have been depressed to find the Italians winning again, and the British cars not taking their rightful place in these races. Among the cars he is hitting most are just the kind of models which could put up an excellent show in these races, and I ask him to bear that aspect of the matter in mind.

The proposal made by my right hon. Friend the Member for Oxford University (Sir A. Salter) merits attention. I am referring to the very old cars. It has been estimated by experts that we shall be very short of cars in this country for at least four years. If that is so, it will mean that a large number of old cars will have to remain on the roads; some of these cars will be in a pretty poor condition. The man who will buy the old car will probably be the man who cannot afford to pay for a new car. Up to 1935, there was a tax remission on all very old cars, and I suggest that the Chancellor of the Exchequer should consider a remission, say, after 15 years, which would be of great use to the owners of veteran cars, who otherwise will have to pay the extraordinarily high tax.

In conclusion, I ask the Chancellor once again not to consider so much the Rolls Royce and the very expensive types of cars, but those very excellent cars which are being developed now, in most cases by firms which are not very large, because if he strikes a blow at these, he will be doing very serious damage to the future of the British motor industry.

5.15 p.m.

Mr. Dalton

I think it would be convenient for me to say a few words at this stage on the speeches which have been made from both sides. We began the discussion on motor taxation this year on the basis—although I did not make any change in my original Budget proposals—that I was willing and prepared to consult with hon. Members in different parts of the Committee and the interests concerned on what scheme of taxation would be for the greatest benefit of the motor industry and general public, providing always that I did not lose revenue this year. That was the basis. The discussions proceeded, and a number of suggestions were made to me, and I, for my part, made certain suggestions, of which this is only one—I will not deal with the others. Part of the plan was that if I lost revenue on the one side, I had to pick it up on the other, and this is the proposal to pick it up on the other. The only alternative proposal to pick up this amount is that of an increased petrol tax, which no one has advocated. Therefore, we began by considering this as a means whereby I could this year pick up approximately the same amount of revenue—that is, within £500,000—as I was losing. In order to complete this point, I would mention that in the years ahead I shall progressively lose more revenue, because the proportion of cars falling out of the lower annual licences will steadily increase, and the greater the prosperity and success of the motor industry, the more that number will increase.

The argument has been put that this double Purchase Tax, above the £1,000, will do great damage to certain branches of our engineering trade. That argument has been persuasively put by several hon. Members. If I were convinced that this really would strike a blow at an essential part of our skilled engineering craftsmanship and the industrial equipment associated with it, I should indeed be concerned, but I am not yet quite convinced of it. I think the argument comes partly from a slightly pessimistic view of the possibilities of the export trade at the moment. We are considering the present Finance Bill at the moment. As hon. Members know, Finance Bills come once a year, but in between there are possibilities of adjusting such matters, if the proof should really be forthcoming that it should be done.

Yesterday, we were speaking of the great importance of the export drive, but no one has said anything to that effect today. It is extraordinary how, like a lake, which is sometimes disturbed by a great storm and at other times quite still, the mood of the House can quickly change from grave apprehensions such as we had yesterday. It is no good the right hon. Gentleman the Member for West Bristol (Mr. Stanley) shaking his head, because he was one of the protagonists in yesterday's Debate. Everyone was convinced then that to expand exports was one of the most immediate and important national duties.

Mr. Stanley

I do not think that the right hon. Gentleman is being quite fair. The case which Members have made today is that they do not believe that this tax will lead to substantial exports.

Mr. Orr-Ewing

May I remind the Chancellor that I mentioned specifically the danger to the export drive which would arise out of this tax?

Mr. Dalton

Whether the hon. Gentleman used those words or not, it is the case—and I am not scoring a debating point—that whereas yesterday everybody was all out for exports, today we are being told that it is the home market that is important. This year we must go flat out for every export we can get. I have had a memorandum from Rolls Royce, and, through the kindness of my hon. and [earned Friend the Member for Crewe (Mr. Scholefield Allen), I have been given further material. I mention this firm because they have gone to great lengths— and I am grateful to them—to set out statistics of their own production and prospects. Of course, other firms are concerned, but what do Rolls Royce say? Their memorandum is dated 4th July, so that the figures about cancellation of orders are quite up to date. They say that between the wars they averaged 1,000 cars per annum, of which only 10 per cent. were exported. That is no good to us now and, of course, Rolls Royce are aware of it. They say: Production is now of the order of 20 to 25 cars a week, the ultimate capacity of the factory being 50 a week. Forty-three per cent. of our production has been exported to date, and we shall shortly be increasing this figure to 60 per cent. That is in accordance with the agreement reached between my right hon. Friend the Minister of Supply and the industry as to what should be the minimum percentage figure for exports. Sixty per cent. of 50 cars is 30, and Rolls Royce are aiming at 30 cars a week. They speak of their orders, and say: We have orders outstanding at present for about 3,300 cars, of which 300 are for export. Therefore, 3,000 out of their 3,300 are for the home market. They speak of cancellations, and say: Since the announcement of the imposition of 66⅔ per cent. Purchase Tax, 82 orders have actually been cancelled on this account, and about another 100 customers are threatening cancellation. This, of course, is not a large proportion of the total order book. The prospective weekly production of Rolls Royce is 50 cars, of which they hope to export 30. They should be able to export 30 a week for some time to come, because they say they have 300 orders for export. This double tax cannot affect export orders, because none of the persons taking an export order will pay Purchase Tax. Even if Rolls Royce do not get additional orders for export, they have 300 to work on, and they are working up to a maximum of 30 per week. I am taking the short view, deliberately. I ask, is their home market in serious danger? They have 3,000 orders on their books; 82, possibly a further 100— let us say 200 altogether—of those 3,000 have been cancelled, leaving 2,800 home orders. They are working up to an output of 50 cars per week, of which 20 will be for the home market. That is a solid cushion for 12 months ahead, and I am not surprised that my hon. and learned Friend the Member for Crewe, who stated their case moderately and reasonably, should say that Rolls Royce can stand it for 12 months. I am sure they can.

Mr. Stanley

Has the right hon. Gentleman the cancellation dates, because it is important to know whether people are cancelling cars for early delivery? They may not take the trouble to cancel an order for delivery two or three years ahead.

Mr. Dalton

The firm have not divided their figures in that way. But we know that there is a very big unsatisfied home demand for cars of all types and makes, and I think it is clear that this is a solid basis for the next 12 months. I do not think it can be shown, on the statement of the firm, which is reasonable and well laid out, that this tax will dry up their home market during the next year.

Mr. Bowles

My right hon. Friend quoted the "Sunday Times" of the Sunday before last—the day after he made his serious statement about a possible cut in petrol. Has he any idea whether that statement may have had anything to do with this cancellation of orders?

Mr. Dalton

It may have had, but I do not know. My statement on petrol was deliberately phrased, so as not to commit us to a reduction in the private motorist's ration. My statement made it clear that the Government were primarily going out to see if we could achieve economy in the petrol issued to the Services, and that issued to commercial users, large quantities of which, it is notorious, slip through into the black market, and which is in excess of their legitimate needs. Since the private motorist was not specifically mentioned, I would doubt whether it had much effect. But I was taking the short view. If it be the case that the home market is not sufficiently buttressed, the figures I have mentioned do not show it.

I must point out that we cannot afford in the state of affairs we discussed last night, to let great quantities of steel, together with the work of our best craftsmen, go into the production of these expensive cars in order to have them run about the roads of this country. That is not the state of mind in which we ought to approach this problem. The hon. Member for Western Dorset (Mr. Digby) from whom I shall be glad to receive particulars, said some hopeful things about the good performance of many of our more expensive cars. I agree with him. He said that that should lead to good export possibilities, and I say that we must not swerve away from our constant concentration on increased exports. I would be happy if a number of these motor firms could go above the 60 per cent. figure. I am talking now about immediate and short-term national necessities. Therefore, bearing that in mind, I am not prepared at this stage to modify this proposal.

5.30 p.m.

There is power in between Finance Bills to make Treasury Orders relating to the Purchase Tax and the Purchase Tax rates. We are always reluctant to make these orders too freely because it is not in accordance with the proper financial procedure of the House, and if carried too far, it might be an abuse of it. But it can be done, and it has been done. As the law now stands, we can only have the Purchase Tax at certain specified rates; none other will be legally possible. The right hon. Member for North Leeds said that we could continually modify Finance Bills to allow for a wider range of operation, but I think that that would be complication without profit.

The offer I make, in complete frankness, particularly in the case of those who have raised the case of other cars—the Rolls Royce case has not convinced me at all—is that if there is evidence that can be produced of a more convincing character from other sources, I will be glad to have it. I have the power, subject to the approval of the House, in between Finance Bills to introduce Purchase Tax orders modifying the Purchase Tax. If I am convinced, by evidence produced in the course of the coming year —in the light of experience and not in the light of anticipation—to that effect, I am prepared to make a Purchase Tax Order, but it will have to be a reduction of Purchase Tax by an adjustment which can be done between Finance Bills, and it must, therefore, be a reduction to 33⅓ per cent. That is the offer I make. I am not convinced by the arguments up to date, and I think that we should adopt the proposal I have made, but I am willing, if evidence is produced during the course of the year, to make a Purchase Tax Order on the lines that I have indicated.

Mr. Stanley

This has been an interesting Debate on a most important matter. Although the right hon. Gentleman showed signs of wishing to respond to the Debate, I must confess that I am not satisfied by the offer he has made. It seems to me that the case made from all parts of the Committee—and there were still hon. Members rising, and I hope that they will rise again to put their case—was all upon one side. The only wholehearted support which the right hon. Gentleman had was from the hon. Member for North Battersea (Mr. Jay), who is fast becoming regarded as the Gunga Din of the Front Bench. It is from the hon. Gentleman's speech, I think, that the Chancellor has got the idea of the offer he has made. The hon. Member for North Battersea, with great frankness and some courage, said that he was prepared to take a gamble. He did not believe that this would ruin the industry, but he was prepared to have the tax on to see if it did ruin it, and if it did, to take it off again at a later period.

The fault of the right hon. Gentleman's reply was that he confused the issue. He certainly confused me as to what was the purpose of this tax. He started by saying that it was a balancing tax, which he was giving to the motor industry in response to their demands—a gesture for which all of us should be grateful. He was giving them a certain amount of money, but in the end he had to have that money back. This was the way he was going to get it. Later in the Debate he made it quite clear that the object of this tax was to provide more exports. The right hon. Gentleman cannot have it both ways. Purchase Tax is not paid on cars which go to export, and he cannot, at the same time, have an increased export trade and get from this tax the money he requires to recoup him for the allowances he is making elsewhere. So far as I am concerned, he must resolve for himself his own intellectual ambiguity. I am interested only in the consequence of this proposition.

I think that the amounts for this year are so small that if this was proved for other reasons to be a bad tax, the Chancellor could well do without the not very large revenue which it will produce. To me the real importance of this tax, and the only argument for it, if it can be supported by figures, is that its effect may be, by making the home market more difficult, to drive more and more of this type of car into the export market. It is on that basis alone that I shall believe this tax to be justified. We have had no evidence produced to us by the Chancellor that that will happen. We have had, on the other side, a good deal of indication that we are likely to have the reverse.

The right hon. Gentleman has fairly read out an important document, but a document coming from one firm—a firm which, I agree, in reputation stands ahead of all others, but a firm which, because of its world-wide reputation, is likely to be affected differently from any of the other firms. My information is that the rate of cancellation with some of the other firms is far larger than that with Rolls Royce. The cancellations in the case of one firm amount to over one-third. The agents for other firms say that their cancellations have been 100 per cent., and I think that there is a great deal of evidence that in the other firms, if we exclude Rolls Royce, the damage to their home market will be very extensive. Is the right hon. Gentleman really convinced of this damage to the home market which, after all, if it is followed by increased exports damages no one but the potential buyer of the big car? It does not matter to the producer. It is of advantage to the nation if instead of selling to the consumer here he can sell it abroad.

Can this gap really be met by an immediate increase in the export of these cars? My information is that it cannot. The export of these cars, although important, is always a small proportion. For many of these cars there is no long waiting list abroad, and there is no probability that we shall immediately be able to switch over to the export market the very substantial number of orders that undoubtedly we are losing in the home market. This is a vicious circle. If the total sales are to be less, it will mean a bigger share of the overheads falling upon what export trade there is, and a rise in export prices which will lead, in the long run, not to an increase but to a decrease of exports. Therefore, I am certainly unconvinced— I have heard nothing yet which does convince me—that the effect of this tax will lead to any increase in exports. One final point. The right hon. Gentleman in his winding up made a great deal of play with the fact that of the Rolls Royce output only 10 per cent. went in exports.

Mr. Dalton

Prewar.

Mr. Stanley

The right hon. Gentleman talked about not being able to spend a great deal of steel in order to allow people to drive from place to place in these great rich cars, and he was cheered, I noticed, with almost equal volume by the hon. Member for West Fife (Mr. Gallacher) and the hon. and learned Member for Gloucester (Mr. Turner-Samuels).

Mr. Turner-Samuels (Gloucester)

The right hon. Gentleman must withdraw the latter part of what he said.

Mr. Stanley

I did not accuse the hon. and learned Gentleman of cheering me, but of cheering the Chancellor of the Exchequer.

Mr. Turner-Samuels

I was not cheering anybody.

Mr. Stanley

If the hon. and learned Gentleman denies that he was cheering the Chancellor of the Exchequer, I withdraw the unfounded and grave allegation. That is an easy political case to make, an easy thing on which to get cheers—that we cannot afford steel to build this kind of motor so that people can drive about in them. It may well be true, but why has it suddenly been found out today? Why did not the Government find it out two years ago when these very firms were encouraged by the Ministry of Supply to restart the manufacture of these cars and also were encouraged to make new cars? The Minister of Supply or his agent did not say, "We cannot afford to give you the steel to make these new and expensive cars in which people can go about, but, all the same, we want you to make them." They asked these firms to make these cars because it was to the national advantage as well as for other reasons that they should be made.

Mr. Follick (Loughborough)

Were not the expensive cars for export and not for this country?

Mr. Stanley

It was certainly the intention that a proportion of these cars should go to export, but a certain proportion were to stay in this country. Our contention is that it is not possible to increase the exports by the exact amount to compensate for the fall in the home market. It is said we are imposing a tax upon the home market to increase our exports. If we can do that, I think we are all in favour of it, provided it is done without any damage to the company, damage to the engineers and damage to the production. What I am protesting about is the introducing of something into a technical argument which can only be introduced to create bias, and that is talking about rich cars driving about the countryside for which we cannot afford the steel. I say that if that is true, or if the Chancellor of the Exchequer believes it, he ought to have stopped it two years ago and not encouraged these people to spend millions of pounds on new tools and jigs for cars, which they were then told were wanted in the national interest, but which they are now told are a waste of steel.

I hope that even at this late hour the right hon. Gentleman will reconsider this proposal. He has made this offer that if this rains these companies then he will take the tax off again. Certainly I am not content to leave the fate of these companies, even excluding Rolls Royce, to the possibility that if a tax which will do a great deal of damage is put on, then at some future date, when the damage has already been done, some Chancellor of the Exchequer may come down to the House of Commons and ask us to reverse this decision which today we ought not to be asked to pass.

5.45 p.m.

Sir Patrick Hannon (Birmingham, Moseley)

I am interested in the motor industry, for I am associated with the Daimler company, as I think the Chancellor knows. The right hon. Gentleman's attitude is well nigh scandalous and it would be disastrous to the whole motor industry.

Take the position of the Daimler company at Coventry. We took over from the Government a very large factory, and we spent an enormous amount of money in equipping the factory for the provision of cars for export We have organised and mobilised manpower, and the manpower we have is highly technical with specialised qualifications Our motor cars have gone to many parts of the world and are the shop window of the industry. The reputation of the Daimler abroad is well known, especially in our Dominions and Colonies, and it is an advertising medium for the high class products of this country. The Chancellor has said that he is prepared to modify the Purchase Tax in favour of the companies if it is shown that it is injurious to the production of cars. I accept that with pleasure, but I say that that will be too late because the whole industry will be disorganised. I see on the other side of the Committee the hon. Member for East Coventry (Mr. Grossman), and he knows the conditions of our workpeople in Coventry. If they are scattered over the country as a result of this tax crushing the motor industry hard, it will be difficult to get them together again to reconstruct the output of cars when this Purchase Tax is reduced to 33⅓ per cent.

The motor industry has responded magnificently to the call of the Government for more production, and in our works at Coventry we have the highest class of technician to be found in any part of the world. They are men whose skill and craftsmanship are creditable to the country. If the industry is dislocated and these men are scattered to the four corners of the land, how are we to get them back again to produce cars when they are needed? I feel strongly about this and I say that the Chancellor, by this act, is undoing much of the good he has done in many respects to help industry to increase production. This will be a great blow at the motor industry, and at the same time will prevent the maintenance of a high level of employment in scores of firms The Daimler company had to increase their price because of increased costs. We have orders from South Africa, Australia and elsewhere for one of our types of car. That car sold at £1,270. After an allowance for the agent and other deductions it works out at £1,016. Some of those cars go to the home market, and how can we sell them in the home market if we have to add 66| per cent. Purchase Tax? We will not be able to compete against American cars even in our own market I put it to the Chancellor that he is spoiling some of the good work he has done in his public financial policy by loading the motor industry with this tax. It will damage our prestige abroad and it will prevent the production of cars at a moment when increased output is most essential in the interests of the nation.

Mr. Frederick Lee (Manchester, Hulme)

My right hon. Friend the Chancellor was fully justified in bringing back the attention of the Committee to the very different atmosphere today as compared with that which obtained yesterday. I believe that he was quite right when he pointed out that, so far as the motor car industry is concerned, the export drive, with which we are all supposed to associate ourselves, is entirely dependent on a standardised car and not on the luxury cars we have been discussing this afternoon. I heard several hon. Members refer to the injury which will be done to the engineering industry and to the highly skilled men who are engaged either with the Rolls Royce undertaking or some other firm if this tax is imposed. If it is true that there is such a large concentration of skilled men in any of these factories, the Minister of Labour should know about it, and there should be an immediate redistribution. My hon. and learned Friend the Member for Crewe (Mr. Scholefield Allen) has given instances of the super-quality of the Rolls Royce car, but may I remind him that during the war the Rolls Royce Merlin aero engine—which we all supposed could not be produced by other than skilled labour—was produced with 80 per cent. unskilled labour in the Ford factories with no decrease in quality.

Sir P. Bennett

I do not think that the hon. Gentleman should allow that statement to go out unqualified. Of course, the quantities were enormously increased, but it was only possible to use the 80 per cent. unskilled labour because we had the 20 per cent. skilled men.

Mr. Lee

I could not agree more. In other words, the use of skilled labour in industry today is not in the actual production but in the setting and tool making, as the hon. Gentleman knows quite well. My hon. and learned Friend the Member for Crewe pointed out that there was a large reservoir of skilled labour engaged in manufacturing processes in the Rolls

Royce undertaking itself. This shows that there is far too great a ratio of skilled people in that firm, particularly when we see that with an 80 per cent. dilution we were able to produce super-quality Merlin engines during the war. I believe, therefore, that the Chancellor would be well advised to continue with his ideas in this direction. I was impressed by what was said by the hon. Member for Moseley (Sir P. Hannon) with regard to skilled labour, and I believe that the decision to go in for motor car export may one day be regretted, but unless we press for standardisation we shall see many people walking the streets of Coventry and Birmingham before very long.

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

The Committee divided: Ayes. 273; Noes, 128.

Division No. 305.]	AYES.	[6.54 p.m
Adams, Richard (Balham)	Crossman, R. H S	Hamilton, Lieut.-Col. R.
Allen, A. C. (Bosworth)	Daggar, G.	Hardy, E. A.
Alpass, J. H.	Daines, P.	Harrison, J
Attewell, H. C	Dalton, Rt. Hon. H.	Holman, P.
Austin, H. Lewis	Davies, Clement (Montgomery)	Holmes, H. E. (Hemsworth)
Awbery, S. S.	Davies, Edward (Burslem)	House, G
Ayles, W. H.	Davies, Ernest (Enfield)	Hoy, J.
Ayrton Gould, Mrs. B	Davies, Harold (Leek)	Hubbard, T.
Balfour, A.	Davies, Hadyn (St. Pancras, S. W)	Hudson, J. H. (Ealing, W.)
Barnes, Rt Hon. A. J	Davies, R. J. (Westhoughton)	Hughes, Hector (Aberdeen, N.)
Barton, C.	Davies, S O. (Merthyr)	Hughes, H. D. (Wolverhampton, W.)
Battley, J. R.	Deer, G.	Hutchinson, H. L. (Rusholme)
Bechervaise, A. E,	Delargy, H. J	Hynd, H. (Hackney, C.)
Belcher, J. W	Diamond, J.	Janner, B
Benson, G.	Dodds, N. N.	Jay, D. P. T.
Bevan, Rt. Hon. A. (Ebbw Vale)	Donovan, T.	Jeger, G (Winchester)
Bing, G. H. C.	Driberg, T. E. N.	Jeger, Dr. S. W (St. Pancras, S.E.)
Binns, J	Dugdale, J (W. Bromwich)	John, W
Bowden, Flg.-Offr. H. W.	Dumpleton, C. W.	Jones, Etwyn (Plaistow)
Bowles, F. G. (Nuneaton)	Edelman, M.	Jones, P. Asterley (Hitchin)
Braddock, Mrs. E. M. (L'pt, Exch'ge)	Evans, E. (Lowestoft)	Kenyon, C.
Braddock, T. (Mitcham)	Evans, John (Ogmore)	Kinghorn, Sqn.-Ldr. E
Bramall, E. A.	Evans, S. N. (Wednesbury)	Kiney, J.
Brook, D. (Halifax)	Fairhurst, F.	Kirby, B. V
Brooks, T. J. (Rothwell)	Farthing, W. J.	Kirkwood, D
Brown, George (Belper)	Fletcher, E. G M. (Islington, E.)	Lang, G.
Brown, T. J. (Ince)	Follick, M.	Lavers, S.
Bruce, Maj. D. W. T.	Foot, M. M.	Lawson, Rt. Hon. J. J.
Buchanan, G.	Forman, J. C.	Lee, F. (Hulme)
Burden, T W.	Foster, W. (Wigan)	Leslie, J. R.
Burke, W. A.	Fraser, T. (Hamilton)	Lever, N. H.
Butler, H. W. (Hackney, S.)	Gallacher, W.	Levy, B. W.
Callaghan, James	George, Lady M. Lloyd (Anglesey)	Lewis, A. W. J. (Upton)
Carmichael, James	Gibbins, J.	Lipton, Lt.-Col. M
Castle, Mrs. B. A.	Gilzean, A	Logan, D. G.
Champion, A J.	Glanviffe, J, E. (Consett)	Longden, F
Chater, D.	Gordon-Walker, P. C	Lyne, A. W
Chetwynd, G. R.	Granville, E. (Eye)	McAdam, W
Cluse, W. S.	Greenwood, A. W. J (Heywood)	McAllister, G.
Cocks, F. S.	Grenfell, D. R.	McEntee, V. La T.
Coldrick, W.	Grey, C. F	MoGhee, H. G.
Collindridge, F,	Grierson, E.	Mack, J. D.
Collins, V. J.	Griffiths, Rt. Hon. J. (Llanelly)	McKay, J. (Wallsend)
Colman, Miss G. M.	Griffiths, W. D. (Moss Side)	Mackay, R. W. G. (Hull, N.W.)
Comyns, Dr. L.	Gruffydd, Prof. W. J.	MoKiniay, A S.
Corbel, Mrs. F. K. (Camb well, N. W.)	Guest, Dr. L. Haden	Maclean, N. (Govan)
Corlelt, Dr. J.	Gunter, R. J.	Mainwaring, W. H.
Corvedale, Viscount	Haire, John E. (Wycombe)	Mattalieu, J. P. W.
Cove, W. G	Hale, Leslie	Mann, Mrs. J.
Crawley, A.	Hall, W. G.	Manning, C. (Camberwell, N.)
Manning, Mrs. L. (Epping)	Rees-Williams, D R	Sylvester, G. O.
Marshall, F. (Brightside)	Reeves, J.	Taylor, H. B. (Mansfield)
Martin, J. H.	Reid, T (Swindon)	Taylor, R. J. (Morpeth)
Mathers, G.	Rhodes, H.	Taylor, Dr. S. (Barnet)
Medland, H M	Richards, R.	Thomas, D. E. (Aberdare)
Mellish, R J	Ridealgh, Mrs. M	Thomas, I. O (Wrekin)
Messer, F	Robens, A.	Thomas, George (Cardiff)
Middleton, Mrs L	Roberts, Emrys (Merioneth)	Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)
Mikardo, Ian	Roberts, Goronwy (Caernarvonshire)	Thorneycroft, Harry (Clayton)
Millington, Wing-Comdr E. R	Roberts, W (Cumberland, N.)	Thurtle, Ernest
Mitchison, G. R	Robertson, J. J. (Berwick)	Tiffany, S.
Monslow, W.	Ross, William (Kilmarnock)	Titterington. M. F.
Moody, A. S.	Royle, C.	Tolley, L.
Morgan. Dr. H B	Scollan, T.	Turner-Samuels, M.
Morley, R.	Scott-Elliot, W.	Ungoed-Thomas, L.
Morris, P (Swansea, W.)	Segal, Dr. S.	Walker, G. H.
Morris, Hopkin (Carmarthen)	Shackleton, E. A. A	Wallace, G. D. (Chislehurst)
Morrison, Rt. Hon H. (Lewisham, E.)	Sharp, Granville	Wallace, H. W. (Walthamstow, E.)
Mort, D. L	Shawcross, Rt Hn Sir H. (St. Helens)	Watkins, T. E.
Moyle, A.	Shurmer, P	Watson, W. M.
Nally, W	Silkin, Rt. Hon. L.	Webb, M. (Bradford, C.)
Naylor, T. E.	Silverman, J (Erdington)	Weitzman. D
Nichol, Mrs. M E (Bradford, N.)	Silverman, S. S. (Nelson)	Wells, P. L. (Faversham)
Noel-Baker, Capt. F. E. (Brentford)	Simmons, C. J.	West, D, G.
Noel-Baker, Rt. Hon P. J. (Derby)	Skeffington, A. M.	White, H. (Derbyshire, N.E)
O'Brien, T.	Skeffington-Lodge, T. C	Whiteley, Rt. Hon. W.
Oldfteld, W. H.	Skinnard, F, W.	Wilkins, W. A.
Orbach, M.	Smith, C. (Colchester)	Willey, F. T. (Sunderland)
Paget, R. T	Smith, H. N (Nottingham, S.)	Willey, 0. G. (Cleveland)
Palmer, A M. F	Smith, S. H. (Hull, S.W.)	Williams, D. J. (Neath)
Paton, J. (Norwich)	Snow, Capt. J. W.	Williams, J. L. (KelvingroveX
Pearson, A.	Solley, L. J.	Willis, E.
Peart, T. F.	Surensen, R. W,	Wills, Mrs. E A
Poole, Major Cecil (Lichfield)	Soskice, Maj. Sir F	Wilmot, Rt. Hon. J
Popplewell, E.	Sparks, J. A.	Wise, Major F. J
Porter E. (Warrington)	Stamford, W	Woods, G. S
Proctor, W. T.	Stephen, C.	Wyatt, W.
Pryde, D. J.	Stewart, Michael (Fulham, E.)	Yates, V. F.
Pursey, Cmdr. H	Strauss, G R (Lambeth, N.)	Zilliacus, K
Randall, H E	Stross, Dr. B
Ranger, J	Stubbs, A. E	TELLERS FOR THE AYES;
Rankin, J.	Summerskill, Dr. Edith	Mr. Joseph Henderson and
		Mr. Hannan.
NOES.
Agnew, Cmdr. P. G.	Fletcher, W. (Bury)	Macdonald, Sir P. (I. of Wight)
Amory, D. Heathcoat	Fraser, H. C. P. (Stone)	Mackeson, Brig H. R.
Anderson, Rt. Hon. Sir J. (Scot. Univ.)	Fraser, Sir I. (Lonsdale)	McKie, J. H (Galloway)
Assheton, Rt. Hon. R	Fyfe, Rt. Hon. Sir D. P. M	Maclay, Hon. J S
Astor, Hon. M	Galbraith, Cmdr. T. D	MacLeod, J.
Barlow, Sir J.	Gammans. L. D	Maitland, Comdr. J. W.
Beechman, N A	Glyn, Sir R.	Manningham-Buller, R E
Bennett, Sir P	Gomme-Duncan, Col. A	Marples, A. E.
Birch, Nigel	Gridley, Sir A.	Marshall, D. (Bodmin)
Boothby, R	Grimston, R. V.	Marshall S. H. (Sutton)
Bower, N.	Hannon, Sir P (Moseley)	Mellor, Sir J
Boyd-Carpenter, J A.	Hare, Hon J. H (Woodbridge)	Morris Jones, Sir H
Bracken, Rt. Hon. Brendan	Harris, H Wilson	Morrison, Maj. J. G. (Salisbury)
Braithwaite, Lt.-Comdr J. G	Harvey, Air-Comdre A. V	Morrison, Rt Hon. W S. (Cirencester)
Brown, W J. (Rugby)	Haughton, S. G.	Neven-Spence, Sir B.
Buchan-Hepburn, P. G T	Head, Brig A. H	Noble, Comdr. A. H P
Butcher, H. w.	Headlam, Lieut.-Col. Rt. Hon. Sir C.	Nutting, Anthony
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)	Hinchingbrooke, Viscount	O'Neill, Rt Hon. Sir H
Challen, C.	Hogg, Hon. Q.	Orr-Ewlng, I. L.
Channon, H	Hollis, M. C	Osborne, C.
Clifton-Browne, Lt.-Col. G	Holmes, Sir J. Stanley (Harwich)	Peake, Rt. Hon. 0
Conant, Maj. R. J. E.	Howard, Hon. A.	Peto, Brig. C. H. M
Crookshank, Capt Rt. Hon. H. F. C.	Hulbert, Wing-Cdr. N, J.	Pickthorn, K.
Crosthwaite-Eyre, Col. 0. E.	Hutchison, Lt.-Cm. Clark (E'b'rgh W)	Ponsonby, Col. C. E
Crowder, Capt. John E	Hutchison, Col. J. R. (Glasgow, C.)	Price-White, Lt.-Col D
Cuthbert, W. N.	Jeffreys, General Sir G.	Raikos, H V.
Davidson, Viscountess	Jennings, R.	Rayner, Brig. R
De la Bere, R	Joynson-Hicks, Hon. L. W	Reid, Rt. Hon J S C (Hillhead)
Oigby, S. W.	Kerr, Sir J. Graham	Ronton, 0.
Dodds-Parker, A. D	Lambert, Hon. G.	Roberts, H. (Handsworth)
Dower, Lt.-Col A V G (Penrith)	Legge-Bourke, Maj. E. A H	Robinson, Wing-Comdr. Roland
Drayson, G B	Lennox-Boyd, A. T.	Ropner, Col. L
Drewe, C.	Lindsay, M (Solihull)	Sanderson, Sir F
Dugdale, Maj Sir T (Richmond)	Linstead, H. N.	Scott, Lord W.
Eccles, D M	Lloyd, Selwyn (Wirral)	Shepherd, W S. (Bucklow)
Eden, Rt. Hon A	Low, Brig. A. R. W.	Smiles, Lt.-Col. Sir W
Elliot Rt Hon. Walter	Lucas-Tooth, Sir H.	Smithers, Sir W
Fleming, Sqn.-Ldr. E L	Lyttelton, Rt Hon. O	Snadden, W. M.

Spearman, A. C. M	Thorneycroft, G. E. P. (Monmouth)	Williams, C. (Torquay)
Stanley, Rt Hon. O	Wakefield, Sir W. W.	Winterton, Rt Hon. Earl
Studholme, H G	Walker-Smith, D.
Sutcliffe, H	Webbe, Sir H. (Abbey)	TELLERS FOR THE NOES:
Taylor, Vice-Adm. E A. {P'dd't'n, S	Wheatley, Colonel M, J	Major Ramsay and
Teeling, William	White, J. B (Canterbury)	Lieut.-Colonel Thorp.

Question put, and agreed to.

Further Amendments made: In page 7, line 15, after "forty-seven," insert: and (b)in so far as they relate to road vehicles, on the eighteenth day of June, nine teen hundred and forty-seven.

In line 18, leave out "that date," and insert: the date of the coming into operation thereof in relation to those goods."—[Mr. Dalton.]

Clause, as amended, ordered to stand part of the Bill.