HC Deb 10 June 1947 vol 438 cc883-8

3.55 p.m.

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

I beg to move, in page 1 line 16, to leave out "fuel oils or any gas oils," and to insert: heavy hydrocarbon oils, other than lubricating oils. The object of this and the next two Amendments in my name is perfectly clear and simple. It is to remove the existing penny a gallon tax on kerosene just as the tax was removed from other heavier oils in this year's Budget. To make the picture clear, I should say that kerosene consists of two types of oil popularly known as vapourising oil and paraffin burning oil. Therefore, they have two different fields of activity. The history of this matter is shortly and simply that a tax was imposed in 1933 with one specific object—in order to discourage the use of these oils and encourage the use of coal. In this year's Budget, however, the tax was removed from the heavier oil classes immediately before this oil class, with exactly the reverse intention. It was removed from these heavier oils in order to encourage their use and to remove certain burdens on the coal supply, which obviously could not carry the load.

I should like to show what the size of the tax is and its scope. The consumption of kerosene in this country is approximately 1,400,000 tons a year, and that is divided into about 750,000 tons of vapourising oil, which is the oil used in engines and tractors, and 630,000 tons in burning oil, with a total yield of tax of some £1,600,000. Though this sum is comparatively small, I feel conscious that one has to consider a request to remove a tax, even if it provides only £1,600,000, very carefully indeed in these days. Unless there is sound reasoning behind the request I do not think that it will be acceded to. I claim there is a very sound reason behind this claim.

The section of the community most affected by the existing tax is the agricultural community. About 50 per cent. of all kerosene used is used in agriculture. That is to say the direct effect of the tax on agriculture amounts to something like £860,000. That is about 96 per cent. of the vapourising oil used in agricultural tractors and engines. About 6 per cent. of the burning oil is used for domestic purposes, for incubators and so on. Some 35 per cent. of kerosene is used for domestic heating, lighting and cooking. As much as 75 per cent. of the burning oil is used for domestic purposes such as for lamps, stoves and cookers. Even in this domestic field the incidence of the tax is felt almost entirely by the agricultural community, or, at least, by the rural community. It is felt by those who have no other means of performing these types of service. Therefore, it is fair to claim that this is almost a discriminatory tax in its objective. It is felt by one specific section of the community, and that section not by any means over-blessed with the good things of life, compared with other sections of the community.

It seems to me, as a matter of principle, that it is not right to add to the cost of producing food when the cost of the food to the consumer is already heavily subsidised by the community. Though the additional cost is only some £1,500,000, yet, as a matter of principle, whether it be large or small, it surely cannot be decided on that consideration alone but must be regarded in relation to the cost of food and its effect on maintaining that cost of production at a certain level or below. Otherwise, why not go further and add a heavier tax so as to have an enormous surplus at the end of the year which the Chancellor can then pay out from the other pocket in order to keep the cost of food down?

4.0 p.m.

I would also ask the Chancellor to consider the comparative picture provided by the situation of those in the rural districts and those in mining areas. A great deal has been done and is planned, so we are assured by the Chancellor, to encourage the miner and the miner's wife. A great deal is being done by means of the supply of food and the old established practice of providing fuel for the miner's home, but it does not seem to me to be a very good thing to keep a tax on the means of heating and lighting rural houses while at the same time continuing to supply free coal in the mining villages. I do not think that that comparison is a very happy one, and it is not a point that we want to rub in, but it means that extensive differences exist between one section of the community and another.

The tax on diesel oil was removed in the Budget, but the diesel oil tractor used in agriculture is almost entirely confined to large farms. During the Debate on the Budget Resolution I made an interruption which rather implied that there were no petrol engine tractors in use in this country at all, and that they nearly all used diesel or vaporising oil. The actual figures taken from the January, 1946, return of agricultural machinery show that there were 182,500 tractors burning vaporising oil, 16,500 burning petrol and 12,500 burning diesel oil. Those numbers have gone up in each case with the estimated number of tractors, now increased by 20,000. This does show that the overwhelming majority of tractors in this country burn vaporising oil. Therefore, if this tax is maintained, it hits at the smaller farmer every time and not at the bigger one. The small farmer is the man whom we want to encourage. He sets the standard, and it is on his standard very largely that the prices of food produced in this country are based.

Incidentally, the fact that diesel oil and fuel oil are free of tax is of assistance to the man who owns a large house and can put in oil-powered central heating. At the same time, the tax is maintained on the man who wants to burn one small paraffin stove. Such a person often cannot obtain alternative services of electricity and gas, and, so far as I know, electricity and gas for the city dwellers are not taxed. I would ask the Chancellor to consider this. If, in 1933, agriculture in this country had been as highly mechanised as it is today, would this tax on the fuel used in agricultural tractors ever have been imposed? Our view is that no Chancellor would have dared to take that step. I urge the Chancellor to look at this matter very carefully and to give way on it. This is the first ball in the first over of what may be a very long match, and I hope he will play it very nicely, because my attitude towards some of the things he says in ensuing days will be governed very largely by his sympathetic approach to the difficulties of the agricultural industry. It may seem a small point to him, but I can assure him that he would be giving very great encouragement to those concerned if he would give way on this matter.

Mrs. Leah Manning (Epping)

I rise to support this Amendment very briefly. I was not quite sure whether the Chancellor wanted to obtain income from this tax or to prevent the use of more oil than was necessary so that he could have more for conversion purposes. I am assuming that the latter is his real intention. Quite apart from the need of this oil in the agricultural industry, the needs of cottage homes and rural areas for oil represent an inflexible demand. It is not one that can change because the oil is made more expensive. Like another Amendment which appears later on the Order Paper with regard to gas and electric cookers, this concerns something which people must have. Whether we make it more expensive and so raise the cost of living and discriminate against people who live in villages and small cottages, or whether we just help them a little by removing this tax, they will still use the same amount of oil.

If a cottage is not supplied with electricity or gas there is only one way in which it can be lighted, in which food can be cooked or in which the place can be warmed. In winter time it is also very often necessary in these cottages to put a small light in a bathroom or something of that kind in order to prevent burst mains. This oil is obviously necessary and, as I have said, it represents an absolutely inflexible demand. For that reason I hope that the Chancellor will soften his heart for once and give us what the Amendment asks.

The chancellor of the Exchequer (Mr. Dalton)

The first ball in this timeless test having been bowled, I am anxious not to disappoint the hon. Member for Weston-super-Mare (Mr. Orr-Ewing) or my hon. Friend the Member for Epping (Mrs. Manning) who is an old associate of mine in propaganda in rural as well as in urban areas. [HON. MEMBERS: "Old?"] The description "old associate" might be true of a very young person. We were boy and girl together. A very good case has been made for this Amendment and it was, of course, debated on an earlier occasion. I hope that I did not give the impression, even then, that I was adopting an inflexible attitude. We are now at the beginning of the Committee stage in which a number of proposals will be made to me not to fortify but to attenuate the revenue, and if I accept this one, then, although I hope I shall obtain the goodwill of the hon. Gentleman—he half promised me that he would not give me any more trouble in those circumstances—at the same time, it does mean that to that extent I must be a little less eager to accept later proposals. This will cost £1,500,000 of revenue a year. At the same time, as I have said, the case for the proposal is undoubtedly strong.

The agricultural countryside is in need of all the help we can give it. It has passed through floods and troubles on an exceptional and grievous scale, and it is the great dollar saver in these critical days through which we are now passing. Therefore, on behalf of His Majesty's Government and, I think, of all sections of the Committee this afternoon, I am anxious to do all I can within the bounds of the Finance Bill to help the agricultural and rural community in general. It is a fact that in regions which are remote from electricity and gas supplies kerosene is an indispensable element for lighting and cooking, and I should be very sorry to impose even this relatively small sum—relatively small in relation to the total, but relatively small is substantial to the poor man—or to do anything to resist the alleviation proposed in this Amendment. There are also considerations regarding agricultural tractors and so on, and I understand that such tractors make use of kerosene to a considerable extent.

So, on the clear understanding that if I accept the Amendment I shall be less able to accept later Amendments involving further inroads on the revenue; and, on the part of the hon. Gentleman who moved the Amendment, that he will keep quiet later on; and further, that I shall retain the good will of the hon. Lady on all issues which may arise, I am glad to accept the Amendment, in principle. I shall have to ask the hon. Gentleman to be willing to withdraw it in this form because it will need a little readjustment. I give an undertaking to move on the Report stage an Amendment giving effect to this principle, to operate from 1st September.

Captain Crookshank (Gainsborough)

Before my hon. Friend asks leave to-withdraw the Amendment, which I am sure he will do in view of the Chancellor's undertaking, I would like to say that we are all very grateful to him for the very wise attitude he has taken. As the tax stands, although the aggregate amount involved may not be very large compared with the total expenditure, and though the actual cost to any particular individual is not very great, the fact remains that, on the burning-oil side of this matter, this tax is a tax upon an amenity. We are all anxious to try to improve the amenities of the countryside. Lack of electricity and gas is a very serious lack of amenity, and it would be very unfortunate to tax those who are unable to get the amenities which we want to give to everybody. On the motive-oil side, it is the small farmer who will he most affected, because of the kind of tractors which they use. The continuation of this tax would have the unfortunate effect that the more the farmer uses his tractor in order to cultivate better his land and gel the maximum production, the more tax he will have to pay. Therefore this is a direct, though perhaps not a very great, tax upon production. I am sure that all of us who sit for agricultural areas or who are interested in the future of agriculture will be most grateful for the forthcoming attitude of the Chancellor of the Exchequer, for which my hon. Friends and I deeply thank him.

Mr. Orr-Ewing

I also desire to express my gratitude to the Chancellor of the Exchequer for what he has done and for the encouraging way in which he has met the Committee. I would like to make only one personal proviso which is that I cannot promise to keep absolutely quiet. I have another matter in prospect, relating to dustbins. In view of the undertaking given by the Chancellor of the Exchequer, I beg to ask leave to withdraw the Amendment

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.