Clause 1.—(HYDROCARBON OILS, PETROL SUBSTITUTES AND POWER METHYLATED SPIRITS.)

HC Deb 05 June 1951 vol 488 cc811-907

3.30 p.m.

The Chairman

It might be helpful if I informed the Committee that on Clause 1 I shall have to rule the first Amendment to leave out subsection (1) out of order, as subsection (1) is really the only effective subsection. I do not propose to select any of the other Amendments to this Clause, but to invite hon. Members to make the points they wish to make on the Question, "That the Clause stand part of the Bill."

Captain Crookshank (Gainsborough)

It is rather a startling decision, Major Milner, if I may say so with respect, because the Amendments raise specific and quite different points. There is the point in the two Amendments to Clause 1, page 1, line 24, with regard to chairs for the disabled. There is the Amendment to page 1, line 24, dealing with the use of oil for industrial purposes, and there is the one to page 2, line 19, with regard to the use of oils in connection with testing aircraft.

We thought that specific and pinpointed debate might be of help to the Committee. However, you in your wisdom have decided not to select those Amendments, and therefore we cannot in the normal practice of the House discuss your decision. But you pointed out that you were not calling the first Amendment because it was out of order. With respect, may I put to you certain considerations on that point? I should have liked to do it on the others, but, out of deference to the normal procedure I cannot do so.

On the first point, I take it that, in announcing that it is out of order, you rely on the argument which is clearly stated on page 534 of Erskine May that, if a subsection is the material part of the Clause, it cannot be debated separately because, without that subsection, the Clause would not make sense. That is the gist of the ruling in Erskine May. Taking the argument at its strictest, we could not quarrel with your decision, but I submit to you and to the Committee, in case consideration should go further later on, that this is the Finance Bill and that, in recent years, the practice on the Finance Bill has been much modified.

That Ruling has stood the test of time for a long while, but in November, 1947, this House of Commons altered Standing Order No. 86 to the effect that there is no debate now on any Budget Resolutions separately. There is the general debate on the last Resolution which covers the whole field and, as everybody knows, different speeches follow each other on different topics and there is never anything specific. We used to have that on the Report stage, but that has now gone. When we had it, of course it was possible to put down specific Amendments and get even more detailed debate than is permissible now.

What I want to put to you, Major Milner, is that, in view of that change in 1947, the Committee stage of the Finance Bill is the first effective time that the House in Committee has of discussing any details. Therefore, while we cannot quarrel with your decision when you rule it out of order, and while that may be so on the strict ruling now, would it not be possible to have such a discussion on details now, particularly as we had the debate last year on this very point? Of course, it may be that was a mistaken decision then, but we did have it, and we fortified ourselves by the hope that it would be possible today.

If you cannot rule otherwise than that it is out of order, of course we have to accept your view, but we would reserve our rights on some future occasion to see whether we cannot get this sort of detailed debate more effectively on the Committee stage of the Finance Bill, in view of the abolition of the Report stage of the Resolutions. One has to remember, when all is said and done, that Finance Bills are not discussed in another place even if they need to be altered purely for technically linguistic reasons. There is no possibility of alterations there, and the Report stage of the Finance Bill in this House is, like all Report stages, very circumscribed. So while you have given the Ruling that it is out of order, I wonder whether even now you would not be prepared, in the light of the situation, to reconsider this problem which, incidentally, will arise again on the next Clause.

The Chairman

I am indebted to the right hon. and gallant Gentleman and, frankly, I have some sympathy with the views he has expressed in that there has been a difference in practice in another respect. However, I do not think that really helps the right hon. and gallant Gentleman in the present circumstances. It is also quite true that last year I rather gave way to the blandishments of the right hon. and gallant Gentleman and his colleagues, and came to an understanding whereby I allowed the Amendment to subsection (1) to be called on the understanding that there was not a further discussion on the Question, "That the Clause stand part of the Bill."

Possibly I was wrong in coming to that decision, and as I have had to consider it again this year, I feel I must adhere to the strict rules of the House and rule the Amendment out of order. Of course, there will be a full opportunity on the Question "That the Clause stand part of the Bill" to make all the points which the right hon. and gallant Gentleman and his hon. Friends wish to make. I will certainly take account of what the right hon. and gallant Gentleman has said between now and another occasion, if it so happens that the same point arises again, because I think there is something in what the right hon. and gallant Gentleman has just said. For the moment, however, I must adhere to my decision and rule the first Amendment out of order.

Lieut.-Commander Gurney Braithwaite (Bristol, North-West)

May I very respectfully make a submission to you, Major Milner, with regard to the other Amendments which you have not selected? Where a Clause increases a tax, are there not ample precedents for Private Members seeking to move definitive Amendments excluding certain sections of the taxpayers? The precedent I would quote was in 1947, when the Tobacco Duty was raised and there was a Private Member's Amendment which specifically excluded old age pensioners from it. I also have in mind on this occasion the Amendment in the name of my hon. Friend the Member for Bridlington (Mr. Wood) to Clause 1, page 1, line 24, at end, insert: except that in the case of hydrocarbon oils used for the propulsion of invalid chairs driven by disabled persons the rate of duty shall remain at eighteen pence a gallon.

The Chairman

I agree entirely with the hon. and gallant Gentleman that there are ample precedents. However, I am not ruling the other Amendments out of order; I am merely not selecting them, which is rather a different thing.

Mr. Jennings (Sheffield, Hallam)

Further to that point of order. Do I understand from what you have ruled, Major Milner, that there will be a full and broad discussion on the Question "That the Clause stand part of the Bill "?

The Chairman

Certainly, I have said that a full discussion will be allowed, so far as I am concerned, on the Question, "That the Clause stand part of the Bill," and hon. and right hon. Gentlemen can make their points on that Question.

Mr. Clement Davies (Montgomery)

I understand, Major Milner, that you are ruling definitely that the first Amendment is out of order—that I can understand—but that, with regard to the other Amendments, for some reason or other you do not propose to call them. How are we Members to differentiate between the use of certain types of oil and the taxes which will be upon them? It may be that we are in favour of a tax upon certain uses but against others. The only way we could show that would be by inserting certain words which are proposed to be inserted by the Amendments we have put down. I do not understand, therefore, why those cannot be called.

The Chairman

It is perfectly true that we cannot have a Division on any of them but right hon. and hon. Gentlemen may put their points to the Chancellor in the debate on the Question "That the Clause stand part of the Bill." I would point out—I think I am right in saying this—that on previous occasions the same points have been raised, although I must not be drawn into argument as to the reasons for the selection or non-selection of Amendments.

Mr. C. Davies

If the only Question that will be before the Committee is to be "That the Clause stand part of the Bill," I would point out that it may be that we are in favour of certain parts of the Clause as against other parts, and the only way in which we can make that distinction clear is by words such as appear in the Amendments.

The Chairman

There is, of course, another stage of this Bill, and it will be a matter for Mr. Speaker to consider in his turn whether the Amendments should be selected or not. In that matter it is not for me to express any view.

Sir Herbert Williams (Croydon, East)

Surely it is quite unprecedented that a Clause of the Finance Bill is to be discussed without the chance of any consideration of any Amendment whatever. As the right hon. and learned Gentleman the Leader of the Liberal Party has said, there are certain issues which are quite separate from the general issue. We can talk for many hours, and I hope that in existing circumstances we shall, on the Question "That the Clause stand part of the Bill," but we cannot separate the general issue whether the Petrol Duty is to go up by a certain amount from the issue whether petrol used for particular purposes shall be treated differently from petrol used for ordinary purposes, which seems most extraordinary. This is creating an entirely new precedent in respect of the discussion of the Finance Bill.

Mr. Eden (Warwick and Leamington)

I have no desire, nor have any of my hon. and right hon Friends, to challenge—we know very well that we cannot do so—the power of selection of the Chair, which is an old-established right of the Chair; but I should like to put to you, Major Milner, this submission. If I understood you aright, you said that one of the considerations that had been in your mind was the fact that these matters had been discussed last year. With all respect to the Chair, I would say that that really is not relevant to the decision which the Committee has to take. We meet every year in a set of circumstances entirely different from those of the previous year, and it would be most unfortunate if this Committee were ever to consider that what had happened previously in any way debarred us from discussing and voting on what is happening now.

There is another consideration I would put to you, Major Milner. It is true that, on the Question "That the Clause stand part of the Bill," the Committee can say what it thinks about the detailed application of any particular duty, but as the Leader of the Liberal Party said, we cannot express through the Division Lobby what we think. I suggest to you, Major Milner, that that is a distinction of some importance that ought to be maintained.

The Chairman

I fully appreciate the arguments which the right hon. Gentleman has advanced, which are very weighty. I have, however, fully considered all those points, and in the exercise of such judgment as I have I have come to a decision for which I think there are good grounds, although, it being a matter of selection, I am unable to indicate what those grounds are.

Sir Ian Fraser (Morecambe and Lonsdale)

May I raise a slightly different point? You were good enough to say, Major Milner, that between now and next year the Chair would consider the powerful arguments that have been put as to the change in procedure in connection with the Budget Resolutions and how far that might affect the decision which you have now made. My only point is to ask whether you will give that consideration between now and the next Clause rather than between now and next year, so that the precedent that you have now established for our immediate discussions will not rule the whole of the proceedings of the next seven or eight days.

3.45 p.m.

The Chairman

I must, of course, be consistent. Clearly I cannot change my mind between Clause 1 and Clause 2, whatever views may be expressed. The considerations advanced by the right hon. and gallant Member for Gainsborough (Captain Crookshank) deserve consideration, but they deserve long consideration and not consideration on the spur of the moment. I feel, therefore, that I must adhere to my decision.

Mr. Pickthorn (Carlton)

With every respect to you, Major Milner, and with only less respect to you than to Mr. Speaker, may I refer to the last answer but two or three which you gave, when you suggested that this would again be a matter for the consideration of Mr. Speaker? May I ask two questions? The first is whether the whole of this intricate law of procedure about our financial processes is not designed to make sure that no charge shall either be put or kept upon the public without annual challenge? The second is whether the whole existence of the Committee of Ways and Means of the whole House was not designed in order to make sure that such matters should be raised without there being any responsibility upon Mr. Speaker or any chance for him to exclude any such matter from the consideration of the House? That is why at this moment we are not in strict technical language the House but a Committee of the whole House. I respectfully put those two questions to you now.

Mr. Eric Fletcher (Islington, East)

Before you deal with that point, Major Milner, may I put briefly two other considerations from this side of the Committee? First, is not the whole of this discussion entirely irregular in the sense that it is quite unprecedented, when you have given a ruling about which Amendment you propose to select or not to select—

The Chairman

May I dispose of that point at once? It is perfectly in order to make representations to the Chair on matters of order but not on the question of selection.

Mr. Fletcher

I was dealing with the question of selection. My other point concerns one which was raised by the right hon. and gallant Member for Gainsborough (Captain Crookshank) and others. They referred to the change in procedure which occurred in 1947 and suggested that that might have some bearing on the procedure at this stage. Surely the difference is that in 1947 the House quite deliberately decided to change the Standing Orders, and in view of the multiplicity of the stages in which the Finance Bill and the Budget Resolutions were previously discussed, it was decided to eliminate certain stages.

One of those stages was the discussion on Report of the Budget Resolutions. Nothing was said or suggested at that time to indicate that because that stage was to be eliminated there would be any change in the ordinary procedure whereby this Committee dealt with the Finance Bill. Therefore, would you bear in mind that, in considering whether you were correct or not in ruling the first Amendment out of order, the same procedure should be adopted now in regard to that Amendment as was adopted prior to the change which the House made in 1947?

The Chairman

I am much obliged to the hon. Gentleman. I have had all those points in mind, but when a new argument which on the face of it seems worthy of consideration is advanced to me, from whatever part of the Committee it may come, I must necessarily give consideration to it. That is what will be done.

Mr. Charles Williams (Torquay)

I wonder whether I might, with great respect, ask you, Major Milner, if there is any precedent for not calling an Amendment on the details of a main Clause in the Finance Bill in which a very heavy increase of taxation is being imposed, and whether, if that is followed in the future—

The Chairman

The hon. Gentleman is now dealing with the question of selection, and he will appreciate that it is not competent for him to argue that matter.

Mr. Williams

I was not arguing about selection; I accept that; but I was about to ask how in future, where there has been an increase such as this, the Committee is to indicate whether it wishes to grant only half of the increase? How would it be possible for us to discuss that properly?

The Chairman

The answer to any question on order is that right hon. and hon. Gentlemen endeavour to put themselves in order in the future.

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

Captain Crookshank

I think the last quarter of an hour will have given us all a great deal of food for thought in the coming months with a view to our finding how best to discuss these matters of very grave difficulty and very serious importance.

Now we come to the first Clause of the Finance Bill which is designed to increase the revenue by some £35 million, and even in these days of great figures that is a sum of importance, to put it mildly. This Clause, as we are not discussing any Amendments today, sets out to increase the duty by 4½d. a gallon. It is interesting to look back. I do not want to detain the Committee very long, nor am I going into any part of the details about the separate uses of petrol, because the points which would have been raised on the Amendments will be discussed by other hon. Members who are fortunate enough to catch your eye, Major Milner.

I wish to take a rather broader view of the matter proposed here. Last year, when the Budget was opened and the proposal was made to increase the duty by 9d. the gist of the argument advanced by Sir Stafford Cripps was the need for the restriction of consumption and the conserving of dollars. In fact, what was being done, if the argument was correct, was what we always understood the Labour Party was against, namely, rationing by the purse. However, that was in the Budget Debate in April.

At Whitsuntide, before we came to the Committee stage of the Finance Bill, the Government did what was characterised, if I may use inverted commas, as "irresponsible" when my right hon. Friend the Leader of the Opposition suggested at the time of the General Election that it should be done; they de-rationed petrol. Therefore, the whole argument about restricting consumption went by the board. If the Government had wanted to restrict consumption, obviously the easiest way of doing it was by the rationing system. So in Committee last year the argument shifted away from that altogether, and the right hon. Gentleman who then led for the Government argued that the purpose of raising the Petrol Duty last year was to set off the remissions being made in other parts of the Budget—not the argument used when the Budget was introduced at all, but a nice convenient one then.

That being the background of the discussion last year when the duty was put up to 9d., I looked to see what arguments were supporting the case this time, and in the Budget speech of 10th April there were four. It is with them that I wish to deal, and I hope to receive some support from hon. Members in all parts of the Committee, because this is not particularly a party issue. It raises a very important economic matter on which I thought that in the past all parties had agreed. The four arguments this year were these. First, referring to the increase last year, the right hon. Gentleman said: …in my opinion it was overdue."—[OFFICIAL REPORT, 19th April, 1951; Vol. 486, c. 863.] That was the first argument. The second was that he had seen little sign of the damage which last year we alleged would follow the raising of the duty. The third reason he gave was that he was satisfied that in the present circumstances there was good reason for a further contribution from this source. His fourth reason was that, even with the increased duty, as by this year's Budget, the price of petrol would still be lower—in some cases substantially lower—than in most European countries. Those were the four arguments—overdue; no damage as a result of the increase last year; present circumstances demanded it; and anyway, at the end of the story, it is cheaper than in many European countries.

Let me take the first argument. The right hon. Gentleman thought the increase last year was overdue and he saw no harm in raising the duty still further this year. That seems to be the most fantastic new theory of taxation ever evolved. What is the underlying thought if we accept it? It is that sooner or later everything should be taxed; nothing should ever be exempt. All we should do is wait our turn, sit quietly and wait for our turn to come round; sit patiently in the queue and meanwhile count our blessings if our turn has not come this year; and in due course the Chancellor will say, "Oh, that one is overdue; up it goes."

There is also something else to presuppose about it. We have argued—I will not say ad nauseam, because that would not be a polite thing to say about speeches made in the House—we have argued and have still failed to impress upon the right hon. Gentleman and his colleagues that there is no reserve of taxable resources in this country. He does not accept that. But this theory that we have only to wait our turn for the tax to go up when some particular impost is overdue does presuppose that there is always a reserve which can be drawn upon without doing anybody any harm. The fact remains that people who have tried to envisage the result of this extra 4½d. have said that out of the £35 million something like £30 million will be passed on to the consumer. That will be a very serious matter.

That is the first argument. It is ridiculous, this saying that any particular commodity is overdue for an increase in the tax upon it. When a British Chancellor says that, it must make his predecessors turn in their graves.

The second argument of the right hon. Gentleman was that he had seen very little sign of damage as a result of the increase of 9d. imposed last year. Well, I should not like to call him "Little Johnny-Head-in-Air" but his is that sort of attitude. Does he really think that there has been no damage to anybody, and to the motoring industry in particular, by the increase in the duty which was imposed last year? Does he really think it makes no difference that in a period of less than 24 months the cumulative effect of the increase on existing licences, Purchase Tax and Petrol Duty has brought from the motor industry a revenue of £270 million—more than twice what it had been less than 24 months before?

Does he think that this great industry and the transport industry of the country can stand that sort of impost without suffering any damage at all? It is now generally accepted that the private motoring sector of the industry is some 15 per cent. Even if the fallacious theory held by so many hon. Members opposite that it is only wealthy people who have motor cars anyway is accepted, even then, at the end of the story, that covers only some 15 per cent. of the whole.

The right hon. Gentleman has seen little sign of damage. Has not he heard of increased bus fares? He does not have to use taxis, but other people have realised the increase in the taxi rates in London, and the increase in the provincial bus rates, whether the buses are privately owned or owned by a corporation. Has not he heard of the increased transport rates, or has he been asleep ever since last year? The right hon. Gentleman is much too astute not to have noticed such things, and I cannot understand how in his Budget speech he could solemnly say that he has not seen any sign of damage.

Now we can see the effects of the 1950 rise. We can see, for example, that it meant a 4 per cent. increase in the operating costs of provincial omnibuses. That is some damage, surely. It has meant an increase of 5 per cent. in the costs in the London area. That is about 1d. per car mile, which is appreciable. And now, if we are to raise the duty by 4½d. more presumably, other things being equal, that will mean an increase of ½. per car mile over the 1d. Of last year in the bus world.

4.0 p.m.

Has not the right hon. Gentleman noticed that the Road Haulage Association put this increase of 4½d. which is to be imposed now as costing them, with their 120,000 vehicles, £3 million in the coming year; whereas British Road Services, with their 40,000 vehicles, have put their extra cost at £1,500,000. What is the result? The Road Haulage Association has recommended increased charges of 2½ per cent. as a result of this, over and above what has happened since the increase in 1950. British Road Services have not recommended a flat 2½ per cent. increase, but one of 2 per cent. for vehicles travelling under 40 miles and 3 per cent. for those travelling over 40 miles. That applies in the zones where they have complete monopoly, so they can do it just as they like, which is not surprising.

British Railways estimate the cost of this increase as £250,000. Last year it was £500,000. One could go on right through every industry which uses transport on the roads, and that includes every industry in the country. No damage? The meat traders say that this will cost an extra £250,000 in their line of business, and they do not get much meat to distribute either. The Coal Merchants' Federation say that this extra increase will cause an increase of 2d. a ton on the retail price of coal. The right hon. Gentleman must be horrified at the heights to which coal prices have gone since he left that Department, and now they are to rise by an extra 2d. per ton. Furniture removers say that there will be an increase of ½d. a mile in their case. The Ballast and Sand Association say that there will be an increase of anything up to 5d. per cubic yard. Building trades employers estimate that it may mean as much as an increase of £10 per local authority house. Birmingham Corporation Buses put their extra cost at £112,000.

No damage? These are increases over what happened last year. This really is a very serious matter. Nor can we possibly forget the major industry of all, the agricultural industry, which has had this extra addition to its costs imposed upon it after this year's February Price Review and the settlement of all the charges. If the right hon. Gentleman thinks that the last increase either has not done damage in the last 12 months or that the increase this year will not cause damage, he reveals himself as living completely in the clouds.

Another item in his argument was that, at the end of the story, petrol would be substantially lower in price than in many other countries in Europe. When one is talking about organising a great transport fleet, or even buying a small secondhand car, one does not look at the cost of petrol and at nothing else. If one is talking about organising a form of transport or using it for oneself, obviously one sees what all the different costs will be before one can put that car on the road. One takes into account such questions as licensing duties, Purchase Tax, and so on. When one does that, one finds that the right hon. Gentleman's figure is right purely from the petrol point of view, but when taking the cost of running figures, whether it is for big transport or for a small car, the cost in this country is higher than that in any other country in Europe, with the exception of Spain. We must remember that this country, the United Kingdom, uses immeasurably more motor transport than any other country in Europe.

I notice that the hon. Lady the Member for Coventry, South (Miss Burton), looks a little sceptically at me. The cost for a 10 horse-power car doing 5,000 miles a year in this country is a great deal higher than the cost in any other country in Europe with the exception—and, knowing her views, I do not suppose she will mind about this one—of Spain. That is the only country where it is more expensive to motor than here. That is very strange.

Miss Burton (Coventry, South)

I was not looking sceptically at the right hon. Gentleman. I was merely surprised that he, when he had developed a very good case on his first two points, decided to go further. I thought that he was astute enough to realise, in developing his third argument, that it did not hold water at all because it introduced other considerations.

Captain Crookshank

That is the whole point. One has to introduce other considerations when talking about the damage or lack of damage done by the increased duty. That was argument number two—no damage done. Then I come, quite logically, to the point that one has to take into account, when discussing the damage, all the costs of running transport as well as the petrol cost. While the right hon. Gentleman says that petrol is cheaper here than in the rest of Europe, the fact remains that, if we took at the figures for the whole of the taxation in all the countries of Europe, we have the highest, with the exception of Spain. Therefore, I do not think that that is a good argument for the right hon. Gentleman to put forward.

Then I come to his other point, because I have altered the argument to cover the last two together. The other argument was that he was satisfied that in our present circumstances there was a good case for a further contribution from this source to provide additional revenue. The words, "from this source" beg the whole question of the other three arguments. I do not think that they carry weight, but one has to consider the whole range of circumstances. In using those words, no doubt the right hon. Gentleman was thinking of the enormous burden which, through the defence programme, he was having to put upon the country. I also bear in mind the consideration that road transport, surely above all else, is the life blood both of the defence programme and of industry. It is the one industry which ought not to suffer specific imposts.

Surely, the whole idea is that one should move goods and people about in this country as cheaply as possible, and not use this industry as a source of revenue. I know that the right hon. Gentleman argued before, "Oh, yes, there always was a petrol tax." That is true. I concede that argument, but it does not follow that we all approved of it by any manner of means. There is a very big difference in the considerations which apply if we have a small tax and if we have a high tax.

A very small tax in a period like that when it was originally put on, when there were great reserves of taxable capacity, is quite different from putting on within 12 months 1s. 1½d. a gallon when we have no reserves. It is these present circumstances which are the very reasons this ought not to have been done. The right hon. Gentleman can argue about the defence programme. I put the question the other way. I say that the need for cheap transport is paramount, and here we are deliberately forcing up its price.

I gather that the export market is still of interest to His Majesty's Government. We have to remember that, by the change in the horse-power tax, the manufacture of larger cars was made possible in this country in a way which was not possible before. Other hon. Members will develop this point, but I will put it briefly. The result was that in two years the export of cars of over 14 horse-power went up by 10 per cent., from 18 per cent to 28 per cent., which was a considerable increase; but if within 12 months the Government increase the Petrol Duty to the extent of 1s. 1½d. a gallon, it seems to me that they will bring back the very circumstances which originally induced the manufacturers to make the small car which was economical on petrol.

Therefore, just those firms which have been thinking of giving up the manufacture of the small car, because they were getting into the export market with the larger car, will, because no export market can survive without the background of a home market even if at the moment it is restricted, find themselves driven back into doing exactly what they did not want to do. To that extent, possibly, the right hon. Gentleman is making a worse job of the export of these motor cars than even he may fear in these circumstances.

I think that present circumstances are not a good case for a further contribution from this source. I think they prove exactly the reverse, unless, of course—I hardly dare whisper it—it was made to cover the curious fact that the £35 million required from this Petrol Duty is exactly the same amount as was lost by the groundnuts scheme. Without that disastrous venture, this £35 million would not have been required.

The Financial Secretary to the Treasury (Mr. Douglas Jay) indicated dissent.

Captain Crookshank

It is no good the hon. Gentleman shaking his head; these are the figures. It is the cumulative effect of all these taxes which matter. Some people, even hon. Gentlemen opposite, may say "Well, 4½d. a gallon is not so very much, after all." But we had 9d. last year. It is like the people who say that the extra 6d. on the Income Tax is not very much. But we have had it at 9s. for a long time, and it is the cumulative effect that matters. I do not like using the old proverb about the last straw, but the right hon. Gentleman must be sure that there is a time rapidly coming when the last straw is going to make all the difference, and perhaps he is getting to that stage now. We shall certainly oppose this Clause when the Question is put.

Lieut.-Commander Gurney Braithwaite

When, a few minutes ago, the Committee was dealing with certain procedural difficulties, the right hon. and learned Member for Montgomery (Mr. C. Davies) pointed out that we are now confronted with what must be described as a bulldozer, and definitive objections cannot be taken through the Division Lobby. I think that all that remains is for those of us who object to this increased duty to indicate briefly, as we should on a Committee stage, those headings under which we believe this proposal to be objectionable.

I come first to its effect upon distribution. I submit to the right hon. Gentleman, and indeed to his hon. Friends who sit behind him, that this increased Petrol Duty is, in fact, a food tax, and a food tax of an onerous character which will reflect itself, without the slightest doubt, as the months go by. Then, I pass to the effect of this duty upon a section of the community with whom hon. Members on all benches have always had the greatest sympathy in their plight—the disabled ex-Service men who, as we all know, have small cars, invalid chairs and so on, which enable them to get about. I have no doubt that I shall be told by the Minister, or whoever replies to the debate, that their consumption of petrol is infinitesimal. That may be so, but it is the section of the community upon whom the very slightest increase in the cost of living falls particularly harshly.

I submit to the right hon. Gentleman—because it is he whom I am addressing, and not the hon. Member for Bermondsey (Mr. Mellish), who is not yet in charge of the Finance Bill—that he might do well to study the discussions which we had in 1947, when the increased Tobacco Duty—a very sharp increase it was that year—fell with great severity upon the old age pensioners, and how representations were made to the Minister of Local Government and Planning, who was then in charge, and not from these benches alone. The right hon. Gentleman was strongly pressed by his own supporters—and the hon. Member for Sparkbrook (Mr. Shurmer) was one of them—and, as a result of the Committee discussions, which were later carried on into the Report stage, this matter was in fact rectified. Though it was not done for some months, it was rectified in the autumn of the year in which the impost was made.

4.15 p.m.

While my hon. Friend the Member for Bridlington (Mr. Wood) cannot move the Amendment that stands in his name, I hope we may hear from him later. If this cannot go into the Division Lobbies—and, had it been taken into the Lobbies, the consequences might well have been interesting—I feel confident that there is a strong feeling on both sides of the Committee that this matter should be re-examined in regard to this particular section of the community, and on that point the right hon. and learned Member for Montgomery was right. Whatever may be the feelings of hon. Members opposite about the Petrol Duty as a whole, here is one particular impact of it upon a small section of the community which I feel sure hon. Members would like to amend.

Mr. Mellish (Bermondsey)

As the hon. and gallant Gentleman has been developing the argument about disabled people, he might also remind the Committee that they get an allowance of £50, and that they received an increase from £45 to £50; and that, if there is any hardship, we should bear in mind what has already been done.

Lieut.-Commander Braithwaite

That was the result of the opportunity of debating the matter in detail a year ago in Committee, and the hon. Gentleman must know that these concessions, which really were of very small value, were the result of discussions on the increased duty which operated in the financial year 1950–51. We are now confronted with yet another increase for the year 1951–52, so that the case for a further concession is established out of the hon. Gentleman's own mouth. I hope we may have his support in the Lobby later on, if he really feels that way about it.

I pass from that aspect of the matter to a somewhat wider one, and here I frankly do not expect to carry hon. Members with me even an inch of the way. It deals with the "sacred cow" of Socialists—British Railways. As traffic has been more and more diverted to the roads, this increased Petrol Duty is once again a syndicalist action—that is how I described it a year ago—and is an attempt, by increasing the costs of road transport and distribution, to drive traffic back to the railways. But there is a bottleneck on the railways at this very moment. We have been reading about it. Many of the summer trains are to be taken off, and Messrs. "Biff" and "Buff" will have to revise their conversation. They were congratulating one another not so long ago on the prospect of the summer excursion trains. Messrs. "Biff" and "Buff" will have to take to the motor coaches—probably those operated by private enterprise—before the summer is out.

Here is a syndicalist action, and what now becomes of the invitation of the Minister of Fuel and Power to the public to stock up their coal supplies during the summer months? What is the Chancellor's contribution to the housewife's stocking up? It is to increase the cost of the transport of coal from the pit to the home. I wonder whether the Chancellor had a word with the Minister of Fuel and Power prior to taking that action.

This Budget, now taking statutory form, is one in which the right hon. Gentleman finds himself, in one of his perorations on that historic day, placing the burden on the shoulders of those least able to bear it. Is there no end to Socialist tyranny? Is it not worth while considering for a moment that even full employment has become short-time employment in many parts of the country, and that the right hon. Gentleman, by this petrol impost, is making it more difficult for our industries to compete in foreign markets? Has he seen the long faces of the taxi drivers during the last few days? They are the victims of this, and they are now experiencing a consumers' resistance of a most marked character. I know that taxi drivers hope that later on, as in the case of the Tobacco Duty, people will recover their taste for this particular luxury—for that is what it is now—and will come back to them.

But the consumers' resistance experienced by the taxi drivers is, I submit to the right hon. Gentleman, only a pointer of a consumers' resistance which will spread into many parts of industry and into many sectors of popular demand. If he is wise, he will realise that if this Clause is steam-rollered through without a discussion of Amendments, or, perhaps, without a debate on many of its details, this is merely a pointer of what is likely to happen. By insisting on Clause I of the Finance Bill, the Chancellor is damaging his revenue, and taking the short rather than the long view for stimulating it.

Mr. David Renton (Huntingdon)

I am neither a financier nor an economist, but it is my duty to try to follow the Chancellor's reasons for his policy, and I must say that I am very puzzled by one matter in particular. The right hon. Gentleman made it plain to the House on an earlier occasion that he is anxious to close the inflationary gap and to mop up the inflationary pressure. He also made it clear that he was fairly confident of having a buoyant revenue and was not so deeply concerned about imposing new taxes merely for revenue-raising purposes.

His main anxiety, as I understand it, is to close the inflationary gap, and one of his reasons for imposing the increased duty under Clause 1 is to close that gap. If I am wrong about that, I hope to be corrected at once, but I do not think I am. I invite hon. Members, before passing this Clause, to consider and to answer in their own minds four questions which I think we must always answer for ourselves before we agree to any new kind of imposition. The first is, what purpose is it intended to have? Secondly, is that purpose necessary? Thirdly, what effect is it going to have? Fourthly, will that effect be beneficial or otherwise? Those are four very simple but important questions, and I propose to examine them briefly in relation to this new increase.

Let us assume, with regard to the purpose of this Clause, that it is intended to absorb surplus spending power and to reduce inflationary pressure. We can also assume, if we wish, that it is intended to raise revenue. Coming from a Socialist Chancellor of the Exchequer, that would be quite natural, because such a Chancellor would never get enough of the people's money. But reverting to my main theme, the question of absorbing surplus spending power, we have to consider whether that purpose can really be fulfilled by means of a tax which is itself inflationary in effect. That is why I say that I am puzzled by the Chancellor's policy and look forward to some simple explanation of it. How does one absorb inflationary pressure and reduce it by means of taxes which, like this tax, will have the effect of increasing the price of petrol and oil, and, as my hon. Friends who have already spoken have shown, will increase, directly or indirectly, the cost of every item used in every household in the country? That is no exaggeration.

Mr. Crosland (Gloucestershire, South)

May I put this question to the hon. Gentleman? Does he mean that no indirect taxation of any kind can possibly have any disinflationary effect at all?

Mr. Renton

I do not take that view at all, and I am glad the hon. Gentleman interrupted me to make that point. I think we must consider whether indirect taxes will inevitably have an inflationary effect, because they affect the cost of every necessary item, food, clothing, and all the necessities of life in the household budget of every family in the country; or whether, on the other hand, they have a somewhat different effect, namely, the absorption of purchasing power which can well be absorbed without increasing the cost of living to ordinary people; or, again, whether perhaps they have a general application, but affect not the necessities but the luxuries such, for example, as the duty on tobacco or the tax on beer, if one regards beer as a luxury and not as a necessary food. Does that answer the hon. Gentleman's question?

I say that this tax is inflationary and completely defeats the intention, if it be the intention, to make some contribution to mopping up the inflationary pressure, and that the Government must explain this matter if they want us to agree to this Clause. The effect upon transport has already been mentioned by my hon. Friends, and there is only one further point I wish to add to what they have said on that matter. It is that we are now faced with the position when the nationalised railways and the nationalised Road Transport Executive ask the Minister to come to the House for approval to increase their charges on the ground, for example, that the cost of coal has gone up, or, to give another example, on the ground that the cost of petrol has gone up, and so on through the whole range of cases.

I wonder whether the good, honest folk throughout this land who voted Labour really expected that once a Socialist Government were in power, that Government would come to the House of Commons and ask for the cost of the services charged by one nationalised industry to be increased because the costs of another nationalised industry had also been increased with the help of a Socialist Chancellor of the Exchequer?

Mr. Monslow (Barrow-in-Furness) rose—

Mr. Renton

I cannot give way to the hon. Gentleman because I do not want to make a long speech. Indeed, I never give way when I am myself puzzled, but only when I am clear about a particular point.

Therefore, that is another matter which I think calls for some kind of explanation by the Chancellor. How long is this policy to continue of the Government boosting up the costs of one service which it controls, or ought to control now that it is nationalised, and then boosting up the costs of another nationalised service? Is it their intention to check it at any stage; and, in particular, where the costs of any of these services are affected by the taxes imposed upon the whole community, is the Chancellor just prepared to let things take their course and to allow this inflationary process to go on in this manner?

There is not the slightest shadow of doubt that it is the services now controlled by the Government which are tending to increase inflation. I agree that the cost of imports is a very important factor, but I should be out of order if I went into that matter at this moment. As far as our internal costs are concerned, there is nothing more inflationary than the continual advances in the costs of the services of each of the nationalised industries. As my hon. Friends have shown, that inflationary process is greatly increased when added to it is the fact that those services are the principal consumers of items such as petrol and oil.

4.30 p.m.

The major problem which the Government, and indeed, everybody in this country, now have to face is the problem of the increase in the cost of living lowering the value of the people's money. We have yet to see that the Government have the slightest intention of making a contribution, either themselves or through those services which they control, towards solving that problem. The Chancellor of the Exchequer has an opportunity, on the Question that this Clause stand part of the Bill, of explaining his policy and giving us some hope that perhaps his policy will be changed.

Mr. David Eccles (Chippenham)

Like my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) and the hon. Member for Huntingdon (Mr. Renton), I am puzzled why the Government have put a tax on an essential raw material at this moment. After all, petrol is an essential raw material. They must think that in some way this extra 4½d. per gallon will help them in carrying out the defence programme.

I want to examine the relation of the tax to the defence programme. The situation, as I see it, is that, having decided to make no substantial economies in other parts of the Budget, the Chancellor has committed us to spend £900 million more this year than last year, and in a desperate search for revenue he has found that the Petrol Duty and the Entertainments Duty are two duties which have not yet reached the point of diminishing returns. Therefore, he says we ought to vote him this tax because it is at least one of which the yield has not yet reached the maximum. That is the Government's argument. They need the money for defence.

The argument might be convincing if we were entering upon re-armament from a very much lower level of taxation than we are and against a background of stable prices and with no fears about our ability to pay for essential imports. Had we those reserves to draw upon, then I would agree that it would be proper to finance re-armament by increasing taxation and not by insisting upon unpopular economies. But in fact re-armament begins when taxation in this country takes a larger proportion of the national income than ever before in peace-time, when prices are rising and when the gap between the value of imports and exports has again grown alarmingly large. In these circumstances, to impose any new tax which gives a twist to the inflationary spiral may very well do more harm than good. This possibility should first be looked at from the point of view of the accounts of the defence programme.

The cost of re-armament which was written into the Budget was based upon estimates of wages, salaries and materials as at the beginning of this year. Since then prices have been moving upwards, and now we are faced with an all-round claim for higher incomes. That claim is not related to increases in output but is founded upon the rise in the cost of living. Anything which the Government may do to increase the cost of living must increase the pressure for higher incomes. If, therefore, the result of gathering in this £35 million from this Petrol Duty were to prove to be the last straw which broke the restraint, such as still exists, in asking for higher wages, salaries and dividends, we should have done the wrong thing, because on the other side of the Budget, the expenditure side, the cost of re-armament would increase not by £35 million but perhaps by £100 million or £200 million.

What we have to consider is whether this extra 4½d. per gallon is likely to prove a significant lever in hoisting up prices to dangerous levels and, therefore, making it certain that wage and salary increases and higher dividends are paid out. I cannot be certain about this. But it is not necessary to be able to measure accurately the inflationary effects of this tax to say that it is a bad tax. As the cost of living goes up month by month, the situation becomes so dangerous that it must be wrong deliberately and as an act of Government policy to add to the cost of an item like transport, which enters into the cost of re-armament both directly and indirectly through its effect upon other prices.

A rise in the price of petrol will encourage rises in the prices of other fuels and in other forms of transport which use those fuels. Today the whole complex of our prices is straining to break away, and is therefore exceedingly sensitive to any impulse in the fatal direction. One would have thought that the Government would have resisted this tax at such a time.

I want to give two examples from my constituency of what is actually happening as a result of dearer petrol. During the last war several thousand people were drafted into North-West Wiltshire to work in an underground factory. They left their homes, and were accommodated in hostels and bungalows. Then, when later on the factory closed they could not get their homes back for reasons well known to hon. Members. Many of them have had to find work at considerable distances from where they are living in my division. That means high travelling expenses, and there has been for years a dispute between these people and the Ministers concerned about who should be responsible for these travelling expenses. Now comes this extra 4½d. per gallon. That is proving to be precisely the last straw which my right hon. and gallant Friend mentioned in his speech—a last straw in a process familiar to all hon. Members.

My right hon. and gallant Friend also mentioned the distributive trades. The effect upon them can be very clearly seen in my part of the world in the business of baking bread. Even before the Budget bakers were finding it difficult to make a living out of the controlled price of bread, so much had the costs risen. Since the Budget the point has been reached where bakers are actually going out of business altogether or confining themselves to the making of confectionery. That is a very serious thing in rural areas because it is not always easy to find an alternative baker in a country district.

What will now happen? The bakers will continue their argument with the Minister of Food and demand a higher price for bread, and in the statement of their case they are certain to include this extra 4½d. a gallon for petrol. Sooner or later the Minister of Food will have to give way. Is it not very unwise for the Government to have preferred to impose this tax, one of the results of which may well be that the price of bread will go up, rather than to have made economies in their own expenditure? I cannot imagine anything more inflationary than taxation which leads to an increase in the price of an article like bread.

Mention has already been made of the Government's statement that we need not worry about the increase in the Petrol Duty because certain foreigners are already paying more than 3s. a gallon. I have only one short observation to add to what has already been said about that. It takes a Labour Government to reduce us to the point where, instead of Britain leading the small nations of Europe, His Majesty's Ministers come to this Committee and almost apologise because they have not followed the example of Belgium and Luxemburg at an earlier date. That is an extraordinary argument to be used by Ministers who represent a trading country like ours. After all, here we are, 50 million of us, living on a narrow and damp island, closely congregated together, quite unable to earn a full supply of food and raw materials, except in open competition with the whole world.

Mr. Manuel (Central Ayrshire)

We have done very well.

Mr. Eccles

We have in the past done very well under private enterprise. One would imagine that right hon. Gentlemen opposite pay no attention to the fact that other countries, leaving aside the United States, where petrol is much cheaper than it is here, have many natural advantages which we have not got. Have they got no hydro-electric power? Have they not, in proportion to their population, sources of food and raw materials within their territories which we do not and cannot possess? If, therefore, we throw away all our natural advantages, or all those which we can contrive, and if we are to follow a policy which says that, wherever possible, we ought to raise one of our costs of production to their level, how are we to meet them in the industrial markets of the world? I wonder how long an industrial country can maintain its standard of life and its place in history if it is continuously governed by Ministers who take such a frivolous view of the importance of cheap and efficient production?

There was one other point in the Government's previous defence of this duty upon which I should like to add a few words to what my right hon. and gallant Friend said. Apart from these comparisons with what is happening in Luxemburg, a totally new principle of taxation appears from the defence of this Petrol Duty put up by Ministers. Listening to their speeches, one sees that they hold, as a matter of doctrine, that an indirect tax like the Petrol Duty ought to be raised to and kept at the point of diminishing returns. I do not see how a Socialist could hold any other view. After all, believing, as he does, that the State spends money more wisely than the citizen, he is bound to push taxes to the point where the revenue itself would fall off if the rate were further increased. That is the logic of the Chancellor's and the Financial Secretary's description of this tax as being overdue.

Here we have imported into the British financial system a revolutionary conception. Up to 1945 it was a cardinal principle of public finance, held by both the Conservative Party and Mr. Gladstone's party, that the national welfare demanded that a reserve of taxable capacity should be kept in peace-time. It was held that the life of a nation and the life of an individual were similar in this respect; that both were wise to keep something for a rainy day. The study of history had taught our ancestors that the international weather is not always cloudless, that unexpected disasters do occur, and that even such things as foreign exchange crises demand sudden measures. For that reason they said: "It is right to have various reserves, and among those reserves none is more essential than a margin of taxable capacity."

4.45 p.m.

Now the Labour Party have shown us by their arguments on this duty that they do not believe in reserves of taxable capacity; they do not think that the Welfare State requires, as part of its apparatus for continuity and stability, a reserve of taxable capacity. When they are contemptuous, as Ministers have been, on this subject of a reserve of taxable capacity, it is as well to remember that there is no social security system for a nation. No other country owes us a living. We, as a nation, are in the position of a man who has not taken out and cannot take out any insurance. We have got to provide ourselves for our rainy days. It is curious to note that the Postmaster-General has lately tumbled to the fact that the Post Office will not run properly unless it, too, has some reserves, but that is not the view taken by the party opposite in regard to the Welfare State.

That sharply distinguishes them from this side of the Committee, and I feel sure that Mr. Gladstone's heirs would agree with me in this; that is to say, without reserves the whole system of social security is endangered, and it can be maintained only when the weather is fair and the sea is smooth. The moment there is any kind of storm, without reserves the whole apparatus is endangered. This is a very real difference between us.

I am sorry to have detained the Committee so long in establishing my argument for what I consider to be the two overwhelming reasons this Clause should be rejected. First of all, it is wrong in conditions of rising prices to put a tax on the costs of production. There can be no doubt that to do so raises the cost of living. Secondly, it is wrong at all times short of war to exhaust the reserves of taxable capacity in our country.

Mr. Manuel

Will the hon. Gentleman clear up this point? The whole burden of his case is on the expenditure on the Welfare State. Has he examined the implications upon defence expenditure in the coming financial year? Why has he not given that its proper place in his argument?

Mr. Eccles

I am sorry, if the hon. Gentleman was not here when I began my speech, or if I did not make myself clear. I began my speech by suggesting that the effect of this duty upon defence expenditure will be to raise that expenditure, directly or indirectly, by more than the £35 million which the duty brings in. Therefore, on the narrow point of defence accounting, I consider this to be a thoroughly bad duty.

Those who vote for this duty tonight will be voting for a depreciation in our money. They will be voting to increase the cost of re-armament. And they will be voting to increase those hardships which accompany a rising cost of living, and which press most severely on those with large families and small incomes. Whatever may be the politics in this Clause, I think it must be offensive to the conscience of every one of us.

Sir I. Fraser

Last year we had a short debate on an Amendment, put down by myself and my hon. Friend, not to increase the Petrol Duty in the case of disabled ex-Service men and women. A similar Amendment appears on the Order Paper again this year, but it has not been selected. I do not propose to go over the ground which was very adequately covered last year. However, last year the Chancellor of the Exchequer found him-self able to permit the Minister of Pensions to make grants which effectively carried out the intention of that Amendment.

The purpose of the Amendment was to prevent the additional duty upon petrol being passed on to a small group of disabled people who cannot afford to bear it. The arguments for selecting this group for this benefit are that they are peculiarly hit through no fault of their own, and that they have no means themselves of any redress except the kindness and understanding of Parliament and the benevolence of the taxpayer. These men are given motor vehicles because they have lost the independent power of locomotion, just as one might give a man an artificial leg because he has been deprived of his leg. One would no more think of taxing an artificial leg than flying, so why therefore should one tax the artificial method necessary to enable a person to become mobile?

Last year, when the Petrol Duty went up, we showed that the cost to these individuals who have small motor cars would be about £10 a year. The cost to those who had tricycles would be substantially less. The present duty does not rise by so steep an amount, and we estimate the cost will be about £5 a year. It might be said that £5 a year is a small amount and that we must all bear our taxes, but when the Chancellor was making his Budget speech he took great pains to point out that hundreds of thousands of wage earners would not find taxation rising by only £3 or £4. He pointed out with pride that, on the contrary, some of them, because they had a family of two or three, would find at the end of the year that their taxes were about £5 less. That seemed to him a very important argument. If that is so, this £5 to a select and maimed group of the community is an important item.

Secondly, all these men are disabled to the most severe degree, otherwise they would not have been selected by the Ministry of Pensions to have these vehicles. Although a great many of them are employed—more than half I am glad to say—they have a great burden to bear, and they need these vehicles to go to their work. They cannot set off any cost that falls upon them in respect of these vehicles as a charge, though I have put down an Amendment which perhaps we may come to next week to try and remedy that position. Consequently, the whole of this £5 falls upon them.

Since last year the principle was recognised that this charge, however the pros and cons may be argued for the main body of motor users, was not one we wished to fall upon these men. There are 1,500 of these men who have small motor vehicles, and perhaps another 1,500 who have motor tricycles. I hope the Chancellor of the Exchequer will see whether he can insert an Amendment to the Bill similar to the one I had down on the Order Paper. If he cannot do that, I hope he will authorise the Ministry of Pensions to make an allowance proportionate to that which his predecessor allowed last year.

Mr. Wood (Bridlington)

I hope I may be forgiven if, like my hon. Friend the Member for Morecambe and Lonsdale (Sir I. Fraser) I confine myself to a narrower issue than that which has been occupying the minds of most of my hon. Friends this afternoon. I do not know what has been occupying the minds of hon. Members opposite as we have not heard from them. Perhaps we shall hear from them later.

Last year I was lucky enough to move an Amendment which sought to relieve from the increases of duty on petrol a number of people who had been unfortunate and who are compelled to use invalid chairs. It was a different Amendment from that moved by my hon. Friend the Member for Morecambe and Lonsdale and I am bound to admit I am disappointed—though certainly I would not presume to complain of the decision—that my Amendment was not allowed to be moved this afternoon. That Amendment was to the effect that duty on hydrocarbon oils used for the propulsion of invalid chairs driven by disabled persons should remain at 1s. 6d. a gallon. I am disappointed because I feel that the grounds on which. I moved that Amend- ment last year have been strengthened since by a number of factors.

The first of the aggravating circumstances is that now, instead of there having been one increase in the duty, there have been two and, therefore, the sum involved for these people is larger than it was last year. Much greater than the actual increase in the duty is the enormous increase in the difficulty for these people in almost every field as a result of the cost of living. The Financial Secretary to the Treasury will know very well that although this is a very important problem it is not a very large one.

Sir Stafford Cripps gave figures last year to show there were roughly 2,500 users of petrol-driven invalid chairs covered by the Ministry of Pensions and the Ministry of Health, and for those people the two Ministries gave help, not covering the cost of petrol but the cost of providing and repairing their vehicles. There were 3,000 other cases some of whom were helped by the National Assistance Board while the remainder bore the whole cost of providing and maintaining their chairs as well as the cost of petrol. To all these people the rise in running costs over the last 12 months, taking into consideration the cost of repairs and the added cost of the new duty on petrol, is something in the nature of 40 to 50 per cent.

Perhaps I might develop a point touched upon by my hon. Friend the Member for Morecambe and Lonsdale in this way. I should like the Committee to consider what an outcry there would be not only in the House of Commons but also throughout the country if this or any other Government came to the House and announced that they had decided to put a tax on walking. The tax might possibly be that rich and poor alike would have to pay a penny to the Exchequer for every five miles they walked. One could imagine that there would be a number of long faces and that a number of hon. Members here would be a little disappointed, particularly with the prospect of having to go through the Division Lobby several times in the next few weeks.

This is not as fanciful as it seems because this method of moving round in an invalid carriage or chair is, for some people, the only means of locomotion. I cannot see that there is any essential difference between, on the one hand, what would obviously be an iniquitous tax if we were to pay a penny for walking five miles and, on the other hand, the taxation of these people who have been a little more unfortunate—in making them pay the Exchequer a penny for every five miles they travel.

5.0 p.m.

The Ministry of Pensions, which perhaps more than any other Ministry have the job of dealing with a number of unfortunate cases, have for some time recognised the principle that they should give help where it is most needed, and although many of us think the extra sum allotted to the Minister of Pensions by the Chancellor—£600,000—is far too small, none of us quarrels with the use which the Minister of Pensions has made of it. He has used it to give most help to the most needy.

If the Government are in earnest in their desire to give to the most unfortunate the greatest help, as I believe they are, then I ask them to consider, between now and the Report stage, whether they can accept something of the spirit of this proposal to allow to these most unfortunate people, the users of these invalid carriages, a little relief in the very difficult time which is coming upon us.

Sir Peter Bennett (Birmingham, Edgbaston)

I am sure that we all listened with sympathy to the speech of the hon. Member for Bridlington (Mr. Wood) and to the special case which he put forward. I and my hon. Friends, and, I am certain, many hon. Members opposite, would very much like to know whether anything can be done in that special case. I shall mention a special case myself a little later in my speech, although I am sure it will not receive the sympathy from all quarters which was given to that outlined by the hon. Member for Bridlington.

Before I turn to that case may I remind the Committee that when the Chancellor introduced this tax he said—I do not know whether it was in an attempt to keep up his spirits—that it was only 2 per cent. and that he did not see why it should cause any increase in prices or any inconvenience. I ventured to prophesy that he had made a mistake and that the tax would make a difference; and the results of the tax are now being seen. On Second Reading I gave some figures of the cost involved and how it was bound to react. I shall not go into them again, because they have been given in still more detail by my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) in his opening speech.

The Chancellor's comment reminded me very much of what Sir Stafford Cripps said when he introduced devaluation. He met us privately and told us to do all we could to keep prices down, and then he made a speech in the House telling us that there was no need for costs to go up. "A little bit of ingenuity on your part," he said, "and a little bit of extra effort on your part, and you can hold costs." Now look what is happening. We cannot look at any of these extra taxes in isolation. It is the cumulative effect which is being felt.

The Government say that we ought to "absorb" these items. In industry we have tried to do that, as I can assure hon. Members opposite. We have tried to hold down our costs because we want to fight in the world markets and to obtain the maximum possible amount of business. But with the best will in the world we cannot absorb all these extra charges. I said to my own people, "Can we absorb this?" They replied, "Look what is happening. We could absorb this if this were the only one, but with everything going up we simply cannot absorb them." They add up the sum and every so often they say, "We cannot go on any longer prices have to go up."

If hon. Members talk to their womenfolk they will be told that every time they open the paper they see that the price of some article has gone up. We are worrying about petrol; they are worrying more at home about milk. But everything is rising in price and the Chancellor is deceiving himself if he thinks that he can introduce an extra tax of this kind and not have it passed on to the public.

My right hon. and gallant Friend the Member for Gainsborough reminded us that in the days when the right hon. Gentleman the Minister for Local Government and Planning was Chancellor of the Exchequer he introduced the flat rate tax on motor cars. That has been very much appreciated; we hoped that it would mean an era of bigger cars in this country. But in increasing the tax on petrol last year and again this year the Chancellor is nullifying to a large extent the gesture made by the present Minister of Local Government and Planning—a gesture which was much appreciated. We were making headway.

I was discussing this question last Friday with my own people in connection with a new car and I said, "Are the makers going to put in a bigger engine?" They shook their heads and replied, "No." They intend to keep the same, smaller engine because they say people are once more talking about petrol consumption. I agree that the majority of British cars go abroad, but the British manufacturer has to have his eye on the day when we shall not be able to send all these cars abroad. He is looking to the day when he must have a home market, and he is keeping his eye on it. He would be very unwise not to do so. Petrol consumption will be a very important matter. Petrol costs are increasing and people will look for smaller cars.

I particularly want to call attention to a point which I mentioned during the Second Reading debate. This tax is very hard on those who use petrol and white spirit as an ordinary manufacturing agent. As a sheer matter of accident they have to use for their raw material what has become the popular fuel for transport. It is hard luck that this burden should fall on them. If they had used turpentine they would not have had to pay, but because they used hydrocarbon oil, which is the fuel for motor use, they have to pay the same tax as is placed upon that fuel when it is used for transport. The cost goes up and up.

The industries to which I refer, such as paint, plastics, the rubber industry, the linoleum industry, the very new, growing industry of chemicals from petrol, old fashioned dyeing and cleaning and boot and shoe polishes, all use petrol or white spirit as a raw material. On a previous occasion the Chancellor said he could not make this exception because it would create administrative difficulties. I asked an old civil servant friend of mine—he has left the service now, he cannot be "got at"—why we have this answer, and he smiled sweetly and said, "The advisers to the Chancellor know very well what he wants them to say. If he comes to them and says, 'You cannot do this, can you?' they say 'No'." But if the Chancellor made it clear that he wanted and intended to have it, they would find a way. We know that that is so.

I have the greatest respect for the gentlemen who advise the Chancellor of the Exchequer and I am quite certain that this exception could be made administratively possible if the Chancellor would only consider the matter. This is a very hard case. Let us remember that one-third of the paint goes overseas on vehicles and other goods. If it is exported direct there is, of course, a rebate. But it goes on the article itself and so it is putting up the cost.

What happens overseas? They do not say it is administratively impossible, because Americans are far too alive to allow their petrol industry to be a bogey to their smaller industries. They make certain that they have a concession. We are competing with people overseas who have these special arrangements, whereas we do not. I think that this is a case in which the Chancellor ought to put right what has been a wrong, and, if it is the only way we have of making a protest, as we cannot move the Amendment we should have liked to have moved we shall vote against the Clause.

Mr. Macdonald (Roxburgh and Selkirk)

I have very great sympathy for the Chancellor in the difficult Budget he has had to put before us due to the rearmament programme. I listened very carefully to the Budget debate, and I shall listen very carefully to the debates on this Bill; but I have not yet heard an alternative to how the Chancellor could secure the £35 million which is represented by this petrol tax. It is vital that this sum should be realised for the re-armament programme. I only wish it were possible to realise it without putting a tax on petrol, but, as I say, I have not yet seen or heard any suggestion put forward for how this £35 million could be secured without in some way increasing the cost of living.

I realise that the tax as at present framed will seriously affect the cost of living, and that is why I ask the Chancellor whether he has considered the possibility of differentiating, on the one side, between petrol used for commercial purposes, in commercial vehicles for goods and passengers, and white spirit used in manufacturing processes—an increase in the cost of which raises the cost of living—and, on the other side, increasing, perhaps unfortunately, the price of petrol for private motoring, so as to offset to some extent the loss of revenue by allowing commercial petrol to be at the pre-Budget price, or at only slightly above the pre-Budget price.

Our petrol costs for private motoring are still lower in this country than in any other country of Europe and I am very glad that it is the case. I am sorry to see it being increased, but I feel that an increase in those costs would be felt less by the community as a whole in the cost of living than would be the effects of adding to the petrol tax generally on commercial and industrial petrol and the by-products.

I want to make a suggestion to the Chancellor which, at first, may sound a very horrible one, and that is that we should re-introduce red petrol. [HON. MEMBERS: "No."] I do not wish to see petrol rationing brought back again; but red petrol at a pre-Budget price, to be used for commercial motoring—commercial vehicles—only would make a very big contribution towards keeping down costs. A very heavy penalty would be applied to people who misused it for private motoring. I feel that unless we make some stand now to differentiate between petrol for commercial use and petrol for private motoring there will be an ever increasing spiral of cost arising out of the general petrol tax.

I shall support the Government in a Division on this matter, not because I welcome the petrol tax—[HON. MEMBERS: "Oh, no."]—but because I believe that that £35 million has to be found for rearmament and I have not heard from these benches or from those benches any other suggestion as to where that £35 million can be secured without an increase in the cost of living.

5.15 p.m.

Mr. Jenkins (Birmingham, Stechford) rose—

Hon. Members

Hear, hear.

Mr. Jenkins

I apologise to the Committee for committing the sin of-rising from this side of the Committee to intervene in the debate for a short time. We have had a very interesting stream of speeches from the other side, and I listened with particular interest to the hon. Member for Chippenham (Mr. Eccles) who, in what was not otherwise an untypical speech from him, greatly surprised me by accusing the Government of following in the path of Belgium and Luxembourg on this point. My recollection of our debates on finance and economics over a number of years past now is that the hon. Member for Chippenham has always devoted most of his time to blaming us for not following the path of Belgium. That has been the continual theme of a very great number of his interventions.

We had a very similar debate on this same point in the Committee last year, and then the Opposition took up a rather different point of view from that which they are taking up today. A great number of hon. Members opposite then devoted their speeches to what I thought was the rather narrow point of trying to show that there was inconsistency in Sir Stafford Cripps's approach to this problem. They seemed to have discovered that he had two reasons for putting forward an increased petrol tax last year, and they thought that was a dreadful thing—to have more than one reason for putting forward any proposal in the Budget; and that, necessarily, if there were two reasons they must both be unsound. This year they have moved on to rather wider ground and attacked the tax rather strongly on its own merits.

I must say that I thought that the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank) went rather far in the direction of hamstringing a future Conservative Chancellor of the Exchequer—if we are ever to see a future Conservative Chancellor of the Exchequer, which is, of course, a very remote contingency. But he went rather far in hamstringing a right hon. Friend of his in the future because he categorically dismissed the whole defence programme as being any possible excuse at all for bringing forward a tax on petrol at the present time. I take it that that was an absolutely clear and categorical statement—that a Conservative Chancellor of the Exchequer would never look to the petrol tax at all to finance the defence programme or any development of the defence programme.

The right hon. and gallant Gentleman also talked a good deal about the damage to industry—and I think, perhaps, that he was thinking particularly of the motor industry, but also of industry generally—which the operation of this tax in the last year had already caused. I thought he was rather confused on that point. I do not think he was distinguishing at all clearly—as, I think, we must do, in considering the effects of the tax—between two situations. The first is that in which a tax imposes burdens on certain people—in which certain people have to make a contribution to the Exchequer which they would not have to make if the tax did not exist.

That, of course, has been the case as the result of the petrol tax which we have had for the past year, and will be the case as a result of the increased petrol tax. Certain people will have to bear certain burdens—new burdens—and nobody disputes that for a moment, but—

Mr. Reader Harris (Heston and Isleworth)

Everybody will.

Mr. Jenkins

Some people will bear a larger part of the burden than other people.

Mr. Harris

Everybody.

Mr. Jenkins

Not everybody, necessarily, at all. But there is a difference between putting forward the point of view that every tax involves a burden—that is obviously true—and saying that a tax does damage to industry, which I would take to mean that it harms productive industry and prevents it from reaching that degree of efficient production which we should otherwise have obtained.

Mr. Nabarro (Kidderminster)

Has the hon. Member forgotten that we are discussing also increased duty on oils—industrial oils—which, assuredly, must affect every industrial undertaking in the country and the cost of production of every article produced by British industry?

Mr. Jenkins

Certainly we are discussing that as well, and certainly the people in the industries to which the hon. Gentleman refers are some of the people who will have to bear this additional burden, but the point that I am trying to make—and I think that if the hon. Member and his hon. Friends in front of him kept quiet for a moment they might be able to appreciate it a little better—is that there is a difference between imposing a purely financial burden on the whole community, or on a particular section of the community, and imposing a tax which harms our productive capacity in the sense that it makes our total wealth as a nation less than it otherwise would have been.

I see no evidence at all that the increase in Petrol Duty last year or the greater Petrol Duty which we are now imposing will have that effect. I should not have thought that even the hon. Member for Edgbaston (Sir P. Bennett) would have argued that it was having that effect on the motor industry today. The motor industry certainly has its problems at the present time, but they are almost all problems which arise on the supply side, through the difficulties of getting sheet steel and the like, and not problems which arise from the demand side, because on that side it is difficult to imagine a more prosperous prospect than that which now faces the motor industry.

We were also reminded by the right hon. and gallant Member for Gainsborough (Captain Crookshank), and by other hon. Members opposite, of the old argument that this duty would do great harm because it would make it impossible for our manufacturers to compete in export markets without sending up their prices. I should not have thought from what one has seen happening to British exports over the last year that there was much substance in that argument. While I agree that increases in costs are gravely disadvantageous to the position at home at present, I should have thought that the fear that a small increase in the Petrol Duty, leading to a small increase in transport costs, would gravely harm our position in the export markets was entirely fictitious.

Mr. Nigel Davies (Epping)

Cannot the hon. Gentleman envisage what the future position will be in regard to selling cars overseas?

Mr. Jenkins

In a position where the major and immediate problem is one of a high re-armament burden, I think that has to be given greater consideration than the problem of future selling difficulties. Our problem at present is much more that of selling our exports too cheaply. I remember putting forward this argument some six months ago and some hon. Members opposite objecting to it. Now we have the testimony of the "Economist" and the "Financial Times" and other papers well-informed on the subject, that our difficulty now is much more that of selling our exports too cheaply than of pricing ourselves out of world markets.

Mr. Osborne (Louth)

Is the hon. Member not aware that when the pound was devalued from four to 2.80 dollars British industry was compelled to sell three articles to produce the same amount of dollars as formerly came from the sale of two articles? The policy which hon. Members opposite applauded only two years ago has produced the very difficulties about which the hon. Member is now complaining.

Mr. Jenkins

I do not want to go too far on this path, but I would be extremely happy to answer the hon. Member on that point. I think that the reduction of dollars to 2.80 was the right rate to go down to in the circumstances of the autumn of 1949. No one could then predict that we were to have a Korean war and the consequences which would follow from that war. We are now in the position, vis-á-vis the rest of the world and because of the development of the Korean war and the things which have come in its train, that we might have been in the autumn of 1949 if we have not devalued not to 2.80 dollars but to something well below that. The rate of 2.80, which was probably right at the time and would have been right if the Korean war had not broken out, is probably now too low a rate, and we are in danger not of pricing ourselves out of the world market but of selling out exports rather too cheaply.

We had the argument from the right hon. and gallant Member for Gainsborough about whether or not our petrol, even after this increase, will still be a good deal cheaper than that of most other countries in Europe. He pointed out that the price of petrol was not the only factor which we had to take into account. We cannot, he said, just talk about the price of petrol and leave the matter there. We have also to talk about other forms of taxation which fall on road transport and private motoring in other countries. I think that there is a certain amount in what he said. He only managed to present a case even on that score by taking a very untypical example of the vehicle which did only 5,000 miles a year. I should have thought that was an un-typically low number of miles for a commercial or private vehicle to do, for if we accept that low number of miles per year, then other forms of taxation become relatively important and petrol costs become relatively unimportant.

If we take a more typical and higher rate of mileage per year, we get a very different answer. If the right hon. and gallant Gentleman had taken a figure nearer the average, I think that it would still have been the case that, even on his own showing, the position is that motoring and road transport costs are a good deal cheaper and will be a good deal cheaper in this country than in most other countries.

Mr. Walker Fletcher (Bury and Radcliffe)

Will the hon. Member deal with the point that the original cost of nearly every Continental car is hundreds of pounds below that of a parallel vehicle here even without Purchase Tax, and that that cannot be wiped out in a year's motoring even if he takes 10,000 miles per year instead of 5,000?

Mr. Jenkins

That would be only one of the factors which, I suggest, would be put on the other side. The prices which many people pay for cars on the Continent—Purchase Tax or no Purchase Tax—is not much less than that paid for cars in this country at present.

I have some dislike of all indirect taxes. I am essentially in theory a direct tax man. I think that direct taxes are better than indirect taxes, but I do not think that the Opposition would wish to put forward this point of view too strongly. I do not think that they take that view nearly so much as hon. Members on this side. I remember that the hon. Member for Chippenham moved an Amendment to the Finance Bill last year or the year before to reduce the standard rate of Income Tax, and he said that this was their main attack on Socialist financial policy. I think that is the point of view of the Opposition. It is direct taxation and Income Tax to which they object most strongly. Therefore, I do not think that they are in a position to say, "We are against indirect taxation like this one because it puts up the cost of living on this and that."

The only way in which one can consistently take that view is if one prefers higher direct taxation, and that is just what the Opposition do not like. I think that this tax—and, as I say, I have always had some hostility to indirect taxation—is, as indirect taxation goes, not a bad tax. We had a more substantial increase last year, and I do not believe that any evidence has been brought forward to show the disastrous result which it was said it would have. I agree that it imposes a hardship on certain special categories.

I was glad that the hon. Member for Bridlington (Mr. Wood) brought forward his point of view on that matter, and I think that it would give pleasure to hon. Members on both sides of the Committee if my right hon. Friend the Chancellor of the Exchequer could do something about the special category of disabled pensioners. Broadly speaking, however, over the whole field no evidence has been brought forward to show that this tax made anything like the changes prophesied by it by hon. Members a year ago. I do not believe that this other increase will either, and in the circumstances of time, and in view of our heavy re-armament burden, for which we have to pay, it is a thoroughly justified increase.

5.30 p.m.

Air Commodore Harvey (Macclesfield)

I was shocked by the speech of the hon. Member for Roxborough and Selkirk (Mr. Macdonald), who was speaking for the Liberal Party. I felt he had more justification for sitting on the other side of the Committee than many hon. Members already there. It is quite clear what are the intentions of the Liberal Party tonight. The hon. Gentleman asked where the money was coming from in place of this tax, but did he ever hear of economies in Government Departments?

Mr. Macdonald

Will the hon. and gallant Gentleman tell the Committee where these economies are to come from?

Air Commodore Harvey

There are many directions from which economies can be made, but perhaps I may be allowed to make just one. I suggest that the Ministry of Civil Aviation should be abolished. That is one; there are numerous others that have been outlined in the House time and time again. This £35 million is wanted, as my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) said, for it coincides with the sum lost on the ground nuts scheme. [HON. MEMBERS: "No."] I know that hon. Members do not like to hear these things, but if they do not like them they can leave the Chamber. It is all very well for the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) to mumble away, but I shall make my speech in my own way.

The Government bought a very large trawler some time ago, and it is operating overseas under the Colonial Development Corporation, losing a packet of money. There are other schemes operating in other parts of the world, which today are losing money and could well produce economies if the Government were prepared to look into them, and to effect economies within their own organisation. The eventual result of all this is that the workers have to pay in the long run. Hon. Members opposite cry about soaking the rich.

The hon. Member for Stechford (Mr. Jenkins) talked about direct taxation. Does he think that if direct taxation is increased more money will be obtained? Of course not, for we get to such a point that returns diminish if we go on increasing taxation. My purpose in rising is to refer to my Amendment, which was not called. For that I think hon. Members opposite were considerably relieved, when they heard that the matter is to be taken on the Motion "That the Clause stand part of the Bill," so that they will not be compelled to go into the Lobby and vote against the Government. That probably lets the Liberal Party out as well.

I want to refer to the question of taxation on aviation spirit. This is a commodity which is bearing the full tax of 1s. 10½d. per gallon. It is a well known anomaly. If an aircraft refuels at Heathrow and proceeds abroad it does not pay any taxation except for internal flying or to the Channel Islands or to the Isle of Man. The jet and the gas turbo-powered aircraft, which use heavy hydrocarbon oils like kerosene, are exempt from taxation, and it seems wrong that an aircraft, which uses aviation fuel, has to pay a tax, while ones like the Vickers Viscount, which will be coming into operation soon in the Airways Corporations, will be exempt because they use kerosene. That does not make sense at all.

Why have taxes on aviation fuel at all? This tax is primarily a road tax. It was first brought in as such, but aircraft get very little benefit from what is in the Road Fund. In 1950 the aviation industry consumed approximately 52,000 tons of aviation spirit, which is 15½ million gallons. Of this total amount of 52,000 tons 60 to 65 per cent. was used in bench testing of aircraft engines and test flying. In the aircraft industry manufacturers carry out thousands of hours of endurance tests to ensure that we have the right and best quality engine for our defence, for commercial use and for export. The duty paid in 1950 was twice as much as was paid in 1949.

This industry is not really a large industry and it uses a relatively small amount of raw material. It exported in 1950 £34¼ million worth of equipment, much of which went to hard currency countries in spite of re-armament. That is a little more than in the previous year of 1949. Furthermore, as a result of the work carried on in the industry licences were granted to foreign countries like Switzerland, Sweden and the United States, and this led to invisible means of earning dollars and other hard currencies.

Most of the flying of B.O.A.C, which is a Government Corporation, is exempt from paying Petrol Duty, but when they fly their aircraft from Heathrow to Filton for servicing they have to pay a duty. British European Airways have to pay duty on all internal services. Therefore, a loss of £1 million or so by the Corporation goes out of one pocket and is brought into the other. It does not make sense at all. The charter companies, in which I have a very small interest, have no State on which to fall back for subsidies and cheques to pay the deficit at the end of the year. They have been struggling against every handicap that could be imposed.

At a time when this country needs an air merchant fleet a good many of them have gone out of business. We have a small Transport Command, because orders were cancelled exactly a year ago. It is unbelievable that 12 months ago the Government cancelled orders for R.A.F. Transport Command aircraft. The orders were renewed in the autumn, but after the Berlin air lift experience it was suicidal to cancel such orders. Nevertheless, it was done and yet the private operations, who are prepared to operate heavy transport aircraft commercially, are given no assistance whatsoever in the form of relief of tax on petrol. If there had been, there would today have been a ready made Transport Command to help us.

Then there is the question of private owners. Unfortunately, there are very few private owners who have their own aircraft but some have. Some firms have their own aircraft to move executives and to carry raw materials quickly from different parts of the country. They have to pay the full tax on the use of aviation spirit, but if they go to a flying club and hire an aeroplane it is exempt from taxation. There, again, it seems quite wrong that if a person flies his own aeroplane he has to pay tax, but if he goes to a club and hires an aircraft for 50s. or £3 an hour he gets away with the tax.

I want to refer quite briefly to the safeguards against evasion. I believe that a scheme could be brought into being whereby there would be no "fiddling" at all. There is a workable scheme in the fishing industry. For aeroplanes and engine works that are situated on an airfield and are closely centralised, I suggest that the onus should be on each company to seek the refund. Aviation spirit differs from motor spirit in that it has high octane value. It is usually differently coloured, so that it is readily identifiable. When hon. Members talk about aviation users in the United States, Canada and New Zealand they should remember that they do not pay the same rate of taxation as is levied on motor cars.

Our aviation industry is not a big one but it is vital to this country and should be given every encouragement. I ask the Government to meet the industry, which will be prepared to discuss ways and means, because by so doing they will be rendering a great service to this important industry.

Viscount Hinchingbrooke (Dorset, South)

Like my hon. and gallant Friend the Member for Macclesfield (Air Commodore Harvey), I was disappointed in the attitude which the representative of the Liberal Party took this afternoon. How the late Mr. Gladstone would turn in his grave to hear what was said today. Mr. Gladstone suggested that money should be left to fructify in the pockets of the people, but the hon. Gentleman to whom I have referred says: "Take it out and give it to the Executive to spend as they like best." It is inevitable that this debate has become like a concertina. We open out particular subjects and then have to close them down in order to give special consideration to important points. Perhaps I may be forgiven if I do not follow the line taken by my hon. and gallant Friend the Member for Macclesfield, but attempt to deal with some of the wider issues.

I have tried to face this duty by reference to three or four criteria. Is it required for defence? Is it required in order to put the railways on their feet, or as a device for removing excessive purchasing power from the people? Or do we fall back on the old idea of the present Chancellor of the Exchequer that somehow he must have more money to balance his enormously inflated Budget? On the first point, I cannot find any evidence that the increase in the Petrol Duty is for purposes of defence. If it had been put upon that basis it would have secured overwhelming support from my hon. Friends on this side of the Committee.

We place defence in priority number one today. If the Chancellor would say that, by putting up the tax another shilling or whatever it might be, enormous quantities of petrol would be saved and left in the Middle East in petrol dumps, would be refined and stored in this country, put underground in disused mines or something of that kind, I dare say this proposal would go through without opposition. There has been no suggestion of that kind whatever. No evidence has been brought forward that the sales of petrol have been lower since the tax was announced or that there will be any saving or forestalling for military purposes of the use of petrol. In the face of all that, I cannot see how this tax will react upon the re-armament programme.

We are sometimes told that taxes are imposed upon commodities in order to make them only partly saleable or unsaleable altogether, and that those who work in those industries transfer their labour to other and more vital industries. This time it is re-armament, but it has been housing. We have heard the same excuse for four or five years. So far as I know, not one dealer has left his petrol pump, not one lorry owner has given up business, because of the increased Petrol Duty and transferred to making ammunition or tanks. That has not been suggested, and so I must conclude that the imposition of this duty for the purposes of defence is null and void and was never contemplated.

What about helping the railways? Last year we were in the same difficulty. Some of my hon. Friends thought that this duty was specially imposed in order to put traffic back on to the railways and to keep up the railway productivity and employment, as an aid to the syndicalist theories of the representatives in this House of the National Union of Railwaymen. We thought there was something in that, but it never came off. If it was intended, we never saw the results. Instead, the railways got into a state of increased chaos and there was no evidence at all that the Government were going to be able to help the railways by penalising the roads, or by any other method. The railways seem to be getting into a greater mess every day. Only this morning—or perhaps it was yesterday—we read that coal is now to be distributed by road and is to be taken off the railways altogether. If the Petrol Duty is put up in order to aid the railways, I do not see how help can be given in that way.

5.45 p.m.

There is the question of removing excessive purchasing power. That is a favourite theme of the Chancellor. It seems to be a new Socialist theory that by raising prices artificially by taxation we can make life much harder and more difficult for people, and so force them to work overtime to earn the means to meet the rising cost of living. It that is the Government's policy, let us have it stated out straight. If the Chancellor's idea is to raise prices by taxation all round, why should he choose so limited a weapon as taxation?

If the theory now is that the cost of living has to be such that people are to be forced against their will to work much harder in order to produce more, there is a much better weapon than taxation, which is limited to certain fields only. There is the weapon of removing price control altogether. That would result in much higher prices and would be far more effective in achieving what appears to be the desire of the Government. I recommend it to the Chancellor of the Exchequer, who seems to be keen on applying this more drastic theory of life to Socialist society. There is nothing in this business of imposing petrol taxation in order to remove purchasing power, because it is far too limited in its effects.

Finally, there is the question of finding revenue for balancing the Budget and to close the inflationary gap. That is the only excuse that the Government can possibly offer for the Petrol Duty increase. The Budget now stands at such an enormous figure that it is quite meaningless to talk in terms of closing a gap of £20 million, £30 million or £40 million, when we are getting in something like £3,500 million by taxation. It has not the slightest effect. The very size of the Budget makes it inflationary in character. Why? Because it takes money away from savings and gives it to the Government. The Government spend it, and their spending is added to the enormous aggregate of private spending. It is the aggregate of private spending plus Government spending which produces inflation. By taxing petrol, the Government put more money into the hands of the Exchequer. The process of spending it at those levels is inflation. The Government have, therefore, no logical defence for this extra Petrol Duty.

Mr. Nabarro

Many arguments have been advanced by hon. Members on this side of the Committee today, but there has been only one solitary voice from the other side, although I am glad to see that another hon. Member is preparing to take up the cudgels shortly. As to the economic review given by the hon. Member for Stechford (Mr. Jenkins), perhaps there is a little sanity in his comment that British exports today, in certain categories, are selling at too low a price overseas; but that is no excuse at all for adding to the costs of production of British industry, for at every stage of every manufacturing process by every industry in Britain costs are to be inflated by the effect of the increase in the duty on light hydrocarbon oils and the majority of the light oils used for direct industrial purposes as distinct from petrol for distributive purposes.

I wish to direct a few comments, initially, to the effect of the increase in duty in so far as it bears on the costs of distribution. It is not practicable or sensible to view this increase out of relation to other imposts which have been made in the course of the last 12 months in other directions, in so far as they affect the motor transport system and its use for distributing goods. Last year, for the first time, the Chancellor of the Exchequer decided as a matter of fiscal principle—I imagine that it was a matter of principle, because it departed completely from anything which had formerly been done—to place a purchase tax on capital equipment in the shape of motor trucks and vehicles used for commercial purposes. That, in itself, added to the cost of distribution.

Secondly, last year the duty on petrol was raised by the equivalent of 9d. a gallon, and this year by a further 4½d. a gallon, which is accumulatively yielding a total of 1s. 1½d. a gallon, a further heavy impost on the cost of distribution by road. No one has yet mentioned in the debate that the third leg of this trinity of additional distributive cost in the case of motor vehicles is the withdrawal of the initial allowances which were lauded for several years after 1945 as being a great incentive to industrial development and re-equipment. The combination of these three factors—and it is the combination with which we ought to be concerned—must have a direct and onerous bearing on the cost of distribution of everything that is essential in our daily lives. Hon. Members have mentioned bread, coal and clothing. The hon. Lady the Member for Coventry, South (Miss Burton), tends to specialise in the subject of vegetables and fruit sold in greengrocers' shops. [HON. MEMBERS: "A proper racket!"] Yes, a proper Socialist racket, derived primarily from excessive costs of distribution.

I speak with some authority in this matter, because a very important fruit and vegetable producing area is to be found in Worcestershire and Herefordshire. [Interruption.] The hon. Member for Spark brook (Mr. Shurmer) seems to want to blow off a lot of steam. Most of his constituents buy their vegetables and fruit from this area, and the cost of those commodities is largely determined by the cost of the motor transport from the Vale of Evesham, Worcestershire and Herefordshire to Birmingham. The profits here are made by the Chancellor of the Exchequer as the result of his excessive imposts on the costs of distribution.

These essential items of diet, vegetables and fruit, undoubtedly cost far too much today, and the principal item in their cost in the shops is the cost of getting them to the market and distributing them from the market through the retailers to the general public. That cost is very largely inflated, and has been in the last two or three years, by the constant increase in the cost of distribution by road transport. Because of their highly perishable character, those goods cannot very easily be sent by rail. On that score alone I condemn what has been referred to as "only a tiny increase" in the Petrol Duty; taken in conjunction with many similar imposts, it has had this accumulatively inflationary effect.

Mr. Manuel

Surely the hon. Member is aware that over the last year there has been a tendency for profit margins to increase? [HON. MEMBERS: "No."] He ought to examine the profit margin before talking of increased prices, or are profits sacrosanct and not to be brought into the reckoning in relation to the price of goods?

Mr. Nabarro

The hon. Member knows that there is no direct evidence of any increase in the profits made by retail or wholesale greengrocers.

Mr. Tomney (Hammersmith, North)

Have there been any bankruptcies?

Mr. Nabarro

If any increased profits have been made in the last 12 months, the Chancellor is the chief beneficiary, for he takes something like £2 out of every £3 of gross profits made.

To pursue my original argument, every necessity of life is increased in cost by reason of this inflationary duty. The old battle-cry of hon. Members opposite, "Soak the rich," is wearing thin today, and the Socialist policy is now a direct one of "Soak the poor." That is all this Measure represents. [HON. MEMBERS: "Nonsense!"]

One of my hon. Friends made a passing reference to the effect on the fares of taxicabs. Today there is a consumer resistance to using taxicabs at all. I have no doubt that the resistance will greatly increase in the course of the next few weeks. It is not only the Tory rich or Members of the House of Commons who use taxicabs, but also ordinary members of the travelling public. Many people have to pass through London to get from one part of the country to another. A traveller from Reading to Colchester will arrive at Paddington and have to cross London by taxicab to get to Liverpool Street for his train to Colchester. I ascertained this morning that the cost today of a taxicab carrying three passengers between Paddington and Liverpool Street is 9s. 6d., and only slightly less for one passenger, without a tip—the taxicab drivers will not receive so many tips on the new scale of charges—and that represents something like 35 per cent. of the railway fare between Reading and Colchester. No one can tell us that the reason for the tremendous increase in taxicab fares is anything but a direct result of the accumulatively inflationary effect of many consecutive imposts made by the Chancellor on the motor industry and the travelling public during the last two years.

6.0 p.m.

I shall vote with great joy against these measures tonight. I know that in recording my vote the overwhelming bulk of sensible and informed opinion in this country will be with me. As for what I consider to be the miserable statement made by the hon. Member for Roxburgh and Selkirk (Mr. Macdonald), that no alternative tax has been suggested, I would remind him that we are now on the first Clause of the Finance Bill, that there are another 37 Clauses to follow, and that practically every hon. Member on this side of the House who has spoken in any Budget debate, particularly on the Committee stage of the Finance Bill in the last five years, as practically every hon. Member has done, has made a large number of suggestions to the Government as to where a multiplicity of economies, large, medium and small, could be effected—[HON. MEMBERS: "Tell us."]—out of the £4,300 million which the Chancellor is expropriating this year.

The Chancellor is having a quiet giggle at that statement. Does he really mean to say that he could not find less than 1 per cent.—for that is £35 million in economies out of the total of the national expenditure in order to avoid having to face this inflationary impost on the whole of the British people, including the poorest sections of the community? For that reason I shall energetically and joyfully vote against this Clause.

Mr. Crosland

I hope it will not be assumed by any hon. Member opposite that the relative lack of speakers from this side is due in any way to our inability to repudiate the arguments which are being put forward. I assure hon. Members opposite that the failure of a great number of hon. Members to rise from this side of the Committee is due merely to our earnest desire to mark and learn and inwardly digest the arguments put forward from the Opposition in order to be better informed as to where to put our vote.

Most of the arguments have been on the subject of how much damage this increase of tax will do to the country. The speech of the right hon. and gallant Member for Gainsborough (Captain Crookshank) was directed mainly to showing that, in the words of the right hon. and gallant Gentleman, a great deal of damage would be done by this tax both to industry and to the standard of life of the country as a whole. Evidently this argument must revolve around what one means by great damage. No one can say that the increase in the Petrol Duty last year did enormous damage to the country in the sense that, for instance, we had mass unemployment or that, as a result, our exports have collapsed and our balance of payments has gone completely to rack and ruin.

But what has legitimately been pointed out is that the increased Petrol Duty is bound to involve some hardship for certain people. It involves an increase of taxi fares, bus fares, furniture removal charges and, as has been made clear by the hon. Member for Kidderminster (Mr. Nabarro), possibly even an increase in the cost of distribution. We have heard also that it means a halfpenny per car mile increase on the average, and the Road Haulage Association estimates that the costs to their members will go up. It would be silly to deny that this increase in charges will affect people. It will affect people adversely, and obviously the entire country would prefer that we should not have this increase in tax. So there is common agreement there on both sides of the Committee.

The real issue is whether one can seriously maintain that the increase of 4½d. in the Petrol Duty this year, considering the immense burden of rearmament, which both sides have accepted, is an insuperable burden to put on the people of this country. I suggest seriously to hon. Members opposite that they cannot maintain that these increases in taxi fares, in the cost of furniture removal, and the like, are an intolerable sacrifice to ask the people of this country to make, when we have the £4,500 million re-armament programme to pay for. I do not suggest for a moment that it is nothing, but I suggest that it is something which people will accept if it is put to them as we ought to put it to them, as part of the necessary price we have to pay if this country is to be made secure.

Another argument raised by hon. Members opposite was that the increase in the price of petrol would have a serious effect on our exports and on our ability to sell abroad. I find this argument difficult to follow. I wish the hon. Member for Chippenham (Mr. Eccles) was in his place, because a number of people associated in the public mind with the Opposition have recently been talking about the case for revaluing the £. Mr. Harrod, a well-known figure who was trying hard for a time to become a Member of the Opposition—we hope he will eventually succeed—has in the "Financial Times" and elsewhere been putting forward strongly the case for revaluation. It is fair to say that this case has had a great deal of support, which is not party support in the slightest degree. It has certainly had some support in the business world, and I imagine that some hon. Members opposite think that a strong case can be made out.

But if it is true that a strong case can be made for revaluation, it cannot at the same time be maintained that this comparatively small increase in our costs which will follow from this duty will wreck our exports in the markets of the world. Both arguments cannot be true at the same time. As to the point which two or three hon. Members have raised, that any taxation which gives, as the hon. Member for Chippenham said, a twist to the inflationary spiral is harmful, I understand that what is meant by that is that any tax which increases the price of anything in present circumstances is a harmful tax and ought not to be put on.

Mr. Osborne

Does not the hon. Gentleman agree?

Mr. Crosland

May I complete my point? This is a serious argument. It means, if it is to be taken literally, that no indirect taxation of any kind is to be imposed to pay for re-armament; because, clearly, any indirect taxation of any kind increases the cost of the article on which the tax is imposed. If we are to take this argument seriously, it means that the Opposition are firmly committed to the policy that re-armament is not to be paid for by any increases in indirect taxation, but entirely by increases in direct taxation.

Mr. Osborne

It might be paid for in two ways. In one case by the total increase in productivity of the whole nation, thus increasing the national income, or partly by economies which we are convinced could be effected in Government expenditure.

Hon. Members

Where?

Mr. Crosland

It would be out of order either for the hon. Member or myself to go into the question of economies in Government expenditure, but perhaps I could say that, looking through the debates which have taken place in the last 12 months in the House, and also looking through Questions in the House over the last year or so, it is the case that the Opposition again and again have asked for an increase in Government expenditure and, when cuts have been made by the Front Bench, they have protested vigorously.

My last point is on the reserve of taxable capacity, a favourite point of the hon. Member for Chippenham. He says that we are leaving no reserve of taxable capacity, that every increase is draining away what little reserve there may have been before and, therefore, that we shall be in a disastrous position if a war should come. Yet he must know that no war that this country has had to pay for in the past has been paid for primarily by an increase in taxation imposed when the war broke out. It has not been paid for primarily even by a fall in the standard of life of the people of this country. Every war, like the last war, has been paid for mainly—and this is unfortunately where the reserve lies—by not building new capital equipment as we do in peacetime, by running down our existing capital equipment, and by foreign aid. This may or may not be a good thing. My point is that it is historically not true to say that past wars have been paid for by increases in tax imposed at the beginning of the war, and the hon. Member is giving a false impression if he puts that forward.

Again and again this afternoon we have had from hon. Members opposite the phrase "the last straw" They have said that this increase in taxation is the last straw which will break the camel's back. We have had the last straw argument now for six years and on this side we are getting sick of the cry of "wolf, wolf." [Laughter.] It is quite true, particularly if one reads many speeches of hon. Members opposite, that in the last six years we have heard time and time again that some increase in taxation is the end, that it will destroy the productive capacity of the country, that it will wreck our exports, that it will wreck full employment, that it will put us in an intolerable position. And in fact it never happens. What we claim on this side of the Committee is not that this tax will be welcomed or that it will not cause hardship, but that compared with other possible methods of obtaining the same amount of revenue, this is a perfectly reasonable tax and a perfectly bearable burden in the present circumstances.

Colonel Gomme-Duncan (Perth and East Perthshire)

I do not propose to keep the Committee very long, and I regret very much that because of other duties I have not been here so far very long. I just want to say a word in connection with those industries which are not concerned with what I might call motive power and the petrol and oils which affect that. I want to put in a word for the Chancellor's consideration for those industries which use some form of spirit, which comes under the Clause, in connection with processes other than that of the internal combustion engine in all its different forms.

I think I am right in saying that this tax originally was put on solely for the purpose of dealing with the internal combustion engine and the various ways in which it is used, and that quite incidentally it happened that such things as dyeing cleaning, paint and other different types of industry, came under its operation. I do not think it was intended that this tax should affect those particular industries, and I should like to point out very briefly the effect of the tax, as at present proposed under the Clause, in connection with dyeing and cleaning, which is a very important industry and which affects the cost of living of a very large number of people.

Today, what is known as white spirit is the principal material used in dry cleaning. It is at present subject to a tax of 1s. 10½d. per gallon. That is a very heavy tax for an industry's main material for carrying out its job. As I have said, I do not think it was intended that this industry, among several others that are in the same position, should have been taxed to that extent by a tax which in itself was proposed for the purpose of the internal combustion engine.

A number of deputations have waited on the Treasury from time to time in this matter and they have all been told, I am led to believe, that the Treasury could not make an exception for an industry like this because to do so might lead to abuses. There may be something to consider in that, but it has been perfectly possible to exclude certain industries, apparently, without fear of abuse—such as, last year, the farming industry—and I cannot see why one industry should be selected as being respectable enough not to be likely to indulge in abuse in this matter while another equally respectable industry should not be given the same opportunity of proving its probity.

It is a fact that the dry cleaning industry has not raised its prices in any case more than 10 per cent. since before the war, and in the case of main articles, such as men's suits, which are very important in these days when they cost so much to replace, the price is precisely the same as before the war. That is highly creditable, as every member of the Committee will admit, to a great industry of this kind when one thinks of the rises which have taken place in other industries.

I therefore appeal to the Chancellor, when he considers Amendments for the Report stage, to think whether he cannot give favourable consideration to this industry—other hon. Members no doubt can speak with authority on other trades similarly placed—which has done so much and over such a wide field of activity to prevent the cost of living from going up when everywhere else it seems to be rising rapidly.

6.15 p.m.

Colonel J. R. H. Hutchison (Glasgow, Scotstoun)

The method of handling the Clause makes it incumbent upon us to make a series of pictures upon one canvas, which leads, perhaps, to a rather jumbled and confused result. I want, therefore, not to follow what has been said from the benches opposite on the deeper theme of the effect that this tax will have, but to narrow down my speech to the very serious effect that the increase in the cost of petrol will have on the Scottish tourist industry.

The Scottish tourist industry is of great importance to Scotland. It enters very largely into her economy, and upon it she very greatly relies in order to make national ends meet. The industry has been hit recently by two cyclones. The first is the ridiculous Catering and Wages Act, which was framed in a mould for the Ritz and is applied to little country hotels in Scotland, and about which the country has been protesting continuously. The second cyclone is the constantly increasing cost of travel where distances are relatively greater than in England and where the people and visitors are, perhaps, sparser.

Therefore, the situation has now come about that it is quite impossible in Scotland to face the cost of building a new hotel because of the incidence of the Catering Wages Act and the rise in the cost of materials and so on, and the situation will be aggravated by the increased cost of travel which the petrol increase must inevitably bring about. I can only feel that the Scottish, and particularly the Highland, districts, which are, of course, remote, are very remote from the Chancellor's thoughts and sympathy. I beg him to realise that whatever damage has been done elsewhere in industry, as my hon. Friends have said already, in this country, and in travel in other parts of the United Kingdom, the effects of the increased tax on petrol will be even more serious in Scotland.

I also add a word of support to what my hon. and gallant Friend the Member for Perth and East Perthshire (Colonel Gomme-Duncan) has said about the use of white spirit for industrial purposes. Heavy oils, when used for industrial purposes, are exempt from tax, but white spirit, which ranks somewhere between kerosene and petrol, is suffering this increase of tax, which has gone up from 9d. to 1s. 6d., and now to 1s. 10½d. My hon. and gallant Friend instanced the cleaning industry, but there are many others in which white spirit is used.

Exhortations are always being made to us, and the late President of the Board of Trade, shortly before he demitted his office, was talking about fresh export target figures. We simply cannot go on raising the cost of producing goods and at the same time expect those target figures to be increased. The latest figures which have been published are, in fact, alarming. I think that for the last published quarter the visible trade gap was £235 million, which compares with £71 million, £63 million, £119 million and £96 million in comparable quarters in the four preceding years.

In linoleum, in paint and in a good many other industries this small ingredient—at any rate, a not all-important ingredient—plays its part, and costs continue to go up. Taxes are raised, costs go up, and prices rise. It is a classic example of the Rake's Progress and is, perhaps, the best example of progress which the Government have shown so far.

Mr. Robert Carr (Mitcham)

While I am wholehearted in my support of my hon. Friends in their opposition to this Clause as a whole, I wish to concentrate on one particular aspect of it as this new tax affects the cost of light hydrocarbon oils used as raw materials in certain industries. Last year I had the privilege of speaking on a similar Motion and had the privilege of following the hon. and gallant Member for Hull, Central (Captain Hewitson) who made a very fine speech on the same lines, namely that this tax is a bad tax. Unfortunately, to my disappointment on that occasion he did not follow his views into the Division Lobby. I was hoping that he would be here today so that again I might have the pleasure of his verbal support, if no other, on this matter.

I speak on the matter because I have some special experience of the effect of the tax. I represent a constituency where one of the main industries is the paint industry. Indeed, Mitcham is one of the homes of the paint industry in this country, and in every gallon of paint or lacquer which is produced there is on the average 35 per cent. of these light hydrocarbon oils which are the subject of the duty we are discussing.

The case I wish to put to the Government is that in industries of this kind—I only quote the paint industry as one example, there are many others—this extra tax is a direct addition to the manufacturing costs of that industry. In the long term, however easy it may seem for that industry to sell its goods under present conditions, it must be a threat to the very prosperity of that industry. Therefore—and this is particularly my concern—it must be a threat to the long-term prosperity of large numbers of my constituents who work in the paint industry.

I must disclose some slight personal interest in another industry which uses these oils, namely the boot and floor polish industry. This tax will mean an increase in cost which will be at least a halfpenny per pound on most of these types of domestic polishes, a halfpenny which inevitably will be passed on to the consumer and will be one more way in which the cost of living of our people will be increased. This special experience and knowledge of these two industries I have mentioned only gives emphasis to the objections to the tax as a matter of principle. I submit that it must be a bad principle to put a direct tax on raw materials of any industry.

In the very limited contributions which we have heard from the other side of the Committee—a silence which we are assured has nothing to do with lack of arguments; perhaps it is more to do with thoughts of sleeplessness or bad conscience, I do not know—the main argument we have heard has been that perhaps we are selling our exports too cheaply and that there is no great worry about our costs of production. That may be, but I fear that if it is so at the moment it will be of short-lived duration, because if we get any easing in the international position—which I know is something for which we all pray on all sides of the Committee—I fear that along with that great advantage will come the quite frightening counter disadvantage that once again we shall have a dollar gap staring us in the face and once again every penny and every fraction of a penny on our costs of production will be of vital importance.

It may be all very well to say that when the time comes we will take off the tax. These times can come very suddenly, and I am rather cynical about taking off taxes. The only way to stop a bad tax is to strangle it at birth because, once it has been born and is fed and increased, every increase is that much harder to remove. I only want to use my two examples of two industries with which I have particular interest and knowledge to illustrate the bad principle of this tax as a tax.

If the Chancellor agrees that this is a bad tax in principle, why do we have it? Last year the Financial Secretary answered this point. First he said that there was a good precedent for it. It had been introduced in the first place in 1928 by my right hon. Friend the Leader of the Opposition. I do not feel abashed to say that even my right hon. Friend may sometimes not do what is best, but if that stands out as one mistake—and I must say frankly I do think it was a mistake, even in the context of 1928 and even at the small level of tax of 4d. per gallon—it is still more of a mistake at the high level of 1s. 10½d.

My right hon Friend's mistakes are, fortunately for the country, so few and far between that they stand out as glaringly as the few good deeds of hon. and right hon. Gentlemen opposite. Surely we cannot seriously argue that just because there is a precedent for this tax we should continue and increase it. If we were to follow all precedents we should be still where we were in the days of the Norman conquest. This is a matter in which we should not continue to follow that precedent.

The second argument the Financial Secretary brought forward last year was one of administrative impracticability. As I tried to point out in the debate last year, and many other hon. Members have also pointed out, there are many other countries which do give such a rebate on these taxes on materials when they are used for special industrial purposes. If other countries can find ways and means administratively to apply such an industrial rebate, surely it is not beyond our ingenuity to do the same. Indeed, the Financial Secretary partially admitted this last year, but then went on to say that the cost of the administrative method would be extremely high. That might have been a valid argument when this tax was at the low amount of 4d. per gallon. Perhaps the administrative cost was not justified then, but it is a very different matter when this tax stands at 1s. 10½d., and evidently other countries have found it worth while, countries such as the United States which have the complication of Federal as well as State taxes which make it more difficult than for this country.

There was one other argument the Financial Secretary used. It was that there was a danger of abuse and that if the tax was exempt on these materials when used for manufacturing industries, they might be improperly used for motor cars and in other ways when they ought to be taxed. Again, other countries have not found that too much of a disadvantage, and in any case I think that on an important matter such as an addition to the cost of raw materials we are justified in taking some risk. Personally, I believe that if administration is right the risk would not be all that great.

I shall certainly willingly and gladly vote against the Clause tonight. I hope that I and my hon. Friends will be successful in carrying the day, but, if we are not successful and the Chancellor has his way, I wish to make the plea to him that he will consider carefully this tax as it applies to raw materials of many industries and see his way to omit those raw materials from the tax. Eventually, I hope that the day will come when this tax on raw materials will be removed altogether. That is something for which I do not feel able to ask today, but I hope that at least the Chancellor will very seriously consider whether he cannot give a concession on the extra 4½d.

6.30 p.m.

What would it cost? On paper, I believe that it would cost £4½ million. I suggest to the Chancellor that it may well not cost as much as that, because in so far as the extra cost of this tax is not passed on to the consumer—and I know that is the appeal which the Chancellor will make to industry—then it must increase costs at the expense of profits, and the Chancellor will lose 60 per cent. of that, which is the average tax return that he gets on profits. So I suggest that he will not lose the whole of that £4½ million. I hope that I may look to the right hon. Gentleman to give that point consideration, because it is a most important matter to British industry, and is one which should be dealt with.

Mr. John McKay (Wallsend)

This question is of sufficient importance to merit some contribution from this side of the Committee. I was glad that the hon. Member for Mitcham (Mr. Carr) mentioned profits, because when one considers an increase of 4½d. a gallon on petrol the question arises how it should be met. It has been admitted that in other countries users of petrol are paying more for it than is the case here. That is not an argument in itself, except under exceptional conditions. The conditions under which it could be an argument would be, if the general economic conditions of this country were such, that we were in difficulties as to where we should impose a tax because we required more income; and the question would then arise as to whether there was scope for such a tax while at the same time carrying on industry with a reasonable return.

What will be the general effect upon industry so far as its ability to carry on is concerned? Is the general condition of almost any trade or industry in this country such that this 4½d. per gallon tax increase on petrol, to the extent that it enters into their operations, will affect their ability to produce and sell? The Opposition will have great difficulty in indicating any industry which is in that condition, so in that respect there is no valid argument.

The next argument used is that this tax, small as it is, will be passed on the consumer. Are the profits that are being made in industry generally so small that industry cannot afford to carry on and, by keeping the price of its products as at present, take perhaps just a little less profit than is being taken at the moment? Unless hon. and right hon. Members are prepared to give a definite illustration which shows that by this imposition some industry will not be able to carry on with a reasonable return, the case against this Clause is weak.

Mr. Nigel Davies rose—

Mr. McKay

No, I wish to go on.

Captain Duncan (South Angus) rose—

Mr. McKay

I do not feel inclined to give way. Members opposite have had every opportunity of speaking.

The Deputy-Chairman (Colonel Sir Charles MacAndrew)

If the hon. Member for Wallsend (Mr. McKay) does not give way the hon. and gallant Member must not stand up.

Mr. McKay

I pass to another point. Is there any sense of responsibility in the attitude now being taken up by the Opposition? If they press the matter home, what they want to do in reality is to take away £35 million from the Exchequer. If they do that there is a bounden duty upon them either to indicate clearly where that £35 million can be saved—[HON. MEMBERS: "Groundnuts."] That has passed away into oblivion. [Laughter.] The groundnuts liability has passed away, it has disappeared, the industry has disappeared. If an industry passes away it ceases to be a liability. So much for groundnuts.

The problem which the Opposition has to meet is where they are to get the £35 million to meet the general policy of the country. They can argue, of course, as has been done on many occasions, that economies could be made, but despite all their arguments they find it difficult to prove that the situation in which that can be done exists. It is quite easy to say in discussions, after seeking to take away income from the Exchequer, "You can effect this and that economy here and there." But what matters is how expenditure is cut and whether the expenditure that is subject to a cut is essential to the well being of the country.

Let me assume that the Opposition are right in wishing to cut taxation. Is this the only vital part of the taxation which the country has to face? Is this the particular kind of tax that should be abolished? Is this a tax that will weigh heavily on the ordinary worker? [HON. MEMBERS: "Yes."] Does it mean that the whole of this 4½d. tax on petrol is to be passed on to the ordinary working man who can pay only a small amount of taxation? Are profits so small that industry cannot afford to carry the increase? Is that the present condition of affairs in the country? There is a seller's market. Not only is the petrol tax passed on to the consumer, but industry is passing on to the consumer the Income Tax that it is paying. It is admitted, in the Budget which the Chancellor and his colleagues have put forward, that the economic condition of the country is such that at the present time we shall be able to get a sufficient return to pay that increased Profits Tax and still have sufficient profits left. What does that indicate?

Mr. Frederic Harris (Croydon, North) rose—

Mr. McKay

No, I am not giving way. That indicates to any logical mind—[HON. MEMBERS: "Oh!"] Yes, it indicates to any logical mind, to any economist and to any financier, "I have an extra tax to pay in the shape of Profits Tax. I can cover that extra taxation and at the end of the year"—as the Chancellor has said—" I shall have more net profit than I had the year before."

How has he managed that? What is the cry at the present time? It is that the cost of living is going up. But are the profits going down? No, profits are going up too. That indicates that the production industries of the country, while they are having to pay more for their raw materials, are passing it on in price and making the same profit as in other years. The whole thing indicates a selling market. There is no difficulty in selling the commodities despite the increased cost and rising prices. The person suffering most is the man in the street, because profiteers are not prepared to reduce their profits. Despite the agony of the country, they wish to maintain their profits not only as they were, but in a rising category. That is the general position.

There are other taxes which to my mind are weighing heavily on the people, but there is no Amendment in respect of them. For instance, there is no Amendment on the Purchase Tax. [HON. MEMBERS: "Yes, there is."] I have not seen one. [Laughter.] Perhaps I may be mistaken. Anyhow, to my mind the position is such that hon. Members opposite have to indicate either the economies they can make or where they will get the money provided for by this Clause. And from that point of view, having to vote against them in the Lobby, I am speaking against them now.

6.45 p.m.

Mr. Geoffrey Wilson (Truro)

I do not propose to follow the hon. Member for Wallsend (Mr. McKay) in any detail, because he started by alleging that this is a tax on profits. I wish to speak from the point of view of the transport industry and I have not noticed any excessive profits in the nationalised transport industry of recent date. My right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) pointed out that the Chancellor gave in his Budget speech four reasons in favour of this tax. He said that the increase made last year was overdue; that there was little sign of the damage which it had been alleged would occur as the result of that increase; he then produced the old argument, which has been repeated two or three times this afternoon, that the increase was only a small one and therefore did not matter—which always strikes me as a most extraordinary argument—and, finally, that petrol in some other countries in Europe was, in any case, more expensive than it is here.

It is to the last point to which I wish to pass as the other points have been dealt with at some considerable length and, in passing, I would remind the hon. Member for Wallsend that if he wants to find examples of the cumulative effect of these small increases he had better read the speech of my hon. Friend the Member for Edgbaston (Sir P. Bennett), which perhaps he did not hear, because concrete examples were given in that speech. The last point made by the Chancellor about the cost of petrol in. Europe seems fallacious, because in this country we are in an entirely different position from those countries in Europe where the cost of petrol is higher. In the first place, we are an exporting country with very few raw materials and while some of those countries in Europe with higher petrol costs are also exporting countries-they have a considerable quantity of raw materials in proportion to their size. Our only exportable raw materials are coal and china clay and a few minerals; with the result that, as we have to live by our export of manufactures made from our imports transport is a particularly vital matter to us and any increase in transport charges is liable to affect our exporters three times over.

First, it is liable to increase the cost of obtaining raw material and bringing it from the port to the factory; second, it will increase the cost of taking the finished product from the factory to the port for re-export; third, our exporter is liable to be faced with an increase in wage cost, because, as has been pointed out already, in many industries in this country the workers do not live near to their factory and are dependent on transport to get to their work and if there is an increase in passenger transport costs a demand for increased wages naturally and reasonably follows. If there is an increase in transport costs and exporters have to pay three times over, and those conditions do not apply in many countries abroad where perhaps the cost of petrol is higher we are, nevertheless, worse off.

Moreover, for better or worse we have in this country a nationalised system of transport which, at least in intention, sets out to be integrated between road and rail. Only last April, before the recent increase of 10 per cent. in the rail charges the railways were losing money at the rate of £460,000 a week. There is a good deal of lee-way to be made up if we are to get the transport system into a reasonably economic position. It certainly will not help to add to the transport costs by increasing the petrol charges because that is bound to have an adverse effect on the amount of travel both by road and rail. It should be remembered that railways themselves are considerable users of petrol in connection with cartage charges and so on, and it will have an effect on the overall charges which both the railways and the nationalised road transport collect.

There is another great difference between this country and other countries. I do not know if it is commonly realised that we have a greater density of traffic on our roads than anywhere else in the world, including the U.S.A. I will give the Committee one or two figures in that connection. Details of the density in traffic per 1,000 miles of road are: Canada, 3,236; New Zealand, 3,649; Australia, 1,753; the United States of America, 12,416; and in this country 14,874. It follows that petrol is a very much more vital matter to us than it is to these other countries. Per mile of road we use more vehicles than other people, surprising as that may seem to those who have travelled in some of these other countries and seen the intense density of the traffic in certain areas.

For these reasons, it seems to me that not sufficient attention has been paid to this question. I hope that the Chancellor, notwithstanding the few hon. Members behind him who have taken part in this debate, will reconsider the matter and see whether something can be done to ease any increase in charges which will fall so heavily on transport and, therefore, have an adverse effect on our exports.

Mr. Profumo (Stratford)

If I came here today feeling that this was a bad tax, I feel so even more profoundly now after having listened to so many logically argued speeches about the vast ramification of problems covering the whole of our national life which this tax will impose upon our people. I have been watching the Treasury Bench very carefully during these speeches, and it looked to me as if the Treasury representatives have already got a closed mind on this subject. If there is anything worse than the closed shop principle, it is the closed mind principle. I hope that the Chancellor and his hon. Friends are seriously considering what has been said from these benches.

In particular, I desire to reinforce what my hon. and gallant Friend the Member for Macclesfield (Air Commodore Harvey) said about the effect of the tax as applied to aviation spirit. This tax is monstrous, for three reasons. First, it is discriminatory; secondly, it is unfair; and, thirdly, it is a low yielder. It affects B.O.A.C. and especially B.E.A. in an extremely adverse way. Here, may I refer to what was said by the hon. Member for Wallsend (Mr. McKay) in a speech which was far too deeply principled for my perception, or else just charmingly naive. It seemed to me that the burden of his contention was that this was not a bad tax, because it need not be passed on to the consumer, because profits in industry are so big that the great profit-making concerns ought to absorb this increase within their own margins.

That may be all very well until we come to a concern which is not making a profit. When we consider the Government-owned British European Airways Corporation, which although gradually managing to reduce its deficit is still being buoyed up by a subsidy paid out of the pockets of the taxpayer, I do not see how the hon. Gentleman's argument can hold any water. In this case, if they were relieved of this tax, they would require a considerably lower subsidy. It seems unfair that B.E.A. and B.O.A.C. should have to bear this tax when flying in this country.

There is another danger which may not have been adequately perceived. Great developments are being made with jet turbine engines. Some of these jet aircraft are now coming into service. They should be placed on the overseas routes but, because they do not attract this tax as they run on heavy hydrocarbon oils, it is possible that they may have to be put on the internal routes in order that B.E.A. can avoid this taxation. I hope that hon. Members opposite will perceive that it is an extremely dangerous precedent to tax aviation spirit, particularly as it affects flying in this country.

At least B.E.A. and B.O.A.C. are able to meet the cost of this tax by the Government subsidy. But it has a punitive effect on the wretched charter companies who do not get any subsidy and are struggling along bravely in an effort to make both ends meet and, indeed, filling in the gaps where the Government corporations are not able to operate at a profit.

I understand the reason for this. Hon. Members opposite may not admit it, but of course it is the truth. They want to drive private enterprise out altogether. They do not want to see the charter companies in operation. But that is a profoundly bad reason for imposing a taxation.

If we go further into this question, we find that its imposition is prohibiting private flying. Hon. Members opposite may say, "But this is a rich man's sport." Private flying is not a rich man's sport. Second hand light aircraft can be bought today at a cheaper price than a motor car. Two or three people can club together and buy an aeroplane. That is fine; but they cannot afford to fly it because they cannot afford to pay this tax on petrol. Hon. Members opposite may say that that is good because they do not want more petrol to be used; but it is a very cheap price to pay for keeping people in practice as pilots—people whom the nation may need in time of danger. To exempt these people from this tax is a far cheaper way of encouraging them to fly than other methods under Government auspices.

The last point about this tax which I think is extremely bad is that it hits the aircraft industry. Of course, that industry will have to pass this part of their costs on to the consumer. Some of our purchases are abroad, and it may well be that if we go on like this we shall lose some of our foreign markets. But, as the Chancellor knows, the majority of the aircraft industry work under Government contract. Thus, the charges they pass on to the consumer are passed on to the British public. In fact, in imposing this tax we are making it necessary to increase the general level of taxation which we must pay for the re-armament programme.

Therefore, I submit that if the Chancellor were to think seriously of making a concession it would cost him very little. When we subtract the taxation which is taken from B.O.A.C. and B.E.A. and which the Government have to pay back, and the tax which they are gaining from the aircraft industry, a large amount of which will have to be borne from other taxation, only the charter companies and the private flyers are left. I submit that the amount of tax which the right hon. Gentleman gets from those sources is infinitesimal compared with the total with which he has to deal. If he made this concession he would make an extremely good gesture at the outset of what-is to be a long debate, showing that the Government were open-minded on this problem and were prepared to take our arguments into serious consideration.

Lady Tweedsmuir (Aberdeen, South)

I hope that my hon. Friend the Member for Stratford (Mr. Profumo) will forgive me if I do not follow up his interesting and constructive remarks on the effect of this tax on aviation. I do not want to detain the Committee for very long, but I should like to draw attention to some of the effects which this increase will have in the remoter areas of Scotland, if my English and Welsh colleagues will forgive me.

First, I should like to say that the three speeches which we have heard from the benches opposite have shown a complete misunderstanding of the reason why we are opposing this Clause. It is just because of the re-armament programme that we oppose this Clause. We think that it will have a serious inflationary effect. It is the responsibility of the Government, and certainly our responsibility as an Opposition, to suggest that every effort should have been made to try, through increased production and Government economies, to secure the £35 million which is contemplated here.

7.0 p.m.

Let us take, first of all, the general effect on the consumer. One hon. Member opposite asked whether we had any evidence as to how the cost would be passed on to the consumer. I would like to draw the attention of the Committee to some of the outstanding organisations which have considered this matter already. The National Wholesale and Retail Provision Merchants' Association estimate that it will mean a further 5 per cent. increase in the cost of distribution. The Federation of Hardware Manufacturers estimate an increase of 4 per cent., and the Multiple Shop Federation an increase of 2½ per cent., with all that that means on the very hard-pressed housewife today.

Concerning the important question of building, the National Federation of Building Trades Employers have said that building costs generally will rise by one-half per cent., which will mean, in the case of a local authority house, an increase of £10 per house. I think that it is very likely that what was said by the "Economist," that great newspaper which we all try to quote, might well take place, and that about £30 million of this £35 million in taxation will be passed on to the consumer.

To give one example concerning fares in Scotland, it is estimated that the Glasgow Corporation's transport department will have £78,000 added to its costs, and hon. Members have already drawn attention to the increased charges which the British Transport Commission are proposing to put forward. My hon. Friend the Member for Edgbaston (Sir P. Bennett) talked of the effect on our exports, particularly in regard to the motor industry. May I remind hon. Members of a speech which was made by the President of the German Motor Trades Association at Frankfurt quite recently, in which he said: Germany's motor industry will prove to be a fully fledged competitor to Britain during the coming year. We are not hampered by taxation like the British industry. By the end of 1951, German cars will be sold abroad at prices below that of British models. Apparently, German exports are now rising to a rate of 100,000 cars a year.

The Chancellor, in his Budget speech, said that the effect of the taxation which he proposes is only equivalent to 2 per cent. of operating costs alone. It is that word "alone" which I think we ought to challenge, because, of course, we cannot possibly consider these taxes without also considering increasing costs everywhere. The general effect is inflationary on all our production on re-armament, because transport enters into production at every stage.

In April, 1951, we had an increase in railway charges, which rose by 10 per cent., an extra 9d. on petrol and an extra 33⅓ per cent. on commercial vehicles. Here, then, I would put forward a plea for some of the remoter areas of Scotland, because the result of these increasing freight charges and transport and bus fares is that an enormous burden is placed on some of our outlying districts. I would like particularly to draw the attention of the Committee to Aberdeen and the North-East. The Economic Survey for Scotland states: The unemployment percentage is high and has been rising. In Aberdeen in particular, the reason is very largely because new industries will not come so far. The costs of transport are so excessive.

To give another example from the fishing industry, the Committee which was established by the Scottish Council (Development and Industry) to inquire into the Aberdeen fishing industry states, on page 21 in its report: Transport charges bear very heavily on the cost of fish to the consumer. That is a point which I hope will be noted by the hon. Lady the Member for Coatbridge (Mrs. Mann), who is not here at the moment. If one takes note of the charges for raw materials in relation to areas in the south and compares them with those in some remote districts, one sees what a tremendous burden it is. For instance, fuel oil for the Aberdeen trawlers is 21s. more per ton than it is in the southern ports, entirely because of transport rates.

If the Government are as anxious as the Opposition to secure an increase in exports, I think they should, above all, pay attention to the prices of those exports. I feel that it is the responsibility of the Government themselves to search for economies which they can make before imposing a further burden on industries which they seek to encourage. One example has already been given by my hon. and gallant Friend the Member for Macclesfield (Air Commodore Harvey), who suggested that one of the economies could be the merging of the Ministries of Civil Aviation and Transport.

We ought to have heard from hon. Members opposite—and I hope we shall hear before the end of the debate—that the Government are really trying to tackle this problem in a much more realistic way. If the Government do not wish Scotland to become a depressed area they must put their own house in order, rather than direct the taxpayer to do it for them.

The Financial Secretary to the Treasury (Mr. Douglas Jay)

We have had a number of points of view put forward in the Committee today; but such arguments as I have heard have not altered our view that a moderate rise in the Petrol Duty is a suitable way of contributing to the cost of re-armament, together with the big increases in Profits Tax and Income Tax and some other less essential goods which were included in the Bill.

The oddest thing about today's debate is that Opposition speakers have hardly mentioned defence or re-armament throughout the afternoon. The right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank) mentioned it only once, when he was putting some words into the mouth of my right hon. Friend the Chancellor. The hon. Member for Roxburgh and Selkirk (Mr. Macdonald) seemed to show a much more responsible attitude when he asked what was the alternative that any one was putting forward for raising this revenue. If the Opposition continue to support rearmament in theory and not in practice, I doubt whether their reputation for responsibility in the country will rise.

Is it, perhaps, the view of hon. Members opposite that indirect taxation should make no contribution to the defence bill at all, and that the whole extra revenue should come out of increased taxation on profits and incomes? Or, alternatively, do they propose that the taxes on beer and tobacco should have been raised this year instead of the duty on petrol? We decided that, having placed the main burden of extra revenue in this Budget on profits, the remaining £35 million which we require should go on the indirect taxation side from petrol rather than from beer or tobacco. The petrol tax seems to us to satisfy all the following arguments, which I shall enumerate, and to be the only indirect tax that does.

First of all, the beer and tobacco taxes have, of course, been raised since 1939 by a much larger percentage than the Petrol Duty, and I really do not see why they should go still higher before there is some moderate increase in the petrol tax. Indeed, it was, of course, in that sense that my right hon. Friend said that the rise in this tax was "overdue." I may say that I entirely repudiate the doctrine, imputed to us by the hon. Member for Chippenham (Mr. Eccles), that every indirect tax should be operated to the point of diminishing returns. That is not our view at all. We raised this tax because we required to find the revenue.

Secondly, oil is a commodity which bulks very largely indeed on the import side of our balance of payments. The total imports in 1950 were about £150 million, and there is still a large dollar cost. The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), not in his speech today, but in an interesting speech which he made in the House in May, 1948, said this: On the consumption side I would like to see the price of petrol rise by 2s. or 3s. a gallon and become known to every person as the financial luxury which we in this House know it to be from the point of view of the world economic situation."—[OFFICIAL REPORT, 11th May, 1948; Vol. 450, c. 2036.] We do not go nearly as far as that, but we do believe that some restraint on the less essential uses of an imported commodity, selling here below its market price in most other countries, is necessary on grounds of general national economy.

Thirdly, in so far as petrol is used for private purposes, it is, surely, perfectly fair that it should make some contribution to defence costs; for the great expansion in motor traffic in this country since the war, desirable as it would be in normal peacetime as a sign of economic progress, does, of course, in a time of re-armament, impose a considerable cost on the community, not merely in terms of imported oil, but also in a heavy demand for steel and engineering capacity, both of which are major bottlenecks in the re-armament programme, and also, of course, in road expenditure, which tends to swell the investment programme.

The right hon. and gallant Member for Gainsborough questioned our contention that the road traffic industry generally had not been damaged by last year's rise in tax. I do not think he will deny that there are many thousand more motor vehicles on the road today than there were a year ago. And when it is argued that some serious damage would be done to British exports generally, we all know that there has been a very large rise in the volume and value of exports since last year.

I fully agree that this rise in tax, in so far as it affects commercial road transport, will spread itself out very widely over all sorts of goods. But it will also spread itself out very thinly, and it seems to us that that in itself is a justification for this measure as a means of paying for defence, in addition to the steep increases in the taxes on profits. Surely some part of the cost of re-armament ought to be borne widely but thinly. Further, when we are computing the cost we ought not to exaggerate it; we ought to keep it in perspective.

It is a fact that this rise in the Petrol Duty this year will only add something like 2½ per cent. to transport costs, and, of course, transport costs are only one element in the cost of production of all the goods which the consumer buys. There is also some truth, I think, in what one of my hon. Friends said, that some part of this increase in costs could come out of profits, when we look at the level at which they are standing at the present time.

Mr. Osborne

I am surprised that the hon. Gentleman should make such a statement. I could understand it being made by hon. Members behind him. Surely he knows that if the £35 million were borne by industry the Treasury would lose £25,500,000, being the 70 per cent. of all profits which goes to the Chancellor by way of taxation. Other additional taxation would have to be imposed to fill the gap.

Mr. Jay

In so far as it was made out of profits, there would, naturally, be some drop in the yield of taxation; but the hon. Gentleman will appreciate that what I was arguing was that that would diminish the increased cost borne by the consumer, and I think he will agree that that is perfectly correct.

When we consider the small increase in transport costs for industry generally, it is perfectly fair to point out, I think, that the price of petrol in this country is still lower than in a good many other countries. The right hon. and gallant Member for Gainsborough was quite entitled to argue that some other running costs of transport abroad may be lower; but I, equally, am entitled to point out the fact that the price of petrol in a number of other countries is higher. We should also remember that in most cases the cost of petrol bought wholesale by commercial users is, on average, 3½d. a gallon below the ordinary price charged to other consumers. Therefore, I hope we shall not exaggerate the burden.

The hon. Member for Edgbaston (Sir P. Bennett) argued, as did one or two other hon. Members opposite, that light oils used in industrial materials by such industries as paint, cleaning, and so forth, should be exempted from this increase. I fully agree that one must consider very carefully before imposing any increase in tax on any industrial material. I think we are all at one about that. But the fact is that this tax on light hydrocarbon oils was never intended, as is sometimes erroneously supposed, as simply a tax on road transport. Indeed, the classical statement of the orthodox doctrine about this tax was enunciated by the right hon. Gentleman the Leader of the Opposition when he brought it into the world in 1928. He said then in answer to various pleas for exemptions: If you start to give these exemptions, you will end by attempting to confine the burden of the Petrol Duty exclusively to the road user. You cannot possibly deal with cattle feedingstuffs without also dealing with dyeing and cleaning, with the manufacture of paint—with the making of gloves, and all these interesting and complicated trades of which we have heard. If you did that, you would, undoubtedly, have vitiated the tax…You will have undoubtedly destroyed the tax…"—[OFFICIAL REPORT, 1st May, 1928; Vol. 216, c. 1655–6.] We agree with that general doctrine, as the right and proper foundation for this tax.

7.15 p.m.

Further, hon. Members opposite cannot really now argue that, as a matter of principle, no tax should be imposed on the materials of industry. The hon. Member for Mitcham (Mr. Carr) said, I think, if I heard him aright, that it must be wrong to put a tax on the materials of any industry. But it was, of course, the party opposite who, by the Import Duties Act, 1932, put import duties on a very wide range of imported industrial materials, including iron and steel, machine tools, cotton yarn, wool yarn and a number of chemicals, and so forth. Therefore, I cannot see how they can argue the matter today as one of principle.

Thirdly, we should not exaggerate the weight of tax by the time it has been spread over the cost of the final product in which oil may be used as a material of industry. The hon. and gallant Member for Perth and East Perthshire (Colonel Gomme-Duncan) very naturally put forward the claims of the cleaning industry.

Mr. Jennings

Will the hon. Gentleman explain to the Committee exactly what was the idea of imposing import duties? It was to stop commodities coming to this country from abroad in unfair competition with our own goods.

Mr. Jay

There may be all sorts of ideas in the hon. Gentleman's head, but it does not affect the principle. I was saying that, in the case of the cleaning industry, according to my information, the pre-Budget rate of oil duty represented only 2d. in the cost of cleaning a suit. In the case of paint, it represented about 2½ per cent.; and only 2 per cent. of the wholesale cost of printing ink, which is another commodity in which oils are used. It is, therefore, highly doubtful whether the benefit of any reduction in tax would, in fact, be passed on to the public by the industries using oils in industrial materials.

Colonel Gomme-Duncan

I do not think that the reduction would be passed on, but what I think would happen is that the cost would not have to go up, and in these days when most things are going up in price that is most important.

Mr. Jay

In any case, the amount involved is exceedingly small. Even so, if we were to exclude all non-road users from this tax, the yield would be reduced by over £20 million a year; and it would, therefore, be necessary, in order to maintain the revenue, to increase the tax on the road user by something like 3d., to 2s. 1½d. a gallon. In addition, any exemption for types of light oil which are capable of use in road vehicles would unquestionably cause very considerable administrative difficulties. One or two hon. Members made light of this, but I can assure them that those difficulties are genuine. The hon. Member for Edg-baston said that we had probably gone to the officials and said, "You cannot do that, can you?" I can assure the hon. Gentleman that that was not the spirit in which we dealt with the matter.

The fact is that any scheme involving the existence of non-taxed oils would require more administrative staff to control it than are at present used in the entire administration of this tax.

Sir P. Bennett rose—

Mr. Jay

I must go on now. That would be a fairly large and extravagant use of manpower. It was said, I think by the hon. Member for Mitcham, that these difficulties had been overcome in other countries. It is perfectly true that some schemes of exemption are in force in other countries, but we are not satisfied from the information we have about them that they can be administered with the fairness and the efficiency which are expected in this country.

But I think that the strongest objection to a specific exemption for oil used in industrial materials is this. Various hon. Members today have argued, with quite a lot of force, that the petrol used in ordinary commercial transport is really a part of the general process of industrial production nowadays. Indeed, the hon. Member for Roxburgh and Selkirk had an Amendment on the Order Paper—it is one of those which have not been called—in page 1, line 24, in which he proposed to exempt not merely oil used in industrial processes but oil used in all forms of commercial transport, and he argued in favour of that today.

Obviously, there would be a lot of substance in that argument, if one went as far as exempting light oils used in manufacture. I do not think, therefore, that one could logically or justifiably grant exemption where the oil was actually used in manufacture, and withhold it from general commercial road transport, which is, after all, nowadays so essential a part of the general manufacturing and distributing process.

Nevertheless, a strong case has been put forward today by various hon. Members, including the hon. Member for Edgbaston, in the case of exports, where light oils are used in manufacture and the British producer may be in active competition with a foreigner who, possibly, enjoys exemption. Already, under the existing law, there is provision for the duty paid in making goods which contain the oil at the time of exportation, such as, for instance, tins of paint, to be refunded by way of drawback. The administrative difficulties are not so great there.

I said last year that we proposed to examine whether this could be extended further, and I listened with interest to what the hon. Members for Edgbaston, Roxburgh and Selkirk, and others said today. It has been pointed out that there are some kinds of exported goods, such as rubber gloves, where the duty on the light oil used in their manufacture represents quite a substantial part of the final cost. The present arrangement for an export drawback applies, as I said, only where the oil is physically present at the time of export. Where the whole of the oil is evaporated away in the process of manufacture, so that none of it is left in the finished articles—and I understand there are a number of cases of that kind—the existing provisions for payment of drawback do not apply. We have gone to much trouble to find a solution to this problem, and I hope on Report to be able to move an Amendment empowering the Treasury to extend the present drawback provisions for exports in suitable cases by statutory order.

Captain Crookshank

A Government Amendment?

Mr. Jay

It will be a Government Amendment. I think that meets the strongest part of the case put forward; that relating to exports of certain goods. But we cannot agree, for reasons I have given, to exempt all oils used in industry, mainly because there is so little real distinction between these and petrol used in ordinary commercial transport.

The hon. and gallant Member for Macclesfield (Air Commodore Harvey) and another hon. Member argued the case for exempting the tax on aviation spirit, and said that 60 per cent. or 65 per cent. of aviation spirit was used in bench testing, if I heard him aright. We have considered the case of civil aviation in relation to this tax very carefully indeed, both last year and this year, and, as the hon. and gallant Member will know, we have already agreed to make an increase in the grant to flying clubs, where the need appears to us to be particularly great. Already, aviation spirit used by aviation companies in flying outside this country is exempt from petrol tax, as part of the general Customs principle that exported goods should not bear a tax of that kind. But we do not think it would be justifiable to single out what is, after all, only one form of transport in competition with other forms of transport, some of them also using petrol, for a complete exemption of this kind.

So far as the airways corporations are concerned, as a matter of accountancy and administration it is simpler, more straightforward, and more practical to allow the corporations to buy petrol at the general market price, including the tax, and then for the Government to pay what subsidy is necessary to cover that. That is the best practical arrangement.

Sir Wavell Wakefield (St. Marylebone)

Is the hon. Gentleman aware that labour is ineffectively used in calculating whether an aircraft is to be used overseas or in England? Only today I was discussing the matter with the Chairman of British European Airways, who said that much saving could be made. Would the hon. Gentleman consult the Chairman and see in what way this can be done?

Mr. Jay

I can assure the hon. Gentleman that we have done so, and that we are very familiar with the views of those responsible for aviation companies. I would only say this. Any saving would certainly be counter-balanced by the additional manpower required in the Customs and Excise to look after the untaxed spirit that would have to be available. On balance, the cost would be greater.

Air Commodore Harvey

The hon. Gentleman referred to reasons for exempting flying clubs—

Mr. Jay

No, I said that we increased the grant.

Air Commodore Harvey

The Government increased the grant, which is the same thing. The Government impose the tax with one hand and take it away with the other. If that is done for flying clubs it ought to be done for other forms of aviation such as charter companies. In the case of aero engines which are going for export they are run for probably 20 hours on the bench. Ought they not to be exempt also?

7.30 p.m.

Mr. Jay

There is clearly a distinction between, on the one hand, the air corporations and the charter companies which, after all, are in commercial competition with other forms of transport, and, on the other, the flying clubs, to which that consideration does not apply. I do not think that we could justify to other forms of transport the giving of a discriminatory concession of that kind.

The hon. Members for Morecambe and Lonsdale (Sir I. Fraser) and Bridlington (Mr. Wood) put the case for war disabled men who, because of their disability, require either motor cars or invalid chairs, and they argued that this increased duty would impose a burden upon them. There we have to distinguish between the motor cars and the invalid chairs. In the case of the invalid chairs, it seems to us that the cost is so very small that no serious difficulty arises. According to my information, the increased duty this year does not amount to more than 1/17d. per mile, and we therefore do not think that the hardship, or the cost, is more than trivial.

The Committee will remember that, in the case of the motor cars which are provided by the Ministry of Pensions for seriously disabled persons, it was decided a year ago to raise the annual grant which the Ministry gives for general expenses of running the car from £45 to £50 a year on account of the duty. We have already considered, of course, whether this year's increase in duty would justify any corresponding further rise in the grant. There we have to remember that, as has already been mentioned, the Ministry of Pensions have made various concessions to the more seriously disabled persons, worth something rather over £600,000 a year, much of which will go to the very people who are using these cars. In addition, the £5 rise in the allowance last year was, in our view, pretty generous in relation, not merely to the increase in Petrol Duty a year ago but to other increases in costs. I think that £50 a year to cover the costs of a car is probably, as perhaps hon. Members will agree, on the fairly generous side.

Therefore, we originally came to the conclusion that, on the strict finances of the question, no further increase in this allowance was justified, as my right hon. Friend the Minister of Pensions said this week. However, having listened to the case made today, I am bound to say that I feel, myself, that we should not take even the slightest risk of doing injustice to these particular members of the community, and I therefore propose, before the Report stage, to consult further with my right hon. Friend the Minister of Pensions to make absolutely sure that the concessions already given adequately cover the costs involved.

I think that, for all the reasons I have advanced this afternoon, and on the understanding that we attempt to meet the Committee in those two particulars hon. Members will agree that no serious alternative has been put forward which would be fairer and better for raising this £35 million of revenue, which we must have for defence. I therefore hope that the Committee will agree to approve the Clause.

Mr. Geoffrey Lloyd (Birmingham, King's Norton)

The fact that I rise now does not in any way indicate that I feel that the debate ought to come to a close. In fact, there may be other speeches from this side of the House, and from this bench. However, I think the Committee will appreciate that as a matter of courtesy to the Financial Secretary there should be an immediate reply from this bench, in view of the defence of this duty that he has made.

Of course, it is open to any hon. Member to select what he regards as the oddest feature of the debate so far, and the hon. Gentleman selected one feature. I should like to suggest a different feature. I think that perhaps the oddest feature of the debate so far has been the almost total silence of hon. Members opposite in not making the slightest effort to voice the grievances of the taxpayer, or, on the other hand, to urge reasonable concessions from the Government on behalf of particular classes of taxpayers affected by this Clause. It has therefore come about that on two topics today—first of all, the war pensioners invalid carriages, and, secondly, the industrial use of petroleum oils—it is due entirely to the representations that have come from my hon. Friends that concessions have been made by His Majesty's Government.

Mr. Jay

I can assure the right hon. Gentleman that I have had correspondence from my hon. Friends on these matters.

Mr. Lloyd

Apparently the operations of the party opposite now take place entirely in secret.

While welcoming particularly the concession that has been made to my hon. Friend the Member for Bridlington (Mr. Wood), and possibly other more secretive hon. Gentlemen opposite who are concerned in the matter, I say at once that I do not regard the concession made with regard to industrial spirits as satisfactory. I think it is in the right direction, but I do not think it is satisfactory, and for this reason. I do not believe it is enough for the Government to tell us that they cannot make the concession because the oils concerned are very much like the ordinary oils used in transport. After all, there is already a concession for the heavier hydrocarbon oils used in industry, and there is a concession for these lighter oils when they are ascertainable in an export product. Now we have this further concession made today.

Although I do not believe that it would be right to suggest, as my hon. Friend did, that the Chancellor almost indicated to his advisers that he would not welcome an administrative solution to this problem, and while I think that is going rather too far, I do know very well from my own Ministerial experience, and from having watched my colleagues, that the degree of determination with which a Minister approaches his advisers to work for a technical administrative solution has a very great bearing on whether or not the solution is produced. I therefore think that it would be possible to reach a more tidy solution, and one very likely involving a smaller amount of administrative work, if a clean sweep were made in this field, where it is quite clear that the oils enter into the costs of production of numerous articles, rather than this kind of niggling, half-way concession announced by the hon. Gentleman this afternoon.

We ought to take into account the fact that there has been something in the nature of a minor industrial revolution in the use of these industrial petroleum solvents in recent years. Their use has expanded by over 100 per cent. since before the war. The plastic industry makes more use of them, and the fabric the former President of the Board of Trade was to be seen wearing in this House, and, we believe, on the Paris boulevards, was also one of those things in which a good deal of these industrial petroleum solvents was required. However, I will not pursue that matter any further but turn to the broader general argument.

I should like to remind the Committee that we have had a very great reversal in the reasons brought forward this year and last for these two consecutive increases in the Petrol Duty, increases which now bring the duty on petrol alone to a sum larger than the cost of the petrol including the duty before the war. These last two increases have a yield of £100 million, a very important fiscal development.

Sir Stafford Cripps, to whom we all extend the very best wishes with regard to his health, when he introduced his Budget last year suggested it was a good tax not so much from the point of view of Revenue, which he did not need and which he did not even mention as a justification, but that it was a kind of pearl of the planners which did very different things. In particular, as my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) mentioned, he said that by forcing economies in the commercial field it was going to enable him to do a little better by the private motorist by making a small increase in the basic ration.

It is a sufficient indication of how far we have come from that time that on this occasion a Chancellor quite bluntly justified the increase on Revenue grounds. The Financial Secretary to the Treasury added a new point as far as this year is concerned, or rather he returned to an older point when he brought forward the argument about the oil import. This he did on two grounds, as I understand it. The first was that it is a big import which, on the grounds of general economy, should be reduced. Secondly, that the import should be reduced because of the dollars involved.

It is a little hard that the point about dollars should be brought up again when almost a year ago the then Chancellor and the Minister of Fuel and Power, when petrol rationing was abolished and a great increase in petrol consumption was envisaged, said it would involve no appreciable extra dollar burden. Therefore, the statement we have heard today is not altogether consistent with the statement made when petrol rationing was abolished.

In general, I also do not think it accords with the special position of this country in relation to oil deposits, royalties and so on about which, for obvious reasons, I do not want to go into too much detail. I know that when we considered this problem towards the end of the war petrol imports and exports were not regarded as being on the ordinary basis of commercial accounts. From the Treasury angle, exports from other parts of the world were actually regarded as coming within the category of exports from this country. If that is the case, surely we ought to have some credit since oil imports are an easier problem for us than normal imports.

The Financial Secretary to the Treasury has brought forward one other very important justification for this duty, and he used a special phrase in earlier debates. He said that not only was it a Revenue producer, but that it would have the effect of drawing off £35 million of purchasing power. I do not know whether the Committee likes it, but I do not care particularly for this medical, almost veterinary metaphor as applied to our fiscal affairs. I understand the Chancellor says it is apt. Apparently the body economic is so gorged with inflationary pressure that it needs some kind of financial bleeding, and this duty is produced as a convenient financial leech to suck away £35 million of purchasing power.

7.45 p.m.

I think part of it falls directly on the private motorist, but part of it really is only drawn away after it has indirectly raised costs in a number of road transport and other industries. I suggest very considerable economic doubts arise as to which of these two processes is taking place. I would remind the Committee of what my right hon. and gallant Friend the Member for Gainsborough said earlier, that 16 per cent. of petrol is used by private cars and about 84 per cent. by commercial cars and lorries and in industry. Therefore, the burden of this duty falls in those same proportions on the private motorist, on one hand, and on the lorries and buses and industry, on the other.

So far as the private motorist is concerned, I think we must agree this drawing off process mentioned by the Financial Secretary takes place directly—painfully no doubt for the motorist, but successfully from the point of view of the Chancellor. That does not mean that we do not very much regret this extra burden, particularly in view of the large numbers of people—I think about two-thirds—who still have pre-war cars that are unduly heavy on petrol consumption.

But I do not think hon. Members opposite do justice to our motives with regard to this matter. We seriously feel this great increase of fiscal burdens on petrol are important, not only from the point of view of the existing motorist but with regard to the growth of the motoring habit in this country in the future. A great deal of progress was made in this growth before the war, and it is rather humilitating to think that in America motoring is taken for granted as part of the standard of life of working men, while here not only is that not the case but increasing fiscal burdens are putting it off further away to the future.

I do not think the Chancellor is really wise continually to minimise the burden he is placing on motorists by perpetually giving out figures which seek to show that after everything he has done petrol is still cheaper here than in any other European country. That is not true of all European countries, and there is another factor already mentioned on which I may cite the authority of the Minister of Local Government and Planning. I see that in 1945, when he was considering this matter, he expressly said one had to consider the burden of motor taxation from a global point of view, and that when one was considering—

The Minister of Local Government and Planning (Mr. Dalton)

I do not believe I ever used the word "global." It is not in my vocabulary.

Mr. Lloyd

I feel as if I were back at Cambridge being lectured by the right hon. Gentleman, but I accept his rebuke. What he said was that one had to consider the burdens of the duty on fuel in relation to the annual licensing duty. Therefore, I feel that from a duet of Winchester economists, so to speak—I refer to the two at the Treasury—it is rather beneath the high level of the argument to mention the price of petrol in Europe only without also mentioning the levels of the annual licence duty.

The fact is, of course, that while right hon. Gentlemen opposite are so fond of quoting France and Italy they must remember that for a 10 h.p. popular car the duty here is £10 and for the pre-war car £12 10s., whereas in Italy the licence duty is only £5 and in France there is no annual duty at all. I think by a reasonable extension of the principles enunciated by the Minister of Local Government and Planning we are also entitled to take the level of Purchase Tax into consideration, and here, if nowhere else, this country leads the world. With Purchase Tax at 66⅔ per cent. nobody else in the world begins to approach us.

When my right hon. and gallant Friend the Member for Gainsborough made calculations to bring all these factors into account in regard to an annual mileage of 5,000 miles, the hon. Member for Stetchford (Mr. Jenkins) said there might be something in the calculation, but he thought that it was quite wrong to base it on such a small figure as 5,000 miles because the fixed charges represented by the annual licence duty or by Purchase Tax would have an unduly great effect on a calculation of that kind.

I can tell him—I do not think he is here—and I can inform the Committee that even if that calculation is made on 10,000 miles a year, which I think the Committee will agree is a reasonable mileage and which is a rather large mileage for the ordinary popular car, it remains a fact that, with the exception of Spain and Italy, motoring taxes in this country are higher than in any Other country in Europe—very much higher. I feel that if the Chancellor and his henchman are to produce these figures again, then in the interests of a high standard of controversy they should give equal prominence, in talking about petrol prices, to the fact that the level of licensing taxes and purchase taxes in Europe is so much lower than in this country.

I shall not pursue the matter further tonight, because I do not want to take up more time. I would conclude by pointing out that every spring nowadays we have the Budget, we have the cuckoo we have an increase in rail charges and we have an increase in the Petrol Duty. It is asking a great deal of hon. Members on this side for them to be expected to believe that there is no connection whatever between the last two items in that list.

Of course, one starts with a certain amount of sympathy for the Railway Executive, because they also have their problem of fuel. Coal is not taxed, of course, but the price has risen very much. The increase adds very much to their costs of operation. But one's sympathy is somewhat reduced when one realises, from studying reports, that the rise in the price of coal is very often produced by the previous rise in rail charges. It comes about that the Railway Executive are labouring under the very considerable handicap of a fuel charge which is over three times larger than it was before the war.

But then the Chancellor comes along and notices that their competitors, the road transport industry and the road passenger services, are providing a similar service and that their fuel, petrol, has increased in price by only 50 per cent. by comparison with before the war. In two successive years Socialist Chancellors have done a very great deal to redress that balance. But we cannot regard that as the right way to conduct these matters, and we remain very much opposed to this tax.

Mr. R. J. Taylor (Lord Commissioner of the Treasury)

rose in his place and claimed to move, "That the Question be now put."

The Chairman

The Question is, "That the Question"—

Several Hon. Members

rose—

The Chairman

Mr. Jennings.

Mr. Jennings

Earlier this afternoon. Major Milner, you ruled that an Amendment was not being accepted because it was out of order, and I took the liberty of asking you whether you would allow a full and comprehensive discussion on this subject. You assured me that you would do so, and in view of that—

The Chairman

Order. I am fully seized with the hon. Member's point. Although I am under no obligation to indicate it, in my view there has been a very full debate, in which something like 30 hon. Members have taken part, which has extended over a period of more than four hours. In those circumstances I must accept the Closure.

Several Hon. Members rose—

The Chairman

No point of order arises.

Mr. Jennings

May I ask for your guidance, Major Milner?

The Chairman

Certainly.

Mr. Jennings

Thank you, Major Milner. I feel that if the debate is closed at this stage and you form the opinion that a great deal has already been said, it is scarcely giving an opportunity to those Members who perhaps have some important issues to raise on this subject.

The Chairman

The hon. Member said he was asking for my guidance instead of which, as I understood it, he criticised my Ruling. I have given that Ruling and I must abide by it. The Question is—

Mr. Jennings rose—

The Chairman

Order.

Mr. W. Fletcher

May I ask for your guidance, Major Milner?

Mr. Frederic Harris

It is a very bad show.

The Chairman

Mr. Fletcher.

Mr. W. Fletcher

You said that in your view ample debate had taken place, Major Milner, but there are a great many hon. Members who, if the previous methods of handling the affairs at this stage of the Bill had taken place, would undoubtedly have had an opportunity which is now denied them. I have a point on behalf of the whole textile area which I wish to put before you, and which has definitely been omitted from the debate so far. It is of very great importance. I should therefore like your guidance on how I can raise this issue?

The Chairman

I am sorry the hon. Member has not caught the eye of the Chair, but he will have an opportunity on other stages of the Bill.

Mr. Jennings

Call this democracy?

Question put, "That the Question be now put."

The Committee divided: Ayes, 299. Noes. 289.

Division No. 82.]	AYES	[7.57 p.m.
Acland, Sir Richard	Brcughton, Dr. A. D. D.	Davies, Harold (Leek)
Adams, Richard	Brown, Rt. Hon. George (Belper)	Davies, Stephen (Merthyr)
Albu, A. H.	Brown, Thomas (Ince)	de Freitas, Geoffrey
Allen, Arthur (Bosworth)	Burke, W. A.	Deer, G.
Allen, Scholefield (Crewe)	Burton, Miss E.	Delargy, H. J.
Anderson, Alexander (Motherwell)	Butler, Herbert (Hackney, S.)	Diamond, J.
Anderson, Frank (Whitehaven)	Callaghan, L. J.	Dodds, N. N.
Awbery, S. S.	Carmichael, J.	Donnelly, D.
Ayles, W. H.	Castle, Mrs. B. A.	Driberg, T. E. N.
Bacon, Miss Alice	Champion, A. J.	Dugdale, Rt. Hon John (W. Bromwich)
Baird, J.	Chetwynd, G. R.	Dye, S.
Balfour, A.	Clunie, J.	Ede, Rt. Hon. J. C.
Barnes, Rt. Hon. A. J.	Cocks, F. S.	Edelman, M.
Bartley, P.	Coldrick, W.	Edwards, John (Brighouse)
Bellenger, Rt. Hon. F. J.	Collindridge, F.	Edwards, Rt. Hon. Ness (Caerphilly)
Benn, Wedgwood	Cook, T. F.	Edwards, W. J. (Stepney)
Benson, G.	Cooper, Geoffrey (Middlesbrough, W.)	Evans, Albert (Islington, S. W.)
Beswick, F.	Cooper, John (Deptford)	Evans, Edward (Lowestoft)
Bevan, Rt. Hon. A. (Ebbw Vale)	Cove, W. G.	Evans, Stanley (Wednesbury)
Bing, G. H. C.	Craddock, George (Bradford, S.)	Ewart, R.
Blenkinsop, A.	Crawley, A.	Fernyhough, E.
Blyton, W. R.	Crosland, C. A. R.	Field, Capt. W. J.
Boardman, H.	Crossman, R. H. S.	Finch, H. J.
Booth, A.	Cullen, Mrs. A.	Fletcher, Eric (Islington, E.)
Bottomley, A. G.	Daines, P.	Follick, M.
Bowles, F. G. (Nuneaton)	Dalton, Rt. Hon. H.	Foot, M. M.
Braddock, Mrs Elizabeth	Darling, George (Hillsborough)	Forman, J. C.
Brook, Dryden (Halifax)	Davies, A. Edward (Stoke, N.)	Fraser, Thomas (Hamilton)
Brooks, T. J. (Normanton)	Davies, Ernest (Enfield, E.)	Freeman, John (Watford)
Freeman, Peter (Newport)	Lipton, Lt.-Col. M.	Ross, William
Gaitskell, Rt. Hon. H. T. N.	Logan, D. G.	Royle, C.
Ganley, Mrs. C. S.	Longden, Fred (Small Heath)	Shawcross, Rt. Hon. Sir Hartley
Gibson, C. W.	McAllister, G.	Shinwell, Rt. Hon. E.
Gilzean, A.	MacColl, J. E.	Shurmer, P. L. E.
Glanville, James (Consett)	McGhee, H. G.	Silverman, Julius (Erdington)
Gooch, E. G.	McGovern, J.	Silverman, Sydney (Nelson)
Gordon-Walker, Rt. Hon. P. C.	McInnes, J.	Simmons, C. J.
Greenwood, Anthony (Rossendale)	Mack, J. D.	Slater, J.
Greenwood, Rt. Hn. Arthur (Wakefield)	McKay, John (Wallsend)	Smith, Ellis (Stoke, S.)
Grenfell, D. R.	Mackay, R. W. G. (Reading, N.)	Smith, Norman (Nottingham, S.)
Grey, C. F.	McLeavy, F.	Snow, J. W.
Griffiths, David (Rother Valley)	MacMillan, Malcolm (Western Isles)	Sorensen, R. W.
Griffiths, Rt. Hon. James (Llanelly)	McNeil, Rt. Hon. H.	Soskice, Rt. Hon. Sir Frank
Griffiths, William (Exchange)	MacPherson, Malcolm (Stirling)	Sparks, J. A.
Gunter, R. J.	Mainwaring, W. H.	Steele, T.
Hale, Joseph (Rochdale)	Mallalieu, E. L. (Brigg)	Stewart, Michael (Fulham, E.)
Hale, Leslie (Oldham, W.)	Mallalieu, J. P. W. (Huddersfield, E.)	Stokes, Rt. Hon. R. R.
Hall, John (Gateshead, W.)	Mann, Mrs. Jean	Strachey, Rt. Hon. J.
Hall, Rt. Hon. Glenvil (Colne Valley)	Manuel, A. C.	Strauss, Rt. Hon. George (Vauxhall)
Hamilton, W. W.	Marquand, Rt. Hon. H. A.	Stross, Dr. Barnett
Hannan, W.	Mathers, Rt. Hon. G.	Summerskill, Rt. Hon. Edith
Hardman, D. R.	Mellish, R. J.	Sylvester, G. O.
Hardy, E. A.	Messer, F.	Taylor, Bernard (Mansfield)
Hargreaves, A.	Middleton, Mrs. L.	Taylor, Robert (Morpeth)
Harrison, J.	Mikardo, Ian.	Thomas, David (Aberdare)
Hastings, S.	Mitchison, G. R.	Thomas, George (Cardiff)
Hayman, F. H.	Moeran, E. W.	Thomas, Iorwerth (Rhondda, W.)
Henderson, Rt. Hon. Arthur (Tipton)	Monslow, W.	Thomas, Ivor Owen (Wrekin)
Herbison, Miss. M.	Moody, A. S.	Thorneycroft, Harry (Clayton)
Hewitson, Capt. M.	Morgan, Dr. H. B.	Thurtle, Ernest
Hobson, C. R.	Morley, R.	Timmons, J.
Holman, P.	Morris, Percy (Swansea, W.)	Tomney, F.
Holmes, Horace (Hemsworth)	Mort, D. L.	Turner-Samuels, M.
Houghton, D.	Moyle, A.	Ungoed-Thomas, Sir. Lynn
Hoy, J.	Mulley, F. W.	Usborne, H.
Hubbard, T.	Murray, J. D.	Vernon, W. F.
Hudson, James (Ealing, N.)	Nally, W.	Viant, S. P.
Hughes, Emrys (S. Ayrshire)	Neal, Harold (Bolsover)	Wallace, H. W.
Hughes, Hector (Aberdeen, N.)	Noel-Baker, Rt. Hon. P. J.	Watkins, T. E.
Hughes, Moelwyn (Islington, N.)	O'Brien, T.	Webb, Rt. Hon. M. (Bradford, C.)
Hynd, H. (Accrington)	Oldfield, W. H.	Weitzman, D.
Hynd, J. B. (Attercliffe)	Oliver, G. H.	Wells, William (Walsall)
Irvine, A. J. (Edge Hill)	Orbach, M.	West, D. G.
Irving, W. J. (Wood Green)	Padley, W. E.	Wheatley, Rt. Hon. John (Edinb'gh E.)
Isaacs, Rt. Hon. G. A.	Paget, R. T.	White, Mrs. Eirene (E. Flint)
Janner, B.	Paling, Rt. Hon. W. (Dearne Valley)	While, Henry (Derbyshire, N. E.)
Jay, D. P. T.	Paling, Will T. (Dewsbury)	Whiteley, Rt. Hon. W.
Jeger, George (Goole)	Pannell, T. C.	Wigg, G.
Jeger, Dr. Santo (St. Pancras, S.)	Pargiter, G. A.	Wilcock, Group Capt. C. A. B.
Jenkins, R. H.	Parker, J.	Wilkes, L.
Johnson, James (Rugby)	Paton, J.	Wilkins, W. A.
Johnston, Douglas (Paisley)	Pearson, A.	Willey, Frederick (Sunderland)
Jones, David (Hartlepool)	Peart, T. F.	Willey, Octavius (Cleveland)
Jones, Frederick Elwyn (W. Ham, S.)	Poole, C.	Williams, David (Neath)
Jones, Jack (Rotherham)	Popplewell, E.	Williams, Rev. Llywelyn (Abertillery)
Jones, William Elwyn (Conway)	Porter, G.	Williams, Ronald (Wigan)
Keenan, W.	Price, Philips (Gloucestershire, W.)	Williams, Rt. Hon. Thomas (Don V'lly)
Kenyon, C.	Proctor, W. T.	Williams, W. T. (Hammersmith, S.)
Key, Rt. Hon. C. W.	Pryde, D. J.	Wilson, Rt. Hon. Harold (Huyton)
King, Dr. H. M.	Pursey, Cmdr. H.	Winterbottom, Ian (Nottingham, C.)
Kinghorn, Sqn. Ldr. E.	Rankin, J.	Winterbottom, Richard (Brightside)
Kinley, J.	Rees, Mrs. D.	Wise, F. J.
Kirkwood, Rt. Hon. D.	Reeves, J.	Woodburn, Rt. Hon. A.
Lang, Gordon	Reid, Thomas (Swindon)	Woods, Rev. G. S.
Lee, Frederick (Newton)	Reid, William (Camlachie)	Wyatt, W. L.
Lee, Miss Jennie (Cannock)	Rhodes, H.	Yates, V. F.
Lever, Harold (Cheetham)	Richards, R.	Younger, Hon. K.
Lever, Leslie (Ardwick)	Robens, Rt. Hon. A.
Lewis, Arthur (West Ham, N.)	Roberts, Goronwy (Caernarvonshire)	TELLERS FOR THE AYES:
Lewis, John (Bolton, W.)	Robertson, J. J. (Berwick)	Mr. Bowden and
Lindgren, G. S.	Rogers, George (Kensington, N.)	Mr. Kenneth Robinson
NOES
Aitken, W. T.	Baldock, Lt.-Cmdr. J. M.	Bevins, J. R. (Liverpool, Toxteth)
Alport, C. J. M.	Baldwin, A. E.	Birch, Nigel
Amery, Julian (Preston, N.)	Banks, Col. C.	Bishop, F. P.
Amory, Heathcoat (Tiverton)	Baxter, A. B.	Black, C. W.
Arbuthnot, John	Beamish, Maj. Tufton	Boles, Lt.-Col. D. C. (Wells)
Ashton, H. (Chelmsford)	Bell, R. M.	Bossom. A. C.
Assheton, Rt. Hon. R. (Blackburn, W.)	Bennett, Sir Peter (Edgbaston)	Boyd-Carpenter, J. A.
Astor, Hon. M. L.	Bennett, Dr. Reginald (Gosport)	Boyle, Sir Edward
Baker, P. A. D.	Bennett, William (Woodside)	Bracken, Rt. Hon. B.

Braine, B. R.	Hill, Mrs. E. (Wythenshawe)	Nutting, Anthony
Braithwaite, Sir Albert (Harrow, W.)	Hinchingbrooke, Viscount	Oakshott, H. D.
Braithwaite, Lt.-Cr. G. (Bristol, N. W.)	Hirst, Geoffrey	Odey, G. W.
Bromley-Davenport, Lt.-Col. W.	Hollis, M. C.	O'Neill, Rt. Hon. Sir Hugh
Browne, Jack (Govan)	Holmes, Sir Stanley (Harwich)	Ormsby-Gore, Hon. W. D.
Buchan-Hepburn, P. G. T.	Hope, Lord John	Orr, Capt. L. P. S.
Bullock, Capt. M.	Hopkinson, H. L. D'A.	Orr-Ewing, Charles Ian (Hendon, N.)
Bullus, Wing Commander, E. E.	Hornsby-Smith, Miss P.	Orr-Ewing, Ian L. (Weston-super-Mare)
Burden, F. A.	Horsbrugh, Rt. Hon. Florence	Osborne, C.
Butcher, H. W.	Howard, Gerald (Cambridgeshire)	Peake, Rt. Hon. O.
Butler, Rt. Hn. R. A. (Saffron Walden)	Howard, Greville (St. Ives)	Perkins, W. R. D.
Carr, Robert (Mitcham)	Hudson, Sir Austin (Lewisham, N.)	Peto, Brig. C. H. M.
Carson, Hon. E.	Hudson, Rt. Hon. Robert (Southport)	Pickthorn, K.
Channon, H.	Hudson, W. R. A. (Hull, N.)	Pitman, I. J.
Clarke, Col. Ralph (East Grinstead)	Hutchinson, Geoffrey (Ilford, N.)	Powell, J. Enoch
Clarke, Brig. Terence (Portsmouth, W.)	Hutchison, Lt.-Com. Clark (E'b'rgh W.)	Prescott, S.
Clyde, J. L.	Hutchison, Col. James (Glasgow)	Price, Henry (Lewisham, W.)
Colegate, A.	Hyde, Lt.-Col. H. M.	Prior-Palmer, Brig. O.
Conant, Maj. R. J. E.	Hylton-Foster, H. B.	Profumo, J. D.
Cooper, Sqn. Ldr. Albert (Ilford, S.)	Jeffreys, General Sir George	Raikes, H. V.
Cooper-Key, E. M.	Jennings, R.	Rayner, Brig. R.
Corbett, Lt.-Col. Uvedale (Ludlow)	Johnson, Howard (Kemptown)	Redmayne, M.
Craddock, Beresford (Spelthorne)	Jones, A. (Hall Green)	Remnant, Hon. P.
Cranborne, Viscount	Joynson-Hicks, Hon. L. W.	Renton, D. L. M.
Crookshank, Capt. Rt. Hon. H. F. C.	Kaberry, D.	Roberts, Emrys (Merioneth)
Crosthwaite-Eyre, Col. O. E.	Kerr, H. W. (Cambridge)	Roberts, Maj. Peter (Heeley)
Crouch, R. F.	Kingsmill, Lt.-Col. W. H.	Robertson, Sir David (Caithness)
Crowder, Capt. John (Finchley)	Lambert, Hon. G.	Robinson, Roland (Blackpool, S.)
Crowder, Petre (Ruislip—Northwood)	Lancaster, Col. C. G.	Robson-Brown, W.
Cundiff, F. W.	Langford-Holt, J.	Rodgers, John (Sevenoaks)
Cuthbert, W. N.	Law, Rt. Hon. R. K.	Roper, Sir Harold
Darling, Sir William (Edinburgh, S.)	Leather, E. H. C.	Ropner, Col. L.
Davidson, Viscountess	Legge-Bourke, Maj. E. A. H.	Russell, R. S.
Davies, Rt. Hon. C. (Montgomery)	Lennox-Boyd, A. T.	Ryder, Capt. R. E. D.
Davies, Nigel (Epping)	Lindsay, Martin	Salter, Rt. Hon. Sir Arthur
de Chair, Somerset	Linstead, H. N.	Sandys, Rt. Hon. D.
De la Bère, R.	Llewellyn, D.	Savory, Prof. D. L.
Deedes, W. F.	Lloyd, Rt. Hn. Geoffrey (King's N'rt'n)	Scott, Donald
Digby, S. Wingfield	Lloyd, Maj. Guy (Renfrew, E.)	Shepherd, William
Dodds-Parker, A. D.	Lloyd, Selwyn (Wirral)	Smiles, Lt.-Col. Sir Walter
Donner, P. W.	Lockwood, Lt.-Col. J. C.	Smithers, Peter (Winchester)
Douglas-Hamilton, Lord Malcolm	Longden, Gilbert (Herts, S. W.)	Smithers, Sir Waldron (Orpington)
Drayson, G. B.	Low, A. R. W.	Smyth, Brig. J. G. (Norwood)
Dugdale, Maj. Sir Thomas (Richmond)	Lucas, Sir Jocelyn (Portsmouth, S.)	Snadden, W. McN.
Duncan, Capt. J. A. L.	Lucas, P. B. (Brentford)	Soames, Capt. C.
Dunglass, Lord	Lucas-Tooth, Sir Hugh	Spearman, A. C. M.
Duthie, W. S.	Lyttelton, Rt. Hon. O.	Spence, H. R. (Aberdeenshire, W.)
Eccles, D. M.	McAdden, S. J.	Spens, Sir Patrick (Kensington, S.)
Eden, Rt. Hon. A.	McCallum, Major D.	Stanley, Capt. Hon. Richard (N. Fylde)
Elliot, Rt. Hon. W. E.	McCorquodale, Rt. Hon. M. S.	Stevens, G. P.
Erroll, F. J.	Macdonald, A. J. F. (Roxburgh)	Steward, W. A. (Woolwich, W.)
Fisher, Nigel	Macdonald, Sir Peter (I. of Wight)	Stewart, Henderson (Fife, E.)
Fletcher, Walter (Bury)	Mackeson, Brig. H. R.	Stoddart-Scott, Col. M.
Fort, R.	McKibbin, A.	Storey, S.
Foster, John	McKie, J. H. (Galloway)	Strauss, Henry (Norwich, S.)
Fraser, Hon. Hugh (Stone)	Maclay, Hon. John	Stuart, Rt. Hon. James (Moray)
Fraser, Sir Ian (Morecambe & Lonsdale)	Maclean, Fitzroy	Summers, G. S.
Fyfe, Rt. Hon. Sir David Maxwell.	MacLeod, Iain (Enfield, W.)	Sutcliffe, H.
Gage, C. H.	MacLeod, John (Ross and Cromarty)	Taylor, Charles (Eastbourne)
Galbraith, Cmdr. T. D. (Pollok)	Macmillan, Rt. Hon. Harold (Bromley)	Taylor, William (Bradford, N.)
Galbraith, T. G. D. (Hillhead)	Macpherson, Major Niall (Dumfries)	Teeling, W.
Gammans, L. D.	Maitland, Cmdr. J. W.	Teevan, T. L.
Garner-Evans, E. H. (Denbigh)	Manningham-Buller, R. E.	Thomas, J. P. L. (Hereford)
Gates, Maj. E. E.	Marlowe, A. A. H.	Thompson, Lt.-Cmdr. R. (Croydon, W.)
Glyn, Sir Ralph	Marples, A. E.	Thorneycroft, Peter (Monmouth)
Gomme-Duncan, Col. A.	Marshall, Douglas (Bodmin)	Thornton-Kemsley, Col. C. N.
Gridley, Sir Arnold	Marshall, Sidney (Sutton)	Thorp, Brig. R. A. F.
Grimston, Hon. John (St. Albans)	Maude, Angus (Ealing S.)	Tilney, John
Grimston, Robert (Westbury)	Maude, John (Exeter)	Touche, G. C.
Harden, J. R. E.	Maudling, R.	Turner, H. F. L.
Hare, Hon. J. H. (Woodbridge)	Medlicott, Brig. F.	Turton, R. H.
Harris, Frederic (Croydon, N.)	Mellor, Sir John	Tweedsmuir, Lady
Harris, Reader (Heston)	Molson, A. H. E.	Vane, W. M. F.
Harvey, Air Cdre. A. V. (Macclesfield)	Monckton, Sir Walter	Vaughan-Morgan, J. K.
Harvey, Ian (Harrow, E.)	Moore, Lt.-Col. Sir Thomas	Vosper, D. F.
Harvie-Watt, Sir George	Morris, Hopkin (Carmarthen)	Wakefied, Edward (Derbyshire, W.)
Hay, John	Morrison, John (Salisbury)	Wakefield, Sir Wavell (Marylebone)
Head, Brig. A. H.	Morrison, Rt. Hon. W. S. (Cirencester)	Walker-Smith, D. C.
Headlam, Lt.-Col. Rt. Hon. Sir Cuthbert	Mott-Radolyffe, C. E.	Ward, Hon. George (Worcester)
Heald, Lionel	Nabarro, G.	Ward, Miss I. (Tynemouth)
Heath, Edward	Nicholls, Harmar	Waterhouse, Capt. Rt. Hon. C.
Henderson, John (Cathcart)	Nicholson, G.	Watkinson, H.
Hicks-Beach, Maj. W. W.	Nield, Basil (Chester)	Webbe, Sir H. (London & Westminster)
Higgs, J. M. C.	Noble, Cmdr. A. H. P.	White, Baker (Canterbury)
Hill, Dr. Charles (Luton)	Nugent, G. R. H.	Williams, Charles (Torquay)

Williams, Gerald (Tonbridge)	Winterton, Rt. Hon Earl	TELLERS FOR THE NOES:
Williams, Sir Herbert (Croydon, E.)	Wood, Hon. R.	Mr. Studholme and
Wills, G.	York, C.	Major Wheatley.
Wilson, Geoffrey (Truro)

Question put accordingly, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 304; Noes, 286.

Division No. 83.]	AYES	[8.17 p.m.
Acland, Sir Richard	Edwards, W. J. (Stepney)	Kenyon, C.
Adams, Richard	Evans, Albert (Islington, S. W.)	Key, Rt. Hon. C. W.
Albu, A. H.	Evans, Edward (Lowestoft)	King, Dr. H. M.
Allen, Arthur (Bosworth)	Evans, Stanley (Wednesbury)	Kinghorn, Sqn. Ldr. E.
Allen, Scholefield (Crewe)	Ewart, R.	Kinley, J.
Anderson, Alexander (Motherwell)	Fernyhough, E.	Kirkwood, Rt. Hon. D.
Anderson, Frank (Whitehaven)	Field, Capt. W. J.	Lang, Gordon
Awbery, S. S.	Finch, H. J.	Lee, Frederick (Newton)
Ayles, W. H.	Fletcher, Eric (Islington, E.)	Lee, Miss Jennie (Cannock)
Bacon, Miss Alice	Follick, M.	Lever, Harold (Cheetham)
Baird, J.	Foot, M. M.	Lever, Leslie (Ardwick)
Balfour, A.	Forman, J. C.	Lewis, Arthur (West Ham, N.)
Barnes, Rt. Hon. A. J.	Fraser, Thomas (Hamilton)	Lewis, John (Bolton, W.)
Bartley, P.	Freeman, John (Watford)	Lindgren, G. S.
Bellenger, Rt. Hon. F. J.	Freeman, Peter (Newport)	Lipton, Lt.-Col. M.
Benn, Wedgwood	Gaitskell, Rt. Hon. H. T. N.	Logan, D. G.
Benson, G.	Ganley, Mrs. C. S.	Longden, Fred (Small Heath)
Beswick, F.	George, Lady Megan Lloyd	McAllister, G.
Bevan, Rt. Hon. A. (Ebbw Vale)	Gibson, C. W.	MacColl, J. E.
Bing, G. H. C.	Gilzean, A.	Macdonald, A. J. F. (Roxburgh)
Blenkinsop, A.	Glanville, James (Consett)	McGhee, H. G.
Blyton, W. R.	Gooch, E. G.	McGovern, J.
Boardman, H.	Gordon-Walker, Rt. Hon. P. C.	McInnes, J.
Booth, A.	Granville, Edgar (Eye)	Mack, J. D.
Bottomley, A. G.	Greenwood, Anthony (Rossendale)	McKay, John (Wallsend)
Bowles, F. G. (Nuneaton)	Greenwood, Rt. Hn. Arthur (Wakefield)	Mackay, R. W. G. (Reading, N.)
Braddock, Mrs Elizabeth	Grenfell, D. R.	McLeavy, F.
Brook, Dryden (Halifax)	Grey, C. F.	MacMillan, Malcolm (Western Isles)
Brooks, T. J. (Normanton)	Griffiths, David (Rother Valley)	McNeil, Rt. Hon. H.
Broughton, Dr. A. D. D.	Griffiths, Rt. Hon. James (Llanelly)	MacPherson, Malcolm (Stirling)
Brown, Rt. Hon. George (Belper)	Griffiths, William (Exchange)	Mainwaring, W. H.
Brown, Thomas (Ince)	Gunter, R. J.	Mallalieu, E. L. (Brigg)
Burke, W. A.	Hale, Joseph (Rochdale)	Mallalieu, J. P. W. (Huddersfield, E.)
Burton, Miss E.	Hale, Leslie (Oldham, W.)	Mann, Mrs. Jean
Butler, Herbert (Hackney, S.)	Hall, John (Gateshead, W.)	Manuel, A. C.
Callaghan, L. J.	Hall, Rt. Hon. Glenvil (Colne Valley)	Marquand, Rt. Hon. H. A.
Carmichael, J.	Hamilton, W. W.	Mathers, Rt. Hon. G.
Castle, Mrs. B. A.	Hannan, W.	Mollish, R. J.
Champion, A. J.	Hardman, D. R.	Messer, F.
Chetwynd, G. R.	Hardy, E. A.	Middleton, Mrs. L.
Clunie, J.	Hargreaves, A.	Mikardo, Ian.
Cocks, F. S.	Harrison, J.	Mitchison, G. R.
Coldrick, W.	Hastings, S.	Moeran, E. W.
Collindridge, F.	Hayman, F. H.	Monslow, W.
Cook T. F.	Henderson, Rt. Hon Arthur (Tipton)	Moody, A. S.
Cooper, Geoffrey (Middlesbrough, W.)	Herbison, Miss. M.	Morgan, Dr. H. B.
Cooper, John (Deptford)	Hewitson, Capt. M.	Morley, R.
Cove, W. G.	Hobson, C. R.	Morris, Percy (Swansea, W.)
Craddock, George (Bradford, S.)	Holman, P.	Mort, D. L.
Crawley, A.	Holmes, Horace (Hemsworth)	Moyle, A.
Crosland, C. A. R.	Houghton, D.	Mulley, F. W.
Crossman, R. H. S.	Hoy, J.	Murray, J. D.
Cullen, Mrs. A.	Hubbard, T.	Nally, W.
Daines, P.	Hudson, James (Ealing, N.)	Neal, Harold (Bolsover)
Dalton, Rt. Hon. H.	Hughes, Emrys (S. Ayrshire)	Noel-Baker, Rt. Hon. P. J.
Darling, George (Hillsborough)	Hughes, Hector (Aberdeen, N.)	O'Brien, T.
Davies, A. Edward (Stoke, N.)	Hughes, Moelwyn (Islington, N.)	Oldfield, W. H.
Davies, Rt. Hon. C. (Montgomery)	Hynd, H. (Accrington)	Oliver, G. H.
Davies, Ernest (Enfield, E.)	Hynd, J. B. (Attercliffe)	Orbach, M.
Davies, Harold (Leek)	Irvine, A. J. (Edge Hill)	Padley, W. E.
Davies, Stephen (Merthyr)	Irving, W. J. (Wood Green)	Paget, R. T.
de Freitas, Geoffrey	Isaacs, Rt. Hon. G. A.	Paling, Rt. Hon. W. (Dearne Valley)
Deer, G.	Janner, B.	Paling, Will T. (Dewsbury)
Delargy, H. J.	Jay, D. P. T.	Pannell, T. C.
Diamond, J.	Jeger, George (Goole)	Pargiter, G. A.
Dodds, N. N.	Jeger, Dr. Santo (St. Pancras, S.)	Parker, J.
Donnelly, D.	Jenkins, R. H.	Paton, J.
Driberg, T. E. N.	Johnson, James (Rugby)	Pearson, A.
Dugdale, Rt. Hon. John (W. Bromwich)	Johnston, Douglas (Paisley)	Peart, T. F.
Dye, S.	Jones, David (Hartlepool)	Poole, C.
Ede, Rt. Hon. J. C.	Jones, Frederick Elwyn (W. Ham, S.)	Popplewell, E.
Edelman, M.	Jones, Jack (Rotherham)	Porter, G.
Edwards, John (Brighouse)	Jones, William Elwyn (Conway)	Price, Philips (Gloucestershire, W.)
Edwards, Rt. Hon. Ness (Caerphilly)	Keenan, W.	Proctor. W. T.
Pryde, D. J.	Steele, T.	Wheatley, Rt. Hon. John (Edinb'gh E.)
Pursey, Cmdr. H.	Stewart, Michael (Fulham, E.)	White, Mrs. Eirene (E. Flint)
Rankin, J.	Stokes, Rt. Hon. R. R.	White, Henry (Derbyshire, N.E.)
Rees, Mrs. D.	Strachey, Rt. Hon. J.	Whiteley, Rt. Hon. W.
Reeves, J.	Strauss, Rt. Hon. George (Vauxhall)	Wigg, G.
Reid, Thomas (Swindon)	Stress, Dr. Barnett	Wilcock, Group Capt. C. A. B.
Reid, William (Camlachie)	Summerskill, Rt. Hon. Edith	Wilkes, L.
Rhodes, H.	Sylvester, G. O.	Wilkins, W. A.
Richards, R.	Taylor, Bernard (Mansfield)	Willey, Frederick (Sunderland)
Robens, Rt. Hon. A.	Taylor, Robert (Morpeth)	Willey, Octavius (Cleveland)
Roberts, Emrys (Mericneth)	Thomas, David (Aberdare)	Williams, David (Neath)
Roberts, Goronwy (Caernarvonshire)	Thomas, George (Cardiff)	Williams, Rev. Llywelyn (Abertillery)
Robertson, J. J. (Berwick)	Thomas, Iorwerth (Rhondda, W.)	Williams, Ronald (Wigan)
Rogers, George (Kensington, N.)	Thomas, Ivor Owen (Wrekin)	Williams, Rt. Hon. Thomas (Don V'lly)
Ross, William	Thorneycroft, Harry (Clayton)	Williams, W. T. (Hammersmith, S.)
Royle, C.	Thurtle, Ernest	Wilson, Rt. Hon. Harold (Huyton)
Shawcross, Rt. Hon. Sir Hartley	Timmons, J.	Winterbottom, Ian (Nottingham, C.)
Shinwell, Rt. Hon. E.	Tomney, F.	Winterbottom, Richard (Brightside)
Shurmer, P. L. E.	Turner-Samuels, M.	Wise, F. J.
Silverman, Julius (Erdington)	Ungoed-Thomas, Sir. Lynn	Woodburn, Rt. Hon. A.
Silverman, Sydney (Nelson)	Usborne, H.	Woods, Rev. G. S.
Simmons, C. J.	Vernon, W. F.	Wyatt, W. L.
Slater, J.	Viant, S. P.	Yates, V. F.
Smith, Ellis (Stoke, S.)	Wallace, H. W.	Younger, Hon. K.
Smith, Norman (Nottingham, S.)	Watkins, T. E.
Snow, J. W.	Webb, Rt. Hon. M. (Bradford, C.)	TELLERS FOR THE AYES:
Sorensen, R. W.	Weitzman, D.	Mr. Bowden and
Soskice, Rt. Hon. Sir Frank	Wells, William (Walsall)	Mr. Kenneth Robinson
Sparks, J. A.	West, D. G.
NOES
Aitken, W. T.	Crosthwaite-Eyre, Col. O. E.	Headlam, Lt.-Col. Rt. Hon. Sir Cuthbert
Alport, C. J. M.	Crouch, R. F.	Heald, Lionel
Amery, Julian (Preston, N.)	Crowder, Capt. John (Finchley)	Heath, Edward
Amory, Heathcoat (Tiverton)	Crowder, Petre (Ruislip—Northwood)	Henderson, John (Cathcart)
Arbuthnot, John	Gundiff, F. W.	Hicks-Beach, Maj. W. W.
Ashton, H. (Chelmsford)	Cuthbert, W. N.	Higgs, J. M. C.
Assheton, Rt. Hon. R. (Blackburn, W.)	Darling, Sir William (Edinburgh, S.)	Hill, Dr. Charles (Luton)
Astor, Hon. M. L.	Davidson, Viscountess	Hill, Mrs. E. (Wytheushawe)
Baker, P. A. D.	Davies, Nigel (Epping)	Hinchingbrooke, Viscount
Baldock, Lt.-Cmdr. J. M.	de Chair, Somerset	Hirst, Geoffrey
Baldwin, A. E.	De la Bère, R.	Hollis, M. C.
Banks, Col. C.	Deedes, W. F.	Holmes, Sir Stanley (Harwich)
Baxter, A. B.	Digby, S. Wingfield	Hope, Lord John
Beamish, Maj. Tufton	Dodds-Parker, A. D.	Hopkinson, H. L. D' A.
Bell, R. M.	Donner, P. W.	Hornsby-Smith, Miss P.
Bennett, Sir Peter (Edgbaston)	Douglas-Hamilton, Lord Malcolm	Horsbrugh, Rt. Hon. Florence
Bennett, Dr. Reginald (Gosport)	Drayson, G. B.	Howard, Gerald (Cambridgeshire)
Bennett, William (Woodside)	Dugdale, Maj. Sir Thomas (Richmond)	Howard, Greville (St. Ives)
Bevins, J. R. (Liverpool, Toxteth)	Duncan, Capt. J. A. L.	Hudson, Sir Austin (Lewisham, N.)
Birch, Nigel	Dunglass, Lord	Hudson, Rt. Hon. Robert (Southport)
Bishop, F. P.	Duthie, W. S.	Hudson, W. R. A. (Hull, N.)
Black, C. W.	Eccles, D. M.	Hutchinson, Geoffrey (Ilford, N.)
Boles, Lt.-Col. D. C. (Wells)	Eden, Rt. Hon. A.	Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Bessom, A. C.	Elliot, Rt. Hon. W. E.	Hutchison, Col. James (Glasgow)
Boyd-Carpenter, J. A.	Erroll, F. J.	Hyde, Lt.-Col. H. M.
Boyle, Sir Edward	Fisher, Nigel	Hylton-Foster, H. B.
Bracken, Rt. Hon B.	Fletcher, Walter (Bury)	Jeffreys, General Sir George
Braine, B. R.	Fort, R.	Jennings, R.
Braithwaite, Sir Albert (Harrow, W.)	Foster, John	Johnson, Howard (Kemptown)
Braithwaite, Lt.-Cr. G. (Bristol, N. W.)	Frater, Hon. Hugh (Stone)	Jones, A. (Hall Green)
Bromley-Davenport, Lt.-Col. W.	Fraser, Sir Ian (Morecambe & Lonsdale)	Joynton-Hicks, Hon L. W.
Browne, Jack (Govan)	Fyfe, Rt. Hon. Sir David Maxwell	Kaberry, D.
Buchan-Hepburn, P. G. T.	Gage, C. H.	Kerr, H. W. (Cambridge)
Bullock, Capt. M.	Galbraith, Cmdr. T. D. (Pollok)	Kingsmill, Lt.-Col. W. H.
Bullus, Wing Commander, E. E.	Galbraith, T. G. D. (Hillhead)	Lambert, Hon. G.
Burden, F. A.	Gammans, L. D.	Lancaster, Col. C. G.
Butcher, H. W.	Garner-Evans, E. H. (Denbigh)	Langford-Holt, J.
Butler, Rt. Hn. R. A. (Saffron Walden)	Gates, Maj. E. E.	Law, Rt. Hon. R. K.
Carr, Robert (Mitcham)	Glyn, Sir Ralph	Leather, E. H. C.
Carton, Hon. E.	Gomme-Duncan, Col. A.	Legge-Bourke, Maj. E. A. H.
Channon, H.	Gridley, Sir Arnold	Lennox-Boyd, A. T.
Clarke, Col. Ralph (East Grinstead)	Grimston, Hon. John (St. Albans)	Lindsay, Martin
Clarke, Brig. Terence (Portsmouth, W.)	Grimston, Robert (Westbury)	Linstead, H. N.
Clyde, J. L.	Harden, J. R. E.	Llewellyn, D.
Colegate, A.	Hare, Hon. J. H. (Woodbridge)	Lloyd, Rt. Hn. Geoffrey (King's N'rt'n)
Conant, Maj. R. J. E.	Harris, Frederic (Croydon, N.)	Lloyd, Maj. Guy (Renfrew, E.)
Cooper, Sqn. Ldr. Albert (Ilford, S.)	Harris, Reader (Heston)	Lloyd, Selwyn (Wirral)
Cooper-Key, E. M.	Harvey, Air Cdre. A. V. (Macclesfield)	Lockwood, Lt.-Col. J. C.
Corbett, Lt.-Col. Uvedale (Ludlow)	Harvey, Ian (Harrow, E.)	Longden, Gilbert (Herts, S. W.)
Craddock, Beresford (Spelthone)	Harvie-Watt, Sir George	Low, A. R. W.
Cranborne, Viscount	Hay, John	Lucas, Sir Jocelyn (Portsmouth, S.)
Crookshank, Capt. Rt. Hon. H. F. C.	Head, Brig. A. H.	Lucas, P. B. (Brentford)

Lucas-Tooth, Sir Hugh	Orr-Ewing, Charles Ian (Hendon, N.)	Stoddart-Scott, Col. M.
Lyttelton, Rt. Hon. O.	Orr-Ewing, Ian L. (Weston-super-Mare)	Storey, S.
McAdden, S. J.	Osborne, C.	Strauss, Henry (Norwich, S.)
McCallum, Major D.	Peake, Rt. Hon. O.	Stuart, Rt. Hon. James (Moray)
McCorquodale, Rt. Hon. M. S.	Perkins, W. R. D.	Summers, G. S.
Macdonald, Sir Peter (I. of Wight)	Peto, Brig. C. H. M.	Sutcliffe, H.
Mackeson, Brig. H. R.	Pickthorn, K.	Taylor, Charles (Eastbourne)
McKibbin, A.	Pitman, I. J.	Taylor, William (Bradford, N.)
HcKie, J. H. (Galloway)	Powell, J. Enoch	Teeling, W.
Maclay, Hon. John	Prescott, S.	Teevan, T. L.
Maclean, Fitzroy	Price, Henry (Lewisham, W.)	Thomas, J. P. L. (Hereford)
MacLeod, Iain (Enfield, W.)	Prior-Palmer, Brig. O.	Thompson, Lt.-Cmdr. R. (Croydon, W.)
MacLeod, John (Ross and Cromarty)	Profumo, J. D.	Thorneycroft, Peter (Monmouth)
Macmillan, Rt. Hon. Harold (Bromley)	Raikes, H. V.	Thornton-Kemsley, Col. C. N.
Macpherson, Major Niall (Dumfries)	Rayner, Brig. R.	Thorp, Brig. R. A. F.
Mainland, Cmdr. J. W.	Redmayne, M.	Tilney, John
Manningham-Buller, R. E.	Remnant, Hon. P.	Touche, G. C.
Marlowe, A. A. H.	Renton, D. L. M.	Turner, H. F. L.
Marples, A. E.	Roberts, Maj. Peter (Heeley)	Turton, R. H.
Marshall, Douglas (Bodmin)	Robertson, Sir David (Caithness)	Tweedsmuir, Lady
Marshall, Sidney (Sutton)	Robinson, Roland (Blackpool, S.)	Vane, W. M. F.
Maude, Angus (Ealing S.)	Robson-Brown, W.	Vaughan-Morgan, J. K.
Maude, John (Exeter)	Rodgers, John (Sevenoaks)	Vosper, D. F.
Maudling, R.	Roper, Sir Harold	Wakefield, Edward (Derbyshire, W.)
Medlicott, Brig. F.	Ropner, Col. L.	Wakefield, Sir Wavell (Marylebone)
Mellor, Sir John	Russell, R. S.	Walker-Smith, D. C.
Molson, A. H. E.	Ryder, Capt. R. E. D.	Ward, Hon. George (Worcester)
Monckton, Sir Walter	Salter, Rt. Hon. Sir Arthur	Ward, Miss I. (Tynemouth)
Moore, Lt.-Col. Sir Thomas	Sandys, Rt. Hon. D.	Waterhouse, Capt. Rt. Hon. C.
Morris, Hopkin (Carmarthen)	Savory, Prof. D. L.	Watkinson, H.
Morrison, John (Salisbury)	Scott, Donald	Webbe, Sir H. (London & Westminster)
Morrison, Rt. Hon. W. S. (Cirencester)	Shepherd, William	White, Baker (Canterbury)
Mott-Radclyffe, C. E.	Smiles, Lt.-Col. Sir Walter	Williams, Charles (Torquay)
Nabarro, G.	Smithers, Peter (Winchester)	Williams, Gerald (Tonbridge)
Nicholls, Harmar	Smithers, Sir Waldron (Orpington)	Williams, Sir Herbert (Croydon, E.)
Nicholson, G.	Smyth, Brig. J. G. (Norwood)	Wills, G.
Nield, Basil (Chester)	Snadden, W. McN.	Wilson, Geoffrey (Truro)
Noble, Cmdr. A. H. P.	Soames, Capt. C.	Winterton, Rt. Hon Earl
Nugent, G. R. H.	Spearman, A. C. M.	Wood, Hon. R.
Nutting, Anthony	Spence, H. R. (Aberdeenshire, W.)	York, C.
Oakshott, H. D.	Spens, Sir Patrick (Kensington, S.)
Odey, G. W.	Stanley, Capt. Hon. Richard (N. Fylde)	TELLERS FOR THE NOES:
O'Neill, Rt. Hon. Sir Hugh	Stevens, G. P.	Mr. Studholme and
Ormsby-Gore, Hon. W. D.	Steward, W. A. (Woolwich, W.)	Major Wheatley.
Orr, Capt. L. P. S.	Stewart, Henderson (Fife, E.)

Question put, and agreed to.