Clause 1.—(HYDROCARBON OILS, ETC.)

HC Deb 30 April 1952 vol 499 cc1458-505

3.33 p.m.

The Chairman

The first two Amendments on the Order Paper are unduly wide but do not quite amount to negativing the Clause. I shall, therefore, select the first Amendment, on the understanding that when the dozen or so Amendments which are designed to make exceptions are reached, those selected will not be debated at much length. I respectfully remind the Committee that, under Standing Order 45, the Chairman may put forthwith the Question that the Clause stand part if he is of the opinion that the principle of the Clause has been adequately discussed.

Mr. Douglas Jay (Battersea, North)

I beg to move, in page 1, line 16, to leave out subsection (1).

I take note of what you have said. Sir Charles. It seems to be that it would be to the convenience of both sides of the Committee that we should discuss the first Amendment and should have a general debate on the subject of the petrol tax.

We have put down the Amendment and we mean to press it, because, briefly, in our view the petrol tax, after last year's Budget, had gone high enough, and because it is extraordinary that hon. Members opposite should this year support this further increase after their repeated condemnations of the increases that we made in 1950 and 1951. In particular, the present Leader of the House fulminated at great length last year against the whole idea of raising the petrol tax at all, and I shall quote some of his remarks.

I believe that the increases that we made in 1950 and 1951 were right at the time, on the grounds that I then gave; but for that very reason the tax had gone high enough by last year. Indeed, if the same tax is raised twice in successive years, that in itself is a good reason against further raising it in the third year. It is, at any rate, more consistent and logical to argue that the tax ought to have gone up from 9d. to 1s. 10½d. a gallon, but should not go further, than to argue, as do hon. Members opposite, that it never ought to have gone up from 9d. to 1s. 10½d., but should now go up from 1s. 10½d. to 2s. 6d.

The situation is different this year in several relevant ways. First, in 1950 and 1951 we were maintaining the food subsidies in order to avoid a steep rise in the cost of living. This time, however, the Government at once push up the cost of food by cutting the food subsidies and the cost of fares by raising the petrol tax. There might have been a case—indeed. I said so before the Budget—for raising this tax to provide revenue for maintaining or increasing the food subsidies. But there is absolutely none if a cut is being made in the food subsidies at the same time.

Secondly, there is this difference. In the previous two years we had to provide extra revenue either to cover an inflationary gap or for the sake of re-armament. Indeed, it was mainly for financing rearmament that I argued in favour of a rise in the tax a year ago. But this year, the Government did not have to do that at all, as the Chancellor of the Exchequer himself admits. In our view, the Chancellor need have raised less revenue this year, because he is both indulging in wasteful expenditure, which I will specify, and giving away some revenue unnecessarily.

If the Chancellor of the Exchequer asks where we would obtain the revenue which he intends to get from this tax, the answer is quite clear—and this, incidentally, applies to all our proposals for tax relief and not merely to the petrol tax alone. First, we would not have added £75 or £80 million to the cost of interest paid by the Government, which is largely in addition to the receipts of banks and other lending firms, and is, in our view, quite unnecessary in order to achieve the restriction of credit which we agree to be desirable. We think that the Chancellor should stop wasting this £80 million and should stop putting this extra burden on the taxpayer in order to meet it. Secondly, we do not think that the Chancellor need have given the big tax reliefs in the Budget to people with four-figure incomes and upwards.

Thirdly, whereas until last year the price of petrol was well below the average price abroad—and that was another of the reasons which I gave in support of the increases—the present increase of 7½d. in the tax takes the price of petrol, if anything, rather above the average retail price in other countries. I think it is a perfectly relevant argument to point out that in earlier years petrol was still cheaper here than abroad on the average. At the present price of 4s. 3d. a gallon here after the increase this year, the Government have raised it as high as in a number of European countries and, of course, a long way above that of Australia, New Zealand, South Africa and North America. The average price abroad at the moment, I understand, is 3s. 9d., compared with the 4s. 3d. charged in this country.

But we object most of all to this further steep rise in the tax this year, at a time when food prices have also been forced up by the Government, because this further action by the Chancellor will tend to push up bus fares all over the country. Is it not really rather extraordinary that at one and the same time the Chancellor raises food prices by withdrawing a subsidy, the Prime Minister sallies forth as a champion of cheap transport, and the Chancellor raises fares by pushing up the petrol tax. Perhaps, however, this is not so extraordinary in a Government which has a remarkable record of muddle in every field of administration.

The British Road Federation, which represents a number of road and motoring organisations, thinks that the Tory Party in this matter has rather let it down. The Federation, in a letter to the Chancellor on 26th March, said that as the Conservative Party voted against the previous increases in 1950 and 1951 the Federation "not unreasonably hoped"—those are its words—that it would get some relief on this occasion. Even more pertinent, I think, the Federation goes on to say that the action of the Chancellor in raising this tax was—and I again quote their words: patently inconsistent with the concern shown by the Government in its statement of last Friday. That was the notorious statement from Downing Street, just before the Budget disclaiming any responsibility for the increase in the London fares. Surely we are entitled to ask: "Did the Prime Minister, when he put out this electioneering effort on 7th March, know that the Chancellor was just going to raise the petrol tax? Or alternatively, did the Chancellor, I wonder, know that the Prime Minister was launching this disingenuous statement about fares? Possibly—I do not know—it may have been Lord Cherwell who issued it without consulting the Prime Minister, or the Chancellor, or the Minister of Transport, who, of course, would not have been let into the secret at all. It came, we must remember, from Downing Street. Perhaps the truth is that we now have a Cabinet so overloaded with overlords, including one overlord specifically for public relations, that this sort of chaos is the only thing one could expect.

While the Prime Minister was indulging in these electioneering sorties and posing as a champion of cheap fares, the Chancellor was pushing them up by this tax. For a very high proportion of the extra revenue from this tax will, in fact, be an addition to the cost of omnibus transport, of commercial transport, of agricultural production of one kind and another and of actual outright industrial production in a number of industries. The extra 7½d. will, according to my calculations—the Government can say if this is right—bring in another £51 million specifically from motor spirit, 85 per cent. of which is commercially consumed. But as much as £10 million will come from Diesel oil and about two-thirds of that represents buses and coaches and one-third goods vehicles. Of that £10 million, I understand, over £1 million will be an increase in the cost of London Transport vehicles.

The British Road Federation again put it this way, that the increased tax will prejudice the ability of London Transport to make the adjustment in London fares for which there has been such a large and determined outcry. Other bus services throughout the country, passenger road services, will pay £5 million or £6 million more—on Diesel oil alone, without counting ordinary motor spirit.

3.45 p.m.

The Public Transport Association, which also represents a number of bus associations, have stated publicly that as a result the new increase in tax will mean a fresh and inevitable cycle of applications to raise fares throughout the country and particularly and positively that it will cause all round increases in provincial fares. That statement was made only last week.

But it is not merely the transport experts who told us that this tax increase must mean higher fares. I can quote even higher authority. The present Leader of the House was very emphatic a year ago in arguing that the effect of the 4½d. increased tax would mean higher costs of transport. Indeed, he asked my right hon. Friend, who was then Chancellor, 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? … Has he not heard of increased bus fares? … Has he not heard of the increased transport rates, or has he been asleep since last year?"—[OFFICIAL REPORT, 5th June, 1951; Vol. 488, c. 821.] The Leader of the House then told us that the rise of only 4½d. in the duty would mean an increase of ½d. per car mile in the cost of London bus traffic, and only a fraction less in the cost of buses elsewhere. This year's rise of 7½d. in the duty therefore, strangely enough, will push up costs rather more. The Leader of the House also said that the 4½d. increase would cost the Road Haulage Association £3 million this year it is going to be £5 million—British Road Services £1,500,000—this year that will be £2,500,000—and the charges, he said, would have to go up by 2 per cent. to 3 per cent. as a result. This year it means about a 3¾ per cent. further rise on the cost of the Road Haulage Association.

The right hon. Gentleman was by no means alone among hon. Members opposite in deploring the effects of the rise of the tax last year. The present Parliamentary Secretary to the Ministry of Transport, who no doubt is often consulted by the Prime Minister and the Chancellor and, perhaps, even by Lord Leathers—I do not know—on these matters—said that this increased petrol tax, 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."—[OFFICIAL. REPORT, 5th June, 1951; Vol. 488, c. 826.] Of course, he used that as an argument against increasing the petrol tax, but, as the Chancellor seemed to think in the Budget that higher food prices are a good thing, he may take that as an argument in favour of it. Then there is the Minister of Works, whom we ought not to forget, although I understand he is not much consulted about economic policy by the Chancellor at the present time. He said about the petrol tax last year: 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. He then got even more eloquent and went on: Those who vote for this duty tonight will be voting for a depreciation in our money."—[OFFICIAL REPORT, 5th June, 1951; Vol. 488, c. 833.] So in his view if he votes for this increase tonight he will be voting, on his argument, for a depreciation in the £.

Then there is the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) who I see is with us and who, as my hon. Friend the Member for Leeds, West (Mr. Pannell) remarked, executed a remarkable double somersault which is surprising even for such a stern and unbending Tory as the noble Lord. He wanted the tax to go up in 1948—I think I have it right—down in 1951 and I presume he is going to support it going up again in 1952. Finally, we have the hon. Member for Kidderminster (Mr. Nabarro). He threw all caution to the winds. He said, "I shall vote with great joy against this increase in the tax tonight."

Mr. Gerald Nabarro (Kidderminster)

The hon. Gentleman must quote me correctly. I said I should vote with great joy and great energy against it.

Mr. Jay

I did not want to lay it on too thick. I hope that both his joy and his energy will be unconfined in voting for the tax increase this evening.

We should remember throughout this debate that the price of petrol has, nowadays, a profound effect on transport generally, on aviation, on agriculture and on the production of certain special industries, including paint, linoleum, dyestuffs, rubber goods and so forth; and also on certain special cases such as disabled persons who use invalid chairs. When the tax is at a low level, it is so spread out as perhaps not to matter very greatly in this respect. That was, to some extent, the view we took two or three years ago. But when it rises to the extremely high level represented by this further jump from 1s. 10½d. to 2s. 6d., all these difficulties begin to be much more serious.

We have put down various Amendments, which will doubtless be discussed later, referring to the possibility of help in these special cases which have been made the more acute by this year's increase. There are very serious administrative difficulties, as I very well understand, and which I have endeavoured to explain in the past, about meeting these various cases. But we have put down these Amendments because we believe that with the higher tax it is at any rate the duty of the Government and of hon. Members on this side of the Committee to scrutinise these difficulties very carefully indeed, and to make sure that we have done everything possible to meet them.

In particular, I would commend to the attention of the hon. Gentleman a scheme which we introduced last year for giving a rebate on the export of products of industries like the paint and linoleum industry which have to pay tax on raw materials for their production. I hope he may be able to tell us that the Government have carried that further, though my information is that it has not had as extensive an effect as I hoped it would when I introduced it last year.

But the clear issue on the main increase in the tax is this. Here is a case where the Government are deliberately and gratuitously—at the same time as they are also deliberately raising food prices—raising the cost of transport and making inevitable a new rise in fares and charges later on, even if they try to stop it when that time comes. We say that is unnecessary and, in the circumstances of this year, completely wrong. It is because Parliament can here do something concrete and effective in helping to keep down fares, instead of indulging in empty electioneering gestures and charging at windmills, like the Prime Minister, that we have put down this Amendment and intend to press it to a Division.

Mr. W. G. Bennett (Glasgow, Woodside)

I rise with very great diffidence, because many of us on both sides of the Committee are much worried about this increase in the petrol tax. I should like to be assured that this is only a temporary measure, because the repercussions of this increase over the country will be devastating in their effect.

We have been told by each Chancellor that it was a question of saving dollars, or our currency. But what is the actual effect of the imposition of any increase? It has very little effect, in fact none, on the saving of dollars and practically none on the saving of our own currency. That must be so, because 80 per cent. to 85 per cent. of the consumption is absolutely vital to the carrying on of the business of this country. The consumption by public transport, commercial undertakings, and the various other sources of national activity, amount to roughly 85 per cent. of the total consumption.

The 15 per cent. left is all that can be affected by the increased price. That 15 per cent. includes commercial travellers and doctors, and there is no possibility at any time of saving any more than 10 per cent. on the consumption. That is proved by the figures that we have year after year, and so it does not have the effect we are told it will have. It does not save dollars or currency.

What is the effect on the economic life of the country? At the moment we in Parliament are being harassed and bombarded by demands from public and private undertakings to be allowed to increase their charges, and these cannot be refuted. They are the effect, or the partial effect, of the last tax increase imposed by the previous Government. When we consider that, out of the 4s. 3d. charged for petrol, 2s. 6d. is duty, it must have a tremendous repercussion throughout our national life. It will cost the Glasgow Corporation another £2,000 a week or £100,000 a year. If it were possible at this moment to take off the petrol tax entirely, that is, the 2s. 6d. per gallon, the public transport undertaking in Glasgow would find their worries disappear. They would not require to put up fares at all.

It must have been after very careful thought, therefore, that the Government have decided at this time that the tax is absolutely necessary. But we want to be assured of that. The public demand is that fares shall stay where they are. Each undertaking is wondering how it can make ends meet. I suggest that it is impossible to take £1,250,000 per week from the national economy and not feel the effect in every sphere of consumption of light hydrocarbon oils.

I do not want to go into a lot of figures suggesting what might be done with the money that is involved, or to suggest that we might do something else, but I would say that we ought to be thoroughly assured that this particular tax is absolutely necessary, that it is vitally important that it should be imposed at this time, and that it will be revised at a very early date. I make that suggestion to the Chancellor.

4.0 p.m.

Mr. David J. Pryde (Midlothian and Peebles)

I am very pleased indeed to follow the hon. Member for Woodside (Mr. W. G. Bennett) because he has shown that in Scotland, at least, there is great antipathy towards this increase. I want to reinforce the arguments of my right hon. Friend the Member for Battersea, North (Mr. Jay) who opened this discussion, but I want also to state a special case—the case of the indigenous oil production in Scotland.

These oils are extracted from our own native oil shale measures, which stretch from Fife down through the Lothians into Peeblesshire. There are estimated reserves of 500 million tons, which may well be the saving of this country.

Fifty years ago, the news of the laying bare of the Torbane Hill and the Drum-gray measures, carried as much significance as the news of a great oil strike in Alberta or Texas today. Names such as Oakbank, Pumpherston and West Calder were names to conjure with in Scotland, and the names of Dr. Young and James Ross were household words. These halcyon days lasted right up to 1912, when the industry felt the cold blast of foreign competition from the free gusher wells of the Middle East and America. In 1914, at the outbreak of the war, there was a slight rejuvenation of the industry, and in 1919 Scottish Oils, Ltd., was formed.

But, by 1920, the industry was in the toils, and received a blow from which it never recovered, and here opens a sordid chapter of Scottish industrial history which is probably unequalled in industrial history in the world. No industry, probably, suffered so much privation as the Scottish oil industry, and no section of the industrial working class in Britain experienced such privation and vicissitudes as the workers in this industry.

The industry has a history of courage, initiative, bravery, loyalty and devotion to that particular part of the country. Although the workers in it suffered from unemployment, and sometimes 30 per cent. of the industry was cut down, and there would be three weeks of work and one week idle, although the workers accepted the heaviest cuts in wages which operated in the whole of industry, and although 10,000 men were reduced to 5,000, they still hung on, believing in better times. When I say that 19 buses leave one of the oil towns before nine o'clock every morning, one realises just what these people have to do in order to get a living, because they have the "bump of locality" well developed. The workers in 1926 even accepted the return of the eight-hour day in order to try to get the industry going again.

Successive Presidents of the Board of Trade and succeeding Chancellors of the Exchequer have recognised and conceded that special treatment is required for this great and essential industry. The Budgets of 1934 and 1938 gave evidence of this, and today I am asking the Chancellor to give special attention again to this particular industry. It is perfectly true to say that it is a small industry, but its by-products are very essential to the carrying on of life in this country. Not only do we produce heavy oils, but also the high octane spirit which is so necessary for this country in an emergency.

Unemployment was such in this particular part of Scotland as late as 1949 that the then Secretary of State for Scotland issued an order under the Distribution of Industry Act, 1949, but nothing was done. Although our people are paid less than any other section of the mining community, they run the same risks as people working in the coalfield as seen at Burngrange, West Calder, where there was a terrible disaster in recent years. Still they hang on to their industry, believing that the Government will one day utilise the Distribution of Industry Act and again supply them with the necessary employment.

These shale measures can be exploited to the great benefit of this country, because the day may come, and that not very far distant, when it will be impossible to bring oil from across the seas. Today, we are dependent on the generosity of Arab sheikhs, when we could exploit our own natural resources.

I am, therefore, going to ask the Chancellor to see to it that these people are assured of work, because they apprehend that the operation of this Clause will cause unemployment. If we lose these men, we lose them for all time. Do not let us imagine for a moment that it will be possible to absorb them in the rearmament programme, because any rearmament work in Scotland is far away from the oil district, and if we lose these men we shall lose them to the Colonies and they will have gone away for all time, so that the oil industry in Scotland will be doomed.

I appeal to the Chancellor to treat us a little more generously than was evinced last night, because not one contract for serge making has gone beyond the border of Scotland. I hope and trust that the Chancellor will remember that, while London may be London, Scotland is Scotland, and if we do not get justice in London, we will get it in Edinburgh.

Mr. Frederic Harris (Croydon, North)

I shall not attempt to follow the hon. Member for Midlothian and Peebles (Mr. Pryde) in regard to the specialised industry to which he referred. Perhaps an opportunity may arise later for other how Members to refer to certain effects on certain industries, but I should like to address my remarks to the difficulty which I personally find in reconciling this further increase with what we have said on previous occasions.

In the last three Budgets, the duty on petrol has been raised, and the effect on distribution and in the increased cost of transport has been very strongly felt throughout the country. In my own limited way, I have expressed my very strong feelings on this matter, and I am coming very strongly to the conclusion that this is a tax which it is far too easy for any Chancellor to apply, because undoubtedly it is only a question of putting up the price and a further tax will be paid from a very generous source.

I recognise that the circumstances have changed, as indeed we all recognise, but we cannot get away from the fact that, by adding this further burden of the increased tax on petrol, we are putting up the cost of transport on all sides. It is approximately true to say that 80 per cent. of this burden falls upon transport generally, and that, over the last five or six years, the transport bill of any corporation has virtually doubled itself. It is now becoming a very alarming feature of the cost of any item manufactured and of delivering it to the consumer. I do not suppose there is one single industry which does not use motorised transport at some stage of its manufacturing requirements. Accordingly, this burden is shared all the way round.

We in industry know that it is not always easy to add the actual increase to a particular item of costing. It is a question of finishing and rounding off the charge when the time comes. Sometimes a company may not pass on the whole of the extra burden it has to stand, but in many cases slightly more is put on to round off the figure. The final effect of such an increase is to add to the burden of the cost of living, and I very sincerely regret that it was found necessary in this Budget to levy this additional tax, in view of the fact that the price of petrol has been increased in the last three Budgets.

Reference has been made to the effect of this increase on fares generally. The burden of the increase in fares has been borne mainly by London. I know that transport from London reaches out to Southend and other districts, but in my constituency of Croydon, North, people have had to bear fare increases, not of 40 per cent., but of as much as 80 and 100 per cent. I have received over 150 letters from constituents complaining of this fact.

At some stage or other this additional burden, however one may try to alter costing, must be passed on to the public. It is essential that the Chancellor should realise that if this increase in the price of petrol has to be levied, it is something of which we want to hear the end in future years. We have reached the stage when we know that with the appearance of each successive Budget we are going to have an increase in the cost of petrol.

If the ordinary car user finds things getting tight and difficult, he may decide to use his car a little less often. He may find the answer to his difficulty by using his car every two or three Sundays instead of every Sunday. But that sort of retrenchment cannot be applied in the case of transport generally, and the extra cost has to be added to the cost of articles manufactured and to general transport, and it eventually results in higher prices all round.

I think this is a most dangerous tax. It will add to the burdens of industry, which has already experienced serious increases in its transport charges. Over the last five or six years transport has gone up out of all proportion, and therefore I should like to have a definite assurance from the Chancellor that petrol will not be further taxed in each successive Budget. On average, the cost of petrol in this country is some 20 per cent. above the cost of petrol in other countries. That is not a good thing when we are seeking export markets, because in the long run it makes competitive manufacturing more difficult.

I am very distressed indeed that it has been found necessary to levy this increased duty. I think my own views on the matter are reasonably well known, and before the Chancellor finishes with this part of the Finance Bill I hope he will give us some assurance that this is not going to be an annual event. I feel that those of us who have spoken against this further increase have been fully justified in doing so, and, as I say, I should like to get something definite from the Chancellor regarding future policy in this particular field.

4.15 p.m.

Mr. Ernest Davies (Enfield, East)

It is significant that the two speakers on the benches opposite have opposed this increase in the Petrol Duty, but at least they are being more consistent than their right hon. and hon. Friends on the Front Bench, and more honest. The hon. Member for Croydon, North (Mr. F. Harris), said that the increase of the Petrol Duty had become a very easy means of raising revenue. He might have added that there is always the danger that once a tax becomes too easy to increase, it is never decreased.

In moving this Amendment, my right hon. Friend the Member for Battersea, North (Mr. Jay), referred to the inconsistency of the Government in setting themselves up at the present time as protagonists in the cause for cheap fares and at the same time raising the Petrol Duty, because of its effect upon fares generally throughout the country. I believe that after Monday's debate on the question of fares, the travelling public, particularly in London, had a sense of anticlimax. They had seen the Prime Minister intervene in the question of fares and they had been given the impression that they were to be relieved of a considerable portion of the additional burden imposed upon them. But after the debate had taken place, it became quite clear that, not only was London not going to be relieved of more than a small fraction of the increased burden imposed upon it, but that in the long run fares in London would inevitably rise still further in view of the imposition of this additional fuel tax.

What does the Government's intervention amount to as far as fares are concerned? Certain concessions are proposed regarding sub-standard fares in London which will result in a relief of only £500,000 per annum. That is what the Home Secretary stated and what the Parliamentary Secretary to the Ministry of Transport confirmed in winding up the debate. This means that London is being extremely unfairly treated, especially in view of the fact that London will suffer most as the result of the increased Petrol Duty now being imposed.

Under the scheme approved by the Transport Tribunal, £18,500,000 was to be taken in increased farces from the travelling public throughout the country. Of that £18,500,000, £13,500,000 was to be taken from London, and that extra burden is already being imposed on the travelling public in London. But in the rest of the country the increase, so far, has only amounted to £3 million. That increase was imposed on 1st January with the rise in the monthly returns. The travelling public outside London are now to be relieved of the balance of £2 million.

London, therefore, is already bearing the largest portion of the increase in fares and is apparently going to suffer even more because of the very large amount of road transport used by the travelling public in the Metropolis. I consider, in view of the great increase in fares in London and in view of the additional burden which this tax will impose upon the travelling public in London, that this matter should be looked at again to see whether the relief proposed to be given in the rest of the country should not be applied in equal or even in greater measure to London.

Although the Central Transport Committee has accepted the scheme proposed by the Transport Tribunal, I think that, in view of this increased tax, the matters which have been the subject of much protest in London, such as the abolition of the 4d., 7d. and 10d fares, should be reconsidered, and the imposition of the excessive increases limited to 42 per cent., as was to be the case in the rest of the country.

It is a masterpiece of inconsistency on the part of the Government to pose as the champions of the travelling public, to intervene and give the impression that they are going to come to their relief, but to do it in very small measure and at the same time impose this duty. They can only be as ineffective as was King Canute's attempt to hold back the incoming tide. But whereas nobody could blame King Canute for failing to do so, the Government are actually encouraging the tide to come in.

The position of the British Transport Commission is bound to worsen as a result of the imposition of these duties. It will not only deteriorate financially because of the greater charge that will be imposed through the increase in the duties on petrol and other fuel, but the Commission will also suffer through their passenger road services in the provinces, in Scotland and, of course, through London Transport. They will suffer, too, from the effect of these duties on the Road Haulage Executive, that is, on British Road Services.

The British Road Haulage Executive will have an additional burden of £2,500,000 to meet as a result of increasing the duty by 7½d. a gallon. Last year, according to the Home Secretary on Monday, the Road Haulage Executive made an operating surplus of roughly £3 million. The imposition of these increased duties means that that operating surplus will be very largely eaten into. In other words, the British Transport Commission will lose £2,500,000 in revenue which they would otherwise have received from the Road Haulage Executive.

Incidentally, the £3 million is not simply a contribution to central charges, as the Home Secretary suggested on Monday, implying thereby that the Road Haulage Executive was not operating at a profit last year but was only contributing its share to central charges. The £3 million which the Road Haulage Executive made last year was an operating profit and the central charge which the Executive has to meet is, in effect, a payment of dividend out of profit. The central charge results from compensation which had to be paid following the taking over of a large number of undertakings on very generous terms.

The British Transport Commission will suffer materially from these increases in duties. If, at the same time as they lose revenue from their road haulage organisation, from London Transport and from the bus undertakings throughout the country in which they have an interest, the Government proceed with a policy of de-nationalising part of the British Transport Commission, then the burden which will be imposed on the transport user, whether he is a trader or shipper of goods or a member of the travelling public, will be one which will be extremely difficult to bear.

As my right hon. Friend the Member for Battersea, North, pointed out, the rise in the Petrol Duty last year brought that duty pretty well up to the limit. And the burden which the trader and the road user is being asked to carry today is one which is out of all proportion to the amount which is being spent on maintaining a safe system of roads throughout the country. It is estimated, for instance, that more than £220 million will be collected in duty on motor fuel at 2s. 6d. a gallon, plus a further £100 million a year in licence duties and Purchase Tax—a total of not less than £320 million from road users this year.

As against that total revenue from taxation imposed on road users, only some £75 million are to be spent on the upkeep of the roads during the financial year. The Petrol Duty, if it is to be justified, would be justified if it were used for improving the road system of this country. The amount of money which is being spent on improving our roads is vastly inadequate compared to the danger which exists on those roads. If we were told that this increase was to be spent on improving the roads, one would be perhaps a little less emphatic in opposing it.

The Government are behaving in a most inconsistent manner in imposing this duty. The travelling public will realise pretty soon that the pose of the Prime Minister, in particular, as one looking after their interests and intervening in this situation to bring relief to the travelling public of London was just a fraud and a deception. By the time that has come home to the people of London and the country and fares have gone up they will know how to judge the situation.

Viscount Hinchingbrooke (Dorset, South)

I feel a good deal of sympathy for what the hon. Member for Enfield, East (Mr. Ernest Davies) has just said about the disproportion between the money exacted from road users in the form of duty on petrol, licence duty and one thing and the other, and the actual amount spent on the roads. I have always thought there was a very strong case for a very substantial reduction, or redress of that position, and I hope that before long we shall achieve it, if possible in the reorganisation of transport that is likely to take place at an early date.

Furthermore, I do not think anybody who takes an interest in road problems and the finances of the British Transport Commission can look upon the continual elevation of the Petrol Duty with any enthusiasm whatever. I support much of what has been said on this side of the Committee about hardship caused to industry generally and to the transport industry and to road users. There are many thousands, perhaps millions, of people who have recourse to private vehicles or road public service vehicles who will have to face in due time an increase in charges.

But I thought the right hon. Member for Battersea, North (Mr. Jay), rather beat the pistol in saying that there had been actually an increase in transport charges as a result of the latest increase in the Petrol Duty. We have been threatened by the Public Vehicle Operators' Association and other bodies concerned that they are bound to put up their charges in time; but it cannot be said that so far any transport fares in the country have gone up as a result of what the present Government have done.

4.30 p.m.

I plead with my right hon. Friend the Chancellor of the Exchequer that in due time and season, when the financial position of the country has eased somewhat, he will make a substantial reduction in the Petrol Duty. The hon. Member for Enfield, East, talked about a limit having been reached last year. I do not know what he has in mind in his reference to a limit. Certainly petrol is still flowing into this country, and the revenue from it is still coming in. If he means that it is beginning to bear hardly on people in general, then I am with him, and I hope that there will be an early reduction.

But this Committee is not a committee sitting on the transport industry this afternoon. We are a Committee on the Finance Bill, and we must have regard to fiscal and economic issues. The right hon. Member for Battersea, North, put up a very specious case, I thought. He ignored altogether the main design of my right hon. Friend's Budget; and he ignored altogether the grand design of operations intended to redress the overseas balance of trade and to bring some order into our international currency position.

So far as the design of the Budget is concerned, my hon. Friends who have been able to congratulate the Chancellor on being able to give tax concessions in the Income Tax range this year might not have been able to do so if the over-all amount received in the Budget had been reduced by not having an increased Petrol Duty. The fact that we have this increased Petrol Duty means that my right hon. Friend has a certain amount more money which he can give in direct taxation reductions.

But surely the main consideration is the overseas balance of trade position. We are faced with an immense and continuing dollar and gold deficit, and one of the taxes to which it is most convenient to have recourse in redressing that situation is the Petrol Duty. Formerly that was not so much the case. Up to last year, I think that only 12½ per cent. of the tax received from petrol could be classed as saving us gold and dollars: but, thanks to the inept foreign policy pursued by the Socialist Government last year, that dollar content has now gone up to something like 25 or 30 per cent. The fall of Abadan is the real reason why the people of this country have this year to put up with an increased tax on petrol; and let everybody who uses the roads, and everybody who is concerned in industry who uses oil and petrol, realise that the chief architect of this year's increased tax is none other than the right hon. Member for Lewisham. South (Mr. H. Morrison). If it had not been for his futile handling of events in Persia, we should not have had the increased tax this year.

Mr. E. G. Gooch (Norfolk, North)

I wish to take the Committee away from the crowded city streets and out into the green fields; in other words, I wish to support this Amendment on agricultural grounds. One of the main problems facing the agricultural industry today is in endeavouring to bring down costs. I know I shall be reminded, because of the interest I take in this matter, that one of the mounting costs in recent years has been that of wages, but I have yet to find an hon. Gentleman on either side of the Committee who would dispute that the men who work in the industry are entitled to good wages.

The increased Petrol Duty is a cost which should never be passed on to the agricultural and horticultural industries. I am not asking the Chancellor to put more feathers in the bed. All I am asking him to do is to deal out a fair measure of justice to the agricultural industry. I know the Committee realises that petrol is used extensively by farmers and market gardeners in tractors and similar equipment. But apart from its use as tractor fuel, it serves for use in harvesting machinery and combines, as well as for stationary engines pumping water, generating electricity, operating milking and threshing machines, and in a variety of cultivators and other mobile and stationary equipment on smallholdings.

There were some 53,000 farm tractors and 45,000 market garden tractors operating on petrol in 1950. I cannot say how many there are today, because I understand that the census is taken every few years, and the latest figures will not be available until July, but I suggest that there are many more tractors operating on our farms today than there were in 1950.

It is estimated that in 1952 some 62 million gallons of motor spirit will be consumed by tractors and stationary engines used by agriculturists and horticulturists in purely land operations, and 7½d. a gallon thus means a yearly cost to the industry of £1,937,500. The additional tax of 7½d. per gallon brings the total tax on motor spirit to 2s. 6d. per gallon, and the total revenue derived from purely land work will amount to £7,750,000 in a full year.

I make the point, which I think is a fair one, that the tax on petrol was designed originally to create a fund for the construction and maintenance of roads. It was never intended to apply to the consumption of petrol on non-road operations. This principle has already been conceded, whereby petrol consumed in fishing vessels does not attract the tax. By the imposition of this tax on petrol when used in land machines, the Government have created what I regard as a very wide discrepancy between petrol and other fuels used on the land.

This discrepancy has resulted in the taxation of engineering, and the manufacturers of tractors and agricultural machines have been concentrating on the design of engines to run on tax free fuels, and the users of tractors have, by virtue of the tax lost, what they regard as the freedom of choice. The existence of a discrepancy between the two types of fuels was acknowledged by the then Chancellor in 1950, and I should like to call attention to something he said in imposing the 9d. tax in 1950: Certain agricultural operations are performed in some cases by vehicles or machines using fuel which is taxed and in other cases by vehicles or machines using an untaxed fuel. The additional duty now to be paid in respect of the former would involve a considerable extra cost to the farmer and an undue discrimination between the two types unless suitable measures were taken to offset the extra cost of running such vehicles or machines. I propose, therefore, that an annual grant should be paid in respect of each such vehicle or machine based on a reasonable assumption as to the average amount of taxed fuel which each type consumes."—[OFFICIAL REPORT, 18th April, 1950; Vol. 474, c. 75–6.] In taking that line the then Chancellor recognised the problem which would be created, and the rebate scheme to which I have referred operated, I think, for a year.

In most progressive agricultural countries, such as Denmark, Sweden, Norway, Switzerland, Canada, the United States Of America, New Zealand, France and Ireland, petrol used for farm purposes is either exempt from duty altogether or given favourable tax treatment. I would not presume to speak for the National Farmers' Union, but I think that what I am saying today would have their sympathy and support. Many countries throughout the world are operating a petrol rebate scheme for the benefit of agriculturists and horticulturists. The scheme works in this way: the users of such fuel pay tax on the purchase price and then make application for a refund based on the amount consumed in non-road work.

Mr. Nabarro

Is it not a fact that the increased cost of petrol for agricultural work has already been taken into account in the prices fixed under the recent Price Review?

Mr. Gooch

I am addressing my remarks through you, Wing Commander Hulbert, to the Chancellor.

Mr. Nabarro

Surely the hon. Member can answer that question.

Mr. Gooch

I shall be able to listen to what the Chancellor has to say when he gets up to speak. When the hon. Member for Kidderminster (Mr. Nabarro) is Chancellor of the Exchequer I will listen to him.

I was talking about this rebate scheme and explaining that the users of this fuel pay the tax at the purchase price and then make application for a refund based upon the amount consumed in non-road work. The schemes in operation have apparently been so designed as to prevent abuse by the use of tax-free fuel in road vehicles. There is no doubt that similar schemes could be operated here.

I hope that the Amendment which has been proposed so far as the use of petrol in farm machinery is concerned can be accepted. The Chancellor realises very well—as I do, living in an agricultural area—that we have to produce a lot more food. I think it can best be done by efficient methods. The increased petrol tax on farm machinery is a tax on farming efficiency, and we shall operate that tax at our peril. We cannot afford to run the risk and I hope, therefore, that the Committee will indicate their endorse-men of my view by voting for the Amendment.

Mr. Julian Amery (Preston, North)

Right hon. and hon. Gentlemen opposite are entitled to criticise and express their disapproval of the way in which we seek to raise increased revenue; but I think it would be very gracious if they prefaced their criticisms and observations by some admission that they—or, at any rate, the late Government, which they supported—are at least in part responsible for the circumstances which oblige us to raise additional revenue.

The need for raising such revenue arises not merely from higher prices; not merely from the fact of increased social benefits, pensions and family allowances, but also from the mistakes and blunders of the late Government which resulted either in a direct loss to the revenue or in a weakening of our sources of revenue. My noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) has just referred to the loss of Abadan and the effect that had on our balance of payments position, thus obliging my right hon. Friend the Chancellor to draw his Budget as he did.

Turning for a moment to the more purely revenue aspect of the situation, I see from the returns that the increase in revenue which the Chancellor hopes to get from the petrol tax is about £65 million. It is a very large sum, but it is not so much larger than the loss in revenue to the Exchequer arising from the loss of the refinery at Abadan. It must be remembered that the Exchequer used to draw the tax on the profits of the Anglo-Iranian Oil Company, the dividend accruing to them in shares in the company which they owned and also the Admiralty contract for petrol. It was a sum which was not very inferior to the sum it is hoped to raise by this tax.

4.45 p.m

I am not suggesting for a moment that the fact that one happens to lose money by losing a petrol asset in any way causes one to put a tax on petrol where it is distributed to commercial vehicles. There is no direct connection of that kind. Nevertheless, the fact that a loss of revenue arising out of the loss of a petrol asset should lead to an increase in taxation upon petrol may help to remind us and the public that weak and vacillating foreign policies inevitably lead to heavier burdens upon the masses of the people.

Mr. Jay

As the hon. Gentleman has referred to Abadan, I should like to ask him if he is aware that the oil—temporarily, we hope—lost from Abadan is now being replaced to a considerable extent by oil from other sources in the Middle East and that the dollar content of our imports is now going down? Will he also tell us, as he never has done, whether the Conservative Party would, in the last resort, have used force to maintain our position at Abadan?

Mr. Amery

The right hon. Gentleman raises two very interesting points. First, he says that we are replacing the oil supplies. I was not talking about the loss of oil. I was talking about the loss of revenue incurred by the Treasury by the loss of a company which the Treasury tax and in which the Treasury has a very large share. The right hon. Gentleman also asks what I have to say about the strategic and diplomatic aspects of the question—

The Temporary Chairman (Wing Commander Hulbert)

We must not debate Abadan.

Mr. Amery

I only wanted to say, had it been in order, that I would very gladly have debated that point.

I regard this tax as an evil but necessary one. It is a necessary evil imposed upon us by the mistakes of the previous Government. All I would urge is that hon. Members on both sides of the Committee should have the honesty, when talking about this tax in the country, to call it by what I suggest is its true name—the Abadan tax.

Mr. J. Grimond (Orkney and Shetland)

The Chancellor of the Exchequer cannot have been much encouraged so far by the speeches made from his side of the Committee, although in the last two speeches there has been a certain warmth and a measure of support, if not for the tax itself, at least for Conservative policy in regard to other events which hon. Gentlemen opposite allege have led us to this tax. However, anyone who believes that the financial situation is certainly serious and certainly requires severe measures has to meet a two-fold case. First, there is the point that the Chancellor requires the revenue, and secondly and alternatively, that the Chancellor cannot afford to go on spending so many dollars for oil.

As to the revenue point, I am bound to say that when the Conservatives were in opposition it was their invariable answer, when they were asked how they would replace any tax which they said was a bad one, to say that it was not their business to suggest how it should be replaced. They said it was their business to criticise the proposals put forward by the Government and not to make other proposals of their own. If they were pressed absolutely to the wall, they usually fell back on the assertion that anyway £200 million, £300 million or £400 million could be saved in Government administration and the loss could be replaced from this.

I agree with both those points of view. I do not see why I should not rely on them, but if one is to be fair I think one has to say that, rather than have this tax, if the revenue is essential it would be preferable to raise that revenue by other taxes or forgo other concessions which the Chancellor has made. I think everyone would agree that the more serious matter is the apparent loss of dollars for oil. Apparently, it was extremely serious last year. In the Economic Survey; on page 9, is given the United Kingdom balance with the dollar area, and apparently the net invisibles moved from a surplus of 14 million dollars in the first half of the year to a deficit of 283 million dollars in the second half of the year. I expect that a considerable amount of that may have been due to the oil situation.

Anyone who accepts the position that the Budget must be drastic is bound to meet that point, therefore; but a partial answer has already been given from the Chancellor's side of the Committee. To begin with, it has been pointed out that a great deal of the petrol which is used must be used, and especially must it be used if we are to maintain and then increase our exports. In his financial statement on 29th January, the Chancellor himself admitted that A good deal less than half the consumption of motor spirit is by private motorists, and not very much of this is used for pleasure motoring."—[OFFICIAL REPORT. 29th January, 1952; Vol. 495, c. 49.] If this is a tax to achieve economy in the use of petrol, therefore, it will be at the expense of essential users and of industry. We have often heard it argued, and quite rightly, by the Conservative Party when they were in opposition that transport charges enter into every stage of production and are a considerable burden on the very goods we want to send abroad.

Mr. Charles Pannell (Leeds, West)

Does the hon. Gentleman agree with the Chancellor that something like half is used on ordinary motoring? I think 85 per cent. is used by the commercial user.

Mr. Grimond

I am quoting the Chancellor.

Mr. Pannell

He is quite wrong.

Mr. Grimond

He may be quite wrong. What I do not think he can deny is that if the tax is to be effective in saving dollars, it can only be as a result of cutting down essential transport. Again, it has been pointed out that there is a very great discrepancy between the statements by the Government that they are anxious to keep down the fares and a tax which must have the direct effect of putting them up.

I should like to make a comment on one remark made earlier, and that is the tendency for all increases always to be passed on in full or even a little more than in full. Some of us who believe in private enterprise are very nervous about that tendency and we wonder whether it is essential every time the tax is increased to pass the burden on in full. I do not think a case can be made out for the tax even on those two grounds—the only two grounds which can be suggested for the tax and which admittedly are strong ones.

I should like further to refer to a point already made by the hon. Member for Norfolk, North (Mr. Gooch) on the very serious effect which this tax will have on agriculture and on all the country districts. Those are the people who will feel the effect of this tax most heavily and most directly. The hon. Member for Kidderminster (Mr. Nabarro) suggested that the extra cost of petrol was taken into account in the recent price review. I agree that that may well be so, but only an over-all picture can be taken into account. In constituencies like my own, the charges are very much heavier than they will be in certain other parts of the country.

Mr. Nabarro

I entirely agree with the hon. Gentleman, and I readily confess that the fact that the increased Petrol Duty is taken into the calculations of the price review helps only agriculturists and does not help the horticulturists. It will have an effect in remote areas such as Orkney and Shetland, or, of course, Western Worcestershire.

Mr. Grimond

In that case we shall look forward to the support of Western Worcestershire in the Lobby opposing this tax. If the Government are anxious to see the population in the North of Scotland maintained and to get more food from that area, then there is nothing more essential than bringing down transport charges. This tax is going in the opposite direction. Petrol is already 4s. 9d. a gallon in parts of my constituency, and it is an essential commodity before you can move at all; there is no railway, and petrol is essential to passenger carrying or any form of agricultural life in the area.

There is an Amendment later on the Paper trying to exclude such counties from the effect of the tax. I see the very serious difficulty of doing anything like that, and the real answer is that, on balance, this is a bad tax for the country as a whole and particularly for certain areas which we are told the Government are anxious to help and into which they are already putting subsidies for certain purposes which are being more than cancelled out by rising freights. Those areas will be particularly hard hit.

As a member of a party which the electorate, by some aberration, seldom entrusts with power, one is perhaps under a particular obligation not to vote against proposals merely because one knows they will be unpopular. After all, we could always do that. In this case, however, we feel—and we are fortified by the support which last year we had from the party opposite and which this year comes from the party on this side of the Committee—that a very powerful case has been made for saying that this increased tax will be a burden on industry, will damage our export trade and will do very great damage to the transport system of the country as a whole, and in particular, in the remoter areas.

Mr. Nabarro

I am glad to have caught your eye, Wing Commander Hulbert, in two consecutive years rather early in the Committee stage of the Finance Bill, and of having had an opportunity on two consecutive years to speak on this rather controversial subject of the Petrol Duty. Already several hon. Members opposite have quoted the peroration of my speech last year, which was somewhat rumbustious in character as a result of the constant interruptions to which I was subjected by hon. Members opposite when they were seated on this side of the Committee.

It is a fact that last year I said during my speech, in the last few words, that I should vote with joy and with energy against the increase in the Petrol Duty. My reason for saying that was that it appeared to me at the time of the Finance Bill last year that there was not the overriding need which was made out by the Government of the day to impose this additional Petrol Duty, and, at a time when inflation was still threatening, I thought the effort ought to have been made to reduce certain items of Government expenditure; and I did, during the course of the Finance Bill debate, venture to say which items of Government expenditure ought to have been reduced to provide a sum which, in revenue, would have approximately equalled the amount derived from the increased Petrol Duty.

Before I pass to the main purpose of my speech may I make some reference to what was said by the right hon. Gentleman the Member for Battersea, North (Mr. Jay), who brought up, once again, the question of petrol prices in Western Europe. I have always taken the view that petrol prices in Britain should, if anything, be somewhat lower than those in any other Western European country, because we have immensely greater refining resources in the United Kingdom.

Nevertheless, I want to correct the right hon. Gentleman in his statement to the general effect that our petrol prices in Britain today are consistently higher than Western European prices. That is emphatically not the case. I have the pleasure every year, if I can find the time, of motoring a few thousand miles in Western Europe to observe general economic conditions and to provide myself with suitable data for refuting the spurious arguments of hon. Gentlemen opposite. The last time I was in Western Europe, a few months ago, the price of petrol in France was approximately 4s. 9d. a gallon and in Italy was over 6s. a gallon. The price of petrol in the cheapest market in Western Europe, Belgium, was a fraction under 4s. a gallon.

On the general picture in Western Europe it is not incorrect to say that the price of petrol is higher than the increased prices in the United Kingdom. I do not advance that as an argument for increasing the Petrol Duty; I merely say that the right hon. Member for Battersea, North, was incorrect in stating the contrary.

Mr. Pannell

If the hon. Gentleman will look up the speeches of hon. Gentlemen opposite, particularly those on the Front Bench, he will find the refutation of all the arguments he is now adducing.

5.0 p.m.

Mr. Nabarro

I am afraid that the hon. Gentleman's memory is not as sound as it used to be. All he has to do if he wants to check my argument is to go into the Library and look up the prices of petrol in the various European countries.

There is no doubt that the effect of this increased Petrol Duty will be felt slightly in every industry in the country, including the horticultural industry. I am the first to recognise that. I would not withdraw one jot from what I said last year in a similar debate on the effect on manufactured goods, on horticultural products, and so on—on the adverse effect of the increase in the Petrol Duty. But there is the undeniable fact that since last year economic conditions have very greatly changed. At this time last year, the dollar content of all the oil imports into the United Kingdom was only 12½ per cent. Today, the figure is estimated to be 27 per cent. It is true that the dollar content may now be falling very slightly, but it is still more than double what the dollar content of oil imports was at the same period last year, and the reason for that greatly increased dollar content is none other than the loss of the Abadan refinery.

Hon. Gentlemen opposite are guilty of the most gross hypocrisy when they attack my right hon. Friend for taking—not a desirable measure—but a necessary measure in discouraging the consumption of petrol in this country by taking one of two recourses. The recourse he has taken to discourage consumption is to put the price up; the alternative recourse, in my view, would have been to re-introduce the rationing of petrol, and that, in my considered opinion—although this view may not be shared in all parts of the Committee—would have been a far worse step, with all the inherent costs and complications, than the raising of the price of petrol to discourage consumption.

Mr. F. Harris

How does this affect in any way the 80 per cent. used on commercial transport?

Mr. Nabarro

By encouraging economy in the consumption of petrol and oil. [HON. MEMBERS: "Oh."] Hon. Gentlemen opposite may scoff, but I have been in the happy position of being a road haulage operator for many years, and I know that as prices rise, as tax increases, as difficulties press upon the business and industrial community, the urge is for managerial executives to exercise the greatest possible efforts to economise in the consumption of such items as petrol and oil—

Lieut.-Colonel Marcus Lipton (Brixton)

And charge for it.

Mr. Nabarro

—and if they are successful in doing so it will benefit the national economy. The Chancellor's action in increasing the price, as an alternative to the rationing of petrol, with all the encumbrances of the bureaucratic control that would have been created—and the corruption—is, in my view, a very desirable step, and the right step.

Let me pass for a moment to another consideration that has not been mentioned to any great extent—why we have the complaint that the increase in Petrol Duty is going to have such an adverse effect on all costs. It is true to say that since the war there has been an accelerated tendency for freight traffic to be transferred from the railways to the roads. One has only to look at the great increase in the number of C licences since 1945 to recognise that is the fact. At the end of the war there were something under 400,000 C licences in the United Kingdom. Today, there are something of the order of 720,000 C licences.

While that may be a desirable state of affairs, a desirable development, none can deny in this Committee that the greatest single cause for the great increase in the number of C licences has been the inefficiency of the British railway system—the fact that manufacturers in so many different parts of the country find that they can get their goods from their factories to their destinations, or bring in their raw materials from the docks to their factories, by road haulage, using their own lorries under C licences, so much more economically and expeditiously than if the goods are transported by rail.

It is futile for hon. Gentlemen opposite to point an accusing finger at my right hon. Friend for trying to check the ever increasing consumption of petrol for freight traffic on the roads by raising the price of petrol, when they themselves are responsible by their nationalisation Acts for the shocking state of affairs that exists on the British railway system today.

Hon. Gentlemen in various parts of the Committee have referred to the fact that the Chancellor is raising an extra £66 million this year from the Petrol Duty. It is very desirable that he should do that and use as a complement, the incentives of Income Tax revisions to secure greater production in industry. Surely the outstanding feature of this Budget is that the great majority of skilled workers in this country and a large number of semi-skilled workers are very pleased indeed to have the opportunity of an increase in their net incomes and a reduction in the amount of P.A.Y.E. they have to pay week by week. I believe that has partly been made possible—not wholly, of course, but partly made possible—by the increased duty on petrol; and, inasmuch, it will be desirable, because it will economise in the consumption of a largely imported commodity whilst using the benefit fiscally provided for inducing greater incentive to increase production in our main industries, not the least important of which, of course, is the coal mining industry.

Mr. Ivor Owen Thomas (The Wrekin)

The hon. Gentleman has argued that the increased tax will bring in more revenue and that it will cause a substantial reduction in the consumption of petrol. If there is a substantial reduction in the consumption of petrol how will the Chancellor get an extra amount from the extra tax?

Mr. Nabarro

What I said earlier was that the increased price will encourage economy in the consumption of petrol. What I have now stated, is the complementary feature—and I think that this is equally important—that the opportunity has been provided, in measure, to enable the Chancellor to provide incentives by revising the Income Tax and reducing P.A.Y.E. That is perfectly sound.

Mr. Thomas

It is contradictory.

Mr. Nabarro

There is no contradiction. The two are completely complementary. Had there not been this additional revenue from the Petrol Duty it is doubtful whether the incentive could have been provided, in the same measure, within the P.A.Y.E. system.

In my view there is nothing whatever that is inconsistent between the attitude of the Members of the Conservative Party last year in opposing an increase in Petrol Duty and the attitude they take this year in supporting one. There is nothing inconsistent about it at all. The right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), is having a quiet laugh to himself. There are two right hon. Gentlemen on the Opposition Front Bench who are laughing, yet they were members of the guiltiest Cabinet in British history—the Cabinet that handed over the Abadan refinery. And the whole British nation will today have to pay the price for their measureless folly.

Mr. Pannell

On a point of order. I understood, Wing Commander Hulbert, that you ruled out of order the hon. Gentleman the Member for Preston, North (Mr. J. Amery) when he was replying to a charge about the Abadan refinery. Therefore, if we are to be debarred from replying either on that side or this, these assertions should not be bandied about.

The Temporary Chairman

Had the hon. Gentleman continued I should certainly have called him to order.

Mr. Nabarro

Is it not a fact that I was referring solely to the economic implications flowing from the loss of the Abadan refinery, whereas another hon. Gentleman earlier in the debate was referring to diplomatic matters? Surely it is in order to refer to the economic implications of the loss of this oil?

The Temporary Chairman

It is in order to refer to Abadan so long as the references are to the oil position, but it is not in order to refer to Abadan to adduce political arguments.

Mr. F. Blackburn (Stalybridge and Hyde)

I am glad to have the pleasure of following the hon. Member for Kidderminster (Mr. Nabarro). If I had known that I was to do so, I should have taken the opportunity of reading in more detail what he said last year. I do not think that he has convinced the Committee of the reason for his change of attitude. He may have convinced himself; he has made a very valiant effort to do so. Whether he has succeeded in that I do not know, but certainly he has not succeeded in convincing anyone else in the Committee.

The chief point at issue is not whether the Chancellor of the Exchequer can afford to do without the £66 million which this duty will bring in, but whether our economy can afford to have this tax. In a time of a rising cost of living, any tax which imposes a severe burden on the people and accentuates the trend is a bad tax. I should like to quote what was said by the present Minister of Works in this connection last year. I am sure that a good many Members on the Front Bench opposite rather wish that they had not said some of the things they said last year. The right hon. Gentleman said: … it is wrong in conditions of rising prices to put a tax on the costs of production. He further said: 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 rearmament. 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."—[OFFICIAL REPORT, 5th June, 1951; Vol. 488, c. 837.] Perhaps the Government think that they have cured the rise in the cost of living. In "Britain Strong and Free" will be found a statement to the effect that it would be impossible to take off the food subsidies or reduce them at a time of a rising cost of living. But since the Chancellor has reduced them by £160 million, perhaps we have to assume that the Government think that the rise in the cost of living has been stopped. But obviously no one in this country believes that, and the effect of this duty will only accentuate this rise.

First of all, as has been said repeatedly, this duty will have a serious effect upon fares. As was said by my right hon. Friend the Member for Battersea, North (Mr. Jay), the present Leader of the House asked my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), when he was Chancellor of the Exchequer, whether he had not heard of increased bus fares. I am quite confident that every hon. Member on the Front Bench opposite this year has heard of increased bus fares since the Prime Minister became responsible for transport. Obviously this will have an effect upon fares at a time when we are seriously considering the increases which have already been recommended.

5.15 p.m.

The present Leader of the House said in the debate last year: 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. He also said: I say that the need for cheap transport is paramount, and here we are deliberately forcing up its price."—[OFFICIAL REPORT, 5th June, 1951; Vol. 488, c. 824.] It will have a serious effect upon the price of food because of the increased costs of distribution and of production. The Parliamentary Secretary to the Ministry of Transport last year described this as a food tax. If it was a food tax last year, then obviously it is a food tax this year. It is bound to increase the cost of food and it is bound to increase the costs of industry. It will increase the costs of industry directly, particularly those firms which are using oil; even small and medium-sized firms are in many cases using large quantities of the light hydrocarbon oils. A firm of dyers and cleaners in my own constituency uses 20,000 gallons of white spirit per year, and this duty will mean a serious increase in that firm's costs in the coming year. That can be multiplied by thousands of firms throughout the country.

There is also an indirect increase in the costs of industry because of the increased transport rates. It will increase the cost of building new houses. The Government are still aiming at their target of 300,000 houses, I understand, and the increased price of petrol is bound to increase the building costs. It will also increase the cost of the distribution of coal. On whichever side of our economy we look, it means an increase in the present cost of living.

The Coal Merchants' Federation of Great Britain estimate that for every penny per gallon cost of petrol, the cost per ton of industrial distribution is approximately three-tenths of a penny. It follows that the present tax of 1s. 10½d. represents a cost of about 7d. a ton in industrial distribution. The approximate figure for retail distribution is that for every penny per gallon cost of petrol the cost per ton is approximately half. A tax of 2s. 6d., therefore, represents 1s. 3d. a ton.

If we consider this duty from the point of view of the cost of fares and transport generally, and the costs of food, building and fuel—in fact, from every aspect—we see that it is likely to send up the cost of living. I come back to what I said at the beginning of my speech. It is not so much a question of whether the Chancellor can afford to do without this £66 million, but rather whether our internal economy at the present time can afford to have this impost placed upon it.

Mr. P. W. Donner (Basingstoke)

Listening to the speeches from the Opposition benches this afternoon, it is difficult to remember that it was the Labour Government which twice increased the duty on petrol. The right hon. Member for Battersea, North (Mr. Jay), in moving the Amendment, charged the Conservative Party with inconsistency in proposing this additional duty when last year most of us spoke against the increase in the Petrol Duty. But he did admit that much had happened since then.

Unfortunately, owing to the rules of order, I cannot develop the argument, but I for one believe that the present increase in the Petrol Duty follows inevitably from the loss of the Abadan refineries. Indeed, at the time, I warned my own constituents that it was impossible to abandon and cast away our greatest single overseas asset without inflicting a deep injury upon this country and upon our people.

This increase in the petrol tax is part of that injury. It is, as we all agree, going to increase the cost of transport and the cost of living in this country. For that reason, I should like to join with those who have already appealed to the Chancellor of the Exchequer in the hope that he will find it possible, when the balance of payments position improves, to reduce this tax which today we have unfortunately to increase.

The fact that we have to increase it today is, in my submission, due to the actions and incapacity of the last Government. Indeed, that view is borne out and reinforced by the Economic Survey, page 15 paragraph 25, where we read: Purchases of dollar oil to replace Persian oil have been costing the sterling area in this initial period over £100 million a year. That cost is an appreciable percentage of the drain on our gold and dollar reserves.

On 11th March, the Chancellor of the Exchequer said, in this House: Since the main objective of the Budget is to relieve our balance of payments difficulties I must pay particular attention to a scarce product which costs us foreign exchange."—[OFFICIAL REPORT, 11th March, 1952; Vol. 497, c. 1296.] It is because he said that and because we must discourage consumption that some hon. Members on this side of the House have taken the view, with which I agree, that the only possible alternative was worse than increasing this tax. That alternative was to resort to rationing, which in our rural areas would be unfair and very unpopular and would, moreover, as we all know, involve the employment of 3,000 people in unproductive work. It is due to the mishandling of the Abadan story that we not only lose the oil which we got from Abadan but we lose the foreign exchange, including dollars, we earned by selling it.

Mr. James Simmons (Brierley Hill)

On a point of order. I think that you ruled, Wing Commander Hulbert, that Abadan could be mentioned from the economic point of view. The whole trend of the argument of the hon. Gentleman is on the political side of Abadan, and he has been using that argument for quite five minutes.

The Temporary Chairman

I have been listening to the hon. Gentleman and I am hoping that he will comply with my Ruling.

Mr. Hugh Gaitskell (Leeds, South)

Further to that point of order. Would you, Wing Commander Hulbert, please define exactly what you mean by this distinction? Apparently, hon. Members are entitled to refer to anything connected with oil but they must not get involved in politics. It is very difficult to talk about oil without getting involved in politics.

The Temporary Chairman

My Ruling was that hon. Members should confine their argument about Abadan and relate it, as far as possible, to oil and the economic situation. It would be quite out of order to discuss military or political events.

Mr. Walter Fletcher (Bury and Radcliffe)

To give the specific figures which arise from the loss of Abadan is surely a quite essential economic aspect but not political.

Mr. Gaitskell

Do I understand that it would be out of order for any hon. Member to refer to the causes of the loss of Abadan?

The Temporary Chairman

It would not be in order to refer to the cause of the loss of Abadan, but the consequences thereof may be referred to.

Mr. Donner

I was trying to keep within the Rules of order which you laid down, Mr. Hulbert. For once in my life, I find myself in agreement with the right hon. Member for Leeds, South (Mr. Gaitskell), when he said that it is very difficult to discuss this matter of economics without also impinging upon politics. I will do my best not to do so.

I was saying that when we lost the oil of Abadan we also lost the foreign exchange, including dollars, which the sale of that oil brought us, forcing us to purchase dollar oil to an extent which the Economic Survey calculates to amount in value to £100 million a year in the initial period. It follows that it is impossible to view the loss of 32,300,000 metric tons of Abadan oil per annum and 18,000 barrels a day of aviation spirit without realising that that loss must impinge upon the economic situation of the cost of living of the people of this country.

I will, owing to the Ruling which has just been given, pursue this matter no further, beyond saying in a single sentence, that the result of what was done by the late Government at Abadan has been to injure deeply capital investment in the Colonies and to hinder colonial development. Obviously this increased Petrol Duty must discourage consumption, though it is true that the greater part of that consumption is by commercial users and not by private cars.

If the Opposition attempt to deny—as I understand they do—that the increased duty follows inevitably from the loss of Abadan, surely they will have the candour to admit that in that case this extra amount of revenue which is now being raised does also in fact help to finance the tax reductions and pay for the increased benefits and increased social services which this Budget includes. Therefore, the Opposition to this increased duty is in fact no more than a disreputable and unedifying attack upon the increased social services.

Mr. Dryden Brook (Halifax)

Are we to understand that there is no relationship between the abolition or the slashing of the food subsidies and the concessions given by the Chancellor of the Exchequer, which he related directly, in his Budget speech, to the taking away of the food subsidies.

Mr. Donner

I do not think that the hon. Member was listening very closely to what I said. My argument was that the increased Petrol Duty followed inevitably upon the loss of Abadan, but the hon. Member, by some form of mental gymnastics, denies the truth of that. He cannot deny that this increased Petrol Duty does help to pay for the increased social services which this Budget gives to our people.

Mr. W. A. Wilkins (Bristol, South)

In being called by the Chair for the first time since the end of 1946, I find myself encouraged by the observations of two hon. Gentlemen opposite who have spoken in this debate. I refer to the hon. Member for Woodside (Mr. W. G. Bennett) and to the hon. Member for Croydon, North (Mr. F. Harris). I should like to tell them that, having known the anxieties of a Government Whip's office on the occasion of an important vote when the majority has not been too big, I can imagine the fluttering in the dovecotes as the Government Whips listened to the two speeches to which I have referred. I look with interest to see into which Lobby the hon. Gentlemen go a little later.

The hon. Member for Croydon, North, was honest enough to tell us that he felt that the attitude adopted by the Government in connection with the petrol tax was inconsistent with the point of view expounded from these benches by the then Opposition last year, and that he would find it difficult to reconcile it with the things he had said on that occasion. I thought about going to the Library, looking up the speech of the hon. Gentleman, and using it in this debate because I thought it was really good.

I want to speak for a few minutes on an aspect of the problem totally different from anything which I have so far heard in the debate. I want to appeal to the Chancellor of the Exchequer, through the Financial Secretary, to reconsider the question of the imposition of this very heavy petrol tax. I know the Chancellor will say that he is only doing what his predecessors have done. In this I agree again with the hon. Member for Croydon, North, that there seems to be a great temptation for all Chancellors to increase existing taxes. I am not sure whether it is really a good thing, whether it applies to petrol or anything else.

We must reach a stage where the tax becomes penal, and I believe that this tax has now gone beyond the limits of economic possibilities and that there will result what we have so often argued in this House, the operation of the law of diminishing returns, and the Chancellor will probably not get the revenue he expects from it.

5.30 p.m.

I disagree with the hon. Member for Kidderminster (Mr. Nabarro) who argued in favour of rationing. I understood that the Chancellor increased the duty on this occasion not to try to discourage petrol consumption but in order to get revenue.

Mr. Nabarro

I did not argue in favour of rationing. I said that the Chancellor's only alternative for discouraging petrol consumption was to impose rationing instead of a higher price, and that I thought the higher price would be preferable.

Mr. Wilkins

I am not making a point of it. I merely say that I thought the Chancellor increased the duty with the intention of getting revenue rather than of discouraging consumption, although that will be its effect.

I believe we have gone beyond the limits of real economic possibilities with the duty. I am not so much worried about the effects in so far as the British Federation of Road Users or industrialists are concerned. They have a very sound case, and they have particularly good advocates in this House to put their case. I want to direct attention to the ordinary working chap, the fellow who at week-ends takes his family into the country in a seven or eight horsepower car, very much like the one which I believe is owned by the noble Lord the Member for Inverness (Lord Malcolm Douglas-Hamilton). There are many thousands of such men.

The Chancellor has dealt that type of man a double blow. He has first knocked him on the point of the jaw by increasing his Road Fund licence duty and he has then doubled him up, as he sinks to his knees, with a blow to his solar plexus, by increasing the Petrol Duty. It is significant that no protest on behalf of these people has been made this time—I believe for the first time since the end of the war—by the two motoring organisations who cater for them.

I am a member of the A.A., and I recall the amount of correspondence I received in recent years about the "punitive" effects of increases in the Petrol Duty by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), and our late colleague Sir Stafford Cripps. It is time someone said something here to protect and assist such people, and that is one of the reasons for the Amendment.

I want to give four personal examples, which I believe the Financial Secretary will agree cover a fair cross-section of the general public. There is an immediate relative of mine who is a maintenance fitter in a municipal omnibus garage and is, therefore, not exceedingly well remunerated. He has an eight horsepower car. He is the secretary of a church and does an enormous amount of work for the church in fetching and carrying visiting ministers, and so on, and meets the cost of the petrol out of his own pocket. He gave up smoking towards the end of last year very largely because of the rising cost of living, and he has now come to the point where he must say, "I am afraid that I shall now have to sell my car. I can no longer run it."

In my constituency recently there came to see me a lady who is blind because she is as yet unable to have a cornea grafting operation. After we had discussed a question relating to that, she said, "Do you think that you can do something in the House of Commons to persuade the Chancellor not to impose the additional duty on petrol? I am blind and I have many interests, some religious and some in connection with blind organisations, and my husband takes me about in a seven horse-power car, but he will now no longer be able to run it."

I hope I may be excused for quoting my own case. I have a 10.9 h. p. car. I find that it is necessary. Hon. Members will agree that if they want to do their job efficiently and fulfil their engagements they really need a car of some sort in which to get about. I have been a smoker for 35 years. No one enjoys a pipe of tobacco more than I do—or rather, more than I did. I have come to the conclusion that I cannot afford both smoking and a car. I have had to make a choice, and I have chosen to keep my car because I believe that it gives pleasure to the whole of the family whereas my pipe gave pleasure only to me. The Chancellor has forced me to do that, and the result is that he has lost a considerable amount of revenue from me. That type of case can be repeated over and over again.

I want to point out to the Committee and to the Financial Secretary the unsatisfactory way in which the duty applies. I want to quote the case of a businessman friend of mine. I hope he will not mind my doing so; at all events, I shall not mention his name. He has a very high horse-powered car and his Road Fund licence duty has hitherto been £23 per annum. That will now be reduced to £12 10s.

Mr. Cyril Osborne (Lough)

Next year.

Mr. Wilkins

I said that it will be reduced. Does the hon. Member suggest that the Chancellor is likely to withdraw his proposals? My friend's Road Fund licence duty will be reduced by 10 guineas a year. It means that he can use at least 325 gallons of petrol before really being affected by the 7½d. increase in duty.

What it means is, that while the fellow with a seven or an eight horse-power car has had his Road Fund tax increased by £2 10s. and in addition to that, on a consumption of 325 gallons of petrol, he will be paying another £10 10s., making in all £13, the man at the other end of the scale will be getting a present of £10 10s. a year from the Chancellor of the Exchequer.

I hope the Financial Secretary will at least give consideration to the points that I have put. I know they are only small points and are not concerned with high policy, but they represent the point of view of the people in this country who expect their interests to be protected by the House of Commons. I hope that the Financial Secretary will agree to look at the points I have put to him. We all have to bear our share of taxation and we accept that as a fact. Our country has to be run and we have to make provision for it. We must find the money in various ways, but it behoves us in this Committee to try to consider ways and means which will inflict the least hardship upon the community in general. I commend these cases to the Financial Secretary.

Mr. Godfrey Nicholson (Farnham)

The hon. Member for Bristol, South (Mr. Wilkins) said that he had not spoken in this House since 1946. I do not know whether to congratulate him on a maiden speech, but I suppose I should not. He is an interesting example of the demi-maiden. I liked his speech very much indeed. The Committee this afternoon seems to be in a Council of State mood, since although political arguments have been thrown across the Floor, everyone has approached the subject with moderation.

I hope hon. Members will bear with me for a few moments if I address a word or two to the Committee generally. I cannot see any point in hurling charges of inconsistency across the Floor of the House. Circumstances have forced both sides to be highly inconsistent. If we come to think about it it is rather ironic that the speeches that were made by Conservatives in the last Parliament are made by Socialists in this, and vice versa, though whether it is conducive to respect for the House of Commons from the public at large is another question.

What surprises me is that no one has drawn the obvious conclusions from it. The conclusion that I draw is this: we are here engaged in trying to raise revenue, but no single tax introduced by any Chancellor of the Exchequer would ever meet with approval from the other side of the Committee or indeed from this side. Any tax is most detestable and most unpopular. The obvious moral can be stated in a very few words. Government expenditure in this country has reached such a level that if any new tax is proposed it is bound to do harm and cause hardship.

Our attention should be directed to trying to find measures of economy, but we are up against this dilemma, that if any particular measure of economy is suggested there will be an outcry from some section of the Committee, if not from every section, against the new economy.

Mr. Jay

Is the hon. Member aware that on this side of the Committee we would all support an economy on the National Debt interest which would save the extra £70 or £80 million which the Chancellor is seeking? Would the hon. Gentleman support that economy?

Mr. Nicholson

No, that is not a true economy. We have to find an economy in some branch or branches of actual Government expenditure. I hope I shall be in order when I say that during the debates on the Finance Bill we ought to be impressing upon our respective Front Benches that this country is overspending its income to such an extent that any taxation is bound to be inequitable and to cause hardship. I very much fear I am out of order and I shall sit down. The sooner all sides of the Committee realise that we have got ourselves into an impossible position with regard to taxation the better it will be.

5.45 p.m.

Mr. Austen Albu (Edmonton)

I hope the hon. Member for Farnham (Mr. Nicholson) will forgive me for not following him as to the way in which this money is to be spent, for it would not be in order. I notice that the hon. Member sat down rather fast when he got on to that point. I agree with him that there is something slightly ironic about this debate, and I have no doubt that those who bear the burden of this sort of taxation and particularly those who are most concerned, like the motor industry, are saying, "Plus ca change, plus c'est la même chose." All Governments find petrol a very convenient method of raising money.

Mr. Nicholson

I hope the hon. Member will support me to this extent—calling the attention of the Government and the Committee to the very excellent report that he has produced showing how quite large sums of State expenditure can be economised on. I should like to congratulate him on that publication.

Mr. Albu

I thank the hon. Member very much, and I hope the Government will take note of those items where they can really save money without interfering with very useful policy. It would not be in order for me to pursue this any further, but I thank the hon. Member for his kind words.

The question of the direct level of tax on any particular commodity, particularly hydrocarbon oils, is an important matter. It is something we have to consider in relation to all other taxes. Certainly while the control of imports is still necessary there must be a control of the price of petrol. If there were no Government control of price under conditions of free competition, it might reach a higher figure than it is going to reach even when this tax is imposed. We on this side of the Committee are in agreement that the price of petrol and the price of hydrocarbon oils generally should come under Government control and should be fixed by Government decree.

What we have to take account of are the considerations that must be borne in mind when the price is fixed as it will be fixed by this tax. If there were no tax and if there were free competition, I rather imagine that the profits that would be taken by the oil companies would be so excessive that even hon. Members on the other side of the Committee would find themselves rising to their feet to protest. We agree that part of the price the public pays for petrol should be paid in taxation, but when we come to the actual considerations which have to be taken into account when fixing the level of taxation and, therefore, the price of petrol, there are several points to be borne in mind, most of which have already been mentioned.

The first was mentioned by my right hon. Friend the Member for Battersea, North (Mr. Jay) in his opening speech, when he drew attention to the fact that the world price outside the United Kingdom is 3s. 9d. and now the average price in the United Kingdom is going to be 4s. 3d., whereas before this new tax came into operation—

Mr. Osborne

It is higher in Europe.

Mr. Albu

I am talking about the world price, not the Western European price. After the tax imposed last year by the Labour Government, the price was still below the world price, that is to say, 3s. 7½d.

The other main considerations which have to be borne in mind are the necessity for the Government to raise revenue and the possibility of reducing the home consumption of an imported commodity. I should like first of all to consider for a moment whether there was, in fact, need to raise revenue and if there was, whether it was necessary to do it in this way? The speech made by my hon. Friend the Member for Bristol, South (Mr. Wilkins) was extremely interesting because it brought out in a homely manner what is, in fact, not only the effect of this imposition on motorists but the total effect of this Budget, taking all the impositions and the reliefs together, in regard to the distribution of income to those who are worse off and those who are better off. I would not like to try to follow him in the extremely homely examples he gave but which seemed to me to put the case very well.

If we pass the Bill, we shall have a very considerable reduction in direct taxation and considerable increases in indirect taxation. One form of increased indirect taxation is the removal of the food subsidies and this tax which we are now considering is a further increase in indirect taxation. It is generally held that an increase in indirect taxation and reliefs in direct taxation are a form of regressive taxation and provide reliefs for the better off and additional burdens on those who are worse off. When one takes into account the removal of the food subsidies, and the undoubted increase in transport fares which must take place when the full effects of the tax we are discussing has been felt, then the total effects must be a substantial increase in indirect taxation.

It has been claimed by hon. Gentlemen on the other side that the taxation has been imposed in order to raise the social services and to provide other forms of relief. I would draw hon. Members' attention to the fact that the reliefs which are now given in direct taxation amount to £181 million this year and to more than £130 million in a full year and that they are practically all going to people in the higher income levels. On the other hand, in addition to the £160 million-odd increase resulting from the reduction in food subsidies and such other increases in prices as may have to take place later in food and transport, there is a further increase of £66 million due to this tax.

My hon. Friends have already referred to the effect of the tax on the British transport Commission and other road services. The Commission has estimated that the total effects will be something like £5 million to £6 million in a year. As a representative of a London constituency, with large numbers of constituents travelling long distances from the outskirts of London to the centre, I am very concerned about the increase of more than £1 million which has to be found by the London Transport.

I am told that the Transport Commission estimate that the increase in taxation, in steel prices and in National Insurance contributions will add to the burden on the Transport Commission alone—it is only part of the transport system of this country—about £10 million in a year. This will all have to be put on to the cost of goods and services and to the expenses of the people who are travelling to work.

If the special classes which are being protected by the Prime Minister by his intervention in the transport discussion continue to be protected, the whole of the charges will fall on the general travelling public. This is a very important consideration when we consider how the transport charges should be allocated. Incidentally, it was Member from the other side of the Committee who referred to the fact that the public vehicle proprietors, the private road haulage transport contractors, have said that this tax undoubtedly will mean an increase in charges.

I am very glad to have seen in a speech made the other day by an official of the Road Haulage Executive that, owing to the very great increase in efficiency which the Executive have been able to bring about in road haulage during the past year, they are not going to increase the charges made by nationalised road haulage. It remains to be seen what the full effect of these charges will be. I hope that the Executive will be able to continue to maintain their present charges and make the profit that they have been making at the present time.

Hon. Members have referred to the effect of the increased charges in the many industries where oils are used as a basic raw material. I do not want to follow them in that argument, but I would ask the Financial Secretary and the Chancellor of the Exchequer, who I am glad to see is now coming in, whether they will see if some way can be found to exempt road passenger transport from these charges. Some of my hon. Friends have put down Amendments dealing particularly with Diesel oil. It may be that here is a way of distinguishing between the fuel that is used in road transport and road haulage and other fuels. The increase in the number of Diesel-engined vehicles is very great indeed and is continually increasing, particularly in road transport. In London it is already 100 per cent. but in many fields it is increasing both in passenger transport and in heavy road haulage.

One other matter to which I should like to direct the attention of the Chancellor of the Exchequer is in regard to the use of Diesel and heavy oils on the railways.

The Chairman

The hon. Member is going a little wide of the scope of this discussion.

Mr. Albu

I thought you said, Sir Charles, at the beginning of the debate that it would be better to deal with all these points in one debate.

The Chairman

No; I simply pointed out that I would select the first Amendment and that the Amendments selected afterwards would not be debated at length.

Mr. Albu

I hope I shall be able again to catch your eye because there was one point I wanted to make in particular about the effect the tax might have. This is not specifically referring to passenger transport but to Diesel-engined locomotives and to gas turbine development on the railways. There is a very considerable increase in the use of heavy oils in this way.

The Chairman

I propose selecting the Amendment at the top of the page 597, which covers all Diesel oil.

Mr. Albu

I shall not pursue that matter any further, Sir Charles.

Coming back to the general argument, I think this tax might be reasonable if the country were suffering from a really gross inflation, but the Chancellor has told us that he expects that we might be getting into the reverse situation and be in danger of a slump. Artificially to raise prices by removing subsidies and increasing indirect taxation I should have thought to be a wrong policy at the present time.

It is not necessary for me to quote words used by hon. Gentlemen opposite in last year's debate. Other hon. Members have done that, and my right hon. Friend the Member for Leeds, West (Mr. Pannell) did it very effectively on the Second Reading of the Bill. I want only to remind hon. Gentlemen opposite that they have repeatedly voted, and particularly in 1950 and 1951, against increases in this taxation. On the whole, the tax has had a very bad reception from Government supporters and I hope that on this occasion they will support our Amendment.

Mr. Christopher Hollis (Devizes)

I am glad to be following the hon. Member for Edmonton (Mr. Albu). I should like very much to go into this large question of the relative merits of direct and indirect taxation, and I might almost be tempted to stretch your patience, Sir Charles, to see how far I could go. If the hon. Member for Chesterfield (Mr. Benson) were in his place, it could be even more interesting, because I have exchanged opinions with him across the Floor of the Committee on previous occasions. He has held very different views from those held by the hon. Member for Edmonton about indirect taxation.

The hon. Member threw out the generalisation that this is a form of taxation which falls most heavily upon the poorer sections of the community. That may be true in regard to indirect taxation upon a necessary food or something like that, but whatever may be the merits and demerits of the tax that we are now discussing I should certainly have thought that that was not true of it. Admittedly an increase in the price of petrol in itself bears hardly upon every section of the community but, between the two, on the whole it bears more hardly on the rich than on the poor. Whatever else may be alleged about this tax, I should not have thought that argument was a valid one.

6.0 p.m.

Mr. Albu

Will the hon. Gentleman allow me to interrupt? He has probably seen the figure, but 85 per cent. of the petrol is used in industry, and one presumes that most of that enters finally into the cost of consumer goods and, therefore, into the goods consumed by the mass of the people.

Mr. Hollis

I do not think we need delay the Committee on this point. I admit it affects every person but, between the two, the products of industry on the whole are bought more by the rich people than by the poor. The hon. Member does not dispute that, does he?

Mr. Albu

I am sorry, but I do. There are many more poor people than rich. The rich are a small part of the population.

Mr. Hollis

But I do not think the hon. Member can say it is a tax which falls with special severity on the poor. We all admit it is a tax which everyone dislikes; in fact, everyone dislikes every tax. The point I want to explore is this. I represent a constituency which includes a large part of the suburbs of Swindon, and one of the most persistent arguments brought before me during the recent Election was that the railways must be preserved as a strategic necessity—