HC Deb 07 July 1953 vol 517 cc1167-87

As from the fifteenth day of April, nineteen hundred and fifty-three, there shall be allowed from the duties of Customs and Excise a rebate of sixpence a gallon on diesel oil.—[Mr. Pargiter.]

Brought up, and read the First time.

Mr. G. A. Pargiter (Southall)

I beg to move, "That the Clause be read a Second time."

There are precedents for the sort of discrimination which this Clause seeks to make. I find that even with the introduction of the first fuel tax, in 1909, there was an allowance of half the rate of duty for goods traffic, passenger transport and also for doctors. As far back as then it was recognised that it was undesirable to tax industry in this particular form. It is because now, perhaps more than ever, we need to give as much aid as possible to industry, that I am pressing very strongly on the Chancellor the need to do something on the lines suggested by this Clause, and I hope that he will accept it.

The history of this tax is very interesting. In 1921, it was found that the tax could be abolished altogether; in 1928, it was reintroduced specially to provide for the relief of industry, arising from the de-rating provisions. It was thought at that time that because those who used motor cars or vehicles generally were more prosperous than basic industries they could afford to provide some compensation, and there may be something in that argument. It was also done to encourage coal consumption, because at one period duty had to be paid on heavy as well as light hydrocarbon oils.

In 1933, the tax was only 1d. a gallon on fuel oil, as against a much higher tax on petrol. In 1935, fuel for road vehicles was brought into the same rate of taxation, very largely because, under the impetus of the reduced fuel tax, design and development had gone ahead very rapidly and, as a consequence, there was a very great increase in the consumption of fuel oil. The Chancellor of the day, in my view very unwisely, decided to take advantage of that situation to provide himself with extra revenue.

Taking the fuel tax and the motor vehicle tax generally, it is fair to say that Britons are among the highest-taxed motor vehicle owners in the world. That must obviously be a cause of some concern at present. I do not know how many meetings are going on here, but I really cannot make myself heard. [HON. MEMBERS: "Order."] The effect of taxation now is, of course, to add an additional burden on production. The weight of the tax all the time has meant an additional burden on production.

9.15 p.m.

We are being urged to make lower prices to compete in world markets. It is up to the Chancellor to set an example. The tax on fuel oil is a tax which applies most particularly to those goods. Passenger transport vehicles in the main are driven with diesel engines. Heavy road vehicles, which constitute an important link in industry, are almost exclusively now driven by oil engines. Consequently, any relief given to the taxation on their fuel would mean a direct relief to industry as a whole. Therefore, the proposal ought to commend itself to the Chancellor.

The tax on fuel oil has had the effect of stultifying development. I would cite, for instance, the farm tractor. Just before the war when the mechanisation of farming was proceeding very rapidly, instead of using the diesel oil engine tractor of that particular time, farmers used an engine that was devised that was worked by vaporised oil because the oil it consumed was free of tax. It was a much less efficient engine, but it was used. Again, now that diesel oil engines are being developed because the other engine proved less efficient, but farming suffered from having the less efficient tractors because the farmers wanted an engine that would avoid fuel tax. At this time anything that nullifies or stultifies development ought to be removed.

We want to go still further in designing oil driven engines which are more efficient than petrol driven engines. If it is proved that they are, and that for them we need import less fuel than for petrol driven engines, there is a case for developing that kind of engine. This applies to other types of machinery as well. If that is the case we should expect the Government to encourage the design of those engines.

I believe that our designers, if they had the incentive of a tax rebate, would be giving consideration to designing oil engines even for light cars; certainly, for larger light cars if not necessarily for the smaller ones. That, I imagine, would give us a very important lead in world markets at the present time. If we can produce something more economical than the petrol driven engine it will certainly attract the motorists, who are fuel minded nowadays because of the high prices of petrol in most countries at the present time. Anything we could do in that direction would be of great advantage to exports as a whole.

Another consideration is that any tax on a basic material at any time has a cumulative effect on final costs. It cannot be avoided. It always happens. That is why, in the main, I think, it has been the policy of Governments to avoid placing taxes on basic materials, because of their cumulative effect, which is undefinable but inevitable, with the ultimate result that the tax is increased several times by the time an article reaches the final purchaser paying the final price.

I do not know whether it is realised, but it ought to be, that fuel oil certainly is not a luxury. It may be argued that petrol used for private motoring is a luxury, but used for other purposes it is certainly not, and yet we find that taxation in this field is far higher than is Purchase Tax on luxury articles. There is no logic in that. If luxury articles can have the tax on them reduced at the present time, why should we not give a rebate of tax on fuel oil so that industry can benefit?

The arguments in favour of this proposal have been advanced often before, and I need not detain the House with a lengthy development of the case and of all the advantages. If something could be done to encourage the use of fuel oil it would be a distinct advantage to industry generally. It might not help to bring the passenger transport fares down, but it would be a factor in preventing a rise in fares. That, again, is having a very direct effect on the cost of living, wage demands and so on.

As I have said, these arguments have been fully-developed and must be well-known to the Financial Secretary. Therefore, it is only a question of whether he is prepared to heed the very important message which all these things convey to him, and I can only express the hope that he will make this modest remission for which we are asking in order that benefits to industry, to the export trade and to the home market may be achieved to some extent as a result.

Mr. Ernest Davies (Enfield, East)

I beg to second the Motion.

During the Committee stage, there was a brief debate, rather late in the evening, on a somewhat similar Clause for a rebate of 6d. on heavy oil used by public service vehicles. This new Clause, which has been so convincingly moved by my hon. Friend the Member for Southall (Mr. Pargiter), is intended to cover the use of diesel oil for all vehicles. When the Financial Secretary was replying to that debate, in effect, he produced only two arguments against that new Clause.

One was that it would be discriminatory, and the second was that it would be expensive. First, as regards its being discriminatory, my hon. Friend pointed out that in the early days of the petrol tax there was no tax at all on diesel oil for vehicles. That is to say, that this discrimination was imposed by the Finance Act, 1928, which was the second time that the petrol tax was imposed. The Finance Act, 1928, imposed 4d. a gallon on petrol and no rebate was allowed on petrol for use by hackney vehicles as was allowed in the earlier 1909 Act, but the full 4d. rebate was allowed on heavy oil. That rebate on heavy oil was carried on, and in 1931 when the petrol tax was increased to 8d. the rebate of the full 8d. was allowed on heavy oil. It was later that the rebate on heavy oil was reduced to 7d. Only in 1935 was the position changed so that heavy oil was subject to the same tax as light oil.

It was found quite administratively possible to have this rebate on diesel oil at that time. It is administratively possible because a rebate can be administered readily on audited certificates of consumption. The Financial Secretary adduced the argument that it was very largely urban buses and coaches which used diesel oil these days and country buses were inclined to run on petrol, and that therefore this would discriminate in favour of the town as against the country. If he has examined the figures a little more closely, as I hope he has done since the Committee stage, he will find that argument does not hold. He should always appreciate that under the present organisation of the transport industry there is averaging as between country and town, and it is only in very rare cases that there is a separate bus company which is serving the country and not also operating in the urban areas. There is an averaging of cost and an averaging of fares. In fact, it is the urban services generally which pay for the less remunerative country services, and, incidentally, it is one of the great advantages of municipal and public ownership which enables that to be done.

But when we come to the cost, it is difficult to work out. Perhaps the Financial Secretary has gone into what would be the cost of the new Clause. As far as I can make out, there is roughly a consumption of six gallons of light oil to one gallon of heavy oil. That is to say, the 6d. rebate would apply to only one-seventh of the taxable fuel used in road vehicles. Perhaps the Financial Secretary will confirm whether that is correct or not.

I deduce this largely from some figures which the Financial Secretary gave yesterday in a written reply to the hon. and gallant Member for Knutsford (Lieut.-Colonel Bromley-Davenport). In column 67 of today's OFFICIAL REPORT the Financial Secretary gave a series of figures and stated that the total receipts in duty on light oils was about £228 million and on heavy oils £36 million and the Excise Duty on light oils was £9 million and on heavy oils some £2 million. If those figures are added together, we get a figure for light oils of about £238 million and for heavy oils practically £39 million. That shows, incidentally, the very heavy tax on fuel used in road vehicles today.

Those figures show that the heavy oil consumption is roughly one-seventh of the total. That means that the 6d. rebate on a seventh of the total consumption of 318,750,000 gallons per year would cost about £8 million. The Financial Secretary will no doubt say that a concession of £8 million cannot possibly be granted, but when the benefit which would accrue to the community from such a concession is appreciated he ought to consider it. Unquestionably, by far the greatest proportion of the concession would accrue to the travelling public. It would be very important to the road passenger, because there has been a steady increase in the use of diesel oil as opposed to light oil in road passenger vehicles. My hon. Friend touched upon that, and all the figures which have been published in recent years show the very steady rise in the substitution of diesel fuel vehicles for petrol operated vehicles.

The latest Ministry of Transport figures—they are regrettably behind the times—relating to a census taken in September, 1951, show that out of 132,000 hackney vehicles—which include not only omnibuses and coaches but also taxis—there were some 76,000 petrol vehicles and 55,000 diesel vehicles. Since then the substitution has been proceeding steadily and the proportion is today far more favourable to diesel vehicles than it was some 18 months ago.

If we take simply the figures for omnibuses and coaches, we find that some 78,000 were operating and that no fewer than three-fifths of them were large vehicles operating on diesel fuel. Thus, if we compare not the number of petrol vehicles with the number of diesel vehicles but the carrying capacities of the vehicles, there is a far greater total carrying capacity of diesel vehicles than of petrol vehicles, and that is what is important. Of the same 55,000 diesel vehicles no fewer than 30,000 had between 48 to 56 seats whereas there were some 400 fewer petrol vehicles with that number of seats operating according to the Ministry of Transport statistics.

9.30 p.m.

If one bears that in mind one realises that the incidence of this rebate would affect a far greater number of passengers and passenger journeys by bus and coach. This would appear from a comparison simply of the figures of the number of petrol driven vehicles and the number of diesel fuel vehicles. In other words, the effect on the travelling public would be far higher than appears on the surface and of considerable advantage to them.

We all know the way that fares have been going up in recent years, and each time, of course, that the petrol tax has been increased so it has been followed inevitably by a rise in fares. While none of us would suggest that other factors are not also responsible and that this small rebate could not possibly lead to a reduction in fares or perhaps prevent some further increase, it might assist in halting the upward trend in fares, which we all regret and which has to be stopped at some stage.

In the case of London Transport this 6d. rebate would effect a saving in fuel costs of some £900,000. That is a little less than one-quarter of the increased revenue which they are seeking before the Transport Tribunal, and whose Report appears to have been somewhat delayed. We are all anxiously awaiting it. I suggest to the Financial Secretary that serious consideration should be given to this new Clause because it would enable the Government to redeem themselves to a very slight extent from their terrible record over this question of transport costs and transport fares.

We all recall the Government's interference in 1952 with the Transport Commission, and the admission of the Prime Minister himself that there were political considerations involved. It happened to coincide with the municipal elections in London, and the Prime Minister blatantly admitted that it had some influence upon his decision in the matter. That interference by the Government meant a temporary saving in fares to the travelling public of £1¼ million per annum, but at the very same time as the Government were interfering with the Transport Commission and preventing them from implementing the Transport Tribunal's Report to the extent of £1¼ million, the Chancellor put on an additional tax of 7½d. on petrol which offset completely that £1¼ million. The 7½d. additional tax cost London Transport practically the same as the Government insisted they should reduce the fares.

That, of course, had the inevitable result that we on this side predicted, for within a very few months London Transport Executive had to go to the Transport Tribunal and ask for a further increase in fares, and the Tribunal is about to report upon that. Not only did this increased petrol tax of 7½d. cost London Transport Executive £1¼ million, but it cost the Transport Commission £1 million through their undertakings of Tillings and Incorporated Provincial Buses, while in Scotland the buses operated by the Commission cost another £500,000. They were not then arguing for the concession of the full 7½d. imposed. We are only asking for the remission of 6d. on diesel oil. If that were conceded by the Government it would be a small recompense to the Transport Commission as well as to the rest of the transport undertakings of this country.

Many of them are local authorities, because a large section of the local passenger services are operated by the municipalities and they have been faced, since the increased costs and the further rise in the petrol tax a year ago, with grave difficulties. They have either had to raise their fares or to reduce their contribution to the rates, or to allow a deficit to accumulate. Perhaps it is not always appreciated that in a large number of cases the municipalities are able to relieve the rates to the extent of the surpluses which are made on their transport operations. In some cases, of course, there are deficits and the ratepayer pays, but on balance, up till recently, there has been a net gain to the ratepayers through the successful operation of municipal transport. Thanks, however, to the increase in the petrol tax, that situation is not as favourable as it was, so this concession by the Government would also assist the municipalities who operate their own undertakings.

Further, if this proposed new Clause were accepted it would assist the road haulage industry but here the percentage of vehicles operating on diesel oil is much less than in the case of the road passenger service. In fact there were in September, 1951, 43,000 diesel-operated goods vehicles compared with 900,000 goods vehicles on the roads, so the proportion is not high. That only emphasises the point I am making that this concession would benefit so much more the travelling public, and that was the reason why it was put down.

I want to refer to the fact, to which this new Clause is relevant, that Britain is lagging behind a large number of countries in the amount of money spent on road construction today and for which these taxes were originally imposed. Today we are a very heavily taxed country as far as fuel and motor vehicles are concerned, and yet we are spending far less on road construction than are most of the countries in Western Europe. I have gone to some trouble to ascertain the figures and I find that in the United Kingdom we are spending today only about £1 per head per annum on road maintenance and construction——

Mr. Speaker

I do not think road maintenance comes into this new Clause.

Mr. Davies

With all respect, Mr. Speaker, my reason for introducing this aspect of the matter is that this tax, in respect of which we are asking that there should be some concession, was imposed for the purpose of maintaining the roads of this country and to enable construction, but I will bow to your Ruling. All I will say is that if this concession were made by the Government it would in no way affect the amount of money which would be spent on our roads, because so much more is being realised in tax than is being put to the purpose for which it was originally imposed.

The petrol taxes and the other taxes on vehicles have become a penal imposition on transport and they are not being spent for the purpose for which they were imposed. Their incidence on the community is great and they have a cumulative effect because the cost of transport enters into so many stages of production and consumption.

In seconding the new Clause, I therefore urge upon the Financial Secretary to consider whether the cost is not so great that it could be conceded and that the result of conceding it would accrue to the community in such a way that it would be well worth while.

Mr. David Jones (The Hartlepools)

In supporting what my hon. Friends have said in introducing the Clause, I want, first, to refer to one at least of the arguments used by the Financial Secretary, on the last occasion when this matter was debated in Committee, for rejecting a Clause with much narrower limits. The hon. Gentleman suggested that it would be quite wrong to differentiate between two different classes of user of this form of fuel. He did not seek to tell us—I hope he will do so tonight—why it is necessary to impose all this taxation on passenger carrying road vehicles that use diesel oil whereas passenger carrying railway vehicles are given a rebate from the tax.

The hon. Gentleman is not being consistent with the pleas of his right hon. Friend. Last Saturday, as I understand, the Chancellor of the Exchequer, in painting the picture of the economic future of the country, said that we ought to be steady. Very many municipalities up and down the country, because of the circumstances revealed by their 1952–53 balance sheets, are already making preparations, to go to the licensing authorities with applications to increase their fares. Figures published recently by the Municipal Passenger Transport Association show that at least 64 municipalities, operating mainly vehicles with diesel oil engines, have greater deficits at the end of their financial year in 1953 than in 1952.

I agree with my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) that that deficit is not all due to the increase in the tax on fuel, but a very substantial proportion of it is due to that reason. Because of the increasing deficiencies in their annual accounts, the municipalities are having to go to the licensing authorities to secure increases in fares. That, in turn, is bound to mean that the workpeople, at least, and the business people who have to use these municipal buses day by day to and from their work, will use that as an added argument for an increase in wages because of the increased cost of travel. So the vicious circle continues. The Government would be wise at this time if they were carefully to examine this position from the point of view of the diesel engine road vehicles.

The argument was advanced during the Committee stage that it would not be proper to regard passenger carrying vehicles using diesel oil as being in a special category. To meet the complaint of the Financial Secretary on that occasion, the present Clause has been widened to embrace the goods carrying vehicles.

9.45 p.m.

I do not want to enter into arguments advanced by my hon. Friend the Member for Southall (Mr. Pargiter), but it is true that municipalities particularly, and other passenger undertakings also, have increasingly developed the diesel engine because of its greater efficiency in operation. The initial cost of securing those vehicles in the first instance has been greater than securing petrol engines and the initial cost of purchasing diesel buses has been considerably higher than that of petrol buses, but in the long run they serve a useful purpose and give a greater degree of efficiency. In their own interest, if they are anxious to encourage efficiency in industry, the Government ought to regard that development as deserving of consideration in the taxation of this form of fuel.

The hon. Gentleman argued on the last occasion that a rebate of 6d. per gallon on diesel oil would not make any substantial difference in the fares to be charged, but it would at least make a substantial contribution towards reducing the overall costs of operating these services and would be a gesture by the Chancellor in support of the principle we adumbrated last Saturday afternoon. I appeal to the Financial Secretary to give this matter careful consideration because in all the circumstances this new Clause is fully justified

Mr. A. G. Bottomley (Rochester and Chatham)

My constituents, like those in other constituencies represented in this House, are concerned with all matters presented in the Finance Bill. Of all the communications I have had most have been as a result of this new Clause. Perhaps my division is in many ways very transport-minded. Constituents are aware of the great difficulties caused by the bottleneck which leads into Rochester, about which I spoke in the House last week, and also of the transport problems arising from the terrible accident in Chatham some time ago.

I have been pressed by the local authorities to say that one of the burdens they have to carry today arises from the high charges and the high price of fuel. I have had representations of all kinds that something should be done to bring down the cost of fuel in such a way as would have a two-fold effect. It would enable fares in transport services to be reduced and I am sure that many hon. Members share the feeling that fares of transport undertakings today are preposterous.

Constituents have complained to me of the amount they have to spend on fares. It is not necessary to remind the House that many have to travel from Chatham to London. Trains are overcrowded and many resort to buses. At one time that was a cheap method of travelling, but it is not so now. If it were possible to reduce the tax on fuel it would make that method of transport cheaper and better for all concerned.

Municipal authorities, not only in my division, but throughout the country, are troubled about charges imposed upon them as a result of rendering municipal services. That is not only true of municipalities but of industry as a whole. If one went into the overhead costs of industry it would be found that a large proportion is in respect of fuel.

I would, therefore, endorse the appeal of my colleagues that everything possible should be done to make an adjustment for the two-fold purpose of reducing the charges to the travelling public and the overhead costs to industry. In that way we shall be able to achieve what the Government have not yet been able to do—stop the rising cost of living. We shall help industry to produce cheaper goods, which would assist our export market. Although I have advanced arguments form a constituency point of view this is a national as well as a local problem.

Mr. Boyd-Carpenter

The hon. Member for Southall (Mr. Pargiter) moved an Amendment during the Committee stage which was somewhat similar to this new Clause and, with rather engaging frankness, admitted that the one of his two Amendments which was selected was not his favourite. He did not this evening tell us whether this new Clause is his favourite. The difference between the two is that whereas his Committee stage Amendment sought to grant this rebate for diesel fuel used in the operation of passenger vehicles, this Clause would have the effect of giving a rebate in respect of diesel fuel used in all road vehicles, whether passenger or goods.

I pointed out during the Committee stage that one of the difficulties facing the mover of a proposal like this is that it is all but inevitable that it will involve either striking anomalies or excessive costs. It would appear to me that this Clause embodies both. As the hon. Member for Enfield East, (Mr. Ernest Davies) correctly worked out, the cost would be £8 million in a full year. That is a very substantial figure, and is not made less substantial when, in a speech advocating it, the hon. Member, at the same time, advocated increased expenditure. In any event, a diminution of revenue of about £8 million this year, over and above the concessions which my right hon. Friend has made, is, I am afraid, an impossible barrier to accepting the argument of the hon. Gentleman.

In this proposal there would not be the discrimination evident in the original proposal, that the rebate would be for diesel propelled passenger vehicles as opposed to other diesel propelled vehicles. This proposes a discrimination in favour of diesel operated vehicles, both passenger and goods, against petrol operated vehicles of all kinds. It would operate somewhat differently. As the hon. Gentleman pointed out, the diesel propelled vehicle is the predominant passenger vehicle. Most of the modern passenger vehicles, particularly those in great cities, are diesel driven.

The hon. Member for The Hartlepools (Mr. D. Jones) appeared to overlook the fact that petrol driven passenger vehicles are used in the countryside. The hon. Member for Enfield, East was quite wrong in seeking to counter that argument by saying that country buses were operated by combines who also operated urban buses. It is the case from my experience that country transport is provided by small operators with petrol driven vehicles, who are sometimes in competition with diesel propelled vehicles from the nearest town.

With taxation so high we must bear in mind that the load must be fairly distributed and that to create anomalies of this kind requires a great deal of justification.

Mr. Pargiter

Would the hon. Gentleman say how many of these petrol driven buses there are operating on country roads because, from my observation and experience, there are very few indeed?

Mr. Boyd-Carpenter

I travel in one from time to time. It is very uncomfortable. I cannot give figures, but I think that the House will accept that, be they substantial or less substantial, there are some of them. For the purpose of my argument I do not think that the precise numbers matter at all.

The hon. Member for Enfield, and the hon. Member for Southall raised the most important subject of fares. I will not be tempted to follow them into an analysis of passenger fares. If I did I might be tempted to a considerable extent beyond the bounds of order, but I must point out that the question of fares is not affected in any very substantial degree by this proposal. As I pointed out during the Committee stage this proposal, if adopted, would reduce the cost of operation by the equivalent of one-tenth of a penny on a 3d. fare.

Mr. Ernest Davies

Will the hon. Gentleman explain why the Government intervened in connection with passenger fares in London to save the London traveller £1,250,000 when this would save the travelling public almost £1 million? Why is £1,250,000 important and £1 million not?

Mr. Boyd-Carpenter

I should certainly not be permitted to enter into a discussion with the hon. Gentleman as to the action of the Government in respect of the proposed increase in fares, though that was an action which I hope I may be allowed to say was warmly approved by public opinion.

The point I am making is that the effect of this new Clause, notwithstanding its substantial cost to public funds, would be equivalent only to one-tenth of a penny on a 3d. fare. There may be marginal cases where that one-tenth of a penny may make a difference between an increase in fare or not. Obviously, there must be a point where the smallest additional amount tips the balance in favour of an increase. I do not think that that would be frequent. When we are concerned with a substantial suggested loss of revenue, I think that the fare argument has been very much over-stressed. [Interruption.] If the hon. Gentleman cannot distinguish between the revenue of London Transport and the revenue of the Exchequer I am surprised.

Mr. Davies

The point is that if £8 million is lost to the Exchequer £8 million are gained by the travelling public. We cannot brush aside the fact that because it means only one-tenth of a penny on a 3d. fare the public would not save that £8 million. The public would be paying £8 million less.

Mr. Boyd-Carpenter

They would only gain that £8 million if every penny of it was passed on. It was the whole essence of the hon. Gentleman's case that the bus operators needed some of this to meet their own costs. The hon. Gentleman cannot have it both ways. He cannot have it that the £8 million will be passed on to the public and that it will simultaneously relieve the needs of the bus operators.

The second discrimination is in the case of goods vehicles. About 14 per cent. of the number of goods vehicles are diesel operated. I agree that they are among the larger operators and, therefore, it is probably the case that something above 14 per cent. of actual carrying capacity is represented by them. None the less, we have here a relatively small minority. It seems to me very difficult to justify a tax discrimination in favour of one minority type of goods vehicle as compared with the great majority. Equally, that percentage does make it clear that what one or two hon. Members opposite said about the effect on industrial costs was greatly overstated, because this would not affect industrial costs in respect of six-sevenths of the vehicles operated, and is not, therefore, a very strong factor in the situation.

The discrimination seems to me to be a serious one, but I do not rest my argument upon that. I rest it on the proposition that £8 million, which is the cost of this proposal, is more than my right hon. Friend can afford in view of the other concessions which have been made, and which have been authorised by the House or by the Committee. Therefore, while I fully appreciate the force of the contentions that have been made, which have really been arguments against the general weight of the fuel tax rather than in favour of the particular proposition in this new Clause, and that heavy taxation in this direction as in others has its patent disadvantages, I must tell the House that my right hon. Friend is not able to face the heavy loss of revenue which is involved in this proposal, and must ask the House not to accept this new Clause.

10.0 p.m.

Mr. Jay

Negative and unresponsive as the attitude of the Government has been in this debate, I must say that the Financial Secretary was nowhere so negative as in the speech which he has just made. I would add to those hon. Members who rather seem to resent my hon. Friend raising this topic that, though it may not appear of interest to them, it is of great interest to millions of people who travel in buses, and, in our view, ought to be seriously considered. Hon. Members opposite will only prolong the discussion if they try to shout down my hon. Friends when making legitimate interventions.

This is really a very modest proposal. All that is being proposed is that, of the 7d. increase made by the Government in the tax a year ago, 6d. should be remitted in the case of diesel fuel. There are two strong arguments for the proposal which my hon. Friend advanced. The first is on the grounds of the admitted superior efficiency of the diesel engine. I do not think anybody would question that the diesel engine is more efficient than the ordinary petrol engine.

Here is a case whereby taxation can give a definite stimulus and incentive to greater industrial efficiency. The Financial Secretary said that it was illegitimate or unjustifiable to discriminate in favour of the diesel engine, whether in a passenger or a commercial vehicle. But it would be just as reasonable to speak, not of discrimination in this case, but of an active stimulus to greater efficiency in this branch of engineering. I do not think that argument has been answered at all.

The second argument is that of the relief which could be given in this way to fares which so notably, particularly in London and the larger cities, enter into the cost of living, and, therefore, into wage negotiations. To my mind, it is one of the greatest weaknesses of the present Chancellor s economic policy—most notably by the food subsidy decisions, but also by raising the petrol tax—that he contributed actively and unnecessarily to a number of wage claims, resulting in rises in wage rates and in costs and export prices, which, undoubtedly, have reacted unfavourably on our export trade in the past 18 months.

It is one of the disadvantages of this petrol tax that, on the one hand, in the present economic circumstances of the country, there are strong arguments for a reasonably high tax in so far as it affects the private motorist and some other consumers of petrol. It operates, in the absence of petrol rationing, which we all wish to be rid of in peace time, to restrain consumption of a commodity which bulks very largely in our balance of payments and still has quite a considerable dollar content.

The second argument is this. The rises in petrol taxes in recent years, in so far as they affected the private motorist, have raised revenue without inflicting so much hardship and inconvenience as alternative ways of raising the same amount of revenue might do. But to achieve these objectives one is compelled at the same time to impose, for example, a tax upon the industrial use of this fuel, and compelled, probably contrary to the wishes of the Government—this certainly applied to the earlier increases of petrol tax made by the Labour Government—to put a burden upon public service vehicles, with the possible and eventually the inevitable result of some rise in fares. That is the dilemma which faces one when dealing with the petrol tax.

The advantage of the proposed new Clause is that it enables one to raise the tax where the case is strongest, and, at the same time, to give relief in such matters as fares and, therefore, wage claims, where the inflationary spiral is likely to be affected. I do not think-that the Financial Secretary dealt with that argument, which becomes all the stronger as the tax becomes higher. It may be that, three or four years ago

when the petrol tax was so much lower, it would not have been worth the trouble and the administrative change, and so on, to introduce a differential of this kind.

The Chancellor himself said the other day, when he was rather unwarily defending his reduction in the higher rate of Purchase Tax on things like furs and jewellery, that no tax ought to stand above 100 per cent. This tax stands at more than 100 per cent. and affects an essential fuel for an essential public service. When we get to that point, especially after the increases in petrol tax in the last year or so, the argument for some discrimination is very strong.

The only reason advanced by the Financial Secretary for rejecting the proposed new Clause was that discrimination, as he called it, was undesirable. He did not say that it was impracticable. My right hon. Friend has already pointed out that discrimination exists in the case of agricultural tractors used on farms, the diesel fuel for which is exempt from tax altogether. My hon. Friend the Member for The Hartlepools (Mr. D. Jones) also said that that applies in the case of certain rail cars using diesel oil on railways. Discrimination is, therefore, already in force without, so far as I know, causing any great administrative difficulty.

We propose a modest extension of that discrimination which would have the dual effect of giving incentives to the use of an engine which is admittedly of greater efficiency, and would also restrain the further rise in passenger bus fares which is otherwise almost certainly inevitable, with all the injurious effects which are likely to follow upon wages and price levels. For these reasons, and unless the Government can advance stronger arguments to the contrary, I advise my hon. Friends to press this modest proposal to a Division.

Question put, "That the Clause be read a Second time."

The House divided: Ayes. 212: Noes, 240.

Division No. 216.] AYES [10.10 p.m.
Acland, Sir Richard Bacon, Miss Alice Beswick, F
Adams, Richard Balfour, A. Bing, G. H. C.
Allen, Scholefield (Crewe) Barnes, Rt. Hen. A J Blackburn, F.
Andereon, Alexander (Motherwell) Bartley, P. Blenkinsop, A
Attlee, Rt. Hon. C. R. Bence, C. R. Blyton, W. R.
Awbery, S. S. Benn, Hon. Wedgwoor Boardman, H
Bottomley, Rt. Hon. A. G. Houghton, Douglas Price, Joseph T. (Westhoughton)
Bowden, H. W. Hay, J. H. Proctor, W. T.
Braddock, Mrs. Elizabeth Hubbard, T. F. Pryde, D. J.
Brockway, A. F. Hudson, James (Ealing, N.) Pursey, Cmdr. H.
Brook, Dryden (Halifax) Hughes, Emrys (S. Ayrshire) Rankin, John
Broughton, Dr. A. D. D. Hughes, Hector (Aberdeen, N.) Reeves, J.
Brown, Rt. Hon. George (Belper) Hynd, H. (Accrington) Reid, Thomas (Swindon)
Burke, W. A. Irving, W. J. (Wood Green) Reid, William (Camlachie)
Burton, Miss F. E. Isaacs, Rt. Hon. G. A. Rhodes, H.
Butler, Herbert (Hackney, S.) Janner, B. Robens, Rt. Hon. A.
Carmichael, J. Jay, Rt. Hon. D. P. T. Robinson, Kenneth (St. Pancras, N.)
Castle, Mrs. B. A. Jeger, George (Goole) Rogers, George (Kensington, N.)
Clunie, J. Jeger, Dr. Santo (St. Pancras, S.) Ross, William
Coldrick, W. Jenkins, R. H. (Stechford) Royle, C.
Collick, P. H. Johnson, James (Rugby) Shackleton, E. A. A
Corbet, Mrs. Freda Jones, David (Hartlepool) Short, E. W.
Cove, W. G. Jones, Frederick Elwyn (West Ham, S.) Simmons, C. J. (Brierley Hill)
Craddock, George (Bradford, S.) Jones, Jack (Rotherham) Skeffington, A. M.
Crosland, C. A. R. Jones, T. W. (Merioneth) Slater, Mrs. H. (Stoke-on-Trent)
Crossman, R. H. S. Keenan, W. Slater, J. (Durham, Sedgefield)
Cullen, Mrs. A. Key, Rt. Hon. C. W. Smith, Ellis (Stoke, S.)
Darling, George (Hillsborough) King, Dr. H. M. Sorensen, R. W.
Davies, Ernest (Enfield, E.) Lee, Frederick (Newton) Soskice, Rt. Hon. Sir Frank
Davies, Harold (Leek) Lever, Leslie (Ardwick) Sparks, J. A.
Davies, Stephen (Merthyr) Lewis, Arthur Stewart, Michael (Fulham, E.)
de Freitas, Geoffrey Lindgren, G. S. Strachey, Rt. Hon. J.
Deer, G. Logan, D. C. Strauss, Rt. Hon. George (Vauxhall)
Delargy, H. J. MacColl, J. E. Summerskill, Rt. Hon. E.
Dodds, N. N. McGhee, H. G. Swingler, S. T.
Donnelly, D. L. McInnes, J. Sylvester, G. O.
Driberg, T. E. N. McKay, John (Wallsend) Taylor, Bernard (Mansfield)
Dugdale, Rt. Hon. John (W. Bromwich) McLeavy, F. Taylor, John (West Lothian)
Ede, Rt. Hon. J. C. McNeil, Rt. Hon. H. Taylor, Rt. Hon. Robert (Morpeth)
Edelman, M. MacPherson, Malcolm (Stirling) Thomas, David (Aberdare)
Edwards, Rt. Hon. John (Brighouse) Mainwaring, W. H. Thomson, George (Dundee, E.)
Edwards, Rt. Hon. Ness (Caerphilly) Mallalieu, J. P. W. (Huddersfield, E.) Thornton, E.
Edwards, W. J. (Stepney) Mann, Mrs. Jean Timmons, J.
Evans, Albert (Islington, S. W.) Manuel, A. C. Tomney, F.
Evans, Stanley (Wednesbury) Marquand, Rt. Hon. H. A. Ungoed-Thomas, Sir Lynn
Fernyhough, E Mason, Roy Usborne, H. C.
Fletcher, Eric (Islington, E.) Mayhew, C. P. Wallace H. W.
Foot, M. M. Mikardo, Ian Webb, Rt. Hon. M. (Bradford, C.)
Fraser, Thomas (Hamilton) Mitchison, G. R. Weitzman, D.
Freeman, John (Watford) Monslow, W. Wells, Percy (Faversham)
Freeman, Peter (Newport) Moody, A. S. Wells, William (Walsall)
Gaitskell, Rt. Hon. H. T. N. Morgan, Dr. H. B. W. West, D. G.
Gibson, C. W. Morley, R. Wheeldon, W. E.
Glanville, James Morris, Percy (Swansea, W.) White, Mrs. Eirene (E. Flint)
Gordon Walker, Rt. Hon. P. C. Mort, D. L. White, Henry (Derbyshire, N. E.)
Greenwood, Anthony (Rossendale) Moyle, A. Whiteley, Rt. Hon. W.
Grey, C. F. Mulley, F. W. Wigg, George
Hale, Leslie Nally, W. Wilcock, Group Capt. C. A. B
Hall, Rt. Hon. Glenvil (Colne Valley) Neal, Harold (Bolsover) Wilkins, W. A.
Hall, John T. (Gateshead, W.) Noel-Baker, Rt. Hon. P. J. Willey, F. T.
Hamilton, W. W. Oldfield, W. H. Williams, David (Neath)
Hannan, W. Oliver, G. H. Williams, Rev. Llywelyn (Abertillery)
Hargreaves, A. Orbach, M. Williams, W. R. (Droylsden)
Harrison, J. (Nottingham, E.) Oswald, T. Wilson, Rt. Hon. Harold (Huyton)
Hastings, S. Padley, W. E. Winterbottom, Richard (Brightside)
Hayman, F. H. Paget, R. T. Woodburn, Rt. Hon. A.
Henderson, Rt. Hon. A. (Rowley Regis) Palmer, A. M. F. Yates, V. F.
Herbison, Miss M. Pargiter, G. A. Younger, Rt. Hon. K.
Hewitson, Capt. M. Paton, J.
Hobson, C. R. Pearson, A. TELLERS FOR THE AYES
Holman, P. Peart, T. F. Mr. Arthur Allen and
Holmes, Horace (Hemsworth) Plummer, Sir Leslie Mr. Popplewell.
Aitken, W. T. Bennett, F. M. (Reading, N.) Bullus, Wing Commander E. E.
Allan, R. A. (Paddington, S.) Bennett, Dr. Reginald (Gosport) Burden, F. F. A.
Alport, C. J. M. Bennett, William (Woodside) Butler, Rt. Hon. R. A. (Saffron Walden)
Amory, Heathcoat (Tiverton) Birch, Nigel Campbell, Sir David
Anstruther-Gray, Major W. J Boothby, Sir R. J. G. Carr, Robert
Arbuthnot, John Bowen, E. R. Cary, Sir Robert
Ashton, H. (Chelmsford) Boyd-Carpenter, J. A. Channon, H.
Assheton, Rt. Hon. R. (Blackburn, W.) Boyle, Sir Edward Clarke, Brig. Terence (Portsmouth, W.)
Astor, Hon. J. J. Braithwaite, Sir Albert (Harrow, W.) Clyde, Rt. Hon. J. L.
Baker, P. A. D. Braithwaite, Lt.-Cdr. G. (Bristol, N. W.) Cole, Norman
Baldock, Lt.-Cmdr. J. M. Bromley-Davenport, Lt.-Col. W. H. Colegate, W. A.
Baldwin, A. E. Brooke, Henry (Hampstead) Conant, Maj. R. J. E.
Banks, Col. C. Brooman-White, R. C. Cooper-Key, E. M.
Barber, Anthony Browne, Jack (Govan) Craddock, Beresford (Spelthorne)
Baxter, A. B. Buchan-Hepburn, Rt. Hon. P. G. T. Crookshank, Capt. Rt. Hon. H. F. C.
Bell, Ronald (Bucks, S.) Bullard, D. G. Crosthwaite-Eyre, Col. O. E.
Crouch, R. F Hylton-Foster, H. B. H Price, Henry (Lewisham, W.)
Crowder, Sir John (Finchley) Jennings, R. Prior-Palmer, Brig, O. L
Crowder, Petre (Ruislip—Northwood) Johnson, Eric (Blackley) Profumo, J. D.
Cuthbert, W. N. Keeling, Sir Edward Raikes, Sir Victor
Darling, Sir William (Edinburgh, S.) Kerr, H. W. Rayner, Brig. R.
Davidson, Viscountess Lambton, Viscount Redmayne, M.
Deedes, W. F. Langford-Holt, J. A. Rees-Davies, W. R
Digby, S. Wingfield Law, Rt. Hon. R. K Remnant, Hon. P.
Donaldson, Cmdr. C. E. McA. Leather, E. H. C. Renton, D. L. M.
Donner, Sir P. W. Legge-Bourke, Maj. E. A. H. Roberts, Peter (Heeley)
Doughty, C. J. A. Legh, Hon. Peter (Petersfield) Robertson, Sir David
Douglas-Hamilton, Lord Malcolm Lindsay, Martin Robinson, Roland (Blackpool, S.)
Drayson, G. B. Linstead, Sir H. N. Rodgers, John (Sevenoaks)
Duncan, Capt. J. A. L Llewellyn, D. T. Roper, Sir Harold
Erroll, F. J. Lloyd, Maj. Sir Guy (Renfrew, E.) Ropner, Col. Sir Leonard
Fell, A. Lockwood, Lt.-Col. J. C. Russell, R. S.
Finlay, Graeme Lucas, p. B. (Brentford) Ryder, Capt. R. E. D
Fisher, Nigel Lucas-Tooth, Sir Hugh Scott, R. Donald
Fleetwood-Hesketh, R. F McCallum, Major D. Scott-Miller, Cmdr. R
Fletcher-Cooke, C. Macdonald, Sir Peter Shepherd, William
Ford, Mrs. Patricia McKibbin, A. J. Simon, J. E. S. (Middlesbrough, W.)
Fort, R. Mackie, J. H. (Galloway) Smithers, Peter (Winchester)
Fraser, Hon. Hugh (Stone) Maclay, Rt. Hon. John Snadden, W. McN.
Fraser, Sir Ian (Morecambe & Lonsdale) Maclean, Fitzroy Spearman, A. C. M.
Fyfe, Rt. Hon. Sir David Maxwell Macleod, Rt. Hon. Iain (Enfield, W.) Speir, R. M.
Galbraith, Rt. Hon. T. D. (Pollok) MacLeod, John (Ross and Cromarty) Stanley, Capt. Hon. Richard
Gammans, L. D. Macpherson, Niall (Dumfries) Stevens, G. P
George, Rt. Hon. Maj. G. Lloyd Maitland, Patrick (Lanark) Steward, W. A. (Woolwich, W.)
Godber, J. B. Manningham-Buller, Sir R. E. Stewart, Henderson (Fife, E.)
Gough, C. F. H Markham, Major Sir S. F. Stoddart-Scott, Col. M.
Gower, H. R. Marlowe, A. A. H. Storey, S.
Graham, Sir Fergus Marples, A. E. Strauss, Henry (Norwich, S.)
Grimond, J. Marshall, Sir Sidney (Sutton) Stuart, Rt. Hon. James (Moray)
Grimston, Hon. John (St. Albans) Maude, Angus Sutcliffe, Sir Harold
Grimston, Sir Robert (Westbury) Maudling, R. Taylor, William (Bradford, N.)
Hall, John (Wycombe) Maydon, Lt.-Comdr. S. L. C. Teeling, W.
Harden, J. R. E. Medlicott, Brig. F. Thomas, Rt. Hon. J. P. L. (Hereford)
Hare. Hon. J. H. Mellor, Sir John Thomas, Leslie (Canterbury)
Harris, Frederic (Croydon, N) Malson, A. H. E. Thompson, Kenneth (Walton)
Harris, Reader (Heston) Monckton, Rt. Hon. Sir Walter Thompson, Lt.-Cdr. R. (Croydon, W.)
Harrison, Col. J. H. (Eye) Morrison, John (Salisbury) Thorneycroft, Rt. Hn. Peter (Monmouth)
Harvey, Air Cdre. A. V. (Macclesfield) Mott-Radclyffe, C. E. Touche, Sir Gordon
Harvey, Ian (Harrow, E.) Nabarro, G. D. N. Turner, H. F. L.
Hay, John Neave, Airey Turton, R. H.
Heald, Sir Lionel Nicholls, Harmar Tweedsmuir, Lady
Heath, Edward Nicholson, Godfrey (Farnham) Vane, W. M. F.
Higgs, J. M. C. Nicolson, Nigel (Bournemouth, E.) Vaughan-Morgan, J. K
Hill, Dr. Charles (Luton) Nield, Basil (Chester) Vosper, D. F.
Hill, Mrs. E. (Wythenshawe) Nutting, Anthony Wakefield, Edward (Derbyshire W.)
Hinchingbrooke, Viscount Oakshott, H. D. Wakefield, Sir Wavell (St. Marylebone)
Hirst, Geoffrey Odey, G. W. Walker-Smith, D. C.
Holland-Martin, C. J O'Neill, Phelim (Co. Antrim, N.) Ward, Hon. George (Worcester)
Hollis, M. C. Ormsby-Gore, Hon. W. D. Ward, Miss I. (Tynemouth)
Holmes, Sir Stanley (Harwich) Orr, Capt. L. P. S. Waterhouse, Capt. Rt. Hon. C.
Holt, A. F. Orr-Ewing, Charles Ian (Hendon, N.) Webbe, Sir H. (London & Westminster)
Hope, Lord John Orr-Ewing, Sir Ian (Weston-super-Mare) Wellwood, W.
Hornsby-Smith, Miss M. P Osborne, C Williams, Rt. Hon. Charles (Torquay)
Horobin, I. M. Partridge, E. Williams, Sir Herbert (Croydon, E.)
Horsbrugh, Rt. Hon. Florence Peake, Rt. Hon. O. Williams, Paul (Sunderland, S.)
Howard, Hon. Greville (St. Ives) Peto, Brig. C. H. M. Williams, R. Dudley (Exeter)
Hudson, Sir Austin (Lewisham, N.) Pickthorn, K. W. M. Wills, G.
Hudson, W. R. A. (Hull, N.) Pilkington, Capt. R. A Wilson, Geoffrey (Truro)
Hutchinson, Sir Geoffrey (Ilford, N.) Pitman, I. J.
Hutchison, Lt.-Com. Clark (E'b'rgh, W. Pitt, Miss E. M.
Hyde, Lt.-Col. H. M. Powell, J. Enoch TELLERS FOR THE NOES:
Sir Cedric Drewe and Mr. Kaberry.

Question put, and agreed to.