§ On and after the first day of September, nineteen hundred and fifty-three, there shall be allowed from the duties of Customs and Excise a rebate of sixpence a gallon on light 1064 hydrocarbon oils which are not used as fuel in mechanically-propelled vehicles constructed or adapted for use on roads.—[Mr. Erroll.]
§ Brought up, and read the First time.
§ Mr. Speaker
I would point out that on a later page of the Order Paper there appears a proposed new Clause in the name of the hon. and gallant Member for Hull, Central (Captain Hewitson) and other hon. Members dealing with a rebate on white spirit, etc., for paint manufacture. Perhaps it would be convenient if the two Clauses were discussed together, although I did not propose to call the second one.
§ Mr. Erroll
This Clause deals with the rate of duty levied on light hydrocarbon oils used for purposes other than as fuel for vehicles constructed or adapted for use on roads. When the original duty was introduced it was for the purpose of taxing motor fuel by a simple, rough and ready definition, inserted in the appropriate Finance Bill and designed to tax all petroleum products of a certain sort which it was considered would be used exclusively by motor vehicles.
That was many years ago and since then, due to the technical progress of the industry and engineering developments throughout the country, not only have many additional and further uses been found for the class of hydrocarbon products known as motor spirit, but there have also grown up a number of additional light hydrocarbon oils falling within the definition of light hydrocarbon oils for the purpose of taxation.
Those many uses which were never intended, expected or anticipated at the time of the passage of the original legislation now find themselves contributing substantial amounts in taxation for what was first intended as a means of raising money to improve the road system of Great Britain. It is because of these technical developments that the position is now anomalous.
The purpose of the new Clause is to seek a reduction in the rate of duty for those light hydrocarbon oils which are used for industrial and other purposes—that is to say, for purposes other than as fuel for vehicles on the roads. I should like to quote a few examples. 1065 Specially important is the use of light hydrocarbon oil for industrial purposes as a solvent in rubber processing or in the manufacture of certain paints and varnishes. In both these cases the light hydrocarbon oil—white spirit—evaporates and is lost after use and, of course, the duty paid disappears with it at the same time.
The amount of taxation may not appear to be large but, nevertheless, it is an appreciable factor in the cost of manufacture. During the last Finance Bill of the late Labour Government a small Amendment was introduced whereby a drawback on the duty could be secured when an identifiable quantity of light hydrocarbon oil was exported as part of the export drive. The difficulty was only partially met because that did not take account of those light hydrocarbon oils used in the manufacture of articles and not themselves exported.
That, to some extent, accounts for why this drawback has not been greatly used by manufacturers. It is partly because it does not apply to all industrial uses of light hydrocarbon oil which are part of the export programme, but also because, since it only applies to those paints and solvents actually exported and not to the whole range of a company's manufactures, it has been found by some not to be worth the administrative cost of applying for only a proportion of the duty paid.
There are other industrial uses, the most popular of which is the dry cleaning industry, where light hydrocarbon oils known as white spirits are used for the dry cleaning of clothes and industrial garments. The evaporation of solvent is quite considerable in these cases and even where recovery plant has been installed only a proportion can be recovered. There is thus a substantial increase in the real cost of dry cleaning garments because of the very high rate of duty which light hydrocarbon oils now attract.
Then there is another serious increase in cost in the bench testing of engines. These may be engines ultimately for use on the road or they may be aero engines. Whatever their ultimate purpose the light hydrocarbon oil necessarily used as fuel during the testing of the engine is subject to duty at the full rate although the engine itself is not, of course, anywhere near the road.
1066 On the farms, the position has become extremely serious. When petrol—that is to say, light hydrocarbon oil—is used on the farm it attracts duty at the full rate. A petrol driven tractor or a petrol driven engine on a farm uses duty paid fuel and the duty, now that it is much more than the cost of the fuel itself, is a serious element in the cost of production. Should the farmer use a paraffin powered tractor he will not have to pay any duty on the fuel because the paraffin is a medium hydrocarbon oil and does not attract duty.
The plain fact is that, were there no differential taxation on petrol as distinct from paraffin, no farmer would think of using a paraffin powered tractor because, on all counts, a petrol driven tractor is more efficient, more reliable and economical. Because the tax element in the fuel cost is so considerable most farmers are driven to use paraffin powered tractors which are less efficient. Here is a plain case of taxation engineering as a result of the taxation policy of successive Governments.
The position on the farms is rendered even more absurd by the fact that, if a farmer should use a diesel fuel tractor, although that diesel fuel will attract the full rate of duty if the tractor is used as a road vehicle, the farmer gets a rebate on the amount of tax when the fuel is used in a diesel tractor employed only on farm land or in a similar engine used for stationary purposes. For diesel fuel, which is not a light hydrocarbon oil, there is, in addition to the exemption for farm tractors, an exemption for diesel rail cars which are a form of transport; but if the diesel engine is used on the road the full amount of duty must be paid on the fuel.
Representations have been made frequently to successive Chancellors about this matter. Proposals have been put forward in the House from time to time ranging from complete exemption for non-road uses to part exemption. In the new Clause I suggest only a small differentiation of 6d. per gallon because to give a complete exemption would, I fear, cost the Treasury too much this year. But even a small reduction would be a most welcome sign from the Treasury to industry and agriculture that there was to be some preferential treatment.
In previous representations the reply has always been that administrative difficulties and the possibilities of evasion 1067 would make it impossible to operate a system of rebates fairly. I submit that that is not really the case. It would be possible to operate a system of refunds and repayments. Such a system has already been submitted to the Chancellor for his consideration. After all, it is no uncommon event in taxation to find that one must first pay the tax in full and then apply for a rebate or refund afterwards.
It happens in the payment of company dividends. Tax is deducted at the full rate at source and it is up to the individual to claim back any reliefs to which he is entitled. The same might be said of various Income Tax allowances where the onus is on the individual to make the claim. With the system proposed in the representations which have been made the idea is that the consumer should pay the tax first and then, if he wishes, claim the rebate to which he would be entitled, making the full disclosure which might be required by the Customs and Excise authorities.
This is the system which has operated in a number of other countries where it is regarded as important to give some preferential rebate to industrial and agricultural users. What can be applied in other countries can surely be operated here, especially when we remember how important it is to keep down our export costs and not to inflate them needlessly by including as an item of production the taxation on a vital raw material, whether it be in the rubber making, the road haulage or the aviation industry.
I should like to point out, in passing, that in aviation the position is specially anomalous in that when light hydrocarbon oil—aviation spirit—is used to power the aircraft on an internal flight duty has to be paid at the full rate. A similar aircraft using a turbo-prop or jet engine, which only requires paraffin, which is a medium hydrocarbon oil, therefore does not pay any duty at all, so that there is a very distinct advantage, from the fuel point of view, in favour of the jet-powered aircraft. In any event, of course, an aircraft which is refuelling in this country for a destination outside Great Britain can get a drawback of the duty, because such fuel is not taxable, but, should it be an internal flight, the 1068 aircraft would have to pay duty at the full rate.
This shows that a system of rebates can be applied to aircraft, as it is, in fact, being done already, and I should like to urge upon the Chancellor that we should like to see an energetic attempt being made by the Treasury to introduce a system of rebates which would give effect to the purpose of this new Clause. If it be said that the Treasury are too busy and overworked at present to undertake the necessary investigation, then, perhaps, the Chancellor would set up a committee of the type which he set up last year—like the Hutton Committee or that which reported upon the Purchase Tax uplift—to investigate the matter, hear all the evidence afresh and reach a conclusion which could be examined by this House next year.
It is in those terms that I submit the new Clause, because I do not wish, at this comparatively late stage of the Finance Bill, which has so far proceeded smoothly and successfully, to provoke a Division, if that can be avoided.
§ Mr. Norman Cole (Bedfordshire, South)
I beg to second the Motion.
A number of firms in my constituency are very much affected by this matter, which, in the eyes of many people, may be a technical one. It is a matter which has been brought very much to my notice by a firm in my constituency which deals exclusively with rubber production. This firm is very seriously affected by the lack of a rebate of this duty. Their products are in competition with those brought into this country from Czechoslovakia and Hong Kong and other areas where rubber articles are produced. In fact, home sales in this country are in competition with such imports, and the home trade in any industry of this type offers very large support for the export trade. That is the first point to be borne in mind.
In addition, the exports of this particular firm, and others of a like nature, are also in competition with the rest of the world and with the products of those countries which I have mentioned, which do, in fact, allow a rebate of taxation on light hydrocarbon oils to firms producing in their countries. It seems to me that, if we are having to compete with other countries, the latent 1069 skill and craft of the people in this country employed in making these products ought not to be so seriously handicapped.
This matter has been brought up in previous years to other Chancellors of the Exchequer, and some attempt has been made to get somewhere, but the fact remains that these industries—rubber producers and others which use these oils—pay 2s. 6d. duty on every gallon which they use in their manufacture. This is a very reasonable and very humble proposal which we are submitting in asking, for a start, for a rebate of at least 6d. per gallon.
I would ask the Financial Secretary or the Economic Secretary, whoever is to reply, whether, in recognition of the great effort which we are making and must make to keep our place in the markets of the world, they can make this gesture to this particular type of industry by allowing this rebate. It is true that it will not solve the whole problem, because there is much difference between 6d. and 2s. 6d., but it will, at least, be some indication that the Government are giving encouragement to industries of this nature.
§ 4.15 p.m.
§ Captain M. Hewitson (Hull, Central)
I welcome the opportunity of supporting the hon. Member for Altrincham and Sale (Mr. Enroll), but I regret the statement in the closing part of his speech, that he would not press his new Clause to a Division. I should have thought that the difficulties we are facing today in building up our export markets are such that this House would have taken an opportunity, especially with a Clause of this description, to express its will that we should be encouraged in the task facing our industry in winning markets abroad.
The Chancellor never fails at any time to make approaches to the trade unions and ask them, first, to restrict their wage applications, because that can only have the effect of raising prices and the cost of living, and, secondly, to ask for every effort to be made by industry to boost our production. The trade union leaders of the country, over the last two years, have loyally supported the Chancellor in his efforts in this direction. They have soft pedalled and kept down wage demands to a minimum, and, further, they have used every means at their disposal 1070 to lift production in all our industries throughout the country, and especially for the export market.
Here is an opportunity for the Minister to say that he can agree to this token concession of 6d. per gallon, because, after all, the duty on a gallon is 2s. 6d. The industry in which I am particularly interested, which is in my own constituency, is the paint manufacturing industry, and I should add that, outside London, Hull is the largest paint manufacturing area in this country. At present, in Hull, there is a great shadow of unemployment hanging over our city. Twenty per cent. of our fishing fleet is tied up and not going to sea, and we have a hard core of 5,000 unemployed in the city which we do not seem to be able to reduce. The shadow of unemployment which is hanging over our greatest manufacturing interest—the paint industry—has caused grave concern in Hull, where there is much support for any efforts aimed at bringing down manufacturing costs, to enable us to retain our export markets and keep our people in regular work.
I do not think this is too much to ask, because the new Clause which stands in my own name asks for twice the reduction which is sought in this one, and we should take into consideration the fact that the paint manufacturing industry uses 35 million gallons of light hydrocarbon oils and pays the Treasury something like £4 million per annum in taxation. Those are round figures, and I do not want the Financial Secretary to tell me that the bulk exporter of paint pays nothing in duty, because he can get a drawback. I am well aware of that. The paint on machines and materials that are exported is paying the full tax. I hope we shall be told that we can get some part of this tax returned. I am told of a motor firm who are exporting and who tried this scheme of drawbacks. The sum due to them was £23,000, but it cost them £30,000 to get the drawback, and after that they did not bother to claim it. This thing is really serious. We are fighting for markets where pence count.
I am given to understand that some of our commodities are exported in wooden packing cases and that the paint on the packing cases costs more than the commodity in the cases that we are exporting. That means that we have reached a ridiculous position. In some export markets 1071 a difference of 1d. per article determines whether or not we get the contract. If we do not get the contract it means unemployment somewhere in this country.
In previous years I have been rather rude to the Chancellor of the Exchequer and his assistants on the Front Bench and I have possibly been a little threatening about what would happen in the workshops if they did not listen to reason. Today, I have lost all that. I am appealing to them because I do not like to see people out of work, knowing what it means to have years of that myself. I make an appeal to the Financial Secretary to have another look at this question.
Countries like Germany are coming into our markets and will leave us behind, because they are giving assistance to their industries. When I say "Germany" I mean the German Government. There are various ways of giving assistance, not only by direct subsidy but by such ways as relief of transport charges which brings down the cost of a commodity at the delivery point.
Something should be worked out. What can be done by assistance to industry in Germany and Italy can be done in this country. It is wrong in principle to tax the raw materials used in building up manufactures but that is what happens in this instance. I make my plea to the Treasury, and I shall give every support, even in the Division Lobby, to the hon. Member for Altrincham and Sale, if the Treasury will not grant a small little concession on this occasion.
§ Squadron Leader A. E. Cooper (Ilford, South)
I hope that the Financial Secretary to the Treasury will not turn a deaf ear to the pleas that have been made. During the years when we were in Opposition we put forward similar pleas, and they were supported by one or two hon. Members on the other side who felt as strongly on this subject as we. The hon. and gallant Member for Hull, Central (Captain Hewitson) put up a very strong case. The real strength of it was contained in his last few sentences, when he said that it was wrong in principle to tax raw material of industry. This is one of the only raw materials which is so treated.
Many years ago somebody at the Treasury decided that these oils had 1072 some relation to petrol. That was the genesis of this tax. Every time that petrol has gone up, light hydrocarbon oils have gone up by half that amount. When petrol has been reduced, the oils have come down.
§ Mr. Douglas Jay (Battersea, North)
The "someone at the Treasury" to whom the hon. and gallant Member referred is the present Prime Minister.
§ Squadron Leader Cooper
The right hon. Member for Battersea, North (Mr. Jay), on an earlier occasion, said that the effect of the tax was something like 2d. or 3d. on the gallon of paint, but he was quite wrong. If we take white spirit formulations that may be the effect, but white spirit is used in synthetic resins, metallic paint driers and certain pigment formulations. All these have the effect of piling up the cost and making it more difficult for us to compete in the export market. There is considerable loss in manufacture due to the volatility of these things and the difficulties in getting a drawback on white spirit.
This affects not only the paint industry but the printing, linoleum and textile industries and many others. They add to our costs and make export competition difficult. I suppose that the answer will be that revenue will be lost to the Treasury. If that is so, we must look for other ways to recoup ourselves for the revenue which will be lost. It is wrong in principle to tax the raw material of industry.
§ Mr. Ralph Morley (Southampton, Itchen)
I hope that whoever replies to the debate on the proposed new Clause, which was so ably moved by the hon. Member for Altrincham and Sale (Mr. Enroll) and supported by the hon. and gallant Member for Hull, Central (Captain Hewitson), will bear in mind that hydrocarbon oils are the raw material in a very large number of manufactured commodities, such as paint and rubber and that, therefore, a tax upon them is a tax upon industry. Any tax upon industry is bad but in this case it is very heavy and is equivalent to a tax of 150 per cent. more than the tax on jewellery and that on mink coats, which seems to have symbolic significance in political controversy on both sides of the Atlantic.
Hydrocarbon oils are used not only in the manufacture of rubber and paint but 1073 in many commodities which are necessary to agricultural production. For example, it is used in the manufacture of the sprays which are used for the extermination of weeds. Therefore, this tax is not only a tax upon industry, but also a tax upon food production. There is no doubt that it affects our export trade because we are now in competition, in the export markets for rubber and paint, with a large number of other countries, and we have not the advantage of the sellers' market which we enjoyed a few years ago.
Many countries either remit taxation altogether on light hydrocarbon oils if they are used for non-motive purposes or give a very considerable rebate of the tax if they are used for purposes of industry or agriculture. The United States of America and Canada both remit taxation altogether on light hydrocarbon oils which are used for non-motive purposes, and nearly all the major countries of Western Europe impose a discriminatory tax upon them so that if used for industrial or agricultural purposes they do not pay so high a tax as if used for other purposes.
This tax is a severe handicap to our manufacturers in competing with the manufacturers of those countries. I understand that at present the exporters of paint are suffering very considerable competition from Czechoslovakia, and that the exporters of rubber are experiencing similar considerable competition from Hong Kong, which would be lessened if this Clause were adopted.
It is a very modest Clause and would not entail a very large financial loss to the Treasury. Indeed, the financial loss incurred by the acceptance of the Clause might, perhaps, be more than compensated for by the additional foreign currency that would come to this country through the expansion of exports that would result. I hope, therefore, that the Economic Secretary will give the Clause his sympathetic consideration.
I also hope that the mover of the Motion, if he does not get a favourable answer, will take the matter to a Division. I imagine that there is a very strong majority feeling on both sides of the House that the Clause should be accepted. If the Economic Secretary does not accept 1074 it, and if the hon. Member for Altrincham and Sale takes it to a Division—as, we hope, in that case he will—there will, of course, be a danger of the Government being defeated. But the defeat of the Government on a minor matter of this sort would not be serious, and all that would happen would be that, the House having decided in favour of the new Clause, the Chancellor would have to accept the decision of the House and give effect to it in the appropriate way.
In the first place, therefore, I hope that the Economic Secretary will look favourably on the Clause, and that, if he does not, the hon. Member for Altrincham and Sale will take his courage in both hands and divide the House upon it.
§ Mr. Frederic Harris (Croydon, North)
I hope that my hon. Friend the Economic Secretary will not put us into the difficult position which the hon. Member for Southampton, Itchen (Mr. Morley) has just described. Perhaps he will be able to make a concession. During the five years that I have been in this House, this matter has come up for discussion on each successive Finance Bill. I think that my hon. Friend the Member for Altrincham and Sale (Mr. Erroll), who moved this new Clause so ably this afternoon, has been trying for about eight years to get something done about it.
I must confess that I sometimes find it very difficult to understand why Governments do not face up to issues such as this which do not call for a great deal of consideration, or even concession. After all, this is a matter of a tax on a raw material used in manufacture. Reference has already (been made by hon. Members on both sides of the House to the fact that light hydrocarbon oils may very well be the only raw materials used in manufacture which are taxed at present, but, at 2s. 6d. a gallon, it is a very heavy tax.
Reference has also been made to specific industries affected. The hon. and gallant Member for Hull, Central (Captain Hewitson) specifically mentioned the paint industry. In my own constituency we have one of the largest firms of dyers and cleaners, who are very directly affected by this considerable burden in their manufacturing processes. In the last few years there has been only one concession in regard to exports. In that case, it could be defined and 1075 allowances in the form of drawback were made.
It seems to me basically wrong that home manufacturers should have to operate under difficulties of this kind. When this tax was first put on it was, obviously, never intended that manufacturers should have to bear this additional burden. It would not be very difficult for the Government to meet us on this point. It is the general desire of all hon. Members who have spoken that a future Government should face up to the difficulties which now confront manufacturers. I sincerely hope that the case so ably put by my hon. Friend will result in a reasonable concession being granted to manufacturers who now have to carry this very excessive burden.
§ Mr. Maudling
As my hon. Friend the Member for Croydon, North (Mr. F. Harris) has pointed out, this is a subject which with slight variations has been discussed on a number of occasions in recent years and under different Governments, and the arguments both for and against the proposal have, therefore, been fairly often rehearsed and have a certain familiarity about them. I cannot claim that the arguments which I propose to lay before the House will present any particular novelty; nor are they likely to depart very far from the answers given by right hon. Gentlemen opposite in dealing with this problem when they sat on this side of the House.
I shall deal, first, with something which appears to have general currency. It is that when this tax was first introduced, in 1928, it was intended as a motor fuel tax for the purpose of improving the roads. That is not the case, and my right hon. Friend the present Prime Minister, who introduced the tax—as has been pointed out on more than one occasion by the right hon. Member for Battersea, North (Mr. Jay)—said at the time that, in the main, hydrocarbon oils were used for motor transport and for various industrial purposes. He made it quite clear that the duty was one on hydrocarbon oils and was not specifically intended as a road tax on motor fuel for the purpose of improving the roads.
The first difficulty that one encounters in considering this proposal is its cost to the Revenue. The amount being asked 1076 for on this occasion is a rebate of 6d. a gallon, and I am informed that the cost of that reduction in a full year would be about £6 million, which is a very large sum indeed. As has been pointed out by one of my hon. Friends, if my right hon. Friend the Chancellor granted this rebate he would have to raise the money elsewhere.
As the hon. and gallant Member for Hull, Central (Captain Hewitson) pointed out, this 6d. rebate would be regarded as only a token concession. I am quite sure that hon. Members who have put this point to various Governments with such assiduity and vigour would not be satisfied with 6d. They would press for the complete abolition of the tax, which would cost £30 million a year. This would be a very large sum indeed.
The first objection to the proposal is, therefore, one of cost. The second objection, which has been put forward on many occasions, is that it would be very difficult indeed to administer a system of rebates and would require a very large number of additional Customs officials. Indeed, I am advised that it is considered that the number of officials needed to police a system of rebates of this kind would substantially exceed the total number of officials engaged at present in the collection of the whole duty which yields £290 million a year to the Exchequer. It would be a very large and difficult administrative problem.
It has been said—I think the hon. Member for Southampton, Itchen (Mr. Morley) and the hon. and gallant Member for Hull, Central mentioned it—that in other countries there are schemes for rebates of this kind. We have examined a number of these schemes which are operating in other countries, and we find that they prove conclusively the great administrative difficulty involved because they are all based on the keeping of very detailed and comprehensive records by an immense number of people and their regular inspection by a number of Customs officials. I am informed that a number of countries have found the difficulties so great that they have confined the rebates to large firms and refuse the rebates to small firms, which is a system which I am sure would not be acceptable to this House or to the country.
The other point which is sometimes made is that if a drawback is arranged 1077 for exports there should be a drawback for the home market. I would emphasise that there is this drawback for exports, as the hon. and gallant Member for Hull, Central mentioned. It has been implied by a number of hon. Members that a continuation of this duty on the light hydrocardon oils used in manufacture places a heavy burden on exports, but, as I have said, there is a provision for drawback on exports. It does not apply in all cases, but there is this provision. It would not be easy to extend the drawback from the relatively simply question of exported goods containing a proportion of hydrocarbon oil—on which Customs officials are already in their normal duties engaged—to the immense number of home uses of light hydrocarbon oils, of which the outstanding example is the dry cleaning industry to which reference was made by my hon. Friend the Member for Croydon, North.
§ Mr. Maudling
I have not the figures of the extent to which advantage has been taken of the drawback, but it would depend on the amount involved in the case of each article. I will give figures later to show that the amount involved in individual cases is so small that it would not be worth while for the manufacturer to reclaim it. Whether or not the export drawback scheme is satisfactory, its extension to the home market raises a much wider problem.
There is also the principle involved, that although, obviously, we wish to remove taxes which raise the price of exported goods, it is not by any means the same thing to remove a tax on goods sold in the home market, if it has to be replaced by a tax on something else sold in the home market. These taxes which fall on raw materials used in production are, broadly speaking, passed on to the consumer and are paid by the consumer. If they are not paid by the consumer of light hydrocarbon oils, they have to be paid by additional imposts placed on other articles, such as tobacco and alcohol.
§ 4.45 p.m.
§ Mr. Maudling
That is an agreeable speculation, but I do not think it would assist us in this debate. All indirect taxes fall on the consumer, and if there were no tax on light hydrocarbon oils there would have to be an additional tax on some other commodity.
Some hon. Members have made the distinction between light hydrocarbon oils used in manufacture and those used for road transport. I should have thought there was a large number of articles sold and exported, to transport which the cost of the petrol used was greater than the cost of the hydrocarbon oil which has gone into the paint with which the packing cases were painted. If there was an argument for giving a special rebate on the light hydrocarbon oil used in the paint, there would be an equally strong argument for removing the petrol duty on the petrol used by firms transporting the goods.
I think it would be a good thing to give one or two figures to show the extent of the problem. I have been provided with a number of figures showing the extent to which this tax affects various articles. Let me take, first of all, rubber gloves, which have been mentioned already. The effect of the tax varies from 7d. to a maximum of 3s. 4d. a dozen pairs. I believe that that is one of the highest examples. One the other hand, for each motor car tyre the figure is 1½d.
For proofed cloth the figure varies from 2s. 2d. on 100 square yards to a maximum on special sheeting of 31s. on 100 square yards. On tennis balls the figure is 10s. per 100 dozen, and on linoleum, of which we hear a good deal, it is 3s. 6d. to 18s. 6d. a ton. Therefore, it does not seem as though the addition to the cost of production resulting from the imposition of this duty is serious inmost cases compared with the general level of cost.
§ Mr. Ede (South Shields)
Can the hon. Gentleman say what percentage those figures are of the total cost of those articles?
§ Mr. Maudling
I think it would be easy to work it out. Certainly, 10s. on 100 dozen tennis balls or 18s. 6d. on a ton of linoleum would not amount to 1079 much. Perhaps the right hon. Gentleman could make a few of these calculations.
To sum up the reasons why the Government cannot accept this new Clause, as preceding Governments have been unable to accept similar proposals: first, there is the cost of the token proposal, which would be £6 million a year, and the full rebate would cost £30 million. Secondly, there are the real administrative problems involved which we have studied with great care on a number of occasions when we have been approached by hon. Members interested in this matter from the point of view of their constituencies. We should like to be able to settle the problem in order not to have it pressed upon us so often. There is no lack of will on the part of the Government to solve the problem, but it does not seem possible to devise satisfactory administrative means of dealing with the question. For those reasons I regret to say that I cannot accept this new Clause.
§ Mr. Ede
The hon. Gentleman has said that there is no lack of will on the part of the Government to deal with this question. I suggest that the Government would find a great deal more will to deal with it if the hon. Members for Altrincham and Sale (Mr. Erroll) and Croydon, North (Mr. F. Harris) and the hon. and gallant Member for Macclesfield (Air Commodore Harvey), who spoke on the matter last year and who apparently wishes to speak this year, found sufficient physical strength to walk into the Lobby against them on this occasion.
§ Mr. Ede
Very likely, but there is no reason why one should not give the hon. Gentleman, who is just a beginner, the result of one's experience. I had hoped that it would have been accepted in the spirit in which it was tendered.
I am like the hon. Member for Croydon, North, in that I have a dry cleaning firm in my constituency, and I am a little surprised from the inquiries that I have made to learn that the problem of administration is as difficult and great as the hon. Gentleman suggests. I often hear that story from the Treasury Bench, 1080 until the moment when they make up their minds that it is as well to give way and then it is astonishing how, with that decision made, the difficulties suddenly seem to vanish. After all, every hill looks steeper than it really is as one approaches it, and if the Government would only start on the upward path, difficult as it now appears, they would be surprised at how the road appears to level out once they have made up their minds that the journey is worth while.
There can be no doubt that this tax is very greatly resented by a number of small but important industries in the country and I do not think that it is much good quoting to us today what the Prime Minister said 25 years ago. Once one starts going back to what the right hon. Gentleman said in the past it will be found that some of our memories go back a good deal further than 25 years ago.
§ Mr. Maudling
I was about to quote a quotation from the Prime Minister made by the right hon. Gentleman two years earlier.
§ Mr. Ede
I know. There are occasions when I feel tempted to quote what the present Prime Minister said 50 years ago, which would be even more uncomfortable for the Treasury than what the right hon. Gentleman said 25 years ago.
I am informed by those skilled in these matters that there is not much difficulty, from the technical point of view, in dealing with this subject, because the flashpoint of the oils in question is very different from the flashpoint of petrol that is more generally consumed, and the distillation range is sufficient to make it quite easy to make a differentiation. I quoted the figures last year and I do not intend to quote them again today. They were not challenged on that occasion by the present Minister of Materials who was then Minister of State for Economic Affairs and I assume, therefore, that they were accepted.
It would appear that the concessions that were made by my own right hon. Friends when they dealt with this matter did not involve as much administrative trouble as at one time was expected, and I should have thought that in view of the arguments that have been put forward from both sides of the House today, in perfectly good temper, the Government could have made a concession along 1081 the very modest lines suggested by the hon. Member for Altrincham and Sale.
This is a subject that has been before the House on several occasions and the prices in some of these industries have risen rather considerably in recent years as a result of economic changes. The small sums that the Economic Secretary to the Treasury mentioned today are, after all, the kind of sums that really count when one is getting into competition in foreign markets. It is no use the hon. Gentleman and his colleagues saying that we must be very careful because we are now in a buyers' market and every increase in cost makes it more difficult for commodities to be sold abroad, and then make little of such charges as result from their own policy when they are applied to the cost of commodities.
I hope that the Economic Secretary will think again and that he will come to the conclusion that the time has at last arrived when this real differentiation between the use of various forms of hydrocarbon oils ought to find expression in the Finance Bill. As far as I am concerned, if the hon. Member for Altrincham and Sale is prepared to tell a Division I can assure him that he will have at least one to count.
§ Air Commodore A. V. Harvey (Macclesfield)
I was disappointed that my hon. Friend the Economic Secretary did not refer to light hydrocarbon oils used by the aviation industry, to which my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) referred when he moved his Motion. I have an interest in this industry, but I am concerned mainly with the engine manufacturers. As we all know, jet engines are gradually taking the place of piston engines in aircraft, but, nevertheless, there is a great demand for piston engines in helicopters throughout the world, and that demand will exist for many years to come. I know of a firm which is spending very large sums of money in developing piston engines for helicopters. The engines will have to be run on the bench for several thousand hours and duty will have to be paid. Then there will have to be proving flights of a great many hours and duty will have to be paid again.
1082 The helicopter industry is waking up and good aircraft are being produced. We shall have new competitors from France where their export price will be more in line with ours than will be the export price in America and Canada. In a year or two B.O.A.C. will be operating jet aircraft almost entirely, using kerosene on which duty is not paid; but B.E.A.C., on their lines in Great Britain, and small operators up and down the country and in the Highlands and Islands of Scotland in which you, Mr. Speaker, no doubt are interested, will be using petrol and will have to pay duty. That is an anomaly which ought to be examined.
We have a very flourishing and promising aircraft industry which can earn for this country foreign currency and render great help to our economy. I think that in this matter the Treasury will be very unwise to proceed in the present way year after year. I was pleased to hear that the right hon. Gentleman the Member for South Shields (Mr. Ede) and his hon. Friends would come into the Lobby to support us if this Motion were pressed to a Division, but my hon. Friend the Member for Altrincham and Sale has spoken on this subject on many occasions during the last seven or eight years and there was no rush from the party opposite to support him. I leave it to the good will of the Government, if they cannot do something immediately, to give an assurance that in the next 12 months something will be done to regularise this anomaly.
§ Mr. Erroll
I rise with the permission of the House to say that, naturally, I can hardly describe myself as satisfied with the statement that has been made. However, I detected some favourable signs. I thought I noticed a more receptive attitude than I had noticed for several years past. If it was not as receptive as I should have liked, that was possibly because the Economic Secretary to the Treasury had not had time to digest fully the very cogent arguments put forward today.
§ Mr. Erroll
It was the fact that most of the arguments which the Economic Secretary used were so well worn that, 1083 obviously, they had been used many times before, and that, therefore, he would look at the new arguments which we used today, refresh himself on the matter in the next few months and be more favourably disposed towards us next year. It would be unfortunate to harden the heart of the Government against us by pressing this Motion to a Division. I therefore beg to ask leave to withdraw the Motion.
§ Motion, and Clause, by leave, withdrawn.