HYDROCARBON OIL DUTIES (TEMPORARY INCREASE) BILL

HC Deb 10 December 1956 vol 562 cc35-130

Order for Second Reading read.

3.38 p.m.

The Chancellor of the Exchequer (Mr. Harold Macmillan)

I beg to move, That the Bill be now read a Second time.

The purpose of this Bill is to give effect to the decision, which I announced to the House last Tuesday, to increase as a temporary measure the Customs duty on imported motor spirit—which means petrol—and other light hydrocarbon oils and also on heavy oils used as fuel in diesel engine road vehicles—that is, the fuel commonly known as derv. The increase is 1s. a gallon, from 2s. 6d. to 3s. 6d. a gallon. The Excise duty on corresponding indigenous oils—that is to say, oils produced from our native materials, such as coal and shale—is also raised by 1s., from 1s. 3d. to 2s. 3d. That is the effect of Clause 1 of the Bill.

For the purpose of the temporary increase of duty, linked with the present oil shortage, it seems right to take the existing structure of the duty. For that reason, those oils which have hitherto been charged at a rate of 2s. 6d. per gallon are being charged an extra 1s. a gallon, those which are free of duty will remain free of duty and the various preferential margins and reliefs from duty will continue to apply as in the past.

I have observed a certain amount of misunderstanding, even confusion, about the scope and real purpose of the Bill. I should, therefore, at the outset, like to deal with two points which do not seem to me to have been fully understood.

First, as to the duration of this increase in the duty. I think that in the excitement of the moment many people somewhat overlooked the important fact that I stated quite deliberately last Tuesday, that this increase is a temporary one. Not only did I emphasise this last week, but the House will see that this intention is reflected both in the title and in the provisions of the Bill. In the normal course of events taxes are imposed by legislation and can be altered or removed only by legislation, but in this case the Bill provides that the increase can be brought to an end simply by Order, and that is a very real distinction.

Some may say that they have heard that story before, and I cannot deny that there are, in our great national picture, many temporary expedients which have survived beyond their expected term. To such sceptics I can only emphasise that I mean what I say and that the Bill has been drawn in this rather special way to emphasise this fact. This is a temporary Measure arising out of the present shortage of oil, and the increase will be applied no longer than is justified on that account. In any case, I shall review this temporary increase, like all other taxation, at the time of the Budget.

My second point concerns the scope of this tax increase. As I have said, it falls only on certain kinds of oil which are mainly used in road transport and not on oil generally. I have seen references in some newspapers which seemed to suggest that this tax, like the rationing, fell upon all oils. Of course, rationing does but not the tax. That is to say, it does not fall, of course, on oil used in power stations, in factories, for heating office buildings or blocks of flats, and so forth.

The increased duty does not apply to the heavy oils. Fuel oil, gas oil and kerosene continue to be free of duty. It is quite true that some quantities of the light oils are used for purposes other than road vehicles. For example, small petrol engines have widespread uses in factories, on building sites, and so forth, and, of course, many farm tractors, although, I am told, the minority are still run on petrol; and there are other uses of light oils in industrial processes. However, I repeat that the greater part of the whole range of oil consumption in this country will still be duty free

Hon Members may ask why it is necessary at present to increase the taxes at all. I would try to explain it in two ways, as objectively as I can, as I tried to do last Tuesday. Put quite simply, temporarily—that is why the tax is temporary—this country has become poorer. The interruption of oil supplies and other disturbances have put an additional, although, I hope, temporary, burden on our balance of payments, and if we are to maintain the position of sterling we must try to live within our reduced income, to consume less at home in order to keep imports within bounds and to stimulate exports.

As I pointed out last Tuesday the recent fall in the gold and dollar reserves is due to lack of confidence throughout the world, and it is right to fortify the reserves by borrowing or by realising dollar assets, but these are stop-gap measures, and the worsening of the balance of payments and the loss of our external income must be permanently made good, and this we must do by our own efforts.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

Will the right hon. Gentleman explain how the Scottish oil producing industry can have an effect on the balance of payments if it is discouraged by this extra tax? It can help in the balance of payments only by continuous existence.

Mr. Macmillan

The right hon. Gentleman means the shale oil industry? The preference remains the same; the ratio remains the same. I do not think that there will be any discouragement of the production of the shale oil industry by this additional tax.

Mr. Woodburn

The industry is steadily being closed down. Unless it gets sonic relief the chances are that it will close down altogether before the tax is removed. Will it not be wise to keep the industry going, especially in these circumstances?

Mr. Macmillan

That is another point. We put up the tax, but that part of the industry, the home production part, is already at a lower rate of tax. In the present circumstances, with oil so much needed, and when we are running on, say. 75 per cent., I should have thought that there would have been a tendency to see an increased production of home oil. However, that is a point of which I take note. It has relevance to one part of this story, although, I think, a minor part.

I was trying to explain why the additional tax was necessary. I say that we should think ill of ourselves, and should expect others to think ill of us, if we sought to maintain our levels of consumption at the expense of the surplus on our balance of payments. The increase in taxation is, therefore, a contribution towards the necessary reduction in our consumption of our own resources. I am absolutely sure that it is right to do this, and I think that the general opinion supports me in the measures I am trying to take to support the sterling area's reserves, for I do not think it is right that, in other words, we should, if I may use the expression, do the whole thing on tick. We ought to do something for ourselves.

The other point, and, perhaps, a simpler one, is that the present shortage of oil means a loss of revenue from the duty of about £6 million a month, and for all the reasons I have given I could not accept a drop in revenue and in the Budget surplus on this scale. The new duties will make good this loss with a small margin to spare.

Mr. Gerald Nabarro (Kidderminster)

I do not think there is any dispute that there will be a loss of revenue, but will my right hon. Friend bear in mind that approximately 75 per cent. of all motor cars on the roads are operated by business firms?

Mr. J. T. Price (Westhoughton)

Eighty per cent.

Mr. Nabarro

It may be 80 per cent. If the cost of petrol is increased by the amount of the additional duty, surely there will, therefore, be a necessary diminution in the yield of Income Tax and Profits Tax on the incomes of those businesses?

Mr. Macmillan

That, of course, is true of any taxing of one commodity, in the sense that it may affect the total yield elsewhere but it is no reason, I think, why it is not good and sound finance to make good the loss of this tax.

Mr. Price

The hon. Member for Kidderminster (Mr. Nabarro) has raised a very important issue. Surely all these transactions, the increase in the duty, and in the allowances which are chargeable to the Treasury as to 80 per cent. of all the vehicles on the roads, the additional 5d. per gallon which is being paid to the distributors which will be charged back to the Treasury as to 80 per cent. of the duty, mean that the tax returns of the commercial firms running road transport must be affected?

Mr. Macmillan

The paradoxical result that what we raise in one duty is bound to produce a reduction of another is not, I think, a reason which one can accept for not making an increase. These things have to be evened out. I should doubt whether the total amount reclaimed on behalf of the commercial travellers' expenses would be likely to be larger in the next six months than in the last six months. I should think that it is likely to be smaller.

If we accept the necessity to make good the revenue, it may well be asked: why should the tax fall upon oil? Why not spread it over a wider range? As I told the House last week, I did consider this. I examined very carefully the possibility of an increase in both direct and indirect taxation, and I explained some of the difficulties in both spheres. Therefore, weighing up all the different considerations, I came to the conclusion that the wisest course, a course in which, I think, the country will see a certain common sense and even justice, was to increase the taxation on the commodity which had become scarce and precious and whose scarcity was itself the cause of the fall in the revenue.

I do not, of course, expect that this proposal will be popular, but I think that I can claim, after reading very carefully some very interesting and well-informed criticisms, that the broad range and general body of informed opinions approve this decision of the Government and that the majority of the people have understood the reasons behind the proposals and think them sound.

After having described Clause I and the tax, I should like to say something about the effect which the increase both in the duty and in the commercial price taken together will have on costs and prices generally. I understand, of course, the anxiety which people feel, but I think that there is a certain amount of exaggeration and some misunderstanding and I should like to give the House the facts as best I can find them out. First, there is the direct effect of the increases on the Interim Index of Retail Prices. This index, standing at present at 102.7, contains two items to which the prices of petrol and oil are directly relevant. The first is private motoring, and the second, bus and other fares. I will come to transport costs generally later.

The whole increase of 1s. 5d. a gallon, that is, the duty and the other price increases taken together, will add about one-quarter of a point through the private motoring item to the retail price index. I have no doubt that the rationing of petrol will provide many motorists with enforced savings on this account. It might be said that these will balance up, but that is rather cold comfort. However, I take the pure mathematical argument that if exactly the same amount of money were spent, the increased cost would add one-quarter of 1 per cent. to the index on private motoring account.

I come to what is, perhaps, more important to the lives of our people—bus fares. The effect will depend, of course, on how far the fares are raised. I will discuss that question on Clause 2. At the moment, I would say only that if all bus undertakings were to raise their fares by the maximum fractions permitted by the Bill—and I am not saying that they will all do so—then, looking at the worst possibility from the point of view of the effect on charges, the resulting increase in the retail price index would be one-fifth of a point.

On private motoring it would be about one-quarter, and on bus fares, if they were all raised to the maximum allowed, it would be one-fifth. Therefore, the direct effect of the increases in duty and price, through private motoring and bus fares, would be to increase the index at the very most by one half point, or in practice, I think, less. To put it in another way, the increase will be about 1¼d. in the £. These are the direct effects of the duty and price increases on the index, but there will be, of course, the indirect effects, which I will try to put as objectively as I can.

Mr. Charles Royle (Salford, West)

Does the right hon. Gentleman realise that many of the municipal undertakings were already considering increases in fares, because of other charges against them, and that they will now have to face two increases, one immediately after the other?

Mr. Macmillan

If that is so, that is due to two quite separate circumstances. I am dealing only with the effect of the Bill and I am trying to put it as honestly and straightforwardly as I can.

The indirect effects, of course, exist, for the cost of transport obviously enters into production and distribution and it is more important in some industries than in others. There is no means of telling how far and how quickly any such increases will be passed on to the customer or consumer, but I estimate that about 40 per cent. of oil used as road fuel is used in goods vehicles. The increase in duty and prices in this sector will represent an additional charge on goods transput and on industrial costs at the rate—and I take a year, not, I hope, that it will last a year—of £40 million. If it lasted six months it would be £20 million. In other words, these increases will increase industrial costs generally at the rate of about £40 million a year.

This, of course, sounds a large sum, but is about one-quarter of 1 per cent. of the gross national product of £17,000 million a year. It can be regarded as roughly equal to a quarter of a point on the retail price index. I do not pretend that these are precise calculations, but they are the best that can be produced by expert statisticians. I say, therefore, with all sincerity that the addition to the cost of living caused by these increases is unlikely to be more than a half-point through direct costs and about a quarter-point through indirect costs. Taking the vast sums over which this £40 million is spread, I think that it will be found that these calculations are about right.

I hope, therefore, that all sections of the business community will bear these figures in mind and that they will agree that they can be fairly asked to make every effort to avoid reflecting these increases in price increases. They are very marginal and much smaller than other increases in costs of materials which go up and down from day to day. I ask the business community to consider whether it would not be possible to improve efficiency or achieve economies in other costs, or even to absorb the increases in profits for the time being. This is all the more important because, as I have already made clear, this increase in duty is an emergency and temporary measure.

Mr. F. Beswick (Uxbridge)

; Can the right hon. Gentleman tell us whether the suggestion that these increases in costs should be absorbed into profits was put to the oil companies?

Mr. Macmillan

The oil companies' increases were very carefully considered, and I believe that any impartial examination would prove them to be exactly right.

There are, of course, cases where, in a particular industry, or for a particular reason, there is no alternative to passing on at least some of the increased costs, but I ask those responsible for fixing prices to make these a minimum and to bear in mind the very small increase concerned, namely, £40 million on a gross national product of £17,000 million. This is a very small increase when related to the total level of economic activity. After all, the Interim Index of Retail Prices has been virtually stable since April and I have shown that the effects of the increase in duty and in the price of petrol is not such as would suggest any significant rise in the cost of living. I hope that these facts will be noted by those who hold responsible positions in industry, whether on the management or on the trade union side.

The purpose of Clause 2 is to enable those bus operators who need to do so to recoup the added cost which will fall on them because of the increased duty of 1s. a gallon together with the additional increase in the price. This will be a burden on bus operators which many of them are not in a financial position to carry without some increase in fares. The bus operators range from giant concerns like London Transport to quite small separate undertakings.

I am told that there are 5,000 bus undertakings in Great Britain, many of them quite small. Many of them are doing a job of particular importance in the rural areas, and some of the services are sometimes being operated at a loss or at a very small margin of profit. Too heavy financial impositions upon these operators would, therefore, involve a danger of many country buses being taken off the road, an event which would cause great inconvenience to the public when private motoring is limited.

The reason for making special provision for bus fares in the Bill is that the normal procedure for obtaining authority to increase the fares—a procedure which is satisfactory in normal conditions and is designed to protect the interest of the traveller—would take too long. I am told that a normal application to the traffic commissioners to vary fares may take several months to decide, not because the procedure is dilatory but because it involves the giving of public notice, the lodging of objections, the holding of public inquiries, and all the rest of the procedure which is necessarily fairly prolonged. It would be absurd, therefore, in present circumstances if the request to increase fares to offset the proposed increase of tax was not decided perhaps until this tax had come to an end, which might easily happen under our present procedure.

Accordingly, this Clause enables the bus operators to make a temporary and limited increase in fares without the need for obtaining further authority. It covers the bus operators throughout the country, and also the London Transport Executive, which provides road and rail services in London. The London transport fares are dealt with in subsection (2) of the Clause. They must be dealt with separately because, as the House knows, they are fixed under a different Act and by a different procedure from that of the bus companies throughout the country. Furthermore, in the case of London it is possible to spread the burden over all the various forms of public transport, that is, buses, coaches, trolley vehicles and the Underground railways. I am sure that this will generally be agreed to be right.

The Clause permits only a temporary increase of fares and subsection (4) provides that the increase which the operator can make in this way will come to an end a fortnight after the temporary duty is abolished, unless the traffic commissioners—or, in the case of the London Transport Executive, the Transport Tribunal—may for special reasons allow a longer period. A fortnight's grace is obviously necessary so that new tickets may be printed, and so forth.

A longer period will only be allowed for special reasons; for instance, because an undertaking already has a case before the commissioners for increased fares on some different ground. I think that this covers the point made by the hon. Gentleman the Member for Salford, West (Mr. Royle). It would be foolish to reduce fares and put them up again the next week. This power is merely to prevent something of that kind happening, but, normally, it will end a fortnight after the emergency tax is ended.

I also said that the increase would be limited in its action. Subsection (3) sets the limit to the increase in fares that may be made under this Clause. In most cases the upper limit is the sum which will increase the operator's aggregate gross receipts from bus fares by one-twelfth of what his receipts would have been at the normal level of fares. That fraction tallies with what I said last week the increase in duty represented. I was not then speaking about increases in commercial prices. I said that the increase in duty represented between one-quarter and one-fifth of 1d. on a 3d. ticket.

Special provision is made for the small bus undertakings, that is, an operator owning five buses or less, and for small or medium-size undertakings serving country districts. The increase in the duty is bound, on the whole, to be a greater burden on these operators because, of course, the cost of fuel forms a greater proportion of their expenses than in the case of the larger operators. In these cases the limit is accordingly set in the Bill at an increase of one-eighth instead of the one-twelfth for this class.

I should explain that these fractions of one-twelfth and one-eighth have been set at a level which will not only meet the increased duty, but will also go a little way to meet the increase in price which the oil companies have had to impose. It does not go the whole way, and I do not think it should go the whole way for this reason: as well as adverse factors, there will be some favourable factors. Naturally, there will be factors in the present situation operating in favour of the bus undertakers. The Government feel that it would be only reasonable, therefore, that the operators should be asked to share some of the burden which all of us have to carry.

Mr. James Callaghan (Cardiff, South-East)

In the case of a bus company which makes application to the licensing authority for an increase in fares after some of these extra fares have been imposed, will the licensing authority be empowered, in fixing the new level of fares, to take into consideration this increase as well? In other words, may it disallow a part of this increase if it decides that the profitability of the undertaking is above what is reasonable?

Mr. Macmillan

I do not think that that would be impossible, but I should like to think about it. I gather from the period of time which has been given to me that it is very unlikely that these things would run contemporaneously.

Mr. Callaghan

My hon. Friend for Salford, West (Mr. Royle) said earlier, and it is fairly well known, that there are a number of undertakings which are now submitting applications for an increase in fares. No doubt this increase will take place before their applications are completed.

Mr. Macmillan

Yes, if their applications run for four or five months. I hope this emergency will be over before then. However, I will look into that. Obviously, they cannot get the benefit twice over for the same reason. That is only justice. They cannot use the same argument twice over.

Mr. Callaghan

Those are for a different reason.

Mr. Macmillan

Then that would be outside this matter altogether. They may have reasons why they should increase fares even if the events of the last four months had not taken place. In that case I have no doubt that the commissioners would deal with the application on its merits.

Mr. Royle

Does the right hon. Gentleman see the great difficulty in which he is putting the undertakings if they have to go to the public for two increases at different times within a very short period?

Mr. Macmillan

No, because from what I am told, if they have already put in an application, it is unlikely that there will be overlapping. It is fair, at any rate, that they should carry some of the cost, and that they should realise that there are some favourable factors which have to be taken into account in the present situation to balance the unfavourable factors. The intention, therefore, is that the increase in costs due to the tax and the recent increase in price which the oil companies have described as an emergency surcharge—that is, the increase in price—should be met with special legislation, special methods and quite separately from the normal control of charges.

Consequently, any increase in fares under this Clause and, on the other hand, the additional costs due to the tax and the recent increase in the price of petrol, should be left out of account. That is the real guide to the Tribunal or the commissioners in considering any wider questions that might arise. That is the legal result of these provisions. If I have not wholly understood them, we can press points further in Committee.

Mr. Ernest Davies (Enfield, East)

The Chancellor has referred to the fact that the companies will be able to put up their charges to meet part of the increase in the price of oil, but according to Clause 2 (1), they may do so— … with a view to offsetting the increase in duties under this Act. … There is no authority given to increase prices above offsetting the duties.

Mr. Macmillan

No, but the figures of one-eighth and one-twelfth are taken roughly to offset the duty. As I said, I did not think it right that we should give them power to recover more than a fraction to offset the higher prices. That is why we chose one-eighth for the small operators and one-twelfth for the large operators as the nearest we could get to a fair assessment of how much should go into the additional tax.

If we look at it in another way, these are the maximum increases, as I have said. In an Act of Parliament we have to legislate in a way which will deal with the generality of cases. In this Clause, however, we make it clear that the operator may raise his fares by one-twelfth or one-eighth as the case may be. I think that this general provision is fair and reasonable. It does not mean that all operators should put up their fares by these fractions, still less would the Government wish them to do so.

Just after the Bill was published, I saw a headline in a newspaper saying: Bus Fares to Rise by a Penny in the Shilling. As far as I know, that statement was made before any operator had announced any such intention. Bus operators must not, of course, blindly put up their fares by these fractions just because an Act of Parliament says they may. I observed that an hon. Gentleman opposite nodded when I said that there are factors in the present circumstances which will help bus operators. There will be reduced congestion in big cities and schedules will probably be rather easier to keep. There will be more passengers and fewer empty buses. If employers and workers can arrange to spread out their hours of travel a little, we may be able to spread the load still more.

Therefore, I say that the bus operators would be wise—the travelling public will expect them—to size up these various factors, as well as the additional cost of fuel, before raising their fares, and then raise them only to the extent that it is absolutely necessary for them to do so.

Mr. Arthur Lewis (West Ham, North)

As the right hon. Gentleman has worked out the effect of the increased tax to fractions, can he say to what extent he has worked out the extra revenue that the companies will get because people who would normally use their cars are being driven off the roads and will use public conveyances?

Mr. Macmillan

The purpose of my general remarks at the beginning was to say that, at the worst, if the rises were the maximum permitted, I should regard the increase as a very small one and not a large one in respect of both the cost of running industry and the burden upon the ordinary traveller. If some of the companies can make additional profit as a result, which is perhaps theoretically possible, I suppose that they will fall into the trap to which reference has already been made and will have to pay additional Income Tax.

Mr. Lewis

The Chancellor misunderstood my point. He says that he has worked out in detail what the cost will be to the various companies. He has referred to ¼d. on the fares and to a fraction of one-twelfth. Can he tell us how much extra he estimates the companies will get because of the large number of additional passengers that they will carry?

Mr. Macmillan

We have done our best to get what seems to be a fair basis. That is why, in the case of small operators in rural areas, where it is very important that the buses should not be taken off the routes, we have set a slightly higher percentage, while the percentage in the case of the larger undertakings is lower.

In that context, I might call attention to what is being done by the London Transport Executive. It is proposing to raise its fares not by the permitted one-twelfth but by one-twentieth, and it is doing that by putting ½d. on the lowest fare and leaving all the other fares alone. In other words, whereas, under the Measure, it could legally recoup £300,000 a month, it is seeking to recoup only £180,000 a month. No doubt for the reason mentioned, that it may visualise some offsetting advantages, it wishes to recoup no more than one-twentieth instead of the permitted one-twelfth. This shows a sense of great responsibility to the travelling public, and I hope that parallel action will be taken by other organisations whether they are private enterprise or national enterprise.

Mr. Walter Monslow (Barrow-in-Furness)

Is the right hon. Gentleman aware that the tax on crude oil has had a terrific impact on municipalities for some time? To give an illustration, an undertaking in my constituency had a deficit of £46,000, which led to an increase in fares, and further representations are to be made for another increase as the result of this Bill.

Mr. Macmillan

The hon. Gentleman says that the undertaking was making a loss under the old rate of taxation. I am trying to give a fair account of what its position will be vis-à-vis the new rate. Organisations will be able to recover, according to their character, either one-twelfth or one-eighth on their fares. What the London Transport Executive has done illustrates my point that the increases should be seen in their proper perspective.

It is the intention in London, I am told, to raise the 2½d. fare on the buses and the underground to 3d. and leave all the other fares unchanged. That has great advantage for those who travel rather far to their work, while it puts a very small additional burden upon those who travel short distances. "Advantage" is not quite the word. It is a matter of taking care of the interests of those who have to travel long journeys and putting a small additional burden upon those who have short journeys, and that, I think, is right.

I hope that on both counts—the effect upon industry and the effect upon the passengers—we shall not exaggerate the effect upon costs of the increased duty and price.

Mr. Cyril Bence (Dunbartonshire, East)

On the question of costs, I hope the right hon. Gentleman has taken into consideration, in relation to the rationing of fuel, that in modern industry, with processes in full swing, it is very important to have regular delivery of raw material and regular and quick clearance of the products afterwards. It is imperative to keep costs down in industry in order to get the products away from the factories as quickly and as regularly as possible. All costs will be driven up tremendously if there is not a regular clearance from the factories.

Mr. Macmillan

The hon. Gentleman raises a very important point, whether, under the principles of rationing, we are making the right distribution to ensure a flow of industrial products. That is a far more important factor than any ½d. or ¼d. in the £ in extra costs. The important thing is to get sufficient use of the oil which is available. We must ensure distribution of it so that our great industrial life goes on unchecked. I am sure that the hon. Gentleman will agree with me that that factor can have a much more real effect on costs than any minor increase in costs, and, therefore, it is much more important.

Mr. Bence

Yes, Sir; it is much more important.

Mr. Macmillan

One can lose a great deal more in industry through not having one's product at the place at which one wants it than through having to pay some small increase in the cost of getting the product there. The loss is in not having material where it is wanted at the critical moment. We want a system which is calculated to maintain industry at the highest possible level. However, that is irrelevant to the point that I am trying to make, which is that this cost factor does not affect true costs.

This Bill, which I have done my best to explain—I am grateful to hon. Members for listening to me and for helping me to make some of the points—is a temporary Measure. It deals with a temporary emergency. I feel that this is the best way of doing what we want to do. I realised when I made this decision that it might not be a very popular one, but I am sure it is the right one and I ask the House to give the Bill a Second Reading.

4.19 p.m.

Mr. Gordon Walker (Smethwick)

Listening to the Chancellor of the Exchequer, who rather played down this tax, one would think that everyone would be better off, that it would bring benefits to all sorts of people, including even those who drive motor cars, because they will save money, and that the burdens, if he chops them up into sufficiently small bits, will be so small that no one will notice them. The fact is, however, that the right hon. Gentleman is making the greatest single increase in petrol duty ever made in its history. This he is imposing upon a product which is already overtaxed, and he is doing it in the context of one of the severest economic crises that the country has had to face.

The real question which we have to ask, and with which the Chancellor has not dealt, is how far this swingeing tax helps to meet the economic crisis. The Chancellor said that there was some public confusion about the scope and purpose of the tax, but I must say that the confusion has not been removed by the speech which he has just made. He has said certain things, and left other things unsaid, that make it very hard to understand what is the purpose of the tax.

For instance, the Financial Times, which is not normally a paper on our side in politics, asked a very pertinent question which the Chancellor did not mention either on 4th December when he made his first statement, or this afternoon. I want to draw this to his attention and to ask the Financial Secretary to answer it. The Financial Times said: A tax increase on petrol is wrong in itself, but it is absolutely indefensible except on the assumption that there is still an immediate inflationary threat. Is it the view of the Government that there is an immediate inflationary threat? Do the Government feel, for instance, that there is an urgent need to suppress an inflationary danger in the motor car industry? Is there or is there not a great inflationary danger, or has it decreased and declined? We really have to be told the Government estimate of that if we are to make a sound judgment on the economic merits or demerits of this tax.

The Chancellor said nothing about that and the explanations he has chosen to give have shrouded the question in great obscurity and ambiguity. He has given two reasons which are not connected and not even compatible. I do not think that either is right. He said that one of his aims was to raise revenue. For what purpose? Is he raising revenue to make up the shortfall in duty resulting from the drop in the consumption of petrol, or does he want to raise revenue to make good that saving of £100 million which he promised us, in his Budget, would be made in the course of the year?

Lately, the right hon. Gentleman has become very quiet about that £100 million, but he said at the time of the Budget that it was essential to the structure of his Budget. It is not enough for the Financial Secretary to say, as he said the other day, that the Chancellor will have a surplus at the end of the year, because the Chancellor told us that the surplus would be £100 million more, owing to savings in Government expenditure. Is the purpose of the increase in the tax to raise revenue to make good the loss of revenue, or to make up the £100 million? It cannot be both. The increase will yield about £90 million a year.

If the Government's prime intention is to use the duty to check purchasing power, then this is about the worst tax for that purpose. There are many fairer, less inflationary and wider spread taxes which the Chancellor could have used; and if we are considering ways of saving dollars there are matters such as the consumption of tobacco and the extra use of Commonwealth tobacco, and so forth.

The Chancellor gave us a second reason to explain the purpose of the tax. Although I have tried very hard to follow it, I find this part of his argument unintelligible. It is interesting to note that he has wrapped it in metaphor and has never told us what he means. He said on 4th December that oil must be guarded by taxation as well as by rationing. He went on, in a glorious mixed metaphor worthy of his predecessor, to say: … it is wise to buttress this precious liquid …"—[OFFICIAL REPORT, 4th December, 1956; Vol. 561, c. 1061.] Does that mean anything at all, or is it just a rhetorical flourish? Will the Financial Secretary try to translate these metaphors into intelligible terms which we can understand? Will he tell us how this duty will help us to recoup our gold and dollar reserves, one of the things which one would think would come within "guarding and buttressing"?

The Chancellor said that he thought that the country felt that there was common sense in this increased tax. It is, on the contrary, almost impossible to understand how any of this "guarding and buttressing" can be achieved by a petrol tax in the context of petrol rationing. If there were no petrol rationing, I could see an economic case for this, at any rate one which could be argued, but how can it be argued in the context of petrol rationing? Its only possible purpose can be to bring petrol consumption below the level of the ration. If that be the case, let us be honest and reduce the ration and face the thing properly.

It is a truism of all rationing that the total ration allocation is always taken up. If there are unused coupons, because people cannot afford to use them, or for some other reason, a black market develops. If the Chancellor succeeds in getting consumption below the ration allocation, consumption will be made equal to the ration allocation level through the black market. That will work in favour of rich people against ordinary people who now have all the added difficulties of getting to work by overcrowded public transport, and so forth.

Money should not be allowed talk in this way when it is a question of sharing burdens. Part of the reason why there is deep and increasing resentment about the petrol tax is that it makes the sharing of the burdens more unequal than before, burdens which have to be shared as a result of the closing of the Suez Canal. I therefore believe that the tax is both irrelevant to our economic needs and unfair.

Further, it is positively harmful to the economy, especially when it is considered with the price increase. I want to ask the Chancellor one or two questions about the price increase. I want once again to quote the Financial Times, which again asks a very pertinent question which I hope will be answered, because it is very important. The Financial Times said, on 5th December: What is perhaps most surprising of all is that the oil companies, after discussion with the Government, are putting a much heavier proportionate increase on fuel oil prices than on petrol. The apparent implication is that the steel industry is to pay over 30 per cent. more on its fuel costs, so that the Chancellor can take the main benefit from an excessively large price increase in petrol. Why was a disproportionate share of the increased cost put on fuel oil prices, after discussion with the Government and presumably, therefore, on the advice of the Government? Why was this deliberate extra burden put upon industry?

Do the Government anticipate prices will rise further? Is it already possible to say on the facts already known whether the price of petrol is likely to rise again in the near future? It is generally expected that world crude oil prices will rise in the next few weeks. Can the Financial Secretary give an estimate of what the total price of petrol per gallon will be in the New Year?

With these price increases, it is extremely unfortunate that the oil companies should make extravagant and provocative increases in dividends at this particular time. Indeed, on the very day on which these price and tax increases were announced, the Shell Transport and Trading Company put its interim dividend up by 25 per cent. and its shares rose substantially on the Stock Exchange, so that shareholders had capital gains as well as increased dividends.

Mr. Nabarro

I am sure that the right hon. Gentleman would want to be fair and put the matter in its correct perspective. The Shell Group estimates that it will have to raise about £1,000 million of new capital in the next ten years. How could that capital be attracted unless there were a reasonable yield on the investment?

Mr. Gordon Walker

I think that there was a very reasonable yield on the investment before this increase in the interim dividend was made. This afternoon the Chancellor was appealing to various concerns to help absorb part of the increased costs, but he made no comment about that sort of thing which, if it goes on, will destroy the united national effort for which he is asking. He cannot merely ignore provocative actions of this sort, which take place in connection with the very commodity of which people are having to go short, and in which the companies concerned do not seem to have to bear any part of the burden which has to be borne by others.

This tax plus price increase will make a direct impact upon the economy. It will raise prices in all sorts of direct and indirect ways. Many of my hon. Friends will be eager to enlarge upon its effects upon particular industries, local authorities and special classes and categories of people, and they will certainly do so with much more expert knowledge than I command. I therefore want to make only one or two general points upon the question of its impact upon the economy. Clause 2 will have to be examined in detail in Committee; it is very difficult to discuss it until we have detailed Amendments in front of us. We shall have to see, for instance, whether the figure of one twelfth in respect of the London Transport Executive is properly arrived at, bearing in mind that it operates railways, which do not use petrol, in addition to buses.

The Chancellor was not very convincing upon the general argument of inflation. This increased duty is being put on in the context of many other simultaneous price increases. If each item is taken separately the effect can be made to look very small indeed, but the Chancellor is putting on the increase at a time when all sorts of other increases are flowing together. Has he taken into account the danger of setting up a wage-price spiral? There can be further indirect effects of his tax than those which he has mentioned, if it triggers off an extra demand for wage increases. Then the whole inflationary effect begins to enlarge and spread itself.

An increase such as this, which brings about similar increases in the price of all kinds of food and other commodities, and bears particularly hardly upon the workers, old-age pensioners, and everybody with a fixed income, must create a great pressure for wage increases, which would not otherwise arise to the same extent. That has to be added to the direct and indirect inflationary effects which the Chancellor was telling us about.

He did not mention it, but one of the consequences of the tax must be an increase in export prices. All our exports have to be carried to the ports, and the cost of every one will be affected by increased transport charges. This increase in export prices is coming at a time when there are already signs that our exports are falling off to some extent. Last September there were signs that the decline was rather worse than the expected seasonal decline. It was not a great amount, but there was some indication of that, and that was before any of the effects of the Suez crisis began to make themselves felt.

The Chancellor has made great play with the idea that the tax is a temporary one. He committed himself to an expectation that it would not last for more than four or five months.

Mr. Macmillan indicated dissent.

Mr. Gordon Walker

He used those words in some context or other in his speech. Perhaps his right hon. Friend can tell us what he meant when he said that. Even if it were a temporary tax we believe it to be a bad and wrong tax, which imposes all sorts of improper and unfair burdens. People will look upon the talk of its being a temporary tax with a rather jaundiced eye. As he said, some of our most permanent and what I may perhaps call "noble" taxes have a lineal descent from temporary expedients. Chief among them is Income Tax, in connection with which Gladstone once fought and lost a very famous Election, when he sought to abolish the tax. Entertainments Duty, Purchase Tax and many similar taxes began as temporary expedients.

The Economist is already criticising the Chancellor, although only in this one respect; he has been getting a good Press in its columns otherwise. But it criticises him for talking about this as being a temporary tax. The good Press which he has had in that publication must have been a little oasis in a desert of criticism by the rest of the economic and financial Press. All sorts of pressures will be brought to bear upon him to make it less temporary. The Chancellor has clearly said, "I mean what I say when I call it temporary." There is one way to prove that he means what he says. Will he give a clear and categorical pledge that the tax will be removed when rationing ends? When the Bill is in Committee, we shall give him the opportunity to write this clear pledge into the Bill. If he will not, doubts will spread as to whether or not it will be really temporary in the end.

The tax has been presented—not so much today, but when he first told us about it, on 4th December—as an integral part of the measures necessary to save the £. There will be general support—certainly from hon. Members on this side of the House—for all appropriate and relevant measures designed to achieve that end. Our great need is to find means of channelling our economic national resources into the essential economic activities, and cut down upon our inessential or less necessary activities. Anything short of that is not really likely to help to save the £.

We know that the Chancellor is in difficulties, because he is threatened by potential anti-planning rebels, who are more blind and hidebound even than the Suez rebels.

Mr. Lewis

They are the same people.

Mr. Gordon Walker

The Chancellor is in difficulties because there would be uproar from many of his own supporters if he took the necessary planning measures to channel our resources into the most essential economic activities. But if he wants to make an appeal to which the nation will respond he must pluck up his courage and defy these potential rebels.

Mr. Nabarro

Who are these people?

Mr. Gordon Walker

They are leery well known. I should have thought that the hon. Member for Kidderminster (Mr. Nabarro) would know at least one of them.

The Chancellor should drop his petrol tax and take proper measures to gear the economy to the needs of the nation. When we strip away all the right hon. Gentleman's metaphors and oratory, what has he done to give the country a lead in facing this very grave economic crisis? He has done only two things. He has made the rather unwise decision to beg the United States to grant a waiver of interest, and he has introduced this petrol tax, which is irrelevant, unfair and harmful to the economy. We do not regard these measures as being good enough. They do not measure up to the needs of the times. We shall, therefore, oppose the Second Reading of the Bill, and do our best to amend it and render it less harmful in Committee.

4.40 p.m.

Sir James Hutchison (Glasgow, Scotstoun)

At the expense of only five minutes of the precious time of this House I should like to refer to the position of a very old and important industry in Scotland, the Scottish shale oil industry. It has often been referred to by hon. Members on both sides of the House, but when the context was slightly different from that of today; different in the sense that the oil problem had not been pressed on us with the urgency with which we now view it, and also that it was not proposed to increase the tax.

This industry, one of the earliest oil producers in the whole world, could supply—were it not in a state of diminution and decay—about 75 per cent. to 80 per cent, of the oil requirements of the road transport in Scotland. But it is, as a matter of policy, gradually falling into decay. Some of the pits have already been closed, causing unemployment in the area, and I am afraid that process will go on unless something can be done.

I understand that the British Petroleum Company, the owners—the holding company which controls these Scottish shale pits—are prepared to spend a very considerable sum of money—perhaps about £1 million—in order to modernise the plant and so allow the industry to continue. But they will do so only if the differential in taxation which it has enjoyed is increased. At present, up to the time of the new tax, while imported oil was paying 2s. 6d., Scottish oils were paying only 1s. 3d. I want this new shilling increase not to apply, at any rate to the derv products of the Scottish oil industry.

Mr. Nabarro

I am sure that my hon. Friend does not wish to restrict what he is saying only to the products of the Scottish shale oil industry. What about the English industry, which is in exactly the same position?

Sir J. Hutchison

I agree. I would say that the extra tax should not apply to the derv products of the indigenous oil producers. That would be a great benefit to the Scottish oil industry.

It seems to me illogical that the Government should spend large sums on subsidising agriculture, or that the produce from the surface of the land should be encouraged, and that at the same time they should tax the wealth which lies under that surface. There can be no logic in the expenditure of these vast sums of money on the one hand and taxing out of existence the indigenous oil industry of Britain on the other. So hope that my right hon. Friend the Financial Secretary will be able to give some encouragement to hon. Members on both sides of the House in the matter of excepting from the tax increase the derv products of the indigenous oil producers of this country.

4.43 p.m.

Mr. John Taylor (West Lothian)

As the representative of a constituency which includes part of the Scottish shale-fields, I am glad of the unexpected support of the hon. Member for Scotstoun (Sir J. Hutchison). I should have welcomed that support last June on the Finance Bill, when, with my hon. Friend the Member for Midlothian (Mr. Pryde) I was responsible for an Amendment to exempt the shale oil industry products from taxation. I am sorry that the hon. Gentleman and his hon. Friends went into the Lobby against that Amendment. However, I am all the more pleased that he has now seen the error of his ways and is supporting this very deserving industry.

Sir J. Hutchison

The hon. Gentleman will admit that the circumstances are a little changed.

Mr. William Ross (Kilmarnock)

We shall hope to see the hon. Gentleman during the Committee stage.

Mr. Taylor

Because the circumstances have changed, there is an even stronger case for the plea I wish to make today.

The oil refineries in Midlothian and West Lothian produce oil from shale at the rate of over 19 million gallons per year. Three-quarters of this amount is high grade diesel oil and roughly a quarter is motor spirit. As the hon. Gentleman said, this is enough to keep running three-quarters of the public transport in Scotland; or it could supply the London buses for about six months of the year. Therefore, it is not an inconsiderable proportion of our oil supply and it certainly is a very important proportion at present.

Last Thursday, when the Chancellor made his statement, he said that there would be corresponding adjustments in the rate of duty for all indigenous oils. That seemed to me to be a rather ambiguous statement, and later I asked him to clarify it. I asked him whether home-produced oils which are now subject to a 1s. 3d. duty per gallon, or 50 per cent. of the 2s. 6d. tax, would be subject to the same 50 per cent. rate of the increase; in other words, would they pay 6d. a gallon additional tax instead of 1s? The Chancellor said that the same preferential margin would be maintained.

I thought then, and I consider that I was entitled so to think, that this meant that the ratio of duty for native oils would be 50 per cent of the duty on imported oils, namely, 1s. 9d. per gallon, or an increase of 6d. per gallon instead of 1s. I immediately inquired of Scottish Oils what was the position. I was informed, and the Chancellor confirmed it this afternoon, that the instructions to Scottish Oils was that the 1s. increase applied to its products just as it applied to any other oils. I was able to consult the general manager of Scottish Oils within a few hours of the Chancellor's statement, because the general manager was in London at the time.

It is interesting to note that the general manager was in London in order to consult his board and get permission to join in a joint plea to the Chancellor of the Exchequer. The plea was to be made by people representing management and workers in the industry, and was for a remission in taxation. The workers in the shale oil industry had tabled a request for a wage increase. They do not do that very often. Their wages have always lagged a long way behind those of other miners and other oil workers, and are very much lower than those of other comparable workers. It is a long time since they put in a wage claim, and now they cannot wait any longer.

The management, to do justice to it, has always been as willing and as forth-coming as the economics of the industry permitted. It wanted to make the increase, but was faced with the fact that the industry was losing money at the rate of £200,000 a year, and just could not do it. The workers' trade union asked whether the management would join in a general appeal to the Chancellor to reduce the tax on shale oil, because that was the only way to ensure the survival of the industry.

It is a strange position. The shale oil workers are a fine body of people. They have a record second to none. There has been no strike in this industry for two generations. The workers have been loyal to the industry, and are very proud of it. They have shown monumental patience, which I hope will not be rewarded by another setback. A measure of tax remission is the only hope of a future for the industry.

The workers are not producing dolls' eyes or candy-floss or anything frivolous of that nature. They are producing oil, the most valuable mineral, along with coal and uranium, that there is in the world today, and in this country at this time it is exceedingly and exceptionally valuable.

I made out this case on the Finance Bill. Today, as the hon. Member for Scotstoun said, it has additional and exceptional weight. The most miserable ten minutes I ever spent in this House was last June when I sat here listening to the then Economic Secretary telling us that he was discarding our plea on behalf of the shale oil industry. Indeed, he discarded it with almost contemptuous cynicism saying, in effect, that the industry was expendable.

The Economic Secretary saw only a comparatively small threat to the Treasury as a result of the concession, but my hon. Friend the Member for Midlothian and I saw the hoplessness of the position of the workers in the industry. We saw the plight of the men and women in the shale fields who were condemned by the hon. Gentleman's airy words at that time to the prospect of a hopeless future for their industry. It was bad policy then, but it is criminal policy today. It would be worse than prodigal folly to allow this source of oil to dry up.

In response to an interjection by my right hon. Friend the Member for East Stirlingshire (Mr. Woodburn) the Chancellor indicated that he would look carefully at the difficulty to which my right hon. Friend drew attention. On this issue the Treasury should think in terms of national need and not in terms of fiscal expediency. To exempt Scottish oils from this tax would mean an increased income for the Scottish oil industry at the rate of £610,000 a year. It would mean the salvation of the industry and would enable it not only to meet the wage claims, but also the costs of modernisation and perhaps of development which would increase the flow of oil.

The 50 per cent. reduction is not a subsidy; it is an inadequate recognition that the shale oil industry is in a special position, that the industry produces oil without pipelines, without tankers and without abortive expeditionary forces and stalemated invasions. I am pleading today for an industry which has 15,000 people engaged in it or dependent on it. It is not merely the 6d. or 1s. reduction in tax with which we are concerned; it is the fact that this reduction, if granted, would mean that the industry could survive. If the reduction is not granted it will mean that the industry may very soon disappear altogether.

There is a chance for us to develop these oil supplies of my native land, and that is what I am pleading for. The United States is now spending very large sums of money in a new exploitation of shale oil. Other countries are doing the same. Only in Britain are shale oil resources threatened. I am told that the industry is good for another twenty-five years at its present rate of extraction if given the opportunity to survive. If the Treasury adopts a realistic policy we shall have the product of that industry for another twenty-five years. As I have said, it is not only the 6d. or 1s. for which I am asking today, although that is symptomatic, but for the product of the industry for the next twenty-five years which is computed at 25 million tons of oil—500 million gallons of oil—as a minimum. That is what is at stake.

I make my plea in all sincerity. I hope that the Chancellor will concede the point, because it is impossible for any reasonable Minister, in view of the present oil shortage, to refuse such a plea. To do so would be absolutely indefensible and it would make the nation think poorly of any Chancellor who refused such a plea. Therefore, in the name not only of the decent people of my constituency and of that of my hon. Friend the Member for Midlothian, but ill the name of sanity. I ask the Chancellor not to apply the increased tax to the shale oil industry of this country.

4.56 p.m.

Sir Robert Cary (Manchester, Withington)

I am sure that the hon. Member for West Lothian (Mr. J. Taylor) will not expect me to follow him too far into the subject of the future of the shale oil industry of Scotland. He said that the workers in that industry were a very fine body of people, but of course that is nothing exceptional in Scotland.

I wish to take up a paint made by the right hon. Member for Smethwick (Mr. Gordon Walker) to the effect that it is easy for the Chancellor of the Exchequer to select a point of taxation, separated completely from its other incidences in the life of a country, and to prove conclusively that the extra duty would represent in bus fares an increase of only one-fifth of one unit in the retail price index. I think that rather falsifies the whole of the situation.

I have intervened in the debate because, as a number of hon. Members who represent constituencies in South Lancashire well know, I have for many years been a director of Lancashire United Transport which operates in the large central area of Lancashire between Bolton, Liverpool, Manchester, Warrington and Leigh. The fleet operated by that company is of average size in terms of provincial operators. It consists of 500 double-deck and single-deck buses. Many of the services operated by the company link up with services provided by other operators in the provinces which operate as far as Newcastle-upon-Tyne.

The future of Lancashire United Transport is centred upon the real need, if this tax is to be imposed, to obtain the increase permitted on all fares—I do not say the maximum increase—under Clause 2 of the Bill, at least during the temporary period of the increased tax. The Chancellor made the point in his speech that the London Transport Executive was only proposing to increase its 2½d. fare by ½d. leaving all its other fares untouched. But, of course, the cheapest short-distance fare of the London Transport Executive in the centre of London is so profitable that the Executive can well afford to carry the many services which operate beyond the centre of London, and indeed most of the poor relations that operate to the outer fringes of London. In the case of many provincial bus services that rather golden position at the centre does not apply.

If we look at the matter in terms of the area that I am privileged to represent we see that there is no golden centre like that in London where just to increase the lowest fare of 2½d. by ½d would provide sufficient remuneration to cover the whole services. Therefore, whilst the Chancellor has quite rightly said that the London Transport Executive is acting generously by the public in only increasing one of its fares, it will, I fear, be necessary for many of the large provincial bus fleets to impose increases over the general range of fares.

The suggestions that have come before my own company are that a ½d. be applied to all fares from 2d. to 11d. and 1d. applied to all fares above 11d. That would give us sufficient additional revenue with which to meet the temporary taxation; but, of course, it must not be overlooked that this tax is imposed upon what for many of these operators, is a most difficult background.

For instance, we have had to find some £30,000 a year additional revenue to meet a wage claim which has just been granted of 5s. a week in the provincial bus operating services, which includes Lancashire United Transport. That £30,000 can be absorbed within the economy of my own company; it was not sufficient to justify our going to the Commissioners and asking for a further fares increase to pay that wage demand. If in addition to that increased wage demand of £30,000 we then impose upon the economy of the company about £70,000 to £80,000 by the imposition of this tax, then we confront a company such as my own with the need to find £100,000 in cash. The advantage given to us in Clause 2 of the Bill enables that to be done; but if the Chancellor of the Exchequer finds that we apply that provision to the fares over the whole of our range by ½d., do not let him think that we shall be ungenerous to the general public because we do not follow the exact example of London Transport.

May I say one other thing to the Chancellor? He laid great stress today on the fact that this tax is to be temporary. I would ask, why not make it temporary in the terms of House of Commons authorisation and why not subject it to six months' Parliamentary revision. Let this tax then be brought back here to be confirmed. I think that that is important because, as was made clear by the hon. Member for Salford, West (Mr. Royle), when he interrupted the Chancellor during his speech, this tax will become, if we are not careful, a burden on the community, and it is important not to confuse this purely temporary measure with the perfectly legitimate applications which are now before the Traffic Commissioners to revise fares in order to meet wage claims.

Mr. William Shepherd (Cheadle)

If the Chancellor is generous enough to say that he will remove this tax after six months' duration, will the bus company directors also give an undertaking that they will remove the increase in the fares that they put on?

Sir R. Cary

Most certainly. I can give my hon. Friend that assurance; but it is important to bear in mind the background against which this temporary tax is being imposed. Many bus services throughout the country have already fare structure claims before the Traffic Commissioners, and if certain wages demands are to be acknowledged in the future those claims must be made permanent by reform in the structure of fares throughout the country.

Mr. Harold Wilson (Huyton)

The hon. Member is making a very important point about providing legislative sanction to the suggestion that this tax should be for only a limited period. Since we on this side of the House, if by any mischance this Bill gets a Second Reading tonight, are thinking of putting down an Amendment in those terms, can we have an assurance from the hon. Gentleman that he will go into the Division Lobby with us in support of that Amendment?

Sir R. Cary

May I say to the right hon. Gentleman that I will give it my consideration. But I would, in passing, say that I am completely free in giving him that limited assurance because I have never been aware that in the ranks of my own party I am at any time subjected to undue or unfair pressure as to the way in which I should act on any particular occasion. [An HON. MEMBER: "What about Suez?"] Nevertheless, it is psychologically important, if the Chancellor wishes to make a case to the public that this Measure is purely temporary, not to look at it in terms of an additional tax at all.

I look upon this tax as a form of surcharge to meet an emergency, and I should like to see it dealt with in a less permanent form by subjecting it to Parliamentary review at an extremely short interval. Let us hope that the Chancellor's optimism is justified and that within six months this tax will be unnecessary.

Hon. Members

Four or five months.

Mr. Nabarro

The Chancellor did not say that.

Sir R. Cary

He implied that perhaps in six months' time we might come to a point where the oil position is so much better that the continuance of a tax such as this would become completely null and void.

May I briefly refer to one other matter about which we heard a lot at Question Time and about which we shall perhaps hear a certain amount in the debate which follows. It has some relationship to this Bill. I have myself had representations from the Manchester and Salford Taxi-Cab Drivers' Association, which feels most strongly that an unintentional act of unfairness has been committed by the Ministry of Fuel and Power—[An HON. MEMBER: "Unintentional?"] I think that at this early stage we should give the Minister concerned the benefit of the doubt—by giving the London taxi driver a far bigger allocation than his provincial brother in Manchester, Liverpool, Glasgow, Leeds and elsewhere—all the taxi-cab services beyond the frontiers of London.

I do not know why there should be the assumption, which the Minister of Fuel and Power implied in answer to Questions today, that the London taxi-cab driver had greater work and greater business. I feel that the taxi-cab drivers of Manchester, or Birmingham or Glasgow have just as much business to discharge and that there are as many fares waiting for cabs at stations and in the streets.

Mr. Deputy-Speaker (Sir Charles MacAndrew)

I think that the hon. Gentleman is going rather beyond the Bill.

Sir R. Cary

I beg your pardon, Mr. Deputy-Speaker, but I cannot, in view of the fact that a deputation waited upon me in the Lobby the other day, avoid trying at this stage to make a plea for provincial taxi-cab drivers.

May I say in parenthesis that I see that a correspondent in the Sunday Times yesterday described taxi drivers as That philosophical, mufflered, seen-from-the-back band of men, the London taxi-drivers …"—

Mr. Deputy-Speaker

Putting it in parenthesis does not put it in order.

Sir R. Cary

I could not but try to put it in brackets. Nevertheless, perhaps that aspect could be elaborated on some other occasion.

There is one final point which I should like to make. I know that there are many other hon. Members who want to speak and that there is not much time, as we hope to get the Second Reading of this Bill by 7 o'clock. This Bill does imply many things to the whole of the country, when we think that our economic need, once so strong and so permanently based purely upon coal, is now based upon coal and oil—we have to import both and we cannot get enough of either—and the economy of our country has become the prisoner equally of the coal factor of the Eastern American seaboard and of the sheiks of the Persian Gulf.

That is raising an immense challenge to us. It is the fundamental issue—and this modest and moderate Bill implies it—and fundamental challenge of our time, when the leadership of our country must be devoted to making this country richer. If we do not succeed in meeting this coal-oil challenge, which is fundamental to our country, it will be idle for a great newspaper like the Daily Mail to publish an article tomorrow asking whether this country has become a second-rate country. Leadership must be devoted slavishly to making this country richer by sustaining those elements within our economy, even though they may mean sacrifice, which do make us richer, and taking national resources and money away from those things which are not quite so important.

This matter is so fundamental to both sides of the House of Commons that it would almost require the work of a Council of State to discharge it adequately. Certainly we cannot do it in terms of the separation which we have seen between the parties in this House in recent debates. This is a matter on a high level, and of great national purpose. Side by side with this challenge is the poisonous challenge of creeping inflation. Some hon. Members may recall that moment in 1940 when Members of the House of Commons wondered how we were to pay for the war. We invited the late Lord Keynes to address us in Committee Room 10. He surprised us a little by saying, "Do not be frightened of inflation. We can have a controlled inflation." It seemed rather like saying that we could have a controlled runaway horse.

Look at the inflation which even this small Bill represents to our economy. Let us not underestimate the dangers. Lord Keynes said one other thing in that Committee Room which rather shocked all hon. Members, drawn from both sides of the House. He said, "Do not be frightened of inflation. It is the finest debt payer in the world." An economy which attempts to pay its debts by the poisonous method of inflation will most assuredly fail. What we have to do is to assist our economy so that inflation can be taken out of it and we may thereby reach new levels of prosperity by which our people will be assisted and sustained.

5.14 p.m.

Mr. Roderic Bowen (Cardigan)

I agree with what the hon. Member for Withington (Sir R. Cary) has just been saying. While it is true that a united effort is needed if we are to increase substantially our economic wealth, that is not likely to be achieved by increases in taxation, particularly of this commodity, which is already heavily overtaxed.

I was not impressed by the Chancellor's financial and economic arguments in favour of the Bill. Whatever financial and economic advantages may be gained by the Bill, I should have thought that they were more than counterbalanced by obvious economic disadvantages. I do not want to go into that point in detail, however, particularly as several hon. Members have already referred to them.

This increase will mean wage claims. It will increase the cost of exports and mop up purchasing power, and it will affect a large number of people who have not much purchasing power to be mopped up. The only possible justification for the Bill is that there is a serious shortage of oil and that the increased duty is needed to reinforce our rationing system. I hope that at a later stage of the debate we may be given details of the actual oil position and the argument for reinforcing the rationing system with rationing by price. If it is felt that the rationing system needs reinforcing—I concede straight away that the Bill will do quite a substantial amount of reinforcing of the rationing by coupons—that is the only valid argument in favour of the Measure.

Reference has been made to the difficulties of provincial bus operators as compared with London. The position of bus operators in rural areas is even more difficult. All the aggravation which was complained of, quite properly, in relation to the provincial bus operator is present in a keener form in scattered rural areas. The Chancellor gave us the overall effect of this Measure upon such things as bus fares and distribution costs, but he did not tell us that the incidence of this increased duty will be uneven on different sections of the community. The increase will fall particularly hardly upon rural areas, and will bring about unavoidably something like an increase of one-eighth as distinct from one-twelfth.

It will affect people who have to travel long distances. I am not talking now about those who pay fares of 2½d. or 3d., but of those who already pay very heavy fares indeed. The proposed increases will make an appreciable demand upon their pockets. It will aggravate the very serious position of many rural bus services. For example, within the last few weeks in my area bus services which have been operating for twenty-five years have been abandoned. I am not saying that this is a prime effect of the Bill, but the Bill will be an added argument for abandoning rural bus services and will aggravate the present position.

The increase will fall heavily upon the small farmer who lives in an area where there has been no electrification, and who operates a small petrol engine and uses petrol in one form or another because he has no electric power at his command. It will hit the small farmer because he, more than the big farmer, has to depend on the tractor, which uses fuel that does not come within the provisions of the Bill.

When trying to calculate the hardship which will be imposed by this Measure, I urge the Chancellor to bear in mind that it will fall unevenly and particularly harshly upon persons who, perhaps, are less able to meet it than the community as a whole. For that reason and others I join hon. Members in asking the Chancellor to be more specific about its temporary aspect than he has been. The proviso in Clause 1 is an indication that it is intended to be of a temporary nature, but there is nothing specific or concrete limiting its operation.

Whether looked at from a financial aspect or from the point of view of strengthening the rationing system, it would appear that the Chancellor should be able to give an indication that the duty will be reduced to 2s. 6d., at least at the time when the rationing system is done away with. In fact, all the argument is in favour of it being done away with earlier; there is certainly no argument for abolishing the rationing system and continuing with the duty. If there is an argument for not doing both at the same time, I believe that it is in favour of reducing the duty first.

Mr. Nabarro

Does that mean that if at some future date the ration of petrol were increased the duty should be commensurately decreased?

Mr. Bowen

I would say, yes. The need for the duty would certainly be less. I hope that we are not moving into a period in which there will be any necessity to juggle one way or the other. I should like a straightforward undertaking from the Chancellor that as soon as the ration is ended this duty will be reduced at the same time. I should like to see a specific requirement put in the Bill that it will end in six months' time. Whatever limitations on his actions the hon. Member for Withington (Sir R. Cary) may feel to exist, I can give an assurance that if an Amendment were moved in Committee to that effect it would certainly receive my support.

I do not see what the Chancellor of the Exchequer would be giving away if he did as I suggest. It would show quite clearly that when he talks of this being a temporary Measure, he means it. If, for any reason, the period should be sligthly longer than he at present hopes, there is no reason why he should not have to come back to the House to obtain further sanction for an extended period for a duty which I believe every one of us—whatever our political complexions—must regard at the best as a most unfortunate necessity.

5.24 p.m.

Captain M. Hewitson (Hull, West)

I should like to bring the House back to a consideration of the effects of this extra tax on industry and wages, apart from its effects on transport.

The hon. Member for Withington (Sir R. Cary) said that he would like to see leadership slavishly devoted to making this country richer. I suggest that he is sitting on the wrong side of the House. If that statement were made by an opponent in his constituency and his opponent put forward the ideas of controls, fair shares for all, and making people pay who can really afford to pay, the hon. Member would be the very first to oppose him. I suggest that before making such statements, in what was an amazing peroration to a speech which up to that point had been reasonable, he should think the matter over.

I wish to bring to the notice of the Chancellor the effect of this tax on light hydrocarbon oils used in industry, especially in the paint industry and in the manufacture of linoleum. My constituency is in Hull, which is the largest paint manufacturing area in the country outside London. In Hull we are afraid of the effects this tax will have on industry. The Chancellor said that he hoped industry would be able to absorb costs for the time being. That may be possible in transport, it may be possible in ordinary petrol rationing, but it will be utterly impossible in industry itself.

The paint industry is not having an easy time. Its margins are very small and contracts overseas and in this country sometimes rely upon 1d. per article on a contract price. The extra 1s. per gallon will mean to the manufacturer in the paint industry that prices will have to be increased. If industry generally consuming paint takes the advice of the Chancellor and absorbs the cost for the time being, the easy way—especially on the sort of understanding that has been given that this is for only two, three, four, five, or six months—to cushion it will be for people to cancel contracts. That would mean further unemployment in the paint industry.

Unemployment in the City of Hull is four times the national average. That has been so since the end of the war. We are rebuilding where we can, but if we have to face further redundancy through the application of this tax, conditions will be very difficult for those who can least afford to bear the cost. If the paint industry has to increase its costs, that will mean increased costs at the production lines for every industry. I am not speaking now of foodstuffs, so I hope no one will ask if we are going to eat paint, but it will mean increased costs for everything else we consume—containers, machinery, and commodities for export, all of which require paint.

With our export costs already cut to a minimum, any increase means greater difficulty in our export markets. It is sometimes said that our greatest competitor in Europe is Western Germany. That, undoubtedly, is so, but the fact remains that those industries in Western Germany that use the light hydrocarbon oils are exempt from any tax on them whatsoever. In this country, the Chancellor is asking the industries which use those oils to pay on them a duty of 3s. 6d. a gallon.

Mr. Shepherd

But there is a drawback in operation, which surely must be considered when dealing with the question of export capacity.

Captain Hewitson

I am glad that the hon. Member has mentioned the drawback. The drawback can be obtained only on the bulk export of paint. It can be obtained if the manufacturer who uses paint will estimate the amount of white spirit tax content in the paint on the commodity which he is making. As has, I think, been quoted in this House before, one firm made such a claim a few years ago, and it is estimated that it cost £31,000 to get a drawback of £27,000. Therefore, the argument about drawback is nonsensical. But I fear that I am drifting from my main argument, and will leave drawback for another occasion.

The increased charges will create difficulty for other exporting industries. The fact that workers will have to pay more in travelling expenses, and that prices of other commodities will rise as a result of the duty, will mean that industry, once again, will be inundated with wage claims from the lower paid workers. As a result, the plan to make this merely a temporary charge just will not work, for, if wages are increased over that period because of the extra charges resulting from this additional duty, the duty may be lifted, but wages will not go down again. No industry dare suggest a penny a week reduction in wages. To do so would be to throw the country into an industrial dispute such as we have never before seen in modern times.

Therefore, between now and the Committee stage, the Chancellor should look again at the problem—and I think that it could be separated—of the application of this duty to light hydrocarbon oils; that is, the white spirit used in various sections of industry.

The linoleum industry has built up a steady export business in recent years, but it has had a hard struggle to make ends meet. In Scotland and England it has been attempting to give a fair show to the workpeople, and the workpeople have pulled hard with the employers to build up an export market against severe competition from other countries. Even a slight increase in the cost of this product can diminish that export market. We do not want to see that. We want to build our export markets so that we can, at least, assure work for all in the factories.

To exclude light hydrocarbon oils as I suggest could be done quite simply by an Amendment in Committee. When the duty on white spirit was first imposed, it was stated to be merely a temporary imposition which would be rectified at some other period. It has never been rectified. I imagine that every Chancellor since the end of the war has received a delegation in this subject. Amendments have been proposed to every Finance Bill since the end of the war, and pleas have been made, from both sides, for exemption for white spirit. This is a matter on which sensible action is called for. The Chancellor could either introduce an Amendment in Committee, or make a statement tonight, based upon the power he has said he has of being able to abolish the duty by Order. Let him state that after the Bill goes through he will, by an Order, abolish this duty, even if he is not in favour of amending the Bill in Committee.

Let me again point out our fears in Hull. We have not yet rebuilt the industries which were devastated during the war. We are doing our best, but our unemployment level, as I have said before, is four times as great as that of the national average, and we cannot stand any more. We are asking for help for our paint industry in Hull. By giving that help, the Chancellor will be helping the whole of the paint industry. By reducing or abolishing the white spirit duty, he would be helping not only the paint industry, but all those industries which consume white spirit. That would ease the position and really help our export effort.

5.38 p.m.

Mr. William Shepherd (Cheadle)

I am sure that my hon. Friends will be sorry to hear that the average of unemployment in Hull is four times as great as the national average. I confess that I was unaware of this, and I hope that we shall be able to do something to help those people. I know them to be very good people, and it is most regrettable that they should have this relatively high degree of unemployment in Hull.

I interrupted the hon. and gallant Member for Hull, West (Captain Hewitson) to draw attention to the drawback, which is a relevant factor when one is talking about paint. Nevertheless, I feel that those industries which are using a material which is a vehicle for taxation are in a very difficult position indeed. They are in a particularly difficult position if the final product does not indicate that they are using that vehicle. For instance, everyone knows that if the duty on tobacco goes up so does the price of cigarettes, but in the case of polishes, paints and linoleum, the relevance of the increased price to the increased duty is not very clear. If my right hon. Friend could consider any separation in that respect, I, for one, would be very pleased.

When this duty was first mentioned in the House I questioned the Chancellor about its temporary nature. I still do, although, paradoxically, I think that its only justification would be if it were long-term. It may well be that, in the present state of our economic affairs, we shall not be able to afford, in the long term, the consumption of fuel at the rate at which we have been maintaining it for other than necessary purposes. But, if that is to be the situation, it cannot be dealt with in this Bill. We cannot talk about the Bill as a source of restraining demand. As hon. Gentlemen opposite have very properly said, a rationing system does, on the whole, result in the full use of the product up to the coupon issue.

The way in which it can have a liimted and marginal effect is this: an increase in prices may persuade some people not to license their cars for a given period in which they might otherwise have done so. That is the sole and limited extent to which one can reduce consumption by a coupon issue, by attempting to bolster it by increasing the rate of duty. I repeat that I believe there may be a case as a matter of long-term policy, but not a case for running these two things together now.

I am very loath to vote for this increase, because I do not consider it wise in any circumstances. I realise the need to bolster the £, though I cannot deal with the broader issues in this debate. It may well be that we are attempting, for example, to bolster transferable sterling to an extent which is not compatible with our economic well-being; but, as I say, I cannot deal with that argument now. I am satisfied that this increase in duty is not likely to improve our economy at this juncture.

First, I do not believe that there is any real necessity for it, expressed in terms of revenue. Secondly, I do not believe that the danger facing the country as a consequence of the Egyptian intervention is a danger of inflation. By and large, the tendency during the next three or four months, will, I believe, be deflationary in character. I do not therefore believe that my right hon. Friend is facing an emergency in terms of revenue or of inflationary pressure. Those two things would have justified a Measure such as this, but they are not, in my view, present dangers confronting us now.

There are dangers in increasing the duty. All the pressures to which the economy is subjected are partly psychological and partly economic. There are times when psychological pressures are very much more important than the economic ones, and at this time the psychological pressures are considerable. I believe that to try to raise the duty on fuel, with all the effects the move will have throughout the entire range of industry today, is most unwise.

As the hon. and gallant Member for Hull, West said, if one puts wages up, one cannot put them down again. All our energies ought to be bent to stopping any increase in costs; all the psychological pressure we can exert ought to be devoted towards preventing any increase in costs which might, in three, six or nine months, react against our exports. I do not consider that what the Government are now doing is designed to bring about the minimising of cost increases which I regard as essential.

I hope that my right hon. Friend will bear in mind what some of us on this side of the House are thinking. Many people will be forced, of necessity, to put up their prices as a result of this tax. Both the small and the big bus companies will be compelled to do so. People take notice of increases in fares; they take a small increase in fares and assume from that that there is a rather larger increase in the cost of living than is justified by that increase, and from that one gets a growing spiral of increases in costs resulting in wage demands.

I believe that this action is not economically justified, because it will result in a demand for increased wages and it is not strictly necessary in terms either of revenue or a need to combat increased inflationary pressure. Further, I believe that we may well be trying to do too much in support of the £. We ought not to subject our people to so much pressure in order, shall I say, to maintain the present rate of transferable sterling. We must look much more deeply into the ways by which we may avoid pressures upon our people at present which they cannot readily bear.

I am sorry to have to condemn in such forthright terms the proposal of the Chancellor. I believe that the psychological influences are supremely important just now, and that all our endeavours ought to be directed towards keeping down costs. The effect of this proposal will, in my view, be to stimulate costs and I therefore regret that my right hon. Friend has found it necessary to introduce it.

5.46 p.m.

Mr. Frank McLeavy (Bradford, East)

What the hon. Gentleman the Member for Cheadle (Mr. Shepherd) has just said will, I think, meet with general agreement throughout the House. I regard the decisions of the Chancellor to introduce this additional tax upon petrol and fuel oil as a profound mistake.

This is not an occasion when the Chancellor finds himself in a budgetary difficulty. The Chancellor is determined to maintain the estimated tax yield of £340 million from this particular section of tax revenue. If we take his figures, he estimates that without the 1s. increase he will lose, for the remaining months of the present financial year, some £30 million. Quite frankly, I consider that it would be far better for the Chancellor to lose the £30 million in estimated taxation for the next four months than cause difficulty to industry by imposing this additional temporary tax.

If the Chancellor insists upon keeping the balance of his Budget and recouping the £30 million, then, in fairness to the users of petrol and oil, he ought to have considered whether the scope of the tax might be broadened. As the Financial Secretary to the Treasury knows, it is only the road transport industry which, by and large, pays any tax at all upon oil or petrol. Certainly, there is a very large section of industry which pays no tax upon the oil it uses. If the Chancellor felt, in the last resort, that he had to recoup this £30 million, it would have been far more reasonable, in my view, if he had said that he would spread it over the larger group comprising all those consuming the product. I am sure that had he decided to extend the taxation, even in a limited degree, to those industries which already enjoy exemption, he would have been doing something far more profitable than the proposals which are now before us.

It seems to me that the Chancellor is not concerned about the equity of this tax. All that he is concerned with is raising the necessary £30 million during the next four months. The hon. Member for Cheadle referred to this and seemed to imply that the Suez problem was the cause of our economic difficulties. What we have to do is to get our facts clear upon the whole economic position. The economic crisis was on our doorstep before the problem of Suez arose. The grave problem now confronting the nation, therefore, stems not from Suez, but from our whole economic position.

I want to deal specifically with the two sections of the transport industry which are affected by the proposed increase in tax. In the road haulage section, we find that the Transport Commission is to increase its charges by 7½ per cent. and the private sector proposes an increase of 10 per cent. I am quite sure that these two increases in the costs of road haulage will represent an increase in the cost of transportation of goods which will be detrimental to our ability to maintain the existing price levels of our commodities in the export and home markets. When we bear in mind the effects of these 7½ and 10 per cent. increases in the cost in transport and consider that all kind of amounts will be added in consequence throughout industry, it is clear that the cost of our commodities in the export and home markets will be materially increased.

In the passenger section, the outlook is even more serious. Most of the municipal undertakings are already carrying a heavy debt and finding it extremely difficult to balance their budgets. They are being authorised to increase their fares to recoup the additional taxation. This will be an extra tax upon the travelling public, who in turn will expect an increase in wages to meet the additional cost. No one denies that the increase in bus fares will reflect itself in the living standards of our people, who will be demanding wage increases as a consequence.

It is unreasonable for the Chancellor to introduce this increased taxation at a time when it is essential to try to keep the cost of living stable. In spite of the provisions that the Chancellor is including in the Bill, the effect upon the bus companies and the municipal undertakings may well mean that the continuation of many of the services of an unprofitable nature, in country areas and the like, will have to be seriously reconsidered.

Passenger transport undertakings cannot afford to bear the heavy burden of taxation which is placed upon them by Chancellors of the Exchequer of successive Governments. A double-deck omnibus, for example, has to bear tax amounting to about £85 a year, according to its seating capacity, which, together with the tax of 3s. 6d. a gallon on fuel oil, represents a terrific factor in mileage costs. The fuel oil tax at 2s. 6d. a gallon has been estimated to cost the bus undertakings an average of about 3d. per mile. It is clear, therefore, that in view of the various items of expenditure confronting the transport industry, this tax will cause considerable difficulty.

I appeal to the Financial Secretary to put before the Chancellor the suggestion that, first, he should consider whether, if the tax has to be applied, the £30 million should not be spread over the wider range of consumers of petrol and fuel oil; and, secondly, he should consider limiting the period of operation of the extra tax, so that Parliament can have an opportunity to consider whether its continuation is justified. This is an unfortunate decision by the Chancellor and I hope that he will reconsider it and decide to withdraw the Bill.

5.58 p.m.

Mr. John Arbuthnot (Dover)

The hon. Member for Bradford, East (Mr. McLeavy) is always listened to with respect when he talks about transport matters. However, I am sure he will forgive me if I do not follow the theme of his remarks. There is one matter on which Members on all sides will be in full agreement, and that is in welcoming the statement by my right hon. Friend the Chancellor of the Exchequer that this unwelcome additional imposition will be of a temporary nature. We welcome still further my right hon. Friend's suggestion of its probable duration. When it was suggested that an appeal for permission to raise bus fares might require a period of four or five months, my right hon. Friend expressed the hope that this additional imposition would, by that time, be over.

I want to take up a remark which the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) made in his speech. I think he will not disagree with me when I suggest that the line of argument which he was following was that if there was rationing it was a mistake to follow it with additional taxation. I believe that fiscal policy and a rationing policy should go hand in hand, each one helping the other, each bolstering the other and making the other easier.

The right hon. Gentleman attacked the Chancellor of the Exchequer for his mixing of metaphors. I notice a magnificent one which the right hon. Gentleman the Member for Smethwick himself produced about "triggering off a demand."

Mr. Gordon Walker

What was it?

Mr. Arbuthnot

"Triggering off a demand."

Mr. Gordon Walker

Oh.

Mr. Arbuthnot

I suggest to the right hon. Gentleman that he cannot really afford to attack my right hon. Friend for his mixed metaphors.

There is an aspect of this additional tax that may, perhaps, have escaped my right hon. Friend, and that is the way in which it impinges upon some small factories which have recently switched to oil burning. There is one example which was brought to my notice the other day. I cite it because I think it is typical of many others. This factory switched to oil burning as a result of a recommendation by the Government-sponsored Fuel Efficiency Committee. The factory was turned over to oil firing, using medium black oil of 960 degrees. To do so, the management had to obtain a loan. The loan was obtained in May, 1955—

Mr. Nabarro

Is my hon. Friend perfectly sure that the fuel oil he is talking about for a factory's use, for heating or processing, is subject to this duty?

Mr. Arbuthnot

I understand so. The matter was raised with me by the firm concerned just recently. If my right hon. Friend can assure me that the duty does not apply, I shall be extremely glad to hear that. [HON. MEMBERS: "It does not."] The cost of this oil has gone up since April of this year, when it was 10⅝d. per gallon, to 11⅝d. per gallon in November, and just now, in this month, by an additional 3½d.

Mr. Nabarro

With great respect to my hon. Friend, I think he is confusing this issue. There have been increases in the costs of the fuel oil to which he is referring, but not on account of additional duty. There have been additional costs of fuel, and additional costs of distribution, but the additional cost he is talking about has no relevance whatever to the increase in the duty under this Bill.

Mr. Arbuthnot

If that is so I hope my right hon. Friend will be able to clear the matter up when he replies to the debate.

6.4 p.m.

Mr. A. E. Oram (East Ham, South)

I am sure that the hon. Member for Dover (Mr. Arbuthnot) will not expect me to follow him in his argument, since I think that his premature resumption of his seat was an indication that he was a little off the mark. Instead, I would invite the House to consider the Bill from the point of view of an industry which has not been much touched upon in the debate, namely, the distributive trade. I invite the House to consider the effect that this increased tax will have in increasing the costs of transport of essential consumer goods and services.

It may be helpful to the House if I try to bring to bear on this subject the experience of a large co-operative society in the south of England with the affairs of which I happen to be familiar. It is a society which includes in its services the distribution of milk, bread, groceries, meat, coal, laundry, furniture and other essential consumer goods. Its area includes a number of large towns and a wide stretch of countryside. It seems to me, therefore, to provide a useful example to consider. It is, so to speak, a miniature of the problem which the whole country is facing in seeking to maintain essential consumer services in the difficult situation in which we find ourselves.

I want to make one main argument about the tax and to give two or three practical illustrations of it. My argument is that this tax can only run counter to the plans which the Minister of Fuel and Power and the Minister of Transport and Civil Aviation are no doubt making to see that the available petrol is used most in the most essential services. This tax runs counter to any sensible schemes which, one hopes, they are devising.

The Minister of Transport and Civil Aviation, for instance, last Wednesday told my hon. Friend, the Member for Shoreditch and Finsbury (Mr. Collins) the criteria which he was suggesting to his regional commissioners as the basis for deciding whether or not to issue supplementary rations of petrol. I have studied those criteria, and I find them in the main commendable. For instance, the right hon. Gentleman assures us that such services as the bulk movement of essential foods will be treated generously by his regional commissioners. His statement included the Retail delivery of:

1. (a) milk
2. (b) other basic foods in rural areas or areas far from shops."—[OFFICIAL REPORT, 5th December, 1956; Vol. 561, c. 1225.]

The delivery of house coal is another category which the right hon. Gentleman mentions in his instructions to his regional commissioners. They are all very commendable and to a large extent fairly obvious instances.

The folly of this Bill is that the more essential services are considered to be, and, therefore, the more petrol that will be allocated to them under the rationing scheme, the more tax those services will be called upon to bear. Surely that is the reverse of justice and the reverse of common sense? It seems to me that the Chancellor is running completely counter to the efforts which his right hon. Friends are trying to make.

I will mention one or two examples. Let us consider the bulk movement of essential foods. I am certain that the assurance which the Minister gave last Wednesday, that this would be generously treated, will be very comforting to the dairy manager of the co-operative society to which I have referred. He has, I know, and quite rightly, been disturbed by the effect upon one of his lorries which has regularly been doing 900 miles a week and using 81 gallons of petrol delivering milk in bulk. Under the ration there will be only 12 gallons for that vehicle.

I have no doubt that there will be a generous supplement to those 12 gallons, but the effect of the Bill is to say that if an added supplement is allowed there will be an increased tax, and that journey to which I have referred will cost the dairy manager's department at least another £4 a week as a result of the tax which the Bill will bring about. In fact this tax which is called a tax on petrol will be a tax on food. In the instance which I have given, it is a tax on milk. In other instances to which I shall refer it will he a tax on bread.

I take as a second example the delivery of house coal, which is again in the category that we are assured will be generously treated. Here is an absolutely essential service. We cannot expect people to get their coal by any other means than having it delivered to their homes, but in the case of a lorry which I have investigated the effect of the tax will be to add another £1 4s. to the weekly cost of the vehicle, which is at present £12 10s. That is an additional impost on a service which the Government admit to be an absolutely essential and unavoidable one.

Mr. Lewis

Surely my hon. Friend will admit that, generous as we know it to be, the co-operative society will not carry the extra cost but will pass it on, and the poor old-age pensioners will eventually pay it.

Mr. Oram

That is the point that I wish to emphasise. These are costs which any distributor, co-operative or private, must inevitably pass on to the consumer. It is always the consumer who pays these increased costs, and although I am using a co-operative society as my example, the problem which confronts that concern is one which faces all retailers, be they private or co-operative, and it is the consumers of all categories who, in the long run, will have to pay these additional costs.

Another category of service which, it seems to me, will suffer particularly under the Bill is the distribution of goods in rural areas. That I know to be a particularly expensive service, and here there is a distinction between co-operative service and private trade service. It is certainly true of the society to which I am referring. One often finds that the rural areas are served almost exclusively by the co-operative societies. The private trade is content to leave these more expensive runs to them. The effect of the tax is that those traders who are prepared, as is the Co-operative movement, to put service before profit and to undertake what is almost a social service in taking goods to rural areas, will now be compelled to pay an extra 1s. a gallon for the privilege of doing so.

It seems to me that whenever there is a shortage of any commodity—and this debate arises out of the shortage of petrol—there is one principle which should be paramount, that is, the principle of fair shares. This is not a question only of fair shares in terms of physical quantities. It is also a question of fair shares in terms of the financial burden that has to be shouldered. We shall be discussing later whether the physical quantities of petrol will be fairly shared as a result of what the Government are doing, but I suggest that the Bill has the effect of making sure that the financial burden is not fairly shared. I have tried to show that those services which the Government themselves recognise to be most essential are the ones that are most likely to carry an unfair burden.

6.15 p.m.

Mr. Frederic Harris (Croydon, North-West)

I hope that the hon. Member for East Ham, South (Mr. Oram) will forgive me if I do not comment fully on his argument. Time is pressing and I will not take the time of the House in so doing, but I want to join with my hon. Friend the Member for Cheadle (Mr. Shepherd) in his criticism of this burden. Both when he announced it, and again today when he opened the debate, my right hon. Friend the Chancellor of the Exchequer tended to play down the incidence of this tax. That was very disturbing. Over the last nine years we have heard every Chancellor of the Exchequer, when increasing the duty on petrol, rather play down its effect. I have never agreed with any of them on that point.

If the Bill could have been justified at all, it could have been justified only on two possibilities. The first is that there was an increase in revenue which had to be obtained. I do not honestly feel that a case has been made out for that at all. No case has been made out that it is essential to raise more revenue at this psychological moment. Secondly, the increase in duty could be justified only if it was necessary to say that by putting up the price a further cut in consumption would be secured. We know that rationing is supposed to do that by itself. In any event, I would agree with the hon. Member for East Ham, South that it would be grossly unfair if that were achieved by raising the price and putting it out of reach of certain members of the public.

The Chancellor made a strong reference to the effect that the tax will be of only a temporary nature, and so have many hon. Members. Unfortunately, many of us have realised over a period of years that when a tax of this kind is brought in and reference is made to its being temporary, the tax eventually becomes considerably permanent and it becomes difficult to have it removed. It is much easier to have a tax imposed than to have it taken off. Therefore, I am suspicious of this reference to a temporary tax.

In any case, if it is temporary, can we not have something definitely inserted in the Bill to say in what way it will be temporary? What is the Chancellor's view? Is it that when rationing ceases, this further burden of taxation will be removed? What does he mean by temporary? The Chancellor made a general reference to the possibility of five months or a period near to that. I concede that the Chancellor was possibly guessing, but nevertheless that period has been mentioned.

The Financial Secretary, in winding up the debate, ought to be a little more specific for the benefit of all of us and tell us what that reference may have meant. I should like to obtain from the Government their view of what is meant by "temporary", so that we have some sort of undertaking that this unfortunate burden will be removed in due course. On every occasion when the petrol duty has been increased, whether by the Socialists or by my own Government, I have personally opposed it.

Mr. Lewis

To the extent of voting against it?

Mr. Harris

If it is a choice between abstaining or voting against the Government and the alternative that one day the Socialists will come into power, I am prepared to put up with a bad bargain rather than have the worst of all possible worlds.

Mr. David Jones (The Hartlepools)

The hon. Gentleman did not oppose it.

Mr. Harris

Yes, I have spoken strongly. Hon. Gentlemen opposite know only too well that one vote on a matter of this kind will not achieve anything.

Mr. Jones

Salve your conscience.

Mr. Harris

If all hon. Members acted only according to their consciences, this House would be a better place. I, as an individual back bencher, have brought all pressure I can to bear on the Treasury, including putting my view clearly to the Patronage Secretary on this matter—[Interruption.] Yes, I have conveyed clearly that I am always against an increase in the tax on petrol.

I say that because, when extra tax is imposed on petrol, it affects the cost of every service enjoyed by the public and almost every item we have to purchase. That is the effect of such an increase, and it does not matter whether the incidence of the tax is direct or indirect. The tragedy is that such increased costs are never levelled off at the actual increased cost of the petrol tax itself; it must always be rounded off at a level figure, and that invariably means a slight extra charge on the incidence of the tax itself.

Furthermore, I cannot see why we are involving our country and our people in such a shocking disruption at the moment. Much of the resulting effect of this tax, from a Revenue point of view, is counter- balanced by lesser returns from other methods of taxation, as my hon. Friend the Member for Kidderminster (Mr. Nabarro) said. To me it seems a most unsatisfactory procedure.

Once again the Treasury has decided that it wants some extra Revenue. Unhappily the Chancellor and the Financial Secretary have, within reason, accepted its arguments. I should like more courage shown on these occasions, because it is bad if the Treasury decides in every instance what is right for the public.

Mr. D. Jones

Vote against it.

Mr. Harris

I feel strongly that this is a bad step, and that the Government have under-estimated the feeling of our people against this imposition. It was not helped when, as I have been told, over television one night the Minister of Fuel and Power conveyed the impression that there would not be an increase in the price of petrol, yet the next day there was this imposition. That did not encourage any of my constituents and I have had many letters to that effect.

Therefore, although hon. Gentleman opposite can laugh and jeer at a person like myself registering my protest on this occasion, I can say sincerely that on every occasion I have tried to the best of my ability to oppose any increase in petrol tax, and I cannot see the justification in this instance for the country suffering once again.

6.23 p.m.

Mr. Douglas Houghton (Sowerby)

It rather looks as if there is fresh trouble brewing for Her Majesty's Government. The strangest feature of this debate is that we have heard so little in support of the Bill now before the House. We listened to the Chancellor of the Exchequer, who, I thought, was very unsure of himself when he was trying to explain the reasons for this new imposition of taxation. In fact, I think it would not be uncharitable to say that the right hon. Gentleman uttered a stream of lame excuses and then left the Chamber, and we have not seen him since.

The hon. Member for Croydon, North-West (Mr. F. Harris) and his hon. Friend the Member for Cheadle (Mr. Shepherd) were the only two hon. Gentlemen on that side of the House who attempted to examine the merits of the Bill, and both of them have come down against it. That is most significant, and it is obvious that the hearts of hon. Gentlemen opposite are not in this Bill, and small wonder.

The first thing which they, in company with my hon. and right hon. Friends on this side of the House, want to know is how temporary is "temporary". We all know what bad things can be done on the ground that they will be temporary. The intervention in Suez was one of them, and fiscal history is strewn with promises that new or additional taxation will be only temporary. It is in line with the excuse for the baby born out of wedlock, that it was only a little one. In this context the word "temporary" may mean months or it may mean years, but hon. Members on both sides of the House would probably join me in representing to the Chancellor of the Exchequer that he really ought to attempt to put a time limit to this new taxation.

I still have not heard what this new tax is for. Is it to replenish the Revenue, to recoup it for the loss which it would otherwise suffer on account of the reduced consumption of petrol? I cannot believe that. Last Tuesday the right hon. Gentleman the Chancellor of the Exchequer, examining his Budget prospects, the out-turn of this financial year, and taking the figures above the line and below the line together, said: The overall out-turn of the Budget will be better, not worse, than I forecast last April."—[OFFICIAL REPORT, 4th December, 1956; Vol. 561, c. 1056.] We all know that the right hon. Gentleman forecast last April a thumping big surplus. That was his precautionary measure against inflationary tendencies. So I really do not believe that he needs this extra taxation in order to make good Revenue for current purposes, nor can he justify it on the ground that he must restore the loss to his already large surplus.

What, then, is this tax for? The House should note that the approach of the Chancellor to this situation seems to be, "This is an occasion when we ought to tax ourselves more. I have had a good look round to see what additional taxes I can find." I suppose that the only underlying motive for that is that we should strike an heroic posture to the world and say, "We are taxing ourselves more. We mean business. Let us have no more palsied hands holding sterling." Really is the world in need of such a bogus remedy for the fears of our financial and economic stability?

The Chancellor of the Exchequer gave the impression, it can be no more, that had the Income Tax been a little more conveniently at hand for a change in the middle of the financial year, he might have adopted that as his vehicle of increased taxation.

Mr. Nabarro

Then there would have been some trouble over here.

Mr. Houghton

That is very likely, because hon. Gentlemen opposite like this indirect, regressive taxation. They know it will pass them by. They do not like direct taxation, because it comes much nearer their pockets than a great deal of indirect taxation does. The interjection by the hon. Member for Kidderminster (Mr. Nabarro) was most significant. There are two hon. Gentlemen opposite at any rate who are prepared to look at the proposal on its merits and condemn it, and probably they would be ready to approve an increase in direct taxation if that were proved to be a desirable alternative.

I acknowledge the Chancellor's difficulties in increasing Income Tax in the middle of the financial year. It is one of the great drawbacks of our pay-as-you-earn system. The Chancellor has no room to manoeuvre in relation to Income Tax in the middle of the financial year, which seems to point to all interim remedies for economic and financial crises being found in the field of additional indirect taxation. That is what we had last year, when it was pots and pans. This year it is petrol. On neither occasion could it be Income Tax; at least, not without a great deal of trouble and considerable hardship. It could, of course, be done, but there is no doubt that it would be a very inconvenient thing to do, especially at this late stage in the year.

The Chancellor suggested to us that, after having made this survey of the field of possible additional taxation, he unexpectedly found that he could tax the very thing which had caused all the trouble. He said "Oil has created all this bother. Oil is going to be short. As I am going to lose revenue on oil, I will put an additional tax on it." What justification has the Chancellor for that? He said last week: I believe that the House and the country will accept that it is right that in present circumstances a commodity as precious as oil now is should effectively be guarded by taxation as well as by rationing."—[OFFICIAL REPORT, 4th December, 1956; Vol. 561, c. 1057]. How is petrol to be guarded by this taxation when most people are preparing to use as much of it as they can lay their hands on and pass as much as they can of the additional tax on to somebody else? Can any hon. Member say that he believes that less petrol will be used by reason of this taxation? I do not for a moment believe that it will.

Mr. Lewis

Just a few small middle-class people, like school teachers, will use less, but not the big businessmen.

Mr. Houghton

My hon. Friend has taken the words right out of my mouth. There will be small, helpless, users who may be compelled to use less oil because of the price, apart from being compelled to use less because of rationing. The Labour Party has always believed that it is much better to ration by coupon than by the purse. When it is proposed to do both, there has to be overwhelming justification for it.

The really serious aspect of the matter is that referred to by the hon. Member for Cheadle, the psychological impact of the tax upon a restive people. The British people have gone through a very miserable time lately. They are feeling very upset. Workers are feeling very apprehensive, and beginning to wonder whether it is time to drive the stakes in on their defences and, indeed, whether to advance in order to defend. There is no doubt that the Chancellor and the Government face a very troubled working community.

This additional tax, which will seep through the whole economy and reach everybody in time, and a lot of people quickly, will stimulate demands for increased wages. I never incite wage claims in the House, and generally deprecate references to them, because the trade unions are in charge there, but it is no good blinking at what is obviously now spreading through the trade union movement, a fear that the additional petrol duty will be made an excuse for increased prices everywhere. As the hon. Member for Croydon, North-West said, they are likely to be increases which will go beyond the immediate necessities of the situation. It will be an opportunity to make something on the side out of the additional tax.

The House would also like to know why it is that since the additional tax was announced the queues at the garages and petrol stations have stopped. Was it that all those who had petrol were hanging on to it in case there was an increase in price or an increase in tax? A lot of money has been made out of the situation in the last few days. Storage tanks were being kept full. Not only motorists were trying to keep their tanks full. Petrol station owners have tried to keep their tanks full in order to be on the safe side. Then something happened, and they will now reap a considerable harvest.

There can be no hesitation on the part of my right hon. and hon. Friends in voting against this bad Bill which imposes a bad tax. That is the long and the short of it. We hope that hon. Members opposite who agree with us will join us in the Lobby. I hope that one day right hon. and hon. Gentlemen on this side of the House will have the courage to act similarly.

6.37 p.m.

Mr. A. E. Cooper (Ilford, South)

I spoke last week when this subject was raised late one evening, and my views are well known to the House. I regard the tax on petrol and light oils as regressive and harmful to our economy. It is no less harmful because it is imposed by a Conservative Government than it was when it was imposed by a Labour Government. However, it does not lie in the mouths of right hon. and hon. Gentlemen opposite to criticise a Conservative Government too much, because Sir Stafford Cripps imposed a duty of 9d. per gallon for no other reason than that our petrol happened to be the cheapest in Europe, which was never a good reason for doing it.

Some countries have certain advantages in their trading position. We have always had the advantage that our oil and petrol were lowly priced, and that offset to a very great extent the disadvantages that we suffered in high wages costs, and one or two other factors, and balanced industrial capacity in export markets.

One would have thought that the first thing the Treasury would think about was how it could help British industry, but that seems to be the last thing it ever thinks about. In fact, one is tempted to ask whether those inside the Treasury have ever heard of British industry and the handicaps under which it works.

The hon. and gallant Member for Hull, West (Captain Hewitson) referred a little earlier to light oils, which constitute a very important raw material for a great number of our industries. Let us have no illusion about the tax on light oils. It was originally imposed by accident. It brought in a lot of money to the Treasury, and Government after Government, both Labour and Conservative, have refused to do anything about it. It is the only raw material of industry which is taxed.

There is some drawback under Section 9 of the Finance Act, 1932. Under that, if white spirit, or any of these hydrocarbon oils, loses its identity during a manufacturing process, the manufacturer can reclaim the full extent of the duty. Let us examine what we have to do. We have to fill up a form giving complete and minute details of the type of plant we use. We then have to give away to the Treasury—I must confess it has never broken a confidence, but the fact is that we have to do it—complete details of all our manufacturing processes, even though they may be secret. We then have to get approval from the Treasury on theoretical grounds that the process itself in fact causes the hydrocarbon oil to lose its identity. We then have to build a special place in which to store the raw material which we buy bonded. We have to keep minute records, quite distinct from all other records which we keep in the factory; twice a month an inspector from Customs and Excise visits the factory, examines the record, we fill up the requisite forms, and in two months' time we get back the tax we have paid.

Industry has had to be put to all that expense to deal with hydrocarbon oils. The time has come when we should get rid of this nonsense and not allow industry to be taxed on its raw materials. Of course, we get a rebate when we export goods in which these light hydrocarbon oils are used, but no allowance is made for any loss which may be sustained during manufacture and no account is made for the fact that not one of our overseas competitors is saddled with this sort of burden.

We should help industry to the maximum of our ability. I take the view, which may be old-fashioned, that the country's entire prosperity is built on the prosperity of British industry and in no other way. The Government, whether Conservative or Labour, make no real contribution to the nation's economy. In fact, the more civil servants we have and the greater Governmental interference in industry the less likelihood there is of a prosperous industry. I therefore view with the gravest apprehension any increase in our taxation at the present time.

The argument about the Treasury wanting increased revenue is irrelevant. I want to refer to the point made by the hon. Member for Sowerby (Mr. Houghton). The sole justification for the imposition of this exta 1s. is the stopping of the panic buying at pumps all over the country. It had become a point of honour with every motorist to ensure that his tank was full and was kept full up to 17th December. I do not blame anybody for doing that sort of thing, but the net result of the policy undoubtedly would have been that on 17th December the garages would have been unable to honour the ration.

The effect of this new burden will be an eruption on the plateau. It is not just a matter of the £30 million which the Treasury hopes to get from this increase. I want to give an example of the accumulation which in the end brings about greater costs than the initial tax itself. Raw materials going to factories will carry a surcharge of 7½ per cent. as a result of this new impost. The processes may involve the use of raw materials which are taxed at an additional 1s. per gallon. Goods to be shipped to customers will bear an additional 7½ per cent. in freight costs. If a basic raw material is sold, the customer will be processing that into a product which he sells to the retailer and then to the customer, both carrying increased freight rates of 7½ per cent. The net result is a much greater impost than is laid down by the extra 1s.

1 support the Chancellor in this issue for one reason only. [Interruption.] I made this point quite clearly the other night, and I make it again now. It is simply that he has told us that this is to be a temporary Measure and a temporary Measure only. Hon. Members on this side of the House will need to be assured in Committee about the meaning of the word "temporary." I know that some of my hon. Friends will wish to put down Amendments limiting the period of operation of the Bill.

6.46 p.m.

Mr. J. T. Price (Westhoughton)

I have no intention at this late stage in the debate of entering into polemical topics which are wide open to any hon. Member. This afternoon the Chancellor was in a genial frame of mind. I had the pleasure of listening to his speech and to many others. The impression I gained was that he knew that he was on a sticky wicket and that it was therefore a good thing to adopt an avuncular attitude towards the House.

He was presenting the first instalment of the bill for the Suez adventure, and there will be many more bills, I am sorry to say. The economic consequences of this adventure are only beginning to reveal themselves to the man in the street, who is very anxious about them. I will avoid the temptation to discuss questions of ethics and morality which are wrapped up in matters of this kind and restrict myself in a couple of minutes to two points which I am entitled to raise because the Chancellor was good enough to give way to me during his speech.

The only logical reason for the imposition of this extra tax of 1s. per gallon—plus an additional 5d. on distribution costs payable to the retailer and wholesaler—which we have had from the benches opposite is that it will help to recoup the Treasury for the £30 million which it is estimated the Treasury will lose in revenue between now and the end of the financial year. I have taken the trouble to do a little arithmetic. I was not able quickly enough to do it mentally when the Chancellor was speaking this afternoon. I have broken down the figure of £30 million and, in all seriousness and modesty, I hope that my figures will be investigated.

The figure of £30 million represents 600 million gallons of petrol. The House is well aware that of all the vehicles now travelling the roads of Britain approximately 80 per cent. are commercial vehicles or passenger vehicles, chargeable to some business account because they are used in the course of trade, industry and commerce. They certainly use more than 80 per cent. of the total consumption of petrol in this country, because the margin of 20 per cent. represents motor cars used for private pleasure and the ordinary amenities of civilised life which do not consume so much per vehicle as vehicles used in the course of commerce. For the sake of my argument, I will restrict myself to 80 per cent.

Let us consider this matter from the point of view of the fiscal policy of the Government in relation to other forms of taxation. Eighty per cent. of all the petrol bought at the pumps for lorries and cars will be charged back on the expense accounts of the companies running those vehicles. The next stage of the process will be that the companies will charge back those expenses to the Treasury without paying tax under the Schedules relating to Profits Tax and so on. I am restricting my argument to the 600 million gallons, representing the £30 million of revenue to which the Chancellor referred. Eighty per cent. of that will be charged back, and if it is charged back at the standard rate of 8s. 6d. in the £, at the end of the first stage of the process £12.8 million of the £30 million will be paid back in refunds or allowances of tax to the business accounts of those who are liable to the Treasury during the accounting period.

There is one other effect of this situation. If my argument upon this is wrong, I hope that somebody at the Treasury will pull it to pieces and that the Chancellor will take the opportunity of putting me right. The Chancellor gets the benefit of the penal tax of 1s. per gallon, but another 5d. per gallon is stuck on because it has been agreed to by the Minister of Fuel and Power in the course of some high pressure negotiations which took place between the Minister and the oil companies. A result was obtained in this case much quicker than any other results from negotiations have been obtained while this Government have been in office. I shall need a lot of convincing that the 5d. can be justified by any rational system of costing which can be produced in this House.

It means that 80 per cent. of all the 5ds. will be charged back to the Treasury on taxation accounts. I estimate that over £4 million will have to be repaid by the Treasury in that respect. In other words, of the estimated £30 million loss of revenue as a result of the diminution of petrol supplies in this emergency period, £17.1 million will be refunded in taxation in one form or another, and the rest will be passed on to the consumer in increased costs of goods and services for which the public has to pay.

I submit that this is an honest and logical argument which should be looked at very closely. Under the stress of this emergency situation this country has found itself in a position in which the Chancellor has to say, "We have all sinned. Let us throw our pennies on the ground, like the Salvation Army"—a penny on the drum representing 1s. on the cost of petrol. Are we honestly going to try to justify a further step in the inflationary spiral if, as a result of the Government's policy, they have not only thrown the country into great difficulties but also failed to produce the results which we are told this tax would produce?

Like my hon. Friends, I am utterly opposed to the Bill. This is a bad tax. I have no confidence in the assurances that it will be a temporary tax, because I still have a feeling that the old dictum of Adam Smith, who said that an old tax is no tax at all, still applies in relation to our fiscal policy. We shall have to make ourselves much more vocal if we are to see the end of this tax once it is placed on the Statute Book.

6.54 p.m.

Mr. Anthony Marlowe (Hove)

The hon. Member for Sowerby (Mr. Houghton) said that he had not heard many speeches from hon. Members on this side of the House in support of the Bill. I can assure him that he will not hear one now. I find the Bill quite incomprehensible. That, perhaps, is not surprising, because I never have understood much about economics. Economists and I do not speak the same language. I do not think that any economist speaks the same langauge as the ordinary man in the street.

I have always understood that there were only two main purposes for taxation—one to raise revenue and the other as a weapon of financial control to have some effect upon consumption. The Chancellor has made it perfectly clear in the last few days that he does not need this tax for revenue purposes—and we do not need financial controls over consumption when we have rationing. So I have not been able to understand what is the purpose of the tax. I cannot help feeling that it is another example of the usual attitude of the people at the Treasury, who have woken up one morning and said, "We are going to lose some money over this, so we must make it good somewhere else." The Treasury never likes to lose a source of revenue if it can possibly help it.

The point which I want to raise is one which aroused a good deal of interest at Question Time today. I shall have to deal with a different aspect of the matter, because the effect of rationing upon provincial taxi-cabs is out of order during the Second Reading debate. But the Preamble allows for the raising of certain fares on certain specified vehicles. Clause 2 deals with that question, limiting the increase in fares to public service vehicles.

From the passages which took place at Question Time today it was quite evident that the Minister of Fuel and Power has not begun to understand the effect of this tax upon the provincial taxi-cab services. They will be very badly hit and will very likely be reduced to entirely uneconomic services. Many taxi drivers will be driven out of emploment, and a useful public service will be seriously curtailed.

In London, there is provision for any increase such as is created by the Bill to be passed on to the consumer by way of increased fares. The Home Secretary has power to deal with this matter. In the provinces many local authorities have their own Acts of Parliament, which also enable them to permit increases in fares, in order that taxi drivers may recoup themselves for the extra expense to which they are put by this taxation.

But there is a certain class which appears to have been overlooked by the Government in the drafting of the Bill, namely, the non-county boroughs. The man who drives a taxi-cab in a non-county borough is not able to obtain any increase in his fares without the passing of a byeleaw by the local authority, and that byelaw cannot come into operation in less than six or eight weeks. The byelaw has first to be approved by the local authority and must then go to the Home Office for sanction. It is therefore a very considerable time before any byelaw permitting an increase in fares in such areas can come into operation.

Taxi drivers in those cases will, therefore, have to go on paying the higher cost of petrol for a long time before they can begin to raise their fares. They cannot make the increase retrospective, so they will be seriously out of pocket over the period and that will have an extremely adverse effect upon them, upon employment in their industry, and also upon a service upon which the public rely, especially in provincial boroughs.

I hope that the Chancellor will bear that point in mind and incorporate in the Bill some power enabling the byelaw procedure to be by-passed, so that local authorities which are affected can bring increased fares into operation immediately, as bus companies are allowed to do under Clause 2.

I endorse what has been said by so many hon. Members on both sides of the House. If this is to be a temporary measure, I cannot see why that should not be written into the Bill. As was said, there have been dozens of occasions when we have heard the story that a tax was only temporary, but somehow it never proved to be so. The only way for us to ensure that this really is a temporary tax is to have written into the Bill that it shall come to an end at the same time as the rationing of petrol. If that be done, a number of hon. Members on this side of the House, who are by no means enthusiastic about this Bill, will feel that at least there is something in it to which we might give our support.

7.0 p.m.

Mr. John Rankin (Glasgow, Govan)

The Chancellor has now returned to the Chamber—I realise that he had good reasons for being absent—and I am sure it will delight him to know that during his absence not a single word of support for his Bill has come from hon. Members opposite. That is also true of hon. Members on this side of the House. The right hon. Gentleman of course would expect that, but it may surprise him to know that both the 1s. tax and the temporary nature of the provision have been violently criticised from his own side.

Some of his hon. Friends have shown themselves very suspicious of the temporary provision which the right hon. Gentleman has inserted in the Bill, and rightly so, because many of us recollect that Income Tax was first introduced as a temporary provision. I assume that it still is a temporary provision, although it has become a permanent part of our taxation system. The same applies to Purchase Tax. That also was brought in to meet an emergency, but it is with us as a permanent feature of our social life. In view of these things, if this is to be a Bill making the tax a temporary provision, then, as has been said by hon. Members on both sides of the House, the Chancellor will convince us of that only if he inserts into the Bill a time limit during which the provision will operate.

Hon. Members on both sides of the House can understand the need for safeguarding our oil supplies by rationing, but the need for the 1s. tax has not been justified by the Chancellor. On 8th December, the Manchester Guardian commented: There seems to be a kind of general post at the moment, in which everyone who can contrive to pass on his share of the bill for Suez is making haste to do so. In this case, the "general post" has been headed by one of the chief criminals. Having incurred the damage, he is now passing on the payment to other people. It is worthwhile noting the train of results which will flow. As an outcome of the 1s. tax, the producer of oil is safeguarded by an increase of 3½d. The distributor is safeguarded by an increase of 1½d. The consumer has to pay. As a result of the Chancellor's impost, British European Airways this morning intimated a rise of 1s. in the £ on its fares. The Transport Commission has indicated that its road delivery charges will carry a surcharge, and under this Bill we are giving bus undertakings the right to increase charges. In every one of these cases the charge is to pass on to the consumer.

The Chancellor defends that on the ground that the total cost will be very small. But the right hon. Gentleman forgets that at this moment bread prices are probably going up; that rents are under review and that they will go up; that subsidies, at least in Scotland—the problem of subsidies may be settled in England—are to be reduced, and therefore there will be a further increase in rents on that account. Recently we have had other increases, such as the increased charge for prescriptions, and so on. The end of all this will be a very steep increase in the cost of living which will react on our export trade; and as a further consequence there will almost certainly be a demand for higher wages. These are the considerations which present themselves to many of us. In view of their criticisms, I feel that we on this side of the House are entitled to expect that hon. Gentlemen opposite will translate their criticism into support for us in the Division Lobbies.

I wish to refer to another example of how the cost of living will be affected on the distributive side. My hon. Friend the Member for East Ham, South (Mr.Oram) has already referred to the matter. I have received an account of the impact of this increase in the cost of petrol on the transactions of a co-operative society which operates mainly in the rural areas. At present the society uses 3,608 gallons of petrol a week to complete its deliveries of dairy produce, coal, bread, meat and so on. As a result of the allocation which it will now get, there will be a short-fall of 1,968 gallons of petrol a week, which will prove a serious handicap to the society. All consuming members of the society will experience an increase in the cost of living because they will now have to pay bus fares and do their own shopping owing to the lack of delivery services.

The increased cost of petrol on a great society like the London Co-operative Society will result in a rise in costs of £50,000 a year. To the South Suburban Society it means £15,000; to Lincoln it means £13,000. All these things will create a state of affairs which is bound to enforce the demand for increased wages throughout the country. I had hoped that that was something which the Chancellor would seek to avoid at this time.

In regard to coal delivery, these will now cost the South Suburban Society 30s. extra per vehicle every week. In Watford the cost of coal will go up by 1s. 3½d. per ton. The Enfield Highway Society tell us that their bakery costs will increase form 2s. 2½d. to 5s. per sack. These are facts which people at the consuming level have to face, in whatever way they use transport, either for themselves or their goods. The facts will face them every time they seek to replenish their larders. There is a danger that the Chancellor, in trying to make others pay for his mistakes and the mistakes of his Government, will seriously affect our economy.

If Government supporters who are with us in this criticism want to do the country a service they should join us in the Lobby and refuse to give a Second Reading to the Bill.

7.11 p.m.

Mr. Gerald Nabarro (Kidderminster)

I shall disappoint the hon. Member for Govan (Mr. Rankin).

Mr. Rankin

That is nothing unusual.

Mr. Nabarro

I am very critical of the Bill, and I consider that the only possible justification Conservative Members can have in voting for it is the inclusion of the words "temporary increase" in parenthesis in the title.

Practically every hon. Member from either side of the House who has spoken has asked the Chancellor what he means by "temporary". I was captivated by my right hon. Friend's reply on 4th December, and I have been poring over it ever since. I have been trying to determine exactly what he meant. My hon. Friend the Member for Cheadle (Mr. Shepherd) asked the Chancellor of the Exchequer: Will he give an assurance that as soon as petrol rationing is over, or at some other convenient time, this additional taxation will be removed? The Chancellor of the Exchequer then replied: I used the word 'temporary' advisedly, but, of course, all taxation is subject to the review of the House each year. I regard it as an emergency tax. The simple answer to the question is that if the flow of oil returns in full, then, at the old rate of tax, the Revenue will be sustained."—[OFFICIAL REPORT, 4th December, 1956; Vol. 561, c. 1065.] Of course the revenue will be sustained. I have not any doubt about that at all. Moreover, I would not expect my right hon. Friend, answering a supplementary question in the Press of events at that moment, to give a precise definition of what he had in mind. However, on the Second Reading of this Bill we ought to be given more substantial assurances than were contained in what I deem to be a somewhat disingenuous answer to the supplementary question.

I would like to see a definition written into the Bill in Committee, not simply to the effect that the additional duties will end when petrol rationing ends. That does not suit me, for the reason I gave when I intervened in the admirable speech of the hon. and learned Member for Cardigan (Mr. Bowen). If, as an interim measure, petrol rationing were relaxed, pending abolition of rationing, and the ration were increased, there would be a clamant demand from all sides of the House for a commensurate reduction of duty and we should be further in the mire of economic disabilities and complexities than ever.

Sir Frederick Messer (Tottenham)

That would by typical.

Mr. Nabarro

I have not seen the hon. Gentleman in the Chamber all this afternoon. Now he says, "That would be typical." It was very typical of his Government between 1945 and 1951. For my part, I want to see a provision written into the Bill that the duty at the increased rate shall be chargeable only for a period of six months and that therefore the Bill will have effect only for six months. If the Chancellor then wishes to continue the extra duty he must bring before the House a repetitive Bill to secure the extension.

Mr. Harold Lever (Manchester, Cheetham)

I have followed the hon. Gentleman's argument with considerable interest and some sympathy. I was not here this afternoon, but I hope I can continue to enjoy the pleasure of hearing what the hon. Gentleman has to say. I hope the hon. Member does not object to my hearing the rest of his speech.

Mr. Nabarro

Not at all. The hon. Member is customarily loquacious—for two hours and 39 minutes on one occasion, if my memory serves me correctly. He was not here this afternoon. The remark I made merely related to my intervention in the speech of the hon. and learned Member for Cardigan. It was a very relevant intervention, as the hon. Member for Cheetham will agree when he reads it in cold print tomorrow morning.

I have dealt with the inclusion of the words in parenthesis in the title of the Bill. Now I want to say something about the very marked effect that the additional duty is bound to have upon our national economy. References have been made to every kind of increase in cost. I make the simple point that this additional duty must be highly inflationary in its incidence for three principle reasons. The first reason is that it will greatly increase the cost of distribution. It is significant that British Road Services announced within 24 hours of the Chancellor's statement last Tuesday that it would put its charges up 7½ per cent. In my calculation the additional duty would not justify an increased cost of 7½ per cent.

Mr. Ernest Davies (Enfield, East)

rose—

Mr. Nabarro

I know in advance what the hon. Gentleman is going to say. I intend to be completely fair and to say what the private hauliers have done. I was at the point that even so inflationary a twist as 7½ per cent. on distribution costs of all commodities, manufactured goods, foodstuffs and the like must be very damaging indeed. Immediately afterwards, the private hauliers followed with the pronouncement that they proposed to increase their charges by 10 per cent. Secondly, I believe it will be inevitable that next Monday my right hon. Friend the Minister of Fuel and Power, when he responds to my Parliamentary Question about the cost of house-coal will have to concede that as tens of millions of tons of coal—very sadly—are distributed in this country by road transport, not only the 31 million tons that go to householders and the 30 million tons of coke that go for heating and associated purposes, but the millions of tons that go to power houses from both deep-mined and open-cast coal mines, and to gas works by transport, will all have to be subject to an increase in price because of the greater petrol duty. This increase in the cost of coal will be highly inflationary.

The third reason, which has not been mentioned in this debate so far, is that farming uses no less than 177 million gallons of petrol or petroleum products and that in aggregate the additional duty of 1s. will cost a notional extra figure of £3.85 million, subject only to a reduction in the consumption of petroleum products on account of rationing. Therefore, in road distribution charges, in the cost of delivering coal and in the cost on farm output, we have a highly inflationary tendency.

Though the intentions of my right hon. Friend are, as always, impeccable and irreproachable, in that he proposes to take his 1s. off again at a reasonably early date, can we be assured that all these other consequentially increased costs will be brought down? Will the cost of coal to the retailer, the cost of food and road haulage charges be brought down? Will the inflationary tendencies which are consequential upon this increase in duty be dealt with in due course? I very much doubt it.

Mr. Lewis

I agree with every word the hon. Member has uttered, but will he also add that the Post Office uses a lot of oil and petrol and that postal charges for telephones and the rest will have to go up?

Mr. Nabarro

I am not sure of that, because the Post Office is, of course, earning a very substantial surplus under the wise guidance of my right hon. Friend the Postmaster-General.

I want to add a final word on the revenue aspect. My right hon. Friend suggested that he had to recoup revenue at the rate of £6 million a month following diminution in consumption of petroleum products as a result of rationing. Whether the hon. Member for Westhoughton (Mr. J. T. Price) was correct in his arithmetical calculations or not—personally, for reasons I will not go into now, as I have no wish to delay the House, I think he was incorrect in those calculations—what undoubtedly is the case is that the overwhelming majority of motor cars and practically all the goods vehicles are operating for business purposes.

At least three-quarters, and possibly more—I used this point in the intervention which my right hon. Friend allowed me to make in his speech—at least 75 per cent., and possibly 80 per cent., of those vehicles will be able to charge the additional cost of petrol, through the accounts of the business undertakings owning them, as a legitimate charge for the purposes of computing liability both to Income Tax and Profits Tax. That, in my opinion, will practically destroy—I use the words literally—from the Chancellor's point of view any prospect of deriving the compensatory revenue mentioned in the statement he made.

Mr. J. T. Price

Before the hon. Member for Kidderminster (Mr. Nabarro) winds up his speech, I should say that I think he and I are thinking on similar lines, but, since he has challenged my figures, it would be only fair to me and to the House—because it is on record—if he disagrees with the figures at least to tell us where they are wrong. He should not merely make an empirical statement that they are wrong, but show where they are wrong. If they are wrong, I shall be glad if he will correct them.

Mr. Nabarro

That would involve me in a long and detailed explanation, but I will happily give the hon. Member the details afterwards. May I add, and I say this with sympathy towards the views of the hon. Member, that I do not think he had sufficient regard to the fact that a large part of the increased distributive costs caused by the greater duty will be recouped by higher prices. I will vote for this Bill on Second Reading tonight—[HON. MEMBERS: "Oh."]—not with great enthusiasm and with a heavy heart. The hon. Member opposite who was jeering at me was not in his place at the beginning of my speech—

Mr. Ross

I am sorry, I was.

Mr. Nabarro

—Even if there is any justification for the Bill, it can only be because of its allegedly temporary character.

Mr. Ross

rose—

Mr. Nabarro

If the hon. Member will allow me to finish. On the Committee stage, I shall ask the Chancellor, and in view of what they have said I hope a number of my hon. Friends will press the Chancellor, to be much more precise in what he means by "temporary". I hope he will tell us something which will be a great deal better than the reply he gave to the supplementary question to which I referred and which I considered was somewhat disingenuous in character.

7.24 p.m.

Mr. Harold Wilson (Huyton)

I think the whole House, with the exception of the Treasury Bench, will agree that this has been a very interesting and rewarding debate. Since half past three, in less than four hours, eighteen right hon. and hon. Members have spoken. I have been present for practically the whole time, and I think it interesting to note that not one hon. Member has given any practical support to the Bill.

The one who came nearest to doing so was the hon. Member for Dover (Mr. Arbuthnot). I think that if he had been able to develop his case a little further, he might have expressed himself in favour of the Bill, but he got out of order and had to sit down. That left the Chancellor with no practical support, even from his own side of the House. It is now clear, or should be to the Chancellor, that there is no more enthusiasm on this side of the House nor on his side for this Bill than there was for his predecessor, a year ago, when, it will be remembered, every hon. Member who spoke attacked the increase in Purchase Tax.

A number of hon. Members opposite, including the hon. Member for Kidderminster (Mr. Nabarro), have said, "We think we can just about vote for this Bill because it is temporary and in its title—although nowhere else—we find the phrase, 'Temporary Increase'". I have indicated to hon. Members opposite that if by any mischance this Bill gets a Second Reading this evening—I am hoping to produce one or two reasons which may persuade even hon. Members opposite why it should not—later in the week it will be our intention to move Amendments which will have the effect of ensuring that this is a temporary Measure. Therefore, we hope to see hon. Members opposite not merely speaking, but voting in favour of Amendments which might limit the Measure to the four or five months about which the Chancellor spoke, or may be a reasonable request to the Chancellor that this temporary increase should be withdrawn, say, thirty days after he receives a certificate from the Secretary-General of the Canal Users' Association to say that the Canal is now open.

The debate has covered a very wide field; petrol supplies have been mentioned, there have been one or two references to rationing—which were not encouraged by the Chairman—to inflation, to the cost of living, road haulage, bus fares, the effect on industry and on agriculture and, of course, the general Budget prospects facing the Chancellor. What we have not had, in any speech, has been any adequate reason for this Bill being brought forward. I had hoped that the Chancellor, who opened the debate and spoke for forty minutes, would have given us some better reason for the Bill—he spoke for forty minutes, including a number of interruptions—

Mr. H. Macmillan

I did not speak for forty minutes.

Mr. Wilson

The Chancellor says that he did not speak for forty minutes, but, including the interruptions to which he gave way, I think the time taken by his speech was forty minutes.

I had hoped that the right hon. Gentleman would give us some reasons for the Bill. Last week he told us that the purpose was to "buttress this precious liquid"—a phrase which, I think, has caught the imagination of the House—but the only two arguments which were advanced were, first, that it would help to economise in the use of oil supplies and, secondly, to some extent that it would counter inflation. What the Chancellor is doing—I think I made this point as soon as he announced this Measure last Tuesday—is to supplement coupon rationing by a system of rationing by the purse. Why is he doing that? Is it that he has no confidence in the rationing scheme which the Minister of Fuel and Power is introducing?

Admittedly, as we shall be pointing out in a few minutes, the Minister of Fuel and Power has produced a most unfair and chaotic rationing scheme. I should be out of order, of course, to attempt to debate that now. When we debate it later we shall have no power to amend the scheme which will be before the House. Although that scheme is certainly a monument to the incompetence of the administration of the Government, I think it right that we should all take the view that if oil supplies are short rationing by the coupon is fairer and better than rationing by price.

Of course, there is no doubt that oil supplies are short, and the whole country understands why oil supplies are short. The whole country understands where the responsibility lies for oil supplies being short. Therefore, we have a rationing scheme, but why do we have rationing by price as well? I suggest it is either because the Chancellor is afraid that the rationing scheme is going to break down—he has had a look at the scheme produced by his right hon. Friend and sees that it is not going to work very well—or it may be because the Government have miscalculated the oil supplies, miscalculated the ration, and the Chancellor is hoping to cut consumption still further below the coupon entitlements.

Of course, the Chancellor gives us another reason for his introduction of this Measure—the need to counter inflation. Despite his brave words about his Budget prospects last Tuesday, he needs taxation, he tells us, to make up for the loss of the petrol revenue. His Budget has been thrown out of balance, and this is his "autumn Budget." Of course, the Chancellor is far wiser in his generation than was his predecessor, the Lord Privy Seal. The Lord Privy Seal made the mistake of going into Committee of Ways and Means, announcing that there was to be an autumn Budget and inviting the hostility of the entire House.

The present Chancellor, when he decides on an autumn Budget, is much cleverer than was his predecessor. Indeed, he justifies all the generous and openhanded remarks which his predecessor had uttered—"his most able successor" we hear him say. So we have the Chancellor now, much wiser and much more clever, coming to the House, making a statement after Questions, and slipping into the Order Paper a Ways and Means Resolution, and then bringing in a one-Clause Finance Bill. But he is much too clever to call it a Finance (No. 1) Bill or a Finance (No. 2) Bill. Instead, he calls it the Hydrocarbon Oil Duties (Temporary Increase) Bill. I am sure that the Lord Privy Seal, looking back on the disasters of last autumn, will wish only that he had had the ingenuity to play it that way and to introduce the Purchase Tax (Permanent Increase) Bill at that time.

The Chancellor's fears, which he expressed this afternoon, are, of course, that petrol users both direct and indirect—that is motorists, would-be users of taxi-cabs who cannot get taxi-cabs because of rationing, housewives whose goods are not delivered to their homes, football supporters who find that there is no bus to take them to the match—everyone, in fact, who would have been using petrol directly or indirectly and cannot now do so, will all have some spare purchasing power. He wants to mop up this spare purchasing power, and no longer having available to him the estimable advice of the former Economic Secretary, has to decide for himself how to do it.

Once he has decided—and I put this to him seriously—that he has to raise tax revenue at a rate of £100 million a year, I do not say whether rightly or wrongly, it becomes no longer a question of petrol at all. It becomes a Budget question, and he should be weighing up one potential source of revenue against another. One can just hear him asking this question, "Where can I turn?"

The task was not easy. Under this Government, public expenditure has risen at a record rate. We are told by the Treasury that public expenditure, which was £4,457 million in 1950, has risen to £6,186 million in 1955. That is an increase of £1,729 million—an increase of 39 per cent. in public expenditure. The Government were elected on a pledge to reduce public expenditure. Therefore, against that background, it was not easy for the Chancellor to find any remunerative sources of taxation.

Furthermore, the Chancellor made very clear last Tuesday that he needed the revenue quickly. That is why he told us that he could not increase Income Tax. He did treat us to some very unusual and unorthodox speculations about the next Budget—we wondered whether he was to go on and tell us the rest of the Budget. But it was clear that an Income Tax increase would not work with sufficient speed. I have no doubt that he must have been tempted, as was his predecessor, to increase Purchase Tax. Then he remembered the Lord Privy Seal and those long, and sometimes all-night sittings last autumn, and what happened at 8 o'clock one Thursday morning. So he decided that to increase Purchase Tax was not the way to proceed, because although it is quick in action, it is not quick in respect of Parliamentary time.

So this tired, demoralised Chancellor took the line of least resistance—

Mr. Ellis Smith (Stoke-on-Trent, South)

Demoralised?

Mr. Wilson

—he went for petrol, including derv, white spirit and all these other products that are used in industry, and are covered by the hydrocarbon oil duties. A number of hon. Members have referred to some of those.

The right hon. Gentleman did it, he told us, to fight inflation. I must remind the Chancellor, as so many hon. Members in all parts of the House have done, that in terms of pushing up prices and starting a wage-price spiral he could not have found a more damaging tax than this one. It is just the way to encourage inflation.

One thing is clear, and I hope we shall get some reply on this point, and a clear assurance. I do not think that the Chancellor consulted his colleagues very fully about this. Just as we understand that the Prime Minister committed himself to the Suez adventure without Cabinet backing, so I think it is quite obvious that the right hon. Gentleman failed to consult his colleagues about this increase in taxation. I say that because they are all on the record. I do not think that there is a tax about which more of his right hon. Friends have addressed the House than this one.

Perhaps I should remind the House for a moment of the facts about this. In 1950 Sir Stafford Cripps raised the duty by 9d., from 2s. 3d. to 3s. in order to save dollars. That was when the Labour Government took off rationing. This Government introduce rationing one week and introduce the duty the next. Not content with giving the motorist a black eye, they want to give him a thick ear as well. In 1951, my right hon. Friend, the Leader of the Opposition, raised the duty by a further 4½d.—a very modest increase compared with this one. That, together with other charges, raised the price of petrol to 3s. 6d. a gallon. Happy days. I would remind the Chancellor, that it was 3s. 6d.—not 6s.

In those debates, when, as I say, we were debating petrol prices of 3s. and 3s. 6d.—not 6s. 1½d.—we had the whole celestial choir of right hon. Gentlemen opposite joining in the debates—all of them, including such noble Lords as Lord Crookshank, Lord Conesford, Lord Chandos—then Mr. Lyttelton—the present Lord Chancellor, and many others who have left us for another place. I should have thought that the Chancellor would have consulted his colleagues about the views which they expressed with so much eloquence and vigour—and so late at night—on those occasions. Perhaps the Chancellor will tell us—and I shall be very ready to give way when he is ready to tell us—that he did consult his colleagues.

I can just imagine, for example, the telephone wires buzzing between Treasury Chambers and Goldeneye in Jamaica a week or two ago on this question. I can well appreciate that the Prime Minister would have wanted to remind the Chancellor of the words which he, the Prime Minister, then deputy Leader of the Opposition, used in the debate on the Second Reading of the Finance Bill, 1950. In case it was a bad line and the Chancellor was not able to hear what the Prime Minister was saying, it might be useful for me to remind him of the words then used. The present Prime Minister, referring to the petrol tax and the tax on commercial vehicles, said: They both constitute further burdens on the cost of production at a time when we should be doing all we can to reduce those costs so that we can continue to compete successfully in export markets. These duties"— he then said, six years ago— will also inevitably prove for many millions of people an addition to the cost of living, which just now, above all things, we surely want to avoid. We shall, therefore, as I said at the beginning, continue our opposition to these duties."—[OFFICIAL REPORT, 16th May. 1950; Vol. 475. c. 1034.] That was when petrol was 3s. a gallon. I wonder whether the Prime Minister is still continuing his "opposition to these duties"?

Then there is the Foreign Secretary. In those days of 1950, as the House may remember, the Foreign Secretary was a frequent spokesman on financial affairs. In those happy days of 1950 and 1951 he was one of our leading financial critics. May I say that the finances of this nation would be in a much better state today if the Foreign Secretary were still only a financial critic and not Foreign Secretary?

This is what he said, in 1951, on the Second Reading of the Finance Bill: Now I come to one or two of the specific tax proposals, first of all the tax on petrol. That is a directly inflationary tax. Then he gave some figures about the burden of road haulage taxation, continuing: It is time that someone in the House drew attention to the enormously increased taxation which road transport has been called upon to bear during the past two years. Then he made a speech about taxable capacity, saying: The very fact that there is not that reserve of taxable capacity is proved by this tax, because the Chancellor has had to go to a tax which is, in my submission, directly inflationary in order to get the necessary amount of money."—[OFFICIAL REPORT, 8th May, 1951; Vol. 487, c. 1890–1.] This was nothing new to the Foreign Secretary. The previous year he had made an important speech about the tax during the Committee stage of the Finance Bill. He referred to the effects both on bus fares and local rates, and he said: That is yet another example of the way in which this new impost is going to increase the burden of the cost of living upon ordinary people in this country. It is a thoroughly had tax. … I do not think there could be a better case for not having this increase in taxation."—[OFFICIAL REPORT, 14th June, 1950; Vol. 476, c. 253.] The President of the Board of Trade, of course, went into hysterics about it, making one of his long passionate speeches, in which he said: Every housewife, as she goes shopping and has to pay the extra 1d. in her bus fare knows the effect of this kind of taxation. I agree with my hon. Friend who said that no tax could have been better designed to force up prices and to increase export costs. Is it only since the right hon. Gentleman became President of the Board of Trade that he has ceased to be interested in export costs? He went on: We believe that the whole of this tax is unnecessary, is vicious, and is calculated to do all the things which the Chancellor, if he was a wise one, would not at present be attempting to do."—[OFFICIAL REPORT, 14th June, 1950; Vol. 476, c. 267–9.] The Lord Privy Seal spoke on this matter. I do not want to leave anybody out. In the 1950 Budget debate, he said: It is not a case of fair shares for all, but a case of those with sufficient money who can afford the petrol being able to buy it."—[OFFICIAL REPORT, 19th April, 1950; Vol. 474, c. 153.] We are sorry not to see the Leader of the House here today; he never is here during finance debates these days, for reasons which I cannot understand.

There were many other right hon. Gentlemen opposite who spoke in a similar way. The Secretary of State for Air was one. The Minister of Fuel and Power was another; he intervened on this subject several times. He was a new Member of the House then. We heard from the Minister of National Insurance and from Parliamentary Secretaries galore. I will not weary the House or embarrass hon. and right hon. Gentlemen by quoting any of their words, except that I should, I think, refer to the speech of the Postmaster-General. The Postmaster-General has just been entrusted with the task of explaining Government policy to those who do not yet understand it, and these words of his might be helpful to him in his new task. During the Committee stage of the Finance Bill, 1950, he said: I will not repeat the argument, or expression of astonishment, that at a time when this country needs above all lower costs, at a time when this country is above all bothered by a rising cost of living"— this is six years ago— there should have been selected for this particular piece of money raising an instrument which increases the cost of production and increases the cost of living to a much greater extent than right hon. Gentlemen on the other side of the Committee are prepared to admit. Then, after a bitter attack on its implications for medical practitioners, especially in rural areas, he concluded: It still remains what it was at the beginning, a tax on the industrial and commercial costs of this country. It is a tax which will result in an increase in the cost of living."—[OFFICIAL REPORT, 14th June, 1950; Vol. 476, c. 277–80.] Those are the views of the Chancellor's right hon. Friends. [An HON. MEMBER: "How much was it then?"] Petrol was 3s. a gallon then, and now it has gone up above 6s.

Did the Chancellor know about all these statements? Was he not moved by all this eloquence of which I have been reminding the House? [An HON. MEMBER: "He is doubling the standard of living."] I want to be fair to the Chancellor, as I always am. We all know he is a conscientious Chancellor, and I am sure he must have been deeply moved when he knew of all these expressions of view. Or was what really happened—as I suspect it was—that when he raised the matter with his colleagues, they said to him, "Do not be naive, Harold. We said all these things when we were in opposition. We had to say them, or we should not have got in; we should not have got in if we had told them a tenth part of what we were going to do." The Chancellor was, no doubt, satisfied with that explanation. It is interesting to note that one cannot find any record of the right hon. Gentleman himself ever having made any speeches on those lines, and he was obviously embarrassed by his colleagues.

As all these right hon. Gentleman say, and as hon. Members in all parts of the House have said again today, this Bill puts up prices all round. We have heard about bus fares and road haulage charges, but I want to stress what was said by a number of hon. Members opposite about the cumulative effect of these things. A trader finds that his costs have been raised by one-fifth of a penny, and so, of course, he puts up the price by 1d. if he can.

As the hon. Member for Cheadle (Mr. Shepherd) quite rightly said, the effect is very largely psychological; the whole psychology is now in terms of price increases. The Chancellor's plateau is dead—or whatever is the right geological expression to describe the end of a plateau. [An HON. MEMBER: "Barren."] Everyone now is going to put prices up whether his costs are raised by the Bill or not. I remember a time in 1950, after Korea, when there was a similar psychological atmosphere for putting up prices. The London hairdressers came to the Board of Trade—there was price control in those days—to say that they had to put up the price of haircuts because of Korea. Of course, we told them we could not agree to that.

Every body now is thinking of putting up prices because of this increase. Bus fares have been referred to. I think the Chancellor is right; many local authorities will show restraint, because they have committees and constituents to think about; but private companies will not show the same restraint in the matter of bus fares.

This price increase which has fallen on petrol is not confined to the tax increase. As my hon. Friends have reminded the House, the companies have put up the price by 3½d. a gallon. I remember suggesting to the Chancellor, in a speech a fortnight before Suez, that he should put price control on petrol and oil products; and we suggested it to him last Tuesday again. These oil companies are getting it both ways. When all is well, and the Canal is open, the companies make record profits. For instance, Royal Dutch Shell has just announced its figures, and for the first three-quarters of the year its net income, after tax, has gone up by £19 million, from £113 million to £132 million. The company increased its interim dividend the last week, the day after the Chancellor made his announcement, from £10 million to £12.2 million.

It may well be said that good times justify high profits, but what the oil companies are doing is to get it both ways. When things go badly, instead of bearing their losses, they use their monopoly position to push up prices still further so as to protect their profit standard. I suggest most seriously to the Minister of Fuel and Power that he has a responsibility to the consumer in this respect. It is not good enough for him to come to the House and act as though he is Parliamentary Secretary to the big oil companies. He is not; he is the Minister of Fuel and Power, and he really should introduce an adequate system of price control over the oil companies.

In a few minutes we shall be called upon to vote. As one of my hon. Friends has said, this will be the first vote which we have been called upon to make on the economic cost as opposed to the political cost of Suez. We shall vote against the Bill on those grounds. We shall vote against it also on the ground that eyen in the situation in which the country finds itself, this is a wrong and unfair way of sharing the burden.

It is possible—I do not know yet—that the Government may win this vote. After last week, we know something of their coercive power. There is, however, one thing that hon. Members should bear in mind. Some of them are here, I believe, because at the last Election they promised that there would be queues, rationing and restrictions if a Labour Government was elected.

I wonder how many hon. Members opposite remember this little document with which they flooded the country, a mock ration book headed "Let's Vote Labour." Perhaps I might remind one or two hon. Members opposite, who are in doubt about how to vote, of what they said would happen if a Labour Government was returned. I quote: The counting of coupons, the filling of forms, the schedules and permits, the quotas and norms, the juggling with rations, one up and two down, the spies and inspectors in country and in town. And, since we find freedom a snare and a strain, let's start with controls and restrictions again. It then goes into further flights of poetry.

There is a very good line here for the Chancellor: let's grovel for dollars while cursing the Yanks, and trace all our troubles to profits and banks —that is, the credit squeeze. And so it goes on. I will take just one last quotation from it: let's step up taxation to heights that astound, destroy Britain's credit, devalue the Pound … I trust—we all trust—that while we see Britain's credit very seriously endangered by what the Government have done, the reference to devaluation will be misplaced and that the Chancellor will, at the earliest possible moment, bring forward those appropriate measures to strengthen the £ for which we have called. This Measure certainly represents raising taxation "to heights that astound"; but it is because the Bill, for all the reasons given by every hon. Member who has spoken, in all parts of the House, is singularly inappropriate for the purposes that the Chancellor has set himself, that we shall vote against the Second Reading tonight.

7.53 p.m.

The Financial Secretary to the Treasury (Mr. Henry Brooke)

Despite all that the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) has said, this short debate has proved once again the unerring judgment of my right hon. Friend the Chancellor—[Laughter]—yes, his unerring judgment when he said that to put an additional tax on petrol would not be popular. Nothing that has been said in the debate has undermined my right hon. Friend's argument that it is right to do so.

Hon. Members opposite have attacked these proposals as rationing by the purse, but apparently rationing by the purse was not sinful when it was done by them in 1950, when they took off rationing and imposed a higher duty as a check on consumption and put it on, not as a temporary, but as a permanent tax. It is apparently, in their view, unforgivable to commit an occasional lapse, but it is quite all right to be like the Socialists and have a bad character.

The right hon. Gentleman committed one of those political errors when he failed to give us the end of that fascinating debate in 1950 from which he quoted. He forbore to tell us that the Labour Party of that day unanimously rejected all the arguments, which his hon. and right hon. Friends today have used, alleging that a higher duty on petrol would damage our export trade and put up prices. They all went into the Lobby in support of precisely the opposite case which they have been putting before the House today.

In two days' time we shall be proceeding to the Committee stage of this Bill, when a number of specific points which have been raised during our Second Reading debate would, I suggest, be better debated then. For example, the hon. and gallant Member for Hull, West (Captain Hewitson) referred to a case in which, he alleged, it would cost £31,000 to claim £28,000 drawback on certain dutiable spirit used in industry. If he is to pursue that kind of case on Wednesday, I hope that before then he will give chapter and verse in support of his allegation so that it can be examined.

My hon. Friend the Member for Scotstoun (Sir J. Hutchison) and the hon. Member for West Lothian (Mr. J. Taylor) referred to Scottish shale oil. They talked in terms of the long-term future of the industry, but, of course, one cannot deal with the long-term future of any industry within the confines of a temporary Bill. In fact, the Scottish shale industry, by the 1s. 3d. a gallon preference which it now enjoys, is receiving in effect a subsidy of rather more than £1 million a year.

The case that the two hon. Members were putting, from both sides of the House, to the Government was that this preference should be temporarily increased. Quite clearly, however, that would be no solution to the real future of the industry, and I remind both of them of the statement made by my right hon. Friend the Minister of Fuel and Power to the House on 26th November that the company had informed him that the throughput of the industry is already at a maximum and could not be increased without large-scale reorganisation which would take several years to carry out."—[OFFICIAL REPORT, 26th November, 1956; Vol. 561, c. 14.] I hope I have proved my point that any temporary change in the preference would be irrelevant to the problems of the industry.

Very little has been said by way of criticism against Clause 2 of the Bill, the Clause which provides special procedure to enable bus companies and London Transport to secure a temporary increase in their fares without going through the prolonged statutory procedure.

Mr. David Jones

Under Clause 2, London Transport Executive is permitted to raise its fares on the London Underground, which does not use oil, for the reason that not to do so would encourage people to travel by Underground. I notice, however, that some of the bigger towns which employ trolleybuses for some of their long-distance routes are not given the same concession. I wonder why?

Mr. Brooke

I suggest that that kind of point ought to be dealt with in Committee rather than that we should hold up the whole House, which, I know, is anxious to proceed to a further debate this evening.

What I wanted to make clear is that the provisions of Clause 2 will not, as some hon. Members suggested, in any way cut across the normal machinery for seeking permission to increase fares. The normal procedure of applications for revisions will continue unchanged and any increases in fares under the Bill and any additional costs due to the temporary emergency will alike be left out of account in considering applications for alterations in fares which come before the Transport Tribunal or the Traffic Commissioners.

I listened with much interest to my hon. and learned Friend the Member for Hove (Mr. Marlowe) and to my hon. Friend the Member for Withington (Sir R. Cary) when they were speaking about the position of taxis. It is quite true that taxis are the one other type of undertaking which is restricted by Statute as to the charges it can make. My hon. and learned Friend the Member for Hove sought to make the case that although in London a temporary increase in taxi fares could be made immediately by order of the Home Secretary, the statutory procedure in the provinces, though not nearly as long as for bus fares, would still be too long in proportion to what we all hope is the temporary period of the Bill. I have drawn the attention of the Chancellor to this point and he is considering it.

My hon. and learned Friend the Member for Hove asked, why not make an Amendment in the Bill? If we were to make a change of this kind, the Amendment moved in Committee, to be in order, would have to be preceded by a further Ways and Means Resolution. If my right hon. Friend comes to the conclusion after further examination that the case made by my hon. Friends is a substantial one, it will then be necessary for him to put a further Ways and Means Resolution on the Notice Paper.

Mr. H. Wilson

Would the right hon. Gentleman be just a little clearer about this, because I think the whole House wants to know? This was a fair point which was raised by hon. Members. I am sure all hon. Members will want to facilitate any possible Amendment to put this matter right, and even without making too much of the fact that the Government should have thought about this matter in the first place, before bringing in the Bill. It really is not good enough—is it?—to tell the House that the Chancellor is going to think about this. We understand that he is going to Paris tomorrow. We are to have the Committee on the Bill on Wednesday. Will the right hon. Gentleman say a little about the timetable, because I understand that we should need to have two different stages of any additional Ways and Means Resolution, the Committee of Ways and Means and the Report of the Committee of Ways and Means, before we could make use in Committee on the Bill of such a further Resolution?

Mr. Brooke

I did not want to be in the least vague. At the same time I wanted to give my right hon. Friend a little time to consider a matter which has been raised during the debate tonight. I certainly give this undertaking, that if my right hon. Friend decides that he should recommend to the House a change in the Bill to meet the point, as the right hon. Gentleman the Member for Huyton has said, the legitimate point raised by several hon. Members, then he will put on the Paper tonight a further Ways and Means Resolution, which would need to be considered in Committee of Ways and Means tomorrow and reported to the House so that any Amendment put down to the Bill would be in order when the Bill is in Committee.

Mr. Marlowe

As the Preamble enables an increase in certain fares to be made, would not an Amendment to allow an alteration in the law relating to provincial taxi fares be in order as things are?

Mr. Brooke

No. There are certain technicalities about these financial Bills, as my hon. and learned Friend will discover if he studies the matter, and one cannot move into a Bill like this anything which is not specifically covered by the Ways and Means Resolution.

Mr. H. Wilson

rose—

Hon. Members

Oh.

Mr. Wilson

I am sorry to interrupt again, but I really must. The House is being asked to agree to something rather unusual for the second week in succession. It is extraordinary that the Government did not realise that there are taxi-cabs outside of London. Would the right hon. Gentleman clarify a small point of procedure which may turn out to be difficult? Is it not a fact that the Report of the Committee of Ways and Means on the passing of a Resolution must take place on a day other than the day on which the Committee of Ways and Means passes a Resolution? Will not a further Ways and Means Resolution have to be reported before an Amendment can be made to the Bill in Committee on the Bill? Are we not to have the Committee on the Bill on Wednesday? What will be the timetable, assuming the Chancellor agrees to the concession?

Mr. Brooke

I think the timetable would be this. The Ways and Means Resolution would be tabled tonight and appear on the Paper tomorrow, Tuesday. It would be debated in Committee of Ways and Means on Tuesday night at whatever time might be arranged through the usual channels, and then the Report of that Ways and Means Resolution would need to be taken first thing on Wednesday, if Amendments to the Bill were to be in order in Committee on the Bill later on Wednesday.

Captain J. A. L. Duncan (South Angus)

The law in Scotland may be different from the law in England. The right hon. Gentleman the Member for Huyton (Mr. H. Wilson) referred to the provinces, but he left out any mention of Scotland. I hope my right hon. Friend is not overlooking the Scottish law.

Mr. Brooke

I was seized of that point.

Mr. Marlowe

If the Report of the Ways and Means Resolution is not made until before the business of the Committee on the Bill is taken on Wednesday, then how, suppose the position is not satisfactory, am I to be in a position to put down an Amendment in Committee on the Bill?

Mr. Wilson

The House is in great difficulty about this, through no fault of ours. Before the right hon. Gentleman answers that question, would he consider this? Would the Treasury Bench join with representatives of the Opposition Front Bench in making representations to the Chair that, in the very special circumstances arising from this unusual Ways and Means Resolution, manuscript Amendments bearing on this would be accepted by the Chair? I think that if both sides of the House were to make such representations to the Chair the matter would be given the fullest possible consideration by the Chair.

Mr. Brooke

Of course, I cannot say what view the Chair would take, but if my right hon. Friend decides to put down a Ways and Means Resolution tonight he will table at the same time any Amendment to the Bill which commends itself to him to give effect to the case which has been put by my hon. Friends. That will be on the Paper, and it will be possible for other hon. Members to put down their own Amendments, or Amendments to my right hon. Friend's Amendment. I would assure my hon. and learned Friend the Member for Hove that when the Bill has had its Second Reading he can put down any Amendments he likes. The Ways and Means Resolution will not debar him from putting down Amendments. It will only determine whether or not they are in order.

A number of hon. Members have asked why the Chancellor should have selected petrol to tax. Many have asked that, but hardly any have suggested any alternative. The hon. Member for Sowerby (Mr. Houghton) agreed with my right hon. Friend that it would be impracticable to increase Income Tax in the middle of the year. The right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) threw out the suggestion that the Government ought to put an additional tax on tobacco. Does he mean that, or does he not? We put an extra tax on tobacco in the Budget. It did not commend itself warmly to right hon. Gentlemen opposite. Now they are suggesting that the tax should be further increased.

Mr. Gordon Walker

I did not suggest such a thing. I spoke of having more Commonwealth and less American tobacco.

Mr. Brooke

The record will show.

Let me quickly assure my hon. Friend the Member for Dover (Mr. Arbuthnot) that there is no tax imposed by this Bill on boiler fuel. It is on petrol, on fuel oil for use for motor vehicles, and on other oils which are already subject to tax.

What are the reasons for this tax, I have been asked? The reasons are, as my right hon. Friend said last Tuesday, first of all discouragement of the use of petrol within rationing. The hon. Member for East Ham, South (Mr. Oram) said that the tax was an absurdity because those who used most oil would pay most. What would be the use of a tax which was imposed heavily on the people who did not pay any tax at all? Of course, it is a tax which is designed to secure that everybody, whether private user or business user, who buys and uses petrol or dutiable oils shall use them with the utmost care and economy, and there is considerable scope, even within the ration, for economical use.

My right hon. Friend used a phrase last week—he is famous for the architectural sparkle of his language—in which he said it was wise to buttress this precious liquid."—[OFFICIAL REPORT, 4th December, 1956; Vol. 561, c 1061.] The mixed metaphor could well have been used by the borough engineer who received a letter one day which started in this way: Dear Sir, I am writing to you because I am told that the sewage goes through your office. My right hon. Friend's vivid language has matched the cogency of his argument, and the fact that his phrase has been repeatedly quoted proves that his argument has gone home.

The second reason for increasing the tax is that otherwise the Chancellor would lose £30 million of revenue this year, and I cannot join with my hon. Friend the Member for Ilford, South (Mr. Cooper) when he says that that would be quite an irrelevancy. From the day when Colonel Nasser seized the Canal this country was poorer. Its oil was at risk. We know from the figures my right hon. Friend gave that, over the year, from midsummer, 1956, to mid-summer, 1957, instead of securing a substantial surplus on the balance of payments for which we had been working, we shall have, through our need for oil and other causes, to work hard to secure a balance. We shall break even. As my right hon. Friend said, on the most pessimistic estimate that he had made, he was satisfied that we would break even, but what we need is a substantial surplus, and we must find means of making our own contribution to the necessary reduction in home consumption which is essential if we are to expand our exports.

This is a form of compulsory saving. Hon. Members on both sides of the House have argued whether a tax like this is inflationary. They have argued whether the situation we are in, with this shortage of oil, is inflationary or deflationary. I doubt whether anybody would care to give a firm and unequivocal answer to that today lest history should prove him wrong. What is true, without any question, is that in these difficult days we should follow the path of discretion. We ought not to take risks.

Mr. Percy Shurmer (Birmingham, Sparkbrook)

Did the right hon. Gentleman say that we shall break even or shall break "Eden"?

Mr. Brooke

The hon. Member is very clever, but I am anxious to enable the House to come to a conclusion on this matter.

I thought that the hon. Member for Sowerby cast some doubt on whether the maintenance of economic strictness on our part had any effect on sterling. I assure him and the House that it has. My right hon. Friend the Chancellor said in the course of his economic statement, when he described the measures which he was taking to strengthen the reserves, that we must not do it all on tick. It is to give evidence to the country and to the world that we are prepared to restrict and restrain and tax ourselves and not expect to get out of all our difficulties by borrowing that my right hon. Friend is asking the House to impose this unpopular tax.

Mr. Sydney Silverman (Nelson and Colne)

I do not pretend to be an expert on this matter but, like everybody else, I try to follow the argument. As the right hon. Gentleman was saying that the purpose of the tax is to persuade or to encourage people to use even less petrol than the miserable ration allowed to them, would it not be much simpler to reduce the ration?

Mr. Brooke

I dealt with that a little time ago. The hon. Member is a little behind hand. I have said that we must not be tempted to increase the levels of consumption at the expense of the surplus which we need on our balance of payments. This tax is a temporary tax and there is no ground whatever for founding on a temporary tax permanent wage increases or permanent increases in prices.

Repeatedly my right hon. Friend has described in terms the nature of this temporary tax. He said at the outset that he regarded the new petrol duty as a temporary measure during the present oil shortage. He has repeated that today. Hon. Members have suggested that we ought to write into the Bill words making sure that the matter would come before the House again within a reasonable period, but I must remind the House that that will happen in any case. [HON. MEMBERS: "No."] There must be a Budget early next year. In four months the House will be considering the next Budget, and my right hon. Friend told the House, in moving the Second Reading of the Bill today, that he intended to review this temporary tax in the course of his Budget planning. Moreover, whatever happens, within six months' time the House will be examining in Committee the terms of a new Finance Bill, and I can see no power that could prevent any hon. Member from putting forward an Amendment for consideration on the Finance Bill to call in question the continuance of the tax.

Mr. H. Wilson

The right hon. Gentleman should not mislead the House in this way. Does he not remember twice in the House in 1955 defending a Budget and a Finance Bill in April and in October of that year and that on neither of those Finance Bills would it have been in order to move any Amendment whatsoever relating to this subject because of a Ways and Means Resolution introduced by the Government? Will the right hon. Gentleman therefore give an assurance that a Resolution in the next Budget will enable the House to move Amendments of this kind if it considers that necessary?

Mr. Brooke

What I can give the right hon. Gentleman is an assurance that there will not be a General Election in 1957 and, therefore, there will be no need to have a curtailed Finance Bill, as there was in 1955.

Some hon. Members urge that there should be written into the Bill a provision

that the tax will come to an end the day that rationing ends. I think that, on reflection, most hon. Members will realise that it would not be possible to guarantee in advance that the Bill could be just cut off like that. Moreover, oil shortage started before the new tax started. But what my right hon. Friend has said four times now to the House is that this temporary tax is connected with the oil shortage and that when the oil shortage ends it will come off.

Mr. R. R. Stokes (Ipswich)

When the tax comes off, will these iniquitous and infamous charges of 3½d. on the wholesale and 1½d. on the retail price come off too?

Mr. Brooke

Those are matters which perhaps might be open to debate in the debate to which I am trying to lead the House by ending a speech which would have ended earlier but for the number of times that I have given way to hon. Members opposite.

The right hon. Member for Smethwich used a curious phrase about honourable taxes and he said that this was a dishonourable one. I will not venture as Financial Secretary to draw this delicate distinction of honour among—[HON. MEMBERS: "Thieves."]—these legitimated thefts. We all know our friends of the Inland Revenue and the Customs and Excise. We know the job that they have to do in collecting these taxes, and we sympathise with them. It is not because this tax will be popular that I ask the House to give a Second Reading to the Bill, but because in my view and that of the Government it is right to give the country further evidence of our resolve to keep consumption under restraint and preserve the value of the £.

Question put, That the Bill be now read a Second time.

The House divided: Ayes 313, Noes 258.

Division No. 22.]	AYES	[8.20 p.m.
Agnew, Cmdr. P. G.	Baldwin, A. E.	Bidgood, J. C.
Aitken, W. T.	Balniel, Lord	Biggs-Davison, J. A.
Allan, R. A. (Paddington, S.)	Barber, Anthony	Birch, Rt. Hon. Nigel
Alport, C. J. M.	Barlow, Sir John	Bishop, F. P.
Amery, Julian (Preston, N.)	Barter, John	Black C. W.
Anstruther-Gray, Major Sir William	Baxter, Sir Beverley	Body, R. F.
Arbuthnot, John	Beamish, Maj. Tufton	Boothby, Sir Robert
Armstrong, C. W.	Bell, Philip (Bolton, E.)	Bossom, Sir Alfred
Ashton, H.	Bell, Ronald (Bucks, S.)	Bowen, E. R. (Cardigan)
Astor, Hon. J. J.	Bennett, F. M. (Torquay)	Boyd-Carpenter, Rt. Hon. J. A.
Atkins, H. E.	Bennett, Dr. Reginald	Boyle, Sir Edward
Baldock, Lt.-Cmdr. J. M.	Bevins, J. R. (Toxteth)	Braithwaite, Sir Albert (Harrow, W.)
Bromley-Davenport, Lt.-Col. W. H.	Heath, Rt. Hon. E. R. G.	Maudling, Rt. Hon. R.
Brooke, Rt. Hon. Henry.	Hesketh, R. F.	Mawby, R. L.
Browne, J. Nixon (Craigton)	Hicks-Beach, Maj. W. W.	Maydon, Lt.-Comdr. S. L. C.
Bryan, P.	Hill, Rt. Hon. Charles (Luton)	Medlicott, Sir Frank
Buchan-Hepburn, Rt. Hon. P. G. T.	Hill, Mrs. E. (Wythenshawe)	Milligan, Rt. Hon. W. R.
Bullus, Wing Commander E. E.	Hill, John (S. Norfolk)	Molson, Rt. Hon. Hugh
Burden, F. F. A.	Hinchingbrooke, Viscount	Monckton, Rt. Hon. Sir Walter
Butcher, Sir Herbert	Hirst, Geoffrey	Moore, Sir Thomas
Butler, Rt. Hr. R. A. (Saffron Walden)	Holland-Martin, C J.	Morrison, John (Salisbury)
Campbell, Sir David	Holt, A. F.	Mott-Radclyffe, C. E.
Carr, Robert	Hope, Lord John	Nabarro, G. D. N.
Cary, Sir Robert	Hornby, R. P.	Nairn, D. L. S.
Channon, H.	Hornsby-Smith, Miss M. P.	Neave, Airey
Chichester-Clark, R.	Horobin, Sir Ian	Nicholls, Harmar
Cole, Norman	Horsbrugh, Rt. Hon. Dame Florence	Nicholson, Godfrey (Farnham)
Conant, Maj Sir Roger	Howard, Gerald (Cambridgeshire)	Nicolson, N. (B'n'm'th, E. & Chr'ch)
Cooper, A, E.	Howard, Hon. Greville (St. Ives)	Noble, Comdr. A. H. P.
Cooper-Key, E. M.	Howard, John (Test)	Nugent, G. R. H.
Cordeaux, Lt.-Col. J. K.	Hughes Hallett, Vice-Admiral J.	O'Neill, Hn. Phelim (Co. Antrim, N.)
Corfield, Capt. F. V.	Hughes-Young, M. H. C.	Ormsby-Gore, Hon. W. D.
Craddock, Beresford (Spelthorne)	Hulbert, Sir Norman	Orr, Capt. L. P. S.
Crouch, R. F.	Hurd, A. R.	Orr-Ewing, Charles Ian (Hendon, N.)
Crowder, Petre (Ruislip—Northwood)	Hutchison, Sir Ian Clark (E'b'gh. W.)	Orr-Ewing, Sir Ian (Weston-S-Mare)
Cunningham, Knox	Hutchison, Sir James (Scotstoun)	Osborne, C.
Dance, J. C. G.	Hyde, Montgomery	Page, R. G.
Davidson, Viscountess	Hylton-Foster, Sir H. B. H.	Pannell, N. A. (Kirkdale)
D'Avigdor-Goldsmid, Sir Henry	Iremonger, T. L.	Partridge, E.
Deedes, W. F.	Irvine, Bryant Godman (Rye)	Peyton, J. W. W.
Digby, Simon Wingfield	Jenkins, Robert (Dulwich)	Pilkington, Capt. R. A.
Dodds-Parker, A. D.	Jennings, J. C. (Burton)	Pitman, I. J.
Donaldson, Cmdr. C. E. McA.	Jennings, Sir Roland (Hallam)	Pitt, Miss E. M.
Doughty, C. J. A.	Johnson, Dr. Donald (Carlisle)	Pott, H. P.
Drayson, G. B.	Johnson, Eric (Blackley)	Powell, J. Enoch
du Cann, E. D. L.	Johnson, Howard (Kemptown)	Price, David (Eastleigh)
Dugdale, Rt. Hn. Sir T. (Richmond)	Jones, R. Hon. Aubrey (Hall Green)	Price, Henry (Lewisham, W.)
Duncan, Capt. J. A. L.	Joseph, Sir Keith	Prior-Palmer, Brig. O. L.
Duthie, W. S.	Joynson-Hicks, Hon. Sir Lancelot	Profumo, J. D.
Eccles, Rt. Hon. Sir David	Kaberry, D.	Raikes, Sir Victor
Eden, J. B. (Bournemouth, West)	Keegan, D.	Ramsden, J. E.
Elliot, Rt. Hon. W. E.	Kerby, Capt. H. B.	Rawlinson, Peter
Emmet, Hon. Mrs. Evelyn	Kershaw, J. A.	Redmayne, M.
Errington, Sir Eric	Kimball, M.	Rees-Davies, W. R.
Erroll, F. J.	Kirk, P. M.	Remnant, Hon. P.
Farey-Jones, F. W.	Lagden, G. W.	Renton, D. L. M.
Fell, A.	Lambert, Hon. G.	Ridsdale, J. E.
Finlay, Graeme	Lambton, Viscount	Rippon, A. G. F.
Fisher, Nigel	Lancaster, Col. C. G.	Robinson, Sir Roland (Blackpool, S.)
Fletcher-Cooke, C.	Langford-Holt, J. A.	Robson-Brown, W.
Fort, R.	Leavey, J. A.	Rodgers, John (Sevenoaks)
Foster, John	Leburn, W. G.	Roper, Sir Harold
Fraser, Hon. Hugh (Stone)	Legge-Bourke, Maj. E. A. H.	Ropner, Col. Sir Leonard
Fraser, Sir Ian (M'cmbe & Lonsdale)	Legh, Hon. Peter (Petersfield)	Russell, R. S.
Freeth, D. K.	Lennox-Boyd, R. Hon. A. T.	Sandys, Rt. Hon. D.
Galbraith, Hon. T. G. D.		Schofield, Lt.-Col. W.
Gammans, Sir David	Lindsay, Hon. James (Devon, N.)	Scott-Miller, Cmdr. R.
Garner-Evans, E. H.	Lindsay, Martin (Solihull)	Sharpies, R. C.
George, J. C. (Pollok)	Linstead, Sir H. N.	Shepherd, William
Gibson-Watt, D.	Llewellyn, D. T.	Simon, J. E. S. (Middlesbrough, W.)
Glover, D.	Lloyd, Rt. Hon. G. (Sutton Coldfield)	Smithers, Peter (Winchester)
Godber, J. B.	Lloyd, Maj. Sir Guy (Renfrew, E.)	Smyth, Brig. Sir John (Norwood)
Gomme-Duncan, Col. Sir Alan	Lloyd-George, Maj. Rt. Hon. G.	Soames, Capt. C.
Gough, C. F. H.	Longden, Gilbert	Spearman, Sir Alexander
Gower, H. R.	Low, Rt. Hon. A. R. W.	Speir, R. M.
Graham, Sir Fergus	Lucas, Sir jocelyn (Portsmouth, S.)	Spence, H. R. (Aberdeen, W.)
Grant, W. (Woodside)	Lucas, P. B. (Brentford & Chiswick)	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Grant-Ferris, Wg. Cdr. R.(Nantwich)	Lucas-Tooth, Sir Hugh	Stanley, Capt. Hon. Richard
Green, A.	McAdden, S. J.	Stevens, Geoffrey
Gresham Cooke, R.	McCallum, Major Sir Duncan	Steward, Sir William (Woolwich, W.)
Grimond, J.	Macdonald, Sir Peter	Stewart, Henderson (Fife, E.)
Grimston, Hon. John (St. Albans)	Mackeson, Brig. Sir Harry	Stoddart-Scott, Col. M.
Grimston, Sir Robert (Westbury)	Mackie, J. H. (Galloway)	Storey, S.
Grosvenor, Lt.-Col. R. G.	McLaughlin, Mrs. P.	Stuart, Rt. Hon. James (Moray)
Gurden, Harold	Maclean, Fitzroy (Lancaster)	Studholme, Sir Henry
Hall, John (Wycombe)	McLean, Nell (Inverness)	Sumner, W. D. M. (Orpington)
Hare, Rt. Hon. J. H.	Macleod, Rt. Hn. Iain (Enfield, W.)	Taylor, Sir Charles (Eastbourne)
Harris, Frederic (Croydon, N.W.)	MacLeod, John (Ross & Cromarty)	Taylor, William (Bradford, N.)
Harris, Reader (Heston)	Macmillan,Rt.Hn.Harold(Bromley)	Teeling, W.
Harrison A. B. C. (Maldon)	Macpherson, Niall (Dumfries)	Temple, J. M.
Harrison, Col. J. H. (Eye)	Maddan, Martin	Thomas, Leslie (Canterbury)
Harvey, Air Cdre. A. V. (Macclesfd)	Maitland, Cdr. J. F. W. (Horncastle)	Thomas, P. J. M. (Conway)
Harvey, Ian (Harrow, E.)	Maltland, Hon. Patrick (Lanark)	Thompson, Kenneth (Walton)
Harvey, John (Walthamstow, E.)	Marlowe, A. A. H.	Thompson, Lt.-Cdr. R. (Croydon, S.)
Harvie-Watt, Sir George	Marples, A. E.	Thorneycroft, Rt. Hon. P.
Hay, John	Marshall, Douglas	Thornton-Kemsley, C. N.
Heald, Rt. Hon. Sir Lionel	Maude, Angus	Tiley, A. (Bradford, W.)

Tilney, John (Wavertree)	Wakefield, Sir Wavell (St. M'lebone)	Williams, Paul (Sunderland, S.)
Turner, H. F. L.	Walker-Smith, D. C.	Williams, R. Dudley (Exeter)
Turton, Rt. Hon. R. H.	Wall, Major Patrick	Wilson, Geoffrey (Truro)
Vane, W. M. F.	Ward, Hon. George (Worcester)	Wood, Hon. R.
Vaughan-Morgan, J. K.	Ward, Dame Irene (Tynemouth)	Woollam, John Victor
Vickers, Miss J. H.	Waterhouse, Capt. Rt. Hon. C.
Vosper, D. F.	Watkinson, Rt. Hon. Harold	TELLERS FOR THE AYES:
Wade, O. W.	Webbe, Sir H.	Mr. Oakshott and Mr. Wills.
Wakefield, Edward (Derbyshire, W.)	Whitelaw, W.S.I. (Penrith & Border)
NOES
Ainsley, J. W.	Gaitskell, Rt. Hon. H. T. N.	Marquand, Rt. Hon. H. A.
Albu, A. H.	Gibson, C. W.	Mason, Roy
Allaun, Frank (Salford, E.)	Gooch, E. G.	Mayhew, C. P.
Allen, Arthur (Bosworth)	Gordon Walker, Rt. Hon. P. C.	Mellish, R. J.
Allen, Scholefield (Crewe)	Greenwood, Anthony	Messer, Sir F.
Anderson, Frank	Grenfell, Rt. Hon. D. R.	Mikardo, Ian
Awbery, S. S.	Grey, C. F.	Mitchison, G. R.
Bacon, Miss Alice	Griffiths, David (Rother Valley)	Monslow, W.
Baird, J.	Griffiths, Rt. Hon. James (Llanelly)	Moody, A. S.
Balfour, A.	Griffiths, William (Exchange)	Morris, Percy (Swansea, W.)
Bellenger, Rt. Hon. F. J.	Hale, Leslie	Mort, D. L.
Bence, C. R. (Dunbartonshire, E.)	Hall, Rt. Hn. Glenvil (Colne Valley)	Moss, R.
Benn, Hn. Wedgwood (Bristol, S. E.)	Hamilton, W. W.	Moyle, A.
Benson, G.	Hannan, W.	Mulley, F. W.
Beswick, F.	Harrison, J. (Nottingham, N.)	Neal, Harold (Bolsover)
Bevan, Rt. Hon. A. (Ebbw Vale)	Hastings, S.	Noel-Baker, Rt. Hon. P. (Derby, S.)
Blackburn, F.	Hayman, F. H.	O'Brien, Sir Thomas
Boardman, H.	Healey, Denis	Oliver, G. H.
Bottomley, Rt. Hon. A. G.	Herbison, Miss M.	Oram, A. E.
Bowden, H. W. (Leicester, S. W.)	Hewitson, Capt. M.	Orbach, M.
Bowles, F. G.	Hobson, C. R.	Oswald, T.
Boyd, T. C.	Holman, P.	Owen, W. J.
Braddock, Mrs. Elizabeth	Houghton, Douglas	Padley, W. E.
Brockway, A. F.	Howell, Charles (Perry Barr)	Paget, R. T.
Broughton, Dr. A. D. D.	Howell, Denis (All Saints)	Paling, Rt. Hon. W. (Dearne Valley)
Brown, Rt. Hon. George (Belper)	Hubbard, T. F.	Palmer, A. M. F.
Brown, Thomas (Ince)	Hughes, Cledwyn (Anglesey)	Pannell, Charles (Leeds, W.)
Burke, W. A.	Hughes, Emrys (S. Ayrshire)	Pargiter, G. A.
Burton, Miss F. E.	Hughes, Hector (Aberdeen, N.)	Parker, J.
Butler, Herbert (Hackney, C.)	Hunter, A. E.	Parkin, B. T.
Butler, Mrs. Joyce (Wood Green)	Hynd, H. (Accrington)	Paton, John
Callaghan, L. J.	Hynd, J. B. (Attercliffe)	Pearson, A.
Carmichael, J.	Irvine, A. J. (Edge Hill)	Peart, T. F.
Castle, Mrs. B. A.	Irving, S. (Dartford)	Pentland, N.
Champion, A. J.	Isaacs, Rt. Hon. G. A.	Plummer, Sir Leslie
Chapman, W. D.	Jay, Rt. Hon. D. P. T.	Price, J. T. (Westhoughton)
Chetwynd, G. R.	Jeger, George (Goole)	Price, Philips (Gloucestershire, W.)
Clunie, J.	Jeger, Mrs. Lena (Holbn & St.Pncs, S.)	Probert, A. R.
Coldrick, W.	Jenkins, Roy (Stechford)	Proctor, W. T.
Collick, P. H. (Birkenhead)	Johnson, James (Rugby)	Pryde, D. J.
Collins, V. J. (Shorditch & Finsbury)	Johnston, Douglas (Paisley)	Pursey, Cmdr. H.
Corbet, Mrs. Freda	Jones, Rt. Hon. A.Creech (Wakefield)	Randall, H. E.
Cove, W. G.	Jones, David (The Hartlepool!)	Rankin, John
Craddock, George (Bradford, S.)	Jones, Elwyn (W. Ham, S.)	Redhead, E. C.
Cronin, J. D.	Jones, Jack (Rotherham)	Reeves, J.
Cullen, Mrs. A.	Jones, J. Idwal (Wrexham)	Reid, William
Daines, P.	Jones, T. W. (Merioneth)	Rhodes, H.
Dalton, Rt. Hon. H.	Kenyon, C.	Roberts, Albert (Normanton)
Darling, George (Hillsborough)	Key, R. Hon. C. W.	Roberts, Goronwy (Caernarvon)
Davies, Ernest (Enfield, E.)	King, Dr. H. M.	Robinson, Kenneth (St. Panoras, N.)
Davies, Harold (Leek)	Lawson, G. M.	Rogers, George (Kensington, N.)
Davies, Stephen (Merthyr)	Ledger, R. J.	Ross, William
Deer, G.	Lee, Frederick (Newton)	Royle, C.
de Freitas, Geoffrey	Lever, Harold (Cheetham)	Short, E. W.
Delargy, H. J.	Lever, Leslie (Ardwick)	Shurmer, P. L. E.
Dodds, N. N.	Lewis, Arthur	Silverman, Julius (Aston)
Donnelly, D. L.	Lindgren, G. S.	Silverman, Sydney (Nelson)
Dugdale, Rt. Hn. John (W. Brmwch)	Lipton, Lt.-Col. M.	Simmons, C. J. (Brierley Hill)
Dye, S.	Logan, D. G.	Skeffington, A. M.
Edelman, M.	Mabon, Dr. J. Dickson	Slater, Mrs. H. (Stoke, N.)
Edwards, Rt. Hon. John (Brighouse)	MacColl, J. E.	Slater, J. (Sedgefield)
Edwards, Rt. Hon. Ness (Caerphilly)	McGhee, H. G.	Smith, Ellis (Stoke, S.)
Edwards, Robert (Bilston)	McInnes, J.	Snow, J. W.
Edwards, W. J. (Stepney)	McKay, John (Wallsend)	Sorensen, R. W.
Evans, Albert (Islington, S.W.)	McLeavy, Frank	Soskice, Rt. Hon. Sir Frank
Evans, Edward (Lowestoft)	MacMillan, M. K. (Western Isles)	Sparks, J. A.
Fernyhough, E.	MacPherson, Malcolm (Stirling)	Steele, T.
Fienburgh, W.	Mahon, Simon	Stewart, Michael (Fulham)
Finch, H. J.	Mainwaring, W. H.	Stokes, Rt. Hon. R. R. (Ipswich)
Fletcher, Eric	Mallalieu, E. L. (Brigg)	Stones, W. (Consett)
Forman, J. C.	Mallalieu, J. P. W. (Huddersfd, E.)	Strachey, Rt. Hon. J.
Fraser, Thomas (Hamilton)	Mann, Mrs. Jean	Strauss, Rt. Hon. George (Vauxhall)

Stross, Dr. Barnett (Stoke-on-Trent, C).	Warbey, W. N.	Williams, Ronald (Wigan)
Summerskill, Rt. Hon. E.	Watkins, T. E.	Williams, Rt. Hon. T. (Don Valley)
Swingler, S. T.	Weitzman, D.	Williams, W. R. (Openshaw)
Sylvester, G. O.	Wells, Percy (Faversham)	Williams, W. T. (Barons Court)
Taylor, Bernard (Mansfield)	Wells, William (Walsall, N.)	Willis, Eustace (Edinburgh, E.)
Taylor, John (West Lothian)	West, D. G.	Wilson, Rt. Hon. Harold (Huyton)
Thomas, George (Cardiff)	Wheeldon, W. E.	Winterbottom, Richard
Thomas, lorwerth (Rhondda, W.)	White, Mrs. Eirene (E. Flint)	Woodburn, Rt. Hon. A.
Thomson, George (Dundee, E.)	White, Henry (Derbyshire, M.E.)	Woof, R. E.
Thornton, E.	Wigg, George	Yates, V. (Ladywood)
Timmons, J.	Wilcock, Group Capt. C. A. B.	Younger, Rt. Hon. K.
Tomney, F.	Wilkins, W. A.	Zilliacus, K.
Turner-Samuels, M.	Willey, Frederick
Usborne, H. C.	Williams, David (Neath)	TELLERS FOR THE NOES:
Viant, S. P.	Williams, Rev. Llywelyn (Ab'tillery)	Mr. Popplewell and Mr. Holmes.

Bill accordingly read a Second time and committed to a Committee of the whole House.

Committee Tomorrow.