HC Deb 18 December 1956 vol 562 cc1074-7
7. Miss Burton

asked the Chancellor of the Exchequer whether, in view of the increased charges resulting from the increase in the price of petrol, he will make a further statement upon their effect on the cost-of-living index.

Mr. H. Macmillan

I would refer the hon. Member to my statement in the debate on the Second Reading of the Bill on 10th December.

Miss Burton

Is the Chancellor aware that his statement that all this will raise the cost of living by less than one-third of a point is hardly correct? Will he tell the House whether, when he spoke of one-third of a point, he was dealing with transport charges affecting the delivery of milk or bread, or the charges on fuel affecting bus fares?

Mr. Macmillan

I gave the figures of one-half a point for the direct effect of the duty and one-quarter of a point for the indirect effect. Those figures are well supported and, I think, accepted in economic circles.

Miss Burton

What is the difference between direct and indirect if the person concerned has to pay it?

Mr. Macmillan

By direct effect, I meant the actual increase on motoring and so forth, and by the indirect effect, when it came to be distributed throughout the economy.

8. Sir F. Medlicott

asked the Chancellor of the Exchequer if in view of the effect of the petrol tax on the cost of living and on costs of production, he will give an assurance that every effort will be made, irrespective of the date on which the flow of oil is restored, to reduce such tax at the earliest possible date, meeting the difference either by economies in Government expenditure or by transferring the incidence of taxation to those parts of our economy where it will be less harmful.

Mr. H. Macmillan

This matter was fully discussed in the debates on the Hydrocarbon Oil Duties (Temporary increase) Bill, and I cannot add anything to what was said in those debates.

Sir F. Medlicott

Will my right hon. Friend bear in mind that this tax, imposed as it is at the starting point of so many of our activities, is very inflationary, and that the best way to reduce the cost of living is to reduce Government expenditure and not increase Government taxation?

Mr. Macmillan

I should accept the second part of my hon. Friend's supple- mentary question as a general proposition, but I think that the first part is mistaken, and I am supported by very high economic opinion.

Mr. H. Wilson

Would not the hon. Member's very cogent argument have gained in force if he had voted against this Measure last week?

13. Mr. Lewis

asked the Chancellor of the Exchequer what plans the Government have made to stabilise and reduce the cost of living in view of the inflationary effect which the 1s. 5d. per gallon additional charge on the price of petrol will have on our national economy.

Mr. H. Macmillan

In our recent debates it has already been explained how limited the effects of this increase are likely to be on the cost of living. I do not think any special anti-inflationary measures are necessary on this account.

Mr. Lewis

While I cannot agree that it is limited, is the Chancellor aware that, while the Government seem to have some wonderful ideas about how to put up the cost of living—a little bit here, a little bit there—we should like just one idea on how to reduce it?

Mr. Macmillan

One remarkable feature of this year is how extremely steady the cost of living has been.

Mr. Gower

Is it not a fact that the cost of living and the standard of living are ultimately determined largely by the people in industry and that there are severe limits to what any Government may achieve, as was demonstrated by the failure of the many expedients tried by the late Labour Government?

21. Mr. Lewis

asked the Chancellor of the Exchequer whether he is aware that all the petroleum companies have in the past few months been making profits, paying large dividends, and issuing share bonuses; and whether, in view of this, he will take such action as may be necessary to suspend further progress with the Hydrocarbon Oil Duties (Temporary Increase) Bill, and replace it by a direct petrol tax on the profits and dividends of these companies.

Mr. H. Macmillan

As I pointed out in my speech on the Second Reading of the Hydrocarbon Oil Duties (Temporary Increase) Bill, I examined very carefully all possible alternatives and came to the conclusion that a temporary increase in the duties on hydrocarbon oils was the proper course.

Mr. Lewis

Is not the Chancellor aware of the fact that all these companies have been paying fabulous dividends, and that even on the day that he announced it they paid a 5 per cent. tax-free dividend? All these companies are handing out free issues of shares. Surely this is a better way of dealing with the matter than by putting a tax upon the ordinary individual?

Mr. Macmillan

No, Sir. I think that, upon consideration, the House would feel that a differential tax upon a certain industry would be very bad in principle. It would lead to demands for reduced rates in respect of industries which were not doing so well. As everyone knows who has studied the oil situation in past years, the profits of the oil companies —including those in which Her Majesty's Government have a very large holding—have been, to a very great extent, ploughed back to finance the great capital development that has been done and that still lies before us.

Mr. J. T. Price

Yes, but let us forget for the moment the fiscal aspect of the matter. Is the Chancellor in a position to lay before the House any costings upon which the increase of 5d. per gallon payable to the wholesaler was agreed to by the Minister?

Mr. Macmillan

That is another question. Perhaps it could be directed to the Minister concerned. I am satisfied that the proposal made in the Question would not be a sound financial proposal.

Major Beamish

If I put down a Question, can my right hon. Friend give an indication of what sort of contribution is made by oil companies, in the shape of taxes, towards our defence programme and the cost of the social services? May I assume that the hon. Member would rather see the companies making losses and defaulting on their dividends?