HC Deb 02 July 1958 vol 590 cc1419-39

On and after the first day of August nineteen hundred and fifty-eight, there shall be allowed from the customs duty a rebate at the rate of two shillings and sixpence a gallon and from the excise duty a rebate at the rate of one shilling and threepence a gallon on the delivery of hydrocarbon oil for use in any mechanically propelled vehicle licensed as a public service vehicle for the carriage of passengers.—[Mr. McLeavy.]

Brought up, and read the First time.

Mr. Frank McLeavy (Bradford, East)

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

The purpose of this new Clause is to exempt all public service vehicles for the carriage of passengers from fuel oil taxation. Before going into the details of the case, I must say that the industry was confidently expecting that at long last some relief from this heavy penal taxation would be forthcoming in the Budget. All the facts of the serious financial position and difficulties of the industry have been placed clearly before the Chancellor. He has been left in no doubt whatever as to the urgency of substantial tax reliefs.

I very much doubt whether the Chancellor can point to any other industry which has been confronted with so many increases in taxation over so short a time. Before the 1950 Budget the tax on fuel oil was 9d. a gallon. By the action of successive Chancellors over a period of three years, 1950–52, the tax was increased to 2s. 6d. a gallon, bringing the taxation on fuel oil to over 200 per cent. The tax represents between 10 and 15 per cent. of operation costs, varying with the type of vehicle used and the type of services run. In other words, the tax is the equivalent of 2½d.-3d. a vehicle-mile.

The passenger transport industry has been caught up in a cycle of ever-increasing prices of vehicles and materials over the last five years, coupled with an increased wage bill arising directly from the Government's economic policy. The industry has never enjoyed the same freedom as private industry in other fields; it has never been able to pass on immediately to the customer its increased costs. There is always a long process of presenting its case to the Traffic Commissioners, and applications for increased fares in any part of the country are carefully and critically examined by the commissioners. It is perfectly clear that even if the commissioners agree to an increase in fares, the increase comes very much behind the increased cost of running the undertaking.

The Municipal Passenger Transport Association recently undertook a survey of this position, and the results show that more than two-thirds of the municipal operators in the country will end the current financial year with a deficit amounting in total to over £1 million. The survey also shows that fewer passengers are now using the services, and this trend is gathering momentum. During the five-year period to March, 1957, local authority operators lost about 7 per cent. of their passengers. But the quickly worsening position becomes more evident when late 1957 figures are compared with the similar period in 1956. Statistics show that as many as 10 per cent. fewer passengers were being carried in 1957.

What is the reason for this reduction in traffic? It is due to competition from other forms of transport and to a change in the habits of the people. There are more private motor cars, scooters and light motor cycles on the roads than ever before, and the railways are extending the scope of their diesel engine railway cars, which is beginning to have a very serious effect upon the receipts of road services. Television is keeping potential passengers at home in the evenings. All such changes in travel and habits reflect themselves upon the receipts of the bus undertakings.

The financial problem of passenger transport is not one which can be clearly sectionalised into city, urban or rural problems. It is one which affects the whole industry. I would say that the city and urban services were interdependent upon each other, while the rural services—I should like the Chancellor to make a note of this point—are entirely dependent upon these other services for the standard and quality of service provided in the rural areas.

If the city and urban undertakings can reasonably be expected to provide economic services to the countryside, they must have the financial resources to do so. The Traffic Commissioners, who are always pressing bus services, whether municipally-owned or privately-owned, to provide the maximum amount of service in the countryside of an unremunerative character, cannot expect or demand that these services should be provided if the financial position of the bus industry is difficult.

7.45 p.m.

It is important that we should know the views which have been expressed by the various associations representing the road passenger transport industry. I should like to read to the Committee an important joint statement upon the effects of fuel oil taxation, which was recently issued by the Public Transport Association, the Municipal Passenger Transport Association, the Passenger Vehicles Operators' Association and the Scottish Road Passenger Transport Association.

Dealing with the question of rural services, the statement makes these points: No one is more worried about the deteriorating situation in rural services than the bus industry itself. It has always been a tradition of which this industry is proud to run a very high percentage of services at a loss, these being subsidised by the better paying services. Today, however, it is the scale of the losses incurred in running marginal and rural services that is making this plan impossible. Before the war losses on these services would range from, say, 1d. to 2d. per mile. Today, the losses can be 1s. or more per mile. Our industry appreciates that it is providing an essential public service and finds it distressing to have to suffer ill-informed criticism because it is forced by the retention of this penal tax into making more and more cuts in rural mileage. It is fully aware from the national point of view of the evils, such as the withdrawal of farm labour, which derives from an insufficiency of rural buses, but the difficulties are not of the bus industry's seeking, and the miracle is that the cuts have not been much bigger than they have been hitherto—and that it has been possible to delay them for so long. This has been largely due to the industry's persistent pursuit of new economies in operation, e.g., lightweight vehicles with lower fuel consumption, and, where practicable, of one-man buses. But, lamentable though it may be the present position is that country mileage is now being reduced wholesale and it must be a matter of real doubt whether in a few years there will be virtually any country services left at all. It is impossible to believe that this is a situation which any Government could desire. That is a very considerable indictment of the persistent policy of the Government in refusing to meet the fair and justified claims for exemption from the fuel oil taxation. If that is not strong enough in itself, I should like to read to the Committee a statement made by Mr. J. Spencer Wills, chairman of the Birmingham and Midland Motor Omnibus Company, Limited, a statement which was made at the annual meeting of the company on 7th May, at Stratford-on-Avon, which I think is important. I am quoting a statement which was published in The Times on Friday, 9th May, 1958. Under the heading, "Rural Services", Mr. Spencer Wills said: The only major 'economy' left is the drastic pruning of services, even to the extent of giving up same altogether. In a company like yours"— he was addressing the shareholders— which, throughout its long history, has never ceased to expand, every effort is made to avoid this kind of 'economy'. Nevertheless, facts must be faced. Sixty-five per cent. of services, and 43 per cent. of our mileage, are run at a loss, and a great deal of this type of operation is in the rural areas. As everybody knows, the position of rural services today, all over the country, gives rise to the gravest concern. Passengers are so few and costs are so high that services are being slashed wholesale; many are being abandoned altogether. The industry has been making the strongest possible representations to the Government to do the only possible thing to help save the situation—abolish the tax on our fuel oil. This year, it was confidently expected that our advice would be taken, and it was with mingled feelings of amazement and disgust that we found that the recent Budget had disappointed us once more. It is even more galling when we read of the tax on many luxuries being reduced to figures like 30 per cent. While our tax is left at over 200 per cent. One thing is clear: the blame for the plight of the rural bus services must be placed fairly and squarely on the shoulders of the Government. That is not the statement of a Socialist. It is the statement of a responsible chairman of a private bus undertaking. I want to say quite frankly to the Chancellor that it is monstrous that the bus undertakings should be called upon to meet this heavy penal taxation at a time when the Government are crying out for industry to keep down the cost of living. I do not think that there is anything which has a greater bearing on the cost of living than increased bus fares. They affect the man going to and from his work, and they affect him again if he decides to go to some place of amusement in the evening or wishes to take his family out for a trip. They affect the housewife when she goes to the shops. They affect the children going to and from school. These factors have a decisive effect upon the cost of living of the people.

It is because of these facts that I cannot for the life of me understand why we should be denied this remission of taxation, which is essential if we are to maintain our standard of services. I know that the rural services are very dear to the heart of the Chancellor, but it is no good having sympathy and saying "I am sorry that I cannot do anything." There is nothing in the world to stop the Chancellor of the Exchequer and the Government from doing something now to ensure that the rural bus services are maintained and that the bus industry throughout the country is able to provide the type of service which is essential for the common well-being of society.

The Minister of Transport has been thinking in terms of miniature 12-seater buses for country services. He seems to have the extraordinary idea, probably derived from lack of knowledge of the position, that by some way or another between the milking of a cow or the ploughing of a field someone will provide a kind of makeshift service for the countryside. This is fantastic. What the people in the countryside want, and what they are entitled to receive, is the type of service which will be efficient, reasonably regular, and, in every sense of the term, reliable.

It is no good people talking about subsidising the farming industry. I am not complaining about it, but we excuse that industry all kinds of taxation because it is a national necessity for the well-being of the community. Yet we deny to a struggling bus undertaking, which is finding it difficult and almost impossible to carry out its obligations and its desire to provide these rural services, the relief which will enable it to do it. This does not make sense.

There is another point which the Chancellor ought to bear in mind, quite apart from the arguments which we have put over the last few years for the remission of this taxation. There is the point that when fuel oil is used for manufacturing purposes, or for heating or for diesel railcars, which are now running—and I am not complaining about it—in competition with road transport, and in some cases doing very considerable harm, but nevertheless benefiting the railways—they are free from taxation. It is only when the oil is used by road transport that it is taxed at all, and it is extraordinary that road transport consumes only about one-sixth of the total amount. Surely the Chancellor must realise how unfair this position is.

8.0 p.m.

I want to put to the right hon. Gentleman three points which I think he ought to consider. First, he should not hesitate at all to consider most seriously the exemption of passenger vehicles from the tax altogether. If he feels that that is too great an immediate change, there is nothing to stop him taking the second course open to him, that is to say, cutting the tax by not less than half. He could say that here, at least, there was something to go on with and he would review the position in the next Budget to see whether a further reduction was justified and the country's financial position allowed it.

If it is his intention that the tax must remain, he ought to consider spreading it over all users of the oil. Quite frankly, that is not a monstrous proposal, yet, when it is made—it would bring a reduction of tax to passenger transport of about 1s. 2d. per gallon—all kinds of difficulties and snags are raised. I quite appreciate that manufacturers and other users of the oil who have never paid the tax would stant to yell about it. But the right hon. Gentleman really must make up his mind about what he will do.

Is the Chancellor determined to insist upon the present tax yield remaining, and is he determined that it shall come from the passenger transport operators only, or is he prepared to consider, if it is to be a permanent feature and the tax yield must come from one source or another, that the burden should be spread evenly over the broader shoulders of all users? There is no justification at all for the passenger services bearing the present penal rate of tax while the others go soot free. The industry is entitled to know precisely where it stands so that it can make plans to meet its difficulties.

It may well be that, during the next twelve months, the financial difficulties of the bus industry arising from further increases in wages and probable further increases in costs due to rises in the general cost of vehicles, repairs, materials and so forth, will considerably worsen. The passenger transport industry has played a very important part in our economic life. It has never refused to provide the maximum amount of uneconomic services in the countryside and elsewhere. It is an industry which, even during the war, kept its prices down to what might be called an artificial level, and kept its wages down in very much the same way. It is an industry which, in war and peace, has served the community faithfully and well, and it is entitled to receive from the Chancellor some definite help.

The matter is urgent. There is always a tendency for some people to say about our proposal that it is a "hardy annual". It is not just a hardy annual. The transport industry is in a very serious position, and the Chancellor has a duty to say firmly tonight where he stands and what he will do to remove the burden of this penal tax which cannot, on any ground, now be justified.

Sir Robert Cary (Manchester, Withington)

I support many of the sentiments expressed by the hon. Member for Bradford, East (Mr. McLeavy). In my opinion, the matter is most urgent. I do not say to my right hon. Friend the Chancellor of the Exchequer that the degree of urgency has reached crisis point so that something must be done by 1st August next, but I feel, as does the hon. Member for Bradford, East that there is coming to the road transport industry a phase which will perhaps be the most difficult in its long history.

Recent events lasting over seven weeks showed how independent members of the public are becoming of an industry which has served them so well in the past. It is startling to read in the newspapers of recent returns showing that at least 13 per cent. of the traffic on the Greater London area road services which existed until eight weeks ago has not returned to those services during the last ten days of resumed operations. The matter is very serious, and I doubt whether much more of that missing 13 per cent. will return at all.

There are changes of habit among the public. Television, domestic entertainments, lighter loadings on public service vehicles late at night, the development of the small motor scooter and independent forms of transport will have a most serious impact upon our road passenger services in two or three years. It will be hard to sustain those services at their present rate in two years' time.

There is a rather frightening aspect to the history of London transport. The wage claim recently acknowledged automatically had repercussions in the provinces. Notice has been given that a wage claim is to be advanced on behalf of the provincial men which will make it almost impossible for provincial services to continue, not their town and urban services, but many of their rural services. This is the difficulty confronting many Members of this Committee who represent rural constituencies, where, perhaps, in the coming winter many services valuable to villages and small market towns will have to be cancelled because of the inability of the local provincial transport undertakings to provide the services hitherto maintained.

May I reinforce and emphasise what was said by the hon. Member for Bradford, East, that it is in the rural services that the first effects of the decline in road passenger transport will occur? I know perfectly well the Chancellor's difficulty. If I could here and now produce a formula to the Committee which would neatly separate rural services from urban and town services and the Chancellor could take a step linked purely to rural services, he might even be tempted to do so, for the benefit of the Committee, by 1st August. But it is because it is impossible to separate any of these services that we must consider the whole problem.

Without denying the Treasury any revenue, it might be possible to shift the burden on fuel oil to other quarters of our economy and thereby lighten it on road passenger services. Of course, the happiest step of all would be to abolish the duty. But perhaps that is asking too much of the Chancellor. Therefore, one searches for variations and I ask my right hon. Friend, before the Finance Bill comes to its ultimate close, seriously to consider, without denying his Department one kopeck of revenue, whether he could shift the incidence of present taxation so that it might fall a little more lightly on road passenger service vehicles.

Mr. David Jones (The Hartlepools)

Far be it from me to try to teach the Chancellor of the Exchequer the difficulties that are being experienced at present in rural bus services. He knows a good deal more about the consequences of the severe costs on rural bus services than ever I could tell him. But of the total fuel oil imported into this country, as my hon. Friend the Member for Bradford, East (Mr. McLeavy) pointed out, about one-sixth of it is used in the road passenger service. The other five-sixths is already duty-free, whether it is used for manufacturing, for heating or in diesel rail cars. The total cost of the concession which the proposed Clause would deny him is roughly 30 million.

Towards the end of yesterday's business in the House I heard the Chancellor vehemently defending his Government as a moderate Government who were concerned with moderate profits and moderate wages. But the effect of what he is doing to this industry is destroying it completely. If the Press is to be believed, hon. Members who sit behind the Chancellor representing rural constituencies had the opportunity the other day of listening to the right hon. Gentleman and the Minister of Transport when they heard of the difficulties that are being experienced by both privately-owned and publicly-owned bus companies in running rural services. There is a depot in a rural part of Northumberland where the United Omnibus Company runs fourteen services. Each one of these services has to be run at a loss and would have been long since withdrawn but for the fact that the urban services are helping to maintain them. But that position is quickly worsening.

The hon. Member for Manchester, Withington (Sir R. Cary) said that it might be possible to separate rural services from urban services. But the problem is now creeping into the urban services. The Municipal Passenger Transport Association estimates that in the financial year ended April, 1958, about 64 of the 95 municipal omnibus authorities will reach the end of the financial year with a deficit, and the total deficit of the 64 towns will be something over £1 million. Those services are mainly used in the urban areas.

Many of the privately-owned bus companies, such as the Midland Red Motor Services and the United Omnibus Company, are finding difficulty in even trying to maintain some of their rural services with any minor surplus that might arise from urban services. When a service loses about a shilling per mile, as has been said, it is very difficult to get urban services to support them. The result is that rural services were substantially cut many months ago. The now semi-urban and rural services are being cut, and, while the hon. Member for Manchester, Withington says that difficulties were experienced in London, what would have been the difficulties in Manchester or Birmingham where there is no tube service to help the situation?

8.15 p.m.

What are the facts of operation? The Chancellor knows as well as I that the tax is 2s. 6d. per gallon and a diesel-driven double-decker bus runs approximately 10 miles to the gallon. In other words, for every mile that that bus runs during the day the first 3d. collected in fares has to be handed over to the Chancellor. Before the platform costs, the cost of maintaining the service, and the costs of running the services are met, the first 3d. in every mile has to be handed over to the right hon. Gentleman. With regard to single-decker buses, where it might be possible to get twelve or 12½ miles to the gallon, the first 2½d. collected in every mile has to be handed over to the right hon. Gentleman. Does he really believe that in these difficult times it will be possible for companies to continue, whether they be publicly or privately owned, to do this kind of thing when the first 3d. in every mile is handed over to the Chancellor?

Let me give one or two other figures. "Headway" is a term used in the industry. It means roughly the number of miles the bus travels during the time it is out of the garage, and the average for the country is roughly 20 miles headway. In other words, the bus travels 20 miles every hour that it is out of the garage. If we assume that the bus is on the road for fifteen hours a day, it means that during the day it will travel roughly 300 miles trying to collect passengers. In other words, it will consume thirty gallons of diesel oil. At 2s. 6d. a gallon that works out at £3 15s. per day. So that the first £3 15s. of revenue that is earned by every double-decker bus that leaves a garage for a full day of fifteen hours £3 15s. has to be handed over to the right hon. Gentleman before the lad who sweeps the bus after it arrives in the garage at night is given his wages.

The Chancellor may say, "What about the single-deckers?" If we take the figure of 12 miles to the gallon, they would consume roughly 25 gallons of fuel. In other words, the Devon General Buses running to Tiverton have to hand over to the right hon. Gentleman £3 2s. 6d. every day before they start to pay the conductor. In these circumstances, how can the Chancellor expect the industry to operate? It must inevitably go out of business. Whether it will be a good or bad thing for the urban, semi-urban and semi-rural people to be without their bus services, I should not like to prophesy; but I know that if the public passenger services operating in the Chancellor's constituency have to be withdrawn there will be an awful lot of discontented people in Tiverton.

All this will cost the Chancellor roughly £30 million. At an earlier stage of the Committee, I heard him say that the country's economy was beginning to become stable and that there was an element of buoyancy about it. Is he prepared to risk what he thinks is the beginning of a stable economy by prejudicing or imperilling our passenger transport service, which enables many thousands of workers, school children and business people to travel backwards and forwards each day? All this is in jeopardy so that the Chancellor can get £30 million more revenue than he would get if he accepted the Clause.

I suggest to the right hon. Gentleman that if wants the recovery of the country to start, if he wants to make a gesture of what he claimed last night to be his policy in relation to wages, a steady cost of living and profits, he should accept the Clause and find other means of raising the £30 million.

Mr. Amory

The Clause asks for the exemption of duties on hydrocarbon oils used by public service passenger vehicles. I shall be frank straightaway and say that the main reason why I have not been able to do anything in this direction in this year's Budget was that I could not afford the loss of the revenue which is brought in. If I had agreed to the exemption which is suggested in the Clause, it would amount in the case of diesel vehicles only to £28 million and in the case of diesel and petrol to £33 million.

It would, however, be extremely unlikely to stop there. If an exemption of this kind were given for passenger-carrying vehicles, the goods vehicle operators would produce a strong case to set against it. If the concession were extended to goods traffic vehicles, for diesel only the cost would be a further £37 million and if it were extended to diesel and petrol goods vehicles it would involve a much larger figure.

Mr. McLeavy

Does the right hon. Gentleman not appreciate that there is a tremendous difference between passenger transport vehicles and the ordinary road haulage vehicles? Road haulage vehicles are not compelled by licence to run a service. They run only if it is economically profitable for them to do so. As against that, the buses must run a schedule of service approved by the Traffic Commissioner. In many cases, they may be only half or a quarter full, but the services must be maintained whether or not they are profitable.

Mr. Amory

I agree with the distinction that the hon. Member makes. On the other hand, of course, goods traffic concerns would, no doubt, make a case on the ground of cost, which enters directly into the cost of production and so interferes with our competitiveness. I agree that in the case of passenger transport, too, that is a cost which also affects the costs of production, although not quite so directly.

In February, before the Budget, I had the pleasure of a talk with the hon. Member for Bradford, East (Mr. McLeavy and with my hon. Friend the Member for Withington (Sir R. Cary). I do not dispute the nature of the problem that they put to me on that occasion and which has been put clearly to us this evening. Nor do I dispute the figures put forward by the hon. Member for The Hartlepools (Mr. D. Jones). Although I was not able to check them in detail, I have no doubt that the figures he produced were substantially accurate and relevant to this problem.

This problem, which I agree goes wider than the rural areas, is nevertheless seen in its most acute form in those areas. I looked carefully not only at the general question of the possibility of relief to passenger road services, but also to see whether there was any way in which at least something could be done in the rural areas. I know very well, as the hon. Member for The Hartlepools mentioned, the difficulties that arise in my own area. I know, too, that part of the difficulties is due to the rapid development of private vehicles, motor bicycles and motor scooters, which means that in many areas there is a lower demand for public service passenger transport. Having said that, however, I realise that in the rural areas this represents an acute problem.

After looking into that problem, I had to reach the conclusion—and no hon. Member who has spoken has disputed this—that it would be extremely difficult to design a relief which would apply only to rural transport. I informed myself about the contents of what is called the Northumberland Report, which recommended selective relief for rural operators. I understand that the passenger transport associations are strongly against any such discrimination, but I believe that, in practice, if relief were given, it might be very difficult to avoid the relief extending further and wider than passenger transport.

The hon. Member for Bradford, East mentioned the rate of tax as being 200 per cent. That is the tax on the fuel itself. I think the right way to look at it, when comparing it with other taxes, is as a tax on the transport service, that is to say, on the fares. The tax would be approximately 14 per cent., not an insignificant tax, I agree, even then. In terms of its effect on the Cost-of-Living Index the tax would represent about one-third of a point.

Mr. McLeavy

Has the right hon. Gentleman considered a tax upon the seating capacity of the buses?

Mr. Amory

No. Does the hon. Gentleman mean the Purchase Tax on the vehicle?

Mr. McLeavy

No, I mean a tax on the seating capacity of the buses.

Mr. Amory

No. I have not. I agree that if we are taking the total tax on the transport, that is a relevant consideration. Indeed, I think one could go further and propose a fuel tax on the vehicle itself. However, I do not want to dwell too much on that point, though the hon. Gentleman is quite right to pull me up upon it.

8.30 p.m.

The hon. Member for Bradford, East suggested the possibility, which I think we discussed at the interview in February to which I referred, of spreading the duty over all the users of hydrocarbon oils. I believe that that would average out at a duty of 1s. 1d. a gallon. Of course, it would have to be applied to all heavy fuel oils used by industry and agriculture. The current price of those heavy oils is about £9 or £10 a ton, and so a tax of 1s. 1d. a gallon would mean about doubling the price. It would have to be applied also to kerosene, which is so much used for domestic heating, and would be a tax on that for the first time.

I was asked about my future plans and whether I could announce them so that bus concerns would know where they were. It would be quite impossible for me to say what might become possible in the future. One simply cannot do that. I know it is a bit early in the year to say that I cannot anticipate my next year's Budget statement, but it is absolutely impossible so to look forward and to say what reductions of taxation—if any, I cautiously say—might become possible on another occasion.

All I can say is that I regret the necessity for the existence of the present very substantial rate of duty on fuel. I recognise that 2s. 6d. a gallon is a heavy charge. I have very considerable sympathy with the case made out moderately and fairly by the hon. Gentlemen who have spoken to this new Clause, and so it is in no very cheerful spirit that I end by saying again that I am afraid that this year I feel myself unable to afford the loss of revenue, Which would make, I fear, no significant impact on the solution of this problem.

Mr. Ernest Davies (Enfield, East)

Disappointing as is the Chancellor's reply to this new Clause, I will say this for him, that the Treasury has produced a new brief tonight in reply to our hardy annual. In the past we have been brushed off with the suggestion that the discrimination as between one set of users and another would be impossible to administer.

Mr. Amory

What I said tonight was quite without any prejudice to anything which my predecessors may have said on other occasions.

Mr. Davies

Then we will see next yeas what the right hon. Gentleman's predecessor has said this year.

The only two reasons which the Chancellor has produced for rejecting this new Clause are, first, that the cost would be too great, and secondly, that if it were given to the road passenger services there would be considerable pressure put upon him from goods traffic operators, and that he felt he would be unable to resist it. Judging from the behaviour of the Chancellor during our debates on this Bill and his resistance to so many suggestions which have been put forward, I should have thought that he would have been quite successful in resisting the goods vehicle operators if they wanted the same treatment as the road passenger service operators.

Although the Chancellor seems to appreciate to some extent the difficulties which are being experienced by bus operators in the rural districts, it is not only the rural areas which are suffering, as everybody who has spoken in this debate has made quite clear. Moreover, I do not feel that the right hon. Gentleman appreciates sufficiently the urgency of this problem and the necessity for taking some action. Action by taxation is not the only action which could be taken, but there is an urgency which requires that the Government should reconsider the position of the public services and should try to formulate a policy which will save them from further serious deterioration.

The cause and the root of this problem is surely this drift from public to private transport. Whatever action is taken, that tendency will continue, and to some extent it reflects a rise in the cost of living. With the increased number of private cars, scooters, motor cycles, and so on, that tendency will continue, and it cannot be halted. But I think that certain action can be taken which will minimise the effects of the drift from one form of transport to another and, in a way, cushion the position.

The reasons for this drift from public to private transport are quite clear and have been referred to in the debate. It is regrettable that the services which are most needed are those which are affected first and most severely, and also that those people who use the public services most are the most needy. That is to say, it is the unremunerative services, which serve the sparsely populated areas where transport is essential, that suffer first; and it is those people who live in those areas and must travel to and from work and cannot afford private transport who suffer as a consequence. They suffer not only because there are more difficulties in getting to work and in travelling for other purposes, but because the greater the decline in overall traffic the higher the fares must be.

It is the responsibility of any Government in power and of all the other authorities concerned to consider this problem and maintain the public services. I know that certain suggestions have been made and that the bus and coach operators themselves are taking what action they can. There has been a great increase in the number of one-man driver-conductor buses. Other steps are also being taken, but the extent of this decline is not fully appreciated and the necessity for action does not seem to have been brought home to the Government, particularly with respect to transport policy generally, as we know from debates in the House of Commons.

To give one example of the decline in the public services, I should like to quote from the British Transport Commission's Report for last year which has just been published. The Report summarises the traffics over the last ten years of operation of London Transport and the provincial and Scottish buses between 1948 and 1957. The number of passenger journeys operated by London Transport in 1948 was roughly 4,000 million, but by 1957 that figure had fallen to a little more than 3,000 million journeys. In other wards, there was an actual drop of 800 million journeys per year in the last ten years. That is evidence of the steady decline about which something must be done.

It is not possible for the bus operators to raise their fares to recoup the losses from the declining traffics. It is a known fact that they have reached the law of diminishing returns and that any attempt to raise fares will result in a further loss of revenue, or at least in a further decline in traffics. Fares are not high today compared with pre-war. They have not risen anywhere near as much as the general cost of living.

The Commission's report for last year shows that the average fare per mile charged by London Transport is 1.98d., compared with 1.14d. ten years ago. That is to say, the rise has been only 70 per cent. We know that there has been a very much greater rise in the cost of the general run of commodities and services. But although the fares are low compared with this general rise, any further increase would have a serious effect on the travelling public as a whole.

The reduction of the duty or its abolition so far as public service vehicles are concerned would make a difference to the undertakings, both for their rural and urban services, and it seems to be the only direct and immediate way of helping them pending consideration of the general matter of policy. It is estimated that the actual operating cost of between 10 and 15 per cent. is represented by the fuel tax, and, therefore, a reduction of it, or its abolition, would certainly have some effect on these companies. It might prevent a further rise in fares, which, unfortunately, seems inevitable if there is a further wage increase.

A point which the Chancellor must also bear in mind is that if relief is not given to these companies, and they are forced to resist the wage increases of those who rightly demand them, then,

in a sense, it is the workers themselves who are subsidising these companies. So not only is this causing industrial difficulties, but there is the danger that the pressure of the rising cost on the operators will cause their resistance and the workers will, in effect, be subsidising the companies.

I suggest to the Chancellor that, although the cost of this concession is high, it is not enough to cause him to reject the Clause, or to refuse to take any immediate action. I wish the Chancellor had told the Committee that he was considering taking action of some kind, and that he appreciated the urgency of so doing. I believe that the outlook for the bus and coach companies is so serious today that, unless some action is taken, the continuance of many public services, not only in the rural areas but in urban areas, too, which are essential to the industrial and social life of large sections of the community, will be in danger.

I think that the industry is heading for subsidies and I suggest to the Chancellor that in preference to getting into a situation where subsidies to the public transport are inevitable, it would be better to bring relief now by reducing the tax.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 162, Noes 201.

Division No. 189.] AYES [8.42 p.m.
Ainsley, J. W. Darling, George (Hillsborough) Hoy, J. H.
Albu, A. H. Davies, Ernest (Enfield, E.) Hughes, Emrys (S. Ayrshire)
Allaun, Frank (Salford, E.) Deer, G. Hughes, Hector (Aberdeen, N.)
Allen, Arthur (Bosworth) de Freitas, Geoffrey Hynd, H. (Accrington)
Awbery, S. S. Delargy, H. J. Hynd, J. B. (Attercliffe)
Bacon, Miss Alice Diamond, John Irving, Sydney (Dartford)
Balfour, A. Dodds, N. N. Isaacs, Rt. Hon. G. A.
Benson, Sir George Ede, Rt. Hon. J. C. Janner, B.
Bevan, Rt. Hon. A. (Ebbw Vale) Edwards, W. J. (Stepney) Jay, Rt. Hon. D. P. T.
Blackburn, F. Evans, Edward (Lowestoft) Jeger, George (Goole)
Blenkinsop, A. Fernyhough, E. Jeger, Mrs. Lena (Holbn & St. Pncs, S.)
Blyton, W. R. Fletcher, Eric Jenkins, Roy (Stechford)
Boardman, H. Fraser, Thomas (Hamilton) Johnston, Douglas (Paisley)
Bonham Carter, Mark Gibson, C. W. Jones, David (The Hartlepools)
Bottomley, Rt. Hon. A. G. Gordon Walker, Rt. Hon. P. C. Jones, Jack (Rotherham)
Bowden, H. W. (Leicester, S. W.) Grenfell, Rt. Hon. D. R. Jones, J. Idwal (Wrexham)
Braddock, Mrs. Elizabeth Griffiths, David (Rother Valley) Kenyon, C.
Broughton, Dr. A. D. D. Grimond, J. Key, Rt. Hon. C. W.
Brown, Thomas (Ince) Hall, Rt. Hn. Glenvil (Colne Valley) Lawson, G. M.
Burke, W. A. Hamilton, W. W. Ledger, R. J.
Butler, Herbert (Hackney, C.) Harrison, J. (Nottingham, N.) Lee, Frederick (Newton)
Callaghan, L. J. Hastings, S. Lee, Miss Jennie (Cannock)
Champion, A. J. Hayman, F. H. Lever, Leslie (Ardwick)
Chapman, W. D. Healey, Denis Lewis, Arthur
Chetwynd, G. R. Herbison, Miss M. Lindgren, G. S.
Clunie, J. Hewitson, Capt. M. Logan, D. G.
Collins, V. J. (Shoreditch & Finsbury) Hobson, C. R. (Keighley) Mabon, Dr. J. Dickson
Corbet, Mrs. Freda Holman, P. McAlister, Mrs. Mary
Craddock, George (Bradford, S.) Holt, A. F. McCann, J.
Cronin, J. D. Houghton, Douglas MacDermot, Niall
McInnes, J. Pentland, N. Summerskill, Rt. Hon. E.
McLeavy, Frank Popplewell, E. Swingler, S. T.
MacPherson, Malcolm (Stirling) Price, J. T. (Westhoughton) Taylor, Bernard (Mansfield)
Mahon, Simon Price, Philips (Gloucestershire, W.) Taylor, John (West Lothian)
Mallalieu, E. L. (Brigg) Probert, A. R. Thomson, George (Dundee, E.)
Mallalieu, J. P. W. (Huddersfd, E.) Proctor, W. T. Tomney, F.
Mann, Mrs. Jean Pursey, Cmdr. H. Viant, S. P.
Mitchison, G. R. Rankin, John Wade, D. W.
Monslow, W. Redhead, E. C. Warbey, W. N.
Morrison, Rt. Hn. Herbert (Lewis'm, S.) Reeves, J. Watkins, T. E.
Moss, B. Reynolds, G. W. Weitzman, D.
Moyle, A. Rhodes, H. Wheeldon, W. E.
Neal, Harold (Bolsover) Robens, Rt. Hon. A. White, Mrs. Eirene (E. Flint)
Noel-Baker, Francis (Swindon) Roberts, Goronwy (Caernarvon) Willey, Frederick
Noel-Baker, Rt. Hon. P. (Derby, S.) Robinson, Kenneth (St. Pancras, N.) Williams, David (Neath)
Oram, A. E. Short, E. W. Williams, Rev. Llywelyn (Ab'tillery)
Orbach, M. Silverman, Julius (Aston) Williams, Rt. Hon. T. (Don Valley)
Oswald, T. Skeffington, A. M. Willis, Eustace (Edinburgh, E.)
Owen, W. J. Smith, Ellis (Stoke, S.) Wilson, fit. Hon. Harold (Huyton)
Padley, W. E. Snow, J. W. Winterbottom, Richard
Palmer, A. M. F. Sorensen, R. W. Woodburn, Rt. Hon. A.
Pargiter, G. A. Soskice, Rt. Hon. Sir Frank Yates, V. (Ladywood)
Parkin, B. T. Sparks, J. A.
Paton, John Stones, W. (Consett) TELLERS FOR THE AYES:
Pearl, T. F. Stross, Dr. Barnett (Stoke-on-Trent, C.) Mr. Pearson and Mr. Simmons.
NOES
Agnew, Sir Peter Fletcher-Cooke, C. Lucas, Sir Jocelyn (Portsmouth, S.)
Aitken, W. T. Fraser, Sir Ian (M'cmbe & Lonsdale) Lucas, P. B. (Brentford & Chiswick)
Allan, R. A. (Paddington, S.) Gammans, Lady Lucas-Tooth, Sir Hugh
Alport, C. J. M. Gamer-Evans, E. H. Macdonald, Sir Peter
Amory, Rt. Hn. Heathcoat (Tiverton) George, J. C. (Pollok) Mackeson, Brig. Sir Harry
Arbuthnot, John Gibson-Watt, D. McKibbin, Alan
Ashton, H. Glover, D. Mackie, J. H. (Galloway)
Atkins, H. E. Godber, J. B. McLaughlin, Mrs. P.
Baldock, Lt.-Cmdr. J. M. Gough, C. F. H. Macmillan, Maurice (Halifax)
Barber, Anthony Gower, H. R. Macpherson, Niall (Dumfries)
Barter, John Graham, Sir Fergus Maddan, Martin
Batsford, Brian Gram, Rt. Hon. W. (Woodside) Markham, Major Sir Frank
Baxter, Sir Beverley Grant-Ferris, Wg. Cdr. R. (Nantwich) Marlowe, A. A. H.
Beamish, Cel. Tufton Green, A. Marshall, Douglas
Bell, Philip (Bolton, E.) Grimston, Hon. John (St. Albans) Mathew, R.
Bell, Ronald (Bucks, S.) Gurden, Harold Maudling, Rt. Hon. R.
Bennett, F. M. (Torquay) Harris, Frederic (Croydon, N. W.) Medlicott, Sir Frank
Bevins, J. R. (Toxteth) Harris, Reader (Heston) Morrison, John (Salisbury)
Bidgood, J. C. Harrison, A. B. C. (Maldon) Nabarro, G. D. N.
Biggs-Davison, J. A. Harrison, Col. J. H. (Eye) Nairn, D. L. S.
Bishop, F. P. Harvey, John (Walthamstow, E.) Nicholson, Sir Godfrey (Farnham)
Black, C. W. Heald, Rt. Hon. Sir Lionel Nicolson, N. (B'n'm'th, E. & Chr'ch)
Bossom, Sir Alfred Heath, Rt. Hon. E. R. G. Noble, Michael (Argyll)
Boyd-Carpenter, Rt. Hon. J. A. Henderson-Stewart, Sir James Nugent, G. R. H.
Boyle, Sir Edward Hesketh, R. F. Oakshott, H. D.
Braine, B. R. Hicks-Beach, Mal. W. W. O'Neill, Hn. Phelim (Co. Antrim, N.)
Braithwaite, Sir Albert (Harrow, W.) Hill, Mrs. E. (Wythenshawe) Orr, Capt. L. P. S.
Bromley-Davenport, Lt.-Col. W. H. Hirst, Geoffrey Orr-Ewing, Charles Ian (Hendon, N.)
Browne, J. Nixon (Craigton) Hobson, John (Warwick & Leam'gt'n) Osborne, C.
Bryan, P. Holland-Martin, C. J. Page, R. G.
Bullus, Wing Commander E. E. Hope, Lord John Pannell, N. A. (Kirkdale)
Burden, F. F. A. Horobin, Sir Ian Partridge, E.
Butcher, Sir Herbert Howard, Gerald (Cambridgeshire) Peel, W. J.
Butler, Rt. Hn. R. A. (Saffron Walden) Hutchison, Michael Clark (E'b'gh, S.) Pickthorn, K. W. M.
Carr, Robert Hyde, Montgomery Pike, Miss Mervyn
Clarke, Brig. Terence (Portsmth, W.) Hylton-Foster, Rt. Hon. Sir Harry Pilkington, Capt. R. A.
Cole, Norman Iremonger, T. L. Pitman, I. J.
Cooke, Robert Irvine, Bryant Godman (Rye) Powell, J. Enoch
Cooper-Key, E. M. Jenkins, Robert (Dulwich) Price, Henry (Lewisham, W.)
Craddock, Beresford (Spelthorne) Jennings, Sir Roland (Hallam) Profumo, J. D.
Crewder, Sir John (Finchley) Johnson, Dr. Donald (Carlisle) Ramsden, J. E.
Crowder, Petre (Ruislip—Northwood) Johnson, Eric (Blackley)
Davidson, Viscountess Joseph, Sir Keith Rawlinson, Peter
D'Avigdor-Goldsmid, Sir Henry Kaberry, D. Redmayne, M.
Deedes, W. F. Kerr, Sir Hamilton Rees-Davies, W. R.
Digby, Simon Wingfield Kershaw, J. A. Ridsdale, J. E.
Donaldson, Cmdr. C. E. McA. Kimball, M. Roberts, Sir Peter (Heeley)
du Cann, E. D. L. Lagden, G. W. Robertson, Sir David
Dugdale, Rt. Hon. Sir T. (Richmond) Leather, E. H. C. Robinson, Sir Roland (Blackpool, S.)
Duncan, Sir James Leavey, J. A. Rodgers, John (Sevenoaks)
Elliott, R. W. (Ne'castle upon Tyne, N.) Leburn, W. G. Roper, Sir Harold
Emmet, Hon. Mrs. Evelyn Legge-Bourke, Maj. E. A. H. Ropner, Col. Sir Leonard
Errington, Sir Eric Legh, Hon. Peter (Petersfield) Russell, R. S.
Farey-Jones, F. W. Linstead, Sir H. N. Shepherd, William
Fell, A. Lloyd, Maj. Sir Guy (Renfrew, E.) Simon, J. E. S. (Middiesbrough, W.)
Finlay, Graeme Lloyd, Rt. Hon. Selwyn (Wirral) Spearman, Sir Alexander
Spence, H. R. (Aberdeen, W.) Thomas, Leslie (Canterbury) Ward, Dame Irene (Tynemouth)
Stanley, Capt. Hon. Richard Thompson, Kenneth (Walton) Webbe, Sir H.
Stevens, Geoffrey Thompson, R. (Croydon, S.) Whitelaw, W. S. I.
Steward, Harold (Stockport, S.) Thornton-Kemsley, Sir Colin Williams, Paul (Sutherland, S.)
Stoddart-Scott, Col. Sir Malcolm Tilney, John (Wavertree) Wills, Sir Gerald (Bridgwater)
Storey, S. Turton, Rt. Hon. R. H. Wilson, Geoffrey (Truro)
Stuart, Rt. Hon. James (Moray) Tweedsmuir, Lady Wood, Hon. R.
Studholme, Sir Henry Vane, W. M. F. Woollam, John Victor
Summers, Sir Spencer Vickers, Miss Joan
Sumner, W. D. M. (Orpington) Vosper, Rt. Hon. D. F. TELLERS FOR THE NOES:
Taylor, Sir Charles (Eastbourne) Wakefield, Edward (Derbyshire, W.) Mr. Hughes-Young and
Teeling, W. Wall, Patrick Mr. Chichester-Clark.
Temple, John M. Ward, Rt. Hon. G. R. (Worcester)