HC Deb 07 July 1959 vol 608 cc1276-9
Mr. Ernest Davies

I beg to move, in page 10, line 41, to leave out from "four" to the end of line 43 and to insert: and not more than twenty persons, twelve pounds;

  1. (iii) if the vehicle has seating capacity for more than twenty persons, twelve pounds and ten shillings."
The purpose of this Amendment is to reduce further the amount of vehicle Excise duty payable on buses and coaches, that is, public service vehicles. The Clause as it stands provides for Excise duty of £12 on vehicles up to 20 seats and, for vehicles of over 20 seats, an additional 10s. per seat. The purport of this Amendment is that vehicles with more than 20 seats shall pay only the flat rate of £12 10s.

At this late hour I do not want to embark on a discussion of the difficulties of the road passenger transport industry, particularly in rural areas. We had a debate on this Clause in Committee and a debate on a new Clause designed to assist rural transport particularly. When he proposed this Clause, and previously in his Budget statement, the Chancellor admitted that conditions in the road passenger transport industry were difficult and said he wanted to help the industry.

The Chancellor's concession, which is only of £3½ million in a full year, makes only a farthing a vehicle-mile difference and is little relief when losses are up to 2s. a vehicle-mile at present. Hon. Members opposite suggested that the Chancellor should go further and suggested the rate in the Amendment. In the previous year we had moved an Amendment to that effect. In view of the Chancellor's adamant refusal to go any further in the previous debates, we felt it desirable to place the Amendment on the Notice Paper.

11.15 p.m.

This concession can be granted because it makes a difference of only £1 million out of a total vehicle Excise Duty of about £106 million a year, a total which is increasing at the rate of £6 million a year. Half-a-million additional cars are being brought on to the road each year, the tax on each being £12 10s., and the total vehicle Excise Duty is rising at over £6 million a year.

To assist the road passenger industry by a further £1 million would not be great assistance to the industry, but might make marginal differences between certain services being dropped or continued. The need for further assistance to the industry is urgent, because the speed with which branch railway lines are being closed is increasing. Where these are closed it is essential that alternative services should be offered.

Since the previous debates the Central Transport Consultative Committee has brought out its annual report, drawing attention to the difficulty of rural road passenger transport services being provided as an alternative to railway services. Referring to bus operators, the Report commented: All these companies are finding that the number of unremunerative rural services which they are operating is steadily increasing, and whereas in the past these services lost at the most only a few pence per car-mile, the losses per car-mile are now sometimes measured in shillings. In these circumstances it is not reasonable to expect these undertakings, or indeed any similar undertakings, whether controlled by the Commission or not, to provide an alternative service in lieu of an uneconomic rail service which has been closed for lack of public support unless the financial return per car-mile equals the outgoings. There is more to that effect, but I will not weary the House with it. It is clear that if some further assistance is not given to the road passenger industry there will be further curtailments of essential services in those less densely populated areas, and particularly in rural areas.

Unfortunately, not only the rural services are suffering. The various municipalities, which are the main providers of services in the urban areas, are finding it increasingly difficult to maintain their services at the frequency and density provided in the past. In many cases fares have had to be raised. While the Amendment would not bring great relief, it might make a difference. In Birmingham, about £37,000 would be saved if it were accepted.

The Chancellor has admitted the difficulties. He has said that he would like to go further, but that he could find no way of doing so. He has accepted that the vehicle Excise Duty can be reduced—he has reduced it by £3½ million. Here is a way of reducing it by a further £½ million while still attracting a considerable revenue. He would also have a tidier administrative structure. A flat rate of £12 10s., with £12 for smaller vehicles, would obviously be far easier to administer.

A committee has been appointed to inquire into the difficulties of rural transport. Its setting up was announced on 11th May, and we were promised the terms of reference later, but we still have not been given the names of the chairman and members. I do not think that the industry can await the findings of that committee before getting further relief. We have all had experience of the length of time such committees sit, the evidence they take, the time it takes them to compile their reports; and then there is Government indecision as to what action shall be taken following publication of reports.

I therefore suggest to the Economic Secretary that here is a further opportunity for the Chancellor to do what he has stated he wishes to do—bring greater relief to the road passenger transport industry, particularly in the rural areas. It would cost him only £1 million out of the £106 he gets from taxing those who travel daily to and from their work.

Mr. Mitchison

I beg formally to second the Amendment.

Mr. Erroll

The object of Clause 10 is to afford some financial help to the operators of bus services, and the hon. Member for Enfield, East (Mr. Ernest Davies) has suggested that my right hon. Friend could have gone further than he has felt able to do. The hon. Member produced some very persuasive arguments suggesting that as the yield of Excise duty was growing year by year the loss of a mere £1 million, as he put it, could quite readily be afforded. Well, every £1 million count these days, as they always have done, and my right hon. Friend does not feel that he can go further than he has done in his original proposals.

After all, the reductions in the duty amount in total to about two-thirds of the present revenue from buses, trolley buses and coaches, which at present yield a total of about £5½ million. In a full year, the amended rates of duty will cost about £3.6 million, and, of course, there is the extra £2.5 million of refunds being made this year.

The Amendment suggests that the graduated scale should be replaced by a flat rate, but I think that the hon. Gentleman would agree that there should be some regard to the size of the vehicle, particularly as there are such very considerable discrepancies in size—between the minibus, with 12 seats, or the 20-seater, and the average double-decker with its 60 seats. That being so, a graded rate of duty would seem appropriate, while, at the same time, we have been successful in providing a substantial measure of relief.

The hon. Gentleman gave the impression that the relief so far has had no effect, but that is not the information we have. We understand that some companies have announced that the relief should help them to keep their rural services going, while a few others have actually gone further, and have approached local authorities with a view to the restoration of services previously withdrawn. We can, therefore, feel confident that the rates proposed in Clause 10 are already being felt as a substantial benefit to the bus industry.

In view of that, my right hon. Friend feels that it would be right to wait for the result of the committee which was set up to examine trends in rural bus services. I hope that it will not take so long to report as the hon. Member fears it will. In the circumstances, I advise the House to reject the Amendment.

Amendment negatived.