HC Deb 11 May 1959 vol 605 cc958-77

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. Ernest Davies

This Clause changes the vehicle Excise Duty as it affects public vehicles. So far as it goes, we welcome it, as on previous occasions we have moved Amendments which would have done the same thing but carried it considerably further. I do not quite understand why the Chancellor of the Exchequer has stopped where he has. The Clause reduces the vehicle Excise Duty to 12 plus 10s. for every seat over twenty, whereas under the present Schedule the amounts payable are substantially higher, This considerably simplifies the basis of assessment of the charge, but we have previously proposed that it would be simplified further if there were a flat charge, as in the case of motor cars.

It may be considered desirable in the case of those motor vehicles to make it £12 10s. without any additional charge for additional seats. I know that one argument against that would be that the larger the vehicle the more Excise Duty it should pay, but that does not apply to motor cars. The Morris Minor pays the same f12 10s. as the very large Rolls Royce or Humber.

I ask the Chancellor to consider the difference of the cost to the Exchequer of the present proposals and the simpler proposals which we put forward. There is a difference of only £1 million. The present cost to the Exchequer is £3½ million and that of the simplified procedure would be £4½ million. It is the smallness of this sum with which I think the Committee must concern itself.

The Chancellor, in proposing his Budget, showed that he was aware of the difficulty which is facing the road passenger transport industry, particularly in the rural areas. He stated that …bus operators have faced increasing difficulty in maintaining their services, particularly in rural areas. The House has over a considerable period drawn the attention of the Government to that. It has reached home, as it were, on the Chancellor's desk.

Consequently, the right hon. Gentleman went on to say: … I am satisfied that the bus operators should be given some tax relief to help them to maintain the rural services. Rural and urban services are very commonly operated by the same concerns, and "— This is the important statement— I have, therefore come to the conclusion that I must find some way of helping the industry generally. The right hon. Gentleman went on to say: The most practical step seems to me to be a reduction in the annual excise duty payable on passenger vehicles."—[OFFICIAL REPORT, 7th April, 1959; Vol. 603, c. 50–511 The question is whether the right hon. Gentleman has done anything substantial to help solve the difficulty and whether it is the most practical step that can be taken.

Unfortunately, the relief which the right hon. Gentleman has given is quite inadequate. It is almost pitiful. The cost of operating a road passenger vehicle, whether bus or coach, varies from about 2s. to 2s. 6d. per mile, but the saving as a result of the reduction of this Excise Duty is less than one-farthing in most cases and is never more than a halfpenny a mile. If the cost varies from 2s. to 2s. 6d. there is a saving of from -16d. to a maximum of 43d. per mile. That is quite inadequate relief and it is not possible to argue that any substantial help is being given to the industry.

The greater relief goes to the operators of the larger vehicles, who least need it. Municipalities which operate double-decker buses do so mainly in urban areas, and the large operators in the big conurbations operate large double-deckers of 50 to 56 seats or more. The relief brought to them is very substantial, but for the operators of single-decker small-seater buses the relief is proportionately far less. It is certainly inadequate to help those who operate small fleets in the rural areas.

When, on previous occasions, we on this side of the Committee have proposed a reduction in the fuel oil duties and have suggested that that should apply only to diesel vehicles, which form the major part of these fleets today, the argument adduced against our proposal has always been that it would bring no relief to the rural services. In other words, the Government have argued in the past that it is the operators of the smaller, petrol Operated vehicles operating unremunerative services in the rural areas who should be relieved.

My argument is that the manner in which the Chancellor has endeavoured to bring about relief is such that the actual benefit goes far more to the large operators and those operating in urban areas than it does to those who operate the unremunerative services.

The position of the road passenger transport industry has been debated frequently in the House of Commons. It was discussed on the Budget statement and again on Second Reading of the Finance Bill, but there are one or two points which are relevant to the Clause. In the first place, the difficulty of the industry is that the remunerative services are expected to pay for the unremunerative, but if the condition of the industry is such that there are many unremunerative services, and the bus operators are able to state at their annual meetings of shareholders that they are operating one-third, 50 per cent., or even more of their services unremuneratively, this gives them justification for reducing the frequency of the services, in some cases cutting them out entirely. We have ample evidence that the services are being reduced and that there is a deterioration in the less densely populated areas.

The excuse is there and this is being done, but in practice the bus companies are not suffering nearly as much as they make out, and the justification for bringing relief to them is to ensure that the unremunerative services are continued, and not to assist them to maintain their profits and dividends. I looked up the figures of a few companies and found that in 1956 and 1957 profits and dividends had been maintained in most cases. There were, of course, exceptions. In fact the total revenue given in the Government publication "Statistics of Public Road Transport in October, 1957–1958 "shows that in 1956–57 the total net receipts were £12.8 million and in the following year, 1957–58 they were £12.3 million.

I am not arguing that assistance is not required for the road passenger industry, because it is, but I am asking that if it is given we should ensure that it goes to the maintenance of the unremunerative services and does not enable the operators to cut unremunerative services in order that the profits of other services shall be maintained. I fear that this small relief will have little effect on the practice of the bus operators of reducing unremunerative services.

It is not for us here in this debate to suggest what insurance there can be that the bus operators will continue to operate unremunerative services if their remunerative services pay, but some action must be taken either through the licensing authorities or by some system of relief other than the Chancellor has given in this Budget. I suggest to the right hon. Gentleman that the relief he has given, welcome as it is, is not adequate to assist the industry to maintain its services and that it puts the industry in a position where it has ample excuse for cutting out unremunerative services. Therefore, the Chancellor should accompany this relief with some method which will ensure the continuance of those services which do not pay but which are required in the public interest. In other words, the operation of the transport industry as a public service is threatened today, and the small relief given here does nothing to ensure that it will continue to operate as a public service.

Mr. John Peyton (Yeovil)

May I enter a brief plea that my right hon. Friend should look again at this matter and go a little further to produce a flat rate? The concession he has made will cost £3½ million. If he produced a flat rate for every passenger service vehicle, the additional cost would be another £1 million only, so I hope my right hon. Friend will do that. It has been done in the past for private cars and we have done it in this Bill for public houses. What is good enough for public houses is good enough for double-decker buses. I hope that my right hon. Friend will accept that very sacred and unchallengeable principle.

8.45 p.m.

There is no pretending that the Clause covers a very large ground or can make any considerable contribution to the problem of the rural 'transport industry, which, as my right hon. Friend is already aware, troubles a great many of us. I am merely suggesting to him that a flat rate throughout without regard to the number of seats in the vehicle would be helpful.

I have a nasty feeling that we may be told that the Committee of Inquiry which was rather coyly announced by the Minister of Transport on Friday is the answer to the maiden's prayer. I think that that Committee could do very useful work, but I believe that if the concession for which I am now asking could receive consideration before the Report stage it would be helpful.

I have one point which I hope my right hon. Friend will consider. He said—I am sure we all applaud his intentions—that he wished to help the rural bus services, which he recognised were in difficulties. My right hon. Friend's concession will be very small in terms of cash, but the difficulty is that when a Government Front Bench speaker during a Budget speech says that he wishes to do something he unfortunately promotes in the public mind an expectation of better or cheaper services. On the basis of the concession which my right hon. Friend has so far made, that, I am afraid, is doomed to disappointment. I very much hope that my right hon. Friend will look at the matter both in its broad aspect, with which I am not now dealing in detail, and also in the narrow aspect of the flat rate duty.

I hasten to say that I do not accept in any way the fatuous argument that a bus should pay more duty because it is bigger. Per passenger carried, it does not occupy any more road space. Moreover, in the light of the last Clause that we discussed, the bus has a great merit which is not shared by private cars in that it never uses the Queen's highway as a garage.

Mr. Frank McLeavy (Bradford, East)

I hope to pick up some of the points made by the hon. Member for Yeovil (Mr. Peyton), but I should first like to take the Chancellor's mind back to twelve months ago when, prior to the Budget, he received most urgent representations from the omnibus undertakings about their financial difficulties arising from the running of unremunerative services. It should be said to the credit of the Chancellor that he was good enough to receive a deputation from both sides of the House, and I think he would be the first to agree that that deputation placed fairly and squarely before him the difficulties confronting the road passenger transport industry.

Indeed, we felt that we had made some impression upon the Chancellor because in a subsequent televised speech on his Budget he said that he regretted that on that occasion he could not give any financial assistance to the passenger transport industry. From that statement we naturally assumed that we had made our case and that the Chancellor had acknowledged that there was a strong case for a substantial reduction of taxation all round for passenger transport vehicles. When a few weeks ago the Chancellor was giving away money, we naturally thought that the passenger section of the transport industry would be included, and far more substantially than it has been, in the provisions which the Chancellor has made in Clause 10.

I say quite frankly that this is merely playing with the position. I have a lot of sympathy with the suggestion that has been made that the Excise Duty should be at a flat rate of £12, but I would say immediately that even if the Chancellor reduced the duty to a round figure of £12, whatever the type of vehicle, it would not solve the very serious problem of the passenger transport industry. What amazes me is that, in spite of all the evidence that has been placed at the disposal of the Chancellor, he has refused to give adequate relief to the passenger section of the industry which would allow it to provide reasonable services, not only in the countryside, but in the towns and villages.

I should like to explain to the Committee what are the actual functions of road passenger transport undertakings. These are undertakings which, in the first place, have to be licensed. Every bus that runs, whether in the cities, towns or rural areas, has to be licensed by a licensing authority, and, coupled with the issue of the licence, the bus undertaking has to provide the licensing authority with a schedule of running to indicate the frequency of the services which it proposes to provide in the respective areas. It is important to point this out, because these undertakings are under a statutory obligation to provide a service, whether it pays or not, for the travelling public throughout the whole of the day.

What confuses a lot of people, and probably some hon. Members of this Committee, is that if we try to compare passenger transport with road haulage, we find that there is no real comparison at all. Road haulage vehicles run only when there is a profitable load to take from A to Z. In other words, road haulage undertakings have no statutory obligation to run their vehicles with the furniture of Mr. Brown or the goods of Mr. Selfridge. They do it only when they have a profitable load to be taken from one point to another.

However, the position of road passenger transport is entirely different, because there is an obligation to maintain a reasonable service. I pay tribute to passenger undertakings, both municipal and private enterprise, which have been willing to accept their statutory responsibility and which have always been prepared to agree with the traffic commissioners and to run unremunerative services in the countryside to provide reasonable facilities for farmers, farm labourers and their wives who want to go to market towns and public centres. It is only fair to record that for many years—and I have been associated with passenger transport for many years, so I know what I am talking about--passenger transport undertakings have been prepared to provide unremunerative services in the countryside and elsewhere to meet the wishes of the traffic commissioners.

Why has the position in the rural areas deteriorated? It is simply because the bus undertakings have at last found it impossible to provide those unremunerative rural services. That is due to many factors. One is the heavy tax on fuel oil. Others are the licensing of seats and the general cost of running an undertaking. especially when, as is often the case, it is run for a large part of the day without any hope of its paying for the fuel used. In addition, there has been a decline in the use of bus services. Picture crowds are no longer as large as they were, because many people stay at home to watch television, Theatre crowds are not as large as they were years ago. Motor cars are more extensively used than ever before.

All those factors have had a bearing on the economic position of the road passenger transport industry. All those difficulties have been put fairly and squarely before the Chancellor. In spite of the difficulties, the industry has tried in some way or other to provide skeleton services for rural areas.

9.0 p.m.

In addition a position has arisen which I do not think most hon. Members of the Committee appreciate. Even in the large cities and towns the prosperous transport undertakings of the past are no longer the prosperous undertakings that they were. We are experiencing a reduction in the frequency of services which is coming to a point where the principle underlying the legislation for passenger transport vehicles is being destroyed. In many cases, even in the towns, we are not providing that reasonable frequency of service which people are entitled to have.

From my own experience and observation, I say frankly that in the City of London the London transport undertaking is not now providing the type or frequency of service that the citizens of London are entitled to receive from an undertaking of that character. Because of the need to economise, these services are not being provided. I have stood near the South Harrow tube station and seen women with their shopping baskets waiting for a bus. I will not repeat their comments, but three or four of them went off and hired a taxi because they were tired of waiting for an ordinary London transport bus.

These facts are indisputable and in spite of all these difficulties we have the Chancellor coming along with this paltry pettifogging concession to an undertaking which is more deserving of consideration than any other. I have heard expressions today about the generosity of the Chancellor to the brewers. I wish that we could impress on the Chancellor the necessity for being fair and equitable to the passenger transport industry. Even though some transport companies are paying their normal dividends they are doing so only because they are cutting down their services when they ought to be maintaining them. One cannot reasonably expect private companies to go to their shareholders and say that because the Chancellor of the Exchequer is taking so much taxation from them—fuel oil at 2s. 6d. a gallon—they ask them to make a sacrifice so that the Chancellor can still take his £40 million a year out of fuel oil tax on road transport vehicles.

I appeal to the Chancellor. The case has been put to him, and we have tried to be fair. We have not over-emphasised our case, but these undertakings which have served the country so well over these long years are entitled to demand from the Chancellor of the Exchequer and from the Government a form of treatment which is just and fair in all the circumstances.

While even a crumb of this character would be very welcome today, this reflects upon the attitude of the Chancellor. In spite of all the facts placed before him, he has turned his back on the road passenger transport industry and given us a miserable concession which will help neither the rural services nor the city and town services. It is an insult to the transport industry. I hope that at this late hour the Chancellor will find ways and means of taking off the backs of the industry this heavy taxation which is preventing it from carrying out its statutory duty to the citizens of Britain.

Sir Robert Cary (Manchester, Withington)

I hope my right hon. Friend the Chancellor of the Exchequer will not convict me of churlishness in returning to this matter again in view of the fact that I intervened so vigorously on Second Reading in regard to the inadequacy of his proposal in the Budget to help rural services.

My right hon. Friend is giving away £6 million in the first year and £31 million in subsequent years. We are grateful for that small concession, but I must say to him that he cannot just relate this matter to one single Budget. Rural services began to wither and decline three or four years ago and representations were then being made to my right hon. Friend's predecessor. Looked at in that way and taking last year with this year, hon. Members ought to be reminded that public service vehicle companies operating under Statute are not able to increase their fares beyond the statutory charge. This is unlike the case of road service vehicle operators, who can do what they like. In parenthesis, I should point out that the bus fare is included in the cost-of-living index, but the road vehicle charge is not It is an important emphasis which must be borne in mind, because the greatest pleading of my right hon. Friend for this most beneficial Budget is that it is a cost-of-living Budget. Therefore, the bus fare ought to play a great part in it.

In the Finance Bill last year, the public service passenger vehicle companies had their Profits Tax jacked up from 3 per cent. to 10 per cent. with all other companies. That imposition in the case of the fleet I am privileged to operate, and for which I am chairman, the Lancashire United Transport Company, with a big fleet in southern Lancashire known to some hon. Members, the jacking up of that Profits Tax on level terms with other joint stock companies cost us something in the neighbourhood of £8,500. In analysing the benefit which the Chancellor confers on my fleet of vehicles now, I find that I shall be a beneficiary through the agency of the licence duties to the extent of £8,100. Therefore. I want my right hon. Friend to be quite clear in his mind that, taking the two Budgets together, although he said in his Budget speech that this was a step forward—not a stride, but at least a step in the right direction—twelve months ago the industry took a backward step in Profits Tax money values to the same amount as the concession now offered.

I seriously plead with my right hon. Friend the Chancellor. This is not the occasion to elaborate the many matters which surround this problem. I agree with the hon. Member for Bradford, East (Mr. McLeavy) that this problem is not going to be suddenly halted by this concession. I am afraid that we shall have a hard winter in many rural areas at the end of this year. Unless some step more helpful than the present concession is taken between now and next year's Budget, I am afraid that there will be great distress throughout many of our counties. As I said on Second Reading, the great beneficiaries of the concession are the big operators such as London Transport and the great municipalities, like Manchester, with their vast fleets of double-deck buses, but if we look at the situation in terms of two years, with Profits Tax raised to 10 per cent. last year and the concession made to them this year, we find that there has been no forward step at all.

The Chancellor has conferred other benefits. For instance, the reduction of 9d. in the standard rate of Income Tax will help all companies. There are other concessions which are small and are not sufficient to begin to answer the problem of rural services. People are buying motor cars, but the pace of acquisition of motor cars is far too slow to give everybody the transport they need. When hon. Members consider a great company like the Ribble Company, which many hon. Members know well and which operates from Blackburn to Carlisle, they will see that only the other day the company was before the Traffic Commissioners asking for a fares increase amounting to no less than £175,000. When a witness for the company, in cross-examination, was asked, before the Budget, what would be the effect of a concession of one-half of the fuel duty, he said, "That would just about take the place of the fares application which we are making."

We shall come to wider issues on Clauses put down on the Paper. I would point out to my right hon. Friend the catalogue of claims being brought forward by the unions in the industry, beginning with a claim for a 40-hour week. Some of these claims will have to be answered, causing further expenditure in the operation of the bus fleets. In a cost-of-living Budget we ought not to be running the risk of putting up fares further. We ought to take a forward step by making concessions which will put operators in a position to reduce fares.

Mr. Harold Davies (Leek)

I am sure that the Committee is grateful for the contributions to the debate which have been made from both sides. In rural bus services we are facing a new social phenomenon. If we are not careful we shall see in Britain exactly the same position as we find in such a wealthy city as Los Angeles, where the bus services are almost useless. I am concerned with the rural services for the market town of Leek and the area around Leek, especially in the wet weather, and in the area south of the Peak District in the winter. From time to time I receive letters from bus operators. No matter which party one belongs to, one tries to deal with the question on the basis of the justice of the claim. In the Leek area we are faced with the decision of the railways to close branch lines from Leek to Manchester via Congleton and via Stoke-on-Trent, and at the same time the rural bus companies are unable to meet their commitments because of lack of a payload in those areas.

This is a phenomenon familiar to each hon. Member who has the honour to represent a rural constituency. Without making a long speech about it, I sincerely hope that something will be done to meet the problem of rural bus services throughout Britain. Some investigation is needed. The evidence submitted to me by bus companies, and I am sure also submitted to the Chancellor, to my mind justifies sonic other concession. We must make further concessions if we want to keep the rural services alive.

9.15 p.m.

There is one other social point on that. We are all concerned in these days with huge conurbations of people in towns and perhaps in large populous cities. If we want to give them the amenities of the countryside, we must give to the people living in the countryside services almost commensurate with those they can have in a city or a town where the payload is regular and heavy. We are not getting that in rural Britain at present. We are not getting it in the Leek area.

I hope that the Chancellor will listen to the appeal made from both sides of the Committee to look again at the case of the rural bus companies.

Mr. Speir

As one who has campaigned for many years for further financial assistance for rural bus operators, I naturally welcome the very limited concession which the Chancellor has given us. Above all, I welcome the fact that at long last the Government have recognised that the deterioration in public transport facilities in the rural areas is now a serious problem.

I know the area about which the hon. Member for Leek (Mr. Harold Davies) was speaking. It is similar to my own area in Northumberland. I have no doubt that the breakdown in public transport facilities is causing real hardship—not to everyone in rural areas, because a large number of people now have motor cars, but it is causing hardship to a minority—to the old, the young and the infirm.

I admit straight away that it is far easier to state this problem than to provide a practical solution, but I cannot say that I think that this concession is going about it in the right way. I do not want to appear ungrateful for small mercies, but it is an extremely small mercy. The hon. Member for Enfield, East (Mr. Ernest Davies) pointed out that this concession will probably amount to a benefit of about a farthing a mile to the rural bus operators. The gap to be closed between their average takings and their average running costs is much more like 1s. or I s. 3d. a mile. Therefore, a farthing a mile will have a nearly negligible effect. It certainly will not prevent further bus services being taken off in the very near future unless there is some prompt action by the Government.

Some critic on the Opposition benches said that this Budget gives the wrong shot in the wrong arm. That is a very apt description of this small concession to bus operators. The Chancellor said that it is meant to help rural operators rather than urban operators. It will provide most help to urban operators. Indeed, about £½ million of the approximately £3½ million which the concession amounts to will go straight to London Transport. That seems an odd way of helping the remote rural operators. I stress "remote", because it is remote operators hi rural areas who need the help. Those who are operating in semi-rural or suburban areas can perhaps offset their unremunerative services against their remunerative services, but remote operators cannot do that.

This is a step in the right direction. Therefore, coupled with the undertaking which the Minister of Transport gave last Friday that he is setting up a committee to look into the whole problem, I welcome this very limited concession.

Mr. Geoffrey Wilson (Truro)

I want to add a very brief word to what has been already said on this matter. With the exception of my hon. Friend the Member for Manchester, Withington (Sir R. Cary) and my hon. Friend the Member for Hexham (Mr. Speir), most hon. Members have been unduly rough on this Clause. Both my hon. Friends gave it a qualified blessing, but other hon. Members have been a little critical. From such inquiries as I have made amongst persons interested in the bus industry, I think that the Clause is generally welcomed, although they say that it does not go far enough. That is generally recognised. If the very large problem of rural bus services is to be tackled, it will have to be tackled in some other way than by this Clause. I have no doubt that the Chancellor will bear that in mind.

Some hon. Members have suggested that there should be a flat rate for these Excise Duties, but they have not explained how that would be of particular value to the rural bus services. It should be pointed out that, although it might be only of small help, a flat rate would be more satisfactory than the present arrangement. The rural buses have the lightest loads, and they are not necessarily the smallest buses. It is quite wrong to imagine that a rural bus is a very small vehicle. It is often a very large bus carrying a light load. Because it is a large bus subject to the higher rate, the higher rate is a greater burden on the rural bus than on a town bus which is subject to a high rate. Therefore, perhaps, a flat rate would be of some slight benefit to them.

Even that concession, however, if there were a change made in the Clause, would really be insufficient. I agree with my hon. Friend the Member for Withington, that further consideration will have to be given to the matter if we want to give substantial help to the rural bus operator and keep the services going in future.

Brigadier 0. L. Prior-Palmer (Worthing)

It is not only the rural bus services in my constituency which have been curtailed; certain services have been taken off altogether. Indeed, only four days ago, I received a very strong petition from a large number of people asking me to see what I could do about it. The rural bus operators are unable to maintain their unremunerative services. For that reason, I put in my plea having in mind particularly the plight of old people in my constituency who are the ones extremely hard hit when such services are taken off.

In this connection, I will alter the old adage and say that the Chancellor helps those who help themselves. I make the suggestion, therefore, that the bus operators themselves should have a good think about how they could help themselves. If one goes abroad, to Switzerland particularly, one sees that the problem of the rural bus service—I say this with all respect to my hon. Friends—has been solved by 'the introduction of the minibus. In this country, in the rural areas, heavy vehicles travel about often with only four or five people in them. Surely, the solution would be to introduce the minibus which holds just about the number of people who wish to use the service on a particular route. I throw out that suggestion to my friends in the industry.

Mr. Amory

The Government have been very concerned about the decline in recent years in the number of bus services in rural areas. Mine is a rural constituency and I know the extent of the problem.

To go back for a moment over the history of the matter, it has been accepted, I think, ever since the licensing of bus services was introduced in 1930, that un-remunerative services should to some extent be run and paid for out of the profits of the more profitable routes. As a result, there has grown up a considerable network of services, mainly in the rural areas, which, taken by themselves, do not cover their costs. They are in most cases run by bigger concerns having other services in more populous areas.

With the fall in traffic in recent years, most services have tended to become less profitable and there is, consequently, a smaller margin to support the unprofitable rural services. There is no doubt that the fall in traffic in rural areas is very largely due to the tremendous growth in the number of motor cars and motor cycles.

The bus companies, which are all commercial concerns, whether privately owned or controlled by the British Transport Commission, have thus been forced to withdraw the services that lost them most. Together with my right lion. Friend the Minister of Transport and Civil Aviation, I have given a great deal of thought to this problem, but I am sorry to say that no practical suggestion, other than the one I have adopted this year, has been made which would help in a more substantial way.

I know that it has been suggested that I should have proposed a reduction in or abolition of the diesel oil duty for passenger buses. I looked at that point very carefully. We shall be discussing it later and therefore, Mr. Thomas, you would not wish me to go into it now. However, I was very sorry to have to decide against doing that. In view of all the evidence which I have had, I felt that the most practical way in which I could help the industry this year was to reduce the amount of licence duty paid on buses by the industry. The Clause proposes a reduction in the rates of duties in excess of £12 per annum which are chargeable on hackney carriages under Section 3 of the Vehicles (Excise) Act, 1949. On this basis, the reduction will apply to hackney carriages, mainly buses and coaches, with more than eight seats. In total, they amount to about two-thirds of the present revenue of £5½ million from these vehicles.

The Clause provides for the amended rates of duties to come into effect from 7th April, 1959, and for rebates to be paid in respect of periods after that date and during which licences already taken out at the old rate remain in force. I thought that that was only fair. The cost to the Exchequer in a full year will be just over £3½million, and in addition refunds this year will amount to about £2½ million.

It has been suggested that it would have been more useful to restrict the concession to buses used on rural services, but that would have been an almost impossible administrative task, because no one has yet been able to show me any way in which rural services can be segregated from urban services.

Mr. G. Wilson

I do not know whether my right hon. Friend is referring to what my hon. Friends and I said, but we did not suggest restricting the rural services. We suggested a flat rate which in our view would be of particular use to rural services.

Mr. Amory

I realise that my hon. Friend was not referring to that when he spoke.

This is as much as I have been able to find it possible to do this year in the way of direct financial help from the Government. I recognise that it will not afford a solution to this problem, although I think that it will be of definite help.

It has been suggested that we should have fixed a flat rate. I think that my hon. Friend the Member for Yeovil (Mr. Peyton) called it a fatuous suggestion that bigger buses should pay a higher rate. I usually agree with my hon. Friend on most matters, but I do not think that I can agree that it is a fatuous suggestion. It is only a very moderate increase. I would have thought that it was reasonable that a bigger bus with bigger carrying capacity should pay a higher rate.

Mr. McLeavy

Will the right hon. Gentleman explain why a tax should be paid at all in respect of seating accommodation?

Mr. Amory

To start with, it is reasonable that they should pay a tax because they use the roads, but I would have thought also that it was reasonable that the tax should be graded according to the size or weight of the vehicle. I do not think that that is unreasonable.

The cost of living has been mentioned, and I agree that the cost of bus travel enters into the cost of living, but it is very thinly spread. To have made any noticeable effect on the cost of living would have cost a very great deal of money, much more than I could have justifiably provided this year, in view of all the other causes that there were.

9.30 p.m.

We recognise that there is anxiety—and we share it—about the future of these services. I am very disappointed that I have not been able in this Budget to find a solution to the problem. I would have been a much happier man had I been able to. Hon. Gentlemen will have noticed that my right hon. Friend the Minister of Transport has announced the setting up of a Committee to review the trends in rural bus services so that we can see more clearly the extent of the problem and how best a solution to it can be found. I think that that will be a good and useful step.

I should like to say again that I recognise that what I have been able to do is not a solution, but it is a helpful contribution. I do not think that £½ million in a full year and £6 million this year is an insignificant contribution to the revenue of one industry. Though we ought not to under-estimate the assistance given, I admit at once that I do not believe that this, by itself, will bring about the solution we seek. The problem is far too difficult to be solved by one single measure such as this.

Mr. Ernest Davies

The Chancellor has said that he is a disappointed man, but the Committee will be very disappointed with his reply. There was a considerable weight of opinion on his own back benches that this Clause does not go nearly far enough and makes very little contribution to the relief of the bus operators on their unremunerative services.

The right hon. Gentleman's defence of the Clause was very lukewarm. He admits that it does not go very far, and he admits failure in finding any way to enable the operators to continue public services. We on this side of the Committee do not wish to prolong the debate now, but in view of the Chancellor's reply we give him notice that we will return to this topic during our further deliberations. We have a new Clause on the Notice Paper that proposes as an alternative method—and, in spite of the Chancellor's claim that it is administratively difficult, we think that it is a practicable method—the reduction or abolition of tax on diesel fuel for public service vehicles. We hope that that Clause will be selected and that we will thus be able to debate it.

Apart from that, we shall, on Report, certainly put down a further Amendment to substitute a flat rate for the system in the Clause. If this Chancellor is really sincere in his wish to bring greater relief than he has been able to give so far, he should accept the suggestion of a flat rate which his own back benchers have suggested following an Amendment on similar lines tabled by us last year. It would give relief to the extent of a further £1 million. As I say, we will return to this on Report, so the Committee and the House have not heard the last of this difficult problem.

Mr. Joseph Slater (Sedgefield)

The Chancellor said that he represents a rural area and is, therefore, well aware of the problem of rural transport. He also said that one of the reasons for the restricted services in these areas was the increased number of motor vehicles on the road. That may be the case with some individuals, but what about the agricultural worker? Is it suggested that the people working on the land all possess cars in which to get to the nearby towns? If so, let me say—

Mr. G. Wilson

The average acreage of the farms in my constituency is 46, and it is the small farmer who has some form of motor transport. It is not necessarily a car. Many have mopeds, Lambrettas or motor-assisted vehicles, which all take custom from the bus services.

Mr. Slater

I have three rural districts in my constituency, and their bus service is not very adequate. If it were, I would not receive representations to make application to the omnibus companies to put on extra buses. What can we do in a rural district when there is overcrowding on the buses and people living in the villages cannot get on them and when it is not possible for the buses to be duplicated? We can only ask the Chancellor to be more generous. We are very grateful to him for the present concession, but that is not to say that he could not have gone further.

It is because of what is happening in the rural areas that people are seeking to migrate into the towns and cities. The Chancellor ought not to run away with the idea that what may be true of his own constituency is necessarily true of others. A high percentage of the people working on the land within the three rural districts of my constituency have not these Facilities.

Question put and agreed to.

Clause ordered to stand part of the Bill.