HC Deb 21 June 1960 vol 625 cc225-377

(1) The following provisions shall have effect where under subsection (1) of section thirteen of the Vehicles (Excise) Act, 1949 (which imposes a higher rate of duty in certain circumstances where the condition of a vehicle or the use made of it is altered while a licence under that Act is in force in respect of the vehicle), an existing licence is exchanged for a new licence, and the date on which the higher rate of duty becomes chargeable falls after the end of September, nineteen hundred and sixty. (2) The payment to be made on the exchange shall, instead of being of the amount specified in that subsection, be equal to the appropriate proportion of the difference between—

  1. (a) the amount payable under that Act on the original licence, and
  2. (b) the amount payable under that Act on a licence taken out for the period for which the original licence was issued but at the higher rate of duty, that amount being calculated, if that rate has been changed since the issue of the original licence, as if that rate had been in force at all material times at the level at which it is in force when it becomes chargeable.
(3) For the purposes of this section the appropriate proportion is the proportion which the number of months in the period beginning when the higher rate of duty becomes chargeable and ending with the end of the period for which the original licence was issued bears to the number of months in the whole of the last-mentioned period, any incomplete month being treated as a whole month.—[Mr. Hay.]

Brought up, and read the First time.

3.50 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport (Mr. John Hay)

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

The purpose of the Clause is to fill a gap which we have only recently discovered in the arrangements which we are making to introduce vehicle excise licences for running periods instead of calendar periods as from 1st October this year. I apologise to the Committee for the fact that the new Clause has appeared at this comparatively late stage, but I think that the Committee will agree, when I have finished, that it is a comparatively minor alteration which we are making in the law which should give rise to no great difficulty.

Perhaps I can best explain the position to the Committee by stating what the present position is about the licensing periods for which exercise licences are issued. At the moment it is possible to take out a vehicle excise licence for one of four different types of period. First, there is the ordinary annual licence, which most people take out. This is a licence which expires on 31st December in the year in which it is taken out. Secondly, there is what we call the part-annual licence—a licence which is taken out some time during the currency of the year, but which expires on 31st December. Thirdly, there is the quarterly licence, which expires on the usual quarter day of the quarter to which it relates. Finally, it is possible to take out a part-quarterly licence for a few weeks, but this, again, will expire on the quarter day next following the date on which it is taken out.

By Section 7 of the Finance Act, 1958, the Minister of Transport was given power by Order to change the periods for which vehicle excise licences may be issued. He has made such an Order quite recently. It is the Road Vehicles (Period Licensing) Order, 1960, Statutory Instrument 1960, No. 1023. It was made on 15th June and comes into operation on 1st October, 1960.

The big change which is being made by this Order is to reduce the four categories for vehicle licensing to two. After 1st October it will be possible to take out vehicle excise licences for only one of two periods. The first will be a 12-month licence, and this will be for a running period of twelve months. One can take it out on the 1st of any month and it will run to the last day of the month which precedes it in the following year.

The second will be a four-monthly licence, and this, again, will be for a running period of four months. The part-annual licence and the part-quarterly licence will disappear.

May I turn to the position in respect of the duty itself? At present, when we issue a part-annual licence we make a surcharge of 5 per cent., and when we issue a quarterly or part-quarterly licence we make a surcharge of 10 per cent. The purpose of those surcharges is to help to meet the additional administrative expense in the vehicle licensing offices throughout the country. After 1st October, when this change takes place, there will be a 10 per cent. surcharge on the four-month licences only. This surcharge will be calculated to the nearest shilling.

As briefly as I can put it, that is the background to the situation which we face. It has raised a difficulty for us which the Clause is intended to remedy. If, during the currency of a licence, an alteration is made to the use or to the classification of a vehicle which brings it into a higher taxation category, extra duty is payable from the date when the change is made.

I can give the Committee two simple examples in which this happens. The first is where, by reason of alterations or additions made to a goods vehicle, the unladen weight is increased. As soon as that happens the vehicle is moved into the next taxation category. The second example, which is becoming increasingly common, is that in which a private vehicle is converted and used for the carriage of goods. This, again, transfers it into a different taxation category.

By Section 13 of the Vehicles (Excise) Act, 1949, this situation is dealt with as follows: a person whose vehicle has undergone this change, and who is, therefore liable for additional duty, is required to go to the taxation office and to exchange his current licence for a new one at the higher rate of duty. He pays the difference between the old rate for a part-annual licence and the new rate for a part-annual licence for what we call the residual period; and the residual period is that period which still has to elapse under the old licence.

I can give the Committee a simple example which will make this clear. Suppose, under the present procedure, that the alteration in the vehicle takes place in July and the vehicle has been licensed on an annual licence to the end of the year. Let us suppose that the old annual rate of duty payable was £12 and that the change brings the vehicle into a new taxation category in which the annual rate is £18. There is a residual period of five months to run until the end of the year. The owner then pays for that residual five-month period at the difference between the old part-annual licence rate—five-twelfths of £12 plus the 5 per cent. surcharge to which I have referred—and the new part-annual licence rate of £18—in other words, five-twelfths of £18 plus 5 per cent. surcharge. These two amounts are £5 5s. for the old licence and £7 17s. 6d. for the new licence. The difference which he has to pay is £2 12s. 6d. When these circumstances occur, what is paid is keyed to the part-annual licence and not to the annual licence. This is the crux of the Clause.

Under the new system, from 1st October next the part-annual licences will be abolished altogether, and the existing provisions of the 1949 Act will not longer provide a basis on which we can calculate the extra duty to be paid. We therefore have to prescribe some other calculation for the extra duty, without changing the principle. That is what the new Clause does.

The effect of the new Clause is this: the amount payable for any residual period of months will be a sum which is equal to what we call the "appropriate proportion" of the difference between the amount paid on the original licence and the amount payable on a licence which is taken out for the same period as the original licence but at the higher rate of duty attracted by reason of the change in the use or condition of the vehicle. The "appropriate portion" is that proportion which the number of months in the residual period bears to the number of months in the period for which the original licence was taken out. Incomplete months will be treated as complete months.

I admit that it all sounds very complicated and that I spent a long time trying to master it. I think that I have done so. May I reiterate the example which I just gave in which the rate was increased from £12 to £18? The difference in the duty for the vehicle to which the alteration is made after the seven-month period has passed will henceforth be a simple five-twelfths of £6—that is to say, five-twelfths of the difference between the old rate of £12 and the new rate of £18. We shall ignore the surcharges altogether. The effect is that most owners will pay a little less.

Mr. Harold Wilson (Huyton)

On a point of order. I am loath to interrupt this interesting arithmetical argument, but it is within the Committee's recollection that on the last occasion that we met to consider the Finance Bill, Sir Gordon, you were most rudely and discourteously shouted at by the hon. Member for Kidderminster (Mr. Nabarro) on the ground that I was spending perhaps a minute raising with you an important point about the procedure on that evening's business.

For the last ten minutes the hon. Member for Kidderminster has been monopolising your attention, which has meant, among other things, that you have missed this fascinating and eloquent argument by the Parliamentary Secretary. I want in no way to interfere with the right of any hon. Member to approach the Chair on matters affecting the conduct of business in the current day's sitting, but since it was the hon. Member for Kidderminster who queried your right to allow me to do that on the last occasion, and since the hon. Member for Kidderminster now finds it necessary to do it himself at considerably greater length, I should welcome your Ruling whether—as I have always considered it to be—it is in order for an hon. Member thus to approach the Chair.

4.0 p.m.

The Chairman

I hope that the hon. Member for Kidderminster (Mr. Nabarro) never suggested that I could not discuss matters with Members of the Committee. It is perfectly in order and necessary for me to do so with any Member of the Committee. It is not always possible to listen at the same time to the hon. Member who is addressing the Committee.

Mr. Wilson

That was the point that I was trying to make, and I am very glad that you have now given that Ruling, Sir Gordon.

On that occasion I was discussing with you when it might be appropriate to move to report Progress, in view of certain occurrences that evening, and the hon. Member for Kidderminster, who was making, no doubt, a powerful speech on one of his Amendments, tried to attract your attention four times by shouting "Sir Gordon" at the top of his not inconsiderable voice, and insisted on your listening to him and not being diverted from doing so by any hon. or right hon. Member who wanted to speak to you.

I am glad that you have given that Ruling. I am sure that it will be as useful to the hon. Member for Kidderminster in the future as it has been to other hon. Members in the past.

Mr. Gerald Nabarro (Kidderminster)

Further to that point of order. As the right hon. Member for Huyton (Mr. H. Wilson) has referred to me twenty-seven times in a lesser number of seconds, is it not the fact that his consultations with you on the evening of the day before the House rose for the Whitsun Recess were conducted in such a loud voice as to make it impossible for the hon. Member you had called to make a speech to make himself heard?

The Chairman

The conversation was conducted in a perfectly normal fashion. If the hon. Gentleman could not hear himself speak, it must have been due to deafness on his part.

Mr. Nabarro

No, Sir Gordon. My hearing is very sound. The right hon. Gentleman opposite has said that my consultation with you during that last few minutes was conducted sotto voce, as compared with the bellowing tones of the consultation that you had with the right hon. Gentleman opposite some two weeks ago.

Mr. Wilson

While I do not wish to take up undue time, it is necessary to make this point clear. This is a different point altogether. The memory of the hon. Member for Kidderminster is at fault. The point he made on that occasion when he called your name several times was that you were not listening to him. It is all on the record. He said that he was addressing the Chair and that he had a right to be heard by the Chair.

I only raise this matter so that it could be clarified and the rights of hon. Members to consult you could be once again repeated. I am grateful to you for doing that, Sir Gordon. The red herring drawn across the track by the hon. Member for Kidderminster is quite beside the point.

I do not wish now further to interrupt either the Joint Parliamentary Secretary or the important conversations which the hon. Member for Kidderminster is having with you, Sir Gordon.

Mr. Nabarro

Would it now be in order for me to continue, sotto voce, my consultations with you, Sir Gordon?

The Chairman

I cannot stop the hon. Member coming to talk to me. I would not desire to do so.

Mr. Nabarro

Jolly good.

Mr. Hay

After those interesting historical reminiscences from both sides, which I am sure have not disturbed the train of thought of hon. Members who have been following in great detail what I had to say, I will complete the second example which I was giving to the Committee by saying that the effect in that case is quite simply to charge five-twelfths in the case I mentioned of the difference between the old rate and the new.

I may add that where the exchange of licence which takes place is of a four-month licence—that is the second new category we are introducing—this new method will also apply with necessary changes of period for the purposes of calculation, but the 10 per cent. surcharge in these cases will continue to be payable as it already is on quarterly licences.

Finally, it remains for me to say that the financial effect of these changes will be that the ordinary person who wishes to exchange a licence will pay a little less than he did before he exchanged it. The Exchequer will lose a little, possibly up to £10,000 in a full year. I therefore think that for all these reasons this change is well worth making.

Mr. E. C. Redhead (Walthamstow, West)

Despite its seeming complications, I think that the Committee can be assured that we need not spend an undue amount of time in considering this proposal. I have had the advantage of a little preliminary examination of the obscurities of the original charging Section of the 1949 Act, and we are indebted to the Joint Parliamentary Secretary for his customary clear explanation of matters which are somewhat difficult to make clear by way of verbal utterance.

As I understand the position, his right hon. Friend, by the Order to which he has referred under Section 7 of the Finance Act, 1958, is, in effect, introducing a simplification of the arrangements for vehicle licensing, and I think that the simplification which he has proposed to the Committee is one that would be welcomed administratively. Solely from the point of view of vehicle owners, such a simplification would be of general advantage. Given the basis now proposed, it is quite clear that the charging basis for what the hon. Gentleman has described as exchange licences provided for under Section 13 (1) of the Vehicles (Excise Duty) Act would no longer be workable, and, in effect, a system has to be provided.

The Clause now proposed provides a perfectly equitable and administratively simple piece of machinery. I am gratified to have the assurance that in the vast majority of cases those who have occasion to take out exchange licences will pay rather less than they have hitherto done.

Without going into the details of the explanation given by the hon. Gentleman, his arithmetic seems to me to be quite accurate, so far as I can check it. He will be very pleased about that. It represents a general piece of administrative tidying-up which is entirely on an equitable basis. For that reason, notwithstanding the difficulties and complications which might still be in the minds of some hon. Members, we on this side of the Committee are prepared to commend the new Clause and advise the Committee to accept it.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

  1. New Clause.—(RELIEF FROM SCHEDULE A FOR OWNER-OCCUPIERS.) 20,563 words, 1 division
  2. cc287-321
  3. New Clause.—(EXEMPTION FROM EXCISE DUTY ON SCOTTISH SHALE OIL.) 14,337 words, 2 divisions
  4. cc321-59
  5. New Clause.—(BLIND PERSONS.) 16,584 words, 2 divisions
  6. cc359-64
  7. New Clause.—(ONE HUNDRED PER CENT. DISABLED.) 1,040 words, 1 division
  8. cc365-73
  9. New Clause.—(INCAPACITATED CHILD OVER THE AGE OF SIXTEEN YEARS.) 5,056 words, 2 divisions
  10. cc373-7
  11. New Clause.—(RELIEF FOR DISABLED PERSONS.) 1,504 words, 1 division