HC Deb 16 May 1961 vol 640 cc1116-305

3.40 p.m.

Sir Leslie Plummer (Deptford)

I beg to move, in page 2, line 18, at the beginning to insert: Subject to the next following subsection".

The Chairman

I think that it would be convenient to discuss with this Amendment the following Amendments, in page 2, line 18, after "oils", to insert: (other than heavy oils to which the provisions of this subsection do not apply)". In line 30, at the end to insert: except in the case of diesel fuel and tractor vapourising oil sold for use by tractors and other implements for agricultural purposes, where a rate one-halfpenny a gallon less than the rate at which rebate of duty is allowed under section one hundred and ninety-nine of the Customs and Excise Act, 1952, shall apply In line 30, at the end to insert: (2) (a) Notwithstanding anything in the foregoing subsection or in section two hundred of the Customs and Excise Act, 1952 (by which rebates are not allowed on heavy oils used as fuel for certain vehicles), or in section seven of the Finance Act, 1959 (which amends the application of the said section two hundred), section two hundred and four of the said Act of 1952 (which provides for the relief from duty of oils used as fuel for ships in home waters) shall apply in relation to heavy oils used as fuel for agricultural vehicles and to the owners and hirers under any contract of such vehicles as it applies in relation to heavy oils used as fuel for such ships and to the owners of such ships and to their charterers by demise: Provided that for the purposes of this subsection references in the said section two hundred and four to the relanding of oil shall be disregarded; (b) for the purposes of this subsection "agricultural vehicles" means vehicles such as are mentioned in paragraph (a) of subsection (2) of section four of the Vehicles (Excise) Act, 1949, as amended by the Finance Act, 1950 (or as would be mentioned in the said paragraph as so amended if the references therein to the said Act of 1949 included references to the law as to the registration of mechanically propelled vehicles for the time being in force in Northern Ireland); and in relation to the phrase "fuel for agricultural vehicles" subsection (1) of section seven of the said Act of 1959 shall apply as it applies for the purposes stated in that subsection. In line 30, at the end to insert: (2) (a) The provisions of the foregoing subsection shall not apply to heavy oils delivered for use and used as fuel for agricultural vehicles; (b) section two hundred and two of the Customs and Excise Act, 1952 (which empowers the Commissioners of Customs and Excise to make regulations for giving effect to certain sections of that Act and imposes a penalty), shall apply in relation to agricultural vehicles and for the purpose of giving effect to this section as it applies in relation to heavy oil vehicles and for the purpose of giving effect to sections two hundred and two hundred and one of that Act; and the Commissioners shall have power to make regulations accordingly and the provisions as to a penalty shall apply accordingly; (c) for the purposes of this subsection "agricultural vehicles" means vehicles such as are mentioned in paragraph (a) of subsection (2) of section four of the Vehicles (Excise) Act, 1949, as amended by the Finance Act. 1950 (or as would be mentioned in the said paragraph as so amended, if the references therein to the said Act of 1949 included references to the law as to the registration of mechanically propelled vehicles for the time being in force in Northern Ireland); and in relation to the phrase "fuel for agricultural vehicles" subsection (1) of section seven of the Finance Act, 1959 (which defines the use of fuel for vehicles), shall apply for the purposes of this section as it applies for the purposes stated in that subsection. There can be separate Divisions on the first two Amendments.

Sir L. Plummer

I am obliged to you for your suggestion, Sir Gordon.

The first two of the five Amendments are paving Amendments for the last two, which are alternative ways of trying to arrive at the same conclusion—that the tax on fuel oil should not be imposed.

Yesterday we had an entrancing debate on the tax on television advertising. It was full of ambiguities about whether it was the intention that the programme companies should pay the tax, or that the advertisers should pay the tax; whether the tax was for social purposes, or whether it was a revenue tax.

Fortunately, there will not be any ambiguities over this tax. In his Budget speech the Chancellor referred to the changeover to the use of oil from coal, particularly since 1947 and made it quite clear that as conditions had changed, he considered that for revenue reasons heavy oil should bear some tax.

The Committee should understand clearly what iit is that the Chancellor has proposed with this new tax. He is hoping to get £48 million this year and £50 million next year by a tax of 2d. a gallon on fuel oil, gas oil and kerosene, and 2d. a gallon more, making 3d. a gallon in all, on lubricating oils. There is no problem of meeting competitive fuel such as coal. This is for purely revenue purposes, and it is clear that derv, which is the gas oil used in the running of lorries, is not in any way affected because it already carries a tax of about 2s. 6d. a gallon. This proposed tax affects iron and steel, railways, and a variety of industries, in particular agriculture, and it is in that context that I want to address the Committee.

I have been favoured with some figures, as I am sure other hon. Members have, from the people who know what the consumption of oil is in this country. These figures make it clear that there will be a heavy imposition on agriculture, and we have here the situation that, contrary to the view expressed yesterday by the Government that they were not in favour of discriminatory taxes, a discriminatory tax will be levied on the agricultural industry.

Let us itemise what this tax will cost. First, it is estimated that the owners of agricultural drying machines will have to find another £182,000 in tax. This is at a time when a barley marketing scheme is to be introduced, the purpose of which is to keep barley off the market in the early part of the year and to induce the farmers to store their barley, which means that they must dry it and see that it is kept dry. For this purpose alone they will be called on to pay another £182,000, and they have already been treated rather roughly by the Minister of Agriculture, Fisheries, and Food, by the cuts he has imposed on barley prices in the Price Review.

Farmers who use agricultural power machines, tractors in particular, will have to find an extra £1¼ million. I cannot quote the accurate figures, but in addition to that sum the farmers will have to find many thousands of pounds to meet their fuel costs for running stationary and mobile machines such as balers and chaff cutters. All this amounts to about £2 million, but that is not all.

Here is the discriminatory tax. The farmers who use tractor vaporising oil, which is no good for any machine but a tractor, will have to pay an extra 2d. a gallon, and the extra cost is estimated at £623,000. The cost to other industries will be £32,000, which means that the agricultural industry will pay twenty times as much as other industries in extra tax on tractor vaporising oil. The figures I have quoted are based on consumption in 1960, and I think that the Chancellor will agree that he expects an increase in consumption of fuel oil in 1961.

What happened when the Chancellor had his famous meeting, which all Chancellors seem to have, with his fellow members of the Cabinet when he disclosed to them the terms of the Budget? Did he receive any criticisms from the Minister of Agriculture, Fisheries and Food? Did his right hon. Friend make any complaints? It would be very odd if he did not, because in the White Paper. Cmnd. 1311, which announced the terms of the Price Review, he said, in paragraph 31: The net income of the industry depends on many factors other than the level of the price guarantees and production grants. This Budget is an illustration of that. But the Government consider that the present determinations, which increase the value of the guarantees by £14 million, will, together with the new guarantee and marketing arrangements, enable the industry to face the coming year with confidence. 3.45 p.m.

At almost the moment when this White Paper was printed, the Chancellor decided to take away £2 million to £2½ million from agriculture. This is about one-seventh of the £14 million which the Minister of Agriculture, Fisheries and Food so triumphantly announced would be the extra revenue provided for the agricultural industry. Was there no complaint from the Minister of Agriculture? Has there been no complaint from the 80 Conservative Members who represent agricultural constituencies? For purely discriminatory purposes, and to provide money which the Chancellor can give to Surtax payers, the farmer will have to find what, in many cases, will be a heavy impost.

The Chancellor has introduced a poll tax. It is the sort of poll tax that we have had from the Minister of Health. The Government are fond of putting on a tax without considering whether the taxpayer will be able to bear the burden. It has been our proud boast that we have the most heavily mechanised agricultural industry in the world. As a result, we have developed the tractor, and as the tractor has taken over a lot of the arduous and heavy labouring work, we have developed heavy agricultural equipment which can be towed only by a diesel engine. The tendency, therefore, has been to have more and more diesel-engined tractors on the farms. In that way agriculture has been able to give support to the diesel industry, which, in turn, has led to an increase in the export of diesel engines. It is the owners of these engines who will have to pay so much more in tax.

When one talks about £2 million or £2½ million spread over an industry it is difficult to relate these sums to the individual farmer. Therefore, I take the liberty of telling the Committee what my own experience will be on my own farm with each tractor. I calculate that a diesel tractor working for 250 days a year, and using approximately 15 gallons of diesel oil a day, will cost another £31 a year. It will attract in tax about £30 a year more than at present.

Mr. J. M. L. Prior (Lowestoft)

How many hours a day does the hon. Member work the tractor and what size of engine does he use? He must be using the most highly-powered tractors ever made to obtain figures like that.

Sir L. Plummer

I am working on the basis of using a Fordson Major diesel tractor and a Fordson Countytrack tractor for ten to twelve hours a day in the summer months. In the winter months, as the hon. Member knows, they cannot work more than eight or nine hours a day. They work five days a week in winter and six or sometimes seven days a week in summer. I can only make a very rough calculation. [HON. MEMBERS: "Very rough."] I am prepared to have my figures checked.

It looks as if the extra cost is about £30 per tractor, which is a great deal of money for a small farmer. On the figures produced by some university research workers in agricultural economics that is the profit on ten acres. That is a very heavy impost on a man who has only one or two tractors, particularly after an undertaking has been given that the Price Review figures were to be inviolate.

The same argument applies to the combine harvester, which is a very expensive machine and works only five or six weeks a year. It is an avid drinker of fuel, which will cost £9 or £10 a season more as a result of the tax.

I will not deal with the horticultural side of this question. Several hon. Members opposite have a considerable interest in that industry. If any section of industry is let down it is horticulture. Those who engage in horticulture were encouraged between 1955 and 1958 to go over to using oil. They cannot now go over to coal, or at least it will be extremely difficult to do so. They were, in fact, subsidised to go over to oil. They do not receive any benefits from the Price Review system in the way other farmers do and they will be even more heavily hit by this tax.

If the Chancellor had wanted to look for extra revenue he could have found it in a variety of ways without making this quite penal impact on agriculture at a time when farmers were told that the extra £14 million as a result of the Price Review was something which had been earned. The Tory Party is always breaking faith with the farmers between General Elections and then trying to make it up at election time. I hope that hon. Members who represent agricultural constituencies, and who have been made well aware of how their constituents feel about it, will support my Amendment.

Mr. James Scott-Hopkins (Cornwall, North)

The hon. Member for Deptford (Sir L. Plummer) drew attention to the fact that hon. Members on this side of the Committee perhaps would not support him, or at least would not agree with his arguments for the Amendment. I would point out to the hon. Member that I and several of my hon. Friends tabled an Amendment, probably before he did, seeking to exempt tractors from the diesel oil duty and the duty on tractor vaporising oil. People who feel as strongly as my hon. Friends and I do would not have taken that action if we had not meant it.

Some of the hon. Member's arguments were couched in excessive terms. I am grateful for the opportunity of speaking now, but I do not think that this is the time to go into the varous merits of my Amendment and the hon. Member's Amendment. Suffice to say that the aim is to help the agricultural industry at this time.

I entirely agree with the hon. Member that the total sum that the industry will be required to pay by the impost of this duty will be about £2½ million. That is correct, but in his additions the hon. Member has gone a little adrift when he talks about the amount used per tractor and what the duty on diesel oil and tractor vaporising oil would cost the industry. I do not intend to weary the Committee with details of tractor hours per day or per year, but the tax would mean about £12 extra per tractor, taking on a reasonable basis the average small farm in my part of the country.

Even so, the principle is exactly the same. This is an increased tax on the small farmer and the large farmer alike and it is an extra cost on the industry. The hon. Member for Deptford made a valid point about agricultural drying plant. Farmers who operate that plant will also suffer because most agricultural drying machinery uses this oil. The industry will undoubtedly suffer from a heavy additional burden.

It may well be argued that that amount of £2½ million is not a tremendous sum to bear in the face of the amount of assistance given to the industry from taxation, price support and guaranteed subsidy. It may well be true that £2½ million, compared with £265 million, is not an enormous sum, but it is the principle that matters.

If we are to talk about the principle there are plenty of precedents whereby the agricultural industry could and should be excluded from the imposition of this tax. My right hon. and learned Friend the Chancellor of the Exchequer used these precedents in his Budget statement when, for instance, he spoke about what happened in 1947.

At that time, my right hon. and learned Friend said: The duty on them"— "them" being heavy oils— of 1d. a gallon was then withdrawn, at a time of acute shortage of coal and when every inducement was being offered to get people to change from coal."—[OFFICIAL REPORT, 17th April, 1961; Vol. 638, c. 818.] In 1947, the duty on heavy oils was withdrawn because there was need at that time to help the coal industry, which was having difficulty in supplying the nation's needs. The oil industry, therefore, had to take the lion's share.

4.0 p.m.

The Government are supporting the agricultural industry to the hilt, telling it to increase its efficiency and production on the right lines and, in general, to strengthen its output and structure. My right hon. and learned Friend the Chancellor of the Exchequer was generous, in the recent Price Review, in enabling that improvement to take place. Yet within a short time of the Review, he takes away £2½ million from the industry. Is it to be expected that the industry should not ask exactly what the Government intend to do, and how it can have confidence in the Government's intentions to strengthen and support the industry?

We must view this in the light of what is liable to happen in the next few years. Whether or not we decide to join the Common Market, enormous changes are looming. They will have to be faced both by the Government and the industry. Is it sensible, therefore, that at this time the Government should undermine the industry's confidence in them by this small, stupid act of taking away £2½ million from the amount given to the industry at the recent Price Review?

The hon. Member for Deptford made great play of the Price Review, but this matter goes back further—to the talks in 1960, between the Minister of Agriculture and the President of the National Farmers' Union, when there was tremendous accord between them and when, indeed, the future of agriculture looked much brighter. Confidence had been restored and it looked as though agriculture would continue to go forward with confidence in the Government's intentions. Now, however, we have this proposal. Unless we can find some way out of this dilemma the industry will no longer have confidence that we and the Government will play square with it.

I said just now that the amount of money involved is not enormous. I am prepared to accept it if my right hon. and learned Friend says that, at this juncture, it is impossible to give any rebate, but, if that is the case, I beg him to consider a method whereby the £2½ million, or £2 million, can be reimbursed to the industry in the coming year. Perhaps it can be done by an addition to the production grants. Could he consult with my right hon. Friend the Minister of Agriculture and work out a method whereby an extra £2½ million could be made available to him to offset the amount of money being taken away by this proposal?

I have heard my right hon. Friend the Minister of Agriculture and others say that, in the coming Price Review for 1962, they are prepared to take this tax into account in a more favourable review. Is that not accepting the principle—I think it is—that it is not right to wait a whole year for action to be taken to offset this tax? It was, after all, the efficiency of the industry which caused the Minister of Agriculture to allow it to keep an extra £14 million of its own money at the last Price Review. I ask the Chancellor to consider a method of giving back this new tax to the industry during the coming months, so that it will not have to wait until the next Price Review.

If my right hon. and learned Friend says that this is impossible, I should find it difficult not to support Members opposite in this matter. Therefore, I hope that he will listen to those of us on this side of the Committee who, sincerely holding the interests of agriculture at heart, want to see it built firmly and strongly so that it can face the future, with whatever changes may happen in Europe, and, at the same time, have confidence that the Government will not niggle it or let it down by giving £14 million and taking away £2½ million a few weeks later. The industry would then have confidence that the Minister of Agriculture would give justice to it. It is striving for the nation at all times to the best of its ability.

Mr. J. Grimond (Orkney and Shetland)

I, also, oppose this tax, and I infer, from what the hon. Member for Cornwall, North (Mr. Scott-Hopkins) has said, that we will get support in the Division Lobby from some Members opposite. I hope that that fact will weigh with the Chancellor.

The reasons for opposing the tax have been explained. They are rather simple. It will put up costs. In particular, it will put up agricultural costs and put up the price of a great many things in rural areas. The last thing which this country wants to do at this time is deliberately to increase its costs. This is a tax on production and on efficiency; and this is not the moment to penalise efficiency.

Small farmers, if they are to make a reasonable living, must employ machinery such as tractors and use heavy oil. I cannot for the life of me understand why the Government ever introduced the tax, unless it is simply a bonus to the coal industry. If that is the reason, then the Government had better make it explicit and carry it out another way, for it is no reason to penalise the rest of industry.

We deserve a fuller explanation from the Government about this tax and about their motives in proposing it. It is not enough to say that this fuel has not been taxed for a long time—which is one of the Government's favourite arguments when pressed to the wall about a tax proposal. For horticulturists, the tax will be disastrous to some and a great handicap to most. They may not be able to change now to other forms of heating, even if it were desirable to do so, and it will put them at a great disadvantage compared with foreign competitors who do not have to pay as much for fuel as our horticulturists will have to pay if the tax is imposed.

Arguments against the tax have been put from both sides of the Committee. It will take the profit out of many small farms and will deter farmers and others from being efficient. I trust that the Chancellor will think again, in view of the protests which have reached him from all parts of the country against his proposal.

Lieut.-Colonel Sir Walter Bromley-Davenport (Knutsford)

On a point of order, Sir Gordon. The hon. Member for Orkney and Shetland (Mr. Grimond) has referred to the horticultural industry. Is it in order, in speaking to these Amendments, to talk about that industry, or must we wait until a later Amendment?

The Chairman

It is in order to talk about it now in so far as these Amendments affect the industry, but the industry as such is more specifically dealt with when we reach the Amendment to page 2, line 30, at the end to insert: Provided that this section shall not apply to heavy oils used for heating glasshouses growing in commercial quantities horticultural produce as defined in subsection (1) of section eight of the Horticulture Act, 1960.

Mr. Prior

Far be it from me, as a farmer, to give my right hon. and learned Friend the Chancellor of the Exchequer any praise in extenuation of this change. All farmers, naturally, deprecate it to the extreme, but I do not agree with my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins). I feel that it is wrong that we should discriminate in any way in the introduction of this tax, if a tax is imposed by the Chancellor then, however unpleasant it may be for the farming industry, that industry should bear it for a year and then be compensated in the next Price Review.

This would give a strong ground for the industry to say, at that Review, "We had to bear this extra cost for a year, and we did not complain unduly because we think it right that everyone should bear it equally, but now we want fail compensation for it". I feel that is a much more genuine approach than trying to create a sectional interest and a sectional change affecting agriculture and leaving the buses, or whatever industry hon. Members like to mention, to bear the tax—there are a lot of other industries which will have to bear it.

We have had some extremely exaggerated statements about the effect of this tax. The hon. Member for Orkney and Shetland (Mr. Grimond) said that it is a tax on production and efficiency. I could not agree less about that. I cannot believe that any farmer will stop using his tractor because he will have to pay another 2d. a gallon in duty. It does not make sense. Does the hon. Gentleman mean that because of the increase in tax we shall go back to using horses? I do not believe that for one moment and I cannot see that this will be a tax on efficiency or production.

Mr. Scott-Hopkins

Surely the more tractors and mechanised equipment a farmer has the more efficient he will become, but the more machines he uses the more oil he will use and, consequently, the more tax he will have to pay. I think that is what the hon. Member for Orkney and Shetland had in mind.

Mr. Prior

The hon. Member may have meant that, but does he honestly believe, and does my hon. Friend the Member for Cornwall, North believe, that the introduction of an extra 2d. per gallon on the duty will stop the use of these machines? Although we do not like this tax at all, I think it is one that we shall have to bear. The exaggerated claim of the hon. Member for Deptford (Sir L. Plummer), who said that it will cost another £30 per tractor, is pure nonsense. The hon. Gentleman should get a fresh agricultural engineer to look at his tractors to see why they are burning so much oil, or else use his tractors more efficiently.

Sir L. Plummer

I do not know what kind of land is farmed by the hon. Member for Lowestoft (Mr. Prior). He may farm light land. I farm extremely heavy clay on the Suffolk border. I did not say that the figure was exact. I said that it acted in my case. The hon. Member may give this to me, that it is what I regard from my experience as the correct figure for the land which I farm.

Mr. Prior

I agree that the hon. Member probably farms heavy land——

Sir L. Plummer

Not "probably farms"—I do farm.

Mr. Prior

—does farm heavy land. If he uses his tractors for 1,500 hours a year, which is a high average for a year, and if, as most modern tractors do, they burn about three-quarters of a gallon an hour, he will find that the extra tax will be about £10, which is a much more reasonable figure than the £30 which he quoted.

When we discuss the next Amendment we shall be dealing with the question of heat for the glasshouses used in the horticulture industry. On the tractor side, I think that horticulture will have to bear this tax and people engaged in the horticulture industry do not have a chance of being recouped for it. When it comes to heating glasshouses, I think that the problem is different altogether. But the farming industry must face its responsibilities in this matter and not squeal at every imposition. The farmers must stand up to it, like the rest of the country. I hope that the Amendment will be defeated. As a farmer with a great deal of practical experience, I have no hesitation in saying that I consider that the industry must carry this one and claim for it at the right time.

4.15 p.m.

Mr. A. V. Hilton (Norfolk, South-West)

Hon. Members on both sides of the Committee have a personal interest in the tax which we are discussing—[HON. MEMBERS; "Vested."]—and a vested interest, as my hon. Friends have said. I have no personal interest in this matter apart from the fact that I represent an area which is almost completely rural and this is of great interest and concern to many people in south-west Norfolk.

There have been estimates about the cost of this tax from both sides of the Committee. My hon. Friend the Member for Deptford (Sir L. Plummer) said that it might, in some cases, mean an additional cost of up to £30 a tractor per year. The hon. Member for Lowestoft (Mr. Prior) did not agree, but it will certainly mean a considerable increase. It will hit every farmer in the country and there are many small farmers in my constituency. I believe it to be true that larger farmers—obviously, there is one on the back benches opposite—can stand this increase in the tax. But I assure the Committee that many small farmers in Norfolk are very concerned about this. They estimate that it will cost them £12 to £15 a year per tractor.

If that be so, £15 a year means a lot to a small farmer, perhaps the difference between swimming and sinking——

Mr. Anthony Fell (Yarmouth)


Mr. Hilton

I advise the hon. Member for Yarmouth (Mr. Fell) to spend more time of the villages in east Norfolk and get to know some of the smallholders there. He will find that what I am saying is perfectly true. This estimated increase of £15 a year will make a great deal of difference to them, and it may be the difference between sinking and swimming.

Mr. Fell

I am grateful to the hon. Gentleman for giving way to me. I am even more grateful to him for his advice about how I should conduct things in my constituency. I happen to live in the village next to the one in which he was born——

Mr. Hilton

There are no small farmers there.

Mr. Fell

—and brought up. So perhaps it would be as well if we left each other alone.

Mr. Hilton

There are no small farmers in the villages to which the hon. Member refers. It is all one very large estate.

The hon. Member for Lowestoft said that in his opinion farmers should pay this tax this year, and grin and bear it, and hope to be recouped in the next Price Review. The next Review is about nine months away and the smaller farmers will find it difficult to carry on during that period if they have to pay this tax. The hon. Member for Cornwall, North (Mr. Scott-Hopkins) suggested that if the Chancellor insists on retaining this tax he ought to reimburse the industry by £2½ million, in some other way. I could not agree with that suggestion. It is all very well to suggest reimbursing the industry, but I want to see the people reimbursed who have suffered the loss. If the industry is reimbursed in some other way, I know what would happen.

There are people in the industry "fly" enough to take advantage of everything which is going in the way of grants and they would be the ones who would benefit by a reimbursement in some other way. I hope that there will be no question of reimbursement in that manner. I support the Amendment. I hope that the Chancellor will agree that this is an additional burden on farmers, especially small farmers, and that he will decide not to impose the additional tax.

Mr. Percy Browne (Torrington)

It seems to me that we have a very strange alliance on the other side of the Committee today. I have sat here in several debates listening to hon. Members opposite running down the farming industry, and every time the word "subsidy" comes up we hear, "What about the farmers". [HON. MEMBERS: "Hear, hear."] That is what I wanted to hear; I was surprised at the silence of hon. Members opposite.

Mr. Gerald Nabarro (Kidderminster)

Crocodile tears.

Mr. Browne

I have here a quotation from the speech made by the hon. Mem- ber for Jarrow (Mr. Fernyhough) on 18th April, when he said: Of all the interests which have had a generous supply of public 'lolly,' the hon. Gentleman had to select the agricultural industry."—[OFFICIAL REPORT, 18th April, 1961; Vol. 638, c. 1080.]

Mr. Hilton

As the hon. Gentleman is following me, there might be the inference that I am one of the culprits who is always running down the agricultural industry. I want to plead "Not guilty" to that charge. I cannot be responsible for what happens on either side of the Committee, but as far as I am personally concerned, I have never criticised the industry in the terms which the hon. Member suggested.

Mr. Browne

Having listened to the hon. Member for Deptford (Sir L. Plummer), I was rather wondering whether hon. Members opposite hope to get a second agricultural seat at the next General Election——

Mr. Harold Davies (Leek)

We shall get many more.

Mr. Browne

—but I agree that the hon. Member for Norfolk, South-West (Mr. Hilton) has always supported agriculture.

I should like to quote from a supplementary question which I asked of the Joint Parliamentary Secretary to the Ministry of Agriculture a short time ago, in which I asked: …will my hon. Friend bear in mind that, unlike any other industry in this country, any increase in costs cannot be passed on to the consumer? whereupon there were cries of "Oh" from the benches opposite. I went on to say: Whatever Members opposite may say, that is so."—[OFFICIAL REPORT, 4th May, 1961; Vol. 639, c. 1591.] And so it is. Therefore, in this case, we cannot plead "Lloyd's Law", as I believe it is now known, in the case of the farming industry.

This law was said to have been stated yesterday evening by my right hon. and learned Friend the Chancellor—that an indirect tax will, broadly speaking, be passed on. I agree with the hon. Member for Deptford and with my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins), that the farming industry is not in a position to pass on the increased costs which it will have to bear as a result of the £2.3 million being added to the fuel tax.

It is quite true that at the next Price Review, as my hon. Friend the Member for Lowestoft (Mr. Prior) said, it can be taken into account. But the trouble in the farming industry is that it is always a year behind, and cannot pass it on at the time. The hon. Member for Dunbartonshire, East (Mr. Bence), I know, is longing to get up and say something. He is running down the farmers all the time. Perhaps he could tell me whether he knows of any product produced by farmers which is subjected to taxation which the farmers can pass on to the consumer at any time.

Mr. Cyril Bence (Dunbartonshire, East)

I am glad to accept that invitation, because I want to expose the stupid situation into which this country is getting. When taxation is imposed on the fuel oil used by a section of industry——

Mr. Browne

Any product.

Mr. Bence

The hon. Gentleman is supporting his hon. Friends in saying——

Mr. Browne

Any product—that is what I asked.

Mr. Julian Snow (Lichfield and Tamworth)

The hon. Member for Torrington (Mr. P. Browne) is choosing his own ground.

Mr. Browne

Will the hon. Gentleman answer my question?

Mr. Bence

The hon. Gentleman has put the question to me, and I am answering it. Here the farmers are having a tax put on, which they cannot claim back, and so it is argued that they should accept it and next year should ask the Chancellor to get the rest of the taxpayers to recoup them for their extra costs.

Mr. Browne

I gave way to the hon. Member, in view of what he always says about farmers, to give him the opportunity to tell me of one product which the farmers produce over which they have control of the selling price, and he has not been able to name one. I knew that he could not do so, because there is not one.

In the White Paper on the Price Review the Government said that it was their responsibility to ensure that the farming industry enjoyed a rising standard of living, both for the farmer and the farm worker. We have had the Price Review, as a result of which, taking into account costs on the industry, at the end a hypothetical figure of £25 million for efficiency is arrived at so that farmers gained £20 million or kept £20 million, if £25 million is the right figure. The farmers have no possibility of redress until the next Price Review, and this is the trouble all the time. In an exposed industry such as farming, under our present cheap food system, the cost falls on the producer until the next Review. He is not recouped even then, because he starts the next year and increases his costs in the following year, and is one year behind again.

For that reason, in three consecutive months, we have said that we would give assistance and have done, and then we have taken the money away. I deprecate the practice of giving with one hand and taking away with the other. I hope that my right hon. and learned Friend will consider the matter very carefully before rejecting the Amendment out of hand.

Mr. Bence

I am glad to follow the hon. Member for Torrington (Mr. P. Browne) because he said that farmers are not able to pass the extra cost on to the consumer. What in the name of fortune is price support? The only difference is that the Chancellor supports the price which the farmer gets with the money of the rest of the taxpayers.

Mr. P. Browne

If the hon. Member will look at Appendix 5 of the Price Review White Paper he will understand what I am getting at. If he will read up the subject, I am quite ready to discuss it with him at any time. We have a cheap food policy and the result is that the price which the housewife pays in this country depends not only on the price of imports, but on the quantity available. Therefore, the farmers will get the price which the housewife will pay for these goods, where-ever they come from.

4.30 p.m.

Mr. Bence

It is quite true that the farmer, by the very nature of his industry, is twelve months behind from sowing to reaping, and that he is reaping the price for a product six, eight or ten months after he has sown it. I know that the Bank Rate is very high, and that probably his overdraft at the bank is now a little more costly than it used to be. The hon. Member must not blame the consumers for that, but the Chancellor of the Exchequer, who fixes the Bank Rate.

This tax will not be collected on the day when the Chancellor imposes it, but over the next twelve months. A case has been made by the hon. Member for Lowestoft (Mr. Prior) that the farmers should pay this tax for the next eight or nine months and that the Chancellor will then use the tax which he has collected from them either in the form of subsidies or price support, so as to recoup the farmers for the tax which he put on them This is the sort of thing to which I object. We had this yesterday on television advertising. There are people who have taxes levied upon them and who can then pass them on to somebody else. Where are we going if we are now to have everybody claiming that they should be able to pass on their taxation?

Mr. Prior

I am sure that the hon. Gentleman would agree that it had nothing to do with the price support system for agriculture. All I was dealing with was the method by which the price support policy is carried out. If the hon. Gentleman does not want to have anything to do with that, he had better say so.

Mr. Bence

That is not the point I was making at all. It is not a question whether I want support for agriculture or not. It seems crazy to me that we are having a tax levied on his products, and the farmer can make a claim that the Chancellor should enable him to recover that tax from all the other sources which are contributing to that tax. What is the good of collecting the tax from the farmers if it is to be given back to them? It seems to be an exercise in futility.

I favour supporting agriculturists—of course I do—in their good use of the land, because that keeps it in good heart and saves us millions of pounds a year in foreign currency. Many of us know that in the bad old days of laissez faire the soil on many a farm was ruthlessly exploited and made derelict: and in other countries, of course, it has been worse. It is better to ensure good husbandry and farming, and it is a good thing, in general, for the taxpayer to make a contribution to that end.

That is how I see support for agriculture. I do not see it in the sense that every tax imposed on the farmers must be covered by the rest of the taxpayers. After all, we as individuals cannot recover the taxes imposed on us. To whom will the hon. Member for Kidderminster (Mr. Nabarro) pass his Surtax? I do not doubt that he will do all he can to do so, but here the agriculturists are quite blatantly asking the Chancellor to underwrite this tax at the next Price Review, and pay them back out of the rest of the country's taxation.

We are already subsidising the industry to the extent of £267 million a year. If we want another £2¼ million out of the farmers we need only reduce the subsidy. I cannot understand why we should have given agriculture support last February and should now want to impose a tax on the industry. It is nonsense and a waste of accountancy. We put up the subsidy, and six months later we impose a tax on the farmers to collect some of the subsidy back from them. That seems to be finance gone mad.

I cannot understand why we should subsidise an industry to the extent that agriculture is subsidised and, at the same time, impose a tax on its productive work. This is not like Income Tax; it is a tax on the raw materials of an industry that we are subsidising. That seems stupid. It is one thing to make the farmer pay the same tax as everyone else on the same raw material, but why specialise in this way and bring in a tax that hits farmers particularly hard?

It is right that the Chancellor should give the industry a subsidy so that it can keep the land in good heart and produce the maximum amount of home-grown food to help our balance-of-payments position, but why, at the same time, impose this tax on it? If the Chancellor wants to get extra revenue from the farmers, let him raise the general level of Surtax and the like, but not use this method.

But in this case and in the case of television advertisements we have the proposition that the tax imposed should be passed on to the consumer, and I object to that.

Mr. Norman Cole (Bedfordshire, South)

It has been a little difficult to follow the hon. Member for Dunbartonshire, East (Mr. Bence) but, on balance, I have decided that he is in favour of the Amendment and against the tax. This, of course, is not a tax only on agriculture; it is a tax on fuel oil, which happens to be used quite a lot by the agricultural industry.

I agree with the hon. Member that it seems illogical and unjustifiable. None of us can tell what the 1962 Price Review will do. It may not hand back the whole of this tax, but if it first takes a substantial portion of taxation and then gives it back to the farmers by means of grants or subsidies, it seems a little illogical to try to make a case for imposing it for a matter of eight months. It is either justifiable or not, but the two things should happen together.

I join issue with my hon. Friend the Member for Lowestoft (Mr. Prior), who did not seem to think that discrimination was any good at all. Our whole taxation system is a lesson in discrimination. In fact, it could be said that good government is a proper recognition of justifiable distinction, and that applies in many cases today. If we are not to have discrimination in this industry, why do we, have this important and quite proper system of subsidies? If there is no discrimination, why are we not in the Common Market? The answer is that we want to protect our agriculture, so we discriminate, quite properly, in its favour.

If the Chancellor wants precedents for an allowance for this tax to the agricultural industry—and, indeed, the horticultural industry, too—there is a wealth of them. I support the Amendment. I think that this is a case in which a tax which otherwise would have a justification has hit, in particular, not one small section of industry, but a major industry and one that we have been trying to build up for many years.

Mr. Harold Davies

My hon. Friend the Member for Dunbartonshire, East (Mr. Bence) made a perfectly logical case. It is no good hon. Members opposite pretending that there were great differences on this side—that we decried British agriculture—when the overt truth is that the best work done for farming in the last hundred years was done by the Labour Government's 1947 Agriculture Act. Therefore, let us get rid of all that rubbish at once. Let us also get rid of the pretence that members of the Conservative Party are not having the devil of a row among themselves about this very problem.

Again, if we look at the historical development of the party opposite, we find that—especially since the parvenus and the rest entered its ranks—it has been ready to sacrifice British agriculture time and time again at the behest of the City of London——

The Temporary Chairman (Mr. John Arbuthnot)

Order. The hon. Member is going rather wide of this Amendment.

Mr. Davies

That was just an introductory statement Mr. Arbuthnot, that will make my facts much more incisive. We have too much of this playing politics backwards and forwards across the Floor of the House. We have had a real pretence this afternoon about the unity of the party opposite——

The Temporary Chairman

Order. I have told the hon. Gentleman that he is going too wide of this Amendment.

Mr. Geoffrey de Freitas (Lincoln)

I wonder, Mr. Arbuthnot, whether you heard the hon. Member for Torrington (Mr. P. Browne)? His speech went extremely wide and, surely, it is exactly to that sort of point that my hon. Friend is replying.

Mr. Davies

I apologise, Mr. Arbuthnot, but I thought that some of the statements that have been made during your absence needed answering, and I have now answered them adequately.

I have received a letter from one of my constituents. In a way, it is the kind of letter one gets from the little man—the property-owning democrat of whom the party opposite talks, and we have them in farming. He tells me that in the mushroom and glasshouse industry—in which he has built up a business from scratch, in Biddulph—they are now faced with an almost insoluble problem resulting from the duty on both kinds of oil.

What does the party opposite stand for? The Chancellor of the Exchequer is sitting there like a black oat upon a glasshouse roof. He is not one of those pleasant farm cats. He is wondering where he can dip his paw so as to fill up the coffers of the Exchequer. In this Budget he has dipped his cattish paw, as usual, into the pockets which have the least gold.

The Temporary Chairman

Order. The hon. Member is making a Second Reading speech. That will not do.

Mr. Davies

I apologise for drifting away from the Amendment. The Association of British Chambers of Commerce, at a meeting last week, said, in respect of this Amendment, that many users of fuel have in recent years been urged to change to fuel oil. Now they will have to pay a penalty equivalent to an increase of £3 a ton on oil. This is what has happened in agriculture and horticulture, and it means an increase of 25 per cent. on the costs of growers and small farmers. We have nullified for the horticulturists much of the safeguard that we have provided in the tomato industry, for instance, by the import tariffs.

The Temporary Chairman

Order. The hon. Member will be in order in talking about the glasshouse and tomato industry on the Amendment in page 2, line 30, at the end to insert: Provided that this section shall not apply to heavy oils used for heating glasshouses growing in commercial quantities horticultural produce as defined in subsection (1) of section eight of the Horticulture Act, 1960. but not on this Amendment.

Mr. Davies

Thank you, Mr. Arbuthnot. I have now finished with that point.

I wish to make another point. Let us get rid of the pretence that one side of the Committee stands 100 per cent. for agriculture and that the other side does not. Here is a very difficult problem for British agriculture, and on both sides of the Committee honest people want to find an answer to this complex problem. We appeal to the Chancellor to find a formula which will enable and encourage those who have the smallest interest in agriculture to keep going in this very difficult industry.

Before the Committee comes to a conclusion, I should like to point out that Dutch and other foreign heavy oils cost in the neighbourhood of £6 a ton as compared with about £10 a ton in England, irrespective of this further taxation which is sought to be imposed. I appeal, on behalf of the horticultural industry——

The Temporary Chairman

Order. I have told the hon. Member that he is out of order in dealing with the horticultural industry on this Amendment, but that he will be in order in doing so on the Amendment in page 2, line 30.

Mr. Davies

I know, Mr. Arbuthnot, but all the time there have been references from both sides of the Committee to horticulture.

The Temporary Chairman

Order. The hon. Member must follow the guidance that he is given from the Chair He is out of order in dealing with horticulture on this Amendment.

Mr. Douglas Jay (Battersea, North)

Further to that point of order, Mr. Arbuthnot. We had a Ruling from the previous occupant of the Chair by which I understood that the main discussion on horticulture would be on the Amendment to which you have referred, but that there could be references to it on this Amendment.

Mr. Davies

I do not propose to deal with the matter in detail, but it is difficult not to refer to horticulture in passing. All I want to say, on behalf of the horticultural industry and the small farmer, is that I hope an adequate answer will be found to this problem and that this Amendment will be accepted.

4.45 p.m.

Mr. R. J. Maxwell-Hyslop (Tiverton)

This tax is either unjust or inflationary. It is a tax on a basic raw material of an industry. If it is passed on to the consumer in the form of increased prices, which is extremely unlikely, it will be inflationary, and it is surely undeniable that if it is not passed on to the consumer, net farm incomes will be reduced by £2.7 million in the course of this coming year.

I protest strongly against the suggestion that we should do again what, regrettably, has been done in the past, and make an inaccurate forecast of costs in the Price Review or allow the Review to be overtaken by costs which could have been foreseen. I do not think that it can be doubted in this case that my right hon. Friend the Minister of Agriculture could have been enabled to include this cost under the heading "miscellaneous" in the estimate of costs for the coming year. Since it has demonstrably not been done, the imposition of this tax has vitiated the basis of the Price Review for this year. That is why I cannot lend myself to supporting the imposition of a tax which will reduce net farm incomes in this country by about £2.7 million.

In addition, it is contrary to one of the major theses of the Budget, which was that we should be encouraged to make the most economical use of our labour, and the effect of the imposition of this tax is directly contrary to the major thesis of the Budget. On those grounds, I support the Amendment, which seeks to relieve agriculture from the imposition of this tax.

Mr. George Forrest (Mid-Ulster)

I should like to say a few words in support of this Amendment. Farmers in Northern Ireland, where we have a lot of unemployment, will be greatly upset by this Clause. Many farmers in Northern Ireland, and particularly those in my constituency, farm on a very small scale. Most of them have farms of 20, 14, 12 or 10 acres. It may be said that the £12 or £14 per tractor per annum which will be added to their costs by this tax is a very small amount, but I cam assure the Committee that it will hurt many of them, and especially those who are on National Assistance. I therefore support the Amendment.

Colonel Sir Leonard Ropner (Barkston Ash)

I should like to add my support to the pleas which have been made to the Chancellor of the Exchequer to accept the Amendment.

I always try to imagine the kind of reply that we shall get from the Chancellor when considering Amendments of this sort. It may well be that it is difficult to single out one industry for special relief. He may say, "Some sort of case can be made on behalf of many other industries and I cannot accept that this relief should be given only to agriculture".

The agricultural industry, however, stands, and has stood for a number of years, in a very special position indeed, with production grants, price support, the whole paraphernalia of the Price Review. These sorts of commitments to agriculture are not shared by any other industry. I do think that it is a bit hard, when the industry was told at the time of our Price Review that it was to be awarded £14 million or £15 million, that at this stage, only a few weeks later, it should have taken away £2½ million.

I do not know whether the Chancellor of the Exchequer was at liberty, during the course of the Price Review, to warn the Minister of Agriculture of what he intended to do. I dare say that that sort of thing is not done, but I wish that it could have been done, and I am sorry that so soon after the Review a hole should be made in the award, which was proclaimed with great pride as agreed between the National Farmers' Union and the Government.

I hope that the Chancellor of the Exchequer will tell us that he will accept this Amendment. I am quite sure that many of his supporters on this side of the Committee, and many agriculturists in the country, will be very sorry unless he does so.

Mr. Frank Tomney (Hammersmith, North)

Whether or not the Amendment is accepted, there has been a most historic division in this Committee, and yet, at the same time, I have not seen a greater travesty of tongue-in-the-cheek politics than we have seen in this last hour in this Chamber. It has been a charade played upon the Finance Bill. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) is quite right: there is a case to be made out for the tax, as there is also a case to be made against it, but the case can be made out on far better grounds than on the grumbles of this industry, and the grumble is not coming from industry——

Mr. Nabarro

It will be.

Mr. Tomney

—although the tax applies to all, and the farming interests on one side.

Mr. Nabarro

On a point of order. Your predecessor in the Chair, Mr. Arbuthnot, ruled that on this group of Amendments we should talk only about the agricultural considerations, and my Amendments deal with the industrial aspect.

Mr. Tomney

The hon. Member should not jump in at the shallow end.

Mr. Nabarro

The hon. Member has gone in at the deep end.

The Temporary Chairman

The hon. Member for Kidderminster (Mr. Nabarro) must not make sedentary interruptions.

Mr. Tomney

The issue is this. For how long——

Mr. Nabarro

On a point of order. I did not hear you correctly, Mr. Arbuthnot. Did you say I was sedentary?

The Temporary Chairman

I said that the hon. Member must not make sedentary interruptions.

Mr. Nabarro

What does "sedentary" mean——

Mr. Fell

Sitting down.

Mr. Nabarro

—in the context of an interruption?

The Temporary Chairman

When the hon. Member has his backside on the bench.

Mr. Nabarro

I do not think that you understood my point of order, Mr. Arbuthnot. My original point of order, which I did not hear adequately answered, was whether or not, as your predecessor ruled, this debate deals only with agricultural matters.

The Temporary Chairman

This debate does deal only with agricultural matters, and if the hon. Member for Hammersmith, North (Mr. Tomney), who is speaking, had been out of order I would have called him to order.

Mr. Tomney

We can, I hope, feel assured that the hon. Member for Kidderminster (Mr. Nabarro) has finally subsided and that we can get on with the debate.

I was trying to say that this country has got to take a long view from now on of the position of the farming industry. Immediately after the war, and probably prior to it, the industry was run down. The system of subsidies was entered into. That was to make it efficient. The subsidies covered every imaginable tangent of the farming industry, farm buildings, machines, price support, and almost everything the farmers use. The support price was a subsidy. This has been carried on for a period of fifteen years, but what the farming industry does not realise is that economic time is passing and that the country's trading position industrially is passing, and that we face the most stringent economic times. One has to face the facts of the position generally as well as in relation to the farming industry.

That is precisely what the Chancellor is doing. It is always good financial sense to recoup from industry or anyone else by a tax on anything for which there is an upward demand, whether it is tobacco or anything else. It is always a safe bet. That is precisely what the right hon. and learned Gentleman is doing.

The question is how long the nation will be prepared to go on giving subsidies of this character to the farming industry. If we get such a squeal as we have heard now at this stage, at a proposal which may cost the farming industry £2½ million, what will happen if and when the country goes—as it will—into the Common Market? For cheap food will be available on the Continent in abundance. We have to decide where our support is to be given. The farming industry has got to adapt itself to changing circumstances, and quickly.

For too long and over too great a range of goods and activities the farming industry, as the former Member for Wednesbury, Mr. Stanley Evans, used to say, has been feather-bedded. It is a remarkable thing when we see farming interests on this side of the Committee and on that coinciding and putting down Amendments to help the industry to get something out of the taxpayer.

Mr. Hilton

I am grateful to my hon. Friend for giving way to me. If he does not have to spend all of his time among the seething millions in this great City, I invite him to come at some time to a rural area, where he will see, despite his criticism of the assistance which agriculture is getting, that the wage of the farm worker is still £8 9s. a week for a 46-hour week, and he can compare that with the national average wage. Although he is advocating that assistance to agriculture should be reviewed, he is, in effect, advocating a reduction in the wages and standards of living of the farm workers. I should like him, and others who are criticising the assistance given to agriculture, to remember these sorts of things, such as the conditions under which farm workers, who are producing my hon. Friend's food as well as food for themselves, are living.

Mr. Tomney

My argument means nothing of the kind. It is said that we have got to have this kind of syndicalism operating with the labour side supported by the capitalist side with its policy and purposes, but agriculture, like other industries, should pay its own wages: not the taxpayer.

I was talking of syndicalism. The fact is that this party's Amendment is no different in substance from the Amendment of the other side. Both Amendments are the same in principle.

Mr. de Freitas

I was only saying that, in our support for agriculture, we on this side welcome allies wherever they were. The Amendment, however, is ours.

Mr. Tomney

What I want to get away from is the objectivity of the argument which divorces farmers from other taxpayers. It is us, the consumers in the towns, who eventually will have to pay the bill if the Chancellor remits this tax in the Price Review next February. In this complex of interests between the farming community, on the one side, with its subsidies and the general taxpayer in Britain and trade in Europe and elsewhere, on the other, we as a nation have to decide where the true interest lies and what we are going to do for this industry which, in my opinion, has already had much too much.

5.0 p.m.

Mr. Nabarro

I am deeply grateful to you, Mr. Arbuthnot, for observing me rising in my place, as I have been doing since half-past three this afternoon. I am deeply grateful to be allowed to follow the "Hammersmith farmer", the hon. Member for Hammersmith, North (Mr. Tomney), who spoke so eloquently on behalf of industrial interests to which I shall address myself more largely on succeeding Amendments in the name of my hon. Friend the Member for Willesden, East (Mr. Skeet) and myself.

I wish to oppose this Amendment on the very simple ground that farming is not the only basic industry of this country. There are at least three basic industries heavily involved with the fuel oil duty increase. One of them is farming, the second is steel and the third is electricity generation. Of the three the effect on farming is by far the smallest. I do not talk with my tongue in my cheek on this matter. I am not myself a farmer, but I sit for a large agricultural industry. Since the Budget I have been subjected to the usual pressures from the National Farmers' Union and farmers in my constituency to oppose the increase in fuel oil duty.

I have said that I am in sympathy with their views, but, if there is to be any reduction in the amount of the increase in the duty it cannot, in my judgment, be applied unilaterally and in discriminatory fashion to farming alone because there are other industries which, although perhaps not so large, are at least as important. We would be doing a disservice to the national economy and to industrial production generally in seeking to relieve one particular basic industry by what I conceive to be a rather clumsy method.

We have every February, as a result of the 1947 Act and succeeding statutes in the same sense, an appraisal of agricultural but not horticultural costs of production. The cost of fuel enters into the cost of every finished product in this country, including farming and horticultural products. The proper time to consider the effect and influence of this increase in fuel oil duty is the time of the February Price Review, 1962, which is a matter of six or eight months' hence.

This is not a huge increase in duty. I shall not reply in detail to the figures given by the hon. Member for Deptford (Sir L. Plummer) when he moved the Amendment. I thought that they were exaggerated. My hon. Friend the Member for Lowestoft (Mr. Prior) dealt only with the tractor aspect. To show how lopsided the argument of the hon. Member for Deptford was, I consulted a leading farmer in my constituency.

Mr. A. C. Manuel (Central Ayrshire)

A barber?

Mr. Nabarro

He is a leading farmer.

Mr. Manuel

I thought the hon. Member said "a barber".

Mr. Nabarro

I was hoping, Mr. Arbuthnot, that you would call the hon. Member for Central Ayrshire (Mr. Manuel) to order for his sedentary intervention, but you failed to do so and I am deeply disappointed.

As I was saying, I consulted a leading farmer in my constituency, the owner of the Ribbesford Herd, near Bewdley, about the effect of the fuel oil duty increase on his farming costs. He farms 1,000 acres and he sent me this useful information: To give you the relevant information first, the proposed tax will cost my Group (of about 1,000 acres) £100 per annum in tractor fuel extra, and £450 per annum in fuel for our driers (grass and grain) extra. There are other incidental uses which may well bring the extra cost to a total of £600 per annum. Out of £600 increase in costs applicable to this fuel oil duty increase, only £100 is in respect of tractors.

Mr. Hilton

How many tractors?

Mr. Nabarro

This is a 1,000-acre farm which I know personally. It is a mixed farm largely concerned with milk production. I fancy that the average number of tractors on a highly mechanised British farm of the standard I have indicated by the title of the Ribbesford Herd would be about eight tractors, but I did not test that point. What I am endeavouring to say is that the burden of this debate has been on tractor fuel, but, of course, there are other considerations. There, we enter into very marginal matters afflicting, not only farming, but the whole of industry generally.

I regard the whole of this fuel oil duty increase as bad and I shall say so on the next group of Amendments—that is, if I catch your eye, Mr. Arbuthnot. I shall recommend a reduction in the duty by those Amendments. I do not believe that it would be the correct course unilaterally to relieve one basic industry only, farming, yet to continue to apply the duty to two other basic industries which are at least as important—the nationalised industry of electricity generation and the very largely private enterprise industry, steel.

Sir L. Plummer

I am sure the hon. Member does not want to be more than unusually unfair in this matter. He may not have been in the Chamber when I addressed the Committee, but I did not speak only of the effect on tractors. I referred to drying plants, mobile engines and stationary engines. I did not confine my argument to tractors. The hon. Member for Lowestoft (Mr. Prior) was more interested in tractors.

Mr. Nabarro

I immediately withdraw if the hon. Member fox Deptford feels that I have been unfair. It was a fact that I was attending a meeting upstairs during the earlier part of his speech and I missed a portion of it.

May I put an analogy to the hon. Member? He and many of my hon. Friends want this relief from duty to be applied to all agricultural machinery, which would include grass driers and grain driers which use fuel oil. Yet, in a carpet factory, for example, there is a similar drying shed, or dyeing shed, or other processes which are strictly analogous to grain or grass drying in agriculture. They, too, are reliant on fuel oil for their processes. Why should we relieve one particular agricultural process and fail to relieve a comparable process in industry? That seems to be a wholly insupportable theory.

I shall argue the general advisability on economic grounds of this fuel oil duty I hope in a few minutes, or within an hour. To relieve one industrially unilaterally and in a discriminatory fashion, especially when the costs of that industry and its prices are subject to meticulous annual scrutiny is, I am sure, a wholly wrong policy in principle. I am very much in sympathy with the hon. Member for Deptford's case for agriculture, because I sit for an agricultural constituency, much more agricultural than is his constituency. My constituency has about 140,000 acres of agricultural land, which is a big proportion for an English county, although not for a Scottish county. Out of the conurbation it is largely an agricultural constituency, so I am subject in this particular context to this plea, but I think that in principle it would be wrong to accede to it.

Mr. Cole

I am sure that my hon. Friend would wish to be fair. He said that there should not be discrimination in favour of this industry in regard to the rebate in the Price Review, but that itself is a discrimination because other industries do not have such a price review.

Mr. Nabarro

On the contrary. My hon. Friend is not well-advised on these matters. Without getting out of order I cannot answer his question, and I shall not dare to get myself out of order with you, Mr. Arbuthnot.

Agriculture is subject to an Annual Price Review and a meticulous examination of its costs. Its prices are largely dominated by Government action, but so is the steel industry, the electricity supply industry and the coal industry. I should be out of order if I pursued that, but I ask hon. Members not to tell me that agriculture is the only industry which is either subsidised or subject to a meticulous examination of costs and prices by the appropriate Government Department, because that is not so. I am against unilaterally giving relief to agriculture in this country. I shall argue on future Amendments that the increase in the fuel oil duty is thoroughly bad.

Mr. de Freitas

We shall all be most interested to hear the hon. Member for Kidderminster (Mr. Nabarro) keeping in order on the later Amendments.

At this point the important question to take up is the measure of the burden on agriculture. I want to relate it to the small farmer. There are very wide variations in the type of land, in particular. But, in passing, may I point out to my hon. Friend the Member for Hammersmith, North (Mr. Tomney) that we must remember two facts about agriculture. First, the percentage of the gross national product which has been going to the agricultural community has declined every year over the last ten years. Secondly, although my hon. Friend talks about cheap food on the Continent, I ask him to look at the markets on the Continent and to compare the prices to the housewife there with the prices to the housewife in this country.

Mr. Tomney

My hon. Friend does not say that the proportion of the gross national product going to the farming industry has been going as a direct gift from the taxpayer as subsidy. The point is how long, in changing circumstances, any industrial nation can afford to support this state of affairs.

Mr. de Freitas

Clearly, my hon. Friend and I are miles apart and it would take hours of argument to settle the point. When I referred to cheap food I thought that he would connect the two points and realise that the so-called agricultural subsidies are largely consumer subsidies, as they are operated in this country.

The burden of the debate has turned on the measure of the additional costs which will fall on the agricultural community, and I want to pick up the example of the small farmer, because there is remarkable agreement between the hon. Member for Cornwall, North (Mr. Scott-Hopkins) and my hon. Friend the Member for Norfolk, South-West (Mr. Hilton) on the approximate cost to a small farmer per year for each tractor. There was a disagreement as to the measure of cost in respect of large farms between the hon. Member for Lowestoft (Mr. Prior) and my hon. Friend the Member for Deptford (Sir L. Plummer).

We must consider the uncertainty facing the agricultural community and especially the small farmer, not only at home but in what many people on the Continent believe to be contradictory statements from the Government about this country and the Common Market.

5.15 p.m.

The hon. Member for Lowestoft suggested that the increased tax should be accepted and then recouped at the next Price Review. May I remind him and other hon. Members that that is not the view of the National Farmers' Union. The union wrote to the Chancellor of the Exchequer on 24th April, and the letter has been published. It begins: I have been asked to write to you on behalf of the three Farmers' Unions to express their grave concern at the proposals contained in your Budget statement to impose a duty… The letter details the duty. The N.F.U. made it clear that it was not its view that the duty should be accepted and used in discussion at the next Price Review.

You have ruled, Mr. Arbuthnot, that we should not discuss horticulture, and reluctantly I will not attempt to do so now. It is the problem of the small farmer which worries by hon. Friends and myself. We must put it in the context of the enormous amount of mechanisation which has taken place on the land since the war. According to the Zuckerman Report, between 1946 and 1956 the number of tractors in this country rose from 180,000 to 427,000—a huge increase. The cost of this development varies not only with the type of land, but also with the size of farm. We learn from the Zuckerman Report that a 50-acre farm needs investment in mechanisation which may be as much as five or ten times that of a large farm. The small farmer has proportionately to put in more capital.

It has only recently been recognised by those engaged in agricultural economics that more specialised equipment must be designed for the small farmer if he is to be able to increase his productivity by the use of his own labour. If the small farmer is to increase his productivity we must look not at the traditional type of farm machinery, but at farm machinery designed to make a greater use of the labour of one or two men. In other words, the future of the small farmer lies very much in still more mechanisation. That is why it seems to my hon. Friends and to me that this is a most untimely moment to increase the tax.

I do not believe that the Chancellor, or those who have spoken about the farmers, realise that the average yearly income of a small farmer with fewer than 50 acres, according to the Farm Management Survey, is under £500 a year. It could be argued on economic grounds that we should not have small farmers, but I understand that that is not the policy which the Government are pursuing. If they want to preserve the small farmer, they must not put on the sort of tax which makes it most difficult for him.

The production of the small farms must also be considered. I can find no comparable figures for the farmer with fewer than 50 acres, but we know that those with between 20 and 100 acres have one-third of the output of our agricultural community with only a quarter of the acreage. Their record of production is, therefore, good.

I am glad that my hon. Friend the Member for Norfolk, South-West, like the hon. Member for Cornwall, North, referred to the small farmer. It is not always realised that there are small farmers throughout the country. The proportion in each county declines as we move from west to east, but there are pockets of small farmers everywhere, and all hon. Members who have an interest in the agricultural community also have an interest in small farms. There are small farms in the Fens, in East Sussex and in many other parts of Eastern England.

The small farmer is the most likely to suffer from the tax. A figure of between £12 and £15 per tractor has been agreed on both sides of the Committee. As I have said, the small farmer has a very low income. If he is to exist we must not say kind words to him at one moment and then, at the next moment, impose a tax which will inevitably affect him not only now but in the future.

I was encouraged by the bold way in which so many hon. Members opposite announced that they were not supporting the Government. The hon. and gallant Member for Barkston Ash (Sir L. Ropner) even went so far as to refer to the bad faith of the Government. That is a serious thing for an hon. Member to say of the Government he nominally supports. As I pointed out in an earlier intervention, my hon. Friends and I, having tabled this Amendment in the interests of the farming community, especially small farmers, would welcome the votes of hon. Members opposite who have so courageously said that they would support us.

Mr. Cole

The hon. Gentleman has twice made that reference. I cannot speak for my hon. Friends, but I rather resent it. A number of Amendments on the Notice Paper are being taken with this Amendment, but because of House of Commons procedure only one can be moved at a time.

The Economic Secretary to the Treasury (Mr. Anthony Barber)

Yesterday, when the Committee debated Clause 1 concerning television advertisement duty several hon. Members opposite complained about some of my hon. Friends taking part despite the fact that they had an interest in the subject being discussed. If that rule had prevailed today, the Committee would have been deprived of the benefit of the advice of a number of hon. Members on both sides.

We are considering a series of Amendments in the names of the hon. Member for Lincoln (Mr. de Freitas) and his hon. Friends and one Amendment in the name of my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins) and some of my hon. Friends. The first series of Amendments tabled by the Opposition are concerned exclusively with agricultural vehicles. I mention this because the hon. Member for Deptford (Sir L. Plummer) and one or two other hon. Members talked about the additional cost which may result from this duty in respect of driers. There is nothing in the Opposition Amendments to cover that case. It is doubtful if it would be covered by the Amendment in the name of my hon. Friend the Member for Cornwall, North, which differs in two respects from the Amendment moved by the hon. Member for Deptford. My hon. Friend's Amendment provides for a reduced rate of duty and not for a complete exemption. It also applies to what he describes as other implements for agricultural purposes in addition to agricultural tractors.

The Amendments standing in the name of the hon. Member for Lincoln taken together would, first, exempt agricultural vehicle fuel from the new duty of 2d. per gallon. Secondly, the Amendments seek to relieve it of the main hydrocarbon oil duty of 2s. 6d. a gallon by a system of repayment claims or by means of duty-free delivery such as is already applied to coastal shipping, which is specifically referred to in the hon. Gentleman's Amendments.

It is doubtful whether the second aspect of the Amendments has any purpose, except perhaps to invoke coastal shipping as a precedent for an exemption. As most members of the farming community who are present will know, agricultural vehicles as defined in the Amendment are already relieved from paying the 2s. 6d. rate which is applicable to vehicle fuel in general. Therefore, agricultural vehicles under the Clause as it stands will pay only the 2d. rate.

Agricultural tractor fuel was not exempted when previously there was a duty on heavy hydro-carbon oil. That was from 1933 to 1947. When in 1935 diesel vehicle fuel, which is commonly known as "Derv", was first subjected to the same rate of tax as petrol, agricultural tractors were permitted to continue to use diesel oil at the lower heavy oil rate. In 1941 this concession was considerably extended in the case of agricultural tractors, which were then allowed to use the cheaper fuel for any journeys required for the produce or the requirements of the farm.

I mention this point because this concession of the heavy oil rate in lieu of the normal rate for heavy oil for vehicles on the roads, which is 2s. 6d., is still in force and consequently users of agricultural tractors are and will remain specially privileged compared with most other users of heavy oil as vehicle fuel, because they will now pay only the heavy oil rate of 2d. a gallon and not the 2s. 6d. per gallon applied to Derv.

My hon. Friend the Member for Cornwall, North talked about precedents. I will remind him of one precedent which shows just how difficult it is to provide assistance in the way he suggested. Petrol used in agricultural tractors, being a light oil, is subject to duty at the rate of 2s. 6d. a gallon. In 1950–51 the Ministry of Agriculture operated a scheme of grants to farmers which was intended to offset the increase in the petrol duty which was made in that financial year. The scheme provided for flat rate payments according to the number and types of tractors used. The scheme was withdrawn after a year. Since then the burden of the petrol duty on farmers has been taken into account in the Annual Price Review. It was generally agreed at the time that this was a better way of dealing with the matter.

I turn now to what I conceive to be the most important point which I wish to make in connection with the Amendments. I repeat the assurance that the extra cost to the farmer flowing from this increase in heavy oil duty will be taken into account in the ordinary way at the next Annual Agricultural Price Review. My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) asked whether the duty could not have been taken into account on the occasion of this year's Price Review, which was announced on 16th March. I hope that my hon. Friend will accept from me that in the very nature of things it would not be appropriate, even if in every case it were practicable, to adopt his suggestion. My hon. Friends the Members for Lowestoft (Mr. Prior) and Kidderminster (Mr. Nabarro) are right in saying that my right hon. and learned Friend's proposals are not unreasonable bearing in mind the operation of the Price Review. I appreciate that my hon. Friend the Member for Kidderminster qualified that statement by making it clear that he did not like the duty at all, but, in so far as there was to be a duty, he thought this was the best way of dealing with the increased cost which farmers will have to bear.

My hon. Friend the Member for Torrington (Mr. P. Browne) criticised the agricultural review system. I under-stood him to make the point that it operates too late and a change cannot be taken into account for a considerable time because, for example, the next Price Review is several months away. This time lag is inherent in the system of annual reviews, which are generally acceptable. While it may operate to the disadvantage of farmers on an increase in costs, it certainly operates to their advantage when any decrease in costs occurs.

Sir Lynn Ungoed-Thomas (Leicester, North-East)

When does that happen?

5.30 p.m.

Mr. Barber

I am dealing with the general principle of the farm Price Review which, as I understand it, is generally acceptable to the farming community.

Mr. Jay

When the Economic Secretary gives an assurance that the increase in duty will be taken into account in the farm Price Review, he is not giving any assurance, is he, that it will be 100 per cent. recouped?

Mr. Barber

The hon. Gentleman—who, I am sure, knows about these things—knows perfectly well that I could not go further than to say that it would be taken into account. My recollection is that when, on 24th April, my hon. Friend the Parliamentary Secretary was questioned at some length about this, nobody ever dreamt of putting that point to him. I do not think that it would ever be expected that the Government would go further than I have in repeating the assurance my hon. Friend then gave.

Mr. Jay

Then the Economic Secretary agrees that it is not the same thing?

Mr. Barber

It may or may not be, depending on the circumstances.

Hon. Members on both sides mentioned the likely effect on the farming community of this increase in duty in relation to tractors—because, as I earlier reminded the Committee, the Opposition's Amendments are concerned solely with agricultural vehicles. A survey was recently made by the Department of Agriculture at Leeds University, and those concerned arrived at an annual average fuel consumption of 500 gallons per diesel tractor, while the figure for a tractor driven on kerosene was nearer 400 gallons. This would put the extra cost of the new duty at between £3 and £4 per year per tractor.

I agree that the hours worked by each tractor vary very considerably from farm to farm, but even a consumption of 800 gallons a year would mean only £7 extra. As I knew that some hon. Members thought that the cost would be higher than that, I have gone to considerable trouble to try to find out whether those figures can in any way be supported. I am told—and I mention this in connection with the statement made by the hon. Member for Deptford that this will result in each of his tractors costing an additional £30 a year to run—that there are about 400,000 tractors operating on heavy oil, of which about half use diesel oil and half use vaporising oil.

A diesel-engined tractor runs for about two hours per gallon. An additional tax burden of £15 a year, therefore implies that the tractor is run for 3,600 hours a year. That is 70 hours per week throughout the whole of the year, and the increase of £30 a year mentioned by the hon. Gentleman would imply a working week of 140 hours, or about 20 hours a day. I am told that an average of 1,000 hours a year is normal for a diesel tractor, and this implies an additional tax burden of a little over £4 a year.

Tractors running on vaporising oil—and these also are covered in the Amendment tabled by my hon. Friend the Member for Cornwall, North, run for about one hour on a gallon of fuel, and an increase of £15 a year implies running for 35 hours a week throughout the year. An increase of £30 a year would mean running for 70 hours a week, but those hon. Members concerned with farming communities know that the tractors running on vaporising oil are generally used for lighter duties, and I understand that about 500 hours a year is normal. That, again, implies an additional burden of slightly over £4 a year.

I accept that I am talking of averages when I speak of £3 or £4 a year, and it is undoubtedly true that on some farms these agricultural tractors are used more intensively, and I daresay particularly by the small farmers referred to by my hon. Friend the Member for Mid-Ulster (Mr. Forrest). However, even if we double the average figure of between £3 and £4 for a tractor, being the additional cost consequent on this duty, the cost is still only £7 a year.

The hon. Member for Lincoln, spoke, as I understood him, of the small farmer being the man farming 50 acres or so. Clearly, the hon. Member has more experience of these matter than I. However, I should not have thought that such a farmer operated more than one or two tractors. Therefore, if he operates one tractor, the additional cost is most unlikely to be more than £10 a year—and even that will be taken into account in the next agricultural Price Review.

As for the figure given for the hon. Member for Deptford of an additional cost of £30 a year, I can only say that I think there is something in what my hon. Friend the Member for Lowestoft said about the hon. Gentleman needing his tractors overhauling. If I wanted to be unkind, I might add that it is not surprising that another of the hon. Gentleman's ventures in another part of the world came to such a "sticky" end.

The Amendments in the name of the hon. Member for Lincoln proceed by reference to the analogy of coastal shipping. When I saw his reference to coastal shipping legislation I pursued the matter a little further, and he may be a little surprised to hear that I came clearly to the conclusion that the effect of his Amendments would be to relieve agricultural tractors only …while engaged on a voyage in home waters… I know that the hon. Member's constituency is surrounded by some rather low-lying land, but I cannot imagine that that is really his intention——

Mr. de Freitas

As the Amendment was originally drafted, it was simply that a tractor should for this purpose be deemed to be a ship; but I thought that seemed to be wrong.

Mr. Barber

I have taken the hon. Gentleman's point.

The rough-and-ready flat-rate repayments to farmers that were in existence in the scheme that operated in 1950–51, which was dropped, show plainly that there are great difficulties in administering an exemption of this kind for farmers, but I would agree that these difficulties in themselves cannot be decisive. Indeed, I should be less than frank with the Committee if I did not say that it is very rare that one reaches the conclusion that something is absolutely impossible. On the other hand, a special scheme of exemption has been tried before and found to be lacking.

I would ask my hon. Friends and hon. Members opposite, if I may do so with respect, to be equally frank with themselves and to consider this matter as a whole. After all, agricultural tractors already receive and will continue to receive favourable treatment. They will pay a duty of only 2d. whereas, in general, the duty is half a crown for vehicles using the same oil. As I have mentioned, the special scheme dealing with petrol which was operated in 1950–51 proved very difficult to administer and was dropped, and certainly, anything on the lines now proposed would be equally difficult. Prima facie, therefore, I think that they are not desirable.

Whatever differences of opinion we may have about the cost to the farming community, it is a fact that the average cost will be about £3 or £4 per tractor per year. That means that even in the exceptional cases it is unlikely to be more than £7 or £10 a year. When, on top of all those facts, it is borne in mind that this extra cost, small though it is, will be taken into account in the next agricultural Price Review, the arguments against doing what hon. Gentlemen opposite and some of my hon. Friends ask for—no doubt for admirable reasons—are really very formidable.

In view of the facts that I have brought to the notice of the Committee, and in view of the undertaking given by my right hon. Friend the Minister of Agriculture concerning the next Price Review, I hope that, at any rate, my hon. Friends and, indeed—and a little more optimistically, perhaps—some hon. Members opposite, will not seek to press these Amendments.

Mr. G. R. Mitchison (Kettering)

I have only two comments to make on the merits or otherwise of this matter. The first is that if, in fact, this is going to mean such a small amount to the farmers, equally it is unlikely to mean a very large amount to the Treasury—and the Economic Secretary has provided me with an additional reason for supporting the Amendment.

The second point is that it seems extraordinarily difficult to meet this case by adjusting prices in the Price Review. Surely—and I speak as someone who is concerned with farming some uncommonly difficult land in Scotland—the use of tractors is not proportionate to the amount of crop obtained, and, therefore, it would be difficult, particularly if the amounts are small, to do justice as between one farmer and another as regards this additional burden the Government seek to put on them. It is clear that to take account of the matter in the Price Review may or may not, to quote the Economic Secretary's words, amount to making an allowance, or an adequate allowance, for it.

Concerning the two proposals in the Amendment, I must differ from the Economic Secretary about the Amendment put forward meaning that the concession would apply only to tractors in home waters. [Laughter.] I do not so read the Amendment, and I do not intend to go further into the matter, except to say that I do not agree with the Economic Secretary.

An answer that is usually given to this kind of thing is that there are administrative difficulties. That answer was given today. But whatever administrative difficulties there may be in not applying the increase to agricultural vehicles, I suggest that the administrative difficulties in operating the scheme set out in the 1952 Act, concerning oil for ships in home waters, are just as great as any that are likely to be encountered in connection with tractors.

If a ship goes away, no one can judge if it has been in home waters without sending out revenue cutters to track the ship for that purpose. Consequently that scheme, which is really a simple one and a matter of annual refunds and power to advance the relief granted by it, would work in this case, and I do not think it was ever applied to the petrol case, which the Economic Secretary mentioned.

I believe, therefore, that although these two Amendments both have the same result, they represent different methods of approach and it is right, if the Government say "no" to the whole business, that they should say "no" to both the possibilities.

5.45 p.m.

Mr. Scott-Hopkins

I gather from the Economic Secretary's reply that the Amendment of the hon. Gentleman opposite does not include anything other than actual tractor vehicles. That is a mistake, because other machinery, such as driers, should not have been included in the Amendment. Nevertheless, as a result of that reply, I am wondering whether the Economic Secretary has appreciated my argument.

I do not dispute that the costs may be £4, £8 or £10 per tractor. I have never disputed that, and I agree that it is a small sum. I have said so. What I have questioned is the principle behind which the Economic Secretary is sheltering. I am wondering, first of all, about the figure which is involved in the next Price Review in 1962. I think it is agreed that the figure is about £2½ million. Does the hon. Member for Kidderminster (Mr. Nabarro) wish to comment on that?

Mr. Nabarro

If I embark on a detailed statistical analysis of division of costs as between certain types of agricultural machinery, fixed and mobile, that would not be appropriate to the Committee stage of the Finance Bill. The Petroleum Information Bureau say that the total cost to the whole of the farm and horticultural industry for mobile machinery and mobile power units and fixed machinery is £2.1 million, and that mobile machinery—tractors in the context of the first Amendment—is about £1.25 million out of the total of £2.1 million.

Mr. Scott-Hopkins

When I consulted the Customs and Excise about this figure they confirmed the figure of about £2 million for fixed equipment and vehicles, and we can take it, therefore, that in large measure we are not in disagreement. We agree on the amount that the industry is going to be asked to bear. Therefore, the fact is surely admitted that this money is being taken from the agricultural industry.

I will not go into all the arguments on this matter, but I must reiterate that in the Price Review of this year £14 million was given back to the industry as a result of increased efficiency and because of the conditions under which the Price Review was conducted. Now we have £2 million-odd being taken away from the industry by the same person and by the same Government which gave back that £14 million. Thus, having considered the costs for the coming twelve months and having given back £14 million, the Government are now taking back this amount.

We shall have to wait until next year's Price Review—about nine months hence—before we get any possible rebate or repayment as a result of the 1962 Price Review. If the Government desire confidence in an industry which has a tremendously important part to play in the economy, the small and large men combined must believe that when the

Government say something they intend to keep their word. [HON. MEMBERS: "Hear, hear."] When the Government pursue a policy or create a structure, they must stick to it at least until discussions take place.

That has not happened in this case. I regret that. I wish the Economic Secretary had said that he was prepared to discuss the matter with the Minister of Agriculture to see whether a method could be found to recoup the industry, perhaps during the coming nine months, with a portion of the sum which will be taken from it. If he had said that I would have been more than happy, and I hope the Economic Secretary will, even at this late stage, be willing to look at this again and, perhaps, get together with the Minister of Agriculture so that, in the coming months, something may be done.

Question put, That those words be there inserted:—

The Committee divided: Ayes 204, Noes 272.

Division No. 169.] AYES [5.48 p.m.
Ainsley, William Edwards, Walter (Stepney) Jay, Rt. Hon. Douglas
Allaun, Frank (Salford, E.) Evans, Albert Jeger, George
Allen, Scholefield (Crewe) Fernyhough, E. Jenkins, Roy (Stechford)
Awbery, Stan Finch, Harold Jones, Dan (Burnley)
Bacon, Miss Alice Fitch, Alan Jones, Elwyn (West Ham, S.)
Baxter, William (Stirlingshire, W.) Foot, Dingle (Ipswich) Jones, Jack (Rotherham)
Bence, Cyril (Dunbartonshire, E.) Foot, Michael (Ebbw Vale) Jones, J. Idwal (Wrexham)
Benson, Sir George Forman, J. C. Jones, T. W. (Merioneth)
Boardman, H. Fraser, Thomas (Hamilton) Kenyon, Clifford
Bowden, Herbert W. (Leics, S.W.) Gaitskell, Rt. Hon. Hugh Key, Rt. Hon. C. W.
Bowen, Roderic (Cardigan) Galpern, Sir Myer King, Dr. Horace
Bowles, Frank George, Lady Megan Lloyd (Crmrthn) Lawson, George
Boyden, James Ginsburg, David Ledger, Ron
Brockway, A. Fenner Gooch, E. G. Lee, Frederick (Newton)
Brown, Rt. Hon. George (Belper) Gordon Walker, Rt. Hon. P. C. Lipton, Marcus
Brown, Thomas (Ince) Gourlay, Harry Logan, David
Butler, Mrs. Joyce (Wood Green) Greenwood, Anthony Loughlin, Charles
Callaghan, James Grey, Charles Mabon, Dr. J. Dickson
Castle, Mrs. Barbara Griffiths, David (Rother Valley) McCann, John
Chapman, Donald Griffiths, Rt. Hon. James (Llanelly) MacColl, James
Chetwynd, George Grimond, J. McInnes, James
Cliffe, Michael Gunter, Ray McKay, John (Wallsend)
Collick, Percy Hale, Leslie (Oldham, W.) Mackie, John
Craddock, George (Bradford, S.) Hall, Rt. Hn. Glenvil (Colne Valley) MacMillan, Malcolm (Western Isles)
Cronin, John Hamilton, William (West Fife) MacPherson, Malcolm (Stirling)
Crossman, R. H. S. Hannan, William Mallalieu, E. L. (Brigg)
Cullen, Mrs. Alice Hart, Mrs. Judith Manuel, A. C.
Darling, George Healey, Denis Mapp, Charles
Davies, Harold, (Leek) Henderson, Rt. Hn. Arthur (Rwly Regis) Marquand, Rt. Hon. H. A.
Davies, Ifor (Gower) Herbison, Miss Margaret Marsh, Richard
Davies, S. O. (Merthyr) Hill, J. (Midlothian) Mason, Roy
Deer, George Hilton, A. V. Maxwell-Hyslop, R. J.
de Freitas, Geoffrey Holman, Percy Mellish, R. J.
Delargy, Hugh Houghton, Douglas Mendelson, J. J.
Dempsey, James Howell, Charles A. (B'ham, Perry Bar) Millan, Bruce
Diamond, John Howell, Denis (B'ham, Small Heath) Mitchison, G. R.
Dodds, Norman Hughes, Cledwyn (Anglesey) Moody, A. S.
Donnelly, Desmond Hughes, Emrys (S. Ayrshire) Mort, D. L.
Driberg, Tom Hughes, Hector (Aberdeen, N.) Neal, Harold
Dugdale, Rt. Hon. John Hunter, A. E. Noel-Baker, Francis (Swindon)
Ede, Rt. Hon. C. Hynd, H. (Accrington) Oliver, G. H.
Edelman, Maurice Irvine, A. J. (Edge Hill) Oswald, Thomas
Edwards, Rt. Hon. Ness (Caerphilly) Irving, Sydney (Dartford) Owen, Will
Edwards, Robert (Bilston) Janner, Sir Barnett Padley, W. E.
Pargiter, G. A. Silverman, Sydney (Nelson) Timmons, John
Parker, John Skeffington, Arthur Ungoed-Thomas, Sir Lynn
Parkin, B. T. Slater, Mrs. Harriet (Stoke, N.) Wade, Donald
Pavitt, Laurence Slater, Joseph (Sedgefield) Wainwright, Edwin
Pearson, Arthur (Pontypridd) Small, William Warbey, William
Peart, Frederick Smith, Ellis (Stoke, S.) Watkins, Tudor
Pentland, Norman Snow, Julian Weitzman, David
Plummer, Sir Leslie Sorensen, R. W. Wells, Percy (Faversham)
Popplewell, Ernest Soskice, Rt. Hon. Sir Frank White, Mrs. Eirene
Prentice, R. E. Spriggs, Leslie Whitlock, William
Price, J. T. (Westhoughton) Steele, Thomas Wigg, George
Probert, Arthur Stewart, Michael (Fulham) Wilkins, W. A.
Rankin, John Stonehouse, John Willey, Frederick
Reid, William Stones, William Williams, D. J. (Neath)
Reynolds, G. W. Strachey, Rt. Hon. John Williams, LI. (Abertillery)
Rhodes, H. Strauss, Rt. Hn. G. R. (Vauxhall) Williams, W. T. (Warrington)
Roberts, Albert (Normanton) Swain, Thomas Willis, E. G. (Edinburgh, E.)
Roberts, Goronwy (Caernarvon) Swingler, Stephen Wilson, Rt. Hon. Harold (Huyton)
Robertson, J. (Paisley) Sylvester, George Woodburn, Rt. Hon. A.
Robinson, Kenneth (St. Pancras, N.) Symonds, J. B. Woof, Robert
Rogers, G. H. R. (Kensington, N.) Taylor, Bernard (Mansfield) Yates, Victor (Ladywood)
Ross, William Taylor, John (West Lothian)
Royle, Charles (Salford, West) Thompson, Dr. Alan (Dunfermline) TELLERS FOR THE AYES:
Shinwell, Rt. Hon. E. Thomson, G. M. (Dundee, E.) Dr. Broughton and Mr. Redhead.
Short, Edward Thorpe, Jeremy
Agnew, Sir Peter Dance, James Hirst, Geoffrey
Aitken, W. T. d'Avigdor-Goldsmid, Sir Henry Hocking, Philip N
Allan, Robert (Paddington, S.) de Ferranti, Basil Holland, Philip
Allason, James Digby, Simon Wingfield Hollingworth, John
Ashton, Sir Hubert Donaldson, Cmdr. C. E. M. Hornby, R. P.
Atkins, Humphrey Doughty, Charles Hornsby-Smith, Rt. Hon. Patricia
Bainlel, Lord Drayson, G. B. Howard, Hon. G. R. (St. Ives)
Barber, Anthony du Cann, Edward Howard, John (Southampton, Test)
Barlow, Sir John Duncan, Sir James Hughes Hallett, Vice-Admiral John
Barter, John Eden, John Hughes-Young, Michael
Batsford, Brian Elliot, Capt. Walter (Carshalton) Hulbert, Sir Norman
Baxter, Sir Beverley (Southgate) Elliott, R. W. (Nwcstle-upon-Tyne, N.) Hurd, Sir Anthony
Beamish, Col. Sir Tufton Emery, Peter Hutchison, Michael Clark
Bell, Ronald Emmet, Hon. Mrs. Evelyn Iremonger, T. L.
Bennett, F. M. (Torquay) Errington, Sir Eric Irvine, Bryant Godman (Rye)
Bennett, Dr. Reginald (Gos & Fhm) Erroll, Rt. Hon. F. J. Jackson, John
Bevins, Rt. Hon. Reginald (Toxteth) Farey-Jones, F. W. James, David
Biggs-Davison, John Farr, John Johnson, Eric (Blackley)
Bingham, R. M. Fell, Anthony Johnson Smith, Geoffrey
Birch, Rt. Hon. Nigel Finlay, Graeme Jones, Rt. Hn. Aubrey (Hall Green)
Bishop, F. P. Fisher, Nigel Kaberry, Sir Donald
Black, Sir Cyril Fletcher-Cooke, Charles Kerans, Cdr. J. S.
Bossom, Clive Forrest, George Kerr, Sir Hamilton
Boyd-Carpenter, Rt. Hon. John Fraser, Ian (Plymouth, Sutton) Kershaw, Anthony
Boyle, Sir Edward Freeth, Denzil Kimball, Marcus
Brewis, John Galbraith, Hon. T. G. D. Kirk, Peter
Bromley-Davenport, Lt.-Col. Sir Walter Gammans, Lady Kitson, Timothy
Brooman-White, R. Gardner, Edward Lagden, Godfrey
Bryan, Paul Glyn, Dr. Alan (Clapham) Lambton, Viscount
Buck, Antony Glyn, Sir Richard (Dorset, N.) Leburn, Gilmour
Bullard, Denys Godber, J. B. Lewis, Kenneth (Rutland)
Burden, F. A. Goodhart, Philip Lilley, F. J. P.
Butcher, Sir Herbert Gough, Frederick Lindsay, Martin
Butler, Rt. Hn. R. A. (Saffron Walden) Grant, Rt. Hon. William Linstead, Sir Hugh
Campbell, Sir David (Belfast, S.) Grant-Ferris, Wg Cdr. R. Litchfield, Capt. John
Campbell, Gordon (Moray & Nairn) Green, Alan Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Carr, Compton (Barons Court) Gresham Cooke, R. Lloyd, Rt. Hon. Selwyn (Wirral)
Carr, Robert (Mitcham) Grimston, Sir Robert Longden, Gilbert
Cary, Sir Robert Grosvenor, Lt.-Col. R. G. Loveys, Walter H.
Channon, H. P. G. Gurden, Harold Low, Rt. Hon. Sir Toby
Chataway, Christopher Hall, John (Wycombe) Lucas, Sir Jocelyn
Chichester-Clark, R. Hamilton, Michael (Wellingborough) Lucas-Tooth, Sir Hugh
Clark, William (Nottingham, S.) Hare, Rt. Hon. John McAdden, Stephen
Clarke, Brig. Terence (Portsmth, W.) Harris, Frederic (Croydon, N.W.) MacArthur, Ian
Cleaver, Leonard Harris, Reader (Heston) McLaren, Martin
Cole, Norman Harrison, Brian (Maldon) Maclay, Rt. Hon. John
Collard, Richard Harrison, Col. J. H. (Eye) Maclean, Sir Fitzroy (Bute & N. Ayrs.)
Cooke, Robert Harvie Anderson, Miss McLean, Neil (Inverness)
Cordeaux, Lt.-Col. J. K. Hastings, Stephen MacLeod, John (Ross & Cromarty)
Cordle, John Hay, John McMaster, Stanley R.
Corfield, F. V. Heald, Rt. Hon. Sir Lionel Macpherson, Niall (Dumfries)
Costain, A. P. Heath, Rt. Hon. Edward Maddan, Martin
Craddock, Sir Beresford Henderson, John (Cathcart) Maginnis, John E.
Critchley, Julian Henderson-Stewart, Sir James Maitland, Sir John
Crosthwaite-Eyre, Col. O. E. Hendry, Forbes Manningham-Buller, Rt. Hn. Sir R.
Cunningham, Knox Hill, Dr. Rt. Hon. Charles (Luton) Markham, Major Sir Frank
Currie, G. B. H. Hill, J. E. B. (S. Norfolk) Marples, Rt. Hon. Ernest
Dalkeith, Earl of Hinchingbrooke, Viscount Marshall, Douglas
Mathew, Robert (Honiton) Rawlinson, Peter Thomas, Leslie (Canterbury)
Matthews, Gordon (Meriden) Redmayne, Rt. Hon. Martin Thompson, Richard (Croydon, S.)
Mawby, Ray Rees, Hugh Thorneycroft, Rt. Hon. Peter
Maydon, Lt.-Cmdr. S. L. C. Renton, David Thornton-Kemsley, Sir Colin
Mills, Stratton Ridley, Hon. Nicholas Tiley, Arthur (Bradford, W.)
Montgomery, Fergus Roberts, Sir Peter (Heeley) Tilney, John (Wavertree)
More, Jasper (Ludlow) Robertson, J. (Paisley) Turner, Colin
Morgan, William Roots, William Turton, Rt. Hon. R. H.
Morrison, John Royle, Anthony (Richmond, Surrey) Tweedsmuir, Lady
Mott-Radclyffe, Sir Charles Russell, Ronald van Straubenzee, W. R.
Nabarro, Gerald Sandys, Rt. Hon. Duncan Vane, W. M. F.
Nicholls, Sir Harmar Seymour, Leslie Vickers, Miss Joan
Nugent, Sir Richard Sharples, Richard Wakefield, Edward (Derbyshire, W.)
Oakshott, Sir Hendrie Shaw, M. Wakefield, Sir Wavell (St. M'lebone)
Orr-Ewing, C. Ian Simon, Rt. Hon. Sir Jocelyn Walder, David
Page, John (Harrow, West) Skeet, T. H. H. Walker, Peter
Page, Graham (Crosby) Smith, Dudley (Br'ntf'rd & Chiswick) Walker-Smith, Rt. Hon. Sir Derek
Pannell, Norman (Kirkdale) Smithers, Peter Ward, Dame Irene
Partridge, E. Smyth, Brig. Sir John (Norwood) Watkinson, Rt. Hon. Harold
Pearson, Frank (Clitheroe) Spearman, Sir Alexander Watts, James
Peel, John Speir, Rupert Webster, David
Percival, Ian Stanley, Hon, Richard Whitelaw, William
Peyton, John Steward, Harold (Stockport, S.) Williams, Paul (Sunderland, S.)
Pickthorn, Sir Kenneth Stodart, J. A. Wills, Sir Gerald (Bridgwater)
Pike, Miss Mervyn Stoddart-Scott, Col. Sir Malcolm Wilson, Geoffrey (Truro)
Pilkington, Sir Richard Storey, Sir Samuel Wise, A. R.
Pitman, I. J. Studholme, Sir Henry Wolrige-Gordon, Patrick
Pott, Percivall Summers, Sir Spencer (Aylesbury) Wood, Rt. Hon. Richard
Price, David (Eastleigh) Sumner, Donald (Orpington) Woollam, John
Prior, J. M. L. Tapsell, Peter Worsley, Marcus
Prior-Palmer, Brig. Sir Otho Taylor, Sir Charles (Eastbourne)
Proudfoot, Wilfred Taylor, W. J. (Bradford, N.) TELLERS FOR THE NOES:
Pym, Francis Teeling, William Mr. Gibson-Watt and Mr. Noble.
Quennell, Miss J. M. Temple, John M.

Amendment proposed: In page 2, line 18, after "oils" insert: (other than heavy oils to which the provisions of this subsection do not apply)".—[Mr. de Freitas.]

Question put, That those words be there inserted:—

The Committee divided: Ayes 201, Noes 272.

Division No. 170.] AYES 5.59 p.m.]
Ainsley, William Ede, Rt. Hon. C. Howell, Denis (B'ham, Small Heath)
Allaun, Frank (Salford, E.) Edelman, Maurice Hughes, Cledwyn (Anglesey)
Allen, Scholefield (Crewe) Edwards, Rt. Hon. Ness (Caerphilly) Hughes, Emrys (S. Ayrshire)
Awbery, Stan Edwards, Robert (Bilston) Hughes, Hector (Aberdeen, N.)
Bacon, Miss Alice Edwards, Walter (Stepney) Hunter, A. E.
Baxter, William (Stirlingshire, W.) Evans, Albert Hynd, H. (Accrington)
Benson, Sir George Fernyhough, E. Irvine, A. J. (Edge Hill)
Boardman, H. Finch, Harold Irving, Sydney (Dartford)
Bowden, Herbert W. (Leics, S.W.) Fitch, Alan Janner, Sir Barnett
Bowen, Roderic (Cardigan) Foot, Dingle (Ipswich) Jay, Rt. Hon. Douglas
Bowles, Frank Foot, Michael (Ebbw Vale) Jeger, George
Boyden, James Forman, J. C. Jenkins, Roy (Stechford)
Brockway, A. Fenner Fraser, Thomas (Hamilton) Jones, Dan (Burnley)
Brown, Rt. Hon. George (Belper) Gaitskell, Rt. Hon. Hugh Jones, Elwyn (West Ham, S.)
Brown, Thomas (Ince) Galpern, Sir Myer Jones, Jack (Rotherham)
Butler, Mrs. Joyce (Wood Green) George, Lady Megan Lloyd (Crmrthn) Jones, J. Idwal (Wrexham)
Callaghan, James Ginsburg, David Jones, T. W. (Merioneth)
Castle, Mrs. Barbara Gooch, E. G. Kenyon, Clifford
Chapman, Donald Gordon Walker, Rt. Hon. P. C. Key, Rt. Hon. G. W.
Chetwynd, George Gourlay, Harry King, Dr. Horace
Cliffe, Michael Greenwood, Anthony Lawson, George
Collick, Percy Grey, Charles Ledger, Ron
Craddock, George (Bradford, S.) Griffiths, David (Bother Valley) Lee, Frederick (Newton)
Cronin, John Griffiths, Rt. Hon. James (Llanelly) Lipton, Marcus
Crossman, R. H. S. Grimond, J. Logan, David
Cullen, Mrs. Alice Gunter, Ray Loughlin, Charles
Darling, George Hale, Leslie (Oldham, W.) Mabon Dr. J. Dickson
Davies, Harold (Leek) Hall, Rt. Hn. Glenvil (Colne Valley) McCann, John
Davies, Ifor (Gower) Hamilton, William (West Fife) MacColl, James
Davies, S. O. (Merthyr) Hannan, William McInnes, James
Deer, George Hart, Mrs. Judith McKay, John (Wallsend)
de Freitas, Geoffrey Healey, Denis Mackie, John
Delargy, Hugh Henderson, Rt. Hn. Arthur (RwlyRegis) MacMillan, Malcolm (Western Isles)
Dempsey, James Herbison, Miss Margaret MacPherson, Malcolm (Stirling)
Diamond, John Hill, J. (Midlothian) Mallalieu, E. L. (Brigg)
Dodds, Norman Hilton, A. V. Manuel, A. C.
Donnelly, Desmond Holman, Percy Mapp, Charles
Driberg, Tom Houghton, Douglas Marquand, Rt. Hon. H. A.
Dugdale, Rt. Hon. John Howell, Charles A. (B'ham, Perry Barr) Marsh, Richard
Mason, Roy Roberts, Goronwy (Caernarvon) Taylor, John (West Lothian)
Mendelson, J. J. Robertson, John (Paisley) Thompson, Dr. Alan (Dunfermline)
Millan, Bruce Robinson, Kenneth (St. Pancras, N.) Thomson, G. M. (Dundee, E.)
Mitchison, G. R. Rogers, G. H. R. (Kensington, N.) Thorpe, Jeremy
Moody, A. S. Ross, William Timmons, John
Mort, D. L. Royle, Charles (Salford, West) Tomney, Frank
Neal, Harold Shinwell, Rt. Hon. E. Ungoed-Thomas, Sir Lynn
Noel-Baker, Francis (Swindon) Short, Edward Wade, Donald
Oliver, G. H. Silverman, Sydney (Nelson) Wainwright, Edwin
Oswald, Thomas Skeffington, Arthur Warbey, William
Owen, Will Slater, Mrs. Harriet (Stoke, N.) Watkins, Tudor
Padley, W. E. Slater, Joseph (Sedgefield) Weitzman, David
Pannell, Charles (Leeds, W.) Small, William Wells, Percy (Faversham)
Pargiter, G. A. Smith, Ellis (Stoke, S.) White, Mrs. Eirene
Parker, John Snow, Julian Whitlock, William
Parkin, B. T. Sorensen, R. W. Wigg, George
Pavitt, Laurence Soskice, Rt. Hon. Sir Frank Wilkins, W. A.
Pearson, Arthur (Pontypridd) Spriggs, Leslie Willey, Frederick
Peart, Frederick Steele, Thomas Williams, D. J. (Neath)
Pentland, Norman Stewart, Michael (Fulham) Williams, LI. (Abertillery)
Plummer, Sir Leslie Stonehouse, John Williams, W. T. (Warrington)
Popplewell, Ernest Stones, William Willis, E. G. (Edinburgh, E.)
Prentice, R. E. Strachey, Rt. Hon. John Wilson, Rt. Hon. Harold (Huyton)
Probert, Arthur Strauss, Rt. Hn. G. R. (Vauxhall) Woodburn, Rt. Hon. A.
Rankin, John Swain, Thomas Woof, Robert
Reid, William Swingler, Stephen Yates, Victor (Ladywood)
Reynolds, G. W. Sylvester, George
Rhodes, H. Symonds, J. B. TELLERS FOR THE AYES:
Roberts, Albert (Normanton) Taylor, Bernard (Mansfield) Mr. Redhead and Dr. Broughton.
Agnew, Sir Peter Craddock, Sir Beresford Harvie Anderson, Miss
Aitken, W. T. Critchley, Julian Hastings, Stephen
Allan, Robert (Paddington, S.) Crosthwaite-Eyre, Col. O. E. Hay, John
Allason, James Cunningham, Knox Heald, Rt. Hon. Sir Lionel
Ashton, Sir Hubert Currie, G. B. H. Henderson, John (Cathcart)
Atkins, Humphrey Dalkeith, Earl of Henderson-Stewart, Sir James
Barber, Anthony Dance, James Hendry, Forbes
Barlow, Sir John d'Avigdor-Goldsmid, Sir Henry Hill, Dr. Rt. Hon. Charles (Luton)
Barter, John de Ferranti, Basil Hill, J. E. B. (S. Norfolk)
Batsford, Brian Digby, Simon Wingfield Hinchingbrooke, Viscount
Baxter, Sir Beverley (Southgate) Donaldson, Cmdr. C. E. M. Hirst, Geoffrey
Beamish, Col. Sir Tufton Doughty, Charles Hocking, Philip N.
Bell, Ronald Drayson, G. B. Holland, Philip
Bennett, F. M. (Torquay) du Cann, Edward Hollingworth, John
Bennett, Dr. Reginald (Gos & Fhm) Duncan, Sir James Hornby, R. P.
Bevins, Rt. Hon. Reginald (Toxteth) Eden, John Hornsby-Smith, Rt. Hon. Patricia
Biggs-Davison, John Elliot, Capt. Walter (Carshalton) Howard, Hon. G. R. (St. Ives)
Bingham, R. M. Elliott, R. W. (Nwcstle-upon-Tyne, N.) Howard, John (Southampton, Test)
Birch, Rt. Hon. Nigel Emery, Peter Hughes Hallett, Vice-Admiral John
Bishop, F. P. Emmet, Hon. Mrs. Evelyn Hughes-Young, Michael
Black, Sir Cyril Errington, Sir Eric Hulbert, Sir Norman
Bossom, Clive Erroll, Rt. Hon. F. J. Hurd, Sir Anthony
Boyd-Carpenter, Rt. Hon. John Farey-Jones, F. W. Hutchison, Michael Clark
Boyle, Sir Edward Farr, John Iremonger, T. L.
Brewis, John Fell, Anthony Irvine, Bryant Godman (Rye)
Bromley-Davenport, Lt.-Col. Sir Walter Finlay, Graeme Jackson, John
Brooman-White, R. Fisher, Nigel James, David
Brown, Alan (Tottenham) Fletcher-Cooke, Charles Johnson, Eric (Blackley)
Bryan, Paul Forrest, George Johnson smith, Geoffrey
Buck, Antony Fraser, Ian (Plymouth, Sutton) Jones, Rt. Hn. Aubrey (Hall Green)
Bullard, Denys Freeth, Denzil Kaberry, Sir Donald
Burden, F. A. Galbraith, Hon. T. G. D. Kerans, Cdr. J. S.
Butcher, Sir Herbert Gammans, Lady Kerr, Sir Hamilton
Butler, Rt. Hn. R. A. (Saffron Walden) Gardner, Edward Kershaw, Anthony
Campbell, Sir David (Belfast, S.) Glyn, Dr. Alan (Clapham) Kimball, Marcus
Campbell, Gordon (Moray & Nairn) Glyn, Sir Richard (Dorset, N.) Kirk, Peter
Carr, Compton (Barons Court) Godber, J. B. Kitson, Timothy
Carr, Robert (Mitcham) Goodhart, Philip Lagden, Godfrey
Cary, Sir Robert Gough, Frederick Lambton, Viscount
Channon, H. P. G. Grant, Rt. Hon. William Langford-Holt, J.
Chataway, Christopher Grant-Ferris, Wg. Cdr. R. Leburn, Gilmour
Chichester-Clark, R. Green, Alan Lewis, Kenneth (Rutland)
Clark, William (Nottingham, S.) Gresham Cooke, R. Lilley, F. J. P.
Clarke, Brig. Terence (Portsmth, W.) Grimston, Sir Robert Lindsay, Martin
Cleaver, Leonard Grosvenor, Lt.-Col. R. G Linstead, Sir Hugh
Cole, Norman Gurden, Harold Litchfield, Capt. John
Collard, Richard Hall, John (Wycombe) Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Cooke, Robert Hamilton, Michael (Wellingborough) Lloyd, Rt. Hon. Selwyn (Wirral)
Cordeaux, Lt.-Col. J. K. Hare, Rt. Hon. John Longden, Gilbert
Cordle, John Harris, Reader (Heston) Loveys, Walter H.
Corfield, F. V. Harrison, Brian (Maldon) Low, Rt. Hon. Sir Toby
Costain, A. P. Harrison, Col. J. H. (Eye) Lucas, Sir Jocelyn
Lucas-Tooth, Sir Hugh Pickthorn, Sir Kenneth Summers, Sir Spencer (Aylesbury)
McAdden, Stephen Pike, Miss Mervyn Sumner, Donald (Orpington)
MacArthur, Ian Pilkington, Sir Richard Tapsell, Peter
McLaren, Martin Pitman, I. J. Taylor, Sir Charles (Eastbourne)
Maclay, Rt. Hon. John Pott, Percivall Taylor, W. J. (Bradford, N.)
Maclean, Sir Fitzroy (Bute & N. Ayrs.) Price, David (Eastleigh) Teeling, William
McLean, Neil (Inverness) Prior, J. M. L. Temple, John M.
MacLeod, John (Ross & Cromarty) Prior-Palmer, Brig. Sir Otho Thatcher, Mrs. Margaret
McMaster, Stanley R. Proudfoot, Wilfred Thomas, Leslie (Canterbury)
Macpherson, Niall (Dumfries) Pym, Francis Thompson, Richard (Croydon, S.)
Maddan, Martin Quennell, Miss J. M. Thorneycroft, Rt. Hon. Peter
Maginnis, John E. Ramsden, James Thornton-Kemsley, Sir Colin
Maitland, Sir John Rawlinson, Peter Tiley, Arthur (Bradford, W.)
Manningham-Buller, Rt. Hn. Sir R. Redmayne, Rt. Hon. Martin Tilney, John (Wavertree)
Markham, Major Sir Frank Rees, Hugh Turner, Colin
Marples, Rt. Hon. Ernest Renton, David Turton, Rt. Hon. R. H.
Marshall, Douglas Roberts, Sir Peter (Heeley) van Straubenzee, W. R.
Mathew, Robert (Honiton) Robertson, Sir David Vane, W. M. F.
Matthews, Gordon (Meriden) Roots, William Vickers, Miss Joan
Mawby, Ray Ropner, Col. Sir Leonard Wakefield, Edward (Derbyshire, W.)
Maydon, Lt.-Cmdr. S. L. C. Royle, Anthony (Richmond, Surrey) Wakefield, Sir Wavell (St. M'lebone)
Mills, Stratton Russell, Ronald Walder, David
Montgomery, Fergus Seymour, Leslie Walker, Peter
More, Jasper (Ludlow) Sharples, Richard Walker-Smith, Rt. Hon. Sir Derek
Morgan, William Shaw, M. Ward, Dame Irene
Morrison, John Simon, Rt. Hon. Sir Jocelyn Watkinson, Rt. Hon. Harold
Mott-Radclyffe, Sir Charles Skeet, T. H. H. Watts, James
Nabarro, Gerald Smith, Dudley (Br'ntf'rd & Chiswick) Webster, David
Nicholls, Sir Harmar Smithers, Peter Whitelaw, William
Noble, Michael Smyth, Brig. Sir John (Norwood) Williams, Paul (Sunderland, S.)
Oakshott, Sir Hendrie Soames, Rt. Hon. Christopher Wills, Sir Gerald (Bridgwater)
Orr-Ewing, C. Ian Spearman, Sir Alexander Wilson, Geoffrey (Truro)
Page, John (Harrow, West) Speir, Rupert Wise, A. R.
Page, Graham (Crosby) Stanley, Hon. Richard Wolrige-Gordon, Patrick
Pannell, Norman (Kirkdale) Steward, Harold (Stockport, S.) Wood, Rt. Hon. Richard
Partridge, E. Stodart, J. A. Woollam, John
Pearson, Frank (Clitheroe) Stoddart-Scott, Col. Sir Malcolm Worsley, Marcus
Percival, Ian Storey, Sir Samuel
Peyton, John Studholme, Sir Henry TELLERS FOR THE NOES:
Mr. Gibson-Watt and Mr. Noble.
Mr. Nabarro

I beg to move, in page 2, line 21, to leave out "twopence" and to insert "one halfpenny".

The Deputy-Chairman (Major Sir William Anstruther-Gray)

I think that it would be convenient to discuss also the subsequent Amendments in the name of the hon. Member for Kidderminster (Mr. Nabarro), in line 25, leave out "twopence" and insert "one halfpenny", and in line 28, leave out "threepence" and insert "three halfpence".

Mr. Nabarro

That is so, Sir William; I am grateful to you.

The purpose of these Amendments is substantially to reduce the amount of the increase in fuel oil duty. My speech is largely exploratory in character. There is a great deal yet to be said about the fuel oil duty. I start with an extract from the Budget speech of my right hon. and learned Friend the Chancellor of the Exchequer, when he used these words: The new duty will operate as from six o'clock this evening. I estimate the yield at £48 million in the present financial year and £50 million in a full year. The Chancellor also made it perfectly clear in his opening sentence in the sec- tion headed "Hydrocarbon Oils", when he said: My third proposal for obtaining extra revenue relates to the hydrocarbon oil duty".—[OFFICIAL REPORT, 17th April, 1961, Vol. 638, cc. 818–819.] The first question that I have put to my right hon. and learned Friend is simply a matter of arithmetic. He has given a notional yield of this increased fuel oil duty of £50 million in a full year. He will, of course, have carried in mind that the increased duty will represent a charge for business firms throughout industry, including farms, excluding only the domestic user, for assessing the liability of the corporation to Income Tax and Profits Tax.

The aggregation of Income Tax and Profits Tax at present is 53¾ per cent. When my right hon. and learned Friend says that the total yield will be £50 million in a full year, does he mean £50 million before taking into account Income Tax and Profits Tax, or after? That point has not yet been answered, and it has an important bearing on the incidence of this duty on industrial costs.

The second point is this. My right hon. and learned Friend heaped, or loaded, this increased fuel oil duty on a very narrow sector of petroleum products. We are all aware that petroleum products as a whole, including the motor spirit yield, give the Chancellor a very large sum annually in revenue. By his method of applying the increased duty, he has chosen to heap the whole of the 2d. per gallon on fuel oil for industry, but as yet we do not know how the oil companies will treat this matter.

Will they place the 2d. a gallon increase in fuel oil duty on fuel oil for industry, or will they pay that sum of money, namely, £50 million annually, to the Chancellor and then spread the £50 million by absorption and indirect means over the whole field of petroleum products, thus increasing the price perhaps of motor spirit fractionally?

That has a vitally important bearing on many of the statements of protest which have been made by different industries. For example, my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins), in pleading his case for agriculture, said that this would cost the agricultural industry £2 million, but that £2 million presupposes that the oil companies will place the fuel oil increase in duty on fuel oil and not spread it over all petroleum products. We must have an answer to this from the Chancellor.

The third important point is the answer to the question I put about calculating this increased duty either before or after paying Income Tax and Profits Tax. Assuming—and I think that we are right to assume this for the purpose of these Amendments—that the oil companies pass on the whole of the fuel oil duty on fuel oil and not on other products, and assuming, also, that the Chancellor's figure of £50 million is a net figure and that he really will get an increased revenue of £50 million, to arrive at that he must collect nearly twice that sum of money in fuel oil duty. Conversely, if the £50 million is a gross yield after Income Tax and Profits Tax, it is a yield of only about £23½ million. The difference is as big as that.

If it were a gross impost on industry, the figures would be very substantial. The farming industry would be called on to bear £2.1 million; the domestic user would be called on to bear £3.844 million; the industrial consumer would be called on to bear £48 million. Out of a total of almost £54 million, the industrial user would be called on to bear £48 million.

If that is the case, this fuel oil duty impost is highly inflationary, because it will raise the cost of an essential ingredient of industrial production, namely, fuel. It is not the only substantial increase in cost to come at the present time. It would be out of order for me to dwell on that point, and I therefore make only a passing reference to it. One cannot but be dismayed to read the leading article in the Financial Times this morning on the subject of rating and to see that one shipyard in Scotland will be called on to pay £50,000 to £60,000 in rates in 1963 compared with only £1,500 in rates in 1958–59—forty times as much in the case of that industrial hereditament.

The increase in Profits Tax under this Finance Bill, the large increase in coal prices a few months ago and now this fuel oil duty impost have come at a time when private industry is continuously being exhorted by Her Majesty's Ministers to increase its competitiveness abroad and to reduce its prices. Her Majesty's Governmeent are making no contribution whatever to help our manufacturing industries to improve their competitive ability or to reduce their prices.

6.15 p.m.

I now deal with the two major industrial considerations, if the assumption is correct that the total yield gross from the fuel oil duty increase will be £50 million, namely, the steel industry and electricity generation.

The increase in fuel oil duty for the steel industry will add £7 million per annum to costs, and 8s. per ton. Those are very large figures. Of course, it is not possible to assess exactly the cost of the new duty to the steel industry until it becomes clear whether the oil companies will pass on the whole of the fuel oil duty increase on fuel oil or whether they will spread it over all petroleum products.

Incidentally, a second point which I hope the Chancellor will clear up today is whether this duty is to be applied to crude tar and creosote pitch. In case my right hon. and learned Friend is unfamiliar with these products which are of such significance to the steel industry, I would remind him that crude tar and creosote pitch are both very important, and it would mean that the steel companies would have to pay substantially larger sums were the tax imposed on those two products.

I am delighted to see my right hon. Friend the Minister of Fuel and Power in his place. This additional burden, following closely—I repeat closely—on the savage coal price increase of September, 1960, which added £12 million to the cost of steel production, will have the result of making it even more difficult to hold the home trade price of steel at its present level, and is bound to affect the industry's competitive strength in foreign markets.

I am sure that the prognostications in the Sunday Times of two days ago will have been noted. Under the heading, "Steel men ask for price rise" it says: The steel firms have asked the Iron and Steel Board for a price increase, because greater fuel, transport and labour costs have added £35 million to their production bill. This is approximately 30s. on every ton of the industry's annual output of 24 million tons. The British Iron & Steel Federation executive will discuss the application when it meets in London on Tuesday. That is today.

Mr. Denis Howell (Birmingham, Small Heath)

I gather from the tape that it has agreed to an increase.

Mr. Nabarro

I am sorry that I have been so preoccupied that I have been unable to look at the tape. I am very grateful to the hon. Member.

The fuel oil duty increase by itself, in the view of the steel industry, will cost 7s. per ton. I cannot understand my right hon. and learned Friend's economics. How does he judge that he is assisting British exports by driving up the price of British steel by 7s. a ton? It is no good telling the steel-makers to absorb this cost, because if they do two things happen. First, the Chancellor diminishes his net revenue from the steel companies in respect of Income Tax and Profits Tax. The second thing that happens is that the price of other British manufactured goods, so largely dependent on steel, notably all engineering products, are driven up by a proportionate sum.

I repeat that in the narrow though vitally important context of steel, the application of this fuel duty increase to it, whether the £50 million is a gross or a net sum, can only be entirely inflationary. It has been protested against on exactly those lines by the principal steel manufacturers. I hope that the appropriate trade unions will add their voices in due course.

Mr. Jack Jones (Rotherham)

The steel trade union executive will be meeting at ten o'clock in the morning.

Mr. Nabarro

That is propitious. Perhaps the hon. Member will arrange to make my speech available to them, so that they may add in appropriate terms their words of protest to the Chancellor.

I have taken one substantially private enterprise industry—the steel industry—and I should like to now to deal with a nationalised industry, that of electricity generating. I have said on numerous occasions in this Chamber, notably during fuel and power debates, that the electricity industry has been consuming less tonnages of fuel oil at power stations. We all know the origin of this fuel oil consumption—the lean years when there was not enough fuel to meet the rate of expansion which we were enjoying and the policy of my right hon. Friend the Member for Sutton Coldfield (Mr. G. Lloyd) of switching largely to oil. It is not easy to switch back. There are, of course, dual-fired stations. The position of the electricity generating industry is similar to that of the steel industry. Once an installation is made to burn oil or to use dual-firing, it is always costly and not easy to switch back.

Notionally, it is estimated that the increased cost to the electricity generating industry will be £10 million in a full year. I would remind my right hon. Friend the Minister of Power that I have arrived at that figure by the simple arithmetical calculation of taking his official figure for the consumption of fuel oil in power stations for 1961 and multiplying it by the amount of the fuel oil duty increase. It is, therefore, a notional figure, but on that basis it is £10 million. What are the nationalised electricity supply industries going to do? Their prices will again be forced up.

Mr. Tomney

They have gone up.

Mr. Nabarro

Some of them have. The hon. Member, the Hammersmith farmer, who made that comment, might observe the words of wisdom of your predecessor in the Chair, Sir William. He was very harsh with me. I am glad to see him appear at the back of the Chair now. He informed me rather savagely that sedentary interruptions were out of order. I commend those words of wisdom to the Hammersmith farmer. Some area boards have already put up their prices. There may be in the Chamber hon. Members who are constituency residents in the area of the Eastern Electricity Board. I hope there are.

Mr. Cole

I am one.

Mr. Nabarro

Yes, there is my hon. Friend the Member for Bedfordshire, South (Mr. Cole).

Mr. Tomney

I am another.

Mr. Nabarro

I thought that Hammersmith was in the London area.

Mr. Tomney

I live in the Eastern Electricity Board's area.

Mr. Nabarro

I said quite clearly "a constituency resident" and not a private resident. The hon. Member is a good deal behind me in these matters.

The Eastern Electricity Board announced last Friday that it was increasing its prices by a straight 20 per cent., from 1¼d. a unit to 1½d. a unit. I do not suggest to my right hon. and learned Friend the Chancellor for one moment that this is entirely or even largely attributable to his fuel oil duty increase, but I say to him, and with emphasis, that if the Central Electricity Generating Board has to absorb a sum of £10 million on account of this extra fuel oil duty, it is inescapable that its surplus from this year's trading will be inadequate to promote its expansion ventures, that is that part paid for out of its own resources from the surplus earned and electricity prices wild go up when the influence of the extra fuel duty, married to the influence of the increases in the price of coal announced a few months ago, make themselves felt. Again, therefore, in the context of electricity generation, fuel oil duty increases are highly inflationary.

As we have dealt adequately with the farming position and we have the horticultural position to come, I want to deal with the narrow political aspect of this matter. My right hon. and learned Friend is, of course, integrity itself, but he is the Chancellor of the Exchequer. I can say things which my right hon. and learned Friend cannot say, and I do. My right hon. and learned Friend has made it perfectly clear in all his statements that he has imposed this fuel oil duty increase for revenue reasons. I do not think so. He has put it up as a sop to the National Union of Mineworkers.

For the last two years, my right hon. Friend the Minister of Power, his predecessor, then Paymaster-General and now President of the Board of Trade, have with monotonous regularity said in fuel and power debates that we in the Conservative Party believe in freedom of choice and will not countenance for one moment the adoption of the West German system of placing a discriminatory fuel oil duty on the essential ingredient of industry which would have the indirect effect of protecting the indigenous coal industry. The Whips have even put me up to tell that story, but, of course, I have always believed that there should be freedom of choice in this matter. [An HON. MEMBER: "A party hack."] I am not a party hack. I have taught successive Ministers of Power the economics in this context and I have pushed them along the right path to resist placing an artificial protection on the coal industry by taxing fuel oil for industry. I am not alone in my view of why this has been done in the Budget. I quote from the Economist.

Mr. Michael Foot (Ebbw Vale)

Hear, hear.

6.30 p.m.

Mr. Nabarro

Well, it is better than Tribune. I cannot discuss the merits or demerits of Tribune here. I think that the Economist is a better journal.

On 22nd April, directly after the Chancellor's Budget statement—[Interruption.] I am sure, Mr. Arbuthnot, that you can hear the sedentary cacophony from the benches opposite—the Economist quoted the Chancellor's statement that the heavy oil duty had been withdrawn fourteen years ago at a time of acute shortage of coal and when every inducement was being offered to get people to change from coal, but that the same considerations did not apply today. It went on: The miners for years now, and the Labour Party for many months, have been agitating for this form of protection for coal; the National Coal Board has not said much about it—in public. It is a deliberately discriminatory addition to the costs of industry using oil; and it could have incidentally discriminatory effects as between other fuels. The article concluded: If the Chancellor was determined to raise £50 million from duties on oil, a general duty on all kinds of oil was preferable to loading the lot on to fuel oil. But it remains blunt protection for a weak nationalised competitor. It is an overt method of protecting the coal industry, and ought to be recognised as such.

My speech today has been largely exploratory in character. It has also been factual. No one can dispute the statistics which I have given. If the oil companies place the whole of the duty on fuel oil—they may spread it over all petroleum products—we must have an answer as to the way in which the £50 million is calculated, whether before Profits and Income Tax on profits, or after.

Whatever the answer may be to these questions, I suggest that this form of duty is highly inflationary. I support my right hon. and learned Friend in requiring such a large surplus in this Budget. I support the Budget generally, subject to three reservations, two of which are dealt with by new Clauses standing in my name, and the third by this Amendment, before reaching the new Clauses. But this new impost is highly inflationary because it is heaped on industry's shoulders at a time when industrial efficiency and competitiveness in export markets should surely be our principal preoccupation. I hope that I shall have full answers to my questions, so that my future action in this matter may carefully be considered.

Mr. Edwin Wainwright (Dearne Valley)

This is the first time that I have heard how one-sided the hon. Member for Kidderminster (Mr. Nabarro) can be in his speeches. Previously, I had always understood him to be fair, just and honest. But on this occasion I noticed that he said certain things, but omitted others.

In opposing this Amendment, I do not speak in favour of the Government's desire to put this new tax on by this method. In so far as I deal with that aspect, I may go a little way with the hon. Member for Kidderminster. I recall that in 1947, because of the shortage of coal and fuel generally, it was agreed to ease the burden on the fuel oil industry. When the hon. Member talks about the burden being heaped on the oil industry again, he must realise that for fourteen years it has been free of this kind of tax. Now that fuel is in good supply, it is only right that it should have this tax imposed upon it.

The National Union of Mineworkers did not ask for 2d. to be put on to fuel oil for the sake of bringing revenue into the Exchequer. It mentioned a figure of 1½d. It also suggested that the revenue from it should be used for the benefit of motorists, who at present pay 2s. 6d. tax a gallon upon their petrol. Therefore, no blame can be attached to the N.U.M., to the T.U.C. or to the Labour Party. They did not want to impose a tax on fuel oil merely to bring revenue to the Government. Their reason was that they considered that such a tax could ease the cost of transport.

I hear from Members opposite bitter criticisms of the coal industry. They hate nothing more than public ownership and the nationalised industries. It was good, therefore, to note that the hon. Member for Kidderminster was rather perturbed about the effect of this tax on the nationalised electricity industry. I wish that he had been as forthright in criticising the Government for relieving Surtax. The money raised by this new fuel oil tax could have been raised instead from the Surtax payers, such as he and his hon. Friends, and not from the nation.

I appreciate the criticisms made by the hon. Member. We on this side of the Committee are aware that the tax will impose a new cost on industry, but we must remember that when the price of our coal was two or three pounds less than the price of continental coal, the National Coal Board was not allowed to sell coal abroad, and I never heard or read a report of criticism of the Government from Members opposite for not allowing a nationalised industry to make the best of competitive prices.

This week I asked a Question about the cost of imported coal from America. My reason was that the steel industry of Wales, more than ever, because of the tax to be placed on fuel oil, wishes to import coal from America, as it is cheaper. I appreciate that I may be getting out of order in pursuing this line of argument, but we should not forget that references to the price of coal and the coal industry were introduced into the debate by the hon. Member for Kidderminster and if the hon. Gentleman comments on the industry, I think it only right that I should have an opportunity to reply to his statements. When considering the income which the Government will obtain from this 2d. on fuel oil one should take note of the advantage enjoyed by the fuel oil industry over a number of years. If it is argued that every industry in the country is to have artificial protection it can be said that fuel oil should have artificial protection. If that be so, the Government are entitled to impose this extra 2d. on the price of fuel oil.

The hon. Member for Kidderminster referred to an article in the Economist. One thing that he did not mention was the tax on fuel oil in other countries. If there is no tax on fuel oil in this country, but there is a tax in other countries and other industries have had the privilege of having cheaper fuel oil—I know the difference between the price on the Continent and this country—it does not behove supporters of the Government to criticise the Chancellor on this issue.

Let me give the Committee the figures. In Belgium, the tax on fuel oil is 25 per cent. In Sweden, a small country, it is 18 per cent. In Italy, it is 30 per cent., and in Western Germany——

Mr. Nabarro

It is 49 per cent.

6.45 p.m.

Mr. Wainwright

—it is 49 per cent. In Britain it is running at about 15 per cent.

Mr. Nabarro

The hon. Gentleman has failed to read out the figure for Holland. It is about 5 per cent. He should have included that.

Mr. Wainwright

As on most other occasions, the hon. Member for Kidderminster is a little too previous. The figure is on my list and will be men- tioned. The hon. Gentleman should have waited while I continued my speech.

I believe that the Government are right to impose this tax, but for quite different reasons. I do not think that it should be imposed simply to increase the amount of revenue. They could have given an easement to transport using petrol and diesel oil. Had they done so I am quite certain that the Opposition would have supported them.

On the question whether there is to be a heavy penalty on the rest of the industry, I would say that if the rest of industry—over the period of years in which there has been the opportunity to secure cheap fuel—had developed, had kept ahead of the industry of other countries of Europe, as was the case between 1945 and 1951, and had made the progress that it should have done, and had reinvested instead of paying out money in profits, it would not now be fearing this increase of 2d. On those grounds, I oppose the Amendment.

Mr. T. H. H. Skeet (Willesden, East)

I have listened patiently to the arguments adduced by the hon. Member for Dearne Valley (Mr. Wainwright) but his argument regarding tax advantage on the Continent of Europe falls to the ground if one considers for example that in Western Germany the tax is for a limited period in order to rehabilitate the coal mining industry. That does not apply in the United Kingdom. I grant that even with the tax imposed, fuel oil consumption in Western Germany has gone up by 36 per cent. compared with coal consumption which has gone up by only 4½ per cent.

Mr. Wainwright

Both the Chancellor of the Exchequer and the Minister of Power have stated publicly that this tax is not to rehabilitate the coal mining industry.

Mr. Skeet

That is what I was indicating. There is a great difference between the tax in Western Germany and the tax in the United Kingdom. But the hon. Member for Dearne Valley has "missed the bus". Here we are concerned with fuel costs. Here in the United Kingdom they are rising whereas energy costs in the countries in the common market are falling. That is a cardinal feature which no one has brought out during this debate.

From 1953 to the present time the price of coal in the United Kingdom increased by 59 per cent. but in the E.E.C. countries the price has advanced by approximately 16 per cent. That could be explained by saying that in Western Europe there are a number of factors which come into the question such as the importation of Russian and other oils. There is also the importation of coal from the United States and elsewhere. Many also recognise that the surplus of oil will go on for many years and therefore prices are likely to fall still further, where market factors are allowed to operate.

What I am saying to the Chancellor is that by adding a tax on heavy oils in his Budget he is creating a price which is entirely artificial in the United Kingdom, and very much higher than our competitors have to pay in Western Europe. We are falling out of step with Europe. If we go back to 1956, we were then much in line with their energy policies and price structure. The E.E.C. has since accepted the position that coal must accept the discipline of the market, with certain reservations, and that we can only have an expanding economy using a plentiful supply of low-cost fuels.

I do not think that it will be at all surprising if I refer to the pamphlet "A New Energy Pattern in Europe", published in January, 1960, which illustrates the point that the Common Market Countries are moving along different lines compared with the United Kingdom. I want to read one short extract from that pamphlet: We recognise the importance of the continuity and regularity of energy supplies. But we do not regard the long-term protection or artificial encouragement of indigenous supplies of energy as the most satisfactory method of obtaining such security. There are two ways in which this can be brought about, either by the Chairman of the National Coal Board manipulating the price, or by the Chancellor deciding that he will close the margin between fuels thus giving coal a competitive advantage in both instances. In other words, we have a price fixation in the United Kingdom which there is not in Europe. If we hope in E.F.T.A. to compete with the E.E.C. countries, we are placed in an immediate difficulty with basic costs. This is one of the cardinal features that we have to face today.

Another factor that we have to bear in mind, is that, while many of the underdeveloped territories are now talking about commodity stabilisation, here we have the Chancellor of the Exchequer discriminating against one form of fuel, making it very much more difficult to argue our case with the underdeveloped territories. I do not want to pursue the point, but simply suggest that this could lead to international difficulties.

To go back to another point, which I do not think many hon. Members have considered, in Northern Ireland at the moment the consumption of heavy oils totalled 395,000 tons last year of which fuel oil represents 250,000 tons, compared with 150,000 tons in the preceding year. If we take it that the additional charge will be about £2 per ton, the tax bill will work out at £800,000 for Northern Ireland, and this in a country which has no indigenous coal, and, further, where the rate of unemployment in March of this year was 7.5 per cent. as compared with 1.6 per cent. for the rest of the United Kingdom.

I should like to know from the Economic Secretary whether the Government intend to rebate Northern Ireland fully in the special context in which it stands. It is not like the agricultural industry, which is one of many industries. It is a segment of our economy for which we hold ourselves responsible, and a country that cannot rely upon indigenous coal.

My hon. Friend the Member for Kidderminster (Mr. Nabarro) mentioned the steel industry, and perhaps I can expand one point. Are we not holding back technical improvements. We had price increases in September, 1960, costing the steel industry about £12 million, and, on top of that, now another charge of £7 million. The industry has introduced economies to be more competitive with Europe. Steel does not want protection it wants to be in a position to reduce its costs, and this is a way of doing it. For instance, companies are experimenting with such ideas as fuel oil injection into blast furnaces, and it is possible that by this scheme there will be a saving of 2 cwt. of coke per ton of iron produced, but all these incentives for doing this are thrown to the wind. The glass industry, which is extremely important to the country, with 80,000 people employed and a turnover of £145 million, is facing a situation——

The Temporary Chairman

Order. That point could better be taken with the Amendment in line 30, at the end to insert: Provided that this section shall not apply to heavy oils used for heating glasshouses growing in commercial quantities horticultural produce as defined in subsection (1) of section eight of the Horticulture Act, 1960.

Mr. Skeet

I will say nothing further about the glass industry, but will go on to another industry which is also important and engaged in the export field.

Mr. Nabarro

On a point of order. You have just referred, Mr. Arbuthnot, to the Amendment which deals with the heating of glasshouses for horticultural products. My hon. Friend is referring to the glass industry, which has nothing to do with glasshouses.

The Temporary Chairman

In that case, I pulled up the hon. Member in mistake.

Mr. Nabarro

Thank goodness for that.

Mr. Skeet

I am very much obliged, Mr. Arbuthnot.

If I may go back to the glass industry, I was indicating that it provided employment for 80,000 people and had a turnover of £145 million. By the imposition of this additional charge, this industry will be called upon to pay 3½ per cent. of the total extra costs, and that is too much for this industry. Pyrex has indicated that it will have to put up its charges by 7½ per cent. in the autumn, and while Pilkington Brothers, who have brought out the new feature of producing plate glass by the float process have not indicated whether they are to pass the charge on or not, the probability is that they will have to do so, because they will have an addition of 25 per cent. to their fuel costs. A principle element in costs is the consumption of fuel. I do not think that I should say a great deal about the cement industry, because all appreciate its valuable contribution to exports of the United Kingdom.

Mr. H. Rhodes (Ashton-under-Lyme)

Would it not be in line with some of the Chancellor's ideas—if this imposition has that effect in the glass industry—for him now to introduce the window tax and go back to 1696?

Mr. Skeet

Perhaps I can carry on at the point where I left off. The industry have passed on a charge of 3s. 3d. per ton. Large parts of the industry decided to go over to oil, and, in fact, did so, remembering the pronouncement from the Front Bench, a few years ago, in which the Government were calling upon industry to convert to oil. Having done so then, it is now penalised for having done so.

Cement companies using primarily oil firing will find that the prices will go up by 8s. per ton. I do not want to weary the Committee by going through a long list of increases, but they should nevertheless be taken into account. There is the textile industry, and general engineering, and here the tax will cost about £7 million. If we take the case of the glass and ceramics industries, oil has the advantage of temperature control, and avoidance of contamination in the melt.

It comes to this. While we are exhorting British industry to do its utmost in Europe, we are putting on a charge of £48 million, 95 per cent. of which has to be carried by British industry including a minor part by agriculture. We exhort and yet visit industry with penalties. How does the Chancellor expect to succeed in his European policies?

I must be frank about this. This is the situation that the country finds itself in at present.

Other people have made observations on this matter. When the President of the Board of Trade was Postmaster-General he said: there are limits to which it is proper for this country to use expensive home-produced fuel and raw materials rather than to use cheap imported fuel and materials, when we have to compete in a market which uses cheap fuel and materials."—[OFFICIAL REPORT, 4th May, 1959; Vol. 605, c. 47.] That refers to what we will have to do when we deal with the Common Market. We must have freedom of choice. I ask the Committee whether we have freedom of choice if the Chancellor says, "You have to pay the price that I specify and nothing else, and, at the same time, you cannot import coal from abroad." In those circumstances, there cannot be the interplay of marketing forces which is traditional in our economy.

7.0 p.m.

The gas industry is a large consumer of heavy fuels. Will it have to pay this charge, or does it fall under the provisions contained in the Finance Act, 1947, and its plant constitute a refinery? Can my hon. Friend answer that question? Secondly, what is the position of Liquid petroleum gases, such as butane and propane, when they are used as fuel? Will they fall under the axe of this imposition? My final question concerns lubricants, which are covered by subsection (1, b) of the Clause. The aviation industry used 10,000 tons of these lubricants in 1960; industry used 520,000 tons; marine engineering used 73,000 tons; the motor industry used 325,000 tons; and tractors 37,000 tons, making a total of 965,000 tons. The Bill provides for an increase of 3d. on these oils.

The penalty on heavy oils is to be 2d. No machine can work unless it is lubricated. In these circumstances, I cannot see why lubricants should bear an increased burden. These lubricants are used in aeroplanes, in marine and general engineering, and I cannot see why that charge should be altered upwards. It does not compete with coal in any way, and I cannot see any reason why the penalty should be imposed.

I have said enough to indicate the general problems with which industry is faced.

Mr. Jeremy Thorpe (Devon, North)

I intervene, first, to assure the Chancellor of the Exchequer that the criticism of this tax is not exclusively reserved to members of the Conservative Party, but is slightly broader based. I disclaim any knowledge or expertise such as the hon. Member for Kidderminster (Mr. Nabarro), the hon. Member for Willesden, East (Mr. Skeet) and the hon. Member for Dearne Valley (Mr. Wainwright) possess of the coal mining industry and the steel industry. I base my opposition to this tax simply and solely on the fact that it offends against every basic tenet of economic morality. The quintessence of the speech of the hon. Member for Dearne Valley was that it was the old argument of protection for special limited interests. There is no doubt that the purpose of the tax is not to raise £50 million, but to underpin the coal mining industry.

Mr. Barber

I am interested that the hon. Member should say that. Does not he accept what my right hon. and learned Friend the Chancellor said? If he does not, he should say so bluntly. My right hon. and learned Friend was quite specific on this point.

Mr. Thorpe

If I am right, the Chancellor indicated that the main purpose of the tax was to raise money. If he has not yet ascertained that the likely effect of it will be underpin the coal mining industry at the expense of the oil industry, I can only say that his powers of perception have not yet produced that logical conclusion. I accept that.

Mr. Nabarro

I want to help the hon. Member. The Chancellor could not claim that this additional impost was other than for revenue purposes. If he had said—as I say, and as the hon. Member for Devon, North (Mr. Thorpe) is now saying—that this is really to protect the coal industry he would have run diametrically opposed to the Paymaster-General, as he then was—now the President of the Board of Trade—who, on 4th May, 1959, said: We cannot impose quotas"— on fuel oil imports— by reason of our international obligations. I should have thought that a duty designed for the protection of coal would probably also be contrary to our international obligations."—[OFFICIAL REPORT, 4th May, 1959; Vol. 605, c. 55.] That is why the Chancellor says that this is for revenue purposes.

Mr. Barber

It is as well to have this point quite clear. My right hon. and learned Friend was quite specific, and I hope that, on reflection, my hon. Friends will agree that the Chancellor would not have used the phrase "for revenue reasons" unless he meant it. He is not the sort of person who would say that he was imposing a tax for revenue reasons if he had quite different objectives.

Mr. Thorpe

The hon. Member has just said that the Chancellor would not have raised the tax unless he wanted it for revenue purposes. I agree with that.

Mr. Barber rose——

Mr. Thorpe

If I have misquoted the hon. Member I will give way.

Mr. Barber

I said that the Chancellor would not have used the phrase "for revenue reasons" if that had not been his objective.

Mr. Thorpe

I thought that all the provisions in the Finance Act were for revenue purposes. If there is any other fresh purpose of which I am unaware I should be interested to know about it. I am saying that although the Chancellor may not perceive it himself, that will, clearly, be the effect of this tax.

Mr. Wainwright

The hon. Member for Devon, North (Mr. Thorpe) said that I was in agreement with this rebate because I supported the coal mining industry. I emphasised time and time again that this tax was eased in 1947, when fuel was short, and that it was only fair that it should now be reimposed, with the present improvement in the position.

Mr. Thorpe

I find that argument quite fantastic. To say that because a tax is reduced, for one reason or another, there is a moral right for any Chancellor, at any time, to reintroduce it, is a fantastic argument. So few hon. Members are now apprised of the free trade argument that they should be reminded that our industry always tries to buy its raw materials in the cheapest possible market, and then to sell its manufactured products in the most profitable market obtainable. Under the present system, if account is taken of the rebate obtainable by the industrial consumer, 28 per cent. of the tax will be put on heavy oil to be used by industry, which is bound to inflate industrial costs. I should be interested to know whether the Chancellor thinks that that is in the best of interests of our export trade, and is calculated to assist us to compete with Europe and the rest of the world.

I suggest that this is what has happened. The Government have seen large heaps of unsold coal building up all over the country. They have then adopted what I call the Bond Street mentality, on the basis that one increases the price and the consumer may take the view that because the product is expensive it must, therefore, be good. That has not worked, but the Bond Street mentality has remained; high prices remain and the Government have now put a tariff upon heavy oil which industry will have to buy. As the hon. Member for Kidderminster said, it would be fairer if there were a general tax. Gas which is made from oil escapes duty, but electricity which is made by burning oil pays tax.

Apart from the economic fallacies of the argument that we are protecting the industry by inflating the cost of our raw materials, the tax in itself is anomalous. As the hon. Member for Willesden, East said, the cost of cement will go up by 3s. 3d. a ton. It will be interesting to see what will be the effect on building. The cost to the agricultural community has already been dealt with. The cost of dried grass and corn, which are to a large extent used as feeding stuffs, will go up by 17s. to £1 on every single ton.

It would be out of order to mention horticulture, but, again, the costs in that industry will be inflated. Perhaps the most interesting aspect of this policy will be the tax on the domestic consumer who has to buy kerosene. I come from an area where village after village still has——

Mr. G. R. Mitchison (Kettering)

On a point of order. Is there not an Amendment to exclude kerosene from this tax?

The Temporary Chairman

There is an Amendment to exclude kerosene and, therefore, the hon. Member would be out of order in referring to it on this Amendment.

Mr. Thorpe

I have no desire to refer to this subject in detail. I was seeking to use this as one further example of the costs which are likely to be inflated, to which, in my submission, it will be in order to refer on a new Clause which seeks for every conceivable reason to reduce the tax to ½d.

This is a retrogressive tax which smacks of the worst form of protection. I had hoped that the Chancellor of the Exchequer might have remembered his Liberal days, when he was a free trader, and remembered, also, that buying in the cheapest market is the only possible way in which British industry will be able to compete.

Sir Derek Walker-Smith (Hertfordshire, East)

I am sure that all my hon. Friends on this side of the Committee heard with great pleasure the Economic Secretary's disavowal of any protectionist design in imposing the fuel oil tax. At the same time, I need hardly remind my hon. Friend, as a former ornament of my own profession, of the legal maxim that a person is presumed to intend the natural consequences of his acts.

Although I wholly and unreservedly accept what my hon. Friend has said, it is a fact that one of the consequences—and, no doubt, in the minds of some people, the most important consequence, judging from the speech of the hon. Member for Devon, North (Mr. Thorpe)—is the protection which it will afford to the coal industry. We would think this a bad reason, if it had been the reason, for imposing this tax, and, of course, it also has this important consequence, that had this been an overt tariff duty imposed for protective purposes there would have been a close and searching scrutiny into the impact on consumers before it could have been established.

But no such scrutiny can be made in the same way in the case of a revenue duty, because of security and other reasons. Therefore, it is right to say that it is only in the processes of this Committee that we can get that consideration of the impact on consumers, which is part and parcel of the tariff machinery prior to the decision taken to introduce a tariff duty.

7.15 p.m.

Having said that, I would tell the Committee that I was a critic of this tax quite apart from any lurking protectionist element that may be within it—not of design, but by natural consequence. I was, and, indeed, am, a critic of it, as I explained in the Second Reading debate, because of its nature it appears to me to be out of context in a Budget designed primarily for counter-inflationary purposes. We understand that this Budget has two main objectives, both of which are admirable. The first is the safeguarding of our balance of payments position, and the second is the counter-inflationary aspect.

Those two admirable objectives are proposed to be achieved by a means which is also admirable in itself—the building of a very substantial above-the-line Budget surplus. As the Committee will appreciate, the surplus can only be achieved by one or other or a combination of two methods, one in reducing public expenditure and the other in increasing taxation. As unfortunately no reduction of expenditure is possible this year sufficient to raise the required Budget surplus, we have to face, however disagreeable it may be, the necessity of increased taxation. Thus far, I am entirely in line with the reasoning of my right hon. and learned Friend the Chancellor of the Exchequer. But the fact that we have to accept a measure of increased taxation in those circumstances to build up the Budget surplus does not exempt us from the necessity of scrutinising the particular forms of taxation proposed. We have to scrutinise them, in particular, to make sure, as far as possible, that there are selected for this purpose those taxes whose individual impact will reinforce the general effect of the Budget surplus rather than those taxes whose individual impact will neutralise or to some extent cancel out the beneficent general purpose.

That is the primary test that we have to apply, and, applying that test to this tax, it is, I think, apparent that it falls into the second and less satisfactory category. It falls into that category because, although it may play a useful contributory part in the beneficent effect of the surplus as a whole, its individual impact is likely to be inflationary and prejudicial, therefore, to our balance of payments position, since its natural effect will be to raise production costs and, therefore, to raise prices.

The economists tell us that there are two aspects of inflation which we have to bear in mind, which they call cost-push inflation and demand-pull inflation. The shortcoming of this tax is that it tends to promote cost-push inflation while, at the same time, doing nothing effective to restrain demand-pull inflation. Therefore, on balance, this tax will have an inflationary effect. It also means that it is adverse to the other main purpose of the Budget—the safeguarding of our balance of payments position.

I am not concerned here with the social consequences of inflation which, naturally, engage so much of our attention in the House, the adverse social consequences on pensioners and elderly people, and so on, but with the main economic adverse consequence, which is the effect that inflation has in helping to price us out of the world's competitive markets. Therefore, anything which adds to the cost of the goods and services which we offer abroad obviously runs counter to one of the main purposes of the Budget.

The effect of this tax must be to add something to the cost of those goods and services. How much, we are not in a position to know till we know the answer to the question postulated by my hon. Friend as to how the oil companies will actually apply the increase, whether they will concentrate it on heavy oils or spread it over oils as a whole. On the assumption that they will concentrate it on the heavy oils there will be some significant addition to the cost of the goods we offer in the export markets, and, that being so, I think it is clear that this tax basically runs counter to the main purpose of the surplus and is a case of the means pulling against the end.

My hon. Friend the Financial Secretary joined issue with me when I put this argument a good deal more shortly in the Second Reading debate. He said that I and those who thought like me on these matters were mistaken in thinking that indirect taxation could not be itself disinflationary. Of course, that is not what I said. I was on rather a different point, and I think, with respect to my hon. Friend, whose economic acumen we all recognise and admire, the fallacy underlying his reasoning in this context is this. He based himself on an antithesis for this purpose between direct taxation and indirect taxation.

We are not able to discuss, on this part of the Bill, the inflationary effects of direct taxation, but there is, of course—and this was the point of my argument—an antithesis within the field of indirect taxation, the dichotomy between indirect taxation falling primarily upon consumption and indirect taxation falling primarily upon production. Really, my hon. Friend, I think, must have been aware of the point, because he went on to refer to excessive demand. If we are to restrain excessive demand as a counter-inflationary measure we have, of course, to restrain consumption in some of its manifestations.

This tax does not restrain consumption in that sense at all. The only demand which this tax will tend to restrain is a demand which is not excessive, a demand which, so far from being excessive, is, in fact, insufficient, that is to say, the export demand for our goods and services. It is a fact, and we have to recognise it, that if we wish to have fiscal measures with a primarily counter-inflationary purpose, then the balance of those must be tilted on to consumption. That is not always an immediately popular political doctrine, but economic propriety has to take precedence over passing political popularity. It is a fact that taxes on production are not counter-inflationary in that sense and can lead to great economic harm, resulting ultimately in lowered standards of life, and unemployment.

I will not emulate some of my hon. Friends in suggesting possible taxes. The hon. Member for Scarborough and Whitby (Sir A. Spearman) suggested a sales tax in the form of a flat-rate tax on the retail trade. My hon. Friend the Member for——

The Temporary Chairman

The right hon. and learned Member is getting a little wide of this Amendment.

Sir D. Walker-Smith

I beg your pardon, Mr. Arbuthnot. I was really stating what I was not going to say. You will remember, from your classical education, what was called the technique of Praeteritid in the Ciceronian idiom. I think that that is right. If it is not, the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) will, possibly, correct it in due course. But I will not proceed with that, Mr. Arbuthnot, for I would not like to risk your displeasure, still less to feel that I deserved it.

I will merely conclude on that point by saying that it is not, I think, in any event for private Members to suggest taxation. That is something for the Treasury Ministers. It is right, however, to say that if we are to have counter-inflationary fiscal measures, then they should not be measures primarily directed to production, because those are inflationary in their effect.

I have not put my name to the Amendment of my hon. Friends, although as hon. Members will know from what I have said, and, indeed, from what I said on this subject on Second Reading, that, again to use the classical formula, my enthusiasm for this tax is confined without difficulty within the bounds of decorum; but the reason why I am not supporting this Amendment and the reason why I hope my hon. Friends will not wish to press it is this, that I think that the tax is an integral part of my right hon. and learned Friend's effort to achieve his Budget surplus. [Interruption.] Yes, his Budget surplus. It is 10 per cent. of his Budget surplus of £506 million.

The right hon. Gentleman the Member for Battersea, North (Mr. Jay) will recall that I drew a distinction between the contributory effect within the general Budget surplus, which is a good effect, and the individual impact, which would be inflationary. We cannot now ask the Chancellor to take back this tax and other taxes on production without imposing on him the necessity either of recasting his Budget, which is impossible at this stage, or of sacrificing his surplus, which is undesirable.

Mr. Jay

Is there not a third alternative? Would it not be perfectly possible either in this Committee or on Report for the Chancellor to diminish the concessions he has made on Surtax?

Sir D. Walker-Smith

No. That would be theoretically an alternative, but it would not be a wise step to take, because the concessions on Surtax are concessions which are directed to increasing productivity, by giving an added incentive to a most important element in the task of production, the executive element. I have always thought that the intelligentsia—I use the word not in the pejorative sense—of the Labour Party, like the right hon. Gentleman, did take some interest in the executive side of industry, and that they were anxious to promote their efficiency and to give them incentives to play their part in the greater production which we need.

Mr. Thorpe

I have listened to the right hon. and learned Member's argument with care. Is he, with his authority, making the proposition that this House of Commons is never able to make a major amendment to any Finance Bill by reason of the fact that it might cause the Chancellor of the Exchequer to vary the proposals he introduced on Budget day?

Sir D. Walker-Smith

No, of course it it possible for this Committee, and the House on Report, to make substantial alterations to the Budget; but, if the hon. Member will do me the honour of reading what I said in my general argument on Second Reading he will see that although I found much to praise in the Budget my criticism of it is that the balance of taxation is slanted too much on to production. In fact, this surplus of £506 million is achieved by those taxes. It would be unrealistic now to ask for a recasting of the Budget in such major particulars without risking the sacrifice of that surplus.

It is for that reason that I hope my hon. Friend will not press his Amendment. In saying that, I say, and I am sure my hon. Friends will feel, that my hon. Friends the Members for Kidderminster and Willesden, East have done a good service in bringing this matter forward and ventilating it. We can be assured that in the consideration of future fiscal measures of a counter-inflationary nature my right hon. and learned Friend—who combines high abilities with a receptive and reflective mind—will give full attention to these important considerations.

Mr. M. Foot

I have been studying the face of the Patronage Secretary during the part of the debate in which he has been present. Because we have been able to study it from this side of the Committee, we have been able to enjoy the debate more than hon. Members opposite. It has been a fascinating exhibition. The Patronage Secretary came in a little late. I am sure he had other important duties, but, if I had been called to speak earlier, I would have brought him up-to-date in this matter. I would have pointed out to him that he had a considerable revolt on his hands. We had two extremely powerful speeches from the other side of the Committee denouncing this part of the Budget in very strong terms.

We then had the remarkable speech of the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith). In the first part of his speech he underlined and stressed with all the eloquence we expect from him the arguments which had been put by his hon. Friends, but in the last few minutes there was a very sad anti-climax. In the first part of the speech he spoke with conviction, eloquence and dynamism, but the last few minutes were a pathetic affair. He did not produce any arguments for rebutting the earlier part of his speech. It seems very sad that, having resigned from the Government for what purpose we are not very clear, he turns himself into a lion in the Chamber and a lamb in the Division Lobby. That, apparently, is what he intends to be.

I hope it will not be the same with the two hon. Members who spoke earlier in the debate.

7.30 p.m.

Mr. Nabarro

I am not a lamb.

Mr. Foot

No, I have the greatest respect for the hon. Member for Kidderminster (Mr. Nabarro). I shall have even greater respect for him if tonight he carries his argument on this issue into the Lobby and votes against the Government. I am sure that that is the logic of what he argued for because, like the hon. Member for Willesden, East (Mr. Skeet), he did not find a single redeeming feature in this proposal. It was not as if they were weighing in the balance the advantages against the disadvantages and saying that the Chancellor had a very good case but an equally forceful case could be put against it. Both their speeches were saying that this tax is clearly inflationary, it is injurious to the export trade, it does not even fulfil the declared purposes of the Budget which the Chancellor himself says he wishes to fulfil and, therefore, they are against it entirely.

I do not see how, after speeches like that, they could fail to divide the Committee. It was a remarkable debate because the only person who has any right to rejoice about it is the acting leader of the Liberal Party, the hon. Member for Devon, North (Mr. Thorpe). He has every reason to think that this is one of the significant debates of this Parliament. He has got hon. Members opposite coming out one after the other in their true Cobdenite colours. Sometimes the hon. Member for Kidderminster is held up as a Right-wing member of the Tory Party. What he was preaching today was pure free trade.

Mr. Nabarro

That is quite wrong. I represent the youthful and progressive element of the Tory Party as opposed to the remainder whom I am pleased to call upon occasions the fuddy-duddies.

Mr. Foot

I do not class the hon. Member for Devon, North with fuddy-duddies among hon. Members opposite. The speech of the hon. Member for Kidderminster was not the speech of a Right-wing Tory, but the speech of a good old free trader. What the hon. Member said—and he must not deny it—was that his main objection to what the Chancellor was doing was that the Chancellor was doing it for protectionist purposes.

In the mouth of the hon. Member, it apparently was a damning indictment that a Conservative Chancellor should be taking action for protectionist purposes. When I hear Tories turn into free traders so suddenly I wonder a little why this happens. They are still good protectionists when they are talking about agriculture, but when they are talking of something which might affect the coal industry they become good free traders. They want the nationalised coal industry to abide by free trade principles which they never demand should apply to agriculture.

The acting leader of the Liberal Party has good reason to rejoice in this debate. He has made converts on the other side of the Committee. Whether they will strengthen his party I cannot say, but he has every right to say that what we have been listening to has not been something so youthful and progressive as the hon. Member for Kidderminster suggests, but something which is old, as old as Richard Cobden. In my view, it is as out-of-date as Richard Cobden.

There has been much argument in this debate about whether the Chancellor introduced this measure for revenue or protectionist purposes. The right hon. and learned Member for Hertfordshire, East said that is was a bit of both. That probably is a fair estimate I do not think the Economic Secretary needs to be so concerned about it to defend the honour of the Chancellor. I am sure that the Chancellor has done it primarily for revenue purposes, although it may be that it will have certain advantages in the sense that certain sections of the community have been pressing for a tax of this nature. There would not be anything dishonourable in doing it for those reasons.

I do not think the hon. Member for Kidderminster put his case quite in this way, but he would have had a strong argument if he were to have said that it would be wrong for the Government to deal With the social aspect or whether we were to protect or assist the coal industry or some other industry in a haphazard measure in a Budget. It ought to be done much more deliberately if in fact we are to have a policy of assisting the coal industry for one purpose or another. It ought to be done much more deliberately and as part of a whole fuel policy. I think that is a perfectly legitimate criticism of what the Chancellor has done, that he has snatched at this money for revenue purposes instead of thinking out what should be a proper fuel policy.

That is one of our main indictments of the Government. When the hon. Member for Kidderminster argues as if it is a kind of natural law for this Government that free trade principles should be applied and the market price should always operate, always govern and always rule and that that is the rule applied by the Government whereas this proposal is somehow a breach of that rule, he is talking nonsense. The coal industry has had one burden after another imposed upon it by Government action. The coal industry has not had the opportunity of being able to compete in a free market freely and to get all the revenue it might be able to get out of such a situation. The hon. Member for Kidderminster, who is such an expert about fuel, ought to know that. For years the coal industry has not been able to charge the prices which it could have charged on the market in this country. At the moment, for a variety of reasons which I will give later, the situation has changed, but for ten years or more the coal industry was not allowed to charge the prices it could have charged. For ten years or more every industry in this country, including those represented by hon. Members opposite who speak for the steel industry and other sections of industry, obtained its coal a good deal cheaper than most, if not all, of its competitors in Europe.

We did not then hear the hon. Member for Kidderminster say, "My Cob- denite conscience rebels against this system. We must have complete freedom and we must let the market price rule". He did not say that. He was quite content that a situation should prevail in which the coal industry was hobbled and prevented from making larger profits and charging much higher prices when it could easily have done so. If, from 1946 until 1957, which saw the beginning of the recession in the coal industry, the Coal Board had been able to charge what the market would have borne, there would have been no question of a deficit. The Board would have piled up a huge surplus which it could have used in bad times. When the coal industry is in the midst of a depression, I believe partly caused by Government action, it is unjust of hon. Members opposite to say that the market price must apply and that coal must be sold at a competitive price when no such claim was made during the previous ten or twelve years.

A whole series of burdens have been imposed on the coal industry without any protests from hon. Members opposite. When we had to import coal, the Board had a unique burden imposed on it; it had to pay for the imported coal. That is a principle which would not be applied to any other industry in the country.

The Temporary Chairman (Mr. George Thomas)

Order. I hope that the hon. Member will relate this argument very quickly to the question of oil.

Mr. Foot

With great respect, it is strictly related. The hon. Member for Kidderminster moved his Amendment before you were in the Chair, Mr. Thomas. His main case was that the tax was inflationary and injurious to the export trade. He wanted to know the reason for it. He suggested that the reason that it had been introduced was the pressure of the coal industry. He regarded it as a clear piece of protectionism on behalf of the coal industry. Because he is so passionately opposed, in this respect if in no other, to protectionist principles, he has placed this Amendment on the Order Paper. If it had not been for his passionate objection to justice being done to the coal industry, we should probably not have seen the Amendment on the Order Paper. What I was saying was therefore strictly relevant.

So far from being allowed to compete freely against oil, the coal industry has had to bear these extra burdens. One burden after another has been imposed on the coal industry. When we had to import coal from abroad, the Coal Board had to pay for it, a burden which was not placed on any other industry in the country. When we had to import steel, the steel industry did not have to pay for it; the other industries, which were buying the steel, paid for it. The steel industry never had to pay for the import of steel in the way in which the Coal Board had to pay for the import of coal.

Mr. Skeet

The hon. Member is talking about the plight of the United Kingdom coal-mining industry. How does he explain that in most other countries with a coal-mining industry it is declining?

Mr. Foot

I do not dispute that in many countries over the last two or three years there has been a decline in the coal industry, partly due to the great increase in oil supplies. I was attempting to answer the hon. Member for Kidderminster, whose main plea is that it is unjust to impose a burden on the fuel industry which gives a discriminatory advantage to the coal industry. I was arguing that a whole series of Government measures have acted in a discriminatory fashion against the coal industry and that, so far from giving an unfair advantage to the coal industry against the oil industry, this tax is only partly rectifying the injustice which existed previously.

In order to prove that, I have cited the fact that the coal industry for many years was unable to charge the prices which it wanted to charge and the fact that it had to pay for the import of coal from abroad, a provision imposed on no other industry in the country. Home supplies were not sufficient to meet the nations needs. In the last two or three years, during the depression in the coal industry, it has had to bear the whole burden of maintaining the stocks of the industry at very high rates of interest. One burden after another has been imposed on the coal industry. The coal industry has been squeezed by Government policy. When the first small step is taken to make for slightly fairer competition between oil and coal than now prevails, it would not go down very well in the mining areas of this country if the miners could see how the Tory oil interests and their spokesmen squeal in the House. They cannot take it. They say that it is unfair to the oil industry.

7.45 p.m.

Mr. Skeet

What about the consumer and trade?

Mr. Foot

If we are to have trade maintained in this country and the consumer supplied with the goods which he needs, we shall have to have coal for a very long time. We must maintain the supply of coal in this country, and the only way to do that is by having miners. If the discrimination against the coal industry continued we should have fewer and fewer miners. The hon. Member may think that it is unimportant, but in the past three years half the people who have left the coal industry have been under 31 years of age. Any Government which was looking to the future would see this as a very significant warning.

I hope that the tax which the Chancellor is imposing is part of an indication that the Government have at last awakened and have realised the truth of what has been said to them by the National Union of Mineworkers and others—who are saying it not merely in the interests of miners but in the interests of the nation. It has been interesting to see a combination of the free trade Tories, who are free trade in the industries in which they are not interested, and the consistent free trader, the acting-leader of the Liberal Party.

We are told that the only alternative to this policy is a policy of protectionism, and my hon. Friend the Member for Norfolk, South-West (Mr. Hilton) was accused of being a protectionist. It is not true. There is a third policy—neither protectionism nor free trade. It is a policy of planning one's industries and one's fuel programme and trying to see ahead and to calculate ahead which forms of fuel one needs. This is the only policy by which the fuel supplies of this country can be guaranteed, because if we switch off the supply of coal we shall not get it back again, and if we close the pits, they will not re-open. If the miners of this generation leave the pits, we shall have no miners. These are the facts. Although this tax is a pitiful and quite inadequate way of dealing with the problem, the Chancellor does not even take credit for the small part of the good reasons for imposing this tax.

If this tax were imposed as part of a general fuel policy, there would be much more to be said for it. That is what the real debate should be about. The Chancellor of the Exchequer disowns the best reason for this imposition and thereby plays into the hands of his bright young friends opposite.

Mr. Nabarro

Youthful and progressive.

Mr. Foot

I had forgotten the exact term. The hon. Member for Kidderminster has told me once how he is described. If he tells me a few more times I may begin to believe it.

Mr. Nabarro

The hon. Member may get it right.

Mr. Foot

I may get the hon. Member's own description right. I hope that in future the Government will incorporate their different taxes into a general fuel policy which they will describe to the country and the industries concerned. The hon. Member for Kidderminster has now been converted to the full doctrine of free trade by reading all the Liberal manuals which he reads, such as the Economist. Although he has gone off on the wrong track, I hope that when the Division takes place he will stick to his new principles so that everybody can see that he votes for the same things for which he speaks in the House of Commons.

Sir Peter Roberts (Sheffield, Heeley)

I hope that the Economic Secretary will be able to use this debate to his advantage. The Committee has put a weapon in his hands because, as my hon. Friend the Member for Kidderminster (Mr. Nabarro) said, we do not yet know what the policy of the oil companies will be. I have no doubt that people in the industry will be watching the debate very carefully. I sum up what we have heard this afternoon as a good deal of perturbation on the inflation issue. Practically every speech has warned the Government about the risk of inflation which this type of tax brings.

I add my warning to those which have been uttered already. I will leave aside the economic arguments, which I am sure have been correctly stated from this side of the Committee. The timing is wrong. At this time of the year anything which is inflationary should be discouraged. The tax is inflationary also because it is on the basic material used by industries and not on an end product.

The Government should have further discussions with the oil industry. They will have gathered from the debate that there is worry about an inflationary move. The Government should have discussion with the oil industry on the question of the spread of the tax and, more importantly, on absorbing some of it into its own finances.

My hon. Friend the Member for Willesden, East (Mr. Skeet) is beginning to look a little restive. He may have a brief on behalf of the oil industry. The oil industries have told us over a number of years that they have made vast capital expenditure out of revenue. We have been told that they have developed enormous areas of the oil world out of revenue. We now know that there is a surplus production of oil. The oil industries may well not wish to continue with vast expenditure on capital investment. Therefore, there may be room for manœuvre, of the price charged for oil.

The Government should watch the position very carefully. They can talk to the oil companies and tell them that, if they are not prepared to make a spread, as my hon. Friend the Member for Kidderminster suggested, or make some absorption of the price, we shall be faced with a dangerous form of inflation. I hope that the Government have noted the volume of opinion expressed by the Committee about inflation. I hope that they are warned of this matter and will be able to talk strongly and candidly to the oil companies as to the policy to be adopted by the oil companies in relation to this tax.

Sir Richard Pilkington (Poole)

The hon. Member for Ebbw Vale (Mr. M. Foot) made an eloquent plea for the coal industry. It is right to remind him that if industrial relations in that industry had been better coal would have done considerably better than it has been doing during the last few years.

The Treasury Bench must feel that there is a great cloud of witness over their heads, because they have been subjected to much criticism from so many parts of the Chamber. We have heard many examples of the way the tax will hit individual industries. I will give one more example. I hope that the Government feel that their call for greater exports by industry generally has been to a very large extent met, particularly by some industries. The exhortation and propaganda which have been going on for some time have brought home to all sides of industry the importance of the export trade.

Why does the Chancellor of the Exchequer, apparently deliberately, now make it more difficult for industry, because of the incidence of this tax, to go on exporting? I want to read one letter which I have received from a very important firm in my constituency. The letter, which represents what a large number of firms feel, says this: I am writing to you…to ask why our endeavours to become efficient and enter the export market should be destroyed by such an unreasonable tax as the 2d. per gallon on heavy fuel oil. Some six years ago my company spent £10,000 on conversion from coal to oil (the first in the country to do so) so that we could do more export and as coal prices were so high. We succeeded in our endeavour. We shall now have to give up export because the tax will cost us between £10,000 and £12,000 per annum which cannot be recouped on the home market. I think that this is typical of very many firms in the country. I hope that the Government will have second thoughts about the tax, or will at any rate give an undertaking that they will at the earliest possible opportunity reconsider it.

8.0 p.m.

Mr. Jack Jones

I have listened carefully to everything which has been said about the fuel tax this afternoon. The debate proves what a queer sort of Chancellor we have to look after the finances of a queer sort of Government. It puzzles me how the right hon. and learned Gentleman can tell the country and the executives of big industry, "You are not pulling your weight. You are not exporting enough. To turn you into good boys, and to put you on to full time, I will give you £83 million in Surtax remission in a full year". In other words, it is blackmailing them to do a little more.

No executive can do any more than the workman who produces the stuff allows him to do. No executive, no matter what the monetary incentive is, can persuade men to produce more steel, use more oil, or produce more coal by simply saying, "Boys, I have got £4 a week out of the Budget to do a bit better". That is nonsense.

The Government say, "We have given another £83 million to those who have not been pulling their weight, but they will now have to pull their weight. They will do better". Then they increase the tax on oil. It looks as if the advisers of the Chancellor of the Exchequer have looked round for a revenue-earner and have said, "The country is importing a great deal of oil. Let us slap 2d. a gallon on it". Twopence a gallon is an increase of 25–28 per cent. It matters not how the load is distributed, it is still an imposition on the cost of potential and eventual production.

It cannot be otherwise. I have direct experience of working a steel furnace which was fired by coal gas for over thirty years. Suddenly, it was converted to oil burning, and worked 21 shifts with oil compared with 18 shifts on coal gas. The company concerned, like many other steel companies, is now using millions of gallons of oil per year. Even if it wished to, it could not turn back to coal-producing gas within eighteen months or two years. That makes nonsense of the argument about this tax being a protection for the coal industry. It has not been put on to protect the coal industry, but simply and solely to get revenue for the Chancellor. That is what he will get, but he fails to go further and look at the results of his action.

I think that this has been one of the best debates that we have had for a long time. More time should be spent on this type of debate, and less on political contention. The real problem is how we are to survive, and that problem remains, whether we have a Labour Government, a Tory Government, a Liberal Government, or even a damn' Coalition Government. This is a matter of exports, and how the Chancellor, granting all his lack of knowledge of industry, expects something to be produced more cheaply by increasing its raw-material price, I do not know—neither does anyone else.

We get the ridiculous position that an ingot of steel weighing five or six tons has to be rolled by electricity produced from oil which has been increased in cost. Then, as bars, that steel is put on the railway and pulled by diesel-tractor engines, whose operating costs have been increased. It is drawn into wire and other types of steel, again at increased cost. So it goes out to industry, all the time increasing in cost to the point where it cannot be sold. [HON. MEMBERS: "Hear, hear."] Yes, it is as simple as that.

On the Continent, due to subsidies, the coalition in regard to the averaging out of freight charges, etc., and the economic decisions of the Common Market they are getting nearer and nearer to our prices every month, and the same thing is happening in India, Japan, Luxemburg—all over the world. This is not really a political matter; it is a vast mistake on the part of the Chancellor. First, he gives away money that nobody really needed; the Surtax payers are doing all right. I know plenty of them. Indeed, I have reason to believe that if some of us were not very careful we could be amongst them. Provided a man could sink his political ideas he could join their ranks quite easily, but we happen to have political convictions and a soul—but that is beside the point.

It gets me down to hear the Chancellor talking about getting people to do better by reducing their taxation. He is thereby slandering some of the finest people in this country. All executives are not idiots. I pay tribute to those who have climbed by the hard road and know what they are doing. On the other hand, we all know that there are others paying Surtax because daddy gave them a chance when no one else would employ them—just an odd one here and there.

This debate has brought to the Committee and, through the Committee, to the country, the need to debate the essentials of the situation. It is no use argy-bargying about what happened to coal. That is a tragic story, but the water has gone under the bridge; all the evils of the coal industry are history. We know that coal is dearer, but there is less blood on it. The hon. Member for Kidderminster (Mr. Nabarro) can shake his head—there are fewer accidents and there is more happiness now amongst those who go down the mines than ever before.

It seems that hon. Members are assuming that the basic cost of the production of oil itself will remain static, but anybody who believes that is a fool. I had the opportunity to go to Abadan when 91,000 oil workers were on strike there because of evil, rotten, wicked conditions imposed by an evil and corrupt Government in Persia—not by the Anglo-Iranian Oil Company.

Those people will not remain content with their present lot when they can see huge profits being made from their sweat under the palm trees in the same way that people have seen profits made from their sweat under the oak trees in Britain. They will demand better wages and conditions for producing oil, so that the price of oil will increase in any case. We talk glibly about increasing the standard of living of the backward nations—good heavens, let us just look at the people sleeping under empty cement bags in Abadan—thousands of them; people sleeping under paper bags propped on sticks, living in evil and rotten conditions.

It all harks back to oil, and oil is now being produced by comparison on very, very low wages. That will not always be the case if the great trade union movement of the world has some say. This all means that the idea of slapping 2d. on this oil to put next year's economy right is fantastic.

The Economic Secretary may ask: what would you have done? We would have left Surtax alone, and would have looked for other means of raising revenue. We can only live by selling to other folk, and we cannot sell by making our products dearer in price. Let us give the hon. Member for Kidderminster credit where it lies. If it were not for his brief interludes of tomfoolery one would have to admit that he knows what he is talking about—[Laughter.] Well, he admits that.

Let us put it on the record that the hon. Member does not come into this House without being well and truly briefed by some of the most able brains in the country, and that he is not badly paid for so doing——

The Temporary Chairman (Mr. George Thomas)

Order. Perhaps the hon. Member will now come to the tax on oil.

Mr. Nabarro

On a point of order, Mr. Thomas. I accept all the hon. Gentleman's eulogies, but I think that it is grossly out of order for him to suggest that I am paid for advocating certain policies in this House. I think that the hon. Member had better withdraw that statement at once, and unequivocally.

Mr. Jones

The hon. Member asks me to withdraw that statement unequivocally, but I do not do so although, perhaps, in making the statement that he was paid I should have said that he was a director of many firms connected with fuel, making fuel appliances, and so on——

Mr. Nabarro

On a point of order, Mr. Thomas. I must protest at once. I am not a director of any concern directly or indirectly associated with fuel or with fuel appliances. May I again ask you, Mr. Thomas, to require that the statements, first, that I am paid to advocate certain policies in the House, and, secondly, that I am a director of certain firms manufacturing fuel appliances are unequivocally—I repeat, unequivocally—withdrawn.

Mr. Jones

I am prepared to do that, Mr. Thomas. Apparently I have been wrongly advised. I apologise quite sincerely to the hon. Member. But, following on that, I must add that I shall make inquiries to find out where those giving the information got it wrong. In any case, I will not quarrel with the hon. Member for Kidderminster about this. He is perfectly justified in putting forward his case, both from an economic as well as a production point of view.

Hon. Members must realise, as must the Chancellor, that oil, relatively, is being used today to a greater extent than any other raw material, including coal or ore, or any other commodity which is the basis of our exports. It is, therefore, surprising that the Chancellor should have selected this commodity and should have slapped a tax on it, simply because it was easy for him to do so. I make one final plea to the Chancellor to have another look at this whole matter and to consider the effects of his action.

Mr. Martin McLaren (Bristol, North-West)

I am not very much concerned about the effect of this duty on private people, on hotels or enterprises of that sort. I am more apprehensive, as are many of my hon. Friends, that this duty may cause damage to our export trade by making our prices less competitive, in the sort of way the hon. Member for Rotherham (Mr. Jack Jones) has explained.

That will be particularly so in business with Europe on products containing small margins of profit. It will also be particularly so in the case of the big volume products which use a lot of fuel and which are sold at relatively low prices. Where there are standard products, all of the same quality, it naturally follows that it is the marginal prices which determine where that order goes. I am not ashamed of holding this view, or of being called a Cobdenite, because I am the great-great-nephew of John Bright, although I wear his mantle on this side of the Committee.

In order to explain my argument, I intend to give hon. Members the comparative fuel prices in different European countries per ton on a group of bulk export chemicals—products which are of a big tonnage but which are relatively low priced. This is how the series runs: France, 118s. per ton; Western Germany, 114s.; Belgium, 106s., and Italy, 100s. The United Kingdom hitherto had the lowest price in the list, of 96s. per ton, but after this duty of 2d. per gallon is imposed Britain will have the highest place in the list with a figure of 127s. per ton. Other examples may be given from the cement industry, the steel industry—which, of course, enters into the engineering industry, the glass industry, and others. The products of those industries represent our major exports to Europe.

A related point is that, except for France, the basic prices before duty for fuel oil in European countries average 25 per cent. below the lowest United Kingdom prices, so that, before taxation even comes into the matter, we are at a relative disadvantage.

The rising costs which this duty will encourage will make us more vulnerable to foreign imports, and it is worth remembering that every £1 million of imports which could have been prevented by more competitive prices in the home market is equivalent to £1 million of exports lost.

If there was a super economist looking down from on high upon the economy of the United Kingdom, he would say to us; "Keep down your power costs, in order to keep your export prices competitive." Anything which increases our costs—whether strikes in the docks or taxes on fuel oil—is getting near to a form of economic sabotage. While I naturally accept the general framework of the Chancellor's Budget, I hope that this particular tax will not be a permanent feature of our fiscal legislation.

8.15 p.m.

Mr. Barber

We can all be grateful to the hon. Member for Kidderminster (Mr. Nabarro), who seems temporarily absent, but knowing his usual courtesy, I have no doubt that he is absent for a good reason or that he will be returning soon. We can be grateful to him for having initiated what I am sure all hon. Members will agree is virtually a debate on the Clause stand part. That was almost inevitable a consequence of the nature of the Amendment.

Mr. Mitchison

I do not agree.

Mr. Barber

I do not know whether the hon. and learned Gentleman has listened carefully to this debate. If he has, I am sure he will agree that it has ranged over every conceivable aspect of the imposition of this duty. At any rate, we have had a most useful and interesting discussion, which has lasted for more than two hours.

Before I deal with some of the general points that have been raised, I should like to deal with several specific questions that have been asked.

Mr. Ellis Smith (Stoke-on-Trent, South)

May I inform the Economic Secretary that the hon. Member for Kidderminster (Mr. Nabarro) has returned?

Mr. Barber

Thank you. I was about to answer a point raised by the hon. Member for Kidderminster, who asked whether the £50 million estimated yield in a full year meant £50 million having allowed for other taxation, or whether it was gross. The answer is that the figure of £50 million is the gross yield and, consequently in so far as the tax is borne by industry, there will be an effect on the yield of Income Tax and Profits Tax. But it is not possible to say what this effect will be.

Mr. Nabarro

This £50 million, as put by the Chancellor in his Budget statement, was a very essential part of the Chancellor's total surplus of £506 million. Surely we should have some sort of estimate, after accounting Income Tax and Profits Tax combined, at 53¾ per cent. on industry, of the yield of the duty? The whole of that sum would not be operative, but is it not correct to say that the £50 million gross becomes a net yield to revenue of about £30 million and, if not, why is that premise false?

Mr. Barber

This method of estimating the yield on a gross basis is, of course, the normal way of dealing with it. The reason it is not possible to say what the ultimate effect of the tax is is that as the tax is passed on right down to the prices of the final consumer goods, profits will be maintained and there will, of course, to that extent be no effect on Income Tax and Profits Tax.

The hon. Member for Kidderminster will have in mind that there is a difference of timing, so far as the payments of these two duties is concerned. I have done my best to answer my hon. Friend's question and, if it had been possible for me to have given him any meaningful figure, I would have done so.

The second question which he asked was whether the duty covered crude tar and creosote pitch. In so far as crude tar and creosote pitch are liquids as defined by the Customs and Excise Act, 1952—I have the particulars here——

Mr. Mitchison

Is there not an Amendment down about those substances?

Mr. Barber

My hon. Friend asked a question presumably because he wanted to know the extent to which his Amendments would affect the duty on creosote pitch and crude tar. I was saying that, in so far as they are liquids, they are liable to duty. Some tars and some pitches are solid or semi-solid liquids at 60 degrees Fahrenheit, which is the temperature referred to in the Act. They are not liable and they are mainly used as road tars. I think that the point which my hon. Friend had in mind concerned crude tar or creosote pitches used by the steel industry. I am told that they are likely to be liquid and consequently, to be dutiable.

Mr. John Hall

Does not that apply to creosote oils used in the timber industry?

Mr. Barber

I would not know offhand whether that was so.

The third question posed by my hon. Friend, which was referred to by my hon. Friend the Member for Sheffield, Heeley (Sir P. Roberts), was whether we had any information about the extent to which the oil companies intend to pass on the duty—whether they propose to pas it on to the consumers of oils subject to this increase of 2d. in the duty or whether they intend to spread it in some way over the whole of their products. I understand that they have raised the prices of their products which are liable to the duty by the amount of the increase. I am afraid, however, that I have no knowledge, and I have been unable to find out, what their future intentions are, or whether they propose to continue on that basis.

My hon. Friend the Member for Willesden, East (Mr. Skeet), whose name appears to the Amendment, raised two points with which I should deal. He asked about gas works. The position is that the cracking of hydrocarbon oil to produce town gas is recognised as a process of chemical synthesis and, consequently, as a refinery process within the existing law. It is therefore exempt from the duty.

His second point concerned liquid propane and butane. The hydrocarbon oil duty does not apply here. They are liable to protective duties when imported.

I do not wish to detain the Committee long, but I should like to mention two points which I think hon. Members should have in mind. They are not conclusive, but they are highly relevant. The first is that this is not a new tax. As, I hope, most hon. Members know, from 1933 to 1947, 14 years, all heavy hydro-carbon oils were liable to a customs duty of 1d. a gallon. Most hon. Members know of the circumstances—they have been referred to in the debate —which prompted the Labour Government in 1947 to remove the duty on fuel oil, gas oil and kerosene. With regard to that earlier duty, 2d. today is equivalent to between ½d. and ¾d. in 1933. Therefore, the duty was more onerous in 1933 than it is today. This is a relevant factor when considering the extent to which this will be a burden on industry and on the consumer.

Mr. Skeet

Was it not indicated in 1933 by the then Chancellor of the Exchequer that the purpose of the imposition was to protect the coal mining industry?

Mr. Barber

My hon. Friend has misunderstood me. I was dealing with the burden of this duty on industry and on the consumer. What I was showing, I think conclusively, as I hope my hon. Friend will agree, was that the burden is not as great today as it was when first imposed in 1933.

Mr. John Hall

I do not think this will do. After all, it has been as a result of the deliberate policy of respective Governments that industry has switched over to oil burning at a tremendous rate. Therefore, the burden on industry is fat greater than it could have been in 1933.

Mr. Barber

I must leave the matter there. I have stated the facts, and hon. Members can draw their own conclusions from them.

My hon. Friend the Member for Willesden, East referred to other Western European countries. I think that the Committee should bear in mind that heavy oils are subject to some form of taxation in nearly all other Western European countries.

We have already considered one of the various suggestions for specific exemption concerning agriculture, and there are others on the Notice Paper. However, these Amendments, as I think my hon. Friend the Member for Kidderminster made clear, raise the whole question of the desirability of this increase of 2d. a gallon on the heavy oil duty. As my hon. Friend and others know, it is a fact that this will involve——

Mr. Mitchison

This is not a debate on the Question, "That the Clause stand part of the Bill". We want a debate on that Question later. We on this side of the Committee have watched this debate with considerable amusement. We do not regard it as the equivalent of a debate on the Question, "That the Clause stand part of the Bill".

Mr. Barber

My hon. Friends and hon. Members opposite have raised points about the steel industry, the coal industry, the Common Market and the effect of this duty on the consumer and industry generally. They are entitled to a reply to those points, and I propose to reply to them.

I was about to say that these Amendments go to the root of the matter. They deal with basic issues concerned with the imposition of this duty. I frankly admit that the duty will involve some measure of industrial cost. My hon. and learned Friend has never denied that. It is also true that it will affect some industries more than others.

My hon. Friend the Member for Willesden, East referred to the glass industry. I saw a deputation from the glass industry the other day. As I once spent six months working on the shop floor at the receiving end of a glass furnace, I hope that I will be permitted by my hon. Friend to apply an unmixed metaphor and to say that I am somewhat reluctant to bite the hand that once fed me.

This increase in tax goes to the heart of my right hon. and learned Friend's proposals for achieving a balance in the economy. I will not weary hon. Members by quoting from my right hon. and learned Friend's Budget speech. His purpose is clearly set out in column 817 of the OFFICIAL REPORT of 17th April He explained that the purpose of this proposal was to raise £48 million this year. The acceptance of these Amendments would result in the additional £80 million of taxation which my right hon. and learned Friend considered necessary being cut by almost half. I mention this because we are here considering, not merely one particular form of tax, but a proposal which, if meant to be taken literally, runs counter to the whole basis of the Budget proposals.

My right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) went at some length into the economic consequences of the imposition of this tax. The tax was criticised on similar grounds by my hon. Friend the Member for Sheffield, Heeley.

The grounds are mainly that it will raise industrial costs and prices in certain sectors of the economy. Therefore, it is said, it cannot serve a disinflationary purpose, which is the only purpose which constitutes its justification. My right hon. and learned Friend the Member for Hertfordshire, East has had considerably more experience in these matters than I, and I am grateful to him for doing me the courtesy of remaining here even though his name does not appear to the Amendment.

I might, however, put this to my right hon. and learned Friend. The economic objective of the additions to taxation provided for in the Budget of my right hon. and learned Friend the Chancellor of the Exchequer is to reduce the pressure of home demand on resources. In the case of fuel tax, as in the case of any indirect tax, this is necessarily achieved through its effect on the prices of goods and services generally. The fact that a particular measure has the effect of raising prices does not mean that it will not have the desired effect on the pressure of home demand. Indeed, if the Government were to accept the argument—which, I know, is not the argument put by my right hon. and learned Friend the Member for Hertfordshire, East, but it has been put by some people—that indirect taxes could never be used in the regulation of the state of demand simply because they worked by raising prices, the Government's power to keep the economic situation under proper control would be greatly reduced.

Sir P. Roberts

Does my hon. Friend mean that he has no differentiation between prices for home demand and for export?

8.30 p.m.

Mr. Barber

I was coming on to say that different kinds of indirect taxes differ in the way in which they impinge upon prices. Some of them affect the prices of a limited range of goods and services and others have a more widespread effect. Each of these two groups has its advantages and its disadvantages. A tax whose final effect is concentrated on a narrow sector has the advantage that it may be possible to ensure that it falls exclusively, or almost exclusively, on personal consumption—I believe that that is what my right hon. and learned Friend the Member for Hertfordshire, East and, presumably, my hon. Friend the Member for Heeley would have preferred in the present economic circumstances—whereas taxes of a more general incidence have some effect upon the cost of exports and on the cost of investment goods as well. This other group of taxes, of which the fuel tax is an example, while, however, their impact is not identical on all industries, are not liable to have such a disturbing effect on particular sectors of industry.

Mr. H. Rhodes (Ashton-under-Lyne)

How does the hon. Gentleman expect a firm like mine to be able to export to Germany when my competitor in Germany buys his oil at slightly more than £4 a ton cheaper than I have to pay for mine? How does the hon. Gentleman overcome that difficulty?

Mr. Barber

My right hon. and learned Friend the Chancellor of the Exchequer reminds me that in Germany there is a higher level of tax on heavy oil than in this country.

Accepting, as I think most hon. Members on both sides of the Committee do, that the general shape of the Budget is right, and ignoring the desirability of particular imposts or reliefs—in other words, assuming that it is right that the Budget should have increased taxation this year by £80 million—there were various courses open to my right hon. and learned Friend. He might have obtained the additional revenue from taxes which impinged upon a narrow section of the economy by some more selective form of taxation.

The tax that we are discussing will have a widespread incidence, but in general its effect on industrial costs will be only marginal. As my right hon. and learned Friend the Chancellor of the Exchequer has said, its overall effect on costs will be only a fraction of 1 per cent. No taxes are positively good. One thing I can say, however, is that nobody has seriously disputed the objective of my right hon. and learned Friend of ensuring that pressure of demand upon our resources did not become too heavy. Very few informed people have criticised my right hon. and learned Friend's proposals for an increase in taxation.

On the question of the source of the extra revenue, I would say only this. In general, the Opposition favours an increase in direct taxation, whereas many of my hon. Friends prefer a shift towards indirect taxation. My hon. Friend the Member for Kidderminster said that the Amendments were in the nature of an exploration. I must point out that their effect would be almost to halve the additional taxation which my right hon. and learned Friend considers necessary in the general interests of the economy.

Overall, the effect of the duty of costs will be only a fraction of 1 per cent. With regard to any particular form of taxation, there are, of course, arguments both ways. Bearing in mind, however, the comment by my right hon. and learned Friend the Member for Hertfordshire, East that this increase in duty is basic to the purposes of my right hon. and learned Friend's Budget, I hope that having had what has been undoubtedly an extremely good discussion for over two hours we might at last bring it to a conclusion.

Mr. Mitchison

May I ask the Economic Secretary to answer one question before he sits down? Can he tell me whether, so far as the Government are concerned, there is any control of the importation of Russian oil, or the price at which it is sold?

The Chairman

The Question is——

Mr. Mitchison

Sir Gordon, I wish to speak, but I hoped that the hon. Gentleman would do me the courtesy of answering my question.

Mr. Barber

If the hon. and learned Gentleman had spoken earlier and given me the opportunity of making inquiries about that matter I would have done my best to answer him, but I would not wish to make a statement on such an important matter when trade discussions are going on between the United Kingdom and the Russian Administration.

Mr. Mitchison

We on this side of the Committee do not regard this debate as the equivalent of a debate on the Question "That the Clause stand part of the Bill". There are still two or three important Amendments to be considered, and while I shall have a good deal to say in reply to what the hon. Gentleman said, I think that it would be more appropriate to do it when the various Amendments have been considered than at this stage.

We have listened with great interest and some amusement to the acute differences of opinion on the other side of the Committee on what appears to be a substantial part of the financial proposals. We noted that this was only an exploratory Amendment, and we shall again watch with interest and with amusement whether the explorations of the hon. Member for Kidderminster (Mr. Nabarro) extend to the Lobby or are merely confined to this Chamber. It is a subject which we always follow with great attention, and, as I say, it is not without its amusing side.

I asked the Economic Secretary a question, but, as he had no notice of it, it is reasonable that he should make inquiries. I hope that he will do so, and that he or his right hon. and learned Friend will be able to answer that somewhat relevant question when we come to the debate on the Question "That the Clause stand part of the Bill".

For the moment I say no more than this. We have had two and a half hours of discussion. It is true that some of

my hon. Friends have taken part in it, but on the point of time I would point out that this was a split in the Tory Party, a Tory Amendment, and that most of the discussions, though not all, came from the benches opposite. We cannot be accused of having taken all that time.

Mr. Nabarro

It is true that when I moved the Amendment I prefixed my observations by saying that my views were to be of an exploratory character. But all exploration is surely for the purpose of making discoveries. There have been discoveries, as enunciated by my hon. Friend the Economic Secretary. I find those discoveries arid and unsatisfactory. I do not believe that they mitigate in any way the grievous affliction placed on British industry by this duty, and that is a view widely held outside this House. Notwithstanding the explanations, I must therefore express the view that I invite those Members of the Committee, on both sides of the House, who feel as I do to join me in the Division Lobby.

Question put, That "twopence" stand part of the Clause:—

The Committee divided: Ayes 226, Noes 7.

Division No. 171.] AYES [8.38 p.m.
Agnew, Sir Peter Chichester-Clark, R. Gardner, Edward
Aitken, W. T. Clark, William (Nottingham, S.) Gibson-Watt, David
Alan, Robert (Paddington, S.) Cleaver, Leonard Glyn, Dr. Alan (Clapham)
Allason, James Cole, Norman Glyn, Sir Richard (Dorset, N.)
Ashton, Sir Hubert Cooke, Robert Godber, J. B.
Atkins, Humphrey Cordeaux, Lt.-Col. J. K. Goodhart, Philip
Barber, Anthony Cordle, John Grant, Rt. Hon. William
Barlow, Sir John Corfield, F. V. Grant-Ferris, Wg Cdr. R.
Barter, John Courtney, Cdr. Anthony Green, Alan
Batsford, Brian Craddock, Sir Beresford Gresrram Cooke, R.
Baxter, Sir Beverley (Southgate) Critchley, Julian Grimston, Sir Robert
Beamish, Col. Sir Tufton Crosthwaite-Eyre, Col. O. E. Grosvenor, Lt.-Col. R. G.
Bell, Ronald Cunningham, Knox Gurden, Harold
Bennett, F. M. (Torquay) Currie, G. B. H. Hamilton, Michael (Wellingborough)
Bennett, Dr. Reginald (Gos & Fhm) Dance, James Harris, Frederic (Croydon, N. W.)
Bevins, Rt. Hon. Reginald (Toxteth) d'Avigdor-Goldsmid, Sir Henry Harrison, Brian (Maldon)
Biggs-Davison, John Deedes, W. F. Harrison, Col. J. H. (Eye)
Bingham, R. M. de Ferranti, Basil Hastings, Stephen
Bishop, F. P. Digby, Simon Wingfield Hay, John
Black, Sir Cyril Donaldson, Cmdr. C. E. M, Heald, Rt. Hon. Sir Lionel
Bossom, Clive Doughty, Charles Henderson, John (Cathcart)
Box, Donald Drayson, G. B. Hendry, Forbes
Boyd-Carpenter, Rt. Hon. John du Cann, Edward Hill, J. E. B. (S. Norfolk)
Boyle, Sir Edward Duncan, Sir James Hinchingbrooke, Viscount
Brewis, John Eden, John Hocking, Philip N.
Bromley-Davenport, Lt.-Col. Sir Walter Elliot, Capt. Walter (Carshalton) Holland, Philip
Brooman-White, R. Elliott, R. W. (Nwcstle-upon-Tyne, N.) Hollingworth, John
Brown, Alan (Tottenham) Emery, Peter Hopkins, Alan
Browne, Percy (Torrington) Errington, Sir Eric Hornby, R. P.
Bryan, Paul Farey-Jones, F. W. Hornsby-Smith, Rt. Hon. Patricia
Buck, Antony Farr, John Howard, Hon. G. R. (St. Ives)
Bullard, Denys Fell, Anthony Howard, John (Southampton, Test)
Butcher, sir Herbert Finlay, Graeme Hughes-Young, Michael
Campbell, Sir David (Belfast, S.) Fisher, Nigel Hulbert, Sir Norman
Campbell, Gordon (Moray & Nairn) Fletcher-Cooke, Charles Hurd, Sir Anthony
Cary, Sir Robert Fraser, Ian (Plymouth, Sutton) Hutchison, Michael Clark
Channon, H. P. G. Gammans, Lady Iremonger, T. L.
Irvine, Bryant Godman (Rye) Mills, Stratton Smithers, Peter
James, David Montgomery, Fergus Smyth, Brig. Sir John (Norwood)
Johnson, Eric (Blackley) More, Jasper (Ludlow) Soames, Rt. Hon. Christopher
Johnson Smith, Geoffrey Morgan, William Spearman, Sir Alexander
Kerans, Cdr. J. S. Morrison, John Speir, Rupert
Kerr, Sir Hamilton Mott-Radclyffe, Sir Charles Stanley, Hon. Richard
Kershaw, Anthony Oakshott, Sir Hendrie Stodart, J. A.
Kimball, Marcus Orr-Ewing, C. Ian Stoddart-Scott, Col. Sir Malcolm
Kirk, Peter Page, John (Harrow, West) Studholme, Sir Henry
Kitson, Timothy Page, Graham (Crosby) Sumner, Donald (Orpington)
Lambton, Viscount Partridge, E. Tapsell, Peter
Leburn, Gilmour Peel, John Taylor, Sir Charles (Eastbourne)
Lewis, Kenneth (Rutland) Percival, Ian Taylor, W. J. (Bradford, N.)
Lilley, F. J. P. Pickthorn, Sir Kenneth Temple, John M.
Lindsay, Martin Pike, Miss Mervyn Thatcher, Mrs. Margaret
Linstead, Sir Hugh Pott, Percival Thomas, Leslie (Canterbury)
Litchfield, Capt. John Price, David (Eastleigh) Thompson, Richard (Croydon, S.)
Lloyd, Rt. Hon. Selwyn (Wirral) Price, H. A. (Lewisham, W.) Thornton-Kemsley, Sir Colin
Loveys, Walter H. Prior, J. M. L. Tiley, Arthur (Bradford, W.)
Lucas-Tooth, Sir Hugh Prior-Palmer, Brig. Sir Otho Tilney, John (Wavertree)
McAdden, Stephen Proudfoot, Wilfred Turton, Rt. Hon. R. H.
MacArthur, Ian Pym, Francis Vane, W. M. F.
McLaren, Martin Quennell, Miss J. M. Vickers, Miss Joan
Maclay, Rt. Hon. John Ramsden, James Wakefield, Sir Wavell (St. M'lebone)
McLean, Neil (Inverness) Rawlinson, Peter Walder, David
MacLeod, John (Ross & Cromarty) Redmayne, Rt. Hon. Martin Walker, Peter
McMaster, Stanley R. Rees, Hugh Ward, Dame Irene
Macmillan, Rt. Hn. Harold (Bromley) Renton, David Webster, David
Macpherson, Niall (Dumfries) Ridley, Hon. Nicholas Whitelaw, William
Maddan, Martin Roberts, Sir Peter (Heeley) Wills, Sir Gerald (Bridgwater)
Maginnis, John E. Roots, William Wilson, Geoffrey (Truro)
Markham, Major Sir Frank Ropner, Col. Sir Leonard Wolrige-Gordon, Patrick
Marples, Rt. Hon. Ernest Russell, Ronald Woodhouse, C. M.
Marshall, Douglas Scott-Hopkins, James Woodnutt, Mark
Mathew, Robert (Honiton) Seymour, Leslie Woollam, John
Matthews, Gordon (Meriden) Shaw, M. Worsley, Marcus
Maudling, Rt. Hon. Reginald Shepherd, William Yates, William (The Wrekin)
Mawby, Ray Simon, Rt. Hon. Sir Jocelyn
Maydon, Lt.-Cmdr. S. L. C. Smith, Dudley (Br'ntf'rd & Chiswick) TELLERS FOR THE AYES:
Mr. E. Wakefield and Mr. F. Pearson.
Bowen, Roderic (Cardigan) Maxwell-Hyslop, R. J. Wade, Donald
Foot, Dingle (Ipswich) Rhodes, H.
Jones, Jack (Rotherham) Smith, Ellis (Stoke, S.) TELLERS FOR THE NOES:
Mr. Nabarro and Mr. Thorpe
Mr. Hilton

I beg to move, in page 2, line 23, to leave out "gas oils and kerosene" and to insert "and gas oils".

The Chairman

Perhaps it would be for the convenience of the Committee if we also discussed at the same time the Amendments, in line 23, after "kerosene", to insert: with the exception of kerosene and paraffin sold for domestic use which will continue to enjoy the rate of rebate of customs or excise duty as allowed under section one hundred and ninety-nine of the Customs and Excise Act, 1952". and in line 30, at the end to insert: Provided that this subsection shall not apply to kerosene.

Mr. Hilton

That would be convenient. Sir Gordon.

The Amendment does not refer specifically to domestic users of kerosene and paraffin, but it goes much wider in referring to gas oils. I wish to draw attention particularly to the adverse effect that the increase in the tax will have on many people less able to afford this additional burden. Yesterday, we discussed television advertising and I am reminded of that discussion because in several areas in my constituency people are unable to have television sets as they have no electricity in their homes.

The Chairman

Order. I hope that the hon. Member will not pursue that point too far.

Mr. Hilton

No, I merely use it as an illustration.

There is no supply of electricity, and so for all purposes these people must use paraffin or kerosene. They are already suffering a hardship without the additional burden which the Chancellor has decided to impose upon them. In a hamlet two miles from where I live, and two or three miles from the country home of the hon. Member for Sheffield, Heeley (Sir P. Roberts), there are fourteen or fifteen houses which still have no electricity supply at all.

The inhabitants there, who have been expecting the provision of an electricity supply for many years, have to continue to use paraffin for all purposes. I appreciate that about 90 to 92 per cent. of the population enjoys a supply of electricity, but I wish to refer to the other unfortunate 8 per cent. who do not.

A number of these people in my constituency are smallholders. They have to use paraffin lamps for lighting and we know the inconvenience and smell associated with a paraffin lamp and the poor light which it provides. They have to use oil stoves for cooking and nobody would suggest at this time that that is the best method of cooking. Their homes are heated by paraffin heaters as an alternative to coal. Paraffin heaters are found not only in rural areas, but in millions of homes all over the country. I frequently visit the homes of old-age pensioners who use oil heaters instead of coal fires, and they are among those people who will have to carry this additional burden. I know that it may be argued that 2d. a gallon is not much, but to these people living in the countryside, the old-age pensioners and those on the lower rungs of the wages ladder, 2d. a gallon means quite a lot, especially when several gallons a week have to be used.

When we come to outside work on some of these smallholdings, such as the hatching of chickens, the situation is all very well on a modern holding, which now has electrically heated incubators and that sort of thing, but the holdings to which I refer, and which I know personally, still have to have oil burning incubators. Today, nobody would suggest that this is the best method of producing chickens and other birds. The heating in the chicken houses, therefore has to be done by paraffin. Surely this is an outdated form of lighting and heating. It is bad enough that these people should still have to bear this burden, without having inflicted upon them this additional tax on oil.

On the land itself, many tractors still run on paraffin. I was talking to a smallholder as recently as Saturday of last week, and he asked me, "What am I going to do about the tax on paraffin?" He uses more than 1,000 gallons in his tractor every year. I told him that I intended making an appeal to the Chancellor on his behalf and on behalf of others suffering like him, and I therefore hope that the few examples which I have given have proved that those who from necessity have to use paraffin or kerosene must pay this additional tax.

I have said enough to show that, in my opinion, this is a bad tax, which will hit hardest the poorer section of the community, especially those living in rural areas, who will suffer from it. To impose this tax should give no pleasure to the Chancellor, and I hope that he will have second thoughts and not inflict it.

Mr. John Hall (Wycombe)

I find myself in complete agreement with everything that has been said by the hon. Member for Norfolk, South-West (Mr. Hilton). In my own constituency, I know that this tax will have some impact upon people who depend upon kerosene almost entirely, not only for heating, but in many cases for cooking and lighting as well.

It may seem odd that in a constituency only 30 or 40 miles from London people should still be in the position in which they cannot have some alternative form of heating or lighting, but there are a certain number of villages and hamlets in the Wycombe area which depend very largely on kerosene and paraffin for their heating. It seems to me that this series of Amendments also to some extent impinges on an Amendment in the name of my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins)—in line 30, at the end to insert: except in the case of diesel fuel and tractor vapourising oil sold for use by tractors and other implements for agricultural purposes, where a rate one-halfpenny a gallon less than the rate at which rebate of duty is allowed under section one hundred and ninety-nine of the Customs and Excise Act. 1952, shall apply —which deals with diesel fuel and tractor vapourising oil, because kerosene is also used for paraffin-burning tractors, and I want to deal with those two aspects.

I do not want to go over all the arguments used by the hon. Member for Norfolk, South-West (Mr. Hilton), but I want to underline them by pointing out that there are about 13 million paraffin heaters in use in this country, quite apart from cooking appliances. That fact should be borne in mind. The hon. Member for Norfolk, South-West will know more about tractors than I do, but I believe that 200,000 farm tractors also use kerosene. It does not seem right to introduce a tax which will largely penalise people who live in the country. They have quite a lot to contend with as it is, and I therefore plead with my right hon. and learned Friend to reconsider this tax and see whether it is not possible to relieve country dwellers of this additional burden.

9.0 p.m.

Mr. P. Browne

Since my Amendment is being discussed with the one that has been moved, I should also like to make a brief intervention.

I can put the reason for the Amendment in a nutshell by saying that it would not be necessary if we had 100 per cent. electrification of the countryside. The hon. Member for Norfolk, South-West (Mr. Hilton) spoke about the hamlets in his constituency which are without electricity. In the south-western area it is hoped that by 1964–65 electrification will have been carried to 85 per cent. of the farms and 95 per cent. of the rural properties generally.

In one part of my constituency, which comprises fourteen parishes and is better off than most, at the end of the financial year 1960 there was less than 55 per cent. electrification, and there are areas with less than 50 per cent. The only alternative available for light or heating is oil—paraffin, kerosene and the like. The people living there will be penalised by this tax.

The better-off farmers may have their own electricity plants, but the people who live in hamlets, villages and cottages have not, and it is because these and the lower-paid people—retirement pensioners and those who live on fixed incomes—will suffer most in my part of the country that I intend to support the Amendment.

Mr. Harold Davies

Most of the argument has been covered, but I want to add my support of the Amendment because, like other hon. Members who have spoken, my constituency does not have complete electrification. There are areas in North Staffordshire which, like the area referred to by the hon. Member for Wycombe (Mr. John Hall)—which is only 30 or 40 miles from London—have no alternative to paraffin or kerosene available. The greatest burden is thrown upon those who are least able to bear it. In my constituency there are 1,400 farms of 20 acres or less—merely smallholdings—whose tenants must make a living and who have no alternative to paraffin for lighting and sometimes for heating.

I am glad that a figure has been given in relation to tractors. Many people forget that some tractors are still driven by this fuel. I sincerely hope that the Chancellor will listen to the appeal which has been made from hon. Members on both sides of the Committee and see whether he can find a formula to remove this burden from people who are not as well off as others.

Mr. Maxwell-Hyslop

In my constituency there are also many houses which still have not mains electricity. Kerosene is used not only for lighting, but for heating. In the majority of cases these houses are very old, and are, therefore, very damp, and it is particularly necessary that they should have adequate heating. In many cases the only effective means at their disposal is kerosene or paraffin. It is no fault of their occupants that mains electricity has not yet been brought to them. It is not that they are unwilling to pay the cost of having it brought to them. It is merely that they have not yet been brought into the programme. In many cases they are unable to ascertain when they will be brought in.

I state emphatically that the Amendment should be accepted, because a kerosene tax inflicts a real hardship on people who suffer the misfortune of living in remote areas. Those of us who have to face the many problems which beset people in remote areas of the country have this particularly in mind.

Mr. Tom Brown (Ince)

I wish to support the five speeches which have been made in support of this Amendment. I do not know how the Chancellor is going to escape. There have been so many speeches from both sides of the Committee that I do not thing he can resist the plea which have been put forward.

I recall reading the story of a great man who had a great deal of trouble with the tribe he led. He went to a very wise man and asked him how he should solve the problem which confronted him. The wise man said, "If those wouldst understand them go thou and sit where they are sitting." If the Chancellor, or the department responsible for drafting this Clause, are to understand this problem they should go and sit where these people are sitting. Not through any fault of their's they have been denied the amenities which for a long time have been enjoyed by those living in towns and cities. How the Chancellor or the Treasury can come forward with a Clause of this character which will make it harder for old people I cannot understand. Surely it would not cost the Treasury much to give the concession asked for in this Amendment approximately £4 million.

Many times we have heard speeches to the effect that the Government are in favour of assisting the poorer sections of the community. Is this the way in which they propose to assist old-age pensioners? Do they mean what is said in this Clause? I do not advance any argument about the cost of living for old-age pensioners, but I suggest that if the Government and the Chancellor want to help old folks this is an opportunity to apply their minds, not so much to the £ s. d. part of the problem, but to its humanitarian aspect. These people for a long period have been denied the ordinary amenities enjoyed in towns and cities. For how long are we to deny them those amenities? How long are we to allow them to live under present conditions and to make it harder for them to endure those conditions?

I plead with the Chancellor to accept this Amendment. It would not apply to everyone, but only to a certain section of the community who are hard hit. Surely the Treasury can afford the small concession which is asked for. I support the Amendment strongly, I hope the Chancellor will yield, not only to the pleas put from this side of the Committee, but by his hon. Friends on the Government side.

Mr. Scott-Hopkins

I wish this Amendment applied only to old people or in the areas such as my hon. Friend the Member for Torrington (Mr. P. Browne) referred to in the West Country. Unfortunately, it goes much wider. If it applied only to old people who have no other means than kerosene for heating or lighting their homes, I would support it to the hilt, but it goes much wider and applies to other forms of the use of kerosene. I underline the pleas made by my hon. Friends the Members for Torrington (Mr. P. Browne) and Tiverton (Mr. Maxwell-Hyslop). For areas which have not had full electrification some concession should be considered later.

I appreciate that this Amendment does not cover the point. I wish that it confined itself more closely to the old people and to areas which have not the benefit of electricity and rely entirely on kerosene for heating and lighting. If it did, I should support it wholeheartedly.

Mr. Fell

May I make a vary short plea to my right hon. and learned Friend? The hon. Member for Norfolk, South-West (Mr. Hilton) was right to put the Amendment down. I do not suppose that there has ever been a Finance Bill which the Chancellor has not altered in some respect in Committee. Perhaps it is a pity for the Chancellor to be born with a heart. If he had no heart he would not be badgered so much. Nevertheless, I add a plea to which I hope he will listen, and I hope that he will make a concession, if it does not cost him too much. I refer particularly to the plea made by my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins) that some way should be found to give relief to those who will be hardest hit and who can least bear it.

Mr. Mitchison

We on this side of the Committee are unanimous in support of the Amendment and we seem to have a great deal of support on the Conservative benches, for only one hon. Member opposite has objected to the Amendment, and that was on grounds which I found a little difficult to follow; it was because he had another Amendment later which is more limited in scope and he would rather have supported his Amendment than ours.

Be that as it may, we are concerned with about 1½ million tons a year out of a total consumption of about 50 million tons of oil products. To put it in terms of tax, I imagine that the Chancellor will give us a figure of about £1 million to £1½ million out of the £47 million to £49 million which he hopes to raise by the tax. From the Treasury's point of view, therefore, it is an inconsiderable part of the total tax, but from the point of view of the life of the community it has points of its own which distinguishes it from the other taxes which we have been considering today.

Broadly, this is not a matter which affects industry on a large scale. It affects paraffin for tractors in the country, although I understand that the use for that purpose has on the whole been diminishing. What is more important and what, curiously enough, represents a growing use is its use for both heat and light in quite small houses in rural areas occupied by people who are not well off.

We have put down an Amendment to exempt kerosene for the simple reason that, while we have no objection to doing it in other cases, it seemed to us that this was the only possible way to do it practically. I do not see how, as a matter of practical administration, we could deal with kerosene destined for one use or another, but it is a distinguishable part of the general category known as heavy oils, it is defined in the Customs and Excise Act as one category of heavy oils and there ought to be no serious difficulty, if the Chancellor is so minded, in having effective machinery for allowing it to continue free of duty, as it is at present.

I do not want to add much to what hon. Members on both sides of the Committee have said, but I would point out that I, too, have a considerable rural area in my constituency. There are still places, even in a very well developed county like Northamptonshire, where there is no electric light. They are getting fewer and fewer, but they are still there. They tend to have as inhabitants people who are villagers in the strictest sense of the word, not people who will find jobs in neighbouring towns. They are very often oldish people. Their resource has to be in practice kerosene for both heat and light.

9.15 p.m.

It would be very sad if for the sake of some apparent completeness—it is a small sum—we were to tax these people at the moment. I cannot see that any conceivable national purpose would be served by it. I do not think that the amount involved is sufficient to entitle us to say that this must be done as their contribution towards the common burden. I feel, with those hon. Members who have already spoken, that when discussing the imposition of a common burden these people are particularly entitled to consideration and not bound to bear their share in the same disproportionate way in which they will have to bear it if kerosene is to be taxed in this way.

On this Amendment I shall not go into the general question of health charges. There has been talk of a poll tax on the community and the objection to it has been that it comes so hard on people who are badly off and living in difficult circumstances. Exactly the same can be said about the tax on kerosene, and with even more force. The right hon. and learned Gentleman would do the public interest no harm and would meet the wishes of both sides of the Committee if he was able to make this concession. There have been very few Chancellors of the Exchequer who at one stage or another in the discussion of a Finance Bill have not given away something. To have the reputation of being the Chancellor of the Exchequer who refused to make any concession, and refused to make it in this case, is something which I am certain the right hon. and learned Gentleman would not wish for himself and would not even wish for his party.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd)

This is an important Amendment and it has been argued on both sides of the Committee very reasonably and moderately. The first proposition with which I have to deal is that it is wrong to tax kerosene at all. I entirely agree with the hon. and learned Member for Kettering (Mr. Mitchison) that it is not possible to distinguish. It is either all kerosene or no kerosene. The cost of the concession would be £4 million. In addition, there would be certain consequential switchings and mixings, so that the real cost to the Exchequer would be a good deal more than £4 million

Therefore, I have to ask my hon. Friends and other hon. Members of the Committee to look at the purpose of the duty as a whole, its contribution to the soundness of the economy, and the purpose of trying to widen the basis of indirect taxation. In that context, I do not think that I can accept the diminution of the yield of this duty by as much as I have said.

The other argument is that it will bear very hardly on the poorer sections of the community. The hon. Member for Norfolk, South-West (Mr. Hilton) made that point, as did the hon. Member for Ince (Mr. T. Brown)—I do not call him my hon. Friend, although I have known him for a long time—with his customary sincerity.

Mr. T. Brown

It is a correct point.

Mr. Lloyd

He made it on the grounds of humanity. No one likes putting a tax on. I dislike all taxes. Before considering this tax I tried to go into the pros and cons, because I was conscious of the points which I thought that my hon. Friends and hon. Members like the hon. Member for Ince would advance. I tried to make an estimate of what would be the hardship involved. I am told that if kerosene is used in a small house for lighting and cooking, the probable consumption is about two gallons a week. That is 4d. a week.

If it is also used for heating—and it is not much used for heating in the country—an extra three to six gallons a week might be consumed. If it is the sole fuel for lighting cooking and heating, the average consumption would probably be about six gallons a week, which means, on an average for the year, 1s. a week. If we compare that with the increases in the prices of electricity and of coal this is not really a disproportionate or unreasonable burden. The sales manager of one of the concerns involved in the marketing of paraffin heaters has said that even after this increased tax paraffin would still be the cheapest domestic fuel. I think that that is true, and I do not think that the burden will be disproportionate.

As I say, I dislike to have to put an extra burden on anyone, particularly on those who are the poorer section of the community but, having regard to the whole state of the economy one has to do what one thinks is right, and get a proper balance. The cost of this concession is far greater than I feel able to agree to and, having made such inquiries as I could, and having received such expert advice as is available, I do not think that the hardship will be disproportionate.

Mr. Hilton

I ask the Chancellor to turn over the suggestion made by my hon. Friend the Member for Ince (Mr. T. Brown). The right hon. and learned Gentleman says that he has made all sorts of inquiries; I suggest that for just a weekend or a week he stays in one of the hamlets where, for cooking, heating, lighting and the like there is only paraffin and kerosene. If he were not only to stay there but filled the lamps, attended to the burners and the stoves, trimmed the wicks and all the rest of it, I am sure that he would change his mind. He has not turned this down very emphatically so far. He has said that £4 million is more than he can concede at present, but he is given several times £4 million to the Surtax payers, and that will help only a very small section of the population. I can assure the Chancellor that to accede to our request would do a good turn to hundreds of thousands of people.

The right hon. and learned Gentleman has told the Committee that his information is that perhaps in extreme cases up to six gallons of paraffin are used per week. Six gallons at an extra 2d. amounts to a shilling, and I can assure him that that shilling makes all the difference to these old people, especially when they are spending right up to the hilt as they have to do at present. I appeal to him to accept the suggestion to experience life in one of these hamlets for himself, to reconsider his decision, and to accept the Amendment.

Mr. John Hall

I wish to put to my right hon. and learned Friend only two short points. First, I believe that a great deal of kerosene is used in the aviation industry for turbine fuel. That must account for quite a considerable proportion of the oil used. I should have thought that it would have been possible to separate that fuel from kerosene used for domestic purposes, or even for tractors.

Secondly, I want to query the figures given to him about the amount of oil consumed in the average small cottage in the country. I have a small cottage in the country. It has electric light and power, but because the electric power is very poor I have to supplement it with oil heating. The two or three heaters I use during the winter consume nearly 20 gallons of oil each week. It is, therefore, hard to believe that all the cooking, heating and lighting in a cottage can be done on six gallons a week.

Mr. T. Brown

I hope we have not had the last word from the Chancellor on this matter. This is an important Amendment. I am not going to accuse the Chancellor for lacking in humanitarianism because the Treasury has the wrong approach in its dealings with the poorest section of the community.

I listened with rapt attention to the way in which the Chancellor calculated, at the rate of 2d. per gallon, how this tax will affect people and how he reached his final calculation of 1s. based on, what he considers, to be the maximum amount of paraffin that is used in a cottage. He said that the maximum would be about six gallons a week. Thus, 6 by 2d. equals 12—and he arrived at the figure of 1s. But the Chancellor has not realised that many of these people are at rock bottom, and they just do not have that 1s. to spare.

I could give an example of how people do not have 1s. to spare, but I would be out of order in doing so. But I must mention, in passing, that I know of an old-age pensioner's home in which an electric light bulb failed—and that occurrence represented an economic crisis in that household. The pensioner concerned had to wait until the following pension day until he could replace the bulb. I will not enlarge on that, except to say that, by the Amendment, the Treasury is provided with an opportunity of helping the poorest of the poor.

It is easy to calculate this tax on the basis of it being merely an extra 1s. But I ask the Chancellor to remember that for people who just do not have that extra 1s., it is an altogether different proposition. If the people responsible for the drafting of this Clause, which hon. Members have attempted to amend, would leave their cosy offices in Whitehall and would go into the countryside to spend a week or two, or even a day, in the conditions in which these unfortunate people have to live, they would soon change their conception of things generally

I plead once again with the Chancellor because, although he says it will cost £4 million to grant this concession, what is £4 million compared with the tremendous amounts of money that we are spending on armaments and in other directions? I urge the Chancellor to concede this on behalf of the old people, in particular, because this is a concession to which hon. Members on both sides of the Committee think they are entitled.

Mr. William Hamilton (Fife, West)

I cannot let this Amendment go by without first challenging the statement of the Chancellor. When I listened to him I thought that I was living in an "Alice-in-Wonderland" world. The Chancellor has tried to tell hon. Members that the economy of the country depends on the rejection of the Amendment. His objection to the Amendment seemed to rest on this argument that its acceptance would jeopardise the economy. The remainder of his argument was that 1s. a week did not matter very much, anyway.

May I remind the Chancellor that whether or not 1s. is important depends on one's income. If one's income is 57s. 6d. a week, which is the old-age pensioner's income, the new tax represents an increase of 2 per cent.—and that is accepting the Chancellor's figures. This is just another increase that these unfortunate people have sustained in recent weeks. It was only 10d. a week in the case of National Health Service contributions. It was only 1s. per item increase on prescription charges. It is only a few coppers here or a few shillings there, and all that these people are told by the Chancellor is that it does not really matter.

It matters a great deal to the people about whom we are speaking and who we represent. That is why we are making a strong protest at the attitude of the Chancellor when he pretends that the economy must be geared and must depend on this kind of charge.

I could give the Chancellor a thousand instances of how he could raise this £4 million with less injustice, and I hope that he will shake up both himself and his Department and find a socially better way of raising this money.

9.30 p.m.

Mr. Mitchison

I heard the right hon. and learned Gentleman's statement. I have no doubt that the figure of £4 million is correct. It is rather less than one-tenth of the total yield of the tax. The right hon. and learned Gentleman is being perfectly consistent by categories of heavy oils. What he has got wrong is the impact of the tax on various groups of people.

As my hon. Friend the Member for Fife, West (Mr. W. Hamilton) has said, it is one increase after another for the folk who still have to use kerosene in lamps and for heating. This is too much. Socially, it is wrong. If the Chancellor

cannot do anything about it, those hon. Members opposite who agree with us about the human side will have the courage, as I know they have the sincerity, for once to force the Chancellor and the Government to do what is right by a group of people who particularly need their protection.

Question put, That "gas oils and kerosene" stand part of the Clause:—

The Committee divided: Ayes 233, Noes 181.

Division No. 172.] AYES [9.32 p.m.
Agnew, Sir Peter Elliott, R. W. (Nwcastle-upon-Tyne, N.) Lindsay, Martin
Aitken, W. T. Emery, Peter Linstead, Sir Hugh
Allan, Robert (Paddington, S.) Errington, Sir Eric Litchfield, Capt. John
Allason, James Farey-Jones, F. W. Lloyd, Rt. Hon. Selwyn (Wirral)
Ashton, Sir Hubert Farr, John Longden, Gilbert
Atkins, Humphrey Finlay, Graeme Loveys, Walter H.
Barber, Anthony Fisher, Nigel Lucas-Tooth, Sir Hugh
Barlow, Sir John Fletcher-Cooke, Charles McAdden, Stephen
Barter, John Fraser, Ian (Plymouth, Sutton) MacArthur, Ian
Batsford, Brian Gammans, Lady McLaren, Martin
Baster, Sir Beverley (Southgate) Gardner, Edward Maclay, Rt. Hon. John
Beamish, Col. Sir Tufton Gibson-Watt, David McLean, Neil (Inverness)
Bell, Ronald Glyn, Dr. Alan (Clapham) MacLeod, John (Ross & Cromarty)
Bennett, F. M. (Torquay) Glyn, Sir Richard (Dorset, N.) McMaster, Stanley R.
Bennett, Dr. Reginald (Gos & Fhm) Godber, J. B. Macmillan, Rt. Hn. Harold (Bromley)
Bevins, Rt. Hon. Reginald (Toxteth) Goodhart, Philip Macpherson, Niall (Dumfries)
Biggs-Davison, John Grant, Rt. Hon. William Madden, Martin
Bingham, R. M. Grant-Ferris, Wg Cdr. R. Maginnis, John E.
Birch, Rt. Hon. Nigel Green, Alan Markham, Major Sir Frank
Bishop, F. P. Gresham Cooke, R. Marshall, Douglas
Black, Sir Cyril Grimston, Sir Robert Matthews, Gordon (Meriden)
Bossom, Clive Grosvenor, Lt.-Col. R. G. Maudling, Rt. Hon. Reginald
Box, Donald Gurden, Harold Mawby, Ray
Boyd-Carpenter, Rt. Hon. John Hamilton, Michael (Wellingborough) Maydon, Lt.-Cmdr. S. L. C.
Boyle, Sir Edward Harris, Frederic (Croydon, N. W.) Mills, Stratton
Brewis, John Harris, Reader (Heston) Montgomery, Fergus
Bromley-Davenport, Lt.-Col. Sir Walter Harrison, Brian (Maldon) More, Jasper (Ludlow)
Brooman-White, R. Harrison, Col. J. H. (Eye) Morgan, William
Brown, Alan (Tottenham) Harvie Anderson, Miss Morrison, John
Bryan, Paul Hastings, Stephen Mott-Radclyffe, Sir Charles
Buck, Antony Hay, John Nabarro, Gerald
Bullard, Denys Heald, Rt. Hon. Sir Lionel Oakshott, Sir Hendrie
Burden, F. A. Henderson, John (Cathcart) Orr-Ewing, C. Ian
Butcher, Sir Herbert Hendry, Forbes Page, John (Harrow, West)
Campbell, Sir David (Belfast, S.) Hinchingbrooke, Viscount Page, Graham (Crosby)
Campbell, Gordon (Moray & Nairn) Holland, Philip Pannell, Norman (Kirkdale)
Carr, Compton (Barons Court) Hollingworth, John Partridge, E.
Cary, Sir Robert Hopkins, Alan Pearson, Frank (Clitheroe)
Channon, H. P. G Hornby, R. P. Peel, John
Clark, William (Nottingham, S.) Hornsby-Smith, Rt. Hon. Patricia Percival, Ian
Clarke, Brig. Terence (Portsmth, W.) Howard, Hon. G. R. (St. Ives) Pickthorn, Sir Kenneth
Cleaver, Leonard Howard, John (Southampton, Test) Pike, Miss Mervyn
Cole, Norman Hughes-Young, Michael Pilkington, Sir Richard
Cooke, Robert Hulbert, Sir Norman Pott, Percivall
Cordeaux, Lt.-Col. J. K. Hurd, Sir Anthony Price, David (Easteigh)
Corfield, F. V. Hutchison, Michael Clark
Courtney, Cdr. Anthony Iremonger, T. L. Price, H. A. (Lewisham, W.)
Craddock, Sir Beresford Irvine, Bryant Godman (Rye) Prior, J. M. L.
Critchley, Julian James, David Proudfoot, Wilfred
Crosthwaite-Eyre, Col. O. E. Johnson, Eric (Blackley) Pym, Francis
Cunningham, Knox Johnson Smith, Geoffrey Quennell, Miss J. M.
Currie, G. B. H. Jones, Rt. Hn. Aubrey (Hall Green) Ramsden, James
d'Avigdor-Goldsmid, Sir Henry Kerans, Cdr. J. S. Rawlinson, Peter
Deedes, W. F. Kerr, Sir Hamilton Redmayne, Rt. Hon. Martin
de Ferranti, Basil Kershaw, Anthony Rees, Hugh
Digby, Simon Wingfield Kimball, Marcus Rees-Davies, W. R.
Donaldson, Cmdr. C. E. M. Kirk, Peter Renton, David
Doughty, Charles Kitson, Timothy Ridley, Hon. Nicholas
Drayson, G. B. Lagden, Godfrey Roberts, Sir Peter (Heeley)
du Cann, Edward Lambton, Viscount Roots, William
Duncan, Sir James Leburn, Gilmour Ropner, Col. Sir Leonard
Eden, John Lewis, Kenneth (Rutland) Russell, Ronald
Elliot, Capt. Walter (Carshalton) Lilley, F. J. P. Shaw, M.
Shepherd, William Temple, John M. Ward, Dame Irene
Simon, Rt. Hon. Sir Jocelyn Thatcher, Mrs. Margaret Webster, David
Smith, Dudley (Br'ntf'rd Chiswick) Thomas, Leslie (Canterbury) Whitelaw William
Smithers, Peter Thompson, Richard (Croydon, S.) Williams, Paul (Sunderland, S.)
Smyth, Brig. Sir John (Norwood) Thornton-Kemsley, Sir Colin Wills, Sir Gerald (Bridgwater)
Soames, Rt. Hon. Christopher Tiley, Arthur (Bradford, W.) Wilson, Geoffrey (Truro)
Spearman, Sir Alexander Tilney, John (Wavertree) Wise, A. R.
Speir, Rupert Turton, Rt. Hon. R. H. Wolrige-Gordon, Patrick
Stanley, Hon. Richard Tweedsmuir, Lady Woodhouse, C. M.
Steward, Harold (Stockport, S.) Vane, W. M. F. Woodnutt, Mark
Stodart, J. A. Vickers, Miss Joan Woollam, John
Stoddart-Scott, Col. Sir Malcolm Wakfield, Edward (Derbyshire, W.) Worsley, Marcus
Studholme, Sir Henry Wakefield, Sir Wavell (St. M'lebone) Yates, William (The Wrekin)
Sumner, Donald (Orpington) Walder, David
Tapsell, Peter Walker, Peter TELLERS FOR THE AYES:
Taylor, W. J. (Bradford, N.) Walker-Smith, Rt. Hon. Sir Derek Mr. Chichester-Clark and
Mr. J. E B. Hill.
Ainsley, William Griffiths, W. (Exchange) Popplewell, Ernest
Allaun, Frank (Salford, E.) Hale, Leslie (Oldham, W.) Probert, Arthur
Allen, Scholefield (Crewe) Hall, Rt. Hn. Glenvil (Colne Valley) Rankin, John
Awbery, Stan Hamilton, William (West Fife) Redhead, E. C.
Bacon, Miss Alice Hannan, William Reid, William
Baxter, William (Stirlingshire, W.) Hart, Mrs. Judith Reynolds, G. W.
Bence, Cyril (Dunbartonshire, E.) Henderson, Rt. Hn. Arthur (Rwly Regis) Roberts, Albert (Normanton)
Boardman, H. Herbison, Miss Margaret Roberts, Goronwy (Caernarvon)
Bowden, Herbert W. (Leics, S.W.) Hill, J. (Midlothian) Robertson, John (Paisley)
Bowen, Roderic (Cardigan) Hilton, A. V. Robinson, Kenneth (St. Pancras, N.)
Bowles, Frank Holman, Percy Rogers, G. H. R. (Kensington, N.)
Boyden, James Houghton, Douglas Ross, William
Brockway, A. Fenner Howell, Denis (B'ham, Small Heath) Short, Edward
Broughton, Dr. A. D. D. Hughes, Cledwyn (Anglesey) Silverman, Sydney (Nelson)
Brown, Thomas (Ince) Hughes, Emrys (S. Ayrshire) Skeffington, Arthur
Browne, Percy (Torrington) Hughes, Hector (Aberdeen N.) Slater, Mrs. Harriet (Stoke, N.)
Butler, Herbert (Hackney, C.) Hunter, A. E. Slater, Joseph (Sedgefield)
Butler, Mrs. Joyce (Wood Green) Hynd, H. (Accrington) Small, William
Callaghan, James Irvine, A. J. (Edge Hill) Smith, Ellis (Stoke, S.)
Castle, Mrs. Barbara Irving, Sydney (Dartford) Snow, Julian
Chetwynd, George Janner, Sir Barnett Sorensen, R. W.
Cliffe, Michael Jay, Rt. Hon. Douglas Soskice, Rt. Hon. Sir Frank
Collick, Percy Jones, Dan (Burnley) Spriggs, Leslie
Craddock, George (Bradford, S.) Jones, Jack (Rotherham) Steele, Thomas
Crossman, R. H. S. Jones, J. Idwal (Wrexham) Stewart, Michael (Fulham)
Cullen, Mrs. Alice Jones, T. W. (Merioneth) Stonehouse, John
Darling, George Kenyon, Clifford Stones, William
Davies, Harold (Leek) Key, Rt. Hon. C. W. Strachey, Rt. Hon. John
Davies, Ifor (Gower) King, Dr. Horace Stross, Dr. Barnett (Stoke-on-Trent, C.)
Davies, S. O. (Merthyr) Lawson, George Sylvester, George
Deer, George Lee, Frederick (Newton) Symonds, J, B.
de Freitas, Geoffrey Lever, Harold (Cheetham) Taylor, Bernard (Mansfield)
Delargy, Hugh Logan, David Taylor, John (West Lothian)
Dempsey, James Loughlin, Charles Thompson, Dr. Alan (Dunfermline)
Diamond, John Mabon, Dr. J. Dickson Thorpe, Jeremy
Dodds, Norman MacColl, James Timmons, John
Donnelly, Desmond McInnes, James Tomney, Frank
Dugdale, Rt. Hon. John McKay, John (Wallsend) Ungoed-Thomas, Sir Lynn
Ede, Rt. Hon. C. Mackie, John Wade, Donald
Edelman, Maurice MacMillan, Malcolm (Western Isles) Wainwright, Edwin
Edwards, Rt. Hon. Ness (Caerphilly) MacPherson, Malcolm (Stirling) Warbey, William
Edwards, Robert (Bilston) Mallalieu E. L. (Brigg) Watkins, Tudor
Edwards, Walter (Stepney) Manuel, A. C. Weitzman, David
Evans, Albert Mapp, Charles White, Mrs. Eirene
Fernyhough, E. Marquand, Rt. Hon. H. A. Whitlock, William
Finch, Harold Mason, Roy Wilkins, W. A.
Fitch, Alan Maxwell-Hyslop, R. J. Willey, Frederick
Fletcher, Eric Millan, Bruce Williams, D. J. (Neath)
Foot, Dingle (Ipswich) Mitchison, G. R. Williams, LI. (Abertillery)
Foot, Michael (Ebbw Vale) Moody, A. S. Williams, W. T. (Warrington)
Forman, J. C. Neal, Harold Willis, E. G. (Edinburgh, E.)
Fraser, Thomas (Hamilton) Noel-Baker, Francis (Swindon) Wilson, Rt. Hon. Harold (Huyton)
Gaitskell, Rt. Hon. Hugh Oliver, G. H. Woodburn, Rt. Hon. A.
Galpern, Sir Myer Oswald, Thomas Woof, Robert
George, Lady Megan Lloyd (Crmrthn) Padley, W. E. Wyatt, Woodrow
Ginsburg, David Pannell, Charles (Leeds, W.) Yates, Victor (Ladywood)
Gooch, E. G. Pargiter, G. A. Zilliacus, K.
Gordon Walker, Rt. Hon. P. C. Parker, John
Gourlay, Harry Parkin, B. T. TELLERS FOR THE NOES:
Greenwood, Anthony Pavitt, Laurence Mr. Charles Howell and
Grey, Charles Pearson, Arthur (Pontypridd) Mr. McCann.
Griffiths, David (Rother Valley) Pentland, Norman
Sir D. Walker-Smith

I beg to move, in page 2, line 30, at the end to insert: Provided that this section shall not apply to heavy oils used for heating glasshouses growing in commercial quantities horticultural produce as defined in subsection (1) of section eight of the Horticulture Act, 1960. The Amendment has secured the support of a large, varied, and representative assembly of my hon. Friends. In addition to those whose names now appear on the Notice Paper, or whose names have previously appeared on the Notice Paper, I am asked by my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens), whom indisposition keeps from the Committee this week, to say that it also has his support, and I am glad to be able to say it, particularly because of his great expertise in matters of taxation and finance.

As my right hon. and learned Friend knows, and as the Committee knows, I have some reservations as to the economic efficacy of the fuel oil tax as such, but they do not, of course, arise in the context of this Amendment.

In moving the Amendment, I am assuming that this tax is an integral part of the Bill and that my right hon. and learned Friend can, if he so wishes, as I hope he will, accept the Amendment, or the spirit of it, without in any way derogating from his view that the tax as a whole is economically necessary and appropriate. I think that on principle most of us are not particularly enamoured of exemptions for particular interests or industries from general taxation. It is a good general principle that the weight of general taxation should be felt by all, but it is our submission in this case that the particular circumstances of horticulture merit an exemption from the incidence of this tax.

In making that submission, I feel that there are two aspects of the matter with which one should appropriately deal. First, is it constitutionally appropriate and is it economically practicable from the Chancellor's point of view that there should be an exemption from this general tax for this particular industry? Secondly, we are concerned with the actual circumstances of the particular industry as going to that general point.

9.45 p.m.

On the first of those two matters, I think that the answer both to the consti- tutional aspect and to the economic aspect is "Yes"

Constitutionally, there are respectable precedents for an exemption from heavy oil tax. They exist, for example, in the exemption of fishing boats and ships in coastal waters, and, indeed, there may be others. These particular exemptions are enshrined in the Customs and Excise Act, 1952. Though the Act is only nine years old it was, of course, a consolidating Act, and therefore these are precedents of reasonable antiquity.

The point of economic practicability that has to be looked at is in relation to the proportion that the yield from the fuel tax on nurseries would bear to the whole of the Budget surplus which the Chancellor wants to have to safeguard our balance of payments and to counter inflation. The whole of the Budget surplus is £506 million. The estimated yield of this tax is rather under 10 per cent. of that, at £50 million, and, as we have heard this afternoon, the agricultural share of that is something over £2 million.

Until my right hon. and learned Friend the Chancellor gives his estimate, I am not in a position to tell the Committee the exact figure in relation to horticulture, but I should be very surprised if it were more than half-a-million pounds and would not be surprised if it were appreciably less. But taking that top figure of half-a-million pounds, the proportion that the nursery share of the tax would bear to the whole of the required Budget surplus would be the proportion of half-a-million pounds to £500 million. If, unlike Lord Randolph Churchill, I am not confused about the dots, the percentage is 0.1 per cent. If the lower figure of about a quarter of a million pounds turns out to be the more accurate, the proportion is not 0.1 per cent. but 0.05 per cent.

If I may turn from mathematics, with which I am only imperfectly acquainted, to the language of the law which I understand a little better and which my right hon. and learned Friend understands very well indeed, such a percentage is clearly de minimis in the context of the major economic aims that my right hon. and learned Friend has before him in the Budget. Turning to the actual circumstances of the horticultural industry in this context, first and foremost is the fact that the proportion borne by fuel costs to the total costs of the industry is remarkably high and, I would have thought, much higher probably than in any other industry. The importance of this, of course, is apparent when the general context of the matter is borne in mind, and my right hon. and learned Friend told the Committee in his Budget statement that the average addition to the industrial on-cost of the fuel oil tax is only 1 per cent.

Mr. Selwyn Lloyd

A fraction of 1 per cent.

Sir D. Walker-Smith

I am much obliged. My right hon. and learned Friend, with his characteristic fair-mindedness, has reinforced my argument.

Mr. Lloyd

It is one-fifth of 1 per cent.

Sir D. Walker-Smith

Now we contrast that figure with the figure in the horticultural industry. Fuel costs, second only to labour costs, are the principal costs of the horticultural industry. On the average, about 30 per cent. of the total industrial costs in horticulture arise from fuel. Now, the addition to its fuel costs is in the nature of 25 per cent., which arises from these facts. The heavy oil used for the heating of glass-houses is at 8d. per gallon in the cheapest grade, ranging to just under 1s. a gallon.

In the circumstances of the horticulture industry, hon. Members will not be surprised to know that a large amount of it is necessarily of the cheapest quality at 8d. a gallon. The addition of a tax of 2d. on 8d. means a figure of 25 per cent.—and 25 per cent. of 30 per cent. is 7½ per cent. So we have the contrasts—0.2 per cent. for industry as a whole and 7½ per cent. for horticulture. That puts more clearly than any eloquence of language could, even if I were possessed of it, the strength of the case in that context for giving this concession.

The case is reinforced by the fact that the addition of this cost would aggravate the industry's difficulties in facing international competition, which are already severe. The Dutch, for instance, are perhaps our main horticultural competitors, and they already get the same grade of oil cheaper than we do in this country; and if our horticulturists have to pay the extra 2d. a gallon it will about double the disadvantage under which they already labour, in regard to fuel costs, against Dutch competition.

They cannot assume that further burden, in view of the fact that the Dutch already have the advantage of lower labour costs and longer working hours. For example, in the summer growing season, overtime rates in the Netherlands do not start until 52 hours a week have been worked, and there are certain basic disadvantages under which our industry already labours. If it has to bear the full impact of this tax, it will be a case of heaping Pelion upon Ossa. [HON. MEMBERS: "Hear, hear."] I am, a little more at home with the classics than with mathematics.

It is not only in international competition that horticulture is at a disadvantage. Here at home it is, in a sense, the odd man out, inasmuch as, unlike the rest of agriculture, it does not come within the main framework of the support price system of the Agriculture Acts or within the Annual Price Review. So that the considerations which arose, in the earlier Amendments to this Clause, of the adjustment of costs in the Review do not apply in this context.

That again seems a very strong reason for applying exceptional treatment in this case, because the strongest of cases is an exception within an exception, Agriculture is itself an exception in the general context of industry, and that has been recognised by all parties over the years. But horticulture is an exception even within that exception because of the reasons I have just adduced.

There is one other reason which I will mention briefly because it is in the minds of many growers today. That is the question that many of them converted to oil, thinking, at any rate, that they were thereby doing what the Government wanted. I shall not go into the refinements of this matter concerning the precise degree of exhortation and encouragement which they have received from successive Governments over the years—whether there should be drawn a distinction between expressly exhorting people to convert to oil and merely exhorting them to improve their heating installations by certain methods including that of oil. These, I think, are matters of semantics——

Mr. Jay


Sir D. Walker-Smith

Semantics. It is a subject, one of the few, in which the right hon. Gentleman the Member for Battersea, North (Mr. Jay) is an expert. Having said that, it is only fair to add that I do not really mean it. I have a high regard for the right hon. Gentleman.

The important thing is the impression left on the minds of the growers, and the fact is that many of them who have installed these oil-fired installations would not have done so had they thought there was any danger of this added tax. When one is thinking what exhortation means my right hon. and learned Friend, who had such a distinguished career in my own profession, will recall the old case which turned on the proper construction of the words used by the leader to the rioters, "Don't throw the bailiff in the pond." The bailiff was duly thrown into the pond and it was held that the right way to judge the real significance of the words was by the action which they induced rather than the form in which they were spoken.

I make that point because I think it of some significance that the growers have expended money in taking a course which they thought in line with what the Government wanted and what was economically appropriate. There is undoubtedly a feeling in their minds that if this tax is put on they have, to some extent, been put in a false position. But I believe this is a very strong case without that, strong for the reasons I have given. I hope they will commend themselves to my right hon. and learned Friend and that he will be able to tell us that he accepts the spirit of the Amendment. I do not say necessarily the form of words. I think I speak for my hon. Friend when I say that we have no obstinate pride of draftsmanship in this matter. Perhaps he will say that he accepts the spirit of the Amendment or at any rate that he will give sympathetic consideration to it between now and Report stage. In that sure hope and strong conviction I beg to move the Amendment.

Dr. Horace King (Southampton, Itchen)

It is a pleasure to support the Amendment so ably moved by the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith). So well has he stated the case that I think other hon. Members taking part in the debate will have nothing to add to the arguments he has given to the Committee and will probably repeat them, though none of us will be able to emulate him in the range and wit with which he presented them. We shall not be able to follow the right hon. and learned Gentleman into the realms of higher mathematics, vulgar fractions and classical allusions; and at one time when he talked about semantics I thought that he was about to discuss the meaning of meaning.

The right hon. and learned Gentleman has stated a powerful case. I believe that there are sufficient hon. Members on each side of the Committee to appeal to the Chancellor of the Exchequer to realise that whatever the merits of the fuel tax the impact that it makes on the horticultural industry is out of all proportion to its impact on any other industry in gravity, and that the horticultural industry has a right to feel that during the years it has been neglected; and that from both sides of the Committee there is a strong appeal to the Chancellor that, whatever the cost of the concession we are asking him to make, it means far more to the horticultural industry than it can mean in financial loss to the Chancellor.

Quite frankly, I speak out of my field tonight, but I have been approached by the Hampshire horticultural industry to plead its case in this debate. My friends in Hampshire who are interested in the glasshouse production of food tell me that the effect of this tax will be an additional cost of about £300 to £400 an acre, and that whereas the impact on other industries—and I hope to give the Committee some figures about that—will be not minimal, but certainly insignificant compared with what it is in this industry, the fuel heating of the glasshouse industry represents one-fifth of the cost. Therefore, the increase in this industry is much more than in the case of any other industry using fuel oil heating.

10.0 p.m.

They also point out to me that we have tomato tariffs which protect British producers, and that the effect of this new tax will be to nullify the Government's own policy of the last few years to protect the British tomato industry. As the right hon. and learned Gentleman pointed out, the Dutch growers of tomatoes are already moving over to heavy oil. They buy it already 20 per cent. cheaper than British horticulturists can do, and if this tax is imposed the Dutch growers will be able to buy their heavy oil some 35 per cent. cheaper than their British competitors. British tomato growers, and, in particular, the hothouse producers, point out that what they regard as unfair competition from abroad will be made even more unfair by the imposition of this tax.

Between 1955 and 1958, the Government were deliberately encouraging by technical assistance and by loan facilities home growers of greenhouse fruit to move over to fuel oil. The horticultural industry feels rightly angry that, having accepted the Government's advice, and the best of it having already led in moving over to fuel oil heating, having been encouraged by the Government to do so, it is now vulnerable to the Chancellor of the Exchequer.

This first came to my notice through the appeal made to me by an old boy of my school, a boy whom I taught some years ago, who has now made his life's work the horticultural industry. He gave me the case of a Hampshire horticulturist who employs 150 people and to whom this tax will mean an additional cost of £7,000 a year. He points out in his letter to me that the chairman of the appropriate committee of the London County Council has said that the cost to the London County council of this tax will be £70,000 a year.

For one single example of the industry in Hampshire, the burden is to be one-tenth of that which is to be carried by the London County Council. This is a striking example of the colossal impact on the horticultural industry of this new tax. It is true that horticulturists point out to me, as they may have done to other hon. Members of the Committee, that there are other features of this Bill which also weigh heavily on horticulture.

I will end by saying that the horticultural industry of this country grows 50 per cent. of the tomatoes which we consume. We have learned, surely, in this post-war period, that the more food we can grow and the more independent we can be of foreign supplies of food, the better; that about £50 million worth of tomatoes are consumed in this country; and that, while the horticultural industry may be regarded as a small industry, it is quite an important one. I hope that the case which the right hon. and learned Gentleman has put, and which I hope hon. Members on both sides of the Committee will support, will weigh with the Chancellor. It is quite certain that the horticulturist will not carry this himself, but that he will pass it on to the housewife.

The other point which I would make is that this tax is an additional burden on the cost of living, and will, as with all direct taxes which are on a flat-rate contribution, bear most heavily on the poorest people. I hope that hon. Members on both sides will join in persuading the Chancellor—whatever he thinks of his main Budget proposals and the purpose of the heavy oil duty in general—at least to accept what we regard as a reasonable Amendment on behalf of horticulture.

Sir W. Bromley-Davenport

I want to support the Amendment which has been moved so fluently and eloquently by my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith). I shall take about four minutes to do so, and as so many other hon. Members wish to speak it might be a good thing if everybody made his speech the same length. There are just over 3,000 acres of glasshouses on agricultural holdings in England and Wales, with heating equipment over half of which are heated by oil. This increase in tax will represent an additional cost of between £400 and £500 an acre. I am told that the industry is now faced with an increased cost of £614,000, and that the use of oil represents 25 per cent. of the total cost of production in glasshouses. The result will be to put up the price of tomatoes by between ½d. and ¾d. per lb.

Mr. John Diamond (Gloucester) rose——

Sir W. Bromley-Davenport

Will the hon. Member please sit down? I have been bored ad nauseam by his speeches.

The Government have constantly exhorted the agricultural industry to become more efficient and, as a result, it has switched over to oil. As has already been stated, however, the horticulturist does not receive the relief which is given to the remainder of the agriculture industry through the Annual Price Review. It is admitted that the Government have stated that instead of a system of guaranteed prices they would support horticulturists by an adequate tariff system, which would protect the home industry against unrestricted foreign imports, and that this policy has been endorsed by all Governments.

Be that as it may, we know from bitter experience that when the horticulturist puts his crops, all lovely and ripe, on the market, and hopes to get a good price for them, in nine cases out of ten the market is flooded by cheap produce from abroad, and the unfortunate horticulturist gets a bad price for his products.

The new duty will seriously undermine the effectiveness of the new tomato duties imposed by the Government in 1960. What about our competitors? The Dutch growers, in their efficient way, have largely converted to oil, for which they pay only £6 a ton. Our growers have to pay between £10 and £12 a ton—nearly twice as much. On top of that, our other competitive growers in the Channel Islands are not subjected to this duty at all. Everything seems to combine against the unfortunate horticulturist, including the weather.

It is hard enough for them under normal conditions, and I would submit to my right hon. and learned Friend that this duty is the final blow. I therefore hope that my right hon. and learned Friend will help the horticultural industry in some way by reducing this tax.

Mr. Snow

I find myself largely in support of what has been said by the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) and the hon. and gallant Member for Knutsford (Sir W. Bromley-Davenport). I wish I could feel that the evident anxiety and strength of opinion evinced on the benches opposite, judged by the number of hon. Members who rose to speak just now, will be carried into the Lobbies, but I doubt it. They are so much Lobby fodder and that is about all there is to it. They will not take us to a Division if a Division is called.

Whatever may be the strength of party discipline opposite, hon. Members know as well as I do that this is an industry which is peculiarly vulnerable and peculiarly sensitive to foreign importations. The hon. and gallant Member for Knutsford spoke about the market being flooded with cheap foreign imports. He did not say foreign and bad quality imports. This is not the time nor place to discuss the relative inefficiency of our horticultural industry. Anyone who has had the opportunity of travelling recently in Europe knows that the marketing efficiency and production efficiency of countries such as Holland and France make our domestic industry look rather sorry. That is a fact which has to be faced.

My intention in intervening in the debate was not only to draw attention to the obvious results of this tax, but to say that, looking a little into the future, we shall be putting our horticultural industry into an even more vulnerable position than at present is the case. Whether we feel that we are now going into the Common Market or not—and I personally think, whatever may be the evasive remarks of the Prime Minister, that we are on the way to participate in the Common Market—we are going to meet increased competition from the Continent

Some of us who believe that participation in the Common Market would be the correct, indeed the inevitable, political development, think that when countries such as Holland and France are paying a relatively small tax on oil we, by increasing our tax, will make the account we shall have to meet one day even more difficult. These importations are going to be importations from increasingly economic efficient sources and our own industry is becoming increasingly weakened.

Some years ago I had the opportunity of studying the market intelligence system of one of the biggest horticultural producers in the country. I saw for myself the amount of money he was spending to secure intelligence as to the shipping of horticultural products from the Continent. I am advised that that kind of overhead expenditure is increasingly necessary to compete in this market.

Reference has been made to the offsetting which was secured in the Tomato Import Duty, introduced in 1960. What is more important is that what is now proposed makes nonsense of the grants which were obtainable under the Horticulture Improvement Scheme. The hon. and gallant Member for Knutsford mentioned that there had been deliberate activity by horticulturists to modernise their heating equipment as a result of the provisions of that scheme.

All of us opposing the Government on this matter have to face the fact that here we are dealing with natural production. We cannot assess the situation as it is now nor even as it will be in a year's time. We must face a political development on the Continent. If not, we shall do a great disservice to our own horticultural industry.

10.15 p.m.

Mr. David Price (Eastleigh)

I shall be brief. I should like, first, to thank my neighbour, the hon. Member for Southampton, Itchen (Dr. King) for being the first townsman who has intervened in support of the case of the Hampshire horticulturists. That is encouraging in view of the classical quarrel which is supposed to exist between town and country. It is encouraging to have a neighbour from the town supporting the countryman's point of view in these matters. My constituency surrounds the Borough of Southampton.

Having supported the Budget Resolution proposing the increased tax, to argue for the Amendment we must show why horticulture should be regarded as a case for special treatment. The arguments developed by my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) are devastating. I want to draw attention to the fact that horticulture is in the most exposed sector of the British economy. It does not enjoy the benefits which agriculture enjoys. It is the Cinderella of agriculture. While the fortunate sister, agriculture, goes to the banquet of the Price Review, horticulture is left at home to enjoy the meagre gruel of the marginal tariff and antidumping legislation which is introduced far too late to be of advantage.

In these circumstances, it is right to look at the whole position. It is true that we manage our horticulture rather inefficiently, but that question would take me wider than the Amendment. I merely add in relation to what was said by the hon. Member for Lichfield and Tamworth (Mr. Snow) that the only hope for British horticulture lies in joining the Common Market when we can get away from the inhibitions of G.A.T.T. on the appropriate pragmatic arrangements. In the meantime to impose a tax which will raise costs broadly by 20 per cent. would be an intolerable burden. Others have suggested between 25 and 30 per cent. In the part of the country which I have the honour to represent that would mean an additional cost of about £350–£500 to the acre.

We are therefore entitled to press this on my right hon. and learned Friend as a special case. If my right hon. and learned Friend replies that the concession is unnecessary because we are joining the Common Market and special arrangements will be made, using quotas and all the other devices which many of us would like to use, I will willingly withdraw my share of the Amendment, but I think that that is unlikely.

The argument has been used that the Ministry of Agriculture has not encouraged growers to change to oil. In the view of my growers in Hampshire, that is not the case. They are obliged to make an annual return to the Ministry of Power stating the amount of coal and coke saved in respect of fuel-saving equipment converted to oil-firing from 1955 onwards. If the Committee wished I could quote the rather tedious number of the form. The Ministry of Power, as it then was, in respect of loans for fuel-saving equipment stated schemes eligible for consideration include conversion to oil-firing, plant for generation of electric power by back-pressure, structural insulation". When one applied for a loan one had to state how much coal was being saved by increased efficiency and the change to liquid fuel. It seems to me fairly evident that this was an invitation to convert to oil. Hampshire may be an exception to the rest of the country—I doubt it—but the growers in Hampshire at least were advised by the N.I.F.E.S. that supplies of steam coal could not be guaranteed, and they were strongly urged to make use of the loan scheme for oil conversion.

I may be very naive in the arts and crafts of politics, but I still look for consistency. My belief is that our fiscal arrangements should fit in with the national economic interest and that in determining tax changes my right hon. and learned Friend and his advisers should look to what I will broadly call the national accounting. It is particularly illogical that the Government should encourage people to convert to oil and, a year or two later, proceed to take it all back by an increased tax. Perhaps in my innocence I expect my right hon. and learned Friend to see our case. I hope that tonight he will not dissuade me from the rôle of innocence.

Mr. John Mackie (Enfield, East)

I congratulate my neighbour the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) en tabling the Amendment. Many of his constituents have written to me on the subject, not because they have no faith in him, but being horticulturists and in a chancy industry they thought it better to have the safety and strength of two people. After the Chancellor of the Exchequer has accepted the Amendment, as I hope that he will, I shall be able to write to them telling them how fortunate they are to have such a worthy advocate of their cause as the right hon. and learned Member.

I am sorry that I cannot follow him in quoting from the classics. It is difficult to make any more points, but I want to remind the Committee of the emphasis which was laid on changing from coal to oil, and particularly to mention the assistance which the Government gave the industry two years ago. One grower gave me figures showing that his scheme showed a profit of £400 at the present price of oil. After the tax is put on he will make a loss of £200. That sort of thing is bound to have a tremendous effect, particularly on small growers.

My hon. Friend the Member for Southampton, Itchen (Dr. King) said that the grower will pass it on to the consumer. I disagree with him. The grower cannot do that. He does not have the sort of market which will allow him to raise the price. The price is controlled from Covent Garden Market and by foreign imports. He cannot pass this on. He must accept the price ruling at the time. This is simply an extra cost.

I do not want to say any more except to ask the Chancellor of the Exchequer to recognise that this is a chancy industry which is not in a good way. The Government gave its assistance worth £6 million two years ago. They are now taking away a great proportion of it. I accept the figure quoted by the right hon. and learned Member for Hertfordshire, East. It is a large proportion of their costs. It is ridiculous. I appeal to the Chancellor of the Exchequer to have another look at it. I hope that he does not ask us to divide on the Amendment, particularly as the weight of opinion on both sides of the Committee is against the Government.

Sir Richard Glyn (Dorset, North)

It is right to point out that the cost of heating is one of the major costs which the growers have to face. The cost of labour is another. The two things go together, because in the Horticulture Improvement Scheme advice was given on behalf of the Government that growers should convert to oil heating because it was an economy not only in heating but also in labour. These are the two cases and the two costs where our growers are most exposed to foreign competition.

We have heard that Dutch growers are much more favourably placed as regards labour. That is well known to hon. Members. They are also much better placed as regards fuel oil. My information is that the grade of oil which is bought in bulk in this country at 8d. per gallon can be bought in bulk in Holland at the same quality at 6d. per gallon. Therefore, Dutch growers have a very substantial advantage which will be doubled by the impact of this tax. I ask the Chancellor of the Exchequer to consider how ill-placed the industry is to carry any extra impost. In my constituency not long ago a grower with a large and very well-managed business was forced completely out of business. That sort of thing has happened in many places. What was a little striking in this case was that when the acres of glass were put up to auction only one buyer came to purchase, and he from the Channel Isles. Not a single purchaser came from the whole of the mainland to make any bid for acres of glass in good condition.

The increased fuel cost will have a devastating effect on this small industry, which has been described, I think appropriately, as the Cinderella of our industries. It has been protected, as far as it has been, first by quotas, then by tariffs. We now always talk about tariff adjustments, but these adjustments come slowly, too late and not effectively. This industry is not able to carry any such extra burden as this. As I say, it is the Cinderella of our industries and was never in greater need of a Prince Charming. I invite my right hon. and learned Friend the Chancellor to play that part.

Mr. Selwyn Lloyd

I do not want to curtail the debate unduly, but it might be of convenience to the Committee if I were to put my point of view now.

It is very easy to destroy a tax by making exceptions to it. I have so far resisted today a number of attempts to secure exemptions, advocated with great sincerity and sound argumentation. The question I have to ask myself is whether special treatment should be given to horticulture. The argument against such special treatment is considerable. It would affect what may be called the integrity of the duty; it could be represented by some as the thin end of the wedge; and it could lead to a demand for other concessions. As I say, I have had to refuse requests for exemptions, for example, for kerosene.

The arguments for special treatment for horticulture are these. The first is that the yield is comparatively small. One estimate I have been given was something under £200,000, but it might be more; it might be between that amount and £½ million. However, the yield is not very great.

I have been given figures by hon. Members on both sides about individual hardship. Earlier, I was given figures relating to a man with one acre of oil-heated glass, specialising in tomatoes. He had a gross income per annum of between £8,000 and £9,000, and a net income of about 25 per cent. of that—about £2,000 or £2,500. It was said that his increased cost would amount to between £250 and £400; in other words, a drop in net income of between 12½ per cent. and 20 per cent.—a very considerable drop in individual income.

If I may say so with respect, the most potent special reason is that horticulture and agriculture have been treated by both sides of the House of Commons as being in a special position. Wherever we have been placed, it has been accepted by Government and Opposition from 1947 onwards that agriculture and horticulture should be regarded as having a special position in our economy. As my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) said, the difference between agriculture and horticulture is that horticulture does not have the protection of the Price Review.

In these circumstances, and because of the views that have been pressed on me from both sides of the Committee, I am prepared to say that I will try to do what I think is right in this special case. [HON. MEMBERS: "Hear, hear."] In other words, I think that a case has been made out for special treatment for this very special and individualistic industry. That is not to be regarded as the thin end of the wedge, or as a precedent for other concessions.

I am not prepared to say tonight exactly how I will implement that promise. There are practical and administrative problems to be considered, and matters of definition, as my right hon. and learned Friend will appreciate, because I believe that in the terms of his own Amendment he has introduced a new definition into the business.

I should, however, like to consider the matter. I would, therefore, ask that my right hon. and learned Friend should withdraw his Amendment, and that those who have agreed with him on the other side of the Committee should permit him to withdraw the Amendment, either to reinstate it on Report, or to permit me to devise a method of providing this special treatment to which I have agreed.

10.30 p.m.

Mr. Mitchison

What an interesting debate. I noticed at the end of the speech of the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), when he moved the Amendment, the very significant words "sure knowledge and confidence".

Sir D. Walker-Smith

"Sure hope and strong confidence" were, I think, the words that I used.

Mr. Mitchison

The right hon. and learned Gentleman is an expert in interpretation, and he can tell me the difference between sure hope and sure knowledge when we have more time to discuss the matter. I rely on the words "sure" and "confidence".

I listened to this debate with some amusement after hearing those words. But what a Government! They have just refused today to make a concession to people who have no other fuel and no other means of heating than paraffin. Now they make the concession not to people at all, but to an industry—the horticultural industry. I have no objection to their making it—none at all. My hon. Friends and hon. Members opposite produced very good reasons for this concession. But I say again, what a Government and what a Tory Party to make a concession for glasshouses and to refuse it to people who have no other fuel and no other light than paraffin! That is the way the party opposite looks at the world and at the Finance Bill.

Sir D. Walker-Smith

I am sorry that the hon. and learned Gentleman should have seen fit to mar the harmony of the occasion and to exhibit once again the incurably fissiparous tendencies of the Opposition when 100 per cent. of the speeches which have been made on the other side of the Committee have been in favour of the concession.

Mr. Mitchison

That is not fair. I said quite distinctly that I was in favour of the concession, that I agree with the reasons that my hon. Friends had given for it, but I said, what a Government and what a party to refuse to the poor old people the concession which they make to the horticultural industry.

Sir D. Walker-Smith

If that is the language and tone that the hon. and learned Gentleman uses to indicate assent, one is left in some wonder what the does when he wants to indicate a mild degree of dissent. I think that my right hon. and learned Friend the Chancellor of the Exchequer need not be unduly upset by what the hon. and learned Gentleman has said. I am sure that he will receive from all quarters the thanks of the Committee for what he has said. For myself, and for my constituents, I am sincerely grateful for the constructive attitude that he has taken and, in view of what he has said, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Bruce Millan (Glasgow, Craigton)

I beg to move, in page 2, line 30, at the and to insert: Provided that section two hundred and three of the Customs and Excise Act, 1952 (which provides for a drawback on certain hydrocarbon oils), shall apply in relation to any duty paid by virtue of the foregoing subsection on coal tar oils used for the manufacture of disinfectant fluid, sheep and cattle dips as it applies in relation to any duty paid on hydrocarbon oils used as materials in the manufacture of articles specified in an order of the Treasury under subsection (2) of that section. I should say at the outset that, as far as I am concerned, this Amendment is to a considerable extent an exploratory one. In view of what has happened to the last Amendment, I imagine that there may be some grounds for thinking that the Government will at least look at this with a certain amount of favour and may be willing to accept it. [Interruption.]

Mr. Harold Wilson (Huyton)

On a point of order, Sir William. May we be permitted to hear the important points which my hon. Friend is making, I understand, on sheep dips? This is just as important as the debate that we have had on the previous Amendment.

The Deputy-Chairman (Major Sir William Anstruther-Gray)

Yes, I think the Committee might be a little more quiet while the hon. Member is speaking.

Mr. Millan

Thank you, Sir William.

The effect of this Amendment would be to exclude from the 2d. per gallon duty coal tar oils which are used for the manufacture of disinfectant fluid, sheep and cattle dips. I think the Chancellor is aware of the point I am going to raise, because I had some correspondence with him about representations which were made to me by a Glasgow firm which manufactures these commodities, disinfectant fluid, sheep and cattle dips. I felt that the points which the firm raised with me were important enough to justify my putting down this Amendment, because there are a number of implications of this tax which, I think, it is worth while having drawn out.

In the first place, the tax falls on coal tar oils and I think there are some considerations applying to coal tar oils which do not apply to other hydrocarbon oils. The Chancellor has said that the intention of the tax as a whole is revenue-raising and that it is not really a question of protecting the coal industry as distinct from its competitor the oil industry, but whether or not the intention of the tax is to raise revenue the Chancellor must, of course, take into account the effect which the tax will have on particular industries, and, therefore, I think it is a relevant consideration that this tax should fall on the coal tar industry as well as on the other hydrocarbon oil industries, because coal tar oils come from the distillation of coal tar, and there are certain factors to which it is worth while to call attention.

In the first place, the coal tar distillation industry has to take crude coal tar which is sent to it from the gas industry and from coke ovens and so it is really bound—in Scotland this is particularly so—to take all the product which comes from the gas industry and coke ovens. Therefore, it is not able to modify its supply in any way. It has got no control over the amount of crude tar oil it gets, and for which it has full responsibility for distillation, and therefore if there are taxes placed on the products of the coal tar distillation industry that industry can get into very serious difficulties because of this factor which, as I say, applies in Scotland—and which, I dare say, applies in England as well—where there is a co-operative tar scheme under which the distillers are responsible for accepting all the crude coal tar which is made available to them by the gas industry and by the coke ovens.

I would have preferred in many ways that this Amendment of mine might have been discussed after the next following Amendment, that in the name of my hon. Friend the Member for Newton (Mr. Lee), in page 2, line 30, at end insert: Provided that this subsection shall not apply to creosote used for timber preservation and that the power to make regulations conferred on the Commissioners of Customs and Excise by section one hundred and ninety-eight of this Act shall include power to make regulations to give effect to this proviso. That deals with another coal tar oil which, I think, is even more important than the one I am dealing with, namely, creosote used for timber preservation. It seems to me that the whole question of coal tax oils cries to be discussed both on this Amendment and my hon. Friend's. I have no doubt at all that the creosote Amendment is the much more important one, though this one about sheep and cattle dips is also important from the industry's point of view, because the coal tar oils it uses are its basic raw materials, and therefore it does affect the industry very considerably if there is this tax placed on its basic raw materials.

There are really two main points as to the industry's costs. First of all, there is the fact that if this tax is imposed on the manufacture of sheep and cattle dips and disinfectants the price of the products will have to be increased, and that, of course, has an effect on the farming industry. We have already today heard certain pleas, in the context of the tax as a whole, for an exception to be made of the agricultural industry. Although this is, therefore, not an important direct burden falling on the agricultural industry, it is something which should be taken into account.

From the exports point of view, I have looked at the Trade and Navigation Accounts for last year and, on page 172, the quantities and values of disinfectants for sheep and cattle dips are given. In 1959 the value was over £800,000 and, in 1960, over £900,000.

I am informed by the manufacturers of these commodities that the imposition of this tax on their basic raw material, the coal tar oils they use, will have serious effects on their export position. It will, in fact, put up their prices and it will have a serious effect on their ability to compete in foreign markets.

The figures I have given are impressive, because this is really quite a small industry—it is not one of the major chemical industries—although its exports have increased and they are approaching £1 million a year, which is a considerable figure.

If the Government are going to persist with this tax and will not accept the Amendment, hon. Members are entitled to the Government's assessment of what the tax will be on the competitiveness of this industry in the export market. The whole question of imposing this tax on coal tar oils, as well as on other hydrocarbon oils, has a number of implications which were, perhaps, not fully realised at first sight. These implications, having now been revealed—both in this Amendment and in the following one, which is concerned with creosote for timber preservation, and there may be other implications—hon. Members are entitled to a statement from the Government about coal tar oils generally, as well as a reply to the points I have raised, and an assessment of the effect of this tax on the manufacturers of these disinfectants and sheep and cattle dips.

I hope we shall be given some assurances by the Government. Either they must accept the Amendment or they must assure hon. Members that they will look at this matter again. Otherwise, the Government must convince hon. Members that the effect of this tax will not be serious for this industry. I am really exploring the position, since I am no expert on this subject, and I have tabled the Amendment in that spirit. But, as I have explained, the information I have is that this increase might have a serious effect on the industry.

Sir E. Boyle

The hon. Member for Glasgow, Craigton (Mr. Millan) as always, has made an extremely interesting and informative speech. I suggest that this is a fairly narrow point. As the hon. Member suggested, the question of creosote will be considered on a later Amendment. Therefore, I hope that the Committee will be ready to come to a rapid conclusion on the Amendment.

The effect of the Amendment is to apply the provisions of Section 203 of the Customs and Excise Act, 1952, which relates to hydrocarbon oil drawback, to coal tar oils used in the manufacture of disinfectant fluid and sheep and cattle dips.

The general terms of that Section of the 1952 Act already apply to those oils and, therefore, strictly as drafted, the Amendment is superfluous. I realise, however, that the hon. Gentleman moved the Amendment in a spirit of exploration.

If we were to concede the point which the hon. Gentleman has most in mind—that there should be relief from duty, whether or not these preparations are exported—I do not believe that the cost would be very heavy. As I say, we are discussing a quite narrow point. But this is the sort of breach in the principle of the Clause which it would be unwise to make, unless one were quite confident that the competitive position of this industry would suffer. While it is difficult to quantify these things, I do not believe from inquiries I have made, that the competitiveness of the coal tar industry will be severely affected by this duty. Therefore, having considered the matter, my right hon. and learned Friend does not think that on balance it would be right to make a concession of the sort that the hon. Member had in mind.

10.45 p.m.

Mr. H. Wilson

That answer is not good enough. We have been given no reasons and no figures. My hon. Friend the Member for Glasgow, Craigton (Mr. Millan), who moved the Amendment in the most constructive and conciliatory manner—there was nothing hostile or biting in his attack—asked for figures and what would be the effect on the industry. All the evidence which he produced, from the information which had been sent to him, suggested that there would be a serious effect, not only on the costs, profits and stability of the industry, but on our exports, and he gave impressive figures from the Trade and Navigation Accounts about the exports from this industry.

All we have had from the Financial Secretary to the Treasury is the most perfunctory reply, which is most unlike him. Usually, we get a full reply. Either somebody thrust a brief into the hon. Gentleman's hand just as he entered the Chamber two minutes ago and he has not had time to read it, or, what is even harder to contemplate, no proper brief was prepared. Surely, the Financial Secretary will get up and say that the Treasury has considered this important question. It has been on the Paper long enough.

The whole Committee has had to sit here hour after hour today listening to filibustering from the other side, if one might use that term, on other important industries. I do not complain about the vehemence with which those points were put. Vital constituency interests are affected. That has gone on for hour after hour, however, and when our little ewe lamb of an Amendment is moved by my hon. Friend the Member for Craigton, with his knowledge, which, I have no doubt, is considerable, of the industry, although it was not necessarily acquired in Craigton, it is treated by the Financial Secretary with obvious disrespect.

Mr. de Freitas

Pulling wool over our eyes.

Mr. Wilson

Surely, the Financial Secretary must have been moved by the case put by my hon. Friend. It is not enough simply to get up and say that the Amendment is not drafted in the most felicitous terms. If the Financial Secretary believes that there is a case—he has not told us what would be the cost to the Exchequer or the effect on the industry—and if he would get up and say, "We do not think that the Amendment is drafted in the proper terms, but, of course, we shall put down an Amendment in appropriate terms on Report," we would be prepared to let it go and then get on to some of the other more important Amendments which look like occupying the Committee for some time tonight.

In the light of this, I appeal to the Financial Secretary to turn over the page, read us the rest of the brief, give us the figures on both the points for which he has been asked and then tell us that he will introduce an appropriate Amendment on Report. If he does that, I undertake to use my best influence, such as it is, with my hon. Friend to get him to withdraw the Amendment. If not, the consequences may well be dire.

Sir James Duncan (South Angus)

For our farming industry, the burden will not be a heavy one. Normally, the sheep are dipped only once a year. Only a moderate figure is involved. There is, however, an effect on the export trade. Accepting the figures given by the hon. Member for Glasgow, Craigton (Mr. Millan), I should like to ask my hon. Friend the Financial Secretary whether there is any possibility of a drawback system for that part of the production which is exported, and whether he will consider that aspect.

Mr. Wainwright

I hope the Financial Secretary will note that this industry has a competitor—the petroleum industry—which will not be affected by this tax. Although it takes its coal tar products from gas works and steel works, by using other materials the petroleum industry could produce similar kinds of crude tar which could compete with the products of the tar distillers. I hope that the hon. Gentleman will look at this again and take note of what my right hon. Friend said about it.

Sir E. Boyle

I will answer the point raised by my hon. Friend the Member for South Angus (Sir J. Duncan). Section 203 of the 1952 Act provides that export goods which contain hydrocarbon oils are entitled to drawback in respect of the oil used as ingredients in their manufacture. The preparations to which the Amendment relates would fall within those provisions as they stand, provided that they are exported.

I think that the hon. Member for Glasgow, Craigton (Mr. Millan) was on a different point, which was whether this new tax would affect the competitive position of the industry. On that point, I can only repeat what I said earlier, that I am not convinced that the point is such a real one as to justify my right hon. and learned Friend making a separate concession.

In answer to the right hon. Member for Huyton (Mr. H. Wilson), if anyone in my position addresses the Committee at some length and turns down an Amendment, he is sometimes accused—as I have sometimes been accused—of trying to blind the Committee with science. As this was a relatively narrow point, I thought that it would be reasonable to suggest that as the Chancellor had taken this view we might come to a fairly early decision.

Mr. H. Wilson

This is not good enough. No one can accuse the hon. Gentleman of blinding us with science in the answers he has given. He has not even given us the basic figures. He has not told us what would be the cost to the revenue of this concession or what proportion of the costs of the industry it represents. All he said was that it was his conviction—and it is most unlike him to have a conviction which he cannot justify with facts or theories, or a little of both—that because the Chancellor had decided not to do it, that should be good enough for the Committee. That is not good enough.

I do not want to repeat the arguments put by my hon. Friend, but the position is that we are dealing with an indigenous raw material. This is not something which has to be imported. It is an indigenous raw material which comes from one of our fuel industries. Figures have been given suggesting that this will have a serious effect. We are not satisfied with the hon. Gentleman's answer about exports after what he told us about the drawback. As the hon. Gentleman obviously has no room to manoeuvre on this, and as the Chancellor left without giving the hon. Gentleman the facts and figures on which the Committee could be asked to come to a conclusion, there is obviously nothing for us to do except to challenge this in the Division Lobby, and we certainly intend to do that.

Mr. E. G. Willis (Edinburgh, East)

We ought to protect vigorously against this procedure. This is treating the Committee with contempt. The Minister comes to the Box and says that the Chancellor has already decided what to do, without listening to the arguments, and therefore we should not discuss the matter. What does the hon. Gentleman think is the purpose of the Committee? He says that the Chancellor has made up his mind and, therefore, we must not discuss this. Why have a House of Commons, if that is the attitude of the Government? The doctrine enunciated by the hon. Gentleman is astonishing, and we ought to protest against this sort of behaviour and this attitude towards the business of the Committee.

The hon. Gentleman has not given us any reasons for not accepting the Amendment. All he said was that in his opinion the increased burden on the industry and its competitive position was negligible. What are the facts? How has the hon. Gentleman reached this conclusion? I am not sure whether he reached it, or whether the Chancellor reached it. Apparently the Chancellor made up his mind and simply told the hon. Gentleman: "We cannot accept this. Just tell them that and get on with the business."

My hon. Friend is entitled to an answer to the questions he asked. I am interested in this because it is a Scottish industry. We cannot afford to see Scottish industries suffer further damage. They are already being damaged by the Government, and we have enough problems in Scotland as a result of eleven years of Tory rule. We do not want to add to those problems.

The hon. Gentleman ought to tell my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) how much it would cost the Exchequer. Is it £2,000, or £20,000 or £200,000? We are also entitled, particularly after the tribute which the hon. Gentleman paid to the manner in which my hon. Friend presented his case, to an explanation why the Government have reached the view that it will not affect the competitive position of the industry.

Mr. Millan

I am sorry that we have not had more information from the Financial Secretary. I said in moving the Amendment that I wanted more information, but I have not had it from him in his reply. My understanding of the exports position is that the hon. Gentleman is saying in effect that in so far as coal tar oil is used for the manufacture of products subsequently exported there will be a remission of duty available to manufacturers.

Sir E. Boyle

Section 203 (2) and (3) provide that where exported goods do not actually include oil but oil has been used in their preparation the drawback may also be paid, subject to Treasury Orders covering the particular classes of goods concerned. That has been the position during the last nine years.

Mr. Millan

Are there Treasury Orders at the moment which cover this industry, or is it intended that there shall be Orders which will in effect give this remission of duty? I had the impression from the hon. Gentleman's first speech that the exports position would not be affected at all, because the duty would not be paid. He is saying something slightly different now and we would require some clarification of that. Obviously, if the duty is not paid on exports I admit that the hon. Gentleman has answered one of my principal points. I would be delighted to hear that that is so.

I do not pretend that the Amendment is absolutely right. I did not draft it myself. I took advantage of the advice of an hon. and learned Friend on the drafting and therefore I have no difficulty in admitting that there may be some defects in it but, as the hon. Gentleman has said, the intention of the Amendment is clear enough. On the export point, can the Financial Secretary say how much the Amendment would cost? It must be a small amount. I admit that this is a narrow point, but it is important and it would help us very much if we had some figures about the effect of the tax on the costs of the industry and figures on what the cost of the remission would be.

Sir E. Boyle

I am sorry if I have not given the Committee some information that it would have liked. I have made further inquiries on the point about Section 203. In this case these particular preparations would be ingredients of export goods and, therefore, would come under Section 203 (1) and Treasury Orders would not arise. I am sorry that through inadvertence I did not give the Committee figures about the cost of the Amendment. It would be small—about £15,000 a year. Nevertheless, granted that the cost is small, my right hon. and learned Friend feels that it would not be right to make this breach in the principles of the Clause.

11.0 p.m.

Mr. H. Wilson

Now that we are beginning to get some figures the case is even weaker. The hon. Gentleman is still standing on the Chancellor's decision not to make a concession in this case. The Chancellor has not heard any of the arguments and, obviously, does not know as much about it as the Financial Secretary. And the Financial Secretary's knowledge of the subject is growing hour by hour as this debate continues. If we keep on, the hon. Gentleman will know a bit about it by midnight, but I do not think there is any point in doing so.

The hon. Gentleman has not satisfied us on the export point. First he said that Treasury Orders were needed and then he said that they were not, and he talked about Section 204 (1) and all the rest of it. His Parliamentary Private Secretary has been breaking the record for the 100 yards trying to get the information. It is all very interesting, but I submit that clearly there is no point in going on, because whatever information the Parliamentary Secretary receives will make no difference. I suggest that we bring this brief debate to a conclusion and set an example to hon. Gentlemen opposite, who are not quite so speedy in bringing their debates to a conclusion, and divide against the Financial Secretary's inability to give us the information and the refusal to give us the concession.

Question put, That those words be there inserted:—

The Committee divided: Ayes 130, Noes 198.

Division No. 173.] AYES [11.0 p.m.
Ainsley, William Grimond, J. Redhead, E. C.
Allaun, Frank (Salford, E.) Hall, Rt. Hn. Glenvil (Colne Valley) Reynolds, G. W.
Allen, Scholefield (Crewe) Hannan, William Roberts, Albert (Normanton)
Awbery, Stan Hart, Mrs. Judith Robertson, John (Paisley)
Bacon, Miss Alice Henderson, Rt. Hn. Arthur (RwlyRegis) Rogers, G. H. R. (Kensington, N.)
Baxter, William (Stirlingshire, W.) Herbison, Miss Margaret Ross, William
Boardman, H. Hill, J. (Midlothian Slater, Mrs. Harrlet (Stoke, N.)
Bowden, Herbert W. (Leics, S.W.) Hilton, A. V. Slater, Joseph (Sedgefield)
Bowles, Frank Holman, Percy Small, William
Brock way, A. Fenner Houghton, Douglas Sorensen, R. W.
Broughton, Dr. A. D. D. Howell, Denis (B'ham, Small Heath) Soskice, Rt. Hon. Sir Frank
Callaghan, James Hughes, Cledwyn (Anglesey) Spriggs, Leslie
Castle, Mrs. Barbara Hughes, Emrys (S. Ayrshire) Steele, Thomas
Cliffe, Michael Hynd, H. (Accrington) Stewart, Michael (Fulham)
Crossman, R. H. S. Irving, Sydney (Dartford) Stonehouse, John
Cullen, Mrs. Alice Janner, Sir Barnett Stones, William
Davies, Harold (Leek) Jay, Rt. Hon. Douglas Strachey, Rt. Hon. John
Davies, Ifor (Gower) Jones, Dan (Burnley) Sylvester, George
Deer, George Jones, Jack (Rotherham) Symonds, J. B.
de Freitas, Geoffrey Jones, J. Idwal (Wrexham) Taylor, Bernard (Mansfield)
Delargy, Hugh Jones, T. W. (Merioneth) Taylor, John (West Lothian)
Dempsey, James King, Dr. Horace Thompson, Dr. Alan (Dunfermline)
Diamond, John Lawson, George Thorpe, Jeremy
Dodds, Norman Lee, Frederick (Newton) Tomney, Frank
Donnelly, Desmond Loughlin, Charles Ungoed-Thomas, Sir Lynn
Dugdale, Rt. Hon. John Mabon, Dr. J. Dickson Wade, Donald
Edelman, Maurice McCann, John Wainwright, Edwin
Evans, Albert MacColl, James Warbey, William
Fernyhough, E. McInnes, James Watkins, Tudor
Finch, Harold McKay, John (Wallsend) Weitzman, David
Fitch, Alan MacMillan, Malcolm (Western Isles) White, Mrs. Eirene
Fletcher, Eric MacPherson, Malcolm (Stirling) Whitelock, William
Foot, Dingle (Ipswich) Mallalieu, E. L. (Brigg) Wilkins, W. A.
Foot, Michael (Ebbw Vale) Manuel, A. C. Willey, Frederick
Forman, J. C. Mapp, Charles Williams, LI. (Abertillery)
Fraser, Thomas (Hamilton) Marquand, Rt. Hon. H. A. Willis, E. G. (Edinburgh, E.)
Gaitskell, Rt. Hon. Hugh Millan, Bruce Wilson, Rt. Hon. Harold (Huyton)
Galpern, Sir Myer Mitchison, G. R. Woof, Robert
George, Lady Megan Lloyd (Crmrthn) Noel-Baker, Francis (Swindon) Wyatt, Woodrow
Ginsburg, David Oswald, Thomas Yates, Victor (Ladywood)
Gordon Walker, Rt. Hon. P. C. Pargiter, G. A.
Gourlay, Harry Pavitt, Laurence
Greenwood, Anthony Pentland, Norman TELLERS FOR THE AYES:
Grey, Charles Popplewell, Ernest Mr. Short and
Griffiths, David (Rother Valley) Probert, Arthur Mr. Charles A. Howell.
Agnew, Sir Peter Carr, Robert (Mitcham) Errington, Sir Eric
Aitken, W. T. Cary, Sir Robert Farr, John
Allason, James Channon, H. P. G, Fisher Nigel
Atkins, Humphrey Chichester-Clark, R. Fletcher-Cooke, Charles
Barber, Anthony Clark, William (Nottingham, S.) Fraser, Ian (Plymouth, Sutton)
Barter, John Cleaver, Leonard Gammans, Lady
Batsford, Brian Cole, Norman Gardner Edward
Beamish, Col. Sir Tufton Cooke, Robert Glyn, Dr. Alan (Clapham)
Bennett, F. M. (Torquay) Cordeaux, Lt.-Col. J. K. Glyn, Sir Richard (Dorset, N.)
Biggs-Davison, John Corfield, F. V. Godber, J. B.
Bingham, R. M. Courtney, Cdr, Anthony Goodhart, Philip
Birch, Rt. Hon. Nigel Critchley, Julian Grant, Rt. Hon. William
Bishop, F. P. Crosthwaite-Eyre, Col. O. E. Grant-Ferris Wg Cdr. R.
Black, Sir Cyril Currie, G. B. H. Green, Alan
Bossom, Clive Dalkeith, Earl of Gresham Cooke, R.
Box, Donald d'Avigdor-Goldsmid, Sir Henry Grosvenor, Lt.-Col. R. G.
Boyd-Carpenter, Rt. Hon. John Deedes, W. F. Gurden, Harold
Boyle, Sir Edward Donaldson, Cmdr. C. E. M. Hall, John (Wycombe)
Brewis, John Doughty, Charles Hamilton Michael (Wellingborough)
Brooman-White, R. Drayson, G. B. Harrison, Col. J. H. (Eye)
Browne, Percy (Torrington) du Cann, Edward Hastings, Stephen
Buck, Antony Duncan, Sir James Hay, John
Bullard, Denys Elliot, Capt. Walter (Carshalton) Hendry, Forbes
Campbell, Gordon (Moray & Nairn) Elliott, R. W. (Nwcstle-upon-Tyne, N.) Hill, J. E. B. (S. Norfolk)
Carr, Compton (Barons Court) Emery, Peter Hinchingbrooke, Viscount
Holland, Philip Mathew, Robert (Honiton) Skeet, T. H. H.
Hollingworth, John Matthews, Gordon (Meriden) Smith, Dudley (Br'ntf'rd & Chiswick)
Hopkins, Alan Maudling, Rt. Hon. Reginald Smithers, Peter
Hornby, R. P. Mawby, Ray Smyth, Brig. Sir John (Norwood)
Hornsby-Smith, Rt. Hon. Patricia Maxwell-Hyslop, R. J. Soames, Rt. Hon. Christopher
Howard, John (Southampton, Test) Maydon, Lt.-Cmdr. S. L. C. Spearman, Sir Alexander
Hughes-Young, Michael Mills, Stratton Stanley, Hon. Richard
Hulbert, Sir Norman Montgomery, Fergus Steward, Harold (Stockport, S.)
Hutchison, Michael Clark More, Jasper (Ludlow) Sumner, Donald (Orpington)
Iremonger, T. L. Morgan, William Tapsell, Peter
Irvine, Bryan Godman (Rye) Morrison, John Teeling, William
James, David Nabarro, Gerald Temple, John M.
Johnson, Eric (Blackley) Oakshott, Sir Hendrie Thomas, Leslie (Canterbury)
Johnson Smith, Geoffrey Page, John (Harrow, West) Thompson, Richard (Croydon, S.)
Jones, Rt. Hon. Aubrey (Hall Green) Page, Graham (Crosby) Thornton-Kemsley, Sir Colin
Kerans, Cdr, J. S. Pannell, Norman (Kirkdale) Tiley, Arthur (Bradford, W.)
Kerr, Sir Hamilton Partridge, E. Tilney, John (Wavertree)
Kershaw, Anthony Pearson, Frank (Clitheroe) Turner, Colin
Kimball, Marcus Peel, John Turton, Rt. Hon. R. H.
Kirk, Peter Percival, Ian Vane, W. M. F.
Pickthorn, Sir Kenneth Vickers, Miss Joan
Kitson, Timothy Pilkington, Sir Richard Wakefield, Edward (Derbyshire, W.)
Langford-Holt, J. Pott, Percivall Wakefield, Sir Wavell (St. M'lebone)
Legge-Bourke, Sir Harry Price, David (Eastleigh) Walder, David
Lewis, Kenneth (Rutland) Prior, J. M. L. Walker, Peter
Lilley, F. J. P. Prior-Palmer, Brig. Sir Otho Walker-Smith, Rt. Hon. Sir Derek
Linstead, Sir Hugh Proudfoot, Wilfred Wall, Patrick
Litchfield, Capt. John Pym, Francis Webster, David
Lloyd, Rt. Hon. Selwyn (Wirral) Quennell, Miss J. M. Whitelaw, William
Longden, Gilbert Ramsden, James Williams, Paul (Sunderland, S.)
Loveys, Walter H. Rawlinson, Peter Wilson, Geoffrey (Truro)
Low, Rt. Hon. Sir Toby Redmayne, Rt. Hon. Martin Wise, A. R.
Lucas-Tooth, Sir Hugh Rees, Hugh Wolrige-Gordon, Patrick
MacArthur, Ian Rees-Davies, W. R. Woodhouse, C. M.
McLaren, Martin Renton, David Woodnutt, Mark
McLean, Neil (Inverness) Ridley, Hon. Nicholas Woollam, John
MacLeod, John (Ross & Cromarty) Roberts, Sir Peter (Heeley) Worsley, Marcus
McMaster, Stanley R. Roots, William Yates, William (The Wrekin)
Macmillan, Rt. Hn. Harold (Bromley) Ropner, Col. Sir Leonard
Macpherson, Niall (Dumfries) Russell, Ronald
Maddan, Martin Scott-Hopkins, James TELLERS FOR THE NOES:
Maginnis, John E. Shaw, M. Mr. Finlay and
Markham, Major Sir Frank Simon, Rt. Hon. Sir Jocelyn Mr. Gibson-Watt.

Mr. Frederick Lee (Newton) I beg to move, in page 2, line 30, at the end to insert: Provided that this subsection shall not apply to creosote used for timber preservation and that the power to make regulations conferred on the Commissioners of Customs and Excise by section one hundred and ninety-eight of this Act shall include power to make regulations to give effect to this proviso.

The Chairman

It might be convenient for the Committee to discuss at the same time the Amendment in page 2, line 18, after "oils", insert: (other than those used for the preservation of timber by absorption or impregnation)".

Mr. Lee

That would be quite convenient to us, Sir William.

When we were discussing the last Amendment the Financial Secretary informed us that if, in the judgment of his right hon. and learned Friend the Chancellor, the competitive position of an industry was involved in the decision he had to make, he would be very liberal in his interpretation of his duties. I hope to prove to him in the course of the next five minutes that that is the precise issue at stake in this Amend- ment. If the proposition within the Bill remains as it now is, one of its effects will be to impose a duty of 2d. a gallon on creosote, which is used largely for timber preservation and which has previously carried no duty at all.

I understand that the raw material used in the tar distillation industry is crude coal tar, obtained as a by-product of the carbonisation of coal in gasworks and coke ovens, and that the total annual production of crude coal tar is about 3 million tons. I understand, further, that the tar distiller has very little room for manoeuvre, in that he has to take the whole of the crude tar regardless of market conditions at any time. In other words, the fact that the market may be very good for him does not enable him to take more, and, conversely, when times are bad he still has to take the total amount coming to him.

About 30 per cent. of the crude tar is creosote, and by far the most important use for it is the preservation of timber, either by impregnation under pressure or by surface absorption. The whole product is completely indigenous material, and for about 100 years it has been used for the preservation of timber. Transmission poles, railway sleepers, marine timbers, timber used in contact with the ground or with water—as hon. Members representing agricultural constituencies will know—agricultural buildings, fences and that kind of thing, are preserved by the use of creosote.

Approximately 15 million gallons of creosote for timber preservation are sold each year by the tar industry in this country. The industry is in pretty keen competition with certain types of imported chemicals which are also used as preservatives, so we have a position in which a British industry, using entirely indigenous materials, is in close competition with imported chemicals, and if the Government's present attitude continues we shall be putting an industry of considerable importance at a great disadvantage, as against the imports with which it is now competing.

11.15 p.m.

It is for this reason that I said to the Financial Secretary that surely this Amendment meets the point he made in discussing the last Amendment. Here there is a question of the competitive nature of a British industry. I should have thought that the Chancellor did not intend either in the Budget or the Finance Bill that this kind of imposition should be placed on one of our industries in keen competition with imported materials which, I understand, are not subject to such taxation as the Chancellor is here levying.

These are the reasons why my hon. Friends and I have put forward this Amendment. We make no secret of the Fact that the industry has been in touch with us, as it probably has been with hon. Members opposite. My hon. Friend the Member for Cannock (Miss Lee) has a very big firm in her constituency which manufactures much of this material. I hope these arguments will appeal to the Chancellor and the Financial Secretary and in that spirit I move this Amendment.

Sir E. Boyle

The effect of the Amendments in the name of the hon. Member for Newton (Mr. Lee) would be to exempt from the new heavy oil duty oils used for the preservation of timber either by absorption or impregnation. As the main oil used for this purpose is creosote, the effect would be to exempt creosote used for timber preservation.

I understand that the cost of the two Amendments would be about £150,000 a year. I mention that to show that the objection of the Government to these Amendments is not primarily the cost itself. As the hon. Member quite properly said, and I am well aware of this, the Tar Distillers Association has made clear to a number of hon. Members that it was concerned about the application of the duty to creosote. As the hon. Member said, in the course of the treatment of coal for the production of gas, coal tars are produced as a by-product and are further treated to extract the different fractions, among which are road tars, pitch and creosote. Creosote is an important indigenous product from the treatment of home-produced coal and its production and sale are of significant importance to the economics of the coal tar industry.

One point I should make clear to the Committee—namely, why we are levying this duty seeing that creosote was not dutiable when the previous duty on heavy oils was levied in 1933 and 1947. Creosote is mainly an indigenous product, and the previous duty applied only to imported oils, but the new extra duty has to apply to indigenous as well as imported oils because the E.F.T.A. agreement rules out any new system of protection of that kind.

There are two rather serious objections to the Amendment, but at the end of my remarks I shall make a point which I hope will be of some value to the industry. The first objection is that the exemptions which the hon. Member has proposed in these Amendments relate to the end use of the products. The hydrocarbon oil duty is itself levied on the delivery of oils from bonded premises Thereafter, after the duty has been raised, the goods are out of Customs control. Any exemption related to ultimate use raises very real administrative difficulties. Any concession in this Clause related to a particular use would very much alter the whole administrative balance of the Clause and raise real difficulties of control.

The objection to the exemption the hon. Member suggested goes rather deeper still. Any exemption from the oil duties for particular users would naturally give rise to a considerable number of other claims for preferential treatment. [An HON. MEMBER: "Horticulture."] I thought that someone would mention that. My right hon. and learned Friend has said already tonight that he will look again at the position with regard to one important industry. It is very important indeed that we should hold a firm line and not at once consider too many special exemptions, because otherwise the whole equity and purpose of the Clause will go. Therefore, I cannot tonight hold out any encouragement that my right hon. and learned Friend will be able to consider favourably the exemption suggested by the hon. Member for Newton.

However, I will say one thing to the industry, because I know that real concern has been expressed about that. Creosote in many cases does not consist wholly of hydrocarbon oil. The Customs are taking such steps as they can to exclude the non-hydrocarbon oil contents of creosote from the charge. The Tar Distillers Association has indicated that, though it would like the complete exemption of creosote, it nonetheless regards the proposal for that abatement as at any rate a worth while concession.

With that explanation I hope that the Committee will feel able to reach a conclusion on the Amendment soon.

Mr. Jay

Can the Financial Secretary tell us quantitatively how the concession he suggests would be related to the one proposed by my hon. Friend?

Sir E. Boyle

I cannot give the right hon. Gentleman the answer offhand in quantitative terms. I will endeavour to find out as accurate a figure as I can and communicate with the right hon. Gentleman.

Mr. Lee

It appears that it is a matter of luck, depending on whether one's Amendment is called first, second or third. I am unfortunate because my Amendment was not called before that of the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith). I must therefore suffer, because the number of concessions for tonight has been exhausted. This is a remarkable version of Boyle's Law of a year or two ago. It is totally unacceptable to us.

The main weight of the argument is that this is an indigenous product which is now being unfairly handicapped in competition with an imported product. The hon. Gentleman did not address himself to that point. What will be the result upon the chances of the industry in competition with imported materials as a result of all this? We heard nothing about that. It appears to me, as I hope it does to hon. Members who have received this kind of communication, that this is an eminently satisfactory and suitable case for a concession. From the point of view of encouragement of the home industry, as distinct from imports, the case deserves favourable consideration. Because the Amendment is called after we have had our ration of concessions for the day we must suffer in this way. I hope that my hon. Friends will support the Amendment in the Lobby.

Sir Henry d'Avigdor-Goldsmid (Walsall, South)

Every hon. Member is used to receiving documents containing the special pleadings of industries affected by changes in the Finance Bill. I am in no doubt as to the wide circulation of the document I have received, because the hon. Member for Newton (Mr. Lee) has evidently received a very similar document. On the occasions we make such pleas we are entitled to an explanation from the Treasury as to its appreciation of the damage that the new duty is doing to the industry and the cost of relieving it. We are entitled to a reasonable explanation as to whether a case of which we cannot have reasonable knowledge but out of duty to our constituents are bound to advance is well based. With respect to my hon. Friend the Financial Secretary, we have not received such a reply tonight.

There may be very good reasons for rejecting this application, but I suspect that my hon. Friend's casual throw-away mention of E.F.T.A. is perhaps the main reason. Whatever it is, we have not been told it this evening, and I hope that before we go back to our constituents we shall be in a position to answer the very sensible protests that have been made against putting this duty on for the first time. This is a new duty on the creosote industry, and it is entitled to an explanation of why it is being levied.

Mr. Malcolm MacPherson (Stirling and Falkirk Burghs)

I shall not take more than two minutes of the Committee's time at this hour of the night, but the headquarters of Scottish Tar Distillers is in my constituency, and I am not convinced by what the Financial Secretary has said. He has not given the reasons for rejecting this Amendment, and I am sorry about that. Scottish Tar Distillers does about 95 per cent. of this kind of work in Scotland. It sends its creosote all over Scotland to about 80 preservation centres—partly to private estates and partly to the Forestry Commission.

The use of this product is connected with the timber industry in Scotland, and in recent years both the House of Commons and public opinion generally have been concerned to build up the timber and forestry industries. The price increase resulting from this tax will be pretty steep—about 15 per cent. I want to emphasise what has been emphasised at far greater length at all hours of the day and night; that Scottish industry is not in a terrifically flourishing state as it is in London and Birmingham, and this duty will be an additional difficulty for the forestry part which we all want to build up.

Mr. William Ross (Kilmarnock)

I think it was rather discourteous of the Financial Secretary to make up his mind not to accept this proposal before hearing all the arguments. There had been only one speech before he answered, and it would have been fairer for him to have first listened to his hon. Friends and to others who had shown a wish to address themselves to this point. I hope that he will now reconsider what he said about quantitative reconsideration, and add this commodity to his list.

Mr. Millan

I should like to hear a further word from the hon. Gentleman on the E.F.T.A. aspect, as I did not follow him completely. I understand that the competition with creosote is not from some other sort of imported oil but from some sort of chemical preservatives—to read from this document that I think we have all had—which …are used as solutions in water, and generally consist of mixtures of copper sulphate, arsenic pentoxide and potassium or sodium dichromate, the basic raw materials for which have to be imported. There is no suggestion that we are putting on 2d. a gallon on sodium dichromate and, that being so, I do not follow the reference to E.F.T.A. If this 2d. a gallon on creosote were removed we would not be offending against the principles of E.F.T.A. Perhaps the hon. Gentleman would explain his argument with special reference to these materials which are, as I understand it, the real competitors with creosote, and are not affected by the oil duty one way or the other because they are not oils.

Sir E. Boyle

The last thing I wish is to be discourteous to the Committee, especially at the end of the day and after a number of agreeable debates. In answer to the hon. Member for Stirling and Falkirk Burghs (Mr. Malcolm MacPherson) I duly note that in all these matters we must consider the effect on Scottish trade and industry.

The E.F.T.A. point was referred to both by the hon. Member for Glasgow, Craigton (Mr. Millan) and by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid). The point that I was making was this—and I do not want to sail under any false colours as far as this E.F.T.A. point is concerned. I pointed out that creosote was not dutiable during the period of the previous duty on heavy oils, which was between 1933 and 1947. The reason for that was that creosote is mainly an indigenous product whereas the previous duty applied only to imported oils.

11.30 p.m.

E.F.T.A. comes into the question in this way. The new Excise duty has to apply to indigenous oils as well as to imported oils because the E.F.T.A. Agreement rules out any new protective measures, and to bring back a duty on heavy oils in 1961 after the signature of the E.F.T.A. Agreement and to appear to discriminate between indigenous oils and imported oils would not be possible in view of the undertakings into which we entered.

I cannot give any quantitative estimate of what will be gained to the industry by the administrative concession to which I have referred. Frankly, it has not yet been possible to make such an estimate. I can only repeat that the reasons why the Government do not feel they ought to accept this Amendment are, first of all, the administrative difficulty, because any exemption related to the ultimate use in this case raises real difficulties of administrative control, and secondly I repeat that I believe that if we are going to have a whole series of detailed exemptions it would be difficult to maintain either a satisfactory or an equitable structure for this tax. It is for those reasons that my right hon. and learned Friend cannot advise the Committee to accept the Amendment.

Mr. Lee

Could the hon. Gentleman say a word on the point which I raised? What will be the effect upon the home industry of this tax, in the judgment of the Government? Is it the opinion of the Government that the industry can carry the tax and still compete successfully with the imported chemicals?

Sir E. Boyle

That is a difficult point for anyone not at the Board of Trade to generalise about. All I can say is that, of course, if the industry were unable to find a market for creosote, it would be in very great difficulties, but we are not convinced that failure to exempt the industry from this tax would put it in such great difficulties as all that. We are bringing back a tax on heavy oils for the first time after fourteen years, and, of course, we shall see how the tax operates and how it bears on individual industries. I say that not to hold out hopes of an Amendment on Report but simply to put before the Committee what any conscientious Government of any party must do when bringing back an important tax after a lapse of fourteen years.

Mr. Jay

Can the Financial Secretary elucidate this E.F.T.A. point which he introduced very casually? He says that the Stockholm Treaty precludes the United Kingdom from introducing new forms of protection. I suppose this means that it precludes this country from introducing new forms of protection against imports from one of the E.F.T.A. countries—not that it precludes us from any increase of any form of import duty Whatever. If the Stockholm Treaty means that, I do not think that most of us understood that that was so. If the hon. Gentleman's argument is that some new form of protection would be involved against some new products coming from one or more of the E.F.T.A. countries, can the hon. Gentleman say what those products are and which countries they are?

Sir E. Boyle

I think the point is relatively simple. We had the earlier duty in the 1930's and 1940's——

Mr. Willis

Do not read it again. The hon. Gentleman has been asked a question.

Sir E. Boyle

The point was that creosote was mainly a product produced in this country and the previous duty applied only to imported oils. Surely there is nothing difficult about the concept that the Stockholm Treaty prevents us from discriminating in this kind of way between indigenous oils and imported oils.

Sir L. Ungoed-Thomas

Would the hon. Gentleman answer the question that he has been asked?

Mr. Grimond

If the duty were removed from both imported and indigenous oils, would that not get round the difficulty?

Sir L. Ungoed-Thomas

May we have an answer to the question my right hon. Friend has asked? He has asked a question. No answer has been given to it.

Sir E. Boyle

I think the full implications of the question the right hon. Gentleman was asking went rather beyond the strict confines of this Amendment. I was merely trying to explain just exactly what were the consequences of this duty affecting the E.F.T.A. Agreement. On that point I do not think I can add to the three answers I have already given to the Committee.

Mr. Jay

I do not wish to prolong this unnecessarily, but the Financial Secretary did introduce this argument. What we are asking is, would he make clear what he means? I asked what are the imports and from which E.F.T.A. countries against which we are not allowed now to introduce protection. He seemed to say in his second or third answer that he had in mind some form of oil imports. I am not familiar with oil imports, at any rate on any scale, from any of the E.F.T.A. countries. Can the hon. Gentleman say what are these oil imports and from which of the six other countries they come?

Sir E. Boyle

Perhaps the right hon. Gentleman would put down a Question about that. [HON. MEMBERS: "Oh."] Tonight I have explained the principle on which the Government are bound to act since the passing of the Stockholm Treaty. If the right hon. Gentleman wishes to know details of how the principle is worked out I suggest that his proper course is to put down a Question.

Mr. Millan

I wonder if we are in the least doubt about the principle now after the Financial Secretary has told us something about it about five times and in roughly the same words each time. [HON. MEMBERS: "He read it."] We are clear about the principle. What we are not clear about is how the principle works in this case. Is he saying that the creosote industry of this country competes with the creosote industry in Sweden or somewhere else and therefore, we cannot have protection for the home industry because that would be to discriminate against the Swedish creosote industry? Or is he saying he is not giving us any information at all?

As I say, my information was that the competition which the indigenous creosote industry had to meet was competition with chemical preservatives. If that is so, if it is not in competition with the creosote industry in one of the E.F.T.A. countries, then it is very difficult to see what the E.F.T.A. point has to do with this argument at all. It is not any use giving us the principle. I think we are now clear about the principle. What we want to know is the practical effect. We have not had anything at all from the Financial Secretary on that. I must say I find it completely puzzling, as, indeed, did the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid).

Mr. Willis

So does the Financial Secretary.

Sir L. Ungoed-Thomas

This really is not good enough. The Financial Secretary himself has produced this as his main argument. This is the thing which stood out in his observations. There really was not a great deal of substance in anything else he said. Every Member who has spoken since the Financial Secretary spoke has dwelt on this point. He has produced no answer. It is not we who have taken him by surprise. He has given us that Treasury brief. We are not on Second Reading and dealing with great matters of principle. We are in Committee on points of detail. We are exactly at the point at which he should give us information.

My right hon. Friend the Member for Battersea, North (Mr. Jay) asked him a question, whether there was discrimination here against any E.F.T.A. country contrary to the Stockholm Treaty which provides against discrimination. The Financial Secretary was asked the inevitable question, "What E.F.T.A. products are discriminated against?". It was the Financial Secretary who brought this matter up. We asked a question, and he is unable to answer it. This really is not good enough, coming here utterly unable to substantiate his own argument before the Committee engaged on matters of detail. This is his argument. May we have an answer? This Committee deserves an answer. We demand an answer. What is the answer to the question which has been put to the Financial Secretary?

Mr. Diamond

I suspect that we may get an answer eventually, but it appears that it is the duty of one or other of us to make clear just what is the question we are asking, so that the answer may be more readily obtained.

My hon. Friends are really not asking for information now. We are saying that we have been misled, that the E.F.T.A. point does not apply, and that there is no competition between home produced and E.F.T.A. oil. The competition is, actually, between home produced oil and chemicals, which is something quite different.

Therefore, unless the Financial Secretary can justify the E.F.T.A. remark he made, he should withdraw that remark. He is now, I suspect, in a position to do one or the other.

Mr. Willis

It would be unfair for hon. Members to rob the Financial Secretary of the opportunity of explaining to the Committee the information he has obviously just received from his Department. I am sure that that information was not in his possession a short while ago when he endeavoured to answer this question.

Up till now the hon. Gentleman has merely read the brief he has on this topic three times, and that brief has not been very helpful. But perhaps now the hon. Gentleman is prepared to answer the question.

Sir E. Boyle

I do not think I have very much to add to what I said earlier. I am rather surprised that hon. Gentlemen have scolded me for my casual reference to E.F.T.A. I am also rather surprised at having been accused at having relied on that point to the exclusion of all other points.

I said to the Committee earlier, and I repeat it now, that the Government are not turning down this Amendment because of their commitments to E.F.T.A. Our commitments to E.F.T.A. under the Stockholm Treaty concerned one point only, which is why we are no longer in a position to apply this duty to imported oil but not to indigenous oil.

That principle remains, because if we do not fulfil our agreements under E.F.T.A. it would be possible, notionally, for oil from other countries to be diverted through E.F.T.A. countries to Britain.

No difficulty would arise if the Government were to follow the policy

of the Leader of the Liberal Party (Mr. Grimond) of having no duty on oil for this purpose at all. The Government have considered that possibility and have turned it down, firstly, on administrative grounds, and, secondly, because it would not be wise to make a further, not a large, but none the less appreciable break in the general nature of this tax. If one were to make this concession, it would be extremely difficult not to make a number of concessions of a similar kind.

For these reasons, the Government have rejected the Amendment and we are unable to have exactly the same structure of duty as we had in the days of the previous oil tax. Having given that explanation, I cannot make myself clearer.

Mr. Lee

The Financial Secretary has still not cleared up the matters that hon. Members have raised. It appears that there is to be no consideration by the Government of the effect this tax will have on the industry. Therefore, I urge my hon. Friends to divide the Committee.

Question put, That those words be there inserted:—

The Committee divided: Ayes 107, Noes 182.

Division No. 174.] AYES [11.44 p.m.
Ainsley, William Hannan, William Redhead, E. C.
Allaun, Frank (Salford, E.) Hart, Mrs. Judith Reynolds, G. W.
Awbery, Stan Herbison, Miss Margaret Robertson John (Paisley)
Baxter, William (Stirlingshire, W.) Hill, J. (Midlothian) Ross, William
Boardman, H. Hilton, A. V. Short, Edward
Bowden, Herbert W. (Leics, S. W.) Hocking, Philip N. Slater, Mrs. Harriet (Stoke, N.)
Bowles, Frank Holman, Percy Slater, Joseph (Sedgefield)
Brockway, A. Fenner Houghton, Douglas Small, William
Broughton, Dr. A. D. D. Howell, Charles A. (B'ham, Perry Barr) Sorensen, R. W.
Castle, Mrs. Barbara Howell, Denis (B'ham, Small Heath) Soskice, Rt. Hon. Sir Frank
Cliffe, Michael Hughes, Cledwyn (Anglesey) Spriggs, Leslie
Crossman, R. H. S. Hughes, Emrys (S. Ayrshire) Stewart, Michael (Fulham)
Davies, Harold (Leek) Hynd, H. (Accrington) Stonehouse, John
Davies, Ifor (Gower) Janner, Sir Barnett Stones, William
de Freitas, Geoffrey Jay, Rt. Hon. Douglas Sylvester, George
Delargy, Hugh Jones, Dan (Burnley) Symonds, J. B.
Dempsey, James Jones, Jack (Rotherham) Taylor, Bernard (Mansfield)
Diamond, John King, Dr. Horace Thompson, Dr. Alan (Dunfermline)
Dodds, Norman Lee, Frederick (Newton) Tomney, Frank
Dugdale, Rt. Hon. John Loughlin, Charles Ungoed-Thomas, Sir Lynn
Edelman, Maurice Mabon, Dr. J. Dickson Wainwright, Edwin
Evans, Albert MacColl, James Warbey, William
Fernyhough, E. McInnes, James Watkins, Tudor
Fitch, Alan MacMillan, Malcolm (Western Isles) Weitzman, David
Fletcher, Eric McPherson, Malcolm (Stirling) White, Mrs. Eirene
Foot, Dingle (Ipswich) Mallalieu, E. L. (Brigg) Whitlock, William
Forman, J. C. Manuel, A. C. Wilkins, W. A.
Fraser, Thomas (Hamilton) Mapp, Charles Willey, Frederick
Gaitskell, Rt. Hon. Hugh Marquand, Rt. Hon. H. A. Willis, E. G. (Edinburgh, E.)
Galpern, Sir Myer Millan, Bruce Wilson, Rt. Hon. Harold (Huyton)
Ginsburg, David Mitchison, G. R. Woof, Robert
Gordon Walker, Rt. Hon. P. C. Noel-Baker, Francis (Swindon) Wyatt, Woodrow
Gourlay, Harry Oswald, Thomas Yates, Victor (Ladywood)
Greenwood, Anthony Pargiter, G. A.
Grey, Charles Pavitt, Laurence TELLERS FOR THE AYES:
Grimond, J. Pentland, Norman Mr. Lawson and
Hall, Rt. Hn. Glenvil (Colne Valley) Probert, Arthur Mr. Irving.
Agnew, Sir Peter Hall, John (Wycombe) Pickthorn Sir Kenneth
Aitken W. T. Hamilton, Michael (Wellingborough) Pilkington, Sir Richard
Allason, James Hastings, Stephen Pott, Percival
Atkins, Humphrey Hendry, Forbes Price, David (Eastleigh)
Barber, Anthony Hill, J. E. B. (S. Norfolk) Prior, J. M. L.
Barter, John Hinchingbrooke, Viscount Prior-Palmer, Brig. Sir Otho
Batsford, Brian Holland, Philip Proudfoot, Wilfred
Beamish, Col. Sir Tufton Hollingworth, John Pym, Francis
Bennett, F. M. (Torquay) Hopkins, Alan Quennell, Miss J. M.
Biggs-Davison, John Hornby, R. P. Ramsden, James
Bingham, R. M. Hughes-Young, Michael Rawlinson, Peter
Birch, Rt. Hon. Nigel Hulbert, Sir Norman Redmayne, Rt. Hon. Martin
Bishop, F. P. Hutchison, Michael Clark Rees-Davies, W. R.
Black, Sir Cyril Iremonger, T. L. Renton, David
Bossom, Clive Irvine, Bryant Godman (Rye) Ridley, Hon. Nicholas
Box Donald James, David Roberts, Sir Peter (Heeley)
Boyd-Carpenter, Rt. Hon. John Johnson, Eric (Blackley) Roots, William
Boyle, Sir Edward Johnson Smith, Geoffrey Russell, Ronald
Brewis, John Kerans, Cdr. J. S. Scott-Hopkins, James
Brown, Alan (Tottenham) Kerr, Sir Hamilton Shaw, M.
Browne, Percy, (Torrington) Kershaw, Anthony Shepherd, William
Buck, Antony Kimball, Marcus Simon, Rt. Hon. Sir Jocelyn
Bullard, Denys Kirk, Peter Skeet, T. H. H.
Campbell, Gordon (Moray & Nairn) Kitson, Timothy Smith, Dudley (Br'ntf'rd & Chiswick)
Carr, Compton (Barons Court) Langford-Holt, J. Smithers, Peter
Carr, Robert (Mitcham) Legge-Bourke, Sir Harry Soames, Rt. Hon. Christopher
Channon, H. P. G. Lewis, Kenneth (Rutland) Spearman, Sir Alexander
Chichester-Clark, R. Lilley, F. J. P. Steward, Harold (Stockport, S.)
Clark, William (Nottingham, S.) Linstead, Sir Hugh Sumner, Donald (Orpington)
Cleaver, Leonard Litchfield, Capt. John Tapsell, Peter
Cordeaux Lt.-Col. J. K. Lloyd, Rt. Hon. Selwyn (Wirral) Temple, John M.
Corfield, F. V. Longden, Gilbert Thomas, Leslie (Canterbury)
Courtney, Cdr. Anthony Loveys, Walter H. Thompson, Richard (Croydon, S.)
Critchley, Julian Low, Rt. Hon. Sir Toby Thornton-Kemsley, Sir Colin
Currie, G. B. H. Lucas-Tooth, Sir Hugh Tiley, Arthur (Bradford, W.)
Dalkeith, Earl of MacArthur, Ian Tilney, John (Wavertree)
d'Avigdor-Goldsmid, Sir Henry McLean, Neil (Inverness) Turner, Colin
Deedes, W. F. McMaster, Stanley R. Turton, Rt. Hon. R. H.
Donaldson, Cmdr. C. E. M. Macmillan, Rt. Hn. Harold (Bromley) Vane, W. M. F.
Doughty, Charles Macpherson, Niali (Dumfries) Vickers, Miss Joan
Drayson, G. B. Maddan, Martin Wakefield, Edward (Derbyshire, W.)
du Cann, Edward Maginnis, John E. Walder, David
Duncan, Sir James Markham, Major Sir Frank Walker, Peter
Elliot, Capt. Walter (Carshalton) Mathew, Robert (Honiton) Walker-Smith, Rt. Hon. Sir Derek
Emery, Peter Matthews, Gordon (Meriden) Ward, Dame Irene
Errington, Sir Eric Maudling, Rt. Hon. Reginald Watts, James
Farr, John Mawby, Ray Webster, David
Finlay, Graeme Maxwell-Hyslop, R. J. Whitelaw, William
Fisher, Nigel Maydon, Lt.-Cmdr. S. L. C. Williams, Paul (Sunderland, S.)
Foster, John Mills, Stratton Wilson, Geoffrey (Truro)
Fraser, Ian (Plymouth, Sutton) Montgomery, Fergus Wise, A. R.
Gammans, Lady More, Jasper (Ludlow) Wolrige-Gordon, Patrick
Gardner, Edward Morgan, William Wood, Rt. Hon. Richard
Glyn, Dr. Alan (Clapham) Nabarro, Gerald Woodhouse, C. M.
Glyn, Sir Richard (Dorset, N.) Noble, Michael Woodnutt, Mark
Godber, J. B. Oakshott, Sir Hendrie Woollam, John
Goodhart, Philip Page, John (Harrow, West) Worsley, Marcus
Grant, Rt. Hon. William Page, Graham (Crosby) Yates, William (The Wrekin)
Grant-Ferris, Wg Cdr. R. Pannell, Norman (Kirkdale)
Green, Alan Pearson, Frank (Clitheroe) TELLERS FOR THE NOES:
Gresham Cooke, R. Peel, John Colonel J. H. Harrison and
Grosvenor, Lt.-Col. R. G. Percival, Ian Mr. Gibson-Watt.
Mr. H. Wilson

I beg to move, That the Chairman do report Progress and ask leave to sit again. I am sure the Prime Minister will realise that this is no disrespect to him. The fact that he has come to enliven our proceedings is one of the strongest reasons for continuing the debate, and we are glad to see him and welcome him back to the Committee stage of the Finance Bill. We wish that he had come in a few minutes earlier. Then perhaps somebody with sufficient authority would have been here to enable the Financial Secretary to accept the valuable Amendments about sheep dipping. Obviously the Financial Secretary had no authority to do so. The Chancellor was not here. Had the Prime Minister been here, the Financial Secretary could have been given the necessary authority.

I do not move this Motion with any great hope that it will be accepted, because I know that the Chancellor has ideas about reaching what he considers to be an adequate stage of progress. I would point out to him, as I am sure he knows, that a great deal of the discussion today has been on Amendments moved from his side of the Committee. We do not object to that. That is the right of hon. Members on both sides of the Committee.

Mr. Nabarro

Good Amendments, too.

Mr. Wilson

I am not sure that they were necessarily good Amendments, but they took a long time. We got through the last two Amendments with exemplary speed. It would be helpful if the Chancellor said what his intentions are for the rest of the evening so that the Committee can adjust itself to what he has in mind.

Mr. Selwyn Lloyd

I have no complaint to make about the way in which progress has been made so far. I think that the discussions have been conducted with very good temper and great objectivity. I still hope to make rather more progress tonight. Yesterday we did Clause 1. We are now most of the way through Clause 2, and I hope that we might succeed in finishing that Clause and perhaps do one or two more Clauses without making excessive demands on the endurance of the Committee.

Mr. H. Wilson

I am grateful to the right hon. and learned Gentleman for saying what he has in mind. There are two or three more Amendments to Clause 2. If they are dealt with with the same celerity as the last two, I think that we should make some reasonable progress. A number of my hon. Friends are anxious to debate the Motion, That the Clause stand part of the Bill. I would not say that they wish to do so at excessive length or particularly fully, but there are points to be made on the Clause as a whole. We shall see how far we get. Clauses 3 and 4 are rather narrow points, though complicated. I gather that we are to have the assistance of the Solicitor-General on both, but that should not delay things unduly. I hope that, with any luck, we shall be able to fit in with what the Chancellor has in mind. If that is the position, I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

Mr. Alan Green (Preston, South)

I beg to move, in page 2, line 31, to leave out subsection (2).

The Chairman (Sir Gordon Touche)

I think it would be convenient to the Committee also to take the Amendments in page 2, line 43, to leave out subsection (3), in page 3, line 12, to leave out subsection (4), and in line 18, to leave out subsection (5).

Mr. Green

It would certainly be very convenient to discuss the other Amendments, which are wholly consequential.

I want to be very brief, in response to the right hon. Member for Huyton (Mr. H. Wilson), and I believe that I can be. The point at issue here is that my hon. Friends and I feel that we should not catch within the Clause stocks already in the hands of consumers before Budget day. I believe that that principle finds a good, strong echo in the heart and mind of my right hon. and learned Friend the Chancellor of the Exchequer, and, indeed, in the hearts and minds of the whole Committee. It is not the practice to impose a new tax or an increase in an old tax upon stocks already held in the hands of the consumer, and it is the whole purpose of the Amendments to secure that that should not be done.

I appreciate that in winding up on Second Reading my hon. Friend the Financial Secretary to the Treasury drew attention to one technical difficulty involved in this matter. The only answer I would make is that if there is some inequity if the subsection is simply omitted we shall not correct that inequity by doing violence to a principle, which is not to tax stocks already in the hands of the consumer. Because I believe that my right hon. and learned Friend is basically in sympathy with the principle that I am trying to enunciate, I think I can leave the matter there.

Mr. Selwyn Lloyd

Perhaps I may intervene early to save time. I cannot contemplate the possibility of exempting all stocks from this tax, because that would cost £15 million. Some stocks were in bond and they must clearly pay duty when they leave bond. Other stocks, I agree, were not in bond, but they were undistributed and unsold and but for the fact of bonding they were in precisely the same position as stocks in bond. In fact the circumstance of bonding is largely fortuitous. Because, as I understand, light oils, which are subject to duty, and heavy oils, which were not so subject, happened to be in the same area, the area has been bonded and it is therefore an accident that certain heavy oils have been bonded and others have not. I cannot accept the conception that stocks which are in process of distribution should be discriminated against according to whether they are in bond or not in bond.

With respect, I think that my hon. Friend the Member for Preston, South (Mr. Green) is on a real point when he suggests—and I find great difficulty in resisting his suggestion—that if certain stocks have been purchased by those who were going to use them—that is they have bought and paid for what they were going to use themselves—it is a remarkable proposition to say that the Revenue must demand a duty on those stocks.

12 m.

To give a homely example, suppose a person bought 10,000 cigarettes for himself and there was a change in the duty. The idea that the Revenue could say that those stocks could be exposed to increased duty would be contrary to what people would regard as common justice. There is here a real point, and I am prepared to look at it again.

There are certain tactical difficulties. There is the question of the identification of stocks which have already been purchased for use and there may be certain questions of definition, but I do not think that they are insuperable and it would be possible to work out something to cover the very real objection. It would be contrary to our system that commodities which have been purchased and delivery has been taken of them for use should be the subject of an alteration in duty. I am prepared to undertake to try to do this re-examination between now and Report.

Mr. Green

With that good assurance from my right hon. and learned Friend, for which I thank him, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

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

Mr. Millan

I wish to raise one point about the matter we were last discussing, the question of creosote. I hope that even at this late stage the Government will look at this again. In 1960 we exported no less than 19 million gallons of creosote. Therefore, it is pretty obvious that what the Financial Secretary was saying about E.F.T.A. is not a serious consideration in relation to creosote.

At a later stage in our proceedings I hope that we shall be able to return to this question and obtain more satisfaction from the Government. I think they have been badly briefed on a number of important questions raised in the Clause. They have given one concession to the horticulture industry, but they have not shown the same generosity of mind towards the other very important objections to this Clause which have been raised. Some hon. Members will want to return to this point later, and I hope that the Government will look on it with a certan amount of favour. I think that the figure that I mentioned shows that the arguments used by the Government on this important matter do not stand serious examination.

Mr. Wainwright

There are a good many points to which objection is taken by hon. Members on this side of the Committee, and it is only right that even at this late hour we should have a fair discussion on this Motion. We were disappointed that the Government refused to accept an Amendment to leave out "gas oils and kerosene" in page 2, line 23. A good many points have been put by hon. Members on this side of the Committee which would warrant the Government looking at that Amendment.

It was mentioned that many people who live in farm houses and cottages have to use paraffin and because they have not a supply of electricity or piped gas, paraffin and kerosene should have been exempted from this duty. But in spite of that the Government decided not to accept the Amendment.

The Chairman

I am afraid the hon. Member cannot argue that point now. It has been settled by a Division of the Committee.

Mr. Wainwright

I do not want to argue the point, Sir Gordon, but merely to comment on it. I think that that should be done. For instance, we never expected that the Government would want to supplement their revenue by imposing a duty on fuel oils. We believe that the Government should have continued to place a duty on fuel oils and allowed the money so obtained to be used to ease the duty on petrol and diesel oil. That has not been done, and that is something to which the country will certainly object.

This duty on fuel oil will bring in some £50 million odd which, plus a few more millions, the Government propose to hand over to a small section of the community as a Surtax rebate. The Government obviously feel that this is the only way in which to obtain the money to give to people who can well afford to manage without it. Yet certain hon. Members opposite criticise this 2d. duty on fuel oils because, they say, it will affect the economy of the country and increase the cost of production. I wonder where they think the money is to come from for the Surtax payers and who is going to produce the money which will enable them——

The Chairman

That does not arise on this Clause.

Mr. Jay

May I ask for your guidance, Sir Gordon? May not this matter arise on this Clause, since it is designed to raise additional revenue, and is not my hon. Friend entitled to argue that this is part of the revenue being used to ease the lot of the Surtax payer?

The Chairman

I am afraid that the hon. Member is going rather beyond that.

Mr. Wainwright

If I am only entitled to criticise the actions of hon. Members opposite on an issue of this kind and am not entitled to discuss the whole Clause, what is the point of discussing the Question "That the Clause stand part of the Bill"? I am rather surprised at your Ruling, Sir Gordon, but as I have a great respect for the Chair I will certainly attempt to keep within the confines of what, in your judgment, you have ruled I can discuss. If the hon. Member for Cornwall, North (Mr. Scott-Hopkins) wants to say something perhaps he will stand up.

Mr. Scott-Hopkins

I said that I would be very grateful to get in as soon as the hon. Member finishes.

Mr. Wainwright

If you stay here long enough you will have an opportunity to speak.

Mr. Scott-Hopkins

That is what I am waiting for.

Mr. Wainwright

You may have to wait a little longer now.

The Chairman

The hon. Member must address his remarks to the Chair.

Mr. Wainwright

I am sorry, Sir Gordon. I will keep the hon Member a little longer if he persists in being impertinent. Is it not peculiar that hon. Members opposite—[Interruption.] The hon. Member for Kidderminster (Mr. Nabarro) has already been accused of saying something from a sedentary position tonight. If I were he I should be careful. He might be accused again.

Earlier this evening we were discussing the effect of the duty on the coal mining industry. The Government were accused of protecting the industry, in spite of the assertions of the Economic Secretary and the Chancellor. I would remind hon. Members opposite that the industry has played a very important part in our economy, and I would remind the hon. Member for Kidderminster, who is about to leave the Chamber, that he is one of those hon. Members opposite who, time and time again, have been very straightforward in their remarks but have refused to vote against the Government in the final issue.

The Chairman

This has nothing to do with the Question, "That the Clause stand part of the Bill."

Mr. Nabarro

I understand that the hon. Member is talking about me. As a matter of fact, I was the first teller this evening in a vote against the Government on this matter. I suppose the hon. Member was asleep at the time, or boozing, or doing something else.

The Chairman

Order. The hon. Member must withdraw that word.

Mr. Nabarro

I withdraw the word "boozing" and substitute the words "taking refreshment".

Mr. Wainwright

If the hon. Member will not withdraw more graciously than that, his withdrawal is not accepted.

There is some uncertainty about what is to happen to our economy. Time after time hon. Members opposite have made statements about the effect of this duty on the economy. They have stated that this increase will so hinder our economy that we shall suffer. But are not we already suffering because of the actions of this Government since 1951? Are hon. Members opposite not aware that, in spite of the fact that they have had cheap fuel, production in this country has not gone forward at the rate it should have done? Instead of being the highest in Europe, it has been second from the bottom of the league. The Government have had cheap fuel in the past. Why have they not done something about investing and re-capitalising our industries and making them more efficient?

The Chairman

I am sorry, but this does not arise out of the Question, "That the Clause stand part of the Bill."

12.15 a.m.

Mr. Wainwright

If it does not, Sir Gordon, of course your Ruling will be accepted, even though I cannot appreciate that the Ruling is as wide as it should be. If we cannot discuss the effect of this Clause it means that you are restricting discussion this evening just because of the time factor and not because of the——

The Chairman

The hon. Member is really going wider than the Clause.

Mr. H. Wilson

It would be helpful, Sir Gordon, if we could be quite clear what can be raised on this Motion. All the Amendments except the one in the name of the hon. Member for Kidderminster (Mr. Nabarro) have been of relatively narrow application for exemption from the ambit of this Clause. The Amendment in the name of the hon. Member for Kidderminster was more fundamental. I take it that my hon. Friend would be in order to raise the general question of the general effects of the Clause on the economy and the tax position and in particular—since I know that this is a matter of very close concern to him, as it is to all of us—the effect the Clause may have on the relative position of different fuels. It would seem that that would be in order and that when you were ruling about production you were ruling about general industrial production and not production in relation to the coal industry.

The Chairman

The hon. Member has sometimes gone rather wider.

Mr. Wainwright

If I have gone wider it is because the Clause itself and the discussion of the Amendments have been wider. I remember that on the Amendments dealing with horticulture there was quite a wide discussion and hon. Members opposite were not prevented by the Chair from taking part. Even so, I shall try to keep a little more within the ambit of the discussion.

The question of power in this country is essential to the nation. It is very important to the economy to create a cheap form of power. The question of a duty being placed on fuel oil can have a great bearing on the needs and requirements of other fuels being used in industry. I am well aware that there may be some grumbles from hon. Members opposite, but, although accusations were made in the debate on fuel oil about protection being given by the Government to the coal mining industry, later in the evening the question of the horticultural industry was discussed. It was said that horticulture might be affected because of the increased duty. It was argued that horticultural produce might be imported from Holland in unfair competition. When it came to the question of the unfair competition of fuel oil with indigenous fuel, some hon. Members opposite were rather disgusted that the Government had put a duty on fuel oil. If the indigenous fuel is vital to the economy, that is all right. If hon. Members opposite argue that it is not and in the next breath argue that agriculture and horticulture are vital industries and must be protected from imported goods, why do they object when the Government put a protective tariff on coal?

The Government said that was not so. In spite of the Chancellor of the Exchequer saying so, some hon. Members opposite seemed to disbelieve what was said by members of their own Government. There is an unfair disposition by members of the Government against what is termed a nationalised industry. Even if agriculture has to be subsidised by agreement, we do not agree that the low rate you farmers pay your employees——

The Chairman

This does not arise on the Question, "That the Clause stand part of the Bill".

Mr. Wainwright

They are employed by hon. Members opposite. If hon. Members opposite would ensure that a fair share of what they are paid in subsidies went to the employees of the farming industry——

The Chairman

I am sorry, but this is not in order.

Mr. Loughlin

On a point of order. We have been dealing in the Clause with oil used by the agricultural industry. In consequence of a promise made by the Front Bench, I understand that some provision is to be made arising from the Clause for the relief of duty on certain oil used in the agricultural industry. May I ask you, Sir Gordon, whether that relief is not in effect a subsidy to the agricultural industry and, in consequence, should we not be able to discuss this subsidy to the agricultural industry?

The Chairman

That concerned the horticultural industry. We cannot on the Question "That the Clause stand part of the Bill" discuss agricultural wages.

Mr. Wainwright

I ask your forgiveness, Sir Gordon, but I was making a comparison between the attitude of hon. Members opposite to a nationalised industry and their attitude to the horticultural and agricultural industries.

Mr. P. Browne

The hon. Gentleman does not know what he is talking about. I am quite certain that he does not know the average wage——

The Chairman

We cannot go into agricultural wages.

Mr. H. Wilson

On a point of order, Sir Gordon, it should be made plain that some hon. Members have sat through hours of speeches made by hon. Members opposite on their own pet Amendments. We are determined to have a proper debate on the Question "That the Clause stand part of the Bill," and any further interruptions of that sort will lead to the debate continuing a good deal longer than seemed likely.

Mr. Nabarro

There are only nine of you here.

Mr. Denis Howell

We are worth any twenty-nine of you.

Mr. Wainwright

As it is not in order to discuss agricultural wages, I will answer the hon. Member on another occasion, but I warn him that if he is a farmer his employees have plenty to complain about——

Mr. Browne

The hon. Member does not know what I pay my farm workers——

The Chairman

I hope that the hon. Member will try to keep more in order.

Mr. Wainwright

Because hon. Members opposite are interested in oil they are very concerned about the effect of this duty on the oil industry. They are also concerned about its effect on industry as a whole. They say that the price of fuel is high, but they do not realise the dangers that face our industry.

I was prevented by you, Sir Gordon, from talking about the industry to which I belong, although it has been mentioned time and again this evening——

The Chairman

I think the hon. Member misunderstood me. I am concerned only with the rules of order.

Mr. Wilson

We understand your difficulties on this, Sir Gordon, and we all want to keep in order, but I do not think that you will rule adversely on this. Surely, it is in order to discuss the general effects of this oil duty on industry, with particular reference to the substitution of oil for coal or coal for oil. One of the motives that led to this tax being suggested originally was, of course, concerned with switching demand for indigenous fuel so, presumably, my hon. Friend is in order when he talks about the precise problem of the substitution of oil for coal, which led to the original proposal.

The Chairman

I have not interrupted the hon. Member on that point but on another point.

Mr. Wainwright

If I have misunderstood the position, I must now revert to what I wanted to say earlier——

Mr. Nabarro

The hon. Member had better start again.

Mr. Wainwright

In the comparison between oil and coal, hon. Members opposite have never yet said anything good about a nationalised industry——

Mr. Nabarro

I am the champion of the miners.

12.30 a.m.

Mr. Wainwright

The hon. Gentleman is the champion of the coal miners. One remembers the complaints about the National Coal Board and the miners for producing what was regarded as dear coal, but have the Government forgotten the cheap rate at which coal was produced in this country between 1947 and 1957? The Coal Board could have sold coal abroad at £3 a ton more and into the coffers of the Coal Board there would have come another £1,000 million had the Board been allowed to sell coal in a competitive manner. [Interruption.] If the hon. Member for Kidderminster collapses, I will see that a doctor attends to him. The Coal Board and the miners have come into disrepute because of the propaganda of hon. Members opposite and their friends. Had the true story of the coal mining industry been told and publicised by the Press, the nation would have realised the benefits that the economy received from the Coal Board producing coal at a cheaper rate than any other European country.

The 2d. duty on oil will indirectly help the coal mining industry; yet hon. Members opposite say that the Government are acting against the economy of this country. If this nationalised industry is not to be considered and looked after by the nation, hon. Members opposite are being unfair to the future of the country, and they are being unrealistic.

I could tell many stories about the coal mining industry that might bring tears to the eyes of even the farmers. They may think that they have had a rough time. They may think that they have a difficult industry to run and that they are entitled to all the benefits that can be derived from any rebates in order to safeguard their own industry. If, however, they were to realise the difficulties which a nationalised industry like the coal mining industry has and has had they would have a different outlook and would recognise that this 2d. duty may be of some help to the coal mining industry.

The Clause imposes a duty on certain industries in this country. I saw hon. Members opposite stand up in droves when its effect on the horticultural industry was considered. "Droves" is, I believe, a farming term. Anyhow, they were there in great numbers to support a proposal affecting their own personal and individual selves.

Hon. Members


Mr. Prior

How can the hon. Member say that?

Sir D. Walker-Smith

I had the honour to move this Amendment. I have no personal interest in the matter. It affects a great number of my constituents and a great many other worthy citizens in the country. The hon. Member must not make that sort of remark.

Mr. Denis Howell (Birmingham, Small Heath)

We give hon. Members opposite credit for sincerely believing that the case they have been advocating today is for the well being of the community as a whole. That being so, it must be to the personal well-being of hon. Members opposite. My hon. Friend is quite right.

Hon. Members


Mr. Wainwright

I am very pleased that the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) suddenly got up when he realised a member of the farming fraternity was going to interject. I think it was very wise of him so to do.

Mr. Prior

I was going to get up to say I supported the Government in their principle of charging full rate of duty on agriculture, although I am a farmer. I have no interest in horticulture whatever. A few of my constituents have an interest in it, so I supported my right hon. and learned Friend in moving the Amendment. Exactly the reverse of what the hon. Member says is true.

Mr. Wainwright

I do not know whether it is quite true that the reverse is true. Agriculture and horticulture may not have fraternity, but they are cousins. Therefore, of course, it was a definite proof of where the interests of a good many hon. Members opposite lie——

Mr. A. R. Wise (Rugby)

On a point of order. Is it not disorderly constantly to reflect on the motives of hon. Members of this Committee?

The Deputy-Chairman

I think it is a matter of degree. I do not think the hon. Member has gone too far, but I hope he will not go further.

Mr. Wainwright

I very much regret it, Sir William, if my very slight comment on that issue affects or cuts rather deeply some hon. Members opposite, because if that is so it means they are really a bit—I was going to use another term—sensitive. "Sensitive" will do on this occasion.

Mr. Wise

There is a definite tradition.

Mr. Wainwright

If hon. Members opposite will stop talking shop and stand up if they have something to say I am willing to give way.

Mr. Nabarro

Start again.

Mr. Wainwright

If the hon. Gentleman really wishes me to start again, I shall do so. [HON. MEMBERS: "No."] I could, in this matter, refer to the added difficulties of horticulturists or farmers, or I could, perhaps, refer to the effect this 2d. tax will have on the nationalised industries, or shall I—[HON. MEMBERS: "No."] Hon. Gentlemen need have no fear, I intend to end my remarks within a very short time.

Mr. Wise

Just before the hon. Gentleman brings his remarks to a close, will he inform the Committee whether he is for or against Clause 2 standing part of the Bill?

Mr. Wainwright

I am for certain parts of the Clause and I am opposed to other parts of it.

Mr. Wise

Does the hon. Gentleman not know?

Mr. Wainwright

I have said that I am against parts of it and, therefore, I must oppose the Clause in general. However, I shall pursue the matter no further, since I see that hon. Gentlemen opposite are looking tired and that a number of my hon. Friends will no doubt wish to comment on the Motion. I warn hon. Gentlemen, however, that I may wish to say something further about this Bill later on in the morning.

I must add that, indirectly, the Government have shown where they stand as a result of the method by which they have imposed this 2d. duty on fuel oil. They have imposed the duty in a manner that is contrary to the advice given to them by hon. Members representing various sections of the community and their sole aim has been to raise £50 million so that that sum could be passed on to the Surtax payers.

Viscount Hinchingbrooke (Dorset, South)

As things have turned out, my right hon. Friend the Chancellor could have saved himself a great deal of trouble if he had turned elsewhere than to this Clause for £50 million of extra revenue. The Clause has received such a mauling from Amendments put and rejected and from other Amendments which have been accepted, that I begin to wonder precisely where we are. I am wondering whether, therefore, the Chancellor should not seriously consider withdrawing the Clause and recasting it in some other form.

The agricultural concession was refused, largely on the grounds, as it was adduced in the debate on an Amendment on horticulture, that agriculture had an annual Price Review. But, as we have seen in past years, the recoupment of the farmers has been dwindled down and, indeed, powers exist to do exactly that. It is by no means certain that, as a result of next year's Price Review, this tax will be recouped by the farming community. Many hon. Members fear that quite the reverse will happen. In that case, those people are put on more or less the same basis as the horticulture industry. The kerosene Amendments came from both sides of the Committee and were rejected. In common with many of my hon. Friends, I have had letters from people living in simple circumstances in my constituency. The Chancellor neglected this important element of the community and, consequently, they are sufferers from the imposition of this tax.

12.45 a.m.

We have had other Amendments of a special nature exposing circumstances of special hardship to coal tar oils used for the manufacture of disinfectant fluid and kerosene used for timber preservation, which, from the arguments adduced on them, have been just as hard cases as the case of the horticultural industry which has been conceded. I am distressed to find my right hon. and learned Friend the Chancellor of the Exchequer by this method indirectly subsidising an industry that is supposed to be in distress.

My hon. Friends behind me and I have for some months, if not years, been arguing that even the direct Exchequer subsidy was not the right way to deal with the case of these special industries which are supposed to be under a disability; but at least that was on the Estimates, and Parliament could look at the sum every year and vote against it if it desired. This tax, however, once it is in a Finance Act, goes on. It does not have to be renewed annually, because Finance Acts work in the aggregate. We lose sight of this tax and this special concession to the horticulture industry promoted in this particular way.

I object quite definitely and formally to this concession to the horticultural industry, not only because it is not done by a special subsidy on the Estimates which we can vote against year by year—or, at least, it is drawn to our attention—but also because I do not think that the horticultural industry should be singled out as an industry which is specially deserving and given consideration in this way.

We have just had—I was one of those who put their names to the Amendment—a concession given to my hon. Friend the Member for Preston, North (Mr. Green) which exempts the drawback in tax as applicable to stocks already purchased. Where are we on the money side there? In his Budget speech on 17th April, my right hon. and learned Friend the Chancellor of the Exchequer was careful to say: In addition, in order to secure uniform treatment of stocks and, at the same time, to maintain the revenue yield, provision is being made for the appropriate duty to be charged on, heavy oils taken out of storage at unbonded premises and on which the new duty has not been paid."—[OFFICIAL REPORT, 17th April, 1961; Vol. 638, c. 819.] Therefore, when this Amendment is conceded to my hon. Friends and myself, we have to ask what sum of the £50 million is lost to the Exchequer by it. We all know that the amount saved by the horticultural industry is negligible.

My right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith), in a brilliant and persuasive speech today, nevertheless could not refrain from using the "black baby" argument that it was only a small sum that the Chancellor was losing and, therefore, it was a tolerable one. My right hon. and learned Friend the Chancellor echoed that and said that he understood it and agreed with it. Whether it is a large sum or whether it is not, it is a bad principle to enshrine in taxation. We are muddling up our tax structure instead of simplifying it, and we have been making repeated appeals from below the Gangway for years past that the tax structure should be simplified.

I object to what has been done. I think that the amount we will get as a result of this concession will be much less than the £50 million which the Chancellor has calculated, and I think that it would be better to get the tax by extending the tax on television sets to the whole of advertising and be done with it.

Mr. H. Wilson

I do not propose to talk about black babies. I am surprised at the noble Lord bringing the colour question into this.

Viscount Hinchingbrooke

We have had coal tar.

Mr. Wilson

Yes. We have had references to coal tar, and coloured babies, and sheep dips, but I always thought that the original reference to the housemaid's baby made no suggestion that the baby was a coloured one. I do not intend to develop that point further.

I do not intend, either, to talk about horticulture or agriculture, because this Clause is not primarily about horticulture or agriculture. It is about a tax on hydrocarbon oils. It happens to be a fact that most of the Amendments that we have discussed today have related to horticulture and agriculture, and it is understandable that that should be so because of the special effect of the tax on horticulture and agriculture. It is, I think, rather significant—I am not sure what of, but it is significant of something—that hon. Gentlemen opposite have been so vehement in their pressure on these Amendments dealing with agriculture and horticulture, yet so little has bean said about the effects on industry.

Mr. Nabarro

Really! I spoke for thirty-five minutes, and of that time I devoted one minute to agriculture and thirty-four minutes to industry.

Mr. Wilson

I do not want to depreciate anything said by the hon. Gentleman. Perhaps I would have put the case better if I had said that there had not been some special Amendments in relation to particular manufacturing industries as there have been in relation to agriculture and horticulture. I hope that the hon. Gentleman will accept that variation of what I said a few moments ago.

Mr. Nabarro

That is much more accurate.

Mr. Wilson

Good. I am glad that I carry the hon. Gentleman with me so far.

What we are debating here—and I think that this is what my hon. Friend the Member for Dearne Valley (Mr. Wainwright) was concerned about—is the relation of this tax to fuel policy. As the Committee knows, from 1947 onwards there was a special exemption for a wide field of hydrocarbon oils on grounds of fuel policy. There was, and is, what the present Minister of Housing and Local Government, in the days when he was Financial Secretary, even before the Solicitor-General was Financial Secretary, used to call in the dark days of 1955 a yawning gap.

It was, in a sense, an anomalous exclusion. The reason for it was sound. It was because of the immediate post-war difficulties relating to coal and electricity, and it was reasonable to take special steps to encourage the consumption of fuel oil. But those arguments have become much thinner as time has gone on, and it has been clear for three or four years, particularly as the coal mining industry has been going through serious difficulties, that Acre was no case for this continued exemption. Indeed, it is only right to say that we on this side of the Committee have in successive years pressed the Government to reinstitute the tax on fuel oil.

That is not an argument against a particular exemption. It is not an argument against the case being made for horticulture. It is not an argument against the case my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) made so eloquently about sheep dips and things of that kind. It is not an argument against the Amendment we moved about paraffin, but it is a fact that this quirk in the taxation system—and it was a quirk in that fuel oil was exempt as compared with other hydrocarbon oils—encouraged the emergence of more substitutes not only in the dual-fired electricity stations but throughout a wide range of industry.

One result of this over the past three or four years has been a serious decline in the coal mining industry, a lot of short time working, the loss of a lot of miners from the industry, and premature retirements.

A lot of this, of course, was caused by the fact that year by year oil was replacing coal and many of us were deeply concerned about it. Oil was replacing coal because of the exemption of fuel oil from taxation, an exemption which is now made good, if that is the word, by the Clause which we are now debating. And this is just as relevant to the Motion as any speech made on any Amendment moved today.

We were losing miners to the tune of about 30,000 a year as a result of the substitution of oil for coal. Many of us were worried about it. It has been debated many times. We were becoming worried about becoming over-dependent upon oil supplies, some from very vulnerable areas. It is only a few years since the Suez trouble and the interruption of supplies. Many of us were worried about the coal industry, particularly in those areas which were dependent on a single pit closed down by this fuel import.

We were also concerned because this might lead to a shortage of coal before long. Those of us who had had to do with difficulties in the past knew that it is a familiar fact that when there is a surplus of coal and of miners, the industry loses men so rapidly that within a year or two there is a shortage of men. This was so in 1944 after the fall of France. This is one of the reasons why we have pressed in two or three Budget debates that the Chancellor should impose the kind of taxation which is included in this Clause.

I want to make one point but will not trespass very far on it because I would be out of order if I developed it. We said that if the Government were to increase taxation on the oil industry by closing this gap we thought that as a matter of rough justice and economic common sense they ought to reduce other forms of oil taxation. One suggestion was made that there should be a reduction on petrol for private motorists. I quite understand that that was not among the highest priorities when the Chancellor came to frame his Budget. But we have moved year by year the abolition of the tax on diesel oil for all passenger transport and we have felt that this Clause would have been better if it had been related to that and the revenue from it had been used for that purpose. We calculated last year that 1⅔d. per gallon would produce £27½ million enabling the tax to be entirely removed from diesel transport. There is nothing about that quid pro quo in the Clause.

Year by year the Government have refused our proposals for some kind of regulation of imports of oil. We thought that the best way to do it was by a tax of this kind, but it having been said that the big argument is freedom of choice in fuel——

Mr. Nabarro

That is my argument.

Mr. Wilson

We felt that freedom of choice might be better if all the different oils started on an equal basis in taxation, but it does not lie in the mouths of the Government or the mouth of the hon. Member for Kidderminster (Mr. Nabarro), as far as I am aware, or anybody else's to talk about freedom of choice in fuel policy, because there is none. If the hon. Member for Kidderminster wanted to import a considerable quantity of Russian oil, instead of buying it from the big combines, he would be told that he cannot by the Government.

1.0 a.m.

Mr. Nabarro

The Government are about to tell the Steel Company of Wales that it cannot import American coal at a lower price. I believe in freedom of choice.

Mr. Wilson

The point I was trying to make, I do not know the Government's decision on the question of the Steel Company of Wales——

Mr. Nabarro

I know, do not worry.

Mr. H. Wilson

I think that I should be out of order if I went further into the question of coal imports. But I do not think that I am out of order—sub- ject to your Ruling. Sir William—if I talk about oil taxation. When the Government refuse to do anything about regulating oil imports, because of the sanctity of freedom of choice, their whole case becomes hypocritical when they produce artificial barriers against the importation of Russian oil. I do not want to develop that point further. I think there is a serious reflection on the logicality of the Government's position.

We have pressed for a tax of this kind to be introduced, and for the removal of the gap between different kinds of oil. We know that it will cause anxiety and perhaps one or two cases of hardship to people who have installed fuel oil heating in their establishments. I received a rather poignant letter from an invalid, who is getting on in years, who had installed fuel heating on the grounds of health and who will now have to pay more. I was sorry to read about that case because I think that we can all talk glibly about changes in taxation and forget that there are such cases.

Regarding hardship, by far the strongest case that has been argued and an Amendment was rejected by the Committee, is over the case of paraffin. I shall not repeat the arguments which were used, but even though it were rejected I do not think I should be out of order in referring to the Amendment, because the subject is referred to in the Clause. I think there will be general agreement that there is more hardship regarding paraffin than any other part of the oil fuel covered by this tax.

We cannot vote against the Motion, we do not intend to and we never did intend to do so, because on the whole it fulfils the kind of proposal which we have in mind. We much regret that the Government should have done it in this way and that they have not used the revenue to do something highly desirable within the fuel oil taxation, namely, to remove the diesel oil tax on road passenger transport. Having said that, we are content to let this Clause go. We hope that between now and Report the Government will think again about certain aspects and the points which have been made today, particularly about paraffin.

Mr. Barber

I hope that it will be convenient if I intervene now, although I do not wish to exclude any of my hon. Friends from the debate. The right hon. Member for Huyton (Mr. H. Wilson) and my hon. Friends will, I think, agree that, up to the present at any rate, we have an extremely useful and full debate. We have certainly covered a wide variety of Amendments, some of which were referred to by my hon. Friend the Member for Dorset, South (Viscount Hinchingbrooke). We have had a long debate lasting more than two hours which was initiated by my hon. Friend the Member for Kidderminster (Mr. Nabarro) in which he proposed to reduce the duty from 2d. a gallon to ½d a gallon and thereby enabled us to discuss the purposes of the Clause from a broad point of view.

I listened with interest to the hon. Member for Dearne Valley (Mr. Wainwright), who I know well. It is a little difficult for me to answer the many points which he raised because I noted that he was called to order no less than eight times. Suffice to say that in all that he said about the effect of this proposal on the coal industry he was, I know, speaking from considerable personal experience. But I am bound to say that I was a little surprised that at the end of it all the hon. Gentleman said that he definitely opposed the Clause standing part of the Bill. That is hardly in line with the view of, I am sure, many of his friends in the coal mining industry.

Mr. Wainwright

I am grateful to the hon. Gentleman for giving way. The only reason why I was opposing the Clause was because the Government were not proposing to utilise the revenue from the 2d. duty for other purposes.

Mr. Barber

I turn next to the points made by my noble Friend the Member for Dorset, South. He referred to several of the Amendments, but he dealt in particular with two of them. My noble Friend was concerned, as I understood him, that my right hon. and learned Friend had expressed the hope that he would be able to give some help to the horticultural industry. All I can say, because I do not wish to weary the Committee by going again over the reasons given by my right hon. and learned Friend the Chancellor, is that he reached the conclusion that there were certain very special——

Mr. H. Wilson

I am trying to follow the hon. Gentleman, but it seems clear to me that the hon. Member for Kidder minister (Mr. Nabarro) is trying to persuade the Patronage Secretary not to make the speech that he wishes to make, and since we are all anxious to hear him——

The Deputy-Chairman

Order. Private conversation may go on in whispers in any part of the Chamber. Nothing out of order has been happening so far.

Mr. Nabarro

Before my hon. Friend——

The Deputy-Chairman

Is the hon. Member rising on a point of order?

Mr. Nabarro

No, Sir William. I am intervening in the speech of my hon. Friend. I was not trying to persuade my hon. Friend the Patronage Secretary not to make a speech. He is here as an ornament of the Treasury Bench, to be seen and not heard. Had matters been the other way round, it might have been better. But my right hon. Friend knows so much better, is always courteous and has full regard for the rights of hon. Members.

The Deputy-Chairman

Mr. Barber.

Mr. Nabarro

Where is the Labour Chief Whip? Has he gone home?

The Deputy-Chairman

This has nothing to do with the debate.

Mr. Nabarro

Before my hon. Friend resumes his speech, may we know where the Labour Chief Whip is?

Mr. Wilson

I apologise for raising a point and not a point of order. Had I known that the Patronage Secretary was trying to deter the hon. Member for Kidderminster (Mr. Nabarro) from speaking, I should not have raised the point.

Mr. Nabarro

The right hon. Gentleman said it the other way round.

The Deputy-Chairman

Order. I hope that the Committee will now come back to the business before the Committee.

Mr. Barber

I was just referring to what my right hon. and learned Friend had said about his hopes to do something to help the horticultural industry. The only point I really want to make, because this has been discussed very recently, is that in this case my right hon. and learned Friend took the view that there were special considerations which he felt were sufficiently strong to warrant this special effort.

As far as the Amendments moved by my hon. Friend the Member for Preston, South (Mr. Green) are concerned, and to which my noble Friend the Member for Dorset, South also referred, I can assure him that the cost of doing what my right hon. and learned Friend has in mind will not be very great. If the proposal were accepted to exempt stocks generally—all stocks, both in and out of bond—the cost would be of the order of £50 million. But what my right hon. and learned Friend has in mind to do, and which was acceptable to my hon. Friend the Member for Preston, South, is something of a much smaller character. Although I cannot give my hon. Friend the exact figure, it is certainly a relatively small amount, and, of course, a once for all amount.

The reason why my right hon. and learned Friend has seen fit to do this and to propose to amend the Clause in this way is simply because, on reflection, he believes this a right and proper thing to do.

The right hon. Member for Huyton gave us his views on the relations between this tax and the coal industry, and he also explained his views about fuel policy generally, and the reasons why the decision was taken by the Labour Government in 1947 to abolish the penny tax on heavy hydrocarbon oils. I know that, in general, subject to the exceptions to which he referred, he supports the Clause, for reasons different from those which have prompted my right hon. and learned Friend to introduce it. I do not wish to go over the argument, which has now become a rather stale one, as to whether or not my right hon. and learned Friend made this proposal for revenue reasons.

But the right hon. Member went on to say—and this is in line with what he has said previously—that some part of the revenue raised by this proposal should be used to reduce other forms of taxation on oil. He referred specifically to road passenger transport. I would remind the Committee that when my right hon. and learned Friend introduced his Budget he stated specifically that, for reasons which he then gave, he had come to the conclusion that an additional £80 million by way of taxation should be raised in this financial year. This proposal concerning a tax on heavy hydrocarbon oils will bring in £48 million this year, and consequently it would run counter to the view which my right hon. and learned Friend formed of the economic situation if after levying this tax to bring in £48 million he were to use any specific part of that sum to make concessions elsewhere.

Mr. H. Wilson

The hon. Member cannot get away with that one, even at one o'clock in the morning. If this were the only change in the Budget; if there were additional taxation of £80 million, made up of this and perhaps one other item, and there were no tax remission in the Budget, he might be able to say that this or some other tax was essential to produce the required degree of disinflation, but when the Chancellor gives out almost exactly the same amount in Clause 11—which it would be out of order to discuss now—the whole of this argument falls to the ground.

Mr. Barber

I think the right hon. Member would agree that the tax to which he referred in Clause 11—Surtax, presumably—is not one which falls upon the Exchequer this year. My right hon. and learned Friend specifically related that tax to certain other proposals he was concerned with in relation to Profits Tax, which is also relevant to a later fiscal year. My right hon. and learned Friend announced a certain concession, which would cost about £13½ million this year, and went on to say that he wished to raise an additional £80 million—and this tax will bring in the bulk of that £80 million. I agree with the way in which my right hon. and learned Friend has approached this matter. It would be quite inconsistent with the purpose of his Budget if he were to do what the right hon. Gentleman has suggested.

Although there may be one or two other hon. Members who wish to speak on the Question, "That the Clause stand part of the Bill," I can say that we have had a long and full discussion of many aspects of the Clause. As my right hon. and learned Friend said only a short time ago, we hope to make a little more progress this evening. As there is general agreement on the Clause I hope that it can be passed without a Division, and I hope that we can reach a decision on it soon.

Question put and agreed to.

Clause ordered to stand part of the Bill.