HC Deb 01 December 1964 vol 703 cc235-93

3.32 p.m.

Mr. Bryant Godman Irvine (Rye)

I beg to move Amendment No. 8, in page 2, line 36, at the end to insert: (4) If on an application made for the purpose of this section by the owner of any machinery or equipment used for the purposes of agricultural or horticultural business it appears to the satisfaction of the Commissioners that the applicant has at any time within the period of six months preceding the date of his application (which date shall be not earlier than six months after the coming into force of this section) used any quantity of hydrocarbon oil for operating such machinery and equipment he shall be entitled to obtain from the Commissioners repayment of two-thirteenths of any customs duty or excise duty paid in respect of the oil so used. The purpose of this Amendment is to enable the agricultural industry—

The Chairman

Order. I must ask hon. Members to be quieter in leaving the Chamber.

Mr. Godman Irvine

The purpose of the Amendment is to see that the agricultural and horticultural industries shall have an opportunity of reclaiming the amount of tax paid through the hydrocarbon oil duty. Knowing the interest which the hon. Gentleman the Member for Gloucester (Mr. Diamond) has in agriculture, I am sure that he will welcome this opportunity of making his position and that of the Government clear, so that the agricultural industry may have no doubt about it. Perhaps I should tell him that in his party's election manifesto there was nothing which would reassure the agricultural industry, as the results of that election would confirm. However, I am sure that he is well aware that the agricultural industry provides one of the most important supports to our balance of payments, and if the industry is turned into a high-cost industry that will have a very unfortunate effect upon the overall financial position of the country.

What is quite clear from the plan which has been put forward for the hydrocarbon oil duty proposal is that it must lead to inflation. I had a Question down, with some of my right hon. and hon friends, for the Minister of Agriculture on 18th November. On that occasion he made it quite clear that there was to be an increased cost to the industry of about £2½ million to agriculture and £250,000 to horticulture. We pressed the Minister to say how he would deal with that sum, and he said quite clearly that it would be dealt with under the Price Review procedure. What does that mean? It means either that there must be an increase in prices which are paid to the producer for agricultural produce, or that the Government are to find increased sums for agricultural subsidies.

I put it to the Minister that the horticultural industry is not included in the Price Review. So very unsatisfactory was the answer on 18th November that I later put two further questions to him on 25th November to find out whether he was going to do anything for horticulture or not. He made it quite clear that there was nothing he or the Government had in mind for horticulture and he went on to say that during the past 13 years the Government had consistently declined to remit increases on petrol used in the horticultural industry. Yet in 1961, as the Chief Secretary will recall, there was an arrangement made so that the horticultural industry should be relieved of the 2d. per gallon duty then proposed.

The other respect in which I would suggest the Minister of Agriculture was wrong was when he said that £250,000 was to be the cost to the horticultural industry. He was, as I suspected, basing his calculation on the overall amount which is produced by the two industries and dividing the ratio for horticulture by the ratio of output produced by each. That is the wrong way to make that calculation. I would submit that there is a much greater amount which the horticultural industry is to be called upon to pay than £250,000.

According to the Ministry of Agriculture's survey of March, 1964, he will see that there are 45,350 tractors of 10 h.p. or under and the vast majority of those, probably 90 per cent., are used in the horticultural industry. The total of tractors over 10 h.p. is 376,000 and of those the number estimated to use petrol is only 13,000. If those figures are applied to the total sum we expect to be collected by this duty, it will be seen that there are 45,000 tractors of under 10-horsepower most of which are used in horticulture against only 13,000 suitable for agricultural use. I ask the hon. Gentleman to agree that the calculation is incorrect, and that the figure which the horticultural industry will have to meet will be much more than £250,000 and may be well over half of the total of the £2½ million.

Perhaps I might put it another way. If it is only £250,000, the hon. Gentleman is in precisely the position which the Chancellor of the Exchequer was in in 1961. because, by a strange coincidence, £250,000 was the sum which it was estimated the horticultural industry would have to bear in 1961. The Chancellor of the Exchequer then came to the conclusion that that was a significant amount and that something should be done for the industry. The Chief Secretary is in a similar position today, and I therefore ask him to take this plea seriously on behalf of the horticultural and agricultural industries, and to consider the Amendment very seriously.

I also ask the hon. Gentleman not to forget that on 3rd April, 1963, my right hon. Friend the Member for Barnet (Mr. Maudling), who was then the Chancellor of the Exchequer, when discussing the question of industrial light oils, found that there was a principle which he thought should receive some attention so that relief would be given to an industry which found that, by the imposition of these additional charges, it was having something added to which its competitors were not subjected.

My right hon. Friend said on that occasion: The duty of 2s. 9d. a gallon on industrial light oils imposes a special additional burden on a number of industries which happen to use oil in the actual manufacture of their products, one which many of their overseas competitors do not have to carry. I accept in principle the claim for some form of duty relief for industrial light oils."—[OFFICIAL REPORT, 3rd April, 1961: Vol. 675, c. 486.] If that is a principle which could be applied in a wide area in industry, I submit that it is one which should receive the hon. Gentleman's favourable consideration for the two industries which I have been discussing.

How do we propose that this should be done? If the hon. Gentleman looks at the Amendment, he will recognise that in 1928 Mr. Winston Churchill, the then Chancellor of the Exchequer, introduced precisely the same Amendment to relieve the fishing industry. Whether that will commend the Amendment to the hon. Gentleman remains to be seen, but at least it is a respectable precedent, and it is one which has worked well for many years.

The other possibility of marking the oil would, it is estimated, add about 1s. a gallon in cost, and, therefore, it seems that our proposal is much the better way of dealing with the position. The proposal is that the industry should purchase its oil in the same way as everyone else, and it should then submit claims which will be checked by the county agricultural executive committees, and by the Customs, according to the methods adopted by them in their experience for dealing with such matters.

The hon. Gentleman may say that a scheme of this sort was introduced in 1950–51, which was of short duration. If that should be his argument, perhaps I might remind him that it did not have a long enough run to get the difficulties dealt with. If he looks at some of the precedents in other countries, he will be reassured. This principle is working in Finland, France, Denmark, New Zealand, Sweden, and the United States. The three States in which special consideration has been given, by those with whom I have been in consultation, are Indiana, Illinois and Kentucky, where simple forms are filled in and no difficulties arise. The whole thing works to the satisfaction of everyone who has anything to do with it, and I commend the Amendment to the Committee.

3.45 p.m.

Mr. James Scott-Hopkins (Cornwall, North)

I support my hon. Friend the Member for Rye (Mr. Bryant Godman Irvine) in the Amendment which he has moved.

I protest strongly at the absence of the right hon. Gentleman the Minister for Agriculture and his two Joint Parliamentary Secretaries. None of them has seen fit to come and listen to the debate. This is not the first time that this discourtesy has been shown to the Committee when a matter of great importance to the agricultural industry has been discussed. It happened in connection with tied cottages when the Protection from Eviction Bill was being discussed. I suggest that the Chief Secretary should ask his right hon. Friend to come here as a matter of urgency so that he can listen to something which will have a great effect on the two industries. I register once more my protest at the Minister's absence.

My hon. Friend has estimated that the total cost to be borne by the farming industry as a result of the imposition of this duty is about £2½ million. There is no question of the industry being able to recoup its costs. There is no question of it being able to raise its prices to get a certain amount back. We have been over this subject in the years gone by. In 1961, the same point was made from the other side of the House by me and my hon. Friends when the duty was raised by an even smaller amount than this. It was pointed out that there was no way in which the farmer could recoup the extra impositions put on him and his industry by this kind of budgetary system until the operation of the Price Review which takes place in the months ahead.

The farmer has had to bear the cost of these increased duties himself, and then hope that at a later date he can recoup the money which he has spent during the months between the imposition and the Price Review. This is grossly unfair, and, although it has an inflationary effect, the farmer does not raise the cost of his produce. Hon. Gentlemen opposite cannot point to a single farm product the price of which has been, or is to be, raised because of this duty, even though it considerably increases the costs to the farmer himself and to the industry.

Let us consider the cost which the agricultural industry has to bear. The President of the N.F.U. has calculated that the actions of the right hon. Gentleman and his friends during the past 40 to 50 days have added about £23 million to the costs of the industry, and this proposal is just a further addition to those costs. I presume that the Chief Secretary will say that this will be taken into account in the Annual Price Review in March next year. I hope that he will. If he has consulted his right hon. Friend the Minister of Agriculture, he will be forced to say that, or perhaps once again the right hon. Gentleman has no interest in this sort of thing, but I find that difficult to believe.

I turn for a moment to the incidence of this tax. I understand that heavy hydrocarbon oils are not affected by the duty which is being raised by this Clause, but this duty does affect petrol and derv used in tractors on farms, and, as my hon. Friend said, it affects the horticultural industry because of the light machines which are used in that industry. I am sure that the Chief Secretary knows that it is the small farm and the small farmer who will have to bear the maximum burden of this increase of 6d. in the tax.

I have many small farmers in my constituency. Indeed, in the West Country they make up the largest proportion of farmers. These are the people who will have to bear the bulk of this extra cost of £2½ million, because often they do not use the more powerful and bigger diesel tractors. They use petrol tractors and tractors which use derv. They also use other types of machinery which require this type of fuel for their operation. Thus, I think that it is fair to say that the incidence of this tax will be concentrated on the small farmer, the one who is least able to bear it. I am certain that the hon. Member has not realised this. Perhaps the Minister of Agriculture, who shows his lack of interest in this matter by not attending, has not pointed it out to him.

I shall not go into details of the exact cost of running a tractor for so many hours on this or that type of fuel, but I do not think that the industry is in a state to bear this extra tax. I am sure that the small farmer is not in a position to bear it, on top of the other extra costs which the Labour Government have imposed on him and upon the industry generally in the past few weeks.

It is extraordinary that the hon. Member for Kettering (Sir G. de Freitas) is not here, because he made a smashing attack on the increase on the fuel oil tax in one Budget. He should be here to reinforce our attack upon the effect of this proposal on the farmers.

This is an unfair tax. The Amendment has a most respectable precedent and it should be adopted. This tax will bear harshly upon the small farmer, who can least bear it. This loss cannot be recouped in the forthcoming Price Review, because there is so much to be recouped already—£23 million or £25 million. It is disgraceful that the Minister of Agriculture or one of his two Parliamentary Secretaries should not be here. I hope that the Committee will support the Amendment.

Mr. Marcus Kimball (Gainsborough)

I hope hat the Minister will give us a favourable reply. My hon. Friend the Member for Rye (Mr. Bryant Godman Irvine) has put some valid arguments in connection with the agriculture industry, emphasising that this serious increased cost cannot be taken into account at the Annual Price Review.

As for the Price Review itself, it is fair to say that people throughout the country are already becoming extremely apprehensive because of the extravagance of the Government and the way they are spending public money at the moment. It makes us all fear that there will be no money left in the "kitty" when the Price Review comes around. I am certain that the hon. Member has already had warnings within the Treasury about the likely bill to be paid in relation to the Price Review. I would have thought that the hon. Member would be very worried about it.

There has already been an increase in wages for which the industry must have full recoupment, and it is not satisfactory to tell the Committee that in addition to that heavy expense, for which the industry will have to be recouped, there is to be this extra increase in the duty on petrol and diesel oil. I hope that the Chief Secretary will give us a favourable answer this afternoon, especially in view of the way in which the Price Review arithmetic is bound to go. If the hon. Member can say something to allay the fears about the way in which the Price Review will go—and I can assure him that those fears are certainly felt by my constituents—we shall be grateful to him.

I should like to know how this increase will affect the many farmers who still have no mains electricity. Will they have to pay this extra tax for the oil they use for their generating plants? The hon. Member will recollect that when previous increases have been made in fuel duty a special rebate scheme has been introduced in respect of private generators where mains electricity is not available. If this increase in duty will have to be paid in respect of small generating sets in places where mains electricity is not available I hope that the hon. Member will begin consultations immediately with the electricity suppliers—the Hydro-Electric Board in Scotland and the electricity boards in England—to see what can be done to speed up the supply of electricity to farms in rural areas. I should declare an interest in this matter. I am without mains electricity myself in various places and I feel very apprehensive about this increase in costs.

I hope that the hon. Member will also bear in mind the increase in cost that this will mean to the farm workers. He must be aware of the serious problem of rural transport, especially in parts of the country like Lincolnshire, where the public transport service is practically non-existent. The argument is that everybody has his own car and goes to work in it, but the Minister should bear in mind that everybody is forced to go to work in his own car, and is therefore forced to pay the increase in petrol duty. It is, therefore, a matter which must be taken into account by the Agricultural Wages Board. That will mean yet another increase in costs for the industry.

I hope that we will have a satisfactory answer from the hon. Member which will show us that he has the feelings and worries of the countryside at heart.

Mr. Geoffrey Wilson (Truro)

I support the Amendment, partly because agriculture is the most important industry in my constituency but also because of the precedent mentioned by my hon. Friend the Member for Rye (Mr. Bryant Godman Irvine) in the Finance Bill of 1928. I do not know whether the Chief Secretary has read the debate on that Bill. If he has, he will know that on that occasion Mr. Winston Churchill—as he then was—who was then Chancellor of the Exchequer, gave a large concession in connection with derating. To pay for it a tax was put on fuel for motor vehicles. It was orginally proposed that a concession should me made in respect of both agriculture and fishing, but as a concession had been pressed for in respect of kerosene, on the ground that that was the fuel used by the poorest section of the community, that concession was granted and the concession for agriculture and fishing was withdrawn.

The predecessor of my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins)—Commander Williams—persuaded the Chancellor to restore the concession for fishing, during the Report stage of the Bill, and that concession has worked quite satisfactorily for more than 30 years. The argument is sometimes used that once a concession is given it multiplies and proliferates in all sorts of directions. In one debate it was suggested that it was like making a crack in a diving bell—the water flooded in. Similarly, it was suggested that the whole tax system would be flooded if a concession was once given. However, the concession then given in respect of fishing more than 30 years ago has worked satisfactorily, and there seems no reason why a small concession of this sort should not now be given to agriculture.

I relate this history to show that the concession for fishing has worked well, and I would remind the Committee that it was the original intention of the 1928 Finance Bill that a similar concession to argriculture should be given.

Mr. Aidan Crawley (Derbyshire, West)

I support the Amendment. I also regret the fact that there is no representative of the Ministry of Agriculture here. If one were here he might be able to induce the Chief Secretary to regard the Amendment with rather more sympathy than he seems to be doing at the moment. I know it is traditional that Treasury Ministers do not approve of agriculture. They regard it as something which costs them money, but they are wrong. Agriculture is not only our largest industry, with a turnover running into thousands of millions of pounds, from which the Treasury benefits; I would ask the Treasury how it could do without some of agriculture's by-products—alcoholic liquors. The Treasury should be very sympathetic towards agriculture.

I support the Amendment chiefly on behalf of the small farmer. To the economist the small farmer is an anachronism. Economists would like to eliminate or collectivise him. The fact is that the small farmers are not merely the backbone but the bulk of the agricultural industry, and unless we are to have Governments that use compulsion to a degree that I hope no British Government ever will use, they will remain the backbone.

4.0 p.m.

The Chief Secretary will know—and, if he does not. his right hon. Friend the Minister of Agriculture can certainly tell him—that the small farmers live on very narrow margins. A great many surveys have been made by university agricultural departments, some of them relating to my own constituency, showing that on holdings of under 100 acres, which are what most of the small farmers of my constituency have, incomes vary from about £2,000 a year—very rarely—to as low as £300 a year for a man and his family. In some areas the majority are living on incomes of below £500 a year.

To those people, petrol used purely for agricultural purposes is one of their heaviest expenditures, particularly when they are farming in very hilly areas, such as west Derbyshire, where tractors are almost always in low gear. Any addition to the petrol bill is a very serious inroad into an already very narrow margin. The Treasury need not just say that these people should make themselves more efficient. Taking advantage of the various Measures produced by my right hon. Friends in the last few years, these farmers have been doing their utmost to make themselves more efficient. In Derbyshire, there have been about 5,000 applications under the various grant schemes, and an enormous amount has been done to increase efficiency.

Nevertheless, what these men can do is limited. It is not only the nature of the country but very often the nature of the holdings which, for historical reasons that cannot be overcome, are widely scattered. The cost of petrol for transport and tractor work is one of their main problems, and an increased bill will reduce their incomes. I therefore hope that the Chief Secretary would consult his right hon. Friend the Minister of Agriculture to find out whether he cannot view this Amendment sympathetically, and so help our largest basic industry.

Mr. Christopher Soames (Bedford)

Has the Chief Secretary consulted his right hon. Friend the Minister of Agriculture on the importance of this Amendment to the agricultural industry? If so, has his right hon. Friend pointed out to him that the result of not accepting the Amendment must be to add to the costs of the industry? Given that fact, what course can the Government take to mitigate that increased cost? They can ignore this Amendment, and so make the industry suffer the increased cost without getting anything to compensate in return. Alternatively, they can meet that increased cost by giving increased prices for certain guaranteed commodities at the Annual Price Review. If they take the latter course, what about the disinflationary aspect of the tax, of which the party opposite has made much? If the Government impose this extra cost on the farmer, the industry suffers—to what avail?

I am sure that the hon. Gentleman will say that it is very difficult to mitigate the effect of the tax, but I ask him most seriously to consider whether he could not mitigate it in the way suggested in the Amendment. Costs in the agricultural industry inevitably rise year by year—there are so many factors involved—and all Governments must do all they possibly can not to make things worse by imposing upon it unnecessary cost burdens.

I should have thought that the Amendment could have been accepted. should like to think that the Minister of Agriculture made just such a case to the Chancellor as has been made by my hon. Friends in this debate. Perhaps the Chief Secretary will tell us what the nation gains by the imposition of this tax on agriculture—our basic and so important industry. Of course, increased prices for certain guaranteed commodities would not have the same effect on the industry as would the remission of the tax as suggested in the Amendment because, as many of my hon. Friends have pointed out, this extra cost falls more heavily on certain farmers on certain types of land than it does on others. My hon. Friend the Member for Derbyshire, West (Mr. Crawley) has spoken about farming on the steep hills; such a tax as this falls harder on farmers in places like that than it does on those who farm in the plain.

The most sensible approach would be for the hon. Gentleman to accept the Amendment, and I very much hope that he will do so. I hope that he will be able to tell us that, after consulting his right hon. Friend—of whom, or of the Joint Parliamentary Secretaries to the Ministry, I had hoped to ask some questions—he will accept the Amendment. If he does not do so, I hope that at least he will give an assurance that the agricultural industry will not be made to suffer from this tax, and will, as a second best, have it made good in the Price Review.

Mr. G. R. Howard (St. Ives)

As has been said, this imposition bears hard on those engaged in horticulture and not covered by the Price Review, who are already being treated most unfairly in relation to the 15 per cent. surcharge. Many importers are suffering hardship in that connection, but the Government have exempted fresh vegetable imports from the surcharge. That means that people in the horticultural industry are not protected by the surcharge as many in other industries are. Now they face this increased cost, which they cannot recoup in the Annual Price Review. Horticultural costs in the Isles of Scilly, where the Prime Minister has a small house, are enormously increased because everything has to be shipped, and those people are now to be exposed to this additional financial suffering.

I support the Amendment very strongly indeed, and hope that we can get a sympathetic hearing from the Government.

The Chief Secretary to the Treasury (Mr. John Diamond)

I hope that the right hon. Member for Bedford (Mr. Soames) will acquit me of any discourtesy in not immediately following him, but I wanted to give his hon. Friends an opportunity to participate in the debate before I replied.

As my right hon. Friend the Minister of Agriculture has been so attacked, it is my first duty to explain why it is impossible for him to be here today. He was present yesterday, when it was hoped and expected that this point would be reached, but early last evening it became obvious—as I happen to know, because I have responsibility in the matter—that it would not be reached then. Therefore, there was no reason for my right hon. Friend to stay all night merely to be looked at by right hon. and hon. Members opposite.

The hon. Member for Cornwall, North (Mr. Scott-Hopkins) did not merely draw attention to the fact that the Minister of Agriculture was not here—he mentioned it four times. When an hon. Member mentions a thing once then the Committee is aware of the point. When he mentions it four times then the Committee is aware that a personal attack is being made, and it is because a personal attack is being made on my right hon. Friend the Minister of Agriculture that I am bound to explain that my right hon. Friend was here yesterday and would have been here today had it not been for the fact that he is at this moment talking to farmers. He is addressing a meeting of members of the N.F.U. at the Farmers' Club.

When that engagement was accepted, there was no possible means of knowing that this Clause would be discussed simultaneously. It is monstrous of the hon. Member for Cornwall, North to keep on pursuing a personal attack in that way. He could easily have found out through the normal channels what my right hon. Friend the Minister of Agriculture was doing today. It was quite unnecessary for him to refer to my right hon. Friend's absence four times in a short speech. I do not know what else he said in his speech other than to attack my right hon. Friend.

Mr. Scott-Hopkins

The Chief Secretary has not explained why the two Parliamentary Secretaries are not here, either. The Minister of Agriculture knew that this debate would come and surely some arrangement could have been made to have someone from the Ministry here today.

Mr. Diamond

I do not know whether the hon. Member's reference to the Parliamentary Secretaries is to be taken as an apology for what he previously said in attacking my right hon. Friend the Minister of Agriculture. Apparently he does not intend to offer the courtesy of an apology to the Committee.

Mr. Scott-Hopkins

I have no intention of withdrawing what I have said.

Mr. Diamond

The facts are on the record. My right hon. Friend was attacked only last week by some hon. Members opposite—as I was not present I do not know whether they included the hon. Member for Cornwall, North—for not being willing to talk to farmers. Now he is engaged in that very pursuit, and it is hard that he should be singled out today for a personal attack of that kind. We should try to discuss this matter in a certain way.

The Chairman

Order. I hope that we can now get to the Amendment.

Mr. Diamond

I am grateful to you, Dr. King, for having given me an opportunity to reply to the four references to the Minister of Agriculture which were made by the hon. Member for Cornwall, North.

I am grateful to the hon. Member for Rye (Mr. Bryant Godman Irvine) for the helpful and clear way in which he moved the Amendment. He speaks with great authority on this matter. I have had the pleasure of hearing him on many occasions and I listened to him today with great sympathy. Of course, my right hon. Friend the Minister of Agriculture has been fully consulted on the Amendments concerning agriculture and I am fully aware of his views. I propose to deal with the problem in general principle and then to answer detailed points put by hon. Members.

The purpose of the Amendment is well understood. It is an attempt to relieve farmers and horticulturists from the increase in the duty. But it goes a little wider, because of the drafting. However, no one wants to dwell on a minor drafting point. It is clear that the method proposed is not satisfactory in any way. It is a method impossible to administer because there would be no means of separating the consumption of petrol for different uses once the rebate were given. There would be no means of preventing it from being used for purposes which were not intended by hon. Members.

4.15 p.m.

That is, of course, one of the reasons why the right hon. Member for Bedford and his right hon. Friends, when in government, never—I repeat, never—attempted to deal with the matter in this way. When they introduced an increase in petrol duty they never attempted to give help to the farming community in the way proposed by the Amendment. There is, of course, a far better way of giving that help, which I shall come to in a moment. Now I am concentrating on the method proposed in the Amendment.

Mr. G. R. Howard

The hon. Gentleman says that there has been no previous method of differentiating in this duty. I mentioned the Isles of Scilly. On most of the islands there are no cars. There are no roads for them. But there are tractors and other farm vehicles, so, in their case at least, the petrol could not be used for any other purpose.

Mr. Diamond

I have not made a detailed examination of the Isles of Scilly. It will be a difficult situation if we have to legislate exclusively for the Isles of Scilly. Possibly the hon. Gentleman will accept my main argument that one could not administer the method proposed satisfactorily. The method of helping that the Government adopt in these cases and which my right hon. Friend the Minister of Agriculture is prepared to adopt in this case is through the Annual Price Review. Indeed, he has already said so. In a reply on 18th November, he said that the increased duty on oils would be taken into account on the occasion of the next Annual Price Review in relation to agriculture.

Since it is clear that the method proposed in the Amendment is not satisfactory, and as my right hon. Friend has stated clearly that this increase in duty will be taken into account in the next Price Review, surely it would be better to leave this problem to be tackled in that way, which would be the best method of doing what the Amendment tries to achieve. There are various difficulties in drafting. It would not be helpful at this point to go into them and I therefore come to the conclusion that, in principle, the Amendment cannot be recommended by the Government to the Committee.

Mr. Geoffrey Wilson

What is the difference between using this method for agriculture and using it for fishing?

Mr. Diamond

I am not fully aware, to be frank, about the situation with regard to fishing. I gather that the hon. Gentleman is referring to a pro- posal made in 1928. I am not fully aware of that. Nevertheless, for the reasons I have indicated, the system would not work in the case of agriculture. Both Conservative and Labour Governments have agreed on that. There is no need to adopt a method which would not work when one already has a method—the Annual Price Review—which does work. I hope, therefore, that the Amendment will not be pressed.

Specific questions were asked of me. The hon. Member for Gainsborough (Mr. Kimball) asked what the effect would be on oil for small generators. There will be no effect because that oil is not covered in the Bill, which deals with heavy oils. If he is talking about petrol being used to the extent that the engine is a petrol-driven one, then it must bear the duty in the ordinary way. Most of these machines, however, use gas oil, which is not affected.

I have dealt as fully but as shortly as I can with the points raised and I hope that the Committee will agree that, while there is full understanding of the purpose sought to be achieved by the Amendment, a satisfactory method of achieving the purpose already exists. There was an attempt to bring such a scheme as that suggested into force by the Labour Government in 1951, but it was never attempted again by the Conservatives during their 13 years of office which followed. There is a better method of reaching a solution of the problem and as my right hon. Friend the Minister of Agriculture has already given a satisfactory answer there will be no need to pursue the Amendment.

Mr. Reginald Maudling (Barnet)

There are one or two points which make me think that the answer of the Chief Secretary, though courteous as always, is not quite enough to satisfy. I understand that the Minister of Agriculture has an engagement, but I am a little surprised that it is not possible for one of the Parliamentary Secretaries to be present during a discussion which is of considerable importance to the agriculture industry.

Mr. Diamond

I apologise that I did not go on to answer that point in my speech. Neither of the Parliamentary Secretaries is present because they are both engaged on legislation, to be introduced in due course, affecting farmers.

Mr. Maudling

I think that the claims of this Committee are, on the whole, regarded as paramount, or close to paramount, and I would have thought it possible for there to be some representation from the Ministry of Agriculture on this occasion.

Coming to the argument, I still find it a little difficult to understand what the Government are trying to do by the duty. They say that it is disinflationary, on the old doctrine that it is disinflationary to raise prices to the consumer. We therefore assume that it is their desire that the total additional cost of the increase in the duty should be passed on in the form of increased prices to the consumer, because if it is not passed on to the consumer it is not disinflationary.

Therefore, we assume—I am not quite certain whether this is the Government's point of view—that the totality of the additional cost to the farmer of the increase in the duty will be added to prices in the Price Review; otherwise, it is not carrying out their purpose. We assume that the purpose of the whole thing is to increase the price of farm produce to the consumer by that amount when the next Price Review comes along.

We think that this is very unsatisfactory because it ignores the position of horticulture, which is very important. The Government are in the difficulty that the systems of supporting agricultural and horticultural products in this country have differed over many years. The system of support for the basic agricultural commodities is one which admits of an increase in prices to compensate for an increase in costs. This is not true of horticulture, and from the reply of the Chief Secretary I cannot see any consolation whatever for horticultural producers for this large increase in their costs which inevitably will be involved from the increase in duty.

For that reason, if for no other, I think that the Government's reply has not been satisfactory.

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

I apologise to the Committee for not being present when the debate started. I, too, was attending the meeting in which the Minister was involved. I can tell the Committee that the Minister made a very good speech, because he upheld the policy which my right hon. Friends pursued very successfully during the last four years and we heard nothing of the new agricultural policy about which we heard so much just before the election. From that point of view, I can assure the Chief Secretary that the Minister's time was not wasted. While he pursues the policies which he adumbrated to the farmers today, I am certain that he will have their support.

I always think that on these occasions it is interesting to look back at debates which took place in bygone days on similar subjects. I must draw the Committee's attention to a debate which took place in 1961. At that time Mr. Percy Browne was speaking about the imposition of the oil duty. He accused the then Opposition of trying to obtain one or two extra agricultural seats at the next General Election. He was interrupted by the hon. Member for Leek (Mr. Harold Davies), who said: We shall get many more."—[OFFICIAL REPORT, 16th May, 1961; Vol. 640, c. 1130.] I have done a little research on the subject of that debate. It is possible that the Labour Party might claim that they got one extra agricultural seat.

The Chairman

I should be grateful to the hon. Gentleman if he came to the Amendment.

Mr. Prior

I was just coming to the Amendment, Dr. King. They may have got one agricultural seat, but in getting one they lost one.

If the Labour Government continue with the disastrous policy towards British agriculture which they have adopted in the first 40 days, they will not get any seats at all at the next election, because the Chief Secretary has completely overlooked the fact that the Amendment is particularly designed to help horticulture. Horticulture can have no protection through an Annual Price Review. It is the industry which is most affected by the increase in the duty. At a time when we are trying to improve marketing particularly in horticulture—marketing involves transport far more in horticulture than it does in agriculture—an extra imposition is being placed on the industry, an imposition which cannot possibly be replaced by increased prices for horticultural products.

I therefore hope that between now and Report the Chief Secretary will be able to come along with some form of rebate for horticulture. This is possible. We know from the National Farmers' Union that a perfectly reasonable system has been worked out in certain American States. There is no reason why that should not be done here. Unless we have

a more reasonable reply than we have heard so far, I hope that my right hon. Friend will divide the Committee.

Question put, That those words be there inserted:—

The Committee divided: Ayes 222, Noes 251.

Division No. 16.] AYES [4.25 p.m.
Agnew, Commander Sir Peter Fletcher-Cooke, Charles Darwen) Mackie, George Y. (C'ness & S'land)
Alison, Michael (Barkston Ash) Forrest, George McMaster, Stanley
Allason, James (Hemel Hempstead) Foster, Sir John McNair-Wilson, Patrick
Amery, Rt. Hn. Julian Fraser, Rt. Hn. Hugh (St'fford & Stone) Maginnis, John E.
Astor, John Fraser, Ian (Plymouth, Sutton) Maitland, Sir John
Awdry, Daniel Gardner, Edward Marten, Neil
Baker, W. H. K. Gibson-Watt, David Mathew, Robert
Balniel, Lord Giles, Rear-Admiral Morgan Maude, Angus E. U.
Barlow, Sir John Gilmour, Sir John (East Fife) Maudling, Rt. Hn. Reginald
Batsford, Brian Glover, Sir Douglas Mawby, Ray
Beamish, Col. Sir Tufton Glyn, Sir Richard Maxwell-Hyslop, R. J.
Bennett, F. M. (Torquay) Goodhew, Victor Maydon, Lt.-Cmdr. S. L. C.
Berry, Hn. Anthony Gower, Raymond Meyer, Sir Anthony
Bessell, Peter Grant, Anthony Mills, Peter (Torrington)
Biffen, John Grant-Ferris, R. Mills, Stratton (Belfast, N.)
Biggs-Davison, John Grieve, Percy Miscampbell, Norman
Bingham, R. M. Griffiths, Eldon (Bury St. Edmunds) Mitchell, David
Black, Sir Cyril Griffiths, Peter (Smethwick) Monro, Hector
Blaker, Peter Grimond, Rt. Hn. J. More, Jasper
Bowen, Roderic (Cardigan) Gurden, Harold Morgan, W. G.
Box, Donald Hall, John (Wycombe) Morrison, Charles (Devizes)
Boyd-Carpenter, Rt. Hn. J. Hall-Davis, A. G. F. Mott-Radclyffe, Sir Charles
Boyle, Rt. Hn. Sir Edward Hamilton, Marquess of (Fermanagh) Murton, Oscar
Braine, Bernard Harris, Frederic (Croydon, N. W.) Nicholls, Sir Harmar
Brewis, John Hawkins, Paul Noble, Rt. Hn. Michael
Brinton, Sir Tatton Hay, John Nugent, Rt. Hn. Sir Richard
Bromley-Davenport, Lt.-Col.Sir Walter Heald, Rt. Hn, Sir Lionel Onslow Cranley
Brooke, Rt. Hn. Henry Heath, Rt. Hn. Edward Orr Capt. L. P. S.
Brown, Sir Edward (Bath) Hendry, Forbes Orr-Ewing Sir Ian
Bruce-Gardyne, J. Higgins, Terence L. Osborn, John (Hallam)
Buchanan-Smith, Alick Hiley, Joseph Page John (Harrow, W)
Burden, F. A. Hill, J. E. B. (S. Norfolk) Page, R. Graham (Crosby)
Butcher, Sir Herbert Hirst, Geoffrey Pearson, Frank (Clitheroe)
Butler, Rt. Hn. R. A. (Saffron Walden) Hordern, Peter Peyton, John
Campbell, Gordon Hornsby-Smith, Rt. Hn. Dame P. Pickthorn, Sir Kenneth
Carlisle, Mark Howard, Hn. G. R. (St. Ives) Pitt, Dame Edith
Carr, Rt. Hn. Robert Hunt, John (Bromley) Pounder, Rafton
Cary, Sir Robert Hutchison, Michael Clark Powell Rt. Hn. J. Enoch
Channon, H. P. G. Irvine, Bryant Godman (Rye) Prior, J. M. L.
Chataway, Christopher Jenkin, Patrick (Woodford) Pym, Francis
Chichester-Clark, R. Jennings, J. C. Quennell, Miss J. M.
Clark, William (Nottingham, S.) Johnston, Russell (Inverness) Ramsden, Rt. Hn. James
Clarke, Brig. Terence (Portsmth, W.) Jopling, Michael Rawlinson, Rt. Hn. Sir Peter
Cooke, Robert Joseph, Rt. Hn. Sir Keith Redmayne, Rt. Hn. Martin
Cooper, A. E. Kaberry, Sir Donald Rees-Davies, W. R.
Cooper-Key, Sir Neill Kerby, Capt. Henry Renton, Rt. Hn. Sir David
Corfield, F. V. Kerr, Sir Hamilton (Cambridge) Ridsdale, Julian
Costain, A. P. Kershaw, Anthony Roberts, Sir Peter (Heeley)
Courtney, Cdr. Anthony Kilfedder, James A. Robson Brown, Sir William
Craddock, Sir Beresford (Spelthorne) Kimball, Marcus Rodgers Sir John (Sevenoaks)
Crawley, Aidan King, Evelyn (Dorset, S.) Roots, William
Crosthwaite-Eyre, Col. Sir Oliver Kitson, Timothy Russell, Sir Ronald
Cunningham, Sir Knox Lagden, Godfrey St. John-Stevas, Norman
Curran, Charles Lancaster, Col. C. G. Scott-Hopkins, James
Currie, G. B. H. Langford-Holt, Sir John Sinclair, Sir George
Dalkeith, Earl of Legge-Bourke, Sir Harry Smyth, Rt. Hn. Brig. Sir John
Dance, James Litchfield, Capt. John Spearman, Sir Alexander
Davies, Dr. Wyndham (Perry Barr) Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield) Stainton, Keith
Dean, Paul Lloyd, Ian (P'tsm'th, Langstone) Summers, Sir Spencer
Digby, Simon Wingfield Lloyd, Rt. Hn. Selwyn (Wirral) Talbot, John E.
Dodds-Parker, Douglas Longbottom, Charles Taylor, Edward M. (G'gow, Cathcart)
Doughty, Charles Longden, Gilbert Taylor, Frank (Moss Side)
Douglas-Home, Rt. Hn. Sir Alec Loveys, Walter H. Thatcher, Mrs. Margaret
Drayson, G. B. Lubbock, Eric Thomas, Sir Leslie (Canterbury)
du Cann, Edward Lucas-Tooth, Sir Hugh Thompson, Sir Richard (Croydon, S.)
Eden, Sir John McAdden, Sir Stephen Thorneycroft, Rt. Hn. Peter
Fell, Anthony MacArthur, Ian Thorpe, Jeremy
Fisher, Nigel Mackenzie, Alasdair (Ross & Crom'ty) Tilney, John (Wavertree)
Turton, Rt. Hn. R. H Weatherill, Bernard Woodnutt, Mark
Tweedsmuir, Lady Whitelaw, William Wylie, N. R.
Vaughan-Morgan, Rt. Hn. Sir John Williams, Sir Rolf Dudley (Exeter) Younger, Hn. George
Vickers, Miss Joan Wills, Sir Gerald (Bridgwater)
Walder, David (High Peak) Wilson, Geoffrey (Truro) TELLERS FOR THE AYES:
Walters, Dennis Wolrige-Gordon, Patrick Mr. McLaren and Mr. R. W. Elliott.
Ward, Dame Irene Wood, Rt. Hn. Richard
Abse, Leo Foot, Sir Dingle (Ipswich) Mallalieu,J.P.W.(Huddersfield,E.)
Albu, Austen Foot, Michael (Ebbw Vale) Manuel, Archie
Allaun, Frank (Salford, E.) Ford, Ben Mapp, Charles
Alldritt, W. H. Freeson, Reginald Marsh, Richard
Allen, Scholefield (Crewe) Galpern, Sir Myer Mellish, Robert
Armstrong, Ernest Garrett, W. E. Mendelson, J. J.
Atkinson, Norman Garrow, A. Mikardo, Ian
Bacon, Miss Alice Ginsburg, David Millan, Bruce
Bagier, Gordon A. T. Gourlay, Harry Miller, Dr. M. S.
Barnett, Joel Gregory, Arnold Milne, Edward (Blyth)
Baxter, William Griffiths, David (Rother Valley) Molloy, William
Beaney, Alan Griffiths, Rt. Hn. James (Llanelly) Monslow, Walter
Bellenger, Rt. Hn. F. J. Hale, Leslie Morris, Alfred (Wythenshawe)
Bence, Cyril Hamilton, James (Bothwell) Morris, Charles (Openshaw)
Benn, Rt. Hn. Anthony Wedgwood Hamilton, William (West Fife) Morris, John (Aberavon)
Bennett, J. (Glasgow, Bridgeton) Hamling, William (Woolwich, W.) Murray, Albert
Binns, John Harper, Joseph Neal, Harold
Bishop, E. S. Harrison, Walter (Wakefield) Newens, Stan
Blackburn, F. Hart, Mrs. Judith Noel-Baker, Francis (Swindon)
Blenkinsop, Arthur Hattersley, Ray Noel-Baker, Rt. Hn. Philip (Derby, S.)
Boardman, H. Hayman, F. H. Oakes, Gordon
Boston, T. G. Hazell, Bert O'Malley Brian
Bowden, Rt. Hn. H. W. (Leics. S. W.) Heffer, Eric S. Oram, Albert E. (E. Ham, S.)
Bowles, Frank Henderson, Rt. Hn. Arthur Orbach, Maurice
Boyden, James Herbison, Rt. Hn. Margaret Orme Stanley
Braddock, Mrs. E. M. Hobden, Dennis (Brighton, K'town) Oswald, Thomas
Bradley, Tom Holman, Percy Owen, Will
Bray, Dr. Jeremy Horner, John Padley, Walter
Broughton, Dr. A. D. D. Houghton, Rt. Hn. Douglas Page, Derek (King's Lynn)
Brown, Hugh D. (Glasgow, Provan) Howarth, Harry (Wellingborough) Paget, R. T.
Brown, R. W. (Shoreditch & Fbury) Howarth, Robert L.(Bolton, E.) Palmer, Arthur
Buchan, Norman (Renfrewshire, W.) Hoy, James Pannell, Rt. Hn. Charles
Buchanan, Richard Hughes, Cledwyn (Anglesey) Pargiter, G. A.
Butler, Herbert (Hackney, C.) Hughes, Emrys (S. Ayrshire) Pavitt, Laurence
Butler, Mrs. Joyce (Wood Green) Hughes, Hector (Aberdeen, N.) Pearson, Arthur (Pontypridd)
Carmichael, Neil Hunter, Adam (Dunfermline) Pentland, Norman
Carter-Jones, Lewis Hunter, A. E. (Feltham) Popplewell, Ernest
Coleman, Donald Irving, Sydney (Dartford) Prentice, R. E.
Conlan, Bernard Jackson, Colin Probert, Arthur
Corbet, Mrs. Freda Janner, Sir Barnett Pursey, Cmdr. Harry
Crawshaw, Richard Jeger, George (Goole) Rankin, John
Crossman, Rt. Hn. R. H. S. Jeger, Mrs. Lena (H'b'n&St.P'cras,S.) Redhead, Edward
Cullen, Mrs. Alice Jenkins, Hugh (Putney) Rees, Merlyn
Dalyell, Tam Jenkins, Rt. Hn. Roy (Stechford) Reynolds, G. W.
Davies G. Elfed (Rhondda, E.) Jones, Dan (Burnley) Rhodes, Geoffrey
Davies Harold (Leek) Jones, J. Idwal (Wrexham) Roberts, Albert (Normanton)
Davies Ifor (Gower) Jones, T. W. (Merioneth) Roberts, Goronwy (Caernarvon)
Davies S. O. (Merthyr) Kelley, Richard Robertson, John (Paisley)
de Freitas, Sir Geoffrey Kenyon, Clifford Rodgers, William (Stockton)
Delargy, Hugh Lawson, George Rogers, George (Kensington, N.)
Dell, Edmund Leadbitter, Ted Rose, Paul B.
Dempsey, James Ledger, Ron Ross, Rt. Hn. William
Diamond, John Lee, Rt. Hn. Frederich (Newton) Rowland, Christopher
Dodds, Norman Lever, Harold (Cheetham) Sheldon, Robert
Doig, Peter Lever, L. M. (Ardwick) Shinwell, Rt. Hn. E.
Donnelly, Desmond Lewis, Arthur (West Ham, N.) Shore, Peter (Stepney)
Driberg, Tom Lewis, Ron (Carlisle) Short,Rt.Hn.E. (N'castle-on-Tyne,C.)
Duffy, Dr. A. E. P. Lipton, Marcus Short, Mrs. Renée (W'hampton,N.E.)
Dunn, James A. Lomas, Kenneth Silkin, John (Deptford)
Dunnett, Jack Loughlin, Charles Silkin, S. C. (Camberwell, Dulwich)
Edelman, Maurice Mabon, Dr. J. Dickson Silverman, Julius (Aston)
Edwards, Rt. Hn. Ness (Caerphilly) McBride, Neil Silverman, Sydney (Nelson)
Edwards, Robert (Bilston) MacColl, James Skeffington, Arthur
English, Michael MacDermot, Niall Slater, Mrs. Harriet (Stoke N.)
Ennals, David McGuire, Michael Slater, Joseph (Sedgefield)
Ensor, David McInnes, James Small, William
Fernyhough, E. McKay, Mrs. Margaret Snow, Julian
Finch, Harold (Bedwelty) MacKenzie, Gregor (Rutherglen) Solomons, Henry
Fitch, Alan (Wigan) Mackie, John (Enfield, E.) Spriggs, Leslie
Fletcher, Sir Eric (Islington, E.) MacMillan, Malcolm Stewart, Rt. Hn. Michael
Fletcher, Ted (Darlington) MacPherson, Malcolm Stonehouse, John
Fletcher, Raymond (Ilkeston) Mahon, Peter (Preston, S.) Stones, William
Floud, Bernard Mahon, Simon (Bootle) Strauss, Rt. Hn. G. R. (Vauxhall)
Foley, Maurice Mallalieu, E. L. (Brigg)
Summerskill, Dr. Shirley Varley, Eric G. Willey, Rt. Hn. Frederick
Swain, Thomas Wainwright, Edwin Williams, Alan (Swansea, W.)
Symonds, J. B. Walden, Brian (All Saints) Williams, Mrs. Shirley (Hitchin)
Taverne, Dick Walker, Harold (Doncacter) Willis, George (Edinburgh, E.)
Taylor, Bernard (Mansfield) Wallace, George Wilson, William (Coventry, S.)
Thomas, George (Cardiff, W.) Warbey, William Winterbottom, R. E.
Thomas, Iorwerth (Rhondda, W.) Watkins, Tudor Woodburn, Rt. Hn. A.
Thomson, George (Dundee, E.) Weitzman, David Woof, Robert
Tinn, James White, Mrs. Eirene Wyatt, Woodrow
Tuck, Raphael Whitlock, William
Urwin, T. W. Wilkins, W. A. TELLERS FOR THE NOES:
Mr. McCann and Mr. Grey.
Mr. Geoffrey Lloyd (Sutton Coldfield)

I beg to move Amendment No. 9, in page 2, line 36, at the end to insert: (4) If on an application made for the purposes of this section by the owner of any public service vehicle it appears to the satisfaction of the Commissioners that the applicant has at any time within the period of six months preceding the date of his application (which date shall be not earlier than six months after the coming into force of this section) used any quantity of hydrocarbon oil for propelling the vehicle, he shall be entitled to obtain from the Commissioners repayment of two-thirteenths of any customs duty or excise duty paid in respect of the oil so used. In this section the expression "public service vehicle" has the same meaning as in the Road Traffic Act 1960.

The Chairman

It will be for the convenience of the Committee if we also take Amendment No. 10, in line 36.

Mr. Lloyd

The purpose of the Amendment is to allow bus operators in general to claim repayment of the whole of the additional duty which will fall on them as a result of the Chancellor's proposal to raise Customs and Excise duties on petrol and other light hydrocarbon oil and diesel oil for road vehicles by 6d. a gallon. The reasons why we have put forward the Amendment are that an increase in fuel costs which will result from the Chancellor's proposal must raise costs and be reflected in higher fares, thereby affecting the cost-of-living. This it is desirable to avoid if possible, particularly because the lower-paid people and less well-off people in general are particularly dependent upon bus services.

The Chancellor referred to this in his Budget statement and in his Second Reading speech, but he was not very explicit. I hope that we shall have some further enlightenment from the Chief Secretary to the Treasury. The Chancellor was not very explicit because he referred to giving some relief to the operating companies, and I did not feel that it was in his nature or natural to his political posture to give relief to the companies. That is not our position. Our position is that we wish to avoid a rise in the cost-of-living for the public and I shall presume that that is what the Chancellor had in mind.

The second unsatisfactory feature to us in what the Chancellor said was that he appeared to be referring to the relief which he talked about as being confined to the stage buses. We feel that it would be wrong in principle to confine this rebate to the stage carriage services only. We feel, additionally, that the place for the rebate to be stated is in the Finance Bill. That is why we have brought forward this Amendment. I should like to make it clear to the Committee that we do not believe that the idea of confining any concessions to the stage buses is sound. We cannot be sure that this is the Chancellor's intention, because we are not privy to the discussions which are in progress between the Ministry of Transport and the operators. No doubt the Chief Secretary will enlighten us on this when he addresses the Committee.

If the proposal is to confine the concession to the stage carriage services, we think that this would lead to anomalies, because, for example, it would exclude contract services to carry school children and it would also exclude contracts to carry men to work. The Chief Secretary will probably agree that there is no difference, in principle, between those services and the stage bus services. We feel, therefore, that if the proposal is as I fear, it is unsatisfactory.

Our Amendment is broader, in that it would give the rebate to public service vehicles. The main difference, therefore, between what we believe to be the Government's idea and the proposal which we are putting forward in this Amendment is that we should give it to all public service vehicles, which would include the long-distance services in addition to the stage carriage services.

We think that this is a matter of some importance. The long-distance bus services are growing. They are a great convenience to many people. In particular, from our inquiries we find that they are a great convenience to people of small means and to pensioners visiting their relatives. While they sometimes take a good deal longer than railway services, they are a good deal cheaper. I would just like to give the Committee a particular example which is apposite to my case—the Midland Red services from Birmingham to London, and vice versa, compared with the train. The second-class return rail fare is 55s. 6d. and the express coach fare is 32s. The non-express coach fare is as low as 27s. It is true that the Railway has a great advantage in time, because the fastest train takes 1 hour and 55 minutes and the fastest coach to Victoria is 3 hours, while the non-express coach takes as long as 5 hours and 20 minutes.

But I think that the Committee will appreciate that there are many people, particularly pensioners, who may not have very great demands on their time, but who find it quite a burden to find the money to visit relatives. For these people this extra saving would be very important. We hope that the Government, on consideration, will include the long-distance services in their concession. We hope very much that they will not be inhibited in this matter by what we have felt in the past has been their prejudice towards road services in general.

4.45 p.m.

Sir David Renton (Huntingdonshire)

I feel obliged to draw the attention of the Committee to the effect of the increased tax upon rural bus services. These services have been declining steadily since the war and many are now running at a loss. The decline and the loss have been due partly to steadily increasing costs and partly to the fact that there have been more cars on the road. However, there are, and will be for the foreseeable future, many people in the villages who need buses. Some of them need buses simply for getting to and from their work. The young people in the villages cannot always get work on the land and have to go to the towns to work. They cannot live in the towns and so they travel to and fro. They do not all have cars.

There are people who have to visit the towns for shopping and entertainment, for visiting people in hospital and going to meetings—

Mr. Scott-Hopkins

On a point of order. Is it right that the hon. Gentlemen opposite should carry on conversations in audible voices while my right hon. and learned Friend is speaking?

The Chairman

That is not a point of order, but I would ask hon. Members, if they have conversations to pursue, to do so outside the Committee.

Sir D. Renton

I was accustomed to the normal courtesy of the hon. Member for Nelson and Colne (Mr. Sydney Silverman) when he was interested in what I was talking about. Obviously, he is not interested in rural buses.

I think it reasonable to see that people who live in villages have the opportunity of attending the meetings of voluntary societies, which are mostly held in towns, and even of taking part in local government activities. For these various reasons, in spite of the great increase in the use of the motor car in recent years, rural bus services are and will be needed. Even before the tax was increased, bus operators in my constituency who have approached me have drawn my attention to the fact that they were running so many services at a loss that they might have to cut them unless there were a reduction or a rebate in tax.

What has happened? There is no question of a reduction or a rebate with the advent of the new Government, but an increase in the tax, which alarmingly increases their difficulties. I understand that at the time that the increase in the tax was announced the Government expressed some anxiety about increased fares and said that they would have discussions with the bus operators about this. Since then, speaking for myself, I have heard nothing more about the matter. I should like to know the outcome of these discussions. Of course, we do not want the fares to go up, but even worse, from the point of view of my constituents, would be a further cut in the rural bus services.

I therefore hope that when the Chief Secretary deals with the matters which have been raised by my right hon. Friend the Member for Sutton Coldfield (Mr. G. Lloyd), he will also deal with the question of the effect, which could be a most unfortunate one, on rural bus services.

Mr. Daniel Awdry (Chippenham)

I naturally hope that the Government will accept Amendment No. 9, but if they do not I hope that they will at least accept Amendment No. 10. It is to that Amendment that I wish to speak. As has been said twice, by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) and my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), the Government has given an undertaking to give tax relief to bus operators, and all that this Amendment does is to turn that undertaking into a precise legal commitment.

The basic cause for giving assistance to rural buses is so well known that it hardly needs repeating. It has been very fully set out in the Jack Committee's Report on Rural Bus Services, which was produced in 1961. That Report made it clear that, even then, the level of rural buses was entirely inadequate to avoid hardship and inconvenience. It went on to say that some way had to be found to give assistance to rural buses. That was in 1961 and now the Government propose their monstrous tax to make the position worse. I represent a rural constituency where this problem has become a great deal more pressing now that a number of our railway stations have been closed. I have received a great deal of correspondence on this and I expect that hon. Members on both sides of the Committee have also received letters. These letters are from mothers whose children have to be taken to school, pensioners who live in villages and want to get into town to shop and people who want to visit their relatives in hospitals or have to have treatment in hospitals themselves or have to see dentists. They rely entirely on buses, and something must be done to improve these services.

The Jack Committee's Report showed that about 10 per cent. of all journeys in rural areas are made by public transport. This 10 per cent. represents the poorer members of the community. Any increase in fuel tax which would lead to a set-back for these rural bus services will hit those people in the community who can afford it the least. Already, they are grossly hampered by local transport difficulties. People who have no garage or car are complaining about inadequate rural services. The idea behind the Amendment is not new. It follows the practical solution set out in a minority report of the Jack Committee, which was signed by Mr. James.

If the Government cannot face a general tax remission, the least they can do would be to give a remission to that part of the service which operates in rural areas. The Amendment defines rural areas by reference to non-restricted roads. It would be a very easy provision to administer, so do not let us have any talk about it being a provision which could not be administered. It is practical and sensible and could easily be administered. The mileage on rural roads could be recorded and certified by the traffic commissioners. The cost of the relief would not be exorbitant, so do not let us have any talk about it costing too much.

The idea has been considered by the bus operators. It was considered in 1959 at the time of the introduction of the Finance Act of that year and the bus operators said that it would work well. If the Government are sincere in their intention to assist rural services they have an excellent opportunity to indicate that sincerity by accepting the Amendment. With a confidence which is probably entirely misplaced, I ask them to do so.

Mr. Charles Longbottom (York)

We have heard about the needs of rural bus services and I should like to put in a word for the urban services. Since the war a continuing pattern has developed in this country, following slum clearance, of people being rehoused away from the centre of cities, on the outskirts, where new development is taking place. People rely more on getting to and from their place of work by bus every day. The payment of fares from the outskirts of the city to destinations which may be on the other side of the city imposes a greater cost on people who have, it may be, to travel several times a day by bus to and from work. It is another example of the way in which this proposal will increase the cost of living for ordinary people. I hope that the Government will bear this in mind and accept the Amendment.

Many of the homes which are provided in urban areas for old-age pensioners are built on the outskirts of cities, away from places where the old people used to live and a long way from where members of their family still live, where they may go to shop. It is not, therefore, only the old-age pensioners in the rural areas who may be affected. Those in the urban areas may be affected even more. This is a serious problem and one which I hope will be borne in mind by the Government.

Mr. G. R. Howard

I do not wish to emphasise points which have been made by other hon. Members. Recently, a branch railway line in my constituency was closed. We were told that such closures took place only when there was adequate alternative transport. If the alternative transport is by bus is it fair that, because of such measures as this, the cost of fares must go up? This is something which reacts unfairly on people who are left with only one means of transport. Apart from the points raised by my hon. Friends about increases in the cost of living, any increase which may be made in fuel costs is something which is very important to people living in rural areas.

I hope that the Minister will be able to assure us that he will look at this problem from the point of view of those who live in rural areas and that it may be regarded as a special problem confronting such people where branch railway lines have been closed.

Mr. Peter Bessell (Bodmin)

Like my hon. Friend the Member for St. Ives (Mr. G. R. Howard), I have no desire to go over ground which has already been covered adequately, but I wish to add a word in support of the Amendment, chiefly because during the General Election members of the party opposite laid great stress on their determination to give assistance to underpopulated rural areas such as my constituency. These will suffer considerably because of the imposition of this tax, particularly in relation to the fuel used by buses and other rural transport services.

For that reason I believe this to be a worth-while Amendment and I hope that the Government will accept it.

Mr. Diamond

I think that it would be helpful to the Committee if I replied to the debate now and saved hon. and right hon. Gentlemen opposite from using their energy to push at a half-opened door, which is an unnecessary activity.

One understands the purpose of these Amendments and sympathises, up to a point. I do not wish to make the obvious debating point that one Amendment goes rather too wide and the other is rather narrowly drawn. The right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) seems to exclude the possibility of providing help in respect of those cases about which other hon. Members spoke exclusively. I take it that hon. Members opposite are saying that although there is a broad general case there is a particularly strong case for giving assistance to rural bus services, which is part of the total case.

We accept that there exists a problem regarding rural buses which must be met. One would go so far as to say that the Amendment does not go far enough, because it deals with a limited kind of rural bus service. The first Amendment goes a little too wide because it deals with a number of cases other than the stage fare services and goes into cases which the right hon. Member for Sutton Coldfield indicated might not be in the same category of need. He explained that the fares on the long-distance coaches from Birmingham to London were, I think, approximately half of the train fares but he said that the passengers had to spend more time travelling. On the face of it, that does not indicate an enormous need for help. Those people are offering a service similar to that provided by the railways, but at approximately half the cost.

Let me say straight away that the Government recognise the need to deal with the problems confronting the travelling public and those going to work. There is a need particularly to deal with the problems of the rural bus services in a way most convenient and most easily capable of administering. That is not by the method proposed in the Amendment, but by the method undertaken long before the Amendment was put on the Notice Paper of making a payment direct to the bus companies concerned by my right hon. Friend the Minister of Transport.

I was asked by the right hon. and learned Member for Huntingdonshire (Sir D. Renton) how far the negotiations have gone. I would refer him to the Answer given by my right hon. Friend on 25th November, when he said that the Government had told bus operators that it was willing to give relief corresponding to the 6d. increase in duty provided that suitable arrangements could be worked out."—[OFFICRL REPORT, 25th November, 1964, Vol. 702, c. 185.] These are specifically the stage coach operators. That is where the need is greatest, be it in country or town. There would follow the borderline cases, such as a service which was recognised or defined as a long-distance one but which, up to a point also served the short distance traveller.

5.0 p.m.

One can imagine in a rural area a long-distance express service making a minimum charge of perhaps 1s. in effect to cater for the local traveller. These borderline cases are being considered by my right hon. Friend. He has received representations from a number of hon. Members and would be glad to receive others dealing with specific cases which do not fall within the generality of the method by which he is proposing to deal with the matter.

I am saying, therefore, that there is every sympathy not only with the core of the second Amendment, but with a little more. I am saying that the method proposed is not the ideal one, but that the method we are adopting is a more effective one. While hon. Members want to protect themselves in terms of discussion, an opportunity for discussing this matter will arise when the necessary legislation which my right hon. Friend the Minister of Transport would have to introduce comes before Parliament. That will be the time, if any hon. Member considers that my right hon. Friend's proposals go too far, or do not go far enough, for the matter to be raised again.

As I explained, long before the Amendment was tabled the necessary steps were taken. My recollection of the matter is that the Budget was agreed to on one night and the following morning the Minister of Transport was already interviewing the bus company operators. Since we are, in effect, meeting more than the desire of one of the Amendments, though slightly less than required in another, since our method is more appropriate, and having regard to the rights of hon. Members to debate this matter carefully, I hope that the Committee will agree not to press the Amendment.

Mr. Maudling

The Chief Secretary has once again been courteous in replying to the representations made by my hon. Friends, but I think that they will not regard his answer as being at all satisfactory. On the specific point, the hon. Gentleman has confined himself to stage coach operators and has not dealt with the other important matters to which my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) referred, a matter which I feel he will wish to press.

We are, secondly, left in rather the same difficulty as we were yesterday, for the Government say, "Let this financial provision go through to impose the additional tax and we will subsequently legislate to mitigate the damage." We cannot, as a Committee, be satisfied with that, because we cannot have foreknowledge of the nature of the Government's proposals. For this reason, my hon. Friends are placed in a difficult position.

As my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) asked yesterday, can the Chief Secretary give an assurance that the Government will deal with this before the Report stage is reached? I have no doubt that the Chief Secretary will answer "No", and I must, therefore, advise my hon. Friends—since it is clear that the Government are not prepared or are not in a position to give an assurance of that sort—to take the matter into the Lobby. We must oppose this provision. It may be that the Government will subsequently put the matter right, but since we have no assurance that that will be so, we must record our opposition in the Lobby.

Sir D. Renton

I am sure that my right hon. Friend the Member for Barnet (Mr. Maudling) will not take it amiss if I say that I was grateful for the assurance of the Chief Secretary, as far as it went, although I would like him to clarify the position. The assurance he gave was vague in several respects. Can he now confirm that it is the intention of the Government that all regular rural bus services—that is, stage carriage services in rural districts—will ultimately be exempt from the 6d. increase in the duty?

Will there have to be legislation to legalise the scheme to which the Chief Secretary referred and about which, he said, negotiations with the bus operators are taking place? If so, when will such legislation be introduced, what will be the position meanwhile and will the legislation be made retrospective to the date when the increased duty came into force?

The Chairman

The Question is—

Mr. Diamond


The Chairman

Mr. Diamond.

Mr. Diamond

I can well understand your rising to put the Question, Dr. King, because I had covered precisely the questions asked by the right hon. Member for Thirsk and Malton (Mr. Turton) in the answer I gave, but I am delighted to repeat what I said if that will help the Committee.

My right hon. Friend said that the Government had told the bus operators—and that includes rural bus operators—that they were willing to give relief corresponding to the 6d. increase in duty, provided that suitable arrangements could be worked out.

Mr. Geoffrey Wilson

What does that mean?

Mr. Diamond

It means that if one cannot find methods of doing it one cannot do it. But we hope to do it. I do not think that there is anything difficult about that.

The right hon. Member for Thirsk and Malton then asked when legislation would be introduced. I said that it would be introduced and that that would be the opportunity for hon. Members to debate the matter if they considered that it was either satisfactory or unsatisfactory in any respect. As to the question of timing—when legislation will be introduced—the answer is as soon as the arrangements have been agreed. As the right hon. Member for Barnet (Mr. Maudling) assumed, I could not possibly give an undertaking that this will be achieved by next week.

Mr. G. R. Howard

I do not think that the explanation of the Chief Secretary is as clear to the Committee as it Is to himself. As I understand, conversations

will take place with the bus operators to see whether the giving of relief to them is practicable. Only then, after those conversations have taken place and if the Government decide to take steps, will legislation be introduced. The Committee has been given no assurance that legislation will be forthcoming. Is that the position; that the Government hope to bring forward legislation but that the Chief Secretary is not prepared to undertake that it will be brought forward?

Mr. Diamond

I am sorry that I am not explaining properly what is certainly clear to me. Obviously, my lack of powers of exposition are in question. I will, therefore, repeat my remarks, and I hope that this time they will be clear to the Committee.

The Government are anxious to see that no damage is suffered by the travelling public from the point of view of the stage coach services. We therefore desire to bring in legislation to give effect to our wish to give relief in respect of the 6d. extra duty which is now being imposed. I hope that that is clear so far. As there are problems involved, and as it is not simply a question of writing a cheque, these matters must be discussed. This is a courtesy due to the bus operators. We must find out their problems and see exactly where the line should be drawn. As soon as these discussions have been completed—they are in progress; they started the morning after the Budget was agreed to—my right hon. Friend the Minister of Transport will make arrangements for legislation to be introduced. I do not think that I can be of any more help to the Committee.

Sir D. Renton

Will it be retrospective?

Several Hon. Members


The Chairman

Order. I had thought that in view of the remarks of the Opposition Front Bench the Committee was anxious to come to a decision.

Question put, That those words be there inserted:—

The Committee divided: Ayes 232, Noes 253.

Division No. 17.] AYES [5.10 p.m.
Agnew, Sir Peter Amery, Rt. Hn. Julian Awdry, Daniel
Alison, M. J. H. (Barkston Ash) Astor, J. Baker, W. H. K.
Allason, James Atkins, Humphrey Barlow, Sir John
Batsford, Brian Grant, Anthony Monro, Hector
Beamish, Col. Sir Tufton Grant-Ferris, R. More, Jasper
Bennett, F. M. (Torquay) Griffiths, Eldon (Bury St. Edmunds) Morgan, W. G.
Berkeley, Humphry Griffiths, Peter (Smethwick) Morrison, Charles (Devizes)
Berry, A. G. Grimond, Rt. Hn. J. Mott-Radclyffe, Sir Charles
Bessell, Peter Gurden, Harold Murton, Oscar
Biffen, John Hall, John (Wycombe) Nicholls, Sir Harmar
Biggs-Davison, John Hall-Davis, A. G. F. Nicholson, Sir Godfrey
Bingham, R. M. Harris, Frederic (Croydon, N. W.) Noble, Rt. Hn. Michael
Birch, Rt. Hn. Nigel Harris, Reader (Heston) Nugent, Rt. Hn. Sir Richard
Black, Sir Cyril Harrison, Col. Sir Harwood (Eye) Onslow, Cranley
Blaker, Peter Hawkins, Paul Orr, Capt. L. P. S.
Bowen, Roderic (Cardigan) Heald, Rt. Hn. Sir Lionel Orr-Ewing, Sir Ian
Box, Donald Heath, Rt. Hn. Edward Osborn, John (Hallam)
Boyd-Carpenter, Rt. Hn. J. Hendry, Forbes Page, John (Harrow, W.)
Boyle, Rt. Hn. Sir Edward Higgins, Terence L. Page, R. Graham (Crosby)
Braine, Bernard Hiley, Joseph Pearson, Frank (Clitheroe)
Brewis, John Hill, J. E. B. (S. Norfolk) Percival, Ian
Brinton, Sir E. T. C. Hirst, Geoffrey Peyton, John
Bromley-Davenport,Lt.-Col.Sir Walter Hordern, Peter Pickthorn, Sir Kenneth
Brooke, Rt. Hn. Henry Hornby, Richard Pike, Miss Mervyn
Brown, Sir Edward (Bath) Hornsby-Smith, Rt. Hn. Dame P. Pitt, Dame Edith
Bruce-Gardyne, J. Howard, Hn. G. R. (St. Ives) Pounder, Rafton
Buchanan-Smith, A. L. Howe, Geoffrey (Bebington) Powell, Rt. Hn. J. Enoch
Buck, Antony Hunt, John (Bromley) Prior, J. M. L.
Burden, F. A. Hutchison, Michael Clark Quennell, Miss J. M.
Butcher, Sir Herbert Irvine, Bryant Godman (Rye) Ramsden, Rt. Hn. James
Butler, Rt. Hn. R. A. (Saffron Walden) Jenkin, Patrick (Woodford) Rawlinson, Rt. Hn. Sir Peter
Campbell, Gordon Jennings, J. C. Redmayne, Rt. Hn. Martin
Carlisle, Mark Johnston, Russell (Inverness) Rees-Davies, W. R.
Carr, Rt. Hn. Robert Jones, Arthur (Northants, S.) Renton, Rt. Hn. Sir David
Cary, Sir Robert Jopling, Michael Ridsdale, Julian
Channon, H. P. G. Joseph, Rt. Hn. Sir Keith Roberts, Sir Peter (Heeley)
Chataway, Christopher Kaberry, Sir Donald Robson Brown, Sir William
Chichester-Clark, R. Kerby, Capt. Henry Rodgers, Sir John (Sevenoaks)
Clark, William (Nottingham, S.) Kerr, Sir Hamilton (Cambridge) Roots, William
Clarke, Brig. Terence (Portsmth, W.) Kershaw, Anthony St. John-Stevas, Norman
Cooke, Robert Kilfedder, James A. Scott-Hopkins, James
Cooper, A. E. Kimball, Marcus Sharples, Richard
Cooper-Key, Sir Neill King, Evelyn (Dorset, S.) Sinclair, Sir George
Corfield, F. V. Kitson, Timothy Smyth, Rt. Hn. Brig. Sir John
Costain, A. P. Lagden, Godfrey Spearman, Sir Alexander
Courtney, Cdr. Anthony Lancaster, Col. C. G. Speir, Rupert
Craddock, Sir Beresford (Spelthorne) Langford-Holt, Sir John Stainton, Keith
Crawley, Aidan Legge-Bourke, Sir Harry Summers, Sir Spencer
Cunningham, Sir Knox Litchfield, Capt. John Talbot, John E.
Curran, Charles Lloyd, Rt.Hn.Geoffrey (Sut'nC'dfleld) Taylor, Edward M. (G'gow, Cathcart)
Currie, G. B. H. Lloyd, Ian (P'tsm'th, Langstone) Taylor, Frank (Moss Side)
Dalkeith, Earl of Lloyd, Rt. Hn. Selwyn (Wirral) Thatcher, Mrs. Margaret
Dance, James Longbottom, Charles Thomas, Sir Leslie (Canterbury)
Davies, Dr. Wyndham (Perry Barr) Longden, Gilbert Thompson, Sir Richard (Croydon, S.)
d'Avigdor-Goldsmid, Sir Henry Loveys, Walter H. Thorpe, Jeremy
Dean, Paul Lubbock, Eric Tilney, John (Wavertree)
Digby, Simon Wingfield Lucas-Tooth, Sir Hugh Turton, Rt. Hn. R. H.
Dodds-Parker, Douglas McAdden, Sir Stephen Tweedsmuir, Lady
Doughty, Charles MacArthur, Ian van Straubenzee, W. R.
Drayson, G. B. Mackenzie, Alasdair (Ross & Crom'ty) Vaughan-Morgan, Rt. Hn. Sir John
du Cann, Edward Mackie, George Y. (C'ness & S'land) Walder, David (High Peak)
Eden, Sir John McLaren, Martin Walker, Peter (Worcester)
Fell, Anthony McMaster, Stanley Walters, Dennis
Fisher, Nigel McNair-Wilson, Patrick Ward, Dame Irene
Fletcher-Cooke, Charles Darwen) Maginnis, John E. Whitelaw, William
Forrest, George Maitland, Sir John Williams, Sir Rolf Dudley (Exeter)
Foster, Sir John Marten, Neil Wills, Sir Gerald (Bridgwater)
Fraser, Rt.Hn.Hugh(St'fford & Stone) Mathew, Robert Wilson, Geoffrey (Truro)
Fraser, Ian (Plymouth, Sutton) Maude, Angus E. U. Wolrige-Gordon, Patrick
Gammans, Lady Maudling, Rt. Hn. Reginald Wood, Rt. Hn. Richard
Gardner, Edward Mawby, Ray Woodhouse, Hn. Christopher
Gibson-Watt, David Maxwell-Hyslop, R. J. Woodnutt, Mark
Giles, Rear-Admiral Morgan Maydon, Lt.-Cmdr. S. L. C. Wylie, N. R.
Gilmour, Sir John (East Fife) Meyer, Sir Anthony Yates, William (The Wrekin)
Glover, Sir Douglas Mills, Peter (Torrington) Younger, G. K. H.
Glyn, Sir Richard Mills, Stratton (Belfast, N.)
Goodhew, Victor Miscampbell, Norman TELLERS FOR THE AYES:
Gower, Raymond Mitchell, David Mr. Pym and Mr. R. W. Elliott.
Abse, Leo Atkinson, Norman Bellenger, Rt. Hn. F. J.
Albu, Austen Bacon, Miss Alice Bence, Cyril
Allaun, Frank (Salford, E.) Bagier, Gordon A. T. Benn, Rt. Hn. Anthony Wedgwood
Alldritt, W. H. Barnett, J. Binns, J.
Allen, Scholefield (Crewe) Baxter, William Bishop, E. S.
Armstrong, E. Beaney, Alan Blackburn, F.
Blenkinsop, Arthur Houghton, Rt. Hn. Douglas Palmer, Arthur
Boardman, H. Howarth, Harry (Wellingborough) Pannell, Rt. Hn. Charles
Boston, T. G. Howarth, Robert L. (Bolton, E.) Pargiter, G. A.
Bowden, Rt. Hn. H. W. (Leics S. W.) Hoy, James Pearson, Arthur (Pontypridd)
Bowles, Frank Hughes, Cledwyn (Anglesey) Pentland, Norman
Boyden, James Hughes, Emrys (S. Ayrshire) Popplewell, Ernest
Braddock, Mrs. E. M. Hughes, Hector (Aberdeen, N.) Prentice, R. E.
Bradley, Tom Hunter, Adam (Dunfermline) Probert, Arthur
Bray, Dr. Jeremy Hunter, A. E. (Feltham) Pursey, Cmdr. Harry
Broughton, Dr. A. D. D. Irving, Sydney (Dartford) Rankin, John
Brown, Rt. Hn. George (Belper) Jackson, Colin Redhead, Edward
Brown, Hugh D. (Glasgow, Provan) Janner, Sir Barnett Reynolds, G. W.
Brown, R. W. (Shoreditch & Fbury) Jeger, George (Goole) Rhodes, Geoffrey
Buchan, Norman (Renfrewshire, W.) Jeger, Mrs. Lena (H'b'n&St.P'cras,S.) Richard, Ivor
Buchanan, R. Jenkins, Hugh (Putney) Roberts, Albert (Normanton)
Butler, Herbert (Hackney, C.) Jenkins, Rt. Hn. Roy (Stechford) Roberts, Goronwy (Caernarvon)
Butler, Mrs. Joyce (Wood Green) Jones, Dan (Burnley) Robertson, John (Paisley)
Carmichael, Neil Jones, J. Idwal (Wrexham) Rodgers, William (Stockton)
Carter-Jones, L. Jones, T. W. (Merioneth) Rogers, George (Kensington, N.)
Castle, Rt. Hn. Barbara Kelley, Richard Rose, Paul B.
Coleman, Donald Kenyon, Clifford Ross, Rt. Hn. William
Conlan, Bernard Lawson, George Rowland, Christopher
Corbet, Mrs. Freda Leadbitter, Ted Sheldon, Robert
Crawshaw, R. Ledger, Ron Shinwell, Rt. Hn. E.
Cullen, Mrs. Alice Lee, Rt. Hn. Frederick (Newton) Shore, Peter (Stepney)
Dalyell, Tam Lee, Miss Jennie (Cannock) Short, Rt.Hn.E.(N'c'tle-on-Tyne,C.)
Davies, G. Elfed (Rhondda, E.) Lever, Harold (Cheetham) Short, Mrs. Renée (W'hampton, N. E.)
Davies, Harold (Leek) Lever, L. M. (Ardwick) Silkin, John (Deptford)
Davies, Ifor (Gower) Lewis, Arthur (West Ham, N.) Silkin, S. C. (Camberwell, Dulwich)
Davies, S. O. (Merthyr) Lewis, Ron (Carlisle) Silverman, Julius (Aston)
de Freitas, Sir Geoffrey Lipton, Marcus Silverman, Sydney (Nelson)
Delargy, Hugh Lomas, Kenneth Skeffington, Arthur
Dell, Edmund Loughlin, Charles Slater, Mrs. Harriet (Stoke, N.)
Dempsey, James Mabon, Dr. J. Dickson Slater, Joseph (Sedgefield)
Diamond, John McBride, Neil Small, William
Dodds, Norman McCann, J. Smith, Ellis (Stoke, S.)
Doig, Peter MacColl, James Snow, Julian
Donnelly, Desmond MacDermot, Niall Solomons, Henry
Driberg, Tom McGuire, Michael Spriggs, Leslie
Duffy, Dr. A. E. P. McInnes, James Stewart, Rt. Hn. Michael
Dunn, James A. McKay, Mrs. Margaret Stonehouse, John
Dunnett, Jack MacKenzie, Gregor (Rutherglen) Stones, William
Edelman, Maurice Mackie, John (Enfield, E.) Strauss, Rt. Hn. G. R. (Vauxhall)
Edwards, Rt. Hn. Ness (Caerphilly) McLeavy, Frank Swain, Thomas
Edwards, Robert (Bilston) MacMillan, Malcolm Symonds, J. B.
English, Michael MacPherson, Malcolm Taverne, Dick
Ennals, David Mahon, Peter (Preston, S.) Taylor, Bernard (Mansfield)
Ensor, David Mahon, Simon (Bootle) Thomas, George (Cardiff, W.)
Fernyhough, E. Mallalieu,J.P.W.(Huddersfield,E.) Thomas, Iorwwerth (Rhondda, W.)
Finch, Harold (Bedwelty) Manuel, Archie Thomson, George (Dundee, E.)
Fletcher, Sir Eric (Islington, E.) Mapp, Charles Thornton, Ernest
Fletcher, Ted (Darlington) Marsh, Richard Tinn, James
Fletcher, Raymond (Ilkeston) Mellish, Robert Tuck, Raphael
Floud, Bernard Mendelson, J. J. Urwin, T. W.
Foley, Maurice Mikardo, Ian Varley, Eric G.
Foot, Sir Dingle (Ipswich) Millan, Bruce Wainwright, Edwin
Foot, Michael (Ebbw Vale) Miller, Dr. M. S. Walden, Brian (All Saints)
Ford, Ben Milne, Edward (Blyth) Walker, Harold (Doncaster)
Galpern, Sir Myer Molloy, William Wallace, George
Garrett, W. E. Monslow, Walter Warbey, William
Ginsburg, David Morris, Alfred (Wythenshawe) Watkins, Tudor
Gregory, Arnold Morris, Charles (Openshaw) Weitzman, David
Grey Charles Morris, John (Aberavon) White, Mrs. Eirene
Griffiths, David (Rother Valley) Murray, Albert Whitlock, William
Griffiths, Rt. Hn. James (Llanelly) Neal, Harold Wilkins, W. A.
Hale, Leslie Newens, Stan Willey, Rt. Hn. Frederick
Hamilton, James (Bothwell) Noel-Baker, Francis (Swindon) Williams, Alan (Swansea, W.)
Hamilton, William (West Fife) Noel-Baker, Rt.Hn.Philip(Derby,S.) Williams, Mrs. Shirley (Hitchin)
Hamling, William (Woolwich, W.) Norwood, Christopher Williams, W. T. (Warrington)
Harrison, Walter (Wakefield) Oakes, Gordon Willis, George (Edinburgh, E.)
Harper, Joseph O'Malley, Brain Wilson, William (Coventry, S.)
Hattersley, Ray Oram, Albert E. (E. Ham, S.) Winterbottom, R. E.
Hayman, F. H. Orbach, Maurice Woodburn, Rt. Hn. A.
Hazell, Bert Orme, Stanley Woof, Robert
Heffer, Eric S. Oswald, Thomas Wyatt, Woodrow
Henderson, Rt. Hn. Arthur Owen, Will Zilliacus, K.
Herbison, Rt. Hn. Margaret Padley, Walter
Hobden, Dennis (Brighton, K'town) Page, Derek (King's Lynn)
Holman, Percy Paget, R. T. TELLERS FOR THE NOES:
Horner, John Mr. Gourlay and Mr. Fitch.

Question proposed, That the Clause stand part of the Bill.

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

I do not think it right that we should part with the Clause without expressing the very deep regret which we on this side feel that the Chancellor of the Exchequer and his colleagues have found it necessary to impose such a wasteful and destructive tax on our economy.

The effect of this increase in petrol duty has gone straight through our economy. The day after the duty was imposed road haulage rates went up by 2½ per cent. This was reflected and magnified in the extra cost of delivering building materials, and builders, who at this time are working at full pressure, have found no difficulty whatsoever in raising their prices yet again. I do not need to detail the effect which the increase in petrol duty is likely to have on the motor car industry on which, after all, we depend for so large a proportion of our export earnings.

This is the greatest discouragement to healthy industrial life in this country that the Chancellor of the Exchequer could conceivably have devised. Nor could he have chosen a worse time for imposing it. The economy is fully stretched and a relatively small increase in prices—not that this increase is very small—is reflected a hundred times in every part of our economy. I wonder who advises the right hon. Gentleman on matters like this. I hope that he does not feel that the gnomes of Zurich are pleased by this sort of economic ignorance. This is simply playing with our economy. It is a case if increasing a tax because of the arithmetic without regard to the consequences. This is a tax which can by no means help solve the main problem, which is that of increasing exports.

In view of this, I hope very much that my right hon. and hon. Friends will show their disgust for this tax and will divide against it.

Mr. F. A. Burden (Gillingham)

I was interested in some of the remarks by the Chief Secretary when he suggested that it was right and proper that taxes imposed should be absorbed by industry. I think that it is germane at this point in the debate to point out to him that among the first people to increase their prices as a result of the increased petrol tax are the nationalised road haulage concerns. In fact, my own company has a van service which is carried out by one of the nationalised road services, and as a result of this extra tax the cost to us of that service is to be increased by about £750 per annum. This is all for the delivery of essential supplies of consumer goods to the various shops.

I was also interested, in view of the fact that the nationalised industries are passing this charge on to the consumer, to have heard about a week ago the answer to a question about the possibility of the taxi trade having either to review its fares or of the possibility of a rebate, and, there again, it was pointed out by the Government spokesman that in fact the cost per mile as a result of the increased petrol tax would be very small, and that in any case the taxi drivers or the taxi companies had not so long ago received an increase in the fares. But of course, that was because of the cost of running those vehicles at that time, and since then this additional impost has been made by the action of the Government.

I would also draw the attention of the hon. Gentleman to the position of the farming industry. This is something of which I have not a very considerable knowledge, but it sticks out like a sore thumb. No industry in this country shows such a good degree of productivity as the farming industry, and I think that no other industry plays such a tremendous part in putting right our balance of payments. The tremendous increase in the quantity of home-grown food has made it possible for us to import less and less from abroad. This industry is vitally important not only from that point of view, but also because of its products. But let us be perfectly frank about this. I do not think that the hon. Gentleman would disagree with me that farm produce is the lifeline of this country and it is something on which every householder has to depend. Any increase in the price of farm produce must increase the cost of living.

I would ask the hon. Gentleman to consider very carefully whether there is not some way in which the farming industry can be eased of this additional cost, which will almost inevitably have to be passed on to the consumer. It was very interesting to hear the hon. Gentleman, who is an accountant, standing at the Dispatch Box and saying that when taxes are imposed by his Government they must be absorbed and prices must not rise. But I wonder whether, as an accountant, when he looks at the books of the companies he is advising and sees inevitable increases in costs, he always gives them the advice he is now advocating.

I very much doubt whether the hon. Gentleman always tells the company that he is advising when its costs are increasing, "Do not pass them on. Just absorb them." I should be very interested to hear the hon. Gentleman's reply on this point. I know that he is in a difficult position because he is now defending Government action and that when he was advising professionally he was advising his clients.

All along the line we have had the suggestion that the taxes introduced by the present Government should be absorbed. I wonder whether the hon. Gentleman has looked back as far as the 1951 speech made by the late Mr. Hugh Gaitskell when he was Chancellor of the Exchequer, in which he said that increased taxes inevitably mean increased prices. It was on 11th March this year, as I pointed out yesterday, that his right hon. Friend the Chancellor of the Exchequer said exactly the same thing. If the hon. Gentleman will look up HANSARD of 11th March he will find that his right hon. Friend the Chancellor agreed from the Opposition Front Bench that increased taxes mean increased prices.

I think that of all the taxes that the Government have so far introduced this is the most inflationary, is bound to make itself felt throughout the whole economy and will undoubtedly lead very soon to an increase in prices over a wide range of goods.

5.30 p.m.

The Temporary Chairman (Commander Donaldson)

Mr. Bennett, or should I say Sir Frederic?

Sir Frederic Bennett (Torquay)

Under either name, Commander Donaldson, I am grateful for being called.

Some few days ago we on these benches had quite a diatribe directed against us by the Chancellor of the Exchequer on the grounds that we have been representing the Budget as being inflationary. We were almost accused of deliberate misrepresentation which was having its effect on the stability of sterling. We were told that we were absolutely wrong to say that the Budget was inflationary and that to the Chancellor of the Exchequer himself it was so clearly not so.

This is the most astonishing accusation to make, because if hon. Members, either in opposition or in government, think that a Budget is inflationary, then it is their clear duty to say so. It is not a conspiracy against the stability of sterling to say it. There are plenty of arguments for saying that the Budget is inflationary to a very large extent. Had I been here yesterday I should have been quite prepared to argue that the increase in Income Tax with regard to savings is inflationary, but as that would be out of order to discuss today, I will deal with the petrol tax and, in due course, I will say something about the surcharge and the other inflationary items in the Budget.

The petrol tax must be accepted by the Chancellor as being inflationary. As some hon. Members have said, we all have experience in one field or another. Already, there are clear signs that where road transport of building materials is concerned it is not just a question of raising the price by 6d. It will raise the price of cement, bricks and everything else with its inevitable effect on the price of the house. One could go through every item to prove that this increase in the petrol tax will mean a much bigger rise in costs than adding it merely to just one item in the cost of living.

I hope, therefore, that when the time comes we shall vote against the Clause and place on record our firmly held view that this is one of the most, if not the most, inflationary items in a very inflationary Budget.

Sir Douglas Glover (Ormskirk)

I support what my hon. Friend the Member for Torquay (Sir F. Bennett) has just said, and I hope that we shall divide on the Clause. It is thoroughly inflationary. Not only is it inflationary, but it affects the most efficient organisations in the country. In my constituency we have some of the most efficient farmers in Britain, who are very little affected by the Price Review. Therefore, their costs will not be taken into account in the Price Review.

Their products will not be affected by it. In the words of the right hon. Gentleman, they will be expected to absorb this increased charge, yet they are very great users indeed of mechanical equipment which is continuously being used in the production of the same crop. It will not mean just a first increase of, say, one-fifth of 1d. a mile as in road transport. It will represent a much bigger increase in agricultural production.

Then there is the horticultural industry, which is already facing today fierce competition from overseas. It is suffering from what those in the industry consider very inadequate protection, and yet now it is faced with an increased surcharge. That industry, again, is not covered by the Price Review. The inevitable effect will be that those in the industry will be forced to increase their prices, and when they do so it will be said that it is inflationary.

My hon. Friend knows a great deal about the consumer industry. The idea seems to be that the increased tax will be a once-for-all charge on the transport cost of goods. But very often goods are transported five or six times before they reach the actual point of sale, and the extra cost of all that to-ing and fro-ing will mean a very big increase in actual prices.

One of the stories that the Government are trying to get over is that these increases are necessary in order to find the money with which to pay the increased pensions. This is a story of a horse that will not run. The hon. Gentleman knows perfectly well that in his Budget statement the Chancellor made it quite clear that the on-cost, over and above the stamp, to cover the increased pension charges represents about £15 million in Exchequer grant and this tax alone is expected to bring in about £60 million or £70 million a year.

Even if we take the whole £15 million on this tax alone, it means that the party opposite is increasing direct taxation on the productive resources of the country by £45 million or £50 million more than is needed for pensions. I think that this lie about the pension had better be nailed once and for all. It is a very misleading argument. These taxes are not being imposed in order to deal with the pensions. They are being imposed for an ideological reason, to try to create—[HON. MEMBERS: "No."] Let me say what I was going to say. The Chancellor said that we had created the climate. The hon. Gentleman, who has a lot of knowledge of these things and has made a similar speech to the one that I am making on so many occasions from this side of the Committee that he must almost know what comes in the next sentence, must know that anything that is a burden on the efficiency of the country is something which we do not want to create at this moment.

These measures will make it harder to export. The whole object of the Budget is supposed to be the exact opposite of what it is to achieve. I am certain that if the Chancellor, who has not been here very much during the Committee stage of the Bill, was able to speak with the knowledge that he has gained in recent days he would say that he wished he had not brought in these measures, but a lot of other taxes which would be much more justifiable and likely to produce the result that he wishes.

Mr. Donald Box (Cardiff, North)

I join with hon. Friends on this side of the Committee who have expressed regret that the Government have found it necessary to increase the petrol tax by such a large amount. I think that the reactions of the motor industry were best summed up by a garage proprietor in my part of Wales, who, immediately following the announcement, published a notice in the South Wales Echo, the newspaper which circulates in my division and also, rather appropriately, in the division of the Chancellor of the Exchequer, which read: Sir Alec, Return immediately. All is forgiven. Quite honestly, I cannot see for what the garage proprietor had to forgive my right hon. Friend the Leader of the Opposition, but I am quite certain that the public will not forgive the present Prime Minister and his right hon. Friend the Chancellor of the Exchequer when they face the extra charges, whether they be for urban or long-distance bus fares, for road haulage or for rates which this Clause will involve, for they are all bound to add to the cost of living.

I was puzzled when, in the Chancellor's speech of 11th November, I came across this sentence: This increase in duty will exercise an appreciable and immediate disinflationary effect and will make an important contribution towards my general objective of preventing an increase in the pressure of demand."—[OFFICIAL REPORT, 11th November, 1964; Vol. 701, c. 1037.] It seems to me that, above all else, this increase in petrol duty is bound to have a most inflationary effect on prices in this country. [HON. MEMBERS: "Rubbish."] Hon. Members opposite may think that that is rubbish, but they have been very unwilling to get to their feet to support what they say.

It is not in the least surprising that the Road Haulage Association immediately recommended that its members should bring about a rise in rates amounting to 2½ per cent. or 6d. in the £. I notice that, despite the Chancellor's assurances and those given by the Chief Secretary, the National Joint Council of Road Passenger Transport Workers, representing about 77,000 busmen, immediately expressed its deep concern at the rise.

We have been given some rather uncertain assurances about relief in respect of stage carriages. I welcome these assurances, though they were a little indecisive, for the effect in a city like Cardiff would have been dramatic had these extra charges gone on to the bus services. We are already losing about £100,000 a year, and the extra charges based on 6d. per gallon would have amounted to a further £18,000.

I shall not pursue the point, Commander Donaldson, because you would probably rule me out of order if I did, but I think it pertinent just to observe that, before the election, some right hon. and hon. Members opposite were anxious to point out how mean the Conservative Government were in not making fare concessions to pensioners. I content myself with saying that, in the discussions on relief from this tax, I have not noticed any suggestions from the benches opposite that there should be any concessions for pensioners in the matter of fares.

As is well known, a number of rural bus services are subsidised out of the more profitable urban services. Despite the Government's assurances about stage carriage relief, I was not surprised to see that at least three companies opera, ting rural bus services in Wales had applied for an increase in their cheap day fares. Incidentally, whenever the subject of rural transport has been discussed in the past, it has always brought a great deal of outcry from hon. Members representing rural constituencies in Wales.

When rail closures were proposed in their areas, they complained, they rampaged, they arranged marches and meetings of protest. Yet today, in an important debate when we are discussing this very matter which might have an effect on rural transport fares, I see not one Welsh Member representing a rural constituency present. This is what happens when an important issue is discussed. They are conspicuous by their absence.

There is no doubt that the cost increase for industry will be considerable. Hardly anything will escape. Most important to the area which I represent will be the added cost for the steel industry. Already, the Steel Company of Wales has reported that a material increase in costs is bound to result, and this, of course, will have to be passed on down the line to the customer, making us less competitive in the future.

I find it difficult, therefore, to see how the rise can do other than increase the cost of living, increase the costs of production and reduce our competitiveness, particularly the competitiveness of our road haulage industry as against the railways, and I hope, therefore, that my right hon. and hon. Friend will vote against the Clause.

5.45 p.m.

Mr. Frederic Harris (Croydon, North-West)

I may be accused of repetition, but, looking back over the past 17 years, I emphasise that I have opposed every increase in the petrol duty, whether it has come from a Conservative or a Labour Government. The present Minister of Works has often referred in the House to some of my past speeches on the subject.

I apologise to the Committee for my loss of voice and I shall not detain it long. I wish merely to emphasise two points which I have stressed before. The trouble is that the increase in petrol duty is far too easy for a Chancellor to use. It gives him a quick answer to his problems. The second point—I put this from a business point of view, and the Chief Secretary will know about it from his own commercial and professional experience—is that, regrettably, when the petrol duty is increased, every industry invariably has to balance off its figures by putting on an increase which is slightly above the actual cost of the tax itself. In the main, this is true, and it aggravates the increased costs about which we are all disturbed and to which we refer quite rightly as having a considerable inflationary tendency.

There can be no dodging the fact that, regrettably, industry cannot put on just the equivalent of the increase in the petrol duty. Unfortunately, the levelling off means much higher increases in costs and, therefore, the effect is even more serious.

On this occasion, as on previous occasions, I strongly oppose the increase in the petrol duty.

Mr. Diamond

I am sure that I speak for the whole Committee when I say how sorry we are that the hon. Member for Croydon, North-West (Mr. Frederic Harris) has a little difficulty in speaking. We hope that he will rest his voice adequately, because we should hate his trouble to go to unnecessary lengths. We recognise, also, that he has been consistent, always taking the view, which he has just expressed, each time the petrol duty was raised by his right hon. and hon. Friends, which has been on more than one occasion.

To come straight to the point which the hon. Gentleman and several of his hon. Friends made, that this increase in the petrol duty means either at least an equivalent increase in the sale price of goods, or, as he said, a more than equivalent increase because of the process of rounding off and the habit which people have of adding on a bit more than the costs which they have in fact incurred, I can only repeat what I said yesterday.

The first thing which we must all understand if we are to get the country out of the situation in which it still is is that we must be more competitive in our export prices. We must be much more competitive in our attitudes, and, to be more competitive, we must be much more efficient in all our operations. This means absorbing price increases and not simply idly or lazily passing them straight on and letting the wretched customer carry them.

Mr. Burden


Mr. Diamond

I listened very carefully to the hon. Gentleman and I shall give way with pleasure shortly. This is the Committee stage and he may intervene as often as he feels compelled. I should like to complete this point and make it absolutely clear.

This debate is not about an increase in the cost of living of one-fifth of a point. It is not about an increase in the mileage charge of the average vehicle of one-fifth of 1d. a mile. It is about the totality of the increase in this tax, about £93 million in a full year. It is a substantial producer of revenue, the total in a full year at the new rate being more than £700 million a year. The real question is: was it necessary for this impost to be added on to meet the economic situation, and, it having been added on, what is the best way of dealing with it?

My right hon. Friend explained in his Budget speech and on Second Reading why it was necessary. I have referred to this matter myself. As is well known, the situation when we took office was such that we were compelled, as a result of the balance of payments position, to reduce imports, and we took steps to do so. If one reduces imports, one increases the pressure which purchasing power exerts on a reduced quantity of goods. In order to avoid that pressure, one had to exercise a disinflationary power, and the best way to do that was some kind of tax which would be broadly spread, which would have the least damaging effects and which would not prejudice exports at all.

Some hon. Members opposite, notably the hon. Member for Ormskirk (Sir D. Glover), have said that this tax would make it harder to export. Taken in conjunction with the other provisions in this very Bill for the export rebate, it will not have any effect whatever on export prices. Therefore, it does not make it harder to export.

Mr. Burden

The hon. Gentleman has come back to the point about absorbing the tax. In the circumstances, would it not be a good thing if the Government set an example by sending a directive to the national road transport organisation telling it to absorb the cost of the increased petrol duty rather than pass it on in increased costs to consumers through carriage charges?

Mr. Diamond

The Government are setting an example by having a stern review of expenditure. This is being conducted at the moment. When the conclusions of it are put before the House, I hope that we shall have the full support of the hon. Member for Gillingham (Mr. Burden) and of all his right hon. and hon. Friends in any reduction of expenditure which may be necessary. This is the way to set the example.

In reply to what the hon. Member for Croydon, North-West put to me in his reference to my personal experience, I am glad to say that I know of no board of self-respecting directors who, when faced with the problem of increased charges coming from wage increases, increases in direct taxation or in any other way, do not first say to themselves, "Here is an increase in our charges. How are we to absorb it and deal with it without making our goods less competitive by putting up the price?". That is the first reaction of any worthwhile business owner or business manager in this country.

Sir Stephen McAdden (Southend, East)

The hon. Gentleman implies a challenge to us to show the contrary of what he has just said. What about the Government's own attitude in the matter? Has he never heard of the British Transport Commission, which regularly asks for fare increases as soon as wages rise?

Mr. Diamond

The hon. Member for Croydon, North-West asked me about one's approach to this situation. I am quite sure that it would be wrong for anyone on either side of the Committee to accept it as automatic or anything approaching automatic that, faced with an increase, especially such a minimal increase as this is likely to be percentage-wise, the first reaction of any business is to pass it on in terms of prices. We shall never make progress if we continue on that basis.

Mr. John Biffen (Oswestry)

I accept the hon. Gentleman's point that it is vital to have the closest attention to costs at all times if British industry is to remain competitive. The point I have to put to him is somewhat different. He said that the main purpose of this tax was to act as a kind of regulator of pressure of demand. It is the arithmetic of that which interests me, because a great deal of this increased tax will fall as an industrial cost and, if it is absorbed, it must reduce the effect of the tax as a regulator on the pressure of demand. What does he think is the actual amount out of the £93 million which will fall on consumption after the amount of cost absorption which he would like to see has taken place?

Mr. Diamond

If it is thought that that is within the scope of this Clause I am only too glad to answer the question. We should not get bedded down with too much detail about the comparative cost of petrol in Belgium, or elsewhere, but we should deal with the vital questions which have been raised by hon. Members who have intervened in the debate. I repeat what the Chancellor said, that the purpose of this tax is to reduce pressure. We can do that in one of two ways. Obviously, if it is all passed on in terms of increased prices the result is a lowering in demand for an equivalent amount of goods. If, on the other hand, it is all absorbed through greater efficiency we get an additional amount of goods for the same purchasing power.

In either event purchasing power and goods available are kept level, and that is the purpose. It can be done in one of two ways, the inefficient way of passing it on and the efficient way of absorbing it, and either way it will have a disinflationary effect on imports. The Committee should recognise this situation and give full support to the Clause.

Most of the contents of the Clause have already been discussed in debates on Amendments, but there is one thing I should add as it has not emerged. The Clause, which is a consolidating Clause, in terms of machinery represents that so far as excise duty as opposed to customs duty is concerned, it removes the preference which exists as between duty on home-produced and imported oil as from 1st January, in conformity with our obligations under E.F.T.A., repeating a provision in the earlier Finance Act which right hon. Members opposite produced this year.

The hon. Member for Cardiff, North (Mr. Box) asked why my hon. Friends were not continually asking questions about reduced travel costs for pensioners. The reason why they have not been doing that is that we have already dealt with a Bill concerned with that subject which has gone from this House to another place. I do not know whether he was in this House at the time, but he has made the continual accusation about my hon. Friends not being present. The figures from the Division Lobbies which you, Commander Donaldson—and I trust your accuracy—have read, show that my hon. Friends are present. They seem to be present in greater numbers than hon. Members opposite. The reason why my hon. Friends are not raising questions about the Clause is that they are satisfied with its contents and give it their silent approval.

Mr. Box

There are many more hon. Members opposite present now than there were when we were discussing Amendments to the Clause. It is true that I have been away on a Parliamentary delegation for some weeks. I was unaware of the fact that the legislation referred to had gone through this House. If my remarks were incorrect, I withdraw them.

Mr. Diamond

Nothing could be more courteous and I am grateful to the hon. Member.

The hon. Member for Torquay (Sir F. Bennett)—[An HON. MEMBER: "He has skedaddled."]—raised a question about transport of bricks and concrete. It is true that at the extreme point where a very heavy load of goods which are inexpensive has to be carried we get a higher proportion resulting from the petrol charge than at the other extreme where there are many valuable lightweight goods to transport. But that does not alter the basic argument that the impact is very slight and it is evenly spread. It is introduced for reasons which are absolutely unavoidable to help our competitive position.

For these reasons, I ask hon. Members to support the Clause.

6.0 p.m.

Mr. William Clark (Nottingham, South)

Yesterday, we had a debate on Clause 1 and there were substantial arguments against its being included in the Bill. I think there are similar arguments against this Clause. We do not think that either the Income Tax increase or the petrol tax increase is necessary.

The burden of the argument of the Chief Secretary was that the increase in petrol tax is to help our balance of payments. The product of this extra 6d. per gallon is to be £93 million. When we break that down we find that approximately £60 million, two-thirds, will fall on industry. if it falls on industry it will be a chargeable expense for tax purposes. If it is said to be disinflationary it should be seen that the Government are not giving up £93 million, but about £30 million. When they came into office the party opposite made great play about modernising Britain, reducing costs, and so on. This is a peculiar way of reducing costs by immediately slapping at least £60 million cost on to industry.

We have maintained throughout that this Budget is an inflationary Budget, but the Chief Secretary seeks to convince us that it is a disinflationary Budget. He would agree with my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) that we want more exports. Is the increased petrol cost to increase transport costs from factory to port, or not? Surely it will increase the cost of exports. Conversely, if imports are moved by road from port to distributing centre, wherever it may be, as my hon. Friend the Member for Gillingham (Mr. Burden) said, this will increase the cost of transport.

I should have thought that the major portion of this £93 million must (a) affect industry and (b) affect the cost of living. The Chief Secretary proved to me that, despite the opposition of hon. Members opposite to the stop-go policy which is derided, he was expounding exactly the same policy.

Mr. Diamond

I interrupt only on a point of fact. The simple fact is that the export rebate is calculated on a number of things, one of which is the cost of the petrol duty entering into the goods exported.

Mr. Burden

Oh, no.

Mr. Diamond

I repeat it. It is quite wrong to say that this, in any case, prejudices the export of goods.

Mr. Clark

Even accepting that, the Chief Secretary, in his winding-up remarks, said that any increase in the cost of petrol for industry should be absorbed and that, consequently, we must become more competitive. It seems extraordinary to slap on a charge on goods and tell the industrialist that he must be competitive and absorb the charge. Even if he does so, that does not make him more competitive for the cost of the goods will not be reduced.

What were the Socialist boasts during and even since the election, both in the Queen's Speech and in the White Paper on maintaining stable prices? Surely the Chief Secretary and his hon. Friends—and, I am certain, my hon. Friends—must agree that this tax must increase the cost of living. There must be many red faces among the Socialists. I am sure that millions of car owners will be particularly bitter about this Socialist Government who, having got into office, not only increase the Income Tax by 6d. in the £, put a poll tax on National Insurance of 2s. irrespective of income, and penalise the small motorist to the extent of 6d. per gallon of petrol.

Many of my hon. Friends have given reasons why we should resist the Clause. My hon. Friend the Member for Rye (Mr. Bryant Godman Irvine) and my hon. Friend the Member for Ormskirk (Sir D. Glover) both spoke of the effect on agriculture. There is no point in recanvassing the arguments in that respect. My right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), in the previous debate, spoke about transport, especially in rural areas. If the Government press this imposition they must apologise to the electorate for having given the electorate the impression that the advent of a Socialist Government did not mean increased taxation.

If hon. Members opposite want to be politically straight about this, they should apologise for giving the impression that there would be no general increase in taxation. Our greatest criticism of this Budget, and this Clause in particular, is that the Chancellor did not think through his proposals. This tax must affect our export effort and make us less competitive. For those reasons, I hope that my hon. and right hon. Friends will vote against this Clause in the Lobby.

Mr. Burden

I intervene very shortly because the Chief Secretary made an important statement and this should be pointed out. He stated that when there is a rebate of the surcharge this increased duty on goods brought in under the 15 per cent. would have the increased cost of petrol included in that rebate. I and many people who have been re-exporting for many years have always found that the amount of rebate we got was the amount shown and assessed by the Customs officials on the invoices only. There was no question of any addition of any cost on transport after the goods had been brought to this country.

I hope that the Chief Secretary will make this point very clear, because it was a statement which I am sure many people will be glad to hear, that when the rebate on the surcharge is made it will also include a token sum to take care of the cost after the goods have been imported and not as shown on the invoices.

Mr. Diamond

I am grateful for the opportunity of making clear what I thought was clear and what it is my duty to make clear to the hon. Member and to the country. He has been referring to past experience of existing legislation, but what I have referred to is new provisions in new legislation which the Committee will be debating on a subsequent Clause. Those provisions provide for a new export rebate. One of the elements is the cost of petrol duty. To the extent that petrol duty goes up or down so would the export rebate be varied. I hope that I have made it clear that the hon. Member was referring to a different thing. Under the provisions which the Committee will debate as soon as may be possible, the sooner the better, he will see that what I have said is quite right.

Mr. Burden

I am grateful to the hon. Gentleman.

Mr. Geoffrey Lloyd

Commending the Clause to the Committee, the Chief Secretary has again delivered a lecture to the industrialists of the country. He did it yesterday in our debate on the earlier Clause and he has done it again today. He says that they have to absorb price increases and become more efficient and more competitive.

I wonder whether the right hon. Gentleman appreciates the badness of his psychology and how much his lectures will be resented and rejected by industrialists and practical businessmen all over the country. It is bad enough for industrialists to receive constant exhortation from Ministers, but many of them will take the view that to have their costs increased and then to receive a lecture from the Minister responsible is too much.

Before we part with the Clause, I must make a strong protest on behalf of the Birmingham and Midland industrial community against the increase in the tax on petrol. We in the Midlands are the centre of the motor car industry and this increase in the cost of motoring is bound to be some kind of check to the expansion of our industry. It is not possible exactly to quantify this effect, but the fact that it constitutes an obstacle to the further rapid expansion of motoring, and therefore of motor manufacturing, is undoubted.

We in the Midlands largely make our living from this industry. It is not only a question of the great motor car companies which we all know, for the component manufacturers are tremendously strongly represented in the Midlands and every year hundreds of millions of pounds worth of orders come into Birmingham and the rest of the Midlands for all the parts which go into motor cars. This production must be checked to some extent by any check in the demand resulting from an increase in the cost of petrol.

It is sometimes said that almost every factory in Birmingham now makes some parts of a motor car. That is an exaggeration, but it is an indication of the importance of this work to the area. Under the Conservative Government, the motor car industry was going ahead well and in the Midlands we were very prosperous.

That brings me to my second grievance on behalf of the Midlands, not as manufacturers but as consumers. It is that, because of the very prosperity of the Midlands area, largely due to its great part in motor car manufacture, we have been the part of the country where new motor car owners have been coming along faster than probably anywhere else. It is commonplace that car workers should have their own cars and we are all very pleased about that, but it is also true that almost any young man in Birmingham who is asked how he is getting on is almost certain to say that he does not have a car yet. Anything which makes motoring more expensive will be an obstacle to the ambition of all our young people to own a motor car, which is not only a part of the Midland's prosperity, but also the legitimate ambition of our young Midland workers.

In the Midlands there is a suspicion that the Government are hostile to the Midlands area. We have already heard that the President of the Board of Trade is to be much tougher about industrial development certificates for our area and in this Clause the Government are striking a blow at the industry which is the fundamental basis of our prosperity.

6.15 p.m.

Mr. Joel Barnett (Heywood and Royton)

I want to refute one assertion of the hon. Member for Nottingham, South (Mr. William Clark). The hon. Gentleman should have known better. He said that of the total involved in this tax, about £90 million, some £60 million would fall on industry and would then be mitigated by the disinflationary effect. He should know that companies whose years end up to and before 5th April will not have their tax payable until January, 1966, while companies whose years end later will not be paying tax until January, 1967, so that the disinflationary effect will clearly not apply now.

Question put, That the Clause stand part of the Bill:—

The Committee divided: Ayes, 243, Noes, 218.

Division No. 18.] AYES [6.16 p.m.
Abse, Leo Atkinson, Norman Bellenger, Rt. Hon. F. J.
Albu, Austen Bacon, Miss Alice Bence, Cyril
Allaun, Frank (Salford, E.) Bagier, Gordon A. T. Benn, Rt. Hon. Anthony Wedgwood
Alldritt, W. H. Barnett, Joel Bennett, J. (Glasgow, Bridgeton)
Allen Scholefield (Crewe) Baxter, William Binns, John
Armstrong, Ernest Beaney, Alan Bishop, E. S.
Blackburn, F. Herbison, Rt. Hn. Margaret Padley, Walter
Blenkinsop, Arthur Hobden, Dennis (Brighton, K'town) Page, Derek (King's Lynn)
Boardman, H. Holman, Percy Paget, R. T.
Boston, T. G. Horner, John Palmer, Arthur
Bowden, Rt. Hn. H. W. (Leics S. W.) Houghton, Rt. Hn. Douglas Pannell, Rt. Hn. Charles
Bowles, Frank Howarth, Harry (Wellingborough) Pargiter, G. A.
Boyden, James Howarth, Robert L. (Bolton, E.) Pearson, Arthur (Pontypridd)
Braddock, Mrs. E. M. Hoy, James Pentland, Norman
Bradley, Tom Hughes, Cledwyn (Anglesey) Popplewell, Ernest
Bray, Dr. Jeremy Hughes, Emrys (S. Ayrshire) Prentice, R. E.
Broughton, Dr. A. D. D. Hughes, Hector (Aberdeen, N.) Probert, Arthur
Brown, Hugh D. (Glasgow, Provan) Hunter, Adam (Dunfermline) Pursey, Cmdr. Harry
Brown, R. W. (Shoreditch & Fbury) Hunter, A. E. (Feltham) Rankin, John
Buchan, Norman (Renfrewshire, W.) Irving, Sydney (Dartford) Redhead, Edward
Buchanan, Richard (Gl'sg'w,Spr'burn) Jackson, Colin Reynolds, Gerald
Butler, Herbert (Hackney, C.) Jeger, George (Goole) Rhodes, Geoffrey
Butler, Mrs. Joyce (Wood Green) Jeger,Mrs.Lena(H'b'n&St.P'cras,S.) Richard, Ivor
Carmichael, Neil Jenkins, Hugh (Putney) Roberts, Albert (Normanton)
Carter-Jones, Lewis Jenkins, Rt. Hn. Roy (Stechford) Roberts, Goronwy (Caernarvon)
Castle, Rt. Hn. Barbara Jones, Dan (Burnley) Robertson, John (Paisley)
Coleman, Donald Jones, J. Idwal (Wrexham) Rodgers, William (Stockton)
Corbet, Mrs. Freda Jones, T. W. (Merioneth) Rose, Paul B.
Crawshaw, Richard Kelley, Richard Ross, Rt. Hn. William
Cullen, Mrs. Alice Kenyon, Clifford Rowland, Christopher
Dalyell, Tam Lawson, George Sheldon, Robert
Davies, G. Elfed (Rhondda, E.) Leadbitter, Ted Shinwell, Rt. Hn. E.
Davies, Harold (Leek) Ledger, Ron Shore, Peter (Stepney)
Davies, Ifor (Gower) Lee, Rt. Hn. Frederick (Newton) Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)
Davies, S. O. (Merthyr) Lee, Miss Jennie (Cannock) Short, Mrs. Renée (W'hampton. N. E.)
de Freitas, Sir Geoffrey Lever, Harold (Cheetham) Silkin, John (Deptford)
Delargy, Hugh Lever, L. M. (Ardwick) Silkin, S. C. (Camberwell, Dulwich)
Dell, Edmund Lewis, Ron (Carlisle) Silverman, Julius (Aston)
Dempsey, James Lipton, Marcus Silverman, Sydney (Nelson)
Diamond, John Lomas, Kenneth Skeffington, Arthur
Dodds, Norman Loughlin, Charles Slater, Joseph (Sedgefield)
Doig, Peter Mabon, Dr. J. Dickson Small, William
Donnelly, Desmond McBride, Neil Smith, Ellis (Stoke, S.)
Driberg, Tom MacDermot, Niall Snow, Julian
Duffy, Dr. A. E. P. McGuire, Michael Solomons, Henry
Dunn, James A. (L'pool, Kirkdale) McInnes, James Spriggs, Leslie
Dunnett, Jack (Nottingh'm, Central) McKay, Mrs. Margaret Stonehouse, John
Edwards, Rt. Hn. Ness (Caerphilly) MacKenzie, Gregor (Rutherglen) Stones, William
Edwards, Robert (Bilston) McLeavy, Frank Summerskill, Dr. Shirley
English, Michael MacMillan, Malcolm Swain, Thomas
Ennals, David MacPherson, Malcolm Symonds, J. B.
Ensor, David Mahon, Peter (Preston, S.) Taylor, Bernard (Mansfield)
Fernyhough, E. Mahon, Simon (Bootle) Thomas, George (Cardiff, W.)
Finch, Harold Mallalieu, J. P. W. (Huddersfield, E.) Thomas, Iorwerth (Rhondda, W.)
Fitch, Alan Manuel, Archie Thomson, George (Dundee, E.)
Fletcher, Sir Eric (Islington, E.) Mapp, Charles Thornton, Ernest
Fletcher, Ted (Darlington) Marsh, Richard Tinn, James
Fletcher, Raymond (Ilkeston) Mellish, Robert Tuck, Raphael
Floud, Bernard Mendelson, J. J. Urwin, T. W.
Foley, Maurice Mikardo, Ian Varley, Eric G.
Foot, Sir Dingle (Ipswich) Millan, Bruce Walden, Brian (All Saints)
Foot, Michael (Ebbw Vale) Miller, Dr. M. S. Walker, Harold (Doncaster)
Ford, Ben Milne, Edward (Blythe) Wallace, George
Galpern, Sir Myer Molloy, William Warbey, William
Garrett, W. E. Monslow, Walter Watkins, Tudor
Garrow, A. Morris, Alfred (Wythenshawe) Weitzman, David
Ginsburg, David Morris, Charles (Openshaw) Whitlock, William
Gourlay, Harry Morris, John (Aberavon) Wilkins, W. A.
Gregory, Arnold Murray, Albert Willey, Rt. Hn. Frederick
Grey, Charles Neal, Harold Williams, Alan (Swansea, W.)
Griffiths, David (Rother Valley) Newens, Stan Williams, Mrs. Shirley (Hitchin)
Griffiths, Rt. Hn. James (Llanelly) Noel-Baker, Francis (Swindon) Williams, W. T. (Warrington)
Hale, Leslie Noel-Baker,Rt.Hn.Philip(Derby,S.) Willis, George (Edinburgh, E.)
Hamilton, James (Bothwell) Norwood, Christopher Wilson, William (Coventry, S.)
Hamilton, William (West Fife) Oakes, Gordon Winterbottom, R. E.
Hamling, William (Woolwich, W.) Ogden, Eric Woodburn, Rt. Hn. A.
Harper, Joseph O'Malley, Brian Woof, Robert
Harrison, Walter (Wakefield) Oram, Albert E. (E. Ham S.) Wyatt, Woodrow
Hayman, F. H. Orbach, Maurice Zilliacus, K.
Hazell, Bert Orme, Stanley
Heffer, Eric S. Oswald, Thomas TELLERS FOR THE AYES:
Henderson, Rt. Hn. Arthur Owen, Will Mr. McCann and Mrs. Slater.
Agnew, Commander Sir Peter Atkins, Humphrey Bennett, F. M. (Torquay)
Alison, Michael (Barkston Ash) Awdry, Daniel Berkeley, Humphry
Allason, James (Hemel Hempstead) Baker, W. H. K. Berry, Hn. Anthony
Amery, Rt. Hon. Julian Barlow, Sir John Bessell, Peter
Astor, John Batsford, Brian Biffen, John
Biggs-Davison, John Hall-Davis, A. G. F. (Morecambe) More, Jasper
Bingham, R. M. Hamilton, Marquess of (Fermanagh) Morgan, W. G.
Birch, Rt. Hn. Nigel Harris, Frederic (Croydon, N. W.) Morrison, Charles (Devizes)
Black, Sir Cyril Harris, Reader (Heston) Mott-Radclyffe, Sir Charles
Blaker, Peter Harrison, Col. Sir Harwood (Eye) Murton, Oscar
Bowen, Roderic (Cardigan) Hawkins, Paul Nicholls, Sir Harmar
Box, Donald Hay, John Noble, Rt. Hn. Michael
Boyd-Carpenter, Rt. Hn. J. Heald, Rt. Hn. Sir Lionel Nugent, Rt. Hn. Sir Richard
Braine, Bernard Heath, Rt. Hn. Edward Onslow, Cranley
Brinton, Sir Tatton Hendry, Forbes Orr, Capt. L. P. S.
Bromley-Davenport,Lt.-Col.Sir Walter Higgins, Terence L. Orr-Ewing, Sir Ian
Brooke, Rt. Hn. Henry Hiley, Joseph Osborn, John (Hallam)
Brown, Sir Edward (Bath) Hill, J. E. B. (S. Norfolk) Page, John (Harrow, W.)
Bruce-Gardyne, J. Hirst, Geoffrey Page, R. Graham (Crosby)
Buchanan-Smith, Alick Hornby, Richard Percival, Ian
Buck, Antony Hornsby-Smith, Rt. Hn. Dame P. Pickthorn, Sir Kenneth
Bullus, Wing Commander Eric Howard, Hn. G. R. (St. Ives) Pike, Miss Mervyn
Burden, F. A. Howe, Geoffrey (Bebington) Pitt, Dame Edith
Butcher, Sir Herbert Hunt, John (Bromley) Pounder, Rafton
Campbell, Gordon Hutchison, Michael Clark Powell, Rt. Hn. J. Enoch
Carlisle, Mark Irvine, Bryant Godman (Rye) Prior, J. M. L.
Carr, Rt. Hn. Robert Jenkin, Patrick (Woodford) Pym, Francis
Gary, Sir Robert Jennings, J. C. Quennell, Miss J. M.
Channon, H. P. G. Johnston, Russell (Inverness) Ramsden, Rt. Hn. James
Chataway, Christopher Jones, Arthur (Northants, S.) Rawlinson, Rt. Hn. Sir Peter
Chichester-Clark, R. Jopling, Michael Redmayne, Rt. Hn. Martin
Clark, William (Nottingham, S.) Joseph, Rt. Hn. Sir Keith Rees-Davies, W. R. (Isle of Thanet)
Cooke, Robert Kaberry, Sir Donald Renton, Rt. Hn. David
Cooper, A. E. Kerby, Capt. Henry Ridsdale, Julian
Cooper-Key, Sir Neill Kerr, Sir Hamilton (Cambridge) Roberts, Sir Peter (Heeley)
Costain, A. P. Kershaw, Anthony Rodgers, Sir John (Sevenoaks)
Courtney, Cdr. Anthony Kilfedder, James A. Roots, William
Craddock, Sir Beresford (Spelthorne) Kimball, Marcus Scott-Hopkins, James
Cunningham, Sir Knox King, Evelyn (Dorset, S.) Sharples, Richard
Curran, Charles Kitson, Timothy Sinclair, Sir George
Currie, G. B. H. Lagden, Godfrey Spearman, Sir Alexander
Dalkeith, Earl of Lambton, Viscount Stainton, Keith
Davies, Dr, Wyndham (Perry Barr) Langford-Holt, Sir John Stanley, Hn. Richard
d'Avigdor-Goldsmid, Sir Henry Legge-Bourke, Sir Harry Summers, Sir Spencer
Dean, Paul Litchfleld, Capt. John Talbot, John E.
Deedes, Rt. Hn. W. F. Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield) Taylor, Edward M. (G'gow, Cathcart)
Digby, Simon Wingfield Lloyd, Ian (P'tsm'th, Langstone) Taylor, Frank (Moss Side)
Dodds-Parker, Douglas Lloyd, Rt. Hon. Selwyn (Wirral) Thatcher, Mrs. Margaret
Doughty, Charles Longbottom, Charles Thomas, Sir Leslie (Canterbury)
Drayson, G. B. Loveys, Walter H. Thompson, Sir Richard (Croydon, S.)
du Cann, Edward Lubbock, Eric Thorpe, Jeremy
Eden, Sir John Lucas, Sir Jocelyn (Portsmouth, S.) Tilney, John (Wavertree)
Elliott, R. W. (N'c'tle-upon-Tyne,N.) Lucas-Tooth, Sir Hugh (Hendon, S.) Turton, Rt. Hn. R. H.
Emery, Peter McAdden, Sir Stephen Tweedsmuir, Lady
Fell, Anthony Mackenzie, Alasdair (Ross & Crom'ty) van Straubenzee, W. R.
Fisher, Nigel Mackie, George Y. (C'ness & S'land) Walder, David (High Peak)
Fletcher-Cooke, Charles (Darwen) McLaren, Martin Walker, Peter (Worcester)
Forrest, George McMaster, Stanley Walters, Denis
Foster, Sir John McNair-Wilson, Patrick Ward, Dame Irene
Fraser,Rt.Hn.Hugh(St'fford & Stone) Maginnis, John E. Whitelaw, William
Gammans, Lady Maitland, Sir John Williams, Sir Rolf Dudley (Exeter)
Gardner, Edward Marten, Neil Wills, Sir Gerald (Bridgwater)
Gibson-Watt, David Mathew, Robert Wilson, Geoffrey (Truro)
Giles, Rear-Admiral Morgan Maude, Angus E. U. Wolrige-Gordon, Patrick
Gilmour, Sir John (East Fife) Maulding, Rt. Hn. Reginald Wood, Rt. Hn. Richard
Glyn, Sir Richard Mawby, Ray Woodhouse, Hn. Christopher
Goodhew, Victor Maxwell-Hyslop, R. J. (Tiverton) Woodnutt, Mark
Gower, Raymond Maydon, Lt.-Cmdr. S. L. C. Wylie, N. R.
Grant, Anthony Meyer, Sir Anthony Yates, William (The Wrekin)
Grant-Ferris, R. (Nantwich) Mills, Peter (Torrington) Younger, Hn. George
Griffiths, Eldon (Bury St. Edmunds) Mills, Stratton (Belfast, N.)
Griffiths, Peter (Smethwick) Miscampbell, Norman TELLERS FOR THE NOES:
Grimond, Rt. Hn. J. Mitchell, David Mr. MacArthur and Mr. Ian Fraser.
Hall, John (Wycombe) Monro, Hector