HC Deb 19 May 1965 vol 712 cc1495-590
Mr. J. Enoch Powell (Wolverhampton, South-West)

I beg to move Amendment No. 101, in page 3, line 32, to leave out "of Schedule 1".

The Temporary Chairman (Mr. H. Hynd)

It is suggested that with this Amendment the Committee should discuss the following Amendments:

In page 3, line 35, to leave out "I".

In Schedule 5, page 123, line 3, to leave out Part I.

In Schedule 5, page 123, line 10, column 2, to leave out "£2 0 0" and to insert "£1 5 0".

In Schedule 5, page 123, line 17, column 2, to leave out "£4 0 0" and to insert "£2 0 0".

In Schedule 5, page 123, line 18, column 2, to leave out "for £8 0s. 0d..", and to insert "£5 0s. 0d.".

Mr. Powell

We come to the Clause of the Bill which imposes increases in vehicles excise duty. For hon. Members in the Committee who are following this in detail in the Bill, it may be of some help if I point out that this page is wrongly lineated. There are two lines 32 on the page. My Amendment refers to the former of the two lines 32.

There are three groups of vehicles to which the increases which this Clause imposes relate: motor-cycles, to which the present Amendment is directed; goods vehicles, which we shall be considering, if you see fit, Mr. Hynd, in connection with the next Amendment; and passenger vehicles, which, I assume, the Committee may wish to discuss upon the Motion, That the Clause stand part of the Bill.

In this Amendment we are considering the increase in vehicles excise duty which is imposed upon motor-cycles and other vehicles of that ilk, and the first point which must strike anyone who reads the Clause is the extraordinary difference between the steepness of the increase of the duty upon motor-cycles and that which is being imposed on the other types of vehicles. We have here an increase of roughly 100 per cent.—100 per cent. in some cases and nearly 100 per cent. in other cases—in contrast with increases of about 18 per cent. applied to passenger vehicles and of 50 per cent., more or less, applied to freight vehicles. The major question to which I hope the Financial Secretary, in replying, will direct himself is, why have motor-cycles been singled out for double the rate of increase imposed upon any other type of vehicle and roughly five times the rate of increase imposed upon the most closely comparable vehicle, the passenger vehicle, namely the passenger car.

The last time that vehicles excise duties were increased—and that was under the Budget of my right hon. and learned Friend for Wirral (Mr. Selwyn Lloyd) in 1961—the Committee will recall that the increase was uniformly imposed upon all types of vehicle and that there was no distinction in the increase for one category and another. Incidentally, we should bear in mind that in that case the average rate of increase was around 20 per cent. and not an increase, as here, of 100 per cent. on some passenger vehicles and 50 per cent. on goods vehicles.

The question poses itself with even greater insistence—why this tremendous increase in the vehicles duty upon motorcycles? What has the motor-cycle done in the Government's eyes to merit twice as great an increase as the very heavy impost which we shall be discussing presently upon the freight vehicle? We recognise that a slight concession has been made in that the side-car is no longer taken in to account to add to the duty which is payable, but I cannot believe that that minor factor can make very much difference to the striking contrast between the treatment of the motor-cycle and the treatment of other vehicles.

Refreshing my memory of the words which the Chancellor of the Exchequer used in his Budget speech in referring to these increases in vehicles excise duties, I want to draw the Committee's attention to a rather sinister implication of what the right hon. Gentleman said which I fear—I hope that the Financial Secretary will be able to dispel my fears—contains the germ of the explanation of this apparently remarkable and paradoxical contrast. As reported in c. 291, when he was talking about cars, the Chancellor floated the idea of a differential between excise duties for cars. Having spoken about that—and I will come back to it in a moment—he introduced his actual proposal with these significant words: While this possibility is being looked into —in other words, while he was considering how it might be practicable to revise the duty on cars so as to introduce a differential between one type of car and another— I am proposing a moderate flat rate increase of £2 10s."—[OFFICIAL REPORT, 6th April, 1965; Vol. 709, c. 291.] On the face of it, the implication of these words is that the increase of only 18 per cent. in the rate of duty upon cars is in the Chancellor's view provisional and that the contrast between that 18 per cent. and this 100 per cent. upon motor-cycles which we are discussing is due to the fact that he has 100 per cent. in his mind as the extent to which he wants to raise the vehicles excise duties upon passenger vehicles, whether motor cycles or cars. Since the question of a differential did not arise in relation to motor-cycles—of course, there is a differential between different c.c. capacity already in the Schedule for motor-cycles—he has slapped the 100 per cent. on the motor-cycle now, and while waiting to sort out how he can arrange the differential for cars he has only—note the word "moderate" in relation to the increase of 18 per cent.—slapped 18 per cent. on to cars.

This proposal, which I think might well lie behind the puzzle which is before the Committee, has a quite remarkable history. In discussing the 1961 Budget, the right hon. Gentleman now the Prime Minister—he was careful to say that he was speaking only in a personal capacity—put forward the idea of a differential, not of course going back to the horse-power differential, but still a differential, based perhaps upon size and area of road occupied, between the licence duty of one type of car and another. He followed up this idea in the Committee stage of the 1961 Finance Bill.

Whatever he was in 1961, the right hon. Member for Huyton (Mr. H. Wilson) is no longer speaking in a private capacity as far as the members of the Government are concerned, and this year the Chancellor of the Exchequer has to take very careful account of the proposals thrown out by his right hon. Friend back in 1961. They have not, as usual, made much progress in the four years in working out what could possibly be the practical application of the idea which the right hon. Gentleman floated, but at any rate an obeisance had to be made towards it in the Budget statement. Here I suggest—and I ask the Financial Secretary to repudiate it if it is not so—what is happening is that the Government have in mind 100 per cent. as the rate of increase in vehicles excise duty for passenger vehicles; they are imposing it now upon motor cycles; they are imposing 18 per cent. ad interim upon the cars until they can work out what I fear may well be a disastrous alteration in the system of vehicles excise duties for cars when they get around to it. That is one possible explanation of this extraordinary and, on the face of it, unjustifiable contrast between the treatment of those who own and use motor cycles and those who own and use other forms of passenger vehicles. 5.30 p.m.

It is possible, however, that the Chancellor of the Exchequer simply thought, "These are very small figures—only a pound or two". [Interruption.] My hon. Friend draws my attention to the fact that the users of 1¾ million motor cycles whose vehicle excise duty will be doubled are represented on the benches opposite by exactly one hon. Member, who is, or appears to be, fast asleep.

I was about to suggest that another possible explanation, although equally discreditable, for this extraordinary contrast is that the Chancellor of the Exchequer felt that the figures were so relatively small that it would not matter if he slapped on £2 instead of £1—if he doubled the duty for the motor cyclist instead of increased it by 20 or 50 per cent. If he is under that misapprehension, I would warn him that this discrimination will be noticed outside. The owners and users of motorcycles will note that, when in the past there has been a variation in the vehicle excise tax, it has been a uniform variation, broadly speaking, whether the underlying figures were small or great and they will resent deeply the fact that merely because they use smaller and cheaper vehicles the rate of tax on their vehicles is increased by twice as much as that of any other road user.

I move the Amendment in the hope that the Financial Secretary will explain clearly the grounds on which this discrimination has been exercised. Then we shall have to consider whether anything that he has said justifies so gross a differentiation between one class of road user and another.

Mr. Maxwell-Hyslop

With his usual modesty and understatement, my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) has drawn attention to some of the anomalies and injustices, but the most staggering one is left before us. At no time in his Budget speech did I hear the Chancellor of the Exchequer announce that he intended to impose an excise duty of £8 on every bicycle—every ordinary pushbike. Line 19 on page 123 of Part I of Schedule 5—which is covered by Amendment No. 103 which proposes to leave out Part I—states quite clearly that bicycles and tricycles not in the foregoing two paragraphs shall suffer a duty of £8. There is no mention anywhere in the Schedule of this provision being restricted to mechanically or electrically propelled bicycles.

Incidentally, if we look at Part II of Schedule 1 of the 1962 Act, to which reference is made, which was passed by my right hon. and hon. Friends, we find that we never decided to put an £8 tax on pushbikes. Surely this is all the more reason why it is absolutely essential that the Committee should pass Amendment No. 103. Could anything be more inflationary or generate more wage claims than to impose out of the blue, and without even giving warning in the Budget statement about it, an £8 duty on every pushbike? Why was not this in the Labour Party's election manifesto?

The Financial Secretary may say that the Government did not mean to do this at all, that it is entirely due to their incompetence and that, although there are more Ministers in this Government than there have been in any previous British Government, they had not read their own Bill and did not know what was in it. Possibly this will be his excuse—professional negligence.

Sir Knox Cunningham (Antrim, South)

Does this include children's tricycles?

Mr. Maxwell-Hyslop

Of course it does. It will be apparent to my hon. and learned Friend that a children's tricycle is not included in the first category given in Part I of Schedule 5, which refers to: Bicycles of which the cylinder capacity of the engine does not exceed 150 cubic centimetres, or which are electrically propelled", because it does not have an engine. Nor does it fall in the second category, which refers to Bicycles of which the cylinder capacity of the engine exceeds 150 cubic centimetres but does not exceed 250 cubic centimetres; tricycles and vehicles (other than mowing machines), with more than three wheels, being tricycles and vehicles neither constricted"— not, hon. Members will notice, "constructed"— nor adapted for use nor used for the carriage of a driver or passenger. I dare say that it might be claimed that a child's tricycle was a constricted tricyle. I conceive it possible that, with the subtlety for which right hon. Members opposite are so rightly renowned, they slipped in the word "constricted" hoping that, like this additional and entirely novel tax on bicycles and tricycles, it would not be noticed by the Committee and that it would be passed on the nod. Because of their other outrageous propositions in the Bill, they doubtless hoped that the focus of our attention would not fall on these trivia.

Could anything be more devasting to the Government's incomes policy? Could anything be more unjust to members of the least affluent section of the community, who depend on bicycles for their transport, than the imposition of an £8 duty? I am unable to tell the Committee what percentage increase this is, because it is an infinite percentage. To go from zero to £8 is the greatest percentage rate of tax ever known in British history. This is certainly an Administration for records. I only wish that some of its records were not so outstanding.

Moreover, I cannot recall in the four years that I have been a Member a time when the Government back benches were so poorly supported on the second day of the Committee stage of the Finance Bill. One can realise the embarrassment of hon. Members who support the Govern-men when they realise what their own party is trying to do in the Bill. I therefore take it that not one Government supporter will fail to support the Amendment. Any hon. Member opposite who votes against the Amendment will be voting for an £8 tax on every bicycle, and if there are any Government supporters who do not know this, may I tell them that it is because they could not be bothered to be in the Chamber when this iniquitous new tax was being debated.

Sir Arthur Vere Harvey (Macclesfield)

I congratulate my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) on bringing to the notice of the Government the inefficiency of the Chancellor of the Exchequer and his hon. Friends in the drafting of the Bill. It is well known that this has all been done in a matter of weeks, or a few months, and the Government are obviously trying to do in that time what it would normally have taken the Treasury and other Departments two years to do. The result is that we have a Bill which is so bad that a coach and horses could be driven right through it in many places.

Mr. Maxwell-Hyslop

Tricycles.

Sir A. V. Harvey

And constricted tricycles as well.

Mr. Paul Hawkins (Norfolk, South-West)

Are they taxing coaches and horses?

Sir A. V. Harvey

I have no doubt that the Government will consider putting down an Amendment to effect that. The Minister of Agriculture, who has just gone out——

The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)

No.

Sir A. V. Harvey

I am delighted that he is here, because I wish to refer to him in a moment.

Why in his Budget statement did the Chancellor refer to this "modest" increase on passenger vehicles when it was to be a 100 per cent. increase on motor cycles and a 50 per cent. increase on transport freight vehicles? It is the latter which particularly concerns me this afternoon.

Surely what is important is the cost of living and this tax will greatly affect the cost of living. When the vehicle excise duty on transport vehicles is increased, almost every delivery in the country, long-distance and short, is affected. As the Minister of Agriculture is here, perhaps he will tell us to what extent this increase will affect agriculture.

I have had 75 farmers down from Cheshire to see me who would like to have a word with the right hon. Gentleman if they could get hold of him. Over the years I have had a roasting from farmers at different times, but I have never seen them so indignant and angry as they still are with the Government.

The road haulage people have to contend also with the 6d. increase in the tax on fuel. We were told during the election that there would be no increase in taxation. How can the Government have the face to come along—and very few of them have and we had only one hon. Member opposite until about 10 minutes ago, but I imagine that the Whips have been rustling up a few more and we are glad to see them and we hope that they will make their contributions to these matters which affect the cost of living of the poorest people in the country—[Laughter.] The hon. Member for South Ayrshire (Mr. Emrys Hughes) laughs. He is easily amused, but I wonder what his constituents would think if we had television in the Chamber and they could see him laughing. The other day he said that he would not support the whisky distilleries in his constituency. He is not coming out of this Finance Bill very well, and I hope that he will try to justify himself in the days and nights of debate which we have ahead of us.

I want also to refer to the motor car industry. In his Budget statement, the Chancellor said that he was not putting a big tax on motor cars because there might be some fall-off in the industry later in the year. I should like to tell him that the inquiries I have made show that while exports of motor cars have been holding up fairly well——

The Temporary Chairman

Motor cars are not dealt with in the Amendments which we are now discussing.

Sir A. V. Harvey

I am referring to passenger vehicles.

The Temporary Chairman

Perhaps I have been a little too indulgent, but the Amendments deal with neither goods vehicles nor motor cars in general.

Sir A. V. Harvey

I am grateful to you for your indulgence, Mr. Hynd, because it has allowed me to make at least some of the points I had in mind.

Mr. John M. Temple (City of Chester)

On a point of order. May I question your Ruling, Mr. Hynd, and draw attention to the fact that Amendment No. 106 is being discussed with these?

The Temporary Chairman

That Amendment is not being discussed with these.

5.45 p.m.

Sir A. V. Harvey

I return to the subject of motor cycles. The young people of this country are being promised, or led to think, that they are to get the vote at 18. These are the very people whom the Government should have in mind, because right hon. Gentlemen opposite are always conscious of votes. Many of these young people, probably more than 90 per cent., buy their motor cycles on hire purchase. Hire-purchase rates are being stiffened and only today we have read how the hire-purchase companies have now to insist on larger deposits and that rates are going up, entirely due to the Government's fiscal policy. The Government are inflicting great hardship on young people throughout the country and I am sure that when the time comes people will take note of the Government's action in these matters.

Mr. William Baxter (West Stirlingshire)

I presume that the hon. Gentleman wants the Government to have some revenue from some source so as partly to placate the angry farmers about whom he was speaking earlier. Would he be kind enough to tell us where they would get that revenue if the Finance Bill did not go through?

The Temporary Chairman

The hon. Gentleman would be out of order if he did that.

Sir A. V. Harvey

I am very disappointed that I would be out of order, because I should like to debate that with the hon. Gentleman.

I will conclude my remarks on these Amendments by saying that the Government's sins will find them out. It is only a matter of time. My advice to them is to reconsider these matters during the very long and dreary nights which we shall spend discussing the Bill. If they want to make some amends for the hundreds of mistakes which they have made in the last few months. they should sit down and rewrite the Bill, or scrap it altogether.

Mr. Emrys Hughes

I have been provoked for only a few minutes and I will not delay the Committee long. I was provoked, of course, by the hon. Member for Macclesfield (Sir A. V. Harvey) who was greatly concerned about the effect of the Clause on the farmers. He said that indignant farmers had been storming into the Lobby to try to stimulate the hon. Gentleman into taking as much interest in the farmers as he usually takes in the aircraft industry. I listen to him with some care when he talks about the aircraft industry, but his contributions hitherto in the Session have been to advocate plans which would mean that another £500 million would have to be added to the Budget, and I am sure——

Captain L. P. S. Orr (Down, South)

Filibustering?

The Temporary Chairman

Will the hon. Member please come to the Amendment?

Mr. Hughes

I was coming to the point of saying that agriculture had nothing to fear from the imposition of this tax. The farmers I represent take the view that they need a considerable increase in the Price Review.

The Temporary Chairman

I am sorry to interrupt again, but these Amendments do not deal with the farming industry.

Mr. Hughes

The only point I intended to make——

Sir D. Glover

It has nothing to do with it.

Mr. Hughes

If it has nothing to do with it, how did the hon. Member for Macclesfield get away with it in his speech?

The Temporary Chairman

I did pull up the hon. Member for Macclesfield (Sir A. V. Harvey). I did not know whether he intended to suggest that some farmers were riding bicycles.

Mr. Hughes

All I want to point out is that the Chancellor of the Exchequer needs revenue to find money for the Price Review, for example, and that this is one of the taxes which has been introduced to help the farmers and to help the aircraft industry.

Sir A. V. Harvey

Will the hon. Gentleman give way?

Mr. Hughes

Certainly. I am delighted to do so.

Sir A. V. Harvey

I am sure that the hon. Gentleman is grateful to have a few minutes' rest to think it over. He accused me of wanting to spend £500 million of Government money on the aircraft industry. What I have been endeavouring to do for months is to show that the Government will have to spend £500 million in dollars in the United States for aircraft.

The Temporary Chairman

Shall we leave it at that and get on with the Amendment?

Mr. Hughes

The trouble is that the hon. Member for Macclesfield entices and tempts me and then I come into conflict with you, Mr. Hynd. I will conclude by saying that if the revenue of the country is to be maintained, it can be done only by taxation. Yet, when the Chancellor proposes taxation, the Opposition say that they do not want to pay it.

Mr. Victor Goodhew (St. Albans)

It would be interesting to follow the hon. Member for South Ayrshire (Mr. Emrys Hughes) on the question of aircraft, but I dare not do so. It is extraordinary that it should have been necessary for one of my hon. Friends to discover this remarkable provision in the Budget for taxing cycles and tricycles. It is a sad reflection on the Government if they cannot produce a Finance Bill without having this sort of nonsense in it. I know that we passed a nonsense this morning on another Bill, but we do not want to make a habit of it.

I should like to warn the Government that it was not long ago that one hon. Gentleman opposite, I think that it was the hon. Member for Loughborough (Mr. Cronin), endeavoured to introduce a Private Member's Bill to provide compulsory accident cover for passengers on motor cycles. This provoked the most tremendous lobby that I have seen in the six years that I have been in the House, and hon. Members who were here then will remember that their post bags were increased 100-fold. It was only at the end of some weeks of this very heavy pressure from those who owned motor cycles that the hon. Gentleman, although he felt that his Bill was right, was forced to withdraw it. If the Government have not explored the political implications of what they are doing in picking on this very section of the community which was so anxious about a possible increase in the cost of motor cycling, it seems that they have dashed blindly into their Budget without thought for the consequences.

It surprises me that the Government should think that a motor cyclist should bear this disproportionately high increase in taxation. After all, he occupies a good deal less of the road, and the motor cycle is an economic means of transport which enables people who cannot afford motor cars to provide their own transport. It also enables people to go to work in country areas where, very often, there are no bus services.

I cannot help wondering whether this is part of a great plan by the Government gradually to drive the private motorist off the road and force him on to public transport. We are seeing signs in various Government policies that this prejudice against private transport is developing. The Government are trying to pressurise the private motorist back to public transport. Having found yesterday that the indicator on a parking meter moved only a fraction when I put in 6d., instead of moving half way across, I realise that this is part of a general policy.

Another matter which should be considered is the export of motor cycles by this country, and the effect which an increased tax can have on the home market. We are constantly told that if we are to be able to export at a competitive price we must have a good and large home market. What will happen to the home market for motor cycles if this incredible increase in taxation is suddenly introduced? I have noticed extensive advertisements in magazines and newspaper for Japanese motor cycles. At a time when other countries are trying to invade our home market, are we going to discourage people from motor cycling altogether so that we destroy our industry and make it unable to compete in markets abroad?

It seems that this proposal, like so many others introduced by the Government since last October, has not really been thought out. They have had plenty of time to think about this. They have had thirteen years during which they constantly told us that we were wasting time, yet when they come to produce a Finance Bill, the thickest one that we have seen for many years, we find that it is full of the most incredible anomalies, and also sinister signs that they may be going to bring pressure to bear to reduce the amount of private motoring in this country.

I hope that when the hon. and learned Gentleman has heard what is said in this Committee he will decide that it would be right for the Government to accept the Amendment and thus see that at last this part of the Bill makes sense, even if much of the rest of it does not.

Mr. R. Gresham Cooke (Twickenham)

I, too, was amazed when I read Schedule 5 to find that the tax on the moped, the scooter, the modest motor cycle, the modest means of transport of the working boy, had been doubled. Now, having heard the brilliant exposition of my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), I realise that this Schedule is only a paving amendment for what is to happen next year, when the tax on motor cars will no doubt be doubled if the party opposite has not been thrown out of office before then.

It is surprising that no one from the benches opposite has risen to say that it is grossly unfair that the means of getting to work of the ordinary man should be attacked in this way and his tax should be doubled. They are not here to attack the Government on that score. I am certain that if we were in power many hon. Gentlemen opposite, who for 13 years attacked the Government on issues such as this, would have had something to say, and I am amazed at the cowardice of some hon. Gentlemen opposite on this occasion.

On the most elementary economic grounds I think that the Chancellor ought to encourage the small moped and the motor cycle, which use less fuel, cause the least congestion, and are in every way an advantage in enabling people to get to and from work. As my hon. Friend the Member for St. Albans (Mr. Goodhew) said, this is the worst moment to hit the motor cycle industry, because it has had nothing like the good fortune of the motor industry. Production in the motor cycle industry at home has been going down year by year. This year it produced only a small number of vehicles. [HON. MEMBERS: "Why?"] This is the worst moment for this attack in the industry, and I am certain that the men making these cycles will feel that this is an unfair and unpopular attack on them.

Sir A. V. Harvey

My hon. Friend was asked why the production of motor cycles had gone down. Will he accept that over the last 13 years the standard of living has risen to such an extent that young people are now buying motor cars?

Mr. Gresham Cooke

My hon. Friend is right. Many young people have graduated to four wheels, but it does not get over the fact that apprentices and other young workers still cannot afford to travel to work on four wheels and have to keep to their motor cycles, and will do for many years.

Over the weekend I was up in the industrial North. I was interested to hear what a large number of people in the works had not voted for the Socialist Party in the local elections. It is obvious to me that the actions taken in this Budget are unpopular, and this small action, which they had hoped to slip through unnoticed, but which, fortunately, we have drawn to the attention of the public, is one of those factors which will bring the Labour Party even further down the scale in the Gallup polls in the next few weeks.

Mr. William Hamling (Woolwich West)

I should like to follow the hon. Member for Twickenham (Mr. Gresham Cooke) and talk about some of the unfairnesses to motor cyclists. Unlike some right hon. and hon. Gentleman opposite, I was a motor cyclist until very recently. The remarkable thing is that many hon. Gentlemen opposite who are defending the motor cycle have not ridden one in 30 years.

For example, if they are so sympathetic why was it that they increased Purchase Tax on motor cycles when they were in office? Why was it that for so many years they permitted Purchase Tax on crash helmets? The hon. Member for Macclesfield (Sir A. V. Harvey) talked about motor cyclists now being wealthy enough to graduate to cars. This contradicts what has just been said for the hon. Member for Twickenham, who argued that all motor cyclists are poor. The implication of his speech is that all motor cyclists are still poor after 13 years of glorious Tory rule.

This concern for motor cyclists is spurious. If the Conservatives had been in power they would have applied the regulator, which would have meant an increased Purchase Tax on motor cycles, which would have been far more than a mere modest increase of tax such as that which my right hon. Friend has imposed in his Budget. [Interruption.] It is no good hon. Members opposite shouting. We can look at the record to see what happened in 1961. Did they or did they not increase the Purchase Tax on motor cycles? Let them say so. That was the Tory answer to the balance of payments problem which my right hon. Friends inherited from them. This concern for different sections of the community is spurious, and it deceives no one outside the 1922 Committee—and, heaven knows, that is gullible enough.

6.0 p.m.

Sir D. Glover

I listened with great interest to the hon. Member for Woolwich, West (Mr. Hamling) who, I understand, was a teacher in a previous incarnation, and who regards a 100 per cent. increase as a minor increase.

Mr. Hamling

A modest increase.

Sir D. Glover

A modest increase. The country will take note of the fact that to the Labour Party a 100 per cent. increase is considered to be a modest increase.

Mr. Hamling

Does not the hon. Member agree that an increase in 30s. in tax is modest, compared with an increase in Purchase Tax of, say, 12 per cent. on a motor cycle costing £300?

Sir D. Glover

I do not want to get carried away into a discussion of that point. I should like the hon. Member to show me a motor cycle that costs £300.

Mr. Hamling rose——

Sir D. Glover

I cannot give way again. By no stretch of any man's imagination can a 100 per cent. increase be considered to be modest. What the hon. Member has said shows the way in which the Labour Party's mind is working on this matter.

In a brilliant speech, my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) raised the problem of bicycles. He thought that Schedule 5 was an error in printing. I do not agree. Does not my hon. Friend realise that the one thing that the Prime Minister has been trying to do with the Labour Party for the last eight years is to get rid of their penny-farthing mentality, and that he has now decided that the only way to do it is to put an £8 tax on penny-farthings.

When we get away from all the hyperbole we realise that this is merely another question of Labour modernisation—in other words, more "strength through misery". I do not know why the hon. Member should say that this is a minor impost——

Mr. Hamling

Modest.

Sir D. Glover

—a modest impost on motor cyclists. I observe that we now have the help of the Prime Minister, who can tell us whether the tax will be put on all bicycles in order to get rid of the penny-farthing. We are glad to have the right hon. Gentleman with us, because his party is doing so badly. It needs his help.

My hon. Friend the Member for Macclesfield (Sir A. V. Harvey) has pointed out that many people have now got motor cars.

Mr. Hamling

I have.

Sir D. Glover

This also applies to the hon. Member for Woolwich, West. I am delighted to hear it.

Mr. Hamling

I have had one for many years.

Sir D. Glover

The hon. Member just now said that he had recently been a motor cyclist. This is another case of prosperity under the Tories. He is a two motor car man—or a motor car-motor bike man, with a motor bike for pleasure and a car for business.

Mr. Hamling

I had it in 1949.

Sir D. Glover

Motor bicycles are bought by the young element of the nation to whom I thought the Labour Party was trying to appeal. It is not a pleasant thing for a young man who has bought a motor bicycle, perhaps a hire purchase, to find that a 100 per cent. increase has been made in the tax. These are heavy burdens for many people. They are not minor increases. These increases are pushing up the spiral of the cost of living.

Many people work in factories and need motor bicycles to get from their homes to their place of work. They have taken jobs ignoring public transport and have been in a position to buy their own private vehicles. Now the cost of petrol has risen by 6d. a gallon and the tax on a motor bicycle has risen by 100 per cent., and all this is adding to their cost of living. Therefore, when future wage negotiations are in process people in certain factories will immediately say, "We must have a rise in pay, not because we have increased production but because, as a direct result of Government action, my cost of transportation has been greatly increased and unless I get a rise in pay it will not be worth my while coming across country to get to this factory." Is this increasing modernisation and efficiency?

My hon. Friend the Member for St. Albans (Mr. Goodhew) said that this was the thickest Finance Bill that we have had for several years.

Mr. Walter Monslow (Barrow-in-Furness) rose——

Sir D. Glover

No, I have given way several times already. If the hon. Member for Barrow-in-Furness (Mr. Monslow) wants to filibuster on his own Finance Bill I do not mind. My hon. Friend said that this was the thickest Finance Bill that we had seen for many years. Having listened to the debate and having studied the Clauses with which we have dealt so far, realising that the ones that we shall come to later on are even more muddleheaded and dangerous to the economy, I say that if this is the sort of standard of modernisation of the party opposite the sooner it gets up and goes the better.

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

I have just these hasty notes cast together at random. A point was made, on which I do not wish to enlarge unduly, that the production of motor bicycles had been decreasing in recent years. My hon. Friend the Member for Macclesfield (Sir A. V. Harvey), in his quick way, took the point right out of my mouth and said that the reason was that 13 years of Tory prosperity had meant that people had been buying motor cars. What is so bad—hon. Members opposite will not like this—is that now, under Socialist misrule, all these people will have to sell their motor cars and buy motor cycles.

During this part of the debate, when we are fighting for the little man and his transport, on all the benches opposite there are only 17 Members. The Prime Minister has come in to bolster up his party and make it 18 Members. On the Opposition benches we have no less than four times as many Members as the Government have, because we care and the Government do not.

Mr. J. Bruce-Gardyne (South Angus)

I wish to intervene only very briefly to support the points made by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop). I must declare a personal interest, because I believe that I am one of the most regular users of what is called now, I believe, a "constricted" vehicle. I use it regularly every day and I am appalled by what my hon. Friend has exposed. I learn, thanks to his diligence and inquiry, that the Government are proposing to impose on my vehicle what amounts to a 100 per cent. tax, an £8 tax.

Mr. Hamling

What make is it?

Mr. Bruce-Gardyne

I am not worried about that very much but I can assure the hon. Member that it cost me no more than £8 and I am now told that I have to pay a 100 per cent. tax. This is a remarkable example of the way the Government are encouraging the stability of the cost of living.

When announcing his plans for increasing tax, the Chancellor of the Exchequer spoke of the need to contribute to a reduction of the overcrowding of our streets by traffic. Those of us who use these constricted vehicles are making our own very important contribution to the elimination of this traffic. Now the Government imposes a 100 per cent. tax on their use. It is a horrifying situation. I am sure that all of us who use these vehicles are grateful to my hon. Friend the Member for Tiverton for bringing it to the attention of the Committee. My hon. Friend the Member for Ormskirk (Sir D. Glover) pointed out——

Mr. Raymond Gower (Barry)

My hon. Friend says that this is an increase of 100 per cent., but surely this is a new tax on certain kinds of bicycle. It is more than 100 per cent.; it is a new tax altogether.

Mr. Bruce-Gardyne

I am grateful to my hon. Friend the Member for Barry (Mr. Gower) for drawing attention to my error. What I meant is that it is a 100 per cent. value tax on the cost of these bicycles.

My hon. Friend the Member for Ormskirk said that the Government intend to tax the penny-farthing also. I hope that the Financial Secretary can reassure us on this. Perhaps he can tell us that neither the penny-farthing nor the scooter comes within the terms of the Clause, that both vehicles are excluded, so that at least those of us who regularly use this method to get to and from the House and elsewhere can——

Mr. Thomas Swain (Derbyshire, North-East)

The hon. Member for South Angus (Mr. Bruce-Gardyne) is the only Conservative who, in the last three days, has not made a commercial or constituency speech. I wonder whether he would tell us the make of the motor cycle on which he arrives at work.

Mr. Bruce-Gardyne

The hon. Member does not appear to have listened very carefully. The vehicle in question is a bicycle. That is why the tax imposed on it is so prohibitive. If he wishes to find out what the make is, I shall have to take him outside the Committee afterwards and we can examine it together. I cannot tell him the make at the moment. It is for me an essential means of transport, and I know that it is for other hon. Members.

Mr. A. P. Costain (Folkestone and Hythe)

My hon. Friend keeps referring to a 100 per cent. tax. Is it not correct that it is 100 per cent. per annum? It is a yearly tax.

Mr. Bruce-Gardyne

I am grateful to my hon. Friend. Yes, it is 100 per cent. per annum, which is unique even for this Government and beats the record of any Socialist Government in the past. It is the best record which they have achieved to date.

Sir Knox Cunningham

If a child's tricycle is bought at 10s., surely this is an 800 per cent. tax?

Mr. Bruce-Gardyne

My hon. and learned Friend is perfectly correct. Perhaps the Financial Secretary will be able to enlighten us on this too.

I hope that the Financial Secretary will reassure us that in buying a pennyfarthing—which was manufactured before hon. Gentlemen opposite or their party were even thought of—or even a simple scooter, we will escape the ravages of this disgraceful tax.

6.15 p.m.

The Financial Secretary to the Treasury (Mr. Niall MacDermot)

I had better intervene, because hon. Members opposite are allowing their fantasies to run away with them. I should make it clear that I have no prejudice whatever against motor cycles or motor-cyclists. I had the good fortune to be brought up in a country where one was allowed to have and drive a motor cycle at the age of 13. I took advantage of that and became the owner of a motor cycle at that age. I have wondered since how it is that I am still alive.

One hon. Member pointed out that there is a powerful motor cycle lobby in this country. He referred to the occasion on which my hon. Friend the Member for Loughborough (Mr. Cronin) introduced a Bill in order to make insurance for pillion passengers compulsory, a proposal which, I was interested to see, the Bar Council recommended again the other day. That Bill was making good progress until a very vigorous campaign began. I was not in the House at the time, but I had helped to draft my hon. Friend's Bill, so I took a keen interest in it. I am aware of the existence of this lobby and so is my right hon. Friend. I would assure hon. Members that, in framing taxes and in trying to do so fairly and equitably, we shall not allow ourselves to be dissuaded by this sort of consideration from doing what we believe is right.

I would start by making it clear that this Schedule refers to motor vehicles, to three-wheelers, bubble cars and to certain types of pedestrian-controlled vehicles. It does not—I am sorry to disappoint hon. Members—refer to push bicycles or to tricycles. When I was on the benches opposite and had to try my hand at drafting Amendments from time to time, I learned a great deal of modesty in my approach, knowing how difficult it is to fathom the technicalities in the language of the draftsmen. I was astonished at the confidence with which the hon. Member for Tiverton (Mr. Maxwell-Hyslop) informed us that we had inadvertently applied this Schedule to all push bikes and to all tricycles, including children's tricycles. He pointed out with pride how, in the 1962 Act, his right hon. Friend had not applied the tax to these articles. What he has omitted to notice is that Schedule 5 is merely an amendment of Part 2 of Schedule 1 of the Act of 1962. It therefore applies only to vehicles to which that Act applies, which in this context means only mechanically propelled vehicles.

Perhaps we can therefore turn to what is relevant in the Amendments. I was asked by the right hon. Member for Wolverhampton, South-West (Mr. Enoch Powell) particularly why it is that my right hon. Friend is making a higher percentage increase on motor cycles and the other vehicles coming within this category than he is on private motor cars. I would emphasise first—I am sure that hon. Members will have observed this—that the Schedule introduces very great simplifications into the scales in the duty relating to motor cycles. There were previously no fewer than seven different scales. I am sure that hon. Members would not wish me to weary them by outlining and repeating them all, but there were seven different scales, plus two different scales for motor cycle combinations. So there were at least nine scales, or, if one added all the possible combinations with sidecars, more than that.

My right hon. Friend has, first of all, abolished completely any additional duty in respect of side-cars. He has simplified the scales and reduced them to three, which will be taxed now respectively at £2, £4 and £8 per annum. This involves increases, but not as large as has been suggested. For three-wheelers and bubble cars, the increase will be less in money terms than the increase for ordinary four-wheeled private cars; the increase will be from £6 to £8. For motor cycles, which are the great majority of the vehicles falling within the Schedule, the increases for those with side-cars vary from 8s. to £2. That is what was categorised by one hon. Member as "the absolutely incredible increases in taxation"—from 8s. to £2 per annum.

Mr. Powell

I think that the hon. Gentleman made a slip. He said that the increase for bubble cars was from £6 to £8 and that this was proportionately a less increase than the increase for private cars.

Mr. MacDermot

I said that it was less in money terms. It is higher in proportion.

The largest percentage increase is at the lower end of the scale with the lightest vehicles. The increase there is a 100 per cent. increase from £1 to £2 per annum; that is for vehicles up to 150 c.c. The increase in percentage terms for solo vehicles varies between 80 per cent. and 100 per cent. For vehicles with side-cars, if one takes into account the abolition of the side-car duty, the lowest increase is only 25 per cent., and that shows that there is real relief to motor-cyclists who have sidecars by the abolition of that duty.

The justification for this higher proportionate increase on motor cycles is simple. As I think any hon. Member will agree if he looks at the duties dispassionately, the duties for motor cycles for a long time have been disproportionately low compared with those on other vehicles. If one takes, for example, the heaviest class of motor cycle or bubble car, those which will be paying at the highest rate of duty, £8 per annum, they will still pay less than half the duty on any class of motor car, including the mini cars. I suggest to hon. Members that if they were approaching this matter afresh they would agree that that is a very fair differential. It might even be criticised still for being unduly fair towards motor cyclists.

This is the simple explanation. It is true that a motor cycle may occupy less space on the roads than does a motor car though I believe that one would give rather more clearance to a motor cyclist when overtaking than one would give to a motor car. Unfortunately, statistics show that the accident rate for motor cyclists and scooter riders is considerably higher than that for the drivers of motor cars.

Mr. David Webster (Western-superMare)

Surely the explanation is that motor cycles and scooters are ridden by the youngest section of the community. Is it not also true that among accidents involving motor cars, the highest incidence involves the younger section of the community?

Mr. MacDermot

I think that that is so, but I do not know whether the hon. Member is suggesting that the youngest section of the community has no taxable capacity to meet this increase. If that is his suggestion, I would question it.

If one takes the heaviest type of motor cycle—over 250 cc.—the cost to the motor cyclist of this extra duty will be £3 10s. I am told that on an average of 3,000 miles riding per annum, which is a modest average figure to take, the cost to the motor cyclist will still be under one-third of a penny per mile.

Mr. James Allason (Hemel Hempstead)

I am becoming confused by this. The hon. Member said that the rate for motor cycles over 250 c.c. would be £3 10s. My reading of the Bill suggests that it will rise from £4 10s. to £8. He also said that there would be no increase above £2. Will he explain what was the previous rate for motor cycles over 250 c.c. and what will be the rate under the Bill?

Mr. MacDermot

The increase for the vehicle over 250 c.c. is £3 10s.—the difference between £4 10s. and £8. The increase from £1 to £2 is for the lightest vehicle—up to 150 c.c. I am sorry if I am speaking too fast.

Some hon. Members have referred to the decline in production in the motor cycle industry which is, of course, a fact. The reasons have been given; they are partly a change of consumer taste and partly the fact that people can afford motor cars whereas previously they could afford only motor cycles, and they have switched their choice.

There was a suggestion that in some way the industry should be assisted because of overseas competition. Overseas competition, particularly with lighter vehicles, has been very successful, but there is no question of favouritism in tax matters for overseas vehicles. Quite the contrary; there is still a protective duty on the overseas vehicles. It cannot be said that they are under-pricing the British vehicles. The fact is that they have produced a type of vehicle which appeals more to some classes of motor cyclist.

I was asked by the right hon. Member for Wolverhampton, South-West about the remark which my right hon. Friend the Chancellor made on the review which he is conducting into the taxation of ordinary private cars. The right hon. Gentleman asked whether this means that there will be a 100 per cent. increase in taxation on cars. It is quite true that the Chancellor made it clear in his speech that the modest increase which he is imposing on motor cars was an interim measure while he is considering again the possibility of introducing a fair and workable differential system of taxation on motor cars. Everyone is agreed that the old horsepower system was not satisfactory, had a bad influence on the industry and was rightly swept away, but I think there is a general feeling that it is not right that a mini car and the heaviest type of luxury car should be taxed, as they are, on the same basis.

If one is hoping to achieve a satisfactory differential system, it would not be right immediately in advance of that to make a substantial increase over the whole field. It is for that reason that the increase in motor car taxation is disproportionately low this year, if I may put it that way, compared with the increase for motor cycles and goods vehicles.

Assuming that it is possible to introduce a satisfactory differential system next year, no doubt this will mean a substantial increase for some types of motor car, whereas other types of motor car at the lower end of whatever may be the new scale may not find themselves having to meet much, if any, further additional increase. But pending that review, it would not be right for us to refrain from introducing what is quite clearly desirable, namely this streamlining of the system of taxation for motor cycles and the revised system for goods vehicles which we shall discuss later.

Miss J. M. Quennell (Petersfield)

Before he leaves this point, will the hon. and learned Gentleman confirm whether the concession given in respect of handicapped persons' vehicles has been preserved in the Bill? It was granted in an earlier Finance Act, but I cannot remember which. An hon. Member would need a wheel-barrow-load of Finance Acts to have them all here.

Mr. MacDermot

I am not sure whether that is done specifically in this Measure. Certainly it is being preserved, and I assure the hon. Lady that it is not affected. What I believe is known as the pre-1933 vintage concession for motor cycles is also preserved.

For the reasons I have given I must recommend the Committee to reject the Amendment.

6.30 p.m.

Mr. Webster

The Financial Secretary's speech was ominous. He was very much on the defensive about this 100 per cent. rise for motor cycles. He has talked about simplifying the system, and I have no doubt that if the electors allow the Government to remain in office we will have other simplifications, perhaps with a rise of 100 per cent. for motor cars. Since for motor cars we have an increase this year of 18 per cent., I suppose that we must consider the increase modest compared with the 100 per cent. increase for motor cycles.

I have been wondering about the results of the studies made by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) into the provisions of the Bill—studies which he makes with such expertise—and the fact that reference is not made to a vehicle without an engine. I take it that if a three-wheeled pram were invented it would be liable for taxation under this legislation. Is that why the word "constrictive" is used in the Bill?

The Financial Secretary spoke at length about the small amount of space occupied on our roads by motor cycles. This must be very much in his mind. That being so, why is this load of taxation being placed on the road user who takes up the least amount of road and who, presumably, is least able to afford this increase. It is undisputable that the motor cycle, because it occupies such a small amount of space on the road, does not cause as much congestion as the motor car. At present many learned men, including Professor Buchanan, are discussing road congestion in cities, yet at this very time the Government place a 100 per cent. increase on the vehicles which occupy the least amount of space.

As I have previously said, it must be remembered that the majority of motor cyclists eventually graduate, or hope to graduate, to motor cars. The hon. Member for Woolwich, West (Mr. Hamling)—who, after his exertion in describing his attempts at trying to ride a motor cycle, and who has unfortunately left the Chamber—said that he had recently, as a result of prosperity under Tory Administrations, graduated from a motor cycle to a motor car.

The Government are imposing the highest rise in taxation on that section of the road-using public which is least able to afford it. It is well known that in the present Administration a tremendous number of hon. Members and their supporters are anti-motorist, anti-road and anti-commercial vehicle. They want to shove everything on to public road transport and the railways, regardless of efficiency, or the lack of it.

In our discussions the hon. Member for Derbyshire, North-East (Mr. Swain) tends to get up and, with his hands in his pockets, make one intervention and then resume his place, followed by him soon leaving the Chamber, no doubt to attend to his other important duties. He has said on many occasions that constituency speeches were made in Monday's debate. I wonder if the Financial Secretary and the Chancellor have considered the people who live in the constituencies where motor cycles are made. Have they considered, for example, that 33 per cent. of the output of the British Small Arms Company is in the manufacture of motor cycles?

That firm is in the Birmingham, Small Heath constituency and I wonder whether they have consulted the "Minister of Sport" on the subject. Since that Minister represents the people who are employed in the motor cycle manufacturing industry I am surprised that he is not here. Indeed, the Ministry of Transport does not have a representative here to keep an eye on things. It is obvious that this is simply a tax-raising exercise and that no concern is being shown for the people employed in the industries concerned with this tax.

It is regrettable that the "Minister of Sport" is not here, because he would, I am sure, be the first to agree that motor cycling is a healthy outdoor sport. I hate it, but I know that many people enjoy it. It will be a body-blow to them if the Amendment is not accepted.

Mr. Allason

Amendment No. 16 refers to heavy motor cycles. I listened to the remarks of the Financial Secretary with attention, and I think that when he refers to the OFFICIAL REPORT tomorrow he will find it reported that he said that £2 was the highest increase in duty on any form of motor cycle. Having said that, he went on to say that the resulting tax on heavy motor cycles would be £3 10s. and I intervened at that point to ask him to qualify what he had said. In fact, the true figures are that the duty at present is £4 10s. and that it will go up under this legislation to £8, which is quite intolerable. My Amendment—which I hope will be accepted even if none other is—would reduce it from £8 to £5, which would be a more reasonable level.

I speak from the point of view of the motor cyclist. I have no constituency interest in the manufacture of motor cycles, but I sympathise deeply with my constituents who drive heavy motor cycles—and by that I mean primarily British motor cycles. The motor cyclist will view the Government proposal as a vicious attack on his costs. The Financial Secretary dismissed it by saying that motor cycles were cheap compared with cars. Certainly, but we must consider the sort of people who ride motor cycles. They are not all wealthy young men who do it for sport. Many of them depend on their machines as their only means of transport. If they could afford to buy cars most of them would. To compare their running costs with the costs of running a car is an unfair comparison. One might equally well compare the degree of comfort. The comfort of riding a motor cycle is only a fraction of driving a car.

This is a particularly heavy rise for heavy motor cycles. Indeed, £3 10s. is the biggest increase in the whole range and it must be interpreted as an attack on heavy motor cyclists and an attempt to eliminate them. When considering what sort of motor cycles to purchase they will tend to go for the lighter machines—and the tragedy is that they are precisely the machines which are manufactured abroad. The motor cycles of under 150 c.c. available in this country are mainly Japanese and other imported makes. Motor cycles of over 250 c.c. are almost all British made.

It is in the manufacture of heavy motor cycles that the British industry is doing remarkably well in the production of really fine machines, about 70 per cent. of which are exported, particularly to the United States. The industry relies on a good home market to keep its costs at a reasonable level and, while its excellent export record has been maintained, we now have this horrible attack on the British motor cyclist.

It is extraordinary that the largest increase over the whole range of motor cycles should be levelled at the British motor cycle. The increase in tax is only £2 10s. on cars, including foreign cars, but if one buys a British heavy motor cycle the increase is £3 10s. The only comparison I can make is to suppose that the Government would introduce a tax on drinking and charge less for a licence to drink French wine than a licence to drink British beer. I hope that the Financial Secretary will consider this whole matter very seriously.

Miss Quennell

A good many forcible and telling arguments have been adduced from this side against this increased motor cycle tax. Some of my hon. Friends have referred to the sporting side of motor cycling, others to the industrial side, and to various aspects, but one type of motor cycle user has so far been overlooked. Bona fide students and apprentices have to get themselves to their technical colleges on part-time day release, and sometimes in the evening.

In a rural constituency such as mine, young people cannot rely on public transport to get to their technical colleges—it is quite inadequate for their purpose. Even if they got there during the day they would not get home afterwards. Neither the public bus services nor the railways supply the type of transport that these people must have. There is not a technical college in my constituency, and these youngsters have to go outside the district to one of three such colleges, which are at an average distance of 20 miles away.

From the comments of hon. Members opposite it would seem that this increase is very minimal and marginal To refer to the much more expensive motor cycle, costing about £300, is quite misleading. The youngster who has to get to his technical college cannot afford that type of machine. What he does is, with the help of "dad" or the family, to buy a second-hand machine, a moped or some light type of scooter which suffices his needs. He is the type of young person whose technical training must be encouraged by every means at the nation's disposal.

We have had arguments produced ad nauseam for years about the need to encourage these youngsters to take bona fide apprenticeships and get proper modern qualifications. No one would dispute that now, but one of the effects of this steep increase in taxation is to make it more difficult for bona fide apprentices, not earning a man's wages, to pay their way and get through technical college as they have to do if they are to get the qualifications that the country wants them to gain. On behalf of these youngsters, I add my support to those of my hon. Friends who eloquently argued that this is an evil increase from the industrial, the sporting and the export point of view.

Mr. T. G. D. Galbraith (Glasgow, Hillhead)

No unprejudiced person listening to this debate can have been in the least satisfied with the argument advanced by the Financial Secretary in attempting to justify this quite extraordinary impost which the Government are placing on the users of motor cycles. The proposal is particularly extraordinary when it comes from members of the party opposite. They always pride themselves—inaccurately as it turns out—on paying particular attention to the least affluent sections of the community and on adjusting any tax which their incompetence may make necessary so as to take account of the ability of the people to pay. That is the picture they paint, but now we find them acting in the very opposite way, and placing the very heaviest percentage tax increase on the owners of the cheapest type of vehicle—and because it is the cheapest type of vehicle, these people are, as my hon. Friend the Member for Petersfield (Miss Quennell) has pointed out, probably those least able to carry the increase.

It is quite extraordinary that the owner of a motor car has to meet an increase of about 17 per cent.—£2 10s.—the owner of a lorry 50 per cent., but the motor cyclist faces an increase of almost 100 per cent.—in the case of the larger motor cycle, on which the tax goes up to £8 from £4 10s. The Financial Secretary must live in a strange world, unconnected with ordinary people, because he said that the increase in the motor car tax was disproportionately low. He will not find anyone to agree with him there. I find the Financial Secretary's justification of these changes quite inadequate, and I wonder whether there may not be some hidden meaning behind this impost.

6.45 p.m.

For young people, the ownership of a motor cycle is often the first private venture into possession of something for which they themselves are entirely responsible. We know that hon. Members opposite do not like private possession—the whole Budget is aimed against it. Is this the reason behind this provision? Is the object to make it more difficult for people to possess something of their own, and have a sense of pride in ownership because it is entirely contrary to the doctrines and principles of the party opposite?

My hon. Friend the Member for St. Albans (Mr. Goodhew) wondered whether this was possibly an attempt to bolster up public transport by making the motor cycle less financially attractive. There is obviously something more in this provision than just finance, and the hon. and learned Gentleman himself admitted it. I was very surprised to hear him make the admission. He said that the accident rate for motor cycles was much higher, and he seemed to be giving that as a reason for this increase——

Mr. MacDermot indicated dissent.

Mr. Galbraith

The Financial Secretary certainly said it. If he did not mean it, I do not know why he said it—perhaps he was filling in time——

Mr. MacDermot

If the hon. Gentleman asks the question, it was because one of his hon. Friends was suggesting that as motor cycles occupy less space on the road they should pay less tax. I pointed out that there were other considerations to put in the balance against that.

Mr. Galbraith

The hon. and learned Gentleman has done it again. That seems to be the trouble with members of the party opposite—they keep on putting their foot in it. He said that other considerations had to be taken into account, and safety was one of the things he suggested should be taken into account. If safety is to be taken into account, it is not for the Financial Secretary to discuss it. He should have representatives of the Ministry of Transport here, but there is no sign of them. This is a matter that goes to the root of transport, and it has nothing at all to do with finance.

The hon. and learned Gentleman who, presumably, is reading the same brief as his right hon. Friend the Chancellor of the Exchequer did when presenting the Budget, said that the object was to simplify the Schedule with regard to motor cycle taxation, so that now, instead of motor cyclists having to pay odd sums, with fractions of a £, it will be straight and easy—they will pay £2, £4 or £8. Here we see the bureaucratic mind at work. It looks nice and neat. It simplifies things administratively for the tax collector.

But it does not simplify things at all for the motorist. He would rather pay less, even though it be a fraction of a £, rather than more in round figures. It makes it more difficult for the motorist, because he has to find the extra money. To say that it simplifies things does not appear to the motor cyclist as being at all a good reason for him to pay an increase far higher than any other vehicle user is asked to meet. If the hon. and learned Gentleman is really genuine in wishing to simplify the matter, let him show that he means what he says by reducing it to a round figure instead of putting the tax up to a round figure. This is a thoroughly unfair tax. It falls especially hard on a section of vehicle owners who are least able to bear the increase. No satisfactory explanation has been given for it.

I am very glad to see that the right hon. Gentleman the Minister of Transport has now arrived. Perhaps he can help us in the debate on the next Amendment. We shall vote on this matter with relish, and I hope that the younger sort of people whose first motor vehicle is a motor bicycle will notice the Labour Party's callous indifference to their hopes and aspirations, and that when next they have an opportunity of registering their votes outside they will bear this in mind.

Mr. George Y. Mackie (Caithness and Sutherland)

I did not intend to speak to this Amendment, but reference has been made by a previous speaker to unprejudiced persons. I wish to state that we on this bench are not supporting the Amendment if it is taken to a Division. There are many things in what in some Clauses is a monstrous Bill to which we seriously object, but, as unprejudiced persons, we on this bench cannot support the long bout of enforced hysteria that we have just gone through, enlivened by one spark of humour from the hon. Member for Tiverton (Mr. Maxwell-Hyslop).

Mr. Maxwell-Hyslop

I regret having missed part of the Financial Secretary's speech in which he referred to my observations on bicycles. I had not realised that he intended to intervene before the conclusion of the debate. I gather that the Financial Secretary has suggested that bicycles are not covered, because Schedule 5 in the Bill replaces the one on page 62 of the 1962 Act. I suggest that he is quite Mistaken. The Schedule in the 1962 Act states: 1. Bicycles (other than bicycles which are electrically propelled) of which the cylinder capacity of the engine—

  1. (a) does not exceed 150 cubic centimetres
  2. (b) exceeds 150 cubic centimetres but does not exceed 250 cubic centimetres
  3. (c) exceeds 250 cubic centimetres.
2. Bicycles which are electrically propelled … There is no class included in that Schedule, which is being replaced, for bicycles which do not fall into those descriptions, but the new one which we are invited to accept in its place does precisely that.

Also if we look at paragraph 3 of the Schedule of the 1962 Act we see: In this Schedule 'bicycle' includes a motor scooter and a bicycle with an attachment for propelling it by mechanical power. It is quite clear there what is included, but it does not say what it excludes. The hon. and learned Gentleman will possibly remember that the courts have held that a car with no engine is a mechanically-propelled vehicle, and a man has been convicted for driving such a vehicle, his defence being that since it had no engine it was not a mechanically-propelled vehicle. If a car with no engine is a mechanically-propelled vehicle, a bicycle that has a mechanism between the rear wheel and the pedals is most certainly a mechanically-propelled vehicle.

Living in the penny-farthing era, as hon. Members opposite do, they might think that bicycles are still in the penny-farthing form with fixed pedals on the front wheel. In fact, we live in the era of the safety bicycle, and that undoubtedly has a mechanically-propelled rear wheel. It may be more or less complicated, but I think the Financial Secretary will find that the majority of bicycles today have an internal toothed wheel with three or even four gears. It has a sprocket and a chain running through another driving sprocket. If that is not mechanical, I do not know what is.

Mr. Bruce-Gardyne

My hon. Friend has obviously conducted a lot of valuable research into this matter and I should like his help. I often find that the chain comes off my bicycle. In that case is it no longer a mechanically-propelled vehicle and subject to the incidence of this tax?

Mr. Maxwell-Hyslop

Subject to legal opinion, I suspect that my hon. Friend is safe from this new imposition of £8 a year on bicycles so long as he does not have a chain on his bicycle. But let him put a chain on his bicycle or have gears in the hub and he, too, will be liable.

The Schedule which appears in this Bill and which would be eliminated by the Amendment proposed so eloquently from the Opposition Front Bench contains phrases which are not in the original Act and therefore—I speak subject to expert legal opinion—we are still in the position where, unless this Amendment is accepted, a tax of £8 a year will be imposed on every bicycle unless it is a penny-farthing bicycle or has its chain missing.

Mr. MacDermot

I am sorry the hon. Gentleman could not be here to hear my remarks. I was inviting him to show a little modesty in this matter. I can only remind him of the words of Oliver Cromwell, in the rather strong language of the 17th century, and beseech him in the bowels of Christ, think it possible you may be mistaken". The relevant passage is to be found in Part I of the Fifth Schedule to the Vehicles (Excise) Act, 1962: The annual rate of duty applicable to a mechanically propelled vehicle of a description specified in the first column of Part II of this Schedule …

Mr. Maxwell-Hyslop

I am grateful to the hon. and learned Gentleman. I put it to him that if a car with no engine is a mechanically-propelled vehicle, a bicycle with no engine is also a mechanically propelled vehicle.

Mr. MacDermot

The answer is, not for the purpose of vehicle excise duty.

Mr. Maxwell-Hyslop

With respect, the fact that the hon. and learned Gentleman says it is not, does not make it the law. Very often Ministers have said things in this Committee which have no force of law whatsoever, any more than do the White Papers which the Government have churned out purporting to explain what the Finance Bill means. Those have no force of law whatsoever. If the hon. and learned Gentleman, from his rich cornucopia of legal knowledge and experience, can quote the specific test case which holds that a bicycle which has a mechanism between its pedals and its driving wheel is not a mechanically-propelled vehicle, then of course I will accept the precedent. But my researches certainly have not produced anything of that kind.

Mr. Thomas Steele (Dunbartonshire, West)

Does the hon. Gentleman's definition include a girl on roller skates?

Mr. Maxwell-Hyslop

I will tell the hon. Gentleman why my definition does not include that. It is because Schedule 5 of the Bill does not include girls on roller skates but it does include other bicycles— Bicycles and tricycles not in the foregoing paragraphs. Whereas a pedal-operated bicycle with a mechanism between the pedals and the rear wheel is a "bicycle or tricycle not in the foregoing paragraphs", a girl on roller skates undoubtedly is not. Though his observations have injected a delight. ful tone of levity into this otherwise serious discussion, I do not think that they are very much help to the Committee on the specific point. I conclude by saying that the hon. and learned Gentleman has not proved to the Committee any test case to support his view that if a car with no engine is a mechanically-propelled vehicle a bicycle with a mechanism interposed between the pedals and back wheel is nevertheless a mechanically-propelled vehicle.

7.0 p.m.

The Temporary Chairman (Sir H. Legge-Bourke)

Order. The hon. Gentleman has put his point. I should be grateful if the Financial Secretary could tell me whether in fact the third part of Part I of Schedule 5 does include only bicycles and tricycles, which have engines but which are not included in paragraphs 1 and 2.

Mr. MacDermot

It is the point which, before you were in the Chair, Sir Harry, I was making clear. The hon. Member has suggested to the Committee that Clause 3 would include ordinary bicycles. I was pointing out that, owing to the wording of the Schedule which this part amends, that Schedule deals only with mechanically-propelled vehicles.

Mr. Maxwell-Hyslop

I am most grateful. I was pointing out that it does not only deal with mechanically-propelled vehicles; and, consequently, even if it did, within the meaning of the law—because of the case in which it was held that a car with no engine is still a mechnically-propelled vehicle—a bicycle with no engine also is a mechanically-propelled vehicle.

The Temporary Chairman

Order. The hon. Member is, I think, in this difficulty. We are dealing here only with bicycles and tricycles, and I do not think it is in order to bring in a test case whether a motor car with four wheels is a mechanically-propelled vehicle, even if it had no engine.

Mr. Maxwell-Hyslop

I was hoping to provoke from this cornucopia of legal knowledge which the Financial Secretary, by his profession, can be presumed to have, information about the test case on the bicycle. The hon. and learned Gentleman has not yet been able to do that.

The Temporary Chairman

Order. We are not in this Amendment dealing with test cases. What we are dealing with is whether or not the words "of Schedule 1" should be left out. I would ask the hon. Gentleman to confine himself to that argument.

Mr. Maxwell-Hyslop

All I would say is that the Financial Secretary has been quite unable to give any evidence

whatsoever to the Committee that the words do not mean what they say, and what they say is bicycles and tricycles not in the foregoing paragraph. They do not say, "motor bicycles, mechanically propelled bicycles or motor tricycles". As the Financial Secretary has been quite unable to offer any evidence at all that the words in this Finance (No. 2) Bill at page 123, line 18, do not mean what they say, then the Committee should take it that they do mean what they say. If they do mean what they say then they impose a duty of £8 a year on a pedal bicycle. This can be avoided in the state of proceedings that we have at the moment only by accepting my right hon. Friend's Amendment.

Question put, That the words "of Schedule 1" stand part of the Clause:—

The Committee divided: Ayes 205, Noes 178.

Division No. 117.] AYES [7.5 p.m.
Abse, Leo Davies, S. O. (Merthyr) Howie, W.
Albu, Austen Delargy, Hugh Hoy, James
Alldritt, Walter Dell, Edmund Hughes, Emrys (S. Ayrshire)
Allen, Scholefield (Crewe) Dempsey, James Hughes, Hector (Aberdeen, N.)
Armstrong, Ernest Diamond, John Hunter, Adam (Dunfermline)
Bacon, Miss Alice Doig, Peter Hunter, A. E. (Feltham)
Barnett, Joel Duffy, Dr. A. E. P. Hynd, John (Attercliffe)
Baxter, William Dunn, James A. Irvine, A. J. (Edge Hill)
Bellenger, Rt. Hn. F. J. Edelman, Maurice Irving, Sydney (Dartford)
Bence, Cyril Edwards, Rt. Hn. Ness (Caerphilly) Jay, Rt. Hn. Douglas
Bennett, J. (Glasgow, Bridgeton) Edwards, Robert (Bilston) Jeger, George (Goole)
Binns, John Ennals, David Jenkins, Hugh (Putney)
Bishop, E. S. Evans, Ioan (Birmingham, Yardley) Johnson, Carol (Lewisham, S.)
Blackburn, F. Fernyhough, E. Johnston, Russell (Inverness)
Blenkinsop, Arthur Finch, Harold (Bedwellty) Jones, Dan (Burnley)
Boardman, H. Fitch, Alan (Wigan) Jones, J. Idwal (Wrexham)
Bowden, Rt. Hn. H. W. (Leics S.W.) Fletcher, Sir Eric (Islington, E.) Jones, T. w. (Merioneth)
Bowen, Roderic (Cardigan) Fletcher, Ted (Darlington) Kelley, Richard
Boyden, James Floud, Bernard Kenyon, Clifford
Braddock, Mrs. E. M. Foot, Sir Dingle (Ipswich) Kerr, Mrs. Anne (R'ter & Chatham)
Bradley, Tom Fraser, Rt. Hn. Tom (Hamilton) Kerr, Dr. David (W'worth, Central)
Bray, Dr. Jeremy Freeson, Reginald Lawson, George
Broughton, Dr. A. D. D. Galpern, Sir Myer Lee, Rt. Hn. Frederick (Newton)
Brown, Hugh D. (Glasgow, Provan) George, Lady Megan Lloyd Lewis, Ron (Carlisle)
Brown, R. W. (Shoreditch & Fbury) Gourlay, Harry Lipton, Marcus
Buchanan, Richard Gregory, Arnold Lubbock, Eric
Butler, Herbert (Hackney, C.) Grey, Charles Mabon, Dr. J. Dickson
Butler, Mrs. Joyce (Wood Green) Griffiths, David (Rother Valley) MacDermot, Niall
Callaghan, Rt. Hn. James Griffiths, Rt. Hn. James (Llanelly) Mclnnes, James
Carmichael, Neil Griffiths, Will (M'chester, Exchange) McKay, Mrs. Margaret
Carter-Jones, Lewis Gunter, Rt. Hn. R. J. Mackenzie, Gregor (Rutherglen)
Chapman, Donald Hamilton, James (Bothwell) Mackie, George Y. (C'ness & S'land)
Coleman, Donald Hamilton, William (West Fife) McLeavy, Frank
Conlan, Bernard Harper, Joseph MacMillan, Malcolm
Cousins, Rt. Hn. Frank Harrison, Walter (Wakefield) MacPherson, Malcolm
Craddock, George (Bradford, S.) Hart, Mrs. Judith Mahon, Peter (Preston, S.)
Crawshaw, Richard Hattersley, Roy Mahon, Simon (Bootle)
Cronin, John Heffer, Eric S. Mallalieu,J.P.W.(Huddersfield,E.)
Crosland, Rt. Hn. Anthony Henderson, Rt. Hn. Arthur Mayhew, Christopher
Cullen, Mrs. Alice Herbison, Rt. Hn. Margaret Mendelson, J. J.
Dalyell, Tam Hill, J. (Midlothian) Miller, Dr. M. S.
Darling, George Holman, Percy Monslow, Walter
Davies, G. Elfed (Rhondda, E.) Hooson, H. E. Morris, John (Aberavon)
Davies, Harold (Leek) Horner, John Neal, Harold
Davies, Ifor (Gower) Howarth, Robert L. (Bolton, E.) Noel-Baker, Francis (Swindon)
Oakes, Gordon Rogers, George (Kensington, N.) Tinn, James
O'Malley, Brian Rose, Paul B. Varley, Eric G.
Orbach, Maurice Ross, Rt. Hn. William Wainwright, Edwin
Orme, Stanley Rowland, Christopher Walden, Brian (All Saints)
Oswald, Thomas Sheldon, Robert Walker, Harold (Doncaster)
Owen, Will Shinwell, Rt. Hn. E. Wallace, George
Page, Derek (King's Lynn) Shore, Peter (Stepney) Watkins, Tudor
Paget, R. T. Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.) White, Mrs. Eirene
Palmer, Arthur Short, Mrs. Renée (W'hampton,N.E.) Wigg, Rt. Hn. George
Parker, John Silkin, John (Deptford) Wilkins, W. A.
Parkin, B. T. Silkin, S. C. (Camberwell, Dulwich) Willey, Rt. Hn. Frederick
Pearson, Arthur (Pontypridd) Silverman, Julius (Aston) Williams, Alan (Swansea, W.)
Peart, Rt. Hn. Fred Silverman, Sydney (Nelson) Williams, Albert (Abertillery)
Pentland, Norman Slater, Joseph (Sedgefield) Willis, George (Edinburgh, E.)
Popplewell, Ernest Small, William Wilson, Rt. Hn. Harold (Huyton)
Price, J. T. (Westhoughton) Snow, Julian Wilson, William (Coventry, S.)
Probert, Arthur Soskice, Rt. Hn. Sir Frank Winterbottom, R. E.
Pursey, Cmdr. Harry Steel, David (Roxburgh) Woodburn, Rt. Hn. A.
Redhead, Edward Steele, Thomas (Dunbartonshire, W.) woof, Robert
Rees, Merlyn Stones, William Yates, Victor (Ladywood)
Rhodes, Geoffrey Summerskill, The Hon. Dr. Shirley
Roberts, Albert (Normanton) Swain, Thomas TELLERS FOR THE AYES:
Roberts, Goronwy (Caernarvon) Taylor, Bernard (Mansfield) Mr. John McCann and
Robertson, John (Paisley) Thomas, George (Cardiff, W.) Mrs. Harriet Slater.
Rodgers, William (Stockton) Thornton, Ernest
NOES
Agnew, Commander Sir Peter Fletcher-Cooke, Charles (Darwen) Maginnis, John E.
Alison, Michael (Barkston Ash) Fletcher-Cooke, Sir John (S'pton) Maitland, Sir John
Allason, James (Hemel Hempstead) Foster, Sir John Marten, Neil
Anstruther-Gray, Rt. Hn. Sir W. Galbraith, Hn. T. G. D. Mathew, Robert
Astor, John Gammans, Lady Maude, Angus
Atkins, Humphrey Gilmour, Ian (Norfolk, Central) Mawby, Ray
Awdry, Daniel Gilmour, Sir John (East Fife) Maxwell-Hyslop, R. J.
Baker, W. H. K. Glover, Sir Douglas Maydon, Lt.-Cmdr. S. L. C.
Barlow, Sir John Godber, Rt. Hn. J. B. Mills, Peter (Torrington)
Beamish, Col. Sir Tufton Goodhew, Victor Miscampbell, Norman
Bell, Ronald Gower, Raymond Monro, Hector
Bennett, Sir Frederic (Torquay) Gresham-Cooke, R. Morrison, Charles (Devizes)
Berry, Hn. Anthony Grieve, Percy Mott-Radclyffe, Sir Charles
Biggs-Davison, John Griffiths, Eldon (Bury St. Edmunds)
Birch, Rt. Hn. Nigel Griffiths, Peter (Smethwick) Murton, Oscar
Black, Sir Cyril Gurden, Harold Neave, Airey
Blaker, Peter Hall, John (Wycombe) Osborn, John (Hallam)
Bossom, Hn. Clive Hall-Davis, A. G. F. Page, John (Harrow, W.)
Box, Donald Hamilton, Marquess of (Fermanagh) Page, R. Graham (Crosby)
Boyd-Carpenter, Rt. Hn. J. Hamilton, M. (Salisbury) Pearson, Sir Frank (Clitheroe)
Brinton, Sir Tatton Harris, Frederic (Croydon, N.W.) Percival, Ian
Brooke, Rt. Hn. Henry Harris, Reader (Heston) Pickthorn, Rt. Hn. Sir Kenneth
Brown, Sir Edward (Bath) Harrison, Brian (Maldon) Pitt, Dame Edith
Bruce-Gardyne, J. Harvey, Sir Arthur Vere (Macclesf'd) Pounder, Rafton
Buchanan-Smith, Alick Heald, Rt. Hn. Sir Lionel Powell, Rt. Hn. J. Enoch
Buck, Anthony Heath, Rt. Hn. Edward Price, David (Eastleigh)
Burden, F. A. Higgins, Terence L. Redmayne, Rt. Hn. Sir Martin
Buxton, Ronald Hiley, Joseph Ridley, Hn. Nicholas
Carlisle, Mark Hill, J. E. B. (S. Norfolk) Ridsdale, Julian
Cary, Sir Robert Hirst, Geoffrey Roberts, Sir Peter (Heeley)
Channon, H. P. G. Hobson, Rt. Hn. Sir John Robson Brown, Sir William
Clark, Henry (Antrim, N.) Hopkins, Alan Roots, William
Clark, William (Nottingham, S.) Hordern, Peter Scott-Hopkins, James
Clarke, Brig. Terence (Portsmth, W.) Hornby, Richard Sharpies, Richard
Cole, Norman Hornsby-Smith, Rt. Hn. Dame P. Shepherd, William
Cooke, Robert Hutchison, Michael Clark Smith, Dudley (Br'ntf'd & Chiswick)
Cooper, A. E. Iremonger, T. L. Smyth, Rt. Hn. Brig. Sir John
Cooper-Key, Sir Neill Irvine, Bryant Godman (Rye) Spearman, Sir Alexander
Corfield, F. V. Jenkin, Patrick (Woodford) Stainton, Keith
Costain, A. P. Jopling, Michael Stoddart-Scott, Col. Sir Malcolm
Craddock, Sir Beresford (Spelthorne) Joseph, Rt. Hn. Sir Keith Studholme, Sir Henry
Crosthwaite-Eyre, Col. Sir Oliver Kerby, Capt. Henry Summers, Sir Spencer
Cunningham, Sir Knox Kerr, Sir Hamilton (Cambridge) Taylor, Sir Charles (Eastbourne)
Curran, Charles Kershaw, Anthony Taylor, Edward M. (G'gow,Cathcart)
Currie, G. B. H. King, Evelyn (Dorset, S.) Taylor, Frank (Moss Side)
Davies, Dr. Wyndham (Perry Barr) Kirk, Peter Temple, John M.
Dean, Paul Kitson, Timothy Thatcher, Mrs. Margaret
Deedes, Rt. Hn. W. F. Lagden, Godfrey Thomas, Rt. Hn. Peter (Conway)
Digby, Simon Wingfield Litchfield, Capt. John Thompson, Sir Richard (Croydon,S.)
Dodds-Parker, Douglas Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield) Turton, Rt. Hn. R. H.
Douglas-Home, Rt. Hn. Sir Alec Lloyd, Rt. Hon. Selwyn (Wirral) Tweedsmuir, Lady
Eden, Sir John Longbottom, Charles van Straubenzee, W. R.
Elliott, R. W.(N'c'tle-upon-Tyne,N.) McAdden, Sir Stephen Vaughan-Morgan, Rt. Hn. Sir John
Emery, Peter MacArthur, Ian Walker, Peter (Worcester)
Errington, Sir Eric McLaren, Martin Walters, Dennis
Eyre, Reginald Macleod, Rt. Hn. Iain Ward, Dame Irene
Fisher, Nigel McMaster, Stanley
Weatherill, Bernard Wills, Sir Garald (Bridgwater) Younger, Hn. George
Webster, David Wilson, Geoffrey (Truro)
Whitelaw, William Woodhouse, Hon. Christopher TELLERS FOR THE NOES:
Williams, Sir Rolf Dudley (Exeter) Woodnutt, Mark Mr. Ian Fraser and Mr. Francis Pym.
Mr. Powell

I beg to move Amendment No. 102, in page 3, line 33, to leave out from the beginning to "and".

The Temporary Chairman

It may be for the convenience of the Committee if I say now that it would be in order to discuss also Amendment No. 104, in page 3, line 35, leave out "II, III";

Amendment No. 10, in line 36, at end insert: for vehicles licensed in England and Wales".

Amendment No. 12, in line 37, leave out subsection (2);

Amendment No. 13, in page 4, line 15, leave out "Parts II and" and insert "Part"; and

Amendment No. 106, in Schedule 5, page 123, line 19, leave out Parts II and III.

Mr. Powell

The Amendment raises one of the major questions in the increase in the vehicles excise duty. It relates to the increase of the duty on goods vehicles of various kinds. There is no doubt what kind of tax it is which is represented by this part of the increase in the excise duty. It is a tax upon the raw materials and upon the tools of production and distribution.

7.15 p.m.

Let us recall for a moment what the magnitude of that imposition is. A sum of £27 million approximately will be added to the costs of operating commercial vehicles of various kinds, and there falls to be added to that about £8 million related to cars operated for commercial purposes. The increase in vehicle excise duty in itself therefore increases by about £35 million the annual production and distribution costs of industry and commerce. But in considering this, the Committee has to take it in conjunction with the effects of the Chancellor's Autumn Budget and the increase in the petrol duty. Of the £100 million approximately which that increase in petrol duty brought in, it is broadly agreed that some £60 million will be attributable to petrol consumed by commercial vehicles of various kinds.

In total, therefore, taking these two measures together, the costs of production and distribution have been increased by a total of about £95 million by these two imposts. This faces the Committee with the question why, having to raise a given amount of additional revenue—and for the purpose of discussing this Amendment we start with the hypothesis that there was a certain quantum of additional revenue which he decided he had to obtain in some way or another—the Chancellor chose to raise this revenue not in relation to consumption but in relation to one of the factors of production and distribution.

It is so surprising, so paradoxical, so unnatural for a Chancellor to use taxation to raise the costs of production and of industry that we are bound to ask ourselves why he resorted to this measure, why he was prepared to put this substantial slab of taxation—£35 million in this Bill alone—upon the costs of production and distribution.

In his Budget speech the right hon. Gentleman, of course, used the standard argument in these circumstances which is available to all in need—that it is "only a little one". We were told that the increase represents only between 2 per cent. and 4 per cent. of the cost per ton-mile of conveying goods.

This, although it seems at first sight small, is in itself a substantial addition to costs when one bears in mind two things. First, something like 80 per cent. to 90 per cent. of all the goods carried in this country are carried by road. This additional cost therefore will fall on the overwhelming majority of all goods transported from one place to another in this country. I am sure that the Chancellor will agree, and I am sure that it will be the advice he will receive from the Minister of Transport, that in no circumstances would any degree of success which we hope for British Railways reduce appreciably the proportion of the total national freight which will continue to go by road. Therefore this is an impost upon the vast majority of all freight transport.

Secondly, we have to remember that this is not just a once-for-all addition to the cost of any given product. In the production of hundreds of thousands of items transportation enters in not just once but repeatedly—the transport of the raw material, the transport of the semi-finished parts, the transport of the finished article. Transport is not simply the final, distributive element in the productive process: it is built into production at many stages throughout our industry. Therefore, for many goods, this addition will be cumulative; it will be an addition added at successive stages of the process of production.

The Chancellor of the Exchequer—again with the object of playing down the size and importance of this impost—said that there had not been any change for about thirty years. He went back to 1933, the implication being, I suppose, that it was time we got around to increasing vehicle excise duties again. I wholly repudiate the idea that the fact that a tax has not been increased for a certain number of years can in itself be a justification for increasing it now. It is no excuse, when one is taxing a factor of production and increasing the impost upon it, to say: "We have not increased the imposition for some thirty years". It really makes the absurdity greater rather than less, that one should now reach back a generation in order to haul out one of the factors of production and crack down an additional tax upon it.

Of course, there is a vast difference between 1933 and 1965 for road transport. It is true that the vehicle excise duty is, in terms of money, the same and, therefore, in real terms, naturally appreciably less; but this is not the whole or the greater part of the taxation which is levied upon road transport. We have to take this in conjunction with the increase in fuel duties. The difference between the fuel duty in 1933 and now is that on petrol is was 8d. a gallon in that incredibly remote golden period as against 3s. 3d. today, and on diesel fuel it was 1d. a gallon compared with 3s. 3d. today.

We have to take the whole of taxation upon road transport together, and, if we do that, the notion that there has been no increase in the imposition upon road transport for a period of years vanishes into thin air. In fact, this is the second blow in six months. Let there be no nonsense about 1933. This is the next increase following upon last November. Thus, there is no substance either in the Chancellor's contention that it does not matter because it is a very little one or in his contention that it was road transport's turn now to have its tax increased because these duties have not been raised for over thirty years.

Again, the Committee has to ask: Why this extraordinary act of picking upon a productive process and taxing it additionally and heavily in this way?

There seems to be some theory implicit in what has been said by right hon. Members opposite that, perhaps, the users of the roads for road haulage are somehow now paying enough. We find this theory associated with the really separate notion that one could somehow protect rail traffic, or even shift goods back on to the railways, by increasing taxation of road transport. I shall examine these two propositions because I suspect that they are part of the psychology which explains this taxation. They are fallacies to which wide currency is given, and it is important that it be understood that neither has any substance.

I take the second first, the notion that, if one taxes road transport, one will produce a dramatic rearrangement of freight so that great masses of it will go back on to the railways. This is a complete misconception. [Interruption.] Theoretically, of course, one could tax road transport off the roads altogether, but, with any conceivably practical level of taxation of road transport, the amount of freight which could go back on to the railways is very small indeed. Those who believe most strongly in the possibility of developing the railways for forms of freight transport for which they are specially suited have never pretended that more than a very small percentage of the traffic now using the roads—I have heard 2 per cent. mentioned in this context—could go back on to the railways in the best case. So it is a pure delusion that by putting on an extra £30 million or £50 million of taxation on to road transport one will alter the balance of the situation as between road and rail. Broadly, whatever success we wish for the railways or secure for the railways, this volume of traffic will flow by road and will increase as the years go by.

We come then to the other leg of the theory, that in some sense road traffic is not paying enough, that there is unfairness, in that the costs which road traffic, particularly the transport of goods by road, and, above all, the transport of heavy goods by road, imposes upon the community are not fully made good by what road traffic pays in terms of taxation.

Can one make out a case that road haulage is not paying its whack of the costs which it causes? The argument might be advanced—it is the only remaining resort of the Chancellor to defend what he is doing here—that the cost of road transport to the public exceeds what freight transport is paying and that, therefore, he is justified in increasing what road transport pays in taxation. This view has been fairly clearly implicit in what has been said from a number of sources on the benches opposite. I am glad to see the right hon. Gentleman the Minister of Transport back with us in the Chamber. I notice that on 3rd March, for example, he said: … Nobody yet knows to what extent a good deal of road transport in this country is in fact being subsidised by the general public".—[OFFICIAL REPORT, 3rd March, 1965; Vol. 707, c. 1321.] In other words, no one knows to what extent the cost to the public of road haulage exceeds what road haulage pays into the public by way of taxation.

Next—this was very ominous and it only shows how one should read the omens—the President of the Board of Trade, speaking on the Third Reading of the Finance Bill last year, said that my right hon. Friend the Member for Barnet (Mr. Maudling) might at least have had a look at the vehicle tax on goods' vehicles … which has not been raised since as long ago as 1933". That was a suggestive remark, and one on which his right hon. Friend has now acted. … he could have looked at an example where we might have achieved some secondary benefit at the same time, as for instance balancing a little better the costs of goods transport between the railways and the roads".—[OFFICIAL REPORT, 3rd July, 1964; Vol. 697, c. 1699.] We see the same thought again—Let us put a bit more on to the costs of road transport, on the assumption that they are not paying their share of the cost which they impose upon the public by way of the maintenance and building of roads and in other respects.

7.30 p.m.

This is a subject on which there is not a complete absence of at any rate statistical material or the expression of opinions. The Committee will recall that last summer British Rail produced a report which was put before the Geddes Committee, then sitting, and which purported to show that road haulage vehicles were not paying in tax as much as the full costs of their track, that is, of providing and maintaining the roads in the full sense of the words. But the Ministry of Transport did not agree with this and promptly produced its own figures and evidence which contradicted British Rail and showed that, on the contrary, there was and had at all material times been a big excess of what is paid in terms of tax by road haulage and any possible road costs which could be attributed to road haulage.

These views of the Ministry of Transport were embodied in the evidence which the Transport Holding Company subsequently submitted to the Geddes Committee. The conclusions are so important that I would like to remind the Committee of what they were. The Transport Holding Company said: These conditions of surplus"— that is, the excess of tax paid over total road track costs— however calculated, apply to all main categories of roads and all main categories of motor transport, including heavy goods vehicles and buses … and substantial surpluses will continue as far ahead as can be reasonably foreseen. It said that when the figures of the Railways Board … were adjusted for certain major questions of fact and approach … the result was … that far from heavy goods vehicles paying only a half of their fair share of the costs they are in fact"— and this was before this Bill— paying about double. The Company then wisely went on to dismiss the suggestion that taxation of road users was necessarily related in any precise way to expenditure upon the roads. It put that on one side and said: What the survey does conclude, however, is that no argument for increasing the present contributions of road transport can validly be founded on the theory that the users are paying less than the real cost of the roads. We do not yet know at what conclusion the Geddes Committee, to which these differing views—of the Ministry, of the Transport Holding Company and the Railways Board—were submitted, will eventually arrive. It may be that the Minister of Transport does not agree with his own Ministry on this. It may be that the Chancellor does not agree with the Minister of Transport. But the fact is that there is at least a conflict of evidence, to put it at its lowest, before the public at the moment, and the Committee set up to resolve it has not yet done so—at least so far as is known to the public.

Yet the Government, in advance of the report of the Geddes Committee, with this issue unresolved, with this only remaining argument which could conceivably justify the Chancellor's action unproven, have hurried forward to put this tax on road transport in addition to the fuel duty imposed last November.

The whole proceeding reeks of prejudice. This is not the action of people who are really interested in getting at the facts and ensuring that the imposition of taxation is not only related to established facts, to principles of fairness which are generally agreed, but also takes into account the undesirability of taxing the factors of production and distribution.

This is the action of prejudiced men, of men who are profoundly prejudiced against one of the modern forms of production and distribution. They are giving way to their innate prejudices in this piece of legislation. The object of the Amendment is to extract it or, if we cannot extract it, then to expose it and to show it up for what it really is.

Sir A. V. Harvey

This is a most extraordinary piece of legislation. In the 1945–50 Labour Government none of the three Chancellors of the Exchequer—Lord Dalton, Sir Stafford Cripps and Mr. Hugh Gaitskell—did this. I wonder why. They held views on transport and British Railways and created British Road Services. But they left this one alone.

I agree with my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) in what he says about this proposed tax. It is quite extraordinary to put a 50 per cent. increase on to goods vehicles when it must be in the Government's own interest to keep the cost of living down. This means in the long term and in the short term almost overnight an effect on the daily lives of the people.

As my right hon. Friend said, this involves £27 million on the cost of operating commercial vehicles in distribution over long distances and £8 million on commercial vehicles used by industry, both of which must be added to the 6d. increase on fuel tax totalling £60 million. The grand total reaches £95 million. That is bound to affect the cost of living. It has already done so, as we see from the newspapers today, for there has been a sharp increase.

These things cannot be blamed on 13 wasted years of Tory rule. They are the result of the Government's own actions. They got themselves into a hopeless muddle last October and November. I remind the Committee that Mr. Patrick Gordon Walker, when Foreign Secretary, went to the United States on 27th October, 12 days after polling day and said that there was no question of raising Bank Rate. Thus, the Tories can be absolved from that one. Subsequent events which have brought about this legislation are the result of actions which were the Government's own fault and built up in the first place on lack of confidence. They have done it although the Attlee Government avoided it.

Mr. Cyril Bence (Dunbartonshire, East)

Oh.

Sir A. V. Harvey

The hon. Member for Dunbartonshire, East laughs, but these are not joking matters. There are four back benchers opposite present, apart from a Parliamentary Private Secretary. It is disgraceful that so few should be present when we are discussing taxation totalling £95 million, unlike the previous Clause which dealt with £1 million on motor cycles. That total of £95 million will affect the cost of living of every soul in the country.

However, we have got used to this Government making the wrong decisions on every possible occasion. This was reflected last week in the local government elections. They were far better results than I thought the Tories would get, although it was not because of what we had done but the result of the Government making the wrong decisions all the time.

Mr. Bence

The hon. Member referred to the fact that I laughed at something he said. I am always amused by the propaganda idea that, because a statesman or an official of the Treasury says that the Government have no intention of raising Bank Rate, therefore, in raising it, the Government do something wrong. It would be very stupid if one said on a Monday, "Next week we shall raise Bank Rate." That would be the last thing one should say.

Sir A. V. Harvey

The hon. Gentleman should look up what Mr. Gordon Walker said. What I am trying to show is that the Conservative Party cannot be blamed for this taxation. The onus is on the Government fairly and squarely. As my right hon. Friend said, this affects industry throughout. When raw materials are drawn from depot or factory they have to be conveyed to the plant. Sub-contractors have to collect the materials. They finish their share of the product, which is then sent back. The goods are assembled and go to the docks. This tax must affect the export price. In the long term, it will affect everything.

We know perfectly well why this has been done. It is because the Government think that in the long term they can drive traffic back to the railways. What a hope they have when the liner trains, which Dr. Beeching in conjunction with his officials has had manufactured and built, stand in the sidings because the workers will not use them. The Government should put first things first in their thinking.

The Minister of Transport (Mr. Tom Fraser) indicated dissent.

Sir A. V. Harvey

The Minister of Transport disagrees. Would he like to state the position about the liner trains and why they are not being used?

Mr. Fraser

It is because the Railways Board does not have the equipment. It does not have even the terminals, the cranage and other equipment to start the service.

Sir A. V. Harvey

I have been informed that the trains are waiting in the sidings. There seems to be something wrong with this policy. Can the Minister of Transport assure us that the trains will be used in the near future to move freight rapidly across the country? If for once we could see the Government putting first things first, they might make progress in these matters, but I fear the worst, that they will never learn.

Mr. Geoffrey Lloyd

I support my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) in his Amendment, and I should like to illustrate the argument from the viewpoint of industry, more particularly in Birmingham and the Midlands. In our view, this tax which has been imposed by the Government is motivated basically by political prejudice and hostility against the road transport industry, the industry that got away from being nationalised. The Government would like to take a running kick at it when they get the opportunity. I am not suggesting that the Government would do it if they did not have to raise revenue, but when it comes to where the weight shall be put they find it easy to put it on the industry which in the end they failed to nationalise.

I have been in touch with a good many firms in Birmingham about the effect of the tax on their costs. I have deliberately kept away from the road hauliers in this matter because they have again been chosen for a reference by the Government. I have, therefore, consulted firms which run large fleets of their own of various sizes.

In one small case, the addition to the company's costs will be about £2,500. For a bigger fleet, the extra cost comes up to £50,000–£60,000. In general, my information is that while this increased tax may be about a 2 per cent. increase in costs, since the Government have taken office, with the increased petrol tax and other items, the increased cost is about 5 per cent. This is a considerable amount. Nobody can laugh off an increase of 5 per cent. in transport costs.

I wish to emphasise the point made by my right hon. Friend in moving the Amendment about the integral part that transport now plays in modern industry. I can illustrate this very well from the Midlands, where I know of a big motor assembly plant where the radiators, for example, come from Coventry. It is no longer a case, as it was in the old days, of the radiators being brought from Coventry, stored in the motor factory and then put on to the production line. The transport of radiators is continuous so as to avoid tying up money unnecessarily in stocks. When I was shown round the factory, I was told that the roads between Coventry and Birmingham were part of its assembly line.

7.45 p.m.

That instance could be multiplied a hundred times in the Birmingham area, because from the viewpoint of motor car production and many other things the great strength of that area, which, incidentally, is a producer as well as a great user of lorries, is that it is a big engineering market. It is possible to go out and buy gearboxes and every other component in a highly competitive atmosphere. This involves frequent transport between different parts of the region. Therefore, when one adds up the 5 per cent. and notes the fact that on different components it enters many times into the cost of production of many of the more complicated final articles, one realises that this is a serious matter.

One other important matter affecting the Midlands in this respect is exports. The Midlands is obviously one of the greatest exporting and industrial areas of the country. A tremendous proportion of our exports goes by lorry, as my right hon. Friend and I found when investigating the great difficulties particularly in the London docks earlier this year. There is, therefore, a direct increase in the cost of our exports as a result of this increase in tax.

I should like finally to mention a point which may attract more sympathy on the benches opposite. We do not feel that hon. Members opposite are very sympathetic to our activities in the Midlands, an area which at the General Election did not give them a favourable result and which last week gave them an even less favourable one. Hon. Members opposite may, however, be more interested in the effect of the tax on the development areas of the North.

As is well known, some of our big industries from the Midlands have moved up to the North, but they have found that the components have still to come from the Midland area, where they are primarily made, and the response of local manufacturers in the North who make components for the motor industry in the North has been disappointing.

It is reported in the Press only today that the cost to one large factory of transporting components from the Midlands to Scotland is as much as the wages of 5,000 men. Here again is an increase as a result of this tax on the development of an industry in the development areas which still depend upon the Midlands for components.

I therefore very much support my right hon. Friend in his Amendment. The increases in costs which I have mentioned so far have been those which fall upon the large operators of big commercial lorry fleets who, by reason of their size, are able intensively to utilise the commercial asset represented by their fleets. There are, however, other types of operators also. The relatively small operator performs a useful service because he does a specialised job which is extremely useful, but very often he cannot utilise his vehicles as intensively as the big fleet. On him an increase in overheads of this kind falls more heavily.

Mr. Bence

Some of the statements which I have heard tonight, particularly from the right hon. Member for Wolverhampton, South-West (Mr. Powell), about the Government doing their best to drive traffic back to the railways remind me of the 1920s, when the internal combustion engine was being evolved and when the vested railway interests did their best to frustrate it.

Mr. Gresham Cooke

The hon. Member is very old-fashioned.

Mr. Bence

That was what happened in the 1920s. The private railways did everything in their power to prevent the development of that dangerous competitor, a far greater competitor than the horse. I know what the motor industry had to struggle against in those years. This is an overhang by hon. Members opposite from those days of private enterprise railways, when they frustrated as far as they could the evolution of the internal combustion engine.

I have always said that the internal combustion engine has done more to revolutionise human society than any other factor. It has given us fast air and motor transport. It has enabled people to move about the world to a degree which would never have been possible without it. Therefore, the internal combustion engine has been an attractive proposition, not only to people who wanted to travel, but to Chancellors of the Exchequer who wanted to raise funds from it because it was a successful industry. The first Chancellor of the Exchequer, I believe, to look on the motor car as a favourable source of revenue was the late Sir Winston Churchill, who imposed the road tax. The railway companies were at one with him. They agreed with him. Every director of the old L.M.S., L.N.E.R. and G.W.R. agreed with him. They said, "Make this industry pay for the roads as we have to pay for the railway track". This should not be laid at the door of a Labour Government. This was done by a Conservative Administration.

Mr. Geoffrey Wilson (Truro)

I cannot allow the hon. Gentleman to get away with that. Is he not aware that the first concern to run a motor bus service in this country was the Great Western Railway, in Penzance?

Mr. Bence

I welcome that interjection. It ran from Penzance to some other place which I have forgotten. This was a private undertaking which many years ago——

Mr. Wilson

It was in 1903.

Mr. Bence

—believed in the coordination of road and rail. This is what the Government want to do today. But everybody is frustrating them. Other people want competition between road and rail. Unfortunately, there are forces in this country which resist the idea of coordination between road and rail.

The right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) mentioned that he had consulted various interests about the increases in the cost of transporting their products which would result from this increased taxa- tion. I, too, consulted some people whom I know who are involved in handling heavy loads of goods by road and rail. I am assured by three managers who should know their business that the heaviest factor in transporting the raw product from the shop to the machines in their factory is wharfage at the docks and handling in their own factory. The cost of moving their products from one point to another was less. They are using road transport. But I was told that the situation was the same on the railways; they got no advantage from using the railways. They still faced heavy handling charges at each end. The contention of one of them is that, although we have efficient means of transport by road and rail, we still lack the full expansion of handling devices at terminal points. He complains about handling on the docks. This is one of his heaviest costs.

All that we have heard about from hon. Members opposite is the impact of the costs between the two points. The right hon. Member for Sutton Coldfield, who comes from the industrial Midlands, will know how in that area all sorts of mechanical handling devices have been devised. No area in Great Britain has done so much work on mechanical handling as the Midlands. We are continually driving home to people who transport goods the fact that the greatest saving that they can make in transporting costs arises from handling at both ends of the journey.

Mr. Geoffrey Lloyd

I appreciate the hon. Gentleman's argument about the great importance of reducing handling costs. But that is no reason why the Government should arbitrarily increase taxes and thereby increase the costs of transport.

Mr. Bence

The Labour Party took over the government of this country in October. It inherited a situation left by a party which had been politically campaigning——

Sir A. V. Harvey

Oh.

Mr. Bence

The hon. Gentleman has had his fun.

Sir A. V. Harvey

Not fun.

Mr. Bence

We inherited a situation in which for 12 months there had been practically no solid administration or government of this country. The party in power had been campaigning politically. The present Leader of the Opposition made it perfectly plain that everything that his party did was in the interests of winning the next election.

Sir A. V. Harvey

Would the hon. Gentleman say that for my right hon. Friend the Member for Bexley (Mr. Heath) last year to put through legislation abolishing resale price maintenance was a popular thing to do a few months before the election?

Mr. Bence

Yes. What was the matter with it? Hon. Members opposite supported it, and many of us on this side agreed with some of the principles of the abolition of resale price maintenance. However, that is irrelevant to the point I am making, which is that we inherited an external deficit of nearly £800 million. Something had to be done about it. Measures had to be taken. Pensions were increased and we had measures for the sick, injured, unemployed, and so on, and taxation had to be raised.

My right hon. Friend the Chancellor of the Exchequer, like Chancellors over the past 30 years, has gone for extra revenue to that industry which by its evolution, development and skill is best able to absorb increased taxation—the motor industry. I have been in the motor industry for a very great part of my life. I feel rather aggrieved that, because it is the most efficient industry and produces a splendid product which we can sell all over the world and which every country wants if it can get enough money to pay for it, the Chancellor of the Exchequer should say that it is a good industry from which he can raise funds. Chancellors of the Exchequer have been doing this since the 1920s. It is not unique for a Labour Chancellor to look at this industry as a source of revenue.

I do not like to see ever-increasing taxation levied on this industry, but it has been done. I have no interest in the industry now. I do not work in it, but I did for a great part of my life. I wish that the rest of the industries in this country were as efficient as the motor car industry. If they were as efficient in searching for markets abroad, perhaps we should not have had the £800 million external deficit which the Tory Party left us. It is because of that that the Chancellor of the Exchequer has been forced again to raise more revenue from the most efficient industry in this country.

Mr. George Y. Mackie

I understand that we are also discussing Amendment No. 10, the purpose of which is to confine the duty increases to England and Wales. The Amendment has been tabled in the name of myself and other members of the Scottish Liberal Party. [HON. MEMBERS: "Where are they?"] They will be here. I assure the Committee that it has not been tabled out of spite or malice towards other hon. Members.

Mr. Webster

On a point of order. As there are no other members of the Liberal Party present, may I draw your attention, Sir Harry, to the fact that there are not 40 Members in the Chamber?

The Temporary Chairman (Sir Harry Legge-Bourke)

I am afraid that the hon. Gentleman has chosen the wrong time to do that.

Mr. Mackie

I was saying that we bore no malice towards other hon. Members who are not fortunate enough to live in or to represent parts of Scotland. What we are trying to do is to get the Government to take a serious view of the development of regional communications and so on.

8.0 p.m.

The Government have many times said that the spread of industry over the country is their aim and that regional policy is one of the principal aims of their programme. I saw the President of the Board of Trade here a short time ago—he has now left—and he has frequently stated this to be the case. Here is a chance to initiate a practical experiment in regional policy. The Government cannot possibly expect industry to spread over the country unless there is some attraction to make industry go to various areas.

However, as the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) said, the further an area is from the large centres and the markets, the greater is the effect on it of a 5 per cent. increase in costs. In my constituency, a 5 per cent. increase in value on goods exported or imported will not cover the cost of the tax increase, for that increase will be infinitely greater by the time the goods have reached remote districts.

If the Government are serious in what they say about a regional policy of development, here is a splendid opportunity for them to apply it. Because Scotland is a country and not a region, it would be easy to have a differential system of taxation. It would be easy to check whether there were bona fide registrations and so on, and yet this would be extremely beneficial to Scotland where the economic conditions are far from needing deflation. Our unemployment figures, at more than 3 per cent., are more than double those for England.

Mr. Michael Alison (Barkston, Ash)

Are you saying that the differential principle should apply——

The Chairman

Order. When an hon. Member addresses another hon. Member, he must do so through the Chair.

Mr. Alison

Is the hon. Gentleman proposing that the differential should relate to Scottish vehicles transporting Scottish goods to England, or should also apply to English vehicles transporting English goods to Scottish industry?

Mr. Mackie

The hon. Gentleman is making what he thinks to be a clever point. I am quite serious in saying that if vehicles in Scotland were relieved of this tax, that would be a considerable help to Scotland. I am proposing Scotland as an area in which it would be administratively easy to operate such a provision. This would be an experiment which could be extended to other areas once the Treasury had seen that it could be done in Scotland.

Mr. Bence

Does the hon. Gentleman know that insurance companies use this principle and that the insurance premium for the comprehensive cover of a car registered in Glasgow is higher than that for a car similarly insured in some out-of-the-way place in Lanarkshire, although it does not matter where the car is driven after it has been insured? The insurance companies operate the differential system all over the country.

Mr. Mackie

I thank the hon. Gentleman for that intervention. There is no need to convince me, however. If he could convince his hon. and right hon. Friends that it could be done, I should be very grateful.

As I was saying, Scotland has a very high percentage of unemployment and something like the differential taxation is needed before we can get anything like the state of prosperity enjoyed in the South-East. When the Government are trying to deflate in the South-East, they cannot possibly apply the same provisions to Scotland where there is more than 3 per cent. unemployment. If they are serious about a regional policy and about using the resources of the whole country, an earnest of their good intentions would be to accept the Amendment.

Mr. Alison

I support the Amendment, because the Government are hitting hard in two directions in their proposal to raise the licence duty, particularly for commercial vehicles, and both the directions hit the public interest and not the private profit so often held in disrepute by the Labour Party.

The first direction is in the direct costs which will be imposed on commercial vehicle operators. My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) has dealt fully and formidably with the indirect costs which are now likely to be imposed on our general industrial production. He quoted the figure of £95 million as a direct increase in industrial costs resulting from increased vehicle licence duties.

At this point I am thinking of the impact directly on the commercial vehicle operators. I speak with some concern, because one of the areas in my constituency is given over almost wholly in one aspect of its activities to many medium-sized and small firms operating commercial vehicles between the East Coast ports and the West Riding industrial cities, southern England and Scotland. This is the town of Selby.

What narks them is that, as free enterprise commercial vehicle operators, operating on extremely close and narrow profit margins in an industry which is extremely competitive, every addition to their costs makes the profit narrower. It is at least a pleasure to be able to say that there is a section of the economy which makes a profit, but the Bill will make it a great deal more difficult for these people to earn their profits.

What really gets them—and this will have the sympathy of the whole Committee—is the way in which the Government's policy of bringing proposed increases in charges and prices before the price review body serves to focus a kind of psychological enmity from the community as a whole upon people who have to raise their charges, particularly when those charges result from increases in Government costs which are the responsibility of the Government.

I should like rapidly to itemise some of the costs which have led the private road hauliers recently to propose a 5 per cent. increase in charges, an increase which they have voluntarily held over for at least a month pending the investigations of the price review body into the proposals, a deferment, I notice, which has not been in any way undertaken by the Road Haulage Wages Council in respect of its 6 per cent. wage increase which is to take effect from 9th June.

One of the items which come into the proposal to increase charges is fuel, where costs have risen at the direct behest of the Chancellor of the Exchequer. A gallon of fuel of the type used by many vehicle operators in my constituency has gone up from 4s. 2d. to 4s. 8d., an increase of 12 per cent., due to budgetary measures. This is a severe direct impost on operating costs which the Government have imposed. It hits the small man most, the small man who operates one or two vehicles—and there are several in Selby—who do not get rebates from the big oil companies from bulk buying. They are the boys who are hit hard, and yet this arises directly from the Government's measures.

As I said, the Road Haulage Wages Council has just given a 6 per cent. increase, the second increase in effect since 1964, taking account of the overtime arrangements which were made last year. This increase is to come into effect almost immediately, without the deferment to which the increased charges have been subjected.

There is also the item of the depreciation of the commercial vehicles, which is very sharp and heavy. A medium tonnage lorry lasts for probably five years—if the operator is lucky. The small operator has to replace vehicles largely by borrowing from the bank—paying 8 per cent. or 9 per cent. loan charges for the replacement of vehicles, a process which must go on all the time in the interests of efficiency and safety.

Thus, we have fuel costs, wages and the Bank Rate directly affecting their depreciation costs. In addition, they have garages, depots, maintenance centres, and so on, to maintain. Local authority rates have risen with the result that the costs of these operators have been increased through no fault of their own. One has also to consider the National Insurance charge and superannuation costs which have increased as a result of the Government's budgetary policies. A firm now has to pay 12s. 11d. per man for National Insurance contributions. This is a lot of money for a small firm to have to pay. All these items are the ingredients of more than a 5 per cent. increase in costs, yet these firms are held up for public approbrium because they propose to increase their charges.

The responsibility for this state of affairs rests on the Government, and it is a very broad-minded, tolerant, and, indeed, noble, act on the part of the Road Haulage Association to propose that the increase of 5 per cent. should be deferred for a month, knowing full well that the wage increase is to be effective from 9th June.

The Government are hitting in two directions. This is a direct attack not only on the road haulier's industrial and commercial activities, but on the public interest, because, as other hon. Members have said, the private road haulier makes an essential contribution to exports. In my constituency, because of the existence of small, private, road hauliers, it is possible for an exporter in the West Riding to ring up a small man at 4.30 on a Saturday afternoon and tell him that he wants a truck load of goods delivered to Liverpool within 24 hours. That exporter will find somebody who is prepared to load up and do the job, yet he will not find a British Railways office open on a Saturday.

The contribution which the industry is making to exports and to the efficient mobility of the economy of this country is being attacked directly by the Government by the imposition of these costs. This is Government by nutcracker. Pressure is being applied from below because of the costs being imposed on the industry by budgetary measures, and pressure being applied from above not to respond to that pressure by increasing charges to the public. This is essentially a squeeze. The result is that something will give in the end. In the case of road transport it will be a diminution in the efficiency of the service, or less attention will be paid to maintenance, or longer hours will be worked by the drivers. Something will give, and it will not be the fault of the private haulier if the service is reduced.

8.15 p.m.

Mr. Bruce-Gardyne

I have some sympathy with Amendment No. 10 in the name of the hon. Member for Caithness and Sutherland (Mr. George Y. Mackie), who has now left the Chamber.

HON. MEMBERS

Where is he?

Mr. David Steel (Roxburgh, Selkirk and Peebles)

My hon. Friend has left the Chamber in order to get something to eat.

Mr. Bruce-Gardyne

I appreciate that the hon. Gentleman's appetite comes before the consideration of the serious matter which is before the Committee at the moment. I believe that it would be far better to devote attention to the Amendment moved by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell)——

HON. MEMBERS

Where is he?

Mr. Webster

The hon. Member for Caithness and Sutherland (Mr. George Y. Mackie) is feeding his face. My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) is upstairs reading his speech in the HANSARD room.

Mr. Bruce-Gardyne

I am grateful to my hon. Friend for explaining the situation. I believe that Amendment No. 10 is really just a jeu d'esprit. The hon. Member for Caithness and Sutherland knows that it is impractical. I am all in favour of differential taxation, and I do not think that we have done enough about it, but the hon. Gentleman's proposal is impractical, and I am sure that he is aware of that. What is needed is an Amendment on the lines of that moved by my right hon. Friend the Member for Wolverhampton, South-West to get rid of this flagrant attempt to discriminate against road transport in favour of the railways and rail freight.

When we were discussing the first of this series of impositions on the road transport industry last November, during the discussions on the autumn Budget, the Chief Secretary said: I take it as a great compliment to the Government that most hon. Gentlemen opposite have based their case on the assumption that we"— that is the Government— should have done in 40 days what they should have done in over 4,000 days. It is natural that we should work ten times as fast; working a hundred times as fast is a little challenging—but we will do our best."—[OFFICIAL RPEORT, 30th November, 1964; Vol. 703, c. 157.] They are doing their best. They have increased the cost of petrol by 6d., and now we have had these two additional imposts. This is an example of their technique of working at speed, and we are all suffering for it.

As my right hon. Friend reminded us, the Chancellor, in proposing this swingeing increase in duty on commercial vehicles, justified it by the fact that the rate had not been increased since 1933. Naturally the right hon. Gentleman could not leave that alone. The Government have established something of a record for achieving the biggest increase in the cost of living in a month in the country's history. Obviously a rate that had been left unchanged since 1933 stuck out like a sore thumb. The Chancellor could not allow that contribution to the stability of the cost of living index to go unnoticed, and so the rate was doubled to bring it into line with the other increases for which the Government are responsible.

We have heard a certain amount today about the motives which lay behind that particular piece of taxation. I think that they were well summed up by the comments which the Road Haulage Association made when this impost was announced. It was quoted as saying: These rates are going to alter the whole basis of competition between the two forms of transport", and that at a time when, as some of my hon. Friends have pointed out, the relationship between the two forms of transport was actively under consideration by the Government.

What concerns me most is the effect of this great increase in taxation on commercial vehicles in areas which are some distance from the main centres of industry, and where the impact of the impost is heaviest because the distance which they have to cover, whether it be by road or rail, in receiving their goods and in sending their products out, is greatest.

When the hon. Member for Dunbartonshire, East (Mr. Bence), who is also not with us now, rose, I hoped that we would at last have a contribution from that side of the Committee to draw attention to the effect of these measures on Scotland. We had nothing of the kind. The hon. Gentleman treated us to an interesting dissertation on the importance of such factors as wharfage and handling charges in the costing of industrial operations. They are two items in respect of which industry in Scotland and in England are more or less on a par.

What the hon. Gentleman failed to draw attention to was that industries in Scotland, and for that matter in the north of England, Northern Ireland, and other areas which are not covered by Amendment No. 10 face an inevitable disadvantage because of the high transport costs involved in getting their goods to market and in receiving their raw materials. I was interested, on looking back to previous years, to see that when my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) increased the vehicle excise duty from £12 10s. to £15 four years ago, the hon. Member for Edinburgh, East (Mr. Willis) who is now the Minister of State for Scotland, said that the tax would result in increasing the transport charges in those areas"— he was referring to the more outlying part of the United Kingdom, and he said: People who carry goods in lorries and vans for the tail end of the journey will add on the extra cost … the cost of living will go up even further and it will become increasingly difficult to maintain the population in those areas".—[OFFICIAL REPORT. 1st June, 1961; Vol. 641, c. 435.] We have heard nothing from him today. We have not heard anything from him on this subject at any time since right hon. Gentlemen opposite came into power.

On that occasion the hon. Member referred to the tail end of the journey. What concerns me is not merely the tail end but the whole journey. It is the cost of the whole journey which will be increased by this impost. As my right hon. Friend the Member for Wolverhampton, South-West reminded us, the amount of freight which, by any conceivable increase in the taxation of commercial vehicles, can be driven off the roads is extremely marginal.

I can cite an example in my constituency. Two years ago I made careful inquiries in order to discover the extent to which small, medium and medium-large firms were using the railways for their freight traffic. I discovered that they were virtually not using the railways at all—not out of any prejudice against them, and not even because of the cost differential, but because of the appalling service that they had experienced from the railways in the past. One such incident concerned a small consignment which took 21 days to cover 12 miles. That is the sort of thing that industry has had to live with, and which has led it to turn more and more to the roads.

By this tax the Chancellor of the Exchequer is imposing a severe additional burden on firms which use the road freight service, which gives them an efficient service, tailored to their requirements and not one, as in the case of the railways, which by bitter experience they have learnt that they cannot afford to rely upon.

The right hon. Member for Kilmarnock (Mr. Ross) who, needless to say, is not with us, said, when we were discussing the increase in the vehicle duty introduced by my right hon. and learned Friend the Member for Wirral, a few years ago: If the Government take action to deal with those parts of the country"— that is, the South-East and the Mid-lands— in such a way as affects the whole country, they will worsen and exaggerate the position of places like North-East Scotland and Northern Ireland. He also said that when they"— that is, the then Government— take action it should not apply indiscriminately to all parts of the country … Scotland has been suffering from this sort of thing for the past eight years."—[OFFICIAL REPORT, 1st June, 1961; Vol. 641, c. 517–527.] At least the right hon. Gentleman can reassure himself; the action which the Chancellor has taken on this occasion is not indiscriminate. It is highly discriminatory against areas like Scotland, where the distances that have to be covered by freight services are very much greater.

Once again we have heard nothing from the right hon. Gentleman on this subject. We wonder what he was doing when this proposition was brought up. Were he and his hon. Friends taking no part in these considerations?

Mr. David Steel

Will the hon. Gentleman tell us what the Secretary of State for Scotland in his party's Government was doing when the same measures were introduced by his Government?

Mr. Bruce-Gardyne

I would remind the hon. Member that there has been no increase in the commercial vehicle tax since 1933. Who was Secretary of State for Scotland in 1933 I am not able to recall. He may have been a member of the National Labour Party; I do not know. During the 13 years of Tory Government we never had an increase in this impost. However, no sooner had hon. Members opposite come into power than we got precisely that.

It is a great pity that the Chancellor, if he had to increase vehicle taxation generally, did not take a greater slice from the private motorist. Then he would not have been damaging the interests of industry in areas like Scotland and the North-East, to which a great deal of lip-service has been paid by hon. Members opposite in connection with regional planning and development. What we have had is a vast pyramid of planners and a whole series of measures, of which this is the most notorious, designed to make industrial development in Scotland, the North-East and Northern Ireland more difficult than it was before.

Mr. W. H. K. Baker (Banff)

We have already had talk of some of the more remote areas of the country, and I also want to address my remarks to those parts, specifically in connection with the increase in vehicle duty. One body of people which has not been considered in conjunction with these Amendments is the farmers. Those farmers who are in the more remote areas, and especially the small farmers, will be hit very badly by this impost, because, of necessity they have to import into their farms a great deal of merchandise.

Mr. Webster

Is it not a pity that there is nobody from the Ministry of Agriculture here to deal with this subject? [Interruption.]

The Chairman

I hope that the hon. Member will not continue his interruption across the Floor of the House. Further, I hope that hon. Members are not going to persist in the practice, which has begun in the last half hour, of calling attention to the absence of every hon. and right hon. Member, otherwise we shall not be able to discuss the Bill. May I also say to the hon. Member who has the Floor of the House at the moment that there are later Amendments on the Order Paper which deal with farmers. I hope he realises that.

Mr. Baker

Thank you, Doctor King, I do indeed. I would respectfully draw your attention to the fact that Amendments other than those which you have called refer to farming interests. There have been other imposts than those which we are discussing on the farmers. As my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) said, the majority of goods nowadays are transported by roads. The suspicion on this side of the House is quite definite that the emphasis seems to be on trying to move goods from the roads to the railways. In the areas which I have in mind, the more remote areas of the south-west of England, Wales and Scotland, there are no railways to carry these goods. If I may take one example, in Part 2 of Schedule 5, the rate of duty for haulage vehicles net being showmen's vehicles under two tons amounts to £45 per annum. That seems to me to be a great deal of money to expend on such things as trailers. I understand that under this Clause trailers towed by any vehicle will be charged via the vehicle at that rate.

I should like to return to farmers. In helping himself, the small farmer may wish to construct a small trailer—say 4 ft. 6 ins. by 7 ft. 6 ins. by 6 ft.—to convey small quantities of goods either from his farm to the market or from a merchant to his farm. Equally, that farmer is entitled to put a caravan behind his car or Land Rover. He can move that caravan from Land's End to John o'Groats without paying a 1d. of tax on it. If he puts a commercial trailer on the back of his car to convey such goods as I have mentioned he has to pay £45. That is a tremendous impost on the smaller man. It does not matter whether he is a farmer, a bricklayer, or anybody else, if he has to pay that large amount it will affect the smaller man more than the big man.

8.30 p.m.

I mentioned that the Amendment standing in the name of the hon. Member for Caithness and Sutherland (Mr. George Y. Mackie) wishes to exclude the whole of Scotland. Nobody thinks it possible other than, frankly, a madman, that this sort of thing can be carried out. It is impossible from the point of view of administration to try to do this. I would draw the attention of the Chief Secretary to the differential taxations which the previous administration carried out, the Local Employment Act, for instance, and the special investment allowances for the development areas. If something were worked out on those lines, it would help not only the unemployment position in the remoter areas which I am talking about but would also cure what I might call that twin evil, depopulation——

Notice taken that 40 members were not present;

Committee counted, and, 40 members being present—

8.34 p.m.

Mr. Baker

In conclusion, I would suggest to the Government Front Bench that they should bear in mind the principles which were elucidated in these two Measures and that they might be able to give some alleviation to those paying these increased imposts in the remoter areas, especially the development areas.

Mr. Daniel Awdry (Chippenham)

The Chancellor chided us on Monday and said that there was a lack of sincerity in some of our Amendments and a lack of passion in some of our speeches.

If we do not use the extravagant language which the Paymaster-General employs, that does not mean that we do not feel strongly. I do not say that I hate the Chancellor's guts, but I do say that I think that the policies contained in this Clause will be disastrous. I ask the Financial Secretary to accept that I and my hon. Friends are entirely sincere in moving our Amendments.

I am glad that the Chancellor accepted in his speech on Monday that one should look at the two Budgets, the Budget of last November and the present one, together. I am sure that the Road Haulage Association and everyone interested in road haulage is bound to look at them together, because they have been hit so extremely hard in both. The Chancellor said on Monday that he was trying to achieve a balance in the two Budgets. It is no good trying to tell that to the road users. There has not been much balance for them—hit for £100 million in the first Budget and, in round figures, for £50 million in the second. No wonder the British Road Federation feels that it has been singled out for harsh and penal treatment. I agree with them.

I hope that the Financial Secretary will listen to the arguments which are deployed and marshalled from this side of the House. When I say "listen", I mean really listen, not as the First Secretary uses that word. I mean listen with an open mind, so that when he replies he tries to answer the arguments which we are putting forward. It may be that he will not accept my arguments. May I, therefore, remind him of what Lord Mitchison, then the hon. and learned Member for Kettering, said in 1961 when an increase in the rates of vehicles excise duties was being discussed. The hon. and learned Gentleman moved an Amendment, and the present Prime Minister took part in the debate. The hon. and learned Member for Kettering said: Looking at this as a piece of indirect taxation, surely it can be said that a tax on road transport, telling on both passenger and goods transport, is bad in principle and is likely to have a bad effect out of proportion to the revenue-raising factor in it, which we would all agree the Chancellor has to consider. … It is unlikely to have a deterrent effect. It will simply impose additional charges on those who use transport and who need the goods which are brought to them by road transport."—[OFFICIAL REPORT, 1st June, 1961; Vol. 641, c. 430–31.] He could not have put the argument better which we are using tonight. The tax which the Chancellor is imposing will not have a deterrent effect. It will not drive transport off the roads. This point has been made time and again from this side of the Committee. It will not drive transport off the road and on to the rail. We all know that rail may well be helpful for long haulage journeys but that most of the journeys are short hauls, and the tax will not have the effect of driving these goods back on to the rail.

I expect that the debate will go on for a long time. Indeed, I hope that it does, because the amount of money which we are discussing in the Amendment is enormous. If this Finance Bill is ever passed—and I express the hope that it never will be passed—motor taxation in this country will produce over £800 million a year, or well over one-tenth of all the total revenue received by the Government. Out of that enormous total of £800 million, £275 million will be from goods vehicles if the Bill is passed.

I very much object to the timing of the Measure, coming, as it does, before the Report of the Geddes Committee, a point which has been well made by my hon. Friends. The most detailed evidence was produced to that Committee by the Ministry of Transport. I am delighted to see that the Parliamentary Secretary is here to listen to me make this point. The Ministry tried to discover the total cost of roads. In their evidence they said that for 1962 the total cost of the roads, including capital, maintenance, lighting administration, policing and everything else, was about £340 million. They tried to assess how much of that was fairly attributable to goods vehicles, and they came to the conclusion that in 1962 it was £130 million.

If this tax is passed, goods vehicles will contribute about £270 million a year, as my right hon. Friend said in his brilliant speech, or about twice as much as they actually cost the roads. These are enormous figures, and I hope that when he replies the Financial Secretary will address his mind to these specific arguments.

The Clause will have an enormous effect on the cost of living. All our constituents are horrified about it, and if hon. Members opposite are not, then they have not yet awakened to the effect which the tax will have on the cost of living, and they should ask some of the Labour candidates in the recent municipal election. If one wanted seriously to harm the First Secretary's incomes policy and wanted to pick out a single measure which would do most harm, then adding 50 per cent. to the tax on one of the basic industries of the country is what one would do. That is what the Chancellor will do unless we can save him from his own foolishness. In the Election campaign last year we said that Socialism would mean higher taxes and a higher cost of living. Unfortunately, that has come true more quickly than we feared. I hope that there is still time for the Chancellor to think again about this taxation. We shall think a great deal more of him if he does so. I say that this is a bad tax, and I ask the Committee to reject it.

Mr. Peter Mills (Torrington)

I support the Amendment because the extra tax on goods vehicles is, to say the least, a savage increase and one which the Government will regret in the years ahead. Transport contractors in my constituency are up in arms about it. I should not like to repeat what my predecessor, Percy Brown, who is a haulage contractor, is saying about it.

Those of us who live in the South-West depend on road transport. As parts of the railways system disappear we are depending on it more and more. I am glad to see the Joint Parliamentary Secretary to the Ministry of Transport in his place and I hope that he will pass these remarks on to his right hon. Friend. He must be aware of the difficulties which we in the West Country face. As the railways close, so more of our produce must go by road. This is bound to increase road transport costs.

North Devon is a development district which has been establishing new industries, for many of which road transport is the only transport available. The increase is bound to affect these newly-established industries, and I fear that it will mean a setback for the efforts that have been made in the area to establish new employment. I have no doubt that people in the area—many of whom have known unemployment for some time—will suffer and will remember that it was a Socialist Government who imposed these increases.

Has the Chancellor considered the extra cost that this will mean on the road building programme? We want to see the programme continued and extended, but I fear that costs are bound to rise. Cement, tarmacadam and all the other materials which are transported by road are bound to cost more.

Adequate communications are essential to a district like the one which I represent and that is why this savage increase will cause a real setback, not only for north Devon and other development districts but also for the road building programme. I support the Amendment and hope that the Chancellor will realise in time that this increase will adversely affect a large number of people in my constituency.

Mr. George Younger (Ayr)

I hope that the Financial Secretary, who has been listening patiently for a considerable time today to the excellent points which my hon. Friends have been making, appreciates that we are trying to save him from himself and the Government from themselves. I assure the hon. and learned Gentleman that if this provision is passed in its present form it will not be regarded as a little piece of taxation which went easily and quietly through the Committee and which can be forgotten. People throughout the country will realise that it was a piece of Government legislation and that they must suffer from the evil effects of this imposition as well as others in the Bill.

There are four reasons why I hope that the Financial Secretary will bring home to the Chancellor the excellence of the points which have been made from this side of the Committee. First, as my hon. Friend the Member for Torrington (Mr. Peter Mills) said, we are discussing a major increase and nobody can make out that it is a minor or inconsiderable one.

One hon. Gentleman opposite thought that the increase in the duty on motor cycles of 100 per cent. was modest. If an increase of 100 per cent. was very modest, I suppose that this increase of only 50 per cent. is positively infinitesimal in the Government's view. The fact is, of course, that it is a very major increase. We do not appreciate that fact only by looking at the figures of increase for a given vehicle this year and in the future. A very great increase results from the way in which this provision is already being implemented. I hope that the Financial Secretary will look at the very difficult point I am about to relate.

8.45 p.m.

It used to be the case that if a vehicle had its unladen weight altered during a year in which it was registered—as can happen for many reasons—the extra duty payable was calculated by charging the appropriate proportion of the duty that the extra weight would attract. That seems to be a perfectly reasonable method. Since the new increase in duty has been introduced, a different method is being used. Let us assume that a vehicle was registered in March of this year and has had its unladen weight upgraded in May. In such a case, tentwelfths—that is, the remaining portion of the year—of the total charge is payable at the new rate less ten-twelfths of the total charged at the old rate. It does not require a mathematical expert to appreciate that this is a very much more disadvantageous way of calculating the charge than simply to take the difference in weight as a proportion of the whole.

Let us take the example of a vehicle weighing 8 tons 4 cwt. licensed in March, 1965, with duty payable at that time of £162. The weight is revised to 8 tons 9 cwt. in May—two months later. The new rate of duty for the vehicle will be £252—from £162 to £252 for an addition of only 5 cwt. in unladen weight. By the new method of calculation there will be an increased charge of £75 for the extra 5 cwt., whereas, by the old method, the increase would have been only about £9 or, possibly, £7 10s. This means that the vehicle owners are losing out both ways—both by the increase in the duty and by the new method of calculation. I could not possibly expect the Financial Secretary to go into all this detail on the spot, but I hope that he will at least undertake to look at this point, which is causing the haulage contractors great concern.

My second reason for suggesting that the Amendment should be accepted has been made so often and so well that I will not dwell on it. It is that these new charges will affect everything. There is not a production officer, manufacturer, distributor or retailer who is not now poring over his books and worrying as to where he will find the money to meet these extra charges. This will affect every part of the country.

The third reason concerns me even more, of course, and I was very glad to hear it raised by several of my hon. Friends. This increase, by its very nature, will affect most hardly those parts of the country least able to bear it. I wonder whether the Financial Secretary or the Chancellor of the Exchequer has consulted those of his colleagues responsible for looking after those areas. Has he consulted the Secretary of State for Scotland? Has he consulted the Secretary of State for Wales? Has he consulted them fully, and has he their full approval for this increase? These extra charges may be painful in places like Birmingham, Manchester, Wolverhampton, Hull, Newcastle and Winchester, but in the remoter areas everything in life has to be brought by lorry for 50, 60, 80 or 100 miles along a winding road—everything from milk to newspapers, groceries, and the mail.

Mr. Emrys Hughes

Beer.

Mr. Younger

Yes, and I might add whisky as well. Everything that keeps life going in these remote areas has to be transported by these vehicles on which this extra tax has to be paid. That means that the cost to the communities, who already find that their purchases cost them more than in this part of the country, will be even greater in the future.

A moment ago I was asking the Financial Secretary whether he had consulted his colleagues. I wonder whether the Ministers concerned have consulted the First Secretary. He has been tramping round the country for seven or eight months talking about regional development and economic planning. We are to have everything planned logically and sensibly according to the right principles. But here we have him allowing his colleagues in the Cabinet to impose something which acts directly against the interests of those places in the country which are least able to bear the cost. I wonder whether there has been yet another Cabinet row and whether the First Secretary has lost this round.

For these four reasons I suggest that if there is, as I am sure there is, a genuine spirit on both sides of the Committee to think carefully about this and to take full account of what is said in these debates, the Financial Secretary and the Chancellor should seriously consider accepting this excellent Amendment, no matter how difficult it may be for them.

Mr. Gresham Cooke

Plenty of evidence and a mass of detail has been given tonight to the Chancellor to give him pause and to show him the trouble that he is piling up for himself and his colleagues. Even his own back benchers are getting a little impatient.

I should like to give him two more details to indicate where this is going to pinch on the taxpayer. Take the case of a 10-ton lorry on which an extra £2 a week has to be paid, so that for every hour it works during the week someone has to find 9d. or 1s. As the hon. Member for Dunbartonshire, East (Mr. Bence) knows, in a big factory in the Midlands or in the south of England there can be 1,000 movements of lorries a day in and out.

In addition to the extra vehicle tax, there is the petrol duty. A lorry may run six or eight miles to the gallon and the owner may have to find an extra 1d. for every mile. Therefore, every time one of these lorries passes the factory gates this extra impost has to be paid to the Chancellor. Every time it passes the factory gates to the place in the factory where it loads or unloads a few pence or even 1s. has to be paid to the Chancellor.

Let us take the case of a firm of wholesalers or retailers with 200 smaller vehicles, perhaps 3-tonners. I calculate that such a firm would have to find an extra £4,600 a year for those 200 vehicles. When the First Secretary reads the report of this debate tomorrow and finds out what the Chancellor has landed him in for, he will have all the Treasury boys up in his study and "give them what for", because it is perfectly obvious that costs in industry and commerce generally will rise. Not only is the Chancellor annoying the First Secretary of State, but he must be infuriating the Minister of Transport because here is the Minister reading through his report at this moment, waiting to publish, waiting to give to the nation a considered plan for transport and the Chancellor of the Exchequer has anticipated him by putting an extra tax on transport, of which no account has been taken at all.

I am afraid that the Chancellor of the Exchequer is not annoying only his Cabinet colleagues. He is annoying the whole road haulage industry. Every trader who owns a C-licence vehicle—and there are tens of hundreds of thousands of them—knows that he will be affected. The right hon. Gentleman is annoying the whole of the public, because as a result of his action the cost of living will not go up 2 per cent., as it has done this month; it will go up by another 2 to 3 per cent. within a very short time.

Mr. Geoffrey Wilson

I am pleased to be able to support the Amendment moved by my right hon. Friend (Mr. Powell) and to follow the speech of my hon. Friend the Member for Twickenham (Mr. Gresham Cooke). I was absent from this Chamber during the greater part of the debate on the previous Amendment. I returned in time to hear one hon. Member opposite complain that hon. Members on this side of the House were making party points. I am not quite sure what the relevance of that point was. I should have thought that, as we represent constituencies, it was part of our duty to make party points. I want to make a party point relevant to this Amendment. I was absent from the Chamber, with a number of other West Country Members, listening upstairs in the Committee rooms to the authors of the South-West Development Plan explaining their findings.

That Report was produced at the instigation of six local authorities with support, not only of the previous Government, but of the present Government as well. The Report drew attention to a proposed point in connection with the South-West. One of the points was that we had an age structural imbalance and the population on the whole was 4 per cent. older than in other parts of the country. It was also said that the population was less dense and that the income was lower. Time and time again throughout the Report it came back to the point that the reason for these discrepancies and differences in the South-West was insufficiency of transport. The hon. Member for Dunbartonshire, East (Mr. Bence), whose speech I listened to with great amazement, made a number of points that did not seem to have any relevance in the least, but he made one point which seemed to have some relevance to this Motion. He pointed out that the transport cost which had fallen on industry arose at the terminals. That is true, maybe, of haulage in connection with a manufacturing industry. But it is not true to any substantial extent with regard to a C-licence vehicle carrying its owner's goods.

We in the South-West, and this point has been made in connection with other areas, suffer particularly because any increase in transport charges is multiplied. That is because of our distance from other areas. For instance, the rise in petrol tax affects us more than it affects the agricultural growers in Kent, because our hauliers carrying horticultural produce from the South-West are travelling much longer distances. The effect is felt also in another way because a large number of goods are going in owner's vehicles. The owners who are exporting our horticultural produce, to a large extent, fish and china clay, do so by road in C-licence vehicles. I have always thought that the last mentioned traffic would be more suitable by rail, but I believe the explanation for that is that the potteries and the other industries which need china clay, because there are many other industries besides the potteries which use it, may have to put up with some delay on the part of the railway and prefer it to be delivered by lorry. That may be, but the point is that when we are dealing with long distances these charges fall very heavily on hauliers.

9.0 p.m.

There is the petrol tax to begin with and then we have this charge on top of it. They fall heavily more especially on owners and those who are dealing with commodities which are not high-priced. China clay is a cheap material. Not much profit is made out of fish, and certainly not out of horticulture unless one is lucky. These charges, therefore, fall heavily on certain areas one of which is the South-West. It seems to me extraordinary that, at a time when this Report has just been issued and has pointed out that one of our difficulties is lack of transport, we are now to face an inevitably heavier charge on transport which will not do us any good. It is for these reasons that I am pleased to support the Amendment.

Mr. MacDermot

We have had a very full debate on this subject, with many speeches from hon. Members, and as I think that I am seized of most of the arguments which have been deployed in support of the Amendments it might be helpful to the Committee if I were to state our position on them. The Amendments deal with the proposal to raise the Excise Duty on goods vehicles by 50 per per cent. I would point out at once that the Opposition Amendment, moved by the right hon. Member for Wolverhampton, South-West (Mr. Powell), would exempt these vehicles from any increase at all whilst increases would be imposed on other vehicles.

The first and major question which I have been asked is why the Chancellor should have chosen, as it is put, to impose the burden of this taxation upon industry and on goods vehicles in general. As my right hon. Friend pointed out in his Budget speech, the simple fact is that since the 1933 rate of duty was fixed this duty on commercial vehicles has only risen in money terms by 20 per cent. I think that some hon. Members opposite were carried away in their enthusiasm and they thought that there had been no increase since 1933. They are of course wrong about that. Goods vehicles were included, along with all vehicles with the exception of buses, in the 20 per cent. increase made by the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) in 1961.

This means that this duty in real terms has fallen very substantially since 1933 As the right hon. Member for Wolverhampton, South-West pointed out, we assume for the purposes of this debate that it is necessary for my right hon. Friend to raise extra taxation and indeed in the Budget debate I do not think that this was seriously challenged. When my right hon. Friend is looking round for some means by which to raise extra taxation it is only right that his eye should fall upon a duty which in real terms has fallen very substantially compared with its pre-war level. If in those circumstances he failed to raise that duty one could almost say that preferential treatment was being given to that field compared with other fields of taxation.

I should make clear at the outset that the fears which have been expressed by hon. Members opposite—with what depth of conviction they are held I do not know—are quite misplaced. It is not my right hon. Friend's intention by this taxation to impose any deterrent effect upon road transport. He is not seeking by means of this increase to drive goods back on to the railways. I think that that was the suggestion of the hon. Member for Chippenham (Mr. Awdry), who, I am sorry to see, is not still with us in the Chamber. Nor was my right hon. Friend moved by any reflections upon the other fallacy, so called by the right hon. Member for Wolverhampton, South-West, namely, a belief that more public expenditure is being paid out on the roads than is being received back by way of taxation on road transport.

I do not wish to be involved in argument on that contentious issue, but, looking at this matter from a fiscal point of view, I do not suppose that any hon. Member would wish to revive the error of the Road Fund licence approach. We do not look to a particular sector of taxation and try to hypothecate that and earmark it for a particular use or purpose. It would be about as logical to try to strike a balance between taxation on road use and public expenditure on roads as it would be to strike a balance between taxation on beer and the cost of building State-owned public houses or between the tax on cigarettes and expenditure on tobacco plantations or on what, in the nineteenth century, used to be called, I think, cigar divans. One has only to state these things to see that they are ludicrous. They are ludicrous also as a basis for argument when one has to consider what is the right level of taxation on motor vehicles.

We did not hear much argument on these Amendments addressed to the comparative treatment of goods vehicles and private cars. We heard rather more about that on the previous Amendment. I think it was the hon. Member for South Angus (Mr. Bruce-Gardyne) who suggested that the Chancellor would have done better not to impose this increase on goods vehicles but, rather, to put what would, of course, have been much stiffer increases on private cars. On the last Amendment, I gave the reasons why the Chancellor, on this occasion, made a modest increase in respect of private cars. Clearly, if we are to succeed, as we hope we shall, in devising a satisfactory differential system for private cars, it would be wrong to precede that by putting on a substantial flat-rate increase which would bear hardly and, perhaps, unfairly upon the owners of small cars.

Most of the arguments in the debate have been directed to the supposed or real economic effects of the increase. The right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) was the first to raise specifically the question of the effect on operating costs. I have here a fascinating table of what are the believed increases in operating costs in respect of vehicles of various weights. I shall not weary the Committee by giving them in full, but here are some examples. On the lightest vehicles, that is, vehicles up to one ton, the effect of the increase is just over 1½d. per ton-mile. At the other end of the scale, on the heaviest type, that is, vehicles over 5 tons, the increase will be just under one-tenth of a penny per ton-mile.

Although the increase on the lighter vehicles will be more than 15 times as much as the increase for the heavier vehicles, viewed in percentage terms it is the other way round. The larger increase on the lighter vehicles represents a 2 per cent. increase while the very much smaller actual increase for heavier vehicles represents a 4 per cent. increase.

Mr. Temple

On what mileage per annum is the hon. and learned Gentleman basing his figures both for light and heavy vehicles?

Mr. MacDermot

I have not with me the figures on which they are based. If the hon. Gentleman would like further particulars perhaps he will write to me about the information he wants and I will try to supply it. It would, of course, be worked out on assumed averages—I do not know the basis of calculation—on the mileage of the different classes of vehicles. These figures illustrate vividly the reason why it is right to have a graduated rate of duty and to impose such very much higher rates of duty upon heavier than upon lighter vehicles.

Another point, also raised by the right hon. Member for Sutton Coldfield, concerned the suggestion that this would operate heavily upon export costs. The duty, of course, enters into the calculation of the export rebate and therefore these increases will qualify in due course for a revision of the rebate. The adjustment will not be made at once but after some time has elapsed and is allowed for renewal of licences.

Of course, the effects generally on costs will vary from industry to industry, depending upon the extent to which road transport is used. Putting the matter into perspective and looking at this as a percentage of the gross costs of industry as a whole, it will represent an increase of .1 per cent. on total costs—less than one farthing in the £. Although the duty will impose an additional burden I hope that the figures I have given will help the Committee to get the increases into perspective.

The hon. Member for Caithness and Sutherland (Mr. George Y. Mackie), on behalf of the Scottish Liberal Members, urged that we should use this duty as a means of giving help and preferential treatment to regions which it is accepted are candidates for economic assistance. The simple question here is whether the Liberal proposal in Amendment No. 10 is practical as a way of achieving its object. I must advise the Committee that it is not because it would be so open to abuse, avoidance and evasion.

Presumably, the intention would be to help industry and hauliers in the area concerned—Scotland, in the case of the Liberal Amendment. But, of course, it would be possible for any one who had business connections with Scotland to register his vehicles there. Indeed, one can see that for any person with a substantial fleet of vehicles it would be well worth while to manufacturer some Scottish connection which could provide an excuse for obtaining Scottish registration.

9.15 p.m.

Mr. George Y. Mackie

I do not think that the verification of registrations in Scotland would be beyond the ingenuity of the Civil Service, which has produced, for instance, this year's Bill. The hon. and learned Gentleman will never know until he tries it. If the Government are serious about regional development and regional preference in any way, they must start somewhere. That was why we put down our Amendment.

Mr. MacDermot

The hon. Member is arguing his case again. I thought that he was intervening for further clarification. He suggests that policing would be an easy matter. The answer is that it would not. I do not know where the hon. Member envisages instituting a check system, whether on the Border, within Scotland or elsewhere. It would require an elaborate policing system and arrangement which, to be effective, would be extremely wasteful in manpower, time and cost. Presumably, if this policy were to be adopted, there would be pressure for it also to be extended to private cars, with a similar field for abuse in that direction also.

Another objection is that as a matter of general approach it is not our policy, and it has not been the policy of any Government, to try to exempt regions from particular taxes. The attempt to start it here would be a bad precedent.

Mr. Mackie

Surely, companies in development districts are allowed to write off their plant. If that is not differential taxation, I do not know what is.

Mr. MacDermot

That is a different matter. In that case, there are special reliefs to encourage industry to go to different areas.

The Amendment proposes this special exemption only for Scotland. A number of other hon. Members, however, speaking for different regions, have said that if the principle were accepted, it could be extended to the South-West, the North-East and to other areas which have been suggested. The simple answer to all these points is that this is neither a desirable nor a particularly effective way of trying to help particular regions. The Government have done a great deal to help the less prosperous areas and as my right hon. Friend the First Secretary made clear in his speech on the Budget on 7th April, further measures are being considered.

In the Budget, my right hon. Friend the Chancellor announced the scheme for allowing 50 per cent. long-term borrowing from the Public Works Loan Board for particular areas needing assistance. The Scottish Planning Board is making its study of the Highlands, the area in which the hon. Member for Caithness and Sutherland is particularly concerned, and its report is expected soon. The Government have introduced the Highland Development Bill, which is going through its various stages, for the setting up of the Highland Development Board.

Mr. Bruce-Gardyne

Would not the hon. and learned Gentleman agree that the Chancellor's decision to allow local authorities 50 per cent. access to the Public Works Loan Board was made necessary by the Government's own credit squeeze and that it is, therefore, hardly a concession to regional development?

Mr. MacDermot

Whatever made it necessary, it is a concession. The increase in these duties is made necessary by the need to reduce the pressure of demand. What we are being asked to do is to make a special concession. I am explaining that in one case the aid can be given in a form in which we would be sure that it reached and helped those who really needed to be helped, would be easy to administer and would not be open to abuse. That does not apply to the Amendments.

A detailed point was put to me by the hon. Member for Ayr (Mr. Younger) in connection with the position when the vehicle becomes liable for a higher rate of duty on an increase in weight. He asked me to look into the question. I will certainly do so. I will study carefully what he said and see whether there is any basis for changing the system. But I understand that there is nothing new in the system proposed in the Bill. The system of which he complained and which I do not pretend fully to understand as yet is one which we have inherited and which was laid down by a previous Act. I will look into what the hon. Member said without giving any undertaking or making any promises.

To sum up, I reject the suggestion that these duties have been in any way motivated by political prejudice. They are proposed by my right hon. Friend solely for the reason that he needs to raise extra duty, that here is a field where the real value of the duty has fallen very substantially and the burden of it will not fall heavily and severely on some limited class but will be spread very generally throughout the level of taxpayers.

May I deal with the argument of hon. Members to the effect that this increase will go into prices and will cover the whole field of the cost of living. First, I am not as pessimistic as they are about the capacity of industry to absorb increases in greater efficiency. Secondly, their own argument shows that this burden will be spread very widely and therefore, I suggest, very fairly throughout the community. For these reasons, I advise the Committee to reject the Amendments.

Mr. Galbraith

This increase in the vehicle excise duty which we are seeking to amend is, like a great many of the Chancellor's ideas, somewhat half-baked and does not fit in with the other aspects of the Government's policy. This may well be intentional on the part of the right hon. Gentleman. I am sorry that he is not here, but he is a bit of a dark horse. He started very far behind the First Secretary, who took over a large section of what had previously been under the control of former Chancellors of the Exchequer. The Chancellor of the Exchequer may be catching up somewhat, because these licence proposals of his, coupled with the earlier petrol tax increase, will make it almost impossible for the First Secretary to achieve his incomes policy, as was pointed out by my hon. Friend the Member for Chippenham (Mr. Awdry).

The First Secretary is in the unfortunate position of being like a man trying to repair a millstream while the Chancellor of the Exchequer insists on keeping the sluice gates wide open. My hon. Friend the Member for Barkston Ash (Mr. Alison) pointed out that the Road Haulage Association has, very public-spiritedly, responded to the First Secretary's request to advise its members to delay the proposed increase in charges for another month. But as the Chancellor of the Exchequer's tax policy in his Budget imposes an extra £35 million a year in addition to the extra £60 million a year which the 6d. petrol tax imposed on basic production costs, it is unlikely that even the most well-disposed organisation will be able to retard the economic effects of the Chancellor's policy, and therefore the First Secretary's policy will not succeed. The policy of the Chancellor of the Exchequer is clearly increasing costs and will stimulate inflation and make the task of everybody concerned with the competitive efficiency of British industry that much more difficult.

Of course it is not only the incomes policy which is prejudiced, nor the competitive position of British industry which alone will suffer. We on this side of the Committee believe not only that this charge is unnecessary but that it will tend to put in jeopardy, and certainly make much more difficult, the success of the policy of the distribution of industry, as was pointed out by my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd).

I did not hear my right hon. Friend's speech, but we probably read the same account in the Press. I noticed the outcry, not from Conservatives but from the unions at the new B.M.C. factory at Bathgate, against the costs of motor car components which come from the Midlands and thereby have to bear a very heavy transport charge. According to these men, the cost of transport is seriously jeopardising the development prospects of the motor car industry in Scotland which the late Government encouraged to come to Scotland and whose advent there created a new spirit, until recently, of hope and change.

I appreciate that again this is a matter in which the First Secretary is more interested than the Chancellor of the Exchequer and that, because of the competitive position between the two, he may not be inclined to be helpful about it. However, on behalf of the Chancellor of the Exchequer the Financial Secretary should remember that it is a Socialist majority in Scotland which is keeping him in his present position and that, when the time comes to vote, his action and that of his right hon. Friend in making it harder for firms at the periphery to take root and grow will not easily be forgotten. Nor will the fact that the present Secretary of State for Scotland has allowed this proposal to go through the Cabinet.

The second defect in this tax—the Chancellor has just returned; I have been slightly critical of him——

Mr. Callaghan

I was listening.

Mr. Galbraith

I should not like the right hon. Gentleman to think that I was saying it in his absence.

Mr. Callaghan

I heard the hon. Gentleman say that it was a Scottish majority which was keeping us in power, but my reflection was that it was a Welsh majority which was keeping us in power.

Mr. Galbraith

It is the majority at the periphery which will not be particularly pleased with what the Chancellor is doing.

The second defect in this increase in vehicle licence duty is that it looks as though the Government are prejudicing the recommendations of the Geddes Committee. Hon. Members will be aware that the proceedings of the Geddes Committee have already given risen to an acute division of opinion about whether road haulage vehicles pay their full share of providing the extra cost of the heavy roads which they require. Speaking for the railways, Dr. Beeching maintained that the road haulage vehicles did not pay enough and were being subsidised by the taxpayer, but the industry, with some backing from the evidence of the Ministry of Transport to the Geddes Comittee—and I am glad that the Parliamentary Secretary is here—takes an entirely different view from that of Dr. Beeching and maintaining that it is paying more than its share of what it costs to provide these roads.

I had believed that it was in order to resolve this problem that Lord Hinton was appointed to the Ministry of Transport. We are awaiting his report, even though it will be a secret report, before the Government decide what to do. By putting on this increase, the Government have prevented hon. Members from having the opportunity to discuss what Lord Hinton proposes. In these circumstances, it is utterly wrong to increase the incidence of taxation in a way which is prejudicial to the road haulage industry.

In spite of what the Financial Secretary said about his motives being entirely appropriate and above board—and I have no doubt that his motives are—I have grave doubts about the Minister of Transport who has given grounds for suspecting with considerable reason that what he and many Government supporters want to do is to keep the railways just as they are at any price, just as they are determined to keep the coal mines just as they are at any price. It is all, apparently, part of what they regard as modernisation. As the party sprang into existence in Victorian times, I suppose hon. Gentlemen opposite think that what existed in those times is best. 9.30 p.m.

A third defect in this tax is that it is quite clear that the Chancellor of the Exchequer regards the travelling public as a kind of dripping roast that he can squeeze indefinitely, and as much as he wants. On the whole people do not mind paying taxes if they get something in return, but what is intolerable about this tax is that when there has already been a great increase in the Petrol Tax, a vastly increased amount of money which is being taken from the motoring public is not being balanced in any way by a Government promise to increase the road programme. In fact, the very opposite. Although hon. Gentlemen opposite said at the election that they would do this, the Parliamentary Secretary to the Ministry of Transport, not the one in this House, but the one in another place, has said that there will be no increase in the road programme, so there is another election promise gone, and another hope for modernisation damped down.

The only possible justification for this vast increase—one-quarter of the extra money raised in the Budget—would be if the Government were to show that they realised the magnitude of the urban transport problems that are crowding in on them, and as a corollary to this increased tax initiated a new programme for urban road development by spending some of this money—not, as the Financial Secretary suggested, all of it. He said that we do not want to go back to the concept of a road fund, and I agree, but I believe that it is wrong to take all this money and show nothing in return.

We are determined to vote for the Amendment. The tax is a thoroughly bad one. It will increase costs, and it will increase inflation. It jumps the gun before the Geddes Committee has reported, and it offers no hope that any of the money will find its way into improving urban roads. I hope that the car-travelling public, and that means almost everybody in the country, will now realise how old-fashioned and anti-motorist the Socialist Party is, and that they will vote against them at the next elecion to which we shall soon come, in the way that we intend to vote tonight.

Mr. David Steel

I apologise for rising to speak after the two Front Benches have indicated that they wish the debate to be brought to a close, but we have had a most unsatisfactory answer from the Minister on the Liberal Amendment No. 10, which proposes that Scotland be exempt from the increases in vehicle licences and I wish to speak further to this point.

It was interesting to note that the hon. and learned Gentleman did not contest the principle of what we were arguing. He said that it was impracticable. I do not believe that he has studied this at all, because at the moment it is impossible to register a vehicle outside the area in which it is normally kept. One has to register it within the local authority area in which the vehicle is ordinarily kept, and I do not for a moment accept that it would be impossible to introduce a different lower rate of vehicle tax in Scotland from that in England.

I draw the hon. and learned Gentleman's attention to what happens with dog licences. He may not be aware of the fact that while the dog licence rate is the same both north and south of the Border, in Scotland the revenue from dog licences goes to the Treasury, while in England it is retained by the local authorities, and I am not aware of any mass infiltration south of the Border by Scottish dogs to avoid payment to the Treasury. If a distinction can be drawn between the allocation of revenue in Scotland and England, it is not impossible to draw a distinction in the level of a rate of duty such as this which is already administered by clearly defined local authorities north and south of the Border, and which would require very little machinery to implement.

Much has been said about the rise in freight costs and passenger transport costs. I want to make another point. The Liberal Party Amendment covers private vehicles as well as goods vehicles.

We are concerned about the maintenance of the fabric of social life in some of the Scottish rural communities in which the public transport service has almost entirely broken down and where—this is certainly the case in some parts of my constituency where it may be summed up as "one bus per village, per week, perhaps." It is not good enough now, when so many parts of the country are dependent upon the private car for transport, to put on this heavy increase in areas where it is not a luxury but where such people as agricultural workers who do not enjoy a high standard of living maintain a motor vehicle as a social necessity.

We have now reached a position in which the annual rate of duty to be charged on a vehicle will often be more than the value of the vehicle itself. [Laughter.] This is true in certain areas. I speak from personal experience.

The most important point is that we are not criticising the Treasury itself; we are criticising the whole Government because they keep telling us that they believe in regionalism. It is no use Minister after Minister telling us that he is hatching plans to encourage industry to move into the regions and to encourage movements of population and housing development if, at the same time, the cost of transport is increasing. It does not matter if the Minister tells us what fractions of a penny the increase represents; the point that we are making is that there should not be an increase at all; there should be a decrease in the cost of transport. If we are to have a genuine regional policy a cheap transport policy is a prerequisite of it.

This is a point which the Minister has not grasped at all. He may have a point in saying that he has to raise so much money out of this sector of taxation, but if he says that why does not he do it by imposing a greater increase in certain overcrowded areas and maintaining the present rate or lowering it in other parts of the country such as Scotland?

The hon. Member for Glasgow, Hill-head (Mr. Galbraith) made several remarks with which I agree, but one thing that did not surprise me was that throughout the debate never more than two or three Scottish Conservative Members were present. [Interruption.]

Mr. Bruce-Gardyne

On a point of order. Is it in order for the hon. Member to make comments about the presence of Scottish Members?

The Deputy-Chairman (Sir Samuel Storey)

That is not a point of order.

Mr. Steel

What I said was quite true, I took careful note of the number who were present during this debate, and there were never more than two or three. That did not surprise me; the Conservative Party is a discredited organisation in Scotland. What did surprise me was that throughout the debate no Member of the Scottish Office was present—none of the Scottish Ministers has been present until now. What is far worse is: what was the Secretary of State for Scotland doing behind the scenes when this matter came up for discussion? Throughout his years

in opposition we were told that he was the man who would fight for Scotland. There is no sign of his fighting for Scotland in this matter.

I support the hon. Member for Hill-head in the point that he made that the people of Scotland will judge the Government by their treatment of Scotland. He should know. The people of Scotland have begun to remove the Conservatives, and are continuing to remove them, from the face of Scotland. If this Government continue to implement the policies which we criticised the last Government for implementing, they will go the same way.

Question put, That the words proposed to be left out stand part of the Clause:—

The Committee. divided: Ayes 190, Noes 176.

Division No. 118.] AYES [9.40 p.m.
Abse, Leo Edelman, Maurice Lawson, George
Albu, Austen Edwards, Rt. Hn. Ness (Caerphilly) Lee, Rt. Hn. Frederick (Newton)
Alldritt, Walter Edwards, Robert (Bilston) Lewis, Ron (Carlisle)
Armstrong, Ernest Ennals, David Lipton, Marcus
Bacon, Miss Alice Evans, loan (Birmingham, Yardley) Mabon, Dr. J. Dickson
Barnett, Joel Fernyhough, E. MacDermot, Niall
Baxter, William Finch, Harold (Bedwellty) Mclnnes, James
Bellenger, Rt. Hn. F. J. Fletcher, Sir Eric (Islington, E.) McKay, Mrs. Margaret
Bence, Cyril Fletcher, Ted (Darlington) Mackenzie, Gregor (Rutherglen)
Bennett, J. (Glasgow, Bridgeton) Floud, Bernard McLeavy, Frank
Binns, John Foot, Sir Dingle (Ipswich) MacMillan, Malcolm
Bishop, E. S. Fraser, Rt. Hn. Tom (Hamilton) MacPherson, Malcolm
Blackburn, F. Freeson, Reginald Mahon, Peter (Preston, S.)
Blenkinsop, Arthur Galpern, Sir Myer Mahon, Simon (Bootle)
Boardman, H. George, Lady Megan Lloyd Mallalieu,J.P.W.(Huddersfield,E.)
Bowden, Rt. Hn. H. W. (Leics S.W.) Gourlay, Harry Mapp, Charles
Boyden, James Gregory, Arnold Mendelson, J. J.
Braddock, Mrs. E. M. Grey, Charles Miller, Dr. M. S.
Bradley, Tom Griffiths, David (Rother Valley) Milne, Edward (Blyth)
Bray, Dr. Jeremy Griffiths, Rt. Hn. James (Llanelly) Monslow, Walter
Broughton, Dr. A. D. D. Griffiths, Will (M'Chester, Exchange) Morris, John (Aberavon)
Brown, Hugh D. (Glasgow, Provan) Gunter, Rt. Hn. R. J. Neal, Harold
Brown, R. W. (Shoreditch & Fbury) Hamilton, James (Bothwell) Noel-Baker, Francis (Swindon)
Buchanan, Richard Hamilton, William (West Fife) Oakes, Gordon
Butler, Herbert (Hackney, C.) Harrison, Walter (Wakefield) O'Malley, Brian
Butler, Mrs. Joyce (Wood Green) Hart, Mrs. Judith Orbach, Maurice
Callaghan, Rt. Hn. James Hattersley, Roy Orme, Stanley
Carmichael, Neil Heffer, Eric S. Oswald, Thomas
Carter-Jones, Lewis Herbison, Rt. Hn. Margaret Owen, Will
Chapman, Donald Hill, J. (Midlothian) Page, Derek (King's Lynn)
Coleman, Donald Holman, Percy Paget, R. T.
Conlan, Bernard Horner, John Palmer, Arthur
Cousine, Rt. Hn. Frank Howarth, Robert L. (Bolton, E.) Parker, John
Craddock, George (Bradford, S.) Howie, W. Pearson, Arthur (Pontypridd)
Crawshaw, Richard Hoy, James Peart, Rt. Hn. Fred
Crosland, Anthony Hughes, Emrys (S. Ayrshire) Pentland, Norman
Cullen, Mrs. Alice Hughes, Hector (Aberdeen, N.) Popplewell, Ernest
Dalyell, Tam Hunter, Adam (Dunfermline) Price, J. T. (Westhoughton)
Darling, George Hunter, A. E. (Feltham) Probert, Arthur
Davies, G. Elfed (Rhondda, E.) Hynd, John (Attercliffe) Pursey, Cmdr. Harry
Davies, Harold (Leek) Irvine, A. J. (Edge Hill) Redhead, Edward
Davies, Ifor (Gower) Irving, Sydney (Dartford) Rees, Merlyn
Davies, S. O. (Merthyr) Jay, Rt. Hn. Douglas Rhodes, Geoffrey
Delargy, Hugh Jeger, George (Goole) Roberts, Albert (Normanton)
Dell, Edmund Jenkins, Hugh (Putney) Roberts, Goronwy (Caernarvon)
Dempsey, James Johnson, Carol (Lewisham, S.) Robertson, John (Paisley)
Diamond, John Jones, Dan (Burnley) Rodgers, William (Stockton)
Donnelly, Desmond Jones, J. Idwal (Wrexham) Rogers, George (Kensington, N.)
Duffy, Dr. A. E. P. Jones, T. W. (Merioneth) Rose, Paul B.
Dunn, James A. Kenyon, Clifford Ross, Rt. Hn. William
Kerr, Mrs. Anne (R'ter & Chatham) Rowland, Christopher
Sheldon, Robert Swingler, Stephen Wilkins, W. A.
Shinwell, Rt. Hn. E. Taylor, Bernard (Mansfield) Willey, Rt. Hn. Frederick
Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.) Thomas George (Cardiff, W.) Williams, Alan (Swansea, W.)
Silkin, John (Deptford) Thornton, Ernest Williams, Albert (Abertillery)
Silverman, Julius (Aston) Tinn, James Willis, George (Edinburgh, E.)
Silverman, Sydney (Nelson) Tomney, Frank Wilson, William (Coventry, S.)
Slater, Mrs. Harriet (Stoke, N.) Varley, Eric G. Winterbottom, R. E.
Slater, Joseph (Sedgefield) Wainright, Edwin Woodburn, Rt. Hn. A.
Small, William Walden, Brian (All Saints) Woof, Robert
Snow, Julian Walker, Harold (Doncaster) Yates, Victor (Ladywood)
Soskice, Bt. Hn. Sir Frank Wallace, George
Steele, Thomas (Dunbartonshire, W.) Watkins, Tudor TELLERS FOR THE AYES:
Stones, William White, Mrs. Eirene Mr. John McCann and
Swain, Thomas Wigg, Rt. Hn. George Mr. Alan Fitch.
NOES
Agnew, Commander Sir Peter Gilmour, Sir John (East Fife) Mathew, Robert
Alison, Michael (Barkston Ash) Glover, Sir Douglas Maude, Angus
Allason, James (Hemel Hempstead) Godber, Rt. Hn. J. B. Mawby, Ray
Anstruther-Gray, Rt. Hn. Sir W. Goodhart, Philip Maxwell-Hyslop, R. J.
Astor, John Goodhew, Victor Maydon, Lt.-Cmdr. s. L. C.
Atkins, Humphrey Gower, Raymond Mills, Peter (Torrington)
Awdry, Daniel Gresham-Cooke, R. Miscampbell, Norman
Baker, W. H. K. Grieve, Percy Mitchell, David
Barlow, Sir John Griffiths, Peter (Smethwick) Monro, Hector
Beamish, Col. Sir Tufton Gurden, Harold More, Jasper
Bell, Ronald Hall, John (Wycombe) Morrison, Charles (Devizes)
Bennett, Sir Frederic (Torquay) Hall-Davis, A. G. F. Mott-Radclyffe, Sir Charles
Berry, Hn. Anthony Hamilton, Marquess of (Fermanagh) Murton, Oscar
Biggs-Davison, John Hamilton, M. (Salisbury) Neave, Airey
Birch, Rt. Hn. Nigel Harris, Reader (Heston) Nicholson, Sir Godfrey
Black, Sir Cyril Harrison, Brian (Maldon) Nugent, Rt. Hn. Sir Richard
Bossom, Hn. Clive Harvey, Sir Arthur Vere (Macclesf'd) Osborn, John (Hallam)
Bowen, Roderic (Cardigan) Harvie Anderson, Miss Page, John (Harrow, W.)
Box, Donald Heald, Rt. Hn. Sir Lionel Page, R. Graham (Crosby)
Boyd-Carpenter, Rt. Hn. J. Heath, Rt. Hn. Edward Pearson, Sir Frank (Clitheroe)
Brinton, Sir Tatton Higgins, Terence L. Percival, Ian
Brooke, Rt. Hn. Henry Hiley, Joseph Pitt, Dame Edith
Brown, Sir Edward (Bath) Hill, J. E. B. (S. Norfolk) Pounder, Rafton
Bruce-Gardyne, J. Hirst, Geoffrey Powell, Rt. Hn. J. Enoch
Buchanan-Smith, Alick Hobson, Rt. Hn. Sir John Price, David (Eastleigh)
Burden, F. A. Hooson, H. E. Redmayne, Rt. Hn. Sir Martin
Buxton, Ronald Hopkins, Alan Ridsdale, Julian
Carlisle, Mark Hordern, Peter Robson Brown, Sir William
Cary, Sir Robert Hornby, Richard Roots, William
Channon, H. P. G. Hornsby-Smith, Rt. Hn. Dame P. Sharpies, Richard
Clark, Henry (Antrim, N.) Howe, Geoffrey (Bebington) Spearman, Sir Alexander
Clark, William (Nottingham, S.) Hutchison, Michael Clark Stainton, Keith
Clarke, Brig. Terence (Portsmth, W.) Iremonger, T. L. Stanley, Hn. Richard
Cole, Norman Irvine, Bryant Godman (Rye) Steel, David (Roxburgh)
Cooke, Robert Jenkin, Patrick (Woodford) Stoddart-Scott, Col. Sir Malcolm
Cooper, A. E. Johnson Smith, G. (East Grinstead) Studholme, Sir Henry
Costaln, A. P. Johnston, Russell (Inverness) Summers, Sir Spencer
Craddock, Sir Beresford (Spelthorne) Jopling, Michael Taylor, Sir Charles (Eastbourne)
Crosthwaite-Eyre, Col. Sir Oliver Joseph, Rt. Hn. sir Keith Taylor, Edward M. (G'gow,Cathcart)
Cunningham, Sir Knox Kerby, Capt. Henry Temple, John M.
Curran, Charles Kerr, Sir Hamilton (Cambridge) Thatcher, Mrs. Margaret
Currie, G. B. H. Kershaw, Anthony Thomas, Rt. Hn. Peter (Conway)
King, Evelyn (Dorset, S.) Thompson, Sir Richard (Croydon,S.)
Davies, Dr. Wyndham (Perry Barr) Kirk, Peter Turton, Rt. Hn. R. H.
d'Avigdor-Goldsmid, Sir Henry Kitson, Timothy Tweedsmuir, Lady
Dean, Paul Lagden, Godfrey van Straubenzee, W. R.
Deedes, Rt. Hn. W. F. Lewis, Kenneth (Rutland) Vaughan-Morgan, Rt. Hn. Sir John
Digby, Simon Wingfield Litchfield, Capt. John Walker, Peter (Worcester)
Dodds-Parker, Douglas Lloyd, Rt. H n. Geoffrey (Sut'nC'dfield) Ward, Dame Irene
Eden, Sir John Lloyd, Rt. Hn. Selwyn (Wirral) Weatherill, Bernard
Elliott, R. W. (N'c'tle-upon-Tyne,N.) Longbottom, Charles Webster, David
Emery, Peter Lubbock, Eric Whitlock, William
Errington, Sir Eric McAdden, Sir Stephen Williams, Sir Rolf Dudley (Exeter)
Eyre, Richard MacArthur, Ian Wills, Sir Gerald (Bridgwater)
Fletcher-Cooke, Charles (Darwen) Mackie, George Y. (C'ness & S'land) Wilson, Geoffrey (Truro)
Fletcher-Cooke, Sir John (S'pton) McLaren, Martin Woodhouse, Hn. Christopher
Foster, Sir John Macleod, Rt. Hn. Ialn Younger, Hn. George
Fraser, Ian (Plymouth, Sutton) Maginnis, John E.
Gammans, Lady Maitland, Sir John TELLERS FOR THE NOES:
Gilmour, Ian (Norfolk, Central) Marten, Neil Mr. Francis Pym and
Mr. Dudley Smith.
Mr. Powell

I beg to move Amendment No. 14, in page 4, line 19, to leave out "6th" and to insert "14th".

The Deputy-Chairman (Sir Samuel Storey)

I think it would be convenient for the Committee to take at the same time Amendment No. 27, which also stands in the name of the right hon. Gentleman in Clause 6, page 5, line 18, leave out "7th" and insert "15th".

Mr. Powell

Amendment No. 14, unlike the last Amendment we were discussing, does not involve a substantial sum of money, but it does afford the opportunity to remove a sense of grievance which is felt by many thousands of people and, as I shall argue, a justifiable grievance. I hope that the Financial Secretary will, therefore, approach the Amendment in a helpful frame of mind.

The significance of the date "14th", which the Amendment seeks to write in—and Amendment No. 27, which seeks to amend a subsequent Clause—is that by convention it is allowable during the first 14 days of the month to take out a vehicle licence to run from the first day of that month.

I entirely concede that this 14 day concession is not statutory. Nevertheless, it is a concession which is perfectly well known. Its existence is officially stated and the right hon. Gentleman the Minister of Transport recently indicated that to the best of his knowledge it is invariably observed. It is, therefore, a concession which has undoubtedly public and official sanction. In other words, no blame or liability whatever attaches to a person who takes out a road vehicle licence to run from the first of the month during the first 14 days of the month. That is the reason why the date "14th" appears in the Amendment.

In the Budget and in the Finance Bill the new rates of duty were imposed in respect of licences taken out after 6th April, from 7th April, and I quite accept—and this was the point which the Financial Secretary made in moving the Second Reading of the Bill—that it was essential for the Chancellor to take steps to prevent forestalling. It would have been absurd if licences which were running could have been paid in and new ones taken out at the old rate for a further 12 months during the remaining days between 6th April and 14th April. I therefore admit that it was necessary for the Chancellor to take steps against forestalling; which he took by the dates "6th" and "7th" respectively which occur in the Resolutions and, therefore, in the Bill.

I also accept from the Financial Secretary that it would have been retrospective legislation if the problem had been solved by bringing in the new rate of duty from 1st April because that would have meant that people who had taken out licences at the old rate, at a time when they were perfectly entitled to do so, would then have found afterwards that they had not paid enough and would have to pay a supplement. I will show that what is in the Bill now is also retrospective legislation in essence, and that is what I seek to remove.

It is really an unacceptable unfairness that as between two sets of people taking out Road Fund licences from 1st April, and doing so in a manner perfectly admissible, those who happen to do so before 7th April should have their licences at the lower rate, and those who happen to do so between 7th and 14th April should have to pay the new rate. This is an unfairness which, if we can possibly avoid it, we should not impose. It is not only an unfairness, but it results in all sorts of absurdities where it is only a matter of chance—often of causes not within the control of the applicant for the licence—whether the new licence was issued or the application made before or after 7th April.

In short, this, too, is retrospective legislation, because those who took out their licences between 7th and 14th April paid for a licence as from 1st April. They therefore have, in fact, since this is a 1st April licence, in their case, as in the rest, been subjected to a retrospective raising of the licence in respect of the date from which that licence was to run.

What I am asking the Financial Secretary and the Government to do is to take a perfectly simple step to remove this injustice, anomaly, and sense of grievance. The Government's mind may well be open on the subject, because I noticed that they themselves made an extra-statutory concession beyond the terms of the Resolution of this Committee. Although under the terms of that Resolution the new rate of duty is payable on any licence taken out on or after 7th April, the right hon. Gentleman the Minister of Transport announced in a Written Answer on 26th April that … instructions were given "— an extra-statutory concession: to the authorities concerned that any licence properly applied for before the announcement of the Budget increase could be issued at the old rate."—[OFFICIAL REPORT, 26th April, 1965; Vol. 711, c. 281 That was irrespective of when it was, in a legal sense, taken out. So the Government themselves are alive to the possible injustices and frictions implicit in this date here, and I want to help them a little further.

I am far from going as far as the right hon. Gentleman the First Lord of the Treasury did when the vehicle licence duties were increased in the 1961 Finance Act. On that occasion, as Budget day fell on 17th April, this problem did not arise, since the 14 concessionary days had elapsed. But the right hon. Gentleman, so nice was his sense of fairness, argued that since people took out their licences in different months round the calendar it was really unfair that those who took out their licences from May onwards should be paying at the newer rate, and that the Chancellor ought to wait to bring the new rates into force until the following January so that everyone could start on an even footing.

My proposal is very much simpler, very much cheaper, and very much more moderate in character than that. It is simply that now that the Chancellor of the Exchequer is safe against forestalling—no one can now forestall—he should recognise that all those who took out their licences from 1st April in a manner in which they were entitled to up to and including 14th April, should have those licences at the old rate; that he should remove this anomaly, this meaningless distinction.

He could do this relatively simply by an administrative arrangement when licences fall to be renewed. I am sure that arrangements whereby this could be done on renewal can be devised, if the Government want to do so. And I am sure that they must want to do so, since there is a manifest unfairness there, a manifest element of retrospection which they themselves repudiate, and an element of accident which, above all, we should attempt to banish from the incidence of taxation.

It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress.