HL Deb 12 March 1947 vol 146 cc325-56

2.37 p.m.

LORD LUCAS OF CHILWORTH had the following Notice on the Order Paper: In view of the urgent need to maintain and increase our export of motor vehicles, to suggest an alternative to the present system of motor vehicle taxation; and to move for Papers. The noble Lord said: My Lords, 1 think it would be acceptable to your Lordships' House, and certainly it would be in keeping with its custom, if I disclosed something which I believe most noble Lords already know, and that is my long connexion with the British motor industry. That connexion may presuppose that I have a very special interest in the Motion which stands in my name upon the Order Paper, but if it does, perhaps it may be counterbalanced by the number of years that I have spent in the British motor industry—how many they are it is embarrassing to recall—and the fact that I may have some slight claim to a little knowledge upon the subject which I am submitting to your Lordships as one of great national importance.

When I had the honour to address your Lordships' House for the first time, now many months ago, I ventured to express the view that British industrial policy should be centred upon the production of the class and type of goods most acceptable to world markets, and at prices comparable to those of our competitors. I invited your: Lordships to consider whether or not this was being clone; whether our industrial policy was indeed being centred upon that objective, and whether we were producing, or planning to produce, the goods which would hold our exports at the desired level in the years that lay ahead. I cited the British motor industry as a case where this was not being done, and where through ra. taxation system restrictive of design it was being prevented from contributing to our export markets that quota of which, given freedom of design, it was undoubtedly capable. This afternoon I seek to prove to the satisfaction, I hope, of your Lordships in general, and to the satisfaction in particular of the noble Lord who is to reply on behalf of His Majesty's Government, that: unless the basis of motor vehicle taxation is altered by removing the restriction on design which the present system imposes, Brit sh motor vehicle exports will not only fail to reach the figures possible, bat in about eighteen months' or two years' time, when we have to face the full force of American competition, there will. be a considerable drop in present-day totals.

In order that I may put the facts before your Lordships, I hope I may have the indulgence of noble Lords while I recount past history. It was in 1921 that the mechanical formula tax, in the shape of the horse power tax, was imposed as the basis for taxation on motor cars. I need not bother your Lordships with the reason for its imposition; suffice to say that the industry's fear of American competition in the home market played no small part. The result of the imposition of this restrictive formula was to encourage the design of small cars. Designers made and designed small engines because the lower the horse power the lower was the tax. The designers of the British motor industry became tax dodgers, attempting, and succeeding, with a great deal of skill, to design smaller and smaller engines so that they could advertise to a tax-conscious buying public the competitive lowness of their horse power ratings.

The other defect of this restrictive mechanical formula, coupled with the fact that the tax was graded in steps of 1 h.p., was to encourage a multiplicity of engine sizes, until the British motor industry was turning out cars of every horse power from seven to twenty and above. By 1927 we had almost become a small car using country. Of the total home market, 25 per cent. was absorbed by cars of 10 h.p. and under. By 1938 this had grown to more than 62 per cent., and by 1939, it was over 70 per cent. Of the sizes of motor car for which there was a world market, that is 15 h.p. and over, only 34,644 were sold in this country in the year 1938. The effect upon our export market was tragic. From 1929 to 1938 (a period during which there was a remarkable growth in world automobile usage) the total exports of motor vehicles from this country averaged only £10,000,000 per annum. Between 1929 and 1938 it increased by only £1,750,000 per annum, and in 1938 the total was only £12,992,000. We had successfully protected the home market, but we had equally successfully cut our throats in the export markets of the world.

Two years ago the industry was asked to submit its views upon proposals for an alteration in the basis of taxation. Those views were to be based upon two fundamental requirements; first, to encourage the building of larger cars more suitable to world markets, and secondly, to discourage the production of a multiplicity of models, thereby achieving a reduction in manufacturing costs, which would in turn put us in a more favourable competitive position overseas. The industry was divided in its views. But was that surprising? Was that not to be expected when, upon one hand, there was a progressive element which could see that the only hope for the British motor industry and this country lay in an expanding export market and when, upon the other hand, there was a section which wanted only a retention of the status quo which effectively protected the home market and encouraged the building of small motor cars out of which fortunes had been made? The strange part was that after the industry had been asked for its views based upon the two requirements which I have outlined—namely, the building of larger motor cars more attractive to overseas markets and a diminution in the number of models produced—proposals were accepted which will do neither, but will make only for a continuance of exactly the same conditions as those which proved to be our biggest handicap in the past.

On 1st January of this year the horse power tax was changed to a tax upon the cubic capacity of the engine. On the same date the grading of the tax in steps of 1 h.p. was changed to a grading in steps of 100 c.c. of engine capacity. There is really no difference between the two. Both are restrictive of design, and both will make for the building of smaller motor cars. The fact that the tax is now graded in steps of 100 c.c. instead of 1 h.p. will make for the same multiplicity of models. That is the position, and we have got to be able to fight our way through it. There is only one way by which the designer can be given a free hand to design for the markets of the world and by which the flexibility of design can be obtained which is necessary to meet all the competitive conditions of overseas markets. That is to scrap all mechanical factors from the basis of taxation, and to base motor vehicle taxation upon a uniform registration fee, plus a tax upon the fuel which the vehicle uses.

It is significant that the greatest protagonist of the cubic capacity tax, Sir Miles Thomas, the Vice-Chairman of the Nuffield Organization, upon his return from a recent visit to America has declared himself in favour of a tax upon petrol. Several of our leading manufacturers, after most educative visits to the United States, are now of the same opinion. There is to-day an overwhelming body of opinion in the motor industry in support of the system I have suggested. In point of fact, it would not be an exaggeration to say that within the motor industry there is complete unanimity that unless we do change the present system of motor vehicle taxation our chances of competing with America in the markets of the world have practically disappeared. I am in no mood to recriminate. I accept this conversion to the faith rather in the spirit that there is more joy in Heaven over one sinner that repenteth than over the ninety and nine just persons who to-day stand unrepentant and unashamed of the fact that they have fought for over twenty-five years to have this restriction taken away from one of our greatest British industries.

It is no part of my case this afternoon to argue for a reduction in the total burden of vehicle taxation. Of course it is too high and must at some time be reduced. You cannot go on penalizing an industry to the tune of £90,000,000 per annum, which represented in 1938 9.4 of the total taxation revenue of the country. Of course it will have to be reduced, but I refuse to advance any case for the reduction of that total burden at the present moment. I am going to say this quite bluntly. A diminution in the total burden of taxation will never influence the design of motor vehicles while the basis upon which that taxation is imposed is in itself restrictive of that designer. My advice to the British motor industry is to concentrate more of its efforts upon a reduction of its production and distribution costs, and to spend less time in agitating for a reduction in that proportion of the total price which the buyer has to pay which is represented by taxation. All I have said in relation to motor cars has equal force when applied to commercial vehicles. As I have said in your Lordships' House on a previous occasion, while goods-carrying vehicles are taxed upon the basis of their unladen weight—which is in itself a mechanical formula—the first consideration of the designer must be to get his vehicle within a specific weight class and not, as it should be, the suitability of the vehicle to carry loads under any and every condition in any country of the world.

May I attempt to answer some of the questions which may be posing themselves in the minds of various noble Lords? What would be the effect of the system of taxation which I have suggested upon the home user of transport? Would he pay more or would he pay less? The right honourable gentleman, the Chancellor of the Exchequer, has laid it down that any new system of motor vehicle taxation must yield to the Exchequer exactly the same amount as is yielded by the system which it supersedes. That means that, over all, the motor vehicle user would pay no more. If it is thought that the various sections of road users, the motor cars, the goods carrying vehicles and the passenger carrying vehicles, should contribute in future the same proportion as they have done in the past, then it only means that the registration fee in every section would be varied, while the price of petrol, including the tax, would remain constant.

For instance, it has been suggested that on motor cars a uniform registration fee of £5, with an increased petrol tax of 3d. or perhaps 4d., would yield from motor cars the same amount in the future as has been yielded in the past. I have not the figures to prove or disprove that, but, after all, it is only a matter of arithmetic. It means that the goods-carrying vehicle and the passenger-carrying vehicle would have a slightly higher registration fee, whereas the motor cycle and the small three-wheeler would have a registration fee of less than The focal point, however, is that no one section of road users would pay more. Very likely in various classes some would pay more and some would pay less. But they do to-day. The man who does the large mileage pays more in total tax than the man who does a small mileage. And is that not fair? Is that not by far the best way to tax a vehicle user—on a basis of pay as you go? After all, the user who does a long and heavy mileage has that mileage over which to spread the capital cost, which is a very great consideration.

Put everything into the scale against the system I have suggested; put everything real or imaginary in one side of the scale, and then put in the other side of the scale our dire and desperate need for exports. What is the position to-day? The British motor industry has been operating in a transport-starved world and has enjoyed a great sellers' market, the like of which the world has never seen before. In 1946 we exported from this country 87,000 motor cars and 48,000 commercial vehicles, to a total value of £50,000,000. But that is coming to an end, American production is getting under way. At the present moment exports of motor cars from America are limited to 6 per cent. of total production, and the limit on the export of commercial vehicles from America is 14 per cent. of total production. But at those percentages they are exceeding our totals in world markets to-day. What is going to happen when American competition is in full spate? What right have we to expect that we are going to succeed in the export markets of 1948 with products exactly similar to those which proved so unacceptable to those markets in 1938?

With that background, how can we expect to meet this American competition? The question intrudes itself: can we as a country compete with America? I unhesitatingly say, "Yes we can." We have in this country the finest designers, the finest technicians and the finest production engineers in the world. Was that not proved during the war when our designers and production engineers did not have a taxation formula to guide their hand? They produced some of the finest internal combustion engines the world has ever seen. Why? Because they had a free hand, unrestricted, to do it. Is there any noble Lord here who will deny that the workmen manning our factories in the automobile industry are not every bit as good as those in America?

I would beg you not to be misled by two fallacious arguments. The first is that in order to compete with America in the markets of the world we have to build 3o h.p. juggernauts. Nothing is further from the truth. Volume-produced American motor cars in the future will be somewhere in the region of 18 to 20 h.p., and we in this country can build a 16 h.p. motor car which is a typically British production and not a slavish copy of the American. If we rationalize this industry, rationalize its production methods and have a taxation system which encourages rationalization, we can produce and compete equally with America in the markets of the world. The other fallacy is that owing to the great home American market we can never compete with America on price. When we have battled and fought and won the class-distinction fight in this country, when we have increased the usage of motor cars in this country by five times what it is to-daywhen we have done that, we shall only have as many motor cars per head of population as America had ten years ago. When we have concentrated on standardization for the home and world markets as the same we can obtain a volume where all the advantages of mass production are secured. With my knowledge of the motor industry' I have every faith that we have, in the motor industry, producers who are straining at the leash and anxious to go out into these export markets and fight, if they are given a chance.

About three weeks ago during the debate in your Lordships' House on the Coal Crisis, the like of which this country has never before known, charges were made that it should have been foreseen. It was stated that the country had been warned and that the country had not heeded these warnings. Before the end of 1948 this country is going to run into a crisis that to-day perhaps is to some of us incomprehensible—an economic crisis on the balance of payments. What are we going to do? How are we going to increase our exports so as to minimize that crisis to the greatest possible extent? How are we, in 1947, to increase exports by 140 per cent. and in 1948 by 175 per cent? Is there any noble Lord here this afternoon who would care to suggest that coal will contribute to that total of exports? Is there any noble Lord who would suggest that cotton will play any major part? Is any noble Lord willing to risk the hazard that textiles will contribute? Where shall we find these exports, except in our manufacturing and engineering industries, in which the motor industry plays such a big part?

May I just quote from the Economic Survey for 1947 (page 5, paragraph 9)? Above all our national existence depends upon imports, which means that the goods we export in return must compete with the rest of the world in price, quality and design, and that our industry must adapt itself rapidly to changes in world markets. It is almost incomprehensible that the same hand that wrote that paragraph can still decree that one of our great exporting industries will be prohibited and prevented from doing any one of those three things. May I make another quotation, from the Economic Survey (page 18, paragraph 73)?

"Our exports of steel and cotton textiles will not expand further this year."—

I would call that a masterly under-statement. Special reliance must therefore be placed upon a further substantial growth of engineering, vehicle, chemical and miscellaneous exports. How can we expect not only a growth in vehicle exports but even to maintain the level we have to-day in the light of the facts that I have placed before your Lordships' House?

I claim that it is a national emergency that we are faced with to-day. I claim that it is in the national interest that the motor industry shall be given an opportunity of playing its part. We are being asked to-day: What can we do to facilitate expansion of production in this country? Let us, by unleashing all their inherent skill and genius, give our engineers a chance. I do not expect the noble Lord who is to reply on behalf of His Majesty's Government to stand up and say he has been so impressed that of course he accepts this Motion. I appreciate that perhaps we shall have to wait for one month to see the result of the debate in your Lordships' House this afternoon. All I hope is that the noble Lord who is to reply will undertake to see that this matter will be reviewed in the light in which I have been privileged to place it before your Lordships' House, and that it will receive the Government's very serious consideration. I beg to move for Papers.

3.9 p.m.

LORD BALFOUR or INCHRYE

My Lords, I am quite sure the whole House is grateful to the noble Lord for the Motion he has put down, and for the knowledgeable and expert survey of the present position and the history of the motor car industry to which we have listened this afternoon. I was particularly interested in his final remarks, when he touched upon the Economic Survey which we are very shortly to debate in your Lordships' House. No doubt those who speak for His Majesty's Government on that occasion will be able to answer the questions which the noble Lord propounded as to the amazing ability of the hand that wrote certain paragraphs and the apparent inaction that has followed them as regards the policy of the Government. I think this is a welcome and timely debate. It is welcome because it gives us an opportunity of reviewing changes, which I believe noble Lords on all sides of the House feel are overdue, as regards this industry which is of such importance for Great Britain. If, as a result of our discussions, a message of considered and informed opinion can go from your Lordships' House to the Government that the time for change is now, the debate will indeed have been timely as well as welcome.

As the noble Lord who introduced this Motion said, an effect of the present system of taxation is that we have developed, very broadly, a peculiarly British type of car behind the protective walls of horse power taxation and duties directed against the import of foreign cars. But even as regards the home market, I do not think we have any reason to congratulate ourselves on our achievement as a nation, although we have had this protective policy in the past. With taxation in this country approximately seven times as high (assuming the motorist does an average of 7,000 to 10,000 miles a year) as in the United States, we have about one car to every twenty-four persons, while the Americans have one car to every five. Therefore, apart from questions relating to the overseas motorist, any change in the system which would enable the home motorist to avoid the payment of the heavy capital sum which now has to be paid out each year under the horse power tax, would be welcome. If the petrol tax with a small registration fee were introduced, it would allow many people who have an income spread over the year sufficient to enable them to be motorists, but have not available the sum necessary for the quarterly tax, to embark on motoring—which they cannot do at the present time.

As regards overseas questions, the present taxation, as the noble Lord has said, has forced our makers to stand and watch overseas rnarkets—particularly in the British Empire—captured by United States manufacturers. British makers are often taken to task for their so-called prewar lack of enterprise in face of competition. For my part, I do not think that we can blame the manufacturers in this country, for there has been precious little encouragement for them to go out for the export trade in view of the handicap of taxation in the form which has hitherto ruled. It is a truism that a healthy export trade can be built up only on the foundations of healthy and prosperous home industries. The noble Lord said we need not slavishly copy the American types; that what we needed to produce for the export trade were models of about 12 h.p. and 16 h.p. to 18 h.p. I had the privilege of being, for some time, Resident Minister in West Africa, and in such places as the Gold Coast and Nigeria it was really pathetic to see business men and Government servants who all wished, in their hearts, to be able to buy and use British cars, being forced to buy from the Americans. There were three reasons for this. The first was that the American car usually gave them better performance and was more suitable for the rough country; the second was that the American car was cheaper, and the third—probably as important as either of the other two reasons—was that the American car had behind it a local service for spares and maintenance such as British manufacturers were not providing.

I believe that if we do change the basis of taxation and switch over to the petrol tax, with a registration fee, our makers will then be able to go out for those overseas markets in a way that has not been possible in the past. I talked to one big manufacturer recently about the particular markets in West Africa, of which I had knowledge, and what was said applies also, I believe, to markets in other parts of the Empire. He said that he and most other manufacturers in this country would be perfectly willing to engage in a long-term project to capture those markets if they received the necessary encouragement from the British Government. He visualized three stages in the campaign to capture those markets. The first would be to produce the right car and, equally, to prove to the potential user, by demonstration in his own country, that it was as good as any other article produced and offered at a competitive price. The second stage would be the laying down of a spares and services organization which would be comparable in all ways with those of the American manufacturers. Only then would he embark on the third stage, which would be the effort to sell cars.

The first and the second stages would cost a great deal of money. It would, in fact, mean making a very large capital investment upon which there would be no return until a large number of cars had been sold over a considerable period of time. If the manufacturer did not sell those cars, his investment as regards his demonstrations and the laying down of a sales and service organization would be lost. But such was that man's confidence that he was perfectly willing, if the Government gave him encouragement, to go forward on that basis. If our manufacturers would tackle the Empire markets on the lines that manufacturer described (I believe there is no reason to think they would not) I am confident that, given Government encouragement, there would be splendid opportunities ahead for the motor-car industry, of which they would not be unwilling or slow to take advantage.

From the revenue aspect, we feel that the present method of taxation is wrong in amount and also in the method of extraction. The present level of motor car taxation seems to be a relic of the type of mind which regards possession of a motor car as a luxury, as a social convenience, whereas in fact, as we all know, the motor car to-day is an essential part of community life and of the transport system of the country. It is the normal means of communication for citizens, commercially and privately. One of the few matters upon which I disagreed with the noble Lord who has moved this Motion was his remark about the abolition of class distinction being a necessary corollary to the extended use of motor cars in this country. If he reviews those words at his leisure I do not think that he will really feel inclined to say that the possession of an Austin Seven is the hall-mark of being in a particular social class in this country.

LORD LUCAS OF CHILWORTH

It is, to the unfortunate individual who has not got one.

LORD BALFOUR OF INCHRYE

Oh, yes, certainly, I agree. But many people have not got a motor car, not because they are not able to afford one but for some other reason—perhaps because they do not wish to have one. There are better yardsticks to apply if you wish to make class divisions. Personally, my wish is to avoid all class divisions so far as possible; I would rather see complete unity. But, as I say, I think there are better yardsticks, if you must differentiate, than the mere possession of a motor car. As I was saying, I regard the present level of taxation as a relic of the type of mind that looks upon the motor car as a luxury. The noble Lord said that he was not, at this stage, asking for any reduction in the level of taxation because the Chancellor could not afford to sacrifice revenue at the present time. I agree with the noble Lord; at present it would be wrong to spoil the case for a changed method of taxation by pressing for a reduction in the amount the Chancellor is going to receive.

Nevertheless, while conceding that point, do not let us get away from the position which many of us take up, that it is wrong to maintain motor car taxation at the present level. If we concede that we do not ask for any reduction at the present time, let it be on the basis, first, that the Government are willing to consider favourably the reduction of motor car taxation as a high-priority reduction when we start to talk about reductions in taxation. That is an important point to make to the Government if one is, at the same time, conceding that one is not pressing for any immediate reduction. The second proviso which we make, since we are riot asking for any reduction, is that the extraction of £90,000,000 from the motorist; each year should be made according to a system suitable to the needs of the industry, and one which will give security to the makers for their new planning, coupled, at the same time, with the flexibility which is necessary to meet changing world industrial conditions.

The present horse power tax does not do any of these things. It certainly does not give flexibility. At the present time the Chancellor, in a few sentences in his Budget, can alter the rates of duty on scent, on tobacco, or on horse power. If he does that with scent and tobacco, the only effect is a difference in consumer price,, either up or down according to whether he raises or lowers the duties. But if he does that with the horse power tax the effect is enormous. It is very different to say that the horse power tax will be increased from 25s. to 3os. from saying that the tobacco or scent duty will be increased. Its effect is considerably more far-reaching than merely the increase or the reduction of the amount received. Our exports have to depend upon the basis of a healthy home industry, and if the horse power tax is suddenly altered, then a particular section of the home market for the manufacturer is probably killed, or perhaps a new section of the home market is opened up. At any rate, the whole basis of design and planning for the manufacturer is altered and must inevitably affect not only the home but also the export market. The maker planning for five years ahead to capture the export markets has his plans knocked on the head right away, and he faces an enormous loss of opportunity and, undoubtedly, a very heavy financial loss.

We say that no risk should be taken with the biggest single engineering industry in the United Kingdom. Surely an industry which employs approximately 600,000 men directly and many hundreds of thousands of men indirectly should not be at the mercy of a stroke of the Chancellor's pen when he is altering taxation. This affects agrictilture (the bide of the cow makes upholstery); it affects forestry (the wood that goes into the manufacture of a car), and it has an effect right through our industrial life. Rather should the Chancellor be given the freedom he requires to alter up or down the revenue which is obtained from motorists, but let it be according to a system which gives the security of design which the manufacturers of this country must have if we are to succeed in the future. Conversely, if no alterations arc made by the Chancellor of the Exchequer in the horse power tax in his annual Budget, our makers are confined rigidly to making those types of motor car which are possible with horse power taxation in its present form and at its present level. They have to adapt their designs to the horse power tax that is ruling at any one particular time, and hope that there will riot be a change in the future.

We cannot allow our motor car industry to be a victim in. the sense of the words of that popular song, "Don't fence me in." At the present time the motor car industry is fenced in by the system of horse power taxation. A tax on petrol, with a registration fee, does allow the Chancellor the power to vary taxation without affecting the plans of the makers. It gives the Chancellor his revenue, it gives security to the makers for planning, and it gives freedom, at the same time, for flexibility in designs to meet changing conditions. We talk about American competition, but France is going to compete with us in the medium-priced car in the years to come, and Italy is going to compete with us in the small car market. We cannot afford to be beaten in the medium size car, the big car, or the small car markets; we must be prepared to win in them all. It is customary, I believe, at the beginning of a speech to declare one's interest in the subject. The noble Lord, Lord Lucas, did so at the beginning of his speech. I would like to declare my interest which, I believe, is common with that of noble Lords on all sides of the House. My interest is to see that a great British industry is given the maximum chance to play its full part in the most critical time in our economic history. If the Motion moved by the noble Lord is accepted by the Government, when the Chancellor comes to introduce his Budget we shall be giving that great industry, which has achieved much in the past, an opportunity to play its part in the future.

3.29 p.m.

THE MARQUESS OF WILLINGDON

My Lords, I think the case for a revision of this tax has been so ably put by the noble Lord, Lord Lucas, and the noble Lord, Lord Balfour of Inchrye, that there is little left for me to say. As a motor manufacturer deeply interested in the export trade I add my plea to theirs. I think some of your Lordships may have been misled by a letter in The Times of Saturday which stated that the Society of Motor Manufacturers and Traders, representing the motor industry, had not declared themselves on this point. This was contradicted in this morning's issue of The Times in a letter from the Society, in which it is definitely stated that they join with the representatives of the users—the A.A., the R.A.C., and the Royal Association of Scotland—in supporting this plea. It has been said that the motor manufacturers will never agree, but we have heard to-day that they do agree. The great pioneers in the industry have visited America and have come to a unanimous decision, and they have had the courage and strength of mind to say to His Majesty's Government, "We are now of one opinion."

I think we must remember that these gentlemen, three of whom are members of your Lordships' House, were the pioneers in this great industry. It is not an old industry. The original pioneers are go-ahead men, and it is difficult to get that type of man to agree. But here we have the final proof that they are agreed on this particular point. I hope that very shortly as many members of your Lordships' House as possible will see what we have to compete with in the American market. There are a few of these American cars in England at the present time. I only wish I could show your Lordships outside an example of the £500 American motor car. It would show you what we are up against when the sellers' market comes to an end, as it is very definitely going to do.

Another point which I beg to bring to your Lordships' notice is that a decision, and a quick one, is most advisable. In the manufacture of new types of models it is two or three years from the time the design is finished before the jigs and tools are ready. The industry cannot swing over to production overnight. It is a very urgent problem. The figures of the noble Lord, Lord Balfour of Inchrye, as to the difference between American taxation and British taxation raise a point that I wished to make. I thought we were paying over seven times as much as the American user. Therefore, though I agree that our case to-day (which I hope will be put forward to His Majesty's Government) will not be biased, as the noble Lord, Lord Lucas, said, by asking for a reduction of taxation, nevertheless I trust that if this proposal for a basic tax of £5 is granted to us, it will be a £5 which can be reduced in the future as the motor car industry expands and more motor cars are sold. I further hope that there will be no form of differentiation between motor cars of different horse power. Although the car of 18 h.p. and thereabouts is obviously the car to manufacture at the moment, we must not lose the 27 h.p. car market. I am sure that there is still a large possibility there, and we have some famous manufacturers' names outstanding in that particular class.

Finally, may I talk about rationalization? From what I have seen of this business, especially since I have been home, I think the industry can safely be left to rationalize itself. Certain manufacturers have a large number of models, but if you go into the facts and the engineering details you will find that in a range of probably fifteen or twenty-five cars there may be only three to four engines and only three or four chassis frames. If you will give this industry a clear-cut taxation policy and a simple one, if you will give us the raw materials. I can assure you that we will get on with the job and do our best to increase the export trade.

3.35 p.m.

LORD STRABOLGI

My Lords, I thought that my noble friend Lord Lucas made an unanswerable case and, if that is possible, it was reinforced by the two speeches which we have heard from the Conservative and Liberal Peers who have addressed your Lordships. Of course, the case is unanswerable. I understand that my noble friend Lord Nathan is to be good enough to reply. The answer that we shall get from him will be that, of course, he cannot anticipate the Budget. But, as the noble Lord, Lord Lucas, said, he is a man of great influence, possessed of great persuasive powers, and I hope he will let it be known in the right quarter at the end of this debate that, as regards the House of Lords, we are absolutely unanimous in supporting the plea put forward by my noble friend Lord Lucas.

May I touch upon the snags? What will be the opposition to this suggestion? It will come from the users of long-distance commercial vehicles and the omnibus companies, including, of course, the municipalities who operate long-distance passenger-carrying vehicles. They will object, as they have always objected—and very naturally—to a special tax on petrol in place of the present horse-power tax on motor cars, and they will be supported, very naturally, by the manufacturers of commercial vehicles, who will want to please their customers who are the users of buses and long-haul commercial vehicles. How can this difficulty be got over? It may be all right for an additional threepenny or, as my noble friend said, even a fourpenny tax on petrol. It will certainly hit the road hauliers.

How car one get over that? The first suggestion that would be made, when this matter was being considered, is: "Well, have a differential tax; have the petrol used on omnibuses and long-distance heavy commercial vehicles taxed at a cheaper rate." The answer to that is that you will get a lot of thievery, "black market" business, and so on. It will be difficult to prevent private motorists buying their petrol from the same sources as the long-distance vehicles at the cheaper rate. But that point can be met (and I would particularly draw the attention of my noble friend Lord Nathan to this when he is trying to persuade the Chancellor of the Exchequer in the direction we want) by having separate filling stations—sealed filling stations for the use of commercial vehicles only. There would be no great difficulty about that. After all, in the recent war, we had a great many filling stations up and down the country reserved for military vehicles, as we all knew to our cost when we drove in hopefully to get petrol in some out-of-the-way barren "desert." If that could be done in the war, with what were really commercial stations taken over by the Army or the Air Force, as the case may be, it can be done also to-day. There could be certain stations for the use of commercial vehicles only with the cheaper taxed petrol. That is a suggestion which I believe has been very carefully examined by people in a far better position to know the whole intricacies of the trade than. I am. I am told it is perfectly feasible and it would meet one objection.

LORD BALFOUR or INCHRYE

May I ask a question of the noble Lord with regard to his very interesting suggestion? If there were separate filling stations, how would you get over the difficulty that perhaps there might be a garage of: 100 cars, fifty commercial and fifty private, all the cars garaged together? The "black market" would then exist by just transferring petrol from one tank to another.

LORD STRABOLGI

You could forbid that sort of garage. It is perfectly easy. There are not many like that. I do not know of one. It a new one to me. I have always found that garages catering for commercial vehicles deal only with commercial vehicles. I am not talking of places where vehicles are put up for the night; I ant talking of filling stations on the roads, where cheating or stealing might take place unless some such suggestion as that which I put before your Lordships was carried out.

LORD LLOYD

Will the noble Lord forgive me for one minor interruption?

LORD STRABOLGI

Yes.

LORD LLOYD

It is merely that I am very interested in the point which the noble Lord has made. If His Majesty's Government are shortly to take over practically all the long-distance road hauliers, is it not really a matter for persuading His Majesty's Government upon rather than the road hauliers?

LORD STRABOLGI

I am much obliged to the noble Lord. Unfortunately, it does not lie with His Majesty's Government. My noble friend Lord Nathan would never be mixed up in any "black market" deal, still less my right honourable friend the Minister of Transport, Mr. Barnes. Perhaps I should say that neither of them would be mixed up in such a business. I do not differentiate. Neither of them would be guilty. But during the war there were, unfortunately, a number of dishonest people in the Army and Air Force—though not in the Navy! They used to make away with Government petrol, and the same thing would happen when the Government in due course take over long-distance motor transport companies. But I am much obliged to my noble friend for bringing that point up. It is at a lower level, I am sorry to say—or perhaps glad to say—that the thievery and "black market" business takes place. I do not think it is impossible to get over it if we really want to get over it. But we can satisfy the very important heavy-vehicle manufacturing industry, which can and does play a large and important part in the export trade, if we set about it in the right way.

There is only one other point I want to make. When (as I hope) my noble friend Lord Lucas and those who agree with him, including myself, have their way in this business, I hope that they will then tackle the question of the unsuitability of our roads to carry the increased motor traffic which they confidently expect to find in this country. When I hear the noble Lord, Lord Balfour of Inchrye, talking to-day of an increase of five times in the number of vehicles in this country to bring us up to the American level, I am frightened.

LORD BALFOUR OF INCHRYE

So should I be.

LORD STRABOLGI

Particularly when we consider the position as it is in big cities, especially this Metropolis. I would ask my noble friend Lord Lucas who spoke with such ability on this occasion to tackle that question, Unlesswe do something effective to clear these bottlenecks it will become wholly impossible. Talking about America and the five times as many motor cars there as compared with this country, I may say that I was recently in Los Angeles. In that city there is no other means of transport—no buses and no trams, or very few, and no underground railway. You must have a motor car, or you walk. From one end of that sprawling city to the other is twenty miles, and every one in that huge city either has a motor car or has the use of one. There is a city spread all over the place, and they have wonderful roads—overhead roads, underground roads, and roads with no artificial crossings at all. They can accommodate the traffic. But if we try to reach that scale of motoring in this country we shall run into the most terrible congestion. That does not really affect the present argument, and I mention it only in a friendly way.

I notice that there are complaints about the high price of British cars abroad, compared with those of the American models. I do not know whether this will be borne out by the noble Marquess, Lord Willingdon, but I am told that the present-day American motor cars are not of such good quality as the pre-war models. I heard that from American motor users themselves, and I should think it is true. No doubt, however, they will get over those defects. How are we to get the British motor car on a price level with the American motor car? I think we have to recognize that it is really a matter of reducing the taxation on the industry in the future, as the noble Lord, Lord Lucas, hinted. Even if we do not press for it now, with the existing great sellers' market, it must be borne in mind for the future.,

The noble Lord, Lord Balfour of Inchrye, spoke of French and Italian competition. He did not mention another country where the competition is already serious, particularly in the field of a very efficient light car; that is, Czechoslovakia. When I was recently in South Africa 300 Skoda cars—excellent models, much to be compared with our own light models—were sold before they were shipped. So we have a good deal of competition to face, apart from the competition of the United States. I hope this debate will have the results that all your Lordships, including those on the Government Bench, desire.

3.43 p.m.

LORD TEYNHAM

My Lords, I would like to support the Motion moved by the noble Lord, Lord Lucas of Chilworth. He has very fully covered all the points in favour of the new form of taxation, but there are one or two matters which I should like to emphasize from this side of the House. There is no doubt that under the present system of motor taxation we can never hope to cornpete successfully in the foreign markets of the world while our manufacturers have to labour under the very serious handicap of the present method of taxation, which limits the design of an efficient internal combustion engine. It is true, of course, that a new form of tax, known as the cubic capacity tax, was proposed recently, with a view to assisting the design of motor car engines, but it really can have no effect at all in that direction. All that it will do is perhaps slightly to improve the efficiency of the small horse power car. It is common knowledge that if we are to be successful in foreign markets we must produce a medium horse power car to compete with American production, and, as the noble Lord, Lord Lucas, has said, that medium horse power car need not be more than 18 h.p. to 20 h.p. It must, however, be produced cheaply, and that means mass production. We cannot have mass production and at the same time produce a large number of different models of varying horse power. That was pointed out by the noble Marquess, Lord Willingdon.

It is now generally agreed among all manufacturers, and the organizations which support and look after private car interests are now in general agreement, that it is uneconomic to produce a small car for home use and a large one for overseas. I do not think that the new tax proposed would prevent the manufacturers from producing, say, a small 8 h.p. car, but it would mean that such a small car would have to stand on its merits and not be the result of a tax. That, I think, is important. It may even be right to consider tank production in this connexion, because I feel that our tank production suffered in some way from the fact that between the war years many of our best designers of internal combustion engines were concentrating on the design of the small engine rather than of the powerful type. The whole question of a change in taxation is, of course, vital to our exports, and any objections there may be against it must surely be weighed against the increased sales which we shall be able to obtain in the foreign markets.

Within the next eighteen months or, two years we shall have to face increasing competition from America, which will become a flood when the American home market has been satisfied. Unless we take steps now to readjust taxation, and the right car at the right price is produced, we shall never be able to compete at all. It may be argued that it would be unfair for the owner of a Rolls-Royce, for instance, to pay the same registration fees as the owner of an Austin-Seven. But surely it is the mileage and petrol consumption which really count, and the owner of a large car would, by way of increased petrol tax, pay his rightful proportion, even if the mileage were the same. I very much welcome the proposed new form of taxation, which I understand will produce the same amount of revenue for the Chancellor of the Exchequer, and will at the same time allow this country to compete in foreign markets. The proposal will, I think, be more economic, fairer, and more flexible, and will not disturb the scientific design of an efficient engine. I hope that the noble Lord who is to reply for the Government will be able to give your Lordships some indication that the Government will give this matter their earnest attention.

3.48 p.m.

LORD WALERAN

My Lords, I, too, wish to support my noble friend, Lord Lucas of Chilworth, in his Motion. As a member of your Lordships' House who has driven motor cars and trucks in countries ranging from China to Mexico, Estonia and New Zealand, I heartily endorse the fact that our small motor cars are no good overseas, except in towns where the roads are smooth. The moment they get into sand, or in the bush, they will not pull their weight if they have a load. But I want to go a little further than that to-day and to bring to your Lordships' notice another restrictive practice which loads the dice in favour of small motor cars; that is the question of insurance. When you tax a motor car Von have to have compulsory insurance—third party insurance within the meaning of the Act. If your Lordships would look at insurance proposal forms you will notice that the insurance rate goes up more rapidly on horse-power than it does on value. It is quite remarkable.

I would like to give your Lordships four sets of figures from a post-war proposal form of one of the bigger companies. A 10 h.p. motor car at £200 pays third party insurance of only los. A 20 h.p. motor car pays third party insurance of 7s. 6d. Whether you are run over by a io h.p. car or a 20 h.p. car, you still get the same amount of compensation, and therefore there is no earthly reason why the higher horse-power motor car of the same value should pay more. In fact, I think that most of your Lordships will agree that the higher horsepower motor car is very much safer. One sees small motor cars trying to pass a truck or lorry going up a long hill, and they take quite a time to get by. The high horse-power motor car can slow down, pull in behind, and still quite easily overtake, and the time the two vehicles are alongside each other is shortened.

Take now full comprehensive cover. A 10 h.p. motor car of £200 value pays £11 10s. for full comprehensive cover. A motor car of the same horse power but of double the value, £400, pays £12 2s. 6d. which is an increase of 12s. 6d. A 20 h.p. motor car of £200 value pays £15 15s. It is of the same value as the ro h.p. car but double the horse power, and therefore it has to pay an extra £4 5s. I suggest that if this new form of registration fee and petrol tax is eventually agreed to we must also devise a system of insurance which will not operate adversely on the motor car of higher horse power. This is another restriction on the designer. We should do the two things at the same time, and not take two bites at the cherry. I talked about this to some insurance men before the war, and one of them said he saw no reason why there should not be a flat rate for third party insurance within the meaning of the Act, and a sliding scale for comprehensive cover based on the spare part value and repair value. That is all I want to say. I would ask my noble friend Lord Nathan if he can give me an assurance that this point will be looked into at the same time, because if we agree that a horse power tax is a bad thing—and I am sure all your Lordships do that— then I think we must agree that any other similar restriction on our designers is equally undesirable.

3.53 p.m.

THE DUKE OF RICHMOND AND GORDON

My Lords, I do not propose to occupy much of your Lordships' time, especially after listening to the speeches made on this Motion so admirably introduced iby my noble friend Lord Lucas, with whom I am in almost entire agreement, apart from his curious reference to class distinction. I cannot see what on earth class distinction has to do with a motor car or, for that matter, with a refrigerator or any other commodity of a personal character, even down to an ox, an ass or anything that anybody else may covet. I should like to say how much I appreciated the speech of the noble Lord, Lord Lucas, and the very comprehensive survey which he made.

I am very interested in this matter because I have been associated with the motor industry for quite a long time—in fact until a few years ago. Casting my mind back, I have no doubt that the question of the horse power tax used very often to crop up in conversation. It created within one a sort of sense of despair; it was talked of very much in the same way as the weather, English cooking or any of our traditional national shortcomings. It somehow seemed that nobody did much about it; we used to shrug our shoulders and go on, like fools, suffering it sadly. Your Lordships have heard this afternoon of the extent to which it has had the effect of influencing design, and I will not go over that ground again. I am firmly convinced, however, that it is beyond all doubt that the type of car created by the British designer which eventually found its way overseas was not so suited to the strenuous conditions prevailing in the wide open spaces as was its American competitor.

When I was in conversation with my noble friend Lord Lucas some time ago he talked most interestingly on this question of the home market and on the excuse—which I have so often heard in the past—that we can never pretend to compete with the Americans because they have on their doorsteps a vast home market which enables them at once to tool up to make thousands of motor cars, and that we shall never be able to do that, no matter what we do. My noble friend made an excellent analogy with the Swiss watch-making industry, which I was rather sorry he did not mention this afternoon. With his permission, I will repeat it. He said he had never heard it argued that the Swiss watch-making industry was backed up by an enormous home market, and no one can doubt the importance of the export side of that industry. I think that is a matter worth bearing in mind when this particular aspect of the case is considered. For fear that it should be talked of any more, let us just reverse the situation for a moment and assume that the Americans, through some stroke of legislation or some geographical circumstance, found themselves obliged to make a type of car that was not well suited to the conditions prevailing on any other continent. I say that no matter if their home market were double present size, they would still riot sell cars in places to which they were not suited.

So far I have talked only of horse power, which of course is now very dead. As for the £1 per 100 c.c. tax, for the life of me I cannot see that it makes any difference at all. It is a matter of astonishment io me how it ever came to pass, because seems to be a case of out of the frying pan and, if not quite into the fire, perhaps on to the grill. I cannot pretend to have worked out details of a solution, although I have read and listened much, but I am pretty certain that the solution is simple. There may be objections by some particular categories of road users who would find themselves not quite so well placed as at present, but I think we have to face the situation that it is better to have—shall we say?—a minority grumble than to lose an enormous export market which we must not only maintain but create. Consequently, when the Government experts get down to the working out of the arithmetic of this -scheme—which I earnestly hope they will do forthwith—I trust that no one will be put off by any relatively unimportant matters of that sort.

3.58 p.m.

EARL HOWE

My Lords, as I listened to this debate I could not help wondering whether we were really talking about how to sell motor cars more than about how to tax them, or vice versa. It seemed to me that the matter could have been argued either way. However, perhaps I shall not transgress the bounds of order more than my predecessors if I make a few remarks upon the sale of motor cars which are intended to have a bearing upon the actual subject of the Motion which is before us. This is not the first occasion on which there has been an agitation to get rid of the horse power tax. I remember that many years ago—exactly how many I do not remember—the Automobile Association led a great crusade, either to get the horse power tax done away with or, alternatively, to get it reduced and to have a tax put on the fuel. The result, I think, has rather a moral for us to-day, because it ended up by our getting both. We got the horse power tax and we got the petrol tax, and the rapacious Chancellors of the Exchequer of the past were very loth to give them up again.

To-day, if we can get a tax based upon use, surely that would coincide far more nearly with the policy of His Majesty's Government, because would it not be the principle of fair user and fair share? The fellow who used his motor car most would pay most, and the fellow who used it least—perhaps being by reason of his employment, able to go out only at week-ends, and not able to cover a very large mileage—would pay least. It seems to me that that is no answer to the proposition. Those of us who have watched this question, and taken perhaps a rather detached view of the taxation aspect, have been amused by (shall I call them?) the antics of those who have claimed to speak at various times for the motor car industry. I can remember when the question of a cubic capacity tax was discussed not very long ago, one of the leaders of the British motor car industry jumped into the ring at once and announced that he was in favour of it. I am sure the noble Marquess will know whom I mean. Like the noble Duke who has just spoken, I cannot see anything between the cubic capacity tax and the horse power tax. In my opinion, they are both likely to have the same effect.

LORD STRABOLGI

Would the noble Earl excuse my interrupting him? Is he aware that when certain manufacturers came down on the side of the cubic capacity tax they had been told that a petrol tax was out of the question, and that that was the only alternative to the horse-power tax?

EARL HOWE

I was not aware of that, and I am obliged to the noble Lord for the correction. I merely looked at the facts, and I was not privy to the discussions which may have taken place round the back stairs or behind the scenes. We want to get a tax that is fair and, at the same time, we want to encourage sales of cars in this country. No one would like to see that more than I would, but I share the pessimistic views of the noble Lord, Lord Strabolgi, on the subject. Until the roads of this country keep pace with the production of cars, to my mind it is quite ridiculous even to suggest the sale of more cars. The traffic density on the roads of this country is higher than that of any other country. There are statistics to prove that. The density is 13.7 per mile in this country, as against the equivalent figure for America of something like 7 or 8 per cent. It is more or less that ratio. Something must be done. I know the Government have it in mind to give us some trunk roads, but we shall not really get what we want until we have a road system that will compare with any in the world.

If we are going to encourage the sale of British cars abroad—which we all of us want to do—there are, it seems to me, several other things which must receive attention besides merely having a different form of taxation. One of the first things, I suggest, is that it will not be possible for more than a very few months longer, relatively speaking, to make little tin boxes on four wheels, paint them black, and send them overseas. We have to do something very much more than that. We have to improve the design of the British motor car altogether, and that is an engineering question. One of the first things we have to do is to improve the power-to-weight ratio of the British car, which will result in a performance worthy of it. I could give your Lordships many figures on this point which would weary and bore you, but I am thinking at this moment of a well-known two-litre British car which weighs 26 cwt. I am thinking too of its foreign equivalent, a German car which is now being built in this country, which weighs only 15 cwt. Those figures speak for themselves and require no explanation. At the present moment the British motor car manufacturer appears to be content for the main part—with the exception of new firms—to continue to turn out pre-war designs with very little in the way of improvement in the light of experience gained, the advance of science and all the rest.

The question of service has been referred to, and no one knows the importance of that more than I do. I remember talking to the Prime Minister of one of our Dominions just before the war. He happened to say to me, "I have a British car." I said I was glad to hear it. He said, "Everybody thinks I am mad." I said, "Good Lord! why is everybody taking that extraordinary view?" He said: "If anything goes wrong with my car and I want it put right."—and he told me that various accessories seemed to give him a great deal of trouble—"I have to go 140 miles to get a spart part or get anything done. If I have an American car I have to go only five or ten miles." It was not really a matter of luck, because I happen to know the Dominion he was talking about, and I know it is common talk out there. The service of British cars is simply not adequate. This seems to stray a long way from the Motion, but it really does bear upon it, because all I want to do—as I am sure does the mover of this Motion—is to improve the sales of British cars. Another thing that can be done—and your Lordships will probably smile at it, coming from me—arises on the question of racing. Outside this country motor racing is looked upon very differently from the way it is in this country. It is not understood here at all. Motor racing is looked upon abroad as being a great and a most powerful advertisement for the country from which the successful car comes. Yet in this country, at the present moment, there are no facilities whatever, either for racing or testing racing cars, for testing sports cars or motor cycles, or for carrying out really extended tests on tyres and all the other accessories. It is a very different pair of shoes abroad. Even in Italy, whole series of racing cars are being built. They are doing things the other way round. Having built a successful racing car and proved its performance, they de-tune it and put it into production.

I mention this only in passing, and I do not want to stress the point because I think it is really out of order. There are other things as well. This is a yarn I heard the other day, and I believe I heard it on very good authority. A purchaser bought one of the best known makes of British cars. Something went wrong with the works, so the chauffeur who was driving got out and crawled about underneath to pat things right—it was only a minor defeat. But to his astonishment, he found painted on the underside of the car the words: "Not for export—steel not up to standard." It seams to me that the manufacturers have to get down to things a little more than they are doing by allowing such words as those to be left there.

There is little more that I can add to what I have said. I most cordially support the Motion so ably moved by the noble Lord, Lord Lucas. He mentioned all the points and covered the ground. Do let us have a fair system of taxation. But do not let the Government try, as it were, to "hot stuff" the motor world by giving us both systems. Do not let them saddle us with the fuel tax and some sort of system like existing taxation. Let us have a proper system. The registration fee of £5 and a tax on fuel will be adequate to bring the Chancellor of the Exchequer the return he wants. That is what I feel would be fair, and to the advantage of the motor industry, and I entirely support the noble Lord in what he said.

4.10 p.m.

THE MINISTER OF Civil AVIATION (LOAN NATHAN)

My Lords, I have listened to the whole of this discussion with very great interest. I am sure all your Lordships have appreciated, as I have, the speech with which my noble friend Lord Lucas opened the debate, informed as it was by experience and marked by moderation and persuasiveness of presentation. Indeed, I would apply that description to all the speeches than have been made on this interesting subject this afternoon. My noble friend Lord Strabolgi pointed out to your Lordships that the opinions expressed in the various speeches up to the time he spoke had been unanimous. I have noticed that noble Lords' speeches after him have adopted the same lines, and that they were unanimous in their views.

In a matter such as this, dealing with taxation, you will not expect that I should, in anticipation of the Chancellor of the Exchequer's statement on the Budget, be in a position to make any pronouncement as to policy. I can assure your Lordships, however, that I shall naturally make it my business to bring prominently to the notice of the Chancellor of the Exchequer what has been said to-day in the course of speeches on both sides of your Lordships' House, and the unanimity that has marked those speeches.

LORD LUCAS OF CHILWORTH

My Lords, I am particularly fortunate in having my noble friend Lord Nathan to reply on behalf of His Majesty's Government. would thank the noble Lord for his very charming personal references and I would thank all noble Lords who have joined in this debate for the complimentary remarks they have made. I do not know why the noble Lord who replied should think I was moderate. I must confess that I had in mind what he himself, as Minister responsible for the establishment of civil aviation in this country, would have said if someone had had the temerity to suggest that in future aero-engines should be faxed on a cubic capacity basis, and all his aeroplanes had to provide £90,000,000 by a weight tax as well. I do not think the noble Lord would have been very moderate. The simile is very true. It would have as effectively driven the British aeroplane out of the skies of the world as the British motor car has been driven off the roads of the world.

If I may have your Lordships' indulgence, I would like to deal with one or two points which noble Lords raised, because they are of extreme importance. I agree with the noble Lord, Lord Balfour of Inchrye, that there may be a case for the protection of the home market, but to try and protect the home market by methods which will, equally successfully, cut your throat in the export market is a policy of the worst foolishness imaginable. Taxation, of course, is too heavy, and we are just realizing it to-day, but I would like to deal with the point made by the noble Lord, Lord Strabolgi. I hope that I can go some way towards knocking a nail in the coffin of that hoary-headed fallacy of the congestion of the roads. Our grandmothers said exactly the same thing. At the period of the stage coach it was said: "What are our roads coming to?" When Stephenson invented the "Rocket" exactly the same was said. I expect the noble Lord, Lord Nathan, will in time have to defend congestion of the air. Let us have a sense of proportion in these things.

If you think you are not going to get new roads until the present roads are incapable of carrying traffic, I say that you are suffering under a fallacy. Necessity was always the mother of invention. We will find a way to build roads when our present roads are so overcrowded that they cannot be used. It is the case of demand absolutely making supply. I would point out that although, as my noble friend Lord Howe said, density of traffic in America is nothing to what it is in this country, it is not density of traffic in America, or lack of it, that contributes so much to the freedom from road accidents; it is the fact that all road vehicles in America are approximately of the same size, and travel at the same pace.

EARL HOWE

Do I understand you to say freedom from road accidents in America? Are you aware that there are 46,000 road accidents per annum in America?

LORD LUCAS of CHILWORTH

I am well aware that the accident ratio of America stands sixth or seventh on the list of ratios among traffic users in the world, and those are figures which can be produced. The other point to which I would like to reply was made by the noble Lord, Lord Teynham, and concerns the alteration in tax. I suggested that you would not prevent an 8 h.p. car from being made if it was a commercial proposition for it to be made, but at the present time the 8 h.p. car is in the ascendancy because tax is biased in its favour and loaded against the larger motor car. I thank the noble Duke for reminding the House of the simile I once gave him about the Swiss watch industry. The output of Swiss watches exceeds 20,000,000 a year and no one has ever argued that the reason that Swiss watches are sold in every country in the world is because they have such a huge home market.

The Home market fallacy I would also like to explode. I do not think there is anything further to say, except perhaps in reply to my noble friend Earl Howe who has led such a fast life for so many years. I am not sure we shall ever cure him of the wish to lead a fast life for the remainder of his years. But with due regard to all that he said about the power-to-weight ratio, the basic truth is that, with good organization or with bad organization, never in the history of the British motor industry shall we sell our products in the export markets until we offer the right kind of goods at the right prices. Once again, I thank my noble friend for his kind reply, and I trust that he will have very great success in his dealings with his right honourable friend the Chancellor of the Exchequer. Having said that, I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.