§ Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
§ 3.41 p.m.
§ Mr. Erroll (Altrincham and Sale)
I beg to move, in line 7, to leave out from "oils," to "of," in line 8, and to insert "not being light oils."
The present Resolution removes the duty of 1d. a gallon from fuel, diesel and gas oils, but, as at present worded, it does not specifically include kerosene, and the effect of the Amendment is to bring kerosene within the range of duty-free oil. The steps taken in the Resolution are welcomed on this side of the House as representing a concession to industry, but we are deeply disappointed to find that kerosene has not been included in oils from which the duty is removed. When the duty of 1d. a gallon was originally 824 imposed in 1933, the purpose was to help the coal industry, and kerosene was included I imagine as much as an oversight as for any other reason, because the consumption of kerosene in those days was extraordinarily small. Since 1933, however, the consumption of kerosene has gone up considerably, particularly in the field of agricultural tractors which use tractor vapourising oils, in other words kerosene. In the 14 years since the development of the original tax, the number of tractors engaged has gone up by several hundred thousand and all using kerosene are at present paying a tax of id. a gallon on every gallon they use. Some 95 per cent. of the vapourising oil in this country is used by agricultural tractors, so it is really a tax on agriculture. We all know what a hard winter agriculture has had, and my hon. Friends and I were hoping that the Chancellor would be able to remit this duty for the benefit of the agricultural community this spring. It is a particularly unfair duty, because, as the Resolution stands at present, the tax of 1d. per gallon is removed from diesel oil for diesel fuel tractors. We have the anomalous position that while diesel oil tractors go tax free, vapourising oil fuelled tractors have to pay the tax of 1d. per gallon. On the grounds of logic and consistency alone it seems that the tax should be removed from tractor vapourising oil.
There is a further reason why the tax should be remitted. Tractors using tractor vapourising oil are those used by the small man, whereas the diesel tractors are used on big farms for deep ploughing of large tracts of land. By reducing the duty, it would be a great benefit to the small farmer, the man who is probably more seriously hit than any other member of the farming community. There is another and more unwelcome development regarding the use of oil fuel in the agricultural industry. There has been a considerable increase in Gulf prices in the last few months, which I think will be reflected in the next few months in domestic prices. One way to offset that increase of prices would undoubtedly be if the tax on tractor vapourising oil could be remitted. Rather more than half the kerosene used by this country is employed in driving tractors. The remaining 45 per cent. or so is used in the form known as burning oil for paraffin lamps, paraffin heaters, and paraffin 825 cookers. Kerosene is essentially used for lighting and warming the poor man's home in rural areas. If kerosene used as burning oil could be excluded from the tax, it would be essentially of benefit to the relative poor agricultural worker.
The total quantity involved is not very large. My hon. Friends will probably be elaborating in detail some of the figures. Some 630,000 tons of burning oil are used each year, so that the total quantity is relatively small: On the other hand, the remission of tax would represent a great deal of benefit to the small rural workers' families who have to rely upon paraffin as a means of lighting and heating their homes. Well-to-do people do not require paraffin, and, therefore, would not benefit. It is essentially a help to the poor man in agriculture which is proposed, and in regard to tractor vapourising oil the small farmer with his small light-weight tractor would be benefited. I hope the Chancellor will see his way to accept the Amendment, the cost of which would not be great, but the value of which would be enormous.
§ Mr. Orr-Ewing (Weston-super-Mare)
I beg to second the Amendment.
There are arguments in favour of it, from the purely agricultural aspect and from the domestic aspect. I think it is fair to say that, in 1933, it was openly avowed that the duty on heavy hydrocarbon oils was introduced in order that assistance should, indirectly, be given to the sale of coal. That as a basic reason for reversing the process now, would appear to be perfectly sound. If by reducing the duty now, the demand on coal were to be reduced, I think it would be of very great national assistance. Anyone looking at the matter on that broader ground, would wish that the Chancellor should give way and lessen the demand for a product which we know is bound to be in very short supply. I also advocate the change, from the point of view of the cost to the country.
One hesitates in these days to come forward with any proposal to reduce the national revenue in any form, more particularly as His Majesty's Government, with a vast majority, are burdening us with such heavy expenditure. We have to face up to the need for meeting those demands so long as that majority exists, but I think this case is rather outside the ordinary field of request. To retain a 826 duty which in any shape or form adds to the production costs of agricultural produce, whilst at the same time heavy subsidies exist on food, is not either right, or reasonable, or, if I may say so, sane. It seems to me to be going an extraordinarily long way round to do what is nothing more than taking money out of one trouser pocket and putting it back into the other, after it has passed through many hands, including those of the Chancellor of the Exchequer. There again, we have a fundamental reason for asking the Chancellor to reconsider this tax. To those who are actually engaged in production, it does not appear right to start this money off on this long career, when we are quite overburdened enough with a considerable Civil Service, which has to handle these complicated manipulations. We should simplify that sort of thing as much as we possibly can.
Finally, on the question of burning oil, the oil used for heating, cooking and lighting, in rural districts, it is quite impossible, at present, in spite of the wishes of all those engaged in agriculture and the expressed opinion of all responsible bodies in the agricultural world, including an official committee, which was set up by His Majesty's Government, to improve, under the present Government, the condition of rural housing in the way we should like to see it improved. It is equally impossible to expect that electricity generating stations will be able to carry a heavier load than they are carrying today. We know that they cannot carry the load with which they are burdened at present. It is, therefore, quite impossible that these more remote rural districts, where, in fact, the greater part, of the burning oil is consumed for heating, cooking and lighting, can be served by electricity or gas. In those conditions, as we are dealing with those who are mainly employed, either directly on, or in connection with, the production of foodstuffs, the Chancellor should show that he really appreciates that the worker on the land is entitled to inducements and encouragement just as much as the worker below the soil. We are not asking that the farmer's wife or the farm worker's wife should get nylon stockings or additional supplies of food, or that additional houses should be rushed up at greater speed than they are being rushed up—or not rushed up—in other areas. We are saying that by reducing these duties, to 827 meet a specific case, some inducement would be given to those who have carried on without praise and thanks through some of the toughest days and one of the toughest winters which this country has known for a long time.
§ Mr. Baldwin (Leominster)
I do not wish to repeat the statements which have already been made, but I intervene to say something which is vital, and which cannot be too often repeated. I ask the Chancellor to remember that it is the smaller farmer who uses the light tractor, and also that the women who would be helped by this concession are those who live in the outlying cottages, and who have not got the benefit of electric light. It would be some little gesture to the farming community and would help towards meeting the extra costs which have been put on the industry, by the introduction of double summer time, which has just come into operation. The concession here asked for would help,' to the extent of a few thousand pounds, to meet that extra expense.
§ Mr. Douglas Marshall (Bodmin)
I sincerely trust that the Chancellor will give consideration to this very reasonable Amendment. I am quite sure from what the Chancellor has said, in regard to the losses which the farmers have sustained, that he realises to the full the tragic losses that they have incurred. If, by means of this Amendment, which involves no great sum of money, he can help the farmers, I am sure that all Members of the House would be with him. I wish to bring one point to the Chancellor's notice. He may have thought in introducing his Budget that this particular point had not been given consideration prior to its introduction. A fortnight ago, in the enchanting little village of Lanreath, I was approached on this matter by many constituents of mine. Here is a chance for the Chancellor, by agreeing to this Amendment, to lift a certain amount of tax connected with vaporising oil for tractors, and to relieve, to a certain extent, the expense of people in rural areas who are using paraffin in their homes. I hope that the Chancellor will give sympathetic consideration to this proposal.
§ Mr. Spence (Aberdeen and Kincardine, Central)
I support this Amendment from the Scottish angle. Scotland would probably derive more benefit from the Amend- 828 ment than any other part of the country, because we have in Scotland a larger number of small farmers; we also have, in Scotland, very hilly country to work, which usually means a higher consumption of ploughing fuel. For bah those reasons, the concession contained in this Amendment would be of great benefit to my part of the world. Further, in Scotland, the rural development of electrification is probably less than it is in England. It would be of great benefit to the crofters and to those who live on the land if the tax were taken off paraffin for cooking, lighting and heating. I put in one special plea for something to be done for Scottish agriculture. We have had this curse of double summer time put upon us. It hits us harder than it hits farmers in England. To mitigate its evils, will the Chancellor not give us this small concession?
§ The Financial Secretary to the Treasury (Mr. Glenvil Hall)
Hydrocarbon oils, which are the subject of the discussion this afternoon on this Resolution, are divided into two groups. It is as well that the Committee should remember that in discussing the Amendment. There are light hydrocarbon oils which, in the main, cover petrol, and the heavy hydro-carbon oils, which cover lubricating oil, kerosene, which is the subject of this Amendment, and heavy fuel oils. It is the heavy fuel oils with which my right hon. Friend proposes to deal by means of this Resolution. At the moment the tax on these heavy oils is 1d. per gallon, whereas on the light oils—petrol—the tax is 9d. It is proposed that the tax on the heavy fuel oils shall now disappear, that a further rebate of rd. shall be given, wiping out the Customs duty altogether. It is in accordance with the announcement made by my right hon. Friend in August last year that he intended to do this in his next Budget. He did it—he was quite open about it—in order to assist the coal industry of this country.
The Resolution does not apply to kerosene, and the proposition is that we should include kerosene for two reasons. One is, that it would help the cottager who still, unfortunately, has to burn lamps; and the other is, that it would help the agricultural industry both here and in Scotland. The hon. Member for 829 Altrincham (Mr. Erroll) pointed out that this Resolution puts diesel engine oil in the same category as the heavy oils that, in fact, are being exempted now under this Resolution. The diesel road vehicle engine oil will continue to pay the duty. It is not exempt under this Resolution. In fact, any oil which goes into a road vehicle, whether a heavy oil or petrol, is not under this Resolution exempt. The provision made in the Finance Act, 1935, still applies; and, up to the moment, at any rate, my right hon. Friend does not propose to alter what, at the moment, is the law. If we exempted kerosene there would, undoubtedly, be some pressure for exempting petrol, which is also used in tractors.[HON. MEMBERS No."] At any rate, that argument would be put forward, and if there is a case for exempting kerosene, there is certainly, an equally strong, if not a stronger, case for exempting petrol which is used in agricultural tractors; because in one case the tax is only a penny on the gallon, whereas in the other it amounts to 9d. a gallon.
§ Mr. Orr-Ewing
The right hon. Gentleman is not suggesting to the House that there are petrol-driven agricultural tractors. Petrol is used in starting some of them, but there are no petrol-driven agricultural tractors.
§ Mr. Glenvil Hall
I accept that point, which, I think, is a valid one. It is true that the overwhelming number of tractors used—certainly on heavy land—[HON. MEMBERS: "On farms."]—do work on heavy fuel, that is, diesel oil; but, nevertheless, it is also true—and will, I think, be found to be increasingly so as the years go on—that petrol is used in many of these vehicles certainly in those which do the lighter work on some farms. If we did include kerosene within the terms of this Resolution it would, in our view, at any rate, open the door to the exclusion of petrol used on farms. The cost at the moment of the concession which my right hon. Friend is making in this Resolution is in the neighbourhood of £4,250,000 in a full year. If kerosene were included, and if the Amendment were accepted, it would add another £1,500,000 to the cost. If, in addition, lubricating oil, which would be one of the few things left among heavy oils, were included also, it would make the cost of the concession £2,000,000, or thereabouts, in a full year.
830 May I say this finally? My right hon. Friend is not able to accept this suggestion, but that that does not mean that he is not open to argument when the further stages of this matter are reached. We still have the Finance Bill to deal with. I can give no undertakings or make any promise on behalf of my right hon. Friend, but he is willing—I think I can say this on his behalf—to look at this; and if a case were made out, and if he were impressed by it, he would be willing to see what could be done when we reach the Finance Bill.
§ Captain Crookshank (Gainsborough)
We are very much obliged to the right hon. Gentleman for the assurance he has given, because we are satisfied that there is a case here. It is true that there is such a thing as a petrol-driven tractor today. But the number is minute. It is something which is new.[HON. MEMBERS: "No."] It may develop, but it is not true to say that, broadly speaking, tractors are petrol-driven in this country. They are not. If, therefore, assistance can be given in this way it will be welcome. I feel certain that it would have been given in 1933 had Parliament at that time been able to foresee the vast increase in agricultural mechanisation. I am sure Parliament at that time would have seen to it there was not a duty on what might be called, almost, one of the raw materials of the agricultural industry—one of the motive powers. Tractors in those days were few and far between. Since the war, as the right hon. Gentleman knows very well, there has been a terrific increase in mechanisation. In fact, is is claimed in some places that ours is now the most highly-mechanised of the agricultural industries in Europe. I say that from hearsay; I have not at the moment checked it. But if that possibility had been foreseen all those years ago, it is very likely that this duty would not have been imposed, and we should not have to discuss it today.
I am glad to see that the right hon. Gentleman is so open-minded on that point. I take it that that applies to the kerosene point, too, irrespective of user? It may be—I do not know—that one can make some distinction between the two. We feel that there is also a very valid argument for heating and lighting for the cottager. The kerosene position is very difficult in the countryside. Those of us who sit for agricultural constituencies are 831 very conscious of it each year. We need not however prolong the discussion today, because we have the right hon. Gentleman's assurance, and we know that he will look into it.
§ Mr. Charles Williams (Torquay)
The Chancellor of the Exchequer through the Financial Secretary has given us some assurance. As far as I am concerned, I regret to see the invidious position in which the Financial Secretary is placed. There is one point I would add to what has been said from this side. We have had the agricultural point of view put before us. There is another side, also. The right hon. Gentleman the Chancellor has intimated, through his assistant, that it may be possible to encourage the farming community at a later stage. But there is another aspect which is of some small interest in connection with food production. It is not often used, but this particular oil is also, at times, used in fishing vessels. I give that as one additional argument for our case. It is a matter which I think ought to be considered; and even although it might be only a small one, it would be a contribution to help an industry which is most useful to the country at the present time. I put this suggestion forward in a friendly way.
§ Mr. Erroll
In view of the helpful answer given by the Financial Secretary, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn
§ Question again proposed, "That this House doth agree with the Committee in the said Resolution."
§ Mr. Assheton (City of London)
When the right hon. Gentleman was introducing his Budget he devoted a short passage to this Resolution, and I, for one, was very glad at the way in which he put this case, because it is certainly not a proposal one would normally expect to come from the Chancellor of the Exchequer to this House. He said:It is not a joyful thing, but it is a national necessity, to import more oil to make good the shortage in our own supplies of coal."—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, c. 71.]I was glad to hear him say it was not a joyful thing; that on this occasion there was no song in his heart, no cardiac murmur; that he realised what a serious 832 thing it was for this country to have to take such action. I am sure that no Member of the House, no matter on what side he sits, would disagree with me, that it is a sad thing for Britain that we have to encourage the use of imported oil from overseas, to take the place of the coal of which we have plentiful supplies beneath our own soil. We must all look forward to the day, which I hope is not far off, when the production of coal will be adequate to meet all the demands which we can possibly make upon it and will also provide us once again with large quantities of coal for the export trade, without which we shall fare very ill in this country.
There is one other point which the Committee ought to have in mind in dealing with the question of conversion from coal to oil-burning. It must not be thought that this is an economical proposition in itself. If I might illustrate it by the case of the railways, I would say that the railway companies have been invited—I would almost say commanded— by the Government to convert a certain number of locomotives to oil-burning. This is a very expensive business. Not only is conversion an expensive business itself, not only is the cost of the oil greater than the cost of coal for running the locomotives, but, in addition, expensive installations are required up and down the railway system, comprising tanks to hold the oil. All this is an additional expense in which we are now involved, because we have not got enough coal. I am sure that no hon. Member on this side of the House will wish to vote against this Resolution, but I did wish to express my agreement with the Chancellor when he said that this was not a joyful thing.
§ Mr. Erroll
I would like to say that there is still a certain apprehension among manufacturers and others that, when the coal position is perhaps rather easier, this duty might be reimposed. I know that it would not be fair to ask the Chancellor to make any commitment regarding the future, but I do not think this Resolution should be passed without it being placed on record that a number of manufacturers are deferring their proposals to change over to fuel oil, because of the fear that the duty may be reimposed. There are very considerable possibilities in the change over, but these 833 possibilities will be limited unless the manufacturers can be given a reasonable assurance that the duty will not be reimposed.