HC Deb 15 May 1962 vol 659 cc1156-257
Mr. G. R. Mitchison (Kettering)

I beg to move, in page 2, line 34, to leave out paragraph (c).

The Chairman

I think that it would be convenient also to discuss the Amendments in page 2, line 34, after "oils" insert: (excluding light oils used for purposes other than as fuel)". In page 6, line 47, at end add: (4) The Treasury may by order direct as respects articles of any class or description specified in the order that, subject to the provisions of the order, relief shall be allowed in accordance with the provisions of the Schedule (Relief for industrial use of light oils) in respect of light oils used, or which formed a component of any goods used, as an ingredient or a material, a solvent, extract, preservative or finish in the manufacture or preparation (including dyeing or cleaning) of articles of that class or description. In page 6, line 47, at end add: (5) For the purposes of the customs and excise Acts the expression "light oils" shall exclude oils used for purposes other than as fuel. And the new Schedule (Relief for Industrial use of Light Oils).

Mr. Mitchison

Paragraph (c) relates to hydrocarbon oils, power methylated spirits and petrol substitutes. What the Clause as a whole does is, on the one hand, to translate into permanent terms the increase brought in under one of the regulators authorised by the 1961 Act, and, on the other, to continue the power granted by the regulator so that the right hon. and learned Gentleman the Chancellor gets the increase that he has already made in a permanent form and remains at liberty to add a second increase up to 10 per cent. or, of course, to make a diminution.

I observe that the first increase was brought in almost immediately after the Budget and that it related not only to the hydrocarbon oils, which we are considering today, but to a number of other things. I can divide them roughly in this way. There is a group of things in respect of which the increase made by the regulator is being continued: spirits, beer, wine and British wine and tobacco, the hydrocarbon oils that we are now considering and, I think, also pool betting and television advertisements.

There is another group of things which are subject to an increase under the regulator: sugar, cocoa, coffee, chicory. These are the breakfast table duties which are dealt with in another Clause of the Bill. Then there are one or two omissions: matches and mechanical lighters, which appear to be omitted because they are dealt with under arrangements affecting other countries, and one or two completely unexplained, particularly hops. Why hops have been omitted is a little obscure.

For the moment we are concerned with this one increase. I wish to say a word or two to begin with about the regulator itself. The right hon. and learned Gentleman took the power to have two regulators and the increases were made under one of them. The other has been dropped and I imagine that there must have been a period when the right hon. and learned Gentleman thought over the position and all the rude things that had been said about the payroll tax. I can imagine him humming to himself in the Treasury room. How happy could I be with either, Were t'other dear charmer away! "T'other dear charmer" has been effectively dropped and does not reappear. But the charmer that we are now concerned with, the 10 per cent. increase, as it proved to be, on Customs duties and the like, is apparently to be turned into a respectable wife.

This is a marriage between the Treasury and the increase. The unfortunate thing about it is that, at the same time, he has started another affair with a lady who looks suspiciously like the original charmer, and I cannot commend the right hon. and learned Gentleman's morals in this respect. One at a time would have been enough. If he intended to make these duties permanent one wonders why he introduced them in their original form and now desires to preserve the power to do the same thing again next year. Be that as it may, it is a subject that affects all the increases that we are now considering and I should like to turn particularly to this one.

4.0 p.m.

This is a substantial amount. No one can deny that. We are now in the fortunate position of knowing almost exactly what it is because the White Paper shows us that it amounts in a full year to £38¾ million and in this current year to £37¾ million, mostly in the way of Customs duties and with a comparatively small amount of £1½ million in excise. That is the 10 per cent. increase that we are now considering.

This seems to me to fall into a number of parts. There is, first, the broad division which is raised by some other Amendments between the use for transport, which is obviously by far the most important and biggest use, and the limited industrial use which we have had occasion to discuss on previous Finance Bills.

When we turn to the transport use, which is the one on which I wish to dwell particularly, we have to bear in mind that what we are discussing is not the total abolition of the fuel tax, but the question whether at this moment it is desirable to continue what was put forward as a temporary increase. I take some exception to the habit of putting forward things as temporary and then finding that they become permanent.

But the right hon. and learned Gentleman has respectable precedents. I find from the volume of HANSARD for 1798 that Income Tax was first introduced as a temporary tax and that it was to take the form of charging annually, during a term to be limited, certain rates of tax in view of the war situation, on much the same sort of grounds—in the interest of the national economy as a whole.

The right hon. and learned Gentleman saw fit to introduce this provision, among other measures, last year as a temporary one. Accordingly, what we are now discussing is the temporary increase of 10 per cent. in respect of fuel used, in fact, for transport by way of petrol, petrol substitutes, diesel oil and the like, and used also to a much smaller extent for industrial purposes. We are not discussing the maintenance of the fuel tax as a whole. We are discussing, I repeat, the maintenance of this increase.

In 1959, the right hon. and learned Gentleman's predecessor, who is now Lord Amory, said that less than one-fifth of this tax as he estimated at that time, fell on private motor cars used for pleasure purposes, and, though no doubt the proportion may have increased a little since then, there is no doubt about it that about one-fifth or a quarter appears to be the proportion attributable to private motoring for pleasure purposes.

But, of course, petrol and the like are used for other purposes, too, and probably the most important from the transport point of view is goods vehicles. We have all had, I dare say, a memorandum from the Road Users' Federation, and, though I would not necessarily accept all its figures and conclusions, I think that it emerges that about half the tax revenue—rather more, actually—comes from goods vehicles and the use of motor cars for what I would call commercial or industrial purposes. It is not merely a question of goods vehicles. It is also a question of commercial travellers and others who have to use a car for and in their business. That is another use.

I should like to deal with that particular point first. As I understand the position, we in this country admittedly require to increase productivity. There can be no dispute about that. We on this side of the Committee say that if that is to be done, the Government must take steps to help and certainly not steps to hinder. That involves, naturally, our competitive position in the world, whether or not we go into the Common Market. To choose this moment to add what is really an on-cost to industry seems to me to be to choose the very worst possible moment for the purpose. That is, of course, what a tax of this sort necessarily is. It is with an appreciation of that and of other factors that from time to time Amendments have been introduced to Finance Bills to alleviate or remove the tax in relation to particular uses of vehicles.

I am coming to one or two of those in a moment, but I think that I can fairly select the use for industry and commerce as probably the main use affected by this tax. That is the most important point that we have to discuss. It seems to me that the right hon. and learned Gentleman and anyone who is prepared to support him in the Lobby today is voting at the moment for an on-cost on industry in general and, more than that, for an additional cost to all those who have to use the transport services for moving goods about. I would instance those who have to get furniture moved from one place to another.

It is not irrelevant, in this connection, to remember that the reorganisation of the railways is going on and that it appears certain to involve a considerable amount of shutting down of small branch lines. This means, for people who are requiring to move goods about the country, a greater dependence on goods vehicles to that extent. I am not attempting to estimate the amount—it would be quite premature to do so—but in the changing situation as we see it, it appears even more indefensible to continue this increase at the moment from that point of view.

I turn from that to another way of looking at the matter. The ordinary persons who live in the countryside use bus transport more and more. When I say they use it more and more I do not mean that the total use goes up. I do not think that that is the case. I mean that those who are obliged to live in small villages which were formerly served by a branch railway line or possibly had no railway line at all really depend on buses to get about. We have had several debates in the House on this matter, and we have had the Jack Report.

The Jack Report came down against what we are really not trying to do—the total abolition of the fuel tax—but it did so only by a majority. I must say that I find myself in very considerable sympathy with the dissenting view expressed by Mr. Nicholas, one of the members of the Committee. He said in paragraph 13, on page 54 of the Report: I cannot accept the majority view that a direct subsidy"— because that was what it was recommending— should be preferred to full tax remission, certainly not as a first step. There seems to me to be no case for granting a subsidy while at the same time extracting from the industry a heavy tax in respect of fuel consumed. This is merely a 'from one pocket to the other' transaction. That seems to me to be from the point of view of the private motorist, if I may return to him for a moment, what is happening in the Budget. He is having the Purchase Tax on motor cars reduced and, at the same time, he is getting an additional tax on fuel preserved and the power to make a further increase also preserved by virtue of the paragraph we are discussing and the rest of the Clause in which it appears.

If we were discussing today the question of the total abolition of the fuel tax, certainly a much larger sum of money would be involved, and certainly the right hon. and learned Gentleman would be entitled to say, "This may or may not be a good thing, but it is more than the country can afford". But when it comes to a question of the increase, I am bound to compare the total of £37 or £38 million involved in this case with the most obvious instance before all of us—the remission of £83 million of tax in favour of Surtax payers. I do so comparing the rural population, on the one hand, with Surtax payers, on the other.

I do so, too, comparing the way in which indirect taxation is not at all progressive and affects most those members of the community who can least afford to pay it, while direct taxation can at any rate, if one so wishes, be made progressive and is to some extent made progressive in our existing legislation. On the balance of what can be afforded between one and the other, I come down without hesitation in favour of not keeping on an increased tax on fuel in order to provide rather less than half of what is being remitted to the Surtax payers.

I have mentioned two points, and on these points and on rural transport I come to look at the Government's attitude on this matter. The Jack Report, with its recommendations—and I am not assenting or dissenting from them in any way—came out early in 1961, but the Government have not yet decided what they will do about it. The Report is dated 6th January, 1961. There was a debate in the House on 11th December, 1961 on the Motion of my hon. Friend the Member for Falmouth and Camborne (Mr. Hayman), who has been very interested in these matters, and there was a later debate that arose from the Government benches.

The Parliamentary Secretary to the Ministry of Transport, still talking about this question, said: I regret that I must leave the question in the air, but that is exactly why the Government do not intend to be rushed into a decision on this matter. It is very easy to call for a subsidy. It is very easy for a Government to give a subsidy. It is very difficult indeed to take off a subsidy once it has been given. Temporary subsidies have an unfortunate habit in this country of becoming permanent ones. As our French friends say, Rien ne dure comme le provisoire."— Nothing lasts like the provisional— This is one of the things that we must have very much in mind."—[OFFICIAL REPORT, 11th December, 1961; Vol. 651, c. 96.] Obviously, the right hon. and learned Gentleman has had it in mind about taxes. Nothing lasts like the provisional, and here the provisional is in the process of being offered to us permanently. As long as that question remains unsolved, and as long as it is agreed, as it must be, that fuel taxes play an important part in deciding whether or not they should be given a rural bus service, I think that it is wrong to continue this increase.

How important that part is appears in the Jack Report. After the question of finding labour for bus services, it mentions, as The other major factor in the rising costs of bus operations … the increase in fuel tax, which roughly doubled the cost of petrol and diesel oil between 1950 and 1952, when it reached its present level. Fuel tax now represents 9 to 12 per cent. of the bus industry's costs—2 ¼d. to 3d. per vehicle mile. If that is the position—and these gentlemen took evidence and knew well what they were talking about—is this the moment to continue an increase in fuel tax which is bound to have an effect on rural bus services? The effect will be that a certain number of services—nobody can say quite haw many—will not be started, or be discontinued, because it is uneconomical to have them.

I say to hon. Gentlemen opposite, many of whom sit for country constituencies and are very much affected by questions of this sort, that if they are voting for this increase today and the permanence of this additional tax, what they are voting for is either a reduction of, or the authority to reduce, rural bus services, and, of course, with it a tendency to put up fares. I do not know whether their constituents will particularly love them for doing so.

I turn now to one or two other things. (My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), opening the debate on the Budget, said: I am sorry that the Chancellor has done nothing to relieve the omnibus companies and municipal undertakings from some part of the fuel tax. In remote country districts, as is well known on both sides of the Committee, this tax may sway the balance between deciding to run a bus service and cutting off a country area completely. In some parts of the country it has already done so. How much more neatly and succinctly my hon. Friend puts it than I have been able to do! But even in the urban areas it is important. This morning I received a letter from the Town Clerk of Cardiff, in which he told me that in 1945 fuel tax cost the city roughly £17,000 whereas today it is costing the city £80,000, which is approximately equivalent, he told me, to the cost of a wage award of 18s. a week. I am sure that the Committee agrees that something should be done to remit fuel tax in this respect."—[OFFICIAL REPORT, 10th April, 1962, Vol. 657, c. 1164.] In this Amendment we are not even asking the right hon. and learned Gentleman to remit the fuel tax, although we may have to do so in another connection later. We are asking him, as against urban areas and municipal undertakings, not to choose this moment to make permanent an increase which was only put on temporarily.

4.15 p.m.

I do not want to take up too much of the time of the Committee, but I strongly urge this on hon. Members on both sides. It really is a choice here between keeping on a tax which, I repeat, will account for about half the remission on Surtax this year—and if that is done hindering rural bus services at a time when rural railway services are likely to be somewhat deficient owing to Dr. Beeching's activities, on which I express no opinion; there is no need for me to do so—and doing it by way of taxation which will hit directly industry and commerce as a whole, and which will also hit those who have to use this fuel for other public purposes.

We talk about municipal undertakings. I find the figures in this short passage that I have read from my hon. Friend's speech very disturbing and I have no reason to suppose that Cardiff is an exception. The result will be that not only will there be this increase of indirect taxation by the maintainance of this 10 per cent., but in some form or another the ratepayers of Cardiff will have to pay some additional amount.

Rates are also indirect taxation. They represent taxation that is certainly not progressive. They come down on people who are not so well off far more hardly than they do on those who are better off, even if the latter have to pay a larger sum. From a social point of view I should have thought that any tendency to increase rates was to be deplored, and the Treasury from time to time appreciates this and makes some changes, but its general rule appears to be, "Put it on to the rates if possible", and I am pointing out that in this case the effect of keeping the increased tax would to some extent put it again on to the rates.

To sum up, I regard this increase as principally affecting transport. I leave it to other hon. Members to talk about its industrial effect. The transport which will be principally affected is not so much private motor pleasure driving, which accounts for only about one-fifth or one-quarter of the total, but the goods services which are the life blood of communications for industry and commerce all over the country. I therefore regard the increase as tending to diminish productivity at a time when the opposite is what we desire.

I regard the increase as an additional burden on rural transport, and, therefore, as inflicting on a large number of people who live in the country an inconvenience that it ought to be the object of the Government to avoid. In some cases this lack of transport will compel people to move from the place in which they have lived since their birth.

If I may take my third instance, I regard this as yet another case in which a Government tax, in this case an increased tax, is hindering the activities of the municipal undertakings and those who have to carry on the business of providing the public local services in the towns as well as in the country. For all those reasons, and on those broad grounds, and having regard to the consequences of the increase, I beg the Committee and the right hon. and learned Gentleman to forbear from asking us to continue it as a permanent tax.

Mr. Geoffrey Stevens (Portsmouth, Langstone)

In his customary brief and lucid fashion, the hon. and learned Member for Kettering (Mr. Mitchison) has made a strong case against an increase of taxation which may affect costs of production. I feel sure, therefore, that my right hon. and learned Friend the Chancellor of the Exchequer will have the hon. and learned Member's full support for the manner in which in this Budget he has broadened the base of indirect taxation in a way which will not increase the cost of production, because the tax of 15 per cent. on soft drinks will not increase cost of production and I do not feel that rural bus fares should be increased because of a 15 per cent. tax on ice creams and lollies. I look forward to hearing the hon. and learned Member's strong support for my right hon. and learned Friend's proposals.

I thought that the hon. and learned Gentleman dismissed a little too lightly the probable cost should my right hon. and learned Friend yield to his strong arguments. The figure of £38½ million is too much to consider now with an overall deficit of £112 million above and below the line. I know that at the time of the Budget the estimated £74 million was criticised from both directions, but the month which has since passed seems to indicate that the world as a whole feels that that was just about right. My right hon. and learned Friend would be most unwise to contemplate increasing that deficit by £38½ million.

I do not want to go nearly as far as that. I do not want to consider the remission of the surcharge of 10 per cent. on petrol used for transport, and so on, but to confine myself to the much narrower point on which we had a debate on a new Clause on the Finance Bill last year—relief for industrial use of light oils. I made a speech on that occasion and I have not the slightest intention of repeating it now, but I would like to take up one or two points which the Economic Secretary to the Treasury then made, points which to him were compelling reasons why last year he was unable to accept the new Clause.

My hon. Friend referred in the first place to the integrity of the duty which was first imposed by my right hon. Friend the Member for Woodford (Sir W. Churchill), whom we are all so pleased to see with us this afternoon. My hon. Friend said that no exception for industrial use was made and that, because there had been no exception of that kind all those years, that was a good reason for not making an exception now. That argument was used by the Economic Secretary in the very year that the integrity of a tax was definitely upset by the exception of horticulture from the 2d. per gallon duty on fuel.

The Economic Secretary chided me on that and said that under no circumstances must I use that exception as a precedent. But immediately afterwards he said that the strongest argument against making an exception in the case of industrial fuel oils was that everyone would use it as a precedent and demand similar concessions for themselves afterwards. But one cannot have it both ways. It cannot be claimed that the tax must be preserved because of its integrity while, at the same time, there can be exceptions in a similar tax without creating a precedent.

My hon. Friend also said that the Government did not regard the duty as a serious handicap on industry, yet he went on to say that the cost of the concession which I suggested would be £8 million, but could conceivably go up to £16 million. As the concession for which I asked was permissive and not mandatory, by Treasury Order, the Treasury would have to be in an extraordinary frame of mind if it ever made such Orders as would take the cost to £16 million. However, my hon. Friend said that the lower figure of £8 million was too much for the Government to consider. Yet, at the same time, he did not regard it as a serious handicap on industry. If £8 million in the context of £6,500 million worth of Government expenditure is too heavy, it cannot be an inconsequential burden on industry where the figures are very much smaller.

Towards the end of his second speech, my hon. Friend said that there were only minor effects on the productive costs for example, about 1½d. a tyre. Every motor car which comes out of the factory has five tyres and there are several motor car manufacturers who produce, say, 250,000 motor cars a year. The figure of 250,000 motor cars multiplied by 1½d. per tyre gives £8,000, a not insubstantial sum—and that is only in respect of tyres. The same cars will have paint and varnishes, which also use light hydrocarbon oils, so that the aggregate accruing to one motor car manufacturer in respect of this duty is quite a substantial sum.

I put forward the other arguments last year and I will not repeat them now. I merely point out that the three Amendments, two to Clause 1 and one to Clause 4, are once again permissive and not mandatory. It is not £8 million which I am suggesting, but a move by which some progress in that direction could be made. Profit margins are small and are getting smaller, and a small concession of this kind would not be of tremendous assistance to industry, but I agree with the hon. and learned Member for Kettering that the abolition of the 10 per cent. surcharge on light hydrocarbon oils would be a step in the right direction, and I hope that the Government will be able to consider it.

4.30 p.m.

Mr. J. T. Price (Westhoughton)

At Question Time today, my hon. Friend the Member for Blyth (Mr. Milne) surprised hon. Members by referring to Adam Smith, the economist, who wrote "The Wealth of Nations" more than 200 years ago. Although the hon. Member was out of order to refer to Adam Smith, it is pertinent and in order to refer to Adam Smith in a debate on the Finance Bill. There are many hon. Members who will have read the works of Adam Smith, and who will recollect that in one of his many famous dicta he said that once the citizens of a country had become accustomed to shouldering the imposition of taxation of various kinds, so long as they had borne it for a considerable time, they ceased to recognise it as a tax, particularly if it was an indirect tax.

Without entering into polemics or academic arguments, one of our criticisms of the increasing tendency of the Government constantly to increase the scope of indirect taxation is that once the tax is embodied in the cost of a commodity, so many people cease to recognise that they are being taxed. This is anti-social, contrary to public policy, reason and equity, and imposes the biggest burden on the shoulders of those least able to to bear it.

Mr. Douglas Jay (Battersea, North)

Thoroughly Tory, in fact.

Mr. Price

I do not want to be too polemical on an occasion like this, although I could be if I were provoked. However, the Committee is in a good mood—up to now, at any rate. Even the Chancellor of the Exchequer has remained quiet and placid.

I am trying to interest the right hon. and learned Gentleman and I am relating my arguments to Adam Smith, who was one of his political godfathers in the days when the right hon. and learned Gentleman was a student and was making his reputation at the Bar and in politics and in other spheres of public life which he has adorned with distinction.

Last year the Chancellor of the Exchequer introduced this 10 per cent. increase in the duty on light hydrocarbon oils to produce a revenue of about £38 million. This year, when he has largely discontinued the use of the regulator, he is retaining it in this case. We are all familiar with what happens once the tycoons of the Treasury get their hands on a substantial chunk of new taxation, they are very loath to let it go, except, of course, when dishing it out as redistribution of wealth to sections of the community who, we say, are not entitled to consideration in any redistribution.

I do not want to be unpleasant this afternoon, but I must hammer the old nail—this £38 million which we are asking the Chancellor to give up is coming largely as part of the £83 million free bonus to Surtax payers who, we think, should not have that consideration. The Chancellor has told us that the country's financial situation is so serious, that the balance of payments is so finely poised between disaster and success, that he has had to introduce all kinds of harsh measures which are finding repercussions in the results of by-elections.

The cost of living is always going up and bus fares are going up, partly as a result of this tax to which we are objecting. Every item of common usage is on the up and up. Rates are going up, and although that fact may not be entirely relevant to the Clause it is all part of the picture. The only thing which is going down and down is the fortunes of the Tory Party, for which Allah be praised. I ought not to object to that, but I must resolutely object to the retention of this unnecessary temporary tax.

I have the privilege of knowing many of the very efficient bus operators, both municipal and private enterprise—I have no ideological approach in this matter. I could give the names of many fine companies which may be a mixture of private and public enterprise, but which, as public utilities, are a credit to the country. The operators of those services are being seriously hampered in their efforts to maintain services in rural and scattered areas by the constantly rising cost of operating those services. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) referred to bus services and compared them with railway services. I have recently had the pleasure, for three or four months, of being a member of the Committee upstairs which considered the Transport Bill. We had 37 sittings and if I would be in order I could say a great deal about the repercussions that have followed some of Dr. Beeching's decisions and those of his associates who are now under instructions from the Government to make our railway system an economic and viable proposition in the general economic life of the country.

I do not stand in the way of the proper reorganisation of our enterprises. I am a Socialist and have stood for national planning in all sorts of ways. But I object to some of the sort of sleight-of-hand manœuvres under which the Government are making it difficult for the railway services to be maintained in areas where there have always been these services to the public, and, at the same time, are making it equally difficult for the substitution and retention of satisfactory bus services which are even mare essential in areas where railway lines are closed.

Therefore, my hon. Friends and I, and many hon. Gentlemen opposite, make the modest plea today that the Chancellor should give further consideration to the continued imposition of the 10 per cent. on his original regulator which now, under a new guise, he is seeking to retain. I am beginning to believe that Adam Smith was right when he said, in effect, that when any Chancellor or financial officer of a modern State gets his hands on such a big chunk of revenue he tends to hold on to it and will not let it go without a great deal of opposition.

Despite any controversial remarks I have made, I hope that the Committee will look at this whole matter from the point of view of the general welfare of the communities which hon. Members have the honour to represent. I hope that hon. Members will make it easier for efficient transport services to be maintained and to mitigate, as far as possible, the constantly rising charges being made on the pay packets of so many workers who must make daily use of public transport. Naturally, this has a bearing on the failure of the Government to regulate the proper location of industry and I hope that the Amendment will be accepted.

Sir Robert Cary (Manchester, Withington)

It is always a pleasure to follow the hon. Member for Westhoughton (Mr. J. T. Price). I agreed with much that he said, although I was sorry that he should have so be laboured the Government once again with that old stick, Surtax. The Chancellor of the Exchequer last year carried out a proper act of justice which is well known and next January heaps of Surtax will be paid. Last year's action was really an unearned income allowance, to give it its proper title, and it goes to a quarter where it is needed. This constant taunting of the Chancellor about his having diverted the nation's precious money to Surtax payers is really misleading the public life of our land, for I am concerned with judgment and no: with prejudice.

Mr. J. T. Price

Since the hon. Gentleman referred to my remarks, perhaps I may reply by leaving it at this: when this debate is over perhaps he and I can discuss this matter more rationally in another place.

Sir R. Cary

I am grateful to the hon. Gentleman and I am also grateful to his hon. and learned Friend the Member for Kettering (Mr. Mitchison), because both hon. Gentlemen place the emphasis of this matter just in the right quarter—on the bas fares and the operation of our public service vehicles.

I feel rather strongly about the action taken by the Chancellor over this matter and I now disclose to hon. Members that I am the chairman of Lancashire United Transport, a rather large bus company in the Lancashire area. I inherited my present position from the late Lord Derby's brother, Sir Arthur Stanley, who was chairman for forty years and for a modest fee I discharge this task in the public interest in an area in which a monopoly exists under the traffic commissioners.

I can, therefore, speak freely about this matter, for I have no monetary interest and, because of that, I do not dishonour the proceedings of this Committee by speaking so fully to the Chancellor on this subject. In addition, it is my privilege to represent one of our great provincial cities in which is operated one of the greatest provincial bus fleets in the country. This fleet pays no less a sum than £600,000 per annum in fuel tax to the Chancellor. When I think of it in this way my mind goes back a few years, because it is important to get the background to this situation in its proper perspective.

4.45 p.m.

In 1956, when the industry was still carrying a tax burden of 2s. 6d. on fuel, the then Chancellor of the Exchequer—the present Prime Minister—brought to the House the Hydro-Carbon Oil Duties Bill which was, following the Suez operation, by imposing a surcharge on bus services to replace the declining Treasury revenue to the extent of £6 million. The then Chancellor of the Exchequer, when presenting that Bill on Second Reading, said: First, as to the duration of this increase in the duty. I think that in the excitement of the moment many people somewhat overlooked the important fact that I stated quite deliberately last Tuesday, that this increase is a temporary one. Not only did I emphasise this last week, but the House will see that this intention is reflected both in the Title and in the provisions of the Bill. In the normal course of events taxes are imposed by legislation and can be altered or removed only by legislation, but in this case the Bill provides that the increase can be brought to an end simply by Order, and that is a very real distinction. Some may say that they have heard that story before, and I cannot deny

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

On the Purchase Tax.

Sir R. Cary

The then Chancellor continued: that there are, in our great national picture, many temporary expedients which have survived beyond their expected term."—[OFFICIAL REPORT, 10th December, 1956; Vol. 562, c. 35–6.] I appreciate that, by another method, this is exactly what the Chancellor is doing at the moment in regard to his regulator. I know that the Government, in the present difficult economic situation of the country, have no good cards to play. What they have had to do is to play a difficult hand well—but not by sleight of hand by which the regulator is to be cancelled and by which the taxation charged by the additional 3d. on fuel oil duty is to be imposed.

The right hon. and learned Member for Kettering raised certain moral aspects of this matter at the beginning of his speech with which I heartily agree. For some years now I have bullied and harried, in my limited way, succeeding Chancellors for the removal or modification of the fuel duty on public service vehicles because this directly affects the pockets of the vast majority of workers who are those least able to bear such a burden. We live in a world in which not necessarily shillings but sometimes still sixpences and pennies are counted, and, despite the concessions which I and my friends in business make to elderly people, there is a large margin of our people to whom any addition in bus fares is important.

May I draw the attention of the hon. and learned Member for Kettering to one special aspect? He talked of the public road vehicle and the public service omnibus as if they were one and the same thing. A distinguished predecessor of the Chancellor, now Lord Amory, produced a cost-of-living Budget when he was Chancellor in 1959. That contained both beer and the bus fare—but not the public road vehicle, which carries goods.

In that Budget, 2d. was given to beer and nothing was given to the bus fare. But the Chancellor made this concession—in another direction he made a modification of licence duties. He did that only because, in the year before, the Profits Tax on companies such as my own were raised from 3 per cent. to 10 per cent. So that, with the offset of the licence duty, I found myself at the end of that year paying a little more money to the Treasury in Income Tax than I otherwise would have paid.

Since then I have implored the Treasury to take some action about this tax. We have swallowed the action of my right hon. and learned Friend over his regulator. That burden of tax now stands at the level of 2s. 9d. and, in addition, the companies and the whole industry with which I am concerned face further wage increases. As the result of the proposal in Clause 1 it means that when fare applications are made in June they will have to be rather slightly higher to cover the position in relation to the tax bill by an addition of 3d. on the regulator in its more permanent form.

I could speak at great length on these issues, but I will not weary the Committee with the operational and tactical aspects of running a public transport organisation. They are well known to hon. Members, they have been discussed many times and many hon. Members who represent agricultural areas bitterly regret this imposition, not only as they see it themselves, but for the future—for the position of bus services in many rural areas has become so difficult that public service transport might, in the next few years, completely disappear.

My remarks on this subject are based in no way on capturing votes. Public harm is being done to the fundamental services of the country. Constantly to see public transport services being withered away is a bad thing. It is not only bad for the rural areas, but also for our cities. It is bad for the nation, because to countries throughout the world we boast of the splendid pattern of transport we possess. Many other countries have copied that pattern and we enjoy many fruits in our export trade by having such a first-class shop window in our public service vehicles and transport system.

These matters trouble us not alone. They are worrying on the other side of the world. I have selected a community which is much like our own, Australia, and I wish to briefly quote an extract from the Report of the Commissioner for Government Transport for New South Wales. It states: Buses now contend for road space on equal terms with private motor vehicles. This is obviously wrong when one considers that a late model 'prestige' sedan, carrying, on the average, about only two people needs nearly as much road space as a double deck bus with a peak hour load of 70. The Traffic Committee of the International Union of Public Transport with headquarters in Brussels, Belgium, actually sums up the position by stating that the person who makes the greatest contribution towards the relief of traffic congestion is not the traffic engineer, the town planner, or the builder of new roads, but the passenger travelling in a public means of transport. I plead again with the present Chancellor of the Exchequer, who was good enough to receive me in person so that I could make representations on this matter, to think again about the imposition of fuel tax on public service transport.

Mr. E. L. Mallalieu (Brigg)

I agree with so much of what the hon. Member for Manchester, Withington (Sir R. Cary) has just said that I hesitate to refer to the opening passage of his speech. It may well be that the remission of Surtax brought in last year, which is now coming into effect, was an act of justice on the part of the Chancellor of the Exchequer. What we on this side have complained about before, and complain about now, is that it is no use looking at an act in isolation. That is why we have to keep hammering home the point that, if the country can stand that remission of £80 million for Surtax payers, at least it ought not to impose, for the sake of a mere £30 million, this duty which is so crippling in many ways to so many of the interests of the country as a whole.

The hon. Member for Portsmouth, Langstone (Mr. Stevens) said that he did not see this duty sending bus fares up. That point has been effectively dealt with by the hon. Member for Withington. I am not so much concerned with whether fares will rise. That is bad enough in all conscience. I am worried about the position of the countryside when a bus goes out of existence. That is what matters. The Tory Party always used to pride itself—very honourably, as I thought—on the fact that it stuck up for the rights of the countryman. The emphasis has now shifted, for reasons which are well understandable, to big business and, indeed, to the City of London, as being the mainsprings of action of hon. Members opposite.

However, they must, in their heart of hearts, realise the importance of having a live and virile countryside populated by live and virile people. Almost every minute of the day we hear of people drifting away from the countryside to towns. Only the most fabulously wealthy now go in the opposite direction. This is a tragedy for the country.

When a representative of countrymen comes to the House of Commons on their behalf, he sits here perhaps for one and a half years or more and gradually his interests become those of the town, because he is here in the town all the time. The countryman is always lacking in representation in the House of Commons and elsewhere. We have seen that happen in far more agricultural countries than ours.

Yet the Government put this burden upon rural transport. They accelerate the movement to close down rural lines and in consequence to take away the life-blood of the countryside. In the county which I have the honour to represent, Lincolnshire, there are at present two proposals for the closing of railway lines. I am not one of those who inveighs against Dr. Beeching because of this policy. He has been told to do these things. It is the policy of right hon. Members opposite that this shall happen. Dr. Beeching has been told that he must make the railways pay, as though pay were the only thing that mattered.

There is such a thing as a social service and many of us think that this country's transport should be organised on the basis of it being a social service, much as the railways are in France. Of course, one has to have regard to economic considerations, but if it is desirable to close a railway line, at least another form of transport should be put in its place. That is not happening at present. Railways are being closed. We all know that. Now the burden is being put also—being kept, in this instance—on road transport. This will push further the movement of depopulating the countryside and making it a less fit place to live in.

If the Government continue this tax upon rural transport, because this is what it amounts to, they will aim a heavy blow at the countryside. That is a most undesirable thing. I should like to be able to go to my Lincolnshire constituents and say that henceforward transport will not suffer this burden. The party of which I have the honour to be a member tried its very best to make some effort towards co-ordinating the country's transport so that—we were not afraid to say this to our urban supporters—to a certain extent, where social considerations made it desirable, towns should help to bear the burden of the countryside in the matter of transport.

We know that that policy has been scrapped. It is no use arguing the main principles now. It is no use arguing against the bus companies for closing down. They are in business. They have to make it profitable to themselves—those of them that are not nationalised. Nobody on this side of the Committee disputes that. What we dispute is the extreme stupidity, and, indeed, the tragedy, of a Government putting more burden on rural transport to make the position worse than before, instead of standing up here for the countryside and giving the country dweller a deal at last comparable in amenities with those which the town dweller has.

Mr. Leonard Cleaver (Birmingham, Yardley)

I thoroughly enjoyed hearing the hon. and learned Member for Brigg (Mr. E. L. Mallalieu) speak up for the countryside, not because I have a constituency in the countryside, but because I am genuinely very fond of it. However, in my constituency all the grass we have either has a placard on it saying, "Please keep off", or forms a rubbish dump. Therefore, I hope that the hon. and learned Gentleman will not expect me to follow him in his argument.

I rise to support the Amendments in the names of my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) and other hon. Members in an endeavour to persuade my right hon. and learned Friend to do something to help the light oils industry. If the duty placed on this industry were remitted in toto, it would not cost the Chancellor as much as the total duty. The total duty he collects is about £11 million, but as that is charged in all the accounts of the firms it would cost the Chancellor only about £5 million. Therefore, in supporting my hon. Friend's Amendment I am not expecting a large remission in taxation but one which would be reasonable if the Chancellor would agree.

It is essentially wrong in principle to impose a revenue duty on the raw materials which go to industry. If we go on like this, we shall find it very difficult when we compete in future either against the Common Market or with other members of the Common Market if we are in it. I hope that my right hon. and learned Friend and his Treasury advisers will get their minds into the frame of thinking which says, "What can we do for the industry?", rather than, "How can we levy money out of it?"

Our industrialists are to enter competitive conditions. They want to be competitive and to go at it. However, if our method of raising taxation is such that we give the impression of trying to harm and hinder them all along the line they will not work with the spirit and energy with which they should.

5.0 p.m.

I want to give two examples of the way in which we harm industry in this respect. I will take, first, resins with a high hydrocarbon content of about 55 per cent. The duty to a British manufacturer works out at about £16 10s., but only about £5 17s. is charged on the imported article.

I turn to the paint industry, which is not a large one, but is a very vital one to the country. The duty there on pigmented materials runs out at about 1s. 3d. a gallon. On thinners it can be anything between 1s. 8d. and 2s. 6d. a gallon. I will go a little further and consider the wholesale prices of paint, where they rise from 30s. to 35s. a gallon. Between 8 per cent. and 4 per cent. is levied in duty. Where thinners have a low hydrocarbon content and the wholesale price runs from 10s. to 25s. a gallon, the duty works out at either 17 per cent. or 7 per cent. If it is a high hydrocarbon thinner costing about 8s. to 12s. a gallon, the duty runs out at 31 per cent. to 21 per cent., according to which it is. In this way we are doing the worst thing we can for industry and putting up its costs and making it as difficult as we can for it to be competitive.

The Committee may well ask what other European countries do about this problem. They give some concession to light hydrocarbon oils used in industry. Some E.F.T.A. countries give concessions of 65 per cent. Many of them give 100 per cent. One E.E.C. country—Italy—gives 40 per cent., but many E.E.C. countries give 100 per cent. Commonwealth countries also give concessions ranging from 95 per cent. to 100 per cent. A real hard competitor—the U.S.A.—has seen the red light and gives 50 per cent.

I hope that the Chancellor will consider these figures before making a decision. It may well be said that when we export goods containing light oils we are entitled to a drawback. That may be true. However, I ask hon. Members to remember that, even if we had a drawback, the cost of our materials sold abroad is based on the home market and the whole turnover of the home market. On the home market we are still levying the full hydrocarbon oil duty. This will become even more serious if we get into the Common Market and our industry has to compete with materials made abroad. I hope that the Chancellor will consider these matters very carefully.

The integrity of the duty has been mentioned. I suggest that the duty has no integrity, although we are often told that it has. Is it realised that already kerosene is exempted from the duty? Is it appreciated that duty is not paid in respect of hydrocarbon oils used on fishing vessels? Other examples could be quoted. In my view, this is not the main point. The main point is the economic cost of the materials to our industry. I hope that my right hon. and learned Friend will see his way to accepting the Amendment.

Mr. Arthur Probert (Aberdare)

All of us who were present in the Committee to hear the hon. Member for Manchester, Withington (Sir R. Cary) will agree when I say that, in a sense, nothing more need be said beyond what he said to his right hon. and learned Friend the Chancellor of the Exchequer. It was said with a great deal of sincerity and from experience. I hope that the Chancellor will consider very seriously what was said by his hon. Friend.

I support the Amendment because I think it more necessary now than it has ever been. In many parts of my country, Wales, more and more rail closures are taking place and many more are under consideration. I do not wish to digress too much on that, because I realise that it would be out of order to do so. Like my hon. Friend the Member for Westhoughton (Mr. J. T. Price) I spent 37 mornings considering the Transport Bill in Committee. What is important and relevant to this Clause is that, as the hon. Member for Withington so aptly said, people are becoming increasingly dependent on public service vehicles.

I do not want anyone to run away with the idea that that is simply the poor man's form of transport. Many of my friends who own motor cars are increasingly using public service vehicles for short, and even for long, journeys rather than using their cars.

Mr. Ellis Smith

That even applies in America.

Mr. Probert

As my hon. Friend says, that even applies in America. This is something which we shall have to consider in the years ahead. In these circumstances it is important that the Government should encourage public service transport rather than discouraging it by a regressive form of taxation.

All along we have seen this type of policy in relation to the transport system. The Transport Bill was another case in which the Government have been acting in a foolish manner towards the community. Municipal services, privately owned services, and nationally owned public services find it increasingly difficult to work on a sound financial basis. Workers in the public service industry work long hours on very difficult shifts. Their pay does not compare with the pay in the better sections of the industry. In those circumstances the municipal, the privately owned and the publicly owned services find it increasingly difficult to recruit the right type of men and to meet their wage demands.

The effects for local authorities are far more serious, as was pointed out by my hon. and learned Friend the Member for Kettering (Mr. Mitchison). They have the problem of increasing fares, depleting services, or putting the loss, as many of them have to do, on to the shoulders of ratepayers. All this is being done in the face of local opposition. Hon. Members opposite may smile, but I know how local councillors have to face fierce opposition in local elections as a result of a policy which is no fault of theirs but is the fault of the Government.

As my hon. and learned Friend the Member for Kettering said, time after time we find examples of how the Exchequer shifts the burden of collection of revenue on to the ratepayer knowing full well—and, no doubt, acting cynically—that opposition to that policy will have to be faced by local representatives and not by the real culprits, the Government.

The Government talk about wage restraint and keeping prices down and at the same time, they recoup to themselves an extra 10 per cent., £38½ million, for the Exchequer. That seems rather cynical. It is the only point on which I disagree with what was said by the hon. Member for Withington. He chided my hon. Friend the Member for Westhoughton for coming back to the charge about the £83 million for Surtax payers, but an hon. Member opposite said that £38 million was a large sum which the Government could not be expected to give back to the bus services. Yet they gave away £83 million presumably in far more stringent economic circumstances. It was quite right for my hon. Friend to refer to that.

Increases in costs for bus services bear directly on the wage packets of millions of workers, as was pointed out by the hon. Member for Withington. The cause wage demands to be made on the bus companies, but we shall also be faced with wage demands in all parts of industry because bus fares form a large part of the outgoings from the wage packet. Because of the lack of planning of industry, workers have to travel far more than they had to in the past. In consequence, increases in bus fares form a heavy burden to be borne from their wage packets, whether it is the worker paying a fare to go to work, his wife doing the shopping, or his children being sent to school.

When we were told about this 10 per cent. increase we were told that it was a temporary expedient. Every section of industry was appalled when it was found that the increase was to be consolidated in the present Bill. I speak for myself alone in saying that I would welcome such a tax if it were imposed on industry generally. It would have a very salutary, and, I think, progressive, effect on our indigenous fuels, notably coal. This tax attaches itself to anything that travels on wheels.

I wish to refer to a speech made by my hon. Friend the Member for Bradford, East (Mr. McLeavy), who put this matter very simply. All will agree that he has been a valiant attacker of the Government on the question of this tax. Last Friday, he said: I once got from an ex-Chancellor of the Exchequer some statistics which I think were exceedingly interesting. I was inquiring what the cost would be to all the users of fuel oil and petrol if the fuel oil taxation on all vehicles, commercial and private, and so on, were spread out. The reply I got was—I am speaking from memory—'I think it would be something in the region of a tax of 3d. or 4d. per gallon.'"—[OFFICIAL REPORT, 11th May, 1962; Vol. 659, c. 830.] That shows what a heavy burden is placed on this industry by this tax.

The tax will completely ruin our rural transport systems. It will be quite impossible to repair the damage. More and more rail closures are taking place. I believe that there is to be a hearing tomorrow in Brecon and Radnorshire. We shall find that whole area completely devoid of transport facilities except for a skeleton system. With the imposition of this tax, how can we expect a transport system to exist in those circumstances? The Chancellor should consider what his hon. Friend the Member for Withington so effectively said. If we go further with this tax the future of public service vehicles will be very much in jeopardy.

5.15 p.m.

Mr. John Peyton (Yeovil)

I wish to echo the plea made by my hon. Friend the Member for Birmingham, Yardley (Mr. Cleaver). The Government ought to be very careful about imposing a burden on industrial raw materials. This question should be high on the list of intractable principles.

I am not familiar with the corridors of the Treasury, but I rather wonder what kind of mental processes were followed in last year's Finance Bill and in the so-called "little Budget" which introduced the July measures. Was the full extent of the increase in the cost of a vital industrial material such as this fully realised? These increased costs seep right down through the economy. It is quite different from taxing profits which are the eventual outcome to put on at an early stage an impost which puts the country at a direct disadvantage with its competitors.

It seems very odd that last year, when the regulator was used by the Chancellor at the end of July, the anxiety which was chiefly in his mind at the time—and few could challenge it—was that the exports from this country on which all ultimately depends should be in a more favourable position. Yet even at a time when my right hon. and learned Friend and his colleagues clearly had no very great confidence in the ability of this particular horse to win the race, they slapped on a penalty. I hope very much that my right hon. and learned Friend will have second thoughts on this matter. It must be the height of absurdity to penalise industry in this way.

The hon. Member for Aberdare (Mr. Probert) and many of his colleagues clearly think that it is a good thing to promote the use of domestic fuel. Others of us, on the other hand, believe very strongly in what we thought was the principle guiding the Government, namely, that the choice of fuels should be left free to the consumer. Many people in industry acted as if that principle were enshrined in Government policy. Many have been disturbed—and with some justification—to find that that principle has been violated by this tax.

I do not want to go at length into the effects upon various industries. Rural transport has been mentioned particularly, but we have also to consider the steel industry, the glass industry, the brick industry, the building and contracting industry and the textile industry, to mention only a few where the costs of the tax on oil represent a very severe handicap. In imposing this tax it seems that my right hon. and learned Friend is curbing any growth in our competitive power. That, I am sure, is the last thing he wishes to do.

Faced with the present level of Government expenditure, I am very reluctant to try to persuade the Chancellor to reduce taxation. At the same time, I think that it must be wrong to impose a tax which mutilates our competitive power and to do so at a time and for a purpose which is the very reverse of that. I ask the Chancellor to think again most seriously about this problem.

Mrs. Barbara Castle (Blackburn)

I am glad that the Chancellor has returned to his seat, because I was afraid that when he slipped out of the Chamber a short while ago it meant he had made up his mind on this question and was closing his ears to any attempts to make him change it. I do not begrudge the right hon. and learned Gentleman his quick cup of tea, but I did not want him—

Mr. Selwyn Lloyd

I cannot be in the Chamber the whole time.

Mrs. Castle

I appreciate that the right hon. and learned Gentleman cannot be here every minute of the day, but I did not want him to miss a single speech from either side of the Committee, because all hon. Members who have so far spoken have put the most unanimous and powerful arguments to the right hon. and learned Gentleman on this Amendment which, I think, will have demonstrated to him quite clearly that in putting down the Amendment we on this side of the Committee were not just indulging in a propaganda campaign, but had been genuinely surprised and shocked at the step which the right hon. and learned Gentleman is taking under this Clause.

We are, after all, dealing with a quite limited point; we are dealing with an increase in taxation on a raw material which enters into the day to day life of all of us. I do not think that anyone, when trying to anticipate the Budget, and recognising the background of the economic difficulties against which it was introduced, would for a moment have guessed that the Chancellor would have chosen this field in which to make what we thought was a temporary increase in the levy into a permanent tax.

I am absolutely certain that the bus operators were the last to imagine that this would happen to them. We know that for years they have been begging for a reduction in the fuel tax. For many years now they have pointed out to us the absolutely disproportionate burden which the bus operator is bearing in the matter of taxation. They reminded us again only recently that this tax is levied at the rate of 275 per cent. compared with the highest rate of Purchase Tax of 55 per cent. It is a very disproportionate level of taxation.

I think that the bus operators were confident that one of the steps which the Chancellor was certain to take in an effort to reduce the cost of living, and thus to underwrite his own incomes policy, would have been, if anything, to reduce and not to make permanent this additional burden. I know that my own local authority wrote to me on the subject. A month before the Budget was introduced I received a letter from the Town Clerk of Blackburn setting out a resolution protesting at the present level of fuel taxation and saying that a copy of the resolution was to be sent to the Chancellor. I am sure that my local authority was by no means alone in expecting the Chancellor to do the exact opposite to what he did and not to incorporate this temporary increase as a permanent increase in the fuel tax and also to retain the right to impose a further surcharge on top in the next few months if he felt so inclined.

I am at a loss to understand the economic reason which lies behind this step. When introduced, the temporary surcharge was supposed to be counter inflationary. Surely dearer bus fares are not exactly the high road to a lower cost of living. Therefore, this step is self-defeating from that point of view. There is also, of course, the wider point of principal, put so skilfully by my hon. and learned Friend the Member for Brigg (Mr. E. L. Mallalieu) and by the hon. Member for Manchester, Withington (Sir R. Cary) and that is the effect on the public transport system and, indeed, on the transport of the people as a whole. Here, again, the Government's policy is totally incomprehensible.

We have all had to face the consequences of the drastic closures of railway services in our areas. My area is no exception. Although I do not represent a rural area I represent a town to which many people from the surrounding rural areas come to work or to shop. Recently, we have been faced with the closure of the Blackburn-Hellifield line against which a large number of industrialists and others in the area have protested to the Transport Commission, though in vain.

Quite recently I pointed out to the Minister of Transport that this closure means that some villages in the surrounding area are to be almost completely isolated because of the inadequacy of the bus services. People will not be able to get to Blackburn to work or to shop. The Minister promised that he would look into the matter. Only yesterday I received a letter from the Parliamentary Secretary to the Ministry of Transport explaining why his right hon. Friend could not oppose the closure of the Blackburn-Hellifield line. In his letter the Parliamentary Secretary stated that the North Western Area Transport Users' Consultative Committee had reluctantly agreed that this railway line was uneconomic. The letter stated: The Area Committee as you know, came to the conclusion that in view of the substantial saving of over £20,000 a year which would result from closure of the passenger services, the Commission's proposals should be approved. They recognised that some hardship would be caused to users in the Hellifield area. They therefore decided to ask the Traffic Commissioners to look at the present bus service between Gisburn and Hellifield to see whether it could be increased. I understand that the Traffic Commissioners have informed the Committee that the bus operators are unwilling to increase the present services which are already unremunerative.

Mr. Geoffrey Wilson (Truro)

We debated this matter at great length last Friday. I pointed out then that there are residual powers vested in the Railways Board to enforce an alternative service from a bus company and, if necessary, to pay for it out of its own resources.

Mrs. Castle

But surely this is to put an additional burden on the persons concerned. If I understand the hon. Gentleman aright—and I will look at his speech—I am not quite clear about the economic implications of what he is saying. However, I think that he will agree—

Mr. G. Wilson

I am saying that there are powers vested in the Railways Board to enable it to call upon a bus company to provide an alternative service and that if the company says that it cannot afford to do so the Railways Board can subsidise that service.

Mrs. Castle

That is a very useful piece of information, and I shall be glad to return to the attack.

Mr. Probert

The British Transport Commission or the Railways Board would consider each year afterwards whether it would continue to pay such a subsidy.

Mrs. Castle

Whatever the device used to try to prevent whole areas of the country from being cut off from human communication, the introduction of this permanent addition to the fuel tax will certainly make that more difficult. Even if the Transport Commission subsidises these services that subsidy is to be deliberately increased as a result of the Government's policy under this Clause. Therefore, as my hon. Friend the Member for Aberdare (Mr. Probert) has just pointed out, the pressure on the Transport Commission to get out of its obligation will be greater because the economic burden will be greater.

What it comes to is this. The Government have decided that the railway system is to be decimated, and to those who are cut off as a consequence they say, "You will either have to go by bus, or you must go by your own private car". Whichever of these alternatives people have to use, the process is made more expensive under this Clause and more unlikely to be realisable. We have not got bottomless pockets.

5.30 p.m.

The other day, I talked with the Minister of Transport about this question and challenged his drastic policy of railway closures. He said to me quite airily that people will just have to use private transport. I told him that I could not afford private transport, that I was a user of public transport. What was I to do? His answer was, "Buy a scooter". That strikes me as a highly frivolous way of approaching the matter.

Mr. Peyton

The hon. Lady would, of course, look very nice on a scooter. However, apart from that, as she is so interested in the subject, I cannot lose the opportunity of asking her to study my very modest little Bill, the Road Traffic Act, 1960 (Amendment) Bill.

Mrs. Castle

I should be out of order were I to discuss that.

The Temporary Chairman (Mr. John Arbuthnot)

Yes. That Bill is not in order on this Amendment.

Mr. Peyton

I do not wish to discuss your Ruling in any way, Mr. Arbuthnot, but my Bill, which I do not wish to go into in detail is, I suggest, germane to the point at issue. I want merely to put myself right. It would have the effect of very considerably lowering the consumption of fuel.

The Temporary Chairman

The hon. Gentleman may not discuss that now.

Mrs. Castle

I am very glad to hear that.

To return to the simple point at issue, whether I want to go by scooter or by bus, or whether other people have to go by private transport or by bus, the outcome is directly affected by the Clause. For my part, I would much prefer to go by bus. It would be very wet sometimes on a scooter.

Mr. Ellis Smith

Who told my hon. Friend to get a scooter?

Mrs. Castle

The Minister of Transport.

Mr. James Callaghan (Cardiff, South-East)

Will he ride pillion?

Mrs. Castle

I am being very serious about this matter.

Whether it be the Minister of Transport or the Chancellor of the Exchequer, there seems to be developing in the Government a highly frivolous attitude towards one of the basic needs of the people. Mobility is an inescapable need of all people, whether it be to go to work, to go shopping, to visit sick relatives, or whatever it be. People ought not to be immobilised by the Government. Yet this is what we are coming to. It will be too expensive or quite impossible in the end to move beyond our own front doors.

I hope that the Chancellor will pay very serious attention to the powerful pleas which have been put to him on totally non-party lines from both sides of the Committee.

Mr. Donald Wade (Huddersfield, West)

I support the Amendment. Like other hon. Members, I hope that the Chancellor has taken note of the very persuasive arguments which have been advanced on both sides and that he will act in accordance with the wishes which have been expresed.

When the surcharge was introduced in July last year, it was debatable whether hydrocarbon oils should have been included. But we were told that it was temporary. This was the burden of the argument in favour of the surcharge at that time. The effect of paragraph (c) is to make the surcharge permanent and, more than that, the Chancellor is taking power to add a further 10 per cent. whenever he thinks fit. In my view, this raises a matter of principle and an objection of principle.

I do not know how many taxes have been imposed for the first time in this country as a temporary measure to deal with an emergency. It would be an interesting subject for research. If we were to abolish all taxes introduced temporarily to deal with emergencies, the Chancellor might find that most of his revenue vanished overnight. In this case we were told specifically that the surcharge was introduced temporarily in such a way that it could be moved up or down in accordance with the state of the economy. We now find that it is being made permanent.

We have further reason for concern about hydrocarbon oils in that this tax imposes an additional burden on trade and industry and on public transport. I do not know how many letters the Chancellor has received from the British Road Federation, but he will probably recollect the letter sent to him in April on this subject. That letter, signed by Lord Derwent, said: My Federation is both disturbed and disappointed by your decision relating to the duty on petrol and diesel fuel. Road users cannot he blamed if they regard the device of making a temporary tax into something more permanent as extremely unfair, to say the least. A semblance of fairness had been given by the regulator, applied to the whole held of customs and excise duties, but now, in its place, we have discrimination. Trade and industry is clearly not helped by the continuance of the 3d. per gallon impost on fuel, and it remains difficult—indeed, impossible—to reconcile this decision with your earlier exhortations to industry to become more efficient and competitive. Earlier in his letter, Lord Derwent points out that at least £412 million would arise from motor fuel duty, of which sum in turn £230 million would be a cost to trade and industry. The Chancellor calls this consolidation. It is, in fact, consolidation in the wrong direction. It is consolidation of a tax which is a cost to industry and an added burden to transport. It is not clear what the object of the imposition is. Is it designed to help the railways, or is it merely a revenue raising tax?

If it is designed to help the railways, I am sure that it is the wrong way of going about it. We shall not solve the railways' problems by putting an extra tax on petrol. If it is merely a revenue raising tax, then this is not the best way of raising that amount of money. It could be raised in other ways with less harmful effect.

Mr. Gerald Nabarro (Kidderminster)


Mr. Wade

It is a tax on one of the basic costs of industry. For that reason, it is, in my view, thoroughly objectionable.

Mr. A. E. Cooper (Ilford, South)

I have listened to the hon. Member for Huddersfield, West (Mr. Wade) speaking with that sort of competence which Liberal Members of Parliament seem to acquire to utter pious platitudinous generalities. The hon. Gentleman has criticised what is in the Bill without offering any constructive suggestions about how it could be improved. I hope that, as the months go by, we shall hear something a little more constructive from the hon. Gentleman and his hon. Friends.

Mr. Wade

I shall deal with the raising of this amount of revenue, if need be, at the appropriate time. At this stage, will the hon. Gentleman say whether he supports the Amendment or opposes it?

Mr. Cooper

If the hon. Gentleman had not been so impetuous and had waited to hear my speech, he would have had the answers he needs.

It is very difficult to imagine what new arguments on this issue can be advanced. During the twelve years I have been in the House, I have listened to arguments about this kind of Amendment year after year. Each year, the Chancellor of the day, whether a Labour Chancellor or a Conservative Chancellor, has produced the same argument, that revenue considerations do not permit any change.

I shall deal with this matter purely from the point of view of industry, not from the point of view of public transport. Speaking from the standpoint of industry, I say to my right hon. and learned Friend that we do not put down Amendments of this sort year after year just for the fun of it. British industry in all the sectors in which these light hydrocarbon oils are used has suffered ever since the imposition of the tax. We shall not forget that the duty on light hydrocarbon oil was imposed quite by accident. Because it produces so much revenue each year, successive Chancellors have not felt able to reduce it.

Within the past eighteen months, an entirely new situation has arisen. Here, I declare an interest. My own company is vitally affected, as is the industry in which I work. I have had a great deal of correspondence with the Chancellor on the subject. In the manufacture of synthetic resins, a very large quantity of light hydrocarbon oils is used. Depending upon the type of resin produced, the quantity of light hydrocarbon oil varies from as much as 75 per cent. to as little as 25 per cent. I shall not go into all the technicalities of what we call the various types of resin depending upon the white spirit content.

When any importer brings from any country this particular type of resin, he pays a flat ad valorem duty, and this ad valorem duty is less than the amount of hydrocarbon oil duty levied in this country. It follows from this that—I am glad to interrupt what I am saying to join in the welcome to the hon. Member for Coventry, East, (Mr. Crossman) on his return from his very serious illness. We hope that he has made a full recovery.

Hon. Members

Hear, hear.

Mr. Cooper

When these resins are imported into this country from any source whatever, depending upon the quantity of white spirit, the effect visàvis the British manufacturer is considerable. For instance, if a resin with a large white spirit content is imported, then the amount of duty paid by the importer is comparatively low, and this makes it quite impossible for the British manufacturer to compete. As a consequence of this fantastic situation, during the past twelve months about 4,000 tons of alkyd resins have been imported into this country, at a cost of upward of £600,000, which need never have come here at all.

The Treasury's answer to all this is that, because of administrative difficulties—and this is the whole point—the situation cannot be adjusted in favour of the British manufacturer. We have reached a farcical position in the synthetic resin industry of this country. It is an industry which, since the war, has developed to a stage second to none in the world, producing resins which, before the war, were not produced in this country but were always imported. Now, however, we are having to import these resins and close down certain plants as a result of the administrative difficulties involved in this duty.

5.45 p.m.

It is argued that the tax does not affect our export potential, that we can produce satisfactorily in this country, paying the heavy duty and, upon exporting, recover the amount by drawback. In fact, that is true, but the procedure laid down by the Board of Trade for the recovery of drawback is so complex that very few companies are willing to give up the time and labour to finding out what they can get back. The result is that we limit severely the activities of synthetic resin manufacturers in the export sphere.

I said at the beginning that British industry does not cause Amendments of this sort to be tabled year by year for fun. This is a serious Amendment which must help British industry if we will only cease to tax the raw materials of industry. As evidence of that, may I indicate how strongly I feel on this by saying that I regret that I shall not be able to support my right hon. and learned Friend in the Lobby if this Amendment is pressed to a division.

Mr. Anthony Crosland (Grimsby)

The Chancellor of the Exchequer has taken a very heavy hammering from a number of his hon. Friends, and I should think that the hon. Member for Ilford, South (Mr. Cooper) will not be alone in the attitude which he has adopted. I cannot follow him in what he said on the subject of the synthetic resin industry, because I know nothing about it. I should, however, like to give him and his colleagues one piece of advice. This tendency on the part of whoever follows the solitary Liberal speaker to deliver a vehement and virulent attack on the Liberal Party is the most visible sign that hon. Members opposite are badly rattled and have an acute inferiority complex.

Mr. Peyton

The hon. Gentleman will notice how effective it was. The hon. Member for Huddersfield, West (Mr. Wade) has gone.

Mr. Crosland

The hon. Member for Yeovil (Mr. Peyton) showed himself miles to the Left, not merely of the Liberal Party but of the Communist Party.

The hon. Member for Ilford, South, in using the phrase about free consumer choice, was saying, in effect, that we should have no indirect taxation. That was so extreme a view that not even some of my hon. Friends below the Gangway would put it forward.

Mr. Cooper

The hon. Gentleman must not make such a liberal interpretation of what I said. I said nothing of the kind.

Mr. Crosland

My interpretation is correct. He was objecting to this tax on the ground that, by imposing a tax burden on a certain type of fuel, this was a denial of free consumer choice. I regard that view as nonsense. But if it is correct, it must obviously apply to any indirect taxation.

Mr. Cooper


Mr. Crosland

Perhaps the hon. Member would explain why not at some time.

I should, however, like to support my hon. Friends for a number of reasons, not for any of the general reasons, which, I think, are more relevant to the Question. "That the Clause stand part of the Bill" about making temporary taxes permanent, and so on, but for a number of particular reasons which have been stressed. First, I wish to deal with one which has been mentioned by the hon. Member for Manchester, Withington (Sir R. Cary) alone, namely, the effect of this tax on public transport in the cities. It was ironic that almost on the day that the Chancellor of the Exchequer decided to make this tax of £38 million permanent we read the story of the decision of the City of Philadelphia, which is almost the first of American cities, with the exception, perhaps, of California, after a very long argument, heavily to subsidise the public transport buses. I think that this is an inevitable movement.

The irony of it is that the United States has finally learnt its lesson and is moving in the direction of subsidising public transport, whereas we in this country are still moving in the reverse direction. The Government refuse to provide the money needed for the new Victoria Underground line. They increase the burdens of fuel cost on public buses and drive more and more car commuters on to the roads. The result, obviously, is worse and worse traffic congestion, noise, diesel fumes and everything else which makes life increasingly hideous in large city centres.

My hon. and learned Friend the Member for Brigg (Mr. E. L. Mallalieu) said that we should treat transport as a social service. I do not think that we need necessarily go as far as that. Indeed, one has not got to do so. The price that we pay for driving commuters to use private passenger car transport is an extremely heavy economic price, apart from any social price. In view of the economic cost of the land on which private cars park in the centre of London, if motorists paid the full economic price for it they would be paying not 1s., but roughly £2 an hour.

If one works out the economic costs to the rest of transport of more and more private car commuters, it will be seen that it is immensely heavy. We need not think of this matter solely in terms of a social service. If the private car commuter had to pay even the full economic cost, it would be much heavier than the price which he bears today. Instead, the Minister seems determined to ruin Kensington today, High-gate tomorrow, and Hampstead the day after. It will all be made worse by the fact that the public buses will have to bear the additional charge.

A number of hon. Members have referred to rural transport. I do not know whether the Chancellor of the Exchequer or hon. Members opposite realise what an enormous revolt against the Government there will be by the entire rural population one of these days. It is all very well for Ministers to talk about people using scooters, but in places like Lincolnshire and in parts of Wales the consequence of withdrawing rural services at the rate at which they are being withdrawn, when the alternative bus services do not exist, on the pattern of life in these areas will be serious, and there will be an enormous popular revolt against the Government. Apart from the Minister of Transport, I have the impression that no Minister has any idea of the long-term results which Dr. Beeching's policy will have on Britain. I wonder whether the Chancellor has ever seriously considered this. The situation will be made worse by the imposition of this additional charge.

The third point which I wish to deal with was mentioned by my hon. and learned Friend the Member for Kettering (Mr. Mitchison), namely, the effect on local rates. I think that any Government decision which tends to put up local rates is indefensible at the moment, for this reason. Local rates will come under increasingly heavy pressure from education over the next ten years. They will not be able to sustain the burdens which will be put upon them by increased education needs, such as the rising school population. In these circumstances, it seems monstrous to put any other charge on the rates additional to the charges which already exist. In view of the burden which will be put on local rates, I think that most of us would accept that the whole educational programme will collapse unless more of it is taken off local government and put on the central Government.

Lastly—and here I agree partly, at any rate, with the hon. Member for Ilford, South—to put this burden on commercial transport and hence on to industrial costs seems to me totally inconsistent with the Government's general economic policy. If we assume that the Government have an economic policy—it would be courteous to say that they have—it consists of one thing only. It is partly by holding back demand and partly by their incomes policy, to keep costs down in the hope that they will rise more rapidly in our main competitor countries, particularly in Germany. This is the point of the incomes policy.

If this is the policy on which everything depends, it seems to me inconsistent with it to impose any additional indirect charges on industry through the Budget. It seems to me that not only has that very undesirable social effects, but is also economically inconsistent with the rest of the Government's policy.

The most curious remark made in this debate was when my hon. Friend the Member for Westhoughton (Mr. J. T. Price) compared the Chancellor with Adam Smith. One can think of a considerable number of ways in which they differ. Adam Smith at least believed in free competition and disliked monopolies, while under the Chancellor's régime concentration goes on very rapidly, to put it mildly. Adam Smith wrote the most beautiful and lucid English prose. I do not think that it is insulting to the Chancellor to say that if we compared the minority Report of the Beveridge Committee with "The Wealth of Nations", we should have to give the palm to "The Wealth of Nations" on a number of scores. Finally, one major difference is that Adam Smith was a rather competent economist. No one could say that of the Chancellor of the Exchequer.

Mr. Ellis Smith

We have had an interesting and informative debate which, I hope, has made an impression on the Chancellor of the Exchequer. I find myself in almost complete agreement with my hon. Friend the Member for Westhoughton (Mr. J. T. Price), and with the hon. Members for Manchester, Withington (Sir R. Cary) and Ilford, South (Mr. Cooper), who spoke about the effect of this tax on synthetic materials. I should like to put forward more evidence to show the correctness of the case stated by my hon. Friend the Member for Westhoughton and by the hon. Member for Withington and then to present evidence to show the correctness of the case stated by the hon. Member for Ilford, South.

Manchester is the centre of the greatest industrial area in the world. Eleven million people live within a 50-mile radius of that great centre. The Manchester area makes the greatest contribution to our export trade. It was my privilege to be trained in one of the most efficient industrial establishments in the world. All the time we had to bear in mind the costs of production. We had to try to reduce costs of production in every possible way so that manufacturers' costs could be reduced to the minimum.

Since this country is more dependent on exports than any other country, I should have thought that it would have been the Government's policy to assist industry and the services which serve industry so that the costs of production could be kept to a minimum. Instead of that, during the past ten years, the increased costs superimposed on the direct costs of industry have increased as each Chancellor of the Exchequer has presented his Budget. One can, therefore, understand that hon. Members who are well-informed and who have spent many years in industry, like my hon. Friend the Member for Westhoughton, and the hon. Member for Withington, have now reached a stage at which they are forced to speak in the way in which they have spoken this afternoon.

In the area to which I have referred there are approximately 60 separate transport authorities, managed by some of the most competent transport managers in this country. Yet year after year they are showing a deficit instead of a profit on their undertakings. The hon. Member for Withington, being chairman of one of these undertakings, has spoken on behalf of those 60 transport authorities. If the reasoning and logic of my case are right, instead of encouraging those living and working in the great industrial areas, we are discouraging them by the introduction of proposals of this character. In addition, their costs are increasing and, therefore, at their annual meetings they are speaking out against the imposition of charges of this description, and their feeling is reflected in the speech of the hon. Member for Withington.

I therefore wish to provide further evidence to show the Chancellor of the Exchequer why he should reconsider the imposition of this tax, particularly when it results in increases in the costs of production. People living in industrial areas are being forced to go out to live in new towns and new centres of population. We welcome this, but then there is the cost of travelling to and from work, which has a serious effect on their weekly income. This is reflected in their growing concern about the need to increase wages and earnings. It is for these reasons that I am in complete agreement with my hon. Friend the Member for Westhoughton and with the hon. Member for Withington.

6.0 p.m.

The hon. Member for Ilford, South spoke about the effect on taxation on synthetic materials. I am very familiar with people who are among the most skilled of those employed in industry. As a result of experiments carried out in the laboratories of some of the largest industrial establishments in the country, we were leading the world in the use of synthetic materials in the manner described by the hon. Member. We were producing, for example, the finest castings in the world, with a mirror finish.

As a result of the pooling of developments and ideas and the application of scientific discoveries we led the world in the production of patterns made from drawings in these synthetic materials. The result was that the cost of machinery used in the production of aircraft and motor car engines was being reduced to a minimum. Those who were engaged in the industry were proud of these developments, but, as the hon. Member for Ilford, South has said, they are now beginning to feel discouraged. The imposition of overhead costs of this description is gathering momentum year after year until it has reached such a serious state that the hon. Member for Withington was moved to speak in the way he did.

As I am familiar with the industry I felt that I ought to support the plea made to the Chancellor and to say that this process should go no further and that from now onwards we should have a policy of reducing unnecessary overhead charges so that our manufacturers can have a fair chance of competing in the export markets and not have their costs pushed up annually by taxation in the way they have been in the past.

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

We have had a full discussion on these Amendments. It is right that we should have considered them at length, because they raise important matters. It was thought convenient by the Chairman at the time that we should discuss together the official Opposition Amendments and also a series of Amendments in the name of my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) and others, although the Amendment moved by the hon. and learned Member for Kettering (Mr. Mitchison) is of a far more sweeping character than those in the names of my hon. Friends.

Although the two series of Amendments are to some extent inter-related it would probably be convenient for the Committee if I dealt, first, with the Amendment moved by the hon. and learned Member for Kettering and later with the Amendments in the names of my hon. Friends. As I think has become clear to most hon. Members, the effect of the Opposition Amendment would be to reduce the Excise duty on light hydrocarbon oils and also on derv, that is, the heavy oil used in road transport, by 3d. a gallon. This is a very attractive proposition and—I make no complaint about it—the sort of proposition one would expect from the Opposition. But bearing in mind the cost which this would involve, I think that the hon. and learned Member for Kettering and others in whose names the Amendment stands know perfectly well that it would be quite wrong for the Government to accept it in the circumstances of this year.

The hon. and learned Member for Kettering dwelt at some length on general matters concerning the regulator. Perhaps it would be more convenient for the Committee to consider those aspects at a later stage, but I would make one point in view of a matter raised by several hon. Members. Criticism was made of the consolidation of this duty. My hon. Friend the Member for Manchester, Withington (Sir R. Cary) used the phrase "sleight of hand". I can only say in all frankness, and I hope that hon. Members will bear the point in mind, that it would have been all too easy for my right hon. and learned Friend to have maintained the rate of duty at the present rate, that is, including the 3d. which the Opposition wish to take off by means of the Amendment, and to have no reference to hydrocarbon oils in the Finance Bill, but merely to include subsection (3) of the Clause.

As a result, the regulator and the 10 per cent. surcharge would have remained in force automatically until the end of August and it would then have been for my right hon. and learned Friend to consider the matter again. It was because he felt it right to give hon. Members on both sides of the Committee an opportunity of debating these sorts of matters that my right hon. and learned Friend dealt with it in this way.

Mr. Jay

Does the hon. Gentleman understand that what we are mainly complaining about is not the way in which the Chancellor maintained the duty, but the fact that he maintained it at all?

Mr. Barber

I was dealing with a serious point raised by my hon. Friend the Member for Withington, which, I thought, deserved an answer.

The cost of the Opposition proposal would be no less than £39 million in a full year. The hon. and learned Member for Kettering referred to the closure of many railway lines and to the Jack Report. I understand that that Report is concerned only with rural transport. Many hon. Members on both sides of the Committee have devoted a considerable proportion, and in some cases the whole, of their speeches to the question of buses in cities and in rural areas. I must point out to those hon. Members who are trying to make up their minds honestly on the Amendment that it involves a coast of £39 million to the Exchequer and that of that figure only £3 million is attributable to fuel used in buses, both in cities and in rural areas. Consequently, it would be quite wrong if the Committee took a decision on the Amendment on the assumption that what we were primarily concerned with was the cost of rural or city transport, or both.

It is sometimes possible to consider the general shape of the Budget separately from the individual fiscal proposals, but no one would pretend that that is so in the case of a proposal which will cost £39 million a year. The Opposition have chosen for the first debate of this Committee stage, quite fairly, a proposal which goes to the very root of the Budget, yet the Opposition do not really object to the general shape of the Budget. I shall not go over again the reasons why my right hon. and learned Friend decided this year that there should be no change in the general burden of taxation, but, having reached that conclusion, as my hon. Friend the Member for Langstone indicated, my right hon. and learned Friend could not possibly advise the Committee to accept an Amendment of this kind.

Mr. Callaghan

I hope that the hon. Gentleman will not associate us with a suggestion that we agree with the general shape of the Budget. We do not. We think it too deflationary. I was waiting for the hon. Gentleman to advance some reasons for these proposals. We have attacked the Budget all through on the ground that we think that there could have been remissions this year but that they were being held up for other purposes, perhaps for electoral reasons later.

Mr. Barber

I know that in one or two of his speeches the hon. Member expressed some views against the general shape of the Budget, but I had in mind the fact that, at the end of the four-day debate on the Budget, when the hon. and learned Member for Kettering rose to wind up, only seven Labour Members were present, and they did not even vote on the final stages of the Budget—which is a matter of some significance.

The hon. and learned Member for Kettering and one or two other hon. Members opposite—and I thought that they had their tongues in their cheeks—referred to the Surtax relief which was granted in last year's Finance Act. I do not know whether it is the policy of the Labour Party, if elected to office, to withdraw the Surtax relief. If so, perhaps hon. Members opposite will say so clearly.

Mr. Nabarro

Ask the Liberal Party.

Mr. Barber

I hope that if hon. Members opposite propose that, they will also say whether they propose to reduce the Profits Tax. It is an extraordinary thing—and it leads me to believe that hon. Members opposite are doing no more than to make debating points in referring to Surtax—but I have yet to hear an hon. Member speaking on this matter refer to the considerable increase in revenue which was derived at the same time from the increase in Profits Tax. To be fair, that fact should be mentioned.

The Deputy-Chairman (Sir Robert Grimston)

Mr. Crosland.

Mr. Nabarro


The Deputy-Chairman

Order. There cannot be two Members on their feet at once. Mr. Crosland.

Mr. Nabarro

I rose first, Sir Robert.

Mr. Crosland

No. The hon. Member was talking first, and talking louder; that is all.

Will the Economic Secretary bear in mind the fact that one reason why some hon. Members on this side of the Committee do not pay constant attention to Profits Tax, or regard it as balancing the Surtax concession, is that we assume that to a large extent it is passed on to the consumer?

Mr. Barber

Does the hon. Member really wish me to answer him? If so, I can only assume that he was not in the Chamber when this point was first dealt with, because it was dealt with in terms of the cost to the Exchequer, and from that point of view there can be no doubt—the hon. Member makes gestures, but I can only assume that he was not present, because we were then discussing the matter in relation to the cost to the Exchequer, and in that respect it is relevant to consider that the cost of the Surtax relief was almost entirely outweighed by the increase in Profits Tax.

Mr. Nabarro

Why does my hon. Friend continue to fall into the error of questioning the Socialist Opposition in these matters? Would it be not more appropriate to address some of his inquiries in respect of Surtax policy to the Shadow Liberal Chancellor of the Exchequer—the sole representative of the Liberal Party now present? Could not he be asked to make a statement on Liberal policy on Surtax matters?

Mr. Barber

The reason why I have not asked is that I knew that my hon. Friend was on to the point, and also because I had assumed that the hon. Member for Huddersfield, West (Mr. Wade) was the Liberal Chief Whip. I am so sorry.

Mr. Nabarro

I must deprecate at once the services of the Treasury Information Division. Is not my hon. Friend aware that the hon. Member for Huddersfield, West (Mr. Wade) is now referred to publicly in many journals as the shadow Liberal Chancellor of the Exchequer?

Mr. Wade

It would be helpful if we ignored this rather futile backchat from the hon. Member for Kidderminster (Mr. Nabarro) and listened to the Minister to see whether he could put forward any reasons for not accepting the Amendment.

Mr. Nabarro

A very feeble answer.

Mr. Barber

I do not think that the consolidation of this 3d. surcharge on hydrocarbon oils is unreasonable. Since, at the moment, I am dealing solely with the Opposition Amendment, which is concerned with the duty of 3d. referred to in it, it is not unfair to remind the Committee that in the last two years when hon. Members opposite were in power these duties were increased by no less than 1s. 1½d. per gallon.

It is true that any reduction in the duty, such as is proposed by the Opposition, would have an advantageous effect on industrial costs. This is a relevant consideration. Although I do not wish to deny the point, it is fair to remind the Committee that this duty has the great advantage of being widely and therefore thinly spread, and its effect in any individual case is therefore generally slight.

Another very relevant aspect is the relationship of the burden of taxation on oil to the general burden of taxation. That relationship is now roughly the same as it was before the war. If we take the pre-war rate of 9d. a gallon on these hydrocarbon oils and make due allowance for the change in the value of money, we arrive at a figure of 2s. 1d. per gallon. If we also take into account the increase in the general burden of taxation and the enormously improved social services, the additional cost of defence, and so on, the proportion of hydrocarbon oil duty to the general burden of taxation is much the same as it was before the war.

I referred a few moments ago to the effect of oil duties upon industrial costs. I want to say a word about the level of petrol and oil duties in other countries. Our competitive position vis-à-vis other countries is of great importance. The hon. and learned Member for Kettering referred to the Common Market countries. It is very difficult to make precise comparisons, because of the different structure of the taxes and duties in other countries, but the present burden of the United Kingdom duty, at 2s. 9d. a gallon, is less than the burden of duty in France, Italy and Belgium, and only slightly higher than in Western Germany and Holland. So that it cannot be said that, generally speaking, we are at any competitive disadvantage as compared to those countries.

Mr. Jay

Does that mean that the Government intend to get our tax up to the highest level in the world?

Mr. Barber

Not in the least. I was going on to say that, be that as it may, I have not the slightest doubt that if we felt it right to reduce the present level of the hydrocarbon oil duty it would be of advantage to British industry. But the overwhelming consideration at the moment is the cost of the proposal, which, as I said earlier, is £39 million a year. Even supposing that my right hon. Friend had £39 million to spare, I wonder whether the Opposition really think that this type of reduction should have priority.

Mr. Wade

I was hoping that the hon. Member would give us the proportion of this £39 million that is borne directly by trade and industry. He referred to the smaller proportion borne by public transport. Has he any details of the amount borne directly by trade and industry, and its effect on costs?

Mr. Barber

All that I can give the hon. Member, off the cuff, are the following facts: motor cars would account for £20 million of the £39 million; buses, including coaches, for £3 million and goods transport for £14 million. That is the only break-down that I have available at the moment.

The Opposition Amendment runs clean counter to my right hon. and learned Friend's Budget, and for that reason alone I must advise the Committee to reject it.

I now turn to the several Amendments in the names of my hon. Friend the Member for Langstone and others, which are concerned to provide relief from duty in respect of light oils used in various ways in industry. When my right bon and learned Friend was framing his Budget he considered the matter carefully. I had the advantage of a discussion with my hon. Friend the Member for Langstone and others in February of this year. I am afraid that my right hon. and learned Friend came to the conclusion that we could not accede to their request that there should be some relief this year.

As for the observations made by my hon. Friend the Member for Yeovil (Mr. Peyton), when referring to the glass industry and the steel industry, I think that he was under some misapprehension about the effect either of the Opposition Amendment or of the Clause. I can give my hon. Friend the firm assurance that the duty on heavy hydrocarbon oils, other than oils used as road fuel—in other words, derv—is not under consideration in the Amendment. The 10 per cent. surcharge on that type of oil, not used as road fuel, is not being consolidated in the Bill. I thought that it would be helpful to make that point clear.

6.15 p.m.

My hon. Friends have made apparent to the Committee the effect of their series of Amendments, and I need not explain it further. Nevertheless, I want briefly to deal with various points raised by my hon. Friend and by one or two hon. Members opposite which are relevant to the Amendments. My hon. Friend the Member for Birminghan, Yardley (Mr. Cleaver) said that the present position put us at a competitive disadvantage with other countries. In certain respects that may be true, because there is no doubt that in some countries tax relief is given in respect of oil used for industrial processes. But it is extremely difficult to draw any firm conclusion from those facts without also taking into account the general levels and systems of taxation. When I met my hon. Friend the Member for Langstone in February I believe that he, and those members of the Industrial Light Oils Committee who came with him to see me, agreed that, on the whole, the German manufacturer probably bore a heavier burden of taxation than his British competitor. Nevertheless, this is a matter of great importance to British industry.

My hon. Friend the Member for Yardley also referred to our possible entry into the Common Market. I can assure him that although many detailed matters concerning the Treaty of Rome and its effect on the hydrocarbon oil duty if we join are not clear, nothing in it seems likely to limit our freedom in respect of the matters with which the Amendments are concerned.

My hon. Friend the Member for Langstone referred to the alleged inflationary effect of the tax on the cost of production. We must keep this matter in proper perspective, and consider the effect of the duty upon the ultimate prices of products to the consumer. My hon. Friend referred to motor car tyres, and to the figure that I gave last year of 1½d. per tyre as being the incidence of duty. I appreciate the point that my hon. Friend has made today, but I am doubtful whether, if we were to accede to his request, the 1½d. reduction in the cost of producing a motor car tyre would be passed on to the consumer. Nevertheless, I agree with him that if we were to do as he requests it would be of some advantage to industry.

There is one further matter on which I should like to say a few words. My hon. Friend the Member for Ilford, South (Mr. Cooper) and my hon. Friend the Member for Yardley referred to resins. The present position is that oil duty is paid at 2s. 9d. a gallon on the light oil used in the manufacture of home-produced goods, whereas in the case of imported goods a flat-rate charge of 5½ per cent., ad valorem, is made where light oil remains present in the product. This is the point which my hon. Friend the Member for Ilford, South had in mind and which he thought was working unfairly. The 5½ per cent. duty on imports containing light oil represents the duty on the oil content at the 2s. 9d. a gallon rate. It certainly does not favour imported goods as a whole. My hon. Friend referred to certain alkyd resin solutions and he thought that in that case the resin solutions of the foreigner were at an advantage compared with home-produced goods. Although over all this present system does not favour the foreigner, the possible claim of alkyd resin solutions to special flat-rate treatment is under investigation by the Custom's and Excise, and I will write to my hon. Friend as soon as that investigation is complete.

I have tried as quickly and as brieffy as I could to cover some of the points which were raised by my hon. Friends in their series of Amendments and which, I realise, were of importance. In a Budget in which my right hon. and learned Friend has been able to provide only comparatively limited reliefs in taxation here and there, the Committee has to consider not only the matters of principle involved—I dare not mention the word "integrity"again—but also the fact that the Amendments would cost something. Of course their cost would be far less than the £39 million involved in the Opposition Amendment and to that extent they are more realistic. I hope that my hon. Friend the Member for Langstone will appreciate the significance of what I have said, particularly in the circumstances of this year, and that he will therefore not feel obliged this year to press his Amendments.

6.30 p.m.

Mr. Frank McLeavy (Bradford, East)

Hon. Members on this side of the Committee, and possibly many hon. Members opposite, will regret the tone of the Economic Secretary's reply, which has been most unsatisfactory. It is regrettable that on an important issue of this character we have not had the opportunity of hearing the Chancellor of the Exchequer himself. When we discussed the important matter of the taxation of the motor industry in the past, Lord Amory, the ex-Chancellor of the Exchequer, always gave a comprehensive reply to the debate.

As my hon. and learned Friend the Member for Kettering (Mr. Mitchison) said, the purpose of our Amendment is to restore the level of the tax on fuel oil to what it was prior to the increase in the "little Budget", of July. The Bill removes the surcharge on petrol and fuel oil, but retains the tax in the form of higher duty. Thus a temporary increase in an emergency situation is consolidated into the new high rate of 2s. 9d. per gallon duty. Although concern about this temporary increase was felt by industry and by hon. Members, we took the view that it was a temporary expedient which would be removed at an early date. There is no wonder that the chairman of the British Road Federation called this increase in tax a back-door method and a reflection upon the standard of Government integrity. Those are strong words for a source which usually supports the Tories, but they show the resentment by industry and public transport undertakings throughout the country at this unnecessary and undesirable increase in the cost of transport.

Before the Budget it was pointed out to the Chancellor that motor taxation had risen from £131 million in 1950 to an expected figure of £730 million during the last financial year. In the same period, revenue from motor taxation had risen from an annual average of about £30 per vehicle to about £73 per vehicle. It had been assumed that the increase in the normal rate of production of motor vehicles would bring the Treasury increased revenue and thus enable some reduction in the fuel oil taxation of industry generally. The ex-Chancellor of the Exchequer was impressed by the arguments about taxation of the motor car industry, particularly fuel oil taxation. He made a statement on television to the effect that he appreciated the difficulties of the transport industry and that he was sorry that he was not able to make some adjustment in his last Budget.

It was the duty of the Treasury to draw the Chancellor's attention to the views of the ex-Chancellor. The motor car industry undoubtedly depends upon an ever-increasing sale of vehicles in the home market so that by mass production it can lower costs and sell in the foreign market at competitive prices. Unless we reduce the level of taxation on the industry generally, its competitiveness will be seriously impaired.

I do not know whether the Chancellor has considered three factors affecting fuel oil taxation. Firstly, there are many thousands of private motorists who are finding it extremely difficult to run their cars because of the heavy overall cost, and an extra tax of 3d. per gallon on petrol, with no guarantee that it is a final increase of taxation, is unjustified. Secondly, there is the running of commercial undertakings and the resulting charge upon the productive capacity of industry. The time has arrived when the Government must seriously consider the relationship of the heavy taxation of the motor industry on industry's future competitive ability. Thirdly, there is the effect on the transport passenger industry.

The Chancellor ought to have some personal knowledge of this matter. He represents a delightful area, the Wirral division of Cheshire, and his constituents use public transport to get to and from their work in Birkenhead or Liverpool. If he took the trouble to inquire from them about the cost and difficulties of transport because of the infrequency of services in that area, infrequency which is due to heavy taxation, he would appreciate the tremendous disadvantages being placed on the travelling public.

The bus industry ought to be regarded as a semi-social service. I have said many times that bus undertakings have to perform a public duty. Their licences are granted by traffic commissioners who decide precisely the routes to be followed, the fares to be charged and the frequency of services. There is no undertaking which is so tied down to a system of regulation. Goods vehicles can take loads from A to Z as they choose and need take only profitable loads, but with bus undertakings it is an entirely different matter. They have to run scheduled services whether the buses are full or empty. They have to pay tax as though every seat in every bus is always full.

Mr. A. R. Wise (Rugby)

To come down to pure mathematics, would not the hon. Member for Bradford, East (Mr. McLeavy) agree that what he has been wringing our withers with is one-tenth of 1d. per mile on the private motorist and one-third of 1d. per mile on a local bus load?

Mr. McLeavy

I am trying to impress on the Chancellor that there is no industry in the country that is taxed so severely and so unjustifiably as the motor industry generally. I feel that the Chancellor ought to look into the question of its taxation in relation to the taxation of any other industry.

I return to the question of the passenger transport service because I want to impress upon the Chancellor the vital importance of this matter. On Friday, we had a discussion in the House on rural transport services. We have had many discussions over the years on this subject, and on each occasion the Minister replying to the debate has refused to take effective action. I think that the remedy lies very largely with the Chancellor.

I know that the bus undertakings have done a tremendous job in providing services for the people residing in the rural areas. They have done it as a kind of public service and because they felt that it was a public duty, but they have had to discontinue some of those services because of the financial difficulties arising from heavy taxation. The traffic commissioners have very strong powers to influence bus undertakings to provide unremunerative services, but if they find, as they are finding repeatedly today, that the bus undertakings cannot possibly carry the dead weight of rural services, they have to allow their discontinuance.

My plea to the Chancellor is that if we are to provide transport services for the rural areas on a basis which is reasonable and fair, the only way to do so is to review the incidence of fuel oil taxation, so that the bus undertakings can do their job. I do not believe that the Treasury really understands the importance of the bus transport industry. I know that the Treasury thinks in the terms that an extra 3d. per gallon does not matter very much, but the existing heavy taxation is a tremendous impediment to the bus undertakings in carrying out their responsibilities in the rural areas.

We have no guarantee that the Chancellor will not introduce, probably in July of this year, another regulator in the form of a further 10 per cent. surcharge, and that when the country has accepted it as a matter of emergency, the Chancellor will not then incorporate it into a Budget Resolution and make it a permanent increase. I think that the whole thing has got out of gear and that the Chancellor has been ill-advised. I hope that he will now pay regard to what has been said here, because unless something is done, and done speedily, the rural areas will have no service at all.

Some railway services have been withdrawn. The bus services have been curtailed and in some cases discontinued because the bus undertakings cannot economically provide the services that they want to provide. We must get the Chancellor to realise the fundamental issues involved.

On Friday I accused Conservative Members representing rural constituencies of not having the courage to chase the Chancellor of the Exchequer. In debate after debate they have pleaded with the Minister of Transport for better services and the continuance of services, and they have had no reply. They have gone away apparently quite happy. I appeal to the Chancellor to re-examine this matter and to make sure that the bus undertakings particularly are relieved of these financial difficulties which prevent them from providing the service to the community which is essential for communal life in the countryside.

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

The Committee divided: Ayes 251, Noes 191.

Division No. 183.] AYES [6.47 p.m.
Agnew, Sir Peter Galbraith, Hon. T. G. D. Miscampbell, Norman
Aitken, W. T. Gammans, Lady Montgomery, Fergus
Allan, Robert (Paddington, S.) Gardner, Edward More, Jasper (Ludlow)
Allason, James Gilmour, Sir John Morgan, William
Atkins, Humphrey Glover, Sir Douglas Morrison, John
Barber, Anthony Glyn, Dr. Alan (Clapham) Nabarro, Gerald
Barlow, Sir John Goodhew, Victor Neave, Airey
Barter, John Gough, Frederick Nicholls, Sir Harmer
Batsford, Brian Grant, Rt. Hon. William Nugent, Rt. Hon. Sir Richard
Baxter, Sir Beverley (Southgate) Green, Alan Orr, Capt. L. P. S.
Beamish, Col. Sir Tufton Grosvenor, Lt.-Col. R. G. Osborne, Sir Cyril (Louth)
Bennett, F. M. (Torquay) Gurden, Harold Page, Graham (Crosby)
Bevins, Rt. Hon. Reginald Hall, John (Wycombe) Page, John (Harrow, West)
Biffen, John Hamilton, Michael (Wellingborough) Pannell, Norman (Kirkdale)
Biggs-Davison, John Harris, Frederic (Croydon, N. W.) Partridge, E.
Birch, Rt. Hon. Nigel Harris, Reader (Heston) Pearson, Frank (Clitheroe)
Bishop, F. P. Harrison, Brian (Maldon) Percival, Ian
Black, Sir Cyril Harvey, Sir Arthur Vere (Macclesf'd) Peyton, John
Bossom, Clive Harvie Anderson, Miss Pickthorn, Sir Kenneth
Bourne-Arton, A. Hastings, Stephen Pike, Miss Mervyn
Box, Donald Hay, John Pilkington, Sir Richard
Boyd-Carpenter, Rt. Hon. John Heald, Rt. Hon. Sir Lionel Pitman, Sir James
Boyle, Sir Edward Henderson, John (Cathcart) Pitt, Miss Edith
Brains, Bernard Hendry, Forbes Pott, Percivall
Bromley-Davenport, Lt.-Col. Sir Walter Hicks Beach, Maj. W. Powell, Rt. Hon. J. Enoch
Brooke, Rt. Hon. Henry Hiley, Joseph Price, H. A. (Lewisham, W.)
Brooman-White, R. Hill, Dr. Rt. Hon. Charles (Luton) Prior, J. M. L.
Brown, Alan (Tottenham) Hill, Mrs. Eveline (Wythenshawe) Profumo, Rt. Hon. John
Browne, Percy (Torrington) Hill, J. E. B. (S. Norfolk) Proudfoot, Wilfred
Bryan, Paul Hinchingbrooke, Viscount Pym, Francis
Buck, Antony Holland, Phillip Quennell, Miss J. M.
Bullard, Denys Hollingworth, John Rawlinson, Peter
Bullus, Wing Commander Eric Hopkins, Alan Redmayne, Rt. Hon. Martin
Burden, F. A. Howard, Hon. G. R. (St. Ives) Rees, Hugh
Butcher, Sir Herbert Howard, John (Southamtuon, Test) Renton, David
Campbell, Sir David (Belfast, S.) Hughes Hallett, Vice-Admiral John Ridsdale, Julian
Campbell, Gordon (Moray & Nairn) Hughes-Young, Michael Robinson, Rt. Hn. Sir R. (B'pool, S.)
Carr, Robert (Mitcham) Hulbert, Sir Norman Rodgers, John (Sevenoaks)
Chataway, Christopher Hurd, Sir Anthony Roots, William
Chichester-Clark, R. Hutchison, Michael Clark Ropner, Col. Sir Leonard
Clark, William (Nottingham, S.) Iremonger, T. L. Royle, Anthony (Richmond, Surrey)
Clarke, Brig. Terence (Portsmth, W.)
Cleaver, Leonard Jackson, John Russell, Ronald
Cole, Norman James, David St. Clair, M.
Collard, Richard Jenkins Robert (Dulwich) Seymour, Leslie
Cooke, Robert Jennings, J. C. Sharples, Richard
Cooper, A. E. Johnson, Eric (Blackley) Shaw, M.
Cooper-Key, Sir Neill Kaberry, Sir Donald Shepherd, William
Cordeaux, Lt.-Col. J. K. Kerans, Cdr. J. S. Skeet, T. H. H.
Costain, A. P. Kerr, Sir Hamilton Smith, Dudley (Br'ntf'd & Chiswick)
Coulson, Michael Kitson, Timothy Smyth, Brig. Sir John (Norwood)
Courtney, Cdr. Anthony Lagden, Godfrey Spearman, Sir Alexander
Craddock, Sir Beresford Lambton, Viscount Speir, Rupert
Crosthwaite-Eyre, Col. Sir Oliver Leather, E. H. C. Stanley, Hon. Richard
Cunningham, Knox Leburn, Gilmour Stevens, Geoffrey
Curran, Charles Legge-Bourke, Sir Harry Steward, Harold (Stockport, S.)
Dalkeith, Earl of Lewis, Kenneth (Rutland) Stoddart, J. A.
Dance, James Lilley, F. J. P. Stoddart-Scott, Col. Sir Malcolm
d'Avigdor-Goldsmid, Sir Henry Litchfield, Capt. John Storey, Sir Samuel
Deedes, W. F. Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield) Studholme, Sir Henry
de Ferranti, Basil Lloyd, Rt. Hon. Selwyn (Wirral) Summers, Sir Spencer
Donaldson, Cmdr. C. E. M. Longden, Gilbert Tapsell, Peter
Doughty, Charles Loveys, Walter H. Taylor, Sir Charles (Eastbourne)
Drayson, G. B. Lucas-Tooth, Sir Hugh Taylor, Frank (M'ch'st'r, Moss Side)
du Cann, Edward McAdden, Stephen Taylor, W. J. (Bradford, N.)
Duncan, Sir James McLean, Neil (Inverness) Teeling, Sir William
Eden, John Macleod, Rt. Hn. Iain (Enfield, W.) Temple, John M.
Elliot, Capt. Walter (Carshalton) MacLeod, John (Ross & Cromarty) Thatcher, Mrs. Margaret
Elliott, R. W. (Nwcastle-upon-Tyne, N.) McMaster, Stanley R. Thomas, Leslie (Canterbury)
Emmet, Hon. Mrs. Evelyn Macpherson, Niall (Dumfries) Thorneycroft, Rt. Hon. Peter
Errington, Sir Eric Maddan, Martin Thornton-Kemsley, Sir Colin
Farey-Jones, F. W. Maginnis, John E. Tilney, John (Wavertree)
Farr, John Maitland, Sir John Touche, Rt. Hon. Sir Gordon
Finlay, Graeme Markham, Major Sir Frank Turner, Colin
Fisher, Nigel Marshall, Douglas van Straubenzee, W. R.
Fletcher-Cooke, Charles Marten, Neil Vane, W. M. F.
Forrest, George Mawby, Ray Vickers, Miss Joan
Fraser, Ian (Plymouth, Sutton) Maxwell-Hyslop, R. J. Vosper, Rt. Hon. Dennis
Freeth, Denzil Maydon, Lt.-Cmdr. S. L. C. Wakefield, Sir Wavell
Walder, David Williams, Paul (Sunderland, S.) Woodnutt, Mark
Walker, Peter Wills, Sir Gerald (Bridgwater) Woollam, John
Walker-Smith, Rt. Hon. Sir Derek Wilson, Geoffrey (Truro) Worsley, Marcus
Wells, John (Maidstone) Wise, A. R. Yates, William (The Wrekin)
Whitelaw, William Wolrige-Gordon, Patrick
Williams, Dudley (Exeter) Wood, Rt. Hon. Richard TELLERS FOR THE AYES:
Mr. Noble and Mr. McLaren.
Ainsley, William Harper, Joseph Parkin, B. T.
Allaun, Frank (Salford, E.) Hart, Mrs. Judith Paton, John
Allen, Scholefield (Crewe) Hayman, F. H. Pavitt, Laurence
Bacon, Miss Alice Henderson, Rt. Hn. Arthur (Rwly Regis) Pearson, Arthur (Pontypridd)
Baird, John Herbison, Miss Margaret Peart, Frederick
Baxter, William (Stirlingshire, W.) Hewitson, Capt. M. Pentland, Norman
Beaney, Alan Hill, J. (Midlothian) Plummer, Sir Leslie
Bellenger, Rt. Hon. F. J. Hilton, A. V. Prentice, R. E.
Bence, Cyril Holman, Percy Price, J. T. (Westhoughton)
Bennett, J. (Glasgow, Bridgeton) Holt, Arthur Probert, Arthur
Benson, Sir George Houghton, Douglas Proctor, W. T.
Blackburn, F. Howell, Charles A. (Perry Barr) Pursey, Cmdr. Harry
Blyton, William Howell, Denis (Small Heath) Rankin, John
Boardman, H. Hoy, James H. Reynolds, G. W.
Bottomley, Rt. Hon. A. G. Hughes, Emrys (S. Ayrshire) Rhodes, H.
Bowden, Rt. Hn. H. W. (Leics. S. W.) Hunter, A. E. Roberts, Albert (Normanton)
Bowles, Frank Hynd, H. (Accrington) Robertson, John (Paisley)
Boyden, James Hynd, John (Attercliffe) Robinson, Kenneth (St. Pancras. N.)
Braddock, Mrs. E. M. Irvine, A. J. (Edge Hill) Rodgers, W. T. (Stockton)
Brockway, A. Fenner Irving, Sydney (Dartford) Ross, William
Brown, Rt. Hon. George (Belper) Jay, Rt. Hon. Douglas Shinwell, Rt. Hon. E.
Brown, Thomas (Ince) Jenkins, Roy (Stechford) Short, Edward
Butler, Herbert (Hackney, C.) Jones, Rt. Hn. A. Creech (Wakefield) Silverman, Julius (Aston)
Callaghan, James Jones, Dan (Burnley) Skefflington, Arthur
Castle, Mrs. Barbara Jones, Jack (Rotherham) Slater, Mrs. Harriet (Stoke, N.)
Chapman, Donald Kelley, Richard Slater, Joseph (Sedgefield)
Collick, Percy Kenyon, Clifford Small, William
Craddock, George (Bradford, S.) King, Dr. Horace Smith, Ellis (Stoke, S.)
Cronin, John Lawson, George Snow, Julian
Crosland, Anthony Ledger, Ron Sorensen, R. W.
Crossman, R. H. S. Lee, Frederick (Newton) Spriggs, Leslie
Cullen, Mrs. Alice Lee, Miss Jennie (Cannock) Steele, Thomas
Darling, George Lewis, Arthur (West Ham, N.) Stewart, Michael (Fulham)
Davies, G. Elfed (Rhondda, E.) Lubbock, Eric Stones, William
Davies, Harold (Leek) Mabon, Dr. J. Dickson Strachey, Rt. Hon. John
Davies, S. O. (Merthyr) McCann, John Stross, Dr. Barnett (Stoke-on-Trent, C.)
Deer, George MacColl, James Swain, Thomas
Delargy, Hugh MacDermot, Niall Swingler, Stephen
Dempsey, James McInnes, James Taverne, D.
Diamond, John McKay, John (Wallsend) Taylor, Bernard (Mansfield)
Dodds, Norman McLeavy, Frank Thomas, Iorwerth (Rhondda, W.)
Donnelly, Desmond MacMillan, Malcolm (Western Isles) Thompson, Dr. Alan (Dunfermline)
Ede, Rt. Hon. C. Mallalieu, E. L. (Brigg) Timmons, John
Edelman, Maurice Mallalieu, J. P. W. (Huddersfield, E.) Tomney, Frank
Edwards, Rt. Hon. Ness (Caerphilly) Mapp, Charles Wade, Donald
Edwards, Robert (Bilston) Mason, Roy Wainwright, Edwin
Edwards, Walter (Stepney) Mellish, R. J. Warbey, William
Evans, Albert Mendelson, J. J. Weitzman, David
Fernyhough, E. Milne, Edward Wells, Percy (Faversham)
Fletcher, Eric Mitchison, G. R. Wells, William (Walsall, N.)
Foot, Dingle (Ipswich) Monslow, Walter Whitlock, William
Foot, Michael (Ebbw Vale) Moody, A. S. Wilkins, W. A.
Forman, J. C. Morris, John Willey, Frederick
Fraser, Thomas (Hamilton) Moyle, Arthur Williams, D. J. (Neath)
Galpern, Sir Myer Mulley, Frederick Williams, Ll. (Abertillery)
Ginsburg, David Neal, Harold Williams, W. T. (Warrington)
Gourlay, Harry Noel-Baker, Rt. Hn. Philip (Derby, S.) Willis, E. G. (Edinburgh, E.)
Greenwood, Anthony Oliver, G. H. Wilson, Rt. Hon. Harold (Huyton)
Griffiths, David (Rother Valley) Oram, A. E. Winterbottom, R. E.
Griffiths, W. (Exchange) Oswald, Thomas Woof, Robert
Grimond, Rt. Hon. J. Padley, W. E. Yates, Victor (Ladywood)
Gunter, Ray Paget, R. T.
Hale, Leslie (Oldham, W.) Pannell, Charles (Leeds, W.) TELLERS FOR THE NOES:
Hall, Rt. Hn. Glenvil (Colne Valley) Pargiter, G. A. Mr. Grey and Dr. Broughton.
Hamilton, William (West Fife) Parker, John
Mr. Stephen McAdden (Southend, East)

I beg to move, in page 2, line 42, to leave out paragraph (d).

The Deputy-Chairman

With this Amendment is selected the Amendment in page 3, line 13, at the end to insert: (3) In the case of the pool betting duty, no equivalent increase shall be made in the rate of the duty applicable, but the rate of duty applicable to bets other than bets made by means of a totalisator set up on a licensed dog race course shall be reduced to twenty-five per cent. with effect for bets made at any time by reference to an event taking place after the commencement of this Act.

Mr. McAdden

I put down the Amendment because it is about time that a Conservative Chancellor of the Exchequer was called upon to defend the maintenance of taxation imposed by previous Governments. Although we have had a Conservative Government in power since 1951, no Conservative Chancellor of the Exchequer so far has been called upon to justify the maintenance of this tax. M. Colbert, Finance Minister to Louis XIV, said that intelligent taxation was plucking the goose to secure the greatest number of feathers with the least amount of squealing. But that doctrine in recent times appears to have been superseded by the doctrine that what is administratively convenient is the right thing to do. No one can deny that it is administratively convenient for the Treasury to find a way of collecting tax from a limited number of sources which produces a considerable sum of revenue without inquiring too much into the justice of the tax which is imposed.

This tax was imposed by a Socialist Government in 1947 at a rate of 10 per cent. In the following year it was raised to 20 per cent., and in 1949 it was raised to 30 per cent. This punitive rate of taxation continued until the Chancellor's regulator came into operation, when it was raised by a further 3 per cent. to a total of 33⅓ per cent., at which level the Chancellor proposes to consolidate the tax.

Merely to continue the taxes of your predecessors without inquiring whether they were just in the first place and whether circumstances have so changed as to make it desirable to vary them is rather a lazy way of doing things. Although Treasury officials may delight in finding something which is administratively convenient for them to operate, we ought to have some regard for the justice of the taxation levied by the Committee. It therefore seems to me that we should see whether it is right that this form of gambling or betting should be singled out for this particularly punitive rate of taxation when, in the changed circumstances of the last two years, my right hon. Friend the Home Secretary has so altered the pattern of gambling and betting in this country that the Treasury might do well to consider whether it should not cast its net a little wider and see whether some of the intensive forms of gambling going on all over the country, such as bingo and "chemmy" parties and all kinds of gambling of that description, which is on a greatly increased scale, ought to be brought within the sphere of taxation, too. This would bring about a more equitable treatment for gambling on football pools which not even the Churches' Committee on Gambling seriously suggests is a great moral and social evil corrupting the fibres of the nation, causing husbands to leave their wives and homes to break up. Much more pernicious forms of gambling, which in some cases produce evil results, are allowed to go scot-free.

In this Budget the only change which has been made is that if one bets on the dogs the rate is reduced from 11 to 10 per cent., but if one is wicked enough to bet on football pools the tax has been fixed at 33⅓ per cent. If one bets on horses there is no taxation at all. If one goes to Crockfords or elsewhere and plays "chemmy", there is no tax at all. I wonder why my right hon. and learned Friend has not bent his mind to the widespread practice of gambling in other directions instead of sticking to this easy administrative method of picking up £20 to £30 million a year from people who in the main are pursuing a pretty harmless form of amusement. Many people throughout the country, most of them in the lower income groups, thoroughly enjoy their 5s. a week flutter on the football pools. On Friday night they think that they are millionaires and on Saturday they discover that they are not.

7.0 p.m.

The Treasury has the greatest stake-holding in gambling in this country. My only quarrel is that they concentrate their stake-holding on gambling in this one form; with the exception of a 10 per cent. tax on greyhound racing, their sole revenue from gambling is the 33⅓ per cent. tax on football pools.

I therefore put down these Amendments, which taken together would have the effect of reducing the tax on football pools to 25 per cent., because the present rate is inequitable, unfair, discriminatory and unjust and is also producing a lesser revenue for the Treasury because people are beginning to realise that for every 1s. they put on the football pools, the Government pinch 4d. before they have a chance. Not only is the Treasury a little odd on picking upon football pools for this form of taxation but it has allowed people to bet on football pools at fixed odds with bookmakers without any deduction as revenue for the Treasury.

It seems to me that we are looking at a rather different pattern and at different circumstances from those which operated when the tax was introduced in 1947, doubled in 1948 and trebled in 1949, and in those changed circumstances the Treasury ought to look at the whole question of gambling to see whether it cannot reduce this punitive rate of tax if necessary by imposing some tax on other forms of gambling, so that there is fairer treatment between people who choose a mild flutter on the football pools and those who choose to speculate on horse racing or dog racing or "chemmy" parties.

My right hon. and learned Friend will not have failed to notice the great growth of bingo and horse racing on films which is being organised in this country. These forms of gambling ought to be investigated instead of the Treasury concentrating its whole attention on football pools simply because it is easier for the Treasury to do so. It is wrong that the Treasury should collect these vast sums when the revenue can be maintained by spreading the load more easily over other forms of betting. It is because I think that a Conservative Chancellor of the Exchequer should, at least once every eleven years, try to defend having taken one-third of all the money of the pools investors that I have provided this opportunity for him to do so.

To say that the tax has been continued merely because it was introduced by a previous Government does not improve the position. Circumstances have radically changed since it was first introduced and I am offering my hon. Friend the Economic Secretary this opportunity to explain why the law should not now be altered. I hope that my hon. Friend will draw the attention of the Chancellor to the changed situation, the widespread incidence of gambling and the unfairness of this tax.

Mr. Barber

I am grateful to my hon. Friend the Member for Southend, East (Mr. McAdden) for having given me the opportunity, after all these years, of explaining the Government's view on this matter. I recognise that it is one of great importance to the pool promoters and is also of some general interest to many millions of people throughout the country.

The effect of the two Amendments, taken together, would be to reduce the current rate of duty, which is 33 per cent., including the surcharge, to 25 per cent. Here again, the most important factor to consider, particularly in respect of a tax of this kind, is the fact that it would cost the Exchequer about £8½ million a year. I am well aware of the case put forward by the pool promoters because the hon. Member for Southend, East came to me not long ago with a deputation and we had a very full discussion about the matter. In fairness, I should say that they presented their case with considerable moderation considering the high rate of tax payable in respect of pool betting.

A part of the case presented by the hon. Member for Southend, East was that of spreading the tax on betting on a general basis.

Mr. Frederic Harris (Croydon, North-West)

One of the main points of the case presented by my hon. Friend the Member for Southend, East (Mr. McAdden) was that the tax should be spread on betting on a general basis. Surely that would not cost the Treasury anything like £.8½ million.

Mr. Barber

I was referring to the effect of the Amendments, which do not involve the extension of the tax or duty to other forms of betting, but merely to a reduction in the pool betting duty from 33 per cent. to 25 per cent.

As the hon. Member for Southend, East pointed out, originally, in 1947, the rate of the duty was 10 per cent. The following year it was increased to 20 per cent. and in 1949 it went up to 30 per cent. It stayed at 30 per cent. until the imposition of the surcharge in July of last year.

My hon. Friend said that the revenue has gone down in the last year. That is certainly so, but I think that it would be a little premature to assume from the fact that there has been a decline in receipts for one year that this is any sense the beginning of a downward trend in receipts. In the eleven years from 1950–51 to 1960–61 the yield of the duty has been increasing—if not in each year then taking the period as a whole. To give the figures from 1951 onwards, they were £16 million, £17 million, £21 million, £21 million, £20 million, £21 million, £22 million, £26 million, £31 million and £33 million. In 1961–62, last year, there was a reduction to £27½ million and I am taking the duty exclusive of the surcharge which is the only fair comparison to make.

Though there was this slight reduction in the yield to £27½ million, it is still a lot of money. This was, I realise, the point made by my hon. Friend. However, we in the Treasury must look at the matter from a slightly different angle. I am bound to inform the Committee that this is not a source of revenue that we would lightly give up. After all, this is the first significant drop in the past ten years and I think it would be unreasonable and unduly pessimistic to assume that it represents anything in the nature of a permanent decline in receipts.

If I were to hazard a guess, I would put the point which I believe I mentioned to my hon. Friend when he came to see me. I would suggest that the lower revenue in this last year may be due to the absence recently of the very large dividends that we have come to know in the last few years. That is purely fortuitous, for whether I am right or wrong, it is too early to assume that this is a permanent decline.

Mr. R. T. Paget (Northampton)

Is is not much more likely that people are putting their money on bingo, where they can get much better odds?

Mr. Barber

That is certainly a possibility, but I would urge the hon. and learned Member for Northampton (Mr. Paget) to consider the figures I have given and, at any rate, to agree that one cannot simply look at them in respect of one year. They must be considered over a reasonable period.

Mr. McAdden

There is surely some validity in the point raised by the hon. and learned Member for Northampton (Mr. Paget). While my hon. Friend has said that we should not look at one year in isolation, it is precisely in this one year that the activities of bingo, and so on, have been so widely spreading.

Mr. Barber

I am aware of that, but my right hon. and learned Friend has not this year proposed any extension of taxation to other forms of gambling. The field of gambling generally has not escaped our consideration and I have no doubt that we shall, before next year, give further consideration to this subject, bearing in mind the sort of points made by the hon. Member for Southend, East and others.

I am sure that the Committee will not expect me to go further than that. I ask hon. Members whether, in a Budget where the general burden of taxation has not been changed, we would wish to single out the pools for a reduction in their taxation amounting to £8½ million? If my right hon. and learned Friend felt that he could reduce the burden by a further £8½ million there would, surely, be other claimants this year who should have priority. The hon. Member for Southend, East is always fair about these matters and I know from what he has said to me in the past that he feels particularly strongly about this subject.

Although, on behalf of my right hon. and learned Friend, I cannot accept the proposal of the hon. Member for Southend, East, I can assure him that we will carefully watch the yield of the duty. With that assurance I hope that he will not this year seek to press his Amendment.

Mr. Nabarro

The Economic Secretary has omitted one important matter to which my hon. Friend the Member for Southend, East (Mr. McAdden) referred. Surely it would not be inopportune for him to express a Treasury view about the very bad fiscal practice of singling out one form of gambling? I am talking about the principle of the thing and not the revenue that is derived. I refer to the 33 per cent. duty on pool betting and there is, of course, the lesser duty on greyhound racing and other arrangements which allow many other forms of gambling to escape entirely.

7.15 p.m.

I do not know—since I have not gone into this matter—what are the possibilities of taxing say, chemin de fer, or bridge? [HON. MEMBERS: "Or the Stock Exchange."] Are not hon. Members opposite aware that the Stock Exchange is already taxed through the Stamp Duty? I am referring to gambling. It is iniquitous that the Treasury should decide that one form of gambling is preferable to another—and that is what it has been doing in recent years. I agree that the legislation last year, for which the Home Secretary was responsible, changed the pattern of gambling in the various social stratas. The very rich people now play chemin de fer, the less rich play bridge—

Mr. Callaghan

And the others play the fool.

Mr. Nabarro

The others play the fool, as the hon. Gentleman says.

The point is that we should have a statement of principle from the Treasury Bench tonight to the effect that they accept the proposition that if gambling is to be taxed at all it should be taxed equitably and that every form of it should be treated on the same basis—which would be seen to be fair. The principal point of the speech of the hon. Member for Southend, East was that we are taxing in a highly discriminatory manner one form of gambling alone. I have never done a football pool in my life, I suppose that I never shall, and I do not hold a brief either for or against those who do. The same applies to my views on those who bet on the totalisator on racecourses. That should not be our business, for there should be freedom of choice in gambling, as in so many other things, in this country.

I object to the adjudicator in these matters being the Treasury, weighting the scales for one form of gambling and against another. I hope that the Economic Secretary, before leaving this matter—because we shall not have another opportunity this year of discussing it on the Finance Bill—will give his view on the principle involved and will support my view that gambling, if it is to be taxed, should be taxed equitably.

Mr. Barber

The fact that the pools have been singled out for taxation does not indicate that this form of betting is in any way more disreputable than any other form of gambling or is in any way immoral. The reason why it was originally imposed I must leave to hon. Gentlemen opposite, for it was they who thought up the idea. It is, undoubtedly, an extremely simple tax to collect, and, while I would not wish on this occasion to go into the details, I can inform my hon. Friend the Member for Kidderminster (Mr. Nabarro) that the question of a general betting tax or something approaching it has been considered in the past. In past circumstances it has always been found that it would involve considerable practicable difficulties.

This is not to say that circumstances do not change and that in the future it may not be desirable and, much more important, that it may not be practicable to have some extension in this field. Certainly, as nothing has been proposed this year, I am sure that the Committee would not expect me to go any further than that, except to repeat what I said at the outset; that the fact that this tax is now limited to pool betting does not indicate any moral judgment whatever.

Mr. McAdden

It is not good enough for my hon. Friend to try to ride off by implying that the morality or otherwise of the tax rests on those who introduced it in the first place. If one has been living on earnings and discovers that they have been immoral, is there any reason, after doing that for eleven years, that one should continue living on immoral earnings?

Mr. Barber

Perhaps it would be better to leave this matter for the Adjournment.

Mr. Glenvil Hall (Colne Valley)

As the Minister who saw the pool promoters at the first interview when this tax was suggested, perhaps I may be allowed to intervene briefly to say why I thought that the idea was an excellent one. After all, if it were possible it might be right to tax those who gamble in some drawing rooms in the West End. I understand that a large number of people now engage in that form of gambling. We shall, no doubt, presently get repercussions in the newspapers because of the scandals which may occur. It is obvious that we cannot now reach that type of gambling in order to tax it, but I am sure that it is in accordance with the wishes of the public that it should be taxed, especially since some other forms of gambling cannot escape taxation.

I forget for the moment what income is derived from the duty on pools betting.

Mr. Nabarro

It is £33 million.

Mr. Glenvil Hall

I hope that hon. Gentlemen opposite who are keen to get rid of this imposition will consider what that means.

Mr. Nabarro

No. I do not want the right hon. Gentleman to be misled in any way about what I said. I do not want to get rid of it. If there is to be a tax on gambling, I want the tax to be imposed on all forms of gambling and to be fair and at a flat rate. I do not want to get rid of the Pool Betting Duty.

Mr. Glenvil Hall

So far as my knowledge goes and in so far as it is possible in a world which is not perfect, all forms of gambling which can be reached are taxed at the moment. [HON. MEMBERS: "No."] All those which are anti-social, anyway.

Mr. Arthur Lewis (West Ham, North)


Mr. McAdden

Surely the right hon. Gentleman knows that it has been a bone of contention in the House of Commons for years that there is a 10 per cent. tax on the Totalisator for greyhound racing but nothing at all for horse racing. That has been the argument for a number of years. It has been said that someone who bets on horses is all right but someone who bets on dogs pays. My argument tonight was that someone who bets on dogs pays 10 per cent., but someone who bets on the football pools pays 33⅓ per cent.

Mr. Glenvil Hall

There are people who take that view, but there are reasons why certain forms of gambling are not charged at the same rate as pool betting. I accept those reasons. I thought that what the hon. Member wished to do was to get rid of paragraph (d). [HON. MEMBERS: "No."] That would be the effect of his Amendment.

Mr. McAdden

No. The right hon. Gentleman must not misinterpret me. My Amendment is designed to reduce the duty from 33⅓ per cent. to 25 per cent. That would not abolish it.

Mr. Glenvil Hall

Perhaps I have not entirely understood what the hon. Member wishes to do. I was going by the Amendment in page 2, line 42, which seeks to delete paragraph (d). If that paragraph is deleted, this form of taxation goes. I desire, as I hope that the Committee desires, to see it retained. It is a good and reasonable tax. It prevents other things being taxed to find the £33 million which is raised from this souce.

Mr. A. Lewis

I want to take part in the debate because of the remarks made by the hon. Member for Kidderminster (Mr. Nabarro). I do not think that the Economic Secretary has even attempted to answer the points which the hon. Member made. My right hon. Friend the Member for Colne Valley (Mr. Glenvil Hall) said that he was responsible for introducing the Pool Betting Duty. He went on to say that all forms of betting are taxed. Incidentally, this is the view of many hon. Members, but it is not true.

This is something which must be examined. The Minister has not attempted to answer the point. The interjection of the hon. Member for Southend, East (Mr. McAdden) was right. If a very wealthy man goes, as wealthy men do go, to a horse race tomorrow and puts a bet of £50 or £100 on a horse on a totalisator made by firm X, he does not pay a halfpenny in duty. The dock worker, the engineer, the bricklayer or the carpenter who goes tomorrow evening to a dog race track and puts £50, if he has it, on the same totalisator made by the same firm, operated in exactly the same way, loses 10 per cent. of his stake in duty before the money goes on.

It is an immoral and invalid argument to say, as the Minister said, that this duty is easy to get and that that is one reason why the Government will continue it. I can tell him of 101 taxes which are easy to get. It is no answer for the Minister to tell us that because it has been easy to get the Government are going to continue it. If it is easy to put a 10 per cent. duty on the totalisator at a greyhound race track, is it not easy to put 10 per cent. on the totalisator at a horse race track? This is not done because, in the main, it is known that horse racing is the sport of kings and of the rich. There is a very big horse racing lobby in the House of Commons and in the other place. It is composed of hon. Members on both sides. There are many titled people who own racehorses. I agree that one hon. Member on this side owns a horse. I do not know whether it is any good. [Interruption.] I must confess that there is a lobby on both sides of the House of Commons. It is much more vociferous in the cause of horse racing than it is in the cause of greyhound racing.

I agree with the hon. Member for Kidderminster about the football pools. Why should a man who has 1s. or 2s. to spare and who puts it on the football pools lose one-third of his stake money before he starts to even attempt to win? He also pays the poundage on his postal order.

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

He loses the lot in the long run, so what does it matter?

Mr. Lewis

I agree with my hon. Friend's interjection to a certain extent. Let there be the same opportunity for all those who gamble, whether it be on horses, on dogs, on football pools or on anything else. My hon. Friend has hit the nail on the head. Let them all have the chance of losing.

Mr. Glenvil Hall

My hon. Friend has been in the House of Commons long enough to know from previous debates on these questions that an entirely different set of circumstances applies to horse racing than that which applies to greyhound racing.

Mr. Lewis

I know the argument. I know the false propaganda that is dished out to the Treasury, which the Treasury dishes out to the Ministers and which the Ministers accept. I am not saying that is the answer, but I know the argument. They try to argue that they have to have this money to keep the bloodstock going. Then they talk about exports and how dollars are earned from horse racing because they export horses that earn dollars. They argue that because of that we must not tax horse racing.

That is not the real reason. It is only the excuse. The same argument could be applied in respect of dogs. Ireland makes tons of dollars exporting dogs to America. It could be argued that if greyhound breeding for export were encouraged dollars could be earned. We are not told how much is spent in buying bloodstock for dollars or for hard currency. We are told only one side of the story. That is the excuse.

If it is desired, tax them all—tax them all out of existence. That would at least be fair. The position at the moment is that preference in taxation is being shown to one section of the population as against another. This is wrong. It could be altered easily. The Economic Secretary said that there are difficulties in the way. The Treasury is rather strange. It can always find difficulties when it wants to get out of a situation, but I could tell the Treasury 1,001 ways in which it could tax all forms of gambling. In fact, I do not have to tell the Treasury because it already knows these ways. The Treasury knows that it could introduce a horse racing tax tomorrow and make a great deal of money as a result.

Mr. Barber

The hon. Gentleman is saying that he thinks it would be fairer and more equitable if there were a uniform rate of duty. Will he tell me whether he is opposed to my right hon. and learned Friend's proposal for excluding from the consolidation of the surcharge Pool Betting Duty on greyhound races and the countervailing bookmakers' licence duty, or would he prefer that that should be treated in the same way as all the other duties, which have been consolidated?

Mr. Lewis

I should like to see—I have said this to the Treasury both privately and in the Chamber—a general universal tax on all forms of betting. There are various ways in which it could be operated, either at source or by registration and the issue of certificates. I should like to see it done fairly and properly. It is not right that a bookmaker who goes into one stand at a particular track should pay £200 or £100 but if he goes into another stand he pays only £50 or nothing at all. There are ways and means in which this could be done on a proper basis. The Treasury would get quite a lot of money in. Much money is now going off course, particularly on greyhound racing, which could be taxed. It would be a nominal tax. I am not a big gambler. I do not follow horses or dogs, but I know that much money is now going off course. Most of these people would not mind paying a reasonable, nominal tax if they knew that everybody was paying it. A tax of 1 per cent., 2 per cent. or 3 per cent.—probably 5 per cent. at the most—if it were levied on all forms of gambling would bring much more to the Treasury than this 33⅓ per cent. on pool betting.

Amendment negatived.

7.30 p.m.

Mr. William Warbey (Ashfield)

I beg to move, in page 3, line 14, to leave out subsection (3).

This is the subsection which confers on the Chancellor the power to continue the economic regulator—the 10 per cent. surcharge or rebate on taxation—introduced in last year's Finance Bill and implemented last July by Order. It is the provision which enables the Chancellor, if he desires, to increase or reduce indirect taxation by a sum of something more or less than £200 million. It is therefore of considerable importance both to the Committee and to the country as a whole.

When my hon. Friends and I tabled the Ameindment the whole of the Liberal Party rushed in to put their names to it.

Mr. Nabarro

Where are they now?

Mr. Warbey

As the hon. Member says, I wonder where they are now. They were in a great hurry to put their names to the Amendment. Perhaps having achieved the necessary publicity in time for the Montgomery by-election, they now consider it not worth while to follow up the matter in Committee. If they were thinking in terms of trying to promote a Lib-Lab pact, they were knocking at the wrong door in relation to the members of my party who put their names to this Amendment. If they wanted to do that they might have put their names to this Amendment. If they wanted to do that they might have put their names to an Amendment in the name of my hon. Friend the Member for Bosworth (Mr. Wyatt) with more effect.

Mr. A. J. Irvine (Liverpool, Edge Hill)

He has withdrawn now.

Mr. Warbey

I am glad to hear that. I must say that the Liberals are remaining true to form, because they were absent when we discussed this matter on last year's Finance Bill. At any rate, they did not speak in Committee. They had not a word to say when I and some of my hon. Friends opposed last year's economic regulator. I suppose we shall hear very little more from them this year. Perhaps as a result of the exciting experience at Orpington they have discovered that the electors are disturbed at the tend towards the increase in indirect taxation, resulting in an increase in the cost of living, which has been imposed upon the country as a result of the deliberate policy of successive Tory Chancellors of the Exchequer. It is because this power is asked for by a Conservative Chancellor that I and my hon. Friends oppose it.

Mr. Nabarro

Has the hon. Member observed that the names of all six hon. Members of the Liberal Party have been put on the Notice Paper in support of this Amendment and that all the six hon. Members of the Liberal Party are missing. Is not that a grave discourtesy to the Committee?

The Temporary Chairman (Mr. George Thomas)

Order. I allowed the hon. Member for Ashfield (Mr. Warbey) considerable latitude in dealing with that point, but maybe he will now come to the Amendment.

Mr. Warbey

I was about to come to the Amendment. I should have thought it was in order, Mr. Thomas, to refer in the debate to the names put down in support of the Amendment. Surely they are a part of the matter which may be properly discussed when considering the Amendment. I had already made the point which has been made by the hon. Member for Kidderminster and had considered that it was dealt with sufficiently.

I now want to give reasons why I and my hon. Friends oppose the continuation of this power in the hands of a Tory Chancellor of the Exchequer. I was saying that although we are not opposed in principle to economic regulators, we are opposed to this regulator in the hands of this Chancellor. We are opposed because we do not trust a Tory Chancellor not to abuse the power which is conferred upon him, a very considerable power contained in this subsection. It is a power which is both political and economic and it has already been abused by the present Tory Chancellor.

I am very glad to see that one hon. Member of the Liberal Party has arrived, somewhat belatedly. Maybe the other five will follow him in due course. One of the reasons why this power has been introduced—I made this point last year, so it is not new—is that it gives very considerable political advantages to a Tory Chancellor. He can use it quite unscrupulously for political purposes. In these days, after the teachings of the late Lord Keynes, we no longer have a commercial trade cycle; we have a political trade cycle. We have a four-year cycle which happens to coincide with the average four-year life of Parliament. We have one year of boom just before a General Election, then a year of slump, two years of stagnation and then another year of boom just before the next General Election.

We have had that political cycle twice already and right hon. Members opposite are now preparing for it next time. This time, I hope that electors will realise how they are having the wool pulled over their eyes and will not allow themselves to be tricked again. The Chancellor, as he has done, can put up the surcharge by 10 per cent. during years of slump and stagnation in order to decrease personal demand, to raise the cost of living of the masses of the people. Then, shortly before a General Election, he can reverse the process, take off the 10 per cent. he has added, take off another 10 per cent. if he likes, to make a glorious hand-out of tax remission to the electors and enable them to see what a magnificent thing it is to have a Tory Government during that short period when they are seeking the votes of the electors.

We have had the upward trend since the regulator was introduced. The 10 per cent. was added, as I prophesied it would be, last July. Now, in this year's Budget, it is consolidated. Then we have power taken to add another 10 per cent. in a few months' time and later power to take 10 per cent. off with a further 10 per cent. reduction if the Chancellor thinks fit. The Chancellor has cheated on his own regulator. In fact, he has turned it into an escalator. By the rather subtle device of consolidating last year's increases before seeking this new power, he has put himself in a position in which he will be able, if he so desires, to increase indirect taxes by a further 10 per cent., making a total of 20 per cent. on last year.

On the other hand, the 10 per cent. reduction, if that power is used, will, in fact, bring us back only to the position where we were a year ago. So we are now doing the whole operation at a higher level, and a level which means a more or less permanent increase in indirect taxation. This is a part of the deliberate policy which has been pursued by successive Tory Chancellors and has been brought to a new peak of perfection by the present Chancellor.

If we compare last year's Budget estimate with the present year we see the effect of this. Compared with last year's estimate, this year's estimate of return on direct taxes shows an increase of £113 million. That is an addition of 3 per cent., but Customs and Excise taxes, including, of course, Purchase Tax yield, show an estimated increase over last year's estimate of no less than £200 million. That is an increase of 9 per cent., three times as much as the increase in the estimated yield of direct taxation.

This is part of a process which began with the increase in Health Service charges, was continued in the increase in National Insurance contributions, then, with last year's surcharge and this year's consolidation and the additional new Purchase Tax elements introduced into the Budget, and, finally, the power to add a still further 10 per cent.

It is part of the process of adding to the poll taxes which bear on the masses of the people, which enter directly into the cost of living of everybody in the country, including the poorest, while, at the same time, relieving the wealthy taxpayers of a part of their burden of direct taxation. It is part of the class war which Tory Chancellors are now fighting against the masses of the people, a part of the process of lowering the standard of living of the masses of the workers and salary earners while encouraging a small section of the community to continue to make large profits and gains with practically no reduction whatsoever.

This is the power we are asked to confer upon the Chancellor once again this year. We have already been "had" once. We have already seen the power abused, and abused in the class and party interest of right hon. Gentlemen opposite. The Committee should not allow this power to be handed once again to a Tory Chancellor to be abused again as it has been in the past.

7.45 p.m.

The Financial Secretary to the Treasury (Sir Edward Boyle)

I will say one thing for the hon. Member for Ashfield (Mr. Warbey), that of all hon. Members one could fairly say of him that his speeches are about as predictable as any speeches by back benchers. Before the debate started I was sure that he would say that the worst thing was that we have a Conservative Chancellor, we would have some calculations About direct and indirect taxation, and before he sat down he would say something about the Conservative Party waging class warfare.

I agree with one, in fact two, things he said. The first was that it would be nice if we could have representatives of those who put their names to this Amendment present in the Chamber when it was discussed. I was glad that afterwards we did so. I also agree with him about the importance of this Amendment. None of us in this Committee will, I hope, dispute the importance of the regulator which my right hon. and learned Friend introduced last year. It can affect the revenue by as much as £200 million a year upward or downward and obviously is an economic weapon of very considerable significance.

I do not agree with the hon. Member's views on this subject. He will remember my speech about it last year. In the first place I must say that he did not give an accurate picture of the general relationship today between direct and indirect taxation or the course which it has taken in the last ten years. I quoted some figures about this when I spoke in the Budget debate. I pointed out that if we take the last full year when hon. Members opposite were in office we find that in 1951 direct taxation was 50.8 per cent. of total taxation whereas today it yields 53 per cent. of revenue.

I suggest this particular piece of research to the hon. Member. He compared this year with last year, but if he looks at last year's Budget estimate and compares it with the year before that he will find that the yield from direct taxation—I am speaking from memory, but I think it is right—was no less than £397 million up on the year before. That was a very large prospective addition. The surplus which my right hon. and learned Friend had in his Budget was very largely due to the vast increase in prospective revenue from direct taxation. I do not accept the hon. Member's general view of movement in direct and indirect taxation in recent years.

Mr. Callaghan

Will the Financial Secretary give the authority for these figures, because in the 104th Report of the Commissioners of Inland Revenue, in a table on page 5, it is shown that in 1951–52—I agree it does not give 1950–51, but the figures could not have been very different—the Inland Revenue proportion percentage was 56.7 per cent. and in 1960–61 it gave the percentage as 56.1 per cent. Indirect Customs revenue was 41.8 per cent. in 1951–52 and 41.8 per cent. in 1960–61. Would he give the authority for his figures?

Sir E. Boyle

I got my figures from the Inland Revenue before the debate. I have not got the document which the hon. Member for Cardiff, South-East (Mr. Callaghan) has before him. I will look it up and, if my figures prove to be incorrect, I will mention it in the Committee. The hon. Member was not correct, however, in saying that there was virtually no difference between 1950–51 and 1951–52 because direct taxation went up under the party opposite—[An HON. MEMBER: "And indirect taxation."]—and indirect taxation.

I return to the point made by the hon. Member for Ashfield. When considering the last two or three years I do not think he paid nearly sufficient attention to the very large increase in the prospective yield of direct taxation which my right hon. and learned Friend mentioned in his Budget Statement last year.

Mr. Warbey

Will the hon. Gentleman bear in mind the reduction in Surtax, which is now beginning to take effect?

Sir E. Boyle

Yes, certainly, and I was speaking about last year's Budget Despite what my right hon. and learned Friend did about Surtax, the figure remains an extremely large one. We discussed this constantly last year not only in debates on the Finance Bill but also on the health stamp. There can be no doubt that the progressive direct taxpayer is paying his full share of the social services of the country—

Mr. Callaghan


Sir E. Boyle

I want to come to the general case for this regulator, because I think it very important that this should be appreciated by the Committee. I thought that the point was put extremely well and fairly by the hon. Member for Grimsby (Mr. Crosland) when we debated the regulator last year. The fact is that any Chancellor, whatever his party, will have to rely for the management of the economy to a considerable extent on general measures of control in order to keep supply and demand in balance. We have disagreements between us as to whether, and to what extent, one must rely on specific measures, but any Chancellor, Conservative, Labour or even Liberal, will have to rely to a considerable extent for the management of the economy on some general measures of economic control in keeping the economy in balance.

Mr. Callaghan

Hear, hear.

Sir E. Boyle

The hon. Gentleman cheers that, but I have said it very often in this Committee before.

Mr. Callaghan

But the lesson has not been learned.

Sir E. Boyle

I disagree with the hon. Gentleman.

In recent years, we have, I think, come to realise more clearly, perhaps, than ever before that monetary policy cannot, as the saying is, go it alone; it must be backed by fiscal measures also. One reason is quite simple. In the debate last year, we pointed out that monetary measures do not have a purely internal reference to our economy; they affect also the movement of funds into this country. Fiscal measures are entirely within our own power.

Mr. Jay

Everybody else realised this years ago.

Sir E. Boyle

The right hon. Gentleman can hardly deny that his party relied far too exclusively on general fiscal controls and thought that it could dispense with the monetary instrument altogether. That was clearly a mistake. I for one was very glad to hear the Leader of the Opposition say in the Budget debate a few weeks ago that he saw nothing wrong in putting up the Bank Rate when our balance of payments was seriously in danger. There is nothing wrong in all parties learning from experience, and I was glad to hear the right hon. Gentleman make that rather important admission, so different from the doctrine we were used to hearing from the right hon. Member for Huyton (Mr. H. Wilson).

I am quite certain that as a fiscal measure the regulator which my right hon. and learned Friend introduced last year has entirely justified itself. I think that the whole Committee recognised last year that it had great advantages, for example, over a really sharp use of hire-purchase controls. The trouble with hire-purchase controls is that they hit one section of industry or one or two sections with disproportionate violence. My right hon. and learned Friend's regulator, on the other hand, affects a much wider band of industry to a very much less violent extent.

The other point about the regulator is this. The hon. Member for Ashfield spoke about its effects on the cost of living—which I do not deny—but, on the other hand, even he can hardly deny that, if supply and demand are seriously out of balance, no power on earth can keep prices stable. On this side of the Committee we do not say—I promise not to repeat my speech of last night—that keeping supply and demand in balance is sufficient to avoid inflation. What we say is that, if supply and demand are seriously out of balance, no power on earth can keep prices stable. When one is regulating the economy so as to keep supply and demand in balance, it is much better to do so to a considerable extent by measures which hit current consumer spending rather than capital investment. Surely, one of the advantages of the regulator which my right hon. and learned Friend introduced is precisely that it enables the Government to regulate the economy without doing anything seriously to hit capital investment.

No methods of economic regulation can ever be popular. I think that Professor Galbraith in "The Great Crash", perhaps his most witty and amusing book, on the 1929 crisis in America, said somewhere that the regulation of the economy is, at best, an unrewarding activity. It must be Any measures which affect the ordinary consumer can never in any circumstances be popular, but they must at times he introduced. I am certain that my right hon. and learned Friend's decision to introduce this regulator last year has justified itself.

I said in the Budget debate, and I mention it again now, that, if one takes the current and the long-term balances together, in 1961 there was an improvement of about £400 million, and even a small credit in the second half of the year compared with a massive deficit of £296 million in the second half of 1960. I am quite sure that we should not have got so definitely improved a trend in the balance of payments in the second half of last year but for the measures which my right hon. and learned Friend introduced on 25th July last, including the use of the regulator. I believe that it is necessary for the Government to have this power in reserve in case our economy should once again get out of balance.

Last year, as the Committee will recall, it was used to its full extent of 10 per cent. Of course, it need not on another occasion necessarily be used to its full extent. In answer to the hon. Member for Ashfield who suggested that the Government would deliberately use this regulator upwards in the middle of a Parliament and then reduce it by an equal amount towards the end of a Parliament, all I can say is that we on this side of the Committee are quite ready to give the electorate credit for some discrimination and intelligence. I should have thought that it was quite obvious, on the one hand, that, when the balance of payments is seriously adverse and the trend has been wrong for some time, that is the occasion for introducing measures to curb consumption. If it looks as though one is making an under-use of capacity, as though one has spare capacity, whether an election be due or not, in those conditions—but only those—it may be right to give encouragement to consumer spending. I do not remember any hon. Member opposite, in the economic circumstances of the 1959 Budget, saying that some encouragement of the economy was undesirable. On the contrary, if I remember aright, everyone said that he was glad that Lord Amory had not listened to those who urged him to be more cautious. And that goes for hon. Members opposite as well.

The very important point here is that we should do everything we can to strengthen our economy and increase our competitive power, and this means not only giving attention to consumer spending but seeing that we have a sufficiently high level of capital investment as well.

I think that that is all that needs to be said, except to repeat again that the experience of last year has shown this regulator to be a valuable power for the regulation of the economy. I think that it should be a regular part of our armoury. At the same time, it is obviously right that the House of Commons should have full opportunity to discuss the matter and decide whether these powers should be given to my right hon. and learned Friend for a further year.

Mr. Callaghan

No one denies that, when the economy gets in a mess, the Government must apply correctives. The Financial Secretary has an engaging air of stating obvious truths as though he were discovering them for the first time. We all realised that the economy was in a mess last July, and that the Government had to take corrective action. I do not blame them for so doing. However, what should be made clear, and what the people should understand, is that last July we were paying for the Government's previous economic policy.

8.0 p.m.

I am sure that my hon. Friend the Member for Ashfield (Mr. Warbey) had this in mind when speaking of the electoral considerations which lead to these measures. I know of no reputable person who studies these affairs who does not believe that, in an excess of zeal to win the last General Election, the Government went much too far in their measures of relaxation of credit, stoking up the economy and getting everything working full-out so that people should be deluded on a short-term basis into thinking that all was well.

We remember how the Prime Minister, as the Daily Express of the day put it, strode into the election saying that never in his life had the British economy been more sound or our people more prosperous. What he was doing, whether he knew it or not, was practising a deceit upon the people, for which we paid last July. Of course, the bill had to be paid. So there is no difference between us on that.

I come now to the subject of direct taxation. I believe that the pendulum has swung too far the wrong way. Listening to these debates, and noting what hon. Members say in their speeches, I begin to detect a desire on the part of the Government and their supporters to move much more in the direction of indirect taxation and away from direct taxation. I warn them that, if my suspicion is right, no matter what the reason may be, we shall fight them to the end. I believe that some of them are influenced by their belief that we shall go into the Common Market in the near future and that they would like to get nearer to the continental system, in which indirect taxation plays a much greater part in raising revenue than it does here.

But let the Committee and the nation be quite clear that the more we move towards a system of Purchase Tax, Customs duties, duty on beer, duty on the necessities of life, and all the rest, the more we penalise the ordinary people of the country and the less we rely in raising revenue on the capacity to pay. That ought to be a basic principle to which we adhere.

I utterly repudiate the view which the Financial Secretary expressed again tonight, that the direct taxpayer is paying his fair share. I take the opposite view. The distribution of the burden of taxation is wrong. It would be possible to raise more direct revenue from those who could afford to pay. It would be possible to redistribute the burden as between rich taxpayers and those who are less well off, by whom I mean people earning less than £25 a week. This, indeed, is among the objectives that a Labour Government would have to set itself. We could do it. It would be possible to make a substantial move in that direction.

I make those general comments because I believe that they mark out a difference between us in this matter, and I think it important that the nation should understand the direction in which we have been tending during the last few years and in which, if hon. Gentlemen opposite have their way and remain in office, we shall, I believe, move much faster during the next few years than we have done so far.

Another truth which the hon. Gentleman stated with that engaging simplicity which we all admire is that monetary measures are not sufficient to control the economy. As my right hon. Friend the Member for Battersea, North (Mr. Jay) said, this is a truth which everyone but the Government Front Bench discovered many years ago. We are delighted that they have now come to our way of thinking. Of course, we all ought to learn from our mistakes. I hope that we shall. The trouble is that some people seem to take eleven years to learn from their mistakes. It took at least ten years before the Government recognised what had become apparent to everyone else, that monetary policy would not solve Britain's problems in this way.

I notice that my hon. Friend the Member for Ashfield said that he did not trust this regulator in the hands of a Conservative Chancellor. I do not know whether the emphasis was on the "Chancellor" or on the "Conservative". Here, I come to a point of agreement with the Financial Secretary. From our experience of the last few years, it seems that there has been a shift in the emphasis which used to be placed upon control of investment and the advice upon which, I think, the hon. Gentleman as well as others used to rely. The control of investment and investment in new plant and machinery is too slow acting and, on the whole, it seems to take effect at the wrong moment and is very lumpy in its action. This being so, I myself believe that it is right for a Government to try to choose other weapons.

Although I trust Conservative Chancellors no more than my hon. Friend does, I think that we ought to be able to try to control the economy by means of a regulator of this sort, which will tend to influence direct spending. If it is to be used as the Chancellor is using this regulator, as a means of permanently increasing taxation—

Mr. Selwyn Lloyd

indicated dissent.

Mr. Callaghan

I am sorry that the right hon. and learned Gentleman shakes his head, because that is what the Clause we are discussing is about.

As I say, if it is used as he is using this regulator, permanently to increase taxation, then it is wrongly used. On the other hand, if it is used as a temporary weapon to try to get regular growth in the economy, which I believe to be the most important thing that the country must achieve, then I am with the Chancellor in using it. In my view, one of the causes of our relative failure over the past decade has been the failure of the Government to achieve regular growth—the stop-start economy, the "traffic light" economy—whatever one cares to call it. I believe that one of our most important tasks is to ensure regular growth. To do that, we shall have to have a substantial measure of planning. That is the first essential.

I do not know how seriously the Chancellor of the Exchequer takes the National Economic Development Council. I take it very seriously and would like to see it made an effective instrument of planning. But, whether he takes it seriously or not, I believe that another weapon in the control is to be able to regulate consumption. However, to do that the Government must carry the country with them. The country must understand and must assent to what is being done. I believe that the people will assent. I do not think that the Government tackle the problem of getting the assent of people to policies in the interests of the nation in the right way.

This is why I do not believe that they can achieve an incomes policy. They have forfeited the good will of the nation, which is very regrettable. This is why we should have a General Election. It is all very well for the Financial Secretary to laugh. It is impossible for a Government to govern the country if they have only one-third of the nation behind them when the matter is put to the test.

That is by way of an aside. I do not wish to follow up that point. If we are to have democratic planning, if there is to be a control of the economy which will ensure regular growth and a proper distribution between private spending and public investment, there must be a gigantic essay in consent and leadership.

Sir E. Boyle

I do not dispute for a moment the political controversy which has been engendered by our incomes policy, but I do not believe that the imposition of the regulator last July caused a great deal of controversy. One reason why I say that is this. I deal with a number of hon. Members' letters on the subject of economic policy. From memory, I have not received one complaint on that aspect of policy. I believe that the regulator was accepted by public opinion as a fairer measure than other measures such as the sharp use of hire-purchase control.

Mr. Callaghan

If the trade unions do not understand the reason for the imposition of the regulator and do not believe that it is temporary in its incidence, then, whatever may be said in the White Paper, they are bound to reflect on the increase in the retail price index which follows their claims for increased pay.

I happen to be a negotiator on pay claims. One of the effects of the introduction of the regulator without detailed explanation, followed by its conversion in the Finance Bill into a permanent increase in indirect taxation, is reflected in wage claims. This is what I mean by leadership in these matters. People will accept regulators of this sort for six or nine months. Perhaps a regulator of this sort for six or nine months would be sufficient to get the economy in balance again provided, above all, that we were committed to a substantial policy of growth. This is where the Government have failed so miserably.

I say to my hon. Friend the Member for Ashfield—in some ways the debate is between us—that I believe that a Labour Government would want to make use of this regulator to ensure the fulfilment of a national plan and to help achieve a regular rate of growth, which is one of the two economic objectives at which we should have to aim. I therefore hope that my hon. Friend will not ask me to follow him into the Lobby on this issue, because I would not wish to separate myself from him on it. When he said that he would not trust a Conservative Chancellor of the Exchequer, I hope that the emphasis was on the word "Conservative".

Mr. Warbey

indicated assent.

Mr. Callaghan

I see that it was.

Mr. T. L. Iremonger (Ilford, North)

I apologise to the Committee for presuming to intervene at this stage in a debate which other duties have prevented me from following. I should, however, like to take up one point made by the hon. Member for Cardiff, South-East (Mr. Callaghan). He made the fair political debating point that the economic difficulties which last year's measures of the Chancellor of the Exchequer were calculated to solve were brought on us by the policy of the previous Government in relaxing credit and inflating the economy or, at least, in allowing it to expand so that inflation supervened.

The point I wish to make—and if it is a purely political debating point the hon. Gentleman will forgive me for taking up what he said about it—is this. The hon. Gentleman is not entitled to say that unless he can say, as he cannot, that at the time, as he claimed, that the Conservative Government were inflating the economy, his right hon. and hon. Friends and he, in an appeal to the country, said, "This economy is overstretched. We are offering you higher taxation. We are offering you restriction of credit and an increased interest rate".

As I recollect, that was not a predominant feature in the appeal which the hon. Gentleman made to the country. If the hon. Gentleman wishes to stand in a white sheet, perhaps I may point out that he is asking the country, which he is so keen to talk about, to forget that.

Mr. Callaghan

The Opposition are always in a difficulty here, and the Government can "get" us. If the Government say, "In our economic judgment—and, after all, we are the people who have all the expert advice—we can relax bank credit. We can encourage everyone to borrow as much as he likes from the banks. In fact, bank managers will implore you to take loans, and hire-purchase companies will go out of their way to offer you agreements", it is difficult for the Opposition to say, "We do not believe a word of it." if the Government propose to preach sunshire, it is difficult for us to preach rain, not because we want to be unpopular but because they claim the virtue of having superior knowledge. They have a great advantage when relaxing measures.

Let me take the forthcoming situation We are coming up to another General Election. The Chancellor of the Exchequer will relax credit once again and will give increased personal allowances in the next Budget. He will introduce a number of measures with a view to convincing the country that the time is ripe economically. Will his judgment be right? The hon. Member for Ilford, North (Mr. Iremonger) and I would have a very difficult job in attempting to dispute that judgment. We can merely have a guess about it.

At the moment, I am disputing his judgment, because I take the view that, in the light of the slack in the economy, he could this year relax some measures and could give some tax reliefs. I am being cynical enough to assume that he is ready to be over-cautious this year because he wants to hold up the reliefs for next year, since they will have more effect before an election. The hon. Member for Ilford, North will see the difficulty in which we are placed when the Chancellor puts himself behind relaxations of this sort.

Mr. Iremonger

The hon. Gentleman has last year's "Bradshaw" whereas my right hon. and learned Friend has the advantage of having the up-to-date "Bradshaw". What the hon. Member says is true in the sense that my right hon. and learned Friend, last February and July, was able to have an advance look at the figures which were coming out and which would enable critics of his policy to base their criticism on statistical evidence. It is equally fair to say to the hon. Gentleman that he and his right hon. Friends never hesitated to call in aid whatever statistical information was available to them when criticising the Government. We might, therefore, call it quits.

The hon. Gentleman says that the Opposition are always in a difficulty here. He was even more frank and said that we on this side were bound to "get" them. My intention in rising was merely to make it clear that he was liable to be "got" and that we have "got" him on this point.

Mr. Wade

The point which I wish to make has, in part, been covered in an earlier debate. I must, however, express some surprise at one remark of the Financial Secretary. I understood him to say that the Chancellor had retained the regulator because no letters of protest against it had been received. It is not an easy task to regulate our complex economy, and that remark throws rather a curious light on the workers in the Treasury if the policy which they pursue is dependent on the number of letters which they receive.

In tabling the Amendment which is being considered with that moved by the hon. Member for Ash field (Mr. Warbey), the object of my hon. Friends and myself was to draw attention to the fact that this regulator was intended to operate in both directions, up or down. Faith in that policy has been rather shaken by the Finance Bill.

8.15 p.m.

The Chancellor of the Exchequer said in his Budget speech last year: I propose that the Government should be empowered to direct by Statutory Instrument, any time of the year, that either a special surcharge or a special rebate should be applied to all the main Customs and Excise revenue duties and to Purchase Tax."—[OFFICIAL REPORT, 17th April, 1961; Vol. 638, c. 806.] In introducing the surcharge on 25th July last year, the right hon. and learned Gentleman said: The effect of the surcharge will be to withdraw purchasing power from the economy art the rate of £210 million per year. It can, of course, be reduced or removed at any time. …"—[OFFICIAL REPORT, 25th July, 1961; Vol. 645, c. 228.] What has happened is that the surcharge has been made permanent and the Chancellor is now taking power to impose a further 10 per cent. It seems to me—this is a simple point but one which must be stressed—that this policy means that the Chancellor, in asking for greater flexibility, is asking for flexibility to deflate and not to inflate. It works only one way. The surcharge was imposed in July with the object that it could be moved up or down. It has now been made permanent and power has been taken to add a further 10 per cent.

Mr. Callaghan

Or take it off.

Mr. Wade

Not the original surcharge. That has been made permanent. There is no power to take off the original 10 per cent. There is power to add another 10 per cent. and to take that off.

It seems to me that, if this policy is flexible, it is flexibility to deflate, not to inflate. I should like to know whether this is not laying down a principle which we shall regret in future, namely, to take power to impose this so-called regulator, this surcharge, and in another year's time, perhaps, make it permanent. What assurance may we have that that is not so?

Mr. Cyril Bence (Dunbartonshire, East)

I intervene only because I wish to know the answer to a situation in which we have a Government using the regulator—and I see the point of a regulator of consumption and demand to keep a stable economy—when we have over 3 million workers of all kinds whose income is based on an annual review which in turn is based on a cost of living index. If the Government introduce a measure imposing a 10 per cent. Purchase Tax on a whole range of products, then it must put up the cost of living by so many points and this is reflected in the claims by workers whose income is automatically based on the cost of living.

Most of these workers are, I believe, in Government service.

Mr. Callaghan

No. There are some outside.

Mr. Bence

That may be, but a large number of them are in Government service. Therefore, the Government raise an indirect tax which a large section of the community pays but which equally a large section does not pay because they have it reimbursed to them in the form of increased wages.

Where are we getting to? We seem to be living in an economy in which from year to year taxes are imposed and a large section of the community can claim through their various organisations and institutions an increase in wages and salaries to cover increases in the prices of commodities in the market. The Government themselves are the institution that increases these prices. It is not the workers in industry who are now increasing the prices of goods on the market. It is the Government who put up the cost of living.

In yesterday's debate we discussed the large number of members of a profession who are claiming not only increases in wages to cover the erosion of their present values as a result of the rising cost of living but who also want a revaluation of incomes with reference to other incomes. What will happen to the economy when year after year Governments impose ever-increasing taxation on our incomes? This is the Government who came into office in 1951 to "mend the hole in the purse". [An HON. MEMBER: "There is now no purse."] Exactly. That purse has worn out and the Government have introduced a big bag with a regulator which is designed not to close the hole but to open it. There is no doubt that the hole is closed immediately after an election and opened again just before an election.

Millions of workers can claim increased incomes only out of the increased productivity and profitability of the enterprises in which they are employed, and there are millions of other workers who, irrespective of productivity and profitability, can secure increased wages because of the increased cost of living which the Government are deliberately bringing about by the continuing trend of increased indirect taxation on consumer goods. That increase is an increase inevitably in the burden of taxation on the lower-income groups. It is felt all over the country but particularly in Scotland.

When the Chancellor of the Exchequer and the Financial Secretary talk about attempts to curb the economy, that may be all right in London but in Scotland we want expansion. It is a little bit of reflation that we want in Scoltand. We want to stimulate demand, not curb it. Although I appreciate the usefulness of the regulator, I think that it has been used by the Government in the context of the wage pause with the idea that millions of workers can obtain increased wages only with increased productivity while millions of others obtain increases on the basis of the cost of living index. This is quite unfair to many millions of people.

Mr. John Diamond (Gloucester)

I am sure that we are all grateful to my hon. Friend the Member for Ashfield (Mr. Warbey) for having made it possible for the debate to take place, because enormous powers are being continued in the hands of the Government and it is right that the Committee should give this matter full consideration. The reasons why I do not reach the same conclusions as my hon. Friend are two fold and can be stated shortly. My hon. Friend believes in planning, as I do, and this is a planning instrument which should be available to any Government of good faith.

My second point is that my hon. Friend believes, as I do, that we have gone too far in indirect taxation as opposed to direct taxation. The way to put that right, therefore, is for the Government to have the power to reduce Purchase Tax, for example, and this is a piece of machinery by which the Government could reduce it [An HON. MEMBER: "Could."] Yes, of course. We are talking about machinery and not the action taken by using that machinery. We are talking about powers and not the action the Government takes under them.

It is for these two simple reasons that I do not draw the same conclusions as are drawn by my hon. Friend, but I intervene in the debate because I think that we have reached very nearly a point of division with the Government and of no further support and we must warn the Government of the way they are going. My hon. Friend objected to the way they use these powers mainly on the economic front, but I have considerable hesitation in allowing the Government to continue the use of these powers because of the undemocratic way in which they have used them and may continue to use them.

I said last year that this question was the greatest challenge to the sense of democracy of hon. Members on this side of the Committee. Here was something which we would want to do and which a Socialist Government would clearly need, but we doubted whether we ought to give this Government this very power. Why did we doubt it? It was mainly because this was the method by which the Government were dodging their liability at Budget time to put forward the state of the nation and take steps to deal with it. As soon as the Finance Bill was completed, and indeed even before that, the Government were saying quite different things and making profoundly different proposals in monetary terms as a result of the powers which they then obtained.

I take the view that one cannot yet be persuaded that at the time when the Government introduced these powers they were not then aware that they would have to use them immediately the Finance Bill was through and, therefore, that they would have been free of any charge of bad faith if they had brought the measures forward in the Budget instead of through a side door by means of the regulators.

Secondly, we were promised last year that when the regulator came to be used there would be the fullest opportunity for debate. The Chancellor of the Exchequer said that in no circumstances did he have in mind giving us an opportunity to have a debate late at night when by the rules of the House our rights to object would be limited in time, but that we would have the fullest debate. When the debate came, it came late at night and we had a negligible time for discussion.

Mr. Selwyn Lloyd

Two days.

Mr. Diamond

No. I have not looked it up, because I did not think that it would be controverted. It is within everybody's recollection that when the final Resolution came it was debated for about half an hour.

Mr. Lloyd

These matters are arranged between both sides of the Committee and it was thought that that was the most convenient way to deal with it. There were two days of debate. On the actual technical debate I agree with the hon. Gentleman, but that was done by arrangement.

8.30 p.m.

Mr. Diamond

I should be glad if the Chancellor would be good enough to confirm that what he called technicalities were dealt with in a matter of minutes. My recollection was that they were dealt with in twenty minutes, but I could be wrong by a few minutes one way or the other. These two facts, added together, make me very doubtful whether the Government are acting democratically in respect of this regulator. It is a most important piece of machinery, whereby the House of Commons gives the Government the right to affect everybody's standard of living with, perhaps, only a negligible debate on the matter. In those circumstances we can allow the Government to use the regulator only if they can be shown to be using it properly.

What have the Government done in economic terms? They have incorporated the 10 per cent. increase in permanent taxation and have renewed their powers. Much as I agree with what my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) said in his excellent speech, and much as I agree with his view that we must have a regulator of this kind and that it is in the interests of the country that we should be able to take immediate steps which do not require the long drawn out processes of Budgets and Finance Bills, there must come a time when we should say to the Government, "You are misusing this power. We shall not continue to give you the right to use it if you continue to act undemocratically and cease to pay regard to the rights of this House, but, instead, use the regulator only as an escalator to increase taxation in the wrong proportion."

Sir E. Boyle

My right hon. and learned Friend will be happy to make a speech on the Question "That the Clause stand part of the Bill." He has suggested to me that we might find it convenient now to come to a decision on the Amendment. Out of courtesy I should like to answer the point made by the hon. Member for Huddersfield, West (Mr. Wade). He asked whether the regulator would be a permanant deflationary influence on the economy, because so much of last year's increase has been consolidated. My answer is that the object of the regulator is to affect demand, in the course of the financial year, upward or downwards. I suggest that he is wrong when he suggests that the effectiveness of the regulator will in any way be impaired by the other decisions that we are taking in the Clause.

It is a mistake to suggest that the regulator will have a permanently deflationary effect. The level of demand at any time is affected by many things—by the amount of money in active circulation, by businessmen's views of expected profits, and so on. The decisions which the Committee may or may not take on the Clause cannot impair the effectiveness of the regulator as a means of regulating the total measure of demand over the whole economy. In that respect the hon. Member's fears were exaggerated.

Mr. Wade

Does not the Financial Secretary agree that if the pattern were followed of imposing 10 per cent. and then making it permanent, and taking power to impose another 10 per cent., it would have a deflationary effect, and would not be carrying out the original intentions expressed when the regulator was first introduced?

Sir E. Boyle

If we did that year after year there might be something in his point. I merely wish to point out that the object of the regulator is to affect the total level of demand and that there are many other factors, besides the regulator, which will decide that level. The effectiveness of the regulator will in no way be impaired by the general pattern of the Clause.

I remember vividly the debates that we had last July, because I took part in them. I do not want to be cynical about them, but my recollection is that after two full days of economic debate one of the reasons why we had a fairly short debate on the regulator was the difficulty of keeping hon. Members back for a reasonable sized Division. In fairness, we must remember that the technical debate followed two days of fairly concentrated economic debates, in which many hon. Members took part. If we were introducing the regulator on its own, with no other economic measures, we should see that there was a reasonable time for the Committee to consider any Order.

Amendment negatived.

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

Mr. Jay

We ought to look a little further at the Clause, both because the Chancellor apparently has something further to say and also because it is a very important Clause, which gives major powers to the Government and consolidates a considerable rise in taxation.

The Clause continues the powers given to the Government to use the regulator and to maintain in being the rise in indirect taxation of £210 million. At least, £210 million is the total increase in indirect taxation in a full year. Strictly speaking, the part relating to Purchase Tax does not come within the ambit of the Clause, but the whole of the rest of indirect taxation does, and it is a very substantial amount.

With a few exceptions, including my hon. Friend the Member for Ashfield (Mr. Warbey), my hon. Friends do not object in principle to the existence of the regulator. But we do object to the use which the Chancellor is making of it. It is logical to be in favour of the existence of a tax but not to be in favour of the way in which the Government use it. My hon. Friend the Member for Ash-field would be in favour of Surtax, but he would not be in favour of the use which the Chancellor has made of it in the past year. We feel that the regulator should remain in existence as a general planning instrument. Indeed, it was the Labour Government who, in 1948, took similar powers, relating only to Purchase Tax.

It is striking that the Liberal Party, which is now with us in rather greater force than was the case earlier in the evening, is opposed to the use of the regulator, judging by its Amendments. I agree with the speech of the hon. Member for Huddersfield, West (Mr. Wade), but I am a little unclear about Liberal policy.

Mr. Wade

I thought that I had made it clear, but I will now make it quite clear. My hon. Friends are not opposed to a regulator as such, but we are opposed to the way in which it is operated. We are very suspicious of the manner in which the 10 per cent. has been imposed and then made permanent, and the power which the Government have taken to add another 10 per cent.

Mr. Jay

It seemed that at a time when the Tories are at last moving in favour of planning, the Liberals have ceased to be in favour of it, but I gather from what the hon. Member said that we are all in favour at least of this measure of planning.

Our objection is to the use which the Chancellor has made of this regulator in the past year. First, he said that he was making a large increase in indirect taxation as an emergency measure to meet the crisis. In other words, this was not even the usual practice of introducing a tax such as Purchase Tax or Income Tax as a temporary tax; it was an emergency tax for one year only. When he took that decision to raise indirect taxation for the purpose of meeting this crisis, he did it in the same year as he made a reduction in Surtax of £83 million, so that he used the regulator to make a major shift of tax from direct to indirect taxation.

The right hon. and learned Gentleman's decision to maintain all this in being by a different method is to make permanent the shift in taxation which he made a year ago from direct to indirect taxation, and irrespective of whether the Financial Secretary's figures are right about the percentages over the last ten years, neither he nor the Chancellor can deny that the effect of this exercise in the past year has been to push down the proportion of direct taxation and to push up the proportion of indirect taxation. It is this use of the regulator of which we cannot approve.

Earlier this operation was described by the hon. Member for Manchester, Withington (Sir R. Cary) as sleight of hand. When he said that he had a great deal on his side, because it is a somewhat disingenuous and sly use of these fiscal measures to introduce this major change in taxation as an emergency measure and then quietly to make it permanent a year later by a totally different means. That is our main complaint.

This was supposed to be connected with the crisis of a year ago, but a week or two ago the Chancellor said in Sheffield that the whale situation had changed, that the outlook was much better, that the £ was strong and that the prospect was good. He painted a picture of sunshine. If this is true, is it necessary to maintain in being the whole of this extra £210 million of taxation? We do not believe that it is.

I do not know why the Economic Secretary said that we on this side of the Committee had approved the general shape of the Budget. We did not approve of its general shape; we said that we thought that in the circumstances it was too deflationary, and surely that view was confirmed by the Chancellor's discovery a few weeks later that the crisis was not as bad as it previously had been. But if the Economic Secretary argues that we approve of the whole Budget because we did not vote against the Resolution at the end of the Budget debate, we shall be forced to vote constantly against almost everything that the Government lay before us. For this reason I hope that my hon. Friends will vote against the Clause, not because it continues the regulator in principle but because it continues this major increase in taxation.

One effect of the Chancellor's decision to meet the crisis in this way, through a general increase in indirect taxation on necessities and everything else and not through an increase in direct taxation, was to engineer last autumn an immediate rise in prices and in the cost of living. There is no doubt that part of the rise in living costs in the last nine months was a direct result of Government policy. The Treasury Bulletin last winter said that of the 4 per cent. rise in living costs in the previous nine months, 1½ points had been directly due to the rises in taxation which the Chancellor introduced in July.

By these measures the Government were forcing up the cost of living at exactly the same time as they were enforcing a pay pause, and that is one of the causes of the discontent with and distrust of the Government measures which we have seen in the country in the past six months. The cost of living has risen by 4½ per cent. in the last twelve months, and it was supposed to be the purpose of the Chancellor's policies to prevent an inflationary rise in prices. He has not prevented it. By his choice of these tax weapons he has engineered the rise in prices which he was professing to avoid, and these higher prices have had to be paid by everybody, including the nurses and the dockers—

Mr. A. Lewis

And the old-age pensioners.

Mr. Jay

—and the old-age pensioners. I do not think that the Chancellor wilt get a response to his appeal for general co-operation in what he calls his incomes policy as long as he follows this policy in taxation and raises prices and the cost of living against those least able to pay. It was somewhat cynical of the Minister of Health yesterday to justify the pay pause in its rigid application on the ground that the purpose of the whole operation was to check inflation,

maintain the value of money and keep prices down, because the direct effect of these measures and this use of the regulator, which the Chancellor introduced a year ago and which he is asking us to prolong tonight, apart from many other things, has been directly to increase prices and the cost of living in the country.

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

The Committee divided: Ayes 228, Noes 168.

Division No. 184.] AYES [8.44 p.m.
Agnew, Sir Peter Errington, Sir Eric Lloyd, Rt. Hon. Selwyn (Wirral)
Aitken, W. T. Farey-Jones, F. W. Longden, Gilbert
Allason, James Farr, John Loveys, Walter H.
Atkins, Humphrey Finlay, Graeme Lucas, Sir Jocelyn
Barber, Anthony Fisher, Nigel Lucas-Tooth, Sir Hugh
Barlow, Sir John Fletcher-Cooke, Charles McAdden, Stephen
Barter, John Forrest, George MacArthur, Ian
Batsford, Brian Fraser, Hn. Hugh (Stafford & Stone) McLaren, Martin
Baxter, Sir Beverley (Southgate) Freeth, Denzil Macleod, Rt. Hn. Iain (Enfield, W.)
Beamish, Col. Sir Tufton Galbraith, Hon. T. G. D. MacLeod, John (Ross & Cromarty)
Biffen, John Gammans, Lady McMaster, Stanley R.
Bishop, F. P. Gardner, Edward Macpherson, Niall (Dumfries)
Black, Sir Cyril Gibson-Watt, David Maddan, Martin
Bossom, Clive Gilmour, Sir John Maginnis, John E.
Bourne-Arton, A. Glover, Sir Douglas Markham, Major Sir Frank
Box, Donald Goodhew, Victor Marlowe, Anthony
Boyle, Sir Edward Grant, Rt. Hon. William Marshall, Douglas
Bromley-Davenport, Lt.-Col. Sir Walter Green, Alan Marten, Neil
Brooke, Rt. Hon. Henry Gresham Cooke, R. Matthews, Gordon (Meriden)
Brooman-White, R. Grosvenor, Lt.-Col. R. G. Mawby, Ray
Brown, Alan (Tottenham) Gurden, Harold Maxwell-Hyslop, R. J.
Browne, Percy (Torrington) Hall, John (Wycombe)
Hamilton, Michael (Wellingborough) Maydon, Lt.-Cmdr. S. L. C.
Bryan, Paul Harris, Frederic (Croydon, N. W.) Mills, Stratton
Bullard, Denys Harris, Reader (Heston) Miscampbell, Norman
Bullus, Wing Commander Eric Harrison, Brian (Maldon) Montgomery, Fergus
Burden, F. A. Harrison, Col. Sir Harwood (Eye) More, Jasper (Ludlow)
Butcher, Sir Herbert Harvey, Sir Arthur Vere (Macclesf'd) Morgan, William
Campbell, Gordon (Moray & Nairn) Harvie Anderson, Miss Morrison, John
Carr, Robert (Mitcham) Hastings, Stephen Nabarro, Gerald
Cary, Sir Robert Hay, John Neave, Airey
Chataway, Christopher Heald, Rt. Hon. Sir Lionel Nicholls, Sir Harmar
Chichester-Clark, R. Henderson, John (Cathcart) Noble, Michael
Clarke, Brig. Terence (Portsmth, W.) Hendry, Forbes Nugent, Rt. Hon. Sir Richard
Cleaver, Leonard Hicks Beach, Maj. W. Orr-Ewing, C. Ian
Cole, Norman Hiley, Joseph Osborne, Sir Cyril (Louth)
Collard, Richard Hill, Mrs. Eveline (Wythenshawe) Page, Graham (Crosby)
Cooke, Robert Hill, J. E. B. (S. Norfolk) Pannell, Norman (Kirkdale)
Cooper, A. E. Holland, Philip Partridge, E.
Cordeaux, Lt.-Col. J. K. Hollingworth, John Pearson, Frank (Clitheroe)
Corfield, F. V. Hopkins, Alan Percival, Ian
Costain, A. P. Hornby, R. P. Peyton, John
Coulson, Michael Howard, John (Southampton, Test) Pickthorn, Sir Kenneth
Courtney, Cdr. Anthony Hughes Hallett, Vice-Admiral John Pike, Miss Mervyn
Craddock, Sir Beresford Hughes-Young, Michael Pilkinglon, Sir Richard
Cunningham, Knox Hulbert, Sir Norman Pitman, Sir James
Curran, Charles Hutchison, Michael Clark Pitt, Miss Edith
Dalkeith, Earl of Jackson, John Pott, Percivall
Dance, James James, David Price, H. A. (Lewisham, W.)
d'Avigdor-Goldsmid, Sir Henry Jenkins, Robert (Dulwich) Prior, J. M. L.
Deedes, W. F. Jennings, J. C. Profumo, Rt. Hon. John
de Ferranti, Basil Johnson, Eric (Blackley) Pym, Francis
Donaldson, Cmdr. C. E. M. Kerans, Cdr. J. S. Quennell, Miss J. M.
Doughty, Charles Kerr, Sir Hamilton Rawlinson, Peter
Drayson, G. B. Kitson, Timothy Redmayne, Rt. Hon. Martin
du Cann, Edward Lancaster, Col. C. G. Rees, Hugh
Duncan, Sir James Leather, E. H. C. Renton, David
Eden, John Legge-Bourke, Sir Harry Robinson, Rt. Hn. Sir Roland
Elliot, Capt. Walter (Carshalton) Lewis, Kenneth (Rutland) Rodgers, John (Sevenoaks)
Elliott, R. W. (Nwcastle-upon-Tyne, N.) Lilley, F. J. P. Roots, William
Emmet, Hon. Mrs. Evelyn Litchfield, Capt. John Ropner, Col. Sir Leonard
Royle, Anthony (Richmond, Surrey) Talbot, John E. Walker, Peter
Russell, Ronald Tapsell, Peter Walker-Smith, Rt. Hon. Sir Derek
St. Clair, M. Taylor, Sir Charles (Eastbourne) Wells, John (Maidstone)
Sharples, Richard Taylor, Frank (M'ch'st'r, Moss Side) Williams, Dudley (Exeter)
Shepherd, William Teeling, Sir William Williams, Paul (Sunderland, S.)
Skeet, T. H. H. Temple, John M. Wills, Sir Gerald (Bridgwater)
Smith, Dudley (Br'ntf'd & Chiswick) Thatcher, Mrs. Margaret Wilson, Geoffrey (Truro)
Smithers, Peter Thomas, Leslies (Canterbury) Wise, A. R.
Smyth, Brig. Sir John (Norwood) Thompson, Kenneth (Walton) Wolrige-Gordon, Patrick
Spearman, Sir Alexander Thornton-Kemsley, Sir Colin Woodnutt, Mark
Speir, Rupert Tilney, John (Wavertree) Woollam, John
Stanley, Hon. Richard Touche, Rt. Hon. Sir Gordon Worsley, Marcus
Stevens, Geoffrey Turner, Colin Yates, William (The Wrekin)
Steward, Harold (Stockport, S.) van Straubenzee, W. R.
Stodart, J. A. Vane, W. M. F. TELLERS FOR THE AYES:
Stoddart-Scott, Col. Sir Malcolm Wakefield, Sir Wavell Mr. Whitelaw and Mr. Ian Fraser.
Summers, Sir Spencer Walder, David
Ainsley, William Hall, Rt. Hn. Glenvil (Colne Valley) Pearson, Arthur (Pontypridd)
Albu, Austen Hamilton, William (West Fife) Peart, Frederick
Allen, Scholefield (Crewe) Harper, Joseph Pentland, Norman
Baird, John Hart, Mrs. Judith Plummer, Sir Leslie
Baxter, William (Stirlingshire, W.) Hayman, F. H. Prentice, R. E.
Beaney, Alan Henderson, Rt. Hn. Arthur (Rwly Regis) Price, J. T. (Westhoughton)
Bellenger, Rt. Hon. F. J. Herbison, Miss Margaret Probert, Arthur
Bence, Cyril Hill, J. (Midlothian) Proctor, W. T.
Bennett, J. (Glasgow, Bridgeton) Hilton, A. V. Pursey, Cmdr. Harry
Blackburn, F. Holman, Percy Rankin, John
Blyton, William Holt, Arthur Reynolds, G. W.
Boardman, H. Houghton, Douglas Rhodes, H.
Bottomley, Rt. Hon. A. G. Hoy, James H. Roberts, Albert (Normanton)
Bowden, Rt. Hn. Herbert W. Hughes, Emrys (S. Ayrshire) Robertson, John (Paisley)
Bowles, Frank Hunter, A. E. Robinson, Kenneth (St. Pancras, N.)
Boyden, James Hynd, H. (Accrington) Rodgers, W. T. (Stockton)
Braddock, Mrs. E. M. Hynd, John (Attercliffe) Ross, William
Brockway, A. Fenner Irving, Sydney (Dartford) Short, Edward
Broughton, Dr. A. D. D. Jay, Rt. Hon. Douglas Silverman, Sydney (Nelson)
Brown, Thomas (Ince) Jones, Dan (Burnley) Skeffington, Arthur
Butler, Herbert (Hackney, C.) Jones, Jack (Rotherham) Slater, Mrs. Harriet (Stoke, N.)
Callaghan, James Kelley, Richard Slater, Joseph (Sedgefield)
Castle, Mrs. Barbara Kenyon, Clifford Small, William
Chapman, Donald King, Dr. Horace Smith, Ellis (Stoke, S.)
Collick, Percy Lawson, George Snow, Julian
Craddock, George (Bradford, S.) Ledger, Ron Soskice, Rt. Hon. Sir Frank
Crosland, Anthony Lee, Frederick (Newton) Spriggs, Leslie
Crossman, R. H. S. Lee, Miss Jennie (Cannock) Steele, Thomas
Cullen, Mrs. Alice Lewis, Arthur (West Ham, N.) Stewart, Michael (Fulham)
Darling, George Lubbock, Eric Stones, William
Davies, G. Elfed (Rhondda, E.) Mabon, Dr. J. Dickson Strachey, Rt. Hon. John
Davies, Harold (Leek) MacColl, James Stross, Dr. Barnett (Stoke-on-Trent, C.)
Davies, S. O. (Merthyr) MacDermot, Niall Swain, Thomas
Delargy, Hugh McInnes, James Swingler, Stephen
Dempsey, James McKay, John (Wallsend) Taylor, Bernard (Mansfield)
Diamond, John McLeavy, Frank Thomas, Iorwerth (Rhondda, W.)
Driberg, Tom Mallalieu, J. P. W. (Huddersfield, E.) Thompson, Dr. Alan (Dunfermline)
Ede, Rt. Hon. C. Mapp, Charles Timmons, John
Edelman, Maurice Mason, Roy Wade, Donald
Edwards, Rt. Hon. Ness (Caerphilly) Mellish, R. J. Wainwright, Edwin
Edwards, Robert (Bilston) Mendelson, J. J. Warbey, William
Edwards, Walter (Stepney) Milne, Edward Weitzman, David
Fernyhough, E. Mitchison, G. R. Wells, Percy (Faversham)
Finch, Harold Monslow, Walter Wells, William (Walsall, N.)
Foot, Michael (Ebbw Vale) Moody, A. S. Whitlock, William
Forman, J. C. Morris, John Wilkins, W. A.
Fraser, Thomas (Hamilton) Moyle, Arthur Williams, D. J. (Neath)
Gaitskell, Rt. Hon. Hugh Mulley, Frederick Williams, LI. (Abertillery)
Galpern, Sir Myer Neal, Harold Williams, W. T. (Warrington)
Ginsburg, David Oram, A. E. Willis, E. G. (Edinburgh, E.)
Gourlay, Harry Oswald, Thomas Winterbottom, R. E.
Greenwood, Anthony Padley, W. E. Woof, Robert
Grey, Charles Paget, R. T. Yates, Victor (Ladywood)
Griffiths, David (Rother Valley) Pannell, Charles (Leeds, W.) Zilliacus, K.
Griffiths, W. (Exchange) Pargiter, G. A.
Grimond, Rt. Hon. J. Parker, John TELLERS FOR THE NOES:
Gunter, Ray Paton, John Mr. Charles A. Howell and
Mr. McCann.

While the Division was in progress

Mr. A. Lewis

On a point of order, Mr. Thomas.

The Temporary Chairman

The hon. Member must be properly covered.

Mr. A. Lewis (seated and covered)

On a point of order, Mr. Thomas. Probably because you were looking elsewhere, you did not see the Chancellor of the Exchequer, whose intention, I think, was to rise to reply.

The Temporary Chairman

The position is perfectly clear. I waited and no hon. Member stood up.

Mr. Crosland

You did not wait long enough, Mr. Thomas.

The Temporary Chairman

Maybe not. I waited as long as I thought wise, and I followed the ordinary rules of the House. I had already collected the voices when the hon. Member for Grimsby (Mr. Crosland) got to his feet and a Division must proceed if order is to be followed.