§ 2.42 p.m.
§ Order of the Day for the Second Reading read.
§ THE CHANCELLOR OF THE DUCHY OF LANCASTER (THE EARL OF SELKIRK)
My Lords, I think that it would be an exaggeration to describe this as a popular Bill. None the less, the reasons which have convinced my right honourable friend the Chancellor of the Exchequer that it is in the interests of our economy that additional duty should be placed on oil have not been effectively rebutted in the course of the discussions which have taken place so far. I think that we can all meet at a point of common agreement—that is, the need to maintain confidence in sterling. Indeed, we should be an unworthy nation, whatever position we were in, if we did not put this question in the forefront of our thoughts. No doubt, the fall in the value of sterling (and I am glad to say sterling has recovered recently) has been due to a large extent, to international tension, and I do not pretend that Bills such as this can do much more than make a certain contribution. None the less, this contribution is important, because it shows that we are determined to restrain any inflationary pressures that may arise through the inevitable increase of purchasing power arising from a reduction of oil consumption in this country.
This Bill, therefore, is a continuance of the policy of restraint on consumption which, in the last eighteen months, no one can deny, has achieved a certain measure of success in stabilising the level of retail prices and improving our balance of payments. The other side to the same point is, of course, the reduction in oil consumption which would produce a reduction in revenue. This would mean that the surplus above the line would be reduced by that amount; or, alternatively, the overall budget deficit—that is, above and below the line—would be increased.
It may be argued that these points could be met by spreading the tax more widely over other items. Indeed, the Chancellor of the Exchequer said specifically that he had examined a wide range of other possible sources of tax, including income tax. It proved, however, impracticable 1182 to make any alteration in income tax so late in the year.
But, it was, after all, logical that supplies of a material so valuable as oil is at the present time should be guarded, not only by rationing but also by putting up the price. In a sense, of course, all indirect taxes, by raising the price of what is taxed, have some effect on the amount bought. This has been done by all parties. Dr. Dalton's taxes on tobacco, Mr. Gaitskell's taxes on petrol, are perfectly simple examples of it. Nevertheless, the bare fact is that tax MI petrol is very widely spread, because there is virtually nobody who does not use petrol in one form or another. Though I should be the first to admit that some people use it more than others.
The effect of rationing and price will necessarily make everyone very careful of the manner in which he uses feel, and its effect on the retail index can very easily be exaggerated. Taking tax and rising prices together, the effect is about 1s. 5d. a gallon. If we take passenger transport, by car and bus, that should amount to perhaps rather less than one-half of a point increase in the retail index. It is, I think, important to remember two points: first that this tax does not apply to fuel oil; and secondly, that it is temporary in character. This latter point, I would emphasise, is clearly laid down in Clause 1 (2) of the Bill. The additional tax will automatically come to an end within one month of the -termination of petrol rationing.
To turn to Clauses 2 and 3, it has, I know, been argued that these two clauses could be brought within the explosive epithet of "tacking". And, although this is a Money Bill, these two clauses, in fact, cut right across existing procedure and deal with a subject which, strictly speaking, has nothing whatsoever to do with taxation. That is perfectly true. But both clauses are a necessary and, it would seem, an inevitable consequence of the first clause, unless it is to operate in a manner that is grossly unfair to certain operators of vehicles. Clause 2 enables bus operators to offset the increase of this duty by increasing fares. They may do so by offsetting to a gross amount of one-twelfth of their existing fares, or one-eighth in certain cases where services are 1183 substantially rural and with a limit of 50 vehicles, or where the firm is operating only five public service vehicles.
I think I should make it clear that within the limits of one-twelfth or one-eighth, as the case may be, taking all the factors into consideration, the operators may increase their charges in a manner which at least will go some way to meet the increased price of oil. This increased price is, of course, affected both by the emergency surcharge which the oil companies have found necessary to impose to cover the additional cost of bringing the oil here and by the increased duty. It is important that this fact should be clear both to the operators, to the Transport Tribunal and to the traffic commissioners.
Increases in prices arising from these two sources are to be dealt with under the procedure laid down in the Bill, and in no other way— that is to say, they are not to be considered as a basis on which increased charges of a more permanent character should be agreed to, either by the Transport Tribunal or by the traffic commissioners. It is true that they are entitled to make this increase according to the best of their judgment. This means that, in effect, it will be virtually impossible, or certainly very difficult, to attack the decision which is reached in the courts of law. There is no doubt that this does give public service vehicle operators a limited freedom of action for a certain period. But it is limited, not only in amount, as I have already explained, but also in time, because these charges must come off within a fortnight of the time when the duty ceases to be paid. Moreover, I should have thought it would not be in the interests of the bus companies, on a short term, to alienate their clients by taking some action which might appear to be unfair.
Similarly, in Clause 3 an abbreviated procedure is provided for increasing the charges of provincial taxicabs. This increase is limited in amount, and is not to exceed the sum of 6d. on any one journey. It is also limited in time, for it is to be in force no longer than a fortnight after the date when the duty comes to an end.
My Lords, we are in a difficult and disagreeable position, but I would submit to the House that this is the right and 1184 proper way of tackling this problem. And the consequential provisions arising from it are both practical and reasonable, and it is for that reason that I would ask the House to agree to them. I beg to move.
§ Moved. That the Bill be now read 2ª.—(The Earl of Selkirk.)
§ 2.50 p.m.
§ LORD LUCAS OF CHILWORTH
My Lords, this is a thoroughly bad Bill, presented to your Lordships in a thoroughly bad manner. May I hasten to say that that is not a personal comment upon the noble Earl who has introduced it. He has made the apologia that this is an abrogation of the rights of your Lordships' House. This is certified as a Supply Bill, when only the first clause is connected with Supply. I would agree with the noble Earl that the other clauses are ancillary, but this measure should have been presented to your Lordships' House in two Bills, and not one. Then your Lordships' House would have had the opportunity of carrying out its statutory right and duty to amend the Bill, or at least those provisions which are not connected with Supply. As it is, your Lordships cannot do it. You have to pass this Bill whether you like it or not, and you have no chance whatever of offering any Amendment to any provision in this Bill which does not affect directly the supply part of it, which is contained solely in the first clause. Upon that issue I raise a protest, because I do not think it is a right and proper way to treat your Lordships' House— though I recognise it may be expedient. That is why I say that the Bill is presented to your Lordships in a thoroughly bad way.
It is a thoroughly bad Bill because, as the noble Earl admitted when he made his speech, it is only rationing by the purse, coupled with rationing by the coupon. If the Government were so disgusted with the organisation of the Ministry of Fuel and Power that they could see their rationing scheme breaking down in chaos, and thought they would have another one, I might agree with the noble Earl. But, believe me, this scheme is not going to do one of the things which the noble Earl has claimed for it. It will make no contribution to the confidence in sterling. Indeed, in my view it will have the reverse effect; and, as I propose to tell your 1185 Lordships, in my view and in the view of those who are in a position to judge, the consequences will be dire.
Again, in my view there was no necessity whatsoever to do as the Chancellor of the Exchequer said, and buttress up this precious liquid. When the Chancellor of the Exchequer was asked in another place what loss of revenue these proposals would cause, he named a sum of £ 6 million over a period. But he hurriedly went on to say, "Of course, the overlying Budget surplus will still be substantial." It has not yet been contradicted that the anticipated above-the-line Budget surplus will be approximately what was estimated, £ 460 million.
§ LORD LUCAS OF CHILWORTH
Below the line. In order to buttress the confidence of sterling we have to add— what? Perhaps the noble Earl will tell me, because I do not know. But at least it is at the rate of about £30 million every four months. I am afraid that the economic consequences of this step are going to be serious, as I hope to prove to your Lordships' House.
The noble Earl has said that the economic arguments of the Chancellor of the Exchequer have received no rebuttal. I am going to make an attempt to rebut them. From all the spokesmen who have so far mentioned this matter on behalf of the Government, including the noble Earl, Lord Selkirk, all we have heard is that it may put up the cost of living by half a point, and that it will have no inflationary effect. If the noble Earl will forgive my using the expression, what a lot of complete and utter nonsense that is! If the Treasury economists, and some of those theoretical economists outside the Treasury, would cease to amuse themselves with the manipulation of digits, would learn a little commercial economic sense and acquire a knowledge of human nature, and not treat the taxpayer of this country like a species of battery hen, to be put into a battery and squeezed and squeezed until he has laid the approximate quota of taxable eggs and then have his neck wrung, they would realise that this can and will be one of the most inflationary actions that has been taken in this country.
1186 It does not stop with the shilling—that is an easily calculable thing. Look at all the things that it brings in its train. It is a futile argument and indicates a lack of knowledge of human nature not to expect small and medium sized businessmen, who have sunk their all in their business, and who see the size of their business reduced by 50 per cent. overnight, to fight with every weapon they can put their hands on for their self-preservation. I wonder whether the Chancellor of the Exchequer or the noble Earl would agree with the economics of the London Passenger Transport Board. May I have the noble Earl's attention, because I am on a very serious point, to which at some later stage I want an answer?
§ LORD LUCAS OF CHILWORTH
When the Chancellor of the Exchequer and the Minister of Transport spoke in another place they commended the action of London Transport in not increasing their fares by more than one-twentieth, instead of the allowable increase that is provided in this Bill of one-twelfth of their gross traffic receipts. The following day, a letter appeared in The Times, over the signature of Mr. Robbins, the Chief Public Relations Officer to London Transport, and he gave some of the reasons why the costs of operating a business such as London Transport must be much more than that covered by the shilling per gallon of increased taxation.
He gives in this authoritative statement by London Transport a great many figures. He says that the extra cost of oil will cost London Transport £ 40,000 a week, and that the delay in putting this increase into operation will cost them a backlog of £ 150,000. He goes on to give some of the reasons why 't is necessary, to spread the increased charge, not only over London's buses but over London's underground railways, which, of course, are virtually unaffected by the increase of this Is. in the gallon on petrol. He states, among other things:it will cost more to carry the additional traffic,for private motoring, being limited, will go on to the buses. And he says:We have undertaken to maintain the peak hour services, and in fact we shall probably have to increase them. This will be expensive; on the Underground we shall have to keep 1187 long trains running throughout the day; this will also cost more money. To make the 5 per cent. reduction of bus mileage required by the Government we must cut services outside the peak hours and on Sundays. This enforced unbalance of our traffic may well offset the additional takings.…Mr. Robbins goes on and finishes in this way, which may amuse some of your Lordships, though it can be an economic argument—it certainly made me smile when I read it. Talking about the halfpenny increase, from 2½d. to 3d., on the minimum London bus fare, he says:A difference of so little as a halfpenny causes substantial diversions of traffic, and it might have serious effects on the Underground if large numbers of short-distance passengers were diverted on to it from the buses.In other words, he was saying that increasing the fare from 2½d. to 3d. on buses will divert traffic to the Underground, and that because that may cause undue pressure on the Underground there must also be a halfpenny increase on the Underground fares in order to divert the traffic back to the buses. Yes— I laughed too. That is an unbalance of business; and if all the economic arguments I have repeated in this letter are applicable to London Transport, they are applicable to any ordinary average business.
It is useless for the noble Earl, Lord Selkirk, or the Chancellor of the Exchequer, or anybody else, to say "Well, there is only one justifiable course—to put up the costs by the fraction that is represented by 1s. per gallon." That is utter and complete nonsense. I want to ask the noble Earl what he expects anyone in business to do. Suppose a business, through rationing and this increased cost, has its turnover reduced by 50 per cent.: does the business man shut down half his business? Who pays the rents, rates and taxes on the half that is completely non-productive? Are the Government going to let him not pay any taxes because he is only doing half his turnover and making half the profit that he made before? Is that not a valid consideration for any business to have in mind?
The Government, in this Bill, have agreed that taxi fares in London shall go up by an extra charge of 6d. for any journey, however short. I do not begrudge the taximan in London that 6d., but what about the argument of the 1188 noble Earl and the Chancellor of the Exchequer that this should be only a fraction of a ld. more per mile, when every time one of your Lordships takes a taxi from here to his club in St. James's Street he will play an extra 6d. for that one mile? That is increasing the taxi fares of London by 6d. a mile. Why did the Government agree to that surcharge, in face of the economic argument of the Chancellor of the Exchequer, his Financial Secretary, the Economic Secretary and the noble Earl the Chancellor of the Duchy of Lancaster? It is the most futile argument that I, as a business man, have ever heard in my life.
May I ask the noble Earl this question, because I am puzzled? The Chancellor of the Exchequer, in his speech in another place, commended the great gesture of London Transport that they were going to bring in under this Bill, which allows an increase for London Transport of one-twelfth of the gross traffic receipts, an increase of only one-twentieth: they were magnanimous enough to do that. To my simple mind, one-twentieth is 5 per cent. In 1955, the total traffic receipts of London Transport— buses, tubes and railways— were £ 74,200,000. That included receipts from some contract carriages and a handful of freight, though it did not amount, I suppose, to more than £ 1 million. Five per cent. of £ 74,200,000, if my mental arithmetic is correct— I myself place no reliance on it; your Lordships can work it out— is £ 3,710,000. If I am right in thinking that the extra tax amounts to £ 40,000 a week, that means an extra £ 2,080,000 a year. But as London Transport are to increase their gross traffic receipts by 5 per cent., they will increase their revenue, or at least their estimated revenue at any rate, by £ 3,710,000. So they will make a profit on the deal of £ 1,630,000.
I do not know where my figures are wrong. They may be, but I have culled them from the official figures for 1955 of London Transport. Is that any disgrace, if they are covering more than 40 per cent.? I do not know whether they are covering all this. There may be subtractions which they have taken into consideration. Of course, London Transport, and any other business in this country, have to meet the extra cost of disturbance and alterations of this, that and the other in the fit-up of their businesses. I 1189 am shocked at the noble Earl, Lord Selkirk. The only thing I will say in mitigation is that he was reading an official statement. I could not expect him to tell a different story to your Lordships from that which three of his colleagues told to another place. But any business man in your Lordships' House would dispel and disperse that argument with contempt.
In this Bill, and in the Amendment to Clause 1 that was moved in another place, the word "temporary" is supposed to be underlined, because in another place this Bill did not have a friend: the unanimity of criticism was complete. So, knowing -the Government like their own Party and the Opposition in the House of Lords know them, they are not going to trust the Government to "get away with" the word "temporary" in only the Title of the Bill. Hence there is an Amendment to Clause 1 (2) which, as the noble Earl has said, states, in effect, that one month after the expiration of petrol rationing this extra tax will come off. I submit that that is a useless and worthless procedure, because it will not decrease by a day the period during which this extra taxation is levied, but it may well mean a long continuance of petrol rationing, because some clever person has got to decide which comes first.
My Lords, may I now deal with what, in my view, is the most serious part of this matter— namely, its inflationary effects? I am quite prepared to admit to your Lordships that a number of these extra charges are nothing more or less than squalid exploitation. But the Government should have known that. If I may use the vernacular, they did not "come down with the last shower." They should have known that immediately they took this course a certain section of the community would jump in. The corollary to this kind of thing is price control, but I suppose that is too much for the Government— that requires too much organisation. The worst exploitation of which I have heard is in regard to coal merchants who, I am given to understand, have been charging an extra 6d. a sack to those people in London who can afford to buy their coal only in 1 cwt. sacks—an extra 6d. in cartage owing to petrol rationing. That is a price increase. On the other hand, I 1190 have great sympathy with the vast bulk of people who have to increase their costs due to the cost of essential distribution. It is no sin if an employer of labour increases his costs, when, by an arbitrary action on the part of the Government, half his business goes overnight, in order to keep his men employed for as long as he can.
Of course there will be increasing wage demands. In my view, this is one of the most serious things that the Government have to face. I have often been asked over the last two or three years why it is that labour in this country will take that forward view which so many people think they ought not to take: why they do not wait for the harvest to be reaped instead of wanting to gather the corn before it is half-grown. The truth has always been that labour in this country have never believed that there ever can be permanent full employment under a Conservative Government—and how right they have been! The question of un-employment in this country is going to he serious. I will give your Lordships an example. The first impact of what we have seen during this last fortnight has fallen with brutality upon one of our greatest industries, the motor industry—the centre of an industrial empire which employs in its manufacture and distribution, 400,000 souls, and in its wider context about 2 million. In point of fact, one in sixteen of the wage-earning folk of this country depends in some degree for his wages upon this country's motor industry.
This industry has been the milch cow for successive Governments since 1926. 1 had the great honour of fighting the battle in your Lordships' House—it was one of the first speeches I ever made—to do away with the tax based on horsepower, to give our great industry the chance of selling in the markets of the world. Sense dawned upon Parliament, and that tax was abolished. But: what happened practically the day afterwards? — up went the petrol tax. The petrol tax has gone up; but, in spite of all the handicaps, the British motor industry has survived, and exported from this country last year £ 386 million worth of goods. That is the exact figures. Then came the credit squeeze that was a kick. Then hire purchase restrictions came alone: that was another kick, Then this, the greatest blow of all.
1191 What has been the result overnight? I think I am correct in saying that there is not a major factory— there may be a few minor ones— in the motor industry in this country which is working more than a three-day week. That situation has increased costs by 16 to 17 per cent, and it will increase costs still more. Freight charges, which had been soaring, have further increased. I can give your Lordships an example: the cost of shipping a motor car from this country to the Pacific Coast has risen by £ 30 to £ 35. These firms will struggle to keep their employees working. The pipelines of distribution from the factory to the retailer are clogged solid. The order books of the British motor industry are anything from 50 to 75 per cent. down on what they were in the corresponding period at this time last year. This is always the worst, the lowest, time for production in the yearly cycle. So I say — and I say it with a full sense of responsibility— that if the present position continues, if this present rationing and taxation continue, with no alleviation between now and the end of January, and no first-aid is brought to the assistance of the industry, the industry will have a quarter of a million unemployed at the end of January. That is the first impact of this situation upon the industry which has to stand the biggest rub. If that is not serious enough, I do not know what is. From the channels of information that are open to me that is the best assessment that I can make.
My Lords, what can be done? One thing stands out above everything else— namely, that we must get into this country as much oil as we possibly can, because that is the only thing that will help the position. I am glad that the noble Marquess the Leader of the House is here, for I want to ask the noble Earl if he can say whether Her Majesty's Government will give an undertaking that they will progressively eliminate this rationing by stages as soon as it is physically possible so to do; that they will not wait until petrol rationing can be taken off suddenly, but will take it off gradually. I want to ask Her Majesty's Government also whether they can do something to alleviate the position in regard to the heavy impost of purchase tax. Successive Chancellors of the Exchequer and Financial Secretaries have 1192 said in another place at various times that as soon as purchase tax made a really heavy mark upon industry, that fact would be taken into account in considering alleviation. Never in the history of the motor industry have we had a position like the present one. And do not forget that the impost of purchase tax on the commercial vehicles of this country is having an effect not only upon their manufacture and production for export but also upon industry's costs.
The last question I want to ask concerns credit. I expect some of your Lordships will be rather shocked at what I am about to say, but I feel certain that one thing which will have to be done to help the industry of this country over the very serious economic crisis which it is facing is a reduction in the bank rate. But let us leave to another time all the arguments surrounding that. For my part, I condemn this Bill. I condemn it as being unnecessary, and I condemn it as having dealt the economy of this country a blow which we shall not get over for very many years.
§ 3.23 p.m.
§ LORD BRABAZON OF TARA
My Lords, I am fully aware of the fact that we are really only wasting time this afternoon in stating our views on this particular measure, because it is privileged and will be passed automatically, whatever we say or do; but I do not think that that should stop us voicing what is our frank opinion of this particular measure. Frankly, I consider it far and away the most imbecile Bill that I have had any experience of in my forty years of Parliamentary life. I have read with great assiduity everything that was said in another place, and all the arguments advanced, and I found them extremely unconvincing. What was even more remarkable was that there was not one note of praise for the Bill in another place, from either side of the House.
What are the two things which Her Majesty's Government have, very rightly, tried to force down our throat at every opportunity? They are two very sound theories: first, that we must keep the cost of living from rising. Her Majesty's Government make great appeals to the unions of this country to stop any demands for rises in wages, saying that they will look after keeping stability in the cost of living. The second thing for which Her Majesty's 1193 Government ask is increased production by our manufacturers. How can these two desires of Her Majesty's Government be better defeated than by a tax on transport? There is not a soul who is not going to pay more when he travels to work. The transport of goods, such a necessary and essential part of manufacture, goes up in price. It is no use pretending, as the Minister has pretended, that this will mean only a very small increase on the fares of the travelling public.
The noble Lord who has just sat down has said that by virtue of the delivery charge the price of a hundredweight of coal had increased by 6d. My experience is that it has increased by 8d. That is the kind of thing that is happening immediately because of this tax. Because of this tax, the cost of living has automatically gone up, and the cost of goods will be increased, to the detriment of our export trade. Surely it is bad enough to have a shortage of fuel and to have rationing. When Her Majesty's Government are going to tax the very essential services of this country, those providing our balance of trade, then I believe they have hit the country very unfairly and very unwisely.
Then I come to the question: What is it all for? We are told that we cannot afford to lose this drop in revenue of £ 30 million. I think we ought to look in more detail at the broader subject of national taxes. When we speak of loss of revenue we must divide our Budget into the parts in which it is divided—a balanced set of circumstances above the line and an enormous amount of taxation below the line. We are told that this year that will amount to nearly £ 500 million. I should very much like to know what Mr. Gladstone or Mr. Snowden would say to the modern Budget. It is nothing else but penal confiscation. Mark you my Lords, these surpluses do not go to reduce the National Debt. That was the old, classical idea of Budgets; but now the surplus goes to capital re-equipment; it goes to the mines; it makes nuclear power stations. In fact it goes to any particular thing that a particular member of Her Majesty's Government likes, except probably on the most important part of our re-equipment—on roads. Surely there is enough cushion in that surplus of £ 500 million to look after 1194 this £ 30 million which the Chancellor of the Exchequer is going to lose over these few months? The old classical idea was that when one re-equipped on the capital side one borrowed the money to do so. Apparently that idea is out of fashion to-day, and we are over-taxed by this monstrous amount every y ear in order to supply these necessary, but capital, luxuries which should not come out of revenue.
Much has been said of the balance of trade and the loss of dollars relative to pounds. I am still at a loss to understand how this particular tax is going to help in that respect. If Her Majesty's Government want to stop people buying dollar goods they can stop those goods coming into this country, They can stop imports of tobacco, cotton or films. That may he very unpleasant, but it would have an effect, whereas this extra tax will have no effect of that kind. The Treasury take the view (it is a very curious one, and I think it is high time it was contradicted) that if the Government tax people enough, then people will not buy dollar goods. I do not follow that reasoning. Why should they, because they are over-taxed, not buy dollar goods? It is for Her Majesty's Government to see that there are no dollar goods to be bought.
Eighty years or so ago, the medical profession held the view that if any body was ill the right thing to do was to bleed him. Of course, it was complete and unadulterated nonsense. But the Treasury now have the same complaint, and they think that they can tax our people into prosperity. If it were not so tragic it would be comic. Everyone with any common sense knows that only by relieving taxation can real prosperity be brought about. It is a dreadful thing to say, but, as a simple citizen, I have come regretfully to the conclusion that the Government of the day are riding for a fall. And if they are doing that, I must say they are doing it extremely efficiently. This may be a great comfort to the Opposition, but it is extremely galling to a loyal Conservative. I would invite your Lordships to-night to throw this Bill out—defeat it. It cannot make any difference; the Bill still goes through by the wishes of another place. But it would be a gesture now to this country that we do not consider it a wise measure, and that we are riot in any way responsible for it.
§ 3.32 p.m.
§ THE EARL OF SWINTON
My Lords, I do not rise in order to pursue the question of whether this popular measure is as popular as the Government would have us believe. That is not my purpose. What I rise to raise is a deeper, more permanent and more fundamental question. As regards the popularity of the measure, it may well be that if it is right that in this House we have no responsibility at all for it, the great popularity which I believe the House of Lords enjoys in the country will not be diminished by our not having any share of responsibility. But I want very sincerely to put to the Leader of the House or to the noble and learned Viscount who sits upon the Woolsack— I am not quite sure to which my inquiries should be addressed; possibly they should be addressed to both— the far more fundamental and lasting constitutional issue which the noble Lord, Lord Lucas of Chilworth, raised for a moment in his interesting speech, and then, I thought, a little shied away from: that is, the constitutional position raised by Clauses 2 and 3 of this Bill.
There can be no question, whether this is a good Bill or a bad Bill, that Clause 1 is clearly what I may call, for convenience, an exempted business. That is the clause which puts up by £ 40 million or £ 50 million the tax upon oil. Then we come to the next clause. I am not criticising the merits; I thing it is right that taxicab men should be able to earn a living and that bus companies should be controlled in the extent to which they put up their fares. But that is not the point. Here we have "tacked on"— that is the right constitutional phrase— to a taxing measure, a Customs Bill, a pure Finance Bill, a clause which says that bus companies (I am paraphrasing, of course) shall not increase their fares by more than a certain amount and that taxicabs are to be allowed to increase their fares by a certain amount but not more.
What I want to know is this. The question of the reform of the House of Lords figured prominently in the Queen's Speech, and I am not one of those who think that the powers of this House should be increased, though I have definite views about how its Constitution might be improved. But I do most strongly take the view that the powers and privileges of this House should not be 1196 diminished, or, if they are to be diminished, that that matter should be a subject of full consideration and debate and not brought in, as it were, by a side wind. There is a lot in Erskine May about this matter. Some of the rulings are founded on measures for which I am afraid I was responsible, like the Ottawa Agreement Bill, which were dealt with a long time ago. But our own Standing Order 45 states the matter quite clearly. It says:—The annexing any clause or clauses to a Bill of Aid or Supply, the matter of which is foreign to and different from the matter of the said Bill of Aid or Supply, is unparliamentary, and tends to the destruction of constitutional Government.We in this House certainly do not desire to infringe the rights of another place but there must be reciprocity in all this, and if that is our position (and each is in a sense master in his own house), then it is very important that the other place should not seek to extend their prerogative or privilege. The fact is that the Speaker in another place, for whom I have the greatest respect, is in the matter of "tacking" (I should like to be corrected if I am wrong) the sole authority to decide. But that does not mean, I would have assumed, that great care was not taken, and that there was not a certain amount of discussion through usual or unusual channels as to whether or not tacking was taking place.
I think we should agree— and I am sure that no one would agree more than the Speaker in another place— that the powers of neither House should be extended, but should be meticulously applied. How ought the rule to be construed that you must not tack any matter which isforeign to and different from the matter of the said Bill.Of course, if you say that anything which can be associated with the Bill can be brought within it, the whole of what is called in our Standing Order a great constitutional principle is brought to the ground. After all, nearly everything in this muddled and mixed-up world to-day is more or less connected. I do not say for a moment that raising bus fares because the price of petrol is increased, or raising taxi fares for the same reason, is in that sense foreign to the imposition of this tax. But surely these words 1197 "foreign", and so on, have to be construed strictly and constitutionally in this matter. I am not saying that the provisions about buses and taxis are not fair just to put into an Order in Council or an Act of Parliament. But I do say that it is very odd to put them into this Bill. If this can be added, where are you going to stop?
My noble friend Lord Brabazon of Tara, and indeed an almost higher authority, if I may say so, the Chancellor of the Exchequer, said that this tax is going to have wide repercussions. This extra tax is going to affect almost every single commodity and service. The Chancellor of the Exchequer has said that it is important that that fact should not be exaggerated. He said (I do not seek to dispute his figures) it is one-fifth on this, one-quarter on that, and not more than three-quarters of a point on the cost of living, if everyone plays the game. If we put in a clause about buses and a clause about taxis, why should we not tack on to this measure all the things which the Chancellor of the Exchequer said it is so important to safeguard? Why is there not tacked on a provision that the oil companies should not raise the price of oil by more than a certain amount, or should lot increase their dividends? More than one speaker has referred to coal. One noble Lord said that coal has gone up by sixpence and another that it has gone up by eightpence—I dare say it will be a shilling before we are finished with it in the more remote country districts, in one of which I live. If it is right to put a limitation on bus fares, why should we not deal in this Bill with the price of coal? We might almost deal with the price of Christmas turkeys—or electricity.
I am not quarrelling with the merits of what is being done, but I think it is important that it should be done constitutionally. Nobody will appreciate this more than my noble friend the Leader of the House, who is such a keen guardian of the rights of your Lordships' House and such a wise leader in never seeking that this House should go further than it is entitled to go—and sometimes less far than the noble Leader of the House thinks that it is entitled to go. I think that it is right to ask your Lordships to take note of this point and to ask the noble Marquess the Leader of the House or the noble and learned 1198 Viscount who sits on the Woolsack to give us some assurance. I do not know whether any assurance cart be effective, because, when we do something like this, we are creating a precedent— that is the bother of it. The Government may say that it is very important to get this Bill through. We all want to go home for Christmas. I do not know why there is such a hurry about it. I am bound to say that if we are £ 500 million out below the line, it cannot make a lot of difference whether this Bill goes through now or after Christmas. I do lot think that any one of us would hesitate for a moment in passing the Bill if it were limited to Clause 1, to the imposition of a petrol duty, little as some of us may like it. I do not see why this matter cannot be separated. I am sure that if a separate Bill were introduced, embodying Clauses 2 and 3, we should pass it in one day, if that were necessary.
At any rate, I should like to raise the constitutional issue. If on to a Bill, the sole purpose of which, when it was introduced on a Ways and Means Resolution in another place, was to raise the Customs or Excise duty on hydrocarbon oils, there is to be tacked a provision about how much bus fares and taxi fares ought to rise, a precedent is being created. Whenever a Finance Bill is introduced which is going to have an effect on everybody in the community—as nearly every Finance Bill has— the Government would be able to tack on to it any clause they liked. Then the whole doctrine of tacking has gone by the board. I thought that it was worth while that somebody with experience of these matters should raise this issue, not at all from a Party point of view but from a constitutional point of view, and ask for some reply and for some assurance.
§ 3,44 p.m.
§ LORD JESSEL
My Lords, I too should have liked to put down some Amendments to remedy what I think is a serious flaw in this Bill, but I topic advice and was told that such a course would be utterly useless. The object of my Amendments would have been to make sure that no operator of public transport services should, under cover of this Bill, increase fares by any amount exceeding that needed to offset the effect of the proposed duties on hydrocarbon oils. I am sure that noble Lords on all sides will agree 1199 that we cannot tolerate any profiteering from the exceptional circumstances which have arisen as a result of the closing of the Suez Canal. I suggest that under Clause 2, as it is at present drawn, this is quite likely to happen. There is nothing to prevent an operator from increasing existing fares by such an amount as would increase his aggregate gross receipts from permitted passenger fares by one-twelfth or, as the case may be, one-eighth, regardless of whether or not this increase is strictly necessary to offset the new duties under the Bill
I have been given figures relating to the Eastern Counties Omnibus Company, which I am assured are accurate. If these figures are accurate, they show that if this company availed themselves of the maximum increases permitted under the Bill, their increased profit would be, at the lowest estimate, at the rate of £ 100,000 a year. I would remind your Lordships that increases in respect of such matters as tyres and wages are a quite separate issue and can be the subject of an application to the appropriate authority. I have nothing against the Eastern Counties Omnibus Company, and I do not know whether, in fact, they are to increase their charges by the maximum amount permitted, but I do say that no operator of public transport should be allowed to make increased profits in this way, and that all operators should be made to deposit a statement with the traffic commissioners setting out the basis of the increases in their fares.
In another place the Financial Secretary to the Treasury emphasised that the London Transport Executive's increase is to be appreciably lower than the maximum permitted under Clause 2. That is very admirable. But what I am concerned with is the people who make the maximum permitted increase when it is not strictly needed. For all I know, there may be a great many people of this kind, and so far as I can see, this Bill gives Her Majesty's Government no powers to control these people. I hope that when the noble Earl comes to reply he will give me some reassurance on this point.
§ 3.49 p.m.
§ LORD PETHICK-LAWRENCE
My Lords, I had no intention of rising to take part in this debate, but very important points have been raised on which 1200 I have views, and I should like to contribute them. I take no exception to what my noble friend Lord Lucas of Chilworth said. He raised important constitutional points. I take no exception to what the noble Lord, Lord Jessel, said just now. I think that his point ought to be carefully considered. Of course, the noble Earl, Lord Swinton, who spoke with great force and judgment, is entitled to raise the point he made, but I feel that I ought to put what I consider to be to some extent a case against what he said. He said that it was wrong to introduce in a Money Bill matters which were alien to the Money clauses in the Bill. Of course, that is quite true. But I think it would be a great stretch of the use of words to assume that these clauses are foreign to or alien to the Bill. I should have thought they were ancillary to the monetary clauses in the Bill.
§ THE EARL OF SWINTON
The noble Lord has a great reputation, and I do not want him to misunderstand me. I said that the "foreign" matter had to be construed strictly: that, when you introduce a Finance Bill, all sorts of consequences flow from it; and unless you construe the Standing Order and the House of Commons rule strictly, then you can introduce, as what the noble Lord calls ancillary to the Bill, almost any class of measure or control, or anything else.
§ LORD PETHICK-LAWRENCE
I was quite aware of what the noble Earl said, and I do not think he has added anything to it by his intervention. But I venture to say that it is an incorrect argument. That is the point. Perhaps the noble Earl will allow me to proceed a little further with his argument.
He said that it would be wrong— he was using a correct phrase— to introduce into a Money Bill anything that is foreign or alien to it. I agree as to that. But I contend that these clauses can be construed not as foreign or alien, but as ancillary. If my interpretation be correct, they are not foreign or alien, and I think we must accept them as reasonable parts of a Money Bill. The noble Earl then went on to say that if it was possible to put in a clause about public transport, and a point about taxicabs, would it not be equally possible to put in something about the price of coal? That is quite a false analogy. The noble Earl, presumably, forgets that public transport is 1201 controlled in its prices by the Government, and by law, and that taxicab owners are equally controlled by Statute in the prices they charge, but that there is no Statutory decision as to the price of coal. Therefore, I see a great distinction. The fact is that, in the present state of affairs, the Government prevent the price of transport and the charge for taxicabs from going up beyond a certain figure. Therefore, if they alter the ingredients of the price, they must at the same time alter the total price, otherwise they are putting a burden upon taxicab owners and the transport authority which they are quite unable to bear.
The noble Earl suggested, further, that we should be doing a great public service by making a protest. I do not say that he went so far as to say this, but he seemed to imply that we should be doing a noble thing if we went into the Lobby and, on constitutional grounds, voted against these clauses of the Bill. I would say from these Benches that I do riot think we on this side have the least intention of putting ourselves so completely in opposition, not to certain clauses of the Bill but to the decision of the Speaker of the House of Commons. That is the fundamental point. Whether the noble Earl is right or wrong— and I think he is wrong—the decision in this matter rests, by Statute, with the Speaker of the House of Commons. He, no doubt weighing all the points that the noble Earl has raised, has come to a certain decision. and has given a Certificate that this Bill is a Money Bill.
In those circumstances—and I am sure my colleagues on these Benches agree—I cannot associate myself with an attack upon the Speaker of the House of Commons. I think that would be, in effect, to bring the House of Lords against the House of Commons; and, much as I dislike the Bill in many respects; much as I may disapprove of the details of the clauses; and whatever may be said for the views put forward by the noble Lord, Lord Jessel, I should be sorry to see this House going into opposition to the Speaker of the House of Commons in this matter.
§ 3.55 p.m.
§ EARL JOWITT
My Lords, perhaps I might say a word or two, if only to emphasise that this is not a Party matter in the least. I am not sure that I do 1202 not agree more closely with the noble Earl, Lord Swinton, than with my noble friend who has just spoken. Of course, it is a matter for the Speaker, and, as I think, we cannot divide against it. I have no doubt that the Speaker in the House of Commons, in the exercise of his discretion, has taken great care. But with the noble Earl, Lord Swinton, I am a little surprised at the decision that has been come to. Supposing you have a measure which affects— as I suppose this one will— shopkeepers. You say, in Clause 1, that a certain tax is to be paid; and Clause 2, in order to compensate them for the loss that they sustain, says that shops may keep open an hour longer than usual. The latter point, plainly, would be a matter that your Lordships' House ought to consider. Or supposing you say that agriculturists are going to be affected adversely by a rise in the cost of petrol, and that they may, therefore, employ school-children outside their holidays. Again I should have thought that was plainly a matter which this House ought to consider.
Though I agree with my noble friend Lord Pethick-Lawrence that we should not go contrary to the advice of the Speaker, who has decided this matter in a way that we have to follow, I cannot think it is a bad thing that we should have made this moderate protest, in order that in the future this matter may be looked at perhaps a little more critically than it has been to-day. With those few words, I hope to have harmonised the views of my noble friend Lord Pethick-Lawrence and the noble Earl, Lord Swinton.
§ 3.57 p.m.
§ LORD SALTER
My Lords, perhaps I may be allowed, though not a lawyer, to add one or two words to the arguments that have been put forward. I must say that I share the anxieties as to what might easily happen in regard to the Rules that have been adopted. I certainly would not for a moment propose an Amendent, or go into the Lobby to contest the Certificate given by the Speaker. But I do suggest that your Lordships do ell, when you feel anxieties, to voice them, in order perhaps to have some influence upon future decisions in other cases. I need not remind your Lordships of what a part in the history of the relations between the two Houses tacking has played. Nor need I emphasise the 1203 fact that even those reduced powers which are now, by deliberate Statute, left with this House might easily be reduced to nullity if, even within the limited period during which we may stop legislation, we found that we could not act because of any kind of loose extension of the tacking on to a Finance Bill.
I quite understand the argument of the noble Lord, Lord Pethick-Lawrence, that this is perhaps ancillary rather than something which deals with consequences. But the ancillary can slip over quite easily into what deals with consequences, and I would much sooner have the idea in mind that it is only what is integral that is permitted, rather than what is ancillary. Once you have the less exacting criterion, there is no end to the extent to which, even within the permitted powers of this House under recent legislation, we might find that our powers had been filched away from us.
§ 4.0 p.m.
§ THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF SALISBURY)
My Lords, during the course of this debate various criticisms have been made of the Bill before the House. We have had a full-blooded attack made by the noble Lord, Lord Lucas of Chilworth, and an almost equally full-blooded attack made by the noble Lord, Lord Brabazon of Tara. I do not propose to answer them, because my noble friend Lord Selkirk is going to reply by leave of the House at the end of the debate. But the noble Earl, Lord Swinton, has raised a different question, a question not of the merits of Clause 1, which is the main part of the Bill, but whether Clauses 2 and 3 should have been "tacked on"— I think that was his word — to it. That is a constitutional question, and the noble Earl was good enough to ask my opinion about it. I did not know that this subject was going to be raised until I heard him speak. Constitutional questions, I believe, require a special study before an opinion is expressed on them. But I will do my best within the limitations which are placed upon me.
The noble Earl and I have often fought together for the privileges and rights of this House, and I hope we shall go on doing so for many years to come. But I am, like the noble Lord, 1204 Lord Pethick-Lawrence, a little doubtful whether his reading of Standing Order No. 45 is correct. The noble Earl quoted it, and said, what is quite true, that it says:The annexing any clause or clauses to a Bill of Aid or Supply, the matter of which is foreign to and different from the matter of the said Bill of Aid or Supply, is unparliamentary, and tends to the destruction of constitutional Government.Of course, all these things are questions of degree. No doubt if one could imagine consequences which are very far away from the original purpose of the Bill, it would be improper to include them. These are direct results of the measures taken under Clause 1, and I should have thought they might well have been held to come within the limits of a Money Bill. It is purely a matter of opinion.
I find that Erskine May says:A Bill which contains any of the enumerated matters and nothing besides is indisputably a money bill'.We all agree about that.If it contains any other matters, then, unless these are subordinate matters incidental to any of the enumerated matters so contained in the bill, the bill is not a money bill'.That is a definition on which I imagine Mr. Speaker had to come to his conclusion. Mr. Speaker has absolute power in this matter under the Parliament Act, 1911, and nobody can dispute his ruling. It would be an impertinence on my part even to comment on his ruling. But I think it was one of those borderline cases which he might have decided one way or the other, and in this case he decided as we all know. It is no good, in such circumstances, any of us in this House trying to reverse the decision which has been reached.
There is only one other thing I would say, and it is this. Whether or not other noble Lords agree with the ruling which Mr. Speaker has made, I do. Perhaps the noble Earl, Lord Swinton, is more doubtful. He thinks that arguments could be put on the other side, and so on. At any rate, I am grateful to the noble Earl for having raised the matter. We are always in a difficult position in this House, owing to the limitations under which we work, and it is quite right that when a case of this kind arises— it does not often happen, but it does every now and then— we should show that we are 1205 alive to the dangers of an undue extension of the powers which may be exercised under the Act. I have no doubt that Mr. Speaker himself will be extremely grateful to the House. It shows that we watch carefully the limitations under which we operate. If we did not do that, we might be reduced even below where we are in our control of legislation. All I rose to say was that I am glad the matter has been raised. I believe that the decision of Mr. Speaker was the right one—that is a matter of opinion— and, in any case, it is not for us to dispute it.
§ LORD LUCAS OF CHILWORTH
My Lords may I be permitted to say just one thing? When I introduced this important matter in my opening remarks, it was in no way to criticise the action of the Speaker in certifying the Bill. My objects were to criticise the Government for not introducing two Bills. I said that that was the way out of it. I consider that the second Bill should have contained all those provisions about bus fares and taxi fares, which could then have been dealt with by amendment in the ordinary course of business.
§ THE MARQUESS OF SALISBURY
My Lords, the only answer I can give to the noble Lord on that—and I am speaking only by leave of the House—is that he would have been right if Mr. Speaker had come to the other decision. As Mr. Speaker came to the decision he did, it is impossible for the noble Lord to argue that there should have been two Bills.
§ LORD LUCAS OF CHILWORTH
But the Speaker should never be placed in that position. The two Bills should have been introduced into another place.
§ 4.7 p.m.
§ THE EARL OF SELKIRK
My Lords, I do not wish to continue this discussion. I will not add much to what has been said. Noble Lords have explained to me at some length that they do not like this Bill. I did not expect they would. All I would say to the noble Lord, Lord Brabazon of Tara, is that he did not understand the effect of the problems which the Chancellor of the Exchequer has to face as regards the confidence in sterling. The interesting thing is that international confidence in sterling has risen since the Chancellor of the Exchequer took the measures he did.
1206 The noble Lord, Lord Lucas of Chilworth, raised a wide variety of questions. In fact, he went a long way towards opening a general economic debate. He dealt with all kinds of things like the credit squeeze, the bank rate and purchase tax. Quite frankly, they have nothing whatever to do with this particular Bill. I do not question that the motor industry is going through a difficult period, but it would be completely wrong to pretend that all the problems are connected with this particular Bill. They are connected with a wide variety of subjects, as the noble Lord is aware.
§ THE EARL OF SELKIRK
I do not believe the noble Lord's anxieties about I unemployment are justified. Indeed, have been given the figure of 1.1 per cent. of the labour force, which means that to all intents and purposes, there is a very low rate of unemployment at the present juncture. The anxiety for the future may, of course, be justified, but there is no reason to suggest it at the present time.
§ LORD PETHICK-LAWRENCE
Does that figure of 1.1 per cent. take into account short-time working, because it is not unemployment in the legal sense?
§ THE EARL OF SELKIRK
I agree that the figures I have given are for unemployment, and not short-time working. I am not questioning that short-time working does exist, but this Bill is certainly not the cause. It would be much more serious if the limitation of the resources of oil which we have to face at the present time was not reasonably evenly distributed.
The noble Lord, Lord Jessel, raised the question that this measure gives too great freedom and too strong a power of decision to the bus companies. I must confess that t find it rather difficult to believe that that is, in fact, the case. I think I am correct in saying that this represents an increase in cost of fuel of about 35 per cent., whereas the increase in fares which these provisions will permit for bus companies may be anything from one-eighth to one-twelfth. It is possible, of course, that some companies may be in an advantageous position for using this provision to the full. They may be in a better position than others. My own feeling is—I should be surprised if it were 1207 not true— that a great many bus fares at present are very near the limit that the traffic will bear. If the companies put them up unduly, they may well find that they will lose their traffic. I should be surprised if the bus companies were able to say that they were in such a position that they could, in fact, extend their fares considerably without losing a great deal of their traffic.
May I also point out that in any case this is a temporary measure. We hope it will last only a matter of months. In that event, it will fall upon the traffic commissioners to make such adjustments after that time as they may think necessary, because this tax ends completely. Does the noble Lord really think that the opportunity will be taken during what may be only a matter of three or four, or perhaps five or six, months by the bus companies to do things which would outrage or, shall I say, annoy, their travelling public? I should doubt very much whether that would be so.
I fully appreciate that this is not a Bill which noble Lords find very satisfactory. The noble Lord, Lord Brabazon of Tara, told us that he found very few supporters in the other place. I wonder when the noble Lord was in the other place how often he voted in favour of any form of tax on motor cars. It is extremely rare for anyone voluntarily to vote in favour of taxation.
§ THE EARL OF SELKIRK
That is, of course, what the Government hope for. On the other hand, it does not necessarily mean to say that a taxation measure is wrong because it is unpopular. Those are the hard facts of this case. I should like your Lordships to look at this Bill in that light. I am sorry that the noble Lord, Lord Derwent, is not here because, when I raised this question before, he pressed me very hard to give a more formal undertaking that it would be temporary. This temporary provision is now formally incorporated in this Bill. 1208 I said that I would try to obtain a more formal recognition. It is there. From the time when rationing is taken off, unless Parliament decides to the contrary, the provisions of this Bill automatically fall. I think, with respect, that that is going as far as any Government can go, and indeed it is a good deal further than most Governments have been able to go.
§ LORD LUCAS OF CHILWORTH
My Lords, would the noble Earl try to answer the specific question I asked him: is it the Government's intention progressively to increase the ration, when circumstances permit, and not wait until they can remove rationing entirely before they make an easement?
§ THE EARL OF SELKIRK
I am always at the disposal of the noble Lord, Lord Lucas of Chilworth, and I seek very hard to answer his questions. I am afraid that, at the moment when the rationing scheme is just coming in and, as the noble Lord is fully aware, is inevitably raising great problems, I should be unwise to give any prophecies about the way it will work out.
§ On Question, Bill read 2ª; Committee negatived.