§ 5.5 p.m.
§ LORD TEVIOT rose to ask Her Majesty's Government when they will further extend the refunding of Excise duty on bus fuel for certain express services, school bus and works contracts. The noble Lord said: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper. I should like first to express my thanks to the noble Lords who have been kind enough to remain in the Chamber to listen to this debate, and particularly to the noble Lord who is to reply.
§ As your Lordships will recall from the discussions last year on Clause 33 of the Transport Bill, a proportion of the Excise duty paid by bus operators on all fuel is in due course refunded to them. This delay amounts to another enforced loan to the Exchequer like that of the selective employment tax. But this refund is not so generous as it might appear, because it is limited solely to the 422 operation of stage carriages; and it is worth stating here that stage carriages are still as defined in the 1930 Road Traffic Act—namely, passenger vehicles on which there is a minimum fare of under 1s. With the steep increase in price levels that has occurred since that time the limit of 1s. is out of date. The fuel tax has risen in the same period from a mere 4d. to no less than 54d.
§ I should like to break down this figure still further. In the thirteen years of the previous Government the tax increased by 1s. 3d. but in the last four years it has been Is. 9d. Thus the bus industry has had to survive three increases in the last 13 months. I should like the noble Lord, Lord Shepherd, to observe these facts and try to explain why this has happened.
§ What I have said so far is not my only concern. I wish now to refer to assurances given by the Government (luring their tenure of office. One cannot emphasise too strongly that during the period from 1964 the fuel tax has increased from 2s. 9d. a gallon to the present 4s. 6d., and the net figure refunded on stage services has been a mere 2s. The significant point is that while the present policy—which appears to be, "tax the motorist off the road"—is being pursued, the passenger road transport industry, which has been seeking relief for other public service vehicles performing duties of obvious benefit to the community (about which I shall go into greater detail later), has, been handicapped by these swingeing increases in the tax on essential fuel.
§ In February, 1965, the then Minister of Transport, Mr. Tom Fraser, actually told representatives of the industry that he was certainly most willing to consider what they had said "about these small concessions". The concessions were asked for in respect of essential express services, works contract services and school services. They would not be quite so small to-clay because of the further 1s. 3d. added to the tax for the past two and a bit years, and they would cost the Exchequer the relatively modest sum of £1¼ million. In terms of national finance this is nothing, but it would have a significant value for the industry, and especially the small operators, who in respect of their essentially necessary services have to pay £1 million out of that £1¼ million.423
§ Let me now tell your Lordships something about the services involved. Apparently some of your Lordships are not quite sure of the difference between express services and stage carriages. One might think that a stage carriage is rather like the old-fashioned mail coach, but that is not so. A stage carriage is a bus which stops at successive stops, an express carriage is one that goes greater distances—for example, from London to Scotland. To give the correct definition, essential express services are services which in the opinion of the traffic commissioners are carrying passengers solely on essential journeys, and they are in all respects, except the minimum fare, analogous to stage carriage services. Works contract services are defined as services provided under a contract for the hire of a public service vehicle to an employer of labour for the purpose of carrying persons employed by such employer to and from premises where they are employed or between part of such premises and another. This definition is intended to include hospital services. School services are services provided under contract for the hire of a public service vehicle to an education authority, or services provided by an education authority for the purpose of carrying school children and staff to and from school. Especially in the last case, it seems absurd that these authorities should have to pay 4s. 6d. a gallon, compared to 2s. per gallon paid by stage services. I hope the noble Lord will tell us about this.
Since February, 1965, the industry has repeatedly made representations to both the Ministers and officers of the Treasury and to the Minister of Transport. It is true to say that sympathetic noises have been made from time to time; but deeds are stronger than words. In this period great encouragement was given when, following the Second Reading of the Bus Fuel Grants Bill in another place, the Money Resolution was being debated. After many Members had pleaded the needs of the essential services provided by the bus and coach industry, the late Mr. Stephen Swingler, then Joint Parliamentary Secretary of the Ministry of Transport—and here I should like to pay tribute to the work done by Mr. Swingler during nearly five years at that Ministry—said:
We are very interested in this pressure from the Opposition for additional rebates. I undertake seriously to consider, with my right honourable friend, whether the system should be further amended in that way. But let us at least take this first step, not provided for by any previous Government"—
here I should like to interpose the suggestion that no previous Government have so grievously afflicted the transport industry; and I know about certain other small benefits for stage carriages—
of discriminating in favour of public transport, by rebating increases in tax. We can consider later possible extensions to other kinds of services such as have been suggested."—[OFFICIAL REPORT, Commons, 1/12/1966; col. 794.]
§ It is because of the present economic crisis that I limit my question to those services I have just mentioned, which in the function which they perform are clearly equivalent to our stage bus services. In order to make my question and submissions complete I must put them in the setting of the true needs of the bus and coach industry. We all know that one of the hidden economic costs of this generation is delay caused by congested roads—which means congestion caused by private cars. I am, of course, a motorist myself and I know that the car is here to stay; it is a reality we must live with. Despite this, we must recognise that there are many times when cars would not be used if cheap and reliable buses and coaches were available. Here we have a vicious circle of cars slowing down the public service vehicles and aggravating for others the problem which the car driver seeks to solve for himself.
§ Whatever way we look at it, there is no denying that our public service vehicles make the most efficient use of the roads and should be encouraged in every way we can. America has found the shortsightedness of allowing the car to swamp the bus. We must reverse the trend before we have to redeem our public transport at a cost even greater than excusing it a few taxes, which are, for example, less than half the cost of one Polaris submarine. Other countries have realised this, so let us do so before it is too late.
§ To sum up, I urge on the Government the benefit to the community of freeing buses altogether from the fuel tax burden, even from that part which they claim represents the value to the operators of the roads they run over—though let me 425 say that even the way in which the Government have calculated this value is strongly challenged by the industry. I am using the word "buses" in its widest sense, to cover not only the stage buses and special services I have referred to but also all other road passenger transport operations. A coach-load of theatregoers is a saving of up to 20 cars, which might be used by the same party. When alcohol is to be consumed, many wise people now make up a coach party—and how much better for road safety! Our coaching industry is a mainstay of tourism in Britain, and, as my noble friend Lord Geddes often affirms in your Lordships' House, tourism is a vital industry, earning us more dollars than even cars or whisky.
§ I could go on multiplying examples ad infinitum, but I believe that I have said enough to demonstrate quite clearly the importance to the country of its passenger road transport industry. Yet I accept that within this industry there are degrees of priority, and at this time I ask Her Majesty's Government what progress they are making in keeping the promises made and repeated during the past four years. I say again that I ask for action, not mere empty words.
§ 5.17 p.m.
§ THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD SHEPHERD)
My Lords, may I first thank the noble Lord, Lord Teviot, for his sincere tribute, which I think will he generally accepted as well merited, to my late right honourable friend Stephen Swingler, who died so tragically some weeks ago.
Before I comment on the particular points which the noble Lord has made, it may help the House if I set out the basis on which the bus fuel grants scheme operates. When an additional duty of 6d. per gallon was imposed on motor fuel by the Autumn Budget of 1964, the Government decided that this additional duty should be refunded to bus operators by way of grants made by the Minister of Transport. The Government felt that there was a particularly serious problem facing the operators of the regular short-distance bus services in town and country which had to operate as essential services regardless of whether there was traffic offering or not. This is an important 426 point to be remembered. These operators were, and still are, facing difficulties in maintaining efficient services in the face of rising costs and falling traffic. On many of these services the fares were already a heavy cost to the travelling public. Some measure of relief was thus necessary to keep these services going and to save the public from an additional fares burden on their day to day journeys.
When the necessary statutory authority to implement the bus fuel grants scheme was provided in the Finance Act 1965 it was limited to stage services. These are public bus services, running according to timetables and licensed by the traffic commissioners, on which there is a minimum fare of less than one shilling. They account for nearly 80 per cent. of total bus mileage each year. Broadly, they are the types of service which the Government were and still are, most anxious to help. It was decided not to extend the relief wider than this, since the other kinds of bus and coach service are, not, as a general rule, in the same serious difficulties. There is much less evidence to suggest that fuel duty creates serious difficulties for operators of the longer-distance coach or makes the fares on these services unduly high. Many of these services are excursions and tours which operate only when and where there is traffic offering.
§ LORD TEVIOT
I apologise for interrupting the noble Lord, but I am ref erring to the central express services, not to the tourist day tours, excursions, and the like.
§ LORD SHEPHERD
I appreciate that, and I will come on to the express services. What I was seeking to do, in view of the noble Lord's speech, was to state the conditions and understandings under which the Government make these grants, and the reasons why they have left out from the grants certain of the services. The point I was seeking to make was that in the group left out were operations undertaken when there were passengers available, and the operators were not required by the regulations to provide services whether there were passengers or not. It is also true that where the service is operated under contract—that is to say, where the operator hires his bus as a whole—he gets a guaranteed return at a negotiated price. In other 427 words, he negotiates a price with the education authority or with the employer who is using the bus to bring in his workers.
The Government have continued to recognise the need to assist stage bus services in the public interest. Stage services have been protected from all increases in fuel tax since November, 1964, right up to and including last week's Budget. In addition, further relief was given, amounting to 9d. per gallon, under Section 33 of the Transport Act 1968. This was in pursuance of the policy set out in the White Paper, Public Transport and Traffic, which recognised the need to ensure that stage bus services paid no more in tax than was properly attributable to the costs of the roads provided for their use, as well as the factor that technical improvements in bus constructions—which are very desirable to improve their performance in present traffic conditions—tend to increase fuel consumption. The relief now given to stage services, as the noble Lord has said, is 2s. 6d. per gallon, and will amount to about £21 million a year. This is a very considerable measure of assistance to the bus industry as a whole, and together with the other forms of assistance afforded to the industry it shows the Government's recognition of the essential part which the bus industry plays in the provision of national transport facilities.
This, then, my Lords, is the background to the Government's policy, and it is necessary to consider how the special claims made by the noble Lord, Lord Teviot, fit into the picture. We must also bear in mind the prevailing economic circumstances as a whole and the many conflicting claims which are made for assistance from public funds. The noble Lord mentioned that the present relief excluded many services, particularly in the field of those licensed as express, which were as deserving of relief as stage services. It is true that there may be some services which are fairly closely akin to stage services, except that for one reason or another there is no fare of less than 1s. on them. I know that the Minister of Transport is giving careful consideration to the points that the representative associations have made. This is not, however, simply a matter of the change in the value of money since the 428 1s. limit was fixed in the 1930s. Although, of course, fares have increased since then, the kind of regular short-distance service that is deserving of fuel duty relief still in most cases—there may be exceptions—has a minimum fare of less than is. The Minister has power under the Road Traffic Act 1960 and the Transport Act 1968 to make regulations to vary the 1s. dividing line between stage and express services and to vary the definition according to different circumstances. I know that he has taken careful note of the points which have been made to him—for example, as regards the urban limited stop services which are now being introduced in some cities—and is ready to consider any more comprehensive information which the industry may wish to give him.
The noble Lord also referred to the special position of services provided for schoolchildren or for workers by contract arrangements between operators and local education authorities or employers. The Government, of course, entirely recognise that these are regular short-distance services and that they perform an essential function. My right honourable friend will bear in mind the representations made to him about them. But they arc not altogether analogous to the services which the fuel grant scheme is primarily designed to help. As I mentioned earlier, the operator's remuneration is freely negotiated between him and the authority or employer concerned. The operator himself gets a guaranteed return from the authority or employer to whom he hires his bus, not dependent upon the amount of traffic carried. The passengers are usually being carried free or at reduced fares. We have no present evidence that any increase in the contract costs which may be occasioned by the fuel duty represents a serious burden to the authorities or employers concerned.
It will be appreciated that the basic legislation conferring the fuel grant powers would not enable extension of the scheme to purely contract services on which no fares are paid, or to an education authority's own vehicles. Any revision of existing contracts, because of changes in costs during the currency of the contract (which may, of course, arise from other circumstances as well as taxation) must be a matter for settlement between the parties concerned. I understand 429 that, so far as school contract services are concerned, for example, my right honourable friend the Secretary of State for Education and Science has no power to issue instructions to local education authorities in this respect.
The operators' associations have estimated that to give concessions on the lines sought would involve about £1½million a year, which they claimed (as I think the noble Lord also claimed) was a comparatively modest sum of money. Nevertheless, such a sum would be a substantial additional commitment, and the Government must look at all such claims in the light of the financial position of the nation as a whole. The bus industry (I am sure the noble Lord will accept this) is in fact receiving assistance on a generous scale. In addition to the £21 million a year it will receive by way of fuel grants, there are now the new schemes for 25 per cent. grants towards the cost of approved types of new buses, 25 per cent. grants towards the cost of capital expenditure on new bus stations, and grants (shared between local authorities and the Government) towards the cost of nonpaying rural services. Also, there is full refund of selective employment tax; the industry is spared purchase tax on its vehicles, and it has been protected for many years from any increase in vehicle Excise duty.
These three measures of assistance, my Lords, benefit the whole of the industry, not merely that of the stage bus opera 430 tors. In these circumstances I do not think it can be argued that the Government do not appreciate the needs of the bus industry as a whole, or the vital role that it plays. However, I recognise that strong feelings are still held by those operators who are not included in the present stage bus operations. They have made representations, through officials, to my right honourable friend; and these, I know, are being most carefully examined. There is no decision as yet, but I know that my right honourable friend is giving this matter most urgent attention.