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Clause 21—(Costs Incurred By Concerns Producing Certain Metals And Oil, And Asbestos Or Mica)

Volume 390: debated on Wednesday 2 June 1943

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I beg to move, in page 12, line 2, to leave out

"otherwise than in the form of ore."
The object of the Amendment is to remove an anomaly in this Clause. Companies engaged in mining and the getting of oil are following various practices in war-time which in fact reduce their costs per unit of immediate output, for the sake of getting the maximum production with the minimum of labour, regardless whether damage is done to the future working of the undertaking. That working was probably planned in the first instance to achieve the most economical results over the whole period of the working of the deposit, but for war-time reasons there has been a departure from the optimum long-term method. In Subsection (2), the Clause deals with the case in which, under these special wartime conditions, an undertaking is deliberately seeking to get from the ground ore of a high metallic content. In Sub-section (3), which I wish to amend, a slightly different kind of case is covered, where an undertaking is departing from normal mining practice in order to achieve with 'a minimum of effort maximum production during the period of the war. That lowers its costs—and the immediate result is to increase the liability of the undertaking to Excess Profits Tax.

The lowering of costs in itself would not matter, without reference to the tax; The additional profits made under wartime practices would serve to offset the higher costs which would have to be incurred on reverting to the normal methods of mining when the war is over. But because of the operation of the Excess Profits Tax, the temporary advantage gained through the specially lower costs in war-time is swept away by the Chancellor. The undertaking is then suffering in just the way that this Committee does not want an undertaking to suffer; that is to say, E.P.T. is not only seeing to it that the undertaking is not better off owing to the war, but is ensuring that it is actually made worse off.

Whereas Sub-section (2) covers the mining of metal in the form of ore, Subsection (3) excludes metal mined in the form of ore and deals only with the mining of metal otherwise than in the form of ore. I feel inclined to put a general knowledge question to the Committee: What metal is mined otherwise than in the form of ore? I can think of alluvial gold, but I am sure that the Treasury did not have that in mind when drafting the Clause. If the Committee wishes to find an answer to the conundrum, I fancy it must turn to Sub-section (7), which says:
"This Section shall have effect … as if asbestos and mica were metals."
That is apparently the way in which Subsection (3) will have to be interpreted by the Treasury and if necessary by the courts. It seems a roundabout way of doing things. But there are cases of metals mined in the form of ore—home iron ore is the obvious example—which can receive no benefit from Sub-section (2) because such undertakings are not producing ore of greater than standard metallic content. Why should they be excluded from the benefit which is offered by Sub-section (3) to undertakings which are mining metal otherwise than in the form of ore?

There is substance in the statement which my hon. Friend has made. Within the last few days I have received representations from the Ministry of Supply much to the effect which my hon. Friend has indicated. In the Clause as presented there is a formula in Subsection (2) as to the relief that is to be applied, but when we come to Sub-section (3) the language is of a general character. There is the phrase:

"otherwise than in the form of ore."
The Ministry of Supply have said to me that in some cases they have required the concern not to deal with the matter as is indicated in Sub-section (2) but have asked them to concentrate production in that quarry or mine which will yield the greatest amount of ore at the least cost, even though the normal practice of the concern might have been to produce a relatively larger quantity of ore from other sources. In those cases no question of the difference in the grade of ore arises, it being due to the difference of working conditions in the quarry or mine concerned. In that state of affairs it is a legitimate criticism, and we shall have to consider between now and the Report stage an Amendment to the Clause, which I will put before the Committee. The Amendment would not be in the form indicated by my hon. Friend in his Amendment because I do not think it would satisfy the Committee unless I inserted a formula of some character. Without making any promise, I propose to consider this matter between now and the Report stage and to try to devise some formula which will be satisfactory to the Committee. In those circumstances, I hope that my hon. Friend will withdraw his Amendment.

After the war is over, such concerns will be faced with the worst part of their exploitation, and there may be a danger of unemployment unless Parliament is prepared to subsidise them to carry on the work. Would not this be a case in which, instead of giving the undertaking the benefit now, they might get the benefit of the 20 per cent. reservation after the war, on condition that they did the work in the other seams?

If I interpret the Chancellor's statement aright, the putting down of the Amendment has had a satisfactory effect. I thank him.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.