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Clause 3—(Petrol Substitutes—Excise)

Volume 476: debated on Wednesday 14 June 1950

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Motion made, and Question proposed: "That the Clause stand part of the Bill."

I desire to raise a point on subsection (4) of the Clause which possibly the Solicitor-General might be able to deal with quite speedily. It gives to the Commissioners power to make by Statutory Instrument regulations dealing with certain important matters. It gives them power to make regulations under which they can prohibit the production of petrol substitutes and to make regulations generally for securing and collecting the duty under the Clause. It is obvious that the powers given to them are of considerable importance.

Are these regulations to be made by Statutory Instrument subject to Parliamentary control, and is it Parliamentary control under the affirmative or negative procedure? I do not know whether the fact that they have to be made by Statutory Instrument necessarily attracts the Statutory Instruments Act. It looks as if it does not from the drafting, for in the previous subsection (7), of Clause 2, where it is also provided that an order shall be made by Statutory Instrument, that provision is followed by an express provision that that order is subject to the negative procedure. There being no express mention in this Clause it seems to me far from clear whether or not there is any Parliamentary control. It might facilitate the progress of the Debate if the Solicitor-General could advise the Committee whether there is in fact any Parliamentary control.

Perhaps it would save time, too, if I asked the Solicitor-General to construe, and possibly give a gloss, upon lines 34–37 which immediately follow those to which my hon. Friend has been referring. Some Members may understand them, but they do not seem plain to me on the face. I have not fully understood them.

I am concerned with the novelty of this Clause. I think that this is the first time that petrol substitutes have been subject to duty, and I want the Committee to give consideration to the desirability of such an arrangement. Is the effect of taxing petrol substitutes going to be to discourage inventiveness? The effect of this Clause—and I hope to be disabused—is to prevent persons seeking something other than petrol for the purpose of the internal combustion engine.

The history of all progress is the history of substitutes. It is the endeavour of persons to find something different, something cheaper and more readily obtained. This Clause is going to put difficulties in the way of inventive genius which may provide us with something which would not cost dollars, nor be of hydrocarbon quality. Under subsection (4), the Commissioners may by Statutory Instrument make regulations for the prohibiting of the production of petrol substitutes. If that is so, it seems to me entirely undesirable. When I come to the concluding part I am more astonished. The punishment is a very heavy one. There is the penalty equal to three times the value of the goods, and in addition the £100. All this seems to me very restrictive on the native genius of our country. Perhaps the dawn may bring a little daylight on this subject.

5.0 a.m.

Some time ago I asked the Minister of Fuel and Power what encouragement he was giving those people in this country who were seeking petrol substitutes so as to save dollars, and I think the answer was that none was given. Now in this Finance Bill a definite discouragement is being given to those who venture into what my hon. Friend has called the realms of discovery to try and find substitutes for petrol. I should like the Government to consider this matter again, to see whether they are not discouraging people from finding substitutes for petrol, and whether they cannot give a little more latitude than this Clause suggests.

The hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) asked whether under subsection (4) the Statutory Instruments referred to were subject to Parliamentary control. The answer is that they are not. The effect of requiring that an order is to be made by statutory instrument is to attract some of the provisions of the Statutory Instruments Act, 1946; for example, as to publication and so on, but the instrument is not subject to negative or positive resolution unless it is expressly so stated, and it is not so stated in this Clause. With regard to the second question, the meaning of lines 34 to 37, I should not have thought there was much doubt as to their effect. They enable certain provisions of the law relating to Customs and Excise, namely, the Customs Consolidation Act, 1876, to be applied to persons carrying on any trade which is subject to the law of Excise. The Clause provides that the Commissioners may make regulations applying to persons:

"producing or dealing in petrol substitutes any enactments relating to any duty of excise or customs and to persons carrying on any trade subject to the law of excise."

It means exactly what it says. It is a descriptive phrase relating to Customs and Excise. Hitherto these petrol substitutes have not been used to any significant extent, but their use by motorists has been growing. Although these substitutes are still very high in cost, it is thought necessary for the sake of uniformity to impose Excise Duty to bring them into line with other substitutes.

I must point out that these regulations are going to create a whole series of new offences for which very heavy penalties are provided in the Clause. That Parliament should have no control over the contents of these regulations is something I simply could not imagine finding in a Bill. In the previous Clause there was express provision for Parliamentary control by the negative procedure, but I could not imagine that we would have regulations creating offences over which Parliament would have no control.

The hon. and learned Member will see that in the earlier Clause subsection (5) is exactly the same as subsection (4) in Clause 3.

I would point out that subsection (7) states that the power of the Treasury shall be exercisable by Statutory Instrument.

That is an order made under subsection (1), but under subsection (5) the Commissioners make the Statutory Instrument and not the Treasury.

I did not appreciate that, but I am now saying it in regard to Clause 3. I do ask the Committee to press for an assurance from the Chancellor on this.

This is really common form. It has been in all the Statutes since 1876 for regulatory matters of this kind. The Commissioners have always had power to make regulations, and it is essential that they should have this power if they are to carry out their duties properly. If any hon. Member finds they are wrong, of course I am the responsible Minister and he can always put questions to me in the House or bring forward a resolution to condemn my behaviour or anything else. It has never happened, and I do not think it ever will happen, because the Commissioners of Customs and Excise are a very responsible body of people who have administered this extremely well.

I should like to take this opportunity of falling in with what I take to be the suggestion of the Chancellor that if we cannot have enough days we should have enough hours to consider every Clause and do our duty to the Bill with the greatest possible care notwithstanding fatigue. I shall cooperate fully with him in seeing that careful consideration is in these conditions devoted to every question.

I would draw the right hon. and learned Gentleman's attention to the fact that we are not objecting to the regulations with which Excise must be administered, but to the extension of these regulations to a brand new field, the field of petrol substitutes. It will be generally agreed that one of the advantages of war is that it produces as a by-product amazing developments of substitutes for things which are in short supply, restricted, or otherwise temporarily unobtainable. Particularly in the field of fuel—the history of the German chemical industry is a good example—we find that a stimulus of this sort creates new inventions and brings them to fruition to the solution of the immediate problem and to the permanent benefit of mankind. Wars are periods of terrible suffering, but they do have the advantage of so generating important new inventions as their by-products. High taxation is also regrettable, but it also has here the potential advantage of encouraging similar by-products.

It seems to me that the Government are here asking us to throw away the advantage which may come in this way from high taxation of petrol in generating invention for substitutes. On the admission of the Government the present production of substitute is an insignificant amount. Moreover on their admission too the price is very much higher than petrol. Petrol substitutes are produced in such tiny quantity and with so great a differential in price that the problem of clearing up an untidy situation is practically irrelevant as well as harmful to future inventions.

We ought to consider whether we really should take power now to put on to the price of substitutes the additional 9d. and so throw away the advantages of the stimulus which the lower price differential ought to give to an extremely inventive industry which will always be looking about for improvements if the stimulus is present. On the other hand, if we persist in imposing the tax on this already insignificant and highly priced commodity, if we pile the Pelion of an additional 9d. on the existing large Ossa of the differential by which the substitutes already exceed in price the price of petrol, then we shall be not only losing a valuable opportunity but also creating a fresh crime, instead of taking a positive line and stimulating the industry to fresh invention and development to the benefit of the British people and of the whole world.

5.15 a.m.

While interested in what my hon. Friend has been saying, I do not want to follow in that direction, because it seems to me that this Clause logically follows from the two we have been discussing. The Committee having accepted these, not with our acquiescence, it is not surprising that this point should come forward.

My hon. Friends have pointed out that they do not care for this arrangement by which the Commissioners act by Statutory Instruments which do not come before the House in any form. The right hon. and learned Gentleman has told us that he is only following precedent, and that it is the normal procedure by which the Commissioners are empowered to act.

I do not know whether in fact there is a precedent quite in this form. I do not mean in the form it is drafted, but in the fact that when a completely new arrangement is brought within the purview of the Commissioners for the first time and the consequential penalties which other regulations may bring about may be more severe in these cases than in other cases. All I would like the Chancellor to do is to look at it again to see whether this is not one of the cases which could come before the House in one form or another. That applies to the previous Clause. If he will do this, I do not think we need discuss it further.

If I may follow up a point made by my hon. Friend the Member for Carlton (Mr. Pickthorn), the Chancellor of the Exchequer pointed out that subsection (4) of Clause 3 corresponds to subsection (5) of Clause 2. Now, if the Solicitor-General will look at the wording of subsection (5) of Clause 2, he will see that the word "or" occurs in line 22 exactly where my hon. Friend pointed out it should occur instead of "and" in line 36 on page 5. Therefore, I think my hon. Friend was right and the Solictor-General was mistaken in suggesting that the wording of Clause 3 is satisfactory as it stands. I think this needs amendment at a later stage.

With regard to the matter raised by the right hon. and gallant Member for Gainsborough (Captain Crook-shank), I have here the Finance Act for 1928, and the words there are identical with those in this Bill about the Commissioners making regulations. When duties were imposed on mechanical lighters and they were brought under tax, the Commissioners were given power to make regulations in exactly the same terms as they are now.

The Commissioners may make the regulations, and, by the definition, the regulations they were empowered to make did not become Statutory Instruments. They were freer still. The power to make the regulations without consultation with Parliament and the tone of the regulations they could make were the same.

When the Chancellor of the Exchequer gives this matter second thoughts I hope he will meet some of the objections made especially by my hon. Friend the Member for Edinburgh, South (Sir W. Darling) and will amend the definition of petrol substitute. We find it means

"any liquid intended to take the place of petrol as fuel for internal combustion piston engines."
The word "intended" will mean that if some mechanical genius decides that he intends to make petrol engines run on beer, that beer, whatever other liquid he is trying to make the petrol engine run on, would attract a duty. If the definition were amended to mean "any liquid which has in fact been proved to take the place of petrol as fuel …" then the Chancellor of the Exchequer and the Treasury in making regulations not subject to Parliamentary control would have to be careful to limit them to the words of the Clause.

I do not think the Chancellor has met the point of my hon. Friend the Member for Wolverhampton, Southwest (Mr. Powell) when he referred to the Act of 1928. The point my hon. Friend was making was that in page 4, line 22, the words

"or customs or to persons carrying on any trade subject to the law of excise"
appear, whereas in Clause 3,
"or customs and to persons carrying on any trade subject to the law of excise."
They cannot both be the same as the one in the 1928 Act. It was the point that they did differ in the two, and we thought, therefore, that my hon. Friend the Member for Carlton (Mr. Pickthorn) had a point of substance.

I think the explanation is that in subsection (5) the "or" is a misprint, because in the 1928 Act the word "and" is used in the same connotation. I agree one has been printed wrongly.

Question, "That the Clause stand part of the Bill," put and agreed to.

Clause ordered to stand part of the Bill.