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Finance Bill

Volume 640: debated on Tuesday 16 May 1961

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Considered in Committee [ Progress, 15th May].

[Sir GORDON TOUCHE in the Chair]

Clause 2—(Rebate On Heavy Oils)

3.40 p.m.

I beg to move, in page 2, line 18, at the beginning to insert:

"Subject to the next following subsection".

I think that it would be convenient to discuss with this Amendment the following Amendments, in page 2, line 18, after "oils", to insert:

"(other than heavy oils to which the provisions of this subsection do not apply)".
In line 30, at the end to insert:
"except in the case of diesel fuel and tractor vapourising oil sold for use by tractors and other implements for agricultural purposes, where a rate one-halfpenny a gallon less than the rate at which rebate of duty is allowed under section one hundred and ninety-nine of the Customs and Excise Act, 1952, shall apply"
In line 30, at the end to insert:
(2) (a) Notwithstanding anything in the foregoing subsection or in section two hundred of the Customs and Excise Act, 1952 (by which rebates are not allowed on heavy oils used as fuel for certain vehicles), or in section seven of the Finance Act, 1959 (which amends the application of the said section two hundred), section two hundred and four of the said Act of 1952 (which provides for the relief from duty of oils used as fuel for ships in home waters) shall apply in relation to heavy oils used as fuel for agricultural vehicles and to the owners and hirers under any contract of such vehicles as it applies in relation to heavy oils used as fuel for such ships and to the owners of such ships and to their charterers by demise:
Provided that for the purposes of this subsection references in the said section two hundred and four to the relanding of oil shall be disregarded;
(b) for the purposes of this subsection "agricultural vehicles" means vehicles such as are mentioned in paragraph (a) of subsection (2) of section four of the Vehicles (Excise) Act, 1949, as amended by the Finance Act, 1950 (or as would be mentioned in the said paragraph as so amended if the references therein to the said Act of 1949 included references to the law as to the registration of mechanically propelled vehicles for the time being in force in Northern Ireland); and in relation to the phrase "fuel for agricultural vehicles" subsection (1) of section seven of the said Act of 1959 shall apply as it applies for the purposes stated in that subsection.
In line 30, at the end to insert:
(2) (a) The provisions of the foregoing subsection shall not apply to heavy oils delivered for use and used as fuel for agricultural vehicles;
(b) section two hundred and two of the Customs and Excise Act, 1952 (which empowers the Commissioners of Customs and Excise to make regulations for giving effect to certain sections of that Act and imposes a penalty), shall apply in relation to agricultural vehicles and for the purpose of giving effect to this section as it applies in relation to heavy oil vehicles and for the purpose of giving effect to sections two hundred and two hundred and one of that Act; and the Commissioners shall have power to make regulations accordingly and the provisions as to a penalty shall apply accordingly;
(c) for the purposes of this subsection "agricultural vehicles" means vehicles such as are mentioned in paragraph (a) of subsection (2) of section four of the Vehicles (Excise) Act, 1949, as amended by the Finance Act. 1950 (or as would be mentioned in the said paragraph as so amended, if the references therein to the said Act of 1949 included references to the law as to the registration of mechanically propelled vehicles for the time being in force in Northern Ireland); and in relation to the phrase "fuel for agricultural vehicles" subsection (1) of section seven of the Finance Act, 1959 (which defines the use of fuel for vehicles), shall apply for the purposes of this section as it applies for the purposes stated in that subsection.
There can be separate Divisions on the first two Amendments.

I am obliged to you for your suggestion, Sir Gordon.

The first two of the five Amendments are paving Amendments for the last two, which are alternative ways of trying to arrive at the same conclusion—that the tax on fuel oil should not be imposed.

Yesterday we had an entrancing debate on the tax on television advertising. It was full of ambiguities about whether it was the intention that the programme companies should pay the tax, or that the advertisers should pay the tax; whether the tax was for social purposes, or whether it was a revenue tax.

Fortunately, there will not be any ambiguities over this tax. In his Budget speech the Chancellor referred to the changeover to the use of oil from coal, particularly since 1947 and made it quite clear that as conditions had changed, he considered that for revenue reasons heavy oil should bear some tax.

The Committee should understand clearly what iit is that the Chancellor has proposed with this new tax. He is hoping to get £48 million this year and £50 million next year by a tax of 2d. a gallon on fuel oil, gas oil and kerosene, and 2d. a gallon more, making 3d. a gallon in all, on lubricating oils. There is no problem of meeting competitive fuel such as coal. This is for purely revenue purposes, and it is clear that derv, which is the gas oil used in the running of lorries, is not in any way affected because it already carries a tax of about 2s. 6d. a gallon. This proposed tax affects iron and steel, railways, and a variety of industries, in particular agriculture, and it is in that context that I want to address the Committee.

I have been favoured with some figures, as I am sure other hon. Members have, from the people who know what the consumption of oil is in this country. These figures make it clear that there will be a heavy imposition on agriculture, and we have here the situation that, contrary to the view expressed yesterday by the Government that they were not in favour of discriminatory taxes, a discriminatory tax will be levied on the agricultural industry.

Let us itemise what this tax will cost. First, it is estimated that the owners of agricultural drying machines will have to find another £182,000 in tax. This is at a time when a barley marketing scheme is to be introduced, the purpose of which is to keep barley off the market in the early part of the year and to induce the farmers to store their barley, which means that they must dry it and see that it is kept dry. For this purpose alone they will be called on to pay another £182,000, and they have already been treated rather roughly by the Minister of Agriculture, Fisheries, and Food, by the cuts he has imposed on barley prices in the Price Review.

Farmers who use agricultural power machines, tractors in particular, will have to find an extra £1¼ million. I cannot quote the accurate figures, but in addition to that sum the farmers will have to find many thousands of pounds to meet their fuel costs for running stationary and mobile machines such as balers and chaff cutters. All this amounts to about £2 million, but that is not all.

Here is the discriminatory tax. The farmers who use tractor vaporising oil, which is no good for any machine but a tractor, will have to pay an extra 2d. a gallon, and the extra cost is estimated at £623,000. The cost to other industries will be £32,000, which means that the agricultural industry will pay twenty times as much as other industries in extra tax on tractor vaporising oil. The figures I have quoted are based on consumption in 1960, and I think that the Chancellor will agree that he expects an increase in consumption of fuel oil in 1961.

What happened when the Chancellor had his famous meeting, which all Chancellors seem to have, with his fellow members of the Cabinet when he disclosed to them the terms of the Budget? Did he receive any criticisms from the Minister of Agriculture, Fisheries and Food? Did his right hon. Friend make any complaints? It would be very odd if he did not, because in the White Paper. Cmnd. 1311, which announced the terms of the Price Review, he said, in paragraph 31:
"The net income of the industry depends on many factors other than the level of the price guarantees and production grants."
This Budget is an illustration of that.
"But the Government consider that the present determinations, which increase the value of the guarantees by £14 million, will, together with the new guarantee and marketing arrangements, enable the industry to face the coming year with confidence."
3.45 p.m.

At almost the moment when this White Paper was printed, the Chancellor decided to take away £2 million to £2½ million from agriculture. This is about one-seventh of the £14 million which the Minister of Agriculture, Fisheries and Food so triumphantly announced would be the extra revenue provided for the agricultural industry. Was there no complaint from the Minister of Agriculture? Has there been no complaint from the 80 Conservative Members who represent agricultural constituencies? For purely discriminatory purposes, and to provide money which the Chancellor can give to Surtax payers, the farmer will have to find what, in many cases, will be a heavy impost.

The Chancellor has introduced a poll tax. It is the sort of poll tax that we have had from the Minister of Health. The Government are fond of putting on a tax without considering whether the taxpayer will be able to bear the burden. It has been our proud boast that we have the most heavily mechanised agricultural industry in the world. As a result, we have developed the tractor, and as the tractor has taken over a lot of the arduous and heavy labouring work, we have developed heavy agricultural equipment which can be towed only by a diesel engine. The tendency, therefore, has been to have more and more diesel-engined tractors on the farms. In that way agriculture has been able to give support to the diesel industry, which, in turn, has led to an increase in the export of diesel engines. It is the owners of these engines who will have to pay so much more in tax.

When one talks about £2 million or £2½ million spread over an industry it is difficult to relate these sums to the individual farmer. Therefore, I take the liberty of telling the Committee what my own experience will be on my own farm with each tractor. I calculate that a diesel tractor working for 250 days a year, and using approximately 15 gallons of diesel oil a day, will cost another £31 a year. It will attract in tax about £30 a year more than at present.

How many hours a day does the hon. Member work the tractor and what size of engine does he use? He must be using the most highly-powered tractors ever made to obtain figures like that.

I am working on the basis of using a Fordson Major diesel tractor and a Fordson Countytrack tractor for ten to twelve hours a day in the summer months. In the winter months, as the hon. Member knows, they cannot work more than eight or nine hours a day. They work five days a week in winter and six or sometimes seven days a week in summer. I can only make a very rough calculation. [HON. MEMBERS: "Very rough."] I am prepared to have my figures checked.

It looks as if the extra cost is about £30 per tractor, which is a great deal of money for a small farmer. On the figures produced by some university research workers in agricultural economics that is the profit on ten acres. That is a very heavy impost on a man who has only one or two tractors, particularly after an undertaking has been given that the Price Review figures were to be inviolate.

The same argument applies to the combine harvester, which is a very expensive machine and works only five or six weeks a year. It is an avid drinker of fuel, which will cost £9 or £10 a season more as a result of the tax.

I will not deal with the horticultural side of this question. Several hon. Members opposite have a considerable interest in that industry. If any section of industry is let down it is horticulture. Those who engage in horticulture were encouraged between 1955 and 1958 to go over to using oil. They cannot now go over to coal, or at least it will be extremely difficult to do so. They were, in fact, subsidised to go over to oil. They do not receive any benefits from the Price Review system in the way other farmers do and they will be even more heavily hit by this tax.

If the Chancellor had wanted to look for extra revenue he could have found it in a variety of ways without making this quite penal impact on agriculture at a time when farmers were told that the extra £14 million as a result of the Price Review was something which had been earned. The Tory Party is always breaking faith with the farmers between General Elections and then trying to make it up at election time. I hope that hon. Members who represent agricultural constituencies, and who have been made well aware of how their constituents feel about it, will support my Amendment.

The hon. Member for Deptford (Sir L. Plummer) drew attention to the fact that hon. Members on this side of the Committee perhaps would not support him, or at least would not agree with his arguments for the Amendment. I would point out to the hon. Member that I and several of my hon. Friends tabled an Amendment, probably before he did, seeking to exempt tractors from the diesel oil duty and the duty on tractor vaporising oil. People who feel as strongly as my hon. Friends and I do would not have taken that action if we had not meant it.

Some of the hon. Member's arguments were couched in excessive terms. I am grateful for the opportunity of speaking now, but I do not think that this is the time to go into the varous merits of my Amendment and the hon. Member's Amendment. Suffice to say that the aim is to help the agricultural industry at this time.

I entirely agree with the hon. Member that the total sum that the industry will be required to pay by the impost of this duty will be about £2½ million. That is correct, but in his additions the hon. Member has gone a little adrift when he talks about the amount used per tractor and what the duty on diesel oil and tractor vaporising oil would cost the industry. I do not intend to weary the Committee with details of tractor hours per day or per year, but the tax would mean about £12 extra per tractor, taking on a reasonable basis the average small farm in my part of the country.

Even so, the principle is exactly the same. This is an increased tax on the small farmer and the large farmer alike and it is an extra cost on the industry. The hon. Member for Deptford made a valid point about agricultural drying plant. Farmers who operate that plant will also suffer because most agricultural drying machinery uses this oil. The industry will undoubtedly suffer from a heavy additional burden.

It may well be argued that that amount of £2½ million is not a tremendous sum to bear in the face of the amount of assistance given to the industry from taxation, price support and guaranteed subsidy. It may well be true that £2½ million, compared with £265 million, is not an enormous sum, but it is the principle that matters.

If we are to talk about the principle there are plenty of precedents whereby the agricultural industry could and should be excluded from the imposition of this tax. My right hon. and learned Friend the Chancellor of the Exchequer used these precedents in his Budget statement when, for instance, he spoke about what happened in 1947.

At that time, my right hon. and learned Friend said:
"The duty on them"—
"them" being heavy oils—
"of 1d. a gallon was then withdrawn, at a time of acute shortage of coal and when every inducement was being offered to get people to change from coal."—[OFFICIAL REPORT, 17th April, 1961; Vol. 638, c. 818.]
In 1947, the duty on heavy oils was withdrawn because there was need at that time to help the coal industry, which was having difficulty in supplying the nation's needs. The oil industry, therefore, had to take the lion's share.

4.0 p.m.

The Government are supporting the agricultural industry to the hilt, telling it to increase its efficiency and production on the right lines and, in general, to strengthen its output and structure. My right hon. and learned Friend the Chancellor of the Exchequer was generous, in the recent Price Review, in enabling that improvement to take place. Yet within a short time of the Review, he takes away £2½ million from the industry. Is it to be expected that the industry should not ask exactly what the Government intend to do, and how it can have confidence in the Government's intentions to strengthen and support the industry?

We must view this in the light of what is liable to happen in the next few years. Whether or not we decide to join the Common Market, enormous changes are looming. They will have to be faced both by the Government and the industry. Is it sensible, therefore, that at this time the Government should undermine the industry's confidence in them by this small, stupid act of taking away £2½ million from the amount given to the industry at the recent Price Review?

The hon. Member for Deptford made great play of the Price Review, but this matter goes back further—to the talks in 1960, between the Minister of Agriculture and the President of the National Farmers' Union, when there was tremendous accord between them and when, indeed, the future of agriculture looked much brighter. Confidence had been restored and it looked as though agriculture would continue to go forward with confidence in the Government's intentions. Now, however, we have this proposal. Unless we can find some way out of this dilemma the industry will no longer have confidence that we and the Government will play square with it.

I said just now that the amount of money involved is not enormous. I am prepared to accept it if my right hon. and learned Friend says that, at this juncture, it is impossible to give any rebate, but, if that is the case, I beg him to consider a method whereby the £2½ million, or £2 million, can be reimbursed to the industry in the coming year. Perhaps it can be done by an addition to the production grants. Could he consult with my right hon. Friend the Minister of Agriculture and work out a method whereby an extra £2½ million could be made available to him to offset the amount of money being taken away by this proposal?

I have heard my right hon. Friend the Minister of Agriculture and others say that, in the coming Price Review for 1962, they are prepared to take this tax into account in a more favourable review. Is that not accepting the principle—I think it is—that it is not right to wait a whole year for action to be taken to offset this tax? It was, after all, the efficiency of the industry which caused the Minister of Agriculture to allow it to keep an extra £14 million of its own money at the last Price Review. I ask the Chancellor to consider a method of giving back this new tax to the industry during the coming months, so that it will not have to wait until the next Price Review.

If my right hon. and learned Friend says that this is impossible, I should find it difficult not to support Members opposite in this matter. Therefore, I hope that he will listen to those of us on this side of the Committee who, sincerely holding the interests of agriculture at heart, want to see it built firmly and strongly so that it can face the future, with whatever changes may happen in Europe, and, at the same time, have confidence that the Government will not niggle it or let it down by giving £14 million and taking away £2½ million a few weeks later. The industry would then have confidence that the Minister of Agriculture would give justice to it. It is striving for the nation at all times to the best of its ability.

I, also, oppose this tax, and I infer, from what the hon. Member for Cornwall, North (Mr. Scott-Hopkins) has said, that we will get support in the Division Lobby from some Members opposite. I hope that that fact will weigh with the Chancellor.

The reasons for opposing the tax have been explained. They are rather simple. It will put up costs. In particular, it will put up agricultural costs and put up the price of a great many things in rural areas. The last thing which this country wants to do at this time is deliberately to increase its costs. This is a tax on production and on efficiency; and this is not the moment to penalise efficiency.

Small farmers, if they are to make a reasonable living, must employ machinery such as tractors and use heavy oil. I cannot for the life of me understand why the Government ever introduced the tax, unless it is simply a bonus to the coal industry. If that is the reason, then the Government had better make it explicit and carry it out another way, for it is no reason to penalise the rest of industry.

We deserve a fuller explanation from the Government about this tax and about their motives in proposing it. It is not enough to say that this fuel has not been taxed for a long time—which is one of the Government's favourite arguments when pressed to the wall about a tax proposal. For horticulturists, the tax will be disastrous to some and a great handicap to most. They may not be able to change now to other forms of heating, even if it were desirable to do so, and it will put them at a great disadvantage compared with foreign competitors who do not have to pay as much for fuel as our horticulturists will have to pay if the tax is imposed.

Arguments against the tax have been put from both sides of the Committee. It will take the profit out of many small farms and will deter farmers and others from being efficient. I trust that the Chancellor will think again, in view of the protests which have reached him from all parts of the country against his proposal.

On a point of order, Sir Gordon. The hon. Member for Orkney and Shetland (Mr. Grimond) has referred to the horticultural industry. Is it in order, in speaking to these Amendments, to talk about that industry, or must we wait until a later Amendment?

It is in order to talk about it now in so far as these Amendments affect the industry, but the industry as such is more specifically dealt with when we reach the Amendment to page 2, line 30, at the end to insert:

Provided that this section shall not apply to heavy oils used for heating glasshouses growing in commercial quantities horticultural produce as defined in subsection (1) of section eight of the Horticulture Act, 1960.

Far be it from me, as a farmer, to give my right hon. and learned Friend the Chancellor of the Exchequer any praise in extenuation of this change. All farmers, naturally, deprecate it to the extreme, but I do not agree with my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins). I feel that it is wrong that we should discriminate in any way in the introduction of this tax, if a tax is imposed by the Chancellor then, however unpleasant it may be for the farming industry, that industry should bear it for a year and then be compensated in the next Price Review.

This would give a strong ground for the industry to say, at that Review, "We had to bear this extra cost for a year, and we did not complain unduly because we think it right that everyone should bear it equally, but now we want fail compensation for it". I feel that is a much more genuine approach than trying to create a sectional interest and a sectional change affecting agriculture and leaving the buses, or whatever industry hon. Members like to mention, to bear the tax—there are a lot of other industries which will have to bear it.

We have had some extremely exaggerated statements about the effect of this tax. The hon. Member for Orkney and Shetland (Mr. Grimond) said that it is a tax on production and efficiency. I could not agree less about that. I cannot believe that any farmer will stop using his tractor because he will have to pay another 2d. a gallon in duty. It does not make sense. Does the hon. Gentleman mean that because of the increase in tax we shall go back to using horses? I do not believe that for one moment and I cannot see that this will be a tax on efficiency or production.

Surely the more tractors and mechanised equipment a farmer has the more efficient he will become, but the more machines he uses the more oil he will use and, consequently, the more tax he will have to pay. I think that is what the hon. Member for Orkney and Shetland had in mind.

The hon. Member may have meant that, but does he honestly believe, and does my hon. Friend the Member for Cornwall, North believe, that the introduction of an extra 2d. per gallon on the duty will stop the use of these machines? Although we do not like this tax at all, I think it is one that we shall have to bear. The exaggerated claim of the hon. Member for Deptford (Sir L. Plummer), who said that it will cost another £30 per tractor, is pure nonsense. The hon. Gentleman should get a fresh agricultural engineer to look at his tractors to see why they are burning so much oil, or else use his tractors more efficiently.

I do not know what kind of land is farmed by the hon. Member for Lowestoft (Mr. Prior). He may farm light land. I farm extremely heavy clay on the Suffolk border. I did not say that the figure was exact. I said that it acted in my case. The hon. Member may give this to me, that it is what I regard from my experience as the correct figure for the land which I farm.

—does farm heavy land. If he uses his tractors for 1,500 hours a year, which is a high average for a year, and if, as most modern tractors do, they burn about three-quarters of a gallon an hour, he will find that the extra tax will be about £10, which is a much more reasonable figure than the £30 which he quoted.

When we discuss the next Amendment we shall be dealing with the question of heat for the glasshouses used in the horticulture industry. On the tractor side, I think that horticulture will have to bear this tax and people engaged in the horticulture industry do not have a chance of being recouped for it. When it comes to heating glasshouses, I think that the problem is different altogether. But the farming industry must face its responsibilities in this matter and not squeal at every imposition. The farmers must stand up to it, like the rest of the country. I hope that the Amendment will be defeated. As a farmer with a great deal of practical experience, I have no hesitation in saying that I consider that the industry must carry this one and claim for it at the right time.

4.15 p.m.

Hon. Members on both sides of the Committee have a personal interest in the tax which we are discussing—[HON. MEMBERS; "Vested."]—and a vested interest, as my hon. Friends have said. I have no personal interest in this matter apart from the fact that I represent an area which is almost completely rural and this is of great interest and concern to many people in south-west Norfolk.

There have been estimates about the cost of this tax from both sides of the Committee. My hon. Friend the Member for Deptford (Sir L. Plummer) said that it might, in some cases, mean an additional cost of up to £30 a tractor per year. The hon. Member for Lowestoft (Mr. Prior) did not agree, but it will certainly mean a considerable increase. It will hit every farmer in the country and there are many small farmers in my constituency. I believe it to be true that larger farmers—obviously, there is one on the back benches opposite—can stand this increase in the tax. But I assure the Committee that many small farmers in Norfolk are very concerned about this. They estimate that it will cost them £12 to £15 a year per tractor.

If that be so, £15 a year means a lot to a small farmer, perhaps the difference between swimming and sinking——

I advise the hon. Member for Yarmouth (Mr. Fell) to spend more time of the villages in east Norfolk and get to know some of the smallholders there. He will find that what I am saying is perfectly true. This estimated increase of £15 a year will make a great deal of difference to them, and it may be the difference between sinking and swimming.

I am grateful to the hon. Gentleman for giving way to me. I am even more grateful to him for his advice about how I should conduct things in my constituency. I happen to live in the village next to the one in which he was born——

—and brought up. So perhaps it would be as well if we left each other alone.

There are no small farmers in the villages to which the hon. Member refers. It is all one very large estate.

The hon. Member for Lowestoft said that in his opinion farmers should pay this tax this year, and grin and bear it, and hope to be recouped in the next Price Review. The next Review is about nine months away and the smaller farmers will find it difficult to carry on during that period if they have to pay this tax. The hon. Member for Cornwall, North (Mr. Scott-Hopkins) suggested that if the Chancellor insists on retaining this tax he ought to reimburse the industry by £2½ million, in some other way. I could not agree with that suggestion. It is all very well to suggest reimbursing the industry, but I want to see the people reimbursed who have suffered the loss. If the industry is reimbursed in some other way, I know what would happen.

There are people in the industry "fly" enough to take advantage of everything which is going in the way of grants and they would be the ones who would benefit by a reimbursement in some other way. I hope that there will be no question of reimbursement in that manner. I support the Amendment. I hope that the Chancellor will agree that this is an additional burden on farmers, especially small farmers, and that he will decide not to impose the additional tax.

It seems to me that we have a very strange alliance on the other side of the Committee today. I have sat here in several debates listening to hon. Members opposite running down the farming industry, and every time the word "subsidy" comes up we hear, "What about the farmers". [HON. MEMBERS: "Hear, hear."] That is what I wanted to hear; I was surprised at the silence of hon. Members opposite.

I have here a quotation from the speech made by the hon. Mem- ber for Jarrow (Mr. Fernyhough) on 18th April, when he said:

"Of all the interests which have had a generous supply of public 'lolly,' the hon. Gentleman had to select the agricultural industry."—[OFFICIAL REPORT, 18th April, 1961; Vol. 638, c. 1080.]

As the hon. Gentleman is following me, there might be the inference that I am one of the culprits who is always running down the agricultural industry. I want to plead "Not guilty" to that charge. I cannot be responsible for what happens on either side of the Committee, but as far as I am personally concerned, I have never criticised the industry in the terms which the hon. Member suggested.

Having listened to the hon. Member for Deptford (Sir L. Plummer), I was rather wondering whether hon. Members opposite hope to get a second agricultural seat at the next General Election——

—but I agree that the hon. Member for Norfolk, South-West (Mr. Hilton) has always supported agriculture.

I should like to quote from a supplementary question which I asked of the Joint Parliamentary Secretary to the Ministry of Agriculture a short time ago, in which I asked:
"…will my hon. Friend bear in mind that, unlike any other industry in this country, any increase in costs cannot be passed on to the consumer?"
whereupon there were cries of "Oh" from the benches opposite. I went on to say:
"Whatever Members opposite may say, that is so."—[OFFICIAL REPORT, 4th May, 1961; Vol. 639, c. 1591.]
And so it is. Therefore, in this case, we cannot plead "Lloyd's Law", as I believe it is now known, in the case of the farming industry.

This law was said to have been stated yesterday evening by my right hon. and learned Friend the Chancellor—that an indirect tax will, broadly speaking, be passed on. I agree with the hon. Member for Deptford and with my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins), that the farming industry is not in a position to pass on the increased costs which it will have to bear as a result of the £2·3 million being added to the fuel tax.

It is quite true that at the next Price Review, as my hon. Friend the Member for Lowestoft (Mr. Prior) said, it can be taken into account. But the trouble in the farming industry is that it is always a year behind, and cannot pass it on at the time. The hon. Member for Dunbartonshire, East (Mr. Bence), I know, is longing to get up and say something. He is running down the farmers all the time. Perhaps he could tell me whether he knows of any product produced by farmers which is subjected to taxation which the farmers can pass on to the consumer at any time.

I am glad to accept that invitation, because I want to expose the stupid situation into which this country is getting. When taxation is imposed on the fuel oil used by a section of industry——

The hon. Member for Torrington (Mr. P. Browne) is choosing his own ground.

The hon. Gentleman has put the question to me, and I am answering it. Here the farmers are having a tax put on, which they cannot claim back, and so it is argued that they should accept it and next year should ask the Chancellor to get the rest of the taxpayers to recoup them for their extra costs.

I gave way to the hon. Member, in view of what he always says about farmers, to give him the opportunity to tell me of one product which the farmers produce over which they have control of the selling price, and he has not been able to name one. I knew that he could not do so, because there is not one.

In the White Paper on the Price Review the Government said that it was their responsibility to ensure that the farming industry enjoyed a rising standard of living, both for the farmer and the farm worker. We have had the Price Review, as a result of which, taking into account costs on the industry, at the end a hypothetical figure of £25 million for efficiency is arrived at so that farmers gained £20 million or kept £20 million, if £25 million is the right figure. The farmers have no possibility of redress until the next Price Review, and this is the trouble all the time. In an exposed industry such as farming, under our present cheap food system, the cost falls on the producer until the next Review. He is not recouped even then, because he starts the next year and increases his costs in the following year, and is one year behind again.

For that reason, in three consecutive months, we have said that we would give assistance and have done, and then we have taken the money away. I deprecate the practice of giving with one hand and taking away with the other. I hope that my right hon. and learned Friend will consider the matter very carefully before rejecting the Amendment out of hand.

I am glad to follow the hon. Member for Torrington (Mr. P. Browne) because he said that farmers are not able to pass the extra cost on to the consumer. What in the name of fortune is price support? The only difference is that the Chancellor supports the price which the farmer gets with the money of the rest of the taxpayers.

If the hon. Member will look at Appendix 5 of the Price Review White Paper he will understand what I am getting at. If he will read up the subject, I am quite ready to discuss it with him at any time. We have a cheap food policy and the result is that the price which the housewife pays in this country depends not only on the price of imports, but on the quantity available. Therefore, the farmers will get the price which the housewife will pay for these goods, where-ever they come from.

4.30 p.m.

It is quite true that the farmer, by the very nature of his industry, is twelve months behind from sowing to reaping, and that he is reaping the price for a product six, eight or ten months after he has sown it. I know that the Bank Rate is very high, and that probably his overdraft at the bank is now a little more costly than it used to be. The hon. Member must not blame the consumers for that, but the Chancellor of the Exchequer, who fixes the Bank Rate.

This tax will not be collected on the day when the Chancellor imposes it, but over the next twelve months. A case has been made by the hon. Member for Lowestoft (Mr. Prior) that the farmers should pay this tax for the next eight or nine months and that the Chancellor will then use the tax which he has collected from them either in the form of subsidies or price support, so as to recoup the farmers for the tax which he put on them This is the sort of thing to which I object. We had this yesterday on television advertising. There are people who have taxes levied upon them and who can then pass them on to somebody else. Where are we going if we are now to have everybody claiming that they should be able to pass on their taxation?

I am sure that the hon. Gentleman would agree that it had nothing to do with the price support system for agriculture. All I was dealing with was the method by which the price support policy is carried out. If the hon. Gentleman does not want to have anything to do with that, he had better say so.

That is not the point I was making at all. It is not a question whether I want support for agriculture or not. It seems crazy to me that we are having a tax levied on his products, and the farmer can make a claim that the Chancellor should enable him to recover that tax from all the other sources which are contributing to that tax. What is the good of collecting the tax from the farmers if it is to be given back to them? It seems to be an exercise in futility.

I favour supporting agriculturists—of course I do—in their good use of the land, because that keeps it in good heart and saves us millions of pounds a year in foreign currency. Many of us know that in the bad old days of laissez faire the soil on many a farm was ruthlessly exploited and made derelict: and in other countries, of course, it has been worse. It is better to ensure good husbandry and farming, and it is a good thing, in general, for the taxpayer to make a contribution to that end.

That is how I see support for agriculture. I do not see it in the sense that every tax imposed on the farmers must be covered by the rest of the taxpayers. After all, we as individuals cannot recover the taxes imposed on us. To whom will the hon. Member for Kidderminster (Mr. Nabarro) pass his Surtax? I do not doubt that he will do all he can to do so, but here the agriculturists are quite blatantly asking the Chancellor to underwrite this tax at the next Price Review, and pay them back out of the rest of the country's taxation.

We are already subsidising the industry to the extent of £267 million a year. If we want another £2¼ million out of the farmers we need only reduce the subsidy. I cannot understand why we should have given agriculture support last February and should now want to impose a tax on the industry. It is nonsense and a waste of accountancy. We put up the subsidy, and six months later we impose a tax on the farmers to collect some of the subsidy back from them. That seems to be finance gone mad.

I cannot understand why we should subsidise an industry to the extent that agriculture is subsidised and, at the same time, impose a tax on its productive work. This is not like Income Tax; it is a tax on the raw materials of an industry that we are subsidising. That seems stupid. It is one thing to make the farmer pay the same tax as everyone else on the same raw material, but why specialise in this way and bring in a tax that hits farmers particularly hard?

It is right that the Chancellor should give the industry a subsidy so that it can keep the land in good heart and produce the maximum amount of home-grown food to help our balance-of-payments position, but why, at the same time, impose this tax on it? If the Chancellor wants to get extra revenue from the farmers, let him raise the general level of Surtax and the like, but not use this method.

But in this case and in the case of television advertisements we have the proposition that the tax imposed should be passed on to the consumer, and I object to that.

It has been a little difficult to follow the hon. Member for Dunbartonshire, East (Mr. Bence) but, on balance, I have decided that he is in favour of the Amendment and against the tax. This, of course, is not a tax only on agriculture; it is a tax on fuel oil, which happens to be used quite a lot by the agricultural industry.

I agree with the hon. Member that it seems illogical and unjustifiable. None of us can tell what the 1962 Price Review will do. It may not hand back the whole of this tax, but if it first takes a substantial portion of taxation and then gives it back to the farmers by means of grants or subsidies, it seems a little illogical to try to make a case for imposing it for a matter of eight months. It is either justifiable or not, but the two things should happen together.

I join issue with my hon. Friend the Member for Lowestoft (Mr. Prior), who did not seem to think that discrimination was any good at all. Our whole taxation system is a lesson in discrimination. In fact, it could be said that good government is a proper recognition of justifiable distinction, and that applies in many cases today. If we are not to have discrimination in this industry, why do we, have this important and quite proper system of subsidies? If there is no discrimination, why are we not in the Common Market? The answer is that we want to protect our agriculture, so we discriminate, quite properly, in its favour.

If the Chancellor wants precedents for an allowance for this tax to the agricultural industry—and, indeed, the horticultural industry, too—there is a wealth of them. I support the Amendment. I think that this is a case in which a tax which otherwise would have a justification has hit, in particular, not one small section of industry, but a major industry and one that we have been trying to build up for many years.

My hon. Friend the Member for Dunbartonshire, East (Mr. Bence) made a perfectly logical case. It is no good hon. Members opposite pretending that there were great differences on this side—that we decried British agriculture—when the overt truth is that the best work done for farming in the last hundred years was done by the Labour Government's 1947 Agriculture Act. Therefore, let us get rid of all that rubbish at once. Let us also get rid of the pretence that members of the Conservative Party are not having the devil of a row among themselves about this very problem.

Again, if we look at the historical development of the party opposite, we find that—especially since the parvenus and the rest entered its ranks—it has been ready to sacrifice British agriculture time and time again at the behest of the City of London——

Order. The hon. Member is going rather wide of this Amendment.

That was just an introductory statement Mr. Arbuthnot, that will make my facts much more incisive. We have too much of this playing politics backwards and forwards across the Floor of the House. We have had a real pretence this afternoon about the unity of the party opposite——

Order. I have told the hon. Gentleman that he is going too wide of this Amendment.

I wonder, Mr. Arbuthnot, whether you heard the hon. Member for Torrington (Mr. P. Browne)? His speech went extremely wide and, surely, it is exactly to that sort of point that my hon. Friend is replying.

I apologise, Mr. Arbuthnot, but I thought that some of the statements that have been made during your absence needed answering, and I have now answered them adequately.

I have received a letter from one of my constituents. In a way, it is the kind of letter one gets from the little man—the property-owning democrat of whom the party opposite talks, and we have them in farming. He tells me that in the mushroom and glasshouse industry—in which he has built up a business from scratch, in Biddulph—they are now faced with an almost insoluble problem resulting from the duty on both kinds of oil.

What does the party opposite stand for? The Chancellor of the Exchequer is sitting there like a black oat upon a glasshouse roof. He is not one of those pleasant farm cats. He is wondering where he can dip his paw so as to fill up the coffers of the Exchequer. In this Budget he has dipped his cattish paw, as usual, into the pockets which have the least gold.

Order. The hon. Member is making a Second Reading speech. That will not do.

I apologise for drifting away from the Amendment. The Association of British Chambers of Commerce, at a meeting last week, said, in respect of this Amendment, that many users of fuel have in recent years been urged to change to fuel oil. Now they will have to pay a penalty equivalent to an increase of £3 a ton on oil. This is what has happened in agriculture and horticulture, and it means an increase of 25 per cent. on the costs of growers and small farmers. We have nullified for the horticulturists much of the safeguard that we have provided in the tomato industry, for instance, by the import tariffs.

Order. The hon. Member will be in order in talking about the glasshouse and tomato industry on the Amendment in page 2, line 30, at the end to insert:

Provided that this section shall not apply to heavy oils used for heating glasshouses growing in commercial quantities horticultural produce as defined in subsection (1) of section eight of the Horticulture Act, 1960.
but not on this Amendment.

Thank you, Mr. Arbuthnot. I have now finished with that point.

I wish to make another point. Let us get rid of the pretence that one side of the Committee stands 100 per cent. for agriculture and that the other side does not. Here is a very difficult problem for British agriculture, and on both sides of the Committee honest people want to find an answer to this complex problem. We appeal to the Chancellor to find a formula which will enable and encourage those who have the smallest interest in agriculture to keep going in this very difficult industry.

Before the Committee comes to a conclusion, I should like to point out that Dutch and other foreign heavy oils cost in the neighbourhood of £6 a ton as compared with about £10 a ton in England, irrespective of this further taxation which is sought to be imposed. I appeal, on behalf of the horticultural industry——

Order. I have told the hon. Member that he is out of order in dealing with the horticultural industry on this Amendment, but that he will be in order in doing so on the Amendment in page 2, line 30.

I know, Mr. Arbuthnot, but all the time there have been references from both sides of the Committee to horticulture.

Order. The hon. Member must follow the guidance that he is given from the Chair He is out of order in dealing with horticulture on this Amendment.

Further to that point of order, Mr. Arbuthnot. We had a Ruling from the previous occupant of the Chair by which I understood that the main discussion on horticulture would be on the Amendment to which you have referred, but that there could be references to it on this Amendment.

I do not propose to deal with the matter in detail, but it is difficult not to refer to horticulture in passing. All I want to say, on behalf of the horticultural industry and the small farmer, is that I hope an adequate answer will be found to this problem and that this Amendment will be accepted.

4.45 p.m.

This tax is either unjust or inflationary. It is a tax on a basic raw material of an industry. If it is passed on to the consumer in the form of increased prices, which is extremely unlikely, it will be inflationary, and it is surely undeniable that if it is not passed on to the consumer, net farm incomes will be reduced by £2·7 million in the course of this coming year.

I protest strongly against the suggestion that we should do again what, regrettably, has been done in the past, and make an inaccurate forecast of costs in the Price Review or allow the Review to be overtaken by costs which could have been foreseen. I do not think that it can be doubted in this case that my right hon. Friend the Minister of Agriculture could have been enabled to include this cost under the heading "miscellaneous" in the estimate of costs for the coming year. Since it has demonstrably not been done, the imposition of this tax has vitiated the basis of the Price Review for this year. That is why I cannot lend myself to supporting the imposition of a tax which will reduce net farm incomes in this country by about £2·7 million.

In addition, it is contrary to one of the major theses of the Budget, which was that we should be encouraged to make the most economical use of our labour, and the effect of the imposition of this tax is directly contrary to the major thesis of the Budget. On those grounds, I support the Amendment, which seeks to relieve agriculture from the imposition of this tax.

I should like to say a few words in support of this Amendment. Farmers in Northern Ireland, where we have a lot of unemployment, will be greatly upset by this Clause. Many farmers in Northern Ireland, and particularly those in my constituency, farm on a very small scale. Most of them have farms of 20, 14, 12 or 10 acres. It may be said that the £12 or £14 per tractor per annum which will be added to their costs by this tax is a very small amount, but I cam assure the Committee that it will hurt many of them, and especially those who are on National Assistance. I therefore support the Amendment.

I should like to add my support to the pleas which have been made to the Chancellor of the Exchequer to accept the Amendment.

I always try to imagine the kind of reply that we shall get from the Chancellor when considering Amendments of this sort. It may well be that it is difficult to single out one industry for special relief. He may say, "Some sort of case can be made on behalf of many other industries and I cannot accept that this relief should be given only to agriculture".

The agricultural industry, however, stands, and has stood for a number of years, in a very special position indeed, with production grants, price support, the whole paraphernalia of the Price Review. These sorts of commitments to agriculture are not shared by any other industry. I do think that it is a bit hard, when the industry was told at the time of our Price Review that it was to be awarded £14 million or £15 million, that at this stage, only a few weeks later, it should have taken away £2½ million.

I do not know whether the Chancellor of the Exchequer was at liberty, during the course of the Price Review, to warn the Minister of Agriculture of what he intended to do. I dare say that that sort of thing is not done, but I wish that it could have been done, and I am sorry that so soon after the Review a hole should be made in the award, which was proclaimed with great pride as agreed between the National Farmers' Union and the Government.

I hope that the Chancellor of the Exchequer will tell us that he will accept this Amendment. I am quite sure that many of his supporters on this side of the Committee, and many agriculturists in the country, will be very sorry unless he does so.

Whether or not the Amendment is accepted, there has been a most historic division in this Committee, and yet, at the same time, I have not seen a greater travesty of tongue-in-the-cheek politics than we have seen in this last hour in this Chamber. It has been a charade played upon the Finance Bill. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) is quite right: there is a case to be made out for the tax, as there is also a case to be made against it, but the case can be made out on far better grounds than on the grumbles of this industry, and the grumble is not coming from industry——

—although the tax applies to all, and the farming interests on one side.

On a point of order. Your predecessor in the Chair, Mr. Arbuthnot, ruled that on this group of Amendments we should talk only about the agricultural considerations, and my Amendments deal with the industrial aspect.

The hon. Member for Kidderminster (Mr. Nabarro) must not make sedentary interruptions.

On a point of order. I did not hear you correctly, Mr. Arbuthnot. Did you say I was sedentary?

I said that the hon. Member must not make sedentary interruptions.

I do not think that you understood my point of order, Mr. Arbuthnot. My original point of order, which I did not hear adequately answered, was whether or not, as your predecessor ruled, this debate deals only with agricultural matters.

This debate does deal only with agricultural matters, and if the hon. Member for Hammersmith, North (Mr. Tomney), who is speaking, had been out of order I would have called him to order.

We can, I hope, feel assured that the hon. Member for Kidderminster (Mr. Nabarro) has finally subsided and that we can get on with the debate.

I was trying to say that this country has got to take a long view from now on of the position of the farming industry. Immediately after the war, and probably prior to it, the industry was run down. The system of subsidies was entered into. That was to make it efficient. The subsidies covered every imaginable tangent of the farming industry, farm buildings, machines, price support, and almost everything the farmers use. The support price was a subsidy. This has been carried on for a period of fifteen years, but what the farming industry does not realise is that economic time is passing and that the country's trading position industrially is passing, and that we face the most stringent economic times. One has to face the facts of the position generally as well as in relation to the farming industry.

That is precisely what the Chancellor is doing. It is always good financial sense to recoup from industry or anyone else by a tax on anything for which there is an upward demand, whether it is tobacco or anything else. It is always a safe bet. That is precisely what the right hon. and learned Gentleman is doing.

The question is how long the nation will be prepared to go on giving subsidies of this character to the farming industry. If we get such a squeal as we have heard now at this stage, at a proposal which may cost the farming industry £2½ million, what will happen if and when the country goes—as it will—into the Common Market? For cheap food will be available on the Continent in abundance. We have to decide where our support is to be given. The farming industry has got to adapt itself to changing circumstances, and quickly.

For too long and over too great a range of goods and activities the farming industry, as the former Member for Wednesbury, Mr. Stanley Evans, used to say, has been feather-bedded. It is a remarkable thing when we see farming interests on this side of the Committee and on that coinciding and putting down Amendments to help the industry to get something out of the taxpayer.

I am grateful to my hon. Friend for giving way to me. If he does not have to spend all of his time among the seething millions in this great City, I invite him to come at some time to a rural area, where he will see, despite his criticism of the assistance which agriculture is getting, that the wage of the farm worker is still £8 9s. a week for a 46-hour week, and he can compare that with the national average wage. Although he is advocating that assistance to agriculture should be reviewed, he is, in effect, advocating a reduction in the wages and standards of living of the farm workers. I should like him, and others who are criticising the assistance given to agriculture, to remember these sorts of things, such as the conditions under which farm workers, who are producing my hon. Friend's food as well as food for themselves, are living.

My argument means nothing of the kind. It is said that we have got to have this kind of syndicalism operating with the labour side supported by the capitalist side with its policy and purposes, but agriculture, like other industries, should pay its own wages: not the taxpayer.

I was talking of syndicalism. The fact is that this party's Amendment is no different in substance from the Amendment of the other side. Both Amendments are the same in principle.

I was only saying that, in our support for agriculture, we on this side welcome allies wherever they were. The Amendment, however, is ours.

What I want to get away from is the objectivity of the argument which divorces farmers from other taxpayers. It is us, the consumers in the towns, who eventually will have to pay the bill if the Chancellor remits this tax in the Price Review next February. In this complex of interests between the farming community, on the one side, with its subsidies and the general taxpayer in Britain and trade in Europe and elsewhere, on the other, we as a nation have to decide where the true interest lies and what we are going to do for this industry which, in my opinion, has already had much too much.

5.0 p.m.

I am deeply grateful to you, Mr. Arbuthnot, for observing me rising in my place, as I have been doing since half-past three this afternoon. I am deeply grateful to be allowed to follow the "Hammersmith farmer", the hon. Member for Hammersmith, North (Mr. Tomney), who spoke so eloquently on behalf of industrial interests to which I shall address myself more largely on succeeding Amendments in the name of my hon. Friend the Member for Willesden, East (Mr. Skeet) and myself.

I wish to oppose this Amendment on the very simple ground that farming is not the only basic industry of this country. There are at least three basic industries heavily involved with the fuel oil duty increase. One of them is farming, the second is steel and the third is electricity generation. Of the three the effect on farming is by far the smallest. I do not talk with my tongue in my cheek on this matter. I am not myself a farmer, but I sit for a large agricultural industry. Since the Budget I have been subjected to the usual pressures from the National Farmers' Union and farmers in my constituency to oppose the increase in fuel oil duty.

I have said that I am in sympathy with their views, but, if there is to be any reduction in the amount of the increase in the duty it cannot, in my judgment, be applied unilaterally and in discriminatory fashion to farming alone because there are other industries which, although perhaps not so large, are at least as important. We would be doing a disservice to the national economy and to industrial production generally in seeking to relieve one particular basic industry by what I conceive to be a rather clumsy method.

We have every February, as a result of the 1947 Act and succeeding statutes in the same sense, an appraisal of agricultural but not horticultural costs of production. The cost of fuel enters into the cost of every finished product in this country, including farming and horticultural products. The proper time to consider the effect and influence of this increase in fuel oil duty is the time of the February Price Review, 1962, which is a matter of six or eight months' hence.

This is not a huge increase in duty. I shall not reply in detail to the figures given by the hon. Member for Deptford (Sir L. Plummer) when he moved the Amendment. I thought that they were exaggerated. My hon. Friend the Member for Lowestoft (Mr. Prior) dealt only with the tractor aspect. To show how lopsided the argument of the hon. Member for Deptford was, I consulted a leading farmer in my constituency.

I was hoping, Mr. Arbuthnot, that you would call the hon. Member for Central Ayrshire (Mr. Manuel) to order for his sedentary intervention, but you failed to do so and I am deeply disappointed.

As I was saying, I consulted a leading farmer in my constituency, the owner of the Ribbesford Herd, near Bewdley, about the effect of the fuel oil duty increase on his farming costs. He farms 1,000 acres and he sent me this useful information:
"To give you the relevant information first, the proposed tax will cost my Group (of about 1,000 acres) £100 per annum in tractor fuel extra, and £450 per annum in fuel for our driers (grass and grain) extra. There are other incidental uses which may well bring the extra cost to a total of £600 per annum."
Out of £600 increase in costs applicable to this fuel oil duty increase, only £100 is in respect of tractors.

This is a 1,000-acre farm which I know personally. It is a mixed farm largely concerned with milk production. I fancy that the average number of tractors on a highly mechanised British farm of the standard I have indicated by the title of the Ribbesford Herd would be about eight tractors, but I did not test that point. What I am endeavouring to say is that the burden of this debate has been on tractor fuel, but, of course, there are other considerations. There, we enter into very marginal matters afflicting, not only farming, but the whole of industry generally.

I regard the whole of this fuel oil duty increase as bad and I shall say so on the next group of Amendments—that is, if I catch your eye, Mr. Arbuthnot. I shall recommend a reduction in the duty by those Amendments. I do not believe that it would be the correct course unilaterally to relieve one basic industry only, farming, yet to continue to apply the duty to two other basic industries which are at least as important—the nationalised industry of electricity generation and the very largely private enterprise industry, steel.

I am sure the hon. Member does not want to be more than unusually unfair in this matter. He may not have been in the Chamber when I addressed the Committee, but I did not speak only of the effect on tractors. I referred to drying plants, mobile engines and stationary engines. I did not confine my argument to tractors. The hon. Member for Lowestoft (Mr. Prior) was more interested in tractors.

I immediately withdraw if the hon. Member fox Deptford feels that I have been unfair. It was a fact that I was attending a meeting upstairs during the earlier part of his speech and I missed a portion of it.

May I put an analogy to the hon. Member? He and many of my hon. Friends want this relief from duty to be applied to all agricultural machinery, which would include grass driers and grain driers which use fuel oil. Yet, in a carpet factory, for example, there is a similar drying shed, or dyeing shed, or other processes which are strictly analogous to grain or grass drying in agriculture. They, too, are reliant on fuel oil for their processes. Why should we relieve one particular agricultural process and fail to relieve a comparable process in industry? That seems to be a wholly insupportable theory.

I shall argue the general advisability on economic grounds of this fuel oil duty I hope in a few minutes, or within an hour. To relieve one industrially unilaterally and in a discriminatory fashion, especially when the costs of that industry and its prices are subject to meticulous annual scrutiny is, I am sure, a wholly wrong policy in principle. I am very much in sympathy with the hon. Member for Deptford's case for agriculture, because I sit for an agricultural constituency, much more agricultural than is his constituency. My constituency has about 140,000 acres of agricultural land, which is a big proportion for an English county, although not for a Scottish county. Out of the conurbation it is largely an agricultural constituency, so I am subject in this particular context to this plea, but I think that in principle it would be wrong to accede to it.

I am sure that my hon. Friend would wish to be fair. He said that there should not be discrimination in favour of this industry in regard to the rebate in the Price Review, but that itself is a discrimination because other industries do not have such a price review.

On the contrary. My hon. Friend is not well-advised on these matters. Without getting out of order I cannot answer his question, and I shall not dare to get myself out of order with you, Mr. Arbuthnot.

Agriculture is subject to an Annual Price Review and a meticulous examination of its costs. Its prices are largely dominated by Government action, but so is the steel industry, the electricity supply industry and the coal industry. I should be out of order if I pursued that, but I ask hon. Members not to tell me that agriculture is the only industry which is either subsidised or subject to a meticulous examination of costs and prices by the appropriate Government Department, because that is not so. I am against unilaterally giving relief to agriculture in this country. I shall argue on future Amendments that the increase in the fuel oil duty is thoroughly bad.

We shall all be most interested to hear the hon. Member for Kidderminster (Mr. Nabarro) keeping in order on the later Amendments.

At this point the important question to take up is the measure of the burden on agriculture. I want to relate it to the small farmer. There are very wide variations in the type of land, in particular. But, in passing, may I point out to my hon. Friend the Member for Hammersmith, North (Mr. Tomney) that we must remember two facts about agriculture. First, the percentage of the gross national product which has been going to the agricultural community has declined every year over the last ten years. Secondly, although my hon. Friend talks about cheap food on the Continent, I ask him to look at the markets on the Continent and to compare the prices to the housewife there with the prices to the housewife in this country.

My hon. Friend does not say that the proportion of the gross national product going to the farming industry has been going as a direct gift from the taxpayer as subsidy. The point is how long, in changing circumstances, any industrial nation can afford to support this state of affairs.

Clearly, my hon. Friend and I are miles apart and it would take hours of argument to settle the point. When I referred to cheap food I thought that he would connect the two points and realise that the so-called agricultural subsidies are largely consumer subsidies, as they are operated in this country.

The burden of the debate has turned on the measure of the additional costs which will fall on the agricultural community, and I want to pick up the example of the small farmer, because there is remarkable agreement between the hon. Member for Cornwall, North (Mr. Scott-Hopkins) and my hon. Friend the Member for Norfolk, South-West (Mr. Hilton) on the approximate cost to a small farmer per year for each tractor. There was a disagreement as to the measure of cost in respect of large farms between the hon. Member for Lowestoft (Mr. Prior) and my hon. Friend the Member for Deptford (Sir L. Plummer).

We must consider the uncertainty facing the agricultural community and especially the small farmer, not only at home but in what many people on the Continent believe to be contradictory statements from the Government about this country and the Common Market.

5.15 p.m.

The hon. Member for Lowestoft suggested that the increased tax should be accepted and then recouped at the next Price Review. May I remind him and other hon. Members that that is not the view of the National Farmers' Union. The union wrote to the Chancellor of the Exchequer on 24th April, and the letter has been published. It begins:
"I have been asked to write to you on behalf of the three Farmers' Unions to express their grave concern at the proposals contained in your Budget statement to impose a duty…"
The letter details the duty. The N.F.U. made it clear that it was not its view that the duty should be accepted and used in discussion at the next Price Review.

You have ruled, Mr. Arbuthnot, that we should not discuss horticulture, and reluctantly I will not attempt to do so now. It is the problem of the small farmer which worries by hon. Friends and myself. We must put it in the context of the enormous amount of mechanisation which has taken place on the land since the war. According to the Zuckerman Report, between 1946 and 1956 the number of tractors in this country rose from 180,000 to 427,000—a huge increase. The cost of this development varies not only with the type of land, but also with the size of farm. We learn from the Zuckerman Report that a 50-acre farm needs investment in mechanisation which may be as much as five or ten times that of a large farm. The small farmer has proportionately to put in more capital.

It has only recently been recognised by those engaged in agricultural economics that more specialised equipment must be designed for the small farmer if he is to be able to increase his productivity by the use of his own labour. If the small farmer is to increase his productivity we must look not at the traditional type of farm machinery, but at farm machinery designed to make a greater use of the labour of one or two men. In other words, the future of the small farmer lies very much in still more mechanisation. That is why it seems to my hon. Friends and to me that this is a most untimely moment to increase the tax.

I do not believe that the Chancellor, or those who have spoken about the farmers, realise that the average yearly income of a small farmer with fewer than 50 acres, according to the Farm Management Survey, is under £500 a year. It could be argued on economic grounds that we should not have small farmers, but I understand that that is not the policy which the Government are pursuing. If they want to preserve the small farmer, they must not put on the sort of tax which makes it most difficult for him.

The production of the small farms must also be considered. I can find no comparable figures for the farmer with fewer than 50 acres, but we know that those with between 20 and 100 acres have one-third of the output of our agricultural community with only a quarter of the acreage. Their record of production is, therefore, good.

I am glad that my hon. Friend the Member for Norfolk, South-West, like the hon. Member for Cornwall, North, referred to the small farmer. It is not always realised that there are small farmers throughout the country. The proportion in each county declines as we move from west to east, but there are pockets of small farmers everywhere, and all hon. Members who have an interest in the agricultural community also have an interest in small farms. There are small farms in the Fens, in East Sussex and in many other parts of Eastern England.

The small farmer is the most likely to suffer from the tax. A figure of between £12 and £15 per tractor has been agreed on both sides of the Committee. As I have said, the small farmer has a very low income. If he is to exist we must not say kind words to him at one moment and then, at the next moment, impose a tax which will inevitably affect him not only now but in the future.

I was encouraged by the bold way in which so many hon. Members opposite announced that they were not supporting the Government. The hon. and gallant Member for Barkston Ash (Sir L. Ropner) even went so far as to refer to the bad faith of the Government. That is a serious thing for an hon. Member to say of the Government he nominally supports. As I pointed out in an earlier intervention, my hon. Friends and I, having tabled this Amendment in the interests of the farming community, especially small farmers, would welcome the votes of hon. Members opposite who have so courageously said that they would support us.

The hon. Gentleman has twice made that reference. I cannot speak for my hon. Friends, but I rather resent it. A number of Amendments on the Notice Paper are being taken with this Amendment, but because of House of Commons procedure only one can be moved at a time.

Yesterday, when the Committee debated Clause 1 concerning television advertisement duty several hon. Members opposite complained about some of my hon. Friends taking part despite the fact that they had an interest in the subject being discussed. If that rule had prevailed today, the Committee would have been deprived of the benefit of the advice of a number of hon. Members on both sides.

We are considering a series of Amendments in the names of the hon. Member for Lincoln (Mr. de Freitas) and his hon. Friends and one Amendment in the name of my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins) and some of my hon. Friends. The first series of Amendments tabled by the Opposition are concerned exclusively with agricultural vehicles. I mention this because the hon. Member for Deptford (Sir L. Plummer) and one or two other hon. Members talked about the additional cost which may result from this duty in respect of driers. There is nothing in the Opposition Amendments to cover that case. It is doubtful if it would be covered by the Amendment in the name of my hon. Friend the Member for Cornwall, North, which differs in two respects from the Amendment moved by the hon. Member for Deptford. My hon. Friend's Amendment provides for a reduced rate of duty and not for a complete exemption. It also applies to what he describes as
"other implements for agricultural purposes"
in addition to agricultural tractors.

The Amendments standing in the name of the hon. Member for Lincoln taken together would, first, exempt agricultural vehicle fuel from the new duty of 2d. per gallon. Secondly, the Amendments seek to relieve it of the main hydrocarbon oil duty of 2s. 6d. a gallon by a system of repayment claims or by means of duty-free delivery such as is already applied to coastal shipping, which is specifically referred to in the hon. Gentleman's Amendments.

It is doubtful whether the second aspect of the Amendments has any purpose, except perhaps to invoke coastal shipping as a precedent for an exemption. As most members of the farming community who are present will know, agricultural vehicles as defined in the Amendment are already relieved from paying the 2s. 6d. rate which is applicable to vehicle fuel in general. Therefore, agricultural vehicles under the Clause as it stands will pay only the 2d. rate.

Agricultural tractor fuel was not exempted when previously there was a duty on heavy hydro-carbon oil. That was from 1933 to 1947. When in 1935 diesel vehicle fuel, which is commonly known as "Derv", was first subjected to the same rate of tax as petrol, agricultural tractors were permitted to continue to use diesel oil at the lower heavy oil rate. In 1941 this concession was considerably extended in the case of agricultural tractors, which were then allowed to use the cheaper fuel for any journeys required for the produce or the requirements of the farm.

I mention this point because this concession of the heavy oil rate in lieu of the normal rate for heavy oil for vehicles on the roads, which is 2s. 6d., is still in force and consequently users of agricultural tractors are and will remain specially privileged compared with most other users of heavy oil as vehicle fuel, because they will now pay only the heavy oil rate of 2d. a gallon and not the 2s. 6d. per gallon applied to Derv.

My hon. Friend the Member for Cornwall, North talked about precedents. I will remind him of one precedent which shows just how difficult it is to provide assistance in the way he suggested. Petrol used in agricultural tractors, being a light oil, is subject to duty at the rate of 2s. 6d. a gallon. In 1950–51 the Ministry of Agriculture operated a scheme of grants to farmers which was intended to offset the increase in the petrol duty which was made in that financial year. The scheme provided for flat rate payments according to the number and types of tractors used. The scheme was withdrawn after a year. Since then the burden of the petrol duty on farmers has been taken into account in the Annual Price Review. It was generally agreed at the time that this was a better way of dealing with the matter.

I turn now to what I conceive to be the most important point which I wish to make in connection with the Amendments. I repeat the assurance that the extra cost to the farmer flowing from this increase in heavy oil duty will be taken into account in the ordinary way at the next Annual Agricultural Price Review. My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) asked whether the duty could not have been taken into account on the occasion of this year's Price Review, which was announced on 16th March. I hope that my hon. Friend will accept from me that in the very nature of things it would not be appropriate, even if in every case it were practicable, to adopt his suggestion. My hon. Friends the Members for Lowestoft (Mr. Prior) and Kidderminster (Mr. Nabarro) are right in saying that my right hon. and learned Friend's proposals are not unreasonable bearing in mind the operation of the Price Review. I appreciate that my hon. Friend the Member for Kidderminster qualified that statement by making it clear that he did not like the duty at all, but, in so far as there was to be a duty, he thought this was the best way of dealing with the increased cost which farmers will have to bear.

My hon. Friend the Member for Torrington (Mr. P. Browne) criticised the agricultural review system. I under-stood him to make the point that it operates too late and a change cannot be taken into account for a considerable time because, for example, the next Price Review is several months away. This time lag is inherent in the system of annual reviews, which are generally acceptable. While it may operate to the disadvantage of farmers on an increase in costs, it certainly operates to their advantage when any decrease in costs occurs.

5.30 p.m.

I am dealing with the general principle of the farm Price Review which, as I understand it, is generally acceptable to the farming community.

When the Economic Secretary gives an assurance that the increase in duty will be taken into account in the farm Price Review, he is not giving any assurance, is he, that it will be 100 per cent. recouped?

The hon. Gentleman—who, I am sure, knows about these things—knows perfectly well that I could not go further than to say that it would be taken into account. My recollection is that when, on 24th April, my hon. Friend the Parliamentary Secretary was questioned at some length about this, nobody ever dreamt of putting that point to him. I do not think that it would ever be expected that the Government would go further than I have in repeating the assurance my hon. Friend then gave.

It may or may not be, depending on the circumstances.

Hon. Members on both sides mentioned the likely effect on the farming community of this increase in duty in relation to tractors—because, as I earlier reminded the Committee, the Opposition's Amendments are concerned solely with agricultural vehicles. A survey was recently made by the Department of Agriculture at Leeds University, and those concerned arrived at an annual average fuel consumption of 500 gallons per diesel tractor, while the figure for a tractor driven on kerosene was nearer 400 gallons. This would put the extra cost of the new duty at between £3 and £4 per year per tractor.

I agree that the hours worked by each tractor vary very considerably from farm to farm, but even a consumption of 800 gallons a year would mean only £7 extra. As I knew that some hon. Members thought that the cost would be higher than that, I have gone to considerable trouble to try to find out whether those figures can in any way be supported. I am told—and I mention this in connection with the statement made by the hon. Member for Deptford that this will result in each of his tractors costing an additional £30 a year to run—that there are about 400,000 tractors operating on heavy oil, of which about half use diesel oil and half use vaporising oil.

A diesel-engined tractor runs for about two hours per gallon. An additional tax burden of £15 a year, therefore implies that the tractor is run for 3,600 hours a year. That is 70 hours per week throughout the whole of the year, and the increase of £30 a year mentioned by the hon. Gentleman would imply a working week of 140 hours, or about 20 hours a day. I am told that an average of 1,000 hours a year is normal for a diesel tractor, and this implies an additional tax burden of a little over £4 a year.

Tractors running on vaporising oil—and these also are covered in the Amendment tabled by my hon. Friend the Member for Cornwall, North, run for about one hour on a gallon of fuel, and an increase of £15 a year implies running for 35 hours a week throughout the year. An increase of £30 a year would mean running for 70 hours a week, but those hon. Members concerned with farming communities know that the tractors running on vaporising oil are generally used for lighter duties, and I understand that about 500 hours a year is normal. That, again, implies an additional burden of slightly over £4 a year.

I accept that I am talking of averages when I speak of £3 or £4 a year, and it is undoubtedly true that on some farms these agricultural tractors are used more intensively, and I daresay particularly by the small farmers referred to by my hon. Friend the Member for Mid-Ulster (Mr. Forrest). However, even if we double the average figure of between £3 and £4 for a tractor, being the additional cost consequent on this duty, the cost is still only £7 a year.

The hon. Member for Lincoln, spoke, as I understood him, of the small farmer being the man farming 50 acres or so. Clearly, the hon. Member has more experience of these matter than I. However, I should not have thought that such a farmer operated more than one or two tractors. Therefore, if he operates one tractor, the additional cost is most unlikely to be more than £10 a year—and even that will be taken into account in the next agricultural Price Review.

As for the figure given for the hon. Member for Deptford of an additional cost of £30 a year, I can only say that I think there is something in what my hon. Friend the Member for Lowestoft said about the hon. Gentleman needing his tractors overhauling. If I wanted to be unkind, I might add that it is not surprising that another of the hon. Gentleman's ventures in another part of the world came to such a "sticky" end.

The Amendments in the name of the hon. Member for Lincoln proceed by reference to the analogy of coastal shipping. When I saw his reference to coastal shipping legislation I pursued the matter a little further, and he may be a little surprised to hear that I came clearly to the conclusion that the effect of his Amendments would be to relieve agricultural tractors only
"…while engaged on a voyage in home waters…"
I know that the hon. Member's constituency is surrounded by some rather low-lying land, but I cannot imagine that that is really his intention——

As the Amendment was originally drafted, it was simply that a tractor should for this purpose be deemed to be a ship; but I thought that seemed to be wrong.

I have taken the hon. Gentleman's point.

The rough-and-ready flat-rate repayments to farmers that were in existence in the scheme that operated in 1950–51, which was dropped, show plainly that there are great difficulties in administering an exemption of this kind for farmers, but I would agree that these difficulties in themselves cannot be decisive. Indeed, I should be less than frank with the Committee if I did not say that it is very rare that one reaches the conclusion that something is absolutely impossible. On the other hand, a special scheme of exemption has been tried before and found to be lacking.

I would ask my hon. Friends and hon. Members opposite, if I may do so with respect, to be equally frank with themselves and to consider this matter as a whole. After all, agricultural tractors already receive and will continue to receive favourable treatment. They will pay a duty of only 2d. whereas, in general, the duty is half a crown for vehicles using the same oil. As I have mentioned, the special scheme dealing with petrol which was operated in 1950–51 proved very difficult to administer and was dropped, and certainly, anything on the lines now proposed would be equally difficult. Prima facie, therefore, I think that they are not desirable.

Whatever differences of opinion we may have about the cost to the farming community, it is a fact that the average cost will be about £3 or £4 per tractor per year. That means that even in the exceptional cases it is unlikely to be more than £7 or £10 a year. When, on top of all those facts, it is borne in mind that this extra cost, small though it is, will be taken into account in the next agricultural Price Review, the arguments against doing what hon. Gentlemen opposite and some of my hon. Friends ask for—no doubt for admirable reasons—are really very formidable.

In view of the facts that I have brought to the notice of the Committee, and in view of the undertaking given by my right hon. Friend the Minister of Agriculture concerning the next Price Review, I hope that, at any rate, my hon. Friends and, indeed—and a little more optimistically, perhaps—some hon. Members opposite, will not seek to press these Amendments.

I have only two comments to make on the merits or otherwise of this matter. The first is that if, in fact, this is going to mean such a small amount to the farmers, equally it is unlikely to mean a very large amount to the Treasury—and the Economic Secretary has provided me with an additional reason for supporting the Amendment.

The second point is that it seems extraordinarily difficult to meet this case by adjusting prices in the Price Review. Surely—and I speak as someone who is concerned with farming some uncommonly difficult land in Scotland—the use of tractors is not proportionate to the amount of crop obtained, and, therefore, it would be difficult, particularly if the amounts are small, to do justice as between one farmer and another as regards this additional burden the Government seek to put on them. It is clear that to take account of the matter in the Price Review may or may not, to quote the Economic Secretary's words, amount to making an allowance, or an adequate allowance, for it.

Concerning the two proposals in the Amendment, I must differ from the Economic Secretary about the Amendment put forward meaning that the concession would apply only to tractors in home waters. [Laughter.] I do not so read the Amendment, and I do not intend to go further into the matter, except to say that I do not agree with the Economic Secretary.

An answer that is usually given to this kind of thing is that there are administrative difficulties. That answer was given today. But whatever administrative difficulties there may be in not applying the increase to agricultural vehicles, I suggest that the administrative difficulties in operating the scheme set out in the 1952 Act, concerning oil for ships in home waters, are just as great as any that are likely to be encountered in connection with tractors.

If a ship goes away, no one can judge if it has been in home waters without sending out revenue cutters to track the ship for that purpose. Consequently that scheme, which is really a simple one and a matter of annual refunds and power to advance the relief granted by it, would work in this case, and I do not think it was ever applied to the petrol case, which the Economic Secretary mentioned.

I believe, therefore, that although these two Amendments both have the same result, they represent different methods of approach and it is right, if the Government say "no" to the whole business, that they should say "no" to both the possibilities.

5.45 p.m.

I gather from the Economic Secretary's reply that the Amendment of the hon. Gentleman opposite does not include anything other than actual tractor vehicles. That is a mistake, because other machinery, such as driers, should not have been included in the Amendment. Nevertheless, as a result of that reply, I am wondering whether the Economic Secretary has appreciated my argument.

I do not dispute that the costs may be £4, £8 or £10 per tractor. I have never disputed that, and I agree that it is a small sum. I have said so. What I have questioned is the principle behind which the Economic Secretary is sheltering. I am wondering, first of all, about the figure which is involved in the next Price Review in 1962. I think it is agreed that the figure is about £2½ million. Does the hon. Member for Kidderminster (Mr. Nabarro) wish to comment on that?

If I embark on a detailed statistical analysis of division of costs as between certain types of agricultural machinery, fixed and mobile, that would not be appropriate to the Committee stage of the Finance Bill. The Petroleum Information Bureau say that the total cost to the whole of the farm and horticultural industry for mobile machinery and mobile power units and fixed machinery is £2·1 million, and that mobile machinery—tractors in the context of the first Amendment—is about £1·25 million out of the total of £2·1 million.

When I consulted the Customs and Excise about this figure they confirmed the figure of about £2 million for fixed equipment and vehicles, and we can take it, therefore, that in large measure we are not in disagreement. We agree on the amount that the industry is going to be asked to bear. Therefore, the fact is surely admitted that this money is being taken from the agricultural industry.

I will not go into all the arguments on this matter, but I must reiterate that in the Price Review of this year £14 million was given back to the industry as a result of increased efficiency and because of the conditions under which the Price Review was conducted. Now we have £2 million-odd being taken away from the industry by the same person and by the same Government which gave back that £14 million. Thus, having considered the costs for the coming twelve months and having given back £14 million, the Government are now taking back this amount.

We shall have to wait until next year's Price Review—about nine months hence—before we get any possible rebate or repayment as a result of the 1962 Price Review. If the Government desire confidence in an industry which has a tremendously important part to play in the economy, the small and large men combined must believe that when the

Division No. 169.]


[5.48 p.m.

Ainsley, WilliamEdwards, Walter (Stepney)Jay, Rt. Hon. Douglas
Allaun, Frank (Salford, E.)Evans, AlbertJeger, George
Allen, Scholefield (Crewe)Fernyhough, E.Jenkins, Roy (Stechford)
Awbery, StanFinch, HaroldJones, Dan (Burnley)
Bacon, Miss AliceFitch, AlanJones, Elwyn (West Ham, S.)
Baxter, William (Stirlingshire, W.)Foot, Dingle (Ipswich)Jones, Jack (Rotherham)
Bence, Cyril (Dunbartonshire, E.)Foot, Michael (Ebbw Vale)Jones, J. Idwal (Wrexham)
Benson, Sir GeorgeForman, J. C.Jones, T. W. (Merioneth)
Boardman, H.Fraser, Thomas (Hamilton)Kenyon, Clifford
Bowden, Herbert W. (Leics, S.W.)Gaitskell, Rt. Hon. HughKey, Rt. Hon. C. W.
Bowen, Roderic (Cardigan)Galpern, Sir MyerKing, Dr. Horace
Bowles, FrankGeorge, Lady Megan Lloyd (Crmrthn)Lawson, George
Boyden, JamesGinsburg, DavidLedger, Ron
Brockway, A. FennerGooch, E. G.Lee, Frederick (Newton)
Brown, Rt. Hon. George (Belper)Gordon Walker, Rt. Hon. P. C.Lipton, Marcus
Brown, Thomas (Ince)Gourlay, HarryLogan, David
Butler, Mrs. Joyce (Wood Green)Greenwood, AnthonyLoughlin, Charles
Callaghan, JamesGrey, CharlesMabon, Dr. J. Dickson
Castle, Mrs. BarbaraGriffiths, David (Rother Valley)McCann, John
Chapman, DonaldGriffiths, Rt. Hon. James (Llanelly)MacColl, James
Chetwynd, GeorgeGrimond, J.McInnes, James
Cliffe, MichaelGunter, RayMcKay, John (Wallsend)
Collick, PercyHale, Leslie (Oldham, W.)Mackie, John
Craddock, George (Bradford, S.)Hall, Rt. Hn. Glenvil (Colne Valley)MacMillan, Malcolm (Western Isles)
Cronin, JohnHamilton, William (West Fife)MacPherson, Malcolm (Stirling)
Crossman, R. H. S.Hannan, WilliamMallalieu, E. L. (Brigg)
Cullen, Mrs. AliceHart, Mrs. JudithManuel, A. C.
Darling, GeorgeHealey, DenisMapp, Charles
Davies, Harold, (Leek)Henderson, Rt. Hn. Arthur (Rwly Regis)Marquand, Rt. Hon. H. A.
Davies, Ifor (Gower)Herbison, Miss MargaretMarsh, Richard
Davies, S. O. (Merthyr)Hill, J. (Midlothian)Mason, Roy
Deer, GeorgeHilton, A. V.Maxwell-Hyslop, R. J.
de Freitas, GeoffreyHolman, PercyMellish, R. J.
Delargy, HughHoughton, DouglasMendelson, J. J.
Dempsey, JamesHowell, Charles A. (B'ham, Perry Bar)Millan, Bruce
Diamond, JohnHowell, Denis (B'ham, Small Heath)Mitchison, G. R.
Dodds, NormanHughes, Cledwyn (Anglesey)Moody, A. S.
Donnelly, DesmondHughes, Emrys (S. Ayrshire)Mort, D. L.
Driberg, TomHughes, Hector (Aberdeen, N.)Neal, Harold
Dugdale, Rt. Hon. JohnHunter, A. E.Noel-Baker, Francis (Swindon)
Ede, Rt. Hon. C.Hynd, H. (Accrington)Oliver, G. H.
Edelman, MauriceIrvine, A. J. (Edge Hill)Oswald, Thomas
Edwards, Rt. Hon. Ness (Caerphilly)Irving, Sydney (Dartford)Owen, Will
Edwards, Robert (Bilston)Janner, Sir BarnettPadley, W. E.

Government say something they intend to keep their word. [HON. MEMBERS: "Hear, hear."] When the Government pursue a policy or create a structure, they must stick to it at least until discussions take place.

That has not happened in this case. I regret that. I wish the Economic Secretary had said that he was prepared to discuss the matter with the Minister of Agriculture to see whether a method could be found to recoup the industry, perhaps during the coming nine months, with a portion of the sum which will be taken from it. If he had said that I would have been more than happy, and I hope the Economic Secretary will, even at this late stage, be willing to look at this again and, perhaps, get together with the Minister of Agriculture so that, in the coming months, something may be done.

Question put, That those words be there inserted:—

The Committee divided: Ayes 204, Noes 272.

Pargiter, G. A.Silverman, Sydney (Nelson)Timmons, John
Parker, JohnSkeffington, ArthurUngoed-Thomas, Sir Lynn
Parkin, B. T.Slater, Mrs. Harriet (Stoke, N.)Wade, Donald
Pavitt, LaurenceSlater, Joseph (Sedgefield)Wainwright, Edwin
Pearson, Arthur (Pontypridd)Small, WilliamWarbey, William
Peart, FrederickSmith, Ellis (Stoke, S.)Watkins, Tudor
Pentland, NormanSnow, JulianWeitzman, David
Plummer, Sir LeslieSorensen, R. W.Wells, Percy (Faversham)
Popplewell, ErnestSoskice, Rt. Hon. Sir FrankWhite, Mrs. Eirene
Prentice, R. E.Spriggs, LeslieWhitlock, William
Price, J. T. (Westhoughton)Steele, ThomasWigg, George
Probert, ArthurStewart, Michael (Fulham)Wilkins, W. A.
Rankin, JohnStonehouse, JohnWilley, Frederick
Reid, WilliamStones, WilliamWilliams, D. J. (Neath)
Reynolds, G. W.Strachey, Rt. Hon. JohnWilliams, LI. (Abertillery)
Rhodes, H.Strauss, Rt. Hn. G. R. (Vauxhall)Williams, W. T. (Warrington)
Roberts, Albert (Normanton)Swain, ThomasWillis, E. G. (Edinburgh, E.)
Roberts, Goronwy (Caernarvon)Swingler, StephenWilson, Rt. Hon. Harold (Huyton)
Robertson, J. (Paisley)Sylvester, GeorgeWoodburn, Rt. Hon. A.
Robinson, Kenneth (St. Pancras, N.)Symonds, J. B.Woof, Robert
Rogers, G. H. R. (Kensington, N.)Taylor, Bernard (Mansfield)Yates, Victor (Ladywood)
Ross, WilliamTaylor, John (West Lothian)
Royle, Charles (Salford, West)Thompson, Dr. Alan (Dunfermline)TELLERS FOR THE AYES:
Shinwell, Rt. Hon. E.Thomson, G. M. (Dundee, E.)Dr. Broughton and Mr. Redhead.
Short, EdwardThorpe, Jeremy


Agnew, Sir PeterDance, JamesHirst, Geoffrey
Aitken, W. T.d'Avigdor-Goldsmid, Sir HenryHocking, Philip N
Allan, Robert (Paddington, S.)de Ferranti, BasilHolland, Philip
Allason, JamesDigby, Simon WingfieldHollingworth, John
Ashton, Sir HubertDonaldson, Cmdr. C. E. M.Hornby, R. P.
Atkins, HumphreyDoughty, CharlesHornsby-Smith, Rt. Hon. Patricia
Bainlel, LordDrayson, G. B.Howard, Hon. G. R. (St. Ives)
Barber, Anthonydu Cann, EdwardHoward, John (Southampton, Test)
Barlow, Sir JohnDuncan, Sir JamesHughes Hallett, Vice-Admiral John
Barter, JohnEden, JohnHughes-Young, Michael
Batsford, BrianElliot, Capt. Walter (Carshalton)Hulbert, Sir Norman
Baxter, Sir Beverley (Southgate)Elliott, R. W. (Nwcstle-upon-Tyne, N.)Hurd, Sir Anthony
Beamish, Col. Sir TuftonEmery, PeterHutchison, Michael Clark
Bell, RonaldEmmet, Hon. Mrs. EvelynIremonger, T. L.
Bennett, F. M. (Torquay)Errington, Sir EricIrvine, Bryant Godman (Rye)
Bennett, Dr. Reginald (Gos & Fhm)Erroll, Rt. Hon. F. J.Jackson, John
Bevins, Rt. Hon. Reginald (Toxteth)Farey-Jones, F. W.James, David
Biggs-Davison, JohnFarr, JohnJohnson, Eric (Blackley)
Bingham, R. M.Fell, AnthonyJohnson Smith, Geoffrey
Birch, Rt. Hon. NigelFinlay, GraemeJones, Rt. Hn. Aubrey (Hall Green)
Bishop, F. P.Fisher, NigelKaberry, Sir Donald
Black, Sir CyrilFletcher-Cooke, CharlesKerans, Cdr. J. S.
Bossom, CliveForrest, GeorgeKerr, Sir Hamilton
Boyd-Carpenter, Rt. Hon. JohnFraser, Ian (Plymouth, Sutton)Kershaw, Anthony
Boyle, Sir EdwardFreeth, DenzilKimball, Marcus
Brewis, JohnGalbraith, Hon. T. G. D.Kirk, Peter
Bromley-Davenport, Lt.-Col. Sir WalterGammans, LadyKitson, Timothy
Brooman-White, R.Gardner, EdwardLagden, Godfrey
Bryan, PaulGlyn, Dr. Alan (Clapham)Lambton, Viscount
Buck, AntonyGlyn, Sir Richard (Dorset, N.)Leburn, Gilmour
Bullard, DenysGodber, J. B.Lewis, Kenneth (Rutland)
Burden, F. A.Goodhart, PhilipLilley, F. J. P.
Butcher, Sir HerbertGough, FrederickLindsay, Martin
Butler, Rt. Hn. R. A. (Saffron Walden)Grant, Rt. Hon. WilliamLinstead, Sir Hugh
Campbell, Sir David (Belfast, S.)Grant-Ferris, Wg Cdr. R.Litchfield, Capt. John
Campbell, Gordon (Moray & Nairn)Green, AlanLloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Carr, Compton (Barons Court)Gresham Cooke, R.Lloyd, Rt. Hon. Selwyn (Wirral)
Carr, Robert (Mitcham)Grimston, Sir RobertLongden, Gilbert
Cary, Sir RobertGrosvenor, Lt.-Col. R. G.Loveys, Walter H.
Channon, H. P. G.Gurden, HaroldLow, Rt. Hon. Sir Toby
Chataway, ChristopherHall, John (Wycombe)Lucas, Sir Jocelyn
Chichester-Clark, R.Hamilton, Michael (Wellingborough)Lucas-Tooth, Sir Hugh
Clark, William (Nottingham, S.)Hare, Rt. Hon. JohnMcAdden, Stephen
Clarke, Brig. Terence (Portsmth, W.)Harris, Frederic (Croydon, N.W.)MacArthur, Ian
Cleaver, LeonardHarris, Reader (Heston)McLaren, Martin
Cole, NormanHarrison, Brian (Maldon)Maclay, Rt. Hon. John
Collard, RichardHarrison, Col. J. H. (Eye)Maclean, Sir Fitzroy (Bute & N. Ayrs.)
Cooke, RobertHarvie Anderson, MissMcLean, Neil (Inverness)
Cordeaux, Lt.-Col. J. K.Hastings, StephenMacLeod, John (Ross & Cromarty)
Cordle, JohnHay, JohnMcMaster, Stanley R.
Corfield, F. V.Heald, Rt. Hon. Sir LionelMacpherson, Niall (Dumfries)
Costain, A. P.Heath, Rt. Hon. EdwardMaddan, Martin
Craddock, Sir BeresfordHenderson, John (Cathcart)Maginnis, John E.
Critchley, JulianHenderson-Stewart, Sir JamesMaitland, Sir John
Crosthwaite-Eyre, Col. O. E.Hendry, ForbesManningham-Buller, Rt. Hn. Sir R.
Cunningham, KnoxHill, Dr. Rt. Hon. Charles (Luton)Markham, Major Sir Frank
Currie, G. B. H.Hill, J. E. B. (S. Norfolk)Marples, Rt. Hon. Ernest
Dalkeith, Earl ofHinchingbrooke, ViscountMarshall, Douglas

Mathew, Robert (Honiton)Rawlinson, PeterThomas, Leslie (Canterbury)
Matthews, Gordon (Meriden)Redmayne, Rt. Hon. MartinThompson, Richard (Croydon, S.)
Mawby, RayRees, HughThorneycroft, Rt. Hon. Peter
Maydon, Lt.-Cmdr. S. L. C.Renton, DavidThornton-Kemsley, Sir Colin
Mills, StrattonRidley, Hon. NicholasTiley, Arthur (Bradford, W.)
Montgomery, FergusRoberts, Sir Peter (Heeley)Tilney, John (Wavertree)
More, Jasper (Ludlow)Robertson, J. (Paisley)Turner, Colin
Morgan, WilliamRoots, WilliamTurton, Rt. Hon. R. H.
Morrison, JohnRoyle, Anthony (Richmond, Surrey)Tweedsmuir, Lady
Mott-Radclyffe, Sir CharlesRussell, Ronaldvan Straubenzee, W. R.
Nabarro, GeraldSandys, Rt. Hon. DuncanVane, W. M. F.
Nicholls, Sir HarmarSeymour, LeslieVickers, Miss Joan
Nugent, Sir RichardSharples, RichardWakefield, Edward (Derbyshire, W.)
Oakshott, Sir HendrieShaw, M.Wakefield, Sir Wavell (St. M'lebone)
Orr-Ewing, C. IanSimon, Rt. Hon. Sir JocelynWalder, David
Page, John (Harrow, West)Skeet, T. H. H.Walker, Peter
Page, Graham (Crosby)Smith, Dudley (Br'ntf'rd & Chiswick)Walker-Smith, Rt. Hon. Sir Derek
Pannell, Norman (Kirkdale)Smithers, PeterWard, Dame Irene
Partridge, E.Smyth, Brig. Sir John (Norwood)Watkinson, Rt. Hon. Harold
Pearson, Frank (Clitheroe)Spearman, Sir AlexanderWatts, James
Peel, JohnSpeir, RupertWebster, David
Percival, IanStanley, Hon, RichardWhitelaw, William
Peyton, JohnSteward, Harold (Stockport, S.)Williams, Paul (Sunderland, S.)
Pickthorn, Sir KennethStodart, J. A.Wills, Sir Gerald (Bridgwater)
Pike, Miss MervynStoddart-Scott, Col. Sir MalcolmWilson, Geoffrey (Truro)
Pilkington, Sir RichardStorey, Sir SamuelWise, A. R.
Pitman, I. J.Studholme, Sir HenryWolrige-Gordon, Patrick
Pott, PercivallSummers, Sir Spencer (Aylesbury)Wood, Rt. Hon. Richard
Price, David (Eastleigh)Sumner, Donald (Orpington)Woollam, John
Prior, J. M. L.Tapsell, PeterWorsley, Marcus
Prior-Palmer, Brig. Sir OthoTaylor, Sir Charles (Eastbourne)
Proudfoot, WilfredTaylor, W. J. (Bradford, N.)TELLERS FOR THE NOES:
Pym, FrancisTeeling, WilliamMr. Gibson-Watt and Mr. Noble.
Quennell, Miss J. M.Temple, John M.

Amendment proposed: In page 2, line 18, after "oils" insert:

"(other than heavy oils to which the provisions of this subsection do not apply)".—[Mr. de Freitas.]

Division No. 170.]


5.59 p.m.]

Ainsley, WilliamEde, Rt. Hon. C.Howell, Denis (B'ham, Small Heath)
Allaun, Frank (Salford, E.)Edelman, MauriceHughes, Cledwyn (Anglesey)
Allen, Scholefield (Crewe)Edwards, Rt. Hon. Ness (Caerphilly)Hughes, Emrys (S. Ayrshire)
Awbery, StanEdwards, Robert (Bilston)Hughes, Hector (Aberdeen, N.)
Bacon, Miss AliceEdwards, Walter (Stepney)Hunter, A. E.
Baxter, William (Stirlingshire, W.)Evans, AlbertHynd, H. (Accrington)
Benson, Sir GeorgeFernyhough, E.Irvine, A. J. (Edge Hill)
Boardman, H.Finch, HaroldIrving, Sydney (Dartford)
Bowden, Herbert W. (Leics, S.W.)Fitch, AlanJanner, Sir Barnett
Bowen, Roderic (Cardigan)Foot, Dingle (Ipswich)Jay, Rt. Hon. Douglas
Bowles, FrankFoot, Michael (Ebbw Vale)Jeger, George
Boyden, JamesForman, J. C.Jenkins, Roy (Stechford)
Brockway, A. FennerFraser, Thomas (Hamilton)Jones, Dan (Burnley)
Brown, Rt. Hon. George (Belper)Gaitskell, Rt. Hon. HughJones, Elwyn (West Ham, S.)
Brown, Thomas (Ince)Galpern, Sir MyerJones, Jack (Rotherham)
Butler, Mrs. Joyce (Wood Green)George, Lady Megan Lloyd (Crmrthn)Jones, J. Idwal (Wrexham)
Callaghan, JamesGinsburg, DavidJones, T. W. (Merioneth)
Castle, Mrs. BarbaraGooch, E. G.Kenyon, Clifford
Chapman, DonaldGordon Walker, Rt. Hon. P. C.Key, Rt. Hon. G. W.
Chetwynd, GeorgeGourlay, HarryKing, Dr. Horace
Cliffe, MichaelGreenwood, AnthonyLawson, George
Collick, PercyGrey, CharlesLedger, Ron
Craddock, George (Bradford, S.)Griffiths, David (Bother Valley)Lee, Frederick (Newton)
Cronin, JohnGriffiths, Rt. Hon. James (Llanelly)Lipton, Marcus
Crossman, R. H. S.Grimond, J.Logan, David
Cullen, Mrs. AliceGunter, RayLoughlin, Charles
Darling, GeorgeHale, Leslie (Oldham, W.)Mabon Dr. J. Dickson
Davies, Harold (Leek)Hall, Rt. Hn. Glenvil (Colne Valley)McCann, John
Davies, Ifor (Gower)Hamilton, William (West Fife)MacColl, James
Davies, S. O. (Merthyr)Hannan, WilliamMcInnes, James
Deer, GeorgeHart, Mrs. JudithMcKay, John (Wallsend)
de Freitas, GeoffreyHealey, DenisMackie, John
Delargy, HughHenderson, Rt. Hn. Arthur (RwlyRegis)MacMillan, Malcolm (Western Isles)
Dempsey, JamesHerbison, Miss MargaretMacPherson, Malcolm (Stirling)
Diamond, JohnHill, J. (Midlothian)Mallalieu, E. L. (Brigg)
Dodds, NormanHilton, A. V.Manuel, A. C.
Donnelly, DesmondHolman, PercyMapp, Charles
Driberg, TomHoughton, DouglasMarquand, Rt. Hon. H. A.
Dugdale, Rt. Hon. JohnHowell, Charles A. (B'ham, Perry Barr)Marsh, Richard

Question put, That those words be there inserted:—

The Committee divided: Ayes 201, Noes 272.

Mason, RoyRoberts, Goronwy (Caernarvon)Taylor, John (West Lothian)
Mendelson, J. J.Robertson, John (Paisley)Thompson, Dr. Alan (Dunfermline)
Millan, BruceRobinson, Kenneth (St. Pancras, N.)Thomson, G. M. (Dundee, E.)
Mitchison, G. R.Rogers, G. H. R. (Kensington, N.)Thorpe, Jeremy
Moody, A. S.Ross, WilliamTimmons, John
Mort, D. L.Royle, Charles (Salford, West)Tomney, Frank
Neal, HaroldShinwell, Rt. Hon. E.Ungoed-Thomas, Sir Lynn
Noel-Baker, Francis (Swindon)Short, EdwardWade, Donald
Oliver, G. H.Silverman, Sydney (Nelson)Wainwright, Edwin
Oswald, ThomasSkeffington, ArthurWarbey, William
Owen, WillSlater, Mrs. Harriet (Stoke, N.)Watkins, Tudor
Padley, W. E.Slater, Joseph (Sedgefield)Weitzman, David
Pannell, Charles (Leeds, W.)Small, WilliamWells, Percy (Faversham)
Pargiter, G. A.Smith, Ellis (Stoke, S.)White, Mrs. Eirene
Parker, JohnSnow, JulianWhitlock, William
Parkin, B. T.Sorensen, R. W.Wigg, George
Pavitt, LaurenceSoskice, Rt. Hon. Sir FrankWilkins, W. A.
Pearson, Arthur (Pontypridd)Spriggs, LeslieWilley, Frederick
Peart, FrederickSteele, ThomasWilliams, D. J. (Neath)
Pentland, NormanStewart, Michael (Fulham)Williams, LI. (Abertillery)
Plummer, Sir LeslieStonehouse, JohnWilliams, W. T. (Warrington)
Popplewell, ErnestStones, WilliamWillis, E. G. (Edinburgh, E.)
Prentice, R. E.Strachey, Rt. Hon. JohnWilson, Rt. Hon. Harold (Huyton)
Probert, ArthurStrauss, Rt. Hn. G. R. (Vauxhall)Woodburn, Rt. Hon. A.
Rankin, JohnSwain, ThomasWoof, Robert
Reid, WilliamSwingler, StephenYates, Victor (Ladywood)
Reynolds, G. W.Sylvester, George
Rhodes, H.Symonds, J. B.TELLERS FOR THE AYES:
Roberts, Albert (Normanton)Taylor, Bernard (Mansfield)Mr. Redhead and Dr. Broughton.


Agnew, Sir PeterCraddock, Sir BeresfordHarvie Anderson, Miss
Aitken, W. T.Critchley, JulianHastings, Stephen
Allan, Robert (Paddington, S.)Crosthwaite-Eyre, Col. O. E.Hay, John
Allason, JamesCunningham, KnoxHeald, Rt. Hon. Sir Lionel
Ashton, Sir HubertCurrie, G. B. H.Henderson, John (Cathcart)
Atkins, HumphreyDalkeith, Earl ofHenderson-Stewart, Sir James
Barber, AnthonyDance, JamesHendry, Forbes
Barlow, Sir Johnd'Avigdor-Goldsmid, Sir HenryHill, Dr. Rt. Hon. Charles (Luton)
Barter, Johnde Ferranti, BasilHill, J. E. B. (S. Norfolk)
Batsford, BrianDigby, Simon WingfieldHinchingbrooke, Viscount
Baxter, Sir Beverley (Southgate)Donaldson, Cmdr. C. E. M.Hirst, Geoffrey
Beamish, Col. Sir TuftonDoughty, CharlesHocking, Philip N.
Bell, RonaldDrayson, G. B.Holland, Philip
Bennett, F. M. (Torquay)du Cann, EdwardHollingworth, John
Bennett, Dr. Reginald (Gos & Fhm)Duncan, Sir JamesHornby, R. P.
Bevins, Rt. Hon. Reginald (Toxteth)Eden, JohnHornsby-Smith, Rt. Hon. Patricia
Biggs-Davison, JohnElliot, Capt. Walter (Carshalton)Howard, Hon. G. R. (St. Ives)
Bingham, R. M.Elliott, R. W. (Nwcstle-upon-Tyne, N.)Howard, John (Southampton, Test)
Birch, Rt. Hon. NigelEmery, PeterHughes Hallett, Vice-Admiral John
Bishop, F. P.Emmet, Hon. Mrs. EvelynHughes-Young, Michael
Black, Sir CyrilErrington, Sir EricHulbert, Sir Norman
Bossom, CliveErroll, Rt. Hon. F. J.Hurd, Sir Anthony
Boyd-Carpenter, Rt. Hon. JohnFarey-Jones, F. W.Hutchison, Michael Clark
Boyle, Sir EdwardFarr, JohnIremonger, T. L.
Brewis, JohnFell, AnthonyIrvine, Bryant Godman (Rye)
Bromley-Davenport, Lt.-Col. Sir WalterFinlay, GraemeJackson, John
Brooman-White, R.Fisher, NigelJames, David
Brown, Alan (Tottenham)Fletcher-Cooke, CharlesJohnson, Eric (Blackley)
Bryan, PaulForrest, GeorgeJohnson smith, Geoffrey
Buck, AntonyFraser, Ian (Plymouth, Sutton)Jones, Rt. Hn. Aubrey (Hall Green)
Bullard, DenysFreeth, DenzilKaberry, Sir Donald
Burden, F. A.Galbraith, Hon. T. G. D.Kerans, Cdr. J. S.
Butcher, Sir HerbertGammans, LadyKerr, Sir Hamilton
Butler, Rt. Hn. R. A. (Saffron Walden)Gardner, EdwardKershaw, Anthony
Campbell, Sir David (Belfast, S.)Glyn, Dr. Alan (Clapham)Kimball, Marcus
Campbell, Gordon (Moray & Nairn)Glyn, Sir Richard (Dorset, N.)Kirk, Peter
Carr, Compton (Barons Court)Godber, J. B.Kitson, Timothy
Carr, Robert (Mitcham)Goodhart, PhilipLagden, Godfrey
Cary, Sir RobertGough, FrederickLambton, Viscount
Channon, H. P. G.Grant, Rt. Hon. WilliamLangford-Holt, J.
Chataway, ChristopherGrant-Ferris, Wg. Cdr. R.Leburn, Gilmour
Chichester-Clark, R.Green, AlanLewis, Kenneth (Rutland)
Clark, William (Nottingham, S.)Gresham Cooke, R.Lilley, F. J. P.
Clarke, Brig. Terence (Portsmth, W.)Grimston, Sir RobertLindsay, Martin
Cleaver, LeonardGrosvenor, Lt.-Col. R. GLinstead, Sir Hugh
Cole, NormanGurden, HaroldLitchfield, Capt. John
Collard, RichardHall, John (Wycombe)Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Cooke, RobertHamilton, Michael (Wellingborough)Lloyd, Rt. Hon. Selwyn (Wirral)
Cordeaux, Lt.-Col. J. K.Hare, Rt. Hon. JohnLongden, Gilbert
Cordle, JohnHarris, Reader (Heston)Loveys, Walter H.
Corfield, F. V.Harrison, Brian (Maldon)Low, Rt. Hon. Sir Toby
Costain, A. P.Harrison, Col. J. H. (Eye)Lucas, Sir Jocelyn

Lucas-Tooth, Sir HughPickthorn, Sir KennethSummers, Sir Spencer (Aylesbury)
McAdden, StephenPike, Miss MervynSumner, Donald (Orpington)
MacArthur, IanPilkington, Sir RichardTapsell, Peter
McLaren, MartinPitman, I. J.Taylor, Sir Charles (Eastbourne)
Maclay, Rt. Hon. JohnPott, PercivallTaylor, W. J. (Bradford, N.)
Maclean, Sir Fitzroy (Bute & N. Ayrs.)Price, David (Eastleigh)Teeling, William
McLean, Neil (Inverness)Prior, J. M. L.Temple, John M.
MacLeod, John (Ross & Cromarty)Prior-Palmer, Brig. Sir OthoThatcher, Mrs. Margaret
McMaster, Stanley R.Proudfoot, WilfredThomas, Leslie (Canterbury)
Macpherson, Niall (Dumfries)Pym, FrancisThompson, Richard (Croydon, S.)
Maddan, MartinQuennell, Miss J. M.Thorneycroft, Rt. Hon. Peter
Maginnis, John E.Ramsden, JamesThornton-Kemsley, Sir Colin
Maitland, Sir JohnRawlinson, PeterTiley, Arthur (Bradford, W.)
Manningham-Buller, Rt. Hn. Sir R.Redmayne, Rt. Hon. MartinTilney, John (Wavertree)
Markham, Major Sir FrankRees, HughTurner, Colin
Marples, Rt. Hon. ErnestRenton, DavidTurton, Rt. Hon. R. H.
Marshall, DouglasRoberts, Sir Peter (Heeley)van Straubenzee, W. R.
Mathew, Robert (Honiton)Robertson, Sir DavidVane, W. M. F.
Matthews, Gordon (Meriden)Roots, WilliamVickers, Miss Joan
Mawby, RayRopner, Col. Sir LeonardWakefield, Edward (Derbyshire, W.)
Maydon, Lt.-Cmdr. S. L. C.Royle, Anthony (Richmond, Surrey)Wakefield, Sir Wavell (St. M'lebone)
Mills, StrattonRussell, RonaldWalder, David
Montgomery, FergusSeymour, LeslieWalker, Peter
More, Jasper (Ludlow)Sharples, RichardWalker-Smith, Rt. Hon. Sir Derek
Morgan, WilliamShaw, M.Ward, Dame Irene
Morrison, JohnSimon, Rt. Hon. Sir JocelynWatkinson, Rt. Hon. Harold
Mott-Radclyffe, Sir CharlesSkeet, T. H. H.Watts, James
Nabarro, GeraldSmith, Dudley (Br'ntf'rd & Chiswick)Webster, David
Nicholls, Sir HarmarSmithers, PeterWhitelaw, William
Noble, MichaelSmyth, Brig. Sir John (Norwood)Williams, Paul (Sunderland, S.)
Oakshott, Sir HendrieSoames, Rt. Hon. ChristopherWills, Sir Gerald (Bridgwater)
Orr-Ewing, C. IanSpearman, Sir AlexanderWilson, Geoffrey (Truro)
Page, John (Harrow, West)Speir, RupertWise, A. R.
Page, Graham (Crosby)Stanley, Hon. RichardWolrige-Gordon, Patrick
Pannell, Norman (Kirkdale)Steward, Harold (Stockport, S.)Wood, Rt. Hon. Richard
Partridge, E.Stodart, J. A.Woollam, John
Pearson, Frank (Clitheroe)Stoddart-Scott, Col. Sir MalcolmWorsley, Marcus
Percival, IanStorey, Sir Samuel
Peyton, JohnStudholme, Sir HenryTELLERS FOR THE NOES:
Mr. Gibson-Watt and Mr. Noble.

I beg to move, in page 2, line 21, to leave out "twopence" and to insert "one halfpenny".

I think that it would be convenient to discuss also the subsequent Amendments in the name of the hon. Member for Kidderminster (Mr. Nabarro), in line 25, leave out "twopence" and insert "one halfpenny", and in line 28, leave out "threepence" and insert "three halfpence".

That is so, Sir William; I am grateful to you.

The purpose of these Amendments is substantially to reduce the amount of the increase in fuel oil duty. My speech is largely exploratory in character. There is a great deal yet to be said about the fuel oil duty. I start with an extract from the Budget speech of my right hon. and learned Friend the Chancellor of the Exchequer, when he used these words:
"The new duty will operate as from six o'clock this evening. I estimate the yield at £48 million in the present financial year and £50 million in a full year."
The Chancellor also made it perfectly clear in his opening sentence in the sec- tion headed "Hydrocarbon Oils", when he said:
"My third proposal for obtaining extra revenue relates to the hydrocarbon oil duty".—[OFFICIAL REPORT, 17th April, 1961, Vol. 638, cc. 818–819.]
The first question that I have put to my right hon. and learned Friend is simply a matter of arithmetic. He has given a notional yield of this increased fuel oil duty of £50 million in a full year. He will, of course, have carried in mind that the increased duty will represent a charge for business firms throughout industry, including farms, excluding only the domestic user, for assessing the liability of the corporation to Income Tax and Profits Tax.

The aggregation of Income Tax and Profits Tax at present is 53¾ per cent. When my right hon. and learned Friend says that the total yield will be £50 million in a full year, does he mean £50 million before taking into account Income Tax and Profits Tax, or after? That point has not yet been answered, and it has an important bearing on the incidence of this duty on industrial costs.

The second point is this. My right hon. and learned Friend heaped, or loaded, this increased fuel oil duty on a very narrow sector of petroleum products. We are all aware that petroleum products as a whole, including the motor spirit yield, give the Chancellor a very large sum annually in revenue. By his method of applying the increased duty, he has chosen to heap the whole of the 2d. per gallon on fuel oil for industry, but as yet we do not know how the oil companies will treat this matter.

Will they place the 2d. a gallon increase in fuel oil duty on fuel oil for industry, or will they pay that sum of money, namely, £50 million annually, to the Chancellor and then spread the £50 million by absorption and indirect means over the whole field of petroleum products, thus increasing the price perhaps of motor spirit fractionally?

That has a vitally important bearing on many of the statements of protest which have been made by different industries. For example, my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins), in pleading his case for agriculture, said that this would cost the agricultural industry £2 million, but that £2 million presupposes that the oil companies will place the fuel oil increase in duty on fuel oil and not spread it over all petroleum products. We must have an answer to this from the Chancellor.

The third important point is the answer to the question I put about calculating this increased duty either before or after paying Income Tax and Profits Tax. Assuming—and I think that we are right to assume this for the purpose of these Amendments—that the oil companies pass on the whole of the fuel oil duty on fuel oil and not on other products, and assuming, also, that the Chancellor's figure of £50 million is a net figure and that he really will get an increased revenue of £50 million, to arrive at that he must collect nearly twice that sum of money in fuel oil duty. Conversely, if the £50 million is a gross yield after Income Tax and Profits Tax, it is a yield of only about £23½ million. The difference is as big as that.

If it were a gross impost on industry, the figures would be very substantial. The farming industry would be called on to bear £2·1 million; the domestic user would be called on to bear £3·844 million; the industrial consumer would be called on to bear £48 million. Out of a total of almost £54 million, the industrial user would be called on to bear £48 million.

If that is the case, this fuel oil duty impost is highly inflationary, because it will raise the cost of an essential ingredient of industrial production, namely, fuel. It is not the only substantial increase in cost to come at the present time. It would be out of order for me to dwell on that point, and I therefore make only a passing reference to it. One cannot but be dismayed to read the leading article in the Financial Times this morning on the subject of rating and to see that one shipyard in Scotland will be called on to pay £50,000 to £60,000 in rates in 1963 compared with only £1,500 in rates in 1958–59—forty times as much in the case of that industrial hereditament.

The increase in Profits Tax under this Finance Bill, the large increase in coal prices a few months ago and now this fuel oil duty impost have come at a time when private industry is continuously being exhorted by Her Majesty's Ministers to increase its competitiveness abroad and to reduce its prices. Her Majesty's Governmeent are making no contribution whatever to help our manufacturing industries to improve their competitive ability or to reduce their prices.

6.15 p.m.

I now deal with the two major industrial considerations, if the assumption is correct that the total yield gross from the fuel oil duty increase will be £50 million, namely, the steel industry and electricity generation.

The increase in fuel oil duty for the steel industry will add £7 million per annum to costs, and 8s. per ton. Those are very large figures. Of course, it is not possible to assess exactly the cost of the new duty to the steel industry until it becomes clear whether the oil companies will pass on the whole of the fuel oil duty increase on fuel oil or whether they will spread it over all petroleum products.

Incidentally, a second point which I hope the Chancellor will clear up today is whether this duty is to be applied to crude tar and creosote pitch. In case my right hon. and learned Friend is unfamiliar with these products which are of such significance to the steel industry, I would remind him that crude tar and creosote pitch are both very important, and it would mean that the steel companies would have to pay substantially larger sums were the tax imposed on those two products.

I am delighted to see my right hon. Friend the Minister of Fuel and Power in his place. This additional burden, following closely—I repeat closely—on the savage coal price increase of September, 1960, which added £12 million to the cost of steel production, will have the result of making it even more difficult to hold the home trade price of steel at its present level, and is bound to affect the industry's competitive strength in foreign markets.

I am sure that the prognostications in the Sunday Times of two days ago will have been noted. Under the heading, "Steel men ask for price rise" it says:
"The steel firms have asked the Iron and Steel Board for a price increase, because greater fuel, transport and labour costs have added £35 million to their production bill. This is approximately 30s. on every ton of the industry's annual output of 24 million tons. The British Iron & Steel Federation executive will discuss the application when it meets in London on Tuesday."
That is today.

I gather from the tape that it has agreed to an increase.

I am sorry that I have been so preoccupied that I have been unable to look at the tape. I am very grateful to the hon. Member.

The fuel oil duty increase by itself, in the view of the steel industry, will cost 7s. per ton. I cannot understand my right hon. and learned Friend's economics. How does he judge that he is assisting British exports by driving up the price of British steel by 7s. a ton? It is no good telling the steel-makers to absorb this cost, because if they do two things happen. First, the Chancellor diminishes his net revenue from the steel companies in respect of Income Tax and Profits Tax. The second thing that happens is that the price of other British manufactured goods, so largely dependent on steel, notably all engineering products, are driven up by a proportionate sum.

I repeat that in the narrow though vitally important context of steel, the application of this fuel duty increase to it, whether the £50 million is a gross or a net sum, can only be entirely inflationary. It has been protested against on exactly those lines by the principal steel manufacturers. I hope that the appropriate trade unions will add their voices in due course.

The steel trade union executive will be meeting at ten o'clock in the morning.

That is propitious. Perhaps the hon. Member will arrange to make my speech available to them, so that they may add in appropriate terms their words of protest to the Chancellor.

I have taken one substantially private enterprise industry—the steel industry—and I should like to now to deal with a nationalised industry, that of electricity generating. I have said on numerous occasions in this Chamber, notably during fuel and power debates, that the electricity industry has been consuming less tonnages of fuel oil at power stations. We all know the origin of this fuel oil consumption—the lean years when there was not enough fuel to meet the rate of expansion which we were enjoying and the policy of my right hon. Friend the Member for Sutton Coldfield (Mr. G. Lloyd) of switching largely to oil. It is not easy to switch back. There are, of course, dual-fired stations. The position of the electricity generating industry is similar to that of the steel industry. Once an installation is made to burn oil or to use dual-firing, it is always costly and not easy to switch back.

Notionally, it is estimated that the increased cost to the electricity generating industry will be £10 million in a full year. I would remind my right hon. Friend the Minister of Power that I have arrived at that figure by the simple arithmetical calculation of taking his official figure for the consumption of fuel oil in power stations for 1961 and multiplying it by the amount of the fuel oil duty increase. It is, therefore, a notional figure, but on that basis it is £10 million. What are the nationalised electricity supply industries going to do? Their prices will again be forced up.

Some of them have. The hon. Member, the Hammersmith farmer, who made that comment, might observe the words of wisdom of your predecessor in the Chair, Sir William. He was very harsh with me. I am glad to see him appear at the back of the Chair now. He informed me rather savagely that sedentary interruptions were out of order. I commend those words of wisdom to the Hammersmith farmer. Some area boards have already put up their prices. There may be in the Chamber hon. Members who are constituency residents in the area of the Eastern Electricity Board. I hope there are.

I said quite clearly "a constituency resident" and not a private resident. The hon. Member is a good deal behind me in these matters.

The Eastern Electricity Board announced last Friday that it was increasing its prices by a straight 20 per cent., from 1¼d. a unit to 1½d. a unit. I do not suggest to my right hon. and learned Friend the Chancellor for one moment that this is entirely or even largely attributable to his fuel oil duty increase, but I say to him, and with emphasis, that if the Central Electricity Generating Board has to absorb a sum of £10 million on account of this extra fuel oil duty, it is inescapable that its surplus from this year's trading will be inadequate to promote its expansion ventures, that is that part paid for out of its own resources from the surplus earned and electricity prices wild go up when the influence of the extra fuel duty, married to the influence of the increases in the price of coal announced a few months ago, make themselves felt. Again, therefore, in the context of electricity generation, fuel oil duty increases are highly inflationary.

As we have dealt adequately with the farming position and we have the horticultural position to come, I want to deal with the narrow political aspect of this matter. My right hon. and learned Friend is, of course, integrity itself, but he is the Chancellor of the Exchequer. I can say things which my right hon. and learned Friend cannot say, and I do. My right hon. and learned Friend has made it perfectly clear in all his statements that he has imposed this fuel oil duty increase for revenue reasons. I do not think so. He has put it up as a sop to the National Union of Mineworkers.

For the last two years, my right hon. Friend the Minister of Power, his predecessor, then Paymaster-General and now President of the Board of Trade, have with monotonous regularity said in fuel and power debates that we in the Conservative Party believe in freedom of choice and will not countenance for one moment the adoption of the West German system of placing a discriminatory fuel oil duty on the essential ingredient of industry which would have the indirect effect of protecting the indigenous coal industry. The Whips have even put me up to tell that story, but, of course, I have always believed that there should be freedom of choice in this matter. [An HON. MEMBER: "A party hack."] I am not a party hack. I have taught successive Ministers of Power the economics in this context and I have pushed them along the right path to resist placing an artificial protection on the coal industry by taxing fuel oil for industry. I am not alone in my view of why this has been done in the Budget. I quote from the Economist.

6.30 p.m.

Well, it is better than Tribune. I cannot discuss the merits or demerits of Tribune here. I think that the Economist is a better journal.

On 22nd April, directly after the Chancellor's Budget statement—[Interruption.] I am sure, Mr. Arbuthnot, that you can hear the sedentary cacophony from the benches opposite—the Economist quoted the Chancellor's statement that the heavy oil duty had been withdrawn fourteen years ago at a time of acute shortage of coal and when every inducement was being offered to get people to change from coal, but that the same considerations did not apply today. It went on:
"The miners for years now, and the Labour Party for many months, have been agitating for this form of protection for coal; the National Coal Board has not said much about it—in public. It is a deliberately discriminatory addition to the costs of industry using oil; and it could have incidentally discriminatory effects as between other fuels."
The article concluded:
"If the Chancellor was determined to raise £50 million from duties on oil, a general duty on all kinds of oil was preferable to loading the lot on to fuel oil. But it remains blunt protection for a weak nationalised competitor."
It is an overt method of protecting the coal industry, and ought to be recognised as such.

My speech today has been largely exploratory in character. It has also been factual. No one can dispute the statistics which I have given. If the oil companies place the whole of the duty on fuel oil—they may spread it over all petroleum products—we must have an answer as to the way in which the £50 million is calculated, whether before Profits and Income Tax on profits, or after.

Whatever the answer may be to these questions, I suggest that this form of duty is highly inflationary. I support my right hon. and learned Friend in requiring such a large surplus in this Budget. I support the Budget generally, subject to three reservations, two of which are dealt with by new Clauses standing in my name, and the third by this Amendment, before reaching the new Clauses. But this new impost is highly inflationary because it is heaped on industry's shoulders at a time when industrial efficiency and competitiveness in export markets should surely be our principal preoccupation. I hope that I shall have full answers to my questions, so that my future action in this matter may carefully be considered.

This is the first time that I have heard how one-sided the hon. Member for Kidderminster (Mr. Nabarro) can be in his speeches. Previously, I had always understood him to be fair, just and honest. But on this occasion I noticed that he said certain things, but omitted others.

In opposing this Amendment, I do not speak in favour of the Government's desire to put this new tax on by this method. In so far as I deal with that aspect, I may go a little way with the hon. Member for Kidderminster. I recall that in 1947, because of the shortage of coal and fuel generally, it was agreed to ease the burden on the fuel oil industry. When the hon. Member talks about the burden being heaped on the oil industry again, he must realise that for fourteen years it has been free of this kind of tax. Now that fuel is in good supply, it is only right that it should have this tax imposed upon it.

The National Union of Mineworkers did not ask for 2d. to be put on to fuel oil for the sake of bringing revenue into the Exchequer. It mentioned a figure of 1½d. It also suggested that the revenue from it should be used for the benefit of motorists, who at present pay 2s. 6d. tax a gallon upon their petrol. Therefore, no blame can be attached to the N.U.M., to the T.U.C. or to the Labour Party. They did not want to impose a tax on fuel oil merely to bring revenue to the Government. Their reason was that they considered that such a tax could ease the cost of transport.

I hear from Members opposite bitter criticisms of the coal industry. They hate nothing more than public ownership and the nationalised industries. It was good, therefore, to note that the hon. Member for Kidderminster was rather perturbed about the effect of this tax on the nationalised electricity industry. I wish that he had been as forthright in criticising the Government for relieving Surtax. The money raised by this new fuel oil tax could have been raised instead from the Surtax payers, such as he and his hon. Friends, and not from the nation.

I appreciate the criticisms made by the hon. Member. We on this side of the Committee are aware that the tax will impose a new cost on industry, but we must remember that when the price of our coal was two or three pounds less than the price of continental coal, the National Coal Board was not allowed to sell coal abroad, and I never heard or read a report of criticism of the Government from Members opposite for not allowing a nationalised industry to make the best of competitive prices.

This week I asked a Question about the cost of imported coal from America. My reason was that the steel industry of Wales, more than ever, because of the tax to be placed on fuel oil, wishes to import coal from America, as it is cheaper. I appreciate that I may be getting out of order in pursuing this line of argument, but we should not forget that references to the price of coal and the coal industry were introduced into the debate by the hon. Member for Kidderminster and if the hon. Gentleman comments on the industry, I think it only right that I should have an opportunity to reply to his statements. When considering the income which the Government will obtain from this 2d. on fuel oil one should take note of the advantage enjoyed by the fuel oil industry over a number of years. If it is argued that every industry in the country is to have artificial protection it can be said that fuel oil should have artificial protection. If that be so, the Government are entitled to impose this extra 2d. on the price of fuel oil.

The hon. Member for Kidderminster referred to an article in the Economist. One thing that he did not mention was the tax on fuel oil in other countries. If there is no tax on fuel oil in this country, but there is a tax in other countries and other industries have had the privilege of having cheaper fuel oil—I know the difference between the price on the Continent and this country—it does not behove supporters of the Government to criticise the Chancellor on this issue.

Let me give the Committee the figures. In Belgium, the tax on fuel oil is 25 per cent. In Sweden, a small country, it is 18 per cent. In Italy, it is 30 per cent., and in Western Germany——

6.45 p.m.

The hon. Gentleman has failed to read out the figure for Holland. It is about 5 per cent. He should have included that.

As on most other occasions, the hon. Member for Kidderminster is a little too previous. The figure is on my list and will be men- tioned. The hon. Gentleman should have waited while I continued my speech.

I believe that the Government are right to impose this tax, but for quite different reasons. I do not think that it should be imposed simply to increase the amount of revenue. They could have given an easement to transport using petrol and diesel oil. Had they done so I am quite certain that the Opposition would have supported them.

On the question whether there is to be a heavy penalty on the rest of the industry, I would say that if the rest of industry—over the period of years in which there has been the opportunity to secure cheap fuel—had developed, had kept ahead of the industry of other countries of Europe, as was the case between 1945 and 1951, and had made the progress that it should have done, and had reinvested instead of paying out money in profits, it would not now be fearing this increase of 2d. On those grounds, I oppose the Amendment.

I have listened patiently to the arguments adduced by the hon. Member for Dearne Valley (Mr. Wainwright) but his argument regarding tax advantage on the Continent of Europe falls to the ground if one considers for example that in Western Germany the tax is for a limited period in order to rehabilitate the coal mining industry. That does not apply in the United Kingdom. I grant that even with the tax imposed, fuel oil consumption in Western Germany has gone up by 36 per cent. compared with coal consumption which has gone up by only 4½ per cent.

Both the Chancellor of the Exchequer and the Minister of Power have stated publicly that this tax is not to rehabilitate the coal mining industry.

That is what I was indicating. There is a great difference between the tax in Western Germany and the tax in the United Kingdom. But the hon. Member for Dearne Valley has "missed the bus". Here we are concerned with fuel costs. Here in the United Kingdom they are rising whereas energy costs in the countries in the common market are falling. That is a cardinal feature which no one has brought out during this debate.

From 1953 to the present time the price of coal in the United Kingdom increased by 59 per cent. but in the E.E.C. countries the price has advanced by approximately 16 per cent. That could be explained by saying that in Western Europe there are a number of factors which come into the question such as the importation of Russian and other oils. There is also the importation of coal from the United States and elsewhere. Many also recognise that the surplus of oil will go on for many years and therefore prices are likely to fall still further, where market factors are allowed to operate.

What I am saying to the Chancellor is that by adding a tax on heavy oils in his Budget he is creating a price which is entirely artificial in the United Kingdom, and very much higher than our competitors have to pay in Western Europe. We are falling out of step with Europe. If we go back to 1956, we were then much in line with their energy policies and price structure. The E.E.C. has since accepted the position that coal must accept the discipline of the market, with certain reservations, and that we can only have an expanding economy using a plentiful supply of low-cost fuels.

I do not think that it will be at all surprising if I refer to the pamphlet "A New Energy Pattern in Europe", published in January, 1960, which illustrates the point that the Common Market Countries are moving along different lines compared with the United Kingdom. I want to read one short extract from that pamphlet:
"We recognise the importance of the continuity and regularity of energy supplies. But we do not regard the long-term protection or artificial encouragement of indigenous supplies of energy as the most satisfactory method of obtaining such security."
There are two ways in which this can be brought about, either by the Chairman of the National Coal Board manipulating the price, or by the Chancellor deciding that he will close the margin between fuels thus giving coal a competitive advantage in both instances. In other words, we have a price fixation in the United Kingdom which there is not in Europe. If we hope in E.F.T.A. to compete with the E.E.C. countries, we are placed in an immediate difficulty with basic costs. This is one of the cardinal features that we have to face today.

Another factor that we have to bear in mind, is that, while many of the underdeveloped territories are now talking about commodity stabilisation, here we have the Chancellor of the Exchequer discriminating against one form of fuel, making it very much more difficult to argue our case with the underdeveloped territories. I do not want to pursue the point, but simply suggest that this could lead to international difficulties.

To go back to another point, which I do not think many hon. Members have considered, in Northern Ireland at the moment the consumption of heavy oils totalled 395,000 tons last year of which fuel oil represents 250,000 tons, compared with 150,000 tons in the preceding year. If we take it that the additional charge will be about £2 per ton, the tax bill will work out at £800,000 for Northern Ireland, and this in a country which has no indigenous coal, and, further, where the rate of unemployment in March of this year was 7·5 per cent. as compared with 1·6 per cent. for the rest of the United Kingdom.

I should like to know from the Economic Secretary whether the Government intend to rebate Northern Ireland fully in the special context in which it stands. It is not like the agricultural industry, which is one of many industries. It is a segment of our economy for which we hold ourselves responsible, and a country that cannot rely upon indigenous coal.

My hon. Friend the Member for Kidderminster (Mr. Nabarro) mentioned the steel industry, and perhaps I can expand one point. Are we not holding back technical improvements. We had price increases in September, 1960, costing the steel industry about £12 million, and, on top of that, now another charge of £7 million. The industry has introduced economies to be more competitive with Europe. Steel does not want protection it wants to be in a position to reduce its costs, and this is a way of doing it. For instance, companies are experimenting with such ideas as fuel oil injection into blast furnaces, and it is possible that by this scheme there will be a saving of 2 cwt. of coke per ton of iron produced, but all these incentives for doing this are thrown to the wind. The glass industry, which is extremely important to the country, with 80,000 people employed and a turnover of £145 million, is facing a situation——

Order. That point could better be taken with the Amendment in line 30, at the end to insert:

Provided that this section shall not apply to heavy oils used for heating glasshouses growing in commercial quantities horticultural produce as defined in subsection (1) of section eight of the Horticulture Act, 1960.

I will say nothing further about the glass industry, but will go on to another industry which is also important and engaged in the export field.

On a point of order. You have just referred, Mr. Arbuthnot, to the Amendment which deals with the heating of glasshouses for horticultural products. My hon. Friend is referring to the glass industry, which has nothing to do with glasshouses.

I am very much obliged, Mr. Arbuthnot.

If I may go back to the glass industry, I was indicating that it provided employment for 80,000 people and had a turnover of £145 million. By the imposition of this additional charge, this industry will be called upon to pay 3½ per cent. of the total extra costs, and that is too much for this industry. Pyrex has indicated that it will have to put up its charges by 7½ per cent. in the autumn, and while Pilkington Brothers, who have brought out the new feature of producing plate glass by the float process have not indicated whether they are to pass the charge on or not, the probability is that they will have to do so, because they will have an addition of 25 per cent. to their fuel costs. A principle element in costs is the consumption of fuel. I do not think that I should say a great deal about the cement industry, because all appreciate its valuable contribution to exports of the United Kingdom.

Would it not be in line with some of the Chancellor's ideas—if this imposition has that effect in the glass industry—for him now to introduce the window tax and go back to 1696?

Perhaps I can carry on at the point where I left off. The industry have passed on a charge of 3s. 3d. per ton. Large parts of the industry decided to go over to oil, and, in fact, did so, remembering the pronouncement from the Front Bench, a few years ago, in which the Government were calling upon industry to convert to oil. Having done so then, it is now penalised for having done so.

Cement companies using primarily oil firing will find that the prices will go up by 8s. per ton. I do not want to weary the Committee by going through a long list of increases, but they should nevertheless be taken into account. There is the textile industry, and general engineering, and here the tax will cost about £7 million. If we take the case of the glass and ceramics industries, oil has the advantage of temperature control, and avoidance of contamination in the melt.

It comes to this. While we are exhorting British industry to do its utmost in Europe, we are putting on a charge of £48 million, 95 per cent. of which has to be carried by British industry including a minor part by agriculture. We exhort and yet visit industry with penalties. How does the Chancellor expect to succeed in his European policies?

I must be frank about this. This is the situation that the country finds itself in at present.

Other people have made observations on this matter. When the President of the Board of Trade was Postmaster-General he said:
"there are limits to which it is proper for this country to use expensive home-produced fuel and raw materials rather than to use cheap imported fuel and materials, when we have to compete in a market which uses cheap fuel and materials."—[OFFICIAL REPORT, 4th May, 1959; Vol. 605, c. 47.]
That refers to what we will have to do when we deal with the Common Market. We must have freedom of choice. I ask the Committee whether we have freedom of choice if the Chancellor says, "You have to pay the price that I specify and nothing else, and, at the same time, you cannot import coal from abroad." In those circumstances, there cannot be the interplay of marketing forces which is traditional in our economy.

7.0 p.m.

The gas industry is a large consumer of heavy fuels. Will it have to pay this charge, or does it fall under the provisions contained in the Finance Act, 1947, and its plant constitute a refinery? Can my hon. Friend answer that question? Secondly, what is the position of Liquid petroleum gases, such as butane and propane, when they are used as fuel? Will they fall under the axe of this imposition? My final question concerns lubricants, which are covered by subsection (1, b) of the Clause. The aviation industry used 10,000 tons of these lubricants in 1960; industry used 520,000 tons; marine engineering used 73,000 tons; the motor industry used 325,000 tons; and tractors 37,000 tons, making a total of 965,000 tons. The Bill provides for an increase of 3d. on these oils.

The penalty on heavy oils is to be 2d. No machine can work unless it is lubricated. In these circumstances, I cannot see why lubricants should bear an increased burden. These lubricants are used in aeroplanes, in marine and general engineering, and I cannot see why that charge should be altered upwards. It does not compete with coal in any way, and I cannot see any reason why the penalty should be imposed.

I have said enough to indicate the general problems with which industry is faced.

I intervene, first, to assure the Chancellor of the Exchequer that the criticism of this tax is not exclusively reserved to members of the Conservative Party, but is slightly broader based. I disclaim any knowledge or expertise such as the hon. Member for Kidderminster (Mr. Nabarro), the hon. Member for Willesden, East (Mr. Skeet) and the hon. Member for Dearne Valley (Mr. Wainwright) possess of the coal mining industry and the steel industry. I base my opposition to this tax simply and solely on the fact that it offends against every basic tenet of economic morality. The quintessence of the speech of the hon. Member for Dearne Valley was that it was the old argument of protection for special limited interests. There is no doubt that the purpose of the tax is not to raise £50 million, but to underpin the coal mining industry.

I am interested that the hon. Member should say that. Does not he accept what my right hon. and learned Friend the Chancellor said? If he does not, he should say so bluntly. My right hon. and learned Friend was quite specific on this point.

If I am right, the Chancellor indicated that the main purpose of the tax was to raise money. If he has not yet ascertained that the likely effect of it will be underpin the coal mining industry at the expense of the oil industry, I can only say that his powers of perception have not yet produced that logical conclusion. I accept that.

I want to help the hon. Member. The Chancellor could not claim that this additional impost was other than for revenue purposes. If he had said—as I say, and as the hon. Member for Devon, North (Mr. Thorpe) is now saying—that this is really to protect the coal industry he would have run diametrically opposed to the Paymaster-General, as he then was—now the President of the Board of Trade—who, on 4th May, 1959, said:

"We cannot impose quotas"—
on fuel oil imports—
"by reason of our international obligations. I should have thought that a duty designed for the protection of coal would probably also be contrary to our international obligations."—[OFFICIAL REPORT, 4th May, 1959; Vol. 605, c. 55.]
That is why the Chancellor says that this is for revenue purposes.

It is as well to have this point quite clear. My right hon. and learned Friend was quite specific, and I hope that, on reflection, my hon. Friends will agree that the Chancellor would not have used the phrase "for revenue reasons" unless he meant it. He is not the sort of person who would say that he was imposing a tax for revenue reasons if he had quite different objectives.

The hon. Member has just said that the Chancellor would not have raised the tax unless he wanted it for revenue purposes. I agree with that.

I said that the Chancellor would not have used the phrase "for revenue reasons" if that had not been his objective.

I thought that all the provisions in the Finance Act were for revenue purposes. If there is any other fresh purpose of which I am unaware I should be interested to know about it. I am saying that although the Chancellor may not perceive it himself, that will, clearly, be the effect of this tax.

The hon. Member for Devon, North (Mr. Thorpe) said that I was in agreement with this rebate because I supported the coal mining industry. I emphasised time and time again that this tax was eased in 1947, when fuel was short, and that it was only fair that it should now be reimposed, with the present improvement in the position.

I find that argument quite fantastic. To say that because a tax is reduced, for one reason or another, there is a moral right for any Chancellor, at any time, to reintroduce it, is a fantastic argument. So few hon. Members are now apprised of the free trade argument that they should be reminded that our industry always tries to buy its raw materials in the cheapest possible market, and then to sell its manufactured products in the most profitable market obtainable. Under the present system, if account is taken of the rebate obtainable by the industrial consumer, 28 per cent. of the tax will be put on heavy oil to be used by industry, which is bound to inflate industrial costs. I should be interested to know whether the Chancellor thinks that that is in the best of interests of our export trade, and is calculated to assist us to compete with Europe and the rest of the world.

I suggest that this is what has happened. The Government have seen large heaps of unsold coal building up all over the country. They have then adopted what I call the Bond Street mentality, on the basis that one increases the price and the consumer may take the view that because the product is expensive it must, therefore, be good. That has not worked, but the Bond Street mentality has remained; high prices remain and the Government have now put a tariff upon heavy oil which industry will have to buy. As the hon. Member for Kidderminster said, it would be fairer if there were a general tax. Gas which is made from oil escapes duty, but electricity which is made by burning oil pays tax.

Apart from the economic fallacies of the argument that we are protecting the industry by inflating the cost of our raw materials, the tax in itself is anomalous. As the hon. Member for Willesden, East said, the cost of cement will go up by 3s. 3d. a ton. It will be interesting to see what will be the effect on building. The cost to the agricultural community has already been dealt with. The cost of dried grass and corn, which are to a large extent used as feeding stuffs, will go up by 17s. to £1 on every single ton.

It would be out of order to mention horticulture, but, again, the costs in that industry will be inflated. Perhaps the most interesting aspect of this policy will be the tax on the domestic consumer who has to buy kerosene. I come from an area where village after village still has——

On a point of order. Is there not an Amendment to exclude kerosene from this tax?

There is an Amendment to exclude kerosene and, therefore, the hon. Member would be out of order in referring to it on this Amendment.

I have no desire to refer to this subject in detail. I was seeking to use this as one further example of the costs which are likely to be inflated, to which, in my submission, it will be in order to refer on a new Clause which seeks for every conceivable reason to reduce the tax to ½d.

This is a retrogressive tax which smacks of the worst form of protection. I had hoped that the Chancellor of the Exchequer might have remembered his Liberal days, when he was a free trader, and remembered, also, that buying in the cheapest market is the only possible way in which British industry will be able to compete.

I am sure that all my hon. Friends on this side of the Committee heard with great pleasure the Economic Secretary's disavowal of any protectionist design in imposing the fuel oil tax. At the same time, I need hardly remind my hon. Friend, as a former ornament of my own profession, of the legal maxim that a person is presumed to intend the natural consequences of his acts.

Although I wholly and unreservedly accept what my hon. Friend has said, it is a fact that one of the consequences—and, no doubt, in the minds of some people, the most important consequence, judging from the speech of the hon. Member for Devon, North (Mr. Thorpe)—is the protection which it will afford to the coal industry. We would think this a bad reason, if it had been the reason, for imposing this tax, and, of course, it also has this important consequence, that had this been an overt tariff duty imposed for protective purposes there would have been a close and searching scrutiny into the impact on consumers before it could have been established.

But no such scrutiny can be made in the same way in the case of a revenue duty, because of security and other reasons. Therefore, it is right to say that it is only in the processes of this Committee that we can get that consideration of the impact on consumers, which is part and parcel of the tariff machinery prior to the decision taken to introduce a tariff duty.

7.15 p.m.

Having said that, I would tell the Committee that I was a critic of this tax quite apart from any lurking protectionist element that may be within it—not of design, but by natural consequence. I was, and, indeed, am, a critic of it, as I explained in the Second Reading debate, because of its nature it appears to me to be out of context in a Budget designed primarily for counter-inflationary purposes. We understand that this Budget has two main objectives, both of which are admirable. The first is the safeguarding of our balance of payments position, and the second is the counter-inflationary aspect.

Those two admirable objectives are proposed to be achieved by a means which is also admirable in itself—the building of a very substantial above-the-line Budget surplus. As the Committee will appreciate, the surplus can only be achieved by one or other or a combination of two methods, one in reducing public expenditure and the other in increasing taxation. As unfortunately no reduction of expenditure is possible this year sufficient to raise the required Budget surplus, we have to face, however disagreeable it may be, the necessity of increased taxation. Thus far, I am entirely in line with the reasoning of my right hon. and learned Friend the Chancellor of the Exchequer. But the fact that we have to accept a measure of increased taxation in those circumstances to build up the Budget surplus does not exempt us from the necessity of scrutinising the particular forms of taxation proposed. We have to scrutinise them, in particular, to make sure, as far as possible, that there are selected for this purpose those taxes whose individual impact will reinforce the general effect of the Budget surplus rather than those taxes whose individual impact will neutralise or to some extent cancel out the beneficent general purpose.

That is the primary test that we have to apply, and, applying that test to this tax, it is, I think, apparent that it falls into the second and less satisfactory category. It falls into that category because, although it may play a useful contributory part in the beneficent effect of the surplus as a whole, its individual impact is likely to be inflationary and prejudicial, therefore, to our balance of payments position, since its natural effect will be to raise production costs and, therefore, to raise prices.

The economists tell us that there are two aspects of inflation which we have to bear in mind, which they call cost-push inflation and demand-pull inflation. The shortcoming of this tax is that it tends to promote cost-push inflation while, at the same time, doing nothing effective to restrain demand-pull inflation. Therefore, on balance, this tax will have an inflationary effect. It also means that it is adverse to the other main purpose of the Budget—the safeguarding of our balance of payments position.

I am not concerned here with the social consequences of inflation which, naturally, engage so much of our attention in the House, the adverse social consequences on pensioners and elderly people, and so on, but with the main economic adverse consequence, which is the effect that inflation has in helping to price us out of the world's competitive markets. Therefore, anything which adds to the cost of the goods and services which we offer abroad obviously runs counter to one of the main purposes of the Budget.

The effect of this tax must be to add something to the cost of those goods and services. How much, we are not in a position to know till we know the answer to the question postulated by my hon. Friend as to how the oil companies will actually apply the increase, whether they will concentrate it on heavy oils or spread it over oils as a whole. On the assumption that they will concentrate it on the heavy oils there will be some significant addition to the cost of the goods we offer in the export markets, and, that being so, I think it is clear that this tax basically runs counter to the main purpose of the surplus and is a case of the means pulling against the end.

My hon. Friend the Financial Secretary joined issue with me when I put this argument a good deal more shortly in the Second Reading debate. He said that I and those who thought like me on these matters were mistaken in thinking that indirect taxation could not be itself disinflationary. Of course, that is not what I said. I was on rather a different point, and I think, with respect to my hon. Friend, whose economic acumen we all recognise and admire, the fallacy underlying his reasoning in this context is this. He based himself on an antithesis for this purpose between direct taxation and indirect taxation.

We are not able to discuss, on this part of the Bill, the inflationary effects of direct taxation, but there is, of course—and this was the point of my argument—an antithesis within the field of indirect taxation, the dichotomy between indirect taxation falling primarily upon consumption and indirect taxation falling primarily upon production. Really, my hon. Friend, I think, must have been aware of the point, because he went on to refer to excessive demand. If we are to restrain excessive demand as a counter-inflationary measure we have, of course, to restrain consumption in some of its manifestations.

This tax does not restrain consumption in that sense at all. The only demand which this tax will tend to restrain is a demand which is not excessive, a demand which, so far from being excessive, is, in fact, insufficient, that is to say, the export demand for our goods and services. It is a fact, and we have to recognise it, that if we wish to have fiscal measures with a primarily counter-inflationary purpose, then the balance of those must be tilted on to consumption. That is not always an immediately popular political doctrine, but economic propriety has to take precedence over passing political popularity. It is a fact that taxes on production are not counter-inflationary in that sense and can lead to great economic harm, resulting ultimately in lowered standards of life, and unemployment.

I will not emulate some of my hon. Friends in suggesting possible taxes. The hon. Member for Scarborough and Whitby (Sir A. Spearman) suggested a sales tax in the form of a flat-rate tax on the retail trade. My hon. Friend the Member for——

The right hon. and learned Member is getting a little wide of this Amendment.

I beg your pardon, Mr. Arbuthnot. I was really stating what I was not going to say. You will remember, from your classical education, what was called the technique of Praeteritid in the Ciceronian idiom. I think that that is right. If it is not, the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) will, possibly, correct it in due course. But I will not proceed with that, Mr. Arbuthnot, for I would not like to risk your displeasure, still less to feel that I deserved it.

I will merely conclude on that point by saying that it is not, I think, in any event for private Members to suggest taxation. That is something for the Treasury Ministers. It is right, however, to say that if we are to have counter-inflationary fiscal measures, then they should not be measures primarily directed to production, because those are inflationary in their effect.

I have not put my name to the Amendment of my hon. Friends, although as hon. Members will know from what I have said, and, indeed, from what I said on this subject on Second Reading, that, again to use the classical formula, my enthusiasm for this tax is confined without difficulty within the bounds of decorum; but the reason why I am not supporting this Amendment and the reason why I hope my hon. Friends will not wish to press it is this, that I think that the tax is an integral part of my right hon. and learned Friend's effort to achieve his Budget surplus. [Interruption.] Yes, his Budget surplus. It is 10 per cent. of his Budget surplus of £506 million.

The right hon. Gentleman the Member for Battersea, North (Mr. Jay) will recall that I drew a distinction between the contributory effect within the general Budget surplus, which is a good effect, and the individual impact, which would be inflationary. We cannot now ask the Chancellor to take back this tax and other taxes on production without imposing on him the necessity either of recasting his Budget, which is impossible at this stage, or of sacrificing his surplus, which is undesirable.

Is there not a third alternative? Would it not be perfectly possible either in this Committee or on Report for the Chancellor to diminish the concessions he has made on Surtax?

No. That would be theoretically an alternative, but it would not be a wise step to take, because the concessions on Surtax are concessions which are directed to increasing productivity, by giving an added incentive to a most important element in the task of production, the executive element. I have always thought that the intelligentsia—I use the word not in the pejorative sense—of the Labour Party, like the right hon. Gentleman, did take some interest in the executive side of industry, and that they were anxious to promote their efficiency and to give them incentives to play their part in the greater production which we need.

I have listened to the right hon. and learned Member's argument with care. Is he, with his authority, making the proposition that this House of Commons is never able to make a major amendment to any Finance Bill by reason of the fact that it might cause the Chancellor of the Exchequer to vary the proposals he introduced on Budget day?

No, of course it it possible for this Committee, and the House on Report, to make substantial alterations to the Budget; but, if the hon. Member will do me the honour of reading what I said in my general argument on Second Reading he will see that although I found much to praise in the Budget my criticism of it is that the balance of taxation is slanted too much on to production. In fact, this surplus of £506 million is achieved by those taxes. It would be unrealistic now to ask for a recasting of the Budget in such major particulars without risking the sacrifice of that surplus.

It is for that reason that I hope my hon. Friend will not press his Amendment. In saying that, I say, and I am sure my hon. Friends will feel, that my hon. Friends the Members for Kidderminster and Willesden, East have done a good service in bringing this matter forward and ventilating it. We can be assured that in the consideration of future fiscal measures of a counter-inflationary nature my right hon. and learned Friend—who combines high abilities with a receptive and reflective mind—will give full attention to these important considerations.

I have been studying the face of the Patronage Secretary during the part of the debate in which he has been present. Because we have been able to study it from this side of the Committee, we have been able to enjoy the debate more than hon. Members opposite. It has been a fascinating exhibition. The Patronage Secretary came in a little late. I am sure he had other important duties, but, if I had been called to speak earlier, I would have brought him up-to-date in this matter. I would have pointed out to him that he had a considerable revolt on his hands. We had two extremely powerful speeches from the other side of the Committee denouncing this part of the Budget in very strong terms.

We then had the remarkable speech of the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith). In the first part of his speech he underlined and stressed with all the eloquence we expect from him the arguments which had been put by his hon. Friends, but in the last few minutes there was a very sad anti-climax. In the first part of the speech he spoke with conviction, eloquence and dynamism, but the last few minutes were a pathetic affair. He did not produce any arguments for rebutting the earlier part of his speech. It seems very sad that, having resigned from the Government for what purpose we are not very clear, he turns himself into a lion in the Chamber and a lamb in the Division Lobby. That, apparently, is what he intends to be.

I hope it will not be the same with the two hon. Members who spoke earlier in the debate.

7.30 p.m.

No, I have the greatest respect for the hon. Member for Kidderminster (Mr. Nabarro). I shall have even greater respect for him if tonight he carries his argument on this issue into the Lobby and votes against the Government. I am sure that that is the logic of what he argued for because, like the hon. Member for Willesden, East (Mr. Skeet), he did not find a single redeeming feature in this proposal. It was not as if they were weighing in the balance the advantages against the disadvantages and saying that the Chancellor had a very good case but an equally forceful case could be put against it. Both their speeches were saying that this tax is clearly inflationary, it is injurious to the export trade, it does not even fulfil the declared purposes of the Budget which the Chancellor himself says he wishes to fulfil and, therefore, they are against it entirely.

I do not see how, after speeches like that, they could fail to divide the Committee. It was a remarkable debate because the only person who has any right to rejoice about it is the acting leader of the Liberal Party, the hon. Member for Devon, North (Mr. Thorpe). He has every reason to think that this is one of the significant debates of this Parliament. He has got hon. Members opposite coming out one after the other in their true Cobdenite colours. Sometimes the hon. Member for Kidderminster is held up as a Right-wing member of the Tory Party. What he was preaching today was pure free trade.

That is quite wrong. I represent the youthful and progressive element of the Tory Party as opposed to the remainder whom I am pleased to call upon occasions the fuddy-duddies.

I do not class the hon. Member for Devon, North with fuddy-duddies among hon. Members opposite. The speech of the hon. Member for Kidderminster was not the speech of a Right-wing Tory, but the speech of a good old free trader. What the hon. Member said—and he must not deny it—was that his main objection to what the Chancellor was doing was that the Chancellor was doing it for protectionist purposes.

In the mouth of the hon. Member, it apparently was a damning indictment that a Conservative Chancellor should be taking action for protectionist purposes. When I hear Tories turn into free traders so suddenly I wonder a little why this happens. They are still good protectionists when they are talking about agriculture, but when they are talking of something which might affect the coal industry they become good free traders. They want the nationalised coal industry to abide by free trade principles which they never demand should apply to agriculture.

The acting leader of the Liberal Party has good reason to rejoice in this debate. He has made converts on the other side of the Committee. Whether they will strengthen his party I cannot say, but he has every right to say that what we have been listening to has not been something so youthful and progressive as the hon. Member for Kidderminster suggests, but something which is old, as old as Richard Cobden. In my view, it is as out-of-date as Richard Cobden.

There has been much argument in this debate about whether the Chancellor introduced this measure for revenue or protectionist purposes. The right hon. and learned Member for Hertfordshire, East said that is was a bit of both. That probably is a fair estimate I do not think the Economic Secretary needs to be so concerned about it to defend the honour of the Chancellor. I am sure that the Chancellor has done it primarily for revenue purposes, although it may be that it will have certain advantages in the sense that certain sections of the community have been pressing for a tax of this nature. There would not be anything dishonourable in doing it for those reasons.

I do not think the hon. Member for Kidderminster put his case quite in this way, but he would have had a strong argument if he were to have said that it would be wrong for the Government to deal With the social aspect or whether we were to protect or assist the coal industry or some other industry in a haphazard measure in a Budget. It ought to be done much more deliberately if in fact we are to have a policy of assisting the coal industry for one purpose or another. It ought to be done much more deliberately and as part of a whole fuel policy. I think that is a perfectly legitimate criticism of what the Chancellor has done, that he has snatched at this money for revenue purposes instead of thinking out what should be a proper fuel policy.

That is one of our main indictments of the Government. When the hon. Member for Kidderminster argues as if it is a kind of natural law for this Government that free trade principles should be applied and the market price should always operate, always govern and always rule and that that is the rule applied by the Government whereas this proposal is somehow a breach of that rule, he is talking nonsense. The coal industry has had one burden after another imposed upon it by Government action. The coal industry has not had the opportunity of being able to compete in a free market freely and to get all the revenue it might be able to get out of such a situation. The hon. Member for Kidderminster, who is such an expert about fuel, ought to know that. For years the coal industry has not been able to charge the prices which it could have charged on the market in this country. At the moment, for a variety of reasons which I will give later, the situation has changed, but for ten years or more the coal industry was not allowed to charge the prices it could have charged. For ten years or more every industry in this country, including those represented by hon. Members opposite who speak for the steel industry and other sections of industry, obtained its coal a good deal cheaper than most, if not all, of its competitors in Europe.

We did not then hear the hon. Member for Kidderminster say, "My Cob- denite conscience rebels against this system. We must have complete freedom and we must let the market price rule". He did not say that. He was quite content that a situation should prevail in which the coal industry was hobbled and prevented from making larger profits and charging much higher prices when it could easily have done so. If, from 1946 until 1957, which saw the beginning of the recession in the coal industry, the Coal Board had been able to charge what the market would have borne, there would have been no question of a deficit. The Board would have piled up a huge surplus which it could have used in bad times. When the coal industry is in the midst of a depression, I believe partly caused by Government action, it is unjust of hon. Members opposite to say that the market price must apply and that coal must be sold at a competitive price when no such claim was made during the previous ten or twelve years.

A whole series of burdens have been imposed on the coal industry without any protests from hon. Members opposite. When we had to import coal, the Board had a unique burden imposed on it; it had to pay for the imported coal. That is a principle which would not be applied to any other industry in the country.

Order. I hope that the hon. Member will relate this argument very quickly to the question of oil.

With great respect, it is strictly related. The hon. Member for Kidderminster moved his Amendment before you were in the Chair, Mr. Thomas. His main case was that the tax was inflationary and injurious to the export trade. He wanted to know the reason for it. He suggested that the reason that it had been introduced was the pressure of the coal industry. He regarded it as a clear piece of protectionism on behalf of the coal industry. Because he is so passionately opposed, in this respect if in no other, to protectionist principles, he has placed this Amendment on the Order Paper. If it had not been for his passionate objection to justice being done to the coal industry, we should probably not have seen the Amendment on the Order Paper. What I was saying was therefore strictly relevant.

So far from being allowed to compete freely against oil, the coal industry has had to bear these extra burdens. One burden after another has been imposed on the coal industry. When we had to import coal from abroad, the Coal Board had to pay for it, a burden which was not placed on any other industry in the country. When we had to import steel, the steel industry did not have to pay for it; the other industries, which were buying the steel, paid for it. The steel industry never had to pay for the import of steel in the way in which the Coal Board had to pay for the import of coal.

The hon. Member is talking about the plight of the United Kingdom coal-mining industry. How does he explain that in most other countries with a coal-mining industry it is declining?

I do not dispute that in many countries over the last two or three years there has been a decline in the coal industry, partly due to the great increase in oil supplies. I was attempting to answer the hon. Member for Kidderminster, whose main plea is that it is unjust to impose a burden on the fuel industry which gives a discriminatory advantage to the coal industry. I was arguing that a whole series of Government measures have acted in a discriminatory fashion against the coal industry and that, so far from giving an unfair advantage to the coal industry against the oil industry, this tax is only partly rectifying the injustice which existed previously.

In order to prove that, I have cited the fact that the coal industry for many years was unable to charge the prices which it wanted to charge and the fact that it had to pay for the import of coal from abroad, a provision imposed on no other industry in the country. Home supplies were not sufficient to meet the nations needs. In the last two or three years, during the depression in the coal industry, it has had to bear the whole burden of maintaining the stocks of the industry at very high rates of interest. One burden after another has been imposed on the coal industry. The coal industry has been squeezed by Government policy. When the first small step is taken to make for slightly fairer competition between oil and coal than now prevails, it would not go down very well in the mining areas of this country if the miners could see how the Tory oil interests and their spokesmen squeal in the House. They cannot take it. They say that it is unfair to the oil industry.

7.45 p.m.

If we are to have trade maintained in this country and the consumer supplied with the goods which he needs, we shall have to have coal for a very long time. We must maintain the supply of coal in this country, and the only way to do that is by having miners. If the discrimination against the coal industry continued we should have fewer and fewer miners. The hon. Member may think that it is unimportant, but in the past three years half the people who have left the coal industry have been under 31 years of age. Any Government which was looking to the future would see this as a very significant warning.

I hope that the tax which the Chancellor is imposing is part of an indication that the Government have at last awakened and have realised the truth of what has been said to them by the National Union of Mineworkers and others—who are saying it not merely in the interests of miners but in the interests of the nation. It has been interesting to see a combination of the free trade Tories, who are free trade in the industries in which they are not interested, and the consistent free trader, the acting-leader of the Liberal Party.

We are told that the only alternative to this policy is a policy of protectionism, and my hon. Friend the Member for Norfolk, South-West (Mr. Hilton) was accused of being a protectionist. It is not true. There is a third policy—neither protectionism nor free trade. It is a policy of planning one's industries and one's fuel programme and trying to see ahead and to calculate ahead which forms of fuel one needs. This is the only policy by which the fuel supplies of this country can be guaranteed, because if we switch off the supply of coal we shall not get it back again, and if we close the pits, they will not re-open. If the miners of this generation leave the pits, we shall have no miners. These are the facts. Although this tax is a pitiful and quite inadequate way of dealing with the problem, the Chancellor does not even take credit for the small part of the good reasons for imposing this tax.

If this tax were imposed as part of a general fuel policy, there would be much more to be said for it. That is what the real debate should be about. The Chancellor of the Exchequer disowns the best reason for this imposition and thereby plays into the hands of his bright young friends opposite.

I had forgotten the exact term. The hon. Member for Kidderminster has told me once how he is described. If he tells me a few more times I may begin to believe it.

I may get the hon. Member's own description right. I hope that in future the Government will incorporate their different taxes into a general fuel policy which they will describe to the country and the industries concerned. The hon. Member for Kidderminster has now been converted to the full doctrine of free trade by reading all the Liberal manuals which he reads, such as the Economist. Although he has gone off on the wrong track, I hope that when the Division takes place he will stick to his new principles so that everybody can see that he votes for the same things for which he speaks in the House of Commons.

I hope that the Economic Secretary will be able to use this debate to his advantage. The Committee has put a weapon in his hands because, as my hon. Friend the Member for Kidderminster (Mr. Nabarro) said, we do not yet know what the policy of the oil companies will be. I have no doubt that people in the industry will be watching the debate very carefully. I sum up what we have heard this afternoon as a good deal of perturbation on the inflation issue. Practically every speech has warned the Government about the risk of inflation which this type of tax brings.

I add my warning to those which have been uttered already. I will leave aside the economic arguments, which I am sure have been correctly stated from this side of the Committee. The timing is wrong. At this time of the year anything which is inflationary should be discouraged. The tax is inflationary also because it is on the basic material used by industries and not on an end product.

The Government should have further discussions with the oil industry. They will have gathered from the debate that there is worry about an inflationary move. The Government should have discussion with the oil industry on the question of the spread of the tax and, more importantly, on absorbing some of it into its own finances.

My hon. Friend the Member for Willesden, East (Mr. Skeet) is beginning to look a little restive. He may have a brief on behalf of the oil industry. The oil industries have told us over a number of years that they have made vast capital expenditure out of revenue. We have been told that they have developed enormous areas of the oil world out of revenue. We now know that there is a surplus production of oil. The oil industries may well not wish to continue with vast expenditure on capital investment. Therefore, there may be room for manœuvre, of the price charged for oil.

The Government should watch the position very carefully. They can talk to the oil companies and tell them that, if they are not prepared to make a spread, as my hon. Friend the Member for Kidderminster suggested, or make some absorption of the price, we shall be faced with a dangerous form of inflation. I hope that the Government have noted the volume of opinion expressed by the Committee about inflation. I hope that they are warned of this matter and will be able to talk strongly and candidly to the oil companies as to the policy to be adopted by the oil companies in relation to this tax.

The hon. Member for Ebbw Vale (Mr. M. Foot) made an eloquent plea for the coal industry. It is right to remind him that if industrial relations in that industry had been better coal would have done considerably better than it has been doing during the last few years.

The Treasury Bench must feel that there is a great cloud of witness over their heads, because they have been subjected to much criticism from so many parts of the Chamber. We have heard many examples of the way the tax will hit individual industries. I will give one more example. I hope that the Government feel that their call for greater exports by industry generally has been to a very large extent met, particularly by some industries. The exhortation and propaganda which have been going on for some time have brought home to all sides of industry the importance of the export trade.

Why does the Chancellor of the Exchequer, apparently deliberately, now make it more difficult for industry, because of the incidence of this tax, to go on exporting? I want to read one letter which I have received from a very important firm in my constituency. The letter, which represents what a large number of firms feel, says this:
"I am writing to you…to ask why our endeavours to become efficient and enter the export market should be destroyed by such an unreasonable tax as the 2d. per gallon on heavy fuel oil. Some six years ago my company spent £10,000 on conversion from coal to oil (the first in the country to do so) so that we could do more export and as coal prices were so high. We succeeded in our endeavour. We shall now have to give up export because the tax will cost us between £10,000 and £12,000 per annum which cannot be recouped on the home market."
I think that this is typical of very many firms in the country. I hope that the Government will have second thoughts about the tax, or will at any rate give an undertaking that they will at the earliest possible opportunity reconsider it.

8.0 p.m.

I have listened carefully to everything which has been said about the fuel tax this afternoon. The debate proves what a queer sort of Chancellor we have to look after the finances of a queer sort of Government. It puzzles me how the right hon. and learned Gentleman can tell the country and the executives of big industry, "You are not pulling your weight. You are not exporting enough. To turn you into good boys, and to put you on to full time, I will give you £83 million in Surtax remission in a full year". In other words, it is blackmailing them to do a little more.

No executive can do any more than the workman who produces the stuff allows him to do. No executive, no matter what the monetary incentive is, can persuade men to produce more steel, use more oil, or produce more coal by simply saying, "Boys, I have got £4 a week out of the Budget to do a bit better". That is nonsense.

The Government say, "We have given another £83 million to those who have not been pulling their weight, but they will now have to pull their weight. They will do better". Then they increase the tax on oil. It looks as if the advisers of the Chancellor of the Exchequer have looked round for a revenue-earner and have said, "The country is importing a great deal of oil. Let us slap 2d. a gallon on it". Twopence a gallon is an increase of 25–28 per cent. It matters not how the load is distributed, it is still an imposition on the cost of potential and eventual production.

It cannot be otherwise. I have direct experience of working a steel furnace which was fired by coal gas for over thirty years. Suddenly, it was converted to oil burning, and worked 21 shifts with oil compared with 18 shifts on coal gas. The company concerned, like many other steel companies, is now using millions of gallons of oil per year. Even if it wished to, it could not turn back to coal-producing gas within eighteen months or two years. That makes nonsense of the argument about this tax being a protection for the coal industry. It has not been put on to protect the coal industry, but simply and solely to get revenue for the Chancellor. That is what he will get, but he fails to go further and look at the results of his action.

I think that this has been one of the best debates that we have had for a long time. More time should be spent on this type of debate, and less on political contention. The real problem is how we are to survive, and that problem remains, whether we have a Labour Government, a Tory Government, a Liberal Government, or even a damn' Coalition Government. This is a matter of exports, and how the Chancellor, granting all his lack of knowledge of industry, expects something to be produced more cheaply by increasing its raw-material price, I do not know—neither does anyone else.

We get the ridiculous position that an ingot of steel weighing five or six tons has to be rolled by electricity produced from oil which has been increased in cost. Then, as bars, that steel is put on the railway and pulled by diesel-tractor engines, whose operating costs have been increased. It is drawn into wire and other types of steel, again at increased cost. So it goes out to industry, all the time increasing in cost to the point where it cannot be sold. [HON. MEMBERS: "Hear, hear."] Yes, it is as simple as that.

On the Continent, due to subsidies, the coalition in regard to the averaging out of freight charges, etc., and the economic decisions of the Common Market they are getting nearer and nearer to our prices every month, and the same thing is happening in India, Japan, Luxemburg—all over the world. This is not really a political matter; it is a vast mistake on the part of the Chancellor. First, he gives away money that nobody really needed; the Surtax payers are doing all right. I know plenty of them. Indeed, I have reason to believe that if some of us were not very careful we could be amongst them. Provided a man could sink his political ideas he could join their ranks quite easily, but we happen to have political convictions and a soul—but that is beside the point.

It gets me down to hear the Chancellor talking about getting people to do better by reducing their taxation. He is thereby slandering some of the finest people in this country. All executives are not idiots. I pay tribute to those who have climbed by the hard road and know what they are doing. On the other hand, we all know that there are others paying Surtax because daddy gave them a chance when no one else would employ them—just an odd one here and there.

This debate has brought to the Committee and, through the Committee, to the country, the need to debate the essentials of the situation. It is no use argy-bargying about what happened to coal. That is a tragic story, but the water has gone under the bridge; all the evils of the coal industry are history. We know that coal is dearer, but there is less blood on it. The hon. Member for Kidderminster (Mr. Nabarro) can shake his head—there are fewer accidents and there is more happiness now amongst those who go down the mines than ever before.

It seems that hon. Members are assuming that the basic cost of the production of oil itself will remain static, but anybody who believes that is a fool. I had the opportunity to go to Abadan when 91,000 oil workers were on strike there because of evil, rotten, wicked conditions imposed by an evil and corrupt Government in Persia—not by the Anglo-Iranian Oil Company.

Those people will not remain content with their present lot when they can see huge profits being made from their sweat under the palm trees in the same way that people have seen profits made from their sweat under the oak trees in Britain. They will demand better wages and conditions for producing oil, so that the price of oil will increase in any case. We talk glibly about increasing the standard of living of the backward nations—good heavens, let us just look at the people sleeping under empty cement bags in Abadan—thousands of them; people sleeping under paper bags propped on sticks, living in evil and rotten conditions.

It all harks back to oil, and oil is now being produced by comparison on very, very low wages. That will not always be the case if the great trade union movement of the world has some say. This all means that the idea of slapping 2d. on this oil to put next year's economy right is fantastic.

The Economic Secretary may ask: what would you have done? We would have left Surtax alone, and would have looked for other means of raising revenue. We can only live by selling to other folk, and we cannot sell by making our products dearer in price. Let us give the hon. Member for Kidderminster credit where it lies. If it were not for his brief interludes of tomfoolery one would have to admit that he knows what he is talking about—[Laughter.] Well, he admits that.

Let us put it on the record that the hon. Member does not come into this House without being well and truly briefed by some of the most able brains in the country, and that he is not badly paid for so doing——

Order. Perhaps the hon. Member will now come to the tax on oil.

On a point of order, Mr. Thomas. I accept all the hon. Gentleman's eulogies, but I think that it is grossly out of order for him to suggest that I am paid for advocating certain policies in this House. I think that the hon. Member had better withdraw that statement at once, and unequivocally.

The hon. Member asks me to withdraw that statement unequivocally, but I do not do so although, perhaps, in making the statement that he was paid I should have said that he was a director of many firms connected with fuel, making fuel appliances, and so on——

On a point of order, Mr. Thomas. I must protest at once. I am not a director of any concern directly or indirectly associated with fuel or with fuel appliances. May I again ask you, Mr. Thomas, to require that the statements, first, that I am paid to advocate certain policies in the House, and, secondly, that I am a director of certain firms manufacturing fuel appliances are unequivocally—I repeat, unequivocally—withdrawn.

I am prepared to do that, Mr. Thomas. Apparently I have been wrongly advised. I apologise quite sincerely to the hon. Member. But, following on that, I must add that I shall make inquiries to find out where those giving the information got it wrong. In any case, I will not quarrel with the hon. Member for Kidderminster about this. He is perfectly justified in putting forward his case, both from an economic as well as a production point of view.

Hon. Members must realise, as must the Chancellor, that oil, relatively, is being used today to a greater extent than any other raw material, including coal or ore, or any other commodity which is the basis of our exports. It is, therefore, surprising that the Chancellor should have selected this commodity and should have slapped a tax on it, simply because it was easy for him to do so. I make one final plea to the Chancellor to have another look at this whole matter and to consider the effects of his action.

I am not very much concerned about the effect of this duty on private people, on hotels or enterprises of that sort. I am more apprehensive, as are many of my hon. Friends, that this duty may cause damage to our export trade by making our prices less competitive, in the sort of way the hon. Member for Rotherham (Mr. Jack Jones) has explained.

That will be particularly so in business with Europe on products containing small margins of profit. It will also be particularly so in the case of the big volume products which use a lot of fuel and which are sold at relatively low prices. Where there are standard products, all of the same quality, it naturally follows that it is the marginal prices which determine where that order goes. I am not ashamed of holding this view, or of being called a Cobdenite, because I am the great-great-nephew of John Bright, although I wear his mantle on this side of the Committee.

In order to explain my argument, I intend to give hon. Members the comparative fuel prices in different European countries per ton on a group of bulk export chemicals—products which are of a big tonnage but which are relatively low priced. This is how the series runs: France, 118s. per ton; Western Germany, 114s.; Belgium, 106s., and Italy, 100s. The United Kingdom hitherto had the lowest price in the list, of 96s. per ton, but after this duty of 2d. per gallon is imposed Britain will have the highest place in the list with a figure of 127s. per ton. Other examples may be given from the cement industry, the steel industry—which, of course, enters into the engineering industry, the glass industry, and others. The products of those industries represent our major exports to Europe.

A related point is that, except for France, the basic prices before duty for fuel oil in European countries average 25 per cent. below the lowest United Kingdom prices, so that, before taxation even comes into the matter, we are at a relative disadvantage.

The rising costs which this duty will encourage will make us more vulnerable to foreign imports, and it is worth remembering that every £1 million of imports which could have been prevented by more competitive prices in the home market is equivalent to £1 million of exports lost.

If there was a super economist looking down from on high upon the economy of the United Kingdom, he would say to us; "Keep down your power costs, in order to keep your export prices competitive." Anything which increases our costs—whether strikes in the docks or taxes on fuel oil—is getting near to a form of economic sabotage. While I naturally accept the general framework of the Chancellor's Budget, I hope that this particular tax will not be a permanent feature of our fiscal legislation.

8.15 p.m.

We can all be grateful to the hon. Member for Kidderminster (Mr. Nabarro), who seems temporarily absent, but knowing his usual courtesy, I have no doubt that he is absent for a good reason or that he will be returning soon. We can be grateful to him for having initiated what I am sure all hon. Members will agree is virtually a debate on the Clause stand part. That was almost inevitable a consequence of the nature of the Amendment.

I do not know whether the hon. and learned Gentleman has listened carefully to this debate. If he has, I am sure he will agree that it has ranged over every conceivable aspect of the imposition of this duty. At any rate, we have had a most useful and interesting discussion, which has lasted for more than two hours.

Before I deal with some of the general points that have been raised, I should like to deal with several specific questions that have been asked.

May I inform the Economic Secretary that the hon. Member for Kidderminster (Mr. Nabarro) has returned?

Thank you. I was about to answer a point raised by the hon. Member for Kidderminster, who asked whether the £50 million estimated yield in a full year meant £50 million having allowed for other taxation, or whether it was gross. The answer is that the figure of £50 million is the gross yield and, consequently in so far as the tax is borne by industry, there will be an effect on the yield of Income Tax and Profits Tax. But it is not possible to say what this effect will be.

This £50 million, as put by the Chancellor in his Budget statement, was a very essential part of the Chancellor's total surplus of £506 million. Surely we should have some sort of estimate, after accounting Income Tax and Profits Tax combined, at 53¾ per cent. on industry, of the yield of the duty? The whole of that sum would not be operative, but is it not correct to say that the £50 million gross becomes a net yield to revenue of about £30 million and, if not, why is that premise false?

This method of estimating the yield on a gross basis is, of course, the normal way of dealing with it. The reason it is not possible to say what the ultimate effect of the tax is is that as the tax is passed on right down to the prices of the final consumer goods, profits will be maintained and there will, of course, to that extent be no effect on Income Tax and Profits Tax.

The hon. Member for Kidderminster will have in mind that there is a difference of timing, so far as the payments of these two duties is concerned. I have done my best to answer my hon. Friend's question and, if it had been possible for me to have given him any meaningful figure, I would have done so.

The second question which he asked was whether the duty covered crude tar and creosote pitch. In so far as crude tar and creosote pitch are liquids as defined by the Customs and Excise Act, 1952—I have the particulars here——

My hon. Friend asked a question presumably because he wanted to know the extent to which his Amendments would affect the duty on creosote pitch and crude tar. I was saying that, in so far as they are liquids, they are liable to duty. Some tars and some pitches are solid or semi-solid liquids at 60 degrees Fahrenheit, which is the temperature referred to in the Act. They are not liable and they are mainly used as road tars. I think that the point which my hon. Friend had in mind concerned crude tar or creosote pitches used by the steel industry. I am told that they are likely to be liquid and consequently, to be dutiable.