Clause 1. — (Increase of Duties.)

Part of the debate – in the House of Commons at 12:00 am on 12th December 1956.

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Photo of Mr Frank McLeavy Mr Frank McLeavy , Bradford East 12:00 am, 12th December 1956

I fear that if I follow the hon. Member for the Isle of Thanet (Mr. Rees-Davies) in discussing the rationing of petrol or derv for the industry, I shall, very properly, be ruled out of order. But whatever may be the position of rationing, we on this side of the Committee sincerely hope that the road hauliers and the passenger transport industry will receive rations as large as it is possible for the Government to provide in the existing circumstances.

I am sure that the hon. Member for the Isle of Thanet is aware of the statements made from the Government Front Bench that it will be the policy of the Ministry of Transport and Civil Aviation to force as much traffic on to the railways during this period as they possibly can. I understand that the Ministry's policy at present is that the transportation of coal shall be by rail if there are sufficient facilities available. Therefore, I think that we can assume that the position of the road haulier side of the industry will be very difficult during this emergency period.

I want to refer to the original duty of 2s. 6d. a gallon on derv. The protest made by the transport industry against the imposition and continuance of this tax has been very strong. I am sure that the hon. Member for the Isle of Thanet will agree that it is within the range of possibilities that the road haulier side of the industry would have been making, in a very short time, the strongest possible representations for the reduction of this penal tax. British Road Services has already decided to increase its charge upon the invoices for general haulage by 7½ per cent., and the Road Haulage Association has decided to make it 10 per cent. It is quite evident that these two charges alone will represent an increased cost upon exports and upon commodities that we require in the home market.

I have argued in the House for several years this question of the tax on derv and petrol as far as it affects road hauliers and passenger transport services. I could never understand why it was thought necessary to impose upon the industrial life of the nation a tax which inevitably reflects itself in increased costs of production. It seemed to me that when we were fighting, as we have never fought before, to maintain and to increase our export trade, that was a time not further to increase the tax, however temporary the increase may be, but a time to take off some part of the tax, thus giving industry a chance to serve the community better than it has served the community in the past.

6.30 p.m.

All the time we have argued this matter in the House the Minister of Transport and the Government have refused to accept the views which have been put forward on behalf of the industry. The Chancellor of the Exchequer talked about the extra duty representing one-third of one point rise in the cost-of-living index. I do not believe that anybody accepts that. The road hauliers and every other section of transport will pass this 7½ per cent. and 10 per cent. increase on to the costs of production. By the time the various people affected by this rise have added a little for luck—and that is what many will do—we shall find that this temporary duty does more harm than good to the well-being of the country.

It is no good the Government talking to the trade union movement about wanting to maintain the wages structure and wanting to resist reasonable applications for wage increases; and it is no good their going to the Trades Union Congress and arguing that in the nation's interest the trade unions must set an example of leadership, when the Government themselves on every conceivable occasion are increasing the cost of living for every section of communal life.

I believe I am expressing the view of the trade union movement when I say that the trade unions are prepared to do everything they can, and have been so prepared for many years, to help the nation out of any financial crisis. We know that it is not a question of saving the Government. It is a question of saving the nation. On the other hand, we expect that if the Government require our assistance and our co-operation, they will themselves set an example. It is no good their increasing rents or the price of bread or the general cost of living if they are seriously to ask the trade union movement to co-operate with them in overcoming the crisis. I do not think that the Government have for one moment given serious thought to the matter.

I stand to be corrected by the Financial Secretary, if he can correct me, but I understand that the consumption of derv by transport is about one-sixth of the total consumption and that the other five-sixths is used in industry, in the main free of duty. It seems to me that if the Government feel that they must have this £30 million which they have lost on their revenue estimates for this financial year, there are better ways of getting the money.

I have suggested recently in the House that they would serve the greater interests of the nation if they waived the £30 million altogether, but if they felt that they must make up the loss of revenue received from duty on derv, an easier way was open to them; they could surely have said to the industries which have for so long enjoyed exemption from this duty, "The nation is in a state of emergency; we will ask those of you who use five-sixths of the total consumption of fuel oil to bear a temporarily increased duty." In my opinion, such a duty would not have amounted to more than 3d. a gallon. Had they done that, the duty would have been borne by industry with no trouble at all and we should have been saved all the humbug and nonsense about increasing fares and increasing road haulage rates.

It seems to me that whenever the Government get into a financial difficulty they always make the wrong decision at the wrong time. They do not seem to realise that when this charge is imposed, commodities will be increased in price; and, when the emergency ends, the taxpayer will still have to pay those higher prices in the shops. The Financial Secretary knows very well that although he may get the Road Haulage Association to withdraw its increase of 10 per cent. and British Transport Road Services to withdraw their increase of 7½ per cent., when the emergency is over, he will not bring the prices down in the shops—prices which he will have deliberately pushed up by this act of stupidity.

I say frankly to the Financial Secretary and to the Parliamentary Secretary to the Ministry of Transport and Civil Aviation that this is not good enough for the transport industry, which is one of the nation's most vital industries. It is an industry upon which our prosperity depends. To play about with it as if it were a political toy means that the Government are not prepared to face the realities of the situation. This industry cannot afford to bear the present duty, never mind an extra duty of 1s. imposed for however long a period we regard as "temporary".

I say, in all seriousness, that unless the Treasury is prepared to accept the sounder advice of people in the industry, and not the advice which it is receiving from officials who appear to know very little about this matter, we shall be in a difficult position. The sooner the Treasury accepts the advice of people in the industry the better for the community.

In examining the question of the 1s. increase in duty, the Government should have taken both sides of industry into their confidence and into consultation. They should have examined the possibilities of passing this £30 million extra, if it must be collected, on to broader shoulders than those of the road transport industry. I do not want to impinge on the next Amendment about road transport, on which I hope to say a few words, but I must say that this is the wrong way to deal with a vital national service. It is no good hon. Members saying that if we get a reasonable volume of traffic transport will be able to carry the extra 1s. There will not be a reasonable volume of traffic. The private sector as well as the public sector of road transport will have a very lean time for some months ahead.

We have to approach this matter remembering the financial difficulties which increased taxation will impose on the transport industry and the unemployment that it may cause. Private owners, for whom hon. Members opposite fought so hard when we were discussing the denationalisation of road transport, will find it almost impossible to keep in business. The duty of the Government is at least to try to order their taxation so that it is fair and equitable to every section of the community.

The tax of 2s. 6d. per gallon cannot be defended and neither can the extra 1s. It is an imposition on the transport industry which will be reflected in the nation's prosperity. The time is coming when it will be realised what this extra 1s. means. The people who were so anxious to have the industry denationalised will find that they have been given a raw deal.