Clause 37. — (Annual Allowances for Mineral Depletion in the United Kingdom.)

Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 21st May 1963.

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Question proposed, That the Clause stand part of the Bill.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

I welcome the Clause, and I promise the Committee that my speech will not be so long as the Clause itself, which is the longest in the Bill. Incidentally, it is fifty times longer than the Remuneration of Teachers Bill and about a thousand times better. At the outset, I should explain that the Economic Secretary and I have a special interest in the Clause, not a financial one, because we are among the group of hon. Members on both sides who have been pressing for something like the reform which is provided by it. I congratulate the Chancellor of the Exchequer on introducing the Clause which gives concessions to the extractive industries, concessions which, I believe, are not only just but long overdue. It is sometimes thought outside the House of Commons that back benchers are merely voting machines, but the history of how this reform has reached the stage of a Clause in the Finance Bill shows how untrue this is, and how back benchers can by persistent advocacy at last convince a Government.

Agitation for the reform we are asked to approve tonight began with the efforts of a few back benchers, including the present Economic Secretary, the present Joint Parliamentary Secretary to the Ministry of Health and hon. Members on both sides, on behalf of industries like the sand and gravel industry and the china clay industry, after representations had been made to us which convinced us that the cause was a just one. We were supported in our conviction by the recommendations of the Millard Tucker Committee on the Taxation of Trading Profits in 1951 and, later, by the Royal Corn-mission of 1955, from whose Report I quote only two sentences: In future a depletion allowance should be given in respect of the cost of acquisition of mineral rights or areas … The second sentence reads: The basis-of relief should be the actual monetary cost less any residual value of the land at the close of working. 8.45 p.m.

In these two sentences is the heart of the claim of the extractive industries and the heart of the solution of the problem with which this Clause deals. The simple case of such an industry is that its capital is its raw material, and that, as it extracts the raw material, it is using up its capital and therefore it should have a capital depreciation allowance. This is true a fortiori because such an allowance was already given to British companies doing extractive industrial work overseas.

It is worth recalling that support in the House of Commons alternately grew and diminished. We had sympathetic noises from the Treasury Bench one year. There was another year which I well remember when there was an onslaught from the combined forces of the Treasury and the Federation of British Industries against this reform. One of the proudest traditions of this Committee is the utter objectivity and impartiality of the Chair. I can remember sitting in the Chair with such objectivity during the deliberations on one Finance Bill when that combined onslaught dealt a severe blow to a Clause in which, if I had not been in the Chair, I should have been interested.

On the last occasion that a Clause similar to this one was before us, namely, last year, not only were the whole of the Opposition in favour of it but there were so many supporters on the Government side that had it gone to a Division we should have carried the Clause with or without the support of the Government Front Bench. One of the unfortunate things last year was that that Clause was not selected. Had it been selected I am sure that it would have been law, either in the form of the Clause that we are considering or in some other form, a year earlier.

The principle of the Clause is simple, but its application is highly complex. There are all kinds of safeguards and limitations which the Treasury, rightly, has had to insist upon, and which presented difficulties which it found insuperable up to the present. One of the reasons why the Clause is so long—such a brobdingnagian Clause—is the complex problems which it has to solve. All the interests —the interests of the Treasury, of the extractive and not so extractive industries and of the mystery body, the F.B.I. —have now arrived at a compromise embodied in the Clause. It at any rate gives rough justice both to the extractive industries and to the Treasury.

I will not comment on the Clause in detail. When both sides of the Committee are agreed about a reform, it is risky to prolong the debate. I commend it wholeheartedly to the Committee, and I do so in the words of the hon. Member for Essex, South-East (Mr. Braine) in 1956 when we were pleading for a Clause such as this. He said: …justice, common sense and the broad national interest all combine in this instance…."—[OFFICIAL REPORT, 25th June, 1956; Vol. 555, c. 99.] We are dealing with important industries. The china clay industry is important in the export market. The sand and gravel industry is responsible for most of the new square box-like buildings which delight most hon. Members and me not so much. This great concrete modern architecture is based on the work of the sand and gravel industry. It is responsible for most of the engineering and factory building and much new housing in the country. This is a large and important industry which has long laboured under an injustice which the Clause will put right.

I sincerely thank the Chancellor of the Exchequer for at long last bringing this reform before the Committee. I know that the Economic Secretary, who will reply to this debate, must have the same joy that I have in seeing this Clause in the Finance Bill.

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

Indeed, I have. I know that my right hon. Friend would wish me to say to the hon. Member for Southampton, Itchen (Dr. King) how much he appreciates the kindly and courteous things that he said.

I am glad to think that this Clause might have the approval of the Committee. The hon. Gentleman was quite right to remind me that with him and many other hon. Members I was much concerned in making rude speeches from the back benches, suggesting that it is high time that justice was provided for the mineral extractive industries. He is also right to complain a little, even though ever so politely, of the length of the Clause, nearly five pages, but he and the Committee may wish to know—and I am authorised to say this—that we understand that the formula and phrasing of the Clause are regarded as most satisfactory from the point of view of the industry.

To use the hon. Gentleman's phrase, not only are we providing justice but we are providing it in a way which appears to be appreciated by the industry. There are so many hon. Members on both sides of the Committee who are concerned with this that I shall not mention any names at all. I should, however, like to remind the Committee of the late Sir Gurney Braithwaite, who was very interested in this matter. I have always had a warm spot in my heart for "Old Gurney", ever since he came to speak for me in my constituency during a period of economic crisis, a situation with which we are all, unfortunately, far too frequently familiar.

I remember "Old Gurney" saying to a very restive audience, "I turn now to the economic situation. The figures are bad, but that does not discourage me in the least. I am used to bad figures, for all my life I have been a supporter of the Somerset County Cricket Club." Things are different now. I am grateful to the hon. Gentleman for what he said, and I am glad to think that this Clause has the welcome of the Committee.

Question put and agreed to.

Clause ordered to stand part of the Bill.