Clause 5. — (Vehicles Excise Duty: Increases and Alterations.)

Orders of the Day — FINANCE (No. 2) BILL – in the House of Commons at 12:00 am on 7th July 1965.

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3.53 p.m.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

I beg to move Amendment No. 1 in page 4, line 19, at the end to add:

showmen's vehicles and farmers' goods vehicles.

I can deal with the position of showmen's vehicles quite briefly. It was put to us by hon. Gentlemen opposite that the increase for showmen's vehicles should be reduced from a 50 per cent. increase to a 25 per cent. one. I indicated at the time that we were sympathetic to this, but I wanted to have inquiries made to check the figures put forward by the Guild of Showmen, on which the proposal was based. That has been done, and I am satisfied that the case is made out. These are vehicles which have very little road use indeed, and it would, I think, impose a quite unfair burden on them if we were to keep a full 50 per cent. increase. Quite simply, what the Amendments do is to make the increase one of 25 per cent. instead of 50 per cent.

The position with regard to farmers' goods vehicles is a little more involved. I promised to consider further especially the case of the small farmer with the relatively small vehicle which may be used a good deal on the farm, but also has a certain road use, but which is quite different in its use from regular hauliers' vehicles, or, indeed, from certain larger haulage vehicles used by farmers mainly for road use.

I offered to discuss the matter further and receive any further representations from the interested organisations, and, as I said yesterday, I had a most helpful discussion with a deputation from the N.F.U. They stressed particularly their concern with the dual purpose vehicle, nearly all of which are under 30 cwt.—the Land Rover type of vehicle—and, in particular, when these vehicles are being used on a road to tow a trailer. Hon. Members will remember that the effect of the provision in the Bill was to make a very substantial increase for these vehicles.

What we are proposing in the Amendments is a new scale of rates, first, for farmers' goods vehicles. That is quite generally covering the whole field of farmers' goods vehicles, including the dual purpose ones. We are proposing an increase rising on a graduated scale from a 25 per cent. increase at the bottom, to a 50 per cent. increase at about the 4-ton mark. Any figure that one chooses is in a sense arbitrary, but that is the figure which we have chosen as indicating the difference between the smaller type of vehicle which I undertook to try to help, and the larger one.

I would remind the House that a farmer already has a considerable concession compared with other road users. For example, for a 4-tonner he will pay £32 duty compared with the £90 paid by a general haulier. The cost of reducing the rate of increase for these vehicles will be about £200,000 out of an increase of £500,000 which would have been caused by the proposals as they stand in the Bill, so the effect of the concession is to reduce the increase on the whole farming community from £500,000 to £300,000.

The second thing that we propose is a reduction in the increases in the extra trailer duty for small goods vehicles. This will include the dual purpose vehicles. The benefit of this concession applies not only to farmers, but to a much wider range of small businesses, including the builder, the decorator, the plumber, the sweep, and some retailers such as greengrocers who, on occasion, use a trailer hitched behind a van or other small goods vehicles.

Perhaps I could give one or two examples to show the extent of the benefits provided by the Amendments. Let us consider, first, the Land Rover type of vehicle without a trailer. A 25-cwt. vehicle before the Budget paid £15 duty. Under the Budget proposals it would have paid £21 10s. Under the Amendments it will pay £18. With a 30-cwt. vehicle the equivalent figures are £15, £22 5s., and now £19. I think that the House will agree that this modest increase compares favourably with the private car increase from £15 to £17 10s.

Let us consider next the same vehicles which are being used with trailers. Before the Budget the 25-cwt. vehicle would have paid £26 5s. The increase which was so much objected to under the Budget would have been to £39 10s. Under the Amendment it will be £30. The equivalent figures for a 30-cwt. vehicle are £26 15s., £40 5s. and £31. The maximum cost of this concession on trailer duties has been estimated at £150,000 a year. It can only be a general estimate, of which it is thought about £100,000 will be for farmers' vehicles, and this will accrue to the benefit of the farming community. As a result of the Amendment farmers will benefit by a reduction of about £300,000 in the increases which have been imposed.

4.0 p.m.

There remains the question of the operative date. If it were practicable we would have liked to make this concession operate retrospectively, back to the date of the Budget, because under the Provisional Collection of Taxes Act the new duties imposed by the Bill are already being collected at the rates laid down in the Bill, and have been as from Budget day. I have looked into the question whether it would be practicable to make refunds of the difference. I would have liked to do so if it had been.

I know that the House always views with scepticism any suggestion that a desirable measure is not practicable administratively. I have borne that in mind in reaching my decision. I must tell the House that if we had sought to make this provision retrospective we would have imposed a very grave burden on local authorities, who are the collectors of this duty. From the notes with which I have been provided I have worked it out that there would have been about seven different categories of licence to consider. I ask the House to bear with me while I read the administrative provisions referring to one category, to illustrate my difficulty. They are as follows: Where, owing to a change in vehicle condition or use, extra duty became payable by virtue of Section 10 of the Act on a licence taken out on or after 7th April, 1965, the repayment would be an amount equal to the sum of one-twelfth of the difference between the annual rate proposed in the Budget and the new annual rate appropriate to the former condition of use for each complete month of currency of the licence prior to the change in condition or use, and one-twelfth of the difference between the annual rate proposed in the Budget and the new annual rate appropriate to the present condition or use for each month of the currency of the licence following the change in condition or use, including the month in which that change took place.

No doubt hon. Members would consider that to be simplicity itself—if I may borrow a phrase—but I did not feel that it would be right to inflict that kind of simplicity sevenfold upon local authority officials who have to administer these duties.

Photo of Mr James Scott-Hopkins Mr James Scott-Hopkins , North Cornwall

I want to deal with the Government Amendment before I refer to the Opposition Amendment to it. It would be very ungenerous of me not to thank the Financial Secretary for the concessions which have been wrung out of him following exchanges which took place in Committee, especially in reference to farmers' goods vehicles and showmen's vehicles.

I appreciate what the Financial Secretary has done in respect of farmers' goods vehicles, after consultations with the N.F.U. Nevertheless, we are a little disappointed at the fact that the Government have not been able to go a little further, especially in the case of the small farmer and horticulturist. The hon. and learned Gentleman must get it quite clear—because this point will occur later, in our discussions on various other Amendments—that we are still dealing with horticulturists' goods vehicles and forestry goods vehicles if used on a private forestry estate. They are all in exactly the same category as farmers' goods vehicles.

As for the dual-purpose vehicle, this is an important concession, because it was the action of the Government in bringing in the various increases which change the situation in which it had been more expensive to have a private goods vehicle licence than a farmers' goods vehicle licence. The action of the Government changed that situation, and by this Amendment the Government are seeking to restore it—although there is still an increase.

This is to be welcomed. As the Financial Secretary pointed out, the farming industry stands to benefit by having to pay £300,000 less, although it will still have to bear a considerable increase in costs because of these increases in excise duty. As the House knows, there is no way of getting repayment of these increased costs until some problematical time next year, at the Price Review. Nevertheless, we welcome these improvements and the fact that dual-purpose vehicles and trailer vehicles have been included in these categories.

I now turn to the Amendment to the proposed Amendment. This seeks to change the date from August to 6th April. As I expected, the hon. and learned Gentleman based his case entirely upon administrative difficulty. This is extraordinary, because it is entirely through the action of the Government that the situation and muddle arose. In April of this year the increased vehicle duty was imposed and the Government, having had second thoughts about the matter and realising the injustice that is being perpetrated against the farming community, are properly reducing the amount of excise duty required. But those farmers who had to take out licences between Budget day and 1st August have had to pay an increased rate which will never really be brought into effect. This is grossly unfair.

Through the Government's own mess and muddle—that is all it is; they did not exercise enough forethought, or have consultations with the interested people—a proportion of our farming community is having to pay an increased rate which even the Financial Secretary has referred to as being very excessive in respect of some categories of farm vehicle.

A great deal of confusion has been caused by these Government actions. Many farmers have gone to their local authorities and N.F.U. county headquarters to ask why they cannot have their licences at the new rates—because these rates were published as soon as the Government put down these Amendments. The Financial Secretary has said that the only reason why this cannot be done—he admits the justice of the case—is that it is administratively difficult. If he will study his own Amendment he will see that it refers to calculations involving one-twelfth of the duty paid. Those calculations will still have to be made by local authorities, and all that they will be asked to do if the Opposition's Amendment to the proposed Amendment is accepted is one further small calculation.

I suspect that the hon. and learned Gentleman can put before the House many other examples of the complexity of this matter, and its administrative difficulties. Nevertheless, since the Government are responsible for creating this situation it is up to them to find a way out of it. I see no reason why we should penalise farmers simply because of the muddle caused by the incompetence of the Government over this change in the rates. I hope that the House will be able to persuade the Financial Secretary that although there may be administrative difficulties it would be right to change the date to 6th April. If he will do that he will correct an injustice which has been done to many farmers.

Photo of Mr Norman Cole Mr Norman Cole , Bedfordshire South

In all fairness, I must thank the Financial Secretary for his concessions to the farmers. I made a speech in somewhat violent terms in Committee about this matter. However, like my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins), I find the explanation of the administrative difficulty most unconvincing. If this were true, we should never change the old-age pensions, because that means an operation one hundred times more difficult than this and, I understand, involves 60 or 70 different rates and takes seven weeks to carry out. A Government which can do that and a State which can implement the various complicated Income Tax, Surtax, Capital Gains Tax and Corporation Tax provisions should find this kind of thing child's play.

I could almost work out in my head, without any paper, the example which the hon. Gentleman gave. That is not good enough. On a legal point, what happens to those who wish to license their vehicles, possibly new ones, between now and the coming into law of the Bill? Is that covered by the Provisional Collection of Taxes Act meanwhile, or do they pay the rate when we pass this Amendment, or do they have to pay the old rate and wait till the Bill becomes law at the beginning of August and then get the concession? The whole thing is quite complicated. Maybe there is a simple answer under the Provisional Collection of Taxes Act. I do not know.

How many cases are involved in this very complicated administrative working-out? Is it thousands? Is it a few hundreds? If it is not a monumental number, I will undertake to do this for the Government and I will not be wrong in more than 5 per cent. of the cases. This is not a question of the amount of the increase so much, though that is of some consequence to farmers, especially small farmers; it is the principle that something which was brought before the House on 6th April in the Budget and on which we passed a Resolution is now, about three months later, being countermanded. What of the unlucky people who, in the meantime, thought that the first rate would be law, despite the fact that we were fighting to get it changed, and who are now facing a burden? Singling out one section of the farming community who happen to have acted quickly in this is unfair. I ask the Government to take action.

4.15 p.m.

Photo of Mr John Temple Mr John Temple , City of Chester

I had the privilege in Committee of moving an Amendment on behalf of the Showmen's Guild of Great Britain. Naturally, I want to thank the Financial Secretary for the new Schedules which he has put down to meet the special case of showmen's vehicles. Would he convey to the Chancellor a personal message from me, to assure his right hon. Friend that I am not a showman, that I am not in show business and that I have no intention whatsoever of entering show business?

Perhaps I might say that I have accepted hospitality from the Showmen's Guild of Great Britain and have enjoyed a banquet with them, at which the smoked salmon was very good indeed. There were more members of the Labour Party at that banquet than of the Conservative Party. I cannot be accused of having any personal interest in the Amendment which I moved in Committee.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

Is it not obvious that hon. Members on the other side of the House take more interest in the showmen's banquets than they do in the Finance Bill?

Photo of Mr John Temple Mr John Temple , City of Chester

That may be true.

I thank the hon. Gentleman for the reduction in vehicle duties for showmen's vehicles which makes the increased tax on showmen's vehicles 25 per cent. instead of the general increase of 50 per cent. I am glad that the Financial Secretary recognised the powerful case put forward by the Showmen's Guild on the basis of the extraordinarily limited mileage which showmen's vehicles go in any year.

However, the increase in vehicle charges for showmen's vehicles will be 25 per cent. In 1961, my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd), then Chancellor of the Exchequer, increased the general vehicle charges—including the charges for showmen's vehicles—by 20 per cent. The Labour Party, then in opposition, took the view that a 20 per cent. increase was far too great and that the increase should have been halved and should have been an increase of only about 10 per cent. I should like to record the fact that, under the Schedule, the increase will be two and a half times as great as the increase which the Labour Party thought was a fair increase in 1961. I believe that these vehicles charges increases will put up prices throughout the economy. I record this because I know that it is the policy of the party opposite to keep down prices. We must welcome decreases in the increases which were proposed where these are made. Nevertheless, any increase in vehicle duties is a severe increase in the cost of any operation.

I should like, once again, to thank the Financial Secretary on behalf of the Showmen's Guild of Great Britain and say that they will regard this as a precedent and a happy omen if these vehicle charges are increased once again.

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

My hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins) welcomed the concessions which the Government make by this Amendment. I welcome them, too, but with no sense of satisfaction, though possibly with a certain amount of minor relief. In respect of the small farmer and the concessions which the Minister mentioned, I would ask him to put his mind to the case of a farm of 30 or 40 acres with a very small income and one Morris truck.

I am thinking of a particular example. The Ministry may feel that, in raising the duty on the small farmer's Morris truck from £15 to £18, he is raising it very little. I can assure him that, on the farm of which I am thinking—I believe it to be typical—this extra money is extremely hard to find at a time when farmers' incomes are depressed. There will be no outbreak of joy unbounded on the farms at the concession which he appears to have made.

I should like to turn to the Government's inability to make the concession retrospective to the Budget date. I must agree with my hon. Friend the Member for Bedfordshire, South (Mr. Cole) that this is an extraordinary statement. Surely, rebates on motor licence fees are often paid to those who wish to give up their motor licences and put their car in the garage for some months. Why cannot this be applied in this case? The Government seem to feel that it is anybody's fault but theirs. But surely, in the case of those farmers and small businessmen who have already paid the extra licence money which the Government now tell they they need not have paid, it is hardly their fault that they should have had to put up this extra cash.

The Minister says that it would be extremely complicated for the local authorities; but it is not the local authorities' fault that this difficulty should have arisen: it is the Government's fault. I would ask him to look at how this will work on the ground. I can imagine that, in the local council offices, clerks have been charging at one rate for the past few weeks and are now told that they were wrong. They will be told by a number of farmers who have paid that they have no business charging them that rate. Now comes a fiat from Whitehall which says that it is all changed. Many local government officers will imagine, as I imagine, that the people in Whitehall do not know what they are doing. This confusion is bound to arise at the local level.

I hope that the hon. and learned Gentleman will look at this matter and bear in mind that, however complicated it may be, it is his responsibility that this complication has arisen. It is his responsibility that people have been made to pay money which some can ill-afford and the Government now say, "We did not really intend that they should pay it at all." Surely it is the task of the Government—and no one else—to make restitution to those people who have been mulcted, apparently against the intention of the Government as now expressed, and to put that money back into the pockets of those from whom it was taken.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

From this side of the House there have been many congratulations to right hon. Gentlemen opposite on the concessions which they have made. That shows how quickly one can get used to punishment, because, even with these concessions, we have a 25 per cent. increase. Even with the concessions which we have obtained from our bitter battles in Committee, I am not certain that the showmen and farmers will be as pleased as has been suggested, because they will still have to pay a 25 per cent. increase, which is a very heavy addition to their costs and adds to the rising spiral of prices.

It would have been unreasonable for the Chancellor not to have accepted the arguments put forward by my hon. Friend the Member for the City of Chester (Mr. Temple) who, I thought, made one of the most able speeches which have been made during the long debates on the Bill in Committee. After listening to those arguments the Chancellor could not have refused to make the concession. The arguments in respect of agricultural vehicles are overwhelming.

It is right that in some degree we should be grateful for the concessions, but I did not like the Minister's comment that it is not administratively possible to back-date this concession. That is always the argument when we are discussing a decrease. I have never noticed the Treasury say, when they are dealing with my Income Tax or Surtax, that it would be administratively inconvenient to collect it and therefore they will not do so. They always seem to overcome the administrative difficulties in that respect, but they do not overcome them when there has been a concession.

If the hon. and learned Gentleman has listened to the arguments, then even at this late stage he must realise that the administrative difficulties are not nearly as great as he suggested. There are thousands of motorists who take out a licence, then decide to get rid of their cars, and then get a draw-back on their licence. The administrative machinery must exist in the taxation offices. If it can be done for those motorists, why cannot it be done in respect of this concession? The concession relates only to showmen's and agricultural vehicles. The number involved must be manageable.

I hope that even at this late stage the Financial Secretary will agree to look at the matter again. If he does not, he will create not only hardship but dissatisfaction and a sense of unfairness among those who have already paid the increased charges.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

With your leave, Mr. Deputy-Speaker, and that of the House, may I reply to the debate? Hon. Members are being wise after the event and are complaining that we have not shown greater understanding of these problems before, have not entered into more consultation with the interested parties and did not originally put down the proposals in their present form.

In commenting on any suggested lack of foresight, I can only say that we followed the precedent which was set for us by the previous Government, because they established a percentage benefit for certain types of showmen and for farmers—a percentage reduction in the vehicle excise duty compared with that paid by the ordinary road user. When applying a general increase to the vehicle excise duties we gave the same percentage reduction in respect of showmen's and farmers' goods vehicles as the previous Government had established and had followed when they made their increases. What we have now done is to make an even more favourable concession to showmen and to farmers than that which they enjoyed under the previous Government.

The hon. Member for the City of Chester (Mr. Temple) is right to say that when there was a general increase in duties last time we urged that it would operate unfairly to showmen and that the increase for these classes should be only half that for the general run of vehicles. But that argument fell on deaf ears.

We have done precisely what we then suggested. We have accepted the argument put forward by the hon. Member for the City of Chester; we have not followed the general rate of increase, but have provided a lower increase so that these showmen have not only the benefit of a lower rate of duty, but, in addition, have the benefit of a lower percentage increase. The same comment applies about the farmers' goods vehicles. Proportionately the concession is greater than it was in the past as a result of proposing a lower percentage increase on certain categories of vehicles.

Photo of Mr James Scott-Hopkins Mr James Scott-Hopkins , North Cornwall

But the Government have changed the categories of farmers' vehicles, too.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

Yes, but except in certain minor ways the effect is not to the disadvantage of the farmers.

I was asked why we cannot make it retrospective. The major objection is administrative. If we had felt able to make it retrospective, Amendments could have been devised to meet the purpose. They would have been exceedingly complicated and lengthy provisions. It is said that the present Amendment would operate unfairly because it would apply only to the people who still had a licence at 1st September. If a farmer took out a four months' licence in April he would not get a refund from the Amendment because the licence would have expired on 31st July and would not be current on 1st September, 1965. That would also apply to someone who surrendered a 12 months' licence before 1st September.

There are other cases, it is true, in which a motorist can get a refund on surrendering a licence, but this involves a simple calculation and presents no great administrative complications. As a result of these Amendments we are throwing a considerable burden on local authorities, because people will be able to claim refunds in respect of any period after 1st September. If people have taken out licences at the rate laid down in the Budget Resolutions—which, incidentally, were not opposed by hon. Members opposite—and if those licences are still current on 1st September, they will be able to claim a refund for any unexpired portion of the validity of the licence after 1st September.

This in itself will be a fairly complicated matter, but nothing like the complications which, we are advised, would have been involved in trying to make the refund retrospective to 6th April. If the House wishes I can weary them with a detailed account of those administrative complications. I gave an extract from my brief on the matter. I ask the House to accept my assurance that if we had felt that the benefit resulting would have been commensurate with the work involved, we should have brought forward the necessary Amendment.

Photo of Mr Norman Cole Mr Norman Cole , Bedfordshire South

I appreciate that the hon. and learned Gentleman may not have the figures with him, but could he tell us how many vehicles are involved in this matter? Secondly, what would happen to anybody taking out a licence between now and the date when the Bill becomes law?

4.30 p.m.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

The position is that anyone taking out a licence up to 1st September will have to pay the licence at the rate laid down in the Budget Resolutions. For any period after 1st September covered by such a licence, he will be entitled to a refund. As to the number of vehicles involved, I am certain that it is far in excess of 25,000. I will try to let the hon. Gentleman have an approximate figure.

There is, perhaps, one point which I should correct. At the beginning of my remarks, when moving this series of Amendments, I suggested that it would be convenient to take certain other Amendments together. In error, I suggested that we also take Amendment No. 9 when I meant Amendment No. 7.

Amendment agreed to.

Fifth Schedule.—(VEHICLES EXCISE DUTY)
Further Amendments made: In page 53, columns 4 and 5, leave out lines 38 to 41 and insert:
37100
4500
52100
521007100

In page 54, leave out lines 18 to 24 and insert:

1. Farmers' goods vehicles12 cwt.1500
12 cwt.16 cwt.1600
16 cwt.1 ton1700
1 ton1¼ tons1800
1¼ tons2½ tons1800100
2½ tons4¼ tons23001100
4¼ tons33100150
1A. Showmen's goods vehicles12 cwt.1500
12 cwt.16 cwt.16100
16 cwt.1 ton1800
1 ton3 tons18001100
3 tons4 tons30001150
4 tons7 tons37001100
7 tons8 tons55001150
8 tons62001100

In line 25, leave out "Showmen's goods vehicles".

In line 29, after "vehicles", insert "or showmen's goods vehicles".

In page 55, leave out lines 9 to 15 and insert:

1. Showmen's goods vehicles1500
2. Electrically propelled goods vehicles (other than farmers' goods vehicles and showmen's goods vehicles); tower wagons1½ tons1200
1½ tons1800
3. Other goods vehicles1½ tons1200
1½ tons2½ tons1800
2½ tons4 tons2700
4 tons3600

In page 56, line 5, at end insert:

PART VI
TRANSITORY RATES FOR CERTAIN VEHICLES
Part II of this Schedule, for paragraph 2 there shall be substituted the following paragraph—
2. Haulage vehicles, being showmen's vehicles7¼ tons4500
7¼ tons8 tons5400
8 tons10 tons6300
10 tons6300900

In Part III of this Schedule, in Table A, for paragraphs 1, 1A and 2 there shall be substituted the following paragraphs—
1. Farners' goods vehicles12 cwt.1800
12 cwt.16 cwt.1950
16 cwt.1 ton2050
1 ton1¼ tons21100
1¼ tons2 tons21100150
2 tons3½ tons23150150
3½ tons3150150
2. Showmen's goods vehicles; electrically propelled goods vehicles (other than farmers' goods vehicles); tower wagons.12 cwt.1800
12 cwt.16 cwt.19150
16 cwt.1 ton21100
1 ton2 tons211001150
2 tons3 tons28100200
3 tons4 tons361001150
4 tons6 tons43100200
6 tons8 tons591001150
8 tons73100200

In Part III of this Schedule, in Table B, for paragraphs 1, 2 and 3 there shall be substituted the following paragraphs—

1. Showmen's goods vehicles; electrically propelled goods vehicles (other than farmers' goods vehicles); tower wagons.1800
2. Other goods vehicles2½ tons1800
2½ tons4 tons2700
4 tons3600

—[Mr. MacDermot.]