Clause 5. — (Rebate of Duty on Heavy Oils.)

Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 15th June 1966.

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Photo of Mr John Peyton Mr John Peyton , Yeovil 12:00 am, 15th June 1966

I beg to move Amendment No. 132, in page 5, line 18, to leave out "twopence" and insert: "one penny".

The taxation of hydrocarbon oils is both onerous and complicated. I have found it extremely difficult to ascertain exactly the yield from this tax. My researches here, despite considerable assistance, did not yield any positive result. Having consulted the annual report of the Commissioners of Customs and Excise and still not knowing what the yield was, I was driven to consulting on the telephone one of the chief victims—in other words, a major distributor of the product.

I understand—and I should be obliged if I could be corrected if I am wrong—that the yield from the fuel tax of 2d. a gallon is £81 million. That is made up of £57 million on fuel oil and £24 million on gas oil and kerosene. I hope that whoever replies to the debate has the figures and will be able either to confirm or deny that that is the right figure for yield.

We are discussing a very important tax which is highly germane to the fuel policy of this country. Although the Minister of Power is not in his place—I do not want to make too much of this point—I hope that before the end of the debate he will be present. I raise this matter not flippantly but as a matter of cardinal importance to the fuel policy of the coun- try, and I am slightly surprised and disappointed that no representative of the Department principally concerned is here to listen to the argument.

Perhaps I can be forgiven if I say how glad I am personally to renew a partnership with my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) which I think he and I have reason to think was fruitful in the past. Today we celebrate a reunion. I hope very much that the Government will show that they have an open mind on these matters and that they are aware that this is not merely a party case but one of the highest importance from the point of view of this country's fuel policy.

The sponsor of this tax was my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd). As Chancellor of the Exchequer, he said that he was introducing it as a means of raising revenue. But subsequently the purpose of the tax has changed. It has now been made clear that its real purpose is to protect the coal industry. The difficulty which the Committee is in is that we do not have with us the Minister of Power, who is responsible for this admirable document, the White Paper on Fuel Policy, from which I want to quote. I will excuse the Minister of State, Board of Trade, if he is not familiar with every line of it.

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

There is some confusion which probably arises from the way in which the Clause had to be drafted in relation to all the other oil taxation to which the hon. Gentleman has referred. This Clause deals only with lubricating oil. It has nothing to do with fuel oil.

Photo of Mr John Peyton Mr John Peyton , Yeovil

Is the hon. Gentleman saying that this Clause does not touch on gas oil, kerosene or fuel oil?

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

There will be an explanation of the Clause, but, because of the way in which we conduct our business, we must take the Amendments first. The Clause does not deal with fuel oil, gas oil and kerosene. It is directed mainly at lubricating oil. Because of the way in which our legislation on this is drafted, we have to make references to the other matters, although we are making no change there.

Photo of Mr John Peyton Mr John Peyton , Yeovil

I have no wish to prolong my remarks on this point. I am sorry if I have misunderstood the matter. I should be happy, if it were the correct thing to do, to raise the points which I have in mind on the Question, That the Clause stand part of the Bill, rather than on this Amendment.

Photo of Mr John Peyton Mr John Peyton , Yeovil

In those circumstances, subject to anything which my hon. Friends on the Front Bench may wish to say, I would beg to ask leave to withdraw the Amendment.

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

Perhaps I have misled the hon. Gentleman. I was merely answering the point as to why the Minister of Power was not here. This i3 a Board of Trade matter dealing very largely with lubricating oils.

Photo of Mr John Peyton Mr John Peyton , Yeovil

If the Minister of State can assure me that this Amendment would affect only lubricating oils——

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

No, it would not. It is the Clause which deals with lubricating oils.

Photo of Mr John Peyton Mr John Peyton , Yeovil

I am obliged. The point with which I am concerned is this. The original purpose of this tax was to raise revenue. Latterly it has been made quite clear by the Government that its main purpose is to help the coal industry.

May I refer the Minister of State to paragraph 17 on page 6 of the White Paper on Fuel Policy, Cmd. 2798, which starts: Following this sudden reduction in demand for coal, a number of measures were taken tc help the industry. It ends with the words: In the 1961 Budget, a duty of 2d. a gallon (about £2 a ton, equivalent to protection in the region of 23s. 0d. per ton of coal used for steam-raising) was placed on oil used for burning. The point was further developed, so that there is no accident about this, in paragraph 44, which specifically states: The most important of the existing measures of protection, which are described in paragraph 17, are the duty on heavy oil (and other oil used for burning) … Then it goes on about the ban on coal imports. The point here is that the Government relied on this tax as a means of protecting the coal industry.

Since the publication of that White Paper the House of Commons has passed an Act conferring upon the coal industry the benefit, at the expense of the taxpayer, of an immense measure of financial reconstruction. The coal industry's debt was reduced by £415 million. This was a very expensive operation from the taxpayers' point of view. One of the suggestions that I make to the Government and to the Committee is that the Act of Parliament which conferred that benefit upon the coal industry radically altered the position and the justification for retaining this tax. I noted with interest the words at the end of paragraph 44 of the White Paper.

Naturally, no Government will go on record condemning a tax, but considering the coyness with which all Governments approach the subject of tax concessions these words in paragraph 44 are to say the least striking. The paragraph says: … it can be argued that, on fuel policy grounds alone, a reduction of the oil duty, and hence of the cost of fuel to industry, is in principle desirable. These were not my words; they are words which I would have been very happy to use had we been on the other side of the House and had I been in the Ministry of Power. This present Administration have used them and we must welcome them for what they are worth.

What I am hoping to hear from the Government is a clear statement that this to my mind bad tax is not to be permanently enshrined in our economy. With anything less than that I am bound to say that I would be very far from content. One of the points made by the Government in the White Paper was that fuel policy should be flexible. It seems very important at this stage that the stress on the need for flexibility should be recognised.

Naturally, I do not want, even if I were permitted to do so, to go at length into the present problems of the coal industry. It is sufficient to say that in the present state of the industry, with a thousand men a week leaving it, one cannot be certain that over five or ten years the industry will be able to meet its main demands. This would naturally put the electricity industry in some jeopardy. I am not talking of astronomical figures like 200 million tons. It seems that those who advocate such high targets are more to be praised for their enthusiasm than for their realism.

The Government should watch this changing position most carefully and, in the interests of flexibility alone, should be considering whether the time has come to abolish or halve the task, particularly on fuel oil. My second reason for putting this proposition forward is that the electricity industry, with the immense burdens imposed upon it by a modern industrial economy, needs to have the advantage of the widest and freest choice among rival fuels. That choice should not be inhibited or influenced in any wrong way by permanent taxation measures.

6.15 p.m.

I agree that in the short-term there may be some argument which can be made for taxation measures upon fuel. Such taxes should always be in the short term. If they are imposed in the longer term, they will result in unnecessary and dangerous distortions, which have the worst possible effect on our economy. I hope that the Minister of State or the Chief Secretary, whoever is to reply, will consider the advantageous position in which the gas industry is placed. I am not for one moment advocating that the Government should go for a policy of equal misery, and tax the raw materials of the gas industry.

It would be a disastrous and retrogressive move if they were to do so. Having said that, I feel that the Government are obliged to bear in mind that there is no tax upon naptha. Equally there is no tax imposed upon Sahara methane. If the Government were to impose a tax it would upset the calculations of a very important sector which has a very useful contribution to make to the fuel economy of the country. I hope that I am right in saying that there can be no question of imposing a tax upon North Sea gas as and when that becomes available. To do so would again be a very reactionary and foolish thing.

That being the case, it seems that it must be wrong to impose a savage tax upon the raw material which is used so much and is so important to the electricity supply industry. I am sure that the Treasury Ministers are conscious that there is a good case for saying that the gas industry should make an increased contribution to the country's fuel economy. This is in order to relieve the burden which would otherwise be placed upon electricity, with the demands which it makes upon other limited capital resources.

I am forced to the conclusion, from whichever angle I look at this, that the retention of the fuel oil tax is an evil and bad thing. I am not speaking from any party point of view. I am talking from the point of view of one who is concerned to see that our fuel costs should be as low as possible. One has at the moment no grounds for making promises, but if the North Sea really fulfils the promise which is now apparent, then we will have benefited enormously from an uncovenanted and unhoped for contribution to our national economy. It would be folly in the extreme to vitiate the fuel policy by imposing this tax on one of the raw materials. I say, in all modesty, that I do not believe that any fuel expert, or any prophecy which has ever been made in this highly complicated subject, has ever been right and therefore one does not want to get oneself too closely wedded to a policy of rigidity and distortion.

As I have said, I am convinced that the permanent enshrining of this bad tax in our national economy will not help our fuel interests. I therefore repeat what are the main arguments to my mind. First, the importance of flexibility which is not helped by the sort of distortion introduced by such a tax; secondly, there is the need to relieve electricity of any unnecessary and artificial burden; thirdly, there is the plain fact that discriminatory factors introduced artificially like this are bad, and that whatever their short-term justifications may be or may have been, there remains for them none in the long term.

I do not wish to take up the time of the Committee any more, but I hope that I have said enough to convince the Committee that this is a matter which should not be allowed lightly to go by. I am for myself convinced that the time has come when we should be at least ready to remove this tax. I admit that, of course, the Government would be confronted with a serious loss of revenue, but, nevertheless, I say to them that the evil which this tax is doing is such that it would be right in the very near future to remove it, or at least to reduce it by half, arid I hope that when the Minister winds up the debate he will be able to assure the Committee that the Government have an open mind and would be ready, perhaps within months, to abolish a tax which, whatever its justification at the moment of its birth may have been, has long outlived its welcome.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I rise to support my hon. Friend the Member for Yeovil (Mr. Peyton), and at once reciprocate the pleasure he expressed in our being associated the one with the other. It is an association which was sadly severed in 1962 when he joined the Ministerial bench opposite and I lingered and languished on the back benches for a further couple of years. We talked together about this important matter of fuel oil duty in 1961 and in 1962, and the impact it would make on our economy, and notably upon industrial costs.

I readily recognise that there may be some dubiety about this Clause 5 and what exactly it applies to, and if our Amendment has the effect of clarifying the position this afternoon it will indeed have performed part of the service to which we have directed the Amendment, and also it will give my hon. Friends and myself a vehicle for expressing our grave dissatisfaction at this continuing impost upon industrial productive costs.

I may claim in this connection some slight individuality—in the proper context: on 16th May, 1961, following a Conservative Chancellor of the Exchequer having imposed the fuel oil duty on industry, I moved from the benches opposite against it, and I divided the Committee against it. Only nine Members voted against it, one other Conservative and myself, five Liberals, and, I believe, two Labour Members, the predecessor of the hon. Member for Ashton-under-Lyne (Mr. Sheldon) and the then Member for Stoke-on-Trent, South (Mr. Ellis Smith). We were rather a mixed bag.

Though a powerful case was made against the Conservative Chancellor placing a tax on productive industry—it raised an amount of £80 million in a full year, equal then to about 8s. a ton on the cost of steel, very considerably increasing the costs of electricity generation and a number of other factors—the overwhelming majority of the Labour Party, then the Opposition, sat quiescent and abstained. They were frightened of their coal mining lobby——[An HON. MEMBER: "No."] I am glad to receive the acknowledgment of the hon. Member for Bolsover (Mr. Neal). He had so suborned his colleagues as to convince them that the way to sustain the coal industry was to put a tax on the competitive, basic and natural fuel, namely, fuel oil for industry.

But the Chancellor of the Exchequer in that year, 1961, did not admit that this 2d. a gallon on heavy fuel oil was for coal protective purposes. He said it was a revenue raiser. Two years later a succeeding Chancellor of the Exchequer, also a Conservative, my right hon. Friend the Member for Barnet (Mr. Maudling) turned turtle and said it was not for revenue purposes, it was to protect the coal industry.

I say this afternoon, in supporting this Amendment, that the circumstances of 1966 are entirely different in the context of the coal industry from the circumstances of 1963. I ask hon. Members to recall what the circumstances were in 1963. There was too much coal. It could not be sold, at home or abroad. Stocks at one time had reached the phenomenal figure of nearly 40 million tons. Coal production was over 200 million tons. There could have been a case at that stage for protecting the coal industry—I recognise that there might have been a case, though a case that I could not myself support—but since then the position has changed very fundamentally.

Coal production year by year has fallen and reached, as I reminded the Minister of Power at Question Time yesterday, the lowest point in our history in peace time. In the last full coal year, the coal year which ended on 31st March, 1966, coal production had actually fallen to 186 million tons. My hon. Friend the Member for Yeovil drew attention to the departure of 1,000 miners a week from the coal industry. He might have added that the coal industry's manpower is now down to 450,000, again, the lowest point in our history, and it has fallen from 713,000, as it was 15 years ago, in 1951.

But it is not only a question of electricity's demand for coal. It is a question that coal demand will remain, in my judgment, above 180 million tons for many years ahead, and coal is productively falling steeply year by year and at the present time based on the first eight or nine weeks of the current year, coal production is running at not much more than 175 million tons in a full year or a further 11 million tons down on last year.

I conceive that there may be a coal shortage within the next two or three years due to the vast exodus of miners from the industry. In these circumstances, is it wise to handicap the only alternative natural fuel, namely, fuel oil? I would not expect the Chancellor of the Exchequer readily to concede all my arguments in this matter or to make any concession in the fiscal sense this year. What I want is a statement—a sympathetic response, perhaps—from the Treasury Bench along the lines suggested by my hon. Friend the Member for Yeovil.

I want a statement to the effect that this iniquitous fuel oil duty—and I call it that advisedly, because two commodities which should never be taxed in this country are food and fuel—is not a permanency and will be closely and carefuly considered before the next Finance Bill with a view to its elimination, having regard to a possible shortage of coal during the next two or three years.

My hon. Friend the Member for Yeovil quoted a pertinent passage from Command Paper No. 2798 on Fuel Policy, and perhaps I may quote a complementary passage from paragraph 17.

6.30 p.m.

Photo of Mr John Peyton Mr John Peyton , Yeovil

I have already done so.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

My hon. Friend tells me that he quoted it. I am afraid that I left the Chamber for about 30 seconds, and I was not quite sure what he had quoted. However, I will read it again to support the arguments which I put forward. It says: In the 1961 Budget when I voted against the fuel oil duty on industry— a duty of 2d. a gallon (about £2 a ton, equivalent to protection in the region of 23s. 0d. per ton of coal used for steam-raising) was placed on oil used for burning. This duty was initially imposed for revenue reasons"— that was my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) doing it in 1961 for revenue reasons— but its protective effect on the coal industry was one of the factors taken into account in deciding to retain it. That thesis was the view of my right hon. Friend the Member for Barnet (Mr. Maudling) when Chancellor of the Exchequer, and he explained it in these terms to my hon. Friend and myself when we were seated on the Government benches: I say to my hon. Friends who are concerned about this"— that is, the fuel oil duty— that I share their great regret that I could not make a reduction. Looking at the whole prospects of fuel costs to British industry, I thought that the decision which I reached"— that is, to retain the fuel oil duty— was the right one, that this was not yet the time, in present circumstances, to make a reduction in this particular duty."—[OFFICIAL REPORT, 9th April 1963; Vol. 675, c. 1224.] That was three years ago. In those three years, the coal industry has passed from a position of substantial surplus to a position of prospective substantial shortage. In view of that dramatic change, I hope that the Treasury Ministers will consider sympathetically the removal of the 2d. a gallon fuel oil duty so that encouragement should be given to fuel oil burning as the only alternative natural fuel resource for years to come.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

I wish to say a few words in support of the very able arguments which have been put forward by my hon. Friend the Member for Yeovil (Mr. Peyton), and I want briefly to comment on some of the Scottish aspects of the Amendment.

In the Bill the Government are introducing a Selective Employment Tax which will discriminate against Scotland. That appears to be a breach of the Act of Union which said that the incidence of taxation should be the same throughout the country. For that reason, I am anxious to support the Amendment, because, if it is carried, it will help Scotland more than any other part of the country.

My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) has referred to the possibility of a shortage of coal, and he has questioned the wisdom of retaining a tax which gives protection to the coal industry, as mentioned in the White Paper on Fuel Policy.

Scotland is in a special position in that we have only 74 coal pits left, and the Government's plans are such that only 26 of those 74 have a guaranteed future. All the rest are under the threat of closure. If there is to be a shortage, the physical shortage in Scotland will be more serious than in the rest of the country.

When the tax was introduced, the whole purpose of it was to provide protection for the coal industry and to encourage industry generally to turn from fuel oil to coal. That is all very well, and it would have had an equal effect throughout the country if the price of coal throughout the country had been the same. However, under the coal industry's pricing arrangements, much higher prices obtain in Scotland. If we encourage a change-over from fuel oil to coal or if we encourage people to stay with coal, as the Act clearly does, the effect in Scotland will be far more serious.

This is not a niggling point. There is a major Scottish steel works which uses a great deal of coal, and an extra 10s. a ton means an extra £1 million every year on its costs. The price differential for industrial coal between that firm and a comparable firm in the North of England is something like 30s. a ton, which means an extra £3 million per year on its costs.

If we retain a tax which gives protection to the coal industry and penalises the use of fuel oil, it will have a far more serious effect in Scotland where the price of coal is extremely high. It has effects in other ways. It has effects on the gas industry, where, if the use of coal is encouraged as against fuel oil, the price of gas is affected. The price of gas in Scotland is above the average for the whole of the United Kingdom; yet we have recently had a 13 per cent. rise in the price which has not been experienced in other areas.

For those reasons, while I support the Amendment on the grounds put forward by my hon. Friend the Member for Yeovil, I want to impress upon the Government that the effect of the problems mentioned by my hon. Friend is far more serious in Scotland. If the Amendment were carried and the fuel tax were reduced or abolished, the advantage to Scotland would be much greater proportionately than in the rest of the country.

The Budget will have a serious effect on Scotland, and I hope that the Government will do something to help us in our problems.

Photo of Dr Reginald Bennett Dr Reginald Bennett , Gosport and Fareham

May I add my voice to those of my hon. Friends who have moved and supported the Amendment, even if I am not able to take part in the mutual congratulations indulged in by my hon. Friends the Member for Yeovil (Mr. Peyton) and the Member for Worcestershire, South (Sir G. Nabarro).

When I heard the Minister of State. Board of Trade, say that it was intended that the Clause should only apply to lubricants, I was a little anxious. Am I to suppose that lubricating oils are to be subject to a 2d. tax which they have not experienced hitherto, or is that a gloss on what he was saying in his remarks on the Amendment?

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

It refers only to lubricating oils. I will deal with the matter when we come to discuss the Clause.

Photo of Dr Reginald Bennett Dr Reginald Bennett , Gosport and Fareham

I am very concerned about this discriminatory tax against fuel oils. It seems to be most unfair to tax liquid fuels when solid and gaseous fuels are not taxed. It distorts the pattern of industry and the pattern of the derivation of power for industry. It handicaps the electricity industry, which has been compelled to hang on to coal and to put up generating plant suitable for coal long after it should have been adapting itself more completely for oil. It has resulted in an unwarranted increase in the cost of power generation over the last 10 years and will for a long time ahead if we cannot get it reduced.

The tax is an admirable windfall for the Exchequer, and there will be very little chance of getting rid of it completely. That is why I supported with more enthusiasm an Amendment which sought to reduce it by half rather than abolish it completely. I still believe that it should be abolished, and I have pleasure in supporting my hon. Friends.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

I rise with pleasure to support the Amendment, and I should like to congratulate my hon. Friend the Member for Yeovil (Mr. Peyton) and my other hon. Friends for putting it on the Notice Paper, and also for the able speeches in which they have put forward the case for reducing the tax on fuel. Any tax on fuel must be towards the inefficiency of industry. Whether it is a tax on fuel oil, or natural gas, or coal, any tax on the basic costs of the fuel that is used in industry must, in the long-term, be to the disadvantage of the nation.

As my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) said, there may have been reasons in 1961 and 1963—and particularly in 1963—for providing some form of protection for the coal industry. I do not know whether my right hon. Friend the Member for Barnet (Mr. Maudling), who used the argument, would maintain that it was a very valid argument even at that time, but it certainly is not valid today.

The coal industry, under the very able chairmanship of Lord Robens, is closing inefficient pits. The result is that it is doubtful whether the total production of coal will meet the requirements that the nation puts on the coal industry, and we shall look a little foolish if in a year or two, because we are not producing enough coal and because of the tax on fuel oil, we have to import coal as it will be cheaper than using fuel oil.

That sort of situation could easily arise. I do not think that anybody from these benches is suggesting that the Government should say that they will scrap the duty on fuel oil. I was very impressed with what my hon. Friend the Member for Yeovil, who is something of an expert in these matters, said about the long-term view of this tax, and I think that everybody in the Committee would be quite happy with the Government if they said that they share the views which we have put forward, that they realise that any tax on fuel must be a tax on efficiency, and that they will therefore view sympathetically the arguments put forward by my hon. Friends for the removal of this tax at the earliest possible date.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

We have had a very interesting debate on this Amendment, with, I think, moderately and persuasively advanced arguments. As my right hon. Friend the Minister of State will make clear when we debate the Question, That the Clause stand part, the purpose of the Clause is to remove a discrimination which exists between imported lubricating oils and some home-produced lubricating oils. This again, is a matter which offends against our international conventions.

The hon. Member for Yeovil (Mr. Peyton) who moved the Amendment, and the hon. Member for Worcestershire, South (Sir G. Nabarro) who supported it, have taken the opportunity, as they are entitled to, to put down an Amendment of a somewhat wider scope aimed at reducing the duty on all heavy oils other than road fuel from 2d. to 1d. a gallon. If this were accepted, the effect would be to cost the Revenue £33 million in a full year and £22 million in the present year.

The same hon. Gentlemen, reversing their roles of mover and supporter, have also put down a new Clause, new Clause 3, which would have the effect of abolishing this duty completely. If this were adopted, the effect would be about £77 million in a full year as the cost to the Exchequer, and this is the answer to the first question which the hon. Member for Yeovil asked me, namely, what is the revenue from this duty at the moment?

In a proposal of this kind one has to look both at its effect from the point of view of revenue collection, and at its effect from the point of view of fuel policy, and the hon. Gentlemen made it clear—particularly the hon. Member for Worcestershire, South—that they appreciated that in present circumstances they could not expect the Chancellor to be able to accept the Amendment as it stands.

6.45 p.m.

As was made clear and, I think widely accepted during our Budget and Second Reading debates, of necessity this year we are faced with a Budget and a Finance Bill whose strategy is to help to remove a substantial amount of demand from the economy. As the Chancellor made clear in his Budget speech, much as he would like to do it, this is not the year in which he is able to reduce taxes. I think that this was fully granted and recognised by the hon. Members who moved and seconded the Amendment, and I shall seek to answer the debate in the spirit in which they have done so.

Before I turn to the question of fuel policy itself, may I just point out that this is one of those duties which qualify for the export rebate. We all know the difficulties which hon. Members on both sides of the Committee—and both Governments—have found in trying to find ways in which, consistent with our international obligations, we can, by fiscal measures, assist exporters. This is one of the rebated taxes, and it is a matter which has to be taken into account when considering proposals either substantially to reduce or to abolish this duty.

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

The hon. and learned Gentleman is suggesting that because they do not have to pay any extra tax this is helping people with their exports. I do not think that the Committee ought ever to accept that. The fact that they are not to pay increased taxes put on in this Budget will not put them in a better position this year for dealing with exports compared with what they had to face last year.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

I have heard the hon. Gentleman advance more forceful arguments than that before now.

If we are seeking to find fiscal measures to assist exporters, it can be done only by relieving exporters of taxes which otherwise they would suffer, unless it is to be done by means of a direct subsidy, and we know that that is out. We have, by fiscal measures, to find ways to produce incentives and inducements to businessmen to turn to the export trade rather than the home trade. This is what we are discussing. This is the only way in which that can be achieved.

On the question of fuel policy, we have twice had quoted to us passages from the White Paper on Fuel Policy. The first quotation was from paragraph 17, which deals with the historical aspect of this, namely, that the duty was imposed initially for revenue reasons by the previous Administration but was kept on, among other reasons, because of its protective effect on the coal industry.

The next quotation was from paragraph 44, which states succinctly the arguments which hon. Gentlemen opposite have been putting forward in this debate. It says: Indeed, it can be argued that, on fuel policy grounds alone, a reduction of the oil duty, and hence of the cost of fuel to industry, is in principle desirable. Although in the present circumstances of the coal industry there is no early prospect of such a reduction, the Government will keep this question under review. That shows that by October of last year the Government had recognised that there was force in the argument. They were not in a position to contemplate any alteration in the duty at the time, but they acknowledged the force of the argument and expressed their readiness to keep it under review.

Since the publication of that White Paper there have been important developments in the fuel sector, and the Minister of Power told the House on 24th May last that he had put in hand a review to take account of the changing situation, in particular, of course, the North Sea gas discoveries which have been referred to during the debate. This review will cover the prospects of the coal industry, and the place of the duty on heavy oils in fuel policy.

Quite clearly, it would be inappropriate for my right hon. Friend the Chancellor of the Exchequer to make any changes in the duty before that review is completed. As I understood the tenor of the questions put to me by the hon. Members for Yeovil and Worcestershire, South, they seek from me an assurance that the Treasury will be willing to look again at the place of this duty in our whole fuel policy, as well as its relevance for purely revenue purposes.

I hope that what I have said will be sufficient to assure hon. Members that the whole question is open, and will be considered in the review and also by the Government in deciding what action to take after the completion of the review. It is because the review is in hand that I cannot say anything more specific and it would have wasted everyone's time to expect the Minister of Power to be able to contribute to our discussions.

Photo of Mr John Peyton Mr John Peyton , Yeovil

When the Committee is discussing fuel policy, I cannot accept that there is any reason why the Minister of Power or his Parliamentary Secretary should not be present to hear the arguments. These are matters of great importance to the nation as a whole, transcending temporary party differences.

The White Paper to which we have all referred contains those classic words, … the Government will keep this question under review". We all know how little those words can mean. Not all of us are entirely convinced of the value of the survey which the Minister of Power is now making of our whole fuel economy. Had he been here this afternoon to comment upon it, he might have been able to convince us.

I do not know what my right hon. and hon. Friends on the Front Bench will say, but I very much hope that they will agree to divide the Committee, unless the Financial Secretary can now say that the Government have moved rather further than he has indicated, because at the moment he has not added anything to the fact that the duty is under review.

If we could have at least some admission that the duty is to be removed as soon as possible, this would be some move in the direction for which I am looking. At present I do not see that the Financial Secretary has moved, and unless he can go further than he has I hope that my right hon. and hon. Friends will decide to divide the Committee.

Photo of Mr Norman St John-Stevas Mr Norman St John-Stevas , Chelmsford

I am glad to spring to the support of my hon. Friend the Member for Yeovil (Mr. Peyton) and the hon. Member for Worcestershire, South (Sir G. Nabarro).

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

We are both my hon. Friend's friends.

Photo of Mr Norman St John-Stevas Mr Norman St John-Stevas , Chelmsford

I assure my hon. Friend that I am smiling on him benevolently. I hope that any sneers that may have come between us have now been exorcised.

My hon. Friend the Member for Yeovil put his finger on the nub of the objection to the tax, when he said that it was a revenue-raising tax which is now being used as a protective device. If we are to survive economically and restore our competitive position in the world, it is precisely this sort of protective device that must go.

If the Government today agreed to reduce it even by one-half, this would do more to stimulate the competitiveness of our economy than all the exhortation from the Prime Minister, even if backed up by the Treasury team. The Financial Secretary said that it would cost £33 million in a full year to reduce the tax by one-half. It would be worth every penny of it for the stimulating effect which it would produce on the economy.

Apart from the practical effect, it would be a symbol of our determination to face up to economic facts instead of indulging ourselves in economic and protective fantasies. Action is all the more urgent on the duty in view of the North Sea gas discoveries, which are about to revolutionise our whole fuel position, and when these gas discoveries have a practical effect we shall want to have the way prepared for a fuel policy which will not be distorted by artificial taxation barriers.

I welcome the Amendment as a move also towards a policy of freer trade. I have grave doubts about whether we should ever have departed from our policy of free trade. So many of our present problems spring from that disastrous decision. I am sure that our best hope for the future lies in following a policy of freer trade. I therefore congratulate my colleagues on producing what is in some ways the most important of all the Amendments tabled to the Bill. I hope that they will match their pertinacity in raising the issue by their courage and determination in pressing it to a Division.

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

I think that the Financial Secretary gave a grain of hope to my hon. Friend the Member for Yeovil (Mr. Peyton), although it was only a grain, and I can understand my hon. Friend thinking it was not a big enough grain and urging the Financial Secretary to go further. From the way in which the hon. and learned Gentleman accepted the argument, he ought to go further today, although the tone of his reply and his words offered some hope that the constant review may well result in something worth while, perhaps in the next Budget. We hope so.

I want to pursue the point on which I intervened while the Financial Secretary was speaking. Whatever abilities those who spoke from the Treasury Bench today may have—no doubt they have many, although I have not found them for myself, but no doubt the book of record will show them—they certainly are not businessmen. They cannot get away with a theoretical argument of the type employed by the Financial Secretary.

It is not true that to give a rebate on a new tax is helping export industries. If a rebate is given of a new tax, the industry to which it is given is in a better position vis-à-vis its home competitors, but it is in precisely the same position vis-à-vis its foreign competitors. If a new tax of 6d. in the £ is imposed, but one industry is excluded from it, that does not put that industry in a better position as compared with its foreign competitors than it was in before.

For all the arguments the Financial Secretary used in telling us why the Govment cannot reduce the duty this year, there was a grain of hope. However, he ought not to tie up in the argument on this Amendment his suggestion in connection with the exporting industries. They should have an absolute first priority all down the line, because the balance of trade figures are what matter and they will decide whether the country will be able to maintain its standard of life and all those things of which we are so proud today. All that depends on the exporters.

It is no good "kidding" ourselves that we are giving the exporters some sort of aid when we are not. During the last five Finance Bills, I have moved Amendments asking that exporters be given an incentive by a tax reduction. That cuts across G.A.T.T. but I should work hard to ensure that G.A.T.T. accepted this. A committee is examining the matter and the Treasury Bench hopes, I gather, that something may come out of that discussion. Do not let us "kid" ourselves by sentences such as the Financial Secretary used that the Government are giving help to exporting industries by merely providing that they will not have to pay increased taxes which are put on year by year.

7.0 p.m.

Photo of Mr James Griffiths Mr James Griffiths , Llanelli

The Financial Secretary stated that the Minister of Power is now conducting a new survey of the fuel situation, bearing in mind the recent discoveries of gas under the North Sea. I wish to utter a word of warning. I listened to the hon. Member for Chelmsford (Mr. St. John-Stevas) talking about the new discoveries, which we welcome. I welcome them as an old colliery man. When the last man comes out of the last pit, I hope that I shall be alive. If I am, I shall take a holiday, for we do not want anyone to go down a pit if we can avoid it.

The discoveries of gas under the North Sea and any discoveries which may be found elsewhere round this island will, at the best estimate, provide only a very small proportion of our fuel needs for many years to come. The euphoria which is growing up that, because of the discoveries under the North Sea, we shall be able to dispense with the coal mining industry in a few years or, according to some, in a few months, is having a serious effect on the mining industry. It is resulting in a loss of manpower.

One day soon we may well be short of coal, because we are short of men. We may well be in that position because the country has been led to believe that everything is now all right and that we need not bother about coal mines or miners because of the discoveries of gas under the North Sea. We shall need coal and miners for a long time.

Therefore, I hope that there will be a sober assessment of the position. Although we should welcome these discoveries of gas under the North Sea, or wherever it may be, I hope that we shall not present the picture to the nation that we can now dispense with coal mining. Let us wait until the survey has been made. We should then plan our whole fuel policy, including the place which coal will have to play for many years in our economy. In the meantime, I hope that this protective duty, so far as it is protective of coal, will be retained.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

We have had an interesting debate. Valuable points have been made from both sides, not the least of which was that just made by the right hon. Member for Llanelly (Mr. James Griffiths). I detected an echo in the right hon. Gentleman's remark about his wanting to take a day's holiday when the last man comes up from the pits of that famous remark by the late Aneurin Bevan, "We all want work, but if we can do it in white coats on top rather than in black coats underneath that will be the day". This is a sentiment with which many will agree.

When the debate started, my right hon. and hon. Friends who were considering what attitude we should adopt to the Amendment had not necessarily intended to divide the Committee. However, I consider that the Government have treated the Committee in a very cavalier way. I take the point made by the Minister of State, Board of Trade, that, whereas the Clause is directed to a very narrow sector of hydrocarbon oils, the Amendment ingeniously opens up a very much wider debate. I am certain that the Government realised this. The Minister of Power must have recognised, or the Treasury should have ensured that the Ministry of Power recognised, that the Amendment would open up a full debate on the fuel duty.

So it has. Yet throughout the debate there has not been one Minister here from the Ministry of Power to deal with a matter which falls absolutely fairly and squarely within the purview of the Minister of Power. It is ridiculous that the Financial Secretary should have had to stand at the Dispatch Box and justify the Government's fuel policy. We know that the hon. and learned Gentleman is a man of parts. We know that he can turn his hands to many things. Indeed, it is the job of a Financial Secretary to do so. It is monstrous that the Minister whose function this plainly is has not been here to answer for the Government.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

Perhaps my hon. Friend would tell the Minister of State that, if he wants to send for the Minister of Power, we are quite capable of keeping the debate going until that Minister arrives.

Hon. Members:


Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

If the Minister had gone to Ascot, one might have said that there was some excuse for his not being here. The fact is that he is just outside the Chamber, although he should be here.

The real point which my hon. Friends have pressed on the Government with eloquence, although they have received a dusty answer, is that the duty is now intended mainly as a protective duty for coal, that this is the primary reason why it is to be kept on, that the duty is damaging to the nation's industrial potential, and that therefore we must have as clear an assurance as the Government can give that the duty will be taken off or reduced at the earliest possible opportunity.

One of the arguments which the Financial Secretary adduced to show why it would not be possible to reduce the duty was that this would result in loss of revenue. The loss of revenue—£22 million this year and £32 million in a full year—as a pure money-raising exercise is a mere bagatelle. What needs to be considered is the economic impact it would have. This is the question to which the Financial Secretary should address his mind. Would it be inflationary? Would it add to the Government's inflationary difficulties if the duty were remitted?

In so far as the duty is charged on the domestic consumer of fuel oil for central and space heating and the ordinary paraffin burners, I suppose it can be said that a remission of the duty would increase purchasing power and, therefore, be inflationary. However, this can be only a relatively small part of the total fuel which is charged, because the great majority goes directly into industry.

I am intrigued by the thought of what the Minister of State, representing that great Department the Board of Trade, must have been thinking as he heard this argument going backwards and forwards across the Committee about industrial costs. His Department must have received countless representations from industry to the effect that this is a direct addition to industry's manufacturing costs and is making the task of industry that much more difficult. The Treasury has an interest in the revenue. The Minister of Power has an interest in the protective aspect. The Board of Trade ought to be using its influence to protect industry from this unjustifiable impost.

The Financial Secretary's argument that this is a tax which is rebatable was answered most effectively by my hon. Friend the Member for Peterborough (Sir Harmar Nicholls). The Financial Secretary's argument was poor because the tax was introduced five years before the rebate. It was the height of folly for him to suggest that the duty should be kept on because a rebate has subsequently been introduced.

The real point is the crucial one of timing. We are told that a review is taking place. My hon. Friend the Member for Yeovil (Mr. Peyton), in his second speech, dealt effectively with this point. We all know about reviews. This one could drag on. The pressures on right hon. and hon. Members on the Treasury Bench from their back benches and from their supporters outside Parliament are intense. Those applying these pressures want coal to go on being protected.

Much has been said about an impending shortage of coal. I understand that there is no real shortage of coal. There is a shortage of economically produced coal. Lord Robens is effectively grappling with this problem. He is conducting a steady campaign of closing uneconomic pits and transferring miners who wish to continue in the industry to more economic areas. Lord Robens is managing to do this without causing any major upheavals amongst miners.

Then, for some reason which it is difficult to follow, the Government intervened and introduced a panic measure of closures, much to the dismay of the National Coal Board. The result was that, in a few weeks, there was a loss of morale, a crisis of confidence on the part of workers in the mining industry which has resulted in the loss, now, of approximately 1,000 miners a week. Not only will the Coal Board be unable to produce economic coal because it is still working uneconomic pits——

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

I do not think that the hon. Gentleman should pursue that line of argument.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

I will draw my remarks to a close, Sir Eric.

The Coal Board is even now having difficulty working its economic coalfields. It is in these circumstances, in this crisis of confidence, that the impact and relevance of the fuel oil duty becomes even more important. From the Financial Secretary we had no indication that the Government were prepared to treat this matter with the sense of urgency and importance which it clearly deserves. Therefore, although the Amendment is drawn considerably wider than the original Clause, it would be right that I should ask my hon. and right hon. Friends to join my hon. Friend the Member for Yeovil in dividing the Committee.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

If the Committee accepts the advice just given by the hon. Member for Wanstead and Woodford (Mr. Jenkin) we shall have a truly remarkable demonstration. We shall see the Opposition voting in favour of an Amendment to reduce taxes by £33 million in a year when the Leader of their own party informed the House yesterday that the most urgent thing which is needed is for the Government to adopt policies to reduce the inflationary pressures in the economy.

The hon. Member asked me whether to reduce taxation by £33 million a year would be inflationary. He himself described that sum of money as being a bagatelle. The hon. Gentleman who supported the Amendment which the committee is invited to vote for himself recognised that, because of this very economic situation, because of these inflationary pressures, this is not a year in which he would expect the Amendment to be accepted, yet the Front Bench spokesman recommends the Committee to vote for it.

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

I have rarely heard a sillier intervention than the one with which the Financial Secretary has just honoured the Committee. I can only think that for a moment his temper got the better of his usual equable self. He knows perfectly well, for example, that we have said that, at the appropriate stage, we shall move to strike out the premiums which would be paid to manufacturing industry to encourage them to hoard labour. Those premiums come to precisely £133 million, or £100 million more than this proposal would cost in a full year.

We should be grateful if the Financial Secretary would calm himself. We have a long way to go on the Bill and he must not start talking like that at this stage. He should not be tired of the Bill already, badly though it is drawn and incompetent though his performance was a year ago on the last Finance Bill, which still rankles with him and remains in our memory on this side of the Committee. Perhaps he would deal with our Amendments, which have been moved in a calm and civilised way, in a rather more cultured fashion in future.

I have no hesitation, particularly after that last contribution, in endorsing the advice given to my right hon. and hon. Friends to divide.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I supported this Amendment, so I will not allow the hon. and learned Gentleman to get away with his figure of £33 million. Of course, he is wrong. He misled the Committee. He has not done his homework with his customary assiduity. Had he studied the earlier debates on this topic, all the background since 1961, he would have learned that the alleged loss of revenue is quoted gross, and that he should offset against that the effects of Corporation Tax and other forms of tax on industry.

I have on two earlier occasions extracted from Treasury Ministers a confession that all statements in relation to the cost of abatement of fuel oil duties are quoted gross, and that there is an offset against it in respect of what was until last year the aggregation of Income Tax and Profits Tax, but is now Corporation Tax plus an element in respect of Income Tax on distributions.

7.15 p.m.

Therefore, the £33 million which he claims would be the gross cost of the Amendment in a full year ought to be adjusted for Corporation Tax and other forms of direct tax on industry. Subject to correction from the Treasury Bench and the Financial Secretary's advisers, my calculation is that the net cost would be about £16 million and not £33 million. I invite the Financial Secretary to read again the debates of 16th May 1961, when I moved an Amendment identical to that moved this afternoon by my hon. Friend the Member for Yeovil (Mr. Peyton). The answer from the Treasury Minister, on that occasion the Economic Secretary to the Treasury—my right hon. Friend the Member for Altrincham and sale (Mr. Barber)——

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

—whom I am glad to see present nodding acknowledgment of the sorrow which he then expressed for having to refuse my admirable Amendment—was that it was a gross figure. That was confirmed on 9th April, 1963, by the then Chancellor of the Exchequer, my right hon. Friend the Member for Barnet (Mr. Maudling).

I accuse the Financial Secretary of misleading the Committee. The cost of the Amendment is not £33 million in a full year: it is nearer £15 million in a full year.

Photo of Mr John Peyton Mr John Peyton , Yeovil

Having moved the Amendment, I do not accept either the figures given by the Financial Secretary or those of my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro). As there seems to be some doubt about what the Amendment would cost, I hope that the Financial Secretary will, in the morning, ask his Department to look into the matter. I shall be interested to know the facts.

The hon. and learned Gentleman was very fair in that he did not allow the misapprehension which was dawning in my mind—that the Amendment did not do what I expected and intended it to do—to develop too far.

I am very glad indeed that we have had the debate. I repeat my very real regret that no one from the Ministry of Power was present to deal with this important aspect of our fuel economy. I understand the difficulties of going through a long Committee stage, but I thought that the hon. and learned Gentleman's answer was disappointing. I do not wish to be personal, but I can attribute his inability to go any further than he did only to the absence of his right hon. Friend. In those circumstances, I am delighted that my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) was able to say that he would advise the Committee to divide.

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

I think that the last point which my hon. Friend the Member for Yeovil (Mr. Peyton) made ought to be pursued further. Notice was given at least three quarters of an hour ago in all the speeches that this was a matter which ought to be drawn to the attention of the Minister of Power. There has been every opportunity for all the facilities of the House to be used, for Parliamentary Private Secretaries to let the Minister know that his Department was under investigation.

It is treating the Committee with disrespect that neither the right hon. Gentleman the Minister nor his hon. Friend the Parliamentary Secretary is on the Treasury Bench so that we can see that the Department directly involved knows first hand what is happening. They have had ample notice as the debate developed that their place was here in the Committee. It ought to be on the record that they are neglecting their duty to the Committee and not using the facilities of the House to come here.

Photo of Dr Reginald Bennett Dr Reginald Bennett , Gosport and Fareham

Is it not the case that the lack of courtesy which the Minister

of Power is showing to the Committee would be less if he were elsewhere? As it has been repeatedly reported that he is in the precincts, does not that make it far worse?

Question put, That "twopence" stand part of the Clause:—

The Committee divided: Ayes 221, Noes 139.

Division No. 20.]AYES[7.20 p.m.
Abse, LeoFletcher, Ted (Darlington)Mason, Roy
Alldritt, WalterFloud, BernardMayhew, Christopher
Anderson, DonaldFoot, Michael (Ebbw Vale)Mitchell, R. C. (S'th'pton, Test)
Archer, PeterFord, BenMoonman, Eric
Armstrong, ErnestForrester, JohnMorgan, Elystan (Cardiganshire)
Ashley, JackFowler, GerryMorris Alfred(Wythenshawe)
Atkins, Ronald (Preston, N.)Fraser, John (Norwood)Morris, Charles R. (Openshaw)
Atkinson, Norman (Tottenham)Freeson, ReginaldMorris, John (Aberavon)
Bacon, Rt. Hn. AliceGalpern, Sir MyerMulley, Rt. Hon. Frederick
Barnett, JoelGarrow, AlexNeal, Harold
Baxter, WilliamGinsburg, DavidNewens, Stan
Bellenger, Rt. Hn. F. J.Gourley, HarryNoel-Baker,Rt.Hn.Philip(Derby,S.)
Bence, CyrilGray, Dr. HughNorwood, Christopher
Benn, Rt. Hn. Anthony WedgwoodGrey, CharlesOakes, Gordon
Bennett, James (G'gow, Bridgeton)Griffiths, David (Rother Valley)Ogden, Eric
Bessell, PeterGriffiths, Rt. Hn. James (Llanelly)O'Malley, Brian
Bidwell, SydneyHale, Leslie (Oldham, W.)Orbach, Maurice
Binns, JohnHamilton, James (Bothwell)Orme, Stanley
Bishop, E. S.Hamilton, William (Fife, W.)Oswald, Thomas
Blackburn, F.Hannan, WilliamOwen, Dr. David (Plymouth, S'tn)
Boardman, H.Harper, JosephPage, Derek (King's Lynn)
Booth, AlbertHazell, BertPaget, R. T.
Bowden, Rt. Hn. HerbertHenig, StanleyPalmer, Arthur
Braddock, Mrs. E. M.Herbison, Rt. Hn. MargaretPannell, Rt. Hn. Charles
Brooks, EdwinHobden, Dennis (Brighton, K'town)Pardoe, J.
Broughton, Dr. A. D. D.Hooley, FrankParker, John (Dagenham)
Brown, Hugh D. (G'gow, Provan)Horner, JohnParkyn, Brian (Bedford)
Brown,Bob(N'c'tle-upon-Tyne,W.)Howarth, Harry (Wellingborough)Pavitt, Laurence
Buchan, NormanHowarth, Robert (Bolton, E.)Pearson, Arthur (Pontypridd)
Buchanan, Richard (G'gow, Sp'burn)Howie, W.Pentland, Norman
Butler, Herbert (Hackney, C.)Hughes, Emrys (Ayrshire, S.)Perry, George H. (Nottingham, S.)
Callaghan, Rt. Hn. JamesHughes, Hector (Aberdeen, N.)Price, Christopher (Perry Barr)
Cant, R. B.Hughes, Roy (Newport)Price, William (Rugby)
Carmichael, NeilIrvine, A. J. (Edge Hilt)Probert, Arthur
Coe, DerisJackson, Peter M. (High Peak)Pursey, Cmdr. Harry
Coleman, DonaldJeger, Mrs.Lena(H'b'n&St.P'cras,S.)Randall, Harry
Concannon, J. D.Jenkins, Hugh (Putney)Rankin, John
Corbet, Mrs. FredaJohnson, Carol (Lewisham, S.)Rees, Merlyn
Craddock, George (Bradford, S.)Johnson, James (K'ston-on-Hull, W.)Reynolds, G. W.
Crawshaw, RichardJones, Dan (Burnley)Rhodes, Geoffrey
Cullen, Mrs. AliceJudd, FrankRobertson, John (Paisley)
Dalyell, TamKenyon, CliffordRobinson, W. O. J. (Walth'stow, E.)
Darling, Rt. Hn. GeorgeKerr, Dr. David (W'worth, Central)Roebuck, Roy
Davidson, Arthur (Accrington)Kerr, Russell (Feltham)Rose, Paul
Davies, Dr. Ernest (Stretford)Lawson, GeorgeRoss, Rt. Hn. William
Davies, G. Elfed (Rhondda, E.)Leadbitter, TedRowlands, E. (Cardiff, N.)
Davies, Harold (Leek)Lestor, Miss JoanRyan, John
Davies, Nor (Gower)Lomas, KennethShaw, Arnold (Ilford, S.)
Davies, Robert (Cambridge)Lubbock, EricSheldon, Robert
Dempsey, JamesLyon, Alexander W. (York)Silkin, John (Deptford)
Dewar, DonaldLyons, Edward (Bradford, E.)Silverman, Sydney (Nelson)
Diamond, Rt. Hn. JohnMcCann, JohnSlater, Joseph
Dickens, JamesMacColl, JamesSmall, William
Dobson, RayMacDermot, NiallSnow, Julian
Doig, PeterMacdonald, A. H.Spriggs, Leslie
Donnelly, DesmondMcGuire, MichaelSteel, David (Roxburgh)
Dunn, James A.McKay, Mrs. MargaretSteele, Thomas (Dunbartonshire, W.)
Dunnett, JackMackenzie, Alasdair(Ross&Crom'ty)Strauss, Rt. Hn. G. R.
Dunwoody, Mrs. Gwyneth (Exeter)Mackenzie, Gregor (Rutherglen)Symonds, J. B.
Dunwoody, Dr. John (F'th & C'b'e)Mackintosh, John P.Thomas, Iorwerth (Rhondda, W.)
Edwards, William (Merioneth)Maclennan, RobertThornton, Ernest
Ellis, JohnMacMillan, Malcolm (Western Isles)Thorpe, Jeremy
English, MichaelMcMillan, Tom (Glasgow, C.)Tinn, James
Evans, Albert (Islington, S.W.)McNamara, J. KevinTomney, Frank
Faulds, AndrewMahon, Peter (Preston, S.)Urwin, T. W.
Finch, HaroldMahon, Simon (Bootle)Varley, Eric G.
Fitch, Alan (Wigan)Manuel, ArchieWainwright, Edwin (Dearne Valley)
Fletcher, Raymond (Ilkeston)Mapp, CharlesWainwright, Richard (Colne Valley)
Walden, Brian (All Saints)Williams, Clifford (Abertillery)Woof, Robert
Walker, Harold (Doncaster)Willis, George (Edinburgh, E.)Wyatt, Woodrow
Wallace, GeorgeWilson, William (Coventry, S.)Zilliacus, K.
Watkins, David (Consett)Winnick, David
Wellbeloved, JamesWinstanley, Dr. M. P.TELLERS FOR THE AYES:
Whitaker, BenWinterbottom, R. E.Mr. William Whitlock and
Williams, Alan Lee (Hornchurch)Woodburn, Rt. Hn. A.Mr. Neil McBride.
Alison, Michael (Barkston Ash)Gower, RaymondMurton, Oscar
Allason, James (Hemel Hempstead)Grieve, PercyNabarro, Sir Gerald
Astor, JohnGriffiths, Eldon (Bury St. Edmunds)Neave, Airey
Atkins, Humphrey (M't'n & M'd'n)Gurden, HaroldOsborn, John (Hallam)
Awdry, DanielHall, John (Wycombe)Osborne, Sir Cyril (Louth)
Baker, W. H. K.Hall-Davis, A. G. F.Page, Graham (Crosby)
Batsford, BrianHamilton, Michael (Salisbury)Percival, Ian
Beamish, Col. Sir TuftonHarris, Reader (Heston)Peyton, John
Bennett, Dr. Reginald (Gos. & Fhm)Harrison, Brian (Maldon)Pink, R. Bonner
Berry, Hn. AnthonyHarvey, Sir Arthur VerePrice, David (Eastleigh)
Biffen, JohnHarvie Anderson, MissPrior, J. M. L.
Biggs-Davison, JohnHawkins, PaulPym, Francis
Birch, Rt. Hn. NigelHeseltine, MichaelQuennell, Miss J. M.
Blaker, PeterHiggins, Terence L.Ramsden, Rt. Hn. James
Boyd-Carpenter, Rt. Hn. J.Hill, J. E. B.Rees-Davies, W. R.
Brain, BernardHirst, GeoffreyRidley, Hn. Nicholas
Bromley-Davenport,Lt.Col.Sir WalterHobson, Rt. Hn. Sir JohnRippon, Rt. Hn. Geoffrey
Brown, Sir Edward (Bath)Hogg, Rt. Hn. QuintinRossi, Hugh (Hornsey)
Bruce-Gardyne, J.Holland, PhilipScott, Nicholas
Bryan, PaulHordern, PeterSharples, Richard
Bullus, Sir EricHornby, RichardShaw, Michael (Sc'b'gh & Whitby)
Burden, F. A.Hunt, JohnSinclair, Sir George
Campbell, GordonHutchison, Michael ClarkSmith, John
Carlisle, MarkIremonger, T. L.Stainton, Keith
Carr, Rt. Hn. RobertIrvine, Bryant Cadman (Rye)Stoddart-Scott, Col. Sir M. (Ripon)
Cary, Sir RobertJenkin, Patrick (Woodford)Summers, Sir Spencer
Chichester-Clark, R.Jopling, MichaelTalbot, John E.
Clark, HenryKerby, Capt. HenryTaylor,Edward M.(G'gow,Cathcart)
Clegg, WalterKimball, MarcusTemple, John M.
Cooke, RobertKing, Evelyn (Dorset, S.)Thatcher, Mrs. Margaret
Craddock, Sir Beresford (Spelthorne)Lancaster, Col. C. G.Turton, Rt. Hn. R. H.
Crawley, AidanLloyd, Ian (P'tsm'th, Langstone)van Straubenzee, W. R.
Crouch, DavidMcAdden, Sir StephenWalker, Peter (Worcester)
Currie, G. B. H.MacArthur, IanWalker-Smith, Rt. Hn. Sir Derek
Dean, Paul (Somerset, N.)Maclean, Sir FitzroyWall, Patrick
Deedes, Rt. Hn. W. F. (Ashford)Macleod, Rt. Hn. IainWard, Dame Irene
Doughty, CharlesMcMaster, StanleyWeatherill, Bernard
Eden, Sir JohnMacmillan, Maurice (Farnham)Whitelaw, William
Elliot, Capt. Walter (Carshalton)Maginnis, John E.Wills, Sir Gerald (Bridgwater)
Elliott, R. W.(N'c'tle-upon-Tyne,N.)Maude, AngusWilson, Geoffrey (Truro)
Errington, SirMaxwell-Hyslop, R. J.Wolrige-Gordon, Patrick
Eric Eyre, ReginaldMaydon, Lt.-Cmdr. S. L. C.Worsley, Marcus
Forrest, GeorgeMills, Stratton (Belfast, N.)Younger, Hn. George
Fortescue, TimMiscampbell, Norman
Gilmour, Sir John (Fife, E.)Mitchell, David (Basingstoke)TELLERS FOR THE NOES:
Glover, Sir DouglasMonro, HectorMr. Jasper More and
Glyn, Sir RichardMorrison, Charles (Devizes)Mr. Anthony Grant.
Goodhew, VictorMunro-Lucas-Tooth, Sir Hugh

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

7.30 p.m.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

As it became apparent during our last debate, this Clause is very much narrower than the rather wide subject that we were discussing. As I understand, most imported heavy oils have the Customs duty rebated all but 2d. This includes gas oil, fuel oil, kerosene, and so on. But there are certain heavy oils which, more or less as an historical survival, have the duty rebated all but 3d. These are what might be described as heavy lubricating oils. There may also be various other small categories.

In other words, the really crucial words in the Clause are "in all cases", for the significant thing is that in most cases the figure is already 2d. What it means, in effect, is that certain limited protection which home producers of heavy lubricating oils have hitherto had is now being taken away. We should like to know from the Government what the attitude of the home producers to this is.

Is this part of a new competition policy? Is it purely an E.F.T.A. arrangement made to comply with the Stockholm Convention, and, if so, why is it not limited to E.F.T.A.? One might have asked the same question about the hop oil point. If the reduction in the protection is required under the Stockholm Treaty, why does it apply universally? Why is it not limited merely to imports from the other member countries under the Convention?

I would ask, as I asked in relation to vodka, whether we are getting any corresponding advantage from this small loss of protection. This is a small Clause, and it is not necessary to labour it for long, but I should be grateful to have my question answered.

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) has clearly and simply explained the purpose of the provision. It is inserted in the Bill to enable us to fulfil an E.F.T.A. obligation. Although I do not think that there could be contrary advantages from this, I am sure that the hon. Member would wish us to carry out our obligation. We are bringing the Customs duty and the Excise duty to the same level so that there is no protective duty on the oils which remain. They are very largely lubricating oils. As far as I know, the other oils involved under the definition of heavy oils would amount to very little indeed.

We did not include this in the last Finance Bill, and by not doing so we committed a breach of our obligations in theory; but the breach was theoretical because there was so little, if any, production in this country. There is very little production going on now, but it has started up during the last year. I do not know how it will grow; it will probably be small for some time. However, the only way in which we can carry out our commitments to the E.F.T.A. Convention is to do it this way.

I am told that there are practical difficulties in applying the duty only to imports from E.F.T.A. countries. In fact, imports from E.F.T.A. countries are very small. There is a little from Sweden, and that is about all. However, it would be very difficult to carry out the suggestion made by the hon. Member.

The cost, I am told, will be about £500,000 in the current year and about £1 million in a full year. As I say, the purpose is to carry out our obligations. Whether we shall get any corresponding advantages I do not know. It is probably unlikely. The reason we are doing this is that production of this kind of oil is starting up in this country, and the only way in which we can carry out our obligations is to do it this way.

Question put and agreed to.

Clause ordered to stand part of the Bill.