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

Part of 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 Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford 12:00 am, 15th June 1966

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——