Orders of the Day — Schedule 1. — (Application of Customs and Excise Act 1952 to Hover Vehicles.)

– 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. 163, in page 57, line 27, to leave out sub-paragraph (2).

Unlike some of my hon. Friends, I was disposed to accept the right hon. Gentleman's arguments and undertakings as being a valuable contribution to the hovercraft industry. I am grateful to him. There is no doubt that what he has said will be looked at both by the hovercraft industry itself and by operators and potential operators with a great deal of interest. I hope that he viill keep his own words and intentions fresh in the minds of Customs and Excise as it comes to address itself to the problems which will no doubt arise.

I draw the attention of the Government to the first Schedule, paragraph 4 (2), in which appear the words: This Act shall not be taken as applying section 204 of the said Act (relief from duty of oils used as fuel for ships in home waters) to hover vehicles. In other words, this very valuable relief accorded to ships is to be denied to hovercraft operating in home waters. I cannot see what justification there can be in distinguishing in any way between a hovercraft and a ship.

I do not want to quarry too deeply into precedent or opinion, but I wonder whether the right hon. Gentleman is aware of the opinion expressed by his right hon. Friend who was then Minister of State at the Board of Trade when taking part in the Standing Committee proceedings on the Anchors and Chain Cables Bill in the last Parliament. A most interesting and somewhat academic discussion took place. The right hon. Gentleman said: In quite another connection, I recently had occasion to raise the same question, whether for purposes of drawback and relief of duty a hovercraft was a ship. I am advised"?— he left himself a loophole. that it is not free of legal doubt, as the hon. Member for Weston-super-Mare (Mr. Webster) said. It has not been tested in the courts at any time, but the view taken by the Customs for the purpose about which I was concerned, is that it 1S a ship."—[OFFICIAL REPORT, Standing Committee C, 26th May, 1965; c. 69.] I should like the right hon. Gentleman to tell me what the justification is for discriminating in this matter against a hovercraft, knowing, as the Government must do, that a hovercraft will be competing for its business against ships and aircraft. How can there be any justification? Hovercraft carriage of goods over land is a remote prospect at the moment. Basically, we are concerned with carriage of goods over the sea by hovercraft. Why should there be any discrimination against a hovercraft, against a modern form of transport in which this country at present leads the world?

I am sure that the right hon. Gentleman will be quick to leap to his feet to assure me that the insertion of this wretched provision in the Schedule was a mistake which has never been adequately brought to his attention until now and that he is very grateful to me for doing so and will immediately remove the horrid thing from its present position of honour and reduce it to the oblivion which it deserves.

10.30 p.m.

Dr. Bennett:

As one who made some efforts when we were considering the Anchors and Chain Cables Bill to reach the truth, we can, I believe, say with justifiable pride that one thing which we unearthed, if that is the right word, was that great statement of fact and principle quoted by my hon. Friend the Member for Yeovil (Mr. Peyton)—a statement which had never hitherto been delivered by the Board of Trade.

On that occasion the then Minister of State ruled that the hovercraft is, from the point of view of the Customs and Excise, almost certainly, without much fear of legal challenge, a ship. I therefore support the remarks of my hon. Friend the Member for Yeovil, whose constituency is a long way inland, who moved the Amendment on behalf of hovercraft, which are indeed in competition with ships.

Photo of Wing Commander Sir Robert Grant-Ferris Wing Commander Sir Robert Grant-Ferris , Nantwich

Is my hon. Friend aware that a notice to mariners recently issued by the Board of Trade laid it down that a hovercraft is a ship and must exhibit the same lights as a ship and observe in every way the rules applying to a ship when in open water?

Dr. Bennett:

As one who travels frequently by hovercraft I assure my hon. Friend that the hovercraft behaves in no way similar to a ship. For example, a ship does not travel sideways quite so fast. I assure him that those who try to share the use of the navigable waters of the Solent are absolutely confounded by the fact that a ship's stern light may be coming towards one very rapidly indeed.

Therefore, without wishing to beat the air unduly, we can be grateful to those snort proceedings upstairs on the Anchors and Chain Cables Bill for establishing a big point of policy which is now not merely recorded in the OFFICIAL REPORT, but which has been published in a notice to mariners. Thus, this judgment is enshrined. I add my voice to the plea so eloquently expressed by my hon. Friend the Member for Yeovil that the hovercraft should not be deprived of this relief on the oil used as fuel by ships in home waters.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

The Treasury is grateful to the hon. Member for Yeovil (Mr. Peyton) for raising this matter because it gives me an opportunity to remove a misconception which might otherwise be widespread. However, I assure the hon. Gentleman at once that what I am removing is the misconception and not part of the Bill.

We have been discussing, on the Clause and the Schedule, the machinery of the Customs and Excise. We have not been dealing, either on the Clause or the Schedule, with the Government's policy towards the development of the hovercraft. Many issues must be considered in this matter and, from the point of of view of the Customs, in asmuch as it is now necessary to take some steps because the traffic already exists, we do not wish to do anything which would prejudice the full development of hovercraft. I repeat that we are at one on this.

We therefore do not want to prejudice the future position in any way. Were it not for an accident, which I will explain, there would be no reference to the point which concerns the hon. Gentleman in the provision. One must take the necessary powers to cope with this new form of transport and, in doing so, one must make reference to the Clause in which similar powers are granted for ships. That previous Clause unfortunately does, as a matter of unhappy drafting, include within it a reference to the exemption for coastwise traffic of heavy oil use.

It is only because that earlier Clause contains that reference that this Clause and Schedule have to make reference to it. All that we are saying is that we are not going to prejudge the issue at all until everything has been fully considered and thought out, and a further development has taken place—that is to say, the hovercraft has been given an opportunity to develop further, so that we can see more readily its full potentiality. In order to leave the position completely open we do not want to incorporate any special advantage or disadvantage.

The relief to which the hon. Member refers is a relief granted to coastwise shipping at a very depressed time in the shipping industry, in 1933. It was granted in very special circumstances. Whether, when the Government are ready and further development of the hovercraft has taken place, there will be a removal of this tax, or other taxes will be imposed, or further encouragement will be given, I cannot say at this moment. I am dealing not with hovercraft but with the Customs machinery. We are attempting to leave the ground completely open. I reassure the hon. Member that nothing that we are doing here prejudges the ultimate situation. This is only a method of getting the Customs machinery established.

It would not have been right to take the very special exemption given to shipping as a principle which we could follow in respect of other forms of transport. When we are ready we shall be only too happy to say what the final proposals are in regard to hovercraft. But the Bill does not deal with that question. I hope that I have satisfied the hon. Member that there is no reason for any anxiety about the further development of the hovercraft.

Dr. Bennett:

Will the right hon. Gentleman make it clear whether the exemption which applied in 1933 still applies to such shipping as still moves round our coasts?

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

Yes, but the answer to what is implicit in the hon. Member's question is that it is a very different thing to remove an exemption than to give an exemption.

Photo of Sir Arthur Harvey Sir Arthur Harvey , Macclesfield

I had not intended to intervene in the debate, but I was very disappointed with the reply of the Chief Secretary. He is a very eminent accountant, who looks at these matters professionally. The Government have exhorted the country to get ahead with exports. We lead the world on the production of the hovercraft, and an exemption in this direction would surely help those who are exploiting, manufacturing and selling it. It does not add up for the Minister to say that coastwise shipping was given this exemption 30 years ago in a depressed period, when that shipping is still being given the advantage of that exemption.

I do not want to be involved in the shipping question, but I am concerned with the hovercraft, in respect of which British industry has a tremendous potential. This would be the right opportunity for the Government to do everything in their power to encourage those manufacturing the hovercraft, especially in exports. Not only over water, but over frozen estuaries and the lakes in Northern Canada the hovercraft has a great potentiality, and I ask the right hon. Gentleman not to push this matter aside as inconvenient but to grasp the nettle and do something about it, and show our people that we want to encourage exports.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

This is most unsatisfactcry. The right hon. Gentleman took 10 minutes to tell my hon. Friend the Member for Yeovil (Mr. Peyton) that he was discriminating against the hovercraft. It is all very well to say that this concession for shipping was brought in 33 years ago; the fact remains that coastwise shipping still gets this concession, but the hovercraft does not. The hovercraft is working at a disadvantage compared with shipping.

We started the debate with the right hon. Gentleman saying that the Government were leaning over backwards to do everything they could to encourage this vital new industry. Yet when we come to cases and cut out the verbiage, it comes down to the fact that the Government are discriminating against the hovercraft in favour of coastal shipping. This is a terrible position. It is like the argument that we had this afternoon, that if there is a tax on fuel and the exporter is relieved of that tax, it is of benefit to the importer. This is an argument for doubling the tax—not reducing it. It does not cheapen the price of exports.

This concession was given to coastal shipping in 1933 in different circumstances, and it does not alter the fact that if a hovercraft has to operate without concessions it is being discriminated against to the benefit of coastal shipping. I should not have thought that this was carrying out what the right hon. Gentleman said at the beginning of the debate, that the Government were genuine in their wish to encourage what should be one of the greatest, most vital and growing industries, particularly in the export field, in this country.

Photo of Mr John Peyton Mr John Peyton , Yeovil

As I moved the Amendment, perhaps I may say a few more words. The Chief Secretary has confronted the Committee with a difficulty. It is clear from his remarks that the hovercraft operator will be at a disadvantage as compared with the operator of a coastwise ship. The right hon. Gentleman, on the other hand, has dealt with the problem at some length with his usual courtesy, and in those circumstances I would feel disposed to ask leave to withdraw the Amendment—[HON. MEMBERS: "No."] I am only asking leave. I am fully entitled to do that.

I should like to ask leave to withdraw the Amendment on the clear understanding that this or a similar Amendment is put down on Report, by which time the Government will have had a fair chance to think out what is admittedly a new problem, and will by that time——

Photo of Mr John Peyton Mr John Peyton , Yeovil

I observe with great alarm that the Chancellor shakes his head. I may tell the Chancellor, since he is here, that only last autumn I was in Kuwait. The then Prime Minister of Kuwait, now the Ruler, informed me that in 1957 he had given to the right hon. Gentleman a set of praying beads. I commented at the time what a very wise and discriminating present it was to give to a politician, and particularly one from the party opposite. I added what a great pity it was that he had never instructed the Chancellor on how to use them.

I very much hope that the right hon. Gentleman will go home, find those beads—I have got some myself—gather some inspiration from them and then go to his right hon. Friend the Chief Secretary, who has had all the embarrassment of this wretched case tonight, and instruct him to come back on Report and say that he has had second thoughts, that he will produce a far more satisfactory solution than this, and that there will be no discrimination against what is a really new, hopeful and promising industry.

I am sure that is the real intention of the right hon. Gentleman, and that is why, in saluting that intention, I beg to ask leave to withdraw the Amendment.

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

Is it the Committee's pleasure that the Amendment be withdrawn?

Hon. Members:


Amendment negatived.

Schedule agreed to.