Chancellor's 'Savage Blow' at Road Haulage
Page 34
If you've noticed an error in this article please click here to report it so we can fix it.
FROM OUR PARLIAMENTARY CORRESPONDENT THE Government's case regarding commercial vehicles was quite remarkable, declared Tory transport spokesman, Mr. Peter Walker, during last week's Commons debate on the Budget.
It had provided that equipment needed to move goods within a factory should enjoy the new investment grants. The movement of goods abroad by ship from the docks would in the future come within the ambit of special provision for investment grants.
But, pointed out Mr. Walker, for some mysterious reason equipment and machinery needed for the movement of goods from the factory to the docks was to be left out, receiving neither investment grants nor investment allowances in the future.
He tried—unsuccessfully—to persuade the House to accept an amendment to the Finance Bill which would have continued investment allowances for commercial vehicles and buses.
Road haulage was going through a period of considerable change now in the types of vehicle used. said Mr. Walker. Yet he noted that Mr. John Diamond. the Chief Secretary to the Treasury. had earlier advanced a remarkable argument.
He said that the Government was sympathetic about the date relating to commercial vehicles, but it understood that there was a twoor threeyear delivery period and this only went to show that there was no need for any incentive. What it came to was: "We need not bother about giving these chaps an incentive in the future. There is a waiting list for vehicles."
One of the prime reasons for the waiting list was that the commercial vehicle industry had concentrated better than most on the export market, said Mr. Walker. Nearly 40 per cent of its production was now going abroad.
The result of the date proposed by the Government would be to put considerable pressure on distributors to go to the manufacturers and say: "Neglect exports a bit until next October so that our chaps can at least get the investment allowance on the goods they have ordered."
Indeed, it would pay a road haulier to offer his 'distributor, and the distributor to offer the manufacturer, additional sums of money to deliver before next October. at the expense of our export drive.
Loss of Incentive When the Government came into power a road haulier buying a £2,000 lorry received during the lifetime of that lorry, if he kept it for the whole length of its working life, a total tax relief of £1,463.
After the introduction of the corporation tax, that incentive was reduced to £1,040. Under the present proposals it would be reduced to £800.
"This is a savage blow from a Chancellor who has already put taxes on road haulage of £30m. extra for motor vehicle licences and £30m. extra in fuel duty", said Mr. Walker.
In the case of a smaller firm buying a vehicle for £1,000 and selling it three years later for £400, the value of the total allowances in 1964 under a Conservative administration was £483. After the Budget it was reduced to £240—more than halved in 18 months of Labour Government, The Government constantly complained that some road vehicles did not meet the required standards of maintenance and road safety, and there should therefore be every encouragement to ensure that road hauliers maintained modern and up-to-date fleets, not holding on to out-dated vehicles which had been on the road too long.
Yet this move by the Government. of course, was a direct discouragement to that.
"It is quite plain that the Ministry of Transport is complacent. and we know that the Government is very happy to deliver a further crippling blow to private enterprise road haulage. But we on this side are intent on seeing that they do not."
What he had said applied also to the bus services, went on Mr. Walker. The Government was adding £2.8m. to the costs of that same service for which last year they arranged a rebate of £5m.
On top of that in September the bus operator: would have to give the Government an interestfree loan of 115m. under the selective employment tax.
Thus the effect of the rebate last year was completely taken away and would remain taken away for the next seven years.
The effects of the date desperately affected the industry, pointed out Mr. Walker. Proprietor after proprietor of the fleets of public transport buses had contacted the Opposition with lists of the coaches they had on order. There was a long delivery time. Many of these operators would take delivery of the chassis of the vehicles before next October and have them fitted in their own organization, but they would not benefit under the present provision because the buses would not be in use.
Dealing with the total impact on costs, Mr. Walker said a £6,000 bus would cost an addi tional £720. An operator with 300 buses, if he adopted the normal practice of keeping his buses for 12 years and replacing 25 each year, would find £45,000 a year added to his costs. This would mean one of two things—reduced services or higher fares.
If the Government, as it so frequently said, wanted to improve public transport, it is a very odd way of going about it to take away the investment allowances on new buses and impose a selective employment tax which would result in a large interest-free loan being paid by the industry.
Sir Robert Cary (Tory, Withington) said he was the chairman of a very large company in the north. with 500 or 600 buses.
The clause removing the investment allowances would cost him £21,000 for 26 vehicles at an average cost of roughly £6,000 each to be delivered in 1967. If he spent £200,000 he now had to face an additional cost of £20,000£30,000.
Unfair penalty This applied to all the operating fleets in the country and was a very unfair penalty to place on the bus industry.
Mr. Diamond intervened to say that Mr. Walker's amendment could only be interpreted as continuing the investment allowances for all time. If that was what he was saying, he wanted to make it clear that the Government would not be considering that kind of proposal.
What it would be considering sympathetically were arrangements related to the transitional period.
Another Tory transport expert, Mr. David Webster. described Mr. Diamond's speech as one of the most fantastic he had ever heard. He thought it contempt of the lowest order for the Opposition to be treated in this way.
They awaited with horror the freight plans to be announced later this summer. There had been a conditioning by the Government over the last 18 months and by this Minister of Transport, who had the temerity to summon road hauliers and put them on the red carpet for having the insolence, as she thought. to recommend a blanket increase in prices.
The industry was publicly rebuked by the Minister in her war of nerves when it tried to put forward a recommended standard increase in charges which companies in the industry should. it was suggested, negotiate with their customers. added Mr. Webster. When would Mrs. Castle rebuke the Transport and General Workers' Union for having a blanket demand for increased wages?
Mr. Webster spoke of "psychological warfare going on in the Ministry of Transport to get control of the industry but not by a legislative act of nationalization".
There were deliberate attempts by the Government to put up the cost of distribution by private hauliers and when the industry attempted to pass on the cost to the customer there was an act of psychological warfare against it. This was socialism at its worst and most subtle.
Mr. Charles Morrison (Tory. Devizes) warned that the loss of the investment allowance was the end of the road for many rural bus operators, unless the Government woke up, took notice of the problem and gave them back the allowances they had had before. This view was supported by Mr. Hector Monro (Tory, Dumfries).