HC Deb 24 May 1932 vol 266 cc249-63
Major NATHAN

I beg to move, in page 5, to leave out lines 1 to 7, and to insert instead thereof the words: In deciding what scheme, if any, to submit for the purposes of this section the committee shall have regard to the necessity in the national interest of expanding exports from the United Kingdom. This Clause is designed to provide a means whereby drawbacks become allowable, the Treasury being authorised to make an Order on a scheme submitted by the Advisory Committee; but by the terms of the proviso to the Clause the discretion given alike to the Treasury and the Advisory Committee is qualified. A direction is given that the committee shall not submit, and the Treasury shall not approve, a scheme unless the committee and the Treasury are satisfied that in all the circumstances, including—and I specially direct attention to these words— the interests of any producers in the United Kingdom of material of the kind specified in the scheme it is in the national interest that drawback should be allowed. At first reading that might appear to be an entirely innocuous proviso, but the sting of it is to be found in the words to which I directed attention, that the Advisory Committee and the Treasury are to have particular regard to the interests of any producers of materials of the kind to which the drawback relates, What in truth we have been witnessing in this country for some months past, and are likely to continue to witness, is what is at the moment a veiled conflict, but will soon become an open conflict, between the limited class of producers in this country on the one hand and the whole trading community and the community of the consumers on the other hand. The chief object of a drawback is to facilitate export, to enable the British merchant to fulfil the behest of the Prince of Wales in the speech made by him last Friday that we should "sell British"; but if the Advisory Committee and the Treasury are to have special regard to the interests of a limited class of producers then, instead of expanding our national trade, we shall simply restrict it.

It is to be noticed that the Government, in the matter of drawbacks in connection with tariffs, seem to have been in some confusion of mind as to what exactly they desire to achieve. I understand that the Parliamentary Secretary to the Board of Trade is to reply, and I would direct his attention and that of the Committee to a point which seems to have been overlooked in the drafting of this Clause of the Finance Bill. In the second paragraph of the Second Schedule of the Import Duties Act provision is made for drawbacks. A scheme is to be settled by the Advisory Committee, just as in the present Bill, and approved by the Treasury, but there is this difference. The scheme under the Import Duties Act relates not to manufactured goods but to goods exported in the state in which they were imported, and the Advisory Committee and the Treasury are directed to have regard to the general interests of the industries concerned, including the export trade. Drawbacks granted under the Second Schedule of the Import Duties Act are to be directed to improving the export trade, whereas, forsooth, drawbacks under the Finance Bill are to be considered in relation to the interests of the producers in the United Kingdom of the materials specified in the scheme. Is there to be a different criterion for goods which are exported in the state in which they are imported from that which is to be applied in the case of goods manufactured in this country? I cannot for a moment believe that it is so.

I cannot believe that it is the intention of the Government to stifle or make more difficult the export trade, but to expand it and to make it simpler. Expression to that view was given in the Import Duties Act, but this Finance Bill shows an absolute change of face in the matter, and I shall be glad to have an explanation as to how that comes about. In order to make the position clear beyond peradventure I am proposing in my Amendment that in the case of the Finance Bill, as in the case of the Import Duties Act, it shall be a direction to the Advisory Committee that in deciding on a scheme they shall have regard to the necessity, in the national interest, of expanding exports from the United Kingdom. Those words are the counterpart of the words found in Clause 3, Subsection (2), of the Import Duties Act, where the Advisory Committee, when considering their recommendations as to the imposition of duties, are directed to have regard to the advisability in the national interest of restricting imports into the United Kingdom. If in imposing duties you are to have regard to the importance of restricting imports, then it is only logical, proper and businesslike, when considering drawbacks, to have regard to the importance of expanding the export trade. It is to achieve the all-important result, compared with which the limitation of imports is nothing, of improving our export trade that I move this Amendment.

6.30 p.m.

Mr. HORE-BELISHA

My hon. and gallant Friend the Member for North-East Bethnal Green (Major Nathan) has argued his case, as always, with great weight, and I think I can give him complete satisfaction upon it. When the Import Duties Act was introduced as a Bill it did contain a limited provision for drawbacks, and my hon. and gallant Friend has quoted that provision. What the provision came to was this: Where goods were imported and subsequently re-exported, a drawback might be given provided the goods had not changed their form or shape. My hon. and gallant Friend will see that the British manufacturer did not come into the picture at all, and that is why the words which he now proposes to introduce here were not introduced into that Schedule; they would have been completely inapposite and meaningless. In the course of the discussions on that Bill a number of hon. Members, including my hon. and gallant Friend, pressed for an extension of the drawback. The Government have met their desire, and what we have done, and what I should have thought would have caused unanimous approval, is this: We have said that where British manufacturers engaged in the export trade are compelled for various reasons to use foreign materials —I will deal with the reasons in a moment—they shall be able to claim a refund of the duty on those materials providing that the circumstances are appropriate. That is what we have done. What are the words which we use? We say that the Advisory Committee shall be able to recommend this refund of duty having regard to the interests of producers, that is to say, if there be in this country producers who can supply the thing at a reasonable price, in a reasonable quantity, and of a reasonable quality, then we say that the position of those producers should be respected. Where there is a conflict of interests between the producers and the exporters, then we say that the national interest shall prevail. In order that every factor shall be taken into account, price, quality and quantity, we use the phrase that the Advisory Committee shall have "regard to all the circumstances." What could be fairer than that? My hon. and gallant Friend the Member for North-East Bethnal Green wants to sweep away all those words and keep out of the Clause any reference to the producers; he wants to leave out any reference to all the relative circumstances such as price, quantity and quality, and substitute for those eminently equitable conditions the interests of the exporting industry. The very object of a drawback is to give advantage to the exporting industries. You might as well say that when the railway companies reduce their fares they must always add that they do so for the convenience of the passengers, and to encourage traffic. It is quite obvious that we have in view the interests of the exporting industry by proposing a drawback.

In taking out the reference to the consumers and the national interest, and the reference to all the circumstances, the implication would be that we wish to put a premium on the use of foreign materials in British manufactures. But we wish to do no such thing. We wish that manufacturers, wherever possible, shall be encouraged to use British-produced material, and when this be not available either in quantity or at a suitable price, then the committee will be empowered to recommend a drawback. I am sure that my hon. and gallant Friend the Member for North-West Bethnal Green will not disagree with us in desiring to give every benefit, where possible, to the producers of material in this country. I have shown the reason why these words were used, and why it would have been impossible to use the same words in the Schedule of the Import Duties Act concerning drawbacks, and, as the hon. and gallant Mem- ber cannot have any object at heart different from our own—at least, I should be reluctant to believe that he had—I would ask him to withdraw his Amendment.

Sir P. HARRIS

I hope my hon. and gallant Friend the Member for North-East Bethnal Green (Major Nathan) will not withdraw his Amendment. The Parliamentary Secretary to the Board of Trade is very quick in taking hold of ideas, and adjusting himself to new conditions and circumstances. No doubt when my hon. Friend has had more experience of world trade, he will realise that our great world trade is a very sensitive machine, and if interfered with by a prentice hand, an enormous amount of damage may be done. I am glad to see the Lord President of the Council present because, quite recently, he made a notable appeal to the people of the country to keep their eyes on export and world trade. The right hon. Gentleman has had great experience, and he does not take a narrow outlook; he realises that we cannot exist except by world trade. I am not ashamed to speak on this subject as a London Member. We have aggregated round the Thames in London some 8,000,000 people and an immense number of industries of various kinds. The large towns and municipalities in every part of Europe have studied and admired London and its great history, and we have some 55,000 manufacturers of various articles in London.

Now I am going to say something that I know is not acceptable to many Members of the House, and that is that the success of London and its great development have been brought about largely by a system of free imports. In London every variety of article of commerce is manufactured. When we talk of the north, and of Newcastle or Birmingham, and other great cities, we visualise great industries and great engineering trades, quite unconscious of the fact that London is a great engineering centre, and that has been rendered possible because London has been able to draw its raw material from all quarters of the globe. In London our manufacturers can look, not to the home market alone, but to the world market, to the Dominions, and to America, where they know that no Customs officer can put his clumsy hands on the raw material. The Parliamentary Secretary to the Board of Trade is going to tell those 55,000 manufacturers how to produce their goods; he is saying to them, "You must not buy your semi-raw materials or textiles anywhere in the open market; you must first find out whether the material you require can be produced in this country; and after that you must find out whether the price of that material, in the opinion of the three gentlemen who form the Advisory Committee, is a reasonable figure." What is a, reasonable figure in these days is very difficult to say, but the manufacturer is not to be allowed to buy in the open market and his market is to be limited. Then comes forward the greatly despised merchant from Australia or Canada, and he finds that he can no longer buy his goods in London because we are to have a limited market for our products, and therefore the prices are no longer competitive.

I would like to hear the experience of the hon. Member for South Croydon (Mr. H. Williams), who is a competent business man, and one who takes a very wide outlook on these matters. I would like to ask if, under this Bill, the Government are providing a complete and full system of drawbacks. I agree that if the Government give a full unlimited system of drawbacks like that which is in existence in most continental countries, then the home trade will be counterbalanced. Apparently the Government have not a method of doing things in a full and thorough way, and we are now dealing with only a halfhearted concession. All these transactions are still to be restricted, and drawbacks are not to be given to manufacturers who produce from foreign material. If tariffs are not to interfere with exports, it is absolutely essential that there should be a full, unqualified, unlimited system of drawbacks-, with no qualifications or restrictions as to production in this country. Without this safeguard, Great Britain is up against the most severe competition we have ever had to face. What is now proposed will increase competition in the world market. Germany will not be able to send her goods here, and will have to look to America and the New World for fresh markets. German and French competition will increase, and if this country is to be successful in the export trade of the world markets, it is essential that we should be put in the same position as our competitors Germany and France, where they have a thorough system of drawbacks. This limited concession is not full enough, and it is not satisfactory. I submit that if the words which have been proposed by my hon. and gallant Friend the Member for North-East Bethnal Green cannot be accepted now, at any rate we ought to have some assurance that on the Report stage the drawbacks will be made complete, and all these disqualifications removed.

Mr. H. WILLIAMS

I would like to thank the hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris) for his kindly reference to myself. I cannot, however, allow my feelings of gratitude to him to stop me from indulging in a few minor criticisms of his arguments. When this matter was under discussion during the Committee stage of the Import Duties Bill, the Government agreed that the drawback should not apply to the additional duties, and the Free Traders rejoiced and said that the system was adequate. I do not want to blow my own trumpet, but I think I was the only person who pointed out that that was not an adequate system of drawbacks, and I think we have now a scheme which is the best system of drawbacks of any country in the world. Anything further would be wrong.

We do not want drawbacks except for exceptional cases. The only justification for them is when a rise in prices has occurred as the result of an Import Duty on a partly manufactured article, and as a consequence the goods are raised in price. Up to now it is a very remarkable thing that there has not been a single genuine case which has arisen where a drawback was really necessary. Under the general system of duties now in operation, no increase has occurred in relative prices. There has not been a single case where a drawback was necessary except in the case of a few commodities which ought to be on the Free List in any event. Let us suppose that we gave a drawback in every case. In those circumstances we should be inflicting immense injury on certain producing industries in this country, and we do not want to subsidise the use of foreign material in our manufactured goods. Take a case where a rise has taken place in the price of the article, and yet a certain amount of that article is coming in from abroad because the foreigner has been willing to cut his price in order to jump the tariff. In that case, although the British manufacturer is not prejudiced in any way, the hon. Baronet the Member for South-West Bethnal Green would grant a drawback in respect of any article made from the imported material.

Imagine that the price is £5 and the duty £1 a ton. The price when the drawback is granted would be £4 a ton, and as the use of foreign material is increased, the manufacturer gets a subsidy on the export trade; if it goes on sufficiently-long you may completely destroy the industry in this country which is manufacturing the semi-manufactured article. Nobody wishes to use a tariff to destroy existing industries, but if the hon. Baronet the Member for South-West Bethnal Green had his way you would, in many cases, deter people from using semi-manufactured material, and you would induce them to take imported foreign material, because when they came to export they would get what, in effect, is a subsidy. On the other hand, I recognise that if in certain individual cases, as the result of the tariff, the price of a partly manufactured article is raised to the manufacturer here, and he is in consequence prejudiced, a sufficient drawback ought to be granted to restore him to the position in which he was before the tariff was introduced. In some cases a drawback of the full amount of the duty would be necessary, but in many eases only half the amount would be necessary. In a case, for instance, in which an article was selling freely in this country at £5 a ton, and a duty of £1 a ton was put on, but the effect was only to raise the price to £5 10s., what justification would there be for granting a drawback of £1?

Sir P. HARRIS

The hon. Member forgets that the home manufacturer's competitor in another country has the advantage of that same material which he is importing, and also has the advantage, on the hon. Member's own showing, of lower wages.

Mr. WILLIAMS

My case is that, if a man abroad is selling normally at £5 a ton in this market and at £5 a ton in his home market, and if we put on a tariff of £1 a ton, the foreigner, in order not to lose his trade, may decide to sell at £4 10s. in this market. [Interruption.] That happens very frequently; indeed, it is almost invariable; and in that case, with the duty added, the price is £5 10s. In order to restore the manufacturer in this country to the position in which he was before, as compared with his foreign competitor, he wants a drawback, not of £1, but of 10s.; but, if the hon. Baronet had his way, we should throw away, quite unnecessarily, another 10s. The system laid down in this Bill provides that, where a manufacturer's export trade has been prejudiced, he can go to the Advisory Committee, who will examine all the circumstances, including those mentioned by the Parliamentary Secretary and also those which I have mentioned, which are the same, though stated in different words. But nothing is gained by destroying an existing manufacture in this country.

The hon. and gallant Member for North-East Bethnal Green (Major Nathan) spoke as though export trade was more important than internal trade, but it is a matter of indifference to a manufacturer whether he sells, say, a motor car in this country or abroad. There is no particular merit in export trade. Why should anyone trouble about export trade if he can sell all his goods at home? The purpose of export trade is to enable us to import from abroad things that we cannot produce here, and, if it is carried on to any further extent, its value is discounted. Indeed, from some points of view, the less you export the better off you are, because in that case you have more to consume yourself. Everything that you hand to someone else to consume is lost. It seems that Free Traders cannot understand their own doctrine. I am afraid, however, that if I pursued that argument I should be ruled out of order. I hope that the Committee will reject this Amendment, which would be destructive of the most scientific provision in regard to drawback that has ever been framed in any country.

Mr. BOOTHBY

I have been amazed by the speeches from the Liberal benches, and particularly by the two speeches of the hon. Members for Bethnal Green. The hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris) chided the Parliamentary Secretary for using his 'prentice hand to tell manufacturers in this country "how to do it." The hon. Baronet thought that that was monstrous. Manufacturers, if his speech meant anything at all, ought to be left entirely alone to run their own businesses with as little interference as possible by way of tariffs or in any other way. Not so long ago, however, the hon. and gallant Member for North-East Bethnal Green (Major Nathan), who moved this Amendment, was moving Amendments designed to secure that the Advisory Committee should take into account the efficiency or otherwise of every single industry in this country before a tariff was granted to it, and I am bound to say that I had a certain general sympathy with his Amendments. I would point out to the Liberals, however, that they cannot have it every way. They cannot on one occasion move Amendments to secure efficiency in industry at the hands of the Government, and on another occasion, in order to score a point against the Government, chide the Parliamentary Secretary to the Board of Trade for using his 'prentice hand in order to tell our manufacturers "how to do it."

I would point out that, when the hon. Member for South-West Bethnal Green spoke about the tremendous and miraculous development of London, he was on the fringe of a very important and difficult subject. I am not myself convinced that this imposing and, I agree, miraculous industrial development around London and in the South of England, which has taken place particularly since the War, is in itself a very good thing. Indeed, I believe that before this century is out some form of national industrial planning will have to be undertaken in this country, for I believe that this mushroom growth of industries in the South of England and around London, while in the North more and more stagnant pools are being left without industries of any sort—

The DEPUTY-CHAIRMAN (Captain Bourne)

I am afraid that the hon. Member is getting rather far from the subject of the Amendment.

Mr. BOOTHBY

I was going to say that I thought that my hon. Friend the Member for South Croydon (Mr. H. Williams) had made an absolutely convincing case to the effect that the method of drawback as laid down in the Bill, and as propounded by the Parliamentary Secretary, was designed for the very purpose of resuscitating and reviving those industries in the North of England which are being at the present moment, and have been for some years past, allowed to languish and die out, and for that reason I am glad to support him. I think it is relevant to the Amendment to say that I agree whole-heartedly with my hon. Friend the Member for South Croydon when he says that we in the House of Commons will be compelled by the march of economic events to concentrate more and more in the future upon the value of the home market, and not to get it into our heads that the salvation and industrial future of this country depend principally, or even primarily, upon our export trade. In the past we have minimised to an immense extent the value of the home market in this country. This home market is of enormous extent, and can be made into a tremendous asset for our producers in the North. Therefore I hope that, while in obvious cases, such as my hon. Friend the Member for South Croydon has instanced, the drawback will be granted, it will be granted only in those cases, and that every facility will be accorded by the Advisory Committee to our own producers, particularly in the North, to produce goods in our own country for our own home market.

Amendment negatived.

Mr. HORE-BELISHA

I beg to move, in page 6, line 24, to leave out the word "regulations," and to insert instead thereof the word "rules."

This is only a drafting Amendment, to correct a mistake in the use of terms. Sub-section (5) provides that the Commissioners of Customs and Excise may make rules, and it is necessary, therefore, that the word "rules" should be used here also.

Amendment agreed to.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

Mr. LUKE THOMPSON

Before we part with this Clause, I should like to ask the Parliamentary Secretary for some in- formation with regard to Sub-section (8). My hon. Friend will remember that, in the discussions on the Import Duties Bill, when we reached Clause 11 a difficulty was found in including marine engine works in the definition of a shipbuilding yard, and, while the Government looked at my Amendment sympathetically, it was found to be impossible to include marine engineering works in that definition. The result is that at present a marine engine works outside a shipbuilding yard in a particular area may be put at a great disadvantage as compared with marine engine works which are included in shipbuilding yards.

It seems to me that Sub-section (8) is very important. Alter the statement of the Parliamentary Secretary on the question of drawback, it looks as though any foreign manufactured goods that might be included in the construction of a marine engine might receive a drawback as such. Sub-section (8) provides that, where goods are brought into any such registered shipbuilding yard as is mentioned in Section 11 of the Import Duties Act from any other part of the United Kingdom, the Commissioners of Customs and Excise may, subject to such conditions as are mentioned in Sub-section (1) of Section 11, treat the goods, for the purpose of the provisions of Clause 8 of this Bill, as if they had been exported from the United Kingdom. Do I understand from the Parliamentary Secretary that such is the case? If so, it will remove a great deal of the difficulty, and will, I think, overcome the position that we tried to overcome at the time when the Import Duties Act was passed.

7.0 p.m.

Mr. T. GRIFFITHS

When the Import Duties Bill was under discussion in the House, I tried to get to know from the Parliamentary Secretary, when he was replying late at night before the Guillotine fell, whether ship-plates were in-eluded under the provisions of Clause 11 of that Bill, and I see now that Clause 8 of this Bill makes provisions with regard to shipbuilding yards. I wanted to find out whether ship-plates would, under the Import Duties Act, be free of tax, or whether they would be subject to a duty of 33⅓ per cent., like steel bars, blooms, billets, angles, wire rods, and so on. I want the Parliamentary Secretary to understand that in the steel trade, especially from the Midland counties up to Scotland, our people are paid on a sliding scale, and that sliding scale is based on the price of ship-plates. In imposing a 33⅓ per cent. duty on, say, blooms or billets, the intention is to increase the price, but, if these ship-plates are allowed to come into this country free of duty, our people who are paid on a sliding scale will not get any advantage whatever from any increase in the prices of other commodities produced in the industry. Take the North-East Coast, to which I think the Parliamentary Secretary paid a visit. You may have there a very large combine—Dorman Long, or some other large combine. This combine produces all the commodities I have mentioned— blooms, billets, angles, and ship-plates. Let us assume that ship-plates have been sold at £6 a ton and the other commodities at the same price. Under the 33⅓ per cent. duty the blooms and billets, we will assume, are to be increased in price by £2 a ton to £8 a ton. Nevertheless, our members will be paid under the sliding-scale based on the £6 a ton for ship-plates and will get no advantage whatever out of the profits made by the steel-makers. This sliding-scale has been in operation for over 40 years, and the steel and iron trade is the only trade which has never had a general strike or industrial trouble. That is due to our negotiating machinery. If our people who make these commodities are to get no advantage whatever from the increase in prices, I warn the National Government that they will have trouble in Middlesbrough, in Scotland, and in every district working under that scale.

I warn the Government that they ought to discuss this matter with the Advisory Committee. If they are going to adopt a policy of tariffs, they ought not to play up to the President of the Board of Trade simply because he is interested in shipyards. If they are going to tax billets, blooms and wire-rods and the other commodities included in the Schedule, they ought to tax ship-plates as well, so that the wages will not be affected. If they are going to allow this rebate or to allow ship-plates to come in free, it will affect the wages of our people under the sliding-scale, and there is bound to be trouble. I am giving this warning, and I hope that the Advisory Committee will look into the matter thoroughly and put ship-plates in the same position as the other commodities.

Mr. HORE-BELISHA

I shall see that the important observations made by the hon. Member for Pontypool (Mr. Griffiths) are brought to the notice of the Advisory Committee. Although I can hardly believe that anything said by such an authority as he is on the subject would escape their attention, I shall personally see that his speech is read. With regard to the position generally—I especially reply here to the hon. Member for Sunderland (Mr. Thompson)—the position is that, under Section 11 (1) of the Import Duties Act, where goods imported into the United Kingdom are consigned direct to a registered shipyard, the goods may, under the conditions prescribed, be imported free of duty. In Sub-section (2) the provision of drawback is applicable to those goods, that is to say, the provision of drawback referred to in the Import Duties Act If goods enter a shipbuilding yard in an unchanged form, then the drawback can be claimed, but, if the goods are manufactured in this country out of foreign material, no drawback can be claimed. The purpose of this Clause is to allow the British manufacturer a chance of making the goods in this country, where necessary out of foreign material, and to put him in a position to claim the drawback. That is as far as the Import Duties Act went, and is as far as this Finance Bill goes. I am sure that my hon. Friend would like the Act to go further than it does, but, as no opportunity was given to him during the discussion of the original provision for extending its application, it would not be possible to extend its application under the Finance Bill. All we do is to preserve the symmetry of the original Act in relation to our new proposals.

Mr. THOMPSON

I am very much obliged to the hon. Member for his explanation. Let me give him a concrete case. Assuming that in the manufacture of a marine engine a foreign crank-shaft is imported from abroad and incorporated in the construction of the engine, I understand that under this Clause a drawback may be claimed on behalf of the foreign crank-shaft. Is that so?

Mr. HORE-BELISHA

That is so. If a foreign crank-shaft is used and is of that class of crank-shaft which the Advisory Committee recommend for the drawback, then the drawback could be claimed.

Commander COCHRANE

The hon. Member for South-West Bethnal Green (Sir P. Harris) said with justifiable pride that there are 55,000 manufacturers in the London area. That is not the whole story, because in the whole country there are 127,000 different factories and, if we exclude the very small concerns, there are over 10,000 factories employing 100 persons or more. Every Member of the Committee will know of instances of one or more of these small factories carrying on a successful export trade. Indeed, in this country it has always been the small producer who has been the virile factor in our productive industry. I only ask my hon. Friend that great care may be taken, in drawing up the schemes provided for under this Clause, to see that the small producer is in no way prejudiced when it comes to applying for the drawback if he is entitled to it and is carrying on an export trade.