HC Deb 14 February 1867 vol 185 cc345-55

Sugar Duties considered in Committee.

(In the Committee.)

THE CHANCELLOR OF THE EXCHEQUER

said: The Resolutions which I am about to propose will, if adopted, effect a great change in a very important portion of our Customs revenue. They are the consequence of a Convention into which Her Majesty entered in 864 with the Emperor of the French, the King of the Belgians, and the King of the Netherlands, with the object of putting an end to great abuses existing in the assessment of the drawback in several countries of Europe, and establishing a drawback upon a common principle to be adopted by all those countries. In our own country I am bound to say that I believe the drawback upon refined sugar was, upon the whole, established upon fair principles, and bore an approximate proportion to the duty received upon the importation of the raw material; but it was far otherwise on the Continent of Europe, especially in the countries where the great sugar refineries existed—Holland, Belgium, and France. There the drawback was, I will not say calculated, but arranged upon a most extravagant scale; and, in fact, under the name of drawback in those three countries, practically speaking, a great bounty was furnished to the sugar refiners. The consequence of this bounty was that the sugar refiners of England could no longer compete with those of the countries I have named in neutral markets, and not only could they not compete in neutral markets, but they soon found the sugar refiners of France and the Low Countries competing successfully with them in our own markets. Under these circumstances, the sugar refining trade of this country greatly decreased, and was, in fact, fast disappearing; and at the first blush it seemed difficult to suppose that anything could be done to relieve this body of our fellow-subjects from so great a disadvantage. It so happened, however, that in time a mode of relief occurred, and in a very remarkable and significant manner. Some years ago the finances of France were not in a satisfactory state, and M. Fould, a Minister of great ability and acuteness, especially on financial subjects, having been called upon to examine the state of French finance and devise remedies, found, on examining the expenditure of the country, that there was what he properly considered a large and most indefensible expenditure in the shape of bounties to sugar refiners. The French Government, under these circumstances, placed themselves in communication with the authorities of this country. The sugar refiners of France did not attempt to defend the principle of the abuse under which their trade had flourished, but defended the practice on the ground that all other countries also, under the name of drawbacks, really supplied bounties to the sugar refiners. It was in 1862 that the French Government communicated with Her Majesty's Government, and about the time of the last Exhibition M. Rouher, the Minister of Commerce, visited this country, and had a communication with the authorities on this subject. The result of M. Rouher's visit was to convince him that the fault did not lie with England, and that our drawback was calculated on principles which bore a fair and just relation to the duties maintained on the raw material. But that was not the case with Belgium and Holland. The French Government then communicated with the Ministers of Belgium and Holland; and after a conference, they were of opinion that it was much better that all the countries interested in the trade of sugar refining should agree upon a bonâ fide drawback, if possible, and make a saving of the large sum which was expended under the name of drawback, but which was really in the nature of a bounty. After coming to that conclusion, the French Government caused a Conference to take place, first, I think, in Paris, and this Conference in due course led to the Convention of 1864 between the four Powers to which I have referred. The object of the Convention was to establish in the four countries a drawback upon the exportation of refined sugars which should be founded upon just and identical principles. By one of the articles of that treaty, it was agreed that experiments in refining sugar should be carried on upon a considerable scale in a neutral State. It was impossible to arrive at the conclusion which was requisite unless a process of that kind was undertaken. At the commencement of the proceedings, when this Resolution was arrived at, the foreign Governments in question were anxious that the drawbacks should be estimated upon sugar considered solely as one article, and they objected greatly to the classification which has prevailed in this country for a considerable time. But when they had thoroughly investigated the question they found it was utterly impossible to arrive at a satisfactory solution of the difficulty—which in a commercial point of view is an affair of great magnitude—without adopting the English system; their prejudices accordingly disappeared, and they did adopt our system of classification. Upon that system the experiments devised by eminent men, the head of the Customs in France and the Surveyor General of the Customs in England—Mr. Ogilvie, a distinguished member of the Civil Service—were carried on at Cologne. A considerable refinery was hired there, and experiments on a very elaborate and extensive scale were carried on upon every variety of sugar. Holland sent specimens from Java, France supplied her beetroot sugar, and England all the other samples. The experiments were prosecuted for more than a year; but though they were elaborate and costly, their result was most satisfactory, for the four Powers were enabled to arrive at a clear conclusion, according to which the drawback upon exported refined sugar in the four countries is established upon precise and similar principles. To complete these labours and carry the Convention entirely into effect, it is necessary that this scale of duties, which I am going to propose to-night, should be adopted by the Committee. I may congratulate the country on the conclusion of this very laborious business. Some of the results are highly favourable, and I think we may fairly congratulate ourselves upon them; because, while France and the other countries concerned have obtained a result which is perfectly satisfactory to themselves, and in which we also share, there are some benefits which are peculiar to England, owing to the remarkable circumstances in which England is placed. In the first place, the trade of our sugar refiners will be completely restored. They will be able to meet in neutral markets on fair terms with their natural rivals, and they will not encounter any vexatious rivalry in our own markets. In the next place, from the adoption throughout the Continent of our classification of duties, a new impulse will be given to the trade and produce of the West Indies. There are West Indian sugars which will find a market on the Continent, which they have not been able to find hitherto. And in the third place, these negotiations will lead to a very considerable reduction in the sugar duties of the other countries concerned. These are results highly satisfactory, and it only re- mains for me to inform the House of the effect of these arrangements upon our revenue. I hope the account I give will be perfectly satisfactory; because by the new duties which I am now going to propose it will be seen that England will obtain all the legitimate advantages to which I have referred, while our revenue will not be affected in the slightest degree. By one of the schemes proposed there would have been a considerable increase in the revenue, and an increase of duty; by another scheme there would have been a loss of about £300,000; but after further labours and arrangements a scheme was devised, and is now adopted, which really will not affect the revenue in any tangible degree. It is hardly necessary for me to explain minutely to the Committee the changes which have taken place with regard to a most important article—that of refined sugar. There is a reduction upon it of from 12s. 10d. to 12s. There is a slight reduction in one other article, and a slight increase in the third scale of the unrefined sugar; but the general result is that the effect upon the revenue is nil. This is a conclusion which, I hope, will be quite satisfactory to the Committee, as it is to myself. The subject is complicated, but I trust I have explained it with sufficient clearness, and I beg now, Sir, to move the Resolutions which I place in your hands. The right hon. Gentleman then moved the following Resolutions:—

1. That on and after the 1st day of March, 1867, in lieu of the Duties of Customs now charged on the undermentioned articles, the following Duties of Customs shall be charged thereon, on importation into Great Britain or Ireland (that is to say):

Sugar, viz.:— £ s. d.
Candy, brown or white, refined Sugar, or Sugar rendered by any process equal in quality thereto, and manufactures of refined Sugar the cwt. 0 12 0
Sugar not equal to refined, viz.:—
First Class the cwt. 0 11 3
Second Class the cwt. 0 10 6
Third Class the cwt. 0 9 7
Fourth Class, including Cane Juice the cwt. 0 8 0
Molasses the cwt. 0 3 6

2. That on and after the 1st day of March, 1867, in lieu of the Drawbacks now allowed thereon, the following Drawbacks shall be paid and allowed on the under-mentioned descriptions of Sugar refined in Great Britain or Ireland on the exportation thereof to Foreign parts, or on removal to the Isle of Man for consumption there, or on deposit in any approved warehouse upon such terms and subject to such regulations as the Commissioners of Customs may direct, for de- livery from such warehouse as Ships' Stores only, or for the purpose of sweetening British Spirits in Bond (that is to say):

£ s. d.
Upon refined Sugar in loaf complete and whole, or lumps duly refined, having been perfectly clarified and thoroughly dried in the stove, and being of an uniform whiteness throughout, and upon such Sugar pounded, crushed, or broken in a warehouse approved by the Commissioners of Customs, such Sugar having been there first inspected by the Officers of Customs in lumps or loaves as if for immediate shipment, and then packed for exportation in the presence of such officers, and at the expense of the exporter, and upon Candy, and also upon Sugar refined by the centrifugal or by any other process, and not in any way inferior to the Export Standard Sample No. 1, approved by the Lords of the Treasury for every cwt. 0 12 0
Upon refined Sugar unstoved, pounded, crushed, or broken, and not in any way inferior to the Export Standard Sample No. 2, approved by the Lords of the Treasury, and which shall not contain more than five per centum of moisture over and above what the same would contain if thoroughly dried in the stove for every cwt. 0 11 5
Upon other refined Sugar unstoved, being bastards or pieces, ground, powdered, or crushed:—
Not in any way inferior to the Export Standard Sample No. 3, approved by the Lords of the Treasury for every cwt. 0 11 3
Not in any way inferior to the Export Standard Sample, No. 4, approved by the Lords of the Treasury for every cwt. 0 10 6
Not in any way inferior to the Export Standard Sample No. 5, approved by the Lords of the Treasury for every cwt. 0 9 7
Inferior to the above last-mentioned Standard Sample for every cwt. 0 8 0

MR. CRAWFORD

said, he had no objection whatever to offer to the changes which the right hon. Gentleman proposed. On the contrary, they were perfectly satisfactory to him, because they would bring the duties more nearly to an equalization than before—a principle for which he had always contended in and out of the House. As far as the effect of these alterations upon trade was concerned, that would depend in a great degree upon the interpretation that might be placed upon the terms—first, second, and third classes. He would therefore ask the right hon. Gentle- man whether it was intended by the use of the terms first, second, third, and fourth classes to depart in any way from the mode in which the sugars were already known as classified for the purposes of the present duties. The best feature in the change was the reduction of the duty on the finest descriptions of sugars from 12s. 10d. to 12s. There was one point upon which he wished for an answer. He found in the schedule two items—the second, one of 11s. 5d.; the third, one of 11s. 3d. The drawbacks corresponded exactly with the duties imposed. He would ask the right hon. Gentleman what was the meaning of the second item of 11s. 5d., which he did not see in the scale of duties on the imported sugars?

MR. GLADSTONE

I do not wish to trouble the Committee by many observations; but I think it my duty to rise and sustain altogether, so far as my information and memory serve me, the statement made by the right hon. Gentleman. In point of fact, this is a proposal for which the late Government are fully responsible; and the right hon. Gentleman, I think, in the exercise of a very just judgment, has approved the result of certain inquiries for which we were responsible. There is only one point upon which I am anxious the House should not labour under any misunderstanding; because, in point of fact, it indicates and illustrates that approximation in the relation of friendly Powers which enables them to confer together, to concur and cooperate in joint proceedings for the regulation of their mutual interests in a manner which, I think, heretofore has been without example. So far it may be said to be realizing the interests of that kind of progress which we must all desire to see realized, and which tends so much to the benefit of mankind. But I wish to state even more openly that the merit of this proposal, which I take to be a very great merit, does not belong to the late Government, nor to the agents of the late Government; the merit of its conception belongs to the Government of France. The right hon. Gentleman was, I think, no more than just in speaking of the assiduity, the knowledge, and the skill with which the duties devolving on our revenue officers have been performed. With regard to Mr. Ogilvie, in particular, I must say that nothing can be more creditable to any public servant than the clearness of the views which he entertains and the aptitude and precision with which he sustains and applies them. There is one point on which I am desirous there should be no misunderstanding. The Convention does not impose any fetter or restraint upon the discretion of the British Legislature or on that of the Legislatures of the three other countries with regard to the use of sugar as a fiscal resource. That branch of our revenue was much too important to allow of its being placed under any such restraint. The points to which we are restrained are the points on which it is actually beneficial for us to be restrained. What I mean is that while agreeing that the duties upon different descriptions of sugar shall bear a certain relation to one another, and that the drawbacks thereon shall bear a certain relation to the duties, the stipulations of an international character are entirely relative, the absolute duties which may be imposed being subject, as heretofore, to the discretion of Parliament. I believe that that is a correct statement; but if it is not, I hope I shall be corrected. Now, besides being a great sign of international progress, this happy occasion marks, I trust, the close of a domestic controversy—a controversy in which my hon. Friend the Member for the City of London (Mr. Crawford) displayed, as the representative of the cause which he espoused, an ability, an amount of knowledge, and a clearness of statement that I have never seen surpassed in this House. I think, however, my hon. Friend has tonight stated the case a little too much upon his own side, for we must not forget the principle which was contended for by the Committee of 1861, as well as by the right hon. Gentleman the Member for Oxford, and the right hon. Member for Shoreham (Mr. Cave)—namely, that the duty ought to vary according to the real value of the sugar, which ought to be regarded as raw material intended to undergo a further process of manufacture. That is the very principle which has now been arrived at by an investigation, carried on with all the resources which science and national funds could supply, and has received so high a sanction that I doubt whether it will ever again be overset or even assailed. I do not think any of us can view that conclusion with regret; because throughout these controversies it was impossible to contend for any other principle than that the real value of the several classes of sugar is the just basis for differences of duty, and the only object was to arrive at a just criterion for determining that value. The right hon. Gentleman the Chancellor of the Exchequer has stated that this proposal will have no effect upon the revenue. I can quite understand the sense in which those words are to be taken, and I think the right hon. Gentleman was perfectly right in adopting such a scale of duties as to leave matters, with regard to the amount of duty, as nearly as possible in the state in which he found them. I think, however, that inasmuch as this is decidedly a sound commercial change, and tends to bring the incidence of duty in closer relation to the value, we should derive the same advantages which we have derived in every department from everything that gets rid of a protective or differential element, and that much greater vigour will be imparted to the operations of the sugar trade under the new than under previous scales. We have from time to time in alterations of the duties endeavoured to reduce those differences. In 1864 we made a very great reduction in the scale, and there is now a further approximation to unity. I hope we have now got to a condition of things in which the enormous interests abroad and the considerable interests at home may look upon the principle of our system of duties as definitely established, and may consequently resume commercial operations free from the disturbing influences and apprehensions which must always be felt so long as uncertainty hangs over the proceedings of the Legislature.

MR. CRUM-EWING

said, he believed that a simpler plan might have been adopted than was now proposed. The Vice President of the Board of Trade (Mr. Cave) suggested last year that the duty should be greatly reduced, expressing his belief that a duty of a half-penny a pound would lead to so enormous a consumption as to protect the revenue from loss. He should like to know whether the right hon. Gentleman adhered to that opinion. A plan even better than that would be to allow the privilege of refining in bond, for then the grower would produce his sugar in the most economical state he could, whereas at present he was forced to make it so as to suit the various duties. He had been informed that a patent had been taken out in France for converting sugar into hard cakes like brickbats, so as to render unnecessary the use of casks, and greatly to diminish the expense of freight. He believed there were many other modes to which growers of sugar would resort if allowed, and he had no doubt these would have the effect of reducing the price of sugar 1d. a pound, independent of the duty altogether. He could testify to the ability which had been shown by Mr. Ogilvie; no more able officer could have been selected for the purpose.

MR. THOMSON HANKEY

said, he was surprised to hear the hon. Member for Paisley (Mr. Crum-Ewing) express so much dissatisfaction with the measure of the Chancellor of the Exchequer. Having sat on the West India Committees, and having been for many years connected with the West India trade, he believed that a great point had been achieved in putting an end to the controversies between the different scales, and arriving at what promised to be a permanent understanding. His hon. Friend thought the question might have been settled in a more simple manner by a single duty; but this was not a mode which the West Indian interest thought was to their advantage. They had always contended that the duty should be levied on the quantity of saccharine matter; and he believed the West Indian interest would read the proposition of the Chancellor of the Exchequer with entire satisfaction.

MR. ALDERMAN LUSK

asked the Chancellor of the Exchequer whether, if they should agree to the Resolutions, the sugar duties would continue as they are for the next twelve months? The time was come for considering whether they should try to reduce the duty on an article of such consumption amongst the humbler classes. If they did away with the classification altogether and brought down the duty to a half-penny per pound, the increase in consumption would make up for the reduction of duty.

MR. STEPHEN CAVE

said, that hon. Members seemed determined to make use of the last opportunity left them to have a sugar debate. The hon. Member for Paisley had asked him whether he was of the same opinion that he had expressed last year as to lowering the sugar duties. He begged to tell him he was, and that whenever the state of the revenue permitted he should be happy to see these duties lowered, if not done away with altogether. Another question—that of refining in bond—had been considered by the Committee, and though in theory there was much to recommend it, in practice it was found to be quite impossible. It was contended that the simplest plan was to tax all kinds of sugar at the same rate. That was exactly what the Government proposed to do by these Resolutions. They had been asked why they put a different value on different kinds of sugar, but they did nothing of the sort. They taxed pure sugar at the same rate in every sample. This was the recommendation of the Committee. At that time the classification was based upon somewhat doubtful rules; but it had been since shown to be possible to find out the exact proportion of sugar in various samples almost to a mathematical certainty. His hon. Friend asked why the Government did not let every one make sugar just as he pleased. This was what the system of classification tended to do, whereas uniform duty would exclude the lower qualities. It was a common fallacy to suppose that every one did not make the best sugar he could. If they went to the various places of growth where duty did not enter into the question, they found the price varied as much as in this country, showing that it paid best to make sugar as good as possible, and the only reason why it was sometimes bad and sometimes good was because the best machinery and appliances could not always be commanded. The ryot of Madras and the free negro of Jamaica could not produce so good an article as those in possession of Derosne's vacuum pans. Colonial refineries seldom answered, and therefore inferior sugar was sent to this country to be refined, just as copper ore was sent to Swansea. It had been truly said that the origin of this movement was due to France, and the reason was that her system of drawbacks was so expensive to the country that the net revenue of the sugar duty, as compared with the gross, was only as 15 to 45. In answer to the hon. Member for London he begged to say that the different grades were precisely the same as those in the present classification, the names only were changed. The old names with which his hon. Friend was familiar, white clayed, brown clayed, muscovado, &c, were unmeaning and sometimes deceptive, and it was thought better to call sugars as of the first, second, third, and fourth class. This was assimilating our practice to the Dutch numbers, which were perfectly well known. The drawback of 11s. 5d. referred to sugar mixed with a certain amount of water, and if the hon. Member looked to the Resolution, he would see that sugar containing not more than 5 per cent of moisture would receive a drawback of 11s. 5d., instead of 12s, If any one imported sugar in a damp state, which was practically never done except by mischance, when allowance was made, it would come in at 12s.; but if it were exported it was fair to allow a drawback of 11s. 5d. only, instead of 12s., otherwise it would be a bounty. The difference of drawback was 7d., or about 5 per cent. It was asked whether we were free to raise or lower duties. Full liberty to do so was reserved by the Convention. We might do as we liked in this respect provided we preserved the proportion between the different grades. It was not usual to publish changes of duty till they were actually in force, but in this case the result of the experiments was published in the French papers, and therefore there had been sufficient data before the trade to enable them to calculate the new duties, and he had that morning received a paper in which they were estimated to within 1d. of the actual amount. The month of May was originally fixed upon as the time at which they would come into operation; but when he was in Paris the other day he heard it stated that all the other countries were ready to begin and were only waiting for us. It was therefore thought desirable to propose the new duties as soon as possible. He heard in Paris that it was hoped the Zollverein would join in the same reform. At present the Zollverein Excise duties and drawbacks were fixed on a different principle—(namely, on the raw root), and one which caused great loss to the Governments of those countries. At all events, when the success of the present experiment was proved it was hoped that other Governments would come in and adopt the same. His hon. Friend had asked him whether the re-arrangement of duties was favourable to the British West Indies. He was sorry to say it was not, and therefore he personally rather objected to it, but it was fair and just, and moreover Her Majesty's Government had no choice as their hands were absolutely tied by the terms of the Convention.

MR. CRUM-EWING

wished to explain that he was not dissatisfied with the plan of the Government altogether. The House owed very much to the Government in regard to the question of drawbacks.

Resolutions agreed to; to be reported To-morrow.