CLAUSE 14.—(Restriction of Delivery of Goods from Bond.) (Hansard, 20 October 1915)

§ Mr. LOUGH
I beg to move, in Subsection (1) to leave out the words "and for a period of twelve months thereafter."
I do not know whether any of the members of the Committee notice the extraordinary character of this Clause. I do not believe any Government ever introduced to the House of Commons, certainly not without notice, such an extraordinary proposal as this one which has been flung at us. I think the attention of very few Members has been drawn to it because there have been other such exciting matters in the Budget.

§ Mr. McKENNA
It was announced in the House of Commons.

§ Mr. LOUGH
Yes, it was announced that you would make adequate provision for a most illegal act.

§ Mr. McKENNA
This Clause.

§ Mr. LOUGH
The charge is that you and the Treasury through the Commissioners of Customs—

§ Mr. McKENNA
You said without notice.

§ Mr. LOUGH
I am maintaining that notice was not given it would be in the middle of this Clause. When my right hon. Friend was challenged for having committed a perfectly illegal act—he said he knew it was illegal, and that was strong language for the Chancellor of the Exchequer. Law makers ought not to be lawbreakers. His pride ought to make him observe the law and not to break it in the outrageous circumstances to which I have referred. He said he would bring in an Act of Indemnity to obtain the approval of the House for what he has done. Quite so, but this is not doing that. The Chancellor of the Exchequer has pushed a Clause in this Bill to treat important matters quite away from the taxation of the country, and brings it on at midnight when no proper attention can be given to it.
It has been the practice of this Parliament from time immemorial that no burdens should be laid on the people of this country except with the consent of Parliament. I am aware that this Clause does not lay burdens on the people except indirectly, but what does it do? It says that when this House has fixed the duty at which anybody can remove goods from bond, the right hon. Gentleman himself and his Commissioners of Customs can interfere and say that although Parliament has fixed the terms on which a thing may be removed from bond, it shall not be removed, and he can keep it there for three months. My right hon. Friend could interfere with any commodity that comes into this country, and he could say, "I shall not allow you to remove it from bond." This power is not necessarily confined to articles on which duty is levied, and the effect of the Clause, if passed, would be that either the Treasury or the Commissioners of Customs might make what regulations they like affecting the trade of this country. I know it is difficult to draw the attention of the House at this late hour to the great principle involved here.
I may point out that all the great import trade of this country is carried on by means of public auctions and market terms in London, Liverpool, Hull, and other places, and if you interfere in this 1943 way with the principle you will upset the market terms in every one of the ports throughout the land. The right hon. Gentleman has also authorised others far removed from the Commissioners of Customs to interfere, and now warehouse-keepers in every port of the country are allowed to use their discretion as to whoso goods they will delay. In many cases, often without the consent of the Customs authorities, very questionable steps were taken by these warehouse people, and a great crisis was caused in trade which caused losses of tens of thousands of pounds to the traders of this country. Everything now seems to be excused by the fact that we are in a state of war. This Clause asks that Parliament should deliberately allow this sort of thing to be done at the option of the Lords of the Treasury by the Commissioners of Customs, and this is a dangerous innovation to admit especially in such wide terms as are involved here. The Amendment is to leave out the words "for twelve months after the War." If during the War, or during any emergency this may be necessary, why should it be necessary for twelve months after the War? Why should we be asked in the middle of the night to abrogate powers of this House which it has always most jealously guarded and let a great innovation like this be brought about in the dark? If such drastic powers are asked for, they should certainly not exceed the duration of the War, and that would be the effect of this Amendment.

§ The DEPUTY-CHAIRMAN (Mr. Maclean)
I have allowed the right hon. Gentleman to open this Amendment rather widely, but he must bear in mind that he has made a speech which would have come more properly on the question that the Clause stand part of the Bill.

§ Mr. McKENNA
Nobody listening to the speech of my right hon. Friend would have the slightest idea what this Clause is intended to deal with. The one subject which he left entirely out of contemplation was the only subject matter which I wish to bring before hon. Members. The reason for this Clause is that the practice of Forestalments had grown to such a hideous and disgraceful extent that I felt bound, although the law was not yet in my favour, to forestal the law relying upon the equity of Parliament for an Act of Indemnity. The proceedings of forestallers have been scandalous, and the statement of the right 1944 hon. Gentleman would only have been complete if he had been good enough to describe to the Committee some of the things which take place under forestalments. I would like to tell hon. Members what happens. When my right hon. Friend the Minister of Munitions (Mr. Lloyd George) as recently as last May, introduced the last Budget before the present Budget, it so happened that the forestallers at that time were caught.

§ Mr. LOUGH
What do you mean by saying that they were caught?

§ Mr. McKENNA
Because there were few duties in the Budget. What happened? They forestalled to the extent of £7,000,000 sterling. They would have defrauded the revenue or the public—

§ Mr. LOUGH
Why do you say that they would have defrauded the public?

§ Mr. McKENNA
Well, I think that they would have done. I think that it is defrauding either the revenue or the public, and generally both. What they do is this: They take out of bond dutiable articles in excess of their ordinary trade requirements; they pay upon these articles the lower scale of duty and from the moment the increased duty is imposed these traders sell the articles to other traders and to the public at an enhanced price, including the higher duty.

§ Mr. LOUGH
That is a very serious charge—a monstrous charge.

§ Mr. McKENNA
' Does the right hon. Gentleman deny it?

§ Mr. LOUGH
In spirit, I absolutely deny it.

§ Mr. McKENNA
Forestalments have been the subject of comment by every Chancellor of the Exchequer who has introduced a Budget. He has, indeed, had to estimate in every Budget for loss of revenue by reason of forestalments, and sometimes it has been a matter of congratulation that the forestallers have made a mistake. I did not mean that they should have an opportunity of making a mistake this time, and when I found that the withdrawals began to be in excess of the ordinary trade withdrawals I gave instructions to stop them, feeling confident that my fellow Members would give me an indemnity and justify my action in preventing the Treasury being swindled out of its dues.

§ Sir G. YOUNGER
I sympathise with the desire of the Chancellor of the Exchequer to do something to limit the extent to which forestalment has been carried on in some cases. I think that in the exceptional circumstances the right hon. Gentleman probably acted wisely in taking certain steps to prevent that. But at the same time he inflicted great hardships on perfectly innocent people who had no desire to forestall. It was at the very time when there was an enormous amount of fruit to be made into jam, and the jam makers were prevented getting the necessary amount of sugar, for, although it was required for trade purposes, the amount needed was in excess of the average withdrawals. It was most unfair so far as they were concerned. I mention this to show that there may be some very hard cases affecting people whose only desire is to carry on a legitimate business in a legitimate way.
Undoubtedly the Chancellor of the Exchequer was quite right in calling attention to the large amount of forestalment which has taken place recently in connection with some of our budgets. It certainly did take place in the case of the Budget of 1909—in the matters of spirits. I do not know that I have much sympathy with the right hon. Gentleman (Mr. Lough) in that connection, and I will tell him why. I remember the 1909–10 Budget very well, and I remember the way in which the Clauses were forced through the Committee. My right hon. Friend had a lot to do with it. He was, I believe, a Member of the Government of that day. It was not at midnight we were called upon to pass these Clauses; it was generally at 6 a.m., and when we complained the right hon. Gentleman showed very little sympathy with our objections to dealing with such important questions at such an unholy hour. I do not think, therefore, he has any right to complain that the Chancellor of the Exchequer is asking us to pass these Clauses at twelve o'clock. We used to consider ourselves extremely fortunate if we could get off to bed at 3 a.m. It was a pretty strong order for the Chancellor of the Exchequer to take the action he did regarding withdrawals from bond, but under the exceptional circumstances I shall support him, although I feel that his regulations might have been made a little more elastic.

§ Mr. J. M. HENDERSON
My right hon. Friend says that every Chancellor of 1946 the Exchequer has found himself up against withdrawals. Of course, if you have indirect taxation, and people say that a certain tax is sure to be put on, everybody who deals in that article will come forward and draw it out. I remember distinctly that under the 1909 Budget there was a forestalment of the tax on whiskey, and there was one Member of this House who made a large sum of money by withdrawals. You cannot help that.

§ Mr. C. DUNCAN
Oh!

§ Mr. HENDERSON
The hon. Member may say "Oh!" and that if people withdraw the stuff they should be made to pay. You do not think of the honest people who are doing their ordinary business. This is the first Chancellor of the Exchequer who has tried to get the best of people who withdraw by doing an illegal action himself.

§ Mr. DUNCAN
Quite right!

§ Mr. HENDERSON
A firm I know paid the duty and held a receipt for it at the beginning of September. The firm could not get the goods which they were waiting to manufacture. It was their ordinary quantity, but they could not get it. They wrote to the Customs, but received an evasive answer. They wrote threatening proceedings, and still received evasive answers, and the appearance of this Bill is the first answer they get. That was an illegal action. It ought to be above the dignity of any Chancellor of the Exchequer to do an illegal thing, and then come to this House to whitewash him. That is my view of what the British Government should do, and my notion of equity and justice. I do not think the Chancellor of the Exchequer should avoid what he cannot help, and never can help. On the 5th April, or whenever a tax is passed, there must be always some time when the public will be talking of some duty that is likely to be imposed. It is very natural that a man with money should anticipate that and withdraw. There is another objection to the way that the Customs dealt with this withdrawing.

§ The DEPUTY-CHAIRMAN
The hon. Member is now making a speech in his Amendment to leave out Sub-section (2). If the general Debate is going on, I shall feel quite justified in confining any subsequent remarks on Amendments 1947 literally to those Amendments, because the general Debate will then have been taken. It just shows how unwise it is very often for the Chairman to allow a little latitude, because the Debate is now perfectly general, and there is not the slightest reference to the Amendment.

§ Mr. LOUGH
On a point of Order. The Chancellor of the Exchequer did not make the slightest allusion to my Amendment, but took a point quite remote from it. He paid no attention to the Amendment at all, but simply made an insulting speech. [HON. MEMBERS: "Oh, oh!" and "Order."] Certainly it was a monstrous speech.

§ The DEPUTY-CHAIRMAN
I am sure that the right hon. Gentleman, with his experience of the House, will at once withdraw that.

§ Mr. LOUGH
I readily withdraw. At any rate, he made a very malignant attack.

§ The DEPUTY-CHAIRMAN
I cannot allow that to pass.

§ Mr. LOUGH
He dealt with some harshness against a section of the community who rendered the greatest service to the Treasury and State, and who should not have been recklessly attacked. The Chairman refused to allow the Subsection to be omitted, which would have permitted a general debate, and I was nearly confined to the point. I would ask you if it would not be better to confine ourselves to our Amendment.

§ The DEPUTY-CHAIRMAN
The only safe course is to confine remarks to the Amendment.

§ Mr. HENDERSON
I quite agree and I wish the Chancellor of the Exchequer had followed that course. He did not say a single word to the point of the Amendment. The point of the Amendment is whether this should go on for another twelve months after the War. My right hon. Friend did not give the slightest ground why it should be continued twelve months after the War. He spoke on the general subject, and I was following him. During the War they would like to get in as much money as possible, legally where they could, illegally where they could not, and justify themselves after, but he has not given us any reason, so far as I can see, why that should be continued for another twelve months after the War. It 1948 is on that point that, I support my right hon. Friend. It may be necessary for the War, but I do not think it is, and I do not think it is dignified. It would be not only undignified but very wrong to continue it.

§ Mr. LOUGH
We have not had a word of answer to the Amendment.

§ Mr. McKENNA
I will give the answer if my right hon. Gentleman is anxious for it. It is because the possibility of a heavy increase of duties may exist even after the War. We shall have very heavy charges to bear. It is impossible to say what taxes may or may not be continued.

§ Mr. KING
I really think we ought to be better treated by the Chancellor of the Exchequer. We have really had nothing whatever in the way of support for the position he has taken up. For instance, he told us he could give scandalous instances of forestalling, but he has not given us one.

§ The DEPUTY-CHAIRMAN
I have already intimated to the Committee, and the Committee, I think, very generously supported me, that the remaining discussion should be strictly confined to the Amendment.

§ Mr. LOUGH
I beg to move, to leave out the words "three months" ["not exceeding three months"] and to insert instead thereof the words "fourteen days."
I would ask the Committee to give me as much latitude as they can because it is impossible to make the Amendment understood owing to the absence of any explanation of the Clause at the beginning and owing to our having been prevented from discussing the subject generally. The point of the Amendment is that the Commissioners of Customs and Excise during any period named in the Order not exceeding three months may refuse to deliver the goods. This enables me to make my answer, which can very easily be given when the whole subject is opened up, to the attack which has been made by the Chancellor of the Exchequer. Merchants do not have this forestalment any more than anyone else. A very different statement was made a few months ago.

§ Mr. McKENNA
No.

§ Mr. LOUGH
They were charged with defrauding the revenue.

§ Mr. McKENNA
Only some persons. By no means all merchants. Only some.

§ Mr. LOUGH
My right hon. Friend's conscience is beginning to strike him. There were no qualifications put in then. [HON. MEMBERS: "Yes."] It was treated as a general practice of traders. [HON. MEMBERS: "No."] I am very glad the House is getting round to the same view. We shall gradually get the whole thing explained. My Amendment is simply that these autocratic powers shall not be used for three months. Let the Committee think how these difficulties can be prevented. Parliament sits seven or eight months in the year. A Minister, a Chancellor of the Exchequer can come down any day and alter any duty on 24 hours' notice, if he gets the consent of the House. If the Chancellor of the Exchequer wishes to change any duty he has only got to get the consent of the House to it, and it is done. What is proposed now is not to give the Treasury or the Customs authorities power to change the rate of duty—although we may come to that, perhaps, in a few weeks or months, and I would rather have that than the Bill in its present form—but to provide that for three months these Commissioners of Customs may entirely refuse to give a man his own property. They may say: "We will not give you what you want. We will not give you what Parliament says you are entitled to get. We will shut the whole thing up for three months and cause all sorts of confusion." I move this Amendment for the sake of certainty, and to enable the community to get on with its business instead of this waste and expense. I put the period at 14 days. I think it would not be unreasonable to make it 48 hours. All that is wanted is to put this matter right.
I shall have an opportunity in other Amendments of showing how essentially reasonable is the attitude of the trade; but I must confine myself to this Amendment. If the Government of this or of any country wishes to change a duty, it does change the duty. Say there is a duty of Is. per lb. on tea to-day; make it 2s. to-morrow; put a notice up giving warning that the duty is to be 2s. Let that be done legally, and the trade will not object to it. The trade only asks to be fairly treated under the law. I am speaking of working against the illegality of those 1950 who want to alter the law by the methods which I have described. I suggest that there are easy methods which could be carried out constitutionally without involving anyone in loss. The Government could cure the evil if they like, but they choose rather to perpetuate the evil. Do not keep us in a state of suspense for three months. Do not let the period exceed fourteen days. My Amendment provides that if drastic action of this kind is to be taken at any time, it should only be taken for the shortest period possible. The Chancellor of the Exchequer admits that it was totally illegal while it was done, but this Clause is an act of indemnity. It will be legal in the sense that permission will be given by this Clause. It is a severe Clause, and I suggest that we should make the period as short as possible.

§ Mr. J. SAMUEL
I should like to ask the right hon. Gentleman, the Financial Secretary to the Treasury, one or two-questions. I think there is a great deal of substance in what the right hon. Gentleman (Mr. Lough) has stated. I have great sympathy with the Chancellor of the Exchequer, and I think he is right in trying to prevent these forestalments, but it would be a very serious matter for the trade generally if there is power given to the Commissioners to withhold delivery of goods for a period of three months. What I understood the Chancellor of the Exchequer intended was that he would allow an average quantity of goods to leave the bond. I understood that previous to the last duties put on the action taken by the Chancellor of the Exchequer was that he would not allow the traders to take out of bond anything beyond the average for the previous three months, and not that there should be total suspension of taking out of bond for a period of three months, because in that way many traders doing a very large business would be very seriously affected. I knew a case a short time ago in which there was some mistake made with regard to the delivery of 600 bags of sugar, and the trader practically lost almost his business through the suspension of delivery. He was under the impression that there was some mistake on the part of the Customs. In the case of men doing an enormous business and buying anything up to thousands of bags of sugar or very large quantities of tea for their trade, if the Commissioners were to refuse them their goods it would inconvenience their trade very much, and 1951 in fact might cause a panic in a given district. If the Chancellor only means that the average consumption or requirement of the firm should be taken out of bond, then I agree, but it should not apply to the total supply of the articles.

§ Mr. MONTAGU
If my hon. Friend reads the Clause he will see that there is no power of total suspension of delivery of goods from bond, but that it is sought only to limit the amount of delivery from bonded warehouses to the amount which appears to the Commissioners to be reasonable.

§ Mr. SAMUEL
If the right hon. Gentleman reads line 25 in the Bill he will see the word "refuse." I took the statement of the right hon. Gentleman the Member for Islington.

§ Mr. MONTAGU
It says, "refuse to allow the delivery of goods or commodities … where deliveries are demanded of amounts exceeding the deliveries which appear to the Commissioners to be reasonable deliveries in the circumstances."
The Treasury and the Customs are just as much interested in the welfare and prosperity of the traders as anybody else. We depend upon them for our revenue and we are not likely to do anything to injure them or the country. The reason we ask the Committee to resist this Amendment is that we desire to stop the practice resorted to by some traders of forestalling. We believe that that is a bad practice, We believe that it acts to the prejudice both of the revenue and of the public. Forestalling occurs immediately when a trader thinks himself in a position to gamble on the prospects of a particular tax in a particular Budget. This provision will be limited to action of that class. The fourteen days would allow a certain amount of that gambling. Therefore I would urge the Committee to stick to the longer period.

§ Mr. WATT
Is three months not too long? A fortnight is too short a time. I venture to say that three months is too long to give the Commissioners the option of suspending. Could a compromise not be made between a fortnight and three months?

§ Mr. SAMUEL
The explanation of the right hon. Gentleman is quite satisfactory.

Mr. T. WILSON
I would suggest to the right hon. Gentleman who has moved the 1952 Amendment that he should withdraw it, as the Clause is not a bad one at all. We must take it for granted that the Commissioners will be men of common sense, who will act in a businesslike manner. I would therefore suggest to the right hon. Gentleman that he should withdraw this Amendment and the following Amendment as well.

§ Mr. LOUGH
Has my hon. Friend noticed that in both replies from the Front Bench prejudice was excited against the action which I have taken by going into the question of forestalling, which I have not yet been allowed to mention? When I raise the whole question of forestalling I shall put an entirely different aspect upon it as far as any trade, on whose behalf I can speak, is concerned. There is not this vicious forestalment at all. It has never taken place in the sense in which it has been described here to-night. What I mean is that the Chancellor of the Exchequer commenced by making that charge against me which has had an effect on the mind of the House. It has been repeated by the Secretary to the Treasury. I do not know whether I should be in order in replying to it.

§ Mr. SAMUEL
Is it not a fact that some tea dealers have been advertising lately that they have paid £1,000,000 for tea?

§ Mr. LOUGH
I did not know it. For many days after the change they have gone on selling the tea at the old price until their stock was exhausted. The difficulty is that these duties are paid in sums of £100 or £20 for grocers throughout the country selling teas. This suggestion that forestalment is done by fraudulent tradesmen for their own profit is most malicious—I was going to say, well, I will not—but it is an entire misunderstanding of the case. It takes place in this way. So much is said about what is to appear in the Budget that, as in the case of tea, a sort of panic arises in the country, and orders are sent in for three, four, and ten times the amount which is usually required. Payments are generally on account of orders received, and I know of very few wholesale houses, in fact I do not know of any, who have made any particular advantage out of this—nothing that balances the losses they have sustained. It is in order to meet tremendous demands from the country that the supply is increased, and there is no evidence that the dealers make a profit out of it. Two or three of the best houses 1953 that I know did not pay £1 on their own account, and I know very few, except it was to meet the demands of customers, who have had larger stocks than usual. The Committee will see that the whole of this arises from the very mischievous practice of levying money by indirect taxation. If there were no indirect taxes at all no accusations of this kind could be made.

§ The CHAIRMAN
The right hon. Gentleman is going beyond the question before the Committee.

§ Mr. LOUGH
Perhaps I am, but both the Ministers immediately plunged into the subject of forestalments, and I do not think—I am not reflecting on you, Sir—that they should be allowed to do so without some reply. They talk of wicked tradesmen and bring this charge about forestalments. It is a charge easy to make, and it takes longer to answer.

§ The CHAIRMAN
The right hon. Gentleman, when I intervened, was proceeding to argue on the merits of indirect taxation.

§ Mr. LOUGH
All I say is that the authorities, in these matters, ought to act quickly so that there would not be opportunity for these forestalments to be carried on. What I wish to do is to deny that they exist on the wide scale stated, and to suggest that, so far as they do exist on any small scale, it is owing to the mischievous system of indirect taxes. Coming back, then, to the Amendment, though it is very difficult to discuss it because we are deprived of any explanation, it is generally admitted that it is a great hardship that this should exist for three months, and that people should not be allowed to get their goods, especially if the Committee would look at the Clause a little lower down. They will see that, as drawn out, it is not confined to tea at all. Timber, or anything at all introduced in this country, must be stopped by the Customs. That is a most extraordinary proposal to make, and I appeal to Members in the various parts of the House to consider whether it is necessary to keep the trade under the harrow for three months, and whether some quicker way cannot be found.

§ Mr. KING
I am going to try to make a speech which is in order, because it will be entirely on the Amendment. I appeal with confidence to the sense of fair play which I am sure the Chancellor of the 1954 Exchequer has in a very marked degree to reduce this lengthly period from three months to some lesser period. Does he really mean that three months before the new Budget is introduced forestalling begins? I cannot think it does. He did not say so at all, and I very much doubt whether he will get up now and say he has scandalous cases of forestalling the Budget three months before the Budget statement is made. Unless he can do that, I really think, in fairness to the trading community he ought to reduce this period to, say, one month. I have never heard of cases of forestalling over one month previous to the introduction of the Budget. The right hon. Gentleman may know more about it, but if he has such cases he ought to give them. Again, I appeal to the fair sense and generosity of the Chancellor of the Exchequer to reduce this very long period of three months to something more like reason.

§ Sir G. YOUNGER
I should like to ask the right hon. Gentleman one question. How long was it in October before the Budget was introduced that forestalling occurred? My impression is that it was only two or three weeks—[HON. MEMBERS: "Not a fortnight"!—Probably less than a fortnight. Further, I should like to ask the right hon. Gentleman: Did not that fortnight suffice to meet very much the objection of forestalments? It appears to me that the right hon. Gentleman wants far too long a period. It is a monstrously long period. The complaint I made before on behalf of the jam maker will be very much aggravated indeed.

§ Mr. McKENNA
I hope the hon. Baronet will not think that because this gives the power to refuse delivery of goods in excess of reasonable amounts for three months that, therefore, the power would be exercised for three months. That is not the intention at all. The power would never be exercised for a day unless the Customs have evidence that forestalment has begun. It is no guide to future practice to say that in the past, when there was no such power, forestalment was never more than two, three, or four weeks in advance of the expected date of the Budget. Of course it was not. No forestalled would pay so long ahead of the time unless it was necessary. They did begin two, three, and sometimes more weeks in advance of the Budget because it began to get so difficult to get goods 1955 out of the Customs on account of the crowds of carts in the streets. It became a question of first come, first served, and oue of the evils of forestalment was—

§ Mr. LOUGH
A general demand.

§ Mr. McKENNA
A general demand which happened every year to coincide with the introduction of the Budget.

§ Mr. HENDERSON
It always will.

§ Mr. McKENNA
My philosophic Friend says it always will. I endeavour to stop it. May I continue my argument for a moment? One of the evils was that the streets outside the Customs House would be so crowded with carts that people who were not fortunate enough to obtain cartage would not get their goods at all. One of the worst evils was that the rich trader who had carts got his goods out before the date of the Budget, while the small man who could not get cartage was left, and could not even get his ordinary supplies. That state of things never existed in the past, I quite agree, anything like three months in advance, because the owner of the goods would not desire to pay the Customs Duty any earlier than he had to do, and we should never use this power long in advance. We do, however, want to take such time as will enable us to watch the taking out of bond so that when we see, as we did a fortnight before the Budget, that the rate of taking out is far surpassing the normal rate, we shall have power to stop it, and I am sure it is a power which the whole House, even including the hon. Gentlemen opposite, will be only too glad to give to the Treasury.

§ Mr. J. W. WILSON
I think anybody can see that when the House broke up at the end of July all traders were perfectly satisfied that no change in the Budget would take place until we met again, and no forestalment took place. But if we had settled a datum line of fourteen days as proposed nobody would have suggested that there would not have been a certain amount of forestalment even before the meeting of the House in September. If it is as certain as it was in September that the duty would be advanced forestalling will begin, and it is no evidence to say that it has not begun fourteen days before this, because the Budget has been the datum line, and there is no evidence that it will not begin with just as great a rush as before.

§ Mr. HENDERSON
What happened at the beginning of September was that people began to say, "There is going to-be big taxation on certain commodities, and we had better get out as much as we can." That is very natural, and when the Chancellor of the Exchequer speaks of "this swindling," it is mot swindling. If you knew that there was going to be some commodity that you could get away without taxation, and you could get it away, is that swindling when you are within the law? You have no right whatever to say it.

§ Mr. McKENNA
I will withdraw.

§ Mr. HENDERSON
Very well. They do not get it out necessarily to make a tremendous lot of profit, although some do. They get orders to be fulfilled, and in the case I have, it arose from orders for confectionery which had to be fulfilled, and on which the usual price was charged. Are we going to say that in future there is going to be three months of agitation and talking of more taxes? Every time you threaten to come to the House for more taxes this forestalling will go on. You talk about the average. I want to know how you will get at the average consumption that any particular man may have at any particular time, especially in War time. The average consumption of chocolates during War time has been enormous, mainly because of people sending them to the troops as presents. It has been twice as much as before. How are you going to say what is the average there? When he speaks of carts the right hon. Gentleman is speaking of people who cannot get delivery. That is not the principle adopted at the Customs. What is done, I am credibly informed, is this: that those brokers through whom the notice is given draw according to their average deliveries, and if you have bought through those particular brokers who had big deliveries you get your stuff, but if you have bought through a small broker who has not, you do not get it. I am speaking of people who have paid the duties, and have the receipt, and are entitled to send their carts day after day, and cannot get it. These people were actually stopped in their manufacture.
Are you always going to be three months talking about your Budget before you make these taxes? Are you always going to give people this excitement? What is it you really get under this Clause? You get this: that the Commissioners are 1957 clothed with a power that the House of Commons has never in its long history given to any despotic King. Are the Commons prepared to go as far as that? Are you prepared to say that the Commissioners are to be empowered to tie up a man's trade for three solid months'? [HON. MEMBERS: "No, no!"] But that is just what you are giving them power to do. I tell the Committee that if in the case of any dutiable article I were to ask for two or three cwts. more than the average quantity I had been accustomed to withdraw, then the Commissioners would say that they were not going to give it to me. That is as plain as it can be.

§ Mr. McKENNA
My hon. Friend will excuse me interrupting him. I want to tell him that I will show him the figures of forestalments, and he shall see for himself the extent of the evil which has had to be met. Every Chancellor of the Exchequer has had the same trouble. We have the figures year by year, and my hon. Friend will see that they have always jumped up during the period preceding the introduction of the Budget. That means that there are forestalments, and sometimes, as I have told the Committee, those forestalments have represented an enormous amount.

§ Mr. HENDERSON
It has always been in the month of April or May that the Budget has been brought in. Of course the traders of the country know very well when to expect it, and it is the experience of every Chancellor of the Exchequer, as my right hon. Friend says, that they withdraw goods which they think may have to pay higher duties under a new Budget. You will always have that state of things as long as you have taxes on these commodities. I tell the Committee quite frankly that if I knew that next month a tax was going to be put on some commodity which I held I would immediately get it out of bond and would think that I was doing nothing wrong. As a matter of fact, I would be acting according to the law, and when I am acting within the law, as I think the Committee will agree, then I hold that I am doing nothing wrong. The power you are asking for here is a power that has never been given to any branch of the Government. It enables the authorities to say to a man, "You are getting more goods than your average; so you do not get anything for three months." That is a very great power, and I would 1958 like to ask the Committee whether they are really prepared to give such a power to any Government. What it really amounts to is that the Government are going to fix up my business for me and tell me what I am to do. That is the whole thing, and the whole thing is absurd.
It is the first instance in which the Government are asking for the Customs powers which they have never had before, and which this House has always fought against. What the Government should realise is that if they will talk about the taxes long before they inflict them, then they are bound to have this trouble, because it is only natural that people should try to get their stuff away before increased duties are put upon it. To put a stop to that practice in the way the Government propose would be most onerous and irksome, and would, I feel sure, arouse great friction. There is serious complaint already about the action the Customs have taken, and if the restriction were put in force for three months it would mean a great deal of worry for traders. The whole proceeding in having to ask for an indemnity Bill is not dignified on the part of the Government, and I do not think it is fair of them to say that the people against whom their action was taken are doing wrong in the sight of the law.

§ Mr. J. SAMUEL
Both the hon. Member who spoke last and the right hon. Gentleman the Member for Islington have, I think, misrepresented what transpired in regard to these duties. This Clause, as I understand it, is only to apply during the War and for twelve months afterwards. As the Chancellor of the Exchequer has stated, there is every probability that these duties will remain in force and that they may even be increased during the twelve months immediately after the end of the War. I was surprised to hear the right hon. Gentleman the Member for Islington stated that these things are due to the customers—he calls them agents—in the country. He knows as well as I do that they are not agents, but that they are customers of his.

§ Mr. LOUGH
May I explain to the hon. Gentleman that—

§ Mr. SAMUEL
If the right hon. Gentleman will excuse me I am in possession of the Chair, and I know the business as well as he does. It is like this. You are the wholesale agent. You have a few hundreds or thousands—just as the case may happen to be—of customers in the country. They 1959 may have, most likely they will have, the same desire as yourself—that is to say, to anticipate a rise in the price of tea or sugar. They send in orders to you, and you for your part are not prepared to send the tea to them. If you have large stocks you are anxious to wait until the Budget is introduced and see whether there is an increase in the duty on tea or not. That is really what transpired in all this trading; it is what transpires also in ordinary times, in times when the country is not at war, if there is an anticipation of an increase in the duties, as the Committee will remember there was some time ago.
What I have said concerning articles like tea and sugar applies with equal force to spirits, or to anything else that is dutiable. Of course, if there is an anticipation that there is going to be a reduction in the scale of the duties charged on tea or sugar every trader in the country reduces his stocks as much as possible before the Budget comes out, but if traders anticipate, as they do now in war time, when the Chancellor of the Exchequer is anxious to obtain money, that the duties will be increased, undoubtedly they try to increase their stocks as largely as possible in advance of the rise. If they can obtain tea, sugar, or spirits out of bond before the increased duty comes into operation there is not the slightest doubt that they will take such articles out of bond. The Chancellor of the Exchequer is under the impression that in doing this they are defrauding the revenue of a certain amount of money which it might legitimately expect to receive, and accordingly he has formed the opinion that it is essential to limit the amount of articles taken out to the average daily clearances for a period of three months.
The power which the Chancellor of the Exchequer is taking is not intended to be used to interfere with the ordinary trade of a trader who may be doing a developing business, but if a trader begins to forestall by purchasing large quantities of dutiable goods above his present requirements, then this Clause will be brought into operation. I cannot help thinking myself that it is essential that the country should obtain revenue, and that a very large number of honest traders have not practised these things; this Clause is a very proper one for the Chancellor of the Exchequer to have inserted in a Budget 1960 during war time. I would only make this suggestion, that if he would desire to meet the traders the Chancellor should agree that this provision should continue for six months after the war instead of for twelve months, as the Bill now proposed. If he were to continue it six months after the War instead of twelve months it might give greater satisfaction.

§ Mr. LOUGH
I do not think it was very courteous of the hon. Gentleman who has just sat down not to allow me to interrupt on a matter of—

§ Mr. SAMUEL
Well, I—

§ Mr. LOUGH
I hope he will not interrupt me now, at any rate. If I were unintentionally misrepresenting him, I would certainly allow him to correct me. What I said was this. I said that the people who do this are usually agents of people in the country and have no interest in it at all. If they can get the tea out they do it, but if they do not they lose nothing. The difficulty we are in with the Chancellor of the Exchequer is that he is not familiar with the circumstances. He spoke in his last speech, of the Custom House being surrounded by carts. Nothing of the kind happens, and no tea is got at the Custom House. There are only papers there, and clerks. Where the commodities are stored is in warehouses, and these warehouses often belong to people—they are public bonded warehouses—who are either importers or dealers in tea themselves, and it is these warehouse keepers who have to carry out the instructions of the Customs House when an order like this is given. The usual custom or practice is that when the money is paid the goods can be obtained, and the effect of what the Chancellor of the Exchequer is doing is this, that although a man has bought his goods and paid a deposit or paid for them entirely he is not to get the goods. That is a strong measure in a Free Trade country. I do not want to assist any fraud that may be going on. Everything in this House now seems to be moved from the idea that every man is a scoundrel except the occupants of the Front Bench opposite.
I want this House to take such steps as effectually to prevent at the fountain head any of these courses that we object to from taking place, and all that the trade want is something settled and certain under which they can deal with the tremendous volume of commodities on which this country has to 1961 exist. A million pounds of tea per day have to be delivered in this country, so that if there are forestalments to the amount of 8,000,000 lbs., it is only eight days' consumption, so that it is very easy to speak of big figures here. The million pounds has got to be got out every day, or else you create far greater difficulties than you remedy, and it would not be got out if you allow the Customs for three months to stop the whole thing, quite contrary to all law. If my right hon. Friend the Chancellor of the Exchequer, instead of using strong language about fraudulent traders, would say what he wants done, all the trade would help him to do it. They do not care for these practices. I only want to suggest that the time should be shortened, and I have various other suggestions, but everybody in the House who has spoken has agreed with me on this, and there is scarcely a speaker who has not said, "Shorten the time." The hon. Member opposite said, "Shorten the time," and the Chancellor of the Exchequer himself says it ought to be shortened, but he would not do it. I make a final appeal to him to bring the Bill into some kind of shape to meet the general sense of the Committee.

§ Mr. McKENNA
I believe the effect of having this power will be that we shall never have to use it. I quite agree with what the right hon. Gentleman has said in one particular, namely, that the great bulk of the traders of the country would infinitely prefer that there was no such thing as forestalling. It is only the few who make the profit out of it. If we have this power in our hands so that we can watch from day to day and week to week the outgoings of the Customs, I do not believe we shall ever have to exercise it; but it is the absence of the power and the knowledge that the forestalments—what I call forestalments, without any odium attaching to the word—could be exercised without danger that encourage people to that form of business. I am trying to use neutral terms.

§ Mr. LOUGH
But you are always making the inference.

§ The CHAIRMAN
The next Amendment in the name of the right hon. Gentleman 1962 the Member for Islington is, I think, superfluous. If he looks further on in the Sub-section he will see the words "on payment of duty," and therefore obviously the commodities must be commodities subject to duty.

§ Mr. LOUGH
If that is so, Mr. Whitley, I shall be delighted not to move it, but we have been discussing a set of new taxes all to-day, and the first Amendment we had was one where the right hon. Gentleman the Chancellor of the Exchequer insisted on his right to levy duty, against the Bill passed some years ago. What I suggest is that the whole general volume of the trade of this country might be suddenly suspended under this Clause, and at least, therefore, let us limit it to articles that are subject to Customs Duty. If there is no harm in my words, they might be put in here. I only want to keep the disturbance of trade within as narrow limits as possible,, and in order that that may be considered I should like to move my Amendment.

§ The CHAIRMAN
It seems to me that the proposed words are totally unnecessary, because the words "on payment of duty" come in the next succeeding line. However, I will put the Question—

§ Mr. MONTAGU
I am perfectly willing to accept the suggestion of the right hon. Gentleman opposite with one exception, but I am afraid I shall be precluded from moving an Amendment to it if you put the Question, Sir. I am willing to add the words "or Excise" to the right hon. Gentleman's Amendment, so that it would read "subject to any Customs or Excise Duty."

§ Sir G. YOUNGER
There can be no possible question about these words being unnecessary, because you cannot possibly pay a duty on an article which is not dutiable.

§ The CHAIRMAN
That seems to be my view, and therefore I will not put the Question as it involves superfluous words.

§ Mr. LOUGH
I beg to move, in Sub-section (1), to leave out the words "the deliveries which appear to the Commissioners to be reasonable deliveries in the circumstances," and to insert instead thereof the words, "by more than fifty per cent, the average daily clearances during the previous three months to any firm."
I have the same object in every one of these Amendments, and that is for this House to retain its power. What I suggest here is that no clearances should be 1963 admitted exceeding by 50 per cent, the average daily clearances during the previous three months to any firm. If 50 per cent, is too much for the Government to accept, I will agree to 10 per cent., or even to the average daily clearance. I only mean to secure that trade may go on somehow. Do not leave it all open so that the Customs people can do what they like with the trade of the country.

§ Mr. McKENNA
We would not do that.

§ Mr. LOUGH
How can the Chancellor of the Exchequer say that, when his hands are red with having committed an illegality, and how do we know that the same thing would not be done again? Why can he not give us some guarantees that will enable trade to be carried on on safe lines, and so that people will know what they are doing? As the Clause stands there is nothing to prevent a total stoppage of the deliveries of these goods. My right hon. Friend replies, "Oh, we would not do it; we would not exercise the power," but he is not treating the businesses in that way. He is proposing a new law. Customs Duties have existed for two or three centuries, and nothing of this kind was ever before brought before this House, nor these charges made against the traders of this country, and, therefore, I think the House should insist that, at any rate, there should be some restriction on these officials who are to be given such large powers. I suggest that if the deliveries exceed by 50 per cent, the average daily clearances for the previous three months they should be liable to be stopped, but if 50 is too much, say 10 per cent, or even the average daily clearance, or anything else that will ensure the trade that, on some basis or other, the business can be carried on.

§ Mr. McKENNA
I think that the words in their form in the Bill would be more favourable to the circumstances of individual traders than would the putting in of any hard-and-fast line of ten or fifteen or twenty per cent. At the present time when a trader complained that there were special circumstances in his case, of which he gave evidence, to justify exceptional withdrawal, and where he showed that he was not making a profit out of such withdrawal and not putting up the price against the consumer, we do not stop it.

§ Mr. HENDERSON
But you do.

§ Mr. McKENNA
My hon. Friend thinks that we do; at any rate, we do our best not to. I think the wider the words and the greater the latitude the less injury there will be to trade. I hope that there will not be any interference at all, and, seriously, I do not believe that there will be any. I do not think that we shall have to interfere, because the moment we have the power to interfere we shall not need to interfere. Therefore, I hope my right hon. Friend will agree to allow the Clause to stand in its present form.

§ Mr. WATT
I think there should be some limitation of the power handed over to the Commissioners of Customs and Excise. The right hon. Member for Islington, in a former Amendment, tried to limit that in point of time, and now he tries to limit it in point of power. I think that this Amendment to limit power ought to be adopted by the Chancellor of the Exchequer; he got too much in point of time, and now we are giving too much in point of power. This House ought not to hand over its rights in this way.

§ Mr. McKENNA
Perhaps it will be for the convenience of hon. Members if I say that we do not propose to go beyond the present Clause to-night.

§ Mr. LOUGH
I beg to move, to leave out Sub-section (2).
This is indemnity for past action, and my hon. Friend below the Gangway opposite (Mr. J. M. Henderson), I understand, feels very strongly about it. But I want to take an entirely practical view of this question. I have protested in much of what I have said already against the action the Government has taken, but I do not know what good we will get by refusing them the indemnity. Therefore, although I will formally move the Amendment, I do not desire to press the matter.

§ Mr. HENDERSON
In what has been done the Chancellor of the Exchequer has really done a very wrong thing, and the House of Commons, which is charged with, and is responsible to the country for, looking after its concerns and seeing that no injustice is done, has ratified all the right hon. Gentleman does. Of course all that is past, and I do not want the right hon. Gentleman to suffer or prevent his being 1965 relieved of responsibility for his deeds; therefore I do not propose to proceed with the matter.

§ Mr. LOUGH
I beg to move, in Sub-section (2), to leave out the first word "as" ["and shall be as valid as if an Order of the Treasury"]. I cannot understand why you want this word.

§ Mr. McKENNA
We do not ask for an indemnity beyond the actual terms of this Clause. But if anybody does anything in excess of this Clause we do not ask for an indemnity; we ought to be subject to due punishment. All the power given to the Treasury under Sub-section (1) shall be deemed to have been in existence on the 21st day of September last, so that future validity of action under Sub-section (1) will extend to past action under Sub-section (2). We do not ask for indemnity beyond the present Clause.

§ Mr. LOUGH
There is a difficulty I would like to point out to the Chancellor. He takes larger power with regard to past action. I am alluding now to the second paragraph of Sub-section (2).

§ Mr. McKENNA
That is not for our benefit.

§ Mr. LOUGH
That does go a little further with regard to past action, but I have no objection to it. I venture, however, to point out a great defect in the Clause. The latter part of Sub-section (2) deals with contracts that will be broken by the action of the Government—

§ The CHAIRMAN
That does not arise on this Amendment.

§ Mr. LOUGH
I beg to move to leave out the Clause.
In the first place, it seems to me that this Clause is defective in the respect I was arguing just now. The second paragraph of Sub-section (2) does give a necessary indemnity with regard to any breach of contract which may have arisen. In Sub-section (l), however, there is no such indemnity, so that if any person is prevented from fulfilling his contract by this there is no indemnity, and I think that there should be such indemnity. I 1966 will not elaborate it, but I hope the right hon. Gentleman will consider the matter before the Report stage. On the general question that the Clause stand part, I must ask him to say one or two more words in reply to what has been said about the practice of forestalling. I think there has been a great deal of exaggeration about this matter, and I think it is a great pity that the Chancellor of the Exchequer should use the word "forestall" and make reflections on traders generally. There may be some to whom the right hon. Gentleman's remarks may apply but the great body, and particularly the people from whom he collects such a large amount of revenue, should be treated with more consideration.
I was sorry to hear an hon. Member make an attack upon me for something he says I stated with regard to the 1909–10 Finance Bill. I do not remember the circumstances at all. I think I have always taken the view I am expressing here to-night. If my hon. Friend refers to whisky and beer I say nothing about it, and I know nothing about these businesses. What I maintain now is, that the practice of forestalling is immensely exaggerated. There is the simple fact that a new duty comes into force gradually. The grocer gives out to the public at the old price goods he has in stock for several days after the duty is raised; he may not even know that the duty has been put on—I admit that the grocer will not be likely to do so to the same extent now that this has been done—so that the effect of the duty is spread over a week or fourteen days. Then the House ought to look at what happens when duties are reduced. Any trader who is making a little profit when the duties are put on makes a great loss when the duties are reduced. The House has the greatest prejudice against everything I suggest because of the foolish ideas of the Chancellor of the Exchequer. When he suddenly reduces the duty there will be a considerable loss on stocks which will more than correspond with any gain that arises when the duty is increased.
There is another consideration. Seven-eighths of the tea in the country now is retailed in paper packets. You are dealing with patent medicines in paper packets, and the Chancellor of the Exchequer gives the makers thirty days in which to change their wrappers. Think of all the loss of tea dealers in changing their wrappers! 1967 Tons and tons simply useless; all these have to be thrown into the waste-paper basket when these charges are made. These evils are not met at all, or remedied well, by a violent proposal of this kind suddenly made with reflections on individuals by Ministers of the Crown who ought to know better. Means ought to be found, if we are to go on with these large indirect taxes, of changing the duty quickly. I cannot imagine that anyone would have a grievance if he went to the Customs House and found tea 2s. a lb. They would get their Tea Duty just the same. The idea of setting up a state of affairs and then making charges against individuals because they act in accordance with it and try to carry out their contracts is a very deplorable thing. We have not had much of a Debate, though I agree I have had every licence, and rather more perhaps than I like, but I am satisfied that the Clause is very bad, and the right hon. Gentleman ought to consider whether it is right to deprive this House for such reasons as he has given of its control of the great matter of taxes. The next step will be that the Treasury will make taxes without coming here at all.

§ Sir G. YOUNGER
I only wish to say that I have not an uneasy conscience at all. I have nothing whatever to do with whisky, and beer is never bonded, so I could not forestall if I wanted to do so.