§ The CHAIRMAN
I am not calling the Amendment standing in the name of the hon. Member for Moseley (Mr. Hannon), to substitute the words "thirty-first day of July" for "first day of August," the discussion upon which can be taken on the Clause.
§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Lieut.-Colonel MOORE-BRABAZON
I want to raise on this Clause the question of the withdrawal of the McKenna Duties, and to mention in particular one small industry which has never had its case put before the House, namely, the cinematograph printing industry in this country. It is an industry which grew up owing to the tax which was put upon films imported into this country, and now, without a moment's warning, this industry—admittedly a small one—is going to suffer great hardship. The whole position is curious in this respect, that, as far as I can find out, not one single soul in this country is going to be benefited by the withdrawal of this duty. No Section of the cinematograph trade, not even importers of foreign films, are in favour of the withdrawal of the tax upon cinema films. I think I ought very briefly to state the two different types of films which are imported into this country. Unfortunately, cinematograph films are not taken in this country so much as they are abroad. Almost 90 per cent. of the great cinema plays are photographed outside the United Kingdom, and, when such a 1035 play is finished, it is, as a rule, imported into this country in the form of a negative. I can quite understand that, if a high duty is put upon the negative, that might increase the charge to cinema theatre patrons, and on the question of negative films I do not say anything at all. It is, however, in connection with positive films that this particular hardship comes upon film printers in this country.
There is no difference in the price of printed films as between this country and any other, and the imposition of this duty upon imported positive films caused films to be printed in this country which otherwise would have been printed abroad. We are now in this position, that, owing to the withdrawal of this particular duty, films which were printed here will now be printed abroad, not because that is necessary, but because, where one has a manufactory, one tries to use it in the very best possible way, on a 100 per cent. basis, doing as much work as possible in order to keep the overhead charges as small as possible. Consequently, copies of the great films which have been made abroad will come into this country already printed. I want to point out to the Chancellor of the Exchequer that this particular industry is in a different position from any other, because the machinery is quite exceptional, and is of no use for any other work but the printing of films. In other industries, such as engineering, the making of motor cars, and so on, it is quite conceivable that the plant in the factories could be turned to some other account; other goods could be manufactured, and the capital invested in the factories used in some way; but in this particular case the machinery is so exceptional, and so entirely confined to the one particular business of film printing, that at this moment, owing to the withdrawal of the duty, the machinery, complicated and expensive as it is, is of no value at all. I have put before the hon. Gentleman this small industry, which was increasing in importance and earning money and is now in a very difficult position. It is going to be sacrificed because of an abstract political doctrine. I know any words I say to-night are not going to change the position, but I have risen to put the case of this small industry and to show how this very great hardship has 1036 been inflicted on a growing business for the benefit of not one single soul in the United Kingdom but for the benefit of people outside the United Kingdom.
§ Mr. HANNON
I rose to call attention to the effect of the McKenna Duties in a much larger branch of enterprise than that which has already been dealt with. When the Chancellor of the Exchequer made his Budget speech and intimated that he was going to abolish the McKenna Duties, there was undoubtedly a good deal of alarm felt, not merely throughout the motor trade itself, but through all the incidental trades associated with it. The agitation which naturally arose was perhaps in some instances a little overdone and there was a good deal of exaggeration perhaps in certain sections of the Press and amongst certain protagonists of the interests of various parties in the industry. But in the deputation which the Chancellor of the Exchequer received, and at which 'the Financial Secretary was present, no exaggerated statements of that nature were presented at all. On the contrary, we confined our arguments within the rigid limits of fact. We pointed out the number of persons who would be directly affected in the first instance by the removal of these duties, and secondly the number of interests in affiliated and incidental trades which were bound also to be affected m soon as the duties came to be removed. Although I take the same position as the hon. and gallant Gentleman, that the highly abstract atmosphere in which certain Members of the Government live will not help us to any concession during the Finance Bill, I would at all events call attention to what has happened since the previous debate took place. I put down a question the other day to the Minister of Labour, calling his, attention to the increase of unemployment in Birmingham and the Midlands. I asked him whether he was aware that the week ending 9th June showed an increase of something like 5,000 in the number of unemployed in the Midlands as against the preceding week, and he answered that the statistics of unemployment for that week showed an increase as compared with the preceding week, 'but detailed statistics on an industrial 'basis were compiled only at monthly intervals, and he was unable then to state what particular industries were 1037 affected. I was naturally anxious to ascertain whether this sudden increase in the number of unemployed in the Midlands was due to the effect of the abolition of the McKenna Duties on the motor trade, and I asked if he could give any information of the extent to which it was being increased by the abandonment of the duties. He regretted that he could not give me an answer as the statistical Department was very short-handed, and owing to the process of economy adopted by the House, he had not enough staff to obtain the required information.
It is quite clear that in this important area of the country, there is a steadily rising tide of unemployment, which is almost entirely due to the fact that these duties are about to be removed. Birmingham is a city of small industries. There are between 1,200 and 1,300 small traders. A great many of these were able to carry on during the past two years, through the flourishing condition of the motor industry, in other parts of the country as well as in the Midlands, which acquired from the small firms certain accessories and parts necessary in the trade. The immediate effect of the Budget speech was that the motor manufacturers suspended or modified large orders which they had placed with these small manufacturers, and naturally this at once led to notice being given to a large number of workpeople that employment could not be continued. A great firm like Lucas's in Birmingham has been obliged to give notice to something like 1,000 hands in the course of the past month or six weeks. That is a condition of things which I am sure no party contemplated when the right hon. Gentleman made his Budget speech. Of course, with all his facile methods of dealing with opponents, the right hon. Gentleman fastened on to one or two of the somewhat extravagant statements which have been made in the newspapers, and on that based his whole argument against the speeches which had been made from the Front Opposition Bench. In a matter like this—we all know the promises which were made in regard to unemployment during the last General Election—the Government ought to have made a more careful study of the results which the abandonment of these duties would have upon the industries of the country before they made it part of their financial policy. Even now 1038 it would not be without profit to the Government to make a careful expert examination of the extent to which highly skilled workers are being put out of employment in large numbers because of the course which is being pursued by them. The struggle to-day at the instance of employers to keep their people employed is exceedingly great. There is not much sympathy in certain parts of the House for the employer, but during the last five hard and difficult years the employer has made great sacrifices in order to enable his workpeople to make their livelihood out of the industries in which they are engaged, and no one has observed with greater concern and anxiety the continuous exodus of the highly skilled workers in the engineering trade than the employers whom they served.
Thanks to their adherence to an old shibboleth and the pursuit of mid-Victorian Free Trade doctrines, great numbers of men, especially men of the quality of those engaged in the engineering trade, are being sacrificed. The Government ought to have given more thought than they apparently did to this point before they introduced these modifications in the taxes. They lose revenue. They do not confer a single benefit upon any soul in this country. They do not reduce the price of motor cars, which in point of fact had been reduced because of higher efficiency and greater production under the existence of these duties. They confer not a single benefit on man, woman or child, and, looking back on the result of their work during the past six weeks or two months, we have weekly another 1,500 skilled men added to the volume of unemployed who register at the Employment Exchanges. In the districts where these industries have contributed so much to the maintenance of the working population the Labour party will have some difficulty in justifying their financial policy the next time they have to make an appeal. I ask the Financial Secretary whether he has any influence upon the stony heart and the somewhat confused economic intelligence of the Chancellor to induce him even now to consider whether there should not he some modification in the determination of the Government to abolish these duties on 1st August. It is not much consolation to the workpeople who are out of employment to know that the Government is salving its conscience by adhering 1039 loyally to an old exploded economic principle. At the same time it is of considerable consequence to them to realise that in other parts of the world, in the United States or in Germany, workmen are producing and selling in this country articles in the production of which they themselves should be employed. We are receiving to-day volumes of goods produced under conditions of cheap labour and longer hours in corn, petition with our workpeople here, and this action of the Government in abolishing these duties, at a time when employment was slowly improving and the whole motor industry was prepared to accept the responsibility of standing on its own merits at the end of three years, has struck a severe blow at national prosperity from which it will take us a considerable time to recover. I ask the hon. Gentleman even now to consider whether the position of this industry and all the people employed in these little trades which work for it should not be taken into account.
§ Mr. DUNCAN
I am interested in the trend of the Debate, for I was not in favour of the abolition of the McKenna Duties. My view was, and I think I know something about the motor industry, that it would have been much wiser to have given these people three years in which to adapt themselves to the circumstances in which they found themselves. They did not ask for the duties to be imposed. The duties were of no advantage to them while the War was on, and during the slump it could not have been argued that there was any protection to the people who were manufacturing motor cars in this country. Here was a question affecting an industry which was developing on good, sound business lines, an industry which had gone through a very difficult period, and which was beginning to get on to its feet again. If the case had been argued from a business point of view, I suppose there never was a stronger case to put before the House. But that was not the line taken by the Opposition. The Leader of the Opposition showed very bad judgment in arguing the McKenna Duties from the Tariff Reform Protectionist point of view. However, he argued it from that point of view and he got what he might have expected. He was defeated on the political issue.
1040 The Opposition might have argued the question from the business point of view. It ought to have been argued from that point of view. The hon. Member for the Moseley Division of Birmingham (Mr. Hannon) began his speech entirely from the business point of view, but before he had finished he could not leave the old nostrum alone. It is this mixing of politics with business that has as much to do with injury to the motor industry of this country as anything I have ever heard in this House. There was a really fine chance of getting the motor industry on to its feet in this country. That it had gone through very difficult times is proved beyond doubt. The position of their shares is eloquent of had times. Many firms within comparatively recent years have had to go into the Bankruptcy Court, and the story is not all told yet. Not long ago there was a meeting in regard to the winding up of Messrs. Harper Bean and Company, a very large firm. If there had been a chance of continuing the McKenna Duties it would have enabled some of these firms to get on to what is termed mass production lines, in order that they might have competed on more easy terms with their American competitors. We have heard from the hon. Member opposite remarks about the dismissal of men. He mentioned the name of one firm, and I will not controvert what he said, but I believe that a number of firms who have stopped their workpeople will be starting them again. It is utterly fantastic to suggest to this House that the rioter industry is a dying industry.
§ Mr. DUNCAN
Anybody who follows the operations of the motor industry, and I follow them as close as anybody in this House, must realise that the motor industry is improving very much. Its exports are increasing practically every week, and, side by side with that, the imports of motor cycles particularly have almost faded out of existence. In the motor cycle industry we are making the finest motor cycles in the world, and we are exporting them in increasing numbers to countries throughout the world. We are exporting them to Germany and other countries that were at war with us. So great is the demand for them that they are actually being taken over in aero- 1041 planes. Our exports of motor cycles, not only to Europe, but practically every country in the world, are increasing greatly. The weak spot in the business is in regard to the motor car, and I admit the abolition of the McKenna Duties, to some extent, will impose hardship on the motor industry. Even so, I say that the position is not without hope, because I believe that the motor car we are making in this country will not only bear comparison with the motor car made in any other country but it is a far better article in every way.
From many points of view it is infinitely cheaper, because of its smaller nominal horse-power and the fact that through the improvements achieved in regard to engines, it develops a far greater level of service than most motor cars. There is very little doubt that the American car which has been imported into this country for the last few years will soon be as dead as Queen Anne, and that the motor car made in this country will take its Place as a better engineering proposition and a much more economical type than cars that have been imported in the past. All the same, I would have preferred that the McKenna Duties on motor vehicles should have been taken off by spreading the reduction over three years. That would have given the motor industry in this country a better opportunity of going on with mass production than is likely to be the case under existing circumstances.
It is very difficult for us on this side of the Committee to take a stand in a case of this kind. I made a few remarks on this subject when the Budget was introduced, and I discovered that my speech was being used in Tory publications as against the Government. I was not against the Government. I voted for the Government. At the same time, I confess that I desired a rather different policy from the one they were pursuing, a policy which would, I think, have been beneficial to the motor industry.
It would have enabled those industries to get better on to their feet, and it would have made a little more employment for the engineers who are now out of work. It might also have prevented many men, or some men, from emigrating to other countries. These matters may seem of small importance in a big Debate of this kind. but it is the little things 1042 that make the big things. From that point of view I am sorry that the Duties were abolished at one swoop, believing as I do that a little consideration not only from this side of the House but from the other side as well would have been advantageous. If the whole proposition had been discussed from the business point of view, I am rather inclined to think that the House might have been willing to give more consideration than it did to the ease. Both sides of the House were equally to blame.
I am sure that the Committee will not expect to-night a long reply to the discussion which has taken place, not because I do not realise the importance of the points put forward in this Debate, but because this is a subject upon which the House already, after a very full Debate, has recorded its, decision. The Debate which has just taken place falls into two parts. The first part, which was raised by the hon. and gallant Member for Chatham (Lieut.-Colonel Moore-Brabazon), regarding the position of a particular industry, the manufacture of cinematograph films; and the second dealt with the McKenna Duties as a whole and was raised by the hon. Member for Moseley (Mr. Hannon) and the hon. Member for Clay Cross (Mr. Duncan). With regard to the manufacture of cinematograph films in this country, it would be wrong on my part to suggest at the moment that I had any detailed information which I could give in reply to the hon. and gallant Member, but the broad facts as regards the importing of cinematograph films into this country under the McKenna Duties is that after the duties were imposed, taking the first year for which we have complete returns, the yield was approximately £184,000, and that rose in the last year for which we have complete returns—1923–24, I think—to about £289,000.
So it is clear that cinematograph films were coming into this country in increasing numbers, and I should think to some extent, on the mere fiscal aspect alone, that there was not that complete protection to those articles which is sometimes derived from the mere existence of what becomes a protective duty. But we have never disputed that in the repeal of these duties there might be some temporary dislocation. The Chancellor of the Exchequer and I endeavoured to make that quite plain when the larger discussion took 1043 place, but I should think that in a small industry of this kind the dislocation cannot be large, and in any case the practical reply to-night is that we could not possibly exempt from the operation of the repeal the manufacture of cinematograph films without opening the door to other exemptions, which might amount in the long rim to a continuance of the duties themselves. The duties have either got to go altogether or to remain altogether. There cannot be any picking out of particular items without a complete upheaval of an important principle in fiscal practice.
On the point raised by the hon. Member for Clay Cross, the main suggestion was that some notice should have been given to the traders in this country, and that perhaps over a period of three years, no doubt in three stages, these duties might be repealed. On that point we took a great deal of advice from the trades affected at the time, and I have no hesitation in telling the Committee that the trades themselves made it perfectly plain that if the duties were to disappear they had better disappear as quickly as possible in order to get rid of the uncertainty and doubt which would remain if this was a suspended operation over a certain term of years.
§ Mr. HANNON
Surely the hon. Gentleman does not say that the trades were against a period of three years?
No, it is, true that there was a difference of opinion in the trade itself, but I should think that for the trades it would be better to give the one definite date, because business men always argue that while they can fight obstacles of all kinds the one thing which they cannot fight is uncertainty, and if the duties were continued for three years, with the possibility of a change of Government that would have exposed important sections of British industry to uncertainty as to the continuance or otherwise of the duties in question, and so the Government decided to repeal the duties all at once. The other point which remains is the larger question of the duties themselves and their aspect upon unemployment. Our information up to the present is that the expected repeal of those duties—they have not yet disappeared—has had no appreciable effect upon unemployment at all.
1044 There is a certain temporary embarrassment—at least we hope that it is temporary—in certain parts of the country, but I think that these are only examples, which may be localised, and I can only add that the Government is bound to take its position on all the facts believing as it does that a Free Trade policy is better for this country than a policy which, whatever the origin of the duties was, had at all events become Protection, because during the whole course of the Debate on the general question recently no one suggested that the peculiar conditions which obtained during the War remained still in force. That those conditions had disappeared was generally admitted, and with the disappearance of those conditions there had gone the 1915 case for the duties. I am not a slave to any particular economic doctrine one way or another, but I have always felt that, on balance, a policy of fiscal freedom is the better policy for this country, and there are many reasons on which this could be argued, if this were the appropriate time. My own faith is that the individuality of the British worker and the ability of manufacturers in this country and the quality of the British goods produced by those who are engaged in the industry, will tide over any temporary dislocation, and, taking a long view, that the trade will be stronger and better rather than weaker as a result of the change.
§ Sir G. COLLINS
I am very glad that the Government have decided to adhere to this Clause as introduced. I do not share in the view which has been expressed that the general motor trade will suffer severely as a result of the discontinuance of these duties. I say that for this reason: I look to our engineering trades before the War, and having regard to the large exports of engineering products, created in British factories by British labour competing against America and Germany in the neutral markets of the world, and having regard to our trade and the size of that trade, I think that experience shows clearly that British commerce, unfettered by State interference supported by British capital, with goods manufactured by British labour on a system of free imports, is able to stand successfully the competition of the world, and I, therefore, do not share the fears that have been expressed in formed Debates that the motor trade will suffer severely on account of the proposals of 1045 the Chancellor of the Exchequer. I am glad to see this duty removed, because it is another of the duties which were posed in the stress of the European War. I know that the Opposition have taunted the Chancellor of the Exchequer with the creation of unemployment as a result of his policy. But the Leader of the Opposition invited the decision of the country on the question of Free Trade or Protection, and when the votes were counted these duties were doomed the day after the Election. I am glad that my friends are co-operating with Members of the Labour party in sealing the fate of these duties, and in placing this trade on the same basis as other trades, and I have no doubt that it will be a successful trade in future.