NEW CLAUSE.—(Silk Duties—Amendment.) (Hansard, 7 July 1927)

§ Mr. REMER
I beg to move, "That the Clause be read a Second time."
I make no apology for introducing this question of the Silk Duties by moving this new Clause to make the duty more equitable between the different branches of the trade, particularly so as it will cost the Exchequer practically nothing during the existing year. The total revenue raised last year by the particular items which I wish to leave out was £250,000. I think drafting Amendments may be necessary if this Clause is agreed to, in order to adjust drawbacks, but they can be quite easily made if the Chancellor accepts this proposal.
In the hosiery trade there is a very small amount of raw silk which is covered by the omission which I propose, and there is a tax on the fully manufactured article of 33⅓ per cent. In other words, that industry has what I call adequate protection, or what the Chancellor of the Exchequer calls compensation for the inconvenience which the trade is suffering. That industry is in a very good position at the present time. This proposed new Clause is designed to help the silk spinners, who are in a very had position at the present time. The tax on spun silk is 6s. 8d. per 1b., and the drawback on the same article is 7s. 9d. per 1b. As the Committee will quite readily see from these two figures, it pays the manufacturer who uses spun silk, or the London merchant who buys spun silk, if the prices of the two articles are the same, to buy the foreign instead of the British article, because, in that event, he gets a rebate of 7s. 9d. per 1b., whereas, if he buys the British article, he only gets 6s. 8d. per 1b.
1571 Furthermore, as far as the spun silk trade is concerned, little or no protection is given to the spinners of silk; and there is a still further point in favour of this proposed new Clause, in dealing with the exports of silk generally to various countries. The countries to which I refer are Canada, South America, the United States of America and South Africa. In all of those countries there is a dumping law, and the import tax in those countries is payable, not on the price at which the goods are sold there, but on the price at which they are sold in the United Kingdom. As the Committee know, in the Silk Duties there is a tax upon the raw material which makes the price of a silk article in this country higher, and the manufacturers, when they export, receive a drawback on exportation. Consequently, the tax which is paid, when silk goods from Britain are exported to the countries I have named, is charged, not upon the price at which those goods are sold there, but upon the price at which they are sold in this country, and that is equivalent to an increased tariff on those goods as compared with foreign countries who export to those same countries.
It may be said that the Chancellor of the Exchequer, when he introduced these Silk Duties, made a very careful scheme to balance the artificial silk trade and the real silk trade in proper proportion. What the Chancellor really did, at a late stage of the Silk Duties, was to buy off Messrs. Courtauld's very pronounced opposition in the country, but he gave nothing to the people who were his real supporters throughout, namely, the Silk Association, for whom I am speaking in moving this Clause. It was originally proposed that there should be, on artificial silk, an excise of 2s. per 1b. The Silk Association proposed that that should be reduced to 1s. 6d., in order to make the proportion equal. In the face of Messrs. Courtauld's opposition, the right hon. Gentleman reduced the Excise to 1s. The artificial silk people have a very considerable protection, amounting to the equivalent of 16⅔ per cent. The spun silk people have no protection whatever, and are suffering from very severe competition. It must be realised by the whole Committee that there is really no competition as between the artificial silk 1572 trade and the real silk trade, for the very good reason that there is an enormous difference between the price of the two commodities. I will give one illustration. A tie in artificial silk would cost wholesale something like 1s. 9d., whereas in real silk it could not be put on the market at less than 5s. 6d., and the price would be nearer 8s. 6d.
I submit this new Clause with a feeling that if this concession can be granted to the real silk industry it will lead to vastly more employment in places where there is great suffering at the present time through unemployment, particularly in the spun silk trade. Unless something can be done quickly for this particular trade, which has no protection of any kind in the Silk Duties, that trade will disappear altogether. which would be a great pity for the trade of this country. I was told to-day in Macclesfield by a very prominent manufacturer that the Italian manufacturers and the French manufacturers are actually offering spun silk in Macclesfield and district at less than the cost of the raw material to the British manufacturer at the present time. That is entirely caused by the tax on raw material which has been put on by the right hon. Gentleman. I do plead with him very strongly to give this concession, mainly because it will not cost any particular amount of revenue but will do a Brent deal of good in making a complete success of the Silk Duties, which have been a partial success up to the present time.

§ The ATTORNEY-GENERAL
I am sorry that the Chancellor of the Exchequer or a representative of the Board of Trade are not here to reply to the hon. Member, and in their absence I will do the best I can. My hon. Friend said that this Clause is required in order to make a complete success of the Silk Duties, but we are to make a complete success of them by turning them from being revenue duties into protective duties. There are some Members of this House to whom that might not be a consideration which would render his arguments unpalatable, but so long as the Government are bound by pledges upon this subject, it is quite impossible for us to take that course. The actual cost of the proposal it is impossible to estimate with accuracy. In the present year it would probably cost £180,000 and in a 1573 full year £270,000, but it would cost a great deal more presently, because if its objects were achieved it would result in the stimulation of the manufacture of silk in this country and the cessation to that extent of the imports of manufactured silk, which would run into £500,000 or more per annum.
There is another more serious objection to the Clause, and that is that if the concession were granted to the manufacturers of real silk it would be almost impossible to deny a similar concession, in due course, to the manufacturers of artificial silk, because it would be impossible to allow home made natural silk yarn to be free from duty and at the same time to insist on home made artificial silk yarn continuing to pay duty.

§ Mr. REMER
If I may interrupt, the artificial silk manufacturers have specifically stated they do not want the duty to be taken off the raw material.

§ The ATTORNEY-GENERAL
The artificial silk manufacturers certainly have not stated that they would like the duty to be taken off this raw silk, which is what the proposal involves. The hon. Member has said, and it is a perfectly valid argument, that there is considerable difficulty arising from the tariffs of Canada and South Africa and some other places in regard to the valuation of the material which is exported from this country for the purposes of drawback. That is a matter which has been brought to the attention of the Government some time since. It was specifically raised at the last Imperial Conference, and the hon. Member will find the subject discussed in the course of the ninth Report of the General Economic Sub-committee.

§ Mr. REMER
If I may interrupt again, Mr. MacKenzie King has since stated to the silk trade that he will not give any concession whatever on the matter.

§ The ATTORNEY-GENERAL
I am sorry to hear that the Prime Minister of Canada at present takes that view. The promise given to us at the time by the Dominion representatives was that the question should be examined, especially in regard to the special duties, in the light of the discussions which had taken place, and the Board of Trade have been in communication, not only with Canada but with other countries, and have 1574 certainly not received any such disappointing assurance as that of which the hon. Member seems to have heard. But the Board of Trade will not desist from their efforts quite so soon, and the right way to meet any difficulty which exists by reason of the method of valuation adopted in Canada or South Africa is clearly, I think, to ask those countries to modify their regulations and methods of valuation if they find they inflict injustice on this country. I am sure, if they can, they will be disposed sympathetically to consider such a suggestion.
A further difficulty in regard to this Clause is that the existence of two classes of similar goods in this country, one of which has paid duty and the other of which has not, would involve the recasting of the whole of the existing drawback rates, would greatly complicate the administration, and would very much embarrass the exporters of silk goods, who would have to prove, in claiming drawback, whether the goods on which they claimed were goods which had, in fact, borne the duty. The information we have is that even the silk trade itself is not unanimous in supporting the present suggestion, and that the Silk Section of the London Chamber of Commerce is against the proposal on the ground that the proposed Clause would fundamentally alter the basis of the whole Silk Duties. For two years now the Silk Duties have been imposed, and a great deal of time was spent in Parliament in thrashing them out and in trying to arrive at a fair scheme, and the right hon. Gentleman the Chancellor of the Exchequer does not feel that it would be possible to make the modification suggested.

§ Mr. REMER
May I ask a question regarding the very important point about the drawback on spun silk, which is 6s. 8d. on British and 7s. 9d. on foreign. The effect of that is that the manufacturers and merchants wanting to buy, spun silk for export buy foreign if the price is the same, as against British. Would the right hon. Gentleman have that point put before the appropriate Department in order to see if something can be done between now and the Report stage to alleviate the difference of drawback on these two particular commodities?

§ The ATTORNEY-GENERAL
I will cause inquiries to be made on that point, but I cannot promise the hon. Gentleman to give him satisfaction. I do not know that there may not be an answer to it.