HC Deb 07 July 1927 vol 208 cc1511-3

Where it is proved to the satisfaction of the Commissioners of Customs and Excise that any paper liable to duty under Section eleven of the Finance Act, 1926, as being packing or wrapping paper is imported after the date of the passing of this Act, solely for the purpose of being spun into yarn, the Commissioners shall, subject to such conditions (if any) as they think necessary for the safeguarding of the revenue, allow that paper to be imported free of duty or repay any duty paid on importation, as the case may be.—[Sir L. Scott.]

Brought up, and read the First time.


I beg to move, "That the Clause be read a Second time."

This is a very small Amendment to the Bill, but a very important one, in order to save a comparatively new industry in this country. If it be accepted, as I hope it may be, that industry will be saved, and a considerable amount of employment will be ensured. The industry consists in using a very particular kind of imported wrapping paper, called Kraft paper, that is within the Safeguarding Duties, which is turned into yarn, and with that yarn carpets, bags and other things are woven. Until the duty was imposed this little company, started with entirely new and very good machinery, was doing very well and increasing its output and the number of hands which it was employing. Everything looked as if we were starting a new industry in this country very successfully. When the duty was imposed under Section 11 of the Finance Act of last year, the result was that the yarn had to stand the duty, and the carpets, and so on, made from the yarn which paid the duty, had to face the competition of manufactured carpets introduced from abroad, which, under the same Act were allowed in free of duty if the material in the carpets other than paper was more than one-sixth.

The result was that their competitors were able to sell an article entirely free of any duty, while they had to pay the duty which, in fact, knocked them out of competition. They had another source of competition in carpets made from jute. They were able to compete successfully against the jute-made carpets as long as they did not have to pay any duty on the paper out of which they made their yarn. As soon as the duty was imposed, it made such a difference in the cost of the manufactured carpet that they have not been able to compete successfully with the jute-made carpets. The result is that, whereas in the year preceding the duty they made a handsome little profit, in the year succeeding the duty they made a definite loss. If the duty on their raw material were removed, they would be able to employ at a very early date something like 400 hands, and if they cannot get the duty removed the company will be ruined, and have to go into liquidation. The case is one for safeguarding a British industry which depends on duty-free raw material, from the harm that—unintentionally—has resulted from the imposition of a duty which, on the whole, in this country has done much good and produced much employment of labour.

The PRESIDENT of the BOARD of TRADE (Sir Philip Cunliffe-Lister)

This is a case which has been very carefully examined by both the Board of Trade and the Customs, and it does present one unique feature, namely, that of all the cases in which it was thought difficulty might occur it is the only case where the material that is used is of a kind which cannot be manufactured in this country. It is a fact that in this special instance the company has to use a particular kind of kraft which is only made, I think, in perhaps one or two factories in Sweden. That is a fact which differentiates it from all the general cases which have hitherto been quoted. It is a case which, by the peculiar nature of the company, might be met without interference with the very important rules and arrangements of the Customs administration with regard to any drawbacks. That being so, the Treasury and the Board of Trade are only too anxious to consider a case which can be met without infringement of Regulations, and without prejudicing British industries. It is a unique case of the kind, and, in these circumstances, I shall be very glad to accept the Clause.


I want to say only one thing. The right hon. and learned Gentleman who moved this new Clause recommended it on the ground that it was a proposal for the safeguarding of an industry by removing the tariff. I welcome this evidence of the progress of the education of Tariff Reformers in this House, and I hope they will realise that the only way to safeguard any industry is by the removal of the tariff.


While thanking the right hon. Gentleman for the education he has given me, may I express the hope that he will follow the path the Government have adopted here.


The President of the Board of Trade describes this as a unique and peculiar instance. It is certainly a peculiar instance, because it is an instance in which even he has to admit that people who try to protect one form of industry can do a great deal more harm to other people than they seem to realise.


I do not think the right hon. Gentleman is quite fair to the concession given by the President of the Board of Trade in the deductions that he draws from it. The position in this matter is this. I have taken considerable interest in the safeguarding of wrapping paper, and the Committee will agree that I know a little bit about it. The position is quite clear. In this particular case there are only two factories in the whole world which make this peculiar form of paper. The wrapping paper makers in this country do not wish to be unreasonable or to ask for unreasonable protection. I do not think it has ever been the case that the safeguarder asked for unreasonable protection. We were very glad to co-operate with the right hon. and learned Gentleman who proposed this Clause, because wherever we do not make an article we are perfectly prepared not to ask for safeguarding.


It is often said that the imposition of a duty does not mean an increase of price. That has often been repeated, but here we are informed that the imposition of a tariff has increased the price paid by the consumer, namely, the user of the article.

Clause read a Second time, and added to the Bill.