§ (1) As from the first day of July, nineteen hundred and thirty-two, the customs duties in respect of coffee and cocoa which are Empire products shall be at the rates specified in the Fourth Schedule to this Act instead of at the rates theretofore chargeable.
§ Brought up, and read the First time.
§ Mr. HERBERT WILLIAMS
I beg to move, "That the Clause be read a Second time."
1964 In moving the Clause which stands in the name of my right hon. Friend the Member for Sparkbrook (Mr. Amery) and the names of myself and other hon. Members, I wish to point out that up to the time that the Tea Duty was abolished in 1929 it had been the practice to regard the duties on tea, coffee, and cocoa as having a certain relationship one to another, and they were generally increased or decreased in proportion. The gradual reduction in the duties, which are preferential on a percentage basis— 16⅔ per cent. of the duty being the amount of preference-has had the effect of diminishing very much the total amount of preference, so that to-day the preferences on coffee and cocoa are really very small indeed. It had been the hope of some of us that when tea was put upon a satisfactory preferential basis in the present Finance Bill the same might have been done for coffee and cocoa, but, unfortunately, for reasons which possibly are perfectly sound in the mind of the Chancellor of the Exchequer, that course has not been taken. It is our hope, therefore, that that course will be taken later on. I am doubtful if it could be taken now in the form in which we have moved it, because we are moving a reduction of a duty at a time when possibly the Exchequer cannot very well afford such a reduction. The more appropriate method of dealing with the situation would be by some ordinary increase in the rates of duty on foreign products, which in the case of these commodities would not mean any addiional charge to consumers in the country.
1965 The amount of preference to-day is very small indeed. In the case of coffee not kiln-dried, roasted or ground the present rate of duty on foreign coffee is 14s. per cwt. and on Empire coffee 11s. 8d., a preference which hon. Members will agree, is very small indeed. Nevertheless, this preference and the larger preference which existed in the past have had a marked effect in stimulating in this country the use of Empire coffee. In the latest year for which I have complete figures, the financial year ending 31st March, 1931, the retained imports of foreign coffee were 172,000 cwts. and of Empire coffee 163,000 cwts., so that the imports of Empire coffee have nearly caught up with the imports of foreign coffee. There is no reason why, in due course, the whole of our supply should not be drawn from Empire countries. The quality of the coffee of the Empire is probably the highest that can be offered to us.
In respect of cocoa, the situation is not quite the same, because cocoa can come to us in three separate forms—in the form of cocoa beans, cocoa butter, which is extracted from the cocoa bean, and which is the actual primary product used in the manufacture of cocoa for drinking and confectionary, and, lastly, in the form of prepared chocolate. The existing system of duties appears to be unsatisfactory, because the same rate of duty applies to raw cocoa, that is, cocoa beans, as to cocoa butter. I am told that it takes 3 lbs. of beans to make 1 lb. of butter, and obviously the rates of duty require modification in any event. At the present time there is a substantial importation of cocoa butter from Continental countries and, though that cocoa butter is to a very large extent made from Empire-grown cocoa, nevertheless I think that the butter ought to be made in the United Kingdom.
There is a strong case for a complete reconstruction of the duties upon cocoa both from the point of view of Imperial preference, though of course the Empire has established an amazingly strong position in this country, and from the point of view of employment. We import at the moment very large quantities of chocolate confectionary which amounts nearly to £1,000,000. [An HON. MEMBER: "Over £1,000,000."] The chocolate manufactures could with great advantage be 1966 made in this country, offering employment to a large number of people, by firms who have been opposed to protective duties. [Interruption.] I am not so narrow-minded as to deny the benefits of Protection to the Free Trader. I hope that the Financial Secretary to the Treasury, even though he may find it incumbent upon himself to say that he cannot afford to agree to the new Clause at the moment, will, nevertheless, give some undertaking that the whole question of preferential duties and protective duties both for coffee and cocoa shall receive the consideration of His Majesty's Government at the earliest possible moment.
§ Mr. AMERY
I only wish to add a few words of general comment upon the rather peculiar position in which coffee and cocoa are left under the present Budget. If they had not been subjected to duty before, they would naturally come under the provisions of the Import Duties Act and enjoy the 10 per cent. preference, a very much larger preference than they enjoy at the present time. I am not sure whether my hon. Friend the Member for South Croydon (Mr. H. Williams) would not have been wiser to have suggested a complete abolition of the duties in question, in which case those articles would automatically have come under the Import Duties Act. I submit that there is really no reason why these two very important products of the Colonial Empire should not get the same substantial preference which is given, not only to tea, but to every other Colonial product. There is still, in the case of coffee at any rate, room for a very considerable expansion of the Empire trade, and anybody who knows anything about the terrible difficulties under which our people in Kenya are carrying on would be glad to give them some assistance to what is practically their major industry. I know that they have been doing reasonably well as compared with some of their other industries in the last few months, but in the present state of world trade and world prices, and in the condition in which our primary producing colonies are situated, it would be, not only a generous, but a prudent action on our part wherever we could to give them the fullest measure of preference possible.
We are very much concerned with the development of our export trade, and, 1967 while it is true, for instance, that the Gold Coast already supplies the bulk of our cocoa, it is also true that in the present state of world prices it is not supplying it at a profit. It is worth mentioning in that connection that the natives of the Gold Coast, who have themselves developed this great industry —for as hon. Members well know it is a native and not a planters' industry—are among the best customers of this country. In normal times the people of the Gold Coast buy per head five times as much from this country as the people of the United States of America. Therefore, surely it is well worth while at a time like this, when every pound which we can add to our exports is worth securing, doing something that would increase the purchasing power of one of our best customers. From our own immediate interests as well as from the obligation we owe to the Colonies for whose administration we are responsible, I should think that there was an overwhelming case for giving those colonial industries at any rate the same degree of protection as is given to the rest of their products. It is not a question of negotiation or bargaining. On the other hand, it is important, to do this, if we can, before we go to Ottawa, because when we go to Ottawa we shall go, I hope, concerned to advocate not only the interests of the industries and productions of this country but also the interests and productions of the Colonies for which we are responsible. If we want to secure in Canada and the other Dominions a generous measure of preference for the products of our West African and East African Colonies, we shall not be in a strong position if we have to confess that our own preference is a rather measly and inadequate one. I hope that from that point of view, too, the matter may deserve further consideration.
There is another point which was touched upon by my hon. Friend, and it is that in cocoa you are dealing, not only with a colonial product, but with an important British industry, and, unless these duties are recast, that industry will be denied the protection that every other industry in the country is receiving to-day. I fully realise the difficulties of the Chancellor of the 1968 Exchequer in attempting to recast his Budget at the last moment. I am quite prepared to receive the answer that it is too late in the day to ask for these things. I wish that they had been dealt with before. The matter must have been well within the cognisance of the Treasury and of the Ministers responsible, but I can at any rate express the hope, when the Financial Secretary to the Treasury replies, that, even if he cannot meet us to-day, he will give us a reasonable assurance that when we come to another Budget these important Colonial products will receive an adequate measure of preference, and that the British cocoa and chocolate industry will also be treated on the same footing as other British industries.
§ Major ELLIOT
The right hon. Member for Sparkbrook (Mr. Amery), and indeed the hon. Member for South Croydon (Mr. H. Williams), have given this subject a great deal of attention and have devoted many years of ardent work to it. Indeed, the work which my right hon. Friend the Member for Sparkbrook has done in his enthusiastic advocacy of Colonial as well as of Dominion development has attracted the greatest possible attention and sympathy in all parts of the country. I would, however, ask him to consider that we are not merely setting up a logical system, but a working system. In the case of cocoa, there is no doubt that whether the preference is measly, as my right hon. Friend says, or not, at any rate it is effective, because 90 per cent. of the cocoa supplies of this country are derived from Empire sources. In the first place, it seems to us, therefore, that it is not unreasonable to suggest that we can review this at more leisure than we can review, for example, other industries which comparatively are losing ground.
So far as cocoa is concerned, with 90 per cent. of our supplies already derived from Empire sources and with no signs of a falling off in that percentage, it; may be said that that matter can be reviewed at greater leisure than it would be possible for us to do it in the very rapid course of events since the General Election and the present Budget.
§ Major ELLIOT
I am not dealing with the general position but with the amount of cocoa imported into this country. Coming to the position of coffee, the Empire production is only 3 per cent. of the world production but it is 50 per cent. of the British consumption. That seems to show that the very substantial amount of preference is being effective in that case. With the Empire production only representing 3 per cent. of the world production and 50 per cent. of our consumption, we are achieving what we desire, namely, that as far as possible we should buy from those who buy from us and support and trade with those who, as the right hon. Gentleman said, consume so large a percentage of British manufactured goods in the way of exports. My right hon. Friend admitted that it was difficult to suppose that the Chancellor of the Exchequer would be able to make the concession which he desires.
§ Major ELLIOT
I am sure that the hon. Member for Claycross (Mr. C. Duncan) will sympathise with me and even agree with me when I give him the reason. The reason why the Chancellor of the Exchequer will not be able to make this concession is that it would cost him £50,000 in respect of coffee and, £'300,000 for cocoa, a loss of nearly £l,000 a day—£350,000 a year. This is not a year in which it is possible for us to contemplate a loss of revenue to that extent. It may be said that this is a quibble, because it would be possible to raise that amount on the competing imports but we should only be able to raise the duty on 10 per cent. of our cocoa imports and on 50 per cent. of our coffee imports. It seems to us, therefore, that this question might reasonably be considered at Ottawa. It is reasonable to suggest that when such a conference is about to take place we should consider as far as possible everything at that conference, and, as this is not a matter of urgency, it might well be considered at Ottawa. My right hon. Friend asked me to give an assurance that this matter will be dealt with in the next Finance Bill. I am afraid that it will not be possible for me to give that assurance, but I can say that it will be considered even before the next Finance Bill, because it will be considered in the 1970 discussions which are about to take place, in which it is our desire to obtain a greater share of trade with our Colonies and our Dependencies than we have had in the past. It would be rather foolish for us to give away the whole of our bargaining power before the discussion started. [Interruption.] I am bargaining for the taxpayers and producers in this country as well as for the case put forward by my right hon. Friend the Member for Sparkbrook (Mr. Amery). I hope that he will not find it necessary to press the Clause, having been given the assurance that the matter will be reviewed at the Ottawa Conference and having regard to our attitude towards the general principle which he has put forward.
§ Brigadier-General Sir HENRY CROFT
I thank the right hon. Gentleman for the very friendly manner in which he has referred to the new Clause. We know the difficulty. I beg of him not to be under the impression that the great expansion in the coffee production in the British Empire is due to preference, because I can assure him that it is not. It is due to the excellence of the coffee. I think that is generally admitted. I ask him not to think that because there has been this expansion in coffee production there is any considerable profit in it at the present time. Unfortunately, I have evidence that numerous planters cannot make coffee pay, and any advantage that could be given to them would help Kenya over these difficult days.
§ Sir PERCY HARRIS
I am not disputing the decision of the right hon. Gentleman, because I appreciate the reason of the well-thought-out case that he has presented. I should like to know exactly what will happen at Ottawa in regard to these particular raw materials. We understand the position clearly as regards the Dominions. There will be representatives from the independent self-governing States concerning their economic position, but the Crown Colonies are in an entirely different position. I understand that they will be mainly represented by the Colonial Secretary. We assume that the Colonial Secretary is in a position to speak for the Crown Colonies of Kenya, the Gold Coast and so on where these particular products are produced. Is it that the Crown Colonies are going to come into the negotiations for a general arrangement 1971 with the Dominions in regard to raw materials, or is it merely that the whole economic position of the Empire is going to be thrown into the melting pot at Ottawa? We ought not to be led astray.
I am ready to jump at any reduction in taxation and at anything that will make commodities cheaper, and I am all for materials coming from our Crown Colonies wherever they can be obtained without detriment to our consumers and the general public in this country; but we are entitled to know whether the Crown Colonies will be in a position to bargain on their own, with their own accredited representatives, or whether the Secretary of State for the Colonies will be their only representative when it comes to making commercial bargains. Will they be in a position, alternatively, to give us any benefit in their markets in return for concessions from this country. I do not see how, as they have no great industries, they will be able to make many concessions. It would be well that a statement should be made in regard to Ottawa and that the whole position should be made clear.
Will the right hon. Gentleman make representations to the chairman of the Kitchen Committee to get some of the superior Empire coffee in the House?
§ Major ELLIOT
I always order Kenya coffee, because it is the best. The hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris) will not expect me to enter into a discussion on the very technical position of the Crown Colonies, governed as they are in half-a-dozen ways and controlled as they are by many international instruments of one sort or another. It would be impossible to lay down any general principle, but, as he asked me a specific question, I can say that the whole position of the Empire as an economic comity is to be reviewed at Ottawa. The Crown Colonies will be represented there primarily by the Secretary of State for the Colonies, whose duty it is. We shall also do our best to get the advantage of the opinion of producers in the various Crown Colonies to reinforce ourselves when we go into discussion.
§ Question, "That the Clause be read a Second time," put, and negatived.