§ As from the first day of July, nineteen hundred and thirty-two, the excise duties in respect of matches and mechanical lighters shall be at the rates specified in the Fifth. Schedule to this Act instead of at the rates theretofore chargeable.—[Sir H. Croft.]
§ Brought up, and read the First time.
§ Sir H. CROFT
I beg to move, "That the Clause be read a Second time."
I understand that the next new Clause, "Excise duty on playing cards," will not be called. The principle is somewhat the same in regard to the two Clauses. Purely by accident these industries have suffered, not on account of any question of merit but simply and solely because they happened to be included in our previous fiscal system and in consequence they are excluded from the benefits of the Tariff Bill. Anyone who has gone into the subject of these industries will agree that there is no other explanation why they have been left on one side and are practically the only industries in the whole country which receive no protection. Matches are at the present time dutiable at the same rate whether imported or manufactured here, except that there is a very slight difference in the rate of Excise in order to cover the expense which manufacturers incur in connection with the application of the duty. The result is that there is no protective effect. On the other hand, the match producers in this country, quite naturally, point out that although matches are not included in the Revenue Bill the raw material of their matches is, and that some of their raw materials come in under the 10 per cent. duty referred to in the Act which we discussed not long ago. The mechanical lighter has seriously affected the match industry. It is estimated that something like £750,000 of revenue is being lost to the State from matches which has gone to the mechanical lighters. On these grounds the match industry deserves consideration.
The effect of the new Clause is to reduce the Excise Duty on matches by about one-sixth. We know that that is not sufficient protection to give the advantage which we would like to give to the home producer, but we realise that we cannot press the Chancellor of the Exchequer to make any great sacrifice 1973 of revenue. We do, however, ask him if he cannot give the match industry this small advantage. The obvious course would be to have imposed a substantially higher duty upon imported matches than we impose upon our own. That would have done no harm to anyone but it would have transferred practically the whole production of matches to the workers in this country, without any loss of revenue. As far as one can judge from the estimate, it is calculated that slightly more than half the matches consumed in this country are of British production. We all know that in efficiency we can compete with foreign countries, and we only want a slight advantage to see this trade transferred to our own people. We are up against great difficulties. Here is £1,000,000 of trade which might be given to home production by the readjustment of the duty. I believe hon. Members are tired of seeing, wherever they go, matches produced in Belgium, Sweden or Soviet Russia, with high-sounding British names on the boxes, simply because matches, like a lost child, had gone astray and did not catch the Chancellor of the Exchequer's eye at the time when the proposals were being examined. For these reasons, I urge that this Clause is worthy of the consideration of the Government. I hope that the Financial Secretary will give way on this point. If he cannot do so to-day I hope that he will give it his serious consideration in the near future. With regard to mechanical lighters, about 10 per cent. of them are being manufactured in this country. There again, why should mechanical lighters be left out of the general tariff scheme? I am sure that it is an oversight and that the Financial Secretary will assure us that the matter will have his attention.
I beg to second the Motion.
I think that we should make our own matches. We have all seen the mess into which the match industry has got through the operations of a great financier. We do not want to be mixed up with those concerns. We should make our own matches, encourage our own people, and give employment to our own workers. Up in the Highlands there is a large amount of timber which might be used in the making of matches; and mechanical lighters should be made in 1974 Sheffield, and nowhere else. There is no reason why we should lose revenue. Let us put a tariff on the imported stuff. The result to the revenue would be the same while a lot of our own people would be employed, and we should get better matches.
§ Mr. GROVES
The hon. and learned Member for Argyllshire (Mr. Macquisten) said that there is timber in this country which is suitable for match making—
§ Mr. GROVES
That is a different proposition. The hon. and learned Member said in this country, and, as I am interested in this question, I should like to know where it is.
If the hon. Member will come up into Argyllshire, I will show him. I do not know whether the trees are ready for cutting yet, but I know that a great deal of land has been under afforestation, and much better afforestation than that of the Government.
§ Major HILLS
I agree that the match industry has been left in an extremely difficult position through the most illogical action of the Import Duties Act, whereby the manufactured match made abroad comes in free of duty while the British manufacturer is taxed on his raw materials. It is the case that Bryant and May are putting down large plantations for the growth of this special timber. There is only one timber which makes matches, and that is aspen, which is not grown in this country, and until these plantations are in bearing our timber has to come from the Baltic. Practically all the matches made in England are made of Baltic timber. A large quantity of the chemicals employed in match-making have to come from abroad. We have, therefore, the impossible position that we give a preference to the foreign producer. The situation is not unlike that which occurred in the case of the silk industry. The right hon. Member for Sparkhrook (Mr. Amery) whose name is down to this new Clause, proposes to remedy that by revising the Excise on home-made matches.
I will take the figures for the standard box of 50 matches. At present the Import Duty on 144 dozen boxes of matches 1975 is 4s. 4d., and under the scale proposed by this new Clause the Excise Duty would be 3s. 5⅔d., so that there would be a preference of 10⅓d., call it 10d., on that number of boxes. The first comment I have to make is that the revenue would lose £400,000. I should not mind that if the industry would benefit, but I do not think it would benefit. If you take some of the duty off, the manufacturer would be able to sell rather cheaper, but the consumer would not benefit, because an immense quantity of matches is sold in single boxes and the price of a single box is 1d. You cannot translate a remission of something like three farthings on 12 boxes of matches on to a single box. We have no coin small enough to effect it. Therefore, I am perfectly sure that the whole of the profit would go to the wholesaler or the middleman; or a large part of it. There might be a reduction of one-halfpenny on 12 boxes where they are sold in packets of 12, but I do not think that would occur in all cases, and it could not occur in the case of single boxes. I have no doubt that the House realises the immense number of matches which are sold in single boxes, although the housewife might by buying matches in boxes of 12 get a reduction of one-halfpenny. There is no benefit therefore to the consumer; and I believe that the greater part of the benefit would go to the middleman and the wholesaler.
Take the case of lighters. At present the duty is 6d. per lighter, and foreign lighters, being a Customs Duty article, come in free of the 10 per cent. Import Duty. My hon. Friend proposes a preference of one penny per lighter in favour of the home producer. That would not assist the English producer, who produces almost entirely the expensive sort of lighter which is no doubt carried by my hon. Friends. The imported lighters are the cheap lighters, including what is known as the flash pistol, which will light a gas stove but will not light a cigar. These arc imported, and they come in with an average value of 1s. A preference of one-sixth would not do much to help the British industry.
May I suggest a way in which the match industry could be helped? There is an increased consumption of lighters. It is now nearly 3,000,000. In 1930 it was 2,100,000 and last year 2,800,000. The immense majority of 1976 these are imported, and each lighter is taxed at 6d. The makers claim that these lighters have 10,000 lights. Now 10,000 matches would produce a revenue of 6s. for the Chancellor of the Exchequer, but all he gets is 6d. If he could reduce the use of lighters and increase the use of matches he would get more money; for each lighter now costs the revenue 5s. or 5s. 6d. The revenue is now losing between £500,000 and £750,000 a year. I put this to the House, that it is a canon of fair taxation that a substitute should be taxed to a proportionate amount in comparison with the article with which it competes. That is a principle which is recognised in nearly all countries. If that principle is carried out here it would mean a much bigger tax on lighters.
In the case of matches, I agree that the real remedy is a tax on foreign imported matches. That would increase employment here. We could do a large part of the trade which is now taken by these imported matches, and show a very handsome revenue for the Chancellor of the Exchequer. It would also rectify the present absurd position whereby we give the foreigner a preference and tax the raw materials of the British producer. It would give our manufacturer a larger share in the trade, without costing one single penny to the consumer. I do not think that the House realises the substantial amount of revenue which matches and mechanical lighters produce. It is estimated this year at over £4,000,000, which, by the way, is a greater sum than foreign wines produce and also greater than the sum which the new Tea Duty produces. It is a substantial revenue, and it could be largely increased by a tax on foreign matches.
§ Mr. REMER
I should not have intervened but for the observations of the hon. Member for Stratford (Mr. Groves) who asked a question about the timber used for matches. The timber used is aspen, but during the war it was utterly impossible to get any aspen from the Baltic into this country, and the great works of Bryant and May were kept going with home-grown timber. I have yet to learn that the matches were any the worse for that. I am sure that it is possible for matches to be made out of home-grown timber instead of foreign timber.
§ 5.30 p.m.
§ Major ELLIOT
I am sure that hon. Members who have raised this point have done so not in the hope that the proposal will be accepted because it will cost £300,000 to the revenue this year, and that, obviously, is a loss which we cannot contemplate. Furthermore the answer to their question, as to why a higher duty was not levied upon foreign matches, is simply that, as has been stated by my right hon. Friend the Member for Ripon (Major Hills), these are revenue duties bringing in an important sum, £4,000,000 sterling, and we are very unwilling to make any alterations which, while they might have a. greater protective effect, may diminish the actual revenue, until we see the working of the other tariffs which we have imposed. When imposing a tariff, you must balance the amount of revenue, as against he amount of foreign goods that you will exclude. You will improve your position by greater employment in this country, but for all that you may have to set off against it a certain loss of revenue. Everyone agrees with that statement. In the case of matches we did not propose any alteration of the existing duty. In spite of that the home-produced article has in fact been gaining upon the foreign article in recent years.
The revenue derived from British matches in 1928–29 was £1,880,000, and from foreign matches, £2,060,000; in 1929 from British matches £2,000,000 and from foreign matches, £2,110,000; in 1930–31, £2,020,000 from home matches, and £2,070,000 from foreign matches; and this year our estimates show £2,120,000 derived from home matches and only £1,950,000 from foreign matches. So at any rate the consumption of the British goods shows progress. It is true that great firms such as Bryant and May are taking steps in Argyllshire and elsewhere to plant large areas on the hillside with timber for future use in matchmaking. All we can say is that we are greatly indebted to the public spirit of those firms which have struck out on these bold new experiments. It is very clear, first, that we cannot accept the Amendment as it stands, and, secondly, that the home trade is still expanding at the expense of foreign goods. As to mechanical lighters I approach the subject very gingerly. Mechanical lighters are very well known 1978 to be perilous things for Financial Secretaries to the Treasury. The House on a previous occasion, on the initiative of my right hon. Friend the Member for Spark-brook (Mr. Amery), ignited a considerable discussion, which went on for quite a long time. I do not wish to be led into that again. I merely say that in this case also the production of the home article is increasing and rapidly increasing. We levied taxes on 174,000 mechanical lighters in 1929–30; on 241,000 in 1930–31; on 457,000 in 1931–32. There, again, the trade is showing a healthy tendency, and it is open to us to consider the matter without any urgency about it.
§ Major ELLIOT
I have not gone into all the minutiae of the question. A trade which has expanded in that way is a trade which at any rate shows a healthy expansion such as we would be very glad to see in many other industries. I agree with the right hon. and gallant Member for Ripon that the steady growth of the mechanical lighter does offer a certain menace to the match industry. A final point was that there was actual injury to the home trade in matches because of this growth, that certain of our raw materials were taxed while no corresponding duty was imposed on foreign competitors. A revenue duty is imposed but is balanced by an excise duty. The Chancellor of the Exchequer agrees that there is a case there for consideration, and he has referred it to the Advisory Committee for their opinion. After these explanations I hope that it will not be found necessary to press the Amendment.
§ Mr. AMERY
After the conciliatory speech of the Financial Secretary we need not press the Clause, especially as he has told us—it is satisfactory news—that this question of the effect of the Import Duties Act will be considered by the Advisory Committee. But I do not think the Financial Secretary ought quite to get away with his rather thin argument on the issue of revenue. Those of us who have spoken on this matter have made it clear that in order to conform with the Rules of this House we have moved a reduction of the home excise, but that our real intention was to ventilate the suggestion that these duties should be 1979 altered so as to give a protective effect. In this particular case there can be no conflict between protection and revenue, because there is no reason for remitting excise on the home matches. Any transfer of match production from foreign to home production would still give a full yield to the excise revenue but would give protection as well. Therefore the case here is doubly strong from the point of view alike of protection and of immediate revenue.
It is the fatal error of the Treasury always to think in terms of next week's revenue, and not to think enough of the solid industrial position of this country, from which revenue alone is derived. The important thing in the case of a duty is not to ask what will it yield in revenue, but what contribution does it make to the total production of the country and therefore to the yield of all other duties? If this were a case in which immediate revenue were sacrified to production increase, the ultimate benefit to the Treasury from that production, from Income Tax, from rates, from consumption tax, would certainly be greater than any immediate loss of revenue. I wish that the Financial Secretary and his chief would keep that point of view in mind when it is their business, as it should be, to override the narrow immediate-revenue-hunting propensities of their Department. However, that subject does not arise at the moment, because in fact there is no reason why direct revenue should be lost, and there is every reason for securing more employment and more direct revenue. I hope that the Chancellor of the Exchequer will remit to the Advisory Committee not only the question of the incidence of the 10 per cent. duty on imported timber, but, as he did in the case of the Silk Duties, the whole effect of the present match duties, and see whether they cannot suggest to him a scheme which will both preserve the revenue and give this industry the same measure of protection as other industries enjoy.
§ Question, "That the Clause be read a Second time," put, and negatived.