HC Deb 26 May 1932 vol 266 cc623-30

(1) As from the commencement of this Section, in addition to the customs duties chargeable under Section four of and the Second Schedule to the Finance Act, 1925, and Sub-section (1) of Section five of the Finance Act, 1926, a customs duty equal to 10 per cent. of the value of the articles shall be charged on the importation into the United Kingdom of yarns and tissues and other articles (not being articles of apparel) made wholly or partly of silk or artificial silk.

(2) As from the commencement of this Section, in the case of an article of apparel made wholly or partly of silk or artificial silk there shall, in lieu of the customs duty chargeable under the enactments aforesaid, be charged, on the importation thereof into the United Kingdom, whichever is the higher of the two following duties, that is to say—

  1. (a) a customs duty equal to the aggregate amount of the customs duty which would otherwise have been chargeable under the enactments aforesaid, and of a duty equal to 10 per cent. of the value of the article;
  2. (b) a customs duty calculated at the rate shown in the following table on the weight of the article: —

— In the case of articles containing silk alone or containing both silk and artificial silk. In the case of articles containing artificial silk alone.
the 1b. the 1b.
s. d. s. d.
Where the article is made wholly of silk or artificial silk, or where the value of the silk or artificial silk component exceeds twenty per cent. of the aggregate of the values of all the components of the article. 12 0 5 0
Where the value of the silk or artificial silk component exceeds five per cent. but does not exceed twenty per cent. of the aggregate of the values of all the components of the article. 4 0 1 8
Where the value of the silk or artificial silk component does not exceed five per cent. of the aggregate of the values of all the components of the article. 0 9 0 4

(3) The provisions of Part II of the Second Schedule to the Finance Act, 1925 (which relates to drawbacks), shall not apply in relation to the duties chargeable under this Section, but a drawback equal to the amount of any duty paid under this Section in respect of any articles may be allowed—

  1. (a) if the articles (not being articles specified in paragraph 1 of the said Part II) are shown to the satisfaction of the Commissioners of Customs and Excise to be in such form and state that the rate of duty which would be payable in respect thereof, if they were being imported, would be the same as that at which they or their components have already been charged; or
  2. (b) if the articles are made up articles exported in the form and state in which they are imported.

(4) The provisions of Part III of the said Schedule shall, so far as applicable, apply to, and in relation to, the duties charged and the drawbacks allowed under this Section as they apply to, and in relation to, the duties and drawbacks mentioned in the said Schedule, subject to the following modifications and exceptions: —

  1. (a) paragraphs 1 and 2 of the said Part III shall not apply in relation to any duty which is calculated by reference to value or to any drawback of such a duty;
  2. (b) paragraph 7 shall apply as if there were inserted after the word "if," in the second and third place where that word occurs, the words "or so far as";
  3. (c) paragraphs 10 and 11 shall not apply.

(5) In the case of goods being Empire products within the meaning of Sub-section (1) of Section eight of the Finance Act, 1919, the customs duties imposed by this Section shall be charged at the preferential rate of five-sixths of the full rate.

(6) This Section shall be deemed to have had effect as from the eleventh day of May, nineteen hundred and thirty-two.—[Major Elliot.]

Brought up, and read the First time.

The FINANCIAL SECRETARY to the TREASURY (Major Elliot)

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

Major NATHAN

There are two or three features of an unusual character in connection with this Clause to which I wish to direct the attention of the Committee. These duties form no part of the considered financial proposals of the Government for providing the revenue of the year. They were, in fact, introduced as a last moment supplement. They are not duties designed to secure revenue. They are duties which by their operation transform the Silk Duties, which have been revenue duties since 1925, into Protectionist duties. That is their avowed object. The fact that the Chancellor of the Exchequer was rushed into placing these proposals before the House at the last minute is doubtless the reason why, when it comes to be examined, the evidence upon which the decision was taken is open to serious criticism. It is probably true to say of the Chancellor of the Exchequer, if I have regard to the evidence which has been published, and it is certainly true as to the great majority of the members of the Committee and of the public, that it was thought that the 50 per cent. Abnormal Importations Duty was a duty which fell on the top of the existing duty, and that that was the reason why the Chancellor of the Exchequer felt that he should put fresh proposals before the Committee. Complaints were made that the sudden drop from 50 per cent. under the Abnormal Importations Duties to 20 per cent. under the Import Duties Order was unfair and demoralising to the trade.

The fact is, when the evidence comes to be examined, that neither pure silk piece goods nor artificial silk piece goods were subject to the 50 per cent. tax at all. The 50 per cent. under the Abnormal Importations Duties only applied to piece goods in so far as they contained at least some element of wool or cotton. Both pure silk and artificial silk goods without wool or cotton were free from the 50 per cant. duty. When I say that, I am referring to piece goods. It is true that silk stockings, both real silk and artificial silk, were subject to the duty of 50 per cent. on top of the existing duty of 33⅓ per cent. making a total of 83⅓ per cent. a wholly prohibitive duty, which induced the recommendation of the Import Duties Advisory Committee that the 50 per cent. duty should be withdrawn. It is to be noted that the 50 per cent. duty only applied to silk or artificial silk hosiery and not to underwear. The truth of the matter is that the heavy incidence of the duty upon the hosiery end of the question was exploited to secure exorbitant protection for silk and artificial silk piece goods.

7.0 p.m.

I ask the Committee to appreciate those duties. I have had certain figures got out, but I will only trouble the Committee with two or three. One set of figures relates to real silk georgette and real silk crepe de chine. They are the two articles which form the great staple of the industry, and the duties amount to 5l½ per cent. and 54 per cent. respectively, including the new 10 per cent. duty reduced to an ad valorem scale. As regards artificial crepe de chine, the duty is no less than 75 per cent. Every hon. Member of the Committee will agree that that is a rate of duty which is exorbitantly high. Consider its effect upon trade, industry and employment in this country. What happens as regards the export trade is that the goods are not brought here as finished goods but in the green state to be printed or dyed and then exported. Although there is a drawback on the preexisting duties and for manufactured articles both in respect of pre-existing duties and the duties about to be imposed, there is no drawback in regard to the additional duties on piece goods. The only result is to force the trade on to the foreigner and impose a large loss on exporters in this country. It means that instead of the dye factories and printing factories being employed in dyeing and printing goods brought here for that purpose, the work will be done abroad. Instead of importing goods, manipulating them and them exporting them, they will be diverted to the foreign manufacturer to be printed and dyed and then sent to the ultimate consumer in the Colonies or on the Continent. A case was brought to my attention to-day in which an order had been placed for £20,000 worth of goods imported into this country to be dyed and printed here and exported abroad. As a result of the additional duty and there being no drawback, though the order has to be fulfilled because it is a contractual obligation, instead of a profit it will show a loss and the British merchant concerned is bound not to undertake further business of that kind, which is definitely going from the country as a result of the duties.

Take the scope and incidence of the duties on hosiery and underwear. The duty in any case would be 43⅓ per cent. —the old 33⅓ per cent. plus 10 per cent., but that is a minimum, and owing to the alternative weight calculation being brought into reckoning, the duties may become as high as 90 per cent. I will give some very remarkable figures as to how these duties actually operate in practice. Take underwear. I am told that pure silk knickers imported at 120s. per dozen weigh 2 lbs. per dozen. The duty on them amounts to 52s. per dozen or 43⅓ per cent. That is the duty which those comparatively few people who are able to afford pure silk goods of this kind have to pay. Take cotton knickers with a silk stripe, imported at 5s. per dozen. On them the duty is 5s. 10d. per dozen, or 116 per cent. Now take fleecy-lined knickers pleated with artificial silk, which are imported at 10s. per dozen and weigh 5 lbs. per dozen. The duty is charged at 5s. per lb.—25s. per dozen or 250 per cent. Pure silk, which the wealthy members of the community buy, pays a duty of 43⅓ per cent, but on the cheaper goods, which the great masses of the population can only afford, the duty alone is 116 per cent. or even 250 per cent.

As a final instance I take silk stockings with lisle tops and feet, imported at 9s. per dozen, upon which the duty is 8s. 9d. per dozen, or practically 100 per cent. I do not believe that when the Chancellor of the Exchequer acceded to the request made to him by the Silk Association he realised the effect of these duties and how tendencious was the information given by them at all events in regard to piece goods. I urge the Chancellor to reconsider this position in the light of these figures, and I would invite him particularly to make some statement on a matter which is causing the greatest anxiety in trade circles, as to drawbacks on the extra 10 per cent. in respect of artificial and real silk piece goods.

Major ELLIOT

I readily respond to the invitation of my hon. and gallant Friend, and am obliged to him for the clarity and brevity with which he put his case. There are cases of duties which will undoubtedly require serious examination, and cases have been brought to me by Members not merely on those benches but on other benches. That is an indication of how necessary it is that these duties should be reviewed by some body which will be able to carry out a full and impartial investigation, and sift the evidence on one side or the other. The circumstances of urgency arising from the fact that there had been a high duty produced a situation of great difficulty in the trade which we recognised not because of pressure but because of argu- ments. It is the business of all hon. Members to bring forward arguments just as the hon. and gallant Member for North-East Bethnal Green (Major Nathan) has brought forward arguments on behalf of some of his constituents.

The case of the silk trade was one of great difficulty, and admittedly it had to be met. We met it by an admittedly emergency procedure. The Chancellor's declaration was that the procedure he proposed to adopt was to put up a temporary shelter and under cover of that to have the case reviewed by the Import Duties Advisory Committee in a consultative capacity. The case which the hon. and gallant Member has brought up shows strongly the need for such a review. The only point on which he asked me to make a declaration was on the question of drawbacks. It is not possible to make provision for such drawbacks under the present scheme. The Silk Duties drawbacks were most carefully and meticulously worked out and it was impossible under the emergency position to spatchcock these drawbacks into that scheme. We shall not be able to apply them in the present case. With that explanation, I hope the hon. and gallant Member will find it possible to allow us to carry the case to the expert tribunal and have it inquired into, and then do our best to bring it into the framework of the general scheme.

Sir P. HARRIS

I must thank the right hon. and gallant Gentleman for his very remarkable admission that this is, after all, only an improvised emergency scheme. I might remind him that the original Financial Resolution was passed at midnight and the Report stage was taken at five in the morning. I protested against that procedure at the time, and pointed out that we were making a very serious precedent in introducing a new tax at midnight or in the early morning without adequate discussion. The Clause consists of over 60 lines, and contains very complex and involved proposals which raise a highly technical and controversial matter. In normal times an ordinary House would have discussed it more fully. This kind of procedure can only be justified by emergency or special circumstances. We do not know how the Government had arrived at these particular percentages, on whose report or on what examination, Or whether there has been any examina- tion by experts, or whether they merely accepted the representations of the interested parties. I am rather inclined to think they have done that. I will not be too severe on the Financial Secretary, because I realise that if you are to have tariffs there is no reason why silk should not have them as much as wool, cotton or other articles. I am glad these proposals are going to the Advisory Committee. I take no exception to that; on the contrary. If we are to have duties of this kind, it is far better that they should go before a properly constituted committee to be examined and the arguments on both sides heard.

It has been pointed out that already various interests have suffered in the export trade because of the arrangements regarding drawbacks. In certain cases, I am assured by people acquainted with the trade, the drawbacks are most unsatisfactory. Take the question of piece goods. These come in from China and Japan, and they change their form and are either dyed or printed, and it is almost impossible to get any drawbacks. These very same goods from China and Japan go to Lyons in France, where they are dyed and printed. There is very severe competition between Lyons and Manchester in this particular trade of dying grey cloths. But, on the whole, Manchester has been doing the better trade owing to the great improvement in printing processes and designing, and the trade in Chinese and Japanese silk is coining to this country. Now, owing to the unsatisfactory arrangements made by drawbacks, a great part of that trade will be lost to Manchester, and will be entirely concentrated in the Lyons area.

Therefore, we must be thankful for small mercies. The Financial Secretary is largely in a white sheet. He admits that this has been forced upon him by circumstances. I hope that when the properly constituted tribunal considers the whole thing these proposals will be reversed or amended and made less injurious to our export trade. In the meantime, I make my protest against this kind of procedure being used to impose new taxes. It was introduced at quarter past twelve midnight, the Report stage was taken at five o'clock in the morning, and now we are told that we must not occupy more than 20 minutes or half an hour because there are many other important matters to be dealt with. Although there are many hon. Members who would like to give useful contributions, they are persuaded to be silent and to let 60 lines of the Bill go through with inadequate consideration.

Lieut.-Colonel ACLAND-TROYTE

I should like to impress upon the Financial Secretary the importance of urging the Advisory Committee to deal with this matter as quickly as possible, especially the question of drawbacks, because these goods are brought here to be dyed and if we lose that dyeing trade it will be hard to recover it. If a 10 per cent. drawback is granted we shall not lose the trade, but if there is delay we may lose a very important trade.

Mr. LEVY

I should like to say one word to correct the hon. Member for South-West Bethnal Green (Sir P. Harris) on the question of drawbacks. A drawback on silk is an advantage to the export trade; but in so far as that silk comes into this country and duty is paid upon it, it is only right and proper that when it is re-exported the duty should be recovered.

Major NATHAN

That is what does not happen.

Mr. LEVY

That is what exactly does happen. With the exception of the overriding 10 per cent. I hope the hon. and gallant Member will forgive me for being so emphatic, but I would ask him to give me credit for knowing what I am talking about.

Clause added to the Bill.