HC Deb 01 June 1933 vol 278 cc2190-4

The duty of customs on unmanufactured tobacco when imported unstripped shall be reduced as from the first day of June, nineteen hundred and thirty-three as follows: In the case of tobacco grown in and consigned from Empire countries by two-pence halfpenny per pound. In all other cases by one penny halfpenny per pound. —[Mr. II. Williams.']

Brought up, and read the First time.

10.10 p.m.

Mr. H. WILLIAMS

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

This Clause deals in particular with tobacco, but it is one of five, all emphasising in one way or another the same principle. When, in February last year, the Financial Resolutions were introduced on which the Import Duties Bill was subsequently based, they provided that protection should be applied in respect of commodities which were not liable to duties under other enactments. In other words, we excluded from their purview all those commodities from which great revenue was obtained for many years. We also excluded from the purview of that Act those commodities that were already protected under the McKenna Duties or other temporary or permanent protective enactments. I do not complain, because, obviously, it was an enormous task suddenly to convert a Free Trade country to a Protectionist country and the method chosen, through the circumstances of the case, left certain gaps' in our protective system. There are a number of commodities which are dutiable for purely revenue purposes. They bear a duty of Excise and a duty, at the same rate, of Customs. They produce a substantial amount of revenue but there is no protection.

Last year, when the Finance Bill was going through, my friends and I raised this question of principle in connection with one or two commodities, one of which was matches, and we are grateful to the Chancellor that in this Budget he has taken matches away from the field where they were liable to heavy duties but where the production in this country was not protected. It is also the case that some of these commodities do not enjoy the degree of Imperial Preference that they might have enjoyed had they not already been dutiable when we adopted our Protective system. This is a convenient Clause on which to raise the issue, because tobacco already enjoys a substantial measure of Imperial Preference, and in no sense is any process of manufacture in this country protected. It is a very remarkable thing that that industry has done so amazingly well despite the fact that it enjoys no protection.

This Clause, if it had been proposed by the Chancellor, would have taken a different form, because he enjoys a privilege denied to those who do not sit on the Front Bench, that he can propose to increase a duty, whereas the rest of us can only propose reductions in duty. I am satisfied that the proper way to approach this problem would be by a small increase in the duty on stripped tobacco. This duty on stripped tobacco must be one of great interest to him persoNaily because in 1904, when the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) was Chancellor of the Exchequer, in what was more or less a Free Trade Government, though a Conservative one, he gave us the first piece of industrial protection that we had had for 44 years. He differentiated between tobacco which had undergone the preliminary process of stripping and that which was un-stripped, and the results were very remarkable. Whereas, prior to the duty, the bulk of the tobacco was coming in stripped, after the duty was imposed the bulk of it came in unstripped and a substantial amount of employment was pro- vided. Two years later Mr. Asquith, because he was a Free Trader, abolished the little preference of 2½d. a lb. The new Clause which I am proposing would restore that protection. Fortunately, the industry does not need it so much to-day as it did then. But a good deal of stripped tobacco is coming into the country, and there is no need at all for one pound's weight of stripped tobacco to come into this country, as that operation can be performed in this country. In our proposal we differentiate between stripped tobacco from the Empire and that from foreign countries, so that we give a small measure of increased preference. I do not think that the Chancellor of the Exchequer will accept my proposal, because he will say chat it will cost him so much revenue. If he will only put down a new Clause on Report whereby we get the preference—

The DEPUTY-CHAIRMAN

I would remind the hon. Member that not even the Chancellor can do that.

Mr. WILLIAMS

I know that under the Rules of Procedure he would have to go back to Committee of Ways and Means, and I cannot expect, under the present pressure of business, that that would happen. We are on the most important part of the Finance Bill proceedings. The most important part is not the ratifying of what the Chancellor of the Exchequer said he was going to do on Budget day. That is more or less settled. The really important part of the Finance Bill discussions is the giving of the Chancellor of the Exchequer broad hints as to what he can do next year. The main purpose of the new Clause is not that we expect to get anything from him to-night. He has distributed all the money that he has available. We are trying to indicate the reforms which he ought to bring about. Apart from the merits of the proposal, I urge upon the Chancellor of the Exchequer the advisability of considering whether it will not be possible in next year's Finance Bill, or perhaps sooner, to amend the Import Duties Act in the same way as, in the Finance Bill, he has amended it in respect of silk, so that every industry shall have the opportunity of going to the Import Duties Advisory Committee even though their duties were not origiNaily imposed under the Import Duties Act. There are certain cases where the circumstances of revenue outweigh anything else. He has always—

Mr. LAWSON

On a point of Order. Is it within the rules of order for an hon. Member to discuss next year's Budget?

The DEPUTY-CHAIRMAN

I do not think that there is any disorder in suggesting that some step might be considered between now and next year. In fact, it is frequently done. Most of the new Clauses have been aimed at the next Budget.

Mr. WILLIAMS

I am grateful to you, Captain Bourne, for not ruling me out of order. I get ruled out of order at times, but for once I am right. I hope that the Chancellor of the Exchequer will consider widening the whole sphere. If he says, "I cannot risk allowing the Import Duties Advisory Committee to examine the position in respect of commodities which yield an enormous revenue in respect of quantities of goods like tobacco, in the broad sense, or spirits or beers which are imported," I would remind him that, after all, no recommendation of the Import Duties Advisory Committee comes into operation unless it is approved by him and by the appropriate Department. Not only that, there is not the slightest reason why a Government Department, where necessary, should not tender evidence to the Import Duties Advisory Committee.

The DEPUTY-CHAIRMAN

I think that the hon. Member is now labouring these things rather too far. It might be advisable to have a private conversation with the Chancellor of the Exchequer in these matters.

Mr. WILLIAMS

I shall be very glad to accept your kindly suggestion. I think I have said enough which is in order to indicate what is in my mind, and when the World Economic Conference is over I hope that the Chancellor of the Exchequer will give me an opportunity of further elaborating the point.

10.19 p.m.

Mr. CHAMBERLAIN

My hon. Friend knows that at any time when I have the leisure I shall be happy to have a discus- sion with him upon any point he wants to raise. I would warn him that we have not yet so perfected our fiscal revenue system as to enable me to contemplate letting go of a number of duties which are responsible at the present time for a considerable part of our revenue. On the other hand, I fully recognise that industries would have some grievance by reason of the fact that if they contribute a particularly large share of revenue they were thereby debarred from obtaining any preference in the home market. My hon. Friend has been good enough to express his approval of the action which I have taken in respect of matches. I think I may say to him on the broad question that, while I am not prepared to hand over the question of what should be done with these particular industries to the Import Duties Advisory Committee, for the reasons that I have stated, I am keeping in mind the whole time the general aspect of the protection of industries, where protection is required.

As to the particular instance that he has mentioned, that of tobacco, I have considered it and, as he pointed out, the situation in regard to the manufacture of tobacco in this country is very different from what it was at the time when one of my predecessors introduced the differential duty. As a matter of fact the imports of stripped tobacco are to-day only half of what they were after the differential duty had been imposed, and less than one-third of what they were before the differentiation was introduced. Stripped tobacco to-day is less than 25 per cent. of the total clearances of tobacco. Out of that 26 per cent. over one-fourth comes from the Empire, and when we talk about transferring the whole of the stripping to this country, we have to consider whether we might thereby throw out of employment in the Empire a certain number of people who are now occupied in the manufacture of tobacco. These are considerations which have been in my mind. I hope that the general position I have outlined will be regarded as satisfactory.

Mr. WILLIAMS

After that satisfactory explanation from the right hon. Gentleman, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.