§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
1138§ 5.30 p.m.
§ Sir PERCY HARRISI have an Amendment on the Paper to move to leave out this Clause.
§ The CHAIRMANThe hon. Baronet must realise that that is not an Amendment. I have put the Question, "That the Clause stand part of the Bill."
§ Sir P. HARRISI make no apology for calling attention to the change of this duty from a mere Excise revenues-producing duty to one of a protectionist class. In 1928 there was a great amount of discussion about it, and it almost brought the Government down. It put the then Financial Secretary in a difficult position, and the First Lord of the Admiralty, who was then Chief Whip, had to come down to ask for mercy, so great was the feeling about the matter. In these days, however, when duties are put on and taken off so easily and when the House almost without discussion brings in various articles to be taxed or protected, the House of Commons is becoming indifferent. Matches stand out in a peculiar position. A tax was first put on matches before the War and was later withdrawn. In the War it was re-introduced by Mr. Bonar Law in search of revenue in order to save the financial position. In 1927, 20 per cent. was added and in 1928, in order to protect the revenue, mechanical lighters were taxed for the first time. A great Conservative Chancellor of the Exchequer, the right hon. Member for Epping (Mr. Churchill), made it clear that it was an Excise Duty imposed merely for revenue and that was the justification for it.
Under the new regime and under our policy of Protection, the Chancellor of the Exchequer has thought fit to impose two different rates, one a purely Excise Duty on the home-produced article, and the other a higher rate of Customs Duty on the imported article. He justified it by saying:
Since the introduction of the Import Duties Act, however, some of the raw materials of match makers have become subject to duty.That is a rather novel principle to justify a new duty from a protectionist Chancellor of the Exchequer. I have always been led to understand that the foreigner pays the duty, and we have had constant discussions in the House and questions suggesting that a duty on timber and other raw materials has not increased the cost. The Chancellor went on to say:The manufacturers have no access to the Advisory Committee under the Import Duties Act, because the Match Duty 1s a Revenue Duty."—[OMBTOIAL REPORT, 25th April, 1925; col. 50, Vol. 277.]That is the excuse for the absence of any inquiry. We are not in this case given the advantage of a report or memoran- 1140 dum or any justification for this action. The Chancellor merely comes to the House and says: "I have decided of my own free will to make this difference in the rate." The Chancellor's justification for imposing this duty without referring the matter to the Advisory Committee is rather lame, because in the next paragraph of his Budget speech he refers to the Silk and the Artificial Silk Duties from the Protectionist point of view to this very Committee. If we are to have a tax and Parliament has set up this Committee of three to decide what articles should be protected, there is no reason for exempting matches any more than silk, for what is good enough for silk should be good enough for matches. If the Government really desire to have this article protected in the interests of the producer, they should follow the proper machinery which they have created, and let the matter be referred to the Advisory Committee.
§ The CHAIRMANI have been listening very carefully to the hon. Baronet for some time, and I have found difficulty in seeing that the speech that he is making is at all in order on the Question, "That the Clause stand part of the Bill." It merely effects an alteration in the rates of Customs Duties already existing.
§ Sir P. HARRISThe present Customs duties are on the same rate as the Excise duties and are not protective. The duty has been deliberately made protective, as was explained by the Chancellor of the Exchequer in his Budget speech. The duty has not been altered for revenue purposes, but in order to give protection to the English match manufacturer. There would be no point in the difference if it were not protective, because the Chancellor seems to think that the revenue will be the same. The only purpose of this Clause, as explained by the Chancellor, is to give protection to the match industry. I therefore suggest that I am justified in arguing that, that being the purpose of the Clause, the ordinary machinery under the Import Duties Act should be followed.
The English match industry has not called out for protection. My right hon. and gallant Friend the Member for Ripon (Major Hills) is an expert, and a far greater authority than I am on this question In the discussion in 1928 he stated that the match industry had never asked 1141 for protection. I am not surprised, because the English match industry is a healthy, virile, strong, well-organised and most efficient industry, and is able to stand on its own legs. If you want a good match, buy a British match; I always do. If, however, you are poor, you ought to be allowed to get the cheaper substitute. It may be inferior, but it is more within the reach of the poorer members of the community. The additional duty may be small, but it will put an extra tax on a necessity of every working woman. It is unfortunate that in order to give an unasked for protection to a strong and healthy British industry, this new rate of duty should be imposed with hardly a word of explanation from the Government. I shall await the explanation of the Financial Secretary with considerable interest.
§ 5.40 p.m.
§ Major HILLSI have no objection to the way in which the hon. Baronet has put his case, but I think that I can reassure him. He made his case on the ground that this was a protective duty. I think that I can convInce him that it is really a compensating duty. I said in 1928 that the match industry did not want protection, but two new factors have arisen Since then to alter the situation. The first new factor is the Import Duties Act. Under that Act an anomalous position arose with regard to the tax on matches, because the raw materials which must be used by the match maker are not produced here and have to be imported, and they are taxed. The wood with which matches are made is aspen wood, which is largely grown round the Baltic, from which the chief imports come. This and the other raw materials in match-making are taxed, and yet the foreign match, made abroad of the same wood and of the same chemicals, comes in free of extra duty. The Import Duties Act does not apply to articles subject to a Customs duty. So the British manufacturer has to pay duties on the necessary articles of his production but finds his foreign competitors free of those duties, and therefore able to compete with him on unfair terms.
The second new factor is that the Russians are sending matches here at a price that cannot pay for the cost of the material. I do not think that 1142 the extra 5d. per 144 boxes of 50 matches can be regarded as a protective duty. It only really compensates for the anomaly that I have mentioned. My hon. Friend twitted us with supporting the doctrine that the foreigner pays the duty. If you give the foreigner an easy way of evading the duty by admitting his finished articles duty free, of course he does not pay the duty. For these reasons I hope that the Committee will pass the Clause. I think that I can say that the match manufacturers have no wish for a substantially higher duty. All that they wish to see is the very moderate increase that the Government have given, and for that I hope I have shown the Committee that there is ample justification.
§ 5.45 p.m.
§ The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha)The hon. Member for South-West Bethnal Green (Sir P. Harris) was anxious to know whether anybody was going to reply to his speech. If he really wishes me to reply, I will do so with the greatest pleasure, although he can hardly expect me to enter into the general discussion which he sought to raise on the merits of Free Trade and Protection.
§ Sir P. HARRISI only sought an explanation on this point.
§ Mr. HORE-BELISHAMy hon. Friend raises that particular issue on every possible occasion. I will confine myself to the comparatively narrow point of why we are raising the Customs duty on matches and leaving the Excise duty where it now stands. We do that for two reasons, with which my hon. Friend is well acquainted, because he quoted them. We desire to see more matches manufactured in this country, and we think this additional inducement will secure that object. We desire also to remove an injustice which is now complained of, namely, that the manufacturer of matches has to pay a tax upon his raw materials—his chemicals and his wood. My right hon. and gallant Friend the Member for Ripon (Major Hills) has explained that this particular kind of wood—and what he said applies to certain of these chemicals—is not obtainable in this country. Therefore, it would be patently unjust that the match 1143 manufacturer should have to pay duty upon his raw materials without receiving the benefit which we now- give him by way of compensation. Those are the reasons for the course we have taken. The subject is not one which could be referred to the Import Duties Advisory Committee. This is a Budgetary duty and the Import Duties Advisory Committee is specifically precluded from considering Budgetary duties. We shall obtain an additional £100,000 by the course we now propose. We are not prepared, as my hon. Friend would desire, to abandon the whole Match Duty, which provides us with something like £4,000,000 a year, especially in these hard times, and we think the general effect of this Clause upon employment will be thoroughly good.