HC Deb 06 July 1934 vol 291 cc2246-64

The following Motions stood upon the Order Paper: That the Silk Duties (No. 1) Order, 1934, dated the twenty-eighth day of June, nineteen hundred and thirty-four, made by the Treasury under the Finance Act, 1933, a copy of which was presented to this House on the said twenty-eighth day of June, nineteen hundred and thirty-four, be approved. That the Additional Import Duties (No. 22) Order, 1934, dated the twenty-first day of June, nineteen hundred and thirty-four, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said twenty-first day of June, nineteen hundred and thirty-four, be approved. That the Additional Import Duties (No. 24) Order, 1934, dated the second day of July, nineteen hundred and thirty-four, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said second day of July, nineteen hundred and thirty-four, be approved."—[The Chancellor of the Exchequer.]


I think it will be for the convenience of the House if these three Ordere are taken together.


That will suit the convenience of Members of the Opposition.

1.0 p.m.


I beg to move: That the Silk Duties (No. 1) Order, 1934, dated the twenty-eighth day of June, nineteen hundred and thirty-four, made by the Treasury under the Finance Act, 1933, a copy of which was presented to this House on the said twenty-eighth day of June, nineteen hundred and thirty-four, be approved. I am afraid that I must give a brief explanation of the Silk Duties Order and the facts which have led up to the present situation. The Silk Duties were first imposed when the right hon. Member for Epping (Mr. Churchill) was Chancellor of the Exchequer, in 1925. They were primarily revenue duties, and accordingly imported raw natural silk was made subject to a Customs duty, and artificial silk manufactured in this country was made the subject of an Excise duty. In arriving at the exact rates which were to be paid the Chancellor of the Exchequer said that he wished to give a "protective turn." The Import Duties Act, 1932, did not directly affect the silk duties, as in general goods already subject to duties under other Acts were exempted from the scope of this Act. The Silk Duties were in the main on a specific basis, and whatever the degree of protection was afforded to the home industry in 1925 it was clear that a change in the level of prices since that date had introduced a new element; the whole range of duties in fact required re-examination and possibly revision.

In order to meet these circumstances a temporary increase in the duty of 10 per cent. on manufactures of silk and artificial silk was imposed, and the whole problem was referred to the Import Duties Advisory Committee for investigation. They began their investigations in 1932, and in the Finance Act of the following year provision was made for any necessary readjustments of the duties in a manner similar to that adopted under the Import Duties Act. The Committee's investigation covered a wide field, and it is not surprising that they took a considerable amount of time to study this complicated problem. In September, 1933, the Government asked the Import Duties Advisory Committee to suspend their inquiries for a time. It is only right that I should explain that conversations were then being arranged between United Kingdom and Japanese industrialists regarding the trade in cotton and artificial silk goods, and it was felt that the possibility of good results from these discussions would be prejudiced so long as the fear existed that at any moment during our conversation our duties on silk and artificial silk goods from Japan might be increased. On the 7th May, 1934, that is this year, negotiations with Japan having proved fruitless for the time being, the Government asked the Import Duties Advisory Committee to resume their investigations, and the Committee promptly replied by making, on the 16th May, the recommendations which are printed in the White Paper, Command Paper 4633.

There are two features in this Report to which attention should be directed. The Import Duties Advisory Committee proposed that the form of the duties should be amended in general by reducing the amount of the specific duty on the more important classes of goods—silk tissues—and by increasing from 10 to 25 per cent. the level of the ad valorem duty. No doubt these proposed duties represent a substantial increase in the protection for the home industry, and also an increase in the actual level of the import duties charged on foreign goods. In paragraphs 6 and 7 the Committee refer to the duty on raw materials and say that these duties appear to them to be anomalous and should be abolished as soon as circumstances permit. As it was understood, however, that no reduction of the duties on raw materials could be contemplated, the Committee made their recommendations on the lines of a continuance of those duties at their existing level.

I need hardly point out that the silk trade of this country is of special importance not only to this country but to a number of other countries, to France, Italy, and Switzerland. It had been made clear to us early in the year how much importance the French Government attached to these Silk Duties, and they have played a considerable part in the negotiations, which I am glad to announce ended happily a fortnight ago. In these circumstances it became necessary for us, while conducting these negotiations, to consider whether the object at which we were aiming, that is an improvement in the position of the United Kingdom industry, could be attained in any other way, and the result of this consideration is set out in the correspondence to which I need not refer. The Chancellor of the Exchequer asked the Import Duties Advisory Committee what scale of duties they would be prepared to recommend on the assumption that he was prepared to agree to a reduction in the Customs Duty on raw silk and the Excise Duty on artificial silk, by one-half.

When this information had been furnished by the Advisory Committee it was possible for us to enter into negotiations with the French Government on a new basis. The Chancellor of the Exchequer agreed to the sacrifice of revenue involved in these transactions and adjustments, and the Advisory Committee were asked, on 22nd June, to make their formal report. It is on that Report that the Order now before the House is based. It will be observed from the Report that the Committee have endeavoured to retain the higher level of protection contemplated in their earlier Report, the reduction of the duties on raw material having enabled them to reduce the duties on most classes of manufactured goods.

There are two points to which I would direct attention. The main feature of the earlier Report of the Advisory Committee is a reduction of the duty by weight and an increase in the ad valorem duty. For certain classes of tissues an alternative to the ad valorem duty was proposed in the form of a duty per square yard, the actual rate being 7½d. per square yard in the case of silk goods, and 5d. in the case of artificial silk goods. The effect of these provisions will, of course, be to increase the duty on goods imported at abnormally low prices, which was one of the objects we had in view. The Committee's new report has enabled us to improve our relations with other countries without in any way infringing the interests of the Home silk industry. The reduction of the duties on raw materials is a reform which the Committee recommended as being in the interest of our own silk trade, and in making their recommendations for a new scale of duties on silk and artificial silk, as they say in their letter of 24th May on page 16 of the White Paper: We must be guided solely by our statutory duty to consider the interests of trade and industry in this country. There need be no doubt that the Committee have been able to reach conclusions which should affect a real improvement in the form of the duties, which were confusing and complicated. The duties they have recommended and which are now put into effect are those calculated to be of the greatest advantage to the industry in this country. The fact that they have also effected an improvement in our relations with other countries is a happy coincidence. It is in these circumstances that I recommend the Order to the House. As regards the other two Orders, I need not detain the House. One imposes an additional duty upon certain component parts of some kinds of gauges and measuring instruments of precision, which it is in the national interest should be produced in this country. The other provides for an adjustment of the duties on manufactured granite.

1.8 p.m.


We are quite prepared to discuss the Order relating to silk. The other two Orders we do not propose to discuss. But that is not to be taken as implying approval, for it is well known that we disapprove in general of all these Orders and the way in which they come before the House. We have had an unusually long and clear statement of the proposed Silk Duties and an exposition of the considerations which led to the change in the method of imposing the duties on silk and silk products. We are grateful for the publication of the letter to the Lord Commissioners of the Treasury from the Advisory Committee, in which the general case is made out. It gives us the various elements for consideration of the whole problem. The President of the Board of Trade has told us that since the matter was first referred to in the investigation in 1932 there have been various changes, and there have been communications between the Chancellor of the Exchequer, himself and the Advisory Committee.

If we have any criticism of the Order before the House and the machinery which lies behind it, it is on the ground that much of that communication and much of the considerations have hitherto not been revealed to the House as fully as they are now revealed. I refer to the communication made by the Chancellor of the Exchequer, dealing with statements made by him on 9th and 10th May on the subject of silk and artificial silk duties, and conveying his request that investigations should be undertaken, and adding: In any revision of the duties which may result from the Committee's investigations, the Chancellor would wish to secure not less revenue from silk and artificial silk than is yielded by the present duties. That is a new feature which we welcome on this side of the House. It is an intimation that the Chancellor of the Chancellor of the Exchequer does not wish to add to the very heavy duties that are imposed on silk and other commodities entering this country. As an augury for the future we welcome it very much indeed. The communication now made public shows that the Chancellor does not wish, for revenue purposes, to impose heavy duties on silk and possibly on other commodities which are now subject to taxation. Then the Chancellor goes on to refer to the negotiations between ourselves and Japan. That is all set out in the letter from the Advisory Committee to the Lords Commissioners of the Treasury. Then we come to the next point, which is very important. In paragraph (4) of the letter it is said: An examination of the statistics of imports and home production, so far as such are available, indicates the substantial developments which have taken place since 1925 in the case of artificial silk and manufactures thereof. That is very encouraging indeed. It is noteworthy that the Excise Duties have increased four times from 1925 to 1933. In 1925 they were £607,973, and £2,390,074 in 1932–1933 on the home production of artificial silk. I would like to know whether the taxation of real silk is responsible for the whole of this increase in the production of artificial silk. That has a bearing on our attitude towards all these problems. The answer to that question will help the House and the country to adjudicate on the merits of Measures of this kind. Then we come to the third point: To a large extent the articles produced by these industries have ceased to be luxury goods, and the duties on their raw materials appear to us to be anomalous. It is encouraging to find that our habits have changed and that taste in dress has changed very much indeed. One of the most cheering things on a day like this is to see the charming pictures that present themselves to us outside the House in the dress of the people. It is obvious that silk and artificial silk goods are being brought within the reach of larger numbers of people. Then we come to the next point. The Committee state: We propose also the continuance of drawback for entrepôt goods. Finally they state: We are confident … our recommendations will place the silk and artificial silk duties upon a footing more suited to present needs. One now feels some assurance that this Committee has had before it, not only the considerations put forward by interested parties such as the manufacturing interests concerned, but other considerations which cannot be divorced from the idea which appears to be dominant in the minds of certain Members of this House. We are glad to know that some weight is being given to those other considerations and to that extent we are somewhat reassured. Then we come to the Schedule setting forth the duties in detail and showing that in a large number of cases no change is proposed. Those hon. Members who take an interest in this matter will find that the particulars are clearly set out there and we make no complaint at all on that score. Although this is a highly technical matter I think the ordinary Member is given every opportunity of clearly seeing the nature of whatever change has been achieved. In his letter of 17th May the Chancellor of the Exchequer says: It is quite impossible to foresee when I might be in a position to accept the recommendations which you would desire to make if revenue considerations did not stand in the way. It is highly important that the House and the country should know what weight is given to the several factors which enter into this problem such as the question of how far these duties are a source of revenue and therefore attract the Chancellor of the Exchequer, and how far they are justified by the requirements of trade and the public interest. We find the Chancellor in this letter referring to the concession that he is prepared to make and also to the necessity for preventing any interruption of international trade. He says: I feel that it is incumbent upon us to make every effort to prevent the further interruption of international trade which would follow from a breakdown of the present negotiations to the grave injury of all concerned. I take it that on some future occasion when the activities of his Department are reviewed in the House, the President of the Board of Trade will give us in more detail a statement of the many considerations involved in this agreement which are of importance, not only to the Chancellor of the Exchequer and the Advisory Committee, but to this House. As I say, we welcome the evidence that all these considerations have not been ignored. We would have despaired altogether of this ad hoc system of assessing imports on imported goods had we not some assurance that vital national and political considerations were not being entirely overlooked. I consider that in the pages of this correspondence and in this Order the nature of the case has been revealed to the House with a great frankness.

There is something else to which I ought to refer before leaving this subject. The great demerit of this system is that the Advisory Committee is removed from the House. I do not know whether other hon. Members are more fortunate than I am, but I do not know where the Committee meets or where its offices are situated. One sees and hears of the names of the chairman and the other members from time to time, but the procedure of the Committee, the system by which it operates—these things are not known to the House. There is not that degree of publicity or that intimate knowledge of its proceedings to which the House and the country are entitled when these various duties are under consideration. We know that the Committee hold consultations with the representatives of the Treasury and of the trade interests concerned but in connection with these discussions Members of this House are entitled to as much information as the trade interests and the people who apparently have access to the Committee from time to time. I do not think that this system should be worked in secret It may be that when the President of the Board of Trade is conducting negotiations or trying to obtain agreements involving revision of duties that there are reasons for secrecy but if we embark upon a policy of Protection the people of this country ought to be taken as much as possible into the confidence of those who are applying that policy.

We find that in the Orders which come before the House from time to time there has been an attempt to balance the pros and cons of the case and to weigh the consequences but the Orders do not give sufficient information. I am sure that the House and the country do not yet appreciate the heavy accumulation of duties which has been piled up by these piecemeal Orders. I think we have to-day the 25th or 26th. They come here one after another and occasionally complaint is made that we have not time for debating them. We are not so much concerned this afternoon with debating the details of this Order which are set out here with such fullness and precision. Our opposition is based on the fear that this machinery does not give the country an opportunity of assessing the merits and demerits of the system upon which we embarked two years ago. As I already have said it is not merely a question of trade interests and import necessities Political considerations are also involved and I think that this House ought to be given the gist of those considerations which come before the Committee from time to time and that there should be the fullest opportunity of discussion before we are involved in any commitments or before Orders are imposed which may require variations of important agreements with other countries.

I suggest that the present system might secure a greater measure of agreement and might even secure concurrence from this side of the House if the Advisory Committee were to take into their confidence not only the Chancellor of the Exchequer and the President of the Board of Trade but also this House. I suggest that there should be a committee of this House which would have all these considerations put before them and would have an opportunity of expressing an opinion before the country is committed to any great changes involving burdens upon our people, and possible political and economic repercussions. We shall divide against this Order as a gesture and without exhausting the arguments which we have brought forward against it we hope that the suggestions we have made will receive the consideration of the right hon. Gentleman and his colleagues.

1.25 p.m.


I can, from my own experience, endorse that portion of the hon. Gentleman's speech in which he complimented the Government and the Import Duties Advisory Committee. During the long period during which these Silk Duties have been before them, as the right hon. Gentleman knows, I have been at times very impatient, but knowing, as I do, how they gave consideration to all sorts of people, some of whom have really been representatives of foreign firms, and that they came to this decision after considering all interests, I thing it is a great tribute to their work. I should like to preface my remarks by thanking the right hon. Gentlemen for the clear way in which he introduced this Motion, and that at long last there is a sense of permanency, which I believe in the long run will be beneficial to our country. To the right hon. Gentleman, it may be some satisfaction to know that the Order Paper at Question time will not be so full of questions from myself and some of my friends in regard to the Silk Duties, and to myself there is some satisfaction that some newspapers which are friendly to the Government may not be writing about myself and some of my friends as unmitigated nuisances. But while there is satisfaction that there is some permanence in this matter, there are some matters in regard to which we are left with regret. It is well known that the Import Duties Advisory Committee would like to have given a greater protection to the silk industry than is included in these Orders, that political influences intervened in the form of the French negotiations, and that their final recommendation was of a lower nature than it would have been but for those political influences.

I am not making much of that point, but there is no doubt that the duties are lower than was generally expected by the silk industry. There is, however, one very big fly in the ointment, and that is that through the reduction of the Excise and the raw material import duties there are going to be made huge losses. That decision by the Government was a great surprise to myself and certainly to the silk industry as a whole. There are in this country huge stocks of silk goods, both in the raw material and in the manufactured state, which have actually paid the higher rates of duty and of Excise. I am told on very reliable authority that there are three wholesale houses in Manchester alone which have £50,000 of silk goods on hand upon which duty has been paid, and I have a letter from one friend saying he is making a loss of £5,000 on the artificial silk which he has in stock upon which he has paid Excise. Another manufacturer has actually written off his balance sheet, which ends at the end of June, £10,000 of his stock, and I am informed that one of the leading manufacturers of artificial silk yarn will actually lose nearly £500,000 on the stock on which he has paid Excise.

It is not merely ending in this way, but contracts have been made on the basis of the higher rate of taxation, and these are being repudiated. Particularly may I emphasise that I have heard of a case in the Argentine Republic where prices which have been given for export are now at a lower rate, and the result is that these old contracts are being repudiated; and, of course, they will only be accepted on the new rate of prices. I am not going to press the right hon. Gentleman, though I myself have been pressed to ask, for concessions on this matter. I know the difficulties of the Chancellor of the Exchequer and that he is bound to have regard to the amount of revenue which he receives, and I know that he cannot spare anything in his budget to deal with the compensation for which my friends are asking, but I think he can help in this matter and in other ways. I understand that certain discussions are taking place during next week between the trade and the officials of the Treasury or of the Customs and Excise on the question of how this difficult matter can be alleviated or settled without loss of revenue to the Exchequer. I have heard certain suggestions made, and I only hope—in fact, I know—that the right hon. Gentleman and the Chancellor of the Exchequer will take very carefully into consideration those suggestions as to how the trade can be assisted sympathetically in this matter.

The further point which I would like to bring before the right hon. Gentleman is that in this Report of the Import Duties Advisory Committee it is clearly laid down as their opinion that eventually the raw material taxes will disappear altogether. I agree entirely. I was never in favour of the original imposition of the raw material taxes. They were imposed, as the right hon. Gentleman has just said, by the right hon. Member for Epping (Mr. Churchill) when he was Chancellor of the Exchequer, and they were only accepted by myself and by the silk industry as a whole because we regarded that small compensation for the inconvenience which they were suffering, to use the picturesque language of the right hon. Member for Epping, or that element of protection, as just that small turn in our favour which was of advantage to our people. I am desperately afraid of what the position of the trade will be between now and next April. Next April there will be consideration by the Chancellor of the Exchequer of his new Budget. The silk trade has been caught with a very heavy loss on this occasion, and they are going to take very good care not to lose on the next occasion. It is going to lead to friends of mine buying only sufficient for the day, until they know finally what their fate is to be as far as this raw material tax is concerned.

Therefore, on this matter I appeal to the right hon. Gentleman that he should have the closest consultation with the silk industry in the meantime, and, speaking on the assumption that the raw material taxes are eventually to go, that the methods, the dates, and the times should be arranged after the closest consultation with the trade. After all, the new duties which we are now passing were known in Lyons three weeks ago. I do not say that the British Government are to blame for that, but these duties were communicated to the Lyons manufacturers by the French politicians. Lyons, which is the great centre of silk manufacture, knew all about these things, but Macclesfield knew nothing, and it was a great disadvantage. I say, therefore, that if and when the present raw material taxes are dealt with either a certain amount of notice should be given or they should not be removed altogether, but spread over a series of months.

These Orders deal only with European competition. It was clearly stated by the Silk Association, when they placed their case before the Import Duties Advisory Committee, that it was based only on dealing with European competition; it had nothing whatever to do with dealing with Japanese competition. They stated clearly in their case which was put before the Committee that the question of Japanese competition had to be dealt with by other methods. I hope, now that the Government (have got this matter free from negotiations with foreign Governments, that some system of quotas for silk will be brought into operation in exactly the same way as it has been done for cotton. While thanking the right hon. Gentleman for at last taking action and for at last granting fiscal justice, though of a limited character, to the silk industry, I hope he will take into consideration the difficulties which have been raised by this Order and do everything possible to alleviate the losses and hardships which will be caused by the removal of the raw material duties.

1.37 p.m.


The hon. Member for Gower (Mr. D. Grenfell) voiced the feelings of a good many of us when he congratulated my right hon. Friend on the fullness of this particular report, which puts us in possession of a good deal of the skeleton working of the processes which led to the production of these Orders. I am sure the House will join with me in hoping that he will give the House material of this kind in advance so that when we discuss similar orders in future we shall have the bare bones of reasoning which lead up to Orders. I cannot join with the hon. Member in hoping that there will be any closer contact between the Import Duties Advisory Committee and Members of this House. That is a proposition which the hon. Gentleman will realise when he reflects on it soberly, will not commend itself, especially to those who have for so long said that the operation of a Committee of this kind must always be in danger of political influence. The great advantage of this Committee is that Members of this House have no access to it, but that trade has access to it, as it properly should, and that it is free from those political contacts which have destroyed bodies of this kind in several other countries in which they have been set up.

I join with the hon. Gentleman in congratulating the President of the Board of Trade on this Order, subject to one or two qualifications. Those who have always said that we cannot operate a protective system and at the same time use that system to obtain political advantages are confuted by this Order, because by it we are doing something to improve the whole of the political and trade position with France. That is what was always said with regard to these duties when they were put on, and this is an instance in which a duty is being lowered to improve trade relations with another country. My right hon. Friend will be the first to agree that we cannot reduce a duty which has been in operation for a considerable time without causing considerable dislocation of the business of people who are engaged in the article under consideration. That must be so, and perhaps, now that we are living under a particular system, they have to face that fact. They may find of a sudden that their stocks have been considerably reduced in value owing to the fact that the duty has been reduced, but in this particular case I want to call my right hon. Friend's attention to what is a very serious hardship in regard, not to the lightening of the duty, but to the proposals as to the rate of drawback. The Order, as far as drawback is concerned, proposes on the recommendation of the Committee that the drawback to be allowed shall be an amount equal to the aggregate amount of the duty or duties chargeable as aforesaid which is proved to the satisfaction of the Commissioners of Customs and Excise to have been paid. That, I presume, is in pursuance of the recommendation which appears on page 21, the last sentence of which suggests: that the present drawback rates should be continued for a time. The Committee has also dealt with the subject of drawbacks on page 27, where, in paragraph 4, it says: Generally, we think that the existing drawbacks allowable as respects the existing duties should be continued for the present. I speak with great diffidence on the interpretation of the Orders that are before the House, because it is an extremely complicated and difficult subject. I have done my best to get into touch with the Treasury and the Board of Trade, and I am informed that the Order does no more than carry out the recommendations of the Committee, that, of course, the Order could not do more than that, and that they are in fact advised that it does not do so. So far as the trade is concerned, a great difficulty arises at once in the case of certain holders of duty paid stocks. The people who are affected are those who have made forward contracts. Under this recommendation, which is that the present rate of drawback should be maintained for a short time—the time is not defined and it may be two, three or six months—they are in the position that, having forward contracts for delivery, they are entitled to a certain rate of drawback. In the case of certain processed goods it is 1s. 7d., and those who can make contracts to-day or to-mmorrow are entitled to the same drawback, although the duty paid is 6d. less. It is a complete bonus for somebody.

The position really, therefore, presents very great difficulties to those who hold stocks of duty paid goods at the present time. I want to give a concrete example. One of my constituents, who is an important dealer in artificial silk, has sold forward artificial silk knit yarns at 1s. 5d. That price is arrived at in this way. The yarn price is 3s., which is made up on the old rate of duty, and from that 3s. he takes 1s. 7d. drawback and quotes the net figure of 1s. 5d. He has quoted that for some considerable time ahead. To-day he can sell the identical yarn at 6d. cheaper, at 11d., because he can sell his yarn at 2s. 6d. and take off 1s. 7d. drawback as though he had paid the old rate of duty. He or any body else is in a position to sell in the market at 6d. less than he has sold under his forward contract. My right hon. Friend may say that the trader is entitled to enforce his contracts at the old rates, but is he, in practice, in a position to do so? Does anybody imagine that a man who had sold forward to the Argentine or South Africa or elsewhere under a contract and forced the buyers to take delivery at 6d. above the market price could do business? Does anybody imagine that if he did business on those terms he would keep his customers? Of course he would not. The net result is that the people with forward contracts will have to stand the loss of a very considerable amount, owing to the fact that the person who is paying the new rate of duty is getting a quite unexpected bonus of 6d. That is something which I cannot justify in any way on theoretical grounds.

What I imagine is said is that although this cannot be justified on any ground of principle—because it is a sheer gift of 6d. to somebody and a sheer handicap of 6d. to somebody else—administratively it is impossible to have differential rates of drawback. But is that right? I have here notice No. 99 which has been issued by the Commissioners of Customs and Excise for the guidance of traders. That divides goods into two classes, Class 1 and Class 2. In the case of Class 2 goods, which are, roughly speaking, raw materials, cocoons, artificial silk yarns and the like, I find that they are to be allowed drawback equal to the amount of the duty payable. It is carefully explained in a footnote on page 4 that that drawback will be proportionate to the rate of duty which has been paid. The man who has paid the lower rate of duty naturally gets the lower rate of drawback, and the man who has paid the higher rate of duty gets the higher drawback. Therefore, as regards Part 2 goods, it appears that there is no administrative difficulty about a differential rate of drawback corresponding to the two rates of duty on stocks in existence. But Class 3 goods, which in the main are processed goods, goods more fully manufactured, have a dead level of drawback, and in the particular case in which I am interested at the moment, that is to say processed knit yarns, the rate of drawback is 1s. 7d. This position seems to put traders in a difficulty. It may very well be that my hon. Friend will be in a position to say that by the Order he has merely carried out the recommendations of the Advisory Committee, though a layman finds it a little difficult to reconcile the words in the Order The drawback shall be equal to the aggregate amount of the duty paid or the duties chargeable with the condition I have been describing, in which the drawback is uniform whatever the rate of duty has been; but I must accept it that reconcilation can be made. Whether it be so or not, ought not the right hon. Gentleman to try to get another recommendation from the Import Duties Advisory Committee dealing with this point, in order that those who hold large duty-paid stocks—I am told they amount to thousands of pounds—and who have forward orders should be in a position to deal with them without unnecessary loss?

Then there is this further matter. Nothing is said as to the duration of the existing rights of drawback. It may be three months, four months or any time. I gather that what is in the minds of the Government and the Import Duties Advisory Committee is that it should be long enough to enable the existing duty-paid stocks to be disposed of. That is a laudable object and a perfectly reasonable one, but it does create a difficulty as regards future quotations. So long as we have the 1s. 7d. rate of drawback—to refer to the instance I have given—so long as the merchant knows that he can quote his price on the basis of a 1s. 7d. drawback, he can make his forward contracts, but when he is told, "This drawback is to be reduced, but we cannot say when," it becomes exceedingly difficult to book forward delivery orders for October, November or December. I am told that many Manchester merchants

are advising their overseas customers that they cannot make a forward quotation at the present time.

I suggest to my right hon. Friend, while recognising that the proposal has been put forward in the interest of fairness, that the period ought not to be unduly long, and that some notice ought to be given within a reasonable time as to the duration of the existing rate of drawback. I hope I have made my point clear. It is the difficulty of reconciling two difficulties, one of which the right hon. Gentleman has dealt with in the Order and the other with which I hope he will deal. I hope the point I have made as regards the possibility of a differential rate of drawback on processed goods may be borne in mind, and that if it is only a matter of administration the present position will be put right in the interests of those people who hold these duty-paid stocks.

1.53 p.m.


I wish to support the argument which has been put forward by my hon. and learned Friend the Member for Central Nottingham (Mr. O'Connor) and to express the hope that the right hon. Gentleman will consider whether it is not possible to do something in the interests of the Treasury itself. To take an illustration, a parcel of silk might be passed backwards and forwards between this country and, say Antwerp, drawing drawback at the old rate of duty, and brought into this country at half the duty and it seems to me that a system which does not make any allowance for the rate of duty which was originally paid provides opportunities for fraud upon the Treasury itself. In the interest of justice as between two manufacturers, one of whom is, by mere accident, put in a position to make a considerable profit while the other will incur a considerable loss, as well as in the interest of the Treasury itself, some further consideration ought to be given to this matter, and some means devised whereby the drawback is only paid at the rate at which the duty has in fact been paid.

Question put:

The House divided: Ayes, 104: Noes, 23.

Division No. 325.] AYES. [1.55 p.m.
Acland-Troyte, Lieut.-Colonel Balfour, Capt. Harold (I. of Thanet) Bower, Commander Robert Tatton
Applin, Lieut.-Col. Reginald V. K. Barrie, Sir Charles Coupar Bowyer, Capt. Sir George E. W.
Baldwin, Rt. Hon. Stanley Beauchamp, Sir Brograve Campbell Broadbent, Colonel John
Brown, Ernest (Leith) Llewellin, Major John J. Runciman, Rt. Hon. Walter
Buchan-Hepburn, P. G. T. Loftus, Pierce C. Runge, Norah Cecil
Burnett, John George Mabane, William Russell, Hamer Field (Sheffield, B'tslde)
Caporn, Arthur Cecil MacAndrew, Capt. J. O. (Ayr) Rutherford, John (Edmonton)
Cochrane, Commander Hon. A. D. McCorquodale, M. S. Sandeman, Sir A. N. Stewart
Conant, R. J. E. Maclay, Hon. Joseph Paton Scone, Lord
Cooke, Douglas McLean, Major Sir Alan Selley, Harry R.
Cranborne, Viscount Macqulsten, Frederick Alexander Shaw, Helen B. (Lanark, Bothwell)
Crookshank, Capt. H. C. (Gainsb'ro) Maitland, Adam Sinclair, Col. T.(Queen's Unv., Belfast)
Cross, R. H. Manningham-Buller, Lt.-Col. Sir M. Sotheron-Estcourt, Captain T. E.
Dickie, John P. Margesson, Capt. Rt. Hon. H. D. R. Stanley, Rt. Hon. Lord (Fylde)
Doran, Edward Mayhew, Lieut.-Colonel John Stewart, J. H. (Fife, E.)
Duncan, James A. L. (Kentington, N.) Moreing, Adrian C. Strauss, Edward A.
Edmondson, Major Sir James Morris-Jones, Dr. J. H. (Denbigh) Tate, Mavis Constance
Emmott, Charles E. G. C. Morrison, G. A. (Scottish Univer'ties) Thomas, Rt. Hon. J. H. (Derby)
Ford, Sir Patrick J. Morrison, William Shephard Thomson, Sir Frederick Charles
Fuller, Captain A. G. Moss, Captain H. J. Tufnell, Lieut.-Commander R. L.
Goldle, Noel B. Nation, Brigadier-General J. J. M. Wallace, John (Dunfermline)
Grattan-Doyle, Sir Nicholas North, Edward T. Ward, Lt.-Col. Sir A. L. (Hull)
Gretton, Colonel Rt. Hon. John Nunn, William Ward, Sarah Adelaide (Cannock)
Grimston, R. V. O'Connor, Terence James Wardlaw-Milne, Sir John S
Hales, Harold K. Ormsby-Gore, Rt. Hon. William G. A. Warrender, Sir Victor A G.
Hanley, Dennis A. Orr Ewing, I. L. Wedderburn, Henry James Scrymgeour
Hannon, Patrick Joseph Henry Percy, Lord Eustace Whiteside, Borras Noel H.
Howitt, Dr. Alfred B. Petherick, M Whyte, Jardine Bell
Hudson, Capt. A. U. M. (Hackney, N.) Peto, Geoffrey K.(W'verh'pt'n, Bliston) Wills, Wilfrid D.
Hume, Sir George Hopwood Raikes, Henry V. A. M. Windsor-Clive, Lieut.-Colonel George
Hunter, Capt. M. J. (Brigg) Ramsay, T. B. W. (Western Isles) Wise, Alfred R.
Hurst, Sir Gerald B. Reid, David D. (County Down) Womersley, Sir Walter
Kimball, Lawrence Remer, John R.
Leighton, Major B. E. P. Rhys, Hon. Charles Arthur U TELLERS FOR THE AYES.—
Levy, Thomas Rickards, George William Major George Davies and Commander Southby.
Lindsay, Noel Ker Rots Taylor, Walter (Woodbridge)
Adams, D. M. (Poplar, South) Hall, George H. (Merthyr Tydvil) Smith, Tom (Normanton)
Bernays, Robert Hamilton, Sir R. W. (Orkney & Zetl'nd) Tinker, John Joseph
Daggar, George Jones, J. J. (West Ham, Silvertown) White, Henry Graham
Davies, David L. (Pontypridd) Macdonald, Gordon (Ince) Williams, Dr. John H. (Llanelly)
Dobbie, William McEntee, Valentine L. Wilmot, John
Foot, Isaac (Cornwall, Bodmin) Maclean, Nell (Glasgow, Govan)
Gardner, Benjamin Walter Mason, David M. (Edinburgh, E.) TELLERS FOR THE NOES.—
Greenwood, Rt. Hon. Arthur Maxton, James Mr. John and Mr. Groves.
Grenfell, David Rees (Glamorgan) Rea, Walter Russell

Resolved, That the Silk Duties (No. 1) Order, 1934, dated the twenty-eighth day of June, nineteen hundred and thirty-four, made by the Treasury under the Finance Act, 1933, a copy of which was presented to this House on the said twenty-eighth day of June, nineteen hundred and thirty-four be approved.

  1. IMPORT DUTIES ACT, 1932. 139 words