NEW CLAUSE.—(Amendment of s. 8 of 17 and 18 Geo. V., c. 10.) (Hansard, 18 June 1934)

§ Mr. H. WILLIAMS
I beg to move, "That the Clause be read a Second time."
If hon. Members will look at the Schedule which appears later on the Order Paper, they will see the rates set forth. They do not convey very much unless hon. Members have before them the existing rates. They represent substantially a reduction in the duty by one-twelfth. I do not imagine for one moment that my hon. Friend the Financial Secretary will accept the new Clause, because it would involve him in a loss of revenue of about £400,000. It is not moved in the hope that he will accept it this year. It is moved in the hope of stimulating him into a suitable activity next year. Some of us who are convinced Protectionists have always regretted the fact that the Import Duties Act applied Protection only to those goods which were not dutiable under any other enactment, and, as a result, there are a num- 137 ber of gaps, rightly or wrongly, in our protective system. Year by year we have tabled new Clauses to deal with these gaps, and some have been selected for discussion and some have not. This year the one which has been selected on the Report stage is the one which deals with matches, which I am now moving. I am told a match duty once wrecked the Chancellor of the Exchequer, but a more callous Chancellor imposed a match duty a good number of years ago, and that duty brings in £4,000,000 a year. It is, therefore, a very important item, of revenue.
Taking the main rate of duty, that is, the duty which applies to boxes of matches of between 20 and 50, or normally the kind which the ordinary Member uses containing 50 safety matches, the difference between the Excise Duty and the Customs Duty up to last year was 2d. for each 144 boxes. That was not a protective 2d. It represented the allowance to British manufacturers of the costs in which he was involved in his factory through the administration of the Excise Duty. Therefore, in fact, there was no protection at all. Last year the Chancellor decided that this duty ought to have a modicum of protection, and in respect of the main rate of duty he raised it from 4s. 4d. for 144 boxes to 4s. 9d. That was not a very large increase. It was, roughly speaking, a 10 per cent. protection calculated on the value of the Revenue Duty. It must be borne in mind that matches are made to a substantial extent from imported raw materials. The wood, in particular, is imported. I understand that most matches are made from aspen, which up to now has not been grown in substantial quantities in this country or in any Empire country. Accordingly, we have imposed a duty of 10 per cent. on the raw material of this industry, and there is no tax-free supply competing. In those conditions, as every Protectionist knows, the duty tends to fall upon the consumer. It is an entirely different case from where there is a tax-free competition. The match manufacturers therefore are paying a duty of 10 per cent. on part of their raw materials, and that represents, I imagine, about 40 per cent., perhaps more, of the finished value, so that in fact they are suffering from a duty of about 4 per cent. of what I call negative protection. It was in order to 138 meet that, I understand, that the Chancellor gave them that modicum of protection, to which I have referred, of 5d. per 144 boxes.
If anyone will consult the Financial Statement of last year, he will see that the Chancellor estimated that a sum of £350,000 of revenue that would have been received under the heading of Customs was likely to be received under the heading of Excise in the case of matches, because he expected that, as a result of this small degree of protection, there would be a substantial cut in the imports and a marked increase of production in this country. I regret to say that the Chancellor was woefully disappointed. In his Budget estimate a year ago he expected to receive from Customs Duties on matches, £1,415,000. He actually received £1,921,000. In other words, he received one-third more by way of Customs Duty. On the other hand, the Excise Duty, instead of being £2,755,000, was £2,114,000. Actually, therefore, there was no increase in the home production, but, as far as I can find out, there was an actual fall in the production of matches in this country and an increase in the importation. Matches are made in a great many countries, and one of the sad things is that half the people who sell matches in the street as the only way of earning a bit of a living while they are unemployed are the victims of these foreign matches. I have a box in my hand which I bought from an unemployed man in the street, and it was made in Finland.
About half the matches in the country are foreign, and I am told that about half are bought in individual boxes across the counter at 1d. per box. You can play about with the duty to an enormous extent without having the slightest effect on the retail price to those people who consume half the matches. It is true that where the housewife buys a packet of a dozen the rate of duty may have some effect on the price, but it is obvious that the retail price cannot be materially affected even by a considerable alteration in the rate of duty. The only effect, if you make the Customs duty too low, is not that the consumers benefit but that the importing merchants and retailers benefit unduly. I think it is absurd that we should import a universal commodity the whole supply of which can be made in this country with great efficiency and 139 under conditions of employment which the Leader of the Opposition would justify if he were with us. I refer to the right hon. Member for Bow and Bromley (Mr. Lansbury), because I know he holds the highest view of the conditions of employment in the great factory in his constituency, though, of course, that is not the only match factory in this country.
The conditions of employment in the British match industry are far higher than those which prevail in the countries from which the bulk of the matches come. Belgium used to be the main source of our supply, though it does not furnish us with the same proportion to-day, and conditions and wages there are far lower than in this country. Finland, also, is a low-wage country compared with ours. I believe the Swedish supplies are much less than they used to be. There are very large supplies from Russia, where wage conditions, whatever else we may think of the situation, are not as good as ours. I think it is tragic that we should import quite unnecessarily £500,000 worth of matches—that is the value before duty has been paid. One can say that £300,000 of that represents a value that could be created in this country—because I recognise that we have to import the timber. There is certain employment there for our own people, and without prejudice to the consumers. I realise that my proposal is not a satisfactory one, because as a private Member I am debarred from putting forward the right proposal, which would be a substantial increase in the Customs duty. I have no hesitation whatever in saying that if the Chancellor were to go to the match manufacturers and say, "We are anxious effectively to protect you, so that practically no matches should come in, and we want a gentlemen's agreement in regard to the wholesale price," that he would get that guarantee. No industry ever approached by the Chancellor of the Exchequer for that kind of guarantee has ever failed him.
At present there is a high rate of duty. Anyone who pays a penny for a box of matches pays two-fifths of that penny as tax, a substantial portion of the penny represents the cost of distribution, and I imagine that the tax is more than the factory value. We could easily get the Customs duty at such a level that there 140 would be no imports at all, and with the absolute assurance that the retail price per box could not be altered, the maximum risk would be some small increase' in the price per dozen boxes. If these are the circumstances I do not know why the Chancellor of the Exchequer has not acted. Last year he made a tentative start, but it is obvious that the hoped for results have not been realised. If hon. Members will consult the trade returns they will see that this meagre attempt at Protection was introduced at a time when something far more drastic was wanted. The case for doing something more is overwhelming. I realise that my proposal, which would inflict a loss of revenue of £400,000, is not an acceptable one, but it is the only proposal I should be in order in moving, and I am only doing it in the hope that the Financial Secretary will take careful note of the situation. We are a Protectionist country, and, apart from that, here is a case where we could get Protection with the certainty of no prejudice to the consumer, and if we can do that surely we ought to make sure that this £500,000 worth of trade, which at the moment is going abroad, is reserved for our own people.

§ Mr. RAIKES
I beg to second the Motion.
After the eloquent and exhaustive speech of my hon. Friend there is very little for me to say on this question of matches. We realise that the Government are anxious to give a fair deal to British matches, otherwise they would not have tackled the problem in the way they did last year, but the fact remains that that effort has not proved effective. The Government's own prediction as to the result of the increased Customs Duty last year has been falsified by events, very largely due to the effect of the 10 per cent. duty on the imported raw materials. Therefore, we ask them very humbly to make just another little effort to assist the industry. There has been a slight decrease in the production of British matches during the past year, and a steady increase of importations. There are matches coming from Japan and from Russia, particularly from Japan, and not only are they cheaper than we can produce them but, also, they are matches that will strike, unlike the matches which 141 used to come from foreign countries in the past. Unless something is done we shall get a steady increase in the supplies of foreign matches month in and month out, to the dislocation of the British match industry. I appeal to the Government to take steps to assist the industry such as will enable wages and employment to be kept up at a decent level.

§ Mr. HORE-BELISHA
The margin between the Customs and Excise duties on matches was, as my hon. Friend the Member for South Croydon (Mr. H. Williams) said, widened last year from 2d. to 7d., and the first question which he raises is this: Does the margin of 5d. compensate for the tax which the match makers have to pay upon their raw materials such as aspen wood? I am advised that all the information goes to show that the 10 per cent. on the wood, plus the tax on the chemicals, does not represent more than 2d. or 3d. a gross, and, indeed, may be only 1d. or 2d. I am sure my hon. Friend will accept that answer under that head. The second question he raises is this: Has the duty produced the results which were anticipated? In other words, has there been the increase in home production which was desired? On that question the answer frankly is, "Up to the present, no." But, after all, the duty has only been on one year, and I think my hon. Friend agrees that it would not be advisable to change it again this year.

§ Mr. H. WILLIAMS
No, I merely said that I was not free to do it.

§ Mr. HORE-BELISHA
I understood my hon. Friend to say that. He opened his remarks by saying that he was staking out a claim for next year, though in view of the subject we are now discussing he might, perhaps, have used the phrase, "blazing a trail" for next year. I am entirely in agreement with him. These matters must be closely watched. It may be that the explanation of the figures he gave is that the imports showed an abnormally heavy decline in 1932/1933. The fact, on the other hand, that the duty is not having the intended effect will be kept under review. That is the request my hon. Friend made to me, and obviously if a duty put on for a certain purpose does not achieve that purpose the Gov- 142 ernment would be very foolish indeed if it did not take all the facts into account.

§ Mr. H. STEWART
The hon. Member who moved this Amendment really raises a much bigger issue than that of a penny box of matches. He asks us to accept the full Protectionist policy. I claim for agriculture certain advantages, in view of the special circumstances of the time, but I am glad to take this opportunity of making it perfectly clear that the outlook which sees nothing but the home market is one with which I cannot at any time agree. We are dealing with a product which is part of our considerable and increasing trade with Finland and Sweden, with which two countries we have recently made trade agreements. The object of the hon. Member is apparently to go behind the whole purpose of those agreements. He apparently sees no export trade, and the same appears to be true of the hon. Members who said "Hear, hear" during his speech. It amazes me that hon. Gentlemen should be so blinded by their Protectionist ideas as to wish to kill the already restricted export trade of this country. I will never be a party to a policy which seeks without good national reasons, still further to reduce the international trade of this country. [HON. MEMBERS: "Hear, hear."] I am very glad to have the support of the Liberal party, and I hope that I shall be supported by all parties, in seeking to prevent any further decline of our export trade. For that reason, I oppose the proposed new Clause not only in detail but in principle.

§ Brigadier-General Sir HENRY CROFT
I must congratulate the hon. Member for East Fife (Mr. H. Stewart) on the truly magnificent way he has performed the circus operation of riding two horses at a time. I hope that his constituents of all shades of opinion will be satisfied with his attitude. He advances the argument that you must not safeguard the match industry of this country because there is a question of exports. If we try to work that out on the lines of Adam Smith, who was spoken about earlier in the afternoon, we shall find that it is a little difficult. The Financial Secretary to the Treasury has impressed upon us that we must not be in too much of a hurry and 143 that the change of duty has only been in operation for one year. I make a plea of him and of His Majesty's Government that, whereas there is clear evidence that the change of duty has not been sufficient and is not accomplishing the aim that it was sought to achieve this time last year, we shall not have long periods of waiting before action is taken. In many directions we see evidence at the present moment of failure in certain branches of the tariff. If that be admitted, I suggest that the Government should see whether something cannot be done at an early stage to put the matter right, because £300,000 worth of trade is £300,000 worth of trade. If it is going to put thousands of British workmen into employment for which they are well fitted, at no increased cost to the consumer, I urge the Government to act with vigour and not to wait for another year.

§ Mr. H. WILLIAMS
The hon. Member for East Fife (Mr. H. Stewart), in a very strange speech, seemed to overlook the fact that no manufactured article for home consumption is supplied to such a high proportion from abroad as matches. I beg to ask leave to withdraw the Clause.