HC Deb 20 June 1950 vol 476 cc1075-9

(1) A scheme under section nine of the Finance Act, 1932, for allowing, in the case of goods of any class or description, a drawback of import duties in respect of any material used in the manufacture of those goods may make provision as follows, that is to say:

  1. (a) instead of providing in accordance with paragraph (b) of subsection (2) of the said section nine for the allowance of drawback in respect either of the quantity of the 1076 relevant material actually contained in the goods or of such average quantity of material as is mentioned in that paragraph, the scheme may provide for the allowance of drawback in respect of the quantity of the relevant material actually contained in the goods together with such additional quantity as may be specified in the scheme as being the appropriate allowance for wastage in the manufacture of the goods;
  2. (b) the scheme may specify a rate of drawback exceeding the limit imposed by paragraph (c) of the said subsection (2), if the rate specified is such as would not exceed that limit were the limit imposed by reference to the average amount of duty paid in respect, not of all duty-paid material of the relevant class or description, but of such of that material as is used, either by manufacturers generally or by any particular manufacturer, in the manufacture either of all goods of the relevant class or description or of such goods of that class or description as are manufactured for export;
  3. (c) instead of specifying a rate of drawback for the relevant material in accordance with the said paragraph (c), the scheme may divide the material into two or more categories (by reference to the duty paid or otherwise) and specify a rate for each category as if it were a separate class or description of material for purposes of the scheme.
(2) Any additional quantity specified under paragraph (a) of the foregoing subsection as being the appropriate allowance for wastage shall be fixed as so much per cent. (by the same measure of quantity as is used in fixing the rate of drawback) of the quantity of the relevant material actually contained in the goods, and for the purposes of that paragraph the expression "the appropriate allowance" means the allowance equivalent to the average rate of wastage of the relevant material, either by manufacturers generally or by any particular manufacturer, in the manufacture either of all goods of the relevant class or description or of such goods of that class or description as are manufactured for export. (3) Where any such scheme as is mentioned in subsection (1) of this section provides different rates of drawback for different categories of the relevant material in accordance with paragraph (c) of that subsection, and in the manufacture of any goods in the case of which drawback is payable under the scheme, there has been used material of more than one of those categories, then (unless the scheme allows drawback only in respect of the quantity of material actually contained in the goods) the quantity of material in respect of which drawback is payable at each of the rates applicable in the case of those goods shall be arrived at as follows:—
  1. (a) if the scheme allows drawback in respect of the quantity of the relevant material actually contained in the goods together with such additional quantity as is mentioned in paragraph (a) of subsection (1) of this section, the said additional quantity shall be deemed to be material of the same categories, and in the same proportions, as the relevant material actually contained in the goods (excluding any such material which is not duty paid);
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  2. (b) if the scheme allows drawback in respect of the average quantity of the relevant material used in manufacture as provided for by paragraph (b) of subsection (2) of the said section nine of the Finance Act, 1932, the quantity in respect of which drawback may be allowed at the rate applicable to any category shall be the quantity of duty-paid material of that category which is shown to the satisfaction of the Commissioners to have been used in the manufacture of the goods, but so that this paragraph shall not affect the total quantity of material in respect of which the drawback may be allowed and, where it would otherwise have that effect, the quantity in respect of which drawback would be payable at a lower rate shall be increased or reduced as the case may require, in preference to the quantity in respect of which it would be payable at a higher rate.
 (4) In subsection (1) of this section the expression "import duties" means any of the following duties of customs, namely—
  1. (a) the duties chargeable under Part 1 of the Import Duties Act, 1932;
  2. (b) the duties chargeable under section one of the Ottawa Agreements Act, 1932;
  3. (c) the new duties chargeable under section nine of the Finance Act, 1933, on silk or artificial silk or articles made wholly or in part of silk or artificial silk;
  4. (d) the duties chargeable under the Safeguarding of Industries Act, 1921;
  5. (e) the duties chargeable under the Beef and Veal (Customs Duties) Act, 1937;
 and any reference in this section to section nine of the Finance Act, 1932, shall accordingly include that section as applied by subsequent enactments to the duties mentioned in paragraphs (b) to (e) of this subsection.—[Mr. H. Wilson.]

Brought up, and read the First time.

3.45 p.m.

The President of the Board of Trade (Mr. Harold Wilson)

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

The Clause is designed to amend Section 9 of the Finance Act, 1932, which provides for the payment of a drawback in respect of duty which is paid on materials used in the manufacture of goods which are subsequently exported. I think the Committee would agree that that Section of the 1932 Act has on the whole worked pretty well. It has succeeded in holding a fair balance between the interests of exporters and of producers for the home market. The development of the export drive in the past year or so, however, has shown the need for further measures, and that is why the Clause is now moved.

The existing provision is open, I think, to criticism on two grounds. It has two main weaknesses. First, under the existing legislation no provision is made for wastage of materials in manufacture in those cases where the drawback is calculated on the basis of the content of the materials in the goods which are subsequently exported. There is provision for wastage if the calculation is based on the average usage of this material in manufacture in the industry as a whole. Under subsection (1, a), wastage is now allowable, even if the drawback calculation is based on the content of the material in the finally exported commodity.

The second point with which the Clause is designed to deal is this. In the past, a drawback has been calculated on the basis of the average of duty of all imports of the materials in question. Under the new Clause, the Board of Customs and Excise can calculate the drawback on a sliding scale depending on the price of the imported material which is actually used. Secondly, as is clear from subsection (1, b) after a little study, the Board may calculate the drawback on the average value of the imported material which is used for export instead of calculating it on the value of all the imports of the material in question.

The matter might be made a little clearer if I were to take a specific case which was very much in our minds when the Clause was tabled: the case of leather. Leather-using industries are making a big contribution to our export drive, particularly to North America. To a considerable extent, of course, they use imported raw materials, and under the present provisions of Section 9 of the 1932 Act, drawback is paid on the basis of an average calculation of duty which is paid on all leather, which at present works out at about 7d. per square foot. The actual duty which is paid on different qualities of leather, however, varies from 5d. to about 1s. 5d. per square foot; and very often it is the better quality and higher priced leathers which go into the goods which are sent to the dollar market. Under the new Clause, therefore, it is possible for the drawback to be calculated on the average duty which is paid on the leather actually used rather than on an average price calculated for all leather imported into the country.

I should explain that the Clause represents our first attempt to deal with the problem of drawback in relation to the dollar export problem. Had we intended to make it a final solution to the problem, I think that we would have had to hold it up for another year, but this present step makes the job of exporting to the dollar areas considerably easier, certainly for the leather-using industry and for certain other industries in a similar position. It arises as an immediate proposal on our part as a result of discussions with industry and with the Dollar Export Board, who strongly pressed it upon us. We are at present studying the possibilities of further changes which may well help other industries which cannot benefit from the new Clause.

Mr. Lyttelton

This Clause is to be welcomed, not so much for its form, as for the substance which apparently lies behind it. It really is a jaw breaker and it does not in my opinion—as the President of the Board of Trade confessed—yet go quite far enough, but I am sure it is a step on the right road and as such we ought to be grateful for it. I know it is a rather unfashionable thing to do, but I think it highly desirable that these Clauses should be expressed in language which the ordinary layman can understand. I am sure my hon. Friend the Member for Croydon, East (Sir H. Williams) will support that. The language is worth looking at because it really is a terrible jumble. I daresay it is unavoidable, but I make that plea to the Chancellor.

Question put, and agreed to.

Clause read a Second time and added to the Bill.