HC Deb 22 June 1950 vol 476 cc1604-20

(1) This section shall apply to profits tax chargeable in respect of any trade or business where any part of the trading receipts of the chargeable accounting period are from the United States of America or Canada, or from any country which, at the beginning of the chargeable accounting period in question imposed no restriction upon the conversion of its currency into United States dollars for current transactions. (2) (a) The year 1949 shall be the standard year, and the total receipts from a trade or business for that year shall be the standard receipts; (b) the total receipts from a trade or business arising from a country referred to in subsection (1) of this section shall be the dollar receipts for the purpose of this section. (3) There shall be deducted in ascertaining profits for profits tax purposes an export allowance being that proportion of those profits which is equivalent to the proportion which the excess of the dollar receipts of the chargeable accounting period over the dollar receipts of the standard year bears to the total receipts from the trade or business of the chargeable accounting period. (4) Where a chargeable accounting period is longer or shorter than a year, an increase or decrease shall be made for the purposes of this section, in the amount of the total receipts of the trade or business for that year, and the dollar receipts for that year in the proportion which the chargeable accounting period in question bears to one year. (5) This section shall apply to any chargeable accounting period or part of any chargeable accounting period commencing on the first day of January, nineteen hundred and fifty, and such apportionment shall be made of the profits and receipts for a chargeable accounting period as may be necessary accordingly.—[Mr. Aitken.]

Brought up, and read the First time.

9.45 p.m.

Mr. W. T. Aitken (Suffolk, Bury St. Edmunds)

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

I ask the indulgence of the Committee on this the very first occasion on which I have the honour of addressing it. That indulgence may be necessary because I have no expert knowledge of taxation or public finance, and the only reason I put my name to this new Clause, which was on the Order Paper in the name of my hon. Friend the Member for Epping (Mr. Nigel Davies), is because I have had some experience of the difficulties and problems which business men encounter from time to time in the North American market—difficulties regarding goods and services in that very difficult and exhilarating market.

It seems to me that the whole purpose and idea behind this Clause is to provide the kind of incentive which stresses the vital need to encourage those small and large business men who have not yet made any attempt to enter the North American market. Indeed, it is most important that a far greater variety of goods should be sold in the American market, and in a far greater variety of territories, than are being sold there at the present time. The reasons for this are quite clear to anyone who is aware of the very wide divergence between the wise and far-seeing import policies of the American and Canadian Governments and the views held by certain manufacturing concerns who are taking what I may term a rather short-view in the interest of their own products.

Although the American tariffs are frequently mentioned as a major difficulty of exporters to the North American Continent, they are not the major difficulty. The major difficulty is the multiplicity of administrative formalities and Customs procedures, State regulations, trade association practices, and various other matters which make it exceedingly difficult for the exporter to conform with the requirements of the American market. Hon. Members will remember that in 1930, when these tariffs were first introduced, the Americans were far less concerned about the height of the tariff wall than about the various other regulations which protected them from what they considered to be undue competition. These are the expensive and complicated difficulties which exporters have to face up to.

I should like to give the Committee an example of a very enterprising industry in, my own constituency where a seed merchant is this year exporting to America half a million dollars worth of seeds-There are no tariff difficulties whatever to speak of, but when those seeds enter American territory, they must be stained a certain colour. That gives the American seed industry an opportunity, if they so desire, to discriminate in various ways against that particular import.

If we look at the figures of the exports which we send to America, we find that the vast bulk of them can be listed under eight or nine headings. Most of them are sold in the Eastern Atlantic States—East of the Mississippi and North of the Potomac—for it so happens that they are the easiest markets; they are the richest and most populous part of the United States. One of the troubles is that this drive to increase the traditional exports has resulted in a good deal of fear and despondency among the American competitors of these particular imports.

It will be found that all the devices they are so well accustomed to use against what they consider to be undue competition are now beginning to have some influence on the increased exports to those particular parts. It will be found that the bulk of the sales of English woollen textiles are in the Eastern, New England States of America. Also concentrated in those areas are the bulk of the American textile industry, so it is small wonder that these industries are beginning to use the sort of devices which they are entitled to use against what they consider to be undue competition. The American market is comparable only to the American territory in its vastness. This 200,000 million dollar market is something which we cannot help but realise offers glorious opportunities to the British export industry. I need not remind hon. Members what even 1 per cent. would mean to Britain and the Commonwealth.

It is strange that, in spite of the many excellent devices which are available to the British exporter at the present time, we are not in a position to do a great deal better in the variety and multiplicity of exports to the American market. When one thinks of the work of the Dollar Exports Board, the British Export Trade Research Association and other Government bodies, and the undoubted assistance they provide to industry, it seems peculiar that there has not been a much greater drive in the whole area rather than in certain areas. Devaluation has brought many lines of British goods into the competitive price range for the first time in our trading history. The stock of good will towards British goods is an extremely valuable, though perhaps a somewhat intangible, asset at the present time. With all these advantages, if our traders cannot take advantage of the market as it stands at present, they never will.

The misgivings which so many industries feel towards the effort required to enter this market are quite understandable in many ways. The rewards are very small and the risks are very great. The Dollar Exports Board and other organisations have done a fine job. It is quite clear that risk and expenses are involved in tackling this very stimulating and great challenge to our industrial entrepreneurs. British industry, with the highest burden of taxation of any industry in the world, cannot afford to tackle the immense cost of embarking upon a campaign in this highly competitive market. It is no denigration of British industry to say that if we had to face here the competitive conditions which prevail in America, half the industries in this country would go out of business.

I do not believe that the art of American salesmanship is an occult art. I do not believe that the ordinary British businessman cannot master the technique of selling to the Americans. I do not believe that the traditional British skills and quality of workmanship are in any way inferior to the American. The trouble is that we cannot afford the cost, whatever is done in the way of export guarantees and other facilities. The real burden of cost to industry in embarking on this adventure must fall on the balance sheets of the companies concerned.

Let me say here that I shall be able to contain my astonishment if the right hon. Gentleman tells me that this Clause is impracticable and opens up all kinds of opportunities for the wicked. I will believe him when he tells me that, and I will also believe that it may be against certain principles of taxation. All those things I will accept if he tells me so. But what I will not accept is the argument that we must not try something new, that we must not be prepared to adopt special incentives to help and encourage the British exporter to North America. If we are prepared to try anything we can achieve anything. There may be all sorts of other devices which could be used, although, Major Milner, you would probably tell me that I was out of order if I were to discuss them now. Perhaps at another time we shall have an opportunity of discussing other kinds of incentives.

What we would like to hear is something about the Government's attitude to incentives to exporters to the North American continent. If we do not hear anything about these new ideas and devices, I am afraid that we shall just have to put it down to the reactionary conservatism of the Socialist Chancellor of the Exchequer. My hon. Friend who was to have moved this new Clause was not here to do so, but I am sure that he will be quite prepared to take on all comers on the question of the technical details of this Clause. As a maiden speaker, I have found myself in a somewhat embarrassing position in having to move it.

Mr. Gaitskell

It is with very real pleasure that I congratulate the hon. Member for Bury St. Edmunds (Mr. Aitken) on a most excellent maiden speech. I think we all know his very gallant war record. We have not previously had the pleasure of hearing him, but I am sure that we were all impressed with the knowledge and thought that he had clearly put into his speech and the experience which lies behind it, and we hope very much that we shall have the opportunity of hearing him on this and other subjects on many future occasions.

With the intention behind this Clause I am entirely in agreement, and I think it is an excellent thing that we should take this opportunity of discussing a matter that is obviously of first-class importance to all of us, namely possible methods of stimulating dollar exports But I am bound to tell the hon. Member that there are several major obstacles to the proposals which he has put forward. I wish there were not, and I can assure him at the outset that we have given a great deal of thought to all sorts of possible methods of providing additional incentives to dollar exporters, but, as I say, this particular scheme really runs up against some pretty difficult hurdles.

10.0 p.m.

This is the first and, I think, the major difficulty, as with almost all such schemes. The proposal is that the relief from tax shall be based on the increase in dollar exports as compared with the base year of 1949. Precisely for that reason it means, in effect, that those firms which in 1949 had already achieved a very large measure of success in expanding their exports will be penalised relative to those who had not bothered at all before 1949.

I think there would be a good deal of resentment on the part of those firms which had been trying hard in 1946, 1947 and 1948 to expand their sales responding to calls from the Government and from this House to do their best to help to close the dollar gap. There would be a good deal of resentment if they found that, as a result of this kind of change, some firms which had really not bothered at all about dollar exports were to be specially relieved from taxation.

Mr. Frederic Harris (Croydon, North)

The Minister's suggestion is that certain firms may not have bothered to expand their sales. That is a very unfair reflecttion on certain manufacturers who often have been unable to obtain exports for many reasons. It is not a question that they have not bothered, but there may have been many difficulties in the way. I think that is a very unfair reflection.

Mr. Gaitskell

The hon. Member misunderstands me. His own argument is itself an argument against this Clause. It is precisely because there are so many fortuitous factors which determine whether or not dollar exports are expanded that it is so difficult to base a tax relief on an increase in exports from one year to another.

One could think of another obvious example. Different industries were obviously affected very differently by devaluation. Broadly speaking, as I understand it, the exporters of whisky have been able quite materially to expand the sterling value of their sales without much trouble. They have not had to cut their prices and they have simply received the increased sterling value as a result of devaluation. On the other hand, the textile exporters, to whom the hon. Member referred, have not had such an easy wicket. They have had a good deal of difficulty to contend with and a good deal more competition to meet, and I suppose they have had to reduce their dollar prices a good deal more, with the consequence that the sterling value of their sales has probably not risen by nearly so much.

Sir Herbert Williams (Croydon, East)

Does not the Clause refer to dollar receipts, so that devaluation has no bearing on the point?

Mr. Gaitskell

Dollar receipts converted into sterling because, after all, they have to be compared with the total profits of the firms themselves. I am putting the argument generally. There is a strong argument, therefore, against taking a base period, and saying, "We will give a tax relief on the increase from that time onwards."

The most obvious alternative, of course, would be to take the total dollar sales, but the difficulty there is that one does not get the incentive at all. Under that system one does not base the tax on the increase but simply on the sales that occur, so that we come up against the point which I think the hon. Member for Croydon, North (Mr. Frederic Harris) had in mind—that inevitably there is a good deal of luck, of position in the market and so on, which makes it very difficult to base tax relief upon that principle.

Nor do I think we can overlook the fact that if we started to single out one body of persons and said, "We will give you special tax relief," then we should certainly be faced with all sorts of other claims. We have only to consider the position of the workers in those industries. They would say, "After all we contributed to this; we have worked overtime to do it and we ought to get something here, some tax relief on the overtime, over and above what the other people get." There would be other persons handling the goods at the ports who had made special efforts to get the goods sent out and there would equally be pressure from them.

Another difficulty is that, quite frankly, I do not think this proposal would be very effective. Perhaps I may give the Committee an example which will make clear what I mean. Supposing the total sales of the firm in question amount to £1 million and, let us say, to start with £100,000 of that sum is derived from exports to the dollar area. The rate of profit, we assume, is 10 per cent. Suppose then that the American sales—the North American sales—are doubled, then the profit ranking for relief would be £10,000 on an increase of £100,000. Profits Tax on this at the basic rate of 10 per cent. would be £1,000, but Profits Tax is deductible in computing Income Tax, and the reduction of £1,000 in the Profits Tax payable would increase the Income Tax by £450, so the company would be left with about £550 on an increase in sales of £100,000. It is not likely in these circumstances—and I have taken a case of sales actually doubled—that we shall get very much incentive in that way. We have to add in consideration of relief on double taxation in the case of companies operating through subsidiaries in North America, and the profits would be even smaller.

There are other difficulties as well. Would one confine the relief to the actual exporter, or should it be extended to the manufacturer behind the exporter? Would one ignore or include invisible exports? What would be the position of shipping earnings? What would be the position of tourist earnings and so on? I am sure that the hon. Gentleman will understand that there are a lot of practical difficulties about a scheme of this kind. It is only for that reason, I would assure him, that we have come reluctantly to the conclusion that this scheme is impracticable, and I may say, because I do not want to mislead the Committee, similar schemes are almost always impracticable.

However, we shall continue our efforts to see if we can find some method which is practicable to increase our dollar earnings and to overcome the difficulties because we all have at heart the raising of our dollar exports still further. Indeed, devaluation itself has been the biggest incentive—a bigger automatic incentive—than anything we could have designed ourselves, and—[Interruption.] I said it gave a bigger incentive than any scheme of this kind we could devise ourselves.

Mr. Selwyn Lloyd (Wirral)

Do I take it that the right hon. Gentleman adheres to the view expressed earlier that devaluation is a device?

Mr. Gaitskell

I am talking of this particular device. Whether or not devaluation is a device I think we can leave over for the moment. But this certainly is a device, and I am saying that devaluation in its consequences is, I think, far greater than anything we could work out on these lines. As I say, we shall continue to explore the matter, and if we are satisfied that a better scheme exists we shall certainly not hesitate to adopt it.

Mr. Nigel Davies (Epping)

I am glad that circumstances ensured that it was my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken) who moved this Clause, and that he therefore had the opportunity of making a most excellent maiden speech on a subject with which he is very well familiar. Before dealing with the points that the right hon. Gentleman mentioned, and before talking on his objections, I should like to say a few general words about the purpose of this Clause, and the objects—the very necessary objects—that it is designed to achieve.

I am glad, and I appreciate the fact, that the right hon. Gentleman agreed that the objectives of the Clause are, at least, desirable, and that he even went so far as to say that he himself and his right hon. Friends would have been glad to be able to devise some scheme to meet this problem and to provide incentives for exports to dollar markets. I should have thought, in view of that, that it was up to him and the Chancellor of the Exchequer to produce a scheme. I cannot believe it is impossible to do so. Nobody would deny, I believe, that it is very necessary indeed. There is no Minister who does not exhort exporters every day to increase their dollar exports, and if every word that had been addressed on the subject to business gatherings had been translated into dollars, I think the problem would not exist at all.

It is clear, I think, from what has already been said, roughly how the Clause would operate. The whole basis and emphasis of it is on increased dollar exports, the principle being that a firm which increases its exports to dollar markets in ratio to its turnover by, say, x per cent. will get x per cent. off its Profits Tax.

What stands out from our dollar drive is that we have not succeeded in increasing the proportion of our sales to dollar markets in terms of dollars. That remains a stubborn fact, in spite of all the successes that have been proclaimed from the benches opposite in other markets—often in markets we ourselves have provided with the money with which to pay for our goods. The one outstanding difficulty, the one thing that hampers our efforts, as I have seen and experienced it, is the fact that we are exporting to countries where an entirely different economic climate prevails from that in the United Kingdom. The Committee is familiar with the difficulties and risks in the dollar market where the customer is king, where all firms and businesses are making frantic efforts to compete, and where only the successful survive.

Let me give but one example. To sell in the United States, a firm may have to pay a salesman 20,000 dollars a year. Even a typist in New York probably gets as much in salary as hon. Members of this Committee. Then, apart from the expenses, there are the unequalled risks involved, and above all the risk that tariffs will be changed against one, when the home manufacturer in the United States and Canada will come in and compete against a firm in successful lines.

As opposed to that, in the United Kingdom we have an entirely different commercial atmosphere which, by comparison, is unruffled and uncompetitive. Quite frankly, goods in many fields are too easy to sell. Let me quote from the Board of Trade Journal of 22nd April, 1950. I will not quote the general preamble about poor deliveries in this article on consumer goods, but let me quote one thing about linen and cotton. It says, talking about United Kingdom deliveries: Deliveries are extremely poor, and four to six months are not uncommon. One of the reasons given for slow delivery is that manufacturers are booked up with orders for New Zealand, Australia and South Africa. The whole trouble is, not only are our goods too easy to sell here but they are too easy to sell throughout the sterling area, owing to inflation emanating from this country, partly due to the release of sterling balances throughout the sterling area. Surely the lesson is that, as long as the inflationary situation exists, we must provide some extra incentive to provide the urge to exporters to export to dollar markets, which are much more difficult to tackle than the sterling area markets, particularly at a time when exporters and firms in general are so highly taxed, particularly through Profits Tax, as to make the whole thing just not worth while.

I myself have had experience in New York—and I must declare an interest in this matter, as perhaps in the general subject—in trying to sell our goods, in particular hardware goods, in that part of New York where hardware importers and wholesalers do their business. I have seen such pedestrian items as screwdrivers and pliers coming from the United Kingdom compared with those produced in Germany and the United States. Some exporters have, I know, made a great effort here and have succeeded, but the fact remains that on the whole such of our goods as I have seen do not compare favourably with those produced in the United States and those exported from Germany — [HON. MEMBERS: "No."] In this particular respect. I am talking of the hardware goods I have seen. I have seen the correspondence of firms from Great Britain who said they could sell their goods in Pakistan; they have been producing the same thing for a hundred years and they would not change.

10.15 p.m.

The whole object lesson is the fact that so long as this inflationary situation exists and goods are too easy to sell, we cannot expect people to make that effort. It is all very well to blame manufacturers for lack of enthusiasm, but they are responsible both to their employees and to their shareholders for the stability of their firms and employment in their firms. We cannot expect them to run risks in new markets when they have easy markets already at hand.

Mr. Daines (East Ham, North)

Is the hon. Gentleman saying that the manufacturing and exporting interests of this country are incapable of appealing to any incentive other than the one which his hon. Friend put forward in moving this new Clause, and that the patriotic appeal does not cut any ice with them at all?

Mr. Davies

If the hon. Gentleman has experience of business, he cannot deny that directors of companies are responsible to their shareholders and employees to maintain full production in their businesses, and that they cannot risk business in dollar markets when they have assured markets elsewhere. It is not a practical proposition. We have to make it a business proposition if we expect them to do so. I am sure that the hon. Gentleman would not suggest that a nationalised hardware industry would be more successful in exporting hardware to the wholesale importers in the United States.

Mr. Messer (Tottenham)

The profit-making motive is anti-social.

Mr. Davies

It works very well in the United States, and we do not sympathise with them for lack of prosperity. The fact is that if we are to maintain the momentum of our dollar exports, we have to do something extra.

The Minister produced detailed objections to this Clause—understandable objections. He pointed to the fact that firms which had already achieved a substantial measure of success would be entitled to object. All I will say, and I think that he will agree—certainly the statement of the Chancellor of the Exchequer bears this out—is that our economic situation is still serious to a point where we have simply got to do every thing, whoever objects, to increase our dollar sales. Whether it treads on certain susceptibilities or not, if we are to achieve that object, we must do something on the lines proposed in the new Clause.

The whole point is that although we may have achieved a certain success in export markets, we have not achieved unqualified success in the dollar market, which is the great thing. We have not only to maintain the momentum but to increase it, and therefore we have to do something new.

Mr. John Hynd (Sheffield, Attercliffe)

On a point of order. I understand that the hon. Gentleman is not in fact talking to this particular Clause but to some hypothetical Clause which it not on the Order Paper. Is that in order, or is it a fact that the hon. Gentleman is still speaking on this Clause?

The Temporary Chairman (Mr. Batcher)

I do not think that the hon. Gentleman is out of order.

Mr. Davies

I am speaking very precisely to the Clause which has been moved, and which I am backing fully and have explained very roughly. I did not go into detail because I did not want to detain the Committee. I am dealing with the objections which the right hon. Gentleman raised to arguments on this Clause.

The second objection, and the very natural one which he raised, was the question of who should benefit by these incentives and by this remission of Profits Tax. He mentioned possible resentment among manufacturers who do not themselves export. I would say that the benefits of this should go to the actual exporter—the man who does the sale in the dollar market—because he is the man who bears the risk, who has to do the advertising and pay the salesmen and who loses his money if an assignment is sent to the United States which cannot be sold. I do not think that is an objection which by itself rules out this Clause.

The right hon. Gentleman himself accepts the desirability of its objects. He went on to say that the Clause would not be effective; in other words, it would not be a sufficiently great incentive. By all means, if he is prepared to accept the Clause, I and my hon. Friends would gladly double or treble the incentive by proposing that, instead of a firm getting the same percentage as the percentage by which it increases its dollar exports, it should get three or four times as much. That would provide a much greater incentive. I realise that the incentive is small and limited, but I hoped that in making this limited proposal it might be acceptable to Members opposite. If the only criticism is that it does not provide enough incentive, then both sides can agree to provide a much greater incentive.

Mr. William Ross (Kilmarnock)

The hon. Member has said that one of the reasons we are failing in our exports to the United States is because our goods are not coming up to standard. He is also saying that our manufacturers must be given a greater incentive to export their goods, and he has told us that the incentive proposed in this Clause should go to the exporter. How does he balance these two things?

Mr. Davies

The hon. Member is playing with words. I may have used the word "manufacturer." I appreciate the hon. Member's intervention. I lay emphasis on the actual exporter, who is usually the manufacturer in the case of manufactured goods. If that is not the case, the incentive should go to the exporter. There may be cases where the exporter would make a price allowance to the manufacturer because he gets this extra incentive, which would make the thing worth while.

This Clause is a simple suggestion to provide an incentive, however modest. I am convinced that some incentive, even of this limited nature, is needed. I think we are agreed on all sides that something must be done to provide an extra incentive, so long as the inflationary conditions exist, to increase our dollar exports. Our exporters need encouragement, not in words but in deeds. I am convinced that if that encouragement is given they will do the job and increase the necessary dollar exports to meet our needs.

Sir H. Williams

I should not have spoken but for one of the arguments used by the Minister for Economic Warfare, or whatever he is called. The right hon. Gentleman suggested that if this scheme was put into operation it would be very unfair as between one class of exporter and another. He quoted, as an example of those who get an undue advantage, the exporters of whisky, and said that without any extra effort the same number of gallons would produce more sterling. I have gone into this since he spoke, and I find it is a false argument. Subsection (2, b) refers to the the total receipts from a trade or business arising from a country referred to in subsection (1) of this section shall be the dollar receipts for the purpose of this section. Therefore, the question of sterling does not arise. If the right hon. Gentleman refers to subsection (3), he will see it refers to the proportion of those profits which is equivalent to the proportion which the excess of the dollar receipts of the chargeable accounting period over the dollar receipts of the standard year bears to the total receipts from the trade or business of the chargeable accounting period. In both cases the measure is in dollars and not sterling, and for that reason his argument seems to be invalid.

I am glad the right hon. Gentleman is trying to discover some incentive. I spent an interesting two hours a fortnight ago listening to an American gentleman whose name it would be improper for me to mention, who has some official position over here trying to stimulate the export of British goods to America, because they realise that it has to be done. At the other end of the conversation was a managing director of a firm with which I have some connection that does not suffer from the disability of the firm of my hon. Friend the Member for Epping (Mr. Nigel Davies), because it produces the highest quality goods of their kind. [An HON. MEMBER: "Where do you come in?"] I am glad to say that I get a little remuneration out of it.

The purpose of the discussion was to see to what extent our exports to the United States could be increased. Goods cannot be allotted for export in the simple expectation that we can sell them. It is a certain kind of goods that has to be sold, including capital goods which call for large stocks of spare parts, and so on. At the moment it has to be borne in mind that American buyers are exceedingly timid. They are placing their orders in negligible quantities so that it is not worth while producing them. Some incentive is required if a considerable amount of capital is to be sunk in a business and in the setting up an office in New York, or wherever the proper selling centre is. People are not encouraged to undertake this kind of work if they find that that which they earn is subject to Profits Tax and then what is left is charged Income Tax at 9s. in the pound.

Particularly is that so if the firm is owned by two or three people, who have to face Income Tax and Surtax charges. Men like that cannot be expected to risk their capital if the net result to them is going to be a negligible return. Therefore, an incentive has to be provided, and that incentive is provided by the profit motive. None of the pals of hon. Members opposite works overtime unless he gets paid for it. We know that if a man works all night he demands 50 per cent. on his normal rate, and if he does not get it he will not do it, because he is animated by the profit motive. [Interruption.] What the Financial Secretary to the Treasury does not realise is that this is our weekly entertainment, which normally we pay for, but we get it here for nothing.

Mr. Harmar Nicholls (Peterborough)

My hon. Friend the Member for Epping (Mr. Nigel Davies), in his extremely sound argument, used an unfortunate phrase when he referred to the fact that it was easy to sell. I do not think that is the interpretation which he would like to go on record. It would be truer to say that sales resistance in the sterling area is not quite as bad as sales resistance in the dollar area, though anybody in business knows that it is bad enough.

Mr. J. Hynd

I would just like to add a word for the sake of charity and for the sake of the record. We heard a speech from the other side of the Committee which was one of the best expositions of the policy of dumping which I have ever heard. It was advocating that inferior goods should be sold on foreign markets by means of continual increasing subsidies. Twice or three times the hon. Member for Epping (Mr. Nigel Davies) advocated that there should be these indirect subsidies for the purpose of insuring that goods go into foreign markets.

10.30 p.m.

The hon. Gentleman made special references to two articles, screwdrivers and pliers, and suggested that those produced here were of an inferior quality. I happen to represent a constituency where articles of that kind are made, and they can in quality face any competition in the world.

Only a short time ago I had a letter from an American firm of builders asking me if it were possible to buy British-made trowels, not from my constituency but from Birmingham, because there is nothing in America to touch them. I was able to put them in touch with a firm producing this article and they have been supplied. I want to protest against the suggestion that screwdrivers, pliers and other British steel made articles are of low quality.

Mr. Nigel Davies

I do not know whether the hon. Member listened to my speech. I do not know from where he got the reference to subsidies. If he reads the OFFICIAL REPORT he will find that that does not occur in what I said. I said nothing about screwdrivers and pliers and corkscrews, but I have seen these with a finish which was not on the same level as those produced by United States manufacturers. In some cases, the burning marks in making them were not removed. I come back to what my hon. Friend said about sales resistance. It is far less in Australia than it is in America, for instance, and therefore there is not the inducement to change goods to meet United States competition, which is fierce, indeed, and becoming fiercer since the end of the war. I advocate no form of subsidy, but a tax remission, an incentive, which the Minister says is desirable, if not necessary, to meet the case.

Question put, and negatived.