N.A.A.F.I. SUPPLIES, CANAL ZONE (CUSTOMS DUTY) (Hansard, 5 February 1952)

§ Mr. E. H. Keeling (Twickenham)
I wish to draw the attention of the House for a few minutes to a matter which is a minor matter compared with the world events we have been discussing but which is of importance to the British individuals concerned. After all, this half-hour at the end of Business is the time when the interests of individuals who have been injuriously affected can be discussed when it is not possible to raise them in any other manner. The subject I wish to raise is the addition of Egyptian customs duty to the price of the wines and spirits sold by N.A.A.F.I. to British troops in the Canal Zone, although no payment of that duty is being made to the Government of Egypt.
At the outset I want to make it clear that I am not seeking to increase the points of difference between this country 937 and Egypt. I shall be very careful not to exacerbate feelings between the two countries, and I bear in mind what my right hon. Friend the Foreign Secretary said today when he expressed hopes of agreement. We all trust that the negotiations he thinks might come about will be successful. I am solely criticising the War Office and the Navy, Army and Air Force Institutes.
The Treaty of 1936, about which we have heard so much in the last few months, lays down that duty shall be paid on wines and spirits imported by N.A.A.F.I., and in accordance with that Treaty N.A.A.F.I. is collecting the duty and adding it to the price of the wines and spirits sold to officers and men. I would explain, in parenthesis, that no other goods imported into the Canal Zone by N.A.A.F.I. are liable to duty and, in practice, only officers and N.C.O.s are allowed to buy these wines and spirits.
If that were the whole story, there would be no complaint. It is right for N.A.A.F.I. to collect the duty because the Treaty says that the duty shall be collected and paid to the Egyptian Government. But that is not the whole story. Egypt is likewise bound by the Treaty to refund the duty paid by British officers and men on cars and guns imported into the Canal Zone if they are re-exported within three years, that is to say, if the British officer or man is transferred to another country. Because Egypt no longer recognises the Treaty, she has refused to refund the duty on the cars and guns, and so we, in turn, are not paying over the duty we collect on wines and spirits to the Egyptian Government.
I submit—and this is my main point—that N.A.A.F.I. ought to be instructed by the War Office to record the duty paid on wines and spirits and ought to undertake to refund that duty to the officers and N.C.O.s who have paid it when eventually an agreement is made with Egypt, unless Egypt carries out her obligation to refund the duty on the cars and guns when they are re-exported.
What is the difficulty? I press my hon. and gallant Friend, the Under-Secretary of State, when he replies, to say what is the difficulty in keeping this record. Quite apart from any question of refund, one would have thought that the N.A.A.F.I. would keep a record of what is sold in the way of wines and spirits, if only to 938 show that they are going to the British officers and N.C.O.s for whom they are intended, and are not going to the black market. The duty which is being charged ought to be recorded, so that if it is not paid to the Egyptian Government it may be repaid to the buyers. In fact, no record is being kept. N.A.A.F.I. is saying to the British officers and men, "Heads Egypt wins, tails you lose."
It is clear that Egypt may or may not be paid the duty; but what is quite certain is that even if Egypt is not paid the duty, the British officers and N.C.O.s are not going to get their money back. I assert that if the War Office decline to order that a record should be kept, they are failing in their duty to support the just rights of the British Army, which has been so severely tried in the last few months.

§ The Under-Secretary of State for War (Mr. J. R. H. Hutchison)
I hope that my hon. Friend the Member for Twickenham (Mr. Keeling), will not think me discourteous if I cannot give as full account as he would like, or that I am unconcerned if I cannot give the pledges which he would like. The truth is that the War Office in this matter is not a free agent. Its hands are largely tied by the foreign policy of the Government.
Broadly speaking, what my hon. Friend has said is true. The fact is that this country has maintained, throughout the troubled time in Egypt, the attitude that the 1936 Treaty is still in force. Egypt, on the other hand, some months ago took unilateral action to denounce that Treaty. By the Treaty we undertook a number of things, inter alia, to pay to the Egyptian Government customs duties on wines and spirits sold through the N.A.A.F.I. organisation. Similar duties are, incidentally, levied in almost every country in the world. Therefore, for many years past, we have recovered, in the price of such goods, the duty which we had an obligation to pay to the Egyptian Government.
My hon. Friend points out that in any case we are not paying these duties over to the Egyptian Government at the moment. That is quite true and, as he outlined, there are certain other intervening factors which are in dispute and which affect the whole consideration of this matter. But our hope is that normal relations with Egypt will be restored and, 939 in the meantime, N.A.A.F.I. are correctly charging a price which will enable them to pay the duty if and when it becomes necessary to pay it.
My hon. Friend asked me what will become of this money which is, at the moment, held in reserve if, at the end of the day, it is decided that it is not necessary that it shall be paid over at all. On that, all I can say is that I have no doubt that it would be possible to estimate how much duty has in that way been avoided, and that the N.A.A.F.I. organisation would accept a direction from the Departments concerned—and it must be remembered that there are a number of Departments concerned in this matter—as to how that money should be applied. I would ask my hon. Friend to apply his mind to that situation.
This part of the problem is what I may call the first foot of my hon. Friend's argument. I must point out that these aspects of the question are really beyond my province. They are in the realms of treaty and foreign policy, and it would not be right for me to venture further into such troubled waters, especially at a time when things seem to be taking a turn for the better.
Meantime, in order that it may be possible, if desirable, to try to trace in the future the original payers of this duty, my hon. Friend asks that from now on note should be taken of those who buy these wines and spirits—the amounts they pay and their names. That seemed to me to be a reasonable suggestion, and I consulted the heads of N.A.A.F.I. on this matter. They told me that at present especially this course is quite impossible. Wines and spirits are sold by the crate, by the bottle or the glass to messes, to officers and sergeants individually, to families and civilian employees.
There are, it should be remembered, certain civilian employees of all three Services in Egypt who are concerned. N.A.A.F.I. are at present desperately short of staff. The disturbances in Egypt have resulted in many of their local staff leaving them, willingly or under duress, and wives of officers and N.C.O.s have been recruited to keep this organisation going even on its present basis.
The second foot of my hon. Friend's argument is that since we are on such 940 unhappy terms with Egypt we should exonerate our troops there from paying charges to N.A.A.F.I. which they have always paid. I cannot see that it is fair to relieve one section of our nationals in Egypt in respect of one payment on one commodity. That theory could be extended very far. When we move into troubled times like those being experienced in Egypt by us at present, a great number of people suffer. There is disruption in family life, jobs are lost, there is the cost of sending families and goods home, there is the risk of damage to property and there is the increased cost of everything in a dangerous zone. All these combine to make life not only uncomfortable but expensive. Some of them may be compensated, but by no means all.
Would it really be right for us suddenly to relieve one small section of the people who are not paying any more than they had paid in the past? The turbulent situation in Egypt has not disadvantaged them in this particular way. It must also be remembered that there is such a thing as local overseas allowance, which is paid to troops in Egypt and other theatres with the intention of compensating them in respect of an increased cost of living in those countries as compared with the cost of living at home. The elimination of the duty component on wines and spirits might well unfavourably affect that allowance. I will not labour that point, but it would have its effect.
I understand very well the sympathy of my hon. Friend—indeed I share it with all those who have suffered anxiety and danger and expense out there. I should like to be able to think of them as being able to drown their anxieties as cheaply as possible. I cannot hope that my hon. Friend will be satisfied with this response to his appeal, but I cannot see a justification at present for going further in this matter, nor in many aspects am I empowered to do so, or is it open for me to do so.

§ Brigadier Terence Clarke (Portsmouth, West)
I think the Under-Secretary of State for War has put forward the best argument he could for holding on to money to which the British Government have no right. I would not give it to the Egyptian Government either. But I think 941 it wrong to say that our soldiers have always been used to paying this. In peace-time, yes; it is one of the things we have to put up with; but these soldiers are fighting a war, they are constantly in danger, and I think the least the Government can do for them is to give them their drinks at the cheapest possible price.
It would not cost the Government anything to do it, and I do not see why anybody should benefit by this money which would have gone to Egypt, but which is now being rightly withheld. I do not think the Under-Secretary of State should hide under a cloak and say this is a matter for the Foreign Secretary. As Under-Secretary of State for War it is up to him to fight on behalf of the soldiers and see that they get their due. I hope he will reconsider the matter and see that, until these troubled waters are once more smoothed, the British soldier pays as little as possible for the few comforts he can get; and that we do not put this money into the pockets of anybody except those from whom it came.

§ Major H. Legge-Bourke (Isle of Ely)
I think my hon. and gallant Friend the Member for Portsmouth, West (Brigadier Clarke), would be the last person to accuse the Under-Secretary of State for War of not being the first one to think of the welfare of our troops. I hope his remarks were not made with that intention, because I know that the Under-Secretary has very considerable experience of and interest in all that concerns the welfare of the British Army.
In his reply my hon. Friend made clear that this is not just a question for him. However strongly he would wish to put the case for the Army he is bound to be affected by decisions taken at the Foreign Office and it is a little unfair to criticise him for not taking the whole matter into his own hands. One thing which was overlooked by my hon. Friends was a point which the Under-Secretary did mention, that it is not only British troops who are concerned in this matter.
This debate has served a useful purpose if it has shown quite clearly that 942 there are a good many British subjects also affected by what has been going on in Egypt; and that those people are in greater danger, perhaps, than British troops, because not all of them are armed.
As I remember, a great many of those people have facilities for using the N.A.A.F.I. and it would be ludicrous if they were not given the same advantages as the soldiers if the suggestions of my hon. Friend the Member for Twickenham (Mr. Keeling) proved feasible. It would be dreadful to have one's name taken for yet another thing, which would be, apparently, for having a drink, because that is what the proposal of my hon. Friend would amount to. On every occasion on which one bought any spirits or wine one's name would have to be recorded. Not everybody is over-anxious for that to happen for a purpose such as that.
Although I have been greatly interested in what was said by my hon. Friend the Member for Twickenham, my feeling is that this is one of those matters which has many points in favour of it and many against. The reply of the War Office is the only one they could have given. We must accept the fact, however disappointing it may be to the troops concerned. But it should not be forgotten that this is not the first time that the Egyptian people have benefited by British troops being in their territory. They made a great deal of money out of British troops during the war, and apparently there is still a possibility of their making a considerable amount out of them despite the recent trouble.
It would be a very nice gesture if, at the end of all this, the Egyptians found themselves able to say that they proposed to forego this duty. That perhaps is crying for the moon, but let us hope that the relationship will be such that that suggestion can be considered.