HC Deb 15 May 1962 vol 659 cc1264-81
Mr. James MacColl (Widnes)

I beg to move, in page 6, line 5, to leave out subsection (6).

The Chairman

This Amendment may be discussed with the Amendments in Schedule 5, page 47, line 6, to leave out paragraph 2, and line 33, to leave out paragraph 5.

Mr. MacColl

It would certainly be a great advantage to me, Sir William, and perhaps to the Committee, if we could follow your advice and consider with this Amendment the Amendments to the Schedule. I say that because I confess that I would feel more confident in deciding precisely to what I object in the Clause and in the Schedule if I were sure I knew what one word in either the Clause or the Schedule actually meant. I am not clear at the moment precisely what it is I want to amend, but I think I know what my complaint is. I should like to put that to the Committee and to the Government.

The Chief Secretary to the Treasury, when he was moving the Second Reading of the Finance Bill, described it as: the play-back at slow speed of a conscientious commentary upon the game in a language not always easy to follow."—[OFFICIAL REPORT, 3rd May, 1962; Vol. 658, c. 1217.] The latter part of that sentence I entirely accept. It is not easy to follow, but the right hon. Gentleman, who is teeming with cheerful facts about the cumulo and has steered a Town and Country Planning Act through the House, finds this Bill hard to follow. That, I confess, is an encouraging thing. By the time we have finished this discussion I hope that we shall know a little more about the matter than we do at the moment.

The complaint I make is that I accuse the right hon. Gentleman of having scrambled the tape of the recording. It is not a conscientious playback of the original proposals in the Budget for it includes a penalty which was never included in the original Budget speech. Because I think that, I want to explain my point of view. If I am wrong I shall be happy to take the matter no further, but I should like to outline what seems to be the position.

Clause 3, as I think everyone understands it, is about the removal of breakfast duties, the duties on sugar, coffee and other commodities in common use in the household. It is generally supposed to be a liberalising proposal. It is taking off Excise duties, as I understand it, and leaving some element of protective duty. That is what it purports to do.

In respect of sugar, there are two types of imposition, to use a fairly colourless word, which affect the purchaser of sugar. One is the ordinary Customs and Excise duty and the other is the surcharge levied under the Sugar Act, 1956. What happens to the sugar surcharge I do not know; it may not be closely relevant to this question. Clause 3, I believe, outlines proposals for the removal, in the main, of the ordinary sugar duties.

In subsection (6) there is a reference to Part II of the Fifth Schedule and to the Sugar Act, 1956. If one turns to page 47 of the Bill, which contains part of Part II of the Fifth Schedule, one finds provided in paragraph 2 that the power to make regulations with respect to surcharge and to surcharge repayments under the Sugar Act continues. One might think that this was simply removing the Excise duty and preserving and safeguarding the surcharge under the Sugar Act as something different in kind from the Excise duties. So far, one might grudgingly agree that the thing had some argument for it. However, turning to paragraph 5 of the same Schedule, one finds it provided that: Notwithstanding anything in the foregoing provisions of this Part of this Schedule, sections two hundred and sixteen and two hundred and seventeen, and paragraphs (e) and (f) of subsection (1) of section two hundred and eighteen, of the Customs and Excise Act, 1952, … shall cease to have effect for any purpose of the Sugar Act, 1956. If one turns to the Customs and Excise Act, 1952, and refers to Section 217, which ceases to have effect in so far as sugar is concerned, one finds—I will not read the words of the Section itself—that the side-note is Remission or allowance of duty on sugar, etc. for use in art or manufacture. In other words, it provides that the Commissioners may authorise any person to receive, and to permit the delivery to any person so authorised, sugar provided that it is being used for some form of manufacture other than the production of food or drink for human consumption.

Under the 1952 Act, the surcharge on sugar was not payable by manufacturers using sugar as a raw material in part of their industrial operations. The effect of this rather complicated legislation by reference in the new Bill is, as I understand it, that that exemption is to be removed.

Thus, what is happening is not just that some worthy or fortunate people who take sugar in their tea, or whatever it may be, are being exempted from paying duty in their use of sugar. It is not a liberalising measure, but, as I understand it, an imposition is being placed on the use of a raw material in manufacturing. There are industries, for instance, which employ a process of fermentation in the course of chemical manufacturing which requires the use of sugar.

I am told that whereas this duty which is being remitted runs as something like £12 a ton, the surcharge which is not being remitted runs at something like £28 a ton and is, therefore, a much more significant imposition than the one which is being remitted But it is not only a question of part of the duty being remitted and the other being retained. As I understand it, those who are at present using sugar not as a foodstuff but as an industrial raw material in this way are now paying neither the present duty nor the surcharge. Therefore, they will be in a very much worse position as a result of these proposals than they are at present.

The matter goes further than that. There are other forms of industrial manufacturing, far instance, those using refined hydrocarbon oils, where a similar situation arises and where there is, in fact, exemption. Therefore, it seems to me—I may be all wrong and I may be making a fool of myself; I do not know—that what has happened is that an industry, for no apparent reason whatever, is having imposed on it a quite substantial levy on the use of a raw material which forms an important part of the processes of manufacture on which it has for many years been engaged. As I understand from all I have read and heard in our debates and elsewhere, this is being done without any explanation, without consultation and without any real reason being offered. Under the camouflage of reducing duties on breakfast foods, the Government are quietly introducing a new tax on a raw material used in the process of manufacture. That being so, it seemed to me that I should raise this question. As I say, I may well have misunderstood the position, in which case I will withdraw my Amendment and apologise for taking up the Committee's time and for wasting the Treasury's time. But, if there is something in what I have said, it is incumbent on the Government to give some explanation of this Clause for the benefit of hon. Members.

9.30 p.m.

Sir E. Boyle

It is some years since I last had the pleasure of following a speech by the hon. Member for Widnes (Mr. MacColl). I cannot advise the Committee to accept the Amendment for reasons which I will explain. However, the hon. Gentleman has raised a perfectly good point which I, together with my right hon. and learned Friend, undertake to consider.

Taken at their face value, these Amendments would destroy the sugar surcharge and, as I will show, reduce to something like absurdity the pattern of the Bill. The main purpose of the Amendments is to delete subsection (6) from Clause 3. It is only by virtue of subsection (6) that the sugar surcharge continues to be levied on sugar freed from duty under the Budget Resolutions. To delete this subsection would, therefore, make all home produced and Commonwealth raw sugar free of sugar surcharge.

A further technical point is that by deleting subsection (6), but only two paragraphs, paragraph (2) and (5) of Part II of the Fifth Schedule, we get a ridiculous situation which would leave all the other paragraphs of Part II of the Schedule still in existence but without any powers behind them. The only reference in the Bill, namely, that in subsection (6) of Clause 3, which governs Part II of the Schedule would be deleted. We should, therefore, get a nonsense if we proceeded in the way that the hon. Gentleman suggests.

I do not believe that the hon. Gentleman is intending to sabotage the Sugar Act, 1956. I think that a clear indication of what he has in mind lies in his proposed deletion of paragraph (5) of Part II of the Fifth Schedule, which specifically provides for a termination of certain reliefs from sugar surcharge in the same way as the last paragraph of Clause 3 (2) provides for the termination of the corresponding duty reliefs.

The reliefs concerned are in respect of sugar used in certain manufacturing processes. The hon. Gentleman stated this correctly. The reliefs from duty are no longer either necessary or justifiable because, as a result of the decisions in my right hon. and learned Friend's Budget, ample supplies of duty free sugar are available. The relief from sugar surcharge depended on the repetition of the duty pattern, and when the Budget changes made it possible to have a fresh look at this matter my right hon. and learned Friend, in consultation with the other Ministers concerned, notably my right hon. Friend the Minister of Agriculture, Fisheries and Food, decided as a matter of sugar marketing policy that there was, on merits, no place for the retention of these reliefs.

However, the hon. Member has justifiably pointed out a small respect in which this has created a fresh anomaly. Sugar is used in the manufacture of some goods without being present in the final product—for example, in the manufacture of lactic acid. Home producers of these goods have to pay surcharge on the sugar which they use. Imports of the same products do not bear surcharge because they do not contain sugar. There is one firm in particular in the hon. Gentleman's constituency which has made representations on this point. I am not suggesting that he has raised this matter entirely for that reason, but it may have encouraged him to carry out a rather more technical survey than he would otherwise have carried out.

I cannot tonight promise any definite solution of this matter, but we have been made aware of it. It certainly will be examined between now and a later stage of the Bill to see whether anything can be done to meet the hon. Gentleman's point.

Mr. Mitchison

We on this side regard the Financial Secretary's reply as most unsatisfactory. This is a technical matter, but the substance of it is that the Government, in one respect, are taxing the raw material of industry.

Whether the Government knew it to begin with or not, since this Amendment was tabled two things have happened. First, they have had to have a look at the substantial point of the Amendments. I noticed that the Financial Secretary was very well prepared with comments on this subject. Secondly, they have had representations from the constituents of my hon. Friend the Member for Widnes (Mr. MacColl), whose interests my hon. Friend is rightly and properly representing. The Government have had ample time to see the point which my hon. Friend intended to raise, and they have been too slow about it.

All that the Financial Secretary could tell us was that he was prepared to consider this matter. If he had said that he was willing to try to meet the grievance, the substance of which he fully understands, according to his reply, we might have taken a different view. But all that he said was that he was prepared to consider it.

As appeared in cases involving a rather wider field than the narrow one which we are now considering, we regard the taxation of any raw material of industry as a serious matter which has to be justified. It may well be that the Government at first did not know what they were doing, but when the Amendment appeared on the Order Paper they knew perfectly well what was going on. The right answer for the Government to make in a case of this sort is not, of course, to accept the Amendment which we shall press to a Division by way of protest, because it is a wrecking Amendment, but to table a substantive Amendment of their own. When the Government say that they knew the argument in favour they should wake up and put down an Amendment to meet a real grievance. They know about black beer and they know perfectly well about sugar, too.

Mr. MacColl

What is the position of the drawback? Assuming for the moment that the Clause remains as it is, and a surcharge is payable, is there a drawback on it if the final product is exported?

Sir E. Boyle

I should need a little time to answer that question.

Mr. MacColl

If the Financial Secretary had been prepared to say "Yes" in answer to my question I might even have considered standing up to my hon. and learned Friend the Member for Kettering (Mr. Mitchison) and saying that I thought that this was a case for compromise. The Financial Secretary has behaved rather cavalierly about this. I do not take seriously the accusation that the Amendment would drive a coach and four through the Clause. It is not for me to try to draft a Clause to stand up to scrutiny in the courts. There are plenty of people to assist the Financial Secretary in drafting one and getting the Government out of this mess. The Government should say "We are not satisfied that the Clause as it stands is fair and just. We will throw it out and at a later stage of the Bill let the draftsmen do something to meet the point." I do not think that lightheartedly the Government should be taxing raw material without any kind of consultation, as far as I know, with the people involved.

The Government are saying that this is a small technical point. That may be so from the point of view of the Treasury, but looked at from the point

of view of people who are trying to run a manufacturing industry in Widnes or anywhere else and have need to keep up employment and to compete with exports this is a very serious matter. They are entitled not to be treated in this amateurish way and left in this position. I hope that my hon. Friends and indeed other hon. Members will feel that this is a case on which they should divide the Committee.

Sir E. Boyle

I have now found out the answer to the hon. Member's question. It is "Yes", but it is called a repayment and not a drawback.

Mr. Denis Howell (Birmingham, Small Heath)

Too late.

Question put, That the words proposed to be left out stand part of the Clause:—

The Committee divided: Ayes 234, Noes 163.

Division No. 185.] AYES [9.38 p.m.
Agnew, Sir Peter Curran, Charles Hicks Beach, Maj. W.
Aitken, W. T. Dalkeith, Earl of Hill, Mrs. Eveline (Wythenshawe)
Allason, James Dance, James Hill, J. E. B. (S. Norfolk)
Atkins, Humphrey d'Avigdor-Goldsmid, Sir Henry Hinchingbrooke, Viscount
Barber, Anthony Deedes, W. F. Holland, Philip
Barlow, Sir John de Ferranti, Basil Hollingworth, John
Barter, John Donaldson, Cmdr. C. E. M. Hopkins, Alan
Batsford, Brian Doughty, Charles Hornby, R. P.
Baxter, Sir Beverley (Southgate) Drayson, G. B. Howard, John (Southampton, Test)
Beamish, Col. Sir Tufton du Cann, Edward Hughes Hallett, Vice-Admiral John
Bennett, Dr. Reginald (Gos & Fhm) Duncan, Sir James Hughes-Young, Michael
Biffen, John Elliot, Capt. Walter (Carshalton) Hulbert, Sir Norman
Biggs-Davison, John Elliott, R. W. (Nwcastle-upon-Tyne, N.) Hutchison, Michael Clark
Bingham, R. M. Errington, Sir Eric Jackson, John
Bishop, F. P. Farey-Jones, F. W. James, David
Black, Sir Cyril Farr, John Jenkins, Robert (Dulwich)
Bossom, Clive Finlay, Graeme Jennings, J. C.
Bourne-Arton, A. Fisher, Nigel Johnson, Eric (Blackley)
Box, Donald Fletcher-Cooke, Charles Kaberry, Sir Donald
Boyd-Carpenter, Rt. Hon. J. Forrest, George Kerans, Cdr. J. S.
Boyle, Sir Edward Fraser, Hn. Hugh (Stafford & Stone) Kerr, Sir Hamilton
Bromley-Davenport, Lt.-Col. Sir Walter Fraser, Ian (Plymouth, Sutton) Kitson, Timothy
Brooke, Rt. Hon. Henry Freeth, Denzil Lancaster, Col. C. G.
Brooman-White, R. Galbraith, Hon. T. G. D. Leather, E. H. C.
Brown, Alan (Tottenham) Gammans, Lady Leburn, Gilmour
Browne, Percy (Torrington) Gardner, Edward Legge-Bourke, Sir Harry
Gibson-Watt, David Lewis, Kenneth (Rutland)
Bryan, Paul Gilmour, Sir John Lilley, F. J. P.
Bullard, Denys Glover, Sir Douglas Litchfield, Capt. John
Bullus, Wing Commander Eric Glyn, Dr. Alan (Clapham) Lloyd, Rt. Hon. Selwyn (Wirral)
Burden, F. A. Goodhew, Victor Longden, Gilbert
Butcher, Sir Herbert Grant, Rt. Hon. William Loveys, Walter H.
Campbell, Gordon (Moray & Nairn) Green, Alan Lucas, Sir Jocelyn
Carr, Robert (Mitcham) Lucas-Tooth, Sir Hugh
Chataway, Christopher Gresham Cooke, R. MacArthur, Ian
Chichester-Clark, R. Grosvenor, Lt.-Col. R. G. McLean, Neil (Inverness)
Clarke, Brig. Terence (Portsmth, W.) Gurden, Harold Macleod, Rt. Hn. Iain (Enfield, W.)
Cleaver, Leonard Hall, John (Wycombe) MacLeod, John (Ross & Cromarty)
Collard, Richard Hamilton, Michael (Wellingborough) McMaster, Stanley R.
Cooke, Robert Harris, Frederic (Croydon, N. W.) Macpherson, Niail (Dumfries)
Cooper, A. E. Harris, Reader (Heston) Maddan, Martin
Cooper-Key, Sir Neill Harrison, Brian (Maldon) Maginnis, John E.
Cordeaux, Lt.-Col. J. K. Harrison, Col. Sir Harwood (Eye) Markham, Major Sir Frank
Corfield, F. V. Harvie Anderson, Miss Marlowe, Anthony
Costain, A. P. Hastings, Stephen Marshall, Douglas
Coulson, Michael Hay, John Marten, Neil
Courtney, Cdr. Anthony Heald, Rt. Hon. Sir Lionel Matthews, Gordon (Meriden)
Craddock, Sir Beresford Henderson, John (Cathcart) Mawby, Ray
Cunningham, Knox Hendry, Forbes Maxwell-Hyslop, R. J.
Maydon, Lt.-Cmdr. S. L. C. Quennell, Miss J. M. Teeling, Sir William
Mills, Stratton Rawlinson, Peter Temple, John M.
Miscampbell, Norman Redmayne, Rt. Hon. Martin Thatcher, Mrs. Margaret
More, Jasper (Ludlow) Rees, Hugh Thomas, Leslie (Canterbury)
Morgan, William Renton, David Thompson, Kenneth (Walton)
Morrison, John Robinson, Rt. Fin. Sir R. (B'pool, S.) Thornton-Kemsley, Sir Colin
Nabarro, Gerald Rodgers, John (Sevenoaks) Tilney, John (Wavertree)
Neave, Airey Roots, William Touche, Rt. Hon. Sir Gordon
Nicholls, Sir Harmar Ropner, Col Sir Leonard Turner, Colin
Noble, Michael Royle, Anthony (Richmond, Surrey) van Straubenzee, W. R.
Nugent, Rt. Hon. Sir Richard Russell, Ronald Vane, W. M. F.
Orr-Ewing, C. Ian St. Clair, M. Vosper, Rt. Hon. Dennis
Osborne, Sir Cyril (Louth) Sharples, Richard Wakefield, Sir Wavell (St. M'lebone)
Page, Graham (Crosby) Shaw, M. Walder, David
Page, John (Harrow, West) Shepherd, William Walker, Peter
Pannell, Norman (Kirkdale) Skeet, T. H. H. Walker-Smith, Rt. Hon. Sir Derek
Partridge, E. Smith, Dudley (Br'ntf'd & Chiswick) Wells, John (Maidstone)
Pearson, Frank (Clitheroe) Smithers, Peter Williams, Dudley (Exeter)
Percival, Ian Smyth, Brig. Sir John (Norwood) Williams, Paul (Sunderland, S.)
Peyton, John Spearman, Sir Alexander Wills, Sir Gerald (Bridgwater)
Pickthorn, Sir Kenneth Speir, Rupert Wilson, Geoffrey (Truro)
Pike, Miss Mervyn Stanley, Hon. Richard Wise, A. R.
Pilkington, Sir Richard Stevens, Geoffrey Wolrige-Gordon, Patrick
Pitman, Sir James Steward, Harold (Stockport, S.) Woodnutt, Mark
Pitt, Miss Edith Stodart, J. A. Woollam, John
Pott, Percivall Stoddart-Scott, Col. Sir Malcolm Worsley, Marcus
Price, H. A. (Lewisham, W.) Summers, Sir Spencer (Aylesbury) Yates, William (The Wrekin)
Prior, J. M. L. Talbot, John E.
Profumo, Rt. Hon. John Tapsell, Peter TELLERS FOR THE AYES:
Proudfoot, Wilfred Taylor, Sir Charles (Eastbourne) Mr. Whitelaw and Mr. McLaren.
Pym, Francis Taylor, Frank (M'ch'st'r, Moss Side)
NOES
Ainsley, William Gourlay, Harry Mitchison, G. R.
Albu, Austen Mulley, Frederick Morris, John
Allen, Scholefield (Crewe) Greenwood, Anthony Neal, Harold
Baird, John Grey, Charles Oram, A. E.
Baxter, William (Stirlingshire, W.) Griffiths, David (Rother Valley) Oswald, Thomas
Beaney, Alan Griffiths, W. (Exchange) Padley, W. E.
Bellenger, Rt. Hon. F. J. Grimond, Rt. Hon. J. Pannell, Charles (Leeds, W.)
Bence, Cyril Gunter, Ray Pargiter, G. A.
Bennett, J. (Glasgow, Bridgeton) Hall, Rt. Hn. Glenvil (Colns Valley) Parker, John
Blackburn, F. Hamilton, William (West Fife) Paton, John
Boardman, H. Harper, Joseph Pearson, Arthur (Pontypridd)
Bottomley, Rt. Hon. A. G. Hart, Mrs. Judith Peart, Frederick
Bowden, Rt. Hn. H. W. (Leics. S. W.) Hayman, F. H. Plummer, Sir Leslie
Bowles, Frank Henderson, Rt. Hn. Arthur (Rwly Regis) Prentice, R. E.
Boyden, James Herbison, Miss Margaret Price, J. T. (Westhoughton)
Braddock, Mrs. E. M. Hill, J. (Midlothian) Probert, Arthur
Brockway, A. Fenner Hilton, A. V. Proctor, W. T.
Broughton, Dr. A. D. D. Holman, Percy Pursey, Cmdr. Harry
Brown, Thomas (Ince) Holt, Arthur Rankin, John
Callaghan, James Houghton, Douglas Reynolds, G. W.
Castle, Mrs. Barbara Howell, Denis (Small Heath) Rhodes, H.
Chapman, Donald Hoy, James H. Robertson, John (Paisley)
Collick, Percy Hughes, Emrys (S. Ayrshire) Robinson, Kenneth (St. Pancras, N.)
Craddock, George (Bradford, S.) Hunter, A. E. Rodgers, W. T. (Stockton)
Crosland, Anthony Hynd, H. (Accrington) Ross, William
Crossman, R. H. S. Hynd, John (Attercliffe) Short, Edward
Cullen, Mrs. Alice Irving, Sydney (Dartford) Silverman, Sydney (Nelson)
Darling, George Jay, Rt. Hon. Douglas Skeffington, Arthur
Davies, G. Elfed (Rhondda, E.) Jones, Dan (Burnley) Slater, Mrs. Harriet (Stoke, N.)
Davies, Harold (Leek) Jones, Jack (Rotherham) Slater, Joseph (Sedgefield)
Davies, S. O. (Merthyr) Kelley, Richard Small, William
Delargy, Hugh Kenyon, Clifford Smith, Ellis (Stoke, S.)
Dempsey, James King, Dr. Horace Snow, Julian
Diamond, John Lawson, George Soskice, Rt. Hon. Sir Frank
Dodds, Norman Lee, Frederick (Newton) Spriggs, Leslie
Lewis, Arthur (West Ham, N.) Steele, Thomas
Driberg, Tom Lubbock, Eric Stewart, Michael (Fulham)
Ede, Rt. Hon. C. MacColl, James Stones, William
Edelman, Maurice MacDermot, Niall Strachey, Rt. Hon. John
Edwards, Rt. Hon. Ness (Caerphilly) McInnes, James
Edwards, Robert (Bilston) McKay, John (Wallsend) Stross, Dr. Barnett (Stoke-on-Trent, C.)
Edwards, Walter (Stepney) McLeavy, Frank Swain, Thomas
Evans, Albert MacMillan, Malcolm (Western Isles) Swingler, Stephen
Fernyhough, E. MacPherson, Malcolm (Stirling) Taylor, Bernard (Mansfield)
Finch, Harold Mallalieu, E. L. (Brigg) Thomas, Iorwerth (Rhondda, W.)
Foot, Michael (Ebbw Vale) Mallalieu, J. P. W. (Huddersfield, E.) Thompson, Dr. Alan (Dunfermline)
Forman, J. C. Mapp, Charles Timmons, John
Fraser, Thomas (Hamilton) Mason, Roy Wade, Donald
Gaitskell, Rt. Hon. Hugh Mellish, R. J. Wainwright, Edwin
Galpern, Sir Myer Mendelson, J. J. Warbey, William
Ginsburg, David Milne, Edward Weitzman, David
Wells, William (Walsall, N.) Williams, W. T. (Warrington) Yates, Victor (Ladywood)
Whitlock, William Willis, E. G. (Edinburgh, E.) Zilliacus, K.
Wilkins, W. A. Wilson, Rt. Hon. Harold (Huyton)
Williams, D. J. (Neath) Winterbottom, R. E. TELLERS FOR THE NOES:
Williams, LI. (Abertillery) Woof, Robert Mr. Charles A. Howell and
Mr. McCann.

Question proposed, That the Clause stand part of the Bill.

Mr. Jay

We are confronted by a demoralised Government. We have already unearthed several mistakes in the Bill. In our last debate the Financial Secretary admitted that the Government had caused an anomaly, as he put it—in other words, a mistake—in the Clause. It has also transpired that there is a further mistake in another part of the Bill in which the Government unintentionally exempted one kind of insurance company from paying capital gains tax and not another. In view of these discoveries we should certainly examine the Clause a little further. Who knows how many further errors are contained in it?

I believe that the Financial Secretary is the expert on the Clause and intends to reply to the debate, and I ask him, first, a general question. The position which we have reached, as I understand it, is that there is no longer any tax—revenue or import duty—to be imposed on cocoa, coffee, sugar or tea, from which the taxes have already been removed. That is what we are doing for coffee and cocoa—removing the tax from all these substances if produced in the United Kingdom or the Commonwealth. That also applies to sugar. Is that correct?

Secondly, we were informed on the previous Clause that though certain reductions in duty were being made, no assurance could be given to the Committee that any reductions in price to the consumer would result. In respect of sugar, however, the Chancellor made a categorical statement in his Budget speech that there would be a reduction in the price of sugar to the consumer. He expanded this in rather glowing terms and said that as a result of his proposals it will be possible for a reduction of ½d. a lb. to be made in the price of sugar. This will not only be of help to the housewife; it will also go some way to ease the burden on manufacturers of some of the things I am bringing into Purchase Tax for the first time."—[OFFICIAL REPORT, 9th April, 1962; Vol. 657, c. 993.] I therefore ask the Financial Secretary whether this reduction in the price of sugar has been made in reality and not subject to any kind of subterfuge. My hon. Friend the Member for Eton and Slough (Mr. Brockway) reported immediately after the Budget that apparently, in one case, the price had been mysteriously raised the night before the Budget and then reduced again the day after it. That would not strike most of us as being a genuine reduction in the price of sugar. Can the Financial Secretary tell us whether the reduction has been made of which the Chancellor boasted in his Budget speech?

Hon. Members

Answer.

Sir E. Boyle

The Chancellor got into trouble on a previous occasion on the question of when he should intervene, and I therefore waited to see whether any other hon. Member wanted to speak on this Clause.

I do not think that there is any quarrel with the main object of the Clause. It has two main effects. In the first place, as from 10th April, 1962, the Clause provides for the repeal of the Excise duties on sugar, molasses, glucose and saccharin and the reduction of the Customs duties on sugar, invert sugar, glucose, saccharin, coffee and cocoa, and it provides for the subsequent repeal of the residual revenue duties and of the revenue duties on tea and chicory at some time after the Finance Bill becomes law, on the coming into force of the protective duties imposed in the 1958 Act.

These breakfast-table duties involved in the Clause are of long standing and produced a good deal of Customs and Excise revenue during the last century and the early part of the present century. They have always proved extremely complicated and have created for the Customs and Excise and no less for industry—because they do not affect only the consumer—work out of all proportion to their present yield. In addition, they are regressive and bear most heavily on the poorer sections of the community. It is fair to say that they are symptomatic of a rather more primitive society than ours is today.

They are almost the last relic of a pattern of revenue raising which has become out of date and has almost been entirely swept away. The duties have not only served a revenue interest, now largely surrendered, but, also, have incorporated elements of protection, for example, for the refining of sugar in the United Kingdom and Commonwealth preference for all the commodities.

The idea of this Clause is, first, to eliminate the revenue element of the duties while retaining the protective and preferential elements and then subsequently to transfer the residual duties as far and in such form as would be appropriate to the protective system under the Import Duties Act.

This two-stage approach is necessary to enable the major changes in rates to operate as from Budget day and it avoids the disruption of trade which would have occurred if they had been delayed and permits the Board of Trade to receive and consider any representations about the level of protective duties or for protective duty drawback Orders. There is nothing in the proposals in the Clause to disturb the very complex marketing arrangements for sugar, both national and international, which arise in many contexts, as we saw recently in the South Africa Bill.

There is nothing complicated in the Clause. Indeed, I think that the effect of the Clause will be that, far from it being complicated, it will facilitate discussion of these tropical products in our negotiations with the Common Market. I dare hardly mention that subject in front of the right hon. Member for Battersea, North (Mr. Jay), but I can assure him that the Clause will not do anything to complicate the discussions now going on. The elimination of the revenue element at a cost of about £15 million and the consequential change of status from revenue to protective is made on its merits and is an integral part of my right hon. and learned Friend's Budget proposals.

May I say to the right hon. Gentleman that I have never known a Finance Bill of this or of any other Government to which there has not been a number of Government-sponsored Amendments. There is no doubt that this proposal also makes a significant contribution to the theme of simplification and reform of the duties of Customs and Excise which has largely depended on legislative change and which has been a recurring theme in recent Budgets.

Mr. Jay

Does that mean, in rather plainer English, that tea, coffee, cocoa and sugar produced in this country or the Commonwealth are no longer to bear either a revenue or a protective duty?

Sir E. Boyle

The right hon. Gentleman's interpretation of the Clause is perfectly correct, but I thought it only reasonable to explain in a little greater detail what the Clause proposes to do. In answer to the right hon. Gentleman, I must frankly say to the Committee that sugar is not a ½d. per lb. cheaper than it would have been but for this Clause, the reason being that the London price of sugar at present—

The Chief Secretary to the Treasury and Paymaster-General (Mr. Henry Brooke)

It is a ½d. per lb. cheaper.

Sir E. Boyle

Sugar is a ½d. per lb. cheaper than it would have been—

Mr. Brooke

Owing to this Clause.

Sir E. Boyle

—as a result of this Clause.

Mr. Jay

On a point of order, Sir William. Rather than that the Chief Secretary should prompt the Financial Secretary at every other sentence, might it not be better for the Committee if, from this point onwards, the Chief Secretary took over the subject himself?

The Chairman

The Financial Secretary is quite in order.

Sir E. Boyle

I apologise. It was an error of writing which caused some confusion. Sugar is a ½d. per lb. cheaper than it would otherwise have been on account of the Clause that we are now discussing.

Mr. Callaghan

The hon. Gentleman says that sugar is ½d. per lb. cheaper than it would otherwise have been but for this Clause. Is sugar in the shops a ½d. per lb. cheaper or not?

Sir E. Boyle

The answer is "No", for the reason I have given—that the London price of sugar is rising. There is nothing inconsistent between the two statements that the London price of sugar at the present time is rising and the fact that sugar, as my right hon. and learned Friend said in his Budget speech, is ½d. per lb. cheaper as a result of this Clause.

Mr. Callaghan

I know that the hon. Gentleman is a bachelor, but I think that there is less excuse for his not knowing the answer than if he were married, because those of us who are married have our wives to purchase sugar and he, presumably, has to purchase his own. Such is his relief secured by the Surtax concession made by his right hon. and learned Friend that he does not even know whether sugar is ½d. per lb. cheaper. This confirms what we have been saying all the evening—and the Leader of the House is here to listen—that the Government are in a poor state of confusion when we have from such a dilligent and an expert member of the Government as the Financial Secretary an exhibition such as we have just had.

10.0 p.m.

The Financial Secretary always knows the answers. He is more agile at putting a convincing case on an unsound foundation than any other member of the Government. He always does it with such a remarkable display of good will and good temper that we believe, at the end of it, that he believes what he has said. But on this occasion not even he can disguise the nakedness of the land. This is the third occasion this evening on which we have had this. We have been very co-operative in the early stages of the Bill. We have got to Clause 3 and we are moving on very fast, but we expect Government spokesmen to be able to give simple straight answers to simple straight questions without prompting, and I hope that as we proceed through the Bill we shall be able to get better answers in future.

Mr. Jay

I rather understated the case when I said that the Government were demoralised, because what the Financial Secretary has now said is quite different from what the Chancellor categorically said in his Budget speech. The Financial Secretary now tells us that the price of sugar is higher than it would have been had it not been for the Clause.

Sir E. Boyle

No, lower.

Mr. Jay

The price of sugar is lower than it would have been but for the Clause. It is very difficult to get it right after listening to the Financial Secretary. The Chancellor said, in his Budget speech: As a result, it will be possible for a reduction of ½d. a lb. to be made in the price of sugar. That clearly meant, and conveyed the impression to everybody in the Committee, that the price of sugar would be ½d. a lb. lower after his action than it was before. He went on to say: This will not only be of help to the housewife; it will also go some way to ease the burden on manufacturers …"—[OFFICIAL REPORT, 9th April, 1962; Vol. 657, c. 993.] What the Financial Secretary has now said is clearly completely different from the Chancellor's categorical statement.

Can the hon. Gentleman say whether the truth is that the Chancellor believed at the time of the Budget that he had an assurance from the sugar manufacturers that they would make this reduction of ½d. in the lb. in the price of sugar, but that they raised the price by that amount, allegedly on other grounds, and then put it back to where it had been? Is that what happened? If it was, the Committee has been misled about the whole matter.

Sir E. Boyle

I will once again say what the position is. Thanks to this Clause, the price of sugar is now ½d. a lb. lower than it would otherwise have been. If the London sugar market had been moving differently, supposing the prices had been falling, my right hon. and learned Friend's statement would have proved to be an understatement and the price of sugar would have been lower than he said in his Budget speech. There is nothing unfair about this. My right hon. and learned Friend said in his Budget speech that the effect of the Clause would be to make the price of sugar ½d. a lb. lower than it would otherwise have been, and that is exactly the state of affairs.

Mr. Denis Howell

These coincidences are always happening. Young people who are trying to buy their own homes find that every time the Bank Rate goes up the rate of interest on their mortgage goes up, but that every time the Bank Rate comes down the rate of interest on their mortgage stays where it was. That is exactly what is happening in the case of sugar. It cannot be absolutely accidental that the trade took this moment to increase the price of sugar, or, to use the economic jargon of the Financial Secretary, the London sugar market conveniently raised it at this moment. We ought to take note of the fact that in spite of what the Government have done, there has been no protection for the housewife. I hope that we shall divide on the Clause.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Fifth and Sixth Schedules agreed to.